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: 2/28/07 ------- Item 1. Schedule of Investments. Franklin High Income Trust QUARTERLY STATEMENT OF INVESTMENTS FEBRUARY 28, 2007 -------------------------------------------------------------------------------- CONTENTS Franklin 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, FEBRUARY 28, 2007 (UNAUDITED)
----------------------------------------------------------------------------------------------------------------------- PRINCIPAL FRANKLIN HIGH INCOME FUND COUNTRY AMOUNT a VALUE ----------------------------------------------------------------------------------------------------------------------- LONG TERM INVESTMENTS 97.4% CORPORATE BONDS 96.4% COMMERCIAL SERVICES 7.5% b ARAMARK Corp., senior note, 144A, B, 8.50%, 2/01/15 ................................................. United States $12,300,000 $ 12,838,125 c FRN, 8.86%, 2/01/15 ............................................... United States 4,050,000 4,201,875 Dex Media East LLC, senior sub. note, B, 12.125%, 11/15/12 ............ United States 12,865,000 14,135,419 Dex Media Inc., B, 8.00%, 11/15/13 ................................................ United States 7,500,000 7,875,000 senior disc. note, zero cpn. to 11/15/08, 9.00% thereafter, 11/15/13 ......................................................... United States 12,600,000 11,718,000 Iron Mountain Inc., senior sub. note, 8.75%, 7/15/18 .................. United States 26,100,000 27,992,250 JohnsonDiversey Holdings Inc., senior disc. note, zero cpn. to 5/17/07, 10.67% thereafter, 5/15/13 .......................................... United States 30,000,000 30,750,000 Lamar Media Corp., senior sub. note, 6.625%, 8/15/15 .................. United States 27,800,000 27,522,000 b Rental Service Corp., senior note, 144A, 9.50%, 12/01/14 .............. United States 28,000,000 29,960,000 R.H. Donnelley Corp., senior note, 8.875%, 1/15/16 .................... United States 20,000,000 21,450,000 United Rentals North America Inc., senior sub. note, 7.75%, 11/15/13 ............................................................ United States 25,000,000 25,687,500 ------------ 214,130,169 ------------ COMMUNICATIONS 11.0% d Asia Global Crossing Ltd., senior note, 13.375%, 10/15/10 ............. Bermuda 11,000,000 825,000 b Digicel Group Ltd., senior note, 144A, 8.875%, 1/15/15 ................ Jamaica 21,600,000 21,141,000 Dobson Cellular Systems Inc., senior secured note, 9.875%, 11/01/12 ............................................................ United States 20,000,000 21,850,000 Inmarsat Finance II PLC, senior note, zero cpn. to 11/15/08, 10.375% thereafter, 11/15/12 ........................................ United Kingdom 37,200,000 35,061,000 Intelsat Intermediate, senior note, zero cpn. to 2/01/10, 9.25% thereafter, 2/01/15 ........................................... Bermuda 5,000,000 4,162,500 Intelsat Subsidiary Holding Co. Ltd., senior note, 8.25%, 1/15/13 .................................................... Bermuda 12,200,000 12,779,500 8.625%, 1/15/15 ................................................... Bermuda 17,500,000 18,900,000 d Iridium LLC, senior note, D, 10.875%, 7/15/05 ......................... Bermuda 17,000,000 4,080,000 Millicom International Cellular SA, senior note, 10.00%, 12/01/13 ..... Luxembourg 11,700,000 12,899,250 Nextel Communications Inc., senior note, D, 7.375%, 8/01/15 ........... United States 10,000,000 10,357,870 Nextel Partners Inc., senior note, 8.125%, 7/01/11 .................... United States 5,000,000 5,216,585 NTL Cable PLC, senior note, 8.75%, 4/15/14 ............................ United Kingdom 8,900,000 9,322,750 Panamsat Corp., senior note, 9.00%, 8/15/14 ........................... United States 13,177,000 14,297,045 Qwest Communications International Inc., senior note, 7.50%, 2/15/14 .................................................... United States 20,000,000 20,825,000 B, 7.50%, 2/15/14 ................................................. United States 20,000,000 20,825,000 Rogers Wireless Inc., senior secured note, 7.25%, 12/15/12 ................................................... Canada 10,000,000 10,787,500 7.50%, 3/15/15 .................................................... Canada 10,000,000 11,025,000 d RSL Communications PLC, senior disc. note, 10.125%, 3/01/08 ............................... United Kingdom 44,500,000 3,671,250 senior note, 12.00%, 11/01/08 ..................................... United Kingdom 6,250,000 515,625
