FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF
REGISTERED MANAGEMENT INVESTMENT COMPANY
Investment Company Act file number 811-05569
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Franklin Universal Trust
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(Exact name of registrant as specified in charter)
One Franklin Parkway, San Mateo, CA 94403-1906
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(Address of principal executive offices) (Zip code)
Craig S. Tyle, One Franklin Parkway, San Mateo, CA 94403-1906
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(Name and address of agent for service)
Registrant's telephone number, including area code: 312/650-2000
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Date of fiscal year end: 8/31
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Date of reporting period: 05/31/08
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Item 1. Schedule of Investments.
Franklin Universal Trust
QUARTERLY STATEMENT OF INVESTMENTS
MAY 31, 2008
CONTENTS
Statement of Investments 3
Notes to Statement of Investments 9
(FRANKLIN TEMPLETON INVESTMENTS LOGO)
FRANKLIN TEMPLETON INVESTMENTS
FRANKLIN - Templeton - Mutual Series
Quarterly Statement of Investments | 1
This page intentionally left blank.
Franklin Universal Trust
STATEMENT OF INVESTMENTS, MAY 31, 2008 (UNAUDITED)
COUNTRY SHARES VALUE
--------------- ------------------- ------------
LONG TERM INVESTMENTS 127.4%
COMMON STOCKS AND RIGHTS 40.1%
AUTOMOBILES & COMPONENTS 0.0%(a)
(b) Harvard Industries Inc. .......................................... United States 109,618 $ 1,754
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COMMERCIAL SERVICES & SUPPLIES 0.0%(a)
(b, c, d) VS Holdings Inc. ................................................. United States 181,875 --
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ENERGY 0.9%
Spectra Energy Corp. ............................................. United States 62,350 1,684,697
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MATERIALS 1.3%
AngloGold Ashanti Ltd., ADR ...................................... South Africa 30,446 1,059,217
(b) Anglogold Ashanti Ltd., rts., 6/23/08 ............................ South Africa 7,501 69,759
Barrick Gold Corp. ............................................... Canada 35,800 1,442,382
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2,571,358
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UTILITIES 37.9%
Alliant Energy Corp. ............................................. United States 55,000 2,064,700
Ameren Corp. ..................................................... United States 60,000 2,727,000
American Electric Power Co. Inc. ................................. United States 50,000 2,116,500
Atmos Energy Corp. ............................................... United States 85,000 2,328,150
CenterPoint Energy Inc. .......................................... United States 226,600 3,838,604
Constellation Energy Group ....................................... United States 55,000 4,742,650
Dominion Resources Inc. .......................................... United States 100,000 4,630,000
Duke Energy Corp. ................................................ United States 124,700 2,304,456
Edison International ............................................. United States 65,000 3,459,950
Entergy Corp. .................................................... United States 50,500 6,098,885
Exelon Corp. ..................................................... United States 104,000 9,152,000
FirstEnergy Corp. ................................................ United States 70,000 5,509,700
FPL Group Inc. ................................................... United States 93,000 6,279,360
Pinnacle West Capital Corp. ...................................... United States 76,000 2,567,280
Progress Energy Inc. ............................................. United States 30,000 1,282,800
Public Service Enterprise Group Inc. ............................. United States 90,000 3,983,400
Sempra Energy .................................................... United States 48,500 2,803,785
The Southern Co. ................................................. United States 155,000 5,611,000
(e) Westar Energy Inc. ............................................... United States 27,300 655,200
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72,155,420
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TOTAL COMMON STOCKS AND RIGHTS (COST $45,765,534) ................ 76,413,229
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PRINCIPAL AMOUNT(F)
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CORPORATE BONDS 87.2%
