N-Q 1 nqfhitpe022916.htm nqfhitpe022916.htm - Generated by SEC Publisher for SEC Filing

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

 

 

FORM N-Q

 

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED

 MANAGEMENT INVESTMENT COMPANY

 

                  Investment Company Act file number 811-01608

 

Franklin High Income Trust

(Exact name of registrant as specified in charter)

 

One Franklin Parkway, San Mateo, CA  94403-1906

(Address of principal executive offices) (Zip code)

 

Craig S. Tyle, One Franklin Parkway, San Mateo, CA  94403-1906

(Name and address of agent for service)

 

Registrant's telephone number, including area code: _650 312-2000

 

Date of fiscal year end: _5/31

 

Date of reporting period: 2/29/16

 

 

Item 1. Schedule of Investments.

 

FRANKLIN HIGH INCOME TRUST

Statement of Investments, February 29, 2016 (unaudited)        
Franklin High Income Fund        
    Shares/    
  Country Warrants   Value
 
Common Stocks and Other Equity Interests 0.0%†        
Consumer Services 0.0%†        
a,b Station Casinos Inc., wts., 6/17/18 United States 136,789 $ 176,457
Transportation 0.0%†        
a CEVA Holdings LLC United Kingdom 3,364   1,513,899
Total Common Stocks and Other Equity Interests        
(Cost $5,172,824)       1,690,356
 
Convertible Preferred Stocks 0.1%        
Transportation 0.1%        
a CEVA Holdings LLC, cvt. pfd., A-1. United Kingdom 134   82,008
a CEVA Holdings LLC, cvt. pfd., A-2. United Kingdom 7,283   3,277,179
Total Convertible Preferred Stocks (Cost $11,036,794)       3,359,187
 
 
    Principal    
    Amount*    
 
Corporate Bonds 91.5%        
Automobiles & Components 2.1%        
Fiat Chrysler Automobiles NV, senior note, 5.25%, 4/15/23 United Kingdom 45,000,000   42,637,500
The Goodyear Tire & Rubber Co.,        
senior note, 6.50%, 3/01/21 United States 15,000,000   15,853,200
senior note, 5.125%, 11/15/23 United States 15,000,000   15,487,500
c International Automotive Components Group SA, senior secured note, 144A, 9.125%,        
6/01/18 United States 15,000,000   13,218,750
        87,196,950
Banks 4.1%        
d Bank of America Corp., junior sub. bond, M, 8.125% to 5/15/18, FRN thereafter,        
Perpetual United States 45,000,000   45,056,250
CIT Group Inc.,        
senior note, 5.375%, 5/15/20 United States 20,000,000   20,700,000
senior note, 5.00%, 8/15/22 United States 33,650,000   33,860,313
d Citigroup Inc., junior sub. bond, M, 6.30% to 5/15/24, FRN thereafter, Perpetual United States 45,000,000   42,243,750
d JPMorgan Chase & Co.,        
junior sub. bond, R, 6.00% to 8/01/23, FRN thereafter, Perpetual United States 5,000,000   4,962,500
junior sub. bond, V, 5.00% to 7/30/19, FRN thereafter, Perpetual United States 10,400,000   9,737,000
Royal Bank of Scotland Group PLC,        
sub. note, 6.125%, 12/15/22 United Kingdom 5,000,000   5,265,625
sub. note, 5.125%, 5/28/24 United Kingdom 10,000,000   9,568,750
        171,394,188
Capital Goods 2.9%        
c Bombardier Inc., senior bond, 144A, 7.50%, 3/15/25 Canada 50,000,000   35,500,000
c CBC Ammo LLC/CBC FinCo Inc., senior note, 144A, 7.25%, 11/15/21 Brazil 25,000,000   19,750,000
c DigitalGlobe Inc., senior note, 144A, 5.25%, 2/01/21 United States 22,000,000   19,250,000
Navistar International Corp., senior bond, 8.25%, 11/01/21 United States 14,000,000   8,540,000
TransDigm Inc.,        
senior sub. bond, 6.50%, 7/15/24 United States 9,500,000   9,310,000
csenior sub. bond, 144A, 6.50%, 5/15/25 United States 4,200,000   4,047,750
senior sub. note, 6.00%, 7/15/22 United States 9,400,000   9,212,000
c Zachry Holdings Inc., senior note, 144A, 7.50%, 2/01/20 United States 16,750,000   16,080,000
        121,689,750

 

Quarterly Statement of Investments | See Notes to Statement of Investments. | 1

 

FRANKLIN HIGH INCOME TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin High Income Fund (continued)        
    Principal    
  Country Amount*   Value
 
