Western Asset Global Corporate Defined Opportunity Fund Inc.

 

 

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 811-22334

 

 

Western Asset Global Corporate Defined Opportunity Fund Inc.

(Exact name of registrant as specified in charter)

 

 

620 Eighth Avenue, 49th Floor, New York, NY 10018

(Address of principal executive offices) (Zip code)

 

 

Robert I. Frenkel, Esq.

Legg Mason & Co., LLC

100 First Stamford Place,

Stamford, CT 06902

(Name and address of agent for service)

 

 

Registrant’s telephone number, including area code: (888) 777-0102

Date of fiscal year end: October 31

Date of reporting period: April 30, 2015

 

 

 


ITEM 1. REPORT TO STOCKHOLDERS.

The Semi-Annual Report to Stockholders is filed herewith.


LOGO

 

Semi-Annual Report   April 30, 2015

WESTERN ASSET

GLOBAL CORPORATE DEFINED OPPORTUNITY FUND INC. (GDO)

 

 

 

 

LOGO

 

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


What’s inside      
Letter from the chairman     II   
Investment commentary     III   
Fund at a glance     1   
Spread duration     2   
Effective duration     3   
Schedule of investments     4   
Statement of assets and liabilities     19   
Statement of operations     20   
Statements of changes in net assets     21   
Statement of cash flows     22   
Financial highlights     23   
Notes to financial statements     24   
Board approval of management and subadvisory agreements  

 

38

  

Additional shareholder information  

 

44

  

Dividend reinvestment plan     45   

 

Fund objectives

The Fund’s primary investment objective is to provide current income and then to liquidate and distribute substantially all of the Fund’s net assets to stockholders on or about December 2, 2024. As a secondary investment objective, the Fund will seek capital appreciation. There can be no assurance the Fund will achieve its investment objectives.

 

Letter from the chairman

 

LOGO

 

Dear Shareholder,

We are pleased to provide the semi-annual report of Western Asset Global Corporate Defined Opportunity Fund Inc. for the six-month reporting period ended April 30, 2015. Please read on for Fund performance information and a detailed look at prevailing economic and market conditions during the Fund’s reporting period.

As always, we remain committed to providing you with excellent service and a full spectrum of investment choices. We also remain committed to supplementing the support you receive from your financial advisor. One way we accomplish this is through our website, www.lmcef.com. Here you can gain immediate access to market and investment information, including:

 

Ÿ  

Fund prices and performance,

 

Ÿ  

Market insights and commentaries from our portfolio managers, and

 

Ÿ  

A host of educational resources.

We look forward to helping you meet your financial goals.

Sincerely,

 

LOGO

Kenneth D. Fuller

Chairman, President and Chief Executive Officer

May 29, 2015

 

II    Western Asset Global Corporate Defined Opportunity Fund Inc.


Investment commentary

 

Economic review

The U.S. economy expanded moderately during the six months ended April 30, 2015 (the “reporting period”). The U.S. Department of Commerce reported that third quarter 2014 U.S. gross domestic product (“GDP”)i growth was 5.0%, its strongest reading since the third quarter of 2003. However, fourth quarter 2014 GDP growth slowed to a modest 2.2%. The deceleration in growth primarily reflected an upturn in imports, a downturn in federal government spending and moderating nonresidential fixed investment. After the reporting period ended, the U.S. Department of Commerce reported that its second estimate for first quarter 2015 GDP was -0.7%. This downturn was attributed to a number of factors, including negative contributions from exports, nonresidential fixed investment, and state and local government spending.

Activity in the U.S. manufacturing sector also moderated during the reporting period. Based on the Institute for Supply Management’s Purchasing Managers’ Index (“PMI”)ii, U.S. manufacturing expanded during all six months of the reporting period (a reading below 50 indicates a contraction, whereas a reading above 50 indicates an expansion). After a reading of 57.6 in November 2014, the PMI generally decelerated over much of the reporting period and the PMI was 51.5 in April 2015.

The labor market was largely a tailwind for the economy during the reporting period. When the period began, unemployment was 5.8%, as reported by the U.S. Department of Labor. Unemployment generally declined during the reporting period and was 5.4% in April 2015, its lowest level since May 2008.

Growth outside the U.S. was mixed. In its April 2015 World Economic Outlook Update, released after the reporting period ended, the International Monetary Fund (“IMF”) said: “Global growth remains moderate, with uneven prospects across the main countries and regions. Relative to last year, the outlook for advanced economies is improving, while growth in emerging market and developing economies is projected to be lower, primarily reflecting weaker prospects for some large emerging market economies and oil-exporting countries.” From a regional perspective, the IMF projects that 2015 growth in the Eurozone will be 1.5%, versus 0.9% in 2014. Japan’s economy is expected to expand 1.0% in 2015, compared to -0.1% in 2014. Elsewhere, the IMF said that overall growth in emerging market countries will decelerate in 2015, with growth of 4.3% versus 4.6% in 2014.

 

Western Asset Global Corporate Defined Opportunity Fund Inc.   III


Investment commentary (cont’d)

 

Market review

Q. How did the Federal Reserve Board (“Fed”)iii respond to the economic environment?

A. The Fed took a number of actions as it sought to meet its dual mandate of fostering maximum employment and price stability. As it has since December 2008, the Fed kept the federal funds rateiv at a historically low range between zero and 0.25%. The Fed ended its asset purchase program that was announced in December 2012. In December 2014, the Fed said that “it can be patient in beginning to normalize the stance of monetary policy.” Finally, at its meeting that ended on April 29, 2015, the Fed said, “…economic growth slowed during the winter months, in part reflecting transitory factors…The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run.”    

Q. What actions did international central banks take during the reporting period?

A. Given the economic challenges in the Eurozone, the European Central Bank (“ECB”)v took a number of actions to stimulate growth and ward off deflation. On June 5, 2014, before the beginning of the reporting period, the ECB reduced rates to a new low of 0.15% and announced it would charge commercial banks 0.10% to keep money at the ECB. This “negative deposit rate” was aimed at encouraging commercial banks to lend some of their incremental cash which, in turn, could help to spur growth. On September 4, 2014, the ECB reduced rates to yet another record low of 0.05% and it began charging commercial banks 0.20% to keep money at the ECB. Furthermore, the ECB started purchasing securitized loans and covered bonds in October 2014. Finally, on January 22, 2015, the ECB announced that beginning in March 2015 it would start a 60 billion-a-month bond buying program that is expected to run until September 2016. In other developed countries, the Bank of England kept rates on hold at 0.50% during the reporting period, as did Japan at a range of zero to 0.10%, its lowest level since 2006. At the end of October 2014, the Bank of Japan announced that it would increase its asset purchases between 10 trillion yen and 20 trillion yen ($90.7 billion to $181.3 billion) to approximately 80 trillion yen ($725 billion) annually, in an attempt to stimulate growth. Elsewhere, after holding rates steady at 6.0% since July 2012, the People’s Bank of China cut the rate to 5.60% on November 21, 2014 and to 5.35% on February 28, 2015. Finally, on May 11, 2015, after the reporting period ended, China’s central bank cut the rate to 5.10% in an effort to stimulate growth.

Q. Did Treasury yields trend higher or lower during the six months ended April 30, 2015?

A. Short-term Treasury yields moved higher, whereas long-term Treasury yields declined during the reporting period. When the reporting period began, the yield on the two-year Treasury was 0.50%. It was as high as 0.73% towards the end of December 2014 and again on March 6, 2015, and fell as low as 0.44% on January 15, 2015, before ending the period at 0.58%. The yield on the ten-year Treasury began the period at 2.35% and its peak of 2.39% occurred on November 6, 2014. The yield on the ten-year Treasury was as low as 1.68% in late

 

IV    Western Asset Global Corporate Defined Opportunity Fund Inc.


January/early February 2015 and concluded the period at 2.05%.

Q. What factors impacted the spread sectors (non-Treasuries) during the reporting period?

A. The spread sectors largely posted positive returns during the reporting period. Performance fluctuated with investor sentiment given uncertainties regarding future Fed monetary policy, concerns over global growth and geopolitical issues. The overall U.S. bond market, as measured by the Barclays U.S. Aggregate Indexvi, gained 2.06% during the six months ended April 30, 2015.

Q. How did the high-yield bond market perform over the six months ended April 30, 2015?

A. The U.S. high-yield bond market, as measured by the Barclays U.S. Corporate High Yield — 2% Issuer Cap Indexvii, returned 1.52% for the six months ended April 30, 2015. High yield bonds were volatile during the reporting period, and posted positive returns in January, February and April 2015, while declining in November and December 2014, and March 2015. While the underlying fundamentals in the high-yield market remained generally solid and defaults were well below their long-term average, the asset class was dragged down at times, primarily due to sharply falling oil prices.

Q. How did the emerging markets debt asset class perform over the reporting period?

A. The JPMorgan Emerging Markets Bond Index Global (“EMBI Global”)viii returned 0.70% during the six months ended April 30, 2015. While the asset class rose during much of the reporting period, those gains were largely offset by a sharp decline in December 2014. This setback was triggered by a number of factors, including expectations for future Fed rate hikes, concerns over global growth, declining oil prices and weak investor demand.

Performance review

For the six months ended April 30, 2015, Western Asset Global Corporate Defined Opportunity Fund Inc. returned 2.67% based on its net asset value (“NAV”)ix and 3.45% based on its New York Stock Exchange (“NYSE”) market price per share. The Fund’s unmanaged benchmark, the Barclays Global Aggregate Corporate Indexx, returned -0.80% for the same period. The Lipper Global Income Closed-End Funds Category Averagexi returned -0.06% over the same time frame. Please note that Lipper performance returns are based on each fund’s NAV.

During this six-month period, the Fund made distributions to shareholders totaling $0.68 per share. As of April 30, 2015, the Fund estimates that 94% of the distributions were sourced from net investment income and 6% constituted a return of capital.* The performance table shows the Fund’s six-month total return based on its NAV and market price as of April 30, 2015. Past performance is no guarantee of future results.

 

 

* These estimates are not for tax purposes. The Fund will issue a Form 1099 with final composition of the distributions for tax purposes after year-end. A return of capital is not taxable and results in a reduction in the tax basis of a shareholder’s investment. For more information about a distribution’s composition, please refer to the Fund’s distribution press release or, if applicable, the Section 19 notice located in the press release section of our website, www.lmcef.com.

 

Western Asset Global Corporate Defined Opportunity Fund Inc.   V


Investment commentary (cont’d)

 

 

Performance Snapshot as of April 30, 2015

(unaudited)

 
Price Per Share   6-Month
Total Return**
 
$20.03 (NAV)     2.67 %† 
$18.15 (Market Price)     3.45 %‡ 

All figures represent past performance and are not a guarantee of future results. Performance figures for periods shorter than one year represent cumulative figures and are not annualized.

** Total returns are based on changes in NAV or market price, respectively. Returns reflect the deduction of all Fund expenses, including management fees, operating expenses, and other Fund expenses. Returns do not reflect the deduction of brokerage commissions or taxes that investors may pay on distributions or the sale of shares.

† Total return assumes the reinvestment of all distributions, including returns of capital, if any, at NAV.

‡ Total return assumes the reinvestment of all distributions, including returns of capital, if any, in additional shares in accordance with the Fund’s Dividend Reinvestment Plan.

Looking for additional information?

The Fund is traded under the symbol “GDO” and its closing market price is available in most newspapers under the NYSE listings. The daily NAV is available on-line under the symbol “XGDOX” 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.lmcef.com.

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 5:30 p.m. Eastern Time, for the Fund’s current NAV, market price and other information.

Thank you for your investment in Western Asset Global Corporate Defined Opportunity Fund Inc. As always, we appreciate that you have chosen us to manage your assets and we remain focused on achieving the Fund’s investment goals.

Sincerely,

 

LOGO

Kenneth D. Fuller

Chairman, President and Chief Executive Officer

May 29, 2015

RISKS: Fixed-income securities are subject to credit risk, inflation risk, call risk and interest rate risk. As interest rates rise, bond prices fall, reducing the value of the Fund’s holdings. The Fund may invest in lower-rated high-yield bonds, known as “junk bonds,” which are subject to greater credit risk (risk of default) than higher-rated obligations. Investments in foreign securities involve risks, including the possibility of losses due to changes in currency exchange rates and negative developments in the political, economic or regulatory structure of specific countries or regions. These risks are magnified in emerging markets. The Fund may make significant investments in derivative instruments. Derivative instruments can be illiquid, may disproportionately increase losses, and have a potentially large impact on Fund performance. Leverage may result in

greater volatility of NAV and the market price of common shares and increases a shareholder’s risk of loss.

 

VI    Western Asset Global Corporate Defined Opportunity Fund Inc.


All investments are subject to risk including the possible loss of principal. Past performance is no guarantee of future results. All index performance reflects no deduction for fees, expenses or taxes. Please note that an investor cannot invest directly in an index.

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. Forecasts and predictions are inherently limited and should not be relied upon as an indication of actual or future performance.

 

 

 

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 Institute for Supply Management’s PMI is based on a survey of purchasing executives who buy the raw materials for manufacturing at more than 350 companies. It offers an early reading on the health of the U.S. manufacturing sector.

 

iii 

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.

 

iv 

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.

 

v 

The European Central Bank (“ECB”) is responsible for the monetary system of the European Union and the euro currency.

 

vi 

The Barclays 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.

 

vii 

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

 

viii 

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.

 

ix 

Net asset value (“NAV”) is calculated by subtracting total liabilities, including liabilities associated with financial leverage (if any), 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 the Fund’s market price as determined by supply of and demand for the Fund’s shares.

 

x 

The Barclays Global Aggregate Corporate Index is the corporate component of the Barclays Global Aggregate Index, which is comprised of several other Barclays indices that measure fixed-income performance of regions around the world.

 

xi 

Lipper, Inc., a wholly-owned subsidiary of Reuters, provides independent insight on global collective investments. Returns are based on the six-month period ended April 30, 2015, including the reinvestment of all distributions, including returns of capital, if any, calculated among the 14 funds in the Fund’s Lipper category.

 

Western Asset Global Corporate Defined Opportunity Fund Inc.   VII


Fund at a glance (unaudited)

 

Investment breakdown (%) as a percent of total investments

 

LOGO

 

The bar graph above represents the composition of the Fund’s investments as of April 30, 2015 and October 31, 2014 and does not include derivatives, such as futures contracts and forward foreign currency contracts. The Fund is actively managed. As a result, the composition of the Fund’s investments is subject to change at any time.

 

Western Asset Global Corporate Defined Opportunity Fund Inc. 2015 Semi-Annual Report   1


Spread duration (unaudited)

 

Economic exposure — April 30, 2015

 

LOGO

 

Total Spread Duration

GDO   — 4.32 years
Benchmark   — 6.48 years

Spread duration measures the sensitivity to changes in spreads. The spread over Treasuries is the annual risk-premium demanded by investors to hold non-Treasury securities. Spread duration is quantified as the % change in price resulting from a 100 basis points change in spreads. For a security with positive spread duration, an increase in spreads would result in a price decline and a decline in spreads would result in a price increase. This chart highlights the market sector exposure of the Fund’s sectors relative to the selected benchmark sectors as of the end of the reporting period.

 

ABS   — Asset-Backed Securities
Benchmark   — Barclays Global Aggregate Corporate Bond Index
EM   — Emerging Markets
GDO   — Western Asset Global Corporate Defined Opportunity Fund Inc.
HY   — High Yield
IG Credit   — Investment Grade Credit
MBS   — Mortgage-Backed Securities

 

2    Western Asset Global Corporate Defined Opportunity Fund Inc. 2015 Semi-Annual Report


Effective duration (unaudited)

 

Interest rate exposure — April 30, 2015

 

LOGO

 

Total Effective Duration

GDO   — 4.34 years
Benchmark   — 6.50 years

Effective duration measures the sensitivity to changes in relevant interest rates. Effective duration is quantified as the % change in price resulting from a 100 basis points change in interest rates. For a security with positive effective duration, an increase in interest rates would result in a price decline and a decline in interest rates would result in a price increase. This chart highlights the interest rate exposure of the Fund’s sectors relative to the selected benchmark as of the end of the reporting period.

 

ABS   — Asset-Backed Securities
Benchmark   — Barclays Global Aggregate Corporate Bond Index
EM   — Emerging Markets
GDO   — Western Asset Global Corporate Defined Opportunity Fund Inc.
HY   — High Yield
IG Credit   — Investment Grade Credit
MBS   — Mortgage-Backed Securities

 

Western Asset Global Corporate Defined Opportunity Fund Inc. 2015 Semi-Annual Report   3


Schedule of investments (unaudited)

April 30, 2015

 

Western Asset Global Corporate Defined Opportunity Fund Inc.

