|
|
|
|
|
|
|
Assets:
|
|
|
|
|
Investments in unaffiliated securities, at value (Cost $304,372,251)
|
|
$
|
348,534,727
|
|
Investments in affiliated securities, at value (Cost $134,264)
|
|
|
134,264
|
|
Foreign currency, at value (Cost $956,679)
|
|
|
946,122
|
|
Interest and dividends receivable
|
|
|
4,678,905
|
|
Receivable for securities sold
|
|
|
1,128,763
|
|
Unrealized appreciation on forward foreign currency contracts
|
|
|
4,484
|
|
Other receivables
|
|
|
2,647
|
|
Prepaid expenses
|
|
|
8,947
|
|
Total Assets
|
|
|
355,438,859
|
|
|
|
Liabilities:
|
|
|
|
|
Loan payable (Note 6)
|
|
|
85,500,000
|
|
Payable for open reverse repurchase agreements (Note 3)
|
|
|
21,448,500
|
|
Payable for securities purchased
|
|
|
4,664,066
|
|
Distributions payable
|
|
|
1,520,719
|
|
Investment management fee payable
|
|
|
251,746
|
|
Unrealized depreciation on forward foreign currency contracts
|
|
|
52,172
|
|
Directors fees payable
|
|
|
10,667
|
|
Interest expense payable
|
|
|
8,800
|
|
Accrued expenses
|
|
|
119,572
|
|
Total Liabilities
|
|
|
113,576,242
|
|
Total Net Assets
|
|
$
|
241,862,617
|
|
|
|
Net Assets:
|
|
|
|
|
Par value ($0.001 par value; 22,697,297 shares issued and outstanding; 100,000,000 shares authorized)
|
|
$
|
22,697
|
|
Paid-in capital in excess of par value
|
|
|
307,508,971
|
|
Total distributable earnings (loss)
|
|
|
(65,669,051)
|
|
Total Net Assets
|
|
$
|
241,862,617
|
|
|
|
Shares Outstanding
|
|
|
22,697,297
|
|
|
|
Net Asset Value
|
|
|
$10.66
|
|
See Notes to Financial
Statements.
|
|
|
|
|
|
|
Western Asset Global High Income Fund Inc. 2021 Annual Report
|
|
|
|
|
25
|
|
Statement of operations
For the Year Ended May 31, 2021
|
|
|
|
|
|
|
Investment Income:
|
|
|
|
|
Interest
|
|
$
|
29,368,398
|
|
Dividends
|
|
|
22,041
|
|
Less: Foreign taxes withheld
|
|
|
(119,240)
|
|
Total Investment Income
|
|
|
29,271,199
|
|
|
|
Expenses:
|
|
|
|
|
Investment management fee (Note 2)
|
|
|
4,042,076
|
|
Interest expense (Notes 3 and 6)
|
|
|
1,073,186
|
|
Commitment fees (Note 6)
|
|
|
165,002
|
|
Directors fees
|
|
|
125,741
|
|
Legal fees
|
|
|
105,239
|
|
Audit and tax fees
|
|
|
74,793
|
|
Transfer agent fees
|
|
|
48,168
|
|
Shareholder reports
|
|
|
24,016
|
|
Stock exchange listing fees
|
|
|
22,047
|
|
Custody fees
|
|
|
20,737
|
|
Fund accounting fees
|
|
|
8,000
|
|
Insurance
|
|
|
6,570
|
|
Miscellaneous expenses
|
|
|
5,068
|
|
Total Expenses
|
|
|
5,720,643
|
|
Less: Fee waivers and/or expense reimbursements (Note 2)
|
|
|
(2,190)
|
|
Net Expenses
|
|
|
5,718,453
|
|
Net Investment Income
|
|
|
23,552,746
|
|
|
|
Realized and Unrealized Gain (Loss) on Investments, Forward Foreign Currency Contracts and Foreign Currency Transactions (Notes 1, 3
and 4):
|
|
|
|
|
Net Realized Gain (Loss) From:
|
|
|
|
|
Investment transactions
|
|
|
19,481,745
|
|
Forward foreign currency contracts
|
|
|
(225,337)
|
|
Foreign currency transactions
|
|
|
(88,192)
|
|
Net Realized Gain
|
|
|
19,168,216
|
|
Change in Net Unrealized Appreciation (Depreciation) From:
|
|
|
|
|
Investments
|
|
|
16,823,460
|
|
Forward foreign currency contracts
|
|
|
(5,233)
|
|
Foreign currencies
|
|
|
103,558
|
|
Change in Net Unrealized Appreciation (Depreciation)
|
|
|
16,921,785
|
|
Net Gain on Investments, Forward Foreign Currency Contracts and Foreign Currency Transactions
|
|
|
36,090,001
|
|
Increase in Net Assets From Operations
|
|
$
|
59,642,747
|
|
|
Net of foreign capital gains tax of $23,061.
|
See Notes to Financial Statements.
|
|
|
|
|
26
|
|
|
|
Western Asset Global High Income Fund Inc. 2021 Annual Report
|
Statements of changes in net assets
|
|
|
|
|
|
|
|
|
For the Years Ended May 31,
|
|
2021
|
|
|
2020
|
|
|
|
|
Operations:
|
|
|
|
|
|
|
|
|
Net investment income
|
|
$
|
23,552,746
|
|
|
$
|
33,533,365
|
|
Net realized gain (loss)
|
|
|
19,168,216
|
|
|
|
(31,786,592)
|
|
Change in net unrealized appreciation (depreciation)
|
|
|
16,921,785
|
|
|
|
(3,032,725)
|
|
Increase (Decrease) in Net Assets From Operations
|
|
|
59,642,747
|
|
|
|
(1,285,952)
|
|
|
|
|
Distributions to Shareholders From (Note 1):
|
|
|
|
|
|
|
|
|
Total distributable earnings
|
|
|
(19,645,733)
|
|
|
|
(30,138,905)
|
|
Return of capital
|
|
|
(5,694,904)
|
|
|
|
(4,158,234)
|
|
Decrease in Net Assets From Distributions to
Shareholders
|
|
|
(25,340,637)
|
|
|
|
(34,297,139)
|
|
|
|
|
Fund Share Transactions:
|
|
|
|
|
|
|
|
|
Cost of shares repurchased (0 and 239,229 shares repurchased, respectively)
(Note 8)
|
|
|
|
|
|
|
(1,781,056)
|
|
Cost of shares repurchased through tender offer (21,170,180 and 0 shares repurchased, respectively)
(Note 5)
|
|
|
(219,958,165)
|
|
|
|
|
|
Decrease in Net Assets From Fund Share Transactions
|
|
|
(219,958,165)
|
|
|
|
(1,781,056)
|
|
Decrease in Net Assets
|
|
|
(185,656,055)
|
|
|
|
(37,364,147)
|
|
|
|
|
Net Assets:
|
|
|
|
|
|
|
|
|
Beginning of year
|
|
|
427,518,672
|
|
|
|
464,882,819
|
|
End of year
|
|
$
|
241,862,617
|
|
|
$
|
427,518,672
|
|
See Notes to Financial
Statements.
|
|
|
|
|
|
|
Western Asset Global High Income Fund Inc. 2021 Annual Report
|
|
|
|
|
27
|
|
Statement of cash flows
For the Year Ended May 31, 2021
|
|
|
|
|
|
|
Increase (Decrease) in Cash:
|
|
|
|
|
Cash Flows from Operating Activities:
|
|
|
|
|
Net increase in net assets resulting from operations
|
|
$
|
59,642,747
|
|
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided (used) by operating
activities:
|
|
|
|
|
Purchases of portfolio securities
|
|
|
(194,914,810)
|
|
Sales of portfolio securities
|
|
|
491,139,799
|
|
Net purchases, sales and maturities of short-term investments
|
|
|
4,821,863
|
|
Payment-in-kind
|
|
|
(265,550)
|
|
Net inflation adjustment
|
|
|
(37,426)
|
|
Net amortization of premium (accretion of discount)
|
|
|
(4,363,662)
|
|
Decrease in receivable for securities sold
|
|
|
7,917,061
|
|
Decrease in security litigation proceeds receivable
|
|
|
22,127
|
|
Decrease in interest and dividends receivable
|
|
|
4,420,281
|
|
Decrease in prepaid expenses
|
|
|
9,701
|
|
Decrease in other receivables
|
|
|
682
|
|
Decrease in payable for securities purchased
|
|
|
(3,661,138)
|
|
Decrease in investment management fee payable
|
|
|
(181,114)
|
|
Increase in Directors fees payable
|
|
|
859
|
|
Decrease in interest expense payable
|
|
|
(48,058)
|
|
Decrease in accrued expenses
|
|
|
(10,485)
|
|
Net realized gain on investments
|
|
|
(19,481,745)
|
|
Change in net unrealized appreciation (depreciation) of investments and forward foreign currency
contracts
|
|
|
(16,818,227)
|
|
Net Cash Provided in Operating Activities*
|
|
|
328,192,905
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
Distributions paid on common stock (net of distributions payable)
|
|
|
(26,759,039)
|
|
Decrease in loan facility borrowings
|
|
|
(72,500,000)
|
|
Decrease in payable for reverse repurchase agreements
|
|
|
(9,254,250)
|
|
Payment for shares repurchased through tender offer
|
|
|
(219,958,165)
|
|
Net Cash Used by Financing Activities
|
|
|
(328,471,454)
|
|
Net Decrease in Cash and Restricted Cash
|
|
|
(278,549)
|
|
Cash and restricted cash at beginning of year
|
|
|
1,224,671
|
|
Cash and restricted cash at end of year
|
|
$
|
946,122
|
|
*
|
Included in operating expenses is cash paid of $1,251,242 for interest and commitment fees.
|
|
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.
|
|
|
|
|
|
|
|
May 31, 2021
|
|
Cash
|
|
|
$946,122
|
|
Restricted cash
|
|
|
|
|
Total cash and restricted cash shown in the Statement of Cash Flows
|
|
|
$946,122
|
|
See Notes to Financial
Statements.
