Edgar Filing: FRANKLIN FLOATING RATE TRUST

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-08271
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FRANKLIN FLOATING RATE TRUST
----------------------------
(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
----

Date of reporting period: 7/31/03
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ITEM 1. REPORTS TO STOCKHOLDERS

JULY 31, 2003

[GRAPHIC OMITTED]
PERSON ART

ANNUAL REPORT AND SHAREHOLDER LETTER INCOME

FRANKLIN
FLOATING RATE TRUST

[GRAPHIC OMITTED]
BUILDING ART

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FRANKLIN TEMPLETON INVESTMENTS
FRANKLIN - TEMPLETON- 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
reliable account services that have helped us become one of the most trusted
names in financial services.

MUTUAL FUNDS | RETIREMENT PLANS | 529 COLLEGE SAVINGS PLANS | SEPARATE ACCOUNTS

[GRAPHIC OMITTED]
BUILDING ART

Not part of the annual report

CONTENTS

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

ANNUAL REPORT

Franklin Floating Rate Trust ..... 3

Performance Summary .............. 7

Financial Highlights &
Statement of Investments ......... 9

Financial Statements ............. 22

Notes to Financial Statements .... 25

Independent Auditors' Report ..... 32

Board Members and Officers ....... 33

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ANNUAL 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.

PERFORMANCE OVERVIEW

Franklin Floating Rate Trust posted a +6.36% cumulative total return for the
fiscal year ended July 31, 2003, as shown in the Performance Summary on page 7.
The share price, as measured by net asset value, rose from $8.31 per share on
July 31, 2002, to $8.43 at year-end. The Fund made dividend distributions
totaling $0.388467 per share. 1

ECONOMIC OVERVIEW

The U.S. economy entered its third year of lackluster growth during the period
under review. Corporate accounting scandals and war with Iraq contributed to
suppressed consumer confidence and tempered economic growth. The economy, as
measured by gross domestic product (GDP) growth, expanded at a 3.1% annualized
pace in the second quarter of 2003, following 1.4% annualized growth rates for
each of the previous two quarters.

The Federal Reserve Board, in an attempt to bolster the sluggish economy,
continued to cut interest rates during the period under review, reducing the
federal funds target rate from 1.75% to 1.00% over the course of the reporting
period. Short-term interest rates, as measured by the three-month London
InterBank Offered Rate (LIBOR), the benchmark underlying many of the Fund's
floating rate loans, also fell, dropping from 1.82% at the beginning of the
period under review to 1.11% on July 31, 2003. For the same period, long-term
rates also dipped, with the yield on the 10-year Treasury note falling from
4.51% to 4.49% after reaching a low of 3.10% in early June.

Seeking to inject fiscal stimulus into the economy, the government approved
another round of tax cuts, including dividend tax reductions. Even with monetary

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 month. 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.

Annual Report| 3

[BEGIN SIDEBAR]
---------------------------------
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.

TOP 10 HOLDINGS
7/31/03
----------------------------------------------------
COMPANY % OF TOTAL
SECTOR/INDUSTRY NET ASSETS
----------------------------------------------------
Arch Wireless Inc. 2.8%
WIRELESS COMMUNICATIONS
----------------------------------------------------
Adelphia Communications 1.9%
CABLE & SATELLITE TELEVISION
----------------------------------------------------
Alabama Pine & Pulp 1.7%
PULP & PAPER
----------------------------------------------------
DirecTV Holdings LLC 1.7%
CABLE & SATELLITE TELEVISION
----------------------------------------------------
Tenneco Automotive Inc. 1.7%
AUTO PARTS: O.E.M.
----------------------------------------------------
Charter Communications CCVI & CCVIII 1.5%
CABLE & SATELLITE TELEVISION
----------------------------------------------------
TRW Automotive Acquisition Corp. 1.4%
AUTO PARTS: O.E.M.
----------------------------------------------------
Vertis Inc. 1.4%
COMMERCIAL PRINTING & FORMS
----------------------------------------------------
American Reprographics 1.3%
COMMERCIAL PRINTING & FORMS
----------------------------------------------------
Southern California Edison Co. 1.3%
ELECTRIC UTILITIES

[END SIDEBAR]

AND fiscal stimulus, by period-end economic recovery was not assured. On a
brighter note, U.S. equity markets, which often serve as a leading indicator of
economic recovery, rallied through 2003's second quarter and into July, ending
the fiscal year higher, with the Dow Jones Industrial Average increasing from
8736.59 on July 31, 2002, to 9233.80 at period-end, for a gain of 8.27%. 2

SYNDICATED BANK LOAN MARKET

The first few months of the year under review were challenging in the loan
market, due to weakening institutional demand and a decline in new-issue volume.
With the economy languishing and the threat of a war looming, Treasury yields
declined and the LIBOR rate remained low, affecting our loan yields.

After a difficult late summer and early fall of 2002, the loan market recovered
and performed well over the last nine months of the reporting period. Recovering
equity and high yield bond markets contributed to improved performance, as did
the entrance of new, non-traditional loan investors. Many of the new entrants
into the loan market included hedge funds and other institutional vehicles
seeking high risk-adjusted returns, which increased demand for loans.

Fundamental factors also contributed to the loan market's improved performance,
resulting in lower default rates and fewer distressed and lower-rated loans than
we have seen since 2000. In June 2003, the lagging 12-month Standard & Poor's
default rate by principal amount declined to its lowest level since December
1999.

INVESTMENT STRATEGY

We use credit analysis to select corporate loan and corporate debt securities
that meet our 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.

2. Source: Standard & Poor's Micropal. The Dow Jones Industrial Average is
price-weighted based on the average market price of 30 blue chip stocks of
companies that are generally industry leaders. Total return, calculated by
Wilshire Associates Inc., includes reinvested dividends.

4 |Annual Report

MANAGER'S DISCUSSION

During the 12 months ended July 31, 2003, the syndicated bank loan market was
active, offering the Fund many investment opportunities in the primary and
secondary markets. Our investments in TRW Automotive (TRW), Peabody Energy,
International Steel Group (ISG) and DirecTV aided Fund performance. All four
traded at premiums to our initial purchase price at period-end, while offering
attractive yields. Their individual stories follow, below:

We bought the bank debt of TRW, a diversified supplier of automotive systems,
modules and components. TRW serves all major vehicle manufacturers and their
suppliers worldwide, and the company is widely recognized for its superior
safety systems. TRW operates primarily in North America and Europe, but also has
facilities in China, South Korea, India, South Africa and other parts of the
world. The company holds the top market position in several of its product lines
and is among the leaders in several others.

We also purchased Peabody Energy's bank debt. In 2002 Peabody, the world's
largest private-sector coal producer, fueled the generation of more than 9% of
all U.S. electric consumption. Peabody owns majority interests in 33 coal
operations in the U.S. and holds the largest market share in three of the four
primary U.S. coal-producing regions. Peabody is the largest producer in the
Powder River Basin, the Midwest and the Southwest, and has added more capacity
from surface mines rather than underground mines in recent years.

ISG was formed in 2002 by Wilbur Ross, a well-known investor in distressed
securities. ISG is the combination of two bankrupt integrated steel companies --
LTV Steel and Acme. Although steel can be a difficult industry, we found ISG
attractive because it lacks the substantial pension and medical liabilities that
strained its predecessor companies.

Finally, we invested in the bank debt of DirecTV, the largest provider of
digital broadcast satellite television services with approximately 11.6 million
U.S. subscribers at period-end. DirecTV exhibited strong financial performance,
cash flow growth and net subscriber additions over the past several calendar
quarters. The company's large subscriber base also helps it reduce expenses and
improve profitability by negotiating for programming on favorable terms and to
secure unique and exclusive programming.

[BEGIN SIDEBAR]
DIVIDEND DISTRIBUTIONS*
8/1/02-7/31/03
----------------------------------------
MONTH DIVIDEND PER SHARE
----------------------------------------
August 3.3879 cents
----------------------------------------
September 3.0826 cents
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October 3.5225 cents
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November 3.4159 cents
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December 3.8568 cents
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January 3.5885 cents
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February 2.6827 cents
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March 2.9521 cents
----------------------------------------
April 3.0223 cents
----------------------------------------
May 2.9433 cents
----------------------------------------
June 3.0873 cents
----------------------------------------
July 3.3048 cents
----------------------------------------
TOTAL 38.8467 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 month.
Income distributions include all accrued
income earned by the Fund during the
reporting period.
[END SIDEBAR]

Annual Report| 5

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

Sincerely,

[GRAPHIC OMITTED] Charles B. Johnson PIC

/S/ Charles B. Johnson
Chairman

[GRAPHIC OMITTED] Richard D'Addario PIC

/S/ Richard D'Addario
Chief Investment Officer - Floating Rate Debt Group

Franklin Floating Rate Trust

THIS DISCUSSION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS AS OF
JULY 31, 2003, THE END OF THE REPORTING PERIOD. OUR STRATEGIES AND THE FUND'S
PORTFOLIO COMPOSITION WILL CHANGE DEPENDING ON 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 |Annual Report

PERFORMANCE SUMMARY AS OF 7/31/03

Your dividend income will vary depending on dividends or interest paid by
securities in the Fund's portfolio, adjusted for operating expenses of each
class. 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 7/31/03 7/31/02
--------------------------------------------------------------------------------
Net Asset Value (NAV) +$0.12 $8.43 $8.31
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DISTRIBUTIONS (8/1/02-7/31/03)
--------------------------------------------------------------------------------
Dividend Income $0.388467

PERFORMANCE 1

--------------------------------------------------------------------------------
1-YEAR 5-YEAR INCEPTION (10/10/97)
--------------------------------------------------------------------------------
Cumulative Total Return 2 +6.36% +20.24% +26.64%
--------------------------------------------------------------------------------
Average Annual Total Return 3 +5.36% +3.76% +4.15%
--------------------------------------------------------------------------------
Value of $10,000 Investment 4 $10,536 $12,024 $12,664
--------------------------------------------------------------------------------
Distribution Rate 5 4.62%
--------------------------------------------------------------------------------
30-Day Distribution Rate 6 4.55%

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. THESE AND OTHER RISKS ARE DESCRIBED MORE FULLY IN THE
FUND'S PROSPECTUS.

For more current performance, see "Funds and Performance" at franklintempleton.
com or call 1-800/342-5236.

ENDNOTES

SHARES REPURCHASED WITHIN 18 MONTHS OF INVESTMENT ARE SUBJECT TO 1% EARLY
WITHDRAWAL CHARGE.
1. The Fund's manager agreed in advance to waive a portion of its management
fees. If the manager had not taken this action, the Fund's total return would
have been lower. The fee waiver may be discontinued at any time, upon notice to
the Fund's Board of Trustees.
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 18 months of purchase.
4. In accordance with SEC rules, we provide standardized average annual total
return information through the latest calendar quarter.
5. The distribution rate is based on the annualization of daily distributions
totaling 3.2042 cents per share during the last 30 days of July and the $8.43
NAV on 7/31/03.
6. Yield, calculated as required by the SEC, is based on the earnings of the
Fund's portfolio for the 30 days ended 7/31/03.

Annual Report|Past performance does not guarantee future results.| 7

THE FUND'S REPURCHASE OFFERS

The Fund will make quarterly repurchase offers for a portion of its shares. With
any repurchase offer, shareholders may elect to tender (have the Fund
repurchase) all, a portion or none of their shares. With each repurchase offer,
shareholders will be notified in writing about the offer, how to request that
the Fund repurchase their shares and the deadline for submitting repurchase
requests.