AUTOMOBILES & COMPONENTS 3.9%
(g) Allison Transmission Inc., senior note, 144A, 11.00%, 11/01/15.... United States 2,000,000 1,895,000
Ford Motor Credit Co. LLC,
7.80%, 6/01/12................................................. United States 2,000,000 1,770,346
senior note, 9.875%, 8/10/11................................... United States 2,000,000 1,893,696
(g) TRW Automotive Inc., senior note, 144A, 7.25%, 3/15/17............ United States 2,000,000 1,880,000
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7,439,042
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Quarterly Statement of Investments | 3
Franklin Universal Trust
STATEMENT OF INVESTMENTS, MAY 31, 2008 (UNAUDITED) (CONTINUED)
COUNTRY PRINCIPAL AMOUNT(F) VALUE
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LONG TERM INVESTMENTS (CONTINUED)
CORPORATE BONDS (CONTINUED)
CAPITAL GOODS 5.1%
DRS Technologies Inc., senior sub. note, 7.625%, 2/01/18 ......... United States 1,800,000 $ 1,948,500
Greenbrier Cos. Inc., senior note, 8.375%, 5/15/15 ............... United States 600,000 580,500
L-3 Communications Corp., senior sub. note, 6.375%, 10/15/15 ..... United States 1,700,000 1,646,875
RBS Global & Rexnord Corp., senior note, 9.50%, 8/01/14 .......... United States 2,000,000 2,015,000
RSC Equipment Rental Inc., senior note, 9.50%, 12/01/14 .......... United States 2,200,000 1,936,000
TransDigm Inc., senior sub. note, 7.75%, 7/15/14 ................. United States 1,500,000 1,541,250
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9,668,125
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COMMERCIAL SERVICES & SUPPLIES 3.0%
Allied Waste North America Inc., senior secured note, 6.875%,
6/01/17 ....................................................... United States 1,100,000 1,069,750
ARAMARK Corp., senior note, 8.50%, 2/01/15 ....................... United States 2,000,000 2,057,500
(g) Ceva Group PLC, senior note, 144A, 10.00%, 9/01/14 ............... United Kingdom 1,500,000 1,556,250
JohnsonDiversey Inc., senior sub. note, B, 9.625%, 5/15/12 ....... United States 1,000,000 1,025,000
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5,708,500
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CONSUMER DURABLES & APPAREL 3.2%
Jarden Corp., senior sub. note, 7.50%, 5/01/17 ................... United States 2,000,000 1,795,000
Jostens IH Corp., senior sub. note, 7.625%, 10/01/12 ............. United States 1,400,000 1,405,250
KB Home, senior note,
6.25%, 6/15/15 ................................................ United States 1,200,000 1,071,000
7.25%, 6/15/18 ................................................ United States 800,000 752,000
Visant Holding Corp., senior note, 8.75%, 12/01/13 ............... United States 1,100,000 1,100,000
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6,123,250
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CONSUMER SERVICES 5.4%
(c, d, h) Atherton Franchise Capital, 13.073%, 12/01/08 .................... United States 721,603 7,216
(g) Fontainebleau Las Vegas, 144A, 10.25%, 6/15/15 ................... United States 1,600,000 1,172,000
Host Marriott LP, senior note, M, 7.00%, 8/15/12 ................. United States 1,500,000 1,505,625
MGM MIRAGE, senior note,
6.875%, 4/01/16 ............................................... United States 2,000,000 1,725,000
7.50%, 6/01/16 ................................................ United States 500,000 446,875
(g) Outback Steakhouse Inc., senior note, 144A, 10.00%, 6/15/15 ...... United States 1,300,000 929,500
Pinnacle Entertainment Inc., senior sub. note, 8.25%, 3/15/12 .... United States 1,000,000 1,012,500
Royal Caribbean Cruises Ltd., senior note,
8.00%, 5/15/10 ................................................ United States 1,200,000 1,227,000
6.875%, 12/01/13 .............................................. United States 800,000 740,000
Station Casinos Inc., senior sub. note,
6.50%, 2/01/14 ................................................ United States 300,000 190,500
6.875%, 3/01/16 ............................................... United States 2,200,000 1,350,250
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10,306,466
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DIVERSIFIED FINANCIALS 1.9%
GMAC LLC, 6.875%, 8/28/12 ........................................ United States 4,500,000 3,626,582
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ENERGY 10.0%
Chesapeake Energy Corp., senior note, 6.25%, 1/15/18 ............. United States 2,500,000 2,356,250
Compagnie Generale de Geophysique-Veritas, senior note,
7.50%, 5/15/15 ................................................ France 400,000 407,000