|
|
|
|
|
28
|
|
|
|
Western Asset Global High Income Fund Inc. 2021 Annual Report
|
Financial highlights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For a share of capital stock outstanding throughout each year ended
May 31:
|
|
|
|
20211
|
|
|
20201
|
|
|
20191
|
|
|
20181
|
|
|
20171
|
|
|
|
|
|
|
|
Net asset value, beginning of year
|
|
|
$9.75
|
|
|
|
$10.54
|
|
|
|
$10.58
|
|
|
|
$11.31
|
|
|
|
$10.55
|
|
|
|
|
|
|
|
Income (loss) from operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
0.72
|
|
|
|
0.76
|
|
|
|
0.72
|
|
|
|
0.73
|
|
|
|
0.82
|
|
Net realized and unrealized gain (loss)
|
|
|
0.96
|
|
|
|
(0.78)
|
|
|
|
(0.04)
|
|
|
|
(0.69)
|
|
|
|
0.98
|
|
Total income (loss) from operations
|
|
|
1.68
|
|
|
|
(0.02)
|
|
|
|
0.68
|
|
|
|
0.04
|
|
|
|
1.80
|
|
|
|
|
|
|
|
Less distributions from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
(0.55)
|
|
|
|
(0.69)
|
|
|
|
(0.70)
|
|
|
|
(0.75)
|
|
|
|
(0.93)
|
|
Return of capital
|
|
|
(0.25)
|
|
|
|
(0.09)
|
|
|
|
(0.04)
|
|
|
|
(0.03)
|
|
|
|
(0.11)
|
|
Total distributions
|
|
|
(0.80)
|
|
|
|
(0.78)
|
|
|
|
(0.74)
|
|
|
|
(0.78)
|
|
|
|
(1.04)
|
|
Anti-dilutive impact of repurchase plan
|
|
|
|
|
|
|
0.01
|
2
|
|
|
0.03
|
2
|
|
|
0.01
|
2
|
|
|
|
|
Anti-dilutive impact of tender offer
|
|
|
0.03
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of year
|
|
|
$10.66
|
|
|
|
$9.75
|
|
|
|
$10.54
|
|
|
|
$10.58
|
|
|
|
$11.31
|
|
|
|
|
|
|
|
Market price, end of year
|
|
|
$10.40
|
|
|
|
$9.07
|
|
|
|
$9.59
|
|
|
|
$9.18
|
|
|
|
$10.23
|
|
Total return, based on NAV4,5
|
|
|
18.06
|
%
|
|
|
(0.17)
|
%6,7
|
|
|
6.90
|
%
|
|
|
0.29
|
%
|
|
|
17.82
|
%
|
|
|
|
|
|
|
Total return, based on Market Price8
|
|
|
24.19
|
%
|
|
|
2.66
|
%
|
|
|
13.17
|
%
|
|
|
(2.99)
|
%
|
|
|
19.21
|
%
|
|
|
|
|
|
|
Net assets, end of year (millions)
|
|
|
$242
|
|
|
|
$428
|
|
|
|
$465
|
|
|
|
$475
|
|
|
|
$512
|
|
Ratios to average net assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross expenses
|
|
|
1.69
|
%
|
|
|
2.76
|
%7
|
|
|
2.54
|
%
|
|
|
2.06
|
%9
|
|
|
1.89
|
%9
|
Net expenses10
|
|
|
1.69
|
|
|
|
2.73
|
7
|
|
|
2.52
|
|
|
|
2.02
|
9
|
|
|
1.82
|
9
|
|
|
|
|
|
|
Net investment income
|
|
|
6.95
|
|
|
|
7.29
|
|
|
|
6.93
|
|
|
|
6.58
|
|
|
|
7.41
|
|
|
|
|
|
|
|
Portfolio turnover rate
|
|
|
43
|
%
|
|
|
60
|
%
|
|
|
89
|
%
|
|
|
97
|
%
|
|
|
78
|
%
|
|
|
|
|
|
|
Supplemental data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan Outstanding, End of Year (000s)
|
|
|
$85,500
|
|
|
|
$158,000
|
|
|
|
$180,000
|
|
|
|
$168,000
|
|
|
|
$171,000
|
|
Asset Coverage Ratio for Loan
Outstanding11
|
|
|
383
|
%
|
|
|
371
|
%
|
|
|
358
|
%
|
|
|
383
|
%
|
|
|
399
|
%
|
Asset Coverage, per $1,000 Principal Amount of Loan Outstanding11
|
|
|
$3,829
|
|
|
|
$3,706
|
|
|
|
$3,583
|
|
|
|
$3,829
|
|
|
|
$3,992
|
|
Weighted Average Loan (000s)
|
|
|
$111,103
|
|
|
|
$175,765
|
|
|
|
$177,490
|
|
|
|
$170,507
|
|
|
|
$156,400
|
|
Weighted Average Interest Rate on Loan
|
|
|
0.92
|
%
|
|
|
2.74
|
%
|
|
|
3.06
|
%
|
|
|
2.36
|
%
|
|
|
1.72
|
%
|
See Notes to Financial
Statements.
|
|
|
|
|
|
|
Western Asset Global High Income Fund Inc. 2021 Annual Report
|
|
|
|
|
29
|
|
Financial highlights (contd)
1
|
Per share amounts have been calculated using the average shares method.
|
2
|
The repurchase plan was completed at an average repurchase price of $7.50 for 239,229 shares and $1,781,056 for the year ended May 31, 2020, $8.74 for
816,259 shares and $7,135,435 for the year ended May 31, 2019 and $9.50 for 319,205 shares and $3,031,002 for the year ended May 31, 2018.
|
3
|
The tender offer was completed at a price of $10.39 for 21,170,180 shares and $219,958,165 for the year ended May 31, 2021.
|
4
|
Performance figures may reflect compensating balance arrangements, fee waivers and/or expense reimbursements. In the absence of compensating balance
arrangements, fee waivers and/or expense reimbursements, the total return would have been lower. Past performance is no guarantee of future results.
|
5
|
The total return calculation assumes that distributions are reinvested at NAV. Past performance is no guarantee of future results.
|
6
|
The total return includes gains from settlement of security litigations. Without these gains, the total return would have been -0.27% for the year ended
May 31, 2020.
|
7
|
Included in the expense ratios and total return are certain non-recurring legal and transfer agent fees that were incurred by the Fund during the period. Without
these fees, the gross and net expense ratios would have been 2.49% and 2.47%, respectively, and total return would have been 0.04% for the year ended May 31, 2020.
|
8
|
The total return calculation assumes that distributions are reinvested in accordance with the Funds dividend reinvestment plan. Past performance is no
guarantee of future results.
|
9
|
Included in the expense ratios are certain non-recurring reorganization fees that were incurred by the Fund during the period. Without these fees, the gross and
net expense ratios would not have changed for the year ended May 31, 2018, would have been 1.87% and 1.80%, respectively, for the year ended May 31, 2017 and 1.76% and 1.69%, respectively, for the year ended May 31, 2016.
|
10
|
Reflects fee waivers and/or expense reimbursements.
|
11
|
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.
|
|
|
|
|
30
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Western Asset Global High Income Fund Inc. 2021 Annual Report
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Notes to financial statements
1. Organization and significant accounting policies
Western Asset Global High Income Fund Inc. (the Fund) was incorporated in Maryland and is registered as a non-diversified, closed-end management
investment company under the Investment Company Act of 1940, as amended (the 1940 Act). The Board of Directors authorized 100 million shares of $0.001 par value common stock. The Funds primary investment objective is high
current income. The Funds secondary objective is total return. Under normal market conditions, the Fund invests in a global portfolio of securities consisting of below investment grade fixed income securities, emerging market fixed income
securities and investment grade fixed income securities. On 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 SECs 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 typically 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. 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 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 Global Fund Valuation Committee (formerly known as Legg Mason North Atlantic
Fund Valuation Committee prior to March 1, 2021) (the Valuation Committee). The Valuation Committee, pursuant to the policies adopted by the
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Western Asset Global High Income Fund Inc. 2021 Annual Report
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31
|
|
Notes to financial statements (contd)
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.
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.
|
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|
|
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Western Asset Global High Income Fund Inc. 2021 Annual Report
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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
|
|
|
|
|
|
$
|
265,990,172
|
|
|
|
|
|
|
$
|
265,990,172
|
|
Sovereign Bonds
|
|
|
|
|
|
|
46,766,888
|
|
|
|
|
|
|
|
46,766,888
|
|
U.S. Government & Agency Obligations
|
|
|
|
|
|
|
21,489,452
|
|
|
|
|
|
|
|
21,489,452
|
|
Senior Loans
|
|
|
|
|
|
|
9,122,252
|
|
|
|
|
|
|
|
9,122,252
|
|
Convertible Bonds & Notes
|
|
|
|
|
|
|
3,486,265
|
|
|
|
|
|
|
|
3,486,265
|
|
Convertible Preferred Stocks
|
|
|
|
|
|
|
894,923
|
|
|
|
|
|
|
|
894,923
|
|
Common Stocks:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy
|
|
|
|
|
|
|
|
|
|
$
|
22,423
|
|
|
|
22,423
|
|
Other Common Stocks
|
|
$
|
762,352
|
|
|
|
|
|
|
|
|
|
|
|
762,352
|
|
Total Long-Term Investments
|
|
|
762,352
|
|
|
|
347,749,952
|
|
|
|
22,423
|
|
|
|
348,534,727
|
|
Short-Term Investments
|
|
|
134,264
|
|
|
|
|
|
|
|
|
|
|
|
134,264
|
|
Total Investments
|
|
$
|
896,616
|
|
|
$
|
347,749,952
|
|
|
$
|
22,423
|
|
|
$
|
348,668,991
|
|
Other Financial Instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward Foreign Currency Contracts
|
|
|
|
|
|
$
|
4,484
|
|
|
|
|
|
|
$
|
4,484
|
|
Total
|
|
$
|
896,616
|
|
|
$
|
347,754,436
|
|
|
$
|
22,423
|
|
|
$
|
348,673,475
|
|
|
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
|
|
|
|
|
|
$
|
52,172
|
|
|
|
|
|
|
$
|
52,172
|
|
|
See Schedule of Investments for additional detailed categorizations.
|
|
Reflects the unrealized appreciation (depreciation) of the instruments.
|
(b) 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.
