Edgar Filing: FRANKLIN FLOATING RATE TRUST

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 811-08271
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FRANKLIN FLOATING RATE TRUST
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(Exact name of registrant as specified in charter)

ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906
(Address of principal executive offices) (Zip code)

MURRAY L. SIMPSON, ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906
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(Name and address of agent for service)

Registrant's telephone number, including area code: (650) 312-2000
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Date of fiscal year end: 7/31
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Date of reporting period: 1/31/04
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ITEM 1. REPORTS TO STOCKHOLDERS.

JANUARY 31, 2004

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MAN SAILING

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SEMIANNUAL REPORT AND SHAREHOLDER LETTER INCOME
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FRANKLIN
FLOATING RATE TRUST

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Franklin o Templeton o Mutual Series

Franklin Templeton Investments

GAIN FROM OUR PERSPECTIVE

Franklin Templeton's distinct multi-manager structure combines the specialized
expertise of three world-class investment management groups--Franklin, Templeton
and Mutual Series.

SPECIALIZED EXPERTISE

Each of our portfolio management groups operates autonomously, relying on its
own research and staying true to the unique investment disciplines that underlie
its success.

FRANKLIN. Founded in 1947, Franklin is a leader in tax-free investing and a
driving force in fixed income investing around the globe. They also bring
expertise in growth- and value-style U.S. equity investing.

TEMPLETON. Founded in 1940, Templeton pioneered international investing and, in
1954, launched what has become the industry's oldest global fund. Today, with
research offices in over 25 countries, they offer investors the broadest global
reach in the industry.

MUTUAL SERIES. Established in 1949, Mutual Series is dedicated to a unique style
of value investing, searching aggressively for opportunity among undervalued
stocks, arbitrage situations and distressed companies.

TRUE DIVERSIFICATION

Because our management groups work independently and adhere to distinctly
different investment approaches, Franklin, Templeton and Mutual Series funds
typically have a low overlap of securities. That's why our funds can be used to
build truly diversified portfolios covering every major asset class.

RELIABILITY YOU CAN TRUST

At Franklin Templeton Investments, we seek to consistently provide investors
with exceptional risk-adjusted returns over the long term, as well as the
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MUTUAL FUNDS | RETIREMENT PLANS | 529 COLLEGE SAVINGS PLANS | SEPARATE ACCOUNTS
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Not part of the semiannual report

Contents

SHAREHOLDER LETTER ....................... 1

SEMIANNUAL REPORT

Franklin Floating Rate Trust ............. 3

Performance Summary ...................... 8

Financial Highlights and
Statement of Investments ................. 9

Financial Statements ..................... 24

Notes to Financial Statements ............ 27

Proxy Voting Policies and Procedures ..... 34

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Semiannual Report

Franklin Floating Rate Trust

YOUR FUND'S GOAL AND PRIMARY INVESTMENTS: Franklin Floating Rate Trust seeks to
provide as high a level of current income and preservation of capital as is
consistent with investment primarily in senior secured corporate loans and
corporate debt securities with floating interest rates.

We are pleased to bring you Franklin Floating Rate Trust's semiannual report for
the period ended January 31, 2004.

PERFORMANCE OVERVIEW

Franklin Floating Rate Trust posted a +6.50% cumulative total return for the six
months ended January 31, 2004, as shown in the Performance Summary on page 8.
The share price, as measured by net asset value, rose from $8.43 per share on
July 31, 2003, to $8.83 at period-end. The Fund made dividend distributions
totaling $0.143696 per share during the period.1

ECONOMIC AND MARKET OVERVIEW

During the six months ended January 31, 2004, domestic economic recovery
appeared to be on track. The annualized gross domestic product growth rate
surged 8.2% in the third quarter of 2003 and rose 4.1% in the fourth quarter.
The U.S. dollar's continued weakness, particularly against the euro, led to
modest trade balance improvements. Business sentiment climbed in January 2004 to
its highest level in nearly a decade, and business equipment spending,
especially in information technology, rose in the third and fourth quarters of
2003. Consumer sentiment rose in January to its highest level since November
2000. Consumer spending, however, grew only modestly in fourth quarter 2003
compared with strong third-quarter spending, which was fueled by federal tax
cuts, mortgage refinancing and auto-buying incentives. Slow wage growth, heavy
indebtedness and lower wealth since 2000 despite recent stock market gains
constrained consumer spending.

Lack of job growth remained a risk to the economy during the reporting period,
and although the unemployment rate fell to 5.6% in January, this occurred mainly
because of a labor force decline. At the Federal Reserve Board's (Fed's) January

1. Assumes shares were purchased and held for the entire accrual period. Since
dividends accrue daily, your actual distributions will vary depending on the
date you purchased your shares and any account activity during the reporting
period. Income distributions include all accrued income earned by the Fund
during the period.

THE DOLLAR VALUE, NUMBER OF SHARES OR PRINCIPAL AMOUNT, AND COMPLETE LEGAL
TITLES OF ALL PORTFOLIO HOLDINGS ARE LISTED IN THE FUND'S STATEMENT OF
INVESTMENTS (SOI). THE SOI BEGINS ON PAGE 10.

Semiannual Report | 3

----------------------------------------------
WHAT ARE SYNDICATED BANK LOANS?
----------------------------------------------
Syndicated bank loans are typically insured,
floating rate loans to corporate borrowers
made by a group, or syndicate, of banks and
other lenders. A group of lenders provides
capital to companies for varied purposes, such
as merger and acquisition activity, leveraged
buyouts or refinancings. Borrowing rates
are generally pegged to an index, such as
LIBOR, the London InterBank Offered Rate.

meeting, Fed policymakers indicated they would not raise interest rates until
the job market improved meaningfully. Thus, they kept the federal funds target
rate at 1.00%, and maintained a neutral stance with respect to future economic
growth and inflation. However, the Fed said it "can be patient" about raising
rates, which was different from previous statements. The change in wording
caused mixed reaction among market analysts about when the Fed might begin
raising rates.

During the period, equity markets continued a rally that began in March 2003.
Data showing robust economic growth and improved revenue reports from corporate
America seemed to increase investor confidence in the stock markets. The
Standard & Poor's 500 Composite Index (S&P 500) rose 15.22% for the six months
under review, while the technology-heavy Nasdaq Composite Index increased
19.43%.2 As economic data improved, some interest rates rose from their lows at
the beginning of the period but eased toward period-end. The 10-year Treasury
note started the period yielding 4.49% on July 31, 2003, reached a peak of 4.61%
on September 2, 2003, then declined to 4.16% on January 31, 2004.

The syndicated bank loan market was strong during the six-month period as it
continued to rebound from lackluster results in 2001 and 2002. Substantial new
loan issuance benefited from improving credit quality and historically low
interest rates. Rising credit quality and healthy demand from both traditional
and non-traditional loan investors such as hedge funds and other institutional
vehicles helped push loan prices higher, particularly for lower-rated credits --
a dominant factor in the overall market's strong performance.

As a result of a supply/demand imbalance, loan market conditions were favorable
for borrowers during the reporting period. Strong demand by lenders enabled
borrowers to reduce interest coupons on their loans and negotiate for more
favorable borrowing terms in the credit agreements that govern syndicated loans.
As a result, during the period the average spread above LIBOR for loans was near
its lowest level since the height of the last credit cycle in 1997. For example,
the average BB-rated issuer offered 2.45 percentage points above LIBOR.

Credit fundamentals continued to look favorable at the beginning of 2004, with
loan default rates down to five-year lows. The loan default rate declined as
most economic figures showed marked improvement in the overall domestic economy.
Prospects of continued economic strength and possible future short-term interest
rate increases contributed to strong demand for loans near period-end, because
the prices of floating rate loans are generally less interest rate-sensitive
than prices of most bonds.

2. Source: Standard & Poor's Micropal. The S&P 500 consists of 500 stocks chosen
for market size, liquidity and industry group representation. Each stock's
weight in the index is proportionate to its market value. The S&P 500 is one of
the most widely used benchmarks of U.S. equity performance. The Nasdaq Composite
Index measures all domestic and international common stocks listed on The Nasdaq
Stock Market. The index is market value-weighted and includes over 3,000
companies.

4 | Semiannual Report

INVESTMENT STRATEGY

We rely on independent and proprietary credit analysis to select corporate loan
and corporate debt securities that meet our rigorous investment criteria. We
seek to invest in companies with the ability to generate substantial free cash
flow, that are in industries with strong barriers to entry, and that possess
significant asset coverage and collateral for our debt. We also prefer companies
with dominant market shares, strong management teams and stable growth
prospects, according to our analysis.

MANAGER'S DISCUSSION

During the period we chose to underweight the wireless and electric utilities
sectors, which we believed were richly valued given their weaker underlying
credit fundamentals and commensurate risks. Over the past year, however, the
loan market's strength rewarded lower-rated credits, so our reduced exposure to
lower-quality names and riskier sectors hurt the Fund's relative performance.

The primary syndicated bank loan market was the source of many Fund purchases
during the period under review, given the strength of the bank loan secondary
market. For example, we bought the bank debt of Nalco, a leading global provider
of integrated water treatment and process improvement services, chemicals and
equipment programs for industrial and institutional applications. We concluded
that our investment, which funded the acquisition of Nalco by three leading
private equity firms, was attractive because of the underlying business's strong
market position and stable cash flows.

We also participated in the syndication of a loan backing Dex Media West, a
telephone directory publisher in seven western states where Qwest Communications
is the local telephone service provider. Dex West's sister company, Dex Media
East, tapped the loan market during the fall of 2002 in a similar transaction,
but with a higher coupon. We believed Dex West's ability to get significantly
better loan terms as it came to market in September 2003 was a good example of
how much the loan market had changed in less than a year. In spite of its lower
yield, we concluded that Dex West's strong brand, dominant market position and
solid cash flows made the investment attractive.

TOP 10 HOLDINGS
1/31/04

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COMPANY % OF TOTAL
SECTOR/INDUSTRY NET ASSETS
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Arch Wireless Inc. 2.5%
WIRELESS COMMUNICATIONS

Adelphia Communications 2.3%
CABLE & SATELLITE TELEVISION

Charter Communications 1.5%
CABLE & SATELLITE TELEVISION

Centerpoint Energy Inc. 1.4%
ELECTRIC UTILITIES

Vertis Inc. 1.4%
COMMERCIAL PRINTING & FORMS

Tenneco Automotive Inc. 1.4%
AUTO PARTS: ORIGINAL

Allied Waste North America Inc. 1.1%
ENVIRONMENTAL SERVICES

Tapco International 1.1%
BUILDING PRODUCTS

Nalco Co. 1.1%
CHEMICALS: SPECIALTY

Calpine Corp. 1.1%
ELECTRIC UTILITIES

Semiannual Report | 5

DIVIDEND DISTRIBUTIONS*
8/1/03-1/31/04

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MONTH DIVIDEND PER SHARE
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August 2.4334 cents
September 2.5281 cents
October 2.5820 cents
November 2.2734 cents
December 2.4383 cents
January 2.1144 cents
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TOTAL 14.3696 CENTS
------------------------------------------

*Assumes shares were purchased and held for the entire accrual period. Since
dividends accrue daily, your actual distributions will vary depending on the
date you purchased your shares and any account activity during the reporting
period. Income distributions include all accrued income earned by the Fund
during the reporting period.

Finally, the Fund benefited from its continued ownership of Arch Wireless's
common equity. The stock's appreciation represented a partial recovery of Arch's
senior secured loans' principal value, which we owned prior to the company's
December 2001 bankruptcy. Arch stock performed well because the company's cash
flows were relatively stable, allowing it to rapidly pay down much of the new
debt assumed during the bankruptcy reorganization process.

We appreciate your investment in Franklin Floating Rate Trust and welcome any
comments or suggestions you might have.

