N-Q 1 nqfhitpe022819.htm nqfhitpe022819.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: 2/28/19

 

 

Item 1. Schedule of Investments.

 

FRANKLIN HIGH INCOME TRUST

Statement of Investments, February 28, 2019 (unaudited)          
Franklin High Income Fund          
      Shares/    
  Country   Warrants   Value
 
Common Stocks and Other Equity Interests 1.6%          
Energy 1.5%          
a Birch Permian Holdings Inc United States   1,413,995 $ 16,260,942
a Chaparral Energy Inc., A United States   43,062   232,535
a,b Chaparral Energy Inc., A, 144A United States   5,033   27,178
a Contura Energy Inc. United States   30,901   1,903,502
a Contura Energy Inc., wts., 7/26/23 United States   5,033   125,825
a,c Goodrich Petroleum Corp United States   1,564,885   20,296,558
a Halcon Resources Corp United States   1,889,580   2,834,370
a Halcon Resources Corp., wts., 9/09/20 United States   145,844   2,917
a Midstates Petroleum Co. Inc United States   8,543   73,811
a,d Midstates Petroleum Co. Inc., wts., 4/21/20 United States   82,587   1
a,d,e Nine Point Energy LLC United States   433,273   39
a Riviera Resources Inc United States   156,119   2,321,490
a Roan Resources Inc United States   156,119   1,213,045
a,c Titan Energy LLC United States   289,137   14,457
          45,306,670
Materials 0.0%†          
a Verso Corp., A United States   83,362   1,638,064
a Verso Corp., wts., 7/25/23 United States   8,775   34,661
          1,672,725
Transportation 0.1%          
a CEVA Logistics AG. Switzerland   108,515   3,266,919
Total Common Stocks and Other Equity Interests          
       (Cost $168,110,946)         50,246,314
 
Management Investment Companies (Cost $60,341,310)          
2.0%          
Diversified Financials 2.0%          
iShares iBoxx $ High Yield Corp. Bond ETF. United States   722,543   61,958,062
Convertible Preferred Stocks (Cost $7,552,087) 0.3%          
Energy 0.3%          
a,d,e Nine Point Energy Holdings Inc., cvt. pfd United States   8,080   8,864,597
 
 
      Principal    
      Amount*    
 
Convertible Bonds (Cost $7,530,521) 0.3%          
Energy 0.3%          
c,f Goodrich Petroleum Corp., senior secured note, second lien, PIK, cvt.,          
          13.50%, 8/30/19 United States $ 8,250,000   8,469,838
Corporate Bonds 92.8%          
Automobiles & Components 0.1%          
The Goodyear Tire & Rubber Co., senior bond, 5.00%, 5/31/26 United States   4,400,000   4,191,000
Banks 1.7%          
CIT Group Inc.,          
senior bond, 5.00%, 8/15/22 United States   3,850,000   3,984,750
senior note, 5.25%, 3/07/25. United States   8,200,000   8,589,500
g JPMorgan Chase & Co.,          
junior sub. bond, R, 6.00% to 8/01/23, FRN thereafter, Perpetual United States   15,000,000   15,505,725
junior sub. bond, V, 5.00% to 7/30/19, FRN thereafter, Perpetual United States   9,900,000   9,900,000

 

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

 

FRANKLIN HIGH INCOME TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin High Income Fund (continued)          
      Principal    
  Country   Amount*   Value
 
