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: (650) 312-2000
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Date of fiscal year end: 8/31
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Date of reporting period: 11/30/09
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Item 1. Schedule of Investments.
Franklin Universal Trust
STATEMENT OF INVESTMENTS, NOVEMBER 30, 2009 (UNAUDITED)
COUNTRY SHARES VALUE
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COMMON STOCKS 32.5%
AUTOMOBILES & COMPONENTS 0.0%(a)
(b, c) Harvard Industries Inc. United States 109,618 $ 1,096
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COMMERCIAL & PROFESSIONAL SERVICES 0.0%
(b, d) VS Holdings Inc. United States 181,875 --
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ENERGY 1.1%
Spectra Energy Corp. United States 92,350 1,792,514
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MEDIA 0.1%
(b) Charter Communications Inc., A United States 4,260 140,580
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UTILITIES 31.3%
Alliant Energy Corp. United States 85,000 2,335,800
Ameren Corp. United States 60,000 1,559,400
American Electric Power Co. Inc. United States 75,000 2,414,250
Atmos Energy Corp. United States 45,000 1,232,550
CenterPoint Energy Inc. United States 276,600 3,670,482
Constellation Energy Group United States 20,000 636,400
Dominion Resources Inc. United States 100,000 3,638,000
Duke Energy Corp. United States 160,000 2,668,800
Edison International United States 63,000 2,145,150
Entergy Corp. United States 50,000 3,932,500
Exelon Corp. United States 70,000 3,372,600
FirstEnergy Corp. United States 50,000 2,154,000
FPL Group Inc. United States 75,000 3,897,750
Great Plains Energy Inc. United States 32,600 580,280
Pinnacle West Capital Corp. United States 70,000 2,456,300
Progress Energy Inc. United States 45,000 1,759,050
Public Service Enterprise Group Inc. United States 50,000 1,568,000
Sempra Energy United States 48,500 2,577,290
The Southern Co. United States 120,000 3,850,800
Westar Energy Inc. United States 27,300 562,107
Wisconsin Energy Corp. United States 20,000 902,000
Xcel Energy Inc. United States 60,000 1,219,200
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49,132,709
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TOTAL COMMON STOCKS (COST $43,445,727) 51,066,899
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PREFERRED STOCKS (COST $214,420) 0.2%
DIVERSIFIED FINANCIALS 0.2%
(e) GMAC Inc., 7.00%, pfd., 144A United States 604 365,476
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PRINCIPAL
AMOUNT(f)
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(g) SENIOR FLOATING RATE INTERESTS (COST $997,459) 0.6%
MATERIALS 0.6%
Novelis Corp., U.S. Term Loan, 2.24% - 2.29%, 7/07/14 United States $ 997,459 892,414
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CORPORATE BONDS 91.1%
AUTOMOBILES & COMPONENTS 3.8%
Ford Motor Credit Co. LLC,
7.80%, 6/01/12 United States 2,000,000 1,999,554
senior note, 9.875%, 8/10/11 United States 2,000,000 2,070,000
(e) TRW Automotive Inc., senior note, 144A, 7.25%, 3/15/17 United States 2,000,000 1,860,000
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5,929,554
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CAPITAL GOODS 4.9%
(e) Allison Transmission Inc., senior note, 144A, 11.00%, 11/01/15 United States 2,000,000 2,080,000
Quarterly Statement of Investments See Notes to Statements of Investments
Franklin Universal Trust
STATEMENT OF INVESTMENTS, NOVEMBER 30, 2009 (UNAUDITED) (CONTINUED)
Case New Holland Inc., senior note,
7.125%, 3/01/14 United States $ 1,000,000 $ 992,500
(e) 144A, 7.75%, 9/01/13 United States 500,000 501,250
RBS Global & Rexnord Corp., senior note, 9.50%, 8/01/14 United States 2,000,000 2,000,000
