|
|
|
Western Asset Global Corporate Defined Opportunity Fund Inc. 2020 Annual Report
|
|
27
|
Statement of assets and liabilities
October 31, 2020
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
Investments, at value (Cost $350,737,258)
|
|
$
|
382,100,070
|
|
Foreign currency, at value (Cost $763,382)
|
|
|
748,185
|
|
Cash
|
|
|
42,475
|
|
Interest receivable
|
|
|
4,472,344
|
|
Receivable for securities sold
|
|
|
633,150
|
|
Unrealized appreciation on forward foreign currency contracts
|
|
|
8,762
|
|
Deposits with brokers for futures contracts
|
|
|
11
|
|
Prepaid expenses
|
|
|
5,694
|
|
Total Assets
|
|
|
388,010,691
|
|
|
|
Liabilities:
|
|
|
|
|
Loan payable (Note 5)
|
|
|
90,000,000
|
|
Payable for open reverse repurchase agreements (Note 3)
|
|
|
20,718,125
|
|
Payable for securities purchased
|
|
|
7,598,961
|
|
Distributions payable
|
|
|
1,508,781
|
|
Investment management fee payable
|
|
|
258,415
|
|
Unrealized depreciation on forward foreign currency contracts
|
|
|
236,016
|
|
Interest expense payable
|
|
|
15,500
|
|
Directors fees payable
|
|
|
4,541
|
|
Accrued expenses
|
|
|
55,314
|
|
Total Liabilities
|
|
|
120,395,653
|
|
Total Net Assets
|
|
$
|
267,615,038
|
|
|
|
Net Assets:
|
|
|
|
|
Par value ($0.001 par value; 14,938,426 shares issued and outstanding; 100,000,000 shares authorized)
|
|
$
|
14,938
|
|
Paid-in capital in excess of par value
|
|
|
272,811,068
|
|
Total distributable earnings (loss)
|
|
|
(5,210,968)
|
|
Total Net Assets
|
|
$
|
267,615,038
|
|
|
|
Shares Outstanding
|
|
|
14,938,426
|
|
|
|
Net Asset Value
|
|
$
|
17.91
|
|
See Notes to Financial
Statements.
|
|
|
28
|
|
Western Asset Global Corporate Defined Opportunity Fund Inc. 2020 Annual Report
|
Statement of operations
For the Year Ended October 31, 2020
|
|
|
|
|
|
|
Investment Income:
|
|
|
|
|
Interest
|
|
$
|
20,472,128
|
|
Dividends
|
|
|
52,361
|
|
Less: Foreign taxes withheld
|
|
|
(34,848)
|
|
Total Investment Income
|
|
|
20,489,641
|
|
|
|
Expenses:
|
|
|
|
|
Investment management fee (Note 2)
|
|
|
2,970,229
|
|
Interest expense (Notes 3 and 5)
|
|
|
1,709,876
|
|
Legal fees
|
|
|
100,305
|
|
Transfer agent fees
|
|
|
96,955
|
|
Directors fees
|
|
|
94,963
|
|
Audit and tax fees
|
|
|
58,088
|
|
Fund accounting fees
|
|
|
34,045
|
|
Shareholder reports
|
|
|
21,772
|
|
Custody fees
|
|
|
19,296
|
|
Stock exchange listing fees
|
|
|
14,522
|
|
Insurance
|
|
|
4,506
|
|
Commitment fees (Note 5)
|
|
|
2,611
|
|
Miscellaneous expenses
|
|
|
6,931
|
|
Total Expenses
|
|
|
5,134,099
|
|
Less: Fee waivers and/or expense reimbursements (Note 2)
|
|
|
(9,247)
|
|
Net Expenses
|
|
|
5,124,852
|
|
Net Investment Income
|
|
|
15,364,789
|
|
|
|
Realized and Unrealized Gain (Loss) on Investments, Futures Contracts, Forward Foreign Currency Contracts and Foreign Currency
Transactions (Notes 1, 3 and 4):
|
|
|
|
|
Net Realized Gain (Loss) From:
|
|
|
|
|
Investment transactions
|
|
|
(9,326,281)
|
|
Futures contracts
|
|
|
(54,670)
|
|
Forward foreign currency contracts
|
|
|
995,441
|
|
Foreign currency transactions
|
|
|
5,528
|
|
Net Realized Loss
|
|
|
(8,379,982)
|
|
Change in Net Unrealized Appreciation (Depreciation) From:
|
|
|
|
|
Investments
|
|
|
4,229,790
|
|
Forward foreign currency contracts
|
|
|
(510,683)
|
|
Foreign currencies
|
|
|
(6,658)
|
|
Change in Net Unrealized Appreciation (Depreciation)
|
|
|
3,712,449
|
|
Net Loss on Investments, Futures Contracts, Forward Foreign Currency Contracts and Foreign Currency Transactions
|
|
|
(4,667,533)
|
|
Increase in Net Assets From Operations
|
|
$
|
10,697,256
|
|
See Notes to Financial
Statements.
|
|
|
Western Asset Global Corporate Defined Opportunity Fund Inc. 2020 Annual Report
|
|
29
|
Statements of changes in net assets
|
|
|
|
|
|
|
|
|
For the Years Ended October 31,
|
|
2020
|
|
|
2019
|
|
|
|
|
Operations:
|
|
|
|
|
|
|
|
|
Net investment income
|
|
$
|
15,364,789
|
|
|
$
|
14,806,272
|
|
Net realized loss
|
|
|
(8,379,982)
|
|
|
|
(7,321,182)
|
|
Change in net unrealized appreciation (depreciation)
|
|
|
3,712,449
|
|
|
|
25,888,329
|
|
Increase in Net Assets From Operations
|
|
|
10,697,256
|
|
|
|
33,373,419
|
|
|
|
|
Distributions to Shareholders From (Note 1):
|
|
|
|
|
|
|
|
|
Total distributable earnings
|
|
|
(15,153,634)
|
|
|
|
(10,365,786)
|
|
Return of capital
|
|
|
(2,952,592)
|
|
|
|
(7,742,148)
|
|
Decrease in Net Assets From Distributions to
Shareholders
|
|
|
(18,106,226)
|
|
|
|
(18,107,934)
|
|
|
|
|
Fund Share Transactions:
|
|
|
|
|
|
|
|
|
Cost of shares repurchased (2,114 and 0 shares repurchased, respectively) (Note 7)
|
|
|
(26,011)
|
|
|
|
|
|
Decrease in Net Assets From Fund Share Transactions
|
|
|
(26,011)
|
|
|
|
|
|
Increase (Decrease) in Net Assets
|
|
|
(7,434,981)
|
|
|
|
15,265,485
|
|
|
|
|
Net Assets:
|
|
|
|
|
|
|
|
|
Beginning of year
|
|
|
275,050,019
|
|
|
|
259,784,534
|
|
End of year
|
|
$
|
267,615,038
|
|
|
$
|
275,050,019
|
|
See Notes to Financial
Statements.
|
|
|
30
|
|
Western Asset Global Corporate Defined Opportunity Fund Inc. 2020 Annual Report
|
Statement of cash flows
For the Year Ended October 31, 2020
|
|
|
|
|
|
|
Increase (Decrease) in Cash:
|
|
|
|
|
Cash Flows from Operating Activities:
|
|
|
|
|
Net increase in net assets resulting from operations
|
|
$
|
10,697,256
|
|
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided (used) by operating
activities:
|
|
|
|
|
Purchases of portfolio securities
|
|
|
(192,928,575)
|
|
Sales of portfolio securities
|
|
|
185,227,497
|
|
Net purchases, sales and maturities of short-term investments
|
|
|
(727,379)
|
|
Net amortization of premium (accretion of discount)
|
|
|
(2,242,260)
|
|
Decrease in receivable for securities sold
|
|
|
70,069
|
|
Decrease in interest receivable
|
|
|
100,600
|
|
Decrease in prepaid expenses
|
|
|
2,193
|
|
Increase in payable for securities purchased
|
|
|
3,447,502
|
|
Increase in investment management fee payable
|
|
|
3,656
|
|
Decrease in Directors fees payable
|
|
|
(271)
|
|
Decrease in interest expense payable
|
|
|
(217,511)
|
|
Decrease in accrued expenses
|
|
|
(8,675)
|
|
Net realized loss on investments
|
|
|
9,326,281
|
|
Change in net unrealized appreciation (depreciation) of investments and forward foreign currency
contracts
|
|
|
(3,719,107)
|
|
Net Cash Provided in Operating Activities*
|
|
|
9,031,276
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
Distributions paid on common stock (net of distributions payable)
|
|
|
(18,106,440)
|
|
Proceeds from loan facility borrowings
|
|
|
5,000,000
|
|
Prepayment from loan facility borrowings
|
|
|
(3,000,000)
|
|
Increase in payable for reverse repurchase agreements
|
|
|
7,483,750
|
|
Payment for shares repurchased
|
|
|
(26,011)
|
|
Net Cash Used by Financing Activities
|
|
|
(8,648,701)
|
|
Net Increase in Cash and Restricted Cash
|
|
|
382,575
|
|
Cash and restricted cash at beginning of year
|
|
|
408,096
|
|
Cash and restricted cash at end of year
|
|
$
|
790,671
|
|
*
|
Included in operating expenses is cash of $1,927,731 paid for interest and commitment fees on borrowings.
|
|
The following table provides a reconciliation of cash (including foreign currency) and restricted cash reported within the Statement of Assets and
Liabilities that sums to the total of such amounts shown on the Statement of Cash Flows.
|
|
|
|
|
|
|
|
October 31, 2020
|
|
Cash
|
|
$
|
790,660
|
|
Restricted cash
|
|
|
11
|
|
Total cash and restricted cash shown in the Statement of Cash Flows
|
|
$
|
790,671
|
|
|
Restricted cash consists of cash that has been segregated to cover the Funds collateral or margin obligations under derivative contracts. It is
separately reported on the Statement of Assets and Liabilities as Deposits with brokers.
|
See Notes to Financial Statements.
|
|
|
Western Asset Global Corporate Defined Opportunity Fund Inc. 2020 Annual Report
|
|
31
|
Financial highlights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For a share of capital stock outstanding throughout each year ended
October 31:
|
|
|
|
|
|
|
20201
|
|
|
20191
|
|
|
20181
|
|
|
20171
|
|
|
20161
|
|
|
|
|
|
|
|
Net asset value, beginning of year
|
|
|
$18.41
|
|
|
|
$17.39
|
|
|
|
$19.20
|
|
|
|
$18.94
|
|
|
|
$18.81
|
|
|
|
|
|
|
|
Income (loss) from operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
1.03
|
|
|
|
0.99
|
|
|
|
0.99
|
|
|
|
1.07
|
|
|
|
1.20
|
|
Net realized and unrealized gain (loss)
|
|
|
(0.32)
|
|
|
|
1.24
|
|
|
|
(1.52)
|
|
|
|
0.55
|
|
|
|
0.29
|
|
Total income (loss) from operations
|
|
|
0.71
|
|
|
|
2.23
|
|
|
|
(0.53)
|
|
|
|
1.62
|
|
|
|
1.49
|
|
|
|
|
|
|
|
Less distributions from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
(1.01)
|
|
|
|
(0.69)
|
|
|
|
(1.26)
|
|
|
|
(1.36)
|
|
|
|
(1.36)
|
|
Return of capital
|
|
|
(0.20)
|
|
|
|
(0.52)
|
|
|
|
(0.02)
|
|
|
|
|
|
|
|
|
|
Total distributions
|
|
|
(1.21)
|
|
|
|
(1.21)
|
|
|
|
(1.28)
|
|
|
|
(1.36)
|
|
|
|
(1.36)
|
|
Anti-dilutive impact of repurchase plan
|
|
|
0.00
|
2,3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.00
|
2,3
|
|
|
|
|
|
|
Net asset value, end of year
|
|
|
$17.91
|
|
|
|
$18.41
|
|
|
|
$17.39
|
|
|
|
$19.20
|
|
|
|
$18.94
|
|
|
|
|
|
|
|
Market price, end of year
|
|
|
$16.53
|
|
|
|
$17.37
|
|
|
|
$15.20
|
|
|
|
$18.10
|
|
|
|
$17.39
|
|
Total return, based on NAV4,5
|
|
|
4.27
|
%
|
|
|
13.30
|
%
|
|
|
(2.86)
|
%
|
|
|
8.92
|
%
|
|
|
8.44
|
%
|
Total return, based on Market Price6
|
|
|
2.25
|
%
|
|
|
22.89
|
%
|
|
|
(9.38)
|
%
|
|
|
12.37
|
%
|
|
|
9.82
|
%
|
|
|
|
|
|
|
Net assets, end of year (millions)
|
|
|
$268
|
|
|
|
$275
|
|
|
|
$260
|
|
|
|
$287
|
|
|
|
$283
|
|
|
|
|
|
|
|
Ratios to average net assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross expenses
|
|
|
1.94
|
%
|
|
|
2.33
|
%
|
|
|
2.00
|
%
|
|
|
1.79
|
%
|
|
|
1.64
|
%
|
Net expenses
|
|
|
1.93
|
7
|
|
|
2.33
|
|
|
|
2.00
|
|
|
|
1.79
|
|
|
|
1.64
|
|
Net investment income
|
|
|
5.79
|
|
|
|
5.55
|
|
|
|
5.42
|
|
|
|
5.66
|
|
|
|
6.53
|
|
|
|
|
|
|
|
Portfolio turnover rate
|
|
|
50
|
%
|
|
|
52
|
%
|
|
|
85
|
%
|
|
|
69
|
%
|
|
|
51
|
%
|
|
|
|
|
|
|
Supplemental data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan Outstanding, End of Year (000s)
|
|
|
$90,000
|
|
|
|
$88,000
|
|
|
|
$88,000
|
|
|
|
$83,000
|
|
|
|
$83,000
|
|
Asset Coverage Ratio for Loan
Outstanding8
|
|
|
397
|
%
|
|
|
413
|
%
|
|
|
395
|
%
|
|
|
446
|
%
|
|
|
441
|
%
|
Asset Coverage, per $1,000 Principal Amount of Loan Outstanding8
|
|
|
$3,974
|
|
|
|
$4,126
|
|
|
|
$3,952
|
|
|
|
$4,456
|
|
|
|
$4,409
|
|
Weighted Average Loan (000s)
|
|
|
$88,716
|
|
|
|
$88,000
|
|
|
|
$84,625
|
|
|
|
$83,000
|
|
|
|
$83,000
|
|
Weighted Average Interest Rate on Loan
|
|
|
1.75
|
%
|
|
|
3.08
|
%
|
|
|
2.50
|
%
|
|
|
1.63
|
%
|
|
|
1.20
|
%
|
See Notes to Financial
Statements.
