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
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(Exact name of registrant as specified in charter)

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

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

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

JULY 31, 2004
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ANNUAL REPORT AND SHAREHOLDER LETTER | INCOME
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FRANKLIN
FLOATING RATE TRUST

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

FRANKLIN o TEMPLETON o MUTUAL SERIES

Franklin Templeton Investments

GAIN FROM OUR PERSPECTIVE

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

SPECIALIZED EXPERTISE

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

FRANKLIN. Founded in 1947, Franklin is a recognized leader in fixed income
investing and also brings 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. Founded 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.

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MUTUAL FUNDS | RETIREMENT PLANS | 529 COLLEGE SAVINGS PLANS | SEPARATE ACCOUNTS
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Not part of the annual report

Contents

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

ANNUAL REPORT

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

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

Your Fund's Expenses............................. 9

Financial Highlights and
Statement of Investments......................... 11

Financial Statements............................. 27

Notes to
Financial Statements............................. 30

Report of Independent
Registered Public
Accounting Firm.................................. 39

Board Members
and Officers..................................... 40

Shareholder Information.......................... 45

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Annual Report

Franklin Floating Rate Trust

YOUR FUND'S GOAL AND MAIN 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.

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PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT GUARANTEE
FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND YOU
MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. CURRENT PERFORMANCE MAY
DIFFER FROM FIGURES SHOWN. PLEASE VISIT FRANKLINTEMPLETON.COM OR CALL
1-800/342-5236 FOR MOST RECENT MONTH-END PERFORMANCE.
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We are pleased to bring you Franklin Floating Rate Trust's annual report for the
fiscal year ended July 31, 2004.

PERFORMANCE OVERVIEW

Franklin Floating Rate Trust posted a +9.95% cumulative total return for the 12
months ended July 31, 2004, as shown in the Performance Summary on page 8. The
share price, as measured by net asset value (NAV), rose from $8.42 per share on
July 31, 2003, to $8.98 at year-end. The Fund made dividend distributions
totaling $0.277869 per share.1

ECONOMIC AND MARKET OVERVIEW

During the 12 months ended July 31, 2004, the U.S. economy remained strong.
One-year gross domestic product (GDP) rose an estimated 4.8% through June. Major
contributors to growth included consumer spending, inventory investment,
equipment and software spending, and federal government spending. Despite solid
export growth and a resilient housing market, annualized second quarter 2004 GDP
grew an estimated 2.8%, which was less than expected, due largely to the weakest
consumer spending growth in three years. Approximately 70% of GDP stemmed from
consumer activity, which slowed as personal liquidity from tax cuts and low
interest-rate incentives faded. Business investment and corporate profits rose
and contributed to overall economic growth.

PORTFOLIO BREAKDOWN
Based on Total Net Assets as of 7/31/04

[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC AS FOLLOWS:

Senior Floating Rate Interests 87.0%
Corporate Bonds 1.6%
Equities 0.7%
Short-Term Investments & Other Net Assets 10.7%

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. All Fund distributions
will vary depending upon current market conditions, and past distributions are
not indicative of future trends.

THE DOLLAR VALUE, NUMBER OF SHARES OR PRINCIPAL AMOUNT, AND NAMES OF ALL
PORTFOLIO HOLDINGS ARE LISTED IN THE FUND'S STATEMENT OF INVESTMENTS (SOI). THE
SOI BEGINS ON PAGE 12.

Annual Report | 3

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WHAT ARE SYNDICATED BANK LOANS?
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Syndicated bank loans are typically 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.
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Labor market conditions improved during the reporting period. More than one-half
of the jobs lost during the recession and weak economic expansion have been
recovered. The economy created 1.5 million jobs since summer 2003. In addition,
the unemployment rate fell from 6.2% in July 2003 to 5.5% at period-end.2
Services created the most jobs led by leisure and hospitality, education and
health, and business and professional services.

In light of positive economic developments, consumer inflation remained modest
but picked up speed in 2004. Excluding the volatile food and energy categories,
consumer prices increased 1.8% for the 12 months ended July 31, 2004.
Consequently, for the first time in more than four years, the Federal Reserve
Board (Fed) raised the federal funds target rate on June 30, 2004, by a
quarter-point to 1.25%. Because Fed policymakers expect inflation to remain
relatively low, they believe they can raise interest rates at a measured pace.
Nonetheless, the Fed said it will respond to changes in economic prospects as
needed to fulfill its obligation to maintain price stability.

Domestic equity markets sustained a rally through year-end 2003, then flattened
before falling into negative territory through July 2004. Despite continued
signs of enhanced corporate fundamentals, investors appeared cautious due to
geopolitical uncertainty, soaring oil prices and rising interest rates. The
Standard & Poor's 500 Composite Index (S&P 500) rose 13.16% for the 12 months
under review, while the technology-heavy NASDAQ Composite Index gained 9.33%.3

The syndicated bank loan market was strong during the year under review as
credit fundamentals continued to look favorable. Investor demand -- spurred by a
strengthening economy, rising interest rates and a low expected default rate --
made floating rate loans an attractive alternative to fixed-rate securities.

Although robust, new loan issuance was not enough to meet rising demand,
resulting in generally higher loan prices. The sustained imbalance between
supply and demand allowed borrowers to refinance their loans at lower interest
rates, reducing borrowing rate spreads over LIBOR.

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

4 | Annual Report

In this favorable borrowing environment, many companies sought to take advantage
of accessing capital. During the year under review, companies incurred
additional debt to finance future growth, acquisition opportunities and capital
expenditures. Some companies also distributed debt proceeds as dividends to
shareholders.

The three-month LIBOR rose from 1.11% on July 31, 2003, to 1.70% on July 31,
2004.4 However, almost all of the increase occurred during the last months of
the Fund's fiscal year as investors anticipated Fed interest rate hikes.

INVESTMENT STRATEGY

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

MANAGER'S DISCUSSION

As loan spreads over LIBOR tightened during the 12-month period, our portfolio's
loan spreads also tightened and affected the Fund's yield. Fortunately, mainly
due to strong demand, many of our loans also appreciated in price, partially
offsetting the yield decline.

Finding good value in a strong loan market remained challenging. We continued to
invest in a conservative manner, and were willing to hold a higher cash position
than we considered ideal if we felt the loans offered to us did not provide
adequate risk compensation. The primary syndication market remained the source
of many of our purchases. For example, the Fund recently purchased the senior
secured loan of VWR International, which funded Clayton, Dubilier & Rice's
acquisition of the company from Merck. VWR is a leading global distributor of
research laboratory supplies to major companies as well as universities and
research institutes. We found the loan attractive due to the company's leading
market position and historically recurring, stable cash flows.

TOP 10 SECTORS/INDUSTRIES
7/31/04
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% OF TOTAL
NET ASSETS
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Cable and Satellite Television 7.7%
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Movies and Entertainment 5.8%
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Auto Parts: Original Equipment
Manufacturer 4.5%
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Electric Utilities 4.2%
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Wireless Communications 3.6%
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Containers and Packaging 3.1%
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Casinos and Gaming 2.3%
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Broadcasting 2.3%
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Publishing: Books and Magazines 2.2%
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Medical and Nursing Services 2.2%
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4. Source: British Bankers' Association.

Annual Report | 5

TOP 10 HOLDINGS
7/31/04

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COMPANY % OF TOTAL
SECTOR/INDUSTRY NET ASSETS
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Aldelphia 2.1%
CABLE & SATELLITE TELEVISION
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Centerpoint Energy Inc. 1.3%
ELECTRIC UTILITIES
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Tenneco Automotive Inc. 1.2%
AUTO PARTS: ORIGINAL EQUIPMENT
MANUFACTURER
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Regal Cinemas Inc. 1.1%
MOVIES & ENTERTAINMENT
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Allied Waste North America Inc. 1.1%
ENVIRONMENTAL SERVICES
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Tapco International 1.1%
BUILDING PRODUCTS
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NTL Investment Holdings 1.0%
CABLE & SATELLITE TELEVISION
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Solo Cup Co. 1.0%
OTHER CONSUMER SPECIALTIES
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Peabody Energy Corp. 1.0%
COAL
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Crown Castle Operating Co. 1.0%
WIRELESS COMMUNICATIONS
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Two of our larger commitments this year in the new issue market were in the
movies and entertainment industry, which we considered attractive due to its
strong asset coverage. These investments were Regal Cinemas, the largest theater
circuit operator in the U.S., and Metro-Goldwyn-Mayer (MGM), a movie production
company. MGM's considerable film library of approximately 4,000 titles provided
substantial collateral value, which secured our loan. These holdings appreciated
after our new issue purchase, contributing to the Fund's performance.

We also remained favorable toward Peabody Energy Corporation, the world's
largest private-sector coal company, and increased our exposure. The company
performed well recently as the recovering worldwide economy led to increased
demand for electricity generation and steel production. With majority interests
in 29 coal operations in the U.S. and Australia, Peabody holds the largest
market share in three of the four primary coal producing regions in the U.S.

Lastly, the Fund benefited from its continued ownership of Arch Wireless common
equity, which we received as part of a reorganization after the company's
December 2001 bankruptcy. In March 2004, Arch, a paging company, announced it
would merge with its competitor Metrocall, driving Arch's stock price up sharply
and contributing to the Fund's share price.

The Fund's performance was negatively impacted by our underweighted exposure to
the utility sector compared with the Credit Suisse First Boston (CSFB) Leveraged
Loan Index.5 The utilities sector was a riskier segment of the loan market,
which performed well over the past 12 months.6 Although avoiding lower-quality
credits hurt relative performance, we remained focused on our conservative
investment strategy.

5. Source: The CSFB Leveraged Loan Index is designed to mirror the investible
universe of the U.S. dollar denominated leveraged loan market. Loans must be
rated 5B or lower. That is, the highest Moody's/S&P ratings are Baa1/BB+ or
Ba1/BBB+. If unrated, the initial spread level must be LIBOR plus 125 basis
points or higher. The tenor must be at least one year and only funded term loans
are included.
6. The utilities sector comprises electric utilities in the SOI.

6 | Annual Report

Thank you for your continued participation in Franklin Floating Rate Trust. We
look forward to serving your future investment needs.

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

/S/Madeline Lam
Madeline Lam

/S/Matthew W. Gregory
Matthew W. Gregory, CFA

Portfolio Managers
Franklin Floating Rate Trust

DIVIDEND DISTRIBUTIONS*
8/1/03-7/31/04

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MONTH DIVIDEND PER SHARE
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August 2.4334 cents
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September 2.5281 cents
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October 2.5820 cents
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November 2.2734 cents
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December 2.4383 cents
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January 2.1144 cents
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February 2.0501 cents
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March 2.2520 cents
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April 2.1762 cents
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May 2.0288 cents
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June 2.5620 cents
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July 2.3482 cents
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TOTAL 27.7869 CENTS
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*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. All Fund distributions
will vary depending upon current market conditions, and past distributions are
not indicative of future trends.

THIS DISCUSSION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS AS OF
JULY 31, 2004, THE END OF THE REPORTING PERIOD. THE WAY WE IMPLEMENT OUR MAIN
INVESTMENT STRATEGIES AND THE RESULTING PORTFOLIO HOLDINGS MAY CHANGE DEPENDING
ON FACTORS SUCH AS MARKET AND ECONOMIC CONDITIONS. THESE OPINIONS MAY NOT BE
RELIED UPON AS INVESTMENT ADVICE OR AN OFFER FOR A PARTICULAR SECURITY. THE
INFORMATION IS NOT A COMPLETE ANALYSIS OF EVERY ASPECT OF ANY MARKET, COUNTRY,
INDUSTRY, SECURITY OR THE FUND. STATEMENTS OF FACT ARE FROM SOURCES CONSIDERED
RELIABLE, BUT THE 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.

Annual Report | 7

Performance Summary as of 7/31/04

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

PRICE AND DISTRIBUTION INFORMATION

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CHANGE 7/31/04 7/31/03
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Net Asset Value (NAV) +$0.56 $8.98 $8.42
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DISTRIBUTIONS (8/1/03-7/31/04)
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Dividend Income $0.277869
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PERFORMANCE 1

SHARES REPURCHASED WITHIN 12 MONTHS OF INVESTMENT ARE SUBJECT TO 1% EARLY
WITHDRAWAL CHARGE. CUMULATIVE TOTAL RETURN EXCLUDES THE EARLY WITHDRAWAL CHARGE.
AVERAGE ANNUAL TOTAL RETURNS INCLUDE THE EARLY WITHDRAWAL CHARGE.

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1-YEAR 5-YEAR INCEPTION (10/10/97)
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Cumulative Total Return 2 +9.95% +23.99% +39.24%
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Average Annual Total Return 3 +8.95% +4.40% +4.98%
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Value of $10,000 Investment 4 $10,895 $12,399 $13,924
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Avg. Ann. Total Return (6/30/04) 5 +9.61% +4.50% +5.01%
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Distribution Rate 6 3.18%
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30-Day Yield 7 2.67%
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PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT GUARANTEE
FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND YOU
MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. CURRENT PERFORMANCE MAY
DIFFER FROM FIGURES SHOWN.

FOR MOST RECENT MONTH-END PERFORMANCE, SEE "FUNDS AND PERFORMANCE" AT
FRANKLINTEMPLETON.COM OR CALL 1-800/342-5236.

