N-Q 1 nqform.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: 8/31/06 ------- Item 1. Schedule of Investments. Franklin High Income Trust QUARTERLY STATEMENT OF INVESTMENTS AUGUST 31, 2006 -------------------------------------------------------------------------------- CONTENTS AGE High Income Fund ...................................................... 3 Notes to Statement of Investments ......................................... 10 [LOGO](R) 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, AUGUST 31, 2006 (UNAUDITED)
----------------------------------------------------------------------------------------------------------------------------- AGE HIGH INCOME FUND COUNTRY PRINCIPAL AMOUNT c VALUE ----------------------------------------------------------------------------------------------------------------------------- LONG TERM INVESTMENTS 97.5% CORPORATE BONDS 96.4% COMMERCIAL SERVICES 5.7% Dex Media East LLC, senior sub. note, B, 12.125%, 11/15/12 ............ United States 12,865,000 $ 14,408,800 Dex Media Inc., B, 8.00%, 11/15/13 .................................................. United States 7,500,000 7,500,000 senior disc. note, zero cpn. to 11/15/08, 9.00% thereafter, 11/15/13 ........................................................... United States 12,600,000 10,552,500 Iron Mountain Inc., senior sub. note, 8.75%, 7/15/18 .................. United States 26,100,000 26,817,750 JohnsonDiversey Holdings Inc., senior disc. note, zero cpn. to 5/17/07, 10.67% thereafter, 5/15/13 .......................................... United States 35,000,000 30,100,000 Lamar Media Corp., senior sub. note, 6.625%, 8/15/15 .................................................... United States 17,800,000 16,776,500 a 144A, 6.625%, 8/15/15 .............................................. United States 10,000,000 9,425,000 R.H. Donnelley Corp., senior note, 8.875%, 1/15/16 .................... United States 13,100,000 12,969,000 United Rentals North America Inc., senior sub. note, 7.75%, 11/15/13 ............................................................ United States 28,000,000 26,950,000 ------------ 155,499,550 ------------ COMMUNICATIONS 10.3% b Asia Global Crossing Ltd., senior note, 13.375%, 10/15/10 ............. Bermuda 11,000,000 990,000 Dobson Cellular Systems Inc., senior secured note, 9.875%, 11/01/12 ............................................................. United States 18,000,000 19,305,000 Inmarsat Finance II PLC, senior note, zero cpn. to 11/15/08, 10.375% thereafter, 11/15/12 ......................................... United Kingdom 37,200,000 32,643,000 Intelsat Bermuda Ltd., 8.625%, 1/15/15 .................................................... Bermuda 17,500,000 17,762,500 senior note, 8.25%, 1/15/13 ........................................ Bermuda 12,200,000 12,230,500 b Iridium LLC, senior note, D, 10.875%, 7/15/05 ......................... Bermuda 17,000,000 4,122,500 Millicom International Cellular SA, senior note, 10.00%, 12/01/13 ..... Luxembourg 10,000,000 10,775,000 Nextel Communications Inc., senior note, D, 7.375%, 8/01/15 ........... United States 10,000,000 10,299,880 Nextel Partners Inc., senior note, 8.125%, 7/01/11 .................... United States 10,000,000 10,550,000 NTL Cable PLC, senior note, 8.75%, 4/15/14 ............................ United Kingdom 8,900,000 9,278,250 Panamsat Corp., senior note, 9.00%, 8/15/14 ........................... United States 13,177,000 13,473,482 Qwest Communications International Inc., senior note, 7.50%, 2/15/14 ...................................................... United States 20,000,000 19,925,000 B, 7.50%, 2/15/14 ................................................... United States 15,000,000 14,943,750 Rogers Wireless Inc., senior secured note, 7.25%, 12/15/12 ..................................................... Canada 12,580,000 13,036,025 7.50%, 3/15/15 ...................................................... Canada 