|
|
|
32
|
|
Western Asset Global Corporate Defined Opportunity Fund Inc. 2020 Annual Report
|
1
|
Per share amounts have been calculated using the average shares method.
|
2
|
Amount represents less than $0.005 per share.
|
3
|
The repurchase plan was completed at an average repurchase price of $12.30 for 2,114 shares and $26,011 for the year ended October 31, 2020 and $15.25 for
14,001 shares and $213,465 for the year ended October 31, 2016.
|
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 calculation assumes that distributions are reinvested in accordance with the Funds dividend reinvestment plan. Past performance is no
guarantee of future results.
|
7
|
Reflects fee waivers and/or expense reimbursements.
|
8
|
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.
|
See Notes to Financial
Statements.
|
|
|
Western Asset Global Corporate Defined Opportunity Fund Inc. 2020 Annual Report
|
|
33
|
Notes to financial statements
1. Organization and significant accounting policies
Western Asset Global Corporate Defined Opportunity Fund Inc. (the Fund) was incorporated in Maryland on September 17, 2009 and is registered as a
non-diversified, limited-term, closed-end management investment company under the Investment Company Act of 1940, as amended (the 1940 Act). The Funds primary investment objective is to provide current income and then to liquidate
and distribute substantially all of the Funds net assets to stockholders on or about December 2, 2024. As a secondary investment objective, the Fund will seek capital appreciation. The Fund seeks to achieve its investment objectives by
investing, under normal market conditions, at least 80% of its managed assets in a portfolio of U.S. and foreign corporate fixed-income securities of varying maturities. On April 1, 2020 and August 14, 2020, the Board of Directors of the
Fund approved amendments to the Funds bylaws. The amended and restated bylaws were subsequently filed on Form 8-K and are available on the Securities and Exchange Commissions website at www.sec.gov.
The following are significant accounting policies consistently followed by the Fund and are in conformity with U.S. generally accepted accounting principles
(GAAP). Estimates and assumptions are required to be made regarding assets, liabilities and changes in net assets resulting from operations when financial statements are prepared. Changes in the economic environment, financial markets
and any other parameters used in determining these estimates could cause actual results to differ. Subsequent events have been evaluated through the date the financial statements were issued.
(a) Investment valuation. The valuations for fixed income securities (which may include, but are not limited to, corporate, government,
municipal, mortgage-backed, collateralized mortgage obligations and asset-backed securities) and certain derivative instruments are typically the prices supplied by independent third party pricing services, which may use market prices or
broker/dealer quotations or a variety of valuation techniques and methodologies. The independent third party pricing services use inputs that are observable such as issuer details, interest rates, yield curves, prepayment speeds, credit
risks/spreads, default rates and quoted prices for similar securities. Investments in open-end funds are valued at the closing net asset value per share of each fund on the day of valuation. Futures contracts are valued daily at the settlement price
established by the board of trade or exchange on which they are traded. Equity securities for which market quotations are available are valued at the last reported sales price or official closing price on the primary market or exchange on which they
trade. When the Fund holds securities or other assets that are denominated in a foreign currency, the Fund will normally use the currency exchange rates as of 4:00 p.m. (Eastern Time). If independent third party pricing services are unable to supply
prices for a portfolio investment, or if the prices supplied are deemed by the manager to be unreliable, the market price may be determined by the manager using quotations from one or more broker/dealers or at the transaction price if the security
has recently been purchased and no value has yet been obtained from a pricing service or pricing broker. When reliable prices are not readily available, such as when the value of a security has been significantly affected by events after the close
of the exchange or market on which the security is principally traded, but before the Fund calculates its net asset
|
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34
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Western Asset Global Corporate Defined Opportunity Fund Inc. 2020 Annual Report
|
value, the Fund values these securities as determined in accordance with procedures approved by the Funds Board of Directors.
The Board of Directors is responsible for the valuation process and has delegated the supervision of the daily valuation process to the Legg Mason North Atlantic Fund Valuation Committee (the Valuation
Committee). The Valuation Committee, pursuant to the policies adopted by the Board of Directors, is responsible for making fair value determinations, evaluating the effectiveness of the Funds pricing policies, and reporting to the Board
of Directors. When determining the reliability of third party pricing information for investments owned by the Fund, the Valuation Committee, among other things, conducts due diligence reviews of pricing vendors, monitors the daily change in prices
and reviews transactions among market participants.
The Valuation Committee will consider pricing methodologies it deems relevant and appropriate when
making fair value determinations. Examples of possible methodologies include, but are not limited to, multiple of earnings; discount from market of a similar freely traded security; discounted cash-flow analysis; book value or a multiple thereof;
risk premium/yield analysis; yield to maturity; and/or fundamental investment analysis. The Valuation Committee will also consider factors it deems relevant and appropriate in light of the facts and circumstances. Examples of possible factors
include, but are not limited to, the type of security; the issuers financial statements; the purchase price of the security; the discount from market value of unrestricted securities of the same class at the time of purchase; analysts
research and observations from financial institutions; information regarding any transactions or offers with respect to the security; the existence of merger proposals or tender offers affecting the security; the price and extent of public trading
in similar securities of the issuer or comparable companies; and the existence of a shelf registration for restricted securities.
For each portfolio
security that has been fair valued pursuant to the policies adopted by the Board of Directors, the fair value price is compared against the last available and next available market quotations. The Valuation Committee reviews the results of such back
testing monthly and fair valuation occurrences are reported to the Board of Directors quarterly.
The Fund uses valuation techniques to measure fair
value that are consistent with the market approach and/or income approach, depending on the type of security and the particular circumstance. The market approach uses prices and other relevant information generated by market transactions involving
identical or comparable securities. The income approach uses valuation techniques to discount estimated future cash flows to present value.
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Western Asset Global Corporate Defined Opportunity Fund Inc. 2020 Annual Report
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35
|
Notes to financial statements (contd)
GAAP establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at
measurement date. These inputs are summarized in the three broad levels listed below:
|
|
Level 1 quoted prices in active markets for identical investments
|
|
|
Level 2 other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)
|
|
|
Level 3 significant unobservable inputs (including the Funds own assumptions in determining the fair value of investments)
|
The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those
securities.
The following is a summary of the inputs used in valuing the Funds assets and liabilities carried at fair value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
Description
|
|
Quoted Prices
(Level 1)
|
|
|
Other Significant
Observable Inputs
(Level 2)
|
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
|
Total
|
|
Long-Term Investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Bonds & Notes
|
|
|
|
|
|
$
|
309,136,452
|
|
|
|
|
|
|
$
|
309,136,452
|
|
Sovereign Bonds
|
|
|
|
|
|
|
22,794,589
|
|
|
|
|
|
|
|
22,794,589
|
|
Senior Loans
|
|
|
|
|
|
|
21,136,158
|
|
|
|
|
|
|
|
21,136,158
|
|
U.S. Government & Agency Obligations
|
|
|
|
|
|
|
19,639,784
|
|
|
|
|
|
|
|
19,639,784
|
|
Convertible Bonds & Notes
|
|
|
|
|
|
|
1,941,237
|
|
|
|
|
|
|
|
1,941,237
|
|
Preferred Stocks
|
|
$
|
1,029,985
|
|
|
|
|
|
|
|
|
|
|
|
1,029,985
|
|
Collateralized Mortgage Obligations
|
|
|
|
|
|
|
140,059
|
|
|
|
|
|
|
|
140,059
|
|
Asset-Backed Securities
|
|
|
|
|
|
|
73,564
|
|
|
|
|
|
|
|
73,564
|
|
Common Stocks
|
|
|
|
|
|
|
44,073
|
|
|
|
|
|
|
|
44,073
|
|
Total Long-Term Investments
|
|
|
1,029,985
|
|
|
|
374,905,916
|
|
|
|
|
|
|
|
375,935,901
|
|
Short-Term Investments
|
|
|
6,164,169
|
|
|
|
|
|
|
|
|
|
|
|
6,164,169
|
|
Total Investments
|
|
$
|
7,194,154
|
|
|
$
|
374,905,916
|
|
|
|
|
|
|
$
|
382,100,070
|
|
Other Financial Instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward Foreign Currency Contracts
|
|
|
|
|
|
$
|
8,762
|
|
|
|
|
|
|
$
|
8,762
|
|
Total
|
|
$
|
7,194,154
|
|
|
$
|
374,914,678
|
|
|
|
|
|
|
$
|
382,108,832
|
|
|
|
|
36
|
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Western Asset Global Corporate Defined Opportunity Fund Inc. 2020 Annual Report
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
$
|
236,016
|
|
|
|
|
|
|
$
|
236,016
|
|
|
See Schedule of Investments for additional detailed categorizations.
|
(b) Futures contracts. The Fund uses futures contracts generally to gain exposure to, or hedge against, changes in interest rates or gain
exposure to, or hedge against, changes in certain asset classes. A futures contract represents a commitment for the future purchase or sale of an asset at a specified price on a specified date.
Upon entering into a futures contract, the Fund is required to deposit cash or securities with a broker in an amount equal to a certain percentage of the contract
amount. This is known as the initial margin and subsequent payments (variation margin) are made or received by the Fund each day, depending on the daily fluctuation in the value of the contract. For
certain futures, including foreign denominated futures, variation margin is not settled daily, but is recorded as a net variation margin payable or receivable. The daily changes in contract value are recorded as unrealized gains or losses in the
Statement of Operations and the Fund recognizes a realized gain or loss when the contract is closed.
Futures contracts involve, to varying degrees, risk
of loss in excess of the amounts reflected in the financial statements. In addition, there is the risk that the Fund may not be able to enter into a closing transaction because of an illiquid secondary market.
(c) Forward foreign currency contracts. The Fund enters into a forward foreign currency
contract to hedge against foreign currency exchange rate risk on its non-U.S. dollar denominated securities or to facilitate settlement of a foreign currency denominated portfolio transaction. A forward foreign currency contract is an agreement
between two parties to buy and sell a currency at a set price with delivery and settlement at a future date. The contract is marked-to-market daily and the change in value is recorded by the Fund as an unrealized gain or loss. When a forward foreign
currency contract is closed, through either delivery or offset by entering into another forward foreign currency contract, the Fund recognizes a realized gain or loss equal to the difference between the value of the contract at the time it was
opened and the value of the contract at the time it is closed.
Non-deliverable forward foreign currency exchange contracts are settled with the
counterparty in cash without the delivery of foreign currency.
Forward foreign currency contracts involve elements of market risk in excess of the
amounts reflected on the Statement of Assets and Liabilities. The Fund bears the risk of an unfavorable change in the foreign exchange rate underlying the forward foreign currency contract. Risks may also arise upon entering into these contracts
from the potential inability of the counterparties to meet the terms of their contracts.
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Western Asset Global Corporate Defined Opportunity Fund Inc. 2020 Annual Report
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|
37
|
Notes to financial statements (contd)
(d) Loan participations. The Fund may invest in loans arranged
through private negotiation between one or more financial institutions. The Funds investment in any such loan may be in the form of a participation in or an assignment of the loan. 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 related to the loan, or any rights of off-set against the borrower and the Fund may not benefit directly from any collateral supporting the loan
in which it has purchased the participation.
The Fund assumes the credit risk of the borrower, the lender that is selling the participation and any
other persons interpositioned between the Fund and the borrower. In the event of the insolvency of the lender selling the participation, the Fund may be treated as a general creditor of the lender and may not benefit from any off-set between the
lender and the borrower.
(e) Unfunded loan commitments. The Fund may enter into
certain credit agreements where all or a portion of the total amount committed may be unfunded. The Fund is obligated to fund these commitments at the borrowers discretion. The commitments are disclosed in the accompanying Schedule of
Investments. At October 31, 2020, the Fund had sufficient cash and/or securities to cover these commitments.
