N-Q 1 fhitnq.txt FHIT N-Q PE 2/28/10 FORM N-Q QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED MANAGEMENT INVESTMENT COMPANY Investment Company Act file number 811-01608 Franklin High Income Trust ------------------------------------------------- (Exact name of registrant as specified in charter) One Franklin Parkway, San Mateo, CA 94403-1906 --------------------------------------------------- (Address of principal executive offices) (Zip code) Craig S. Tyle, One Franklin Parkway, San Mateo, CA 94403-1906 ------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: 650 312-2000 ------------ Date of fiscal year end: 5/31 ---- Date of reporting period: 2/28/10 ------- Item 1. Schedule of Investments. Franklin High Income Trust Franklin High Income Fund STATEMENT OF INVESTMENTS, FEBRUARY 28, 2010 (UNAUDITED)
PRINCIPAL(a) COUNTRY AMOUNT VALUE ---------------- --------------- --------------- (b) SENIOR FLOATING RATE INTERESTS 1.7% CONSUMER SERVICES 0.2% OSI Restaurant Partners LLC (Outback), Pre-Funded Revolving Credit, 0.074% - 2.563%, 6/14/13 United States 600,957 $ 535,174 Term Loan B, 2.563%, 6/14/14 United States 7,042,618 6,271,705 --------------- 6,806,879 --------------- MATERIALS 0.7% Novelis Corp., U.S. Term Loan, 2.23% - 2.26%, 7/07/14 United States 20,638,310 20,019,161 --------------- MEDIA 0.3% Univision Communications Inc., Initial Term Loan, 2.501%, 9/29/14 United States 10,000,000 8,654,690 --------------- UTILITIES 0.5% Dynegy Holdings Inc., Term L/C Facility, 3.98%, 4/02/13 United States 13,861,332 13,586,587 Term Loan B, 3.98%, 4/02/13 United States 1,115,837 1,093,720 --------------- 14,680,307 --------------- TOTAL SENIOR FLOATING RATE INTERESTS (COST $49,256,560) 50,161,037 --------------- CORPORATE BONDS 92.4% AUTOMOBILES & COMPONENTS 3.4% (c) American Axle & Manufacturing Holdings Inc., senior secured note, 144A, 9.25%, 1/15/17 United States 6,350,000 6,604,000 Ford Motor Credit Co. LLC, senior note, 9.875%, 8/10/11 United States 30,000,000 31,473,390 7.50%, 8/01/12 United States 35,000,000 35,158,130 8.125%, 1/15/20 United States 10,000,000 9,981,940 (c) TRW Automotive Inc., senior note, 144A, 7.00%, 3/15/14 United States 5,000,000 4,800,000 7.25%, 3/15/17 United States 17,000,000 16,150,000 --------------- 104,167,460 --------------- BANKS 0.5% (d) Wells Fargo Capital XIII, pfd., 7.70%, Perpetual United States 15,000,000 14,850,000 --------------- CAPITAL GOODS 5.3% (c) Allison Transmission Inc., senior note, 144A, 11.00%, 11/01/15 United States 25,000,000 26,062,500 (c) Altra Holdings Inc., senior secured note, 144A, 8.125%, 12/01/16 United States 5,700,000 5,863,875 Case New Holland Inc., senior note, 7.125%, 3/01/14 United States 20,000,000 20,100,000 (c) 144A, 7.75%, 9/01/13 United States 5,000,000 5,050,000 Greenbrier Cos. Inc., senior note, 8.375%, 5/15/15 United States 7,900,000 6,991,500 L-3 Communications Corp., senior sub. note, 6.125%, 1/15/14 United States 15,000,000 15,168,750 The Manitowoc Co. Inc., senior note, 9.50%, 2/15/18 United States 14,200,000 14,235,500 (c) Oshkosh Corp., senior note, 144A, 8.25%, 3/01/17 United States 3,500,000 3,500,000 8.50%, 3/01/20 United States 3,200,000 3,200,000 RSS Global & Rexnord Corp., senior note, 9.50%, 8/01/14 United States 19,534,000 19,875,845 senior sub. note, 11.75%, 8/01/16 United States 9,100,000 9,509,500 (c) RSC Equipment Rental/RSC Holdings, senior note, 144A, 10.25%, 11/15/19 United States 4,000,000 3,980,000 RSC Equipment Rental Inc., senior note, 9.50%, 12/01/14 United States 26,000,000 25,285,000 --------------- 158,822,470 --------------- COMMERCIAL & PROFESSIONAL SERVICES 1.5% ARAMARK Corp., senior note, 8.50%, 2/01/15 United States 18,507,000 18,784,605 (c) Geo Group Inc., senior note, 144A, 7.75%, 10/15/17 United States 5,500,000 5,568,750 (e,f) Goss Graphic Systems Inc., senior sub. note, 12.25%, 11/19/05 United States 9,053,899 905
