UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-09869
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FRANKLIN FLOATING RATE MASTER TRUST
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(Exact name of registrant as specified in charter)
ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906
(Address of principal executive offices) (Zip code)
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: 7/31/09
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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,
2009 2008 2007 2006 2005
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PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of year $9.02 $9.51 $9.77 $9.85 $9.84
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Income from investment operations/a:
Net investment income 0.325 0.549 0.655 0.565 0.398
Net realized and unrealized gains (losses) (0.780) (0.493) (0.258) (0.076) 0.013
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Total from investment operations (0.455) 0.056 0.397 0.489 0.411
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Less distributions from net investment income (0.325) (0.546) (0.657) (0.569) (0.401)
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Net asset value, end of year $8.24 $9.02 $9.51 $9.77 $9.85
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Total return (4.65)% 0.64% 4.09% 5.09% 4.23%
RATIOS TO AVERAGE NET ASSETS
Expenses before waiver and payments by affiliates 1.02% 1.00% 0.95% 0.95% 0.95%
Expenses net of waiver and payments by affiliates(b) 0.69% 0.60% 0.60% 0.60% 0.60%
Net investment income 4.27% 6.16% 6.70% 5.76% 4.08%
SUPPLEMENTAL DATA
Net assets, end of year (000's) $340,579 $447,246 $1,069,720 $1,140,854 $1,121,133
Portfolio turnover rate 53.88% 28.10% 77.72% 78.29% 72.38%
(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) Benefit of expense reduction rounds to less than 0.01%.
Anual 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, JULY 31, 2009
PRINCIPAL % OF NET
COUNTRY AMOUNT/a VALUE ASSETS
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b, c SENIOR FLOATING RATE INTERESTS
AEROSPACE & DEFENSE
BE Aerospace Inc., Term Loan B, 5.75% 7/28/14 United States $ 2,286,725 $ 2,825,296 0.67
Hawker Beechcraft Inc.,
Synthetic L/C, 2.598%, 3/26/14 United States 133,797 91,484 0.03
Term Loan B, 2.285% - 2.598%, 3/26/14 United States 2,266,962 1,550,035 0.45
ILC Industries Inc., June 2006 Term Loan, 2.285%, United States 724,488 688,264 0.20
2/24/12
L-1 Identity Solutions Operating Co., Tranche B-1 Term United States 1,355,000 1,361,210 0.40
Loan, 6.75%, 8/05/13
Spirit Aerosystems Inc. (Onex Wind Finance LP), Term United States 2,937,011 2,870,929 0.84
B-1 Loan, 2.255%, 12/31/11
TransDigm Inc., Term Loan B, 2.285%, 6/23/13 United States 2,650,000 2,572,707 0.76
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11,419,925 3.35
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APPLICATION SOFTWARE
CCC Information Services Group Inc., Term Loan B, United States 558,323 536,455 0.16
2.54%, 2/10/13
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AUTO PARTS & EQUIPMENT
Affinia Group Inc., Term Loan B, 3.488%, 11/30/11 United States 737,531 678,528 0.20
Cooper Standard Automotive Inc.,
DIP Facility, 12.25%, 4/24/10 United States 600,000 600,000 0.18
Term Loan C, 3.125%, 12/23/11 United States 1,750,114 1,233,830 0.36
Dayco Products LLC (Mark IV),
d/Replacement Term Loan, 6.75%, 6/23/11 United States 3,380,745 950,834 0.28
U.S. Term Facility (DIP TL), 8.50%, 5/04/11 United States 700,000 648,145 0.19
Federal-Mogul Corp., Term Loan B, 2.228% - 2.248%, United States 2,401,261 1,818,955 0.54
12/27/14
Key Safety Systems Inc., Term Loan B, 2.538% - 2.851%, United States 4,547,725 1,932,783 0.57
3/10/14
United Components Inc., Term Loan D, 3.21%, 6/29/12 United States 746,564 658,843 0.19
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8,521,918 2.51
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BROADCASTING
e Bresnan Communications LLC,
Add-on Term Loan, 4.25%, 9/29/13 United States 1,200,750 1,154,472 0.34
Initial Term Loan B, 4.25% 9/29/13 United States 299,250 290,215 0.09
Citadel Broadcasting Corp., Term Loan B, 2.33% - 2.35%, United States 2,573,388 1,460,398 0.43
6/12/14
Discovery Communications Inc.,
Term Loan B, 2.598%, 5/14/14 United States 3,357,296 3,315,330 0.97
Term Loan B, 2.598%, 5/14/14 United States 897,750 912,338 0.27
Entravision Communications Corp., Term Loan B, 5358%,
3/29/13 United States 1,437,372 1,354,723 0.40
Gray Television Inc., Term Loan B, 3.81%, 12/31/14 United States 2,239,136 1,430,248 0.42
LBI Media Inc., Term Loan B, 1.785%, 3/31/12 United States 967,500 717,159 0.21
Mission Broadcasting Inc., Term Loan B, 2.348%, 10/01/12 United States 735,877 553,748 0.16
Nexstar Broadcasting Inc., Term Loan B, 2.089% - 2.238%,
10/01/12 United States 695,962 523,712 0.15
Univision Communications Inc., Initial Term Loan, United States 5,600,000 4,534,835 1.33
2.535% 9/29/14
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16,247,178 4.77
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BUILDING PRODUCTS
Goodman Global Holdings Co. Inc., Term Loan B, 6.50%, United States 947,500 927,958 0.27
2/13/14
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CABLE & SATELLITE
e CSC Holdings Inc. (Cablevision), Incremental Term Loan United States 1,386,790 1,355,339 0.40
B-2, 2.038%, 3/29/16
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
DIRECTV Holdings LLC, Term Loan C, 5.25%, 4/13/13 United States $ 3,171,766 $ 3,188,617 0.94
Insight Midwest Holdings, Term Loan B, 2.31%, 4/02/14 United States 1,907,500 1,810,763 0.53
