UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM N-CSR

 

CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES

 

Investment Company Act file number

811-21337

 

Western Asset Global High Income Fund Inc.

(Exact name of registrant as specified in charter)

 

125 Broad Street, New York, NY

 

10004

(Address of principal executive offices)

 

(Zip code)

 

Robert I. Frenkel, Esq.

Legg Mason & Co., LLC

300 First Stamford Place, 4th Floor

Stamford, CT 06902

(Name and address of agent for service)

 

Registrant’s telephone number, including area code:

(800) 451-2010

 

 

Date of fiscal year end:

May 31

 

 

Date of reporting period:

November 30, 2007

 

 



 

ITEM 1.                  REPORT TO STOCKHOLDERS.

 

The Semi-Annual Report to Stockholders is filed herewith.

 



 

 

 

Western Asset Global
High Income Fund Inc.
(EHI)

 

 

 

 

 

 

SEMI-ANNUAL

 

 

REPORT

 

 

 

 

 

 

 

 

NOVEMBER 30, 2007

 

 

 

 

 

 

 

 

 

 

 

 

INVESTMENT PRODUCTS: NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE

 


 

 

 

Western Asset Global
High Income Fund Inc.

 

 

 

 

 

 

Semi-Annual Report · November 30, 2007

 

 

 

 

 

 

What’s

 

Letter from the Chairman

I

Inside

 

 

 

 

 

Fund at a Glance

1

 

 

 

 

 

 

Schedule of Investments

2

 

 

 

 

 

 

Statement of Assets and Liabilities

20

 

 

 

 

 

 

Statement of Operations

21

 

 

 

 

 

 

Statements of Changes in Net Assets

22

 

 

 

 

 

 

Statement of Cash Flows

23

 

 

 

 

 

 

Financial Highlights

24

 

 

 

 

Fund Objective

 

Notes to Financial Statements

25

The Fund’s primary

 

 

 

investment objective is high

 

Board Approval of Management and Subadvisory Agreements

34

current income. The Fund’s

 

 

 

secondary investment

 

Additional Shareholder Information

38

objective is total return.

 

 

 

 

 

Dividend Reinvestment Plan

39

 


 

 

 

Letter from the Chairman

 

 

 



R. JAY GERKEN, CFA
Chairman, President and
Chief Executive Officer

 

Dear Shareholder,

 

 

 

Despite continued weakness in the housing market and a credit crunch that began in the summer of 2007, the U.S. economy was largely resilient during the six-month reporting period ended November 30, 2007. In the first quarter of 2007, U.S. gross domestic product (“GDP”)i growth was a tepid 0.6%, according to the U.S. Commerce Department. This was the lowest growth rate since the fourth quarter of 2002. The economy then rebounded, as second quarter 2007 GDP growth was a solid 3.8%. Given the modest increase earlier in the year, this higher growth rate was not unexpected. The final estimate for third quarter GDP growth was 4.9%. A surge in inventory-building and robust exports supported the economy during the third calendar quarter. While initial fourth quarter 2007 GDP data will not be released until the end of January 2008, the Federal Reserve Board (“Fed”)ii, among others, anticipates that economic growth will moderate significantly.

 

Ongoing issues related to the housing and subprime mortgage markets and an abrupt tightening in  the credit markets prompted the Fed to take several actions during the reporting period. The Fed initially responded by lowering the discount rate — the rate the Fed uses for loans it makes directly to banks — from 6.25% to 5.75% in mid-August 2007. Then, at its meeting on September 18, the Fed reduced the discount rate to 5.25% and the federal funds rateiii from 5.25% to 4.75%. This marked the first reduction in the federal funds rate since June 2003. The Fed again lowered the discount rate and federal funds rate in October to 5.00% and 4.50%, respectively. In December 2007, after the end of the reporting period, the Fed again reduced rates, as it cut both the discount rate and federal funds rate another 0.25% to 4.75% and 4.25%, respectively. In its statement accompanying the December meeting, the Fed stated: “Incoming information

 

Western Asset Global High Income Fund Inc.

I

 


 

 

 

suggests that economic growth is slowing, reflecting the intensification of the housing correction and some softening in business and consumer spending. Moreover, strains in financial markets have increased in recent weeks. Today’s action, combined with the policy actions taken earlier, should help promote moderate growth over time.”

 

 

 

 

 

During the six-month reporting period, both short- and long-term Treasury yields experienced periods of significant volatility given mixed economic data and shifting expectations regarding the Fed’s future monetary policy. After falling during the first three months of 2007, yields then moved steadily higher during much of the second calendar quarter. This was due, in part, to inflationary fears, a solid job market and expectations that the Fed would not be cutting short-term rates in the foreseeable future. During the remainder of the reporting period, the U.S. fixed-income markets were extremely volatile, which negatively impacted market liquidity conditions. Initially, the concern on the part of market participants was limited to the subprime segment of the mortgage-backed market. These concerns broadened, however, to include a wide range of financial institutions and markets. As a result, other fixed-income instruments also experienced increased price volatility. This turmoil triggered several “flights to quality,” causing Treasury yields to move sharply lower (and their prices higher), while riskier segments of the market saw their yields move higher (and their prices lower). Overall, during the six months ended November 30, 2007, two-year Treasury yields fell from 4.92% to 3.04%. Over the same period, 10-year Treasury yields fell from 4.90% to 3.97%. Looking at the six-month period as a whole, the overall bond market, as measured by the Lehman Brothers U.S. Aggregate Indexiv, returned 5.32%.

 

 

 

 

 

Increased investor risk aversion at the beginning and the end of the reporting period offset the gains in the high-yield bond market over the six months ended November 30, 2007. During that period, the Citigroup High Yield Market Indexv returned -2.99%. While high-yield bond prices rallied in the middle of the period, flights to quality in June and July, as well as in November, dragged down the sector, despite continued low default rates.

 

II

Western Asset Global High Income Fund Inc.

 


 

 

 

Despite a dramatic flight to quality and weakness earlier in the reporting period, emerging markets debt generated positive results, as the JPMorgan Emerging Markets Bond Index Global (“EMBI Global”)vi returned 2.65% for the six months ended November 30, 2007. Overall solid demand, an expanding global economy, strong domestic spending and the Fed’s rate cuts supported the emerging market debt asset class.

 

 

 

 

 

Performance Review

 

 

 

 

 

For the six months ended November 30, 2007, Western Asset Global High Income Fund Inc. returned -3.17% based on its net asset value (“NAV”)vii and -14.36% based on its New York Stock Exchange (“NYSE”) market price per share. In comparison, the Fund’s unmanaged benchmarks, the Lehman Brothers U.S. Aggregate Index, the Lehman Brothers U.S. Corporate High Yield 2% Issuer Cap Indexviii and the EMBI Global, returned 5.32%, -2.84% and 2.65%, respectively, over the same time frame. The Lipper Global Income Closed-End Funds Category Averageix increased 2.20% for the same period. Please note that Lipper performance returns are based on each fund’s NAV per share.

 

 

 

 

 

During the six-month period, the Fund made distributions to shareholders totaling $0.51 per share (which may have included a return of capital). The performance table shows the Fund’s six-month total return based on its NAV and market price as of November 30, 2007. Past performance is no guarantee of future results.

 

Performance Snapshot as of November 30, 2007 (unaudited)

 

Price
Per Share

 

 

 

 

Six-Month 
Total Return

 

 

 

 

 

 

 

 

$13.70 (NAV)

 

 

 

 

-3.17

%

$11.65 (Market Price)

 

 

 

 

-14.36

%

 

All figures represent past performance and are not a guarantee of future results.

Total returns are based on changes in NAV or market price, respectively. Total returns assume the reinvestment of all distributions, including returns of capital, if any, in additional shares.

 

Western Asset Global High Income Fund Inc.

III

 


 

 

 

Special Shareholder Notices

 

 

 

 

 

On August 15, 2007, the Board of Directors of Western Asset Global High Income Fund Inc. approved changes, to be effective on September 17, 2007, to the non-fundamental investment policies relating to the credit ratings of the securities in which the Fund may invest, as well as the types of securities in which the Fund may invest during periods of adverse market conditions.

 

 

 

 

 

Under the Fund’s amended non-fundamental investment policies recommended by Fund Management and approved by the Board of Directors, the Fund will usually attempt to maintain a portfolio with a weighted average credit rating of at least B3 by Moody’s Investor Service (“Moody’s”) or B- by Standard & Poor’s Corporation (“S&P”), or an equivalent rating by a nationally recognized statistical rating organization. Previously, the Fund was subject to a standard requiring it to attempt to maintain a portfolio with a weighted average credit quality rated at least Ba3 to A2 by Moody’s or BB- to A by S&P. A restriction prohibiting the Fund from investing over 80% of its managed assets in below investment grade fixed-income securities was also eliminated. These changes, which are further described below, are intended to provide the portfolio managers with additional flexibility to meet the Fund’s investment objectives and address recent and future developments in the market, although, the Fund’s portfolio managers do not currently anticipate that any dramatic changes in the Fund’s portfolio composition or investment approach will result.

 

 

 

 

 

As a result of the amendments to the Fund’s non-fundamental investment policies, the Fund may invest a greater percentage of its managed assets in securities rated below investment grade. High-yield, lower-quality securities, or “junk bonds,” are securities that are rated by a nationally recognized statistical rating organization below its top four long-term rating categories or unrated securities determined by the Fund’s investment manager to be of equivalent quality. The issuers of lower-quality securities may be highly leveraged and have difficulty servicing their debt, especially during prolonged economic recessions or periods of rising interest rates. The prices of lower-quality securities are volatile and may go down due to market perceptions of

 

IV

Western Asset Global High Income Fund Inc.

 


 

 

 

deteriorating issuer creditworthiness or economic conditions. Lower-quality securities may become illiquid and hard to value in down markets. Securities rated below investment grade securities are considered speculative and, compared to investment grade securities, tend to have more volatile prices and increased price sensitivity to changing interest rates and to adverse economic and business developments, greater risk of loss due to default or declining credit quality, greater likelihood that adverse economic or company specific events will make the issuer unable to make interest and/or principal payments and greater susceptibility to negative market sentiments leading to depressed prices and decrease in liquidity.

 

 

 

 

 

The Board of Directors also approved a new policy providing that, during times when, in the judgment of Western Asset Management Company, the Fund’s subadviser, conditions in the securities markets would make pursuing the Fund’s basic investment strategy inconsistent with the best interest of the Fund’s stockholders, as a temporary defensive strategy, the subadviser may employ alternative strategies, including investment of all of the Fund’s assets in securities rated investment grade by any nationally recognized statistical rating organization, or in unrated securities of comparable quality. Previously, the Fund had no investment policies that addressed adverse market conditions.

 

 

 

 

 

Information About Your Fund

 

 

 

 

 

Important information with regard to recent regulatory developments that may affect the Fund is contained in the Notes to Financial Statements included in this report.

 

 

 

 

 

Looking for Additional Information?

 

 

 

 

 

The Fund is traded under the symbol “EHI” and its closing market price is available in most newspapers under the NYSE listings. The daily NAV is available on-line under the symbol “XEHIX” on most financial websites. Barron’s and The Wall Street Journal’s Monday edition both carry closed-end fund tables that provide additional information. In addition, the Fund issues a quarterly press release that can be found on most major financial websites, as well as www.leggmason.com/individualinvestors.

 

Western Asset Global High Income Fund Inc.

V

 


 

 

 

In a continuing effort to provide information concerning the Fund, shareholders may call 1-888-777-0102 (toll free), Monday through Friday from 8:00 a.m. to 6:00 p.m. Eastern Time, for the Fund’s current NAV, market price and other information.

 

 

 

 

 

As always, thank you for your confidence in our stewardship of your assets. We look forward to helping you meet your financial goals.

 

 

 

 

 

Sincerely,

 

 

 

 

 

 

 

R. Jay Gerken, CFA

 

 

Chairman, President and Chief Executive Officer

 

 

 

 

 

December 28, 2007

 

The information provided is not intended to be a forecast of future events, a guarantee of future results or investment advice. Views expressed may differ from those of the firm as a whole.

 

RISKS: An investment in the Fund is subject to investment risk, including the possible loss of the entire principal amount that you invest. The Fund may use derivatives, such as options and futures, which can be illiquid, may disproportionately increase losses, and have a potentially large impact on Fund performance. Investing in foreign securities is subject to certain risks not associated with domestic investing, such as currency fluctuations, and changes in political and economic conditions. These risks are magnified in emerging or developing markets. High-Yield bonds involve greater credit and liquidity risks than investment grade bonds. Leverage may magnify gains and increase losses in the Fund’s portfolio.

 

All index performance reflects no deduction for fees, expenses or taxes. Please note that an investor cannot invest directly in an index.

 

i   Gross domestic product (“GDP”) is the market value of all final goods and services produced within a country in a given period of time.

 

ii   The Federal Reserve Board (“Fed”) is responsible for the formulation of policies designed to promote economic growth, full employment, stable prices, and a sustainable pattern of international trade and payments.

 

iii  The federal funds rate is the rate charged by one depository institution on an overnight sale of immediately available funds (balances at the Federal Reserve) to another depository institution; the rate may vary from depository institution to depository institution and from day to day.

 

iv  The Lehman Brothers U.S. Aggregate Index is a broad-based bond index comprised of government, corporate, mortgage- and asset-backed issues, rated investment grade or higher, and having at least one year to maturity.

 

v   The Citigroup High Yield Market Index is a broad-based unmanaged index of high-yield securities.

 

vi  The JPMorgan Emerging Markets Bond Index Global (“EMBI Global”) tracks total returns for U.S. dollar denominated debt instruments issued by emerging market sovereign and quasi-sovereign entities: Brady bonds, loans, Eurobonds, and local market instruments. Countries covered are Algeria, Argentina, Brazil, Bulgaria, Chile, China, Colombia, Cote d’Ivoire, Croatia, Ecuador, Greece, Hungary, Lebanon, Malaysia, Mexico, Morocco, Nigeria, Panama, Peru, the Philippines, Poland, Russia, South Africa, South Korea, Thailand, Turkey and Venezuela.

 

vii  NAV is calculated by subtracting total liabilities from the closing value of all securities held by the Fund (plus all other assets) and dividing the result (total net assets) by the total number of the common shares outstanding. The NAV fluctuates with changes in the market prices of securities in which the Fund has invested. However, the price at which an investor may buy or sell shares of the Fund is at the Fund’s market price as determined by supply of and demand for the Fund’s shares.

 

viii The Lehman Brothers U.S. Corporate High Yield 2% Issuer Cap Index is an index of the 2% Issuer Cap component of the Lehman Brothers U.S. Corporate High Yield Index, which covers the U.S. dollar-denominated, non-investment grade fixed-rate, taxable corporate bond market.

 

ix   Lipper, Inc. is a major independent mutual-fund tracking organization. Returns are based on the six-month period ended November 30, 2007, including the reinvestment of all distributions, including returns of capital, if any, calculated among the 15 funds in the Fund’s Lipper category.

 

VI

Western Asset Global High Income Fund Inc.

 


 

Fund at a Glance (unaudited)

 

Investment Breakdown

 

Western Asset Global High Income Fund Inc. 2007 Semi-Annual Report

1

 


 

Schedule of Investments (November 30, 2007) (unaudited)

 

WESTERN ASSET GLOBAL HIGH INCOME FUND INC.

 

Face
Amount†

 

Security

 

Value

 

CORPORATE BONDS & NOTES — 65.3%

 

 

 

Aerospace & Defense — 0.9%

 

 

 

410,000

 

Alliant Techsystems Inc., Senior Subordinated Notes, 6.750% due 4/1/16

 

$

407,950

 

1,150,000

 

DRS Technologies Inc., Senior Subordinated Notes, 6.875% due 11/1/13 (a)

 

 

1,141,375

 

 

 

Hawker Beechcraft Acquisition Co.:

 

 

 

 

600,000

 

Senior Notes, 8.875% due 4/1/15 (a)(b)(c)

 

 

594,000

 

905,000

 

Senior Subordinated Notes, 9.750% due 4/1/17 (a)(b)

 

 

916,313

 

845,000

 

L-3 Communications Corp., Senior Subordinated Notes, 7.625% due 6/15/12

 

 

871,406

 

 

 

Total Aerospace & Defense

 

 

3,931,044

 

Airlines — 0.7%

 

 

 

 

 

 

Continental Airlines Inc.:

 

 

 

 

209,843

 

8.388% due 11/1/20

 

 

208,794

 

270,000

 

Notes, 8.750% due 12/1/11

 

 

259,200

 

 

 

Pass-Through Certificates:

 

 

 

 

49,867

 

6.541% due 3/15/08

 

 

49,493

 

399,507

 

8.312% due 4/2/11

 

 

397,968

 

290,000

 

7.339% due 4/19/14

 

 

272,600

 

1,590,000

 

DAE Aviation Holdings Inc., Senior Notes, 11.250% due 8/1/15 (a)(b)

 

 

1,677,450

 

 

 

Total Airlines

 

 

2,865,505

 

Auto Components — 1.0%

 

 

 

 

900,000

 

Allison Transmission Inc., 11.250% due 11/1/15 (b)(c)

 

 

843,750

 

1,500,000

 

Keystone Automotive Operations Inc., Senior Subordinated Notes,
9.750% due 11/1/13 (a)

 

 

1,110,000

 

2,565,000

 

Visteon Corp., Senior Notes, 8.250% due 8/1/10 (a)

 

 

2,295,675

 

 

 

Total Auto Components

 

 

4,249,425

 

Automobiles — 2.4%

 

 

 

 

 

 

Ford Motor Co.:

 

 

 

 

 

 

Debentures:

 

 

 

 

545,000

 

8.875% due 1/15/22

 

 

449,625

 

275,000

 

8.900% due 1/15/32

 

 

215,875

 

7,205,000

 

Notes, 7.450% due 7/16/31 (a)

 

 

5,475,800

 

 

 

General Motors Corp.:

 

 

 

 

570,000

 

Notes, 7.200% due 1/15/11 (a)

 

 

531,525

 

 

 

Senior Debentures:

 

 

 

 

300,000

 

8.250% due 7/15/23 (a)

 

 

247,500

 

3,570,000

 

8.375% due 7/15/33 (a)

 

 

2,980,950

 

 

 

Total Automobiles

 

 

9,901,275

 

Beverages — 0.6%

 

 

 

 

2,330,000

 

Constellation Brands Inc., 8.375% due 12/15/14

 

 

2,359,125

 

 

See Notes to Financial Statements.

