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 811-09869
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Franklin Floating Rate Master Trust
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(Exact name of registrant as specified in charter)
One Franklin Parkway, San Mateo, CA 94403-1906
(Address of principal executive offices) (Zip code)
Murray L. Simpson, One Franklin Parkway, San Mateo, CA 94403-1906
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(Name and address of agent for service)
Registrant's telephone number, including area code: (650) 312-2000
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Date of fiscal year end: 7/31
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Date of reporting period: 7/31/04
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Item 1. Reports to Stockholders.
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
Financial Highlights
Year Ended July 31,
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2004 2003 2002 2001 2000b
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Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year $9.69 $9.58 $9.88 $10.05 $10.00
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Income from investment operations:
Net investment income .334 .464 .545 .861 .288
Net realized and unrealized gains (losses) .151 .111 (.300) (.173) .050
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Total from investment operations .485 .575 .245 .688 .338
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Less distributions from net investment income (.335) (.465) (.545) (.861) (.288)
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Net asset value, end of year $9.84 $9.69 $9.58 $9.88 $10.05
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Total return a 5.08% 6.19% 2.52% 7.13% 3.42%
Ratios/supplemental data
Net assets, end of year (000's) $757,987 $218,647 $265,940 $218,545 $37,370
Ratios to average net assets:
Expenses .60% .60% .60% .62% 1.00%c
Expenses net of waiver and payments by
affiliate .98% 1.02% .98% 1.01% 2.27%c
Net investment income 3.34% 4.86% 5.55% 8.34% 8.62%c
Portfolio turnover rate 54.41% 75.69% 77.29% 37.87% 11.10%
a Total return is not annualized for periods less than one year.
b For the period March 24, 2000 (effective date) to July 31, 2000.
c Annualized.
See notes to financial statements.
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
STATEMENT OF INVESTMENTS, JULY 31, 2004
PRINCIPAL % OF
AMOUNT VALUE NET ASSETS
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BONDS
BROADCASTING
Paxson Communications Corp., senior secured floating rate note, 144A, 4.35%,
1/15/10 $ 5,100,000 $ 5,144,625 0.68
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STEEL
Ispat Inland ULC, senior secured note, 144A, 7.86%, 4/01/10 3,000,000 3,075,000 0.40
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TOTAL BONDS (COST $8,123,966) 8,219,625 1.08
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b SENIOR FLOATING RATE INTERESTS
ADVERTISING/MARKETING SERVICES
Adams Outdoor Advertising Inc., Term Loan, 3.88%, 10/05/11 3,000,000 3,038,751 0.40
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AEROSPACE & DEFENSE
ARINC Inc., Term Loan, 4.12%, 2/24/11 1,496,250 1,516,823 0.20
CACI International Inc., Term Loan B, 3.18%, 4/23/11 4,488,750 4,511,194 0.59
c DRS Technologies Inc., Term Loan B, 3.09 - 3.73%, 11/04/10 3,688,390 3,724,123 0.49
ILC Industries Inc., Second Lien Term Loan, 7.336%, 2/05/11 500,000 505,000 0.07
Titan Corp., Term Loan B, 4.62 - 4.70%, 2/23/06 980,000 985,104 0.13
Vought Aircraft Industries, Term Loan X, 4.73%, 12/31/06 678,110 684,043 0.09
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11,926,287 1.57
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APPAREL/FOOTWEAR
St. John Knits Inc., Term Loan B, 5.438%, 7/31/07 941,376 948,583 0.13
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AUTO PARTS: ORIGINAL EQUIPMENT MANUFACTURER
Dayco Products LLC, Term Loan B, 4.57 - 4.87%, 6/18/11 4,000,000 4,066,252 0.54
Eagle Picher Industries Inc., DIP Term Loan B, 4.41%, 8/07/09 2,450,765 2,473,740 0.33
Exide Technologies USD (US Borrower), Term Loan, 4.813%, 5/04/10 750,000 756,562 0.10
Exide Technologies USD (EURO Borrower), Term Loan, 4.813%, 5/04/10 750,000 753,281 0.10
Federal Mogul Corp., DIP Term Loan, 4.313 - 4.50%, 2/06/05 959,540 960,749 0.13
c Grand Vehicle Works, Term Loan B, 4.43 - 4.92%, 7/23/10 2,250,000 2,247,188 0.30
Hayes Lemmerz, Term Loan, 4.91 - 5.73%, 6/03/09 2,863,333 2,914,072 0.38
Hilite International Inc., Term Loan B, 5.85 - 6.086%, 3/31/09 838,604 843,845 0.11
Key Plastics and Key Safety,
Term Loan B, 4.37 - 4.61%, 7/31/10 1,500,000 1,523,907 0.20
Term Loan C, 7.12 - 7.36%, 7/31/11 1,000,000 1,014,063 0.13
Plastech Engineered Products Inc.,
First Lien Term Loan, 4.34%, 3/11/10 989,655 1,005,119 0.13
Second Lien Term Loan, 5.79%, 3/31/11 1,000,000 1,016,250 0.13
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
PRINCIPAL % OF
AMOUNT VALUE NET ASSETS
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Progressive Moulded Products, Term Loan C, 6.75%, 6/30/08 (Canada) $ 895,477 $ 896,597 0.12
Tenneco Automotive Inc.,
Term Loan, 4.61%, 12/12/10 1,241,379 1,266,983 0.17
Term Loan B, 4.253%, 12/12/10 2,744,828 2,799,153 0.37
Tower Automotive Inc., Term Loan B, 5.82%, 5/24/09 1,000,000 1,003,333 0.13
TRW Automotive Acquisition Corp., Term Loan D1, 4.125%, 2/28/11 1,995,000 2,032,406 0.27
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27,573,500 3.64
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AUTOMOTIVE AFTERMARKET
United Components Inc., Term Loan C, 3.99%, 6/30/10 856,667 870,031 0.11
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BEVERAGES: ALCOHOLIC
Southern Wine & Spirits of America Inc., Term Loan B, 3.84%, 6/21/08 1,972,459 1,996,500 0.26
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BEVERAGES: NON-ALCOHOLIC
Dr. Pepper Bottling Co. of Texas, Term Loan, 3.65 - 3.95%, 12/18/10 2,384,760 2,413,079 0.32
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BROADCASTING
Cumulus,
Term Loan A1, 3.13%, 3/28/09 2,500,000 2,520,313 0.33
c Term Loan E, 3.13%, 3/28/10 3,125,000 3,165,528 0.42
Emmis Operating Co., Term Loan B, 3.10%, 11/10/11 5,000,000 5,060,545 0.67
Gray Television Inc., Term Loan C, 2.97 - 3.36%, 12/31/10 1,000,000 1,006,780 0.13
Mission Broadcasting Inc., Term Loan C, 3.84%, 12/31/10 714,359 721,949 0.10
c NEP Supershooters LP, First Lein Term Loan, 5.70%, 2/03/11 1,250,000 1,263,281 0.16
Nexstar Finance LLC, Term Loan C, 3.84%, 12/31/10 280,641 282,921 0.04
Radio One Inc., Term Loan A, 1.985%, 6/30/07 911,765 905,782 0.12
c Sinclair Broadcasting, Term Loan A, 3.23%, 6/30/09 4,500,000 4,522,500 0.60
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19,449,599 2.57
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BUILDING PRODUCTS
Associated Materials Inc., Term Loan, 4.11 - 4.13%, 8/27/09 736,842 746,053 0.10
Atrium Cos. Inc., Term Loan, 3.86 - 4.13%, 11/30/08 2,238,750 2,266,734 0.30
Builders FirstSource Inc., Term Loan, 4.53 - 4.59%, 3/17/10 1,665,825 1,680,401 0.22
Building Materials Holding Corp., Term Loan B, 4.375%, 8/13/10 990,000 993,712 0.13
Masonite International Corp., Term Loan C2, 3.625%, 8/31/08 997,500 1,014,022 0.14
NCI Building Systems Inc., Term Loan B, 3.41 - 3.45%, 6/07/10 1,000,000 1,013,125 0.14
Norcraft Cos. LP, Term Loan, 4.66%, 10/21/09 2,833,333 2,861,667 0.38
PGT Industries Inc., First Lien Term Loan, 4.67%, 2/05/10 995,000 1,009,925 0.13
Tapco International,
Term Loan B, 4.33 - 4.34%, 7/23/07 479,798 482,197 0.06
Term Loan C, 4.58 - 4.59%, 7/23/08 479,798 482,197 0.06
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12,550,033 1.66
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FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
PRINCIPAL % OF
AMOUNT VALUE NET ASSETS
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CABLE/SATELLITE TELEVISION
Atlantic Broadband Finance LLC, Term Loan B, 4.61%, 8/06/11 $ 1,250,000 $ 1,270,118 0.17
Bresnan Broadband Holdings LLC,
Term Loan A, 4.90 - 5.73%, 3/31/10 1,250,000 1,257,291 0.16
Term Loan B, 4.83 - 5.11%, 9/30/10 1,000,000 1,015,000 0.13
f Century Cable (Adelphia), Discretionary Term Loan, 6.25%, 12/31/09 1,000,000 965,000 0.13
Charter Communications Operating LLC, Term Loan B, 4.92%, 4/23/11 6,500,000 6,419,972 0.85
DirecTV Holdings LLC, Term Loan, 3.45 - 3.76%, 3/06/10 2,477,755 2,504,788 0.33
Grapeclose Ltd. (Inmarsat),
Term Loan B, 4.561%, 10/10/10 (United Kingdom) 2,500,000 2,528,125 0.33
