-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CasDNuv31RDLGsq7fdTlKSqQTmGNGDJ6/yAMGq1pNUMqPXaTlH46FBkchFqu6h6H tMr0BfZUSCe+JwOue8tihA== 0000002768-08-000021.txt : 20081030 0000002768-08-000021.hdr.sgml : 20081030 20081030075258 ACCESSION NUMBER: 0000002768-08-000021 CONFORMED SUBMISSION TYPE: N-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20080831 FILED AS OF DATE: 20081030 DATE AS OF CHANGE: 20081030 EFFECTIVENESS DATE: 20081030 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FRANKLIN HIGH INCOME TRUST CENTRAL INDEX KEY: 0000002768 IRS NUMBER: 941693697 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: N-Q SEC ACT: 1940 Act SEC FILE NUMBER: 811-01608 FILM NUMBER: 081149183 BUSINESS ADDRESS: STREET 1: ONE FRANKLIN PARKWAY CITY: SAN MATEO STATE: CA ZIP: 94403-1906 BUSINESS PHONE: 650-312-2000 MAIL ADDRESS: STREET 1: ONE FRANKLIN PARKWAY CITY: SAN MATEO STATE: CA ZIP: 94403-1906 FORMER COMPANY: FORMER CONFORMED NAME: AGE HIGH INCOME FUND INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: AGE FUND INC DATE OF NAME CHANGE: 19810128 0000002768 S000006840 FRANKLIN HIGH INCOME FUND C000018490 CLASS A AGEFX C000018491 CLASS B FHIBX C000018492 CLASS C FRAIX C000018493 ADVISOR CLASS FAHAX C000018494 CLASS R FAHRX N-Q 1 fhitnq1008.txt FR. HIGH INCOME TRUST PE 10/08 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: 8/31/08 ------- Item 1. Schedule of Investments. Franklin High Income Trust QUARTERLY STATEMENT OF INVESTMENTS AUGUST 31, 2008 CONTENTS Franklin High Income Fund ................................................ 3 Notes to Statement of Investments ........................................ 10
(FRANKLIN TEMPLETON INVESTMENTS(R) LOGO) FRANKLIN - Templeton - Mutual Series Quarterly Statement of Investments | 1 This page intentionally left blank. Franklin High Income Trust STATEMENT OF INVESTMENTS, AUGUST 31, 2008 (UNAUDITED)
FRANKLIN HIGH INCOME FUND COUNTRY PRINCIPAL AMOUNT(a) VALUE ------------------------- -------------- ------------------- -------------- (b) SENIOR FLOATING RATE INTERESTS 1.2% CONSUMER SERVICES 0.3% OSI Restaurant Partners LLC (Outback), Pre-Funded Revolving Credit, 2.596%, 6/14/13 ....................... United States $ 600,957 $ 463,238 Term Loan B, 5.125%, 6/14/14 ....................................... United States 7,532,699 5,806,453 -------------- 6,269,691 -------------- MEDIA 0.3% Univision Communications Inc., Initial Term Loan, 4.719% - 5.049%, 9/29/14 ............................................................ United States 10,000,000 8,080,560 -------------- UTILITIES 0.6% Dynegy Holdings Inc., Term L/C Facility, 3.963%, 4/02/13 ................................. United States 13,861,332 12,873,712 Term Loan B, 3.963%, 4/02/13 ....................................... United States 1,132,960 1,052,237 -------------- 13,925,949 -------------- TOTAL SENIOR FLOATING RATE INTERESTS (COST $27,869,648) .............. 28,276,200 -------------- CORPORATE BONDS 90.8% AUTOMOBILES & COMPONENTS 3.3% Ford Motor Credit Co. LLC, senior note, 5.80%, 1/12/09 ..................................................... United States 40,000,000 39,252,400 9.875%, 8/10/11 .................................................... United States 20,000,000 16,427,740 (c) TRW Automotive Inc., senior note, 144A, 7.00%, 3/15/14 ..................................................... United States 8,800,000 7,788,000 7.25%, 3/15/17 ..................................................... United States 20,000,000 17,300,000 -------------- 80,768,140 -------------- BANKS 0.9% Citigroup Capital XXI, pfd., junior sub. bond, 8.30%, 12/21/77 ........ United States 15,000,000 13,574,685 (d) Wells Fargo Capital XIII, 7.70%, Perpetual ............................ United States 10,000,000 9,505,030 -------------- 23,079,715 -------------- CAPITAL GOODS 3.7% (c) Allison Transmission Inc., senior note, 144A, 11.00%, 11/01/15 ........ United States 20,000,000 18,500,000 L-3 Communications Corp., senior sub. note, 6.125%, 1/15/14 ........... United States 15,000,000 14,550,000 (c) Nortek Inc., senior note, 144A, 10.00%, 12/01/13 ...................... United States 10,350,000 9,729,000 RBS Global & Rexnord Corp., senior note, 9.50%, 8/01/14 ........................................ United States 18,000,000 17,640,000 senior sub. note, 11.75%, 8/01/16 .................................. United States 9,100,000 8,895,250 RSC Equipment Rental Inc., senior note, 9.50%, 12/01/14 ............... United States 26,000,000 20,930,000 -------------- 90,244,250 -------------- COMMERCIAL & PROFESSIONAL SERVICES 3.6% Allied Waste North America Inc., senior note, 7.875%, 4/15/13 ....................................... United States 15,000,000 15,412,500 senior secured note, 6.875%, 6/01/17 ............................... United States 4,000,000 3,960,000 ARAMARK Corp., senior note, 8.50%, 2/01/15 ............................ United States 29,000,000 29,362,500 (e,f) Goss Graphic Systems Inc., senior sub. note, 12.25%, 11/19/05 ......... United States 9,053,899 905
Quarterly Statement of Investments | 3 Franklin High Income Trust STATEMENT OF INVESTMENTS, AUGUST 31, 2008 (UNAUDITED) (CONTINUED)
FRANKLIN HIGH INCOME FUND COUNTRY PRINCIPAL AMOUNT(a) VALUE ------------------------- -------------- ------------------- -------------- CORPORATE BONDS (CONTINUED) COMMERCIAL & PROFESSIONAL SERVICES (CONTINUED) Iron Mountain Inc., senior sub. note, 8.75%, 7/15/18 .................. United States $19,450,000 $ 19,984,875 JohnsonDiversey Holdings Inc., senior disc. note, 10.67%, 5/15/13 ..... United States 20,000,000 20,200,000 (e,f) Safety Kleen Services, senior sub. note, 9.25%, 6/01/08 ............... United States 10,000,000 50,000 -------------- 88,970,780 -------------- CONSUMER DURABLES & APPAREL 2.8% Jarden Corp., senior sub. note, 7.50%, 5/01/17 ........................ United States 26,000,000 23,270,000 Jostens IH Corp., senior sub. note, 7.625%, 10/01/12 .................. United States 20,000,000 19,650,000 KB Home, senior note, 6.25%, 6/15/15 ..................................................... United States 20,000,000 16,800,000 7.25%, 6/15/18 ..................................................... United States 10,000,000 8,400,000 -------------- 68,120,000 -------------- CONSUMER SERVICES 6.9% Boyd Gaming Corp., senior sub. note, 6.75%, 4/15/14 ................... United States 10,000,000 7,775,000 (c) Fontainebleau Las Vegas, 144A, 10.25%, 6/15/15 ........................ United States 18,000,000 8,595,000 Host Hotels & Resorts LP, senior note, K, 7.125%, 11/01/13 ................................................ United States 20,000,000 18,950,000 M, 7.00%, 8/15/12 .................................................. United States 7,100,000 6,674,000 Q, 6.75%, 6/01/16 .................................................. United States 9,500,000 8,217,500 MGM MIRAGE, senior note, 6.625%, 7/15/15 .................................................... United States 33,000,000 26,482,500 6.875%, 4/01/16 .................................................... United States 10,000,000 7,975,000 OSI Restaurant Partners Inc., senior note, 10.00%, 6/15/15 ............ United States 10,000,000 5,550,000 Pinnacle Entertainment Inc., senior sub. note, 8.25%, 3/15/12 ..................................................... United States 6,000,000 5,880,000 8.75%, 10/01/13 .................................................... United States 14,100,000 13,994,250 Royal Caribbean Cruises Ltd., senior deb., 7.25%, 3/15/18 ........................................ United States 17,000,000 14,407,500 senior note, 8.00%, 5/15/10 ........................................ United States 4,200,000 4,247,250 senior note, 6.875%, 12/01/13 ...................................... United States 13,800,000 12,230,250 Station Casinos Inc., senior note, 6.00%, 4/01/12 ........................................ United States 9,300,000 6,533,250 senior sub. note, 6.50%, 2/01/14 ................................... United States 7,000,000 3,185,000 senior sub. note, 6.875%, 3/01/16 .................................. United States 15,000,000 6,600,000 Universal City Development, senior note, 11.75%, 4/01/10 .............. United States 10,000,000 10,150,000 -------------- 167,446,500 -------------- DIVERSIFIED FINANCIALS 5.0% CIT Group Inc., senior note, 7.625%, 11/30/12 ......................... United States 20,000,000 16,991,480 GMAC LLC, 6.875%, 9/15/11 ............................................. United States 65,000,000 40,359,345 (g) Lehman Brothers Holdings Inc., senior note, 6.20%, 9/26/14 ..................................................... United States 17,000,000 15,944,232 7.00%, 9/27/27 ..................................................... United States 8,000,000 7,151,224 Merrill Lynch & Co. Inc., 6.875%, 4/25/18 .................................................... United States 5,000,000 4,612,900 senior note, 6.40%, 8/28/17 ........................................ United States 20,000,000 18,172,460
4 | Quarterly Statement of Investments Franklin High Income Trust STATEMENT OF INVESTMENTS, AUGUST 31, 2008 (UNAUDITED) (CONTINUED)
FRANKLIN HIGH INCOME FUND COUNTRY PRINCIPAL AMOUNT(a) VALUE ------------------------- -------------- ------------------- -------------- CORPORATE BONDS (CONTINUED) DIVERSIFIED FINANCIALS (CONTINUED) Morgan Stanley, senior note, 6.625%, 4/01/18 ....................................... United States $ 5,000,000 $ 4,653,610 sub. note, 4.75%, 4/01/14 .......................................... United States 15,000,000 13,185,960 -------------- 121,071,211 -------------- ENERGY 10.4% Atlas Pipeline Partners LP, senior note, 8.125%, 12/15/15 ................................................... United States 14,000,000 13,440,000 (c) 144A, 8.75%, 6/15/18 ............................................... United States 11,000,000 10,780,000 Chesapeake Energy Corp., senior note, 6.625%, 1/15/16 .................................................... United States 10,000,000 9,425,000 6.25%, 1/15/18 ..................................................... United States 27,600,000 25,392,000 6.875%, 11/15/20 ................................................... United States 5,000,000 4,637,500 El Paso Corp., senior note, 6.875%, 6/15/14 ........................... United States 15,000,000 14,934,555 Mariner Energy Inc., senior note, 7.50%, 4/15/13 ...................... United States 27,000,000 25,380,000 (c) MarkWest Energy Partners LP, senior note, 144A, 8.75%, 4/15/18 ........ United States 15,600,000 15,600,000 Peabody Energy Corp., senior note, 7.375%, 11/01/16 ................................................... United States 6,900,000 7,141,500 B, 6.875%, 3/15/13 ................................................. United States 5,000,000 5,087,500 (c) Petroplus Finance Ltd., senior note, 144A, 6.75%, 5/01/14 ..................................................... Switzerland 20,000,000 18,200,000 7.00%, 5/01/17 ..................................................... Switzerland 6,400,000 5,712,000 Plains Exploration & Production Co., senior note, 7.625%, 6/01/18 ..... United States 25,400,000 24,066,500 Pride International Inc., senior note, 7.35%, 7/15/14 ................. United States 10,000,000 10,200,000 (c) SandRidge Energy Inc., senior note, 144A, 8.00%, 6/01/18 .............. United States 11,800,000 11,121,500 Tesoro Corp., senior note, 6.50%, 6/01/17 ............................. United States 30,000,000 25,275,000 The Williams Cos. Inc., senior note, 7.875%, 9/01/21 .................................................... United States 13,100,000 13,783,230 8.75%, 3/15/32 ..................................................... United States 13,000,000 14,663,896 -------------- 254,840,181 -------------- FOOD, BEVERAGE & TOBACCO 2.7% Dean Foods Inc., senior note, 7.00%, 6/01/16 .......................... United States 13,750,000 12,787,500 Dole Food Co. Inc., 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 25,000,000 25,962,275 