 

2

Western Asset Global High Income Fund Inc. 2007 Semi-Annual Report

 


 

Schedule of Investments (November 30, 2007) (unaudited) (continued)

 

Face
Amount†

 

Security

 

Value

 

Building Products — 1.2%

 

 

 

 

 

Associated Materials Inc.:

 

 

 

25,000

 

Senior Discount Notes, step bond to yield 7.090% due 3/1/14

 

$

16,375

 

1,560,000

 

Senior Subordinated Notes, 9.750% due 4/15/12 (a)

 

 

1,599,000

 

2,036,000

 

GTL Trade Finance Inc., 7.250% due 10/20/17 (b)

 

 

2,087,214

 

680,000

 

Nortek Inc., Senior Subordinated Notes, 8.500% due 9/1/14 (a)

 

 

554,200

 

1,130,000

 

NTK Holdings Inc., Senior Discount Notes, step bond to yield
11.542% due 3/1/14 (a)

 

 

672,350

 

 

 

Total Building Products

 

 

4,929,139

 

Capital Markets — 0.0%

 

 

 

 

250,000

 

E*TRADE Financial Corp., Senior Notes, 7.375% due 9/15/13

 

 

186,875

 

Chemicals — 1.2%

 

 

 

 

429,000

 

Equistar Chemicals LP, Senior Notes, 10.625% due 5/1/11

 

 

450,450

 

 

 

Georgia Gulf Corp., Senior Notes:

 

 

 

 

930,000

 

9.500% due 10/15/14 (a)

 

 

771,900

 

1,220,000

 

10.750% due 10/15/16 (a)

 

 

847,900

 

415,000

 

Huntsman International LLC, Senior Subordinated Notes,
7.875% due 11/15/14 (a)

 

 

447,163

 

 

 

Lyondell Chemical Co., Senior Notes:

 

 

 

 

310,000

 

8.000% due 9/15/14 (a)

 

 

352,625

 

260,000

 

8.250% due 9/15/16 (a)

 

 

306,150

 

495,000

 

Methanex Corp., Senior Notes, 8.750% due 8/15/12 (a)

 

 

533,362

 

1,190,000

 

Montell Finance Co. BV, Debentures, 8.100% due 3/15/27 (a)(b)

 

 

934,150

 

220,000

 

Westlake Chemical Corp., Senior Notes, 6.625% due 1/15/16 (a)

 

 

210,650

 

 

 

Total Chemicals

 

 

4,854,350

 

Commercial Banks — 3.1%

 

 

 

 

2,370,000

 

ATF Capital BV, Senior Notes, 9.250% due 2/21/14 (a)(b)

 

 

2,402,588

 

1,050,000

 

Banco Mercantil del Norte SA, Subordinated Bonds,
6.135% due 10/13/16 (a)(b)(d)

 

 

1,060,146

 

 

 

HSBK Europe BV:

 

 

 

 

1,700,000

 

7.250% due 5/3/17 (a)(b)

 

 

1,476,875

 

730,000

 

7.250% due 5/3/17 (b)

 

 

631,450

 

 

 

ICICI Bank Ltd., Subordinated Bonds:

 

 

 

 

1,840,000

 

6.375% due 4/30/22 (b)(d)

 

 

1,651,161

 

454,000

 

6.375% due 4/30/22 (a)(b)(d)

 

 

403,288

 

 

 

Russian Agricultural Bank, Loan Participation Notes:

 

 

 

 

1,692,000

 

7.175% due 5/16/13 (b)

 

 

1,749,020

 

1,529,000

 

6.299% due 5/15/17 (b)

 

 

1,438,636

 

 

 

TuranAlem Finance BV, Bonds:

 

 

 

 

1,786,000

 

8.250% due 1/22/37 (a)(b)

 

 

1,424,335

 

780,000

 

8.250% due 1/22/37 (b)

 

 

622,050

 

 

 

Total Commercial Banks

 

 

12,859,549

 

Commercial Services & Supplies — 1.9%

 

 

 

 

775,000

 

Allied Security Escrow Corp., Senior Subordinated Notes,
11.375% due 7/15/11 (a)

 

 

740,125

 

 

See Notes to Financial Statements.

 

Western Asset Global High Income Fund Inc. 2007 Semi-Annual Report

3

 


 

Schedule of Investments (November 30, 2007) (unaudited) (continued)

 

Face
Amount†

 

Security

 

Value

 

Commercial Services & Supplies — 1.9% (continued)

 

 

 

 

 

Allied Waste North America Inc., Senior Notes:

 

 

 

900,000

 

7.375% due 4/15/14 (a)

 

$

906,750

 

400,000

 

7.250% due 3/15/15 (a)

 

 

400,000

 

1,518,000

 

DynCorp International LLC/DIV Capital Corp., Senior Subordinated Notes,
9.500% due 2/15/13 (a)

 

 

1,586,310

 

1,100,000

 

Interface Inc., Senior Subordinated Notes, 9.500% due 2/1/14 (a)

 

 

1,149,500

 

745,000

 

Rental Services Corp., 9.500% due 12/1/14 (a)

 

 

694,712

 

2,510,000

 

US Investigations Services Inc., 10.500% due 11/1/15 (a)(b)

 

 

2,346,850

 

 

 

Total Commercial Services & Supplies

 

 

7,824,247

 

Construction & Engineering — 0.2%

 

 

 

 

761,000

 

Odebrecht Finance Ltd., 7.500% due 10/18/17 (b)

 

 

770,513

 

Consumer Finance — 2.4%

 

 

 

 

 

 

Ford Motor Credit Co.:

 

 

 

 

 

 

Notes:

 

 

 

 

50,000

 

7.875% due 6/15/10 (a)

 

 

46,436

 

1,300,000

 

7.000% due 10/1/13 (a)

 

 

1,136,703

 

 

 

Senior Notes:

 

 

 

 

1,650,000

 

10.944% due 6/15/11 (a)(d)

 

 

1,569,544

 

115,000

 

9.875% due 8/10/11 (a)

 

 

111,370

 

210,000

 

7.993% due 1/13/12 (a)(d)

 

 

183,139

 

440,000

 

8.000% due 12/15/16 (a)

 

 

385,565

 

 

 

General Motors Acceptance Corp.:

 

 

 

 

5,820,000

 

Bonds, 8.000% due 11/1/31 (a)

 

 

4,949,898

 

2,040,000

 

Notes, 6.875% due 8/28/12 (a)

 

 

1,735,956

 

 

 

Total Consumer Finance

 

 

10,118,611

 

Containers & Packaging — 1.0%

 

 

 

 

705,000

 

Graham Packaging Co. Inc., Senior Subordinated Notes,
9.875% due 10/15/14 (a)

 

 

650,362

 

805,000

 

Graphic Packaging International Corp., Senior Subordinated Notes,
9.500% due 8/15/13 (a)

 

 

800,975

 

1,575,000

 

Owens-Illinois Inc., Senior Notes, 7.350% due 5/15/08 (a)

 

 

1,590,750

 

390,000

 

Plastipak Holdings Inc., Senior Notes, 8.500% due 12/15/15 (a)(b)

 

 

393,900

 

575,000

 

Radnor Holdings Corp., Senior Notes, 11.000% due 3/15/10 (e)

 

 

7,188

 

745,000

 

Smurfit-Stone Container Enterprises Inc., Senior Notes,
8.375% due 7/1/12 (a)

 

 

731,962

 

 

 

Total Containers & Packaging

 

 

4,175,137

 

Diversified Consumer Services — 0.4%

 

 

 

 

 

 

Education Management LLC/Education Management Finance Corp.:

 

 

 

 

430,000

 

Senior Notes, 8.750% due 6/1/14 (a)

 

 

432,150

 

595,000

 

Senior Subordinated Notes, 10.250% due 6/1/16 (a)

 

 

609,875

 

 

 

Service Corp. International:

 

 

 

 

140,000

 

Debentures, 7.875% due 2/1/13 (a)

 

 

143,181

 

 

See Notes to Financial Statements.

 

4

Western Asset Global High Income Fund Inc. 2007 Semi-Annual Report

 


 

Schedule of Investments (November 30, 2007) (unaudited) (continued)

 

Face
Amount†

 

Security

 

Value

 

Diversified Consumer Services — 0.4% (continued)

 

 

 

 

 

Senior Notes:

 

 

 

185,000

 

7.625% due 10/1/18 (a)

 

$

184,538

 

210,000

 

7.500% due 4/1/27 (a)

 

 

196,350

 

 

 

Total Diversified Consumer Services

 

 

1,566,094

 

Diversified Financial Services — 1.5%

 

 

 

 

420,000

 

Basell AF SCA, Senior Secured Subordinated Second Priority Notes,
8.375% due 8/15/15 (a)(b)

 

 

355,950

 

550,000

 

CCM Merger Inc., Notes, 8.000% due 8/1/13 (a)(b)

 

 

512,875

 

290,000

 

El Paso Performance-Linked Trust Certificates, Notes, 7.750% due 7/15/11 (a)(b)

 

 

305,147

 

540,000

 

Leucadia National Corp., Senior Notes, 8.125% due 9/15/15 (a)

 

 

540,000

 

135,000

 

Milacron Escrow Corp., Senior Secured Notes, 11.500% due 5/15/11 (a)

 

 

126,900

 

 

 

TNK-BP Finance SA:

 

 

 

 

1,750,000

 

7.500% due 7/18/16 (a)(b)

 

 

1,695,575

 

1,490,000

 

Senior Notes, 7.875% due 3/13/18 (b)

 

 

1,473,237

 

890,000

 

Vanguard Health Holdings Co. I LLC, Senior Discount Notes, step bond to yield 9.952% due 10/1/15 (a)

 

 

658,600

 

555,000

 

Vanguard Health Holdings Co. II LLC, Senior Subordinated Notes,
9.000% due 10/1/14 (a)

 

 

528,638

 

 

 

Total Diversified Financial Services

 

 

6,196,922

 

Diversified Telecommunication Services — 3.1%

 

 

 

 

1,996,000

 

Axtel SAB de CV, 7.625% due 2/1/17 (b)

 

 

1,976,040

 

650,000

 

Cincinnati Bell Inc., Senior Notes, 7.000% due 2/15/15 (a)

 

 

615,875

 

120,000

 

Cincinnati Bell Telephone Co., Senior Debentures, 6.300% due 12/1/28 (a)

 

 

104,400

 

635,000

 

Citizens Communications Co., Senior Notes, 7.875% due 1/15/27 (a)

 

 

612,775

 

535,000

 

Hawaiian Telcom Communications Inc., Senior Subordinated Notes,
12.500% due 5/1/15 (a)

 

 

553,725

 

 

 

Intelsat Bermuda Ltd.:

 

 

 

 

755,000

 

9.250% due 6/15/16 (a)

 

 

772,931

 

1,505,000

 

Senior Notes, 11.250% due 6/15/16 (a)

 

 

1,565,200

 

25,000

 

L-3 Communications Corp., Senior Subordinated Notes, 6.375% due 10/15/15 (a)

 

 

24,875

 

 

 

Level 3 Financing Inc.:

 

 

 

 

965,000

 

9.250% due 11/1/14 (a)

 

 

870,913

 

70,000

 

9.150% due 2/15/15 (a)(d)

 

 

59,500

 

670,000

 

Nordic Telephone Co. Holdings, Senior Secured Bonds, 8.875% due 5/1/16 (a)(b)

 

 

683,400

 

130,000

 

PAETEC Holding Corp., Senior Notes, 9.500% due 7/15/15 (a)(b)

 

 

129,675

 

1,520,000

 

Qwest Communications International Inc., Senior Notes, 7.500% due 2/15/14 (a)

 

 

1,516,200

 

85,000

 

Qwest Corp., Notes, 8.944% due 6/15/13 (a)(d)

 

 

87,763

 

1,255,000

 

Telcordia Technologies Inc., Senior Subordinated Notes,
10.000% due 3/15/13 (a)(b)

 

 

960,075

 

 

 

Virgin Media Finance PLC, Senior Notes:

 

 

 

 

650,000

 

8.750% due 4/15/14 (a)

 

 

650,000

 

550,000

 

9.125% due 8/15/16 (a)

 

 

550,000

 

155,000

 

Wind Acquisition Finance SA, Senior Bonds, 10.750% due 12/1/15 (a)(b)

 

 

168,175

 

1,225,000

 

Windstream Corp., Senior Notes, 8.625% due 8/1/16 (a)

 

 

1,277,062

 

 

 

Total Diversified Telecommunication Services

 

 

13,178,584

 

 

See Notes to Financial Statements.

 

Western Asset Global High Income Fund Inc. 2007 Semi-Annual Report

5

 


 

Schedule of Investments (November 30, 2007) (unaudited) (continued)

 

Face
Amount†

 

Security

 

Value

 

Electric Utilities — 0.8%

 

 

 

2,050,000

 

EEB International Ltd., Senior Bonds, 8.750% due 10/31/14 (b)

 

$

2,087,925

 

581,000

 

Enersis SA, Notes, 7.375% due 1/15/14 (a)

 

 

621,837

 

550,000

 

Orion Power Holdings Inc., Senior Notes, 12.000% due 5/1/10 (a)

 

 

602,250

 

 

 

Total Electric Utilities

 

 

3,312,012

 

Electronic Equipment & Instruments — 0.2%

 

 

 

 

 

 

NXP BV/NXP Funding LLC:

 

 

 

 

170,000

 

Senior Notes, 9.500% due 10/15/15 (a)

 

 

155,125

 

530,000

 

Senior Secured Notes, 7.875% due 10/15/14 (a)

 

 

511,450

 

 

 

Total Electronic Equipment & Instruments

 

 

666,575

 

Energy Equipment & Services — 0.4%

 

 

 

 

560,000

 

Complete Production Services Inc., Senior Notes, 8.000% due 12/15/16 (a)

 

 

534,800

 

175,000

 

GulfMark Offshore Inc., Senior Subordinated Notes, 7.750% due 7/15/14 (a)

 

 

177,625

 

750,000

 

Key Energy Services Inc., 8.375% due 12/1/14 (a)(b)

 

 

755,625

 

270,000

 

Pride International Inc., Senior Notes, 7.375% due 7/15/14 (a)

 

 

278,100

 

 

 

Total Energy Equipment & Services

 

 

1,746,150

 

Food & Staples Retailing — 0.2%

 

 

 

 

189,587

 

CVS Caremark Corp., Pass-Through Certificates, 5.298% due 1/11/27 (a)(b)

 

 

190,523

 

 

 

CVS Lease Pass-Through Trust:

 

 

 

 

105,379

 

5.880% due 1/10/28 (a)(b)

 

 

103,314

 

646,651

 

6.036% due 12/10/28 (a)(b)

 

 

662,175

 

 

 

Total Food & Staples Retailing

 

 

956,012

 

Food Products — 0.2%

 

 

 

 

 

 

Dole Food Co. Inc., Senior Notes:

 

 

 

 

610,000

 

7.250% due 6/15/10 (a)

 

 

561,200

 

432,000

 

8.875% due 3/15/11 (a)

 

 

405,000

 

 

 

Total Food Products

 

 

966,200

 

Gas Utilities — 0.3%

 

 

 

 

1,480,000

 

Suburban Propane Partners LP/Suburban Energy Finance Corp., Senior Notes,
6.875% due 12/15/13 (a)

 

 

1,431,900

 

Health Care Equipment & Supplies — 0.1%

 

 

 

 

330,000

 

Advanced Medical Optics Inc., 7.500% due 5/1/17 (a)

 

 

301,950

 

Health Care Providers & Services — 3.3%

 

 

 

 

1,180,000

 

Community Health Systems Inc., 8.875% due 7/15/15 (a)

 

 

1,197,700

 

1,300,000

 

DaVita Inc., Senior Subordinated Notes, 7.250% due 3/15/15 (a)

 

 

1,270,750

 

 

 

HCA Inc.:

 

 

 

 

540,000

 

9.250% due 11/15/16 (a)

 

 

560,250

 

1,360,000

 

Notes, 6.375% due 1/15/15 (a)

 

 

1,135,600

 

400,000

 

Senior Notes, 6.500% due 2/15/16 (a)

 

 

335,000

 

3,770,000

 

Senior Secured Notes, 9.625% due 11/15/16 (a)(c)

 

 

3,930,225

 

1,675,000

 

IASIS Healthcare LLC/IASIS Capital Corp., Senior Subordinated Notes,
8.750% due 6/15/14 (a)

 

 

1,633,125

 

 

See Notes to Financial Statements.

