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 811-07038
---------
THE MONEY MARKET PORTFOLIOS
---------------------------
(Exact name of registrant as specified in charter)
ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906
----------------------------------------------
(Address of principal executive offices) (Zip code)
CRAIG S. TYLE, ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906
-------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: 650 312-2000
------------
Date of fiscal year end: 6/30
----
Date of reporting period: 6/30/08
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ITEM 1. REPORTS TO STOCKHOLDERS.
The Money Market Portfolios
FINANCIAL HIGHLIGHTS
THE MONEY MARKET PORTFOLIO
YEAR ENDED JUNE 30,
----------------------------------------------------------------
2008 2007 2006 2005 2004
---------- ---------- ---------- --------- ----------
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 0.052 0.041 0.020 0.009
Net realized gains (losses) ............................ -- --(a) -- -- --
---------- ---------- ---------- ---------- ----------
Less distributions from net investment income ............. (0.040) (0.052) (0.041) (0.020) (0.009)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year .............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total return .............................................. 4.10% 5.28% 4.15% 2.06% 0.94%
RATIOS TO AVERAGE NET ASSETS
Expenses before waiver and payments by affiliates and
expense reduction ...................................... 0.16% 0.15% 0.16% 0.16% 0.16%
Expenses net of waiver and payments by affiliates and
expense reduction(b).................................... 0.16% 0.15% 0.16% 0.16% 0.15%
Net investment income ..................................... 4.02% 5.17% 4.09% 2.04% 0.93%
SUPPLEMENTAL DATA
Net assets, end of year (000's) ........................... $7,028,194 $6,580,101 $4,993,739 $5,676,479 $5,505,394
(a) Amount rounds to less than $0.001 per share.
(b) Benefit of expense reduction rounds to less than 0.01%.
The accompanying notes are an integral part of these financial statements.
The Money Market Portfolios
STATEMENT OF INVESTMENTS, JUNE 30, 2008
THE MONEY MARKET PORTFOLIO PRINCIPAL AMOUNT(a) VALUE
-------------------------- ------------------- --------------
INVESTMENTS 102.4%
BANK NOTES 7.8%
Bank of America NA, 2.85%, 10/14/08 .............................................. $275,000,000 $ 275,007,946
Wells Fargo Bank NA, 2.50%, 7/14/08 .............................................. 275,000,000 275,000,000
--------------
TOTAL BANK NOTES (COST $550,007,946) ............................................. 550,007,946
--------------
CERTIFICATES OF DEPOSIT 48.8%
ABN Amro Bank NV, Chicago Branch, 2.43%, 7/08/08 ................................. 275,000,000 275,000,534
Australia and New Zealand Banking Group Ltd., New York Branch, 2.92%, 10/15/08 ... 125,000,000 125,003,645
Bank of Ireland, Connecticut Branch, 2.625%, 7/07/08 ............................. 275,000,000 275,000,228
Banque Nationale De Paris, New York Branch, 2.88%, 7/23/08 ....................... 100,000,000 100,000,000
Banque Nationale De Paris, New York Branch, 2.45%, 8/15/08 ....................... 175,000,000 175,002,133
Barclays Bank PLC, New York Branch, 2.87%, 7/29/08 ............................... 275,000,000 275,000,000
Calyon NY, New York Branch, 2.90%, 10/01/08 ...................................... 275,000,000 275,000,000
Dexia Credit Local NY, New York Branch, 2.66%, 8/08/08 ........................... 275,000,000 275,000,000
Lloyds Bank PLC, New York Branch, 2.395%, 7/10/08 ................................ 275,000,000 275,000,686
Rabobank Nederland, New York Branch, 2.67%, 9/12/08 .............................. 275,000,000 275,000,000
Royal Bank of Canada, New York Branch, 2.72%, 9/15/08 ............................ 275,000,000 275,000,000
Svenska Handelsbanken, New York Branch, 2.59%, 9/03/08 ........................... 275,000,000 275,000,000
Toronto-Dominion Bank, New York Branch, 2.60%, 8/21/08 ........................... 275,000,000 275,000,000
Westpac Banking Corp., New York Branch, 2.85%, 8/22/08 ........................... 275,000,000 275,003,935
--------------
TOTAL CERTIFICATES OF DEPOSIT (COST $3,425,011,161) .............................. 3,425,011,161
--------------
(b) COMMERCIAL PAPER 43.4%
Abbott Laboratories, 7/08/08 ..................................................... 77,000,000 76,967,061
