ThZeal - The Zeal

N-CSRS 1 srpt.txt 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 --------- FRANKLIN FLOATING RATE MASTER TRUST ----------------------------------- (Exact name of registrant as specified in charter) ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906 ----------------------------------------------- (Address of principal executive offices) (Zip code) CRAIG S. TYLE, ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906 ------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code:(650) 312-2000 ------------- Date of fiscal year end: 7/31 ----- Date of reporting period: 1/31/07 -------- ITEM 1. REPORTS TO STOCKHOLDERS. FRANKLIN FLOATING RATE MASTER TRUST FRANKLIN FLOATING RATE MASTER SERIES FINANCIAL HIGHLIGHTS

a The amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchase of the Fund shares in relation to income earned and/or fluctuating market value of the investments of the Fund. b Total return is not annualized for periods less than one year. c Annualized. d Benefit 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, 2007 (UNAUDITED)

SemiAnnual Report FRANKLIN FLOATING RATE MASTER TRUST FRANKLIN FLOATING RATE MASTER SERIES Cooper Standard Automotive Inc., Term Loan B, 7.875%, 12/23/11 Canada 2,363,145 2,364,799 0.22 Term Loan C, 7.875%, 12/23/11 United States 4,999,917 5,003,417 0.47 Dayco Products LLC (Mark IV), Term Loan B, 7.86% - 7.87%, 6/21/11 United States 3,835,487 3,846,226 0.37 Key Plastics LLC and Key Safety Inc., First Lien Term Loan, 8.82% - 8.87%, 6/25/10 United States 1,336,886 1,338,477 0.13 Tenneco Automotive Inc., L/C Term Loan, 7.322%, 12/12/10 United States 1,068,966 1,072,237 0.10 Term Loan B, 7.36%, 12/10/10 United States 2,433,436 2,440,883 0.23 TRW Automotive Inc., Term Loan B, 6.938%, 6/30/12 United States 3,185,000 3,176,209 0.30 Term Loan B2, 6.875%, 6/30/12 United States 990,000 987,268 0.09 Term Loan E, 6.875%, 10/31/10 United States 3,417,670 3,422,297 0.32 ------------------------ 25,606,632 2.42 ------------------------ AUTOMOTIVE AFTERMARKET Affinia Group Inc., Term Loan B, 8.36%, 11/30/11 United States 4,762,586 4,796,071 0.46 United Components Inc., Term Loan D, 7.63%, 6/29/12 United States 2,980,781 2,983,106 0.28 ------------------------ 7,779,177 0.74 ------------------------ BEVERAGES: ALCOHOLIC Constellation Brands Inc., Term Loan B, 6.875%, 6/05/13 United States 4,000,000 4,005,600 0.38 Southern Wine & Spirits of America Inc., Term Loan B, 6.864%, 5/31/12 United States 2,185,410 2,187,006 0.21 ------------------------ 6,192,606 0.59 ------------------------ BROADCASTING Alliance Atlantis Communications Inc., Term Loan C, 6.686%, 12/16/11 United States 2,947,500 2,935,150 0.28 Cumulus Media Inc., Term Loan B, 7.32% - 7.366%, 6/07/13 United States 2,385,506 2,397,171 0.23 Entravision Communications Corp., Term Loan B, 6.86%, 3/29/13 United States 8,471,000 8,420,597 0.80 Gray Television Inc., 2006-1 Incremental Facility Loan, 6.85%, 5/22/13 United States 1,857,491 1,858,178 0.17 Term Loan B, 6.85%, 11/22/12 United States 1,014,471 1,015,830 0.10 LBI Media Inc., Term Loan B, 6.82% - 6.875%, 3/31/12 United States 990,909 976,808 0.09 Mission Broadcasting Inc., Term Loan B, 7.114%, 10/01/12 United States 3,795,143 3,782,430 0.36 NEP Supershooters LP, First Lien Term Loan, 9.32% - 9.37%, 2/03/11 United States 962,746 970,034 0.09 Nexstar Broadcasting Inc., Term Loan B, 7.114%, 10/01/12 United States 3,596,225 3,584,177 0.34 NextMedia Inc., Delay Draw, 7.32%, 11/15/12 United States 546,923 546,718 0.05 Term Loan B, 7.32%, 11/15/12 United States 1,230,577 1,229,802 0.12 Spanish Broadcasting System Inc., Term Loan B, 7.12%, 6/11/12 United States 1,965,000 1,954,527 0.18 ------------------------ 29,671,422 2.81 ------------------------ BUILDING PRODUCTS Euramax International Inc., Domestic Term Loan, 8.125%, 6/29/12 United States 3,113,702 3,129,582 0.30 Goodman Global Holdings Inc., Term Loan C, 7.125%, 12/15/11 United States 2,352,887 2,344,981 0.22 Headwaters Inc., Term Loan B, 7.32%, 4/30/11 United States 1,974,710 1,973,604 0.19 NCI Building Systems Inc., Term Loan B, 6.82% - 6.87%, 6/18/10 United States 2,246,060 2,245,791 0.21

SemiAnnual Report FRANKLIN FLOATING RATE MASTER TRUST FRANKLIN FLOATING RATE MASTER SERIES Nortek Inc., Term Loan, 7.35% - 9.25%, 8/27/11 United States 10,824,339 10,831,700 1.02 ------------------------ 20,525,658 1.94 ------------------------ CABLE/SATELLITE TELEVISION d,e Century Cable (Adelphia), Discretionary Term Loan, 10.25%, 12/31/09 United States 4,500,000 4,365,000 0.41 Term Loan B, 10.25%, 6/30/09 United States 3,000,000 2,910,000 0.28 Charter Communications Operating LLC, Term Loan B, 7.985%, 4/28/13 United States 7,708,399 7,765,133 0.74 CSC Holdings Inc. (Cablevision), Incremental Term Loan, 7.11% - 7.121%, 3/29/13 United States 12,098,525 12,132,764 1.15 DIRECTV Holdings LLC, Term Loan B, 6.82%, 4/13/13 United States 5,590,764 5,601,163 0.53 Insight Midwest Holdings, Term Loan B, 7.61%, 4/02/14 United States 7,900,000 7,946,373 0.75 Intelsat Corp. (Panamsat), Term Loan B2, 7.36%, 1/03/14 United States 4,901,403 4,958,064 0.47 Intelsat Subsidiary Holding Co. Ltd., Term Loan B, 7.36%, 6/30/13 United States 5,900,078 5,920,197 0.56 MCC Iowa, Term Loan D-1, 7.12% - 7.27%, 1/31/15 United States 3,882,513 3,889,540 0.37 Term Loan D-2 (Delayed Draw), 7.12%, 1/31/15 United States 1,200,000 1,202,172 0.11 Mediacom Broadband (MCC Iowa), Term Loan A, 6.37%, 3/31/10 United States 2,265,000 2,240,742 0.21 Mediacom LLC, Term Loan C, 7.12% - 7.27%, 1/31/15 United States 2,287,500 2,291,640 0.22 NTL Dover LLC, Tranche B4, 7.36%, 12/31/12 United States 3,045,902 3,062,989 0.29 d,e Olympus Cable Holdings (Adelphia), Term Loan B, 10.25%, 9/30/10 United States 2,000,000 1,940,000 0.18 UPC Financing Partnership, Term Loan J2, 7.37%, 3/31/13 Netherlands 4,661,000 4,683,093 0.44 Term Loan K2, 7.37%, 12/31/13 Netherlands 4,661,000 4,683,093 0.44 ------------------------ 75,591,963 7.15 ------------------------ CASINOS/GAMING Boyd Gaming Corp., Term Loan B, 6.864%, 6/30/11 United States 462,816 462,257 0.04 CCM Merger Inc. (MotorCity Casino), Term Loan B, 7.35% - 7.37%, 7/13/12 United States 2,845,370 2,836,464 0.27 Greektown Casinos LLC, Term Loan B, 7.89%, 12/03/12 United States 2,670,692 2,685,087 0.25 Herbst Gaming Inc., Term Loan B, 7.245%, 12/02/11 United States 866,667 870,567 0.08 Isle of Capri Black Hawk LLC, Term Loan, 7.36% - 7.374%, 10/24/11 United States 3,053,339 3,045,645 0.29 Penn National Gaming Inc., Term Loan B, 7.10% - 7.15%, 10/03/12 United States 3,628,888 3,648,012 0.34 Venetian Casino Resorts, Delay Draw, 7.12%, 6/15/11 United States 803,419 806,464 0.08 Term Loan B, 7.12%, 6/15/11 United States 3,896,581 3,911,349 0.37 VML US Finance LLC (Venetian Macau), Term Loan B, 8.12%, 5/26/13 United States 2,033,333 2,065,419 0.20 Wimar Opco LLC, Term Loan B, 7.86%, 1/03/12 United States 2,000,000 2,027,400 0.19 ------------------------ 22,358,664 2.11 ------------------------ CHEMICALS: AGRICULTURAL Mosaic Co., Term Loan B, 7.098% - 7.125%, 12/01/13 United States 800,000 800,744 0.08 ------------------------ CHEMICALS: MAJOR DIVERSIFIED Basell BV, Term Loan B4, 7.595%, 8/01/13 Netherlands 100,000 100,807 0.01 Term Loan C4, 8.345%, 8/01/14 Netherlands 100,000 100,880 0.01