MCC Iowa, Term Loan E, 6.50%, 1/03/16 United States 1,236,011 1,241,419 0.36
UPC Financing Partnership,
Term Loan N, 2.059%, 12/31/14 Netherlands 2,722,809 2,605,388 0.77
Term Loan T, 3.809%, 12/31/16 Netherlands 1,477,191 1,445,184 0.42
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11,646,710 3.42
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CASINOS & GAMING
Ameristar Casinos Inc., Term Loan B, 3.76%, 11/10/12 United States 1,711,319 1,668,536 0.49
CCM Merger Inc. (MotorCity Casin), Term Loan B, 8.50%,
7/13/12 United States 1,116,842 1,028,891 0.30
Green Valley Ranch Gaming LLC, Term Loan B, 4.25%, 2/16/14 United States 53,125 37,387 0.01
Penn National Gaming Inc., Term Loan B, 2.04% - 2.72%, United States 3,263,430 3,202,824 0.94
10/03/12
VML U.S. Finance LLC (Venetian Macau),
Delayed Draw, 2.85%, 5/25/12 Macau 2,364,321 2,194,878 0.65
New Project Term Loans, 2.85%, 5/25/13 Macau 1,918,919 1,781,396 0.52
Term Loan B, 2.85%, 5/25/13 Macau 1,203,009 1,116,793 0.33
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11,030,705 3.24
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COMMERCIAL PRINTING
Cenveo Corp.,
Delayed Draw Term Loan, 5.109%, 6/21/13 United States 9,817 9,424 0.00/f
Term Loan C, 5.109%, 6/21/13 United States 994,296 954,524 0.28
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963,948 0.28
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COMMUNICATIONS EQUIPMENT
Brocade Communications Systems Inc., Term Loan, 7.00%, United States 946,774 951,311 0.28
10/07/13
CommScope Inc., Term Loan B, 3.098, 12/16/14 United States 772,674 756,014 0.22
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1,707,325 0.50
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CONSTRUCTION & ENGINEERING
URS Corp., Term Loan B, 2.535% - 2.845%, 5/15/13 United States 2,342,242 2,335,4104 0.69
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CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS
Bucyrus International Inc., Tranche B Dollar Term Loan, United States 1,270,316 1,203,624 0.35
1.79% - 2.52%, 5/04/14
Oshkosh Truck Corp.,
Term Loan A, 8.25%, 12/06/11 United States 706,500 695,903 0.21
Term Loan B, 6.60% - 6.64%, 12/06/13 United States 1,542,162 1,531,422 0.45
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3,430,949 1.01
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CONSTRUCTION MATERIALS
Headwaters Inc., Term Loan B, 5.960, 4/30/11 United States 1,181,238 1,126,606 0.33
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DATA PROCESSING & OUTSOURCED SERVICES
Affiliated Computer Services Inc.,
Additional Term Loan, 2.285% - 2.296%, 3/20/13 United States 2,018,906 1,984,069 0.58
Term Loan B, 2.285%, 3/20/13 United States 1,254,500 1,232,854 0.36
e Emdeon Business Services LLC, First Lien Term Loan, United States 2,733,740 2,665,397 0.78
2.29% - 2.598%, 11/16/13
First Data Corp., Term Loan B-2, 3.035, 9/24/14 United States 1,267,376 1,073,309 0.32
Lender Processing Services Inc., Term Loan B, 2.785%, United States 591,519 592,258 0.17
7/02/14
Metavante Corp., Term Loan B, 2.778%, 11/01/14 United States 5,216,031 5,126,926 1.51
SunGard Data Systems Inc.,
Incremental Term Loan, 6.75%, 2/28/14 United States 694,750 696,114 0.21
Tranche B U.S. TL, 3.993% - 4.604%, 2/28/16 United States 897,698 862,239 0.25
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14,233,166 4.18
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FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
DISTILLERS & VINTNERS
Constellation Brands Inc., Term Loan B, 1.813%, 6/05/13 United States $ 2,267,491 $ 2,232,771 0.66
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DIVERSIFIED CHEMICALS
Ashland Inc., Term Loan B, 7.65%, 5/13/14 United States 1,479,363 1,507,649 0.44
Celanese U.S. Holdings LLC, Dollar Term Loan, 2.345%, United States 1,767,164 1,677,977 0.49
4/02/14
Huntsman International LLC, Term Loan B, 2.038%, 4/21/14 United States 3,806,535 3,538,174 1.04
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6,723,800 1.97
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DIVERSIFIED REAL ESTATE ACTIVITIES
e CB Richard Ellis Services Inc., Term Loan B, 6.00% - United States 1,712,274 1,630,941 0.48
6.25%, 12/20/13
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DIVERSIFIED SUPPORT SERVICES
ARAMARK Corp.,
Synthetic L/C, 2.336%, 1/26/14 United States 320,496 304,872 0.09
Term Loan B, 2.473%, 1/26/14 United States 5,044,817 4,798,882 1.41
e JohnsonDiversey Inc.,
Delay Draw, 3.016%, 12/16/10 United States 506,349 495,589 0.15
Term Loan B, 3.016%, 12/16/11 United States 3,071,495 3,006,226 0.88
Language Lines Inc., Term Loan B, 3.85%, 6/11/11 United States 1,175,142 1,142,826 0.33
West Corp.,
Term Loan B-2, 2.66% - 2.677%, 10/24/13 United States 1,319,550 1,253,401 0.37
Term Loan B-3, 7.25%, 10/24/13 United States 987,500 996,963 0.29
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11,998,759 3.52
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DRUG RETAIL
Rite Aid Corp.,
Tranche 3 Term Loan, 5.25%, 6/04/14 United States 682,972 424,297 0.14
Tranche 4 Term Loan, 9.50%, 6/10/15 United States 102,206 63,495 0.02
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1,468,861 0.43
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EDUCATION SERVICES
Bright Horizons Family Solution Inc., Term Loan B,
7.50%, 5/21/15 United States 1,383,519 1,308,809 0.39
Education Management LLC, Term Loan C, 2.375%, 6/01/13 United States 2,696,901 2,589,024 0.76
Laureate Education Inc.,
Closing Date Term Loan, 3.754%, 8/18/14 United States 1,317,872 1,165,658 0.34
Delayed Draw Term Loan, 3.754%, 8/18/14 United States 197,231 174,451 0.05
