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
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(Address of principal executive offices) (Zip code)
CRAIG S. TYLE, ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906
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(Name and address of agent for service)
Registrant's telephone number, including area code: 650 312-2000
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Date of fiscal year end: 7/31
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Date of reporting period: 7/31/07
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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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2007 2006 2005 2004 2003
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PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year $9.77 $9.85 $9.84 $9.69 $9.58
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Income from investment operations a :
Net investment income 0.655 0.565 0.398 0.334 0.464
Net realized and unrealized gains (losses) (0.258) (0.076) 0.013 0.151 0.111
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Total from investment operations 0.397 0.489 0.411 0.485 0.575
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Less distributions from net investment income (0.657) (0.569) (0.401) (0.335) (0.465)
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Net asset value, end of year $9.51 $9.77 $9.85 $9.84 $9.69
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Total return 4.09% 5.09% 4.23% 5.08% 6.19%
RATIOS TO AVERAGE NET ASSETS
Expenses before waiver and payments by affiliates 0.95% 0.95% 0.95% 0.98% 1.02%
Expenses net of waiver and payments by affiliates 0.60% 0.60% 0.60% 0.60% 0.60%
Net investment income 6.70% 5.76% 4.08% 3.34% 4.86%
SUPPLEMENTAL DATA
Net assets, end of year (000's) $1,069,720 $ 1,140,854 $1,121,133 $757,987 $218,647
Portfolio turnover rate 77.72% 78.29% 72.38% 54.41% 75.69%
a The amount shown for a share outstanding throughout the period may not
correlate with the Statement of Operations for the period due to the timing of
sales and repurchase of the Fund shares in relation to income earned and/or
fluctuating market value of the investments of the Fund.
The accompanying notes are an integral part of these financial statements.
ANNUAL REPORT
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
STATEMENT OF INVESTMENTS, JULY 31, 2007
COUNTRY PRINCIPAL a VALUE % OF NET
AMOUNT ASSETS
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b,c SENIOR FLOATING RATE INTERESTS
ADVERTISING/MARKETING SERVICES
Dex Media East LLC, Term Loan B, 6.84% - 6.86%, 5/08/09 United States $ 1,978,348 $ 1,961,769 0.18
Dex Media West LLC,
Term Loan B1, 6.86%, 3/09/10 United States 2,445,587 2,413,453 0.23
Term Loan B2, 6.84% - 6.86%, 3/09/10 United States 2,893,390 2,855,371 0.27
IDEARC Inc.,
Term Loan A, 6.86%, 11/17/13 United States 2,000,000 1,930,500 0.18
Term Loan B, 7.36%, 11/17/14 United States 10,052,500 9,673,018 0.90
R.H. Donnelley Inc.,
Term Loan A-4, 6.57% - 6.59%, 12/31/09 United States 482,809 475,832 0.04
Term Loan D-2, 6.86%, 6/30/11 United States 4,307,218 4,263,586 0.40
Valassis Communications Inc., Term Loan B, 7.11%, 3/02/14 United States 2,154,100 2,014,299 0.19
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25,587,828 2.39
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AEROSPACE & DEFENSE
d BE Aerospace Inc., Term Loan B, 7.11% - 7.14%, 8/24/12 United States 2,616,667 2,578,411 0.24
CACI International Inc., Term Loan B, 6.86% - 8.75%, 5/03/11 United States 2,408,226 2,378,195 0.22
DRS Technologies Inc., Term Loan, 6.86%, 1/31/13 United States 741,188 721,398 0.07
Dyncorp International LLC, Term Loan B, 7.625%, 2/11/11 United States 2,631,989 2,614,513 0.24
Hawker Beechcraft Inc.,
Synthetic L/C, 5.26%, 3/26/14 United States 195,035 190,119 0.02
Term Loan B, 7.32% - 7.36%, 3/26/14 United States 2,299,202 2,241,239 0.21
ILC Industries Inc., Term Loan B, 7.61%, 2/24/12 United States 859,017 847,927 0.08
SI International Inc., Term Loan B, 7.32% - 7.34%, 12/31/10 United States 2,070,524 2,052,221 0.19
d Spirit Aerosystems Inc. (Onex Wind Finance LP), Term Loan B,
7.11%, 12/31/11 United States 2,997,390 2,998,199 0.28
TransDigm Inc., Term Loan B, 7.36%, 6/23/13 United States 4,400,000 4,296,952 0.40
Vought Aircraft Industries Inc., Term Loan B, 7.83%, 12/22/11 United States 4,275,278 4,259,117 0.40
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25,178,291 2.35
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APPAREL/FOOTWEAR
Hanesbrands Inc., Term Loan B, 7.07% - 7.11%, 9/05/13 United States 1,000,393 979,365 0.09
Warnaco Inc., Term Loan, 6.84% - 8.75%, 1/31/13 United States 2,533,901 2,495,234 0.23
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3,474,599 0.32
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APPAREL/FOOTWEAR RETAIL
Easton Bell Sports Inc., Term Loan B, 7.11%, 3/16/12 United States 3,889,471 3,836,496 0.36
The William Carter Co., Term Loan B, 6.84% - 6.858%, 7/14/12 United States 4,486,480 4,349,284 0.40
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8,185,780 0.76
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AUTO PARTS: ORIGINAL EQUIPMENT MANUFACTURER
Accuride Corp., Term Loan B, 7.375%, 1/31/12 United States 1,714,182 1,665,970 0.16
Cooper Standard Automotive Inc.,
Term Loan B, 7.875%, 12/23/11 Canada 1,924,118 1,906,205 0.18
Term Loan C, 7.875%, 12/23/11 United States 4,776,051 4,731,586 0.44
Dayco Products LLC (Mark IV), Term Loan B, 7.82% - 7.89%,
6/23/11 United States 3,816,213 3,784,385 0.35
Key Safety Systems Inc., Term Loan B, 7.57% - 7.61%, 3/08/14 United States 2,593,500 2,553,716 0.24
Tenneco Inc., Synthetic L/C, 6.82%, 3/16/14 United States 3,600,867 3,547,934 0.33
ANNUAL REPORT
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
COUNTRY PRINCIPAL a VALUE % OF NET
AMOUNT ASSETS
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TRW Automotive Inc., Tranche B-1 Term Loan, 6.875%, 2/09/14 United States 1,381,987 1,357,153 0.13
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19,546,949 1.83
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AUTOMOTIVE AFTERMARKET
Affinia Group Inc., Term Loan B, 8.358%, 11/30/11 United States 4,762,586 4,706,030 0.44
United Components Inc., Term Loan D, 7.36%, 6/29/12 United States 2,737,452 2,706,409 0.25
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7,412,439 0.69
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BEVERAGES: ALCOHOLIC
Constellation Brands Inc., Term Loan B, 6.875%, 6/05/13 United States 2,500,000 2,465,500 0.23
Southern Wine & Spirits of America Inc., Term Loan B, 6.86%,
5/31/12 United States 2,799,661 2,765,701 0.26
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5,231,201 0.49
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BROADCASTING
Alliance Atlantis Communications Inc., Term Loan C, 6.85%,
12/16/11 United States 2,932,500 2,904,964 0.27
d Citadel Broadcasting Corp., Term Loan B, 6.985%, 6/12/14 United States 10,522,642 9,985,461 0.93
Cumulus Media Inc., Replacement Term Loan, 7.07% - 7.11%,
6/11/14 United States 2,251,509 2,218,929 0.21
Entravision Communications Corp., Term Loan B, 6.86%, 3/29/13 United States 9,945,693 9,854,292 0.92
Gray Television Inc., Term Loan B, 6.86%, 12/31/14 United States 4,100,000 4,020,665 0.38
LBI Media Inc., Term Loan B, 6.82%, 3/31/12 United States 987,500 974,189 0.09
Mission Broadcasting Inc., Term Loan B, 7.11%, 10/01/12 United States 3,775,927 3,735,374 0.35
Nexstar Broadcasting Inc., Term Loan B, 7.11%, 10/01/12 United States 3,576,664 3,538,250 0.33
NextMedia Inc.,
Delay Draw, 7.32%, 11/15/12 United States 533,668 510,987 0.05
Initial Term Loan, 7.32%, 11/15/12 United States 1,200,754 1,187,702 0.11
Spanish Broadcasting System Inc., Term Loan B, 7.11%, 6/11/12 United States 1,955,000 1,931,481 0.18
Univision Communications Inc., Term Loan B, 7.61%, 9/29/14 United States 11,275,168 10,336,172 0.97
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51,198,466 4.79
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BUILDING PRODUCTS
Goodman Global Holdings Inc., Term Loan C, 7.125%, 12/15/11 United States 2,336,974 2,294,698 0.21
Mueller Water Products Inc., Term Loan B, 7.07% - 7.11%, 5/24/14 United States 2,137,318 2,091,985 0.20
NCI Building Systems Inc., Term Loan B, 6.82%, 6/18/10 United States 2,246,060 2,226,385 0.21
Nortek Inc., Term Loan, 7.61% - 9.50%, 8/27/11 United States 9,372,580 9,032,824 0.84
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15,645,892 1.46
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CABLE/SATELLITE TELEVISION
Charter Communications Operating LLC,
New First Lien Term Loan, 7.36%, 3/06/14 United States 2,300,000 2,152,248 0.20
Refinance First Lien Term Loan, 7.36%, 3/06/14 United States 7,708,399 7,213,212 0.67
CSC Holdings Inc. (Cablevision), Incremental Term Loan, 7.07%,
3/29/13 United States 12,037,575 11,628,779 1.09
DIRECTV Holdings LLC, Term Loan B, 6.82%, 4/13/13 United States 5,562,385 5,459,035 0.51
Discovery Communications Inc., Term Loan B, 7.36%, 5/14/14 United States 6,300,000 6,183,891 0.58
Insight Midwest Holdings, Term Loan B, 7.36%, 4/02/14 United States 7,900,000 7,670,268 0.71
Intelsat Corp. (Panamsat), Term Loan B2, 7.36%, 1/03/14 United States 6,369,316 6,182,122 0.58
Intelsat Subsidiary Holding Co. Ltd., Term Loan B, 7.36%,
6/30/13 United States 4,378,023 4,282,188 0.40
MCC Iowa,
Term Loan D-1, 7.07% - 7.11%, 1/31/15 United States 5,995,776 5,754,026 0.54
Term Loan D-2 (Delayed Draw), 7.07%, 1/31/15 United States 1,528,569 1,466,937 0.14
Mediacom Broadband (MCC Iowa), Term Loan A, 6.82% - 6.86%,
3/31/10 United States 1,965,000 1,896,834 0.18
Mediacom LLC, Term Loan C, 7.07% - 7.11%, 1/31/15 United States 2,276,063 2,184,292 0.20
UPC Financing Partnership,
Term Loan N-1, 7.13%, 12/31/14 Netherlands 9,322,000 9,009,247 0.84
Term Loan N-2, 7.13%, 12/31/14 Netherlands 2,178,000 2,104,928 0.20
ANNUAL REPORT
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
COUNTRY PRINCIPAL a VALUE % OF NET
AMOUNT ASSETS
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Virgin Media Dover LLC (NTL Dover LLC), Tranche B4, 7.36%,
9/03/12 United States 3,045,902 3,022,905 0.28
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76,210,912 7.12
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CASINOS/GAMING
Ameristar Casinos Inc., Term Loan B, 6.82%, 11/10/12 United States 2,000,000 1,965,100 0.18
Cannery Casino Resort LLC,