SemiAnnual Report FRANKLIN FLOATING RATE MASTER TRUST FRANKLIN FLOATING RATE MASTER SERIES Basell USA Inc., Term Loan B2, 7.595%, 8/01/13 United States 500,000 504,550 0.05 Term Loan C2, 8.345%, 8/01/14 United States 500,000 504,400 0.05 BCP Crystal U.S. Holdings Corp. (Celanese), Term Loan B, 7.114%, 4/06/11 United States 5,200,476 5,218,158 0.49 Huntsman International LLC, Term Loan B, 7.07%, 8/16/12 United States 8,086,114 8,100,427 0.77 Ineos U.S. Finance LLC, Term Loan B2, 7.611%, 12/16/13 United States 1,683,000 1,697,474 0.16 Term Loan C2, 8.111%, 12/23/14 United States 1,683,000 1,697,692 0.16 Invista Canada Co., Term Loan B2, 6.875%, 4/29/11 Canada 997,082 999,814 0.09 Invista SARL, Term Loan B1, 6.875%, 4/29/11 Luxembourg 1,881,024 1,886,178 0.18 Lyondell Chemical Co., Term Loan, 7.121%, 8/16/13 United States 8,678,250 8,695,780 0.82 ------------------------ 29,506,160 2.79 ------------------------ CHEMICALS: SPECIALTY Brenntag Holding GmbH & Co. KG, Acquisition Facility, 7.887%, 1/20/14 Germany 451,636 453,895 0.04 Term Loan B2, 7.887%, 1/20/14 United States 1,848,364 1,856,885 0.18 Compass Minerals Group Inc., Term Loan, 6.86% - 6.87%, 12/22/12 United States 2,891,981 2,899,934 0.27 Hexion Specialty Chemicals BV, Term Loan C-2, 7.875%, 5/03/13 Netherlands 2,659,410 2,670,633 0.25 Hexion Specialty Chemicals Inc., Term Loan C-1, 7.875%, 5/03/13 United States 12,242,457 12,294,120 1.16 ISP Chemco Inc., Term Loan, 7.375%, 2/16/13 United States 2,084,250 2,088,210 0.20 JohnsonDiversey Inc., Delay Draw, 7.87%, 12/16/10 United States 178,033 178,245 0.02 Term Loan B, 7.87%, 12/16/11 United States 2,484,414 2,490,948 0.23 Nalco Co., Term Loan B, 7.07% - 7.14%, 11/04/10 United States 6,439,787 6,471,471 0.61 Rockwood Specialties Group Inc., Term Loan E, 7.36%, 7/30/12 United States 3,219,176 3,239,328 0.31 Vertellus Specialties Inc., First Lien Term Loan, 8.61% - 8.62%, 7/10/13 United States 2,189,000 2,185,520 0.21 ------------------------ 36,829,189 3.48 ------------------------ COAL Alpha Natural Resources LLC, Term Loan B, 7.114%, 10/26/12 United States 2,277,000 2,276,658 0.22 ------------------------ COMMERCIAL PRINTING/FORMS Cenveo Corp., Term Loan B, 7.36% - 7.365%, 6/21/13 United States 1,592,000 1,592,605 0.15 ------------------------ CONSUMER SUNDRIES Central Garden & Pet Co., Term Loan B, 6.82%, 9/30/12 United States 3,212,764 3,221,310 0.31 Chattem Inc., Term Loan B, 7.11% - 9.00%, 1/02/12 United States 1,200,000 1,202,760 0.11 Nutro Products Inc., Term Loan B, 7.364%, 4/26/13 United States 2,719,426 2,720,323 0.26 ------------------------ 7,144,393 0.68 ------------------------ CONTAINERS/PACKAGING Altivity Packaging LLC (Bluegrass Container Co.), Delayed Draw First Lien Term Loan, 7.576% - 7.614%, 6/30/13 United States 1,008,267 1,014,760 0.10 First Lien Term Loan, 7.576% - 7.614%, 6/30/13 United States 3,369,733 3,393,119 0.32 Berry Plastics Holding Corp., Term Loan B, 7.11%, 9/20/13 United States 698,250 698,906 0.07 BWAY Corp., Term Loan B, 7.188%, 7/17/13 United States 1,248,947 1,250,171 0.12

SemiAnnual Report FRANKLIN FLOATING RATE MASTER TRUST FRANKLIN FLOATING RATE MASTER SERIES Graham Packaging Co., First Lien Term Loan, 7.625%, 10/07/11 United States 7,840,130 7,905,909 0.75 Incremental Term Loan B, 7.688%, 10/07/11 United States 893,165 900,337 0.08 Smurfit-Stone Container Canada Inc., Term Loan C, 7.625%, 11/01/11 Canada 631,353 637,515 0.06 Term Loan C-1, 7.625%, 11/01/11 Canada 211,338 215,078 0.02 Smurfit-Stone Container Enterprises, L/C Term Loan, 5.222%, 11/01/10 United States 261,990 264,068 0.02 Term Loan B, 7.625%, 11/01/11 United States 1,035,581 1,045,689 0.10 ------------------------ 17,325,552 1.64 ------------------------ DATA PROCESSING SERVICES InfoUSA Inc., Term Loan B, 7.12%, 2/14/12 United States 2,930,553 2,935,359 0.28 ------------------------ DEPARTMENT STORES Neiman Marcus Group Inc., Term Loan, 7.595% - 7.603%, 4/06/13 United States 1,933,840 1,945,791 0.18 ------------------------ DRUG STORE CHAINS The Jean Coutu Group (PJC) Inc., Term Loan B, 7.875%, 7/30/11 Canada 1,109,792 1,111,035 0.11 ------------------------ ELECTRIC UTILITIES Astoria Generating Co. Acquisitions LLC, Term Loan B, 7.35% - 7.37%, 2/23/13 United States 1,137,576 1,145,767 0.11 f Infrastrux Group Inc., Term Loan, 8.57%, 11/03/12 United States 747,218 748,391 0.07 LSP General Finance Co. LLC, Delay Draw, 7.114%, 5/04/13 United States 91,193 91,315 0.01 Term Loan, 7.114%, 5/04/13 United States 2,119,659 2,122,499 0.20 Midwest Generation LLC, Term Loan, 6.83% - 6.86%, 4/27/11 United States 1,456,378 1,465,247 0.14 NRG Energy Inc., Credit Link, 7.364%, 2/01/13 United States 4,053,333 4,092,326 0.39 Term Loan B, 7.364%, 2/01/13 United States 7,594,444 7,667,275 0.72 TPF Generation Holdings LLC, Synthetic LC, 7.37%, 12/15/13 United States 150,543 151,168 0.01 Synthetic Revolver, 7.37%, 12/15/11 United States 47,192 47,388 0.00 g Term Loan, 7.37%,12/15/13 United States 802,265 805,595 0.08 ------------------------ 18,336,971 1.73 ------------------------ ELECTRICAL PRODUCTS EnerSys Capital Inc., Term Loan D, 7.32% - 7.44%, 3/17/11 United States 2,664,083 2,675,939 0.25 ------------------------ ELECTRONIC COMPONENTS Freescale Semiconductor Inc., Term Loan B, 7.369%, 12/02/13 United States 6,500,000 6,537,115 0.62 Marvell Technology Group Ltd., Term Loan, 7.35%, 11/09/09 Bermuda 3,688,438 3,694,228 0.35 Sanmina-SCI Corp., Term Loan, 7.875%, 1/31/08 United States 1,800,000 1,804,428 0.17 ------------------------ 12,035,771 1.14 ------------------------ ELECTRONICS/APPLIANCES DEI Sales Inc., Term Loan B, 7.821% - 7.864%, 9/22/13 United States 2,388,000 2,393,755 0.23