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5,237,942 1.54
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ELECTRICAL COMPONENTS & EQUIPMENT
Baldor Electric Co., Term Loan B, 5.258%, 1/31/14 United States 3,346,687 3,284,535 0.96
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ELECTRONIC MANUFACTURING SERVICES
FCI USA,
Term Loan B1, 3.406%, 11/01/13 United States 1,339,473 910,841 0.27
Term Loan C1, 3.406%, 11/03/14 United States 1,339,473 930,934 0.27
Flextronics International USA Inc.,
Term Loan A, 2.552% - 2.847%, 10/01/14 United States 447,337 389,276 0.12
Term Loan A-1, 2.759%, 10/01/14 United States 128,545 111,861 0.03
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2,342,912 0.69
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ENVIRONMENTAL & FACILITIES SERVICES
Casella Waste Systems Inc., Term Loan B, 7.00%, 4/09/14 United States 650,000 645,125 0.19
Duratek Inc. (EnergySolutions), Term Loan B, 2.54%, United States 687,215 645,983 0.19
6/07/13
EnergySolutions LLC,
Synthetic L/C, 2.54%, 6/07/13 United States 95,475 90,701 0.03
Synthetic L/C (Add-On), 2.54%, 6/07/13 United States 1,060,905 1,007,860 0.30
Term Loan B, 2.54%, 6/07/13 United States 1,432,370 1,346,427 0.39
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
g EnviroSolutions Inc., Initial Term Loan, PIK, 10.50%, United States $ 2,218,843 $ 1,608,662 0.47
7/07/12
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5,344,758 1.57
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FOOD DISTRIBUTORS
JRD Holdings Inc., Term Loan, 2.538%, 7/02/14 United States 1,500,000 1,443,750 0.42
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FOOD RETAIL
Pantry Inc.,
Delayed Draw Term Loan, 1.79%, 5/14/14 United States 298,686 280,205 0.08
Term Loan B, 1.79%, 5/14/14 United States 1,037,188 973,012 0.29
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794,461 0.25
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GENERAL MERCHANDISE STORES
Dollar General Corp., Tranche B-1 Term Loan, 3.035% - United States 3,200,000 3,123,501 0.92
3.238%, 7/07/14
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HEALTH CARE EQUIPMENT
DJO Finance LLC, Term Loan B, 3.285% - 3.598%, 5/20/14 United States 2,705,028 2,533,711 0.75
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HEALTH CARE FACILITIES
Community Health Systems Inc.,
Delayed Draw Term Loan, 2.535%, 7/25/14 United States 275,930 259,875 0.08
Term Loan, 2.535% - 2.924%, 7/25/14 United States 5,406,674 5,092,411 1.49
HCA Inc., Term Loan B-1, 3.848%, 11/18/13 United States 4,523,656 4,254,797 1.25
Health Management Associates Inc., Term Loan B, 2.348%, United States 691,266 643,633 0.19
2/28/14
HealthSouth Corp., Term Loan B, 2.54%, 3/10/13 United States 2,700,282 2,580,697 0.76
Iasis Healthcare LLC,
Delayed Draw Term Loan, 2.285%, 3/14/14 United States 1,134,850 1,063,921 0.31
Initial Term Loan, 2.285%, 3/14/14 United States 3,279,390 3,074,428 0.90
Synthetic L/C, 2.37%, 3/14/14 United States 305,683 286,578 0.08
LifePoint Hospitals Inc., Term Loan B, 2.295%,
4/15/12 United States 2,970,414 2,854,568 0.84
e Psychiatric Solutions Inc., Term Loan, 2.038% - United States 1,890,117 1,796,793 0.53
2.052%, 7/01/12
Vanguard Health Holding Co. II LLC, Replacement Term United States 3,897,436 3,773,205 1.11
Loan, 2.535%, 9/23/11
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25,680,906 7.54
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HEALTH CARE SERVICES
AMR Holdco/EmCare Holdco, Term Loan B, 2.285% - 2.302%, United States 1,202,959 1,151,833 0.34
2/10/12
DaVita Inc., Term Loan B-1, 1.79% - 2.10%, 10/05/12 United States 4,577,225 4,394,136 1.29
Fresenius Medical Care Holdings Inc., Term Loan B, Germany 2,071,292 2,009,584 0.59
1.885% - 1.985%, 3/31/13
Fresenius SE (APP), Term Loan B2, 6.75%, 9/10/14, Germany 277,984 280,833 0.08
Fresenius SE (New Finco1), Term Loan B, 6.75%, 9/10/14 Germany 516,016 521,305 0.15
Team Finance LLC, Term Loan B, 2.608% - 2.716%, United States 1,143,014 1,074,433 0.31
11/23/12
VICAR Operating Inc., Incremental Term Loan, 1.813%, United States 879,750 844,560 0.25
5/16/11
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10,276,684 3.01
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HEALTH CARE SUPPLIES
Bausch and Lomb Inc.,
Delayed Draw Term Loan, 3.535%-3.848%, 4/28/15 United States 299,833 284,895 0.08
Parent Term Loan, 3.848%, 4/28/15 United States 1,181,341 1,122,485 0.33
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1,407,380 0.41
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HOUSEHOLD PRODUCTS
Prestige Brands Inc., Term Loan B, 2.535%, 4/06/11 United States 732,518 719,699 0.21
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FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
HOUSEWARES & SPECIALTIES
Jarden Corp.,
Term Loan B1, 2.348%, 1/24/12 United States $ 1,647,892 $ 1,611,639 0.47
Term Loan B2, 2.348%, 1/24/12 United States 1,685,964 1,648,872 0.48
Jostens IH Corp. (Visant Holding Corp.), Term Loan C, United States 1,824,366 1,774,196 0.52
2.637%, 10/04/11
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5,034,707 1.48
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INDEPENDENT POWER PRODUCERS & ENERGY TRADERS
Dynegy Holdings Inc.,
Term L/C Facility, 1.79%, 4/02/13 United States 1,447,792 1,404,358 0.41
Term Loan B, 1.79%, 4/02/13 United States 193,751 187,939 0.06
e NRG Energy Inc.,
Credit Link, 0.498%, 2/01/13 United States 1,728,754 1,643,613 0.48
Term Loan, 1.785% - 2.098%, 2/01/13 United States 3,225,076 3,066,241 0.90
Texas Competitive Electric Holdings Co. LLC,
Term Loan B-2, 3.785% - 3.802%, 10/10/14 United States 543,371 420,962 0.13
