N-Q 1 nq.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: 2/29/08 ------- Item 1. Schedule of Investments. Franklin High Income Trust QUARTERLY STATEMENT OF INVESTMENTS FEBRUARY 29, 2008 -------------------------------------------------------------------------------- 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 29, 2008 (UNAUDITED)
------------------------------------------------------------------------------------------------------------------------------------ FRANKLIN HIGH INCOME FUND COUNTRY PRINCIPAL AMOUNT a VALUE ------------------------------------------------------------------------------------------------------------------------------------ LONG TERM INVESTMENTS 96.0% b SENIOR FLOATING RATE INTERESTS 0.9% CONSUMER SERVICES 0.3% c OSI Restaurant Partners LLC (Outback), Pre-Funded Revolving Credit, 4.878%, 6/14/13 ......................... United States $ 735,294 $ 601,890 Term Loan B, 5.438%, 6/14/14 ......................................... United States 9,264,706 7,583,820 --------------- 8,185,710 --------------- UTILITIES 0.6% c Dynegy Holdings Inc., Term L/C Facility, 4.761%, 4/02/13 ................................... United States 13,861,350 12,509,868 Term Loan B, 4.683%, 4/02/13 ......................................... United States 1,138,650 1,027,632 --------------- 13,537,500 --------------- TOTAL SENIOR FLOATING RATE INTERESTS (COST $21,150,000) ................. 21,723,210 --------------- CORPORATE BONDS 93.0% AUTOMOBILES & COMPONENTS 3.9% d Allison Transmission Inc., senior note, 144A, 11.00%, 11/01/15 .......... United States 6,900,000 5,934,000 Ford Motor Credit Co. LLC, senior note, 5.80%, 1/12/09 ....................................................... United States 40,000,000 38,672,120 9.875%, 8/10/11 ...................................................... United States 20,000,000 18,526,460 General Motors Corp., senior deb., 7.70%, 4/15/16 ....................................................... United States 5,000,000 3,987,500 8.25%, 7/15/23 ....................................................... United States 5,000,000 3,806,250 d TRW Automotive Inc., senior note, 144A, 7.00%, 3/15/14 ....................................................... United States 8,800,000 8,162,000 7.25%, 3/15/17 ....................................................... United States 20,000,000 18,300,000 --------------- 97,388,330 --------------- CAPITAL GOODS 4.6% Commercial Vehicle Group Inc., senior note, 8.00%, 7/01/13 .............. United States 14,250,000 11,685,000 Great Lakes Dredge & Dock Co., senior sub. note, 7.75%, 12/15/13 ........ United States 10,000,000 9,300,000 L-3 Communications Corp., senior sub. note, 6.125%, 1/15/14 ............. United States 15,000,000 14,887,500 Nortek Inc., senior sub. note, 8.50%, 9/01/14 ........................... United States 27,000,000 21,060,000 RBS Global & Rexnord Corp., senior note, 9.50%, 8/01/14 .......................................... United States 18,000,000 16,290,000 senior sub. note, 11.75%, 8/01/16 .................................... United States 9,100,000 7,780,500 RSC Equipment Rental Inc., senior note, 9.50%, 12/01/14 ................. United States 23,300,000 19,164,250 United Rentals North America Inc., senior sub. note, 7.75%, 11/15/13 .... United States 15,150,000 12,347,250 --------------- 112,514,500 --------------- COMMERCIAL SERVICES & SUPPLIES 3.1% Allied Waste North America Inc., senior note, 7.875%, 4/15/13 ......................................... United States 21,600,000 22,167,000 senior secured note, 6.875%, 6/01/17 ................................. United States 4,000,000 3,890,000 ARAMARK Corp., senior note, 8.50%, 2/01/15 ....................................................... United States 29,000,000 28,710,000 b FRN, 6.739%, 2/01/15 ................................................. United States 4,050,000 3,564,000 e,f Goss Graphic Systems Inc., senior sub. note, 12.25%, 11/19/05 ........... United States 9,053,899 --
Quarterly Statement of Investments | 3 Franklin High Income Trust STATEMENT OF INVESTMENTS, FEBRUARY 29, 2008 (UNAUDITED) (CONTINUED)