Quarterly Statement of Investments | 3 Franklin High Income Trust STATEMENT OF INVESTMENTS, FEBRUARY 28, 2007 (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------------------------------------------- PRINCIPAL FRANKLIN HIGH INCOME FUND COUNTRY AMOUNT a VALUE --------------------------------------------------------------------------------------------------------------------- LONG TERM INVESTMENTS (CONTINUED) CORPORATE BONDS (CONTINUED) COMMUNICATIONS (CONTINUED) Verizon New York Inc., senior deb., B, 7.375%, 4/01/32 ............. United States $15,000,000 $ 16,151,535 b Wind Acquisition Finance SA, senior note, 144A, 10.75%, 12/01/15 ......................................................... Italy 28,000,000 32,410,000 Windstream Corp., senior note, 8.625%, 8/01/16 ..................... United States 25,400,000 27,940,000 ------------ 315,043,410 ------------ CONSUMER DURABLES 5.8% Beazer Homes USA Inc., senior note, 8.125%, 6/15/16 ................ United States 22,775,000 23,629,062 Ford Motor Credit Co., 5.625%, 10/01/08 ............................................... United States 40,000,000 39,455,760 senior note, 9.875%, 8/10/11 ................................... United States 20,000,000 21,598,540 Jarden Corp., senior sub. note, 7.50%, 5/01/17 ..................... United States 18,900,000 19,254,375 Jostens IH Corp., senior sub. note, 7.625%, 10/01/12 ............... United States 14,625,000 15,063,750 KB Home, senior note, 6.25%, 6/15/15 ................................................. United States 20,000,000 19,285,440 7.25%, 6/15/18 ................................................. United States 14,800,000 14,903,260 William Lyon Homes Inc., senior note, 7.625%, 12/15/12 ............................................... United States 4,300,000 3,902,250 7.50%, 2/15/14 ................................................. United States 9,500,000 8,597,500 ------------ 165,689,937 ------------ CONSUMER NON-DURABLES 3.1% Dole Foods Co., senior note, 7.25%, 6/15/10 ........................ United States 3,325,000 3,241,875 Reynolds American Inc., senior secured note, 7.625%, 6/01/16 ....... United States 35,000,000 38,189,270 Smithfield Foods Inc., senior note, 7.00%, 8/01/11 ................................................. United States 18,900,000 19,325,250 7.75%, 5/15/13 ................................................. United States 9,600,000 9,996,000 Spectrum Brands Inc., senior sub. note, 7.375%, 2/01/15 ............ United States 19,500,000 16,696,875 ------------ 87,449,270 ------------ CONSUMER SERVICES 16.7% AMC Entertainment Inc., senior sub. note, 9.50%, 2/01/11 ................................................. United States 5,000,000 5,012,500 9.875%, 2/01/12 ................................................ United States 12,500,000 13,203,125 Boyd Gaming Corp., senior sub. note, 6.75%, 4/15/14 ................ United States 15,000,000 15,000,000 Cablevision Systems Corp., senior note, B, 8.00%, 4/15/12 .......... United States 19,200,000 19,584,000 d,e 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 28,980,000 CCH I Holdings LLC, senior note, 13.50%, 1/15/14 ................... United States 15,500,000 15,829,375 CCH II LLC, senior note, 10.25%, 9/15/10 ........................... United States 33,800,000 35,743,500 CSC Holdings Inc., senior deb., 7.625%, 7/15/18 .................... United States 8,000,000 8,140,000 DIRECTV Holdings LLC, senior note, 8.375%, 3/15/13 ................. United States 18,901,000 20,058,686 EchoStar DBS Corp., senior note, 6.375%, 10/01/11 ............................................... United States 15,000,000 15,112,500 7.125%, 2/01/16 ................................................ United States 7,300,000 7,582,875 b IDEARC Inc., senior note, 144A, 8.00%, 11/15/16 .................... United States 14,000,000 14,455,000