Corporate Bonds (continued)        
Commercial & Professional Services 0.8%        
c Acosta Inc., senior note, 144A, 7.75%, 10/01/22 United States 20,000,000 $ 17,700,000
b,e Goss Graphic Systems Inc., senior sub. note, 12.25%, 11/19/05 United States 9,053,899   905
United Rentals North America Inc., senior bond, 5.75%, 11/15/24. United States 15,000,000   14,697,000
        32,397,905
Consumer Durables & Apparel 2.3%        
KB Home,        
senior bond, 7.50%, 9/15/22 United States 25,000,000   23,812,500
senior note, 4.75%, 5/15/19 United States 11,000,000   10,560,000
senior note, 7.00%, 12/15/21 United States 10,000,000   9,550,000
c Taylor Morrison Communities Inc./Monarch Communities Inc.,        
senior note, 144A, 5.875%, 4/15/23 United States 15,000,000   13,875,000
senior note, 144A, 5.625%, 3/01/24 United States 25,000,000   22,500,000
Toll Brothers Finance Corp., senior bond, 5.625%, 1/15/24 United States 15,000,000   15,300,000
        95,597,500
Consumer Services 4.3%        
c 1011778 BC ULC/New Red Finance Inc.,        
secured note, second lien, 144A, 6.00%, 4/01/22 Canada 25,000,000   26,125,000
senior secured note, first lien, 144A, 4.625%, 1/15/22 Canada 15,000,000   15,300,000
c 24 Hour Holdings III LLC, senior note, 144A, 8.00%, 6/01/22 United States 30,000,000   22,950,000
c,e Fontainebleau Las Vegas, senior secured bond, first lien, 144A, 11.00%, 6/15/15 United States 20,000,000   39,500
c International Game Technology PLC,        
senior secured bond, 144A, 6.50%, 2/15/25. United States 26,500,000   23,783,750
senior secured note, 144A, 6.25%, 2/15/22 United States 22,000,000   20,845,000
MGM Resorts International,        
senior note, 6.625%, 12/15/21 United States 10,000,000   10,675,000
senior note, 6.00%, 3/15/23 United States 15,000,000   15,412,500
c Wynn Las Vegas LLC/Wynn Las Vegas Capital Corp., senior bond, 144A, 5.50%,        
  3/01/25 United States 21,700,000   20,804,875
c Wynn Macau Ltd., senior note, 144A, 5.25%, 10/15/21 Macau 22,500,000   20,868,750
        176,804,375
Diversified Financials 3.9%        
AerCap Ireland Capital Ltd./AerCap Global Aviation Trust,        
senior note, 4.25%, 7/01/20 Netherlands 9,250,000   9,284,688
senior note, 4.625%, 10/30/20 Netherlands 5,800,000   5,897,875
senior note, 5.00%, 10/01/21 Netherlands 15,000,000   15,431,250
senior note, 4.625%, 7/01/22 Netherlands 15,900,000   15,939,750
Deutsche Bank AG, sub. bond, 4.296% to 5/24/23, FRN thereafter, 5/24/28 Germany 25,000,000   21,381,250
E*TRADE Financial Corp.,        
senior note, 5.375%, 11/15/22 United States 5,000,000   5,209,450
senior note, 4.625%, 9/15/23 United States 10,000,000   9,825,000
Navient Corp.,        
senior note, 5.50%, 1/15/19 United States 30,000,000   29,775,000
senior note, 4.875%, 6/17/19 United States 4,000,000   3,810,000
senior note, 5.00%, 10/26/20 United States 12,500,000   11,062,500
senior note, 5.875%, 3/25/21 United States 5,000,000   4,406,250
c Neuberger Berman Group LLC/Finance Corp., senior note, 144A, 5.875%, 3/15/22 United States 10,000,000   10,412,500
c OneMain Financial Holdings Inc., senior note, 144A, 7.25%, 12/15/21 United States 18,000,000   16,897,500
        159,333,013

 

|2

 

FRANKLIN HIGH INCOME TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin High Income Fund (continued)          
    Principal      
  Country Amount*     Value
 
Corporate Bonds (continued)          
Energy 11.0%          
c,e Alpha Natural Resources Inc., second lien, 144A, 7.50%, 8/01/20. United States 25,000,000   $ 109,375
Atlas Energy Holdings Operating Co. LLC/Atlas Resource Finance Corp.,          
senior note, 7.75%, 1/15/21 United States 25,500,000     3,697,500
senior note, 9.25%, 8/15/21 United States 17,400,000     2,523,000
BreitBurn Energy Partners LP/BreitBurn Finance Corp., senior bond, 7.875%,          
4/15/22 United States 45,000,000     4,725,000
California Resources Corp.,          
csecured note, second lien, 144A, 8.00%, 12/15/22 United States 31,982,000     8,075,455
senior bond, 6.00%, 11/15/24 United States 8,040,000     1,065,300
senior note, 5.50%, 9/15/21 United States 3,882,000     543,480
c Calumet Specialty Products Partners LP/Calumet Finance Corp., senior note, 144A,          
7.75%, 4/15/23 United States 30,100,000     17,006,500
CGG SA,          
senior note, 6.50%, 6/01/21 France 29,000,000     9,932,500
senior note, 6.875%, 1/15/22 France 20,800,000     7,488,000
Chaparral Energy Inc.,          
senior bond, 8.25%, 9/01/21 United States 10,000,000     750,000
senior bond, 7.625%, 11/15/22. United States 6,700,000     502,500
senior note, 9.875%, 10/01/20 United States 15,000,000     1,350,000
CHC Helicopter SA,          
senior note, 9.375%, 6/01/21 Canada 10,000,000     587,500
senior secured note, first lien, 9.25%, 10/15/20 Canada 37,800,000     13,608,000
c Chesapeake Energy Corp., secured note, second lien, 144A, 8.00%, 12/15/22. United States 34,207,000     13,511,765
Clayton Williams Energy Inc., senior note, 7.75%, 4/01/19 United States 19,550,000     9,872,750
Compressco Partners LP/Finance Corp., senior note, 7.25%, 8/15/22 United States 12,900,000     7,417,500
CONSOL Energy Inc.,          
senior note, 5.875%, 4/15/22 United States 15,000,000     9,862,500
senior note, 8.00%, 4/01/23 United States 35,000,000     23,625,000
c Crestwood Midstream Partners LP/Crestwood Midstream Finance Corp., senior note,          
144A, 6.25%, 4/01/23 United States 17,700,000     12,168,750
Energy Transfer Equity LP,          
senior note, first lien, 7.50%, 10/15/20. United States 25,000,000     23,000,000
senior secured bond, first lien, 5.875%, 1/15/24 United States 15,000,000     12,450,000
senior secured bond, first lien, 5.50%, 6/01/27 United States 17,900,000     13,604,000
Energy XXI Gulf Coast Inc.,          
senior note, 9.25%, 12/15/17 United States 26,000,000     658,112
csenior secured note, second lien, 144A, 11.00%, 3/15/20 United States 10,000,000     1,125,000
c EnQuest PLC, senior note, 144A, 7.00%, 4/15/22 United Kingdom 25,000,000     6,000,000
EPL Oil & Gas Inc., senior note, 8.25%, 2/15/18 United States 20,000,000     675,000
c Ferrellgas LP/Ferrellgas Finance Corp., senior note, 144A, 6.75%, 6/15/23 United States 33,900,000     24,492,750
c,f Goodrich Petroleum Corp.,          
second lien, 144A, 8.00%, 3/15/18 United States 15,000 g   2,250,000
secured note, second lien, 144A, 8.875%, 3/15/18 United States 17,500 g   2,625,000
f Halcon Resources Corp.,          
senior note, 9.75%, 7/15/20 United States 20,000,000     2,300,000
senior note, 8.875%, 5/15/21 United States 5,000,000     575,000
csenior secured note, third lien, 144A, 13.00%, 2/15/22 United States 20,000,000     3,100,000