e Delayed Draw Term Loan, 7.61%, 5/18/13 United States 129,921 126,943 0.01
Term Loan B, 7.61%, 5/18/13 United States 1,818,898 1,777,208 0.17
CCM Merger Inc. (MotorCity Casino), Term Loan B, 7.36%, 7/13/12 United States 2,830,932 2,780,202 0.26
Greektown Holdings LLC,
Term Loan B, 7.875%, 12/03/12 United States 2,657,305 2,611,679 0.24
Term Loan B Add-On, 7.875%, 12/03/12 United States 499,500 490,924 0.05
Green Valley Ranch Gaming LLC, Term Loan B, 7.36%, 2/16/14 United States 3,340,402 3,281,244 0.31
Herbst Gaming Inc.,
Delayed Draw Term Loan, 7.235%, 12/02/11 United States 432,250 415,211 0.04
Term Loan B, 7.235%, 12/02/11 United States 862,333 828,340 0.08
Isle of Capri Black Hawk LLC, Term Loan, 7.34% - 7.36%, 10/24/11 United States 4,534,072 4,459,486 0.42
Las Vegas Sands LLC, Term Loan B, 7.11%, 5/23/14 United States 3,760,000 3,649,381 0.34
Penn National Gaming Inc., Term Loan B, 7.11%, 10/03/12 United States 1,110,514 1,088,004 0.10
VML U.S. Finance LLC (Venetian Macau),
Delay Draw, 7.61%, 5/25/12 Macau 2,766,667 2,740,605 0.26
New Project Term Loans, 7.61%, 5/25/13 Macau 1,000,000 986,040 0.09
Term Loan B, 7.61%, 5/24/13 Macau 2,033,333 2,010,052 0.19
d Wynn Group Asia Inc., Project Facility Tranche C, 9.00%, 5/31/14 Macau 1,250,000 1,228,000 0.11
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30,438,419 2.85
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CHEMICALS: MAJOR DIVERSIFIED
Celanese U.S. Holdings LLC, Dollar Term Loan, 7.11%, 4/02/14 United States 5,785,500 5,495,184 0.51
Huntsman International, Term Loan B, 7.07%, 4/19/14 United States 6,024,708 5,826,857 0.55
Ineos U.S. Finance LLC,
Term Loan B2, 7.58%, 12/16/13 United States 1,683,000 1,626,603 0.15
Term Loan C2, 8.08%, 12/23/14 United States 1,683,000 1,660,515 0.16
Invista Canada Co., Term Loan B2, 6.86%, 4/29/11 Canada 992,046 981,342 0.09
Invista SARL, Term Loan B1, 6.86%, 4/29/11 Luxembourg 1,871,524 1,851,330 0.17
Lyondell Chemical Co., Term Loan, 6.856%, 8/16/13 United States 9,634,750 9,495,335 0.89
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26,937,166 2.52
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CHEMICALS: SPECIALTY
Brenntag Holding GmbH & Co. KG,
Acquisition Facility, 7.387%, 1/20/14 Germany 451,636 443,448 0.04
Term Loan B2, 7.387%, 1/20/14 United States 1,848,364 1,810,121 0.17
Cognis GmbH, Term Loan C , 7.357%, 9/15/13 Germany 2,300,000 2,248,917 0.21
Compass Minerals Group Inc., Term Loan, 6.84% - 6.86%, 12/22/12 United States 796,327 778,872 0.07
Hexion Specialty Chemicals BV, Term Loan C-2, 7.625%, 5/03/13 Netherlands 2,290,022 2,248,962 0.21
Hexion Specialty Chemicals Inc., Term Loan C-1, 7.625%, 5/03/13 United States 10,541,999 10,352,981 0.97
ISP Chemco LLC, Term Loan B, 7.125%, 6/04/14 United States 3,100,000 2,975,039 0.28
JohnsonDiversey Inc.,
Delay Draw, 7.86%, 12/16/10 United States 177,143 172,823 0.02
Term Loan B, 7.86%, 12/16/11 United States 2,456,690 2,397,361 0.22
Nalco Co., Term Loan B, 7.07% - 7.12%, 11/04/10 United States 5,296,469 5,193,559 0.49
Oxbow Carbon LLC, Term Loan B, 7.36% - 9.25%, 5/08/14 United States 3,210,076 3,139,518 0.29
Rockwood Specialties Group Inc., Term Loan E, 6.857%, 7/30/12 United States 3,202,752 3,162,109 0.30
Vertellus Specialties Inc., First Lien Term Loan, 8.61%, 7/10/13 United States 2,178,000 2,147,159 0.20
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37,070,869 3.47
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ANNUAL REPORT
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
COUNTRY PRINCIPAL a VALUE % OF NET
AMOUNT ASSETS
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COAL
Alpha Natural Resources LLC, Term Loan B, 7.11%, 10/26/12 United States 2,265,500 2,229,320 0.21
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COMMERCIAL PRINTING/FORMS
Cenveo Corp.,
Delayed Draw Term Loan, 7.11%, 6/21/13 United States 43,807 43,102 0.01
Term Loan C, 7.11%, 6/21/13 United States 2,214,223 2,178,575 0.20
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2,221,677 0.21
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CONSUMER SUNDRIES
Central Garden & Pet Co., Term Loan B, 6.82%, 9/30/12 United States 3,956,368 3,895,242 0.37
Chattem Inc., Term Loan B, 7.09% - 7.11%, 1/02/13 United States 585,000 575,950 0.05
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4,471,192 0.42
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CONTAINERS/PACKAGING
Altivity Packaging LLC (Bluegrass Container Co.),
Delayed Draw First Lien Term Loan, 7.57% - 7.61%, 6/30/13 United States 1,003,200 991,402 0.09
First Lien Term Loan, 7.57% - 7.61%, 6/30/13 United States 3,352,800 3,297,881 0.31
Berry Plastics Holding Corp., Term Loan C, 7.355%, 4/03/15 United States 694,759 668,316 0.06
BWAY Corp., Term Loan B, 7.188%, 7/17/13 United States 1,248,947 1,226,966 0.12
Graham Packaging Co. LP., New Term Loan, 7.625%, 10/07/11 United States 6,716,461 6,663,401 0.62
Smurfit-Stone Container Canada Inc.,
Term Loan C, 7.375%, 11/01/11 Canada 572,801 563,533 0.05
Term Loan C-1, 7.375%, 11/01/11 Canada 191,746 190,005 0.02
Smurfit-Stone Container Enterprises,
L/C Term Loan, 5.22%, 11/01/10 United States 261,990 258,621 0.02
Term Loan B, 7.375%, 11/01/11 United States 1,035,581 1,018,826 0.10
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14,878,951 1.39
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DATA PROCESSING SERVICES
InfoUSA Inc.,
2007 Term Loan, 7.36%, 2/10/12 United States 1,393,000 1,375,114 0.13
Term Loan B, 7.36%, 2/10/12 United States 2,915,900 2,878,460 0.27
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4,253,574 0.40
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DEPARTMENT STORES
Neiman Marcus Group Inc., Term Loan, 7.09% - 7.11%, 4/06/13 United States 1,848,523 1,814,972 0.17
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DRUG STORE CHAINS
Rite Aid Corp., Tranche 2 Term Loan, 7.07%, 6/04/14 United States 3,400,000 3,329,518 0.31
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ELECTRIC UTILITIES
Ashmore Energy International,
Synthetic Revolver, 8.35%, 3/30/12 United States 464,088 454,988 0.04
Term Loan, 8.36%, 3/30/14 Cayman Islands 3,535,912 3,470,073 0.33
Astoria Generating Co. Acquisitions LLC, Term Loan B, 7.34%,
2/23/13 United States 1,130,998 1,108,264 0.11
Broadway General Funding LLC (LS Power), First Lien Term
Loan, 7.36%, 5/01/14 United States 447,757 431,799 0.04
Dynegy Holdings Inc.,
Synthetic L/C, 6.82%, 4/02/13 United States 3,063,830 2,923,813 0.27
Term Loan B, 6.82%, 4/02/13 United States 536,170 511,667 0.05
Term L/C Facility, 6.82%, 4/02/13 United States 2,500,000 2,385,750 0.22
Infrastrux Group Inc., Term Loan, 8.57%, 11/03/12 United States 343,473 335,360 0.03
ANNUAL REPORT
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
COUNTRY PRINCIPAL a VALUE % OF NET
AMOUNT ASSETS
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NRG Energy Inc.,
Credit Link, 7.07%, 2/01/13 United States 3,114,216 3,016,741 0.28
Term Loan, 7.11%, 2/01/13 United States 7,501,432 7,266,638 0.68
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21,905,093 2.05
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ELECTRICAL PRODUCTS
Edwards (Cayman Islands II) Ltd., Term Loan B, 7.36%, 5/31/14 United States 1,400,000 1,369,032 0.13
EnerSys Capital Inc., Term Loan D, 7.07% - 7.15%, 3/17/11 United States 2,650,763 2,624,785 0.24
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3,993,817 0.37
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ELECTRONIC COMPONENTS
Freescale Semiconductor Inc., Term Loan B, 7.11%, 12/02/13 United States 8,462,487 7,797,082 0.73
H3C Holdings Ltd., Term Loan B, 8.37%, 9/28/12 Cayman Islands 3,500,000 3,440,710 0.32
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11,237,792 1.05
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ELECTRONICS/APPLIANCES
DEI Sales Inc., Term Loan B, 7.82% - 7.86%, 9/22/13 United States 2,376,000 2,324,916 0.22
Jarden Corp.,
Term Loan B1, 7.11%, 1/24/12 United States 619,001 606,033 0.05
Term Loan B2, 7.11%, 1/24/12 United States 4,365,900 4,277,142 0.40
------------------------
7,208,091 0.67
------------------------
ENVIRONMENTAL SERVICES
Allied Waste North America Inc.,
Credit Link, 5.32%, 3/28/14 United States 3,092,462 2,992,946 0.28
Term Loan B, 7.06% - 7.14%, 1/15/12 United States 5,690,604 5,507,480 0.51
Casella Waste Systems Inc., Term Loan B, 7.355% - 7.36%, 4/28/10 United States 1,989,714 1,933,883 0.18
EnviroSolutions Inc., Term Loan B, 8.87% - 8.89%, 7/07/12 United States 2,830,882 2,811,717 0.26
IESI Corp., Term Loan B, 7.07% - 7.11%, 1/20/12 United States 1,900,000 1,872,184 0.17
Safety-Kleen Systems Inc.,
Synthetic L/C, 7.875%, 8/02/13 United States 305,085 300,237 0.03
Term Loan B, 7.875%, 8/02/13 United States 1,160,720 1,142,277 0.11
Synatech Inc. (Synagro), Term Loan, 7.36%, 4/02/14 United States 731,250 707,645 0.07
------------------------
17,268,369 1.61
------------------------
FINANCE/RENTAL/LEASING
Ashtead Group PLC, Term Loan, 7.125%, 8/31/11 United States 1,600,000 1,573,456 0.14
Avis Budget Car Rental LLC, Term Loan, 6.61%, 4/19/12 United States 2,655,576 2,582,043 0.24
Bakercorp., Term Loan C, 7.57% - 7.61%, 5/08/14 United States 2,394,000 2,356,414 0.22
Hertz Corp.,
Credit Link, 5.36%, 12/21/12 United States 544,444 532,434 0.05
Term Loan B, 7.09% - 7.11%, 12/21/12 United States 3,033,664 2,970,594 0.28
RSC Holdings III, ABL Term Loan, 7.09% - 7.11%, 11/27/12 United States 3,473,750 3,411,639 0.32
------------------------
13,426,580 1.25
------------------------
FINANCIAL CONGLOMERATES
Nasdaq Stock Market Inc.,
Incremental Term Loan B, 7.07%, 4/18/12 United States 694,750 684,572 0.07
Term Loan B, 7.07%, 4/18/12 United States 3,245,606 3,197,376 0.30
Term Loan C (Delayed Draw), 7.07%, 4/18/12 United States 1,881,402 1,853,445 0.17
------------------------
5,735,393 0.54
------------------------
ANNUAL REPORT
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
COUNTRY PRINCIPAL a VALUE % OF NET
AMOUNT ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
FOOD DISTRIBUTORS
OSI Group LLC,
German Term Loan, 7.36%, 9/02/11 Germany 432,222 424,918 0.04
Netherlands Term Loan, 7.36%, 9/02/11 Netherlands 540,278 531,147 0.05
U.S. Term Loan, 7.36%, 9/02/11 United States 975,000 958,522 0.09
------------------------
1,914,587 0.18
------------------------
FOOD: MAJOR DIVERSIFIED
Del Monte Foods Co., Term Loan B, 6.82%, 2/08/12 United States 3,719,725 3,677,134 0.34
Pinnacle Foods Finance LLC, Term Loan B, 8.11%, 4/02/14 United States 3,326,298 3,273,742 0.31
