UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-09869
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FRANKLIN FLOATING RATE MASTER TRUST
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(Exact name of registrant as specified in charter)
ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906
(Address of principal executive offices) (Zip code)
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: 1/31/09
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ITEM 1. REPORTS TO STOCKHOLDERS.
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
FINANCIAL HIGHLIGHTS
Six Months Ended
January 31, 2009 Year Ended July 31,
(unaudited) 2008 2007 2006 2005 2004
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PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the
period)
Net asset value, beginning of period $9.02 $9.51 $9.77 $9.85 $9.84 $9.69
---------- --------- --------- ------- -------- ---------
Income from investment operations/a:
Net investment income 0.203 0.549 0.655 0.565 0.398 0.334
Net realized and unrealized gains
(losses) (1.812) (0.493) (0.258) (0.076) 0.013 0.151
------------- ------------- ----------- ------------ ----------- ---------
Total from investment operations..... (1.609) 0.056 0.397 0.489 0.411 0.485
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Less distributions from net investment
income (0.201) (0.546) (0.657) (0.569) (0.401) (0.335)
---------- --------- ----------- ---------- ---------- -----------
Net asset value, end of period $7.21 $9.02 $9.51 $9.77 $9.85 $9.84
========= ========= ========= ========= ========= =========
Total return(b) (17.94)% 0.64% 4.09% 5.09% 4.23% 5.08%
RATIOS TO AVERAGE NET ASSETSc
Expenses before waiver and payments by
affiliates 1.03% 1.00% 0.95% 0.95% 0.95% 0.98%
Expenses net of waiver and payments by
affiliates(d) 0.60% 0.60% 0.60% 0.60% 0.60% 0.60%
Net investment income 5.12% 6.16% 6.70% 5.76% 4.08% 3.34%
SUPPLEMENTAL DATA
Net assets, end of period (000's) $314,037 $447,246 $1,069,720 $1,140,854 $1,121,133 $757,987
Portfolio turnover rate
11.77% 28.10% 77.72% 78.29% 72.38% 54.41%
(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 repurchases of the Fund shares in relation to income earned
and/or fluctuating market value of the investments of the Fund.
(b) Total Return is not annualized for periods less than one year. cRatios are
annualized for periods less than one year. dBenefit of expense reduction
rounds to less than 0.01%.
Semiannual Report | The accompanying notes are an integral part of these
financial statements.
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
STATEMENT OF INVESTMENTS, JANUARY 31, 2009 (UNAUDITED)
PRINCIPAL % OF NET
COUNTRY AMOUNT/a VALUE ASSETS
- -----------------------------------------------------------------------------------------------------------------------------------
b, c SENIOR FLOATING RATE INTERESTS
AEROSPACE & DEFENSE
BE Aerospace Inc., Term Loan B, 5.75% - 5.87%, 7/28/14 United States $ 995,000 $ 925,350 0.30
Hawker Beechcraft Inc.,
Synthetic L/C, 5.559%, 3/26/14 United States 133,797 74,183 0.02
Term Loan B, 2.409% - 3.459%, 3/26/14 United States 2,278,558 1,263,333 0.40
ILC Industries Inc., June 2006 Term Loan, 2.409%, United States 724,488 610,381 0.20
2/24/12
L-1 Identity Solutions Operating Co., Term Loan B, United States 1,086,250 1,018,359 0.32
7.50%, 8/05/13
Spirit Aerosystems Inc. (Onex Wind Finance LP), Term United States 2,952,112 2,634,760 0.84
B-1 Loan, 2.91%, 12/31/11
TransDigm Inc., Term Loan B, 3.498%, 6/23/13 United States 2,650,000 2,318,750 0.74
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8,845,116 2.82
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APPLICATION SOFTWARE
CCC Information Services Group Inc., Term Loan B, United States 561,215 398,463 0.13
3.72%, 2/10/13
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AUTO PARTS & EQUIPMENT
Affinia Group Inc., Term Loan B, 4.174%, 11/30/11 United States 762,586 457,552 0.15
Cooper Standard Automotive Inc.,
Term Loan B, 4.00%, 12/23/11 Canada 1,566,270 647,391 0.21
Term Loan C, 4.00%, 12/23/11 United States 2,965,548 1,225,759 0.39
Dayco Products LLC (Mark IV), Replacement Term Loan, United States 3,380,745 1,141,001 0.36
5.97% - 8.48%, 6/23/11
Federal-Mogul Corp., Term Loan B, 2.268% - 2.388%, United States 4,719,273 2,265,251 0.72
12/27/14
Key Safety Systems Inc., Term Loan B, 2.661% - 3.716%, United States 4,215,371 2,121,735 0.67
3/10/14
TRW Automotive Inc., Tranche B-1 Term Loan, 1.938% - United States 1,361,257 939,267 0.30
4.625%, 2/09/14
United Components Inc., Term Loan D, 4.39%, 6/29/12 United States 511,626 372,208 0.12
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9,170,164 2.92
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BROADCASTING
Citadel Broadcasting Corp., Term Loan B, 2.16% - 2.19%, United States 3,573,388 1,518,690 0.48
6/12/14
Discovery Communications Inc., Term Loan B, 3.459%, United States 970,863 878,284 0.28
5/14/14