 

|3

 

FRANKLIN HIGH INCOME TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin High Income Fund (continued)        
    Principal    
  Country Amount*   Value
 
Corporate Bonds (continued)        
Energy (continued)        
c Kinder Morgan Inc., senior secured bond, first lien, 144A, 5.625%, 11/15/23 United States 25,000,000 $ 23,383,300
c Linn Energy LLC/Finance Corp., senior secured note, second lien, 144A, 12.00%,        
12/15/20. United States 35,000,000   4,243,750
Martin Midstream Partners LP/Martin Midstream Finance Corp., senior note, 7.25%,        
2/15/21 United States 30,000,000   24,150,000
Memorial Production Partners LP/Memorial Production Finance Corp.,        
senior note, 7.625%, 5/01/21 United States 30,000,000   7,050,000
senior note, 6.875%, 8/01/22 United States 10,000,000   2,200,000
Memorial Resource Development Corp., senior note, 5.875%, 7/01/22 United States 15,000,000   10,275,000
Midstates Petroleum Co. Inc./LLC, senior note, 9.25%, 6/01/21 United States 25,000,000   687,500
c Murray Energy Corp., secured note, second lien, 144A, 11.25%, 4/15/21. United States 24,500,000   3,001,250
Oasis Petroleum Inc., senior note, 6.875%, 3/15/22. United States 15,000,000   8,850,000
PBF Holding Co. LLC, first lien, 8.25%, 2/15/20 United States 10,000,000   10,050,000
c,f Peabody Energy Corp., secured note, second lien, 144A, 10.00%, 3/15/22 United States 53,000,000   2,120,000
Penn Virginia Corp., senior note, 8.50%, 5/01/20 United States 25,000,000   2,250,000
QEP Resources Inc.,        
senior bond, 5.375%, 10/01/22. United States 20,000,000   13,900,000
senior bond, 5.25%, 5/01/23 United States 10,000,000   7,050,000
Sabine Pass Liquefaction LLC,        
first lien, 5.625%, 2/01/21 United States 25,000,000   23,984,375
first lien, 5.625%, 4/15/23 United States 13,300,000   12,335,750
senior secured note, first lien, 5.625%, 3/01/25 United States 10,000,000   9,112,500
Sanchez Energy Corp.,        
senior note, 7.75%, 6/15/21 United States 10,000,000   4,100,000
senior note, 6.125%, 1/15/23 United States 20,000,000   7,200,000
c Triangle USA Petroleum Corp., senior note, 144A, 6.75%, 7/15/22 United States 20,000,000   3,100,000
c Ultra Petroleum Corp., senior bond, 144A, 6.125%, 10/01/24 United States 40,000,000   2,200,000
Vanguard Natural Resources LLC/Finance Corp., senior note, 7.875%, 4/01/20 United States 20,000,000   2,300,000
W&T Offshore Inc., senior note, 8.50%, 6/15/19 United States 40,000,000   5,100,000
WPX Energy Inc.,        
senior note, 6.00%, 1/15/22 United States 35,000,000   20,212,500
senior note, 8.25%, 8/01/23 United States 5,300,000   3,299,250
        453,432,412
Food, Beverage & Tobacco 3.0%        
Cott Beverages Inc., senior note, 6.75%, 1/01/20 United States 18,000,000   18,990,000
c Dole Food Co. Inc., senior secured note, 144A, 7.25%, 5/01/19 United States 7,900,000   7,761,750
c JBS USA LLC/Finance Inc.,        
senior bond, 144A, 5.875%, 7/15/24 United States 17,100,000   15,219,000
senior note, 144A, 8.25%, 2/01/20 United States 20,000,000   20,160,000
senior note, 144A, 7.25%, 6/01/21 United States 10,000,000   9,725,000
Post Holdings Inc.,        
senior note, 7.375%, 2/15/22 United States 20,000,000   21,275,000
csenior note, 144A, 6.75%, 12/01/21 United States 24,000,000   25,500,000
csenior note, 144A, 6.00%, 12/15/22 United States 5,400,000   5,629,500
        124,260,250
Health Care Equipment & Services 6.4%        
Alere Inc., senior sub. note, 6.50%, 6/15/20 United States 6,300,000   6,552,000
CHS/Community Health Systems Inc.,        
senior note, 8.00%, 11/15/19 United States 20,000,000   19,000,000
senior note, 7.125%, 7/15/20 United States 13,300,000   12,036,500
senior note, 6.875%, 2/01/22 United States 4,600,000   3,967,500

 

|4

 

FRANKLIN HIGH INCOME TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin High Income Fund (continued)        
    Principal    
  Country Amount*   Value
 