------------------------
6,950,876 0.65
------------------------
FOOD: MEAT/FISH/DAIRY
Advance Food Co., Term Loan B, 7.11%, 3/16/14 United States 698,250 684,488 0.07
Bumble Bee Foods LLC, Term Loan B, 7.106% - 7.11%, 5/02/12 United States 800,000 786,448 0.07
Dean Foods Co., Term Loan B, 6.86%, 4/02/14 United States 7,880,250 7,714,607 0.72
------------------------
9,185,543 0.86
------------------------
FOOD: SPECIALTY/CANDY
CBRL Group (Cracker Barrel),
Term Loan B1, 6.86%, 4/27/13 United States 1,222,744 1,202,606 0.11
e Term Loan B2 (Delayed Draw), 6.84%, 4/27/13 United States 213,621 210,102 0.02
Herbalife International Inc., Term Loan B, 6.82%, 7/21/13 United States 1,565,806 1,547,470 0.14
------------------------
2,960,178 0.27
------------------------
GAS DISTRIBUTORS
Knight Inc. (Kinder Morgan)., Term Loan B, 6.82%, 5/30/14 United States 6,400,000 6,193,344 0.58
------------------------
Home Furnishings
National Bedding Co. LLC, Term Loan, 7.36%, 8/31/11 United States 2,432,437 2,385,807 0.22
Simmons Bedding Company, Term Loan D, 7.375% - 7.438%, 12/19/11 United States 2,328,389 2,289,971 0.22
------------------------
4,675,778 0.44
------------------------
HOMEBUILDING
Building Materials Corp. of America, Term Loan B, 8.125%,
2/22/14 United States 2,992,500 2,814,327 0.26
CONTECH Construction Products Inc., Term Loan B, 7.32% - 7.34%,
1/31/13 United States 2,984,425 2,922,647 0.28
Stile Acquisition Corp. (Masonite), Canadian Term Loan, 7.36%,
4/05/13 Canada 3,280,903 3,125,618 0.29
Stile U.S. Acquisition Corp. (Masonite), U.S. Term Loan, 7.36%,
4/05/13 United States 3,286,492 3,130,942 0.29
------------------------
11,993,534 1.12
------------------------
HOSPITAL/NURSING MANAGEMENT
d Community Health Systems Inc.,
Delay Draw Term Loan, 9.50%, 7/25/14 United States 989,946 955,733 0.09
Term Loan, 9.50%, 7/25/14 United States 15,010,054 14,491,307 1.36
d HCA Inc., Term Loan B-1, 7.61%, 11/18/13 United States 22,234,533 21,031,200 1.97
d Health Management Associates Inc., Term Loan B, 7.11%, 2/28/14 United States 13,834,500 13,228,549 1.24
Iasis Healthcare LLC,
e Delayed Draw Term Loan, 7.34% - 7.36%, 3/14/14 United States 705,882 685,334 0.06
Initial Term Loan, 7.36%, 3/14/14 United States 2,784,754 2,703,689 0.25
Synthetic L/C, 7.32%, 3/14/14 United States 254,372 246,967 0.02
d LifePoint Hospitals Inc., Term Loan B, 6.985%, 4/15/12 United States 5,110,383 5,010,679 0.47
Psychiatric Solutions Inc., Second Additional Term Loan, 7.09%
- 7.134%, 7/01/12 United States 2,000,000 1,967,400 0.18
Surgical Care Affiliates LLC, Term Loan B, 7.57%, 12/29/14 United States 1,100,000 1,057,254 0.10
ANNUAL REPORT
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
COUNTRY PRINCIPAL a VALUE % OF NET
AMOUNT ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
United Surgical Partners International Inc.,
e Delayed Draw Term Loan, 7.367%, 4/19/14 United States 109,435 105,169 0.01
Term Loan B, 7.381%, 4/19/14 United States 1,924,210 1,849,185 0.17
Vanguard Health Holding Co. II LLC, Term Loan C, 7.61%, 9/23/11 United States 5,382,304 5,193,924 0.49
------------------------
68,526,390 6.41
------------------------
HOTEL/RESORTS/CRUISELINES
Oceania Cruises Inc., Term Loan B, 7.59%, 4/26/13 United States 1,700,000 1,667,326 0.16
------------------------
HOUSEHOLD/PERSONAL CARE
Acco Brands Corp., Term Loan B, 7.11%, 8/17/12 United States 2,250,180 2,201,171 0.21
American Safety Razor Co., Term Loan B, 7.83% - 7.86%, 7/31/13 United States 495,000 487,372 0.05
Levlad LLC and Arbonne Int'l LLC (Natural Products Group), United States 397,832 374,758 0.03
Term Loan B, 7.608% - 7.61%, 3/06/14
Prestige Brands Inc., Term Loan B, 7.63% - 9.50%, 4/06/11 United States 1,759,400 1,741,771 0.16
Spectrum Brands Inc.,
Dollar Term B Loan, 9.32% - 9.36%, 4/01/13 United States 2,451,022 2,379,158 0.22
Dollar Term B II Loan, 9.32%, 4/01/13 United States 436,168 423,380 0.04
L/C Commitment, 5.17%, 4/01/13 United States 121,158 117,605 0.01
------------------------
7,725,215 0.72
------------------------
INDUSTRIAL CONGLOMERATES
Amsted Industries Inc.,
Delay Draw, 7.36%, 4/05/13 United States 498,750 490,311 0.05
Term Loan B, 7.36%, 4/05/13 United States 1,078,442 1,064,067 0.10
FCI USA,
Term Loan B1, 7.755%, 11/01/13 United States 1,350,000 1,324,134 0.12
Term Loan C1, 7.755%, 11/03/14 United States 1,350,000 1,321,083 0.12
GPS CCMP Merger Corp. (Generac), Term Loan B, 7.86%, 11/09/13 United States 5,751,333 5,340,056 0.50
PlayPower Inc., Term Loan B, 8.11%, 6/30/12 United States 629,528 623,075 0.06
TriMas Co. LLC,
Term Loan B, 7.59% - 7.61%, 8/02/13 United States 2,939,871 2,896,214 0.27
Tranche B-1 L/C, 8.07%, 8/02/13 United States 683,559 676,702 0.06
------------------------
13,735,642 1.28
------------------------
INDUSTRIAL MACHINERY
Bucyrus International Inc., Tranche B Dollar Term Loan,
6.84% - 6.88%, 5/04/14 United States 2,800,000 2,744,588 0.26
CI Acquisition Inc. (Chart Industries), Term Loan B, 7.375%,
10/17/12 United States 962,662 941,435 0.09
Colfax Corp., Term Loan B, 7.625%, 1/03/12 United States 2,467,891 2,444,298 0.23
d Dresser Inc., Term Loan B, 7.86%, 5/04/14 United States 4,368,293 4,217,019 0.39
Flowserve Corp., Term Loan B, 6.875%, 8/10/12 United States 3,070,209 3,021,914 0.28
RBS Global Inc. (Rexnord Corp.),
Incremental Tranche B-2, 7.642%, 7/22/13 United States 1,283,750 1,246,701 0.12
Term Loan, 7.84% - 7.86%, 7/22/13 United States 2,803,279 2,726,777 0.26
Sensus Metering Systems Inc.,
Term Loan B1, 7.36% - 7.383%, 12/17/10 United States 4,904,078 4,843,660 0.45
Term Loan B2, 7.36% - 7.383%, 12/17/10 Luxembourg 461,183 455,501 0.04
------------------------
22,641,893 2.12
------------------------
INDUSTRIAL SPECIALTIES
Headwaters Inc., Term Loan B, 7.36%, 4/30/11 United States 1,917,592 1,891,877 0.18
d Veyance Technologies Inc.(Goodyear Engineered Products),
Delayed Draw Term Loan, 9.75%, 7/13/14 United States 362,500 354,913 0.03
Term Loan B, 9.75%, 7/13/14 United States 2,537,500 2,484,390 0.23
------------------------
4,731,180 0.44
------------------------
ANNUAL REPORT
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
COUNTRY PRINCIPAL a VALUE % OF NET
AMOUNT ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY SERVICES
Safenet Inc., Term Loan, 7.86%, 4/11/14 United States 1,200,000 1,155,840 0.11
Verifone Inc., Term Loan B, 7.09% - 7.11%, 10/31/13 United States 760,000 743,212 0.07
------------------------
1,899,052 0.18
------------------------
INSURANCE BROKERS/SERVICES
Alliant Resources Group Inc.,
First Lien Term Loan, 8.375%, 11/30/11 United States 886,500 875,623 0.08
Term Loan C, 8.375%, 11/30/11 United States 995,000 982,791 0.09
Arrowhead General Insurance Agency Inc., First Lien Term
Loan, 8.36%, 8/08/12 United States 1,094,500 1,080,425 0.10
HMSC Holdings Corp. (Swett & Crawford), First Lien Term
Loan, 7.61%, 4/03/14 United States 1,179,793 1,130,902 0.11
------------------------
4,069,741 0.38
------------------------
INVESTMENT BANKS/BROKERS
Amwins Group Inc., First Lien Term Loan, 7.82% - 7.84%, 6/08/13 United States 2,800,000 2,733,248 0.26
BNY ConvergEx Group LLC,
First Lien Term Loan, 8.36%, 10/02/13 United States 4,178,571 4,111,923 0.38
Incremental Term Loan B, 8.34%, 10/02/13 United States 512,120 503,952 0.05
d HUB International Holdings Inc., Initial Term Loan, 7.86%,
6/30/14 United States 1,225,490 1,189,252 0.11
LPL Holdings Inc., Term Loan D, 7.36%, 12/18/14 United States 1,728,201 1,702,918 0.16
TD Ameritrade Holding Corp., Term Loan B, 6.82%, 12/31/12 United States 5,637,965 5,547,758 0.52
------------------------
15,789,051 1.48
------------------------
LIFE/HEALTH INSURANCE
Conseco Inc., Term Loan, 7.32%, 10/10/13 United States 3,978,250 3,915,911 0.37
------------------------
MAJOR TELECOMMUNICATIONS
Alaska Communications Systems Holdings Inc.,
2005 Incremental Loan, 7.11%, 2/01/12 United States 728,567 723,088 0.07
2006 Incremental Loan, 7.11%, 2/01/12 United States 300,000 296,040 0.03
Term Loan, 7.11%, 2/01/12 United States 2,357,133 2,339,408 0.22
Consolidated Communications Inc., Term Loan D, 7.11%, 10/14/11 United States 2,000,000 1,982,100 0.18
Hargray Communications Group Inc., Term Loan B, 7.57%, 6/29/14 United States 3,000,000 2,949,270 0.27
Wind Telecomunicazioni SpA,
Term Loan B, 8.59%, 9/30/13 Italy 3,150,000 3,086,370 0.29
Term Loan C, 8.09%, 9/30/14 Italy 3,150,000 3,096,135 0.29
------------------------
14,472,411 1.35
------------------------
MARINE SHIPPING
Horizon Lines LLC, Term Loan C, 7.57%, 7/07/11 United States 1,542,049 1,527,615 0.14
------------------------
MEDICAL SPECIALTIES
DJ Orthopedics LLC, Term Loan B, 6.875%, 4/07/13 United States 1,235,496 1,209,242 0.11
IM US Holdings LLC (Inverness), Term Loan, 7.34%, 6/26/14 United States 680,000 659,940 0.06
ONEX Carestream Finance LP, Term Loan, 7.32% - 7.358%, 4/30/13 United States 2,900,000 2,825,557 0.27
------------------------
4,694,739 0.44
------------------------
MEDICAL/NURSING SERVICES
AMR Holdco/EmCare Holdco, Term Loan B, 7.32% - 7.357%, 2/10/12 United States 2,349,762 2,322,011 0.22
DaVita Inc., Term Loan B-1, 6.86% - 6.88%, 10/05/12 United States 10,377,225 10,064,455 0.94
Fresenius Medical Care Holdings Inc., Term Loan B, 6.73% -
6.735%, 3/31/13 United States 11,993,750 11,595,798 1.09
HealthSouth Corp., Term Loan B, 7.86%, 3/10/13 United States 2,751,056 2,684,516 0.25
ANNUAL REPORT
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
COUNTRY PRINCIPAL a VALUE % OF NET
AMOUNT ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Oncology Inc., Term Loan B, 7.61%, 8/20/11 United States 2,078,781 2,060,862 0.19
------------------------
28,727,642 2.69
------------------------
METAL FABRICATION
Baldor Electric Co., Term Loan B, 7.125%, 1/31/14 United States 1,929,810 1,873,344 0.17
------------------------
MISCELLANEOUS COMMERCIAL SERVICES
Acosta Inc., Term Loan B, 7.57%, 7/26/13 United States 2,217,600 2,194,670 0.21
Acxiom Corp., Term Loan B, 7.07%, 9/14/12 United States 2,636,583 2,595,321 0.24
Affiliated Computer Services Inc.,
Additional Term Loan, 7.32%, 3/20/13 United States 5,341,038 5,253,605 0.49
Term Loan B, 7.32%, 3/20/13 United States 1,280,500 1,259,538 0.12
Alix Partners LLP, Term Loan, 7.61%, 10/12/13 United States 2,686,500 2,637,364 0.25
Alliance Laundry Systems LLC, Term Loan, 7.61%, 1/27/12 United States 511,970 505,319 0.05
American Reprographics Co. LLC, Term Loan B, 7.11%, 6/18/09 United States 2,800,927 2,776,111 0.26