Australia and New Zealand Banking Group Ltd., 7/09/08 ............................ 100,000,000 99,944,444
Australia and New Zealand Banking Group Ltd., 8/04/08 ............................ 50,000,000 49,882,417
BP Capital Markets PLC, 7/01/08 .................................................. 106,878,000 106,878,000
Commonwealth Bank of Australia, 7/07/08 .......................................... 100,000,000 99,956,083
Commonwealth Bank of Australia, 9/22/08 .......................................... 175,000,000 173,910,625
Danske Corp., 7/01/08 ............................................................ 50,000,000 50,000,000
Danske Corp., 7/28/08 ............................................................ 275,000,000 274,480,250
General Electric Capital Corp., 3/06/09 .......................................... 275,000,000 269,316,666
Internationale Nederlanden U.S., 7/01/08 ......................................... 50,000,000 50,000,000
Internationale Nederlanden U.S., 9/08/08 ......................................... 275,000,000 273,632,219
Johnson & Johnson, 7/21/08 ....................................................... 75,000,000 74,883,000
Johnson & Johnson, 7/28/08 ....................................................... 200,000,000 199,772,222
Lloyds Bank PLC (CP), 7/01/08 .................................................... 100,000 100,000
Nestle Capital Corp., 7/01/08 .................................................... 155,700,000 155,700,000
Nestle Capital Corp., 7/21/08 .................................................... 100,000,000 99,881,667
Novartis Finance Corp., 7/18/08 .................................................. 250,000,000 249,728,472
PepsiCo Inc., 7/02/08 ............................................................ 125,000,000 124,992,535
PepsiCo Inc., 7/07/08 ............................................................ 50,000,000 49,982,250
Pfizer Inc., 7/15/08 ............................................................. 125,306,000 125,212,438
Procter & Gamble International Funding, 7/01/08 .................................. 100,000,000 100,000,000
Procter & Gamble International Funding, 7/22/08 .................................. 50,000,000 49,936,708
Toyota Motor Credit Corp., 2/09/09 ............................................... 250,000,000 245,896,181
United Parcel Service Inc., 7/09/08 .............................................. 50,000,000 49,977,778
--------------
TOTAL COMMERCIAL PAPER (COST $3,051,031,016) ..................................... 3,051,031,016
--------------
30 | Annual Report
The Money Market Portfolios
STATEMENT OF INVESTMENTS, JUNE 30, 2008 (CONTINUED)
THE MONEY MARKET PORTFOLIO PRINCIPAL AMOUNT(a) VALUE
-------------------------- ------------------- --------------
INVESTMENTS (CONTINUED)
U.S. GOVERNMENT AND AGENCY SECURITIES (COST $30,325,000) 0.4%
(b) FHLB, 7/01/08 .................................................................... $ 30,325,000 $ 30,325,000
--------------
TOTAL INVESTMENTS BEFORE REPURCHASE AGREEMENTS(COST $7,056,375,123) .............. 7,056,375,123
--------------
(c) REPURCHASE AGREEMENTS 2.0%
ABN Amro Bank NV, 2.15%, 7/01/08 (Maturity Value $55,003,285)
Collateralized by U.S. Government Agency Securities, 3.125% - 4.75%,
4/24/09 - 11/12/10 ............................................................ 55,000,000 55,000,000
Deutsche Morgan Grenfell, 1.75%, 7/01/08 (Maturity Value $84,159,091)
Collateralized by aU.S. Treasury Bill, 9/25/08; and U.S. Treasury Note, 3.00%,
7/15/12 ....................................................................... 84,155,000 84,155,000
--------------
TOTAL REPURCHASE AGREEMENTS (COST $139,155,000) .................................. 139,155,000
--------------
TOTAL INVESTMENTS (COST $7,195,530,123) 102.4% ................................... 7,195,530,123
OTHER ASSETS, LESS LIABILITIES (2.4)% ............................................ (167,335,933)
--------------
NET ASSETS 100.0% ................................................................ $7,028,194,190
==============
SELECTED PORTFOLIO ABBREVIATIONS
FHLB - Federal Home Loan Bank
(a) The principal amount is stated in U.S. dollars unless otherwise indicated.
(b) The security is traded on a discount basis with no stated coupon rate.
(c) See Note 1(b) regarding repurchase agreements.
The accompanying notes are an integral part of these financial statements.