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Western Asset Global High Income Fund Inc. 2021 Annual Report
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33
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Notes to financial statements (contd)
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.
(c) 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.
(d) 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 May 31, 2021, the Fund had sufficient cash and/or securities to cover these commitments.
(e) 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 pledge
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 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.
(f) 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.
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Western Asset Global High Income Fund Inc. 2021 Annual Report
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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.
(g) 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.
(h) 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 Statements of Changes in Net Assets and additional information on cash receipts and cash payments is presented in the Statement of Cash Flows.
(i) 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.
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.
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Western Asset Global High Income Fund Inc. 2021 Annual Report
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35
|
|
Notes to financial statements (contd)
(j) 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.
(k) 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.
(l) 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 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 (OTC) 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 net asset value per share 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.
|
|
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|
|
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Western Asset Global High Income Fund Inc. 2021 Annual Report
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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 OTC 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 May 31, 2021, the Fund held forward foreign currency contracts with credit related contingent features which had a liability position of
$52,172. If a contingent feature in the master agreements would have been triggered, the Fund would have been required to pay this amount to its derivatives counterparties.
(m) 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.
(n) 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 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.
(o) 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.
(p) 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.
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Western Asset Global High Income Fund Inc. 2021 Annual Report
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37
|
|
Notes to financial statements (contd)
Management has analyzed the Funds tax positions taken on income tax returns for all open tax years and has concluded that as of
May 31, 2021, 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. Realized gains upon disposition of securities issued in or by certain foreign countries are subject to capital gains tax imposed by those countries.
(q) 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 following reclassifications have been made:
|
|
|
|
|
|
|
Total Distributable
Earnings (Loss)
|
|
Paid-in
Capital
|
(a)
|
|
$(45,526)
|
|
$45,526
|
(a)
|
Reclassifications are due to differences between actual and estimated information which adjusted the prior year return of capital.
|
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 Limited (Western Asset Limited) and Western Asset Management Company Pte. Ltd. (Western Asset Singapore) are the Funds subadvisers. As of July 31, 2020, LMPFA, Western Asset,
Western Asset Limited and Western Asset Singapore are indirect, wholly-owned subsidiaries of Franklin Resources, Inc. (Franklin Resources). Prior to July 31, 2020, LMPFA, Western Asset, Western Asset Limited and Western Asset
Singapore 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 0.85% of the Funds average
daily net assets plus the proceeds of any outstanding borrowings.
LMPFA delegates to Western Asset the day-to-day portfolio management of the Fund.
Western Asset Limited and Western Asset Singapore provide certain subadvisory services to the Fund relating to currency transactions and investment in non-U.S. dollar denominated securities. Western Asset Limited and Western Asset Singapore do not
receive any compensation from the Fund and are compensated by Western Asset for its services to the Fund. For its services, LMPFA pays Western Asset monthly 70% of the net management fee it receives from the Fund. Western Asset pays Western Asset
Limited and Western Asset Singapore 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.
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38
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Western Asset Global High Income Fund Inc. 2021 Annual Report
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During the 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.
The manager has agreed to waive the Funds management fee to an extent sufficient to offset the net management fee payable in connection with any investment in
an affiliated money market fund.
During the year ended May 31, 2021, fees waived and/or expenses reimbursed amounted to $2,190.
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 Trustee of the Trust were employees of Legg Mason and did not receive compensation from the Trust.
3. Investments
During the year ended May 31, 2021, 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
|
|
|
$172,926,626
|
|
|
|
$21,988,184
|
|
Sales
|
|
|
454,722,137
|
|
|
|
36,417,662
|
|
At May 31, 2021, 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
|
|
|
$307,723,967
|
|
|
|
$47,174,703
|
|
|
|
$(6,229,679)
|
|
|
|
$40,945,024
|
|
Forward foreign currency contracts
|
|
|
|
|
|
|
4,484
|
|
|
|
(52,172)
|
|
|
|
(47,688)
|
|
Transactions in reverse repurchase agreements for the Fund during the year ended May 31, 2021 were as follows:
|
|
|
|
|
Average Daily
Balance*
|
|
Weighted Average
Interest Rate*
|
|
Maximum Amount
Outstanding
|
$25,552,963
|
|
0.200%
|
|
$30,788,875
|
*
|
Averages based on the number of days that the Fund had reverse repurchase agreements outstanding.
|
Interest rates on reverse repurchase agreements ranged from 0.070% to 0.720% during the year ended May 31, 2021. Interest expense incurred on reverse
repurchase agreements totaled $51,126.
|
|
|
|
|
|
|
Western Asset Global High Income Fund Inc. 2021 Annual Report
|
|
|
|
|
39
|
|
Notes to financial statements (contd)
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 May 31, 2021.
|
|
|
ASSET
DERIVATIVES1
|
|
|
Foreign
Exchange Risk
|
Forward foreign currency contracts
|
|
$4,484
|
|
|
|
LIABILITY
DERIVATIVES1
|
|
|
Foreign
Exchange Risk
|
Forward foreign currency contracts
|
|
$52,172
|
1
|
Generally, the balance sheet location for asset derivatives is receivables/net unrealized appreciation and for liability derivatives is payables/net unrealized
depreciation.
|
The following tables provide information about the effect of derivatives and hedging activities on the Funds
Statement of Operations for the year ended May 31, 2021. 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
|
|
|
Foreign
Exchange Risk
|
Forward foreign currency contracts
|
|
$(225,337)
|
|
|
|
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON DERIVATIVES RECOGNIZED
|
|
|
Foreign
Exchange Risk
|
Forward foreign currency contracts
|
|
$(5,233)
|
During the year ended May 31, 2021, the volume of derivative activity for the Fund was as follows:
|
|
|
|
|
Average Market
Value
|
Forward foreign currency contracts (to buy)
|
|
$1,756,158
|
Forward foreign currency contracts (to sell)
|
|
3,417,171
|
|
|
|
|
|
40
|
|
|
|
Western Asset Global High Income Fund Inc. 2021 Annual Report
|
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 May 31, 2021.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Counterparty
|
|
Gross Assets
Subject to
Master
Agreements1
|
|
|
Gross
Liabilities
Subject to
Master
Agreements1
|
|
|
Net Assets
(Liabilities)
Subject to
Master
Agreements
|
|
|
Collateral
Pledged
(Received)
|
|
|
Net
Amount2
|
|
Citibank N.A.
|
|
$
|
4,484
|
|
|
|
|
|
|
$
|
4,484
|
|
|
|
|
|
|
$
|
4,484
|
|
Goldman Sachs Group Inc.
|
|
|
|
|
|
$
|
(45,897)
|
|
|
|
(45,897)
|
|
|
|
|
|
|
|
(45,897)
|
|
JPMorgan Chase & Co.
|
|
|
|
|
|
|
(6,275)
|
|
|
|
(6,275)
|
|
|
|
|
|
|
|
(6,275)
|
|
Total
|
|
$
|
4,484
|
|
|
$
|
(52,172)
|
|
|
$
|
(47,688)
|
|
|
|
|
|
|
$
|
(47,688)
|
|
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. Tender offer
On June 22, 2020, the
Funds Board of Directors authorized (subject to certain conditions) a cash tender offer for up to 50% of the Funds outstanding shares at a price per share equal to 99.5% of the Funds net asset value per share as of the business day
immediately following the expiration date of the tender offer. On October 19, 2020, the Fund commenced its tender offer, which expired on November 16, 2020. On November 19, 2020, the Fund announced the final results of the tender
offer. The Fund accepted 21,170,180 duly tendered and not withdrawn shares, representing approximately 48% of the Funds outstanding shares. The shares accepted for tender were repurchased at a price of $10.39, equal to 99.5% of the per share
net asset value, $10.44, as of the close of the regular trading session of the New York Stock Exchange on November 17, 2020. Payment for such shares was made on November 19, 2020. Shares that were not tendered remain outstanding.
6. Loan
The Fund has a revolving
credit agreement with The Bank of Nova Scotia (Credit Agreement), which allows the Fund to borrow up to an aggregate amount of $180,000,000 and renews daily for a 179-day term, unless notice to the contrary is given to the Fund.
Effective January 7, 2021, unless renewed, the Credit Agreement will terminate on January 6, 2022. The Fund pays a commitment fee on the unutilized portion of the loan commitment amount at an annual rate of 0.25%, except that the
commitment fee is 0.15% in the event that the aggregate outstanding principal balance of the loan is equal to or greater than 75% of $180,000,000. The interest on the loan is calculated at a variable rate based on LIBOR plus any applicable margin.
Securities held by the Fund are subject to a lien, granted to The Bank of Nova Scotia, 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 agreement.
|
|
|
|
|
|
|
Western Asset Global High Income Fund Inc. 2021 Annual Report
|
|
|
|
|
41
|
|
Notes to financial statements (contd)
Interest expense related to this loan for the year ended May 31, 2021 was $1,020,863. For the year ended May 31, 2021, the Fund
incurred commitment fees of $165,002. For the year ended May 31, 2021, based on the number of days during the reporting period that the Fund had an outstanding balance under the Credit Agreement, the Fund had an average daily loan balance
outstanding of $111,102,740 and the weighted average interest rate was 0.92%. At May 31, 2021 the Fund had $85,500,000 of borrowings outstanding per the Credit Agreement.