RSC Equipment Rental Inc., senior note, 9.50%, 12/01/14 United States 2,200,000 2,164,250
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7,738,000
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COMMERCIAL & PROFESSIONAL SERVICES 2.2%
ARAMARK Corp., senior note, 8.50%, 2/01/15 United States 1,000,000 1,007,500
(e) Casella Waste Systems Inc., senior secured note, 144A, 11.00%, 7/15/14 United States 500,000 537,500
(e) Clean Harbors Inc., senior secured note, 144A, 7.625%, 8/15/16 United States 300,000 303,375
Iron Mountain Inc., senior sub. note, 8.75%, 7/15/18 United States 600,000 624,750
(e, h) JohnsonDiversey Holdings Inc., senior note, 144A, PIK, 10.50%, 5/15/20 United States 1,000,000 965,000
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3,438,125
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CONSUMER DURABLES & APPAREL 3.1%
Jarden Corp., senior sub. note, 7.50%, 5/01/17 United States 2,000,000 1,990,000
Jostens IH Corp., senior sub. note, 7.625%, 10/01/12 United States 400,000 404,000
KB Home, senior note,
6.25%, 6/15/15 United States 700,000 651,000
7.25%, 6/15/18 United States 800,000 740,000
Visant Holding Corp., senior note, 8.75%, 12/01/13 United States 1,100,000 1,138,500
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4,923,500
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CONSUMER SERVICES 4.6%
(d, i) Atherton Franchise Capital, 13.073%, 12/01/08 United States 721,603 7,216
(e, i) Fontainebleau Las Vegas, 144A, 10.25%, 6/15/15 United States 1,600,000 24,000
(e) Harrah's Operating Escrow, senior secured note, 144A, 11.25%, 6/01/17 United States 1,500,000 1,537,500
MGM MIRAGE, senior note,
6.875%, 4/01/16 United States 1,500,000 1,125,000
7.50%, 6/01/16 United States 1,200,000 915,000
(e) Norwegian Cruise Line Ltd., senior secured note, 144A, 11.75%,
11/15/16 United States 1,500,000 1,486,875
Pinnacle Entertainment Inc.,
(e) senior note, 144A, 8.625%, 8/01/17 United States 500,000 500,000
senior sub. note, 8.25%, 3/15/12 United States 323,000 324,615
(i) Station Casinos Inc.,
senior note, 7.75%, 8/15/16 United States 1,100,000 236,500
senior sub. note, 6.50%, 2/01/14 United States 100,000 1,500
senior sub. note, 6.875%, 3/01/16 United States 1,200,000 18,000
(e) Universal City Development,
senior note, 144A, 8.875%, 11/15/15 United States 600,000 586,500
senior sub. note, 144A, 10.875%, 11/15/16 United States 400,000 403,000
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7,165,706
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DIVERSIFIED FINANCIALS 1.7%
(e) GMAC LLC, senior note, 144A, 6.875%, 8/28/12 United States 2,849,000 2,727,918
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ENERGY 13.0%
(e) Antero Resources Finance, senior note, 144A, 9.375%, 12/01/17 United States 700,000 705,250
(e) Arch Coal Inc., senior note, 144A, 8.75%, 8/01/16 United States 200,000 207,000
Berry Petroleum Co., senior note, 10.25%, 6/01/14 United States 800,000 860,000
Chesapeake Energy Corp., senior note, 6.25%, 1/15/18 United States 2,000,000 1,810,000
Compagnie Generale de Geophysique-Veritas, senior note,
7.50%, 5/15/15 France 400,000 398,000
7.75%, 5/15/17 France 600,000 596,250
Concho Resources Inc., senior note, 8.625%, 10/01/17 United States 500,000 516,250
Copano Energy LLC, senior note, 8.125%, 3/01/16 United States 1,000,000 1,005,000
El Paso Corp., senior note, 12.00%, 12/12/13 United States 1,200,000 1,377,000
(g) Enterprise Products Operating LLC, junior sub. note, FRN, 7.034%,
1/15/68 United States 1,200,000 1,104,150
(e) General Maritime Corp., senior note, 144A, 12.00%, 11/15/17 United States 700,000 721,000
(e) Holly Corp., senior note, 144A, 9.875%, 6/15/17 United States 400,000 417,000
Franklin Universal Trust