Quarterly Statement of Investments See Notes to Statements of Investments Franklin High Income Trust Franklin High Income Fund STATEMENT OF INVESTMENTS, FEBRUARY 28, 2010 (UNAUDITED) (CONTINUED) (c,g) JohnsonDiversey Holdings Inc., senior note, 144A, PIK, 10.50%, 5/15/20 United States 19,600,000 $ 20,482,000 --------------- 44,836,260 --------------- CONSUMER DURABLES & APPAREL 2.3% Jarden Corp., senior sub. note, 7.50%, 5/01/17 United States 26,000,000 26,260,000 Jostens IH Corp., senior sub. note, 7.625%, 10/01/12 United States 25,000,000 25,250,000 KB Home, senior note, 6.25%, 6/15/15 United States 20,000,000 18,975,000 --------------- 70,485,000 --------------- CONSUMER SERVICES 7.9% Boyd Gaming Corp., senior sub. note, 6.75%, 4/15/14 United States 10,000,000 8,562,500 (c,f) Fontainebleau Las Vegas, 144A, 10.25%, 6/15/15 United States 20,000,000 312,500 Harrah's Operating Co, Inc., senior secured note, 11.25%, 6/01/17 United States 40,000,000 41,700,000 Host Hotels & Resorts LP, senior note, K, 7.125%, 11/01/13 United States 15,000,000 15,243,750 Q, 6.75%, 6/01/16 United States 5,000,000 4,950,000 MGM MIRAGE, senior note, 6.625%, 7/15/15 United States 45,000,000 35,775,000 6.875%, 4/01/16 United States 10,000,000 7,850,000 (c) Norwegian Cruise Line Ltd., senior secured note, 144A, 11.75%, 11/15/16 United States 25,000,000 26,625,000 Pinnacle Entertainment Inc., (c) senior note, 144A, 8.625%, 8/01/17 United States 16,800,000 16,044,000 senior sub. note, 8.25%, 3/15/12 United States 3,876,000 3,837,240 senior sub. note, 7.50%, 6/15/15 United States 9,000,000 7,492,500 Royal Caribbean Cruises Ltd., senior deb., 7.25%, 3/15/18 United States 15,000,000 14,137,500 senior note, 6.875%, 12/01/13 United States 5,000,000 5,000,000 (c) Shingle Springs Tribal Gaming, senior note, 144A, 9,375%, 6/15/15 United States 10,280,000 8,224,000 Starwood Hotels & Resorts Worldwide Inc., senior note, 6.75%, 5/15/18 United States 15,000,000 15,000,000 7.15%, 12/01/19 United States 5,000,000 5,062,500 (f) Station Casinos Inc., senior note, 6.00%, 4/01/12 United States 9,300,000 1,395,000 senior note, 7.75%, 8/15/16 United States 9,575,000 1,436,250 senior sub. note, 6.50%, 2/01/14 United States 3,400,000 34,680 senior sub. note, 6.875%, 3/01/16 United States 8,400,000 85,680 (c) Universal City Development, senior note, 144A, 8.875%, 11/15/15 United States 18,000,000 18,225,000 senior sub. note, 144A, 10.875%, 11/15/16 United States 2,750,000 2,860,000 --------------- 239,853,100 --------------- DIVERSIFIED FINANCIALS 2.3% GMAC Inc., senior note, 6.875%, 9/15/11 United States 39,700,000 40,097,000 senior note, 6.875%, 8/28/12 United States 5,000,000 4,975,000 sub. note, 8.00%, 12/31/18 United States 5,250,000 4,908,750 (d) JPMorgan Chase & Co., junior sub. note, 1, 7.90%, Perpetual United States 15,000,000 15,558,000 (f) Lehman Brothers Holdings Inc., senior note, 6.20%, 9/26/14 United States 17,000,000 3,910,000 7.00%, 9/27/27 United States 8,000,000 1,840,000 --------------- 71,288,750 --------------- ENERGY 16.0% (c) Antero Resources Finance, senior note, 144A, 9.375%, 12/01/17 United States 17,500,000 17,937,500 (c) Arch Coal Inc., senior note, 144A, 8.75%, 8/01/16 United States 4,500,000 4,680,000 Atlas Pipeline Partners LP, senior note, 8.125%, 12/15/15 United States 14,000,000 13,195,000 8.75%, 6/15/18 United States 11,000,000 10,340,000 Berry Petroleum Co., senior note, 10.25%, 6/01/14 United States 16,500,000 18,026,250 Chesapeake Energy Corp., senior note, 9.50%, 2/15/15 United States 5,000,000 5,462,500 6.625%, 1/15/16 United States 10,000,000 9,700,000 6.25%, 1/15/18 United States 27,600,000 25,875,000