7.75%, 5/15/17 ................................................ France 600,000 615,000
4 | Quarterly Statement of Investments
Franklin Universal Trust
STATEMENT OF INVESTMENTS, MAY 31, 2008 (UNAUDITED) (CONTINUED)
COUNTRY PRINCIPAL AMOUNT(F) VALUE
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LONG TERM INVESTMENTS (CONTINUED)
CORPORATE BONDS (CONTINUED)
ENERGY (CONTINUED)
Copano Energy LLC, senior note,
8.125%, 3/01/16 ............................................... United States 1,500,000 $ 1,548,750
(g)144A, 7.75%, 6/01/18 .......................................... United States 500,000 499,375
Mariner Energy Inc., senior note, 7.50%, 4/15/13 ................. United States 2,500,000 2,431,250
MarkWest Energy Partners LP, senior note, 6.875%, 11/01/14 ....... United States 2,000,000 1,955,000
(g) Petroplus Finance Ltd., senior note, 144A, 6.75%, 5/01/14 ........ Switzerland 2,000,000 1,865,000
Plains Exploration & Production Co., senior note, 7.625%,
6/01/18 ....................................................... United States 1,900,000 1,919,000
Range Resources Corp., senior sub. note, 7.25%, 5/01/18 .......... United States 800,000 816,000
(g) SandRidge Energy Inc., senior note, 144A, 8.00%, 6/01/18 ......... United States 900,000 915,750
Tesoro Corp., senior note, 6.50%, 6/01/17 ........................ United States 1,500,000 1,348,125
The Williams Cos. Inc., senior note,
7.625%, 7/15/19 ............................................... United States 600,000 647,250
7.875%, 9/01/21 ............................................... United States 700,000 766,500
8.75%, 3/15/32 ................................................ United States 800,000 936,000
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19,026,250
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FOOD, BEVERAGE & TOBACCO 2.8%
Dean Foods Inc., senior note, 7.00%, 6/01/16 ..................... United States 1,400,000 1,312,500
Dole Food Co. Inc., senior note,
8.625%, 5/01/09 ............................................... United States 100,000 98,500
7.25%, 6/15/10 ................................................ United States 100,000 93,250
Reynolds American Inc., senior secured note, 7.625%, 6/01/16 ..... United States 2,000,000 2,097,424
Smithfield Foods Inc., senior note, 7.75%,
5/15/13 ....................................................... United States 700,000 694,750
7/01/17 ....................................................... United States 1,000,000 990,000
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5,286,424
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HEALTH CARE EQUIPMENT & SERVICES 7.0%
FMC Finance III SA, senior note, 6.875%, 7/15/17 ................. Germany 2,500,000 2,487,500
HCA Inc., senior note, 6.50%, 2/15/16 ............................ United States 2,500,000 2,184,375
Tenet Healthcare Corp., senior note, 7.375%, 2/01/13 ............. United States 2,500,000 2,343,750
(i, j) U.S. Oncology Holdings Inc., senior note, FRN, PIK, 7.949%,
3/15/12 ....................................................... United States 2,107,000 1,727,740
(j) United Surgical Partners International Inc., senior sub. note,
PIK,
9.25%, 5/01/17 ................................................ United States 2,000,000 1,970,000
Vanguard Health Holding Co. II LLC, senior sub. note, 9.00%,
10/01/14 ...................................................... United States 2,500,000 2,581,250
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13,294,615
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MATERIALS 9.9%
Crown Americas Inc., senior note, 7.75%, 11/15/15 ................ United States 2,500,000 2,637,500
Freeport-McMoRan Copper & Gold Inc., senior note, 8.375%,
4/01/17 ....................................................... United States 1,700,000 1,830,373
Huntsman International LLC, senior sub. note, 7.875%, 11/15/14 ... United States 2,000,000 2,150,000
(g) Ineos Group Holdings PLC, senior sub. note, 144A, 8.50%,
2/15/16 ....................................................... United Kingdom 2,500,000 1,956,250
(g) MacDermid Inc., senior sub. note, 144A, 9.50%, 4/15/17 ........... United States 1,300,000 1,267,500
Nalco Co., senior sub. note, 8.875%, 11/15/13 .................... United States 2,000,000 2,115,000
(g) NewPage Corp., senior secured note, 144A, 10.00%, 5/01/12 ........ United States 2,000,000 2,140,000
Quarterly Statement of Investments | 5
Franklin Universal Trust
STATEMENT OF INVESTMENTS, MAY 31, 2008 (UNAUDITED) (CONTINUED)
COUNTRY PRINCIPAL AMOUNT(F) VALUE
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LONG TERM INVESTMENTS (CONTINUED)