Annual Report | 31
The Money Market Portfolios
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2008
THE
MONEY MARKET
PORTFOLIO
--------------
Assets:
Investments in securities, at amortized cost ....... $7,056,375,123
Repurchase agreements, at value and cost ........... 139,155,000
--------------
Total investments ............................... $7,195,530,123
Cash ............................................... 5,646
Interest receivable ................................ 8,650,806
--------------
Total assets .................................... 7,204,186,575
--------------
Liabilities:
Payables:
Investment securities purchased ................. 175,002,133
Affiliates ...................................... 864,562
Distributions to shareholders ................... 8,342
Accrued expenses and other liabilities ............. 117,348
--------------
Total liabilities ............................... 175,992,385
--------------
Net assets, at value ............................ $7,028,194,190
--------------
Net assets consist of:
Paid-in capital .................................... $7,028,213,659
Accumulated net realized gain (loss) ............... (19,469)
--------------
Net assets, at value ............................ $7,028,194,190
==============
Shares outstanding ................................. 7,028,213,659
==============
Net asset value per share .......................... $ 1.00
==============
The accompanying notes are an integral part of these financial statements.
32 | Annual Report
The Money Market Portfolios
FINANCIAL STATEMENTS (CONTINUED)
STATEMENT OF OPERATIONS
for the year ended June 30, 2008
THE
MONEY MARKET
PORTFOLIO
------------
Investment income:
Interest ...................................................... $282,174,972
------------
Expenses:
Management fees (Note 3a) ..................................... 10,149,545
Custodian fees (Note 4) ....................................... 115,572
Reports to shareholders ....................................... 9,144
Professional fees ............................................. 105,934
Other ......................................................... 110,380
------------
Total expenses ............................................. 10,490,575
Expense reductions (Note 4) ................................ (1,906)
------------
Net expenses ............................................ 10,488,669
------------
Net investment income ................................ 271,686,303
------------
Net increase (decrease) in net assets resulting from operations .. $271,686,303
============
The accompanying notes are an integral part of these financial statements.
Annual Report | 33
The Money Market Portfolios
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF CHANGES IN NET ASSETS
THE MONEY MARKET PORTFOLIO
YEAR ENDED JUNE 30,
-------------------------------
2008 2007
-------------- --------------
Increase (decrease) in net assets:
Operations:
Net investment income ............................................................. $ 271,686,303 $ 318,082,571
Net realized gain (loss) from investments ......................................... -- (19,469)
-------------- --------------
Net increase (decrease) in net assets resulting from operations ................ 271,686,303 318,063,102
-------------- --------------
Distributions to shareholders from net investment income ............................. (271,686,303) (318,082,571)
Capital share transactions (Note 2) .................................................. 448,092,878 1,586,381,761
-------------- --------------
Net increase (decrease) in net assets .......................................... 448,092,878 1,586,362,292
Net assets (there is no undistributed net investment income at beginning or end of year):
Beginning of year .................................................................... 6,580,101,312 4,993,739,020
-------------- --------------
End of year .......................................................................... $7,028,194,190 $6,580,101,312
============== ==============
The accompanying notes are an integral part of these financial statements.
34 | Annual Report
The Money Market Portfolios
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Money Market Portfolios (Trust) is registered under the Investment Company
Act of 1940, as amended, (1940 Act) as a diversified, open-end investment
company, consisting of one portfolio, The Money Market Portfolio (Portfolio).
The shares of the Portfolio are issued in private placements and are exempt from
registration under the Securities Act of 1933.
The following summarizes the Portfolio's 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 Portfolio may enter into repurchase agreements, which are accounted for as a
loan by the Portfolio to the seller, collateralized by securities which are
delivered to the Portfolio's 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 Portfolio, with the value of the underlying
securities marked to market daily to maintain coverage of at least 100%. All
repurchase agreements held by the Portfolio at year end had been entered into on
June 30, 2008. Repurchase agreements are valued at cost.
C. INCOME TAXES
No provision has been made for U.S. income taxes because it is the Portfolio's
policy 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.
The Portfolio has reviewed the tax positions, taken on federal income tax
returns, for each of the three open tax years and as of June 30, 2008, and has
determined that no provision for income tax is required in the Portfolio's
financial statements.
Annual Report | 35
The Money Market Portfolios
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 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 accounting principles
generally accepted in the United States of America. 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.
E. ACCOUNTING ESTIMATES
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the amounts of income
and expenses during the reporting period. Actual results could differ from those
estimates.
F. GUARANTEES AND INDEMNIFICATIONS
Under the Trust's organizational documents, its officers and trustees are
indemnified by the Trust against certain liabilities arising out of the
performance of their duties to the Trust. Additionally, in the normal course of
business, the Trust enters into contracts with service providers that contain
general indemnification clauses. The Trust's maximum exposure under these
arrangements is unknown as this would involve future claims that may be made
against the Trust that have not yet occurred. Currently, the Trust expects the
risk of loss to be remote.