Term Loan B-3, 3.785% - 3.802%, 10/10/14 United States 982,500 757,906 0.22
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7,481,019 2.20
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INDUSTRIAL CONGLOMERATES
Manitowoc Co., Inc., Term Loan B, 7.50%, 11/06/14 United States 2,786,000 2,532,939 0.74
Sensus Metering Systems Inc., Term Loan B-3, United States 1,293,083 1,293,083 0.38
7.00%, 6/17/13
TriMas Co. LLC,
Term Loan B, 2.535% - 2.752%, 8/02/13 United States 1,350,242 1,218,593 0.36
Tranche B-1 L/C, 2.595%, 8/02/11 United States 320,405 289,166 0.08
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5,320,851 1.56
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INDUSTRIAL MACHINERY
Amsted Industries Inc., Delayed Draw, 2.60% - 3.007% United States 997,469 935,958 0.27
4/05/13
CI Acquisition Inc. (Chart Industries), Term Loan B, United States 962,662 900,088 0.26
2.313%, 10/17/12
Husky Injection Molding Systems Ltd. (Ontario Inc.), Canada 1,267,500 1,254,825 0.37
Term Loan, 3.848%, 12/14/12
Iltron Inc., Dollar Term Loan, 3.79%, 4/18/14 United States 1,343,797 1,340,095 0.39
Mueller Water Products Inc., Term Loan B, 5.988% - United States 650,244 599,309 0.18
6.098%, 5/24/14
RBS Global Inc. (Rexnord Corp.),
Incremental Tranche B-2, 2.313%, 7/22/13 United States 1,569,271 1,412,344 0.41
Tranche B-1 Term B Loan, 2.813%-3.063%, 7/22/13 United States 3,503,279 3,187,983 0.94
----------------- ----------
9,630,602 2.82
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INTEGRATED TELECOMMUNICATION SERVICES
GCI Holdings Inc., Add-On Term Loan, 4.54%, 8/31/12 United States 1,678,546 1,644,975 0.48
NTELOS Inc., Term Loan B-1, 2.54%, 8/24/11 United States 1,054,755 1,048,163 0.31
Wind Telecomunicazioni SpA,
Term Loan B-2, 3.991%, 5/26/13 Italy 2,650,000 2,527,806 0.74
Term Loan C-2, 4.991%, 5/26/13 Italy 2,650,000 2,526,332 0.74
Windstream Corp., Tranche B-1, 1.79% - 2.02%, 7/17/13 United States 3,144,402 3,050,070 0.90
----------------- ----------
10,797,346 3.17
----------------- ----------
INTERNET RETAIL
Ticketmaster, Term Loan B, 3.60%, 7/25/14 United States 450,000 436,500 0.13
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IT CONSULTING & OTHER SERVICES
Acxiom Corp., Term Loan B, 2.035% - 2.92%, 9/14/12 United States 809,778 779,412 0.23
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LEISURE FACILITIES
24 Hour Fitness Worldwide Inc., Term Loan B, 2.79% - United States 2,329,521 2,015,036 0.59
3.08%, 6/08/12
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FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
LEISURE PRODUCTS
PlayPower Inc., Term Loan B, 5.49% - 5.67%, 6/30/12 United States $ 569,011 $ 513,533 0.15
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LIFE & HEALTH INSURANCE
e Conseco Inc., Term Loan, 2.386%, 10/10/13 United States 5,537,649 4,042,484 1.19
----------------- ----------
LIFE SCIENCES TOOLS & SERVICES
Life Technologies Corp., Term Loan B, 5.25%, 11/21/15 United States 395,654 399,776 0.12
----------------- ----------
METAL & GLASS CONTAINERS
Anchor Glass Container Corp., Term Loan, 6.75%, 6/20/14 United States 1,329,601 1,302,454 0.38
Crown Americas LLC,
Additional Term B Dollar Loan, 2.038%, 11/15/12 United States 621,795 608,582 0.18
e Term B Dollar Loan, 2.038%, 11/15/12 United States 1,978,205 1,936,168 0.57
Owens-Brockway Glass Container Inc., Term Loan B, 3.75%, United States 1,150,000 1,141,375 0.33
6/20/14
----------------- ----------
4,988,579 1.46
MOVIES & ENTERTAINMENT
Cinemark USA Inc., Term Loan, 2.04% - 2.67%, 10/05/13 United States 1,380,739 1,326,883 0.39
Metro-Goldwyn-Mayer Inc., Term Loan B, 3.535%, 10/05/13 United States 2,640,000 1,531,200 0.45
e Regal Cinemas Corp., Term Loan, 4.348%, 10/27/13 United States 2,258,216 2,243,388 0.66
Zuffa LLC, Term Loan B, 2.375%, 6/19/15 United States 1,914,830 1,693,821 0.49
----------------- ----------
6,795,292 1.99
----------------- ----------
OIL & GAS DRILLING
Dresser Inc., Term Loan B, 3.104%, 5/04/14 United States 2,745,638 2,565,456 0.75
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PACKAGED FOODS & MEATS
B&G Foods, Inc., Term Loan C, 4.45%, 2/23/13 United States 793,814 779,261 0.23
Dean Foods Co., Term Loan B, 1.975%, 4/02/14 United States 3,687,801 3,557,190 1.04
e Del Monte Foods Co., Term Loan B, 1.785%-1.988%, 2/8/12 United States 2,159,332 2,145,836 0.63
Michale Foods Inc., Term Loan B, 6/50%, 5/01/14 United States 1,506,545 1,521,610 0.45
Wm. Wrigley Jr. Co., Term Loan B, 6.50%, 10/06/14 United States 975,000 987,696 0.29
----------------- ----------
8,991,593 2.64
----------------- ----------
PAPER PACKAGING
Rock-Tenn Co., Term Loan B, 5.75%, 3/05/14 United States 1,223,396 1,211,162 0.36
----------------- ----------
PAPER PRODUCTS
e Domtar Corp., Term Loan, 1.671%, 3/07/14 United States 1,937,124 1,856,814 0.55
Georgia-Pacific LLC,
Additional Term Loan, 2.30% - 2.339%, 12/20/12 United States 471,231 455,916 0.13
e Term Loan B, 2.30% - 2.65%, 12/20/12 United States 1,231,614 1,191,586 0.35
e Term Loan C, 3.55% - 3.90%, 12/23/14 United States 937,765 917,765 0.27
Graphic Packaging International Inc., 2008 United States 886,842 855,842 0.25
Incremental Term Loan, 3.059% - 3.347%, 5/16/14
NewPage Corp., Term Loan, 4.063%, 12/22/14 United States 1,405,000 1,221,472 0.36
----------------- ----------
6,499,395 1.91
----------------- ----------
PERSONAL PRODUCTS
Chattem Inc., Term Loan B, 2.038% - 2.259%, 1/02/13 United States 900,499 866,730 0.26
Herbalife International Inc., Term Loan B, 1.78-2.10%, United States 1,142,314 1,070,919 0.31
7/21/13
----------------- ----------
1,937,646 0.57
----------------- ----------
