Edgar Filing: FRANKLIN FLOATING RATE TRUST

Semi
Annual
Report

[GRAPHIC OMITTED]

JANUARY 31, 2003

FRANKLIN FLOATING RATE TRUST

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FRANKLIN(R) TEMPLETON(R)
INVESTMENTS

THANK YOU FOR INVESTING WITH FRANKLIN TEMPLETON. WE ENCOURAGE OUR
INVESTORS TO MAINTAIN A LONG-TERM PERSPECTIVE AND REMEMBER THAT ALL
SECURITIES MARKETS MOVE BOTH UP AND DOWN, AS DO MUTUAL FUND SHARE
PRICES. WE APPRECIATE YOUR PAST SUPPORT AND LOOK FORWARD TO
SERVING YOUR INVESTMENT NEEDS IN THE YEARS AHEAD.

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CHARLES B. JOHNSON

CHAIRMAN
FRANKLIN FLOATING RATE TRUST

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SHAREHOLDER LETTER

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YOUR FUND'S GOAL AND PRIMARY INVESTMENTS: FRANKLIN FLOATING RATE TRUST'S PRIMARY
GOAL IS 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.

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Dear Shareholder:

This semiannual report for Franklin Floating Rate Trust covers the period ended
January 31, 2003.

ECONOMIC OVERVIEW

During the six months under review, the U.S. economy rebounded from 2001's
lingering recession. The economy, as measured by gross domestic product (GDP)
growth, expanded at a healthy 4.0% annualized rate in the third quarter. The
annualized GDP growth rate fell sharply to an estimated 1.4% in the fourth
quarter, however, as consumer spending slowed to its weakest pace in more than a
decade.

CONTENTS

Shareholder Letter ............... 1

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

Financial Highlights &
Statement of Investments ......... 8

Financial Statements ............. 20

Notes to
Financial Statements ............. 23

[GRAPHIC OMITTED] FUND CATEGORY
EDGAR REPRESENTATION OF TEXT USED IN PYRAMID GRAPHIC AS FOLLOWS:
Global
Growth
Growth & Income
Income
Tax-Free Income

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 9.

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NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
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[SIDEBAR]

WHAT ARE SYNDICATED BANK LOANS?
SYNDICATED BANK LOANS ARE TYPICALLY SECURED, 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.

Interest rates remained at historically low levels largely due to aggressive
action by the Federal Reserve Board (the Fed). In November 2002, the Fed cut the
federal funds target rate 50 basis points (0.50%) to 1.25%, the lowest level in
more than 40 years. Short-term interest rates, as measured by the 3-month London
InterBank Offered Rate (LIBOR), the benchmark underlying many of the Fund's
floating rate loans, fell from 1.82% at the beginning of the reporting period to
1.35% on January 31, 2003. Long-term rates also dipped, and the yield on the
10-year Treasury note fell from 4.51% to 4.00%.

U.S. equity markets experienced significant volatility during the reporting
period. Initially declining, they staged a brief recovery before falling again.
Overall, the Dow Jones Industrial Average fell from 8736.59 on July 31, 2002, to
8053.81 at period-end.

SYNDICATED BANK LOAN MARKET

The six-month reporting period was another volatile period for the bank loan
market. Total issuance, including investment-grade issues, diminished due to
high default rates, accounting irregularities and sector-specific difficulties
in industries like telecommunications and utilities. According to Standard &
Poor's, however, leveraged loan issuance for all of 2002 was actually the same
as 2001, indicating that the problems in the investment-grade market benefited
the leveraged loan segment to some extent.

After a very strong second quarter 2002, which saw numerous refinancings, the
leveraged loan market took a breather at the

beginning of the summer. By late summer, lack of demand sent secondary prices
tumbling, closing the primary market to all but the highest quality new issues.
As has become commonplace in the hot-and-cold loan market, however, a turnaround
was soon at hand thanks to a recovery in equity and high yield markets. By early
fall, market tone began to improve, and a number of new deals -- including
several leveraged buyouts -- were well received. In addition, buyers started to
express interest in discounted loans in the secondary market. After hitting lows
in early November, secondary prices recovered somewhat by the end of the
reporting period.

Default rates improved during the period, falling to 6% at the end of 2002, down
from a peak of 7.4% in June 2002. At year-end 2002, the default rate, as
measured by number of issuers, was at its lowest level since May 2000. 1

Over the past six months, the loan market started to resemble the high yield
bond market, with many deals restructured to meet market demands. Final interest
rate spreads and price discounts were often very different from originally
proposed terms. By the beginning of 2003, spreads started to tighten a bit,
reflecting investors' willingness to accept more risk. This opening of the high
yield market also tightened pricing a bit, and some companies had the option of
issuing high yield bonds to meet their capital needs. The pipeline of new deals
remained surprisingly strong in early 2003, reflecting the market's ability to
absorb new issues and refinance older loans.

TOP 10 HOLDINGS
1/31/03

COMPANY % OF TOTAL
SECTOR/INDUSTRY NET ASSETS
------------------------------------------------
Wyndham International Inc. 2.4%
HOTELS, RESORTS & CRUISELINES

Loews Cineplex
Entertainment Corp. 2.1%
MOVIES & ENTERTAINMENT

Arch Wireless Inc. 1.9%
WIRELESS COMMUNICATIONS

Vertis Inc. 1.7%
COMMERCIAL PRINTING & FORMS

Tenneco Automotive Inc. 1.6%
AUTO PARTS: O.E.M.

Alabama Pine & Pulp 1.6%
PULP & PAPER

Adelphia Communications 1.5%
CABLE & SATELLITE TELEVISION

Charter Communications
CCVI & CCVII 1.4%
CABLE & SATELLITE TELEVISION

Southern California Edison Co. 1.3%
ELECTRIC UTILITIES

Ashtead Group 1.2%
RENTAL & LEASING COMPANIES

1. Source: Standard & Poor's, www.pmdzone.com.

DIVIDEND DISTRIBUTIONS*
8/1/02-1/31/03

DIVIDEND
MONTH PER SHARE
----------------------------------------------

August 3.3879 cents

September 3.0826 cents

October 3.5225 cents

November 3.4159 cents

December 3.8568 cents

January 3.5885 cents

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TOTAL 20.8542 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.

PORTFOLIO NOTES

Within this environment, Franklin Floating Rate Trust posted a +0.75% cumulative
total return for the six months ended January 31, 2003, as shown in the
Performance Summary on page 7. The Fund's share price, as measured by net asset
value, declined from $8.31 on July 31, 2002, to a low of $8.00 in mid-November
as the bank loan market seemed to bottom out, before ending the period at $8.16.

During the six months under review, we continued to pursue our strategy of
focusing on providing loans to companies with strong cash flow, franchise value
and asset coverage. Consistent with that approach, we invested in the Dex Media
East bank facility, which funded the leveraged buyout of Qwest's yellow page
directory business. Qwest, a financially troubled telephone company serving
areas in the western U.S., desperately needed to raise cash to reduce debt, and
two major leveraged buyout firms agreed to buy the firm's yellow page
directories business in two parts. We invested in the bank loan that financed
the first transaction. We felt that the inherently stable nature of the yellow
page business and strong collateral value -- including the right to be Qwest's
official yellow page publisher and the use of the Qwest yellow page brand name
-- made the loan attractive.

We also participated in refinancing the bank debt of PerkinElmer, a leading
provider of scientific instruments, consumables and services to the
pharmaceutical, biomedical, environmental testing and general industrial
industries. We found the bank debt attractive due to the company's leading
market position and diversified product offering, as well as its global reach.

MDCP Acquisitions, the largest European-based integrated manufacturer of
containerboard, corrugated containers and other paper-based packaging products,
was another of the Fund's new investments during the period. We found the MDCP
senior credit issues attractive due to their strong underlying security package
and significant asset coverage. Additionally, we believe MDCP benefits from an
internationally experienced management team with local expertise in each of
MDCP's geographic markets, including Europe, North America and Latin America.

Lastly, the Fund also invested in the debt of Integrated Defense Technologies
(IDT), a leading supplier of defense electronics whose products are installed on
front-line defense platforms and used by all branches of the U.S. military. We
felt comfortable lending to IDT because its products are viewed by the military
as "mission critical," giving the company a stable base of funding. Moreover,
IDT's management believes that its large base of installed products provides
ample opportunity for future growth and diversification of the company's program
and customer base, as well as significant opportunities for follow-on business.

Looking forward, we will continue our strategy of holding loans from companies
that we believe have strong market positions and asset coverage. We are
cautiously optimistic on the leveraged loan market. The economy appears to be in
the midst of a shallow but solid recovery and interest rates remain very low,
but potentially poised to increase. With its relatively stable share price and
potential for high, current income, we believe the Fund is an attractive
investment for those seeking to diversify portfolios heavily weighted in
equities.

