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
(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: 650/312-2000
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Date of fiscal year end: 8/31
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Date of reporting period: 11/30/08
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Item 1. Schedule of Investments.
Franklin Universal Trust
QUARTERLY STATEMENT OF INVESTMENTS
NOVEMBER 30, 2008
CONTENTS
Statement of Investments ........... 3
Notes to Statement of Investments .. 8
(FRANKLIN TEMPLETON INVESTMENT (R) LOGO)
FRANKLIN - Templeton - Mutual Series
Quarterly Statement of Investments | 1
This page intentionally left blank.
Franklin Universal Trust
STATEMENT OF INVESTMENTS, NOVEMBER 30, 2008 (UNAUDITED)
COUNTRY SHARES VALUE
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COMMON STOCKS 40.3%
AUTOMOBILES & COMPONENTS 0.0%(a)
(b) Harvard Industries Inc. ........................................... United States 109,618 $ 329
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COMMERCIAL & PROFESSIONAL SERVICES 0.0%
(b, c) VS Holdings Inc. .................................................. United States 181,875 --
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ENERGY 1.0%
Spectra Energy Corp. .............................................. United States 62,350 1,013,811
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MATERIALS 0.6%
AngloGold Ashanti Ltd., ADR ....................................... South Africa 30,446 650,022
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UTILITIES 38.7%
Alliant Energy Corp. .............................................. United States 55,000 1,752,850
Ameren Corp. ...................................................... United States 60,000 2,134,800
American Electric Power Co. Inc. .................................. United States 50,000 1,564,500
Atmos Energy Corp. ................................................ United States 45,000 1,121,850
CenterPoint Energy Inc. ........................................... United States 226,600 2,929,938
Dominion Resources Inc. ........................................... United States 100,000 3,682,000
Duke Energy Corp. ................................................. United States 124,700 1,940,332
Edison International .............................................. United States 63,000 2,104,200
Entergy Corp. ..................................................... United States 50,000 4,255,000
Exelon Corp. ...................................................... United States 70,000 3,934,700
FirstEnergy Corp. ................................................. United States 50,000 2,929,000
FPL Group Inc. .................................................... United States 75,000 3,657,000
Pinnacle West Capital Corp. ....................................... United States 60,000 1,824,000
Progress Energy Inc. .............................................. United States 15,000 595,350
Public Service Enterprise Group Inc. .............................. United States 50,000 1,545,000
Sempra Energy ..................................................... United States 48,500 2,263,495
The Southern Co. .................................................. United States 80,000 2,905,600
Westar Energy Inc. ................................................ United States 27,300 552,279
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41,691,894
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TOTAL COMMON STOCKS (COST $36,008,469) ............................ 43,356,056
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PRINCIPAL AMOUNT(d)
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CORPORATE BONDS 94.4%
AUTOMOBILES & COMPONENTS 3.0%
Ford Motor Credit Co. LLC,
7.80%, 6/01/12 ................................................. United States 2,000,000 863,140
senior note, 9.875%, 8/10/11 ................................... United States 3,000,000 1,410,699
(e) TRW Automotive Inc., senior note, 144A, 7.25%, 3/15/17 ............ United States 2,000,000 930,000
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3,203,839
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CAPITAL GOODS 6.7%
(e) Allison Transmission Inc., senior note, 144A, 11.00%, 11/01/15 .... United States 2,000,000 990,000
DRS Technologies Inc., senior sub. note, 7.625%, 2/01/18 .......... United States 1,800,000 1,795,500
L-3 Communications Corp., senior sub. note, 6.375%, 10/15/15 ...... United States 1,700,000 1,419,500
RBS Global & Rexnord Corp., senior note, 9.50%, 8/01/14 ........... United States 2,000,000 1,410,000
RSC Equipment Rental Inc., senior note, 9.50%, 12/01/14 ........... United States 2,200,000 1,089,000
TransDigm Inc., senior sub. note, 7.75%, 7/15/14 .................. United States 700,000 535,500
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7,239,500