2. SHARES OF BENEFICIAL INTEREST
At June 30, 2008, there were an unlimited number of shares authorized (without
par value). Transactions in the Portfolio's shares at $1.00 per share were as
follows:
YEAR ENDED JUNE 30,
---------------------------------
2008 2007
--------------- ---------------
Shares sold...................................... $ 8,390,404,437 $ 9,565,818,487
Shares issued on merger (Note 6)................. -- 84,125,474
Shares issued in reinvestment of distributions... 271,685,448 318,075,338
Shares redeemed.................................. (8,213,997,007) (8,381,637,538)
--------------- ---------------
Net increase (decrease).......................... $ 448,092,878 $ 1,586,381,761
=============== ===============
36 | Annual Report
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 or trustees of the
Franklin Money Fund, the Institutional Fiduciary Trust, and the Franklin
Templeton Money Fund Trust, 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 Portfolio pays an investment management fee to Advisers of 0.15% per year of
the average daily net assets of the Portfolio.
B. TRANSFER AGENT FEES
Investor Services, under terms of an agreement, performs shareholder servicing
for the Portfolio and is not paid by the Portfolio for the services.
C. OTHER AFFILIATED TRANSACTIONS
At June 30, 2008, the shares of the Portfolio were owned by the following funds:
PERCENTAGE OF
SHARES OUTSTANDING SHARES
------------- ------------------
Institutional Fiduciary Trust - Money Market Portfolio........ 4,086,199,858 58.14%
Franklin Money Fund........................................... 2,495,690,642 35.51%
Franklin Templeton Money Fund Trust-
Franklin Templeton Money Fund.............................. 295,809,448 4.21%
Institutional Fiduciary Trust - Franklin Cash Reserves Fund... 150,513,711 2.14%
4. EXPENSE OFFSET ARRANGEMENT
The Portfolio has entered into an arrangement with its custodian whereby credits
realized as a result of uninvested cash balances are used to reduce a portion of
the Portfolio's custodian expenses. During the year ended June 30, 2008, the
custodian fees were reduced as noted in the Statement of Operations.
5. INCOME TAXES
For tax purposes, capital losses may be carried over to offset future capital
gains, if any. At June 30, 2008, the Portfolio had tax basis capital losses of
$19,469 expiring in 2016.
Annual Report | 37
The Money Market Portfolios
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. INCOME TAXES (CONTINUED)
The tax character of distributions paid during the years ended June 30, 2008 and
2007, was as follows:
2008 2007
------------ ------------
Distributions paid fromordinary income... $271,686,303 $318,082,571
------------ ------------
At June 30, 2008, the cost of investments and undistributed ordinary income for
income tax purposes were as follows:
Cost of investments............. $7,195,530,123
--------------
Undistributed ordinary income... $ 8,342
--------------
6. MERGER
On August 31, 2006, the Franklin Money Fund acquired all of the assets, subject
to liabilities of the Franklin Federal Money Fund pursuant to an agreement of
merger. The merger was accomplished by a taxable exchange and accounted for as a
purchase, and resulted in the Franklin Money Fund owning shares of the U.S.
Government Securities Money Market Portfolio. The Franklin Money Fund then used
the shares of the U.S. Government Securities Money Market Portfolio to purchase
in-kind additional shares of the Portfolio. The U.S. Government Securities Money
Market Portfolio then liquidated and transferred its portfolio securities to the
Portfolio.
The selected financial information and shares outstanding immediately before and
after the acquisition were as follows:
SHARES AT
FUND NAME $1.00 PER SHARE
- --------- ---------------
The U.S. Government Securities Money Market Portfolio... 84,125,474
The Money Market Portfolio.............................. 5,604,232,120
The Money Market Portfolio - post merger................ 5,688,357,594
7. NEW ACCOUNTING PRONOUNCEMENT
In September 2006, the Financial Accounting Standards Board (FASB) issued FASB
Statement No. 157, "Fair Value Measurement" (SFAS 157), which defines fair
value, establishes a framework for measuring fair value, and expands disclosures
about fair value measurements. SFAS 157 is effective for fiscal years beginning
after November 15, 2007, and interim periods within those fiscal years. The
Trust believes the adoption of SFAS 157 will have no material impact on its
financial statements.
38 | Annual Report
The Money Market Portfolios
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF THE MONEY MARKET PORTFOLIO
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 The Money Market Portfolio (the
"Fund") at June 30, 2008, 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, which included confirmation of securities at June
30, 2008 by correspondence with the custodian and brokers, provide a reasonable
basis for our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
August 19, 2008
Annual Report | 39
The Money Market Portfolios
TAX DESIGNATION (UNAUDITED)
Under Section 871(k)(1)(C) of the Internal Revenue Code (Code), the Portfolio
designates the maximum amount allowable but no less than $271,686,303 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, 2008.