------------------------------------------------------------------------------------------------------------------------------------ FRANKLIN HIGH INCOME FUND COUNTRY PRINCIPAL AMOUNT a VALUE ------------------------------------------------------------------------------------------------------------------------------------ LONG TERM INVESTMENTS (CONTINUED) CORPORATE BONDS (CONTINUED) COMMERCIAL SERVICES & SUPPLIES (CONTINUED) JohnsonDiversey Holdings Inc., senior disc. note, 10.67%, 5/15/13 ....... United States $ 20,000,000 $ 19,200,000 e,f Safety Kleen Services, senior sub. note, 9.25%, 6/01/08 ................. United States 10,000,000 50,000 --------------- 77,581,000 --------------- CONSUMER DURABLES & APPAREL 2.8% Jarden Corp., senior sub. note, 7.50%, 5/01/17 .......................... United States 26,000,000 22,912,500 Jostens IH Corp., senior sub. note, 7.625%, 10/01/12 .................... United States 20,000,000 19,400,000 KB Home, senior note, 6.25%, 6/15/15 ....................................................... United States 20,000,000 18,025,000 7.25%, 6/15/18 ....................................................... United States 10,000,000 9,325,000 --------------- 69,662,500 --------------- CONSUMER SERVICES 6.2% Boyd Gaming Corp., senior sub. note, 6.75%, 4/15/14 ..................... United States 10,000,000 8,300,000 d Fontainebleau Las Vegas, 144A, 10.25%, 6/15/15 .......................... United States 15,300,000 11,092,500 MGM MIRAGE, senior note, 6.625%, 7/15/15 ...................................................... United States 33,000,000 29,658,750 6.875%, 4/01/16 ...................................................... United States 10,000,000 9,050,000 d Outback Steakhouse Inc., senior note, 144A, 10.00%, 6/15/15 ............. United States 10,000,000 6,150,000 Pinnacle Entertainment Inc., senior sub. note, 8.25%, 3/15/12 ....................................................... United States 5,000,000 4,775,000 8.75%, 10/01/13 ...................................................... United States 14,100,000 13,747,500 Royal Caribbean Cruises Ltd., senior deb., 7.25%, 3/15/18 .......................................... United States 17,000,000 15,690,711 senior note, 8.00%, 5/15/10 .......................................... United States 4,200,000 4,435,460 senior note, 6.875%, 12/01/13 ........................................ United States 13,800,000 13,228,887 Station Casinos Inc., senior note, 6.00%, 4/01/12 .......................................... United States 9,300,000 7,905,000 senior sub. note, 6.50%, 2/01/14 ..................................... United States 7,000,000 4,707,500 senior sub. note, 6.875%, 3/01/16 .................................... United States 15,000,000 9,525,000 Universal City Development, senior note, 11.75%, 4/01/10 ................ United States 15,000,000 15,506,250 --------------- 153,772,558 --------------- DIVERSIFIED FINANCIALS 5.0% CIT Group Inc., senior note, 7.625%, 11/30/12 ........................... United States 11,650,000 11,742,862 Citigroup Inc., pfd., junior sub. bond, 8.30%, 12/21/77 ................. United States 15,000,000 15,271,260 GMAC LLC, 6.875%, 9/15/11 ............................................... United States 60,000,000 48,991,680 Lehman Brothers Holdings Inc., senior note, 6.20%, 9/26/14 ....................................................... United States 17,000,000 17,187,765 7.00%, 9/27/27 ....................................................... United States 8,000,000 8,075,192 Merrill Lynch & Co. Inc., senior note, 6.40%, 8/28/17 ................... United States 20,000,000 20,498,740 --------------- 121,767,499 --------------- ENERGY 8.7% Atlas Pipeline Partners LP, senior note, 8.125%, 12/15/15 ............... United States 20,000,000 19,800,000 Chesapeake Energy Corp., senior note, 6.625%, 1/15/16 ...................................................... United States 10,000,000 9,787,500 6.25%, 1/15/18 ....................................................... United States 27,600,000 26,496,000 6.875%, 11/15/20 ..................................................... United States 5,000,000 4,837,500
4 | Quarterly Statement of Investments Franklin High Income Trust STATEMENT OF INVESTMENTS, FEBRUARY 29, 2008 (UNAUDITED) (CONTINUED)