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A NOTE ABOUT
DUPLICATE MAILINGS

YOU WILL RECEIVE THE FUND'S SHAREHOLDER REPORT EVERY SIX MONTHS. TO REDUCE FUND
EXPENSES, WE TRY TO IDENTIFY RELATED SHAREHOLDERS IN A HOUSEHOLD AND SEND ONLY
ONE COPY OF THE REPORT. THIS PROCESS, CALLED "HOUSEHOLDING," WILL CONTINUE
INDEFINITELY UNLESS YOU INSTRUCT US OTHERWISE. IF YOU PREFER NOT TO HAVE THESE
DOCUMENTS HOUSEHOLDED, PLEASE CALL US AT 1-800/632-2301. AT ANY TIME YOU MAY
VIEW CURRENT SHAREHOLDER REPORTS ON OUR WEBSITE.
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We appreciate your investment in Franklin Floating Rate Trust and welcome any
comments or suggestions you might have.

Sincerely,

/S/ C B Johnson
Charles B. Johnson
Chairman

/S/Chauncey Lufkin
Chauncey Lufkin
Chief Investment Officer

/S/Richard D'Addario
Richard D'Addario
Portfolio Manager

Franklin Floating Rate Trust

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This discussion reflects our analysis, opinions and portfolio holdings as of
January 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 provided 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 adviser 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.
--------------------------------------------------------------------------------

PERFORMANCE SUMMARY AS OF 1/31/03

DISTRIBUTIONS AND RETURNS WILL VARY BASED ON EARNINGS OF THE FUND'S PORTFOLIO
AND ANY PROFITS REALIZED FROM THE SALE OF THE PORTFOLIO'S SECURITIES, AS WELL AS
THE LEVEL OF THE FUND'S OPERATING EXPENSES. THE PERFORMANCE TABLE DOES NOT
REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES.

PRICE AND DISTRIBUTION INFORMATION

CHANGE 1/31/03 7/31/02
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Net Asset Value (NAV) -$0.15 $8.16 $8.31
DISTRIBUTIONS (8/1/02-1/31/03)
Dividend Income $0.208542

PERFORMANCE

INCEPTION
6-MONTH 1-YEAR 5-YEAR (10/10/97)
---------------------------------------------------------------------------------------------------

Cumulative Total Return 1 +0.75% -2.55% +17.82% +19.96%
Average Annual Total Return 2 -0.24% -3.47% +3.33% +3.49%
Avg. Ann. Total Return (12/31/02) 3 -4.30% +3.23% +3.34%
Distribution Rate 4 5.18%
30-Day Standardized Yield 5 6.87%

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Shares repurchased within 18 months of investment are subject to 1% early
withdrawal charge. 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.
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1. Cumulative total return represents the change in value of an investment over
the periods indicated and does not include the early withdrawal charge.

2. 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. Six-month
return has not been annualized.

3. In accordance with SEC rules, we provide standardized average annual total
return information through the latest calendar quarter.

4. The distribution rate is based on the annualization of daily distributions
totaling 3.4723 cents per share during the last 30 days of January and the $8.16
NAV on 1/31/03.

5. Yield, calculated as required by the SEC, is based on the earnings of the
Fund's portfolio for the 30 days ended 1/31/03.

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

Past performance does not guarantee future results.

FRANKLIN FLOATING RATE TRUST

Financial Highlights

SIX MONTHS ENDED YEAR ENDED JULY 31,
JANUARY 31, 2003 ----------------------------------------------------
(UNAUDITED) 2002 2001 2000 1999 1998 d
----------------------------------------------------------------------

PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ....... $8.30 $9.24 $9.85 $9.98 $10.04 $10.00
----------------------------------------------------------------------
Income from investment operations:
Net investment income ..................... .183 .568 c .875 .839 .700 .482
Net realized and unrealized gains (losses) (.114) (.927) c (.606) (.130) (.060) .040
----------------------------------------------------------------------
Total from investment operations ........... .069 (.359) .269 .709 .640 .522
----------------------------------------------------------------------
Less distributions from net investment income (.209) (.581) (.879) (.839) (.700) (.482)
----------------------------------------------------------------------
Net asset value, end of period ............. $8.16 $8.30 $9.24 $9.85 $ 9.98 $10.04
======================================================================

Total return a ............................. .75% (3.95)% 2.80% 7.39% 6.62% 5.33%

RATIOS/SUPPLEMENTAL DATA

Net assets, end of period (000's) .......... $1,291,302 $1,779,930 $2,832,188 $2,541,497 $1,106,363 $168,537
Ratios to average net assets:
Expenses .................................. 1.35% b 1.32% 1.36% 1.35% 1.39% 1.32% b
Expenses excluding waiver and payments
by affiliate .............................. 1.35% b 1.32% 1.36% 1.35% 1.41% 1.76% b
Net investment income ..................... 4.64% b 6.58% c 9.07% 8.51% 6.93% 6.06% b
Portfolio turnover rate .................... 15.72% 62.21% 84.15% 66.27% 63.29% 45.32%

aTotal return does not reflect the contingent deferred sales charge and is not
annualized for periods less than one year.
bAnnualized
cEffective 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.
dFor period October 10, 1997 (effective date) to July 31, 1998.

See notes to financial statements.

FRANKLIN FLOATING RATE TRUST

STATEMENT OF INVESTMENTS, JANUARY 31, 2003 (UNAUDITED)

PRINCIPAL
AMOUNT a VALUE
---------------------------------------------------------------------------------------------------------------------------

BONDS 2.3%
FINANCIAL CONGLOMERATES .5%
Finova Group Inc., 7.50%, 11/15/09 ....................................... $ 17,086,000 $ 6,279,105
--------------
HOSPITAL/NURSING MANAGEMENT .2%
Genesis Health Ventures Inc., 6.38%, 4/02/07 ............................. 3,326,596 3,127,000
--------------
WIRELESS COMMUNICATIONS 1.6%
Arch Wireless Inc.,
Senior secured note, 10.00%, 5/15/07 ................................... 11,231,661 11,035,107
Senior sub. note, PIK, 12.00%, 5/15/09 ................................. 12,730,030 9,865,773
--------------
20,900,880
--------------
TOTAL BONDS (COST $76,728,738) ........................................... 30,306,985
--------------
b SENIOR FLOATING RATE INTERESTS 77.7%
ADVERTISING/MARKETING SERVICES .7%
Adams Outdoor Advertising Inc., Term Loan B, 4.868 - 4.87%, 12/26/07 ..... 2,670,000 2,679,457
DIMAC Holdings,
c Term Loan A, 7.25%, 12/31/05 ........................................... 2,092,640 --
c Term Loan B, 7.25%, 9/30/03 ............................................ 558,337 16,750
DIMAC Marketing Partners,
c Revolver, 7.25%, 7/01/03 ............................................... 233,270 --
c Term Loan B, 7.25%, 1/01/05 ............................................ 1,366,068 --
Lamar Media Corp., Term Loan A, 3.375%, 3/01/06 .......................... 6,493,145 6,411,981
--------------
9,108,188
--------------
AEROSPACE & DEFENSE 2.3%
Aerostructures Corp., Term Loan, 5.59%, 11/05/08 ......................... 1,000,000 991,250
Hexcel Corp., Term Loan B, 5.625 - 5.938%, 9/14/05 ....................... 964,499 945,209
Integrated Defense Technology Inc., Term Loan B, 5.40 - 5.757%, 3/04/08 .. 8,977,472 8,910,141
Raytheon Aerospace LLC, Term Loan B, 5.40%, 6/29/07 ...................... 3,491,198 3,456,286
Titan Corp., Term Loan B, 4.11 - 5.75%, 2/23/06 .......................... 9,452,500 9,452,500
United Defense Industries Inc., Term Loan B, 3.60%, 8/13/09 .............. 816,504 819,274
Veridian Corp., Term Loan, 4.59 - 5.08%, 6/05/08 ......................... 1,980,021 1,987,693
Vought Aircraft Industries, Term Loan X, 4.34%, 12/01/06 ................. 2,580,000 2,528,400
--------------
29,090,753
--------------
AGRICULTURAL COMMODITIES/MILLING .1%
Hines Nurseries Inc., Term Loan B, 5.438%, 2/28/05 ....................... 1,534,063 1,534,063
--------------
ALTERNATIVE POWER GENERATION .1%

Headwaters Inc., Term Loan B, 5.91%, 9/12/07 ............................. 1,872,581 1,844,492
--------------
APPAREL/FOOTWEAR .5%
Levi Strauss & Co., Term Loan B, 7.25%, 7/31/06 .......................... 6,000,000 6,030,000
St. John Knits Inc., Term Loan B, 4.375%, 7/31/07 ........................ 758,707 759,339
--------------
6,789,339
--------------
AUTO PARTS: ORIGINAL EQUIPMENT MANUFACTURER 3.5%
Dayco Products LLC, Term Loan B, 4.66 - 4.99%, 5/31/07 ................... 3,817,309 3,775,319
GenCorp Inc., Term Loan B, 5.188%, 3/28/07 ............................... 1,995,000 1,985,025
Metaldyne, Term Loan D, 4.375%, 12/31/09 ................................. 9,987,500 9,650,422

FRANKLIN FLOATING RATE TRUST

STATEMENT OF INVESTMENTS, JANUARY 31, 2003 (UNAUDITED) (CONT.)