Corporate Bonds (continued)        
Health Care Equipment & Services (continued)        
CHS/Community Health Systems Inc., (continued)        
senior secured note, 5.125%, 8/01/21 United States 4,100,000 $ 4,141,000
senior secured note, first lien, 5.125%, 8/15/18 United States 5,000,000   5,043,750
DaVita HealthCare Partners Inc.,        
senior bond, 5.125%, 7/15/24 United States 17,800,000   18,144,875
senior bond, 5.00%, 5/01/25 United States 17,400,000   17,400,000
senior note, 5.75%, 8/15/22 United States 8,000,000   8,450,000
HCA Inc.,        
senior bond, 5.875%, 5/01/23 United States 45,000,000   47,475,000
senior bond, 5.375%, 2/01/25 United States 7,000,000   7,140,000
senior secured bond, first lien, 5.875%, 3/15/22 United States 10,000,000   10,750,000
senior secured bond, first lien, 5.25%, 4/15/25 United States 11,000,000   11,357,500
senior secured note, first lien, 5.00%, 3/15/24 United States 20,000,000   20,450,000
Tenet Healthcare Corp.,        
first lien, 6.00%, 10/01/20 United States 6,700,000   7,122,937
senior note, 5.00%, 3/01/19 United States 10,700,000   10,272,000
senior note, 5.50%, 3/01/19 United States 6,300,000   6,095,250
senior note, 8.125%, 4/01/22 United States 20,000,000   19,762,400
senior note, 6.75%, 6/15/23 United States 13,700,000   12,535,500
c Vizient Inc., senior note, 144A, 10.375%, 3/01/24 United States 17,800,000   18,868,000
        266,564,212
Materials 13.7%        
ArcelorMittal,        
senior note, 6.50%, 3/01/21 Luxembourg 46,800,000   42,266,250
senior note, 6.125%, 6/01/25 Luxembourg 10,800,000   8,802,000
c Ardagh Packaging Finance PLC/Ardagh MP Holdings USA Inc.,        
senior note, 144A, 6.25%, 1/31/19 Luxembourg 4,100,000   4,028,250
senior note, 144A, 7.00%, 11/15/20 Luxembourg 2,647,059   2,466,728
senior note, 144A, 6.00%, 6/30/21 Luxembourg 7,000,000   6,440,000
hsenior secured note, 144A, FRN, 3.512%, 12/15/19 Luxembourg 22,800,000   22,230,000
c Barminco Finance Pty. Ltd., senior note, 144A, 9.00%, 6/01/18. Australia 29,000,000   22,221,250
c Blue Cube Spinco Inc., senior bond, 144A, 10.00%, 10/15/25 United States 15,000,000   16,687,500
c Cemex Finance LLC, senior secured note, first lien, 144A, 6.00%, 4/01/24. Mexico 15,800,000   14,279,250
c Cemex SAB de CV,        
first lien, 144A, 5.70%, 1/11/25. Mexico 30,000,000   26,287,500
senior secured bond, first lien, 144A, 6.125%, 5/05/25 Mexico 10,000,000   8,925,000
c The Chemours Co.,        
senior bond, 144A, 7.00%, 5/15/25 United States 8,500,000   6,183,750
senior note, 144A, 6.625%, 5/15/23 United States 37,000,000   26,917,500
c Eldorado Gold Corp., senior note, 144A, 6.125%, 12/15/20 Canada 40,000,000   33,650,000
c First Quantum Minerals Ltd.,        
senior note, 144A, 6.75%, 2/15/20 Canada 20,000,000   10,500,000
senior note, 144A, 7.00%, 2/15/21 Canada 35,000,000   18,200,000
c FMG Resources (August 2006) Pty. Ltd., senior secured note, 144A, 9.75%, 3/01/22 . Australia 55,000,000   51,734,375
Novelis Inc., senior note, 8.75%, 12/15/20 Canada 20,000,000   18,650,000
c Owens-Brockway Glass Container Inc.,        
senior note, 144A, 5.00%, 1/15/22 United States 14,800,000   14,578,000
senior note, 144A, 5.875%, 8/15/23 United States 10,000,000   10,318,750
c Platform Specialty Products Corp.,        
senior note, 144A, 10.375%, 5/01/21 United States 7,400,000   6,771,000
senior note, 144A, 6.50%, 2/01/22 United States 27,000,000   22,005,000

 

|5

 

FRANKLIN HIGH INCOME TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin High Income Fund (continued)        
    Principal    
  Country Amount*   Value
 