ARAMARK Corp.,
Synthetic L/C, 5.36%, 1/26/14 United States 242,955 231,874 0.02
Term Loan B, 7.36%, 1/26/14 United States 3,453,343 3,295,836 0.31
Audatex North America Inc., Domestic Term Loan C, 7.375%,
5/16/14 United States 1,138,522 1,116,969 0.10
Brickman Group Holdings Inc., Term Loan B, 7.34%, 1/23/14 United States 2,892,750 2,824,481 0.26
CCC Information Services Group Inc., Term Loan B, 7.86%, 2/10/13 United States 3,268,494 3,246,921 0.30
Clarke American Corp., Term Loan B, 7.86%, 6/30/14 United States 3,500,000 3,297,630 0.31
Coinmach Corp., Term Loan B-1, 7.875%, 12/19/12 United States 1,490,921 1,476,638 0.14
Corporate Express NV,
Term Loan D-1 Add-On, 7.11%, 12/23/10 United States 1,990,000 1,967,851 0.18
Term Loan D-1, 7.105% - 7.11%, 12/23/10 United States 3,880,000 3,836,040 0.36
Dealer Computer Services Inc. (Reynolds & Reynolds), United States 6,042,527 5,925,846 0.55
First Lien Term Loan, 7.36%, 10/26/12
Duratek Inc. (EnergySolutions), Term Loan B, 7.66%, 6/07/13 United States 1,018,094 1,010,448 0.09
Emdeon Business Services LLC, First Lien Term Loan, 7.61%,
11/16/13 United States 2,437,831 2,394,852 0.22
EnergySolutions LLC,
Synthetic L/C, 7.57%, 6/07/13 United States 108,318 107,390 0.01
Synthetic L/C (Add-On), 7.57%, 6/07/13 United States 1,000,000 986,910 0.09
Term Loan B, 7.66%, 6/07/13 United States 2,123,841 2,105,661 0.20
Language Lines Inc., Term Loan B, 8.61%, 6/11/11 United States 1,384,625 1,357,832 0.13
Mitchell International Inc., First Lien Term Loan, 7.375%,
3/28/14 United States 2,493,750 2,453,700 0.23
NEP II Inc., Term Loan B, 7.61%, 2/16/14 United States 960,337 949,111 0.09
Nielsen Finance LLC (VNU Inc.), Term Loan B, 7.607%, 8/09/13 United States 10,925,000 10,701,474 1.00
TDS Investor Corp. (Travelport),
Synthetic L/C, 7.86%, 8/23/13 United States 535,332 520,300 0.05
Term Loan B, 7.82%, 8/23/13 United States 2,667,981 2,593,064 0.24
Workflow Management Inc., Term Loan B, 9.355%, 11/30/11 United States 1,702,158 1,684,286 0.16
Worldspan LP, Term Loan B, 8.606% - 8.61%, 12/07/13 United States 2,587,000 2,533,553 0.24
------------------------
73,840,595 6.90
------------------------
MOVIES/ENTERTAINMENT
24 Hour Fitness Worldwide Inc., Term Loan B, 7.86% - 7.88%,
6/08/12 United States 1,975,000 1,941,761 0.18
AMF Bowling Worldwide Inc., Term Loan B, 7.82%, 6/08/13 United States 2,000,000 1,949,560 0.18
Carmike Cinemas Inc., Delay Draw, 8.61%, 5/19/12 United States 1,842,553 1,820,903 0.17
Cinemark USA Inc., Term Loan, 7.04% - 7.15%, 10/05/13 United States 2,977,500 2,925,066 0.27
Cinram International, Term Loan B, 7.355%, 5/05/11 Canada 1,719,795 1,690,163 0.16
National CineMedia LLC, Term Loan, 7.11%, 2/13/15 United States 3,700,000 3,570,463 0.34
Regal Cinemas Corp., Term Loan, 6.86%, 10/27/13 United States 12,060,034 11,589,331 1.08
WMG Acquisition Corp. (Warner Music), Term Loan B, 7.36%,
2/28/10 United States 4,389,175 4,346,732 0.41
Zuffa LLC, Term Loan B, 7.375%, 6/19/15 United States 3,500,000 3,290,665 0.31
------------------------
33,124,644 3.10
------------------------
ANNUAL REPORT
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
COUNTRY PRINCIPAL a VALUE % OF NET
AMOUNT ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
OIL & GAS PRODUCTION
Helix Energy Solutions Group, Term Loan B, 7.32% - 7.36%,
7/01/13 United States 5,048,695 4,978,114 0.46
W&T Offshore Inc., Term Loan B, 7.61%, 5/26/10 United States 840,000 840,000 0.08
------------------------
5,818,114 0.54
------------------------
OIL REFINING/MARKETING
Big West Oil LLC, Term Loan B, 7.61%, 5/15/14 United States 382,500 373,003 0.03
Citgo Petroleum Corp., Term Loan B, 6.695%, 11/15/12 United States 3,511,159 3,506,841 0.33
Niska Gas Storage Canada ULC (C/R Gas),
Asset Sale Term Loan, 7.07%, 5/13/11 Canada 562,625 553,471 0.05
Canadian Term Loan, 7.11%, 5/12/13 Canada 3,045,415 2,988,740 0.28
Niska Gas Storage U.S. LLC (C/R Gas),
Delay Draw, 7.11%, 5/12/13 United States 336,104 329,849 0.03
U.S. Term Loan, 7.11%, 5/12/13 United States 496,175 486,942 0.05
Western Refining Inc.,
Delayed Advance Commitment, 7.07%, 6/02/12 United States 825,000 804,622 0.07
Initial Advance Commitment, 7.07%, 6/02/12 United States 3,375,000 3,291,637 0.31
------------------------
12,335,105 1.15
------------------------
OILFIELD SERVICES/EQUIPMENT
Petroleum Geo-Services ASA, Term Loan B, 7.11%, 6/29/15 Norway 6,700,000 6,549,183 0.61
------------------------
OTHER CONSUMER SERVICES
Affinion Group Inc., Term Loan B, 7.82% - 7.86%, 10/17/12 United States 5,058,140 4,987,781 0.47
Edge Acquisition Corp., First Lien Term Loan, 7.57%, 6/14/13 United States 995,903 979,650 0.09
Education Management LLC, Term Loan C, 7.125%, 6/01/13 United States 5,063,981 4,847,091 0.45
Fender Musical Instruments Corp., Term Loan B, 7.65%, 6/09/14 United States 566,667 532,905 0.05
FTD Inc., Term Loan B, 7.358%, 7/28/13 United States 1,415,351 1,391,233 0.13
Protection One Inc., Term Loan C, 7.57% - 7.61%, 3/31/12 United States 921,271 908,106 0.09
Sabre Inc., Term Loan B, 7.608%, 9/30/14 United States 3,304,146 3,041,433 0.28
VICAR Operating Inc. (Veterinary Centers),
Incremental Term Loan, 6.875%, 5/16/11 United States 897,750 886,762 0.08
Term Loan B, 6.875%, 5/16/11 United States 944,611 944,611 0.09
------------------------
18,519,572 1.73
------------------------
OTHER CONSUMER SPECIALTIES
d Jostens IH Corp. (Visant Holding Corp.), Term Loan C, 7.33%,
12/21/11 United States 2,824,366 2,789,372 0.26
Tupperware Corp., Term Loan B, 6.86%, 12/05/12 United States 6,945,067 6,832,973 0.64
Waterpik Technologies Inc., First Lien Term Loan, 7.62%, 6/28/13 United States 721,851 705,573 0.07
------------------------
10,327,918 0.97
------------------------
OTHER METALS/MINERALS
Noranda Aluminum Acquisition Corp., Term Loan B, 7.32%, 5/18/14 United States 2,635,000 2,549,969 0.24
Thompson Creek Metals Co., First Lien Term Loan, 10.09%,
10/26/12 United States 2,695,000 2,670,556 0.25
------------------------
5,220,525 0.49
------------------------
OTHER TRANSPORTATION
Laidlaw International Inc., Term Loan B, 7.07%, 7/31/13 United States 1,040,259 1,028,754 0.10
Laidlaw Transit Inc., Term Loan B, 7.07%, 7/31/13 Canada 346,753 342,918 0.03
------------------------
1,371,672 0.13
------------------------
ANNUAL REPORT
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
COUNTRY PRINCIPAL a VALUE % OF NET
AMOUNT ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
PACKAGED SOFTWARE
Infor Global Solutions,
Delayed Draw First Lien Term Loan, 9.11%, 7/28/12 Luxembourg 895,489 881,833 0.08
First Lien Term Loan, 9.11%, 7/28/12 Luxembourg 1,716,353 1,690,179 0.16
Nuance Communications Inc., Term Loan B-1, 7.32%, 3/31/13 United States 1,097,250 1,078,717 0.10
d SunGard Data Systems Inc., New U.S. Term Loan, 7.356%, 2/28/14 United States 18,233,500 17,723,874 1.66
Verint Systems Inc., Term Loan, 8.09%, 5/25/14 United States 494,118 471,709 0.04
------------------------
21,846,312 2.04
------------------------
PERSONNEL SERVICES
Allied Security Holdings LLC, Term Loan D, 8.36%, 6/30/10 United States 880,466 874,118 0.08
U.S. Investigations Services Inc.,
Term Loan B, 8.07%, 10/14/12 United States 1,587,404 1,564,577 0.14
Term Loan C, 8.07%, 10/14/12 United States 1,379,000 1,359,170 0.13
------------------------
3,797,865 0.35
------------------------
PROPERTY-CASUALTY INSURANCE
Affirmative Insurance Holdings Inc., Term Loan, 8.82% - 8.86%,
1/31/14 United States 1,890,500 1,861,348 0.17
------------------------
PUBLISHING: BOOKS/MAGAZINES
Readers Digest Association Inc., Term Loan B, 7.33% - 7.385%,
3/02/14 United States 1,197,000 1,173,132 0.11
TL Acquisitions Inc., Term Loan B, 8.07%, 7/05/14 United States 5,500,000 5,234,460 0.49
d Wenner Media LLC, Term Loan B, 7.11%, 10/02/13 United States 2,738,250 2,594,273 0.24
------------------------
9,001,865 0.84
------------------------
PUBLISHING: NEWSPAPERS
Canwest Mediaworks Ltd. Partnership, Term Loan B, 7.34%, 7/10/14 Canada 3,300,000 3,247,167 0.31
Gatehouse Media Operating Inc.,
Additional Term Loan, 7.61%, 8/28/14 United States 1,900,000 1,827,591 0.17
Delayed Draw Term Loan, 7.36%, 8/28/14 United States 1,250,000 1,201,975 0.11
Term Loan, 7.36%, 8/28/14 United States 3,350,000 3,221,293 0.30
MediaNews Group Inc.,
Term Loan B, 6.59%, 12/30/10 United States 899,640 884,796 0.08
Term Loan C, 7.09%, 8/02/13 United States 1,881,000 1,862,999 0.18
Tribune Co., Term Loan B, 8.36%, 5/16/14 United States 13,000,000 11,667,500 1.09
------------------------
23,913,321 2.24
------------------------
PULP & PAPER
Boise Cascade LLC, Term Loan E, 6.844% - 6.875%, 4/30/14 United States 977,977 952,129 0.09
Domtar Corp., Term Loan, 6.695%, 3/07/14 United States 2,880,000 2,776,665 0.26
Georgia-Pacific Corp.,
Additional Term Loan, 7.11%, 12/20/12 United States 2,418,403 2,278,837 0.21
Term Loan B, 7.11%, 12/20/12 United States 7,640,809 7,234,012 0.68
NewPage Corp., Term Loan, 7.625%, 5/02/11 United States 3,434,350 3,428,203 0.32
Verso Paper Holdings LLC, Term Loan B, 7.125%, 8/01/13 United States 2,623,864 2,561,521 0.24
------------------------
19,231,367 1.80
------------------------
RAILROADS
Helm Financial Corp., Term Loan B, 7.57% - 7.61%, 7/08/11 United States 1,226,995 1,212,712 0.11
------------------------
Kansas City Southern Railway Co.,
Term Loan B, 7.07% - 7.08%, 4/26/13 United States 2,132,666 2,101,764 0.20
Term loan C, 6.82%, 4/28/13 United States 1,200,000 1,182,540 0.11
------------------------
4,497,016 0.42
------------------------
ANNUAL REPORT
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
COUNTRY PRINCIPAL a VALUE % OF NET
AMOUNT ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
REAL ESTATE DEVELOPMENT
Standard Pacific Corp., Term Loan B, 6.86%, 5/05/13 United States 1,800,000 1,737,954 0.16
------------------------
REAL ESTATE INVESTMENT TRUSTS
Capital Automotive REIT, Term Loan B, 7.07%, 12/15/10 United States 1,001,400 997,745 0.09
CB Richard Ellis Services Inc., Term Loan B, 6.82%, 12/20/13 United States 4,256,591 4,168,224 0.39
Macerich Co., Term Loan B, 6.875%, 4/25/10 United States 3,500,000 3,461,955 0.33
------------------------
8,627,924 0.81
------------------------
RECREATIONAL PRODUCTS
Mega Bloks Inc., Term Loan B, 7.375% - 7.963%, 7/26/12 Canada 3,550,386 3,498,053 0.33
------------------------
RESTAURANTS
Arby's Restaurant Holdings LLC, Term Loan B, 7.608% - 7.61%,
7/25/12 United States 5,027,355 4,982,259 0.47
OSI Restaurant Partners LLC (Outback),