PHARMACEUTICALS
Mylan Inc., Term Loan B, 3.563% - 3.875%, 10/02/14 United States 1,710,435 1,666,305 0.49
----------------- ----------
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
PROPERTY & CASUALTY INSURANCE
Affirmative Insurance Holdings Inc., Term Loan, 9.25%, United States $ 594,299 $ 314,978 0.09
1/31/14
----------------- ----------
PUBLISHING
Dex Media East LLC, Term Loan B, 2.49% - 2.67%, 10/24/14 United States 608,287 457,431 0.13
Dex Media West LLC, Term Loan B, 7.00%, 10/24/14 United States 4,381,844 3,568,464 1.05
Newsday LLC, Floating Rate Term Loan, 6.009%, 8/01/13 United States 2,400,000 2,379,000 0.70
e R.H. Donnelley Inc., Term Loan D-2, 4.00%, 6/30/11 United States 2,322,396 1,792,116 0.53
d Tribune Co.,
Term Loan B, 5.25%, 5/16/14 United States 6,419,555 2,646,462 0.78
Term Loan X, 5.00%, 5/18/09 United States 1,042,571 426,586 0.12
Tribune Receivables LLC, Term Loan (DIP), 9.00%, 4/10/10 United States 1,700,000 1,712,750 0.50
Wenner Media LLC, Term Loan B, 2.035%, 10/02/13 United States 846,487 770,303 0.23
----------------- ----------
13,753,112 4.04
----------------- ----------
RAILROADS
Kansas City Southern Railway Co., Term Loan B, United States 2,493,573 2,319,023 0.68
2.04% - 2.76%, 4/26/13 -------------- ----------
RESEARCH & CONSULTING SERVICES
Alix Partners LLP, Term Loan C, 2.29%-2.51%, 10/12/13 United States 1,458,727 1,436,846 0.42
Nielsen Finance LLC (VNU Inc.),
Class A Term Loan, 2.30%, 8/09/13 United States 2,280,537 2,126,584 0.63
Class B Term Loan, 4.05%, 5/02/16 United States 516,646 487,584 0.14
----------------- ----------
4,051,031 1.19
----------------- ----------
RETAIL REITS
Macerich Co., Term Loan B, 1.813%, 4/25/10 United States 1,037,447 980,388 0.29
----------------- ----------
SECURITY & ALARM SERVICES
Protection One Inc., Term Loan C, 2.54%, 3/31/12 United States 902,612 861,994 0.25
----------------- ----------
SEMICONDUCTORS
Fairchild Semiconductor Corp.,
Incremental Term Loan, 2.785%, 6/26/13 United States 1,678,750 1,540,253 0.45
----------------- ----------
SPECIALIZED CONSUMER SERVICES
Affinion Group Inc., Term Loan B, 2.785%, 10/17/12 United States 2,323,115 2,213,929 0.65
----------------- ----------
SPECIALTY CHEMICALS
Brenntag Holding GmbH & Co. KG,
Acquisition Facility, 2.289% - 2.985%, 1/20/14 Germany 441,369 420,404 0.12
Term Loan B2, 2.289%, 1/20/14 United States 829,690 790,280 0.23
Cognis GmbH, Term Loan C, 2.618%, 9/15/13 Germany 2,300,000 1,964,584 0.58
Compass Minerals Group Inc., Term Loan, 1.79%-2.10% Germany 1,358,294 1,327,732 0.39
12/22/12
Hexion Specialty Chemicals BV, Term Loan C-2, 2.875% Netherlands 840,458 634,546 0.19
5/03/13
Hexion Specialty Chemicals Inc., Term Loan C-1, 2.875%, United States 3,869,003 2,921,097 0.86
5/03/13
Nalco Co.,
Term Loan, 6.50%, 5/13/16 United States 2,032,557 2,060,504 0.60
Term Loan B, 2.063%, 11/01/10 United States 196,971 196,528 0.06
Oxbow Carbon LLC,
Delayed Draw Term Loan, 2.31%, 5/08/14 United States 288,548 265,464 0.08
Term Loan B, 2.31% - 2.598%, 5/08/14 United States 3,025,667 2,783,614 0.82
e Polypore Inc., U.S. Term Loan, 2.56%, 7/03/14 United States 1,238,535 1,170,416 0.34
Rockwood Specialties Group Inc., Term Loan H, 6.00%, United States 2,033,889 2,059,313 0.60
5/15/14
Univar Inc., Opco Tranche B Term Loan, 3.285%, 10/10/14 United States 2,402,917 2,168,633 0.64
----------------- ----------
18,763,115 5.51
----------------- ----------
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
SYSTEMS SOFTWARE
Audatex North America Inc., Domestic Term Loan C, United States $ 1,074,255 $ 1,046,056 0.31
2.438%, 5/16/14
Rovi Corp., Term Loan B, 6.00%, 5/02/13 United States 654,813 656,450 0.19
----------------- ----------
1,702,506 0.50
----------------- ----------
TRADING COMPANIES & DISTRIBUTORS
Ashtead Group PLC, Term Loan, 2.063%, 8/31/11 United Kingdom 759,200 711,750 0.21
Interline Brands,
Delayed Draw Term Loan, 1.98%, 6/23/13 United States 562,261 508,846 0.15
Term Loan B, 1.98%, 6/23/13 United States 315,395 285,432 0.08
RSC Holdings III, Second Term Loan, 3.79%-4.08%, 11/30/13 United States 850,000 697,000 0.21
----------------- ----------
2,203,028 0.65
----------------- ----------
TRUCKING
Hertz Corp.,
Credit Link, 0.609%, 12/21/12 United States 104,200 98,632 0.03
Term Loan B, 2.04% - 2.06%, 12/21/12 United States 569,096 538,686 0.16
----------------- ----------
637,318 0.19
----------------- ----------
WIRELESS TELECOMMUNICATION SERVICES
e Intelsat Corp. (Panamsat),
Tranche B-2-A, 2.804%, 1/03/14 United States 2,062,366 1,972,567 0.58
Tranche B-2-B, 2.804%, 1/03/14 United States 2,061,738 1,971,965 0.58
Tranche B-2-C, 2.804%, 1/03/14 United States 2,061,738 1,971,965 0.58
----------------- ----------
5,916,497 1.74
----------------- ----------
TOTAL SENIOR FLOATING RATE INTERESTS (COST $323,207,879) 307,196,250 90.20
----------------- ----------
SHORT TERM INVESTMENTS (COST $49,308,769)
i/REPURCHASE AGREEMENTS
Joint Repurchase Agreement, 0.165%, 8/03/09 United States 49,308,769 49,308,769 14.48
(Maturity Value $49,309,447)
Banc of America Securities LLC (Maturity Value $5,653,328)
Barclays Capital Inc. (Maturity Value $6,088,237)
BNP Paribas Securities Corp. (Maturity Value $6,958,056)
Credit Suisse Securities (USA) LLC (Maturity Value
$5,653,328)
Deutsche Bank Securities Inc. (Maturity Value $7,126,696)
HSBC Securities (USA) Inc. (Maturity Value $6,088,237)
Morgan Stanley & Co. Inc. (Maturity Value $6,088,237)
UBS Securities LLC (Maturity Value $5,653,328)
Collateralized by U.S. Government Agency Securities,
0.493% - 5.125%, 3/30/10 - 3/23/12; i//U.S Treasury Bills,
4/01/10-6/10/10; and U.S. Treasury Note, 1.75% - 1065%.