Corporate Bonds (continued)        
Materials (continued)        
c Rain CII Carbon LLC/CII Carbon Corp., second lien, 144A, 8.25%, 1/15/21 United States 19,700,000 $ 14,479,500
Reynolds Group Issuer Inc./LLC/SA,        
first lien, 5.75%, 10/15/20 United States 20,000,000   20,600,000
senior note, 8.50%, 5/15/18 United States 10,000,000   9,975,000
senior note, 9.00%, 4/15/19 United States 2,300,000   2,314,490
senior note, 9.875%, 8/15/19 United States 7,500,000   7,734,375
senior note, 8.25%, 2/15/21 United States 20,000,000   19,750,000
c Sealed Air Corp., senior bond, 144A, 5.50%, 9/15/25 United States 19,300,000   20,337,375
Steel Dynamics Inc.,        
senior bond, 5.50%, 10/01/24 United States 15,000,000   14,100,000
senior note, 5.125%, 10/01/21 United States 10,000,000   9,800,000
c,i Summit Materials LLC/Summit Materials Finance Corp., senior note, 144A, 8.50%,        
4/15/22 United States 30,200,000   30,200,000
c U.S. Coatings Acquisition Inc./Flash Dutch 2 BV, senior note, 144A, 7.375%, 5/01/21 . United States 10,000,000   10,650,000
c Univar USA Inc., senior note, 144A, 6.75%, 7/15/23 United States 12,500,000   10,812,500
e Verso Paper Holdings LLC/Inc., senior secured note, first lien, 11.75%, 1/15/19 United States 5,406,000   783,870
        565,679,213
Media 9.5%        
CCO Holdings LLC/CCO Holdings Capital Corp.,        
senior bond, 5.25%, 9/30/22 United States 25,000,000   25,343,750
senior bond, 5.125%, 2/15/23 United States 10,000,000   9,950,000
csenior bond, 144A, 5.375%, 5/01/25 United States 15,000,000   14,850,000
c CCOH Safari LLC, senior bond, 144A, 5.75%, 2/15/26 United States 13,200,000   13,267,716
f Clear Channel Worldwide Holdings Inc.,        
senior sub. note, 7.625%, 3/15/20. United States 15,000,000   13,256,250
senior sub. note, 7.625%, 3/15/20. United States 1,650,000   1,348,875
senior note, 6.50%, 11/15/22 United States 3,500,000   3,189,375
senior note, 6.50%, 11/15/22 United States 6,500,000   6,280,625
CSC Holdings LLC,        
senior note, 6.75%, 11/15/21 United States 5,000,000   5,087,500
senior note, 5.25%, 6/01/24 United States 30,000,000   25,875,000
DISH DBS Corp.,        
senior bond, 5.00%, 3/15/23 United States 5,000,000   4,437,500
senior note, 5.875%, 7/15/22 United States 25,000,000   24,000,000
senior note, 5.875%, 11/15/24 United States 20,000,000   18,046,000
Gannett Co. Inc.,        
senior bond, 6.375%, 10/15/23. United States 10,000,000   10,750,000
senior note, 5.125%, 10/15/19 United States 5,000,000   5,318,750
senior note, 5.125%, 7/15/20 United States 15,000,000   15,712,500
f iHeartCommunications Inc.,        
senior secured bond, first lien, 9.00%, 3/01/21 United States 35,000,000   23,975,000
senior secured note, first lien, 9.00%, 9/15/22 United States 15,000,000   10,106,250
c Radio One Inc., senior sub. note, 144A, 9.25%, 2/15/20. United States 20,000,000   14,650,000
c Sirius XM Radio Inc.,        
senior bond, 144A, 6.00%, 7/15/24 United States 30,000,000   31,575,000
senior bond, 144A, 5.375%, 4/15/25 United States 13,400,000   13,400,000
c Unitymedia KabelBW GmbH, senior bond, 144A, 6.125%, 1/15/25 Germany 25,000,000   25,703,125
c Univision Communications Inc.,        
senior secured note, first lien, 144A, 5.125%, 5/15/23 United States 5,000,000   4,987,500
senior secured note, first lien, 144A, 5.125%, 2/15/25 United States 17,700,000   17,368,125

 

|6

 

FRANKLIN HIGH INCOME TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin High Income Fund (continued)        
    Principal    
  Country Amount*   Value
 
Corporate Bonds (continued)        
Media (continued)        
c Virgin Media Secured Finance PLC,        
senior secured bond, 144A, 5.25%, 1/15/26. United Kingdom 20,000,000 $ 20,087,500
senior secured bond, first lien, 144A, 5.50%, 1/15/25 United Kingdom 20,000,000   20,162,500
c VTR Finance BV, senior secured note, 144A, 6.875%, 1/15/24 Chile 15,000,000   14,137,500
        392,866,341
Pharmaceuticals, Biotechnology & Life Sciences 5.0%        
c AMAG Pharmaceuticals Inc., senior note, 144A, 7.875%, 9/01/23 United States 30,000,000   26,250,000
c Concordia Healthcare Corp., senior note, 144A, 7.00%, 4/15/23 Canada 25,000,000   21,875,000
c Endo Finance LLC/Endo Ltd./Endo Finco Inc.,        
senior bond, 144A, 6.00%, 2/01/25 United States 20,900,000   20,900,000
senior note, 144A, 6.00%, 7/15/23 United States 13,700,000   14,042,500
Grifols Worldwide Operations Ltd., senior note, 5.25%, 4/01/22 United States 16,300,000   16,931,625
c Horizon Pharma Financing Inc., senior note, 144A, 6.625%, 5/01/23 United States 25,000,000   22,125,000
c Jaguar Holding Co. II/Pharmaceutical Product Development LLC, senior note, 144A,        
   6.375%, 8/01/23 United States 17,300,000   17,689,250
c Valeant Pharmaceuticals International, senior note, 144A, 6.375%, 10/15/20 United States 40,000,000   36,900,000
c Valeant Pharmaceuticals International Inc.,        
senior bond, 144A, 6.125%, 4/15/25 United States 12,500,000   10,125,000
senior note, 144A, 7.50%, 7/15/21 United States 10,000,000   9,200,000
senior note, 144A, 5.625%, 12/01/21 United States 15,000,000   12,909,300
        208,947,675
Real Estate 1.1%        
Equinix Inc.,        
senior bond, 5.375%, 4/01/23 United States 35,000,000   37,614,500
senior bond, 5.875%, 1/15/26 United States 7,400,000   7,751,500
        45,366,000
Retailing 1.3%        
c Argos Merger Sub Inc., senior note, 144A, 7.125%, 3/15/23 United States 12,700,000   13,017,500
c Dollar Tree Inc., senior note, 144A, 5.75%, 3/01/23 United States 10,000,000   10,687,500
Netflix Inc.,        
senior bond, 5.875%, 2/15/25 United States 10,000,000   10,525,000
senior note, 5.50%, 2/15/22 United States 20,000,000   21,100,000
        55,330,000
Semiconductors & Semiconductor Equipment 0.5%        
c Qorvo Inc.,        
senior bond, 144A, 7.00%, 12/01/25 United States 5,000,000   5,162,500
senior note, 144A, 6.75%, 12/01/23 United States 16,800,000   17,136,000
        22,298,500
Software & Services 3.1%        
c BMC Software Finance Inc., senior note, 144A, 8.125%, 7/15/21 United States 45,000,000   28,743,750
c First Data Corp.,        
second lien, 144A, 5.75%, 1/15/24 United States 30,000,000   30,262,500
secured note, first lien, 144A, 5.00%, 1/15/24 United States 18,400,000   18,733,592
senior note, 144A, 7.00%, 12/01/23 United States 14,000,000   14,014,000
c Infor (U.S.) Inc., senior note, 144A, 6.50%, 5/15/22 United States 40,000,000   34,800,000
        126,553,842