7. Distributions subsequent to May 31, 2021
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
|
|
5/21/2021
|
|
|
6/1/2021
|
|
|
$
|
0.0670
|
|
6/23/2021
|
|
|
7/1/2021
|
|
|
$
|
0.0670
|
|
7/23/2021
|
|
|
8/2/2021
|
|
|
$
|
0.0670
|
|
8/24/2021
|
|
|
9/1/2021
|
|
|
$
|
0.0670
|
|
8. Stock repurchase program
On November 16, 2015, the Fund announced that the Funds Board of Directors (the Board) had authorized the Fund to repurchase in the open market up to approximately 10% of the Funds
outstanding common stock when the Funds shares are trading at a discount to net asset value. The Board has 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 May 31, 2021, the Fund did not repurchase any shares.
Since the commencement of the stock repurchase program through May 31, 2021, the Fund repurchased 1,374,693 shares or 3.04% of its common shares outstanding
for a total amount of $11,947,493.
9. Transactions with affiliated company
As defined by the 1940 Act, an affiliated company is one in which the Fund owns 5% or more of the outstanding voting securities, or a company which is under common
ownership or control with the Fund. The following company was considered an affiliated company for all or some portion of the year ended May 31, 2021. The following transactions were effected in such company for the year ended May 31,
2021.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Affiliate
Value at
May 31,
2020
|
|
|
Purchased
|
|
|
Sold
|
|
|
|
Cost
|
|
|
Shares
|
|
|
Cost
|
|
|
Shares
|
|
Western Asset Premier Institutional Government Reserves, Premium Shares
|
|
|
|
|
|
$
|
134,264
|
|
|
|
134,264
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42
|
|
|
|
Western Asset Global High Income Fund Inc. 2021 Annual Report
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(contd)
|
|
Realized
Gain (Loss)
|
|
|
Interest
Income
|
|
|
Net Increase
(Decrease) in
Unrealized
Appreciation
(Depreciation)
|
|
|
Affiliate
Value at
May 31,
2021
|
|
Western Asset Premier
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Institutional
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government Reserves,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premium Shares
|
|
|
|
|
|
$
|
0
|
*
|
|
|
|
|
|
$
|
134,264
|
|
*
|
Amount represents less than $1.
|
10. Income tax information and distributions to shareholders
The tax character of
distributions paid during the fiscal years ended May 31, was as follows:
|
|
|
|
|
|
|
|
|
|
|
2021
|
|
|
2020
|
|
Distributions paid from:
|
|
|
|
|
|
|
|
|
Ordinary income
|
|
$
|
19,645,733
|
|
|
$
|
30,138,905
|
|
Tax return of capital
|
|
|
5,694,904
|
|
|
|
4,158,234
|
|
Total distributions paid
|
|
$
|
25,340,637
|
|
|
$
|
34,297,139
|
|
As of May 31, 2021, the components of distributable earnings (loss) on a tax basis were as follows:
|
|
|
|
|
Deferred capital losses*
|
|
$
|
(104,880,336)
|
|
Other book/tax temporary differences(a)
|
|
|
(1,663,637)
|
|
Unrealized appreciation (depreciation)(b)
|
|
|
40,874,922
|
|
Total distributable earnings (loss) net
|
|
$
|
(65,669,051)
|
|
*
|
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 difference between cash and accrual basis distributions
paid, the realization for tax purposes of unrealized gains (losses) on certain foreign currency contracts, 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, the
difference between book and tax amortization methods for premium on fixed income securities and other book/tax basis adjustments.
|
11. Recent accounting pronouncement
In March 2020, the Financial Accounting Standards Board
issued Accounting Standards Update No. 2020-04, Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting (the ASU). The amendments in the ASU provide optional
temporary financial reporting relief from the effect of certain types of contract modifications due to the planned discontinuation of the London Interbank Offered Rate and other interbank-offered based reference rates as of the end of 2021. The ASU
is effective for certain reference rate-related contract modifications that occur during the period March 12, 2020 through December 31, 2022. Management has reviewed the
|
|
|
|
|
|
|
Western Asset Global High Income Fund Inc. 2021 Annual Report
|
|
|
|
|
43
|
|
Notes to financial statements (contd)
requirements and believes the adoption of this ASU will not have a material impact on the financial statements.
12. 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. On March 5, 2021, the ICE Benchmark Administration, the administrator of LIBOR, stated that it will cease the publication of (i) the overnight and one-, three-, six- and twelve-month USD LIBOR settings immediately
following the LIBOR publication on Friday, June 30, 2023 and (ii) all other LIBOR settings, including the one-week and two-month USD LIBOR settings, immediately following the LIBOR publication on Friday, December 31, 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.
|
|
|
|
|
44
|
|
|
|
Western Asset Global High Income Fund Inc. 2021 Annual Report
|
Report of independent registered public accounting firm
To the Board of Directors and Shareholders of Western Asset Global
High Income 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)
|
|
19
|
Other board memberships held by Director during the past five years
|
|
None
|
|
|
Carol L. Colman
|
|
|
|
|
Year of birth
|
|
1946
|
Position(s) held with Fund1
|
|
Director and Member of Nominating, Audit and Compensation Committees, and Chair of Pricing and Valuation Committee, Class I
|
Term of office1 and length of time served
|
|
Since 2003
|
Principal occupation(s) during the past five years
|
|
President, Colman Consulting Company (consulting)
|
Number of portfolios in fund complex overseen by Director (including the Fund)
|
|
19
|
Other board memberships held by Director during the past five years
|
|
None
|
|
|
|
|
|
48
|
|
|
|
Western Asset Global High Income Fund Inc.
|
|
|
|
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 2003
|
Principal occupation(s) during the past five years
|
|
Retired; formerly, Associate General Counsel, Pfizer Inc. (prior to and including 2004)
|
Number of portfolios in fund complex overseen by Director (including the Fund)
|
|
19
|
Other board memberships held by Director during the past five years
|
|
None
|
|
|
|
|
|
Paolo M. Cucchi
|
|
|
|
|
Year of birth
|
|
1941
|
Position(s) held with Fund1
|
|
Director and Member of Nominating, Audit, and Pricing and Valuation Committees, and Chair of Compensation Committee, Class I
|
Term of office1 and length of time served
|
|
Since 2007
|
Principal occupation(s) during the past five years
|
|
Emeritus Professor of French and Italian (since 2014) and formerly, Vice President and Dean of The College of Liberal Arts (1984 to 2009) and
Professor of French and Italian (2009 to 2014) at Drew University
|
Number of portfolios in fund complex overseen by Director (including the Fund)
|
|
19
|
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 2003
|
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)
|
|
19
|
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. (financial services
company)
|
|
|
|
|
|
|
|
Western Asset Global High Income Fund Inc.
|
|
|
|
|
49
|
|
Additional information
(unaudited) (contd)
Information about Directors and Officers
|
|
|
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, Georgetown University Law Center (since 2021); 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)
|
|
19
|
Other board memberships held by Director during the past five years
|
|
Director of ACV Auctions Inc. (since 2021); Trustee of AIG Funds and Anchor Series Trust (since 2018); Director of Hochschild Mining plc (precious
metals company) (since 2016); Director of Associated Banc-Corp (financial services company) (since 2007)
|
|
|
|
|
|
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)
|
|
19
|
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)
|
|
|
|
|
|
50
|
|
|
|
Western Asset Global High Income Fund Inc.
|
|
|
|
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 145 funds associated with 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)
|
|
143
|
Other board memberships held by Director during the past five years
|
|
None
|
|
|
|
Additional Officers
|
|
|
|
|
Fred Jensen
Franklin Templeton
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
Franklin Templeton
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)
|
|
|
|
|
|
|
|
Western Asset Global High Income Fund Inc.
|
|
|
|
|
51
|
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Additional information
(unaudited) (contd)
Information about Directors and Officers
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Additional Officers (contd)
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George P. Hoyt*
Franklin Templeton
100 First Stamford Place, 6th Floor, Stamford, CT 06902
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Year of birth
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1965
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Position(s) held with Fund1
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Secretary and Chief Legal Officer
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Term of office1 and length of time served
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Since 2020
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Principal occupation(s) during the past five years
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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)
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Thomas C. Mandia
Franklin Templeton
100 First Stamford Place, 6th Floor, Stamford, CT 06902
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Year of birth
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1962
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Position(s) held with Fund1
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Assistant Secretary
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Term of office1 and length of time served
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Since 2006
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Principal occupation(s) during the past five years
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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)
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Christopher Berarducci
Franklin Templeton
620 Eighth Avenue, 47th Floor, New York, NY 10018
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Year of birth
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1974
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Position(s) held with Fund1
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Treasurer and Principal Financial Officer
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Term of office1 and length of time served
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Since 2019
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Principal occupation(s) during the past five years
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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.
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Western Asset Global High Income Fund Inc.
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Additional Officers (contd)
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Jeanne M. Kelly
Franklin Templeton
620 Eighth Avenue, 47th Floor, New York, NY 10018
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Year of birth
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1951
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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 2007
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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 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 2023, 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 High Income 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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54
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Western Asset Global High Income 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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Western Asset Global High Income Fund Inc.
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Summary of information regarding the Fund (unaudited)
Investment Objectives
The Funds
primary investment objective is high current income and secondary investment objective is total return.
Principal Investment Policies
and Strategies
Under normal market conditions, the Fund will invest at least 10% and up to 80% of its total assets in (i) below investment
grade (high yield) fixed income (debt) securities issued by corporate issuers.
Under normal market conditions, the Fund will invest at least 10% and up
to 80% of its assets in emerging market fixed income securities.
Under normal market conditions, the Fund will invest at least 10% and up to 80% of its
assets in investment grade fixed income securities.
The Fund usually will attempt to maintain a portfolio with a weighted average credit quality rated
at least B3 by Moodys or B- by S&P or an equivalent rating from any nationally recognized statistical rating organization. If a security is rated by multiple nationally recognized statistical rating organizations (NRSROs) and
receives different ratings, the Fund will treat the security as being rated in the lowest rating category received from an NRSRO.
