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: 8/31/07 ------- Item 1. Schedule of Investments. Franklin High Income Trust QUARTERLY STATEMENT OF INVESTMENTS AUGUST 31, 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, AUGUST 31, 2007 (UNAUDITED)
----------------------------------------------------------------------------------------------------------------------------------- FRANKLIN HIGH INCOME FUND COUNTRY PRINCIPAL AMOUNT a VALUE ----------------------------------------------------------------------------------------------------------------------------------- LONG TERM INVESTMENTS 96.8% CORPORATE BONDS 95.7% COMMERCIAL SERVICES 7.7% ARAMARK Corp., senior note, 8.50%, 2/01/15 .................................................... United States $ 29,000,000 $ 29,036,250 b FRN, 8.856%, 2/01/15 .............................................. United States 4,050,000 4,029,750 Dex Media East LLC, senior sub. note, B, 12.125%, 11/15/12 ........... United States 10,000,000 10,700,000 Dex Media Inc., B, 8.00%, 11/15/13 ................................................ United States 7,500,000 7,481,250 senior disc. note, zero cpn. to 11/15/08, 9.00% thereafter, 11/15/13 ......................................................... United States 12,600,000 11,686,500 Iron Mountain Inc., senior sub. note, 8.75%, 7/15/18 ................. United States 26,100,000 26,556,750 JohnsonDiversey Holdings Inc., senior disc. note, 10.67%, 5/15/13 .... United States 20,000,000 20,200,000 Lamar Media Corp., senior sub. note, 6.625%, 8/15/15 ................. United States 27,800,000 26,688,000 R.H. Donnelley Corp., senior note, 8.875%, 1/15/16 ................... United States 20,000,000 20,600,000 c Rental Service Corp., senior note, 144A, 9.50%, 12/01/14 ............. United States 28,000,000 27,545,000 United Rentals North America Inc., senior sub. note, 7.75%, 11/15/13 ............................................................ United States 20,000,000 20,700,000 --------------- 205,223,500 --------------- COMMUNICATIONS 9.6% d Asia Global Crossing Ltd., senior note, 13.375%, 10/15/10 ............ Bermuda 11,000,000 1,127,500 c Digicel Group Ltd., senior note, 144A, 8.875%, 1/15/15 ............... Jamaica 29,000,000 26,572,700 Dobson Cellular Systems Inc., senior secured note, 9.875%, 11/01/12 ............................................................ United States 10,700,000 11,556,000 Inmarsat Finance II PLC, senior note, zero cpn. to 11/15/08, 10.375% thereafter, 11/15/12 ........................................ United Kingdom 30,000,000 28,575,000 Intelsat Intermediate, senior note, zero cpn. to 2/01/10, 9.25% thereafter, 2/01/15 ........................................... Bermuda 5,000,000 4,075,000 Intelsat Subsidiary Holding Co. Ltd., senior note, 8.25%, 1/15/13 .................................................... Bermuda 12,200,000 12,322,000 8.625%, 1/15/15 ................................................... Bermuda 17,500,000 17,696,875 d Iridium LLC, senior note, D, 10.875%, 7/15/05 ........................ Bermuda 17,000,000 2,677,500 c MetroPCS Wireless Inc., senior note, 144A, 9.25%, 11/01/14 ........... United States 15,000,000 14,850,000 Millicom International Cellular SA, senior note, 10.00%, 12/01/13 .... Luxembourg 11,700,000 12,402,000 Nextel Communications Inc., senior note, D, 7.375%, 8/01/15 .......... United States 10,000,000 10,075,130 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 19,750,000 B, 7.50%, 2/15/14 ................................................. United States 20,000,000 19,750,000 d,e 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 6,250,000 234,375 Virgin Media Finance PLC, senior note, 8.75%, 4/15/14 ................ United Kingdom 8,900,000 9,055,750 c Wind Acquisition Finance SA, senior note, 144A, 10.75%, 12/01/15 ..... Italy 28,000,000 28,980,000 Windstream Corp., senior note, 8.625%, 8/01/16 ....................... United States 20,000,000 21,000,000 --------------- 255,508,312 ---------------
Quarterly Statement of Investments | 3 Franklin High Income Trust STATEMENT OF INVESTMENTS, AUGUST 31, 2007 (UNAUDITED) (CONTINUED)