 

Security   Rate     Maturity
Date
    Face
Amount†
    Value  
Corporate Bonds & Notes — 113.1%                                
Consumer Discretionary — 12.2%                                

Auto Components — 0.4%

                               

Europcar Groupe SA, Senior Notes

    11.500     5/15/17        175,000  EUR    $ 222,535  (a) 

Europcar Groupe SA, Senior Notes

    9.375     4/15/18        785,000  EUR      930,374  (a) 

Total Auto Components

                            1,152,909   

Automobiles — 0.4%

                               

Ford Motor Credit Co., LLC, Senior Notes

    2.375     1/16/18        1,300,000        1,320,653  (b) 

Diversified Consumer Services — 0.1%

                               

Co-operative Group Holdings 2011 Ltd., Senior Notes

    6.875     7/8/20        100,000  GBP      167,299  (c) 

Co-operative Group Holdings 2011 Ltd., Senior Notes

    7.500     7/8/26        190,000 GBP      325,819   

Total Diversified Consumer Services

                            493,118   

Hotels, Restaurants & Leisure — 2.0%

                               

24 Hour Holdings III LLC, Senior Notes

    8.000     6/1/22        1,000,000        890,000  (a) 

Arcos Dorados Holdings Inc., Senior Notes

    6.625     9/27/23        650,000        624,000  (a) 

Carlson Travel Holdings Inc., Senior Notes

    7.500     8/15/19        300,000        306,000  (a)(d) 

CEC Entertainment Inc., Senior Notes

    8.000     2/15/22        1,440,000        1,481,400   

International Game Technology PLC, Senior Secured Notes

    6.500     2/15/25        940,000        916,500  (a) 

MGM Resorts International, Senior Notes

    11.375     3/1/18        1,000,000        1,205,000   

Mitchells & Butlers Finance PLC, Secured Notes

    5.965     12/15/23        396,568  GBP      697,618   

Total Hotels, Restaurants & Leisure

                            6,120,518   

Household Durables — 0.6%

                               

Shea Homes LP/Shea Homes Funding Corp., Senior Notes

    6.125     4/1/25        980,000        1,009,400  (a) 

William Lyon Homes Inc., Senior Notes

    7.000     8/15/22        700,000        733,250   

Total Household Durables

                            1,742,650   

Media — 7.3%

                               

CCO Holdings LLC/CCO Holdings Capital Corp., Senior Notes

    8.125     4/30/20        1,570,000        1,643,319   

Comcast Corp., Senior Notes

    5.700     7/1/19        1,800,000        2,074,534  (b) 

CSC Holdings LLC, Senior Notes

    6.750     11/15/21        1,000,000        1,133,750   

DISH DBS Corp., Senior Notes

    5.875     11/15/24        1,950,000        1,925,625   

Grupo Televisa SAB, Senior Bonds

    6.625     1/15/40        1,730,000        2,116,309   

iHeartCommunications Inc., Senior Notes

    10.000     1/15/18        920,000        808,450   

MDC Partners Inc., Senior Notes

    6.750     4/1/20        300,000        305,625  (a) 

Numericable-SFR, Senior Secured Bonds

    6.000     5/15/22        1,570,000        1,610,231  (a) 

Numericable-SFR, Senior Secured Bonds

    6.250     5/15/24        690,000        709,845  (a) 

Time Warner Cable Inc., Senior Notes

    8.750     2/14/19        1,500,000        1,772,142  (b) 

TVN Finance Corp. III AB, Senior Bonds

    7.375     12/15/20        483,000  EUR      604,890  (a) 

UBM PLC, Notes

    5.750     11/3/20        1,500,000        1,656,119  (a)(b) 

UPC Holding BV, Junior Secured Subordinated Notes

    6.375     9/15/22        910,000  EUR      1,108,482  (a) 

 

See Notes to Financial Statements.

 

4    Western Asset Global Corporate Defined Opportunity Fund Inc. 2015 Semi-Annual Report


Western Asset Global Corporate Defined Opportunity Fund Inc.

 

Security   Rate     Maturity
Date
    Face
Amount†
    Value  

Media — continued

                               

UPCB Finance II Ltd., Senior Notes

    6.375     7/1/20        253,000  EUR    $ 296,481  (c) 

Videotron Ltd, Senior Notes

    7.125     1/15/20        2,000,000  CAD      1,796,303  (a) 

Virgin Media Finance PLC, Senior Notes

    6.000     10/15/24        1,000,000        1,038,125  (a) 

Virgin Media Finance PLC, Senior Notes

    5.750     1/15/25        1,500,000        1,528,125  (a) 

Total Media

                            22,128,355   

Multiline Retail — 0.4%

                               

Neiman Marcus Group LLC, Senior Secured Notes

    7.125     6/1/28        180,000        185,850   

Neiman Marcus Group Ltd. LLC, Senior Notes

    8.750     10/15/21        1,000,000        1,080,000  (a)(d) 

Total Multiline Retail

                            1,265,850   

Specialty Retail — 1.0%

                               

AA Bond Co., Ltd., Secured Notes

    9.500     7/31/19        200,000  GBP      340,205  (a) 

Gap Inc., Senior Notes

    5.950     4/12/21        2,250,000        2,602,764  (b) 

Total Specialty Retail

                            2,942,969   

Total Consumer Discretionary

                            37,167,022   
Consumer Staples — 5.2%                                

Beverages — 0.3%

                               

Carolina Beverage Group LLC/Carolina Beverage Group Finance Inc., Secured Notes

    10.625     8/1/18        830,000        813,400  (a) 

Food & Staples Retailing — 1.3%

                               

CVS Health Corp., Senior Notes

    6.125     9/15/39        1,000,000        1,298,007  (b) 

Family Tree Escrow LLC, Senior Notes

    5.750     3/1/23        710,000        749,050  (a) 

Tesco PLC, Senior Notes

    6.125     2/24/22        1,200,000  GBP      2,051,516   

Total Food & Staples Retailing

                            4,098,573   

Food Products — 0.3%

                               

Boparan Finance PLC, Senior Notes

    5.250     7/15/19        616,000  GBP      875,824  (c) 

Personal Products — 0.3%

                               

Hypermarcas SA, Notes

    6.500     4/20/21        760,000        802,560  (a) 

Tobacco — 3.0%

                               

Alliance One International Inc., Secured Notes

    9.875     7/15/21        500,000        437,500   

BAT International Finance PLC, Senior Notes

    4.875     2/24/21        1,450,000  EUR      2,008,467   

Imperial Tobacco Finance PLC, Senior Notes

    8.375     2/17/16        1,150,000  EUR      1,373,653  (c) 

Lorillard Tobacco Co., Senior Notes

    8.125     6/23/19        2,305,000        2,817,374  (b) 

Reynolds American Inc., Senior Notes

    6.750     6/15/17        2,340,000        2,586,908  (b) 

Total Tobacco

                            9,223,902   

Total Consumer Staples

                            15,814,259   
Energy — 14.0%                                

Energy Equipment & Services — 1.3%

                               

Atwood Oceanics Inc., Senior Notes

    6.500     2/1/20        800,000        786,000   

 

See Notes to Financial Statements.

 

Western Asset Global Corporate Defined Opportunity Fund Inc. 2015 Semi-Annual Report   5


Schedule of investments (unaudited) (cont’d)

April 30, 2015

 

Western Asset Global Corporate Defined Opportunity Fund Inc.

 

Security   Rate     Maturity
Date
    Face
Amount†
    Value  

Energy Equipment & Services — continued

                               

Parker Drilling Co., Senior Notes

    7.500     8/1/20        740,000      $ 664,150   

TMK OAO Via TMK Capital SA, Senior Notes

    6.750     4/3/20        820,000        706,020  (a) 

Transocean Inc., Senior Notes

    6.800     3/15/38        2,200,000        1,694,000   

Total Energy Equipment & Services

                            3,850,170   

Oil, Gas & Consumable Fuels — 12.7%

                               

Anadarko Petroleum Corp., Senior Notes

    6.450     9/15/36        1,370,000        1,698,211  (b) 

California Resources Corp., Senior Notes

    6.000     11/15/24        2,000,000        1,890,000   

Calumet Specialty Products Partners LP/Calumet Finance Corp., Senior Notes

    6.500     4/15/21        1,410,000        1,410,000   

Comstock Resources Inc., Senior Notes

    9.500     6/15/20        1,550,000        782,750   

Continental Resources Inc., Senior Notes

    3.800     6/1/24        3,000,000        2,888,037   

CrownRock LP/CrownRock Finance Inc., Senior Notes

    7.750     2/15/23        680,000        724,200  (a) 

Dolphin Energy Ltd., Senior Secured Bonds

    5.888     6/15/19        1,228,510        1,349,211  (c) 

Ecopetrol SA, Senior Bonds

    4.125     1/16/25        1,000,000        964,700   

Ecopetrol SA, Senior Notes

    7.625     7/23/19        1,650,000        1,968,285   

EDC Finance Ltd., Senior Notes

    4.875     4/17/20        800,000        720,000  (a) 

Enterprise Products Operating LLC, Senior Notes

    6.500     1/31/19        1,290,000        1,493,500  (b) 

Globe Luxembourg SCA, Senior Secured Notes

    9.625     5/1/18        1,050,000        997,500  (a) 

Halcon Resources Corp., Secured Notes

    8.625     2/1/20        730,000        761,481  (a) 

Indo Energy Finance BV, Senior Notes

    7.000     5/7/18        470,000        392,450  (a) 

LUKOIL International Finance BV, Bonds

    6.356     6/7/17        310,000        322,654  (c) 

LUKOIL International Finance BV, Bonds

    6.656     6/7/22        1,860,000        1,922,310  (c) 

Murray Energy Corp., Senior Secured Notes

    11.250     4/15/21        1,550,000        1,584,875  (a) 

Pemex Project Funding Master Trust, Senior Bonds

    6.625     6/15/35        910,000        1,030,120   

Petrobras Global Finance BV, Senior Notes

    6.250     3/17/24        380,000        378,518   

Petrobras Global Finance BV, Senior Notes

    7.250     3/17/44        1,000,000        987,250   

Petroleos Mexicanos, Senior Notes

    4.250     1/15/25        1,000,000        1,008,500  (a) 

Petroleum Co. of Trinidad & Tobago Ltd., Senior Notes

    9.750     8/14/19        2,590,000        3,122,245  (a) 

Petronas Capital Ltd., Senior Notes

    5.250     8/12/19        1,780,000        1,992,103  (c) 

Petronas Capital Ltd., Senior Notes

    5.250     8/12/19        700,000        783,411  (a) 

Quicksilver Resources Inc., Senior Notes

    11.000     7/1/21        500,000        66,250  (e) 

Ras Laffan Liquefied Natural Gas Co., Ltd. III, Senior Secured Bonds

    6.750     9/30/19        2,280,000        2,729,958  (c) 

Reliance Holdings USA Inc., Senior Notes

    5.400     2/14/22        1,000,000        1,104,090  (a) 

Rosneft Finance SA, Senior Notes

    7.875     3/13/18        2,830,000        2,895,798  (a) 

Williams Partners LP, Senior Notes

    5.250     3/15/20        610,000        675,480  (b) 

Total Oil, Gas & Consumable Fuels

                            38,643,887   

Total Energy

                            42,494,057   

 

See Notes to Financial Statements.

 

6    Western Asset Global Corporate Defined Opportunity Fund Inc. 2015 Semi-Annual Report


Western Asset Global Corporate Defined Opportunity Fund Inc.

 

Security   Rate     Maturity
Date
    Face
Amount†
    Value  
Financials — 34.7%                                

Banks — 21.9%

                               

Australia & New Zealand Banking Group Ltd., Subordinated Notes

    5.125     9/10/19        1,250,000  EUR    $ 1,660,751  (c) 

Barclays Bank PLC, Subordinated Notes

    7.625     11/21/22        5,750,000        6,746,906   

Barclays PLC, Junior Subordinated Bonds

    8.250     12/15/18        240,000        256,128  (f)(g) 

BNP Paribas Fortis SA, Senior Subordinated Notes

    5.757     10/4/17        1,200,000  EUR      1,510,914   

Citigroup Inc., Senior Notes

    7.375     9/4/19        1,300,000  EUR      1,876,108   

Commonwealth Bank of Australia, Subordinated Notes

    5.500     8/6/19        1,200,000  EUR      1,607,673   

Cooperatieve Centrale Raiffeisen-Boerenleenbank BA of Netherlands, Junior Subordinated Notes

    11.000     6/30/19        1,997,000        2,571,138  (a)(b)(f)(g) 

Credit Agricole SA, Junior Subordinated Notes

    7.875     10/26/19        400,000  EUR      545,705  (c)(f)(g) 

Credit Agricole SA, Subordinated Bonds

    8.125     9/19/33        900,000        1,019,250  (a)(b)(f) 

Credit Agricole SA, Subordinated Notes

    8.375     10/13/19        2,530,000        3,002,477  (a)(b)(f)(g) 

Credit Agricole SA, Subordinated Notes

    4.375     3/17/25        760,000        753,257  (a) 

HSBC Holdings PLC, Junior Subordinated Bonds

    6.375     9/17/24        2,670,000        2,764,118  (b)(f)(g) 

HSBC Holdings PLC, Junior Subordinated Bonds

    6.375     3/30/25        1,400,000        1,449,000  (f)(g) 

ING Bank NV, Subordinated Notes

    6.875     5/29/23        2,850,000  GBP      4,945,452  (f) 

Intesa Sanpaolo SpA, Senior Notes

    3.625     8/12/15        1,000,000        1,006,768  (a)(b) 

Intesa Sanpaolo SpA, Subordinated Bonds

    5.017     6/26/24        1,940,000        1,957,747  (a) 

Intesa Sanpaolo SpA, Subordinated Notes

    8.375     10/14/19        450,000  EUR      614,298  (c)(f)(g) 

JPMorgan Chase & Co., Junior Subordinated Bonds

    6.000     8/1/23        5,870,000        6,060,775  (b)(f)(g) 

JPMorgan Chase & Co., Junior Subordinated Notes

    6.100     10/1/24        250,000        259,375  (f)(g) 

M&T Bank Corp., Junior Subordinated Bonds

    6.875     6/15/16        1,570,000        1,624,950  (b)(g) 

National Australia Bank Ltd., Subordinated Notes

    6.750     6/26/23        2,750,000  EUR      3,630,265  (f) 

National Capital Trust I, Junior Subordinated Bond

    5.620     12/17/18        266,000  GBP      440,066  (c)(f)(g) 

Royal Bank of Scotland Group PLC, Subordinated Notes

    6.100     6/10/23        2,570,000        2,827,871  (b) 

Royal Bank of Scotland PLC, Subordinated Notes

    13.125     3/19/22        1,420,000  AUD      1,301,130  (c)(f) 

Santander Issuances SAU, Notes

    5.911     6/20/16        2,000,000        2,079,622  (a)(b) 

Santander UK PLC, Subordinated Notes

    5.000     11/7/23        1,120,000        1,188,096  (a)(b) 

Societe Generale SA, Subordinated Notes

    9.375     9/4/19        1,550,000  EUR      2,203,803  (c)(f)(g) 

Standard Chartered Bank, Subordinated Notes

    5.875     9/26/17        1,250,000  EUR      1,575,896  (c) 

Standard Chartered Bank, Subordinated Notes

    7.750     4/3/18        1,000,000  GBP      1,764,275  (c) 

Wachovia Capital Trust III, Junior Subordinated Bonds

    5.570     6/18/15        3,660,000        3,664,575  (b)(f)(g) 

Wells Fargo & Co., Junior Subordinated Bonds

    5.900     6/15/24        2,910,000        3,055,500  (b)(f)(g) 

Wells Fargo & Co., Junior Subordinated Bonds

    5.875     6/15/25        440,000        468,050  (f)(g) 

Total Banks

                            66,431,939   

Capital Markets — 2.9%

                               

Goldman Sachs Capital II, Junior Subordinated Bonds

    4.000     6/18/15        1,300,000        1,017,250  (f)(g) 

Goldman Sachs Group Inc., Subordinated Notes

    4.750     10/12/21        2,700,000  EUR      3,605,734   

 

See Notes to Financial Statements.

 

Western Asset Global Corporate Defined Opportunity Fund Inc. 2015 Semi-Annual Report   7


Schedule of investments (unaudited) (cont’d)

April 30, 2015

 

Western Asset Global Corporate Defined Opportunity Fund Inc.

