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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Western Asset Global High Income Fund Inc | NYSE:EHI | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.02 | -0.28% | 7.03 | 7.12 | 7.02 | 7.06 | 75,209 | 21:00:02 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number
811-21337
(Exact name of registrant as specified in charter)
620 Eighth Avenue, 47th Floor, New York, NY 10018
(Address of principal executive offices) (Zip code)
Marc A. De Oliveira.
Franklin Templeton
100 First Stamford Place
Stamford, CT 06902
(Name and address of agent for service)
Registrant’s telephone number, including area code: 1-888-777-0102
Date of fiscal year end: May 31
Date of reporting period:
ITEM 1. | REPORT TO STOCKHOLDERS. |
The Annual Report to Stockholders is filed herewith.
III
|
|
1
|
|
7
|
|
8
|
|
10
|
|
35
|
|
36
|
|
37
|
|
38
|
|
39
|
|
42
|
|
57
|
|
58
|
|
65
|
|
71
|
|
72
|
|
73
|
|
76
|
|
99
|
|
101
|
Performance Snapshot as of May 31, 2024
|
|
Price Per Share
|
12-Month
Total Return**
|
$7.17 (NAV)
|
12.34
%†
|
$6.96 (Market Price)
|
17.46
%‡
|
Net Asset Value
|
|
Average annual total returns1
|
|
Twelve Months Ended 5/31/24
|
12.34
%
|
Five Years Ended 5/31/24
|
1.34
|
Ten Years Ended 5/31/24
|
2.49
|
Cumulative total returns1
|
|
5/31/14 through 5/31/24
|
27.88
%
|
Market Price
|
|
Average annual total returns2
|
|
Twelve Months Ended 5/31/24
|
17.46
%
|
Five Years Ended 5/31/24
|
3.11
|
Ten Years Ended 5/31/24
|
3.47
|
Cumulative total returns2
|
|
5/31/14 through 5/31/24
|
40.70
%
|
1
|
Assumes the reinvestment of all distributions, including returns of capital, if any,
at net asset value.
|
2
|
Assumes the reinvestment of all distributions, including returns of capital, if any,
in additional shares in
accordance with the Fund’s Dividend Reinvestment Plan.
|
Security
|
|
Rate
|
Maturity
Date
|
Face
Amount†
|
Value
|
Corporate Bonds & Notes — 108.9%
|
|||||
Communication Services — 12.0%
|
|||||
Diversified Telecommunication Services — 3.3%
|
|||||
Altice Financing SA, Senior Secured
Notes
|
5.000%
|
1/15/28
|
750,000
|
$593,249
(a)(b)
|
|
Altice Financing SA, Senior Secured
Notes
|
5.750%
|
8/15/29
|
1,390,000
|
1,034,508
(a)(b)
|
|
Altice France Holding SA, Senior
Secured Notes
|
10.500%
|
5/15/27
|
470,000
|
174,352
(a)
|
|
Altice France Holding SA, Senior
Secured Notes
|
6.000%
|
2/15/28
|
1,150,000
|
359,073
(a)
|
|
Altice France SA, Senior Secured Notes
|
5.500%
|
1/15/28
|
210,000
|
147,256
(a)
|
|
Altice France SA, Senior Secured Notes
|
5.500%
|
10/15/29
|
750,000
|
504,585
(a)
|
|
British Telecommunications PLC, Senior
Notes
|
9.625%
|
12/15/30
|
60,000
|
72,944
|
|
Telecom Italia Capital SA, Senior Notes
|
7.200%
|
7/18/36
|
284,000
|
258,447
|
|
Telecom Italia Capital SA, Senior Notes
|
7.200%
|
7/18/36
|
846,000
|
863,352
(a)
|
|
Turk Telekomunikasyon AS, Senior
Notes
|
4.875%
|
6/19/24
|
300,000
|
299,744
(a)
|
|
Turk Telekomunikasyon AS, Senior
Notes
|
7.375%
|
5/20/29
|
1,090,000
|
1,089,525
(a)
|
|
Total Diversified Telecommunication Services
|
5,397,035
|
||||
Entertainment — 0.5%
|
|||||
Banijay Entertainment SASU, Senior
Secured Notes
|
8.125%
|
5/1/29
|
870,000
|
890,048
(a)(b)
|
|
Interactive Media & Services — 0.3%
|
|||||
Match Group Holdings II LLC, Senior
Notes
|
3.625%
|
10/1/31
|
500,000
|
416,851
(a)(b)
|
|
Media — 4.5%
|
|||||
Charter Communications Operating LLC/
Charter Communications Operating
Capital Corp., Senior Secured Notes
|
3.700%
|
4/1/51
|
500,000
|
306,322
|
|
Charter Communications Operating LLC/
Charter Communications Operating
Capital Corp., Senior Secured Notes
|
3.850%
|
4/1/61
|
2,830,000
|
1,667,683
|
|
Clear Channel Outdoor Holdings Inc.,
Senior Notes
|
7.750%
|
4/15/28
|
720,000
|
621,744
(a)(b)
|
|
DirecTV Financing LLC/DirecTV
Financing Co-Obligor Inc., Senior
Secured Notes
|
5.875%
|
8/15/27
|
750,000
|
704,852
(a)(b)
|
|
DISH DBS Corp., Senior Notes
|
7.375%
|
7/1/28
|
460,000
|
204,644
|
Security
|
|
Rate
|
Maturity
Date
|
Face
Amount†
|
Value
|
Media — continued
|
|||||
DISH DBS Corp., Senior Notes
|
5.125%
|
6/1/29
|
2,320,000
|
$926,112
|
|
iHeartCommunications Inc., Senior
Secured Notes
|
6.375%
|
5/1/26
|
480,000
|
367,815
|
|
United Group BV, Senior Secured Notes
|
5.250%
|
2/1/30
|
540,000
EUR
|
582,350
(c)
|
|
Univision Communications Inc., Senior
Secured Notes
|
6.625%
|
6/1/27
|
350,000
|
338,440
(a)
|
|
Virgin Media Finance PLC, Senior Notes
|
5.000%
|
7/15/30
|
1,260,000
|
1,047,920
(a)(b)
|
|
Virgin Media Vendor Financing Notes III
DAC, Senior Secured Notes
|
4.875%
|
7/15/28
|
500,000
GBP
|
566,834
(a)
|
|
Total Media
|
7,334,716
|
||||
Wireless Telecommunication Services — 3.4%
|
|||||
CSC Holdings LLC, Senior Notes
|
11.750%
|
1/31/29
|
930,000
|
739,660
(a)(b)
|
|
CSC Holdings LLC, Senior Notes
|
4.500%
|
11/15/31
|
2,210,000
|
1,354,036
(a)
|
|
Millicom International Cellular SA,
Senior Notes
|
6.625%
|
10/15/26
|
360,000
|
357,426
(a)
|
|
Millicom International Cellular SA,
Senior Notes
|
4.500%
|
4/27/31
|
750,000
|
645,258
(a)
|
|
Sprint Capital Corp., Senior Notes
|
6.875%
|
11/15/28
|
560,000
|
591,807
|
|
Sprint Capital Corp., Senior Notes
|
8.750%
|
3/15/32
|
1,160,000
|
1,387,398
(b)
|
|
Vmed O2 UK Financing I PLC, Senior
Secured Notes
|
4.500%
|
7/15/31
|
450,000
GBP
|
474,683
(a)
|
|
Total Wireless Telecommunication Services
|
5,550,268
|
||||
|
|||||
Total Communication Services
|
19,588,918
|
||||
Consumer Discretionary — 22.8%
|
|||||
Automobile Components — 3.2%
|
|||||
Adient Global Holdings Ltd., Senior
Notes
|
4.875%
|
8/15/26
|
530,000
|
514,849
(a)(b)
|
|
American Axle & Manufacturing Inc.,
Senior Notes
|
6.500%
|
4/1/27
|
1,450,000
|
1,443,276
(b)
|
|
Garrett Motion Holdings Inc./Garrett LX
I Sarl, Senior Notes
|
7.750%
|
5/31/32
|
360,000
|
362,674
(a)
|
|
JB Poindexter & Co. Inc., Senior Notes
|
8.750%
|
12/15/31
|
1,800,000
|
1,845,880
(a)(b)
|
|
ZF North America Capital Inc., Senior
Notes
|
6.875%
|
4/14/28
|
500,000
|
509,132
(a)
|
|
ZF North America Capital Inc., Senior
Notes
|
7.125%
|
4/14/30
|
510,000
|
526,502
(a)
|
|
Total Automobile Components
|
5,202,313
|
||||
Automobiles — 2.4%
|
|||||
Ford Motor Co., Senior Notes
|
3.250%
|
2/12/32
|
1,990,000
|
1,636,673
(b)
|
|
Ford Motor Credit Co. LLC, Senior Notes
|
7.350%
|
3/6/30
|
500,000
|
527,272
(b)
|
Security
|
|
Rate
|
Maturity
Date
|
Face
Amount†
|
Value
|
|
|||||
Automobiles — continued
|
|||||
General Motors Co., Senior Notes
|
6.125%
|
10/1/25
|
350,000
|
$351,802
(b)
|
|
Nissan Motor Co. Ltd., Senior Notes
|
4.810%
|
9/17/30
|
1,500,000
|
1,384,645
(a)(b)
|
|
Total Automobiles
|
3,900,392
|
||||
Broadline Retail — 2.5%
|
|||||
Amazon.com Inc., Senior Notes
|
2.100%
|
5/12/31
|
750,000
|
627,427
(b)
|
|
Marks & Spencer PLC, Senior Notes
|
3.750%
|
5/19/26
|
300,000
GBP
|
371,114
(c)
|
|
Marks & Spencer PLC, Senior Notes
|
7.125%
|
12/1/37
|
1,120,000
|
1,182,805
(a)(b)
|
|
MercadoLibre Inc., Senior Notes
|
3.125%
|
1/14/31
|
1,800,000
|
1,521,937
(b)
|
|
Prosus NV, Senior Notes
|
4.193%
|
1/19/32
|
500,000
|
431,550
(c)
|
|
Total Broadline Retail
|
4,134,833
|
||||
Distributors — 0.7%
|
|||||
Ritchie Bros Holdings Inc., Senior Notes
|
7.750%
|
3/15/31
|
1,110,000
|
1,160,003
(a)(b)
|
|
Diversified Consumer Services — 1.9%
|
|||||
APCOA Parking Holdings GmbH, Senior
Secured Notes
|
4.625%
|
1/15/27
|
1,730,000
EUR
|
1,835,198
(a)
|
|
Carriage Services Inc., Senior Notes
|
4.250%
|
5/15/29
|
510,000
|
452,647
(a)(b)
|
|
Service Corp. International, Senior
Notes
|
7.500%
|
4/1/27
|
770,000
|
796,187
|
|
Total Diversified Consumer Services
|
3,084,032
|
||||
Hotels, Restaurants & Leisure — 11.3%
|
|||||
888 Acquisitions Ltd., Senior Secured
Notes
|
7.558%
|
7/15/27
|
1,350,000
EUR
|
1,454,328
(a)
|
|
Carnival Holdings Bermuda Ltd., Senior
Notes
|
10.375%
|
5/1/28
|
30,000
|
32,498
(a)(b)
|
|
Carnival PLC, Senior Notes
|
1.000%
|
10/28/29
|
2,760,000
EUR
|
2,424,174
|
|
Carrols Restaurant Group Inc., Senior
Notes
|
5.875%
|
7/1/29
|
460,000
|
475,363
(a)
|
|
Full House Resorts Inc., Senior Secured
Notes
|
8.250%
|
2/15/28
|
710,000
|
671,998
(a)(b)
|
|
IRB Holding Corp., Senior Secured
Notes
|
7.000%
|
6/15/25
|
1,160,000
|
1,161,065
(a)(b)
|
|
Las Vegas Sands Corp., Senior Notes
|
3.900%
|
8/8/29
|
1,260,000
|
1,145,412
(b)
|
|
Melco Resorts Finance Ltd., Senior
Notes
|
5.375%
|
12/4/29
|
530,000
|
478,131
(a)(b)
|
|
NCL Corp. Ltd., Senior Notes
|
5.875%
|
3/15/26
|
490,000
|
482,090
(a)(b)
|
|
NCL Corp. Ltd., Senior Secured Notes
|
8.125%
|
1/15/29
|
190,000
|
198,641
(a)
|
|
NCL Finance Ltd., Senior Notes
|
6.125%
|
3/15/28
|
1,830,000
|
1,792,789
(a)(b)
|
|
Royal Caribbean Cruises Ltd., Senior
Notes
|
5.375%
|
7/15/27
|
1,900,000
|
1,862,776
(a)(b)
|
Security
|
|
Rate
|
Maturity
Date
|
Face
Amount†
|
Value
|
|
|||||
Hotels, Restaurants & Leisure — continued
|
|||||
Royal Caribbean Cruises Ltd., Senior
Notes
|
5.500%
|
4/1/28
|
1,170,000
|
$1,143,720
(a)(b)
|
|
Saga PLC, Senior Notes
|
5.500%
|
7/15/26
|
310,000
GBP
|
373,884
(c)
|
|
Sands China Ltd., Senior Notes
|
2.850%
|
3/8/29
|
680,000
|
597,267
|
|
Viking Ocean Cruises Ship VII Ltd.,
Senior Secured Notes
|
5.625%
|
2/15/29
|
764,000
|
733,222
(a)(b)
|
|
VOC Escrow Ltd., Senior Secured Notes
|
5.000%
|
2/15/28
|
160,000
|
153,784
(a)(b)
|
|
Wheel Bidco Ltd., Senior Secured Notes
|
6.750%
|
7/15/26
|
450,000
GBP
|
491,701
(a)
|
|
Wynn Macau Ltd., Senior Notes
|
5.625%
|
8/26/28
|
850,000
|
794,939
(a)
|
|
Wynn Macau Ltd., Senior Notes
|
5.125%
|
12/15/29
|
270,000
|
242,690
(a)
|
|
Wynn Resorts Finance LLC/Wynn
Resorts Capital Corp., Senior Notes
|
5.125%
|
10/1/29
|
1,330,000
|
1,251,648
(a)(b)
|
|
Wynn Resorts Finance LLC/Wynn
Resorts Capital Corp., Senior Notes
|
7.125%
|
2/15/31
|
470,000
|
482,883
(a)(b)
|
|
Total Hotels, Restaurants & Leisure
|
18,445,003
|
||||
Specialty Retail — 0.8%
|
|||||
Global Auto Holdings Ltd./AAG FH UK
Ltd., Senior Notes
|
8.750%
|
1/15/32
|
200,000
|
192,502
(a)
|
|
Michaels Cos. Inc., Senior Secured
Notes
|
5.250%
|
5/1/28
|
590,000
|
479,160
(a)(b)
|
|
Sally Holdings LLC/Sally Capital Inc.,
Senior Notes
|
6.750%
|
3/1/32
|
560,000
|
549,924
(b)
|
|
Total Specialty Retail
|
1,221,586
|
||||
|
|||||
Total Consumer Discretionary
|
37,148,162
|
||||
Consumer Staples — 1.0%
|
|||||
Beverages — 0.7%
|
|||||
Central American Bottling Corp./CBC
Bottling Holdco SL/Beliv Holdco SL,
Senior Notes
|
5.250%
|
4/27/29
|
1,250,000
|
1,176,469
(a)
|
|
Food Products — 0.3%
|
|||||
FAGE International SA/FAGE USA Dairy
Industry Inc., Senior Notes
|
5.625%
|
8/15/26
|
500,000
|
497,915
(a)
|
|
|
|||||
Total Consumer Staples
|
1,674,384
|
||||
Energy — 25.9%
|
|||||
Energy Equipment & Services — 0.6%
|
|||||
Noble Finance II LLC, Senior Notes
|
8.000%
|
4/15/30
|
500,000
|
516,123
(a)
|
|
Sunnova Energy Corp., Senior Notes
|
5.875%
|
9/1/26
|
540,000
|
383,721
(a)
|
|
Total Energy Equipment & Services
|
899,844
|
||||
Oil, Gas & Consumable Fuels — 25.3%
|
|||||
Apache Corp., Senior Notes
|
5.100%
|
9/1/40
|
1,400,000
|
1,204,482
(b)
|
Security
|
|
Rate
|
Maturity
Date
|
Face
Amount†
|
Value
|
|
|||||
Oil, Gas & Consumable Fuels — continued
|
|||||
Continental Resources Inc., Senior
Notes
|
3.800%
|
6/1/24
|
1,040,000
|
$1,040,000
(b)
|
|
Continental Resources Inc., Senior
Notes
|
4.375%
|
1/15/28
|
790,000
|
759,140
(b)
|
|
Continental Resources Inc., Senior
Notes
|
4.900%
|
6/1/44
|
300,000
|
248,219
(b)
|
|
Crescent Energy Finance LLC, Senior
Notes
|
9.250%
|
2/15/28
|
400,000
|
423,740
(a)
|
|
Crescent Energy Finance LLC, Senior
Notes
|
7.625%
|
4/1/32
|
470,000
|
479,318
(a)
|
|
Diamondback Energy Inc., Senior Notes
|
3.500%
|
12/1/29
|
730,000
|
669,915
(b)
|
|
Ecopetrol SA, Senior Notes
|
5.875%
|
5/28/45
|
2,490,000
|
1,789,909
(d)
|
|
Ecopetrol SA, Senior Notes
|
5.875%
|
11/2/51
|
320,000
|
221,809
|
|
El Paso Natural Gas Co. LLC, Senior
Notes
|
8.375%
|
6/15/32
|
70,000
|
80,698
|
|
Energy Transfer LP, Junior Subordinated
Notes (6.625% to 2/15/28 then 3 mo.
USD LIBOR + 4.155%)
|
6.625%
|
2/15/28
|
680,000
|
642,228
(b)(e)(f)
|
|
EQM Midstream Partners LP, Senior
Notes
|
4.500%
|
1/15/29
|
1,060,000
|
988,622
(a)(b)
|
|
EQM Midstream Partners LP, Senior
Notes
|
7.500%
|
6/1/30
|
510,000
|
538,993
(a)(b)
|
|
EQM Midstream Partners LP, Senior
Notes
|
4.750%
|
1/15/31
|
1,540,000
|
1,415,159
(a)(b)
|
|
EQT Corp., Senior Notes
|
3.900%
|
10/1/27
|
1,380,000
|
1,316,844
(b)
|
|
Hilcorp Energy I LP/Hilcorp Finance Co.,
Senior Notes
|
8.375%
|
11/1/33
|
470,000
|
503,111
(a)
|
|
KazMunayGas National Co. JSC, Senior
Notes
|
3.500%
|
4/14/33
|
500,000
|
406,800
(a)
|
|
Kinder Morgan Inc., Senior Notes
|
7.750%
|
1/15/32
|
1,390,000
|
1,562,529
(b)
|
|
NGPL PipeCo LLC, Senior Notes
|
7.768%
|
12/15/37
|
1,430,000
|
1,636,980
(a)(b)
|
|
Occidental Petroleum Corp., Senior
Notes
|
6.950%
|
7/1/24
|
204,000
|
204,053
|
|
Occidental Petroleum Corp., Senior
Notes
|
2.900%
|
8/15/24
|
710,000
|
706,993
|
|
Occidental Petroleum Corp., Senior
Notes
|
5.550%
|
3/15/26
|
450,000
|
449,710
|
|
Occidental Petroleum Corp., Senior
Notes
|
6.200%
|
3/15/40
|
310,000
|
312,602
|
|
Pan American Energy LLC, Senior Notes
|
8.500%
|
4/30/32
|
500,000
|
521,047
(a)
|
Security
|
|
Rate
|
Maturity
Date
|
Face
Amount†
|
Value
|
|
|||||
Oil, Gas & Consumable Fuels — continued
|
|||||
Petrobras Global Finance BV, Senior
Notes
|
6.750%
|
1/27/41
|
2,910,000
|
$2,804,327
(b)
|
|
Petroleos del Peru SA, Senior Notes
|
4.750%
|
6/19/32
|
650,000
|
471,665
(a)
|
|
Petroleos del Peru SA, Senior Notes
|
5.625%
|
6/19/47
|
500,000
|
303,915
(a)
|
|
Petroleos Mexicanos, Senior Notes
|
6.500%
|
6/2/41
|
250,000
|
172,623
|
|
Petroleos Mexicanos, Senior Notes
|
6.375%
|
1/23/45
|
3,732,000
|
2,449,855
|
|
Puma International Financing SA,
Senior Notes
|
7.750%
|
4/25/29
|
420,000
|
427,048
(a)
|
|
Range Resources Corp., Senior Notes
|
4.875%
|
5/15/25
|
770,000
|
763,860
(b)
|
|
Range Resources Corp., Senior Notes
|
8.250%
|
1/15/29
|
430,000
|
447,982
(b)
|
|
Rockies Express Pipeline LLC, Senior
Notes
|
6.875%
|
4/15/40
|
330,000
|
313,865
(a)(b)
|
|
SilverBow Resources Inc., Secured
Notes (3 mo. Term SOFR + 7.750%)
|
13.079%
|
12/15/28
|
600,000
|
603,082
(a)(f)
|
|
Summit Midstream Holdings LLC/
Summit Midstream Finance Corp.,
Secured Notes
|
9.500%
|
10/15/26
|
960,000
|
985,558
(a)(b)
|
|
Targa Resources Partners LP/Targa
Resources Partners Finance Corp.,
Senior Notes
|
6.500%
|
7/15/27
|
1,220,000
|
1,228,106
(b)
|
|
Transcontinental Gas Pipe Line Co. LLC,
Senior Notes
|
7.850%
|
2/1/26
|
1,500,000
|
1,545,691
(b)
|
|
Venture Global LNG Inc., Senior
Secured Notes
|
9.875%
|
2/1/32
|
660,000
|
708,127
(a)(b)
|
|
Vital Energy Inc., Senior Notes
|
7.875%
|
4/15/32
|
650,000
|
660,423
(a)(b)
|
|
Western Midstream Operating LP,
Senior Notes
|
5.300%
|
3/1/48
|
500,000
|
430,051
|
|
Western Midstream Operating LP,
Senior Notes
|
5.250%
|
2/1/50
|
6,216,000
|
5,402,551
(d)
|
|
Williams Cos. Inc., Senior Notes
|
4.550%
|
6/24/24
|
680,000
|
679,393
(b)
|
|
Williams Cos. Inc., Senior Notes
|
7.500%
|
1/15/31
|
340,000
|
374,765
|
|
Williams Cos. Inc., Senior Notes
|
8.750%
|
3/15/32
|
486,000
|
575,387
|
|
Williams Cos. Inc., Senior Notes
|
5.750%
|
6/24/44
|
1,510,000
|
1,484,186
(d)
|
|
YPF SA, Senior Notes
|
8.500%
|
7/28/25
|
300,000
|
296,205
(a)
|
|
Total Oil, Gas & Consumable Fuels
|
41,251,566
|
||||
|
|||||
Total Energy
|
42,151,410
|
Security
|
|
Rate
|
Maturity
Date
|
Face
Amount†
|
Value
|
|
|||||
Financials — 17.6%
|
|||||
Banks — 10.9%
|
|||||
Banco Mercantil del Norte SA, Junior
Subordinated Notes (6.625% to 1/24/32
then 10 year Treasury Constant Maturity
Rate + 5.034%)
|
6.625%
|
1/24/32
|
1,340,000
|
$1,204,569
(a)(b)(e)(f)
|
|
Barclays PLC, Junior Subordinated
Notes (8.000% to 6/15/24 then 5 year
Treasury Constant Maturity Rate +
5.672%)
|
8.000%
|
6/15/24
|
1,800,000
|
1,803,064
(b)(e)(f)
|
|
BBVA Bancomer SA, Subordinated
Notes (5.125% to 1/17/28 then 5 year
Treasury Constant Maturity Rate +
2.650%)
|
5.125%
|
1/18/33
|
570,000
|
525,284
(a)(f)
|
|
BNP Paribas SA, Junior Subordinated
Notes (7.750% to 8/16/29 then 5 year
Treasury Constant Maturity Rate +
4.899%)
|
7.750%
|
8/16/29
|
2,400,000
|
2,462,073
(a)(b)(e)(f)
|
|
Comerica Bank, Senior Notes
|
2.500%
|
7/23/24
|
620,000
|
616,978
(b)
|
|
Credit Agricole SA, Junior Subordinated
Notes (8.125% to 12/23/25 then USD 5
year ICE Swap Rate + 6.185%)
|
8.125%
|
12/23/25
|
2,160,000
|
2,207,200
(a)(b)(e)(f)
|
|
HSBC Holdings PLC, Subordinated
Notes (8.113% to 11/3/32 then SOFR +
4.250%)
|
8.113%
|
11/3/33
|
950,000
|
1,077,397
(b)(f)
|
|
Intesa Sanpaolo SpA, Subordinated
Notes
|
5.710%
|
1/15/26
|
2,250,000
|
2,229,190
(a)(b)
|
|
JPMorgan Chase & Co., Junior
Subordinated Notes (6.100% to 10/1/24
then 3 mo. Term SOFR + 3.592%)
|
6.100%
|
10/1/24
|
500,000
|
502,062
(b)(e)(f)
|
|
Lloyds Banking Group PLC, Junior
Subordinated Notes (8.000% to 3/27/30
then 5 year Treasury Constant Maturity
Rate + 3.913%)
|
8.000%
|
9/27/29
|
2,360,000
|
2,386,505
(d)(e)(f)
|
|
UniCredit SpA, Subordinated Notes
(7.296% to 4/2/29 then USD 5 year ICE
Swap Rate + 4.914%)
|
7.296%
|
4/2/34
|
2,600,000
|
2,674,218
(a)(b)(f)
|
|
Total Banks
|
17,688,540
|
||||
Capital Markets — 1.0%
|
|||||
Credit Suisse AG AT1 Claim
|
—
|
—
|
4,900,000
|
147,000
*(g)(h)
|
|
StoneX Group Inc., Senior Secured
Notes
|
7.875%
|
3/1/31
|
330,000
|
337,976
(a)
|
Security
|
|
Rate
|
Maturity
Date
|
Face
Amount†
|
Value
|
|
|||||
Capital Markets — continued
|
|||||
UBS Group AG, Junior Subordinated
Notes (6.875% to 8/7/25 then USD 5
year ICE Swap Rate + 4.590%)
|
6.875%
|
8/7/25
|
600,000
|
$595,388
(c)(e)(f)
|
|
UBS Group AG, Junior Subordinated
Notes (9.250% to 11/13/28 then 5 year
Treasury Constant Maturity Rate +
4.745%)
|
9.250%
|
11/13/28
|
500,000
|
535,089
(a)(e)(f)
|
|
Total Capital Markets
|
1,615,453
|
||||
Consumer Finance — 0.5%
|
|||||
Navient Corp., Senior Notes
|
5.875%
|
10/25/24
|
480,000
|
479,430
(b)
|
|
Navient Corp., Senior Notes
|
6.750%
|
6/15/26
|
410,000
|
409,538
(b)
|
|
Total Consumer Finance
|
888,968
|
||||
Financial Services — 4.6%
|
|||||
AerCap Ireland Capital DAC/AerCap
Global Aviation Trust, Senior Notes
|
3.400%
|
10/29/33
|
4,000,000
|
3,333,127
(d)
|
|
Boost Newco Borrower LLC, Senior
Secured Notes
|
7.500%
|
1/15/31
|
210,000
|
217,806
(a)
|
|
Boost Newco Borrower LLC/GTCR W
Dutch Finance Sub BV, Senior Secured
Notes
|
8.500%
|
1/15/31
|
100,000
GBP
|
137,135
(a)
|
|
GE Capital International Funding Co.