Term Loan C, 5.061%, 10/10/11 (United Kingdom) 2,500,000 2,528,125 0.33
c Insight Midwest, Term Loan A, 2.688%, 6/30/09 5,380,825 5,368,718 0.71
Insight Midwest Holdings,
Additional Term Loan, 3.938%, 12/31/09 995,000 1,011,237 0.13
Term Loan B, 3.938%, 12/31/09 995,000 1,011,237 0.13
MCC Iowa (Broadband),
c Term Loan A, 2.88%, 3/31/10 3,000,000 3,035,391 0.40
Term Loan B1, 3.87 - 4.17%, 9/12/10 1,000,000 1,011,797 0.13
c NTL Investment Holdings, Term Loan B, 4.627%, 5/31/12 (United Kingdom) 8,000,000 7,946,664 1.05
f Olympus Cable Holdings (Adelphia), Term Loan B, 6.25%, 9/30/10 2,000,000 1,938,928 0.26
c Persona Communications Inc., Term Loan, 6.50%, 4/12/11 3,500,000 3,538,283 0.47
UPC Distribution Holdings B.V., Term Loan C2, 7.325 - 7.381%, 3/31/09
(Netherlands) 1,990,000 2,009,279 0.27
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45,359,953 5.98
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CASINOS/GAMING
Alliance Gaming Corp., Term Loan B, 3.788%, 8/22/09 1,500,000 1,518,375 0.20
Boyd Gaming Corp., Term Loan B, 3.35 - 3.69%, 5/14/11 2,500,000 2,533,202 0.34
Global Cash Access LLC, Term Loan, 4.23%, 3/10/10 987,500 1,004,164 0.13
Greektown Casinos LLC, Term Loan D, 4.679 - 4.84%, 12/31/05 3,480,562 3,493,614 0.46
Green Valley Ranch Gaming LLC, Term Loan B, 4.336%, 12/05/10 995,000 1,007,437 0.13
Isle of Capri, Term Loan B, 3.44 - 3.828%, 4/25/08 827,500 837,696 0.11
c Isle of Capri Black Hawk LLC, Term Loan C, 4.18 - 4.59%, 12/31/07 3,208,324 3,254,268 0.43
Marina District Finance Co. Inc., Term Loan B, 5.16 - 5.59%, 12/31/07 949,343 958,095 0.13
Penn National Gaming Inc., Term Loan D, 3.86 - 4.09%, 3/03/09 630,393 638,305 0.08
Scientific Games Corp., Term Loan C, 3.98 - 4.08%, 12/31/09 3,972,537 4,028,816 0.53
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19,273,972 2.54
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CATALOG/SPECIALTY DISTRIBUTION
Affinity Group Inc.,
Term Loan B1, 5.209 - 5.66%, 6/23/09 231,122 233,626 0.03
Term Loan B2, 5.209 - 5.578%, 6/23/09 577,806 584,066 0.08
Oriental Trading Co. Inc., Term Loan B, 4.375%, 7/29/10 1,926,941 1,947,414 0.25
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2,765,106 0.36
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CHEMICALS: MAJOR DIVERSIFIED
d Celanese AG, Term Loan, 3.688 - 4.23%, 4/06/11 (Luxembourg) 1,379,631 1,403,488 0.19
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
PRINCIPAL % OF
AMOUNT VALUE NET ASSETS
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Huntsman International LLC, Term Loan B, 4.688%, 12/31/10 $ 4,000,000 $ 4,065,500 0.54
Invista B.V.,
Term Loan B1, 4.563%, 4/29/11 2,776,471 2,819,853 0.37
Term Loan B2, 4.563%, 4/29/11 (Canada) 1,223,529 1,242,647 0.16
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9,531,488 1.26
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CHEMICALS: SPECIALTY
Brenntag, Term Loan B2, 3.881%, 2/27/12 1,500,000 1,524,844 0.20
FMC Corp., Term Loan B, 3.23%, 10/21/07 4,959,167 5,023,438 0.66
Hercules Inc., Term Loan B, 3.475 - 3.836%, 10/08/10 1,745,625 1,758,717 0.23
Kraton Polymers LLC, Term Loan B, 4.063 - 4.50%, 12/24/10 980,834 997,386 0.13
Nalco Co., Term Loan B, 3.95 - 4.43%, 11/04/10 6,338,563 6,444,043 0.85
Ripplewood Phosphorus LLC, Term Loan B, 4.53%, 7/16/11 1,250,000 1,265,625 0.17
c Rockwood Specialties Group Inc., Term Loan B, 4.183%, 7/23/10 2,500,000 2,522,545 0.34
Sovereign Specialty Chemicals Inc., Term Loan B, 6.341%, 12/31/07 985,000 980,691 0.13
Westlake Chemical Corp., Term Loan B, 4.951 - 7.00%, 7/31/10 990,000 1,004,850 0.13
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21,522,139 2.84
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COAL
CONSOL Energy Inc., Term Loan B, 3.84%, 6/08/10 1,250,000 1,271,875 0.17
c Foundation Coal, Term Loan B, 3.68%, 7/30/11 2,650,000 2,680,475 0.35
Peabody Energy Corp., Term Loan B, 3.23 - 3.27%, 3/21/10 4,477,330 4,531,900 0.60
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8,484,250 1.12
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COMMERCIAL PRINTING/FORMS
American Reprographics, Term Loan B, 4.179%, 6/17/09 1,990,000 2,019,850 0.27
c Merrill Corp., Term Loan B, 3.98%, 7/30/09 1,000,000 1,008,438 0.13
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3,028,288 0.40
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CONSTRUCTION MATERIALS
c St. Marys Cement Inc., Term Loan B, 4.086%, 11/24/09 (Canada) 4,487,500 4,549,203 0.60
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CONSUMER SUNDRIES
NBTY Inc., Term Loan C, 3.313%, 7/22/09 692,989 694,535 0.09
Rayovac Corp., Term Loan C, 3.75 - 4.10%, 10/01/09 721,546 729,627 0.10
Scotts Co., Term Loan B, 3.375 - 3.50%, 9/30/10 1,197,000 1,206,298 0.16
United Industries Corp.,
c Second Lien Term Loan, 5.98%, 10/31/11 500,000 509,375 0.07
c Term Loan B, 3.84 - 4.09%, 4/30/11 2,995,000 3,045,541 0.40
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6,185,376 0.82
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CONTAINERS/PACKAGING
ACI Operations Property Ltd., Term Loan A, 4.21%, 4/01/07 (Australia) 1,000,000 1,013,958 0.13
Berry Plastics, Term Loan C, 3.68%, 7/22/10 956,136 973,665 0.13
Crown Cork & Seal Co. Inc., Term Loan B, 4.586%, 9/15/08 950,000 965,289 0.13
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
PRINCIPAL % OF
AMOUNT VALUE NET ASSETS
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Graham Packaging Co., Term Loan B, 4.188 - 4.375%, 2/20/10 $ 992,982 $ 1,000,636 0.13
Graphic Packaging International Corp., Term Loan B, 4.375%, 8/08/10 2,475,000 2,517,023 0.33
Greif Brothers Corp., Term Loan B, 3.43%, 8/15/09 3,698,413 3,738,171 0.49
Kerr Group Inc., Term Loan B, 5.09 - 6.75%, 8/11/10 4,746,696 4,794,757 0.63
Owens-Brockway Glass Container Inc.,
Term Loan B, 4.48%, 4/01/08 4,000,000 4,061,668 0.54
Term Loan C, 4.45%, 4/01/08 500,000 501,354 0.07
Stone Container Corp.,
Term Loan B, 4.00%, 7/25/09 2,237,237 2,256,813 0.30
Term Loan C, 4.00%, 7/25/09 294,098 297,407 0.04
Tekni-Plex Inc., Term Loan B, 5.578 - 5.68%, 6/21/08 685,188 690,184 0.09
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22,810,925 3.01
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DATA PROCESSING SERVICES
InfoUSA Inc.,
Term Loan A, 3.87%, 3/25/09 3,833,333 3,881,250 0.51
Term Loan B, 4.01%, 6/04/10 2,000,000 2,025,000 0.27
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5,906,250 0.78
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DRUG STORE CHAINS
c Duane Reade Inc., Term Loan, 4.73%, 7/30/10 1,000,000 1,017,250 0.13
General Nutrition Centers Inc., Term Loan, 4.40 - 4.42%, 12/04/09 1,990,000 2,015,621 0.27
c Jean Coutu Group PJC Inc., Term Loan B, 3.75%, 7/28/11 5,500,000 5,563,355 0.73
Rite Aid Corp., Term Loan B1, 4.35 - 4.46%, 4/30/08 997,500 1,020,193 0.14
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9,616,419 1.27
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ELECTRIC UTILITIES
AES Corp., Term Loan B, 5.32%, 4/30/08 714,286 724,490 0.10
Calpine Corp., Second Lien Term Loan, 6.89%, 7/15/07 1,980,000 1,706,376 0.23
Calpine Generating Co., First Priority Term Loan, 5.23%, 3/22/09 1,500,000 1,505,812 0.20
Centerpoint Energy Inc., Term Loan B, 4.723%, 10/07/06 2,975,676 3,015,972 0.40
Cogentrix Energy Inc., Term Loan, 3.836%, 2/19/09 2,992,500 3,041,128 0.40
Coleto Creek WLE LP,
c Term Loan B, 3.848%, 7/31/11 1,750,000 1,778,074 0.23
c Term Loan C, 5.19%, 7/31/12 1,000,000 1,015,208 0.13
Dynegy Holdings Inc., Term Loan B, 5.36%, 5/27/10 1,500,000 1,529,532 0.20
Midwest Generation LLC, Term Loan, 4.57 - 4.85%, 4/27/11 1,496,250 1,517,759 0.20
NRG Energy Inc., Term Loan B, 1.486 - 5.559%, 6/23/10 577,515 598,991 0.08
Pike Electric Inc., Term Loan B, 3.625%, 7/02/12 992,500 1,011,109 0.13
Quanta Services Inc., Term Loan B, 1.40 - 4.54%, 12/15/08 3,000,000 3,011,250 0.40
Teton Power Funding LLC, Term Loan B, 4.80%, 2/20/11 1,361,538 1,376,005 0.18
TNP Enterprises Inc., Term Loan, 6.505%, 12/31/06 990,000 1,005,469 0.13
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22,837,175 3.01
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FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
PRINCIPAL % OF
AMOUNT VALUE NET ASSETS
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ELECTRICAL PRODUCTS
Enersys Capital Inc.,
Second Lien Term Loan, 6.361%, 3/10/12 $ 500,000 $ 508,021 0.07
Term Loan B, 3.62 - 3.84%, 3/09/11 997,500 1,014,488 0.13
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1,522,509 0.20
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ELECTRONICS/APPLIANCES