ENDNOTES

FRANKLIN FLOATING RATE TRUST IS A NON-DIVERSIFIED FUND, WHICH MEANS IT CAN BE
MORE SUSCEPTIBLE TO ADVERSE ECONOMIC, POLITICAL AND REGULATORY CHANGES. THE
LOANS IN WHICH THE FUND INVESTS TEND TO BE RATED BELOW INVESTMENT GRADE.
INVESTING IN HIGHER-YIELDING, LOWER-RATED LOANS INVOLVES GREATER RISK OF
DEFAULT, WHICH COULD RESULT IN LOSS OF PRINCIPAL--A RISK THAT MAY BE HEIGHTENED
IN A SLOWING ECONOMY. BECAUSE THE TIME REQUIRED TO TRADE OR LIQUIDATE LOANS
COULD BE LONGER THAN FOR MOST SECURITIES, THE SECONDARY MARKET FOR THESE TYPES
OF LOANS IS CONSIDERED ILLIQUID. THE FUND IS STRUCTURED AS A CONTINUOUSLY
OFFERED, CLOSED-END FUND AND DOES NOT OFFER DAILY REDEMPTIONS. THE FUND HAS A
FUNDAMENTAL POLICY TO PROVIDE INVESTORS ACCESS TO THEIR MONEY BY MAKING
QUARTERLY TENDER OFFERS FOR 5%-25% OF THE FUND'S OUTSTANDING SHARES. HOWEVER, IN
UNUSUAL CIRCUMSTANCES, THE FUND MAY SUSPEND OR POSTPONE A TENDER OFFER SUBJECT
TO APPROVAL BY THE FUND'S BOARD OF TRUSTEES. THE FUND'S PROSPECTUS ALSO INCLUDES
A DESCRIPTION OF THE MAIN INVESTMENT RISKS.

1. Past expense reductions by the Fund's manager increased the Fund's total
returns. If the manager had not taken this action, the Fund's total returns
would have been lower.
2. Cumulative total return represents the change in value of an investment over
the periods indicated and does not include the early withdrawal charge.
3. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes the early withdrawal
charge.
4. These figures represent the value of a hypothetical $10,000 investment in the
Fund over the periods indicated and include the early withdrawal charge.
5. In accordance with SEC rules, we provide standardized average annual total
return information through the latest calendar quarter.
6. The distribution rate is based on the annualization of daily distributions
totaling 2.3482 cents per share during the last 30 days of July and the $8.98
NAV on 7/31/04.
7. Yield is based on the earnings of the Fund's portfolio for the 30 days ended
7/31/04.

8 | Annual Report

Your Fund's Expenses

As a Fund shareholder, you can incur two types of costs:

o Transaction costs, including sales charges (loads) on Fund purchases and
redemption fees; and

o Ongoing Fund costs, including management fees, distribution and service
(12b-1) fees, and other Fund expenses. All mutual funds have ongoing costs,
sometimes referred to as operating expenses.

The following table shows ongoing costs of investing in the Fund and can help
you understand these costs and compare them with those of other mutual funds.
The table assumes a $1,000 investment held for the six months indicated.

ACTUAL FUND EXPENSES
The first line (Actual) for each share class listed in the table below provides
actual account values and expenses. The "Ending Account Value" is derived from
the Fund's actual return, which includes the effect of Fund expenses.

You can estimate the expenses you paid during the period, by following these
steps. OF COURSE, YOUR ACCOUNT VALUE AND EXPENSES WILL DIFFER FROM THOSE IN THIS
ILLUSTRATION:

1. Divide your account value by $1,000.
IF AN ACCOUNT HAD AN $8,600 VALUE, THEN $8,600 / $1,000 = 8.6.

2. Multiply the result by the number under the heading "Expenses Paid During
Period."
IF EXPENSES PAID DURING PERIOD WERE $7.50, THEN 8.6 X $7.50 = $64.50.

In this illustration, the estimated expenses paid this period are $64.50.

HYPOTHETICAL EXAMPLE FOR COMPARISON WITH OTHER FUNDS
Information in the second line (Hypothetical) for each class in the table can
help you compare ongoing costs of investing in the Fund with those of other
mutual funds. This information may not be used to estimate the actual ending
account balance or expenses you paid during the period. The hypothetical "Ending
Account Value" is based on the actual expense ratio for each class and an
assumed 5% annual rate of return before expenses, which does not represent the
Fund's actual return. The figure under the heading "Expenses Paid During Period"
shows the hypothetical expenses your account would have incurred under this
scenario. You can compare this figure with the 5% hypothetical examples that
appear in shareholder reports of other funds.

PLEASE NOTE THAT EXPENSES SHOWN IN THE TABLE ARE MEANT TO HIGHLIGHT ONGOING
COSTS AND DO NOT REFLECT ANY TRANSACTION COSTS, SUCH AS SALES CHARGES OR
REDEMPTION FEES. Therefore, the second line for each class is useful in
comparing ongoing costs only, and will not help you compare total costs of
owning different funds. In addition, if transaction costs were included, your
total costs would have been higher. Please refer to the Fund prospectus for
additional information on operating expenses.

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BEGINNING ACCOUNT ENDING ACCOUNT EXPENSES PAID DURING
VALUE 1/31/04 VALUE 7/31/04 PERIOD* 1/31/04-7/31/04
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Actual $1,000 $1,032.30 $6.82
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Hypothetical (5% return before expenses) $1,000 $1,018.15 $6.77
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*Expenses are equal to the Fund's annualized expense ratio of 1.35%, multiplied
by the average account value over the period, multiplied by 182/366 to reflect
the one-half year period.

Annual Report | 9

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 - 8/1/03 THROUGH 7/31/04

--------------------------------------------------------------------------------------
REPURCHASE REPURCHASE % OF SHARES NUMBER OF
REQUEST DEADLINE OFFER AMOUNT TENDERED* SHARES TENDERED*
--------------------------------------------------------------------------------------

10/01/03 25% 6.316% 8,950,842.290
--------------------------------------------------------------------------------------
01/05/04 25% 4.913% 6,832,488.269
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04/01/04 25% 5.932% 8,138,376.863
--------------------------------------------------------------------------------------
07/01/04 25% 4.700% 6,758,262.896
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*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.

10 | Annual Report

Franklin Floating Rate Trust

FINANCIAL HIGHLIGHTS

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YEAR ENDED JULY 31,
2004 2003 2002 2001 2000
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PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)

Net asset value, beginning of year ...................... $8.42 $8.30 $9.24 $9.85 $9.98
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Income from investment operations:

Net investment income .................................. .266 .330 .568b .875 .839

Net realized and unrealized gains (losses) ............. .572 .179 (.927)b (.606) (.130)
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Total from investment operations ........................ .838 .509 (.359) .269 .709
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Less distributions from net investment income ........... (.278) (.389) (.581) (.879) (.839)
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Net asset value, end of year ............................ $8.98 $8.42 $8.30 $9.24 $9.85
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Total return a .......................................... 9.95% 6.36% (3.95)% 2.80% 7.39%

RATIOS/SUPPLEMENTAL DATA

Net assets, end of year (000's) ......................... $1,257,676 $1,160,979 $1,779,930 $2,832,188 $2,541,497

Ratios to average net assets:

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

Net investment income .................................. 3.02% 4.26% 6.58%b 9.07% 8.51%

Portfolio turnover rate ................................. 86.50% 55.96% 62.21% 84.15% 66.27%

a Total return does not reflect the contingent deferred sales charge, and is not
annualized for periods less than one year.

b Effective August 1, 2001, the Fund adopted the provisions of the AICPA Audit
and Accounting Guide for 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. | 11

Franklin Floating Rate Trust

STATEMENT OF INVESTMENTS, JULY 31, 2004

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COUNTRY PRINCIPAL AMOUNT VALUE
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BONDS 1.6%
BROADCASTING 1.0%

Comcorp Holdings Inc., PIK, 12.50%, 6/04/10 ........................ United States $ 2,666,667 $ 1,760,000
Paxson Communications Corp., senior secured floating rate note, 144A,
4.35%, 1/15/10 ................................................... United States 10,450,000 10,541,437
---------------
12,301,437
---------------

FINANCIAL CONGLOMERATES .2%
Finova Group Inc., 7.50%, 11/15/09 ................................. United States 5,598,989 3,191,424
---------------

STEEL .4%
Ispat Inland ULC, senior secured note, 144A, 7.86%, 4/01/10 ........ United States 5,000,000 5,125,000
---------------
TOTAL BONDS (COST $21,814,851) ..................................... 20,617,861
---------------

a SENIOR FLOATING RATE INTERESTS 87.0%
ADVERTISING/MARKETING SERVICES .3%
Adams Outdoor Advertising Inc.,
Second Lien Term Loan, 5.13%, 4/05/12 ........................... United States 1,000,000 1,015,625
Term Loan, 3.88%, 10/05/11 ...................................... United States 3,000,000 3,038,751
b DIMAC Holdings, Term Loan B, 10.00%, 9/30/04 ....................... United States 558,337 16,750
---------------
4,071,126
---------------

AEROSPACE & DEFENSE 2.0%
Anteon International Corp., Term Loan B, 3.586%, 12/19/10 .......... United States 2,985,000 3,024,178
CACI International Inc., Term Loan B, 3.18%, 4/23/11 ............... United States 997,500 1,002,488
DRS Technologies Inc., Term Loan B, 3.09 - 3.73%, 11/04/10 ......... United States 1,688,390 1,704,747
ILC Industries Inc.,
First Lien Term Loan, 4.586%, 8/04/10 ........................... United States 995,000 1,004,950
Second Lien Term Loan, 7.336%, 2/05/11 .......................... United States 500,000 505,000
Titan Corp., Term Loan B, 4.62 - 4.70%, 2/23/06 .................... United States 11,284,811 11,343,582
Transdigm Inc., Term Loan B, 3.61%, 7/22/10 ........................ United States 995,006 1,009,154
United Defense Industries Inc., Term Loan B, 3.48 - 3.59%, 8/13/09 . United States 783,491 790,918
Vought Aircraft Industries,
Term Loan B, 4.98%, 6/30/07 ..................................... United States 276,496 279,866
Term Loan C, 5.23%, 6/30/08 ..................................... United States 2,059,114 2,084,211
Term Loan X, 4.73%, 12/31/06 .................................... United States 2,034,329 2,052,129
---------------
24,801,223
---------------

APPAREL/FOOTWEAR .2%
St. John Knits Inc., Term Loan B, 5.438%, 7/31/07 .................. United States 2,124,704 2,140,971
---------------

AUTO PARTS: ORIGINAL EQUIPMENT MANUFACTURER 4.9%
Dayco Products LLC, Term Loan B, 4.57 - 4.87%, 6/18/11 ............. United States 5,300,000 5,387,784
Exide Technologies USD (US Borrower), Term Loan, 4.813%, 5/04/10 ... United States 1,000,000 1,008,750
Exide Technologies USD (EURO Borrower), Term Loan, 4.813%,
5/04/10 .......................................................... United States 1,000,000 1,004,375
Federal Mogul Corp., DIP Term Loan, 4.313 - 4.50%, 2/06/05 ......... United States 959,540 960,749
GenCorp Inc., Term Loan B, 5.25 - 5.375%, 3/28/07 .................. United States 8,367,256 8,426,521
c Grand Vehicle Works, Term Loan B, 4.43 - 4.92%, 7/23/10 ............ United States 1,250,000 1,248,437
Hayes Lemmerz, Term Loan, 4.91 - 5.73%, 6/03/09 .................... United States 8,590,000 8,742,215
Hilite International Inc., Term Loan B, 5.85 - 6.086%, 3/31/09 ..... United States 838,604 843,845

12 | Annual Report

Franklin Floating Rate Trust

STATEMENT OF INVESTMENTS, JULY 31, 2004 (CONTINUED)

Key Plastics and Key Safety,
Term Loan B, 4.37 - 4.61%, 7/31/10 .............................. United States $ 2,500,000 $ 2,539,845
Term Loan C, 7.12 - 7.36%, 7/31/11 .............................. United States 2,000,000 2,028,126
Metaldyne Corp., Term Loan D, 5.875%, 12/31/09 ..................... United States 1,302,784 1,305,227
Plastech Engineered Products Inc., First Lien Term Loan, 4.34%,
3/11/10 .......................................................... United States 1,484,483 1,507,678
Progressive Moulded Products, Term Loan C, 6.75%, 6/30/08 .......... Canada 95,477 896,597
Tenneco Automotive Inc.,
L/C Term Loan, 4.61%, 12/12/10 .................................. United States 4,655,172 4,751,185
Term Loan B, 4.503%, 12/12/10 ................................... United States 10,293,104 10,496,825
Tower Automotive Inc., Term Loan B, 5.82%, 5/24/09 ................. United States 1,500,000 1,505,000
TRW Automotive Acquisition Corp.,
Term Loan A1, 3.625%, 2/28/09 ................................... United States 3,000,000 3,036,249
Term Loan D1, 4.125%, 2/28/11 ................................... United States 4,792,337 4,882,193
---------------
60,571,601
---------------

AUTOMOTIVE AFTERMARKET .4%
Guilford Mills Inc., First Lien Term Loan, 6.25%, 5/20/10 .......... United States 1,395,652 1,385,185
Keystone Automotive Operations Inc., Term Loan, 4.00 - 4.669%,
10/30/09 ......................................................... United States 2,380,435 2,415,025
United Components Inc., Term Loan C, 3.99%, 6/30/10 ................ United States 856,667 870,030
---------------
4,670,240
---------------

BEVERAGES: ALCOHOLIC .2%
Constellation Brands Inc., Term Loan B, 3.188 - 3.50%, 11/30/08 .... United States 1,000,000 1,005,980
Southern Wine & Spirits of America Inc., Term Loan B, 3.84%,
6/21/08 .......................................................... United States 992,432 1,004,528
---------------
2,010,508
---------------

BEVERAGES: NON-ALCOHOLIC .3%
Dr. Pepper Bottling Co. of Texas, Term Loan, 3.65 - 3.95%, 12/18/10 United States 3,338,664 3,378,311
---------------