PRINCIPAL
AMOUNT a VALUE
---------------------------------------------------------------------------------------------------------------------------

b SENIOR FLOATING RATE INTERESTS (CONT.)
AUTO PARTS: ORIGINAL EQUIPMENT MANUFACTURER (CONT.)
SPX Corp.,
Term Loan B, 3.688%, 9/30/09 .......................................... $ 3,076,875 $ 3,070,721
Term Loan C, 3.938%, 12/31/07 ......................................... 5,128,125 5,117,869
Tenneco Automotive Inc.,
Term Loan B, 5.69%, 11/04/07 .......................................... 11,517,802 10,440,069
Term Loan C, 5.94%, 5/04/08 ........................................... 11,517,802 10,440,069
--------------
44,479,494
--------------
BROADCASTING 2.0%
Benedek Broadcasting Corp., Term Loan B, 1.439%, 11/20/07 ................ 43,182 43,092
Comcorp Broadcasting, Term Loan, 11.75%, 3/31/03 ......................... 3,185,651 2,739,660
Comcorp Holdings, Term Loan, 10.875 - 12.75%, 9/30/03 .................... 4,714,710 4,054,651
Cumulus Media Inc., Term Loan B, 4.375%, 3/28/10 ......................... 500,000 503,542
Emmis Communications Corp., Term Loan A, 3.875%, 2/28/09 ................. 2,569,763 2,578,598
Emmis Operating Co., Term Loan B, 3.625%, 8/31/09 ........................ 2,081,088 2,094,746
Quorum Broadcasting, Term Loan B, 5.90%, 9/30/07 ......................... 8,118,407 7,123,902
Radio One Inc., Term Loan A, 2.67%, 6/30/07 .............................. 3,000,000 2,925,000
Sinclair Broadcast Group Inc., Term Loan B, 3.625%, 12/31/09 ............. 1,000,000 1,002,902
White Knight Broadcasting, Term Loan B, 11.75%, 3/31/03 .................. 3,516,334 3,024,047
--------------
26,090,140
--------------
BUILDING PRODUCTS 1.3%
Masonite International Corp., Term Loan C, 4.188%, 8/31/08 ............... 2,972,316 2,975,660
Tapco International,
Term Loan B, 4.40%, 7/23/07 ............................................ 7,401,989 7,346,474
Term Loan C, 4.65%, 7/23/08 ............................................ 6,195,739 6,149,271
--------------
16,471,405
--------------
CABLE/SATELLITE TELEVISION 8.6%
Century Cable (Adelphia),
Discretionary Term Loan, 6.25%, 12/31/09 ............................... 3,000,000 2,143,500
Term Loan, 6.25%, 6/30/09 .............................................. 1,000,000 732,750
Charter Communications CCVI,
d Revolver, .50 - 2.89%, 5/12/08 ......................................... 875,000 705,834
Term Loan A, 2.87%, 5/12/08 ............................................ 1,125,000 880,313
Term Loan B, 3.87%, 11/12/08 ........................................... 17,500,000 13,825,000
Charter Communications CCVIII, Term Loan B, 4.13%, 2/02/08 ............... 2,885,221 2,428,996
Hughes Electronics, Term Loan, 5.86%, 8/31/03 ............................ 12,000,000 12,022,500
Insight Midwest Holdings, Term Loan B, 4.563%, 12/31/09 .................. 10,000,000 9,697,500
MCC Iowa (Broadband), Term Loan B1, 4.06 - 4.11%, 9/12/10 ................ 3,000,000 2,931,876
Mediacom Illinois, Term Loan B, 3.84%, 12/31/08 .......................... 4,987,500 4,874,244
Olympus Cable Holdings (Adelphia), Term Loan B, 6.25%, 9/30/10 ........... 2,000,000 1,618,500
PanAmSat Corp., Term Loan B, 4.84%, 12/31/08 ............................. 13,000,000 12,813,125
Pegasus Media & Communications, Term Loan B, 5.313%, 4/30/05 ............. 12,652,723 11,324,187
Satelites Mexicanos, Term Loan C, 144A, 5.88%, 6/30/04 ................... 5,528,000 4,256,560
UCA-HHC (Adelphia), Term Loan B, 5.50%, 3/31/08 .......................... 20,935,000 14,549,825
UPC Distribution Holdings BV, Term Loan C2, 6.88%, 3/31/09 ............... 11,500,000 7,978,125
Videotron Itee, Term Loan B, 4.159 - 4.17%, 12/01/09 ..................... 8,682,052 8,465,001
--------------
111,247,836
--------------

FRANKLIN FLOATING RATE TRUST

STATEMENT OF INVESTMENTS, JANUARY 31, 2003 (UNAUDITED) (CONT.)

PRINCIPAL
AMOUNT a VALUE
---------------------------------------------------------------------------------------------------------------------------

b SENIOR FLOATING RATE INTERESTS (CONT.)
CASINOS/GAMING 1.3%
Ameristar Casinos Inc., Term Loan B, 4.125 - 4.188%, 12/20/06 ............ $ 3,369,847 $ 3,387,960
Greektown Casinos LLC,
Term Loan B, 5.125 - 5.188%, 11/16/04 .................................. 3,423,429 3,429,848
Term Loan C, 5.188%, 11/16/04 .......................................... 1,496,224 1,501,834
Isle of Capri, Term Loan B, 3.90 - 3.92%, 3/26/08 ........................ 992,500 994,672
Marina District Finance Co. Inc., Term Loan B, 5.40 - 5.76%, 12/31/07 .... 3,000,000 2,977,500
Scientific Games Corp., Term Loan B, 4.85%, 12/10/08 ..................... 5,000,000 5,003,125
--------------
17,294,939
--------------
CHEMICALS: SPECIALTY 1.5%
Arteva B.V. (Kosa), Term Loan B, 4.65%, 12/31/06 ......................... 3,706,258 3,668,617
FMC Corp., Term Loan B, 6.11%, 10/21/07 .................................. 5,000,000 5,068,750
Geo Specialty Chemicals, Term Loan B, 7.00%, 12/31/07 .................... 1,000,000 923,333
Ineos Group Ltd., Term Loan C, 5.258%, 6/30/09 ........................... 2,363,204 2,359,512
Noveon Inc., Term Loam B, 4.938 - 5.00%, 9/30/08 ......................... 4,925,000 4,938,632
OM Group Inc., Term Loan C, 6.75%, 4/01/06 ............................... 1,990,000 1,875,575
Sovereign Specialty Chemicals Inc., Term Loan B, 5.89 - 7.75%, 12/31/07 .. 1,000,000 940,000
--------------
19,774,419
--------------
COAL .9%
Arch Western Resources LLC, Term Loan B, 4.35 - 4.85%, 4/18/08 ........... 12,000,000 12,007,500
--------------
COMMERCIAL PRINTING/FORMS 3.3%
American Reprographics, Term Loan B, 5.14%, 4/10/08 ...................... 16,046,675 15,926,325
Moore North America Inc., Term Loan B, 4.39 - 4.41%, 8/02/08 ............. 5,385,000 5,405,194
Vertis Inc.,
Bridge Term Loan, 13.50%, 12/09/09 ..................................... 16,305,556 15,653,333
Term Loan B, 5.188 - 5.625%, 12/09/08 .................................. 6,133,233 6,006,735
--------------
42,991,587
--------------
CONSUMER SUNDRIES .7%
Church & Dwight Co., Term Loan B, 3.88%, 5/27/09 ......................... 995,000 1,001,322
Playtex Products Inc.,
d Revolver, .50 - 2.75%, 5/31/07 ......................................... 4,944,444 4,845,556
Term Loan C, 3.629 - 3.63%, 5/31/09 .................................... 1,492,500 1,489,934
United Industries Corp., Term Loan B, 5.34%, 1/20/06 ..................... 997,421 999,291
--------------
8,336,103
--------------
CONTAINERS/PACKAGING 3.0%
Berry Plastics, Term Loan, 4.634%, 7/22/10 ............................... 992,506 997,624
Constar International Inc., Term Loan B, 6.50%, 11/20/09 ................. 4,987,500 4,999,969
Graham Packaging Co.,
Term Loan B, 3.75%, 1/31/06 ............................................ 1,936,440 1,917,227
Term Loan C, 3.938%, 1/31/07 ........................................... 1,604,479 1,588,559
Term Loan D, 4.00 - 4.188%, 1/31/07 .................................... 8,293,086 8,218,299
Greif Brothers Corp., Term Loan B, 3.59%, 8/15/09 ........................ 995,000 997,799

FRANKLIN FLOATING RATE TRUST

STATEMENT OF INVESTMENTS, JANUARY 31, 2003 (UNAUDITED) (CONT.)