c Alliance Laundry Systems LLC, Term Loan, 4.60%, 7/31/09 1,250,000 1,263,281 0.16
Directed Electronics Inc., Term Loan, 5.65 - 6.13%, 6/15/10 1,500,000 1,511,250 0.20
Juno Lighting Inc., First Lien Term Loan, 4.34 - 5.75%, 10/21/10 1,927,273 1,956,182 0.26
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4,730,713 0.62
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ENGINEERING & CONSTRUCTION
Washington Group, Synthetic Term Loan, 1.24%, 10/01/07 3,000,000 3,012,960 0.40
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ENVIRONMENTAL SERVICES
Allied Waste North America Inc.,
L/C Term Loan, 4.119%, 1/15/10 214,286 218,058 0.03
Term Loan B, 3.93 - 4.27%, 1/15/10 3,269,643 3,317,746 0.44
Term Loan C, 4.27 - 4.30%, 1/15/10 500,000 507,634 0.07
Duratek Inc., Term Loan B, 5.15%, 12/16/09 2,173,913 2,173,913 0.29
Envirosolutions Inc.,
d Delay Draw, 5.43%, 3/01/09 46,363 46,422 0.00
Term Loan B, 5.43%, 3/01/09 2,135,455 2,138,124 0.28
IESI Corp., Term Loan, 4.438 - 4.625%, 10/10/10 992,500 1,010,179 0.13
c Waste Connections Inc., Term Loan, 2.91 - 3.16%, 10/22/10 7,403,336 7,488,941 0.99
------------ ---------
16,901,017 2.23
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FINANCE/RENTAL/LEASING
United Rentals Inc.,
L/C Term Loan, 3.611%, 2/11/11 250,000 255,156 0.03
Term Loan B, 3.44 - 3.71%, 2/11/11 1,246,875 1,270,566 0.17
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1,525,722 0.20
------------ ---------
FOOD RETAIL
Pathmark Stores Inc., Term Loan B2, 5.938%, 6/30/07 344,779 349,376 0.05
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FOOD: MAJOR DIVERSIFIED
B&G Foods Inc., Term Loan, 6.50%, 9/03/09 992,500 999,944 0.13
Birds Eye Foods Inc., Term Loan B, 4.23%, 8/08/08 934,015 946,712 0.12
Dole Food Inc.,
Term Loan D, 3.625 - 5.50%, 3/28/08 179,707 180,674 0.02
Term Loan E, 3.688 - 5.50%, 9/28/08 1,000,000 1,015,938 0.14
Luigino's Inc., Term Loan, 4.313 - 4.50%, 4/02/11 1,995,000 2,027,419 0.27
Pinnacle Foods Holding Corp., Term Loan B, 4.03 - 4.26%, 11/25/10 4,987,500 5,060,756 0.67
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10,231,443 1.35
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FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
PRINCIPAL % OF
AMOUNT VALUE NET ASSETS
---------------------------------------------------------------------------------------------------------------------------
FOOD: MEAT/FISH/DAIRY
American Seafoods, Term Loan B, 4.73%, 4/15/09 $ 857,716 $ 861,469 0.11
Dean Foods (Suiza Foods) Corp.,
Term Loan B, 3.59%, 7/15/08 990,000 990,990 0.13
Term Loan C, 3.34%, 7/15/08 997,500 998,747 0.13
Keystone Foods Intermediate LLC, Term Loan, 3.75%, 6/15/11 1,250,000 1,265,235 0.17
Land O'Lakes Inc., Term Loan B, 4.73%, 10/11/08 695,661 707,980 0.09
Michael Foods Inc., Term Loan B, 3.76 - 4.09%, 11/21/10 995,000 1,011,480 0.14
Pierre Foods Inc., Term Loan B, 3.98%, 6/29/10 1,000,000 1,012,813 0.14
------------ ---------
6,848,714 0.91
------------ ---------
FOOD: SPECIALTY/CANDY
Atkins Nutritionals Inc., First Lien Term Loan, 4.84%, 11/21/09 965,000 948,112 0.12
Leiner Health Products Group Inc., Term Loan B, 4.59 - 4.89%, 6/09/11 2,000,000 2,035,000 0.27
Meow Mix Co., First Lien Term Loan, 5.84 - 6.12%, 8/21/09 1,135,227 1,132,389 0.15
Nellson Neutraceuticals Inc.,
First Lien Term Loan, 4.59%, 10/04/09 1,924,994 1,924,994 0.25
Second Lien Term Loan, 7.09%, 4/04/10 750,000 746,250 0.10
c Otis Spunkmeyer Inc., Term Loan B, 7.00%, 6/24/11 2,750,000 2,780,938 0.37
Reddy Ice Group Inc., Term Loan, 3.98%, 8/15/09 827,083 838,284 0.11
------------ ---------
10,405,967 1.37
------------ ---------
FOREST PRODUCTS
Roseburg Forest Products, Term Loan B, 3.48%, 2/20/10 2,985,000 3,014,850 0.40
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HOME FURNISHINGS
National Bedding Co., Term Loan B, 3.55 - 3.93%, 8/21/08 3,989,491 4,036,866 0.53
Sealy Mattress Co., Term Loan B, 4.111%, 4/02/12 2,919,643 2,967,694 0.39
Simmons Holdings Inc., Term Loan B, 4.125 - 4.688%, 12/02/11 2,448,148 2,489,461 0.33
Tempur World Inc., Term Loan B, 4.586%, 8/15/09 990,000 1,002,375 0.13
------------ ---------
10,496,396 1.38
------------ ---------
HOME IMPROVEMENT CHAINS
Harbor Freight Tools USA Inc., Term Loan B, 4.16%, 7/15/10 2,500,000 2,530,470 0.33
------------ ---------
HOMEBUILDING
Landsource Communities Development LLC, Term Loan B, 4.00%, 3/31/10 4,000,000 4,062,500 0.54
------------ ---------
HOSPITAL/NURSING MANAGEMENT
Beverly Enterprises Inc., Term Loan B, 3.82 - 4.43%, 10/22/08 992,500 1,007,387 0.13
Iasis Healthcare LLC, Term Loan B, 3.70%, 6/22/11 2,350,000 2,388,923 0.32
c Medcath Corp., Term Loan B, 4.581%, 7/02/11 3,000,000 3,044,064 0.40
Triad Hospitals Inc., Term Loan B, 3.73%, 9/30/08 2,228,743 2,269,975 0.30
Vanguard Health Systems Inc., Term Loan B, 3.59%, 5/18/11 4,500,000 4,505,625 0.59
------------ ---------
13,215,974 1.74
------------ ---------
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
PRINCIPAL % OF
AMOUNT VALUE NET ASSETS
---------------------------------------------------------------------------------------------------------------------------
HOTEL/RESORTS/CRUISELINES
Wyndham International Inc., Term Loan B, 6.125%, 6/30/06 $ 943,559 $ 937,409 0.12
------------ ---------
HOUSEHOLD/PERSONAL CARE
Holmes Group Inc., First Lien Term Loan, 4.49 - 4.719%, 11/06/10 1,000,000 1,010,000 0.13
Prestige Brands Inc., Term Loan B, 4.075 - 6.00%, 6/24/11 4,073,125 4,141,859 0.55
------------ ---------
5,151,859 0.68
------------ ---------
INDUSTRIAL CONGLOMERATES
Invensys (BTR Dunlop),
c Bonding Facility, 5.08%, 3/05/09 2,000,000 2,010,000 0.27
Term Loan B, 4.611%, 9/05/09 1,496,884 1,522,144 0.20
Roper Industries Inc., Term Loan, 3.11 - 3.66%, 12/19/08 975,000 989,625 0.13
SPX Corp., Term Loan B, 3.625 - 5.50%, 9/30/09 2,031,496 2,064,508 0.27
Trimas Corp., Term Loan B, 4.875%, 12/06/09 2,728,243 2,751,548 0.36
------------ ---------
9,337,825 1.23
------------ ---------
INDUSTRIAL MACHINERY
Colfax Corp., Term Loan B, 4.50%, 5/30/09 1,767,536 1,776,374 0.24
Dresser Inc., Unsecured Term Loan, 4.68%, 3/01/10 1,250,000 1,276,250 0.17
Flowserve Corp., Term Loan C, 4.00 - 4.375%, 6/30/09 654,961 664,376 0.09
Itron Inc., Term Loan B, 3.625%, 11/24/10 1,500,000 1,515,000 0.20
Rexnord Corp., Term Loan, 4.61 - 4.63%, 11/25/09 181,381 183,761 0.02
Sensus Metering Systems Inc., Term Loan, 4.17 - 4.891%, 12/16/10 3,980,000 4,028,922 0.53
------------ ---------
9,444,683 1.25
------------ ---------
INDUSTRIAL SPECIALTIES
Ionics Inc., Term Loan B, 6.00%, 2/01/11 5,276,858 5,362,607 0.71
Polypore Inc., Term Loan B, 3.97%, 11/13/11 1,500,000 1,527,187 0.20
Unifrax Corp., Term Loan, 5.00%, 5/19/10 996,429 1,011,998 0.13
------------ ---------
7,901,792 1.04
------------ ---------
INFORMATION TECHNOLOGY SERVICES
The Relizon Co., Term Loan B, 4.26%, 2/20/11 2,293,750 2,306,653 0.31
Transfirst Holdings, Term Loan B, 5.18%, 3/31/10 2,500,000 2,521,875 0.33
Verifone Inc., Term Loan B, 4.18%, 6/30/11 1,000,000 1,014,375 0.13
Worldspan, Term Loan, 4.938 - 5.125%, 6/30/07 597,950 602,061 0.08
Xerox Corp., Term Loan, 3.34%, 9/30/08 4,500,000 4,527,657 0.60
------------ ---------
10,972,621 1.45
------------ ---------
INVESTMENT BANKS/BROKERS
c Refco Group Ltd. LLC, Term Loan B, 4.23%, 7/28/11 4,250,000 4,255,313 0.56
------------ ---------
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
PRINCIPAL % OF
AMOUNT VALUE NET ASSETS
---------------------------------------------------------------------------------------------------------------------------
LIFE/HEALTH INSURANCE
Conseco Inc., Term Loan, 5.426%, 6/22/10 $ 4,000,000 $ 4,061,252 0.54
------------ ---------
MAJOR TELECOMMUNICATIONS
Alec Holdings Inc., Term Loan B, 4.875%, 8/20/10 1,990,000 2,009,486 0.27
Cincinnati Bell Inc., Term Loan D, 3.90 - 4.08%, 6/30/08 897,501 908,271 0.12
Consolidated Communications Inc., Term Loan B, 4.008 - 4.336%, 10/14/11 1,000,000 1,019,063 0.13
Qwest Corp., Term Loan, 6.50%, 6/30/07 1,000,000 1,039,063 0.14
------------ ---------
4,975,883 0.66
------------ ---------
MANAGED HEALTH CARE
Multiplan Inc., Term Loan, 4.34%, 3/04/09 3,241,875 3,274,294 0.43
Pacificare Health Systems Inc., Term Loan, 3.709%, 6/03/08 990,000 1,007,325 0.13
------------ ---------
4,281,619 0.56
------------ ---------
MARINE SHIPPING
Horizon Lines LLC, Term Loan, 4.60%, 7/07/11 2,000,000 2,036,876 0.27
Moran Transportation Co., Term Loan B, 4.586%, 8/08/09 1,987,481 2,009,840 0.26
United States Shipping LLC, Term Loan, 3.836 - 4.12%, 4/08/10 1,467,593 1,481,351 0.20
------------ ---------
5,528,067 0.73
------------ ---------