CORPORATE BONDS (CONTINUED)
MATERIALS (CONTINUED)
Novelis Inc., senior note, 7.25%, 2/15/15 ........................ Canada 1,700,000 $ 1,606,500
Owens-Brockway Glass Container Inc., senior note, 6.75%,
12/01/14 ...................................................... United States 1,500,000 1,526,250
Smurfit Kappa Funding PLC, senior sub. note, 7.75%, 4/01/15 ...... Ireland 1,700,000 1,551,250
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18,780,623
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MEDIA 12.6%
CanWest Media Inc., senior sub. note, 8.00%, 9/15/12 ............. Canada 2,000,000 1,845,000
CCH I LLC, senior secured note, 11.00%, 10/01/15 ................. United States 800,000 684,000
CCH II LLC, senior note, 10.25%, 9/15/10 ......................... United States 2,500,000 2,500,000
CSC Holdings Inc., senior note, 6.75%, 4/15/12 ................... United States 800,000 780,000
Dex Media Finance/West, senior sub. note, 9.875%, 8/15/13 ........ United States 2,342,000 2,262,957
(g) DIRECTV Holdings LLC, senior note, 144A, 7.625%, 5/15/16 ......... United States 2,500,000 2,503,125
Dish Network Corp., senior note, 7.125%, 2/01/16 ................. United States 2,000,000 1,920,000
Idearc Inc., senior note, 8.00%, 11/15/16 ........................ United States 2,500,000 1,800,000
Lamar Media Corp., senior sub. note, 6.625%, 8/15/15 ............. United States 2,500,000 2,368,750
LIN Television Corp., senior sub. note, 6.50%, 5/15/13 ........... United States 1,500,000 1,430,625
Quebecor Media Inc., senior note, 7.75%, 3/15/16 ................. Canada 2,200,000 2,167,000
R.H. Donnelley Corp., senior note, A-3, 8.875%, 1/15/16 .......... United States 700,000 483,000
Radio One Inc., senior sub. note, 6.375%, 2/15/13 ................ United States 1,700,000 1,292,000
(g, j) Univision Communications Inc., senior note, 144A, PIK, 9.75%,
3/15/15 ....................................................... United States 2,500,000 1,900,000
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23,936,457
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RETAILING 2.2%
Dollar General Corp., senior note, 10.625%, 7/15/15 .............. United States 2,000,000 1,970,000
Michaels Stores Inc., senior note, 10.00%, 11/01/14 .............. United States 2,500,000 2,325,000
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4,295,000
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SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT 0.4%
Freescale Semiconductor Inc., senior note, 8.875%, 12/15/14 ...... United States 900,000 801,000
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SOFTWARE & SERVICES 3.5%
(g) First Data Corp., senior note, 144A, 9.875%, 9/24/15 ............. United States 1,300,000 1,178,125
Iron Mountain Inc., senior sub. note, 8.75%, 7/15/18 ............. United States 2,400,000 2,568,000
(c, h) PSINet Inc.,
10.50%, 12/01/06 .............................................. United States 700,000 70
senior note, 11.00%, 8/01/09 .................................. United States 3,250,000 325
SunGard Data Systems Inc.,
senior note, 9.125%, 8/15/13 .................................. United States 900,000 931,500
senior sub. note, 10.25%, 8/15/15 ............................. United States 1,900,000 1,985,500
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6,663,520
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6 | Quarterly Statement of Investments
Franklin Universal Trust
STATEMENT OF INVESTMENTS, MAY 31, 2008 (UNAUDITED) (CONTINUED)
COUNTRY PRINCIPAL AMOUNT(F) VALUE
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LONG TERM INVESTMENTS (CONTINUED)
CORPORATE BONDS (CONTINUED)
TECHNOLOGY HARDWARE & EQUIPMENT 2.5%
Celestica Inc., senior sub. note,
7.875%, 7/01/11 ............................................... Canada 1,000,000 $ 1,008,750
7.625%, 7/01/13 ............................................... Canada 400,000 396,000
(g) Nortel Networks Ltd., senior note, 144A, 10.75%, 7/15/16 ......... Canada 1,300,000 1,290,250
Sanmina-SCI Corp.,
(g, i) senior note, 144A, FRN, 5.55%, 6/15/14 .................... United States 700,000 658,000
senior sub. note, 6.75%, 3/01/13 .......................... United States 1,100,000 1,020,250
senior sub. note, 8.125%, 3/01/16 ......................... United States 400,000 378,000
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4,751,250
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TELECOMMUNICATION SERVICES 6.2%
(g) Digicel Group Ltd., senior note, 144A, 8.875%, 1/15/15 ........... Jamaica 2,000,000 1,840,000
Inmarsat Finance II PLC, senior note, zero cpn. to 11/15/08,