PRINCIPAL
AMOUNT a VALUE
---------------------------------------------------------------------------------------------------------------------------

b SENIOR FLOATING RATE INTERESTS (CONT.)
CONTAINERS/PACKAGING (CONT.)
Impress Metal, Term Loan G, 4.644%, 12/31/06 ............................. $ 3,428,042 $ 3,359,481
Owens-Illinois Group Inc., Term Loan, 3.39%, 3/31/04 ..................... 4,572,187 4,547,694
Stone Container Corp.,
Term Loan B, 3.875%, 7/25/09 ........................................... 5,846,154 5,787,692
Term Loan C, 3.875%, 7/25/09 ........................................... 2,153,846 2,135,000
Tekni-Plex Inc., Term Loan B, 4.875%, 6/21/08 ............................ 4,875,000 4,797,814
--------------
39,347,158
--------------
DISCOUNT STORES .4%
Kmart Corp., DIP, 1.38%, 7/07/04 ......................................... 5,750,000 5,691,304
--------------
DRUG STORE CHAINS .6%
Rite Aid Corp., Term Loan, 5.188%, 3/15/05 ............................... 7,340,309 7,230,205
--------------
ELECTRIC UTILITIES 2.8%
AES New York Funding LLC, Term Loan, 6.188%, 2/28/05 ..................... 8,250,000 7,620,938
Calpine Corp., Term Loan B, 5.188%, 3/08/04 .............................. 5,495,649 4,901,432
Consumers Energy Co., Term Loan, 5.89 - 6.324%, 7/11/04 .................. 1,000,000 1,005,000
Michigan Electric Transmission Co. LLC, Term Loan, 3.84%, 5/01/07 ........ 990,013 988,775
Mission Energy Holding,
Term Loan A, 8.88%, 6/30/06 ............................................ 1,298,701 324,675
Term Loan B, 8.88%, 6/30/06 ............................................ 3,701,299 925,325
Pike Electric Inc., Term Loan, 4.625%, 4/17/10 ........................... 2,534,094 2,549,405
Southern California Edison Co.,
Term Loan A, 4.313%, 3/03/03 ........................................... 1,500,000 1,498,125
Term Loan B, 4.813%, 3/01/05 ........................................... 15,000,000 14,978,910
Westar Energy Inc., Term Loan, 4.38%, 6/05/05 ............................ 1,996,581 1,964,137
--------------
36,756,722
--------------
ELECTRICAL PRODUCTS .2%
Rayovac Corp., Term Loan B, 5.12 - 5.15%, 10/01/09 ....................... 2,735,000 2,735,000
--------------
ELECTRONIC COMPONENTS .2%
Seagate Technology HDD Holdings, Term Loan B, 3.375%, 5/13/07 ............ 2,132,186 2,130,471
Seagate Technology (US) Holdings, Term Loan B, 3.375%, 5/13/07 ........... 852,815 852,129
--------------
2,982,600
--------------
ELECTRONIC EQUIPMENT/INSTRUMENTS .2%
Neptune Technology Group Inc., Term Loan B, 4.89%, 11/01/08 .............. 2,846,310 2,860,542
--------------
ELECTRONICS/APPLIANCES .4%
Alliance Laundry Systems LLC, Term Loan, 4.88 - 6.75%, 7/31/09 ........... 4,740,933 4,691,546
--------------
ENGINEERING & CONSTRUCTION .7%
Brand Services Inc., Term Loan B, 5.41%, 10/16/09 ........................ 1,000,000 1,004,063
URS Corp., Term Loan B, 4.84%, 8/22/08 ................................... 3,990,000 3,780,525
Washington Group International (Morrison Knudsen),
Synthetic Term Loan, 1.24%, 7/23/04 ..................................... 4,500,000 4,410,000
--------------
9,194,588
--------------

FRANKLIN FLOATING RATE TRUST

STATEMENT OF INVESTMENTS, JANUARY 31, 2003 (UNAUDITED) (CONT.)

PRINCIPAL
AMOUNT a VALUE
---------------------------------------------------------------------------------------------------------------------------

b SENIOR FLOATING RATE INTERESTS (CONT.)
ENVIRONMENTAL SERVICES 1.3%
Allied Waste Industries Inc.,
Term Loan B, 4.188%, 7/30/06 ........................................... $ 6,450,057 $ 6,432,203
Term Loan C, 4.438%, 7/30/07 ........................................... 7,740,071 7,718,306
Casella Waste Systems Inc., Term Loan B, 4.625%, 1/24/09 ................. 1,000,000 1,006,667
Mactec Inc., Term Loan B, 5.688%, 2/22/08 ................................ 1,947,222 1,849,861
--------------
17,007,037
--------------
FINANCIAL CONGLOMERATES .4%
e Ares IV, Term Loan D, 144A, 7.40%, 12/22/12 .............................. 1,400,000 941,500
e Centurion II, Tranche D, 144A, 7.40%, 11/12/12 ........................... 2,500,000 1,266,406
e Clydesdale CLO, Tranche D, 144A, 7.864%, 3/22/13 ......................... 2,000,000 1,696,250
e First Dominion Funding II, sub. floating rate deb., Series A-D,
144A, 7.003%, 4/25/14 ................................................... 3,000,000 1,079,063
e Highland Legacy CLO I, Term Loan D, 144A, 7.957%, 6/01/11 ................ 2,000,000 663,125
--------------
5,646,344
--------------
FOOD DISTRIBUTORS .1%
Fleming Companies Inc., Term Loan, 4.625%, 6/18/08 ....................... 762,665 747,984
--------------
FOOD RETAIL .1%
Gate Gourmet LLC, Term Loan B, 9.50%, 12/21/07 ........................... 1,000,000 970,000
--------------
FOOD: MAJOR DIVERSIFIED 1.2%
Birds Eye Foods Inc., Term Loan B, 4.34 - 4.77%, 8/08/08 ................. 7,980,000 7,999,950
Del Monte Corp., Term Loan B, 5.11 - 5.15%, 12/20/10 ..................... 1,000,000 1,008,375
International Multifoods, Term Loan B, 4.34 - 4.42%, 2/28/08 ............. 1,326,907 1,332,831
Merisant Corp., Term Loan B, 4.65%, 3/17/07 .............................. 962,212 962,663
Nutrasweet,
Second Lien Term Loan, 6.50%, 5/24/09 .................................. 3,000,000 2,992,500
Term Loan B, 4.625%, 5/24/07 ........................................... 997,054 998,716
--------------
15,295,035
--------------
FOOD: MEAT/FISH/DAIRY .4%
American Seafoods, Term Loan B, 4.65 - 6.50%, 4/15/09 .................... 1,467,277 1,473,468
Suiza Foods Corp., Term Loan B, 3.65%, 12/21/08 .......................... 2,961,912 2,963,947
Swift & Co., Term Loan B, 4.96 - 6.50%, 9/19/08 .......................... 997,500 1,001,241
--------------
5,438,656
--------------
FOOD: SPECIALTY/CANDY .2%
Otis Spunkmeyer Inc., Term Loan B, 5.619%, 2/20/09 ....................... 1,977,273 1,969,858
--------------
HOME FURNISHINGS .1%
Aero Products International, Term Loan, 5.90%, 12/16/08 .................. 970,874 968,447
--------------
HOSPITAL/NURSING MANAGEMENT 1.4%
Genesis Health Ventures Inc., Term Loan B, 4.88 - 4.90%, 3/30/07 ......... 5,460,217 5,460,217
Iasis Healthcare Corp.,
Term Loan A, 4.88%, 9/30/04 ............................................ 7,448,718 7,446,394
Term Loan B, 5.63%, 9/30/06 ............................................ 1,829,765 1,832,195

FRANKLIN FLOATING RATE TRUST

STATEMENT OF INVESTMENTS, JANUARY 31, 2003 (UNAUDITED) (CONT.)