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Quarterly Statement of Investments | 3
Franklin Universal Trust
STATEMENT OF INVESTMENTS, NOVEMBER 30, 2008 (UNAUDITED) (CONTINUED)
COUNTRY PRINCIPAL AMOUNT(d) VALUE
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CORPORATE BONDS (CONTINUED)
COMMERCIAL & PROFESSIONAL SERVICES 2.9%
ARAMARK Corp., senior note, 8.50%, 2/01/15 ........................ United States 1,400,000 $ 1,169,000
Iron Mountain Inc., senior sub. note, 8.75%, 7/15/18 .............. United States 1,300,000 1,111,500
JohnsonDiversey Inc., senior sub. note, B, 9.625%, 5/15/12 ........ United States 1,000,000 822,500
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3,103,000
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CONSUMER DURABLES & APPAREL 4.1%
Jarden Corp., senior sub. note, 7.50%, 5/01/17 .................... United States 2,000,000 1,310,000
Jostens IH Corp., senior sub. note, 7.625%, 10/01/12 .............. United States 1,400,000 1,127,000
KB Home, senior note,
6.25%, 6/15/15 ................................................. United States 1,200,000 702,000
7.25%, 6/15/18 ................................................. United States 800,000 468,000
Visant Holding Corp., senior note, 8.75%, 12/01/13 ................ United States 1,100,000 797,500
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4,404,500
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CONSUMER SERVICES 5.0%
(c, f) Atherton Franchise Capital, 13.073%, 12/01/08 ..................... United States 721,603 7,216
(e) Fontainebleau Las Vegas, 144A, 10.25%, 6/15/15 .................... United States 1,600,000 216,000
Host Hotels & Resorts LP, senior note, M, 7.00%, 8/15/12 .......... United States 1,000,000 755,000
MGM MIRAGE, senior note,
6.875%, 4/01/16 ................................................ United States 2,000,000 1,050,000
7.50%, 6/01/16 ................................................. United States 1,200,000 624,000
Pinnacle Entertainment Inc., senior sub. note, 8.25%, 3/15/12 ..... United States 1,000,000 735,000
Royal Caribbean Cruises Ltd., senior note,
8.00%, 5/15/10 ................................................. United States 1,200,000 1,080,000
6.875%, 12/01/13 ............................................... United States 800,000 484,000
Station Casinos Inc.,
senior note, 7.75%, 8/15/16 .................................... United States 1,100,000 341,000
senior sub. note, 6.50%, 2/01/14 ............................... United States 100,000 9,500
senior sub. note, 6.875%, 3/01/16 .............................. United States 1,200,000 123,000
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5,424,716
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DIVERSIFIED FINANCIALS 1.5%
GMAC LLC, 6.875%, 8/28/12 ......................................... United States 4,500,000 1,576,292
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ENERGY 12.8%
Chesapeake Energy Corp., senior note, 6.25%, 1/15/18 .............. United States 2,500,000 1,650,000
Compagnie Generale de Geophysique-Veritas, senior note,
7.50%, 5/15/15 ................................................. France 400,000 262,000
7.75%, 5/15/17 ................................................. France 600,000 371,250
Copano Energy LLC, senior note,
8.125%, 3/01/16 ................................................ United States 1,500,000 1,072,500
(e) 144A, 7.75%, 6/01/18 .............................................. United States 500,000 330,000
Mariner Energy Inc., senior note, 7.50%, 4/15/13 .................. United States 2,500,000 1,637,500
MarkWest Energy Partners LP, senior note, 6.875%, 11/01/14 ........ United States 2,000,000 1,330,000
(e) Petroplus Finance Ltd., senior note, 144A, 6.75%, 5/01/14 ......... Switzerland 2,000,000 1,300,000
Plains Exploration & Production Co., senior note,
7.625%, 6/01/18 ................................................ United States 1,900,000 1,273,000
Quicksilver Resources Inc., senior note, 8.25%, 8/01/15 ........... United States 2,000,000 1,300,000
(e) SandRidge Energy Inc., senior note, 144A, 8.00%, 6/01/18 .......... United States 1,900,000 1,225,500
4 | Quarterly Statement of Investments
Franklin Universal Trust
STATEMENT OF INVESTMENTS, NOVEMBER 30, 2008 (UNAUDITED) (CONTINUED)
COUNTRY PRINCIPAL AMOUNT(d) VALUE
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CORPORATE BONDS (CONTINUED)
ENERGY (CONTINUED)
Tesoro Corp., senior note, 6.50%, 6/01/17 ......................... United States 2,500,000 $ 1,475,000
The Williams Cos. Inc., senior note, 8.75%, 3/15/32 ............... United States 800,000 585,169
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13,811,919
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FOOD, BEVERAGE & TOBACCO 1.9%
Dean Foods Inc., senior note, 7.00%, 6/01/16 ...................... United States 1,400,000 1,095,500
Smithfield Foods Inc., senior note, 7.75%,