10.375% thereafter, 11/15/12 .................................. United Kingdom 1,500,000 1,507,500
MetroPCS Wireless Inc., senior note, 9.25%, 11/01/14 ............. United States 2,000,000 1,932,500
Qwest Communications International Inc., senior note, 7.50%,
2/15/14 ....................................................... United States 2,000,000 1,970,000
(g) Wind Acquisition Finance SA, senior note, 144A,
10.75%, 12/01/15 .............................................. Italy 2,500,000 2,687,500
Windstream Corp., senior note, 8.625%, 8/01/16 ................... United States 1,900,000 1,973,625
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11,911,125
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UTILITIES 7.6%
(g) The AES Corp., senior note, 144A, 8.00%, 6/01/20 ................. United States 2,000,000 1,975,000
Aquila Inc., senior note, 14.875%, 7/01/12 ....................... United States 1,800,000 2,151,000
Dynegy Holdings Inc., senior note, 8.75%, 2/15/12 ................ United States 2,000,000 2,072,500
Edison Mission Energy, senior note, 7.00%, 5/15/17 ............... United States 2,300,000 2,259,750
NRG Energy Inc., senior note, 7.375%,
2/01/16 ....................................................... United States 1,800,000 1,759,500
1/15/17 ....................................................... United States 700,000 686,000
PNM Resources Inc., senior note, 9.25%, 5/15/15 .................. United States 1,000,000 1,042,500
(g) Texas Competitive Electric Holdings Co. LLC, senior note, 144A,
10.25%, 11/01/15 .............................................. United States 2,500,000 2,565,625
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14,511,875
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TOTAL CORPORATE BONDS (COST $175,824,169) ........................ 166,130,104
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FOREIGN GOVERNMENT AND AGENCY SECURITIES 0.1%
Eskom Holdings Ltd., 11.00%,
6/01/08 ....................................................... South Africa 783,334 ZAR 103,144
6/01/09 ....................................................... South Africa 783,333 ZAR 100,770
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TOTAL FOREIGN GOVERNMENT AND AGENCY SECURITIES
(COST $429,970) ............................................... 203,914
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TOTAL LONG TERM INVESTMENTS (COST $222,019,673) .................. 242,747,247
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Quarterly Statement of Investments | 7
Franklin Universal Trust
STATEMENT OF INVESTMENTS, MAY 31, 2008 (UNAUDITED) (CONTINUED)
COUNTRY SHARES VALUE
--------------- ------------------- ------------
SHORT TERM INVESTMENT (COST $80,279) 0.0%(a)
MONEY MARKET FUND 0.0%(a)
(k) Franklin Institutional Fiduciary Trust Money Market Portfolio,
2.18% ......................................................... United States 80,279 $ 80,279
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TOTAL INVESTMENTS (COST $222,099,952) 127.4% ..................... 242,827,526
NOTES PAYABLE (28.8)% ............................................ (55,000,000)
OTHER ASSETS, LESS LIABILITIES 1.4% .............................. 2,720,849
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NET ASSETS 100.0% ................................................ $190,548,375
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CURRENCY ABBREVIATIONS
ZAR - South African Rand
SELECTED PORTFOLIO ABBREVIATIONS
ADR - American Depository Receipt
FRN - Floating Rate Note
PIK - Payment-In-Kind
(a) Rounds to less than 0.1% of net assets.
(b) Non-income producing for the twelve months ended May 31, 2008.
(c) Security has been deemed illiquid because it may not be able to be sold
within seven days. At May 31, 2008, the aggregate value of these securities
was $7,611, representing less than 0.01% of net assets.
(d) See Note 4 regarding restricted securities.
(e) A portion or all of the security purchased on a delayed delivery basis.
(f) The principal amount is stated in U.S. dollars unless otherwise indicated.
(g) 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 Fund's Board of Trustees. At May 31, 2008, the
aggregate value of these securities was $32,674,250, representing 17.15% of
net assets.
(h) Defaulted security.
(i) The coupon rate shown represents the rate at period end.
(j) Income may be received in additional securities and/or cash.
(k) The Franklin Institutional Fiduciary Trust Money Market Portfolio is
managed by the Fund's investment manager. The rate shown is the annualized
seven-day yield at period end.