------------------------------------------------------------------------------------------------------------------------------------ FRANKLIN HIGH INCOME FUND COUNTRY PRINCIPAL AMOUNT a VALUE ------------------------------------------------------------------------------------------------------------------------------------ LONG TERM INVESTMENTS (CONTINUED) CORPORATE BONDS (CONTINUED) ENERGY (CONTINUED) El Paso Corp., senior note, 6.875%, 6/15/14 ............................. United States $ 25,000,000 $ 25,688,925 Mariner Energy Inc., senior note, 7.50%, 4/15/13 ........................ United States 27,000,000 26,122,500 Peabody Energy Corp., senior note, 7.375%, 11/01/16 ..................................................... United States 6,900,000 7,176,000 B, 6.875%, 3/15/13 ................................................... United States 15,900,000 16,277,625 d Petroplus Finance Ltd., senior note, 144A, 6.75%, 5/01/14 ....................................................... Switzerland 20,000,000 18,450,000 7.00%, 5/01/17 ....................................................... Switzerland 6,400,000 5,776,000 Pride International Inc., senior note, 7.35%, 7/15/14 ................... United States 10,000,000 10,450,000 Tesoro Corp., senior note, 6.50%, 6/01/17 ............................... United States 15,000,000 14,025,000 The Williams Cos. Inc., 8.75%, 3/15/32 ....................................................... United States 13,000,000 15,372,500 senior note, 7.875%, 9/01/21 ......................................... United States 13,100,000 14,344,500 --------------- 214,604,050 --------------- FOOD, BEVERAGE & TOBACCO 2.9% Dean Foods Inc., senior note, 7.00%, 6/01/16 ............................ United States 13,750,000 12,100,000 Dole Foods Co., senior note, 7.25%, 6/15/10 ............................. United States 1,325,000 1,093,125 Reynolds American Inc., senior secured note, 7.625%, 6/01/16 ............ United States 30,000,000 31,919,520 Smithfield Foods Inc., senior note, 7.00%, 8/01/11 ....................................................... United States 18,900,000 18,522,000 7.75%, 5/15/13 ....................................................... United States 7,500,000 7,406,250 --------------- 71,040,895 --------------- HEALTH CARE EQUIPMENT & SERVICES 6.9% DaVita Inc., senior sub. note, 7.25%, 3/15/15 ........................... United States 30,000,000 29,850,000 FMC Finance III SA, senior note, 6.875%, 7/15/17 ........................ Germany 14,700,000 14,810,250 HCA Inc., senior note, 6.50%, 2/15/16 .......................................... United States 6,300,000 5,355,000 senior secured note, 9.125%, 11/15/14 ................................ United States 32,000,000 32,720,000 Tenet Healthcare Corp., senior note, 7.375%, 2/01/13 ...................................................... United States 10,000,000 8,725,000 9.875%, 7/01/14 ...................................................... United States 20,000,000 18,775,000 b,g U.S. Oncology Holdings Inc., senior note, FRN, PIK, 10.759%, 3/15/12 .............................................................. United States 25,000,000 19,375,000 United Surgical Partners International Inc., senior sub. note, 8.875%, 5/01/17 ...................................................... United States 8,500,000 8,032,500 g PIK, 9.25%, 5/01/17 .................................................. United States 9,000,000 8,325,000 Vanguard Health Holding Co. II LLC, senior sub. note, 9.00%, 10/01/14 ............................................................. United States 25,000,000 24,000,000 --------------- 169,967,750 --------------- MATERIALS 10.0% Buckeye Technologies Inc., senior note, 8.50%, 10/01/13 ................. United States 10,000,000 10,200,000 Crown Americas Inc., senior note, 7.75%, 11/15/15 ....................... United States 28,000,000 28,770,000 Freeport-McMoRan Copper & Gold Inc., senior note, 8.25%, 4/01/15 ....................................................... United States 6,700,000 7,060,125 8.375%, 4/01/17 ...................................................... United States 17,400,000 18,487,500 Huntsman International LLC, senior sub. note, 7.875%, 11/15/14 .......... United States 25,000,000 26,000,000
Quarterly Statement of Investments | 5 Franklin High Income Trust STATEMENT OF INVESTMENTS, FEBRUARY 29, 2008 (UNAUDITED) (CONTINUED)