Unlimited Co., Senior Notes
|
3.373%
|
11/15/25
|
1,000,000
|
972,434
(b)
|
|
Global Aircraft Leasing Co. Ltd., Senior
Notes (6.500% Cash or 7.250% PIK)
|
6.500%
|
9/15/24
|
1,207,683
|
1,149,895
(a)(i)
|
|
Jane Street Group/JSG Finance Inc.,
Senior Secured Notes
|
7.125%
|
4/30/31
|
1,040,000
|
1,059,483
(a)(b)
|
|
Rocket Mortgage LLC/Rocket Mortgage
Co-Issuer Inc., Senior Notes
|
3.625%
|
3/1/29
|
300,000
|
268,514
(a)
|
|
VistaJet Malta Finance PLC/Vista
Management Holding Inc., Senior Notes
|
6.375%
|
2/1/30
|
530,000
|
425,984
(a)
|
|
Total Financial Services
|
7,564,378
|
||||
Mortgage Real Estate Investment Trusts (REITs) — 0.6%
|
|||||
Starwood Property Trust Inc., Senior
Notes
|
7.250%
|
4/1/29
|
970,000
|
965,883
(a)(b)
|
|
|
|||||
Total Financials
|
28,723,222
|
||||
Health Care — 4.3%
|
|||||
Health Care Equipment & Supplies — 0.4%
|
|||||
Medline Borrower LP, Senior Secured
Notes
|
3.875%
|
4/1/29
|
700,000
|
637,722
(a)(b)
|
Security
|
|
Rate
|
Maturity
Date
|
Face
Amount†
|
Value
|
|
|||||
Health Care Providers & Services — 2.3%
|
|||||
Centene Corp., Senior Notes
|
2.625%
|
8/1/31
|
500,000
|
$407,260
|
|
CHS/Community Health Systems Inc.,
Senior Secured Notes
|
4.750%
|
2/15/31
|
250,000
|
197,592
(a)(b)
|
|
CHS/Community Health Systems Inc.,
Senior Secured Notes
|
10.875%
|
1/15/32
|
1,130,000
|
1,168,978
(a)(b)(j)
|
|
Legacy LifePoint Health LLC, Senior
Secured Notes
|
4.375%
|
2/15/27
|
580,000
|
548,199
(a)(b)
|
|
Sotera Health Holdings LLC, Senior
Secured Notes
|
7.375%
|
6/1/31
|
630,000
|
625,359
(a)
|
|
Tenet Healthcare Corp., Secured Notes
|
6.250%
|
2/1/27
|
860,000
|
861,980
(b)
|
|
Total Health Care Providers & Services
|
3,809,368
|
||||
Pharmaceuticals — 1.6%
|
|||||
Bausch Health Cos. Inc., Senior Secured
Notes
|
4.875%
|
6/1/28
|
840,000
|
616,199
(a)
|
|
Cidron Aida Finco Sarl, Senior Secured
Notes
|
5.000%
|
4/1/28
|
672,000
EUR
|
701,358
(a)
|
|
Endo Finance Holdings Inc., Senior
Secured Notes
|
8.500%
|
4/15/31
|
640,000
|
656,812
(a)
|
|
Par Pharmaceutical Inc., Escrow
|
—
|
—
|
310,000
|
0
*(a)(g)(h)(k)
|
|
Teva Pharmaceutical Finance
Netherlands III BV, Senior Notes
|
3.150%
|
10/1/26
|
700,000
|
655,400
(b)
|
|
Total Pharmaceuticals
|
2,629,769
|
||||
|
|||||
Total Health Care
|
7,076,859
|
||||
Industrials — 13.0%
|
|||||
Aerospace & Defense — 1.0%
|
|||||
Bombardier Inc., Senior Notes
|
7.500%
|
2/1/29
|
620,000
|
641,904
(a)(b)
|
|
TransDigm Inc., Senior Secured Notes
|
7.125%
|
12/1/31
|
940,000
|
965,348
(a)(b)
|
|
Total Aerospace & Defense
|
1,607,252
|
||||
Building Products — 0.6%
|
|||||
Standard Industries Inc., Senior Notes
|
5.000%
|
2/15/27
|
360,000
|
349,324
(a)(b)
|
|
Standard Industries Inc., Senior Notes
|
4.375%
|
7/15/30
|
640,000
|
571,614
(a)(b)
|
|
Total Building Products
|
920,938
|
||||
Commercial Services & Supplies — 2.0%
|
|||||
CoreCivic Inc., Senior Notes
|
4.750%
|
10/15/27
|
80,000
|
75,332
|
|
CoreCivic Inc., Senior Notes
|
8.250%
|
4/15/29
|
1,590,000
|
1,661,581
(b)
|
|
GEO Group Inc., Senior Notes
|
10.250%
|
4/15/31
|
600,000
|
631,822
(a)(b)
|
|
GEO Group Inc., Senior Secured Notes
|
8.625%
|
4/15/29
|
440,000
|
453,209
(a)
|
|
GFL Environmental Inc., Senior Secured
Notes
|
6.750%
|
1/15/31
|
440,000
|
449,358
(a)
|
|
Total Commercial Services & Supplies
|
3,271,302
|
Security
|
|
Rate
|
Maturity
Date
|
Face
Amount†
|
Value
|
|
|||||
Industrial Conglomerates — 0.2%
|
|||||
Alfa SAB de CV, Senior Notes
|
6.875%
|
3/25/44
|
400,000
|
$408,616
(a)(b)
|
|
Machinery — 0.5%
|
|||||
Titan International Inc., Senior Secured
Notes
|
7.000%
|
4/30/28
|
810,000
|
784,875
(b)
|
|
Passenger Airlines — 7.6%
|
|||||
American Airlines Group Inc., Senior
Notes
|
3.750%
|
3/1/25
|
2,030,000
|
1,986,248
(a)(b)
|
|
American Airlines Inc., Senior Secured
Notes
|
8.500%
|
5/15/29
|
1,040,000
|
1,073,334
(a)(b)
|
|
Delta Air Lines Inc., Senior Notes
|
2.900%
|
10/28/24
|
840,000
|
831,108
(b)
|
|
Delta Air Lines Inc., Senior Notes
|
7.375%
|
1/15/26
|
690,000
|
706,157
(b)
|
|
Delta Air Lines Inc., Senior Secured
Notes
|
7.000%
|
5/1/25
|
6,050,000
|
6,107,760
(a)(b)(d)
|
|
Spirit Loyalty Cayman Ltd./Spirit IP
Cayman Ltd., Senior Secured Notes
|
8.000%
|
9/20/25
|
1,778,693
|
1,336,938
(a)
|
|
Spirit Loyalty Cayman Ltd./Spirit IP
Cayman Ltd., Senior Secured Notes
|
8.000%
|
9/20/25
|
490,000
|
368,304
(a)
|
|
Total Passenger Airlines
|
12,409,849
|
||||
Trading Companies & Distributors — 1.1%
|
|||||
H&E Equipment Services Inc., Senior
Notes
|
3.875%
|
12/15/28
|
1,130,000
|
1,014,379
(a)(b)
|
|
United Rentals North America Inc.,
Senior Notes
|
5.500%
|
5/15/27
|
750,000
|
743,218
(b)
|
|
Total Trading Companies & Distributors
|
1,757,597
|
||||
|
|||||
Total Industrials
|
21,160,429
|
||||
Information Technology — 2.2%
|
|||||
Communications Equipment — 0.4%
|
|||||
CommScope Technologies LLC, Senior
Notes
|
5.000%
|
3/15/27
|
580,000
|
239,250
(a)
|
|
Viasat Inc., Senior Notes
|
7.500%
|
5/30/31
|
660,000
|
450,554
(a)(b)
|
|
Total Communications Equipment
|
689,804
|
||||
Electronic Equipment, Instruments & Components — 0.2%
|
|||||
EquipmentShare.com Inc., Secured
Notes
|
8.625%
|
5/15/32
|
280,000
|
290,309
(a)
|
|
Software — 0.4%
|
|||||
Cloud Software Group Inc., Senior
Secured Notes
|
8.250%
|
6/30/32
|
590,000
|
596,326
(a)
|
Security
|
|
Rate
|
Maturity
Date
|
Face
Amount†
|
Value
|
|
|||||
Technology Hardware, Storage & Peripherals — 1.2%
|
|||||
Seagate HDD Cayman, Senior Notes
|
4.750%
|
1/1/25
|
1,330,000
|
$1,319,486
(b)
|
|
Seagate HDD Cayman, Senior Notes
|
4.875%
|
6/1/27
|
630,000
|
612,153
(b)
|
|
Total Technology Hardware, Storage & Peripherals
|
1,931,639
|
||||
|
|||||
Total Information Technology
|
3,508,078
|
||||
Materials — 6.2%
|
|||||
Chemicals — 1.5%
|
|||||
Braskem Netherlands Finance BV,
Senior Notes
|
5.875%
|
1/31/50
|
750,000
|
551,469
(c)
|
|
Orbia Advance Corp. SAB de CV, Senior
Notes
|
5.875%
|
9/17/44
|
1,000,000
|
908,118
(a)(b)
|
|
Sasol Financing USA LLC, Senior Notes
|
8.750%
|
5/3/29
|
930,000
|
931,004
(a)
|
|
Total Chemicals
|
2,390,591
|
||||
Construction Materials — 0.5%
|
|||||
Smyrna Ready Mix Concrete LLC, Senior
Secured Notes
|
8.875%
|
11/15/31
|
730,000
|
769,251
(a)
|
|
Containers & Packaging — 1.3%
|
|||||
Ardagh Metal Packaging Finance
USA LLC/Ardagh Metal Packaging
Finance PLC, Senior Notes
|
4.000%
|
9/1/29
|
770,000
|
636,488
(a)
|
|
Ardagh Packaging Finance PLC/Ardagh
Holdings USA Inc., Senior Notes
|
5.250%
|
8/15/27
|
840,000
|
494,382
(a)
|
|
Pactiv LLC, Senior Notes
|
8.375%
|
4/15/27
|
1,020,000
|
1,065,157
|
|
Total Containers & Packaging
|
2,196,027
|
||||
Metals & Mining — 2.9%
|
|||||
Anglo American Capital PLC, Senior
Notes
|
4.875%
|
5/14/25
|
359,000
|
356,112
(a)
|
|
ArcelorMittal SA, Senior Notes
|
7.000%
|
10/15/39
|
1,140,000
|
1,237,440
(d)
|
|
First Quantum Minerals Ltd., Secured
Notes
|
9.375%
|
3/1/29
|
630,000
|
658,180
(a)(b)
|
|
Freeport Indonesia PT, Senior Notes
|
5.315%
|
4/14/32
|
500,000
|
482,549
(a)
|
|
Southern Copper Corp., Senior Notes
|
5.250%
|
11/8/42
|
1,620,000
|
1,503,320
(d)
|
|
Teck Resources Ltd., Senior Notes
|
6.000%
|
8/15/40
|
460,000
|
457,233
|
|
Total Metals & Mining
|
4,694,834
|
||||
|
|||||
Total Materials
|
10,050,703
|
||||
Real Estate — 1.3%
|
|||||
Health Care REITs — 0.1%
|
|||||
Diversified Healthcare Trust, Senior
Notes
|
4.375%
|
3/1/31
|
140,000
|
101,307
|
|
Hotel & Resort REITs — 0.6%
|
|||||
Service Properties Trust, Senior Notes
|
8.875%
|
6/15/32
|
1,040,000
|
973,495
(j)
|
Security
|
|
Rate
|
Maturity
Date
|
Face
Amount†
|
Value
|
|
|||||
Real Estate Management & Development — 0.2%
|
|||||
Add Hero Holdings Ltd., Senior Secured
Notes (7.500% Cash or 8.500% PIK)
|
8.500%
|
9/30/29
|
100,223
|
$5,512
(c)(i)
|
|
Add Hero Holdings Ltd., Senior Secured
Notes (8.000% Cash or 9.000% PIK)
|
9.000%
|
9/30/30
|
77,280
|
2,125
(c)(i)
|
|
Add Hero Holdings Ltd., Senior Secured
Notes (8.800% Cash or 9.800% PIK)
|
9.800%
|
9/30/31
|
100,848
|
2,521
(c)(i)
|
|
China Aoyuan Group Ltd., Senior Notes,
Step bond (0.000% to 9/30/31 then
1.000%)
|
0.000%
|
3/30/2173
|
152,810
|
1,528
(c)
|
|
China Aoyuan Group Ltd., Senior
Secured Notes (5.500% PIK)
|
5.500%
|
9/30/31
|
39,251
|
294
(c)(i)
|
|
Country Garden Holdings Co. Ltd.,
Senior Secured Notes
|
—
|
1/27/24
|
400,000
|
34,500
*(c)(l)
|
|
Cushman & Wakefield US
Borrower LLC, Senior Secured Notes
|
8.875%
|
9/1/31
|
180,000
|
189,377
(a)
|
|
Heimstaden AB, Senior Notes
|
4.250%
|
3/9/26
|
200,000
EUR
|
162,508
(c)
|
|
Total Real Estate Management & Development
|
398,365
|
||||
Specialized REITs — 0.4%
|
|||||
Iron Mountain Inc., Senior Notes
|
7.000%
|
2/15/29
|
710,000
|
720,108
(a)(b)
|
|
|
|||||
Total Real Estate
|
2,193,275
|
||||
Utilities — 2.6%
|
|||||
Electric Utilities — 1.2%
|
|||||
Comision Federal de Electricidad,
Senior Notes
|
3.348%
|
2/9/31
|
600,000
|
500,485
(a)
|
|
Eskom Holdings SOC Ltd., Senior Notes
|
4.314%
|
7/23/27
|
980,000
|
899,601
(c)
|
|
Vistra Operations Co. LLC, Senior Notes
|
7.750%
|
10/15/31
|
550,000
|
571,858
(a)(b)
|
|
Total Electric Utilities
|
1,971,944
|
||||
Gas Utilities — 1.4%
|
|||||
Suburban Propane Partners LP/
Suburban Energy Finance Corp., Senior
Notes
|
5.875%
|
3/1/27
|
2,340,000
|
2,305,855
(b)
|
|
|
|||||
Total Utilities
|
4,277,799
|
||||
Total Corporate Bonds & Notes (Cost — $167,610,583)
|
177,553,239
|
||||
Sovereign Bonds — 25.4%
|
|||||
Angola — 0.7%
|
|||||
Angolan Government International
Bond, Senior Notes
|
8.000%
|
11/26/29
|
1,200,000
|
1,091,250
(a)
|
Security
|
|
Rate
|
Maturity
Date
|
Face
Amount†
|
Value
|
|
|||||
Argentina — 0.7%
|
|||||
Provincia de Buenos Aires, Senior
Notes, Step bond (6.375% to 9/1/24
then 6.625%)
|
6.375%
|
9/1/37
|
157,687
|
$69,974
(a)
|
|
Provincia de Cordoba, Senior Notes
|
6.875%
|
2/1/29
|
1,370,000
|
1,041,200
(a)
|
|
Total Argentina
|
1,111,174
|
||||
Bahamas — 0.5%
|
|||||
Bahamas Government International
Bond, Senior Notes
|
6.000%
|
11/21/28
|
500,000
|
452,238
(a)
|
|
Bahamas Government International
Bond, Senior Notes
|
9.000%
|
6/16/29
|
425,000
|
420,962
(a)
|
|
Total Bahamas
|
873,200
|
||||
Brazil — 1.0%
|
|||||
Brazil Notas do Tesouro Nacional Serie
F, Notes
|
10.000%
|
1/1/25
|
6,500,000
BRL
|
1,233,976
|
|
Brazilian Government International
Bond, Senior Notes
|
5.625%
|
1/7/41
|
500,000
|
440,791
|
|
Total Brazil
|
1,674,767
|
||||
Colombia — 1.4%
|
|||||
Colombia Government International
Bond, Senior Notes
|
3.250%
|
4/22/32
|
1,000,000
|
763,527
(b)
|
|
Colombia Government International
Bond, Senior Notes
|
7.375%
|
9/18/37
|
1,042,000
|
1,009,834
(b)
|
|
Colombia Government International
Bond, Senior Notes
|
4.125%
|
2/22/42
|
830,000
|
544,381
|
|
Total Colombia
|
2,317,742
|
||||
Costa Rica — 0.3%
|
|||||
Costa Rica Government International
Bond, Senior Notes
|
7.158%
|
3/12/45
|
500,000
|
521,375
(a)
|
|
Dominican Republic — 2.2%
|
|||||
Dominican Republic International Bond,
Senior Notes
|
9.750%
|
6/5/26
|
37,500,000
DOP
|
640,686
(c)
|
|
Dominican Republic International Bond,
Senior Notes
|
4.500%
|
1/30/30
|
620,000
|
565,669
(a)
|
|
Dominican Republic International Bond,
Senior Notes
|
4.875%
|
9/23/32
|
1,910,000
|
1,714,968
(a)
|
|
Dominican Republic International Bond,
Senior Notes
|
13.625%
|
2/3/33
|
31,500,000
DOP
|
635,558
(c)
|
|
Total Dominican Republic
|
3,556,881
|
Security
|
|
Rate
|
Maturity
Date
|
Face
Amount†
|
Value
|
|
|||||
Ecuador — 0.1%
|
|||||
Ecuador Government International
Bond, Senior Notes, Step bond (2.500%
to 7/31/24 then 5.000%)
|
2.500%
|
7/31/40
|
480,000
|
$224,400
(a)
|
|
Egypt — 0.9%
|
|||||
Egypt Government International Bond,
Senior Notes
|
7.625%
|
5/29/32
|
1,780,000
|
1,523,235
(c)
|
|
Indonesia — 1.6%
|
|||||
Indonesia Government International
Bond, Senior Notes
|
6.625%
|
2/17/37
|
945,000
|
1,051,653
(c)
|
|
Indonesia Treasury Bond
|
6.875%
|
4/15/29
|
24,200,000,000
IDR
|
1,489,908
|
|
Indonesia Treasury Bond
|
8.375%
|
3/15/34
|
209,000,000
IDR
|
14,136
|
|
Total Indonesia
|
2,555,697
|
||||
Ivory Coast — 0.8%
|
|||||
Ivory Coast Government International
Bond, Senior Notes
|
6.125%
|
6/15/33
|
1,500,000
|
1,335,712
(a)
|
|
Jamaica — 0.4%
|
|||||
Jamaica Government International
Bond, Senior Notes
|
8.000%
|
3/15/39
|
500,000
|
586,825
|
|
Jordan — 0.6%
|
|||||
Jordan Government International Bond,
Senior Notes
|
5.850%
|
7/7/30
|
960,000
|
884,238
(a)
|
|
Kenya — 0.3%
|
|||||
Republic of Kenya Government
International Bond, Senior Notes
|
8.000%
|
5/22/32
|
600,000
|
549,408
(a)
|
|
Mexico — 4.3%
|
|||||
Mexican Bonos, Bonds
|
7.750%
|
5/29/31
|
77,360,000
MXN
|
4,080,088
|
|
Mexico Government International Bond,
Senior Notes
|
2.659%
|
5/24/31
|
2,020,000
|
1,667,217
|
|
Mexico Government International Bond,
Senior Notes
|
3.500%
|
2/12/34
|
1,500,000
|
1,228,004
(b)
|
|
Total Mexico
|
6,975,309
|
||||
Nigeria — 1.2%
|
|||||
Nigeria Government International Bond,
Senior Notes
|
7.143%
|
2/23/30
|
920,000
|
813,188
(a)
|
|
Nigeria Government International Bond,
Senior Notes
|
7.696%
|
2/23/38
|
1,450,000
|
1,149,315
(c)
|
|
Total Nigeria
|
1,962,503
|
||||
Oman — 1.0%
|
|||||
Oman Government International Bond,
Senior Notes
|
5.625%
|
1/17/28
|
1,600,000
|
1,595,834
(a)
|
Security
|
|
Rate
|
Maturity
Date
|
Face
Amount†
|
Value
|
|
|||||
Panama — 0.8%
|
|||||
Panama Government International
Bond, Senior Notes
|
2.252%
|
9/29/32
|
1,890,000
|
$1,350,309
|
|
Peru — 1.2%
|
|||||
Peruvian Government International
Bond, Senior Notes
|
8.750%
|
11/21/33
|
1,604,000
|
1,927,731
(b)
|
|
Philippines — 0.4%
|
|||||
Philippine Government International
Bond, Senior Notes
|
3.200%
|
7/6/46
|
1,000,000
|
697,590
|
|
Qatar — 0.9%
|
|||||
Qatar Government International Bond,
Senior Notes
|
3.750%
|
4/16/30
|
1,500,000
|
1,413,439
(a)
|
|
Saudi Arabia — 0.9%
|
|||||
Saudi Government International Bond,
Senior Notes
|
4.000%
|
4/17/25
|
1,500,000
|
1,480,995
(a)
|
|
Senegal — 0.2%
|
|||||
Senegal Government International
Bond, Senior Notes
|
6.250%
|
5/23/33
|
450,000
|
381,087
(a)
|
|
South Africa — 0.3%
|
|||||
Republic of South Africa Government
International Bond, Senior Notes
|
6.250%
|
3/8/41
|
500,000
|
411,701
|
|
Supranational — 0.5%
|
|||||
European Bank for Reconstruction &
Development, Senior Notes
|
4.250%
|
2/7/28
|
13,000,000,000
IDR
|
742,720
|
|
Turkey — 1.4%
|
|||||
Turkey Government International Bond,
Senior Notes
|
5.125%
|
2/17/28
|
2,000,000
|
1,896,292
|
|
Turkey Government International Bond,
Senior Notes
|
4.875%
|
4/16/43
|
500,000
|
353,151
|
|
Total Turkey
|
2,249,443
|
||||
Ukraine — 0.3%
|
|||||
Ukraine Government International Bond,
Senior Notes
|
7.375%
|
9/25/34
|
1,950,000
|
529,760
*(a)(m)
|
|
Uruguay — 0.5%
|
|||||
Uruguay Government International
Bond, Senior Notes
|
9.750%
|
7/20/33
|
32,500,000
UYU
|
867,327
|
|
|
|||||
Total Sovereign Bonds (Cost — $40,188,377)
|
41,391,652
|
Security
|
|
Rate
|
Maturity
Date
|
Face
Amount†
|
Value
|
|
|||||
Senior Loans — 12.0%
|
|||||
Communication Services — 0.7%
|
|||||
Media — 0.7%
|
|||||
iHeartCommunications Inc., New Term
Loan (1 mo. Term SOFR + 3.114%)
|
8.444%
|
5/1/26
|
720,000
|
$569,200
(f)(n)(o)
|
|
Ziggo Financing Partnership, Term Loan
I (1 mo. Term SOFR + 2.614%)
|
7.931%
|
4/30/28
|
500,000
|
494,470
(f)(n)(o)
|
|
|
|||||
Total Communication Services
|
1,063,670
|
||||
Consumer Discretionary — 2.6%
|
|||||
Automobile Components — 0.7%
|
|||||
Autokiniton US Holdings Inc., 2024
Replacement Term Loan B (1 mo. Term
SOFR + 4.114%)
|
9.444%
|
4/6/28
|
748,125
|
755,273
(f)(n)(o)
|
|
First Brands Group LLC, 2022
Incremental Term Loan (3 mo. Term
SOFR + 5.262%)
|
10.591%
|
3/30/27
|
498,831
|
496,337
(f)(n)(o)
|
|
Total Automobile Components
|
1,251,610
|
||||
Diversified Consumer Services — 0.1%
|
|||||
WW International Inc., Initial Term Loan
(1 mo. Term SOFR + 3.614%)
|
8.944%
|
4/13/28
|
324,000
|
148,332
(f)(n)(o)
|
|
Hotels, Restaurants & Leisure — 1.8%
|
|||||
Caesars Entertainment Inc., Incremental
Term Loan B1 (3 mo. Term SOFR +
2.750%)
|
8.097%
|
2/6/31
|
1,400,000
|
1,406,125
(f)(n)(o)
|
|
Fertitta Entertainment LLC, Initial Term
Loan B (1 mo. Term SOFR + 3.750%)
|
9.071%
|
1/27/29
|
997,455
|
1,001,615
(f)(n)(o)
|
|
Scientific Games International Inc.,
Term Loan B1 (1 mo. Term SOFR +
2.750%)
|
8.070%
|
4/14/29
|
500,000
|
503,320
(f)(n)(o)
|
|
Total Hotels, Restaurants & Leisure
|
2,911,060
|
||||
|
|||||
Total Consumer Discretionary
|
4,311,002
|
||||
Consumer Staples — 0.8%
|
|||||
Beverages — 0.5%
|
|||||
Triton Water Holdings Inc., First Lien
Initial Term Loan (3 mo. Term SOFR +
3.512%)
|
8.814%
|
3/31/28
|
797,949
|
797,721
(f)(n)(o)
|
|
Consumer Staples Distribution & Retail — 0.3%
|
|||||
Froneri U.S. Inc., Term Loan Facility B2
(1 mo. Term SOFR + 2.350%)
|
7.679%
|
1/29/27
|
498,705
|
500,034
(f)(n)(o)
|
|
|
|||||
Total Consumer Staples
|
1,297,755
|
Security
|
|
Rate
|
Maturity
Date
|
Face
Amount†
|
Value
|
|
|||||
Energy — 0.3%
|
|||||
Oil, Gas & Consumable Fuels — 0.3%
|
|||||
Buckeye Partners LP, 2023 Term Loan
Facility B2
|
—
|
11/22/30
|
498,750
|
$500,463
(p)
|
|
|
|||||
Financials — 1.7%
|
|||||
Banks — 0.2%
|
|||||
Mercury Borrower Inc., First Lien Initial
Term Loan (1 mo. Term SOFR + 3.614%)
|
8.944%
|
8/2/28
|
398,954
|
400,076
(f)(n)(o)
|
|
Consumer Finance — 0.1%
|
|||||
Blackhawk Network Holdings Inc., Term
Loan B (1 mo. Term SOFR + 5.000%)
|
10.329%
|
3/12/29
|
240,000
|
241,290
(f)(n)(o)
|
|
Financial Services — 0.9%
|
|||||
Boost Newco Borrower LLC, Initial USD
Term Loan (3 mo. Term SOFR + 3.000%)
|
8.309%
|
1/31/31
|
1,050,000
|
1,055,759
(f)(n)(o)
|
|
Nexus Buyer LLC, Amendment No. 5
Term Loan (1 mo. Term SOFR + 4.500%)
|
9.829%
|
12/13/28
|
400,000
|
401,334
(f)(n)(o)
|
|
Total Financial Services
|
1,457,093
|
||||
Insurance — 0.5%
|
|||||
Asurion LLC, New Term Loan B10 (1 mo.
Term SOFR + 4.100%)
|
9.429%
|
8/19/28
|
748,101
|
740,673
(f)(n)(o)
|
|
|
|||||
Total Financials
|
2,839,132
|
||||
Health Care — 0.9%
|
|||||
Health Care Equipment & Supplies — 0.9%
|
|||||
Medline Borrower LP, Term Loan B (1
mo. Term SOFR + 2.750%)
|
8.079%
|
10/23/28
|
1,500,000
|
1,511,678
(f)(n)(o)(p)
|
|
|
|||||
Industrials — 2.5%
|
|||||
Aerospace & Defense — 0.3%
|
|||||
Transdigm Inc., Term Loan J (3 mo. Term
SOFR + 3.250%)
|
8.559%
|
2/28/31
|
498,750
|
501,306
(f)(n)(o)
|
|
Building Products — 0.1%
|
|||||
ACProducts Holdings Inc., Initial Term
Loan (3 mo. Term SOFR + 4.512%)
|
9.814%
|
5/17/28
|
199,487
|
169,841
(f)(n)(o)
|
|
Commercial Services & Supplies — 0.3%
|
|||||
Garda World Security Corp., Fourth
Additional Term Loan (3 mo. Term SOFR
+ 4.250%)
|
9.583%
|
2/1/29
|
398,985
|
403,324
(f)(n)(o)
|
|
Construction & Engineering — 0.3%
|
|||||
Tutor Perini Corp., Term Loan
|
—
|
8/18/27
|
498,076
|
500,046
(p)
|
|
Machinery — 0.6%
|
|||||
TK Elevator Midco GmbH, USD Term
Loan Facility B2
|
—
|
4/30/30
|
997,500
|
1,005,345
(p)
|
Security
|
|
Rate
|
Maturity
Date
|
Face
Amount†
|
Value
|
|
|||||
Passenger Airlines — 0.9%
|
|||||
United Airlines Inc., Term Loan B (1 mo.
Term SOFR + 2.750%)
|
8.071%
|
2/22/31
|
1,450,000
|
$1,457,511
(f)(n)(o)
|
|
|
|||||
Total Industrials
|
4,037,373
|
||||
Information Technology — 1.6%
|
|||||
Electronic Equipment, Instruments & Components — 0.4%
|
|||||
Coherent Corp., Term Loan B1 (1 mo.
Term SOFR + 2.500%)
|
7.829%
|
7/2/29
|
587,227
|
591,337
(f)(n)(o)
|
|
IT Services — 0.3%
|
|||||
Redstone Holdco 2 LP, First Lien Initial
Term Loan (1 mo. Term SOFR + 4.864%)
|
10.194%
|
4/27/28
|
550,000
|
478,891
(f)(n)(o)
|
|
Semiconductors & Semiconductor Equipment — 0.3%
|
|||||
MKS Instruments Inc., 2023 Dollar Term
Loan B (1 mo. Term SOFR + 2.500%)
|
7.822%
|
8/17/29
|
512,282
|
515,794
(f)(n)(o)
|
|
Software — 0.6%
|
|||||
DCert Buyer Inc., First Lien Initial Term
Loan (1 mo. Term SOFR + 4.000%)
|
9.329%
|
10/16/26
|
698,182
|
695,864
(f)(n)(o)
|
|
Modena Buyer LLC, Term Loan
|
—
|
4/18/31
|
330,000
|
323,468
(p)
|
|
Total Software
|
1,019,332
|
||||
|
|||||
Total Information Technology
|
2,605,354
|
||||
Utilities — 0.3%
|
|||||
Electric Utilities — 0.3%
|
|||||
Vistra Operations Co. LLC, 2018
Incremental Term Loan (1 mo. Term
SOFR + 2.000%)
|
7.329%
|
12/20/30
|
399,000
|
400,879
(f)(n)(o)
|
|
|
|||||
Sovereign Bonds — 0.6%
|
|
|
|
|
|
Tanzania — 0.6%
|
|
|
|
|
|
Government of the
United Republic of
Tanzania, Term Loan A2
(3 mo. Term SOFR +
5.450%)
|
|
10.764%
|
4/29/31
|
1,000,000
|
995,000
(f)(g)(h)(n)(o)
|
|
|||||
Total Senior Loans (Cost — $19,659,479)
|
19,562,306
|
||||
Collateralized Mortgage Obligations(q) — 4.5%
|
|||||
BANK, 2022-BNK43 D
|
3.000%
|
8/15/55
|
510,000
|
344,307
(a)
|
|
BX Commercial Mortgage Trust, 2024-
KING E (1 mo. Term SOFR + 3.688%)
|
8.988%
|
5/15/34
|
410,000
|
409,232
(a)(f)
|
|
Citigroup Commercial Mortgage Trust,
2015-GC29 D
|
3.110%
|
4/10/48
|
320,000
|
284,449
(a)
|
|
Citigroup Commercial Mortgage Trust,
2015-P1 D
|
3.225%
|
9/15/48
|
540,000
|
475,568
(a)
|
Security
|
|
Rate
|
Maturity
Date
|
Face
Amount†
|
Value
|
Collateralized Mortgage Obligations(q) — continued
|
|||||
Citigroup Commercial Mortgage Trust,
2015-P1 E
|
4.369%
|
9/15/48
|
450,000
|
$343,453
(a)(f)
|
|
CSAIL Commercial Mortgage Trust,
2015-C3 C
|
4.349%
|
8/15/48
|
519,000
|
444,772
(f)
|
|
Federal Home Loan Mortgage Corp.
(FHLMC) REMIC, Structured Agency
Credit Risk Debt Notes, 2020-DNA1 B2
(30 Day Average SOFR + 5.364%)
|
10.688%
|
1/25/50
|
750,000
|
821,737
(a)(f)
|
|
Federal Home Loan Mortgage Corp.
(FHLMC) REMIC, Structured Agency
Credit Risk Debt Notes, 2021-DNA3 B2
(30 Day Average SOFR + 6.250%)
|
11.574%
|
10/25/33
|
570,000
|
674,408
(a)(f)
|
|
Federal Home Loan Mortgage Corp.
(FHLMC) REMIC, Structured Agency
Credit Risk Debt Notes, 2021-DNA7 B2
(30 Day Average SOFR + 7.800%)
|
13.124%
|
11/25/41
|
550,000
|
601,670
(a)(f)
|
|
Federal National Mortgage Association
(FNMA) — CAS, 2024-R01 1B2 (30 Day
Average SOFR + 4.000%)
|
9.324%
|
1/25/44
|
800,000
|
823,504
(a)(f)
|
|
GS Mortgage Securities Corp. Trust,
2024-70P E
|
8.965%
|
3/10/41
|
430,000
|
430,737
(a)(f)
|
|
Hawaii Hotel Trust, 2019-MAUI F (1 mo.
Term SOFR + 2.797%)
|
8.364%
|
5/15/38
|
500,000
|
496,249
(a)(f)
|
|
Morgan Stanley Capital Trust, 2015-
UBS8 C
|
4.558%
|
12/15/48
|
510,000
|
457,537
(f)
|
|
Morgan Stanley Capital Trust, 2016-
BNK2 B
|
3.485%
|
11/15/49
|
530,000
|
436,481
|
|
UBS Commercial Mortgage Trust, 2018-
C15 C
|
5.140%
|
12/15/51
|
345,000
|
307,690
(f)
|
|
|
|||||
Total Collateralized Mortgage Obligations (Cost — $7,081,779)
|
7,351,794
|
||||
U.S. Government & Agency Obligations — 1.8%
|
|||||
U.S. Government Obligations — 1.8%
|
|||||
U.S. Treasury Notes
|
3.250%
|
8/31/24
|
400,000
|
397,868
|
|
U.S. Treasury Notes
|
4.125%
|
1/31/25
|
2,480,000
|
2,461,431
|
|
|
|||||
Total U.S. Government & Agency Obligations (Cost — $2,864,274)
|
2,859,299
|
||||
Convertible Bonds & Notes — 1.2%
|
|||||
Communication Services — 1.2%
|
|||||
Media — 1.2%
|
|||||
DISH Network Corp., Senior Notes
|
3.375%
|
8/15/26
|
2,900,000
|
1,870,281
|
Security
|
|
Rate
|
Maturity
Date
|
Face
Amount†
|
Value
|
|
|||||
Real Estate — 0.0%††
|
|||||
Real Estate Management & Development — 0.0%††
|
|||||
China Aoyuan Group Ltd., Senior Notes
|
0.000%
|
9/30/28
|
13,656
|
$172
(c)
|
|
|
|||||
Total Convertible Bonds & Notes (Cost — $2,028,415)
|
1,870,453
|
||||
|
|
|
|
Shares
|
|
Common Stocks — 0.0%††
|
|||||
Health Care — 0.0%††
|
|||||
Pharmaceuticals — 0.0%††
|
|||||
Endo Inc.
|
|
1,798
|
50,944
*
|
||
Endo International PLC
|
|
60
|
1,700
*
|
||
|
|||||
Total Health Care
|
52,644
|
||||
Real Estate — 0.0%††
|
|||||
Real Estate Management & Development — 0.0%††
|
|||||
China Aoyuan Group Ltd.
|
|
38,203
|
840
*
|
||
|
|||||
Total Common Stocks (Cost — $49,526)
|
53,484
|
||||
|
|
|
Expiration
Date
|
Warrants
|
|
Warrants — 0.0%††
|
|||||
Industrials — 0.0%††
|
|||||
Passenger Airlines — 0.0%††
|
|||||
flyExclusive Inc. (Cost — $12,086)
|
|
5/28/28
|
12,623
|
7,448
*
|
|
Total Investments before Short-Term Investments (Cost — $239,494,519)
|
250,649,675
|
||||
|
|
Rate
|
Maturity
Date
|
Face
Amount†
|
|
Short-Term Investments — 1.2%
|
|||||
U.S. Treasury Bills — 1.2%
|
|||||
U.S. Treasury Bills (Cost — $1,999,122)
|
1.340%
|
6/4/24
|
2,000,000
|
1,999,709
(r)
|
|
|
|
|
|
Shares
|
|
Money Market Funds — 0.0%††
|
|||||
Western Asset Premier Institutional
Government Reserves, Premium Shares
(Cost — $30,670)
|
5.262%
|
|
30,670
|
30,670
(s)(t)
|
|
|
|||||
Total Short-Term Investments (Cost — $2,029,792)
|
2,030,379
|
||||
Total Investments — 155.0% (Cost — $241,524,311)
|
252,680,054
|
||||
Liabilities in Excess of Other Assets — (55.0)%
|
(89,696,179
)
|
||||
Total Net Assets — 100.0%
|
$162,983,875
|
†
|
Face amount denominated in U.S. dollars, unless otherwise noted.
|
††
|
Represents less than 0.1%.
|
*
|
Non-income producing security.
|
(a)
|
Security is exempt from registration under Rule 144A of the Securities Act of 1933.
This security may be resold in
transactions that are exempt from registration, normally to qualified institutional
buyers. This security has been
deemed liquid pursuant to guidelines approved by the Board of Directors.
|
(b)
|
All or a portion of this security is pledged as collateral pursuant to the loan agreement (Note 5).
|
(c)
|
Security is exempt from registration under Regulation S of the Securities Act of 1933.