BROADCASTING 1.3%
Cumulus Media Inc., Term Loan E, 3.13%, 3/28/10 .................... United States 1,400,000 1,418,157
Emmis Operating Co., Term Loan B, 3.10%, 11/10/11 .................. United States 8,250,000 8,349,899
Gray Television Inc., Term Loan C, 2.97 - 3.36%, 12/31/10 .......... United States 1,750,000 1,761,865
c NEP Supershooters LP, First Lien Term Loan, 5.70%, 2/03/11 ......... United States 1,500,000 1,515,937
Sinclair Broadcasting,
Term Loan A, 3.23%, 6/30/09 ..................................... United States 1,500,000 1,507,500
Term Loan C, 3.23%, 12/31/09 .................................... United States 1,500,000 1,518,750
---------------
16,072,108
---------------

BUILDING PRODUCTS 1.8%
Builders FirstSource Inc., Term Loan, 4.53 - 4.59%, 3/17/10 ........ United States 1,665,825 1,680,401
Building Materials Holding Corp., Term Loan B, 4.375%, 8/13/10 ..... United States 990,000 993,712
Masonite International Corp.,
Term Loan C, 4.063%, 8/31/08 .................................... United States 2,841,111 2,871,740
Term Loan C2, 3.625%, 8/31/08 ................................... United States 997,500 1,014,022

Annual Report | 13

Franklin Floating Rate Trust

STATEMENT OF INVESTMENTS, JULY 31, 2004 (CONTINUED)

NCI Building Systems Inc., Term Loan B, 3.41 - 3.45%, 6/07/10 ...... United States $ 1,750,000 $ 1,772,969
Norcraft Cos. LP, Term Loan, 4.66%, 10/21/09 ....................... United States 944,444 953,889
Tapco International,
Term Loan B, 4.33 - 4.34%, 7/23/07 .............................. United States 7,286,932 7,323,367
Term Loan C, 4.58 - 4.59%, 7/23/08 .............................. United States 6,099,432 6,129,929
---------------
22,740,029
---------------

CABLE/SATELLITE TELEVISION 7.7%
Bresnan Broadband Holdings LLC,
Term Loan A, 4.90 - 5.73%, 3/31/10 .............................. United States 1,250,000 1,257,291
Term Loan B, 4.83 - 5.11%, 9/30/10 .............................. United States 1,000,000 1,015,000
i Century Cable (Adelphia),
Discretionary Term Loan, 6.25%, 12/31/09 ........................ United States 3,000,000 2,895,000
Term Loan, 6.25%, 6/30/09 ....................................... United States 1,000,000 969,271
Charter Communications Operating LLC, Term Loan B, 4.92%,
4/23/11 .......................................................... United States 9,500,000 9,383,036
DirecTV Holdings LLC, Term Loan, 3.45 - 3.76%, 3/06/10 ............. United States 9,085,102 9,184,220
Grapeclose Ltd. (Inmarsat),
Term Loan B, 4.561%, 10/10/10 ................................... United Kingdom 5,750,000 5,814,687
Term Loan C, 5.061%, 10/10/11 ................................... United Kingdom 5,750,000 5,814,688
Insight Midwest Holdings,
Additional Term Loan, 3.938%, 12/31/09 .......................... United States 3,980,000 4,044,950
Term Loan B, 3.938%, 12/31/09 ................................... United States 2,985,000 3,033,712
MCC Iowa (Broadband), Term Loan B1, 3.87 - 4.17%, 9/12/10 .......... United States 3,000,000 3,035,391
Mediacom Illinois, Term Loan B, 3.98%, 12/31/08 .................... United States 4,895,992 4,953,750
c NTL Investment Holdings, Term Loan B, 4.627%, 5/31/12 .............. United Kingdom 12,500,000 12,416,663
i Olympus Cable Holdings (Adelphia), Term Loan B, 6.25%, 9/30/10 ..... United States 2,000,000 1,938,928
i UCA-HHC (Adelphia), Term Loan, 5.50%, 3/31/08 ...................... United States 20,935,000 20,040,029
UPC Distribution Holdings B.V., Term Loan C2, 7.325 - 7.381%,
3/31/09 .......................................................... Netherlands 11,442,500 11,553,355
---------------
97,349,971
---------------

CASINOS/GAMING 2.3%
Alliance Gaming Corp., Term Loan B, 3.788%, 8/22/09 ................ United States 2,000,000 2,024,500
Ameristar Casinos Inc., Term Loan B1, 3.563%, 12/20/06 ............. United States 3,019,844 3,060,424
Boyd Gaming Corp., Term Loan B, 3.35 - 3.69%, 5/14/11 .............. United States 2,000,000 2,026,562
Global Cash Access LLC, Term Loan, 4.23%, 3/10/10 .................. United States 987,500 1,004,164
Greektown Casinos LLC, Term Loan D, 4.679 - 4.84%, 12/31/05 ........ United States 5,929,065 5,951,299
Green Valley Ranch Gaming LLC, Term Loan B, 4.336%, 12/05/10 ....... United States 995,000 1,007,437
Isle of Capri, Term Loan B, 3.44 - 3.828%, 4/25/08 ................. United States 827,500 837,696
Isle of Capri Black Hawk LLC, Term Loan C, 4.18 - 4.59%, 12/31/07 .. United States 989,900 1,004,075
Marina District Finance Co. Inc., Term Loan B, 5.16 - 5.59%,
12/31/07 ......................................................... United States 2,848,028 2,874,284
Penn National Gaming Inc., Term Loan D, 3.86 - 4.09%, 3/03/09 ...... United States 2,284,301 2,312,969
Scientific Games Corp., Term Loan C, 3.98 - 4.08%, 12/31/09 ........ United States 6,271,460 6,360,308
---------------
28,463,718
---------------

14 | Annual Report

Franklin Floating Rate Trust

STATEMENT OF INVESTMENTS, JULY 31, 2004 (CONTINUED)

Affinity Group Inc.,
Term Loan B1, 5.209 - 5.66%, 6/23/09 ............................ United States $ 231,122 $ 233,626
Term Loan B2, 5.209 - 5.578%, 6/23/09 ........................... United States 577,806 584,065
Oriental Trading Co. Inc., Term Loan B, 4.375%, 7/29/10 ............ United States 939,384 949,365
---------------
1,767,056
---------------

CHEMICALS: MAJOR DIVERSIFIED 1.4%
d Celanese AG, Term Loan, 3.688 - 4.23%, 4/06/11 ..................... Luxembourg 2,759,262 2,806,975
Huntsman International LLC, Term Loan B, 4.688%, 12/31/10 .......... United States 8,000,000 8,131,000
c Invista B.V.,
Term Loan B1, 4.563%, 4/29/11 ................................... United States 4,858,824 4,934,743
Term Loan B2, 4.563%, 4/29/11 ................................... Canada 2,141,176 2,174,632
---------------
18,047,350
---------------

CHEMICALS: SPECIALTY 2.1%
Brenntag, Term Loan B2, 3.881%, 2/27/12 ............................ United States 1,500,000 1,524,844
FMC Corp., Term Loan B, 3.23%, 10/21/07 ............................ United States 6,842,136 6,930,810
Ineos Group Ltd., Term Loan C, 4.661%, 6/30/09 ..................... United States 2,167,393 2,200,582
Nalco Co., Term Loan B, 3.95 - 4.43%, 11/04/10 ..................... United States 9,420,585 9,577,353
c Rockwood Specialties Group Inc., Term Loan B, 4.183%, 7/23/10 ...... United States 4,700,000 4,742,385
Sovereign Specialty Chemicals Inc., Term Loan B, 6.341%, 12/31/07 .. United States 985,000 980,691
Westlake Chemical Corp., Term Loan B, 4.951 - 7.00%, 7/31/10 ....... United States 990,000 1,004,850
---------------
26,961,515
---------------

COAL 1.2%
CONSOL Energy Inc., Term Loan B, 3.84%, 6/08/10 .................... United States 1,000,000 1,017,500
c Foundation Coal, Term Loan B, 3.68%, 7/30/11 ....................... United States 2,650,000 2,680,475
Peabody Energy Corp., Term Loan B, 3.23 - 3.27%, 3/21/10 ........... United States 11,894,773 12,039,747
---------------
15,737,722
---------------

COMMERCIAL PRINTING/FORMS .1%
American Reprographics, Term Loan B, 4.179%, 6/17/09 ............... United States 995,000 1,009,925
---------------

CONSTRUCTION MATERIALS .2%
St. Marys Cement Inc., Term Loan B, 4.086%, 11/24/09 ............... Canada 2,985,000 3,026,044
---------------

CONSUMER SUNDRIES .7%
Central Garden & Pet Co., Term Loan, 3.73%, 5/14/09 ................ United States 1,980,000 1,997,325
NBTY Inc., Term Loan C, 3.313%, 7/22/09 ............................ United States 692,989 694,535
Rayovac Corp., Term Loan C, 3.75 - 4.10%, 10/01/09 ................. United States 2,164,637 2,188,881
c United Industries Corp.,
Second Lien Term Loan, 5.98%, 10/31/11 .......................... United States 1,150,000 1,171,562
Term Loan B, 3.84 - 4.09%, 4/30/11 .............................. United States 2,995,750 3,046,303
---------------
9,098,606
---------------

Annual Report | 15

Franklin Floating Rate Trust

STATEMENT OF INVESTMENTS, JULY 31, 2004 (CONTINUED)

ACI Operations Property Ltd., Term Loan A, 4.21%, 4/01/07 .......... Australia $ 1,000,000 $ 1,013,958
Berry Plastics, Term Loan C, 3.68%, 7/22/10 ........................ United States 1,563,307 1,591,967
Crown Cork & Seal Co. Inc., Term Loan B, 4.586%, 9/15/08 ........... United States 850,000 863,680
Graham Packaging Co., Term Loan B, 4.188 - 4.375%, 2/20/10 ......... United States 7,943,860 8,005,091
Graphic Packaging International Corp., Term Loan B, 4.35%, 8/08/10 . United States 3,960,000 4,027,237
Greif Brothers Corp., Term Loan B, 3.43%, 8/15/09 .................. United States 714,083 721,760
Kerr Group Inc., Term Loan B, 5.09 - 6.75%, 8/11/10 ................ United States 1,918,605 1,938,030
Owens-Brockway Glass Container Inc.,
Term Loan B, 4.48%, 4/01/08 ..................................... United States 6,000,000 6,092,502
Term Loan C, 4.45%, 4/01/08 ..................................... United States 5,500,000 5,514,894
Stone Container Corp.,
Term Loan B, 4.00%, 7/25/09 ..................................... United States 6,575,170 6,632,703
Term Loan C, 4.00%, 7/25/09 ..................................... United States 737,249 745,543
Tekni-Plex Inc., Term Loan B, 5.578 - 5.68%, 6/21/08 ............... United States 1,841,442 1,854,869
---------------
39,002,234
---------------

DATA PROCESSING SERVICES .3%
InfoUSA Inc.,
Term Loan A, 3.87%, 3/25/09 ..................................... United States 958,333 970,312
Term Loan B, 4.01%, 6/04/10 ..................................... United States 3,000,000 3,037,500
---------------
4,007,812
---------------

DRUG STORE CHAINS 1.4%
c Duane Reade Inc., Term Loan, 4.73%, 7/30/10 ........................ United States 1,000,000 1,017,250
General Nutrition Centers Inc., Term Loan, 4.40 - 4.42%, 12/04/09 .. United States 995,000 1,007,811
c Jean Coutu Group PJC Inc., Term Loan B, 3.75%, 7/28/11 ............. United States 5,500,000 5,563,354
Rite Aid Corp., Term Loan B1, 4.35 - 4.46%, 4/30/08 ................ United States 9,975,000 10,201,931
---------------
17,790,346
---------------

ELECTRIC UTILITIES 4.2%
AES Corp., Term Loan B, 5.32%, 4/30/08 ............................. United States 1,857,143 1,883,674
Calpine Corp., Second Lien Term Loan, 6.89%, 7/15/07 ............... United States 10,880,050 9,376,493
Calpine Generating Co., First Priority Term Loan, 5.23%, 3/22/09 ... United States 2,500,000 2,509,687
Centerpoint Energy Inc., Term Loan B, 4.723%, 10/07/06 ............. United States 15,870,270 16,085,185
Cogentrix Energy Inc., Term Loan, 3.836%, 2/19/09 .................. United States 3,990,000 4,054,837
c Coleto Creek WLE LP,
Term Loan B, 3.848%, 7/31/11 .................................... United States 1,750,000 1,778,074
Term Loan C, 5.19%, 7/31/12 ..................................... United States 1,000,000 1,015,208
Dynegy Holdings Inc., Term Loan B, 5.36%, 5/27/10 .................. United States 5,000,000 5,098,440
Midwest Generation LLC, Term Loan, 4.57 - 4.85%, 4/27/11 ........... United States 1,995,000 2,023,678
NRG Energy Inc., Term Loan B, 1.486 - 5.559%, 6/23/10 .............. United States 577,515 598,991
Pike Electric Inc., Term Loan B, 3.625%, 7/02/12 ................... United States 3,275,250 3,336,661
Quanta Services Inc., Term Loan B, 1.40 - 4.54%, 12/15/08 .......... United States 3,000,000 3,011,250
Teton Power Funding LLC, Term Loan B, 4.80%, 2/20/11 ............... United States 907,692 917,337
TNP Enterprises Inc., Term Loan, 6.505%, 12/31/06 .................. United States 990,000 1,005,469
---------------
52,694,984
---------------

16 | Annual Report

Franklin Floating Rate Trust

STATEMENT OF INVESTMENTS, JULY 31, 2004 (CONTINUED)

Enersys Capital Inc., Term Loan B, 3.62 - 3.84%, 3/09/11 ........... United States $ 1,496,250 $ 1,521,733
---------------

ELECTRONIC COMPONENTS .2%
Seagate Technology HDD Holdings, Term Loan B, 3.688%, 5/13/07 ...... Cayman 2,100,042 2,134,693
Seagate Technology (US) Holdings, Term Loan B, 3.688%, 5/13/07 ..... United States 839,958 853,817
---------------
2,988,510
---------------