2/28/10 - 6/30/14
----------------- ----------
TOTAL INVESTMENTS (COST $372,516,648) 356,505,019 104.68
OTHER ASSETS, LESS LIABILITIES (15,926,172) (4.68)
---------------- ---------
NET ASSETS $ 340,578,847 100.00
---------------- ---------
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 See Note 7 regarding defaulted securities.
e A portion or all of the security purchased on a delayed delivery basis. See
Note 1(c).
f Rounds to less than 0.1% of net assets.
g Income may be received in additional securities and/or cash.
h See Note 1(b) regardingjoint repurchase agreement.
i 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
July 31, 2009
Assets:
Investments in securities:
Cost - Unaffiliated issuers $323,207,879
Cost - Repurchase agreements 49,308,769
------------------------
Total cost of investments $372,516,648
------------------------
Value - Unaffiliated issuers $307,196,250
Value - Repurchase agreements 49,308,769
------------------------
Total value of investments 356,505,019
Cash 1,581,229
Receivables:
Investment securities sold 6,046,599
Interest 843,535
Other assets 355
------------------------
Total assets 364,976,737
------------------------
Liabilities:
Payables:
Investment securities purchased 23,280,942
Affiliates 226,108
Distributions to shareholders 777,350
Accrued expenses and other liabilities 113,490
------------------------
Total liabilities 24,397,890
------------------------
Net assets, at value $340,578,847
------------------------
Net assets consist of:
Paid-in capital $464,530,943
Distributions in excess of net investment income (60,555)
Net unrealized appreciation (depreciation) (16,011,629)
Accumulated net realized gain (loss) (107,879,912)
------------------------
Net assets, at value $340,578,847
------------------------
Net asset value and maximum offering price per
share ($340,578,847 / 41,343,938 shares
outstanding) $8.24
------------------------
Annual 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 year ended July 31, 2009
Investment income:
Interest $16,768,644
-------------------
Expenses:
Management fees (Note 3a) 2,704,421
Administrative fees (Note 3b) 486,371
Custodian fees (Note 4) 6,388
Reports to shareholders 6,188
Professional fees 155,917
Trustees' fees and expenses 27,182
Other 72,206
-------------------
Total expenses 3,458,673
Expense reductions (Note 4) (6,200)
Expenses waived/paid by affiliates (Note 3d) (1,115,297)
-------------------
Net expenses 2,337,176
-------------------
Net investment income 14,431,468
-------------------
Realized and unrealized gains (losses):
Net realized gain (loss) from investments (54,640,585)
Net change in unrealized appreciation
(depreciation) on investments 10,247,552
-------------------
Net realized and unrealized gain (loss) (44,393,033)
-------------------
Net increase (decrease) in net assets resulting
from operations $(29,961,565)
-------------------
Annual 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)
Statements of Changes in Net Assets
Year Ended July 31,
2009 2008
---------------------------------------------
Increase (decrease) in net assets:
Operations:
Net investment income $ 14,431,468 $ 38,665,606
Net realized gain (loss) from investments (54,640,585) (40,055,119)
Net change in unrealized appreciation
(depreciation) on investments 10,247,552 2,152,125
---------------------------------------------
Net increase (decrease) in net assets
resulting from operations (29,961,565) 762,612
---------------------------------------------
Distributions to shareholders from net investment
income (14,457,547) (38,661,719)
Capital share transactions (Note 2) (62,248,468) (584,574,579)
---------------------------------------------
Net increase (decrease) in net assets (106,667,580) (622,473,686)
Net assets:
Beginning of year 447,246,427 1,069,720,113
---------------------------------------------
End of year $ 340,578,847 $ 447,246,427
---------------------------------------------
Distributions in excess of net investment income
included in net assets:
End of year $ (60,555) $ (30,735)
---------------------------------------------
Annual 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
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
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 Fund 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 based upon the underlying investment book value,
anticipated future cash flows, market changes in comparable or similar
securities, 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 Fund'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, 2009. The joint
repurchase agreement is valued at cost.
c. SECURITIES PURCHASED ON A WHEN-ISSUED AND DELAYED DELIVERY BASIS
The Fund may purchase securities on a when-issued and 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 July 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. Each Fund's net investment income is proportionately allocated to the
partners daily and paid 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, 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 July 31, 2009, there were an unlimited number of shares authorized (without
par value). Transactions in the Fund's shares were as follows:
TABLE>
Year Ended July 31,
2009 2008
---------------------------------------------------------------
Shares Amount Shares Amount
---------------------------------------------------------------
Shares sold 12,816,839 $101,386,162 4,842,844 $44,297,914
Shares redeemed (21,035,136) (163,634,630) (67,790,869) (628,872,493)
---------------------------------------------------------------
Net increase (decrease) (8,218,297) $(62,248,468) (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. (Advisers) 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 July 31, 2009, the shares of the Fund were owned by the following entities:
ENTITY SHARES
- ---------------------------------------------------------
Franklin Floating Rate Fund, PLC 41,323,938
Franklin Resources, Inc. 10,000
Templeton Investment Counsel, LLC 10,000
-------------
Total 41,343,938
==============
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, 2009, the
custodian fees were reduced as noted in the Statement of Operations.
5. INCOME TAXES
At July 31, 2009, the cost of investments and net unrealized appreciation
(depreciation) for income tax purposes were as follows:
Cost of investments $ 373,099,911
==============
Unrealized appreciation $ 5,033,900
Unrealized depreciation (21,628,792)
--------------
Net unrealzied appreciation (depreciation) $ (16,594,892)
==============
Net investment income differs for financial statement and tax purposes primarily
due to differing treatments of defaulted securities, payments-in-kind, bond
discounts and premiums.
Net realized gains (losses) differ for financial statement and tax purposes
primarily due to differing treatments of wash sales, payments-in-kind, bond
discounts and premiums.
6. INVESTMENT TRANSACTIONS
Purchases and sales of investments (excluding short term securities) for the
year ended July 31, 2009, aggregated $147,406,610 and $204,480,801,
respectively.
7. CREDIT RISK AND DEFAULTED SECURITIES
At July 31, 2009, the Fund had 79.30% 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 July 31, 2009, the aggregate value of these
securities was $4,023,882, representing 1.18% 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. SHAREHOLDER DISTRIBUTIONS
For the period ended July 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
2/27/2009 $0.018198
3/31/2009 $0.022309
4/30/2009 $0.021118
5/29/2009 $0.018879
6/30/2009 $0.024378
7/31/2009 $0.019427
-----------
Total $0.325134
============
9. 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
interest charged 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, the Fund incurred commitment fees of $404 of its
pro rata portion of the Global Credit Facility, which is reflected in other
expenses on the Statement of Operations. During the year ended July 31, 2009,
the Fund did not utilize the Global Credit Facility.
10. 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 December 8, 2008, the
court entered a stipulated order of 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. The current deadline
for completing all appellate briefing is November 12, 2009.
11. 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 Fund'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.