Corporate Bonds (continued)          
Banks (continued)          
Royal Bank of Scotland Group PLC,          
sub. note, 6.125%, 12/15/22 United Kingdom $ 4,000,000 $ 4,216,380
sub. note, 5.125%, 5/28/24 United Kingdom   10,000,000   10,131,350
          52,327,705
Capital Goods 6.8%          
Aircastle Ltd., senior note, 4.125%, 5/01/24 United States   13,000,000   12,606,834
b BBA U.S. Holdings Inc., senior note, 144A, 5.375%, 5/01/26 United States   9,800,000   10,008,250
b Beacon Roofing Supply Inc., senior note, 144A, 4.875%, 11/01/25 United States   14,400,000   13,459,500
b BWX Technologies Inc., senior note, 144A, 5.375%, 7/15/26 United States   8,500,000   8,712,500
b Cloud Crane LLC, secured note, second lien, 144A, 10.125%, 8/01/24 United States   10,000,000   10,675,000
CNH Industrial Capital LLC, senior note, 3.875%, 10/15/21 United States   5,300,000   5,323,850
H&E Equipment Services Inc., senior note, 5.625%, 9/01/25 United States   19,700,000   19,576,875
b HD Supply Inc., senior note, 144A, 5.375%, 10/15/26 United States   14,900,000   15,198,000
b Jeld-Wen Inc.,          
senior bond, 144A, 4.875%, 12/15/27 United States   7,800,000   7,244,250
senior note, 144A, 4.625%, 12/15/25 United States   7,600,000   7,172,500
b NCI Building Systems Inc., senior secured note, 144A, 8.00%, 4/15/26. United States   18,000,000   17,055,000
b Resideo Funding Inc., senior note, 144A, 6.125%, 11/01/26 United States   9,300,000   9,555,750
b Terex Corp., senior note, 144A, 5.625%, 2/01/25 United States   10,400,000   10,127,000
b TransDigm Inc., senior secured note, 144A, 6.25%, 3/15/26 United States   31,400,000   32,263,500
b Vertiv Group Corp., senior note, 144A, 9.25%, 10/15/24 United States   29,500,000   29,685,850
          208,664,659
Commercial & Professional Services 2.2%          
d,h 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   14,000,000   14,472,500
senior bond, 5.875%, 9/15/26 United States   4,600,000   4,726,500
senior bond, 5.50%, 5/15/27 United States   18,400,000   18,446,000
b West Corp., senior note, 144A, 8.50%, 10/15/25 United States   34,900,000   29,000,504
          66,646,409
Consumer Durables & Apparel 2.6%          
b Ashton Woods USA LLC, senior note, 144A, 6.75%, 8/01/25 United States   13,500,000   12,154,725
b Hanesbrands Inc., senior note, 144A, 4.625%, 5/15/24 United States   17,000,000   17,066,300
KB Home, senior note, 7.00%, 12/15/21 United States   5,000,000   5,306,250
PulteGroup Inc., senior bond, 5.00%, 1/15/27 United States   12,000,000   11,535,000
b Taylor Morrison Communities Inc./Taylor Morrison Holdings II Inc., senior          
note, 144A, 5.625%, 3/01/24 United States   8,800,000   8,734,000
Weekley Homes LLC/Weekley Finance Corp., senior note, 6.625%, 8/15/25 United States   25,000,000   23,687,500
          78,483,775
Consumer Services 6.2%          
b 1011778 BC ULC/New Red Finance Inc.,          
secured note, second lien, 144A, 5.00%, 10/15/25 Canada   7,400,000   7,194,650
senior secured note, first lien, 144A, 4.25%, 5/15/24 Canada   16,100,000   15,708,207
b 24 Hour Holdings III LLC, senior note, 144A, 8.00%, 6/01/22 United States   28,000,000   27,580,000
b Ascend Learning LLC, senior note, 144A, 6.875%, 8/01/25 United States   7,500,000   7,378,125
b Downstream Development Authority of the Quapaw Tribe of Oklahoma,          
secured note, 144A, 10.50%, 2/15/23 United States   8,600,000   8,793,500
b Golden Nugget Inc.,          
senior note, 144A, 6.75%, 10/15/24 United States   23,200,000   23,374,000
senior note, 144A, 8.75%, 10/01/25 United States   2,700,000   2,787,750

 

|2

 

FRANKLIN HIGH INCOME TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin High Income Fund (continued)          
      Principal    
  Country   Amount*   Value
 
Corporate Bonds (continued)          
Consumer Services (continued)          
b KFC Holding Co./Pizza Hut Holdings LLC/Taco Bell of America LLC,          
senior note, 144A, 5.00%, 6/01/24 United States $ 13,600,000 $ 13,807,808
senior note, 144A, 5.25%, 6/01/26 United States   12,700,000   12,976,479
b MGM Growth Properties Operating Partnership LP/MGP Finance Co-          
Issuer Inc., senior note, 144A, 5.75%, 2/01/27 United States   14,500,000   14,862,500
b Stars Group Holdings BV/Stars Group U.S. Co-Borrower LLC, senior note,          
144A, 7.00%, 7/15/26 Canada   11,000,000   11,283,910
b Studio City Finance Ltd., senior note, 144A, 7.25%, 2/11/24 Macau   23,200,000   23,661,680
b Wynn Las Vegas LLC/Wynn Las Vegas Capital Corp., senior bond, 144A,          
5.50%, 3/01/25 United States   20,000,000   19,981,000
          189,389,609
Diversified Financials 1.5%          
b MSCI Inc., senior note, 144A, 5.375%, 5/15/27 United States   11,300,000   11,695,500
Navient Corp.,          
senior note, 5.00%, 10/26/20 United States   7,200,000   7,281,000
senior note, 5.875%, 3/25/21 United States   5,000,000   5,112,500
senior note, 6.625%, 7/26/21 United States   5,300,000   5,492,125
senior note, 6.50%, 6/15/22. United States   9,900,000   10,172,250
senior note, 7.25%, 9/25/23. United States   5,980,000   6,189,300
          45,942,675
Energy 11.5%          
b Aker BP ASA, senior note, 144A, 5.875%, 3/31/25 Norway   18,800,000   19,427,083
California Resources Corp.,          
      b secured note, second lien, 144A, 8.00%, 12/15/22 United States   13,382,000   10,722,328
senior bond, 6.00%, 11/15/24 United States   850,000   603,500
senior note, 5.50%, 9/15/21. United States   411,000   330,855
Callon Petroleum Co., senior note, 6.375%, 7/01/26 United States   13,000,000   13,065,000
Calumet Specialty Products Partners LP/Calumet Finance Corp., senior note,          
7.75%, 4/15/23 United States   22,700,000   19,692,250
Cheniere Corpus Christi Holdings LLC,          
senior secured note, first lien, 7.00%, 6/30/24 United States   11,600,000   12,876,000
senior secured note, first lien, 5.875%, 3/31/25 United States   17,500,000   18,681,425
Cheniere Energy Partners LP,          
           b senior note, 144A, 5.625%, 10/01/26 United States   9,000,000   9,191,250
senior secured note, first lien, 5.25%, 10/01/25 United States   28,700,000   29,166,375
Chesapeake Energy Corp., senior note, 7.50%, 10/01/26 United States   18,400,000   18,262,000
Crestwood Midstream Partners LP/Crestwood Midstream Finance Corp.,          
senior note, 6.25%, 4/01/23. United States   17,000,000   17,535,840
senior note, 5.75%, 4/01/25. United States   15,000,000   15,173,438
CSI Compressco LP/CSI Compressco Finance Inc., senior note, 7.25%,          
8/15/22 United States   12,900,000   11,577,750
b Diamondback Energy Inc., senior note, 144A, 4.75%, 11/01/24 United States   18,900,000   19,207,125
Energy Transfer LP,          
senior secured bond, first lien, 5.875%, 1/15/24. United States   13,000,000   13,975,000
senior secured bond, first lien, 5.50%, 6/01/27 United States   17,900,000   18,839,750
b,f EnQuest PLC, senior note, 144A, PIK, 7.00%, 4/15/22 United Kingdom   22,955,575   18,852,266
c,d,f Goodrich Petroleum Corp., senior secured note, second lien, PIK, 13.50%,          
8/30/19 United States   2,884,370   2,963,264
Martin Midstream Partners LP/Martin Midstream Finance Corp., senior note,          
7.25%, 2/15/21 United States   17,000,000   16,638,750
b,f Murray Energy Corp., secured note, 1.5 lien, 144A, PIK, 12.00%, 4/15/24 United States   18,290,148   8,303,727