Regulation S applies to
securities offerings that are made outside of the United States and do not involve
direct selling efforts in the
United States. This security has been deemed liquid pursuant to guidelines approved
by the Board of Directors.
|
(d)
|
All or a portion of this security is held by the counterparty as collateral for open
reverse repurchase agreements.
|
(e)
|
Security has no maturity date. The date shown represents the next call date.
|
(f)
|
Variable rate security. Interest rate disclosed is as of the most recent information
available. Certain variable rate
securities are not based on a published reference rate and spread but are determined
by the issuer or agent and
are based on current market conditions. These securities do not indicate a reference
rate and spread in their
description above.
|
(g)
|
Security is fair valued in accordance with procedures approved by the Board of Directors (Note 1).
|
(h)
|
Security is valued using significant unobservable inputs (Note 1).
|
(i)
|
Payment-in-kind security for which the issuer has the option at each interest payment
date of making interest
payments in cash or additional securities.
|
(j)
|
Securities traded on a when-issued or delayed delivery basis.
|
(k)
|
Value is less than $1.
|
(l)
|
The maturity principal is currently in default as of May 31, 2024.
|
(m)
|
The coupon payment on this security is currently in default as of May 31, 2024.
|
(n)
|
Interest rates disclosed represent the effective rates on senior loans. Ranges in
interest rates are attributable to
multiple contracts under the same loan.
|
(o)
|
Senior loans may be considered restricted in that the Fund ordinarily is contractually
obligated to receive approval
from the agent bank and/or borrower prior to the disposition of a senior loan.
|
(p)
|
All or a portion of this loan has not settled as of May 31, 2024. Interest rates are
not effective until settlement
date. Interest rates shown, if any, are for the settled portion of the loan.
|
(q)
|
Collateralized mortgage obligations are secured by an underlying pool of mortgages
or mortgage pass-through
certificates that are structured to direct payments on underlying collateral to different
series or classes of the
obligations. The interest rate may change positively or inversely in relation to one
or more interest rates, financial
indices or other financial indicators and may be subject to an upper and/or lower
limit.
|
(r)
|
Rate shown represents yield-to-maturity.
|
(s)
|
Rate shown is one-day yield as of the end of the reporting period.
|
(t)
|
In this instance, as defined in the Investment Company Act of 1940, an “Affiliated Company” represents Fund
ownership of at least 5% of the outstanding voting securities of an issuer, or a company
which is under common
ownership or control with the Fund. At May 31, 2024, the total market value of investments
in Affiliated
Companies was $30,670 and the cost was $30,670 (Note 9).
|
Abbreviation(s) used in this schedule:
|
||
BRL
|
—
|
Brazilian Real
|
CAS
|
—
|
Connecticut Avenue Securities
|
DOP
|
—
|
Dominican Peso
|
EUR
|
—
|
Euro
|
GBP
|
—
|
British Pound
|
ICE
|
—
|
Intercontinental Exchange
|
IDR
|
—
|
Indonesian Rupiah
|
JSC
|
—
|
Joint Stock Company
|
LIBOR
|
—
|
London Interbank Offered Rate
|
MXN
|
—
|
Mexican Peso
|
PIK
|
—
|
Payment-In-Kind
|
REMIC
|
—
|
Real Estate Mortgage Investment Conduit
|
SOFR
|
—
|
Secured Overnight Financing Rate
|
USD
|
—
|
United States Dollar
|
UYU
|
—
|
Uruguayan Peso
|
Counterparty
|
Rate
|
Effective
Date
|
Maturity
Date
|
Face Amount
of Reverse
Repurchase
Agreements
|
Asset Class
of Collateral*
|
Collateral
Value**
|
Deutsche Bank AG
|
5.700%
|
3/19/2024
|
6/18/2024
|
$3,220,000
|
Corporate Bonds &
Notes
|
$3,342,799
|
Deutsche Bank AG
|
5.750%
|
3/25/2024
|
6/18/2024
|
1,123,666
|
Corporate Bonds &
Notes
|
1,247,636
|
Deutsche Bank AG
|
5.850%
|
5/14/2024
|
8/14/2024
|
2,036,982
|
Corporate Bonds &
Notes
|
2,420,070
|
Goldman Sachs
Group Inc.
|
5.700%
|
5/21/2024
|
6/21/2024
|
9,331,159
|
Corporate Bonds &
Notes
Cash
|
10,130,293
56,367
|
Counterparty
|
Rate
|
Effective
Date
|
Maturity
Date
|
Face Amount
of Reverse
Repurchase
Agreements
|
Asset Class
of Collateral*
|
Collateral
Value**
|
Goldman Sachs
Group Inc.
|
5.850%
|
10/20/2023
|
TBD ***
|
$1,132,650
|
Corporate Bonds &
Notes
Cash
|
$1,508,753
6,842
|
Goldman Sachs
Group Inc.
|
6.000%
|
12/14/2023
|
TBD ***
|
793,087
|
Corporate Bonds &
Notes
Cash
|
1,078,956
4,791
|
|
|
|
|
$17,637,544
|
|
$19,796,507
|
*
|
Refer to the Schedule of Investments for positions held at the counterparty as collateral
for reverse repurchase
agreements.
|
**
|
Including accrued interest.
|
***
|
TBD — To Be Determined; These reverse repurchase agreements have no maturity dates because they are
renewed daily and can be terminated by either the Fund or the counterparty in accordance
with the terms of the
agreements. The rates for these agreements are variable. The rate disclosed is the
rate as of May 31, 2024.
|
Currency
Purchased
|
Currency
Sold
|
Counterparty
|
Settlement
Date
|
Unrealized
Appreciation
(Depreciation)
|
||
EUR
|
104,083
|
USD
|
113,141
|
Bank of America N.A.
|
7/19/24
|
$48
|
USD
|
5,195,298
|
EUR
|
4,861,743
|
Bank of America N.A.
|
7/19/24
|
(91,799
)
|
EUR
|
152,389
|
USD
|
165,446
|
BNP Paribas SA
|
7/19/24
|
275
|
GBP
|
722,097
|
USD
|
907,898
|
BNP Paribas SA
|
7/19/24
|
12,462
|
GBP
|
165,318
|
USD
|
205,264
|
Citibank N.A.
|
7/19/24
|
5,444
|
GBP
|
328,475
|
USD
|
415,780
|
Citibank N.A.
|
7/19/24
|
2,884
|
USD
|
2,884,373
|
GBP
|
2,299,188
|
Citibank N.A.
|
7/19/24
|
(46,094
)
|
USD
|
630,011
|
MXN
|
10,516,151
|
JPMorgan Chase & Co.
|
7/19/24
|
15,042
|
USD
|
1,445,377
|
MXN
|
24,020,000
|
JPMorgan Chase & Co.
|
7/19/24
|
40,721
|
CAD
|
28,985
|
USD
|
21,199
|
Morgan Stanley & Co. Inc.
|
7/19/24
|
90
|
Net unrealized depreciation on open forward foreign currency contracts
|
$(60,927
)
|
Abbreviation(s) used in this table:
|
||
CAD
|
—
|
Canadian Dollar
|
EUR
|
—
|
Euro
|
GBP
|
—
|
British Pound
|
MXN
|
—
|
Mexican Peso
|
USD
|
—
|
United States Dollar
|
Summary of Investments by Country# (unaudited)
|
|
United States
|
54.4
%
|
Mexico
|
5.8
|
United Kingdom
|
4.5
|
Brazil
|
2.6
|
France
|
2.5
|
Italy
|
2.4
|
Luxembourg
|
1.8
|
Colombia
|
1.7
|
Germany
|
1.5
|
Turkey
|
1.4
|
Dominican Republic
|
1.4
|
Ireland
|
1.3
|
Indonesia
|
1.2
|
Peru
|
1.1
|
Canada
|
1.1
|
South Africa
|
1.0
|
Guatemala
|
0.9
|
Nigeria
|
0.8
|
Argentina
|
0.8
|
Macau
|
0.6
|
Oman
|
0.6
|
Switzerland
|
0.6
|
Egypt
|
0.6
|
Saudi Arabia
|
0.6
|
Qatar
|
0.6
|
Japan
|
0.5
|
Panama
|
0.5
|
Ivory Coast
|
0.5
|
Cayman Islands
|
0.5
|
Angola
|
0.4
|
Tanzania
|
0.4
|
Jordan
|
0.3
|
Bahamas
|
0.3
|
Uruguay
|
0.3
|
Supranational
|
0.3
|
Philippines
|
0.3
|
Zambia
|
0.3
|
Israel
|
0.3
|
Netherlands
|
0.3
|
Jamaica
|
0.2
|
Slovenia
|
0.2
|
Summary of Investments by Country# (unaudited) (cont’d)
|
|
Kenya
|
0.2
%
|
Ukraine
|
0.2
|
Costa Rica
|
0.2
|
Hong Kong
|
0.2
|
China
|
0.2
|
Singapore
|
0.2
|
Kazakhstan
|
0.2
|
Senegal
|
0.2
|
Ecuador
|
0.1
|
Sweden
|
0.1
|
Short-Term Investments
|
0.8
|
|
100.0
%
|
#
|
As a percentage of total investments. Please note that the Fund holdings are as of
May 31, 2024 and are subject to
change.
|
Assets:
|
|
Investments in unaffiliated securities, at value (Cost — $241,493,641)
|
$252,649,384
|
Investments in affiliated securities, at value (Cost — $30,670)
|
30,670
|
Foreign currency, at value (Cost — $384,034)
|
276,511
|
Cash
|
2,625,398
|
Interest receivable
|
3,790,143
|
Receivable for securities sold
|
686,085
|
Unrealized appreciation on forward foreign currency contracts
|
76,966
|
Deposits with brokers for open reverse repurchase agreements
|
68,000
|
Dividends receivable from affiliated investments
|
7,980
|
Prepaid expenses
|
98,980
|
Total Assets
|
260,310,117
|
Liabilities:
|
|
Loan payable (Note 5)
|
70,000,000
|
Payable for open reverse repurchase agreements (Note 3)
|
17,637,544
|
Payable for securities purchased
|
7,114,386
|
Distributions payable
|
1,590,736
|
Interest and commitment fees payable
|
529,305
|
Investment management fee payable
|
180,048
|
Unrealized depreciation on forward foreign currency contracts
|
137,893
|
Directors’ fees payable
|
7,025
|
Accrued foreign capital gains tax
|
21
|
Accrued expenses
|
129,284
|
Total Liabilities
|
97,326,242
|
Total Net Assets
|
$162,983,875
|
Net Assets:
|
|
Par value ($0.001 par value; 22,724,807 shares issued and outstanding; 100,000,000
shares
authorized)
|
$22,725
|
Paid-in capital in excess of par value
|
297,993,044
|
Total distributable earnings (loss)
|
(135,031,894
)
|
Total Net Assets
|
$162,983,875
|
Shares Outstanding
|
22,724,807
|
Net Asset Value
|
$7.17
|
Investment Income:
|
|
Interest
|
$21,470,530
|
Dividends from affiliated investments
|
109,763
|
Less: Foreign taxes withheld
|
(38,114
)
|
Total Investment Income
|
21,542,179
|
Expenses:
|
|
Interest expense (Notes 3 and 5)
|
4,813,177
|
Investment management fee (Note 2)
|
2,064,996
|
Transfer agent fees
|
84,113
|
Commitment fees (Note 5)
|
76,249
|
Legal fees
|
72,806
|
Audit and tax fees
|
70,769
|
Directors’ fees
|
56,902
|
Shareholder reports
|
51,685
|
Fund accounting fees
|
33,825
|
Stock exchange listing fees
|
12,483
|
Custody fees
|
4,569
|
Insurance
|
1,481
|
Miscellaneous expenses
|
9,194
|
Total Expenses
|
7,352,249
|
Less: Fee waivers and/or expense reimbursements (Note 2)
|
(1,854
)
|
Net Expenses
|
7,350,395
|
Net Investment Income
|
14,191,784
|
Realized and Unrealized Gain (Loss) on Investments, Forward Foreign Currency Contracts
and
Foreign Currency Transactions (Notes 1, 3 and 4):
|
|
Net Realized Gain (Loss) From:
|
|
Investment transactions in unaffiliated securities
|
(15,115,346
)
|
Forward foreign currency contracts
|
174,005
|
Foreign currency transactions
|
35,465
|
Net Realized Loss
|
(14,905,876
)
|
Change in Net Unrealized Appreciation (Depreciation) From:
|
|
Investments in unaffiliated securities
|
20,255,410
‡
|
Forward foreign currency contracts
|
(250,675
)
|
Foreign currencies
|
(37,129
)
|
Change in Net Unrealized Appreciation (Depreciation)
|
19,967,606
|
Net Gain on Investments, Forward Foreign Currency Contracts and Foreign Currency
Transactions
|
5,061,730
|
Increase in Net Assets From Operations
|
$19,253,514
|
‡
|
Net of change in accrued foreign capital gains tax of $(61).
|
For the Years Ended May 31,
|
2024
|
2023
|
Operations:
|
|
|
Net investment income
|
$14,191,784
|
$15,600,850
|
Net realized loss
|
(14,905,876
)
|
(21,072,545
)
|
Change in net unrealized appreciation (depreciation)
|
19,967,606
|
(7,152,887
)
|
Increase (Decrease) in Net Assets From Operations
|
19,253,514
|
(12,624,582
)
|
Distributions to Shareholders From (Note 1):
|
|
|
Total distributable earnings
|
(11,930,220
)
|
(15,124,670
)
|
Return of capital
|
(6,542,582
)
|
(3,124,571
)
|
Decrease in Net Assets From Distributions to Shareholders
|
(18,472,802
)
|
(18,249,241
)
|
Fund Share Transactions:
|
|
|
Reinvestment of distributions (18,340 and 9,170 shares issued, respectively)
|
134,430
|
66,758
|
Increase in Net Assets From Fund Share Transactions
|
134,430
|
66,758
|
Increase (Decrease) in Net Assets
|
915,142
|
(30,807,065
)
|
Net Assets:
|
|
|
Beginning of year
|
162,068,733
|
192,875,798
|
End of year
|
$162,983,875
|
$162,068,733
|
Increase (Decrease) in Cash:
|
|
Cash Flows from Operating Activities:
|
|
Net increase in net assets resulting from operations
|
$19,253,514
|
Adjustments to reconcile net increase in net assets resulting from operations to net
cash
provided (used) by operating activities:
|
|
Purchases of portfolio securities
|
(107,634,064
)
|
Sales of portfolio securities
|
107,556,741
|
Net purchases, sales and maturities of short-term investments
|
(6,310,024
)
|
Payment-in-kind
|
(13,172
)
|
Net amortization of premium (accretion of discount)
|
(5,874,148
)
|
Securities litigation proceeds
|
54,408
|
Increase in receivable for securities sold
|
(477,610
)
|
Decrease in interest receivable
|
239,576
|
Increase in prepaid expenses
|
(98,980
)
|
Decrease in other receivables
|
127
|
Increase in dividends receivable from affiliated investments
|
(2,812
)
|
Increase in payable for securities purchased
|
7,114,386
|
Increase in investment management fee payable
|
6,742
|
Increase in Directors’ fees payable
|
1,913
|
Increase in interest and commitment fees payable
|
123,947
|
Increase in accrued expenses
|
23,714
|
Net realized loss on investments
|
15,115,346
|
Change in net unrealized appreciation (depreciation) of investments and forward foreign
currency contracts
|
(20,004,735
)
|
Net Cash Provided in Operating Activities*
|
9,074,869
|
Cash Flows from Financing Activities:
|
|
Distributions paid on common stock (net of distributions payable)
|
(18,268,969
)
|
Increase in payable for open reverse repurchase agreements
|
11,003,303
|
Net Cash Used by Financing Activities
|
(7,265,666
)
|
Net Increase in Cash and Restricted Cash
|
1,809,203
|
Cash and restricted cash at beginning of year
|
1,160,706
|
Cash and restricted cash at end of year
|
$2,969,909
|
*
|
Included in operating expenses is $4,765,479 paid for interest and commitment fees
on borrowings.
|
|
May 31, 2024
|
Cash
|
$2,901,909
|
Restricted cash
|
68,000
|
Total cash and restricted cash shown in the Statement of Cash Flows
|
$2,969,909
|
Non-Cash Financing Activities:
|
|
Proceeds from reinvestment of distributions
|
$134,430
|
For a share of capital stock outstanding throughout each year ended May 31:
|
|||||
|
20241
|
20231
|
20221
|
20211
|
20201
|
Net asset value, beginning of year
|
$7.14
|
$8.50
|
$10.66
|
$9.75
|
$10.54
|
Income (loss) from operations:
|
|||||
Net investment income
|
0.62
|
0.69
|
0.79
|
0.72
|
0.76
|
Net realized and unrealized gain (loss)
|
0.22
|
(1.25
)
|
(2.15
)
|
0.96
|
(0.78
)
|
Total income (loss) from operations
|
0.84
|
(0.56)
|
(1.36)
|
1.68
|
(0.02)
|
Less distributions from:
|
|
|
|
|
|
Net investment income
|
(0.52
)
|
(0.66
)
|
(0.80
)
|
(0.55
)
|
(0.69
)
|
Return of capital
|
(0.29
)
|
(0.14
)
|
—
|
(0.25
)
|
(0.09
)
|
Total distributions
|
(0.81
)
|
(0.80
)
|
(0.80
)
|
(0.80
)
|
(0.78
)
|
Anti-dilutive impact of repurchase plan
|
—
|
—
|
—
|
—
|
0.01
2
|
Anti-dilutive impact of tender offer
|
—
|
—
|
—
|
0.03
3
|
—
|
Net asset value, end of year
|
$7.17
|
$7.14
|
$8.50
|
$10.66
|
$9.75
|
Market price, end of year
|
$6.96
|
$6.65
|
$7.57
|
$10.40
|
$9.07
|
Total return, based on NAV4,5
|
12.34
%
|
(6.65
)%
|
(13.52
)%
|
18.06
%
|
(0.17
)%6,7
|
Total return, based on Market Price8
|
17.46
%
|
(1.84
)%
|
(20.72
)%
|
24.19
%
|
2.66
%
|
Net assets, end of year (millions)
|
$163
|
$162
|
$193
|
$242
|
$428
|
Ratios to average net assets:
|
|||||
Gross expenses
|
4.46
%
|
3.92
%
|
1.89
%
|
1.69
%
|
2.76
%7
|
Net expenses10,11
|
4.46
|
3.92
|
1.89
|
1.69
|
2.73
7
|
Net investment income
|
8.60
|
8.94
|
7.86
|
6.95
|
7.29
|
Portfolio turnover rate
|
45
%
|
75
%
|
50
%
|
43
%
|
60
%
|
Supplemental data:
|
|
|
|
|
|
Loan Outstanding, End of Year (000s)
|
$70,000
|
$70,000
|
$77,000
|
$85,500
|
$158,000
|
Asset Coverage Ratio for Loan Outstanding12
|
333
%
|
332
%
|
350
%
|
383
%
|
371
%
|
Asset Coverage, per $1,000 Principal Amount
of Loan Outstanding12
|
$3,328
|
$3,315
|
$3,505
|
$3,829
|
$3,706
|
Weighted Average Loan (000s)
|
$70,000
|
$74,603
|
$83,148
|
$111,103
|
$175,765
|
Weighted Average Interest Rate on Loan
|
6.11
%
|
4.30
%
|
1.00
%
|
0.92
%
|
2.74
%
|
For a share of capital stock outstanding throughout each year ended May 31:
|
|||||
|
20191
|
20181
|
20171
|
20161
|
20151
|
Net asset value, beginning of year
|
$10.58
|
$11.31
|
$10.55
|
$12.33
|
$13.59
|
Income (loss) from operations:
|
|||||
Net investment income
|
0.72
|
0.73
|
0.82
|
0.97
|
0.99
|
Net realized and unrealized gain (loss)
|
(0.04
)
|
(0.69
)
|
0.98
|
(1.59
)
|
(1.09
)
|
Total income (loss) from operations
|
0.68
|
0.04
|
1.80
|
(0.62)
|
(0.10)
|
Less distributions from:
|
|
|
|
|
|
Net investment income
|
(0.70
)
|
(0.75
)
|
(0.93
)
|
(1.16
)
|
(1.16
)
|
Return of capital
|
(0.04
)
|
(0.03
)
|
(0.11
)
|
—
|
—
|
Total distributions
|
(0.74
)
|
(0.78
)
|
(1.04
)
|
(1.16
)
|
(1.16
)
|
Anti-dilutive impact of repurchase plan
|
0.03
2
|
0.01
2
|
—
|
—
|
—
|
Net asset value, end of year
|
$10.54
|
$10.58
|
$11.31
|
$10.55
|
$12.33
|
Market price, end of year
|
$9.59
|
$9.18
|
$10.23
|
$9.52
|
$10.91
|
Total return, based on NAV4,5
|
6.90
%
|
0.29
%
|
17.82
%
|
(4.66
)%
|
(0.66
)%
|
Total return, based on Market Price8
|
13.17
%
|
(2.99
)%
|
19.21
%
|
(1.08
)%
|
(6.76
)%
|
Net assets, end of year (millions)
|
$465
|
$475
|
$512
|
$327
|
$383
|
Ratios to average net assets:
|
|||||
Gross expenses
|
2.54
%
|
2.06
%9
|
1.89
%9
|
1.79
%9
|
1.55
%
|
Net expenses10
|
2.52
|
2.02
9
|
1.82
9
|
1.72
9
|
1.48
|
Net investment income
|
6.93
|
6.58
|
7.41
|
8.99
|
7.74
|
Portfolio turnover rate
|
89
%
|
97
%
|
78
%
|
71
%
|
40
%
|
Supplemental data:
|
|
|
|
|
|
Loan Outstanding, End of Year (000s)
|
$180,000
|
$168,000
|
$171,000
|
$120,000
|
$125,000
|
Asset Coverage Ratio for Loan Outstanding12
|
358
%
|
383
%
|
399
%
|
373
%
|
406
%
|
Asset Coverage, per $1,000 Principal Amount
of Loan Outstanding12
|
$3,583
|
$3,829
|
$3,992
|
$3,729
|
$4,062
|
Weighted Average Loan (000s)
|
$177,490
|
$170,507
|
$156,400
|
$120,027
|
$102,205
|
Weighted Average Interest Rate on Loan
|
3.06
%
|
2.36
%
|
1.72
%
|
1.18
%
|
0.97
%
|
1
|
Per share amounts have been calculated using the average shares method.
|
2
|
The repurchase plan was completed at an average repurchase price of $7.50 for 239,229
shares and $1,781,056 for
the year ended May 31, 2020, $8.74 for 816,259 shares and $7,135,435 for the year
ended May 31, 2019, and
$9.50 for 319,205 shares and $3,031,002 for the year ended May 31, 2018.
|
3
|
The tender offer was completed at a price of $10.39 for 21,170,180 shares and $219,958,165
for the year ended
May 31, 2021.
|
4
|
Performance figures may reflect compensating balance arrangements, fee waivers and/or
expense
reimbursements. In the absence of compensating balance arrangements, fee waivers and/or
expense
reimbursements, the total return would have been lower. Past performance is no guarantee
of future results.
|
5
|
The total return calculation assumes that distributions are reinvested at NAV. Past
performance is no guarantee
of future results.
|
6
|
The total return includes gains from settlement of security litigations. Without these
gains, the total return
would have been -0.27% for the year ended May 31, 2020.
|
7
|
Included in the expense ratios and total return are certain non-recurring legal and
transfer agent fees that were
incurred by the Fund during the period. Without these fees, the gross and net expense
ratios would have been
2.49% and 2.47%, respectively, and total return would have been 0.04% for the year
ended May 31, 2020.
|
8
|
The total return calculation assumes that distributions are reinvested in accordance with the Fund’s
dividend reinvestment plan. Past performance is no guarantee of future results.
|
9
|
Included in the expense ratios are certain non-recurring reorganization fees that
were incurred by the Fund during
the period. Without these fees, the gross and net expense ratios would not have changed
for the year ended
May 31, 2018, would have been 1.87% and 1.80%, respectively, for the year ended May
31, 2017, and 1.76% and
1.69%, respectively, for the year ended May 31, 2016.
|
10
|
Reflects fee waivers and/or expense reimbursements.
|
11
|
The manager has agreed to waive the Fund’s management fee to an extent sufficient to offset the net
management fee payable in connection with any investment in an affiliated money market
fund.
|
12
|
Represents value of net assets plus the loan outstanding at the end of the period
divided by the loan
outstanding at the end of the period.
|
ASSETS
|
||||
Description
|
Quoted Prices
(Level 1)
|
Other Significant
Observable Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
Total
|
Long-Term Investments†:
|
|
|
|
|
Corporate Bonds & Notes:
|
|
|
|
|
Financials
|
—
|
$28,576,222
|
$147,000
|
$28,723,222
|
Health Care
|
—
|
7,076,859
|
0
*
|
7,076,859
|
Other Corporate Bonds &
Notes
|
—
|
141,753,158
|
—
|
141,753,158
|
Sovereign Bonds
|
—
|
41,391,652
|
—
|
41,391,652
|
Senior Loans:
|
|
|
|
|
Sovereign Bond
|
—
|
—
|
995,000
|
995,000
|
Other Senior Loans
|
—
|
18,567,306
|
—
|
18,567,306
|
Collateralized Mortgage
Obligations
|
—
|
7,351,794
|
—
|
7,351,794
|
U.S. Government & Agency
Obligations
|
—
|
2,859,299
|
—
|
2,859,299
|
Convertible Bonds & Notes
|
—
|
1,870,453
|
—
|
1,870,453
|
Common Stocks:
|
|
|
|
|
Health Care
|
—
|
52,644
|
—
|
52,644
|
Real Estate
|
$840
|
—
|
—
|
840
|
Warrants
|
7,448
|
—
|
—
|
7,448
|
Total Long-Term Investments
|
8,288
|
249,499,387
|
1,142,000
|
250,649,675
|
Short-Term Investments†:
|
|
|
|
|
U.S. Treasury Bills
|
—
|
1,999,709
|
—
|
1,999,709
|
Money Market Funds
|
30,670
|
—
|
—
|
30,670
|
Total Short-Term Investments
|
30,670
|
1,999,709
|
—
|
2,030,379
|
Total Investments
|
$38,958
|
$251,499,096
|
$1,142,000
|
$252,680,054
|
ASSETS (cont’d)
|
||||
Description
|
Quoted Prices
(Level 1)
|
Other Significant
Observable Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
Total
|
Other Financial Instruments:
|
|
|
|
|
Forward Foreign Currency
Contracts††
|
—
|
$76,966
|
—
|
$76,966
|
Total
|
$38,958
|
$251,576,062
|
$1,142,000
|
$252,757,020
|
LIABILITIES
|
||||
Description
|
Quoted Prices
(Level 1)
|
Other Significant
Observable Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
Total
|
Other Financial Instruments:
|
|
|
|
|
Forward Foreign Currency
Contracts††
|
—
|
$137,893
|
—
|
$137,893
|
†
|
See Schedule of Investments for additional detailed categorizations.
|
*
|
Amount represents less than $1.
|
††
|
Reflects the unrealized appreciation (depreciation) of the instruments.
|
|
Investments
|
U.S. Government &
Agency Obligations
|
Purchases
|
$101,286,186
|
$6,347,878
|
Sales
|
99,580,173
|
7,976,568
|
|
Cost
|
Gross
Unrealized
Appreciation
|
Gross
Unrealized
Depreciation
|
Net
Unrealized
Appreciation
(Depreciation)
|
Securities
|
$243,333,397
|
$15,748,848
|
$(6,402,191)
|
$9,346,657
|
Forward foreign currency contracts
|
—
|
76,966
|
(137,893)
|
(60,927)
|
Average Daily
Balance*
|
Weighted Average
Interest Rate*
|
Maximum Amount
Outstanding
|
$8,039,870
|
5.722%
|
$17,637,544
|
* Averages based on the number of days that the Fund had reverse repurchase agreements
outstanding.
|
ASSET DERIVATIVES1
|
|
|
Foreign
Exchange Risk
|
Forward foreign currency contracts
|
$76,966
|
LIABILITY DERIVATIVES1
|
|
|
Foreign
Exchange Risk
|
Forward foreign currency contracts
|
$137,893
|
1
|
Generally, the balance sheet location for asset derivatives is receivables/net unrealized
appreciation and for
liability derivatives is payables/net unrealized depreciation.
|
AMOUNT OF NET REALIZED GAIN (LOSS) ON DERIVATIVES RECOGNIZED
|
|
|
Foreign
Exchange Risk
|
Forward foreign currency contracts
|
$174,005
|
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON DERIVATIVES RECOGNIZED
|
|
|
Foreign
Exchange Risk
|
Forward foreign currency contracts
|
$(250,675
)
|
|
Average Market
Value
|
Forward foreign currency contracts (to buy)
|
$795,125
|
Forward foreign currency contracts (to sell)
|
10,671,376
|
Counterparty
|
Gross Assets
Subject to
Master
Agreements1
|
Gross
Liabilities
Subject to
Master
Agreements1
|
Net Assets
(Liabilities)
Subject to
Master
Agreements
|
Collateral
Pledged
(Received)
|
Net
Amount2
|
Bank of America N.A.
|
$48
|
$(91,799)
|
$(91,751)
|
—
|
$(91,751)
|
BNP Paribas SA
|
12,737
|
—
|
12,737
|
—
|
12,737
|
Citibank N.A.
|
8,328
|
(46,094)
|
(37,766)
|
—
|
(37,766)
|
JPMorgan Chase & Co.
|
55,763
|
—
|
55,763
|
—
|
55,763
|
Morgan Stanley & Co. Inc.
|
90
|
—
|
90
|
—
|
90
|
Total
|
$76,966
|
$(137,893)
|
$(60,927)
|
—
|
$(60,927)
|
1
|
Absent an event of default or early termination, derivative assets and liabilities
are presented gross and not
offset in the Statement of Assets and Liabilities.
|
2
|
Represents the net amount receivable (payable) from (to) the counterparty in the event
of default.
|
Record Date
|
Payable Date
|
Amount
|
5/23/2024
|
6/3/2024
|
$0.0700
|
6/21/2024
|
7/1/2024
|
$0.0700
|
7/24/2024
|
8/1/2024
|
$0.0700
|
8/23/2024
|
9/3/2024
|
$0.0700
|
|
Affiliate
Value at
May 31, 2023
|
Purchased
|
Sold
|
||
Cost
|
Shares
|
Proceeds
|
Shares
|
||
Western Asset
Premier
Institutional
Government
Reserves, Premium
Shares
|
$263,193
|
$102,197,670
|
102,197,670
|
$102,430,193
|
102,430,193
|
(cont’d)
|
Realized
Gain (Loss)
|
Dividend
Income
|
Net Increase
(Decrease) in
Unrealized
Appreciation
(Depreciation)
|
Affiliate
Value at
May 31,
2024
|
Western Asset Premier
Institutional
Government Reserves,
Premium Shares
|
—
|
$109,763
|
—
|
$30,670
|
|
2024
|
2023
|
Distributions paid from:
|
|
|
Ordinary income
|
$11,930,220
|
$15,124,670
|
Tax return of capital
|
6,542,582
|
3,124,571
|
Total distributions paid
|
$18,472,802
|
$18,249,241
|
Deferred capital losses*
|
$(142,622,530)
|
Other book/tax temporary differences(a)
|
(1,613,470)
|
Unrealized appreciation (depreciation)(b)
|
9,204,106
|
Total distributable earnings (loss) — net
|
$(135,031,894)
|
*
|
These capital losses have been deferred in the current year as either short-term or
long-term losses. The losses
will be deemed to occur on the first day of the next taxable year in the same character
as they were originally
deferred and will be available to offset future taxable capital gains.
|
(a)
|
Other book/tax temporary differences are attributable to the tax deferral of losses
on straddles, the realization
for tax purposes of unrealized gains (losses) on foreign currency contracts, the difference
between cash and
accrual basis distributions paid and book/tax differences in the timing of the deductibility
of various expenses.
|
(b)
|
The difference between book-basis and tax-basis unrealized appreciation (depreciation)
is attributable to the tax
deferral of losses on wash sales, the difference between book and tax amortization
methods for premium on
fixed income securities, book/tax differences in the accrual of interest income on
securities in default and other
book/tax basis adjustments.