PRINCIPAL
AMOUNT a VALUE
---------------------------------------------------------------------------------------------------------------------------

b SENIOR FLOATING RATE INTERESTS (CONT.)
HOSPITAL/NURSING MANAGEMENT (CONT.)
Triad Hospitals Inc., Term Loan B, 4.34%, 9/30/08 ........................ $ 986,364 $ 991,357
Vanguard Health Systems Inc., Term Loan B, 4.40%, 1/03/10 ................ 2,000,000 2,001,250
--------------
17,731,413
--------------
HOTEL/RESORTS/CRUISELINES 3.0%
Extended Stay America Inc., Term Loan B, 4.34%, 7/01/07 .................. 8,591,216 8,496,352
Wyndham International Inc.,
Increasing Rate Note, 6.188%, 6/05/03 .................................. 16,243,131 13,359,976
d Revolver, 2.00 - 5.188%, 6/30/05 ....................................... 9,482,804 7,586,243
Term Loan B, 6.188%, 6/30/04 ........................................... 12,111,784 9,591,855
--------------
39,034,426
--------------
INDUSTRIAL MACHINERY .6%
Blount International Inc., Term Loan B, 5.84%, 6/30/06 ................... 2,251,494 2,214,907
Flowserve Corp., Term Loan C, 4.188%, 6/30/09 ............................ 1,595,354 1,591,366
Gleason Corp., Term Loan B, 5.125 - 5.50%, 2/18/08 ....................... 4,468,311 4,465,519
--------------
8,271,792
--------------
INDUSTRIAL SPECIALTIES .4%
SC Johnson Commercial Markets, Term Loan B, 5.186%, 11/03/09 ............. 5,000,000 5,023,830
--------------
MAJOR TELECOMMUNICATIONS 1.6%
Alec Holdings Inc.,
Term Loan B, 4.875%, 11/04/07 .......................................... 2,605,263 2,405,525
Term Loan C, 4.625%, 5/14/08 ........................................... 2,344,737 2,164,973
c E.Spire Communications, Term Loan C, 8.25%, 8/01/06 ...................... 16,877,867 --
GCI Holdings Inc., Term Loan, 7.91%, 10/30/04 ............................ 2,000,000 1,995,000
McLeod USA Inc., Term Loan B, 6.09%, 5/31/08 ............................. 6,394,639 2,977,504
c Northpoint Communications Group Inc., Term Loan, 7.75%, 3/31/04 .......... 7,545,010 --
c WCI Capital Corp., Term Loan B, 9.75%, 3/31/07 ........................... 30,500,000 --
c Winstar Communications Inc., DIP, 7.25%, 12/30/03 ........................ 5,035,549 708,502
d Worldcom Inc., DIP, 3.50%, 7/23/04 ....................................... 10,000,000 10,000,000
--------------
20,251,504
--------------
MANAGED HEALTH CARE .1%
Pacificare Health Systems Inc., Term Loan, 6.34%, 1/03/05 ................ 1,460,325 1,462,150
--------------
MARINE SHIPPING .7%
Great Lakes Transportation LLC, Term Loan, 5.375 - 5.438%, 3/23/08 ....... 6,620,341 6,603,791
Ingram Industries Inc., Term Loan B, 3.88 - 4.207%, 7/02/08 .............. 1,683,650 1,681,545
United States Shipping LLC, Term Loan, 4.643 - 5.007%, 9/16/08 ........... 959,615 962,315
--------------
9,247,651
--------------
MEDIA CONGLOMERATES 1.6%
Bridge Information Systems Inc.,
c Multi Draw Term Loan, 7.00%, 5/29/03 ................................... 487,662 65,834
c Revolver, 6.75%, 5/29/03 ............................................... 8,706 1,175
c Term Loan A, 7.00%, 5/29/03 ............................................ 483,643 65,292
c Term Loan B, 6.25%, 5/29/05 ............................................ 14,685,421 1,982,532

FRANKLIN FLOATING RATE TRUST

STATEMENT OF INVESTMENTS, JANUARY 31, 2003 (UNAUDITED) (CONT.)

PRINCIPAL
AMOUNT a VALUE
---------------------------------------------------------------------------------------------------------------------------

b SENIOR FLOATING RATE INTERESTS (CONT.)
MEDIA CONGLOMERATES (CONT.)
Canwest Media Inc.,
Term Loan B, 4.90%, 5/15/08 ............................................ $ 7,719,200 $ 7,726,171
Term Loan C, 5.15%, 5/15/09 ............................................ 4,823,317 4,827,673
PEI Holdings, Term Loan B, 5.67 - 5.678%, 3/15/06 ........................ 6,640,381 6,573,977
--------------
21,242,654
--------------
MEDICAL SPECIALTIES .3%
PerkinElmer Inc., Term Loan B, 5.35%, 12/26/08 ........................... 4,000,000 4,040,000
--------------
MEDICAL/NURSING SERVICES 1.2%
Alliance Imaging Inc., Term Loan C, 3.75 - 4.25%, 11/30/08 ............... 1,373,313 1,354,430
DaVita Inc., Term Loan B, 4.353 - 4.822%, 3/31/09 ........................ 9,408,632 9,435,682
Team Health Inc., Term Loan B, 4.688%, 10/31/08 .......................... 5,000,000 4,887,500
--------------
15,677,612
--------------
MILITARY/GOVERNMENT/TECHNICAL .7%
DigitalNet Inc., Term Loan, 5.83%, 12/10/07 .............................. 1,000,000 977,500
DRS Technologies Inc., Term Loan, 4.59 - 4.72%, 9/28/08 .................. 2,468,772 2,485,231
U.S. Investigations Services Inc., Term Loan, 7.25%, 1/02/08 ............. 6,000,000 5,970,000
--------------
9,432,731
--------------
MISCELLANEOUS COMMERCIAL SERVICES 2.1%
Burhmann N.V., Term Loan B, 5.659%, 10/26/07 (Netherlands) ............... 12,722,514 12,095,930
Corrections Corp. of America, Term Loan B, 4.85 - 4.92%, 10/31/08 ........ 12,377,557 12,397,670
Iron Mountain Inc., Term Loan B, 3.625 - 4.031%, 2/15/08 ................. 499,500 501,009
Wackenhut Corrections Corp., Term Loan B, 6.00%, 12/10/08 ................ 1,000,000 999,375
--------------
25,993,984
--------------
MISCELLANEOUS MANUFACTURING .9%
General Cable Corp., Term Loan B, 6.375%, 5/27/07 ........................ 194,253 156,131
Mueller Group, Term Loan E, 4.09 - 4.51%, 5/31/08 ........................ 7,950,025 7,936,113
Rexnord Corp., Term Loan, 5.40%, 11/18/09 ................................ 2,000,000 2,015,626
Sanmina-Sci Corp., Term Loan B, 5.438%, 12/12/07 ......................... 2,000,000 2,012,500
--------------
12,120,370
--------------
MOVIES/ENTERTAINMENT 6.7%
d AMC Entertainment Inc., Revolver, .50 - 1.50%, 4/10/04 ................... 4,000,000 3,893,332
Carmike Cinemas Inc., Term Loan, 7.75%, 1/31/07 .......................... 1,883,791 1,863,384
CH Operating LLC, Term Loan B, 5.875 - 5.938%, 6/21/07 ................... 4,258,621 4,221,358
Fitness Holdings Worldwide,
Term Loan B, 6.188 - 6.25%, 11/02/06 ................................... 4,544,667 4,419,689
Term Loan C, 6.438 - 6.50%, 11/02/07 ................................... 9,381,648 9,123,653
Hollywood Entertainment Corp., Term Loan, 4.87 - 4.89%, 3/31/08 .......... 3,000,000 3,003,126
Hoops LP (Memphis Grizzlies), Term Loan A, 4.875%, 6/12/06 ............... 5,000,000 4,990,625
Loews Cineplex Entertainment Corp., Term Loan A, 4.875%, 2/28/08 ......... 27,480,951 27,022,926
Metro-Goldwyn-Mayer Inc.,
Term Loan A, 4.14%, 6/30/07 ............................................ 8,000,000 7,965,000
Term Loan B, 4.39%, 6/30/08 ............................................ 4,000,000 3,982,500
New Orleans Hornets NBA LP, Term Loan A, 4.625%, 6/30/04 ................. 1,000,000 998,125
Phoenix Suns, Term Loan B, 4.111%, 3/31/05 ............................... 12,000,000 11,970,000

FRANKLIN FLOATING RATE TRUST

STATEMENT OF INVESTMENTS, JANUARY 31, 2003 (UNAUDITED) (CONT.)