Each quarter the Board of Trustees will set the amount of the repurchase offer,
as a percentage of outstanding shares. This amount is known as the repurchase
offer amount and will generally be between 5% and 25% of the Fund's outstanding
shares. If repurchase requests exceed the repurchase offer amount, the Fund will
prorate requests. The Fund may, however, first accept any requests to repurchase
all of a shareholder's shares if the shareholder owns less than 100 shares. The
Board will also determine the date by which the Fund must receive shareholders'
repurchase requests, which is known as the repurchase request deadline. The
Board will base these decisions on investment management considerations, market
conditions, liquidity of the Fund's assets, shareholder servicing and
administrative considerations and other factors it deems appropriate. Each
repurchase request deadline will occur within the period that begins 21 days
before, and ends 21 days after, the end of the quarterly interval. The
repurchase price of the shares will be the net asset value as of the close of
the NYSE on the date the Board sets as the repurchase pricing date. The maximum
number of days between the repurchase request deadline and the repurchase
pricing date is 14 days.

SUMMARY OF REPURCHASE OFFERS - 8/1/02 THROUGH 7/31/03

--------------------------------------------------------------------------------
REPURCHASE REPURCHASE % OF SHARES NUMBER OF
REQUEST DEADLINE OFFER AMOUNT TENDERED* SHARES TENDERED*
--------------------------------------------------------------------------------
1. 10/2/02 25% 18.364% 39,752,700.668
--------------------------------------------------------------------------------
2. 1/3/03 25% 12.052% 21,572,736.857
--------------------------------------------------------------------------------
3. 4/1/03 25% 9.216% 14,701,188.799
--------------------------------------------------------------------------------
4. 7/1/03 25% 7.691% 11,326,020.293

*In connection with the repurchase offers, due to the limited number of shares
tendered, the Fund did not have to consider whether to repurchase an additional
amount of shares, not in excess of 2% of the shares outstanding, and did not
need to repurchase any shares on a pro rata basis as described in the Prospectus
and Repurchase Offer/Request Form.

8 |Annual Report

FRANKLIN FLOATING RATE TRUST

FINANCIAL HIGHLIGHTS

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YEAR ENDED JULY 31,
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2003 2002 2001 2000 1999

PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)

Net asset value, beginning of year ...................... $8.30 $9.24 $9.85 $9.98 $10.04
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Income from investment operations:

Net investment income .................................. .330 .568 b .875 .839 .700

Net realized and unrealized gains (losses) ............. .179 (.927)b (.606) (.130) (.060)
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Total from investment operations ........................ .509 (.359) .269 .709 .640
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Less distributions from net investment income ........... (.389) (.581) (.879) (.839) (.700)
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Net asset value, end of year ............................ $8.42 $8.30 $9.24 $9.85 $9.98
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Total return a .......................................... 6.36% (3.95)% 2.80% 7.39% 6.62%

RATIOS/SUPPLEMENTAL DATA

Net assets, end of year (000's) ......................... $1,160,979 $1,779,930 $2,832,188 $2,541,497 $1,106,363

Ratios to average net assets:

Expenses ............................................... 1.35% 1.32% 1.36% 1.35% 1.39%

Expenses excluding waiver and payments by affiliate .... 1.35% 1.32% 1.36% 1.35% 1.41%

Net investment income .................................. 4.26% 6.58% b 9.07% 8.51% 6.93%

Portfolio turnover rate ................................. 55.96% 62.21% 84.15% 66.27% 63.29%

aTotal return does not reflect the contingent deferred sales charge and is not
annualized for periods less than one year.
bEffective 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.

Annual Report|See notes to financial statements.| 9

FRANKLIN FLOATING RATE TRUST

STATEMENT OF INVESTMENTS, JULY 31, 2003

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PRINCIPAL AMOUNT A VALUE
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BONDS 2.2%
FINANCIAL CONGLOMERATES .7%
Finova Group Inc., 7.50%, 11/15/09 ............................................... $17,086,000 $ 7,774,130
---------------
HOSPITAL/NURSING MANAGEMENT .3%
Genesis Health Ventures Inc., 6.114%, 4/02/07 .................................... 3,326,596 3,309,963
---------------
WIRELESS COMMUNICATIONS 1.2%
Arch Wireless Inc.,
Senior secured note, 10.00%, 5/15/07 .......................................... 1,089,941 1,095,391
Senior sub. note, PIK, 12.00%, 5/15/09 ........................................ 12,115,000 13,356,787
---------------
14,452,178
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TOTAL BONDS (COST $62,940,563) ................................................... 25,536,271
---------------
b SENIOR FLOATING RATE INTERESTS 90.7%
ADVERTISING/MARKETING SERVICES .2%
Adams Outdoor Advertising Inc., Term Loan B, 4.578 - 6.25%, 2/08/08 ........... 2,655,759 2,668,210
c DIMAC Holdings, Term Loan B, 7.00%, 9/30/03 ................................. 558,337 16,750
---------------
2,684,960
---------------

AEROSPACE & DEFENSE 3.2%
ILC Industries Inc., Term Loan, 5.60%, 4/11/10 ................................... 966,981 959,729
Integrated Defense Technology Inc., Term Loan B, 5.10%, 3/04/08 .................. 8,515,744 8,505,100
Raytheon Aerospace LLC, Term Loan B, 5.10 - 5.11%, 6/29/07 ....................... 8,848,926 8,854,457
Titan Corp., Term Loan B, 4.38 - 6.00%, 2/23/06 .................................. 11,399,962 11,430,833
United Defense Industries Inc., Term Loan B, 3.10%, 8/13/09 ...................... 816,504 819,419
Veridian Corp., Term Loan, 4.35%, 6/05/08 ........................................ 1,945,586 1,945,586
Vought Aircraft Industries,
Term Loan B, 4.35%, 7/21/07 ................................................... 276,496 276,841
Term Loan C, 4.60%, 7/24/08 ................................................... 2,059,114 2,061,688
Term Loan X, 4.10%, 12/01/06 .................................................. 2,034,329 2,029,243
---------------
36,882,896
---------------

AGRICULTURAL COMMODITIES/MILLING .1%
Hines Nurseries Inc., Term Loan B, 5.125%, 2/28/05 ............................... 1,534,063 1,534,063
---------------
AIRLINES .1%
Transdigm Inc., Term Loan B, 3.85%, 7/22/10 ...................................... 1,000,000 1,010,938
---------------
ALTERNATIVE POWER GENERATION .1%
Headwaters Inc., Term Loan B, 5.36 - 7.25%, 9/12/07 .............................. 1,609,318 1,601,272
---------------
APPAREL/FOOTWEAR .9%
Levi Strauss & Co., Term Loan B, 5.353%, 7/31/06 ................................. 8,790,267 8,666,658
St. John Knits Inc., Term Loan B, 4.875 - 5.063%, 7/31/07 ........................ 2,251,994 2,255,865
---------------
10,922,523
---------------

AUTO PARTS: ORIGINAL EQUIPMENT MANUFACTURER 6.6%
Dayco Products LLC, Term Loan B, 4.25 - 4.51%, 5/31/07 ........................... 3,817,309 3,792,497
GenCorp Inc., Term Loan B, 4.938%, 3/28/07 ....................................... 8,452,419 8,441,853
Hayes Lemmerz, Term Loan, 5.86 - 6.04%, 6/03/09 .................................. 9,000,000 9,056,250
Hilite International Inc., Term Loan B, 5.60 - 5.77%, 3/31/09 .................... 982,500 966,534
Key Plastics Inc.,
Term Loan B, 8.00%, 4/25/09 ................................................... 2,160,000 2,192,400
Term Loan C, 12.50%, 4/25/10 .................................................. 2,000,000 2,010,000

10 | Annual Report

FRANKLIN FLOATING RATE TRUST

STATEMENT OF INVESTMENTS, JULY 31, 2003 (CONTINUED)

b SENIOR FLOATING RATE INTERESTS (CONT.)
AUTO PARTS: ORIGINAL EQUIPMENT MANUFACTURER (CONT.)
Metaldyne, Term Loan D, 5.625%, 12/31/09 ......................................... $ 4,981,258 $ 4,760,837
Progressive Moulded Products, Term Loan C, 4.625%, 6/30/08 ....................... 1,000,000 1,005,000
SPX Corp.,
Term Loan B, 3.375%, 9/30/09 .................................................. 3,068,438 3,081,672
Term Loan C, 3.625%, 12/31/07 ................................................. 5,114,063 5,136,119
Tenneco Automotive Inc.,
Term Loan B, 5.30%, 11/04/07 .................................................. 9,888,800 9,887,920
Term Loan C, 5.55%, 5/04/08 ................................................... 9,888,800 9,902,041
TRW Automotive Acquisition Corp.,
Term Loan A, 4.813%, 2/27/09 .................................................. 1,536,585 1,538,506
Term Loan C1, 4.13%, 2/28/11 .................................................. 15,000,000 15,076,560
---------------
76,848,189
---------------

AUTOMOTIVE AFTERMARKET .4%
Advanced Store Cos. Inc., Term Loan C, 3.875 - 4.063%, 11/30/07 .................. 3,935,528 3,961,109
United Components Inc., Term Loan B, 4.37%, 6/20/10 .............................. 1,000,000 1,008,958
---------------
4,970,067
---------------
BEVERAGES: ALCOHOLIC .4%
Constellation Brands Inc., Term Loan B, 3.875%, 11/30/08 ......................... 5,000,000 5,051,250
---------------
BROADCASTING 2.6%
c Comcorp Broadcasting, Term Loan, 11.50%, 9/30/03 ................................. 3,185,651 3,161,759
c Comcorp Holdings, Term Loan, 13.875%, 9/30/03 .................................... 4,714,710 4,478,975
Cumulus Media Inc., Term Loan C, 3.625%, 3/28/10 ................................. 2,992,500 3,012,607
Emmis Communications Corp., Term Loan A, 3.125%, 2/28/09 ......................... 2,569,763 2,575,042
Emmis Operating Co., Term Loan B, 3.375%, 8/31/09 ................................ 2,081,088 2,094,384
Gray Television Inc., Term Loan C, 3.36 - 3.51%, 12/31/10 ........................ 1,000,000 1,008,750
Quorum Broadcasting, Term Loan B, 5.60%, 9/30/07 ................................. 7,437,348 7,177,041
Radio One Inc., Term Loan A, 2.03%, 6/30/07 ...................................... 2,775,000 2,740,313
Sinclair Broadcast Group Inc., Term Loan B, 3.313 - 3.375%, 12/31/09 ............. 971,800 977,483
c White Knight Broadcasting, Term Loan B, 11.50%, 9/30/03 .......................... 3,516,334 3,489,962
---------------
30,716,316
---------------
BUILDING PRODUCTS 1.7%
Masonite International Corp., Term Loan C, 3.75 - 4.063%, 8/31/08 ................ 2,871,339 2,877,920
Tapco International,
Term Loan B, 4.00 - 4.10%, 7/23/07 ............................................ 7,363,636 7,377,443
Term Loan C, 4.25 - 4.35%, 7/23/08 ............................................ 6,163,636 6,175,193
Therma-Tru Corp., Term Loan B, 4.103%, 2/18/09 ................................... 2,947,500 2,961,318
---------------
19,391,874
---------------
CABLE/SATELLITE TELEVISION 10.4%
Bresnan Broadband Holdings LLC, Term Loan, 5.35 - 5.57%, 9/20/10 ................. 1,000,000 1,003,906
Century Cable (Adelphia),
Discretionary Term Loan, 6.00%, 12/31/09 ...................................... 3,000,000 2,521,500
Term Loan, 6.00%, 6/30/09 ..................................................... 1,000,000 846,786