 

|3

 

FRANKLIN HIGH INCOME TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin High Income Fund (continued)          
      Principal    
  Country   Amount*   Value
 
Corporate Bonds (continued)          
Energy (continued)          
QEP Resources Inc.,          
senior bond, 5.375%, 10/01/22 United States $ 14,000,000 $ 13,807,500
senior note, 5.625%, 3/01/26 United States   10,700,000   10,084,750
Sanchez Energy Corp.,          
senior note, 7.75%, 6/15/21. United States   7,000,000   1,155,000
senior note, 6.125%, 1/15/23 United States   8,000,000   1,220,000
Sunoco LP/Sunoco Finance Corp.,          
senior note, 4.875%, 1/15/23 United States   6,500,000   6,597,500
senior note, 5.50%, 2/15/26. United States   8,000,000   7,966,400
Weatherford International Ltd.,          
senior note, 5.125%, 9/15/20 United States   5,300,000   4,452,000
senior note, 4.50%, 4/15/22. United States   8,500,000   5,886,250
senior note, 8.25%, 6/15/23. United States   9,600,000   6,888,000
          353,142,376
Food & Staples Retailing 0.3%          
b Aramark Services Inc., senior bond, 144A, 5.00%, 2/01/28 United States   8,300,000   8,217,000
Food, Beverage & Tobacco 3.0%          
B&G Foods Inc., senior note, 5.25%, 4/01/25 United States   17,300,000   16,617,342
b Cott Holdings Inc., senior note, 144A, 5.50%, 4/01/25. Canada   23,000,000   22,827,500
b Lamb Weston Holdings Inc.,          
senior note, 144A, 4.625%, 11/01/24 United States   10,900,000   10,981,750
senior note, 144A, 4.875%, 11/01/26 United States   17,700,000   17,810,625
b Post Holdings Inc., senior bond, 144A, 5.00%, 8/15/26 United States   23,000,000   22,223,750
          90,460,967
Health Care Equipment & Services 8.1%          
b Avantor Inc., senior secured note, first lien, 144A, 6.00%, 10/01/24 United States   17,300,000   17,689,250
b Centene Corp., senior note, 144A, 5.375%, 6/01/26 United States   23,550,000   24,492,000
CHS/Community Health Systems Inc.,          
senior note, 6.875%, 2/01/22 United States   4,003,000   2,641,980
        b senior note, 144A, 8.125%, 6/30/24 United States   13,747,000   11,410,010
senior secured note, 5.125%, 8/01/21. United States   4,100,000   4,043,625
senior secured note, first lien, 6.25%, 3/31/23 United States   14,200,000   13,720,750
HCA Inc.,          
senior bond, 5.875%, 5/01/23 United States   16,000,000   16,960,000
senior bond, 5.375%, 2/01/25 United States   7,000,000   7,277,830
senior bond, 5.875%, 2/01/29 United States   12,200,000   12,810,000
senior secured bond, first lien, 5.25%, 4/15/25 United States   11,000,000   11,671,817
b MEDNAX Inc., senior note, 144A, 6.25%, 1/15/27 United States   20,000,000   20,161,000
b MPH Acquisition Holdings LLC, senior note, 144A, 7.125%, 6/01/24 United States   15,400,000   15,380,750
b,f Polaris Intermediate Corp., senior note, 144A, PIK, 8.50%, 12/01/22 United States   7,000,000   6,936,720
Tenet Healthcare Corp.,          
senior note, 8.125%, 4/01/22 United States   12,000,000   12,855,000
senior note, 6.75%, 6/15/23. United States   13,700,000   14,093,875
           b senior note, second lien, 144A, 6.25%, 2/01/27 United States   15,000,000   15,459,375
senior secured note, first lien, 6.00%, 10/01/20 United States   6,700,000   6,934,500
WellCare Health Plans Inc.,          
senior note, 5.25%, 4/01/25. United States   27,500,000   28,179,250
          b senior note, 144A, 5.375%, 8/15/26 United States   5,000,000   5,156,250
          247,873,982