Smithfield Foods Inc., senior note, 7.00%, 8/01/11 ..................................................... United States 18,900,000 18,049,500 7.75%, 5/15/13 ..................................................... United States 7,500,000 7,012,500 -------------- 65,044,025 -------------- HEALTH CARE EQUIPMENT & SERVICES 6.8% DaVita Inc., senior sub. note, 7.25%, 3/15/15 ......................... United States 25,000,000 24,718,750 FMC Finance III SA, senior note, 6.875%, 7/15/17 ...................... Germany 15,000,000 14,475,000 HCA Inc., senior note, 6.50%, 2/15/16 ........................................ United States 6,300,000 5,276,250 senior secured note, 9.125%, 11/15/14 .............................. United States 35,000,000 36,050,000 Tenet Healthcare Corp., senior note, 7.375%, 2/01/13 .................................................... United States 10,000,000 9,437,500 9.875%, 7/01/14 .................................................... United States 15,000,000 15,187,500
Quarterly Statement of Investments | 5 Franklin High Income Trust STATEMENT OF INVESTMENTS, AUGUST 31, 2008 (UNAUDITED) (CONTINUED)
FRANKLIN HIGH INCOME FUND COUNTRY PRINCIPAL AMOUNT(a) VALUE ------------------------- -------------- ------------------- -------------- CORPORATE BONDS (CONTINUED) HEALTH CARE EQUIPMENT & SERVICES (CONTINUED) (b,h) U.S. Oncology Holdings Inc., senior note, FRN, PIK, 7.949%, 3/15/12 ............................................................ United States $26,341,000 $ 21,204,505 United Surgical Partners International Inc., senior sub. note, 8.875%, 5/01/17 .................................................... United States 8,500,000 7,352,500 (h) PIK, 9.25%, 5/01/17 ................................................ United States 10,000,000 8,700,000 Vanguard Health Holding Co. II LLC, senior sub. note, 9.00%, 10/01/14 ........................................................... United States 25,000,000 24,687,500 -------------- 167,089,505 -------------- MATERIALS 8.5% Crown Americas Inc., senior note, 7.75%, 11/15/15 ..................... United States 25,000,000 25,750,000 Freeport-McMoRan Copper & Gold Inc., senior note, 8.25%, 4/01/15 ..................................................... United States 6,700,000 7,043,911 8.375%, 4/01/17 .................................................... United States 17,400,000 18,472,345 Huntsman International LLC, senior sub. note, 7.875%, 11/15/14 ........ United States 20,000,000 18,700,000 (c) Ineos Group Holdings PLC, senior secured note, 144A, 8.50%, 2/15/16 ............................................................ United Kingdom 28,000,000 18,060,000 Ispat Inland ULC, senior secured note, 9.75%, 4/01/14 ................. United States 5,000,000 5,344,685 Nalco Co., senior sub. note, 8.875%, 11/15/13 ......................... United States 30,000,000 31,350,000 NewPage Corp., senior secured note, 10.00%, 5/01/12 ................... United States 25,000,000 24,375,000 Novelis Inc., senior note, 7.25%, 2/15/15 ............................. Canada 30,000,000 27,975,000 Owens-Brockway Glass Container Inc., senior note, 6.75%, 12/01/14 ..... United States 5,000,000 4,987,500 Owens-Illinois Inc., senior note, 7.80%, 5/15/18 ...................... United States 20,000,000 20,300,000 Smurfit Kappa Funding PLC, senior sub. note, 7.75%, 4/01/15 ........... Ireland 5,700,000 5,044,500 -------------- 207,402,941 -------------- MEDIA 11.5% (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 26,500,000 22,889,375 CCH I Holdings LLC, senior note, 13.50%, 1/15/14 ...................... United States 15,500,000 10,307,500 CCH II LLC, senior note, 10.25%, 9/15/10 .............................. United States 33,800,000 32,617,000 CSC Holdings Inc., senior deb., 7.625%, 7/15/18 ....................................... United States 8,000,000 7,480,000 senior note, 6.75%, 4/15/12 ........................................ United States 7,750,000 7,595,000 Dex Media Inc., B, 8.00%, 11/15/13 ................................................. United States 7,500,000 4,462,500 senior disc. note, zero cpn. to 11/15/08, 9.00% thereafter, 11/15/13 ........................................................... United States 12,600,000 7,371,000 DIRECTV Holdings LLC, senior note, 8.375%, 3/15/13 .................................................... United States 5,000,000 5,200,000 (c) 144A, 7.625%, 5/15/16 .............................................. United States 23,375,000 23,433,437 EchoStar DBS Corp., senior note, 6.375%, 10/01/11 ................................................... United States 10,000,000 9,800,000 7.125%, 2/01/16 .................................................... United States 17,300,000 16,002,500 Idearc Inc., senior note, 8.00%, 11/15/16 ............................. United States 28,000,000 12,810,000 Lamar Media Corp., senior sub. note, 6.625%, 8/15/15 .................................................... United States 17,800,000 15,886,500 B, 6.625%, 8/15/15 ................................................. United States 10,000,000 8,912,500 Liberty Media Corp., senior note, 5.70%, 5/15/13 ...................... United States 22,000,000 19,511,360
6 | Quarterly Statement of Investments Franklin High Income Trust STATEMENT OF INVESTMENTS, AUGUST 31, 2008 (UNAUDITED) (CONTINUED)
FRANKLIN HIGH INCOME FUND COUNTRY PRINCIPAL AMOUNT(a) VALUE ------------------------- -------------- ------------------- -------------- CORPORATE BONDS (CONTINUED) MEDIA (CONTINUED) LIN Television Corp., senior sub. note, 6.50%, 5/15/13 ................ United States $10,000,000 $ 8,250,000 Quebecor Media Inc., senior note, 7.75%, 3/15/16 ...................... Canada 27,500,000 25,987,500 R.H. Donnelley Corp., senior disc. note, A-1, 6.875%, 1/15/13 ............................ United States 900,000 495,000 senior disc. note, A-2, 6.875%, 1/15/13 ............................ United States 1,600,000 888,000 senior note, A-3, 8.875%, 1/15/16 .................................. United States 20,000,000 10,600,000 Radio One Inc., senior sub. note, B, 8.875%, 7/01/11 .................. United States 10,000,000 8,550,000 (c) Rainbow National Services LLC, senior sub. deb., 144A, 10.375%, 9/01/14 ............................................................ United States 10,000,000 10,687,500 (c,h) Univision Communications Inc., senior note, 144A, PIK, 9.75%, 3/15/15 ............................................................ United States 15,000,000 10,800,000 -------------- 280,540,472 -------------- RETAILING 1.9% Dollar General Corp., senior note, 10.625%, 7/15/15 ................... United States 25,000,000 25,187,500 Michaels Stores Inc., senior note, 10.00%, 11/01/14 ................... United States 28,000,000 21,140,000 -------------- 46,327,500 -------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT 0.5% Freescale Semiconductor Inc., senior note, 8.875%, 12/15/14 ........... United States 15,800,000 12,877,000 -------------- SOFTWARE & SERVICES 2.0% (c) First Data Corp., senior note, 144A, 9.875%, 9/24/15 .................. United States 15,000,000 12,956,250 (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 11,322,000 senior sub. note, 10.25%, 8/15/15 .................................. United States 24,175,000 24,477,188 -------------- 48,757,313 -------------- TECHNOLOGY HARDWARE & EQUIPMENT 2.5% Celestica Inc., senior sub. note, 7.875%, 7/01/11 .................................................... Canada 13,400,000 13,500,500 7.625%, 7/01/13 .................................................... Canada 4,550,000 4,390,750 (c) Nortel Networks Ltd., senior note, 144A, 10.75%, 7/15/16 .............. Canada 17,500,000 16,275,000 Sanmina-SCI Corp., (b,c) senior note, 144A, FRN, 5.526%, 6/15/14 ............................ United States 5,000,000 4,650,000 senior sub. note, 6.75%, 3/01/13 ................................... United States 14,600,000 13,249,500 senior sub. note, 8.125%, 3/01/16 .................................. United States 10,000,000 9,075,000 -------------- 61,140,750 -------------- TELECOMMUNICATION SERVICES 9.0% (c) American Tower Corp., senior note, 144A, 7.00%, 10/15/17 .............. United States 10,000,000 10,000,000 (c) Digicel Group Ltd., senior note, 144A, 8.875%, 1/15/15 ................ Jamaica 29,000,000 27,297,700 Inmarsat Finance II PLC, senior note, zero cpn. to 11/15/08, 10.375% thereafter, 11/15/12 ....................................... United Kingdom 25,000,000 25,593,750 Intelsat Bermuda Ltd., senior note, 11.25%, 6/15/16 ................... Bermuda 5,000,000 5,268,750 (c) Intelsat Subsidiary Holding Co. Ltd., senior note, 144A, 8.50%, 1/15/13 ............................................................ Bermuda 25,000,000 24,875,000 (e) Iridium LLC, senior note, D, 10.875%, 7/15/05 ......................... Bermuda 17,000,000 191,250 MetroPCS Wireless Inc., senior note, 9.25%, 11/01/14 .................. United States 25,000,000 24,906,250
Quarterly Statement of Investments | 7 Franklin High Income Trust STATEMENT OF INVESTMENTS, AUGUST 31, 2008 (UNAUDITED) (CONTINUED)
FRANKLIN HIGH INCOME FUND COUNTRY PRINCIPAL AMOUNT(a) VALUE ------------------------- -------------- ------------------- -------------- CORPORATE BONDS (CONTINUED) TELECOMMUNICATION SERVICES (CONTINUED) 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 8,129,990 Qwest Communications International Inc., senior note, 7.50%, 2/15/14 ..................................................... United States 15,000,000 13,725,000 B, 7.50%, 2/15/14 .................................................. United States 20,000,000 18,300,000 (e,f) RSL Communications PLC, senior disc. note, 10.125%, 3/01/08 ................................ United Kingdom 44,500,000 712,000 senior note, 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 8,544,000 (c) Wind Acquisition Finance SA, senior note, 144A, 10.75%, 12/01/15 ...... Italy 28,000,000 28,840,000 Windstream Corp., senior note, 8.625%, 8/01/16 ........................ United States 10,000,000 9,950,000 -------------- 218,860,690 -------------- UTILITIES 8.8% The AES Corp., senior note, 8.00%, 10/15/17 .................................................... United States 20,000,000 19,800,000 (c) 144A, 8.00%, 6/01/20 ............................................... United States 5,000,000 4,812,500 Aquila Inc., senior note, 14.875%, 7/01/12 ............................ United States 16,900,000 19,619,379 Dynegy Holdings Inc., senior note, 8.375%, 5/01/16 .................... United States 15,000,000 14,756,250 Edison Mission Energy, senior note, 7.00%, 5/15/17 .................... United States 28,000,000 26,950,000 ESI Tractebel Acquisition Corp., secured note, 7.99%, 12/30/11 ........ United States 5,020,000 5,132,950 (c) Intergen NV, senior secured note, 144A, 9.00%, 6/30/17 ................ Netherlands 15,000,000 15,375,000 Mirant North America LLC, senior note, 7.375%, 12/31/13 ............... United States 21,700,000 21,645,750 NRG Energy Inc., senior note, 7.25%, 2/01/14 ..................................................... United States 8,500,000 8,404,375 7.375%, 2/01/16 .................................................... United States 20,000,000 19,800,000 7.375%, 1/15/17 .................................................... United States 10,000,000 9,800,000 PNM Resources Inc., senior note, 9.25%, 5/15/15 ....................... United States 8,100,000 8,262,000 (c) Texas Competitive Electric Holdings Co. LLC, senior note, 144A, 10.25%, 11/01/15 ................................................... United States 40,000,000 40,100,000 -------------- 214,458,204 -------------- TOTAL CORPORATE BONDS (COST $2,511,476,401) ........................... 2,217,039,177 --------------