----------------------------------------------------------------------------------------------------------------------------------- FRANKLIN HIGH INCOME FUND COUNTRY PRINCIPAL AMOUNT a VALUE ----------------------------------------------------------------------------------------------------------------------------------- LONG TERM INVESTMENTS (CONTINUED) CORPORATE BONDS (CONTINUED) MATERIALS (CONTINUED) d Ineos Group Holdings PLC, 144A, 8.50%, 2/15/16 ......................... United Kingdom $ 28,000,000 $ 21,140,000 Ispat Inland ULC, senior secured note, 9.75%, 4/01/14 .................. United States 5,000,000 5,432,135 JSG Funding PLC, senior sub. note, 7.75%, 4/01/15 ...................... Ireland 20,000,000 18,100,000 Nalco Co., senior sub. note, 8.875%, 11/15/13 .......................... United States 30,000,000 30,750,000 NewPage Corp., senior secured note, d 144A, 10.00%, 5/01/12 ............................................... United States 5,000,000 5,037,500 10.00%, 5/01/12 ..................................................... United States 20,000,000 20,150,000 Novelis Inc., senior note, 7.25%, 2/15/15 .............................. Canada 30,000,000 27,150,000 Owens-Brockway Glass Container Inc., senior note, 6.75%, 12/01/14 ...... United States 5,000,000 5,025,000 Owens-Illinois Inc., senior note, 7.80%, 5/15/18 ....................... United States 22,000,000 22,330,000 -------------- 245,632,260 -------------- MEDIA 11.8% Cablevision Systems Corp., senior note, B, 8.00%, 4/15/12 .............. United States 11,100,000 10,739,250 e,f 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 27,405,000 CCH I Holdings LLC, senior note, 13.50%, 1/15/14 ....................... United States 15,500,000 10,152,500 CCH II LLC, senior note, 10.25%, 9/15/10 ............................... United States 33,800,000 31,096,000 CSC Holdings Inc., senior deb., 7.625%, 7/15/18 ........................................ United States 8,000,000 7,360,000 senior note, 6.75%, 4/15/12 ......................................... United States 7,750,000 7,517,500 Dex Media Inc., B, 8.00%, 11/15/13 .................................................. United States 7,500,000 5,362,500 senior disc. note, zero cpn. to 11/15/08, 9.00% thereafter, 11/15/13 ......................................................... United States 12,600,000 9,135,000 DIRECTV Holdings LLC, senior note, 8.375%, 3/15/13 ..................... United States 10,000,000 10,350,000 Dish Network Corp., senior note, 6.375%, 10/01/11 .................................................... United States 10,000,000 9,875,000 7.125%, 2/01/16 ..................................................... United States 7,300,000 7,208,750 Idearc Inc., senior note, 8.00%, 11/15/16 .............................. United States 28,000,000 16,660,000 Lamar Media Corp., senior sub. note, 6.625%, 8/15/15 ................... United States 27,800,000 25,715,000 Liberty Media Corp., senior note, 5.70%, 5/15/13 ....................... United States 22,000,000 19,782,026 LIN Television Corp., senior sub. note, 6.50%, 5/15/13 ................. United States 15,000,000 13,650,000 Quebecor Media Inc., d 144A, 7.75%, 3/15/16 ................................................ Canada 2,500,000 2,306,250 senior note, 7.75%, 3/15/16 ......................................... Canada 25,000,000 23,062,500 R.H. Donnelley Corp., senior note, 8.875%, 1/15/16 ..................................................... United States 20,000,000 12,000,000 d 144A, 8.875%, 10/15/17 .............................................. United States 2,500,000 1,475,000 Radio One Inc., senior sub. note, B, 8.875%, 7/01/11 ................... United States 10,000,000 7,975,000 d Rainbow National Services LLC, senior sub. deb., 144A, 10.375%, 9/01/14 .............................................................. United States 10,000,000 10,700,000 d,g Univision Communications Inc., senior note, 144A, PIK, 9.75%, 3/15/15 .............................................................. United States 29,000,000 20,155,000 -------------- 289,686,076 --------------
6 | Quarterly Statement of Investments Franklin High Income Trust STATEMENT OF INVESTMENTS, FEBRUARY 29, 2008 (UNAUDITED) (CONTINUED)