(f) Repurchase
agreements. The Fund may enter into repurchase agreements with institutions that its subadviser has determined are creditworthy. Each repurchase agreement is recorded at cost. Under the terms of a
typical repurchase agreement, the Fund acquires a debt security subject to an obligation of the seller to repurchase, and of the Fund to resell, the security at an agreed-upon price and time, thereby determining the yield during the Funds
holding period. When entering into repurchase agreements, it is the Funds policy that its custodian or a third party custodian, acting on the Funds behalf, take possession of the underlying collateral securities, the market value of
which, at all times, at least equals the principal amount of the repurchase transaction, including accrued interest. To the extent that any repurchase transaction maturity exceeds one business day, the value of the collateral is marked-to-market and
measured against the value of the agreement in an effort to ensure the adequacy of the collateral. If the counterparty defaults, the Fund generally has the right to use the collateral to satisfy the terms of the repurchase transaction. However, if
the market value of the collateral declines during the period in which the Fund seeks to assert its rights or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of the collateral by the Fund may be
delayed or limited.
(g) Reverse repurchase agreements. The Fund may enter into
reverse repurchase agreements. Under the terms of a typical reverse repurchase agreement, a fund sells a security subject to an obligation to repurchase the security from the buyer at an agreed upon time and price. In the event the buyer of
securities under a reverse repurchase agreement files for bankruptcy or becomes insolvent, the Funds use of the proceeds of the agreement may be restricted pending a determination by the counterparty, or its trustee or receiver, whether to
enforce the Funds obligation to repurchase the securities. In entering into reverse repurchase agreements, the Fund will maintain cash, U.S. government securities or other liquid debt obligations at least equal in value to its obligations with
respect to reverse repurchase agreements or will take other actions permitted by law to
|
|
|
38
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Western Asset Global Corporate Defined Opportunity Fund Inc. 2020 Annual Report
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cover its obligations. If the market value of the collateral declines during the period, the Fund may be required to post additional collateral to cover its obligation. Cash collateral that has
been pledged to cover obligations of the Fund under reverse repurchase agreements, if any, will be reported separately in the Statement of Assets and Liabilities. Securities pledged as collateral are noted in the Schedule of Investments. Interest
payments made on reverse repurchase agreements are recognized as a component of Interest expense on the Statement of Operations. In periods of increased demand for the security, the Fund may receive a fee for use of the security by the
counterparty, which may result in interest income to the Fund.
(h) Securities traded on a when-issued and delayed delivery
basis. The Fund may trade securities on a when-issued or delayed delivery basis. In when-issued and delayed delivery transactions, the securities are purchased or sold by the Fund with payment and
delivery taking place in the future in order to secure what is considered to be an advantageous price and yield to the Fund at the time of entering into the transaction.
Purchasing such securities involves risk of loss if the value of the securities declines prior to settlement. These securities are subject to market fluctuations and their current value is determined in the same
manner as for other securities.
(i) Inflation-indexed bonds. Inflation-indexed
bonds are fixed income securities whose principal value or interest rate is periodically adjusted according to the rate of inflation. As the index measuring inflation changes, the principal value or interest rate of inflation-indexed bonds will be
adjusted accordingly. Inflation adjustments to the principal amount of inflation-indexed bonds are reflected as an increase or decrease to investment income on the Statement of Operations. Repayment of the original bond principal upon maturity (as
adjusted for inflation) is guaranteed in the case of U.S. Treasury inflation-indexed bonds. For bonds that do not provide a similar guarantee, the adjusted principal value of the bond repaid at maturity may be less than the original principal.
(j) Cash flow information. The Fund invests in securities and distributes
dividends from net investment income and net realized gains, which are paid in cash and may be reinvested at the discretion of shareholders. These activities are reported in the Statement of Changes in Net Assets and additional information on cash
receipts and cash payments are presented in the Statement of Cash Flows.
(k) Foreign currency translation. Investment securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts based upon prevailing exchange rates on the date of valuation. Purchases and sales
of investment securities and income and expense items denominated in foreign currencies are translated into U.S. dollar amounts based upon prevailing exchange rates on the respective dates of such transactions.
The Fund does not isolate that portion of the results of operations resulting from fluctuations in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments.
|
|
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Western Asset Global Corporate Defined Opportunity Fund Inc. 2020 Annual Report
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|
39
|
Notes to financial statements (contd)
Net realized foreign exchange gains or losses arise from sales of foreign currencies, including gains and losses on forward foreign
currency contracts, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Funds books
and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the values of assets and liabilities, other than investments in securities, on the date of valuation,
resulting from changes in exchange rates.
Foreign security and currency transactions may involve certain considerations and risks not typically
associated with those of U.S. dollar denominated transactions as a result of, among other factors, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic
instability.
(l) Credit and market risk. The Fund invests in high-yield and
emerging market instruments that are subject to certain credit and market risks. The yields of high-yield and emerging market debt obligations reflect, among other things, perceived credit and market risks. The Funds investments in securities
rated below investment grade typically involve risks not associated with higher rated securities including, among others, greater risk related to timely and ultimate payment of interest and principal, greater market price volatility and less liquid
secondary market trading. The consequences of political, social, economic or diplomatic changes may have disruptive effects on the market prices of investments held by the Fund. The Funds investments in non-U.S. dollar denominated securities
may also result in foreign currency losses caused by devaluations and exchange rate fluctuations.
Investments in securities that are collateralized by
real estate mortgages are subject to certain credit and liquidity risks. When market conditions result in an increase in default rates of the underlying mortgages and the foreclosure values of underlying real estate properties are materially below
the outstanding amount of these underlying mortgages, collection of the full amount of accrued interest and principal on these investments may be doubtful. Such market conditions may significantly impair the value and liquidity of these investments
and may result in a lack of correlation between their credit ratings and values.
(m) Foreign investment risks. The Funds investments in foreign securities may involve risks not present in domestic investments. Since securities may be denominated in foreign currencies, may require settlement in foreign currencies or
pay interest or dividends in foreign currencies, changes in the relationship of these foreign currencies to the U.S. dollar can significantly affect the value of the investments and earnings of the Fund. Foreign investments may also subject the Fund
to foreign government exchange restrictions, expropriation, taxation or other political, social or economic developments, all of which affect the market and/or credit risk of the investments.
(n) Counterparty risk and credit-risk-related contingent features of derivative instruments. The Fund may invest in certain securities or
engage in other transactions, where the Fund is exposed to counterparty credit risk in addition to broader market risks. The Fund may invest in securities of issuers, which may also be considered counterparties
|
|
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40
|
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Western Asset Global Corporate Defined Opportunity Fund Inc. 2020 Annual Report
|
as trading partners in other transactions. This may increase the risk of loss in the event of default or bankruptcy by the counterparty or if the counterparty otherwise fails to meet its
contractual obligations. The Funds subadviser attempts to mitigate counterparty risk by (i) periodically assessing the creditworthiness of its trading partners, (ii) monitoring and/or limiting the amount of its net exposure to each
individual counterparty based on its assessment and (iii) requiring collateral from the counterparty for certain transactions. Market events and changes in overall economic conditions may impact the assessment of such counterparty risk by the
subadviser. In addition, declines in the values of underlying collateral received may expose the Fund to increased risk of loss.
With exchange traded
and centrally cleared derivatives, there is less counterparty risk to the Fund since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller
of the contract; therefore, the credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, the Fund does not have a contractual right of offset against a clearing broker or clearinghouse in the event
of a default of the clearing broker or clearinghouse.
The Fund has entered into master agreements, such as an International Swaps and Derivatives
Association, Inc. Master Agreement (ISDA Master Agreement) or similar agreement, with certain of its derivative counterparties that govern over-the-counter derivatives and provide for general obligations, representations, agreements,
collateral posting terms, netting provisions in the event of default or termination and credit related contingent features. The credit related contingent features include, but are not limited to, a percentage decrease in the Funds net assets
or NAV over a specified period of time. If these credit related contingent features were triggered, the derivatives counterparty could terminate the positions and demand payment or require additional collateral.
Under an ISDA Master Agreement, the Fund may, under certain circumstances, offset with the counterparty certain derivative financial instruments payables
and/or receivables with collateral held and/or posted and create one single net payment. However, absent an event of default by the counterparty or a termination of the agreement, the terms of the ISDA Master Agreements do not result in an offset of
reported amounts of financial assets and financial liabilities in the Statement of Assets and Liabilities across transactions between the Fund and the applicable counterparty. The enforceability of the right to offset may vary by jurisdiction.
Collateral requirements differ by type of derivative. Collateral or margin requirements are set by the broker or exchange clearinghouse for exchange
traded derivatives while collateral terms are contract specific for over-the-counter traded derivatives. Cash collateral that has been pledged to cover obligations of the Fund under derivative contracts, if any, will be reported separately in the
Statement of Assets and Liabilities. Securities pledged as collateral, if any, for the same purpose are noted in the Schedule of Investments.
As of
October 31, 2020, the Fund held forward foreign currency contracts with credit related contingent features which had a liability position of $236,016. If a contingent feature in the master agreements would have been triggered, the Fund would
have been required to pay this amount to its derivative counterparties.
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|
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Western Asset Global Corporate Defined Opportunity Fund Inc. 2020 Annual Report
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|
41
|
Notes to financial statements (contd)
(o) Security transactions and investment income. Security
transactions are accounted for on a trade date basis. Interest income (including interest income from payment-in-kind securities), adjusted for amortization of premium and accretion of discount, is recorded on the accrual basis. Paydown gains and
losses on mortgage- and asset-backed securities are recorded as adjustments to interest income. Dividend income is recorded on the ex-dividend date for dividends received in cash and/or securities. Foreign dividend income is recorded on the
ex-dividend date or as soon as practicable after the Fund determines the existence of a dividend declaration after exercising reasonable due diligence. The cost of investments sold is determined by use of the specific identification method. To the
extent any issuer defaults or a credit event occurs that impacts the issuer, the Fund may halt any additional interest income accruals and consider the realizability of interest accrued up to the date of default or credit event.
(p) Distributions to shareholders. Distributions from net investment income of the Fund, if
any, are declared quarterly and paid on a monthly basis. Distributions of net realized gains, if any, are taxable and are declared at least annually. Distributions to shareholders of the Fund are recorded on the ex-dividend date and are determined
in accordance with income tax regulations, which may differ from GAAP.
(q) Compensating balance arrangements. The Fund has an arrangement with its custodian bank whereby a portion of the custodians fees is paid indirectly by credits earned on the Funds cash on deposit with the bank.
(r) Federal and other taxes. It is the Funds policy to comply with the federal income
and excise tax requirements of the Internal Revenue Code of 1986 (the Code), as amended, applicable to regulated investment companies. Accordingly, the Fund intends to distribute its taxable income and net realized gains, if any, to
shareholders in accordance with timing requirements imposed by the Code. Therefore, no federal or state income tax provision is required in the Funds financial statements.
Management has analyzed the Funds tax positions taken on income tax returns for all open tax years and has concluded that as of October 31, 2020, no provision for income tax is required in the
Funds financial statements. The Funds federal and state income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and
state departments of revenue.
Under the applicable foreign tax laws, a withholding tax may be imposed on interest, dividends and capital gains at
various rates.
(s) Reclassification. GAAP requires that certain components of net
assets be reclassified to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or net asset value per share. During the current year, the Fund had no reclassifications.
2. Investment management agreement and other transactions with affiliates
Legg Mason Partners Fund Advisor, LLC (LMPFA) is the Funds investment manager. Western Asset Management Company, LLC (Western Asset), Western Asset Management Company Pte. Ltd.
(Western Asset Singapore), Western Asset Management
|
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42
|
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Western Asset Global Corporate Defined Opportunity Fund Inc. 2020 Annual Report
|
Company Ltd (Western Asset Japan) and Western Asset Management Company Limited (Western Asset Limited) are the Funds subadvisers. As of July 31, 2020, LMPFA,
Western Asset, Western Asset Singapore, Western Asset Japan and Western Asset Limited are wholly-owned subsidiaries of Franklin Resources, Inc. (Franklin Resources). Prior to July 31, 2020, LMPFA, Western Asset, Western Asset
Singapore, Western Asset Japan and Western Asset Limited were wholly-owned subsidiaries of Legg Mason, Inc. (Legg Mason). As of July 31, 2020, Legg Mason is a subsidiary of Franklin Resources.
LMPFA provides administrative and certain oversight services to the Fund. The Fund pays LMPFA an investment management fee, calculated daily and paid monthly, at an
annual rate of 0.80% of the Funds average daily net assets plus the amount of any borrowings and assets attributable to any preferred stock that may be outstanding.
LMPFA delegates to Western Asset the day-to-day portfolio management of the Fund. Western Asset Singapore, Western Asset Japan and Western Asset Limited provide certain subadvisory services to the Fund relating to
currency transactions and investments in non-U.S. dollar denominated debt securities. For its services, LMPFA pays Western Asset a fee monthly, at an annual rate equal to 70% of the net management fee it receives from the Fund. Western Asset
Singapore, Western Asset Japan and Western Asset Limited do not receive any compensation from the Fund. Western Asset pays Western Asset Singapore, Western Asset Japan and Western Asset Limited a monthly subadvisory fee in an amount equal to 100% of
the management fee paid to Western Asset on the assets that Western Asset allocates to each such non-U.S. subadviser to manage.