|
Independent Directors†
|
|
Robert D. Agdern
|
|
Year of birth
|
1950
|
Position(s) held with Fund1
|
Director and Member of Nominating, Audit, Compensation and
Pricing and Valuation Committees, and Compliance Liaison,
Class III
|
Term of office1 and length of time served
|
Since 2015
|
Principal occupation(s) during the past five years
|
Member of the Advisory Committee of the Dispute Resolution
Research Center at the Kellogg Graduate School of Business,
Northwestern University (2002 to 2016); formerly, Deputy
General Counsel responsible for western hemisphere matters
for BP PLC (1999 to 2001); Associate General Counsel at Amoco
Corporation responsible for corporate, chemical, and refining
and marketing matters and special assignments (1993 to 1998)
(Amoco merged with British Petroleum in 1998 forming BP PLC)
|
Number of portfolios in fund complex overseen by Director
(including the Fund)
|
18
|
Other board memberships held by Director during the past five
years
|
None
|
Carol L. Colman
|
|
Year of birth
|
1946
|
Position(s) held with Fund1
|
Director and Member of Nominating, Audit and Compensation
Committees, and Chair of Pricing and Valuation Committee,
Class I
|
Term of office1 and length of time served
|
Since 2003
|
Principal occupation(s) during the past five years
|
President, Colman Consulting Company (consulting)
|
Number of portfolios in fund complex overseen by Director
(including the Fund)
|
18
|
Other board memberships held by Director during the past five
years
|
None
|
Independent Directors† (cont’d)
|
|
Daniel P. Cronin
|
|
Year of birth
|
1946
|
Position(s) held with Fund1
|
Director and Member of Audit, Compensation and Pricing and
Valuation Committees, and Chair of Nominating Committee,
Class I
|
Term of office1 and length of time served
|
Since 2003
|
Principal occupation(s) during the past five years
|
Retired; formerly, Associate General Counsel, Pfizer Inc. (prior to
and including 2004)
|
Number of portfolios in fund complex overseen by Director
(including the Fund)
|
18
|
Other board memberships held by Director during the past five
years
|
None
|
Paolo M. Cucchi
|
|
Year of birth
|
1941
|
Position(s) held with Fund1
|
Director and Member of Nominating, Audit, and Pricing and
Valuation Committees, and Chair of Compensation Committee,
Class I
|
Term of office1 and length of time served
|
Since 2007
|
Principal occupation(s) during the past five years
|
Emeritus Professor of French and Italian (since 2014) and
formerly, Vice President and Dean of The College of Liberal Arts
(1984 to 2009) and Professor of French and Italian (2009 to 2014)
at Drew University
|
Number of portfolios in fund complex overseen by Director
(including the Fund)
|
18
|
Other board memberships held by Director during the past five
years
|
None
|
Independent Directors† (cont’d)
|
|
Eileen A. Kamerick
|
|
Year of birth
|
1958
|
Position(s) held with Fund1
|
Lead Independent Director and Member of Nominating,
Compensation, Pricing and Valuation and Audit Committees,
Class III
|
Term of office1 and length of time served
|
Since 2013
|
Principal occupation(s) during the past five years
|
Chief Executive Officer, The Governance Partners, LLC
(consulting firm) (since 2015); National Association of Corporate
Directors Board Leadership Fellow (since 2016, with Directorship
Certification since 2019) and NACD 2022 Directorship 100
honoree; Adjunct Professor, Georgetown University Law Center
(since 2021); Adjunct Professor, The University of Chicago Law
School (since 2018); Adjunct Professor, University of Iowa
College of Law (since 2007); formerly, Chief Financial Officer,
Press Ganey Associates (health care informatics company) (2012
to 2014); Managing Director and Chief Financial Officer,
Houlihan Lokey (international investment bank) and President,
Houlihan Lokey Foundation (2010 to 2012)
|
Number of portfolios in fund complex overseen by Director
(including the Fund)
|
18
|
Other board memberships held by Director during the past five
years
|
Director, VALIC Company I (since October 2022); Director of ACV
Auctions Inc. (since 2021); Director of Associated Banc-Corp
(financial services company) (since 2007); formerly, Director of
Hochschild Mining plc (precious metals company) (2016
to 2023); formerly Trustee of AIG Funds and Anchor Series Trust
(2018 to 2021)
|
Nisha Kumar
|
|
Year of birth
|
1970
|
Position(s) held with Fund1
|
Director and Member of Nominating, Compensation and Pricing
and Valuation Committees, and Chair of the Audit Committee,
Class II
|
Term of office1 and length of time served
|
Since 2019
|
Principal occupation(s) during the past five years
|
Formerly, Managing Director and the Chief Financial Officer and
Chief Compliance Officer of Greenbriar Equity Group, LP (2011
to 2021); formerly, Chief Financial Officer and Chief
Administrative Officer of Rent the Runway, Inc. (2011); Executive
Vice President and Chief Financial Officer of AOL LLC, a
subsidiary of Time Warner Inc. (2007 to 2009); Member of the
Council of Foreign Relations
|
Number of portfolios in fund complex overseen by Director
(including the Fund)
|
18
|
Other board memberships held by Director during the past five
years
|
Director of Birkenstock Holding plc (since 2023); Director of The
India Fund, Inc. (since 2016); formerly, Director of Aberdeen
Income Credit Strategies Fund (2017 to 2018); and Director of
The Asia Tigers Fund, Inc. (2016 to 2018)
|
Interested Director and Officer
|
|
Jane Trust, CFA2
|
|
Year of birth
|
1962
|
Position(s) held with Fund1
|
Director, Chairman, President and Chief Executive Officer, Class II
|
Term of office1 and length of time served
|
Since 2015
|
Principal occupation(s) during the past five years
|
Senior Vice President, Fund Board Management, Franklin
Templeton (since 2020); Officer and/or Trustee/Director of 121
funds associated with FTFA or its affiliates (since 2015);
President and Chief Executive Officer of FTFA (since 2015);
formerly, Senior Managing Director (2018 to 2020) and
Managing Director (2016 to 2018) of Legg Mason & Co., LLC
(“Legg Mason & Co.”); and Senior Vice President of FTFA (2015)
|
Number of portfolios in fund complex overseen by Director
(including the Fund)
|
Trustee/Director of Franklin Templeton funds consisting of 121
portfolios; Trustee of Putnam Family of Funds consisting of 105
portfolios
|
Other board memberships held by Director during the past five
years
|
None
|
Additional Officers
|
|
Fred Jensen
|
|
Franklin Templeton
280 Park Avenue, 8th Floor, New York, NY 10017
|
|
Year of birth
|
1963
|
Position(s) held with Fund1
|
Chief Compliance Officer
|
Term of office1 and length of time served
|
Since 2020
|
Principal occupation(s) during the past five years
|
Director - Global Compliance of Franklin Templeton (since 2020);
Managing Director of Legg Mason & Co. (2006 to 2020); Director
of Compliance, Legg Mason Office of the Chief Compliance
Officer (2006 to 2020); formerly, Chief Compliance Officer of
Legg Mason Global Asset Allocation (prior to 2014); Chief
Compliance Officer of Legg Mason Private Portfolio Group (prior
to 2013); formerly, Chief Compliance Officer of The Reserve
Funds (investment adviser, funds and broker-dealer) (2004) and
Ambac Financial Group (investment adviser, funds and broker-
dealer) (2000 to 2003)
|
Marc A. De Oliveira
|
|
Franklin Templeton
100 First Stamford Place, 6th Floor, Stamford, CT 06902
|
|
Year of birth
|
1971
|
Position(s) held with Fund1
|
Secretary and Chief Legal Officer
|
Term of office1 and length of time served
|
Since 2023
|
Principal occupation(s) during the past five years
|
Associate General Counsel of Franklin Templeton (since 2020);
Secretary and Chief Legal Officer of certain funds associated
with Legg Mason & Co. or its affiliates since 2020); Assistant
Secretary of certain funds associated with Legg Mason & Co. or
its affiliates (since 2006); formerly, Managing Director (2016
to 2020) and Associate General Counsel of Legg Mason & Co.
(2005 to 2020)
|
Additional Officers (cont’d)
|
|
Thomas C. Mandia
|
|
Franklin Templeton
100 First Stamford Place, 6th Floor, Stamford, CT 06902
|
|
Year of birth
|
1962
|
Position(s) held with Fund1
|
Senior Vice President
|
Term of office1 and length of time served
|
Since 2022
|
Principal occupation(s) during the past five years
|
Senior Associate General Counsel of Franklin Templeton
(since 2020); Secretary of FTFA (since 2006); Assistant Secretary
of certain funds associated with Legg Mason & Co. or its
affiliates (since 2006); Secretary of LM Asset Services, LLC
(“LMAS”) (since 2002) and Legg Mason Fund Asset
Management, Inc. (“LMFAM”) (since 2013) (formerly registered
investment advisers); formerly, Managing Director and Deputy
General Counsel of Legg Mason & Co. (2005 to 2020) and
Assistant Secretary of certain funds in the fund complex (2006
to 2022)
|
Christopher Berarducci
|
|
Franklin Templeton
280 Park Avenue, 8th Floor, New York, NY 10017
|
|
Year of birth
|
1974
|
Position(s) held with Fund1
|
Treasurer and Principal Financial Officer
|
Term of office1 and length of time served
|
Since 2019
|
Principal occupation(s) during the past five years
|
Vice President, Fund Administration and Reporting, Franklin
Templeton (since 2020); Treasurer (since 2010) and Principal
Financial Officer (since 2019) of certain funds associated with
Legg Mason & Co. or its affiliates; formerly, Managing
Director (2020), Director (2015 to 2020), and Vice President (2011
to 2015) of Legg Mason & Co.
|
Jeanne M. Kelly
|
|
Franklin Templeton
280 Park Avenue, 8th Floor, New York, NY 10017
|
|
Year of birth
|
1951
|
Position(s) held with Fund1
|
Senior Vice President
|
Term of office1 and length of time served
|
Since 2007
|
Principal occupation(s) during the past five years
|
U.S. Fund Board Team Manager, Franklin Templeton (since 2020);
Senior Vice President of certain funds associated with Legg
Mason & Co. or its affiliates (since 2007); Senior Vice President
of FTFA (since 2006); President and Chief Executive Officer of
LMAS and LMFAM (since 2015); formerly, Managing Director of
Legg Mason & Co. (2005 to 2020); Senior Vice President of
LMFAM (2013 to 2015)
|
Sales Load (
|
%
|
Offering Expense (
|
%
|
Dividend Reinvestment Plan Fees(2)
|
$
|
|
|
Management Fees(3)
|
|
Interest Payments on Borrowed Funds(4)
|
|
Other Expenses(5)
|
|
Total Annual Fund Operating Expenses
|
|
(1) | Costs incurred by the Fund in connection with the shelf offering are recorded as a prepaid expense. These costs will be amortized on a pro-rata basis as shares are sold and will be presented as a reduction to the net proceeds from the sale of shares. Any deferred charges remaining at the end of the life of the shelf offering period will be expensed. For the period ended May 31, 2024, no shares were sold and no deferred offering costs were amortized. |
(2) |
(3) |
(4) | The Fund has utilized Borrowings in an aggregate amount of 32% of its Managed Assets, which equals the average level of Borrowings for the Fund’s fiscal year ended May 31, 2024. The expenses and rates associated with Borrowings may vary. |
(5) |
One Year
|
Three Years
|
Five Years
|
Ten Years
|
$
|
$
|
$
|
$
|
|
Quarterly Closing
Market Price
|
Quarterly Closing
NAV Price per Common share
on Date of Market Price
|
Quarterly Closing
Premium/(Discount)
on Date of Market Price
|
|||
|
High
|
Low
|
High
|
Low
|
High
|
Low
|
Fiscal Year 2024:
|
|
|
|
|
|
|
May 31, 2024
|
|
|
|
|
|
|
February 29, 2024
|
|
|
|
|
|
|
November 30, 2023
|
|
|
|
|
|
|
August 31, 2023
|
|
|
|
|
|
|
Fiscal Year 2023:
|
|
|
|
|
|
|
May 31, 2023
|
|
|
|
|
|
|
February 28, 2023
|
|
|
|
|
|
|
November 30, 2022
|
|
|
|
|
|
|
August 31, 2022
|
|
|
|
|
|
|
Year Ended
|
Total
Amount
Outstanding(1)
|
Asset
Coverage
per 1,000(2)
|
Average
Market
Value
Per
Unit(3)
|
Revolving Credit Facility:
|
|
|
|
May 31, 2024*
|
$
|
|
|
May 31, 2023*
|
$
|
|
|
May 31, 2022*
|
$
|
|
|
May 31, 2021*
|
$
|
|
|
May 31, 2020*
|
$
|
|
|
May 31, 2019*
|
$
|
|
|
May 31, 2018
|
$
|
|
|
May 31, 2017
|
$
|
|
|
May 31, 2016
|
$
|
|
|
May 31, 2015*
|
$
|
|
|
* | The Fund had open reverse repurchase agreements at May 31, 2024, 2023, 2022, 2021, 2020, 2019 and 2015. |
(1) | Total amount of senior securities outstanding at the end of the period presented. |
(2) | Asset coverage per $1,000 of indebtedness is the value of net assets plus the senior securities outstanding at the end of the period divided by the senior securities outstanding at the end of the period. |
(3) |
|
Pursuant to:
|
Amount Reported
|
Qualified Net Interest Income (QII)
|
§871(k)(1)(C)
|
$5,646,253
|
Section 163(j) Interest Earned
|
§163(j)
|
$21,110,548
|
Interest Earned from Federal Obligations
|
Note (1)
|
$361,256
|
Item 2. | CODE OF ETHICS. |
The registrant has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller.
Item 3. | AUDIT COMMITTEE FINANCIAL EXPERT. |
The Board of Directors of the registrant has determined that Eileen A. Kamerick and Nisha Kumar, are the members of the Board’s Audit Committee, possesses the technical attributes identified in Instruction 2(b) of Item 3 to Form N-CSR to qualify as an “audit committee financial experts”.
Item 4. | Principal Accountant Fees and Services. |
(a) Audit Fees. The aggregate fees billed in the previous fiscal years ending May 31, 2023 and May 31, 2024 (the “Reporting Periods”) for professional services rendered by the Registrant’s principal accountant (the “Auditor”) for the audit of the Registrant’s annual financial statements, or services that are normally provided by the Auditor in connection with the statutory and regulatory filings or engagements for the Reporting Periods, were $66,769 in May 31, 2023 and $66,769 in May 31, 2024.
(b) Audit-Related Fees. The aggregate fees billed in the Reporting Period for assurance and related services by the Auditor that are reasonably related to the performance of the Registrant’s financial statements were $0 in May 31, 2023 and $0 in May 31, 2024.
(c) Tax Fees. The aggregate fees billed in the Reporting Periods for professional services rendered by the Auditor for tax compliance, tax advice and tax planning (“Tax Services”) were $10,000 in May 31, 2023 and $10,000 in May 31, 2024. These services consisted of (i) review or preparation of U.S. federal, state, local and excise tax returns; (ii) U.S. federal, state and local tax planning, advice and assistance regarding statutory, regulatory or administrative developments, and (iii) tax advice regarding tax qualification matters and/or treatment of various financial instruments held or proposed to be acquired or held.
There were no fees billed for tax services by the Auditors to service affiliates during the Reporting Periods that required pre-approval by the Audit Committee.
(d) All Other Fees. The aggregate fees for other fees billed in the Reporting Periods for products and services provided by the Auditor, other than the services reported in paragraphs (a) through (c) of this Item for the Western Asset Global High Income Fund Inc. were $0 in May 31, 2023 and $8,000 in May 31, 2024.
All Other Fees. There were no other non-audit services rendered by the Auditor to Franklin Templeton Fund Advisor, LLC (“FTFA”), and any entity controlling, controlled by or under common control with FTFA that provided ongoing services to Western Asset Global High Income Fund Inc. requiring pre-approval by the Audit Committee in the Reporting Period.
(e) Audit Committee’s pre—approval policies and procedures described in paragraph (c) (7) of Rule 2-01 of Regulation S-X.
(1) The Charter for the Audit Committee (the “Committee”) of the Board of each registered investment company (the “Fund”) advised by FTFA or one of their affiliates (each, an “Adviser”) requires that the Committee shall approve (a) all audit and permissible non-audit services to be provided to the Fund and (b) all permissible non-audit services to be provided by the Fund’s independent auditors to the Adviser and any Covered Service Providers if the engagement relates directly to the operations and financial reporting of the Fund. The Committee may
implement policies and procedures by which such services are approved other than by the full Committee.
The Committee shall not approve non-audit services that the Committee believes may impair the independence of the auditors. As of the date of the approval of this Audit Committee Charter, permissible non-audit services include any professional services (including tax services), that are not prohibited services as described below, provided to the Fund by the independent auditors, other than those provided to the Fund in connection with an audit or a review of the financial statements of the Fund. Permissible non-audit services may not include: (i) bookkeeping or other services related to the accounting records or financial statements of the Fund; (ii) financial information systems design and implementation; (iii) appraisal or valuation services, fairness opinions or contribution-in-kind reports; (iv) actuarial services; (v) internal audit outsourcing services; (vi) management functions or human resources; (vii) broker or dealer, investment adviser or investment banking services; (viii) legal services and expert services unrelated to the audit; and (ix) any other service the Public Company Accounting Oversight Board determines, by regulation, is impermissible.
Pre-approval by the Committee of any permissible non-audit services is not required so long as: (i) the aggregate amount of all such permissible non-audit services provided to the Fund, the Adviser and any service providers controlling, controlled by or under common control with the Adviser that provide ongoing services to the Fund (“Covered Service Providers”) constitutes not more than 5% of the total amount of revenues paid to the independent auditors during the fiscal year in which the permissible non-audit services are provided to (a) the Fund, (b) the Adviser and (c) any entity controlling, controlled by or under common control with the Adviser that provides ongoing services to the Fund during the fiscal year in which the services are provided that would have to be approved by the Committee; (ii) the permissible non-audit services were not recognized by the Fund at the time of the engagement to be non-audit services; and (iii) such services are promptly brought to the attention of the Committee and approved by the Committee (or its delegate(s)) prior to the completion of the audit.
(2) None of the services described in paragraphs (b) through (d) of this Item were performed in reliance on paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) N/A
(g) Non-audit fees billed by the Auditor for services rendered to Western Asset Global High Income Fund Inc., FTFA and any entity controlling, controlled by, or under common control with FTFA that provides ongoing services to Western Asset Global High Income Fund Inc. during the reporting period were $350,359 in May 31, 2023 and $342,635 in May 31, 2024.
(h) Yes. Western Asset Global High Income Fund Inc.’s Audit Committee has considered whether the provision of non-audit services that were rendered to Service Affiliates, which were not pre-approved (not requiring pre-approval), is compatible with maintaining the Accountant’s independence. All services provided by the Auditor to the Western Asset Global High Income Fund Inc. or to Service Affiliates, which were required to be pre-approved, were pre-approved as required.
(i) Not applicable.
(j) Not applicable.
ITEM 5. | AUDIT COMMITTEE OF LISTED REGISTRANTS. |
a) Registrant has a separately-designated standing Audit Committee established in accordance with Section 3(a)58(A) of the Exchange Act. The Audit Committee consists of the following Board members:
Robert D. Agdern
Carol L. Colman
Daniel P. Cronin
Paolo M. Cucchi
Eileen A. Kamerick
Nisha Kumar
b) Not applicable
ITEM 6. | SCHEDULE OF INVESTMENTS. |
Included herein under Item 1.
ITEM 7. | FINANCIAL STATEMENTS AND FINANCIAL HIGLIGHTS FOR OPEN-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable.
ITEM 8. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS FOR OPEN-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable.
ITEM 9. | PROXY DISCLOSURES FOR OPEN-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable.
ITEM 10. | REMUNERATION PAID TO DIRECTORS, OFFICERS, AND OTHERS OF OPEN-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable.
ITEM 11. | STATEMENT REGARDING BASIS FOR APPROVAL OF INVESTMENT ADVISORY CONTRACT. |
Not applicable.
ITEM 12. | DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES |
Western Asset Management Company, LLC
Proxy Voting Policies and Procedures
NOTE
The policy below relating to proxy voting and corporate actions is a global policy for Western Asset Management Company, LLC (“Western Asset” or the “Firm”) and all Western Asset affiliates, including Western Asset Management Company Limited (“Western Asset Limited”), Western Asset Management Company Ltd (“Western Asset Japan”) and Western Asset Management Company Pte. Ltd. (“Western Asset Singapore”), as applicable. As compliance with the policy is monitored by Western Asset, the policy has been adopted from the US Compliance Manual and all defined terms are those defined in the US Compliance Manual rather than the compliance manual of any other Western Asset affiliate.
BACKGROUND
An investment adviser is required to adopt and implement policies and procedures that we believe are reasonably designed to ensure that proxies are voted in the best interest of clients, in accordance with fiduciary duties and Rule 206(4)-6 under the Investment Advisers Act of 1940 (“Advisers Act”). The authority to vote the proxies of our clients is established through investment management agreements or comparable documents. In addition to SEC requirements governing advisers, long-standing fiduciary standards and responsibilities have been established for ERISA accounts. Unless a manager of ERISA assets has been expressly precluded from voting proxies, the Department of Labor has determined that the responsibility for these votes lies with the investment manager.
POLICY
As a fixed income only manager, the occasion to vote proxies is very rare. However, the Firm has adopted and implemented policies and procedures that we believe are reasonably designed to ensure that proxies are voted in the best interest of clients, in accordance with our fiduciary duties and Rule 206(4)-6 under the Advisers Act. In addition to SEC requirements governing advisers, our proxy voting policies reflect the long-standing fiduciary standards and responsibilities for ERISA accounts. Unless a manager of ERISA assets has been expressly precluded from voting proxies, the Department of Labor has determined that the responsibility for these votes lies with the investment manager.
While the guidelines included in the procedures are intended to provide a benchmark for voting standards, each vote is ultimately cast on a case-by-case basis, taking into consideration the Firm’s contractual obligations to our clients and all other relevant facts and circumstances at the time of the vote (such that these guidelines may be overridden to the extent the Firm deems appropriate).
In exercising its voting authority, Western Asset will not consult or enter into agreements with officers, directors or employees of Franklin Resources (Franklin Resources includes Franklin Resources, Inc. and organizations operating as Franklin Resources) or any of its affiliates (other than Western Asset affiliated companies) regarding the voting of any securities owned by its clients.
PROCEDURES
Responsibility and Oversight
The Regulatory Affairs Group is responsible for administering and overseeing the proxy voting process. The gathering of proxies is coordinated through the Corporate Actions area of Investment Operations Group (“Corporate Actions”). Research analysts and portfolio managers are responsible for determining appropriate voting positions on each proxy utilizing any applicable guidelines contained in these procedures.
Client Authority
The Investment Management Agreement for each client is reviewed at account start-up for proxy voting instructions. If an agreement is silent on proxy voting, but contains an overall delegation of discretionary authority or if the account represents assets of an ERISA plan, Western Asset will assume responsibility for proxy voting. The Regulatory Affairs Group maintains a matrix of proxy voting authority.
Proxy Gathering
Registered owners of record, client custodians, client banks and trustees (“Proxy Recipients”) that receive proxy materials on behalf of clients should forward them to Corporate Actions. Proxy Recipients for new clients (or, if Western Asset becomes aware that the applicable Proxy Recipient for an existing client has changed, the Proxy Recipient for the existing client) are notified at start-up of appropriate routing to Corporate Actions of proxy materials received and reminded of their responsibility to forward all proxy materials on a timely basis. If Western Asset personnel other than Corporate Actions receive proxy materials, they should promptly forward the materials to Corporate Actions.
Proxy Voting
Once proxy materials are received by Corporate Actions, they are forwarded to the Regulatory Affairs Group for coordination and the following actions:
• | Proxies are reviewed to determine accounts impacted. |
• | Impacted accounts are checked to confirm Western Asset voting authority. |
• | The Regulatory Affairs Group reviews proxy issues to determine any material conflicts of interest. (See Conflicts of Interest section of these procedures for further information on determining material conflicts of interest.) |
• | If a material conflict of interest exists, (i) to the extent reasonably practicable and permitted by applicable law, the client is promptly notified, the conflict is disclosed and Western Asset obtains the client’s proxy voting instructions, and (ii) to the extent that it is not reasonably practicable or permitted by applicable law to notify the client and obtain such instructions (e.g., the client is a mutual fund or other commingled vehicle or is an ERISA plan client), Western Asset seeks voting instructions from an independent third party. |
• | The Regulatory Affairs Group provides proxy material to the appropriate research analyst or portfolio manager to obtain their recommended vote. Research analysts and portfolio managers determine votes on a case-by-case basis taking into account the voting guidelines contained in these procedures. For avoidance of doubt, depending on the best interest of each individual client, Western Asset may vote the same proxy differently for different clients. The analyst’s or portfolio manager’s basis for their decision is documented and maintained by the Regulatory Affairs Group. |
• | Portfolio Compliance Group votes the proxy pursuant to the instructions received in (d) or (e) and returns the voted proxy as indicated in the proxy materials. |
Timing
Western Asset’s Legal and Compliance Department personnel act in such a manner to ensure that, absent special circumstances, the proxy gathering and proxy voting steps noted above can be completed before the applicable deadline for returning proxy votes.
Recordkeeping
Western Asset maintains records of proxies voted pursuant to Rule 204-2 of the Advisers Act and ERISA DOL Bulletin 94-2. These records include:
• | A copy of Western Asset’s proxy voting policies and procedures. |
• | Copies of proxy statements received with respect to securities in client accounts. |
• | A copy of any document created by Western Asset that was material to making a decision how to vote proxies. |
• | Each written client request for proxy voting records and Western Asset’s written response to both verbal and written client requests. |
• | A proxy log including: |
1. | Issuer name; |
2. | Exchange ticker symbol of the issuer’s shares to be voted; |
3. | Committee on Uniform Securities Identification Procedures (“CUSIP”) number for the shares to be voted; |
4. | A brief identification of the matter voted on; |
5. | Whether the matter was proposed by the issuer or by a shareholder of the issuer; |
6. | Whether a vote was cast on the matter; |
7. | A record of how the vote was cast; and |
8. | Whether the vote was cast for or against the recommendation of the issuer’s management team. |
Records are maintained in an easily accessible place for a period of not less than five (5) years with the first two (2) years in Western Asset’s offices.
Disclosure
Western Asset’s proxy policies and procedures are described in the Firm’s Form ADV Part 2A. Clients are provided with a copy of these policies and procedures upon request. In addition, clients may receive reports on how their proxies have been voted, upon request.
Conflicts of Interest
All proxies are reviewed by the Regulatory Affairs Group for material conflicts of interest. Issues to be reviewed include, but are not limited to:
1. | Whether Western Asset (or, to the extent required to be considered by applicable law, its affiliates) manages assets for the company or an employee group of the company or otherwise has an interest in the company; |
2. | Whether Western Asset or an officer or director of Western Asset or the applicable portfolio manager or analyst responsible for recommending the proxy vote (together, “Voting Persons”) is a close relative of or has a personal or business relationship with an executive, director or person who is a candidate for director of the company or is a participant in a proxy contest; and |
3. | Whether there is any other business or personal relationship where a Voting Person has a personal interest in the outcome of the matter before shareholders. |
Voting Guidelines
Western Asset’s substantive voting decisions are based on the particular facts and circumstances of each proxy vote and are evaluated by the designated research analyst or portfolio manager. The examples outlined below are meant as guidelines to aid in the decision making process.
Situations can arise in which more than one Western Asset client invests in instruments of the same issuer or in which a single client may invest in instruments of the same issuer but in multiple accounts or strategies. Multiple clients or the same client in multiple accounts or strategies may have different investment objectives, investment styles, or investment professionals involved in making decisions. While there may be differences, votes are always cast in the best interests of the client and the investment objectives agreed with Western Asset. As a result, there may be circumstances where Western Asset casts different votes on behalf of different clients or on behalf of the same client with multiple accounts or strategies.
Guidelines are grouped according to the types of proposals generally presented to shareholders. Part I deals with proposals which have been approved and are recommended by a company’s board of directors; Part II deals with proposals submitted by shareholders for inclusion in proxy statements; Part III addresses issues relating to voting shares of investment companies; and Part IV addresses unique considerations pertaining to foreign issuers.
I. | Board Approved Proposals |
The vast majority of matters presented to shareholders for a vote involve proposals made by a company itself that have been approved and recommended by its board of directors. In view of the enhanced corporate governance practices currently being implemented in public companies, Western Asset generally votes in support of decisions reached by independent boards of directors. More specific guidelines related to certain board-approved proposals are as follows:
1. | Matters relating to the Board of Directors |
Western Asset votes proxies for the election of the company’s nominees for directors and for board-approved proposals on other matters relating to the board of directors with the following exceptions:
a. | Votes are withheld for the entire board of directors if the board does not have a majority of independent directors or the board does not have nominating, audit and compensation committees composed solely of independent directors. |
b. | Votes are withheld for any nominee for director who is considered an independent director by the company and who has received compensation from the company other than for service as a director. |
c. | Votes are withheld for any nominee for director who attends less than 75% of board and committee meetings without valid reasons for absences. |
d. | Votes are cast on a case-by-case basis in contested elections of directors. |
2. | Matters relating to Executive Compensation |
Western Asset generally favors compensation programs that relate executive compensation to a company’s long-term performance. Votes are cast on a case-by-case basis on board-approved proposals relating to executive compensation, except as follows:
a. | Except where the firm is otherwise withholding votes for the entire board of directors, Western Asset votes for stock option plans that will result in a minimal annual dilution. |
b. | Western Asset votes against stock option plans or proposals that permit replacing or repricing of underwater options. |
c. | Western Asset votes against stock option plans that permit issuance of options with an exercise price below the stock’s current market price. |
d. | Except where the firm is otherwise withholding votes for the entire board of directors, Western Asset votes for employee stock purchase plans that limit the discount for shares purchased under the plan to no more than 15% of their market value, have an offering period of 27 months or less and result in dilution of 10% or less. |
3. | Matters relating to Capitalization |
The Management of a company’s capital structure involves a number of important issues, including cash flows, financing needs and market conditions that are unique to the circumstances of each company. As a result, Western Asset votes on a case-by-case basis on board-approved proposals involving changes to a company’s capitalization except where Western Asset is otherwise withholding votes for the entire board of directors.
a. | Western Asset votes for proposals relating to the authorization of additional common stock. |
b. | Western Asset votes for proposals to effect stock splits (excluding reverse stock splits). |
c. | Western Asset votes for proposals authorizing share repurchase programs. |
4. | Matters relating to Acquisitions, Mergers, Reorganizations and Other Transactions |
Western Asset votes these issues on a case-by-case basis on board-approved transactions.
5. | Matters relating to Anti-Takeover Measures |
Western Asset votes against board-approved proposals to adopt anti-takeover measures except as follows:
a. | Western Asset votes on a case-by-case basis on proposals to ratify or approve shareholder rights plans. |
b. | Western Asset votes on a case-by-case basis on proposals to adopt fair price provisions. |
6. | Other Business Matters |
Western Asset votes for board-approved proposals approving such routine business matters such as changing the company’s name, ratifying the appointment of auditors and procedural matters relating to the shareholder meeting.
a. | Western Asset votes on a case-by-case basis on proposals to amend a company’s charter or bylaws. |
b. | Western Asset votes against authorization to transact other unidentified, substantive business at the meeting. |
7. | Reporting of Financially Material Information |
Western Asset generally believes issuers should disclose information that is material to their business. This principle extends to Environmental, Social and Governance matters. What qualifies as “material” can vary, so votes are cast on a case by case basis but consistent with the overarching principle.
II. | Shareholder Proposals |
SEC regulations permit shareholders to submit proposals for inclusion in a company’s proxy statement. These proposals generally seek to change some aspect of a company’s corporate governance structure or to change some aspect of its business operations. Western Asset votes in accordance with the recommendation of the company’s board of directors on all shareholder proposals, except as follows:
1. | Western Asset votes for shareholder proposals to require shareholder approval of shareholder rights plans. |
2. | Western Asset votes for shareholder proposals that are consistent with Western Asset’s proxy voting guidelines for board-approved proposals. |
3. | Western Asset votes on a case-by-case basis on other shareholder proposals where the firm is otherwise withholding votes for the entire board of directors. |
Environmental or social issues that are the subject of a proxy vote will be considered on a case by case basis. Constructive proposals that seek to advance the health of the issuer and the prospect for risk-adjusted returns to Western Assets clients are viewed more favorably than proposals that advance a single issue or limit the ability of management to meet its operating objectives.
III. | Voting Shares of Investment Companies |
Western Asset may utilize shares of open or closed-end investment companies to implement its investment strategies. Shareholder votes for investment companies that fall within the categories listed in Parts I and II above are voted in accordance with those guidelines.
1. | Western Asset votes on a case-by-case basis on proposals relating to changes in the investment objectives of an investment company taking into account the original intent of the fund and the role the fund plays in the clients’ portfolios. |
2. | Western Asset votes on a case-by-case basis all proposals that would result in increases in expenses (e.g., proposals to adopt 12b-1 plans, alter investment advisory arrangements or approve fund mergers) taking into account comparable expenses for similar funds and the services to be provided. |
IV. | Voting Shares of Foreign Issuers |
In the event Western Asset is required to vote on securities held in non-U.S. issuers – i.e. issuers that are incorporated under the laws of a foreign jurisdiction and that are not listed on a U.S. securities exchange or the NASDAQ stock market, the following guidelines are used, which are premised on the existence of a sound corporate governance and disclosure framework. These guidelines, however, may not be appropriate under some circumstances for foreign issuers and therefore apply only where applicable.
1. | Western Asset votes for shareholder proposals calling for a majority of the directors to be independent of management. |
2. | Western Asset votes for shareholder proposals seeking to increase the independence of board nominating, audit and compensation committees. |
3. | Western Asset votes for shareholder proposals that implement corporate governance standards similar to those established under U.S. federal law and the listing requirements of U.S. stock exchanges, and that do not otherwise violate the laws of the jurisdiction under which the company is incorporated. |
4. | Western Asset votes on a case-by-case basis on proposals relating to (1) the issuance of common stock in excess of 20% of a company’s outstanding common stock where shareholders do not have preemptive rights, or (2) the issuance of common stock in excess of 100% of a company’s outstanding common stock where shareholders have preemptive rights. |
V. | Environmental, Social and Governance Matters |
Western Asset considers ESG matters as part of the overall investment process where appropriate. The Firm seeks to identify and consider material risks to the investment thesis, including material risks presented by ESG factors. While Western Asset is primarily a fixed income manager, opportunities to vote proxies are considered on the investment merits of the instruments and strategies involved.
As a general proposition, Western Asset votes to encourage disclosure of information material to their business. This principle extends to ESG matters. What qualifies as “material” can vary, so votes are cast on a case by case basis but consistent with the overarching principle. Western Asset recognizes that objective standards and criteria may not be available or universally agreed and that there may be different views and subjective analysis regarding factors and their significance.
As a general matter, Western Asset votes to encourage management and governance practices that enhance the strength of the issuer, build value for investors, and mitigate risks that might threaten their ability to operate and navigate competitive pressures.
