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
|
811-7162
|
|
Western Asset High Income Fund Inc.
|
(Exact name of registrant as
specified in charter)
|
|
55 Water Street, New York, NY
|
|
10041
|
(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)
|
|
Registrants telephone number, including
area code:
|
(888) 777-0102
|
|
|
Date of fiscal year end:
|
December 31
|
|
|
Date of reporting period:
|
June 30,
2010
|
|
|
|
|
|
|
|
|
|
|
ITEM 1.
REPORT TO
STOCKHOLDERS.
The
Semi-
Annual
Report to Stockholders is filed herewith.
June 30, 2010
|
|
|
Semi-Annual Report
Western Asset High Income
Fund Inc.
(HIF)
|
|
|
INVESTMENT PRODUCTS: NOT
FDIC INSURED
·
NO BANK
GUARANTEE
·
MAY LOSE VALUE
|
|
|
II
|
|
Western Asset High Income
Fund Inc.
|
|
|
Fund
objectives
The
Fund seeks to maintain a high level of current income. As a secondary
objective, the Fund seeks capital appreciation.
Whats
inside
Letter from the chairman
|
II
|
|
|
Investment commentary
|
III
|
|
|
Fund at a glance
|
1
|
|
|
Schedule of investments
|
2
|
|
|
Statement of assets and liabilities
|
15
|
|
|
Statement of operations
|
16
|
|
|
Statements of changes in net assets
|
17
|
|
|
Financial highlights
|
18
|
|
|
Notes to financial statements
|
19
|
|
|
Additional shareholder information
|
26
|
|
|
Dividend reinvestment plan
|
27
|
Letter from the chairman
|
|
Dear
Shareholder,
We
are pleased to provide the semi-annual report of Western Asset High Income Fund
Inc. for the six-month reporting period ended June 30, 2010.
Please
read on for Fund performance information and a detailed look at prevailing
economic and market conditions during the Funds reporting period. Important
information with regard to recent regulatory developments that may affect the
Fund is contained in the Notes to Financial Statements included in this report.
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.leggmason.com/cef. Here you can gain immediate access
to market and investment information, including:
·
Fund
prices and performance,
·
Market
insights and commentaries from our portfolio managers, and
·
A
host of educational resources.
We
look forward to helping you meet your financial goals.
Sincerely,
R.
Jay Gerken, CFA
Chairman,
President and Chief Executive Officer
July
30, 2010
|
|
Western
Asset High Income Fund Inc.
|
|
III
|
Investment
commentary
Economic
review
While
the overall U.S. economy continued to expand over the six months ended June 30,
2010, several economic data points weakened toward the end of the reporting
period. This, in combination with sovereign debt woes in Europe, caused
investor sentiment to turn negative and had significant implications for the
financial markets.
Looking
back, the U.S. Department of Commerce reported that U.S. gross domestic product
(GDP)
i
contracted four consecutive quarters,
beginning in the third quarter of 2008 through the second quarter of 2009.
Economic conditions then began to improve in the third quarter of 2009, as GDP
growth was 1.6%. A variety of factors helped the economy to regain its footing,
including the governments $787 billion stimulus program. Economic growth then
accelerated during the fourth quarter of 2009, as GDP growth was 5.0%. A slower
drawdown in business inventories and renewed consumer spending were
contributing factors spurring the economys higher growth rate. While the
recovery continued during the first half of 2010, it did so at a more modest
pace, as GDP growth was 3.7% during the first quarter of 2010 and an estimated
2.4% during the second quarter. The slower pace of growth in the second quarter
was due, in part, to slower consumer spending, which rose an annualized 1.6%
during the quarter, versus a 1.9% gain over the first three months of the year.