 

|4

 

FRANKLIN HIGH INCOME TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin High Income Fund (continued)          
      Principal    
  Country   Amount*   Value
 
Corporate Bonds (continued)          
Household & Personal Products 0.6%          
b Prestige Brands Inc., senior note, 144A, 6.375%, 3/01/24 United States $ 17,800,000 $ 17,978,000
Materials 11.9%          
f ARD Finance SA, secured note, PIK, 7.125%, 9/15/23 Luxembourg   14,000,000   14,105,000
b Ardagh Packaging Finance PLC/Ardagh MP Holdings USA Inc., senior note,          
144A, 6.00%, 2/15/25 Luxembourg   10,000,000   9,900,000
b BWAY Holding Co.,          
secured note, 144A, 5.50%, 4/15/24. United States   5,000,000   4,948,400
senior note, 144A, 7.25%, 4/15/25 United States   31,900,000   30,384,750
b Cemex SAB de CV, senior secured bond, first lien, 144A, 5.70%, 1/11/25 Mexico   25,000,000   25,508,375
The Chemours Co.,          
senior note, 6.625%, 5/15/23 United States   8,791,000   9,154,068
senior note, 5.375%, 5/15/27 United States   12,200,000   11,956,000
Crown Americas LLC/Crown Americas Capital Corp. VI, senior note, 4.75%,          
2/01/26 United States   13,900,000   14,001,748
b Eldorado Gold Corp., senior note, 144A, 6.125%, 12/15/20 Canada   21,700,000   21,211,750
b Element Solutions Inc., senior note, 144A, 5.875%, 12/01/25. United States   20,000,000   20,337,600
b First Quantum Minerals Ltd.,          
senior note, 144A, 7.00%, 2/15/21 Zambia   5,000,000   5,091,875
senior note, 144A, 7.25%, 4/01/23 Zambia   17,000,000   16,766,250
senior note, 144A, 6.875%, 3/01/26 Zambia   8,000,000   7,480,000
b Grinding Media Inc./MC Grinding Media Canada Inc., senior secured note,          
144A, 7.375%, 12/15/23 United States   16,500,000   16,603,125
b New Enterprise Stone & Lime Co., senior note, 144A, 6.25%, 3/15/26 United States   17,400,000   16,878,000
b New Gold Inc., senior note, 144A, 6.375%, 5/15/25 Canada   16,600,000   13,529,000
b Novelis Corp.,          
senior bond, 144A, 5.875%, 9/30/26. United States   12,700,000   12,414,250
senior note, 144A, 6.25%, 8/15/24 United States   11,000,000   11,106,590
b OCI NV, senior note, 144A, 6.625%, 4/15/23 Netherlands   9,600,000   9,948,000
b Owens-Brockway Glass Container Inc.,          
senior note, 144A, 5.00%, 1/15/22 United States   10,000,000   10,323,100
senior note, 144A, 5.875%, 8/15/23 United States   10,000,000   10,562,500
b Rain CII Carbon LLC / CII Carbon Corp., senior note, 144A, 7.25%, 4/01/25 United States   15,000,000   13,050,000
b Reynolds Group Issuer Inc./Reynolds Group Issuer LLC/Reynolds Group          
Issuer Luxembourg SA,          
senior secured note, first lien, 144A, 5.125%, 7/15/23 United States   2,200,000   2,202,750
i senior secured note, first lien, 144A, FRN, 6.287%, (3-month USD LIBOR          
+ 3.50%), 7/15/21. United States   5,300,000   5,346,375
b Sealed Air Corp., senior bond, 144A, 5.50%, 9/15/25 United States   5,500,000   5,747,500
Steel Dynamics Inc.,          
senior bond, 5.50%, 10/01/24 United States   10,000,000   10,300,000
senior bond, 5.00%, 12/15/26 United States   15,000,000   15,300,000
Summit Materials LLC/Summit Materials Finance Corp., senior note, 8.50%,          
4/15/22 United States   5,000,000   5,247,250
b SunCoke Energy Partners LP/SunCoke Energy Partners Finance Corp.,          
senior note, 144A, 7.50%, 6/15/25 United States   15,000,000   15,300,000
          364,704,256