Annual Report | 11

FRANKLIN FLOATING RATE TRUST

STATEMENT OF INVESTMENTS, JULY 31, 2003 (CONTINUED)

b SENIOR FLOATING RATE INTERESTS (CONT.)
CABLE/SATELLITE TELEVISION (CONT.)
Charter Communications CCVI,
d Revolver, .25 - 2.62%, 5/12/08 ................................................ $ 875,000 $ 794,063
Term Loan A, 2.60%, 5/12/08 ................................................... 1,068,750 944,241
Term Loan B, 3.60%, 11/12/08 .................................................. 14,427,519 12,954,714
Charter Communications CCVIII, Term Loan B, 3.62 - 3.85%, 2/02/08 ................ 2,870,649 2,704,562
DirecTV Holdings LLC, Term Loan, 4.74 - 4.77%, 3/06/10 ........................... 20,000,000 20,128,760
Insight Midwest Holdings, Term Loan B, 4.063%, 12/31/09 .......................... 8,000,000 8,033,568
MCC Iowa (Broadband), Term Loan B1, 3.62%, 9/12/10 ............................... 3,000,000 3,024,792
Mediacom Illinois, Term Loan B, 3.60%, 12/31/08 .................................. 4,962,500 5,003,510
Olympus Cable Holdings (Adelphia), Term Loan B, 6.00%, 9/30/10 ................... 2,000,000 1,775,750
PanAmSat Corp., Term Loan B, 4.60%, 12/31/08 ..................................... 6,800,000 6,841,895
Pegasus Media & Communications, Term Loan B, 4.625%, 4/30/05 ..................... 12,588,168 12,257,729
Satelites Mexicanos, Term Loan C, 144A, 5.614%, 6/30/04 .......................... 8,522,000 7,541,970
UCA-HHC (Adelphia), Term Loan B, 5.25%, 3/31/08 .................................. 20,935,000 17,145,765
UPC Distribution Holdings BV, Term Loan C2, 6.61%, 3/31/09 ....................... 11,500,000 10,242,188
Videotron Itee, Term Loan B, 4.03%, 12/01/09 ....................................... 7,272,062 7,223,579
---------------
120,989,278
---------------
CASINOS/GAMING 1.9%
Ameristar Casinos Inc., Term Loan B, 3.875%, 12/20/06 ............................ 3,352,600 3,372,297
Greektown Casinos LLC,
Term Loan B, 4.875 - 5.063%, 11/16/04 ......................................... 3,184,898 3,196,842
Term Loan C, 4.875%, 11/16/04 ................................................. 1,488,658 1,490,519
Isle of Capri, Term Loan B, 3.758 - 3.77%, 4/26/08 ............................... 987,500 991,974
Isle of Capri Black Hawk, Term Loan C, 5.00 - 5.32%, 4/15/06 ..................... 997,460 1,000,890
Marina District Finance Co. Inc., Term Loan B, 5.10 - 5.27%, 12/31/07 ............ 3,000,000 3,011,250
Penn National Gaming Inc., Term Loan B, 5.00 - 5.28%, 3/03/09 .................... 3,987,500 4,003,450
Scientific Games Corp., Term Loan B, 4.60%, 12/10/08 ............................. 4,975,000 4,993,656
---------------
22,060,878
---------------
CATALOG/SPECIALTY DISTRIBUTION .2%
Affinity Group Inc.,
Term Loan B1, 5.13 - 7.00%, 5/21/09 ........................................... 285,000 286,336
Term Loan B2, 5.10 - 5.164%, 5/21/09 .......................................... 712,500 715,840
Oriental Trading Co. Inc., Term Loan B, 5.75%, 7/29/10 ........................... 1,000,000 1,006,250
---------------
2,008,426
---------------
CHEMICALS: SPECIALTY 1.3%
Arteva B.V. (Kosa), Term Loan B, 4.35%, 12/31/06 ................................. 3,674,581 3,669,069
FMC Corp., Term Loan B, 5.85%, 10/21/07 .......................................... 4,975,000 5,042,163
Ineos Group Ltd., Term Loan C, 4.771%, 6/30/09 ................................... 2,328,487 2,337,219
Noveon Inc., Term Loan B, 3.938%, 12/31/09 ....................................... 1,000,000 1,011,563
Rockwood Specialties Group Inc., Term Loan B, 4.61%, 7/23/10 ..................... 1,000,000 1,012,500
Sovereign Specialty Chemicals Inc., Term Loan B, 5.625%, 12/31/07 ................ 995,000 962,663
Westlake Chemical Corp., Term Loan B, 4.88 - 4.97%, 7/31/10 ...................... 1,000,000 1,011,250
---------------
15,046,427
---------------

12 | Annual Report

FRANKLIN FLOATING RATE TRUST

STATEMENT OF INVESTMENTS, JULY 31, 2003 (CONTINUED)

b SENIOR FLOATING RATE INTERESTS (CONT.)
COAL 1.4%
Massey Energy Co., Term Loan, 4.61%, 1/01/07 ..................................... $10,000,000 $ 9,993,750
Peabody Energy Corp., Term Loan B, 3.60 - 3.76%, 3/21/10 ......................... 5,985,000 6,044,850
---------------
16,038,600
---------------
COMMERCIAL PRINTING/FORMS 3.2%
American Reprographics, Term Loan B, 5.15%, 4/10/08 .............................. 15,964,260 15,630,017
Moore Holdings USA Inc., Term Loan B, 4.25 - 4.313%, 3/14/10 ..................... 5,000,000 5,016,405
Vertis Inc., Bridge Term Loan, 13.50%, 12/09/09 .................................. 16,305,556 16,142,500
---------------
36,788,922
---------------
CONSUMER SUNDRIES .5%
Central Garden & Pet Co., Term Loan, 3.851 - 4.04%, 5/14/09 ...................... 2,000,000 2,013,126
NBTY Inc., Term Loan B, 3.60%, 7/22/09 ........................................... 1,000,000 1,011,250
Playtex Products Inc., Term Loan C, 4.60 - 4.616%, 5/31/09 ....................... 1,485,000 1,486,083
United Industries Corp., Term Loan B, 5.10%, 1/20/06 ............................. 774,599 776,052
---------------
5,286,511
---------------

CONTAINERS/PACKAGING 3.2%
ACI Operations Property Ltd., Term Loan, 4.39%, 4/01/07 .......................... 1,000,000 997,031
Berry Plastics, Term Loan, 4.29%, 7/22/10 ........................................ 987,519 994,431
Constar International Inc., Term Loan B, 6.50%, 11/20/09 ......................... 4,962,500 4,945,960
Crown Cork & Seal Co. Inc., Term Loan B, 4.10%, 9/15/08 .......................... 3,000,000 3,014,064
Graham Packaging Co., Term Loan B, 5.00 - 5.063%, 2/20/10 ........................ 8,000,000 8,002,000
Greif Brothers Corp., Term Loan B, 3.36%, 8/15/09 ................................ 990,000 992,723
Impress Metal, Term Loan G, 4.352%, 12/31/06 ..................................... 827,138 825,070
Owens-Brockway Glass Container Inc., Term Loan B, 4.36%, 4/01/08 ................. 6,000,000 6,022,500
Stone Container Corp.,
Term Loan B, 3.625%, 7/25/09 .................................................. 5,771,370 5,800,949
Term Loan C, 3.625%, 7/25/09 .................................................. 977,862 982,873
Tekni-Plex Inc., Term Loan B, 4.625%, 6/21/08 .................................... 4,850,000 4,781,799
---------------
37,359,400
---------------
DRUG STORE CHAINS .9%
Rite Aid Corp., Term Loan, 4.60 - 4.61%, 5/22/08 ................................. 10,000,000 10,082,500
---------------
ELECTRIC UTILITIES 3.5%
AES Corp., Term Loan B, 5.13 - 5.32%, 4/30/08 .................................... 6,000,000 5,968,752
Calpine Corp., Term Loan, 8.75%, 7/15/07 ......................................... 13,000,000 12,215,359
Consumers Energy Co.,
Term Loan, 5.839%, 7/11/04 .................................................... 1,000,000 1,006,875
Term Loan, 5.61%, 3/31/06 ..................................................... 1,000,000 1,006,875
Michigan Electric Transmission Co. LLC, Term Loan, 3.60%, 5/01/07 ................ 985,038 988,936
Mission Energy Holding,
Term Loan A, 8.625%, 6/30/06 .................................................. 259,740 140,260
Term Loan B, 8.625%, 6/30/06 .................................................. 740,260 399,740
Pike Electric Inc., Term Loan, 4.375%, 4/17/10 ................................... 2,373,065 2,390,123
Southern California Edison Co., Term Loan B, 4.375%, 3/01/05 ..................... 15,000,000 15,060,945
Westar Energy Inc., Term Loan, 4.12%, 6/05/05 .................................... 1,986,336 1,996,268
---------------
41,174,133
---------------

Annual Report | 13

FRANKLIN FLOATING RATE TRUST

STATEMENT OF INVESTMENTS, JULY 31, 2003 (CONTINUED)

b SENIOR FLOATING RATE INTERESTS (CONT.)
ELECTRICAL PRODUCTS .2%
Rayovac Corp., Term Loan B, 4.85 - 5.04%, 10/01/09 ............................... $ 2,670,000 $ 2,675,562
---------------
ELECTRONIC COMPONENTS .5%
Amkor Technology Inc., Term Loan, 5.10%, 1/31/06 ................................. 2,493,750 2,528,820
Seagate Technology HDD Holdings, Term Loan B, 3.125%, 5/13/07 .................... 2,121,471 2,132,078
Seagate Technology (US) Holdings, Term Loan B, 3.125%, 5/13/07 ................... 848,529 852,772
---------------
5,513,670
---------------
ELECTRONIC EQUIPMENT/INSTRUMENTS .6%
Neptune Technology Group Inc., Term Loan B, 5.58%, 3/31/10 ....................... 6,815,789 6,892,467
---------------
ELECTRONICS/APPLIANCES .6%
Alliance Laundry Systems LLC, Term Loan, 4.74 - 4.81%, 7/31/09 ................... 4,481,865 4,462,257
Interline Brands, Term Loan B, 5.60%, 9/30/09 .................................... 3,000,000 3,011,250
---------------
7,473,507
---------------

ENGINEERING & CONSTRUCTION .8%
Brand Services Inc., Term Loan B, 5.10%, 10/16/09 ................................ 995,000 1,000,182
URS Corp., Term Loan B, 4.85%, 8/22/08 ........................................... 3,363,119 3,358,915
Washington Group International (Morrison Knudsen),
Synthetic Term Loan, 1.014%, 7/23/04 ............................................. 4,500,000 4,488,750
---------------
8,847,847
---------------
ENVIRONMENTAL SERVICES 1.3%
Allied Waste North America Inc.,
Term Loan, 4.37%, 1/15/10 ..................................................... 2,142,857 2,162,724
Term Loan B, 4.37 - 4.56%, 1/15/10 ............................................ 10,357,143 10,457,731
Casella Waste Systems Inc., Term Loan B, 4.375 - 4.563%, 1/24/09 ................. 1,000,000 1,005,375
Mactec Inc., Term Loan B, 6.75%, 2/22/08 ......................................... 1,897,222 1,328,056
---------------
14,953,886
---------------
FINANCIAL CONGLOMERATES .4%
e Ares IV, Term Loan D, 144A, 7.29%, 12/22/12 ...................................... 1,400,000 739,760
e Centurion II, Tranche D, 144A, 7.349%, 11/12/12 .................................. 2,500,000 1,200,000
e Clydesdale CLO, Tranche D, 144A, 7.829%, 3/22/13 ................................. 2,000,000 1,724,400
e First Dominion Funding II, sub. floating rate deb.,
Series A-D, 144A, 6.97%, 4/25/14 ................................................. 3,000,000 897,300
---------------
4,561,460
---------------
FOOD DISTRIBUTORS .2%
Fleming Cos. Inc., Term Loan, 4.375%, 6/18/08 .................................... 2,527,950 2,388,913
---------------
FOOD RETAIL .1%
Pathmark Stores Inc., Term Loan B2, 5.625%, 6/30/07 .............................. 915,543 914,970
---------------
FOOD: MAJOR DIVERSIFIED 1.3%
Birds Eye Foods Inc., Term Loan B, 3.85%, 8/08/08 ................................ 7,940,000 7,966,464
Del Monte Corp., Term Loan B, 4.85 - 4.86%, 12/20/10 ............................. 926,425 934,299
Dole Food Inc., Term Loan B, 4.938 - 6.75%, 3/28/08 .............................. 3,408,696 3,440,652
International Multifoods Corp., Term Loan B, 4.07 - 6.00%, 2/28/08 ............... 1,320,206 1,327,529
Merisant Corp., Term Loan B, 3.86%, 1/09/10 ...................................... 1,000,000 1,007,500
---------------
14,676,444
---------------

