N-Q/A 1 fhitnqform.txt AMENDED FORM N-Q QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED MANAGEMENT INVESTMENT COMPANY Investment Company Act file number 811-01608 --------- FRANKLIN HIGH INCOME TRUST (Exact name of registrant as specified in charter) ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906 (Address of principal executive offices) (Zip code) MURRAY L. SIMPSON, ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906 (Name and address of agent for service) Registrant's telephone number, including area code: 650 312-2000 ------------ Date of fiscal year end: 5/31 ---- Date of reporting period: 8/31/04 ------- Item 1. Schedule of Investments. FRANKLIN HIGH INCOME TRUST QUARTERLY STATEMENT OF INVESTMENTS AUGUST 31, 2004 -------------------------------------------------------------------------------- CONTENTS AGE High Income Fund ...................................................... 3 Notes to Statement of Investments ......................................... 11 FRANKLIN(R) TEMPLETON(R) INVESTMENTS FRANKLIN o Templeton o Mutual Series Quarterly Statement of Investments | 1 This page intentionally left blank. FRANKLIN HIGH INCOME TRUST STATEMENT OF INVESTMENTS, AUGUST 31, 2004 (UNAUDITED)
----------------------------------------------------------------------------------------------------------------------------------- AGE HIGH INCOME FUND COUNTRY PRINCIPAL AMOUNT(f) VALUE ----------------------------------------------------------------------------------------------------------------------------------- BONDS 90.9% COMMERCIAL SERVICES 1.0% JohnsonDiversey Holdings Inc., senior disc. note, zero cpn. to 5/17/07, 10.67% thereafter, 5/15/13 ............................................... United States $35,000,000 $ 28,612,500 (a)Key3Media Group Inc., senior sub. note, 11.25%, 6/15/11 .................... United States 20,000,000 300,000 -------------- 28,912,500 -------------- COMMUNICATIONS 8.6% (a)Asia Global Crossing Ltd., senior note, 13.375%, 10/15/10 .................. Bermuda 11,000,000 907,500 AT&T Wireless Group, senior note, 7.875%, 3/01/11 .......................... United States 22,000,000 25,963,586 Crown Castle International Corp., senior note, 7.50%, 12/01/13 ............. United States 15,000,000 15,075,000 Dobson Communications Corp., senior note, 8.875%, 10/01/13 ................. United States 18,000,000 12,420,000 (a)Iridium LLC/Capital Corp., senior note, D, 10.875%, 7/15/05 ................ Bermuda 17,000,000 1,615,000 MCI Inc., senior note, 5.908%, 5/01/07 ..................................... United States 5,542,000 5,465,797 MCI Inc., senior note, 6.688%, 5/01/09 ..................................... United States 5,542,000 5,237,190 MCI Inc., senior note, 7.735%, 5/01/14 ..................................... United States 4,750,000 4,399,687 Millicom International Cellular SA, senior note, 144A, 10.00%, 12/01/13 ................................................................. Luxembourg 10,000,000 9,950,000 Nextel Communications Inc., senior note, 7.375%, 8/01/15 ................... United States 33,300,000 34,965,000 Nextel Partners Inc., senior note, 8.125%, 7/01/11 ......................... United States 26,100,000 27,339,750 NTL Cable PLC, senior note, 144A, 8.75%, 4/15/14 ........................... United Kingdom 8,900,000 9,300,500 PanAmSat Corp., senior notes, 144A, 9.00%, 8/15/14 ......................... United States 20,500,000 21,473,750 (a)Poland Telecom Finance, B, 14.00%, 12/01/07 ................................ Poland 30,000,000 3,000 Qwest Communications International Inc., senior note, 144A, 7.50%, 2/15/14 .................................................................. United States 20,000,000 17,900,000 Qwest Corp., 6.875%, 9/15/33 ............................................... United States 28,300,000 23,347,500 (a)RSL Communications PLC, senior note, 10.125%, 3/01/08 ...................... United Kingdom 44,500,000 55,625 (a)RSL Communications PLC, senior note, 12.00%, 11/01/08 ...................... United Kingdom 6,250,000 7,813 Time Warner Telecom Inc., senior note, 9.25% 2/15/14 ....................... United States 20,000,000 19,600,000 Triton PCS Inc., senior note, 8.50%, 6/01/13 ............................... United States 15,300,000 13,961,250 Triton PCS Inc., senior sub. note, 9.375%, 2/01/11 ......................... United States 6,900,000 4,933,500 -------------- 253,921,448 -------------- CONSUMER DURABLES 4.1% D.R. Horton Inc., senior note, 8.50%, 4/15/12 .............................. United States 25,000,000 28,500,000 General Motors, senior deb., 8.25%, 7/15/23 ................................ United States 23,500,000 24,831,863 Sealy Mattress Co., senior sub. note, 144A, 8.25%, 6/15/14 ................. United States 30,000,000 31,125,000 Simmons Co., senior sub. note, 144A, 7.875%, 1/15/14 ....................... United States 16,400,000 16,974,000 William Lyon Homes, senior note, 7.50%, 2/15/14 ............................ United States 18,500,000 18,407,500 -------------- 119,838,363 -------------- CONSUMER NON-DURABLES 1.0% Smithfield Foods Inc., senior note, 7.75%, 5/15/13 ......................... United States 9,600,000 10,272,000 Smithfield Foods Inc., Senior Note, 144A, 7.00%, 8/01/11 ................... United States 18,900,000 19,656,000 -------------- 29,928,000 --------------
Quarterly Statement of Investments | 3 FRANKLIN HIGH INCOME TRUST STATEMENT OF INVESTMENTS, AUGUST 31, 2004 (UNAUDITED) (CONTINUED)
----------------------------------------------------------------------------------------------------------------------------------- AGE HIGH INCOME FUND COUNTRY PRINCIPAL AMOUNT(f) VALUE ----------------------------------------------------------------------------------------------------------------------------------- BONDS (CONT.) CONSUMER SERVICES 21.2% (a)Adelphia Communications Corp., senior note, 10.875%, 10/01/10 .............. United States $25,000,000 $ 22,937,500 Aztar Corp., senior sub. note, 144A, 7.875%, 6/15/14 ....................... United States 13,700,000 14,128,125 Boyd Gaming Corp., senior sub. note, 6.75%, 4/15/14 ........................ United States 21,600,000 21,762,000 Cablevision Systems Corp., senior note, 144A, 8.00%, 4/15/12 ............... United States 19,200,000 19,776,000 (a)Callahan Nordrhein-Westfalen, senior disc. note, zero cpn. to 7/15/05, 16.00% thereafter, 7/15/10 ............................................... Germany 38,000,000 1,615,000 CanWest Media Inc., senior note, B, 7.625%, 4/15/13 ........................ Canada 3,500,000 3,745,000 CanWest Media Inc., senior sub. note, 10.625%, 5/15/11 ..................... Canada 15,600,000 17,842,500 Charter Communications Holdings II, senior note, 10.25%, 9/15/10 ........... United States 33,800,000 34,983,000 Charter Communications Holdings LLC, senior disc. note, zero cpn. to 1/15/06, 13.50% thereafter, 1/15/11 ...................................... United States 15,500,000 11,392,500 CSC Holdings Inc., senior deb., 7.625%, 7/15/18 ............................ United States 20,000,000 20,200,000 Dex Media East LLC, senior sub. note, B, 12.125%, 11/15/12 ................. United States 12,865,000 15,920,438 Dex Media Inc., senior disc. note, 144A, zero cpn. to 11/15/08, 9.00% thereafter, 11/15/13 ..................................................... United States 12,600,000 9,292,500 Dex Media Inc., senior note, 144A, 8.00%, 11/15/13 ......................... United States 7,500,000 7,818,750 DIRECTV Holdings/Finance, senior note, 8.375%, 3/15/13 ..................... United States 29,200,000 33,361,000 EchoStar DBS Corp., senior note, 6.375%, 10/01/11 .......................... United States 20,000,000 20,150,000 Emmis Operating Co., senior sub. note, 6.875%, 5/15/12 ..................... United States 26,500,000 26,708,025 Lin Television Corp., senior sub. note, 6.50%, 5/15/13 ..................... United States 19,600,000 19,404,000 Mandalay Resort Group, senior note, 9.50%, 8/01/08 ......................... United States 5,900,000 6,755,500 Mandalay Resort Group, senior sub. note, 10.25%, 8/01/07 ................... United States 14,600,000 16,443,250 Marquee Holdings Inc., senior disc. note, 144A, zero cpn. to 8/15/09, 12.00% thereafter, 8/15/14 ............................................... United States 17,700,000 10,465,125 Marquee Inc., senior note, 144A, 8.625%, 8/15/12 ........................... United States 9,400,000 9,870,000 Park Place Entertainment Corp., senior sub. note, 7.875%, 3/15/10 .......... United States 25,000,000 27,875,000 Pinnacle Entertainment Inc., senior sub. note, 8.75%, 10/01/13 ............. United States 6,300,000 6,520,500 Quebecor Media Inc., senior disc. note, zero cpn. to 7/15/06, 13.75% thereafter, 7/15/11 ...................................................... Canada 31,500,000 30,082,500 Rainbow National Services, senior sub. deb., 144A, 10.375%, 9/01/14 .................................................................. United States 29,000,000 30,160,000 Royal Caribbean Cruises Ltd., senior deb., 7.25%, 3/15/18 .................. United States 14,400,000 14,832,000 Royal Caribbean Cruises Ltd., senior note, 8.00%, 5/15/10 .................. United States 4,200,000 4,688,250 Royal Caribbean Cruises Ltd., senior note, 6.875%, 12/01/13 ................ United States 13,800,000 14,386,500 Six Flags Inc., senior note, 9.50%, 2/01/09 ................................ United States 30,000,000 29,250,000 Station Casinos Inc., senior note, 6.00%, 4/01/12 .......................... United States 9,300,000 9,369,750 Station Casinos Inc., senior sub. note, 6.50%, 2/01/14 ..................... United States 7,000,000 7,035,000 Station Casinos Inc., senior sub. note, 6.875%, 3/01/16 United States 15,000,000 15,056,250 Universal City Development, senior note, 11.75%, 4/01/10 ................... United States 15,000,000 17,475,000 Venetian Casino/LV Sands, secured note, 11.00%, 6/15/10 .................... United States 24,800,000 28,365,000 Yell Finance BV, senior disc. note, zero cpn. to 8/01/06, 13.50% thereafter, 8/01/11 ...................................................... United Kingdom 12,325,000 12,016,875 Yell Finance BV, senior note, 10.75%, 8/01/11 .............................. United Kingdom 6,485,000 7,619,875 Young Broadcasting Inc., senior sub. note, 10.00%, 3/01/11 ................. United States 5,000,000 5,137,500 Young Broadcasting Inc., senior sub. note, 8.75%, 1/15/14 .................. United States 17,900,000 17,251,125 -------------- 621,691,338 --------------
4 | Quarterly Statement of Investments FRANKLIN HIGH INCOME TRUST STATEMENT OF INVESTMENTS, AUGUST 31, 2004 (UNAUDITED) (CONTINUED)
----------------------------------------------------------------------------------------------------------------------------------- AGE HIGH INCOME FUND COUNTRY PRINCIPAL AMOUNT(f) VALUE ----------------------------------------------------------------------------------------------------------------------------------- BONDS (CONT.) ELECTRONIC TECHNOLOGY 3.3% Alliant Techsystems Inc., senior sub. note, 8.50%, 5/15/11 .............. United States $ 6,900,000 $ 7,538,250 Flextronics International Ltd., senior sub. note, 6.50%, 5/15/13 ........ Singapore 8,900,000 8,944,500 L-3 Communications Corp., senior sub. note, 6.125%, 1/15/14 ............. United States 26,500,000 26,168,750 ON Semiconductor Corp., senior secured note, 13.00%, 5/15/08 ............ United States 8,224,000 9,293,120 SCG Holding Corp., 144A, zero cpn., 8/04/11 ............................. United States 7,300,000 10,147,000 Solectron Corp., senior note, 9.625%, 2/15/09 ........................... United States 9,100,000 10,055,500 Xerox Corp., senior note, 7.125%, 6/15/10 ............................... United States 8,000,000 8,520,000 Xerox Corp., senior note, 6.875%, 8/15/11 ............................... United States 15,600,000 16,224,000 ------------- 96,891,120 ------------- ENERGY MINERALS 1.2% Arch Western Finance, senior note, 144A, FRN, 7.50%, 7/01/13 ............ United States 19,100,000 19,864,000 Peabody Energy Corp., senior note, B, 6.875%, 3/15/13 ................... United States 15,900,000 16,854,000 ------------- 36,718,000 ------------- FINANCE 1.0% Americredit Corp., senior note, 9.25%, 5/01/09 .......................... United States 15,000,000 16,050,000 Western Financial Bank-FSB, sub. deb., 9.625%, 5/15/12 .................. United States 12,400,000 13,702,000 ------------- 29,752,000 ------------- GOVERNMENT BONDS .3% Eskom, 11.00%, 6/01/08 .................................................. South Africa 63,800,000 ZAR 10,208,000 ------------- HEALTH SERVICES 3.7% HealthSouth Corp., senior note, 7.625%, 6/01/12 ......................... United States 27,000,000 25,987,500 Pacificare Health Systems Inc., senior note, 10.75%, 6/01/09 ............ United States 15,792,000 18,397,680 Tenet Healthcare Corp., senior note, 7.375%, 2/01/13 .................... United States 18,000,000 16,740,000 Tenet Healthcare Corp., senior note, 144A, 9.875%, 7/01/14 .............. United States 14,000,000 14,665,000 United Surgical Partners, senior sub. note, 10.00%, 12/15/11 ............ United States 27,000,000 30,915,000 ------------- 106,705,180 ------------- HEALTH TECHNOLOGY .5% Alliance Imaging Inc., senior sub. note, 10.375%, 4/15/11 ............... United States 14,000,000 15,085,000 ------------- INDUSTRIAL SERVICES 3.8% Allied Waste North America Inc., senior note, 7.875%, 4/15/13 ........... United States 21,600,000 22,896,000 Allied Waste North America Inc., senior secured note, 6.50%, 11/15/10 .............................................................. United States 10,000,000 10,050,000 Allied Waste North America Inc., senior secured note, 6.125%, 2/15/14 ............................................................... United States 5,000,000 4,687,500 El Paso Energy Partners LP, senior sub. note, B, 8.50%, 6/01/11 ......... United States 7,874,000 8,936,990 Gulfterra Energy Partners, senior sub. note, 10.625%, 12/01/12 .......... United States 3,131,000 3,960,715 Hanover Equipment Trust 01, senior secured note, A, 8.50%, 9/01/08 ............................................................... United States 18,000,000 19,305,000 Hanover Equipment Trust 01, senior secured note, B, 8.75%, 9/01/11 ............................................................... United States 12,000,000 13,020,000
Quarterly Statement of Investments | 5 FRANKLIN HIGH INCOME TRUST STATEMENT OF INVESTMENTS, AUGUST 31, 2004 (UNAUDITED) (CONTINUED)
----------------------------------------------------------------------------------------------------------------------------------- AGE HIGH INCOME FUND COUNTRY PRINCIPAL AMOUNT(f) VALUE ----------------------------------------------------------------------------------------------------------------------------------- BONDS (CONT.) INDUSTRIAL SERVICES (CONT.) Pride International Inc., senior note, 144A, 7.375%, 7/15/14 ........ United States $20,700,000 $ 22,149,000 (a)Safety Kleen Services, senior sub. note, 9.25%, 6/01/08 ............. United States 10,000,000 50,000 Universal Compression Inc., senior note, 7.25%, 5/15/10 ............. United States 7,100,000 7,419,500 -------------- 112,474,705 -------------- NON-ENERGY MINERALS 1.8% Glencore Funding LLC, 144A, 6.00%, 4/15/14 .......................... United States 21,100,000 20,369,075 Ispat Inland ULC, senior secured note, 144A, 9.75%, 4/01/14 ......... United States 29,200,000 31,317,000 -------------- 51,686,075 -------------- PROCESS INDUSTRIES 13.1% BCP Caylux Holding Lux SCA, senior sub. note, 144A, 9.625%, 6/15/14 ........................................................... United States 24,600,000 26,537,250 Bear Island Paper Co. LLC, senior note, B, 10.00%, 12/01/07 ......... United States 11,700,000 11,290,500 Buckeye Technologies Inc., senior note, 8.50%, 10/01/13 ............. United States 11,700,000 12,460,500 Equistar Chemicals LP, senior note, 8.75%, 2/15/09 .................. United States 20,000,000 21,150,000 Equistar Chemicals LP, senior note, 10.625%, 5/01/11 ................ United States 4,400,000 4,972,000 (a)FiberMark Inc., senior note, 10.75%, 4/15/11 ........................ United States 17,000,000 10,795,000 Georgia-Pacific Corp., 7.25%, 6/01/28 ............................... United States 3,000,000 2,985,000 Georgia-Pacific Corp., senior note, 9.375%, 2/01/13 ................. United States 14,800,000 17,501,000 Georgia Pacific Corp., senior note, 8.00%, 1/15/14 .................. United States 8,000,000 9,140,000 Georgia-Pacific Corp., senior note, 8.00%, 1/15/24 .................. United States 15,000,000 16,237,500 Huntsman ICI Holdings LLC, senior disc. note, zero cpn., 12/31/09 ... United States 66,130,000 34,056,950 IMC Global Inc., senior note, 10.875%, 8/01/13 ...................... United States 28,000,000 35,420,000 Jefferson Smurfit Corp., senior note, 7.50%, 6/01/13 ................ United States 15,800,000 16,590,000 Lyondell Chemical Co., senior secured note, 10.50%, 6/01/13 ......... United States 17,400,000 19,662,000 MDP Acquisitions PLC, senior note, 9.625%, 10/01/12 ................. Irish Republic 18,600,000 21,018,000 Nalco Co., senior note, 144A, 7.75%, 11/15/11 ....................... United States 2,700,000 2,889,000 Nalco Co., senior sub. note, 144A, 8.875%, 11/15/13 ................. United States 27,200,000 29,478,000 Owens-Illinois Inc., senior note, 7.80%, 5/15/18 .................... United States 29,000,000 28,275,000 (a)Pindo Deli Finance Mauritius Ltd., senior note, 11.75%, 10/01/17 .... Singapore 28,800,000 8,352,000 (a)Polysindo International Finance Co. BV, secured note, 9.375%, 7/30/07 ........................................................... Indonesia 27,750,000 2,358,750 Rhodia SA, senior note, 10.25%, 6/01/10 ............................. France 30,000,000 30,750,000 Stone Container Corp., senior note, 8.375%, 7/01/12 ................. United States 15,400,000 17,017,000 (a)Tjiwi Kimia Finance Mauritius, senior note, 10.00%, 8/01/04 ......... Indonesia 11,000,000 4,345,000 -------------- 383,280,450 -------------- PRODUCER MANUFACTURING 7.3% Airxcel Inc., senior sub. note, B, 11.00%, 11/15/07 ................. United States 11,995,000 11,935,025 Case New Holland Inc., senior note, 144A, 9.25%, 8/01/11 ............ United States 32,000,000 35,520,000 Fimep SA, senior note, 10.50%, 2/15/13 .............................. France 20,700,000 24,012,000 (a)Goss Graphic Systems Inc., senior sub. note, 12.25%, 11/19/05 ....... United States 9,053,899 -- HLI Operating Co. Inc., senior sub. note, 10.50%, 6/15/10 ........... United States 16,262,000 18,619,990 Hutchison Whampoa International Ltd., senior note, 144A, 6.25%, 1/24/14 ........................................................... Hong Kong 20,300,000 21,003,354
6 | Quarterly Statement of Investments FRANKLIN HIGH INCOME TRUST STATEMENT OF INVESTMENTS, AUGUST 31, 2004 (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------------------------------------------------------- AGE HIGH INCOME FUND COUNTRY PRINCIPAL AMOUNT(f) VALUE --------------------------------------------------------------------------------------------------------------------------------- BONDS (CONT.) PRODUCER MANUFACTURING (CONT.) Invensys PLC, senior note, 144a, 9.875%, 3/15/11 ..................... United Kingdom $18,000,000 $ 18,360,000 Milacron Escrow Corp., senior secured note, 144A, 11.50%, 5/15/11 .... United States 30,000,000 32,100,000 Russel Metals Inc., senior note, 6.375%, 3/01/14 ..................... United States 17,000,000 16,362,500 THL Buildco Inc., senior sub. note, 144A, 8.50%, 9/01/14 ............. United States 18,300,000 19,169,250 TRW Automotive Inc., senior note, 9.375%, 2/15/13 .................... United States 13,903,000 16,092,723 TRW Automotive Inc., senior sub. note, 11.00%, 2/15/13 ............... United States 1,102,000 1,338,930 ------------- 214,513,772 ------------- REAL ESTATE INVESTMENT TRUSTS 2.5% Host Marriott LP, senior note, 7.125%, 11/01/13 ...................... United States 20,000,000 20,450,000 Host Marriott LP, senior note, 144A, 7.00%, 8/15/12 .................. United States 7,100,000 7,259,750 Host Marriott LP, senior note, I, 9.50%, 1/15/07 ..................... United States 7,000,000 7,840,000 Meristar Hospitality Corp., senior note, 9.00%, 1/15/08 .............. United States 16,500,000 17,077,500 Meristar Hospitality Corp., senior note, 10.50%, 6/15/09 ............. United States 10,700,000 11,622,875 Ventas Realty LP Capital Corp., senior note, 8.75%, 5/01/09 .......... United States 7,500,000 8,212,500 ------------- 72,462,625 ------------- RETAIL TRADE 3.0% Office Depot Inc., senior sub. note, 10.00%, 7/15/08 ................. United States 22,000,000 25,960,000 Rite Aid Corp., 7.70%, 2/15/27 ....................................... United States 10,000,000 8,750,000 Rite Aid Corp., senior note, 144A, 6.125%, 12/15/08 .................. United States 26,900,000 26,093,000 Stater Brothers Holdings, senior note, 144A, 8.125%, 6/15/12 ......... United States 25,800,000 26,961,000 ------------- 87,764,000 ------------- TECHNOLOGY SERVICES 1.0% (a)PSINet Inc., senior note, 11.00%, 8/01/09 ............................ United States 18,750,000 1,265,625 UGS Corp., senior sub. note, 144A, 10.00%, 6/01/12 ................... United States 25,000,000 27,375,000 ------------- 28,640,625 ------------- TRANSPORTATION 3.0% CP Ships Ltd., senior note, 10.375%, 7/15/12 Canada 20,000,000 22,875,000 Great Lakes Dredge & Dock Corp., senior sub. note, 7.75%, 12/15/13 ........................................................... United States 12,400,000 10,338,500 Laidlaw International Inc., senior note, 10.75%, 6/15/11 ............. United States 19,800,000 22,671,000 Ultrapetrol Ltd., first mortgage, 10.50%, 4/01/08 .................... Argentina 24,300,000 22,173,750 (a)United Air Lines Inc., pass through certificates, 9.06%, 9/26/14 ..... United States 20,422,000 9,240,955 ------------- 87,299,205 ------------- UTILITIES 9.5% AES Corp., senior note, 9.375%, 9/15/10 .............................. United States 15,000,000 16,762,500 AES Corp., senior secured note, 144A, 9.00%, 5/15/15 ................. United States 24,700,000 27,602,250 Allegheny Energy Supply Co. LLC, 144A, 8.25%, 4/15/12 ................ United States 35,000,000 37,275,000 Aquila Inc., senior note, 14.875%, 7/01/12 ........................... United States 30,000,000 40,725,000 Calpine Canada Energy Finance, senior note, 8.50%, 5/01/08 ........... Canada 30,000,000 19,275,000 Calpine Corp., senior secured note, 144A, 8.75%, 7/15/13 ............. United States 18,000,000 14,130,000 Dynegy Holdings Inc., senior note, 8.75%, 2/15/12 .................... United States 39,000,000 39,292,500
Quarterly Statement of Investments | 7 FRANKLIN HIGH INCOME TRUST STATEMENT OF INVESTMENTS, AUGUST 31, 2004 (UNAUDITED) (CONTINUED)
----------------------------------------------------------------------------------------------------------------------------------- AGE HIGH INCOME FUND COUNTRY PRINCIPAL AMOUNT(f) VALUE ----------------------------------------------------------------------------------------------------------------------------------- BONDS (CONT.) UTILITIES (CONT.) ESI Tractebel Acquisition Corp., secured note, 7.99%, 12/30/11 .... United States $ 7,177,000 $ 7,464,080 Midland Funding II, sub. secured lease obligation, A, 11.75%, 7/23/05 ......................................................... United States 1,548,676 1,660,683 Midland Funding II, sub. secured lease obligation, B, 13.25%, 7/23/06 ......................................................... United States 11,500,000 13,164,498 Midwest Generation LLC, senior secured note, 144A, 8.75%, 5/01/34 ......................................................... United States 31,600,000 33,733,000 NRG Energy Inc., senior secured note, 144A, 8.00%, 12/15/13 ....... United States 14,500,000 15,297,500 Williams Cos. Inc., senior note, 8.625%, 6/01/10 .................. United States 9,200,000 10,718,000 -------------- 277,100,011 -------------- TOTAL BONDS (COST $2,713,644,572) 2,664,872,417 -------------- CONVERTIBLE BOND (COST $27,973,103) 1.1% ELECTRONIC TECHNOLOGY Nortel Networks Corp., cvt., senior note, 4.25%, 9/01/08 .......... Canada 33,700,000 32,646,875 -------------- --------------- SHARES/WARRANTS --------------- COMMON STOCKS AND WARRANTS 2.1% COMMUNICATIONS 1.5% (b)Arch Wireless Inc., A ............................................. United States 12,772 389,546 (b)Call-Net Enterprises Inc., B ...................................... Canada 254,140 533,694 (b)Dobson Communications Corp. ....................................... United States 1,335,237 1,869,332 (b)ICG Communications Inc. ........................................... United States 106,945 73,792 (b)ICG Communications Inc., wts., 6/05/07 ............................ United States 17,723 177 (b)ICO Global Communications Holdings Ltd. ........................... United States 2,105,368 905,308 (b)ICO Global Communications Holdings Ltd., wts., 5/16/06 ............ United States 528,825 5,283 (b),(c)International Wireless Communications Holdings Inc. ............... United States 1,759,743 211,169 (b)Metrocall Holdings Inc. ........................................... United States 182,155 11,772,678 (b)Millicom International Cellular SA ................................ Luxembourg 1 16 (b)Nextel Communications Inc., A ..................................... United States 128,674 2,983,950 (b)NII Holdings Inc., B .............................................. United States 223,719 8,199,301 (b)NTL Inc. .......................................................... United Kingdom 100,000 5,431,000 (b),(d)Poland Telecom Finance, wts., 144A, 12/01/07 ...................... Poland 30,000 -- (b)Telewest Global Inc. .............................................. United Kingdom 951,951 10,995,034 (b)XO Communications Inc., wts., A, 1/16/10 .......................... United States 68,579 58,292 -------------- 43,428,572 -------------- CONSUMER SERVICES (b)Jack in the Box Inc. .............................................. United States 24,090 680,301 -------------- ELECTRONIC TECHNOLOGY (b)Loral Space & Communications LTD., wts., 12/27/06 ................. United States 155,654 2,724 (b)Loral Space & Communications Ltd., wts., 1/15/07 .................. United States 35,300 618 -------------- 3,342 --------------