/s/Richard S. Hsu, CFA
Richard S. Hsu, CFA

/s/Madeline Lam
Madeline Lam

/s/Matthew W. Gregory, CFA
Matthew W. Gregory, CFA

Portfolio Managers
Franklin Floating Rate Trust

THIS DISCUSSION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS AS OF
JANUARY 31, 2004, THE END OF THE REPORTING PERIOD. THE WAY WE IMPLEMENT OUR MAIN
INVESTMENT STRATEGIES AND THE RESULTING PORTFOLIO HOLDINGS MAY CHANGE DEPENDING
ON FACTORS SUCH AS MARKET AND ECONOMIC CONDITIONS. THESE OPINIONS MAY NOT BE
RELIED UPON AS INVESTMENT ADVICE OR AN OFFER FOR A PARTICULAR SECURITY. THE
INFORMATION IS NOT A COMPLETE ANALYSIS OF EVERY ASPECT OF ANY MARKET, COUNTRY,
INDUSTRY, SECURITY OR THE FUND. STATEMENTS OF FACT ARE FROM SOURCES CONSIDERED
RELIABLE, BUT THE ADVISOR MAKES NO REPRESENTATION OR WARRANTY AS TO THEIR
COMPLETENESS OR ACCURACY. ALTHOUGH HISTORICAL PERFORMANCE IS NO GUARANTEE OF
FUTURE RESULTS, THESE INSIGHTS MAY HELP YOU UNDERSTAND OUR INVESTMENT MANAGEMENT
PHILOSOPHY.

6 | Semiannual Report

RICHARD S. HSU is a vice president of Franklin Advisers, Inc., and portfolio
manager for the Franklin Floating Rate Debt Group. He is the lead manager on
Franklin Floating Rate Trust, Franklin Floating Rate Daily Access Fund and
Franklin Floating Rate Fund PLC, which is sold offshore. Mr. Hsu also manages
the floating rate loan investments of Franklin Templeton Limited Duration Income
Trust. Mr. Hsu is also an analyst, specializing in bank loan participations in
the broadcasting, cable television and entertainment industries.

Mr. Hsu joined Franklin Templeton in 1996. He has been with the Floating Rate
Debt Group since its inception in 1997. Mr. Hsu helped start the group and
develop its infrastructure, including various areas such as trading, marketing
and legal compliance. Before joining the Floating Rate Debt Group, he worked in
Franklin's high yield corporate bond department.

Mr. Hsu received both a Bachelor of Arts degree with honors and a Master of Arts
degree from Stanford University. He is a Chartered Financial Analyst (CFA). He
is also a member of the Security Analysts of San Francisco (SASF) and the
Association for Investment Management and Research (AIMR).

MADELINE LAM is a vice president for Franklin Advisers, Inc., and portfolio
manager for the Franklin Floating Rate Debt Group. She is a co-manager on
Franklin Floating Rate Trust, Franklin Floating Rate Daily Access Fund and
Franklin Floating Rate Fund PLC, which is sold offshore. She is also part of the
team that manages the floating rate loan investments of Franklin Templeton
Limited Duration Income Trust. Ms. Lam specializes in the analysis of bank loans
in the health care, chemicals, energy and rental/leasing industries.

Ms. Lam has over 12 years of experience in the bank loan asset class. Prior to
joining Franklin Templeton Investments in 1998, she worked for Paribas as a
banking officer in their diversified industries group and an associate in their
health care group. Ms. Lam was also an analyst in Chase Manhattan Bank's (now JP
Morgan Chase) global energy division.

Ms. Lam received a Bachelor of Business Administration in finance from the
University of Texas at Austin.

MATTHEW GREGORY is a portfolio manager/research analyst for Franklin Advisers,
Inc.'s Floating Rate Debt Group. He is a co-manager on Franklin Floating Rate
Trust, Franklin Floating Rate Daily Access Fund and Franklin Floating Rate Fund
PLC, which is sold offshore. He is also part of the team that manages the
floating rate loan investments of Franklin Templeton Limited Duration Income
Trust. He specializes in the analysis of bank loan participations in the media
and publishing, commercial services, homebuilding and utilities industries for
the Floating Debt Rate Group.

Mr. Gregory joined Franklin Templeton Investments in 1996 as a management
trainee and worked in Trading and Investor Relations before joining the Franklin
Floating Rate Debt Group in 1998. Mr. Gregory received a Bachelor of Arts in
economics from Stanford University and is a Chartered Financial Analyst (CFA).

Semiannual Report | 7

Performance Summary as of 1/31/04

Your dividend income will vary depending on dividends or interest paid by
securities in the Fund's portfolio, adjusted for operating expenses. Capital
gain distributions are net profits realized from the sale of portfolio
securities. The performance table does not reflect any taxes due on Fund
dividends, capital gain distributions, if any, or any realized gains on the sale
of Fund shares. Total return reflects the Fund's dividend income, capital gain
distributions, if any, and any unrealized gains or losses.

PRICE AND DISTRIBUTION INFORMATION

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CHANGE 1/31/04 7/31/03
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Net Asset Value (NAV) +$0.40 $8.83 $8.43
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DISTRIBUTIONS (8/1/03-1/31/04)
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Dividend Income $0.143696
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PERFORMANCE 1

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6-MONTH 1-YEAR 5-YEAR INCEPTION (10/10/97)
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Cumulative Total Return 2 +6.50% +12.44% +24.86% +34.88%
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Average Annual Total Return 3 +5.50% +11.44% +4.54% +4.86%
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Value of $10,000 Investment 4 $10,550 $11,144 $12,486 $13,488
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Avg. Annual Total Return (12/31/03) 5 +11.33% +4.40% +4.73%
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Distribution Rate 6 2.91%
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30-Day Yield 7 3.30%
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ONGOING MARKET VOLATILITY CAN SIGNIFICANTLY AFFECT SHORT-TERM PERFORMANCE; MORE
RECENT RETURNS MAY DIFFER FROM THOSE SHOWN. INVESTMENT RETURN AND PRINCIPAL
VALUE WILL FLUCTUATE WITH MARKET CONDITIONS, AND YOU MAY HAVE A GAIN OR LOSS
WHEN YOU SELL YOUR SHARES.

FOR MORE CURRENT PERFORMANCE, SEE "FUNDS AND PERFORMANCE" AT
FRANKLINTEMPLETON.COM OR CALL 1-800/342-5236.

ENDNOTES

SHARES REPURCHASED WITHIN 12 MONTHS OF INVESTMENT ARE SUBJECT TO 1% EARLY
WITHDRAWAL CHARGE.

1. Past expense reductions by the Fund's manager increased the Fund's total
returns. Without these reductions, the Fund's total returns would have been
lower.
2. Cumulative total return represents the change in value of an investment over
the periods indicated and does not include the early withdrawal charge.
3. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes the 1% early withdrawal
charge, assuming shares were redeemed within 12 months of purchase.
4. These figures represent the value of a hypothetical $10,000 investment in the
Fund over the periods indicated.
5. In accordance with SEC rules, we provide standardized average annual total
return information through the latest calendar quarter.
6. The distribution rate is based on the annualization of daily distributions
totaling 2.1144 cents per share during the last 30 days of January and the $8.83
NAV on 1/31/04.
7. Yield is based on the earnings of the Fund's portfolio for the 30 days ended
1/31/04.

8 | Past performance does not guarantee future results. | Semiannual Report

Franklin Floating Rate Trust

FINANCIAL HIGHLIGHTS

SIX MONTHS ENDED
JANUARY 31, 2004 YEAR ENDED JULY 31,
(UNAUDITED) 2003 2002 2001 2000 1999
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PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout
the period)

Net asset value, beginning of period ....... $8.42 $8.30 $9.24 $9.85 $9.98 $10.04
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Income from investment operations:
Net investment income ..................... .153 .330 .568 c .875 .839 .700
Net realized and unrealized gains
(losses) .................................. .411 .179 (.927) c (.606) (.130) (.060)
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Total from investment operations ........... .564 .509 (.359) .269 .709 .640
Less distributions from net investment
income .................................... (.144) (.389) (.581) (.879) (.839) (.700)
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Net asset value, end of period ............. $8.84 $8.42 $8.30 $9.24 $9.85 $ 9.98
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Total return a ............................. 6.50% 6.36% (3.95)% 2.80% 7.39% 6.62%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) .......... $1,183,476 $1,160,979 $1,779,930 $2,832,188 $2,541,497 $1,106,363
Ratios to average net assets:
Expenses .................................. 1.37% b 1.35% 1.32% 1.36% 1.35% 1.39%
Expenses excluding waiver and
payments by affiliate ..................... 1.37% b 1.35% 1.32% 1.36% 1.35% 1.41%
Net investment income ..................... 3.56% b 4.26% 6.58% c 9.07% 8.51% 6.93%
Portfolio turnover rate .................... 41.06% 55.96% 62.21% 84.15% 66.27% 63.29%

a Total return does not reflect the contingent deferred sales charge, and is not
annualized for periods less than one year.
b Annualized.
c Effective August 1, 2001, the Fund adopted the provisions of the AICPA Audit
and Accounting Guide of Investment Companies and began amortizing all premium
and discount on fixed-income securities, as required. The effect of this
change was as follows:

Net investment income per share .............................. $(.008)
Net realized and unrealized gains (losses) per share ......... .008
Ratio of net investment income to average net assets ......... .07%

Per share data and ratios for prior periods have not been restated to reflect
this change in accounting policy.

Not part of the semiannual report | 9

Franklin Floating Rate Trust

STATEMENT OF INVESTMENTS, JANUARY 31, 2004 (UNAUDITED)

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PRINCIPAL AMOUNT VALUE
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BONDS 1.8%
FINANCIAL CONGLOMERATES 1.0%

Finova Group Inc., 7.50%, 11/15/09 .................................................. $ 17,086,000 $ 11,234,045
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WIRELESS COMMUNICATIONS .8%
Arch Wireless Inc., Senior sub. note, 12.00%, 5/15/09 ............................... 8,655,215 9,996,773
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TOTAL BONDS (COST $43,366,248) ...................................................... 21,230,818
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a SENIOR FLOATING RATE INTERESTS 86.8%
ADVERTISING/MARKETING SERVICES .2%
Adams Outdoor Advertising Inc., Term Loan B, 4.37%, 2/08/08 ......................... 2,640,750 2,655,604
b DIMAC Holdings, Term Loan B, 10.00%, 9/30/04 ........................................ 558,337 16,750
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2,672,354
--------------

AEROSPACE & DEFENSE 1.9%
c Anteon International Corp., Term Loan B, 3.163%, 12/19/10 ........................... 3,000,000 3,022,500
DRS Technologies Inc., Term Loan B, 3.58 - 3.73%, 11/04/10 .......................... 1,995,000 2,016,197
ILC Industries Inc., Term Loan, 5.634%, 4/11/10 ..................................... 863,208 867,524
Titan Corp., Term Loan B, 4.35 - 6.00%, 2/23/06 ..................................... 11,342,387 11,369,563
United Defense Industries Inc., Term Loan B, 3.10%, 8/13/09 ......................... 805,499 811,037
Vought Aircraft Industries,
Term Loan B, 4.35%, 7/21/07 ...................................................... 276,496 277,319
Term Loan C, 4.60%, 7/24/08 ...................................................... 2,059,114 2,065,292
Term Loan X, 4.10%, 12/01/06 ..................................................... 2,034,329 2,038,143
--------------
22,467,575
--------------

AIRLINES .1%
Transdigm Inc., Term Loan B, 4.10%, 7/22/10 ......................................... 997,500 1,010,124
--------------

ALTERNATIVE POWER GENERATION .1%
Headwaters Inc., Term Loan B, 5.41 - 7.25%, 9/12/07 ................................. 969,508 971,932
--------------

APPAREL/FOOTWEAR .2%
St. John Knits Inc., Term Loan B, 4.875%, 7/31/07 ................................... 2,246,967 2,253,989
--------------

AUTO PARTS: ORIGINAL EQUIPMENT MANUFACTURER 4.8%
Dayco Products LLC, Term Loan B, 4.35 - 4.43%, 5/31/07 .............................. 3,817,309 3,831,624
Federal Mogul Corp., Term Loan, 4.125 - 4.25%, 2/06/05 .............................. 1,000,000 998,020
GenCorp Inc., Term Loan B, 4.938%, 3/28/07 .......................................... 8,409,837 8,458,892
Hayes Lemmerz, Term Loan, 4.90 - 4.98%, 6/03/09 ..................................... 8,977,500 9,137,416
Hilite International Inc., Term Loan B, 5.64 - 5.76%, 3/31/09 ....................... 907,319 911,856
Intermet Corp., Term Loan B, 5.35%, 1/07/09 ......................................... 4,000,000 3,992,500
Key Plastics Inc.,
Term Loan B, 6.60 - 8.00%, 4/25/09 ............................................... 1,110,000 1,126,650
Term Loan C, 11.10 - 11.17%, 4/25/10 ............................................. 2,000,000 2,010,000
Metaldyne, Term Loan D, 5.40%, 12/31/09 ............................................. 1,304,421 1,309,041
Progressive Moulded Products, Term Loan B, 4.625%, 6/30/08 .......................... 995,000 1,003,084