SemiAnnual Report FRANKLIN FLOATING RATE MASTER TRUST FRANKLIN FLOATING RATE MASTER SERIES Eastman Kodak Co., Term Loan B1, 7.57%, 10/18/12 United States 1,904,626 1,906,969 0.18 Term Loan B2 (Delayed Draw), 7.57%, 10/18/12 United States 3,327,857 3,331,850 0.31 Jarden Corp., Term Loan B1, 7.364%, 1/24/12 United States 749,477 751,314 0.07 Term Loan B2, 7.114%, 1/24/12 United States 5,286,035 5,291,585 0.50 ------------------------ 13,675,473 1.29 ------------------------ ENVIRONMENTAL SERVICES Allied Waste North America Inc., Credit Link, 5.322%, 1/15/12 United States 3,156,316 3,179,672 0.30 Term Loan B, 7.12% - 7.21%, 1/15/12 United States 7,117,595 7,170,265 0.68 Casella Waste Systems Inc., Term Loan B, 7.368% - 7.37%, 4/28/10 United States 1,100,000 1,103,267 0.10 EnviroSolutions Inc., Term Loan B, 8.89%, 7/07/12 United States 2,830,882 2,857,181 0.27 IESI Corp., Term Loan B, 7.11% - 7.121%, 1/20/12 United States 1,900,000 1,899,145 0.18 Safety-Kleen Systems Inc., Synthetic L/C, 7.875%, 8/02/13 United States 330,508 331,338 0.03 Term Loan B, 7.875%, 8/02/13 United States 1,166,568 1,169,496 0.11 Synagro Technologies Inc., Delay Draw, 7.626%, 6/21/12 United States 185,714 185,764 0.02 Term Loan B, 7.626%, 6/21/12 United States 1,114,286 1,114,587 0.11 ------------------------ 19,010,715 1.80 ------------------------ FINANCE/RENTAL/LEASING Ashtead Holdings LLC, Term Loan, 7.125%, 8/31/11 United States 1,600,000 1,596,208 0.15 Avis Budget Car Rental LLC, Term Loan, 6.61%, 4/19/12 United States 4,772,143 4,740,456 0.45 Baker Tanks Inc., Term Loan, 7.57%, 11/23/12 United States 661,272 663,289 0.06 RSC Holdings III, ABL Term Loan, 7.10% - 7.12%, 11/30/12 United States 3,491,250 3,487,479 0.33 ------------------------ 10,487,432 0.99 ------------------------ FINANCIAL CONGLOMERATES Nasdaq Stock Market Inc., Incremental Term Loan B, 7.07% - 7.114%, 4/18/12 United States 698,250 699,346 0.06 Term Loan B, 7.07% - 7.114%, 4/18/12 United States 3,262,040 3,267,259 0.31 Term Loan C (Delayed Draw), 7.07% - 7.114%, 4/18/12 United States 1,890,928 1,893,954 0.18 ------------------------ 5,860,559 0.55 ------------------------ FOOD DISTRIBUTORS OSI Group LLC, Dutch Term Loan, 7.364%, 9/02/11 Netherlands 543,056 542,382 0.05 German Term Loan, 7.364%, 9/02/11 Germany 434,444 433,906 0.04 U.S. Term Loan, 7.364%, 9/02/11 United States 977,500 976,288 0.09 ------------------------ 1,952,576 0.18 ------------------------ FOOD: MAJOR DIVERSIFIED Birds Eye Foods Inc. (Agrilink Foods), Term Loan B, 8.10%, 6/30/08 United States 604,185 607,581 0.06 Del Monte Foods Co., Term Loan B, 6.82% - 6.86%, 2/08/12 United States 3,738,559 3,740,054 0.35

SemiAnnual Report FRANKLIN FLOATING RATE MASTER TRUST FRANKLIN FLOATING RATE MASTER SERIES Dole Food Co. Inc., Term Loan B, 7.438% - 9.25%, 4/12/13 United States 807,956 809,039 0.08 Pinnacle Foods Group Inc., Term Loan B, 7.36%, 11/25/10 United States 4,512,361 4,513,128 0.43 Solvest Ltd. (Dole), L/C, 5.23%, 4/12/13 Bermuda 361,805 362,290 0.03 Term Loan C, 7.438% - 9.25%, 4/12/13 Bermuda 2,693,187 2,696,796 0.25 ------------------------ 12,728,888 1.20 ------------------------ FOOD: MEAT/FISH/DAIRY Bumble Bee Foods LLC, Term Loan B, 7.11% - 7.125%, 5/02/12 United States 800,000 799,880 0.07 Michael Foods Inc., Term Loan B1, 7.35%, 11/21/10 United States 806,771 806,642 0.08 ------------------------ 1,606,522 0.15 ------------------------ FOOD: SPECIALTY/CANDY CBRL Group (Cracker Barrel), Term Loan B1, 6.85% - 6.87%, 4/27/13 United States 2,730,339 2,734,079 0.26 Herbalife International Inc., Term Loan B, 6.82%, 7/21/13 United States 1,884,750 1,886,503 0.18 ------------------------ 4,620,582 0.44 ------------------------ HOME FURNISHINGS Knoll Inc., Term Loan, 7.114%, 10/03/12 United States 1,468,950 1,466,041 0.14 National Bedding Co. LLC, Term Loan, 7.35% - 7.37%, 8/31/11 United States 2,444,661 2,458,546 0.23 Simmons Bedding Company, Term Loan D, 7.375% - 7.438%, 12/19/11 United States 2,328,389 2,345,014 0.22 ------------------------ 6,269,601 0.59 ------------------------ HOME IMPROVEMENT CHAINS Harbor Freight Tools USA Inc., Term Loan C, 7.123%, 7/15/10 United States 3,637,417 3,619,703 0.34 ------------------------ HOMEBUILDING CONTECH Construction Products Inc., Term Loan B, 7.32% - 7.35%, 1/31/13 United States 2,999,566 3,012,524 0.28 Lanoga Corp. (Pro-Build Holdings), Term Loan B, 7.114%, 6/29/13 United States 2,786,018 2,786,909 0.26 Propex Fabrics Inc., Term Loan B, 8.32%, 7/31/12 United States 927,305 923,948 0.09 Stile Acquisition Corp. (Masonite), Canadian Term Loan, 7.36% - 7.364%, 4/05/13 Canada 5,497,317 5,469,611 0.52 Stile U.S. Acquisition Corp. (Masonite), U.S. Term Loan, 7.36% - 7.364%, 4/05/13 United States 5,506,683 5,478,929 0.52 ------------------------ 17,671,921 1.67 ------------------------ HOSPITAL/NURSING MANAGEMENT HCA Inc., Term Loan B, 8.114%, 11/18/13 United States 13,300,000 13,394,430 1.27 Iasis Healthcare LLC, Term Loan B, 7.57% - 7.614%, 6/22/11 United States 3,037,423 3,060,629 0.29 LifePoint Hospitals Inc., Term Loan B, 6.945%, 4/15/12 United States 9,454,100 9,442,566 0.89 Vanguard Health Holding Co. II LLC, Term Loan C, 7.614%, 9/23/11 United States 5,395,794 5,449,752 0.51 ------------------------ 31,347,377 2.96 ------------------------ HOUSEHOLD/PERSONAL CARE Acco Brands Corp., Term Loan B, 7.058% - 7.115%, 8/17/12 United States 2,250,180 2,251,148 0.21 American Safety Razor Co., Term Loan B, 7.86% - 7.88%, 7/31/13 United States 497,500 500,236 0.05 Prestige Brands Inc., Term Loan B, 7.71%, 4/06/11 United States 1,884,321 1,891,048 0.18 Spectrum Brands Inc., Term Loan B, 8.57% - 8.63%, 2/06/12 United States 3,155,299 3,170,795 0.30 ------------------------ 7,813,227 0.74 ------------------------