 

Security   Rate     Maturity
Date
    Face
Amount†
    Value  

Capital Markets — continued

                               

Goldman Sachs Group Inc., Subordinated Notes

    5.500     10/12/21        600,000  GBP    $ 1,038,425   

Merrill Lynch & Co. Inc., Senior Notes

    7.750     4/30/18        800,000  GBP      1,440,985   

UBS AG London, Senior Notes

    6.375     7/20/16        1,050,000  GBP      1,714,898  (c) 

Total Capital Markets

                            8,817,292   

Consumer Finance — 1.3%

                               

American Express Co., Subordinated Debentures

    6.800     9/1/66        1,820,000        1,915,550  (b)(f) 

SLM Corp., Medium-Term Notes, Senior Notes

    8.000     3/25/20        1,880,000        2,098,531  (b) 

Total Consumer Finance

                            4,014,081   

Diversified Financial Services — 3.5%

                               

Argos Merger Sub Inc., Senior Notes

    7.125     3/15/23        1,500,000        1,578,750  (a) 

FCE Bank PLC, Senior Notes

    5.125     11/16/15        900,000  GBP      1,408,612  (c) 

General Electric Capital Corp., Subordinated Bonds

    5.500     9/15/67        940,000  EUR      1,156,833  (c)(f) 

General Electric Capital Corp., Subordinated Debentures

    6.375     11/15/67        1,200,000        1,314,000  (b)(f) 

International Lease Finance Corp., Senior Notes

    8.750     3/15/17        3,000,000        3,340,800  (b) 

International Lease Finance Corp., Senior Notes

    6.250     5/15/19        1,130,000        1,251,475  (b) 

MUFG Capital Finance 4 Ltd., Junior Subordinated Bonds

    5.271     1/25/17        550,000  EUR      655,393  (f)(g) 

Total Diversified Financial Services

                            10,705,863   

Insurance — 3.9%

                               

AXA SA, Junior Subordinated Notes

    5.777     7/6/16        500,000  EUR      591,117  (f)(g) 

AXA SA, Junior Subordinated Notes

    6.463     12/14/18        2,000,000        2,131,200  (a)(b)(f)(g) 

BUPA Finance PLC, Subordinated Bonds

    5.000     4/25/23        910,000  GBP      1,480,398  (c) 

ELM BV, Subordinated Notes

    5.252     5/25/16        550,000  EUR      643,752  (c)(f)(g) 

Farmers Insurance Exchange, Subordinated Notes

    8.625     5/1/24        1,295,000        1,749,395  (a)(b) 

Generali Finance BV, Junior Subordinated Bonds

    5.317     6/16/16        500,000  EUR      578,436  (f)(g) 

MetLife Capital Trust IV, Junior Subordinated Notes

    7.875     12/15/37        300,000        399,000  (a)(b) 

Muenchener Rueckversicherungs-Gesellschaft AG (MunichRe), Subordinated Bonds

    5.767     6/12/17        500,000  EUR      614,211  (c)(f)(g) 

QBE Insurance Group Ltd., Senior Notes

    6.125     9/28/15        550,000  GBP      860,577  (c) 

Scottish Widows PLC, Subordinated Notes

    5.500     6/16/23        910,000  GBP      1,500,155  (c) 

Travelers Cos. Inc., Senior Notes

    5.350     11/1/40        1,150,000        1,405,989  (b) 

Total Insurance

                            11,954,230   

Real Estate Management & Development — 1.2%

  

                       

Caesars Entertainment Resort Properties LLC, Secured Notes

    11.000     10/1/21        170,000        153,000   

Caesars Entertainment Resort Properties LLC, Senior Secured Notes

    8.000     10/1/20        1,510,000        1,517,550   

Howard Hughes Corp., Senior Notes

    6.875     10/1/21        1,230,000        1,303,800  (a) 

Tesco Property Finance 6 PLC, Senior Secured Notes

    5.411     7/13/44        409,311  GBP      604,184  (c) 

Total Real Estate Management & Development

  

                    3,578,534   

Total Financials

                            105,501,939   

 

See Notes to Financial Statements.

 

8    Western Asset Global Corporate Defined Opportunity Fund Inc. 2015 Semi-Annual Report


Western Asset Global Corporate Defined Opportunity Fund Inc.

 

Security   Rate     Maturity
Date
    Face
Amount†
    Value  
Health Care — 5.9%                                

Health Care Equipment & Supplies — 1.6%

                               

ConvaTec Healthcare E SA, Senior Notes

    10.875     12/15/18        1,070,000  EUR    $ 1,276,540  (a) 

DJO Finance LLC/DJO Finance Corp., Senior Notes

    9.875     4/15/18        1,000,000        1,050,000   

DJO Finco Inc./DJO Finance LLC/DJO Finance Corp., Secured Notes

    8.125     6/15/21        1,770,000        1,800,975  (a) 

Lantheus Medical Imaging Inc., Senior Notes

    9.750     5/15/17        690,000        680,512   

Total Health Care Equipment & Supplies

                            4,808,027   

Health Care Providers & Services — 2.7%

                               

Crown Newco 3 PLC, Senior Subordinated Notes

    8.875     2/15/19        450,000  GBP      720,770  (c) 

Humana Inc., Senior Notes

    7.200     6/15/18        2,700,000        3,125,023  (b) 

Labco SAS, Senior Secured Notes

    8.500     1/15/18        200,000  EUR      236,809  (a) 

Unilabs Subholding AB, Senior Secured Notes

    8.500     7/15/18        1,200,000  EUR      1,411,422  (c) 

UnitedHealth Group Inc., Senior Notes

    6.000     2/15/18        1,350,000        1,523,365  (b) 

Universal Hospital Services Inc., Secured Notes

    7.625     8/15/20        1,320,000        1,164,900   

Total Health Care Providers & Services

                            8,182,289   

Pharmaceuticals — 1.6%

                               

Actavis Funding SCS, Senior Notes

    4.550     3/15/35        580,000        584,011   

Actavis Funding SCS, Senior Notes

    4.750     3/15/45        780,000        791,661   

Concordia Healthcare Corp., Senior Notes

    7.000     4/15/23        980,000        997,150  (a) 

Valeant Pharmaceuticals International Inc., Senior Notes

    5.500     3/1/23        570,000        578,550  (a) 

Valeant Pharmaceuticals International Inc., Senior Notes

    6.125     4/15/25        1,980,000        2,048,062  (a) 

Total Pharmaceuticals

                            4,999,434   

Total Health Care

                            17,989,750   
Industrials — 6.9%                                

Aerospace & Defense — 0.3%

                               

Erickson Inc., Secured Notes

    8.250     5/1/20        1,019,000        827,938   

Air Freight & Logistics — 0.4%

                               

XPO Logistics Inc., Senior Notes

    7.875     9/1/19        1,150,000        1,226,188  (a) 

Airlines — 1.4%

                               

Air Canada, Pass-Through Trust, Secured Notes

    6.625     5/15/18        330,000        352,077  (a) 

Heathrow Finance PLC, Senior Secured Notes

    7.125     3/1/17        950,000 GBP      1,584,277  (c) 

United Airlines Inc., Pass-Through Certificates, Secured Notes

    9.250     5/10/17        1,968,152        2,164,967   

United Airlines Inc., Pass-Through Certificates, Senior Secured Notes

    10.400     11/1/16        35,093        38,252   

Total Airlines

                            4,139,573   

Building Products — 0.2%

                               

Andrade Gutierrez International SA, Senior Notes

    4.000     4/30/18        870,000        736,455  (a) 

 

See Notes to Financial Statements.

 

Western Asset Global Corporate Defined Opportunity Fund Inc. 2015 Semi-Annual Report   9


Schedule of investments (unaudited) (cont’d)

April 30, 2015

 

Western Asset Global Corporate Defined Opportunity Fund Inc.

 

Security   Rate     Maturity
Date
    Face
Amount†
    Value  

Commercial Services & Supplies — 1.5%

                               

Garda World Security Corp., Senior Notes

    7.250     11/15/21        470,000      $ 470,000  (a) 

Monitronics International Inc., Senior Notes

    9.125     4/1/20        1,570,000        1,562,150   

Republic Services Inc., Senior Notes

    5.250     11/15/21        1,450,000        1,657,086  (b) 

Taylor Morrison Communities Inc./Monarch Communities Inc., Senior Notes

    7.750     4/15/20        500,000        529,065  (a) 

Taylor Morrison Communities Inc./Monarch Communities Inc., Senior Notes

    5.250     4/15/21        420,000        423,150  (a) 

Total Commercial Services & Supplies

                            4,641,451   

Construction & Engineering — 1.0%

                               

Astaldi SpA, Senior Bonds

    7.125     12/1/20        410,000  EUR      497,888  (a) 

Astaldi SpA, Senior Notes

    7.125     12/1/20        100,000  EUR      121,296  (c) 

Brundage-Bone Concrete Pumping Inc., Senior Secured Notes

    10.375     9/1/21        720,000        756,000  (a) 

Michael Baker International LLC/CDL Acquisition Co. Inc., Senior Secured Notes

    8.250     10/15/18        920,000        901,600  (a) 

Modular Space Corp., Secured Notes

    10.250     1/31/19        740,000        603,100  (a) 

Total Construction & Engineering

                            2,879,884   

Electrical Equipment — 0.0%

                               

Trionista TopCo GmbH, Senior Subordinated Notes

    6.875     4/30/21        100,000  EUR      121,773  (a) 

Machinery — 0.7%

                               

KION Finance SA, Senior Secured Notes

    6.750     2/15/20        1,195,000  EUR      1,444,185  (a) 

KraussMaffei Group GmbH, Senior Secured Notes

    8.750     12/15/20        252,000  EUR      310,547  (a) 

SIG Combibloc Holdings SCA, Senior Bonds

    7.750     2/15/23        350,000  EUR      421,981  (a) 

Total Machinery

                            2,176,713   

Marine — 0.3%

                               

Horizon Lines LLC, Senior Secured Notes

    11.000     10/15/16        173,000        173,865  (h) 

Ultrapetrol Bahamas Ltd., Senior Secured Notes

    8.875     6/15/21        630,000        582,750   

Total Marine

                            756,615   

Road & Rail — 0.5%

                               

Gategroup Finance Luxembourg SA, Senior Notes

    6.750     3/1/19        150,000  EUR      176,849  (a) 

Jack Cooper Holdings Corp., Senior Secured Notes

    10.250     6/1/20        1,630,000        1,414,025  (a) 

Total Road & Rail

                            1,590,874   

Transportation — 0.6%

                               

CMA CGM, Senior Notes

    8.500     4/15/17        1,750,000        1,798,125  (a) 

Total Industrials

                            20,895,589   
Information Technology — 3.2%                                

Electronic Equipment, Instruments & Components — 0.2%

                               

Interface Security Systems Holdings Inc./Interface Security Systems LLC, Senior Secured Notes

    9.250     1/15/18        770,000        783,475   

 

See Notes to Financial Statements.

 

10    Western Asset Global Corporate Defined Opportunity Fund Inc. 2015 Semi-Annual Report


Western Asset Global Corporate Defined Opportunity Fund Inc.

 

Security   Rate     Maturity
Date
    Face
Amount†
    Value  

Internet Software & Services — 0.7%

                               

Ancestry.com Inc., Senior Notes

    9.625     10/15/18        2,110,000      $ 2,170,663  (a)(d) 

IT Services — 1.1%

                               

First Data Corp., Secured Notes

    8.250     1/15/21        3,040,000        3,238,542  (a) 

Semiconductors & Semiconductor Equipment — 0.2%

                               

Micron Technology Inc., Senior Notes

    5.250     8/1/23        590,000        593,540  (a) 

Software — 0.3%

                               

Oberthur Technologies Holding SAS, Senior Secured Notes

    9.250     4/30/20        670,000  EUR      821,898  (a) 

Technology Hardware, Storage & Peripherals — 0.7%

                               

Hewlett-Packard Co., Senior Notes

    4.650     12/9/21        2,000,000        2,191,966  (b) 

Total Information Technology

                            9,800,084   
Materials — 10.6%                                

Chemicals — 0.8%

                               

Eco Services Operations LLC/Eco Finance Corp., Senior Notes

    8.500     11/1/22        460,000        471,500  (a) 

Kerling PLC, Senior Secured Notes

    10.625     2/1/17        606,000  EUR      698,309  (a) 

OCP SA, Senior Notes

    5.625     4/25/24        800,000        857,160  (a) 

Techniplas LLC, Senior Secured Notes

    10.000     5/1/20        280,000        289,800  (a) 

Total Chemicals

                            2,316,769   

Construction Materials — 0.8%

                               

Cemex SAB de CV, Senior Secured Notes

    5.700     1/11/25        660,000        663,102  (a) 

Hardwoods Acquisition Inc., Senior Secured Notes

    7.500     8/1/21        750,000        721,875  (a) 

HeidelbergCement AG, Senior Notes

    8.500     10/31/19        610,000  EUR      898,557  (c) 

NWH Escrow Corp., Senior Secured Notes

    7.500     8/1/21        300,000        284,250  (a) 

Total Construction Materials

                            2,567,784   

Containers & Packaging — 1.8%

                               

Ardagh Packaging Finance PLC/Ardagh MP Holdings USA Inc., Senior Notes

    9.125     10/15/20        1,200,000        1,290,000  (a) 

Ardagh Packaging Finance PLC/Ardagh MP Holdings USA Inc., Senior Notes

    7.000     11/15/20        88,235        90,662  (a) 

BWAY Holding Co., Senior Notes

    9.125     8/15/21        1,290,000        1,335,150  (a) 

Coveris Holdings SA, Senior Notes

    7.875     11/1/19        450,000        459,000  (a) 

SGD Group SAS, Senior Secured Bonds

    5.625     5/15/19        1,230,000  EUR      1,429,582  (c) 

Suzano Trading Ltd., Senior Notes

    5.875     1/23/21        970,000        1,028,200  (a) 

Total Containers & Packaging

                            5,632,594   

Metals & Mining — 5.9%

                               

AngloGold Ashanti Holdings PLC, Senior Notes

    8.500     7/30/20        1,008,000        1,112,580   

Barrick Gold Corp., Senior Notes

    6.950     4/1/19        500,000        582,942  (b) 

Evraz Group SA, Notes

    9.500     4/24/18        450,000        464,625  (a) 

Evraz Group SA, Senior Notes

    6.500     4/22/20        984,000        895,440  (c) 

 

See Notes to Financial Statements.

 

Western Asset Global Corporate Defined Opportunity Fund Inc. 2015 Semi-Annual Report   11


Schedule of investments (unaudited) (cont’d)

April 30, 2015

 

Western Asset Global Corporate Defined Opportunity Fund Inc.

 

Security   Rate     Maturity
Date
    Face
Amount†
    Value  

Metals & Mining — continued

                               

Evraz Group SA, Senior Notes

    6.500     4/22/20        340,000      $ 309,400  (a) 

FMG Resources (August 2006) Pty Ltd., Senior Notes

    6.875     4/1/22        1,200,000        913,500  (a) 

FMG Resources (August 2006) Pty Ltd., Senior Secured Notes

    9.750     3/1/22        1,080,000        1,115,775  (a) 

Freeport-McMoRan Inc., Senior Notes

    4.550     11/14/24        2,000,000        1,944,110   

Glencore Finance Canada Ltd., Senior Notes

    5.250     6/13/17        950,000  EUR      1,169,256   

GTL Trade Finance Inc., Senior Bonds

    5.893     4/29/24        1,562,000        1,585,430  (a) 

Rio Tinto Finance USA PLC, Senior Notes

    2.250     12/14/18        800,000        811,453   

Southern Copper Corp., Senior Notes

    5.250     11/8/42        1,850,000        1,709,992   

St. Barbara Ltd., Senior Secured Notes

    8.875     4/15/18        600,000        549,000  (a) 

Vale Overseas Ltd., Notes

    6.250     1/23/17        670,000        713,947   

Vale Overseas Ltd., Notes

    8.250     1/17/34        2,146,000        2,479,227   

Vale Overseas Ltd., Notes

    6.875     11/21/36        340,000        344,930   

Vedanta Resources PLC, Senior Notes

    9.500     7/18/18        260,000        271,050  (c) 

Vedanta Resources PLC, Senior Notes

    6.000     1/31/19        990,000        938,025  (a) 

Total Metals & Mining

                            17,910,682   

Paper & Forest Products — 1.3%

                               

Celulosa Arauco y Constitucion SA, Senior Notes

    7.250     7/29/19        1,220,000        1,444,466   

Fibria Overseas Finance Ltd., Senior Notes

    5.250     5/12/24        260,000        269,100   

Resolute Forest Products Inc., Senior Notes

    5.875     5/15/23        620,000        600,625   

UPM-Kymmene OYJ, Senior Notes

    6.625     1/23/17        1,000,000  GBP      1,660,988   

Total Paper & Forest Products

                            3,975,179   

Total Materials

                            32,403,008   
Telecommunication Services — 12.4%                                

Diversified Telecommunication Services — 9.1%

                               

Axtel SAB de CV, Senior Secured Notes

    9.000     1/31/20        316,000        304,940  (a) 

British Telecommunications PLC, Senior Bonds

    8.500     12/7/16        1,200,000  GBP      2,048,075  (c) 

CenturyLink Inc., Senior Notes

    5.800     3/15/22        500,000        521,250   

Level 3 Financing Inc., Senior Notes

    7.000     6/1/20        375,000        402,656   

Level 3 Financing Inc., Senior Notes

    8.625     7/15/20        625,000        679,688   

Level 3 Financing Inc., Senoir Notes

    5.625     2/1/23        1,770,000        1,820,888  (a) 

Ooredoo International Finance Ltd., Senior Notes

    4.750     2/16/21        650,000        717,074  (a) 

Qwest Corp., Senior Notes

    6.750     12/1/21        2,500,000        2,872,622  (b) 

Telecom Italia SpA, Senior Notes

    5.303     5/30/24        5,570,000        5,883,312  (a) 

Telefonica Emisiones SAU, Senior Notes

    5.134     4/27/20        2,000,000        2,243,362  (b) 

Telefonica Emisiones SAU, Senior Notes

    7.045     6/20/36        2,000,000        2,654,302  (b) 

Verizon Communications Inc., Senior Notes

    5.150     9/15/23        5,280,000        5,969,552  (b) 

Windstream Corp., Senior Notes

    7.500     4/1/23        1,800,000        1,714,500   

Total Diversified Telecommunication Services

                            27,832,221   

 

See Notes to Financial Statements.