During periods in which
the Fund utilizes financial leverage, the fees paid to LMPFA will be higher than if the Fund did not utilize leverage because the fees are calculated as a percentage of the Funds assets, including those investments purchased with leverage.
During the year ended October 31, 2020, fees waived and/or expenses reimbursed amounted to $9,247.
As of July 31, 2020, all officers and one Director of the Fund are employees of Franklin Resources or its affiliates and do not receive compensation from the
Fund. Prior to July 31, 2020, all officers and one Director of the Fund were employees of Legg Mason and did not receive compensation from the Fund.
3. Investments
During the year ended October 31, 2020, the aggregate cost of purchases
and proceeds from sales of investments (excluding short-term investments) and U.S. Government & Agency Obligations were as follows:
|
|
|
|
|
|
|
|
|
|
|
Investments
|
|
|
U.S. Government &
Agency Obligations
|
|
Purchases
|
|
$
|
174,344,737
|
|
|
$
|
18,583,838
|
|
Sales
|
|
|
170,311,388
|
|
|
|
14,916,109
|
|
|
|
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Western Asset Global Corporate Defined Opportunity Fund Inc. 2020 Annual Report
|
|
43
|
Notes to financial statements (contd)
At October 31, 2020, the aggregate cost of investments and the aggregate gross unrealized appreciation and depreciation of
investments for federal income tax purposes were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
|
|
|
Gross
Unrealized
Appreciation
|
|
|
Gross
Unrealized
Depreciation
|
|
|
Net
Unrealized
Appreciation
(Depreciation)
|
|
Securities
|
|
$
|
354,355,657
|
|
|
$
|
34,680,432
|
|
|
$
|
(6,936,019)
|
|
|
$
|
27,744,413
|
|
Forward foreign currency contracts
|
|
|
|
|
|
|
8,762
|
|
|
|
(236,016)
|
|
|
|
(227,254)
|
|
Transactions in reverse repurchase agreements for the Fund during the year ended October 31, 2020 were as follows:
|
|
|
|
|
Average Daily
Balance*
|
|
Weighted Average
Interest Rate*
|
|
Maximum Amount
Outstanding
|
$17,394,152
|
|
0.879%
|
|
$20,718,125
|
*
|
Averages based on the number of days that the Fund had reverse repurchase agreements outstanding.
|
Interest rates on reverse repurchase agreements ranged from 0.19% to 1.99% during the year ended October 31, 2020. Interest expense incurred on reverse
repurchase agreements totaled $152,826.
4. Derivative instruments and hedging activities
Below is a table, grouped by derivative type, that provides information about the fair value and the location of derivatives within the Statement of Assets and
Liabilities at October 31, 2020.
|
|
|
|
|
|
|
|
|
ASSET
DERIVATIVES1
|
|
|
|
|
|
|
Foreign
Exchange Risk
|
|
Forward foreign currency contracts
|
|
|
|
|
|
$
|
8,762
|
|
|
LIABILITY
DERIVATIVES1
|
|
|
|
|
|
|
Foreign
Exchange Risk
|
|
Forward foreign currency contracts
|
|
|
|
|
|
$
|
236,016
|
|
1
|
Generally, the balance sheet location for asset derivatives is receivables/net unrealized appreciation and for liability derivatives is payables/net unrealized
depreciation.
|
|
|
|
44
|
|
Western Asset Global Corporate Defined Opportunity Fund Inc. 2020 Annual Report
|
The following tables provide information about the effect of derivatives and hedging activities on the Funds
Statement of Operations for the year ended October 31, 2020. The first table provides additional detail about the amounts and sources of gains (losses) realized on derivatives during the period. The second table provides additional information
about the change in unrealized appreciation (depreciation) resulting from the Funds derivatives and hedging activities during the period.
|
|
|
|
|
|
|
|
|
|
|
|
|
AMOUNT OF REALIZED GAIN (LOSS) ON DERIVATIVES RECOGNIZED
|
|
|
|
Interest
Rate Risk
|
|
|
Foreign
Exchange Risk
|
|
|
Total
|
|
Futures contracts
|
|
$
|
(54,670)
|
|
|
|
|
|
|
$
|
(54,670)
|
|
Forward foreign currency contracts
|
|
|
|
|
|
$
|
995,441
|
|
|
|
995,441
|
|
Total
|
|
$
|
(54,670)
|
|
|
$
|
995,441
|
|
|
$
|
940,771
|
|
|
|
|
|
|
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON DERIVATIVES RECOGNIZED
|
|
|
|
Foreign
Exchange Risk
|
|
Forward foreign currency contracts
|
|
$
|
(510,683)
|
|
During the year ended October 31, 2020, the volume of derivative activity for the Fund was as follows:
|
|
|
|
|
|
|
Average Market
Value
|
|
Futures contracts (to buy)
|
|
$
|
1,178,347
|
|
Forward foreign currency contracts (to buy)
|
|
|
21,719,157
|
|
Forward foreign currency contracts (to sell)
|
|
|
1,748,011
|
|
|
At October 31, 2020, there were no open positions held in this derivative.
|
The following table presents the Funds OTC derivative assets and liabilities by counterparty net of amounts available for offset under an ISDA Master
Agreement and net of the related collateral pledged (received) by the Fund as of October 31, 2020.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Counterparty
|
|
Gross Assets
Subject to
Master
Agreements1
|
|
|
Gross
Liabilities
Subject to
Master
Agreements
|
|
|
Net Assets
(Liabilities)
Subject to
Master
Agreements
|
|
|
Collateral
Pledged
(Received)
|
|
|
Net
Amount2
|
|
BNP Paribas SA
|
|
|
|
|
|
$
|
(236,016)
|
|
|
$
|
(236,016)
|
|
|
|
|
|
|
$
|
(236,016)
|
|
Goldman Sachs Group Inc.
|
|
$
|
8,762
|
|
|
|
|
|
|
|
8,762
|
|
|
|
|
|
|
|
8,762
|
|
Total
|
|
$
|
8,762
|
|
|
$
|
(236,016)
|
|
|
$
|
(227,254)
|
|
|
|
|
|
|
$
|
(227,254)
|
|
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.
|
5. Loan
The Fund has a revolving credit
agreement with National Australia Bank Limited (Credit Agreement) that allows the Fund to borrow up to an aggregate amount of $90,000,000.
|
|
|
Western Asset Global Corporate Defined Opportunity Fund Inc. 2020 Annual Report
|
|
45
|
Notes to financial statements (contd)
This Credit Agreement renews daily for a six month term unless notice to the contrary is given to the Fund. The Fund pays a commitment
fee at an annual rate of 0.20% on the unutilized portion of the loan commitment amount. The interest on the loan is calculated at a variable rate based on the LIBOR plus any applicable margin. Securities held by the Fund are subject to a lien
granted to National Australia Bank Limited, to the extent of the borrowing outstanding and any additional expenses. The Funds Credit Agreement contains customary covenants that, among other things, may limit the Funds ability to pay
distributions in certain circumstances, incur additional debt, change its fundamental investment policies and engage in certain transactions, including mergers and consolidations, and require asset coverage ratios in addition to those required by
the 1940 Act. In addition, the Credit Agreement may be subject to early termination under certain conditions and may contain other provisions that could limit the Funds ability to utilize borrowing under the Credit Agreement. Interest expense
related to the loan for the year ended October 31, 2020 was $1,555,661. For the year ended October 31, 2020, the Fund incurred a commitment fee in the amount of $2,611. For the year ended October 31, 2020, the Fund had an average
daily loan balance outstanding of $88,715,847 and the weighted average interest rate was 1.75%. At October 31, 2020, the Fund had $90,000,000 of borrowings outstanding per this Credit Agreement.
6. Distributions subsequent to October 31, 2020
The following distributions have been declared by the Funds Board of Directors and are payable subsequent to the period end of this report:
|
|
|
|
|
|
|
|
|
Record Date
|
|
Payable Date
|
|
|
Amount
|
|
10/23/2020
|
|
|
11/2/2020
|
|
|
$
|
0.1010
|
|
11/20/2020
|
|
|
12/1/2020
|
|
|
$
|
0.1010
|
|
12/23/2020
|
|
|
12/31/2020
|
|
|
$
|
0.1010
|
|
1/22/2021
|
|
|
2/1/2021
|
|
|
$
|
0.1010
|
|
2/19/2020
|
|
|
3/1/2021
|
|
|
$
|
0.1010
|
|
7. Stock repurchase program
On March 10, 2014, the Fund announced that the Funds Board of Directors (the Board) had authorized the Fund to repurchase in the open market up to 1,600,000 shares of the Funds
outstanding common stock when the Funds shares are trading at a discount to the net asset value. The Board directed management of the Fund to repurchase shares of common stock at such times and in such amounts as management reasonably believes
may enhance stockholder value. The Fund is under no obligation to purchase shares at any specific discount levels or in any specific amounts.
During the
year ended October 31, 2020, the Fund repurchased and retired 0.01% of its common shares outstanding under the repurchase plan. The weighted average discount per share on these repurchases was 11.95% for the year ended October 31, 2020.
Shares repurchased and the corresponding dollar amount are included in the Statement of Changes in Net Assets. The anti-dilutive impact of these share repurchases is included in the Financial Highlights.
Since the Funds commencement of the stock repurchase program through October 31, 2020, the Fund repurchased 408,350 shares or 2.66% of its common shares
outstanding for the
|
|
|
46
|
|
Western Asset Global Corporate Defined Opportunity Fund Inc. 2020 Annual Report
|
total amount of $7,013,966. The anti-dilutive impact of these share repurchases is included on the Financial Highlights.
8. Income tax information and distributions to shareholders
The tax character of distributions
paid during the fiscal years ended October 31, was as follows:
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
|
2019
|
|
Distributions paid from:
|
|
|
|
|
|
|
|
|
Ordinary income
|
|
$
|
15,153,634
|
|
|
$
|
10,365,786
|
|
Tax return of capital
|
|
|
2,952,592
|
|
|
|
7,742,148
|
|
Total distributions paid
|
|
$
|
18,106,226
|
|
|
$
|
18,107,934
|
|
As of October 31, 2020, the components of distributable earnings (loss) on a tax basis were as follows:
|
|
|
|
|
Deferred capital losses*
|
|
$
|
(31,341,905)
|
|
Other book/tax temporary differences(a)
|
|
|
(1,369,830)
|
|
Unrealized appreciation (depreciation)(b)
|
|
|
27,500,767
|
|
Total distributable earnings (loss) net
|
|
$
|
(5,210,968)
|
|
*
|
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 certain foreign currency contracts, the difference between cash and accrual basis distributions paid, book/tax differences in the accrual of interest income on securities in default 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 and the
difference between book and tax amortization methods for premiums on fixed income securities.
|
9. Other matters
The outbreak of the respiratory illness COVID-19 (commonly referred to as coronavirus) has continued to rapidly spread around the world,
causing considerable uncertainty for the global economy and financial markets. The ultimate economic fallout from the pandemic, and the long-term impact on economies, markets, industries and individual issuers, are not known. The COVID-19 pandemic
could adversely affect the value and liquidity of the Funds investments and negatively impact the Funds performance. In addition, the outbreak of COVID-19, and measures taken to mitigate its effects, could result in disruptions to the
services provided to the Fund by its service providers.
* * *
The Funds investments, payment obligations, and financing terms may be based on floating rates, such as the London Interbank Offered Rate, or
LIBOR, which is the offered rate for short-term Eurodollar deposits between major international banks. Plans are underway to phase out the use of LIBOR by the end of 2021. There remains uncertainty regarding the nature of any replacement
rate and the impact of the transition from LIBOR on the Funds
|
|
|
Western Asset Global Corporate Defined Opportunity Fund Inc. 2020 Annual Report
|
|
47
|
Notes to financial statements (contd)
transactions and the financial markets generally. As such, the potential effect of a transition away from LIBOR on the Fund or the
Funds investments cannot yet be determined.
* * *
On August 14, 2020, the Fund announced that it has elected, by resolution unanimously adopted by the Funds board of directors, to be subject to the
Maryland Control Share Acquisition Act (the MCSAA), effective immediately. The MCSAA protects the interests of all stockholders of a Maryland corporation by providing that any holder of control shares acquired in a
control share acquisition will not be entitled to vote its shares unless the other stockholders of the corporation reinstate those voting rights at a meeting of stockholders by a vote of two-thirds of the votes entitled to be cast on the
matter, excluding the acquiring person (i.e., the holder or group of holders acting in concert that acquires, or proposes to acquire, control shares) and any other holders of interested shares as defined in the
MCSAA. Generally, control shares are shares that, when aggregated with shares already owned by an acquiring person, would entitle the acquiring person to exercise 10% or more, 33 1/3% or more, or a majority of the total voting power of
shares entitled to vote in the election of directors.