SemiAnnual Report FRANKLIN FLOATING RATE MASTER TRUST FRANKLIN FLOATING RATE MASTER SERIES INDUSTRIAL CONGLOMERATES Amsted Industries Inc., Term Loan B, 7.36% - 7.37%, 4/05/13 United States 1,085,128 1,087,092 0.10 Day International Group Inc., Term Loan B, 7.86%, 12/05/12 United States 671,730 675,969 0.06 FCI USA, Term Loan B 1, 7.867%, 11/01/13 United States 1,350,000 1,363,581 0.13 Term Loan C 1, 8.617%, 10/31/14 United States 1,350,000 1,363,891 0.13 GPS CCMP Merger Corp. (Generac), Term Loan B, 7.86%, 11/09/13 United States 2,200,000 2,209,856 0.21 TriMas Co. LLC, Term Loan B, 8.11%, 2/28/12 United States 2,954,682 2,967,978 0.28 Tranche B-1 L/C, 8.125%, 8/02/13 United States 683,559 686,354 0.07 ------------------------ 10,354,721 0.98 ------------------------ INDUSTRIAL MACHINERY CI Acquisition Inc. (Chart Industries), Term Loan B, 7.375% - 7.438%, 10/17/12 United States 1,443,992 1,445,090 0.14 Colfax Corp., Term Loan B, 7.125%, 11/30/11 United States 2,480,292 2,481,880 0.23 Dresser Inc., Term Loan B, 8.125%, 10/31/13 United States 5,517,353 5,573,188 0.53 Flowserve Corp., Term Loan B, 6.875%, 8/10/12 United States 3,070,209 3,077,055 0.29 Mueller Group, Term Loan B, 7.36% - 7.618%, 10/03/12 United States 2,842,079 2,855,863 0.27 RBS Global Inc. (Rexnord Corp.), Term Loan, 7.875%, 7/19/13 United States 2,901,639 2,904,396 0.27 Sensus Metering Systems Inc., Term Loan B1, 7.36% - 7.387%, 12/17/10 United States 5,189,199 5,178,249 0.49 Term Loan B2, 7.344% - 7.466%, 12/17/10 Luxembourg 689,280 687,598 0.07 ------------------------ 24,203,319 2.29 ------------------------ INDUSTRIAL SPECIALTIES Babcock and Wilcox Co., Delay Draw, 8.32%, 2/22/12 United States 3,400,000 3,402,482 0.32 Synthetic L/C, 5.264%, 2/22/12 United States 800,000 803,216 0.08 ------------------------ 4,205,698 0.40 ------------------------ INFORMATION TECHNOLOGY SERVICES Verifone Inc., Term Loan B, 7.10% - 7.12%, 10/31/13 United States 1,600,000 1,603,888 0.15 ------------------------ INSURANCE BROKERS/SERVICES Alliant Resources Group Inc., First Lien Term Loan, 6.938%, 11/30/11 United States 891,000 892,577 0.09 Term Loan C, 8.375%, 11/30/11 United States 1,000,000 1,001,770 0.10 Arrowhead General Insurance Agency Inc., First Lien Term Loan, 8.37%, 8/08/12 United States 1,097,250 1,101,047 0.10 HMSC Holdings Corp. (Swett & Crawford), First Lien Term Loan, 7.845% - 7.86%, 11/11/11 United States 1,091,750 1,097,514 0.10 ------------------------ 4,092,908 0.39 ------------------------ INVESTMENT BANKS/BROKERS Ameritrade Holding Corp., Term Loan B, 6.82%, 12/31/12 United States 6,528,727 6,543,874 0.62 BNY ConvergEx Group LLC, First Lien Term Loan, 8.36%, 10/02/13 United States 4,178,571 4,192,737 0.40 LPL Holdings Inc., Term Loan C, 8.114%, 6/28/13 United States 1,736,875 1,746,115 0.16 ------------------------ 12,482,726 1.18 ------------------------

SemiAnnual Report FRANKLIN FLOATING RATE MASTER TRUST FRANKLIN FLOATING RATE MASTER SERIES LIFE/HEALTH INSURANCE Conseco Inc., Term Loan, 7.32%, 10/10/13 United States 2,892,750 2,904,408 0.28 ------------------------ MAJOR TELECOMMUNICATIONS Alaska Communications Systems Holdings Inc., 2006-1 Incremental Facility Loan, 7.114%, 2/01/12 United States 300,000 299,874 0.03 Incremental Term Loan, 7.114%, 2/01/12 United States 728,567 729,470 0.07 Term Loan, 7.114%, 2/01/12 United States 2,357,133 2,360,056 0.22 Consolidated Communications Inc., Term Loan D, 7.364% - 7.373%, 10/14/11 United States 2,000,000 2,001,960 0.19 Wind Telecomunicazioni SpA, Term Loan B, 8.668%, 9/30/13 Italy 3,150,000 3,163,010 0.30 Term Loan C, 8.168%, 9/30/14 Italy 3,150,000 3,171,168 0.30 ------------------------ 11,725,538 1.11 ------------------------ MARINE SHIPPING Horizon Lines LLC, Term Loan C, 7.62%, 7/07/11 United States 1,750,512 1,754,888 0.17 ------------------------ MEDICAL DISTRIBUTORS VWR International Inc., Term Loan B, 7.61%, 4/07/11 United States 1,708,641 1,709,547 0.16 ------------------------ MEDICAL SPECIALTIES DJ Orthopedics LLC, Term Loan B, 6.875%, 4/07/13 United States 3,085,500 3,077,416 0.29 Kyphon Inc., Term Loan B, 7.57%, 1/17/14 United States 1,600,000 1,600,784 0.15 ------------------------ 4,678,200 0.44 ------------------------ MEDICAL/NURSING SERVICES AMR Holdco/EmCare Holdco, Term Loan B, 7.376% - 7.386%, 2/10/12 United States 2,361,781 2,369,433 0.22 DaVita Inc., Term Loan B, 7.32% - 7.69%, 10/05/12 United States 11,576,032 11,669,451 1.10 Fresenius Medical Care Holdings Inc., Term Loan B, 6.739% - 6.745%, 3/31/13 United States 13,200,250 13,142,829 1.24 HealthSouth Corp., Term Loan B, 8.61%, 3/10/13 United States 4,776,000 4,827,046 0.46 US Oncology Inc., Term Loan B, 7.62% - 7.625%, 8/20/11 United States 2,084,182 2,090,372 0.20 ------------------------ 34,099,131 3.22 ------------------------ MISCELLANEOUS COMMERCIAL SERVICES Acosta Inc., Term Loan B, 8.07%, 7/26/13 United States 2,228,800 2,245,650 0.21 Acxiom Corp., Term Loan B, 7.07% - 7.11%, 9/14/12 United States 2,892,750 2,904,350 0.27 Affiliated Computer Services Inc., Additional Term Loan, 7.35% - 7.369%, 3/20/13 United States 5,368,013 5,380,413 0.51 Term Loan B, 7.345%, 3/20/13 United States 1,287,000 1,289,973 0.12 Alix Partners LLP, Term Loan, 7.86%, 10/12/13 United States 2,700,000 2,707,857 0.26 Alliance Laundry Systems LLC, Term Loan, 7.57% - 7.60%, 1/27/12 United States 521,278 523,160 0.05 American Reprographics, Term Loan C, 7.07% - 7.12%, 6/18/09 United States 2,814,984 2,819,882 0.27 h Aramark Corp., Synthetic LC, 9.375%, 1/26/14 United States 533,316 539,508 0.05 Term Loan B, 9.375%, 1/26/14 United States 7,566,684 7,654,533 0.72 Audatex North America Inc., Term Loan B, 7.61%, 4/13/13 United States 1,144,250 1,149,651 0.11 h Brickman Group Holdings Inc., Term Loan B, 9.25%, 1/25/14 United States 2,900,000 2,909,338 0.27