----------------------------------------------------------------------------------------------------------------------------------- FRANKLIN HIGH INCOME FUND COUNTRY PRINCIPAL AMOUNT a VALUE ----------------------------------------------------------------------------------------------------------------------------------- LONG TERM INVESTMENTS (CONTINUED) CORPORATE BONDS (CONTINUED) REAL ESTATE 1.5% Host Marriott LP, senior note, K, 7.125%, 11/01/13 .............................................. United States $ 20,000,000 $ 19,800,000 M, 7.00%, 8/15/12 ................................................ United States 7,100,000 6,958,000 Q, 6.75%, 6/01/16 ................................................ United States 9,500,000 9,048,750 -------------- 35,806,750 -------------- RETAILING 2.1% d Dollar General Corp., senior note, 144A, 10.625%, 7/15/15 .............. United States 28,000,000 26,880,000 Michaels Stores Inc., senior note, 10.00%, 11/01/14 .................... United States 28,000,000 24,605,000 -------------- 51,485,000 -------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT 0.8% Freescale Semiconductor Inc., senior note, 8.875%, 12/15/14 ............ United States 25,000,000 20,500,000 -------------- SOFTWARE & SERVICES 3.4% d First Data Corp., senior note, 144A, 9.875%, 9/24/15 ................... United States 23,200,000 20,155,000 Iron Mountain Inc., senior sub. note, 8.75%, 7/15/18 ................... United States 26,100,000 27,470,250 e,f 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 11,238,750 senior sub. note, 10.25%, 8/15/15 .................................. United States 24,175,000 24,175,000 -------------- 83,040,875 -------------- TECHNOLOGY HARDWARE & EQUIPMENT 1.6% Flextronics International Ltd., senior sub. note, 6.50%, 5/15/13 ....... Singapore 10,000,000 9,625,000 Sanmina-SCI Corp., b,d senior note, 144A, FRN, 7.741%, 6/15/14 ............................ United States 6,200,000 5,735,000 senior sub. note, 6.75%, 3/01/13 ................................... United States 14,600,000 12,775,000 senior sub. note, 8.125%, 3/01/16 .................................. United States 13,700,000 12,261,500 -------------- 40,396,500 -------------- TELECOMMUNICATION SERVICES 9.4% d American Tower Corp., senior note, 144A, 7.00%, 10/15/17 ............... United States 10,000,000 10,025,000 d Digicel Group Ltd., senior note, 144A, 8.875%, 1/15/15 ................. Jamaica 29,000,000 25,447,500 Inmarsat Finance II PLC, senior note, zero cpn. to 11/15/08, 10.375% thereafter, 11/15/12 ........................................ United Kingdom 30,000,000 29,175,000 h Intelsat Intermediate, senior note, zero cpn. to 2/01/10, 9.25% thereafter, 2/01/15 ........................................... Bermuda 5,000,000 4,212,500 h Intelsat Subsidiary Holding Co. Ltd., senior note, 8.25%, 1/15/13 ..................................................... Bermuda 12,200,000 12,261,000 8.625%, 1/15/15 .................................................... Bermuda 17,500,000 17,587,500 f Iridium LLC, senior note, D, 10.875%, 7/15/05 .......................... Bermuda 17,000,000 297,500 MetroPCS Wireless Inc., senior note, 9.25%, 11/01/14 ................... United States 25,000,000 22,125,000 Millicom International Cellular SA, senior note, 10.00%, 12/01/13 ...... Luxembourg 11,700,000 12,548,250 Nextel Communications Inc., senior note, D, 7.375%, 8/01/15 ............ United States 10,000,000 7,755,420 Qwest Communications International Inc., senior note, 7.50%, 2/15/14 ..................................................... United States 20,000,000 19,550,000 B, 7.50%, 2/15/14 .................................................. United States 20,000,000 19,550,000
Quarterly Statement of Investments | 7 Franklin High Income Trust STATEMENT OF INVESTMENTS, FEBRUARY 29, 2008 (UNAUDITED) (CONTINUED)