MEDIA CONGLOMERATES
Canwest Media Inc., Term Loan E, 3.66%, 5/15/09 (Canada) 1,484,615 1,499,506 0.20
------------ ---------
MEDICAL DISTRIBUTORS
VWR International Inc., Term Loan B, 3.77%, 4/07/11 3,203,667 3,268,141 0.43
------------ ---------
MEDICAL SPECIALTIES
Advanced Medical Optics, Term Loan B, 3.831 - 4.09%, 6/26/09 1,250,000 1,269,922 0.17
Fresenius Medical Care, Term Loan D, 2.74 - 3.086%, 2/21/10 997,500 1,007,371 0.13
Kinetic Concepts Inc., Term Loan B, 3.59%, 8/11/10 1,242,500 1,258,329 0.17
Medex Inc., Term Loan B, 4.38%, 5/21/09 990,000 999,436 0.13
PerkinElmer Inc., Term Loan B, 3.44%, 12/26/08 585,817 592,652 0.08
------------ ---------
5,127,710 0.68
------------ ---------
MEDICAL/NURSING SERVICES
Alliance Imaging Inc., Term Loan C, 3.563 - 4.063%, 11/30/08 1,590,068 1,583,609 0.21
AMN Healthcare Services Inc., Term Loan B, 4.59%, 10/02/08 1,662,500 1,672,890 0.22
Cross Country Healthcare Inc., Term Loan, 4.55 - 4.73%, 6/05/09 536,011 545,559 0.07
DaVita Inc., Term Loan B, 3.16 - 3.98%, 6/30/10 3,967,618 4,014,024 0.53
Insight Health Services, Term Loan B, 5.086%, 10/17/08 2,468,641 2,484,070 0.33
MedQuest Inc., Term Loan B, 5.34%, 7/31/09 990,000 997,425 0.13
Sheridan Healthcare, Term Loan B, 3.929 - 4.23%, 3/31/10 987,500 999,844 0.13
Team Health Inc., Term Loan B, 4.84%, 3/23/11 3,067,502 3,103,929 0.41
------------ ---------
15,401,350 2.03
------------ ---------
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
PRINCIPAL % OF
AMOUNT VALUE NET ASSETS
---------------------------------------------------------------------------------------------------------------------------
MISCELLANEOUS COMMERCIAL SERVICES
c Buhrmann US Inc., Term Loan C1, 3.96%, 12/02/10 $ 4,000,000 $ 4,060,960 0.54
Corrections Corp. of America, Term Loan D, 3.49 - 3.91%, 3/31/08 984,773 1,000,468 0.13
DS Waters Enterprises LP, Term Loan, 4.336 - 4.62%, 11/07/09 4,977,264 4,916,607 0.65
Global Imaging Systems Inc., Term Loan B, 3.24 - 3.59%, 5/15/10 1,987,519 2,009,878 0.27
JohnsonDiversey Inc., Term Loan B, 3.38 - 3.619%, 5/03/08 844,354 858,814 0.11
Language Line LLC, Term Loan B, 5.66%, 6/11/11 1,750,000 1,759,712 0.23
c Mitchell, Term Loan B, 4.65%, 7/30/11 1,000,000 1,008,438 0.13
US Investigations Services Inc., Term Loan C, 5.04%, 1/10/09 1,341,514 1,343,191 0.18
------------ ---------
16,958,068 2.24
------------ ---------
MISCELLANEOUS MANUFACTURING
Day International Group Inc., Term Loan D, 4.98 - 5.09%, 1/01/10 924,250 931,760 0.12
Douglas Dynamics, Term Loan B, 3.57 - 4.43%, 3/30/10 998,083 1,010,559 0.13
Mueller Group, Term Loan, 4.55 - 4.93%, 4/14/11 3,779,817 3,818,798 0.51
Norcross Safety Products, Term Loan, 4.90%, 3/20/09 756,731 763,116 0.10
Vutek Inc., Term Loan B, 6.75%, 6/23/10 1,000,000 1,009,375 0.13
------------ ---------
7,533,608 0.99
------------ ---------
MOVIES/ENTERTAINMENT
24 Hour Fitness Inc., Term Loan, 5.125%, 7/01/09 995,000 997,487 0.13
Carmike Cinemas Inc., Term Loan, 4.41%, 2/02/09 1,592,000 1,630,805 0.22
CH Operating LLC, Term Loan B, 5.813 - 6.188%, 6/21/07 448,276 453,879 0.06
Cinram International,
Term Loan B, 5.09%, 9/30/09 (Canada) 1,975,400 2,009,353 0.27
Term Loan C, 7.09%, 3/31/10 (Canada) 1,965,395 1,989,350 0.26
Detroit Red Wings Inc., Term Loan, 3.836%, 8/30/06 915,891 918,180 0.12
Hollywood Entertainment Corp., Term Loan, 4.97 - 6.50%, 3/31/08 625,000 628,646 0.08
c Loews Cineplex Entertainment Corp., Term Loan B, 3.764 - 3.94%, 7/30/11 1,500,000 1,516,500 0.20
Metro-Goldwyn-Mayer Studios Inc., Term Loan B, 3.98%, 4/30/11 4,000,000 4,024,000 0.53
Mets II LLC, Term Loan, 4.69%, 8/23/05 1,000,000 1,007,500 0.13
Minnesota Hockey Ventures Group LP Holding Co., Term Loan, 5.66%, 12/29/08 1,350,000 1,346,625 0.18
Minnesota Wild Hockey Club LP Option Co., Term Loan, 3.91%, 12/29/08 1,000,000 1,003,750 0.13
New Jersey Basketball LLC, Term Loan, 6.25%, 10/15/04 4,000,000 4,003,920 0.53
Rainbow Media Holdings Inc., Term Loan C, 3.70%, 12/31/09 7,964,913 7,998,931 1.06
Regal Cinemas Inc., Term Loan B, 3.49 - 3.696%, 11/10/10 8,221,174 8,329,077 1.10
Six Flags Theme Parks, Term Loan B, 3.87%, 6/30/09 3,304,866 3,346,177 0.44
c Warner Music, Term Loan B, 4.025 - 4.319%, 2/28/11 8,987,500 9,128,730 1.20
Yankee Holdings, Term Loan, 3.86 - 4.10%, 6/25/07 392,857 397,768 0.05
Yankee Nets, Term Loan, 3.933 - 4.15%, 6/25/07 857,143 867,857 0.11
------------ ---------
51,598,535 6.80
------------ ---------
OIL & GAS PIPELINES
Magellan Midstream Holdings LP, Term Loan B, 4.65%, 6/17/08 557,141 565,498 0.08
Vulcan Energy Corp., Term Loan B, 6.00%, 4/30/10 1,600,000 1,623,000 0.21
------------ ---------
2,188,498 0.29
------------ ---------
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
PRINCIPAL % OF
AMOUNT VALUE NET ASSETS
---------------------------------------------------------------------------------------------------------------------------
OIL & GAS PRODUCTION
c Pride Offshore Inc., Term Loan B, 3.34%, 7/07/11 $ 1,000,000 $ 1,013,750 0.14
Williams Production RMT Co., Term Loan C, 3.72%, 5/30/08 990,025 999,024 0.13
------------ ---------
2,012,774 0.27
------------ ---------
OIL REFINING/MARKETING
Getty Petroleum Marketing, Term Loan B, 4.84%, 5/18/10 1,000,000 1,016,875 0.13
La Grange Acquisition LP, Term Loan, 4.14 - 4.41%, 1/08/08 3,000,000 3,047,814 0.40
Lyondell-Citgo Refining LP, Term Loan, 3.79 - 4.37%, 5/21/07 4,750,000 4,845,000 0.64
Tesoro Petroleum Corp.,
L/C Term Loan, 7.10%, 4/30/07 1,000,000 1,005,000 0.13
Term Loan, 6.88 - 6.91%, 4/15/08 987,500 1,018,977 0.14
------------ ---------
10,933,666 1.44
------------ ---------
OTHER CONSUMER SERVICES
Alderwoods Group Inc., Term Loan B, 4.10 - 4.20%, 9/12/08 775,285 787,884 0.10
Coinstar Inc., Term Loan, 3.84%, 7/01/11 1,000,000 1,017,500 0.13
Travelcenters of America Inc., Term Loan B, 4.43 - 5.12%, 11/14/08 874,867 886,531 0.12
Veterinary Centers of America Inc., Term Loan E, 3.625%, 9/20/08 748,125 761,919 0.10
------------ ---------
3,453,834 0.45
------------ ---------
OTHER CONSUMER SPECIALTIES
American Acheivement Corp., Term Loan B, 3.82 - 5.75%, 3/22/11 997,500 1,013,398 0.14
American Safety Razor Co., First Lien Term Loan, 4.55 - 4.84%, 4/22/11 997,500 1,009,345 0.13
Home Interiors & Gifts Inc., Term Loan, 5.41%, 4/02/11 1,984,375 1,919,264 0.25
Jarden Corp., Term Loan B, 5.75%, 4/24/08 2,488,750 2,518,304 0.33
Sola International Inc., Term Loan, 4.09%, 12/05/09 987,500 1,003,547 0.13
Solo Cup Co., Term Loan B, 3.84 - 4.086%, 2/23/11 7,992,500 8,095,739 1.07
------------ ---------
15,559,597 2.05
------------ ---------
OTHER TRANSPORTATION
c Great Lakes Dredge & Dock Corp., Term Loan B, 4.14 - 4.87%, 12/19/10 1,958,541 1,958,541 0.26
Laidlaw International Inc., Term Loan B, 5.50%, 6/17/09 2,888,776 2,944,746 0.39
Pacer International Inc., Term Loan, 4.125 - 4.875%, 6/06/10 717,647 727,963 0.10
Transcore Holdings Inc.,
Term Loan B, 4.823 - 6.00%, 12/03/07 2,926,694 2,963,278 0.39
Term Loan C, 4.93 - 6.00%, 12/03/07 992,500 1,004,906 0.13
------------ ---------
9,599,434 1.27
------------ ---------
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
PRINCIPAL % OF
AMOUNT VALUE NET ASSETS
---------------------------------------------------------------------------------------------------------------------------
PERSONNEL SERVICES
c Allied Security Holdings LLC, Term Loan B, 7.50%, 8/02/10 $ 1,000,000 $ 1,007,500 0.13
------------ ---------
PUBLISHING: BOOKS/MAGAZINES
Advanstar Communications, Term Loan B, 5.78%, 10/11/07 69,699 70,149 0.01
CBD Media LLC, Term Loan C, 3.61%, 12/31/09 887,500 889,568 0.12
DEX Media West LLC, Term Loan B, 3.61 - 3.84%, 3/09/10 2,704,342 2,758,147 0.36
F&W Publications Inc., Term Loan B, 4.93%, 12/31/09 2,251,614 2,275,538 0.30
Primedia Inc., Term Loan B, 4.25%, 6/30/09 2,373,712 2,283,511 0.30
R.H. Donnelley Corp., Term Loan B2, 3.63 - 3.86%, 6/30/10 985,259 998,304 0.13
c Transwestern Publishing Co., Term Loan B, 3.375 - 3.938%, 2/25/11 6,820,989 6,912,649 0.91
Weekly Reader, Second Lien Term Loan, 6.761%, 3/23/09 2,000,000 2,001,250 0.27
------------ ---------
18,189,116 2.40
------------ ---------
PUBLISHING: NEWSPAPERS
Freedom Communications, Term Loan B, 3.28 - 3.34%, 5/17/09 2,500,000 2,541,015 0.34
Medianews Group Inc., Term Loan B, 3.48%, 12/30/10 995,000 1,009,096 0.13
------------ ---------
3,550,111 0.47
------------ ---------
PULP & PAPER
Appleton Papers Inc., Term Loan B, 3.66 - 3.79%, 6/01/10 1,900,000 1,925,234 0.25
c Intertape Polymer Group Inc., Term Loan B, 5.75%, 8/01/11 1,800,000 1,815,750 0.24
Koch Cellulose LLC,
L/C Term Loan, 3.108%, 5/03/11 692,603 702,560 0.09