For temporary
defensive purposes and in order to keep the Funds cash fully invested, the Fund may deviate from its investment objectives and policies and invest some or all of its assets in investments of non-corporate issuers, including high-quality,
short-term debt securities. In addition, in anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, the Fund may invest up to 100% of its assets in U.S. government securities,
certificates of deposit, repurchase agreements, or short term commercial paper. The Fund may also invest in money market funds, including funds affiliated with the Funds manager and subadvisers.
As a temporary defensive strategy, the Fund may employ alternative strategies, including investment of all of the Funds assets in securities rated investment
grade by any nationally recognized statistical rating organization, or in unrated securities of comparable quality.
The Fund may invest up to 20% of its
managed assets in all types of equity securities, including common stocks traded on an exchange or in the over the counter market, preferred stocks, warrants, rights, convertible securities, depositary receipts, trust certificates, limited
partnership interests, shares of other investment companies and REITs.
The Fund has no specific policy with regard to turnover.
The Fund may invest up to 15% of its managed assets in illiquid securities.
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Western Asset Global High Income Fund Inc.
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The Fund may invest up to 10% of its total assets in any combination of publicly or privately traded mortgage REITs
and hybrid REITs.
The Fund may invest in zero coupon securities, pay-in-kind bonds and deferred payment securities.
The Fund may invest in certain bank obligations, including certificates of deposit, bankers acceptances, and fixed time deposits.
The Fund may invest in collateralized debt obligations, collateralized bond obligations and collateralized loan obligations.
The average portfolio duration of the Fund will normally be within one to seven years based on the Investment Managers forecast for interest rates. Duration
is a measure of the expected life of a debt security that is used to determine the sensitivity of a securitys price to changes in interest rates.
The Fund may not purchase or sell commodities or commodities contracts or oil, gas or mineral programs, but may purchase, sell, or enter into futures contracts,
options on futures contracts, forward contracts, or interest rate, securities-related or other hedging instruments, including swap agreements and other derivative instruments.
Principal Risk Factors
There is no assurance that the Fund will meet its investment
objectives. You may lose money on your investment in the Fund. The value of the Funds shares may go up or down, sometimes rapidly and unpredictably. Market conditions, financial conditions of issuers represented in the Funds portfolio,
investment strategies, portfolio management, and other factors affect the volatility of the Funds shares. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation, the Federal Reserve Board or any
other government agency.
The following section includes a summary of the principal risks of investing in the Fund.
Fixed Income Securities Risk. In addition to the risks described elsewhere in this section with respect to valuations and liquidity, fixed income securities,
including high-yield securities, are also subject to certain risks, including:
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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
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Western Asset Global High Income Fund Inc.
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Summary of information regarding the Fund (unaudited) (contd)
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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 market price of Common Shares or overall returns.
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Below Investment Grade (High-Yield or Junk Bond) Securities Risk. The Fund may invest in high-yield debt securities. Debt
securities rated below investment grade are commonly referred to as high-yield securities or junk bonds and are regarded as having predominantly speculative characteristics with respect to the issuers capacity to pay
interest and repay principal in accordance with the terms of the obligations and involve major risk exposure to adverse conditions. Debt securities rated C or lower by Moodys, CCC or lower by S&P or CC or lower by Fitch or comparably rated
by another nationally recognized statistical rating organization (NRSRO) or, if unrated, determined by Western Asset to be of comparable quality are considered to have extremely poor prospects of ever attaining any real investment
standing, to have a current identifiable vulnerability to default, to be unlikely to have the capacity to pay interest and repay principal when due in the event of adverse business, financial or economic conditions and/or to be in default or not
current in the payment of interest or principal. Ratings may not accurately reflect the actual credit risk associated with a corporate security.
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Debt securities rated below investment grade generally offer a higher current yield than that available from higher
grade issues, but typically involve greater risk. These securities are especially sensitive to adverse changes in general economic conditions, to changes in the financial condition of their issuers and to price fluctuation in response to changes in
interest rates. During periods of economic downturn or rising interest rates, issuers of below investment grade instruments may experience financial stress that could adversely affect their ability to make payments of principal and interest and
increase the possibility of default. The secondary market for high-yield securities may not be as liquid as the secondary market for more highly rated securities, a factor which may have an adverse effect on the Funds ability to dispose of a
particular security. There are fewer dealers in the market for high-yield securities than for investment grade obligations. The prices quoted by different dealers may vary significantly, and the spread between the bid and asked price is generally
much larger for high-yield securities than for higher quality instruments. Under continuing adverse market or economic conditions, the secondary market for high-yield securities could contract further, independent of any specific adverse changes in
the condition of a particular issuer, and these securities may become illiquid. In addition, adverse publicity and investor perceptions, whether or not based on fundamental analysis, may also decrease the values and liquidity of below investment
grade securities, especially in a market characterized by a low volume of trading.
Foreign Securities and Emerging Markets Risk. The Funds
investments in securities of foreign issuers or issuers with significant exposure to foreign markets involve additional risk as compared to investment in U.S. securities or issuers with predominantly domestic exposure, such as less liquid, less
regulated, less transparent and more volatile markets. The markets for some foreign securities are relatively new, and the rules and policies relating to these markets are not fully developed and may change. The value of the Funds investments
may decline because of factors affecting the particular issuer as well as foreign markets and issuers generally, such as unfavorable or unsuccessful government actions, tariffs and tax disputes, reduction of government or central bank support,
inadequate accounting standards, lack of information and political, economic, financial or social instability. Foreign investments may also be adversely affected by U.S. government or international economic sanctions, which could eliminate the value
of an investment. To the extent the Fund focuses its investments in a single country or only a few countries in a particular geographic region, economic, political, regulatory or other conditions affecting such country or region may have a greater
impact on Fund performance relative to a more geographically diversified fund.
The risks of foreign investment are greater for investments in emerging
markets. Emerging market country is defined as any country which is, at the time of investment, it is (i) represented in the J.P. Morgan Emerging Markets Bond Index Global Diversified or the J.P. Morgan Corporate Emerging Market
Bond Index Broad or (ii) categorized by the World Bank
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Summary of information regarding the
Fund (unaudited) (contd)
in its annual categorization as middle- or low-income. Emerging market countries typically have economic and political systems that are less fully developed, and
that can be expected to be less stable, than those of more advanced countries. Low trading volumes may result in a lack of liquidity and in price volatility. Emerging market countries may have policies that restrict investment by foreigners, that
require governmental approval prior to investments by foreign persons, or that prevent foreign investors from withdrawing their money at will. An investment in emerging market securities should be considered speculative.
Non-U.S. Government, or Sovereign, Debt Securities Risk. The Fund invests in non-U.S. government, or sovereign, debt securities. The ability of a government
issuer, especially in an emerging market country, to make timely and complete payments on its debt obligations will be strongly influenced by the government 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.
Foreign Currency Risk. The value of investments denominated in foreign currencies increases or decreases as the rates of exchange between those currencies and the U.S. dollar change. Currency conversion
costs and currency fluctuations could erase investment gains or add to investment losses. Currency exchange rates can be volatile, and are affected by factors such as general economic conditions, the actions of the U.S. and foreign governments or
central banks, the imposition of currency controls and speculation. The Fund may be unable or may choose not to hedge its foreign currency exposure.
Liquidity Risk. The Fund may invest in illiquid securities. Illiquid securities are securities that cannot be disposed of within seven days in the ordinary
course of business at approximately the value at which the Fund has valued the securities. Liquidity risk exists when particular investments are difficult to sell. Securities may become illiquid after
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purchase by the Fund, particularly during periods of market turmoil. When the Fund holds illiquid investments, the
portfolio may be harder to value, especially in changing markets, and if the Fund is forced to sell these investments in order to segregate assets or for other cash needs, the Fund may suffer a loss.
Common Stock Risk. An adverse event, such as an unfavorable earnings report, may depress the value of a particular common stock held by the Fund. In
addition, the prices of common stocks are sensitive to general movements in the stock market, and a drop in the stock market may depress the prices of common stocks to which the Fund has exposure. Common stock prices fluctuate for several reasons
including changes in investors perceptions of the financial condition of an issuer or the general condition of the relevant stock market, or when political or economic events affecting an issuer occur. In addition, common stock prices may be
particularly sensitive to rising interest rates, as the cost of capital rises and borrowing costs increase. The value of the common stocks in which the Fund may invest will be affected by changes in the stock markets generally, which may be the
result of domestic or international political or economic news, changes in interest rates or changing investor sentiment. At times, stock markets can be volatile and stock prices can change substantially. The common stocks of smaller companies are
more sensitive to these changes than those of larger companies. Common stock risk will affect the Funds net asset value per share, which will fluctuate as the value of the securities held by the Fund change.
Preferred Stock Risk. Generally, the Fund has a greater flexibility to invest in equity securities. Preferred stocks are unique securities that combine some
of the characteristics of both common stocks and bonds. Preferred stocks generally pay a fixed rate of return and are sold on the basis of current yield, like bonds. However, because they are equity securities, preferred stock provides equity
ownership of a company, and the income is paid in the form of dividends. Preferred stocks typically have a yield advantage over common stocks as well as comparably-rated fixed income investments. Preferred stocks are typically subordinated to bonds
and other debt instruments in a 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.
Convertible Securities Risk. A convertible security is a bond, debenture, note, preferred stock or other security that may be converted into or exchanged for a prescribed amount of common stock or other
equity security of the same or a different issuer within a particular period of time at a specified price or formula. Before conversion, convertible securities have characteristics similar to nonconvertible income securities in that they ordinarily
provide a stable stream of income with generally higher yields than those of common stocks of the same or similar issuers, but lower yields than comparable nonconvertible securities. Similar
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Western Asset Global High Income Fund Inc.
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Summary of information regarding the Fund (unaudited) (contd)
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.