Pre-funded Revolving Credit, 5.36%, 6/14/13 United States 274,927 269,247 0.03
Term Loan B, 7.625%, 6/14/14 United States 3,601,544 3,517,484 0.33
------------------------
8,868,990 0.83
------------------------
SEMICONDUCTORS
Advanced Micro Devices Inc., Term Loan B, 7.36%, 12/31/13 United States 3,116,141 2,961,487 0.27
Fairchild Semiconductor Corp., Term Loan, 6.86%, 6/26/13 United States 1,940,586 1,902,667 0.18
Marvell Technology Group Ltd., Term Loan, 7.34%, 11/09/09 Bermuda 3,669,938 3,637,715 0.34
------------------------
8,501,869 0.79
------------------------
SPECIALTY STORES
Dollar General Corp., Term Loan, 8.108%, 7/06/13 United States 6,000,000 5,593,740 0.52
Pantry Inc., Term Loan B, 7.07%, 5/14/14 United States 2,421,323 2,308,344 0.22
------------------------
8,434,989 0.79
------------------------
SPECIALTY TELECOMMUNICATIONS
Iowa Telecommunications Services Inc., Term Loan B, 7.11%,
11/23/11 United States 6,250,000 6,180,937 0.58
NTELOS Inc., Term Loan B-1, 7.57%, 8/24/11 United States 4,294,210 4,279,095 0.40
West Corp., Term Loan B-2, 7.695% - 7.763%, 10/24/13 United States 4,179,026 4,120,645 0.38
Windstream Corp., Tranche B-1, 6.86%, 7/17/13 United States 8,291,461 8,191,715 0.77
------------------------
22,772,392 2.13
------------------------
TRUCKING
Swift Transportation Co., Term Loan B, 8.375%, 5/09/14 United States 2,209,302 1,988,262 0.19
------------------------
TRUCKS/CONSTRUCTION/FARM MACHINERY
Oshkosh Truck Corp.,
Term Loan A, 6.61%, 12/06/11 United States 1,425,000 1,398,210 0.13
d Term Loan B, 7.11%, 12/06/13 United States 14,039,500 13,732,456 1.28
------------------------
15,130,666 1.41
------------------------
WHOLESALE DISTRIBUTORS
Interline Brands,
Delayed Draw Term Loan, 7.07%, 6/23/13 United States 1,015,808 990,972 0.09
Term Loan B, 7.07%, 6/23/13 United States 702,462 685,287 0.07
------------------------
1,676,259 0.16
------------------------
WIRELESS COMMUNICATIONS
Trilogy International Partners LLC, Term Loan, 8.86%, 7/29/12 United States 2,500,000 2,473,375 0.23
------------------------
ANNUAL REPORT
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
COUNTRY PRINCIPAL a VALUE % OF NET
AMOUNT ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL SENIOR FLOATING RATE INTERESTS (COST $1,048,142,996) 1,020,298,392 95.38
--------------------------
SHORT TERM INVESTMENT (COST $61,659,467)
REPURCHASE AGREEMENT
f Joint Repurchase Agreement, 5.189%, 8/01/07
(Maturity Value $61,668,354) United States 61,659,467 61,659,467 5.76
ABN AMRO Bank, NV, New York Branch (Maturity
Value $4,824,932)
Banc of America Securities LLC (Maturity Value $4,824,932)
Barclays Capital Inc. (Maturity Value $4,824,932)
Bear, Stearns & Co. Inc. (Maturity Value $4,824,932)
BNP Paribas Securities Corp. (Maturity Value $4,824,932)
Deutsche Bank Securities Inc. (Maturity Value $4,824,932)
Dresdner Kleinwort Wasserstein Securities LLC (Maturity
Value $4,824,932)
Goldman, Sachs & Co. (Maturity Value $4,824,932)
Greenwich Capital Markets Inc. (Maturity Value $4,824,932)
Lehman Brothers Inc. (Maturity Value $3,769,170)
Merrill Lynch Government Securities Inc. (Maturity Value
$4,824,932)
Morgan Stanley & Co. Inc. (Maturity Value $4,824,932)
UBS Securities LLC (Maturity Value $4,824,932)
Collateralized by U.S. Government Agency Securities,
3.00% - 6.625%, 8/23/07 - 6/28/12; g U.S. Government
Agency Discount Notes, 10/26/07; g U.S. Treasury Bill,
8/09/07 and U.S. Treasury Notes, 3.375% - 6.50%,
11/15/08 - 6/30/12
--------------------------
TOTAL INVESTMENTS (COST $1,109,802,463) 1,081,957,859 101.14
OTHER ASSETS, LESS LIABILITIES (12,237,746) (1.14)
--------------------------
NET ASSETS 1,069,720,113 100.00
--------------------------
a The principal amount is stated in U.S. dollars unless otherwise
indicated.
b The coupon rate shown represents the rate at period end.
c See Note 1(d) regarding senior floating rate interests.
d See Note 1(c) regarding securities purchased on a when-issued or
delayed delivery basis.
e See Note 8 regarding unfunded loan commitments.
f See Note 1(b) regarding repurchase agreement.
g The security is traded on a discount basis with no stated coupon rate.
SELECTED PORTFOLIO ABBREVIATIONS
FRN Floating Rate Note
L/C Letter of Credit
REIT Real Estate Investment Trust
The accompanying notes are an integral part of these financial statements.
ANNUAL REPORT
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 2007
Assets:
Investments in securities:
Cost - Unaffiliated issuers $ 1,048,142,996
Cost - Repurchase agreements 61,659,467
---------------
Total cost of investments $ 1,109,802,463
---------------
Value - Unaffiliated issuers 1,020,298,392
Value - Repurchase agreements 61,659,467
---------------
Total value of investments 1,081,957,859
Cash 4,675,717
Receivables:
Investment securities sold 34,375,356
Interest 7,372,733
---------------
Total assets 1,128,381,665
---------------
Liabilities:
Payables:
Investment securities purchased 45,238,276
Capital shares redeemed 5,777,420
Affiliates 540,827
Distributions to shareholders 6,260,532
Unrealized loss on unfunded loan commitments (Note 8) 566,702
Accrued expenses and other liabilities 277,795
---------------
Total liabilities 58,661,552
---------------
Net assets, at value $ 1,069,720,113
---------------
Net assets consist of:
Paid-in capital $ 1,111,353,990
Distributions in excess of net investment income (249,002)
Net unrealized appreciation (depreciation) (28,411,306)
Accumulated net realized gain (loss) (12,973,569)
---------------
Net assets, at value $ 1,069,720,113
---------------
Net asset value and maximum offering price per share ($1,069,720,113 / 112,510,260 shares outstanding) $ 9.51
---------------
The accompanying notes are an integral part of these financial statements.
ANNUAL REPORT
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JULY 31, 2007
Investment income:
Interest $ 79,144,663
-------------
Expenses:
Management fees (Note 3a) 8,670,766
Administrative fees (Note 3b) 1,358,922
Custodian fees (Note 4) 17,042
Reports to shareholders 7,859
Professional fees 160,043
Trustees' fees and expenses 2,660
Other 75,362
-------------
Total expenses 10,292,654
Expense reductions (Note 4) (14,681)
Expenses waived/paid by affiliates (Note 3d) (3,750,933)
-------------
Net expenses 6,527,040
-------------
Net investment income (loss) 72,617,623
-------------
Realized and unrealized gains (losses):
Net realized gain (loss) from investments (2,377,692)
Net change in unrealized appreciation (depreciation) on investments (27,572,215)
-------------
Net realized and unrealized gain (loss) (29,949,907)
-------------
Net increase (decrease) in net assets resulting from operations $ 42,667,716
-------------
The accompanying notes are an integral part of these financial statements.
ANNUAL REPORT
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended July 31,
2007 2006
---------------------------------------
Increase (decrease) in net assets:
Operations:
Net investment income $ 72,617,623 $ 63,252,971
Net realized gain (loss) from investments (2,377,692) 502,393
Net change in unrealized appreciation (depreciation) on investments (27,572,215) (8,914,543)
---------------------------------------
Net increase (decrease) in net assets resulting from operations 42,667,716 54,840,821
Distributions to shareholders from net investment income (72,772,124) (63,744,758)
Capital share transactions (Note 2) (41,029,763) 28,625,266
---------------------------------------
Net increase (decrease) in net assets (71,134,171) 19,721,329
Net assets:
Beginning of year 1,140,854,284 1,121,132,955
---------------------------------------
End of year $ 1,069,720,113 $ 1,140,854,284
---------------------------------------
Distributions in excess of net investment income included in net assets:
End of year $ (249,002) $ (469,924)
---------------------------------------
The accompanying notes are an integral part of these financial statements.
ANNUAL REPORT
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Franklin Floating Rate Master Trust (the Trust) is registered under the
Investment Company Act of 1940, as amended, (the 1940 Act) as a non-diversified,
open-end investment company, consisting of one fund, the Franklin Floating Rate
Master Series (the Fund), which is organized as a partnership. The shares of the
Fund are issued in the form of partnership interests and are exempt from
registration under Securities Act of 1933.
The following summarizes the Fund's significant accounting policies.
A. SECURITY VALUATION
Securities listed on a securities exchange or on the NASDAQ National Market
System are valued at the last quoted sale price or the official closing price of
the day, respectively. Over-the-counter securities and listed securities for
which there is no reported sale are valued within the range of the most recent
quoted bid and ask prices. Securities that trade in multiple markets or on
multiple exchanges are valued according to the broadest and most representative
market.
Corporate debt securities generally trade in the over-the-counter market rather
than on a securities exchange. The Fund may utilize independent pricing
services, quotations from bond dealers, and information with respect to bond and
note transactions, to assist in determining a current market value for each
security. The Fund's pricing services may use valuation models or matrix pricing
which considers information with respect to comparable bond and note
transactions, quotations from bond dealers, or by reference to other securities
that are considered comparable in such characteristics as rating, interest rate
and maturity date, option adjusted spread models, prepayment projections,
interest rate spreads and yield curves, to determine current value.
Senior secured corporate loans with floating or variable interest rates
generally trade in the over-the-counter market rather than on a securities
exchange. The Fund may utilize independent pricing services, quotations from
loan dealers and other financial institutions, and information with respect to
bond and note transactions, to assist in determining a current market value for
each security. The Fund's pricing services use independent market quotations
from loan dealers or financial institutions and may incorporate valuation
methodologies that consider multiple bond characteristics such as dealer quotes,
issuer type, coupon, maturity, weighted average maturity, interest rate spreads
and yield curves, cash flow and credit risk/quality analysis to determine
current value.