 

|5

 

FRANKLIN HIGH INCOME TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin High Income Fund (continued)          
      Principal    
  Country   Amount*   Value
 
Corporate Bonds (continued)          
Media & Entertainment 11.4%          
b Altice Luxembourg SA, senior secured note, 144A, 7.75%, 5/15/22 Luxembourg $ 30,900,000 $ 30,861,375
AMC Networks Inc., senior note, 5.00%, 4/01/24 United States   22,800,000   22,678,932
CCO Holdings LLC/CCO Holdings Capital Corp.,          
senior bond, 5.125%, 2/15/23 United States   10,000,000   10,187,500
b senior bond, 144A, 5.375%, 5/01/25. United States   12,000,000   12,315,000
b senior bond, 144A, 5.75%, 2/15/26 United States   10,200,000   10,595,658
b senior bond, 144A, 5.00%, 2/01/28 United States   10,000,000   9,650,000
Clear Channel Worldwide Holdings Inc.,          
senior note, 6.50%, 11/15/22 United States   3,500,000   3,591,875
senior note, 6.50%, 11/15/22 United States   6,500,000   6,678,750
senior sub. note, 7.625%, 3/15/20 United States   1,650,000   1,659,075
senior sub. note, 7.625%, 3/15/20 United States   14,000,000   14,059,500
b senior sub. note, 144A, 9.25%, 2/15/24. United States   13,200,000   13,876,500
CSC Holdings LLC,          
b senior bond, 144A, 5.50%, 4/15/27 United States   3,000,000   3,022,500
senior note, 6.75%, 11/15/21 United States   5,000,000   5,337,500
senior note, 5.25%, 6/01/24. United States   28,000,000   28,060,480
b senior secured note, first lien, 144A, 5.50%, 5/15/26 United States   23,550,000   23,962,125
DISH DBS Corp.,          
senior bond, 5.875%, 7/15/22 United States   10,000,000   9,587,500
senior bond, 5.00%, 3/15/23 United States   5,000,000   4,437,500
senior note, 5.875%, 11/15/24 United States   17,500,000   14,804,125
b Gray Escrow Inc., senior note, 144A, 7.00%, 5/15/27 United States   10,700,000   11,342,000
Netflix Inc.,          
senior bond, 4.375%, 11/15/26 United States   15,700,000   15,101,516
senior bond, 4.875%, 4/15/28 United States   4,700,000   4,588,375
b senior bond, 144A, 5.875%, 11/15/28 United States   9,100,000   9,500,855
b Nexstar Broadcasting Inc., senior note, 144A, 5.625%, 8/01/24 United States   12,800,000   12,736,000
b Unitymedia KabelBW GmbH, senior bond, 144A, 6.125%, 1/15/25 Germany   23,500,000   24,410,625
b Univision Communications Inc.,          
senior secured note, first lien, 144A, 5.125%, 5/15/23 United States   5,000,000   4,550,000
senior secured note, first lien, 144A, 5.125%, 2/15/25 United States   16,000,000   13,960,000
b Virgin Media Secured Finance PLC,          
senior secured bond, 144A, 5.25%, 1/15/26 United Kingdom   10,000,000   10,012,500
senior secured bond, first lien, 144A, 5.50%, 8/15/26 United Kingdom   7,300,000   7,281,750
b WMG Acquisition Corp.,          
secured note, 144A, 4.875%, 11/01/24 United States   2,600,000   2,593,500
secured note, first lien, 144A, 5.00%, 8/01/23 United States   8,500,000   8,553,125
          349,996,141
Pharmaceuticals, Biotechnology & Life Sciences 4.1%          
Advanz Pharma Corp., senior secured note, first lien, 8.00%, 9/06/24. Canada   7,106,000   6,799,554
b Bausch Health Americas Inc., senior note, 144A, 9.25%, 4/01/26 United States   27,000,000   29,160,000
b Bausch Health Cos. Inc.,          
j senior note, 144A, 5.75%, 8/15/27 United States   2,300,000   2,325,875
senior bond, 144A, 6.125%, 4/15/25. United States   6,800,000   6,562,000
senior note, 144A, 5.625%, 12/01/21 United States   2,846,000   2,852,048
senior note, 144A, 5.875%, 5/15/23 United States   2,000,000   1,997,500
senior note, first lien, 144A, 7.00%, 3/15/24 United States   4,200,000   4,436,250
b,f Eagle Holdings Co. II LLC, senior note, 144A, PIK, 7.625%, 5/15/22 United States   14,200,000   14,271,000
b Endo DAC/Endo Finance LLC/Endo Finco Inc.,          
senior bond, 144A, 6.00%, 2/01/25 United States   23,400,000   18,135,000
senior note, 144A, 6.00%, 7/15/23 United States   16,200,000   13,506,750