Targeted environmental or social issues that are the subject of a proxy vote will be considered on a case by case basis. Constructive proposals that seek to advance the health of the issuer and the prospect for risk-adjusted returns to Western Assets clients are viewed more favorably than proposals that advance a single issue or limit the ability of management to meet its operating objectives.
Situations can arise in which different clients and strategies have explicit ESG objectives beyond generally taking into account material ESG risks. Votes may be cast for such clients with the ESG objectives in mind. Votes involving ESG proposals that are not otherwise addressed in this policy will be voted on a case-by-case basis consistent with the Firm’s fiduciary duties to its clients, the potential consequences to the investment thesis for that issuer, and the specific facts and circumstances of each proposal.
Retirement Accounts
For accounts subject to ERISA, as well as other retirement accounts, Western Asset is presumed to have the responsibility to vote proxies for the client. The Department of Labor has issued a bulletin that states that investment managers have the responsibility to vote proxies on behalf of Retirement Accounts unless the authority to vote proxies has been specifically reserved to another named fiduciary. Furthermore, unless Western Asset is expressly precluded from voting the proxies, the Department of Labor has determined that the responsibility remains with the investment manager.
In order to comply with the Department of Labor’s position, Western Asset will be presumed to have the obligation to vote proxies for its retirement accounts unless Western Asset has obtained a specific written instruction indicating that: (a) the right to vote proxies has been reserved to a named fiduciary of the client, and (b) Western Asset is precluded from voting proxies on behalf of the client. If Western Asset does not receive such an instruction, Western Asset will be responsible for voting proxies in the best interests of the retirement account client and in accordance with any proxy voting guidelines provided by the client.
ITEM 13. | PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
(a)(1): As of the date of filing this report:
NAME AND ADDRESS | LENGTH OF TIME SERVED | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | ||||
Michael C. Buchanan
Western Asset 385 East
Pasadena, CA 91101 |
Since 2006 |
Responsible for the day-to-day management with other members of the Fund’s portfolio management team; Became Co-Chief Investment Officer of Western Asset in September 2023 with S. Kenneth Leech, with whom he leads the Global and US Strategy Committees; employed by Western Asset Management as an investment professional for at least the past five years; Managing Director and head of U.S. Credit Products from 2003-2005 at Credit Suisse Asset Management
| ||||
Ryan K. Brist
Western Asset 385 East
Pasadena, CA 91101 |
Since 2010 |
Responsible for the day-to-day management with other members of the Fund’s portfolio management team; Head of U.S. Investment Grade Credit of Western Asset since 2009; Chief Investment Officer and Portfolio Manager at Logan Circle Partners, L.P. from 2007-2009; Co-Chief Investment Officer and Senior Portfolio Manager at Delaware Investment Advisors from 2000-2007
| ||||
Christopher F. Kilpatrick Western
Asset |
Since 2012 |
Responsible for the day-to-day management with other members of the Fund’s portfolio management team; employed by Western Asset Management as an investment professional for at least the past five years. | ||||
Walter Kilcullen Western
Asset |
Since March 1, 2024 |
Responsible for the day-to-day management with other members of the Fund’s portfolio management team; employed by Western Asset Management as an investment professional since 2002 | ||||
Ian Edmonds Western
Asset |
Since March 1, 2024 | Responsible for the day-to-day management with other members of the Fund’s portfolio management team; Lead Portfolio Manager of Western Asset Management’s Global Multi-Sector portfolios; employed by Western Asset Management as an investment professional since 1994 |
(a)(2): DATA TO BE PROVIDED BY FINANCIAL CONTROL
The following tables set forth certain additional information with respect to the fund’s portfolio managers for the fund. Unless noted otherwise, all information is provided as of May 31, 2024.
Other Accounts Managed by Portfolio Managers
The table below identifies the number of accounts (other than the fund) for which the fund’s portfolio managers have day-to-day management responsibilities and the total assets in such accounts, within each of the following categories: registered investment companies, other pooled investment vehicles, and other accounts. For each category, the number of accounts and total assets in the accounts where fees are based on performance is also indicated.
Name of PM | Type of Account | Number of Accounts Managed | Total Assets Managed | Number of Accounts Managed for which Advisory Fee is Performance-Based | Assets Managed for which Advisory Fee is Performance-Based |
Michael C. Buchanan ‡ | Other Registered Investment Companies | 75 | $111.65 billion | None | None |
Other Pooled Vehicles | 286 | $68.00 billion | 22 | $2.56 billion | |
Other Accounts | 574 | $173.55 billion | 20 | $11.26 billion | |
Ian Edmonds‡ | Other Registered Investment Companies | 3 | $834 million | None | None |
Other Pooled Vehicles | 21 | $3.80 billion | 3 | $326 million | |
Other Accounts | 16 | $6.33 billion | 1 | $171 million | |
Christopher Kilpatrick ‡
|
Other Registered Investment Companies | 8 | $3.05 billion | None | None |
Other Pooled Vehicles | 6 | $483 million | 3 | $326 million | |
Other Accounts | None | None | None | None | |
Ryan Brist ‡ | Other Registered Investment Companies | 29 | $14.64 billion | None | None |
Other Pooled Vehicles | 29 | $14.84 billion | None | None | |
Other Accounts | 169 | $72.46 billion | 5 | $1.32 billion |
Walter Kilcullen‡
|
Other Registered Investment Companies | 10 | $4.88 billion | None | None |
Other Pooled Vehicles | 18 | $7.60 billion | 3 | $326 million | |
Other Accounts | 21 | $3.43 billion | None | None |
‡ The numbers above reflect the overall number of portfolios managed by employees of Western Asset Management Company (“Western Asset”). They are involved in the management of all the Firm’s portfolios, but they are not solely responsible for particular portfolios. Western Asset’s investment discipline emphasizes a team approach that combines the efforts of groups of specialists working in different market sectors. They are responsible for overseeing implementation of Western Asset’s overall investment ideas and coordinating the work of the various sector teams. This structure ensures that client portfolios benefit from a consensus that draws on the expertise of all team members.
(a)(3): As of May 31, 2024 : Investment Professional Compensation
Conflicts of Interest
The Subadviser has adopted compliance policies and procedures to address a wide range of potential conflicts of interest that could directly impact client portfolios. For example, potential conflicts of interest may arise in connection with the management of multiple portfolios (including portfolios managed in a personal capacity). These could include potential conflicts of interest related to the knowledge and timing of a portfolio’s trades, investment opportunities and broker selection. Portfolio managers are privy to the size, timing, and possible market impact of a portfolio’s trades.
It is possible that an investment opportunity may be suitable for both a portfolio and other accounts managed by a portfolio manager, but may not be available in sufficient quantities for both the portfolio and the other accounts to participate fully. Similarly, there may be limited opportunity to sell an investment held by a portfolio and another account. A conflict may arise where the portfolio manager may have an incentive to treat an account preferentially as compared to a portfolio because the account pays a performance-based fee or the portfolio manager, the Subadviser or an affiliate has an interest in the account. The Subadviser has adopted procedures for allocation of portfolio transactions and investment opportunities across multiple client accounts on a fair and equitable basis over time. Eligible accounts that can participate in a trade generally share the same price on a pro-rata allocation basis, taking into account differences based on factors such as cash availability, investment restrictions and guidelines, and portfolio composition versus strategy.
With respect to securities transactions, the Subadviser determines which broker or dealer to use to execute each order, consistent with their duty to seek best execution of the transaction. However, with respect to certain other accounts (such as pooled investment vehicles that are not registered investment companies and other accounts managed for organizations and individuals), the Subadviser may be limited by the client with respect to the selection of brokers or dealers or may be instructed to direct trades through a particular broker or dealer. In these cases, trades for a portfolio in a particular security may be placed separately from, rather than aggregated with, such other accounts. Having separate transactions with respect to a security may temporarily affect the market price of the security or the execution of the transaction, or both, to the possible detriment of a portfolio or the other account(s) involved. Additionally, the management of multiple portfolios and/or other accounts may result in a portfolio manager devoting unequal time and attention to the management of each portfolio and/or other account. The Subadviser’s team approach to portfolio management and block trading approach seeks to limit this potential risk.
The Subadviser also maintains a gift and entertainment policy to address the potential for a business contact to give gifts or host entertainment events that may influence the business judgment of an employee. Employees are permitted to retain gifts of only a nominal value and are required to make reimbursement for entertainment events above a certain value. All gifts (except those of a de minimis value) and entertainment events that are given or sponsored by a business contact are required to be reported in a gift and entertainment log which is reviewed on a regular basis for possible issues.
Employees of the Subadviser have access to transactions and holdings information regarding client accounts and the Subadviser’s overall trading activities. This information represents a potential conflict of interest because employees may take advantage of this information as they trade in their personal accounts. Accordingly, the Subadviser maintains a Code of Ethics that is compliant with Rule 17j-1 under the 1940 Act and Rule 204A-1 under the Advisers Act to address personal trading. In addition, the Code of Ethics seeks to establish broader principles of good conduct and fiduciary responsibility in all aspects of the Subadviser’s business. The Code of Ethics is administered by the Legal and Compliance Department and monitored through the Subadviser’s compliance monitoring program.
The Subadviser may also face other potential conflicts of interest with respect to managing client assets, and the description above is not a complete description of every conflict of interest that could be deemed to exist. The Subadviser also maintains a compliance monitoring program and engages independent auditors to conduct a SOC1/ISAE 3402 audit on an annual basis. These steps help to ensure that potential conflicts of interest have been addressed.
Investment Professional Compensation
With respect to the compensation of the Fund’s investment professionals, the Subadviser’s compensation system assigns each employee a total compensation range, which is derived from annual market surveys that benchmark each role with its job function and peer universe. This method is designed to reward employees with total compensation reflective of the external market value of their skills, experience and ability to produce desired results. Standard compensation includes competitive base salaries, generous employee benefits and a retirement plan.
In addition, the Subadviser’s employees are eligible for bonuses. These are structured to closely align the interests of employees with those of the Subadviser, and are determined by the professional’s job function and pre-tax performance as measured by a formal review process. All bonuses are completely discretionary. The principal factor considered is an investment professional’s investment performance versus appropriate peer groups and benchmarks (e.g., a securities index and with respect to the Fund, the benchmark set forth in the Fund’s Prospectus to which the Fund’s average annual total returns are compared or, if none, the benchmark set forth in the Fund’s annual report). Performance is reviewed on a 1, 3 and 5 year basis for compensation—with 3 and 5 years having a larger emphasis. The Subadviser may also measure an investment professional’s pre-tax investment performance against other benchmarks, as it determines appropriate. Because investment professionals are generally responsible for multiple accounts (including the Fund) with similar investment strategies, they are generally compensated on the performance of the aggregate group of similar accounts, rather than a specific account. Other factors that may be considered when making bonus decisions include client service, business development, length of service to the Subadviser, management or supervisory responsibilities, contributions to developing business strategy and overall contributions to the Subadviser’s business.
Finally, in order to attract and retain top talent, all investment professionals are eligible for additional incentives in recognition of outstanding performance. These are determined based upon the factors described above and include long-term incentives that vest over a set period of time past the award date.
Investment Professional Securities Ownership
The table below identifies the dollar range of securities beneficially owned by the named investment professional as of May 31, 2024.
Portfolio Manager(s) |
Dollar
Range of | |
Michael C. Buchanan |
A | |
Ryan K. Brist | A | |
Christopher F. Kilpatrick |
A | |
Ian Edmonds | A | |
Walter Kilcullen | A |
Dollar
Range ownership is as follows:
A: none
B: $1 - $10,000
C: 10,001 - $50,000
D: $50,001 - $100,000
E: $100,001
- $500,000
F: $500,001 - $1 million
G: over $1 million
ITEM 14. | PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS |
Not applicable.
ITEM 15. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. |
Not applicable.
ITEM 16. | CONTROLS AND PROCEDURES. |
(a) | The registrant’s principal executive officer and principal financial officer have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a- 3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective as of a date within 90 days of the filing date of this report that includes the disclosure required by this paragraph, based on their evaluation of the disclosure controls and procedures required by Rule 30a-3(b) under the 1940 Act and 15d-15(b) under the Securities Exchange Act of 1934. |
(b) | There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the period covered by this report that have materially affected, or are likely to materially affect the registrant’s internal control over financial reporting. |
ITEM 17. | DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable
ITEM 18. | RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION. |
(a) | Not applicable. |
(b) | Not applicable. |
ITEM 19. | EXHIBITS. |
(a) (1) Code of Ethics attached hereto.
Exhibit 99.CODE ETH
(a) (2) Certifications pursuant to section 302 of the Sarbanes-Oxley Act of 2002 attached hereto.
Exhibit 99.CERT
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 attached hereto.
Exhibit 99.906CERT
(c) Consent of Independent Registered Public Accounting Firm
EX99_CONSENT
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, there unto duly authorized.
Western Asset Global High Income Fund Inc.
By: | /s/ Jane Trust | |
Jane Trust | ||
Chief Executive Officer | ||
Date: | July 25, 2024 |
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/ Jane Trust | |
Jane Trust | ||
Chief Executive Officer | ||
Date: | July 25, 2024 |
By: | /s/ Christopher Berarducci | |
Christopher Berarducci | ||
Principal Financial Officer | ||
Date: | July 25, 2024 |
Code of Conduct for Principal Executive and Financial Officers (SOX)
Covered Officers and Purpose of the Code
The Funds’ code of ethics (the “Code”) for investment companies within the Legg Mason family of mutual funds (each a “Fund,” and collectively, the “Funds”) applies to each Fund’s Principal Executive Officer, Principal Financial Officer, and Controller (the “Covered Officers”) for the purpose of promoting:
• | honest and ethical conduct, including ethical handling of actual or apparent conflicts of interest between personal and professional relationships; |
• | full, fair, accurate, timely and understandable disclosure in reports and documents a registrant files with, or submits to, the Securities and Exchange Commission (“SEC”) and in other public communications made by the Funds; |
• | compliance with applicable laws and governmental rules and regulations; |
• | prompt internal reporting of Code violations to appropriate persons identified in the Code; and |
• | accountability for adherence to the Code. |
Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest.
Covered Officers Should Ethically Handle Actual and Apparent Conflicts of Interest
A “conflict of interest” occurs when a Covered Officer’s private interest interferes with the interests of, or his or her service to, a Fund. For example, a conflict of interest would arise if a Covered Officer, or a member of his or her family, receives improper personal benefits as a result of his or her position with a Fund.
Certain conflicts of interest arise out of the relationships between Covered Officers and a Fund and already are subject to conflict of interest provisions in the Investment Company Act of 1940 (“Investment Company Act”) and the Investment Advisers Act of 1940 (“Investment Advisers Act”). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with a Fund because of their status as “affiliated persons” of the Fund. The Funds’ and the investment advisers’ compliance programs and procedures are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code.
Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or as a result of, the contractual relationship between a Fund and an investment adviser of which Covered Officers are also officers or employees. As a result, this Code recognizes Covered Officers will, in the normal course of their duties (whether formally for a Fund or for the adviser, or for both), be involved in establishing policies and
implementing decisions that will have different effects on the adviser and the Funds. The participation of Covered Officers in such activities is inherent in the contractual relationship between a Fund and an adviser and is consistent with the performance by Covered Officers of their duties as officers of the Funds. Thus, if performed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, such activities will be deemed to have been handled ethically. In addition, it is recognized by the Funds’ Boards of Directors/Trustees (“Boards”) that Covered Officers may also be officers or employees of one or more other investment companies covered by this or other codes and that such service, by itself does not give rise to a conflict of interest.
Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act. The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of a Fund.
Each Covered Officer must:
• | not use his or her personal influence or personal relationships improperly to influence investment decisions or financial reporting by a Fund; |
• | not cause a Fund to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit the Fund; and, |
• | not use material non-public knowledge of portfolio transactions made or contemplated for the Trust to trade personally or cause others to trade personally in contemplation of the market effect of such transactions. |
There are some actual or potential conflict of interest situations that, if material, should always be discussed with the Chief Compliance Officer (“CCO”) or designate that has been appointed by the Board of the Funds. Examples of these include:
• | service as a director on the board of any public company (other than the Funds or their investment advisers or any affiliated person thereof); |
• | the receipt of any non-nominal gifts (i.e., in excess of $100); |
• | the receipt of any entertainment from any company with which a Fund has current or prospective business dealings unless such entertainment is business-related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety; |
• | any ownership interest in, or any consulting or employment relationship with, any of the Funds’ service providers (other than their investment advisers, or principal underwriter, or any affiliated person thereof); |
• | a direct or indirect financial interest in commissions, transaction charges or spreads paid by a Fund for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer’s employment, such as compensation or equity ownership. |
Disclosure and Compliance
Each Covered Officer should:
• | familiarize him or herself with the disclosure requirements generally applicable to the Funds; |
• | not knowingly misrepresent, or cause others to misrepresent, facts about a Fund to others, whether within or outside the Fund, including to the Fund’s Directors/Trustees and auditors, and to governmental regulators and self-regulatory organizations; and |
• | to the extent appropriate within his or her area of responsibility, consult with other officers and employees of the Funds and the advisers with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Funds file with, or submit to, the SEC and in other public communications made by the Funds. |
It is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations.
Reporting and Accountability
Each Covered Officer must:
• | upon adoption of the Code (or thereafter as applicable, upon becoming a Covered Officer), affirm in writing to the Board that he or she has received, read, and understands the Code; |
• | annually thereafter affirm to the Board that he or she has complied with the requirements of the Code; |
• | not retaliate against any other Covered Officer or any employee of the Funds or their advisers or any affiliated persons thereof or service providers of the Funds for reports of potential violations that are made in good faith; |
• | notify the CCO promptly if he or she knows of any violation of this Code, of which failure to do so is itself a violation; and |
• | report at least annually, if necessary, any employment position, including officer or directorships, held by the Covered Officer or any immediate family member of a Covered Officer with affiliated persons of or Service Providers to the Funds. |
The CCO is responsible for applying this Code to specific situations in which questions are presented and has the authority to interpret this Code in any particular situation. However, approvals or waivers sought by a Covered Officer will be considered by the Compliance Committee or Audit Committee, (the “Committee”) responsible for oversight of the Fund’s code of ethics under Rule 17j-1 under the Investment Company Act. If a Covered Officer seeking an approval or waiver sits on the Committee, the Covered Person shall recuse him or herself from any such deliberations. Any approval or waiver granted by the Committee will be reported promptly to the Chair of the Audit Committees of the Funds.
The Funds will follow these procedures in investigating and enforcing this Code:
• | the CCO will take all appropriate action to investigate any potential violations reported to him, which actions may include the use of internal or external counsel, accountants or other personnel; |
• | if, after such investigation, the CCO believes that no violation has occurred, the CCO is not required to take any further action; |
• | any matter that the CCO believes is a violation will be reported to the Committee; |
• | if the Committee concurs that a violation has occurred, it will inform the Board, which will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the investment adviser or its board; or a recommendation to dismiss the Covered Officer; |
• | the Committee will be responsible for granting waivers, as appropriate; and, |
• | any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules. |
Other Policies and Procedures
This Code shall be the sole code of ethics adopted by the Funds for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder. Insofar as other policies or procedures of the Funds, the Funds’ advisers, principal underwriter, or other service providers govern or purport to govern the behavior or activities of Covered Officers subject to this Code, they are superseded by this Code to the extent they overlap or conflict with the provisions of this Code. The Funds’ and their investment advisers’ and principal underwriter’s codes of ethics under Rule 17j-1 under the Investment Company Act are separate requirements applying to Covered Officers and others, and are not part of this Code.
Confidentiality
All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the appropriate Board and Fund counsel, and the board of Directors/Trustees and fund counsel of any other investment company for whom a Covered Officer serves in a similar capacity.
Annual Report
No less than annually, the CCO shall provide the Board with a written report describing any issues having arisen since the prior year’s report.
Internal Use
This Code is intended solely for the internal use by the Funds and does not constitute an admission by or on behalf of any Fund, as to any fact, circumstance or legal consideration.
CERTIFICATIONS PURSUANT TO SECTION 302
EX-99.CERT
CERTIFICATIONS
I, Jane Trust certify that:
1. | I have reviewed this report on Form N-CSR of Western Asset Global High Income Fund Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and |
d) | Disclosed in this report any change 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 registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officers and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | July 25, 2024 | /s/ Jane Trust |
Jane Trust | ||
Chief Executive Officer |
CERTIFICATIONS
I, Christopher Berarducci, certify that:
1. | I have reviewed this report on Form N-CSR of Western Asset Global High Income Fund Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial information included in this report, and the financial statements on which the financial information is based, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and |
d) | Disclosed in this report any change 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 registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officers and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | July 25, 2024 | /s/ Christopher Berarducci |
Christopher Berarducci | ||
Principal Financial Officer |
CERTIFICATIONS PURSUANT TO SECTION 906
EX-99.906CERT
CERTIFICATION
Jane Trust, Chief Executive Officer, and Christopher Berarducci, Principal Financial Officer of Western Asset Global High Income Fund Inc. (the “Registrant”), each certify to the best of their knowledge that:
1. The Registrant’s periodic report on Form N-CSR for the period ended May 31, 2024, the “Form N-CSR”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
2. The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
Chief Executive Officer | Principal Financial Officer | |
Western Asset Global High Income Fund Inc. | Western Asset Global High Income Fund Inc. |
/s/ Jane Trust | /s/ Christopher Berarducci | |
Jane Trust | Christopher Berarducci | |
Date: July 25, 2024 | Date: July 25, 2024 |
This certification is being furnished to the Securities and Exchange Commission solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Form N-CSR with the Commission.
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statement on Form N-2 (No. 333-276304) of Western Asset Global High Income Fund Inc. of our report dated July 19, 2024, relating to the financial statements and financial highlights, which appears in Western Asset Global High Income Fund Inc.’s Annual Report on Form N-CSR for the year ended May 31, 2024.
/s/ PricewaterhouseCoopers LLP
Baltimore, Maryland
July 24, 2024
N-2 - USD ($) |
3 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2024 |
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Aug. 31, 2022 |
May 31, 2024 |
May 31, 2023 |
May 31, 2022 |
May 31, 2021 |
May 31, 2020 |
May 31, 2019 |
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May 31, 2016 |
May 31, 2015 |
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Cover [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Entity Central Index Key | 0001228509 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amendment Flag | false | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Entity Inv Company Type | N-2 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Document Type | N-CSR | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Entity Registrant Name | Western Asset Global High Income Fund Inc. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fee Table [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholder Transaction Expenses [Table Text Block] |
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Sales Load [Percent] | 0.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividend Reinvestment and Cash Purchase Fees | $ 5.00 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Transaction Expenses [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Transaction Expenses [Percent] | 0.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual Expenses [Table Text Block] | Annual Operating Expenses
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Management Fees [Percent] | 1.25% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest Expenses on Borrowings [Percent] | 2.96% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Annual Expenses [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Annual Expenses [Percent] | 0.25% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Annual Expenses [Percent] | 4.46% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expense Example [Table Text Block] | Examples
An investor would pay the following expenses on a $1,000 investment in the Fund, assuming a 5% annual return:
The above table and example are intended to assist investors in understanding the
various costs and expenses directly or indirectly associated with investing in Shares of the
Fund. The “Example” assumes that all dividends and other distributions are reinvested at net asset value and that the percentage amounts listed in the table above under Total
Annual Operating Expenses remain the same in the years shown. The above table and example
and the assumption in the example of a 5% annual return are required by regulations of
the SEC that are applicable to all investment companies; the assumed 5% annual return is not
a prediction of, and does not represent, the projected or actual performance of the Fund’s Common Shares. The example should not be considered a representation of past or future expenses, and the Fund’s actual expenses may be greater than or less than those shown. The Fund’s actual rate of return may be greater or less than the hypothetical 5% return shown in the example.
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Expense Example, Year 01 | $ 45 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expense Example, Years 1 to 3 | 135 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expense Example, Years 1 to 5 | 226 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expense Example, Years 1 to 10 | $ 458 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purpose of Fee Table , Note [Text Block] | The following additional information is provided for the Fund as of the fiscal year ended May 31, 2024. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Transaction Fees, Note [Text Block] | as a percentage of offering price | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Transaction Fees, Note [Text Block] | Common Stockholders will pay brokerage charges if they direct the Plan Agent to sell shares of Common Stock held in a dividend reinvestment account. There are no fees charged to stockholders for participating in the Fund’s dividend reinvestment plan. However, stockholders participating in the Plan that elect to sell their shares obtained pursuant to the plan would pay $5.00 per transaction to sell shares. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Expenses, Note [Text Block] | “Other Expenses” are estimated based on amounts incurred in the fiscal year ended May 31, 2024. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Management Fee not based on Net Assets, Note [Text Block] | The Investment Manager receives an annual fee, payable monthly, in an amount equal to 0.85% of the Fund’s average daily “Managed Assets”. Managed Assets means net assets plus the amount of any borrowings (including loans from certain financial institutions, the use of reverse repurchase agreements and/or the issuance of debt securities and preferred stock that may be outstanding, collectively “Borrowings”). For the purposes of this table, we have assumed that the Fund has utilized Borrowings in an aggregate amount of 32% of its Managed Assets, which equals the average level of Borrowings for the Fund’s fiscal year ended May 31, 2024. If the Fund were to use Borrowings in excess of 32%, the amount of management fees paid to the Investment Manager would be higher because the fees paid are calculated on the Fund’s Managed Assets, which include assets purchased with leverage. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Highlights [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Senior Securities [Table Text Block] | Senior Securities Table
The Fund engaged in senior securities during the prior ten years as follows:
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Senior Securities, Note [Text Block] |
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Senior Securities Averaging Method, Note [Text Block] | Not applicable, as these senior securities were not registered for public trading. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment Objectives and Practices [Text Block] | Investment Objectives
The Fund’s primary investment objective is high current income and secondary investment objective is total return.
Principal Investment Policies and Strategies
Under normal market conditions, the Fund will invest at least 10% and up to 80% of
its total assets in (i) below investment grade (high yield) fixed income (debt) securities
issued by corporate issuers.
Under normal market conditions, the Fund will invest at least 10% and up to 80% of
its assets in emerging market fixed income securities.
Under normal market conditions, the Fund will invest at least 10% and up to 80% of
its assets in investment grade fixed income securities.
The Fund usually will attempt to maintain a portfolio with a weighted average credit
quality rated at least B3 by Moody’s or B- by S&P or an equivalent rating from any nationally recognized statistical rating organization. If a security is rated by multiple nationally
recognized statistical rating organizations (“NRSROs”) and receives different ratings, the Fund will treat the security as being rated in the lowest rating category received
from an NRSRO.
For temporary defensive purposes and in order to keep the Fund’s cash fully invested, the Fund may deviate from its investment objectives and policies and invest some or all
of its assets in investments of non-corporate issuers, including high-quality, short-term
debt securities. In addition, in anticipation of or in response to adverse market conditions,
for cash management purposes, or for defensive purposes, the Fund may invest up to 100%
of its assets in U.S. government securities, certificates of deposit, repurchase agreements,
or short term commercial paper. The Fund may also invest in money market funds, including
funds affiliated with the Fund’s manager and subadvisers.
As a temporary defensive strategy, the Fund may employ alternative strategies, including
investment of all of the Fund’s assets in securities rated investment grade by any nationally recognized statistical rating organization, or in unrated securities of comparable
quality.
The Fund may invest up to 20% of its managed assets in all types of equity securities,
including common stocks traded on an exchange or in the over the counter market, preferred stocks, warrants, rights, convertible securities, depositary receipts, trust
certificates, limited partnership interests, shares of other investment companies
and REITs.
The Fund has no specific policy with regard to turnover.
The Fund may invest up to 15% of its managed assets in illiquid securities.
The Fund may invest up to 10% of its total assets in any combination of publicly or
privately traded mortgage REITs and hybrid REITs.
The Fund may invest in zero coupon securities, pay-in-kind bonds and deferred payment
securities.
The Fund may invest in certain bank obligations, including certificates of deposit, bankers’ acceptances, and fixed time deposits.
The Fund may invest in collateralized debt obligations, collateralized bond obligations
and collateralized loan obligations.
The average portfolio duration of the Fund will normally be within one to seven years
based on the Investment Manager’s forecast for interest rates. Duration is a measure of the expected life of a debt security that is used to determine the sensitivity of a security’s price to changes in interest rates.
The Fund may not purchase or sell commodities or commodities contracts or oil, gas
or mineral programs, but may purchase, sell, or enter into futures contracts, options
on futures contracts, forward contracts, or interest rate, securities-related or other hedging
instruments, including swap agreements and other derivative instruments.
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Risk Factors [Table Text Block] | Principal Risk Factors
There is no assurance that the Fund will meet its investment objectives. You may lose
money on your investment in the Fund. The value of the Fund’s shares may go up or down, sometimes rapidly and unpredictably. Market conditions, financial conditions of issuers
represented in the Fund’s portfolio, investment strategies, portfolio management, and other factors affect the volatility of the Fund’s shares. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation, the Federal Reserve Board
or any other government agency.
The following section includes a summary of the principal risks of investing in the
Fund.
Fixed Income Securities Risk. In addition to the risks described elsewhere in this section with respect to valuations and liquidity, fixed income securities, including high-yield
securities, are also subject to certain risks, including:
• Issuer Risk. The value of fixed income securities may decline for a number of reasons that directly relate to the issuer, such as management performance, financial leverage
and reduced demand for the issuer’s goods and services.
• Interest Rate Risk. The market price of the Fund’s investments will change in response to changes in interest rates and other factors. During periods of declining interest
rates, the market price of fixed income securities generally rises. Conversely, during periods
of rising interest rates, the market price of such securities generally declines. The
magnitude of these fluctuations in the market price of fixed income securities is
generally greater for securities with longer maturities. Fluctuations in the market price of the Fund’s securities will not affect interest income derived from securities already owned by
the Fund, but will be reflected in the Fund’s net asset value. The Fund may utilize certain strategies, including investments in structured notes or interest rate swap or cap
transactions, for the purpose of reducing the interest rate sensitivity of the portfolio
and decreasing the Fund’s exposure to interest rate risk, although there is no assurance that it will do so or that such strategies will be successful. • Prepayment Risk. During periods of declining interest rates, the issuer of a security may exercise its option to prepay principal earlier than scheduled, forcing the Fund to
reinvest the proceeds from such prepayment in lower yielding securities, which may result in
a decline in the Fund’s income and distributions to stockholders. This is known as prepayment or “call” risk. Debt securities frequently have call features that allow the issuer to redeem the security at dates prior to its stated maturity at a specified
price (typically greater than par) only if certain prescribed conditions are met. An issuer
may choose to redeem a debt security if, for example, the issuer can refinance the debt
at a lower cost due to declining interest rates or an improvement in the credit standing
of the issuer. • Reinvestment Risk. Reinvestment risk is the risk that income from the Fund’s portfolio will decline if and when the Fund invests the proceeds from matured, traded or called fixed
income securities at market interest rates that are below the portfolio’s current earnings rate. A decline in income could affect the market price of Common Shares or overall
returns. Below Investment Grade (High-Yield or Junk Bond) Securities Risk. The Fund may invest in high-yield debt securities. Debt securities rated below investment grade are commonly
referred to as “high-yield” securities or “junk bonds” and are regarded as having predominantly speculative characteristics with respect to the issuer’s capacity to pay interest and repay principal in accordance with the terms of the obligations and involve
major risk exposure to adverse conditions. Debt securities rated C or lower by Moody’s, CCC or lower by S&P or CC or lower by Fitch or comparably rated by another nationally
recognized statistical rating organization (“NRSRO”) or, if unrated, determined by Western Asset to be of comparable quality are considered to have extremely poor prospects
of ever attaining any real investment standing, to have a current identifiable vulnerability
to default, to be unlikely to have the capacity to pay interest and repay principal when
due in the event of adverse business, financial or economic conditions and/or to be in default
or not current in the payment of interest or principal. Ratings may not accurately reflect
the actual credit risk associated with a corporate security.
Debt securities rated below investment grade generally offer a higher current yield
than that available from higher grade issues, but typically involve greater risk. These
securities are especially sensitive to adverse changes in general economic conditions, to changes
in the financial condition of their issuers and to price fluctuation in response to changes
in interest rates. During periods of economic downturn or rising interest rates, issuers
of below investment grade instruments may experience financial stress that could adversely
affect their ability to make payments of principal and interest and increase the possibility
of default. The secondary market for high-yield securities may not be as liquid as the
secondary market for more highly rated securities, a factor which may have an adverse
effect on the Fund’s ability to dispose of a particular security. There are fewer dealers in the market for high-yield securities than for investment grade obligations. The prices
quoted by different dealers may vary significantly, and the spread between the bid and asked
price is generally much larger for high-yield securities than for higher quality instruments.
Under continuing adverse market or economic conditions, the secondary market for high-yield
securities could contract further, independent of any specific adverse changes in
the condition of a particular issuer, and these securities may become illiquid. In addition,
adverse publicity and investor perceptions, whether or not based on fundamental analysis,
may also decrease the values and liquidity of below investment grade securities, especially
in a market characterized by a low volume of trading. Foreign Securities and Emerging Markets Risk. The Fund’s investments in securities of foreign issuers or issuers with significant exposure to foreign markets involve additional
risk as compared to investment in U.S. securities or issuers with predominantly domestic
exposure, such as less liquid, less regulated, less transparent and more volatile
markets. The markets for some foreign securities are relatively new, and the rules and policies
relating to these markets are not fully developed and may change. The value of the Fund’s investments may decline because of factors affecting the particular issuer as well
as foreign markets and issuers generally, such as unfavorable or unsuccessful government
actions, tariffs and tax disputes, reduction of government or central bank support,
inadequate accounting standards, lack of information and political, economic, financial
or social instability. Foreign investments may also be adversely affected by U.S. government
or international economic sanctions, which could eliminate the value of an investment.