40 | Annual Report
The Money Market Portfolios
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 Trust, principal occupations
during the past five years and number of portfolios overseen in the Franklin
Templeton Investments fund complex are shown below. Generally, each board member
serves 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 1992 143 Bar-S Foods (meat packing company).
One Franklin Parkway
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 122 None
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Retired; and FORMERLY, Vice President, senior member and past President, Board of Administration, California Public
Employees Retirement Systems (CALPERS) (1971-January 2008); member and Chairman of the Board, Sutter Community Hospitals;
member, Corporate Board, Blue Shield of California; and Chief Counsel, California Department of Transportation.
SAM GINN (1937) Trustee Since 2007 122 Chevron Corporation (global energy
One Franklin Parkway company) and ICO Global
San Mateo, CA 94403-1906 Communications (Holdings) Limited
(satellite company).
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Private investor; and FORMERLY, Chairman of the Board, Vodafone AirTouch, PLC (wireless company); Chairman of the Board and
Chief Executive Officer, AirTouch Communications (cellular communications) (1993-1998) and Pacific Telesis Groups (telephone
holding company) (1988-1994).
EDITH E. HOLIDAY (1952) Trustee Since 2005 143 Hess Corporation (exploration and
One Franklin Parkway refining of oil and gas), H.J. Heinz
San Mateo, CA 94403-1906 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).
36 | Annual Report
NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------ ----------- ------------- ----------------------- -----------------------------------
FRANK W.T. LAHAYE (1929) Trustee Since 1992 122 Center for Creative Land Recycling
One Franklin Parkway (brownfield 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).
FRANK A. OLSON (1932) Trustee Since 2007 143 Hess Corporation (exploration and
One Franklin Parkway refining of oil and gas) and
San Mateo, CA 94403-1906 Sentient Jet (private jet service).
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).
LARRY D. THOMPSON (1945) Trustee Since 2007 143 None
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Vice President - Government Affairs, General Counsel and Secretary, PepsiCo, Inc. (consumer products); and FORMERLY,
Director, Delta Airlines (aviation) (2003-2005) and Providian Financial Corp. (credit card provider) (1997-2001); Senior
Fellow of The Brookings Institution (2003-2004); Visiting Professor, University of Georgia School of Law (2004); and Deputy
Attorney General, U.S. Department of Justice (2001-2003).
JOHN B. WILSON (1959) Lead Trustee since 122 None
One Franklin Parkway Independent 2007 and Lead
San Mateo, CA 94403-1906 Trustee Independent
Trustee since
January 2008
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President and Founder, Hyannis Port Capital, Inc. (real estate and private equity investing); serves on private and
non-profit boards; and FORMERLY, Chief Operating Officer and Executive Vice President, Gap, Inc. (retail) (1996-2000); Chief
Financial Officer and Executive Vice President - Finance and Strategy, Staples, Inc. (office supplies) (1992-1996);
Executive Vice President - Corporate Planning, Northwest Airlines, Inc. (airlines) (1990-1992); and Vice President and
Partner, Bain & Company (consulting firm) (1986-1990).
Annual Report | 37
INTERESTED BOARD MEMBERS AND OFFICERS
NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------ ----------- ------------- ----------------------- -----------------------------------
**CHARLES B. JOHNSON (1933) Trustee and Trustee since 143 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.; Director, Templeton
Worldwide, 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 42 of the investment companies in Franklin Templeton Investments.
**GREGORY E. JOHNSON (1961) Trustee Since 2007 94 None
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director, President and Chief Executive Officer, Franklin Resources, Inc.; President, Templeton Worldwide, Inc.; Director,
Templeton Asset Management Ltd.; and officer and/or director or trustee, as the case may be, of some of the other
subsidiaries of Franklin Resources, Inc. and of 33 of the investment companies in Franklin Templeton Investments.
JAMES M. DAVIS (1952) Chief Chief Not Applicable Not Applicable
One Franklin Parkway Compliance Compliance
San Mateo, CA 94403-1906 Officer and Officer since
Vice 2004 and Vice
President - President -
AML AML
Compliance Compliance
since 2006
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director, Global Compliance, Franklin Resources, Inc.; officer of some of the other subsidiaries of Franklin Resources, Inc.
and of 46 of the investment companies in Franklin Templeton Investments; and FORMERLY, Director of Compliance, Franklin
Resources, Inc. (1994-2001).
LAURA F. FERGERSON (1962) Treasurer, Treasurer Not Applicable Not Applicable
One Franklin Parkway Chief since 2004,
San Mateo, CA 94403-1906 Financial Chief
Officer and Financial
Chief Officer and
Accounting Chief
Officer Accounting
Officer since
February 2008
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice President, Franklin Templeton Services, LLC; officer of 46 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).