ELECTRONICS/APPLIANCES .6%
c Alliance Laundry Systems LLC, Term Loan, 4.60%, 7/31/09 ............ United States 2,900,000 2,930,813
Directed Electronics Inc., Term Loan, 5.65 - 6.13%, 6/15/10 ........ United States 2,000,000 2,015,000
Juno Lighting Inc., First Lien Term Loan, 4.34 - 5.75%, 10/21/10 ... United States 2,409,091 2,445,227
---------------
7,391,040
---------------

ENGINEERING & CONSTRUCTION 1.1%
Brand Services Inc., Term Loan B, 4.611 - 4.73%, 10/16/09 .......... United States 793,372 798,331
URS Corp., Term Loan B, 3.73%, 8/22/08 ............................. United States 2,802,259 2,817,148
Washington Group, Synthetic Term Loan, 1.24%, 10/01/07 ............. United States 9,700,000 9,741,904
---------------
13,357,383
---------------

ENVIRONMENTAL SERVICES 1.7%
Allied Waste North America Inc.,
L/C Term Loan, 4.119%, 1/15/10 .................................. United States 2,142,857 2,180,580
Term Loan B, 3.93 - 4.27%, 1/15/10 .............................. United States 10,227,679 10,378,148
Term Loan C, 4.27 - 4.30%, 1/15/10 .............................. United States 1,000,000 1,015,268
Duratek Inc., Term Loan B, 5.15%, 12/16/09 ......................... United States 1,739,131 1,739,131
Envirosolutions Inc.,
dDelay Draw, 5.43%, 3/01/09 ...................................... United States 46,363 46,422
Term Loan B, 5.43%, 3/01/09 ..................................... United States 2,135,454 2,138,124
IESI Corp., Term Loan, 4.438 - 4.625%, 10/10/10 .................... United States 992,500 1,010,179
Waste Connections Inc., Term Loan, 2.91 - 3.16%, 10/22/10 .......... United States 3,000,000 3,034,689
---------------
21,542,541
---------------

FINANCE/RENTAL/LEASING .5%
United Rentals Inc.,
L/C Term Loan, 3.611%, 2/11/11 .................................. United States 1,053,333 1,075,058
Term Loan B, 3.44 - 3.71%, 2/11/11 .............................. United States 5,320,000 5,421,080
---------------
6,496,138
---------------

FINANCIAL CONGLOMERATES .6%
e Ares IV, Term Loan D, 144A, 7.11%, 12/22/12 ........................ Cayman 1,400,000 1,136,660
e Centurion II, Tranche D, 144A, 7.18%, 11/12/12 ..................... Cayman 2,500,000 2,194,500
e Clydesdale CLO, Tranche D, 144A, 7.65%, 3/22/13 .................... Cayman 2,000,000 1,903,200
e First Dominion Funding II, sub. floating rate deb., Series A-D, 144A,
6.811%, 4/25/14 .................................................. Cayman 3,000,000 2,325,000
---------------
7,559,360
---------------

Annual Report | 17

Franklin Floating Rate Trust

STATEMENT OF INVESTMENTS, JULY 31, 2004 (CONTINUED)

Fleming Cos. Inc., Term Loan, 4.625%, 6/18/08 ...................... United States $ 708,965 $ 706,307
---------------

FOOD RETAIL .1%
Pathmark Stores Inc., Term Loan B2, 5.938%, 6/30/07 ................ United States 878,504 890,217
---------------

FOOD: MAJOR DIVERSIFIED 2.1%
B&G Foods Inc., Term Loan, 6.50%, 9/03/09 .......................... United States 992,500 999,944
Birds Eye Foods Inc., Term Loan B, 4.23%, 8/08/08 .................. United States 7,472,119 7,573,694
Del Monte Corp., Term Loan B, 3.836 - 3.93%, 12/20/10 .............. United States 637,570 647,632
Dole Food Inc., Term Loan D, 3.625 - 5.50%, 3/28/08 ................ United States 1,440,161 1,447,909
Luiginos Inc., Term Loan, 4.313 - 4.50%, 4/02/11 ................... United States 4,488,750 4,561,692
Merisant Corp., Term Loan B, 4.43%, 1/09/10 ........................ United States 833,679 838,160
Pinnacle Foods Holding Corp., Term Loan B, 4.03 - 4.26%, 11/25/10 .. United States 9,975,000 10,121,513
---------------
26,190,544
---------------

FOOD: MEAT/FISH/DAIRY .9%
American Seafoods, Term Loan B, 4.73%, 4/15/09 ..................... United States 1,274,153 1,279,727
Dean Foods (Suiza Foods) Corp.,
Term Loan B, 3.59%, 7/15/08 ..................................... United States 1,735,600 1,737,336
Term Loan C, 3.34%, 7/15/08 ..................................... United States 2,244,375 2,247,181
Keystone Foods Intermediate LLC, Term Loan, 3.75%, 6/15/11 ......... United States 1,000,000 1,012,188
Land O'Lakes Inc., Term Loan B, 4.73%, 10/11/08 .................... United States 695,661 707,980
Michael Foods Inc., Term Loan B, 3.76 - 4.09%, 11/21/10 ............ United States 1,990,000 2,022,960
Pierre Foods Inc., Term Loan B, 3.98%, 6/29/10 ..................... United States 1,000,000 1,012,813
Swift & Co., Term Loan B, 4.69 - 4.82%, 9/19/08 .................... United States 982,500 989,869
---------------
11,010,054
---------------

FOOD: SPECIALTY/CANDY 1.5%
Atkins Nutritionals Inc., First Lien Term Loan, 4.84%, 11/21/09 .... United States 1,930,000 1,896,225
Doane Pet Care Co.,
Term Loan B, 6.20%, 12/31/05 .................................... United States 158,310 159,365
Term Loan C, 6.16%, 12/31/06 .................................... United States 81,043 81,583
Leiner Health Products Group Inc., Term Loan B, 4.59 - 4.89%,
6/09/11 .......................................................... United States 2,000,000 2,035,000
Meow Mix Co.,
First Lien Term Loan, 5.84 - 6.12%, 8/21/09 ..................... United States 3,788,851 3,779,379
Second Lien Term Loan, 8.84%, 8/21/09 ........................... United States 1,000,000 986,875
Nellson Neutraceuticals Inc.,
First Lien Term Loan, 4.59%, 10/04/09 ........................... United States 2,406,483 2,406,483
Second Lien Term Loan, 7.09%, 4/04/10 ........................... United States 1,000,000 995,000
Nutrasweet,
Second Lien Term Loan, 8.063%, 5/24/09 .......................... United States 2,670,000 2,643,300
Term Loan B, 5.563%, 5/24/07 .................................... United States 346,631 347,498
Otis Spunkmeyer Inc., Term Loan B, 7.00%, 6/24/11 .................. United States 2,000,000 2,022,500
Reddy Ice Group Inc., Term Loan, 3.98%, 8/15/09 .................... United States 992,500 1,005,940
---------------
18,359,148
---------------

18 | Annual Report

Franklin Floating Rate Trust

STATEMENT OF INVESTMENTS, JULY 31, 2004 (CONTINUED)

Roseburg Forest Products, Term Loan B, 3.48%, 2/20/10 .............. United States $ 2,487,500 $ 2,512,375
---------------

HOME FURNISHINGS 1.1%
Aero Products International, Term Loan, 5.66 - 7.75%, 12/16/08 ..... United States 1,671,478 1,583,726
National Bedding Co., Term Loan B, 3.55 - 3.93%, 8/21/08 ........... United States 4,740,930 4,797,229
Sealy Mattress Co., Term Loan B, 4.111%, 4/02/12 ................... United States 2,238,393 2,275,232
Simmons Holdings Inc., Term Loan B, 4.125 - 4.688%, 12/02/11 ....... United States 3,427,407 3,485,245
Springs Industries Inc., Term Loan B, 5.625%, 9/05/08 .............. United States 1,959,002 1,983,897
---------------
14,125,329
---------------

HOME IMPROVEMENT CHAINS .2%
Harbor Freight Tools USA Inc., Term Loan B, 4.16%, 7/15/10 ......... United States 2,000,000 2,024,376
---------------

HOMEBUILDING .5%
Landsource Communities Development LLC, Term Loan B, 4.00%,
3/31/10 .......................................................... United States 6,000,000 6,093,750
---------------

HOSPITAL/NURSING MANAGEMENT 1.5%
Beverly Enterprises Inc., Term Loan B, 3.82 - 4.43%, 10/22/08 ...... United States 1,985,000 2,014,775
Community Health Systems Inc., Term Loan, 3.80%, 1/16/11 ........... United States 992,500 1,006,147
Iasis Healthcare LLC, Term Loan B, 3.70%, 6/22/11 .................. United States 9,250,000 9,403,208
MedCath Corp., Term Loan B, 4.581%, 7/02/11 ........................ United States 2,500,000 2,536,720
Triad Hospitals Inc., Term Loan B, 3.73%, 9/30/08 .................. United States 742,914 756,658
Vanguard Health Systems Inc., Term Loan B, 3.59%, 5/18/11 .......... United States 3,000,000 3,003,750
---------------
18,721,258
---------------

HOTEL/RESORTS/CRUISELINES .3%
Wyndham International Inc., Term Loan B, 6.125%, 6/30/06 ........... United States 4,078,845 4,052,259
---------------

HOUSEHOLD/PERSONAL CARE .3%
Prestige Brands Inc., Term Loan B, 4.075 - 6.00%, 6/24/11 .......... United States 3,491,250 3,550,165
---------------

INDUSTRIAL CONGLOMERATES 1.1%
c Invensys (BTR Dunlop),
Bonding Facility, 5.08%, 3/05/09 ................................ United States 2,000,000 2,010,000
Term Loan B, 4.611%, 9/05/09 .................................... United States 1,247,403 1,268,454
Roper Industries Inc., Term Loan, 3.11 - 3.66%, 12/19/08 ........... United States 2,925,000 2,968,875
SPX Corp., Term Loan B, 3.625 - 5.50%, 9/30/09 ..................... United States 3,251,410 3,304,245
Trimas Corp., Term Loan B, 4.875%, 12/06/09 ........................ United States 4,241,399 4,277,629
---------------
13,829,203
---------------

INDUSTRIAL MACHINERY 1.5%
Colfax Corp.,
Term Loan B, 4.50%, 5/30/09 ..................................... United States 3,047,181 3,062,417
Term Loan C, 7.875%, 5/30/10 .................................... United States 1,000,000 1,025,000
Dresser Inc., Unsecured Term Loan, 4.68%, 3/01/10 .................. United States 1,500,000 1,531,500
Flowserve Corp., Term Loan C, 4.00 - 4.375%, 6/30/09 ............... United States 1,260,053 1,278,167
c Gleason Corp., Term Loan, 4.20%, 7/20/11 ........................... United States 4,000,000 4,050,000

Annual Report | 19

Franklin Floating Rate Trust

STATEMENT OF INVESTMENTS, JULY 31, 2004 (CONTINUED)

Itron Inc., Term Loan B, 3.625%, 11/24/10 .......................... United States $ 2,000,000 $ 2,020,000
Rexnord Corp., Term Loan, 4.61 - 4.63%, 11/25/09 ................... United States 1,777,778 1,801,111
Sensus Metering Systems Inc., Term Loan, 4.17 - 4.891%, 12/16/10 ... United States 3,980,000 4,028,922
---------------
18,797,117
---------------

INDUSTRIAL SPECIALTIES .6%
Ionics Inc., Term Loan B, 6.00%, 2/01/11 ........................... United States 5,276,858 5,362,607
Polypore Inc., Term Loan B, 3.97%, 11/13/11 ........................ United States 2,250,000 2,290,781
---------------
7,653,388
---------------

INFORMATION TECHNOLOGY SERVICES 1.5%
The Relizon Co., Term Loan B, 4.26%, 2/20/11 ....................... United States 4,358,125 4,382,639
Transfirst Holdings, Term Loan B, 5.18%, 3/31/10 ................... United States 5,000,000 5,043,750
Verifone Inc., Term Loan B, 4.18%, 6/30/11 ......................... United States 1,000,000 1,014,375
Worldspan, Term Loan, 4.938 - 5.125%, 6/30/07 ...................... United States 1,195,901 1,204,123
Xerox Corp., Term Loan, 3.34%, 9/30/08 ............................. United States 7,500,000 7,546,095
---------------
19,190,982
---------------

INSURANCE BROKERS/SERVICES .1%
U.S.I. Holdings Corp., Term Loan, 4.18%, 8/04/08 ................... United States 990,000 1,001,138
---------------

INVESTMENT BANKS/BROKERS .6%
c Refco Group Ltd. LLC, Term Loan B, 4.23%, 7/28/11 .................. United States 8,000,000 8,010,000
---------------

LIFE/HEALTH INSURANCE .8%
Conseco Inc., Term Loan, 5.426%, 6/22/10 ........................... United States 10,000,000 10,153,130
---------------

MAJOR TELECOMMUNICATIONS .8%
Alec Holdings Inc., Term Loan B, 4.875%, 8/20/10 ................... United States 4,975,000 5,023,715
Consolidated Communications Inc., Term Loan B, 4.008 - 4.336%,
10/14/11 ......................................................... United States 2,500,000 2,547,657
b E.Spire Communications, Term Loan C, 8.25%, 8/01/06 ................ United States 16,877,867 --
Qwest Corp., Term Loan, 6.50%, 6/30/07 ............................. United States 3,000,000 3,117,189
b WCI Capital Corp., Term Loan B, 9.75%, 3/31/07 ..................... United States 30,500,000 --
b Winstar Communications Inc., DIP, 7.25%, 2/20/49 ................... United States 4,076,853 408
---------------
10,688,969
---------------

MANAGED HEALTH CARE .3%
Multiplan Inc., Term Loan, 4.34%, 3/04/09 .......................... United States 2,493,750 2,518,688
Pacificare Health Systems Inc., Term Loan, 3.709%, 6/03/08 ......... United States 990,000 1,007,325
---------------
3,526,013
---------------