Term Loan B, 3.83%, 5/03/11 2,800,378 2,840,633 0.38
------------ ---------
7,284,177 0.96
------------ ---------
RAILROADS
Kansas City Southern Railway Co., Term Loan B, 3.48 - 3.578%, 3/30/08 1,396,500 1,417,157 0.19
------------ ---------
REAL ESTATE INVESTMENT TRUSTS
c Crescent Real Estate Funding XII, Term Loan, 3.61 - 3.742%, 1/12/06 5,628,437 5,688,239 0.75
Newkirk Master LP, Term Loan, 5.98 - 6.37%, 11/24/06 1,698,095 1,714,546 0.23
------------ ---------
7,402,785 0.98
------------ ---------
RECREATIONAL PRODUCTS
Amscan Holdings Inc., Term Loan B, 4.13 - 4.35%, 4/30/12 1,000,000 1,016,250 0.14
BRP Holdings LP, Term Loan, 4.18%, 12/18/10 5,970,000 6,061,419 0.80
PlayPower Inc., Term Loan, 5.75%, 2/07/10 925,000 929,625 0.12
Pure Fishing Inc., Term Loan B, 4.57 - 4.85%, 9/12/11 2,992,500 3,041,068 0.40
True Temper Sports Inc., Term Loan, 3.65 - 3.86%, 3/15/11 2,992,500 3,029,906 0.40
------------ ---------
14,078,268 1.86
------------ ---------
RESTAURANTS
CKE Restaurants Inc., Term Loan, 4.375%, 4/30/09 3,469,130 3,534,177 0.46
Dominos Inc., Term Loan, 3.875%, 6/25/10 1,714,796 1,744,537 0.23
Jack In The Box Inc., Term Loan B, 3.59 - 4.23%, 12/19/10 1,990,000 2,018,606 0.27
------------ ---------
7,297,320 0.96
------------ ---------
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
PRINCIPAL % OF
AMOUNT VALUE NET ASSETS
---------------------------------------------------------------------------------------------------------------------------
SEMICONDUCTORS
Fairchild Semiconductor Corp., Term Loan, 4.125%, 6/19/08 $ 990,000 $ 1,003,613 0.13
------------ ---------
SERVICES TO THE HEALTH INDUSTRY
c Accredo Health Inc., Term Loan B, 3.61%, 8/02/11 2,200,000 2,220,625 0.29
Quintiles Transnational Corp., Term Loan B, 5.70 - 5.84%, 9/25/09 1,985,000 2,019,737 0.27
Sterigenics International Inc., Term Loan B, 4.86%, 6/08/11 1,500,000 1,518,750 0.20
------------ ---------
5,759,112 0.76
------------ ---------
SPECIALTY STORES
CSK Auto Inc., Term Loan B, 3.85%, 6/20/09 995,000 1,000,054 0.13
Pantry Inc., Term Loan, 4.09%, 3/12/11 2,525,431 2,565,116 0.34
PETCO Animal Supplies Inc., Term Loan D, 3.98%, 10/02/08 989,965 1,003,268 0.13
------------ ---------
4,568,438 0.60
------------ ---------
SPECIALTY TELECOMMUNICATIONS
D&E Communications Inc., Term Loan B, 4.03 - 4.20%, 12/31/11 2,089,444 2,119,480 0.28
GCI Holdings Inc., Term Loan, 3.689%, 10/30/04 1,405,142 1,421,610 0.19
c Valor Telecommunications, Term Loan B, 3.87 - 3.98%, 9/30/09 6,500,000 6,599,535 0.87
------------ ---------
10,140,625 1.34
------------ ---------
TOBACCO
Commonwealth Brands Inc., Term Loan, 5.563%, 8/22/07 415,750 423,026 0.05
------------ ---------
TRUCKING
Comcar Industries, Term Loan B, 6.42 - 8.25%, 12/31/09 1,492,500 1,485,038 0.20
Flexi-Van Leasing Inc., Term Loan B, 3.10 - 3.13%, 9/20/07 374,196 375,833 0.05
Kenan Advantage, Term Loan, 5.05%, 6/30/10 1,000,000 1,012,500 0.13
Yellow Corp.,
L/C Term Loan, 1.293%, 5/24/07 2,636,364 2,660,257 0.35
Term Loan, 3.23%, 5/24/07 584,416 589,712 0.08
------------ ---------
6,123,340 0.81
------------ ---------
WHOLESALE DISTRIBUTORS
Interline Brands, Term Loan B, 4.98 - 5.086%, 11/30/09 950,000 956,531 0.13
National Waterworks Inc., Term Loan B, 4.34%, 11/22/09 948,980 962,621 0.13
Nebraska Book Co., Term Loan B, 3.91%, 3/04/11 997,500 1,009,346 0.13
------------ ---------
2,928,498 0.39
------------ ---------
WIRELESS COMMUNICATIONS
AAT Communications Corp., Term Loan B, 4.14%, 12/31/11 5,000,000 5,062,500 0.67
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
PRINCIPAL % OF
AMOUNT VALUE NET ASSETS
---------------------------------------------------------------------------------------------------------------------------
American Tower Corp., Term Loan B, 3.70%, 8/31/11 $ 2,250,000 $ 2,285,860 0.30
Crown Castle Operating Co., Term Loan B, 5.09%, 9/30/10 2,972,538 2,985,129 0.39
Dobson Cellular Systems Inc., Term Loan, 4.91 - 4.92%, 3/31/10 2,407,403 2,415,302 0.32
Nextel Finance Inc., Term Loan E, 3.813%, 12/15/10 995,000 1,002,949 0.13
Nextel Partners Inc., Term Loan C, 4.00%, 5/31/11 6,000,000 6,104,250 0.81
d SBA Communications Corp., Term Loan, 4.65 - 5.37%, 10/31/08 3,344,374 3,375,955 0.46
Spectrasite Communications Inc., Term Loan C, 3.93%, 2/22/07 998,182 1,010,130 0.13
------------ ---------
24,242,075 3.21
------------ ---------
TOTAL SENIOR FLOATING RATE INTERESTS (COST $673,232,000) 682,745,367 678,883,723 89.57
------------ ---------
COMMON STOCKS SHARES
------------
SPECIALTY TELECOMMUNICATIONS
a Global Crossing Ltd. 539 $10,133 0.00
------------ ---------
WIRELESS COMMUNICATIONS
a Arch Wireless Inc. 52 1,467 0.00
------------ ---------
TOTAL COMMON STOCKS (COST $19,135) 11,600 0.00
------------ ---------
TOTAL LONG TERM INVESTMENTS (COST $681,375,101) 687,114,948 90.65
------------ ---------
e REPURCHASE AGREEMENT (COST $148,658,441) PRINCIPAL
AMOUNT
------------
Joint Repurchase Agreement, 1.320%, 8/02/04 (Maturity Value $148,674,796) 148,658,441 148,658,441 19.61
------------ ---------
ABN AMRO Bank, N.V., New York Branch (Maturity Value $14,607,299)
Banc of America Securities LLC (Maturity Value $14,607,299)
Barclays Capital Inc. (Maturity Value $14,607,299)
Bear, Stearns & Co. Inc. (Maturity Value $6,494,112)
BNP Paribas Securities Corp. (Maturity Value $14,607,299)
Deutsche Bank Securities Inc. (Maturity Value $14,607,299)
Goldman, Sachs & Co. (Maturity Value $14,607,299)
Greenwich Capital Markets Inc. (Maturity Value $14,607,299)
Lehman Brothers Inc. (Maturity Value $10,714,993)
Morgan Stanley & Co. Inc. (Maturity Value $14,607,299)
UBS Securities LLC (Maturity Value $14,607,299)
Collateralized by U.S. Government Agency Securities, 1.260% - 7.125%,
8/11/04 - 6/15/09, U.S. Treasury Bonds, 9.375%, 2/15/06, and
U.S. Treasury Notes, 1.625% - 7.500%, 2/15/05 - 6/15/09
TOTAL INVESTMENTS (COST $830,033,542) 835,773,389 110.26
OTHER ASSETS, LESS LIABILITIES (77,786,677) (10.26)
------------ ---------
NET ASSETS $757,986,712 100.00
------------ ---------
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
aNon-income producing.
bSee Note 1(d) regarding senior floating rate interests.
cSee Note 1(c) regarding securities purchased on a when-issued or delayed
delivery basis.
dSee Note 9 regarding unfunded loan commitments.
eSee Note 1(b) regarding joint repurchase agreement.
fSee Note 12 regarding fund litigation.
GLOSSARY OF TERMS
DIP - Debtor-In-Possession
L/C - Line of Credit
LLC - Limited Liability Corp.
LP - Limited Partnership
See notes to financial statements.
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 2004
Assets:
Investments in securities:
Cost $681,375,101
------------
Value 687,114,948
Repurchase agreement, at value and cost 148,658,441
Cash 2,812,552
Receivables:
Investment securities sold 3,288,996
Capital shares sold 2,066,351
Interest 2,095,297
Unrealized gain on unfunded commitments (Note 9) 19,246
Other assets 7,102
------------
Total assets 846,062,933
------------
Liabilities:
Payables:
Investment securities purchased 85,705,936
Affiliates 327,392
Distributions to shareholders 2,013,617
Other liabilities 29,276
------------
Total liabilities 88,076,221
------------
Net assets, at value $757,986,712
------------
Net assets consist of:
Distributions in excess of net investment income $ (142,575)
Net unrealized appreciation (depreciation) 5,757,313
Accumulated net realized gain (loss) (9,023,404)
Capital shares 761,395,378
------------
Net assets, at value $757,986,712
------------
Net asset value and maximum offering price per share
($757,986,712 -:- 77,037,652 shares outstanding) $ 9.84
------------
See notes to financial statements.
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
FINANCIAL STATEMENTS (CONTINUED)
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JULY 31, 2004
Investment income:
Interest $17,191,478
-----------
Expenses:
Management fees (Note 4) 3,488,943
Administrative fees (Note 4) 618,229
Custodian fees 8,634
Professional fees 73,847
Other 94,909
-----------
Total expenses
4,284,562
Expense reductions (Note 5) (3,366)
Expenses waived/paid by affiliate (Note 4) (1,657,461)
-----------
Net expenses 2,623,735
-----------
Net investment income 14,567,743
-----------
Realized and unrealized gains (losses):
Net realized gain (loss) from investments 770,172
Net unrealized appreciation (depreciation) on investments 5,403,365
-----------
Net realized and unrealized gain (loss) 6,173,537
-----------
Net increase (decrease) in net assets resulting from operations $20,741,280
-----------
See notes to financial statements.