To the extent the Fund focuses its investments in a single country or only a few countries
in a particular geographic region, economic, political, regulatory or other conditions
affecting such country or region may have a greater impact on Fund performance relative to a
more geographically diversified fund.
The risks of foreign investment are greater for investments in emerging markets. “Emerging market country” is defined as any country which is, at the time of investment, it is (i) represented in the J.P. Morgan Emerging Markets Bond Index Global Diversified or the
J.P. Morgan Corporate Emerging Market Bond Index Broad or (ii) categorized by the World
Bank in its annual categorization as middle- or low-income. Emerging market countries typically
have economic and political systems that are less fully developed, and that can be
expected to be less stable, than those of more advanced countries. Low trading volumes may
result in a lack of liquidity and in price volatility. Emerging market countries may have policies
that restrict investment by foreigners, that require governmental approval prior to investments
by foreign persons, or that prevent foreign investors from withdrawing their money
at will. An investment in emerging market securities should be considered speculative. Non-U.S. Government, or Sovereign, Debt Securities Risk. The Fund invests in non-U.S. government, or sovereign, debt securities. The ability of a government issuer, especially
in an emerging market country, to make timely and complete payments on its debt obligations
will be strongly influenced by the government issuer’s balance of payments, including export performance, its access to international credits and investments, fluctuations
of interest rates and the extent of its foreign reserves. A country whose exports are
concentrated in a few commodities or whose economy depends on certain strategic imports
could be vulnerable to fluctuations in international prices of these commodities or
imports. To the extent that a country receives payment for its exports in currencies other
than U.S. dollars, its ability to make debt payments denominated in U.S. dollars could be adversely
affected. If a government issuer cannot generate sufficient earnings from foreign
trade to service its external debt, it may need to depend on continuing loans and aid from
foreign governments, commercial banks, and multinational organizations. There are no bankruptcy
proceedings similar to those in the United States by which defaulted non-U.S. government
debt may be collected. Additional factors that may influence a government issuer’s ability or willingness to service debt include, but are not limited to, a country’s cash flow situation, the availability of sufficient foreign exchange on the date a payment is due, the
relative size of its debt service burden to the economy as a whole, and the issuer’s policy towards the International Monetary Fund, the International Bank for Reconstruction and Development
and other international agencies to which a government debtor may be subject.
Foreign Currency Risk. The value of investments denominated in foreign currencies increases or decreases as the rates of exchange between those currencies and the U.S.
dollar change. Currency conversion costs and currency fluctuations could erase investment
gains or add to investment losses. Currency exchange rates can be volatile, and are
affected by factors such as general economic conditions, the actions of the U.S. and
foreign governments or central banks, the imposition of currency controls and speculation.
The Fund may be unable or may choose not to hedge its foreign currency exposure.
Liquidity Risk. The Fund may invest in illiquid securities. Illiquid securities are securities that
cannot be disposed of within seven days in the ordinary course of business at approximately the value at which the Fund has valued the securities. Liquidity risk
exists when particular investments are difficult to sell. Securities may become illiquid
after
purchase by the Fund, particularly during periods of market turmoil. When the Fund
holds illiquid investments, the portfolio may be harder to value, especially in changing
markets, and if the Fund is forced to sell these investments in order to segregate assets or
for other cash needs, the Fund may suffer a loss. Common Stock Risk. An adverse event, such as an unfavorable earnings report, may depress the value of a particular common stock held by the Fund. In addition, the
prices of common stocks are sensitive to general movements in the stock market, and a drop in
the stock market may depress the prices of common stocks to which the Fund has exposure.
Common stock prices fluctuate for several reasons including changes in investors’ perceptions of the financial condition of an issuer or the general condition of the
relevant stock market, or when political or economic events affecting an issuer occur. In addition,
common stock prices may be particularly sensitive to rising interest rates, as the
cost of capital rises and borrowing costs increase. The value of the common stocks in which
the Fund may invest will be affected by changes in the stock markets generally, which
may be the result of domestic or international political or economic news, changes in interest
rates or changing investor sentiment. At times, stock markets can be volatile and stock
prices can change substantially. The common stocks of smaller companies are more sensitive to
these changes than those of larger companies. Common stock risk will affect the Fund’s net asset value per share, which will fluctuate as the value of the securities held by the Fund
change.
Preferred Stock Risk. Generally, the Fund has a greater flexibility to invest in equity securities. Preferred stocks are unique securities that combine some of the characteristics
of both common stocks and bonds. Preferred stocks generally pay a fixed rate of return
and are sold on the basis of current yield, like bonds. However, because they are equity
securities, preferred stock provides equity ownership of a company, and the income
is paid in the form of dividends. Preferred stocks typically have a yield advantage over common
stocks as well as comparably-rated fixed income investments. Preferred stocks are
typically subordinated to bonds and other debt instruments in a company’s capital structure, in terms of priority to corporate income, and therefore will be subject to greater credit risk
than those debt instruments. Unlike interest payments on debt securities, preferred stock
dividends are payable only if declared by the issuer’s board of directors. Preferred stocks also may be subject to optional or mandatory redemption provisions.
Convertible Securities Risk. A convertible security is a bond, debenture, note, preferred stock or other security that may be converted into or exchanged for a prescribed amount
of common stock or other equity security of the same or a different issuer within a particular
period of time at a specified price or formula. Before conversion, convertible securities
have characteristics similar to nonconvertible income securities in that they ordinarily
provide a stable stream of income with generally higher yields than those of common stocks of
the same or similar issuers, but lower yields than comparable nonconvertible securities.
Similar
to traditional fixed income securities, the market values of convertible securities
tend to decline as interest rates increase and, conversely, to increase as interest rates
decline. However, when the market price of the common stock underlying a convertible security
exceeds the conversion price, the convertible security tends to reflect the market
price of the underlying common stock. As the market price of the underlying common stock declines,
the convertible security tends to trade increasingly on a yield basis and thus may
not decline in price to the same extent as the underlying common stock. The credit standing
of the issuer and other factors also may have an effect on the convertible security’s investment value. Convertible securities rank senior to common stock in a corporation’s capital structure but are usually subordinated to comparable nonconvertible securities. Convertible
securities may be subject to redemption at the option of the issuer at a price established in
the convertible security’s governing instrument. Risks of Warrants and Rights. Warrants and rights are subject to the same market risks as stocks, but may be more volatile in price. Warrants and rights do not carry the right
to dividends or voting rights with respect to their underlying securities, and they do
not represent any rights in the assets of the issuer. An investment in warrants or rights
may be considered speculative. In addition, the value of a warrant or right does not necessarily
change with the value of the underlying security and a warrant or right ceases to
have value if it is not exercised prior to its expiration date. The purchase of warrants or rights
involves the risk that the Fund could lose the purchase value of a warrant or right if the
right to subscribe to additional shares is not exercised prior to the warrants’ or rights’ expiration. Also, the purchase of warrants and rights involves the risk that the effective price
paid for the warrant or right added to the subscription price of the related security may exceed
the value of the subscribed security’s market price such as when there is no movement in the price of the underlying security.
REITs Risk. Investing in REITs involves certain unique risks in addition to those risks associated with investing in the real estate industry in general. An equity or hybrid
REIT may be affected by changes in the value of the underlying properties owned by the
REIT. A mortgage or hybrid REIT may be affected by changes in interest rates and the ability
of the issuers of its portfolio mortgages to repay their obligations. Mortgage and hybrid
REITs are subject to the risks of accelerated prepayments of mortgage pools or pass-through
securities, reliance on short-term financing and more highly leveraged capital structures.
REITs are dependent upon the skills of their managers and are not diversified.
REITs are generally dependent upon maintaining cash flows to repay borrowings and
to make distributions to stockholders and are subject to the risk of default by lessees
and borrowers. REITs whose underlying assets are concentrated in properties used by a
particular industry, such as healthcare, are also subject to industry related risks.
Certain “special purpose” REITs may invest their assets in specific real estate sectors, such as hotels, nursing homes or warehouses, and are therefore subject to the risks associated
with adverse developments in any such sectors. REITs are subject to management fees and other expenses. Therefore, investments in
REITs will cause CRO to bear its proportionate share of the costs of the REITs’ operations. At the same time, CRO will continue to pay its own management fees and expenses with respect
to all of its assets, including any portion invested in REITs. Mortgage-Backed and Asset-Backed Securities Risks. Mortgage-backed securities include, among other things, participation interests in pools of residential mortgage loans
purchased from individual lenders by a federal agency or originated and issued by private lenders
and involve, among others, the following risks:
• Credit and Market Risks of Mortgage-Backed Securities. Investments by the Fund in fixed rate and floating rate mortgage-backed securities will entail credit risks (i.e.,
the risk of non-payment of interest and principal) and market risks (i.e., the risk that interest
rates and other factors could cause the value of the instrument to decline). Many issuers
or servicers of mortgage-backed securities may guarantee timely payment of interest and
principal on the securities, whether or not payments are made when due on the underlying mortgages. This kind of guarantee generally increases the quality of a
security, but does not mean that the security’s market value and yield will not change. The value of all mortgage-backed securities also may change because of changes in the market’s perception of the creditworthiness of the organization that issues or guarantees them.
In addition, an unexpectedly high rate of defaults on the mortgages held by a mortgage
pool may limit substantially the pool’s ability to make payments of principal or interest to the Fund as a holder of such securities, reducing the values of those securities or in
some cases rendering them worthless. The Fund also may purchase securities that are not
guaranteed or subject to any credit support.
Like bond investments, the value of fixed rate mortgage-backed securities will tend
to rise when interest rates fall, and fall when rates rise. Floating rate mortgage-backed
securities will generally tend to have more moderate changes in price when interest rates rise
or fall, but their current yield will be affected.
In addition, the mortgage-backed securities market in general may be adversely affected
by changes in governmental legislation or regulation. Factors that could affect the value
of a mortgage-backed security include, among other things, the types and amounts of insurance
which an individual mortgage or specific mortgage-backed security carries, the default
and delinquency rate of the mortgage pool, the amount of time the mortgage loan has been
outstanding, the loan-to-value ratio of each mortgage and the amount of overcollateralization or undercollateralization of the mortgage pool.
Asset-backed securities represent participation in, or are secured by and payable
from, assets such as installment sales or loan contracts, leases, credit card receivables,
and other categories of receivables. Certain debt instruments may only pay principal at maturity
or may only represent the right to receive payments of principal or payments of interest
on underlying pools or mortgages, assets, or government securities, but not both. The
value of these types of instruments may change more drastically than debt securities that pay
both principal and interest. The Fund may obtain a below market yield or incur a loss on
such instruments during periods of declining interest rates. Principal only and interest
only instruments are subject to extension risk. For mortgage derivatives and structured
securities that have imbedded leverage features, small changes in interest or prepayment rates
may cause large and sudden price movements. Mortgage derivatives can also become illiquid
and hard to value in declining markets. • Prepayment, Extension and Redemption Risks of Mortgage-Backed Securities. Mortgage-backed securities may reflect an interest in monthly payments made by the borrowers who receive the underlying mortgage loans. Although the underlying mortgage loans
are for specified periods of time, such as 20 or 30 years, the borrowers can, and historically
have, paid them off sooner. When a prepayment happens, a portion of the mortgage-backed security which represents an interest in the underlying mortgage loan will be prepaid. A borrower is more likely to prepay a mortgage which bears a relatively high
rate of interest. This means that in times of declining interest rates, a portion of the Fund’s higher yielding securities are likely to be redeemed and the Fund will probably be
unable to replace them with securities having as great a yield. Prepayments can result in
lower yields to stockholders. The increased likelihood of prepayment when interest rates
decline also limits market price appreciation of mortgage-backed securities. This
is known as prepayment risk. Mortgage-backed securities also are subject to extension
risk. Extension risk is the possibility that rising interest rates may cause prepayments
to occur at a slower than expected rate. This particular risk may effectively change a security
which was considered short or intermediate term into a long-term security. The values
of long-term securities generally fluctuate more widely in response to changes in interest
rates than short or intermediate-term securities. In addition, a mortgage-backed security
may be subject to redemption at the option of the issuer. If a mortgage-backed security
held by the Fund is called for redemption, the Fund will be required to permit the
issuer to redeem or “pay-off” the security, which could have an adverse effect on the Fund’s ability to achieve its investment objective.
• Liquidity Risk of Mortgage-Backed Securities. The liquidity of mortgage-backed securities varies by type of security; at certain times the Fund may encounter difficulty in
disposing of such investments. Because mortgage-backed securities have the potential to be less
liquid than other securities, the Fund may be more susceptible to liquidity risks
than funds
that invest in other securities. In the past, in stressed markets, certain types of
mortgage-backed securities suffered periods of illiquidity when disfavored by the market. • Collateralized Mortgage Obligations. There are certain risks associated specifically with collateralized mortgage obligations (“CMOs”). CMOs are debt obligations collateralized by mortgage loans or mortgage pass-through securities. The average life of CMOs is
determined using mathematical models that incorporate prepayment assumptions and other factors that involve estimates of future economic and market conditions. These
estimates may vary from actual future results, particularly during periods of extreme
market volatility. Further, under certain market conditions, such as those that occurred
in 1994, 2007, 2008 and 2009, the average weighted life of certain CMOs may not accurately reflect the price volatility of such securities. For example, in periods
of supply and demand imbalances in the market for such securities and/or in periods of sharp
interest rate movements, the prices of CMOs may fluctuate to a greater extent than
would be expected from interest rate movements alone. CMOs issued by private entities
are not obligations issued or guaranteed by the United States Government, its agencies
or instrumentalities or by any government agency, although the securities underlying
a CMO may be subject to a guarantee. Therefore, if the collateral securing the CMO,
as well as any third party credit support or guarantees, is insufficient to make payments
when due, the holder could sustain a loss.
• Adjustable Rate Mortgages. Adjustable Rate Mortgages (“ARMs”) contain maximum and minimum rates beyond which the mortgage interest rate may not vary over the lifetime
of the security. In addition, many ARMs provide for additional limitations on the maximum
amount by which the mortgage interest rate may adjust for any single adjustment period.
Alternatively, certain ARMs contain limitations on changes in the required monthly
payment. In the event that a monthly payment is not sufficient to pay the interest
accruing on an ARM, any excess interest is added to the principal balance of the mortgage loan, which is repaid through future monthly payments. If the monthly payment
for such an instrument exceeds the sum of the interest accrued at the applicable mortgage interest rate and the principal payment required at such point to amortize
the outstanding principal balance over the remaining term of the loan, the excess is used
to reduce the then-outstanding principal balance of the ARM.
In addition, certain ARMs may provide for an initial fixed, below-market or “teaser” interest rate. During this initial fixed-rate period, the payment due from the related mortgagor
may be less than that of a traditional loan. However, after the “teaser” rate expires, the monthly payment required to be made by the mortgagor may increase dramatically when the interest
rate on the mortgage loan adjusts. This increased burden on the mortgagor may increase
the risk of delinquency or default on the mortgage loan and in turn, losses on the
mortgage-backed security into which that loan has been bundled.
• Interest and Principal Only Securities Risk. One type of stripped mortgage-backed security pays to one class all of the interest from the mortgage assets (the interest-only, or “IO” class), while the other class will receive all of the principal (the principal-only, or “PO” class). The yield to maturity on an IO class is extremely sensitive to the rate of
principal payments (including prepayments) on the underlying mortgage assets, and a rapid rate
of principal payments may have a material adverse effect on the Fund’s yield to maturity from these securities. If the assets underlying the IO class experience greater than
anticipated prepayments of principal, the Fund may fail to recoup fully, or at all,
its initial investment in these securities. Conversely, PO class securities tend to decline in
value if prepayments are slower than anticipated. Derivatives Risk. The Fund may utilize a variety of derivative instruments for investment or risk management purposes, such as options, futures contracts, swap agreements and
credit default swaps. Generally derivatives are financial contracts whose value depends on,
or is derived from, the value of an underlying asset, reference rate or index, and may relate
to individual debt or equity instruments, interest rates, currencies or currency exchange
rates and related indexes. Derivatives are subject to a number of risks, such as liquidity
risk, interest rate risk, credit risk and management risk. Derivatives are also subject
to counterparty risk, which is the risk that the other party in the transaction will
not fulfill its contractual obligation. Changes in the credit quality of the companies that serve
as the Fund’s counterparties with respect to its derivative transactions will affect the value of those instruments. By using derivatives that expose the Fund to counterparties, the
Fund assumes the risk that its counterparties could experience financial hardships that
could call into question their continued ability to perform their obligations. In addition, in
the event of the insolvency of a counterparty to a derivative transaction, the derivative transaction
would typically be terminated at its fair market value. If the Fund is owed this fair
market value in the termination of the derivative transaction and its claim is unsecured,
the Fund will be treated as a general creditor of such counterparty, and will not have any
claim with respect to the underlying security. As a result, concentrations of such derivatives
in any one counterparty would subject the Fund to an additional degree of risk with respect to
defaults by such counterparty. Derivatives also involve the risk of mispricing or improper
valuation and the risk that changes in the value of a derivative may not correlate perfectly
with an underlying asset, interest rate or index. Suitable derivative transactions may not
be available in all circumstances and there can be no assurance that the Fund will engage
in these transactions to reduce exposure to other risks when that would be beneficial.
If the Fund invests in a derivative instrument, it could lose more than the principal amount
invested. Derivative instruments can be illiquid, may disproportionately increase
losses and may have a potentially large impact on the Fund’s performance.
Registered investment companies are subject to regulatory limitations on their use
of derivative investments and certain financing transactions (e.g. reverse repurchase
agreements) by registered investment companies. Among other things, Rule 18f-4 requires
funds that invest in derivative instruments beyond a specified limited amount to apply
a value at risk (VaR) based limit to their use of certain derivative instruments and
financing transactions and to adopt and implement a derivatives risk management program. A fund
that uses derivative instruments in a limited amount is not subject to the full requirements
of Rule 18f-4. Compliance with Rule 18f-4 by the Fund could, among other things, make
derivatives more costly, limit their availability or utility, or otherwise adversely
affect their performance. Rule 18f-4 may limit the Fund’s ability to use derivatives as part of its investment strategy and may not work as intended to limit losses from derivatives. Risks of Futures and Options on Futures. The use by the Fund of futures contracts and options on futures contracts to hedge interest rate risks involves special considerations
and risks, as described below.
• Successful use of hedging transactions depends upon Western Asset’s ability to correctly predict the direction of changes in interest rates. There can be no assurance that
any particular hedging strategy will succeed.
• There might be imperfect correlation, or even no correlation, between the price movements of a futures or option contract and the movements of the interest rates
being hedged. Such a lack of correlation might occur due to factors unrelated to the interest
rates being hedged, such as market liquidity and speculative or other pressures on
the markets in which the hedging instrument is traded.
• Hedging strategies, if successful, can reduce risk of loss by wholly or partially
offsetting the negative effect of unfavorable movements in the interest rates being hedged. However, hedging strategies can also reduce opportunity for gain by offsetting the
positive effect of favorable movements in the hedged interest rates.
• There is no assurance that a liquid secondary market will exist for any particular
futures contract or option thereon at any particular time. If the Fund were unable to liquidate
a futures contract or an option on a futures contract position due to the absence of
a liquid secondary market or the imposition of price limits, it could incur substantial losses.
The Fund would continue to be subject to market risk with respect to the position.
• There is no assurance that the Fund will use hedging transactions. For example, if
the Fund determines that the cost of hedging will exceed the potential benefit to the
Fund, the Fund will not enter into such transactions.
Risks of Futures and Options on Futures. The use by the Fund of futures contracts and options on futures contracts to hedge interest rate risks involves special considerations
and risks, as described below.
• Successful use of hedging transactions depends upon Western Asset’s ability to correctly predict the direction of changes in interest rates. There can be no assurance that
any particular hedging strategy will succeed.
• There might be imperfect correlation, or even no correlation, between the price movements of a futures or option contract and the movements of the interest rates
being hedged. Such a lack of correlation might occur due to factors unrelated to the interest
rates being hedged, such as market liquidity and speculative or other pressures on
the markets in which the hedging instrument is traded.
• Hedging strategies, if successful, can reduce risk of loss by wholly or partially
offsetting the negative effect of unfavorable movements in the interest rates being hedged. However, hedging strategies can also reduce opportunity for gain by offsetting the
positive effect of favorable movements in the hedged interest rates.
• There is no assurance that a liquid secondary market will exist for any particular
futures contract or option thereon at any particular time. If the Fund were unable to liquidate
a futures contract or an option on a futures contract position due to the absence of
a liquid secondary market or the imposition of price limits, it could incur substantial losses.
The Fund would continue to be subject to market risk with respect to the position.
• There is no assurance that the Fund will use hedging transactions. For example, if
the Fund determines that the cost of hedging will exceed the potential benefit to the
Fund, the Fund will not enter into such transactions.
Credit Default Swap Risk. The Fund may invest in credit default swap transactions for hedging or investment purposes. Credit default swap agreements involve greater risks
than if the Fund had invested in the reference obligation directly since, in addition to
general market risks, credit default swaps are subject to illiquidity risk, counterparty risk
and credit risk. The “buyer” in a credit default contract is obligated to pay the “seller” a periodic stream of payments over the term of the contract, provided that no event of default
on an underlying reference obligation has occurred. If an event of default occurs, the seller
must pay the buyer the full notional value, or “par value,” of the reference obligation through either physical settlement or cash settlement. The Fund may be either the buyer or
seller in a credit default swap transaction. If the Fund is a buyer and no event of default
occurs, the Fund will have made a series of periodic payments and recover nothing of monetary
value. However, if an event of default occurs, the Fund (if the buyer) will receive the full
notional value of the reference obligation either through a cash payment in exchange for the
asset or a cash payment in addition to owning the reference assets. As a seller, the Fund receives
a fixed rate of income throughout the term of the contract, which typically is between
six months and five years, provided that there is no event of default. The sale of a credit
default swap is a form of leverage. The Fund currently segregates assets on the Fund’s
records in the form of cash, cash equivalents or liquid securities in an amount equal
to the notional value of the credit default swaps of which it is the seller or otherwise
covers such obligations. If such assets are not fully segregated or otherwise covered by the Fund,
the use of credit default swap transactions could then be considered senior securities
for purposes of the 1940 Act. Recent market developments related to credit default swaps
have prompted increased scrutiny with respect to these instruments. As a result of the
Dodd-Frank Wall Street Reform and Consumer Protection Act, credit default swaps may in the future be subject to increased regulation. Such regulation may limit the Fund’s ability to use credit default swaps. Although the Fund will seek to realize gains by writing credit
default swaps that increase in value, to realize gains on writing credit default swaps, an
active secondary market for such instruments must exist or the Fund must otherwise be able
to close out these transactions at advantageous times. If no such secondary market exists
or the Fund is otherwise unable to close out these transactions at advantageous times,
writing credit default swaps may not be profitable for the Fund. The market for credit default swaps has become more volatile in recent years as the
creditworthiness of certain counterparties has been questioned and/or downgraded.
If a counterparty’s credit becomes significantly impaired, multiple requests for collateral posting in a short period of time could increase the risk that the Fund may not receive adequate
collateral. The Fund may exit its obligations under a credit default swap only by
terminating the contract and paying applicable breakage fees, or by entering into an offsetting
credit default swap position, which may cause the Fund to incur more losses. Repurchase Agreements Risk. Subject to its investment objective and policies, the Fund may invest in repurchase agreements for leverage or investment purposes. Repurchase
agreements typically involve the acquisition by the Fund of debt securities from a
selling financial institution such as a bank, savings and loan association or broker-dealer.
The agreement provides that the Fund will sell the securities back to the institution
at a fixed time in the future. The Fund does not bear the risk of a decline in the value of the
underlying security unless the seller defaults under its repurchase obligation. In the event
of the bankruptcy or other default of a seller of a repurchase agreement, the Fund could
experience both delays in liquidating the underlying securities and losses, including
(1) possible decline in the value of the underlying security during the period in which
the Fund seeks to enforce its rights thereto; (2) possible lack of access to income on the
underlying security during this period; and (3) expenses of enforcing its rights. While repurchase
agreements involve certain risks not associated with direct investments in debt securities,
the Fund follows procedures approved by the Fund’s Board of Directors that are designed to minimize such risks. These procedures include effecting repurchase transactions only
with large, well-capitalized and well-established financial institutions whose financial
condition will be continually monitored by Western Asset. In addition, as described above, the
value of the collateral underlying the repurchase agreement will be at least equal to the
repurchase price, including any accrued interest earned on the repurchase agreement.
In the event of a default or bankruptcy by a selling financial institution, the Fund
generally will seek to liquidate such collateral. However, the exercise of the Fund’s right to liquidate such collateral could involve certain costs or delays and, to the extent that proceeds
from any sale upon a default of the obligation to repurchase were less than the repurchase
price, the Fund could suffer a loss. Reverse Repurchase Agreements Risk. The Fund’s use of reverse repurchase agreements involves many of the same risks involved in the Fund’s use of leverage, as the proceeds from reverse repurchase agreements generally will be invested in additional securities.
There is a risk that the market value of the securities acquired in the reverse repurchase
agreement may decline below the price of the securities that the Fund has sold but remains obligated
to repurchase. In addition, there is a risk that the market value of the securities
retained by the Fund may decline. If the buyer of securities under a reverse repurchase agreement
were to file for bankruptcy or experience insolvency, the Fund may be adversely affected.
Also, in entering into reverse repurchase agreements, the Fund would bear the risk of loss
to the extent that the proceeds of the reverse repurchase agreement are less than the value
of the underlying securities. In addition, due to the interest costs associated with reverse
repurchase agreements transactions, the Fund’s net asset value will decline, and, in some cases, the Fund may be worse off than if it had not used such instruments.
Senior Loans Risk. The Fund may invest in first lien senior secured loans (“Senior Loans”) issued by banks, other financial institutions, and other investors to corporations,
partnerships, limited liability companies and other entities to finance leveraged
buyouts, recapitalizations, mergers, acquisitions, stock repurchases, debt refinancings and,
to a lesser extent, for general operating and other purposes. An investment in Senior Loans
involves risk that the borrowers under Senior Loans may default on their obligations
to pay principal or interest when due. In the event a borrower fails to pay scheduled interest
or principal payments on a Senior Loan held by the Fund, the Fund will experience a reduction
in its income and a decline in the market value of the Senior Loan, which will likely
reduce dividends and lead to a decline in the net asset value of the Fund. If the Fund acquires
a Senior Loan from another lender, for example, by acquiring a participation, the Fund
may also be subject to credit risk with respect to that lender.
The Fund will generally invest in Senior Loans that are secured with specific collateral.
However, there can be no assurance that liquidation of collateral would satisfy the
borrower’s obligation in the event of non-payment or that such collateral could be readily liquidated. In the event of the bankruptcy of a borrower, the Fund could experience
delays and limitations on its ability to realize the benefits of the collateral securing
the Senior Loan. Senior Loans are typically structured as floating rate instruments in which
the interest rate payable on the obligation fluctuates with interest rate changes. As a result,
the yield on Senior Loans will generally decline in a falling interest rate environment causing
the Fund to experience a reduction in the income it receives from a Senior Loan. Senior
Loans are generally of below investment grade quality and may be unrated at the time of
investment; are generally not registered with the SEC or state securities commissions;
and are generally not listed on any securities exchange. In addition, the amount of public
information available on Senior Loans is generally less extensive than that available
for other types of assets. Second Lien Loans Risk. Second senior secured lien loans (“Second Lien Loans”) generally are subject to similar risks as those associated with investments in Senior Loans.
Because Second Lien Loans are subordinated or unsecured and thus lower in priority of payment
to Senior Loans, they are subject to the additional risk that the cash flow of the borrower
and property securing the loan or debt, if any, may be insufficient to meet scheduled
payments after giving effect to the senior secured obligations of the borrower. This risk is
generally higher for subordinated unsecured loans or debt, which are not backed by a security
interest in any specific collateral. Second Lien Loans generally have greater price volatility
than Senior Loans and may be less liquid. There is also a possibility that originators
will not be able to sell participations in Second Lien Loans, which would create greater credit
risk exposure for the holders of such loans. Second Lien Loans share the same risks as
other below investment grade securities.
Loan Participations and Assignments Risk. The Fund may invest in participations in loans or assignments of all or a portion of loans from third parties. In connection with purchasing
participations, the Fund generally will have no right to enforce compliance by the
borrower with the terms of the loan agreement relating to the loan, nor any rights of set-off
against the borrower, and the Fund may not directly benefit from any collateral supporting
the loan in which it has purchased the participation. As a result, the Fund may be subject
to the credit risk of both the borrower and the lender that is selling the participation.
In the event of the insolvency of the lender selling a participation, the Fund may be treated as
a general creditor of the lender and may not benefit from any set-off between the lender and
the borrower. Certain participations may be structured in a manner designed to avoid purchasers of participations being subject to the credit risk of the lender with respect
to the participation, but even under such a structure, in the event of the lender’s insolvency, the lender’s servicing of the participation may be delayed and the assignability of the participation impaired. The Fund will acquire participations only if the lender interpositioned
between the Fund and the borrower is determined by Western Asset to be creditworthy.
Smaller Company Risk. The general risks associated with income-producing securities are particularly pronounced for securities issued by companies with smaller market capitalizations. These companies may have limited product lines, markets or financial
resources or they may depend on a few key employees. As a result, they may be subject
to
greater levels of credit, market and issuer risk. Securities of smaller companies
may trade less frequently and in lesser volume than more widely held securities and their values
may fluctuate more sharply than other securities. Companies with medium-sized market capitalizations may have risks similar to those of smaller companies. Management Risk. The Fund is subject to management risk because it is an actively managed investment portfolio. Western Asset, Western Asset Management Company Pte.
Ltd. in Singapore (“Western Singapore”) and Western Asset Management Company Limited in London (“Western Asset London”, together with Western Singapore, the “Non-U.S. Subadvisers” and individually, each a “Non-U.S. Subadviser”) and each individual investment professional may not be successful in selecting the best performing securities
or investment techniques, and the Fund’s performance may lag behind that of similar funds.
Potential Conflicts of Interest Risk. FTFA, Western Asset, the Non-U.S. Subadvisers (together with FTFA and Western Asset, the “Managers”) and the Fund’s investment professionals have interests which may conflict with the interests of the Fund. In
particular, FTFA also manages, and Western Asset serves as subadviser to, another closed-end investment company listed on the NYSE that has an investment objective and investment
strategies that are substantially similar to the Fund. Further, the Managers may at
some time in the future manage and/or advise other investment funds or accounts with the
same investment objective and strategies as the Fund. As a result, the Managers and the Fund’s investment professionals may devote unequal time and attention to the management of
the Fund and those other funds and accounts, and may not be able to formulate as complete
a strategy or identify equally attractive investment opportunities as might be the case
if they were to devote substantially more attention to the management of the Fund. The Managers
and the Fund’s investment professionals may identify a limited investment opportunity that may be suitable for multiple funds and accounts, and the opportunity may be allocated
among these several funds and accounts, which may limit the Fund’s ability to take full advantage of the investment opportunity. Additionally, transaction orders may be aggregated for multiple accounts for purpose of execution, which may cause the price
or brokerage costs to be less favorable to the Fund than if similar transactions were
not being executed concurrently for other accounts. At times, an investment professional may
determine that an investment opportunity may be appropriate for only some accounts
for which he or she exercises investment responsibility, or may decide that certain accounts
should take differing positions with respect to a particular security. In these cases,
the investment professional may place separate transactions for one or more funds or accounts
which may affect the market price of the security or the execution of the transaction,
or both, to the detriment or benefit of one or more other funds and accounts. For example,
an investment professional may determine that it would be in the interest of another
account to sell a security that the Fund holds, potentially resulting in a decrease in the
market value of the security held by the Fund.
Rating Agency Risk. Credit ratings are issued by rating agencies which are private services that provide ratings of the credit quality of debt obligations, including convertible
securities. Ratings assigned by a rating agency are not absolute standards of credit quality and
do not evaluate market risks or the liquidity of securities. Rating agencies may fail to
make timely changes in credit ratings and an issuer’s current financial condition may be better or worse than a rating indicates. In addition, in recent years there have been instances in
which the initial rating assigned by a rating agency to a security failed to take account of
adverse economic developments which subsequently occurred, leading to losses that were not
anticipated based on the initial rating. To the extent that the issuer of a security
pays a rating agency for the analysis of its security, an inherent conflict of interest may
exist that could affect the reliability of the rating. The ratings of a debt security may change
over time. As a result, debt instruments held by the Fund could receive a higher rating
or a lower rating during the period in which they are held. The Fund will not necessarily sell
a security when its rating is reduced below its rating at the time of purchase.