SemiAnnual Report FRANKLIN FLOATING RATE MASTER TRUST FRANKLIN FLOATING RATE MASTER SERIES Buhrmann U.S. Inc., Term Loan D-1 Anton, 7.111%, 12/23/10 United States 2,000,000 2,003,000 0.19 Term Loan D-1, 7.111% - 7.12%, 12/23/10 United States 3,900,000 3,906,162 0.37 CCC Information Services Group Inc., Term Loan B, 7.87%, 2/10/13 United States 3,593,596 3,611,564 0.34 Coinmach Corp., Term Loan B-1, 7.875%, 12/19/12 United States 1,493,947 1,506,930 0.14 Dealer Computer Services Inc. (Reynolds & Reynolds), First Lien Term Loan, 7.845%, 10/26/12 United States 5,187,000 5,218,900 0.49 Duratek Inc. (EnergySolutions), Term Loan B, 7.63%, 6/07/13 United States 1,027,921 1,032,947 0.10 Emdeon Business Services LLC, First Lien Term Loan, 7.87%, 11/16/13 United States 2,483,444 2,492,036 0.24 EnergySolutions LLC, Synthetic L/C, 7.57%, 6/07/13 United States 108,318 108,847 0.01 Term Loan B, 7.63%, 6/07/13 United States 2,269,992 2,281,092 0.22 Language Lines Inc., Term Loan B, 8.60%, 6/11/11 United States 1,451,773 1,466,290 0.14 Nielsen Finance LLC (VNU Inc.), Term Loan B, 8.19%, 8/09/13 United States 9,975,000 10,049,713 0.95 RGIS Holdings LLC, Term Loan B, 7.564%, 12/31/12 United States 3,168,238 3,168,079 0.30 TDS Investor Corp. (Travelport), Synthetic L/C, 7.864%, 8/23/13 United States 535,332 538,555 0.05 Term Loan B, 7.864%, 8/23/13 United States 5,451,006 5,483,822 0.52 Workflow Management Inc., Term Loan B, 9.36%, 11/30/11 United States 1,702,158 1,701,001 0.16 Worldspan LP, Term Loan B, 8.57% - 8.595%, 12/07/13 United States 2,600,000 2,612,818 0.25 ------------------------ 77,306,071 7.31 ------------------------ MOVIES/ENTERTAINMENT 24 Hour Fitness Worldwide Inc., Term Loan B, 7.86% - 7.87%, 6/08/12 United States 1,985,000 1,983,769 0.19 Carmike Cinemas Inc., Delay Draw, 8.60%, 5/19/12 United States 1,851,859 1,869,414 0.18 Cinemark USA Inc., Term Loan, 7.38%, 10/05/13 United States 2,992,500 3,009,258 0.28 Cinram International, Term Loan B, 7.118%, 5/05/11 Canada 2,683,089 2,654,648 0.25 Regal Cinemas Corp., Term Loan, 7.114%, 10/27/13 United States 12,120,790 12,163,940 1.15 WMG Acquisition Corp. (Warner Music), Term Loan B, 7.36% - 7.409%, 3/01/11 United States 5,418,642 5,438,908 0.51 ------------------------ 27,119,937 2.56 ------------------------ OIL & GAS PIPELINES El Paso Corp., Deposit Loan, 7.322%, 7/29/11 United States 1,334,520 1,341,593 0.13 ------------------------ OIL & GAS PRODUCTION Helix Energy Solutions Group, Term Loan B, 7.32% - 7.36%, 7/01/13 United States 5,074,347 5,073,535 0.48 W&T Offshore Inc., Term Loan B, 7.62%, 5/26/10 United States 1,200,000 1,202,532 0.11 ------------------------ 6,276,067 0.59 ------------------------ OIL REFINING/MARKETING Citgo Petroleum Corp., Term Loan B, 6.677%, 11/15/12 United States 4,499,579 4,502,144 0.43 Coffeyville Resources LLC, Synthetic LC, 8.36%, 12/28/10 United States 518,919 521,410 0.05 Term Loan D, 8.36%, 12/28/13 United States 2,681,081 2,694,647 0.25 Niska Gas Storage Canada ULC (C/R Gas), Asset Sale Term Loan, 7.07% - 7.103%, 5/13/11 Canada 562,625 561,927 0.05 Canadian Term Loan, 7.103% 7.171%, 5/12/13 Canada 3,177,091 3,171,849 0.30

SemiAnnual Report FRANKLIN FLOATING RATE MASTER TRUST FRANKLIN FLOATING RATE MASTER SERIES Niska Gas Storage U.S. LLC (C/R Gas), Delay Draw, 7.103%, 5/12/13 United States 406,255 404,979 0.04 U.S. Term Loan, 7.103% - 7.171%, 5/12/13 United States 606,327 604,726 0.06 ------------------------ 12,461,682 1.18 ------------------------ OTHER CONSUMER SERVICES Affinion Group, Term Loan B, 7.82% - 7.873%, 10/17/12 United States 7,023,256 7,097,000 0.67 Education Management LLC, Term Loan B, 7.875%, 5/31/13 United States 2,583,259 2,601,962 0.25 FTD Inc., Term Loan B, 7.32%, 7/28/13 United States 1,426,250 1,431,327 0.13 Hertz Corp., Credit Link, 5.365%, 12/21/12 United States 544,444 545,653 0.05 Term Loan B, 7.32% - 7.37%, 12/21/12 United States 4,314,874 4,324,453 0.41 Protection One Inc., Term Loan C, 7.82% - 7.87%, 3/31/12 United States 925,935 929,667 0.09 VICAR Operating Inc. (Veterinary Centers), Term Loan B, 6.875%, 5/16/11 United States 949,443 952,368 0.09 ------------------------ 17,882,430 1.69 ------------------------ OTHER CONSUMER SPECIALTIES Tupperware Corp., Term Loan B, 6.86%, 12/05/12 United States 6,994,722 6,960,938 0.66 Visant Holding Corp. (Jostens IH Corp.), Term Loan C, 7.372%, 12/21/11 United States 3,086,597 3,098,079 0.29 Waterpik Technologies Inc., First Lien Term Loan, 7.62%, 6/28/13 United States 721,851 719,988 0.07 ------------------------ 10,779,005 1.02 ------------------------ OTHER METALS/MINERALS Thompson Creek Metals Co., First Lien Term Loan, 10.13%, 10/26/12 United States 3,400,000 3,448,960 0.33 ------------------------ OTHER PHARMACEUTICALS Stiefel Laboratories Inc., First Lien Term Loan, 7.61%, 12/28/13 United States 1,416,533 1,423,162 0.13 ------------------------ OTHER TRANSPORTATION Laidlaw International Inc., Term Loan B, 7.11%, 7/31/13 United States 1,045,500 1,050,979 0.10 Laidlaw Transit Inc., Term Loan B, 7.11%, 7/31/13 Canada 348,500 350,326 0.03 ------------------------ 1,401,305 0.13 ------------------------ PACKAGED SOFTWARE Infor Global Solutions, Delayed Draw First Lien Term Loan, 9.12%, 7/28/12 United States 900,000 904,590 0.09 First Lien Term Loan, 9.12%, 7/28/12 United States 1,725,000 1,734,539 0.16 SunGard Data Systems Inc., Term Loan, 7.875%, 2/11/13 United States 12,152,930 12,279,807 1.16 ------------------------ 14,918,936 1.41 ------------------------ PERSONNEL SERVICES Allied Security Holdings LLC, Term Loan D, 8.37%, 6/30/10 United States 896,924 899,704 0.09 U.S. Investigations Services Inc., Term Loan B, 7.87%, 10/14/12 United States 1,594,025 1,598,074 0.15 Term Loan C, 7.87%, 10/14/12 United States 1,384,699 1,388,217 0.13 ------------------------ 3,885,995 0.37 ------------------------

SemiAnnual Report FRANKLIN FLOATING RATE MASTER TRUST FRANKLIN FLOATING RATE MASTER SERIES PROPERTY-CASUALTY INSURANCE h Affirmative Insurance Holdings Inc., Term Loan, 10.75%, 12/31/13 United States 1,900,000 1,907,505 0.18 ------------------------ PUBLISHING: BOOKS/MAGAZINES IDEARC Inc. (Verizon Corp.), Term Loan B, 7.33%, 11/17/14 United States 9,500,000 9,576,855 0.91 Wenner Media LLC, Term Loan B, 7.114%, 10/02/13 United States 1,296,750 1,298,617 0.12 ------------------------ 10,875,472 1.03 ------------------------ PUBLISHING: NEWSPAPERS MediaNews Group Inc., Term Loan B, 6.57%, 12/30/10 United States 904,230 893,171 0.08 Term Loan C, 7.07%, 6/30/13 United States 1,890,500 1,885,528 0.18 ------------------------ 2,778,699 0.26 ------------------------ PULP & PAPER Boise Cascade LLC, Term Loan D, 7.094% - 7.125%, 10/28/11 United States 1,198,179 1,205,980 0.12 Georgia-Pacific Corp., Additional Term Loan, 7.114%, 12/20/12 United States 2,430,556 2,448,882 0.23 Term Loan B, 7.345% - 7.364%, 12/20/12 United States 7,679,595 7,737,038 0.73 NewPage Corp., Term Loan, 7.625%, 5/02/11 United States 3,485,291 3,515,299 0.33 Verso Paper Holdings LLC, Term Loan B, 7.125%, 8/01/13 United States 2,638,364 2,638,364 0.25 ------------------------ 17,545,563 1.66 ------------------------ RAILROADS Helm Financial Corp., Term Loan B, 7.87% - 7.875%, 7/08/11 United States 1,233,540 1,235,687 0.12 Kansas City Southern Railway Co., Term Loan B, 7.07% - 7.11%, 4/26/13 United States 2,143,437 2,142,044 0.20 RailAmerica Transportation Corp., Canadian Term Loan, 7.375%, 9/29/11 Canada 38,914 39,014 0.00g U.S. Term Loan, 7.375%, 9/29/11 United States 327,967 328,806 0.03 ------------------------ 3,745,551 0.35 ------------------------ REAL ESTATE DEVELOPMENT Standard Pacific Corp., Term Loan B, 6.873%, 5/05/13 United States 1,800,000 1,774,746 0.17 SunCal Master I LLC, Term Loan B, 8.61%, 1/19/10 United States 474,861 471,703 0.04 ------------------------ 2,246,449 0.21 ------------------------ REAL ESTATE INVESTMENT TRUSTS Capital Automotive REIT, Term Loan B, 7.08%, 12/10/10 United States 3,001,400 3,033,065 0.29 CB Richard Ellis Services Inc., Term Loan B, 6.845% - 6.85%, 12/20/13 United States 4,500,000 4,511,700 0.43 General Growth Properties Inc., Term Loan A-1, 6.57% - 6.657%, 2/24/10 United States 3,850,000 3,825,629 0.36 Lion Gables Realty LP, Term Loan B, 7.07%, 3/30/07 United States 107,368 107,388 0.01 Macerich Co., Term Loan B, 6.875%, 4/26/10 United States 3,500,000 3,491,705 0.33 Newkirk Master LP, Term Loan B, 7.076%, 8/11/08 United States 1,968,836 1,968,285 0.18 ------------------------ 16,937,772 1.60 ------------------------ RECREATIONAL PRODUCTS Fender Musical Instruments, Term Loan B, 8.08%, 3/30/12 United States 1,077,841 1,081,312 0.10