 

|6

 

FRANKLIN HIGH INCOME TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin High Income Fund (continued)          
      Principal    
  Country   Amount*   Value
 
Corporate Bonds (continued)          
Pharmaceuticals, Biotechnology & Life Sciences (continued)          
Horizon Pharma USA Inc., senior note, 6.625%, 5/01/23. United States $ 24,000,000 $ 24,840,000
          124,885,977
Real Estate 1.4%          
CyrusOne LP/CyrusOne Finance Corp., senior note, 5.375%, 3/15/27 United States   9,400,000   9,588,000
b Five Point Operating Co. LP/Five Point Capital Corp., senior note, 144A,          
7.875%, 11/15/25 United States   21,400,000   20,784,750
MPT Operating Partnership LP/MPT Finance Corp.,          
senior bond, 5.25%, 8/01/26 United States   7,700,000   7,834,750
senior bond, 5.00%, 10/15/27 United States   3,700,000   3,681,500
          41,889,000
Retailing 0.9%          
b Party City Holdings Inc., senior note, 144A, 6.625%, 8/01/26 United States   7,300,000   7,208,750
b PetSmart Inc.,          
senior note, 144A, 7.125%, 3/15/23 United States   12,700,000   8,667,750
senior secured note, first lien, 144A, 5.875%, 6/01/25 United States   15,600,000   12,480,000
          28,356,500
Semiconductors & Semiconductor Equipment 0.8%          
b Qorvo Inc., senior note, 144A, 5.50%, 7/15/26 United States   23,700,000   24,233,250
Software & Services 2.4%          
b First Data Corp., secured note, second lien, 144A, 5.75%, 1/15/24 United States   30,000,000   31,075,200
Infor (U.S.) Inc., senior note, 6.50%, 5/15/22 United States   29,000,000   29,682,080
b Symantec Corp., senior note, 144A, 5.00%, 4/15/25 United States   12,600,000   12,565,282
          73,322,562
Technology Hardware & Equipment 2.4%          
b Blackboard Inc., secured note, second lien, 144A, 9.75%, 10/15/21 United States   34,410,000   25,218,229
b CommScope Finance LLC, senior secured note, first lien, 144A, 6.00%,          
3/01/26 United States   15,000,000   15,393,750
b CommScope Inc., senior bond, 144A, 5.50%, 6/15/24 United States   7,000,000   6,746,250
b CommScope Technologies LLC, senior bond, 144A, 6.00%, 6/15/25 United States   10,200,000   9,664,500
b Dell International LLC/EMC Corp.,          
senior note, 144A, 5.875%, 6/15/21 United States   4,500,000   4,591,899
senior note, 144A, 7.125%, 6/15/24 United States   4,900,000   5,199,824
senior secured bond, first lien, 144A, 6.02%, 6/15/26 United States   5,400,000   5,731,834
          72,546,286
Telecommunication Services 5.9%          
b Block Communications Inc., senior note, 144A, 6.875%, 2/15/25 United States   8,700,000   9,026,250
b Digicel Group One Ltd., senior secured note, first lien, 144A, 8.25%, 12/30/22. Jamaica   7,720,000   5,191,700
b Digicel Group Two Ltd., senior note, 144A, 8.25%, 9/30/22 Bermuda   7,280,000   3,130,400
b Digicel Ltd., senior note, 144A, 6.00%, 4/15/21 Bermuda   22,000,000   18,093,350
b DKT Finance ApS, senior secured note, first lien, 144A, 9.375%, 6/17/23 Denmark   16,800,000   18,090,240
Hughes Satellite Systems Corp., senior bond, 6.625%, 8/01/26 United States   26,250,000   25,889,062
Sprint Communications Inc., senior note, 6.00%, 11/15/22 United States   6,500,000   6,610,500
Sprint Corp.,          
senior note, 7.625%, 2/15/25 United States   20,000,000   21,000,000
senior note, 7.625%, 3/01/26 United States   15,300,000   15,912,000

 

|7

 

FRANKLIN HIGH INCOME TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin High Income Fund (continued)          
      Principal    
  Country   Amount*   Value
 