SHARES ------------------- COMMON STOCKS 0.1% AUTOMOBILES & COMPONENTS 0.0%(i) (j,k) Cambridge Industries Liquidating Trust Interest ....................... United States 4,853,892 60,188 (k,l) Harvard Industries Inc. ............................................... United States 793,966 7,940 -------------- 68,128 -------------- COMMERCIAL & PROFESSIONAL SERVICES 0.0% (j,k,l) VS Holdings Inc. ...................................................... United States 1,685,375 -- -------------- TELECOMMUNICATION SERVICES 0.1% Sprint Nextel Corp. ................................................... United States 163,094 1,422,180 -------------- TOTAL COMMON STOCKS (COST $29,131,254) ................................ 1,490,308 --------------
8 | Quarterly Statement of Investments Franklin High Income Trust STATEMENT OF INVESTMENTS, AUGUST 31, 2008 (UNAUDITED) (CONTINUED)
FRANKLIN HIGH INCOME FUND COUNTRY SHARES VALUE ------------------------- -------------- ------------------- -------------- CONVERTIBLE PREFERRED STOCKS (COST $26,500,000) 1.0% UTILITIES 1.0% CMS Energy Trust I, 7.75%, cvt. pfd. .................................. United States 530,000 $ 25,712,632 -------------- PREFERRED STOCKS 1.2% BANKS 0.3% Freddie Mac, 8.375%, pfd. ............................................. United States 505,100 7,096,655 -------------- DIVERSIFIED FINANCIALS 0.9% JPMorgan Chase & Co., 7.90%, pfd., 1, junior sub. note ................ United States 25,000,000 22,778,025 -------------- TOTAL PREFERRED STOCKS (COST $37,706,387) ............................. 29,874,680 -------------- TOTAL INVESTMENTS BEFORE SHORT TERM INVESTMENTS (COST $2,632,683,690) .............................................. 2,302,392,997 -------------- SHORT TERM INVESTMENTS (COST $81,941,931) 3.4% MONEY MARKET FUNDS 3.4% (m) Franklin Institutional Fiduciary Trust Money Market Portfolio, 2.15% .. United States 81,941,931 81,941,931 -------------- TOTAL INVESTMENTS (COST $2,714,625,621) 97.7% ......................... 2,384,334,928 OTHER ASSETS, LESS LIABILITIES 2.3% ................................... 55,891,401 -------------- NET ASSETS 100.0% ..................................................... $2,440,226,329 ==============
SELECTED PORTFOLIO ABBREVIATIONS 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) 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, 2008, the aggregate value of these securities was $371,487,887, representing 15.22% of net assets. (d) Perpetual bond with no stated maturity date. (e) Defaulted security. (f) Security has been deemed illiquid because it may not be able to be sold within seven days. At August 31, 2008, the aggregate value of these securities was $893,580, representing 0.04% of net assets. (g) See Note 6 regarding other considerations. (h) Income may be received in additional securities and/or cash. (i) Rounds to less than 0.1% of net assets. (j) See Note 4 regarding restricted and illiquid securities. (k) Non-income producing for the twelve months ended August 31, 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. See Notes to Statement of Investments. Quarterly 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, (1940 Act) 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 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 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 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 August 31, 2008, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows: Cost of investments ......................... $2,719,248,599 ============== Unrealized appreciation ..................... $ 21,663,242 Unrealized depreciation ..................... (356,576,913) -------------- Net unrealized appreciation (depreciation) .. $(334,913,671) ==============
4. RESTRICTED SECURITIES At August 31, 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 $ -- $60,188 1,685,375 VS Holdings Inc. ................................. 12/06/01 1,685,375 -- ------- TOTAL RESTRICTED SECURITIES (0.00%(a)of Net Assets) .......... $60,188 =======
(a) Rounds to less than 0.01% of net assets. 5. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES Investments in "affiliated companies" for the Fund for the three months ended August 31, 2008, were as shown below.