MARINE SHIPPING .3%
Horizon Lines LLC, Term Loan, 4.60%, 7/07/11 ....................... United States 2,300,000 2,342,407
United States Shipping LLC, Term Loan, 3.836 - 4.12%, 4/08/10 ...... United States 1,174,074 1,185,081
---------------
3,527,488
---------------

20 | Annual Report

Franklin Floating Rate Trust

STATEMENT OF INVESTMENTS, JULY 31, 2004 (CONTINUED)

Canwest Media Inc., Term Loan E, 3.66%, 5/15/09 .................... Canada $ 4,948,718 $ 4,998,354
---------------

MEDICAL DISTRIBUTORS .5%
VWR International Inc., Term Loan B, 3.77%, 4/07/11 ................ United States 6,407,334 6,536,281
---------------

MEDICAL SPECIALTIES .6%
Conmed Corp., Term Loan C, 3.68 - 4.15%, 12/15/09 .................. United States 858,888 867,082
DJ Orthopedics Inc., Term Loan B, 3.875 - 4.25%, 6/03/09 ........... United States 975,000 986,578
c Fisher Scientific International Inc., Term Loan B, 3.34%, 6/30/11 .. United States 2,000,000 2,019,376
Medex Inc., Term Loan B, 4.38%, 5/21/09 ............................ United States 990,000 999,436
PerkinElmer Inc., Term Loan B, 3.44%, 12/26/08 ..................... United States 2,343,267 2,370,606
---------------
7,243,078
---------------

MEDICAL/NURSING SERVICES 2.2%
Alliance Imaging Inc., Term Loan C, 3.563 - 4.063%, 11/30/08 ....... United States 1,321,684 1,316,316
Cross Country Healthcare Inc., Term Loan, 4.55 - 4.73%, 6/05/09 .... United States 536,011 545,559
DaVita Inc., Term Loan B, 3.16 - 3.98%, 6/30/10 .................... United States 9,560,798 9,672,621
Insight Health Services, Term Loan, 5.336%, 10/17/08 ............... United States 9,000,000 9,000,000
MedQuest Inc., Term Loan B, 5.34%, 7/31/09 ......................... United States 990,000 997,425
Sheridan Healthcare, Term Loan B, 3.929 - 4.23%, 3/31/10 ........... United States 987,500 999,844
Team Health Inc., Term Loan B, 4.84%, 3/23/11 ...................... United States 4,747,592 4,803,969
---------------
27,335,734
---------------

MISCELLANEOUS COMMERCIAL SERVICES 1.9%
Buhrmann US Inc., Term Loan C1, 3.96%, 12/02/10 .................... United States 5,273,500 5,353,868
Corrections Corp. of America, Term Loan D, 3.49 - 3.91%, 3/31/08 ... United States 3,643,659 3,701,732
c DS Waters Enterprises LP, Term Loan, 4.336 - 4.62%, 11/07/09 ....... United States 3,925,000 3,877,166
Global Imaging Systems Inc., Term Loan B, 3.24 - 3.59%, 5/15/10 .... United States 990,019 1,001,156
JohnsonDiversey Inc., Term Loan B, 3.38 - 3.619%, 5/03/08 .......... United States 4,221,771 4,294,069
Language Line LLC, Term Loan B, 5.66%, 6/11/11 ..................... United States 3,500,000 3,519,425
U.S. Investigations Services Inc., Term Loan C, 5.04%, 1/10/09 ..... United States 2,414,725 2,417,743
---------------
24,165,159
---------------

MISCELLANEOUS MANUFACTURING .8%
Day International Group Inc., Term Loan D, 4.98 - 5.09%, 1/01/10 ... United States 1,386,363 1,397,627
Mueller Group, Term Loan, 4.55 - 4.93%, 4/14/11 .................... United States 6,047,706 6,110,076
Norcross Safety Products, Term Loan, 4.90%, 3/20/09 ................ United States 756,731 763,116
Vutek Inc., Term Loan B, 6.75%, 6/23/10 ............................ United States 2,000,000 2,018,750
---------------
10,289,569
---------------

MOVIES/ENTERTAINMENT 5.8%
24 Hour Fitness Inc., Term Loan, 5.125 - 5.375%, 7/01/09 ........... United States 2,985,000 2,992,462
Carmike Cinemas Inc., Term Loan, 4.41%, 2/02/09 .................... United States 1,592,000 1,630,805
CH Operating LLC, Term Loan B, 5.813 - 6.188%, 6/21/07 ............. United States 2,913,793 2,950,216
Cinemark USA Inc., Term Loan, 3.63%, 4/02/11 ....................... United States 997,500 1,011,839

Annual Report | 21

Franklin Floating Rate Trust

STATEMENT OF INVESTMENTS, JULY 31, 2004 (CONTINUED)

Cinram International,
Term Loan B, 5.09%, 9/30/09 ..................................... Canada $ 5,173,667 $ 5,262,592
Term Loan C, 7.09%, 3/31/10 ..................................... Canada 1,965,395 1,989,349
Detroit Red Wings Inc., Term Loan, 3.836%, 8/30/06 ................. United States 915,891 918,180
Hollywood Entertainment Corp., Term Loan, 4.97 - 6.50%, 3/31/08 .... United States 1,875,000 1,885,937
c Loews Cineplex Entertainment Corp., Term Loan B, 3.764-3.94%,
7/30/11 .......................................................... United States 2,000,000 2,022,000
Metro-Goldwyn-Mayer Inc., Term Loan B, 3.98%, 4/30/11 .............. United States 8,500,000 8,551,000
Mets II LLC, Term Loan, 4.69%, 8/23/05 ............................. United States 3,000,000 3,022,500
New Jersey Basketball LLC, Term Loan, 6.75%, 10/15/04 .............. United States 7,500,000 7,507,350
Rainbow Media Holdings Inc., Term Loan C, 3.70%,
12/31/09 ......................................................... United States 7,964,913 7,998,931
Regal Cinemas Inc., Term Loan B, 3.49 - 3.696%, 11/10/10 ........... United States 13,540,758 13,718,480
Six Flags Theme Parks, Term Loan B, 3.87%, 6/30/09 ................. United States 1,810,885 1,833,522
Warner Music, Term Loan B, 4.025 - 4.319%, 2/28/11 ................. United States 6,982,500 7,092,223
Yankee Holdings, Term Loan, 3.86 - 4.10%, 6/25/07 .................. United States 785,714 795,536
Yankee Nets, Term Loan, 3.933 - 4.15%, 6/25/07 ..................... United States 1,714,286 1,735,714
---------------
72,918,636
---------------

OIL & GAS PIPELINES .1%
Magellan Midstream Holdings LP, Term Loan B, 4.65%, 6/17/08 ........ United States 1,114,282 1,130,996
---------------

OIL & GAS PRODUCTION .4%
Williams Production RMT Co., Term Loan C, 3.72%, 5/30/08 ........... United States 4,950,125 4,995,122
---------------

OIL REFINING/MARKETING .7%
Getty Petroleum Marketing, Term Loan B, 4.84%, 5/18/10 ............. United States 2,000,000 2,033,750
La Grange Acquisition LP, Term Loan, 4.14 - 4.41%, 1/08/08 ......... United States 3,000,000 3,047,814
Lyondell-Citgo Refining LP, Term Loan, 3.79 - 4.37%, 5/21/07 ....... United States 1,000,000 1,020,000
Tesoro Petroleum Corp.,
L/C Term Loan, 7.10%, 4/30/07 ................................... United States 1,500,000 1,507,500
Term Loan, 6.88 - 6.91%, 4/15/08 ................................ United States 987,500 1,018,977
---------------
8,628,041
---------------

OTHER CONSUMER SERVICES .4%
Alderwoods Group Inc., Term Loan B, 4.10 - 4.20%, 9/12/08 .......... United States 1,550,570 1,575,767
Coinstar Inc., Term Loan, 3.84%, 7/01/11 ........................... United States 2,000,000 2,035,000
Weight Watchers International Inc., Term Loan B, 3.17%, 3/31/10 .... United States 995,000 1,006,401
---------------
4,617,168
---------------

OTHER CONSUMER SPECIALTIES 1.5%
American Safety Razor Co., First Lien Term Loan, 4.55 - 4.84%,
4/22/11 .......................................................... United States 1,496,250 1,514,018
Home Interiors & Gifts Inc., Term Loan, 5.41%, 4/02/11 ............. United States 3,968,750 3,838,527
Jostens Inc., Term Loan, 3.869%, 7/29/10 ........................... United States 862,128 875,060
Sola International Inc., Term Loan, 4.09%, 12/05/09 ................ United States 987,500 1,003,547
c Solo Cup Co., Term Loan B, 3.84 - 4.086%, 2/23/11 .................. United States 11,990,000 12,144,875
---------------
19,376,027
---------------

22 | Annual Report

Franklin Floating Rate Trust

STATEMENT OF INVESTMENTS, JULY 31, 2004 (CONTINUED)

Great Lakes Dredge & Dock Corp., Term Loan B, 4.14 - 4.87%,
12/19/10 ......................................................... United States $ 958,541 $ 958,541
Laidlaw International Inc., Term Loan B, 5.50%, 6/17/09 ............ United States 9,500,000 9,684,062
Transcore Holdings Inc.,
Term Loan B, 4.823 - 6.00%, 12/03/07 ............................ United States 1,884,968 1,908,530
Term Loan C, 4.93 - 6.00%, 12/03/07 ............................. United States 1,985,000 2,009,813
---------------
14,560,946
---------------

PERSONNEL SERVICES .1%
c Allied Security Holdings LLC, Term Loan B, 7.50%, 8/02/10 .......... United States 1,200,000 1,209,000
---------------

PUBLISHING: BOOKS/MAGAZINES 2.2%
Advanstar Communications, Term Loan B, 5.78%, 10/11/07 ............. United States 178,063 179,213
American Media Inc., Term Loan C, 3.86 - 4.375%, 4/01/07 ........... United States 919,703 934,936
CBD Media LLC, Term Loan C, 3.61%, 12/31/09 ........................ United States 887,500 889,568
DEX Media West LLC, Term Loan B, 3.61 - 3.84%, 3/09/10 ............. United States 8,912,035 9,089,349
F&W Publications Inc., Term Loan B, 4.93%, 12/31/09 ................ United States 1,853,070 1,872,758
Primedia Inc., Term Loan B, 4.25%, 6/30/09 ......................... United States 4,906,204 4,719,768
Readers Digest Association Inc., Term Loan B, 3.57%,
5/20/08 .......................................................... United States 310,937 316,233
R.H. Donnelley Corp., Term Loan B2, 3.63 - 3.86%, 6/30/10 .......... United States 4,926,296 4,991,520
Transwestern Publishing Co., Term Loan B, 3.375 - 3.938%, 2/25/11 .. United States 955,000 967,833
Weekly Reader, Second Lien Term Loan, 6.761%, 3/23/09 .............. United States 3,500,000 3,502,187
---------------
27,463,365
---------------

PUBLISHING: NEWSPAPERS .3%
Freedom Communications, Term Loan B, 3.28 - 3.34%, 5/17/09 ......... United States 2,500,000 2,541,015
Medianews Group Inc., Term Loan B, 3.48%, 12/30/10 ................. United States 995,000 1,009,096
---------------
3,550,111
---------------

PULP & PAPER .6%
Appleton Papers Inc., Term Loan B, 3.66 - 3.79%, 6/01/10 ........... United States 900,000 911,953
c Intertape Polymer Group Inc., Term Loan B, 5.75%, 8/01/11 .......... United States 1,800,000 1,815,750
Koch Cellulose LLC,
L/C Term Loan, 3.108%, 5/03/11 .................................. United States 643,132 652,377
Term Loan B, 3.83%, 5/03/11 ..................................... United States 2,600,351 2,637,731
MDCP Acquisitions I,
Term Loan B, 4.33%, 9/12/10 ..................................... Ireland 1,000,000 1,003,125
Term Loan C, 4.39%, 9/12/11 ..................................... Ireland 1,000,000 1,003,125
---------------
8,024,061
---------------

RAILROADS .1%
RailAmerica Transportation Corp., Term Loan B, 3.813 - 3.938%,
5/21/09 .......................................................... United States 1,825,599 1,852,755
---------------

REAL ESTATE INVESTMENT TRUSTS .7%
c Crescent Real Estate Funding XII, Term Loan, 3.61 - 3.742%, 1/12/06 United States 4,287,778 4,333,336
Newkirk Master LP, Term Loan, 5.98 - 6.37%, 11/24/06 ............... United States 3,990,523 4,029,183
---------------
8,362,519
---------------

Annual Report | 23

Franklin Floating Rate Trust

STATEMENT OF INVESTMENTS, JULY 31, 2004 (CONTINUED)

Amscan Holdings Inc., Term Loan B, 4.13 - 4.591%, 4/30/12 .......... United States $ 1,000,000 $ 1,016,250
BRP Holdings LP, Term Loan, 4.18%, 12/18/10 ........................ United States 8,955,000 9,092,128
PlayPower Inc., Term Loan, 5.75%, 2/07/10 .......................... United States 925,000 929,625
Pure Fishing Inc., Term Loan B, 4.57 - 4.85%, 9/12/11 .............. United States 1,496,250 1,520,534
True Temper Sports Inc., Term Loan, 3.65 - 3.86%, 3/15/11 .......... United States 5,985,000 6,059,813
---------------
18,618,350
---------------

RESTAURANTS .5%
CKE Restaurants Inc., Term Loan, 4.375%, 4/30/09 ................... United States 867,283 883,544
Dominos Inc., Term Loan, 3.875%, 6/25/10 ........................... United States 2,572,194 2,616,806
Jack In The Box Inc., Term Loan B, 3.59 - 4.23%, 12/19/10 .......... United States 2,985,000 3,027,910
---------------
6,528,260
---------------

