N-Q 1 fhitnq.txt 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) CRAIG S. TYLE, 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: 2/28/06 ------- Item 1. Schedule of Investments. Franklin High Income Trust QUARTERLY STATEMENT OF INVESTMENTS FEBRUARY 28, 2006 -------------------------------------------------------------------------------- CONTENTS AGE High Income Fund .............................................. 3 Notes to Statement of Investments ................................. 10 [LOGO] FRANKLIN TEMPLETON INVESTMENTS FRANKLIN o Templeton o Mutual Series Quarterly Statement of Investments | 1 This page intentionally left blank. Franklin High Income Trust STATEMENT OF INVESTMENTS, FEBRUARY 28, 2006 (UNAUDITED)
------------------------------------------------------------------------------------------------------------------------------------ AGE HIGH INCOME FUND COUNTRY PRINCIPAL AMOUNT d VALUE ------------------------------------------------------------------------------------------------------------------------------------ LONG TERM INVESTMENTS 97.4% CORPORATE BONDS 96.1% COMMERCIAL SERVICES 3.7% Dex Media East LLC, senior sub. note, B, 12.125%, 11/15/12 ............. United States 12,865,000 $ 14,907,319 Dex Media Inc., B, 8.00%, 11/15/13 ................................................... United States 7,500,000 7,800,000 senior disc. note, zero cpn. to 11/15/08, 9.00% thereafter, 11/15/13 ............................................................ United States 12,600,000 10,647,000 JohnsonDiversey Holdings Inc., senior disc. note, zero cpn. to 5/17/07, 10.67% thereafter, 5/15/13 ............................................ United States 35,000,000 30,362,500 Lamar Media Corp., senior sub. note, 6.625%, 8/15/15 ................... United States 17,800,000 18,089,250 a Quebecor Media Inc., senior note, 144A, 7.75%, 3/15/16 ................. Canada 9,200,000 9,476,000 a R.H. Donnelley Corp., senior note, 144A, 8.875%, 1/15/16 ............... United States 13,100,000 13,738,625 --------------- 105,020,694 --------------- COMMUNICATIONS 11.8% b Asia Global Crossing Ltd., senior note, 13.375%, 10/15/10 .............. Bermuda 11,000,000 330,000 Dobson Cellular Systems Inc., senior secured note, 9.875%, 11/01/12 .............................................................. United States 18,000,000 19,755,000 Inmarsat Finance II PLC, senior note, zero cpn. to 11/15/08, 10.375% thereafter, 11/15/12 .......................................... United Kingdom 37,200,000 31,527,000 a Intelsat Bermuda Ltd., senior note, 144A, 8.50%, 1/15/13 ....................................................... Bermuda 12,200,000 12,535,500 8.875%, 1/15/15 ...................................................... Bermuda 17,500,000 18,243,750 b Iridium LLC, senior note, D, 10.875%, 7/15/05 .......................... Bermuda 17,000,000 4,505,000 Millicom International Cellular SA, senior note, 10.00%, 12/01/13 ...... Luxembourg 10,000,000 11,062,500 Nextel Communications Inc., senior note, D, 7.375%, 8/01/15 ............ United States 33,300,000 35,243,654 Nextel Partners Inc., senior note, 8.125%, 7/01/11 ..................... United States 26,100,000 27,796,500 NTL Cable PLC, senior note, 8.75%, 4/15/14 ............................. United Kingdom 8,900,000 9,122,500 Panamsat Corp., senior note, 9.00%, 8/15/14 ............................ United States 13,177,000 13,967,620 Qwest Communications International Inc., senior note, 7.50%, 2/15/14 ............................................................... United States 35,000,000 36,137,500 Qwest Corp., 6.875%, 9/15/33 ........................................... United States 18,300,000 17,659,500 Rogers Wireless Inc., senior secured note, 7.25%, 12/15/12 ...................................................... Canada 12,580,000 13,413,425 7.50%, 3/15/15 ....................................................... Canada 15,500,000 16,895,000 b RSL Communications PLC, senior disc. note, 10.125%, 3/01/08 .................................. United Kingdom 44,500,000 667,500 senior note, 12.00%, 11/01/08 ........................................ United Kingdom 6,250,000 93,750 Time Warner Telecom Holdings Inc., senior note, 9.25%, 2/15/14 ......... United States 20,000,000 21,675,000 Verizon New York Inc., 7.375%, 4/01/32 ................................. United States 15,000,000 15,946,110 a,c Wind Acquisition Finance SA, senior note, 144A, 10.75%, 12/01/15 .............................................................. Italy 28,000,000 30,100,000 --------------- 336,676,809 --------------- CONSUMER DURABLES 5.3% D.R. Horton Inc., senior note, 8.50%, 4/15/12 .......................... United States 25,000,000 26,679,100 Ford Motor Credit Co., 5.625%, 10/01/08 ................................ United States 15,100,000 13,721,385 General Motors Acceptance Corp., 6.875%, 9/15/11 ....................... United States 50,000,000 44,818,300 Sealy Mattress Co., senior sub. note, 8.25%, 6/15/14 ................... United States 24,700,000 25,935,000 Simmons Bedding Co., senior sub. note, 7.875%, 1/15/14 ................. United States 16,400,000 15,826,000
Quarterly Statement of Investments | 3 Franklin High Income Trust STATEMENT OF INVESTMENTS, FEBRUARY 28, 2006 (UNAUDITED) (CONTINUED)
------------------------------------------------------------------------------------------------------------------------------------ AGE HIGH INCOME FUND COUNTRY PRINCIPAL AMOUNT d VALUE ------------------------------------------------------------------------------------------------------------------------------------ LONG TERM INVESTMENTS (CONTINUED) CORPORATE BONDS (CONTINUED) CONSUMER DURABLES (CONTINUED) William Lyon Homes Inc., senior note, 7.625%, 12/15/12 ..................................................... United States 10,000,000 $ 8,750,000 7.50%, 2/15/14 ....................................................... United States 18,500,000 15,678,750 --------------- 151,408,535 --------------- CONSUMER NON-DURABLES 2.0% Smithfield Foods Inc., senior note, 7.00%, 8/01/11 ....................................................... United States 18,900,000 19,230,750 7.75%, 5/15/13 ....................................................... United States 9,600,000 10,092,000 Spectrum Brands Inc., senior sub. note, 7.375%, 2/01/15 ................ United States 32,800,000 28,454,000 --------------- 57,776,750 --------------- CONSUMER SERVICES 19.0% b Adelphia Communications Corp., senior note, 10.875%, 10/01/10 .......... United States 25,000,000 16,312,500 AMC Entertainment Inc., senior note, B, 8.625%, 8/15/12 ...................................... United States 9,400,000 9,846,500 senior sub. note, 9.50%, 2/01/11 ..................................... United States 5,000,000 4,756,250 senior sub. note, 9.875%, 2/01/12 .................................... United States 12,500,000 11,953,125 Aztar Corp., senior sub. note, 7.875%, 6/15/14 ......................... United States 13,700,000 14,316,500 Boyd Gaming Corp., senior sub. note, 6.75%, 4/15/14 .................... United States 21,600,000 21,654,000 Cablevision Systems Corp., senior note, B, 8.00%, 4/15/12 .............. United States 19,200,000 18,960,000 Caesars Entertainment Inc., senior sub. note, 7.875%, 3/15/10 .......... United States 25,000,000 26,781,250 b Callahan NordRhein-Westfallen, senior disc. note, 16.00%, 7/15/10 ...... Germany 38,000,000 3,800 CanWest Media Inc., senior sub. note, 8.00%, 9/15/12 ................... Canada 11,500,000 11,845,000 a CCH I Holdings LLC, senior note, 144A, 13.50%, 1/15/14 ................. United States 15,500,000 10,152,500 CCH II LLC, senior note, 10.25%, 9/15/10 ............................... United States 33,800,000 33,884,500 CSC Holdings Inc., senior deb., 7.625%, 7/15/18 ........................ United States 20,000,000 19,575,000 DIRECTV Holdings LLC, senior note, 8.375%, 3/15/13 ...................................................... United States 18,901,000 20,365,828 6.375%, 6/15/15 ...................................................... United States 10,000,000 10,012,500 EchoStar DBS Corp., senior note, 6.375%, 10/01/11 ....................................................... United States 20,000,000 19,650,000 a 144A, 7.125%, 2/01/16 ................................................ United States 10,300,000 10,248,500 Emmis Operating Co., senior sub. note, 6.875%, 5/15/12 ................. United States 26,500,000 26,102,500 a Hertz Corp., senior note, 144A, 8.875%, 1/01/14 ........................ United States 19,000,000 19,950,000 Liberty Media Corp., senior note, 5.70%, 5/15/13 ....................... United States 20,000,000 18,832,260 LIN Television Corp., senior sub. note, 6.50%, 5/15/13 ................. United States 30,000,000 28,612,500 Mandalay Resort Group, senior note, 9.50%, 8/01/08 .......................................... United States 5,900,000 6,401,500 senior sub. note, 10.25%, 8/01/07 .................................... United States 14,600,000 15,567,250 MGM MIRAGE Inc., senior note, 6.625%, 7/15/15 .......................... United States 20,000,000 20,175,000 Pinnacle Entertainment Inc., senior sub. note, 8.75%, 10/01/13 ......... United States 11,300,000 12,147,500 a Rainbow National Services LLC, senior sub. deb., 144A, 10.375%, 9/01/14 ............................................................... United States 29,000,000 32,951,250 Rogers Cable Inc., senior secured note, 6.75%, 3/15/15 ................. Canada 9,000,000 9,247,500 Royal Caribbean Cruises Ltd., senior deb., 7.25%, 3/15/18 .......................................... United States 14,400,000 15,512,400 senior note, 8.00%, 5/15/10 .......................................... United States 4,200,000 4,563,598 senior note, 6.875%, 12/01/13 ........................................ United States 13,800,000 14,635,369
4 | Quarterly Statement of Investments Franklin High Income Trust STATEMENT OF INVESTMENTS, FEBRUARY 28, 2006 (UNAUDITED) (CONTINUED)
------------------------------------------------------------------------------------------------------------------------------------ AGE HIGH INCOME FUND COUNTRY PRINCIPAL AMOUNT d VALUE ------------------------------------------------------------------------------------------------------------------------------------ LONG TERM INVESTMENTS (CONTINUED) CORPORATE BONDS (CONTINUED) CONSUMER SERVICES (CONTINUED) Station Casinos Inc., senior note, 6.00%, 4/01/12 .......................................... United States 9,300,000 $ 9,346,500 senior sub. note, 6.50%, 2/01/14 ..................................... United States 7,000,000 7,035,000 senior sub. note, 6.875%, 3/01/16 .................................... United States 15,000,000 15,337,500 Universal City Development, senior note, 11.75%, 4/01/10 ............... United States 15,000,000 16,781,250 Universal City Florida, senior note, 8.375%, 5/01/10 ................... United States 7,000,000 7,017,500 --------------- 540,534,130 --------------- ELECTRONIC TECHNOLOGY 3.8% Flextronics International Ltd., senior sub. note, 6.50%, 5/15/13 ....... Singapore 15,600,000 15,795,000 L-3 Communications Corp., senior sub. note, 6.125%, 1/15/14 ...................................................... United States 26,500,000 26,168,750 5.875%, 1/15/15 ...................................................... United States 3,700,000 3,570,500 6.375%, 10/15/15 ..................................................... United States 9,300,000 9,323,250 Sanmina-SCI Corp., senior sub. note, 6.75%, 3/01/13 ....................................................... United States 14,600,000 14,162,000 8.125%, 3/01/16 ...................................................... United States 13,700,000 14,076,750 Xerox Corp., senior note, 7.125%, 6/15/10 ...................................................... United States 8,000,000 8,330,000 6.875%, 8/15/11 ...................................................... United States 15,600,000 16,204,500 --------------- 107,630,750 --------------- ENERGY MINERALS 4.3% Arch Western Finance, senior note, 6.75%, 7/01/13 ...................... United States 30,000,000 30,225,000 Chesapeake Energy Corp., senior note, 6.625%, 1/15/16 ...................................................... United States 10,000,000 10,200,000 6.25%, 1/15/18 ....................................................... United States 27,600,000 27,703,500 a 144A, 6.875%, 11/15/20 ............................................... United States 5,000,000 5,162,500 a Massey Energy Co., senior note, 144A, 6.875%, 12/15/13 ................. United States 14,600,000 14,636,500 Peabody Energy Corp., senior note, B, 6.875%, 3/15/13 .................. United States 15,900,000 16,416,750 Pogo Producing Co., senior sub. note, 6.875%, 10/01/17 ................. United States 18,700,000 18,933,750 --------------- 