The Trust has procedures to determine the fair value of individual securities
and other assets for which market prices are not readily available or which may
not be reliably priced. Methods for valuing these securities may include:
fundamental analysis, matrix pricing, discounts from market prices of similar
securities, or discounts applied due to the nature and duration of restrictions
on the disposition of the securities. Due to the inherent uncertainty of
valuations of such securities, the fair values may differ significantly from the
values that would have been used had a ready market for such investments
existed. Occasionally, events occur between the time at which trading in a
security is completed and the close of the NYSE that might call into question
the availability (including the reliability) of the value of a portfolio
security held by the Fund. If such an event occurs, the securities may be valued
using fair value procedures, which may include the use of independent pricing
services. All security valuation procedures are approved by the Trust's Board of
Trustees.
B. JOINT REPURCHASE AGREEMENT
The Fund may enter into a joint repurchase agreement whereby its uninvested cash
balance is deposited into a joint cash account with other funds managed by the
investment manager or an affiliate of the investment manager and is used to
invest in one or more repurchase agreements. The value and face amount of the
joint repurchase agreement are allocated to the funds based on their 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%. The joint repurchase agreement held by
the Fund at year end had been entered into on July 31, 2007. The joint
repurchase agreement is valued at cost.
ANNUAL REPORT
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)
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. Sufficient
assets have been segregated for these securities.
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.
E. INCOME TAXES
No provision has been made for income taxes because all income, expenses, gains
and losses are allocated to the partners for inclusion in their income tax
returns.
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. Amortization of
premium and accretion of discount on debt securities are included in interest
income. Facility fees are recognized as income over the expected term of the
loan. The Fund's net investment income is proportionately allocated to the
partners daily and distributed monthly. Net capital gains (or losses) realized
by the Fund will be allocated proportionately to each partner and will not be
distributed. Distributions to partners are determined according to income tax
regulations (tax basis). Distributable earnings determined on a tax basis may
differ from earnings recorded in accordance with accounting principles generally
accepted in the United States of America. These differences may be permanent or
temporary. Permanent differences are reclassified among capital accounts to
reflect their tax character. These reclassifications have no impact on net
assets or the results of operations. Temporary differences are not reclassified,
as they may reverse in subsequent periods.
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 Trust's organizational documents, its officers and trustees are
indemnified by the Trust against certain liabilities arising out of the
performance of their duties to the Trust. Additionally, in the normal course of
business, the Trust enters into contracts with service providers that contain
general indemnification clauses. The Trust's maximum exposure under these
arrangements is unknown as this would involve future claims that may be made
against the Trust that have not yet occurred. Currently, the Trust expects the
risk of loss to be remote.
ANNUAL REPORT
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. SHARES OF BENEFICIAL INTEREST
At July 31, 2007, there were an unlimited number of shares authorized ($0.01 par
value). Transactions in the Fund's shares were as follows:
YEAR ENDED JULY 31,
2007 2006
--------------------------------------------------------------------------------
Shares Amount Shares Amount
--------------------------------------------------------------------------------
Shares sold 31,322,400 $ 306,179,057 25,347,164 $ 248,905,074
Shares redeemed (35,593,260) (347,208,820) (22,428,878) (220,279,808)
--------------------------------------------------------------------------------
Net increase (decrease) (4,270,860) $ (41,029,763) 2,918,286 $ 28,625,266
--------------------------------------------------------------------------------
3. TRANSACTIONS WITH AFFILIATES
Franklin Resources, Inc. is the holding company for various subsidiaries that
together are referred to as Franklin Templeton Investments. Certain officers and
trustees of the Trust are also officers and/or directors of the following
subsidiaries:
SUBSIDIARY AFFILIATION
- ---------------------------------------------------------------------------------
Franklin Advisers, Inc. (Advisers) Investment manager
Franklin Templeton Services, LLC (FT Services) Administrative manager
Franklin Templeton Investor Services, LLC (Investor Services) Transfer agent
A. MANAGEMENT FEES
The Fund pays an investment management fee to Advisers of 0.80% per year of the
average daily net assets of the Fund.
B. ADMINISTRATIVE FEES
The Fund pays an administrative fee to FT Services based on the Fund's average
daily net assets as follows:
ANNUALIZED FEE RATE NET ASSETS
- --------------------------------------------------------------------------------
0.150% Up to and including $200 million
0.135% Over $200 million, up to and including $700 million
0.100% Over $700 million, up to and including $1.2 billion
0.075% In excess of $1.2 billion
C. TRANSFER AGENT FEES
Investor Services, under terms of an agreement, performs shareholder servicing
for the Fund and is not paid by the Fund for the services.
D. WAIVER AND EXPENSE REIMBURSEMENTS
FT Services agreed in advance to voluntarily waive administrative fees.
Additionally, Advisers agreed in advance to voluntarily waive a portion of
management fees. Total expenses waived by FT Services and Advisers are not
subject to reimbursement by the Fund subsequent to the Fund's fiscal year end.
FT Services and Advisers may discontinue this waiver at any time upon notice to
the Fund's Board of Trustees.
ANNUAL REPORT
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. TRANSACTIONS WITH AFFILIATES (continued)
E. OTHER AFFILIATED TRANSACTIONS
At July 31, 2007, the shares of the Fund were owned by the following entities:
ENTITY SHARES
- ---------------------------------------------------------------------------
Franklin Floating Rate Fund PLC 112,490,260
Franklin Resources Inc. 10,000
Templeton Investment Counsel LLC 10,000
------------
Total 112,510,260
------------
4. 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, 2007, the
custodian fees were reduced as noted in the Statement of Operations.
5. INCOME TAXES
At July 31, 2007, the cost of investments and net unrealized appreciation
(depreciation), for income tax purposes were as follows:
Cost of investments $ 1,109,963,566
----------------
Unrealized appreciation $ 4,014
Unrealized depreciation (28,009,721)
----------------
Net unrealized appreciation (depreciation) $ (28,005,707)
----------------
Net investment income differs for financial statement and tax purposes primarily
due to differing treatment of bond discounts and premiums.
Net realized gains (losses) differ for financial statement and tax purposes
primarily due to differing treatments of wash sales, and bond discounts and
premiums.
6. INVESTMENT TRANSACTIONS
Purchases and sales of investments (excluding short term securities) for the
year ended July 31, 2007, aggregated $784,216,267 and $790,015,640,
respectively.
7. CREDIT RISK
The Fund has 86.11% 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. The risk of loss
due to default by the issuer may be significantly greater for the holders of
high yielding securities because such securities are generally unsecured and are
often subordinated to other creditors of the issuer.
ANNUAL REPORT
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
8. 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. Funded portions of credit agreements are presented on the
Statement of Investments.
At July 31, 2007, unfunded commitments were as follows:
- -------------------------------------------------------------------------------------
UNFUNDED
BORROWER COMMITMENT
- -------------------------------------------------------------------------------------
Advance Food Co. Inc., Delayed Draw Term Loan $ 200,000
Big West Oil LLC, Delayed Draw Term Loan 467,500
BNY ConvergEx Group LLC, Delayed Draw Term Loan 487,880
Boise Cascade LLC, Delayed Draw Term Loan 219,572
Cannery Casino Resorts LLC, Delayed Draw Term Loan 1,351,181
CBRL Group (Cracker Barrel), Term Loan B2 (Delayed Draw) 213,621
Conseco Inc., Revolver 4,000,000
Fender Musical Instruments, Delayed Draw 283,333
Greektown Holdings LLC, Delayed Draw Term Loan 500,000
HUB International Holdings Inc., Delayed Draw Term Loan 274,510
Iasis Healthcare LLC, Delayed Draw Term Loan 248,013
Las Vegas Sands LLC, Delayed Draw 1 Term Loan 940,000
NRG Holdings, Inc., Term Loan 2,395,551
Oxbow Carbon LLC, Delayed Draw Term Loan 281,879
Pantry Inc., Delayed Draw Term Loan 691,807
Sealy Mattress Co., Revolver 750,000
TDS Investor Corp. (Travelport), Delayed Draw Term Loan 3,771,797
United Surgical Partners Internatioanl Inc., Delayed Draw Term Loan 261,532
Univision Communications Inc., Delayed Draw Term Loan 724,832
Valassis Communications Inc., Delayed Draw Term Loan 640,000
WMG Acquisition Corp. (Warner Music), Revolver A 3,427,333
-----------
$22,130,341
-----------
Unfunded loan commitments and funded portions of credit agreements are marked to
market daily and any unrealized gain or loss is included in the Statement of
Assets and Liabilities and Statement of Operations.
ANNUAL REPORT
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
9. SHAREHOLDER DISTRIBUTIONS
For the year ended July 31, 2007, the Fund made the following distributions:
Payment Date Amount Per Share
- ---------------------------------------------------------------
8/31/2006 $0.056262
9/29/2006 $0.054615
10/31/2006 $0.056289
11/30/2006 $0.055227
12/29/2006 $0.056905
1/31/2007 $0.056962
2/28/2007 $0.049513
3/30/2007 $0.054762
4/30/2007 $0.054716
5/31/2007 $0.053100
6/29/2007 $0.053526
7/31/2007 $0.054877
- ---------------------------------------------------------------
Total $0.656754
Daily distribution information is available at the registered office upon
request.
10. OTHER CONSIDERATIONS
Officers, directors or employees of the Fund's Investment Manager, may serve
from time to time as members of bondholders' steering committees or official
creditors' committees. Such participation may result in the possession by the
Investment Manager of material non-public information which, pursuant to the
Fund's policies and the requirements of applicable securities laws, could
prevent the Fund from trading in the securities of such companies for limited or
extended periods of time.
11. FUND LITIGATION
On July 6, 2003, Adelphia Communications Corp. ("Adelphia") and related parties,
along with its Official Committee of Unsecured Creditors, filed an adversary
proceeding in the Adelphia bankruptcy case in the U.S. Bankruptcy Court (SNDY)
against more than 400 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 the fraudulent transfers. The reference
of this adversary proceeding to the Bankruptcy Court has been withdrawn, and the
matter is now pending in U.S. District Court (SDNY) before Judge Lawrence
McKenna.
The Franklin defendants have not yet been required to respond to the complaint
or to discovery, and other pending motions to dismiss have not been ruled upon.
Thus, it is not possible to predict the lawsuit's outcome at this preliminary
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.
ANNUAL REPORT
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
12. REGULATORY AND LITIGATION MATTERS
As part of various investigations by a number of federal, state, and foreign
regulators and governmental entities, including the Securities and Exchange
Commission ("SEC"), relating to certain practices in the mutual fund industry,
including late trading, market timing and marketing support payments to
securities dealers who sell fund shares ("marketing support"), Franklin
Resources, Inc. and certain of its subsidiaries (collectively, the "Company"),
entered into settlements with certain of those regulators and governmental
entities. Specifically, the Company entered into settlements with the SEC, among
others, concerning market timing and marketing support.
On June 23, 2006, the SEC approved the proposed plan of distribution for the
marketing support settlement, and disbursement of the settlement monies to the
designated funds, in accordance with the terms and conditions of that settlement
and plan, was completed in September 2006. The Fund did not participate in that
settlement.
On June 6, 2007, the SEC posted for public comment the proposed plan of
distribution for the market timing settlement. Once the SEC approves the final
plan of distribution, disbursements of settlement monies will be made promptly
to individuals who were shareholders of the designated funds during the relevant
period, in accordance with the terms and conditions of the settlement and plan.
In addition, the Company, as well as most of the mutual funds within Franklin
Templeton Investments and certain current or former officers, Company directors,
fund directors, and employees, have been named in private lawsuits (styled as
shareholder class actions, or as derivative actions on behalf of either the
named funds or Franklin Resources, Inc.). The lawsuits relate to the industry
practices referenced above.
The Company and fund management believe that the claims made in each of the
private lawsuits referenced above are without merit and intend to defend against
them vigorously. The Company cannot predict with certainty the eventual outcome
of these lawsuits, nor whether they will have a material negative impact on the
Company. If it is determined that the Company bears responsibility for any
unlawful or inappropriate conduct that caused losses to the Fund, it is
committed to making the Fund or its shareholders whole, as appropriate.
13. NEW ACCOUNTING PRONOUNCEMENTS
In July 2006, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an
Interpretation of FASB Statement No. 109" ("FIN 48"), which clarifies the
accounting for uncertainty in tax positions taken or expected to be taken in a
tax return. FIN 48 provides guidance on the measurement, recognition,
classification and disclosure of tax positions, along with accounting for the
related interest and penalties. FIN 48 is effective for fiscal years beginning
after December 15, 2006, and is to be applied to all open tax years as of the
date of effectiveness. On December 22, 2006, the Securities and Exchange
Commission extended the implementation date to no later than the last net asset
value calculation in the first semi-annual reporting period in 2007. The Trust
believes the adoption of FIN 48 will have no material impact on its financial
statements.