 

6

Western Asset Global High Income Fund Inc. 2007 Semi-Annual Report

 


 

Schedule of Investments (November 30, 2007) (unaudited) (continued)

 

Face
Amount†

 

Security

 

Value

 

Health Care Providers & Services — 3.3% (continued)

 

 

 

240,000

 

Reable Therapeutics Finance LLC, 10.875% due 11/15/14 (a)(b)

 

$

231,600

 

 

 

Tenet Healthcare Corp., Senior Notes:

 

 

 

 

430,000

 

6.375% due 12/1/11 (a)

 

 

389,150

 

125,000

 

7.375% due 2/1/13 (a)

 

 

110,625

 

1,959,000

 

9.875% due 7/1/14 (a)

 

 

1,856,152

 

 

 

Universal Hospital Services Inc., Secured Notes:

 

 

 

 

135,000

 

8.500% due 6/1/15 (a)(b)(c)

 

 

135,675

 

160,000

 

8.759% due 6/1/15 (a)(b)

 

 

158,400

 

1,080,000

 

US Oncology Holdings Inc., 10.759% due 3/15/12 (a)(c)

 

 

918,000

 

 

 

Total Health Care Providers & Services

 

 

13,862,252

 

Hotels, Restaurants & Leisure — 4.0%

 

 

 

 

675,000

 

Boyd Gaming Corp., Senior Subordinated Notes, 6.750% due 4/15/14 (a)

 

 

646,312

 

675,000

 

Buffets Inc., Senior Notes, 12.500% due 11/1/14 (a)

 

 

325,687

 

 

 

Caesars Entertainment Inc.:

 

 

 

 

465,000

 

Senior Notes, 7.000% due 4/15/13 (a)

 

 

488,795

 

650,000

 

Senior Subordinated Notes, 8.875% due 9/15/08 (a)

 

 

664,625

 

539,000

 

Choctaw Resort Development Enterprise, Senior Notes,
7.250% due 11/15/19 (a)(b)

 

 

517,440

 

875,000

 

Denny’s Holdings Inc., Senior Notes, 10.000% due 10/1/12 (a)

 

 

870,625

 

255,000

 

El Pollo Loco Inc., Senior Notes, 11.750% due 11/15/13 (a)

 

 

248,625

 

825,000

 

Herbst Gaming Inc., Senior Subordinated Notes, 7.000% due 11/15/14 (a)

 

 

548,625

 

1,000,000

 

Inn of the Mountain Gods Resort & Casino, Senior Notes,
12.000% due 11/15/10 (a)

 

 

1,051,250

 

975,000

 

Las Vegas Sands Corp., Senior Notes, 6.375% due 2/15/15 (a)

 

 

926,250

 

 

 

MGM MIRAGE Inc.:

 

 

 

 

560,000

 

Notes, 6.750% due 9/1/12 (a)

 

 

545,300

 

 

 

Senior Notes:

 

 

 

 

675,000

 

5.875% due 2/27/14 (a)

 

 

615,094

 

30,000

 

6.625% due 7/15/15 (a)

 

 

28,050

 

725,000

 

7.625% due 1/15/17 (a)

 

 

725,000

 

 

 

Mohegan Tribal Gaming Authority, Senior Subordinated Notes:

 

 

 

 

675,000

 

7.125% due 8/15/14 (a)

 

 

653,062

 

625,000

 

6.875% due 2/15/15 (a)

 

 

581,250

 

 

 

Pinnacle Entertainment Inc., Senior Subordinated Notes:

 

 

 

 

450,000

 

8.250% due 3/15/12 (a)

 

 

456,750

 

675,000

 

8.750% due 10/1/13 (a)

 

 

691,875

 

940,000

 

Pokagon Gaming Authority, Senior Notes, 10.375% due 6/15/14 (a)(b)

 

 

1,010,500

 

95,000

 

River Rock Entertainment Authority, Senior Notes, 9.750% due 11/1/11 (a)

 

 

98,325

 

830,000

 

Sbarro Inc., Senior Notes, 10.375% due 2/1/15 (a)

 

 

726,250

 

1,150,000

 

Seneca Gaming Corp., Senior Notes, 7.250% due 5/1/12 (a)

 

 

1,161,500

 

 

 

Snoqualmie Entertainment Authority, Senior Secured Notes:

 

 

 

 

150,000

 

9.063% due 2/1/14 (a)(b)(d)

 

 

144,000

 

145,000

 

9.125% due 2/1/15 (a)(b)

 

 

140,288

 

 

See Notes to Financial Statements.

 

Western Asset Global High Income Fund Inc. 2007 Semi-Annual Report

7

 


 

Schedule of Investments (November 30, 2007) (unaudited) (continued)

 

Face
Amount†

 

Security

 

Value

 

Hotels, Restaurants & Leisure — 4.0% (continued)

 

 

 

 

 

Station Casinos Inc.:

 

 

 

 

 

Senior Notes:

 

 

 

110,000

 

6.000% due 4/1/12 (a)

 

$

100,375

 

760,000

 

7.750% due 8/15/16 (a)

 

 

718,200

 

190,000

 

Senior Subordinated Notes, 6.875% due 3/1/16 (a)

 

 

152,238

 

2,000,000

 

Turning Stone Casino Resort Enterprise, Senior Notes, 9.125% due 12/15/10 (a)(b)

 

 

2,020,000

 

 

 

Total Hotels, Restaurants & Leisure

 

 

16,856,291

 

Household Durables — 0.8%

 

 

 

 

80,000

 

American Greetings Corp., Senior Notes, 7.375% due 6/1/16 (a)
K Hovnanian Enterprises Inc., Senior Notes:

 

 

77,200

 

780,000

 

7.500% due 5/15/16 (a)

 

 

565,500

 

130,000

 

8.625% due 1/15/17 (a)

 

 

96,200

 

1,205,000

 

KB Home, Senior Subordinated Notes, 8.625% due 12/15/08

 

 

1,183,912

 

1,050,000

 

Norcraft Cos. LP/Norcraft Finance Corp., Senior Subordinated Notes, 9.000% due 11/1/11 (a)

 

 

1,060,500

 

445,000

 

Norcraft Holdings LP/Norcraft Capital Corp., Senior Discount Notes, step bond to yield 9.838% due 9/1/12 (a)

 

 

402,725

 

 

 

Total Household Durables

 

 

3,386,037

 

Household Products — 0.1%

 

 

 

 

490,000

 

Visant Holding Corp., Senior Notes, 8.750% due 12/1/13 (a)

 

 

491,225

 

Independent Power Producers & Energy Traders — 4.7%

 

 

 

 

675,000

 

AES China Generating Co., Ltd., 8.250% due 6/26/10 (a)

 

 

657,545

 

 

 

AES Corp.:

 

 

 

 

1,500,000

 

7.750% due 10/15/15 (a)(b)

 

 

1,496,250

 

 

 

Senior Notes:

 

 

 

 

525,000

 

9.375% due 9/15/10 (a)

 

 

549,281

 

670,000

 

8.875% due 2/15/11 (a)

 

 

698,475

 

1,940,000

 

7.750% due 3/1/14 (a)

 

 

1,915,750

 

1,150,000

 

Dynegy Holdings Inc., 7.750% due 6/1/19 (a)

 

 

1,040,750

 

 

 

Edison Mission Energy:

 

 

 

 

550,000

 

7.200% due 5/15/19 (a)

 

 

528,000

 

765,000

 

7.625% due 5/15/27

 

 

717,188

 

690,000

 

Senior Notes, 7.750% due 6/15/16 (a)

 

 

700,350

 

 

 

Energy Future Holdings, Senior Notes:

 

 

 

 

1,110,000

 

10.875% due 11/1/17 (a)(b)

 

 

1,093,350

 

6,970,000

 

11.250% due 11/1/17 (a)(b)(c)

 

 

6,882,875

 

845,000

 

Mirant North America LLC, Senior Notes, 7.375% due 12/31/13 (a)

 

 

851,338

 

 

 

NRG Energy Inc., Senior Notes:

 

 

 

 

450,000

 

7.250% due 2/1/14 (a)

 

 

441,000

 

2,135,000

 

7.375% due 2/1/16 (a)

 

 

2,097,637

 

 

 

Total Independent Power Producers & Energy Traders

 

 

19,669,789

 

Industrial Conglomerates — 0.2%

 

 

 

 

523,000

 

Koppers Inc., Senior Notes, 9.875% due 10/15/13 (a)

 

 

551,765

 

 

See Notes to Financial Statements.

 

8

Western Asset Global High Income Fund Inc. 2007 Semi-Annual Report

 


 

Schedule of Investments (November 30, 2007) (unaudited) (continued)

 

Face
Amount†

 

Security

 

Value

 

Industrial Conglomerates — 0.2% (continued)

 

 

 

205,000

 

Sequa Corp., Senior Notes, 9.000% due 8/1/09 (a)

 

$

220,375

 

 

 

Total Industrial Conglomerates

 

 

772,140

 

IT Services — 0.9%

 

 

 

 

 

 

Ceridian Corp.:

 

 

 

 

230,000

 

11.250% due 11/15/15 (b)

 

 

215,338

 

520,000

 

12.250% due 11/15/15 (a)(b)(c)

 

 

492,700

 

1,240,000

 

First Data Corp., 9.875% due 9/24/15 (a)(b)

 

 

1,154,750

 

 

 

SunGard Data Systems Inc.:

 

 

 

 

325,000

 

Senior Notes, 9.125% due 8/15/13 (a)

 

 

332,312

 

1,415,000

 

Senior Subordinated Notes, 10.250% due 8/15/15 (a)

 

 

1,464,525

 

145,000

 

Vangent Inc., 9.625% due 2/15/15 (a)

 

 

126,150

 

 

 

Total IT Services

 

 

3,785,775

 

Machinery — 0.1%

 

 

 

 

190,000

 

Terex Corp., 8.000% due 11/15/17

 

 

191,900

 

Media — 4.0%

 

 

 

 

 

 

Affinion Group Inc.:

 

 

 

 

1,105,000

 

Senior Notes, 10.125% due 10/15/13 (a)

 

 

1,113,287

 

380,000

 

Senior Subordinated Notes, 11.500% due 10/15/15 (a)

 

 

380,950

 

 

 

CCH I Holdings LLC/CCH I Holdings Capital Corp.:

 

 

 

 

325,000

 

Senior Accreting Notes, 12.125% due 1/15/15 (a)

 

 

225,875

 

1,205,000

 

Senior Notes, 11.750% due 5/15/14 (a)

 

 

825,425

 

1,247,000

 

CCH I LLC/CCH Capital Corp., Senior Secured Notes, 11.000% due 10/1/15 (a)

 

 

1,091,125

 

 

 

CCH II LLC/CCH II Capital Corp., Senior Notes:

 

 

 

 

1,050,000

 

10.250% due 9/15/10 (a)

 

 

1,042,125

 

309,000

 

10.250% due 10/1/13 (a)

 

 

307,455

 

185,000

 

Charter Communications Holdings LLC, Senior Discount Notes,
12.125% due 1/15/12 (a)

 

 

139,675

 

285,000

 

Charter Communications Holdings LLC/Charter Communications Holdings
Capital Corp., Senior Discount Notes, 11.750% due 5/15/11 (a)

 

 

220,875

 

400,000

 

Chukchansi Economic Development Authority, Senior Notes,
8.000% due 11/15/13 (a)(b)

 

 

394,000

 

575,000

 

CMP Susquehanna Corp., 9.875% due 5/15/14 (a)

 

 

485,875

 

 

 

CSC Holdings Inc.:

 

 

 

 

425,000

 

Senior Debentures, 8.125% due 8/15/09 (a)

 

 

430,313

 

 

 

Senior Notes:

 

 

 

 

550,000

 

8.125% due 7/15/09 (a)

 

 

556,875

 

250,000

 

7.625% due 4/1/11 (a)

 

 

246,250

 

575,000

 

6.750% due 4/15/12 (a)

 

 

541,937

 

1,367,000

 

Dex Media West LLC/Dex Media Finance Co., Senior Subordinated Notes,
9.875% due 8/15/13 (a)

 

 

1,423,389

 

 

 

EchoStar DBS Corp., Senior Notes:

 

 

 

 

375,000

 

7.000% due 10/1/13 (a)

 

 

390,000

 

1,775,000

 

6.625% due 10/1/14 (a)

 

 

1,801,625

 

 

See Notes to Financial Statements.

 

Western Asset Global High Income Fund Inc. 2007 Semi-Annual Report

9

 


 

Schedule of Investments (November 30, 2007) (unaudited) (continued)

 

Face
Amount†

 

Security

 

Value

 

Media — 4.0% (continued)

 

 

 

1,175,000

 

Idearc Inc., Senior Notes, 8.000% due 11/15/16 (a)

 

$

1,104,500

 

455,000

 

Lamar Media Corp., Senior Subordinated Notes, 6.625% due 8/15/15 (a)

 

 

434,525

 

 

 

R.H. Donnelley Corp., Senior Notes:

 

 

 

 

650,000

 

8.875% due 1/15/16 (a)

 

 

617,500

 

100,000

 

8.875% due 10/15/17 (a)(b)

 

 

94,750

 

1,100,000

 

Rogers Cable Inc., Senior Secured Notes, 7.875% due 5/1/12 (a)

 

 

1,216,273

 

270,000

 

Sun Media Corp., 7.625% due 2/15/13 (a)

 

 

260,550

 

690,000

 

TL Acquisitions Inc., Senior Notes, 10.500% due 1/15/15 (a)(b)

 

 

676,200

 

225,000

 

Videotron Ltee., Senior Notes, 6.375% due 12/15/15 (a)

 

 

208,688

 

 

 

XM Satellite Radio Inc., Senior Notes:

 

 

 

 

370,000

 

9.411% due 5/1/13 (a)(d)

 

 

362,600

 

205,000

 

9.750% due 5/1/14 (a)

 

 

206,025

 

 

 

Total Media

 

 

16,798,667

 

Metals & Mining — 3.6%

 

 

 

 

1,050,000

 

Corporacion Nacional del Cobre-Codelco, Notes, 5.500% due 10/15/13 (a)(b)

 

 

1,075,129

 

4,210,000

 

Freeport-McMoRan Copper & Gold Inc., Senior Notes, 8.375% due 4/1/17 (a)

 

 

4,557,325

 

2,100,000

 

Metals USA Inc., Senior Secured Notes, 11.125% due 12/1/15 (a)

 

 

2,184,000

 

525,000

 

Noranda Aluminum Holding Corp., Senior Notes,
10.488% due 11/15/14 (a)(b)(c)

 

 

458,063

 

495,000

 

Novelis Inc., Senior Notes, 7.250% due 2/15/15 (a)

 

 

464,062

 

860,000

 

Ryerson Inc., 12.000% due 11/1/15 (a)(b)

 

 

848,175

 

250,000

 

Steel Dynamics Inc., 7.375% due 11/1/12 (a)(b)

 

 

249,375

 

500,000

 

Tube City IMS Corp., 9.750% due 2/1/15 (a)

 

 

477,500

 

 

 

Vale Overseas Ltd., Notes:

 

 

 

 

1,448,000

 

8.250% due 1/17/34 (a)

 

 

1,734,617

 

2,934,000

 

6.875% due 11/21/36 (a)

 

 

3,064,592

 

 

 

Total Metals & Mining

 

 

15,112,838

 

Multiline Retail — 0.8%

 

 

 

 

 

 

Dollar General Corp.:

 

 

 

 

1,085,000

 

Senior Notes, 10.625% due 7/15/15 (a)(b)

 

 

992,775

 

995,000

 

Senior Subordinated Notes, 11.875% due 7/15/17 (a)(b)(c)

 

 

800,975

 

 

 

Neiman Marcus Group Inc.:

 

 

 

 

600,000

 

7.125% due 6/1/28 (a)

 

 

549,000

 

165,000

 

Senior Notes, 9.000% due 10/15/15 (a)(c)

 

 

172,425

 

925,000

 

Senior Subordinated Notes, 10.375% due 10/15/15 (a)

 

 

987,437

 

 

 

Total Multiline Retail

 

 

3,502,612

 

Oil, Gas & Consumable Fuels — 10.8%

 

 

 

 

1,395,000

 

Belden & Blake Corp., Secured Notes, 8.750% due 7/15/12 (a)

 

 

1,415,925

 

 

 

Chesapeake Energy Corp., Senior Notes:

 

 

 

 

1,350,000

 

6.375% due 6/15/15 (a)

 

 

1,302,750

 

270,000

 

6.625% due 1/15/16 (a)

 

 

263,250

 

160,000

 

Colorado Interstate Gas Co., Senior Notes, 6.800% due 11/15/15 (a)

 

 

170,154

 

245,000

 

Compagnie Generale de Geophysique SA, Senior Notes,
7.500% due 5/15/15 (a)

 

 

248,062

 

458,174

 

Corral Finans AB, 10.243% due 4/15/10 (a)(b)(c)

 

 

423,811

 

 

See Notes to Financial Statements.