10 | Semiannual Report

Franklin Floating Rate Trust

STATEMENT OF INVESTMENTS, JANUARY 31, 2004 (UNAUDITED) (CONTINUED)

AUTO PARTS: ORIGINAL EQUIPMENT MANUFACTURER (CONT.)
Tenneco Automotive Inc.,
Term Loan, 4.42%, 12/12/10 ....................................................... $ 4,905,645 $ 4,973,098
Term Loan B, 4.44%, 12/12/10 ..................................................... 10,901,433 11,083,127
TRW Automotive Acquisition Corp.,
Term Loan A1, 3.188%, 2/28/09 .................................................... 3,000,000 3,028,437
Term Loan D1, 3.688%, 2/28/11 .................................................... 4,804,348 4,888,424
--------------

56,752,169
--------------

AUTOMOTIVE AFTERMARKET .3%
Keystone Automotive Operations Inc., Term Loan, 3.85%, 10/30/09 ..................... 2,500,000 2,531,250
United Components Inc., Term Loan C, 3.92%, 6/20/10 ................................. 990,000 998,346
--------------

3,529,596
--------------

BEVERAGES: ALCOHOLIC .2%
Constellation Brands Inc., Term Loan B, 3.125 - 3.188%, 11/30/08 .................... 1,000,000 1,013,450
Southern Wine & Spirits of America Inc., Term Loan B, 3.39%, 6/21/08 ................ 997,500 1,009,138
--------------

2,022,588
--------------

BEVERAGES: NON-ALCOHOLIC .3%
Dr. Pepper Bottling Co. of Texas, Term Loan, 3.61%, 12/18/10 ........................ 3,500,000 3,549,585
--------------

BROADCASTING 2.3%
b Comcorp Broadcasting, Term Loan, 11.50%, 3/31/04 .................................... 3,185,651 3,169,723
b Comcorp Holdings, Term Loan, 13.875%, 3/30/04 ....................................... 4,714,710 3,653,900
Cumulus Media Inc., Term Loan D, 3.625%, 3/28/10 .................................... 2,977,500 3,016,115
Emmis Communications Corp., Term Loan A, 3.375%, 2/28/09 ............................ 2,460,549 2,471,532
Emmis Operating Co., Term Loan B, 3.375%, 8/31/09 ................................... 2,075,885 2,102,988
Gray Television Inc., Term Loan C, 3.39 - 3.41%, 12/31/10 ........................... 1,000,000 1,010,125
c Paxson Communications Corp., Term Loan, 144A, 3.89%, 1/15/10 ........................ 5,200,000 5,248,750
Radio One Inc., Term Loan A, 1.93%, 6/30/07 ......................................... 2,550,000 2,518,125
Sinclair Television Group Inc., Term Loan B, 3.313 - 3.375%, 12/31/09 ............... 971,800 981,258
b White Knight Broadcasting, Term Loan B, 11.50%, 3/31/04 ............................. 3,516,334 3,498,753
--------------

27,671,269
--------------

BUILDING PRODUCTS 1.6%
Building Materials Holding Corp., Term Loan B, 4.438%, 8/13/10 ...................... 995,000 998,731
Masonite International Corp.,
Term Loan C, 3.875 - 3.938%, 8/31/08 ............................................. 2,856,225 2,875,505
c Term Loan C2, 3.375%, 8/31/08 .................................................... 1,000,000 1,007,500
Norcraft Cos. LP, Term Loan, 4.36%, 10/21/09 ........................................ 1,000,000 1,010,000
Tapco International,
Term Loan B, 4.17%, 7/23/07 ...................................................... 7,325,284 7,339,019
Term Loan C, 4.42%, 7/23/08 ...................................................... 6,131,534 6,143,031
--------------

19,373,786
--------------

Semiannual Report | 11

Franklin Floating Rate Trust

STATEMENT OF INVESTMENTS, JANUARY 31, 2004 (UNAUDITED) (CONTINUED)

CABLE/SATELLITE TELEVISION 8.9%
Bresnan Broadband Holdings LLC, Term Loan, 5.42 - 5.48%, 9/30/10 .................... $ 1,000,000 $ 1,009,375
Century Cable (Adelphia),
Discretionary Term Loan, 6.00%, 12/31/09 ......................................... 3,000,000 2,971,125
Term Loan, 6.00%, 6/30/09 ........................................................ 1,000,000 990,893
Charter Communications CCVI,
d Revolver, .25 - 2.41%, 5/12/08 ................................................... 875,000 835,625
Term Loan A, 2.36 - 2.37%, 5/12/08 ............................................... 951,113 914,020
Term Loan B, 3.61 - 3.62%, 11/12/08 .............................................. 13,473,027 13,072,204
Charter Communications CCVIII, Term Loan B, 3.66%, 2/02/08 .......................... 2,856,082 2,821,572
DirecTV Holdings LLC, Term Loan, 3.87 - 3.92%, 3/06/10 .............................. 11,000,000 11,134,068
c Grapeclose Ltd. (Inmarsat),
Term Loan B, 4.111%, 10/10/10 .................................................... 5,750,000 5,767,969
Term Loan C, 4.611%, 10/10/11 .................................................... 5,750,000 5,767,969
Insight Midwest Holdings,
Additional Term Loan, 4.00%, 12/31/09 ............................................ 4,000,000 4,026,876
Term Loan, 3.938%, 12/31/09 ...................................................... 3,000,000 3,020,157
MCC Iowa (Broadband), Term Loan B1, 3.68%, 9/12/10 .................................. 3,000,000 3,033,543
Mediacom Illinois, Term Loan B, 3.62 - 3.65%, 12/31/08 .............................. 4,937,500 4,992,706
Olympus Cable Holdings (Adelphia), Term Loan B, 6.00%, 9/30/10 ...................... 2,000,000 1,982,916
PanAmSat Corp., Term Loan B1, 3.60%, 9/30/10 ........................................ 1,615,385 1,640,961
Pegasus Media & Communications,
Term Loan B, 4.688%, 4/30/05 ..................................................... 3,550,768 3,534,126
Term Loan D, 9.00%, 7/31/06 ...................................................... 4,987,500 5,120,502
UCA-HHC (Adelphia), Term Loan B, 5.25%, 3/31/08 ..................................... 20,935,000 20,745,287
UPC Distribution Holdings BV, Term Loan C2, 6.65%, 3/31/09 .......................... 11,500,000 11,471,250
--------------

104,853,144
--------------

CASINOS/GAMING 2.2%
Alliance Gaming Corp., Term Loan B, 3.96%, 8/22/09 .................................. 2,000,000 2,018,940
Ameristar Casinos Inc., Term Loan B, 3.875%, 12/20/06 ............................... 3,335,353 3,355,365
Greektown Casinos LLC, Term Loan D, 6.50%, 12/31/05 ................................. 6,050,185 6,105,647
Green Valley Ranch Gaming LLC, Term Loan B, 3.913%, 12/05/10 ........................ 1,000,000 1,012,500
Isle of Capri, Term Loan B, 3.36 - 3.43%, 4/25/08 ................................... 982,500 991,250
Isle of Capri Black Hawk, Term Loan C, 5.11 - 5.18%, 4/15/06 ........................ 992,381 996,413
Marina District Finance Co. Inc., Term Loan B, 5.18 - 5.22%, 12/31/07 ............... 2,992,500 3,031,154
Penn National Gaming Inc., Term Loan D, 3.60 - 3.63%, 3/03/09 ....................... 2,666,159 2,693,328
Scientific Games Corp., Term Loan C, 3.85%, 12/31/09 ................................ 6,302,975 6,401,459
--------------

26,606,056
--------------

CATALOG/SPECIALTY DISTRIBUTION .2%
Affinity Group Inc.,
Term Loan B1, 5.125%, 6/23/09 .................................................... 283,571 284,457
Term Loan B2, 5.125 - 5.164%, 6/23/09 ............................................ 708,929 711,144
Oriental Trading Co. Inc., Term Loan B, 3.938%, 7/29/10 ............................. 975,000 981,094
--------------

1,976,695
--------------

12 | Semiannual Report

Franklin Floating Rate Trust

STATEMENT OF INVESTMENTS, JANUARY 31, 2004 (UNAUDITED) (CONTINUED)

CHEMICALS: MAJOR DIVERSIFIED .8%
Huntsman International LLC,
Term Loan B, 5.438 - 5.50%, 6/30/07 .............................................. $ 5,000,000 $ 5,055,625
Term Loan C, 5.75%, 6/30/08 ...................................................... 5,000,000 5,060,070
--------------

10,115,695
--------------

CHEMICALS: SPECIALTY 2.4%
Arteva B.V. (Kosa), Term Loan B, 4.913%, 12/31/06 ................................... 3,339,390 3,342,171
FMC Corp., Term Loan B, 3.60%, 10/21/07 ............................................. 4,950,000 5,013,113
Ineos Group Ltd., Term Loan C, 4.681%, 6/30/09 ...................................... 2,309,672 2,332,288
Kraton Polymers LLC, Term Loan B, 3.75%, 12/24/10 ................................... 1,000,000 1,016,250
c Nalco Co., Term Loan B, 3.62%, 11/04/10 ............................................. 13,000,000 13,163,852
Noveon Inc., Term Loan B, 3.938 - 4.00%, 12/31/09 ................................... 1,000,000 1,011,250
Rockwood Specialties Group Inc., Term Loan C, 3.87%, 7/23/10 ........................ 995,000 1,000,597
Sovereign Specialty Chemicals Inc., Term Loan B, 5.712%, 12/31/07 ................... 990,000 965,250
Westlake Chemical Corp., Term Loan B, 4.92 - 4.938%, 7/31/10 ........................ 997,500 1,011,839
--------------

28,856,610
--------------

COAL .5%
Peabody Energy Corp., Term Loan B, 3.60 - 3.67%, 3/21/10 ............................ 5,955,000 6,032,540
--------------

COMMERCIAL PRINTING/FORMS 1.9%
American Reprographics, Term Loan B, 4.12%, 6/17/09 ................................. 1,000,000 1,015,000
Moore Holdings USA Inc., Term Loan B2, 3.125 - 3.188%, 3/14/10 ...................... 4,975,000 4,994,691
Vertis Inc., Bridge Term Loan, 13.50%, 12/09/09 ..................................... 16,305,556 16,142,500
--------------

22,152,191
--------------

CONSTRUCTION MATERIALS .3%
St. Marys Cement Inc., Term Loan B, 3.69%, 11/24/09 ................................. 3,000,000 3,033,750
--------------

CONSUMER SUNDRIES .8%
Central Garden & Pet Co., Term Loan, 3.35%, 5/14/09 ................................. 1,990,000 2,003,681
NBTY Inc., Term Loan C, 3.125%, 7/22/09 ............................................. 995,006 1,003,713
Playtex Products Inc., Term Loan C, 4.62 - 4.72%, 5/31/09 ........................... 3,477,500 3,489,456
Rayovac Corp., Term Loan B, 4.85 - 4.93%, 10/01/09 .................................. 2,164,637 2,181,322
United Industries Corp., Term Loan B, 5.10%, 1/20/06 ................................ 683,145 688,268
--------------

9,366,440
--------------

CONTAINERS/PACKAGING 3.4%
ACI Operations Property Ltd., Term Loan, 3.95%, 4/01/07 ............................. 1,000,000 1,005,750
Berry Plastics, Term Loan C, 3.67%, 6/30/10 ......................................... 1,630,937 1,647,247
Constar International Inc., Term Loan B, 6.50%, 11/20/09 ............................ 3,260,130 3,294,091
Crown Cork & Seal Co. Inc., Term Loan B, 4.17%, 9/15/08 ............................. 2,850,000 2,889,187
Graham Packaging Co., Term Loan B, 5.188%, 2/20/10 .................................. 7,971,930 8,068,589
Graphic Packaging International Corp., Term Loan B, 3.92 - 3.93%, 8/08/10 ........... 3,980,000 4,042,187
Greif Brothers Corp., Term Loan B, 3.37%, 8/15/09 ................................... 751,667 755,693
Impress Metal, Term Loan G, 4.464%, 12/31/06 ........................................ 824,670 826,217

Semiannual Report | 13

Franklin Floating Rate Trust

STATEMENT OF INVESTMENTS, JANUARY 31, 2004 (UNAUDITED) (CONTINUED)