Franklin High Income Trust Franklin High Income Fund STATEMENT OF INVESTMENTS, FEBRUARY 28, 2010 (UNAUDITED) (CONTINUED) Compagnie Generale de Geophysique-Veritas, senior note, 7.50%, 5/15/15 France 15,000,000 $ 14,775,000 9.50%, 5/15/16 France 5,600,000 5,897,242 7.75%, 5/15/17 France 5,000,000 4,925,000 (c) Crosstex Energy/Crosstex Energy Finance, senior note, 144A, 8.875%, 2/15/18 United States 6,800,000 6,936,000 Denbury Resources Inc., senior sub. note, 8.25%, 2/15/20 United States 9,300,000 9,672,000 EI Paso Corp., senior note, 12.00%, 12/12/13 United States 10,000,000 11,675,000 6.875%, 6/15/14 United States 15,000,000 15,185,880 7.00%, 6/15/17 United States 8,500,000 8,557,061 (b) Enterprise Products Operating LLC, junior sub. note, FRN, 7.034%, 1/15/68 United States 25,000,000 23,722,475 (c) Expro Finance Luxembourg, senior secured note, 144A, 8.50%, 12/15/16 United Kingdom 19,000,000 18,918,718 (c) General Maritime Corp., senior note, 144A, 12.00%, 11/15/17 United States 14,200,000 14,768,000 (c) Holly Corp., senior note, 144A, 9.875%, 6/15/17 United States 9,250,000 9,527,500 Mariner Energy Inc., senior note, 7.50%, 4/15/13 United States 27,000,000 27,135,000 MarkWest Energy Partners LP, senior note, 8.75%, 4/15/18 United States 25,000,000 25,437,500 Peabody Energy Corp., senior note, 7.375%, 11/01/16 United States 6,900,000 7,331,250 B, 6.875%, 3/15/13 United States 15,000,000 15,262,500 Petrohawk Energy Corp., senior note, 10.50%, 8/01/14 United States 21,550,000 23,489,500 (c) Petroplus Finance Ltd., senior note, 144A, 6.75%, 5/01/14 Switzerland 21,700,000 18,445,000 Plains Exploration & Production Co., senior note, 10.00%, 3/01/16 United States 3,000,000 3,277,500 7.625%, 6/01/18 United States 27,000,000 27,202,500 Quicksilver Resources Inc., senior note, 8.25%, 8/01/15 United States 20,000,000 20,300,000 11.75%, 1/01/16 United States 2,600,000 2,964,000 9.125%, 8/15/19 United States 5,000,000 5,225,000 (c) SandRidge Energy Inc., senior note, 144A, 8.00%, 6/01/18 United States 25,000,000 24,062,500 8.75%, 1/15/20 United States 3,300,000 3,250,500 Teekay Corp., senior note, 8.50%, 1/15/20 Marshall Islands 7,000,000 7,140,000 Tesoro Corp., senior note, 6.50%, 6/01/17 United States 25,000,000 22,562,500 --------------- 482,861,376 --------------- FOOD & STAPLES RETAILING 1.1% Rite Aid Corp., senior secured note, 9.75%, 6/12/16 United States 15,150,000 16,248,375 SUPERVALU Inc., senior note, 8.00%, 5/01/16 United States 16,600,000 16,807,500 --------------- 33,055,875 --------------- FOOD, BEVERAGE & TOBACCO 2.0% (c) CEDC Finance Corp. International Inc., senior secured note, 144A, 9.125%, 12/01/16 United States 14,900,000 15,645,000 Dean Foods Inc., senior note, 7.00%, 6/01/16 United States 7,100,000 6,780,500 (c) Dole Food Co. Inc., senior note, 144A, 13.875%, 3/15/14 United States 11,171,000 13,377,273 (c) JBS USA LLC, senior note, 144A, 11.625%, 5/01/14 United States 23,000,000 25,990,000 --------------- 61,792,773 --------------- HEALTH CARE EQUIPMENT & SERVICES 7.0% DaVita Inc., senior sub. note, 7.25%, 3/15/15 United States 25,000,000 25,218,750 FMC Finance III SA, senior note, 6.875%, 7/15/17 Germany 15,000,000 15,450,000 (c) Fresenius US Finance II, senior note, 144A, 9.00%, 7/15/15 Germany 10,000,000 11,100,000 HCA Inc., senior note, 6.50%, 2/15/16 United States 6,300,000 5,906,250 senior secured note, 9.125%, 11/15/14 United States 35,000,000 36,881,250 (c) senior secured note, 144A, 7.875%, 2/15/20 United States 15,000,000 15,712,500 (g) senior secured note, PIK, 9.625%, 11/15/16 United States 11,000,000 11,797,500 Tenet Healthcare Corp., senior note, 7.375%, 2/01/13 United States 9,600,000 9,648,000 (c) senior secured note, 144A, 8.875%, 7/01/19 United States 18,800,000 19,928,000 United Surgical Partners International Inc., senior sub. note, 8.875%, 5/01/17 United States 8,500,000 8,733,750 (g) PIK, 9.25%, 5/01/17 United States 12,575,000 13,015,125