38 | Annual Report
NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------ ----------- ------------- ----------------------- -----------------------------------
JIMMY D. GAMBILL (1947) Vice Since Not Applicable Not Applicable
500 East Broward Blvd. President February 2008
Suite 2100
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President, Franklin Templeton Services, LLC; Senior Vice President, Templeton Worldwide, Inc.; and officer of some of the
other subsidiaries of Franklin Resources, Inc. and of 46 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 46 of the investment companies in Franklin Templeton Investments.
RUPERT H. JOHNSON, JR. (1940) President Since 2002 Not Applicable Not Applicable
One Franklin Parkway and Chief
San Mateo, CA 94403-1906 Executive
Officer -
Investment
Management
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice Chairman, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Director, Franklin Advisers, Inc. and
Templeton Worldwide, 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 44 of the investment companies in
Franklin Templeton Investments.
KAREN L. SKIDMORE (1952) Vice Since 2006 Not Applicable Not Applicable
One Franklin Parkway President
San Mateo, CA 94403-1906 and Secretary
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Associate General Counsel, Franklin Templeton Investments; and officer of 30 of the investment companies in Franklin
Templeton Investments.
Annual Report | 39
NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------ ----------- ------------- ----------------------- -----------------------------------
CRAIG S. TYLE (1960) Vice Since 2005 Not Applicable Not Applicable
One Franklin Parkway President
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
General Counsel and Executive Vice President, Franklin Resources, Inc.; officer of some of the other subsidiaries of
Franklin Resources, Inc. and of 46 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) Senior Vice Since Not Applicable Not Applicable
500 East Broward Blvd. President February 2008
Suite 2100 and Chief
Fort Lauderdale, FL 33394-3091 Executive
Officer -
Finance and
Administra-
tion
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Vice President, Franklin Templeton Services, LLC; officer of some of the other subsidiaries of Franklin Resources,
Inc. and of 46 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 is considered to be an interested person of the Trust
under the federal securities laws due to his position as officer and
director and major shareholder of Franklin Resources, Inc. (Resources),
which is the parent company of the Fund's administrator and distributor.
Gregory E. Johnson is considered to be an interested person of the Trust
under the federal securities laws due to his position as an officer and
director of Resources.
Note 1: Charles B. Johnson and Rupert H. Johnson, Jr. are brothers and the
father and uncle, respectively, of Gregory E. Johnson.
Note 2: Officer information is current as of the date of this report. It is
possible that after this date, information about officers may change.
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 HAS DETERMINED THAT THERE IS
AT LEAST ONE SUCH FINANCIAL EXPERT ON THE AUDIT COMMITTEE AND HAS DESIGNATED
JOHN B. WILSON AS ITS AUDIT COMMITTEE FINANCIAL EXPERT. THE BOARD BELIEVES THAT
MR. WILSON QUALIFIES AS SUCH AN EXPERT IN VIEW OF HIS EXTENSIVE BUSINESS
BACKGROUND AND EXPERIENCE, INCLUDING SERVICE AS CHIEF FINANCIAL OFFICER OF
STAPLES, INC. FROM 1992 TO 1996. MR. WILSON HAS BEEN A MEMBER AND CHAIRMAN OF
THE FUND'S AUDIT COMMITTEE SINCE 2007. AS A RESULT OF SUCH BACKGROUND AND
EXPERIENCE, THE BOARD BELIEVES THAT MR. WILSON 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. WILSON IS AN INDEPENDENT BOARD MEMBER 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.
SHAREHOLDER INFORMATION
BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT
At a meeting held February 25, 2008, the Board of Trustees (Board), including a
majority of non-interested or independent Trustees, approved renewal of the
investment management agreement for the Fund. In reaching this decision, the
Board took into account information furnished throughout the year at regular
Board meetings, as well as information prepared specifically in connection with
the annual renewal review process. Information furnished and discussed
throughout the year included portfolio performance and financial information for
the Fund, as well as periodic reports on shareholder services, legal compliance,
pricing, and other services provided by the Investment Manager (Manager) and its
affiliates. In addition, information specifically furnished to the Trustees in
connection with the contract renewals being considered at the meeting included a
Fund Profitability Analysis Report and additional information. Additionally, a
report prepared by Lipper, Inc. ("Lipper") compared the investment performance
and expenses of each of the separate Franklin funds investing in the Fund under
the master/feeder structure (the "feeder funds") with those of other mutual
funds deemed comparable 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 in the additional material prepared specifically for the meeting 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, as well as a three-year expense analysis with an explanation for
any increase in expense ratios. Additional information accompanying such report
were a memorandum prepared by Management describing project initiatives and
capital investments relating to the services provided to the Fund by the
Franklin Templeton Investments organization, as well as a memorandum relating to
economies of scale and a comparative analysis concerning transfer agent fees
charged the Fund.