 

12    Western Asset Global Corporate Defined Opportunity Fund Inc. 2015 Semi-Annual Report


Western Asset Global Corporate Defined Opportunity Fund Inc.

 

Security   Rate     Maturity
Date
    Face
Amount†
    Value  

Wireless Telecommunication Services — 3.3%

                               

Altice Financing SA, Senior Secured Notes

    5.250     2/15/23        110,000  EUR    $ 130,060  (a) 

Altice Financing SA, Senior Secured Notes

    6.625     2/15/23        610,000        631,350  (a) 

America Movil SAB de CV, Senior Notes

    5.625     11/15/17        2,050,000        2,263,823   

America Movil SAB de CV, Senior Notes

    6.125     3/30/40        650,000        802,295   

Oi SA, Senior Notes

    5.750     2/10/22        480,000        406,800  (a) 

Sprint Capital Corp., Senior Notes

    6.875     11/15/28        750,000        680,625   

Sprint Capital Corp., Senior Notes

    8.750     3/15/32        2,000,000        2,055,000   

Sprint Corp., Senior Notes

    7.625     2/15/25        1,720,000        1,695,748   

Vimpel Communications Via VIP Finance Ireland Ltd. OJSC, Senior Notes

    9.125     4/30/18        1,150,000        1,225,900  (c) 

Total Wireless Telecommunication Services

                            9,891,601   

Total Telecommunication Services

                            37,723,822   
Utilities — 8.0%                                

Electric Utilities — 3.9%

                               

Centrais Eletricas Brasileiras SA, Senior Notes

    6.875     7/30/19        1,680,000        1,654,296  (a) 

Electricite de France, Junior Subordinated Notes

    5.625     1/22/24        2,500,000        2,651,875  (a)(b)(f)(g) 

Enel SpA, Junior Subordinated Bonds

    7.750     9/10/75        1,740,000  GBP      3,028,070  (c)(f) 

ENW Capital Finance PLC, Notes

    6.750     6/20/15        600,000  GBP      927,268  (c) 

FirstEnergy Corp., Notes

    7.375     11/15/31        1,930,000        2,465,361   

State Grid Overseas Investment 2014 Ltd., Senior Notes

    4.125     5/7/24        1,000,000        1,081,569  (c) 

Total Electric Utilities

                            11,808,439   

Gas Utilities — 0.3%

                               

Wales & West Utilities Finance PLC, Senior Secured Bonds

    5.125     12/2/16        650,000  GBP      1,058,497  (c) 

Independent Power and Renewable Electricity Producers — 2.0%

  

                       

Calpine Corp., Senior Secured Notes

    7.875     1/15/23        1,552,000        1,714,960  (a) 

Colbun SA, Senior Notes

    6.000     1/21/20        1,370,000        1,545,860  (a) 

Mirant Mid Atlantic LLC, Pass-Through Certificates

    10.060     12/30/28        1,948,589        2,161,716   

TerraForm Power Operating LLC, Senior Notes

    5.875     2/1/23        630,000        658,350  (a) 

Total Independent Power and Renewable Electricity Producers

  

                    6,080,886   

Multi-Utilities — 1.8%

                               

Centrica PLC, Senior Notes

    6.375     3/10/22        1,200,000  GBP      2,261,813  (c) 

Empresas Publicas de Medellin ESP, Senior Notes

    7.625     7/29/19        1,210,000        1,430,220  (a) 

Veolia Environnement, Senior Notes

    6.750     4/24/19        1,200,000  EUR      1,680,902   

Total Multi-Utilities

                            5,372,935   

Total Utilities

                            24,320,757   

Total Corporate Bonds & Notes (Cost — $333,330,022)

  

                    344,110,287   

 

See Notes to Financial Statements.

 

Western Asset Global Corporate Defined Opportunity Fund Inc. 2015 Semi-Annual Report   13


Schedule of investments (unaudited) (cont’d)

April 30, 2015

 

Western Asset Global Corporate Defined Opportunity Fund Inc.

 

Security   Rate     Maturity
Date
    Face
Amount†
    Value  
Asset-Backed Securities — 1.6%                                

Argent Securities Inc., 2004-W10 A2

    0.954     10/25/34        816,891      $ 797,614  (f) 

Asset Backed Funding Certificates, 2003-WMC1 M1

    1.156     6/25/33        1,510,572        1,458,529  (f) 

Countrywide Home Equity Loan Trust, 2006-HW 2A1B

    0.305     11/15/36        581,072        517,131  (f) 

Home Equity Asset Trust, 2004-8 M1

    1.051     3/25/35        641,516        619,182  (f) 

Park Place Securities Inc., 2004-WCW1 M2

    1.201     9/25/34        760,084        755,654  (f) 

Residential Asset Mortgage Products Inc., 2003-RZ5 A7

    5.470     9/25/33        493,462        511,847   

Residential Asset Securities Corp., 2003-KS10 AI6

    4.540     12/25/33        104,664        108,176  (f) 

Soundview Home Equity Loan Trust, 2005-3 M2

    0.961     6/25/35        51,808        51,694  (f) 

Total Asset-Backed Securities (Cost — $4,381,723)

  

                    4,819,827   
Collateralized Mortgage Obligations — 1.8%                                

ARM Trust, 2004-5 4A1

    2.703     4/25/35        379,783        372,351  (f) 

Bear Stearns ARM Trust, 2005-12 24A1

    5.289     2/25/36        33,465        31,257  (f) 

Credit Suisse Mortgage Capital Certificates, 2009-3R 25A1

    2.688     7/27/36        143,892        146,527  (a)(f) 

Greenwich Capital Commercial Funding Corp., 2006-GG7 AM

    6.014     7/10/38        1,500,000        1,567,033  (f) 

GSMPS Mortgage Loan Trust, 2006-RP1 1A2

    7.500     1/25/36        265,687        283,552  (a) 

HarborView Mortgage Loan Trust, 2004-10 4A

    2.522     1/19/35        266,448        266,199  (f) 

JPMorgan Mortgage Trust, 2005-A5 1A2

    2.654     8/25/35        1,171,869        1,166,422  (f) 

Residential Asset Mortgage Products Inc., 2003-SL1 M1

    7.361     4/25/31        1,412,563        1,202,279  (f) 

Sequoia Mortgage Trust, 2003-03 A1

    0.841     7/20/33        545,425        515,782  (f) 

Washington Mutual Inc., Mortgage Pass-Through Certificates, 2007-HY4 4A1

    2.063     9/25/36        77,159        68,982  (f) 

Total Collateralized Mortgage Obligations (Cost — $5,345,080)

  

                    5,620,384   
Convertible Bonds & Notes — 0.0%                                
Telecommunication Services — 0.0%                                

Diversified Telecommunication Services — 0.0%

                               

Axtel SAB de CV, Senior Secured Notes (Cost — $47,791)

    9.000     1/31/20        360,800  MXN      44,683  (a) 
Senior Loans — 1.9%                                
Energy — 0.4%                                

Oil, Gas & Consumable Fuels — 0.4%

                               

Murray Energy Corp., Term Loan B2

           3/19/21        560,000        555,800  (i) 

Westmoreland Coal Co., Term Loan B

    7.500     12/16/20        638,400        632,016  (j)(k) 

Total Energy

                            1,187,816   
Health Care — 1.1%                                

Health Care Providers & Services — 1.1%

                               

Radnet Management Inc., Second Lien Term Loan

    8.000     3/25/21        770,000        772,887  (j)(k) 

Tenet Healthcare Corp., Bridge Loan

           7/1/15        636,000        636,000  (h)(i)(l) 

Tenet Healthcare Corp., Bridge Loan

           7/1/15        1,904,000        1,904,000  (h)(i)(l) 

Total Health Care

                            3,312,887   

 

See Notes to Financial Statements.

 

14    Western Asset Global Corporate Defined Opportunity Fund Inc. 2015 Semi-Annual Report


Western Asset Global Corporate Defined Opportunity Fund Inc.

 

Security   Rate     Maturity
Date
    Face
Amount†
    Value  
Utilities — 0.4%                                

Independent Power and Renewable Electricity Producers — 0.4%

  

                       

Energy Future Intermediate Holding Co., LLC, DIP Term Loan

    4.250     6/19/16        1,273,594      $ 1,282,615  (j)(k) 

Total Senior Loans (Cost — $5,765,262)

                            5,783,318   
Sovereign Bonds — 4.1%                                

Brazil — 1.2%

                               

Banco Nacional de Desenvolvimento Economico e Social, Senior Notes

    3.375     9/26/16        560,000        568,120  (a) 

Federative Republic of Brazil, Notes

    10.000     1/1/17        10,052,000  BRL      3,184,245   

Total Brazil

                            3,752,365   

Chile — 0.5%

                               

Banco del Estado de Chile, Senior Notes

    4.125     10/7/20        1,540,000        1,637,785  (a) 

Peru — 0.2%

                               

Republic of Peru, Senior Bonds

    7.840     8/12/20        1,249,000  PEN      454,102   

Turkey — 1.1%

                               

Republic of Turkey, Senior Bonds

    5.750     3/22/24        3,000,000        3,321,120   

United Arab Emirates — 0.5%

                               

MDC-GMTN B.V., Senior Notes

    7.625     5/6/19        1,250,000        1,521,875  (c) 

United Kingdom — 0.6%

                               

United Kingdom Treasury Gilt, Bonds

    4.500     3/7/19        1,019,000  GBP      1,769,452  (c) 

Total Sovereign Bonds (Cost — $13,836,349)

                            12,456,699   
                   Shares         
Common Stocks — 0.9%                                
Financials — 0.9%                                

Banks — 0.9%

                               

Citigroup Inc.

                    48,867        2,605,588   
Industrials — 0.0%                                

Marine — 0.0%

                               

Horizon Lines Inc., Class A Shares

                    139,004        97,303   *(h) 

Total Common Stocks (Cost — $2,611,704)

                            2,702,891   
Convertible Preferred Stocks — 0.1%                                
Energy — 0.1%                                

Oil, Gas & Consumable Fuels — 0.1%

                               

Rex Energy Corp. (Cost—$409,750)

    6.000             4,400        198,088   
Preferred Stocks — 0.4%                                
Financials — 0.4%                                

Capital Markets — 0.4%

                               

State Street Corp.

    5.900             37,454        1,008,636  (f) 

 

See Notes to Financial Statements.

 

Western Asset Global Corporate Defined Opportunity Fund Inc. 2015 Semi-Annual Report   15


Schedule of investments (unaudited) (cont’d)

April 30, 2015

 

Western Asset Global Corporate Defined Opportunity Fund Inc.

 

Security   Rate            Shares     Value  

Diversified Financial Services — 0.0%

                               

Citigroup Capital XIII

    7.875             3,050      $ 78,965  (f) 

Total Preferred Stocks (Cost — $1,017,989)

                            1,087,601   

Total Investments before Short-Term Investments (Cost — $366,745,670)

  

            376,823,778   
            Maturity
Date
    Face
Amount†
        
Short-Term Investments — 2.4%                                

Repurchase Agreements — 2.4%

                               

State Street Bank & Trust Co. repurchase agreement dated 4/30/15; Proceeds at maturity — $7,282,000; (Fully collateralized by U.S. government agency obligations, 2.070% due 11/7/22; Market Value — $7,428,829) (Cost — $7,282,000)

    0.000     5/1/15        7,282,000        7,282,000   

Total Investments — 126.3% (Cost — $374,027,670#)

                            384,105,778   

Liabilities in Excess of Other Assets — (26.3)%

                            (79,955,609

Total Net Assets — 100.0%

                          $ 304,150,169   

 

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

 

* Non-income producing security.

 

(a) 

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

 

(b) 

All or a portion of this security is held by the counterparty as collateral for open reverse repurchase agreements.

 

(c) 

Security is exempt from registration under Regulation S of the Securities Act of 1933. Regulation S applies to securities offerings that are made outside of the United States and do not involve direct selling efforts in the United States. This security has been deemed liquid pursuant to guidelines approved by the Board of Directors, unless otherwise noted.

 

(d) 

Payment-in-kind security for which the issuer has the option at each interest payment date of making interest payments in cash or additional debt securities.

 

(e) 

The coupon payment on these securities is currently in default as of April 30, 2015.

 

(f) 

Variable rate security. Interest rate disclosed is as of the most recent information available.

 

(g) 

Security has no maturity date. The date shown represents the next call date.

 

(h) 

Illiquid security.

 

(i) 

All or a portion of this loan is unfunded as of April 30, 2015. The interest rate for fully unfunded term loans is to be determined.

 

(j) 

Interest rates disclosed represent the effective rates on senior loans. Ranges in interest rates are attributable to multiple contracts under the same loan.

 

(k) 

Senior loans may be considered restricted in that the Fund ordinarily is contractually obligated to receive approval from the agent bank and/or borrower prior to the disposition of a senior loan.

 

(l) 

Security is valued in good faith in accordance with procedures approved by the Board of Directors (See Note 1).

 

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

 

See Notes to Financial Statements.

 

16    Western Asset Global Corporate Defined Opportunity Fund Inc. 2015 Semi-Annual Report


Western Asset Global Corporate Defined Opportunity Fund Inc.

 

 

Abbreviations used in this schedule:

ARM   — Adjustable Rate Mortgage
AUD   — Australian Dollar
BRL   — Brazilian Real
CAD   — Canadian Dollar
DIP   — Debtor-in-Possession
EUR   — Euro
GBP   — British Pound
MXN   — Mexican Peso
OJSC   — Open Joint Stock Company
PEN   — Peruvian Nuevo Sol

 

Summary of Investments by Country**  
United States      45.7
United Kingdom      13.2   
France      5.8   
Brazil      3.9   
Italy      3.6   
Australia      2.8   
Mexico      2.6   
Russia      2.5   
Netherlands      2.3   
Spain      1.8   
Chile      1.2   
Colombia      1.1   
Luxembourg      1.1   
Canada      1.1   
Switzerland      1.0   
Qatar      0.9   
Germany      0.9   
Turkey      0.9   
Trinidad and Tobago      0.8   
United Arab Emirates      0.7   
Malaysia      0.7   
India      0.6   
Finland      0.4   
Belgium      0.4   
Ireland      0.4   
South Africa      0.3   
China      0.3   
Morocco      0.2   
Japan      0.2   

 

See Notes to Financial Statements.

 

Western Asset Global Corporate Defined Opportunity Fund Inc. 2015 Semi-Annual Report   17


Schedule of investments (unaudited) (cont’d)

April 30, 2015

 

Western Asset Global Corporate Defined Opportunity Fund Inc.

 

Summary of Investments by Country** continued  
Argentina      0.2
Poland      0.2   
Bahamas      0.1   
Peru      0.1   
Indonesia      0.1   
Short-Term Investments      1.9   
       100.0

 

** As a percentage of total investments. Please note that the Fund holdings are as of April 30, 2015 and are subject to change.

 

See Notes to Financial Statements.