----------------------------------------------------------------------------------------------------------------------------------- FRANKLIN HIGH INCOME FUND COUNTRY PRINCIPAL AMOUNT a VALUE ----------------------------------------------------------------------------------------------------------------------------------- LONG TERM INVESTMENTS (CONTINUED) CORPORATE BONDS (CONTINUED) CONSUMER DURABLES 6.1% Beazer Homes USA Inc., senior note, 8.125%, 6/15/16 .................. United States $ 22,775,000 $ 18,106,125 Ford Motor Credit Co. LLC, senior note, 5.80%, 1/12/09 .................................................... United States 40,000,000 37,702,720 9.875%, 8/10/11 ................................................... United States 20,000,000 19,759,280 General Motors Corp., senior deb., 8.25%, 7/15/23 .................... United States 20,000,000 16,050,000 Jarden Corp., senior sub. note, 7.50%, 5/01/17 ....................... United States 23,100,000 21,714,000 Jostens IH Corp., senior sub. note, 7.625%, 10/01/12 ................. United States 17,525,000 17,656,438 KB Home, senior note, 6.25%, 6/15/15 .................................................... United States 20,000,000 17,150,000 7.25%, 6/15/18 .................................................... United States 14,800,000 13,024,000 --------------- 161,162,563 --------------- CONSUMER NON-DURABLES 2.3% Dole Foods Co., senior note, 7.25%, 6/15/10 .......................... United States 1,325,000 1,232,250 Reynolds American Inc., senior secured note, 7.625%, 6/01/16 ......... United States 30,000,000 31,568,610 Smithfield Foods Inc., senior note, 7.00%, 8/01/11 .................................................... United States 18,900,000 18,994,500 7.75%, 5/15/13 .................................................... United States 9,600,000 9,696,000 --------------- 61,491,360 --------------- CONSUMER SERVICES 16.9% Boyd Gaming Corp., senior sub. note, 6.75%, 4/15/14 .................. United States 10,000,000 9,500,000 Cablevision Systems Corp., senior note, B, 8.00%, 4/15/12 ............ United States 19,200,000 18,480,000 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 29,000,000 28,383,750 CCH I Holdings LLC, senior note, 13.50%, 1/15/14 ..................... United States 15,500,000 14,725,000 CCH II LLC, senior note, 10.25%, 9/15/10 ............................. United States 33,800,000 34,307,000 CSC Holdings Inc., senior deb., 7.625%, 7/15/18 ...................... United States 8,000,000 7,380,000 DIRECTV Holdings LLC, senior note, 8.375%, 3/15/13 ................... United States 18,901,000 19,609,787 EchoStar DBS Corp., senior note, 6.375%, 10/01/11 .................................................. United States 15,000,000 14,775,000 7.125%, 2/01/16 ................................................... United States 7,300,000 7,172,250 c Fontainebleau Las Vegas, 144A, 10.25%, 6/15/15 ....................... United States 15,300,000 13,196,250 IDEARC Inc., senior note, 8.00%, 11/15/16 ............................ United States 14,000,000 13,895,000 Liberty Media Corp., senior note, 5.70%, 5/15/13 ..................... United States 20,000,000 18,590,180 LIN Television Corp., senior sub. note, 6.50%, 5/15/13 ............... United States 27,000,000 25,515,000 MGM MIRAGE, senior note, 6.625%, 7/15/15 ................................................... United States 30,000,000 28,387,500 6.875%, 4/01/16 ................................................... United States 10,000,000 9,525,000 c Outback Steakhouse Inc., senior note, 144A, 10.00%, 6/15/15 .......... United States 18,600,000 16,135,500 Pinnacle Entertainment Inc., senior sub. note, 8.25%, 3/15/12 .................................................... United States 5,000,000 5,050,000 8.75%, 10/01/13 ................................................... United States 14,100,000 14,382,000 Quebecor Media Inc., senior note, 7.75%, 3/15/16 ..................... Canada 21,000,000 20,081,250 Radio One Inc., senior sub. note, B, 8.875%, 7/01/11 ................. United States 10,000,000 9,625,000 c Rainbow National Services LLC, senior sub. deb., 144A, 10.375%, 9/01/14 ............................................................. United States 14,665,000 16,039,844
4 | Quarterly Statement of Investments Franklin High Income Trust STATEMENT OF INVESTMENTS, AUGUST 31, 2007 (UNAUDITED) (CONTINUED)