14 | Annual Report

FRANKLIN FLOATING RATE TRUST

STATEMENT OF INVESTMENTS, JULY 31, 2003 (CONTINUED)

b SENIOR FLOATING RATE INTERESTS (CONT.)
FOOD: MEAT/FISH/DAIRY .5%
American Seafoods, Term Loan B, 4.35%, 4/15/09 ................................... $ 1,322,304 $ 1,324,783
Suiza Foods Corp., Term Loan B, 3.35%, 12/21/08 .................................. 2,947,028 2,962,529
Swift & Co., Term Loan B, 4.35%, 9/19/08 ......................................... 992,500 994,981
---------------
5,282,293
---------------
FOOD: SPECIALTY/CANDY .6%
Nellson Neutraceuticals Inc., Term Loan, 4.11%, 10/04/09 ......................... 1,500,000 1,513,125
Nutrasweet,
Second Lien Term Loan, 7.313%, 5/24/09 ........................................ 2,913,000 2,665,395
Term Loan B, 4.688%, 5/24/07 .................................................. 640,340 635,137
Otis Spunkmeyer Inc., Term Loan B, 5.35%, 2/20/09 ................................ 1,930,165 1,932,979
Reddy Ice Group Inc., Term Loan, 4.11%, 7/31/09 .................................. 1,000,000 1,011,875
---------------
7,758,511
---------------

HOME FURNISHINGS .4%
Aero Products International, Term Loan, 5.77 - 7.50%, 12/16/08 ................... 1,931,456 1,907,918
National Bedding Co., Term Loan B, 4.99 - 5.08%, 8/21/08 ......................... 939,857 943,528
Springs Industries Inc., Term Loan B, 5.125%, 9/05/08 ............................ 2,000,000 2,005,000
---------------
4,856,446
---------------
HOSPITAL/NURSING MANAGEMENT 1.6%
Community Health Systems Inc., Term Loan, 3.62%, 1/16/11 ......................... 1,000,000 1,003,750
Genesis Health Ventures Inc., Term Loan B, 4.60%, 3/30/07 ........................ 5,010,258 5,011,826
Iasis Healthcare Corp., Term Loan B, 5.36 - 5.364%, 2/07/09 ...................... 9,250,000 9,319,375
Triad Hospitals Inc., Term Loan B, 4.10%, 9/30/08 ................................ 980,909 988,322
Vanguard Health Systems Inc., Term Loan B, 5.36%, 1/03/10 ........................ 1,990,000 1,999,950
---------------
18,323,223
---------------
HOTEL/RESORTS/CRUISELINES .9%
Extended Stay America Inc., Term Loan B, 4.85%, 7/01/07 .......................... 8,504,437 8,561,382
Wyndham International Inc., Term Loan B, 5.875%, 6/30/04 ......................... 2,512,080 2,124,278
---------------
10,685,660
---------------
INDUSTRIAL CONGLOMERATES .8%
Walter Industries Inc., Term Loan B, 5.35 - 5.518%, 4/14/10 ...................... 8,775,000 8,775,000
---------------
INDUSTRIAL MACHINERY 1.0%
Colfax Corp.,
Term Loan B, 3.125 - 4.875%, 5/30/09 .......................................... 5,000,000 4,987,500
Term Loan C, 7.375%, 5/30/10 .................................................. 1,000,000 995,000
Flowserve Corp., Term Loan C, 3.875 - 4.00%, 6/30/09 ............................. 1,430,452 1,438,371
Gleason Corp., Term Loan B, 4.938 - 5.125%, 2/18/08 .............................. 4,177,291 4,156,405
---------------
11,577,276
---------------
INDUSTRIAL SPECIALTIES .4%
SC Johnson Commercial Markets, Term Loan B, 4.80%, 11/03/09 ...................... 4,791,470 4,814,570
---------------

Annual Report | 15

FRANKLIN FLOATING RATE TRUST

STATEMENT OF INVESTMENTS, JULY 31, 2003 (CONTINUED)

b SENIOR FLOATING RATE INTERESTS (CONT.)
INFORMATION TECHNOLOGY SERVICES .3%
Worldspan, Term Loan, 4.875%, 6/30/07 ............................................ $ 1,000,000 $ 1,006,875
Xerox Corp., Term Loan, 3.35%, 9/30/08 ........................................... 2,000,000 1,985,000
---------------
2,991,875
---------------

MAJOR TELECOMMUNICATIONS 1.7%
Alec Holdings Inc.,
Term Loan B, 4.334%, 11/04/07 ................................................. 1,940,274 1,938,658
Term Loan C, 4.579%, 5/14/08 .................................................. 1,746,246 1,744,792
c E.Spire Communications, Term Loan C, 8.00%, 8/01/06 .............................. 16,877,867 --
GCI Holdings Inc., Term Loan, 7.578%, 10/30/04 ................................... 2,000,000 2,012,500
Qwest Corp., Term Loan, 6.50%, 6/30/07 ........................................... 3,000,000 3,024,750
c WCI Capital Corp., Term Loan B, 9.50%, 3/31/07 ................................... 30,500,000 --
c Winstar Communications Inc., DIP, 7.00%, 12/30/03 ................................ 5,035,549 708,502
d Worldcom Inc., DIP, 3.50%, 7/23/04 ............................................... 10,000,000 10,000,000
---------------
19,429,202
---------------
MANAGED HEALTH CARE .3%
Oxford Health Plans Inc., Term Loan B, 4.07 - 5.75%, 4/25/09 ..................... 2,992,500 3,005,592
Pacificare Health Systems Inc., Term Loan, 4.61%, 6/03/08 ........................ 1,000,000 1,006,875
---------------
4,012,467
---------------
MARINE SHIPPING 1.0%
Great Lakes Transportation LLC, Term Loan, 5.063 - 5.125%, 3/23/08 ............... 6,475,679 6,491,869
Horizon Lines LLC, Term Loan, 5.03 - 5.33%, 2/27/09 .............................. 2,995,714 3,006,481
Ingram Industries Inc., Term Loan B, 4.00 - 4.29%, 7/02/08 ....................... 1,675,189 1,684,264
United States Shipping LLC, Term Loan, 4.35 - 4.52%, 9/16/08 ..................... 870,192 872,731
---------------
12,055,345
---------------
MEDIA CONGLOMERATES 1.2%
Bridge Information Systems Inc.,
c Multi Draw Term Loan, 6.75%, 5/29/05 ......................................... 477,598 52,536
c Revolver, 6.50%, 7/07/05 ..................................................... 8,527 938
c Term Loan A, 6.75%, 5/29/05 .................................................. 473,663 52,103
c Term Loan B, 6.00%, 5/29/05 .................................................. 14,382,362 1,582,060
Canwest Media Inc.,
Term Loan B, 4.79%, 5/15/08 ................................................... 7,306,133 7,368,235
Term Loan C, 5.04%, 5/15/09 ................................................... 4,565,249 4,604,054
---------------
13,659,926
---------------
MEDICAL SPECIALTIES .9%
Alaris Medical Inc., Term Loan, 3.85 - 3.87%, 6/30/09 ............................ 1,918,367 1,938,750
Conmed Corp., Term Loan, 3.86 - 4.09%, 12/15/09 .................................. 1,000,000 1,008,750
Fisher Scientific International Inc., Term Loan B, 3.60%, 3/31/10 ................ 1,995,000 2,006,970
Fresenius Medical Care, Term Loan B, 3.603 - 3.779%, 2/21/10 ..................... 997,500 1,005,605
Medex Inc., Term Loan B, 4.85%, 5/21/09 .......................................... 1,000,000 1,006,667
PerkinElmer Inc., Term Loan B, 5.10%, 12/26/08 ................................... 3,610,000 3,651,742
---------------
10,618,484
---------------

16 | Annual Report

FRANKLIN FLOATING RATE TRUST

STATEMENT OF INVESTMENTS, JULY 31, 2003 (CONTINUED)

b SENIOR FLOATING RATE INTERESTS (CONT.)
MEDICAL/NURSING SERVICES 2.2%
Alliance Imaging Inc., Term Loan C, 3.438 - 3.75%, 11/30/08 ...................... $ 1,321,684 $ 1,291,286
Ameripath Inc., Term Loan B, 5.60%, 3/27/10 ...................................... 2,992,500 3,011,203
Cross Country Healthcare Inc., Term Loan, 4.364%, 6/05/09 ........................ 1,000,000 1,012,500
DaVita Inc., Term Loan B, 3.603 - 3.66%, 3/31/09 ................................. 7,000,000 7,037,191
d Insight Health Services, Delayed Draw, 2.50 - 6.75%, 10/17/08 .................... 9,000,000 9,033,750
Team Health Inc., Term Loan B, 4.531%, 10/31/08 .................................. 4,759,491 4,707,436
---------------
26,093,366
---------------
MILITARY/GOVERNMENT/TECHNICAL .6%
DRS Technologies Inc., Term Loan, 4.10 - 4.34%, 9/28/08 .......................... 2,456,316 2,477,809
U.S. Investigations Services Inc., Term Loan, 5.07 - 5.26%, 1/02/08 .............. 4,326,470 4,341,345
---------------
6,819,154
---------------
MISCELLANEOUS COMMERCIAL SERVICES 2.9%
Burhmann N.V., Term Loan B, 5.30%, 10/26/07 ...................................... 12,587,207 12,522,697
Century Maintenance Supply Inc., Term Loan B, 5.75%, 5/07/10 ..................... 8,000,000 8,120,000
Corrections Corp. of America, Term Loan B, 4.60 - 4.78%, 3/31/08 ................. 10,820,694 10,886,635
Global Imaging Systems Inc., Term Loan, 4.03 - 4.10%, 6/20/09 .................... 1,000,000 1,012,500
Wackenhut Corrections Corp., Term Loan B, 4.10 - 4.12%, 7/10/09 .................. 1,000,000 1,005,000
---------------
33,546,832
---------------
MISCELLANEOUS MANUFACTURING 1.3%
General Cable Corp., Term Loan B, 6.10 - 6.125%, 5/27/07 ......................... 191,773 175,472
Mueller Group, Term Loan E, 3.85 - 4.03%, 5/31/08 ................................ 7,910,075 7,915,723
Norcross Safety Products, Term Loan, 5.53%, 3/01/09 .............................. 997,500 1,000,929
Rexnord Corp., Term Loan, 5.13 - 5.14%, 11/18/09 ................................. 1,944,444 1,963,078
Sanmina-Sci Corp., Term Loan B, 5.30%, 12/12/07 .................................. 1,990,000 2,011,974
Trimas Corp., Term Loan B, 4.50 - 6.25%, 12/06/09 ................................ 2,495,318 2,501,120
---------------
15,568,296
---------------
MOVIES/ENTERTAINMENT 6.3%
d AMC Entertainment Inc., Revolver, .50 - 1.50%, 4/10/04 ........................... 3,500,000 3,456,250
Carmike Cinemas Inc., Term Loan, 7.75%, 1/31/07 .................................. 1,716,995 1,727,369
CH Operating LLC, Term Loan B, 5.625%, 6/21/07 ................................... 3,810,345 3,807,963
Cinemark USA Inc., Term Loan, 3.78 - 4.13%, 3/31/08 .............................. 1,995,000 2,010,587
Fitness Holdings Worldwide,
Term Loan B, 5.875%, 11/02/06 ................................................. 3,418,018 3,394,520
Term Loan C, 6.125%, 11/02/07 ................................................. 8,110,056 8,054,300
Hollywood Entertainment Corp., Term Loan, 4.60%, 3/31/08 ......................... 2,475,000 2,487,375
Loews Cineplex Entertainment Corp., Term Loan A, 4.688%, 2/28/08 ................. 13,525,430 13,491,616
Metro-Goldwyn-Mayer Inc.,
Term Loan A, 3.85%, 6/30/07 ................................................... 8,000,000 8,012,504
Term Loan B, 4.10%, 6/30/08 ................................................... 4,000,000 4,006,252
Mets II LLC, Term Loan, 4.35%, 8/23/05 ........................................... 3,000,000 2,996,250
New Jersey Basketball LLC, Term Loan, 4.10%, 12/06/03 ............................ 3,000,000 3,000,000
Rainbow Media AMC/IFC/WE, Term Loan, 4.56%, 3/31/09 .............................. 600,000 602,063
Rainbow Media Holdings Inc., Term Loan, 4.56%, 3/31/09 ........................... 2,400,000 2,408,251