 

18    Western Asset Global Corporate Defined Opportunity Fund Inc. 2015 Semi-Annual Report


Statement of assets and liabilities (unaudited)

April 30, 2015

 

Assets:         

Investments, at value (Cost — $374,027,670)

   $ 384,105,778   

Foreign currency, at value (Cost — $785,592)

     707,616   

Cash

     101,148   

Interest and dividends receivable

     6,588,475   

Receivable for securities sold

     1,950,049   

Unrealized appreciation on forward foreign currency contracts

     1,374,781   

Principal paydown receivable

     5,606   

Deposits with brokers for futures contracts

     995   

Prepaid expenses

     19,786   

Total Assets

     394,854,234   
Liabilities:         

Payable for open reverse repurchase agreements (Note 3)

     83,013,768   

Payable for securities purchased

     7,009,731   

Unrealized depreciation on forward foreign currency contracts

     360,017   

Investment management fee payable

     253,517   

Interest payable (Note 3)

     19,923   

Accrued expenses

     47,109   

Total Liabilities

     90,704,065   
Total Net Assets    $ 304,150,169   
Net Assets:         

Par value ($0.001 par value; 15,183,993 shares issued and outstanding;
100,000,000 shares authorized)

   $ 15,184   

Paid-in capital in excess of par value

     289,078,973   

Overdistributed net investment income

     (2,426,945)   

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

     6,535,437   

Net unrealized appreciation on investments and foreign currencies

     10,947,520   
Total Net Assets    $ 304,150,169   
Shares Outstanding      15,183,993   
Net Asset Value      $20.03   

 

See Notes to Financial Statements.

 

Western Asset Global Corporate Defined Opportunity Fund Inc. 2015 Semi-Annual Report   19


Statement of operations (unaudited)

For the Six Months Ended April 30, 2015

 

Investment Income:         

Interest

   $ 11,488,811   

Dividends

     44,311   

Total Investment Income

     11,533,122   
Expenses:         

Investment management fee (Note 2)

     1,518,960   

Interest expense (Note 3)

     300,068   

Excise tax (Note 1)

     187,483   

Transfer agent fees

     29,093   

Audit and tax fees

     28,980   

Directors’ fees

     25,405   

Legal fees

     22,255   

Shareholder reports

     16,174   

Fund accounting fees

     14,506   

Stock exchange listing fees

     10,538   

Custody fees

     10,456   

Insurance

     3,057   

Miscellaneous expenses

     5,855   

Total Expenses

     2,172,830   
Net Investment Income      9,360,292   

Realized and Unrealized Gain (Loss) on Investments, Futures Contracts

and Foreign Currency Transactions (Notes 1, 3 and 4):

        

Net Realized Gain (Loss) From:

        

Investment transactions

     (2,953,501)   

Futures contracts

     (96,187)   

Foreign currency transactions

     13,485,444   

Net Realized Gain

     10,435,756   

Change in Net Unrealized Appreciation (Depreciation) From:

        

Investments

     (6,800,625)   

Futures contracts

     149,108   

Foreign currencies

     (5,456,108)   

Change in Net Unrealized Appreciation (Depreciation)

     (12,107,625)   
Net Loss on Investments, Futures Contracts and Foreign Currency Transactions      (1,671,869)   
Increase in Net Assets From Operations    $ 7,688,423   

 

See Notes to Financial Statements.

 

20    Western Asset Global Corporate Defined Opportunity Fund Inc. 2015 Semi-Annual Report


Statements of changes in net assets

 

For the Six Months Ended April 30, 2015 (unaudited)

and the Year Ended October 31, 2014

   2015      2014  
Operations:                  

Net investment income

   $ 9,360,292       $ 19,913,881   

Net realized gain (loss)

     10,435,756         (3,191,896)   

Change in net unrealized appreciation (depreciation)

     (12,107,625)         1,802,910   

Increase in Net Assets from Operations

     7,688,423         18,524,895   
Distributions to Shareholders From (Note 1):                  

Net investment income

     (10,345,619)         (21,242,289)   

Decrease in Net Assets from Distributions to Shareholders

     (10,345,619)         (21,242,289)   
Fund Share Transactions:                  

Cost of shares repurchased (46,667 and 116,116 shares repurchased, respectively)

     (823,390)         (2,103,258)   

Decrease in Net Assets from Fund Share Transactions

     (823,390)         (2,103,258)   

Decrease in Net Assets

     (3,480,586)         (4,820,652)   
Net Assets:                  

Beginning of period

     307,630,755         312,451,407   

End of period*

   $ 304,150,169       $ 307,630,755   

*Includesoverdistributed net investment income of:

     $(2,426,945)         $(1,441,618)   

 

See Notes to Financial Statements.

 

Western Asset Global Corporate Defined Opportunity Fund Inc. 2015 Semi-Annual Report   21


Statement of cash flows (unaudited)

For the Six Months Ended April 30, 2015

 

Increase (Decrease) in Cash:         
Cash Provided (Used) by Operating Activities:   

Net increase in net assets resulting from operations

   $ 7,688,423   

Adjustments to reconcile net increase in net assets resulting from operations to net cash provided (used) by operating activities:

        

Purchases of portfolio securities

     (68,664,818)   

Sales of portfolio securities

     52,421,339   

Net purchases, sales and maturities of short-term investments

     (3,339,000)   

Net amortization of premium (accretion of discount)

     429,052   

Increase in receivable for securities sold

     (321,172)   

Increase in interest and dividends receivable

     (8,015)   

Decrease in receivable from broker — variation margin on open futures contracts

     19,070   

Increase in prepaid expenses

     (7,655)   

Increase in principal paydown receivable

     (5,606)   

Decrease in deposits with brokers for futures contracts

     129,011   

Increase in payable for securities purchased

     6,288,031   

Decrease in due to custodian

     (1,392,326)   

Decrease in investment management fee payable

     (14,556)   

Decrease in Directors’ fees payable

     (3,700)   

Increase in interest payable

     5,271   

Decrease in accrued expenses

     (51,629)   

Net realized loss on investments

     2,953,501   

Change in unrealized appreciation of investments and forward foreign currency transactions

     12,235,730   

Net Cash Provided by Operating Activities*

     8,360,951   
Cash Flows from Financing Activities:         

Distributions paid on common stock

     (10,345,619)   

Payment for shares repurchased

     (823,390)   

Increase in payable for reverse repurchase agreements

     3,013,768   

Net Cash Used in Financing Activities

     (8,155,241)   
Net Increase in Cash      205,710   

Cash at Beginning of Period

     603,054   

Cash at End of Period

   $ 808,764   

 

* Included in operating expenses is cash of $294,797 paid for interest on borrowings.

 

See Notes to Financial Statements.

 

22    Western Asset Global Corporate Defined Opportunity Fund Inc. 2015 Semi-Annual Report


Financial highlights

 

For a share of capital stock outstanding throughout each year ended October 31, unless otherwise noted:  
          20151,2          20141          20131          20121          20111          20101,3  
Net asset value, beginning of period     $20.20        $20.36        $20.63        $19.15        $20.41        $19.06 4 
Income (loss) from operations:            

Net investment income

    0.62        1.30        1.24        1.33        1.39        1.21   

Net realized and unrealized gain (loss)

    (0.12)        (0.09)        (0.09)        1.67        (1.09)        1.44   

Total income from operations

    0.50        1.21        1.15        3.00        0.30        2.65   
Less distributions from:            

Net investment income

    (0.68) 5      (1.39)        (1.33)        (1.50)        (1.48)        (1.30)   

Net realized gains

                  (0.08)        (0.02)        (0.08)          

Return of capital

                  (0.01)                        

Total distributions

    (0.68)        (1.39)        (1.42)        (1.52)        (1.56)        (1.30)   

Anti-dilutive impact of repurchase plan

    0.01 6      0.02 6                             
Net asset value, end of period     $20.03        $20.20        $20.36        $20.63        $19.15        $20.41   
Market price, end of period     $18.15        $18.22        $18.08        $20.25        $18.05        $19.08   

Total return, based on NAV7,8

    2.67     6.18     5.76     16.55     2.13     14.87

Total return, based on Market Price9

    3.45     8.67     (3.84)     21.54     2.97     2.33
Net assets, end of period (000s)   $ 304,150      $ 307,631      $ 312,451      $ 316,104      $ 291,495      $ 310,652   
Ratios to average net assets:            

Gross expenses

    1.45 %10      1.28     1.23     1.34     1.40     1.35 %10 

Net expenses11

    1.45 10      1.28        1.23        1.34        1.40        1.34 10,12 

Net investment income

    6.23 10      6.36        6.04        6.79        7.05        6.76 10 
Portfolio turnover rate     14     22     20     9     16     18
Supplemental data:            

Loans Outstanding, End of Period (000s)

                                       $50,000   

Asset Coverage Ratio for Loan Outstanding

                                       721

Weighted Average Loan (000s)

                                $21,644        $48,044   

Weighted Average Interest Rate on Loans

                                1.16     1.18

 

1 

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

 

2 

For the six months ended April 30, 2015 (unaudited).

 

3 

For the period November 24, 2009 (commencement of operations) to October 31, 2010.

 

4 

Initial public offering price of $20.00 per share less offering costs and sales load totaling $0.94 per share.

 

5 

The actual source of the Fund’s current fiscal year distributions may be from net investment income, return of capital or a combination of both. Shareholders will be informed of the tax characteristics of the distributions after the close of the fiscal year.

 

6 

The repurchase plan was completed at an average repurchase price of $17.64 for 46,667 shares and $823,390 for the six months ended April 30, 2015 and $18.11 for 116,116 shares and $2,103,258 for the year ended October 31, 2014.

 

7 

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

 

8 

The total return calculation assumes that distributions are reinvested at NAV. Prior to January 1, 2012, the total return calculation assumed the reinvestment of all distributions in accordance with the Fund’s dividend reinvestment plan. Past performance is no guarantee of future results. Total returns for periods of less than one year are not annualized.

 

9 

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. Total returns for periods of less than one year are not annualized.

 

10 

Annualized.

 

11 

The impact of compensating balance arrangements, if any, was less than 0.01%.

 

12 

The investment manager has agreed to reimburse all organizational expenses.

 

See Notes to Financial Statements.

 

Western Asset Global Corporate Defined Opportunity Fund Inc. 2015 Semi-Annual Report   23


Notes to financial statements (unaudited)

 

1. Organization and significant accounting policies

Western Asset Global Corporate Defined Opportunity Fund Inc. (the “Fund”) was incorporated in Maryland on September 17, 2009 and is registered as a non-diversified, limited-term, closed-end management investment company under the Investment Company Act of 1940, as amended (the “1940 Act”). The Fund’s primary investment objective is to provide current income and then to liquidate and distribute substantially all of the Fund’s net assets to stockholders on or about December 2, 2024. As a secondary investment objective, the Fund will seek capital appreciation. The Fund seeks to achieve its investment objectives by investing 80% of its managed assets in a portfolio of U.S. and foreign corporate fixed-income securities of varying maturities.

Under normal market conditions, the Fund will invest at least 40% of its managed assets in fixed-income securities of foreign issuers organized or having a principal place of business outside the United States, including in emerging market countries. In addition, the Fund may invest up to 35% of its managed assets in fixed-income securities of below investment grade quality.

The following are significant accounting policies consistently followed by the Funds and are in conformity with U.S. generally accepted accounting principles (“GAAP”). Estimates and assumptions are required to be made regarding assets, liabilities and changes in net assets resulting from operations when financial statements are prepared. Changes in the economic environment, financial markets and any other parameters used in determining these estimates could cause actual results to differ. Subsequent events have been evaluated through the date the financial statements were issued.

(a) Investment valuation. The valuations for fixed income securities (which may include, but are not limited to, corporate, government, municipal, mortgage-backed, collateralized mortgage obligations and asset-backed securities) and certain derivative instruments are typically the prices supplied by independent third party pricing services, which may use market prices or broker/dealer quotations or a variety of valuation techniques and methodologies. The independent third party pricing services use inputs that are observable such as issuer details, interest rates, yield curves, prepayment speeds, credit risks/spreads, default rates and quoted prices for similar securities. Short-term fixed income securities that will mature in 60 days or less are valued at amortized cost, unless it is determined that using this method would not reflect an investment’s fair value. Futures contracts are valued daily at the settlement price established by the board of trade or exchange on which they are traded. Equity securities for which market quotations are available are valued at the last reported sales price or official closing price on the primary market or exchange on which they trade. When the Fund holds securities or other assets that are denominated in a foreign currency, the Fund will normally use the currency exchange rates as of 4:00 p.m. (Eastern Time). If independent third party pricing services are unable to supply prices for a portfolio investment, or if the prices supplied are deemed by the manager to be unreliable, the market price may be determined by the manager using quotations from one or more broker/dealers or at the transaction price if the security has recently been purchased and no

 

24    Western Asset Global Corporate Defined Opportunity Fund Inc. 2015 Semi-Annual Report


value has yet been obtained from a pricing service or pricing broker. When reliable prices are not readily available, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded, but before the Fund calculates its net asset value, the Fund values these securities as determined in accordance with procedures approved by the Fund’s Board of Directors.

The Board of Directors is responsible for the valuation process and has delegated the supervision of the daily valuation process to the Legg Mason North Atlantic Fund Valuation Committee (formerly, Legg Mason North American Fund Valuation Committee) (the “Valuation Committee”). The Valuation Committee, pursuant to the policies adopted by the Board of Directors, is responsible for making fair value determinations, evaluating the effectiveness of the Fund’s pricing policies, and reporting to the Board of Directors. When determining the reliability of third party pricing information for investments owned by the Fund, the Valuation Committee, among other things, conducts due diligence reviews of pricing vendors, monitors the daily change in prices and reviews transactions among market participants.

The Valuation Committee will consider pricing methodologies it deems relevant and appropriate when making fair value determinations. Examples of possible methodologies include, but are not limited to, multiple of earnings; discount from market of a similar freely traded security; discounted cash-flow analysis; book value or a multiple thereof; risk premium/yield analysis; yield to maturity; and/or fundamental investment analysis. The Valuation Committee will also consider factors it deems relevant and appropriate in light of the facts and circumstances. Examples of possible factors include, but are not limited to, the type of security; the issuer’s financial statements; the purchase price of the security; the discount from market value of unrestricted securities of the same class at the time of purchase; analysts’ research and observations from financial institutions; information regarding any transactions or offers with respect to the security; the existence of merger proposals or tender offers affecting the security; the price and extent of public trading in similar securities of the issuer or comparable companies; and the existence of a shelf registration for restricted securities.

For each portfolio security that has been fair valued pursuant to the policies adopted by the Board of Directors, the fair value price is compared against the last available and next available market quotations. The Valuation Committee reviews the results of such back testing monthly and fair valuation occurrences are reported to the Board of Directors quarterly.

The Fund uses valuation techniques to measure fair value that are consistent with the market approach and/or income approach, depending on the type of security and the particular circumstance. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable securities. The income approach uses valuation techniques to discount estimated future cash flows to present value.

 

Western Asset Global Corporate Defined Opportunity Fund Inc. 2015 Semi-Annual Report   25


Notes to financial statements (unaudited) (cont’d)

 

GAAP establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are summarized in the three broad levels listed below:

 

Ÿ  

Level 1—quoted prices in active markets for identical investments

 

Ÿ  

Level 2—other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

 

Ÿ  

Level 3—significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.

The following is a summary of the inputs used in valuing the Fund’s assets and liabilities carried at fair value:

 

ASSETS  
Description   Quoted Prices
(Level 1)
    Other Significant
Observable Inputs
(Level 2)
   

Significant
Unobservable
Inputs

(Level 3)

    Total  
Long-term investments†:                                

Corporate bonds & notes:

                               

Industrials

         $ 18,692,370      $ 2,203,219      $ 20,895,589   

Other corporate bonds & notes

           323,214,698               323,214,698   

Asset-backed securities

           4,819,827               4,819,827   

Collateralized mortgage obligations

           5,620,384               5,620,384   

Convertible bonds & notes

           44,683               44,683   

Senior loans:

                               

Energy

           555,800        632,016        1,187,816   

Health care

           2,540,000        772,887        3,312,887   

Utilities

           1,282,615               1,282,615   

Sovereign bonds

           12,456,699               12,456,699   

Common stocks

  $ 2,702,891                      2,702,891   

Convertible preferred stocks

           198,088               198,088   

Preferred stocks

    1,087,601                      1,087,601   
Total long-term investments   $ 3,790,492      $ 369,425,164      $ 3,608,122      $ 376,823,778   
Short-term investments†            7,282,000               7,282,000   
Total investments   $ 3,790,492      $ 376,707,164      $ 3,608,122      $ 384,105,778   
Other financial instruments:                                

Forward foreign currency contracts

         $ 1,374,781             $ 1,374,781   
Total   $ 3,790,492      $ 378,081,945      $ 3,608,122      $ 385,480,559   

 

26    Western Asset Global Corporate Defined Opportunity Fund Inc. 2015 Semi-Annual Report


LIABILITIES  
Description   Quoted Prices
(Level 1)
    Other Significant
Observable Inputs
(Level 2)
   

Significant
Unobservable
Inputs

(Level 3)

    Total  
Other financial instruments:                                

Forward foreign currency contracts

         $ 360,017             $ 360,017   

 

See Schedule of Investments for additional detailed categorizations.