----------------------------------------------------------------------------------------------------------------------------------- FRANKLIN HIGH INCOME FUND COUNTRY PRINCIPAL AMOUNT a VALUE ----------------------------------------------------------------------------------------------------------------------------------- LONG TERM INVESTMENTS (CONTINUED) CORPORATE BONDS (CONTINUED) CONSUMER SERVICES (CONTINUED) Royal Caribbean Cruises Ltd., senior deb., 7.25%, 3/15/18 ....................................... United States $ 17,000,000 $ 16,429,684 senior note, 8.00%, 5/15/10 ....................................... United States 4,200,000 4,388,446 senior note, 6.875%, 12/01/13 ..................................... United States 13,800,000 13,537,579 Station Casinos Inc., senior note, 6.00%, 4/01/12 ....................................... United States 9,300,000 8,672,250 senior sub. note, 6.50%, 2/01/14 .................................. United States 7,000,000 5,967,500 senior sub. note, 6.875%, 3/01/16 ................................. United States 15,000,000 12,637,500 Universal City Development, senior note, 11.75%, 4/01/10 ............. United States 15,000,000 15,825,000 c Univision Communications Inc., senior note, 144A, PIK, 9.75%, 3/15/15 ............................................................. United States 29,000,000 27,767,500 --------------- 449,984,570 --------------- ELECTRONIC TECHNOLOGY 5.3% Flextronics International Ltd., senior sub. note, 6.50%, 5/15/13 ..... Singapore 15,600,000 14,937,000 Freescale Semiconductor Inc., senior note, 8.875%, 12/15/14 .......... United States 36,000,000 33,390,000 c Hawker Beechcraft Acquisition Co., senior note, 144A, PIK, 8.875%, 4/01/15 ............................................................. United States 9,500,000 9,286,250 L-3 Communications Corp., senior sub. note, 6.125%, 1/15/14 ................................................... United States 20,000,000 19,400,000 6.375%, 10/15/15 .................................................. United States 9,300,000 9,044,250 NXP BV/NXP Funding LLC, senior secured note, 7.875%, 10/15/14 ........ Netherlands 28,000,000 25,375,000 Sanmina-SCI Corp., b,c senior note, 144A, FRN, 8.11%, 6/15/14 ............................ United States 6,200,000 5,874,500 senior sub. note, 6.75%, 3/01/13 .................................. United States 14,600,000 12,483,000 senior sub. note, 8.125%, 3/01/16 ................................. United States 13,700,000 11,919,000 --------------- 141,709,000 --------------- ENERGY MINERALS 5.7% Chesapeake Energy Corp., senior note, 6.625%, 1/15/16 ................................................... United States 10,000,000 9,725,000 6.25%, 1/15/18 .................................................... United States 27,600,000 25,978,500 6.875%, 11/15/20 .................................................. United States 5,000,000 4,825,000 Denbury Resources Inc., senior sub. note, 7.50%, 12/15/15 ............ United States 5,600,000 5,600,000 Mariner Energy Inc., senior note, 7.50%, 4/15/13 ..................... United States 29,000,000 27,695,000 Peabody Energy Corp., senior note, 7.375%, 11/01/16 .................................................. United States 6,900,000 6,986,250 B, 6.875%, 3/15/13 ................................................ United States 15,900,000 15,939,750 c Petroplus Finance Ltd., senior note, 144A, 6.75%, 5/01/14 .................................................... Switzerland 13,075,000 12,176,094 7.00%, 5/01/17 .................................................... Switzerland 6,400,000 5,920,000 Pogo Producing Co., senior sub. note, 7.875%, 5/01/13 ................................................... United States 3,100,000 3,138,750 6.875%, 10/01/17 .................................................. United States 23,700,000 23,996,250 c Tesoro Corp., senior note, 144A, 6.50%, 6/01/17 ...................... United States 8,425,000 8,235,437 --------------- 150,216,031 ---------------
Quarterly Statement of Investments | 5 Franklin High Income Trust STATEMENT OF INVESTMENTS, AUGUST 31, 2007 (UNAUDITED) (CONTINUED)