In September 2006, FASB issued FASB Statement No. 157, "Fair Value Measurement"
("SFAS 157"), which defines fair value, establishes a framework for measuring
fair value, and expands disclosures about fair value measurements. SFAS 157 is
effective for fiscal years beginning after November 15, 2007, and interim
periods within those fiscal years. The Fund believes the adoption of SFAS 157
will have no material impact on its financial statements.
ANNUAL REPORT
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE BOARD OF TRUSTEES OF FRANKLIN FLOATING RATE MASTER TRUST 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, 2007, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the five years in the
period then ended, in conformity with accounting principles generally accepted
in the United States of America. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at July 31, 2007 by correspondence with the
custodian, brokers, and agent banks, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
September 17, 2007
ACTION BY WRITTEN CONSENT OF A SHAREHOLDER, APRIL 16, 2007
Franklin Floating Rate Fund PLC (the "Company"), an Irish public limited
company and a holder of more than 99.9% of the outstanding shares of
Franklin Floating Rate Master Series (the "Fund"), a series of Franklin
Floating Rate Master Trust, a Delaware statutory trust (the "Trust"),
adopted and approved certain resolutions by written consent without a
meeting of the Fund and Trust pursuant to Article V, Section 3 of the
Second Amended and Restated Agreement and Declaration of Trust of the
Trust (the "Trust Agreement"). Based upon the instructions of holders of
100% of the shares in the capital of the Company, representing more than
a majority of the outstanding shares of the Fund, amended and restated
fundamental investment restrictions for the Fund were approved and
adopted for the Fund; and the following persons were elected to serve as
Independent Trustees of the Trust: Harris J. Ashton, Robert F. Carlson,
Sam Ginn, Edith E. Holiday, Frank W.T. LaHaye, Frank A. Olson, Larry D.
Thompson and John B. Wilson. Charles B. Johnson and Gregory E. Johnson
were elected by the shareholders to serve as Interested Trustees.
BOARD MEMBERS AND OFFICERS
The name, year of birth and address of the officers and board members, as well
as their affiliations, positions held with the Trust, principal occupations
during the past five years and number of portfolios overseen in the Franklin
Templeton Investments fund complex are shown below. Generally, each board member
serves until that person's successor is elected and qualified.
INDEPENDENT BOARD MEMBERS
- ------------------------------ -------------- -------------- ----------------------- -------------------------------------------
NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------ -------------- -------------- ----------------------- -------------------------------------------
HARRIS J. ASHTON (1932) Trustee Since 1999 140 Director, Bar-S Foods (meat packing
One Franklin Parkway company).
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director of various companies; and FORMERLY, Director, RBC Holdings, Inc. (bank
holding company) (until 2002); and President, Chief Executive Officer and
Chairman of the Board, General Host Corporation (nursery and craft centers)
(until 1998).
- ------------------------------------------------------------------------------------------------------------------------------------
ROBERT F. CARLSON (1928) Trustee Since April 121 None
One Franklin Parkway 2007
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice President, senior member and past President, Board of Administration,
California Public Employees Retirement Systems (CALPERS); and FORMERLY, member
and Chairman of the Board, Sutter Community Hospitals; member, Corporate Board,
Blue Shield of California; and Chief Counsel, California Department of
Transportation.
- ------------------------------------------------------------------------------------------------------------------------------------
SAM GINN (1937) Trustee Since March 121 Director, Chevron Corporation (global
One Franklin Parkway 2007 energy company) and ICO Global
San Mateo, CA 94403-1906 Communications (Holdings) Limited
(satellite company).
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Private investor; and FORMERLY, Chairman of the Board, Vodafone AirTouch
(wireless company), PLC; Chairman of the Board and Chief Executive Officer,
AirTouch Communications (cellular communications) (1993-1998) and Pacific
Telesis Groups (telephone holding company) (1988-1994).
- ------------------------------------------------------------------------------------------------------------------------------------
EDITH E. HOLIDAY (1952) Trustee Since 1999 140 Director, Hess Corporation (formerly,
One Franklin Parkway Amerada Hess Corporation) (exploration and
San Mateo, CA 94403-1906 refining of oil and gas), H.J. Heinz
Company (processed foods and allied
products), RTI International Metals, Inc.
(manufacture and distribution of titanium),
Canadian National Railway (railroad) and
White Mountains Insurance Group, Ltd.
(holding company).
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director or Trustee of various companies and trusts; and FORMERLY, Assistant to
the President of the United States and Secretary of the Cabinet (1990-1993);
General Counsel to the United States Treasury Department (1989-1990); and
Counselor to the Secretary and Assistant Secretary for Public Affairs and Public
Liaison-United States Treasury Department (1988-1989).
- ------------------------------------------------------------------------------------------------------------------------------------
FRANK W.T. LAHAYE (1929) Trustee Since 1999 121 Director, Center for Creative Land
One Franklin Parkway Recycling (brownfield redevelopment).
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
General Partner, Las Olas L.P. (Asset Management); and FORMERLY, Chairman, Peregrine Venture Management Company (venture capital).
- ------------------------------------------------------------------------------------------------------------------------------------
FRANK A. OLSON (1932) Trustee Since 2005 140 Director, Hess Corporation (formerly,
One Franklin Parkway Amerada Hess Corporation) (exploration and
San Mateo, CA 94403-1906 refining of oil and gas) and Sentient Jet
(private jet service).
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman Emeritus, The Hertz Corporation (since 2000) (Chairman of the Board
(1980-2000) and Chief Executive Officer (1977-1999)); and FORMERLY, Chairman of
the Board, President and Chief Executive Officer, UAL Corporation.
- ------------------------------------------------------------------------------------------------------------------------------------
LARRY D. THOMPSON (1945) Trustee Since April 140 None
One Franklin Parkway 2007
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Vice President - Government Affairs, General Counsel and Secretary,
PepsiCo, Inc. (consumer products); and FORMERLY, Director, Delta Airlines
(aviation) (2003-2005) and Providian Financial Corp. (1997-2001); Senior Fellow
of The Brookings Institution (2003-2004); Visiting Professor, University of
Georgia School of Law (2004); and Deputy Attorney General, U.S. Department of
Justice (2001-2003).
- ------------------------------------------------------------------------------------------------------------------------------------
JOHN B. WILSON (1959) Trustee Since April 121 None
One Franklin Parkway 2007
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President and Founder, Hyannis Port Capital, Inc. (real estate and private
equity investing); serves on private and non-profit boards; and FORMERLY, Chief
Operating Officer and Executive Vice President, Gap, Inc. (retail) (1996-2000);
Chief Financial Officer and Executive Vice President - Finance Strategy,
Staples, Inc. (office supplies) (1992-1996); Executive Vice President -
Corporate Planning, Northwest Airlines, Inc. (airlines) (190-1992); Vice
President and Partner, Bain & Company (consulting firm) (1986-1990).
- ------------------------------------------------------------------------------------------------------------------------------------
INTERESTED BOARD MEMBERS AND OFFICERS
- ------------------------------ -------------- -------------- ----------------------- ----------------------------
NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------ -------------- -------------- ----------------------- ----------------------------
**CHARLES B. JOHNSON (1933) Trustee and Since 1999 140 None
One Franklin Parkway Chairman of
San Mateo, CA 94403-1906 the Board
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman of the Board, Member - Office of the Chairman and Director, Franklin
Resources, Inc.; Director, Templeton Worldwide, Inc.; and officer and/or
director or trustee, as the case may be, of some of the other subsidiaries of
Franklin Resources, Inc. and of 42 of the investment companies in Franklin
Templeton Investments.
- -----------------------------------------------------------------------------------------------------------------------
**GREGORY E. JOHNSON (1961) Trustee Since April 91 None
One Franklin Parkway 2007
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director, President and Chief Executive Officer, Franklin Resources, Inc.;
President, Templeton Worldwide, Inc.; Director, Templeton Asset Management Ltd.;
and officer and/or director or trustee, as the case may be, of some of the other
subsidiaries of Franklin Resources, Inc. and of 33 of the investment companies
in Franklin Templeton Investments.
- -----------------------------------------------------------------------------------------------------------------------
MARK BOYADJIAN (1964) Vice Since 2003 Not Applicable Not Applicable
One Franklin Parkway President
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Vice President, Franklin Advisers, Inc. and Templeton Worldwide, Inc.;
and officer of two of the investment companies in Franklin Templeton
Investments).
- -----------------------------------------------------------------------------------------------------------------------
JAMES M. DAVIS (1952) Chief Chief Not Applicable Not Applicable
One Franklin Parkway Compliance Compliance
San Mateo, CA 94403-1906 Officer and Officer
Vice President since 2004
- AML and Vice
Compliance President -
AML
Compliance
since 2006
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director, Global Compliance, Franklin Resources, Inc.; officer of some of the
other subsidiaries of Franklin Resources, Inc. and of 46 of the investment
companies in Franklin Templeton Investments; and FORMERLY, Director of
Compliance, Franklin Resources, Inc. (1994-2001).
- -----------------------------------------------------------------------------------------------------------------------
LAURA FERGERSON (1962) Treasurer Since 2004 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice President, Franklin Templeton Services, LLC; officer of 30 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).
- -----------------------------------------------------------------------------------------------------------------------
JIMMY D. GAMBILL (1947) Senior Vice Since 2002 Not Applicable Not Applicable
500 East Broward Blvd. President and
Suite 2100 Chief
Fort Lauderdale, FL 33394-3091 Executive
Officer -
Finance and
Administration
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President, Franklin Templeton Services, LLC; Senior Vice President, Templeton
Worldwide, Inc.; and officer of some of the other subsidiaries of Franklin
Resources, Inc. and of 46 of the investment companies in Franklin Templeton
Investments.
- -----------------------------------------------------------------------------------------------------------------------
DAVID P. GOSS (1947) Vice President Since 2000 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Associate General Counsel, Franklin Templeton Investments; officer and
director of one of the subsidiaries of Franklin Resources, Inc.; and officer of
46 of the investment companies in Franklin Templeton Investments.
- -----------------------------------------------------------------------------------------------------------------------
RUPERT H. JOHNSON, JR. (1940) President and President Not Applicable Not Applicable
One Franklin Parkway Chief since 1999
San Mateo, CA 94403-1906 Executive and Chief
Officer Executive
- Investment Officer -
Management Investment
Management
since 2002
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice Chairman, Member - Office of the Chairman and Director, Franklin Resources,
Inc.; Director, Franklin Advisers, Inc. and Templeton Worldwide, Inc.; Senior
Vice President, Franklin Advisory Services, LLC; and officer and/or director or
trustee, as the case may be, of some of the other subsidiaries of Franklin
Resources, Inc. and of 44 of the investment companies in Franklin Templeton
Investments.
- -----------------------------------------------------------------------------------------------------------------------
KAREN L. SKIDMORE (1952) Vice President Since 2006 Not Applicable Not Applicable
One Franklin Parkway and Secretary
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Associate General Counsel, Franklin Templeton Investments; and officer of
30 of the investment companies in Franklin Templeton Investments.
- -----------------------------------------------------------------------------------------------------------------------
CRAIG S. TYLE (1960) Vice President Since 2005 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
General Counsel and Executive Vice President, Franklin Resources, Inc.; officer
of some of the other subsidiaries of Franklin Resources, Inc. and of 46 of the
investment companies in Franklin Templeton Investments; and FORMERLY, Partner,
Shearman & Sterling, LLP (2004-2005); and General Counsel, Investment Company
Institute (ICI) (1997-2004).
- -----------------------------------------------------------------------------------------------------------------------
GALEN G. VETTER (1951) Chief Since 2004 Not Applicable Not Applicable
500 East Broward Blvd. Financial
Suite 2100 Officer and
Fort Lauderdale, FL 33394-3091 Chief
Accounting
Officer
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Vice President, Franklin Templeton Services, LLC; officer of 46 of the
investment companies in Franklin Templeton Investments; and FORMERLY, Managing
Director, RSM McGladrey, Inc. (1999-2004); and Partner, McGladrey & Pullen, LLP
(1979-1987 and 1991-2004).