CONTAINERS/PACKAGING (CONT.)
Kerr Group Inc., Term Loan B, 4.61%, 8/11/10 ........................................ $ 1,959,302 $ 1,975,629
Owens-Brockway Glass Container Inc., Term Loan B, 3.88%, 4/01/08 .................... 6,000,000 6,058,752
Stone Container Corp.,
Term Loan B, 3.625%, 7/25/09 ..................................................... 6,702,814 6,761,464
Term Loan C, 3.625%, 7/25/09 ..................................................... 968,684 977,160
Tekni-Plex Inc., Term Loan B, 5.125%, 6/21/08 ....................................... 1,851,033 1,861,830
--------------

40,163,796
--------------

DRUG STORE CHAINS .9%
General Nutrition Centers Inc., Term Loan, 4.17 - 4.22%, 12/04/09 ................... 1,000,000 1,007,813
Rite Aid Corp., Term Loan B1, 4.10%, 4/30/08 ........................................ 10,000,000 10,220,000
--------------

11,227,813
--------------

ELECTRIC UTILITIES 3.6%
c AES Corp., Term Loan B, 5.19 - 5.32%, 4/30/08 ....................................... 6,500,000 6,590,896
Calpine Corp., Term Loan, 6.87%, 7/15/07 ............................................ 12,935,000 12,817,783
Centerpoint Energy Inc., Term Loan B, 4.68%, 10/07/06 ............................... 15,956,757 16,334,070
NRG Energy Inc., Term Loan B, 1.07 - 5.50%, 6/23/10 ................................. 1,000,000 1,035,417
Pike Electric Inc., Term Loan, 4.375%, 4/17/12 ...................................... 2,322,214 2,343,260
Quanta Services Inc., Term Loan B, 1.16 - 4.12%, 12/15/08 ........................... 2,000,000 2,018,750
TNP Enterprises Inc., Term Loan, 6.245%, 12/31/06 ................................... 995,000 1,001,841
Westar Energy Inc., Term Loan, 4.12%, 6/05/05 ....................................... 390,234 392,185
--------------

42,534,202
--------------

ELECTRONIC COMPONENTS .5%
Amkor Technology Inc., Term Loan, 7.00%, 1/31/06 .................................... 2,481,250 2,516,660
Seagate Technology HDD Holdings, Term Loan B, 3.125%, 5/13/07 ....................... 2,110,757 2,129,603
Seagate Technology (US) Holdings, Term Loan B, 3.125%, 5/13/07 ...................... 844,244 851,782
--------------

5,498,045
--------------

ELECTRONICS/APPLIANCES .6%
Alliance Laundry Systems LLC, Term Loan, 4.652 - 6.50%, 7/31/09 ..................... 4,067,357 4,085,998
Interline Brands, Term Loan B, 4.663%, 11/30/09 ..................................... 2,925,000 2,940,540
--------------

7,026,538
--------------

ENGINEERING & CONSTRUCTION 1.1%
Brand Services Inc., Term Loan B, 5.10 - 5.163%, 10/16/09 ........................... 951,635 956,790
URS Corp., Term Loan B, 3.92%, 8/22/08 .............................................. 2,930,097 2,939,253
Washington Group, Term Loan, 1.034%, 10/01/07 ....................................... 9,700,000 9,722,310
--------------

13,618,353
--------------

14 | Semiannual Report

Franklin Floating Rate Trust

STATEMENT OF INVESTMENTS, JANUARY 31, 2004 (UNAUDITED) (CONTINUED)

ENVIRONMENTAL SERVICES 1.6%
Allied Waste North America Inc.,
Term Loan, 3.87%, 1/15/10 ........................................................ $ 2,142,857 $ 2,174,554
Term Loan B, 3.92 - 3.93%, 1/15/10 ............................................... 10,227,679 10,395,157
Term Loan C, 3.92%, 1/15/10 ...................................................... 1,000,000 1,018,438
Duratek Inc., Term Loan B, 5.125%, 12/16/09 ......................................... 2,000,000 2,003,750
IESI Corp., Term Loan, 4.25 - 4.325%, 10/10/10 ...................................... 997,500 1,009,969
Mactec Inc., Term Loan B, 6.75%, 2/22/08 ............................................ 1,828,723 822,925
Waste Connections Inc., Term Loan, 3.12%, 10/16/10 .................................. 1,000,000 1,012,813
--------------

18,437,606
--------------

FINANCE/RENTAL/LEASING .5%
United Rentals Inc., Term Loan B, 4.09 - 4.21%, 9/30/07 ............................. 6,336,504 6,375,613
--------------

FINANCIAL CONGLOMERATES .5%
e Ares IV, Term Loan D, 144A, 7.17%, 12/22/12 ......................................... 1,400,000 959,000
e Centurion II, Tranche D, 144A, 7.18%, 11/12/12 ...................................... 2,500,000 1,718,000
e Clydesdale CLO, Tranche D, 144A, 7.67%, 3/22/13 ..................................... 2,000,000 1,734,400
e First Dominion Funding II, sub. floating rate deb., Series A-D, 144A, 6.811%, 4/25/14 3,000,000 1,251,600
--------------

5,663,000
--------------

FOOD DISTRIBUTORS .1%
Fleming Cos. Inc., Term Loan, 4.375%, 6/18/08 ....................................... 1,010,991 1,003,831
Land O'Lakes Inc., Term Loan B, 4.68%, 10/11/08 ..................................... 743,745 746,069
--------------

1,749,900
--------------

FOOD RETAIL .2%
Alimentation Couche Tard Inc., Term Loan B, 3.375%, 12/16/10 ........................ 1,000,000 1,006,250
Pathmark Stores Inc., Term Loan B2, 5.625 - 5.688%, 6/30/07 ......................... 879,988 886,148
--------------

1,892,398
--------------

FOOD: MAJOR DIVERSIFIED 1.7%
B&G Foods Inc., Term Loan, 4.52%, 9/03/09 ........................................... 997,500 1,008,722
Birds Eye Foods Inc., Term Loan B, 3.85 - 3.913%, 8/08/08 ........................... 7,512,119 7,594,286
Del Monte Corp., Term Loan B, 3.37 - 3.42%, 12/20/10 ................................ 921,769 933,983
Dole Food Inc., Term Loan C, 3.688 - 5.50%, 3/28/08 ................................. 2,253,716 2,264,894
Merisant Corp., Term Loan B, 3.913%, 1/09/10 ........................................ 840,000 848,925
d Pinnacle Foods Holding Corp., Term Loan B, 1.25 - 3.85%, 11/25/10 ................... 8,000,000 8,085,000
--------------

20,735,810
--------------

FOOD: MEAT/FISH/DAIRY .7%
American Seafoods, Term Loan B, 4.42%, 4/15/09 ...................................... 1,315,618 1,321,786
Michael Foods Inc.,
Term Loan B, 3.60 - 3.964%, 11/21/10 ............................................. 2,000,000 2,029,584
Term Loan C, 5.214%, 11/21/11 .................................................... 2,000,000 2,048,750
c Suiza Foods Corp., Term Loan B, 3.17%, 7/15/08 ...................................... 1,744,366 1,766,338
Swift & Co., Term Loan B, 4.37 - 4.40%, 9/19/08 ..................................... 987,500 994,906
--------------

8,161,364
--------------

Semiannual Report | 15

Franklin Floating Rate Trust

STATEMENT OF INVESTMENTS, JANUARY 31, 2004 (UNAUDITED) (CONTINUED)

FOOD: SPECIALTY/CANDY 1.7%
Atkins Nutritionals Inc.,
First Lien Term Loan, 4.40%, 11/21/09 ............................................ $ 4,000,000 $ 4,025,000
Second Lien Term Loan, 6.90%, 11/21/09 ........................................... 2,000,000 2,022,500
Doane Pet Care Co.,
Term Loan B, 5.938%, 12/31/05 .................................................... 158,310 158,936
Term Loan C, 5.95%, 12/31/06 ..................................................... 81,043 81,499
Meow Mix Co.,
c First Lien Term Loan, 4.67 - 4.73%, 8/21/09 ...................................... 4,975,000 4,987,438
Second Lien Term Loan, 7.72%, 8/21/09 ............................................ 1,000,000 988,750
Nellson Neutraceuticals Inc., Term Loan, 4.17%, 10/04/09 ............................ 2,481,250 2,499,859
Nutrasweet,
Second Lien Term Loan, 7.313%, 5/24/09 ........................................... 2,700,000 2,674,688
Term Loan B, 4.688%, 5/24/07 ..................................................... 346,631 347,497
Otis Spunkmeyer Inc., Term Loan B, 5.35%, 2/20/09 ................................... 1,884,749 1,898,885
Reddy Ice Group Inc., Term Loan, 4.10%, 7/31/09 ..................................... 997,500 1,008,514
--------------

20,693,566
--------------

HOME FURNISHINGS .6%
Aero Products International, Term Loan, 5.67%, 12/16/08 ............................. 1,744,223 1,713,700
National Bedding Co., Term Loan B, 4.99 - 5.03%, 8/21/08 ............................ 876,889 885,247
Simmons Holdings Inc.,
Term Loan, 4.938%, 6/02/12 ....................................................... 1,000,000 1,010,625
Term Loan B, 3.875 - 5.75%, 12/02/11 ............................................. 2,000,000 2,026,500
Springs Industries Inc., Term Loan B, 5.188%, 9/05/08 ............................... 1,966,849 1,979,494
--------------

7,615,566
--------------

HOMEBUILDING .1%
Landsource Communities Development LLC, Term Loan B, 4.50%, 3/31/10 ................. 1,000,000 1,014,375
--------------

HOSPITAL/NURSING MANAGEMENT 1.3%
Beverly Enterprises Inc., Term Loan B, 4.37 - 4.42%, 10/22/08 ....................... 1,995,000 2,017,444
Community Health Systems Inc., Term Loan, 3.67%, 1/16/11 ............................ 997,500 1,007,787
Iasis Healthcare Corp., Term Loan B, 5.37%, 2/7/09 .................................. 9,200,000 9,317,880
Triad Hospitals Inc., Term Loan B, 4.10%, 9/30/08 ................................... 748,207 756,692
Vanguard Health Systems Inc., Term Loan B, 5.42%, 1/03/10 ........................... 1,980,000 1,996,087
--------------

15,095,890
--------------

HOTEL/RESORTS/CRUISELINES 1.1%
Extended Stay America Inc., Term Loan B, 4.85%, 7/01/07 ............................. 8,504,437 8,641,570
Wyndham International Inc., Term Loan B, 5.875%, 6/30/06 ............................ 4,205,888 4,084,969
--------------

12,726,539
--------------

INDUSTRIAL CONGLOMERATES .6%
SPX Corp., Term Loan B, 3.438%, 9/30/09 ............................................. 3,267,749 3,293,789
Walter Industries Inc., Term Loan B, 5.36 - 5.413%, 4/14/10 ......................... 4,065,668 4,089,811
--------------

7,383,600
--------------

16 | Semiannual Report

Franklin Floating Rate Trust

STATEMENT OF INVESTMENTS, JANUARY 31, 2004 (UNAUDITED) (CONTINUED)

INDUSTRIAL MACHINERY 1.5%
Colfax Corp.,
Term Loan C, 7.375%, 5/30/10 ..................................................... $ 1,000,000 $ 1,000,000
Term Loan B, 4.875%, 5/30/09 ..................................................... 3,170,716 3,186,569
Day International Group Inc.,
Term Loan B, 5.60 - 5.61%, 9/10/09 ............................................... 975,000 980,282
Term Loan C, 5.60%, 9/10/09 ...................................................... 487,500 491,766
Flowserve Corp., Term Loan C, 3.875 - 3.938%, 6/30/09 ............................... 1,279,292 1,290,485
Gleason Corp., Term Loan B, 4.688 - 4.75%, 2/18/08 .................................. 3,922,051 3,882,831
c Itron Inc., Term Loan B, 5.25%, 11/24/10 ............................................ 2,000,000 2,020,000
c Roper Industries Inc., Term Loan, 3.15%, 12/19/08 ................................... 3,000,000 3,039,375
Sensus Metering Systems Inc., Term Loan, 4.10 - 4.17%, 12/16/10 ..................... 2,000,000 2,020,000
--------------

17,911,308
--------------

INFORMATION TECHNOLOGY SERVICES .7%
Worldspan LP, Term Loan, 4.875 - 4.938%, 6/30/07 .................................... 1,808,000 1,809,884
Xerox Corp., Term Loan, 3.42%, 9/30/08 .............................................. 7,000,000 7,082,033
--------------

8,891,917
--------------

INSURANCE BROKERS/SERVICES .1%
U.S.I. Holdings Corp., Term Loan, 4.12%, 8/04/08 .................................... 995,000 1,004,950
--------------