Franklin High Income Trust Franklin High Income Fund STATEMENT OF INVESTMENTS, FEBRUARY 28, 2010 (UNAUDITED) (CONTINUED) (b,g) US Oncology Holdings Inc., senior note, PIK, FRN, 7.178%, 3/15/12 United States 25,012,000 $ 23,636,340 (c) Vanguard Health Holding Co, II LLC, senior bond, 144A, 8,00%, 2/01/18 United States 13,600,000 13,430,000 --------------- 210,457,465 --------------- MATERIALS 8.5% Ball Corp., senior note, 7.125%, 9/01/16 United States 3,400,000 3,544,500 7.375%, 9/01/19 United States 3,400,000 3,544,500 Cellu Tissue Holdings Inc., senior secured note, 11.50%, 6/01/14 United States 12,300,000 13,683,750 Crown Americas Inc., senior note, 7.75%, 11/15/15 United States 10,000,000 10,375,000 Freeport-McMoRan Copper & Gold Inc., senior note, 8.25%, 4/01/15 United States 5,000,000 5,424,385 8.375%, 4/01/17 United States 15,000,000 16,296,870 Huntsman International LLC, (c) senior note, 144A, 5.50%, 6/30/16 United States 1,100,000 973,500 senior sub. note, 7.875%, 11/15/14 United States 25,000,000 24,375,000 (c) Ineos Group Holdings PLC, senior secured note, 144A, 8,50%, 2/15/16 United Kingdom 18,000,000 11,790,000 (c) MacDermid Inc., senior sub. note, 144A, 9,50%, 4/15/17 United States 22,600,000 22,713,000 Nalco Co., senior sub. note, 8.875%, 11/15/13 United States 20,000,000 20,600,000 NewPage Corp., senior secured note, 10.00%, 5/01/12 United States 2,375,000 1,377,500 11.375%, 12/31/14 United States 28,087,000 26,963,520 Novelis Inc., senior note, 7.25%, 2/15/15 Canada 3,700,000 3,450,250 11.50%, 2/15/15 Canada 3,150,000 3,362,625 Owens-Brockway Glass Container Inc., senior note, 6.75%, 12/01/14 United States 5,000,000 5,062,500 Owens-Illinois Inc., senior note, 7.80%, 5/15/18 United States 20,000,000 20,600,000 Solo Cup Co., senior secured note, 10,50%, 11/01/13 United States 5,100,000 5,367,750 senior sub. note, 8,50%, 2/15/14 United States 20,000,000 19,100,000 Teck Resources Ltd., senior secured note, 10.25%, 5/15/16 Canada 5,000,000 5,987,500 10.75%, 5/15/19 Canada 10,200,000 12,597,000 Weyerhaeuser Co., senior note, 7.375%, 10/01/19 United States 17,050,000 18,166,553 --------------- 255,355,703 --------------- MEDIA 11.4% (c) Cablevision Systems Corp., senior note, 144A, 8.625%, 9/15/17 United States 18,000,000 18,630,000 (c) CCH II LLC/CCH II Capital Corp., senior note, 144A, 13.50%, 11/30/16 United States 29,335,118 34,505,433 CCO Holdings LLC, senior note, 8.75%, 11/15/13 United States 5,000,000 5,100,000 (c) Clear Channel Worldwide Holdings Inc., senior note, A, 144A, 9.25%, 12/15/17 United States 3,000,000 3,075,000 B, 144A, 9.25%, 12/15/17 United States 12,000,000 12,390,000 CSC Holdings Inc., senior deb., 7.625%, 7/15/18 United States 8,000,000 8,260,000 senior note, 6.75%, 4/15/12 United States 5,000,000 5,212,500 (c) senior note, 144A, 8.50%, 4/15/14 United States 4,000,000 4,225,000 DIRECTV Holdings LLC, senior note, 7.625%, 5/15/16 United States 10,000,000 10,976,150 EchoStar DBS Corp., senior note, 6.375%, 10/01/11 United States 5,000,000 5,212,500 7.75%, 5/31/15 United States 5,000,000 5,212,500 7.125%, 2/01/16 United States 20,000,000 20,150,000 Lamar Media Corp., senior sub. note, 6.625%, 8/15/15 United States 17,800,000 17,088,000 B, 6.625%, 8/15/15 United States 10,000,000 9,400,000 Liberty Media Corp., senior note, 5.70%, 5/15/13 United States 25,000,000 24,625,000 LIN Television Corp., senior sub. note, 6.50%, 5/15/13 United States 22,000,000 20,955,000 (c) Media General Inc., senior secured note, 144A, 11.75%, 2/15/17 United States 15,300,000 14,917,500 Quebecor Media Inc., senior note, 7.75%, 3/15/16 Canada 15,000,000 15,112,500 (h) Radio One Inc., senior sub. note, 6.375%, 2/15/13 United States 5,000,000 3,981,250
