ThZeal - The Zeal

N-CSRS 1 ffrmtsrpt0310.txt FFRMT SAR PE 1/31/10 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: 1/31/10 ------- ITEM 1. REPORTS TO STOCKHOLDERS. Franklin Floating Rate Master Trust Franklin Floating Rate Master Series Semiannual Report | The accompanying notes are an integral part of these financial statements. 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 repurchases of the Fund shares in relation to income earned and/or fluctuating market value of the investments of the Fund. b/Total return is not annualized for periods less than one year. c/Ratios are annualized for periods less than one year. d/Benefit of expense reduction rounds to less than 0.01%. Franklin Floating Rate Master Trust Franklin Floating Rate Master Series STATEMENT OF INVESTMENTS, JANUARY 31, 2010 (UNAUDITED)

Franklin Floating Rate Master Trust Franklin Floating Rate Master Series

Franklin Floating Rate Master Trust Franklin Floating Rate Master Series

Franklin Floating Rate Master Trust Franklin Floating Rate Master Series

Franklin Floating Rate Master Trust Franklin Floating Rate Master Series

Franklin Floating Rate Master Trust Franklin Floating Rate Master Series

Franklin Floating Rate Master Trust Franklin Floating Rate Master Series

Franklin Floating Rate Master Trust Franklin Floating Rate Master Series

Franklin Floating Rate Master Trust Franklin Floating Rate Master Series

Franklin Floating Rate Master Trust Franklin Floating Rate Master Series

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/Security has been deemed illiquid because it may not be able to be soldwithin seven days. At January 31, 2010, the aggregate value of these securities was $1,770,033, representing 0.45% of net assets. f/Income may be received in additional securities and/or cash. g/A portion or all of the security purchased on a delayed delivery basis. See Note 1(c). h/Rounds to less than 0.01% of net assets. 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, 2010 (UNAUDITED) Assets: Investments in securities: Cost - Unaffiliated issuers $353,628,847 Cost - Repurchase agreements 55,728,013 ------------------ Total cost of investments $409,356,860 ------------------ Value - Unaffiliated issuers $357,408,792 Value - Repurchase agreements 55,728,013 ------------------ Total value of investments 413,136,805 Cash 9,443,013 Receivables: Capital shares sold 197,108 Interest 984,719 ------------------ Total assets 423,761,645 ------------------ Liabilities: Payables: Investment securities purchased 28,581,298 Affiliates 241,399 Distributions to shareholders 1,136,881 Accrued expenses and other liabilities 99,977 ------------------ Total liabilities 30,059,555 ------------------ Net assets, at value $393,702,090 ------------------ Net assets consist of: Paid-in capital $499,675,658 Undistributed net investment income 64,694 Net unrealized appreciation (depreciation) 3,779,945 Accumulated net realized gain (loss) (109,818,207) ------------------ Net assets, at value $393,702,090 ------------------ Net asset value and maximum offering price per share $8.66 ($393,702,090 / 45,485,308 shares outstanding) ------------------ Semiannual Report | The accompanying notes are an integral part of these financial statements. Franklin Floating Rate Master Trust Franklin Floating Rate Master Series FINANCIAL STATEMENTS (continued) STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JANUARY 31, 2010 (UNAUDITED) Investment income: Interest $7,989,191 ------------------ Expenses: Management fees (Note 3a) 1,464,918 Administrative fees (Note 3b) 262,328 Custodian fees (Note 4) 3,555 Reports to shareholders 3,195 Professional fees 71,688 Trustees' fees and expenses 13,726 Other 20,240 ------------------ Total expenses 1,839,650 Expense reductions (Note 4) (87) Expenses waived/paid by affiliates (Note 3d) (374,645) ------------------ Net expenses 1,464,918 ------------------ Net investment income 6,524,273 ------------------ Realized and unrealized gains (losses): Net realized gain (loss) from investments (1,938,295) Net change in unrealized appreciation (depreciation) on investments 19,791,574 ------------------ Net realized and unrealized gain (loss) 17,853,279 ------------------ Net increase (decrease) in net assets resulting $24,377,552 from operations ------------------ 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