LIFE/HEALTH INSURANCE .5%
Conseco Inc.,
Term Loan A, 7.25%, 9/01/09 ...................................................... 4,230,769 4,262,500
Term Loan B, 9.50%, 9/01/09 ...................................................... 1,269,231 1,281,923
--------------

5,544,423
--------------

MAJOR TELECOMMUNICATIONS 1.2%
Alec Holdings Inc., Term Loan B, 4.50%, 8/20/10 ..................................... 5,000,000 5,037,500
Cincinnati Bell Inc., Term Loan D, 3.68%, 6/30/08 ................................... 997,500 1,010,592
b E.Spire Communications, Term Loan C, 8.00%, 8/01/06 ................................. 16,877,867 --
GCI Holdings Inc., Term Loan, 4.35%, 10/30/04 ....................................... 1,885,714 1,903,666
Qwest Corp., Term Loan, 6.50%, 6/30/07 .............................................. 3,000,000 3,153,750
b WCI Capital Corp., Term Loan B, 9.50%, 3/31/07 ...................................... 30,500,000 --
b Winstar Communications Inc., DIP, 7.00%, 12/31/04 ................................... 4,076,853 573,613
d Worldcom Inc., DIP, 3.50%, 7/23/04 .................................................. 2,727,273 2,727,273
--------------

14,406,394
--------------

MANAGED HEALTH CARE .5%
Oxford Health Plans Inc., Term Loan B, 3.419 - 5.25%, 4/25/09 ....................... 4,485,000 4,508,874
Pacificare Health Systems Inc., Term Loan, 3.93%, 6/03/08 ........................... 995,000 1,006,815
--------------

5,515,689
--------------

Semiannual Report | 17

Franklin Floating Rate Trust

STATEMENT OF INVESTMENTS, JANUARY 31, 2004 (UNAUDITED) (CONTINUED)

MARINE SHIPPING 1.1%
Great Lakes Dredge & Dock Corp., Term Loan B, 4.14 - 6.00%, 12/19/10 ................ $ 1,000,000 $ 1,010,000
Great Lakes Transportation LLC, Term Loan, 5.125 - 5.188%, 3/23/08 .................. 6,360,042 6,375,943
Horizon Lines LLC, Term Loan, 4.15 - 4.33%, 2/27/09 ................................. 2,824,286 2,851,204
Ingram Industries Inc., Term Loan B, 4.15 - 4.17%, 7/02/08 .......................... 1,666,729 1,690,948
United States Shipping LLC, Term Loan, 4.43 - 4.463%, 9/16/08 ....................... 772,115 777,584
--------------

12,705,679
--------------

MEDIA CONGLOMERATES .4%
Canwest Media Inc., Term Loan D, 3.93%, 5/15/09 (Canada) ............................ 4,974,359 5,027,729
--------------

MEDICAL SPECIALTIES .9%
Alaris Medical Inc., Term Loan, 3.655%, 6/30/09 ..................................... 1,418,571 1,435,594
Conmed Corp., Term Loan C, 3.35%, 12/15/09 .......................................... 936,416 946,211
DJ Orthopedics Inc., Term Loan B, 3.875%, 6/03/09 ................................... 1,000,000 1,008,750
Empi Inc., Term Loan B, 4.24%, 11/24/09 ............................................. 1,000,000 1,012,500
Fisher Scientific International Inc., Term Loan C, 3.17%, 3/31/10 ................... 1,352,539 1,355,461
Hanger Orthopedic Group Inc., Term Loan B, 3.913%, 9/30/09 .......................... 389,025 393,037
Medex Inc., Term Loan B, 4.11 - 4.24%, 5/21/09 ...................................... 995,000 1,002,878
PerkinElmer Inc., Term Loan B, 3.35%, 12/26/08 ...................................... 3,102,540 3,132,271
--------------

10,286,702
--------------

MEDICAL/NURSING SERVICES 2.5%
Alliance Imaging Inc., Term Loan C, 3.563 - 3.625%, 11/30/08 ........................ 1,321,684 1,316,934
Ameripath Inc., Term Loan B, 5.60%, 3/27/10 ......................................... 2,844,167 2,851,277
Cross Country Healthcare Inc., Term Loan, 4.36 - 4.37%, 6/05/09 ..................... 736,011 754,411
c DaVita Inc., Term Loan B, 3.369 - 3.463%, 3/31/09 ................................... 9,612,865 9,721,010
d Insight Health Services, Delayed Draw, 2.50 - 4.86%, 10/17/08 ....................... 9,000,000 9,011,250
MedQuest Inc., Term Loan B, 4.92%, 7/31/09 .......................................... 995,000 985,050
Team Health Inc., Term Loan B, 4.469%, 10/31/08 ..................................... 4,759,491 4,759,491
--------------

29,399,423
--------------

MISCELLANEOUS COMMERCIAL SERVICES 2.3%
Buhrmann N.V., Term Loan B, 3.856%, 12/02/10 ........................................ 7,300,000 7,389,731
Corrections Corp. of America, Term Loan C, 3.92 - 3.93%, 3/31/08 .................... 3,643,659 3,689,205
DS Waters Enterprises LP, Term Loan, 3.875 - 3.938%, 11/07/09 ....................... 3,000,000 3,046,875
Global Imaging Systems Inc., Term Loan, 3.61 - 3.68, 6/20/09 ........................ 995,000 1,001,219
Johnson Diversey Inc., Term Loan B, 3.87 - 3.913%, 5/03/08 .......................... 4,465,210 4,510,559
Sirva Worldwide Inc., Term Loan, 3.62%, 12/01/10 .................................... 976,471 978,912
Spectaguard Acquisition LLC,
d Delayed Draw, .50%, 12/31/09 ..................................................... 666,667 668,260
Term Loan, 7.50%, 12/31/09 ....................................................... 1,333,333 1,336,520
Term Loan, 7.50%, 4/25/10 ........................................................ 958,553 953,396
U.S. Investigations Services Inc., Term Loan C, 4.67%, 1/10/09 ...................... 2,618,493 2,634,858
Wackenhut Corrections Corp., Term Loan B, 4.10%, 7/10/09 ............................ 975,000 985,969
--------------

27,195,504
--------------

18 | Semiannual Report

Franklin Floating Rate Trust

STATEMENT OF INVESTMENTS, JANUARY 31, 2004 (UNAUDITED) (CONTINUED)

MISCELLANEOUS MANUFACTURING 1.2%
Mueller Group, Term Loan E, 3.86 - 3.92%, 5/31/08 ................................... $ 7,870,125 $ 7,917,204
Norcross Safety Products, Term Loan, 4.93%, 3/01/09 ................................. 761,731 768,872
Rexnord Corp., Term Loan, 5.14 - 5.20%, 11/25/09 .................................... 1,838,889 1,852,968
Trimas Corp., Term Loan B, 4.62 - 4.688%, 12/06/09 .................................. 4,262,492 4,280,987
--------------

14,820,031
--------------

MOVIES/ENTERTAINMENT 5.0%
24 Hour Fitness Inc., Term Loan, 4.75%, 7/01/09 ..................................... 3,000,000 2,994,375
d AMC Entertainment Inc., Revolver, .50 - 1.50%, 4/10/04 .............................. 1,658,088 1,638,743
Carmike Cinemas Inc., Term Loan,
7.75%, 1/31/07 ................................................................... 1,598,572 1,608,895
4.438%, 2/02/09 .................................................................. 1,600,000 1,600,000
CH Operating LLC, Term Loan B, 5.625 - 5.688%, 6/21/07 .............................. 2,913,793 2,913,793
Cinemark USA Inc., Term Loan C, 3.69%, 3/31/08 ...................................... 995,000 1,007,644
Cinram International,
Term Loan B, 4.87%, 9/30/09 ...................................................... 5,500,000 5,521,483
Term Loan C, 6.87%, 3/31/10 ...................................................... 1,965,395 1,977,372
Detroit Red Wings Inc., Term Loan, 3.36%, 8/30/06 ................................... 1,000,000 1,000,625
Hollywood Entertainment Corp., Term Loan, 4.60%, 3/31/08 ............................ 1,875,000 1,889,942
Houston Limited Partners NFL Holdings LP, Term Loan B, 2.875 - 2.938%, 1/05/11 ...... 1,000,000 1,010,313
Loews Cineplex Entertainment Corp., Term Loan A, 4.688%, 2/28/08 .................... 10,104,321 10,137,999
Mets II LLC, Term Loan, 4.35%, 8/23/05 .............................................. 3,000,000 3,000,000
New Jersey Basketball LLC, Term Loan, 4.375%, 7/16/04 ............................... 7,500,000 7,497,450
Rainbow Media Holdings Inc., Term Loan C, 3.44%, 12/31/09 ........................... 2,992,495 3,020,861
Regal Cinemas Inc., Term Loan D, 3.688%, 6/30/09 .................................... 974,194 986,574
Six Flags Theme Parks, Term Loan B, 3.62%, 6/30/09 .................................. 2,000,000 2,009,376
Vivendi Universal Entertainment, Term Loan, 3.85%, 6/24/08 .......................... 9,000,000 9,081,567
--------------

58,897,012
--------------

OIL & GAS PIPELINES .2%
Magellan Midstream Holdings, Term Loan A, 4.60 - 4.67%, 6/17/08 ..................... 1,498,436 1,517,166
Magellan Midstream Partners, Term Loan C, 3.18%, 8/05/08 ............................ 1,000,000 1,005,190
--------------

2,522,356
--------------

OIL & GAS PRODUCTION .4%
Williams Production RMT Co., Term Loan, 4.86%, 5/30/07 .............................. 4,975,000 5,043,406
--------------

OIL REFINING/MARKETING .8%
Citgo Petroleum Corp., Term Loan, 8.25%, 2/27/06 .................................... 5,000,000 5,200,000
Pacific Energy Group LLC, Term Loan B, 3.37 - 3.476%, 7/26/09 ....................... 3,000,000 3,019,689
Tesoro Petroleum Corp., Term Loan, 6.62 - 6.67%, 4/15/08 ............................ 992,500 1,025,170
--------------

9,244,859
--------------

OILFIELD SERVICES/EQUIPMENT .2%
Basic Energy Services LP, Term Loan B, 4.61 - 4.63%, 10/03/09 ....................... 2,978,571 2,993,464
--------------

Semiannual Report | 19

Franklin Floating Rate Trust

STATEMENT OF INVESTMENTS, JANUARY 31, 2004 (UNAUDITED) (CONTINUED)

OTHER CONSUMER SERVICES .1%
Weight Watchers International Inc., Term Loan B, 2.92%, 3/31/10 ..................... $ 1,000,000 $ 1,008,125
--------------

OTHER CONSUMER SPECIALTIES .2%
Jostens Inc., Term Loan, 3.72%, 7/29/10 ............................................. 947,776 957,609
Sola International Inc., Term Loan, 3.62%, 12/05/09 ................................. 1,000,000 1,015,000
--------------

1,972,609
--------------

OTHER PHARMACEUTICALS .1%
aaiPHARMA Inc., Term Loan B, 4.40 - 5.03%, 11/26/09 ................................. 975,000 986,781
--------------

OTHER TRANSPORTATION 1.2%
Laidlaw International Inc., Term Loan, 5.50%, 6/17/09 ............................... 9,700,000 9,827,312
Transcore Holdings Inc.,
Term Loan B, 4.37%, 10/31/06 ..................................................... 1,894,968 1,913,918
Term Loan C, 4.37 - 5.75%, 12/03/07 .............................................. 2,000,000 2,004,820
--------------

13,746,050
--------------

PROPERTY-CASUALTY INSURANCE .3%
Infinity Property & Casualty Corp., Term Loan, 3.67%, 7/17/10 ....................... 2,895,370 2,921,307
--------------

PUBLISHING: BOOKS/MAGAZINES 3.2%
Advanstar Communications, Term Loan B, 5.60%, 10/11/07 .............................. 178,063 178,508
American Media Inc., Term Loan C, 3.91 - 3.92%, 4/01/07 ............................. 966,510 978,712
CBD Media LLC, Term Loan, 4.37%, 12/31/09 ........................................... 937,500 947,656
DEX Media West LLC, Term Loan B, 3.85 - 3.99%, 3/09/10 .............................. 9,435,185 9,580,251
F&W Publications Inc., Term Loan B, 4.92%, 12/31/09 ................................. 1,900,138 1,913,202
c Primedia Inc., Term Loan B, 3.875 - 3.938%, 6/30/09 ................................. 7,234,118 7,154,542
R.H. Donnelley Corp., Term Loan B2, 3.39 - 3.43%, 6/30/10 ........................... 4,950,432 5,010,332
Readers Digest Association Inc.,
Term Loan A, 4.188 - 4.25%, 5/20/07 .............................................. 5,913,070 5,942,636
Term Loan B, 4.188 - 4.25%, 5/20/08 .............................................. 945,747 950,729
Weekly Reader, Term Loan B, 5.10 - 5.19%, 11/08/06 .................................. 4,679,202 4,686,515
--------------