Application of the MCSAA seeks to limit the ability of an acquiring person to achieve a short-term
gain at the expense of the Funds ability to pursue its investment objective and policies and seek long-term value for the rest of the Funds stockholders. The above description of the MCSAA is only a high-level summary and does not
purport to be complete. Investors should refer to the actual provisions of the MCSAA and the Funds bylaws for more information, including definitions of key terms, various exclusions and exemptions from the statutes scope, and the
procedures by which stockholders may approve the reinstatement of voting rights to holders of control shares.
|
|
|
48
|
|
Western Asset Global Corporate Defined Opportunity Fund Inc. 2020 Annual Report
|
Report of independent registered public accounting firm
To the Board of Directors and Shareholders of Western Asset Global
Corporate Defined Opportunity Fund Inc.
|
|
|
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)
|
|
24
|
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 2009
|
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)
|
|
24
|
Other board memberships held by Director during the past five years
|
|
None
|
|
|
|
Western Asset Global Corporate Defined Opportunity Fund Inc.
|
|
51
|
Additional information
(unaudited) (contd)
Information about Directors and Officers
|
|
|
Independent Directors (contd)
|
|
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 2009
|
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)
|
|
24
|
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 2009
|
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)
|
|
24
|
Other board memberships held by Director during the past five years
|
|
None
|
|
William R. Hutchinson
|
|
|
Year of birth
|
|
1942
|
Position(s) held with Fund1
|
|
Lead Independent Director and Member of Nominating, Audit, Compensation and Pricing and Valuation Committees, Class II
|
Term of office1 and length of time served
|
|
Since 2009
|
Principal occupation(s) during the past five years
|
|
President, W.R. Hutchinson & Associates Inc. (Consulting) (since 2001)
|
Number of portfolios in fund complex overseen by Director (including the Fund)
|
|
24
|
Other board memberships held by Director during the past five years
|
|
Director (since 1994) and formerly, Non-Executive Chairman of the Board (December 2009 to April 2020), Associated Banc Corp.
(banking)
|
|
|
|
52
|
|
Western Asset Global Corporate Defined Opportunity Fund Inc.
|
|
|
|
Independent Directors (contd)
|
|
Eileen A. Kamerick
|
|
|
Year of birth
|
|
1958
|
Position(s) held with Fund1
|
|
Director and Member of Nominating, Compensation and Pricing and Valuation Committees, and Chair of Audit Committee, 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) and financial expert; Adjunct Professor, The University of Chicago Law School (since 2018); Adjunct Professor, Washington University in St. Louis and University of Iowa law schools (since 2007); formerly, Senior Advisor to the
Chief Executive Officer and Executive Vice President and Chief Financial Officer of ConnectWise, Inc. (software and services company) (2015 to 2016); 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)
|
|
24
|
Other board memberships held by Director during the past five years
|
|
Trustee of AIG Funds and Anchor Series Trust (since 2018); Hochschild Mining plc (precious metals company) (since 2016); Director of Associated
Banc-Corp (financial services company) (since 2007); Westell Technologies, Inc. (technology company) (2003 to 2016)
|
|
Nisha Kumar
|
|
|
Year of birth
|
|
1970
|
Position(s) held with Fund1
|
|
Director and Member of Nominating, Audit, Compensation and Pricing and Valuation Committees, Class II
|
Term of office1 and length of time served
|
|
Since 2019
|
Principal occupation(s) during the past five years
|
|
Managing Director and the Chief Financial Officer and Chief Compliance Officer of Greenbriar Equity Group, LP (since 2011); 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)
|
|
24
|
Other board memberships held by Director during the past five years
|
|
Director of The India Fund, Inc. (since 2016); formerly, Director of Aberdeen Income Credit Strategies Fund (2017-2018); and Director of The Asia
Tigers Fund, Inc. (2016 to 2018)
|
|
|
|
Western Asset Global Corporate Defined Opportunity Fund Inc.
|
|
53
|
Additional information
(unaudited) (contd)
Information about Directors and Officers
|
|
|
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 150 funds associated with Legg
Mason Partners Fund Advisor, LLC (LMPFA) or its affiliates (since 2015); President and Chief Executive Officer of LMPFA (since 2015); formerly, Senior Managing Director (2018 to 2020) and Managing Director (2016 to 2018) of Legg Mason
& Co., LLC (Legg Mason & Co.); Senior Vice President of LMPFA (2015)
|
Number of portfolios in fund complex overseen by Director (including the Fund)
|
|
147
|
Other board memberships held by Director during the past five years
|
|
None
|
|
|
|
Additional Officers
|
|
Fred Jensen*
Legg Mason
620 Eighth Avenue, 47th Floor, New York, NY 10018
|
|
|
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)
|
|
Jenna Bailey
Legg Mason
100 First Stamford Place, 5th Floor, Stamford, CT 06902
|
|
|
Year of birth
|
|
1978
|
Position(s) held with Fund1
|
|
Identity Theft Prevention Officer
|
Term of office1 and length of time served
|
|
Since 2015
|
Principal occupation(s) during the past five years
|
|
Senior Compliance Analyst of Franklin Templeton (since 2020); Identity Theft Prevention Officer of certain funds associated with Legg Mason &
Co. or its affiliates (since 2015); formerly, Compliance Officer of Legg Mason & Co. (2013 to 2020); Assistant Vice President of Legg Mason & Co. (2011 to 2020)
|
|
|
|
54
|
|
Western Asset Global Corporate Defined Opportunity Fund Inc.
|
|
|
|
Additional Officers (contd)
|
|
George P. Hoyt**
Legg Mason
100 First Stamford Place, 6th Floor, Stamford, CT
06902
|
|
|
Year of birth
|
|
1965
|
Position(s) held with Fund1
|
|
Secretary and Chief Legal Officer
|
Term of office1 and length of time served
|
|
Since 2020
|
Principal occupation(s) during the past five years
|
|
Associate General Counsel of Franklin Templeton (since 2020); Secretary and Chief Legal Officer of certain mutual funds associated with Legg Mason
& Co. or its affiliates (since 2020); formerly, Managing Director (2016 to 2020) and Associate General Counsel for Legg Mason & Co. and Assistant Secretary of certain mutual funds associated with Legg Mason & Co. or its affiliates (2006
to 2020)
|
|
Thomas C. Mandia
Legg Mason
100 First Stamford Place, 6th Floor, Stamford, CT
06902
|
|
|
Year of birth
|
|
1962
|
Position(s) held with Fund1
|
|
Assistant Secretary
|
Term of office1 and length of time served
|
|
Since 2006
|
Principal occupation(s) during the past five years
|
|
Senior Associate General Counsel of Franklin Templeton (since 2020); Secretary of LMPFA (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)
|
|
Christopher Berarducci
Legg Mason
620 Eighth Avenue, 47th Floor, New York, NY
10018
|
|
|
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.
|
|
|
|
Western Asset Global Corporate Defined Opportunity Fund Inc.
|
|
55
|
Additional information
(unaudited) (contd)
Information about Directors and Officers
|
|
|
Additional Officers (contd)
|
|
Jeanne M. Kelly
Legg Mason
620 Eighth Avenue, 47th Floor, New York, NY 10018
|
|
|
Year of birth
|
|
1951
|
Position(s) held with Fund1
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Senior Vice President
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Term of office1 and length of time served
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Since 2009
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Principal occupation(s) during the past five years
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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 LMPFA (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)
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Directors who are not interested persons of the Fund within the meaning of Section 2(a)(19) of the Investment Company Act of 1940, as
amended (the 1940 Act).
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*
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Effective April 17, 2020, Mr. Jensen became Chief Compliance Officer.
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**
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Effective August 13, 2020, Mr. Hoyt became Secretary and Chief Legal Officer.
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1
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The Funds Board of Directors is divided into three classes: Class I, Class II and Class III. The terms of office of the Class I, II and III Directors
expire at the Annual Meetings of Stockholders in the year 2020, year 2021 and year 2022, respectively, or thereafter in each case when their respective successors are duly elected and qualified. The Funds executive officers are chosen each
year, to hold office until their successors are duly elected and qualified.
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2
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Ms. Trust is an interested person of the Fund as defined in the 1940 Act because Ms. Trust is an officer of LMPFA and certain of its
affiliates.
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Western Asset Global Corporate Defined Opportunity Fund Inc.
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Annual chief executive officer and
principal financial officer certifications (unaudited)
The Funds Chief
Executive Officer (CEO) has submitted to the NYSE the required annual certification and the Fund also has included the Certifications of the Funds CEO and Principal Financial Officer required by Section 302 of the
Sarbanes-Oxley Act in the Funds Form N-CSR filed with the SEC for the period of this report.
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Western Asset Global Corporate Defined Opportunity Fund Inc.
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Other shareholder communications regarding accounting matters (unaudited)
The Funds Audit Committee has established guidelines and procedures regarding the receipt, retention and treatment of complaints regarding accounting,
internal accounting controls or auditing matters (collectively, Accounting Matters). Persons with complaints or concerns regarding Accounting Matters may submit their complaints to the Chief Compliance Officer (CCO). Persons
who are uncomfortable submitting complaints to the CCO, including complaints involving the CCO, may submit complaints directly to the Funds Audit Committee Chair. Complaints may be submitted on an anonymous basis.
The CCO may be contacted at:
Legg Mason & Co., LLC
Compliance Department
620 Eighth Avenue, 47th Floor
New York, New York 10018
Complaints may also be
submitted by telephone at 1-800-742-5274. Complaints submitted through this number will be received by the CCO.
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Summary of information regarding the Fund (unaudited)
Investment Objectives
The Funds
primary investment objective is to provide current income and then to liquidate and distribute substantially all of the Funds net assets to stockholders on or about December 2, 2024. As a secondary investment objective, the Fund will seek
capital appreciation.
Principal Investment Policies and Strategies
The Fund seeks to achieve its investment objectives by investing, under normal market conditions, at least 80% of its Managed Assets (as defined herein) in a portfolio of U.S. and foreign corporate fixed income
securities of varying maturities. Fixed income securities include bonds, debentures, notes, commercial paper and other similar types of debt instruments, as well as preferred stock, convertible securities, Senior Loans, Second Lien
Loans, loan participations, payment-in-kind securities, zero-coupon bonds, bank certificates of deposit, fixed time deposits and bankers acceptances. Corporate securities are those securities that are issued or originated by U.S. or foreign
public or private corporations and other business entities, and do not include securities issued by governments, agencies or supranational entities. Certain fixed income instruments, such as convertible securities, may also include the right to
participate in equity appreciation, and Western Asset will generally evaluate those instruments based primarily on their debt characteristics. The Fund is not required to dispose of common stock if, due to a conversion of convertible securities into
the underlying shares of common stock, less than 80% of the Funds Managed Assets are invested in corporate fixed income securities. However, under normal circumstances, the Fund will be restricted from investing in any securities that are not
U.S. and foreign corporate fixed income securities until the Fund regains such 80% threshold. While the common stock issued by the Fund will not be rated by a nationally recognized statistical rating organization, it is expected that, under normal
market conditions, the Fund will maintain on an ongoing basis a dollar-weighted average credit quality of portfolio holdings of at least BBB- or higher by Standard & Poors Ratings Services (S&P) or Fitch Ratings, Inc.
(Fitch) or Baa3 or higher by Moodys Investors Service, Inc. (Moodys), or comparable quality as determined by Western Asset. The Fund will not include derivative instruments for the purpose of calculating the
dollar-weighted average credit quality of the Funds portfolio holdings.
The Fund may invest in derivative instruments, such as options contracts,
futures contracts, options on futures contracts, indexed securities, credit default swaps and other swap agreements for investment, hedging and risk management purposes; provided that the Funds exposure to derivative instruments, as measured
by the total notional amount of all such instruments, will not exceed 20% of its Managed Assets. With respect to this limitation, the Fund may net derivatives with opposite exposure to the same underlying instrument. Notwithstanding the foregoing,
the Fund may invest without limitation in derivative instruments related to currencies, including options contracts, futures contracts,
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59
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Summary of information regarding the Fund (unaudited) (contd)
options on futures contracts, forward contracts and swap agreements and combinations thereof; provided that such currency derivatives are used for hedging purposes
only. To the extent that the security or index underlying the derivative or synthetic instrument is or is composed of U.S. or foreign corporate fixed income securities, the Fund will include such derivative and synthetic instruments for the purposes
of the Funds policy to invest at least 80% of its Managed Assets in a portfolio of U.S. and foreign corporate fixed income securities.
The
Funds investments may be denominated in U.S. dollars or in foreign currencies. Under normal market conditions, the Fund will invest at least 40% of its Managed Assets in fixed income securities of foreign issuers organized or having a
principal place of business outside of the United States, including in emerging market countries. A foreign issuer is a company, government or agency which is organized or has a principal place of business outside of the United States.
Western Asset will select securities from a diverse selection of countries around the world, focusing on high real yields, pricing inefficiencies and improving credit conditions that offer income opportunities. The Fund has no present intention to
invest a significant portion of its Managed Assets in a specific geographical region.
The Fund may invest up to 35% of its Managed Assets in fixed
income securities of below investment grade quality. Below investment grade fixed income securities are rated below BBB- by S&P or Fitch, below Baa3 by Moodys or comparably rated by another NRSRO or, if unrated,
determined by Western Asset to be of comparable quality. Below investment grade fixed income securities are commonly referred to as high-yield or junk bonds and are regarded as having predominantly speculative characteristics
with respect to the issuers capacity to pay interest and repay principal. In the event that a security receives different ratings from different NRSROs, the Fund will treat the security as being rated in the highest rating category received
from an NRSRO.