4 | Quarterly Statement of Investments Franklin High Income Trust STATEMENT OF INVESTMENTS, FEBRUARY 28, 2007 (UNAUDITED) (CONTINUED)
---------------------------------------------------------------------------------------------------------------- PRINCIPAL FRANKLIN HIGH INCOME FUND COUNTRY AMOUNT a 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 $ 19,259,160 LIN Television Corp., senior sub. note, 6.50%, 5/15/13 .......... United States 28,000,000 27,440,000 Mandalay Resort Group, senior sub. note, 10.25%, 8/01/07 ........ United States 14,600,000 14,928,500 MGM MIRAGE Inc., senior note, 6.625%, 7/15/15 ............................................. United States 30,000,000 28,987,500 6.875%, 4/01/16 ............................................. United States 10,000,000 9,750,000 Pinnacle Entertainment Inc., senior sub. note, 8.25%, 3/15/12 .............................................. United States 9,400,000 9,729,000 8.75%, 10/01/13 ............................................. United States 14,100,000 15,051,750 Quebecor Media Inc., senior note, 7.75%, 3/15/16 ................ Canada 21,000,000 21,630,000 Radio One Inc., senior sub. note, B, 8.875%, 7/01/11 ............ United States 20,200,000 20,957,500 b Rainbow National Services LLC, senior sub. deb., 144A, 10.375%, 9/01/14 ....................................................... United States 25,000,000 28,125,000 Royal Caribbean Cruises Ltd., senior deb., 7.25%, 3/15/18 ................................. United States 17,000,000 17,829,532 senior note, 8.00%, 5/15/10 ................................. United States 4,200,000 4,495,932 senior note, 6.875%, 12/01/13 ............................... United States 13,800,000 14,294,413 Station Casinos Inc., senior note, 6.00%, 4/01/12 ................................. United States 9,300,000 9,067,500 senior sub. note, 6.50%, 2/01/14 ............................ United States 7,000,000 6,527,500 senior sub. note, 6.875%, 3/01/16 ........................... United States 15,000,000 14,006,250 Universal City Development, senior note, 11.75%, 4/01/10 ........ United States 15,000,000 16,012,500 ------------ 476,797,398 ------------ ELECTRONIC TECHNOLOGY 5.3% b Bombardier Inc., senior note, 144A, 8.00%, 11/15/14 ............. Canada 12,200,000 12,810,000 Flextronics International Ltd., senior sub. note, 6.50%, 5/15/13 Singapore 15,600,000 15,522,000 b Freescale Semiconductor Inc., senior note, 144A, 8.875%, 12/15/14 ...................................................... United States 28,000,000 28,525,000 L-3 Communications Corp., senior sub. note, 6.125%, 1/15/14 ............................................. United States 26,500,000 26,301,250 5.875%, 1/15/15 ............................................. United States 3,700,000 3,626,000 6.375%, 10/15/15 ............................................ United States 9,300,000 9,300,000 b NXP BV/NXP Funding LLC, 144A, 7.875%, 10/15/14 .................. Netherlands 28,000,000 29,050,000 Sanmina-SCI Corp., senior sub. note, 6.75%, 3/01/13 .............................................. United States 14,600,000 13,505,000 8.125%, 3/01/16 ............................................. United States 13,700,000 13,152,000 ------------ 151,791,250 ------------ ENERGY MINERALS 4.8% Chesapeake Energy Corp., senior note, 7.625%, 7/15/13 ............................................. United States 5,000,000 5,325,000 6.625%, 1/15/16 ............................................. United States 10,000,000 10,100,000 6.25%, 1/15/18 .............................................. United States 27,600,000 27,324,000 6.875%, 11/15/20 ............................................ United States 5,000,000 5,037,500 Mariner Energy Inc., senior note, 7.50%, 4/15/13 ................ United States 27,000,000 26,527,500