 

10

Western Asset Global High Income Fund Inc. 2007 Semi-Annual Report

 


 

Schedule of Investments (November 30, 2007) (unaudited) (continued)

 

Face
Amount†

 

Security

 

Value

 

Oil, Gas & Consumable Fuels — 10.8% (continued)

 

 

 

 

 

El Paso Corp.:

 

 

 

 

 

Medium-Term Notes:

 

 

 

2,050,000

 

7.375% due 12/15/12 (a)

 

$

2,148,092

 

1,330,000

 

7.750% due 1/15/32 (a)

 

 

1,335,327

 

125,000

 

Notes, 7.875% due 6/15/12 (a)

 

 

131,449

 

70,000

 

El Paso Natural Gas Co., Bonds, 8.375% due 6/15/32 (a)

 

 

82,869

 

980,000

 

Enterprise Products Operating LP, Junior Subordinated Notes,
8.375% due 8/1/66 (d)

 

 

1,024,657

 

1,530,000

 

EXCO Resources Inc., Senior Notes, 7.250% due 1/15/11 (a)

 

 

1,495,575

 

 

 

Gazprom:

 

 

 

 

 

 

Bonds:

 

 

 

 

159,710,000

RUB

6.790% due 10/29/09 (a)

 

 

6,511,540

 

53,230,000

RUB

7.000% due 10/27/11 (a)

 

 

2,177,335

 

 

 

Gazprom Loan Participation Notes:

 

 

 

 

890,000

 

6.212% due 11/22/16 (a)(b)

 

 

860,808

 

 

 

Senior Notes:

 

 

 

 

1,179,000

 

6.510% due 3/7/22 (a)(b)

 

 

1,158,680

 

570,000

 

6.510% due 3/7/22 (a)(b)

 

 

548,511

 

61,340,000

RUB

Gazprom OAO, 6.950% due 8/6/09 (a)

 

 

2,508,493

 

655,000

 

International Coal Group Inc., Senior Notes, 10.250% due 7/15/14 (a)

 

 

622,250

 

 

 

LUKOIL International Finance BV:

 

 

 

 

830,000

 

6.356% due 6/7/17 (a)(b)

 

 

790,575

 

946,000

 

6.656% due 6/7/22 (a)(b)

 

 

879,780

 

390,000

 

Mariner Energy Inc., Senior Notes, 7.500% due 4/15/13 (a)

 

 

372,450

 

845,000

 

Northwest Pipeline Corp., Senior Notes, 7.000% due 6/15/16 (a)

 

 

922,106

 

 

 

OPTI Canada Inc., Senior Secured Notes:

 

 

 

 

690,000

 

7.875% due 12/15/14 (a)(b)

 

 

676,200

 

445,000

 

8.250% due 12/15/14 (a)(b)

 

 

440,550

 

 

 

Pemex Project Funding Master Trust:

 

 

 

 

5,640,000

 

6.625% due 6/15/35 (a)(b)

 

 

6,015,218

 

1,390,000

 

Senior Bonds, 6.625% due 6/15/35 (a)

 

 

1,482,474

 

510,000

 

Petrohawk Energy Corp., Senior Notes, 9.125% due 7/15/13 (a)

 

 

538,050

 

410,000

 

Petroplus Finance Ltd., Senior Notes, 7.000% due 5/1/17 (a)(b)

 

 

379,250

 

 

 

Petrozuata Finance Inc.:

 

 

 

 

1,800,000

 

8.220% due 4/1/17 (a)(b)

 

 

1,863,000

 

600,000

 

8.220% due 4/1/17 (a)(b)

 

 

615,000

 

1,245,000

 

SemGroup LP, Senior Notes, 8.750% due 11/15/15 (a)(b)

 

 

1,195,200

 

40,000

 

SESI LLC, Senior Notes, 6.875% due 6/1/14 (a)

 

 

38,800

 

660,000

 

Stone Energy Corp., Senior Subordinated Notes, 8.250% due 12/15/11 (a)

 

 

656,700

 

550,000

 

TNK-BP Finance SA, 6.625% due 3/20/17 (a)(b)

 

 

503,690

 

355,000

 

W&T Offshore Inc., Senior Notes, 8.250% due 6/15/14 (a)(b)

 

 

335,475

 

630,000

 

Whiting Petroleum Corp., Senior Subordinated Notes, 7.000% due 2/1/14 (a)

 

 

614,250

 

 

 

Williams Cos. Inc.:

 

 

 

 

1,060,000

 

Notes, 8.750% due 3/15/32 (a)

 

 

1,285,250

 

1,000,000

 

Senior Notes, 7.625% due 7/15/19 (a)

 

 

1,112,500

 

 

 

Total Oil, Gas & Consumable Fuels

 

 

45,146,056

 

 

See Notes to Financial Statements.

 

Western Asset Global High Income Fund Inc. 2007 Semi-Annual Report

11

 


 

Schedule of Investments (November 30, 2007) (unaudited) (continued)

 

Face
Amount†

 

Security

 

Value

 

 

 

 

 

 

 

Paper & Forest Products — 0.7%

 

 

 

 

 

Abitibi-Consolidated Co. of Canada:

 

 

 

190,000

 

Notes, 7.750% due 6/15/11 (a)

 

$

154,850

 

 

 

Senior Notes:

 

 

 

 

460,000

 

6.000% due 6/20/13 (a)

 

 

317,400

 

325,000

 

8.375% due 4/1/15 (a)

 

 

247,000

 

485,000

 

Abitibi-Consolidated Inc., Debentures, 7.400% due 4/1/18 (a)

 

 

332,225

 

 

 

Appleton Papers Inc.:

 

 

 

 

375,000

 

Senior Notes, 8.125% due 6/15/11 (a)

 

 

369,375

 

715,000

 

Senior Subordinated Notes, 9.750% due 6/15/14 (a)

 

 

703,381

 

 

 

NewPage Corp.:

 

 

 

 

885,000

 

Senior Secured Notes, 11.161% due 5/1/12 (a)(d)

 

 

933,675

 

65,000

 

Senior Subordinated Notes, 12.000% due 5/1/13 (a)

 

 

68,250

 

 

 

Total Paper & Forest Products

 

 

3,126,156

 

Pharmaceuticals — 0.2%

 

 

 

 

1,270,000

 

Leiner Health Products Inc., Senior Subordinated Notes, 11.000% due 6/1/12

 

 

1,009,650

 

Real Estate Investment Trusts (REITs) — 0.8%

 

 

 

 

30,000

 

Forest City Enterprises Inc., Senior Notes, 7.625% due 6/1/15 (a)

 

 

29,325

 

2,275,000

 

Host Marriott LP, Senior Notes, 7.125% due 11/1/13 (a)

 

 

2,292,063

 

155,000

 

Kimball Hill Inc., Senior Subordinated Notes, 10.500% due 12/15/12 (a)

 

 

70,525

 

 

 

Ventas Realty LP/Ventas Capital Corp., Senior Notes:

 

 

 

 

175,000

 

6.500% due 6/1/16 (a)

 

 

171,500

 

690,000

 

6.750% due 4/1/17 (a)

 

 

684,825

 

 

 

Total Real Estate Investment Trusts (REITs)

 

 

3,248,238

 

Real Estate Management & Development — 0.3%

 

 

 

 

325,000

 

Ashton Woods USA LLC/Ashton Woods Finance Co.,

 

 

 

 

 

 

Senior Subordinated Notes, 9.500% due 10/1/15 (a)

 

 

229,125

 

1,550,000

 

Realogy Corp., Senior Subordinated Notes, 12.375% due 4/15/15 (a)(b)

 

 

1,019,125

 

 

 

Total Real Estate Management & Development

 

 

1,248,250

 

Road & Rail — 0.9%

 

 

 

 

790,000

 

Grupo Transportacion Ferroviaria Mexicana SA de CV, Senior Notes,

 

 

 

 

 

 

9.375% due 5/1/12

 

 

837,400

 

 

 

Hertz Corp.:

 

 

 

 

750,000

 

Senior Notes, 8.875% due 1/1/14 (a)

 

 

753,750

 

1,860,000

 

Senior Subordinated Notes, 10.500% due 1/1/16 (a)

 

 

1,934,400

 

160,000

 

Kansas City Southern de Mexico, 7.625% due 12/1/13 (a)

 

 

161,200

 

190,000

 

Kansas City Southern Railway, Senior Notes, 7.500% due 6/15/09 (a)

 

 

191,900

 

 

 

Total Road & Rail

 

 

3,878,650

 

Semiconductors & Semiconductor Equipment — 0.1%

 

 

 

 

605,000

 

Freescale Semiconductor Inc., 8.875% due 12/15/14 (a)

 

 

555,844

 

Software — 0.2%

 

 

 

 

1,075,000

 

Activant Solutions Inc., Senior Subordinated Notes, 9.500% due 5/1/16 (a)

 

 

927,188

 

 

See Notes to Financial Statements.

 

12

Western Asset Global High Income Fund Inc. 2007 Semi-Annual Report


 

Schedule of Investments (November 30, 2007) (unaudited) (continued)

 

Face
Amount†

 

Security

 

Value

 

Specialty Retail — 0.3%

 

 

 

 

 

AutoNation Inc., Senior Notes:

 

 

 

335,000

 

7.243% due 4/15/13 (a)(d)

 

$

316,575

 

85,000

 

7.000% due 4/15/14 (a)

 

 

80,750

 

590,000

 

Blockbuster Inc., Senior Subordinated Notes, 9.000% due 9/1/12 (a)

 

 

504,450

 

345,000

 

Eye Care Centers of America, Senior Subordinated Notes, 10.750% due 2/15/15 (a)

 

 

369,150

 

 

 

Total Specialty Retail

 

 

1,270,925

 

Textiles, Apparel & Luxury Goods — 0.5%

 

 

 

 

995,000

 

Levi Strauss & Co., Senior Notes, 9.750% due 1/15/15 (a)

 

 

1,003,706

 

1,375,000

 

Simmons Co., Senior Discount Notes, step bond to yield 9.983% due 12/15/14 (a)

 

 

1,093,125

 

 

 

Total Textiles, Apparel & Luxury Goods

 

 

2,096,831

 

Tobacco — 0.1%

 

 

 

 

480,000

 

Alliance One International Inc., Senior Notes, 11.000% due 5/15/12 (a)

 

 

506,400

 

Trading Companies & Distributors — 0.7%

 

 

 

 

595,000

 

Ashtead Capital Inc., Notes, 9.000% due 8/15/16 (a)(b)

 

 

526,575

 

1,370,000

 

H&E Equipment Services Inc., Senior Notes, 8.375% due 7/15/16 (a)

 

 

1,274,100

 

1,115,000

 

Penhall International Corp., Senior Secured Notes, 12.000% due 8/1/14 (a)(b)

 

 

1,031,375

 

 

 

Total Trading Companies & Distributors

 

 

2,832,050

 

Transportation Infrastructure — 0.2%

 

 

 

 

 

 

Saint Acquisition Corp.:

 

 

 

 

1,090,000

 

Secured Notes, 12.500% due 5/15/17 (a)(b)

 

 

583,150

 

310,000

 

Senior Secured Notes, 12.619% due 5/15/15 (a)(b)(d)

 

 

165,850

 

 

 

Total Transportation Infrastructure

 

 

749,000

 

Wireless Telecommunication Services — 3.2%

 

 

 

 

630,000

 

ALLTEL Communications Inc., 10.375% due 12/1/17 (b)(c)

 

 

582,750

 

1,090,000

 

America Movil SAB de CV, 5.625% due 11/15/17 (a)

 

 

1,079,691

 

260,000

 

MetroPCS Wireless Inc., 9.250% due 11/1/14 (a)

 

 

247,650

 

1,105,000

 

Nextel Communications Inc., Senior Notes, 7.375% due 8/1/15 (a)

 

 

1,088,668

 

20,000

 

Rogers Wireless Communications Inc., Senior Secured Notes,
7.250% due 12/15/12 (a)

 

 

21,867

 

170,000

 

Rogers Wireless Inc., Senior Subordinated Notes, 8.000% due 12/15/12 (a)

 

 

177,533

 

 

 

Rural Cellular Corp.:

 

 

 

 

260,000

 

Senior Notes, 9.875% due 2/1/10 (a)

 

 

271,050

 

900,000

 

Senior Secured Notes, 8.250% due 3/15/12 (a)

 

 

938,250

 

440,000

 

Senior Subordinated Notes, 8.580% due 6/1/13 (a)(b)

 

 

448,800

 

6,510,000

 

True Move Co., Ltd., 10.750% due 12/16/13 (a)(b)

 

 

6,737,850

 

1,708,000

 

UBS Luxembourg SA for OJSC Vimpel Communications, Loan Participation
Notes, 8.250% due 5/23/16 (b)

 

 

1,733,962

 

 

 

Total Wireless Telecommunication Services

 

 

13,328,071

 

 

 

TOTAL CORPORATE BONDS & NOTES
(Cost — $281,566,340)

 

 

273,700,029

 

 

See Notes to Financial Statements.

 

Western Asset Global High Income Fund Inc. 2007 Semi-Annual Report

13


 

Schedule of Investments (November 30, 2007) (unaudited) (continued)

 

Face
Amount†

 

Security

 

Value

 

ASSET-BACKED SECURITIES — 0.0%

 

 

 

Home Equity — 0.0%

 

 

 

110,125

 

Finance America Net Interest Margin Trust, 5.250% due 6/27/34 (b)(f)

 

$

99

 

 

 

Sail Net Interest Margin Notes:

 

 

 

 

14,101

 

7.000% due 7/27/33 (b)

 

 

240

 

42,974

 

7.000% due 7/27/33 (b)(f)

 

 

172

 

 

 

TOTAL ASSET-BACKED SECURITIES
(Cost — $166,859)

 

 

511

 

COLLATERALIZED MORTGAGE OBLIGATIONS — 1.0%

 

 

 

 

 

 

Federal National Mortgage Association (FNMA) STRIP, IO:

 

 

 

 

8,263,342

 

5.500% due 1/1/33 (a)

 

 

1,930,905

 

10,114,273

 

5.500% due 7/1/33 (a)

 

 

2,383,290

 

 

 

TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost — $5,278,044)

 

 

4,314,195

 

COLLATERALIZED SENIOR LOANS — 0.3%

 

 

 

 

Oil, Gas & Consumable Fuels — 0.3%

 

 

 

 

988,207

 

Ashmore Energy International Term Loan, 8.198% due 3/30/14 (d)

 

 

953,620

 

131,105

 

Ashmore Energy International, Synthetic Revolving Credit Facility,
8.250% due 3/30/14 (d)

 

 

126,516

 

 

 

Total COLLATERALIZED SENIOR LOANS
(Cost — $1,116,757)

 

 

1,080,136

 

MORTGAGE-BACKED SECURITIES — 57.0%

 

 

 

 

FHLMC — 15.9%

 

 

 

 

 

 

Federal Home Loan Mortgage Corp. (FHLMC):

 

 

 

 

2,114,418

 

5.910% due 10/1/36 (a)(d)

 

 

2,154,335

 

4,229,559

 

5.736% due 3/1/37 (a)(d)

 

 

4,290,286

 

3,541,637

 

5.888% due 5/1/37 (a)(d)

 

 

3,600,422

 

197,146

 

6.118% due 9/1/37 (a)(d)

 

 

200,612

 

 

 

Gold:

 

 

 

 

10,000,000

 

5.500% due 12/12/37 (g)

 

 

10,001,560

 

2,700,000

 

6.000% due 12/12/37 (g)

 

 

2,740,921

 

40,000,000

 

5.000% due 1/14/38 (g)

 

 

39,256,240

 

4,230,000

 

FH 51 Hybrid, 1.000% due 12/1/37 (a)(g)

 

 

4,249,663

 

 

 

TOTAL FHLMC

 

 

66,494,039

 

FNMA — 35.8%

 

 

 

 

 

 

Federal National Mortgage Association (FNMA):

 

 

 

 

42,950,000

 

5.500% due 12/17/22-12/12/37 (g)

 

 

43,050,831

 

500,000

 

6.000% due 12/17/22 (g)

 

 

511,172

 

999,900

 

6.500% due 7/1/36

 

 

1,028,702

 

11,063,293

 

6.000% due 10/1/37

 

 

11,247,188

 

4,280,000

 

5.000% due 12/12/37 (g)

 

 

4,195,068

 

36,550,000

 

6.000% due 12/12/37 (g)

 

 

37,149,639

 

21,770,000

 

6.500% due 12/12/37 (g)

 

 

22,392,491

 

 

See Notes to Financial Statements.