At July 31, 2009, all of the Fund's investments in securities carried at fair
value were in Level 2 inputs. For detailed industry descriptions, see the
accompanying Statement of Investments.
12. SUBSEQUENT EVENTS
The Fund has evaluated subsequent events through September 17, 2009, the
issuance date of the financial statements and determined that no events have
occurred that require disclosure.
===============================================================================
ABBREVIATIONS
SELECTED PORTFOLIO
DIP Debtor-In-Possession
L/C Letter of Credit
PIK Payment-In-Kind
REIT Real Estate Investment Trust
FRANKLIN FLOATING RATE MASTER TRUST
FRANKLIN FLOATING RATE MASTER SERIES
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF FRANKLIN FLOATING RATE MASTER
SERIES
In our opinion, the accompanying statement of assets and liabilities, including
the statement of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Franklin Floating Rate Master
Series (the "Fund") at July 31, 2009, 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, 2009 by correspondence with the custodian
and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
September 17, 2009
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 FUND COMPLEX
AND ADDRESS POSITION LENGTH OF TIME OVERSEEN BY OTHER DIRECTORSHIPS HELD
SERVED BOARD MEMBER*
- ----------------------- --------------------- ---------------- ----------------- ----------------------------
Harris J. Ashton Trustee Since 1999 135 Bar-S Foods (meat packing
(1932) company).
One Franklin Parkway
San Mateo, CA
94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director of various companies; and FORMERLY, Director, RBC Holdings, Inc. (bank
holding company) (until 2002); and President, Chief Executive Officer and
Chairman of the Board, General Host Corporation (nursery and craft centers)
(until 1998).
- -------------------------------------------------------------------------------------------------------------
Robert F. Carlson Trustee Since 2007 112 None
(1928)
One Franklin Parkway
San Mateo, CA
94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Retired; and FORMERLY, Vice President, senior member and President, Board
of Administration, California Public Employees Retirement Systems (1971 -
January 2008) (CALPERS);, member and Chairman of the Board, Sutter Community
Hospitals; member, Corporate Board, Blue Shield of California; and Chief
Counsel, California Department of Transportation.
- -------------------------------------------------------------------------------------------------------------
Sam Ginn (1937) Trustee Since 2007 112 Chevron Corporation
One Franklin Parkway (global energy company)
San Mateo, CA and ICO Global
94403-1906 Communications (Holdings)
Limited (satellite
company).
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Private investor; and FORMERLY, Chairman of the Board, Vodafone AirTouch, PLC
(wireless company); Chairman of the Board and Chief Executive Officer, AirTouch
Communications (cellular communications) (1993-1998) and Pacific Telesis Groups
(telephone holding company) (1988-1994).
- -------------------------------------------------------------------------------------------------------------
Edith E. Holiday Trustee Since 1999 135 Hess Corporation
(1952) (exploration and refining
One Franklin Parkway of oil and gas), H.J.
San Mateo, CA Heinz Company (processed
94403-1906 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 Trustee Since 1999 112 Center for Creative Land
(1929) Recycling (brownfield
One Franklin Parkway 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 135 Hess Corporation
One Franklin Parkway (exploration and refining
San Mateo, CA of oil and gas) and
94403-1906 Sentient Jet (private jet
service).
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman Emeritus, The Hertz Corporation (car rental) (since 2000) (Chairman of
the Board (1980-2000) and Chief Executive Officer (1977-1999)); and FORMERLY,
Chairman of the Board, President and Chief Executive Officer, UAL Corporation
(airlines).
- -------------------------------------------------------------------------------------------------------------
Larry D. Thompson Trustee Since 2007 143 None
(1945)
One Franklin Parkway
San Mateo, CA
94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Vice President - Government Affairs, General Counsel and Secretary,
PepsiCo, Inc. (consumer products); and FORMERLY, Director, Delta Airlines
(aviation) (2003-2005) and Providian Financial Corp. (credit card provider)
(1997-2001); Senior Fellow of The Brookings Institution (2003-2004); Visiting
Professor, University of Georgia School of Law (2004); and Deputy Attorney
General, U.S. Department of Justice (2001-2003).
- -------------------------------------------------------------------------------------------------------------
John B. Wilson (1959) Lead Independent Trustee since 112 None
One Franklin Parkway Trustee 2007 and Lead
San Mateo, CA Independent
94403-1906 Trustee since
2008
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President and Founder, Hyannis Port Capital, Inc. (real estate and private equity investing); serves on
private and non-profit boards; and FORMERLY, Chief Operating Officer and Executive Vice President, Gap,
Inc. (retail) (1996-2000); Chief Financial Officer and Executive Vice President - Finance and Strategy,
Staples, Inc. (office supplies) (1992-1996); Senior Vice President - Corporate Planning, Northwest
Airlines, Inc. (airlines) (1990-1992); and Vice President and Partner, Bain & Company (consulting firm)
(1986-1990).
- -------------------------------------------------------------------------------------------------------------
INTERESTED BOARD MEMBERS AND OFFICERS
- ----------------------- --------------------- ---------------- ----------------- ----------------------------
NUMBER OF D
PORTFOLIOS IN
FUND COMPLEX
NAME, YEAR OF BIRTH LENGTH OF OVERSEEN BY
AND ADDRESS POSITION TIME SERVED BOARD MEMBER* OTHER DIRECTORSHIPS HEL
- ----------------------- --------------------- ---------------- ----------------- ----------------------------
**Charles B. Johnson Trustee and Since 1999 135 None
(1933) Chairman of
One Franklin Parkway the Board
San Mateo, CA
94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman of the Board, Member - Office of the Chairman and Director, Franklin Resources, Inc.; 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 41 of the investment companies in Franklin Templeton
Investments.
- -------------------------------------------------------------------------------------------------------------
**Gregory E. Johnson Trustee Since 2007 91 None
(1961)
One Franklin Parkway
San Mateo, CA
94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director, President and Chief Executive Officer, Franklin Resources, Inc.; President, Templeton Worldwide,
Inc.; Director, Templeton Asset Management Ltd.; and officer and/or director or trustee, as the case may
be, of some of the other subsidiaries of Franklin Resources, Inc. and of 32 of the investment companies in
Franklin Templeton Investments.
- -------------------------------------------------------------------------------------------------------------
Mark Boyadjian (1964) Vice President Since 2003 Not Applicable Not Applicable
One Franklin Parkway
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 Chief Compliance Chief Not Applicable Not Applicable
(1952) Officer and Vice Compliance
One Franklin Parkway President - AML Officer since
San Mateo, CA Compliance 2004 and Vice
94403-1906 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 45 of the investment companies in Franklin Templeton Investments; and
FORMERLY, Director of Compliance, Franklin Resources, Inc. (1994-2001).