Quarterly Statement of Investments | 5 Franklin High Income Trust STATEMENT OF INVESTMENTS, FEBRUARY 28, 2007 (UNAUDITED) (CONTINUED)
----------------------------------------------------------------------------------------------------------- PRINCIPAL FRANKLIN HIGH INCOME FUND COUNTRY AMOUNT a VALUE ----------------------------------------------------------------------------------------------------------- LONG TERM INVESTMENTS (CONTINUED) CORPORATE BONDS (CONTINUED) ENERGY MINERALS (CONTINUED) Massey Energy Co., senior note, 6.875%, 12/15/13 ........... United States $15,000,000 $ 14,475,000 Peabody Energy Corp., senior note, 7.375%, 11/01/16 ........................................ United States 6,900,000 7,245,000 B, 6.875%, 3/15/13 ...................................... United States 15,900,000 16,178,250 Pogo Producing Co., senior sub. note, 7.875%, 5/01/13 ......................................... United States 3,100,000 3,154,250 6.875%, 10/01/17 ........................................ United States 23,700,000 23,226,000 ------------ 138,592,500 ------------ FINANCE 1.8% GMAC LLC, 6.875%, 9/15/11 .................................. United States 50,000,000 50,648,800 ------------ HEALTH SERVICES 5.7% DaVita Inc., senior sub. note, 7.25%, 3/15/15 .............. United States 30,000,000 30,450,000 Fresenius Medical Care Capital Trust II, 7.875%, 2/01/08 ... Germany 28,000,000 28,490,000 HCA Inc., senior note, 6.50%, 2/15/16 ............................. United States 6,300,000 5,433,750 b senior secured note, 144A, 9.125%, 11/15/14 ............. United States 32,000,000 34,160,000 Tenet Healthcare Corp., senior note, 7.375%, 2/01/13 ......................................... United States 18,000,000 16,920,000 9.875%, 7/01/14 ......................................... United States 20,000,000 20,450,000 Vanguard Health Holding Co. II LLC, senior sub. note, 9.00%, 10/01/14 .................................................. United States 25,000,000 25,812,500 ------------ 161,716,250 ------------ HEALTH TECHNOLOGY 0.6% b The Cooper Cos. Inc., senior note, 144A, 7.125%, 2/15/15 ... United States 18,100,000 18,371,500 ------------ INDUSTRIAL SERVICES 5.3% Allied Waste North America Inc., senior note, 7.875%, 4/15/13 ......................................... United States 21,600,000 22,626,000 f 6.875%, 6/01/17 ......................................... United States 4,000,000 3,990,000 B, 7.125%, 5/15/16 ...................................... United States 4,000,000 4,085,000 Atlas Pipeline Partners LP, senior note, 8.125%, 12/15/15 .. United States 14,600,000 15,147,500 El Paso Corp., senior note, MTN, 7.75%, 1/15/32 ............ United States 35,000,000 38,325,000 Pride International Inc., senior note, 7.35%, 7/15/14 ...... United States 20,700,000 21,321,000 d 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 10,000,000 10,993,290 Universal Compression Inc., senior note, 7.25%, 5/15/10 .... United States 7,100,000 7,259,750 The Williams Cos. Inc., senior note, 7.625%, 7/15/19 ......................................... United States 3,300,000 3,597,000 7.875%, 9/01/21 ......................................... United States 7,400,000 8,140,000 b Williams Partners LP, 144A, 7.25%, 2/01/17 ................. United States 14,100,000 14,875,500 ------------ 150,370,040 ------------ NON-ENERGY MINERALS 1.7% Ispat Inland ULC, senior secured note, 9.75%, 4/01/14 ...... United States 15,000,000 16,902,855 Novelis Inc., senior note, 7.25%, 2/15/15 .................. Canada 30,000,000 31,350,000 ------------ 48,252,855 ------------
6| Quarterly Statement of Investments Franklin High Income Trust STATEMENT OF INVESTMENTS, FEBRUARY 28, 2007 (UNAUDITED) (CONTINUED)