 

14

Western Asset Global High Income Fund Inc. 2007 Semi-Annual Report


 

Schedule of Investments (November 30, 2007) (unaudited) (continued)

 

Face
Amount

 

Security

 

Value

 

FNMA — 35.8% (continued)

 

 

 

31,420,000

 

5.000% due 1/14/38 (g)

 

$

30,742,805

 

 

 

TOTAL FNMA

 

 

150,317,896

 

GNMA — 5.3%

 

 

 

 

8,700,000

 

Government National Mortgage Association (GNMA),
6.500% due 12/19/37 (g)

 

 

9,003,143

 

12,800,000

 

Government National Mortgage Association (GNMA) II pool,
6.500% due 12/19/37 (g)

 

 

13,236,096

 

 

 

TOTAL GNMA

 

 

22,239,239

 

 

 

TOTAL MORTGAGE-BACKED SECURITIES
(Cost — $237,119,323)

 

 

239,051,174

 

SOVEREIGN BONDS — 17.1%

 

 

 

 

Argentina — 0.9%

 

 

 

 

 

 

Republic of Argentina:

 

 

 

 

1,074,000

EUR

9.000% due 6/20/03 (e)

 

 

524,498

 

1,100,000

EUR

10.250% due 1/26/07 (e)

 

 

561,430

 

1,729,117

EUR

1.000% due 2/26/08 (e)

 

 

860,684

 

1,550,000

DEM

11.750% due 11/13/26 (e)

 

 

375,270

 

1,903,824

ARS

Bonds, 2.000% due 1/3/10 (a)(d)

 

 

1,227,929

 

522,000

EUR

Medium-Term Notes, 10.000% due 2/22/07 (e)

 

 

264,124

 

 

 

Total Argentina

 

 

3,813,935

 

Brazil — 4.1%

 

 

 

 

 

 

Brazil Nota do Tesouro Nacional:

 

 

 

 

1,000

BRL

10.000% due 1/1/10

 

 

540

 

32,108,000

BRL

10.000% due 7/1/10 (a)

 

 

17,171,453

 

 

 

Total Brazil

 

 

17,171,993

 

Colombia — 1.0%

 

 

 

 

 

 

Republic of Colombia:

 

 

 

 

544,000

 

11.750% due 2/25/20 (a)

 

 

810,560

 

2,852,000

 

7.375% due 9/18/37

 

 

3,215,630

 

 

 

Total Colombia

 

 

4,026,190

 

Ecuador — 0.6%

 

 

 

 

2,765,000

 

Republic of Ecuador, 10.000% due 8/15/30 (a)(b)

 

 

2,682,050

 

Indonesia — 1.5%

 

 

 

 

 

 

Republic of Indonesia:

 

 

 

 

15,399,000,000

IDR

10.250% due 7/15/22 (a)

 

 

1,553,830

 

28,956,000,000

IDR

11.000% due 9/15/25 (a)

 

 

3,036,165

 

11,646,000,000

IDR

9.750% due 5/15/37 (a)

 

 

1,062,425

 

525,000

 

8.500% due 10/12/35 (a)(b)

 

 

618,187

 

 

 

Total Indonesia

 

 

6,270,607

 

Mexico — 1.2%

 

 

 

 

 

 

United Mexican States:

 

 

 

 

300,000

 

11.375% due 9/15/16 (a)

 

 

427,515

 

 

See Notes to Financial Statements.

 

Western Asset Global High Income Fund Inc. 2007 Semi-Annual Report

15


 

Schedule of Investments (November 30, 2007) (unaudited) (continued)

 

Face
Amount

 

Security

 

Value

 

Mexico — 1.2% (continued)

 

 

 

 

 

Medium-Term Notes:

 

 

 

84,000

 

5.625% due 1/15/17 (a)

 

$

85,365

 

3,832,000

 

6.750% due 9/27/34 (a)

 

 

4,301,420

 

 

 

Total Mexico

 

 

4,814,300

 

Panama — 1.6%

 

 

 

 

 

 

Republic of Panama:

 

 

 

 

1,275,000

 

9.375% due 4/1/29 (a)

 

 

1,746,750

 

4,820,000

 

6.700% due 1/26/36 (a)

 

 

5,073,050

 

 

 

Total Panama

 

 

6,819,800

 

Peru — 0.5%

 

 

 

 

 

 

Republic of Peru:

 

 

 

 

278,000

 

8.750% due 11/21/33 (a)

 

 

367,655

 

1,774,000

 

Bonds, 6.550% due 3/14/37 (a)

 

 

1,853,830

 

50,000

 

Global Bonds, 7.350% due 7/21/25 (a)

 

 

57,125

 

 

 

Total Peru

 

 

2,278,610

 

Russia — 2.0%

 

 

 

 

 

 

Russian Federation:

 

 

 

 

777,804

 

8.250% due 3/31/10 (a)(b)

 

 

808,916

 

4,236,000

 

12.750% due 6/24/28 (a)(b)

 

 

7,709,520

 

 

 

Total Russia

 

 

8,518,436

 

Turkey — 0.4%

 

 

 

 

1,896,000

TRY

Republic of Turkey, 14.000% due 1/19/11 (a)

 

 

1,524,335

 

Uruguay — 0.6%

 

 

 

 

2,229,935

 

Oriental Republic of Uruguay, Bonds, 7.625% due 3/21/36 (a)

 

 

2,458,503

 

Venezuela — 2.7%

 

 

 

 

 

 

Bolivarian Republic of Venezuela:

 

 

 

 

365,000

 

8.500% due 10/8/14 (a)

 

 

346,294

 

10,497,000

 

5.750% due 2/26/16 (a)

 

 

8,227,023

 

475,000

 

7.650% due 4/21/25 (a)

 

 

401,375

 

 

 

Collective Action Securities:

 

 

 

 

1,608,000

 

9.375% due 1/13/34 (a)

 

 

1,591,116

 

875,000

 

Notes, 10.750% due 9/19/13 (a)

 

 

927,500

 

 

 

Total Venezuela

 

 

11,493,308

 

 

 

TOTAL SOVEREIGN BONDS
(Cost — $69,093,952)

 

 

71,872,067

 

U.S. GOVERNMENT & AGENCY OBLIGATIONS — 0.4%

 

 

 

 

U.S. Government Agencies — 0.4%

 

 

 

 

410,000

 

Federal Home Loan Mortgage Corp. (FHLMC), Notes, 5.125% due 4/18/11 (a)

 

 

428,022

 

1,000,000

 

Federal National Mortgage Association (FNMA), 5.625% due 11/15/21 (a)

 

 

1,030,386

 

 

 

TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS
(Cost — $1,410,785)

 

 

1,458,408

 

 

See Notes to Financial Statements.

 

16

Western Asset Global High Income Fund Inc. 2007 Semi-Annual Report

 


 

Schedule of Investments (November 30, 2007) (unaudited) (continued)

 

Face
Amount

 

Security

 

Value

 

U.S. TREASURY INFLATION PROTECTED SECURITIES — 2.0%

 

 

 

 

 

U.S. Treasury Bonds, Inflation Indexed:

 

 

 

3,056,518

 

2.000% due 1/15/26 (a)

 

$

3,086,607

 

951,050

 

2.375% due 1/15/27 (a)

 

 

1,019,779

 

 

 

U.S. Treasury Notes, Inflation Indexed:

 

 

 

 

735,245

 

2.000% due 1/15/16 (a)

 

 

758,451

 

1,695,350

 

2.375% due 1/15/17 (a)

 

 

1,802,635

 

1,709,962

 

2.625% due 7/15/17 (a)

 

 

1,862,123

 

 

 

TOTAL U.S. TREASURY INFLATION PROTECTED SECURITIES
(Cost — $7,958,950)

 

 

8,529,595

 

 

Shares

 

COMMON STOCK — 0.0%

 

 

 

CONSUMER DISCRETIONARY — 0.0%

 

 

 

Household Durables — 0.0%

 

 

 

2,085,181

 

Home Interiors & Gifts Inc. (f)(h)* (Cost — $853,389)

 

20,852

 

PREFERRED STOCKS — 0.2%

 

 

 

CONSUMER DISCRETIONARY — 0.1%

 

 

 

Automobiles — 0.1%

 

 

 

32,400

 

Ford Motor Co., 8.000%

 

503,675

 

FINANCIALS — 0.1%

 

 

 

Diversified Financial Services — 0.1%

 

 

 

2,600

 

Preferred Plus, Trust, 7.400%

 

40,144

 

9,700

 

Saturns, 8.125%

 

166,161

 

 

 

TOTAL FINANCIALS

 

206,305

 

 

 

TOTAL PREFERRED STOCKS
(Cost — $738,392)

 

709,980

 

 

Warrants

 

WARRANT — 0.0%

 

 

 

2,675

 

Bolivarian Republic of Venezuela, Oil-linked payment obligations,
Expires 4/15/20* (Cost — $82,925)

 

100,313

 

 

 

TOTAL INVESTMENTS BEFORE SHORT-TERM INVESTMENTS
(Cost — $605,385,716)

 

600,837,260

 

 

Face
Amount

 

 

 

 

 

SHORT-TERM INVESTMENTS — 34.7%

 

 

 

Sovereign Bonds — 3.5%

 

 

 

5,701,000

MYR

Bank Negara Malaysia Monetary Notes, Series 4207, zero coupon
bond to yield 3.420% due 4/22/08 (a)

 

1,671,506

 

 

See Notes to Financial Statements.

 

Western Asset Global High Income Fund Inc. 2007 Semi-Annual Report

17

 


 

Schedule of Investments (November 30, 2007) (unaudited) (continued)

 

Face
Amount

 

Security

 

Value

 

Sovereign Bonds — 3.5% (continued)

 

 

 

 

 

Egypt Treasury Bills:

 

 

 

56,850,000

EGP

Zero coupon bond to yield 7.570% due 10/28/08 (a)

 

$

9,617,253

 

20,625,000

EGP

Zero coupon bond to yield 6.800% due 11/11/08 (a)(h)

 

 

3,490,227

 

 

 

Total Sovereign Bonds
(Cost — $14,843,983)

 

 

14,778,986

 

U.S. Government Agencies — 23.3%

 

 

 

 

 

 

Federal Home Loan Bank (FHLB):

 

 

 

 

15,000,000

 

Discount Notes, 4.310% due 12/10/07 (a)(i)

 

 

14,983,875

 

30,000,000

 

Discount Notes, 4.233% due 12/5/07 (a)(i)

 

 

29,985,900

 

48,700,000

 

Federal Home Loan Mortgage Corp. (FHLMC), Discount Notes,
4.350% due 12/10/07 (a)(i)

 

 

48,647,160

 

4,050,000

 

Federal National Mortgage Association (FNMA), Discount Notes,
5.203% due 3/17/08 (a)(i)(j)

 

 

4,000,801

 

 

 

Total U.S. Government Agencies
(Cost — $97,606,628)

 

 

97,617,736

 

Repurchase Agreement — 7.9%

 

 

 

 

33,175,000 

 

Morgan Stanley tri-party repurchase agreement dated 11/30/07, 4.500%
due 12/3/07; Proceeds at maturity — $33,187,441; (Fully collateralized by
U.S. government agency obligations, 0.000% due 7/15/20 to 10/15/20;
Market value — $33,930,527) (a)
(Cost — $33,175,000)

 

 

33,175,000

 

 

 

TOTAL SHORT-TERM INVESTMENTS
(Cost — $145,625,611)

 

 

145,571,722

 

 

 

TOTAL INVESTMENTS — 178.0% (Cost — $751,011,327#)

 

 

746,408,982

 

 

 

Liabilities in Excess of Other Assets — (78.0)%

 

 

(327,109,431)

 

 

 

TOTAL NET ASSETS — 100.0%

 

$

419,299,551

 

 

*          Non-income producing security.

             Face amount denominated in U.S. dollars, unless otherwise noted.

(a)      All or a portion of this security is segregated for open futures contracts, extended settlements, swap contracts, foreign currency contracts, mortgage dollar rolls, and securities traded on a to-be-announced (“TBA”) basis.

(b)      Security is exempt from registration under Rule 144A of the Securities Act of 1933. This security may be resold in transactions that are exempt from registration, normally to qualified institutional buyers. This security has been deemed liquid pursuant to guidelines approved by the Board of Directors, unless otherwise noted.

(c)      Payment-in-kind security for which part of the income earned may be paid as additional principal.

(d)      Variable rate security. Interest rate disclosed is that which is in effect at November 30, 2007.

(e)      Security is currently in default.

(f)       Illiquid security.

(g)      This security is traded on a TBA basis (See Note 1).

(h)      Security is valued in good faith at fair value by or under the direction of the Board of Directors (See Note 1).

(i)        Rate shown represents yield-to-maturity.

(j)       All or a portion of this security is held at the broker as collateral for open futures contracts.

#           Aggregate cost for federal income tax purposes is substantially the same.

 

See Notes to Financial Statements.

 

18

Western Asset Global High Income Fund Inc. 2007 Semi-Annual Report

 


 

Schedule of Investments (November 30, 2007) (unaudited) (continued)

 

Abbreviations used in this schedule:

 

ARS

– Argentine Peso

BRL

– Brazilian Dollar

DEM

– German Mark

EGP

– Egyptian Pound

EUR

– Euro

IDR

– Indonesian Rupiah

IO

– Interest Only

MYR

– Malaysian Ringgit

OJSC

– Open Joint Stock Company

RUB

– Russian Ruble

STRIP

– Separate Trading of Registered Interest and Principal

TRY

– Turkish Lira

 

Schedule of Options Written

 

Contracts

 

Security

 

Expiration
Date

 

Strike
Price

 

Value

 

350,000

 

OTC Swaption Payer

 

1/22/08

 

$0.96

 

$443,310

 

 

 

(Premium received — $311,500)

 

 

 

 

 

 

 

 

See Notes to Financial Statements.

 

Western Asset Global High Income Fund Inc. 2007 Semi-Annual Report

19

 


 

Statement of Assets and Liabilities (November 30, 2007) (unaudited)

 

ASSETS:

 

 

 

Investments, at value (Cost — $751,011,327)

 

$

746,408,982

 

Foreign currency, at value (Cost — $500,726)

 

523,102

 

Cash

 

281

 

Receivable for securities sold

 

89,512,130

 

Dividends and interest receivable

 

7,998,837

 

Interest recievable for open swap contracts

 

1,000,000

 

Receivable from broker — variation margin on open futures contracts

 

42,576

 

Principal paydown receivable

 

3,628

 

Prepaid expenses

 

12,351

 

Total Assets

 

845,501,887

 

LIABILITIES:

 

 

 

Payable for securities purchased

 

318,242,023

 

Loan payable (Note 4)

 

100,000,000

 

Swap Contracts, at value (premiums received ($1,687,500))

 

6,541,830

 

Investment management fee payable

 

518,327

 

Options written, at value (premium received $311,500)

 

443,310

 

Interest payable

 

395,874

 

Payable for open forward currency contracts

 

37,832

 

Directors’ fees payable

 

1,248

 

Accrued expenses

 

21,892

 

Total Liabilities

 

426,202,336

 

Total Net Assets

 

$

419,299,551

 

NET ASSETS:

 

 

 

Par value ($0.001 par value; 30,608,381 shares issued and outstanding; 100,000,000 shares authorized)

 

$

30,608

 

Paid-in capital in excess of par value

 

436,420,710

 

Overdistributed net investment income

 

(572,064

)

Accumulated net realized loss on investments, futures contracts, swap contracts and foreign currency transactions

 

(2,169,024

)

Net unrealized depreciation on investments, futures contracts, options written, swap contracts and foreign currencies

 

(14,410,679

)

Total Net Assets

 

$

419,299,551

 

Shares Outstanding

 

30,608,381

 

Net Asset Value

 

$13.70

 

 

See Notes to Financial Statements.