5/15/13 ........................................................ United States 700,000 388,500
7/01/17 ........................................................ United States 1,000,000 527,500
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2,011,500
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HEALTH CARE EQUIPMENT & SERVICES 9.5%
FMC Finance III SA, senior note, 6.875%, 7/15/17 .................. Germany 2,000,000 1,680,000
HCA Inc.,
senior note, 6.50%, 2/15/16 ................................... United States 2,500,000 1,412,500
(g) senior secured note, PIK, 9.625%, 11/15/16 .................... United States 1,000,000 722,500
Tenet Healthcare Corp., senior note, 7.375%, 2/01/13 .............. United States 2,500,000 1,737,500
(g, h) U.S. Oncology Holdings Inc., senior note, PIK, FRN, 8.334%,
3/15/12 ........................................................ United States 2,149,218 1,407,737
(g) United Surgical Partners International Inc., senior sub. note,
PIK, 9.25%,
5/01/17 ........................................................ United States 2,000,000 1,210,000
Vanguard Health Holding Co. II LLC, senior sub. note, 9.00%,
10/01/14 ....................................................... United States 2,500,000 2,012,500
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10,182,737
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MATERIALS 10.4%
Crown Americas Inc., senior note, 7.75%, 11/15/15 ................. United States 2,000,000 1,820,000
Freeport-McMoRan Copper & Gold Inc., senior note, 8.375%,
4/01/17 ........................................................ United States 1,700,000 1,208,605
Huntsman International LLC, senior sub. note, 7.875%, 11/15/14 .... United States 2,000,000 1,330,000
(e) Ineos Group Holdings PLC, senior secured note, 144A, 8.50%,
2/15/16 ........................................................ United Kingdom 3,000,000 547,500
(e) MacDermid Inc., senior sub. note, 144A, 9.50%, 4/15/17 ............ United States 1,300,000 708,500
Nalco Co., senior sub. note, 8.875%, 11/15/13 ..................... United States 2,000,000 1,610,000
NewPage Corp., senior secured note, 10.00%, 5/01/12 ............... United States 2,000,000 1,090,000
Novelis Inc., senior note, 7.25%, 2/15/15 ......................... Canada 1,700,000 994,500
Owens-Brockway Glass Container Inc., senior note, 6.75%,
12/01/14 ....................................................... United States 1,500,000 1,312,500
Smurfit Kappa Funding PLC, senior sub. note, 7.75%, 4/01/15 ....... Ireland 800,000 540,000
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11,161,605
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MEDIA 11.3%
CanWest Media Inc., senior sub. note, 8.00%, 9/15/12 .............. Canada 2,000,000 790,000
CCH I LLC, senior secured note, 11.00%, 10/01/15 .................. United States 800,000 216,000
CCH II LLC, senior note, 10.25%, 9/15/10 .......................... United States 3,000,000 1,537,500
CSC Holdings Inc., senior note, 6.75%, 4/15/12 .................... United States 800,000 674,000
Dex Media West Finance, senior sub. note, 9.875%, 8/15/13 ......... United States 2,342,000 521,095
DIRECTV Holdings LLC, senior note, 7.625%, 5/15/16 ................ United States 2,000,000 1,715,000
EchoStar DBS Corp., senior note, 7.125%, 2/01/16 .................. United States 2,000,000 1,430,000
Quarterly Statement of Investments | 5
Franklin Universal Trust
STATEMENT OF INVESTMENTS, NOVEMBER 30, 2008 (UNAUDITED) (CONTINUED)
COUNTRY PRINCIPAL AMOUNT(d) VALUE
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CORPORATE BONDS (CONTINUED)
MEDIA (CONTINUED)
Idearc Inc., senior note, 8.00%, 11/15/16 ......................... United States 2,500,000 $ 218,750
Lamar Media Corp., senior sub. note, B, 6.625%, 8/15/15 ........... United States 2,500,000 1,825,000
LIN Television Corp., senior sub. note, 6.50%, 5/15/13 ............ United States 1,500,000 705,000
Quebecor Media Inc., senior note, 7.75%, 3/15/16 .................. Canada 2,200,000 1,485,000
R.H. Donnelley Corp., senior note, A-3, 8.875%, 1/15/16 ........... United States 700,000 94,500
Radio One Inc., senior sub. note, 6.375%, 2/15/13 ................. United States 1,700,000 586,500
(e, g) Univision Communications Inc., senior note, 144A, PIK, 9.75%,
3/15/15 ........................................................ United States 2,500,000 331,250
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12,129,595
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RETAILING 0.7%
Michaels Stores Inc., senior note, 10.00%, 11/01/14 ............... United States 2,500,000 800,000
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SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT 0.2%
Freescale Semiconductor Inc., senior note, 8.875%, 12/15/14 ....... United States 800,000 276,000
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SOFTWARE & SERVICES 2.4%