STATEMENT OF INVESTMENTS, NOVEMBER 30, 2009 (UNAUDITED) (CONTINUED)
Mariner Energy Inc., senior note, 7.50%, 4/15/13 United States $ 1,500,000 $ 1,477,500
MarkWest Energy Partners LP, senior note, 6.875%, 11/01/14 United States 2,000,000 1,890,000
(e) OPTI Canada Inc., senior secured note, 144A, 9.00%, 12/15/12 Canada 400,000 401,000
Plains Exploration & Production Co., senior note, 7.625%, 6/01/18 United States 1,900,000 1,862,000
Quicksilver Resources Inc., senior note, 8.25%, 8/01/15 United States 2,000,000 2,000,000
(e) SandRidge Energy Inc., senior note, 144A, 8.00%, 6/01/18 United States 1,900,000 1,805,000
Tesoro Corp., senior note, 6.50%, 6/01/17 United States 1,500,000 1,353,750
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20,506,150
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FOOD & STAPLES RETAILING 1.6%
(e) Duane Reade Inc., senior secured note, 144A, 11.75%, 8/01/15 United States 500,000 541,250
Rite Aid Corp., senior secured note, 9.75%, 6/12/16 United States 900,000 976,500
SUPERVALU Inc., senior note, 8.00%, 5/01/16 United States 900,000 922,500
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2,440,250
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FOOD, BEVERAGE & TOBACCO 2.5%
(e) Alliance One International Inc., senior note, 144A, 10.00%, 7/15/16 United States 300,000 316,500
(e, j) CEDC Finance Corp. International Inc., senior secured note, 144A,
9.125%, 12/01/16 United States 700,000 703,500
(e) Cott Beverages Inc., senior note, 144A, 8.375%, 11/15/17 United States 700,000 701,750
(e) Dole Food Co. Inc., senior note, 144A, 13.875%, 3/15/14 United States 676,000 797,680
(e) JBS USA LLC, senior note, 144A, 11.625%, 5/01/14 United States 1,200,000 1,338,000
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3,857,430
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HEALTH CARE EQUIPMENT & SERVICES 8.3%
FMC Finance III SA, senior note, 6.875%, 7/15/17 Germany 1,500,000 1,492,500
(e) Fresenius US Finance II, senior note, 144A, 9.00%, 7/15/15 Germany 700,000 770,000
HCA Inc.,
senior note, 6.50%, 2/15/16 United States 2,500,000 2,306,250
(h) senior secured note, PIK, 9.625%, 11/15/16 United States 1,051,000 1,123,256
Tenet Healthcare Corp., senior note, 7.375%, 2/01/13 United States 1,700,000 1,683,000
(h) United Surgical Partners International Inc., senior sub. note, PIK,
9.25%, 5/01/17 United States 2,000,000 2,030,000
(g, h) US Oncology Holdings Inc., senior note, PIK, FRN, 6.428%, 3/15/12 United States 2,323,000 2,102,315
Vanguard Health Holding Co. II LLC, senior sub. note, 9.00%, 10/01/14 United States 1,500,000 1,552,500
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13,059,821
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MATERIALS 10.5%
(e) Associated Materials LLC, senior secured note, 144A, 9.875%, 11/15/16 United States 500,000 525,000
Ball Corp., senior note,
7.125%, 9/01/16 United States 200,000 206,000
7.375%, 9/01/19 United States 200,000 205,500
Freeport-McMoRan Copper & Gold Inc., senior note, 8.375%, 4/01/17 United States 1,500,000 1,620,354
Huntsman International LLC, senior sub. note, 7.875%, 11/15/14 United States 2,000,000 1,905,000
(e) Ineos Group Holdings PLC, senior secured note, 144A, 8.50%, 2/15/16 United Kingdom 2,500,000 1,662,500
(e) MacDermid Inc., senior sub. note, 144A, 9.50%, 4/15/17 United States 1,800,000 1,791,000
Nalco Co., senior sub. note, 8.875%, 11/15/13 United States 1,500,000 1,545,000
NewPage Corp., senior secured note,
10.00%, 5/01/12 United States 1,200,000 780,000
(e) 144A, 11.375%, 12/31/14 United States 800,000 792,000
(e) Novelis Inc., senior note, 144A, 11.50%, 2/15/15 Canada 250,000 261,250
Owens-Brockway Glass Container Inc., senior note, 6.75%, 12/01/14 United States 1,500,000 1,522,500
Solo Cup Co.,