----------------------------------------------------------------------------------------------------------------------------------- FRANKLIN HIGH INCOME FUND COUNTRY PRINCIPAL AMOUNT a VALUE ----------------------------------------------------------------------------------------------------------------------------------- LONG TERM INVESTMENTS (CONTINUED) CORPORATE BONDS (CONTINUED) FINANCE 2.3% E*trade Financial Corp., senior note, 8.00%, 6/15/11 ................. United States $ 7,000,000 $ 6,720,000 GMAC LLC, 6.875%, 9/15/11 ............................................ United States 60,000,000 53,556,840 --------------- 60,276,840 --------------- HEALTH SERVICES 7.1% DaVita Inc., senior sub. note, 7.25%, 3/15/15 ........................ United States 30,000,000 29,550,000 c FMC Finance III SA, senior note, 144A, 6.875%, 7/15/17 ............... Germany 14,000,000 13,790,000 Fresenius Medical Care Capital Trust II, 7.875%, 2/01/08 ............. Germany 14,000,000 14,035,000 HCA Inc., senior note, 6.50%, 2/15/16 ....................................... United States 6,300,000 5,166,000 c senior secured note, 144A, 9.125%, 11/15/14 ....................... United States 32,000,000 32,880,000 Tenet Healthcare Corp., senior note, 7.375%, 2/01/13 ................................................... United States 18,000,000 15,030,000 9.875%, 7/01/14 ................................................... United States 20,000,000 17,800,000 b,c U.S. Oncology Holdings Inc., senior note, 144A, FRN, 9.797%, 3/15/12 ............................................................. United States 23,300,000 21,669,000 c United Surgical Partners International Inc., senior sub. note, 144A, 8.875%, 5/01/17 ................................................... United States 8,500,000 8,160,000 PIK, 9.25%, 5/01/17 ............................................... United States 6,900,000 6,589,500 Vanguard Health Holding Co. II LLC, senior sub. note, 9.00%, 10/01/14 ............................................................ United States 25,000,000 23,500,000 --------------- 188,169,500 --------------- HEALTH TECHNOLOGY 0.6% The Cooper Cos. Inc., senior note, 7.125%, 2/15/15 ................... United States 18,100,000 17,376,000 --------------- INDUSTRIAL SERVICES 5.3% Allied Waste North America Inc., senior note, 7.875%, 4/15/13 ...................................... United States 21,600,000 22,032,000 senior secured note, 6.875%, 6/01/17 .............................. United States 4,000,000 3,900,000 Atlas Pipeline Partners LP, senior note, 8.125%, 12/15/15 ............ United States 20,000,000 19,950,000 c Bristow Group Inc., senior note, 144A, 7.50%, 9/15/17 ................ United States 9,400,000 9,400,000 El Paso Corp., senior note, 6.875%, 6/15/14 .......................... United States 28,000,000 28,391,888 Pride International Inc., senior note, 7.35%, 7/15/14 ................ United States 20,700,000 21,010,500 d,e Safety Kleen Services, senior sub. note, 9.25%, 6/01/08 .............. United States 10,000,000 50,000 The Williams Cos. Inc., 8.75%, 3/15/32 .................................................... United States 13,000,000 14,852,500 senior note, 7.625%, 7/15/19 ...................................... United States 5,900,000 6,298,250 senior note, 7.875%, 9/01/21 ...................................... United States 13,100,000 14,115,250 --------------- 140,000,388 --------------- NON-ENERGY MINERALS 2.3% Freeport-McMoRan Copper & Gold Inc., senior note, 8.25%, 4/01/15 .................................................... United States 6,700,000 7,118,750 8.375%, 4/01/17 ................................................... United States 17,400,000 18,574,500
6 | Quarterly Statement of Investments Franklin High Income Trust STATEMENT OF INVESTMENTS, AUGUST 31, 2007 (UNAUDITED) (CONTINUED)
----------------------------------------------------------------------------------------------------------------------------------- FRANKLIN HIGH INCOME FUND COUNTRY PRINCIPAL AMOUNT a VALUE ----------------------------------------------------------------------------------------------------------------------------------- LONG TERM INVESTMENTS (CONTINUED) CORPORATE BONDS (CONTINUED) NON-ENERGY MINERALS (CONTINUED) Ispat Inland ULC, senior secured note, 9.75%, 4/01/14 ................ United States $ 5,000,000 $ 5,461,330 Novelis Inc., senior note, 7.25%, 2/15/15 ............................ Canada 30,000,000 29,250,000 --------------- 60,404,580 --------------- PROCESS INDUSTRIES 9.3% Buckeye Technologies Inc., senior note, 8.50%, 10/01/13 ...................................... United States 11,700,000 11,875,500 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 28,420,000 Huntsman International LLC, senior sub. note, 7.875%, 11/15/14 ....... United States 25,000,000 26,250,000 c Ineos Group Holdings PLC, 144A, 8.50%, 2/15/16 ....................... United Kingdom 28,000,000 25,900,000 JSG Funding PLC, senior sub. note, 7.75%, 4/01/15 .................... Ireland 11,000,000 10,670,000 Lyondell Chemical Co., senior note, 8.00%, 9/15/14 ....................................... United States 15,000,000 16,387,500 senior note, 6.875%, 6/15/17 ...................................... United States 8,400,000 9,135,000 senior secured note, 10.50%, 6/01/13 .............................. United States 17,400,000 18,835,500 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 30,000,000 30,825,000 NewPage Corp., senior secured note, 10.00%, 5/01/12 .................. United States 20,000,000 20,800,000 Owens-Brockway Glass Container Inc., senior note, 6.75%, 12/01/14 .... United States 6,700,000 6,499,000 Owens-Illinois Inc., senior note, 7.80%, 5/15/18 ..................... United States 22,000,000 21,230,000 --------------- 245,668,250 --------------- PRODUCER MANUFACTURING 3.5% Commercial Vehicle Group Inc., senior note, 8.00%, 7/01/13 ........... United States 15,800,000 14,812,500 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 23,490,000 RBS Global & Rexnord Corp., senior note, 9.50%, 8/01/14 ....................................... United States 18,000,000 18,270,000 senior sub. note, 11.75%, 8/01/16 ................................. United States 9,100,000 9,464,000 c TRW Automotive Inc., senior note, 144A, 7.00%, 3/15/14 .................................................... United States 8,800,000 8,228,000 7.25%, 3/15/17 .................................................... United States 20,000,000 18,300,000 --------------- 92,564,500 --------------- REAL ESTATE INVESTMENT TRUSTS 1.5% Host Marriott LP, senior note, K, 7.125%, 11/01/13 ............................................... United States 20,000,000 20,000,000 M, 7.00%, 8/15/12 ................................................. United States 7,100,000 6,904,750 O, 6.375%, 3/15/15 ................................................ United States 4,100,000 3,997,500 Q, 6.75%, 6/01/16 ................................................. United States 9,500,000 9,286,250 --------------- 40,188,500 --------------- RETAIL TRADE 2.0% c Dollar General Corp., senior note, 144A, 10.625%, 7/15/15 ............ United States 28,000,000 25,340,000 c Michaels Stores Inc., senior note, 144A, 10.00%, 11/01/14 ............ United States 28,000,000 28,210,000 --------------- 53,550,000 ---------------
Quarterly Statement of Investments | 7 Franklin High Income Trust STATEMENT OF INVESTMENTS, AUGUST 31, 2007 (UNAUDITED) (CONTINUED)
----------------------------------------------------------------------------------------------------------------------------------- FRANKLIN HIGH INCOME FUND COUNTRY PRINCIPAL AMOUNT a VALUE ----------------------------------------------------------------------------------------------------------------------------------- LONG TERM INVESTMENTS (CONTINUED) CORPORATE BONDS (CONTINUED) TECHNOLOGY SERVICES 1.4% 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 11,516,250 senior sub. note, 10.25%, 8/15/15 ................................. United States 24,175,000 25,021,125 --------------- 36,539,250 --------------- TRANSPORTATION 0.6% Great Lakes Dredge & Dock Co., senior sub. note, 7.75%, 12/15/13 ..... United States 17,100,000 16,373,250 --------------- UTILITIES 6.2% Aquila Inc., senior note, 14.875%, 7/01/12 ........................... United States 23,000,000 28,922,500 Dynegy Holdings Inc., senior note, 8.375%, 5/01/16 ................... United States 28,000,000 27,650,000 c Edison Mission Energy, senior note, 144A, 7.00%, 5/15/17 ............. United States 28,000,000 26,600,000 ESI Tractebel Acquisition Corp., secured note, 7.99%, 12/30/11 ....... United States 5,792,000 5,982,748 c Intergen NV, senior secured note, 144A, 9.00%, 6/30/17 ............... Netherlands 15,000,000 15,300,000 Mirant North America LLC, senior note, 7.375%, 12/31/13 .............. United States 21,700,000 21,700,000 NRG Energy Inc., senior note, 7.25%, 2/01/14 .................................................... United States 8,500,000 8,436,250 7.375%, 2/01/16 ................................................... United States 20,000,000 19,800,000 7.375%, 1/15/17 ................................................... United States 10,000,000 9,850,000 --------------- 164,241,498 --------------- TOTAL CORPORATE BONDS (COST $2,686,508,839) .......................... 