 

20

Western Asset Global High Income Fund Inc. 2007 Semi-Annual Report

 


 

Statement of Operations (For the six months ended November 30, 2007) (unaudited)

 

INVESTMENT INCOME:

 

 

 

Interest

 

$

19,163,201

 

Dividends

 

55,406

 

Less: Foreign taxes withheld

 

(18,604

)

Total Investment Income

 

19,200,003

 

EXPENSES:

 

 

 

Investment management fee (Note 2)

 

3,180,371

 

Interest expense (Note 4)

 

2,824,493

 

Commitment fees (Note 4)

 

97,768

 

Directors’ fees

 

49,947

 

Custody fees

 

49,504

 

Audit and tax

 

45,648

 

Shareholder reports

 

33,564

 

Legal fees

 

19,849

 

Stock exchange listing fees

 

12,773

 

Transfer agent fees

 

5,289

 

Insurance

 

1,647

 

Miscellaneous expenses

 

5,230

 

Total Expenses

 

6,326,083

 

Net Investment Income

 

12,873,920

 

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FUTURES CONTRACTS, OPTIONS WRITTEN, SWAP CONTRACTS AND
FOREIGN CURRENCY TRANSACTIONS (NOTES 1 AND 3):

 

 

 

Net Realized Gain (Loss) From:

 

 

 

Investment transactions

 

6,748,125

 

Futures contracts

 

(5,391,060

)

Swap contracts

 

781,250

 

Foreign currency transactions

 

(106,348

)

Net Realized Gain

 

2,031,967

 

Change in Net Unrealized Appreciation/Depreciation From:

 

 

 

Investments

 

(19,264,541

)

Futures contracts

 

(1,471,804

)

Options written

 

(131,810

)

Swap contracts

 

(8,229,330

)

Foreign currencies

 

(21,301

)

Change in Net Unrealized Appreciation/Depreciation

 

(29,118,786

)

Net Loss on Investments, Futures Contracts, Options Written, Swap Contracts and Foreign Currency Transactions

 

(27,086,819

)

Decrease in Net Assets From Operations

 

$

(14,212,899

)

 

See Notes to Financial Statements.

 

Western Asset Global High Income Fund Inc. 2007 Semi-Annual Report

21

 


 

Statements of Changes in Net Assets

 

For the six months ended November 30, 2007 (unaudited)
and the year ended May 31, 2007

 

 

 

November 30

 

May 31

 

OPERATIONS:

 

 

 

 

 

Net investment income

 

$

12,873,920

 

$

25,494,503

 

Net realized gain (loss)

 

2,031,967

 

(895,017

)

Change in net unrealized appreciation/depreciation

 

(29,118,786

)

25,360,322

 

Increase from payment by affiliate

 

 

5,862

 

Increase (Decrease) in Net Assets From Operations

 

(14,212,899

)

49,965,670

 

DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTE 1):

 

 

 

 

 

Net investment income

 

(15,610,274

)

(24,262,360

)

Net realized gains

 

 

(7,858,440

)

Decrease in Net Assets From Distributions to Shareholders

 

(15,610,274

)

(32,120,800

)

FUND SHARE TRANSACTIONS (NOTE 6):

 

 

 

 

 

Proceeds from shares issued in reinvestment of distributions (66,306  shares issued)

 

 

952,900

 

Increase in Net Assets From Fund Share Transactions

 

 

952,900

 

Increase (Decrease) in Net Assets

 

(29,823,173

)

18,797,770

 

 

 

 

 

 

 

NET ASSETS:

 

 

 

 

 

Beginning of period

 

449,122,724

 

430,324,954

 

End of period*

 

$

419,299,551

 

$

449,122,724

 

 

 

 

 

 

 

*Includes undistributed (overdistributed) net investment income of:

 

$(572,064

)

$2,164,290

 

 

See Notes to Financial Statements.

 

22

Western Asset Global High Income Fund Inc. 2007 Semi-Annual Report

 


 

Statement of Cash Flows (For the six months ended November 30, 2007) (unaudited)

 

CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES:

 

 

 

Interest received

 

$

16,880,050

 

Operating expenses paid

 

(3,511,065

)

Net purchases of short-term investments

 

37,192,389

 

Realized loss on foreign currency transactions

 

(106,348

)

Realized loss on futures contracts

 

(5,391,060

)

Realized gain on swap contracts

 

781,250

 

Net change in unrealized depreciation on futures contracts

 

(1,471,804

)

Net change in unrealized appreciation on foreign currencies

 

148,689

 

Purchases of long-term investments

 

(1,249,447,022

)

Proceeds from disposition of long-term investments

 

1,434,188,790

 

Premium for written swaps

 

(1,687,500

)

Premium for written options

 

443,310

 

Change in payable to broker — variation margin

 

(151,494

)

Change in payable for open forward currency contracts

 

50,618

 

Interest paid

 

(2,969,918

)

Net Cash Provided By Operating Activities

 

224,948,885

 

CASH FLOWS USED BY FINANCING ACTIVITIES:

 

 

 

Cash distributions paid on Common Stock

 

(15,610,274

)

Net receipt from dollar roll transactions

 

(209,044,999

)

Net Cash Flows Used By Financing Activities

 

(224,655,273

)

Net Increase In Cash

 

293,612

 

Cash, Beginning of period

 

229,771

 

Cash, End of period

 

$

523,383

 

RECONCILIATION OF INCREASE IN NET ASSETS FROM OPERATIONS TO
NET CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES:

 

 

 

Increase in Net Assets From Operations

 

$

(14,212,899

)

Accretion of discount on investments

 

(1,320,344

)

Amortization of premium on investments

 

554,616

 

Decrease in investments, at value

 

15,876,204

 

Increase in payable for securities purchased

 

315,888,819

 

Increase in interest receivable

 

(1,554,225

)

Decrease in premium for written swaps

 

(1,687,500

)

Increase in premium for written options

 

443,310

 

Increase in receivable for securities sold

 

(88,783,320

)

Increase in payable for open forward currency contracts

 

50,618

 

Decrease in payable to broker — variation margin

 

(151,494

)

Decrease in prepaid expenses

 

5,043

 

Decrease in interest payable

 

(145,425

)

Decrease in accrued expenses

 

(14,518

)

Total Adjustments

 

239,161,784

 

Net Cash Flows Provided By Operating Activities

 

$

224,948,885

 

 

See Notes to Financial Statements.

 

Western Asset Global High Income Fund Inc. 2007 Semi-Annual Report

23

 


 

Financial Highlights

 

For a share of capital stock outstanding throughout each year ended May 31, unless otherwise noted:

 

 

 

2007(1)

 

2007

 

2006

 

2005(2)

 

2004(2)(3)

 

Net Asset Value, Beginning of Period

 

$14.67

 

$14.09

 

$14.76

 

$14.50

 

$14.30

(4) 

Income (Loss) From Operations:

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

0.42

 

0.83

 

0.95

 

1.02

 

1.00

 

Net realized and unrealized gain (loss)

 

(0.88

)

0.80

 

0.00

(5) 

0.51

 

0.23

 

Total Income (Loss) From Operations

 

(0.46

)

1.63

 

0.95

 

1.53

 

1.23

 

Less Distributions From:

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

(0.51

)

(0.79

)

(0.97

)

(1.06

)

(0.97

)

Net realized gains

 

 

(0.26

)

(0.65

)

(0.17

)

(0.06

)

Return of capital

 

 

 

 

(0.04

)

 

Total Distributions

 

(0.51

)

(1.05

)

(1.62

)

(1.27

)

(1.03

)

Increase in Net Asset Value Due to Shares Issued on Reinvestment of Distributions

 

 

0.00

(5) 

 

 

0.00

(5) 

Net Asset Value, End of Period

 

$13.70

 

$14.67

 

$14.09

 

$14.76

 

$14.50

 

Market Price, End of Period

 

$11.65

 

$14.17

 

$12.42

 

$12.96

 

$13.76

 

Total Return, Based on NAV(6)

 

(3.17

)%

11.96

%(7)

6.57

%

10.92

%

8.44

%

Total Return, Based on Market Price(8)

 

(14.36

)%

23.25

%

8.46

%

3.15

%

(1.63

)%

Net Assets, End of Period (000s)

 

$419,300

 

$449,123

 

$430,325

 

$450,716

 

$442,892

 

Ratios to Average Net Assets:

 

 

 

 

 

 

 

 

 

 

 

Gross expenses

 

2.93

%(9)

2.86

%

2.63

%

2.14

%

1.79

%(9)

Gross expenses, excluding interest expense

 

1.62

(9) 

1.58

 

1.58

 

1.55

 

1.45

(9) 

Net expenses

 

2.93

(9) 

2.86

(10) 

2.62

(10) 

2.14

 

1.79

(9) 

Net expenses, excluding interest expense

 

1.62

(9)

1.58

(10)

1.58

(10) 

1.55

 

1.45

(9)

Net investment income

 

5.97

(9)

5.77

 

6.43

 

6.85

 

7.93

(9) 

 

 

 

 

 

 

 

 

 

 

 

 

Portfolio Turnover Rate(11)

 

265

%

201

%

111

%

88

%

100

%

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental Data:

 

 

 

 

 

 

 

 

 

 

 

Loans Outstanding, End of Period (000s)

 

$100,000

 

$100,000

 

$100,000

 

$100,000

 

$100,000

 

Asset Coverage (000s)

 

$519,300

 

$549,123

 

$530,325

 

$550,716

 

$542,892

 

Asset Coverage for Loan Outstanding

 

519

%

549

%

530

%

551

%

543

%

Weighted Average Loan (000s)

 

$100,000

 

$100,000

 

$100,000

 

$100,000

 

$108,367

 

Weighted Average Interest Rate on Loans

 

5.56

%

5.67

%

4.71

%

2.70

%

1.65

%(9)

 

(1)

For the six months ended November 30, 2007 (unaudited).

(2)

Per share amounts have been calculated using the average shares method.

(3)

For the period July 28, 2003 (inception date) to May 31, 2004.

(4)

Initial public offering price of $15.00 per share less offering costs and sales load totaling $0.70 per share.

(5)

Amount represents less than $0.01 per share.

(6)

Performance figures may reflect fee waivers and/or expense reimbursements. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower. Past performance is no guarantee of future results. Total returns for periods of less than one year are not annualized.

(7)

The prior investment manager fully reimbursed the fund for losses incurred resulting from an investment transaction error. Without this reimbursement, total return would not have changed.

(8)

The total return calculation assumes that distributions are reinvested in accordance with the Fund’s dividend reinvestment plan. Past performance is no guarantee of future results.

(9)

Annualized.

(10)

Reflects fee waivers and/or expense reimbursements.

(11)

Excluding mortgage dollar roll transactions. If mortgage dollar roll transactions had been included, the portfolio turnover rate would have been 533%, 527%, 437%, and 285% for the years ended May 31, 2007, 2006, 2005, and the period ended May 31, 2004, respectively.

 

See Notes to Financial Statements.

 

24

Western Asset Global High Income Fund Inc. 2007 Semi-Annual Report

 


 

Notes to Financial Statements (unaudited)

 

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 Fund’s primary investment objective is high current income. The Fund’s secondary objective is total return.

 

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.

 

(a) Investment Valuation. Debt securities are valued at the mean between the last quoted bid and asked prices provided by an independent pricing service that are based on transactions in debt obligations, quotations from bond dealers, market transactions in comparable securities and various other relationships between securities. Equity securities for which market quotations are available are valued at the last sale price or official closing price on the primary market or exchange on which they trade. Publicly traded foreign government debt securities are typically traded internationally in the over-the-counter market, and are valued at the mean between the last quoted bid and asked prices as of the close of business of that market. When prices are not readily available, or are determined not to reflect fair value, 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 may value these securities at fair value as determined in accordance with the procedures approved by the Fund’s Board of Directors. Short-term obligations with maturities of 60 days or less are valued at amortized cost, which approximates fair value.

 

(b) Repurchase Agreements. When entering into repurchase agreements, it is the Fund’s policy that its custodian or a third party custodian take possession of the underlying collateral securities, the market value of which, at all times, at least equals the principal amount of the repurchase transaction, including accrued interest. To the extent that any repurchase transaction exceeds one business day, the value of the collateral is marked-to-market to ensure the adequacy of the collateral. If the seller defaults, and the market value of the collateral declines or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of the collateral by the Fund may be delayed or limited.

 

(c) Financial Futures Contracts. The Fund may enter into financial futures contracts typically to hedge a portion of the portfolio. Upon entering into a financial futures contract, the Fund is required to deposit cash or securities as initial margin, equal in value to a certain percentage of the contract amount (initial margin deposit). Additional securities are also segregated up to the current market value of the financial futures contracts. Subsequent payments, known as “variation margin,” are made or received by the Fund each day, depending on the daily fluctuations in the value of the underlying financial instruments. For foreign denominated futures, variation margins are not settled daily. The

 

Western Asset Global High Income Fund Inc. 2007 Semi-Annual Report

25

 


 

Notes to Financial Statements (unaudited) (continued)

 

Fund recognizes an unrealized gain or loss equal to the fluctuation in the value. When the financial futures contracts are closed, a realized gain or loss is recognized equal to the difference between the proceeds from (or cost of) the closing transactions and the Fund’s basis in the contracts.

 

The risks associated with entering into financial futures contracts include the possibility that a change in the value of the contract may not correlate with the changes in the value of the underlying financial instruments. In addition, investing in financial futures contracts involves the risk that the Fund could lose more than the initial margin deposit and subsequent payments required for a futures transaction. Risks may also arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of their contracts.

 

(d) Forward Foreign Currency Contracts. The Fund may enter 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 records 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 was closed.

 

Forward foreign currency contracts involve elements of market risk in excess of the amounts reflected in 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.

 

(e) Written Options. When the Fund writes an option, an amount equal to the premium received by the Fund is recorded as a liability, the value of which is marked-to-market daily to reflect the current market value of the option written. If the option expires, the Fund realizes a gain from investments equal to the amount of the premium received. When a written call option is exercised, the difference between the premium received plus the option exercise price and the Fund’s basis in the underlying security (in the case of a covered written call option), or the cost to purchase the underlying security (in the case of an uncovered written call option), including brokerage commission, is treated as a realized gain or loss. When a written put option is exercised, the amount of the premium received is added to the cost of the security purchased by the Fund from the exercise of the written put option to form the Fund’s basis in the underlying security purchased. The writer or buyer of an option traded on an exchange can liquidate the position before the exercise of the option by entering into a closing transaction. The cost of a closing transaction is deducted from the original premium received resulting in a realized gain or loss to the Fund.

 

The risk in writing a covered call option is that the Fund may forego the opportunity of profit if the market price of the underlying security increases and the option is exercised. The risk in writing a put option is that the Fund may incur a loss if the market price of the underlying security decreases and the option is exercised. The risk in writing a

 

26

Western Asset Global High Income Fund Inc. 2007 Semi-Annual Report

 


 

Notes to Financial Statements (unaudited) (continued)

 

call option is that the Fund is exposed to the risk of loss if the market price of the underlying security increases. In addition, there is the risk that the Fund may not be able to enter into a closing transaction because of an illiquid secondary market.

 

(f) Stripped Securities. The Fund invests in “Stripped Securities,” a term used collectively for stripped fixed income securities. Stripped securities can be principal only securities (“PO”), which are debt obligations that have been stripped of unmatured interest coupons or, interest only securities (“IO”), which are unmatured interest coupons that have been stripped from debt obligations. As is the case with all securities, the market value of Stripped Securities will fluctuate in response to changes in economic conditions, interest rates and the market’s perception of the securities. However, fluctuations in response to interest rates may be greater in Stripped Securities than for debt obligations of comparable maturities that pay interest currently. The amount of fluctuation increases with a longer period of maturity.

 

The yield to maturity on IO’s is sensitive to the rate of principal repayments (including prepayments) on the related underlying debt obligation and principal payments may have a material effect on yield to maturity. If the underlying debt obligation experiences greater than anticipated prepayments of principal, the Fund may not fully recoup its initial investment in IO’s.

 

(g) Securities Traded on a To-Be-Announced Basis. The Fund may trade securities on a to-be-announced (“TBA”) basis. In a TBA transaction, the Fund commits to purchasing or selling securities which have not yet been issued by the issuer and for which specific information is not known, such as the face amount and maturity date and the underlying pool of investments in U.S. government agency mortgage pass-through securities. Securities purchased on a TBA basis are not settled until they are delivered to the Fund, normally 15 to 45 days after purchase. Beginning on the date the Fund enters into a TBA transaction, cash, U.S. government securities or other liquid high-grade debt obligations are segregated in an amount equal in value to the purchase price of the TBA security. These securities are subject to market fluctuations and their current value is determined in the same manner as for other securities.

 

(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 Statement of Changes in Net Assets and additional information on cash receipts and cash payments are presented in the Statement of Cash Flows.

 

(i)  Security Transactions and Investment Income. Security transactions are accounted for on a trade date basis. Interest income, adjusted for amortization of premium and accretion of discount, is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date. The cost of investments sold is determined by use of the specific identification method. To the extent any issuer defaults on an expected interest payment, the Fund’s policy is to generally halt any additional interest income accruals and consider the realizability of interest accrued up to the date of default.