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JULY 31, 2004 AND 2003
2004 2003
---------------------------------
Increase (decrease) in net assets:
Operations:
Net investment income $ 14,567,743 $ 9,868,757
Net realized gain (loss) from investments 770,172 (6,995,225)
Net unrealized appreciation (depreciation) on investments 5,403,365 8,380,408
---------------------------------
Net increase (decrease) in net assets resulting from operations
20,741,280 11,253,940
Distributions to shareholders from net investment income (14,725,533) (9,890,428)
Capital share transactions (Note 2) 533,324,229 (48,656,880)
---------------------------------
Net increase (decrease) in net assets 539,339,976 (47,293,368)
Net assets:
Beginning of year 218,646,736 265,940,104
---------------------------------
End of year $757,986,712 $218,646,736
---------------------------------
Distributions in excess of net investment income:
End of year $ (142,575) $ (23,123)
---------------------------------
See notes to financial statements.
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Franklin Floating Rate Master Trust (the Trust) is registered under the
Investment Company Act of 1940 as a non-diversified, open-ended investment
company. The Trust is organized as a partnership and consists of one series, the
Franklin Floating Rate Master Series (the Fund). Shares of the Fund are issued
in the form of partnership interests and are exempt from registration under the
Securities Act of 1933. The Fund seeks current income and preservation of
capital. The following summarizes the Fund's significant accounting policies.
A. SECURITY VALUATION
The Fund invests primarily in senior secured corporate loans and senior secured
debt that meet credit standards established by Franklin Advisers Inc. Debt
securities, other over-the-counter securities and listed securities for which no
sale is reported are valued within the range of the latest quoted bid and asked
prices by independent pricing services or recognized dealers in such securities.
Securities listed or traded on a recognized national exchange are valued at the
last reported sales price. Securities listed or traded on NASDAQ are valued at
their official closing price. If events occur that materially affect the values
of securities after the prices are determined, but prior to 4:00 p.m. Eastern
time or the close of trading on the NYSE, whichever is earlier, or if market
quotations are deemed not readily available or reliable, the securities will be
valued at fair value. Short-term securities are valued at amortized cost which
approximates current value. All security valuation procedures are approved by
the Board of Trustees.
B. JOINT REPURCHASE AGREEMENT
The Fund may enter into a joint repurchase agreement whereby its uninvested cash
balance is deposited into a joint cash account to be used to invest in one or
more repurchase agreements. The value and face amount of the joint repurchase
agreement are allocated to the Fund based on its pro-rata interest. A repurchase
agreement is accounted for as a loan by the Fund to the seller, collateralized
by securities which are delivered to the Fund'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 funds, with the value of the
underlying securities marked to market daily to maintain coverage of at least
100%. At July 31, 2004, all repurchase agreements had been entered into on July
30, 2004.
C. SECURITIES PURCHASED ON A WHEN-ISSUED OR DELAYED DELIVERY BASIS
The Fund may purchase securities on a when-issued or delayed delivery basis,
with payment and delivery scheduled for a future date. These transactions are
subject to market fluctuations and are subject to the risk that the value at
delivery may be more or less than the trade date purchase price. Although the
Fund will generally purchase these securities with the intention of holding the
securities, it may sell the securities before the settlement date.
D. SENIOR FLOATING RATE INTERESTS
Senior secured corporate loans pay interest at rates which are periodically
reset by reference to a base lending rate plus a spread. These base lending
rates are generally the prime rate offered by a designated U.S. bank or the
London InterBank Offered Rate (LIBOR). Senior secured corporate loans often
require prepayment of principal from excess cash flows or at the discretion of
the borrower. As a result, actual maturity may be substantially less than the
stated maturity.
Senior secured corporate loans in which the Fund invests are generally readily
marketable, but may be subject to some restrictions on resale.
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
E. INCOME TAXES
No provision has been made for income taxes because all income and expenses are
allocated to the partners for inclusion in their individual income tax returns.
Fund distributions to shareholders are determined on a tax basis and may differ
from net investment income and realized gains for financial reporting purposes.
F. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Security transactions are accounted for on trade date. Realized gains and losses
on security transactions are determined on a specific identification basis.
Interest income and estimated expenses are accrued daily. Discounts and premiums
on securities purchased are amortized over the lives of the respective
securities. Facility fees are recognized as income over the expected term of the
loan. The Fund's net investment income is proportionally allocated to the
partners daily and distributed monthly.
G. 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.
H. GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and trustees are
indemnified against certain liability arising out of the performance of their
duties to the Fund. Additionally, in the normal course of business, the Fund
enters into contracts with service providers that contain general
indemnification clauses. The Fund's maximum exposure under these arrangements is
unknown as this would involve future claims that may be made against the Fund
that have not yet occurred. However, based on experience, the Fund expects the
risk of loss to be remote.
2. SHARES OF BENEFICIAL INTEREST
At July 31, 2004, there were an unlimited number of shares authorized ($.01 par
value). Transactions in the Fund's shares were as follows:
Year Ended July 31,
--------------------------------------------------------------------------------------------
2004 2003
--------------------------------------------------------------------------------------------
Shares Amount Shares Amount
--------------------------------------------------------------------------------------------
Shares sold 57,549,828 $563,299,502 5,371,074 $ 51,648,778
Shares redeemed (3,071,659) (29,975,273) (10,574,183) (100,305,658)
--------------------------------------------------------------------------------------------
Net increase (decrease) 54,478,169 $533,324,229 (5,203,109) $ (48,656,880)
--------------------------------------------------------------------------------------------
3. REVOLVING CREDIT FACILITY
The Fund participates in a $200 million senior unsecured revolving credit
facility to fund shareholder redemptions or meet unfunded loan commitments. The
facility agreement ends on December 20, 2004. Interest is charged at the Federal
Funds Rate plus .50%. Facility fees paid are amortized on a straight line basis
over the term of the commitment. Annual commitment fees of .09% are charged on
the unused portion of the facility and allocated among the participating funds
based on net assets.
During the year ended July 31, 2004, the Fund did not utilize the facility.
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. TRANSACTIONS WITH AFFILIATES
Certain officers and trustees of the Fund are also officers and/or directors of
the following entities:
ENTITY AFFILIATION
- --------------------------------------------------------------------------------
Franklin Advisers Inc. (Advisers) Investment manager
Franklin Templeton Services LLC (FT Services) Administrative manager
Franklin/Templeton Investor Services LLC Transfer agent
(Investor Services)
Franklin/Templeton Distributors Inc. (Distributors) Principal underwriter
The Fund pays an investment management fee to Advisers of .80% per year of the
average daily net assets of the Fund.
The Fund pays an administrative fee to FT Services based on the daily net assets
of the Fund as follows:
ANNUALIZED
FEE RATE NET ASSETS
- ------------------------------------------------------------------
.150% First $200 million
.135% Over $200 million, up to and including $700 million
.100% Over $700 million, up to and including $1.2 billion
.075% In excess of $1.2 billion
FT Services and Advisers agreed in advance to voluntarily waive administrative
fees. Additionally FT Services and Advisors agreed in advance to voluntarily
waive a portion of management fees, as noted in the Statement of Operations.
Total expenses waived by FT Services and Advisers are not subject to
reimbursement by the Fund subsequent to the Fund's fiscal year end.
At July 31, 2004, the shares of the Fund were owned by the following entities:
PERCENTAGE OF
OUTSTANDING
ENTITY SHARES SHARES
- --------------------------------------------------------------------------------
Franklin Floating Rate Fund PLC 77,017,652 99.98%
Franklin Resources Inc. 10,000 .01%
Templeton Investment Counsel Inc. 10,000 .01%
----------------------------
TOTAL 77,037,652 100.00%
----------------------------
5. EXPENSE OFFSET ARRANGEMENT
The Fund 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 Fund's custodian expenses. During the year ended July 31, 2004, the
custodian fees were reduced as noted in the Statement of Operations.
6. INCOME TAXES
At July 31, 2004, net unrealized appreciation (depreciation) based on the cost
of investments for income tax purposes of $830,096,997 was as follows:
Unrealized appreciation $6,333,161
Unrealized depreciation (656,769)
-----------
Net unrealized appreciation (depreciation) $5,676,392
-----------
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Net investment income differs for financial statement and tax purposes primarily
due to differing treatments of organization costs and bond premiums
Net realized gains (losses) differ for financial statement and tax purposes
primarily due to differing treatments of bond premiums and wash sales.
7. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the year
ended July 31, 2004 aggregated $711,290,832 and $212,697,951, respectively.
At July 31, 2004, the Fund did not participate in any soft commission
arrangements.
8. CREDIT RISK
The Fund has 80.21% of its portfolio invested in below investment grade and
comparable quality unrated high yield securities, which tend to be more
sensitive to economic conditions than higher rated securities.
9. UNFUNDED LOAN COMMITMENTS
The Fund may enter into certain credit agreements, all or a portion of which may
be unfunded. The Fund is obligated to fund these loan commitments at the
borrowers' discretion.
At July 31, 2004, unfunded commitments were as follows:
Unfunded
Borrower Commitment
- --------------------------------------------------------------------------------
Celanese AG, Term Loan $620,369
Envirosolutions Inc., Delay Draw 818,182
New Jersey Devils LLC, Term Loan 2,000,000
SBA Communications Corp., Term Loan 403,846
----------
$3,842,397
----------
Unfunded loan commitments are marked to market daily and any unrealized gain or
loss is included in the Statement of Assets and Liabilities and Statement of
Operations.
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
Notes to Financial Statements (continued)
10. PARTNERSHIP DISTRIBUTIONS
For the year ended July 31, 2004, the Fund made the following distributions:
Payment Date Amount Per Share
- ------------------------------------------------------
8/29/03 $0.030857
9/30/03 $0.029927
10/31/03 $0.030294
11/28/03 $0.030032
12/31/03 $0.028570
1/30/04 $0.027523
2/27/04 $0.029191
3/31/04 $0.026043
4/30/04 $0.025618
5/28/04 $0.025470
6/30/04 $0.024574
7/30/04 $0.026934
Daily distribution information is available at the registered office upon
request.
11. OTHER CONSIDERATIONS
Advisers, as the Fund's Manager, may serve as a member of various bondholders'
steering committees, on credit committees, or may represent the Fund in certain
corporate restructuring negotiations. Currently the Manager serves in one or
more of these capacities for Adelphia Communications Corp. As a result of this
involvement, Advisers may be in possession of certain material non-public
information. If the Fund's Manager, while in possession of such information,
seeks to sell any of its holdings in these securities it will comply with all
applicable federal securities laws.