8 | See Notes to Statement of Investments. | Quarterly Statement of Investments
Franklin Universal Trust
NOTES TO STATEMENT OF INVESTMENTS (UNAUDITED)
1. ORGANIZATION
Franklin Universal Trust (Fund) is registered under the Investment Company Act
of 1940, as amended, as a diversified, closed-end investment company.
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 and government 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.
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 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, 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. The investment manager monitors price movements
following the close of trading in foreign stock markets through a series of
country specific market proxies (such as baskets of
Quarterly Statement of Investments | 9
Franklin Universal Trust
NOTES TO STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
2. SECURITY VALUATION (CONTINUED)
American Depository Receipts, futures contracts and exchange traded funds).
These price movements are measured against established trigger thresholds for
each specific market proxy to assist in determining if an event has occurred. If
such an event occurs, the securities may be valued using fair value procedures,
which may include the use of independent pricing services. All security
valuation procedures are approved by the Fund's Board of Trustees.
3. INCOME TAXES
At May 31, 2008, the cost of investments and net unrealized appreciation
(depreciation) for income tax purposes were as follows:
Cost of investments ............................ $222,451,009
============
Unrealized appreciation ........................ $ 37,748,089
Unrealized depreciation ........................ (17,371,572)
------------
Net unrealized appreciation (depreciation) ..... $ 20,376,517
============
4. RESTRICTED SECURITIES
At May 31, 2008, the Fund held investments in restricted securities, excluding
144A securities deemed to be liquid, valued in accordance with procedures
approved by the Fund's Board of Trustees as reflecting fair value, as follows:
PRINCIPAL AMOUNT/ ACQUISITION
SHARES ISSUER DATE COST VALUE
----------------- -------------------------------------------------- ----------- -------- ------
721,603 Atherton Franchise Capital, 13.073%,
12/01/08 ...................................... 4/28/94 $721,603 $7,216
181,875 VS Holdings Inc. ................................. 12/06/01 181,875 --
------
TOTAL RESTRICTED SECURITIES (0.00%(a) of Net
Assets) ................................................................ $7,216
======
(a) Rounds to less than 0.01% of net assets.
10 | Quarterly Statement of Investments
Franklin Universal Trust
NOTES TO STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
5. NEW ACCOUNTING PRONOUNCEMENTS
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 Fund
believes the adoption of SFAS 157 will have no material impact on its financial
statements.
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 beginning after November 15,
2008, and interim periods within those fiscal years. The Fund is currently
evaluating the impact, if any, of applying the various provisions of SFAS 161.
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.
Quarterly Statement of Investments | 11
Item 2. Controls and Procedures.
(a) Evaluation of Disclosure Controls and Procedures. The Registrant maintains
disclosure controls and procedures that are designed to ensure that information
required to be disclosed in the Registrant's filings under the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 is recorded,
processed, summarized and reported within the periods specified in the rules and
forms of the Securities and Exchange Commission. Such information is accumulated
and communicated to the Registrant's management, including its principal
executive officer and principal financial officer, as appropriate, to allow
timely decisions regarding required disclosure. The Registrant's management,
including the principal executive officer and the principal financial officer,
recognizes that any set of controls and procedures, no matter how well designed
and operated, can provide only reasonable assurance of achieving the desired
control objectives.
Within 90 days prior to the filing date of this Quarterly Schedule of Portfolio
Holdings on Form N-Q, the Registrant had carried out an evaluation, under the
supervision and with the participation of the Registrant's management, including
the Registrant's principal executive officer and the Registrant's principal
financial officer, of the effectiveness of the design and operation of the
Registrant's disclosure controls and procedures. Based on such evaluation, the
Registrant's principal executive officer and principal financial officer
concluded that the Registrant's disclosure controls and procedures are
effective.
(b) Changes in Internal Controls. There have been no significant changes in the
Registrant's internal controls or in other factors that could significantly
affect the internal controls subsequent to the date of their evaluation in
connection with the preparation of this Quarterly Schedule of Portfolio Holdings
on Form N-Q.
Item 3. Exhibits.
(a) Certification pursuant to Section 30a-2 under the Investment Company Act of
1940 of 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 Universal Trust
By /s/GALEN G. VETTER
-----------------------
Galen G. Vetter
Chief Executive Officer -
Finance and Administration
Date July 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 July 25, 2008
By /s/LAURA F. FERGERSON
-----------------------
Laura F. Fergerson
Chief Financial Officer and
Chief Accounting Officer
Date July 25, 2008