First Data Corp., senior note, 9.875%, 9/24/15 .................... United States 1,300,000 754,000
SunGard Data Systems Inc.,
senior note, 9.125%, 8/15/13 ................................... United States 900,000 702,000
senior sub. note, 10.25%, 8/15/15 .............................. United States 1,900,000 1,111,500
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2,567,500
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TECHNOLOGY HARDWARE & EQUIPMENT 1.9%
Celestica Inc., senior sub. note, 7.625%, 7/01/13 ................. Canada 400,000 298,000
(e, i) Nortel Networks Ltd., senior note, 144A, 10.75%, 7/15/16 .......... Canada 2,000,000 590,000
Sanmina-SCI Corp.,
(e, h) senior note, 144A, FRN, 5.569%, 6/15/14 .................... United States 700,000 472,500
senior sub. note, 6.75%, 3/01/13 ........................... United States 1,100,000 555,500
senior sub. note, 8.125%, 3/01/16 .......................... United States 400,000 182,000
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2,098,000
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TELECOMMUNICATION SERVICES 9.9%
(e) Digicel Group Ltd., senior note, 144A, 8.875%, 1/15/15 ............ Jamaica 2,000,000 1,040,000
Inmarsat Finance PLC, senior note, 10.375%, 11/15/12 .............. United Kingdom 1,500,000 1,323,750
Intelsat Bermuda Ltd., senior note, 11.25%, 6/15/16 ............... Bermuda 500,000 405,000
(e) Intelsat Subsidiary Holding Co. Ltd., senior note, 144A, 8.50%,
1/15/13 ........................................................ Bermuda 2,000,000 1,720,000
MetroPCS Wireless Inc., senior note, 9.25%, 11/01/14 .............. United States 2,000,000 1,650,000
Qwest Communications International Inc., senior note, 7.50%,
2/15/14 ........................................................ United States 2,000,000 1,310,000
(e) Wind Acquisition Finance SA, senior note, 144A, 10.75%, 12/01/15 .. Italy 2,500,000 2,062,500
Windstream Corp., senior note, 8.625%, 8/01/16 .................... United States 1,500,000 1,177,500
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10,688,750
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TRANSPORTATION 1.0%
(e) Ceva Group PLC, senior note, 144A, 10.00%, 9/01/14 ................ United Kingdom 1,500,000 1,132,500
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UTILITIES 9.2%
(e) The AES Corp., senior note, 144A, 8.00%, 6/01/20 .................. United States 2,000,000 1,290,000
Aquila Inc., senior note, 11.875%, 7/01/12 ........................ United States 1,300,000 1,268,402
6 | Quarterly Statement of Investments
Franklin Universal Trust
STATEMENT OF INVESTMENTS, NOVEMBER 30, 2008 (UNAUDITED) (CONTINUED)
COUNTRY PRINCIPAL AMOUNT(d) VALUE
-------------- ------------------- ------------
CORPORATE BONDS (CONTINUED)
UTILITIES (CONTINUED)
Dynegy Holdings Inc., senior note, 8.75%, 2/15/12 ................. United States 2,000,000 $ 1,695,000
Edison Mission Energy, senior note, 7.00%, 5/15/17 ................ United States 2,300,000 1,736,500
NRG Energy Inc., senior note, 7.375%,
2/01/16 ........................................................ United States 1,800,000 1,467,000
1/15/17 ........................................................ United States 700,000 567,000
PNM Resources Inc., senior note, 9.25%, 5/15/15 ................... United States 300,000 237,000
(e) Texas Competitive Electric Holdings Co. LLC, senior note, 144A,
10.25%, 11/01/15 ............................................... United States 2,500,000 1,612,500
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9,873,402
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TOTAL CORPORATE BONDS (COST $163,867,775) 101,685,355
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FOREIGN GOVERNMENT AND AGENCY SECURITIES
(COST $214,532) 0.1%
Eskom Holdings Ltd., 11.00%, 6/01/09 .............................. South Africa 783,333 ZAR 76,337
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TOTAL INVESTMENTS BEFORE SHORT TERM INVESTMENTS
(COST $200,090,776) ............................................ 145,117,748
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SHARES
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SHORT TERM INVESTMENTS (COST $2,199,783) 2.0%
MONEY MARKET FUNDS 2.0%
(j) Franklin Institutional Fiduciary Trust Money Market Portfolio,
0.99% .......................................................... United States 2,199,783 2,199,783
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TOTAL INVESTMENTS (COST $202,290,559) 136.8% ...................... 147,317,531
NOTES PAYABLE (39.0)% ............................................. (42,000,000)
OTHER ASSETS, LESS LIABILITIES 2.2% ............................... 2,359,354
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NET ASSETS 100.0% ................................................. $107,676,885
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See Abbreviations on page 11.