12. FUND LITIGATION
On July 6, 2003, Adelphia Communications Corp. ("Adelphia") and related parties,
along with its Official Committee of Unsecured Creditors, filed and adversary
proceeding in the Adelphia bankruptcy case in the U.S. Bankruptcy Court (SDNY)
against more than 360 banks, financial services companies, insurance companies,
investment banks, mutual funds and other parties that had arranged for the sale
of, or purchased the bank debt of, Adelphia or its related parties. Named
Defendants included Franklin Advisers Inc., Franklin CLOs I - III, Franklin
Floating Rate Daily Access Fund, Franklin Floating Rate Master Series, and
Franklin Floating Rate Trust.
The Complaint alleges that the purchasers of this bank debt knew, or should have
known, that the loan proceeds would not benefit Adelphia, but instead would be
used to enrich Adelphia insiders. It seeks avoidance of the loans and recovery
of intentionally fraudulent transfers.
Discovery for this case has been stayed and pending motions have not been ruled
upon. Thus, it is not possible to predict its outcome at this early stage of the
proceedings. However, management of the Funds does not expect that the result
will have a material adverse effect on the financial condition of the Funds.
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
Notes to Financial Statements (continued)
13. REGULATORY MATTERS
MASSACHUSETTS ADMINISTRATIVE PROCEEDING
On February 4, 2004, the Securities Division of the Office of the Secretary of
the Commonwealth of Massachusetts filed an administrative complaint against
Franklin Resources, Inc. and certain of its subsidiaries (the "Company")
claiming violations of the Massachusetts Uniform Securities Act ("Massachusetts
Act") with respect to an alleged arrangement to permit market timing (the "Mass.
Proceeding"). On February 17, 2004, the Company filed an answer denying all
violations of the Massachusetts Act.
U.S. SECURITIES AND EXCHANGE COMMISSION (SEC) SETTLEMENT
On August 2, 2004, the Company announced that an agreement had been reached by
the Fund's investment manager with the SEC that resolved the issues resulting
from the SEC's investigation of market timing activity. The SEC issued an "order
instituting administrative and cease-and-desist proceedings pursuant to sections
203(e) and 203(k) of the Investment Advisers Act of 1940 and sections 9(b) and
9(f) of the Investment Company Act of 1940, making findings and imposing
remedial sanctions and a cease and desist order" (the "Order"). The SEC's Order
concerns the activities of a limited number of third parties that ended in 2000
and those that are the subject of the Mass. Proceeding described above.
Under the terms of the SEC's Order, pursuant to which the Fund's investment
manager neither admits nor denies any wrongdoing, the Fund's investment manager
has agreed to pay $50 million, of which $20 million is a civil penalty, to be
distributed to certain fund shareholders in accordance with a plan to be
developed by an Independent Distribution Consultant. At this time, it is unclear
whether shareholders of all funds will receive distributions or whether all
shareholders of any particular fund will receive distributions. The SEC Order
also requires the Fund's investment manager to, among other things, enhance and
periodically review compliance policies and procedures.
OTHER GOVERNMENTAL INVESTIGATIONS
As part of ongoing investigations by the SEC, the U.S. Attorney for the Northern
District of California, the New York Attorney General, the California Attorney
General, the U.S. Attorney for the District of Massachusetts, the Florida
Department of Financial Services and the Commissioner of Securities, the West
Virginia Attorney General, the Vermont Department of Banking, Insurance,
Securities, and Health Care Administration and the National Association of
Securities Dealers, relating to certain practices in the mutual fund industry,
including late trading, market timing and payments to securities dealers who
sell fund shares, the Company and its subsidiaries, as well as certain current
or former executives and employees of the Company, have received requests for
information and/or subpoenas to testify or produce documents. The Company has
been providing documents and information in response to these requests and
subpoenas. In addition, the Company has responded to requests for similar kinds
of information from regulatory authorities in some of the foreign countries
where the Company conducts its global asset management business.
The Staff of the SEC has also informed the Company that it is considering
recommending a civil action or proceeding against the Fund's investment manager
and the Fund's principal underwriter concerning payments to securities dealers
who sell fund shares (commonly referred to as "revenue sharing"). The staff of
the California Attorney General's Office (CAGO) also has advised the Company
that it is authorized to bring a civil action against Franklin Resources, Inc.
and the Fund's principal underwriter arising from the same events. Even though
the Company currently believes that the charges the SEC staff and CAGO staff are
contemplating are unwarranted, it also believes that it is in the best interest
of the Company and fund shareholders to resolve these issues voluntarily, to the
extent the Company can reasonably do so.
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
Notes to Financial Statements (continued)
OTHER LEGAL PROCEEDINGS
The Fund, in addition to other entities within Franklin
Templeton Investments, including the Company and certain of its subsidiaries,
other funds, and current and former officers, employees, and directors have been
named in multiple lawsuits in different federal courts in Nevada, California,
Illinois, New York and Florida, alleging violations of various federal
securities laws and seeking, among other things, monetary damages and costs.
Specifically, the lawsuits claim breach of duty with respect to alleged
arrangements to permit market timing and/or late trading activity, or breach of
duty with respect to the valuation of the portfolio securities of certain funds
managed by Company subsidiaries, resulting in alleged market timing activity.
The majority of these lawsuits duplicate, in whole or in part, the allegations
asserted in the Mass. Proceeding detailed above. The lawsuits are styled as
class actions or derivative actions on behalf of either the named Funds or the
Company.
In addition, the Company and certain of its subsidiaries, as well as certain
current and former officers, employees, and directors have been named in
multiple lawsuits alleging violations of various securities laws and pendent
state law claims relating to the disclosure of directed brokerage payments
and/or payment of allegedly excessive commissions and advisory fees. These
lawsuits are styled as class actions and derivative actions.
The Company's management strongly believes that the claims made in each of these
lawsuits are without merit and intends to vigorously defend against them.
The Company cannot predict with certainty the eventual outcome of the foregoing
Mass. Proceeding, other governmental investigations or other legal proceedings.
The impact, if any, of these matters on the Fund is uncertain at this time. If
the Company determines that it bears responsibility for any unlawful or
inappropriate conduct that caused losses to the Fund, it is committed to making
the Fund or its shareholders whole, as appropriate.
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
Report of Independent Registered Public Accounting Firm
TO THE BOARD OF TRUSTEES
and Shareholders of
Franklin Floating Rate Master Series
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 Floating Rate Master
Series (the "Fund") at July 31, 2004, 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 periods
presented, in conformity with generally accepted accounting principles. 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 July 31, 2004 by
correspondence with the custodian, agent banks and brokers, provide a reasonable
basis for our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
September 9, 2004
Board Members and Officers
The name, age 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. Each board member will serve until
that person's successor is elected and qualified.
INDEPENDENT BOARD MEMBERS
- -----------------------------------------------------------------
NUMBER
OF
PORTFOLIOS
NAME, AGE IN FUND
AND ADDRESS LENGTH COMPLEX OTHER
OF TIME OVERSEEN DIRECTORSHIPS
POSITION SERVED BY BOARD HELD
MEMBER*
- -----------------------------------------------------------------
Frank H. Trustee Since 111 None
Abbott, III 1999
(83)
One Franklin
Parkway
San Mateo,
CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President and Director, Abbott Corporation (an investment
company).
- -----------------------------------------------------------------
Harris J. Trustee Since 140 Director, Bar-S
Ashton (72) 1999 Foods (meat
One Franklin packing company).
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).
- -----------------------------------------------------------------
S. Joseph Trustee Since 141 None
Fortunato 1999
(72)
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.
- -----------------------------------------------------------------
Edith E. Trustee Since 96 Director,
Holiday (52) 1999 Amerada Hess
One Franklin Corporation
Parkway (exploration and
San Mateo, refining of oil
CA 94403-1906 and gas); H.J.
Heinz Company (processed foods
and allied products); RTI
International Metals, Inc.
(manufacture and distribution of
titanium); and Canadian National
Railway (railroad).
PRINCIPAL OCCUPATION DURING PAST 5 YEARS: Director or Trustee of various
companies and trusts; and FORMERLY, Assistant to the President of the United
States and Secretary of the Cabinet (1990-1993); General Counsel to the United
States Treasury Department (1989-1990); and Counselor to the Secretary and
Assistant Secretary for Public Affairs and Public Liaison-United States Treasury
Department (1988-1989).
- -----------------------------------------------------------------
Frank W.T. Trustee Since 113 Director, The
LaHaye (75) 1999 California
One Franklin Center for Land
Parkway Recycling
San Mateo, (redevelopment).
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. Trustee Since 140 Director, White
Macklin (76) 1999 Mountains
One Franklin Insurance Group,
Parkway Ltd. (holding
San Mateo, company); Martek
CA 94403-1906 Biosciences
Corporation;
MedImmune, Inc.
(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) and
Spacehab, Inc.
(aerospace
services)
(1994-2003).
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Deputy Chairman, White Mountains Insurance Group, Ltd. (holding
company); and FORMERLY, Chairman, White River Corporation
(financial services) (1993-1998) and Hambrecht & Quist Group
(investment banking) (1987-1992); and President, National
Association of Securities Dealers, Inc. (1970-1987).
- -----------------------------------------------------------------
INTERESTED BOARD MEMBERS AND OFFICERS
- -----------------------------------------------------------------
NAME, AGE POSITION LENGTH NUMBER OTHER
AND ADDRESS OF TIME OF DIRECTORSHIPS
SERVED PORTFOLIOS HELD
IN FUND
COMPLEX
OVERSEEN
BY BOARD
MEMBER*
- -----------------------------------------------------------------
**Charles B. Trustee and Since 140 None
Johnson (71) Chairman of 1999
One Franklin the Board
Parkway
San Mateo,
CA 94403-1906
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 46 of the investment companies in
Franklin Templeton Investments.
- -----------------------------------------------------------------
**Rupert H. Trustee, Trustee 123 None
Johnson, Jr. President and
(63) and Chief President
One Franklin Executive since
Parkway Officer - 1999 and
San Mateo, Investment Chief
CA 94403-1906 Management Executive
Officer -
Investment
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.
and Franklin Investment Advisory Services, 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 49 of the
investment companies in Franklin Templeton Investments.
- -----------------------------------------------------------------
Mark Vice Since Not None
Boyadjian President 2003 Applicable
(40)
One Franklin
Parkway
San Mateo,
CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Vice President, Templeton Worldwide, Inc.; and officer
of three of the investment companies in Franklin Templeton
Investments.
- -----------------------------------------------------------------
Harmon E. Vice Since Not None
Burns (59) President 1999 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.; Director, Franklin Investment Advisory
Services, 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 49 of the investment companies in
Franklin Templeton Investments.
- -----------------------------------------------------------------
James M. Chief Since Not None
Davis Compliance July 2004 Applicable
(52) Officer
One Franklin
Parkway
San Mateo,
CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Officer of 51 of the investment companies in Franklin Templeton
Investments; Director, Global Compliance, Franklin Resources,
Inc.; and FORMERLY, Director of Compliance, Franklin Resources,
Inc. (1994-2001).