Corporate Bonds (continued)          
Telecommunication Services (continued)          
b Sprint Spectrum Co. LLC/Sprint Spectrum Co. II LLC, senior secured bond,          
    first lien, 144A, 4.738%, 9/20/29 United States $ 16,600,000 $ 16,670,799
T-Mobile USA Inc.,          
senior bond, 6.375%, 3/01/25 United States   22,400,000   23,366,000
senior note, 6.00%, 4/15/24. United States   8,500,000   8,850,625
senior note, 5.125%, 4/15/25 United States   9,000,000   9,261,563
          181,092,489
Transportation 1.8%          
b Avolon Holdings Funding Ltd.,          
senior note, 144A, 5.125%, 10/01/23 Ireland   9,700,000   9,857,625
j senior note, 144A, 5.25%, 5/15/24 Ireland   7,200,000   7,389,000
b DAE Funding LLC,          
senior note, 144A, 4.50%, 8/01/22 United Arab Emirates   16,000,000   15,900,000
senior note, 144A, 5.00%, 8/01/24 United Arab Emirates   12,000,000   11,940,000
b Park Aerospace Holdings Ltd., senior note, 144A, 5.50%, 2/15/24 Ireland   8,900,000   9,222,625
          54,309,250
Utilities 5.2%          
Calpine Corp.,          
senior note, 5.375%, 1/15/23 United States   18,300,000   18,162,750
b senior secured bond, first lien, 144A, 5.875%, 1/15/24 United States   5,000,000   5,112,500
Clearway Energy Operating LLC,          
senior bond, 5.375%, 8/15/24 United States   16,000,000   15,760,000
senior bond, 5.00%, 9/15/26 United States   19,000,000   17,812,500
   b senior note, 144A, 5.75%, 10/15/25 United States   11,200,000   11,046,000
Ferrellgas LP/Ferrellgas Finance Corp., senior note, 6.75%, 6/15/23 United States   23,600,000   21,240,000
Ferrellgas Partners LP/Ferrellgas Partners Finance Corp., senior note,          
8.625%, 6/15/20 United States   6,600,000   5,156,250
b InterGen NV, secured bond, 144A, 7.00%, 6/30/23 Netherlands   5,800,000   5,249,000
Talen Energy Supply LLC, senior note, 6.50%, 6/01/25 United States   35,450,000   31,763,200
b Vistra Operations Co. LLC, senior note, 144A, 5.625%, 2/15/27 United States   26,500,000   27,361,250
          158,663,450
Total Corporate Bonds (Cost $2,903,601,769)         2,837,317,318
 
 
      Shares    
 
Escrows and Litigation Trusts 0.0%†          
a,d Alpha Natural Resources Inc., Escrow Account United States   25,000,000   —
a,d Midstates Petroleum Co. Inc./Midstates Petroleum Co. LLC, Escrow Account . United States   25,000,000   —
a,d NewPage Corp., Litigation Trust United States   30,000,000   —
a,d T-Mobile USA Inc., Escrow Account United States   39,900,000   —
a Vistra Energy Corp., Escrow Account United States   50,000,000   175,000
Total Escrows and Litigation Trusts (Cost $1,442,951)         175,000
Total Investments before Short Term Investments          
(Cost $3,148,579,584)         2,967,031,129

 

|8

 

FRANKLIN HIGH INCOME TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin High Income Fund (continued)        
  Country Shares   Value
Short Term Investments (Cost $70,081,531) 2.3%        
Money Market Funds 2.3%        
k,l Institutional Fiduciary Trust Money Market Portfolio, 2.06% United States 70,081,531 $ 70,081,531
Total Investments (Cost $3,218,661,115) 99.3%       3,037,112,660
Other Assets, less Liabilities 0.7%       20,735,907
Net Assets 100.0%.     $ 3,057,848,567

 

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 was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers
or in a public offering registered under the Securities Act of 1933. These securities have been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At
February 28, 2019 , the aggregate value of these securities was $1,691,604,808, representing 55.3% of net assets.
cSee Note 4 regarding holdings of 5% voting securities.
dFair valued using significant unobservable inputs. See Note 6 regarding fair value measurements.
eSee Note 3 regarding restricted securities.
fIncome may be received in additional securities and/or cash.
gPerpetual security with no stated maturity date.
hDefaulted security or security for which income has been deemed uncollectible.
iThe coupon rate shown represents the rate at period end.
jSecurity purchased on a when-issued basis.
kSee Note 5 regarding investments in affiliated management investment companies.
lThe rate shown is the annualized seven-day effective yield at period end.

|9

 

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 (1940 Act) 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 (U.S. GAAP).

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 each business day as of 4 p.m. Eastern time or the regularly scheduled close of the New York Stock Exchange (NYSE), whichever is earlier. 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 Committee (VC). The Fund may utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Equity securities and exchange traded funds 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. 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.

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 Fund 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.

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 Fund’s business day. Occasionally, events occur between the time at which trading in a foreign security is completed and 4 p.m. Eastern time 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 4 p.m. Eastern time. In order to minimize the potential for these differences, the VC monitors price movements following the close of trading in foreign stock markets through a

|10

 

FRANKLIN HIGH INCOME TRUST
NOTES TO STATEMENT OF INVESTMENTS (UNAUDITED)

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 Fund’s NAV is not calculated, 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. RESTRICTED SECURITIES

At February 28, 2019, investments in restricted securities, excluding securities exempt from registration under the Securities Act of 1933 deemed to be liquid, were as follows:

    Acquisition          
Shares Issuer Date   Cost   Value
8,080 Nine Point Energy Holdings Inc., cvt. pfd 3/24/17 $ 7,552,087 $ 8,864,597
433,273 Nine Point Energy LLC 7/15/14 - 2/01/18   18,779,777   39
  Total Restricted Securities (Value is 0.3% of Net Assets)   $ 26,331,864 $ 8,864,636