The following is a reconciliation of investments in which significant unobservable inputs (Level 3) were used in determining fair value:

 

    Corporate
Bonds & Notes
    Senior Loans        
Investments in Securities   Industrials     Consumer
Discretionary
    Energy     Health Care     Total  
Balance as of October 31, 2014          $ 266,354                    $ 266,354   
Accrued premiums/discounts                 $ 705               705   
Realized gain (loss)1                   39               39   
Change in unrealized appreciation (depreciation)2            1,338        8,872               10,210   
Purchases                   624,000               624,000   
Sales             (267,692)        (1,600)               (269,292)   
Transfers into Level 33   $ 2,203,219                    $ 772,887        2,976,106   
Transfers out of Level 3                                   
Balance as of April 30, 2015   $ 2,203,219             $ 632,016      $ 772,887      $ 3,608,122   
Net change in unrealized appreciation (depreciation) for investments in securities
still held at April 30, 20152
                $ 8,872             $ 8,872   

The Fund’s policy is to recognize transfers between levels as of the end of the reporting period.

 

1 

This amount is included in net realized gain (loss) from investment transactions in the accompanying Statement of Operations.

 

2 

This amount is included in the change in net unrealized appreciation (depreciation) in the accompanying Statement of Operations. Change in unrealized appreciation (depreciation) includes net unrealized appreciation (depreciation) resulting from changes in investment values during the reporting period and the reversal of previously recorded unrealized appreciation (depreciation) when gains or losses are realized.

 

3 

Transferred into Level 3 as a result of the unavailability of a quoted price in an active market for an identical investment or the unavailability of other significant observable inputs.

(b) Repurchase agreements. The Fund may enter into repurchase agreements with institutions that its investment adviser has determined are creditworthy. Each repurchase agreement is recorded at cost. Under the terms of a typical repurchase agreement, the Fund acquires a debt security subject to an obligation of the seller to repurchase, and of the Fund to resell, the security at an agreed-upon price and time, thereby determining the yield during the Fund’s holding period. When entering into repurchase agreements, it is the Fund’s policy that its custodian or a third party custodian, acting on the Fund’s behalf, take possession of the underlying collateral securities, the market value of which, at all times, at

 

Western Asset Global Corporate Defined Opportunity Fund Inc. 2015 Semi-Annual Report   27


Notes to financial statements (unaudited) (cont’d)

 

least equals the principal amount of the repurchase transaction, including accrued interest. To the extent that any repurchase transaction maturity exceeds one business day, the value of the collateral is marked-to-market and measured against the value of the agreement in an effort to ensure the adequacy of the collateral. If the counterparty defaults, the Fund generally has the right to use the collateral to satisfy the terms of the repurchase transaction. However, if the market value of the collateral declines during the period in which the Fund seeks to assert its rights or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of the collateral by the Fund may be delayed or limited.

(c) Reverse repurchase agreements. The Fund may enter into reverse repurchase agreements. Under the terms of a typical reverse repurchase agreement, a fund sells a security subject to an obligation to repurchase the security from the buyer at an agreed-upon time and price. In the event the buyer of securities under a reverse repurchase agreement files for bankruptcy or becomes insolvent, the Fund’s use of the proceeds of the agreement may be restricted pending a determination by the counterparty, or its trustee or receiver, whether to enforce the Fund’s obligation to repurchase the securities. In entering into reverse repurchase agreements, the Fund will maintain cash, U.S. government securities or other liquid debt obligations at least equal in value to its obligations with respect to reverse repurchase agreements or will take other actions permitted by law to cover its obligations. Interest payments made on reverse repurchase agreements are recognized as a component of “Interest expense” on the Statement of Operations. In periods of increased demand for the security, the Fund may receive a fee for use of the security by the counterparty, which may result in interest income to the Fund.

(d) Futures contracts. The Fund uses futures contracts generally to gain exposure to, or hedge against, changes in interest rates or gain exposure to, or hedge against, changes in certain asset classes. A futures contract represents a commitment for the future purchase or sale of an asset at a specified price on a specified date.

Upon entering into a futures contract, the Fund is required to deposit cash or cash equivalents with a broker in an amount equal to a certain percentage of the contract amount. This is known as the ‘‘initial margin’’ and subsequent payments (‘‘variation margin’’) are made or received by the Fund each day, depending on the daily fluctuation in the value of the contract. For certain futures, including foreign denominated futures, variation margin is not settled daily, but is recorded as a net variation margin payable or receivable. Futures contracts are valued daily at the settlement price established by the board of trade or exchange on which they are traded. The daily changes in contract value are recorded as unrealized gains or losses in the Statement of Operations and the Fund recognizes a realized gain or loss when the contract is closed.

Futures contracts involve, to varying degrees, risk of loss in excess of the amounts reflected in the financial statements. In addition, there is the risk that the Fund may not be able to enter into a closing transaction because of an illiquid secondary market.

 

28    Western Asset Global Corporate Defined Opportunity Fund Inc. 2015 Semi-Annual Report


(e) Forward foreign currency contracts. The Fund enters into a forward foreign currency contract to hedge against foreign currency exchange rate risk on its non-U.S. dollar denominated securities or to facilitate settlement of a foreign currency denominated portfolio transaction. A forward foreign currency contract is an agreement between two parties to buy and sell a currency at a set price with delivery and settlement at a future date. The contract is marked-to-market daily and the change in value is recorded by the Fund as an unrealized gain or loss. When a forward foreign currency contract is closed, through either delivery or offset by entering into another forward foreign currency contract, the Fund recognizes a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value of the contract at the time it is closed.

Forward foreign currency contracts involve elements of market risk in excess of the amounts reflected on the Statement of Assets and Liabilities. The Fund bears the risk of an unfavorable change in the foreign exchange rate underlying the forward foreign currency contract. Risks may also arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of their contracts.

(f) Foreign currency translation. Investment securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts based upon prevailing exchange rates on the date of valuation. Purchases and sales of investment securities and income and expense items denominated in foreign currencies are translated into U.S. dollar amounts based upon prevailing exchange rates on the respective dates of such transactions.

The Fund does not isolate that portion of the results of operations resulting from fluctuations in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments.

Net realized foreign exchange gains or losses arise from sales of foreign currencies, including gains and losses on forward foreign currency contracts, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the 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 values of assets and liabilities, other than investments in securities, on the date of valuation, resulting from changes in exchange rates.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

(g) Loan participations. The Fund may invest in loans arranged through private negotiation between one or more financial institutions. The Fund’s investment in any such loan may be in the form of a participation in or an assignment of the loan. In connection with

 

Western Asset Global Corporate Defined Opportunity Fund Inc. 2015 Semi-Annual Report   29


Notes to financial statements (unaudited) (cont’d)

 

purchasing participations, the Fund generally will have no right to enforce compliance by the borrower with the terms of the loan agreement related to the loan, or any rights of off-set against the borrower and the Fund may not benefit directly from any collateral supporting the loan in which it has purchased the participation.

The Fund assumes the credit risk of the borrower, the lender that is selling the participation and any other persons interpositioned between the Fund and the borrower. In the event of the insolvency of the lender selling the participation, the Fund may be treated as a general creditor of the lender and may not benefit from any off-set between the lender and the borrower.

(h) Unfunded loan commitments. The Fund may enter into certain credit agreements where all or a portion of which may be unfunded. The Fund is obligated to fund these commitments at the borrower’s discretion. The commitments are disclosed in the accompanying Schedule of Investments. At April 30, 2015, the Fund had sufficient cash and/or securities to cover these commitments.

(i) 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.

(j) Foreign investment risks. The Fund’s investments in foreign securities may involve risks not present in domestic investments. Since securities may be denominated in foreign currencies, may require settlement in foreign currencies or pay interest or dividends in foreign currencies, changes in the relationship of these foreign currencies to the U.S. dollar can significantly affect the value of the investments and earnings of the Fund. Foreign investments may also subject the Fund to foreign government exchange restrictions, expropriation, taxation or other political, social or economic developments, all of which affect the market and/or credit risk of the investments.

(k) Credit and market risk. The Fund invests in high-yield and emerging market instruments that are subject to certain credit and market risks. The yields of high-yield and emerging market debt obligations reflect, among other things, perceived credit and market risks. The Fund’s investments in securities rated below investment grade typically involve risks not associated with higher rated securities including, among others, greater risk related to timely and ultimate payment of interest and principal, greater market price volatility and less liquid secondary market trading. The consequences of political, social, economic or diplomatic changes may have disruptive effects on the market prices of investments held by the Fund. The Fund’s investments in non-U.S. dollar denominated securities may also result in foreign currency losses caused by devaluations and exchange rate fluctuations.

Investments in securities that are collateralized by residential real estate mortgages are subject to certain credit and liquidity risks. When market conditions result in an increase in

 

30    Western Asset Global Corporate Defined Opportunity Fund Inc. 2015 Semi-Annual Report


default rates of the underlying mortgages and the foreclosure values of underlying real estate properties are materially below the outstanding amount of these underlying mortgages, collection of the full amount of accrued interest and principal on these investments may be doubtful. Such market conditions may significantly impair the value and liquidity of these investments and may result in a lack of correlation between their credit ratings and values.

(l) Counterparty risk and credit-risk-related contingent features of derivative instruments. The Fund may invest in certain securities or engage in other transactions, where the Fund is exposed to counterparty credit risk in addition to broader market risks. The Fund may invest in securities of issuers, which may also be considered counterparties as trading partners in other transactions. This may increase the risk of loss in the event of default or bankruptcy by the counterparty or if the counterparty otherwise fails to meet its contractual obligations. The Fund’s investment manager attempts to mitigate counterparty risk by (i) periodically assessing the creditworthiness of its trading partners, (ii) monitoring and/or limiting the amount of its net exposure to each individual counterparty based on its assessment and (iii) requiring collateral from the counterparty for certain transactions. Market events and changes in overall economic conditions may impact the assessment of such counterparty risk by the investment manager. In addition, declines in the values of underlying collateral received may expose the Fund to increased risk of loss.

The Fund has entered into master agreements with certain of its derivative counterparties that provide for general obligations, representations, agreements, collateral, events of default or termination and credit related contingent features. The credit related contingent features include, but are not limited to, a percentage decrease in the Fund’s net assets or NAV over a specified period of time. If these credit related contingent features were triggered, the derivatives counterparty could terminate the positions and demand payment or require additional collateral.

Collateral requirements differ by type of derivative. Collateral or margin requirements are set by the broker or exchange clearinghouse for exchange traded derivatives while collateral terms are contract specific for over-the-counter traded derivatives. Cash collateral that has been pledged to cover obligations of the Fund under derivative contracts, if any, will be reported separately in the Statement of Assets and Liabilities. Securities pledged as collateral, if any, for the same purpose are noted in the Schedule of Investments.

Absent an event of default by the counterparty or a termination of the agreement, the terms of the master agreements do not result in an offset of reported amounts of financial assets and financial liabilities in the Statement of Assets and Liabilities across transactions between the Fund and the applicable counterparty. The enforceability of the right to offset may vary by jurisdiction.

As of April 30, 2015, the Fund held forward foreign currency contracts with credit related contingent features which had a liability position of $360,017. If a contingent feature in the master agreements would have been triggered, the Fund would have been required to pay this amount to its derivatives counterparties.

 

Western Asset Global Corporate Defined Opportunity Fund Inc. 2015 Semi-Annual Report   31


Notes to financial statements (unaudited) (cont’d)

 

(m) 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. Paydown gains and losses on mortgage- and asset-backed securities are recorded as adjustments to interest income. Dividend income is recorded on the ex-dividend date. Foreign dividend income is recorded on the ex-dividend date or as soon as practicable after the Fund determines the existence of a dividend declaration after exercising reasonable due diligence. The cost of investments sold is determined by use of the specific identification method. To the extent any issuer defaults or a credit event occurs that impacts the issuer, the Fund may halt any additional interest income accruals and consider the realizability of interest accrued up to the date of default or credit event.

(n) Distributions to shareholders. Distributions from net investment income of the Fund, if any, are declared quarterly and paid on a monthly basis. The actual source of the Fund’s monthly distributions may be from net investment income, return of capital or a combination of both. Shareholders will be informed of the tax characteristics of the distributions after the close of the fiscal year. Distributions of net realized gains, if any, are declared at least annually. Distributions to shareholders of the Fund are recorded on the ex-dividend date and are determined in accordance with income tax regulations, which may differ from GAAP.

(o) Compensating balance arrangements. The Fund has an arrangement with its custodian bank whereby a portion of the custodian’s fees is paid indirectly by credits earned on the Fund’s cash on deposit with the bank.

(p) 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 (the “Code”), as amended, applicable to regulated investment companies. Accordingly, the Fund intends to distribute its taxable income and net realized gains, if any, to shareholders in accordance with timing requirements imposed by the Code. Therefore, no federal or state income tax provision is required in the Fund’s financial statements.

However, due to the timing of when distributions are made by the Fund, the Fund may be subject to an excise tax of 4% of the amount by which 98% of the Fund’s annual taxable income and 98.2% of net realized gains exceed the distributions from such taxable income and realized gains for the calendar year. The Fund paid $187,483 of Federal excise taxes attributable to calendar year 2014 in March 2015.

Management has analyzed the Fund’s tax positions taken on income tax returns for all open tax years and has concluded that as of April 30, 2015, no provision for income tax is required in the Fund’s financial statements. The Fund’s federal and state income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.

Under the applicable foreign tax laws, a withholding tax may be imposed on interest, dividends and capital gains at various rates.

 

32    Western Asset Global Corporate Defined Opportunity Fund Inc. 2015 Semi-Annual Report


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

2. Investment management agreement and other transactions with affiliates

Legg Mason Partners Fund Advisor, LLC (“LMPFA”) is the Fund’s investment manager. Western Asset Management Company (“Western Asset”), Western Asset Management Company Pte. Ltd. (“Western Singapore”), Western Asset Management Company Ltd (“Western Japan”) and Western Asset Management Company Limited (“Western Asset Limited”) are the Fund’s subadvisers. LMPFA, Western Asset, Western Singapore, Western Japan 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 an investment management fee, calculated daily and paid monthly, at an annual rate of 0.80% of the Fund’s average daily net assets plus the amount of any borrowings and assets attributable to any preferred stock that may be outstanding.

LMPFA delegates to Western Asset the day-to-day portfolio management of the Fund. Western Singapore, Western Japan and Western Asset Limited provide certain advisory services to the Fund relating to currency transactions and investment in non-U.S. dollar denominated debt securities. For its services, LMPFA pays Western Asset 70% of the net management fee it receives from the Fund. In turn, Western Asset pays Western Singapore, Western Japan and Western Asset Limited a fee for its services at no additional expense to the Fund. Each of Western Singapore, Western Japan and Western Asset Limited receives a fee from Western Asset, payable monthly, in an amount equal to an annual rate of 0.56% of the Fund’s daily managed assets related to the Fund’s assets that Western Asset allocates to Western Singapore, Western Japan and Western Asset Limited, respectively, to manage.

During periods in which the Fund utilizes financial leverage, the fees which are payable to the investment manager as a percentage of the Fund’s net assets will be higher than if the Fund did not utilize leverage because the fees are calculated as a percentage of the Fund’s assets, including those investments purchased with leverage.

All 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 April 30, 2015, the aggregate cost of purchases and proceeds from sales of investments (excluding short-term investments) were as follows:

 

Purchases      $ 68,664,818   
Sales        52,421,339   

 

Western Asset Global Corporate Defined Opportunity Fund Inc. 2015 Semi-Annual Report   33


Notes to financial statements (unaudited) (cont’d)

 

At April 30, 2015, the aggregate gross unrealized appreciation and depreciation of investments for federal income tax purposes were substantially as follows:

 

Gross unrealized appreciation      $ 24,199,691   
Gross unrealized depreciation        (14,121,583)   
Net unrealized appreciation      $ 10,078,108   

Transactions in reverse repurchase agreements for the Fund during the six months ended April 30, 2015 were as follows:

 

Average Daily

Balance*

 

Weighted Average

Interest Rate*

 

Maximum Amount

Outstanding

$80,133,205   0.76%   $83,013,768

 

* Averages based on the number of days that Fund had reverse repurchase agreements outstanding.

Interest rates on reverse repurchase agreements ranged from 0.73% to 1.08% during the six months ended April 30, 2015. Interest expense incurred on reverse repurchase agreements totaled $300,068.