8 | Quarterly Statement of Investments FRANKLIN HIGH INCOME TRUST STATEMENT OF INVESTMENTS, AUGUST 31, 2004 (UNAUDITED) (CONTINUED)
----------------------------------------------------------------------------------------------------------------------------------- AGE HIGH INCOME FUND COUNTRY SHARES/WARRANTS VALUE ----------------------------------------------------------------------------------------------------------------------------------- COMMON STOCKS AND WARRANTS (CONT.) ENERGY MINERALS (b)Horizon Natural Resources Co. ...................................... United States 533,333 $ -- (b)McMoRan Exploration Co. ............................................ United States 25,937 362,859 -------------- 362,859 -------------- HEALTH SERVICES .4% (b)Kindred Healthcare Inc. ............................................ United States 72 1,862 (b)Kindred Healthcare Inc., wts., A, 4/20/06 .......................... United States 134,263 3,155,180 (b)Kindred Healthcare Inc., wts., B, 4/20/06 .......................... United States 335,658 6,511,765 -------------- 9,668,807 -------------- INDUSTRIAL SERVICES .1% (b)Transocean Inc., wts., 144A, 5/01/09 ............................... United States 11,750 2,784,750 -------------- PRODUCER MANUFACTURING .1% (b)Cambridge Industries Liquidating Trust Interest .................... United States 4,853,892 24,270 (b)Goss Holdings Inc., B .............................................. United States 211,174 -- (b),(c)Harvard Industries Inc. ............................................ United States 793,966 3,970 (b),(c)VS Holdings ........................................................ United States 1,685,375 1,685 Walter Industries Inc. ............................................. United States 189,505 2,812,254 -------------- 2,842,179 -------------- RETAIL TRADE (b)Penn Traffic Co. ................................................... United States 389,598 23,376 -------------- TOTAL COMMON STOCKS AND WARRANTS (COST $192,931,011) ............... 59,794,186 -------------- PREFERRED STOCKS 1.1% COMMUNICATIONS PTV Inc., 10.00%, pfd., A .......................................... United Kingdom 388 1,940 -------------- HEALTH SERVICES 1.1% Fresenius Medical Care Capital Trust II, 7.875%, pfd. .............. Germany 30,600,000 32,742,000 -------------- PROCESS INDUSTRIES (a)Asia Pulp & Paper Co. Ltd., 12.00%, pfd. ........................... Indonesia 24,700,000 370,500 -------------- TOTAL PREFERRED STOCKS (COST $55,292,487) .......................... 33,114,440 -------------- CONVERTIBLE PREFERRED STOCKS 1.9% COMMUNICATIONS .1% Dobson Communications Corp., 6.00%, cvt. pfd. ...................... United States 28,400 1,420,000 -------------- CONSUMER DURABLES 1.0% Ford Motor Co. Capital Trust II, 6.50%, cvt. pfd. .................. United States 560,000 29,635,200 -------------- UTILITIES .8% CMS Energy Trust I, 7.75%, cvt. pfd. ............................... United States 530,000 23,076,200 -------------- TOTAL CONVERTIBLE PREFERRED STOCKS (COST $56,582,961) .............. 54,131,400 -------------- TOTAL LONG TERM INVESTMENTS (COST $3,046,424,134) .................. 2,844,559,318 --------------
Quarterly Statement of Investments | 9 FRANKLIN HIGH INCOME TRUST STATEMENT OF INVESTMENTS, AUGUST 31, 2004 (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------------------------------------------------------- AGE HIGH INCOME FUND COUNTRY SHARES VALUE --------------------------------------------------------------------------------------------------------------------------------- SHORT TERM INVESTMENT (COST $36,098,383) 1.2% (e)Franklin Institutional Fiduciary Trust Money Market Portfolio ......... United States 36,098,383 $ 36,098,383 -------------- TOTAL INVESTMENTS (COST $3,082,522,517) 98.3% ......................... 2,880,657,701 OTHER ASSETS, LESS LIABILITIES 1.7% ................................... 49,815,953 -------------- NET ASSETS 100.0% ..................................................... $2,930,473,654 ==============