SemiAnnual Report FRANKLIN FLOATING RATE MASTER TRUST FRANKLIN FLOATING RATE MASTER SERIES Mega Bloks Inc., Term Loan B, 7.125% - 7.188%, 7/26/12 Canada 2,068,500 2,069,245 0.20 PlayPower Inc., Term Loan B, 8.11% - 8.12%, 6/30/12 United States 650,000 653,276 0.06 Samsonite Corp., Term Loan B, 7.62%, 12/21/13 United States 1,300,000 1,308,866 0.12 ------------------------ 5,112,699 0.48 ------------------------ RESTAURANTS Arby's Restaurant Holdings LLC, Term Loan B, 7.57% - 7.614%, 7/25/12 United States 5,055,355 5,055,254 0.48 Dominos Inc., Term Loan B, 6.875%, 6/25/10 United States 1,670,459 1,666,316 0.16 ------------------------ 6,721,570 0.64 ------------------------ SEMICONDUCTORS Advanced Micro Devices Inc., Term Loan B, 7.62%, 12/31/13 United States 4,077,872 4,110,087 0.39 Fairchild Semiconductor Corp., Term Loan, 6.864%, 6/26/13 United States 1,950,387 1,950,231 0.18 Spansion LLC, Term Loan, 8.375%, 11/03/12 United States 1,900,000 1,904,731 0.18 ------------------------ 7,965,049 0.75 ------------------------ SPECIALTY STORES Michaels Stores Inc., Term Loan B, 8.125%, 10/31/13 United States 3,711,531 3,745,232 0.35 Pantry Inc., Term Loan, 7.07%, 1/02/12 United States 1,514,425 1,518,030 0.14 Sally Holdings LLC, Term Loan B, 7.87%, 11/16/13 United States 2,394,000 2,391,079 0.23 ------------------------ 7,654,341 0.72 ------------------------ SPECIALTY TELECOMMUNICATIONS h Iowa Telecommunications Services Inc., Term Loan B, 7.08% - 7.12%, 11/23/11 United States 6,250,000 6,259,125 0.59 Madison River Communications Corp., Term Loan B-1, 7.61%, 7/29/12 United States 2,971,429 2,977,995 0.28 NTELOS Inc., Term Loan B-1, 7.60%, 8/24/11 United States 4,359,198 4,372,145 0.41 West Corp., Term Loan B, 8.07% - 8.11%, 10/24/13 United States 4,200,000 4,223,142 0.40 Windstream Corp., Term Loan B, 7.11%, 7/17/13 United States 12,200,000 12,306,140 1.17 ------------------------ 30,138,547 2.85 ------------------------ TOBACCO Commonwealth Brands Inc., Term Loan B, 7.625%, 12/22/12 United States 2,571,646 2,586,972 0.25 Reynolds American Inc., Term Loan B, 7.104% - 7.188%, 5/31/12 United States 7,164,000 7,205,408 0.68 ------------------------ 9,792,380 0.93 ------------------------ TRUCKS/CONSTRUCTION/FARM MACHINERY Oshkosh Truck Corp., Term Loan B, 7.35%, 12/06/13 United States 12,100,000 12,169,212 1.15 ------------------------ WHOLESALE DISTRIBUTORS Interline Brands, Delayed Draw Term Loan, 7.07%, 6/23/13 United States 1,020,938 1,022,909 0.09 Term Loan B, 7.07%, 6/23/13 United States 706,409 707,772 0.07 ------------------------ 1,730,681 0.16 ------------------------

SemiAnnual Report FRANKLIN FLOATING RATE MASTER TRUST FRANKLIN FLOATING RATE MASTER SERIES WIRELESS COMMUNICATIONS American Cellular Corp., f Delayed Draw Term Loan, 7.64%, 8/07/13 United States 62,344 62,216 0.01 Term Loan B, 7.61%, 8/07/13 United States 249,375 250,138 0.02 ------------------------ 312,354 0.03 TOTAL SENIOR FLOATING RATE INTERESTS (COST $941,257,054) 943,334,522 89.19 ------------------------ SHORT TERM INVESTMENT (COST $102,339,655) REPURCHASE AGREEMENT i Joint Repurchase Agreement, 5.222%, 2/01/07 (Maturity Value $102,354,499) United States 102,339,655 102,339,655 9.68 ------------------------ ABN AMRO Bank, NV, New York Branch (Maturity Value $8,938,618) Banc of America Securities LLC (Maturity Value $8,938,618) Barclays Capital Inc. (Maturity Value $8,938,618) Bear, Stearns & Co. Inc. (Maturity Value $4,413,528) BNP Paribas Securities Corp. (Maturity Value $8,938,618) Deutsche Bank Securities Inc. (Maturity Value $8,938,618) Goldman, Sachs & Co. (Maturity Value $8,938,618) Greenwich Capital Markets Inc. (Maturity Value $8,938,618) Lehman Brothers Inc. (Maturity Value $8,554,791) Merrill Lynch Government Securities Inc. (Maturity Value $8,938,618) Morgan Stanley & Co. Inc. (Maturity Value $8,938,618) UBS Securities LLC (Maturity Value $8,938,618) Collateralized by U.S. Government Agency Securities, 2.50% - 7.625%, 3/15/07 - 10/15/11; j U.S. Government Agency Discount Notes, 2/28/07 - 4/16/07; j U.S. Treasury Bill, 5/31/07; and U.S. Treasury Notes, 2.625% - 5.125%, 7/31/07 - 11/30/11 ------------------------ TOTAL INVESTMENTS (COST $1,043,596,709) 1,045,674,177 98.87 OTHER ASSETS, LESS LIABILITIES 11,980,456 1.13 ------------------------ NET ASSETS $ 1,057,654,633 100.00 ------------------------

SELECTED PORTFOLIO ABBREVIATIONS FRN Floating Rate Note L/C Letter of Credit REIT Real Estate Investment Trust 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 10 regarding other considerations - credit committee participation. e See Note 11 regarding fund litigation. f See Note 8 regarding unfunded loan commitments. g Rounds to less than 0.01% of net assets. h See Note 1(c) regarding securities purchased on a when-issued or delayed delivery basis. i See Note 1(b) regarding joint repurchase agreement. j The security is traded on a discount basis with no stated coupon rate. 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 STATEMENT OF ASSETS AND LIABILITIES JANUARY 31, 2007 (UNAUDITED) Assets: Investments in securities: Cost - Unaffiliated issuers $ 941,257,054 Cost - Repurchase agreements 102,339,655 --------------- Total cost of investments $ 1,043,596,709 --------------- Value - Unaffiliated issuers 943,334,522 Value - Repurchase agreements 102,339,655 --------------- Total value of investments 1,045,674,177 Cash 8,379,329 Receivables: Investment securities sold 10,102,035 Capital shares sold 7,635,975 Interest 7,069,933 --------------- Total assets 1,078,861,449 --------------- Liabilities: Payables: Investment securities purchased 14,413,375 Affiliates 514,308 Distributions to shareholders 6,080,984 Unrealized loss on unfunded loan commitments (Note 8) 17,755 Accrued expenses and other liabilities 180,394 --------------- Total liabilities 21,206,816 --------------- Net assets, at value $ 1,057,654,633 =============== Net assets consist of: Paid-in capital $ 1,067,429,329 Accumulated distributions in excess of net investment income (551,690) Net unrealized appreciation (depreciation) 2,059,713 Accumulated net realized gain (loss) (11,282,719) --------------- Net assets, at value $ 1,057,654,633 =============== Net asset value and maximum offering price per share ($1,057,654,633 -:- 108,079,391 shares outstanding) $ 9.79 ===============