Even
before GDP growth turned positive, there were signs that the economy was on the
mend. The manufacturing sector, as measured by the Institute for Supply
Managements PMI
ii
, rose to 52.8
in August 2009, the first time it surpassed 50 since January 2008 (a reading
below 50 indicates a contraction, whereas a reading above 50 indicates an
expansion). While June 2010s PMI reading of 56.2 was lower than Mays reading
of 59.7, manufacturing has now expanded eleven consecutive months according to
PMI data. The manufacturing sectors growth remained fairly broad-based with
thirteen of the eighteen industries tracked by the Institute for Supply
Management expanding during June.
After
experiencing sharp job losses in 2009, the U.S. Department of Labor reported
that over one million new positions were added during the first five months of
2010. Included in that total, however, were 700,000 temporary government jobs
tied to the 2010 Census. In June, 225,000 of these temporary positions were
eliminated, offsetting private sector growth and resulting in a net loss of
125,000 jobs for the month. However, the unemployment rate fell to 9.5% in
June, versus 9.7% and 9.9% in May and April, respectively.
There
was mixed news in the housing market during the period. According to the
National Association of Realtors, existing home sales increased 7.0% and 8.0%
in March and April, respectively, after sales had fallen for the period from
December 2009 through February 2010. The rebound was largely attributed to
people rushing to take advantage of the governments $8,000 tax credit for
first-time home buyers that expired at the end of April. However, with the end
of the tax credit, existing home sales then declined 2.2% and 5.1% in May and
June, respectively. In addition, the inventory of unsold homes increased 2.5%
to 3.99 million in June. Looking at home prices, the S&P/Case-Shiller Home
Price Index
iii
indicated that month-to-month U.S. home prices
rose 1.3% in May. This marked the second straight monthly increase following
six consecutive months of declining prices.
Financial
market overview
During
the first half of the reporting period, the financial markets were largely
characterized by healthy investor risk appetite and solid results by lower-quality
bonds. However, the market experienced a sharp sell-off during the second half
of the reporting period, during which risk aversion returned and investors
flocked to the relative safety of U.S. Treasury securities.
Given
certain pockets of weakness in the economy, including elevated unemployment in
the U.S., the Federal Reserve Board (Fed)
iv
remained
cautious. At its meeting in June 2010, the Fed said it will maintain the
target range for the federal funds rate
v
at 0 to 1/4
percent and continues to anticipate that economic conditions, including low
rates of resource utilization, subdued inflation trends, and stable inflation
expectations, are likely to warrant exceptionally low levels of the federal
funds rate for an extended period.
However,
the Fed took several steps in reversing its accommodative monetary stance. On
February 18, 2010, the Fed raised the discount rate, the interest rate it
charges banks for temporary loans, from 1/2 to 3/4 percent. The Fed also
concluded its $1.25 trillion mortgage securities purchase program at the end of
the first quarter
IV
|
|
Western Asset High Income
Fund Inc.
|
|
|
Investment
commentary (contd)
of
2010. However, the Fed left the door open for future stimulus measures if
needed. In the minutes of its June meeting that were released on July 14
th
(after the reporting period ended), the Fed
said, In addition to continuing to develop and test instruments to exit from
the period of unusually accommodative monetary policy, the Committee would need
to consider whether further policy stimulus might become appropriate if the
outlook were to worsen appreciably.
Fixed-income
market review
Continuing
the trend that began in the second quarter of 2009, nearly every spread sector
(non-Treasury) outperformed equal-duration
vi
Treasuries
during the first half of the reporting period. Over that time, investor
confidence was high given encouraging economic data, continued low interest
rates, benign inflation and rebounding corporate profits. However, robust
investor appetite was replaced with heightened risk aversion toward the end of
April and during the month of May. This was due to the escalating sovereign
debt crisis in Europe, uncertainties regarding new financial reforms in the
U.S. and some worse-than-expected economic data. Most spread sectors then
produced positive absolute returns in June, as investor demand for these
securities began to again increase.