PRINCIPAL
AMOUNT a VALUE
---------------------------------------------------------------------------------------------------------------------------

b SENIOR FLOATING RATE INTERESTS (CONT.)
MOVIES/ENTERTAINMENT (CONT.)
Regal Cinemas Inc., Term Loan C, 4.188%, 12/31/07 ........................ $ 950,000 $ 952,969
Washington Football Group, Term Loan A, 4.324%, 10/07/07 ................. 2,500,000 2,514,063
--------------
86,920,750
--------------
OFFICE EQUIPMENT/SUPPLIES .6%
Imagistics International Inc., Term Loan B, 4.188%, 11/09/07 ............. 7,785,537 7,775,805
--------------
OIL REFINING/MARKETING .6%
Pacific Energy Group LLC, Term Loan B, 4.099%, 7/26/09 ................... 3,000,000 3,009,375
Tesoro Petroleum Corp., Term Loan B, 7.50%, 9/30/07 ...................... 4,449,734 4,116,004
--------------
7,125,379
--------------
OILFIELD SERVICES/EQUIPMENT .4%
Veritas DGC Inc., Term Loan B, 8.00%, 2/07/07 ............................ 5,000,000 4,950,000
--------------
OTHER CONSUMER SERVICES .6%
Sotheby's Holdings Inc., Term Loan B, 5.21%, 2/11/03 ..................... 7,692,308 7,653,846
--------------
OTHER CONSUMER SPECIALTIES .2%
Herbalife International Inc., Term Loan, 5.77%, 7/31/08 .................. 2,500,000 2,490,625
--------------
OTHER METALS/MINERALS .3%
Better Minerals & Aggregates, Term Loan B, 5.875 - 7.75%, 9/30/07 ........ 4,710,526 4,086,382
--------------
OTHER TRANSPORTATION .8%
Eurotunnel Finance Ltd., Tier 1 Jr Debt, 7.03%, 7/01/25 (United Kingdom) . 6,167,225 GBP 8,920,672
Transcore Holdings Inc., Term Loan B, 5.09 - 7.00%, 10/31/06 ............. 1,995,000 1,999,988
--------------
10,920,660
--------------
PHARMACEUTICALS: GENERIC .1%
Alpharma Operating Corp., Term Loan B, 4.65 - 5.00%, 10/05/08 ............ 1,244,174 1,239,508
--------------
PROPERTY-CASUALTY INSURANCE 1.0%
White Mountains Insurance Group Inc., Term Loan B, 4.40%, 3/31/07 ........ 12,524,390 12,473,516
--------------
PUBLISHING: BOOKS/MAGAZINES 2.0%
Advanstar Communications,
Term Loan A, 4.59%, 4/11/07 ............................................ 2,942,825 2,795,684
Term Loan B, 5.43%, 10/11/07 ........................................... 2,000,000 1,900,000
American Media Inc., Term Loan C, 4.15 - 4.50%, 4/01/07 .................. 976,448 980,415
BAI Finance LP, Term Loan C, 5.688%, 11/28/09 ............................ 3,000,000 3,019,500
F&W Publications Inc., Term Loan B, 5.44%, 12/31/09 ...................... 1,983,333 1,973,417
Primedia Inc., Term Loan B, 4.125 - 4.625%, 6/30/09 ...................... 584,660 552,504
R.H. Donnelley Corp., Term Loan B, 5.34%, 6/30/10 ........................ 5,000,000 5,038,750
Readers Digest Association Inc., Term Loan B, 3.70 - 4.00%, 5/20/08 ...... 477,550 469,960
Weekly Reader, Term Loan B, 5.36 - 5.40%, 11/08/06 ....................... 4,738,776 4,679,541
Yellow Book USA,
Term Loan C, 4.84%, 3/31/10 ............................................ 1,990,000 1,964,628
Term Loan D, 4.34%, 3/31/09 ............................................ 2,000,000 1,972,000
--------------
25,346,399
--------------
PUBLISHING: NEWSPAPERS .1%
First DT Holdings Ltd. (Hollinger), Term Loan B, 4.688%, 9/30/09 ......... 1,500,000 1,507,500
--------------

FRANKLIN FLOATING RATE TRUST

STATEMENT OF INVESTMENTS, JANUARY 31, 2003 (UNAUDITED) (CONT.)

PRINCIPAL
AMOUNT a VALUE
---------------------------------------------------------------------------------------------------------------------------

b SENIOR FLOATING RATE INTERESTS (CONT.)
PULP & PAPER 1.8%
Alabama Pine & Pulp,
c PIK Term Loan B, 5.34%, 6/30/05 ........................................ $ 3,894,619 $ 77,892
PIK Term Loan C, 10.75%, 6/30/05 ....................................... 6,247,202 124,944
Revolver, 10.34%, 6/30/03 .............................................. 5,000,000 3,980,500
c Term Loan A, 5.34%, 6/30/03 ............................................ 37,105,162 16,637,955
MDCP Acquisitions I,
Term Loan B, 4.139%, 9/12/10 ........................................... 1,000,000 998,750
Term Loan C, 4.639%, 9/12/11 ........................................... 1,000,000 998,750
--------------
22,818,791
--------------
RAILROADS .9%
DM&E Railroad, Term Loan, 8.00%, 6/30/08 ................................. 2,970,000 2,947,725
Helm Holding Corp., Term Loan B, 5.103 - 5.176%, 10/18/06 ................ 2,870,779 2,655,471
RailAmerica Transportation Corp., Term Loan B, 3.938 - 4.00%, 5/21/09 .... 2,500,000 2,498,125
Trinity Industries Inc., Term Loan, 4.656 - 4.969%, 6/07/07 .............. 2,985,000 2,992,089
--------------
11,093,410
--------------
REAL ESTATE INVESTMENT TRUSTS .5%
Aimco, Term Loan, 3.96%, 2/06/04 ......................................... 1,719,996 1,711,396
Macerich Partnership LP, Term Loan B, 4.78%, 7/09/09 ..................... 389,582 390,069
Newkirk Master LP, Term Loan, 8.50%, 1/30/05 ............................. 4,666,933 4,661,099
--------------
6,762,564
--------------
RENTAL/LEASING COMPANIES 1.9%
Ashtead Group, Term Loan B, 4.398%, 6/30/07 .............................. 17,443,861 16,135,571
d Rent-A-Center Inc., Revolver, .25 - 1.25%, 7/31/04 ....................... 1,984,654 1,925,115
Rent-Way Inc., Term Loan B, 7.40%, 9/30/06 ............................... 4,946,547 4,600,289
United Rentals Inc., Term Loan B, 4.35 - 5.10%, 9/30/07 .................. 1,336,504 1,330,155
--------------
23,991,130
--------------
RESTAURANTS .3%
Dominos Inc., Term Loan B, 3.90%, 7/26/08 ................................ 992,506 995,298
Jack in the Box Inc., Term Loan B, 4.61%, 7/24/07 ........................ 1,000,000 1,006,875
O'Charleys Inc., Term Loan B, 5.34%, 1/15/09 ............................. 1,000,000 998,125
--------------
3,000,298
--------------
SEMICONDUCTORS .5%
ON Semiconductor Corp.,
Term Loan A, 5.438%, 8/04/05 ........................................... 47,188 41,348
Term Loan B, 5.438%, 8/04/06 ........................................... 2,534,622 2,272,712
Term Loan C, 5.438%, 8/04/07 ........................................... 2,858,384 2,565,399
Term Loan D, 5.438%, 8/04/07 ........................................... 1,864,724 1,661,469
--------------
6,540,928
--------------
SERVICES TO THE HEALTH INDUSTRY .4%
Accredo Health Inc., Term Loan B, 4.12%, 4/15/09 ......................... 992,500 993,741
NDC Health Corp., Term Loan B, 5.47%, 11/30/08 ........................... 4,000,000 4,005,000
--------------
4,998,741
--------------

FRANKLIN FLOATING RATE TRUST

STATEMENT OF INVESTMENTS, JANUARY 31, 2003 (UNAUDITED) (CONT.)