------------------------------------------------------------------------------------------------------------------ PRINCIPAL FRANKLIN HIGH INCOME FUND COUNTRY AMOUNT a VALUE ------------------------------------------------------------------------------------------------------------------ LONG TERM INVESTMENTS (CONTINUED) CORPORATE BONDS (CONTINUED) PROCESS INDUSTRIES 10.0% b Basell AF SCA, senior note, 144A, 8.375%, 8/15/15 .............. Germany $11,400,000 $ 12,084,000 BCP Crystal Holdings Corp., senior sub. note, 9.625%, 6/15/14 .. United States 22,455,000 25,065,394 Buckeye Technologies Inc., senior note, 8.50%, 10/01/13 ............................... United States 11,700,000 12,460,500 senior sub. note, 8.00%, 10/15/10 .......................... United States 16,000,000 16,080,000 Crown Americas Inc., senior note, 7.75%, 11/15/15 .............. United States 28,000,000 29,400,000 Equistar Chemicals LP, senior note, 8.75%, 2/15/09 ............................................. United States 10,000,000 10,500,000 10.625%, 5/01/11 ........................................... United States 4,400,000 4,675,000 b Huntsman International LLC, senior note, 144A, 7.875%, 11/15/14 ..................................................... United States 24,250,000 25,220,000 JSG Funding PLC, senior sub. note, 7.75%, 4/01/15 .............. Ireland 11,000,000 11,165,000 Lyondell Chemical Co., senior note, 8.00%, 9/15/14 ................................ United States 10,000,000 10,575,000 senior note, 8.25%, 9/15/16 ................................ United States 3,300,000 3,564,000 senior secured note, 10.50%, 6/01/13 ....................... United States 17,400,000 19,140,000 MDP Acquisitions PLC, senior note, 9.625%, 10/01/12 ............ Ireland 18,600,000 19,832,250 Nalco Co., senior note, 7.75%, 11/15/11 ............................... United States 2,700,000 2,801,250 senior sub. note, 8.875%, 11/15/13 ......................... United States 30,000,000 32,100,000 NewPage Corp., senior secured note, 10.00%, 5/01/12 ............ United States 20,000,000 21,900,000 Owens-Brockway Glass Container Inc., senior note, 6.75%, 12/01/14 ..................................................... United States 6,700,000 6,666,500 Owens-Illinois Inc., senior note, 7.80%, 5/15/18 ............... United States 22,000,000 22,770,000 ------------ 285,998,894 ------------ PRODUCER MANUFACTURING 4.9% Case New Holland Inc., senior note, 9.25%, 8/01/11 ............. United States 28,000,000 29,680,000 Commercial Vehicle Group Inc., senior note, 8.00%, 7/01/13 ..... United States 15,800,000 15,997,500 Cooper-Standard Automotive Inc., senior note, 7.00%, 12/15/12 ............................... United States 7,500,000 7,012,500 senior sub. note, 8.375%, 12/15/14 ......................... United States 17,500,000 14,787,500 d,e Goss Graphic Systems Inc., senior sub. note, 12.25%, 11/19/05 .. United States 9,053,899 -- Nortek Inc., senior sub. note, 8.50%, 9/01/14 .................. United States 27,000,000 27,607,500 b RBS Global & Rexnord Corp., senior note, 144A, 9.50%, 8/01/14 .......................... United States 18,000,000 19,080,000 senior sub. note, 144A, 11.75%, 8/01/16 .................... United States 9,100,000 10,010,000 TRW Automotive Inc., senior note, 9.375%, 2/15/13 .............. United States 15,203,000 16,400,236 ------------ 140,575,236 ------------ REAL ESTATE INVESTMENT TRUSTS 1.4% Host Marriott LP, senior note, K, 7.125%, 11/01/13 ........................................ United States 20,000,000 20,500,000 M, 7.00%, 8/15/12 .......................................... United States 7,100,000 7,242,000 O, 6.375%, 3/15/15 ......................................... United States 4,100,000 4,069,250 Q, 6.75%, 6/01/16 .......................................... United States 9,500,000 9,595,000 ------------ 41,406,250 ------------
Quarterly Statement of Investments | 7 Franklin High Income Trust STATEMENT OF INVESTMENTS, FEBRUARY 28, 2007 (UNAUDITED) (CONTINUED)