 

|7

 

FRANKLIN HIGH INCOME TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin High Income Fund (continued)        
    Principal    
  Country Amount*   Value
 
Corporate Bonds (continued)        
Technology Hardware & Equipment 1.7%        
c Blackboard Inc., senior note, 144A, 7.75%, 11/15/19. United States 25,000,000 $ 20,250,000
c,j CommScope Holdings Co. Inc., senior note, 144A, PIK, 6.625%, 6/01/20 United States 5,000,000   5,118,750
c CommScope Inc.,        
senior bond, 144A, 5.50%, 6/15/24 United States 7,000,000   6,816,250
senior note, 144A, 5.00%, 6/15/21 United States 15,000,000   14,756,250
c CommScope Technologies Finance LLC, senior bond, 144A, 6.00%, 6/15/25. United States 10,200,000   10,149,000
c Plantronics Inc., senior note, 144A, 5.50%, 5/31/23. United States 12,000,000   11,490,000
        68,580,250
Telecommunication Services 10.0%        
CenturyLink Inc.,        
senior bond, 6.75%, 12/01/23 United States 6,300,000   6,197,625
senior bond, 5.625%, 4/01/25 United States 17,800,000   15,730,750
senior note, 5.80%, 3/15/22 United States 30,000,000   29,212,500
c Digicel Group Ltd., senior note, 144A, 8.25%, 9/30/20 Bermuda 15,000,000   11,615,625
c Digicel Ltd.,        
senior note, 144A, 6.00%, 4/15/21 Bermuda 24,400,000   20,907,750
senior note, 144A, 6.75%, 3/01/23 Bermuda 8,100,000   6,904,399
Frontier Communications Corp.,        
senior bond, 7.625%, 4/15/24 United States 4,800,000   4,224,000
senior bond, 7.875%, 1/15/27 United States 22,775,000   17,764,500
senior note, 7.125%, 1/15/23 United States 3,775,000   3,301,955
Intelsat Jackson Holdings SA,        
senior bond, 6.625%, 12/15/22. Luxembourg 20,000,000   10,150,000
senior bond, 5.50%, 8/01/23 Luxembourg 15,000,000   9,825,000
senior note, 7.25%, 10/15/20 Luxembourg 10,000,000   6,950,000
senior note, 7.50%, 4/01/21 Luxembourg 15,000,000   10,108,950
c Millicom International Cellular SA, senior note, 144A, 6.625%, 10/15/21 Luxembourg 31,900,000   30,145,500
c Neptune Finco Corp., senior bond, 144A, 10.875%, 10/15/25 United States 8,600,000   9,314,875
b,e RSL Communications PLC,        
senior discount bond, 10.125%, 3/01/08 United Kingdom 44,500,000   —
senior note, 12.00%, 11/01/08 United Kingdom 6,250,000   —
Sprint Communications Inc.,        
senior note, 8.375%, 8/15/17 United States 20,000,000   19,550,000
senior note, 6.00%, 11/15/22 United States 12,500,000   8,875,000
csenior note, 144A, 9.00%, 11/15/18 United States 40,000,000   41,724,000
csenior note, 144A, 7.00%, 3/01/20 United States 9,800,000   9,677,500
Sprint Corp.,        
senior bond, 7.875%, 9/15/23 United States 4,700,000   3,492,147
senior bond, 7.125%, 6/15/24 United States 10,900,000   7,820,750
senior note, 7.625%, 2/15/25 United States 27,000,000   19,440,000
T-Mobile USA Inc.,        
senior bond, 6.50%, 1/15/24 United States 7,400,000   7,622,000
senior bond, 6.375%, 3/01/25 United States 22,400,000   22,764,000
senior note, 6.542%, 4/28/20 United States 11,700,000   12,168,000
senior note, 6.633%, 4/28/21 United States 9,000,000   9,450,000
senior note, 6.125%, 1/15/22 United States 4,200,000   4,347,000
senior note, 6.731%, 4/28/22 United States 9,000,000   9,459,900
c Wind Acquisition Finance SA,        
senior note, 144A, 7.375%, 4/23/21 Italy 35,000,000   32,068,750
senior secured note, first lien, 144A, 4.75%, 7/15/20 Italy 15,000,000   14,531,250
        415,343,726

 

|8

 

FRANKLIN HIGH INCOME TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin High Income Fund (continued)        
    Principal    
  Country Amount*   Value
 