123,278,000 --------------- FINANCE 0.5% AmeriCredit Corp., senior note, 9.25%, 5/01/09 ......................... United States 15,000,000 15,787,500 --------------- HEALTH SERVICES 6.0% DaVita Inc., senior note, 6.625%, 3/15/13 ......................................... United States 4,700,000 4,794,000 senior sub. note, 7.25%, 3/15/15 ..................................... United States 18,700,000 19,167,500 Fresenius Medical Care Capital Trust II, 7.875%, 2/01/08 ............... Germany 34,600,000 35,984,000 HCA Inc., 6.50%, 2/15/16 ....................................................... United States 5,100,000 5,107,936 senior note, 8.75%, 9/01/10 .......................................... United States 25,000,000 27,622,200 HEALTHSOUTH Corp., senior note, 7.625%, 6/01/12 ........................ United States 27,000,000 29,767,500 Tenet Healthcare Corp., senior note, 7.375%, 2/01/13 ...................................................... United States 18,000,000 16,605,000 9.875%, 7/01/14 ...................................................... United States 14,000,000 14,315,000
Quarterly Statement of Investments | 5 Franklin High Income Trust STATEMENT OF INVESTMENTS, FEBRUARY 28, 2006 (UNAUDITED) (CONTINUED)
------------------------------------------------------------------------------------------------------------------------------------ AGE HIGH INCOME FUND COUNTRY PRINCIPAL AMOUNT d VALUE ------------------------------------------------------------------------------------------------------------------------------------ LONG TERM INVESTMENTS (CONTINUED) CORPORATE BONDS (CONTINUED) HEALTH SERVICES (CONTINUED) Vanguard Health Holding Co. II LLC, senior sub. note, 9.00%, 10/01/14 .............................................................. United States 17,300,000 $ 18,121,750 --------------- 171,484,886 --------------- INDUSTRIAL SERVICES 4.9% Allied Waste North America Inc., senior note, 7.875%, 4/15/13 ......................................... United States 21,600,000 22,572,000 senior note, 7.25%, 3/15/15 .......................................... United States 4,000,000 4,080,000 senior secured note, 6.125%, 2/15/14 ................................. United States 5,000,000 4,825,000 senior secured note, B, 5.75%, 2/15/11 ............................... United States 2,500,000 2,406,250 a Atlas Pipeline Partners LP, senior note, 144A, 8.125%, 12/15/15 ........ United States 9,700,000 10,136,500 El Paso Corp., senior note, MTN, 7.75%, 1/15/32 ........................ United States 42,000,000 44,835,000 Pride International Inc., senior note, 7.35%, 7/15/14 .................. United States 20,700,000 22,200,750 b Safety Kleen Services, senior sub. note, 9.25%, 6/01/08 ................ United States 10,000,000 5,000 Tennessee Gas Pipeline Co., senior deb., 7.00%, 10/15/28 ............... United States 20,000,000 21,135,140 Universal Compression Inc., senior note, 7.25%, 5/15/10 ................ United States 7,100,000 7,384,000 --------------- 139,579,640 --------------- NON-ENERGY MINERALS 2.1% a Glencore Funding LLC, 144A, 6.00%, 4/15/14 ............................. Switzerland 21,100,000 20,159,341 Ispat Inland ULC, senior secured note, 9.75%, 4/01/14 .................. United States 18,917,000 21,504,845 a Novelis Inc., senior note, 144A, 7.25%, 2/15/15 ........................ Canada 17,600,000 17,160,000 --------------- 58,824,186 --------------- PROCESS INDUSTRIES 12.2% a Basell AF SCA, senior note, 144A, 8.375%, 8/15/15 ...................... Germany 11,400,000 11,514,000 BCP Crystal Holdings Corp., senior sub. note, 9.625%, 6/15/14 .......... United States 22,455,000 25,233,806 Buckeye Technologies Inc., senior note, 8.50%, 10/01/13 ................ United States 11,700,000 11,963,250 a Crown Americas Inc., senior note, 144A, 7.75%, 11/15/15 ................ United States 28,000,000 29,330,000 Equistar Chemicals LP, senior note, 8.75%, 2/15/09 ....................................................... United States 20,000,000 20,850,000 10.625%, 5/01/11 ..................................................... United States 4,400,000 4,807,000 Georgia-Pacific Corp., 7.25%, 6/01/28 ....................................................... United States 3,000,000 2,797,500 senior note, 8.00%, 1/15/24 .......................................... United States 15,000,000 15,075,000 a Huntsman International LLC, senior sub. note, 144A, 7.875%, 1/01/15 ............................................................... United States 10,000,000 10,200,000 IMC Global Inc., senior note, 10.875%, 8/01/13 ......................... United States 28,000,000 32,445,000 Jefferson Smurfit Corp., senior note, 7.50%, 6/01/13 ................... United States 15,800,000 14,852,000 JSG Funding PLC, senior sub. note, 7.75%, 4/01/15 ...................... Ireland 11,000,000 10,065,000 Lyondell Chemical Co., senior secured note, 10.50%, 6/01/13 ............ United States 17,400,000 19,531,500 MDP Acquisitions PLC, senior note, 9.625%, 10/01/12 .................... Ireland 18,600,000 19,576,500 Nalco Co., senior note, 7.75%, 11/15/11 ......................................... United States 2,700,000 2,760,750 senior sub. note, 8.875%, 11/15/13 ................................... United States 27,200,000 28,628,000 NewPage Corp., senior secured note, 10.00%, 5/01/12 .................... United States 20,000,000 21,000,000 Owens-Brockway Glass Container Inc., senior note, 6.75%, 12/01/14 .............................................................. United States 6,700,000 6,599,500 Owens-Illinois Inc., senior note, 7.80%, 5/15/18 ....................... United States 29,000,000 29,435,000
6 | Quarterly Statement of Investments Franklin High Income Trust STATEMENT OF INVESTMENTS, FEBRUARY 28, 2006 (UNAUDITED) (CONTINUED)
------------------------------------------------------------------------------------------------------------------------------------ AGE HIGH INCOME FUND COUNTRY PRINCIPAL AMOUNT d VALUE ------------------------------------------------------------------------------------------------------------------------------------ LONG TERM INVESTMENTS (CONTINUED) CORPORATE BONDS (CONTINUED) PROCESS INDUSTRIES (CONTINUED) e,f,g Pindo Deli Finance Mauritius Ltd., 144A, h FRN, 5.664%, 4/29/15 ................................................. Indonesia 3,256,502 $ 734,016 h FRN, 5.664%, 4/29/18 ................................................. Indonesia 8,467,542 1,908,584 zero cpn., 4/29/25 ................................................... Indonesia 17,495,011 3,943,375 Rhodia SA, senior note, 10.25%, 6/01/10 ................................ France 19,557,000 22,099,410 e,f,g Tjiwi Kimia Finance Mauritius, secured note, 144A, h FRN, 5.664%, 4/29/15 ................................................. Indonesia 1,628,955 481,682 h FRN, 5.664%, 4/29/18 ................................................. Indonesia 4,192,714 1,239,786 zero cpn., 4/29/25 ................................................... Indonesia 5,386,416 1,592,763 --------------- 348,663,422 --------------- PRODUCER MANUFACTURING 4.9% Case New Holland Inc., senior note, 9.25%, 8/01/11 ..................... United States 32,000,000 34,480,000 Cooper-Standard Automotive Inc., senior note, 7.00%, 12/15/12 ......................................... United States 7,500,000 6,937,500 senior sub. note, 8.375%, 12/15/14 ................................... United States 17,500,000 13,650,000 b Goss Graphic Systems Inc., senior sub. note, 12.25%, 11/19/05 .......... United States 9,053,899 -- a Invensys PLC, senior note, 144A, 9.875%, 3/15/11 ....................... United Kingdom 18,000,000 18,720,000 Milacron Escrow Corp., senior secured note, 11.50%, 5/15/11 ............ United States 11,300,000 10,170,000 Nortek Inc., senior sub. note, 8.50%, 9/01/14 .......................... United States 21,000,000 21,052,500 Russel Metals Inc., senior note, 6.375%, 3/01/14 ....................... United States 17,000,000 16,745,000 TRW Automotive Inc., senior note, 9.375%, 2/15/13 ...................... United States 15,203,000 16,571,270 --------------- 138,326,270 --------------- REAL ESTATE INVESTMENT TRUSTS 2.0% Host Marriott LP, senior note, I, 9.50%, 1/15/07 .................................................... United States 7,000,000 7,253,750 K, 7.125%, 11/01/13 .................................................. United States 20,000,000 20,750,000 M, 7.00%, 8/15/12 .................................................... United States 7,100,000 7,277,500 O, 6.375%, 3/15/15 ................................................... United States 4,100,000 4,110,250 MeriStar Hospitality Corp., senior note, 9.00%, 1/15/08 ................ United States 16,500,000 17,572,500 --------------- 56,964,000 --------------- RETAIL TRADE 2.1% Rite Aid Corp., senior deb., 7.70%, 2/15/27 .......................................... United States 10,000,000 7,812,500 a senior note, 144A, 6.125%, 12/15/08 .................................. United States 26,900,000 26,025,750 Stater Brothers Holdings Inc., senior note, 8.125%, 6/15/12 ............ United States 25,800,000 26,187,000 --------------- 60,025,250 --------------- TECHNOLOGY SERVICES 1.8% b PSINet Inc., senior note, 11.00%, 8/01/09 .............................. United States 18,750,000 23,438 a SunGard Data Systems Inc., senior note, 144A, 9.125%, 8/15/13 ................................... United States 11,100,000 11,863,125 senior sub. note, 144A, 10.25%, 8/15/15 .............................. United States 11,100,000 11,696,625 UGS Corp., senior sub. note, 10.00%, 6/01/12 ........................... United States 25,000,000 27,531,250 --------------- 51,114,438 ---------------
Quarterly Statement of Investments | 7 Franklin High Income Trust STATEMENT OF INVESTMENTS, FEBRUARY 28, 2006 (UNAUDITED) (CONTINUED)
------------------------------------------------------------------------------------------------------------------------------------ AGE HIGH INCOME FUND COUNTRY PRINCIPAL AMOUNT d VALUE ------------------------------------------------------------------------------------------------------------------------------------ LONG TERM INVESTMENTS (CONTINUED) CORPORATE BONDS (CONTINUED) TRANSPORTATION 0.8% Great Lakes Dredge & Dock Co., senior sub. note, 7.75%, 12/15/13 ....... United States 25,900,000 $ 24,216,500 --------------- UTILITIES 8.9% a AES Corp., senior secured note, 144A, 9.00%, 5/15/15 ................... United States 26,000,000 28,470,000 a Allegheny Energy Supply Co. LLC, 144A, 8.25%, 4/15/12 .................. United States 30,000,000 33,112,500 Aquila Inc., senior note, 14.875%, 7/01/12 ............................. United States 30,000,000 40,875,000 a,b,f Calpine Corp., senior secured note, 144A, 8.75%, 7/15/13 ............... United States 20,000,000 18,700,000 Dynegy Holdings Inc., senior note, 8.75%, 2/15/12 .......................................... United States 19,000,000 21,090,000 a senior secured note, 144A, 10.125%, 7/15/13 .......................... United States 20,000,000 22,600,000 ESI Tractebel Acquisition Corp., secured note, 7.99%, 12/30/11 ......... United States 6,648,000 6,985,964 Midland Funding II, sub. secured lease obligation, B, 13.25%, 7/23/06 .............................................................. United States 8,490,640 8,737,896 Midwest Generation LLC, senior secured note, 8.75%, 5/01/34 ............ United States 31,600,000 34,681,000 a Mirant North America LLC, senior note, 144A, 7.375%, 12/31/13 .......... United States 11,900,000 12,271,875 NRG Energy Inc., senior note, 7.25%, 2/01/14 ....................................................... United States 8,500,000 8,733,750 7.375%, 2/01/16 ...................................................... United States 16,700,000 17,242,750 --------------- 253,500,735 --------------- TOTAL CORPORATE BONDS (COST $2,732,728,367) 2,740,812,495 --------------- FOREIGN GOVERNMENT AND AGENCY SECURITIES (COST $1,384,797) 0.1% GOVERNMENT BOND 0.1% Eskom, E168, 11.00%, 6/01/08 ........................................... South Africa 5,300,000 ZAR 923,714 --------------- ---------- SHARES ---------- COMMON STOCKS 0.3% COMMUNICATIONS 0.3% Sprint Nextel Corp. .................................................... United States 163,094 3,919,149 g Telewest Global Inc. ................................................... United Kingdom 176,951 4,220,281 --------------- 8,139,430 --------------- ENERGY MINERALS 0.0% i g McMoRan Exploration Co. ................................................ United States 25,937 458,826 --------------- PRODUCER MANUFACTURING 0.0% i e,g Cambridge Industries Liquidating Trust Interest ........................ United States 4,853,892 48,539 e,g Goss Holdings Inc., B .................................................. United States 211,174 -- g,j Harvard Industries Inc. ................................................ United States 793,966 7,940 e,g,j VS Holdings Inc. ....................................................... United States 1,685,375 -- --------------- 56,479 ---------------