If a fixed income security is considered investment grade at the time of investment and is subsequently downgraded below that rating, the
Fund will not be required to dispose of the security. If as a result of downgrades, the Funds holdings of below investment grade fixed income securities rises above 35% of the Funds Managed Assets, the Fund would, under normal
circumstances, be restricted from investing in any additional below investment grade securities until the Fund otherwise reduced its holdings below the 35% cap. With respect to securities that are downgraded, Western Asset will consider what action,
including the sale of the security, is in the best interests of the Fund and its stockholders.
The Fund may invest up to 20% of its Managed Assets in
government debt securities, including those of emerging market issuers or of other non-U.S. issuers.
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The Fund may invest up to 20% of its
Managed Assets in mortgage-backed and asset-backed securities.
The Fund may invest up to 20% of its Managed Assets in securities that, at the time of
investment, are considered illiquid. Illiquid securities are securities which cannot be sold within seven days in the ordinary course of business at approximately the value at which the Fund has valued the securities.
The Fund may enter into various interest rate transactions, such as interest rate swaps and the purchase or sale of interest rate caps and floors. The Fund may
enter into, among other things, fixed-for-floating rate swaps in the same currency, fixed-for-floating rate swaps in different currencies, floating-for-floating rate swaps in the same currency, floating-for-floating rate swaps in different
currencies, or fixed-for-fixed rate swaps in different currencies. The Fund may enter into total return swaps. The Fund may enter into these transactions to hedge the value of the Funds portfolio to seek to increase its return, to preserve a
return or spread on a particular investment or portion of its portfolio, or for investment purposes.
The Fund may enter into repurchase agreements, in
which the Fund purchases a security from a bank or broker-dealer and the bank or broker-dealer agrees to repurchase the security at the Funds cost plus interest within a specified time. The Fund may also enter into reverse repurchase
agreements, under which the Fund will effectively pledge its assets as collateral to secure a short-term loan.
The Fund may lend its portfolio
securities so long as the terms and the structure of such loans are not inconsistent with the requirements of the 1940 Act.
Principal
Risk Factors
The Fund is a non-diversified, limited term, closed-end management investment company designed primarily as a long-term investment and
not as a trading vehicle. The Fund is not intended to be a complete investment program and, due to the uncertainty inherent in all investments, there can be no assurance that the Fund will achieve its investment objectives. Your Common Stock at any
point in time may be worth less than you invested, even after taking into account the reinvestment of Fund dividends and distributions.
Investment
and Market Risk. An investment in the Fund is subject to investment risk, including the possible loss of the entire amount that you invest. Your investment in the Common Stock represents an indirect investment in the fixed income securities and
other investments owned by the Fund, most of which could be purchased directly. The value of the Funds portfolio securities may move up or down, sometimes rapidly and unpredictably. At any point in time, your Common Stock may be worth less
than your original investment, even after taking into account the reinvestment of Fund dividends and distributions.
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61
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Summary of information regarding the Fund (unaudited) (contd)
Fixed Income Securities Risk. Under normal market conditions, the Fund will invest at least 80% of its Managed Assets in a portfolio of U.S. and foreign
corporate fixed income securities of varying maturities. 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:
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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 issuers goods and services.
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Interest Rate Risk. The market price of the Funds 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 Funds securities will not affect interest income derived from securities already owned by the Fund, but will
be reflected in the Funds 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 Funds exposure to interest rate risk, although there is no assurance that it will do so or that such strategies will be successful.
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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 Funds 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.
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Reinvestment Risk. Reinvestment risk is the risk that income from the Funds 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 portfolios current earnings rate. A decline in income could affect the Funds Common Stock price, its distributions or its overall return.
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Credit 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
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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.
Below Investment Grade (High Yield or Junk Bond) Securities Risk. The Fund may invest up to 35% of its Managed Assets in fixed income securities
of below investment grade quality. High yield debt securities are generally subject to greater credit risks than higher-grade debt securities, including the risk of default on the payment of interest or principal. High yield debt securities are
considered speculative, typically have lower liquidity and are more difficult to value than higher grade bonds. High yield debt securities tend to be volatile and more susceptible to adverse events, credit downgrades and negative sentiments and may
be difficult to sell at a desired price, or at all, during periods of uncertainty or market turmoil.
Foreign Securities and Emerging Markets Risk.
A fund that invests in foreign (non-U.S.) securities may experience more rapid and extreme changes in value than a fund that invests exclusively in securities of U.S. companies. The securities markets of many foreign countries are relatively
small, with a limited number of companies representing a small number of industries. Investments in foreign securities (including those denominated in U.S. dollars) are subject to economic and political developments in the countries and regions
where the issuers operate or are domiciled, or where the securities are traded, such as changes in economic or monetary policies. Values may also be affected by restrictions on receiving the investment proceeds from a foreign country. Less
information may be publicly available about foreign companies than about U.S. companies. Foreign companies are generally not subject to the same accounting, auditing and financial reporting standards as are U.S. companies. In addition, the
Funds investments in foreign securities may be subject to the risk of nationalization or expropriation of assets, imposition of currency exchange controls or restrictions on the repatriation of foreign currency, confiscatory taxation,
political or financial instability and adverse diplomatic developments. In addition, there may be difficulty in obtaining or enforcing a court judgment abroad. Dividends or interest on, or proceeds from the sale of, foreign securities may be subject
to non-U.S. withholding taxes, and special U.S. tax considerations may apply.
The risks of foreign investment are greater for investments in emerging
markets. The Fund considers a country to be an emerging market country if, at the time of investment, it is represented in the J.P. Morgan Emerging Markets Bond Index Global or 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
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63
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Summary of information regarding the Fund (unaudited) (contd)
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.
Currency Risk. The value of investments in securities 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.
Leverage Risk. The Fund may utilize leverage in an amount up to 33 1/3% of the Funds Managed Assets. 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 funds portfolio. Other risks described in the Prospectus also will be compounded because leverage generally magnifies the effect of a change in
the value of an asset and creates a risk of loss of value on a larger pool of assets than the fund would otherwise have had. 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 funds assets. In addition, the funds portfolio will be leveraged if it
exercises its right to delay payment on a redemption, and losses will result if the value of the funds 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.
Reverse Repurchase Agreements Risk. The Funds use of reverse repurchase agreements involves many of the same risks
involved in the Funds 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 Funds net asset value will decline, and, in some cases,
the Fund may be worse off than if it had not used such instruments.
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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 Funds 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 Funds 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.
Derivatives
Risk. The Fund may utilize a variety of derivative instruments such as options, floors, caps and collars, futures contracts, forward contracts, options on futures contracts and indexed securities. Using derivatives can increase Fund losses and
reduce opportunities for gains when market prices, interest rates, currencies, or the derivatives themselves behave in a way not anticipated by the Fund. Using derivatives also can have a leveraging effect and increase Fund volatility. Certain
derivatives have the potential for unlimited loss, regardless of the size of the initial investment. Derivatives may not be available at the time or price desired, may be difficult to sell, unwind or value, and the counterparty may default on its
obligations to the Fund. Derivatives are generally subject to the risks applicable to the assets, rates, indices or other indicators underlying the derivative. The value of a derivative may fluctuate more than the underlying assets, rates, indices
or other indicators to which it relates. Use of derivatives may have different tax consequences for the Fund than an investment in the underlying security, and those differences may affect the amount, timing and character of income distributed to
shareholders. The U.S. government and foreign governments are in the process of adopting and implementing regulations governing
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Western Asset Global Corporate Defined Opportunity Fund Inc.
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Summary of information regarding the Fund (unaudited) (contd)
derivatives markets, including mandatory clearing of certain derivatives, margin and reporting requirements. The ultimate impact of the regulations remains unclear.
Additional regulation of derivatives may make derivatives more costly, limit their availability or utility, otherwise adversely affect their performance or disrupt markets.
The Securities and Exchange Commission adopted a new rule on October 28, 2020 that mandates that a funds derivatives risk management program provide for specific items as required by the rule, including
compliance with a VaR test. Compliance with these new requirements will be required after an eighteen-month transition period following the effective date of the adopted rule. Following the compliance date, these requirements may limit the ability
of the Fund to use derivatives and reverse repurchase agreements and similar financing transactions as part of its investment strategies. These requirements may increase the cost of the Funds investments in derivatives, which could adversely
affect shareholders.
Credit default swap contracts involve heightened risks and may result in losses to the Fund. Credit default swaps may be illiquid
and difficult to value. When the Fund sells credit protection via a credit default swap, credit risk increases since the Fund has exposure to both the issuer whose credit is the subject of the swap and the counterparty to the swap.
Liquidity Risk. The Fund may invest up to 20% of its Managed Assets in illiquid securities. The term illiquid securities for this purpose means
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.
Management Risk. The Fund is subject to management
risk because it is an actively managed investment portfolio. Western Asset and each individual portfolio manager may not be successful in selecting the best performing securities or investment techniques, and the Funds performance may lag
behind that of similar funds.
Credit Crisis Liquidity and Volatility Risk. The markets for credit instruments, including fixed income securities,
have experienced periods of extreme illiquidity and volatility. General market uncertainty and consequent repricing risk have led to market imbalances of sellers and buyers, which in turn have also resulted in significant valuation uncertainties in
a variety of debt securities, including certain fixed income securities. These conditions resulted, and in many cases continue to result in greater volatility, less liquidity, widening credit spreads and a lack of price transparency, with many debt
securities remaining illiquid
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and of uncertain value. During times of
reduced market liquidity, the Fund may not be able to sell securities readily at prices reflecting the values at which the securities are carried on the Funds books. Sales of large blocks of securities by market participants, such as the Fund,
that are seeking liquidity can further reduce security prices in an illiquid market. These market conditions may make valuation of some of the Funds securities uncertain and/or result in sudden and significant valuation increases or decreases
in its holdings. Illiquidity and volatility in the credit markets may directly and adversely affect the setting of dividend rates on the Common Shares.
LIBOR Risk. The Funds investments, payment obligations, and financing terms may be based on floating rates, such as the London Interbank Offered Rate,
or LIBOR, which is the offered rate for short-term Eurodollar deposits between major international banks. Plans are underway to phase out the use of LIBOR by the end of 2021. There remains uncertainty regarding the nature of any
replacement rate and the impact of the transition from LIBOR on the Funds transactions and the financial markets generally. As such, the potential effect of a transition away from LIBOR on the Fund or the Funds investments cannot yet be
determined.
Government Intervention in Financial Markets Risk. The instability in the financial markets has led the U.S. government and foreign
governments to take a number of unprecedented actions designed to support certain financial institutions and segments of the financial markets that have experienced extreme volatility, and in some cases a lack of liquidity. U.S. federal and state
governments and foreign governments, their regulatory agencies or self regulatory organizations may take additional actions that affect the regulation of the securities in which the Fund invests, or the issuers of such securities, in ways that are
unforeseeable. Issuers of corporate fixed income securities might seek protection under the bankruptcy laws. Legislation or regulation may also change the way in which the Fund itself is regulated. Such legislation or regulation could limit or
preclude the Funds ability to achieve its investment objectives. Western Asset will monitor developments and seek to manage the Funds portfolio in a manner consistent with achieving the Funds investment objectives, but there can be
no assurance that it will be successful in doing so.
Limited Term Risk. Unless the termination date is amended by stockholders in accordance with
the Articles, the Fund will be terminated on or about December 2, 2024. The Fund does not seek to return $20 per share upon termination. As the assets of the Fund will be liquidated in connection with its termination, the Fund may be required
to sell portfolio securities when it otherwise would not, including at times when market conditions are not favorable, which may cause the Fund to lose money. As the Fund approaches its termination date, the portfolio composition of the Fund may
change, which may cause the Funds returns to decrease and the market price of the Common Stock to fall. Rather than reinvesting the proceeds of its securities, the Fund may distribute the proceeds in one or more liquidating
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distributions prior to the final liquidation, which may cause the Funds fixed expenses to increase when expressed as a percentage of net assets attributable
to Common Stock, or the Fund may invest the proceeds in lower yielding securities or hold the proceeds in cash or cash equivalents, which may adversely affect the performance of the Fund. Upon its termination, the Fund will distribute substantially
all of its net assets to stockholders which may be more than, equal to or less than $20 per share. In addition, other provisions of the Articles may permit the Fund (with stockholder approval) to take certain actions that could have the effect of
changing the termination date, such as through merger, consolidation or liquidation.
Asset-Backed, Mortgage-Backed or Mortgage-Related Securities
Risk. To the extent the Fund invests significantly in asset-backed, mortgage-backed or mortgage-related securities, its exposure to prepayment and extension risks may be greater than other investments in fixed income securities. Mortgage
derivatives held by the Fund may have especially volatile prices and may have a disproportionate effect on the Funds share price. Rising interest rates tend to extend the duration of mortgage-related securities, making them more sensitive to
changes in interest rates. In addition, mortgage-related securities are subject to prepayment riskthe risk that borrowers may pay off their mortgages sooner than expected, particularly when interest rates decline. This can reduce the
Funds returns because the Fund may have to reinvest that money at lower prevailing interest rates. The Funds investments in other asset-backed securities are subject to risks similar to those associated with mortgage-backed securities.