The accompanying notes are an integral part of these financial statements. | SemiAnnual Report FRANKLIN FLOATING RATE MASTER TRUST FRANKLIN FLOATING RATE MASTER SERIES FINANCIAL STATEMENTS (CONTINUED) STATEMENT OF OPERATIONS FOR THE PERIOD ENDED JANUARY 31, 2007 (UNAUDITED) Investment income: Interest $ 40,108,497 ------------ Expenses: Management fees (Note 3a) 4,336,386 Administrative fees (Note 3b) 680,754 Custodian fees (Note 4) 10,363 Reports to shareholders 3,922 Professional fees 58,764 Other 32,966 ------------ Total expenses 5,123,155 Expense reductions (Note 4) (7,637) Expenses waived/paid by affiliates (Note 3d) (1,863,837) ------------ Net expenses 3,251,681 ------------ Net investment income (loss) 36,856,816 ------------ Realized and unrealized gains (losses): Net realized gain (loss) from investments (1,062,265) Net change in unrealized appreciation (depreciation) on investments 2,898,804 ------------ Net realized and unrealized gain (loss) 1,836,539 ------------ Net increase (decrease) in net assets resulting from operations $ 38,693,355 ============

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) STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED JANUARY 31, 2007 YEAR ENDED (UNAUDITED) JULY 31, 2006 ------------------------------------ Increase (decrease) in net assets: Operations: Net investment income $ 36,856,816 $ 63,252,971 Net realized gain (loss) from investments (1,062,265) 502,393 Net change in unrealized appreciation (depreciation) on investments 2,898,804 (8,914,543) ------------------------------------ Net increase (decrease) in net assets resulting from operations 38,693,355 54,840,821 Distributions to shareholders from net investment income (36,938,582) (63,744,758) Capital share transactions (Note 2) (84,954,424) 28,625,266 ------------------------------------ Net increase (decrease) in net assets (83,199,651) 19,721,329 Net assets: Beginning of period 1,140,854,284 1,121,132,955 ------------------------------------ End of period $ 1,057,654,633 $ 1,140,854,284 ==================================== Distributions in excess of net investment income included in net assets: End of period $ (551,690) $ (469,924) ====================================
The accompanying notes are an integral part of these financial statements. | SemiAnnual Report FRANKLIN FLOATING RATE MASTER TRUST FRANKLIN FLOATING RATE MASTER SERIES NOTES TO FINANCIAL STATEMENTS 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Franklin Floating Rate Master Trust (the Trust) is registered under the Investment Company Act of 1940, as amended, (the 1940 Act) as a non-diversified, open-end investment company, consisting of one fund, the Franklin Floating Rate Master Series (the Fund), which is organized as a partnership. The shares of the Trust are issued in the form of partnership interests and 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. Short term investments are valued at cost. Senior secured corporate loans with floating or variable interest rates generally trade in the over-the-counter market rather than on a securities exchange. The Fund may utilize independent pricing services, quotations from loan dealers and other financial institutions, and information with respect to bond and note transactions, to assist in determining a current market value for each security. The Fund's pricing services use independent market quotations from loan dealers or financial institutions and may incorporate valuation methodologies that consider multiple bond characteristics such as dealer quotes, issuer type, coupon, maturity, weighted average maturity, interest rate spreads and yield curves, cash flow and credit risk/quality analysis to determine current value. The Trust has procedures to determine the fair value of individual securities and other assets for which market prices are not readily available or which may not be reliably priced. Methods for valuing these securities may include: fundamental analysis, matrix pricing, discounts from market prices of similar securities, or discounts applied due to the nature and duration of restrictions on the disposition of the securities. Due to the inherent uncertainty of valuations of such securities, the fair values may differ significantly from the values that would have been used had a ready market for such investments existed. Occasionally, events occur between the time at which trading in a security is completed and the close of the NYSE that might call into question the availability (including the reliability) of the value of a portfolio security held by the Fund. If such an event occurs, the securities may be valued using fair value procedures, which may include the use of independent pricing services. All security valuation procedures are approved by the Trust's Board of Trustees. B. JOINT REPURCHASE AGREEMENT The Fund may enter into a joint repurchase agreement whereby its uninvested cash balance is deposited into a joint cash account with other funds managed by the investment manager or an affiliate of the investment manager and is used to invest in one or more repurchase agreements. The value and face amount of the joint repurchase agreement are allocated to the funds based on their pro-rata interest. A repurchase agreement is accounted for as a loan by the fund to the seller, collateralized by securities which are delivered to the fund's custodian. The market value, including accrued interest, of the initial collateralization is required to be at least 102% of the dollar amount invested by the funds, with the value of the underlying securities marked to market daily to maintain coverage of at least 100%. The joint repurchase agreement held by the Fund at period end had been entered into on January 31, 2007. The joint repurchase agreement is valued at cost. C. SECURITIES PURCHASED ON A WHEN-ISSUED OR DELAYED DELIVERY BASIS The Fund may purchase securities on a when-issued or delayed delivery basis, with payment and delivery scheduled for a future date. These transactions are subject to market fluctuations and are subject to the risk that the value at delivery may be more or less than the trade date purchase price. Although the Fund will generally purchase these securities with the intention of holding the securities, it may sell the securities before the settlement date. Sufficient assets have been segregated for these securities. SemiAnnual Report FRANKLIN FLOATING RATE MASTER TRUST FRANKLIN FLOATING RATE MASTER SERIES NOTES TO FINANCIAL STATEMENTS (CONTINUED) 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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. 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 distributed monthly. Net capital gains (or losses) realized by the Fund will be allocated proportionately to each partner and will not be distributed. Distributions to partners are determined according to income tax regulations (tax basis). Distributable earnings determined on a tax basis may differ from earnings recorded in accordance with accounting principles generally accepted in the United States. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods. G. ACCOUNTING ESTIMATES The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates. H. GUARANTEES AND INDEMNIFICATIONS Under the Trust's organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust enters into contracts with service providers that contain general indemnification clauses. The Trust's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote. SemiAnnual Report FRANKLIN FLOATING RATE MASTER TRUST FRANKLIN FLOATING RATE MASTER SERIES NOTES TO FINANCIAL STATEMENTS (CONTINUED) 2. SHARES OF BENEFICIAL INTEREST At January 31, 2007, there were an unlimited number of shares authorized ($0.01 par value). Transactions in the Fund's shares were as follows:
SIX MONTHS ENDED YEAR ENDED JANUARY 31, 2007 JULY 31, 2006 ------------------------------------------------------------------- Shares Amount Shares Amount ------------------------------------------------------------------- Shares sold 13,070,741 $ 127,726,254 25,347,164 $ 248,905,074 Shares redeemed (21,772,470) (212,680,678) (22,428,878) (220,279,808) ------------------------------------------------------------------- Net increase (decrease) (8,701,729) $ (84,954,424) 2,918,286 $ 28,625,266 ===================================================================
3. TRANSACTIONS WITH AFFILIATES Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton Investments. Certain officers and trustees of the Trust are also officers and/or directors of the following subsidiaries:
ENTITY AFFILIATION --------------------------------------------------------------------------------------------- Franklin Advisers, Inc. (Advisers) Investment manager Franklin Templeton Services, LLC (FT Services) Administrative manager Franklin/Templeton Investor Services, LLC (Investor Services) Transfer agent