Franklin High Income Trust Franklin High Income Fund STATEMENT OF INVESTMENTS, FEBRUARY 28, 2010 (UNAUDITED) (CONTINUED) B, 8.875%, 7/01/11 United States 10,000,000 $ 8,825,000 (c) Salem Communications Corp., senior secured note, 144A, 9.625%, 12/15/16 United States 8,500,000 8,818,750 (c) Sinclair Television Group Inc., senior secured note, 144A, 9.25%, 11/01/17 United States 23,000,000 23,977,500 (c) Univision Communications Inc., (g) senior note, 144A, PIK, 10.50%, 3/15/15 United States 5,262,500 4,683,625 senior secured note, 144A, 12.00%, 7/01/14 United States 5,000,000 5,437,500 (c) UPC Germany GmbH, senior secured bond, 144A, 8.125%, 12/01/17 Germany 14,900,000 14,948,010 (c) Virgin Media Secured Finance, senior secured note, 144A, 6.50%, 1/15/18 United Kingdom 12,400,000 12,402,346 (c) WMG Acquisition Corp., senior secured note, 144A, 9.50%, 6/15/16 United States 25,000,000 26,375,000 --------------- 344,496,064 --------------- PHARMACEUTICALS, BIOTECHNOLOGY & LIFE SCIENCES 0.3% (c) Talecris Biotherapeutics Holdings Corp., senior note, 144A, 7.75%, 11/15/16 United States 9,500,000 9,595,000 --------------- REAL ESTATE 1.4% (c) FelCor Lodging LP, senior secured note, 144A, 10.00%, 10/01/14 United States 28,000,000 27,370,000 Forest City Enterprises Inc., senior note, 7.625%, 6/01/15 United States 15,900,000 14,389,500 --------------- 41,759,500 --------------- RETAILING 1.6% Dollar General Corp., senior note, 10.625%, 7/15/15 United States 17,000,000 18,700,000 Michaels Stores Inc., senior note, 10.00%, 11/01/14 United States 28,600,000 29,172,000 --------------- 47,872,000 --------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT 1.1% (c) Advanced Micro Devices Inc., senior note, 144A, 8.125%, 12/15/17 United States 6,100,000 6,206,750 Freescale Semiconductor Inc., senior note, 8.875%, 12/15/14 United States 30,000,000 26,775,000 --------------- 32,981,750 --------------- SOFTWARE & SERVICES 1.8% First Data Corp., senior note, 9.875%, 9/24/15 United States 4,000,000 3,440,000 First Data Corp., senior note, 9.875%, 9/24/15 United States 20,000,000 17,400,000 SunGard Data Systems Inc., senior note, 9.125%, 8/15/13 United States 11,100,000 11,419,125 senior sub. note, 10.25%, 8/15/15 United States 20,000,000 20,850,000 --------------- 53,109,125 --------------- TECHNOLOGY HARDWARE & EQUIPMENT 0.8% Sanmina-SCI Corp., (b,c) senior note, 144A, FRN, 3.004%, 6/15/14 United States 5,000,000 4,675,000 senior sub. note, 6.75%, 3/01/13 United States 10,000,000 10,025,000 senior sub. note, 8.125%, 3/01/16 United States 10,000,000 9,900,000 --------------- 24,600,000 --------------- TELECOMMUNICATION SERVICES 8.6% Crown Castle International Corp., senior bond, 7.125%, 11/01/19 United States 2,100,000 2,110,500 senior note, 9.00%, 1/15/15 United States 15,000,000 16,275,000 (c) Digicel Group Ltd., senior note, 144A, 8.875%, 1/15/15 Jamaica 30,000,000 28,912,500 Intelsat Bermuda Ltd., senior note, 11.25%, 6/15/16 Bermuda 20,000,000 21,450,000 Intelsat Subsidiary Holding Co. Ltd., senior note, 8.50%, 1/15/13 Bermuda 25,000,000 25,375,000 (c) 144A, 8.875%, 1/15/15 Bermuda 5,000,000 5,100,000 MetroPCS Wireless Inc., senior note, 9.25%, 11/01/14 United States 30,000,000 30,075,000 Millicom International Cellular SA, senior note, 10.00%, Luxembourg 20,000,000 20,850,000 12/01/13 Qwest Communications International Inc., senior note, 7.50%, 2/15/14 United States 10,000,000 10,150,000 B, 7.50%, 2/15/14 United States 20,000,000 20,300,000 Qwest Corp., senior note, 8.375%, 5/01/16 United States 5,000,000 5,500,000
Franklin High Income Trust Franklin High Income Fund STATEMENT OF INVESTMENTS, FEBRUARY 28, 2010 (UNAUDITED) (CONTINUED) (f) RSL Communications PLC, senior discount note, 10.125%, 3/01/08 United Kingdom 44,500,000 $ 556,250 senior note, 12.00%, 11/01/08 United Kingdom 6,250,000 78,125 (c) SBA Telecommunications Inc., senior note, 144A, 8.25%, 8/15/19 United States 10,350,000 10,919,250 Sprint Nextel Corp., senior note, 8.375%, 8/15/17 United States 30,000,000 29,175,000 (c) Wind Acquisition Finance SA, senior note, 144A, 12.00%, 12/01/15 Italy 25,000,000 26,875,000 (c,g) Wind Acquisition Holding, senior note, 144A, PIK, 12.25%, 7/15/17 Italy 5,000,000 EUR 6,161,013 --------------- 259,862,638 --------------- TRANSPORTATION 1.6% (c) Ceva Group PLC, senior secured note, 144A, 10.00%, 9/01/14 United Kingdom 16,700,000 16,783,500 11.625%, 10/01/16 United Kingdom 3,700,000 3,829,500 (c) Delta Air