Corporate Bonds (continued)        
Transportation 2.0%        
c Florida East Coast Holdings Corp.,        
secured note, first lien, 144A, 6.75%, 5/01/19 United States 15,000,000 $ 15,037,500
senior note, 144A, 9.75%, 5/01/20 United States 9,300,000   5,998,500
Hertz Corp.,        
senior note, 6.75%, 4/15/19 United States 25,000,000   25,002,750
senior note, 5.875%, 10/15/20 United States 10,000,000   9,750,000
senior note, 6.25%, 10/15/22 United States 10,000,000   9,562,500
c Stena International SA, secured bond, 144A, 5.75%, 3/01/24. Sweden 20,000,000   15,575,000
        80,926,250
Utilities 2.8%        
Calpine Corp.,        
senior bond, 5.75%, 1/15/25 United States 15,400,000   13,917,750
senior note, 5.375%, 1/15/23 United States 18,300,000   17,156,250
csenior secured bond, first lien, 144A, 5.875%, 1/15/24 United States 10,000,000   10,225,000
c InterGen NV, secured bond, 144A, 7.00%, 6/30/23 Netherlands 45,000,000   31,050,000
NGL Energy Partners LP/NGL Energy Finance Corp., senior note, 5.125%, 7/15/19 United States 3,000,000   1,777,500
NRG Yield Operating LLC, senior bond, 5.375%, 8/15/24. United States 20,000,000   17,700,000
PPL Energy Supply LLC, senior bond, 6.50%, 6/01/25. United States 13,500,000   9,382,500
c,e Texas Competitive Electric Holdings Co. LLC/Texas Competitive Electric Holdings        
Finance Inc., senior secured note, first lien, 144A, 11.50%, 10/01/20 United States 50,000,000   14,750,000
        115,959,000
Total Corporate Bonds (Cost $4,959,666,171)       3,786,521,352
 
Senior Floating Rate Interests (Cost $30,157,943) 0.7%        
Household & Personal Products 0.7%        
h Sun Products Corp., Tranche B Term Loan, 5.50%, 3/23/20 United States 30,350,265   28,889,416
 
 
    Shares    
 
Litigation Trusts (Cost $—) 0.0%        
a,b NewPage Corp., Litigation Trust United States 30,000,000   —
Total Investments before Short Term Investments        
(Cost $5,006,033,732)       3,820,460,311
 
Short Term Investments (Cost $194,284,041) 4.7%        
Money Market Funds 4.7%        
a,k Institutional Fiduciary Trust Money Market Portfolio United States 194,284,041   194,284,041
Total Investments (Cost $5,200,317,773) 97.0%.       4,014,744,352
Other Assets, less Liabilities 3.0%       124,482,486
Net Assets 100.0%     $ 4,139,226,838

 

|9

 

FRANKLIN HIGH INCOME TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin High Income Fund (continued)

See Abbreviations on page 13.

†Rounds to less than 0.1% of net assets.
*The principal amount is stated in U.S. dollars unless otherwise indicated.
aNon-income producing.
bSecurity has been deemed illiquid because it may not be able to be sold within seven days. At February 29, 2016, the aggregate value of these securities was $177,362,
representing less than 0.01% of net assets.
cSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers
or in a public offering registered under the Securities Act of 1933. These securities have been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At
February 29, 2016, the aggregate value of these securities was $1,875,096,005, representing 45.30% of net assets.
dPerpetual security with no stated maturity date.
eDefaulted security or security for which income has been deemed uncollectible.
fAt February 29, 2016, pursuant to the Fund’s policies and the requirements of applicable securities law, the Fund is restricted from trading these securities at period end.
gPrincipal amount is stated in 1,000 Units.
hThe coupon rate shown represents the rate at period end.
iSecurity purchased on a when-issued basis.
jIncome may be received in additional securities and/or cash.
kSee Note 4 regarding investments in affiliated management investment companies.

|10

 

FRANKLIN HIGH INCOME TRUST

Notes to Statement of Investments (unaudited)

1. ORGANIZATION

Franklin High Income Trust (Trust) is registered under the Investment Company Act of 1940 as an open-end management investment company, consisting of one fund, Franklin High Income Fund (Fund) and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles.

2. FINANCIAL INSTRUMENT VALUATION

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share as of 4 p.m. Eastern time each day the New York Stock Exchange (NYSE) is open for trading. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation and Liquidity Oversight Committee (VLOC). The VLOC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Equity securities listed on an 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. Foreign equity securities are valued as of the close of trading on the foreign stock exchange on which the security is primarily traded or as of 4 p.m. Eastern time whichever is earlier. The value is then converted into its U.S. dollar equivalent at the foreign exchange rate in effect at 4 p.m. Eastern time on the day that the value of the security is determined. Over-the-counter (OTC) securities 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.

Debt securities generally trade in the OTC market rather than on a securities exchange. The Fund’s pricing services use multiple valuation techniques to determine fair value. In instances where sufficient market activity exists, the pricing services may utilize a market-based approach through which quotes from market makers are used to determine fair value. In instances where sufficient market activity may not exist or is limited, the pricing services also utilize proprietary valuation models which may consider market characteristics such as benchmark yield curves, credit spreads, estimated default rates, anticipated market interest rate volatility, coupon rates, anticipated timing of principal repayments, underlying collateral, and other unique security features in order to estimate the relevant cash flows, which are then discounted to calculate the fair value. Securities denominated in a foreign currency are converted into their U.S. dollar equivalent at the foreign exchange rate in effect at 4 p.m. Eastern time on the date that the values of the foreign debt securities are determined.

Investments in open-end mutual funds are valued at the closing NAV.

The Fund has procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the VLOC convenes on a regular basis to review such financial instruments and considers a number of factors, including significant unobservable valuation inputs, when arriving at fair value. The VLOC primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The VLOC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

|11

 

FRANKLIN HIGH INCOME TRUST

NOTES TO STATEMENT OF INVESTMENTS (UNAUDITED)

2. FINANCIAL INSTRUMENT VALUATION (continued)

Trading in securities on foreign securities stock exchanges and OTC markets may be completed before 4 p.m. Eastern time. In addition, trading in certain foreign markets may not take place on every NYSE business day. Occasionally, events occur between the time at which trading in a foreign security is completed and the close of the NYSE that might call into question the reliability of the value of a portfolio security held by the Fund. As a result, differences may arise between the value of the Fund’s portfolio securities as determined at the foreign market close and the latest indications of value at the close of the NYSE. In order to minimize the potential for these differences, the VLOC monitors price movements following the close of trading in foreign stock markets through a series of country specific market proxies (such as baskets of American Depositary 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 that may call into question the reliability of the values of the foreign securities 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.