 

(j) Foreign Currency Translation. Investment securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts based upon

 

Western Asset Global High Income Fund Inc. 2007 Semi-Annual Report

27

 


 

Notes to Financial Statements (unaudited) (continued)

 

prevailing exchange rates at 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 changes 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 Fund’s 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 fair values of assets and liabilities, other than investments in securities, at 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.

 

(k) Credit Default Swaps. The Fund may enter into credit default swap (“CDS”) contracts for investment purposes, to manage its credit risk or to add leverage. CDS agreements involve one party making a stream of payments to another party in exchange for the right to receive a specified return in the event of a default by a third party, typically corporate issuers or sovereign issuers of an emerging country, on a specified obligation. The Fund may use a CDS to provide a measure of protection against defaults of the issuers (i.e., to reduce risk where a Fund has exposure to the sovereign issuer) or to take an active long or short position with respect to the likelihood of a particular issuer’s default. As a seller of protection, the Fund generally receives an upfront payment or a fixed rate of income throughout the term of the swap provided that there is no credit event. If the Fund is a seller of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will pay to the buyer of the protection an amount up to the notional value of the swap, and in certain instances take delivery of the security. As the seller, the Fund would effectively add leverage to its portfolio because, in addition to its total net assets, the Fund would be subject to investment exposure on the notional amount of the swap. As a buyer of protection, the Fund generally receives an amount up to the notional value of the swap if a credit event occurs.

 

Payments received or made at the beginning of the measurement period are reflected as such on the Statement of Assets and Liabilities. These upfront payments are recorded as realized gain or loss on the Statement of Operations upon termination or maturity of the swap. A liquidation payment received or made at the termination of the swap is recorded as realized gain or loss on the Statement of Operations. Net periodic payments received or paid by the Fund are recorded as realized gain or loss on the Statement of Operations.

 

28

Western Asset Global High Income Fund Inc. 2007 Semi-Annual Report

 


 

Notes to Financial Statements (unaudited) (continued)

 

Entering into a CDS agreement involves, to varying degrees, elements of credit, market and documentation risk in excess of the related amounts recognized on the Statement of Assets and Liabilities. Such risks involve the possibility that there will be no liquid market for these agreements, that the counterparty to the agreement may default on its obligation to perform or disagree as to the meaning of the contractual terms in the agreement, and that there will be unfavorable changes in net interest rates.

 

(l)  Distributions to Shareholders. Distributions from net investment income for the Fund, if any, are declared and paid on a monthly basis. Distributions of net realized gains, if any, are declared at least annually. Distributions are recorded on the ex-dividend date and are determined in accordance with income tax regulations, which may differ from GAAP.

 

(m) Federal and Other Taxes. It is the Fund’s policy to comply with the federal income and excise tax requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies. Accordingly, the Fund intends to distribute substantially all of its taxable income and net realized gains, if any, to shareholders each year. Therefore, no federal income tax provision is required in the Fund’s financial statements. Under the applicable foreign tax laws, a withholding tax may be imposed on interest, dividends and capital gains at various rates.

 

(n) Reclassification. GAAP requires that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or net asset values per share.

 

2. Investment Management Agreement and Other Transactions with Affiliates

 

Legg Mason Partners Fund Advisor, LLC (“LMPFA”) is the Fund’s investment manager and Western Asset Management Company (“Western Asset”) and Western Asset Management Company Limited (“Western Asset Limited”) are the Fund’s subadvisers. LMPFA, Western Asset and Western Asset Limited are wholly-owned subsidiaries of Legg Mason, Inc. (“Legg Mason”).

 

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 Fund’s average daily net assets plus the proceeds of any outstanding borrowings. LMPFA has delegated to the subadvisers the day-to-day portfolio management of the Fund. The Fund’s investment management fee remains unchanged. For its services, LMPFA pays Western Asset 70% of the net management fee it receives from the Fund

 

Western Asset Limited provides certain advisory services to the Fund relating to currency transactions and investment in non-U.S. dollar denominated securities. Western Asset Limited does not receive any compensation from the Fund and is paid by Western Asset for its services to the Fund.

 

During the periods in which the Fund is utilizing borrowings, the fee which is payable to the investment manager as a percentage of the Fund’s assets will be higher than if the Fund did not utilize borrowings because the fee is calculated as a percentage of the Fund’s net assets, including those investments purchased with borrowings. Borrowings for the

 

Western Asset Global High Income Fund Inc. 2007 Semi-Annual Report

29

 


 

Notes to Financial Statements (unaudited) (continued)

 

purpose of the calculation of the management fee include loans from certain financial institutions, the use of mortgage dollar roll transactions and reverse repurchase agreements.

 

Certain officers and one Director of the Fund are employees of Legg Mason or its affiliates and do not receive compensation from the Fund.

 

3. Investments

 

During the six months ended November 30, 2007, the aggregate cost of purchases and proceeds from sales of investments (excluding short-term investments) and U.S. Government & Agency Obligations were as follows:

 

 

 

 

 

U.S. Government &

 

 

 

Investments

 

Agency Obligations

 

Purchases

 

$97,431,604

 

$1,467,904,237

 

Sales

 

78,626,862

 

1,442,184,261

 

 

At November 30, 2007, the aggregate gross unrealized appreciation and depreciation of investments for federal income tax purposes were substantially as follows:

 

Gross unrealized appreciation

 

13,382,280

 

Gross unrealized depreciation

 

(17,984,625

)

Net unrealized depreciation

 

(4,602,345

)

 

At November 30, 2007, the Fund had the following open futures contracts:

 

 

 

Number of 
Contracts

 

Expiration 
Date

 

 

Basis 
Value

 

 

Market 
Value

 

Unrealized 
Gain (Loss)

 

Contracts to Buy:

 

 

 

 

 

 

 

 

 

 

 

Eurodollar

 

109

 

 

3/08

 

 

$

26,051,733

 

$

26,113,675

 

$

61,942

 

 

Japanese Yen

 

48

 

 

12/07

 

 

5,264,771

 

5,407,200

 

142,429

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

204,371

 

 

Contracts to Sell:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Australian Dollar

 

16

 

 

12/07

 

 

$

1,329,600

 

$

1,410,880

 

$

(81,280

)

 

Eurodollar

 

32

 

 

12/07

 

 

5,536,840

 

5,857,200

 

(320,360

)

 

U.S. Treasury Bond

 

2

 

 

12/07

 

 

222,599

 

234,375

 

(11,776

)

 

U.S. Treasury Bond

 

49

 

 

3/08

 

 

5,744,614

 

5,742,187

 

2,427

 

 

U.S. Treasury 2 Year Note

 

45

 

 

3/08

 

 

9,437,916

 

9,454,922

 

(17,006

)

 

U.S. Treasury 5 Year Note

 

48

 

 

12/07

 

 

5,129,065

 

5,298,000

 

(168,935

)

 

U.S. Treasury 5 Year Note

 

284

 

 

3/08

 

 

31,210,736

 

31,271,062

 

(60,326

)

 

U.S. Treasury 10 Year Note

 

208

 

 

12/07

 

 

22,717,991

 

23,695,750

 

(977,759

)

 

U.S. Treasury 10 Year Note

 

304

 

 

3/08

 

 

34,379,800

 

34,413,750

 

(33,950

)

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(1,668,965

)

 

Net Unrealized Loss on Open Futures Contracts

 

 

 

 

 

 

 

 

 

$

(1,464,594

)

 

 

30

Western Asset Global High Income Fund Inc. 2007 Semi-Annual Report

 


 

Notes to Financial Statements (unaudited) (continued)

 

At November 30, 2007, the Fund had open forward foreign currency contracts as described below:

 

Foreign Currency

 

Local
Currency

 

Market
Value

 

Settlement
Date

 

Unrealized
Loss

 

Contracts to Buy:

 

 

 

 

 

 

 

 

 

Pound Sterling

 

1,683,000

 

$3,452,724

 

2/12/08

 

$(37,832)

 

 

During the six months ended November 30, 2007, written option transactions for the Fund were as follows:

 

 

 

Number of

 

 

 

 

 

Contracts

 

Premiums

 

Options written, outstanding May 31, 2007

 

 

 

 

 

Options written

 

35,000,000

 

 

$311,500

 

 

Options closed

 

 

 

 

 

Options expired

 

 

 

 

 

Options written, outstanding November 30, 2007

 

35,000,000

 

 

$311,500

 

 

 

At November 30, 2007, the Fund held TBA securities with a total cost of $214,780,286. The average monthly balance of mortgage dollar rolls outstanding for the fund for the six months ended November 30, 2007 was approximately $215,216,873.

 

At November 30, 2007, the Fund held the following credit default swap contract:

 

Swap Counterparty:

 

Barcalays Capital Inc.

 

Effective Date:

 

10/11/2007

 

Referenced Entity:

 

CDX North America Crossover Index

 

Notional Amount:

 

150,000,000

 

Payments received by the Fund:

 

3.75% quarterly

 

Payments made by the Fund:

 

Payment only if credit event occurs

 

Termination Date:

 

12/20/2012

 

Unrealized Depreciation

 

$(8,229,330

)

 

4. Loan

 

At November 30, 2007, the Fund had a $150,000,000 credit line available pursuant to a revolving credit and security agreement dated as of December 21, 2006 (“Agreement”), with CIESCO, LLC and Citibank, N.A. (“Citibank”). Citibank acts as administrative agent and secondary lender. Also as of November 30, 2007, the Fund had a $100,000,000 loan outstanding pursuant to the Agreement. The loan generally bears interest at a variable rate based on the weighted average interest rates of the underlying commercial paper or LIBOR, plus any applicable margin. In addition, the Fund pays a commitment fee on the total amount of the loan available, whether used or unused. For the six months ended November 30, 2007, the Fund paid $97,768 in commitment fees.

 

Western Asset Global High Income Fund Inc. 2007 Semi-Annual Report

31

 


 

Notes to Financial Statements (unaudited) (continued)

 

Securities held by the Fund are subject to a lien, granted to the lenders, to the extent of the borrowing outstanding and any additional expenses. For the six months ended November 30, 2007, based on the number of days during the reporting period that the Fund had a loan balance outstanding, the average daily loan balance was $100,000,000 and the weighted average interest rate was 5.56%. Total interest expense incurred on the loan for the period was $2,824,493.

 

5. Distributions Subsequent to November 30, 2007

 

On November 19, 2007, the Board of Directors declared 3 dividends, each in the amount of $0.085 per share, payable on December 28, 2007, January 25, 2008 and February 29, 2008, to shareholders of record on December 21, 2007, January 18, 2008 and February 22, 2008, respectively.

 

6. Capital Shares

 

On October 22, 2003, the Fund’s Board authorized the Fund to repurchase from time to time in the open market up to 3,000,000 shares of the Fund’s common stock. The Board directed the management of the Fund to repurchase shares of the Fund’s common stock at such times and in such amounts as management believes will enhance shareholder value, subject to review by the Fund’s Board. Since inception of the repurchase plan, the Fund has not repurchased any shares.

 

7. Capital Loss Carryforward

 

As of May 31, 2007, the Fund had a net capital loss carrryforward of $2,706,694, which expires in 2015. These amounts will be available to offset any future taxable gains.

 

8. Other Matters

 

As previously disclosed, on September 16, 2005, the staff of the Securities and Exchange Commission (“SEC”) informed Smith Barney Fund Management (“SBFM”) and Salomon Brothers Asset Management Inc. (“SBAM”) that the staff was considering recommending administrative proceedings against SBFM and SBAM for alleged violations of Section 19(a) and 34(b) of the 1940 Act (and related Rule 19a-1). On September 27, 2007, SBFM and SBAM, without admitting or denying any findings therein, consented to the entry of an order by the SEC relating to the disclosure by certain other closed-end funds of the sources of distributions paid by the funds between 2001 and 2004. Each of SBFM and SBAM agreed to pay a fine of $450,000, for which it was indemnified by Citigroup, Inc., its former parent. It is not expected that this matter will adversely impact the Fund or its current investment adviser.

 

9. Recent Accounting Pronouncements

 

During June 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation 48 (“FIN 48” or the “Interpretation”), Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement 109. FIN 48 supplements FASB Statement 109, Accounting for Income Taxes, by defining the confidence level that a tax position must

 

32

Western Asset Global High Income Fund Inc. 2007 Semi-Annual Report

 


 

Notes to Financial Statements (unaudited) (continued)

 

meet in order to be recognized in the financial statements. FIN 48 prescribes a comprehensive model for how a fund should recognize, measure, present, and disclose in its financial statements uncertain tax positions that the fund has taken or expects to take on a tax return. FIN 48 requires that the tax effects of a position be recognized only if it is “more likely than not” to be sustained based solely on its technical merits. Management must be able to conclude that the tax law, regulations, case law, and other objective information regarding the technical merits sufficiently support the position’s sustainability with a likelihood of more than 50 percent. FIN 48 is effective for fiscal periods beginning after December 15, 2006, which for this Fund was June 1, 2007. At adoption, the financial statements must be adjusted to reflect only those tax positions that are more likely than not to be sustained as of the adoption date. Management of the Fund has determined that adopting FIN 48 will not have a material impact on the Fund’s financial statements.

 

* * *

 

On September 20, 2006, FASB released Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“FAS 157”). FAS 157 establishes an authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair value measurements. The application of FAS 157 is required for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. At this time, management is evaluating the implications of FAS 157.

 

Western Asset Global High Income Fund Inc. 2007 Semi-Annual Report

33

 


 

Board Approval of Management and Subadvisory Agreements (unaudited)

 

At a meeting (the “Contract Renewal Meeting”) held in-person on November 13 and 14, 2007, the Board of Western Asset Global High Income Fund Inc. (the “Fund”), including the Fund’s Board members that are not considered to be “interested persons” under the Investment Company Act of 1940, as amended (the “Independent Board Members”), approved the continuation of the investment management contract (the “Management Agreement”) with the Fund’s manager, Legg Mason Partners Fund Advisor, LLC (the “Manager”) and the sub-advisory agreement (the “Sub-Advisory Agreement”) with the Manager’s affiliate, Western Asset Management Company (the “Subadviser”) for a period of one year. To assist in its consideration of the renewals of the Management and Sub-Advisory Agreements, the Board received and considered a variety of information about the Manager and Subadviser, as well as the management and sub-advisory arrangements for the Fund and other funds overseen by the Board, certain portions of which are discussed below. A presentation made by the Manager and Subadviser to the Board at the Contract Renewal Meeting in connection with its evaluations of the Management and Sub-Advisory Agreements encompassed the Fund and all the funds for which the Board has responsibility. In addition to the Contract Renewal Information, including information presented by management at the Contract Renewal Meeting, the Board received information throughout the year related to the services rendered by the Manager and the Subadviser to the Fund. The Board’s evaluation took into account the information received throughout the year and reflected the knowledge and familiarity gained as Board members of the Fund and other funds in the same complex with respect to the services provided to the Fund by the Manager and Subadviser.

 

The discussion below covers both advisory and administrative functions being rendered by the Manager, each function encompassed by the Management Agreement.

 

In approving the Management Agreement and Sub-Advisory Agreement, the Fund’s Board, including the Independent Board Members, considered the factors below.

 

The Board received and considered information regarding the nature, extent and quality of services provided to the Fund by the Manager and the Subadviser under the Management Agreement and the Sub-Advisory Agreement, respectively, during the past year. The Board also reviewed information received from the Manager regarding the Fund’s compliance policies and procedures established pursuant to Rule 38a-1 under the Investment Company Act of 1940, as amended.

 

The Board reviewed the qualifications, backgrounds and responsibilities of the Fund’s senior personnel and the portfolio management team primarily responsible for the day-to-day portfolio management of the Fund. The Board also considered, based on its knowledge of the Manager and its affiliates, the financial resources available to the Legg Mason funds’ parent organization, Legg Mason, Inc. (“Legg Mason”).

 

The Board considered the division of responsibilities between the Manager and the Subadviser and the oversight provided by the Manager. The Board also considered the Manager’s and Subadviser’s brokerage policies and practices, the standards applied in seeking best execution, the Manager’s policies and practices regarding soft dollars, the use of a broker affiliated with the Manager or the Subadviser, and the existence of quality controls

 

34

Western Asset Global High Income Fund Inc.

 


 

Board Approval of Management and Subadvisory Agreements (unaudited) (continued)

 

applicable to brokerage allocation procedures. In addition, the Manager also reported generally to the Board on, among other things, its business plans, recent organizational changes, including Legg Mason’s plans to address the pending retirement of its Chief Executive Officer, and the compensation plan for the Fund’s portfolio managers.

 

The Board concluded that, overall, the nature, extent and quality of services provided (and expected to be provided) under the Management Agreement and the Sub-Advisory Agreement have been acceptable under the circumstances.