Investments in mortgage-related securities may involve particularly high levels of
risk under current market conditions. Inflation/Deflation Risk. Inflation risk is the risk that the value of certain assets or income from the Fund’s investments will be worth less in the future as inflation decreases the value of money. As inflation increases, the real value of the Common Stock and distributions
on the Common Stock can decline. In addition, during any periods of rising inflation,
the dividend rates or borrowing costs associated with the Fund’s use of leverage would likely increase, which would tend to further reduce returns to stockholders. Deflation risk
is the risk that prices throughout the economy decline over time—the opposite of inflation. Deflation may have an adverse effect on the creditworthiness of issuers and may make
issuer defaults more likely, which may result in a decline in the value of the Fund’s portfolio.
Counterparty Risk. If an issuer or guarantor of a security held by the Fund or a counterparty to a financial contract with the Fund defaults or its credit is downgraded, or is
perceived to be less creditworthy, or if the value of the assets underlying a security declines,
the value of your investment will typically decline. Changes in actual or perceived creditworthiness
may occur quickly. The Fund could be delayed or hindered in its enforcement of rights
against an issuer, guarantor or counterparty. Subordinated securities are more likely to suffer
a credit loss than non-subordinated securities of the same issuer and will be disproportionately
affected by a default, downgrade or perceived decline in creditworthiness.
When-Issued and Delayed-Delivery Transactions Risk. The Fund may purchase fixed income securities on a when-issued basis, and may purchase or sell those securities for delayed
delivery. When-issued and delayed-delivery transactions occur when securities are
purchased or sold by the Fund with payment and delivery taking place in the future
to
secure an advantageous yield or price. Securities purchased on a when-issued or delayed-delivery basis may expose the Fund to counterparty risk of default as well as the risk that
securities may experience fluctuations in value prior to their actual delivery. The
Fund will not accrue income with respect to a when-issued or delayed-delivery security prior
to its stated delivery date. Purchasing securities on a when-issued or delayed-delivery basis
can involve the additional risk that the price or yield available in the market when the
delivery takes place may not be as favorable as that obtained in the transaction itself. Leverage Risk. The Fund may use leverage through borrowings, including loans from certain financial institutions and/or the issuance of debt securities, and through the issuance
of preferred stock. The Fund may use leverage through borrowings in an aggregate amount
of up to approximately 33 1/3% of the Fund’s total assets less all liabilities and indebtedness not represented by senior securities (for these purposes, “total net assets”) immediately after such borrowings. Furthermore, the Fund may use leverage through the issuance
of preferred stock in an aggregate amount of liquidation preference attributable to the
preferred stock combined with the aggregate amount of any borrowings of up to approximately 50% of the Fund’s total net assets immediately after such issuance. The value of your investment may be more volatile if the Fund borrows or uses instruments,
such as derivatives, that have a leveraging effect on the Fund’s portfolio. The Fund may also have to sell assets at inopportune times to satisfy its obligations created by the
use of leverage or derivatives. The use of leverage is considered to be a speculative investment
practice and may result in the loss of a substantial amount, and possibly all, of the Fund’s assets. In addition, the Fund’s portfolio will be leveraged if it exercises its right to delay payment on a redemption, and losses will result if the value of the Fund’s assets declines between the time a redemption request is deemed to be received by the Fund and the
time the Fund liquidates assets to meet redemption requests.
Portfolio Turnover Risk. The Fund’s annual portfolio turnover rate may vary greatly from year to year. Changes to the investments of the Fund may be made regardless of the length
of time particular investments have been held. A high portfolio turnover rate may result
in increased transaction costs for the Fund in the form of increased dealer spreads and
other transactional costs, which may have an adverse impact on the Fund’s performance. In addition, high portfolio turnover may result in the realization of net short-term
capital gains by the Fund which, when distributed to stockholders, will be taxable as ordinary income.
A high portfolio turnover may increase the Fund’s current and accumulated earnings and profits, resulting in a greater portion of the Fund’s distributions being treated as a dividend to the Fund’s stockholders. The portfolio turnover rate of the Fund will vary from year to year, as well as within a given year.
Temporary Defensive Strategies Risk. When Western Asset anticipates unusual market or other conditions, the Fund may temporarily depart from its principal investment strategies
as a defensive measure and invest all or a portion of its assets in obligations of
the U.S. government, its agencies or instrumentalities; other investment grade debt securities;
investment grade commercial paper; certificates of deposit and bankers’ acceptances; repurchase agreements with respect to any of the foregoing investments or any other
fixed income securities that Western Asset considers consistent with this strategy. To the
extent that the Fund invests defensively, it may not achieve its investment objectives. Market Price Discount from Net Asset Value Risk. Shares of closed-end investment companies frequently trade at a discount from their net asset value. This risk is
separate and distinct from the risk that the Fund’s net asset value could decrease as a result of its investment activities and may be a greater risk to investors expecting to sell their
Common Shares in a relatively short period. Whether investors will realize gains or losses
upon the sale of Common Shares will depend not upon the Fund’s net asset value but upon whether the market price of Common Shares at the time of sale is above or below the investor’s purchase price for Common Shares. Because the market price of Common Shares will be
determined by factors such as relative supply of and demand for Common Shares in the
market, general market and economic conditions and other factors beyond the control
of the Fund, the Fund cannot predict whether Common Shares will trade at, above or below
net asset value. The Common Shares are designed primarily for long-term investors and
you should not view the Fund as a vehicle for trading purposes.
Anti-Takeover Provisions. The Fund’s Charter and Bylaws include provisions that are designed to limit the ability of other entities or persons to acquire control of the
Fund for short-term objectives, including by converting the Fund to open-end status or changing
the composition of the Board, that may be detrimental to the Fund’s ability to achieve its primary investment objective. The Fund’s Bylaws also contains a provision providing that the Fund is subject to the provisions of the Maryland Control Share Acquisition Act. There
can be no assurance, however, that such provisions will be sufficient to deter professional
arbitrageurs that seek to cause the Fund to take actions that may not be consistent
with its investment objective or aligned with the interests of long-term shareholders, such
as liquidating debt investments prior to maturity, triggering taxable events for shareholders
and decreasing the size of the Fund. Such provisions may limit the ability of shareholders
to sell their shares at a premium over prevailing market prices by discouraging a third
party from seeking to obtain control of the Fund. There can be no assurance, however, that
such provisions will be sufficient to deter activist investors that seek to cause the Fund
to take actions that may not be aligned with the interests of long-term shareholders.
Market Events Risk. The market values of securities or other assets will fluctuate, sometimes sharply and unpredictably, due to factors such as economic events, governmental actions or intervention, actions taken by the U.S. Federal Reserve or
foreign central banks, market disruptions caused by trade disputes, labor strikes or other
factors,
political developments, armed conflicts, economic sanctions and countermeasures in
response to sanctions, major cybersecurity events, the global and domestic effects
of widespread or local health, weather or climate events, and other factors that may
or may not be related to the issuer of the security or other asset. Economies and financial
markets throughout the world are increasingly interconnected. Economic, financial or political
events, trading and tariff arrangements, public health events, terrorism, wars, natural
disasters and other circumstances in one country or region could have profound impacts
on global economies or markets. As a result, whether or not the fund invests in securities
of issuers located in or with significant exposure to the countries or markets directly
affected, the value and liquidity of the fund’s investments may be negatively affected. Following Russia’s invasion of Ukraine in 2022, Russian stocks lost all, or nearly all, of their market value. Other securities or markets could be similarly affected by past or future geopolitical
or other events or conditions. Furthermore, events involving limited liquidity, defaults,
non-performance or other adverse developments that affect one industry, such as the financial services industry, or concerns or rumors about any events of these kinds, have in
the past and may in the future lead to market-wide liquidity problems, may spread to other
industries, and could negatively affect the value and liquidity of the fund’s investments.
The long-term impact of the COVID-19 pandemic and its subsequent variants on economies,
markets, industries and individual issuers is not known. Some sectors of the economy
and individual issuers have experienced or may experience particularly large losses. Periods
of extreme volatility in the financial markets, reduced liquidity of many instruments,
increased government debt, inflation, and disruptions to supply chains, consumer demand and
employee availability, may continue for some time. The U.S. government and the Federal
Reserve, as well as certain foreign governments and central banks, took extraordinary
actions to support local and global economies and the financial markets in response
to the COVID-19 pandemic. This and other government intervention into the economy and financial
markets may not work as intended, and have resulted in a large expansion of government
deficits and debt, the long term consequences of which are not known. In addition,
the COVID-19 pandemic, and measures taken to mitigate its effects, could result in disruptions
to the services provided to the fund by its service providers.
Raising the ceiling on U.S. government debt has become increasingly politicized. Any
failure to increase the total amount that the U.S. government is authorized to borrow could
lead to a default on U.S. government obligations, with unpredictable consequences for economies
and markets in the U.S. and elsewhere. Recently, inflation and interest rates have
increased and may rise further. These circumstances could adversely affect the value and liquidity
of the fund’s investments, impair the fund’s ability to satisfy redemption requests, and negatively impact the fund’s performance.
The United States and other countries are periodically involved in disputes over trade
and other matters, which may result in tariffs, investment restrictions and adverse impacts
on affected companies and securities. For example, the United States has imposed tariffs
and other trade barriers on Chinese exports, has restricted sales of certain categories
of goods to China, and has established barriers to investments in China. Trade disputes may
adversely affect the economies of the United States and its trading partners, as well
as companies directly or indirectly affected and financial markets generally. The United
States government has prohibited U.S. persons from investing in Chinese companies designated
as related to the Chinese military. These and possible future restrictions could limit the fund’s opportunities for investment and require the sale of securities at a loss or make
them illiquid. Moreover, the Chinese government is involved in a longstanding dispute with
Taiwan that has included threats of invasion. If the political climate between the
United States and China does not improve or continues to deteriorate, if China were
to attempt unification of Taiwan by force, or if other geopolitical conflicts develop
or get worse, economies, markets and individual securities may be severely affected both
regionally and globally, and the value of the fund’s assets may go down. Valuation Risk. The sales price the Fund could receive for any particular portfolio investment may differ from the Fund’s valuation of the investment, particularly for securities that trade in thin or volatile markets or that are valued using a fair value methodology. These
differences may increase significantly and affect Fund investments more broadly during
periods of market volatility. The Fund’s ability to value its investments may be impacted by technological issues and/or errors by pricing services or other third party service
providers. The valuation of the Fund’s investments involves subjective judgment.
Operational Risk. The valuation of the Fund’s investments may be negatively impacted because of the operational risks arising from factors such as processing errors and
human errors, inadequate or failed internal or external processes, failures in systems and
technology, changes in personnel, and errors caused by third party service providers
or trading counterparties. It is not possible to identify all of the operational risks
that may affect the Fund or to develop processes and controls that completely eliminate or
mitigate the occurrence of such failures. The Fund and its shareholders could be negatively
impacted as a result.
Cybersecurity Risk. Like other funds and business enterprises, the fund, the manager, the subadvisers, Authorized Participants, the relevant listing exchange and their service
providers are subject to the risk of cyber incidents occurring from time to time.
Cybersecurity incidents, whether intentionally caused by third parties or otherwise,
may allow an unauthorized party to gain access to fund assets, fund or customer data (including
private shareholder information) or proprietary information, cause the fund, the manager,
the subadvisers, Authorized Participants, the relevant listing exchange and/or their
service
providers (including, but not limited to, fund accountants, custodians, sub-custodians,
transfer agents and financial intermediaries) to suffer data breaches, data corruption
or loss of operational functionality, or prevent fund investors from purchasing, redeeming
or exchanging shares, receiving distributions or receiving timely information regarding
the fund or their investment in the fund. The fund, the manager, and the subadvisers have
limited ability to prevent or mitigate cybersecurity incidents affecting third party
service providers, and such third party service providers may have limited indemnification
obligations to the fund, the manager, and/or the subadvisers. Cybersecurity incidents
may result in financial losses to the fund and its shareholders, and substantial costs
may be incurred in order to prevent or mitigate any future cybersecurity incidents. Issuers
of securities in which the fund invests are also subject to cybersecurity risks, and
the value of these securities could decline if the issuers experience cybersecurity incidents. New ways to carry out cyber attacks continue to develop. There is a chance that some
risks have not been identified or prepared for, or that an attack may not be detected, which
puts limitations on the fund’s ability to plan for or respond to a cyber attack. |
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Share Price [Table Text Block] | The Fund’s Common Stock is traded on the NYSE under the symbol “EHI”. The below table details for the period indicated the high and low closing market prices, the NAV,
and premium to or discount from NAV, on the date of each of the high and low market prices.
Source of market prices: NYSE.
The NAV per Common Share on May 31, 2024 was $ and the market price per Common
Stock at the close of business on May 31, 2024 was $ , representing a discount
from such net asset value. As of May 31, 2024, the Fund has outstanding
shares of Common Stock.
Shares of a closed-end investment company may frequently trade at prices lower than
NAV. The Fund’s Common Stock has traded in the market below, at and above net asset value since the commencement of the Fund’s operations. However, it has recently been the case that the Fund’s Common Stock has traded at a discount from NAV. The Fund cannot determine the reasons why the Fund’s Common Stock trades at a premium to or discount from NAV, nor can the Fund predict whether its Stock will trade in the future at a
premium to or discount from NAV, or the level of any premium or discount. The Board regularly
monitors the relationship between the market price and NAV of the Common Stock. If
the Common Stock were to trade at a substantial discount to NAV for an extended period
of time, the Board may consider the repurchase of the Fund’s Common Stock on the open market, the making of a tender offer for such shares or other programs intended to
reduce the discount. The Fund cannot assure you that its Board will decide to take or propose
any of these actions, or that share repurchases or tender offers will actually reduce
market discount.
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Capital Stock, Long-Term Debt, and Other Securities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Document Period End Date | May 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fixed Income Securities Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk [Text Block] | Fixed Income Securities Risk. In addition to the risks described elsewhere in this section with respect to valuations and liquidity, fixed income securities, including high-yield
securities, are also subject to certain risks, including:
• Issuer Risk. The value of fixed income securities may decline for a number of reasons that directly relate to the issuer, such as management performance, financial leverage
and reduced demand for the issuer’s goods and services.
• Interest Rate Risk. The market price of the Fund’s investments will change in response to changes in interest rates and other factors. During periods of declining interest
rates, the market price of fixed income securities generally rises. Conversely, during periods
of rising interest rates, the market price of such securities generally declines. The
magnitude of these fluctuations in the market price of fixed income securities is
generally greater for securities with longer maturities. Fluctuations in the market price of the Fund’s securities will not affect interest income derived from securities already owned by
the Fund, but will be reflected in the Fund’s net asset value. The Fund may utilize certain strategies, including investments in structured notes or interest rate swap or cap
transactions, for the purpose of reducing the interest rate sensitivity of the portfolio
and decreasing the Fund’s exposure to interest rate risk, although there is no assurance that it will do so or that such strategies will be successful.
• Prepayment Risk. During periods of declining interest rates, the issuer of a security may exercise its option to prepay principal earlier than scheduled, forcing the Fund to
reinvest the proceeds from such prepayment in lower yielding securities, which may result in
a decline in the Fund’s income and distributions to stockholders. This is known as prepayment or “call” risk. Debt securities frequently have call features that allow the issuer to redeem the security at dates prior to its stated maturity at a specified
price (typically greater than par) only if certain prescribed conditions are met. An issuer
may choose to redeem a debt security if, for example, the issuer can refinance the debt
at a lower cost due to declining interest rates or an improvement in the credit standing
of the issuer. • Reinvestment Risk. Reinvestment risk is the risk that income from the Fund’s portfolio will decline if and when the Fund invests the proceeds from matured, traded or called fixed
income securities at market interest rates that are below the portfolio’s current earnings rate. A decline in income could affect the market price of Common Shares or overall
returns. |
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Below Investment Grade Securities Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk [Text Block] | Below Investment Grade (High-Yield or Junk Bond) Securities Risk. The Fund may invest in high-yield debt securities. Debt securities rated below investment grade are commonly
referred to as “high-yield” securities or “junk bonds” and are regarded as having predominantly speculative characteristics with respect to the issuer’s capacity to pay interest and repay principal in accordance with the terms of the obligations and involve
major risk exposure to adverse conditions. Debt securities rated C or lower by Moody’s, CCC or lower by S&P or CC or lower by Fitch or comparably rated by another nationally
recognized statistical rating organization (“NRSRO”) or, if unrated, determined by Western Asset to be of comparable quality are considered to have extremely poor prospects
of ever attaining any real investment standing, to have a current identifiable vulnerability
to default, to be unlikely to have the capacity to pay interest and repay principal when
due in the event of adverse business, financial or economic conditions and/or to be in default
or not current in the payment of interest or principal. Ratings may not accurately reflect
the actual credit risk associated with a corporate security. Debt securities rated below investment grade generally offer a higher current yield
than that available from higher grade issues, but typically involve greater risk. These
securities are especially sensitive to adverse changes in general economic conditions, to changes
in the financial condition of their issuers and to price fluctuation in response to changes
in interest rates. During periods of economic downturn or rising interest rates, issuers
of below investment grade instruments may experience financial stress that could adversely
affect their ability to make payments of principal and interest and increase the possibility
of default. The secondary market for high-yield securities may not be as liquid as the
secondary market for more highly rated securities, a factor which may have an adverse
effect on the Fund’s ability to dispose of a particular security. There are fewer dealers in the market for high-yield securities than for investment grade obligations. The prices
quoted by different dealers may vary significantly, and the spread between the bid and asked
price is generally much larger for high-yield securities than for higher quality instruments.
Under continuing adverse market or economic conditions, the secondary market for high-yield
securities could contract further, independent of any specific adverse changes in
the condition of a particular issuer, and these securities may become illiquid. In addition,
adverse publicity and investor perceptions, whether or not based on fundamental analysis,
may also decrease the values and liquidity of below investment grade securities, especially
in a market characterized by a low volume of trading.
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Foreign Securities and Emerging Markets Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk [Text Block] | Foreign Securities and Emerging Markets Risk. The Fund’s investments in securities of foreign issuers or issuers with significant exposure to foreign markets involve additional
risk as compared to investment in U.S. securities or issuers with predominantly domestic
exposure, such as less liquid, less regulated, less transparent and more volatile
markets. The markets for some foreign securities are relatively new, and the rules and policies
relating to these markets are not fully developed and may change. The value of the Fund’s investments may decline because of factors affecting the particular issuer as well
as foreign markets and issuers generally, such as unfavorable or unsuccessful government
actions, tariffs and tax disputes, reduction of government or central bank support,
inadequate accounting standards, lack of information and political, economic, financial
or social instability. Foreign investments may also be adversely affected by U.S. government
or international economic sanctions, which could eliminate the value of an investment.
To the extent the Fund focuses its investments in a single country or only a few countries
in a particular geographic region, economic, political, regulatory or other conditions
affecting such country or region may have a greater impact on Fund performance relative to a
more geographically diversified fund. The risks of foreign investment are greater for investments in emerging markets. “Emerging market country” is defined as any country which is, at the time of investment, it is (i) represented in the J.P. Morgan Emerging Markets Bond Index Global Diversified or the
J.P. Morgan Corporate Emerging Market Bond Index Broad or (ii) categorized by the World
Bank in its annual categorization as middle- or low-income. Emerging market countries typically
have economic and political systems that are less fully developed, and that can be
expected to be less stable, than those of more advanced countries. Low trading volumes may
result in a lack of liquidity and in price volatility. Emerging market countries may have policies
that restrict investment by foreigners, that require governmental approval prior to investments
by foreign persons, or that prevent foreign investors from withdrawing their money
at will. An investment in emerging market securities should be considered speculative.
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Non-U.S. Government or Sovereign Debt Securities Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk [Text Block] | Non-U.S. Government, or Sovereign, Debt Securities Risk. The Fund invests in non-U.S. government, or sovereign, debt securities. The ability of a government issuer, especially in an emerging market country, to make timely and complete payments on its debt obligations will be strongly influenced by the government issuer’s balance of payments, including export performance, its access to international credits and investments, fluctuations of interest rates and the extent of its foreign reserves. A country whose exports are concentrated in a few commodities or whose economy depends on certain strategic imports could be vulnerable to fluctuations in international prices of these commodities or imports. To the extent that a country receives payment for its exports in currencies other than U.S. dollars, its ability to make debt payments denominated in U.S. dollars could be adversely affected. If a government issuer cannot generate sufficient earnings from foreign trade to service its external debt, it may need to depend on continuing loans and aid from foreign governments, commercial banks, and multinational organizations. There are no bankruptcy proceedings similar to those in the United States by which defaulted non-U.S. government debt may be collected. Additional factors that may influence a government issuer’s ability or willingness to service debt include, but are not limited to, a country’s cash flow situation, the availability of sufficient foreign exchange on the date a payment is due, the relative size of its debt service burden to the economy as a whole, and the issuer’s policy towards the International Monetary Fund, the International Bank for Reconstruction and Development and other international agencies to which a government debtor may be subject. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign Currency Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk [Text Block] | Foreign Currency Risk. The value of investments denominated in foreign currencies increases or decreases as the rates of exchange between those currencies and the U.S. dollar change. Currency conversion costs and currency fluctuations could erase investment gains or add to investment losses. Currency exchange rates can be volatile, and are affected by factors such as general economic conditions, the actions of the U.S. and foreign governments or central banks, the imposition of currency controls and speculation. The Fund may be unable or may choose not to hedge its foreign currency exposure. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liquidity Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk [Text Block] | Liquidity Risk. The Fund may invest in illiquid securities. Illiquid securities are securities that
cannot be disposed of within seven days in the ordinary course of business at approximately the value at which the Fund has valued the securities. Liquidity risk
exists when particular investments are difficult to sell. Securities may become illiquid
after purchase by the Fund, particularly during periods of market turmoil. When the Fund
holds illiquid investments, the portfolio may be harder to value, especially in changing
markets, and if the Fund is forced to sell these investments in order to segregate assets or
for other cash needs, the Fund may suffer a loss.
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Common Stock Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk [Text Block] | Common Stock Risk. An adverse event, such as an unfavorable earnings report, may depress the value of a particular common stock held by the Fund. In addition, the prices of common stocks are sensitive to general movements in the stock market, and a drop in the stock market may depress the prices of common stocks to which the Fund has exposure. Common stock prices fluctuate for several reasons including changes in investors’ perceptions of the financial condition of an issuer or the general condition of the relevant stock market, or when political or economic events affecting an issuer occur. In addition, common stock prices may be particularly sensitive to rising interest rates, as the cost of capital rises and borrowing costs increase. The value of the common stocks in which the Fund may invest will be affected by changes in the stock markets generally, which may be the result of domestic or international political or economic news, changes in interest rates or changing investor sentiment. At times, stock markets can be volatile and stock prices can change substantially. The common stocks of smaller companies are more sensitive to these changes than those of larger companies. Common stock risk will affect the Fund’s net asset value per share, which will fluctuate as the value of the securities held by the Fund change. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred Stock Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk [Text Block] | Preferred Stock Risk. Generally, the Fund has a greater flexibility to invest in equity securities. Preferred stocks are unique securities that combine some of the characteristics of both common stocks and bonds. Preferred stocks generally pay a fixed rate of return and are sold on the basis of current yield, like bonds. However, because they are equity securities, preferred stock provides equity ownership of a company, and the income is paid in the form of dividends. Preferred stocks typically have a yield advantage over common stocks as well as comparably-rated fixed income investments. Preferred stocks are typically subordinated to bonds and other debt instruments in a company’s capital structure, in terms of priority to corporate income, and therefore will be subject to greater credit risk than those debt instruments. Unlike interest payments on debt securities, preferred stock dividends are payable only if declared by the issuer’s board of directors. Preferred stocks also may be subject to optional or mandatory redemption provisions. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Convertible Securities Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk [Text Block] | Convertible Securities Risk. A convertible security is a bond, debenture, note, preferred stock or other security that may be converted into or exchanged for a prescribed amount
of common stock or other equity security of the same or a different issuer within a particular
period of time at a specified price or formula. Before conversion, convertible securities
have characteristics similar to nonconvertible income securities in that they ordinarily
provide a stable stream of income with generally higher yields than those of common stocks of
the same or similar issuers, but lower yields than comparable nonconvertible securities.
Similar to traditional fixed income securities, the market values of convertible securities
tend to decline as interest rates increase and, conversely, to increase as interest rates
decline. However, when the market price of the common stock underlying a convertible security
exceeds the conversion price, the convertible security tends to reflect the market
price of the underlying common stock. As the market price of the underlying common stock declines,
the convertible security tends to trade increasingly on a yield basis and thus may
not decline in price to the same extent as the underlying common stock. The credit standing
of the issuer and other factors also may have an effect on the convertible security’s investment value. Convertible securities rank senior to common stock in a corporation’s capital structure but are usually subordinated to comparable nonconvertible securities. Convertible
securities may be subject to redemption at the option of the issuer at a price established in
the convertible security’s governing instrument.
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Risks of Warrants and Rights [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk [Text Block] | Risks of Warrants and Rights. Warrants and rights are subject to the same market risks as stocks, but may be more volatile in price. Warrants and rights do not carry the right to dividends or voting rights with respect to their underlying securities, and they do not represent any rights in the assets of the issuer. An investment in warrants or rights may be considered speculative. In addition, the value of a warrant or right does not necessarily change with the value of the underlying security and a warrant or right ceases to have value if it is not exercised prior to its expiration date. The purchase of warrants or rights involves the risk that the Fund could lose the purchase value of a warrant or right if the right to subscribe to additional shares is not exercised prior to the warrants’ or rights’ expiration. Also, the purchase of warrants and rights involves the risk that the effective price paid for the warrant or right added to the subscription price of the related security may exceed the value of the subscribed security’s market price such as when there is no movement in the price of the underlying security. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REITs Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Risk [Text Block] | REITs Risk. Investing in REITs involves certain unique risks in addition to those risks associated with investing in the real estate industry in general. An equity or hybrid
REIT may be affected by changes in the value of the underlying properties owned by the
REIT. A mortgage or hybrid REIT may be affected by changes in interest rates and the ability
of the issuers of its portfolio mortgages to repay their obligations. Mortgage and hybrid
REITs are subject to the risks of accelerated prepayments of mortgage pools or pass-through
securities, reliance on short-term financing and more highly leveraged capital structures.
REITs are dependent upon the skills of their managers and are not diversified. REITs are generally dependent upon maintaining cash flows to repay borrowings and
to make distributions to stockholders and are subject to the risk of default by lessees
and borrowers. REITs whose underlying assets are concentrated in properties used by a
particular industry, such as healthcare, are also subject to industry related risks.
Certain “special purpose” REITs may invest their assets in specific real estate sectors, such as hotels, nursing homes or warehouses, and are therefore subject to the risks associated
with adverse developments in any such sectors. REITs are subject to management fees and other expenses. Therefore, investments in
REITs will cause CRO to bear its proportionate share of the costs of the REITs’ operations. At the same time, CRO will continue to pay its own management fees and expenses with respect
to all of its assets, including any portion invested in REITs.
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Mortgage-Backed and Asset-Backed Securities Risks [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk [Text Block] | Mortgage-Backed and Asset-Backed Securities Risks. Mortgage-backed securities include, among other things, participation interests in pools of residential mortgage loans
purchased from individual lenders by a federal agency or originated and issued by private lenders
and involve, among others, the following risks:
• Credit and Market Risks of Mortgage-Backed Securities. Investments by the Fund in fixed rate and floating rate mortgage-backed securities will entail credit risks (i.e.,
the risk of non-payment of interest and principal) and market risks (i.e., the risk that interest
rates and other factors could cause the value of the instrument to decline). Many issuers
or servicers of mortgage-backed securities may guarantee timely payment of interest and
principal on the securities, whether or not payments are made when due on the underlying mortgages. This kind of guarantee generally increases the quality of a
security, but does not mean that the security’s market value and yield will not change. The value of all mortgage-backed securities also may change because of changes in the market’s perception of the creditworthiness of the organization that issues or guarantees them.
In addition, an unexpectedly high rate of defaults on the mortgages held by a mortgage
pool may limit substantially the pool’s ability to make payments of principal or interest to the Fund as a holder of such securities, reducing the values of those securities or in
some cases rendering them worthless. The Fund also may purchase securities that are not
guaranteed or subject to any credit support.
Like bond investments, the value of fixed rate mortgage-backed securities will tend
to rise when interest rates fall, and fall when rates rise. Floating rate mortgage-backed
securities will generally tend to have more moderate changes in price when interest rates rise
or fall, but their current yield will be affected.
In addition, the mortgage-backed securities market in general may be adversely affected
by changes in governmental legislation or regulation. Factors that could affect the value
of a mortgage-backed security include, among other things, the types and amounts of insurance
which an individual mortgage or specific mortgage-backed security carries, the default
and delinquency rate of the mortgage pool, the amount of time the mortgage loan has been
outstanding, the loan-to-value ratio of each mortgage and the amount of overcollateralization or undercollateralization of the mortgage pool.
Asset-backed securities represent participation in, or are secured by and payable
from, assets such as installment sales or loan contracts, leases, credit card receivables,
and other categories of receivables. Certain debt instruments may only pay principal at maturity
or may only represent the right to receive payments of principal or payments of interest
on underlying pools or mortgages, assets, or government securities, but not both. The
value of these types of instruments may change more drastically than debt securities that pay
both principal and interest. The Fund may obtain a below market yield or incur a loss on
such instruments during periods of declining interest rates. Principal only and interest
only instruments are subject to extension risk. For mortgage derivatives and structured
securities that have imbedded leverage features, small changes in interest or prepayment rates
may cause large and sudden price movements. Mortgage derivatives can also become illiquid
and hard to value in declining markets. • Prepayment, Extension and Redemption Risks of Mortgage-Backed Securities. Mortgage-backed securities may reflect an interest in monthly payments made by the borrowers who receive the underlying mortgage loans. Although the underlying mortgage loans
are for specified periods of time, such as 20 or 30 years, the borrowers can, and historically
have, paid them off sooner. When a prepayment happens, a portion of the mortgage-backed security which represents an interest in the underlying mortgage loan will be prepaid. A borrower is more likely to prepay a mortgage which bears a relatively high
rate of interest. This means that in times of declining interest rates, a portion of the Fund’s higher yielding securities are likely to be redeemed and the Fund will probably be
unable to replace them with securities having as great a yield. Prepayments can result in
lower yields to stockholders. The increased likelihood of prepayment when interest rates
decline also limits market price appreciation of mortgage-backed securities. This
is known as prepayment risk. Mortgage-backed securities also are subject to extension
risk. Extension risk is the possibility that rising interest rates may cause prepayments
to occur at a slower than expected rate. This particular risk may effectively change a security
which was considered short or intermediate term into a long-term security. The values
of long-term securities generally fluctuate more widely in response to changes in interest
rates than short or intermediate-term securities. In addition, a mortgage-backed security
may be subject to redemption at the option of the issuer. If a mortgage-backed security
held by the Fund is called for redemption, the Fund will be required to permit the
issuer to redeem or “pay-off” the security, which could have an adverse effect on the Fund’s ability to achieve its investment objective.
• Liquidity Risk of Mortgage-Backed Securities. The liquidity of mortgage-backed securities varies by type of security; at certain times the Fund may encounter difficulty in
disposing of such investments. Because mortgage-backed securities have the potential to be less
liquid than other securities, the Fund may be more susceptible to liquidity risks
than funds
that invest in other securities. In the past, in stressed markets, certain types of
mortgage-backed securities suffered periods of illiquidity when disfavored by the market. • Collateralized Mortgage Obligations. There are certain risks associated specifically with collateralized mortgage obligations (“CMOs”). CMOs are debt obligations collateralized by mortgage loans or mortgage pass-through securities. The average life of CMOs is
determined using mathematical models that incorporate prepayment assumptions and other factors that involve estimates of future economic and market conditions. These
estimates may vary from actual future results, particularly during periods of extreme
market volatility. Further, under certain market conditions, such as those that occurred
in 1994, 2007, 2008 and 2009, the average weighted life of certain CMOs may not accurately reflect the price volatility of such securities. For example, in periods
of supply and demand imbalances in the market for such securities and/or in periods of sharp
interest rate movements, the prices of CMOs may fluctuate to a greater extent than
would be expected from interest rate movements alone. CMOs issued by private entities
are not obligations issued or guaranteed by the United States Government, its agencies
or instrumentalities or by any government agency, although the securities underlying
a CMO may be subject to a guarantee. Therefore, if the collateral securing the CMO,
as well as any third party credit support or guarantees, is insufficient to make payments
when due, the holder could sustain a loss.
• Adjustable Rate Mortgages. Adjustable Rate Mortgages (“ARMs”) contain maximum and minimum rates beyond which the mortgage interest rate may not vary over the lifetime
of the security. In addition, many ARMs provide for additional limitations on the maximum
amount by which the mortgage interest rate may adjust for any single adjustment period.
Alternatively, certain ARMs contain limitations on changes in the required monthly
payment. In the event that a monthly payment is not sufficient to pay the interest
accruing on an ARM, any excess interest is added to the principal balance of the mortgage loan, which is repaid through future monthly payments. If the monthly payment
for such an instrument exceeds the sum of the interest accrued at the applicable mortgage interest rate and the principal payment required at such point to amortize
the outstanding principal balance over the remaining term of the loan, the excess is used
to reduce the then-outstanding principal balance of the ARM.