Annual Report | 17

FRANKLIN FLOATING RATE TRUST

STATEMENT OF INVESTMENTS, JULY 31, 2003 (CONTINUED)

b SENIOR FLOATING RATE INTERESTS (CONT.)
MOVIES/ENTERTAINMENT (CONT.)
Regal Cinemas Inc.,
Term Loan C, 3.875%, 12/31/07 ................................................. $ 925,000 $ 936,563
Term Loan D, 3.625%, 6/30/09 .................................................. 1,000,000 1,011,250
Vivendi Universal Entertainment, Term Loan, 3.85 - 3.86%, 6/24/08 ................ 9,000,000 9,057,654
Washington Football Group, Term Loan A, 3.834%, 10/07/07 ......................... 2,500,000 2,514,063
---------------
72,974,830
---------------
OIL & GAS PIPELINES .3%
WEG Acquisitions LP, Term Loan, 5.60 - 5.61%, 6/17/08 ............................ 2,000,000 2,020,000
Williams Energy Partners LP, Term Loan B, 5.375%, 8/05/08 ........................ 1,000,000 1,005,000
---------------
3,025,000
---------------
OIL & GAS PRODUCTION .4%
Williams Production RMT Co., Term Loan, 4.90%, 5/30/07 ........................... 5,000,000 5,037,500
---------------
OIL REFINING/MARKETING .9%
Citgo Petroleum Corp., Term Loan, 8.25%, 2/27/06 ................................. 5,000,000 5,162,500
Pacific Energy Group LLC, Term Loan B, 3.86 - 4.066%, 7/26/09 .................... 3,000,000 3,022,500
Tesoro Petroleum Corp.,
Term Loan, 4.36 - 5.50%, 4/17/07 .............................................. 831,250 838,523
Term Loan (ABL), 6.53 - 6.606%, 4/15/08 ....................................... 997,500 1,004,625
---------------
10,028,148
---------------

OTHER CONSUMER SPECIALTIES .2%
Central Parking Corp., Term Loan B, 4.60%, 3/03/09 ............................... 997,500 996,461
Jostens Inc., Term Loan, 3.60%, 7/28/10 .......................................... 1,000,000 1,009,375
---------------
2,005,836
---------------
OTHER TRANSPORTATION 1.9%
Eurotunnel Finance Ltd., Tier 1 Jr Debt, 7.03%, 7/01/25 (United Kingdom) ......... 6,167,225 GBP 8,723,932
Laidlaw International Inc., Term Loan, 7.00%, 6/17/09 ............................ 9,900,000 9,974,250
Pacer International Inc., Term Loan, 4.375 - 6.25%, 6/06/10 ...................... 949,020 957,324
Transcore Holdings Inc., Term Loan B, 4.85 - 6.25%, 10/31/06 ..................... 1,904,968 1,912,112
---------------
21,567,618
---------------
PERSONNEL SERVICES .1%
Spectaguard Acquisition LLC, Term Loan, 7.50%, 4/25/10 ........................... 986,184 961,530
---------------
PHARMACEUTICALS: GENERIC .1%
Alpharma Operating Corp., Term Loan B, 4.35 - 4.60%, 10/05/08 .................... 1,137,092 1,140,408
---------------
PROPERTY-CASUALTY INSURANCE .3%
Infinity Property & Casualty Corp., Term Loan, 3.60%, 7/17/10 .................... 3,000,000 3,024,375
---------------
PUBLISHING: BOOKS/MAGAZINES 2.3%
Advanstar Communications,
Term Loan A, 4.85%, 4/11/07 ................................................... 2,648,543 2,631,989
Term Loan B, 5.60%, 10/11/07 .................................................. 2,000,000 1,987,500
American Media Inc., Term Loan C, 3.85 - 4.125%, 4/01/07 ......................... 971,479 976,943
BAI Finance LP, Term Loan C, 5.35%, 11/28/09 ..................................... 2,725,486 2,751,719
CBD Media LLC, Term Loan, 4.37 - 4.38%, 12/31/09 ................................. 1,000,000 1,010,000
F&W Publications Inc., Term Loan B, 5.05%, 12/31/09 .............................. 1,950,000 1,950,000
Primedia Inc., Term Loan B, 3.875 - 4.125%, 6/30/09 .............................. 1,493,371 1,458,371

18 | Annual Report

FRANKLIN FLOATING RATE TRUST

STATEMENT OF INVESTMENTS, JULY 31, 2003 (CONTINUED)

b SENIOR FLOATING RATE INTERESTS (CONT.)
PUBLISHING: BOOKS/MAGAZINES (CONT.)
R.H. Donnelley Corp., Term Loan B, 5.10 - 5.28%, 6/30/10 ......................... $ 4,975,000 $ 5,075,883
Readers Digest Association Inc.,
Term Loan A, 3.83 - 4.10%, 5/20/07 ............................................ 3,643,196 3,602,210
Term Loan B, 4.01 - 4.10%, 5/20/08 ............................................ 447,897 444,298
Weekly Reader, Term Loan B, 5.29 - 7.00%, 11/08/06 ............................... 4,703,636 4,609,563
---------------
26,498,476
---------------
PUBLISHING: NEWSPAPERS .1%
First DT Holdings Ltd. (Hollinger), Term Loan B, 4.625%, 9/30/09 ................. 1,488,750 1,509,220
---------------
PULP & PAPER 1.9%
Alabama Pine & Pulp,
c PIK Term Loan B, 5.10%, 6/30/05 ............................................... 3,894,619 38,946
c PIK Term Loan C, 10.75%, 6/30/05 .............................................. 6,584,854 65,849
Revolver, 10.10%, 9/30/03 ..................................................... 5,000,000 3,796,500
c Term Loan A, 5.10%, 9/30/03 ................................................... 37,105,162 16,326,271
MDCP Acquisitions I,
Term Loan B, 3.86%, 9/12/10 ................................................... 1,000,000 1,001,875
Term Loan C, 4.36%, 9/12/11 ................................................... 1,000,000 1,001,875
---------------
22,231,316
---------------
RAILROADS .9%
DM&E Railroad, Term Loan, 8.00%, 6/30/08 ......................................... 2,940,000 2,969,400
Helm Holding Corp., Term Loan B, 4.86 - 5.089%, 10/18/06 ......................... 2,856,503 2,663,689
RailAmerica Transportation Corp., Term Loan B, 3.813%, 5/21/09 ................... 1,960,000 1,966,125
Trinity Industries Inc., Term Loan, 4.375 - 4.563%, 6/07/07 ...................... 2,970,000 2,981,138
---------------
10,580,352
---------------
REAL ESTATE INVESTMENT TRUSTS .4%
Macerich Partnership LP, Term Loan B, 4.09%, 7/09/09 ............................. 374,364 375,768
Newkirk Master LP, Term Loan, 8.50%, 1/30/05 ..................................... 4,212,759 4,239,089
---------------
4,614,857
---------------
RECREATIONAL PRODUCTS .1%
PlayPower Inc., Term Loan, 5.53%, 2/07/10 ........................................ 975,000 973,781
---------------
RENTAL/LEASING COMPANIES .5%
United Rentals Inc., Term Loan B, 4.13%, 9/30/07 ................................. 6,336,504 6,372,641
---------------
RESTAURANTS .4%
Dominos Inc., Term Loan, 4.125%, 6/25/10 ......................................... 2,852,459 2,882,766
Jack in the Box Inc., Term Loan B, 4.35 - 4.52%, 7/24/07 ......................... 995,000 1,006,194
O'Charleys Inc., Term Loan B, 5.10%, 1/15/09 ..................................... 975,000 983,531
---------------
4,872,491
---------------
SEMICONDUCTORS .3%
Fairchild Semiconductor Corp., Term Loan, 3.938%, 6/19/08 ........................ 3,000,000 3,022,500
---------------
SERVICES TO THE HEALTH INDUSTRY .3%
NDC Health Corp., Term Loan B, 6.00%, 11/30/08 ................................... 4,000,000 4,000,000
---------------

Annual Report | 19

FRANKLIN FLOATING RATE TRUST

STATEMENT OF INVESTMENTS, JULY 31, 2003 (CONTINUED)

b SENIOR FLOATING RATE INTERESTS (CONT.)
SPECIALTY STORES .5%
CSK Auto Inc., Term Loan B, 3.87%, 2/15/06 ....................................... $ 1,000,000 $ 1,010,250
Doane Pet Care Co.,
Term Loan B, 6.03%, 12/31/05 .................................................. 172,586 172,910
Term Loan C, 6.07%, 12/31/06 .................................................. 88,351 88,609
Pantry Inc., Term Loan, 6.00%, 4/11/07 ........................................... 1,980,237 2,009,941
PETCO Animal Supplies Inc., Term Loan C, 4.24 - 6.00%, 10/02/08 .................. 2,968,992 2,983,837
---------------
6,265,547
---------------
SPECIALTY TELECOMMUNICATIONS .5%
c Global Crossing Holdings Ltd., Term Loan B, 8.00%, 8/15/06 ....................... 2,477,298 534,388
McLeod USA Inc., Term Loan B, 5.47%, 5/31/08 ..................................... 6,394,639 3,042,780
c Pacific Crossing Ltd., Term Loan B, 5.25%, 7/28/06 ............................... 21,312,525 1,065,626
RCN Corp., Term Loan B, 7.00%, 6/03/07 ........................................... 1,176,145 1,063,431
---------------
5,706,225
---------------
STEEL 1.6%
International Steel Group,
Term Loan A, 4.37%, 5/05/05 ................................................... 4,224,000 4,224,000
Term Loan B, 4.62%, 5/05/07 ................................................... 9,276,000 9,281,798
LTV Corp., Term Loan, 5.725%, 10/31/04 ........................................... 9,376,333 4,594,403
---------------
18,100,201
---------------
TOBACCO .2%
Commonwealth Brands Inc., Term Loan, 5.188%, 8/22/07 ............................. 2,860,833 2,864,409
---------------
TOOLS/HARDWARE .1%
Werner Holding Co., Term Loan, 3.86%, 6/06/09 .................................... 1,000,000 1,013,333
---------------
TRUCKING .1%
Flexi-Van Leasing Inc., Term Loan B, 4.21 - 4.31%, 9/20/07 ....................... 992,500 995,602
---------------
WHOLESALE DISTRIBUTORS .3%
Amscan Holdings Inc., Term Loan, 6.50 - 7.50%, 6/20/07 ........................... 995,000 999,975
National Waterworks Inc., Term Loan B, 6.50%, 11/27/09 ........................... 1,960,000 1,980,825
---------------
2,980,800
---------------
WIRELESS COMMUNICATIONS 2.3%
c Cricket Communications Inc., Term Loan, 6.375%, 6/30/07 .......................... 10,000,000 3,875,000
Nextel Communications Inc., Term Loan D, 4.313%, 3/31/09 ......................... 4,975,000 4,959,931
Nextel Operations Inc., Leveraged Lease II, 4.54%, 2/08/07 ....................... 9,805,755 9,119,352
Nextel Partners Inc., Term Loan C, 5.39 - 5.46%, 7/29/08 ......................... 5,000,000 4,969,790
Spectrasite Communications Inc., Term Loan, 3.92 - 4.02%, 6/30/07 ................ 2,000,000 1,988,000
Sygnet Wireless Inc., Term Loan C, 5.01%, 12/23/07 ............................... 1,636,722 1,595,804
---------------
26,507,877
---------------