2,540,647,892 --------------- ------------------ SHARES ------------------ COMMON STOCKS 0.1% COMMUNICATIONS 0.1% Sprint Nextel Corp. .................................................. United States 163,094 3,085,739 --------------- PRODUCER MANUFACTURING 0.0% f e,g,h Cambridge Industries Liquidating Trust Interest ...................... United States 4,853,892 5,339 e,g,h Goss Holdings Inc., B ................................................ United States 211,174 -- g,i Harvard Industries Inc. .............................................. United States 793,966 4,764 e,g,h,i VS Holdings Inc. ..................................................... United States 1,685,375 -- --------------- 10,103 --------------- TOTAL COMMON STOCKS (COST $29,553,602) ............................... 3,095,842 --------------- CONVERTIBLE PREFERRED STOCK (COST $26,500,000) 1.0% UTILITIES 1.0% CMS Energy Trust I, 7.75%, cvt. pfd .................................. United States 530,000 26,574,730 --------------- TOTAL LONG TERM INVESTMENTS (COST $2,742,562,441) .................... 2,570,318,464 ---------------
8 | Quarterly Statement of Investments Franklin High Income Trust STATEMENT OF INVESTMENTS, AUGUST 31, 2007 (UNAUDITED) (CONTINUED)
----------------------------------------------------------------------------------------------------------------------------------- FRANKLIN HIGH INCOME FUND COUNTRY SHARES VALUE ----------------------------------------------------------------------------------------------------------------------------------- SHORT TERM INVESTMENT (COST $35,940,758) 1.4% MONEY MARKET FUND 1.4% j Franklin Institutional Fiduciary Trust Money Market Portfolio, 4.98% ............................................................... United States 35,940,758 $ 35,940,758 --------------- TOTAL INVESTMENTS (COST $2,778,503,199) 98.2% ........................ 2,606,259,222 OTHER ASSETS, LESS LIABILITIES 1.8% .................................. 48,277,441 --------------- NET ASSETS 100.0% .................................................... $2,654,536,663 ===============
SELECTED PORTFOLIO ABBREVIATIONS FRN - Floating Rate Note PIK - Payment-In-Kind a The principal amount is stated in U.S. dollars unless otherwise indicated. b The coupon rate shown represents the rate at period end. c 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 August 31, 2007, the aggregate value of these securities was $452,945,575, representing 17.06% of net assets. d Defaulted security. e Security has been deemed illiquid because it may not be able to be sold within seven days. At August 31, 2007, the aggregate value of these securities was $1,630,389, representing 0.06% of net assets. f Rounds to less than 0.1% of net assets. g Non-income producing for the twelve months ended August 31, 2007. h See Note 4 regarding restricted securities. i See Note 5 regarding holdings of 5% voting securities. j 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). 2. SECURITY VALUATION Securities listed on a securities exchange or on the NASDAQ National Market System are valued at the last quoted sale price or the official closing price of the day, respectively. Over-the-counter securities and listed securities for which there is no reported sale are valued within the range of the most recent quoted bid and ask prices. Securities that trade in multiple markets or on multiple exchanges are valued according to the broadest and most representative market. Investments in open-end mutual funds are valued at the closing net asset value. Corporate debt securities generally trade in the over-the-counter market rather than on a securities exchange. The Trust may utilize independent pricing services, quotations from bond dealers, and information with respect to bond and note transactions, to assist in determining a current market value for each security. The Trust's pricing services may use valuation models or matrix pricing which considers information with respect to comparable bond and note transactions, quotations from bond dealers, or by reference to other securities that are considered comparable in such characteristics as rating, interest rate and maturity date, option adjusted spread models, prepayment projections, interest rate spreads and yield curves, to determine current value. Foreign securities are valued as of the close of trading on the foreign stock exchange on which the