PRINCIPAL
AMOUNT a VALUE
---------------------------------------------------------------------------------------------------------------------------

b SENIOR FLOATING RATE INTERESTS (CONT.)
SPECIALTY STORES .2%
PETCO Animal Supplies Inc., Term Loan C, 4.34 - 4.38%, 10/02/08 .......... $ 2,984,496 $ 2,994,757
--------------
SPECIALTY TELECOMMUNICATIONS .3%
c Global Crossing Holdings Ltd., Term Loan B, 8.25%, 8/15/06 ............... 2,477,298 468,435
c Pacific Crossing Ltd., Term Loan B, 5.50%, 7/28/06 ....................... 21,312,525 1,065,626
RCN Corp., Term Loan B, 7.00%, 6/03/07 ................................... 3,701,027 2,661,039
--------------
4,195,100
--------------
STEEL .5%
LTV Corp., Term Loan, 5.985%, 10/31/04 ................................... 9,376,333 6,610,315
--------------
TOBACCO .4%
Commonwealth Brands Inc., Term Loan, 5.375%, 8/22/07 ..................... 4,708,333 4,702,448
--------------
TRUCKING .1%
Flexi-Van Leasing Inc., Term Loan B, 4.31 - 4.82%, 9/20/07 ............... 997,500 998,747
--------------
TRUCKS/CONSTRUCTION/FARM MACHINERY .1%
Terex Corp., Incremental Term Loan, 3.90%, 12/31/09 ...................... 997,500 962,172
--------------
WATER UTILITES .2%
National Waterworks Inc., Term Loan B, 6.50%, 11/27/09 ................... 2,000,000 2,015,626
--------------
WHOLESALE DISTRIBUTORS .6%
Amscan Holdings Inc., Term Loan, 5.87%, 6/20/07 .......................... 1,000,000 992,500
Wilmar Industries Inc., Term Loan B, 5.36%, 9/27/07 ...................... 7,331,250 7,257,938
--------------
8,250,438
--------------
WIRELESS COMMUNICATIONS 1.9%
c Cricket Communications Inc., Term Loan, 6.375%, 6/30/07 .................. 10,000,000 2,425,000
Nextel Communications Inc., Term Loan D, 4.438%, 3/31/09 ................. 5,000,000 4,566,965
Nextel Operations Inc.,
Leveraged Lease I, 6.125%, 3/15/05 ..................................... 2,466,962 2,133,922
Leveraged Lease II, 4.65%, 2/08/07 ..................................... 10,862,664 9,396,205
Nextel Partners Inc., Term Loan C, 5.70%, 7/29/08 ........................ 5,000,000 4,566,665
Sygnet Wireless Inc., Term Loan C, 5.13%, 12/23/07 ....................... 1,646,602 1,432,533
--------------
24,521,290
--------------
TOTAL SENIOR FLOATING RATE INTERESTS (COST $1,147,008,451) ............... 1,003,070,526
--------------

SHARES
------------
COMMON STOCKS AND WARRANTS .3%
ADVERTISING/MARKETING SERVICES
f DIMAC Holdings Inc., wts., 2/20/49 ....................................... 4,109 --
--------------
AUTO PARTS: O.E.M.
f Exide Technologies., wts., 3/18/06 ....................................... 74,278 --
--------------
COMMERCIAL PRINTING/FORMS
f Vertis Holdings Inc., wts., 6/30/11 ...................................... 39,812 --
--------------
MEDICAL/NURSING SERVICES
e,f Rotech Medical Corp. ..................................................... 26,267 --
--------------

FRANKLIN FLOATING RATE TRUST

STATEMENT OF INVESTMENTS, JANUARY 31, 2003 (UNAUDITED) (CONT.)

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

COMMON STOCKS AND WARRANTS (CONT.)
PACKAGED SOFTWARE
e,f Rivus Internet Group Inc. ................................................ 72,960 $ --
--------------
WIRELESS COMMUNICATIONS .3%
f,g Arch Wireless Inc. ....................................................... 1,908,741 4,275,580
f Teligent Inc. ............................................................ 460 --
--------------
4,275,580
--------------
TOTAL COMMON STOCKS AND WARRANTS (COST $30,610,412) ...................... 4,275,580
--------------
PREFERRED STOCKS
ADVERTISING/MARKETING SERVICES
f DIMAC Holdings, 20% PIK pfd. ............................................. 4,109 --
--------------
TOTAL PREFERRED STOCKS ................................................... --
CONVERTIBLE PREFERRED STOCKS (COST $1,232,448) .1%
MEDICAL/NURSING SERVICES .1%
Genesis Health Ventures Inc., 6.00%, cvt. pfd. ........................... 12,576 1,062,672
--------------
TOTAL CONVERTIBLE PREFERRED STOCKS ....................................... 1,062,672
--------------
TOTAL LONG TERM INVESTMENTS (COST $1,255,580,049) 1,038,715,763
--------------
SHORT TERM INVESTMENTS (COST $225,849,310) 17.5%
h Franklin Institutional Fiduciary Trust Money Market Portfolio ............ 225,849,310 225,849,310
--------------
TOTAL INVESTMENTS (COST $1,481,429,359) 97.9% ............................ 1,264,565,073
OTHER ASSETS, LESS LIABILITIES 2.1% ...................................... 26,737,032
--------------
NET ASSETS 100.0% ........................................................ $1,291,302,105
==============

CURRENCY ABBREVIATION:

GBP - British Pounds

aThe principal amount is stated in U.S. dollars unless otherwise indicated.
bSenior 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).
cSee Note 9 regarding defaulted securities.
dSee Note 1(h) 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 Institutional Fiduciary Trust
Money Market Portfolio.

See notes to financial statements.

FRANKLIN FLOATING RATE TRUST

Financial Statements

STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 2003 (UNAUDITED)

Assets:
Investments in securities:

Cost - Unaffiliated issuers ............................... $1,451,203,170
Cost - Non-controlled affiliated issuers .................. 30,226,189
==============
Value - Unaffiliated issuers .............................. 1,260,289,493
Value - Non-controlled affiliated issuers ................. 4,275,580
Receivables:

Investment securities sold ................................ 62,879,358
Capital shares sold ....................................... 492,220
Interest .................................................. 9,054,299
Other assets ............................................... 126,974
--------------
Total assets .......................................... 1,337,117,924
--------------
Liabilities:
Payables:
Investment securities purchased ........................... 10,914,481
Affiliates ................................................ 1,374,099
Shareholders .............................................. 1,216,917
Distributions to shareholders .............................. 2,254,543
Funds advanced by custodian ................................ 2,063,377
Unfunded loan commitments (Note 1) ......................... 27,593,781
Other liabilities .......................................... 398,621
--------------
Total liabilities ..................................... 45,815,819
--------------
Net assets, at value ................................. $1,291,302,105
==============
Net assets consist of:
Undistributed net investment income ........................ (5,982,571)
Net unrealized appreciation (depreciation) ................. (216,493,312)
Accumulated net realized gain (loss) ....................... (267,297,931)
Capital shares ............................................. 1,781,075,919
--------------
Net assets, at value ................................. $1,291,302,105
==============
Net asset value and maximum offering price per share
($1,291,302,105 [DIVIDE] 158,294,301
shares outstanding) a ..................................... $8.16
==============

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

See notes to financial statements.

FRANKLIN FLOATING RATE TRUST
Financial Statements (CONTINUED)

STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JANUARY 31, 2003 (UNAUDITED)

Investment income:

Dividends ................................................................ $ 1,612,247
Interest ................................................................. 44,538,933
-------------
Total investment income ............................................. 46,151,180
-------------
Expenses:
Management fees (Note 5) ................................................. 5,765,589
Administrative fees (Note 5) ............................................. 868,493
Transfer agent fees (Note 5) ............................................. 3,086,027
Custodian fees ........................................................... 7,742
Reports to shareholders .................................................. 52,548
Registration and filing fees ............................................. 58,022
Professional fees ........................................................ 174,329
Trustees' fees and expenses .............................................. 2,057
Amortization of organization costs (Note 1) .............................. 4,672
Other .................................................................... 384,720
-------------
Total expenses ...................................................... 10,404,199
-------------
Net investment income .............................................. 35,746,981
-------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments ............................................................. (137,297,526)
Foreign currency transactions ........................................... 130,890
-------------
Net realized gain (loss) ........................................... (137,166,636)
Net unrealized appreciation (depreciation) on:
Investments ............................................................. 109,794,641
Translation of assets and liabilities denominated in foreign currencies . 272,585
-------------
Net unrealized appreciation (depreciation) ......................... 110,067,226
-------------
Net realized and unrealized gain (loss) ................................... (27,099,410)
-------------
Net increase (decrease) in net assets resulting from operations ........... $ 8,647,571
=============

See notes to financial statements.

FRANKLIN FLOATING RATE TRUST
Financial Statements (CONTINUED)

STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JANUARY 31, 2003 (UNAUDITED)
AND THE YEAR ENDED JULY 31, 2002

SIX MONTHS YEAR
ENDED ENDED
JANUARY 31, 2003 JULY 31, 2002
-----------------------------------------

Increase (decrease) in net assets:
Operations:
Net investment income ................................................ $ 35,746,981 $ 150,636,612
Net realized gain (loss) from investments and
foreign currency transactions ....................................... (137,166,636) (116,136,805)
Net unrealized appreciation (depreciation) on
investments and translation of assets and
liabilities denominated in foreign currencies ....................... 110,067,226 (126,879,661)
-----------------------------------------
Net increase (decrease) in net assets resulting
from operations .................................................. 8,647,571 (92,379,854)
Distributions to shareholders from net investment income .............. (39,185,955) (153,197,524)
Capital share transactions (Note 2) ................................... (458,089,940) (806,679,853)
-----------------------------------------
Net increase (decrease) in net assets ............................ (488,628,324) (1,052,257,231)
Net assets:

Beginning of period ................................................... 1,779,930,429 2,832,187,660
-----------------------------------------
End of period ......................................................... $1,291,302,105 $ 1,779,930,429
=========================================
Undistributed net investment income included in net assets:
End of period ......................................................... $ (5,982,571) $ (3,736,760)
=========================================

See notes to financial statements.