Risks of Warrants and Rights. Warrants and rights are subject to the same market risks as stocks, but may be more volatile in price. Warrants and rights do not carry the right to dividends or voting rights
with respect to their underlying securities, and they do not represent any rights in the assets of the issuer. An investment in warrants or rights may be considered speculative. In addition, the value of a warrant or right does not necessarily
change with the value of the underlying security and a warrant or right ceases to have value if it is not exercised prior to its expiration date. The purchase of warrants or rights involves the risk that the Fund could lose the purchase value of a
warrant or right if the right to subscribe to additional shares is not exercised prior to the warrants or rights expiration. Also, the purchase of warrants and rights involves the risk that the effective price paid for the warrant or
right added to the subscription price of the related security may exceed the value of the subscribed securitys market price such as when there is no movement in the price of the underlying security.
REITs Risk. Investing in REITs involves certain unique risks in addition to those risks associated with investing in the real estate industry in general. An
equity or hybrid REIT may be affected by changes in the value of the underlying properties owned by the REIT. A mortgage or hybrid REIT may be affected by changes in interest rates and the ability of the issuers of its portfolio mortgages to repay
their obligations. Mortgage and hybrid REITs are subject to the risks of accelerated prepayments of mortgage pools or pass-through securities, reliance on short-term financing and more highly leveraged capital structures. REITs are dependent upon
the skills of their managers and are not diversified.
REITs are generally dependent upon maintaining cash flows to repay borrowings and to make
distributions to stockholders and are subject to the risk of default by lessees and borrowers. REITs whose underlying assets are concentrated in properties used by a particular industry, such as healthcare, are also subject to industry related
risks. Certain special purpose REITs may invest their assets in specific real estate sectors, such as hotels, nursing homes or warehouses, and are therefore subject to the risks associated with adverse developments in any such sectors.
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REITs are subject to management fees and
other expenses. Therefore, investments in REITs will cause CRO to bear its proportionate share of the costs of the REITs operations. At the same time, CRO will continue to pay its own management fees and expenses with respect to all of its
assets, including any portion invested in REITs.
Mortgage-Backed and Asset-Backed Securities Risks. Mortgage-backed securities include, among
other things, participation interests in pools of residential mortgage loans purchased from individual lenders by a federal agency or originated and issued by private lenders and involve, among others, the following risks:
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Credit and Market Risks of Mortgage-Backed Securities. Investments by the Fund in fixed rate and floating rate mortgage-backed securities will entail
credit risks (i.e., the risk of non-payment of interest and principal) and market risks (i.e., the risk that interest rates and other factors could cause the value of the instrument to decline). Many issuers or servicers of mortgage-backed
securities may guarantee timely payment of interest and principal on the securities, whether or not payments are made when due on the underlying mortgages. This kind of guarantee generally increases the quality of a security, but does not mean that
the securitys market value and yield will not change. The value of all mortgage-backed securities also may change because of changes in the markets perception of the creditworthiness of the organization that issues or guarantees them. In
addition, an unexpectedly high rate of defaults on the mortgages held by a mortgage pool may limit substantially the pools ability to make payments of principal or interest to the Fund as a holder of such securities, reducing the values of
those securities or in some cases rendering them worthless. The Fund also may purchase securities that are not guaranteed or subject to any credit support.
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Like bond investments, the value of fixed rate mortgage-backed securities will tend to rise when interest rates fall, and fall when rates rise. Floating rate mortgage-backed securities will generally tend to have
more moderate changes in price when interest rates rise or fall, but their current yield will be affected.
In addition, the mortgage-backed securities
market in general may be adversely affected by changes in governmental legislation or regulation. Factors that could affect the value of a mortgage-backed security include, among other things, the types and amounts of insurance which an individual
mortgage or specific mortgage-backed security carries, the default and delinquency rate of the mortgage pool, the amount of time the mortgage loan has been outstanding, the loan-to-value ratio of each mortgage and the amount of overcollateralization
or undercollateralization of the mortgage pool.
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Summary of information regarding the
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Asset-backed securities represent participation in, or are secured by and payable from, assets such as installment sales or loan contracts, leases, credit card
receivables, and other categories of receivables. Certain debt instruments may only pay principal at maturity or may only represent the right to receive payments of principal or payments of interest on underlying pools or mortgages, assets, or
government securities, but not both. The value of these types of instruments may change more drastically than debt securities that pay both principal and interest. The Fund may obtain a below market yield or incur a loss on such instruments during
periods of declining interest rates. Principal only and interest only instruments are subject to extension risk. For mortgage derivatives and structured securities that have imbedded leverage features, small changes in interest or prepayment rates
may cause large and sudden price movements. Mortgage derivatives can also become illiquid and hard to value in declining markets.
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Prepayment, Extension and Redemption Risks of Mortgage-Backed Securities. Mortgage-backed securities may reflect an interest in monthly payments made by
the borrowers who receive the underlying mortgage loans. Although the underlying mortgage loans are for specified periods of time, such as 20 or 30 years, the borrowers can, and historically have, paid them off sooner. When a prepayment happens, a
portion of the mortgage-backed security which represents an interest in the underlying mortgage loan will be prepaid. A borrower is more likely to prepay a mortgage which bears a relatively high rate of interest. This means that in times of
declining interest rates, a portion of the Funds higher yielding securities are likely to be redeemed and the Fund will probably be unable to replace them with securities having as great a yield. Prepayments can result in lower yields to
stockholders. The increased likelihood of prepayment when interest rates decline also limits market price appreciation of mortgage-backed securities. This is known as prepayment risk. Mortgage-backed securities also are subject to extension risk.
Extension risk is the possibility that rising interest rates may cause prepayments to occur at a slower than expected rate. This particular risk may effectively change a security which was considered short or intermediate term into a long-term
security. The values of long-term securities generally fluctuate more widely in response to changes in interest rates than short or intermediate-term securities. In addition, a mortgage-backed security may be subject to redemption at the option of
the issuer. If a mortgage-backed security held by the Fund is called for redemption, the Fund will be required to permit the issuer to redeem or pay-off the security, which could have an adverse effect on the Funds ability to
achieve its investment objective.
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Liquidity Risk of Mortgage-Backed Securities. The liquidity of mortgage-backed securities varies by type of security; at certain times the Fund may
encounter difficulty in disposing of such investments. Because mortgage-backed securities have the potential to be less liquid than other securities, the Fund may be more susceptible to liquidity risks than funds that invest in other securities. In
the past, in stressed markets, certain types of mortgage-backed securities suffered periods of illiquidity when disfavored by the market.
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Collateralized Mortgage Obligations. There are certain risks associated specifically with collateralized mortgage obligations (CMOs). CMOs are
debt obligations collateralized by mortgage loans or mortgage pass-through securities. The average life of CMOs is determined using mathematical models that incorporate prepayment assumptions and other factors that involve estimates of future
economic and market conditions. These estimates may vary from actual future results, particularly during periods of extreme market volatility. Further, under certain market conditions, such as those that occurred in 1994, 2007, 2008 and 2009, the
average weighted life of certain CMOs may not accurately reflect the price volatility of such securities. For example, in periods of supply and demand imbalances in the market for such securities and/or in periods of sharp interest rate movements,
the prices of CMOs may fluctuate to a greater extent than would be expected from interest rate movements alone. CMOs issued by private entities are not obligations issued or guaranteed by the United States Government, its agencies or
instrumentalities or by any government agency, although the securities underlying a CMO may be subject to a guarantee. Therefore, if the collateral securing the CMO, as well as any third party credit support or guarantees, is insufficient to make
payments when due, the holder could sustain a loss.
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Adjustable Rate Mortgages. Adjustable Rate Mortgages (ARMs) contain maximum and minimum rates beyond which the mortgage interest rate may not
vary over the lifetime of the security. In addition, many ARMs provide for additional limitations on the maximum amount by which the mortgage interest rate may adjust for any single adjustment period. Alternatively, certain ARMs contain limitations
on changes in the required monthly payment. In the event that a monthly payment is not sufficient to pay the interest accruing on an ARM, any excess interest is added to the principal balance of the mortgage loan, which is repaid through future
monthly payments. If the monthly payment for such an instrument exceeds the sum of the interest accrued at the applicable mortgage interest rate and the principal payment required at such point to amortize the outstanding principal balance over the
remaining term of the loan, the excess is used to reduce the then-outstanding principal balance of the ARM.
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In addition, certain ARMs
may provide for an initial fixed, below-market or teaser interest rate. During this initial fixed-rate period, the payment due from the related mortgagor may be less than that of a traditional loan. However, after the teaser
rate expires, the monthly payment required to be made by the mortgagor may increase dramatically when the interest rate on the mortgage loan adjusts. This increased burden on the mortgagor may increase the risk of delinquency or default on the
mortgage loan and in turn, losses on the mortgage-backed security into which that loan has been bundled.
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Western Asset Global High Income Fund Inc.
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65
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Summary of information regarding the
Fund (unaudited) (contd)
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Interest and Principal Only Securities Risk. One type of stripped mortgage-backed security pays to one class all of the interest from the mortgage assets
(the interest-only, or IO class), while the other class will receive all of the principal (the principal-only, or PO class). The yield to maturity on an IO class is extremely sensitive to the rate of principal payments
(including prepayments) on the underlying mortgage assets, and a rapid rate of principal payments may have a material adverse effect on the Funds yield to maturity from these securities. If the assets underlying the IO class experience greater
than anticipated prepayments of principal, the Fund may fail to recoup fully, or at all, its initial investment in these securities. Conversely, PO class securities tend to decline in value if prepayments are slower than anticipated.