A. MANAGEMENT FEES The Fund pays an investment management fee to Advisers of 0.80% per year of the average daily net assets of the Funds. 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. VOLUNTARY 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. SemiAnnual Report FRANKLIN FLOATING RATE MASTER TRUST FRANKLIN FLOATING RATE MASTER SERIES NOTES TO FINANCIAL STATEMENTS (CONTINUED) E. OTHER AFFILIATED TRANSACTIONS At January 31, 2007, the shares of the Franklin Floating Rate Master Series were owned by the following entities: ENTITY SHARES ----------------------------------------------------------------- Franklin Floating Rate Fund PLC 108,059,391 Franklin Resources Inc. 10,000 Templeton Investment Counsel Inc. 10,000 ------------- TOTAL 108,079,391 ============= 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, 2007, the custodian fees were reduced as noted in the Statement of Operations. 5. INCOME TAXES At January 31, 2007, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows: Cost of investments $ 1,043,843,761 =============== Unrealized appreciation $ 3,465,592 Unrealized depreciation (1,635,176) --------------- Net unrealized appreciation (depreciation) $ 1,830,416 =============== 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, 2007, aggregated $234,580,237 and $359,153,931, respectively. 7. CREDIT RISK The Fund has 87.33% of its portfolio invested in below investment grade and comparable quality unrated high yield securities, which tend to be more sensitive to economic conditions than higher rated securities. The risk of loss due to default by the issuer may be significantly greater for the holders of high yielding securities because such securities are generally unsecured and are often subordinated to other creditors of the issuer. SemiAnnual Report FRANKLIN FLOATING RATE MASTER TRUST FRANKLIN FLOATING RATE MASTER SERIES NOTES TO FINANCIAL STATEMENTS (CONTINUED) 8. UNFUNDED LOAN COMMITMENTS The Fund may enter into certain credit agreements, all or a portion of which may be unfunded. The Fund is obligated to fund these loan commitments at the borrowers' discretion. Funded portions of credit agreements are presented on the Statement of Investments. At January 31, 2007, unfunded commitments were as follows: -------------------------------------------------------------------------------- UNFUNDED BORROWER COMMITMENT -------------------------------------------------------------------------------- American Cellular Corp., Delay Draw $ 187,500 American Greetings Corp., Term Loan 1,000,000 Amsted Industries Inc., Delay Draw 500,000 CBRL Group (Cracker Barrel), Term Loan B2 (Delayed Draw) 427,242 Conseco Inc., Revolver 4,000,000 Herbst Gaming Inc., Delay Draw 433,333 Infrastrux Group Inc., Delay Draw 50,909 Sealy Mattress Co., Revolver 750,000 Stiefel Laboratories Inc., Delay Draw 1,083,467 VML US Finance LLC (Venetian Macau), Delay Draw 2,766,667 WMG Acquisition Corp. (Warner Music), Revolver A 3,427,333 ------------ $ 14,626,451 ============ Unfunded loan commitments and funded portions of credit agreements are marked to market daily and any unrealized gain or loss is included in the Statement of Assets and Liabilities and Statement of Operations. 9. SHAREHOLDER DISTRIBUTIONS For the period ended January 31, 2007, the Fund made the following distributions: Payment Date Amount Per Share -------------------------------------------------------------------------------- 8/31/2006 $0.056262 9/29/2006 $0.054615 10/31/2006 $0.056289 11/30/2006 $0.055227 12/29/2006 $0.056905 1/31/2007 $0.056962 --------- Total $0.336260 ========= Daily distribution information is available at the registered office upon request. SemiAnnual Report FRANKLIN FLOATING RATE MASTER TRUST FRANKLIN FLOATING RATE MASTER SERIES NOTES TO FINANCIAL STATEMENTS (CONTINUED) 10. OTHER CONSIDERATIONS Directors or employees of Advisers, as the Fund's Investment Manager, serve as members of various bondholders' steering committees, on credit committees, and represent the Fund in certain corporate restructuring negotiations. As a result of this involvement, such individuals may be in possession of certain material non-public information. If the Fund's Investment Manager, while in possession of such information, seeks to buy or sell any of these securities, it will comply with all applicable federal securities laws. The securities have been identified on the accompanying Statement of Investments. 11. FUND LITIGATION On July 6, 2003, Adelphia Communications Corp. ("Adelphia") and related parties, along with its Official Committee of Unsecured Creditors, filed an adversary proceeding in the Adelphia bankruptcy case in the U.S. Bankruptcy Court (SDNY) 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 CLOs I - III, Franklin Floating Rate Daily Access Fund, Franklin Floating Rate Master Series, and Franklin Floating Rate Trust. The Complaint alleges that the purchasers of this bank debt knew, or should have known, that the loan proceeds would not benefit Adelphia, but instead would be used to enrich Adelphia insiders. It seeks avoidance of the loans and recovery of intentionally fraudulent transfers. The Franklin defendants have not yet been required to respond to the complaint or to discovery, and other pending motions to dismiss have not been ruled upon. Thus, it is not possible to predict the lawsuit's outcome at this preliminary stage of the proceedings. However, management of the Funds does not expect that the result will have a material adverse effect on the financial condition of the Funds. 12. REGULATORY AND LITIGATION MATTERS As part of various investigations by a number of federal, state, and foreign regulators and governmental entities, including the Securities and Exchange Commission ("SEC"), relating to certain practices in the mutual fund industry, including late trading, market timing and marketing support payments to securities dealers who sell fund shares ("marketing support"), Franklin Resources, Inc. and certain of its subsidiaries (collectively, the "Company"), entered into settlements with certain of those regulators and governmental entities. Specifically, the Company entered into settlements with the SEC, among others, concerning market timing and marketing support. On June 23, 2006, the SEC approved the proposed plan of distribution for the marketing support settlement, and disbursement of the settlement monies to the designated funds, in accordance with the terms and conditions of that settlement and plan, was completed in September 2006. The Trust did not participate in that Settlement. The plan of distribution for the market timing settlement is currently under review by the SEC staff. After publication of notice of the plan and a 30-day comment period, the proposed plan of distribution will be submitted to the SEC for approval. Following the SEC's approval of the plan of distribution, with modifications as appropriate, distribution of the settlement monies will begin in accordance with the terms and conditions of the settlement and plan. In addition, the Company, as well as most of the mutual funds within Franklin Templeton Investments and certain current or former officers, Company directors, fund directors, and employees, have been named in private lawsuits (styled as shareholder class actions, or as derivative actions on behalf of either the named funds or Franklin Resources, Inc.). The lawsuits relate to the industry practices referenced above, as well as to allegedly excessive commissions and advisory and distribution fees. The Company and fund management believe that the claims made in each of the private lawsuits referenced above are without merit and intend to defend against them vigorously. The Company cannot predict with certainty the eventual outcome of these lawsuits, nor whether they will have a material negative impact on the Company. If it is determined that the Company bears responsibility for any unlawful or inappropriate conduct that caused losses to the Trust, it is committed to making the Trust or its shareholders whole, as appropriate. SemiAnnual Report FRANKLIN FLOATING RATE MASTER TRUST FRANKLIN FLOATING RATE MASTER SERIES NOTES TO FINANCIAL STATEMENTS (CONTINUED) 13. NEW ACCOUNTING PRONOUNCEMENTS In July 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an Interpretation of FASB Statement No. 109" ("FIN 48"), which clarifies the accounting for uncertainty in tax positions taken or expected to be taken in a tax return. FIN 48 provides guidance on the measurement, recognition, classification and disclosure of tax positions, along with accounting for the related interest and penalties. FIN 48 is effective for fiscal years beginning after December 15, 2006, and is to be applied to all open tax years as of the date of effectiveness. On December 22, 2006, the Securities and Exchange Commission extended the implementation date to no later than the last net asset value calculation in the first semi-annual reporting period in 2007. The Fund is currently evaluating the impact, if any, of applying the various provisions of FIN 48. In September 2006, FASB issued FASB Statement No. 157, "Fair Value Measurement" ("SFAS 157"), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. SFAS 157 is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Trust believes the adoption of SFAS 157 will have no material impact on its financial statements. SemiAnnual Report 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 1-954-527-7678 or by sending a written request to: Franklin Templeton Companies, LLC, 500 East Broward Boulevard, Suite 1500, Fort Lauderdale, FL 33394, Attention: Proxy Group. Copies of the Fund's proxy voting records are also made available online at franklintempleton.com and posted on the U.S. Securities and Exchange Commission's website at sec.gov and reflect the most recent 12-month period ended June 30. QUARTERLY STATEMENT OF INVESTMENTS The Fund files a complete statement of investments with the U.S. Securities and Exchange Commission for the first and third quarters for each fiscal year on Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission's website at sec.gov. The filed form may also be viewed and copied at the Commission's Public Reference Room in Washington, DC. Information regarding the operations of the Public Reference Room may be obtained by calling 1-800/SEC-0330. ITEM 2. CODE OF ETHICS. (a) The Registrant has adopted a code of ethics that applies to its principal executive officers and principal financial and accounting officer. (c) N/A (d) N/A (f) Pursuant to Item 12(a)(1), the Registrant is attaching as an exhibit a copy of its code of ethics that applies to its principal executive officers and principal financial and accounting officer. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. (a)(1) The Registrant has an audit committee financial expert serving on its audit committee. (2) The audit committee financial expert is Frank W. T. LaHaye and he is "independent" as defined under the relevant Securities and Exchange Commission Rules and Releases. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. 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 Jimmy D. Gambill, Chief Executive Officer - Finance and Administration, and Galen G. Vetter, Chief Financial Officer (b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Jimmy D. Gambill, Chief Executive Officer - Finance and Administration, and Galen G. Vetter, Chief Financial Officer SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. FRANKLIN FLOATING RATE MASTER TRUST By /S/JIMMY D. GAMBILL ------------------- Jimmy D. Gambill Chief Executive Officer - Finance and Administration Date March 29, 2007 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By /S/JIMMY D. GAMBILL ------------------- Jimmy D. Gambill Chief Executive Officer - Finance and Administration Date March 29, 2007 By /S/GALEN G. VETTER ------------------ Galen G. Vetter Chief Financial Officer Date March 29, 2007