CURRENCY ABBREVIATIONS | ZAR - South African Rand (a) Defaulted security. (b) Non-income producing. (c) See Note 3 regarding holdings of 5% voting securities. (d) See Note 2 regarding restricted securities. (e) The Franklin Institutional Fiduciary Trust Money Market Portfolio is managed by the Fund's investment manager. (f) The principal amount is stated in U.S. dollars unless otherwise indicated. 10 | See Notes to Statement of Investments. | Quarterly Statement of Investments FRANKLIN HIGH INCOME TRUST NOTES TO STATEMENT OF INVESTMENTS (UNAUDITED) AGE HIGH INCOME FUND Franklin High Income Trust (the Trust) is registered under the Investment Company Act of 1940 as an open-end investment company, consisting of one Fund, the Franklin AGE High Income Fund (the Fund). 1. INCOME TAXES At August 31, 2004, the net unrealized appreciation (depreciation) based on the cost of investments for income tax purposes were as follows: Costs of investments .................................... $ 3,083,815,842 =============== Unrealized appreciation ................................. $ 255,576,287 Unrealized depreciation ................................. (458,734,428) --------------- Net unrealized appreciation (depreciation) .............. $ (203,158,141) =============== 2. RESTRICTED SECURITIES At August 31, 2004, the Fund held investments in restricted and illiquid securities that were valued under approved methods by the Trustees, as follows:
------------------------------------------------------------------------------------------------------------------------ ACQUISITION SHARES ISSUER DATE COST VALUE ------------------------------------------------------------------------------------------------------------------------ 30,000 Poland Telecom Finance, wts., 144A, 12/01/07 11/24/97 $180,000 $ -- ------------ TOTAL RESTRICTED SECURITIES (0% OF NET ASSETS) $ -- ============
3. HOLDING OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES Investments in "affiliated companies" for the Fund at Aug 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 PERIOD OF PERIOD INCOME GAIN (LOSS) ---------------------------------------------------------------------------------------------------------------------------------- Harvard Industries Inc. ....... 793,966 -- -- 793,966 $ 3,970 $ -- $ -- International Wireless Communications Holdings ..... 1,759,743 -- -- 1,759,743 211,169 -- -- VS Holdings ................... 1,685,375 -- -- 1,685,375 1,685 -- -- -------------------------------------- TOTAL NON-CONTROLLED AFFILIATED ISSUERS ................................................. $216,824 $ -- $ -- ======================================
For information regarding the Fund's policy regarding valuation of investments and other significant accounting policies, please refer to the Fund's most recent semiannual or annual shareholder report. Quarterly Statement of Investments | 11 Item 2. 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 Quarterly Schedule of Portfolio Holdings on Form N-Q, 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 Quarterly Schedule of Portfolio Holdings on Form N-Q. Item 3. Exhibits. (A) Certification pursuant to Section 30a-2 under the Investment Company Act of 1940 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. (Registrant) FRANKLIN HIGH INCOME TRUST By /S/JIMMY D. GAMBILL ------------------- Chief Executive Officer - Finance and Administration Date October 28, 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 October 28, 2004 By /S/GALEN G. VETTER ------------------ Chief Financial Officer Date October 28, 2004 Exhibit A I, Jimmy D. Gambill, certify that: 1. I have reviewed this report on Form N-Q of Franklin High Income Trust; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the schedules of investments included in this report fairly present in all material respects the investments of the registrant as of the end of the fiscal quarter for which the report is filed; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report, based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. October 21, 2004 /s/Jimmy D. Gambill Chief Executive Officer - Finance and Administration I, Galen G. Vetter, certify that: 1. I have reviewed this report on Form N-Q of Franklin High Income Trust; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the schedules of investments included in this report fairly present in all material respects the investments of the registrant as of the end of the fiscal quarter for which the report is filed; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report, based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. October 21, 2004 /s/GALEN G. VETTER Chief Financial Officer