- -----------------------------------------------------------------
Laura Treasurer Since Not None
Fergerson July 2004 Applicable
(42)
One Franklin
Parkway
San Mateo,
CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Officer of 34 of the investment companies in Franklin Templeton Investments; and
FORMERLY, Director and member of Audit and Valuation Committees, Runkel Funds,
Inc. (2003-2004); Assistant Treasurer of most of the investment companies in
Franklin Templeton Investments (1997-2003); and Vice President, Franklin
Templeton Services, LLC (1997-2003).
- -----------------------------------------------------------------
Martin L. Vice Since Not None
Flanagan (44) President 1999 Applicable
One Franklin
Parkway
San Mateo,
CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS: Co-President and Chief Executive
Officer, Franklin Resources, Inc.; Senior Vice President and Chief Financial
Officer, Franklin Mutual Advisers, LLC; Executive Vice President, Chief
Financial Officer and Director, Templeton Worldwide, Inc.; Executive Vice
President and Chief Operating Officer, Templeton Investment Counsel, LLC;
President and Director, Franklin Advisers, Inc.; Executive Vice President,
Franklin Investment Advisory Services, Inc. and Franklin Templeton Investor
Services, LLC; Chief Financial Officer, Franklin Advisory Services, LLC;
Chairman, Franklin Templeton Services, LLC; and officer and/or director or
trustee, as the case may be, of some of the other subsidiaries of Franklin
Resources, Inc. and of 49 of the investment companies in Franklin Templeton
Investments.
- -----------------------------------------------------------------
Jimmy D. Senior Vice Since Not Applicable None
Gambill (56) President 2002
500 East and Chief
Broward Executive
Blvd. Officer
Suite 2100 -Finance and
Fort Administration
Lauderdale,
FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President, Franklin Templeton Services, LLC; Senior Vice
President, Templeton Worldwide, Inc.; and officer of 51 of the
investment companies in Franklin Templeton Investments.
- -----------------------------------------------------------------
David P. Vice Since Not None
Goss (57) President 2000 Applicable
One Franklin
Parkway
San Mateo,
CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Associate General Counsel, Franklin Resources, Inc.; officer
and director of one of the subsidiaries of Franklin Resources,
Inc.; officer of 51 of the investment companies in Franklin
Templeton Investments; and FORMERLY, President, Chief Executive
Officer and Director, Property Resources Equity Trust (until
1999) and Franklin Select Realty Trust (until 2000).
- -----------------------------------------------------------------
Barbara J. Vice Since Not None
Green (56) President 2000 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,
Inc., 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 51 of the investment companies in
Franklin Templeton Investments; and FORMERLY, Deputy Director,
Division of Investment Management, Executive Assistant and
Senior Advisor to the Chairman, Counselor to the Chairman,
Special Counsel and Attorney Fellow, U.S. Securities and
Exchange Commission (1986-1995); Attorney, Rogers & Wells
(until 1986); and Judicial Clerk, U.S. District Court (District
of Massachusetts) (until 1979).
- -----------------------------------------------------------------
Michael O. Vice Since Not Director, FTI
Magdol (67) President - 2002 Applicable Banque, Arch
600 Fifth AML Chemicals, Inc.
Avenue Compliance and Lingnan
Rockefeller Foundation.
Center
New York, NY
10020-2302
PRINCIPAL OCCUPATION DURING PAST 5 YEARS: Vice Chairman, Chief Banking Officer
and Director, Fiduciary Trust Company International; and officer and/or
director, as the case may be, of some of the other subsidiaries of Franklin
Resources, Inc. and of 48 of the investment companies in Franklin Templeton
Investments.
- -----------------------------------------------------------------
Murray L. Vice Since Not None
Simpson (67) President 2000 Applicable
One Franklin and
Parkway Secretary
San Mateo,
CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Executive Vice President and General Counsel, Franklin
Resources, Inc.; officer and/or director, as the case may be,
of some of the subsidiaries of Franklin Resources, Inc. and of
51 of the investment companies in Franklin Templeton
Investments; and FORMERLY, Chief Executive Officer and Managing
Director, Templeton Franklin Investment Services (Asia) Limited
(until 2000); and Director, Templeton Asset Management Ltd.
(until 1999).
- -----------------------------------------------------------------
Galen G. Chief Since Not None
Vetter (52) Financial May 2004 Applicable
500 East Officer and
Broward Chief
Blvd. Accounting
Suite 2100 Officer
Fort
Lauderdale,
FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Officer of 51 of the investment companies in Franklin Templeton Investments;
Senior Vice President, Franklin Templeton Services, LLC; and FORMERLY, Managing
Director, RSM McGladrey, Inc.; and Partner, McGladrey & Pullen, LLP.
- -----------------------------------------------------------------
*We base the number of portfolios on each separate series of the U.S. registered
investment companies within the Franklin Templeton Investments fund complex.
These portfolios have a common investment adviser or affiliated investment
advisers.
**Charles B. Johnson and Rupert H. Johnson, Jr. are considered to be interested
persons of the Trust under the federal securities laws due to their positions as
officers and directors and major shareholders of Franklin Resources, Inc., which
is the parent company of the Trust's adviser and distributor.
Note: Charles B. Johnson and Rupert H. Johnson, Jr. are brothers.
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.
PROXY VOTING POLICIES AND PROCEDURES
The Fund has established Proxy Voting Policies and Procedures ("Policies") that
the Fund uses to determine how to vote proxies relating to portfolio securities.
Shareholders may view the Fund's complete Policies online at
franklintempleton.com. Alternatively, shareholders may request copies of the
Policies free of charge by calling the Proxy Group collect at 1-954/847-2268 or
by sending a written request to: Franklin Templeton Companies, LLC, 500 East
Broward Boulevard, Suite 1500, Fort Lauderdale, FL 33394, Attention: Proxy
Group. Copies of the Fund's proxy voting records are also made available online
at franklintempleton.com and posted on the Securities and Exchange Commission's
website at sec.gov and reflect the 12-month period beginning July 1, 2003, and
ending June 30, 2004.
QUARTERLY STATEMENT OF INVESTMENTS
The Fund files a complete statement of investments with the 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 11(A), the Registrant is attaching as an exhibit a copy of
its code of ethics that applies to its principal executive officers and
principal financial and accounting officer.
Item 3. Audit Committee Financial Expert.
(a)(1) The Registrant has an audit committee financial expert serving on its
audit committee.
(2) The audit committee financial expert is Frank W. T. LaHaye, and he is
"independent" as defined under the relevant Securities and Exchange Commission
Rules and Releases.
Item 4. Principal Accountant Fees and Services.
(a) Audit Fees
The aggregate fees paid to the principal accountant for professional services
rendered by the principal accountant for the audit of the registrant's annual
financial statements or for services that are normally provided by the
principal accountant in connection with statutory and regulatory filings or
engagements were $60,918 for the fiscal year ended July 31, 2004 and $21,660
for the fiscal year ended July 31, 2003.
(b) Audit-Related Fees
There were no fees paid to the principal accountant for assurance and related
services rendered by the principal accountant to the registrant that are
reasonably related to the performance of the audit of the registrant's
financial statements and are not reported under paragraph (a) of Item 4.
The aggregate fees paid to the principal accountant for assurance and related
services rendered by the principal accountant to the registrant's investment
adviser and any entity controlling, controlled by or under common control
with the investment adviser that provides ongoing services to the registrant
that are reasonably related to the performance of the audit of the their
financial statements were $48,134 for the fiscal year ended July 31, 2004 and
$0 for the fiscal year ended July 31, 2003. The services for which these
fees were paid included attestation services.
(c) Tax Fees
There were no fees paid to the principal accountant for professional services
rendered by the principal accountant to the registrant for tax compliance,
tax advice and tax.
There were no 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.
(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 $140 for the fiscal year ended July 31,
2004 and $0 for the fiscal year ended July 31, 2003. The services for which
these fees were paid included review of materials provided to the fund Board
in connection with the investment management contract renewal process.
The aggregate fees paid to the principal accountant for products and services
rendered by the principal accountant to the registrant's investment adviser
and any entity controlling, controlled by or under common control with the
investment adviser that provides ongoing services to the registrant not
reported in paragraphs (a)-(c) of Item 4 were $99,860 for the fiscal year
ended July 31, 2004 and $12,972 for the fiscal year ended July 31, 2003. The
services for which these fees were paid included review of materials provided
to the fund Board in connection with the investment management contract
renewal process, subscription fees and a review of an ICI transfer agent
survey.
(e) (1) The registrant's audit committee is directly responsible for
approving the services to be provided by the auditors, including:
(i) pre-approval of all audit and audit related services;
(ii) pre-approval of all non-audit related services to be provided to
the Fund by the auditors;
(iii)pre-approval of all non-audit related services to be provided to
the registrant by the auditors to the registrant's investment adviser or to
any entity that controls, is controlled by or is under common control with
the registrant's investment adviser and that provides ongoing services to the
registrant where the non-audit services relate directly to the operations or
financial reporting of the registrant; and
(iv) establishment by the audit committee, if deemed necessary or
appropriate, as an alternative to committee pre-approval of services to be
provided by the auditors, as required by paragraphs (ii) and (iii) above, of
policies and procedures to permit such services to be pre-approved by other
means, such as through establishment of guidelines or by action of a
designated member or members of the committee; provided the policies and
procedures are detailed as to the particular service and the committee is
informed of each service and such policies and procedures do not include
delegation of audit committee responsibilities, as contemplated under the
Securities Exchange Act of 1934, to management; subject, in the case of (ii)
through (iv), to any waivers, exceptions or exemptions that may be available
under applicable law or rules.
(e) (2) None of the services provided to the registrant described in
paragraphs (b)-(d) of Item 4 were pre-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 $148,134 for the fiscal year ended July 31,
2004 and $12,972 for the fiscal year ended July 31, 2003.
(h) No disclosures are required by this Item 4(h).
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. Purchases of Equity Securities by Closed-End Management
Investment Company and Affiliated Purchasers. N/A
Item 9. 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 10. 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 11. Exhibits.
(A) Code of Ethics
(B) (1) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
of Jimmy D. Gambill, Chief Executive Officer - Finance and Administration, and
Galen G. Vetter, Chief Financial Officer
(B) (2) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
of Jimmy D. Gambill, Chief Executive Officer - Finance and Administration, and
Galen G. Vetter, Chief Financial Officer
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
FRANKLIN FLOATING RATE MASTER TRUST
By /s/Jimmy D. Gambill
Chief Executive Officer - Finance and Administration
Date September 30, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/Jimmy D. Gambill
Chief Executive Officer - Finance and Administration
Date September 30, 2004
By /s/Galen G. Vetter
Chief Financial Officer
Date September 30, 2004