security is primarily traded, or the NYSE, whichever is earlier. If no sale is reported at that time, the foreign security will be valued within the range of the most recent quoted bid and ask prices. The value is then converted into its U.S. dollar equivalent at the foreign exchange rate in effect at the close of the NYSE on the day that the value of the foreign security is determined. The Trust has procedures to determine the fair value of individual securities and other assets for which market prices are not readily available or which may not be reliably priced. Methods for valuing these securities may include: fundamental analysis, matrix pricing, discounts from market prices of similar securities, or discounts applied due to the nature and duration of restrictions on the disposition of the securities. Due to the inherent uncertainty of valuations of such securities, the fair values may differ significantly from the values that would have been used had a ready market for such investments existed. Occasionally, events occur between the time at which trading in a security is completed and the close of the NYSE that might call into question the availability (including the reliability) of the value of a portfolio security held by the Fund. 10 | Quarterly Statement of Investments Franklin High Income Trust NOTES TO STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED) FRANKLIN HIGH INCOME FUND 2. SECURITY VALUATION (CONTINUED) The investment manager monitors price movements following the close of trading in foreign stock markets through a series of country specific market proxies (such as baskets of American Depository Receipts, futures contracts and exchange traded funds). These price movements are measured against established trigger thresholds for each specific market proxy to assist in determining if an event has occurred. If such an event occurs, the securities may be valued using fair value procedures, which may include the use of independent pricing services. All security valuation procedures are approved by the Trust's Board of Trustees. 3. INCOME TAXES At August 31, 2007, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows: Costs of investments .................................. $ 2,780,679,761 ================ Unrealized appreciation ............................... $ 44,634,097 Unrealized depreciation ............................... (219,054,636) ---------------- Net unrealized appreciation (depreciation) ............ $ (174,420,539) ================ 4. RESTRICTED SECURITIES At August 31, 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 August 31, 2007. b Rounds to less than 0.01% of net assets. Quarterly Statement of Investments | 11 Franklin High Income Trust NOTES TO STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED) FRANKLIN HIGH INCOME FUND 5. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES Investments in "affiliated companies" for the Fund for the three months ended August 31, 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 Industires Inc. .................. 793,966 -- -- 793,966 $ 4,764 $ -- $ -- VS Holdings Inc. ......................... 1,685,375 -- -- 1,685,375 -- -- -- ---------------------------------- TOTAL AFFILIATED SECURITIES (0.00% a of Net Assets)........................................... $ 4,764 $ -- $ -- ==================================
a Rounds to less than 0.01% of net assets. 6. NEW ACCOUNTING PRONOUNCEMENT In September 2006, the Financial Accounting Standard Board (FASB) issued FASB Statement No. 157, "Fair Value Measurement" ("SFAS 157"), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. SFAS 157 is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Trust believes the adoption of SFAS 157 will have no material impact on its financial statements. For information regarding the Fund's policy regarding other significant accounting policies, please refer to the Fund's most recent semiannual or annual shareholder report. 12 | Quarterly Statement of Investments 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, 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 October 26, 2007 By /S/GALEN G. VETTER ------------------ Galen G. Vetter Chief Financial Officer Date October 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. 10/26/07 /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. 10/26/07 /s/ GALEN G. VETTER Galen G. Vetter Chief Financial Officer