SEMICONDUCTORS .2%
Fairchild Semiconductor Corp., Term Loan, 4.125 - 4.438%, 6/19/08 .. United States 2,970,000 3,010,838
---------------

SERVICES TO THE HEALTH INDUSTRY .5%
c Accredo Health Inc., Term Loan B, 3.61%, 8/02/11 ................... United States 4,000,000 4,037,500
Quintiles Transnational Corp., Term Loan B, 5.70 - 5.84%, 9/25/09 .. United States 1,687,250 1,716,777
Sterigenics International Inc., Term Loan B, 4.86%, 6/08/11 ........ United States 1,000,000 1,012,500
---------------
6,766,777
---------------

SPECIALTY STORES .3%
Pantry Inc., Term Loan, 4.09%, 3/12/11 ............................. United States 2,645,576 2,687,149
PETCO Animal Supplies Inc., Term Loan D, 3.98%, 10/02/08 ........... United States 1,565,525 1,586,563
---------------
4,273,712
---------------

SPECIALTY TELECOMMUNICATIONS 1.3%
D&E Communications Inc., Term Loan B, 4.03 - 4.20%, 12/31/11 ....... United States 2,338,188 2,371,799
GCI Holdings Inc., Term Loan, 3.689%, 10/30/04 ..................... United States 2,384,777 2,412,727
b Pacific Crossing Ltd., Term Loan B, 5.50%, 7/28/06 ................. United States 21,151,939 1,057,597
c Valor Telecommunications, Term Loan B, 3.87 - 3.98%, 9/30/09 ....... United States 9,800,000 9,950,067
---------------
15,792,190
---------------

STEEL .4%
Copperweld Corp., Term Loan, 5.95%, 10/31/04 ....................... United States 5,290,404 4,920,075
---------------

TOBACCO .2%
Commonwealth Brands Inc., Term Loan, 5.563%, 8/22/07 ............... United States 2,078,750 2,115,128
---------------

TOOLS/HARDWARE .1%
Paint Sundry Brands LLC, Term Loan B, 4.87%, 6/27/10 ............... United States 478,125 484,202
Werner Holding Co., Term Loan, 4.65 - 4.88%, 6/11/09 ............... United States 916,667 893,177
---------------
1,377,379
---------------

24 | Annual Report

Franklin Floating Rate Trust

STATEMENT OF INVESTMENTS, JULY 31, 2004 (CONTINUED)

Comcar Industries, Term Loan B, 6.42 - 8.25%, 12/31/09 ............. United States $ 2,487,500 $ 2,475,062
Flexi-Van Leasing Inc., Term Loan B, 3.10 - 3.13%, 9/20/07 ......... United States 748,392 751,667
Kenan Advantage, Term Loan, 5.05%, 6/30/10 ......................... United States 1,000,000 1,012,500
Yellow Corp.,
L/C Term Loan, 1.293%, 5/24/07 .................................. United States 3,909,091 3,944,519
Term Loan, 3.23%, 5/24/07 ....................................... United States 779,221 786,283
---------------
8,970,031
---------------

WHOLESALE DISTRIBUTORS .4%
Interline Brands, Term Loan B, 4.98 - 5.086%, 11/30/09 ............. United States 2,850,000 2,869,594
National Waterworks Inc., Term Loan B, 4.34%, 11/22/09 ............. United States 948,980 962,621
Nebraska Book Co., Term Loan B, 3.91%, 3/04/11 ..................... United States 997,500 1,009,345
---------------
4,841,560
---------------

WIRELESS COMMUNICATIONS 3.0%
AAT Communications Corp., Term Loan B, 4.14%, 12/31/11 ............. United States 3,000,000 3,037,500
b Cricket Communications Inc., Term Loan, 6.375%, 6/30/07 ............ United States 1,000,000 1,161,250
Crown Castle Operating Co., Term Loan B, 5.09%, 9/30/10 ............ United States 11,910,000 11,960,451
Dobson Cellular Systems Inc., Term Loan, 4.91 - 4.92%, 3/31/10 ..... United States 3,646,069 3,658,032
Nextel Finance Inc., Term Loan E, 3.813%, 12/15/10 ................. United States 1,592,000 1,604,718
Nextel Partners Inc., Term Loan C, 4.00%, 5/31/11 .................. United States 6,500,000 6,612,937
d SBA Communications Corp., Term Loan, 4.65 - 5.37%, 10/31/08 ........ United States 7,584,615 7,652,164
Spectrasite Communications Inc.,
Term Loan A, 3.40 - 3.93%, 6/30/07 .............................. United States 1,713,926 1,724,995
Term Loan C, 3.93%, 2/22/07 ..................................... United States 998,182 1,010,130
---------------
38,422,177
---------------
TOTAL SENIOR FLOATING RATE INTERESTS (COST $1,149,557,685) ......... 1,093,776,714
---------------

-----------------
SHARES/WARRANTS
-----------------
COMMON STOCKS AND WARRANTS .7%
AUTO PARTS: ORIGINAL EQUIPMENT MANUFACTURER
f Exide Technologies, wts., 3/18/06 .................................. United States 74,278 --
---------------

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

SPECIALTY TELECOMMUNICATIONS .1%
f Global Crossing Ltd. ............................................... United States 2,684 50,459
f IDT Corp. .......................................................... United States 53,428 841,491
---------------
891,950
---------------

STEEL
f Copperweld Holding Co., A .......................................... United States 242 --
f Copperweld Holding Co., B .......................................... United States 1,741 --
---------------
--
---------------

Annual Report | 25

Franklin Floating Rate Trust

STATEMENT OF INVESTMENTS, JULY 31, 2004 (CONTINUED)

---------------------------------------------------------------------------------------------------------------------------
COUNTRY SHARES/WARRANTS VALUE
---------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS AND WARRANTS (CONT.)
WIRELESS COMMUNICATIONS .6%

f,h Arch Wireless Inc. ............................................... United States 253,746 $ 7,158,175
f Teligent Inc. .................................................... United States 115 690,000
---------------
7,848,175
---------------
TOTAL COMMON STOCKS AND WARRANTS (COST $5,362,050) ............... 8,740,125
---------------
TOTAL LONG TERM INVESTMENTS (COST $1,176,734,586) ................ 1,123,134,700
---------------

--------------
SHARES
--------------
SHORT TERM INVESTMENTS (COST $168,916,040) 13.4%
g Franklin Institutional Fiduciary Trust Money Market Portfolio .... United States 168,916,040 168,916,040
---------------
TOTAL INVESTMENTS (COST $1,345,650,626) 102.7% ................... 1,292,050,740
OTHER ASSETS, LESS LIABILITIES (2.7)% ............................ (34,375,056)
---------------
NET ASSETS 100.0% ................................................ $1,257,675,684
---------------

a See Note 1(d) regarding senior floating rate interests.
b Defaulted securities. See Note 10.
c See Note 1(c) regarding securities purchased on a when-issued or delayed
delivery basis.
d See Note 13 regarding unfunded loan commitments.
e See Note 11 regarding restricted securities.
f Non-income producing.
g See Note 9 regarding investments in the Franklin Institutional Fiduciary Trust
Money Market Portfolio.
h See Note 12 regarding holdings of 5% voting securities.
i See Note 15 regarding fund litigation.

GLOSSARY OF TERMS

DIP - Debtor-In-Possession
L/C - Line of Credit
LLC - Limited Liability Corp.
LP - Limited Partnership
PIK - Payment-In-Kind

26 | See notes to financial statements. | Annual Report

Franklin Floating Rate Trust

FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES
July 31, 2004

Assets:
Investments in securities:

Cost - Unaffiliated issuers ............................................................................ $1,176,734,586
Cost - Sweep money fund (Note 9) ....................................................................... 168,916,040
---------------
Value - Unaffiliated issuers ........................................................................... 1,123,134,700
Value - Sweep money fund (Note 9) ...................................................................... 168,916,040
Cash .................................................................................................... 13,798,337
Receivables:
Investment securities sold ............................................................................. 20,827,387
Capital shares sold .................................................................................... 4,658,506
Interest ............................................................................................... 3,756,438
Unrealized gain on unfunded commitments (Note 13) ...................................................... 34,334
Other assets ............................................................................................ 43,056
---------------
Total assets ....................................................................................... 1,335,168,798
---------------
Liabilities:
Payables:
Investment securities purchased ........................................................................ 74,655,104
Affiliates ............................................................................................. 1,342,075
Distributions to shareholders ........................................................................... 1,114,816
Other liabilities ....................................................................................... 381,119
---------------
Total liabilities .................................................................................. 77,493,114
---------------
Net assets, at value .............................................................................. $1,257,675,684
---------------
Net assets consist of:
Undistributed net investment income ..................................................................... $ 3,109,614
Net unrealized appreciation (depreciation) .............................................................. (53,570,919)
Accumulated net realized gain (loss) .................................................................... (324,906,896)
Capital shares .......................................................................................... 1,633,043,885
---------------
Net assets, at value .............................................................................. $1,257,675,684
---------------
Net asset value and maximum offering price per share ($1,257,675,684 / 140,043,962 shares outstanding) a . $8.98
---------------

a Redemption price is equal to net asset value less any applicable contingent
deferred sales charge and redemption fees retained by the Fund.

Annual Report | See notes to financial statements. | 27

Franklin Floating Rate Trust

FINANCIAL STATEMENTS (CONTINUED)

STATEMENT OF OPERATIONS
for the year ended July 31, 2004

Investment income:

Dividends .............................................................................. $ 1,012,967
Interest ............................................................................... 51,335,018
-------------
Total investment income ........................................................... 52,347,985
-------------
Expenses:
Management fees (Note 5) ............................................................... 9,108,284
Administrative fees (Note 5) ........................................................... 1,468,293
Transfer agent fees (Note 5) ........................................................... 5,073,896
Custodian fees ......................................................................... 22,723
Reports to shareholders ................................................................ 79,050
Registration and filing fees ........................................................... 38,772
Professional fees ...................................................................... 127,961
Trustees' fees and expenses ............................................................ 1,975
Other .................................................................................. 314,633
-------------
Total expenses .................................................................... 16,235,587
Expense reductions (Note 6) ....................................................... (8,828)
-------------
Net expenses ..................................................................... 16,226,759
-------------
Net investment income ........................................................... 36,121,226
-------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments:
Unaffiliated issuers ................................................................. (43,434,276)
Non-controlled affiliated issuers (Note 12) .......................................... 15,481,875
Foreign currency transactions ......................................................... 32,699
-------------
Net realized gain (loss) ........................................................ (27,919,702)
Net unrealized appreciation (depreciation) on investments .............................. 105,394,762
-------------
Net realized and unrealized gain (loss) ................................................. 77,475,060
-------------
Net increase (decrease) in net assets resulting from operations ......................... $113,596,286
-------------

28 | See notes to financial statements. | Annual Report

Franklin Floating Rate Trust

FINANCIAL STATEMENTS (CONTINUED)

STATEMENTS OF CHANGES IN NET ASSETS
for the years ended July 31, 2004 and 2003

---------------------------------
2004 2003
---------------------------------
Increase (decrease) in net assets:
Operations:

Net investment income .............................................................. $ 36,121,226 $ 58,790,859
Net realized gain (loss) from investments and foreign currency transactions ........ (27,919,702) (152,344,808)
Net unrealized appreciation (depreciation) on investments and translation of assets
and liabilities denominated in foreign currencies ................................. 105,394,762 167,594,857
---------------------------------
Net increase (decrease) in net assets resulting from operations ................ 113,596,286 74,040,908
Distributions to shareholders from net investment income ............................ (37,883,644) (65,886,321)
Capital share transactions (Note 2) ................................................. 20,983,674 (627,105,648)
---------------------------------
Net increase (decrease) in net assets .......................................... 96,696,316 (618,951,061)
Net assets:
Beginning of year ................................................................... 1,160,979,368 1,779,930,429
---------------------------------
End of year ......................................................................... $1,257,675,684 $1,160,979,368
---------------------------------
Undistributed net investment income (distributions in excess of net investment income)
included in net assets:
End of year ........................................................................ $ 3,109,614 $ (9,465,664)
---------------------------------

Annual Report | See notes to financial statements. | 29

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. Debt
securities, other over-the-counter securities and listed securities for which no
sale is reported are valued within the range of the latest quoted bid and asked
prices by independent pricing services or recognized dealers in such securities.
Securities listed or traded on a recognized national exchange are valued at the
last reported sales price. Securities listed or traded on NASDAQ are valued at
their official closing price. If events occur that materially affect the values
of securities after the prices are determined, but prior to 4:00 p.m. Eastern
time or the close of trading on the NYSE, whichever is earlier, or if market
quotations are deemed not readily available or reliable, the securities
(including restricted securities) will be valued at fair value. Investments in
open-end mutual funds are valued at the closing net asset value. All security
valuation procedures are approved 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, income and expense 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.

30 | Annual Report

Franklin Floating Rate Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

D. SENIOR FLOATING RATE INTERESTS

Senior secured corporate loans pay interest at rates which are periodically
reset by reference to a base lending rate plus a spread. These base lending
rates are generally the prime rate offered by a designated U.S. bank or the
London InterBank Offered Rate (LIBOR). Senior secured corporate loans often
require prepayment of principal from excess cash flows or at the discretion of
the borrower. As a result, actual maturity may be substantially less than the
stated maturity.

Senior secured corporate loans in which the Fund invests are generally readily
marketable, but may be subject to some restrictions on resale.

E. INCOME TAXES

No provision has been made for income taxes because the Fund's policy is to
qualify as a regulated investment company under the Internal Revenue Code and
distribute substantially all of its taxable income. Fund distributions to
shareholders are determined on a tax basis and may differ from net investment
income and realized gains for financial reporting purposes.

F. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS

Security transactions are accounted for on trade date. Realized gains and losses
on security transactions are determined on a specific identification basis.
Interest income and estimated expenses are accrued daily. Discounts and premiums
on securities purchased are amortized over the lives of the respective
securities. Facility fees are recognized as income over the expected term of the
loan. Dividend income and distributions to shareholders are recorded on the
ex-dividend date.

G. ACCOUNTING ESTIMATES

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

H. GUARANTEES AND INDEMNIFICATIONS

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

Annual Report | 31

Franklin Floating Rate Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

2. SHARES OF BENEFICIAL INTEREST

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

---------------------------------------------------------------
YEAR ENDED JULY 31,
2004 2003
---------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------

Shares sold ...................... 30,148,214 $ 266,060,960 5,568,709 $ 45,936,820
Shares issued in reinvestment
of distributions ................ 2,769,859 24,316,522 5,106,050 41,769,067
Shares redeemed .................. (30,679,970) (269,393,808) (87,416,170) (714,811,535)
---------------------------------------------------------------
Net increase (decrease) .......... 2,238,103 $ 20,983,674 (76,741,411) $(627,105,648)
---------------------------------------------------------------

3. TENDER OF SHARES

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

4. REVOLVING CREDIT FACILITY

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

During the year ended July 31, 2004, the Fund did not utilize the facility.

5. TRANSACTIONS WITH AFFILIATES

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

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

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

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

32 | Annual Report

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 daily net assets
of the Fund as follows:

--------------------------------------------------------------------------------
ANNUALIZED FEE RATE 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 has advised the Fund that it has received contingent deferred sales
charges for the year of $68,628.

The Fund pays a transfer agent fee to Investor Services of .40% per year of the
average daily net assets of the Fund, totaling $4,781,190 for the year ended
July 31, 2004.

6. EXPENSE OFFSET ARRANGEMENT

The Fund has entered into an arrangement with its custodian whereby credits
realized as a result of uninvested cash balances are used to reduce a portion of
the Fund's custodian expenses. During the year ended July 31, 2004, the
custodian fees were reduced as noted in the Statement of Operations.

7. INCOME TAXES

At July 31, 2004, the Fund had tax basis capital losses which may be carried
over to offset future capital gains. Such losses expire as follows:

Capital loss carryover expiring in:
2009 ................................................. $ 2,115,134
2011 ................................................. 199,627,510
2012 ................................................. 107,803,681
------------
$309,546,325
------------

At July 31, 2004, Fund has deferred capital losses occurring subsequent to
October 31, 2003 of $14,631,185. For tax purposes, such losses will be reflected
in the year ending July 31, 2005.

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.

Annual Report | 33

Franklin Floating Rate Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

7. INCOME TAXES (CONTINUED)

The tax character of distributions paid during the years ended July 31, 2004 and
2003, was as follows:

---------------------------------
2004 2003
---------------------------------
Distributions paid from ordinary income .... $37,883,644 $65,886,321

At July 31, 2004, the cost of investments, net unrealized appreciation
(depreciation) and undistributed ordinary income for income tax purposes were as
follows:

Cost of investments ................................... $1,346,496,159
---------------
Unrealized appreciation ............................... $ 20,414,126
Unrealized depreciation ............................... (74,859,545)
---------------
Net unrealized appreciation (depreciation) ............ $ (54,445,419)
---------------
Distributable earnings - undistributed ordinary income $ 4,827,491
---------------

8. INVESTMENT TRANSACTIONS

Purchases and sales of securities (excluding short-term securities) for the year
ended July 31, 2004 aggregated $942,890,198 and $997,526,505, respectively.

9. INVESTMENTS IN THE 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.

10. CREDIT RISK AND DEFAULTED SECURITIES

The Fund has 83.36% 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. At July 31, 2004, the value of these securities was
$2,236,005 representing 0.18% of the Fund's net assets. The Fund discontinues
accruing income on securities for which income has been deemed uncollectible and
provides an estimate for losses on interest receivable. For information as to
specific securities, see the accompanying Statement of Investments.

11. RESTRICTED SECURITIES

At July 31, 2004, investments in securities included issues that are restricted
or illiquid. Restricted securities are often purchased in private placement
transactions, are not registered under the Securities

34 | Annual Report

Franklin Floating Rate Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

11. RESTRICTED SECURITIES (CONTINUED)

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, 2004, the
Fund held investments in restricted and illiquid securities that were valued
under approved methods by the Trustees, as follows:

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

$ 1,400,000 Ares IV, Term Loan D, 144A, 7.11%, 12/22/12 ..... 11/14/00 $ 1,400,000 $1,136,660
2,500,000 Centurion II, Tranche D, 144A, 7.18%, 11/12/12 .. 11/07/00 2,500,000 2,194,500
2,000,000 Clydesdale CLO, Tranche D, 144A, 7.65%,
3/22/13 ....................................... 5/23/01 1,889,673 1,903,200
3,000,000 First Dominion Funding II, sub. floating rate deb.,
Series A-D, 144A, 6.811%, 4/25/14 ............. 5/03/99 2,991,559 2,325,000
-----------
TOTAL RESTRICTED SECURITIES (.60% OF NET ASSETS) ...................................... $7,559,360
-----------

12. 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 during the year ended July 31, 2004 were as shown below.

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

Arch Wireless Inc. ....... 1,908,741 43,174 1,698,169 253,746 $ * $ -- $15,481,875

*At July 31, 2004, no longer an affiliate.

13. 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.

At July 31, 2004, unfunded commitments were as follows:

------------------------------------------------------------------------
UNFUNDED
BORROWER COMMITMENT
------------------------------------------------------------------------
Celanese AG, Term Loan ................................... $1,240,738
Envirosolutions Inc., Delay Draw ......................... 818,182
New Jersey Devils LLC, Term Loan ......................... 1,900,000
SBA Communications Corp., Term Loan ...................... 915,385
-----------
$4,874,305
-----------

Unfunded loan commitments are marked to market daily and any unrealized gain or
loss is included in the Statement of Assets and Liabilities and Statement of
Operations.

Annual Report | 35

Franklin Floating Rate Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

14. 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.

15. FUND 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.

Discovery for this case has been stayed and pending motions have not been ruled
upon. Thus, it is not possible to predict its outcome at this early stage of the
proceedings. However, management of the Funds does not expect that the result
will have a material adverse effect on the financial condition of the Funds.

16. REGULATORY MATTERS

MASSACHUSETTS ADMINISTRATIVE PROCEEDING
On February 4, 2004, the Securities Division of the Office of the Secretary of
the Commonwealth of Massachusetts filed an administrative complaint against
Franklin Resources, Inc. and certain of its subsidiaries (the "Company")
claiming violations of the Massachusetts Uniform Securities Act ("Massachusetts
Act") with respect to an alleged arrangement to permit market timing (the "Mass.
Proceeding"). On February 17, 2004, the Company filed an answer denying all
violations of the Massachusetts Act.

U.S. SECURITIES AND EXCHANGE COMMISSION (SEC) SETTLEMENT
On August 2, 2004, the Company announced that an agreement had been reached by
the Fund's investment manager with the SEC that resolved the issues resulting
from the SEC's investigation of market timing activity. The SEC issued an "order
instituting administrative and cease-and-desist

36 | Annual Report

Franklin Floating Rate Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

16. REGULATORY MATTERS (CONTINUED)

U.S. SECURITIES AND EXCHANGE COMMISSION (SEC) SETTLEMENT (CONTINUED)
proceedings pursuant to sections 203(e) and 203(k) of the Investment Advisers
Act of 1940 and sections 9(b) and 9(f) of the Investment Company Act of 1940,
making findings and imposing remedial sanctions and a cease and desist order"
(the "Order"). The SEC's Order concerns the activities of a limited number of
third parties that ended in 2000 and those that are the subject of the Mass.
Proceeding described above.

Under the terms of the SEC's Order, pursuant to which the Fund's investment
manager neither admits nor denies any wrongdoing, the Fund's investment manager
has agreed to pay $50 million, of which $20 million is a civil penalty, to be
distributed to certain fund shareholders in accordance with a plan to be
developed by an Independent Distribution Consultant. At this time, it is unclear
whether shareholders of all funds will receive distributions or whether all
shareholders of any particular fund will receive distributions. The SEC Order
also requires the Fund's investment manager to, among other things, enhance and
periodically review compliance policies and procedures.

OTHER GOVERNMENTAL INVESTIGATIONS
As part of ongoing investigations by the SEC, the U.S. Attorney for the Northern
District of California, the New York Attorney General, the California Attorney
General, the U.S. Attorney for the District of Massachusetts, the Florida
Department of Financial Services and the Commissioner of Securities, the West
Virginia Attorney General, the Vermont Department of Banking, Insurance,
Securities, and Health Care Administration and the National Association of
Securities Dealers, relating to certain practices in the mutual fund industry,
including late trading, market timing and payments to securities dealers who
sell fund shares, the Company and its subsidiaries, as well as certain current
or former executives and employees of the Company, have received requests for
information and/or subpoenas to testify or produce documents. The Company has
been providing documents and information in response to these requests and
subpoenas. In addition, the Company has responded to requests for similar kinds
of information from regulatory authorities in some of the foreign countries
where the Company conducts its global asset management business.

The Staff of the SEC has also informed the Company that it is considering
recommending a civil action or proceeding against the Fund's investment manager
and the Fund's principal underwriter concerning payments to securities dealers
who sell fund shares (commonly referred to as "revenue sharing"). The staff of
the California Attorney General's Office (CAGO) also has advised the Company
that it is authorized to bring a civil action against Franklin Resources, Inc.
and the Fund's principal underwriter arising from the same events. Even though
the Company currently believes that the charges the SEC staff and CAGO staff are
contemplating are unwarranted, it also believes that it is in the best interest
of the Company and fund shareholders to resolve these issues voluntarily, to the
extent the Company can reasonably do so.

Annual Report | 37

Franklin Floating Rate Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

16. REGULATORY MATTERS (CONTINUED)

OTHER LEGAL PROCEEDINGS
The Fund, in addition to other entities within Franklin Templeton Investments,
including the Company and certain of its subsidiaries, other funds, and current
and former officers, employees, and directors have been named in multiple
lawsuits in different federal courts in Nevada, California, Illinois, New York
and Florida, alleging violations of various federal securities laws and seeking,
among other things, monetary damages and costs. Specifically, the lawsuits claim
breach of duty with respect to alleged arrangements to permit market timing
and/or late trading activity, or breach of duty with respect to the valuation of
the portfolio securities of certain funds managed by Company subsidiaries,
resulting in alleged market timing activity. The majority of these lawsuits
duplicate, in whole or in part, the allegations asserted in the Mass. Proceeding
detailed above. The lawsuits are styled as class actions or derivative actions
on behalf of either the named Funds or the Company.

In addition, the Company and certain of its subsidiaries, as well as certain
current and former officers, employees, and directors have been named in
multiple lawsuits alleging violations of various securities laws and pendent
state law claims relating to the disclosure of directed brokerage payments
and/or payment of allegedly excessive commissions and advisory fees. These
lawsuits are styled as class actions and derivative actions.

The Company's management strongly believes that the claims made in each of these
lawsuits are without merit and intends to vigorously defend against them.

The Company cannot predict with certainty the eventual outcome of the foregoing
Mass. Proceeding, other governmental investigations or other legal proceedings.
The impact, if any, of these matters on the Fund is uncertain at this time. If
the Company determines that it bears responsibility for any unlawful or
inappropriate conduct that caused losses to the Fund, it is committed to making
the Fund or its shareholders whole, as appropriate.

38 | Annual Report

Franklin Floating Rate Trust

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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, 2004, 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 the standards of the
Public Company Accounting Oversight Board (United States). Those standards
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, 2004 by correspondence with the
custodian, agent banks and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

San Francisco, California
September 9, 2004

Annual Report | 39

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 (83) Trustee Since 1997 111 None
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President and Director, Abbott Corporation (an investment company).
------------------------------------------------------------------------------------------------------------------------------------
HARRIS J. ASHTON (72) 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 (72) 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 (52) Trustee Since 1998 96 Director, Amerada Hess Corporation
One Franklin Parkway (exploration and refining of oil
San Mateo, CA 94403-1906 and gas); 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).
------------------------------------------------------------------------------------------------------------------------------------
FRANK W.T. LAHAYE (75) Trustee Since 1997 113 Director, The California Center
One Franklin Parkway for 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).
------------------------------------------------------------------------------------------------------------------------------------

40 | Annual Report

GORDON S. MACKLIN (76) Trustee Since 1997 140 Director, White Mountains
One Franklin Parkway Insurance Group, Ltd. (holding
San Mateo, CA 94403-1906 company); Martek Biosciences
Corporation; MedImmune, Inc.
(biotechnology); and Overstock.com
(Internet services); and FORMERLY,
Director, MCI Communication
Corporation (subsequently known as
MCI WorldCom, Inc. and WorldCom,
Inc.) (communications services)
(1988-2002) and Spacehab, Inc.
(aerospace services) (1994-2003).