NUMBER OF NUMBER OF SHARES HELD SHARES HELD VALUE AT AT BEGINNING GROSS GROSS AT END OF END OF INVESTMENT REALIZED CAPITAL NAME OF ISSUER OF YEAR ADDITIONS REDUCTIONS PERIOD 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. Quarterly Statement of Investments | 11 Franklin High Income Trust NOTES TO STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED) FRANKLIN HIGH INCOME FUND 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. FAIR VALUE MEASUREMENTS The Fund adopted Financial Accounting Standards Board (FASB) issued FASB Statement No. 157, "Fair Value Measurement" (SFAS 157), on June 1, 2008. SFAS 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The Fund has determined that the implementation of SFAS 157 did not have a material impact on the Fund's financial statements. SFAS 157 establishes a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Trust's own market assumptions (unobservable inputs). These inputs are used in determining the value of the Fund's investments and are summarized in the following fair value hierarchy: - Level 1 - quoted prices in active markets for identical securities - Level 2 - other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speed, credit risk, etc.) - Level 3 - significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments) The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities. The following is a summary of the inputs used as of August 31, 2008, in valuing the Fund's assets and liabilities carried at fair value:
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL ----------- -------------- -------- -------------- ASSETS: Investments in Securities $90,468,706 $2,292,912,454 $953,768 $2,384,334,928
12 | Quarterly Statement of Investments Franklin High Income Trust NOTES TO STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED) FRANKLIN HIGH INCOME FUND 7. FAIR VALUE MEASUREMENTS (CONTINUED) At August 31, 2008, the reconciliation of assets in which significant unobservable inputs (Level 3) were used in determining fair value, is as follows:
INVESTMENTS IN SECURITIES ------------- Beginning Balance - June 1, 2008 ............................ $ 929,079 Net realized gain (loss) ................................. (422,348) Net change in unrealized appreciation (depreciation) ..... 447,037 Net purchases (sales) .................................... -- Transfers in and/or out of Level 3 ....................... -- --------- Ending Balance .............................................. $ 953,768 ========= Net change in unrealized appreciation (depreciation) attributable to assets still held at end of period ....... $ 24,689 =========
8. NEW ACCOUNTING PRONOUNCEMENT In March 2008, FASB issued FASB Statement No. 161, "Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133" (SFAS 161), which expands disclosures about derivative investments and hedging activities. SFAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. The Fund is currently evaluating the impact, if any, of applying the various provisions of SFAS 161. 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. Quarterly Statement of Investments | 13 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. 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 October 28, 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 October 28, 2008 By /s/LAURA F. FERGERSON ------------------ Laura F. Fergerson Chief Financial Officer Date October 28, 2008 EX-99.CERT 2 fhit-30208nq.txt 302 CERTIFICATION Exhibit 3(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. 10/28/2008 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. 10/28/2008 S\LAURA F. FERGERSON Laura F. Fergerson Chief Financial Officer and Chief Accounting Officer -----END PRIVACY-ENHANCED MESSAGE-----