Both
short- and long-term Treasury yields fluctuated during the period but generally
moved lower. When the period began, two- and ten-year Treasury yields were
1.14% and 3.85%, respectively. Two- and ten-year Treasury yields initially
rose, reaching as high as 1.18% and 4.01%, respectively, in early April. Yields
then largely declined amid the investor flight to quality. On June 30, 2010,
two- and ten-year Treasury yields reached their lows for the reporting period:
0.61% and 2.97%, respectively. Over the six-month reporting period, the yield
curve
vii
flattened, with longer-term Treasury yields
declining more than their shorter-term counterparts. For the six months ended
June 30, 2010, the Barclays Capital U.S. Aggregate Index
viii
returned 5.33%.
While
the high-yield bond market could not escape the negative impact of the investor
flight to quality, it still was able to produce strong results during the
reporting period. The asset class posted positive returns during each month
except for May 2010 when risk aversion reached extremely elevated levels. The
high-yield market was supported by better-than-expected corporate profits and
overall strong investor demand. All told, the Barclays Capital U.S. High Yield
2% Issuer Cap Index
ix
returned 4.45% for the six months ended June
30, 2010.
Emerging
market debt prices rallied over the reporting period, also posting positive
returns each month during the period except for May 2010. This impressive
performance was triggered by strong economic growth in many emerging market
countries, solid domestic demand and generally robust investor demand for the
asset class. The JPMorgan Emerging Markets Bond Index Global (EMBI Global)
x
returned 5.37% over the six months ended June
30, 2010.
Performance
review
For
the six months ended June 30, 2010, Western Asset High Income Fund Inc. returned
4.45% based on its net asset value (NAV)
xi
and 12.36%
based on its New York Stock Exchange (NYSE) market price per share. The Funds
unmanaged benchmarks, the Barclays Capital U.S. High Yield 2% Issuer Cap
Index and the EMBI Global, returned 4.45% and 5.37%, respectively, over the
same time frame. The Lipper High Current Yield Closed-End Funds Category
Average
xii
returned 6.15% for the same period. Please
note that Lipper performance returns are based on each funds NAV.
During
this six-month period, the Fund made distributions to shareholders totaling
$0.45 per share, which may have included a return of capital. The performance
table shows the Funds six-month total return based on its NAV and market price
as of June 30, 2010.
Past performance is no
guarantee of future results.
Performance
Snapshot as of June 30, 2010 (unaudited)
Price Per Share
|
|
6-Month
Total Return*
|
|
|
|
|
|
$9.02 (NAV)
|
|
4.45%
|
|
$9.88 (Market Price)
|
|
12.36%
|
|
All
figures represent past performance and are not a guarantee of future results.
*
Total
returns are based on changes in NAV or market price, respectively. Total
returns assume the reinvestment of all distributions, including returns of
capital, if any, in additional shares. Performance figures for periods shorter
than one year represent cumulative figures and are not annualized.
|
|
Western
Asset High Income Fund Inc.
|
|
V
|
Looking
for additional information?
The
Fund is traded under the symbol HIF and its closing market price is available
in most newspapers under the NYSE listings. The daily NAV is available on-line
under the symbol XHIFX on most financial websites.
Barrons
and the
Wall Street Journals
Monday edition
both carry closed-end fund tables that provide additional information. In
addition, the Fund issues a quarterly press release that can be found on most
major financial websites as well as www.leggmason.com/cef.
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 Funds current NAV, market price and other
information.
As
always, thank you for your confidence in our stewardship of your assets.
Sincerely,
R.
Jay Gerken, CFA
Chairman,
President and Chief Executive Officer
July
30, 2010
RISKS:
Investing in foreign securities is subject to
certain risks not associated with domestic investing, such as currency
fluctuations and changes in political and economic conditions. These risks are
magnified in emerging or developing markets. High-yield bonds involve greater
credit and liquidity risks than investment grade bonds. As interest rates rise,
bond prices fall, reducing the value of the fixed-income securities held by the
Fund. 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.
All
investments are subject to risk including the possible loss of principal. 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.