Semiannual Report | The accompanying notes are an integral part of these financial statements. Franklin Floating Rate Master Trust Franklin Floating Rate Master Series NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES The Franklin Floating Rate Master Trust (Trust) is registered under the Investment Company Act of 1940, as amended, (1940 Act) as an open-end investment company, consisting of one fund, the Franklin Floating Rate Master Series (Fund). 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 period end had been entered into on January 29, 2010. The joint repurchase agreement is valued at cost which approximates market value. c. SECURITIES PURCHASED ON A DELAYED DELIVERY BASIS The Fund may purchase securities on a delayed delivery basis, with payment and delivery scheduled for a future date. These transactions are subject to market fluctuations and are subject to the risk that the value at delivery may be more or less than the trade date purchase price. Although the Fund will generally purchase these securities with the intention of holding the securities, it may sell the securities before the settlement date. Sufficient assets have been segregated for these securities. d. SENIOR FLOATING RATE INTERESTS Senior secured corporate loans pay interest at rates which are periodically reset by reference to a base lending rate plus a spread. These base lending rates are generally the prime rate offered by a designated U.S. bank or the London InterBank Offered Rate (LIBOR). Senior secured corporate loans often require prepayment of principal from excess cash flows or at the discretion of the borrower. As a result, actual maturity may be substantially less than the stated maturity. Franklin Floating Rate Master Trust Franklin Floating Rate Master Series 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 owner for inclusion in their individual income tax return. The Fund has reviewed the tax positions, taken on federal income tax returns, for each of the three open tax years and as of January 31, 2010, and has determined that no provision for income tax is required in the Fund's financial statements. Prior to December 23, 2009, the Fund was treated as a partnership for US income tax purposes. On December 23, 2009, Franklin Advisers, Inc and Templeton Investment Counsel redeemed their interests in the Fund, terminating the partnership status for US tax purposes. The Fund has elected to be treated as a disregarded entity for US income tax purposes, effective December 23, 2009. 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 owner daily and paid monthly. Net capital gains (or losses) realized by the Fund will be allocated proportionately to each owner and will not be distributed. Distributions to owner are determined according to income tax regulations (tax basis). Distributable earnings determined on a tax basis may differ from earnings recorded in accordance with accounting principles generally accepted in the United States of America. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods. g. ACCOUNTING ESTIMATES The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates. h. GUARANTEES AND INDEMNIFICATIONS Under the Trust's organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust, on behalf of the Fund, enters into contracts with service providers that contain general indemnification clauses. The Trust's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote. 2. SHARES OF BENEFICIAL INTEREST At January 31, 2010, there were an unlimited number of shares authorized (without par value). Transactions in the Fund's shares were as follows:

Franklin Floating Rate Master Trust Franklin Floating Rate Master Series 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:

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 Advisers and FT Services have voluntarily agreed in advance to waive or limit their respective fees and to assume as their own expense certain expenses otherwise payable by the fund so that the common expenses (i.e. a combination of management fees, administrative fees, and other expenses, but excluding distribution fees, and acquired fund fees and expenses) for each class of the Fund do not exceed 0.80% (other than certain non-routine expenses or costs, including those relating to litigation, indemnification, reorganizations, and liquidations). Advisers and FT Services may discontinue this waiver at any time upon notice to the Fund's Board of Trustees. E. OTHER AFFILIATED TRANSACTIONS At January 31, 2010, Franklin Floating Rate Fund, PLC owned 100% of the Fund outstanding shares. 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, 2010, the custodian fees were reduced as noted in the Statement of Operations. 5. INCOME TAXES At January 31, 2010, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows: Franklin Floating Rate Master Trust Franklin Floating Rate Master Series Cost of investments $409,976,457 ----------------- Unrealized appreciation $ 9,785,820 Unrealized depreciation (6,625,472) ----------------- Net unrealized appreciation $ 3,160,348 (depreciation) ----------------- 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 period ended January 31, 2010, aggregated $109,506,354 and $78,151,231, respectively. 7. CREDIT RISK AND DEFAULTED SECURITIES At January 31, 2010, the Fund had 79.17% of its portfolio invested in senior secured floating rate notes rated below investment grade. These securities may be more sensitive to economic conditions causing greater price volatility and are potentially subject to a greater risk of loss due to default than higher rated securities. The Fund held defaulted securities and/or other securities for which the income has been deemed uncollectible. At January 31, 2010, the aggregate value of these securities was $7,383,170, representing 1.88% 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 January 31, 2010, the Fund made the following distributions: PAYMENT DATE AMOUNT PER SHARE ---------------------------------------------- -------------------- 8/31/2009 $0.022798 9/30/2009 $0.023100 10/30/2009 $0.025104 11/30/2009 $0.025293 12/31/2009 $0.026253 1/29/2010 $0.025626 -------------------- TOTAL $0.148174 -------------------- 9. CREDIT FACILITY The Fund, together with other U.S. registered and foreign investment funds (collectively "Borrowers"), managed by Franklin Templeton Investments, are borrowers in a 364-day joint syndicated senior unsecured credit facility totaling $750 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. On January 22, 2010, the Fund renewed the Global Credit Facility for a total of $750 million, maturing January 21, 2011. 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 of 0.10% based upon the unused portion of the Global Credit Facility, which is reflected in other expenses on the Statement of Operations. During the period ended January 31, 2010, the Fund did not utilize the Global Credit Facility. Franklin Floating Rate Master Trust Franklin Floating Rate Master Series 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. All appellate briefing has since been submitted and the parties are awaiting a final schedule for oral argument. 11. FAIR VALUE MEASUREMENTS The Trust follows a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Trust's own market assumptions (unobservable inputs). These inputs are used in determining the value of the Fund's investments and are summarized in the following fair value hierarchy: o Level 1 - quoted prices in active markets for identical securities o Level 2 - other significant observable inputs including quoted prices for similar securities, interest rates, prepayment speed, credit risk, etc.) o Level 3 - significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments) The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities. The following is a summary of the inputs used as of January 31, 2010, in valuing the Fund's assets carried at fair value:

At January 31, 2010, the reconciliation of assets in which significant unobservable inputs (Level 3) were used in determining fair value, is as follows: Franklin Floating Rate Master Trust Franklin Floating Rate Master Series

12. NEW ACCOUNTING PRONOUNCEMENTS In January 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) NO. 2010-6, FAIR VALUE MEASUREMENTS AND DISCLOSURES (TOPIC 820): IMPROVING DISCLOSURES ABOUT FAIR VALUE MEASUREMENTS, which enhances and clarifies existing fair value measurement disclosure requirements and is effective for interim and annual periods beginning after December 15, 2009. The Fund is currently evaluating the impact, if any, of applying this provision. In March 2010, the FASB issued ASU NO. 2010-11, DERIVATIVES AND HEDGING (TOPIC 815): SCOPE EXCEPTION RELATED TO EMBEDDED CREDIT DERIVATIVES, which clarifies existing derivatives and hedging disclosure requirements and is effective for fiscal quarters beginning after June 15, 2010. The Fund is currently evaluating the impact, if any, of applying this provision. 13. SUBSEQUENT EVENTS The Fund has evaluated subsequent events through the issuance 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 Franklin Floating Rate Master Trust Franklin Floating Rate Master Series SHAREHOLDER INFORMATION 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. N/A ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. N/A ITEM 6. SCHEDULE OF INVESTMENTS. N/A ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. N/A ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. N/A ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. N/A ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There have been no changes to the procedures by which shareholders may recommend nominees to the Registrant's Board of Trustees that would require disclosure herein. ITEM 11. CONTROLS AND PROCEDURES. (a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. The Registrant maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Registrant's filings under the Securities Exchange Act of 1934 and the Investment Company Act of 1940 is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission. Such information is accumulated and communicated to the Registrant's management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. The Registrant's management, including the principal executive officer and the principal financial officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Within 90 days prior to the filing date of this Shareholder Report on Form N-CSR, the Registrant had carried out an evaluation, under the supervision and with the participation of the Registrant's management, including the Registrant's principal executive officer and the Registrant's principal financial officer, of the effectiveness of the design and operation of the Registrant's disclosure controls and procedures. Based on such evaluation, the Registrant's principal executive officer and principal financial officer concluded that the Registrant's disclosure controls and procedures are effective. (b) CHANGES IN INTERNAL CONTROLS. There have been no significant changes in the Registrant's internal controls or in other factors that could significantly affect the internal controls subsequent to the date of their evaluation in connection with the preparation of this Shareholder Report on Form N-CSR. ITEM 12. EXHIBITS. (a)(1) Code of Ethics (a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Laura F. Fergerson, Chief Executive Officer - Finance and Administration, and Gaston Gardey, Chief Financial Officer, Chief Accounting Officer and Treasurer (b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Laura F. Fergerson, Chief Executive Officer - Finance and Administration, and Gaston Gardey, Chief Financial Officer, Chief Accounting Officer and Treasurer SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. FRANKLIN FLOATING RATE MASTER TRUST By /s/LAURA F. FERGRESON ---------------------- Laura F. Fergerson Chief Executive Officer - Finance and Administration Date March 30, 2010 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. FERGRESON ---------------------- Laura F. Fergerson Chief Executive Officer - Finance and Administration Date March 30, 2010 By /s/GASTON GARDEY ----------------- Gaston Gardey Chief Financial Officer and Chief Accounting Officer Date March 30, 2010