When the last day of the reporting period is a non-business day, certain foreign markets may be open on those days that the NYSE is closed, which could result in differences between the value of the Fund’s portfolio securities on the last business day and the last calendar day of the reporting period. Any significant security valuation changes due to an open foreign market are adjusted and reflected by the Fund for financial reporting purposes.

3. INCOME TAXES

At February 29, 2016, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments $ 5,211,152,020  
 
Unrealized appreciation $ 41,415,235  
Unrealized depreciation   (1,237,822,903 )
Net unrealized appreciation (depreciation) $ (1,196,407,668 )
 
4. INVESTMENTS IN AFFILIATED MANAGEMENT INVESTMENT COMPANIES      

 

The Fund invests in an affiliated management investment company for purposes other than exercising a controlling influence over the management or policies. Management fees paid by the Fund are waived on assets invested in the affiliated management investment company, in an amount not to exceed the management and administrative fees paid directly or indirectly by each affiliate. Prior to June 1, 2013, the waiver was accounted for as a reduction to management fees.

                    % of  
                    Affiliated  
  Number of       Number of         Fund Shares  
  Shares Held       Shares   Value     Outstanding  
  at Beginning Gross Gross   Held at End   at End Investment Realized Held at End  
  of Period Additions Reductions   of Period   of Period Income Gain (Loss) of Period  
 
Non-Controlled                      
Affiliates                      
Institutional Fiduciary                      
Trust Money Market                      
Portfolio 217,022,124 869,310,440 (892,048,523 ) 194,284,041 $ 194,284,041 $- $- 0.99 %

 

|12

 

FRANKLIN HIGH INCOME TRUST

NOTES TO STATEMENT OF INVESTMENTS (UNAUDITED)

5. 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 financial instruments and are summarized in the following fair value hierarchy:

  • Level 1 – quoted prices in active markets for identical financial instruments
  • Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)
  • Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments)

The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.

A summary of inputs used as of February 29, 2016, in valuing the Fund’s assets carried at fair value, is as follows:

    Level 1   Level 2   Level 3     Total
Assets:                  
  Investments in Securities:                  
Equity Investments:a                  
         Consumer Services $ — $ — $ 176,457   $ 176,457
Transportation.   —   4,873,086   —     4,873,086
Corporate Bonds   —   3,781,645,447   4,875,905 b   3,786,521,352
Senior Floating Rate Interests   —   28,889,416   —     28,889,416
Litigation Trusts   —   —   —b     —
Short Term Investments   194,284,041   —   —     194,284,041
Total Investments in Securities $ 194,284,041 $ 3,815,407,949 $ 5,052,362   $ 4,014,744,352

 

aIncludes common and convertible preferred stocks as well as other equity investments.
bIncludes securities determined to have no value at February 29, 2016.

A reconciliation of assets in which Level 3 inputs are used in determining fair value is presented when there are significant Level 3 financial instruments at the end of the period.

6. SUBSEQUENT EVENTS

The Fund has evaluated subsequent events through the issuance of the Statement of Investments and determined that no events have occurred that require disclosure.

Abbreviations

Selected Portfolio

FRN Floating Rate Note
PIK Payment-In-Kind

For additional information on the Fund’s significant accounting policies, please refer to the Fund’s most recent semiannual or annual shareholder report.

|13

 

 

 

 

Item 2. Controls and Procedures.

 

(a) Evaluation of Disclosure Controls and Procedures.  The Registrant maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Registrant’s filings under the Securities Exchange Act of 1934 and the Investment Company Act of 1940 is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission.  Such information is accumulated and communicated to the Registrant’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.  The Registrant’s management, including the principal executive officer and the principal financial officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

 

Within 90 days prior to the filing date of this Quarterly Schedule of Portfolio Holdings on Form N-Q, the Registrant had carried out an evaluation, under the supervision and with the participation of the Registrant’s management, including the Registrant’s principal executive officer and the Registrant’s principal financial officer, of the effectiveness of the design and operation of the Registrant’s disclosure controls and procedures.  Based on such evaluation, the Registrant’s principal executive officer and principal financial officer concluded that the Registrant’s disclosure controls and procedures are effective.

 

(b) Changes in Internal Controls.  There have been no changes in the Registrant’s internal controls or in other factors that could materially affect the internal controls over financial reporting subsequent to the date of their evaluation in connection with the preparation of this Quarterly Schedule of Portfolio Holdings on Form N-Q.

 

Item 3. Exhibits.

 

(a) Certification pursuant to Section 30a-2 under the Investment Company Act of 1940 of Laura F. Fergerson, Chief Executive Officer - Finance and Administration, and Gaston Gardey, Chief Financial Officer and Chief Accounting Officer.

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

FRANKLIN HIGH INCOME TRUST

 

 

By _/s/ Laura F. Fergerson_

      Laura F. Fergerson

      Chief Executive Officer - Finance and Administration

Date  April 26, 2016

 

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

 

By _/s/ Laura F. Fergerson_

      Laura F. Fergerson

      Chief Executive Officer - Finance and Administration

Date  April 26, 2016

 

 

By _/s/ Gaston Gardey_

      Gaston Gardey

      Chief Financial Officer and Chief Accounting Officer

Date  April 26, 2016