TOTAL SENIOR FLOATING RATE INTERESTS (COST $1,162,370,471) ....................... 1,053,090,948
---------------

20 | Annual Report

FRANKLIN FLOATING RATE TRUST

STATEMENT OF INVESTMENTS, JULY 31, 2003 (CONTINUED)

-----------------------------------------------------------------------------------------------------------------------------
SHARES VALUE
-----------------------------------------------------------------------------------------------------------------------------

COMMON STOCKS AND WARRANTS 1.6%
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 --
---------------
WIRELESS COMMUNICATIONS 1.6%
f,g Arch Wireless Inc. ............................................................... 1,908,741 18,133,040
f Teligent Inc. .................................................................... 460 --
---------------
18,133,040
---------------

TOTAL COMMON STOCKS AND WARRANTS (COST $30,487,104) .............................. 18,133,040
---------------
CONVERTIBLE PREFERRED STOCKS (COST $1,232,448) .1%
MEDICAL/NURSING SERVICES .1%
f Genesis Health Ventures Inc., 6.00%, cvt. pfd. ................................... 12,576 1,304,750
---------------
TOTAL LONG TERM INVESTMENTS (COST $1,257,030,586) ................................ 1,098,065,009
---------------
SHORT TERM INVESTMENTS (COST $74,472,252) 6.4%
h Franklin Institutional Fiduciary Trust Money Market Portfolio .................... 74,472,252 74,472,252
---------------
TOTAL INVESTMENTS (COST $1,331,502,838) 101.0% ................................... 1,172,537,261
OTHER ASSETS, LESS LIABILITIES (1.0)% ............................................ (11,557,893)
---------------
NET ASSETS 100.0% ................................................................ $1,160,979,368
---------------

CURRENCY ABBREVIATION: | GBP - British Pounds

aThe principal amount is stated in U.S. dollars unless otherwise indicated.
bSee Note 1(d) regarding senior floating rate interests.
cThe fund discontinues accruing income on defaulted securities. See Note 9.
dSee Note 1(j) regarding unfunded loan commitments.
eSee Note 10 regarding restricted securities.
fNon-income producing
gSee Note 11 regarding Holdings of 5% Voting Securities.
hSee Note 8 regarding investments in the Franklin Fiduciary Trust Money Market
Portfolio.

Annual Report|See notes to financial statements.| 21

FRANKLIN FLOATING RATE TRUST

FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES
July 31, 2003

Assets:
Investments in securities:
Cost - Unaffiliated issuers ................................................................. $1,301,276,649
Cost - Non-controlled affiliated issuers .................................................... 30,226,189
---------------
Value - Unaffiliated issuers ................................................................ 1,154,404,221
Value - Non-controlled affiliated issuers ................................................... 18,133,040
Cash ......................................................................................... 3,831,356
Receivables:
Investment securities sold .................................................................. 21,460,702
Capital shares sold ......................................................................... 2,559,025
Interest .................................................................................... 6,284,045
Other assets ................................................................................. 55,428
---------------
Total assets ............................................................................ 1,206,727,817
---------------
Liabilities:
Payables:
Investment securities purchased ............................................................. 23,582,500
Affiliates .................................................................................. 952,506
Shareholders ................................................................................ 407,891
Distributions to shareholders ................................................................ 1,693,120
Unfunded loan commitments (Note 1) ........................................................... 18,585,000
Other liabilities ............................................................................ 527,432
---------------
Total liabilities ....................................................................... 45,748,449
Net assets, at value ................................................................... $1,160,979,368
---------------
Net assets consist of:
Undistributed net investment income .......................................................... (9,465,664)
Net unrealized appreciation (depreciation) ................................................... (158,965,681)
Accumulated net realized gain (loss) ......................................................... (282,649,498)
Capital shares ............................................................................... 1,612,060,211
---------------
Net assets, at value .................................................................... $1,160,979,368
---------------
Net asset value and maximum offering price ($1,160,979,368 / 137,805,859 shares outstanding)a . $8.42
---------------

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

22 |See notes to financial statements.|Annual Report

FRANKLIN FLOATING RATE TRUST

FINANCIAL STATEMENTS (CONTINUED)

STATEMENT OF OPERATIONS
for the year ended July 31, 2003

Investment income:
Dividends ............................................................................................... $ 2,328,874
Interest ................................................................................................ 75,106,603
-------------
Total investment income ............................................................................ 77,435,477
-------------
Expenses:
Management fees (Note 5) ................................................................................ 10,375,588
Administrative fees (Note 5) ............................................................................ 1,608,964
Transfer agent fees (Note 5) ............................................................................ 5,852,546
Custodian fees .......................................................................................... 11,096
Reports to shareholders ................................................................................. 112,715
Professional fees ....................................................................................... 345,153
Trustees' fees and expenses ............................................................................. 3,047
Amortization of organization costs ...................................................................... 4,672
Other ................................................................................................... 330,837
-------------
Total expenses ..................................................................................... 18,644,618
-------------
Net investment income ............................................................................. 58,790,859
-------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments ............................................................................................ (152,315,689)
Foreign currency transactions .......................................................................... (29,119)
-------------
Net realized gain (loss) .......................................................................... (152,344,808)
Net unrealized appreciation (depreciation) on:
Investments ............................................................................................ 167,693,350
Translation of assets and liabilities denominated in foreign currencies ................................ (98,493)
-------------
Net unrealized appreciation (depreciation) ........................................................ 167,594,857
-------------
Net realized and unrealized gain (loss) .................................................................. 15,250,049
-------------
Net increase (decrease) in net assets resulting from operations .......................................... $ 74,040,908
-------------

Annual Report|See notes to financial statements.| 23

FRANKLIN FLOATING RATE TRUST

FINANCIAL STATEMENTS (CONTINUED)

STATEMENTS OF CHANGES IN NET ASSETS
for the years ended July 31, 2003 and 2002

----------------------------------
2003 2002
----------------------------------

Increase (decrease) in net assets:
Operations:
Net investment income ................................................................. $ 58,790,859 $ 150,636,612
Net realized gain (loss) from investments and foreign currency transactions ........... (152,344,808) (116,136,805)
Net unrealized appreciation (depreciation) on investments and translation of assets and
liabilities denominated in foreign currencies ......................................... 167,594,857 (126,879,661)
----------------------------------
Net increase (decrease) in net assets resulting from operations ................... 74,040,908 (92,379,854)
Distributions to shareholders from net investment income ............................... (65,886,321) (153,197,524)
Capital share transactions (Note 2) .................................................... (627,105,648) (806,679,853)
----------------------------------
Net increase (decrease) in net assets ............................................. (618,951,061) (1,052,257,231)
Net assets:
Beginning of year ...................................................................... 1,779,930,429 2,832,187,660
----------------------------------
End of year ............................................................................ $1,160,979,368 $1,779,930,429
----------------------------------
Undistributed net investment income included in net assets:
End of year ............................................................................ $ (9,465,664) $ (3,736,760)
----------------------------------

24 |See notes to financial statements.|Annual Report

FRANKLIN FLOATING RATE TRUST

NOTES TO FINANCIAL STATEMENTS

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. 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. dollar
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.

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).

Annual Report| 25

FRANKLIN FLOATING RATE TRUST

NOTES TO FINANCIAL STATEMENTS (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. ORGANIZATION COSTS

Organization costs are amortized on a straight line basis over five years.

H. 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.

I. 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 future 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.

J. 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.

26 |Annual Report

FRANKLIN FLOATING RATE TRUST

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

2. SHARES OF BENEFICIAL INTEREST

At July 31, 2003, there were an unlimited number of shares authorized ($.01 par
value). Transactions in the Fund's shares were as follows:

---------------------------------------------------------------------
YEAR ENDED JULY 31,
2003 2002
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------------

Shares sold .................. 5,568,709 $ 45,936,820 28,062,186 $ 250,305,588
Shares issued in reinvestment
of distributions ............ 5,106,050 41,769,067 11,096,664 97,874,769
Shares redeemed .............. (87,416,170) (714,811,535) (131,170,493) (1,154,860,210)
---------------------------------------------------------------------
Net increase (decrease) ...... (76,741,411) $(627,105,648) (92,011,643) $ (806,679,853)
---------------------------------------------------------------------

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 19, 2003. 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 year ended July 31, 2003, 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.

Annual Report| 27

FRANKLIN FLOATING RATE TRUST

NOTES TO FINANCIAL STATEMENTS (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 year of
$168,735.

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 July 31, 2003, the Fund had tax basis capital losses of $201,858,439 which
may be carried over to offset future capital gains. Such losses expire as
follows:

Capital loss carryover expiring in:

2009 ................................................... $ 2,230,929
2011 ................................................... 199,627,510
------------
$201,858,439
------------

At July 31, 2003, the Fund has deferred capital losses occurring subsequent to
October 31, 2002 of $79,715,245. For tax purposes, such losses will be reflected
in the year ending July 31, 2004.

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.

The tax character of distributions paid during the years ended July 31, 2003 and
2002, was as follows:

---------------------------
2003 2002
---------------------------
Distributions paid from ordinary income .... $65,886,321 $153,197,524

28 |Annual Report

FRANKLIN FLOATING RATE TRUST

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

6. INCOME TAXES (CONTINUED)

At July 31, 2003, the cost of investments, net unrealized appreciation
(depreciation), undistributed ordinary income and undistributed long-term
capital gains for income tax purposes were as follows:

Cost of investments .................................... $1,342,189,828
--------------
Unrealized appreciation ................................ 15,007,778
Unrealized depreciation ................................ (184,660,449)
--------------
Net unrealized appreciation (depreciation) ............. $ (169,652,671)
--------------

Undistributed ordinary income .......................... $ 5,465,699
Undistributed long-term capital gains .................. --
--------------
Distributable earnings ................................. $ 5,465,699
--------------

7. INVESTMENT TRANSACTIONS

Purchases and sales of securities (excluding short-term securities) for the year
ended July 31, 2003 aggregated $675,438,404 and $1,121,148,296, respectively.

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 $2,328,874 of dividend income from investment
in the Sweep Money Fund for the year ended July 31, 2003.

9. CREDIT RISK AND DEFAULTED SECURITIES

The Fund has 92.91% 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 July 31, 2003,
the value of these securities was $35,449,665 representing 3.05% of the Fund's
net assets. For information as to specific securities, see the accompanying
Statement of Investments.

Annual Report| 29

FRANKLIN FLOATING RATE TRUST

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

10. RESTRICTED SECURITIES

At July 31, 2003, 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 July 31, 2003, 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, 7.29%, 12/22/12 ..................... 11/14/00 $1,400,000 $ 739,760
2,500,000 Centurion II, Tranche D, 144A, 7.349%, 11/12/12 ................. 11/07/00 2,500,000 1,200,000
2,000,000 Clydesdale CLO, Tranche D, 144A, 7.829%, 3/22/13 ................ 5/23/01 1,889,673 1,724,400
3,000,000 First Dominion Funding II, sub. floating rate deb., Series A-D,
144A, 6.97%, 4/25/14 ........................................... 5/03/99 2,991,559 897,300
-----------
TOTAL RESTRICTED SECURITIES (.39% OF NET ASSETS) ................ $4,561,460
-----------

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 July 31, 2003 were as shown below.

--------------------------------------------------------------------------------------------------------------
NUMBER OF NUMBER OF REALIZED
SHARES HELD SHARES CAPITAL
AT BEGINNING GROSS GROSS HELD AT VALUE AT DIVIDEND GAINS
NAME OF ISSUER OF YEAR ADDITIONS REDUCTIONS END OF YEAR END OF YEAR INCOME (LOSSES)
--------------------------------------------------------------------------------------------------------------

Arch Wireless Inc. .... 1,618,619 290,122 -- 1,908,741 $18,133,040 $-- $--
--------------------------------

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 Manager serves in one or
more of these capacities for Adelphia Communications Corp. As a result of this
involvement, the 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.