- -----------------------------------------------------------------------------------------------------------------------
* We base the number of portfolios on each separate series of the U.S.
registered investment companies within the Franklin Templeton Investments fund
complex. These portfolios have a common investment manager or affiliated
investment managers.
** Charles B. Johnson is considered to be an interested person of the Trust
under the federal securities laws due to his position as officer and director
and major shareholder of Franklin Resources, Inc. (Resources), which is the
parent company of the Trust's investment manager and distributor. Gregory E.
Johnson is considered to be an interested person of the Trust under the federal
securities laws due to his position as an officer and director of Resources.
Note 1: Charles B. Johnson and Rupert H. Johnson, Jr. are brothers and the
father and uncle, respectively, of Gregory E. Johnson.
Note 2: Officer information is current as of the date of this report. It is
possible that after this date, information about officers may change.
Note 3: Prior to July 31, 2007, S. Joseph Fortunato, Rupert H. Johnson, Jr. and
Gordon S. Macklin ceased to be trustees of the Trust.
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 JOHN B. WILSON AS ITS AUDIT COMMITTEE FINANCIAL EXPERT. THE BOARD
BELIEVES THAT MR. WILSON QUALIFIES AS SUCH AN EXPERT IN VIEW OF HIS EXTENSIVE
BUSINESS BACKGROUND AND EXPERIENCE, INCLUDING SERVICE AS CHIEF FINANCIAL OFFICER
OF STAPLES, INC. FROM 1992 TO 1996. MR. WILSON HAS BEEN A MEMBER AND CHAIRMAN OF
THE FUND'S AUDIT COMMITTEE SINCE 2006. AS A RESULT OF SUCH BACKGROUND AND
EXPERIENCE, THE BOARD OF TRUSTEES BELIEVES THAT MR. WILSON HAS ACQUIRED AN
UNDERSTANDING OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND FINANCIAL
STATEMENTS, THE GENERAL APPLICATION OF SUCH PRINCIPLES IN CONNECTION WITH THE
ACCOUNTING ESTIMATES, ACCRUALS AND RESERVES, AND ANALYZING AND EVALUATING
FINANCIAL STATEMENTS THAT PRESENT A BREADTH AND LEVEL OF COMPLEXITY OF
ACCOUNTING ISSUES GENERALLY COMPARABLE TO THOSE OF THE FUND, AS WELL AS AN
UNDERSTANDING OF INTERNAL CONTROLS AND PROCEDURES FOR FINANCIAL REPORTING AND AN
UNDERSTANDING OF AUDIT COMMITTEE FUNCTIONS. MR. WILSON IS AN INDEPENDENT TRUSTEE
AS THAT TERM IS DEFINED UNDER THE RELEVANT SECURITIES AND EXCHANGE COMMISSION
RULES AND RELEASES.
BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT
SHAREHOLDER INFORMATION
At a meeting held February 27, 2007, the Board of Trustees ("Board"), including
a majority of non-interested or independent Trustees, approved renewal of the
investment management agreement for the Fund. It was noted that at regular Board
meetings during the course of the year, the Trustees had reviewed and discussed
portfolio performance and financial information for the Fund, as well as
periodic reports on shareholder services, legal compliance, pricing, and other
services provided by the Manager and its affiliates. In addition, information
specifically furnished to the Trustees in connection with the contract renewals
being considered at the meeting included a Fund Profitability Analysis Report
and additional information. The Profitability Analysis Report discussed the
profitability to Franklin Templeton Investments from its overall U.S. fund
operations, as well as on an individual fund-by-fund basis. Included in the
additional material prepared specifically for the meeting was information on a
fund-by-fund basis listing portfolio managers and other accounts they manage, as
well as information on management fees charged by the Manager and its
affiliates, including management's explanation of differences where relevant, as
well as a three-year expense analysis with an explanation for any increase in
expense ratios. Additional information accompanying such report were a
memorandum prepared by management describing project initiatives and capital
investments relating to the services provided to the Fund by the Franklin
Templeton Investments organization, as well as a memorandum relating to
economies of scale and a comparative analysis concerning transfer agent fees
charged the Fund.
In considering such information, the independent Trustees received assistance
and met separately with independent counsel. The Fund Profitability Report and
other additional material prepared by management were sent to each of the
Trustees on February 2, 2007. Such material was reviewed and discussed by the
independent Trustees among themselves and with management in a telephonic
conference call that took place February 16, 2007. Questions raised in such
telephonic conference call were responded to by management and were discussed
at a meeting of independent Trustees held prior to the Board meeting.
PROXY VOTING POLICIES AND PROCEDURES
The Fund has established Proxy Voting Policies and Procedures ("Policies") that
the Fund uses to determine how to vote proxies relating to portfolio securities.
Shareholders may view the Fund's complete Policies online at
franklintempleton.com. Alternatively, shareholders may request copies of the
Policies free of charge by calling the Proxy Group collect at 1-954/847-2268 or
by sending a written request to: Franklin Templeton Companies, LLC, 500 East
Broward Boulevard, Suite 1500, Fort Lauderdale, FL 33394, Attention: Proxy
Group. Copies of the Fund's proxy voting records are also made available online
at franklintempleton.com and posted on the U.S. Securities and Exchange
Commission's website at sec.gov and reflect the most recent 12-month period
ended June 30.
QUARTERLY STATEMENT OF INVESTMENTS
The Fund files a complete statement of investments with the U.S. Securities and
Exchange Commission for the first and third quarters for each fiscal year on
Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission's
website at sec.gov. The filed form may also be viewed and copied at the
Commission's Public Reference Room in Washington, DC. Information regarding the
operations of the Public Reference Room may be obtained by calling
1-800/SEC-0330.
ITEM 2. CODE OF ETHICS.
(a) The Registrant has adopted a code of ethics that applies to its principal
executive officers and principal financial and accounting officer.
(c) N/A
(d) N/A
(f) Pursuant to Item 12(a)(1), the Registrant is attaching as an exhibit a copy
of its code of ethics that applies to its principal executive officers and
principal financial and accounting officer.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a)(1) The Registrant has an audit committee financial expert serving on its
audit committee.
(2) The audit committee financial expert is John B. Wilson and he is
"independent" as defined under the relevant Securities and Exchange Commission
Rules and Releases.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees
The aggregate fees paid to the principal accountant for professional services
rendered by the principal accountant for the audit of the registrant's annual
financial statements or for services that are normally provided by the principal
accountant in connection with statutory and regulatory filings or engagements
were $65,090 for the fiscal year ended July 31, 2007 and $78,402 for the fiscal
year ended July 31, 2006.
(b) Audit-Related Fees
There were no fees paid to the principal accountant for assurance and related
services rendered by the principal accountant to the registrant that are
reasonably related to the performance of the audit of the registrant's financial
statements and are not reported under paragraph (a) of Item 4.
There were no fees paid to the principal accountant for assurance and related
services rendered by the principal accountant to the registrant's investment
adviser and any entity controlling, controlled by or under common control with
the investment adviser that provides ongoing services to the registrant that are
reasonably related to the performance of the audit of their financial
statements.
(c) Tax Fees
The aggregate fees paid to the principal accountant for professional services
rendered by the principal accountant to the registrant for tax compliance, tax
advice and tax planning were $11,200 for the fiscal year end July 31, 2007 and
$0 for fiscal year end July 31, 2006.
The aggregate fees paid to the principal accountant for professional services
rendered by the principal accountant to the registrant's investment adviser and
any entity controlling, controlled by or under common control with the
investment adviser that provides ongoing services to the registrant for tax
compliance, tax advice and tax planning were $46,000 for the fiscal year ended
July 31, 2007 and $0 for the fiscal year ended July 31, 2006. The services for
which these fees were paid included tax compliance and advice.
(d) All Other Fees
The aggregate fees paid to the principal accountant for products and services
rendered by the principal accountant to the registrant not reported in
paragraphs (a)-(c) of Item 4 were $0 for the fiscal year ended July 31, 2007 and
$589 for the fiscal year ended July 31, 2006. 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 $0 for the fiscal year ended July 31, 2007
and $175,272 for the fiscal year ended July 31, 2006. 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.
(e) (1) The registrant's audit committee is directly responsible for approving
the services to be provided by the auditors, including:
(i) pre-approval of all audit and audit related services;
(ii) pre-approval of all non-audit related services to be provided to the
Fund by the auditors;
(iii)pre-approval of all non-audit related services to be provided to the
registrant by the auditors to the registrant's investment adviser or to any
entity that controls, is controlled by or is under common control with the
registrant's investment adviser and that provides ongoing services to the
registrant where the non-audit services relate directly to the operations or
financial reporting of the registrant; and
(iv) establishment by the audit committee, if deemed necessary or
appropriate, as an alternative to committee pre-approval of services to be
provided by the auditors, as required by paragraphs (ii) and (iii) above, of
policies and procedures to permit such services to be pre-approved by other
means, such as through establishment of guidelines or by action of a designated
member or members of the committee; provided the policies and procedures are
detailed as to the particular service and the committee is informed of each
service and such policies and procedures do not include delegation of audit
committee responsibilities, as contemplated under the Securities Exchange Act of
1934, to management; subject, in the case of (ii) through (iv), to any waivers,
exceptions or exemptions that may be available under applicable law or rules.
(e) (2) None of the services provided to the registrant described in paragraphs
(b)-(d) of Item 4 were approved by the audit committee pursuant to paragraph
(c)(7)(i)(C) of Rule 2-01 of regulation S-X.
(f) No disclosures are required by this Item 4(f).
(g) The aggregate non-audit fees paid to the principal accountant for services
rendered by the principal accountant to the registrant and the registrant's
investment adviser and any entity controlling, controlled by or under common
control with the investment adviser that provides ongoing services to the
registrant were $57,200 for the fiscal year ended July 31, 2007 and $175,861 for
the fiscal year ended July 31, 2006.
(h) The registrant's audit committee of the board has considered whether the
provision of non-audit services that were rendered to the registrant's
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or under common control
with the investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of
Regulation S-X is compatible with maintaining the principal accountant's
independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. N/A
ITEM 6. SCHEDULE OF INVESTMENTS. N/A
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES. N/A
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT
COMPANIES. N/A
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT
INVESTMENT COMPANY AND AFFILIATED PURCHASERS. N/A
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There have
been no changes to the procedures by which shareholders may recommend nominees
to the Registrant's Board of Trustees that would require disclosure herein.
ITEM 11. CONTROLS AND PROCEDURES.
(A) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. The Registrant maintains
disclosure controls and procedures that are designed to ensure that information
required to be disclosed in the Registrant's filings under the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 is recorded,
processed, summarized and reported within the periods specified in the rules and
forms of the Securities and Exchange Commission. Such information is accumulated
and communicated to the Registrant's management, including its principal
executive officer and principal financial officer, as appropriate, to allow
timely decisions regarding required disclosure. The Registrant's management,
including the principal executive officer and the principal financial officer,
recognizes that any set of controls and procedures, no matter how well designed
and operated, can provide only reasonable assurance of achieving the desired
control objectives.
Within 90 days prior to the filing date of this Shareholder Report on Form
N-CSR, the Registrant had carried out an evaluation, under the supervision and
with the participation of the Registrant's management, including the
Registrant's principal executive officer and the Registrant's principal
financial officer, of the effectiveness of the design and operation of the
Registrant's disclosure controls and procedures. Based on such evaluation, the
Registrant's principal executive officer and principal financial officer
concluded that the Registrant's disclosure controls and procedures are
effective.
(B) CHANGES IN INTERNAL CONTROLS. There have been no significant changes in the
Registrant's internal controls or in other factors that could significantly
affect the internal controls subsequent to the date of their evaluation in
connection with the preparation of this Shareholder Report on Form N-CSR.
ITEM 12. EXHIBITS.
(a) (1) Code of Ethics
(a) (2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
of Jimmy D. Gambill, Chief Executive Officer - Finance and Administration, and
Galen G. Vetter, Chief Financial Officer
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of
Jimmy D. Gambill, Chief Executive Officer - Finance and Administration, and
Galen G. Vetter, Chief Financial Officer
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
FRANKLIN FLOATING RATE MASTER TRUST
By /S/JIMMY D. GAMBILL
-------------------
Jimmy D. Gambill
Chief Executive Officer - Finance and Administration
Date September 27, 2007
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
-------------------
Jimmy D. Gambill
Chief Executive Officer - Finance and Administration
Date September 27, 2007
By /S/GALEN G. VETTER
------------------
Galen G. Vetter
Chief Financial Officer
Date September 27, 2007