37,343,083
--------------

PUBLISHING: NEWSPAPERS .2%
First DT Holdings Ltd. (Hollinger), Term Loan B, 4.688%, 9/30/09 .................... 1,481,250 1,504,395
Medianews Group Inc., Term Loan B, 3.10%, 12/30/10 .................................. 1,000,000 1,011,250
--------------

2,515,645
--------------

PULP & PAPER .2%
Appleton Papers Inc., Term Loan D, 3.60%, 11/08/06 .................................. 1,000,000 1,007,500
MDCP Acquisitions I,
Term Loan B, 3.90%, 9/12/10 ...................................................... 1,000,000 1,003,125
Term Loan C, 4.40%, 9/12/11 ...................................................... 1,000,000 1,003,125
--------------

3,013,750
--------------

20 | Semiannual Report

Franklin Floating Rate Trust

STATEMENT OF INVESTMENTS, JANUARY 31, 2004 (UNAUDITED) (CONTINUED)

RAILROADS .6%
Helm Holding Corp., Term Loan B, 4.62 - 4.672%, 10/18/06 ............................ $ 2,840,566 $ 2,805,059
RailAmerica Transportation Corp., Term Loan B, 3.688%, 5/21/09 ...................... 1,919,636 1,939,552
Trinity Industries Inc., Term Loan, 4.406 - 4.438%, 6/07/07 ......................... 2,455,000 2,468,810
--------------

7,213,421
--------------

REAL ESTATE INVESTMENT TRUSTS .4%
Macerich Partnership LP, Term Loan B, 3.951%, 7/09/09 ............................... 374,364 376,236
Newkirk Master LP, Term Loan, 5.60 - 5.713%, 11/24/06 ............................... 4,562,618 4,611,095
--------------

4,987,331
--------------

RECREATIONAL PRODUCTS .8%
c BRP Holdings LP, Term Loan, 6.00%, 12/18/10 ......................................... 8,000,000 8,095,000
PlayPower Inc., Term Loan, 5.42%, 2/07/10 ........................................... 925,000 928,469
--------------

9,023,469
--------------

RESTAURANTS .5%
Dominos Inc., Term Loan, 3.75%, 6/25/10 ............................................. 2,611,539 2,654,629
Jack In The Box Inc., Term Loan B, 3.87 - 3.92%, 12/19/10 ........................... 3,000,000 3,014,880
--------------

5,669,509
--------------

SEMICONDUCTORS .3%
Fairchild Semiconductor Corp., Term Loan, 3.75%, 6/19/08 ............................ 2,985,000 3,017,960
--------------

SERVICES TO THE HEALTH INDUSTRY 1.2%
Alderwoods Group Inc., Term Loan B, 3.85 - 5.75%, 9/12/08 ........................... 1,762,993 1,788,336
Medco Health Solutions Inc., Term Loan B, 3.43%, 6/30/10 ............................ 6,982,500 7,091,636
NDC Health Corp., Term Loan B, 3.875 - 3.938%, 11/30/08 ............................. 3,552,000 3,556,440
Quintiles Transnational Corp., Term Loan B, 5.42%, 9/25/09 .......................... 1,695,750 1,731,785
--------------

14,168,197
--------------

SPECIALTY STORES .4%
CSK Auto Inc., Term Loan B, 3.37%, 6/20/09 .......................................... 1,000,000 1,006,850
Pantry Inc., Term Loan, 5.42 - 6.00%, 3/31/07 ....................................... 1,916,803 1,957,535
PETCO Animal Supplies Inc., Term Loan D, 3.67%, 10/02/08 ............................ 1,573,460 1,593,129
--------------

4,557,514
--------------

SPECIALTY TELECOMMUNICATIONS .7%
McLeod USA Inc., Term Loan B, 5.42%, 5/31/08 ........................................ 6,362,666 5,174,966
b Pacific Crossing Ltd., Term Loan B, 5.25%, 7/28/06 .................................. 21,312,525 1,065,626
Valor Telecom,
Term Loan A, 3.61 - 3.64%, 6/30/07 ............................................... 2,228,781 2,231,567
Term Loan B, 4.42%, 8/31/08 ...................................................... 196,589 197,941
--------------

8,670,100
--------------

Semiannual Report | 21

Franklin Floating Rate Trust

STATEMENT OF INVESTMENTS, JANUARY 31, 2004 (UNAUDITED) (CONTINUED)

STEEL 1.0%
International Steel Group, Term Loan B, 5.10%, 5/05/07 .............................. $ 6,188,441 $ 6,188,441
LTV Corp., Term Loan, 5.60 - 7.75%, 10/31/04 ........................................ 9,376,333 5,156,983
--------------

11,345,424
--------------

TOBACCO .2%
Commonwealth Brands Inc., Term Loan, 5.188%, 8/22/07 ................................ 2,490,147 2,509,602
--------------

TOOLS/HARDWARE .1%
Paint Sundry Brands LLC, Term Loan B, 6.50%, 6/27/10 ................................ 500,000 498,750
Werner Holding Co., Term Loan, 3.85 - 3.92%, 6/11/09 ................................ 958,333 928,785
--------------

1,427,535
--------------

TRUCKING .6%
Comcar Industries, Term Loan B, 6.10 - 7.50%, 12/31/09 .............................. 2,500,000 2,487,500
Flexi-Van Leasing Inc., Term Loan B, 3.84 - 3.94%, 9/20/07 .......................... 750,297 752,407
Yellow Corp., Term Loan,
2.87%, 5/24/07 ................................................................... 1,818,182 1,834,091
2.86%, 5/24/07 ................................................................... 2,181,818 2,200,909
--------------

7,274,907
--------------

WHOLESALE DISTRIBUTORS .2%
Amscan Holdings Inc., Term Loan, 6.50%, 6/20/07 ..................................... 990,000 998,250
National Waterworks Inc., Term Loan B, 3.92%, 11/22/09 .............................. 979,592 990,612
--------------

1,988,862
--------------

WIRELESS COMMUNICATIONS 4.0%
AAT Communications Corp., Term Loan A, 5.35 - 5.48%, 8/13/09 ........................ 1,000,000 1,002,500
American Tower Corp., Term Loan A, 3.36 - 3.42%, 6/30/07 ............................ 1,873,438 1,882,806
b Cricket Communications Inc., Term Loan, 6.375%, 6/30/07 ............................. 10,000,000 8,125,000
Crown Castle Operating Co., Term Loan B, 4.66%, 9/30/10 ............................. 11,970,000 12,224,363
Dobson Cellular Systems Inc., Term Loan, 4.37 - 4.43%, 3/31/10 ...................... 6,184,500 6,275,820
Nextel Communications Inc., Term Loan E, 3.438%, 12/15/10 ........................... 1,600,000 1,621,125
Nextel Operations Inc., Leveraged Lease II, 4.42%, 2/08/07 .......................... 8,703,037 8,093,824
Nextel Partners Operating Corp., Term Loan B, 4.125%, 11/30/10 ...................... 5,000,000 5,061,250
Spectrasite Communications Inc.,
Term Loan A, 3.42 - 3.46%, 6/30/07 ............................................... 1,715,487 1,722,457
Term Loan C, 4.24%, 2/22/07 ...................................................... 999,091 1,004,455
--------------

47,013,600
--------------

TOTAL SENIOR FLOATING RATE INTERESTS (COST $1,091,311,519) .......................... 1,026,667,689
--------------

22 | Semiannual Report

Franklin Floating Rate Trust

STATEMENT OF INVESTMENTS, JANUARY 31, 2004 (UNAUDITED) (CONTINUED)

------------------------------------------------------------------------------------------------------------------------------
SHARES/WARRANTS VALUE
------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS AND WARRANTS 2.7%
AUTO PARTS: ORIGINAL EQUIPMENT MANUFACTURER
f Exide Technologies, wts., 3/18/06 ................................................. 74,278 $ --
--------------

COMMERCIAL PRINTING/FORMS
f Vertis Holdings Inc., wts., 6/30/11 ............................................... 39,812 --
--------------

HOSPITAL/NURSING MANAGEMENT .2%
f Neighborcare Inc. ................................................................. 112,398 2,552,559
--------------

SPECIALTY TELECOMMUNICATIONS
f Global Crossing Ltd. .............................................................. 2,684 81,755
--------------

WIRELESS COMMUNICATIONS 2.5%
f,g Arch Wireless Inc. ................................................................ 1,337,441 29,677,816
f Teligent Inc. ..................................................................... 460 --
--------------

29,677,816
--------------

TOTAL COMMON STOCKS AND WARRANTS (COST $20,145,896) ............................... 32,312,130
--------------

TOTAL LONG TERM INVESTMENTS (COST $1,154,823,663) ................................. 1,080,210,637
--------------

SHORT TERM INVESTMENT (COST $140,958,216) 11.9%
h Franklin Institutional Fiduciary Trust Money Market Portfolio ..................... 140,958,216 140,958,216
--------------

TOTAL INVESTMENTS (COST $1,295,781,879) 103.2% .................................... 1,221,168,853
OTHER ASSETS, LESS LIABILITIES (3.2)% ............................................. (37,692,604)
--------------

NET ASSETS 100.0% ................................................................. $1,183,476,249
--------------

a See Note 1(d) regarding senior floating rate interests.
b The fund discontinues accruing income on defaulted securities. See Note 9.
c See Note 1(c) regarding securities purchased on a delayed delivery basis.
d See Note 1(i) regarding unfunded loan commitments.
e See Note 10 regarding restricted securities.
f Non-income producing.
g See Note 11 regarding holdings of 5% voting securities.
h See Note 8 regarding investments in the Franklin Institutional Fiduciary Trust
Money Market Portfolio.

Semiannual Report | See notes to financial statements. | 23

Franklin Floating Rate Trust

FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES
January 31, 2004 (unaudited)

Assets:
Investments in securities:

Cost - Unaffiliated issuers ........................................................ $1,277,224,628
Cost - Non-controlled affiliated issuers ........................................... 18,557,251
--------------
Value - Unaffiliated issuers ....................................................... 1,191,491,037
Value - Non-controlled affiliated issuers .......................................... 29,677,816
Cash ................................................................................ 1,366,193
Receivables:
Investment securities sold ......................................................... 8,856,184
Capital shares sold ................................................................ 1,658,473
Interest ........................................................................... 5,148,998
Other assets ........................................................................ 99,428
--------------
Total assets ................................................................... 1,238,298,129
--------------
Liabilities:
Payables:
Investment securities purchased .................................................... 35,420,355
Affiliates ......................................................................... 886,438
Shareholders ....................................................................... 504,562
Distributions to shareholders ....................................................... 1,032,627
Unfunded loan commitments (Note 1i) ................................................. 16,375,560
Other liabilities ................................................................... 602,338
--------------
Total liabilities .............................................................. 54,821,880
--------------
Net assets, at value .......................................................... $1,183,476,249
==============
Net assets consist of:
Undistributed net investment income ................................................. (8,002,357)
Net unrealized appreciation (depreciation) .......................................... (74,612,922)
Accumulated net realized gain (loss) ................................................ (312,251,842)
Capital shares ...................................................................... 1,578,343,370
--------------
Net assets, at value .......................................................... $1,183,476,249
==============
Net asset value and maximum offering price ($1,183,476,249 / 133,889,176)a ........... $8.84
==============

a Redemption price is equal to net asset value less any applicable contingent
deferred sales charge.