In considering such information, the independent Trustees received assistance
and met separately with independent counsel. The Fund Profitability Report and
other additional material prepared by Management, along with the Lipper Reports
for the feeder funds, were sent to each of the Trustees on February 1, 2008.
Such material was reviewed and discussed by the independent Trustees among
themselves and with Management in a telephonic conference call that took place
February 15, 2008. Questions raised in such telephonic conference call were
responded to by Management and were discussed at a meeting of independent
Trustees held prior to the Board meeting. It was noted that all of the
independent Trustees also served as independent Trustees on the Boards of each
of the feeder funds and in considering such materials, emphasis was placed on
various factors, including those taken into account by such Trustees in
approving the investment advisory arrangements for the feeder funds.
PROXY VOTING POLICIES AND PROCEDURES
The Fund has established Proxy Voting Policies and Procedures (Policies) that
the Fund uses to determine how to vote proxies relating to portfolio securities.
Shareholders may view the Fund's complete Policies online at
franklintempleton.com. Alternatively, shareholders may request copies of the
Policies free of charge by calling the Proxy Group collect at 1-954/527-7678 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 Fund's proxy voting records are also made available online
at franklintempleton.com and posted on the U.S. Securities and Exchange
Commission's website at sec.gov and reflect the most recent 12-month period
ended June 30.
QUARTERLY STATEMENT OF INVESTMENTS
The Fund files a complete statement of investments with the U.S. Securities and
Exchange Commission for the first and third quarters for each fiscal year on
Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission's
website at sec.gov. The filed form may also be viewed and copied at the
Commission's Public Reference Room in Washington, DC. Information regarding the
operations of the Public Reference Room may be obtained by calling
1-800/SEC-0330.
ITEM 2. CODE OF ETHICS.
(a) The Registrant has adopted a code of ethics that applies to its principal
executive officers and principal financial and accounting officer.
(c) N/A
(d) N/A
(f) Pursuant to Item 12(a)(1), the Registrant is attaching as an exhibit a copy
of its code of ethics that applies to its principal executive officers and
principal financial and accounting officer.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a)(1) The Registrant has an audit committee financial expert serving on its
audit committee.
(2) The audit committee financial expert is John B. Wilson and he is
"independent" as defined under the relevant Securities and Exchange Commission
Rules and Releases.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees
The aggregate fees paid to the principal accountant for professional services
rendered by the principal accountant for the audit of the registrant's annual
financial statements or for services that are normally provided by the principal
accountant in connection with statutory and regulatory filings or engagements
were $47,172 for the fiscal year ended June 30, 2008 and $29,132 for the fiscal
year ended June 30, 2007.
(b) Audit-Related Fees
There were no fees paid to the principal accountant for assurance and related
services rendered by the principal accountant to the registrant that are
reasonably related to the performance of the audit of the registrant's financial
statements and are not reported under paragraph (a) of Item 4.
There were no fees paid to the principal accountant for assurance and related
services rendered by the principal accountant to the registrant's investment
adviser and any entity controlling, controlled by or under common control with
the investment adviser that provides ongoing services to the registrant that are
reasonably related to the performance of the audit of their financial
statements.
(c) Tax Fees
There were no fees paid to the principal accountant for professional services
rendered by the principal accountant to the registrant for tax compliance, tax
advice and tax planning.
The aggregate fees paid to the principal accountant for professional services
rendered by the principal accountant to the registrant's investment adviser and
any entity controlling, controlled by or under common control with the
investment adviser that provides ongoing services to the registrant for tax
compliance, tax advice and tax planning were $0 for the fiscal year ended June
30, 2008 and $46,000 for the fiscal year ended June 30, 2007. The services for
which these fees were paid included tax compliance and advice.
(d) All Other Fees
The aggregate fees paid to the principal accountant for products and services
rendered by the principal accountant to the registrant not reported in
paragraphs (a)-(c) of Item 4 were $5,198 for the fiscal year ended June 30, 2008
and $0 for the fiscal year ended June 30, 2007. The services for which these
fees were paid include review of materials provided to the fund Board in
connection with the investment management contract renewal process.
The aggregate fees paid to the principal accountant for products and services
rendered by the principal accountant to the registrant's investment adviser and
any entity controlling, controlled by or under common control with the
investment adviser that provides ongoing services to the registrant other than
services reported in paragraphs (a)-(c) of Item 4 were $278,879 for the fiscal
year ended June 30, 2008 and $0 for the fiscal year ended June 30, 2007. The
services for which these fees were paid include review of materials provided to
the fund Board in connection with the investment management contract renewal
process.