30 |Annual Report

FRANKLIN FLOATING RATE TRUST

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

13. RECENT LITIGATION

On July 6, 2003, Adelphia Communications Corp. ("Adelphia") and related parties,
along with its Official Committee of Unsecured Creditors, filed an adversary
proceeding in the Adelphia bankruptcy case in the U.S. Bankruptcy Court (SDNY)
against more than 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.

Annual Report| 31

FRANKLIN FLOATING RATE TRUST

INDEPENDENT AUDITORS' REPORT

TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF FRANKLIN FLOATING RATE TRUST

In our opinion, the accompanying statement of assets and liabilities, including
the statement of investments, and the related statements of operations, and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Franklin Floating Rate Trust
(hereafter referred to as "the Fund") at July 31, 2003, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the periods presented, in conformity with accounting principles generally
accepted in the United States of America. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included confirmation
of securities at July 31, 2003 by correspondence with the custodian and brokers,
provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

San Francisco, California
September 4, 2003

32 |Annual Report

BOARD MEMBERS AND OFFICERS

The name, age and address of the officers and board members, as well as their
affiliations, positions held with the Trust, principal occupations during the
past five years and number of portfolios overseen in the Franklin Templeton
Investments fund complex are shown below. Each board member will serve until
that person's successor is elected and qualified.

INDEPENDENT BOARD MEMBERS

---------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
LENGTH OF FUND COMPLEX OVERSEEN
NAME, AGE AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
-----------------------------------------------------------------------------------------------------------------------------

FRANK H. ABBOTT, III (82) Trustee Since 1997 113 None
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President and Director, Abbott Corporation (an investment company); and FORMERLY, Director, MotherLode Gold Mines
Consolidated (gold mining) (until 1996) and Vacu-Dry Co. (food processing) (until 1996).
-----------------------------------------------------------------------------------------------------------------------------
HARRIS J. ASHTON (71) Trustee Since 1997 140 Director, Bar-S Foods (meat packing
One Franklin Parkway company).
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director of various companies; and FORMERLY, Director, RBC Holdings, Inc. (bank holding company) (until 2002); and
President, Chief Executive Officer and Chairman of the Board, General Host Corporation (nursery and craft centers)
(until 1998).
-----------------------------------------------------------------------------------------------------------------------------
S. JOSEPH FORTUNATO (71) Trustee Since 1997 141 None
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Attorney; and FORMERLY, member of the law firm of Pitney, Hardin, Kipp & Szuch.
-----------------------------------------------------------------------------------------------------------------------------
EDITH E. HOLIDAY (51) Trustee Since 1998 90 Director, Amerada Hess Corporation
One Franklin Parkway (exploration and refining of oil
San Mateo, CA 94403-1906 and gas); Hercules Incorporated
(chemicals, fibers and resins);
Beverly Enterprises, Inc. (health
care); H.J. Heinz Company
(processed foods and allied
products); RTI International
Metals, Inc. (manufacture and
distribution of titanium); and
Canadian National Railway
(railroad).

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director or Trustee of various companies and trusts; and FORMERLY, Assistant to the President of the United States and
Secretary of the Cabinet (1990-1993); General Counsel to the United States Treasury Department (1989-1990); and Counselor to
the Secretary and Assistant Secretary for Public Affairs and Public Liaison-United States Treasury Department (1988-1989).
-----------------------------------------------------------------------------------------------------------------------------

Annual Report| 33

-----------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
LENGTH OF FUND COMPLEX OVERSEEN
NAME, AGE AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
-----------------------------------------------------------------------------------------------------------------------------

FRANK W.T. LAHAYE (74) Trustee Since 1997 113 Director, The California Center for
One Franklin Parkway Land Recycling (redevelopment).
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
General Partner, Las Olas L.P. (Asset Management); and FORMERLY, Chairman, Peregrine Venture Management Company (venture
capital).
-----------------------------------------------------------------------------------------------------------------------------
GORDON S. MACKLIN (75) Trustee Since 1997 140 Director, White Mountains Insurance
One Franklin Parkway Group, Ltd. (holding company);
San Mateo, CA 94403-1906 Martek Biosciences Corporation;
MedImmune, Inc. (biotechnology);
Overstock.com (Internet services);
and Spacehab, Inc. (aerospace
services); and FORMERLY, Director,
MCI Communication Corporation
(subsequently known as MCI
WorldCom, Inc. and WorldCom, Inc.)
(communications services)
(1988-2002).

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Deputy Chairman, White Mountains Insurance Group, Ltd. (holding company); and FORMERLY, Chairman, White River Corporation
(financial services) (1993-1998) and Hambrecht & Quist Group (investment banking) (1987-1992); and President, National
Association of Securities Dealers, Inc. (1970-1987).
-----------------------------------------------------------------------------------------------------------------------------

INTERESTED BOARD MEMBERS AND OFFICERS
-----------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
LENGTH OF FUND COMPLEX OVERSEEN
NAME, AGE AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
-----------------------------------------------------------------------------------------------------------------------------
**CHARLES B. JOHNSON (70) Trustee and Since 1997 140 None
One Franklin Parkway Chairman of
San Mateo, CA 94403-1906 the Board

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman of the Board, Chief Executive Officer, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Vice
President, Franklin Templeton Distributors, Inc.; Director, Fiduciary Trust Company International; and officer and/or
director or trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 46 of the
investment companies in Franklin Templeton Investments.
-----------------------------------------------------------------------------------------------------------------------------
**RUPERT H. JOHNSON, JR.(62) Trustee, Trustee and 123 None
One Franklin Parkway President and President since
San Mateo, CA 94403-1906 Chief Executive 1997 and Chief
Officer - Executive Officer
Investment - Investment
Management Management
since 2002

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice Chairman, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Vice President and Director, Franklin
Templeton Distributors, Inc.; Director, Franklin Advisers, Inc. and Franklin Investment Advisory Services, Inc.; Senior Vice
President, Franklin Advisory Services, LLC; and officer and/or director or trustee, as the case may be, of some of the other
subsidiaries of Franklin Resources, Inc. and of 49 of the investment companies in Franklin Templeton Investments.
-----------------------------------------------------------------------------------------------------------------------------

34 |Annual Report

MARK BOYADJIAN (39) Vice President Since April 2003 Not Applicable None
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Vice President, Templeton Worldwide, Inc.; and officer of three of the investment companies in Franklin Templeton
Investments.
-----------------------------------------------------------------------------------------------------------------------------
HARMON E. BURNS (58) Vice President Since 1997 Not Applicable None
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice Chairman, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Vice President and Director, Franklin
Templeton Distributors, Inc.; Executive Vice President, Franklin Advisers, Inc.; Director, Franklin Investment Advisory
Services, Inc.; and officer and/or director or trustee, as the case may be, of some of the other subsidiaries of Franklin
Resources, Inc. and of 49 of the investment companies in Franklin Templeton Investments.
-----------------------------------------------------------------------------------------------------------------------------
RICHARD D'ADDARIO (54) Vice President Since 2002 Not Applicable None
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Vice President and Director of Research, Franklin Advisers, Inc.; and officer of four of the investment companies in
Franklin Templeton Investments.
-----------------------------------------------------------------------------------------------------------------------------
MARTIN L. FLANAGAN (43) Vice President Since 1997 Not Applicable None
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President, Franklin Resources, Inc.; Senior Vice President and Chief Financial Officer, Franklin Mutual Advisers, LLC;
Executive Vice President, Chief Financial Officer and Director, Templeton Worldwide, Inc.; Executive Vice President and Chief
Operating Officer, Templeton Investment Counsel, LLC; President and Director, Franklin Advisers, Inc.; Executive Vice
President, Franklin Investment Advisory Services, Inc. and Franklin Templeton Investor Services, LLC; Chief Financial
Officer, Franklin Advisory Services, LLC; Chairman, Franklin Templeton Services, LLC; and officer and/or director or trustee,
as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 49 of the investment companies in
Franklin Templeton Investments.
-----------------------------------------------------------------------------------------------------------------------------
JIMMY D. GAMBILL (55) Senior Vice Since 2002 Not Applicable None
500 East Broward Blvd. President
Suite 2100 and Chief
Fort Lauderdale, FL Executive
33394-3091 Officer -
Finance and
Administration

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President, Franklin Templeton Services, LLC; Senior Vice President, Templeton Worldwide, Inc.; and officer of 51 of the
investment companies in Franklin Templeton Investments.
-----------------------------------------------------------------------------------------------------------------------------
DAVID P. GOSS (56) Vice President Since 2000 Not Applicable None
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Associate General Counsel, Franklin Resources, Inc.; officer and director of one of the subsidiaries of Franklin Resources,
Inc.; officer of 51 of the investment companies in Franklin Templeton Investments; and FORMERLY, President, Chief Executive
Officer and Director, Property Resources Equity Trust (until 1999) and Franklin Select Realty Trust (until 2000).

Annual Report| 35

BARBARA J. GREEN (55) Vice President Since 2000 Not Applicable None
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice President and Deputy General Counsel, Franklin Resources, Inc.; Senior Vice President, Templeton Worldwide, Inc.;
officer of some of the other subsidiaries of Franklin Resources, Inc. and of 51 of the investment companies in Franklin
Templeton Investments; and FORMERLY, Deputy Director, Division of Investment Management, Executive Assistant and Senior
Advisor to the Chairman, Counselor to the Chairman, Special Counsel and Attorney Fellow, U.S. Securities and Exchange
Commission (1986-1995); Attorney, Rogers & Wells (until 1986); and Judicial Clerk, U.S. District Court (District of
Massachusetts) (until 1979).
-----------------------------------------------------------------------------------------------------------------------------
CHAUNCEY F. LUFKIN (45) Vice President Since 1997 Not Applicable None
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Executive Vice President and Portfolio Manager, Franklin Advisers, Inc.; and officer of two of the investment companies in
Franklin Templeton Investments.
-----------------------------------------------------------------------------------------------------------------------------
KIMBERLEY H. MONASTERIO (39) Treasurer and Treasurer Not Applicable None
One Franklin Parkway Chief Financial since 2000
San Mateo, CA 94403-1906 Officer and Chief
Financial
Officer
since 2002

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Vice President, Franklin Templeton Services, LLC; and officer of 51 of the investment companies in Franklin Templeton
Investments.
-----------------------------------------------------------------------------------------------------------------------------
MURRAY L. SIMPSON (66) Vice President Since 2000 Not Applicable None
One Franklin Parkway and Secretary
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Executive Vice President and General Counsel, Franklin Resources, Inc.; officer and/or director, as the case may be, of some
of the subsidiaries of Franklin Resources, Inc. and of 51 of the investment companies in Franklin Templeton Investments; and
FORMERLY, Chief Executive Officer and Managing Director, Templeton Franklin Investment Services (Asia) Limited (until 2000);
and Director, Templeton Asset Management Ltd. (until 1999).
-----------------------------------------------------------------------------------------------------------------------------

*We base the number of portfolios on each separate series of the U.S. registered
investment companies within the Franklin Templeton Investments fund complex.
These portfolios have a common investment adviser or affiliated investment
advisers.
**Charles B. Johnson and Rupert H. Johnson, Jr. are considered interested
persons of the Trust under the federal securities laws due to their positions as
officers and directors and major shareholders of Franklin Resources Inc., which
is the parent company of the Trust's adviser and distributor.
Note: Charles B. Johnson and Rupert H. Johnson, Jr. are brothers.