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Derivatives Risk. The Fund may utilize a variety of derivative instruments for investment or risk management purposes, such as
options, futures contracts, swap agreements and credit default swaps. Generally derivatives are financial contracts whose value depends on, or is derived from, the value of an underlying asset, reference rate or index, and may relate to individual
debt or equity instruments, interest rates, currencies or currency exchange rates and related indexes. Derivatives are subject to a number of risks, such as liquidity risk, interest rate risk, credit risk and management risk. Derivatives are also
subject to counterparty risk, which is the risk that the other party in the transaction will not fulfill its contractual obligation. Changes in the credit quality of the companies that serve as the Funds counterparties with respect to its
derivative transactions will affect the value of those instruments. By using derivatives that expose the Fund to counterparties, the Fund assumes the risk that its counterparties could experience financial hardships that could call into question
their continued ability to perform their obligations. In addition, in the event of the insolvency of a counterparty to a derivative transaction, the derivative transaction would typically be terminated at its fair market value. If the Fund is owed
this fair market value in the termination of the derivative transaction and its claim is unsecured, the Fund will be treated as a general creditor of such counterparty, and will not have any claim with respect to the underlying security. As a
result, concentrations of such derivatives in any one counterparty would subject the Fund to an additional degree of risk with respect to defaults by such counterparty. Derivatives also involve the risk of mispricing or improper valuation and the
risk that changes in the value of a derivative may not correlate perfectly with an underlying asset, interest rate or index. Suitable derivative transactions may not be available in all circumstances and there can be no assurance that the Fund will
engage in these transactions to reduce exposure to other risks when that would be beneficial. If the Fund invests in a derivative instrument, it could lose more than the principal amount invested. Derivative instruments can be illiquid, may
disproportionately increase losses and may have a potentially large impact on the Funds performance.
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66
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Western Asset Global High Income Fund Inc.
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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 a transition period that ends on August 19, 2022. 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.
Risks of Futures and Options on Futures. The use by the Fund of futures contracts and options on futures contracts to hedge interest rate risks involves special considerations and risks, as described below.
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Successful use of hedging transactions depends upon Western Assets ability to correctly predict the direction of changes in interest rates. There can be no
assurance that any particular hedging strategy will succeed.
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There might be imperfect correlation, or even no correlation, between the price movements of a futures or option contract and the movements of the interest rates
being hedged. Such a lack of correlation might occur due to factors unrelated to the interest rates being hedged, such as market liquidity and speculative or other pressures on the markets in which the hedging instrument is traded.
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Hedging strategies, if successful, can reduce risk of loss by wholly or partially offsetting the negative effect of unfavorable movements in the interest rates
being hedged. However, hedging strategies can also reduce opportunity for gain by offsetting the positive effect of favorable movements in the hedged interest rates.
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There is no assurance that a liquid secondary market will exist for any particular futures contract or option thereon at any particular time. If the Fund were
unable to liquidate a futures contract or an option on a futures contract position due to the absence of a liquid secondary market or the imposition of price limits, it could incur substantial losses. The Fund would continue to be subject to market
risk with respect to the position.
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There is no assurance that the Fund will use hedging transactions. For example, if the Fund determines that the cost of hedging will exceed the potential benefit
to the Fund, the Fund will not enter into such transactions.
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Risks of Futures and Options on Futures. The use by the Fund of
futures contracts and options on futures contracts to hedge interest rate risks involves special considerations and risks, as described below.
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Successful use of hedging transactions depends upon Western Assets ability to correctly predict the direction of changes in interest rates. There can be no
assurance that any particular hedging strategy will succeed.
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Western Asset Global High Income Fund Inc.
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67
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Summary of information regarding the
Fund (unaudited) (contd)
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There might be imperfect correlation, or even no correlation, between the price movements of a futures or option contract and the movements of the interest rates
being hedged. Such a lack of correlation might occur due to factors unrelated to the interest rates being hedged, such as market liquidity and speculative or other pressures on the markets in which the hedging instrument is traded.
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Hedging strategies, if successful, can reduce risk of loss by wholly or partially offsetting the negative effect of unfavorable movements in the interest rates
being hedged. However, hedging strategies can also reduce opportunity for gain by offsetting the positive effect of favorable movements in the hedged interest rates.
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There is no assurance that a liquid secondary market will exist for any particular futures contract or option thereon at any particular time. If the Fund were
unable to liquidate a futures contract or an option on a futures contract position due to the absence of a liquid secondary market or the imposition of price limits, it could incur substantial losses. The Fund would continue to be subject to market
risk with respect to the position.
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There is no assurance that the Fund will use hedging transactions. For example, if the Fund determines that the cost of hedging will exceed the potential benefit
to the Fund, the Fund will not enter into such transactions.
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Credit Default Swap Risk. The Fund may invest in credit default
swap transactions for hedging or investment purposes. Credit default swap agreements involve greater risks than if the Fund had invested in the reference obligation directly since, in addition to general market risks, credit default swaps are
subject to illiquidity risk, counterparty risk and credit risk. The buyer in a credit default contract is obligated to pay the seller a periodic stream of payments over the term of the contract, provided that no event of
default on an underlying reference obligation has occurred. If an event of default occurs, the seller must pay the buyer the full notional value, or par value, of the reference obligation through either physical settlement or cash
settlement. The Fund may be either the buyer or seller in a credit default swap transaction. If the Fund is a buyer and no event of default occurs, the Fund will have made a series of periodic payments and recover nothing of monetary value. However,
if an event of default occurs, the Fund (if the buyer) will receive the full notional value of the reference obligation either through a cash payment in exchange for the asset or a cash payment in addition to owning the reference assets. As a
seller, the Fund receives a fixed rate of income throughout the term of the contract, which typically is between six months and five years, provided that there is no event of default. The sale of a credit default swap is a form of leverage. The Fund
currently segregates assets on the Funds records in the form of cash, cash equivalents or liquid securities in an amount equal to the notional value of the credit default swaps of which it is the seller or otherwise covers such obligations. If
such assets are not fully segregated or otherwise covered by the Fund, the use of credit default swap transactions could then be considered senior securities for
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Western Asset Global High Income Fund Inc.
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purposes of the 1940 Act. Recent market
developments related to credit default swaps have prompted increased scrutiny with respect to these instruments. As a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act, credit default swaps may in the future be subject to
increased regulation. Such regulation may limit the Funds ability to use credit default swaps. Although the Fund will seek to realize gains by writing credit default swaps that increase in value, to realize gains on writing credit default
swaps, an active secondary market for such instruments must exist or the Fund must otherwise be able to close out these transactions at advantageous times. If no such secondary market exists or the Fund is otherwise unable to close out these
transactions at advantageous times, writing credit default swaps may not be profitable for the Fund.
The market for credit default swaps has become more
volatile in recent years as the creditworthiness of certain counterparties has been questioned and/or downgraded. If a counterpartys credit becomes significantly impaired, multiple requests for collateral posting in a short period of time
could increase the risk that the Fund may not receive adequate collateral. The Fund may exit its obligations under a credit default swap only by terminating the contract and paying applicable breakage fees, or by entering into an offsetting credit
default swap position, which may cause the Fund to incur more losses.
Repurchase Agreements Risk. Subject to its investment objective and
policies, the Fund may invest in repurchase agreements for leverage or investment purposes. Repurchase agreements typically involve the acquisition by the Fund of debt securities from a selling financial institution such as a bank, savings and loan
association or broker-dealer. The agreement provides that the Fund will sell the securities back to the institution at a fixed time in the future. The Fund does not bear the risk of a decline in the value of the underlying security unless the seller
defaults under its repurchase obligation. In the event of the bankruptcy or other default of a seller of a repurchase agreement, the Fund could experience both delays in liquidating the underlying securities and losses, including (1) possible
decline in the value of the underlying security during the period in which the Fund seeks to enforce its rights thereto; (2) possible lack of access to income on the underlying security during this period; and (3) expenses of enforcing its
rights. While repurchase agreements involve certain risks not associated with direct investments in debt securities, the Fund follows procedures approved by the 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.
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Western Asset Global High Income Fund Inc.
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69
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Summary of information regarding the
Fund (unaudited) (contd)
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.
Senior Loans Risk. The Fund may invest in first lien senior secured loans (Senior Loans) issued by
banks, other financial institutions, and other investors to corporations, partnerships, limited liability companies and other entities to finance leveraged buyouts, recapitalizations, mergers, acquisitions, stock repurchases, debt refinancings and,
to a lesser extent, for general operating and other purposes. An investment in Senior Loans involves risk that the borrowers under Senior Loans may default on their obligations to pay principal or interest when due. In the event a borrower fails to
pay scheduled interest or principal payments on a Senior Loan held by the Fund, the Fund will experience a reduction in its income and a decline in the market value of the Senior Loan, which will likely reduce dividends and lead to a decline in the
net asset value of the Fund. If the Fund acquires a Senior Loan from another lender, for example, by acquiring a participation, the Fund may also be subject to credit risk with respect to that lender.
The Fund will generally invest in Senior Loans that are secured with specific collateral. However, there can be no assurance that liquidation of collateral would
satisfy the 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 of below investment grade quality and may be unrated at the time
of investment; are generally not registered with the SEC or state securities commissions; and are generally not listed on any securities exchange. In addition, the amount of public information available on Senior Loans is generally less extensive
than that available for other types of assets.
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70
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Western Asset Global High Income Fund Inc.
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Second Lien Loans Risk. Second
senior secured lien loans (Second Lien Loans) generally are subject to similar risks as those associated with investments in Senior Loans. Because Second Lien Loans are subordinated or unsecured and thus lower in priority of payment to
Senior Loans, they are subject to the additional risk that the cash flow of the borrower and property securing the loan or debt, if any, may be insufficient to meet scheduled payments after giving effect to the senior secured obligations of the
borrower. This risk is generally higher for subordinated unsecured loans or debt, which are not backed by a security interest in any specific collateral. Second Lien Loans generally have greater price volatility than Senior Loans and may be less
liquid. There is also a possibility that originators will not be able to sell participations in Second Lien Loans, which would create greater credit risk exposure for the holders of such loans. Second Lien Loans share the same risks as other below
investment grade securities.