(a) Rounds to less than 0.1% of net assets.
(b) Non-income producing for the twelve months ended November 30, 2008.
(c) See Note 4 regarding restricted and illiquid securities.
(d) The principal amount is stated in U.S. dollars unless otherwise indicated.
(e) 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 November 30, 2008,
the aggregate value of these securities was $16,498,750, representing
15.32% of net assets.
(f) Defaulted security.
(g) Income may be received in additional securities and/or cash.
(h) The coupon rate shown represents the rate at period end.
(i) Security trading flat.
(j) The Franklin Institutional Fiduciary Trust Money Market Portfolio is
managed by the Fund's investment manager. The rate shown is the annualized
seven-day yield at period end.
See Notes to Statement of Investments.
Quarterly Statement of Investments | 7
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. Occasionally, events may impact the availability or
reliability of foreign exchange rates used to convert to the U.S. dollar
equivalent value. If such an event occurs, the foreign exchange rate will be
valued at fair value using procedures established and approved by the Fund's
Board of Trustees.
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
8 | Quarterly Statement of Investments
Franklin Universal Trust
NOTES TO STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
2. SECURITY VALUATION (CONTINUED)
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. INCOME TAXES
At November 30, 2008, the cost of investments and net unrealized appreciation
(depreciation) for income tax purposes were as follows:
Cost of investments ......................... $202,730,511
============
Unrealized appreciation ..................... $ 13,590,806
Unrealized depreciation ..................... (69,003,786)
------------
Net unrealized appreciation (depreciation)... $(55,412,980)
============
4. RESTRICTED SECURITIES
At November 30, 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 (0.01% of Net Assets) ..... $7,216
======
5. FAIR VALUE MEASUREMENTS
The Fund adopted Financial Accounting Standards Board (FASB) issued FASB
Statement No. 157, "Fair Value Measurement" (SFAS 157), on September 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.
Quarterly Statement of Investments | 9
Franklin Universal Trust
NOTES TO STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
5. FAIR VALUE MEASUREMENTS (CONTINUED)
SFAS 157 establishes a fair value hierarchy that distinguishes between market
data obtained from independent sources (observable inputs) and the Fund'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 November 30, 2008, in
valuing the Fund's assets and liabilities carried at fair value:
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
----------- ------------ ------- ------------
ASSETS:
Investments in Securities $45,555,839 $101,754,476 $7,216 $147,317,531
LIABILITIES:
Senior Fixed Rate Notes -- 42,000,000 -- 42,000,000
At November 30, 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 - September 1, 2008 ...................... $ 7,611
Net realized gain (loss) ................................ (3,384,733)
Net change in unrealized appreciation (depreciation) .... 3,388,384
Net purchases (sales) ................................... (4,046)
Transfers in and/or out of Level 3 ...................... --
-----------
Ending Balance ............................................. $ 7,216
===========
Net change in unrealized appreciation (depreciation)
attributable to assets still held at end of period ...... $ --
===========
10 | Quarterly Statement of Investments
Franklin Universal Trust
NOTES TO STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
6. 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.
ABBREVIATIONS
CURRENCY
ZAR - South African Rand
SELECTED PORTFOLIO
ADR - American Depository Receipt
FRN - Floating Rate Note
PIK - Payment-In-Kind
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 Jennifer J. Bolt, 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/JENNIFER J. BOLT
-----------------------------------
Jennifer J. Bolt
Chief Executive Officer -
Finance and Administration
Date January 27, 2009
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/JENNIFER J. BOLT
-----------------------------------
Jennifer J. Bolt
Chief Executive Officer -
Finance and Administration
Date January 27, 2009
By /s/LAURA F. FERGERSON
------------------------------------
Laura F. Fergerson
Chief Financial Officer and
Chief Accounting Officer
Date January 27, 2009