24 | See notes to financial statements. | Semiannual Report

Franklin Floating Rate Trust

FINANCIAL STATEMENTS (CONTINUED)

STATEMENT OF OPERATIONS
for the six months ended January 31, 2004 (unaudited)

Investment income:
Dividends .............................................................................. $ 478,372
Interest ............................................................................... 28,789,775
-----------
Total investment income ........................................................... 29,268,147
-----------
Expenses:
Management fees (Note 5) ............................................................... 4,509,963
Administrative fees (Note 5) ........................................................... 728,408
Transfer agent fees (Note 5) ........................................................... 2,489,177
Custodian fees ......................................................................... 5,481
Reports to shareholders ................................................................ 44,847
Professional fees ...................................................................... 109,969
Trustees' fees and expenses ............................................................ 1,407
Other .................................................................................. 228,552
-----------
Total expenses .................................................................... 8,117,804
-----------
Net investment income ............................................................ 21,150,343
-----------
Realized and unrealized gains (losses): Net realized gain (loss) from:
Investments:
Unaffiliated issuers ................................................................. (28,674,139)
Non-controlled affiliated issuers (Note 11) .......................................... (954,303)
Foreign currency transactions ......................................................... 26,098
-----------
Net realized gain (loss) ......................................................... (29,602,344)
Net unrealized appreciation (depreciation) on:
Investments ........................................................................... 84,352,551
Translation of assets and liabilities denominated in foreign currencies ............... 208
-----------
Net unrealized appreciation (depreciation) ....................................... 84,352,759
-----------
Net realized and unrealized gain (loss) ................................................. 54,750,415
-----------
Net increase (decrease) in net assets resulting from operations ......................... $75,900,758
===========

Semiannual Report | See notes to financial statements. | 25

Franklin Floating Rate Trust

FINANCIAL STATEMENTS (CONTINUED)

STATEMENTS OF CHANGES IN NET ASSETS
for the six months ended January 31, 2004 (unaudited)
and the year ended July 31, 2003
------------------------------------
SIX MONTHS YEAR
ENDED ENDED
JANUARY 31, 2004 JULY 31, 2003
------------------------------------
Increase (decrease) in net assets:
Operations:

Net investment income ............................................................... $ 21,150,343 $ 58,790,859
Net realized gain (loss) from investments and foreign currency transactions ......... (29,602,344) (152,344,808)
Net unrealized appreciation (depreciation) on investments and translation
of assets and liabilities denominated in foreign currencies ....................... 84,352,759 167,594,857
------------------------------------
Net increase (decrease) in net assets resulting from operations ................. 75,900,758 74,040,908
Distributions to shareholders from net investment income ............................. (19,687,036) (65,886,321)
Capital share transactions (Note 2) .................................................. (33,716,841) (627,105,648)
------------------------------------
Net increase (decrease) in net assets ........................................... 22,496,881 (618,951,061)
Net assets:
Beginning of period .................................................................. 1,160,979,368 1,779,930,429
------------------------------------
End of period ........................................................................ $1,183,476,249 $1,160,979,368
====================================
Undistributed net investment income included in net assets:
End of period ........................................................................ $ (8,002,357) $ (9,465,664)
====================================

26 | See notes to financial statements. | Semiannual Report

Franklin Floating Rate Trust

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

The Franklin Floating Rate Trust (the Fund) is registered under the Investment
Company Act of 1940 as a non-diversified, closed-end, continuously offered
investment company. The Fund seeks current income and preservation of capital.
The following summarizes the Fund's significant accounting policies.

A. SECURITY VALUATION

The Fund invests primarily in senior secured corporate loans and senior secured
debt that meet credit standards established by Franklin Advisers Inc. The Fund
values its securities based on quotations provided by banks, broker/dealers or
pricing services experienced in such matters. Investments in open-end mutual
funds are valued at the closing net asset value. Restricted securities and
securities for which market quotations are not readily available are valued at
fair value as determined by management in accordance with procedures established
by the Board of Trustees.

B. FOREIGN CURRENCY TRANSLATION

Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the exchange rate of such
currencies against U.S. dollars on the date of valuation. Purchases and sales of
securities and income items denominated in foreign currencies are translated
into U.S. dollars at the exchange rate in effect on the transaction date.

The Fund does not separately report the effect of changes in foreign exchange
rates from changes in market prices on securities held. Such changes are
included in net realized and unrealized gain or loss from investments.

Realized foreign exchange gains or losses arise from sales of foreign
currencies, currency gains or losses realized between the trade and settlement
dates on securities transactions and the difference between the recorded amounts
of dividends, interest, and foreign withholding taxes and the U.S. dollars
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in foreign exchange rates on
foreign denominated assets and liabilities other than investments in securities
held at the end of the reporting period.

C. SECURITIES PURCHASED ON A WHEN-ISSUED OR DELAYED DELIVERY BASIS

The Fund may purchase securities on a when-issued or delayed delivery basis,
with payment and delivery scheduled for a future date. These transactions are
subject to market fluctuations and are subject to the risk that the value at
delivery may be more or less than the trade date purchase price. Although the
Fund will generally purchase these securities with the intention of holding the
securities, it may sell the securities before the settlement date. Sufficient
assets have been segregated for these securities.

D. SENIOR FLOATING RATE INTERESTS

Senior secured corporate loans pay interest at rates which are periodically
reset by reference to a base lending rate plus a spread. These base lending
rates are generally the prime rate offered by a designated U.S. bank or the
London InterBank Offered Rate (LIBOR).

Semiannual Report | 27

Franklin Floating Rate Trust

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

E. INCOME TAXES

No provision has been made for income taxes because the Fund's policy is to
qualify as a regulated investment company under the Internal Revenue Code and to
distribute substantially all of its taxable income.

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. Discounts and premiums
on securities purchased are amortized over the lives of the respective
securities. Facility fees are recognized as income over the expected term of the
loan. Dividend income and distributions to shareholders are recorded on the
ex-dividend date.

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 Fund's organizational documents, its officers and trustees are
indemnified against certain liability arising out of the performance of their
duties to the Fund. Additionally, in the normal course of business, the Fund
enters into contracts with service providers that contain general
indemnification clauses. The Fund's maximum exposure under these arrangements is
unknown as this would involve further claims that may be made against the Fund
that have not yet occurred. However, based on experience, the Fund expects the
risk of loss to be remote.

I. 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. These commitments are disclosed in the accompanying
Statement of Investments and Statement of Assets and Liabilities.

28 | Semiannual Report

Franklin Floating Rate Trust

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

2. SHARES OF BENEFICIAL INTEREST

At January 31, 2004, there were an unlimited number of shares authorized ($.01
par value). Transactions in the Fund's shares were as follows:

SIX MONTHS ENDED YEAR ENDED
JANUARY 31, 2004 JULY 31, 2003
-----------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT

-----------------------------------------------------------------
Shares sold ....................... 10,415,949 $ 89,635,220 5,568,709 $ 45,936,820
Shares issued in reinvestment
of distributions ................. 1,450,697 12,514,989 5,106,050 41,769,067
Shares redeemed ................... (15,783,329) (135,867,050) (87,416,170) (714,811,535)
-----------------------------------------------------------------
Net increase (decrease) ........... (3,916,683) $ (33,716,841) (76,741,411) $(627,105,648)
=================================================================

3. TENDER OF SHARES

On a quarterly basis, the Fund may make tender offers, the amount of which is
determined by the Board of Trustees, for the repurchase of at least 5% but not
more than 25% of the shares outstanding. The repurchase price is the net asset
value on the tender offer expiration date.

4. REVOLVING CREDIT FACILITY

The Fund participates in a $200 million senior unsecured revolving credit
facility to fund shareholder redemptions or meet unfunded loan commitments. The
facility agreement ends on December 20, 2004. Interest is charged at the Federal
Funds Rate plus .50%. Facility fees paid are amortized on a straight line basis
over the term of the commitment. Annual commitment fees of .09% are charged on
the unused portion of the facility and allocated among the participating funds
based on net assets.

During the period ended January 31, 2004, the Fund did not utilize the facility.

5. TRANSACTIONS WITH AFFILIATES

Certain officers and trustees of the Fund are also officers and/or directors of
the following entities:

-----------------------------------------------------------------------------------------------
ENTITY AFFILIATION
-----------------------------------------------------------------------------------------------

Franklin Advisers Inc. (Advisers) Investment manager
Franklin Templeton Services LLC (FT Services) Administrative manager
Franklin/Templeton Distributors Inc. (Distributors) Principal underwriter
Franklin/Templeton Investor Services LLC (Investor Services) Transfer agent

The Fund pays an investment management fee to Advisers of .80% per year of the
average daily net assets of the Fund.

Semiannual Report | 29

Franklin Floating Rate Trust

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

5. TRANSACTIONS WITH AFFILIATES (CONTINUED)

The Fund pays an administrative fee to FT Services based on the average net
assets of the Fund as follows:

--------------------------------------------------------------------------------
ANNUALIZED FEE RATE AVERAGE DAILY NET ASSETS
--------------------------------------------------------------------------------
.150% First $200 million
.135% Over $200 million, up to and including $700 million
.100% Over $700 million, up to and including $1.2 billion
.075% In excess of $1.2 billion

Distributors received contingent deferred sales charges for the period of
$25,409.

The Fund pays a transfer agent fee to Investor Services of .40% per year of the
average daily net assets of the Fund.

6. INCOME TAXES

At January 31, 2004, net unrealized appreciation (depreciation) based on the
cost of investments for income tax purposes of $1,301,872,817 was as follows:

Unrealized appreciation ................................ $ 23,447,945
Unrealized depreciation ................................ (104,151,909)
-------------
Net unrealized depreciation ............................ $ (80,703,964)
=============

At July 31, 2003, the Fund had tax basis capital losses of $201,742,644 which
may be carried over to offset future capital gains. Such losses expire as
follows:

Capital loss carryover expiring in:
2009 ................................................. $ 2,115,134
2011 ................................................. 199,627,510
-------------
$ 201,742,644
=============

Net investment income differs for financial statement and tax purposes primarily
due to differing treatments of defaulted securities, foreign currency
transactions, and bond premiums.

Net realized gains (losses) differ for financial statement and tax purposes
primarily due to differing treatment of wash sales, defaulted securities,
foreign currency transactions, and bond premiums.

7. INVESTMENT TRANSACTIONS

Purchases and sales of securities (excluding short-term securities) for the
period ended January 31, 2004 aggregated $445,326,483 and $518,946,893,
respectively.

30 | Semiannual Report

Franklin Floating Rate Trust

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

8. INVESTMENTS IN FRANKLIN INSTITUTIONAL FIDUCIARY TRUST MONEY MARKET PORTFOLIO

The Fund may invest in the Franklin Institutional Fiduciary Trust Money Market
Portfolio (the Sweep Money Fund), an open-end investment company managed by
Advisers. Management fees paid by the Fund are reduced on assets invested in the
Sweep Money Fund, in an amount not to exceed the management fees paid by the
Sweep Money Fund. The Fund earned $478,372 of dividend income from investment in
the Sweep Money Fund for the period ended January 31, 2004.

9. CREDIT RISK AND DEFAULTED SECURITIES

The Fund has 98.54% 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 Fund held defaulted and/or other securities for which the income has been
deemed uncollectible. The Fund discontinues accruing income on these securities
and provides an estimate for losses on interest receivable. At January 31, 2004,
the value of these securities was $20,103,365, representing 1.70% of the Fund's
net assets. For information as to specific securities, see the accompanying
Statement of Investments.

10. RESTRICTED SECURITIES

At January 31, 2004, investments in securities included issues that are
restricted or illiquid. Restricted securities are often purchased in private
placement transactions, are not registered under the Securities Act of 1933, may
have contractual restrictions on resale, and are valued under methods approved
by the Board of Trustees as reflecting fair value. A security may also be
considered illiquid if it lacks a readily available market or if its valuation
has not changed for a certain period of time. At January 31, 2004, the Fund held
investments in restricted and illiquid securities that were valued under
approved methods by the Trustees, as follows:

---------------------------------------------------------------------------------------------------------------------
PRINCIPAL ACQUISITION
AMOUNT ISSUER DATE COST VALUE
---------------------------------------------------------------------------------------------------------------------

$1,400,000 Ares IV, Term Loan D, 144A, 7.17%, 12/22/12 ....................... 11/14/00 $1,400,000 $ 959,000
2,500,000 Centurion II, Tranche D, 144A, 7.18%, 11/12/12 .................... 11/07/00 2,500,000 1,718,000
2,000,000 Clydesdale CLO, Tranche D, 144A, 7.67%, 3/22/13 ................... 5/23/01 1,889,673 1,734,400
3,000,000 First Dominion Funding II, sub. floating rate deb., Series A-D,
144A, 6.811%, 4/25/14 ........................................... 5/03/99 2,991,559 1,251,600
----------
TOTAL RESTRICTED SECURITIES (.48% OF NET ASSETS) .................................................... $5,663,000
==========

Semiannual Report | 31

Franklin Floating Rate Trust

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

11. HOLDING OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES

The Investment Company Act of 1940 defines "affiliated companies" to include
investments in portfolio companies in which a fund owns 5% or more of the
outstanding voting securities. Investments in "affiliated companies" for the
Fund at January 31, 2004 were as shown below.