 

4. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES

The 1940 Act defines "affiliated companies" to include investments in portfolio companies in which a fund owns 5% or more of the outstanding voting securities. During the period ended February 28, 2019, investments in “affiliated companies” were as follows:

  Number of       Number of                  
  Shares/       Shares/                  
  Principal       Principal               Net Change in  
  Amount Held       Amount Held   Value       Realized   Unrealized  
  at Beginning Gross   Gross at End   at End   Investment   Gain   Appreciation  
Name of Issuer of Period Additions   Reductions of Period   of Period   Income   (Loss)   (Depreciation)  
 
Non-Controlled Affiliates                            
                  Dividends          
Goodrich Petroleum Corp 1,564,885 —   — 1,564,885 $ 20,296,558 $ — $ — $ —  
Titan Energy LLC 289,137 —   — 289,137   14,457   —   —   (300,702 )
            $ 20,311,015 $ — $ — $ (300,702 )
 
                  Interest          
Goodrich Petroleum Corp., senior secured                            
note, second lien, PIK, 13.50%, 8/30/19 1,829,041 1,055,329 a — 2,884,370   2,963,264   237,015   —   (41,340 )
Goodrich Petroleum Corp., senior secured                            
note, second lien, PIK, cvt., 13.50%,                            
8/30/19 8,250,000 —   — 8,250,000   8,469,838   835,313   —   (944,762 )
            $ 11,433,102 $ 1,072,328 $ — $ (986,102 )
Total Affiliated Securities (Value is 1.0% of Net Assets)         $ 31,744,117 $ 1,072,328 $ — $ (1,286,804 )
 
aGross addition was the result of various corporate actions.                          

 

|11

 

FRANKLIN HIGH INCOME TRUST
NOTES TO STATEMENT OF INVESTMENTS (UNAUDITED)

5. INVESTMENTS IN AFFILIATED MANAGEMENT INVESTMENT COMPANIES

The Fund invests in one or more affiliated management investment companies for purposes other than exercising a controlling influence over the management or policies. During the period ended February 28, 2019, the Fund held investments in affiliated management investment companies as follows:

  Number of       Number of           Net Change in
  Shares Held       Shares   Value     Realized Unrealized
  at Beginning Gross Gross   Held at End   at End   Dividend Gain Appreciation
  of Period Additions Reductions   of Period   of Period   Income (Loss) (Depreciation)
 
Non-Controlled Affiliates                      
Institutional Fiduciary Trust Money Market                      
Portfolio, 2.06%. 71,126,554 657,848,464 (658,893,487 ) 70,081,531 $ 70,081,531 $ 1,341,691 $ — $ —

 

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 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.

A summary of inputs used as of February 28, 2019, in valuing the Fund’s assets carried at fair value, is as follows:

    Level 1   Level 2   Level 3   Total
Assets:                
Investments in Securities:a                
Equity Investments:b                
Energy. $ 29,045,688 $ 16,260,942 $ 8,864,637 $ 54,171,267
All Other Equity Investments.   66,897,706   —   —   66,897,706
Convertible Bonds   —   8,469,838   —   8,469,838
Corporate Bonds:                
Commercial & Professional Services   —   66,645,504   905   66,646,409
Energy.   —   350,179,112   2,963,264   353,142,376
All Other Corporate Bonds   —   2,417,528,533   —   2,417,528,533
Escrows and Litigation Trusts   —   175,000   —c   175,000
Short Term Investments   70,081,531   —   —   70,081,531
Total Investments in Securities $ 166,024,925 $ 2,859,258,929 $ 11,828,806 $ 3,037,112,660

 

aFor detailed categories, see the accompanying Statement of Investments.
bIncludes common, preferred stocks and management investment companies as well as other equity interests.
cIncludes securities determined to have no value at February 28, 2019.

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 beginning and/or end of the period.

|12

 

FRANKLIN HIGH INCOME TRUST
NOTES TO STATEMENT OF INVESTMENTS (UNAUDITED)

7. 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    
 
Currency Selected portfolio
USD United States Dollar ETF Exchange Traded Fund
  FRN Floating Rate Note
  LIBOR London InterBank Offered Rate
  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 provide reasonable assurance that information required to be disclosed in the Registrant’s filings under the Securities Exchange Act of 1934, as amended, 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 control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect the internal control over financial reporting.

 

 

Item 3. Exhibits.

 

(a) Certification pursuant to Section 30a-2 under the Investment Company Act of 1940 of Matthew T. Hinkle, 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/ Matthew T. Hinkle

      Matthew T. Hinkle

      Chief Executive Officer –

       Finance and Administration

 

Date  April 26, 2019

 

 

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/ Matthew T. Hinkle

      Matthew T. Hinkle

      Chief Executive Officer –

       Finance and Administration

Date  April 26, 2019

 

 

By /s/ Gaston Gardey

      Gaston Gardey

      Chief Financial Officer and

       Chief Accounting Officer

Date  April 26, 2019