----------------------------------------------------------------------------------------------------------------------- PRINCIPAL FRANKLIN HIGH INCOME FUND COUNTRY AMOUNT a VALUE ----------------------------------------------------------------------------------------------------------------------- LONG TERM INVESTMENTS (CONTINUED) CORPORATE BONDS (CONTINUED) RETAIL TRADE 1.7% b Michaels Stores Inc., senior note, 144A, 10.00%, 11/01/14 ...... United States $28,000,000 $ 30,100,000 Stater Brothers Holdings Inc., senior note, 8.125%, 6/15/12 .... United States 18,800,000 19,293,500 -------------- 49,393,500 -------------- TECHNOLOGY SERVICES 1.3% d,e PSINet Inc., senior note, 11.00%, 8/01/09 ...................... United States 18,750,000 1,875 SunGard Data Systems Inc., senior note, 9.125%, 8/15/13 ................................ United States 11,100,000 11,904,750 senior sub. note, 10.25%, 8/15/15 ........................... United States 24,175,000 26,411,188 -------------- 38,317,813 -------------- TRANSPORTATION 0.9% Great Lakes Dredge & Dock Co., senior sub. note, 7.75%, 12/15/13 United States 26,600,000 26,467,000 -------------- UTILITIES 6.9% b AES Corp., senior secured note, 144A, 9.00%, 5/15/15 ........... United States 15,000,000 16,143,750 b Allegheny Energy Supply, 144A, 8.25%, 4/15/12 .................. United States 15,000,000 16,500,000 Aquila Inc., senior note, 14.875%, 7/01/12 ..................... United States 28,000,000 36,680,000 Dynegy Holdings Inc., senior note, 8.375%, 5/01/16 ............. United States 28,000,000 30,100,000 ESI Tractebel Acquisition Corp., secured note, 7.99%, 12/30/11 . United States 6,178,000 6,419,096 Midwest Generation LLC, senior secured note, 8.75%, 5/01/34 .... United States 28,300,000 30,634,750 Mirant North America LLC, senior note, 7.375%, 12/31/13 ........ United States 21,700,000 22,405,250 NRG Energy Inc., senior note, 7.25%, 2/01/14 .............................................. United States 8,500,000 8,691,250 7.375%, 2/01/16 ............................................. United States 20,000,000 20,450,000 7.375%, 1/15/17 ............................................. United States 10,000,000 10,200,000 -------------- 198,224,096 -------------- TOTAL CORPORATE BONDS (COST $2,744,051,386) .................... 2,759,236,168 -------------- ---------- SHARES ---------- COMMON STOCKS 0.1% COMMUNICATIONS 0.1% Sprint Nextel Corp. ............................................ United States 163,094 3,144,452 -------------- PRODUCER MANUFACTURING 0.0%g e,h,i Cambridge Industries Liquidating Trust Interest ................ United States 4,853,892 5,339 e,h,i Goss Holdings Inc., B .......................................... United States 211,174 -- h,j Harvard Industries Inc. ........................................ United States 793,966 3,176 e,h,i,j VS Holdings Inc. ............................................... United States 1,685,375 -- -------------- 8,515 -------------- TOTAL COMMON STOCKS (COST $29,553,602) ......................... 3,152,967 -------------- CONVERTIBLE PREFERRED STOCK (COST $26,500,000) 0.9% UTILITIES 0.9% CMS Energy Trust I, 7.75%, cvt. pfd. ........................... United States 530,000 26,408,416 -------------- TOTAL LONG TERM INVESTMENTS (COST $2,800,104,988) .............. 2,788,797,551 --------------
8 | Quarterly Statement of Investments Franklin High Income Trust STATEMENT OF INVESTMENTS, FEBRUARY 28, 2007 (UNAUDITED) (CONTINUED)
---------------------------------------------------------------------------------------------------------------------- FRANKLIN HIGH INCOME FUND COUNTRY SHARES VALUE ---------------------------------------------------------------------------------------------------------------------- SHORT TERM INVESTMENT (COST $22,513,375) 0.8% MONEY MARKET FUND 0.8% k Franklin Institutional Fiduciary Trust Money Market Portfolio, 4.98% . United States 22,513,375 $ 22,513,375 -------------- TOTAL INVESTMENTS (COST $2,822,618,363) 98.2% ........................ 2,811,310,926 OTHER ASSETS, LESS LIABILITIES 1.8% .................................. 50,799,519 -------------- NET ASSETS 100.0% .................................................... $2,862,110,445 ==============