THE SARBANES-OXLEY ACT OF 2002 AND RULES ADOPTED BY THE SECURITIES AND EXCHANGE
COMMISSION REQUIRE THE FUND TO DISCLOSE WHETHER THE FUND'S AUDIT COMMITTEE
INCLUDES AT LEAST ONE MEMBER WHO IS AN AUDIT COMMITTEE FINANCIAL EXPERT WITHIN
THE MEANING OF SUCH ACT AND RULES. THE FUND'S BOARD OF TRUSTEES HAS DETERMINED
THAT THERE IS AT LEAST ONE SUCH FINANCIAL EXPERT ON THE AUDIT COMMITTEE AND HAS
DESIGNATED FRANK W.T. LAHAYE AS ITS AUDIT COMMITTEE FINANCIAL EXPERT. THE BOARD
BELIEVES THAT MR. LAHAYE QUALIFIES AS SUCH AN EXPERT IN VIEW OF HIS EXTENSIVE
BUSINESS BACKGROUND AND EXPERIENCE, INCLUDING SERVICE AS PRESIDENT AND DIRECTOR
OF MCCORMICK SELPH ASSOCIATES FROM 1954 THROUGH 1965; DIRECTOR AND CHAIRMAN OF
TELEDYNE CANADA LTD. FROM 1966 THROUGH 1971; DIRECTOR AND CHAIRMAN OF
QUARTERDECK CORPORATION FROM 1982 THROUGH 1998; AND SERVICES AS A DIRECTOR OF
VARIOUS OTHER PUBLIC COMPANIES INCLUDING U.S. TELEPHONE INC. (1981-1984), FISHER
IMAGING INC. (1991-1998) AND DIGITAL TRANSMISSIONS SYSTEMS (1995-1999). IN
ADDITION, MR. LAHAYE SERVED FROM 1981 TO 2000 AS A DIRECTOR AND CHAIRMAN OF
PEREGRINE VENTURE MANAGEMENT CO., A VENTURE CAPITAL FIRM, AND HAS BEEN A MEMBER
AND CHAIRMAN OF THE FUND'S AUDIT COMMITTEE SINCE ITS INCEPTION. AS A RESULT OF
SUCH BACKGROUND AND EXPERIENCE, THE BOARD OF TRUSTEES BELIEVES THAT MR. LAHAYE
HAS ACQUIRED AN UNDERSTANDING OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND
FINANCIAL STATEMENTS, THE GENERAL APPLICATION OF SUCH PRINCIPLES IN CONNECTION
WITH THE ACCOUNTING ESTIMATES, ACCRUALS AND RESERVES, AND ANALYZING AND
EVALUATING FINANCIAL STATEMENTS THAT PRESENT A BREADTH AND LEVEL OF COMPLEXITY
OF ACCOUNTING ISSUES GENERALLY COMPARABLE TO THOSE OF THE FUND, AS WELL AS AN
UNDERSTANDING OF INTERNAL CONTROLS AND PROCEDURES FOR FINANCIAL REPORTING AND AN
UNDERSTANDING OF AUDIT COMMITTEE FUNCTIONS. MR. LAHAYE IS AN INDEPENDENT
DIRECTOR AS THAT TERM IS DEFINED UNDER THE RELEVANT SECURITIES AND EXCHANGE
COMMISSION RULES AND RELEASES.

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 ON-LINE AT
WWW.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.

THE STATEMENT OF ADDITIONAL INFORMATION (SAI) INCLUDES ADDITIONAL INFORMATION
ABOUT THE BOARD MEMBERS AND IS AVAILABLE, WITHOUT CHARGE, UPON REQUEST.
SHAREHOLDERS MAY CALL 1-800/DIAL BEN (1-800/342-5236) TO REQUEST THE SAI.

36 |Annual Report

LITERATURE REQUEST

For a brochure and prospectus, which contains more complete information,
including charges and expenses, 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, 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.

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 3
Franklin Small Cap Value Fund
Mutual Beacon Fund
Mutual Qualified Fund
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 Conservative Target Fund
Franklin Templeton Growth Target Fund
Franklin Templeton Moderate Target Fund
Franklin Templeton Corefolio Allocation Fund
Franklin Templeton Founding Funds Allocation 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 7
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 8
Double Tax-Free Income Fund
Federal Intermediate-Term Tax-Free Income Fund
Federal Limited-Term Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund 9
Tax-Exempt Money Fund 5,6

STATE-SPECIFIC TAX-FREE INCOME 8
Alabama
Arizona
California 10
Colorado
Connecticut
Florida 10
Georgia
Kentucky
Louisiana
Maryland
Massachusetts 9
Michigan 9
Minnesota 9
Missouri
New Jersey
New York 10
North Carolina
Ohio 9
Oregon
Pennsylvania
Tennessee
Virginia

VARIABLE INSURANCE PRODUCTS FUNDS
Franklin Templeton Variable Insurance
Products Trust 11

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. Effective June 30, 2003, the fund reopened to all new investors.
4. Upon reaching approximately $350 million in assets, the fund will 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. 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.
8. For investors subject to the alternative minimum tax, a small portion of
these dividends may be taxable. Distributions of capital gains are generally
taxable.
9. Portfolio of insured municipal securities.
10. 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).
11. The funds of the Franklin Templeton Variable Insurance Products Trust are
generally available only through insurance company variable contracts.

09/03 Not part of the annual report

[GRAPHIC OMITTED]
FRANKLIN TEMPLETON INVESTMENTS

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.

ANNUAL 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 and expenses.

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 A2003 09/03

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 10(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 IF FRANK W.T. LAHAYE AND HE IS
"INDEPENDENT" AS DEFINED UNDER THE RELEVANT SECURITIES AND EXCHANGE COMMISSION
RULES AND RELEASES.

ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.

The board of trustees of the Trust has delegated the authority to vote proxies
related to the portfolio securities held by the Fund to the Fund's manager,
Franklin Advisers, Inc., in accordance with the Proxy Voting Policies and
Procedures (Policies) adopted by the manager.

The manager has delegated its administrative duties with respect to the voting
of proxies to the Proxy Group within Franklin Templeton Companies, LLC (Proxy
Group), an affiliate and wholly owned subsidiary of Franklin Resources, Inc. All
proxies received by the Proxy Group will be voted based upon the manager's
instructions and/or policies.

To assist it in analyzing proxies, the manager subscribes to Institutional
Shareholder Services (ISS), an unaffiliated third party corporate governance
research service that provides in-depth analyses of shareholder meeting agendas,
vote recommendations, recordkeeping and vote disclosure services. Although ISS'
analyses are thoroughly reviewed and considered in making a final voting
decision, the manager does not consider recommendations from ISS or any other
third party to be determinative of the manager's ultimate decision. The manager
votes proxies solely in the interests of the Fund and its shareholders. As a
matter of policy, the officers, directors and employees of the Fund, the manager
and the Proxy Group will not be influenced by outside sources whose interests
conflict with the interests of the Fund and its shareholders. All conflicts are
resolved in the interests of the manager's clients. In situations where the
manager perceives a material conflict of interest, the manager may: disclose the
conflict to the Fund's Board of Directors; defer to the voting recommendation of
the Fund's Board of Directors, ISS or those of another independent third party
provider of proxy services; or take such other action in good faith (in
consultation with counsel) which would protect the interests of the Fund and its
shareholders.

The recommendation of management on any issue is a factor which the manager
considers in determining how proxies should be voted, but is not determinative
of the manager's ultimate decision. As a matter of practice, the votes with
respect to most issues are cast in accordance with the position of the company's
management. Each issue, however, is considered on its own merits, and the
manager will not support the position of the company's management in any
situation where it deems that the ratification of management's position would
adversely affect the investment merits of owning that company's shares.

ADVISER'S PROXY VOTING POLICIES AND PRINCIPLES

The manager has adopted general proxy voting guidelines, which are summarized
below. These guidelines are not an exhaustive list of all the issues that may
arise and the manager cannot anticipate all future situations. In all cases,
each proxy will be considered based on the relevant facts and circumstances.

BOARD OF DIRECTORS The manager supports an independent board of directors, and
prefers that key committees such as audit, nominating, and compensation
committees be comprised of independent directors. The manager will generally
vote against management efforts to classify a board and will generally support
proposals to declassify the board of directors. The manager may withhold votes
from directors who have attended less than 75% of meetings without a valid
reason. While generally in favor of separating Chairman and CEO positions, the
manager will review this issue as well as proposals to restore or provide for
cumulative voting on a case-by-case basis taking into consideration factors such
as the company's corporate governance guidelines or provisions and performance.

MANAGEMENT & DIRECTOR COMPENSATION A company's equity-based compensation plan
should be in alignment with its shareholders' long-term interests. The manager
evaluates plans on a case-by-case basis by considering several factors to
determine whether the plan is fair and reasonable, including the ISS
quantitative model utilized to assess such plans. The manager will generally
oppose plans that have the potential to be excessively dilutive, and will almost
always oppose plans that are structured to allow the repricing of underwater
options, or plans that have an automatic share replenishment "evergreen"
feature. The manager will generally support employee stock option plans in which
the purchase price is at least 85% of fair market value, and when potential
dilution is 10% or less.

Severance compensation arrangements will be reviewed on a case-by-case basis,
although the manager will generally oppose "golden parachutes" that are
considered to be excessive. The manager will normally support proposals that
require a percentage of directors' compensation to be in the form of common
stock, as it aligns their interests with those of shareholders. The manager will
review on a case-by-case basis any shareholder proposals to adopt policies on
expensing stock option plans.

ANTI-TAKEOVER MECHANISMS AND RELATED ISSUES The manager generally opposes
anti-takeover measures since they tend to reduce shareholder rights. On
occasion, the manager may vote with management when the research analyst has
concluded that the proposal is not onerous and would not harm the Fund or its
shareholders' interests. The manager generally supports proposals that require
shareholder rights' plans ("poison pills") to be subject to a shareholder vote
and will closely evaluate such plans on a case-by-case basis to determine
whether or not they warrant support. The manager will generally vote against any
proposal to issue stock that has unequal or subordinate voting rights. The
manager generally opposes any supermajority voting requirements as well as the
payment of "greenmail." The manager generally supports "fair price" provisions
and confidential voting.

CHANGES TO CAPITAL STRUCTURE The manager will review, on a case-by-case basis,
proposals by companies to increase authorized shares and the purpose for the
increase and proposals seeking preemptive rights. The manager will generally not
vote in favor of dual-class capital structures to increase the number of
authorized shares where that class of stock would have superior voting rights.
The manager will generally vote in favor of the issuance of preferred stock in
cases where the company specifies the voting, dividend, conversion and other
rights of such stock and the terms of the preferred stock issuance are deemed
reasonable.

MERGERS AND CORPORATE RESTRUCTURING Mergers and acquisitions will be subject to
careful review by the research analyst to determine whether each will be
beneficial to shareholders. The manager will analyze various economic and
strategic factors in making the final decision on a merger or acquisition.
Corporate restructuring and reincorporation proposals are also subject to a
thorough examination on a case-by-case basis.

SOCIAL AND CORPORATE POLICY ISSUES The manager will generally give management
discretion with regard to social, environmental and ethical issues, although the
manager may vote in favor of those that are believed to have significant
economic benefits or implications for the Fund and its shareholders.

GLOBAL CORPORATE GOVERNANCE Many of the tenets discussed above are applied to
proxy voting decisions for international companies. However, the manager must be
more flexible in these instances and must be mindful of the varied market
practices of each region.

The manager will attempt to process every vote it receives for all domestic and
foreign proxies. However, there may be situations in which the manager cannot
process proxies, for example, where a meeting notice was received too late, or
sell orders preclude the ability to vote. The manager may abstain from voting
under certain circumstances or vote against items such as "Other Business" when
the manager is not given adequate information from the company.

Shareholders may view the complete Policies on-line at
www.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. Copies of the Fund's proxy voting records will also be made available
on-line at www.franklintempleton.com and posted on the SEC website at
www.sec.gov no later than August 31, 2004 and will reflect the twelve-month
period beginning July 1, 2003, and ending June 30, 2004

ITEM 9. 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 10. 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
KIMBERLEY H. MONASTERIO, 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
KIMBERLEY H. MONASTERIO, 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 September 30, 2003

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 September 30, 2003

By /s/Kimberley H. Monasterio
Chief Financial Officer
Date September 30, 2003