In addition, certain ARMs may provide for an initial fixed, below-market or “teaser” interest rate. During this initial fixed-rate period, the payment due from the related mortgagor
may be less than that of a traditional loan. However, after the “teaser” rate expires, the monthly payment required to be made by the mortgagor may increase dramatically when the interest
rate on the mortgage loan adjusts. This increased burden on the mortgagor may increase
the risk of delinquency or default on the mortgage loan and in turn, losses on the
mortgage-backed security into which that loan has been bundled.
• Interest and Principal Only Securities Risk. One type of stripped mortgage-backed security pays to one class all of the interest from the mortgage assets (the interest-only, or “IO” class), while the other class will receive all of the principal (the principal-only, or “PO” class). The yield to maturity on an IO class is extremely sensitive to the rate of
principal payments (including prepayments) on the underlying mortgage assets, and a rapid rate
of principal payments may have a material adverse effect on the Fund’s yield to maturity from these securities. If the assets underlying the IO class experience greater than
anticipated prepayments of principal, the Fund may fail to recoup fully, or at all,
its initial investment in these securities. Conversely, PO class securities tend to decline in
value if prepayments are slower than anticipated. |
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Risks of Futures and Options on Futures [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Risk [Text Block] | Risks of Futures and Options on Futures. The use by the Fund of futures contracts and options on futures contracts to hedge interest rate risks involves special considerations
and risks, as described below.
• Successful use of hedging transactions depends upon Western Asset’s ability to correctly predict the direction of changes in interest rates. There can be no assurance that
any particular hedging strategy will succeed.
• There might be imperfect correlation, or even no correlation, between the price movements of a futures or option contract and the movements of the interest rates
being hedged. Such a lack of correlation might occur due to factors unrelated to the interest
rates being hedged, such as market liquidity and speculative or other pressures on
the markets in which the hedging instrument is traded.
• Hedging strategies, if successful, can reduce risk of loss by wholly or partially
offsetting the negative effect of unfavorable movements in the interest rates being hedged. However, hedging strategies can also reduce opportunity for gain by offsetting the
positive effect of favorable movements in the hedged interest rates.
• There is no assurance that a liquid secondary market will exist for any particular
futures contract or option thereon at any particular time. If the Fund were unable to liquidate
a futures contract or an option on a futures contract position due to the absence of
a liquid secondary market or the imposition of price limits, it could incur substantial losses.
The Fund would continue to be subject to market risk with respect to the position.
• There is no assurance that the Fund will use hedging transactions. For example, if
the Fund determines that the cost of hedging will exceed the potential benefit to the
Fund, the Fund will not enter into such transactions.
Risks of Futures and Options on Futures. The use by the Fund of futures contracts and options on futures contracts to hedge interest rate risks involves special considerations
and risks, as described below.
• Successful use of hedging transactions depends upon Western Asset’s ability to correctly predict the direction of changes in interest rates. There can be no assurance that
any particular hedging strategy will succeed.
• There might be imperfect correlation, or even no correlation, between the price movements of a futures or option contract and the movements of the interest rates
being hedged. Such a lack of correlation might occur due to factors unrelated to the interest
rates being hedged, such as market liquidity and speculative or other pressures on
the markets in which the hedging instrument is traded.
• Hedging strategies, if successful, can reduce risk of loss by wholly or partially
offsetting the negative effect of unfavorable movements in the interest rates being hedged. However, hedging strategies can also reduce opportunity for gain by offsetting the
positive effect of favorable movements in the hedged interest rates.
• There is no assurance that a liquid secondary market will exist for any particular
futures contract or option thereon at any particular time. If the Fund were unable to liquidate
a futures contract or an option on a futures contract position due to the absence of
a liquid secondary market or the imposition of price limits, it could incur substantial losses.
The Fund would continue to be subject to market risk with respect to the position.
• There is no assurance that the Fund will use hedging transactions. For example, if
the Fund determines that the cost of hedging will exceed the potential benefit to the
Fund, the Fund will not enter into such transactions.
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Derivatives Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Risk [Text Block] | Derivatives Risk. The Fund may utilize a variety of derivative instruments for investment or risk management purposes, such as options, futures contracts, swap agreements and
credit default swaps. Generally derivatives are financial contracts whose value depends on,
or is derived from, the value of an underlying asset, reference rate or index, and may relate
to individual debt or equity instruments, interest rates, currencies or currency exchange
rates and related indexes. Derivatives are subject to a number of risks, such as liquidity
risk, interest rate risk, credit risk and management risk. Derivatives are also subject
to counterparty risk, which is the risk that the other party in the transaction will
not fulfill its contractual obligation. Changes in the credit quality of the companies that serve
as the Fund’s counterparties with respect to its derivative transactions will affect the value of those instruments. By using derivatives that expose the Fund to counterparties, the
Fund assumes the risk that its counterparties could experience financial hardships that
could call into question their continued ability to perform their obligations. In addition, in
the event of the insolvency of a counterparty to a derivative transaction, the derivative transaction
would typically be terminated at its fair market value. If the Fund is owed this fair
market value in the termination of the derivative transaction and its claim is unsecured,
the Fund will be treated as a general creditor of such counterparty, and will not have any
claim with respect to the underlying security. As a result, concentrations of such derivatives
in any one counterparty would subject the Fund to an additional degree of risk with respect to
defaults by such counterparty. Derivatives also involve the risk of mispricing or improper
valuation and the risk that changes in the value of a derivative may not correlate perfectly
with an underlying asset, interest rate or index. Suitable derivative transactions may not
be available in all circumstances and there can be no assurance that the Fund will engage
in these transactions to reduce exposure to other risks when that would be beneficial.
If the Fund invests in a derivative instrument, it could lose more than the principal amount
invested. Derivative instruments can be illiquid, may disproportionately increase
losses and may have a potentially large impact on the Fund’s performance. Registered investment companies are subject to regulatory limitations on their use
of derivative investments and certain financing transactions (e.g. reverse repurchase
agreements) by registered investment companies. Among other things, Rule 18f-4 requires
funds that invest in derivative instruments beyond a specified limited amount to apply
a value at risk (VaR) based limit to their use of certain derivative instruments and
financing transactions and to adopt and implement a derivatives risk management program. A fund
that uses derivative instruments in a limited amount is not subject to the full requirements
of Rule 18f-4. Compliance with Rule 18f-4 by the Fund could, among other things, make
derivatives more costly, limit their availability or utility, or otherwise adversely
affect their performance. Rule 18f-4 may limit the Fund’s ability to use derivatives as part of its investment strategy and may not work as intended to limit losses from derivatives.
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Credit Default Swap Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Risk [Text Block] | Credit Default Swap Risk. The Fund may invest in credit default swap transactions for hedging or investment purposes. Credit default swap agreements involve greater risks
than if the Fund had invested in the reference obligation directly since, in addition to
general market risks, credit default swaps are subject to illiquidity risk, counterparty risk
and credit risk. The “buyer” in a credit default contract is obligated to pay the “seller” a periodic stream of payments over the term of the contract, provided that no event of default
on an underlying reference obligation has occurred. If an event of default occurs, the seller
must pay the buyer the full notional value, or “par value,” of the reference obligation through either physical settlement or cash settlement. The Fund may be either the buyer or
seller in a credit default swap transaction. If the Fund is a buyer and no event of default
occurs, the Fund will have made a series of periodic payments and recover nothing of monetary
value. However, if an event of default occurs, the Fund (if the buyer) will receive the full
notional value of the reference obligation either through a cash payment in exchange for the
asset or a cash payment in addition to owning the reference assets. As a seller, the Fund receives
a fixed rate of income throughout the term of the contract, which typically is between
six months and five years, provided that there is no event of default. The sale of a credit
default swap is a form of leverage. The Fund currently segregates assets on the Fund’s records in the form of cash, cash equivalents or liquid securities in an amount equal
to the notional value of the credit default swaps of which it is the seller or otherwise
covers such obligations. If such assets are not fully segregated or otherwise covered by the Fund,
the use of credit default swap transactions could then be considered senior securities
for purposes of the 1940 Act. Recent market developments related to credit default swaps
have prompted increased scrutiny with respect to these instruments. As a result of the
Dodd-Frank Wall Street Reform and Consumer Protection Act, credit default swaps may in the future be subject to increased regulation. Such regulation may limit the Fund’s ability to use credit default swaps. Although the Fund will seek to realize gains by writing credit
default swaps that increase in value, to realize gains on writing credit default swaps, an
active secondary market for such instruments must exist or the Fund must otherwise be able
to close out these transactions at advantageous times. If no such secondary market exists
or the Fund is otherwise unable to close out these transactions at advantageous times,
writing credit default swaps may not be profitable for the Fund. The market for credit default swaps has become more volatile in recent years as the
creditworthiness of certain counterparties has been questioned and/or downgraded.
If a counterparty’s credit becomes significantly impaired, multiple requests for collateral posting in a short period of time could increase the risk that the Fund may not receive adequate
collateral. The Fund may exit its obligations under a credit default swap only by
terminating the contract and paying applicable breakage fees, or by entering into an offsetting
credit default swap position, which may cause the Fund to incur more losses.
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Repurchase Agreements Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Risk [Text Block] | Repurchase Agreements Risk. Subject to its investment objective and policies, the Fund may invest in repurchase agreements for leverage or investment purposes. Repurchase
agreements typically involve the acquisition by the Fund of debt securities from a
selling financial institution such as a bank, savings and loan association or broker-dealer.
The agreement provides that the Fund will sell the securities back to the institution
at a fixed time in the future. The Fund does not bear the risk of a decline in the value of the
underlying security unless the seller defaults under its repurchase obligation. In the event
of the bankruptcy or other default of a seller of a repurchase agreement, the Fund could
experience both delays in liquidating the underlying securities and losses, including
(1) possible decline in the value of the underlying security during the period in which
the Fund seeks to enforce its rights thereto; (2) possible lack of access to income on the
underlying security during this period; and (3) expenses of enforcing its rights. While repurchase
agreements involve certain risks not associated with direct investments in debt securities,
the Fund follows procedures approved by the Fund’s Board of Directors that are designed to minimize such risks. These procedures include effecting repurchase transactions only
with large, well-capitalized and well-established financial institutions whose financial
condition will be continually monitored by Western Asset. In addition, as described above, the
value of the collateral underlying the repurchase agreement will be at least equal to the
repurchase price, including any accrued interest earned on the repurchase agreement.
In the event of a default or bankruptcy by a selling financial institution, the Fund
generally will seek to liquidate such collateral. However, the exercise of the Fund’s right to liquidate such collateral could involve certain costs or delays and, to the extent that proceeds
from any sale upon a default of the obligation to repurchase were less than the repurchase
price, the Fund could suffer a loss.
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Reverse Repurchase Agreements Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Risk [Text Block] | Reverse Repurchase Agreements Risk. The Fund’s use of reverse repurchase agreements involves many of the same risks involved in the Fund’s use of leverage, as the proceeds from reverse repurchase agreements generally will be invested in additional securities. There is a risk that the market value of the securities acquired in the reverse repurchase agreement may decline below the price of the securities that the Fund has sold but remains obligated to repurchase. In addition, there is a risk that the market value of the securities retained by the Fund may decline. If the buyer of securities under a reverse repurchase agreement were to file for bankruptcy or experience insolvency, the Fund may be adversely affected. Also, in entering into reverse repurchase agreements, the Fund would bear the risk of loss to the extent that the proceeds of the reverse repurchase agreement are less than the value of the underlying securities. In addition, due to the interest costs associated with reverse repurchase agreements transactions, the Fund’s net asset value will decline, and, in some cases, the Fund may be worse off than if it had not used such instruments. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Senior Loans Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk [Text Block] | Senior Loans Risk. The Fund may invest in first lien senior secured loans (“Senior Loans”) issued by banks, other financial institutions, and other investors to corporations,
partnerships, limited liability companies and other entities to finance leveraged
buyouts, recapitalizations, mergers, acquisitions, stock repurchases, debt refinancings and,
to a lesser extent, for general operating and other purposes. An investment in Senior Loans
involves risk that the borrowers under Senior Loans may default on their obligations
to pay principal or interest when due. In the event a borrower fails to pay scheduled interest
or principal payments on a Senior Loan held by the Fund, the Fund will experience a reduction
in its income and a decline in the market value of the Senior Loan, which will likely
reduce dividends and lead to a decline in the net asset value of the Fund. If the Fund acquires
a Senior Loan from another lender, for example, by acquiring a participation, the Fund
may also be subject to credit risk with respect to that lender. The Fund will generally invest in Senior Loans that are secured with specific collateral.
However, there can be no assurance that liquidation of collateral would satisfy the
borrower’s obligation in the event of non-payment or that such collateral could be readily liquidated. In the event of the bankruptcy of a borrower, the Fund could experience
delays and limitations on its ability to realize the benefits of the collateral securing
the Senior Loan. Senior Loans are typically structured as floating rate instruments in which
the interest rate payable on the obligation fluctuates with interest rate changes. As a result,
the yield on Senior Loans will generally decline in a falling interest rate environment causing
the Fund to experience a reduction in the income it receives from a Senior Loan. Senior
Loans are generally of below investment grade quality and may be unrated at the time of
investment; are generally not registered with the SEC or state securities commissions;
and are generally not listed on any securities exchange. In addition, the amount of public
information available on Senior Loans is generally less extensive than that available
for other types of assets.
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Second Lien Loans Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk [Text Block] | Second Lien Loans Risk. Second senior secured lien loans (“Second Lien Loans”) generally are subject to similar risks as those associated with investments in Senior Loans. Because Second Lien Loans are subordinated or unsecured and thus lower in priority of payment to Senior Loans, they are subject to the additional risk that the cash flow of the borrower and property securing the loan or debt, if any, may be insufficient to meet scheduled payments after giving effect to the senior secured obligations of the borrower. This risk is generally higher for subordinated unsecured loans or debt, which are not backed by a security interest in any specific collateral. Second Lien Loans generally have greater price volatility than Senior Loans and may be less liquid. There is also a possibility that originators will not be able to sell participations in Second Lien Loans, which would create greater credit risk exposure for the holders of such loans. Second Lien Loans share the same risks as other below investment grade securities. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loan Participations and Assignments Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk [Text Block] | Loan Participations and Assignments Risk. The Fund may invest in participations in loans or assignments of all or a portion of loans from third parties. In connection with purchasing participations, the Fund generally will have no right to enforce compliance by the borrower with the terms of the loan agreement relating to the loan, nor any rights of set-off against the borrower, and the Fund may not directly benefit from any collateral supporting the loan in which it has purchased the participation. As a result, the Fund may be subject to the credit risk of both the borrower and the lender that is selling the participation. In the event of the insolvency of the lender selling a participation, the Fund may be treated as a general creditor of the lender and may not benefit from any set-off between the lender and the borrower. Certain participations may be structured in a manner designed to avoid purchasers of participations being subject to the credit risk of the lender with respect to the participation, but even under such a structure, in the event of the lender’s insolvency, the lender’s servicing of the participation may be delayed and the assignability of the participation impaired. The Fund will acquire participations only if the lender interpositioned between the Fund and the borrower is determined by Western Asset to be creditworthy. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Smaller Company Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk [Text Block] | Smaller Company Risk. The general risks associated with income-producing securities are particularly pronounced for securities issued by companies with smaller market capitalizations. These companies may have limited product lines, markets or financial
resources or they may depend on a few key employees. As a result, they may be subject
to greater levels of credit, market and issuer risk. Securities of smaller companies
may trade less frequently and in lesser volume than more widely held securities and their values
may fluctuate more sharply than other securities. Companies with medium-sized market capitalizations may have risks similar to those of smaller companies.
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Management Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk [Text Block] | Management Risk. The Fund is subject to management risk because it is an actively managed investment portfolio. Western Asset, Western Asset Management Company Pte. Ltd. in Singapore (“Western Singapore”) and Western Asset Management Company Limited in London (“Western Asset London”, together with Western Singapore, the “Non-U.S. Subadvisers” and individually, each a “Non-U.S. Subadviser”) and each individual investment professional may not be successful in selecting the best performing securities or investment techniques, and the Fund’s performance may lag behind that of similar funds. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Potential Conflicts Of Interest Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk [Text Block] | Potential Conflicts of Interest Risk. FTFA, Western Asset, the Non-U.S. Subadvisers (together with FTFA and Western Asset, the “Managers”) and the Fund’s investment professionals have interests which may conflict with the interests of the Fund. In particular, FTFA also manages, and Western Asset serves as subadviser to, another closed-end investment company listed on the NYSE that has an investment objective and investment strategies that are substantially similar to the Fund. Further, the Managers may at some time in the future manage and/or advise other investment funds or accounts with the same investment objective and strategies as the Fund. As a result, the Managers and the Fund’s investment professionals may devote unequal time and attention to the management of the Fund and those other funds and accounts, and may not be able to formulate as complete a strategy or identify equally attractive investment opportunities as might be the case if they were to devote substantially more attention to the management of the Fund. The Managers and the Fund’s investment professionals may identify a limited investment opportunity that may be suitable for multiple funds and accounts, and the opportunity may be allocated among these several funds and accounts, which may limit the Fund’s ability to take full advantage of the investment opportunity. Additionally, transaction orders may be aggregated for multiple accounts for purpose of execution, which may cause the price or brokerage costs to be less favorable to the Fund than if similar transactions were not being executed concurrently for other accounts. At times, an investment professional may determine that an investment opportunity may be appropriate for only some accounts for which he or she exercises investment responsibility, or may decide that certain accounts should take differing positions with respect to a particular security. In these cases, the investment professional may place separate transactions for one or more funds or accounts which may affect the market price of the security or the execution of the transaction, or both, to the detriment or benefit of one or more other funds and accounts. For example, an investment professional may determine that it would be in the interest of another account to sell a security that the Fund holds, potentially resulting in a decrease in the market value of the security held by the Fund. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rating Agency Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk [Text Block] | Rating Agency Risk. Credit ratings are issued by rating agencies which are private services that provide ratings of the credit quality of debt obligations, including convertible
securities. Ratings assigned by a rating agency are not absolute standards of credit quality and
do not evaluate market risks or the liquidity of securities. Rating agencies may fail to
make timely changes in credit ratings and an issuer’s current financial condition may be better or worse than a rating indicates. In addition, in recent years there have been instances in
which the initial rating assigned by a rating agency to a security failed to take account of
adverse economic developments which subsequently occurred, leading to losses that were not
anticipated based on the initial rating. To the extent that the issuer of a security
pays a rating agency for the analysis of its security, an inherent conflict of interest may
exist that could affect the reliability of the rating. The ratings of a debt security may change
over time. As a result, debt instruments held by the Fund could receive a higher rating
or a lower rating during the period in which they are held. The Fund will not necessarily sell
a security when its rating is reduced below its rating at the time of purchase. Investments in mortgage-related securities may involve particularly high levels of
risk under current market conditions.
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Inflation/Deflation Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk [Text Block] | Inflation/Deflation Risk. Inflation risk is the risk that the value of certain assets or income from the Fund’s investments will be worth less in the future as inflation decreases the value of money. As inflation increases, the real value of the Common Stock and distributions on the Common Stock can decline. In addition, during any periods of rising inflation, the dividend rates or borrowing costs associated with the Fund’s use of leverage would likely increase, which would tend to further reduce returns to stockholders. Deflation risk is the risk that prices throughout the economy decline over time—the opposite of inflation. Deflation may have an adverse effect on the creditworthiness of issuers and may make issuer defaults more likely, which may result in a decline in the value of the Fund’s portfolio. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Counterparty Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk [Text Block] | Counterparty Risk. If an issuer or guarantor of a security held by the Fund or a counterparty to a financial contract with the Fund defaults or its credit is downgraded, or is perceived to be less creditworthy, or if the value of the assets underlying a security declines, the value of your investment will typically decline. Changes in actual or perceived creditworthiness may occur quickly. The Fund could be delayed or hindered in its enforcement of rights against an issuer, guarantor or counterparty. Subordinated securities are more likely to suffer a credit loss than non-subordinated securities of the same issuer and will be disproportionately affected by a default, downgrade or perceived decline in creditworthiness. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
When Issued and Delayed Delivery Transactions Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk [Text Block] | When-Issued and Delayed-Delivery Transactions Risk. The Fund may purchase fixed income securities on a when-issued basis, and may purchase or sell those securities for delayed
delivery. When-issued and delayed-delivery transactions occur when securities are
purchased or sold by the Fund with payment and delivery taking place in the future
to secure an advantageous yield or price. Securities purchased on a when-issued or delayed-delivery basis may expose the Fund to counterparty risk of default as well as the risk that
securities may experience fluctuations in value prior to their actual delivery. The
Fund will not accrue income with respect to a when-issued or delayed-delivery security prior
to its stated delivery date. Purchasing securities on a when-issued or delayed-delivery basis
can involve the additional risk that the price or yield available in the market when the
delivery takes place may not be as favorable as that obtained in the transaction itself.
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Leverage Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk [Text Block] | Leverage Risk. The Fund may use leverage through borrowings, including loans from certain financial institutions and/or the issuance of debt securities, and through the issuance of preferred stock. The Fund may use leverage through borrowings in an aggregate amount of up to approximately 33 1/3% of the Fund’s total assets less all liabilities and indebtedness not represented by senior securities (for these purposes, “total net assets”) immediately after such borrowings. Furthermore, the Fund may use leverage through the issuance of preferred stock in an aggregate amount of liquidation preference attributable to the preferred stock combined with the aggregate amount of any borrowings of up to approximately 50% of the Fund’s total net assets immediately after such issuance. The value of your investment may be more volatile if the Fund borrows or uses instruments, such as derivatives, that have a leveraging effect on the Fund’s portfolio. The Fund may also have to sell assets at inopportune times to satisfy its obligations created by the use of leverage or derivatives. The use of leverage is considered to be a speculative investment practice and may result in the loss of a substantial amount, and possibly all, of the Fund’s assets. In addition, the Fund’s portfolio will be leveraged if it exercises its right to delay payment on a redemption, and losses will result if the value of the Fund’s assets declines between the time a redemption request is deemed to be received by the Fund and the time the Fund liquidates assets to meet redemption requests. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio Turnover Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk [Text Block] | Portfolio Turnover Risk. The Fund’s annual portfolio turnover rate may vary greatly from year to year. Changes to the investments of the Fund may be made regardless of the length of time particular investments have been held. A high portfolio turnover rate may result in increased transaction costs for the Fund in the form of increased dealer spreads and other transactional costs, which may have an adverse impact on the Fund’s performance. In addition, high portfolio turnover may result in the realization of net short-term capital gains by the Fund which, when distributed to stockholders, will be taxable as ordinary income. A high portfolio turnover may increase the Fund’s current and accumulated earnings and profits, resulting in a greater portion of the Fund’s distributions being treated as a dividend to the Fund’s stockholders. The portfolio turnover rate of the Fund will vary from year to year, as well as within a given year. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Temporary Defensive Strategies Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk [Text Block] | Temporary Defensive Strategies Risk. When Western Asset anticipates unusual market or other conditions, the Fund may temporarily depart from its principal investment strategies
as a defensive measure and invest all or a portion of its assets in obligations of
the U.S. government, its agencies or instrumentalities; other investment grade debt securities;
investment grade commercial paper; certificates of deposit and bankers’ acceptances; repurchase agreements with respect to any of the foregoing investments or any other
fixed income securities that Western Asset considers consistent with this strategy. To the
extent that the Fund invests defensively, it may not achieve its investment objectives.
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Market Price Discount From Net Asset Value Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk [Text Block] | Market Price Discount from Net Asset Value Risk. Shares of closed-end investment companies frequently trade at a discount from their net asset value. This risk is separate and distinct from the risk that the Fund’s net asset value could decrease as a result of its investment activities and may be a greater risk to investors expecting to sell their Common Shares in a relatively short period. Whether investors will realize gains or losses upon the sale of Common Shares will depend not upon the Fund’s net asset value but upon whether the market price of Common Shares at the time of sale is above or below the investor’s purchase price for Common Shares. Because the market price of Common Shares will be determined by factors such as relative supply of and demand for Common Shares in the market, general market and economic conditions and other factors beyond the control of the Fund, the Fund cannot predict whether Common Shares will trade at, above or below net asset value. The Common Shares are designed primarily for long-term investors and you should not view the Fund as a vehicle for trading purposes. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Anti-Takeover Provisions [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Risk [Text Block] | Anti-Takeover Provisions. The Fund’s Charter and Bylaws include provisions that are designed to limit the ability of other entities or persons to acquire control of the Fund for short-term objectives, including by converting the Fund to open-end status or changing the composition of the Board, that may be detrimental to the Fund’s ability to achieve its primary investment objective. The Fund’s Bylaws also contains a provision providing that the Fund is subject to the provisions of the Maryland Control Share Acquisition Act. There can be no assurance, however, that such provisions will be sufficient to deter professional arbitrageurs that seek to cause the Fund to take actions that may not be consistent with its investment objective or aligned with the interests of long-term shareholders, such as liquidating debt investments prior to maturity, triggering taxable events for shareholders and decreasing the size of the Fund. Such provisions may limit the ability of shareholders to sell their shares at a premium over prevailing market prices by discouraging a third party from seeking to obtain control of the Fund. There can be no assurance, however, that such provisions will be sufficient to deter activist investors that seek to cause the Fund to take actions that may not be aligned with the interests of long-term shareholders. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Market Events Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk [Text Block] | Market Events Risk. The market values of securities or other assets will fluctuate, sometimes sharply and unpredictably, due to factors such as economic events, governmental actions or intervention, actions taken by the U.S. Federal Reserve or
foreign central banks, market disruptions caused by trade disputes, labor strikes or other
factors, political developments, armed conflicts, economic sanctions and countermeasures in
response to sanctions, major cybersecurity events, the global and domestic effects
of widespread or local health, weather or climate events, and other factors that may
or may not be related to the issuer of the security or other asset. Economies and financial
markets throughout the world are increasingly interconnected. Economic, financial or political
events, trading and tariff arrangements, public health events, terrorism, wars, natural
disasters and other circumstances in one country or region could have profound impacts
on global economies or markets. As a result, whether or not the fund invests in securities
of issuers located in or with significant exposure to the countries or markets directly
affected, the value and liquidity of the fund’s investments may be negatively affected. Following Russia’s invasion of Ukraine in 2022, Russian stocks lost all, or nearly all, of their market value. Other securities or markets could be similarly affected by past or future geopolitical
or other events or conditions. Furthermore, events involving limited liquidity, defaults,
non-performance or other adverse developments that affect one industry, such as the financial services industry, or concerns or rumors about any events of these kinds, have in
the past and may in the future lead to market-wide liquidity problems, may spread to other
industries, and could negatively affect the value and liquidity of the fund’s investments.
The long-term impact of the COVID-19 pandemic and its subsequent variants on economies,
markets, industries and individual issuers is not known. Some sectors of the economy
and individual issuers have experienced or may experience particularly large losses. Periods
of extreme volatility in the financial markets, reduced liquidity of many instruments,
increased government debt, inflation, and disruptions to supply chains, consumer demand and
employee availability, may continue for some time. The U.S. government and the Federal
Reserve, as well as certain foreign governments and central banks, took extraordinary
actions to support local and global economies and the financial markets in response
to the COVID-19 pandemic. This and other government intervention into the economy and financial
markets may not work as intended, and have resulted in a large expansion of government
deficits and debt, the long term consequences of which are not known. In addition,
the COVID-19 pandemic, and measures taken to mitigate its effects, could result in disruptions
to the services provided to the fund by its service providers.
Raising the ceiling on U.S. government debt has become increasingly politicized. Any
failure to increase the total amount that the U.S. government is authorized to borrow could
lead to a default on U.S. government obligations, with unpredictable consequences for economies
and markets in the U.S. and elsewhere. Recently, inflation and interest rates have
increased and may rise further. These circumstances could adversely affect the value and liquidity
of the fund’s investments, impair the fund’s ability to satisfy redemption requests, and negatively impact the fund’s performance.
The United States and other countries are periodically involved in disputes over trade
and other matters, which may result in tariffs, investment restrictions and adverse impacts
on affected companies and securities. For example, the United States has imposed tariffs
and other trade barriers on Chinese exports, has restricted sales of certain categories
of goods to China, and has established barriers to investments in China. Trade disputes may
adversely affect the economies of the United States and its trading partners, as well
as companies directly or indirectly affected and financial markets generally. The United
States government has prohibited U.S. persons from investing in Chinese companies designated
as related to the Chinese military. These and possible future restrictions could limit the fund’s opportunities for investment and require the sale of securities at a loss or make
them illiquid. Moreover, the Chinese government is involved in a longstanding dispute with
Taiwan that has included threats of invasion. If the political climate between the
United States and China does not improve or continues to deteriorate, if China were
to attempt unification of Taiwan by force, or if other geopolitical conflicts develop
or get worse, economies, markets and individual securities may be severely affected both
regionally and globally, and the value of the fund’s assets may go down.
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Valuation Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk [Text Block] | Valuation Risk. The sales price the Fund could receive for any particular portfolio investment may differ from the Fund’s valuation of the investment, particularly for securities that trade in thin or volatile markets or that are valued using a fair value methodology. These differences may increase significantly and affect Fund investments more broadly during periods of market volatility. The Fund’s ability to value its investments may be impacted by technological issues and/or errors by pricing services or other third party service providers. The valuation of the Fund’s investments involves subjective judgment. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operational Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk [Text Block] | Operational Risk. The valuation of the Fund’s investments may be negatively impacted because of the operational risks arising from factors such as processing errors and human errors, inadequate or failed internal or external processes, failures in systems and technology, changes in personnel, and errors caused by third party service providers or trading counterparties. It is not possible to identify all of the operational risks that may affect the Fund or to develop processes and controls that completely eliminate or mitigate the occurrence of such failures. The Fund and its shareholders could be negatively impacted as a result. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cybersecurity Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk [Text Block] | Cybersecurity Risk. Like other funds and business enterprises, the fund, the manager, the subadvisers, Authorized Participants, the relevant listing exchange and their service
providers are subject to the risk of cyber incidents occurring from time to time.
Cybersecurity incidents, whether intentionally caused by third parties or otherwise,
may allow an unauthorized party to gain access to fund assets, fund or customer data (including
private shareholder information) or proprietary information, cause the fund, the manager,
the subadvisers, Authorized Participants, the relevant listing exchange and/or their
service providers (including, but not limited to, fund accountants, custodians, sub-custodians,
transfer agents and financial intermediaries) to suffer data breaches, data corruption
or loss of operational functionality, or prevent fund investors from purchasing, redeeming
or exchanging shares, receiving distributions or receiving timely information regarding
the fund or their investment in the fund. The fund, the manager, and the subadvisers have
limited ability to prevent or mitigate cybersecurity incidents affecting third party
service providers, and such third party service providers may have limited indemnification
obligations to the fund, the manager, and/or the subadvisers. Cybersecurity incidents
may result in financial losses to the fund and its shareholders, and substantial costs
may be incurred in order to prevent or mitigate any future cybersecurity incidents. Issuers
of securities in which the fund invests are also subject to cybersecurity risks, and
the value of these securities could decline if the issuers experience cybersecurity incidents.
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Common Shares [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Annual Expenses [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Transaction Fees, Note [Text Block] | to Common Shares |
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General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lowest Price or Bid | $ 6.74 | $ 6.85 | $ 6.05 | $ 6.86 | $ 6.65 | $ 6.71 | $ 6.34 | $ 7.01 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Highest Price or Bid | 7.15 | 7.37 | 7.35 | 7.72 | 7.77 | 7.72 | 7.41 | 7.82 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lowest Price or Bid, NAV | 7.15 | 7.21 | 6.81 | 7.16 | 7.14 | 7.61 | 7.24 | 7.69 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Highest Price or Bid, NAV | $ 7.46 | $ 7.47 | $ 7.29 | $ 7.44 | $ 7.50 | $ 8.12 | $ 7.77 | $ 8.37 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Highest Price or Bid, Premium (Discount) to NAV [Percent] | (4.16%) | (1.34%) | 0.82% | 3.76% | 3.60% | (4.93%) | (4.63%) | (6.57%) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lowest Price or Bid, Premium (Discount) to NAV [Percent] | (5.73%) | (4.99%) | (11.16%) | (4.19%) | (6.86%) | (11.83%) | (12.43%) | (8.84%) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share Price | $ 6.96 | $ 6.96 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NAV Per Share | $ 7.17 | $ 7.17 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Latest Premium (Discount) to NAV [Percent] | 2.93% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capital Stock, Long-Term Debt, and Other Securities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outstanding Security, Held [Shares] | 22,724,807 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Senior Securities [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Highlights [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Senior Securities Amount | $ 70,000,000 | $ 70,000,000 | $ 70,000,000 | $ 70,000,000 | $ 77,000,000 | $ 85,500,000 | $ 158,000,000 | $ 180,000,000 | $ 168,000,000 | $ 171,000,000 | $ 120,000,000 | $ 125,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Senior Securities Coverage per Unit | $ 3,328 | $ 3,315 | $ 3,328 | $ 3,315 | $ 3,505 | $ 3,829 | $ 3,706 | $ 3,583 | $ 3,829 | $ 3,992 | $ 3,729 | $ 4,062 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Senior Securities Average Market Value per Unit |
1 Year Western Asset Global Hig... Chart |
1 Month Western Asset Global Hig... Chart |
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