------------------------------------------------------------------------------------------------------------------------------------ FRANKLIN HIGH INCOME FUND COUNTRY PRINCIPAL AMOUNT a VALUE ------------------------------------------------------------------------------------------------------------------------------------ LONG TERM INVESTMENTS (CONTINUED) CORPORATE BONDS (CONTINUED) TELECOMMUNICATION SERVICES (CONTINUED) e,f RSL Communications PLC, senior note, 10.125%, 3/01/08 ............................................. United Kingdom $ 44,500,000 $ 712,000 12.00%, 11/01/08 ............................................. United Kingdom 6,250,000 125,000 Virgin Media Finance PLC, senior note, 8.75%, 4/15/14 ............. United Kingdom 8,900,000 7,654,000 d Wind Acquisition Finance SA, senior note, 144A, 10.75%, 12/01/15 .. Italy 28,000,000 28,490,000 Windstream Corp., senior note, 8.625%, 8/01/16 .................... United States 15,000,000 15,337,500 --------------- 232,853,170 --------------- UTILITIES 8.3% AES Corp., senior note, 8.00%, 10/15/17 ........................... United States 15,000,000 15,375,000 Aquila Inc., senior note, 14.875%, 7/01/12 ........................ United States 23,000,000 28,405,000 Dynegy Holdings Inc., senior note, 8.375%, 5/01/16 ................ United States 15,000,000 14,737,500 Edison Mission Energy, senior note, 7.00%, 5/15/17 ................ United States 28,000,000 27,650,000 ESI Tractebel Acquisition Corp., secured note, 7.99%, 12/30/11 .... United States 5,406,000 5,548,373 d Intergen NV, senior secured note, 144A, 9.00%, 6/30/17 ............ Netherlands 15,000,000 15,750,000 Mirant North America LLC, senior note, 7.375%, 12/31/13 ........... United States 21,700,000 21,889,875 NRG Energy Inc., senior note, 7.25%, 2/01/14 ............................................... United States 8,500,000 8,319,375 7.375%, 2/01/16 .............................................. United States 20,000,000 19,325,000 7.375%, 1/15/17 .............................................. United States 10,000,000 9,650,000 d Texas Competitive Electric Holdings Co. LLC, senior note, 144A, 10.25%, 11/01/15 ....................................... United States 34,000,000 33,320,000 B, 144A, 10.25%, 11/01/15 .................................... United States 4,500,000 4,410,000 --------------- 204,380,123 --------------- TOTAL CORPORATE BONDS (COST $2,531,625,380) ....................... 2,292,079,836 --------------- ------------ SHARES ------------ COMMON STOCKS 0.0% i AUTOMOBILES & COMPONENTS 0.0% i e,j,k Cambridge Industries Liquidating Trust Interest ................... United States 4,853,892 36,404 k,l Harvard Industries Inc. ........................................... United States 793,966 7,940 --------------- 44,344 --------------- COMMERCIAL SERVICES & SUPPLIES 0.0% e,j,k Goss Holdings Inc., B ............................................. United States 211,174 -- e,j,k,l VS Holdings Inc. .................................................. United States 1,685,375 -- --------------- -- --------------- TELECOMMUNICATION SERVICES 0.0% i Sprint Nextel Corp ................................................ United States 163,094 1,159,598 --------------- TOTAL COMMON STOCKS (COST $29,553,602) ............................ 1,203,942 --------------- CONVERTIBLE PREFERRED STOCK (COST $26,500,000) 1.1% UTILITIES 1.1% CMS Energy Trust I, 7.75%, cvt. pfd ............................... United States 530,000 26,632,500 ---------------
8 | Quarterly Statement of Investments Franklin High Income Trust STATEMENT OF INVESTMENTS, FEBRUARY 29, 2008 (UNAUDITED) (CONTINUED)
------------------------------------------------------------------------------------------------------------------------------------ FRANKLIN HIGH INCOME FUND COUNTRY SHARES VALUE ------------------------------------------------------------------------------------------------------------------------------------ PREFERRED STOCKS 1.0% FINANCE 1.0% FHLMC, 8.375%, pfd ..................................................... United States 551,900 $ 14,211,425 FNMA, 8.25%, pfd ....................................................... United States 393,000 10,060,800 --------------- TOTAL PREFERRED STOCKS (COST $23,622,500) .............................. 24,272,225 --------------- TOTAL LONG TERM INVESTMENTS (COST $2,632,451,482) ...................... 2,365,911,713 --------------- SHORT TERM INVESTMENT (COST $68,947,732) 2.8% MONEY MARKET FUND 2.8% m Franklin Institutional Fiduciary Trust Money Market Portfolio, 3.13% ... United States 68,947,732 68,947,732 --------------- TOTAL INVESTMENTS (COST $2,701,399,214) 98.8% .......................... 2,434,859,445 OTHER ASSETS, LESS LIABILITIES 1.2% .................................... 29,835,965 --------------- NET ASSETS 100.0% ...................................................... $2,464,695,410 ===============