Entravision Communications Corp., Term Loan B, 2.94%, United States 763,007 558,903 0.18
3/29/13
Gray Television Inc., Term Loan B, 1.94% - 2.93%, United States 2,251,884 998,334 0.32
12/31/14
LBI Media Inc., Term Loan B, 1.909%, 3/31/12 United States 972,500 486,250 0.15
Mission Broadcasting Inc., Term Loan B, 3.209%, 10/01/12 United States 739,700 436,423 0.14
Nexstar Broadcasting Inc., Term Loan B, 3.209%, 10/01/12 United States 699,854 412,914 0.13
Univision Communications Inc., Initial Term Loan, United States 5,600,000 2,978,001 0.95
2.659% 9/29/14
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8,267,799 2.63
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BUILDING PRODUCTS
Goodman Global Holdings Co. Inc., Term Loan B, 7.708%, United States 947,500 780,207 0.25
2/13/14
NCI Building Systems Inc., Term Loan B, 1.84% - 2.66%, United States 1,625,721 1,463,149 0.46
6/18/10
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2,243,356 0.71
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CABLE & SATELLITE
Charter Communications Operating LLC,
Incremental Term Loan, 8.50%, 3/06/14 United States 2,334,738 2,003,336 0.64
Term Loan, 3.18% - 4.29%, 3/06/14 United States 492,093 377,682 0.12
CSC Holdings Inc. (Cablevision), Incremental Term Loan, United States $ 1,093,184 988,875 0.31
2.083%, 3/29/13
DIRECTV Holdings LLC, Term Loan C, 5.25%, 4/13/13 United States 1,684,006 1,625,066 0.52
Insight Midwest Holdings, Term Loan B, 2.45%, 4/02/14 United States 1,907,500 1,669,063 0.53
MCC Iowa, Term Loan E, 6.50%, 1/03/16 United States 1,242,254 1,159,436 0.37
d UPC Financing Partnership, Term Loan N, 2.198%, 12/31/14 Netherlands 4,200,000 3,391,500 1.08
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11,214,958 3.57
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CASINOS & GAMING
Ameristar Casinos Inc., Term Loan B, 2.411%, 11/10/12 United States 1,720,186 1,049,313 0.33
Las Vegas Sands LLC,
Delayed Draw I Term Loan, 2.16%, 5/23/14 United States 277,508 137,171 0.04
Term Loan B, 2.16%, 5/23/14 United States 1,131,257 559,175 0.18
Penn National Gaming Inc., Term Loan B, 2.15% - 5.89%, United States 591,807 536,695 0.17
10/03/12
VML U.S. Finance LLC (Venetian Macau),
Delayed Draw, 2.66%, 5/25/12 Macau 1,976,190 1,145,291 0.37
New Project Term Loans, 2.66%, 5/25/13 Macau 1,000,000 579,545 0.18
Term Loan B, 2.66%, 5/25/13 Macau 523,810 303,571 0.10
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4,310,761 1.37
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COMMERCIAL PRINTING
Cenveo Corp.,
Delayed Draw Term Loan, 3.275%, 6/21/13 United States 10,118 6,147 0.00/e
Term Loan C, 3.275%, 6/21/13 United States 1,024,818 622,577 0.20
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628,724 0.20
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COMMODITY CHEMICALS
f Lyondell Chemical Co.,
Tranche B-1, 6.50%, 12/20/14 United States 1,141,368 463,247 0.15
Tranche B-2, 6.50%, 12/20/14 United States 2,730,601 965,950 0.31
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1,429,197 0.46
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COMMUNICATIONS EQUIPMENT
Bright Horizons Family Solution Inc., Term Loan B, United States 1,390,506 950,759 0.30
6.25% -7.50%, 5/21/15
Brocade Communications Systems Inc., Term Loan, 7.00%, United States 1,036,875 904,674 0.29
10/07/13
CommScope Inc., Term Loan B, 2.909% - 3.959%, 12/26/14 United States 1,132,555 965,503 0.31
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2,820,936 0.90
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CONSTRUCTION & ENGINEERING
CONTECH Construction Products Inc., Term Loan B, 2.43%, United States 1,901,449 884,174 0.28
1/31/13
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CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS
Bucyrus International Inc., Tranche B Dollar Term Loan, United States 1,276,797 1,078,893 0.34
1.91% -4.526%, 5/04/14
Manitowoc Co. Inc., Term Loan B, 6.50%, 11/06/14 United States 2,800,000 2,180,500 0.70
Oshkosh Truck Corp.,
Term Loan A, 1.83% - 1.91%, 12/06/11 United States 1,162,500 784,688 0.25
Term Loan B, 1.83% - 3.70%, 12/06/13 United States 3,680,439 2,571,707 0.82
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6,615,788 2.11
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CONSTRUCTION MATERIALS
Headwaters Inc., Term Loan B, 5.97%, 4/30/11 United States 1,080,070 837,054 0.27
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DATA PROCESSING & OUTSOURCED SERVICES
Affiliated Computer Services Inc.,
Additional Term Loan, 2.386% - 2.436%, 3/20/13 United States 828,295 765,396 0.24
Term Loan B, 2.401%, 3/20/13 United States 1,261,000 1,165,243 0.37
Emdeon Business Services LLC, First Lien Term Loan, United States 963,301 833,256 0.27
3.459%, 11/16/13
First Data Corp., Term Loan B-2, 3.139% - 3.159%, United States 271,288 172,607 0.05
9/24/14
infoGROUP Inc.,
2006 Term Loan, 3.46%, 2/10/12 United States $ 2,091,551 $ 1,620,952 0.52