Lines Inc., senior secured note, 144A, 9.50%, 9/15/14 United States 13,810,000 14,224,300 (c) Marquette Transportation Co. Inc./Finance Corp., senior secured note, 144A, 10.875%, 1/15/17 United States 13,300,000 13,399,750 --------------- 48,237,050 --------------- UTILITIES 6.0% Ameren Corp., senior note, 8.875%, 5/15/14 United States 10,000,000 11,637,530 CMS Energy Corp., senior note, 8.75%, 6/15/19 United States 12,200,000 13,772,092 Dynegy Holdings Inc., senior note, 8.375%, 5/01/16 United States 15,000,000 13,200,000 Edison Mission Energy, senior note, 7.00%, 5/15/17 United States 13,200,000 9,735,000 ESI Tractebel Acquisition Corp., secured note, 7.99%, 12/30/11 United States 3,688,000 3,715,900 (c) Intergen NV, senior secured note, 144A, 9.00%, 6/30/17 Netherlands 25,000,000 25,625,000 Mirant North America LLC, senior note, 7.375%, 12/31/13 United States 23,000,000 23,028,750 NRG Energy Inc., senior note, 7.25%, 2/01/14 United States 8,500,000 8,585,000 7.375%, 2/01/16 United States 20,000,000 19,775,000 7.375%, 1/15/17 United States 5,000,000 4,931,250 Texas Competitive Electric Holdings Co. LLC, senior note, A, 10.25%, 11/01/15 United States 60,000,000 45,144,000 --------------- 179,149,522 --------------- TOTAL CORPORATE BONDS (COST $2,772,576,070) 2,789,488,881 ---------------
SHARES/ WARRANTS ----------- COMMON STOCKS AND OTHER EQUITY INTERESTS 0.4% AUTOMOBILES & COMPONENTS 0.0%(i) (j,k) Cambridge Industries Liquidating Trust Interest United States 4,853,892 -- (e,j,l) Harvard Industries Inc. United States 793,966 7,940 --------------- 7,940 --------------- COMMERCIAL & PROFESSIONAL SERVICES 0.0% (j,k,l) VS Holdings Inc. United States 1,685,375 -- --------------- MEDIA 0.4% (j) Charter Communications Inc., wts., 11/30/14 United States 38,880 204,120 (j) Dex One Corp. United States 393,941 11,739,445 --------------- 11,943,565 --------------- TOTAL COMMON STOCKS AND OTHER EQUITY INTERESTS (COST $39,552,675) 11,951,505 --------------- PREFERRED STOCKS 0.2% BANKS 0.0%(i) (j) Freddie Mac, 8.375%, pfd., Z United States 400,000 456,000 --------------- DIVERSIFIED FINANCIALS 0.2% (c) GMAC Inc., 7.00%, pfd., 144A United States 8,059 5,704,513 ---------------
Franklin High Income Trust Franklin High Income Fund STATEMENT OF INVESTMENTS, FEBRUARY 28, 2010 (UNAUDITED) (CONTINUED) TOTAL PREFERRED STOCKS (COST $12,860,945) 6,160,513 --------------- TOTAL INVESTMENTS BEFORE SHORT TERM INVESTMENTS (COST $2,874,246,250) 2,857,761,936 --------------- SHORT TERM INVESTMENTS (COST $95,089,227) 3.2% MONEY MARKET FUNDS 3.2% (m) Institutional Fiduciary Trust Money Market Portfolio, 0.00% United States 95,089,227 $ 95,089,227 --------------- TOTAL INVESTMENTS (COST $2,969,335,477) 97.9% 2,952,851,163 OTHER ASSETS, LESS LIABILITIES 2.1% 64,421,396 --------------- NET ASSETS 100.0% $ 3,017,272,559 ===============
(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 February 28, 2010, the aggregate value of these securities was $832,503,356, representing 27.59% of net assets. (d) perpetual security with no stated maturity date. (e) Security has been deemed illiquid because it may not be able to be sold within seven days. At February 28, 2010, the aggregate value of these securities was $8,845, representing less than 0.01% of net assets. (f) Defaulted security or security for which income has been deemed uncollectible. (g) Income may be received in additional securities and/or cash. (h) See Note 7 regarding other considerations. (i) Rounds to less than 0.1% of net assets. (j) Non-income producing. (k) See Note 5 regarding restricted securities. (l) See Note 6 regarding holdings of 5% voting securities. (m) The 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. Franklin High Income Trust Franklin High Income Fund STATEMENT OF INVESTMENTS, FEBRUARY 28, 2010 (UNAUDITED) (CONTINUED) At February 28, 2010, the Fund had the following forward exchange contracts outstanding. See Note 3.