At April 30, 2015, the Fund had the following open reverse repurchase agreements:

 

Counterparty    Rate      Effective Date      Maturity
Date
     Face Amount of Reverse
Repurchase Agreements
 
Barclays      1.08      4/23/15         6/5/15       $ 83,013,768   

On April 30, 2015, the total market value of underlying collateral (refer to the Schedule of Investments for positions held at the counterparty as collateral for reverse repurchase agreements) for open reverse repurchase agreements was $87,185,166.

At April 30, 2015, the Fund had the following open forward foreign currency contracts:

 

Currency
Purchased
    Currency
Sold
    Counterparty   Settlement
Date
    Unrealized
Appreciation
(Depreciation)
 
EUR     650,000      USD     741,566      Citibank N.A.     5/13/15      $ (11,639)   
EUR     450,000      USD     483,404      Citibank N.A.     5/13/15        21,931   
EUR     405,481      USD     438,809      Citibank N.A.     5/13/15        16,532   
USD     10,353,044      EUR     9,060,040      Citibank N.A.     5/13/15        178,941   
USD     389,834      EUR     340,000      Citibank N.A.     5/13/15        8,026   
USD     1,285,437      GBP     843,197      Citibank N.A.     5/13/15        (8,785)   
EUR     2,180,000      USD     2,307,213      Morgan Stanley     5/13/15        140,850   
EUR     1,200,000      USD     1,301,972      Morgan Stanley     5/13/15        45,585   
USD     1,100,050      CAD     1,372,526      Morgan Stanley     5/13/15        (37,370)   
USD     41,254,472      EUR     36,013,751      Morgan Stanley     5/13/15        812,309   
USD     16,769,608      GBP     11,039,175      Morgan Stanley     5/13/15        (174,412)   
EUR     920,000      USD     996,677      UBS AG     5/13/15        36,450   
EUR     690,000      USD     747,746      UBS AG     5/13/15        27,099   
GBP     380,764      USD     571,972      UBS AG     5/13/15        12,462   
USD     4,265,661      EUR     3,732,143      UBS AG     5/13/15        74,596   
USD     17,691,701      GBP     11,609,566      UBS AG     5/13/15        (127,811)   
Total      $ 1,014,764   

 

34    Western Asset Global Corporate Defined Opportunity Fund Inc. 2015 Semi-Annual Report


Abbreviations used in this table:

CAD   — Canadian Dollar
EUR   — Euro
GBP   — British Pound
USD   — United States Dollar

4. Derivative instruments and hedging activities

Below is a table, grouped by derivative type, that provides information about the fair value and the location of derivatives within the Statement of Assets and Liabilities at April 30, 2015.

 

ASSET DERIVATIVES1  
      Foreign
Exchange Risk
 
Forward foreign currency contracts    $ 1,374,781   

 

LIABILITY DERIVATIVES1  
      Foreign
Exchange Risk
 
Forward foreign currency contracts    $ 360,017   

 

1 

Generally, the balance sheet location for asset derivatives is receivables/net unrealized appreciation (depreciation) and for liability derivatives is payables/net unrealized appreciation (depreciation).

The following tables provide information about the effect of derivatives and hedging activities on the Fund’s Statement of Operations for the six months ended April 30, 2015. The first table provides additional detail about the amounts and sources of gains (losses) realized on derivatives during the period. The second table provides additional information about the change in unrealized appreciation (depreciation) resulting from the Fund’s derivatives and hedging activities during the period.

 

AMOUNT OF REALIZED GAIN (LOSS) ON DERIVATIVES RECOGNIZED  
      Interest
Rate Risk
     Foreign
Exchange Risk
     Total  
Futures contracts    $ (96,187)               $ (96,187)   
Forward foreign currency contracts1            $ 13,764,442         13,764,442   
Total    $ (96,187)       $ 13,764,442       $ 13,668,255   

 

1 

Net realized gain (loss) from forward foreign currency contracts is reported in net realized gain (loss) from foreign currency transactions in the Statement of Operations.

 

CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON DERIVATIVES RECOGNIZED  
      Interest
Rate Risk
     Foreign
Exchange Risk
     Total  
Futures contracts    $ 149,108               $ 149,108   
Forward foreign currency contracts1            $ (5,435,105)         (5,435,105)   
Total    $ 149,108       $ (5,435,105)       $ (5,285,997)   

 

1 

The change in unrealized appreciation (depreciation) from forward foreign currency contracts is reported in the change in net unrealized appreciation (depreciation) from foreign currencies in the Statement of Operations.

 

Western Asset Global Corporate Defined Opportunity Fund Inc. 2015 Semi-Annual Report   35


Notes to financial statements (unaudited) (cont’d)

 

During the six months ended April 30, 2015, the volume of derivative activity for the Fund was as follows:

 

        Average Market
Value
 
Futures contracts (to buy)1      $ 3,825,951   
Futures contracts (to sell)1        3,929,690   
Forward foreign currency contracts (to buy)        5,070,557   
Forward foreign currency contracts (to sell)        98,315,657   

 

1 

At April 30, 2015, there were no open positions held in this derivative.

The following table presents by financial instrument, the Fund’s derivative assets net of the related collateral received by the Fund at April 30, 2015:

 

      Gross Amount of Derivative
Assets in the Statement of
Assets and Liabilities1
     Collateral
Received
     Net
Amount
 
Forward foreign currency contracts    $ 1,374,781               $ 1,374,781   

The following table presents by financial instrument, the Fund’s derivative liabilities net of the related collateral pledged by the Fund at April 30, 2015:

 

      Gross Amount of Derivative
Liabilities in the Statement
of Assets and Liabilities1
     Collateral
Pledged
    

Net

Amount

 
Forward foreign currency contracts    $ 360,017               $ 360,017   

 

1 

Absent an event of default or early termination, derivative assets and liabilities are presented gross and not offset in the Statement of Assets and Liabilities.

5. Distributions subsequent to April 30, 2015

The following distributions have been declared by the Fund’s Board of Directors and are payable subsequent to the period end of this report:

 

Record Date      Payable Date        Amount  
5/22/2015        5/29/2015         $ 0.1135   
6/19/2015        6/26/2015         $ 0.1135   
7/24/2015        7/31/2015         $ 0.1135   
8/21/2015        8/28/2015         $ 0.1135   

6. Stock repurchase program

On March 10, 2014, the Board of Directors (the “Board”) of the Fund announced that it had authorized the Fund to repurchase in the open market up to 1,600,000 shares of the Fund’s common stock when the Fund’s shares are trading at a discount to the net asset value. 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 Fund management reasonably believes may enhance stockholder value. The Fund is under no obligation to purchase shares at any specific discount levels or in any specific amounts.

 

36    Western Asset Global Corporate Defined Opportunity Fund Inc. 2015 Semi-Annual Report


During the six months ended April 30, 2015, the Fund repurchased and retired 0.31% of its common shares outstanding under the repurchase plan. The weighted average discount per share on these repurchases was 11.27% for the six months ended April 30, 2015. Shares repurchased and the corresponding dollar amount are included on the Statement of Changes in Net Assets. The anti-dilutive impact of these share repurchases is included on the Financial Highlights.

Since the Fund’s commencement of the stock repurchase program through April 30, 2015, the Fund repurchased 162,783 shares or 1.06% of its common shares outstanding for the total amount of $2,926,648.

7. Deferred capital losses

As of October 31, 2014, the Fund had deferred capital losses of $208,684, which have no expiration date, that will be available to offset future taxable capital gains.

8. Subsequent event

Effective June 2, 2015, the Fund has a revolving credit agreement with National Australia Bank Limited that allows the Fund to borrow up to an aggregate amount of $90,000,000 and renews daily for a 180-day term unless notice to the contrary is given to the Fund. The final scheduled termination date of the credit agreement is June 2, 2020. The Fund pays a commitment fee at an annual rate of 0.20% on the unutilized portion of the loan commitment amount. The interest on the loan is calculated at a variable rate based on the LIBOR plus any applicable margin.

 

Western Asset Global Corporate Defined Opportunity Fund Inc. 2015 Semi-Annual Report   37


Board approval of management and

subadvisory agreements (unaudited)

 

Background

The Investment Company Act of 1940, as amended (the “1940 Act”), requires that the Board of Directors (the “Board”) of Western Asset Global Corporate Defined Opportunity Fund Inc. (the “Fund”), including a majority of its members who are not considered to be “interested persons” under the 1940 Act (the “Independent Directors”) voting separately, approve on an annual basis 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 agreements (individually, a “Sub-Advisory Agreement,” and collectively, the “Sub-Advisory Agreements”) with the Manager’s affiliates, Western Asset Management Company (“Western Asset”) Western Asset Management Company Pte. Ltd. in Singapore (“Western Asset Singapore”) Western Asset Management Company Ltd. in Japan (“Western Asset Japan”) and Western Asset Management Company Limited in London (“Western Asset London”). Western Asset, Western Asset Singapore, Western Asset Japan and Western Asset London together are hereinafter referred to as the “Sub-Advisers,” and Western Asset Singapore, Western Asset Japan and Western Asset London together are hereinafter referred to as the “Non-U.S. Sub-Advisers.” At a meeting (the “Contract Renewal Meeting”) held in-person on November 12 and 13, 2014, the Board, including the Independent Directors, considered and approved the continuation of each of the Management Agreement and the Sub-Advisory Agreements for an additional one-year term. To assist in its consideration of the renewals of the Management Agreement and the Sub-Advisory Agreements, the Board received and considered a variety of information (together with the information provided at the Contract Renewal Meeting, the “Contract Renewal Information”) about the Manager and the Sub-Advisers, as well as the management and sub-advisory arrangements for the Fund and the other closed-end funds in the same complex under the Board’s supervision (collectively, the “Legg Mason Closed-end Funds”), certain portions of which are discussed below. A presentation made by the Manager and Western Asset to the Board at the Contract Renewal Meeting in connection with its evaluations of the Management Agreement and the Sub-Advisory Agreements encompassed the Fund and other Legg Mason Closed-end Funds. In addition to the Contract Renewal Information, the Board received performance and other information throughout the year related to the respective services rendered by the Manager and the Sub-Advisers to the Fund. The Board’s evaluation took into account the information received throughout the year and also reflected the knowledge and familiarity gained as members of the Boards of the Fund and other Legg Mason Closed-end Funds with respect to the services provided to the Fund by the Manager and the Sub-Advisers.

The Manager provides the Fund with investment advisory and administrative services pursuant to the Management Agreement and the Sub-Advisers together provide, or in the case of the Non-U.S. Sub-advisers help to provide, the Fund with certain investment sub-advisory services pursuant to the Sub-Advisory Agreements. The discussion below covers both the advisory and administrative functions being rendered by the Manager, each such function being encompassed by the Management Agreement, and the investment sub-advisory functions being rendered by the Sub-Advisers.

 

38    Western Asset Global Corporate Defined Opportunity Fund Inc.


In its deliberations regarding renewal of the Management Agreement and the Sub-Advisory Agreements, the Board, including the Independent Directors, considered the factors below.

Nature, extent and quality of the services under the management agreement and sub-advisory agreements

The Board received and considered Contract Renewal Information regarding the nature, extent and quality of services provided to the Fund by the Manager and the Sub-Advisers under the Management Agreement and the Sub-Advisory Agreements, respectively, during the past year. The Board also reviewed Contract Renewal Information regarding the Fund’s compliance policies and procedures established pursuant to the 1940 Act.

The Board considered 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 Contract Renewal Information and the Board’s discussions with the Manager and Western Asset at the Contract Renewal Meeting, the general reputation and investment performance records of the Manager, Western Asset and their affiliates and the financial resources available to the corporate parent of the Manager and the Sub-Advisers, Legg Mason, Inc. (“Legg Mason”), to support their activities in respect of the Fund and the other Legg Mason Closed-end Funds.

The Board considered the responsibilities of the Manager and the Sub-Advisers under the Management Agreement and the Sub-Advisory Agreements, respectively, including the Manager’s coordination and oversight of the services provided to the Fund by the Sub- Advisers and others and Western Asset’s coordination and oversight of the services provided to the Fund by the Non-U.S. Sub-Advisers. The Management Agreement permits the Manager to delegate certain of its responsibilities, including its investment advisory duties thereunder, provided that the Manager, in each case, will supervise the activities of the delegee. Pursuant to this provision of the Management Agreement, the Manager does not provide day-to-day portfolio management services to the Fund. Rather, portfolio management services for the Fund are provided by Western Asset pursuant to the Sub-Advisory Agreement (the “Western Asset Sub-Advisory Agreement”) between the Manager and Western Asset. The Western Asset Sub-Advisory Agreement permits Western Asset to delegate certain of its responsibilities, including its investment sub-advisory duties thereunder, provided that Western Asset, in each case, will supervise the activities of the delegee. Pursuant to this provision of the Western Asset Sub-Advisory Agreement, each Non-U.S. Sub-Adviser helps to provide certain investment sub-advisory services to the Fund pursuant to a separate Sub-Advisory Agreement with Western Asset.

In reaching its determinations regarding continuation of the Management Agreement and the Sub-Advisory Agreements, the Board took into account that Fund shareholders, in pursuing their investment goals and objectives, likely purchased their shares based upon the reputation and the particular investment style, philosophy and strategy of the Manager and Western Asset, as well as the resources available to the Manager and the Sub-Advisers.

 

Western Asset Global Corporate Defined Opportunity Fund Inc.   39


Board approval of management and

subadvisory agreements (unaudited) (cont’d)

 

The Board concluded that, overall, the nature, extent and quality of the management and other services provided to the Fund under the Management Agreement and the Sub- Advisory Agreements have been satisfactory under the circumstances.

Fund performance

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 included the Fund and all leveraged global income closed-end funds, as classified by Lipper, regardless of asset size. The Performance Universe consisted of six funds, including the Fund, for the 1-year period ended June 30, 2014 and of ten funds, including the Fund, for the 3-year period ended such date. The Board noted that it had received and discussed with the Manager and Western Asset information throughout the year at periodic intervals comparing the Fund’s performance against its benchmark and its peer funds as selected by Lipper.

The Lipper Performance Information comparing the Fund’s performance to that of the Performance Universe based on net asset value per share showed, among other things, that the Fund’s performance for the 1-year period ended June 30, 2014 was ranked sixth among the funds in the Performance Universe for that period (first being best in these performance rankings) and was ranked third among the Funds in the Performance Universe for the 3-year period ended such date. In each of the periods, the Fund’s performance was better than the median performance for the funds in the Performance Universe for that period. The Board noted that the small number of funds in the Performance Universe made meaningful performance comparisons difficult. In addition to the Fund’s performance relative to the Performance Universe, the Board considered the Fund’s performance in absolute terms and relative to its benchmark. On a net asset value basis, the Fund outperformed its benchmark in each of the 1- and 3-year periods ended June 30, 2014.

Based on the reviews and discussions of Fund performance and considering other relevant factors, including those noted above, the Board concluded that, under the circumstances, continuation of the Management Agreement and the Sub-Advisory Agreements for an additional one-year period would be consistent with the interests of the Fund and its shareholders.

Management fees and expense ratios

The Board reviewed and considered the management fee (the “Management Fee”) payable by the Fund to the Manager under the Management Agreement and the sub-advisory fees (the “Sub-Advisory Fees”) payable to the Sub-Advisers under the Sub-Advisory Agreements in light of the nature, extent and overall quality of the management, investment advisory and other services provided by the Manager and the Sub-Advisers. The Board noted that the

 

40    Western Asset Global Corporate Defined Opportunity Fund Inc.


 

Sub-Advisory Fees payable to Western Asset under the Western Asset Sub-Advisory Agreement are paid by the Manager, not the Fund, and, accordingly, that the retention of Western Asset does not increase the fees or expenses otherwise incurred by the Fund’s shareholders. Similarly, the Board noted that the Sub-Advisory Fees payable to each of the Non-U.S. Sub-Advisers under its Sub-Advisory Agreement with Western Asset are paid by Western Asset, not the Fund, and, accordingly, that the retention of such Non-U.S. Sub-Adviser 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 an expense universe (the “Expense Universe”) selected and provided by Lipper. The comparison was based upon the constituent funds’ latest fiscal years. The Expense Universe consisted of the Fund and seven other leveraged global income closed-end funds, as classified by Lipper. The eight funds in the Expense Universe had average net common share assets ranging from $122.4 million to $454.7 million. Three of the Expense Universe funds were larger than the Fund and four were smaller.