2007 Term Loan, 3.46%, 2/10/12 United States 1,049,745 813,552 0.26
Lender Processing Services Inc., Term Loan B, 2.909%, United States 594,506 575,185 0.18
7/02/14
Metavante Corp., Term Loan B, 4.943%, 11/01/14 United States 1,387,995 1,169,386 0.37
SunGard Data Systems Inc., Incremental Term Loan, United States 698,250 617,686 0.20
6.75%, 2/28/14
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7,733,263 2.46
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DISTILLERS & VINTNERS
Constellation Brands Inc., Term Loan B, 1.938% - United States 898,769 845,841 0.27
3.688%, 6/05/13
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DIVERSIFIED CHEMICALS
Celanese U.S. Holdings LLC, Dollar Term Loan, 2.935%, United States 740,935 608,802 0.19
4/02/14
Huntsman International LLC, Term Loan B, 2.161%, 4/21/14 United States 3,340,275 2,373,162 0.76
Ineos U.S. Finance LLC,
Term Loan B2, 8.202%, 12/16/13 United States 1,511,834 582,056 0.18
Term Loan C2, 8.702%, 12/23/14 United States 1,511,834 595,285 0.19
Invista Canada Co., Term Loan B2, 4.50%, 4/29/11 Canada 161,483 127,571 0.04
Invista SARL, Term Loan B1, 4.50%, 4/29/11 Luxembourg 587,111 463,817 0.15
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4,750,693 1.51
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DIVERSIFIED REAL ESTATE ACTIVITIES
CB Richard Ellis Services Inc., Term Loan B, 1.834%, United States 1,908,013 1,154,348 0.37
12/20/13
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DIVERSIFIED SUPPORT SERVICES
ARAMARK Corp.,
Synthetic L/C, 2.427%, 1/26/14 United States 171,159 150,572 0.05
Term Loan B, 3.334%, 1/26/14 United States 2,694,154 2,370,107 0.75
Language Lines Inc., Term Loan B, 4.71%, 6/11/11 United States 1,238,354 1,058,793 0.34
West Corp.,
Term Loan B-2, 2.731% - 2.811%, 10/24/13 United States 635,130 456,499 0.15
Term Loan B-3, 7.25%, 10/24/13 United States 992,500 820,467 0.26
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4,856,438 1.55
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EDUCATION SERVICES
Education Management LLC, Term Loan C, 3.25%, 6/01/13 United States 2,410,295 1,848,696 0.59
Laureate Education Inc.,
Closing Date Term Loan, 4.409%, 8/18/14 United States 682,972 424,297 0.14
Delayed Draw Term Loan, 4.409%, 8/18/14 United States 102,206 63,495 0.02
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2,336,488 0.75
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ELECTRICAL COMPONENTS & EQUIPMENT
Baldor Electric Co., Term Loan B, 2.188% - 2.938%, United States 1,178,514 1,030,358 0.33
1/31/14
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ELECTRONIC EQUIPMENT & INSTRUMENTS
Sensus Metering Systems Inc., Term Loan B1, 2.334% - United States 2,317,481 2,108,908 0.67
4.196%, 12/17/10
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ELECTRONIC MANUFACTURING SERVICES
FCI USA,
Term Loan B1, 4.145%, 11/01/13 United States 1,345,848 958,917 0.31
Term Loan C1, 4.145%, 11/03/14 United States 1,345,848 941,609 0.30
Flextronics International USA Inc.,
Term Loan A, 3.344% - 3.685%, 10/01/14 United States 449,614 294,497 0.09
Term Loan A-1, 3.344%, 10/01/14 United States 129,199 84,625 0.03
------------ ----------
2,279,648 0.73
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ENVIRONMENTAL & FACILITIES SERVICES
Duratek Inc. (EnergySolutions), Term Loan B, 4.15%, United States 490,898 425,854 0.13
6/07/13
EnergySolutions LLC,
Synthetic L/C, 0.39%, 6/07/13 United States $ 66,787 $ 57,938 0.02
Synthetic L/C (Add-On), 0.39%, 6/07/13 United States 1,000,000 867,500 0.28
Term Loan B, 4.15%, 6/07/13 United States 1,023,184 887,612 0.28
g EnviroSolutions Inc., Initial Term Loan, PIK, 10.50%, United States 2,218,843 1,314,665 0.42
7/07/12
Safety-Kleen Systems Inc.,
Synthetic L/C, 0.50%, 8/02/13 United States 305,085 269,570 0.09
Term Loan B, 3.00%, 8/02/13 United States 1,143,178 1,010,100 0.32
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4,833,239 1.54
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FOOD RETAIL
Pantry Inc.,
Delayed Draw Term Loan, 2.16%, 5/14/14 United States 232,906 177,591 0.06
Term Loan B, 2.16%, 5/14/14 United States 809,010 616,870 0.19
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794,461 0.25
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GENERAL MERCHANDISE STORES
Dollar General Corp., Tranche B-1 Term Loan, 3.079% - United States 600,000 506,000 0.16
3.924%, 7/07/14
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HEALTH CARE EQUIPMENT
DJO Finance LLC, Term Loan B, 3.409% - 4.459%, 5/20/14 United States 2,718,759 2,215,789 0.70
Fresenius SE (New Finco1) Term Loan B1, 6.75%, 9/10/14 Germany 519,916 500,852 0.16
Fresenius SE (APP) Term Loan B2, 6.75%, 9/10/14 Germany 280,084 269,814 0.09
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2,986,455 0.95
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HEALTH CARE FACILITIES
Community Health Systems Inc.,
Delayed Draw Term Loan, 2.72% - 3.404%, 7/25/14 United States 217,510 184,965 0.06