CONTRACT SETTLEMENT UNREALIZED UNREALIZED CURRENCY COUNTERPARTY TYPE QUANTITY AMOUNT DATE APPRECIATION DEPRECIATION -------- ------------ ---- --------- ---------- ---------- ------------ ------------ Euro DBAB Sell 4,868,750 $7,098,151 12/15/10 $474,729 $-- -------- ---
ABBREVIATIONS CURRENCY DBAB Deutsche Bank AG CURRENCY EUR Euro SELECTED PORTFOLIO FRN Floating Rate Note L/C Letter of Credit PIK Payment-In-Kind FRANKLIN HIGH INCOME TRUST Notes to Statement of Investments (unaudited) 1. ORGANIZATION Franklin High Income Trust (Trust) is registered under the Investment Company Act of 1940, as amended, as an open-end investment company, consisting of one fund, the Franklin High Income Fund (Fund). 2. SECURITY VALUATION Equity and other 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. Certain equity securities are valued based upon fundamental characteristics or relationships to similar securities. 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 Fund 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 Fund'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. Debt securities denominated in a foreign currency are converted into their U.S. dollar equivalent at the foreign exchange rate in effect at the close of the NYSE on the date that the values of the foreign debt securities are determined. Senior secured corporate loans with floating or variable interest rates generally trade in the over-the-counter market rather than on a securities exchange. The Fund may utilize independent pricing services, quotations from loan dealers and other financial institutions, and information with respect to bond and note transactions, to assist in determining a current market value for each security. The Fund's pricing services use independent market quotations from loan dealers or financial institutions and may incorporate valuation methodologies that consider multiple bond characteristics such as dealer quotes, issuer type, coupon, maturity, weighted average maturity, interest rate spreads and yield curves, cash flow and credit risk/quality analysis, to determine current value. The Fund 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 based upon the underlying investment book value, anticipated future cash flows, market changes in comparable or similar securities, matrix pricing, discounts from market prices of similar securities, or discounts applied due to the nature and duration of restrictions on the disposition of the securities. Due to the inherent uncertainty of valuations of such securities, the fair values may differ significantly from the values that would have been used had a ready market for such investments existed. Occasionally, events occur between the time at which trading in a security is completed and the close of the NYSE that might call into question the availability (including the reliability) of the value of a portfolio security held by the Fund. 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 Fund's Board of Trustees. 3. DERIVATIVE FINANCIAL INSTRUMENTS The Fund may invest in derivative financial instruments (derivatives) in order to manage risk or gain exposure to various other investments or markets. Derivatives are financial contracts based on an underlying or notional amount, require no initial investment or an initial net investment that is smaller than would normally be required to have a similar response to changes in market factors, and require or permit net settlement. Derivatives may contain various risks including the potential inability of the counterparty to fulfill their obligations under the terms of the contract, the potential for an illiquid secondary market, and the potential for market movements. Derivatives are marked to market daily based upon quotations from market makers or the Fund's independent pricing services and the Fund's net benefit or obligation under the contract, as measured by the fair market value of the contract, is included in net assets. The Fund generally enters into forward exchange contracts in order to hedge against fluctuations in foreign exchange rates or to gain exposure to certain foreign currencies. A forward exchange contract is an agreement between the Fund and a counterparty to buy or sell a foreign currency for a specific exchange rate on a future date. Pursuant to the terms of the forward exchange contracts, cash or securities may be required to be deposited as collateral. 4. INCOME TAXES At February 28, 2010, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows: Cost of investments $2,972,536,864 -------------- Unrealized appreciation $ 168,651,743 Unrealized depreciation (188,337,444) -------------- Net unrealized appreciation (depreciation) $ (19,685,701) ==============
5. RESTRICTED SECURITIES At February 28, 2010, 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 DATE COST VALUE --------- ----------------------------------------------- ----------- ---------- ----- 4,853,892 Cambridge Industries Liquidating Trust Interest 1/09/02 $ -- $-- 1,685,375 VS Holdings Inc. 12/06/01 1,685,375 -- --- TOTAL RESTRICTED SECURITIES (0.00% of Net Assets) $-- ===
6. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES Investments in "affiliated companies" for the Fund for the nine months ended February 28, 2010, were as shown below.