FRANKLIN FLOATING RATE TRUST

Notes to Financial Statements (unaudited)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

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

A. SECURITY VALUATION:

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

B. FOREIGN CURRENCY TRANSLATION:

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

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

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

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

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

D. 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.

E. 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.

FRANKLIN FLOATING RATE TRUST

Notes to Financial Statements (unaudited) (CONTINUED)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONT.)

F. ORGANIZATION COSTS:

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

G. ACCOUNTING ESTIMATES:

The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the amounts of income
and expense during the reporting period. Actual results could differ from those
estimates.

H. 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.

2. SHARES OF BENEFICIAL INTEREST

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

SIX MONTHS ENDED YEAR ENDED
JANUARY 31, 2003 JULY 31, 2002
------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
------------------------------------------------------------------------

Shares sold .................................. 2,042,316 $ 16,657,295 28,062,186 $ 250,305,588
Shares issued in reinvestment
of distributions ............................ 3,069,722 24,916,463 11,096,664 97,874,769
Shares redeemed .............................. (61,365,007) (499,663,698) (131,170,493) (1,154,860,210)
------------------------------------------------------------------------
Net increase (decrease) ...................... (56,252,969) $(458,089,940) (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.

FRANKLIN FLOATING RATE TRUST

Notes to Financial Statements (unaudited) (CONTINUED)

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 period ended January 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.

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

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

Distributors received contingent deferred sales charges for the period of
$128,540.

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

6. INCOME TAXES

At January 31, 2003, the net unrealized appreciation (depreciation) based on the
cost of investments for income tax purposes of $1,488,406,674 was as follows:

Unrealized appreciation ....................... $ 7,786,524
Unrealized depreciation ....................... (231,628,125)
--------------
Net unrealized appreciation (depreciation) .... $(223,841,601)
==============

FRANKLIN FLOATING RATE TRUST

Notes to Financial Statements (unaudited) (CONTINUED)

6. INCOME TAXES (CONT.)

At July 31, 2002, the Fund had tax basis capital losses of $2,115,134, which may
be carried over to offset future capital gains. Such losses expire in 2009.

At July 31, 2002, the Fund has deferred capital losses occurring subsequent to
October 31, 2001 of $127,009,562. For tax purposes, such losses will be
reflected in the year ending July 31, 2003.

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

7. INVESTMENT TRANSACTIONS

Purchases and sales of securities (excluding short-term securities) for the
period ended January 31, 2003 aggregated $205,224,916 and $672,789,803,
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 $1,612,247 of dividend income from investment
in the Sweep Money Fund.

9. CREDIT RISK AND DEFAULTED SECURITIES

The Fund has 95.64% 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. At January 31,
2003, the Fund held defaulted securities with a value aggregating $23,514,993
representing 1.82% of the Fund's net assets. For information as to specific
securities, see the accompanying Statement of Investments.

For financial reporting purposes, the Fund discontinues accruing income on
defaulted bonds and those bonds for which the income is deemed uncollectible and
provides an estimate for losses on interest receivable.

FRANKLIN FLOATING RATE TRUST

Notes to Financial Statements (CONTINUED)

10. RESTRICTED SECURITIES

At January 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 January 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/SHARES ISSUER DATE COST VALUE
-----------------------------------------------------------------------------------------------------------------

$1,400,000 Ares IV, Term Loan D, 144A, 7.40%, 12/22/12 ................. 11/14/00 $1,400,000 $ 941,500
$2,500,000 Centurion II, Tranche D, 144A, 7.40%, 11/12/12 .............. 11/07/00 2,500,000 1,266,406
$2,000,000 Clydesdale CLO, Tranche D, 144A, 7.864%, 3/22/13 ............ 5/23/01 1,889,673 1,696,250
$3,000,000 First Dominion Funding II, sub. floating rate deb.,
Series A-D, 7.003%, 4/25/14 .............................. 5/03/99 2,991,559 1,079,063
$2,000,000 Highland Legacy CLO I, Term Loan D, 144A,
7.957%, 6/01/11 .......................................... 8/18/99 1,981,606 663,125
72,960 Rivus Internet Group Inc. ................................... 5/10/00 18,240 --
26,267 Rotech Medical Corp. ........................................ 3/26/02 105,068 --
----------
TOTAL RESTRICTED SECURITIES (.44% OF NET ASSETS) ............ $5,646,344
==========

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 the Fund owns 5% or more of the
outstanding voting securities. Investments in "affiliated companies" at January
31, 2003 were as shown below.

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

Arch Wireless Inc. 1,618,619 290,122 -- 1,908,741 $4,275,580 $-- $--
=================================

This page intentionally left blank.

LITERATURE REQUEST

For a brochure and prospectus, which contain 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 determined by the presence of a regular beeping
tone.

FRANKLIN TEMPLETON INVESTMENTS

GLOBAL GROWTH
Franklin Global Aggressive
Growth Fund
Franklin Global Growth Fund
Franklin Global Health Care Fund
Mutual Discovery Fund
Templeton Developing Markets Trust
Templeton Foreign Fund
Templeton Foreign Smaller
Companies Fund
Templeton Global Opportunities Trust
Templeton Global Smaller
Companies Fund
Templeton Growth Fund
Templeton International (Ex EM) Fund
Templeton World Fund

GLOBAL GROWTH & INCOME
Franklin Global Communications Fund
Mutual European Fund
Templeton Global Bond Fund

GLOBAL INCOME
Franklin Templeton Hard
Currency Fund

GROWTH
Franklin Aggressive Growth Fund
Franklin Biotechnology
Discovery Fund
Franklin Blue Chip Fund
Franklin Capital Growth Fund 1
Franklin DynaTech Fund
Franklin Flex Cap Growth Fund 2
Franklin Gold and Precious
Metals Fund
Franklin Growth Fund
Franklin Large Cap Growth Fund
Franklin Small-Mid Cap
Growth Fund
Franklin Technology Fund
Franklin U.S. Long-Short Fund 3

GROWTH & INCOME
Franklin Balance Sheet Investment Fund 4
Franklin Convertible
Securities Fund
Franklin Equity Income Fund
Franklin Income Fund
Franklin Large Cap Value Fund
Franklin MicroCap Value Fund 4
Franklin Natural Resources Fund
Franklin Real Estate
Securities Fund
Franklin Rising Dividends Fund
Franklin Small Cap Value Fund
Franklin Utilities Fund
Mutual Beacon Fund
Mutual Financial Services Fund
Mutual Qualified Fund
Mutual Shares Fund

FUND ALLOCATOR SERIES
Franklin Templeton Conservative Target Fund
Franklin Templeton Growth
Target Fund
Franklin Templeton Moderate
Target Fund

INCOME
Franklin Adjustable U.S. Government Securities Fund 5
Franklin's AGE High Income Fund
Franklin Floating Rate Daily
Access Fund
Franklin Floating Rate Trust 6
Franklin Short-Intermediate
U.S. Government Securities Fund 5
Franklin Strategic Income Fund
Franklin Total Return Fund
Franklin U.S. Government
Securities Fund 5
Franklin Federal Money Fund 5 , 7
Franklin Money Fund 5 , 7

TAX-FREE INCOME 8
Double Tax-Free Income Fund
Federal Intermediate-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 , 7

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

INSURANCE FUNDS
Franklin Templeton Variable
Insurance Products Trust 11

1. Formerly Franklin Growth and Income Fund. Effective 5/1/02, the fund's name
changed; investment goal and strategy remained the same.
2. Formerly Franklin California Growth Fund. Effective 9/1/02, the fund's name
changed and its investment criteria was modified to invest a majority of its net
assets in California companies, as opposed to at least 80% of net assets.
3. Upon reaching approximately $350 million in assets, the fund will close to
all investors.
4. The fund is only open to existing shareholders as well as select retirement
plans.
5. An investment in the fund is neither insured nor guaranteed by the U.S.
government or by any other entity or institution.
6. 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.
7. 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.
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
intermediate-term and money market portfolios (CA and NY).
11. The funds of the Franklin Templeton Variable Insurance Products Trust are
generally only available as investment options in variable annuity or variable
life insurance contracts.

12/02

[LOGO OMITTED]
FRANKLIN(R) TEMPLETON(R)
INVESTMENTS

One Franklin Parkway
San Mateo, CA 94403-1906

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--------------------------------------------------
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SEMIANNUAL REPORT
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 S2003 03/03 [RECYCLE LOGO] Printed on recycled paper