Term Loan, 4.439% - 4.446%, 7/25/14 United States 4,251,177 3,615,094 1.15
HCA Inc., Term Loan B-1, 3.709%, 11/18/13 United States 2,856,651 2,370,046 0.75
Health Management Associates Inc., Term Loan B, 3.209%, United States 1,097,076 787,544 0.25
2/28/14
HealthSouth Corp., Term Loan B, 2.84% - 4.75%, 3/10/13 United States 1,972,734 1,734,362 0.55
Iasis Healthcare LLC,
Delayed Draw Term Loan, 2.409%, 3/14/14 United States 1,021,107 878,152 0.28
Initial Term Loan, 2.409%, 3/14/14 United States 2,950,895 2,537,770 0.81
Synthetic L/C, 4.54%, 3/14/14 United States 273,663 235,350 0.08
Psychiatric Solutions Inc., Second Additional Term United States 747,535 655,028 0.21
Loan, 2.159% - 2.171%, 7/01/12
Vanguard Health Holding Co. II LLC, Replacement Term United States 2,413,237 2,083,830 0.66
Loan, 2.659% - 3.709%, 9/23/11
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15,082,141 4.80
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HEALTH CARE SERVICES
AMR Holdco/EmCare Holdco, Term Loan B, 2.386% - 4.189%, United States 1,209,241 1,070,178 0.34
2/10/12
DaVita Inc., Term Loan B-1, 1.84% - 2.96%, 10/05/12 United States 4,577,225 4,212,681 1.34
Fresenius Medical Care Holdings Inc., Term Loan B, Germany 1,983,552 1,799,365 0.57
2.535% - 2.953%, 3/31/13
U.S. Oncology Inc., Term Loan B, 4.561% - 6.178%, United States 1,414,781 1,273,303 0.41
8/20/11
VICAR Operating Inc., Incremental Term Loan, 1.938%, United States 884,250 786,982 0.25
5/16/11
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9,142,509 2.91
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HEALTH CARE SUPPLIES
Bausch and Lomb Inc.,
h Delayed Draw Term Loan, 3.25 - 4.709%, 4/28/15 United States 240,506 202,111 0.06
Parent Term Loan B, 4.709%, 4/28/15 United States 1,587,338 1,333,930 0.43
------------ ----------
1,536,041 0.49
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HOME FURNISHINGS
h Sealy Mattress Co., Revolver, 3.75% - 7.00%, 4/06/10 United States $ 525,000 $ 301,875 0.10
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HOUSEHOLD PRODUCTS
Prestige Brands Inc., Term Loan B, 2.659% - 2.661%, United States 828,760 725,165 0.23
4/06/11
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HOUSEWARES & SPECIALTIES
Jarden Corp.,
Term Loan B1, 3.209%, 1/24/12 United States 609,481 522,630 0.17
Term Loan B2, 3.209%, 1/24/12 United States 1,616,256 1,385,939 0.44
Jostens IH Corp. (Visant Holding Corp.), Term Loan C, United States 1,824,366 1,596,320 0.51
2.448%, 12/21/11
------------ ----------
3,504,889 1.12
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INDEPENDENT POWER PRODUCERS & ENERGY TRADERS
Dynegy Holdings Inc.,
Term L/C Facility, 1.91%, 4/02/13 United States 1,312,528 1,112,368 0.35
Term Loan B, 1.91%, 4/02/13 United States 183,737 155,717 0.05
NRG Energy Inc.,
Credit Link, 1.359%, 2/01/13 United States 1,101,487 1,023,256 0.33
Term Loan, 1.909% - 2.959%, 2/01/13 United States 2,233,739 2,075,092 0.66
Texas Competitive Electric Holdings Co. LLC,
Term Loan B-2, 3.906% - 5.888%, 10/10/14 United States 546,136 382,432 0.12
Term Loan B-3, 3.906% - 3.909%, 10/10/14 United States 987,500 690,756 0.22
------------ ----------
5,439,621 1.73
------------ ----------
INDUSTRIAL CONGLOMERATES
TriMas Co. LLC,
Term Loan B, 2.659% - 3.434%, 8/02/13 United States 2,088,102 1,273,742 0.40
Tranche B-1 L/C, 4.88%, 8/02/11 United States 492,961 300,707 0.10
------------ ----------
1,574,449 0.50
------------ ----------
INDUSTRIAL MACHINERY
CI Acquisition Inc. (Chart Industries), Term Loan B, United States 962,662 832,702 0.27
2.438%, 10/17/12
Husky Injection Molding Systems Ltd. (Ontario Inc.), Canada 1,287,000 1,184,040 0.38
Term Loan, 4.459%, 12/14/12
Mueller Water Products Inc., Term Loan B, 2.159% - United States 1,105,271 893,888 0.28
3.209%, 5/24/14
RBS Global Inc. (Rexnord Corp.),
Incremental Tranche B-2, 2.938%, 7/22/13 United States 775,272 610,527 0.19
Term Loan, 2.936% - 3.625%, 7/22/13 United States 2,703,279 2,128,832 0.68
------------ ----------
5,649,989 1.80
------------ ----------
INTEGRATED TELECOMMUNICATION SERVICES
GCI Holdings Inc., Add-On Term Loan, 4.66%, 8/31/12 United States 1,687,110 1,493,092 0.48
NTELOS Inc., Term Loan B-1, 2.66%, 8/24/11 United States 1,060,250 952,238 0.31
Wind Telecomunicazioni SpA,
Term Loan C-2, 6.635%, 5/26/14 Italy 2,650,000 2,268,400 0.72
Term Loan B-2, 5.885%, 5/26/13 Italy 2,650,000 2,270,719 0.72
Windstream Corp., Tranche B-1, 2.35% - 2.59%, 7/17/13 United States 1,659,186 1,509,859 0.48
------------ ----------
8,494,308 2.71
------------ ----------
INTERNET RETAIL
Ticketmaster, Term Loan B, 6.64%, 7/25/14 United States 900,000 666,000 0.21
------------ ----------
IT CONSULTING & OTHER SERVICES
Acxiom Corp., Term Loan B, 2.109% - 4.884%, 9/14/12 United States 1,314,746 1,104,387 0.35
------------ ----------
LEISURE FACILITIES
24 Hour Fitness Worldwide Inc., Term Loan B, 2.91% - United States $ 2,341,560 $ 1,451,767 0.46
3.93%, 6/08/12