- -------------------------------------------------------------------------------------------------------------
Laura F. Fergerson Chielf Executive Since March Not Applicable Not Applicable
(1962) Officer - Finance 2009
One Franklin Parkway and Administration
San Mateo,
CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice President, Franklin Templeton Services, LLC; officer of 45 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).
- -------------------------------------------------------------------------------------------------------------
Gaston Gardey Treasurer, Chief Since March Not Applicable Not Applicable
(1967) Financial Officer 2009
One Franklin Parkway and Chief
San Mateo, Accounting Officer
CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director, Fund Acconting, Franklin Templeton Investments; and officer of 27 of
the investment companies in Franklin Templeton Investments.
- -------------------------------------------------------------------------------------------------------------
Aliya S. Gordon Vice President Since March Not Applicable Not Applicable
(1973) 2009
One Franklin Parkway
San Mateo, CA
94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Associate General Counsel, Franklin Templeton Investments; officer of 45 of the
investment companies in Franklin Templeton Investments; and FORMERLY, Ligigation
Associate, Steefel, Levitt & Weiss, LLP (2000-2004).
- -------------------------------------------------------------------------------------------------------------
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/or
director, as the case may be, of some of the other subsidiaries of Franklin
Resources, Inc. and of 45 of the investment companies in Franklin Templeton Investments.
- -------------------------------------------------------------------------------------------------------------
Rupert H. Johnson, President and Chief President Not Applicable Not Applicable
Jr. (1940) Executive Officer since 1999
One Franklin Parkway -Investment and Chief
San Mateo, CA Management Executive
94403-1906 Officer -
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 43 of the investment companies in Franklin Templeton Investments.
- -------------------------------------------------------------------------------------------------------------
Karen L. Skidmore Vice President and Since 2006 Not Applicable Not Applicable
(1952) Secretary
One Franklin Parkway
San Mateo, CA
94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Associate General Counsel, Franklin Templeton Investments; and officer of
29 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 45 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).
- -------------------------------------------------------------------------------------------------------------
*We base the number of portfolios on each separate series of the U.S. registered
investment companies within the Franklin Templeton Investments fund complex.
These portfolios have a common investment manager or affiliated investment
managers.
**Charles B. Johnson is considered to be an interested person of the Trust under
the federal securities laws due to his position as officer and director and
major shareholder of Franklin Resources, Inc. (Resources), which is the parent
company of the Fund's 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.
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 2007. 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 24, 2009, 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 FFRMT 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 Fund Profitability Analysis Report discussed the
profitability to Franklin Templeton Investments from its overall U.S. fund
operations, as well as on an individual fund-by-fund basis. Included in the
additional material prepared specifically for the meeting was information on a
fund-by-fund basis listing portfolio managers and other accounts they manage, as
well as information on management fees charged by the Manager and its
affiliates, including Management's explanation of differences where relevant, as
well as a three-year expense analysis with an explanation for any increase in
expense ratios. Additional information accompanying such report were a
memorandum prepared by Management describing project initiatives and capital
investments relating to the services provided to the FFRMT 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 Analysis
Report and other additional material prepared by Management were sent to each of
the Trustees on February 3, 2009. Such material was reviewed and discussed by
the independent Trustees among themselves and with Management in a telephonic
conference call that took place February 12, 2009. 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's investment manager 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 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
(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 $74,979 for the fiscal year ended July 31, 2009 and $73,910 for the fiscal
year ended July 31, 2008.
(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 $13,250 for the fiscal year ended July 31, 2009 and
$0 for the fiscal year ended July 31, 2008. The services for which these fees
were paid included tax compliance and advice.
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 $6,000 for the fiscal year ended
July 31, 2009 and $0 for the fiscal year ended July 31, 2008. 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, 2009 and
$348 for the fiscal year ended July 31, 2008. The services for which these fees
were paid include review of materials provided to the fund Board in connection
with the investment management contract renewal process.
The aggregate fees paid to the principal accountant for products and services
rendered by the principal accountant to the registrant's investment adviser and
any entity controlling, controlled by or under common control with the
investment adviser that provides ongoing services to the registrant other than
services reported in paragraphs (a)-(c) of Item 4 were $0 for the fiscal year
ended July 31, 2009 and $283,729 for the fiscal year ended July 31, 2008. The
services for which these fees were paid include review of materials provided to
the fund Board in connection with the investment management contract renewal
process.
(e) (1) The registrant's audit committee is directly responsible for approving
the services to be provided by the auditors, including:
(i) pre-approval of all audit and audit related services;
(ii) pre-approval of all non-audit related services to be provided to
the Fund by the auditors;
(iii) pre-approval of all non-audit related services to be provided to
the registrant by the auditors to the registrant's investment adviser or to any
entity that controls, is controlled by or is under common control with the
registrant's investment adviser and that provides ongoing services to the
registrant where the non-audit services relate directly to the operations or
financial reporting of the registrant; and
(iv) establishment by the audit committee, if deemed necessary or
appropriate, as an alternative to committee pre-approval of services to be
provided by the auditors, as required by paragraphs (ii) and (iii) above, of
policies and procedures to permit such services to be pre-approved by other
means, such as through establishment of guidelines or by action of a designated
member or members of the committee; provided the policies and procedures are
detailed as to the particular service and the committee is informed of each
service and such policies and procedures do not include delegation of audit
committee responsibilities, as contemplated under the Securities Exchange Act of
1934, to management; subject, in the case of (ii) through (iv), to any waivers,
exceptions or exemptions that may be available under applicable law or rules.
(e) (2) None of the services provided to the registrant described in paragraphs
(b)-(d) of Item 4 were approved by the audit committee pursuant to paragraph
(c)(7)(i)(C) of Rule 2-01 of regulation S-X.
(f) No disclosures are required by this Item 4(f).
(g) The aggregate non-audit fees paid to the principal accountant for services
rendered by the principal accountant to the registrant and the registrant's
investment adviser and any entity controlling, controlled by or under common
control with the investment adviser that provides ongoing services to the
registrant were $19,250 for the fiscal year ended July 31, 2009 and $284,077 for
the fiscal year ended July 31, 2008.
(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 Laura F. Fergerson, Chief Executive Officer - Finance and Administration, and
Gaston Gardey, Chief Financial Officer and Chief Accounting Officer
(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 and, Chief Accounting Officer
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
FRANKLIN FLOATING RATE MASTER TRUST
By /s/LAURA F. FERGERSON
---------------------------------------
Laura F. Fergerson
Chief Executive Officer - Finance
and Administration
Date September 25, 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 September 25, 2009
By /s/GASTON GARDEY
---------------------------------------
Gaston Gardey
Chief Financial Officer and Chief
Accounting Officer
Date September 25, 2009