-----------------------------------------------------------------------------------------------------------------------------
NUMBER OF NUMBER OF
SHARES HELD SHARES HELD VALUE REALIZED
AT BEGINNING GROSS GROSS AT END AT END INVESTMENT CAPITAL
NAME OF ISSUER OF PERIOD ADDITIONS REDUCTIONS OF PERIOD OF PERIOD INCOME GAIN (LOSS)
-----------------------------------------------------------------------------------------------------------------------------

Arch Wireless Inc. 1,908,741 30,900 602,200 1,337,441 $29,677,816 $-- $(954,303)

12. OTHER CONSIDERATIONS

Advisers, as the Fund's Manager, may serve as a member of various bondholders'
steering committees, on credit committees, or may represent the Fund in certain
corporate restructuring negotiations. Currently the Manger serves in one or more
of these capacities for Adelphia Communications Corp. As a result of this
involvement, Advisers may be in possession of certain material non-public
information. If the Fund's Manager, while in possession of such information,
seeks to sell any of its holdings in these securities it will comply with all
applicable federal securities laws.

13. RECENT LITIGATION

On July 6, 2003, Adelphia Communications Corp. ("Adelphia") and related parties,
along with its Official Committee of Unsecured Creditors, filed and adversary
proceeding in the Adelphia bankruptcy case in the U.S. Bankruptcy Court (SDNY)
against more than 360 banks, financial services companies, insurance companies,
investment banks, mutual funds and other parties that had arranged for the sale
of, or purchased the bank debt of, Adelphia or its related parties. Named
Defendants included Franklin Advisers Inc., Franklin CLOs I-III, Franklin
Floating Rate Daily Access Fund, Franklin Floating Rate Master Series, and
Franklin Floating Rate Trust.

The Complaint alleges that the purchasers of this bank debt knew, or should have
known, that the loan proceeds would not benefit Adelphia, but instead would be
used to enrich Adelphia insiders. It seeks avoidance of the loans and recovery
of intentionally fraudulent transfers.

Although it is not possible to predict the outcome of these matters at this
early stage of the proceedings, the Fund's management does not expect that the
result will have a material adverse effect on the financial condition of the
Fund.

32 | Semiannual Report

Franklin Floating Rate Trust

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

14. REGULATORY MATTERS

On February 4, 2004, the Securities Division of the Office of the Secretary of
the Commonwealth of Massachusetts filed an administrative complaint against
Franklin Resources, Inc. and certain of its subsidiaries (the "Company"),
alleging violations of the Massachusetts Uniform Securities Act. The complaint
arises from activity that occurred in 2001 during which time an officer of a
Company subsidiary was negotiating an agreement with an investor relating to
investments in a mutual fund and a hedge fund.

The Fund, in addition to other entities within Franklin Templeton Investments,
including the Company and other funds, has been named in shareholder class
actions related to the matter described above. The Fund's management believes
that the claims made in the lawsuit are without merit and it intends to defend
vigorously against the allegations. It is anticipated that the Fund may be named
in additional similar civil actions related to the matter described above.

In addition, as part of ongoing investigations by the U.S. Securities and
Exchange Commission (the "SEC"), the U.S. Attorney for the Northern District of
California, the New York Attorney General, the California Attorney General, the
U.S. Attorney for the District of Massachusetts, the Florida Department of
Financial Services, and the Commissioner of Securities and the Attorney General
of the State of West Virginia, relating to certain practices in the mutual fund
industry, including late trading, market timing and sales compensation
arrangements, the Company and its subsidiaries, as well as certain current or
former executives and employees of the Company, have received requests for
information and/or subpoenas to testify or produce documents. The Company and
its current employees are providing documents and information in response to
these requests and subpoenas. In addition, the Company has responded to requests
for similar kinds of information from regulatory authorities in some of the
foreign countries where the Company conducts its global asset management
business.

The Staff of the SEC has informed the Company that it intends to recommend that
the Commission authorize an action against the Fund's investment adviser
relating to the frequent trading issues that are the subject of the SEC's
investigation. These issues were previously disclosed as being under
investigation by government authorities and the subject of an internal inquiry
by the Company in its Annual Report on Form 10-K and on its public website. The
Company currently is in discussions with the SEC Staff in an effort to resolve
the issues raised in their investigation. Such discussions are preliminary and
the Fund's management has been advised that the Company cannot predict the
likelihood of whether those discussions will result in a settlement and, if so,
the terms of such settlement. The impact, if any, of these matters on the Fund
is uncertain at this time. If the Company finds that it bears responsibility for
any unlawful or improper conduct, it has committed to making the Fund or its
shareholders whole, as appropriate.

Semiannual Report | 33

Franklin Floating Rate Trust

PROXY VOTING POLICIES AND PROCEDURES

The Fund has established Proxy Voting Policies and Procedures ("Policies") that
the Fund uses to determine how to vote proxies relating to portfolio securities.
Shareholders may view the Fund's complete Policies online at
franklintempleton.com. Alternatively, shareholders may request copies of the
Policies free of charge by calling the Proxy Group collect at 1-954/847-2268 or
by sending a written request to: Franklin Templeton Companies, LLC, 500 East
Broward Boulevard, Suite 1500, Fort Lauderdale, FL 33394, Attention: Proxy
Group.

34 | Semiannual Report

This page intentionally left blank.

Literature Request

For a brochure and prospectus, which contains more complete information,
including charges, expenses and risks, call Franklin Templeton Investments at
1-800/DIAL BEN(R) (1-800/342-5236). Please read the prospectus carefully before
investing or sending money. To ensure the highest quality of service, we may
monitor, record and access telephone calls to or from our service departments.
These calls can be identified by the presence of a regular beeping tone.

FRANKLIN TEMPLETON INVESTMENTS

INTERNATIONAL
Mutual European Fund
Templeton China World Fund
Templeton Developing Markets Trust
Templeton Foreign Fund
Templeton Foreign Smaller Companies Fund
Templeton International (Ex EM) Fund

GLOBAL
Franklin
Global Aggressive Growth Fund
Franklin Global Growth Fund
Mutual Discovery Fund
Templeton Capital Accumulator Fund
Templeton Global Long-Short Fund
Templeton Global Opportunities Trust
Templeton Global Smaller Companies Fund
Templeton Growth Fund Templeton World Fund

GROWTH
Franklin Aggressive Growth Fund
Franklin Capital Growth Fund
Franklin Flex Cap Growth Fund
Franklin Small-Mid Cap Growth Fund
Franklin Small Cap Growth Fund II 1

VALUE
Franklin Balance Sheet Investment Fund 2
Franklin Equity Income Fund
Franklin Large Cap Value Fund
Franklin MicroCap Value Fund 2
Franklin Small Cap Value Fund
Mutual Beacon Fund Mutual Qualified Fund
Mutual Recovery Fund 3
Mutual Shares Fund

BLEND
Franklin Blue Chip
Fund Franklin Convertible Securities Fund
Franklin Growth Fund
Franklin Rising Dividends Fund
Franklin U.S. Long-Short Fund 4

SECTOR
Franklin Biotechnology Discovery Fund
Franklin DynaTech Fund
Franklin Global Communications Fund
Franklin Global Health Care Fund
Franklin Gold and Precious Metals Fund
Franklin Natural Resources Fund
Franklin Real Estate Securities Fund
Franklin Utilities Fund Franklin Technology Fund
Mutual Financial Services Fund

ASSET ALLOCATION
Franklin Templeton Corefolio Allocation Fund
Franklin Templeton Founding Funds
Allocation Fund

TARGET FUNDS
Franklin Templeton Conservative Target Fund
Franklin Templeton Growth Target Fund
Franklin Templeton Moderate Target Fund

INCOME
Franklin Adjustable U.S. Government Securities Fund 5
Franklin's AGE High Income Fund
Franklin Federal Money Fund 5, 6
Franklin Floating Rate Daily Access Fund
Franklin Floating Rate Trust 3
Franklin Income Fund Franklin Money Fund 5, 6
Franklin Short-Intermediate U.S. Government Securities Fund 5
Franklin Strategic Income Fund
Franklin Strategic Mortgage Portfolio
Franklin Templeton Hard Currency Fund
Franklin Total Return Fund
Franklin U.S. Government Securities Fund 5
Templeton Global Bond Fund

TAX-FREE INCOME 7
NATIONAL FUNDS
Double Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund 8
Tax-Exempt Money Fund 5, 6

LIMITED-TERM FUNDS
California Limited-Term Tax-Free Income Fund
Federal Limited-Term Tax-Free Income Fund
New York Limited-Term Tax-Free Income Fund

INTERMEDIATE-TERM FUNDS
California Intermediate-Term Tax-Free Income Fund
Federal Intermediate-Term Tax-Free Income Fund
New York Intermediate-Term Tax-Free Income Fund

STATE-SPECIFIC 7
Alabama
Arizona
California 9
Colorado
Connecticut
Florida 9
Georgia
Kentucky
Louisiana
Maryland
Massachusetts 8
Michigan 8
Minnesota 8
Missouri
New Jersey
New York 9
North Carolina
Ohio 8
Oregon
Pennsylvania
Tennessee
Virginia

INSURANCE FUNDS
Franklin Templeton Variable Insurance Products Trust 10

1.The fund is closed to new investors. Existing shareholders can continue adding
to their accounts.
2.The fund is only open to existing shareholders as well as select retirement
plans.
3.The fund is a continuously offered, closed-end fund. Shares may be purchased
daily; there is no daily redemption. However, each quarter, pending board
approval, the fund will authorize the repurchase of 5%-25% of the outstanding
number of shares. Investors may tender all or a portion of their shares during
the tender period.
4.Upon reaching approximately $350 million in assets, the fund intends to close
to all investors.
5.An investment in the fund is neither insured nor guaranteed by the U.S.
government or by any other entity or institution.
6.No assurance exists that the fund's $1.00 per share price will be maintained.
It is possible to lose money by investing in the fund.
7.For investors subject to the alternative minimum tax, a small portion of fund
dividends may be taxable. Distributions of capital gains are generally taxable.
8.Portfolio of insured municipal securities.
9.These funds are available in two or more variations, including long-term
portfolios, portfolios of insured securities, a high-yield portfolio (CA) and
limited-term, intermediate-term and money market portfolios (CA and NY).
10.The funds of the Franklin Templeton Variable Insurance Products Trust are
generally available only through insurance company variable contracts.

02/04 Not part of the semiannual report

[GRAPHIC OMITTED]
FRANKLIN TEMPLETON INVESTMENTS LOGO

One Franklin Parkway
San Mateo, CA 94403-1906

WANT TO RECEIVE THIS DOCUMENT FASTER VIA EMAIL?
Eligible shareholders can sign up for eDelivery at
franklintempleton.com. See inside for details.

SEMIANNUAL REPORT AND SHAREHOLDER LETTER
Franklin Floating Rate Trust

INVESTMENT MANAGER
Franklin Advisers, Inc.

DISTRIBUTOR
Franklin Templeton Distributors, Inc.
1-800/DIAL BEN(R)
franklintempleton.com

SHAREHOLDER SERVICES
1-800/632-2301

This report must be preceded or accompanied by the current Franklin Floating
Rate Trust prospectus, which contains more complete information, including
charges, expenses and risks.

To ensure the highest quality of service, telephone calls to or from our service
departments may be monitored, recorded and accessed. These calls can be
identified by the presence of a regular beeping tone.

020 S2004 03/04

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.

(d) N/A

(f) Pursuant to Item 11(A), the Registrant is attaching as an exhibit a copy of
its code of ethics that applies to its principal executive officers 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 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.

ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS. N/A

ITEM 9. 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 10. 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 11. EXHIBITS.

(A) Code of Ethics for Principal Executive and Senior Financial Officers.

(B)(1) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
of Jimmy D. Gambill, Chief Executive Officer - Finance and Administration, and
Diomedes Loo-Tam, Chief Financial Officer

(B)(2) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
of Jimmy D. Gambill, Chief Executive Officer - Finance and Administration, and
Diomedes Loo-Tam, 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 TRUST

By /s/Jimmy D. Gambill
Chief Executive Officer - Finance and Administration
Date March 31, 2004

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
Chief Executive Officer - Finance and Administration
Date March 31, 2004

By /s/Diomedes Loo-Tam
Chief Financial Officer
Date March 31, 2004