15,500,000 16,275,000 b RSL Communications PLC, senior disc. note, 10.125%, 3/01/08 ................................. United Kingdom 44,500,000 1,335,000 senior note, 12.00%, 11/01/08 ....................................... United Kingdom 6,250,000 187,500 Verizon New York Inc., senior deb., 7.375%, 4/01/32 ................... United States 15,000,000 15,621,960 a Wind Acquisition Finance SA, senior note, 144A, 10.75%, 12/01/15 ............................................................. Italy 28,000,000 30,555,000 a Windstream Corp., senior note, 144A, 8.625%, 8/01/16 .................. United States 25,400,000 26,987,500 ------------ 280,296,847 ------------
Quarterly Statement of Investments | 3 Franklin High Income Trust STATEMENT OF INVESTMENTS, AUGUST 31, 2006 (UNAUDITED) (CONTINUED)
----------------------------------------------------------------------------------------------------------------------------- AGE HIGH INCOME FUND COUNTRY PRINCIPAL AMOUNT c VALUE ----------------------------------------------------------------------------------------------------------------------------- LONG TERM INVESTMENTS (CONTINUED) CORPORATE BONDS (CONTINUED) CONSUMER DURABLES 7.5% a Beazer Homes USA Inc., senior note, 144A, 8.125%, 6/15/16 ........... United States 28,000,000 $ 26,880,000 Ford Motor Credit Co., 5.625%, 10/01/08 ................................................. United States 35,000,000 33,771,745 senior note, 9.875%, 8/10/11 ..................................... United States 13,000,000 13,595,582 General Motors Acceptance Corp., 6.875%, 9/15/11 .................... United States 65,000,000 64,084,020 Jostens IH Corp., senior sub. note, 7.625%, 10/01/12 ................ United States 13,425,000 13,223,625 KB Home, senior note, 6.25%, 6/15/15 ................................................... United States 20,000,000 18,128,780 7.25%, 6/15/18 ................................................... United States 14,800,000 14,001,599 Simmons Bedding Co., senior sub. note, 7.875%, 1/15/14 .............. United States 4,800,000 4,656,000 William Lyon Homes Inc., senior note, 7.625%, 12/15/12 ................................................. United States 6,300,000 5,126,625 7.50%, 2/15/14 ................................................... United States 13,500,000 10,833,750 ------------ 204,301,726 ------------ CONSUMER NON-DURABLES 3.3% a Reynolds American Inc., senior secured note, 144A, 7.625%, 6/01/16 ............................................................ United States 35,000,000 36,692,460 Smithfield Foods Inc., senior note, 7.00%, 8/01/11 .................................................... United States 18,900,000 19,065,375 7.75%, 5/15/13 .................................................... United States 9,600,000 9,864,000 Spectrum Brands Inc., senior sub. note, 7.375%, 2/01/15 ............. United States 32,800,000 25,584,000 ------------ 91,205,835 ------------ CONSUMER SERVICES 18.3% b Adelphia Communications Corp., senior note, 10.875%, 10/01/10 ....... United States 20,000,000 11,950,000 AMC Entertainment Inc., senior note, B, 8.625%, 8/15/12 ................................... United States 9,400,000 9,682,000 senior sub. note, 9.50%, 2/01/11 .................................. United States 5,000,000 5,012,500 senior sub. note, 9.875%, 2/01/12 ................................. United States 12,500,000 12,843,750 Aztar Corp., senior sub. note, 7.875%, 6/15/14 ...................... United States 13,700,000 14,864,500 Boyd Gaming Corp., senior sub. note, 6.75%, 4/15/14 ................. United States 21,600,000 20,466,000 Cablevision Systems Corp., senior note, B, 8.00%, 4/15/12 ........... United States 19,200,000 19,392,000 Caesars Entertainment Inc., senior sub. note, 7.875%, 3/15/10 ....... United States 20,000,000 20,950,000 b,d 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 28,000,000 27,230,000 CCH I Holdings LLC, senior note, 13.50%, 1/15/14 .................... United States 15,500,000 11,508,750 CCH II LLC, senior note, 10.25%, 9/15/10 ............................ United States 33,800,000 34,391,500 CSC Holdings Inc., senior deb., 7.625%, 7/15/18 ..................... United States 8,000,000 8,110,000 DIRECTV Holdings LLC, senior note, 8.375%, 3/15/13 ................................................... United States 18,901,000 19,940,555 6.375%, 6/15/15 ................................................... United States 10,000,000 9,400,000 EchoStar DBS Corp., senior note, 6.375%, 10/01/11 ................................................ United States 20,000,000 19,525,000 a 144A, 7.125%, 2/01/16 ........................................... United States 7,300,000 7,144,875 Emmis Operating Co., senior sub. note, 6.875%, 5/15/12 .............. United States 14,325,000 13,966,875
4 | Quarterly Statement of Investments Franklin High Income Trust STATEMENT OF INVESTMENTS, AUGUST 31, 2006 (UNAUDITED) (CONTINUED)
----------------------------------------------------------------------------------------------------------------------------- AGE HIGH INCOME FUND COUNTRY PRINCIPAL AMOUNT c VALUE ----------------------------------------------------------------------------------------------------------------------------- LONG TERM INVESTMENTS (CONTINUED) CORPORATE BONDS (CONTINUED) CONSUMER SERVICES (CONTINUED) Liberty Media Corp., senior note, 5.70%, 5/15/13 ...................... United States 20,000,000 $ 18,888,680 LIN Television Corp., senior sub. note, 6.50%, 5/15/13 ................ United States 30,000,000 27,825,000 Mandalay Resort Group, senior note, 9.50%, 8/01/08 ......................................... United States 5,900,000 6,268,750 senior sub. note, 10.25%, 8/01/07 ................................... United States 14,600,000 15,184,000 MGM MIRAGE Inc., senior note, 6.625%, 7/15/15 ................................................... United States 20,000,000 18,925,000 a 144A, 6.875%, 4/01/16 ............................................. United States 10,000,000 9,537,500 Pinnacle Entertainment Inc., senior sub. note, 8.75%, 10/01/13 ........ United States 11,300,000 11,921,500 Quebecor Media Inc., senior note, 7.75%, 3/15/16 ...................... Canada 14,300,000 14,228,500 a Rainbow National Services LLC, senior sub. deb., 144A, 10.375%, 9/01/14 ............................................................. United States 29,000,000 32,443,750 Royal Caribbean Cruises Ltd., senior deb., 7.25%, 3/15/18 ........................................ United States 14,400,000 14,304,888 senior note, 8.00%, 5/15/10 ........................................ United States 4,200,000 4,444,864 senior note, 6.875%, 12/01/13 ...................................... United States 13,800,000 13,839,068 Station Casinos Inc., senior note, 6.00%, 4/01/12 ........................................ United States 9,300,000 8,939,625 senior sub. note, 6.50%, 2/01/14 ................................... United States 7,000,000 6,562,500 senior sub. note, 6.875%, 3/01/16 .................................. United States 15,000,000 13,968,750 Universal City Development, senior note, 11.75%, 4/01/10 .............. United States 15,000,000 16,312,500 ------------ 499,976,980 ------------ ELECTRONIC TECHNOLOGY 3.0% Flextronics International Ltd., senior sub. note, 6.50%, 5/15/13 ...... Singapore 15,600,000 15,288,000 L-3 Communications Corp., senior sub. note, 6.125%, 1/15/14 .................................................... United States 26,500,000 25,572,500 5.875%, 1/15/15 .................................................... United States 3,700,000 3,515,000 6.375%, 10/15/15 ................................................... United States 9,300,000 8,997,750 Sanmina-SCI Corp., senior sub. note, 6.75%, 3/01/13 ..................................................... United States 14,600,000 14,052,500 8.125%, 3/01/16 .................................................... United States 13,700,000 13,426,000 ------------ 80,851,750 ------------ ENERGY MINERALS 5.5% Arch Western Finance, senior note, 6.75%, 7/01/13 ..................... United States 25,000,000 24,250,000 Chesapeake Energy Corp., senior note, 6.625%, 1/15/16 .................................................... United States 10,000,000 9,650,000 6.25%, 1/15/18 ..................................................... United States 27,600,000 25,599,000 6.875%, 11/15/20 ................................................... United States 5,000,000 4,737,500 a Mariner Energy Inc., senior note, 144A, 7.50%, 4/15/13 ................ United States 27,000,000 26,392,500 Massey Energy Co., senior note, 6.875%, 12/15/13 ...................... United States 20,000,000 18,650,000 Peabody Energy Corp., senior note, B, 6.875%, 3/15/13 ................. United States 15,900,000 15,820,500 Pogo Producing Co., senior sub. note, 6.875%, 10/01/17 ................................................... United States 23,700,000 22,692,750 a 144A, 7.875%, 5/01/13 .............................................. United States 3,100,000 3,177,500 ------------ 150,969,750 ------------
Quarterly Statement of Investments | 5 Franklin High Income Trust STATEMENT OF INVESTMENTS, AUGUST 31, 2006 (UNAUDITED) (CONTINUED)
----------------------------------------------------------------------------------------------------------------------------- AGE HIGH INCOME FUND COUNTRY PRINCIPAL AMOUNT c VALUE ----------------------------------------------------------------------------------------------------------------------------- LONG TERM INVESTMENTS (CONTINUED) CORPORATE BONDS (CONTINUED) HEALTH SERVICES 5.3% DaVita Inc., senior note, 6.625%, 3/15/13 ........................................ United States 4,700,000 $ 4,606,000 senior sub. note, 7.25%, 3/15/15 .................................... United States 18,700,000 18,419,500 Fresenius Medical Care Capital Trust II, 7.875%, 2/01/08 .............. Germany 34,600,000 35,292,000 HCA Inc., 6.50%, 2/15/16 ...................................................... United States 8,000,000 6,340,000 senior note, 8.75%, 9/01/10 ......................................... United States 25,000,000 25,250,000 Tenet Healthcare Corp., senior note, 7.375%, 2/01/13 ..................................................... United States 18,000,000 16,110,000 9.875%, 7/01/14 ..................................................... United States 14,000,000 13,720,000 Vanguard Health Holding Co. II LLC, senior sub. note, 9.00%, 10/01/14 ............................................................. United States 25,000,000 24,375,000 ------------ 144,112,500 ------------ INDUSTRIAL SERVICES 4.5% Allied Waste North America Inc., a 144A, 7.125%, 5/15/16 ............................................. United States 4,000,000 3,910,000 senior note, 7.875%, 4/15/13 ...................................... United States 21,600,000 21,978,000 senior secured note, B, 5.75%, 2/15/11 ............................ United States 2,500,000 2,387,500 Atlas Pipeline Partners LP, senior note, 8.125%, 12/15/15 ............. United States 12,100,000 12,402,500 El Paso Corp., senior note, MTN, 7.75%, 1/15/32 ....................... United States 35,000,000 35,350,000 Pride International Inc., senior note, 7.35%, 7/15/14 ................. United States 20,700,000 21,165,750 b Safety Kleen Services, senior sub. note, 9.25%, 6/01/08 ............... United States 10,000,000 10,000 Tennessee Gas Pipeline Co., senior deb., 7.00%, 10/15/28 .............. United States 20,000,000 19,598,280 Universal Compression Inc., senior note, 7.25%, 5/15/10 ............... United States 7,100,000 7,206,500 ------------ 124,008,530 ------------ NON-ENERGY MINERALS 1.6% Ispat Inland ULC, senior secured note, 9.75%, 4/01/14 ................. United States 15,000,000 16,882,995 a Novelis Inc., senior note, 144A, 7.25%, 2/15/15 ....................... Canada 27,000,000 25,785,000 ------------ 42,667,995 ------------ PROCESS INDUSTRIES 11.9% a Basell AF SCA, senior note, 144A, 8.375%, 8/15/15 ..................... Germany 11,400,000 11,471,250 BCP Crystal Holdings Corp., senior sub. note, 9.625%, 6/15/14 ......... United States 22,455,000 24,447,881 Buckeye Technologies Inc., senior note, 8.50%, 10/01/13 ........................................ United States 11,700,000 11,641,500 senior sub. note, 8.00%, 10/15/10 ................................... United States 11,450,000 10,820,250 Crown Americas Inc., senior note, 7.75%, 11/15/15 ..................... United States 28,000,000 28,280,000 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 4,752,000 a Huntsman International LLC, senior sub. note, 144A, 7.875%, 1/01/15 .............................................................. United States 10,000,000 9,975,000 IMC Global Inc., senior note, 10.875%, 8/01/13 ........................ United States 28,000,000 31,500,000
6 | Quarterly Statement of Investments Franklin High Income Trust STATEMENT OF INVESTMENTS, AUGUST 31, 2006 (UNAUDITED) (CONTINUED)
----------------------------------------------------------------------------------------------------------------------------- AGE HIGH INCOME FUND COUNTRY PRINCIPAL AMOUNT c VALUE ----------------------------------------------------------------------------------------------------------------------------- LONG TERM INVESTMENTS (CONTINUED) CORPORATE BONDS (CONTINUED) PROCESS INDUSTRIES (CONTINUED) Jefferson Smurfit Corp., senior note, 7.50%, 6/01/13 ............ United States 10,100,000 $ 9,292,000 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 19,227,000 MDP Acquisitions PLC, senior note, 9.625%, 10/01/12 ............. Ireland 18,600,000 19,506,750 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 30,000,000 31,050,000 NewPage Corp., senior secured note, 10.00%, 5/01/12 ............. United States 20,000,000 20,750,000 Owens-Brockway Glass Container Inc., senior note, 6.75%, 12/01/14 ...................................................... United States 6,700,000 6,264,500 Owens-Illinois Inc., senior note, 7.80%, 5/15/18 ................ United States 22,000,000 20,680,000 d,f,g,i Pindo Deli Finance Mauritius Ltd., 144A, e FRN, 6.00%, 4/29/15 ......................................... Indonesia 3,256,502 738,900 e FRN, 5.664%, 4/29/18 ........................................ Indonesia 8,467,542 1,921,285 zero cpn., 4/29/25 .......................................... Indonesia 17,495,011 3,969,618 Rhodia SA, senior note, 10.25%, 6/01/10 ..................... France 20,000,000 22,050,000 d,f,g,i Tjiwi Kimia Finance Mauritius, secured note, 144A, e FRN, 6.00%, 4/29/15 ......................................... Indonesia 1,628,955 484,777 e FRN, 6.00%, 4/29/18 ......................................... Indonesia 4,192,714 1,247,752 zero cpn., 4/29/25 .......................................... Indonesia 5,386,416 1,602,998 ------------ 325,349,211 ------------ PRODUCER MANUFACTURING 5.5% Case New Holland Inc., senior note, 9.25%, 8/01/11 .............. United States 32,000,000 34,080,000 Cooper-Standard Automotive Inc., senior note, 7.00%, 12/15/12 ................................. United States 7,500,000 6,487,500 senior sub. note, 8.375%, 12/15/14 ........................... United States 17,500,000 13,343,750 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 11,707,000 12,702,095 Milacron Escrow Corp., senior secured note, 11.50%, 5/15/11 ..... United States 5,700,000 5,472,000 Nortek Inc., senior sub. note, 8.50%, 9/01/14 ................... United States 27,000,000 25,245,000 a RBS Global & Rexnord Corp., senior note, 144A, 9.50%, 8/01/14 ............................. United States 15,000,000 15,150,000 senior sub. note, 144A, 11.75%, 8/01/16 ....................... United States 9,100,000 9,418,500 Russel Metals Inc., senior note, 6.375%, 3/01/14 ................ United States 12,000,000 11,355,000 TRW Automotive Inc., senior note, 9.375%, 2/15/13 ............... United States 15,203,000 16,305,218 ------------ 149,559,063 ------------ REAL ESTATE INVESTMENT TRUSTS 1.5% Host Marriott LP, senior note, 6.75%, 6/01/16 ................................................ United States 9,500,000 9,262,500 K, 7.125%, 11/01/13 ........................................... United States 20,000,000 20,300,000 M, 7.00%, 8/15/12 ............................................. United States 7,100,000 7,188,750 O, 6.375%, 3/15/15 ............................................ United States 4,100,000 3,956,500 ------------ 40,707,750 ------------
Quarterly Statement of Investments | 7 Franklin High Income Trust STATEMENT OF INVESTMENTS, AUGUST 31, 2006 (UNAUDITED) (CONTINUED)
------------------------------------------------------------------------------------------------------------------------------- AGE HIGH INCOME FUND COUNTRY PRINCIPAL AMOUNT c VALUE ------------------------------------------------------------------------------------------------------------------------------- LONG TERM INVESTMENTS (CONTINUED) CORPORATE BONDS (CONTINUED) RETAIL TRADE 2.2% Rite Aid Corp., senior deb., 7.70%, 2/15/27 .................................... United States 10,000,000 $ 8,025,000 a senior note, 144A, 6.125%, 12/15/08 ............................ United States 26,900,000 26,160,250 Stater Brothers Holdings Inc., senior note, 8.125%, 6/15/12 ....... United States 25,800,000 25,864,500 -------------- 60,049,750 -------------- TECHNOLOGY SERVICES 1.9% b PSINet Inc., senior note, 11.00%, 8/01/09 ......................... United States 18,750,000 187,500 SunGard Data Systems Inc., senior note, 9.125%, 8/15/13 ................................... United States 11,100,000 11,516,250 senior sub note, 10.25%, 8/15/15 ............................... United States 24,175,000 24,809,594 UGS Corp., senior sub. note, 10.00%, 6/01/12 ...................... United States 15,000,000 16,200,000 -------------- 52,713,344 -------------- TRANSPORTATION 0.9% Great Lakes Dredge & Dock Co., senior sub. note, 7.75%, 12/15/13 ......................................................... United States 25,900,000 24,281,250 -------------- UTILITIES 7.5% a AES Corp., senior secured note, 144A, 9.00%, 5/15/15 .............. United States 20,000,000 21,675,000 a Allegheny Energy Supply, 144A, 8.25%, 4/15/12 ..................... United States 20,000,000 21,700,000 Aquila Inc., senior note, 14.875%, 7/01/12 ........................ United States 28,000,000 37,100,000 a,b,g Calpine Corp., senior secured note, 144A, 8.75%, 7/15/13 .......... United States 17,100,000 17,014,500 Dynegy Holdings Inc., senior note, 8.75%, 2/15/12 ................................................. United States 3,100,000 3,177,500 a 144A, 8.375%, 5/01/16 .......................................... United States 28,000,000 27,720,000 ESI Tractebel Acquisition Corp., secured note, 7.99%, 12/30/11 .... United States 6,417,000 6,674,886 Midwest Generation LLC, senior secured note, 8.75%, 5/01/34 ....... United States 28,300,000 30,281,000 Mirant North American LLC, senior note, 7.375%, 12/31/13 .......... United States 11,900,000 11,840,500 NRG Energy Inc., senior note, 7.25%, 2/01/14 .................................................. United States 8,500,000 8,415,000 7.375%, 2/01/16 ................................................. United States 20,000,000 19,750,000 -------------- 205,348,386 -------------- TOTAL CORPORATE BONDS (COST $2,713,594,294) ....................... 2,631,900,217 -------------- FOREIGN GOVERNMENT AND AGENCY SECURITIES (COST $1,399,205) 0.0% h GOVERNMENT BOND 0.0% h Eskom, E168, 11.00%, 6/01/08 ...................................... South Africa 5,300,000 ZAR 759,391 -------------- -------------- SHARES -------------- COMMON STOCKS 0.1% COMMUNICATIONS 0.1% NTL Inc. .......................................................... United Kingdom 50,873 1,347,626 Sprint Nextel Corp. ............................................... United States 163,094 2,759,551 -------------- 4,107,177 --------------