 

The Board received and considered performance information and analyses (the “Lipper Performance Information”) for the Fund, as well as for a group of funds (the “Performance Universe”) selected by Lipper, Inc. (“Lipper”), an independent provider of investment company data. The Board was provided with a description of the methodology Lipper used to determine the similarity of the Fund with the funds included in the Performance Universe. The Performance Universe consisted of all funds (including the Fund) classified by Lipper as closed-end leveraged global income funds regardless of asset size or primary distribution channel. The Performance Universe consisted of six funds, including the Fund and two other funds in the Legg Mason fund complex that are managed by the Subadviser. The remaining three funds in the Performance Universe were in a single fund complex. The Board noted that it had received and discussed with management information throughout the year at periodic intervals comparing the Fund’s performance against its benchmark(s) and, at the Board’s request, its peer funds as selected by Lipper.

 

The Lipper Performance Information comparing the Fund’s performance to that of its Performance Universe showed, among other things, that the Fund’s performance for the 1- and 3-year periods ended June 30, 2007 was in each case below the Performance Universe median. The Board considered the Manager’s explanation of the underperformance relative to the Performance Universe. Among other things, the Manager noted that the small size and the composition of the Performance Universe made meaningful comparisons difficult.

 

Based on its review, which included consideration of all of the information and factors noted above, the Board concluded that the Fund’s performance, viewed on an absolute performance basis, supported continuation of the Management and Sub-advisory Agreements for an additional one-year period but that it will continue to evaluate the Fund’s performance.

 

The Board reviewed and considered the management fee (the “Management Fee”) payable by the Fund to the Manager in light of the nature, extent and quality of the management and sub-advisory services provided by the Manager and the Subadviser. The Board noted that the compensation paid to the Subadviser is paid by the Manager, not the Fund, and, accordingly, that the retention of the Subadviser does not increase the fees or expenses otherwise incurred by the Fund’s shareholders.

 

Additionally, the Board received and considered information and analyses prepared by Lipper (the “Lipper Expense Information”) comparing the Management Fee and the Fund’s overall expenses with those of funds in a relevant expense group (the “Expense

 

Western Asset Global High Income Fund Inc.

35

 


 

Board Approval of Management and Subadvisory Agreements (unaudited) (continued)

 

Universe”) selected and provided by Lipper for the year ended June 30, 2007. The Expense Universe consisted of all funds, including the Fund, classified by Lipper as closed-end leveraged global income funds, excluding certain funds regarded by Lipper as inappropriate for comparative purposes. The Expense Universe consisted of six funds that had assets ranging from $155.4 million to $2.3 billion. The Expense Universe funds were identical to the Performance Universe funds.

 

The Lipper Expense Information, comparing the Management Fee as well as its actual total expenses to the Fund’s Expense Universe, showed that the Management Fee, whether on a contractual basis or an actual basis (i.e., giving in effect to a voluntary fee waiver implemented by the Manager), was above the median for the Expense Universe on a common assets basis. The actual total expenses of the Fund also were above the Expense Universe median on a common assets basis. On the basis of common and leveraged assets, the Fund’s contractual and actual Management Fees were both above the Expense Universe median. The Fund’s actual total expenses also were above the Expense Universe median on that basis. The Management Fee and the Fund’s total expenses were not the highest in the Performance Universe on either a contractual or actual basis.

 

The Board considered the Manager’s view that the small size and the composition of the Expense Universe, including the wide range of sizes among the six constituent funds, limited the value of the comparison.

 

The Board also reviewed information provided by the Manager regarding fees charged by the Manager to other U.S. clients investing primarily in an asset class similar to that of the Fund, including, where applicable, separate accounts. The Board was advised that the fees paid by such other clients generally are lower, and may be significantly lower, than the Management Fee. The Contract Renewal Information discussed the significant differences in scope of services provided to the Fund and to these other clients, noting that the Fund is provided with administrative services, office facilities, Fund officers (including the Fund’s chief executive, chief financial and chief compliance officers), and that the Manager coordinates and oversees the provision of services to the Fund by other Fund providers. The Board considered the fee comparisons in light of the differences required to manage these different types of accounts. The Contract Renewal Information included an analysis of complex-wide management fees provided by the Manager, which, among other things, set out a proposed framework of fees based on asset classes.

 

Taking all of the above into consideration, the Board determined that the Management Fee and the sub-advisory fee were reasonable in light of the nature, extent and quality of the services provided to the Fund under the Management Agreement and the Sub-Advisory Agreement.

 

The Board, as part of the Contract Renewal Information, received a profitability analysis of the Manager and its affiliates in providing services to the Fund. The Board also received profitability information with respect to the Legg Mason fund complex as a whole. In addition, the Board received information with respect to the Manager’s revenue and cost allocation methodologies used in preparing such profitability data, together with a report from an outside consultant that had reviewed the Manager’s methodology. The

 

36

Western Asset Global High Income Fund Inc.

 


 

Board Approval of Management and Subadvisory Agreements (unaudited) (continued)

 

profitability to the Subadviser was not considered to be a material factor in the Board’s considerations since the Subadviser’s fee is paid by the Manager, not the Fund. The profitability analysis presented to the Board as part of the Contract Renewal Information indicated that profitability to the Manager in providing services to the Fund had increased during the past year. The Board expressed its concern regarding the increasing level of profitability to the Manager from providing services to the Fund but noted that the Manager had implemented a new allocation methodology in 2007 which was used in preparing the profitability analysis presented at the Contract Renewal Meeting and that the methodology was subject to further review and refinement. The Board consequently concluded that it would be appropriate to continue to monitor profitability in light of the parties’ limited experience with the new allocation methodologies.

 

The Board received and discussed information concerning whether the Manager realizes economies of scale if the Fund’s assets grow. The Board noted that because the Fund is a closed-end Fund, growth in its assets will occur through appreciation in the value of the Fund’s investment portfolio, rather than sales of additional shares in the Fund. The Board noted that the Management Fee is lower than the average of management fees paid by the other funds in the Expense Universe. The Board determined that the management fee structure was reasonable under present circumstances.

 

The Board considered other benefits received by the Manager, the Subadviser and its affiliates as a result of their relationship with the Fund, including the opportunity to obtain research services from brokers who effect Fund portfolio transactions.

 

In light of the costs of providing investment management and other services to the Fund and the Manager’s ongoing commitment to the Fund, the profits and other ancillary benefits that the Manager and its affiliates received were not considered to be excessive under the circumstances.

 

In light of all of the foregoing, the Board approved the Management Agreement and the Sub-Advisory Agreement to continue for another year.

 

No single factor reviewed by the Board was identified by the Board as the principal factor in determining whether to approve the Management Agreement and Sub-Advisory Agreement, and each Board Member attributed different weight to the various factors. The Independent Board Members were advised by separate independent legal counsel throughout the process. The Board also discussed the proposed continuance of the Management Agreement and the Sub-Advisory Agreement in private sessions with their independent legal counsel at which no representatives of the Manager were present.

 

Western Asset Global High Income Fund Inc.

37

 


 

Additional Shareholder Information (unaudited)

 

Results of Annual Meeting of Shareholders

 

The Annual Meeting of Shareholders of Western Asset Global High Income Fund Inc. was held on September 18, 2007, for the purpose of considering and voting upon the election of Directors. The following table provides information concerning the matter voted upon at the Meeting.

 

Election of Directors

 

Nominees

 

Votes For

 

Votes Withheld

 

R. Jay Gerken

 

25,984,793

 

 

443,699

 

Dr. Riordan Roett

 

25,987,744

 

 

487,383

 

Jeswald W. Salacuse

 

25,986,837

 

 

444,596

 

 

At November 30, 2007, in addition to R. Jay Gerken, Dr. Riordan Roett and Jeswald W. Salacuse, the other Directors of the Fund were as follows:

 

Carol L. Colman

Daniel P. Cronin

Paolo M. Cucchi

Leslie H. Gelb

William R. Hutchinson

 

38

Western Asset Global High Income Fund Inc.

 


 

Dividend Reinvestment Plan (unaudited)

 

Unless you elect to receive distributions in cash, all distributions, on your Common Shares will be automatically reinvested by American Stock Transfer & Trust Company (“AST”), as agent for the Common Shareholders (the “Plan Agent”), in additional Common Shares under the 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 AST as distribution paying agent.

 

If you participate in the Plan, the number of Common Shares you will receive will be determined as follows:

 

(1) If the market price of the Common Shares on the record date (or, if the record date is not a New York Stock Exchange trading day, the immediately preceding trading day) for determining shareholders eligible to receive the relevant distribution (the “determination date”) is equal to or exceeds 98% of the net asset value per share of the Common Shares, the Fund will issue new Common Shares at a price equal to the greater of (a) 98% of the net asset value per share at the close of trading on the Exchange on the determination date or (b) 95% of the market price per share of the Common Shares on the determination date.

 

(2) If 98% of the net asset value per share of the Common Shares exceeds the market price of the Common Shares on the determination date, the Plan Agent will receive the distribution in cash and will buy Common Shares in the open market, on the Exchange or elsewhere, for your account as soon as practicable commencing on the trading day following the determination date and terminating no later than the earlier of (a) 30 days after the distribution payment date, or (b) the record date for the next succeeding distribution to be made to the Common Shareholders; except when necessary to comply with applicable provisions of the federal securities laws. If during this period: (i) the market price rises so that it equals or exceeds 98% of the net asset value per share of the Common Shares at the close of trading on the Exchange on the determination 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 Shares in the open market and the Fund shall issue the remaining Common Shares at a price per share equal to the greater of (a) 98% of the net asset value per share at the close of trading on the Exchange on the determination date or (b) 95% of the then current market price per share.

 

The Plan Agent maintains all participants’ accounts in the Plan and gives written confirmation of all transactions in the accounts, including information you may need for tax records. Common Shares in your account will be held by the Plan Agent in non-certificated form. Any proxy you receive will include all Common Shares you have received under the Plan.

 

You may withdraw from the Plan by notifying the Plan Agent in writing at 59 Maiden Lane, New York, New York 10038 or by calling the Plan Agent at 1-877-366-6441. Such withdrawal will be effective immediately if notice is received by the Plan Agent not less than ten business days prior to any distribution record date; otherwise such withdrawal will be effective as soon as practicable after the Plan Agent’s investment of the most recently declared distribution on the Common Shares. The Plan may be terminated by the Fund upon notice in writing mailed to Common Shareholders at least 30 days prior to the record date for the payment

 

Western Asset Global High Income Fund Inc.

39

 


 

Dividend Reinvestment Plan (unaudited) (continued)

 

of any distribution by the Fund for which the termination is to be effective. Upon any termination, you will be sent a certificate or certificates for the full Common Shares held for you under the Plan and cash for any fractional Common Shares. You may elect to notify the Plan Agent in advance of such termination to have the Plan Agent sell part or all of your shares on your behalf. You will be charged $5.00 plus a $0.05 per Common Share service charge and the Plan Agent is authorized to deduct brokerage charges actually incurred for this transaction from the proceeds.

 

There is no service charge for reinvestment of your distributions in Common Shares. 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 distributions will be automatically reinvested in additional Common Shares, this allows you to add to your investment through dollar cost averaging, which may lower the average cost of your Common Shares over time.

 

Automatically reinvesting distributions does not mean that you do not have to pay income taxes due upon receiving distributions.

 

The Fund reserves the right to amend or terminate the Plan if, in the judgment of the Board of Directors, the change is warranted. There is no direct service charge to participants in the Plan; however, the Fund reserves the right to amend the Plan to include a service charge payable by the participants. Additional information about the Plan and your account may be obtained from the Plan Agent at 1-877-366-6441.

 

40

Western Asset Global High Income Fund Inc.

 


 

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Western Asset Global

 

 

High Income Fund Inc.

 

 

 

 

 

DIRECTORS

WESTERN ASSET

 

Carol L. Colman

GLOBAL HIGH

 

Daniel P. Cronin

INCOME FUND INC.

 

Paolo M. Cucchi

125 Broad Street

 

Leslie H. Gelb

10th Floor, MF-2

 

R. Jay Gerken, CFA

New York, New York 10004

 

Chairman

 

 

William R. Hutchinson

INVESTMENT MANAGER

 

Dr. Riordan Roett

Legg Mason Partners

 

Jeswald W. Salacuse

Fund Advisor, LLC

 

 

 

 

OFFICERS

SUBADVISERS

 

R. Jay Gerken, CFA

Western Asset Management

 

President and

Company

 

Chief Executive Officer

Western Asset Management

 

 

Company Limited

 

Kaprel Ozsolak

 

 

Chief Financial Officer

CUSTODIAN

 

and Treasurer

State Street Bank and

 

 

Trust Company

 

Ted P. Becker

225 Franklin Street

 

Chief Compliance Officer

Boston, Massachusetts 02110

 

 

 

 

Thomas C. Mandia

TRANSFER AGENT

 

Assistant Secretary

American Stock Transfer &

 

 

Trust Company

 

Albert Laskaj

59 Maiden Lane

 

Controller

New York, NY 10038

 

 

 

 

Steven Frank

INDEPENDENT

 

Controller

REGISTERED PUBLIC

 

 

ACCOUNTING FIRM

 

Robert I. Frenkel

KPMG LLP

 

Secretary and

345 Park Avenue

 

Chief Legal Officer

New York, New York 10154

 

 

 

 

 

LEGAL COUNSEL

 

 

Simpson Thacher &

 

 

Bartlett LLP

 

 

425 Lexington Avenue

 

 

New York, New York 10017-3909

 

 

 

 

 

NEW YORK STOCK
EXCHANGE SYMBOL

 

 

EHI

 


 

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.

 

 

American Stock Transfer

& Trust Company

59 Maiden Lane,

New York, New York 10038

 

 

 

WASX010654 1/08    SR07-485

 

 

Western Asset Global
High Income Fund Inc.


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 common stock in the open market.

 

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 on Form N-Q. The Fund’s Forms N-Q are available on the SEC’s website at www.sec.gov. The Fund’s Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington D.C., and information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. To obtain information on Form N-Q from the Fund, shareholders can call 1-800-451-2010.

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 relating to portfolio transactions are available (1) without charge, upon request, by calling 1-800-451-2010, (2) on the Fund’s website at www.leggmason.com/individualinvestors and (3) on the SEC’s website at www.sec.gov.

 


 

ITEM 2.

 

CODE OF ETHICS.

 

 

 

 

 

Not applicable.

 

 

 

ITEM 3.

 

AUDIT COMMITTEE FINANCIAL EXPERT.

 

 

 

 

 

Not applicable.

 

 

 

ITEM 4.

 

Principal Accountant Fees and Services

 

 

 

 

 

Not applicable.

 

 

 

ITEM 5.

 

AUDIT COMMITTEE OF LISTED REGISTRANTS.

 

 

 

 

 

Not applicable.

 

 

 

ITEM 6.

 

SCHEDULE OF INVESTMENTS.

 

 

 

 

 

Included herein under Item 1.

 

 

 

ITEM 7.

 

DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

 

 

 

 

 

Not applicable.

 

 

 

ITEM 8.

 

PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

 

 

 

 

 

Not applicable.

 

 

 

ITEM 9.

 

PURCHASES OF INCOME SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.

 

 

 

 

 

Not applicable.

 

 

 

ITEM 10.

 

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

 

 

 

 

 

Not applicable.

 

 

 

ITEM 11.

 

CONTROLS AND PROCEDURES.

 

 

 

 

 

(a)          The registrant’s principal executive officer and principal financial officer have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a- 3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective as of a date within 90 days of the filing date of this report that includes the disclosure required by this paragraph, based on their evaluation of the disclosure controls and procedures required by Rule 30a-3(b) under the 1940 Act and 15d-15(b) under the Securities Exchange Act of 1934.

 

 

 

 

 

(b)         There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the registrant’s last fiscal half-year (the registrant’s second fiscal half-year in the case of an annual report) that have materially affected, or are likely to materially affect the registrant’s internal control over financial reporting.

 



 

ITEM 12.

 

EXHIBITS.

 

 

 

 

 

(a) (1) Not applicable.

 

 

Exhibit 99.CODE ETH

 

 

 

 

 

(a) (2) Certifications pursuant to section 302 of the Sarbanes-Oxley Act of 2002 attached hereto.

 

 

Exhibit 99.CERT

 

 

 

 

 

(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 attached hereto.

 

 

Exhibit 99.906CERT

 



 

SIGNATURES

 

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

 

 

Western Asset Global High Income Fund Inc.

 

By:

/s/ R. Jay Gerken

 

 

(R. Jay Gerken)

 

Chief Executive Officer of

 

Western Asset Global High Income Fund Inc.

 

 

Date:

February 6, 2008

 

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

 

 

By:

/s/ R. Jay Gerken

 

 

(R. Jay Gerken)

 

Chief Executive Officer of

 

Western Asset Global High Income Fund Inc.

 

 

Date:

February 6, 2008

 

 

By:

/s/ Kaprel Ozsolak

 

 

(Kaprel Ozsolak)

 

Chief Financial Officer of

 

Western Asset Global High Income Fund Inc.

 

 

Date:

February 6, 2008