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 Funds 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 Stock in a relatively short
period following completion of this offering. Whether investors will realize gains or losses upon the sale of the Common Stock will depend not upon the Funds net asset value but upon whether the market price of the Common Stock at the time of
sale is above or below the investors purchase price for the Common Stock.
Because the market price of the Common Stock will be determined by
factors such as relative supply of and demand for the Common Stock in the market, general market and economic conditions and other factors beyond the control of the Fund, the Fund cannot predict whether the Common Stock will trade at, above or below
net asset value or at, above or below the initial public offering price. The Funds Common Stock is designed primarily for long term investors and you should not view the Fund as a vehicle for trading purposes.
Non-Diversification Risk. The Fund is classified as non-diversified under the 1940 Act. As a result, it can invest a greater portion of its
assets in obligations of a single issuer than a
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diversified fund. The Fund may therefore be more susceptible than a diversified fund to being adversely affected by any single corporate, economic, political or regulatory occurrence.
See The Funds Investments. The Fund intends to qualify for the special tax treatment available to regulated investment companies under Subchapter M of the Code, and thus intends to satisfy the diversification
requirements of Subchapter M, including the less stringent diversification requirement that applies to the percent of its total assets that are represented by cash and cash items (including receivables), U.S. government securities, the securities of
other regulated investment companies and certain other securities.
U.S. Government Debt Securities Risk. Although the U.S. government guarantees
principal and interest payments on securities issued by the U.S. government and some of its agencies, such as securities issued by the Government National Mortgage Association, this guarantee does not apply to losses resulting from declines in the
market value of these securities.
Non-U.S. Government Debt Securities Risk. The Fund intends to invest in Non-U.S. government 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 issuers 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 issuers ability or willingness to service
debt include, but are not limited to, a countrys 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 issuers
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.
Senior Loans Risk. The Fund may invest in 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
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Western Asset Global Corporate Defined Opportunity Fund Inc.
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69
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Summary of information regarding the Fund (unaudited) (contd)
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 risks 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 borrowers 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 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 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
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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 lenders insolvency, the lenders 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.
Common Stock
Risk. The Fund may invest in common stocks and may hold common stocks which result from a corporate restructuring or stock conversion. 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 Funds net asset value per share, which will fluctuate as the value of the securities held by the Fund change.
Preferred Stock Risk. The Fund may invest in preferred stock. 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
companys 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 issuers board of directors. Preferred stocks also may be subject to optional or mandatory redemption provisions. Certain of the preferred stocks in which the Fund may invest may be convertible preferred stocks.
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Western Asset Global Corporate Defined Opportunity Fund Inc.
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71
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Summary of information regarding the Fund (unaudited) (contd)
Convertible Securities Risk. The Fund may invest in convertible securities. 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
securitys investment value. Convertible securities rank senior to common stock in a corporations 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 securitys governing instrument.
Short Sales Risk. To the extent the
Fund makes use of short sales for investment and/or risk management purposes, the Fund may be subject to risks associated with selling short. Short sales are transactions in which the Fund sells securities or other instruments that the Fund does not
own. Short sales expose the Fund to the risk that it will be required to cover its short position at a time when the securities have appreciated in value, thus resulting in a loss to the Fund. The Fund may engage in short sales where it does not own
or have the right to acquire the security sold short at no additional cost. The Funds loss on a short sale theoretically could be unlimited in a case where the Fund is unable, for whatever reason, to close out its short position. In addition,
the Funds short selling strategies may limit its ability to benefit from increases in the markets. If the Fund engages in short sales, it will segregate liquid assets, enter into offsetting transactions or own positions covering its
obligations; however, such segregation and cover requirements will not limit or offset losses on related positions. Short selling also involves a form of financial leverage that may exaggerate any losses realized by the Fund. Also, there is the risk
that the counterparty to a short sale may fail to honor its contractual terms, causing a loss to the Fund.
Risk of Short Economic Exposure Through
Derivatives. The use by the Fund of derivatives such as options, forwards or futures contracts for investment and/or risk management purposes may subject the Fund to risks associated with short economic exposure through such derivatives. Taking
a short economic position through derivatives exposes the Fund to
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Western Asset Global Corporate Defined Opportunity Fund Inc.
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the risk that it will be obligated to make payments to its counterparty if the underlying asset appreciates in value, thus resulting in a loss to the Fund. The Funds loss on a short
position using derivatives theoretically could be unlimited.
Counterparty Risk. Changes in the credit quality of the companies that serve as the
Funds counterparties with respect to derivatives or other transactions supported by another partys credit will affect the value of those instruments. Certain entities that have served as counterparties in the markets for these
transactions have recently incurred significant financial hardships including bankruptcy and losses as a result of exposure to sub-prime mortgages and other lower quality credit investments that have experienced recent defaults or otherwise suffered
extreme credit deterioration. If a counterparty becomes bankrupt or otherwise fails to perform its obligations under a derivative contract due to financial difficulties, the Fund may experience significant delays in obtaining any recovery under the
derivative contract in a bankruptcy or other reorganization proceeding. The Fund may obtain only a limited recovery or may obtain no recovery in such circumstances.
Structured Notes and Related Instruments Risk. The Fund may invest in structured notes and other related instruments, which are privately negotiated debt obligations where the principal and/or
interest is determined by reference to the performance of a benchmark asset, market or interest rate (an embedded index), such as selected securities, an index of securities or specified interest rates, or the differential performance of
two assets or markets, such as indexes reflecting bonds. Structured instruments may be issued by corporations, including banks, as well as by governmental agencies. Structured instruments frequently are assembled in the form of medium-term notes,
but a variety of forms are available and may be used in particular circumstances. The terms of such structured instruments normally provide that their principal and/or interest payments are to be adjusted upwards or downwards (but ordinarily not
below zero) to reflect changes in the embedded index while the structured instruments are outstanding. As a result, the interest and/or principal payments that may be made on a structured product may vary widely, depending on a variety of factors,
including the volatility of the embedded index and the effect of changes in the embedded index on principal and/or interest payments. The rate of return on structured notes may be determined by applying a multiplier to the performance or
differential performance of the referenced index(es) or other asset(s). Application of a multiplier involves leverage that will serve to magnify the potential for gain and the risk of loss.
Inflation/Deflation Risk. Inflation risk is the risk that the value of certain assets or income from the Funds 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 Funds use of leverage
would likely
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Western Asset Global Corporate Defined Opportunity Fund Inc.
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73
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Summary of information regarding the Fund (unaudited) (contd)
increase, which would tend to further reduce returns to stockholders. Deflation risk is the risk that prices throughout the economy decline over timethe
opposite of inflation. Deflation may have an adverse affect on the creditworthiness of issuers and may make issuer defaults more likely, which may result in a decline in the value of the Funds portfolio.
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.
Portfolio Turnover Risk. 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 Funds 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 Funds current and accumulated earnings and profits, resulting in a greater portion of the Funds distributions being treated as a dividend to the Funds 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.
Anti-Takeover Provisions Risk. The Funds 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 Funds ability to achieve its primary investment objective. Such provisions may limit the ability of
shareholders to sell
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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 changes in general market
conditions, overall economic trends or events, governmental actions or intervention, actions taken by the U.S. Federal Reserve or foreign central banks, market disruptions caused by trade disputes or other factors, political developments, investor
sentiment, the global and domestic effects of a pandemic, 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, 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 directly affected, the value and liquidity of the Funds investments may be negatively affected.
The rapid and global spread of a highly contagious novel coronavirus respiratory disease, designated COVID-19, first detected in China in December 2019, has
resulted in extreme volatility in the financial markets and severe losses; reduced liquidity of many instruments; restrictions on international and, in some cases, local travel, significant disruptions to business operations (including business
closures); strained healthcare systems; disruptions to supply chains, consumer demand and employee availability; and widespread uncertainty regarding the duration and long-term effects of this pandemic. Some sectors of the economy and individual
issuers have experienced particularly large losses. In addition, the COVID-19 pandemic may result in a sustained economic downturn or a global recession, domestic and foreign political and social instability, damage to diplomatic and international
trade relations and increased volatility and/or decreased liquidity in the securities markets. The ultimate economic fallout from the pandemic, and the long-term impact on economies, markets, industries and individual issuers, are not known. Certain
risks, such as interest rate risk, credit risk, liquidity risk and counterparty risk, may be heightened as a result of such market events. The U.S. government and the Federal Reserve, as well as certain foreign governments and central banks, are
taking extraordinary actions to support local and global economies and the financial markets in response to the COVID-19 pandemic, including by pushing interest rates to very low levels. This and other government intervention into the economy and
financial markets to address the COVID-19 pandemic may not work as intended, particularly if the efforts are perceived by investors as being unlikely to achieve the desired results. The COVID-19 pandemic could adversely affect the value and
liquidity of the Funds investments and negatively impact the Funds performance.
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Western Asset Global Corporate Defined Opportunity Fund Inc.
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75
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Summary of information regarding the Fund (unaudited) (contd)
In addition, the outbreak of COVID-19, and measures taken to mitigate its effects, could result in disruptions to the services provided to the Fund by its service
providers.
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 issuers 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.
Managed Distribution Risk. Under a managed distribution policy, the Fund would intend to make monthly distributions to stockholders at a fixed rate per share
of Common Stock or a fixed percentage of net asset value that may include periodic distributions of long-term capital gains. Under a managed distribution policy, if, for any monthly distribution, ordinary income (that is, net investment income and
any net short-term capital gain) and net realized capital gains were less than the amount of the distribution, the difference would be distributed from the Funds previously accumulated earnings and profits or cash generated from the sale of
Fund assets. If, for any fiscal year, the total distributions exceeded ordinary income and net realized capital gains (the Excess), the Excess would decrease the Funds total assets and, as a result, would have the likely effect of
increasing the Funds expense ratio. There is a risk that the Fund would not eventually realize capital gains in an amount corresponding to a distribution of the Excess. In addition, in order to make such distributions, the Fund may have to
sell a portion of its investment portfolio at a time when independent investment judgment might not dictate such action. If the Fund were to issue senior securities and not be in compliance with the asset coverage requirements of the 1940 Act, the
Fund would be required to suspend the managed distribution policy. Pursuant to the requirements of the 1940 Act and other applicable laws, a notice will accompany each monthly distribution disclosing the sources of the distribution.
More Information
For a complete list of the
Funds fundamental investment restrictions and more detailed descriptions of the Funds investment policies, strategies and risks, see the Funds registration statement on Form N-2 that was declared effective by the SEC on
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Western Asset Global Corporate Defined Opportunity Fund Inc.
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November 23, 2009. The Funds
fundamental investment restrictions may not be changed without the approval of the holders of a majority of the outstanding voting securities, as defined in the 1940 Act.
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Western Asset Global Corporate Defined Opportunity Fund Inc.
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77
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Dividend reinvestment plan (unaudited)
Unless you elect to receive distributions in cash (i.e., opt-out), all dividends, including any capital gain dividends and return of capital distributions, on your
Common Stock will be automatically reinvested by Computershare Trust Company, N.A., as agent for the stockholders (the Plan Agent), in additional shares of Common Stock under the Funds Dividend Reinvestment Plan (the
Plan). You may elect not to participate in the Plan by contacting the Plan Agent. If you do not participate, you will receive all cash distributions paid by check mailed directly to you by Computershare Trust Company, N.A., as dividend
paying agent.
If you participate in the Plan, the number of shares of Common Stock you will receive will be determined as follows:
(1) If the market price of the Common Stock (plus $0.03 per share commission) on the payment date (or, if the payment date is not a NYSE trading
day, the immediately preceding trading day) is equal to or exceeds the net asset value per share of the Common Stock at the close of trading on the NYSE on the payment date, the Fund will issue new Common Stock at a price equal to the greater of
(a) the net asset value per share at the close of trading on the NYSE on the payment date or (b) 95% of the market price per share of the Common Stock on the payment date.
(2) If the net asset value per share of the Common Stock exceeds the market price of the Common Stock (plus $0.03 per share commission) at the close
of trading on the NYSE on the payment date, the Plan Agent will receive the dividend or distribution in cash and will buy Common Stock in the open market, on the NYSE or elsewhere, for your account as soon as practicable commencing on the trading
day following the payment date and terminating no later than the earlier of (a) 30 days after the dividend or distribution payment date, or (b) the payment date for the next succeeding dividend or distribution to be made to the
stockholders; except when necessary to comply with applicable provisions of the federal securities laws. If during this period: (i) the market price (plus $0.03 per share commission) rises so that it equals or exceeds the net asset value per
share of the Common Stock at the close of trading on the NYSE on the payment date before the Plan Agent has completed the open market purchases or (ii) if the Plan Agent is unable to invest the full amount eligible to be reinvested in open
market purchases, the Plan Agent will cease purchasing Common Stock in the open market and the Fund shall issue the remaining Common Stock at a price per share equal to the greater of (a) the net asset value per share at the close of trading on
the NYSE on the day prior to the issuance of shares for reinvestment or (b) 95% of the then current market price per share.