(e) (1) The registrant's audit committee is directly responsible for approving
the services to be provided by the auditors, including:
(i) pre-approval of all audit and audit related services;
(ii) pre-approval of all non-audit related services to be provided to the
Fund by the auditors;
(iii)pre-approval of all non-audit related services to be provided to the
registrant by the auditors to the registrant's investment adviser or to any
entity that controls, is controlled by or is under common control with the
registrant's investment adviser and that provides ongoing services to the
registrant where the non-audit services relate directly to the operations or
financial reporting of the registrant; and
(iv) establishment by the audit committee, if deemed necessary or
appropriate, as an alternative to committee pre-approval of services to be
provided by the auditors, as required by paragraphs (ii) and (iii) above, of
policies and procedures to permit such services to be pre-approved by other
means, such as through establishment of guidelines or by action of a designated
member or members of the committee; provided the policies and procedures are
detailed as to the particular service and the committee is informed of each
service and such policies and procedures do not include delegation of audit
committee responsibilities, as contemplated under the Securities Exchange Act of
1934, to management; subject, in the case of (ii) through (iv), to any waivers,
exceptions or exemptions that may be available under applicable law or rules.
(e) (2) None of the services provided to the registrant described in paragraphs
(b)-(d) of Item 4 were approved by the audit committee pursuant to paragraph
(c)(7)(i)(C) of Rule 2-01 of regulation S-X.
(f) No disclosures are required by this Item 4(f).
(g) The aggregate non-audit fees paid to the principal accountant for services
rendered by the principal accountant to the registrant and the registrant's
investment adviser and any entity controlling, controlled by or under common
control with the investment adviser that provides ongoing services to the
registrant were $284,077 for the fiscal year ended June 30, 2008 and $46,000 for
the fiscal year ended June 30, 2007.
(h) The registrant's audit committee of the board has considered whether the
provision of non-audit services that were rendered to the registrant's
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or under common control
with the investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of
Regulation S-X is compatible with maintaining the principal accountant's
independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. N/A
ITEM 6. SCHEDULE OF INVESTMENTS. N/A
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND
PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
N/A
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT
INVESTMENT COMPANIES. N/A
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END
MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. N/A
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There have
been no changes to the procedures by which shareholders may recommend nominees
to the Registrant's Board of Trustees that would require disclosure herein.
ITEM 11. CONTROLS AND PROCEDURES. (A) EVALUATION OF DISCLOSURE CONTROLS
AND PROCEDURES. The Registrant maintains disclosure controls and procedures that
are designed to ensure that information required to be disclosed in the
Registrant's filings under the Securities Exchange Act of 1934 and the
Investment Company Act of 1940 is recorded, processed, summarized and reported
within the periods specified in the rules and forms of the Securities and
Exchange Commission. Such information is accumulated and communicated to the
Registrant's management, including its principal executive officer and principal
financial officer, as appropriate, to allow timely decisions regarding required
disclosure. The Registrant's management, including the principal executive
officer and the principal financial officer, recognizes that any set of controls
and procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives.
Within 90 days prior to the filing date of this Shareholder Report on Form
N-CSR, the Registrant had carried out an evaluation, under the supervision and
with the participation of the Registrant's management, including the
Registrant's principal executive officer and the Registrant's principal
financial officer, of the effectiveness of the design and operation of the
Registrant's disclosure controls and procedures. Based on such evaluation, the
Registrant's principal executive officer and principal financial officer
concluded that the Registrant's disclosure controls and procedures are
effective.
(B) CHANGES IN INTERNAL CONTROLS. There have been no significant changes in the
Registrant's internal controls or in other factors that could significantly
affect the internal controls subsequent to the date of their evaluation in
connection with the preparation of this Shareholder Report on Form N-CSR.
ITEM 12. EXHIBITS.
(a)(1) Code of Ethics
(a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
of Galen G. Vetter, Chief Executive Officer - Finance and Administration, and
Laura F. Fergerson, Chief Financial Officer and Chief Accounting Officer
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of
Galen G. Vetter, Chief Executive Officer - Finance and Administration, and Laura
F. Fergerson, Chief Financial Officer and Chief Accounting Officer
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
THE MONEY MARKET PORTFOLIOS
By /S/GALEN G. VETTER
------------------
Galen G. Vetter
Chief Executive Officer - Finance and Administration
Date August 27, 2008
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /S/GALEN G. VETTER
------------------
Galen G. Vetter
Chief Executive Officer - Finance and Administration
Date August 27, 2008
By /S/LAURA F. FERGERSON
---------------------
Laura F. Fergerson
Chief Financial Officer and Chief Accounting Officer
Date August 27, 2008