(e) senior secured note, 144A, 10.50%, 11/01/13 United States 300,000 318,000
senior sub. note, 8.50%, 2/15/14 United States 1,000,000 967,500
Solutia Inc., senior note, 8.75%, 11/01/17 United States 400,000 418,000
Teck Resources Ltd., senior secured note, 10.75%, 5/15/19 Canada 900,000 1,055,250
Weyerhaeuser Co., senior note, 7.375%, 10/01/19 United States 900,000 942,992
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16,517,846
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Franklin Universal Trust
STATEMENT OF INVESTMENTS, NOVEMBER 30, 2009 (UNAUDITED) (CONTINUED)
MEDIA 10.4%
(e) Cablevision Systems Corp., senior note, 144A, 8.625%, 9/15/17 United States $ 500,000 $ 515,000
(e) CCH II LLC/CCH II Capital Corp., senior note, 144A, 13.50%, 11/30/16 United States 2,200,134 2,585,157
(e) CSC Holdings Inc., senior note, 144A, 8.50%, 4/15/14 United States 300,000 316,875
(i, k) Dex Media Inc.,
senior disc. note, 9.00%, 11/15/13 United States 200,000 50,000
senior note, B, 8.00%, 11/15/13 United States 500,000 125,000
(i, k) Dex Media West Finance, senior sub. note, 9.875%, 8/15/13 United States 2,342,000 743,585
EchoStar DBS Corp., senior note, 7.125%, 2/01/16 United States 1,500,000 1,492,500
Lamar Media Corp., senior sub. note, B, 6.625%, 8/15/15 United States 2,000,000 1,890,000
LIN Television Corp., senior sub. note, 6.50%, 5/15/13 United States 1,500,000 1,410,000
Quebecor Media Inc., senior note, 7.75%, 3/15/16 Canada 2,200,000 2,134,000
Radio One Inc., senior sub. note, 6.375%, 2/15/13 United States 1,700,000 1,113,500
(e) Sinclair Television Group Inc., senior secured note, 144A, 9.25%,
11/01/17 United States 1,200,000 1,221,000
(e, h) Univision Communications Inc., senior note, 144A, PIK, 10.50%, 3/15/15 United States 1,052,500 844,631
(e) UPC Germany GmbH, senior secured bond, 144A, 8.125%, 12/01/17 Germany 600,000 600,000
(e) UPC Holding BV, senior note, 144A, 9.875%, 4/15/18 Netherlands 300,000 312,000
(e) WMG Acquisition Corp., senior secured note, 144A, 9.50%, 6/15/16 United States 900,000 972,000
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16,325,248
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PHARMACEUTICALS, BIOTECHNOLOGY & LIFE SCIENCES 0.2%
(e) Talecris Biotherapeutics Holdings Corp., senior note, 144A, 7.75%,
11/15/16 United States 300,000 307,500
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REAL ESTATE 1.2%
(e) FelCor Lodging Trust Inc., senior secured note, 144A, 10.00%, 10/01/14 United States 1,400,000 1,372,000
Forest City Enterprises Inc., senior note, 7.625%, 6/01/15 United States 600,000 513,000
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1,885,000
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RETAILING 1.4%
Michaels Stores Inc., senior note, 10.00%, 11/01/14 United States 1,500,000 1,537,500
(e) QVC Inc., senior secured note, 144A, 7.50%, 10/01/19 United States 700,000 703,500
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2,241,000
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SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT 1.0%
(e) Advanced Micro Devices Inc., senior note, 144A, 8.125%, 12/15/17 United States 300,000 284,625
Freescale Semiconductor Inc., senior note, 8.875%, 12/15/14 United States 1,500,000 1,282,500
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1,567,125
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SOFTWARE & SERVICES 2.2%
First Data Corp., senior note, 9.875%, 9/24/15 United States 1,300,000 1,163,500
SunGard Data Systems Inc.,
senior note, 9.125%, 8/15/13 United States 900,000 918,000
senior sub. note, 10.25%, 8/15/15 United States 1,400,000 1,442,000
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3,523,500
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TECHNOLOGY HARDWARE & EQUIPMENT 1.9%