The Lipper Expense Information, comparing the Management Fee as well as the Fund’s actual total expenses to the Fund’s Expense Universe, showed, among other things, that the Fund’s Management Fee on a contractual basis was ranked third among the funds in the Expense Universe (first being lowest and, therefore, best in these expense component rankings) and was better (i.e., lower) than the Expense Universe median for that expense component. The Fund’s actual Management Fee (i.e., giving effect to any voluntary fee waivers implemented by the Manager with respect to the Fund and by the managers of the other Expense Universe funds) was ranked second among the funds in the Expense Universe compared on the basis of common share assets only and was ranked third among the funds in the Expense Universe on the basis of common share and leveraged assets. The Fund’s actual total expenses ranked first among the funds in the Expense Universe compared on the basis of common share assets only and ranked third among the funds in the Expense Universe compared on the basis of common share and leveraged assets. Each of the Fund’s expense components was better than the Expense Universe median for that expense component. The Board considered that the small number of funds in the Expense Universe, which included another Legg Mason Closed-end Fun, made meaningful comparisons difficult.

The Board also reviewed Contract Renewal Information 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, institutional and separate accounts. The Board was advised that the fees paid by such institutional, separate account and other clients (collectively, “institutional 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 institutional clients. Among other things, institutional clients have fewer compliance, administration and other needs than the Fund and the Fund is subject not only to heightened regulatory requirements relative to institutional clients but also to requirements for listing on the New York Stock

 

Western Asset Global Corporate Defined Opportunity Fund Inc.   41


Board approval of management and

subadvisory agreements (unaudited) (cont’d)

 

Exchange. The Contract Renewal Information noted further 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 service providers. The Contract Renewal Information included information regarding management fees paid by open-end mutual funds in the same complex (the “Legg Mason Open-end Funds”) and such information indicated that the management fees paid by the Legg Mason Closed-end Funds generally were higher than those paid by the Legg Mason Open-end Funds. The Manager, in response to an inquiry from the Board as to the reasons for the fee differential, provided information as to differences between the services provided to the Fund and the other Legg Mason Closed-end Funds and the services provided to the Legg Mason Open-end Funds. The Board considered the fee comparisons in light of the different services provided in managing these other types of clients and funds.

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

Manager profitability

The Board, as part of the Contract Renewal Information, received an analysis of the profitability to the Manager and its affiliates in providing services to the Fund for the Manager’s fiscal years ended March 31, 2014 and March 31, 2013. The Board also received profitability information with respect to the Legg Mason fund complex as a whole. In addition, the Board received Contract Renewal Information with respect to the Manager’s revenue and cost allocation methodologies used in preparing such profitability data. The Board received a report from an outside consultant engaged by the Manager that had reviewed the Manager’s revenue and cost allocation methodologies. The profitability to each of the Sub-Advisers was not considered to be a material factor in the Board’s considerations since Western Asset’s Sub-Advisory Fees are paid by the Manager, not the Fund, and the Sub- Advisory Fees for the Non-U.S. Sub-Advisers are paid by Western Asset, not the Fund. The profitability analysis presented to the Board as part of the Contract Renewal Information indicated that profitability to the Manager had increased by 3 percent during the period covered by the analysis but remained at a level that the Board did not consider such as to support a determination against continuation of the Management Agreement in light of judicial guidance and the nature, extent and overall quality of the investment advisory and other services provided to the Fund.

Economies of scale

The Board received and discussed Contract Renewal 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 with no current plans to seek additional assets beyond maintaining its dividend reinvestment plan, any significant growth in its assets

 

42    Western Asset Global Corporate Defined Opportunity Fund Inc.


generally will occur through appreciation in the value of the Fund’s investment portfolio, rather than sales of additional shares in the Fund. The Board determined that the Management Fee structure, which incorporates no breakpoints reducing the Management Fee at specified increased asset levels, was appropriate under present circumstances.

Other benefits to the manager and the sub-advisers

The Board considered other benefits received by the Manager, the Sub-Advisers and their affiliates as a result of their relationship with the Fund and did not regard such benefits as excessive.

*  *  *  *  *  *

In light of all of the foregoing and other relevant factors, the Board determined that, under the circumstances, continuation of the Management Agreement and the Sub-Advisory Agreements would be consistent with the interests of the Fund and its shareholders and unanimously voted to continue each Agreement for a period of one additional year. No single factor reviewed by the Board was identified by the Board as the principal factor in determining whether to approve continuation of the Management Agreement and the Sub- Advisory Agreements, and each Board member attributed different weights to the various factors. The Independent Directors were advised by separate independent legal counsel throughout the process. Prior to the Contract Renewal Meeting, the Board received a memorandum prepared by the Manager discussing its responsibilities in connection with the proposed continuation of the Management Agreement and the Sub-Advisory Agreements as part of the Contract Renewal Information and the Independent Directors separately received a memorandum discussing such responsibilities from their independent counsel. Prior to voting, the Independent Directors also discussed the proposed continuation of the Management Agreement and the Sub-Advisory Agreements in private sessions with their independent legal counsel at which no representatives of the Manager or any Sub- Adviser were present.

 

Western Asset Global Corporate Defined Opportunity Fund Inc.   43


Additional shareholder information (unaudited)

 

Results of annual meeting of shareholders

The Annual Meeting of Shareholders of Western Asset Global Corporate Defined Opportunity Fund Inc. was held on February 27, 2015 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
 

Robert D. Agdern

       12,683,578           1,188,328   

Kenneth D. Fuller

       12,688,776           1,183,130   

Leslie H. Gelb

       12,670,436           1,201,470   

William R. Hutchinson

       12,674,159           1,197,747   

At April 30, 2015, in addition to Robert D. Agdern, Kenneth D. Fuller, Leslie H. Gelb and William R. Hutchinson, the other Directors of the Fund were as follows:

 

Carol L. Colman

         

Daniel P. Cronin

         

Paolo M. Cucchi

         
Eileen A. Kamerick          
Riordan Roett          

 

44    Western Asset Global Corporate Defined Opportunity Fund Inc.


Dividend reinvestment plan (unaudited)

 

Unless you elect to receive distributions in cash (i.e., opt-out), all dividends, including any capital gain dividends, on your Common Stock will be automatically reinvested by American Stock Transfer & Trust Company LLC, as agent for the stockholders (the “Plan Agent”), in additional shares of Common Stock under the Fund’s 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 American Stock Transfer & Trust Company LLC, as dividend paying agent.

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

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

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

Common Stock in your account will be held by the Plan Agent in non-certificated form. Any proxy you receive will include all shares of Common Stock you have received under the Plan.

 

Western Asset Global Corporate Defined Opportunity Fund Inc.   45


Dividend reinvestment plan (unaudited) (cont’d)

 

You may withdraw from the Plan (i.e., opt-out) by notifying the Plan Agent in writing at P.O. Box 922, Wall Street Station, New York, NY 10269-0560 or by calling the Plan Agent at 1-888-888-0151. Such withdrawal will be effective immediately if notice is received by the Plan Agent not less than ten business days prior to any dividend or distribution record date; otherwise such withdrawal will be effective as soon as practicable after the Plan Agent’s investment of the most recently declared dividend or distribution on the Common Stock. The Plan may be amended or supplemented by the Fund upon notice in writing mailed to stockholders at least 30 days prior to the record date for the payment of any dividend or distribution by the Fund for which the termination is to be effective.

Upon any termination, you will be sent a certificate or certificates for the full number of shares of Common Stock held for you under the Plan and cash for any fractional share of Common Stock. You may elect to notify the Plan Agent in advance of such termination to have the Plan Agent sell part or all of your Common Stock on your behalf. You will be charged a 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 dividends or distributions in Common Stock. However, all participants will pay a pro rata share of brokerage commissions incurred by the Plan Agent when it makes open market purchases. Because all dividends and distributions will be automatically reinvested in additional shares of Common Stock, this allows you to add to your investment through dollar cost averaging, which may lower the average cost of your Common Stock over time. Dollar cost averaging is a technique for lowering the average cost per share over time if the Fund’s net asset value declines. While dollar cost averaging has definite advantages, it cannot assure profit or protect against loss in declining markets.

Automatically reinvesting dividends and distributions does not mean that you do not have to pay income taxes due upon receiving dividends and distributions. Investors will be subject to income tax on amounts reinvested under the Plan.

The Fund reserves the right to amend or terminate the Plan if, in the judgment of the Board of Directors, the change is warranted. 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 6201 15th Avenue, Brooklyn, New York 11219 or by calling the Plan Agent at 1-888-888-0151.

 

46    Western Asset Global Corporate Defined Opportunity Fund Inc.


Western Asset

Global Corporate Defined Opportunity Fund Inc.

 

Directors

Robert D. Agdern*

Carol L. Colman

Daniel P. Cronin

Paolo M. Cucchi

Kenneth D. Fuller

Chairman

Leslie H. Gelb

William R. Hutchinson

Eileen A. Kamerick

Riordan Roett

Officers

Kenneth D. Fuller

President and Chief Executive Officer

Richard F. Sennett

Principal Financial Officer

Ted P. Becker

Chief Compliance Officer

Vanessa A. Williams

Identity Theft

Prevention Officer

Robert I. Frenkel

Secretary and Chief Legal Officer

Thomas C. Mandia

Assistant Secretary

Steven Frank

Treasurer

Jeanne M. Kelly

Senior Vice President

Western Asset Global Corporate Defined Opportunity Fund Inc.

620 Eighth Avenue

49th Floor

New York, NY 10018

Investment manager

Legg Mason Partners Fund Advisor, LLC

Subadvisers

Western Asset Management Company

Western Asset Management Company Limited

Western Asset Management Company Ltd

Western Asset Management Company Pte. Ltd.

Custodian

State Street Bank and Trust Company

1 Lincoln Street Boston, MA 02111

Transfer agent

American Stock Transfer & Trust Company

6201 15th Avenue

Brooklyn, NY 11219

Independent registered public accounting firm

KPMG LLP

345 Park Avenue

New York, NY 10154

Legal counsel

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, NY 10017

New York Stock Exchange Symbol

GDO

 

* Effective January 1, 2015, Mr. Agdern became a Director.


Legg Mason Funds Privacy and Security Notice

 

Your Privacy and the Security of Your Personal Information is Very Important to the Legg Mason Funds

This Privacy and Security Notice (the “Privacy Notice”) addresses the Legg Mason Funds’ privacy and data protection practices with respect to nonpublic personal information the Funds receive. The Legg Mason Funds include any funds sold by the Funds’ distributor, Legg Mason Investor Services, LLC, as well as Legg Mason-sponsored closed-end funds and certain closed-end funds managed or subadvised by Legg Mason or its affiliates. The provisions of this Privacy Notice apply to your information both while you are a shareholder and after you are no longer invested with the Funds.

The Type of Nonpublic Personal Information the Funds Collect About You

The Funds collect and maintain nonpublic personal information about you in connection with your shareholder account. Such information may include, but is not limited to:

 

Ÿ  

Personal information included on applications or other forms;

 

Ÿ  

Account balances, transactions, and mutual fund holdings and positions;

 

Ÿ  

Online account access user IDs, passwords, security challenge question responses; and

 

Ÿ  

Information received from consumer reporting agencies regarding credit history and creditworthiness (such as the amount of an individual’s total debt, payment history, etc.).

How the Funds Use Nonpublic Personal Information About You

The Funds do not sell or share your nonpublic personal information with third parties or with affiliates for their marketing purposes, or with other financial institutions or affiliates for joint marketing purposes, unless you have authorized the Funds to do so. The Funds do not disclose any nonpublic personal information about you except as may be required to perform transactions or services you have authorized or as permitted or required by law. The Funds may disclose information about you to:

 

Ÿ  

Employees, agents, and affiliates on a “need to know” basis to enable the Funds to conduct ordinary business or comply with obligations to government regulators;

 

Ÿ  

Service providers, including the Funds’ affiliates, who assist the Funds as part of the ordinary course of business (such as printing, mailing services, or processing or servicing your account with us) or otherwise perform services on the Funds’ behalf, including companies that may perform marketing services solely for the Funds;

 

Ÿ  

The Funds’ representatives such as legal counsel, accountants and auditors; and

 

Ÿ  

Fiduciaries or representatives acting on your behalf, such as an IRA custodian or trustee of a grantor trust.

 

NOT PART OF THE SEMI-ANNUAL REPORT


Legg Mason Funds Privacy and Security Notice (cont’d)

 

Except as otherwise permitted by applicable law, companies acting on the Funds’ behalf are contractually obligated to keep nonpublic personal information the Funds provide to them confidential and to use the information the Funds share only to provide the services the Funds ask them to perform.

The Funds may disclose nonpublic personal information about you when necessary to enforce their rights or protect against fraud, or as permitted or required by applicable law, such as in connection with a law enforcement or regulatory request, subpoena, or similar legal process. In the event of a corporate action or in the event a Fund service provider changes, the Funds may be required to disclose your nonpublic personal information to third parties. While it is the Funds’ practice to obtain protections for disclosed information in these types of transactions, the Funds cannot guarantee their privacy policy will remain unchanged.

Keeping You Informed of the Funds’ Privacy and Security Practices

The Funds will notify you annually of their privacy policy as required by federal law. While the Funds reserve the right to modify this policy at any time they will notify you promptly if this privacy policy changes.

The Funds’ Security Practices

The Funds maintain appropriate physical, electronic and procedural safeguards designed to guard your nonpublic personal information. The Funds’ internal data security policies restrict access to your nonpublic personal information to authorized employees, who may use your nonpublic personal information for Fund business purposes only.

Although the Funds strive to protect your nonpublic personal information, they cannot ensure or warrant the security of any information you provide or transmit to them, and you do so at your own risk. In the event of a breach of the confidentiality or security of your nonpublic personal information, the Funds will attempt to notify you as necessary so you can take appropriate protective steps. If you have consented to the Funds using electronic communications or electronic delivery of statements, they may notify you under such circumstances using the most current email address you have on record with them.

In order for the Funds to provide effective service to you, keeping your account information accurate is very important. If you believe that your account information is incomplete, not accurate or not current, or if you have questions about the Funds’ privacy practices, write the Funds using the contact information on your account statements, email the Funds by clicking on the Contact Us section of the Funds’ website at www.leggmason.com, or contact the Fund at 1-888-777-0102.

 

NOT PART OF THE SEMI-ANNUAL REPORT


Western Asset Global Corporate Defined Opportunity Fund Inc.

Western Asset Global Corporate Defined Opportunity Fund Inc.

620 Eighth Avenue

49th Floor

New York, NY 10018

Notice is hereby given in accordance with Section 23(c) of the Investment Company Act of 1940, as amended, that from time to time, the Fund may purchase, at market prices, shares of its 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 1-888-777-0102.

Information on how the Fund voted proxies relating to portfolio securities during the prior 12-month period ended June 30th of each year and a description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio transactions are available (1) without charge, upon request, by calling 1-888-777-0102, (2) on the Fund’s website at www.lmcef.com and (3) on the SEC’s website at www.sec.gov.

This report is transmitted to the shareholders of Western Asset Global Corporate Defined Opportunity Fund Inc. for their information. This is not a prospectus, circular or representation intended for use in the purchase or sale of shares of the Fund or any securities mentioned in the report.

American Stock Transfer & Trust Company

6201 15th Avenue

Brooklyn, NY 11219

WASX012645 6/15 SR15-2511


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 POLOCIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
   Not Applicable.
ITEM 8.    INVESTMENT PROFESSIONALS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
   Not Applicable.
ITEM 9.    PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.

 

     (a)    (b)    (c)    (d)

Period

   Total
Number of
Shares
Purchased
   Average
Price Paid
per Share
   Total
Number of
Shares
Purchased
as Part of
Publicly
Announced
Plans or
Programs
   Maximum
Number of
Shares that
May Yet
Be
Purchased
Under the
Plans or
Programs

November 1 through November 30

   20,527    $17.73    20,527    1,463,357

December 1 through December 31

   26,140    $17.57    26,140    1,437,217

January 1 through January 31

   0    0    0    1,437,217

February 1 through February 28

   0    0    0    1,437,217

March 1 through March 31

   0    0    0    1,437,217

April 1 through April 30

   0    0    0    1,437,217

Total

           


On March 10, 2014, the Board of Directors (the “Board”) of the Fund announced that it had authorized the Fund to repurchase in the open market up to 1,600,000 shares of the Fund’s common stock when the Fund’s shares are trading at a discount to the net asset value. 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 Fund management reasonably believes may enhance stockholder value. The Fund is under no obligation to purchase shares at any specific discount levels or in any specific amounts.
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 second fiscal quarter of the period covered by this report that have materially affected, or are likely to materially affect the registrant’s internal control over financial reporting.

ITEM 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 Corporate Defined Opportunity Fund Inc.

 

By:

/s/ Kenneth D. Fuller

Kenneth D. Fuller
Chief Executive Officer
Date: June 23, 2015

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/ Kenneth D. Fuller

Kenneth D. Fuller
Chief Executive Officer
Date: June 23, 2015
By:

/s/ Richard F. Sennett

Richard F. Sennett
Principal Financial Officer
Date: June 23, 2015