020 P-1
                        SUPPLEMENT DATED FEBRUARY 2, 2004
                              TO THE PROSPECTUS OF
                          FRANKLIN FLOATING RATE TRUST
                             dated December 1, 2003

The prospectus is amended as follows:

I. The  section  "Who  Manages  the  Fund?"  on page 30 is  replaced  with  the
 following:

 WHO MANAGES THE FUND?

 THE  BOARD. The  Board  oversees  the  management  of the Fund and elects its
 officers. The officers are responsible for the Fund's day-to-day operations.

 INVESTMENT   MANAGER. Franklin   Advisers,  Inc.  (Advisers),   One  Franklin
 Parkway,  San Mateo,  CA 94403-1906  manages the Fund's  assets.  The manager
 also  performs  similar  services  for  other  funds.  It is a  wholly  owned
 subsidiary of Resources,  a publicly  owned company  engaged in the financial
 services industry through its subsidiaries.  Charles B. Johnson and Rupert H.
 Johnson,  Jr. are the  principal  shareholders  of Resources.  Together,  the
 manager and its  affiliates  manage over $336  billion in assets.  Please see
 "Investment  Management and Other Services" and  "Miscellaneous  Information"
 in the SAI for information on securities transactions.

 PORTFOLIO MANAGERS.

 RICHARD S. HSU CFA, VICE PRESIDENT OF ADVISERS

 Mr. Hsu has been a manager of the Fund since 2000. He joined Franklin Templeton
 Investments in 1996.

 MADELINE LAM, VICE PRESIDENT OF ADVISERS

 Ms. Lam has been a manager of the Fund since January 2004. She joined Franklin
 Templeton Investments in 1998.

 MATTHEW GREGORY CFA, PORTFOLIO MANAGER OF ADVISERS

 Mr. Gregory has been a manager of the Fund since January 2004. He joined
 Franklin Templeton Investments in 1996.

 MANAGEMENT FEES. For the fiscal year ended July 31, 2003, management fees,
 before any reduction, were 0.80% of the average net assets of the Fund. Under
 an agreement by the manager to reduce its fees to reflect reduced services
 resulting from the Fund's investment in a Franklin Templeton money fund, the
 Fund paid 0.75% of its average net assets tothe manager for its services. This
 reduction is required by the Fund's Board and an exemptive order by the
 Securities and Exchange Commission.

 ADMINISTRATIVE SERVICES. FT Services provides certain administrative services
 and facilities for the Fund. Under its agreement with the Fund, FT Services is
 entitled to a monthly fee equal to an annual rate of 0.15% of the Fund's
 average daily net assets up to $200 million, 0.135% of average daily net assets
 over $200 million up to $700 million, 0.10% of average daily net assets over
 $700 million up to $1.2 billion, and 0.075% of average daily net assets over
 $1.2 billion. During the fiscal year ended July 31, 2003, administration fees
 totaled 0.12%. Please see "Investment Management and Other Services" in the SAI
 for more information.

 SHAREHOLDER SERVICING AND TRANSFER AGENT. Investor Services, a wholly owned
 subsidiary of Resources, is the Fund's shareholder servicing agent and acts as
 the Fund's transfer agent and dividend-paying agent. Investor Services is
 compensated at an annual rate of 0.40% of the Fund's average daily net assets.
 The Fund also may reimburse Investor Services for certain out-of-pocket
 expenses.

               Please keep this supplement for future reference.