------------ ----------
LEISURE PRODUCTS
PlayPower Inc., Term Loan B, 3.16% - 4.38%, 6/30/12 United States 629,528 497,327 0.16
------------ ----------
LIFE & HEALTH INSURANCE
Conseco Inc.,
Revolver, 2.386%, 6/22/09 United States 2,933,333 1,613,333 0.51
Term Loan, 2.386%, 10/10/13 United States 1,938,447 1,255,145 0.40
------------ ----------
2,868,478 0.91
------------ ----------
LIFE SCIENCES TOOLS & SERVICES
Life Technologies Corp., Term Loan B, 5.25%, 11/21/15 United States 498,000 489,908 0.16
------------ ----------
METAL & GLASS CONTAINERS
Anchor Glass Container Corp., Term Loan, 6.75% - United States 1,482,482 1,237,872 0.39
7.958%, 6/20/14
------------ ----------
MOVIES & ENTERTAINMENT
Cinemark USA Inc., Term Loan, 2.09% - 3.99%, 10/05/13 United States 787,838 709,448 0.22
Regal Cinemas Corp., Term Loan, 5.209%, 10/27/13 United States 993,942 904,487 0.29
Zuffa LLC, Term Loan B, 2.438%, 6/19/15 United States 1,924,600 1,409,770 0.45
------------ ----------
3,023,705 0.96
------------ ----------
OIL & GAS DRILLING
Dresser Inc., Term Loan B, 2.659% - 4.486%, 5/04/14 United States 2,745,638 1,993,163 0.64
------------ ----------
OIL & GAS EXPLORATION & PRODUCTION
ATP Oil and Gas Corp.,
Tranche B-1, 8.50%, 7/15/14 United States 506,545 294,882 0.09
Tranche B-2, 8.50%, 1/15/11 United States 158,407 92,215 0.03
------------ ----------
387,097 0.12
------------ ----------
PACKAGED FOODS & MEATS
Dean Foods Co., Term Loan B, 1.91% - 2.96%, 4/02/14 United States 3,308,208 2,992,089 0.95
Wm. Wrigley Jr. Co., Term Loan B, 4.938%, 10/06/14 United States 1,000,000 985,313 0.32
------------ ----------
3,977,402 1.27
------------ ----------
PAPER PACKAGING
Graphic Packaging International Inc., Incremental Term United States 886,704 763,397 0.24
Loan, 3.083% - 4.185%, 5/16/14
Rock-Tenn Co., Term Loan B, 5.75%, 3/05/14 United States 1,240,625 1,153,781 0.37
------------ ----------
1,917,178 0.61
------------ ----------
PAPER PRODUCTS
Domtar Corp., Term Loan, 1.796%, 3/07/14 United States 797,394 674,367 0.21
Georgia-Pacific LLC,
Additional Term Loan, 2.409% - 4.189%, 12/20/12 United States 809,321 700,569 0.22
Term Loan B, 2.409% - 4.189%, 12/20/12 United States 1,112,670 963,155 0.31
NewPage Corp., Term Loan, 5.313%, 12/22/14 United States 641,998 373,429 0.12
Verso Paper Holdings LLC, Term Loan B, 3.25%, 8/01/13 United States 998,146 718,665 0.23
------------ ----------
3,430,185 1.09
------------ ----------
PERSONAL PRODUCTS
Chattem Inc., Term Loan B, 2.598% - 2.844%, 1/02/13 United States 913,333 821,999 0.26
Herbalife International Inc., Term Loan B, 2.96%, United States $ 1,148,187 $ 815,213 0.26
7/21/13
------------ ----------
1,637,212 0.52
------------ ----------
PHARMACEUTICALS
Mylan Inc., Term Loan B, 3.688% - 4.75%, 10/02/14 United States 578,000 530,315 0.17
------------ ----------
PROPERTY & CASUALTY INSURANCE
Affirmative Insurance Holdings Inc., Term Loan, 3.909% United States 621,290 318,411 0.10
-5.696%, 1/31/14
------------ --------
PUBLISHING
Canwest Mediaworks LP, Credit D, 4.196%, 7/10/14 Canada 3,408,893 1,934,547 0.61
d Dex Media East LLC, Term Loan B, 3.18% - 4.17%, 10/24/14 United States 1,468,750 663,036 0.21
Dex Media West LLC, Term Loan B, 7.00%, 10/24/14 United States 3,179,073 1,748,490 0.56
d Idearc Inc., Term Loan B, 2.42% - 3.46%, 11/17/14 United States 7,859,743 2,729,296 0.87
Newsday LLC, Floating Rate Term Loan, 6.594%, 8/01/13 United States 2,400,000 2,070,000 0.66
f Tribune Co.,
Term Loan B, 5.25%, 5/16/14 United States 5,719,555 1,599,434 0.51
Term Loan X, 7.084%, 5/18/09 United States 1,042,571 292,963 0.09
Wenner Media LLC, Term Loan B, 3.209%, 10/02/13 United States 851,565 617,384 0.20
------------ ----------
11,655,150 3.71
------------ ---------
RESEARCH & CONSULTING SERVICES
Nielsen Finance LLC (VNU Inc.), Dollar Term Loan, United States 4,125,659 3,300,528 1.05
2.406% -4.388%, 8/09/13
------------ ----------
RESTAURANTS
Arby's Restaurant Holdings LLC, Term Loan B, 2.659%, United States 1,479,440 1,013,417 0.32
7/25/12
------------ ----------
RETAIL REITS
Macerich Co., Term Loan B, 1.938%, 4/25/10 United States 3,456,250 2,592,188 0.83
------------ ----------
SECURITY & ALARM SERVICES
Protection One Inc., Term Loan C, 2.65% - 2.66%, 3/31/12 United States 907,277 635,094 0.20
------------ ----------
SEMICONDUCTORS
Fairchild Semiconductor Corp.,
Incremental Term Loan, 3.959%, 6/26/13 United States 1,687,250 1,147,330 0.37
Initial Term Loan, 2.959%, 6/26/13 United States 913,740 598,500 0.19
------------ ----------
1,745,830 0.56
------------ ----------
SPECIALIZED CONSUMER SERVICES
Affinion Group Inc., Term Loan B, 3.959% - 4.673%, United States 1,336,171 978,745 0.31
10/17/12
------------ ----------
SPECIALTY CHEMICALS
Brenntag Holding GmbH & Co. KG,
Acquisition Facility, 2.334% - 3.501%, 1/20/14 Germany 451,636 352,276 0.11
Term Loan B2, 2.334% - 3.501%, 1/20/14 United States 848,364 608,115 0.19
Cognis GmbH, Term Loan C , 3.996%, 9/15/13 Germany 2,300,000 1,495,000 0.48