8 | Quarterly Statement of Investments Franklin High Income Trust STATEMENT OF INVESTMENTS, AUGUST 31, 2006 (UNAUDITED) (CONTINUED)
------------------------------------------------------------------------------------------------------------------------------- AGE HIGH INCOME FUND COUNTRY SHARES VALUE ------------------------------------------------------------------------------------------------------------------------------- LONG TERM INVESTMENTS (CONTINUED) COMMON STOCKS (CONTINUED) PRODUCER MANUFACTURING 0.0% h d,f,i Cambridge Industries Liquidating Trust Interest ................. United States 4,853,892 $ 5,339 d,f,i Goss Holdings Inc., B ........................................... United States 211,174 -- i,j Harvard Industries Inc. ......................................... United States 793,966 5,558 d,f,i,j VS Holdings Inc. ................................................ United States 1,685,375 -- -------------- 10,897 -------------- TOTAL COMMON STOCKS (COST $30,151,785) .......................... 4,118,074 -------------- PREFERRED STOCK (COST $24,700,000) 0.0% h PROCESS INDUSTRIES 0.0% h b,d,f,g Asia Pulp & Paper Co. Ltd., 12.00%, pfd., Perpetual ............. Indonesia 24,700,000 271,700 -------------- CONVERTIBLE PREFERRED STOCK (COST $26,500,000) 1.0% UTILITIES 1.0% CMS Energy Trust I, 7.75%, cvt. pfd ............................. United States 530,000 26,134,671 -------------- TOTAL LONG TERM INVESTMENTS (COST $2,796,345,284) ............... 2,663,184,053 -------------- SHORT TERM INVESTMENT (COST $18,292,781) 0.7% MONEY MARKET FUND 0.7% k Franklin Institutional Fiduciary Trust Money Market Portfolio, 4.99% .......................................................... United States 18,292,781 18,292,781 -------------- TOTAL INVESTMENTS (COST $2,814,638,065) 98.2% .................. 2,681,476,834 OTHER ASSETS, LESS LIABILITIES 1.8% ............................ 49,578,969 -------------- NET ASSETS 100.0% ............................................... $2,731,055,803 ==============
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 August 31, 2006, the aggregate value of these securities was $411,917,680, representing 15.08% of net assets. b Defaulted security. c The principal amount is stated in U.S. dollars unless otherwise indicated. d Security has been deemed illiquid because it may not be able to be sold within seven days. At August 31, 2006, the aggregate value of these securities was $10,246,169, representing 0.38% of net assets. e The coupon rate shown represents the rate at period end. f See Note 2 regarding restricted securities. g See Note 4 regarding other considerations. h Rounds to less than 0.1% of net assets. i Non-income producing for the twelve months ended August 31, 2006. 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. The rate shown is the annualized seven-day yield at period end. 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 Frankin High Income Trust is registered under the Investment Company Act of 1940 as a diversified, open-end investment company, consisting of one Fund, the AGE High Income Fund (the Fund). On May 10, 2006, the Trust's Board of Trustees approved a proposal to change the name of the Fund to Franklin High Income Fund, effective October 1, 2006. 1. INCOME TAXES At August 31, 2006, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows: Costs of investments ........................................ $ 2,818,764,467 --------------- Unrealized appreciation ..................................... $ 93,143,243 Unrealized depreciation ..................................... (230,430,876) --------------- Net unrealized appreciation (depreciation) .................. $ (137,287,633) =============== 2. RESTRICTED SECURITIES At August 31, 2006, the Fund held investments in restricted securities, excluding 144A securities deemed to be liquid, 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 $ 271,700 4,853,892 Cambridge Industries Liquidating Trust Interest ................................. 1/09/02 -- 5,339 211,174 a Goss Holdings Inc., B ..................... 11/17/99 422,348 -- 3,256,502 Pindo Deli Finance Mauritius Ltd., 144A, FRN, 6.00%, 4/29/15 ...................... 4/29/05 756,681 738,900 8,467,542 Pindo Deli Finance Mauritius Ltd., 144A, FRN, 5.664%, 4/29/18 ..................... 4/29/05 1,967,518 1,921,285 17,495,011 Pindo Deli Finance Mauritius Ltd., 144A, zero cpn., 4/29/25 ....................... 4/29/05 4,065,141 3,969,618 1,628,955 Tjiwi Kimia Finance Mauritius, secured note, 144A, FRN, 6.00%, 4/29/15 .......... 4/29/05 496,505 484,777 4,192,714 Tjiwi Kimia Finance Mauritius, secured note, 144A, FRN, 6.00%, 4/29/18 .......... 4/29/05 1,277,939 1,247,752 5,386,416 Tjiwi Kimia Finance Mauritius, secured note, 144A, zero cpn., 4/29/25 ........... 4/29/05 1,641,780 1,602,998 1,685,375 VS Holdings Inc. .......................... 12/06/01 1,685,375 -- -------------- TOTAL RESTRICTED SECURITIES (0.38% OF NET ASSETS) ............................ $ 10,242,369 ==============
a The Fund also invests in unrestricted securities of this issuer, valued at $0 as of August 31, 2006. 10 | Quarterly Statement of Investments Franklin High Income Trust NOTES TO STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED) AGE HIGH INCOME FUND 3. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES Investments in "affiliated companies" for the Fund for the period ended August 31, 2006 were as shown below.
----------------------------------------------------------------------------------------------------------------------- NUMBER OF NUMBER OF SHARES HELD SHARES HELD VALUE AT BEGINNING GROSS GROSS AT END AT END NAME OF ISSUER OF PERIOD ADDITIONS REDUCTIONS OF PERIOD OF PERIOD ----------------------------------------------------------------------------------------------------------------------- NON-CONTROLLED AFFILIATES Harvard Industries Inc. ........................... 793,966 -- -- 793,966 $ 5,558 VS Holdings Inc. .................................. 1,685,375 -- -- 1,685,375 -- --------- TOTAL AFFILIATED SECURITIES (0.00% OF NET ASSETS) a ..................................................... $ 5,558 ========= -------------------------------------------------------------------------------- REALIZED INVESTMENT CAPITAL NAME OF ISSUER INCOME GAIN (LOSS) -------------------------------------------------------------------------------- NON-CONTROLLED AFFILIATES Harvard Industries Inc. ........................... $ -- $ -- VS Holdings Inc. .................................. -- -- ------------------------ TOTAL AFFILIATED SECURITIES (0.00% OF NET ASSETS) a $ -- $ -- ========================
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 the completion of the sale, the transaction will be accounted for as a secured borrowing with a pledge of collateral. 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 Advisers, as the Fund's Investment Manager, may serve as members of various bondholders' steering committees, on credit committees, or may represent the Fund in certain corporate restructuring negotiations. At August 31, 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 buy or sell any of these securities, 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 October 26, 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 October 26, 2006 By /S/GALEN G. VETTER ------------------ Galen G. Vetter Chief Financial Officer Date October 26, 2006 Exhbiit 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 26, 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. October 26, 2006 /S/GALEN G. VETTER Galen G. Vetter Chief Financial Officer