8 | Quarterly Statement of Investments Franklin High Income Trust STATEMENT OF INVESTMENTS, FEBRUARY 28, 2006 (UNAUDITED) (CONTINUED)
------------------------------------------------------------------------------------------------------------------------------------ AGE HIGH INCOME FUND COUNTRY SHARES VALUE ------------------------------------------------------------------------------------------------------------------------------------ LONG TERM INVESTMENTS (CONTINUED) CORPORATE BONDS (CONTINUED) RETAIL TRADE 0.0% i Stage Stores Inc. ...................................................... United States 301 $ 8,777 --------------- TOTAL COMMON STOCKS (COST $35,480,528) 8,663,512 --------------- PREFERRED STOCK (COST $24,700,000) 0.0% i PROCESS INDUSTRIES 0.0%(i) b,e,f Asia Pulp & Paper Co. Ltd., 12.00%, pfd., Perpetual .................... Indonesia 24,700,000 269,230 --------------- CONVERTIBLE PREFERRED STOCK (COST $26,500,000) 0.9% UTILITIES 0.9% CMS Energy Trust I, 7.75%, cvt. pfd. ................................... United States 530,000 25,287,042 --------------- TOTAL LONG TERM INVESTMENTS (COST $2,820,793,692) 2,775,955,993 --------------- SHORT TERM INVESTMENT (COST $51,071,629) 1.8% MONEY MARKET FUND 1.8% k Franklin Institutional Fiduciary Trust Money Market Portfolio .......... United States 51,071,629 51,071,629 --------------- TOTAL INVESTMENTS (COST $2,871,865,321) 99.2% 2,827,027,622 OTHER ASSETS, LESS LIABILITIES 0.8% 24,180,479 --------------- NET ASSETS 100.0% $2,851,208,101 ===============
CURRENCY ABBREVIATION ZAR - South African Rand SELECTED PORTFOLIO ABBREVIATIONS FRN - Floating Rate Note MTN - Medium Term Notes a Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. These securities have been deemed liquid under guidelines approved by the Fund's Board of Trustees. At February 28, 2006, the aggregate value of these securities was $459,154,841, representing 16.10% of net assets. b Defaulted security. c Security purchased on a delayed delivery basis. d The principal amount is stated in U.S. dollars unless otherwise indicated. e See Note 2 regarding restricted and illiquid securities. f See Note 4 regarding other considerations. g Non-income producing. h The coupon rate shown represents the rate at period end. i Rounds to less than 0.1% of net assets. j See Note 3 regarding holdings of 5% voting securities. k The Franklin Institutional Fiduciary Trust Money Market Portfolio is managed by the Fund's investment manager. Quarterly Statement of Investments | See Notes to Statement of Investments | 9 Franklin High Income Trust NOTES TO STATEMENT OF INVESTMENTS (UNAUDITED) AGE HIGH INCOME FUND Franklin High Income Trust is registered under the Investment Company Act of 1940 as a diversified, open-end investment company, consisting of one Fund, the Franklin AGE High Income Fund (the Fund). 1. INCOME TAXES At February 28, 2006, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows: Costs of investments ............................. $ 2,875,480,470 ================ Unrealized appreciation .......................... $ 158,713,278 Unrealized depreciation .......................... (207,166,126) ---------------- Net unrealized appreciation (depreciation) ....... $ (48,452,848) ================ 2. RESTRICTED AND ILLIQUID SECURITIES At February 28, 2006, the Fund held investments in restricted and illiquid securities, valued in accordance with procedures approved by the Fund's Board of Trustees as reflecting fair value, as follows:
------------------------------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT/ ACQUISITION SHARES ISSUER DATE COST VALUE ------------------------------------------------------------------------------------------------------------------- 24,700,000 Asia Pulp & Paper Co. Ltd., 12.00%, pfd., Perpetual ................................. 2/14/97 $ 24,700,000 $ 269,230 4,853,892 Cambridge Industries Liquidating Trust Interest .................................. 1/09/02 -- 48,539 211,174 a Goss Holdings Inc., B ..................... 11/17/99 422,348 -- 3,256,502 Pindo Deli Finance Mauritius Ltd., 144A, FRN, 5.664%, 4/29/15 ...................... 4/29/05 756,681 734,016 8,467,542 Pindo Deli Finance Mauritius Ltd., 144A, FRN, 5.664%, 4/29/18 ...................... 4/29/05 1,967,518 1,908,584 17,495,011 Pindo Deli Finance Mauritius Ltd., 144A, zero cpn., 4/29/25 ........................ 4/29/05 4,065,141 3,943,375 1,628,955 Tjiwi Kimia Finance Mauritius, secured note, 144A, FRN, 5.664%, 4/29/15 .......... 4/29/05 496,505 481,682 4,192,714 Tjiwi Kimia Finance Mauritius, secured note, 144A, FRN, 5.664%, 4/29/18 .......... 4/29/05 1,277,939 1,239,786 5,386,416 Tjiwi Kimia Finance Mauritius, secured note, 144A, zero cpn., 4/29/25 ............ 4/29/05 1,641,780 1,592,763 1,685,375 VS Holdings Inc. .......................... 12/06/01 1,685,375 -- ------------- TOTAL RESTRICTED AND ILLIQUID SECURITIES (0.36% of Net Assets) ............. $ 10,217,975 =============
a The Fund also invests in unrestricted securities of this issuer, valued at $0 as of February 28, 2006. 10 | Quarterly Statement of Investments Franklin High Income Trust NOTES TO STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED) AGE HIGH INCOME FUND 3. HOLDING OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES Investments in "affiliated companies" for the Fund at February 28, 2006 were as shown below.
---------------------------------------------------------------------------------------------------------------------------------- NUMBER OF NUMBER OF SHARES HELD SHARES HELD VALUE REALIZED AT BEGINNING GROSS GROSS AT END AT END INVESTMENT CAPITAL NAME OF ISSUER OF PERIOD ADDITIONS REDUCTIONS OF PERIOD OF PERIOD INCOME GAIN (LOSS) ---------------------------------------------------------------------------------------------------------------------------------- NON-CONTROLLED AFFILIATES Harvard Industries Inc. ............. 793,966 -- -- 793,966 $ 7,940 $ -- $ -- International Wireless Communications Holdings Inc. ...................... 1,759,743 -- 1,759,743 -- -- -- (3,229,128) VS Holdings Inc. .................... 1,685,375 -- -- 1,685,375 -- -- -- ------------------------------------ TOTAL AFFILIATED SECURITIES (0.00% of Net Assets) a ......................................... $ 7,940 $ -- $ (3,229,128) ====================================
a Rounds to less than 0.01% of net assets. 4. OTHER CONSIDERATIONS Subject to certain terms and conditions, the Fund has agreed to sell its holdings in Asia Pulp & Paper Co. Ltd., Pindo Deli Finance Mauritius Ltd. and Tjiwi Kimia Finance Mauritius in November 2006. Until completion of the sale, the transaction is being accounted for as a secured borrowing with a pledge of collateral and any preliminary sales proceeds or other interest and cash distributions received are deferred until the completion of the transaction and are recorded as part of the net sales proceeds. Directors or employees of Franklin Advisers, Inc., as the Fund's Investment Manager, may serve as members of various bondholders' steering committees, on credit committee, or may represent the Fund in certain corporate restructuring negotiations. At February 28, 2006, such individuals serve in one or more of these capacities for Calpine Corp. As a result of this involvement, such individuals may be in possession of certain material non-public information. If the Fund's Investment Manager, while in possession of such information, seeks to sell any of its holdings in this security it will comply with all applicable federal securities laws. For information regarding the Fund's policy regarding the 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. FRANKLIN HIGH INCOME TRUST By /s/JIMMY D. GAMBILL ------------------- Jimmy D. Gambill Chief Executive Officer - Finance and Administration Date April 24, 2006 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 ------------------- Jimmy D. Gambill Chief Executive Officer - Finance and Administration Date April 24, 2006 By /s/GALEN G. VETTER ------------------ Galen G. Vetter Chief Financial Officer Date April 24, 2006 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. April 24, 2006 /s/JIMMY D. GAMBILL ---------------------------------------------------- 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. April 24, 2006 /s/GALEN G. VETTER ----------------------- Galen G. Vetter Chief Financial Officer