Hexion Specialty Chemicals BV, Term Loan C-2, 3.75%, Netherlands 844,790 359,036 0.11
5/03/13
Hexion Specialty Chemicals Inc., Term Loan C-1, 3.688%, United States 3,888,946 1,652,802 0.53
5/03/13
Nalco Co., Term Loan B, 2.188% - 4.188%, 11/04/10 United States 1,096,469 1,028,723 0.33
Oxbow Carbon LLC,
Delayed Draw Term Loan, 2.409%, 5/08/14 United States 289,977 199,178 0.06
Term Loan B, 2.409% - 3.459%, 5/08/14 United States 3,239,020 2,224,802 0.71
Polypore Inc., Incremental Term Loan, 2.45%, 7/03/14 United States 643,327 434,246 0.14
Rockwood Specialties Group Inc., Term Loan E, 1.909%, United States 1,676,556 1,478,722 0.47
7/30/12
------------ ----------
9,832,900 3.13
------------ ----------
SYSTEMS SOFTWARE
Audatex North America Inc., Domestic Term Loan C, United States 1,079,818 777,469 0.25
3.746%, 5/16/14
Macrovision Solutions Corp., Term Loan B, 6.00%, 5/02/13 United States $ 1,393,000 $ 1,358,175 0.43
------------ ----------
2,135,644 0.68
------------ ----------
TRADING COMPANIES & DISTRIBUTORS
Ashtead Group PLC, Term Loan, 2.188%, 8/31/11 United Kingdom 759,200 611,156 0.19
Interline Brands,
Delayed Draw Term Loan, 2.04%, 6/23/13 United States 587,886 376,247 0.12
Term Loan B, 2.04%, 6/23/13 United States 408,158 261,221 0.08
RSC Holdings III, ABL Term Loan, 2.16% - 2.22%, 11/27/12 United States 1,927,615 1,556,549 0.50
------------ ----------
2,805,173 0.89
------------ ----------
TRUCKING
Hertz Corp.,
Credit Link, 1.525%, 12/21/12 United States 104,200 66,949 0.02
Term Loan B, 2.09% - 2.19%, 12/21/12 United States 571,952 367,479 0.12
------------ ----------
434,428 0.14
------------ ----------
WIRELESS TELECOMMUNICATION SERVICES
Intelsat Corp. (Panamsat),
Tranche B-2-A, 3.925%, 1/03/14 United States 1,624,265 1,406,149 0.46
Tranche B-2-B, 3.925%, 1/03/14 United States 1,623,773 1,405,723 0.44
Tranche B-2-C, 3.925%, 1/03/14 United States 1,623,773 1,405,723 0.44
------------ ----------
4,217,595 1.34
------------ ----------
TOTAL SENIOR FLOATING RATE INTERESTS (COST $287,505,278) 212,210,716 67.58
---------------- ---------
SHORT TERM INVESTMENTS (COST $94,285,564)
i/REPURCHASE AGREEMENTS
Joint Repurchase Agreement, 0.235%, 2/02/09 United States 94,285,564 94,285,564 30.02
(Maturity Value $94,287,407)
Banc of America Securities LLC (Maturity Value $14,757,865)
Barclays Capital Inc. (Maturity Value $14,445,772)
BNP Paribas Securities Corp. (Maturity Value $14,759,751)
Credit Suisse Securities (USA) LLC
(Maturity Value $14,759,751)
Deutsche Bank Securities Inc. (Maturity Value $6,358,743)
HSBC Securities (USA) Inc. (Maturity Value $14,759,751)
UBS Securities LLC (Maturity Value $14,445,774)
Collateralized by U.S. Government Agency Securities,
2.58% - 7.125%, 3/10/09 - 2/28/18; j/U.S Governement
Agency Discount Note, 3/10/09; j/U.S. Treasury Bills,
4/09/09 and U.S. Treasury Note, 1.50%, 10/31/10.
----------------- ----------
TOTAL INVESTMENTS (COST $381,790,842) 306,496,280 97.60
OTHER ASSETS, LESS LIABILITIES 7,541,147 2.40
---------------- ---------
NET ASSETS $ 314,037,427 100.00
---------------- ---------
See Abbreviations on page XX.
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 A portion or all of the security purchased on a delayed delivery basis. See
Note 1(c).
e Rounds to less than 0.01% of net assets.
f See Note 7 regarding defaulted securities.
g Income may be received in additional securities and/or cash.
h See Note 8 regarding unfunded loan commitments.
i See Note 1(b) regardingjoint repurchase agreement.
j The security is traded on a discount basis with no stated coupon rate.
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 2009 (UNAUDITED)
Assets:
Investments in securities:
Cost - Unaffiliated issuers $ 287,505,278
Cost - Repurchase agreements 94,285,564
--------------
Total cost of investments $ 381,790,842
--------------
Value - Unaffiliated issuers $ 212,210,716
Value - Repurchase agreements 94,285,564
--------------
Total value of investments 306,496,280
Cash 889,068
Receivables:
Investment securities sold 7,644,325
Capital shares sold 571,623
Interest 1,227,577
--------------
Total assets 316,828,873
--------------
Liabilities:
Payables:
Investment securities purchased 1,462,300
Affiliates 128,830
Distributions to shareholders 992,563
Unrealized depreciation on unfunded loan
commitments (Note 8) 117,423
Accrued expenses and other liabilities 90,330
--------------
Total liabilities 2,791,446
--------------
Net assets, at value $ 314,037,427
--------------
Net assets consist of:
Paid-in capital $ 479,674,443
Undistributed net investment income 24,830
Net unrealized appreciation (depreciation) (75,411,985)
Accumulated net realized gain (loss) (90,249,861)
---------------
Net assets, at value $ 314,037,427
---------------
Net asset value and maximum offering
price per $314,037,427 x
43,540,266 shares outstanding) $ 7.21
---------------
Semiannual Report | The accompanying notes are an integral part of these
financial statements.