Jabil Circuit Inc., senior note, 7.75%, 7/15/16 United States 500,000 517,500
Sanmina-SCI Corp.,
(e, g) senior note, 144A, FRN, 3.049%, 6/15/14 United States 700,000 630,000
senior sub. note, 6.75%, 3/01/13 United States 1,100,000 1,078,000
senior sub. note, 8.125%, 3/01/16 United States 400,000 391,000
(e) ViaSat Inc., senior note, 144A, 8.875%, 9/15/16 United States 300,000 307,500
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2,924,000
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TELECOMMUNICATION SERVICES 8.6%
(e) CC Holdings GS V LLC, senior secured note, 144A, 7.75%, 5/01/17 United States 300,000 318,750
Crown Castle International Corp.,
senior bond, 7.125%, 11/01/19 United States 100,000 99,250
Franklin Universal Trust
STATEMENT OF INVESTMENTS, NOVEMBER 30, 2009 (UNAUDITED) (CONTINUED)
senior note, 9.00%, 1/15/15 United States $ 800,000 $ 850,000
(e) Digicel Group Ltd., senior note, 144A, 8.875%, 1/15/15 Jamaica 2,000,000 1,952,500
Inmarsat Finance PLC, senior note, 10.375%, 11/15/12 United Kingdom 1,500,000 1,556,250
Intelsat Bermuda Ltd., senior note, 11.25%, 6/15/16 Bermuda 500,000 536,250
Intelsat Subsidiary Holding Co. Ltd., senior note, 8.50%, 1/15/13 Bermuda 1,500,000 1,513,125
MetroPCS Wireless Inc., senior note, 9.25%, 11/01/14 United States 2,000,000 2,015,000
Qwest Communications International Inc., senior note, 7.50%, 2/15/14 United States 2,000,000 1,990,000
(e) SBA Telecommunications Inc., senior note, 144A, 8.25%, 8/15/19 United States 600,000 627,000
(e) Wind Acquisition Finance SA, senior note, 144A, 12.00%, 12/01/15 Italy 1,500,000 1,612,500
(e) Windstream Corp., senior note, 144A, 7.875%, 11/01/17 United States 400,000 400,000
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13,470,625
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TRANSPORTATION 1.2%
(e) Ceva Group PLC, senior note, 144A, 10.00%, 9/01/14 United Kingdom 1,500,000 1,423,125
(e) Delta Air Lines Inc., senior secured note, 144A, 9.50%, 9/15/14 United States 500,000 508,750
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1,931,875
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UTILITIES 6.8%
The AES Corp., senior note, 8.00%, 6/01/20 United States 1,500,000 1,492,500
Ameren Corp., senior note, 8.875%, 5/15/14 United States 900,000 1,019,327
Aquila Inc., senior note, 11.875%, 7/01/12 United States 1,300,000 1,512,480
CMS Energy Corp., senior note, 8.75%, 6/15/19 United States 700,000 773,730
Dynegy Holdings Inc., senior note, 8.75%, 2/15/12 United States 2,000,000 2,055,000
NRG Energy Inc., senior note, 7.375%,
2/01/16 United States 1,800,000 1,795,500
1/15/17 United States 200,000 199,000
Texas Competitive Electric Holdings Co. LLC, senior note, A, 10.25%,
11/01/15 United States 2,500,000 1,787,500
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10,635,037
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TOTAL CORPORATE BONDS (COST $146,760,617) 143,115,210
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TOTAL INVESTMENTS BEFORE SHORT TERM INVESTMENTS (COST $191,418,223) 195,439,999
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COUNTRY SHARES VALUE
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SHORT TERM INVESTMENTS (COST $1,405,386) 0.9%
MONEY MARKET FUNDS 0.9%
(l) Institutional Fiduciary Trust Money Market Portfolio, 0.00% United States 1,405,386 1,405,386
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TOTAL INVESTMENTS (COST $192,823,609) 125.3% 196,845,385
NOTES PAYABLE (26.7)% (42,000,000)
OTHER ASSETS, LESS LIABILITIES 1.4% 2,262,728
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NET ASSETS 100.0% $ 157,108,113
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(a) Rounds to less than 0.1% of net assets.