Loan Participations and Assignments Risk. The Fund may invest in participations in loans or assignments of all or a
portion of loans from third parties. In connection with purchasing participations, the Fund generally will have no right to enforce compliance by the borrower with the terms of the loan agreement relating to the loan, nor any rights of set-off
against the borrower, and the Fund may not directly benefit from any collateral supporting the loan in which it has purchased the participation. As a result, the Fund may be subject to the credit risk of both the borrower and the lender that is
selling the participation. In the event of the insolvency of the lender selling a participation, the Fund may be treated as a general creditor of the lender and may not benefit from any set-off between the lender and the borrower. Certain
participations may be structured in a manner designed to avoid purchasers of participations being subject to the credit risk of the lender with respect to the participation, but even under such a structure, in the event of the 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.
Smaller Company Risk. The general risks associated with income-producing securities are particularly
pronounced for securities issued by companies with smaller market capitalizations. These companies may have limited product lines, markets or financial resources or they may depend on a few key employees. As a result, they may be subject to greater
levels of credit, market and issuer risk. Securities of smaller companies may trade less frequently and in lesser volume than more widely held securities and their values may fluctuate more sharply than other securities. Companies with medium-sized
market capitalizations may have risks similar to those of smaller companies.
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Western Asset Global High Income Fund Inc.
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71
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Summary of information regarding the
Fund (unaudited) (contd)
Management Risk. The Fund is subject to management risk because it is an actively managed investment portfolio. Western Asset, Western Asset Management
Company Pte. Ltd. in Singapore (Western Singapore) and Western Asset Management Company Limited in London (Western Asset Limited, together with Western Singapore, the Non-U.S. Subadvisers and individually, each a
Non-U.S. Subadviser) and each individual investment professional may not be successful in selecting the best performing securities or investment techniques, and the Funds performance may lag behind that of similar funds.
Potential Conflicts of Interest Risk. LMPFA, Western Asset, the Non-U.S. Subadvisers (together with LMPF and Western Asset, the
Managers) and the Funds investment professionals have interests which may conflict with the interests of the Fund. In particular, LMPFA also manages, and Western Asset serves as subadviser to, another closed-end investment company
listed on the NYSE that has an investment objective and investment strategies that are substantially similar to the Fund. Further, the Managers may at some time in the future manage and/or advise other investment funds or accounts with the same
investment objective and strategies as the Fund. As a result, the Managers and the Funds investment professionals may devote unequal time and attention to the management of the Fund and those other funds and accounts, and may not be able to
formulate as complete a strategy or identify equally attractive investment opportunities as might be the case if they were to devote substantially more attention to the management of the Fund. The Managers and the Funds investment
professionals may identify a limited investment opportunity that may be suitable for multiple funds and accounts, and the opportunity may be allocated among these several funds and accounts, which may limit the Funds ability to take full
advantage of the investment opportunity. Additionally, transaction orders may be aggregated for multiple accounts for purpose of execution, which may cause the price or brokerage costs to be less favorable to the Fund than if similar transactions
were not being executed concurrently for other accounts. At times, an investment professional may determine that an investment opportunity may be appropriate for only some accounts for which he or she exercises investment responsibility, or may
decide that certain accounts should take differing positions with respect to a particular security. In these cases, the investment professional may place separate transactions for one or more funds or accounts which may affect the market price of
the security or the execution of the transaction, or both, to the detriment or benefit of one or more other funds and accounts. For example, an investment professional may determine that it would be in the interest of another account to sell a
security that the Fund holds, potentially resulting in a decrease in the market value of the security held by the Fund.
Rating Agency Risk.
Credit ratings are issued by rating agencies which are private services that provide ratings of the credit quality of debt obligations, including convertible securities. Ratings assigned by a rating agency are not absolute standards of credit
quality and do not evaluate market risks or the liquidity of securities. Rating agencies may fail to make timely
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72
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Western Asset Global High Income Fund Inc.
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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.
Investments in
mortgage-related securities may involve particularly high levels of risk under current market conditions.
Inflation/Deflation Risk. Inflation
risk is the risk that the value of certain assets or income from the 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 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 effect 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.
Counterparty Risk. If an issuer or guarantor of a security held by the Fund or a
counterparty to a financial contract with the Fund defaults or its credit is downgraded, or is perceived to be less creditworthy, or if the value of the assets underlying a security declines, the value of your investment will typically decline.
Changes in actual or perceived creditworthiness may occur quickly. The Fund could be delayed or hindered in its enforcement of rights against an issuer, guarantor or counterparty. Subordinated securities are more likely to suffer a credit loss than
non-subordinated securities of the same issuer and will be disproportionately affected by a default, downgrade or perceived decline in creditworthiness.
When-Issued and Delayed-Delivery Transactions Risk. The Fund may purchase fixed income securities on a when-issued basis, and may purchase or sell those
securities for delayed delivery. When-issued and delayed-delivery transactions occur when securities are purchased or sold by the Fund with payment and delivery taking place in the future to secure an advantageous yield or price. Securities
purchased on a when-issued or delayed-delivery basis may expose the Fund to counterparty risk of default as well as the risk that securities may experience fluctuations in value prior to their actual delivery. The Fund will not accrue income with
respect to a when-issued or delayed-delivery security prior to its stated delivery date. Purchasing securities on a when-issued or delayed-delivery basis can involve the additional risk that the price or yield available in the market when the
delivery takes place may not be as favorable as that obtained in the transaction itself.
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Western Asset Global High Income Fund Inc.
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73
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Summary of information regarding the
Fund (unaudited) (contd)
Leverage Risk. The Fund is authorized to use leverage in amounts of up to approximately 33 1/3% of its total assets immediately after such borrowing and/or
issuance. The value of your investment may be more volatile if the Fund borrows or uses instruments, such as derivatives, that have a leveraging effect on the Funds portfolio. The Fund may also have to sell assets at inopportune times to
satisfy its obligations created by the use of leverage or derivatives. The use of leverage is considered to be a speculative investment practice and may result in the loss of a substantial amount, and possibly all, of the 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.
Portfolio Turnover Risk. The Funds annual portfolio
turnover rate may vary greatly from year to year. Changes to the investments of the Fund may be made regardless of the length of time particular investments have been held. A high portfolio turnover rate may result in increased transaction costs for
the Fund in the form of increased dealer spreads and other transactional costs, which may have an adverse impact on the 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.
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 Shares in
a relatively short period. Whether investors will realize gains or losses upon the sale of Common Shares will depend not upon the Funds net asset value but upon whether
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Western Asset Global High Income Fund Inc.
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the market price of Common Shares at the
time of sale is above or below the investors purchase price for Common Shares. Because the market price of Common Shares will be determined by factors such as relative supply of and demand for Common Shares in the market, general market and
economic conditions and other factors beyond the control of the Fund, the Fund cannot predict whether Common Shares will trade at, above or below net asset value. The Common Shares are designed primarily for long-term investors and you should not
view the Fund as a vehicle for trading purposes.
Anti-Takeover Provisions. The 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 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,
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Western Asset Global High Income Fund Inc.
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75
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Summary of information regarding the
Fund (unaudited) (contd)
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. 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.
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. On March 5, 2021, the ICE Benchmark Administration, the administrator of LIBOR, stated that it will cease the publication of
(i) the overnight and one-, three-, six- and twelve-month USD LIBOR settings immediately following the LIBOR publication on Friday, June 30, 2023 and (ii) all other LIBOR settings, including the one-week and two-month USD LIBOR
settings, immediately following the LIBOR publication on Friday, December 31, 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.
Operational Risk. The valuation of the Funds investments may be negatively impacted because of the operational risks arising from factors such as processing errors and human errors, inadequate or
failed internal or external processes, failures in systems and technology, changes in personnel, and errors caused by third party service providers or trading counterparties. It is not possible to identify all of the operational risks that may
affect the Fund or to develop processes and controls that completely eliminate or mitigate the occurrence of such failures. The Fund and its shareholders could be negatively impacted as a result.
Cybersecurity Risk. Cybersecurity incidents, both intentional and unintentional, may allow an unauthorized party to gain access to Fund assets, Fund or
proprietary information, cause the Fund, LMPFA and the subadvisers and/or their service providers to suffer data breaches,
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Western Asset Global High Income Fund Inc.
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data corruption or loss of operational
functionality or prevent Fund investors from purchasing, redeeming or exchanging shares or receiving distributions. The Fund, LMPFA and the subadvisers have limited ability to prevent or mitigate cybersecurity incidents affecting third party service
providers, and such third party service providers may have limited indemnification obligations to the Fund or LMPFA. Cybersecurity incidents may result in financial losses to the Fund and its shareholders, and substantial costs may be incurred in
order to prevent any future cybersecurity incidents. Issuers of securities in which the Fund invests are also subject to cybersecurity risks, and the value of these securities could decline if the issuers experience cybersecurity incidents.
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-14 that was declared effective by the SEC
on June 13, 2016. 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 High Income Fund Inc.
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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; 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.
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Western Asset Global High Income Fund Inc.
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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 High Income Fund Inc.
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Important tax information (unaudited)
The following information is provided with respect to the distributions paid during the taxable year ended May 31, 2021:
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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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June 2020 -
December 2020
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January 2021 -
May 2021
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Ordinary Income:
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Qualified Dividend Income for Individuals
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1.30%
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34.30%
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Dividends Qualifying for the Dividends Received Deduction for Corporations
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1.30%
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34.30%
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Interest from Federal Obligations
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1.98%
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Tax Return of Capital
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93.62%
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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 following ordinary income
distributions paid monthly by the Fund represent Interest-related dividends eligible for exemption from U.S.withholding tax for nonresident shareholders 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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June 2020 -
December 2020
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January 2021 -
May 2021
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Interest-related Dividends
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30.00%
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100.00%
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80
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Western Asset Global High Income Fund Inc.
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Western Asset
Global High Income Fund Inc. (EHI)
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 High Income 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 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
EHI
*
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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 High Income Fund Inc.
Western Asset Global High Income 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 High Income 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
WASX010005 7/21 SR21-4199