SELECTED PORTFOLIO ABBREVIATIONS FRN - Floating Rate Note MTN - Medium Term Note a The principal amount is stated in U.S. dollars unless otherwise indicated. b 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 Trust's Board of Trustees. At February 28, 2007, the aggregate value of these securities was $410,060,750, representing 14.33% of net assets. c The coupon rate shown represents the rate at period end. d Defaulted security. e Security has been deemed illiquid because it may not be able to be sold within seven days. At February 28, 2007, the aggregate value of these securities was $11,014, representing less than 0.01% of net assets. f Security purchased on a when-issued or delayed delivery basis. g Rounds to less than 0.1% of net assets. h Non-income producing for the twelve months ended February 28, 2007. i See Note 3 regarding restricted securities. j See Note 4 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) FRANKLIN HIGH INCOME FUND 1. ORGANIZATION Franklin High Income Trust (the Trust) is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end investment company, consisting of one fund, the Franklin High Income Fund (the Fund). Effective October 1, 2006, the AGE High Income Fund was renamed the Franklin High Income Fund. 2. INCOME TAXES At February 28, 2007, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows: Costs of investments ..................... $ 2,824,849,761 =============== Unrealized appreciation .................. $ 137,909,316 Unrealized depreciation .................. (151,448,151) --------------- Net unrealized appreciation (depreciation) $ (13,538,835) =============== 3. RESTRICTED SECURITIES At February 28, 2007, the Fund held investments in restricted securities, excluding 144A securities deemed to be liquid, valued in accordance with procedures approved by the Trust's Board of Trustees as reflecting fair value, as follows:
---------------------------------------------------------------------------------------------------------------------- ACQUISITION SHARES ISSUER DATES COST VALUE ---------------------------------------------------------------------------------------------------------------------- 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 -- 1,685,375 VS Holdings Inc. ........................................... 12/06/01 1,685,375 -- ------ TOTAL RESTRICTED SECURITIES (0.00%b of Net Assets) ......................................... $5,339 ======
a The Fund also invests in unrestricted securities of this issuer, valued at $0 as of February 28, 2007. b Rounds to less than 0.01% of net assets. 10 | Quarterly Statement of Investments Franklin High Income Trust NOTES TO STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED) FRANKLIN HIGH INCOME FUND 4. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES Investments in "affiliated companies" for the Fund for the nine months ended February 28, 2007 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 YEAR ADDITIONS REDUCTIONS OF PERIOD OF PERIOD INCOME GAIN (LOSS) ---------------------------------------------------------------------------------------------------------------------------------- NON-CONTROLLED AFFILIATES Harvard Industries Inc. . 793,966 -- -- 793,966 $ 3,176 $ -- $ -- VS Holdings Inc. ........ 1,685,375 -- -- 1,685,375 -- -- -- ------------------------------------------ TOTAL AFFILIATED SECURITIES (0.00% a of Net Assets) $ 3,176 -- -- ==========================================
a Rounds to less than 0.01% of net assets. 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 26, 2007 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 26, 2007 By /S/GALEN G. VETTER ------------------ Galen G. Vetter Chief Financial Officer Date April 26, 2007 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 26, 2007 /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 26, 2007 /S/GALEN G. VETTER Galen G. Vetter Chief Financial Officer