(b) Non-income producing.
(c) Security has been deemed illiquid because it may not be able to be sold
within seven days. At November 30, 2009, the value of this security was
$1,096, representing less than 0.01% of net assets.
(d) See Note 4 regarding restricted securities.
(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, 2009,
the aggregate value of these securities was $44,051,330, representing
28.04% of net assets.
(f) The principal amount is stated in U.S. dollars unless otherwise indicated.
(g) The coupon rate shown represents the rate at period end.
(h) Income may be received in additional securities and/or cash.
(i) Defaulted security or security for which income has been deemed
uncollectible.
(j) Security purchased on a when-issued basis.
(k) See Note 5 regarding other considerations.
(l) 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 Universal Trust
STATEMENT OF INVESTMENTS, NOVEMBER 30, 2009 (UNAUDITED) (CONTINUED)
ABBREVIATIONS
SELECTED PORTFOLIO
FRN Floating Rate Note
PIK Payment-In-Kind
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 closed-end investment company.
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.
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. INCOME TAXES
At November 30, 2009, the cost of investments and net unrealized appreciation
(depreciation) for income tax purposes were as follows:
Franklin Universal Trust
Cost of investments $193,422,434
============
Unrealized appreciation $ 19,094,528
Unrealized depreciation (15,671,577)
------------
Net unrealized appreciation (depreciation) $ 3,422,951
============
4. RESTRICTED SECURITIES
At November 30, 2009, 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 ACQUISITION
AMOUNT/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% of Net Assets)(a) $7,216
======
(a) Rounds to less than 0.01% of net assets.
5. 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.
6. FAIR VALUE MEASUREMENTS
The Fund follows 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, 2009, in
valuing the Fund's assets and liabilities carried at fair value:
Franklin Universal Trust
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
----------- ------------ ------- ------------
ASSETS:
Investments in Securities:
Equity Investments:(a)
Automobiles & Components $ -- $ -- $1,096 $ 1,096
Commercial & Professional Services -- -- --(b) --(b)
Diversified Financials -- 365,476 -- 365,476
Other Equity Investments(c) 51,065,803 -- -- 51,065,803
Senior Floating Rate Interests -- 892,414 -- 892,414
Corporate Bonds -- 143,107,994 7,216 143,115,210
Short Term Investments 1,405,386 -- -- 1,405,386
----------- ------------ ------ ------------
Total Investments in Securities $52,471,189 $144,365,884 $8,312 $196,845,385
----------- ------------ ------ ------------
(a) Includes common and preferred stock as well as other equity investments.
(b) Includes security determined to have no value at November 30, 2009.
(c) For detailed industry descriptions, see the accompanying Statement of
Investments.
At November 30, 2009, 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 IN APPRECIATION
BALANCE AT NET UNREALIZED NET TRANSFER IN BALANCE AT (DEPRECIATION)
BEGINNING REALIZED APPRECIATION PURCHASES (OUT) OF END OF ON ASSETS HELD
OF PERIOD GAIN (LOSS) (DEPRECIATION) (SALES) LEVEL 3 PERIOD AT PERIOD END
---------- ----------- -------------- -------- ----------- ---------- --------------
ASSETS
Equity Investments:
Automobiles & Components $1,096 $-- $-- $-- $-- $1,096 $--
Corporate Bonds 7,216 -- -- -- -- 7,216 --
------ --- --- --- --- ------ ---
Total $8,312 $-- $-- $-- $-- $8,312 $--
------ --- --- --- --- ------ ---
7. SUBSEQUENT EVENTS
The Fund has evaluated subsequent events through January 22, 2010, the issuance
date 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 UNIVERSAL TRUST
By /s/LAURA F. FERGERSON
--------------------------------
Laura F. Fergerson
Chief Executive Officer -
Finance and Administration
Date January 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 January 27, 2010
By /s/GASTON GARDEY
--------------------------------
Gaston Gardey
Chief Financial Officer and
Chief Accounting Officer
Date January 27, 2010