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
FINANCIAL STATEMENTS (CONTINUED)
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JANUARY 31, 2009 (UNAUDITED)
Investment income:
Interest $ 10,474,970
---------------
Expenses:
Management fees (Note 3a) 1,466,391
Administrative fees (Note 3b) 262,577
Custodian fees (Note 4) 5,480
Reports to shareholders 3,277
Professional fees 78,725
Trustees' fees and expenses 26,004
Other 44,380
--------------
Total expenses 1,886,834
Expense reductions (Note 4) (3,999)
Expenses waived/paid by
affiliates (Note 3d) (783,690)
--------------
Net expenses 1,099,145
--------------
Net investment income 9,375,825
--------------
Realized and unrealized gains (losses):
Net realized gain (loss) from investments (37,006,793)
Net change in unrealized appreciation
(depreciation) on investments (49,152,804)
--------------
Net realized and unrealized gain (loss) (86,159,597)
--------------
Net increase (decrease) in net assets
resulting from operations $ (76,783,772)
--------------
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED
JANUARY 31, 2009 YEAR ENDED JULY 31,
(UNAUDITED) 2008
=======-----------------------------------------
Increase (decrease) in net assets:
Operations:
Net investment income $ 9,375,825 $ 38,665,606
Net realized gain (loss) from investments (37,006,793) (40,055,119)
Net change in unrealized appreciation (depreciation) on
investments (49,152,804) 2,152,125
-----------------------------------------------
Net increase (decrease) in net assets resulting
from operations (76,783,772) 762,612
-----------------------------------------------
Distributions to shareholders from net investment income (9,320,260) (38,661,719)
Capital share transactions (Note 2) (47,104,968) (584,574,579)
-----------------------------------------------
Net increase (decrease) in net assets (133,209,000) (622,473,686)
Net assets:
Beginning of period 447,246,427 1,069,720,113
-----------------------------------------------
End of period $ 314,037,427 $ 447,246,427
-----------------------------------------------
Undistributed net investment income (distributions in
excess of net investment income) included in net assets:
End of period $ 24,830 $ (30,735)
-----------------------------------------------
Semiannual Report | The accompanying notes are an integral part of these
financial statements.
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
Notes to Financial Statements (unaudited)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Franklin Floating Rate Master Trust (Trust) is registered under the
Investment Company Act of 1940, as amended, (1940 Act) as an open-end investment
company, consisting of one fund, the Franklin Floating Rate Master Series
(Fund), which is organized as a partnership for tax purposes. The shares are
exempt from registration under the 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.
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 Trust 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 Trust'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 period end had been entered into on January 30, 2009. The joint
repurchase agreement is valued at cost.
c. SECURITIES PURCHASED ON A DELAYED DELIVERY BASIS
The Fund may purchase securities on a 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 individual
income tax returns.
The Fund has reviewed the tax positions, taken on federal income tax returns,
for each of the three open tax years and as of January 31, 2009, and has
determined that no provision for income tax is required in the Fund's financial
statements.
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. 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, on behalf of the Fund, enters into contracts with service
providers that contain general indemnification clauses. The Trust's maximum
exposure under these arrangements is unknown as this would involve future claims
that may be made against the Trust that have not yet occurred. Currently, the
Trust expects the risk of loss to be remote.
2. SHARES OF BENEFICIAL INTEREST
At January 31, 2009, there were an unlimited number of shares authorized
(without par value). Transactions in the Fund's shares were as follows:
Six Months Ended Year Ended
January 31, 2009 July 31, 2008
---------------------------------------------------------------
Shares Amount Shares Amount
---------------------------------------------------------------
Shares sold 7,478,938 $60,294,691 4,842,844 $44,297,914
Shares redeemed (13,500,907) (107,399,659) (67,790,869) (628,872,493)
---------------------------------------------------------------
Net increase (decrease) (6,021,969) $(47,104,968) (62,948,025) $(584,574,579)
---------------------------------------------------------------
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. Investment manager
Franklin Templeton Services, LLC (FT Services) Administrative manager
Franklin Templeton Investors 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.
E. OTHER AFFILIATED TRANSACTIONS
At January 31, 2009, the shares of the Fund were owned by the following
entities:
Entity SHARESSETS
- -------------------------------------------------------------------------
Franklin Floating Rate Fund, PLC 43,520,266
Franklin Resources, Inc. 10,000
Templeton Investment Counsel, LLC 10,000
------------
Total 43,540,266
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 period ended January 31, 2009, the
custodian fees were reduced as noted in the Statement of Operations.
5. INCOME TAXES
At January 31, 2009, the cost of investments and net unrealized appreciation
(depreciation) for income tax purposes were as follows:
Cost of investments $ 382,241,407
==============
Unrealized appreciation $ 484,124
Unrealized depreciation (76,229,251)
--------------
Net unrealzied appreciation (depreciation) $ (75,745,127)
==============
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
period ended January 31, 2009, aggregated $34,732,149 and $144,387,389,
respectively.
7. CREDIT RISK AND DEFAULTED SECURITIES
The Fund has 63.64% of its portfolio invested in senior secured floating rate
notes rated below investment grade. These securities may be more sensitive to
economic conditions causing greater price volatility and are potentially subject
to a greater risk of loss due to default than higher rated securities.
The Fund held defaulted securities and/or other securities for which the income
has been deemed uncollectible. At January 31, 2009, the aggregate value of these
securities was $3,321,593, representing 1.06% of the Fund's net assets. The Fund
discontinues accruing income on securities for which income has been deemed
uncollectible and provides an estimate for losses on interest receivable. The
securities have been identified on the accompanying Statement of Investments.
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 January 31, 2009, unfunded commitments were as follows:
UNFUNDED
BORROWER COMMITMENT
Bausch and Lomb, Inc., Delayed Draw Term Loan $ 160,337
Sealy Mattress Co., Revolver 225,000
-----------
$ 385,337
===========
Unfunded loan commitments and funded portions of credit agreements are marked to
market daily and any unrealized appreciation or depreciation is included in the
Statement of Assets and Liabilities and Statement of Operations.
9. SHAREHOLDER DISTRIBUTIONS
For the period ended January 31, 2009, the Fund made the following
distributions:
PAYMENT DATE AMOUNT PRE SHARE
- -----------------------------------------------
8/29/2008 $0.036180
9/30/2008 $0.035554
10/31/2008 $0.040650
11/28/2008 $0.034303
12/31/2008 $0.031261
1/30/2009 $0.022877
-----------
Total $0.200825
============
10. CREDIT FACILITY
Effective, January 23, 2009, the Fund, together with other U.S. registered and
foreign investment funds managed by Franklin Templeton Investments
(individually, "Borrower"; collectively "Borrowers"), entered into a joint
syndicated senior unsecured credit facility totaling $725 million (Global Credit
Facility) to provide a source of funds to the Borrowers for temporary and
emergency purposes, including the ability to meet future unanticipated or
unusually large redemption requests.