NUMBER OF SHARES REALIZED HELD AT NUMBER OF SHARES VALUE AT CAPITAL BEGINNING GROSS GROSS HELD AT END OF END OF INVESTMENT GAIN NAME OF ISSUER OF YEAR ADDITIONS REDUCTIONS PERIOD PERIOD INCOME (LOSS) ----------------------- --------- --------- ---------- ---------------- -------- ---------- -------- 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. 7. OTHER CONSIDERATIONS From time to time, officers, directors or employees of the Fund's Investment Manager may have discussions or enter into agreements with issuers, underwriters or creditors' committees which, pursuant to the Fund's policies and requirements of applicable securities laws, could prevent the Fund from trading in the securities of such company for limited or extended periods of time. 8. FAIR VALUE MEASUREMENTS The Fund follows 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 February 28, 2010, in valuing the Fund's assets carried at fair value:
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL ------------ -------------- ------- -------------- ASSETS: Investments in Securities: Equity Investments:(a) Automobiles & Components $ -- $ -- $7,940(b) $ 7,940 Diversified Financials -- 5,704,513 -- 5,704,513 All Other Equity Investments(c) 12,399,565 -- --(b) 12,399,565 Senior Floating Rate Interests -- 50,161,037 -- 50,161,037 Corporate Bonds -- 2,789,487,976 905 2,789,488,881 Short Term Investments 95,089,227 -- -- 95,089,227 ------------ -------------- ------ -------------- Total Investments in Securities $107,488,792 $2,845,353,526 $8,845 $2,952,851,163 ------------ -------------- ------ -------------- Forward Exchange Contracts -- 474,729 -- 474,729
(a) Includes common and preferred stock as well as other equity investments. (b) Includes securities determined to have no value at February 28, 2010. (c) For detailed industry descriptions, see the accompanying Statement of Investments. At February 28, 2010, the reconciliation of assets in which significant unobservable inputs (Level 3) were used in determining fair value, is as follows:
NET CHANGE IN UNREALIZED NET CHANGE APPRECIATION IN TRANSFER BALANCE (DEPRECIATION) UNREALIZED NET IN AT ON ASSETS BEGINNING NET REALIZED APPRECIATION PURCHASES (OUT) OF END OF HELD BALANCE GAIN (LOSS) (DEPRECIATION) (SALES) LEVEL 3 PERIOD AT PERIOD END --------- ------------ -------------- --------- --------- ------- -------------- ASSETS Equity Securities: $ 7,940(a) $ -- $ -- $ -- $ -- $7,940(b) $-- Automobiles & Components Corporate Bonds 473,205 (29,061,478) 29,596,797 (589,119) (418,500) 905 -- -------- ------------ ----------- --------- --------- ------ --- Total $481,145 $(29,061,478) $29,596,797 $(589,119) $(418,500) $8,845 $-- -------- ------------ ----------- --------- --------- ------ ---
(a) Includes securities determined to have no value at May 31, 2009. (b) Includes securities determined to have no value at February 28, 2010. 9. NEW ACCOUNTING PRONOUNCEMENTS In January 2010, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2010-6, FAIR VALUE MEASUREMENTS AND DISCLOSURES (TOPIC 820): IMPROVING DISCLOSURES ABOUT FAIR VALUE MEASUREMENTS, which enhances and clarifies existing fair value measurement disclosure requirements and is effective for interim and annual periods beginning after December 15, 2009. The Fund is currently evaluating the impact, if any, of applying this provision. 10. SUBSEQUENT EVENTS The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure. For information on the Fund's policy regarding other significant accounting policies, please refer to the Fund's most recent semiannual or annual shareholder report. 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 Laura F. Fergerson, Chief Executive Officer - Finance and Administration, and Gaston Gardey, 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/LAURA F. FERGERSON ------------------------ Laura F. Fergerson Chief Executive Officer - Finance and Administration Date April 27, 2010 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/LAURA F. FERGERSON ------------------------ Laura F. Fergerson Chief Executive Officer - Finance and Administration Date April 27, 2010 By /s/Gaston Gardey ----------------- Gaston Gardey Chief Financial Officer and Chief Accounting Officer Date April 27, 2010