SELECTED PORTFOLIO ABBREVIATIONS FHLMC - Federal Home Loan Mortgage Corp. FNMA - Federal National Mortgage Association FRN - Floating Rate Note L/C - Letter of Credit 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 A portion or all of the security purchased on a delayed delivery basis. d 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 29, 2008, the aggregate value of these securities was $304,890,750, representing 12.37% of net assets. e Security has been deemed illiquid because it may not be able to be sold within seven days. At February 29, 2008, the aggregate value of these securities was $929,079, representing 0.04% of net assets. f Defaulted security. g Income may be received in additional securities and/or cash. h See Note 6 regarding other considerations. i Rounds to less than 0.1% of net assets. j See Note 4 regarding restricted securities. k Non-income producing for the twelve months ended February 29, 2008. l See Note 5 regarding holdings of 5% voting securities. m 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 (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 (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 10 | Quarterly Statement of Investments Franklin High Income Trust NOTES TO STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED) FRANKLIN HIGH INCOME FUND 2. SECURITY VALUATION (CONTINUED) 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. 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 February 29, 2008, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows: Cost of investments ......................................... $ 2,704,088,100 ================ Unrealized appreciation ..................................... $ 32,872,189 Unrealized depreciation ..................................... (302,100,844) ---------------- Net unrealized appreciation (depreciation) .................. $ (269,228,655) ================ 4. RESTRICTED SECURITIES At February 29, 2008, 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 $ -- $ 36,404 211,174 a Goss Holdings Inc. ......................................... 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) .................................... $ 36,404 ===========
a The Fund also invests in unrestricted securities of the issuer, valued at $0 as of February 29, 2008. 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 nine months ended February 29, 2008, 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 $ 7,940 $ -- $ -- VS Holdings Inc. ..................... 1,685,375 -- -- 1,685,375 -- -- -- ------------------------------------ TOTAL AFFILIATED SECURITIES (0.00% a of Net Assets) ................................................................. $ 7,940 $ -- $ -- ====================================
a Rounds to less than 0.01% of net assets. 6. OTHER CONSIDERATIONS Officers, directors or employees of the Fund's Investment Manager may have discussions with issuers and underwriters that could cause the Investment Manager to be in the possession of material non-public information which, pursuant to the Fund's policies and the requirements of applicable securities laws, could prevent the Fund from trading in the securities of such companies for limited or extended periods of time. 7. NEW ACCOUNTING PRONOUNCEMENT In September 2006, the Financial Accounting Standards 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 Galen G. Vetter, Chief Executive Officer - Finance and Administration, and Laura F. Fergerson, Chief Financial Officer and Chief Accounting 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/GALEN G. VETTER ------------------ Galen G. Vetter Chief Executive Officer - Finance and Administration Date April 25, 2008 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/GALEN G. VETTER ------------------ Galen G. Vetter Chief Executive Officer - Finance and Administration Date April 25, 2008 By /S/LAURA F. FERGERSON --------------------- Laura F. Fergerson Chief Financial Officer and Chief Accounting Officer Date April 25, 2008 Exhibit A 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. 4/25/2008 /s/ GALEN G. VETTER Galen G. Vetter Chief Executive Officer - Finance and Administration I, Laura F. Fergerson, 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. 4/25/2008 /s/ LAURA F. FERGERSON Laura F. Fergerson Chief Financial Officer and Chief Accounting Officer