Under the terms of the Global Credit Facility, the Fund shall, in addition to
interst charges on any borrowings made by the Fund and other costs incurred by
the Fund, pay its share of fees and expenses incurred in connection with the
implementation and maintenance of the Global Credit Facility, based upon its
relative share of the aggregate net assets of all of the Borrowers, including an
annual commitment fee based upon the unused portion of the Global Credit
Facility. During the period ended January 31, 2009, the Fund did not utilize the
Global Credit Facility.
11. FUND LITIGATION
On July 6, 2003, Adelphia Communications Corp. ("Adelphia") and related parties,
along with its Official Committee of Unsecured Creditors, (collectively
"Plaintiffs") filed an adversary proceeding in the then-pending Adelphia
bankruptcy case in the U.S. Bankruptcy Court for the Southern District of New
York 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 Floating Rate Daily Access Fund (individually
and as successor to the Franklin Floating Rate Trust's interests in the credit
facilities at issue), Franklin Floating Rate Trust, and Franklin Floating Rate
Master Series (collectively the "Franklin Defendants"), and Franklin CLOs I-III,
among other defendants. In addition, Advisers was originally named as a
defendant, but later dismissed from the lawsuit. The complaint alleged 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 and sought avoidance of the loans and recovery of fraudulent transfers
(the "Complaint"). The agent bank and investment bank defendants moved to
dismiss the Complaint, which the Bankruptcy Court granted in part and denied in
part, with leave to amend the Complaint. The reference to the bankruptcy was
withdrawn and the matter was transferred to the U.S. District Court for the
Southern District of New York.
On October 22, 2007, Plaintiffs filed an amended complaint, largely duplicating
the allegations in the original Complaint, and adding hundreds of additional
syndicate lender defendants (the "Amended Complaint"). The Franklin Defendants,
among others, moved to dismiss the Amended Complaint on December 20, 2007. On
June 17, 2008, the court granted the motions and dismissed all of the claims
against certain defendants, including the Franklin Defendants, while leaving
other claims against other defendants outstanding. On July 17, 2008, defendants,
including the Franklin Defendants, filed a motion asking the court to enter
final judgment with respect to the dismissed claims. Plaintiffs then agreed to
the entry of a final judgment and the parties filed a stipulation to that effect
with the court. On December 8, 2008, the court accepted the parties' stipulation
and entered final judgment with respect to the dismissed claims, and Plaintiffs
filed a notice of appeal from that judgment to the U.S. Court of Appeals for the
Second Circuit on January 6, 2009.
12. FAIR VALUE MEASUREMENTS
The Fund adopted Financial Accounting Standards Board (FASB) Statement No. 157,
"Fair Value Measurement" (SFAS 157), on August 1, 2008. SFAS 157 defines fair
value, establishes a framework for measuring fair value, and expands disclosures
about fair value measurements. The Fund has determined that the implementation
of SFAS 157 did not have a material impact on the Fund's financial statements.
SFAS 157 establishes a fair value hierarchy that distinguishes between market
data obtained from independent sources (observable inputs) and the Trust's own
market assumptions (unobservable inputs). These inputs are used in determining
the value of the Fund's investments and are summarized in the following fair
value hierarchy:
o Level 1 - quoted prices in active markets for identical securities
o Level 2 - other significant observable inputs (including quoted prices
for similar securities, interest rates, prepayment speed, credit risk,
etc.)
o Level 3 - significant unobservable inputs (including the Fund's own
assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not an indication of
the risk associated with investing in those securities.
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
---------------------------------------------------
Assets:
Investments in Securities $ - $306,496,280 $ - $306,496,280
Liabilities:
Other Financial Instruments/a $ - (117,423) $ - (117,423)
a/Other financial instruments included net unrealzied appreciation
(depreciation) on unfolded loan commitments.
13. NEW ACCOUNTING PRONOUNCEMENTS
In March 2008, FASB issued FASB Statement No. 161, "Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133"
(SFAS 161), which expands disclosures about derivative investments and hedging
activities. SFAS 161 is effective for fiscal years and interim periods beginning
after November 15, 2008. The Fund believes applying the various provisions of
SFAS 161 will not have a material impact on its financial statements.
- -------------------------------------------------------------------------------
ABBREVIATIONS
SELECTED PORTFOLIO
L/C Letter of Credit
PIK Payment-In-Kind
REIT Real Estate Investment Trust
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
SHAREHOLDER INFORMATION
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 (954) 527-7678 or
by sending a written request to: Franklin Templeton Companies, LLC, 500 East
Broward Boulevard, Suite 1500, Fort Lauderdale, FL 33394, Attention: Proxy
Group. Copies of the Fund's proxy voting records are also made available online
at franklintempleton.com and posted on the U.S. Securities and Exchange
Commission's website at sec.gov and reflects 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. N/A
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 Laura F. Fergerson, Chief Executive Officer - Finance and Administration, and
Gaston Gardey, Chief Financial Officer, Chief Accounting Officer and Treasurer
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of
Laura F. Fergerson, Chief Executive Officer - Finance and Administration, and
Gaston Gardey, Chief Financial Officer, Chief Accounting Officer and Treasurer
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/LAURA F. FERGERSON
---------------------------------------
Laura F. Fergerson
Chief Executive Officer - Finance
and Administration
Date March 27, 2009
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/LAURA F. FERGERSON
---------------------------------------
Laura F. Fergerson
Chief Executive Officer - Finance
and Administration
Date March 27, 2009
By /s/GASTON GARDEY
---------------------------------------
Gaston Gardey
Chief Financial Officer, Chief
Accounting Officer and Treasurer
Date March 27, 2009