Common Stock in your
account will be held by the Plan Agent in non-certificated form. Any proxy you receive will include all shares of Common Stock you have received under the Plan. You may withdraw from the Plan (i.e., opt-out) by notifying the Plan Agent in writing at
462 South 4th Street, Suite 1600, Louisville, KY 40202 or by calling the Plan Agent at 1-888-888-0151. Such withdrawal will be effective immediately if notice is received by the Plan Agent not less than ten business days prior to any dividend or
distribution record date;
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Western Asset Global Corporate Defined Opportunity Fund Inc.
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otherwise such withdrawal will be effective as soon as practicable after the Plan Agents investment of the most
recently declared dividend or distribution on the Common Stock.
Plan participants who sell their shares will be charged a service charge (currently
$5.00 per transaction) and the Plan Agent is authorized to deduct brokerage charges actually incurred from the proceeds (currently $0.05 per share commission). There is no service charge for reinvestment of your dividends or distributions in Common
Stock. However, all participants will pay a pro rata share of brokerage commissions incurred by the Plan Agent when it makes open market purchases. Because all dividends and distributions will be automatically reinvested in additional shares of
Common Stock, this allows you to add to your investment through dollar cost averaging, which may lower the average cost of your Common Stock over time. Dollar cost averaging is a technique for lowering the average cost per share over time if the
Funds net asset value declines. While dollar cost averaging has definite advantages, it cannot assure profit or protect against loss in declining markets.
Automatically reinvesting dividends and distributions does not mean that you do not have to pay income taxes due upon receiving dividends and distributions. Investors will be subject to income tax on amounts
reinvested under the Plan.
The Fund reserves the right to amend or terminate the Plan if, in the judgment of the Board of Directors, the change is
warranted. The Plan may be terminated, amended or supplemented by the Fund upon notice in writing mailed to stockholders at least 30 days prior to the record date for the payment of any dividend or distribution by the Fund for which the termination
or amendment is to be effective. Upon any termination, you will be sent cash for any fractional share of Common Stock in your account. You may elect to notify the Plan Agent in advance of such termination to have the Plan Agent sell part or all of
your Common Stock on your behalf. Additional information about the Plan and your account may be obtained from the Plan Agent at 462 South 4th Street, Suite 1600, Louisville, KY 40202 or by calling the Plan Agent at 1-888-888-0151.
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Western Asset Global Corporate Defined Opportunity Fund Inc.
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79
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Important tax information (unaudited)
The following information is provided with respect to the distributions paid during the taxable year ended October 31, 2020:
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Record date:
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Monthly
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Monthly
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Payable date:
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November 2019 through
December 2019
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January 2020 through
October 2020
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Ordinary Income:
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Qualified Dividend Income for Individuals
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3.30
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%
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6.64
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%*
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Dividends Qualifying for the Dividends
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Received Deduction for Corporations
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3.30
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%
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6.64
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%*
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Interest from Federal Obligations
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2.40
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%*
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Tax Return of Capital
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21.74
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%**
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The law varies in each state as to whether and what percentage of dividend income attributable to Federal obligations is exempt from
state income tax. We recommend that you consult with your tax adviser to determine if any portion of the dividends you received is exempt from state income taxes.
The following information is applicable to non-U.S. resident shareholders
The percentages
indicated below represent the portion of the ordinary income distributions paid monthly by the Fund that are Interest-related dividends and eligible for exemption from U.S. withholding tax for nonresident aliens and foreign corporations.
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Record date:
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Monthly
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Monthly
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Payable date:
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November 2019 through
December 2019
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January 2020 through
October 2020
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Qualified Net Interest Income
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55.00
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%*
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*
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Expressed as a percentage of the distributions paid reduced by the return of capital.
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**
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Expressed as a percentage of the cash distributions paid.
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80
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Western Asset Global Corporate Defined Opportunity Fund Inc.
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Western Asset
Global Corporate Defined Opportunity Fund Inc.
Directors
Robert D. Agdern
Carol L. Colman
Daniel P. Cronin
Paolo M. Cucchi
William R. Hutchinson
Eileen A. Kamerick
Nisha Kumar
Jane Trust
Chairman
Officers
Jane Trust
President and Chief Executive Officer
Christopher Berarducci
Treasurer and Principal Financial Officer
Fred Jensen*
Chief Compliance Officer
Jenna Bailey
Identity Theft Prevention Officer
George P.
Hoyt**
Secretary and Chief Legal Officer
Thomas
C. Mandia
Assistant Secretary
Jeanne M. Kelly
Senior Vice President
Western
Asset Global Corporate Defined Opportunity Fund Inc.
620 Eighth Avenue
47th Floor
New York, NY 10018
Investment manager
Legg Mason Partners Fund Advisor, LLC
Subadvisers
Western Asset Management
Company, LLC
Western Asset Management Company Limited
Western Asset Management Company Ltd
Western Asset Management
Company Pte. Ltd.
Custodian
The
Bank of New York Mellon
Transfer agent
Computershare Inc.
462 South 4th Street, Suite 1600
Louisville, KY 40202
Independent registered public accounting firm
PricewaterhouseCoopers LLP
Baltimore, MD
Legal counsel
Simpson Thacher &
Bartlett LLP
425 Lexington Avenue
New York, NY 10017
New York Stock Exchange Symbol
GDO
*
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Effective April 17, 2020, Mr. Jensen became Chief Compliance Officer.
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**
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Effective August 13, 2020, Mr. Hoyt became Secretary and Chief Legal Officer.
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Legg Mason Funds Privacy and Security Notice
Your Privacy and the Security of Your Personal Information is Very Important to the Legg Mason Funds
This Privacy and Security Notice (the Privacy Notice) addresses the Legg Mason Funds privacy and data protection practices with respect to
nonpublic personal information the Funds receive. The Legg Mason Funds include any funds sold by the Funds distributor, Legg Mason Investor Services, LLC, as well as Legg Mason-sponsored closed-end funds. The provisions of this Privacy Notice
apply to your information both while you are a shareholder and after you are no longer invested with the Funds.
The Type of
Nonpublic Personal Information the Funds Collect About You
The Funds collect and maintain nonpublic personal information about you in connection
with your shareholder account. Such information may include, but is not limited to:
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Personal information included on applications or other forms;
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Account balances, transactions, and mutual fund holdings and positions;
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Bank account information, legal documents, and identity verification documentation;
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Online account access user IDs, passwords, security challenge question responses; and
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Information received from consumer reporting agencies regarding credit history and creditworthiness (such as the amount of an individuals total debt,
payment history, etc.).
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How the Funds Use Nonpublic Personal Information About You
The Funds do not sell or share your nonpublic personal information with third parties or with affiliates for their marketing purposes, or with other financial
institutions or affiliates for joint marketing purposes, unless you have authorized the Funds to do so. The Funds do not disclose any nonpublic personal information about you except as may be required to perform transactions or services you have
authorized or as permitted or required by law.
The Funds may disclose information about you to:
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Employees, agents, and affiliates on a need to know basis to enable the Funds to conduct ordinary business, or to comply with obligations to
government regulators;
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Service providers, including the Funds affiliates, who assist the Funds as part of the ordinary course of business (such as printing, mailing services, or
processing or servicing your account with us) or otherwise perform services on the Funds behalf, including companies that may perform statistical analysis, market research and marketing services solely for the Funds;
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Permit access to transfer, whether in the United States or countries outside of the United States to such Funds employees, agents and affiliates and
service providers as required to enable the Funds to conduct ordinary business, or to comply with obligations to government regulators;
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The Funds representatives such as legal counsel, accountants and auditors to enable the Funds to conduct ordinary business, or to comply with obligations
to government regulators;
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Fiduciaries or representatives acting on your behalf, such as an IRA custodian or trustee of a grantor trust.
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NOT PART OF THE ANNUAL REPORT
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Legg Mason Funds Privacy and Security Notice (contd)
Except as otherwise permitted by applicable law, companies acting on the Funds
behalf, including those outside the United States, are contractually obligated to keep nonpublic personal information the Funds provide to them confidential and to use the information the Funds share only to provide the services the Funds ask them
to perform. The Funds may disclose nonpublic personal information about you when necessary to enforce their rights or protect against fraud, or as permitted or required by applicable law, such as in connection with a law enforcement or regulatory
request, subpoena, or similar legal process. In the event of a corporate action or in the event a Fund service provider changes, the Funds may be required to disclose your nonpublic personal information to third parties. While it is the Funds
practice to obtain protections for disclosed information in these types of transactions, the Funds cannot guarantee their privacy policy will remain unchanged.
Keeping You Informed of the Funds Privacy and Security Practices
The Funds will notify
you annually of their privacy policy as required by federal law. While the Funds reserve the right to modify this policy at any time they will notify you promptly if this privacy policy changes.
The Funds Security Practices
The
Funds maintain appropriate physical, electronic and procedural safeguards designed to guard your nonpublic personal information. The Funds internal data security policies restrict access to your nonpublic personal information to authorized
employees, who may use your nonpublic personal information for Fund business purposes only.
Although the Funds strive to protect your nonpublic
personal information, they cannot ensure or warrant the security of any information you provide or transmit to them, and you do so at your own risk. In the event of a breach of the confidentiality or security of your nonpublic personal information,
the Funds will attempt to notify you as necessary, so you can take appropriate protective steps. If you have consented to the Funds using electronic communications or electronic delivery of statements, they may notify you under such circumstances
using the most current email address you have on record with them.
In order for the Funds to provide effective service to you, keeping your account
information accurate is very important. If you believe that your account information is incomplete, not accurate or not current, if you have questions about the Funds privacy practices, or our use of your nonpublic personal information, write
the Funds using the contact information on your account statements, email the Funds by clicking on the Contact Us section of the Funds website at www.leggmason.com, or contact the Fund at 1-888-777-0102.
Revised April 2018
Legg Mason California
Consumer Privacy Act Policy
Although much of the personal information we collect is nonpublic personal information subject to federal
law, residents of California may, in certain circumstances, have additional rights under the California Consumer Privacy Act (CCPA). For example, if you are a broker,
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NOT PART OF THE ANNUAL REPORT
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Legg Mason Funds Privacy and Security Notice (contd)
dealer, agent, fiduciary, or representative acting by or on behalf of, or for, the
account of any other person(s) or household, or a financial advisor, or if you have otherwise provided personal information to us separate from the relationship we have with personal investors, the provisions of this Privacy Policy apply to your
personal information (as defined by the CCPA).
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In addition to the provisions of the Legg Mason Funds Security and Privacy Notice, you may have the right to know the categories and specific pieces of personal
information we have collected about you.
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You also have the right to request the deletion of the personal information collected or maintained by the Funds.
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If you wish to exercise any of the rights you have in respect of your personal information, you should advise the Funds by contacting them as set forth below. The
rights noted above are subject to our other legal and regulatory obligations and any exemptions under the CCPA. You may designate an authorized agent to make a rights request on your behalf, subject to the identification process described below. We
do not discriminate based on requests for information related to our use of your personal information, and you have the right not to receive discriminatory treatment related to the exercise of your privacy rights.
We may request information from you in order to verify your identity or authority in making such a request. If you have appointed an authorized agent to make a
request on your behalf, or you are an authorized agent making such a request (such as a power of attorney or other written permission), this process may include providing a password/passcode, a copy of government issued identification, affidavit or
other applicable documentation, i.e. written permission. We may require you to verify your identity directly even when using an authorized agent, unless a power of attorney has been provided. We reserve the right to deny a request submitted by an
agent if suitable and appropriate proof is not provided.
For the 12-month period prior to the date of this Privacy Policy, the Legg Mason Funds have not
sold any of your personal information; nor do we have any plans to do so in the future.
Contact Information
Address: Data Privacy Officer, 100 International Dr., Baltimore, MD 21202
Email: DataProtectionOfficer@franklintempleton.com
Phone: 1-800-396-4748
Revised October 2020
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NOT PART OF THE ANNUAL REPORT
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Western Asset Global Corporate Defined Opportunity Fund Inc.
Western Asset Global Corporate Defined Opportunity Fund Inc.
620
Eighth Avenue
47th Floor
New York, NY 10018
Notice is hereby given in accordance with
Section 23(c) of the Investment Company Act of 1940, as amended, that from time to time the Fund may purchase, at market prices, shares of its stock.
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each
fiscal year as an exhibit to its reports on Form N-PORT. The Funds Forms N-PORT are available on the SECs website at www.sec.gov. To obtain information on Form N-PORT, shareholders can call the Fund at 1-888-777-0102.
Information on how the Fund voted proxies relating to portfolio securities during the prior 12-month period ended June 30th of each year and a description of
the policies and procedures that the Fund uses to determine how to vote proxies related to portfolio transactions are available (1) without charge, upon request, by calling 1-888-777-0102, (2) at www.lmcef.com and (3) on the
SECs website at www.sec.gov.
This report is transmitted to the shareholders of Western Asset Global Corporate Defined Opportunity Fund Inc. for
their information. This is not a prospectus, circular or representation intended for use in the purchase of shares of the Fund or any securities mentioned in this report.
Computershare Inc.
462 South
4th Street, Suite 1600
Louisville, KY 40202
WASX013050 12/20 SR20-4037