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

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman of the Board, 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. (63) 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.
------------------------------------------------------------------------------------------------------------------------------------

Annual Report | 41

MARK BOYADJIAN (40) Vice President Since 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 (59) 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.
------------------------------------------------------------------------------------------------------------------------------------
JAMES M. DAVIS (52) Chief Since July 2004 Not Applicable None
One Franklin Parkway Compliance
San Mateo, CA 94403-1906 Officer

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Officer of 51 of the investment companies in Franklin Templeton Investments; Director, Global Compliance, Franklin Resources,
Inc., and FORMERLY, Director of Compliance, Franklin Resources, Inc. (1994-2001).
------------------------------------------------------------------------------------------------------------------------------------
LAURA FERGERSON (42) Treasurer Since July 2004 Not Applicable None
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Officer of 34 of the investment companies in Franklin Templeton Investments; and FORMERLY, Director and member of Audit and
Valuation Committees, Runkel Funds, Inc. (2003-2004); Assistant Treasurer of most of the investment companies in Franklin Templeton
Investments (1997-2003); and Vice President, Franklin Templeton Services, LLC (1997-2003).
------------------------------------------------------------------------------------------------------------------------------------
MARTIN L. FLANAGAN (44) Vice President Since 1997 Not Applicable None
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Co-President and Chief Executive Officer, 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.
------------------------------------------------------------------------------------------------------------------------------------

42 | Annual Report

JIMMY D. GAMBILL (56) Senior Vice Since 2002 Not Applicable None
500 East Broward Blvd. President and
Suite 2100 Chief Executive
Fort Lauderdale, FL 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 (57) 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).
------------------------------------------------------------------------------------------------------------------------------------
BARBARA J. GREEN (56) Vice President Since 2000 Not Applicable None
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice President, Deputy General Counsel and Secretary, Franklin Resources, Inc.; Secretary and Senior Vice President, Templeton
Worldwide, Inc.; Secretary, Franklin Advisers, Inc., Franklin Advisory Services, LLC, Franklin Investment Advisory Services,
Inc., Franklin Mutual Advisers, LLC, Franklin Templeton Alternative Strategies, Inc., Franklin Templeton Investor Services, LLC,
Franklin Templeton Services, LLC, Franklin Templeton Distributors, Inc., Templeton Investment Counsel, LLC, and
Templeton/Franklin Investment Services, Inc.; and 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).
------------------------------------------------------------------------------------------------------------------------------------
MICHAEL O. MAGDOL (67) Vice President Since 2002 Not Applicable Director, FTI Banque, Arch
600 Fifth Avenue -AML Chemicals, Inc. and Lingnan
Rockefeller Center Compliance Foundation.
New York, NY 10020-2302

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice Chairman, Chief Banking Officer and Director, Fiduciary Trust Company International; and officer and/or director, as the case
may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 48 of the investment companies in Franklin Templeton
Investments.
------------------------------------------------------------------------------------------------------------------------------------

Annual Report | 43

MURRAY L. SIMPSON (67) 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).
------------------------------------------------------------------------------------------------------------------------------------
GALEN G. VETTER (52) Chief Financial Since May 2004 Not Applicable None
500 East Broward Blvd. Officer
Suite 2100
Fort Lauderdale, FL 33394-3091

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Officer of 51 of the investment companies in Franklin Templeton Investments; Senior Vice President, Franklin Templeton Services,
LLC; and FORMERLY, Managing Director, RSM McGladrey, Inc.; and Partner, McGladrey & Pullen, LLP.
------------------------------------------------------------------------------------------------------------------------------------

*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 to be 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 TRUSTEE
AS THAT TERM IS DEFINED UNDER THE RELEVANT SECURITIES AND EXCHANGE COMMISSION
RULES AND RELEASES.

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.

44 | Annual Report

Franklin Floating Rate Trust

SHAREHOLDER INFORMATION

PROXY VOTING POLICIES AND PROCEDURES

The Fund has established Proxy Voting Policies and Procedures ("Policies") that
the Fund uses to determine how to vote proxies relating to portfolio securities.
Shareholders may view the Fund's complete Policies online at
franklintempleton.com. Alternatively, shareholders may request copies of the
Policies free of charge by calling the Proxy Group collect at 1-954/847-2268 or
by sending a written request to: Franklin Templeton Companies, LLC, 500 East
Broward Boulevard, Suite 1500, Fort Lauderdale, FL 33394, Attention: Proxy
Group. Copies of the Fund's proxy voting records are also made available online
at franklintempleton.com and posted on the Securities and Exchange Commission's
website at sec.gov and reflect the 12-month period beginning July 1, 2003, and
ending June 30, 2004.

QUARTERLY STATEMENT OF INVESTMENTS

The Fund files a complete statement of investments with the Securities and
Exchange Commission for the first and third quarters for each fiscal year on
Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission's
website at sec.gov. The filed form may also be viewed and copied at the
Commission's Public Reference Room in Washington, DC. Information regarding the
operations of the Public Reference Room may be obtained by calling
1-800/SEC-0330.

Annual Report | 45

This page intentionally left blank.

Literature Request

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

FRANKLIN TEMPLETON INVESTMENTS

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

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

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

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

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

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

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

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

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

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

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

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

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

INSURANCE FUNDS
Franklin Templeton Variable Insurance
Products Trust 10

1. The fund is closed to new investors. Existing shareholders can continue
adding to their accounts.

2. The fund is only open to existing shareholders as well as select retirement
plans.

3. The fund is a continuously offered, closed-end fund. Shares may be purchased
daily; there is no daily redemption. However, each quarter, pending board
approval, the fund will authorize the repurchase of 5%-25% of the outstanding
number of shares. Investors may tender all or a portion of their shares during
the tender period.

4. Upon reaching approximately $350 million in assets, the fund intends to close
to all investors.

5. An investment in the fund is neither insured nor guaranteed by the U.S.
government or by any other entity or institution.

6. No assurance exists that the fund's $1.00 per share price will be maintained.
It is possible to lose money by investing in the fund.

7. For investors subject to the alternative minimum tax, a small portion of fund
dividends may be taxable. Distributions of capital gains are generally taxable.

8. Portfolio of insured municipal securities.

9. These funds are available in two or more variations, including long-term
portfolios, portfolios of insured securities, a high-yield portfolio (CA) and
limited-term, intermediate-term and money market portfolios (CA and NY).

10. The funds of the Franklin Templeton Variable Insurance Products Trust are
generally available only through insurance company variable contracts.

02/04 Not part of the annual report

[LOGO OMITTED]
FRANKLIN[R] TEMPLETON[R] One Franklin Parkway
INVESTMENTS 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

Authorized for distribution only when accompanied or preceded by a prospectus.
Investors should carefully consider a fund's investment goals, risks, charges
and expenses before investing. The prospectus contains this and other
information; please read it carefully before investing.

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 A2004 09/04

ITEM 2. CODE OF ETHICS.

(a) The Registrant has adopted a code of ethics that applies to its principal
executive officers and principal financial and accounting officer.

(d) N/A

(f) Pursuant to Item 11(A), the Registrant is attaching as an exhibit a copy of
its code of ethics that applies to its principal executive officers and
principal financial and accounting officer.

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.

(a)(1) The Registrant has an audit committee financial expert serving on its
audit committee.

(2) The audit committee financial expert is Frank W. T. LaHaye, and he is
"independent" as defined under the relevant Securities and Exchange Commission
Rules and Releases.

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

(a) Audit Fees
The aggregate fees paid to the principal accountant for professional services
rendered by the principal accountant for the audit of the registrant's annual
financial statements or for services that are normally provided by the
principal accountant in connection with statutory and regulatory filings or
engagements were $83,245 for the fiscal year ended July 31, 2004 and $51,245
for the fiscal year ended July 31, 2003.

(b) Audit-Related Fees
There were no fees paid to the principal accountant for assurance and related
services rendered by the principal accountant to the registrant that are
reasonably related to the performance of the audit of the registrant's
financial statements and are not reported under paragraph (a) of Item 4.

The aggregate fees paid to the principal accountant for assurance and related
services rendered by the principal accountant to the registrant's investment
adviser and any entity controlling, controlled by or under common control
with the investment adviser that provides ongoing services to the registrant
that are reasonably related to the performance of the audit of the their
financial statements were $48,134 for the fiscal year ended July 31, 2004 and
$0 for the fiscal year ended July 31, 2003. The services for which these
fees were paid included attestation services.

(c) Tax Fees
There were no fees paid to the principal accountant for professional services
rendered by the principal accountant to the registrant for tax compliance,
tax advice and tax.

There were no fees paid to the principal accountant for professional services
rendered by the principal accountant to the registrant's investment adviser
and any entity controlling, controlled by or under common control with the
investment adviser that provides ongoing services to the registrant for tax
compliance, tax advice and tax planning.

(d) All Other Fees
The aggregate fees paid to the principal accountant for products and services
rendered by the principal accountant to the registrant not reported in
paragraphs (a)-(c) of Item 4 were $609 for the fiscal year ended July 31,
2004 and $0 for the fiscal year ended July 31, 2003. The services for which
7these fees were paid included review of materials provided to the fund Board
in connection with the investment management contract renewal process.

The aggregate fees paid to the principal accountant for products and services
rendered by the principal accountant to the registrant's investment adviser
and any entity controlling, controlled by or under common control with the
investment adviser that provides ongoing services to the registrant not
reported in paragraphs (a)-(c) of Item 4 were $99,391 for the fiscal year
ended July 31, 2004 and $12,972 for the fiscal year ended July 31, 2003. The
services for which these fees were paid included review of materials provided
to the fund Board in connection with the investment management contract
renewal process, subscription fees and a review of an ICI transfer agent
survey.

(e) (1) The registrant's audit committee is directly responsible for
approving the services to be provided by the auditors, including:

(i) pre-approval of all audit and audit related services;

(ii) pre-approval of all non-audit related services to be provided to
the Fund by the auditors;

(iii)pre-approval of all non-audit related services to be provided to
the registrant by the auditors to the registrant's investment adviser or to
any entity that controls, is controlled by or is under common control with
the registrant's investment adviser and that provides ongoing services to the
registrant where the non-audit services relate directly to the operations or
financial reporting of the registrant; and

(iv) establishment by the audit committee, if deemed necessary or
appropriate, as an alternative to committee pre-approval of services to be
provided by the auditors, as required by paragraphs (ii) and (iii) above, of
policies and procedures to permit such services to be pre-approved by other
means, such as through establishment of guidelines or by action of a
designated member or members of the committee; provided the policies and
procedures are detailed as to the particular service and the committee is
informed of each service and such policies and procedures do not include
delegation of audit committee responsibilities, as contemplated under the
Securities Exchange Act of 1934, to management; subject, in the case of (ii)
through (iv), to any waivers, exceptions or exemptions that may be available
under applicable law or rules.

(e) (2) None of the services provided to the registrant described in
paragraphs (b)-(d) of Item 4 were pre-approved by the audit committee
pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of regulation S-X.

(f) No disclosures are required by this Item 4(f).

(g) The aggregate non-audit fees paid to the principal accountant for
services rendered by the principal accountant to the registrant and the
registrant's investment adviser and any entity controlling, controlled by or
under common control with the investment adviser that provides ongoing
services to the registrant were $148,134 for the fiscal year ended July 31,
2004 and $12,972 for the fiscal year ended July 31, 2003.

(h) No disclosures are required by this Item 4(h).

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. N/A

ITEM 6. SCHEDULE OF INVESTMENTS. N/A

ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES. The Board has delegated the
authority to vote proxies related to the portfolio securities held by the Fund
to the Fund's manager Franklin Advisers, Inc. (Advisers) 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. In addition,
the manager subscribes to Glass Lewis & Co., LLC (Glass Lewis), an unaffiliated
third party analytical research firm, to receive analyses and vote
recommendations on the shareholder meetings of publicly held U.S. companies.
Although ISS' and/or Glass Lewis' analyses are thoroughly reviewed and
considered in making a final voting decision, the manager does not consider
recommendations from ISS, Glass Lewis 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, trustees 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 trustees; defer to the voting recommendation of
the Fund's board of trustees, ISS, Glass Lewis 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.

MANAGER'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.

RATIFICATION OF AUDITORS. In light of several high profile accounting scandals,
the manager will closely scrutinize the role and performance of auditors. On a
case-by-case basis, the manager will examine proposals relating to non-audit
relationships and non-audit fees. The manager will also consider, on a
case-by-case basis, proposals to rotate auditors, and will vote against the
ratification of auditors when there is clear and compelling evidence of
accounting irregularities or negligence.

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 and/or the Glass Lewis
evaluation of the 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 proxy 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 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 are available on-line at franklintempleton.com and posted
on the SEC website at WWW.SEC.GOV and reflect the twelve-month period beginning
July 1, 2003, and ending June 30, 2004.

ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT
INVESTMENT COMPANY AND AFFILIATED PURCHASERS. N/A. Registrant's equity
securities are not registered for sale on an exchange pursuant to Section 12
of the Exchange Act (15 U.S.C. 781).

ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There have
been no changes to the procedures by which shareholders may recommend nominees
to the Registrant's Board of Trustees that would require disclosure herein.

ITEM 10. CONTROLS AND PROCEDURES.
(A) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. The Registrant maintains
disclosure controls and procedures that are designed to ensure that information
required to be disclosed in the Registrant's filings under the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 is recorded,
processed, summarized and reported within the periods specified in the rules and
forms of the Securities and Exchange Commission. Such information is accumulated
and communicated to the Registrant's management, including its principal
executive officer and principal financial officer, as appropriate, to allow
timely decisions regarding required disclosure. The Registrant's management,
including the principal executive officer and the principal financial officer,
recognizes that any set of controls and procedures, no matter how well designed
and operated, can provide only reasonable assurance of achieving the desired
control objectives.

Within 90 days prior to the filing date of this Shareholder Report on Form
N-CSR, the Registrant had carried out an evaluation, under the supervision and
with the participation of the Registrant's management, including the
Registrant's principal executive officer and the Registrant's principal
financial officer, of the effectiveness of the design and operation of the
Registrant's disclosure controls and procedures. Based on such evaluation, the
Registrant's principal executive officer and principal financial officer
concluded that the Registrant's disclosure controls and procedures are
effective.

(B) CHANGES IN INTERNAL CONTROLS. There have been no significant changes in the
Registrant's internal controls or in other factors that could significantly
affect the internal controls subsequent to the date of their evaluation in
connection with the preparation of this Shareholder Report on Form N-CSR.

ITEM 11. EXHIBITS.

(A) Code of Ethics

(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
Galen G. Vetter, 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
Galen G. Vetter, 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, 2004

Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.

By /s/Jimmy D. Gambill
Chief Executive Officer - Finance and Administration
Date September 30, 2004

By /s/Galen G. Vetter
Chief Financial Officer
Date September 30, 2004