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 Managements 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 manufacturing sector.
iii
The
S&P/Case-Shiller Home Price Index measures the residential housing market,
tracking changes in the value of the residential real estate market in twenty
metropolitan regions across the United States.
iv
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.
v
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.
vi
Duration is the
measure of the price sensitivity of a fixed-income security to an interest rate
change of 100 basis points. Calculation is based on the weighted average of the
present values for all cash flows.
vii
The yield curve
is the graphical depiction of the relationship between the yield on bonds of
the same credit quality but different maturities.
viii
The Barclays
Capital 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.
ix
The Barclays
Capital U.S. High Yield 2% Issuer Cap Index is an index of the 2% Issuer Cap
component of the Barclays Capital U.S. Corporate High Yield Index, which covers
the U.S. dollar-denominated, non-investment grade, fixed-rate, taxable
corporate bond market.
x
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.
xi
Net asset value
(NAV) is calculated by subtracting total liabilities and outstanding
preferred stock (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 Funds
market price as determined by supply of and demand for the Funds shares.
xii
Lipper, Inc., a
wholly-owned subsidiary of Reuters, provides independent insight on global
collective investments. Returns are based on the six-month period ended June
30, 2010, including the reinvestment of all distributions, including returns of
capital, if any, calculated among the 7 funds in the Funds Lipper category.
|
|
Western
Asset High Income Fund Inc. 2010 Semi-Annual Report
|
|
1
|
Fund at
a glance
(unaudited)
Investment
breakdown (%) as a percent of total investments
The bar graph
above represents the composition of the Funds investments as of June 30,
2010 and December 31, 2009 and does not include derivatives. The Fund is
actively managed. As a result, the composition of the Funds investments is
subject to change at any time.
Represents less than 0.1%
2
|
|
Western Asset High Income
Fund Inc. 2010 Semi-Annual Report
|
|
|
Schedule
of investments (unaudited)
June 30,
2010
Western
Asset High Income Fund Inc.
Security
|
|
Rate
|
|
Maturity
Date
|
|
Face
Amount
|
|
Value
|
|
Corporate
Bonds & Notes 87.7%
|
|
|
|
|
|
|
|
|
|
Consumer
Discretionary 17.0%
|
|
|
|
|
|
|
|
|
|
Auto Components 0.5%
|
|
|
|
|
|
|
|
|
|
Cooper-Standard Automotive Inc., Senior Notes
|
|
8.500
|
%
|
5/1/18
|
|
90,000
|
|
$
|
91,125
|
(a)
|
Hertz Holdings Netherlands BV, Senior Secured Bonds
|
|
8.500
|
%
|
7/31/15
|
|
100,000
|
EUR
|
122,132
|
(a)
|
Total Auto Components
|
|
|
|
|
|
|
|
213,257
|
|
Automobiles 0.6%
|
|
|
|
|
|
|
|
|
|
Motors Liquidation Co., Senior Debentures
|
|
8.375
|
%
|
7/15/33
|
|
445,000
|
|
144,625
|
(b)
|
Motors Liquidation Co., Senior Notes
|
|
7.200
|
%
|
1/15/11
|
|
440,000
|
|
135,300
|
(b)
|
Total Automobiles
|
|
|
|
|
|
|
|
279,925
|
|
Diversified Consumer Services 0.7%
|
|
|
|
|
|
|
|
|
|
Service Corp. International, Senior Notes
|
|
7.500
|
%
|
4/1/27
|
|
60,000
|
|
53,400
|
|
Sothebys, Senior Notes
|
|
7.750
|
%
|
6/15/15
|
|
100,000
|
|
100,500
|
|
Stonemor Operating LLC/Cornerstone Family Services/Osiris Holdings,
Senior Notes
|
|
10.250
|
%
|
12/1/17
|
|
195,000
|
|
198,900
|
(a)
|
Total Diversified Consumer Services
|
|
|
|
|
|
|
|
352,800
|
|
Hotels, Restaurants & Leisure 7.0%
|
|
|
|
|
|
|
|
|
|
Ameristar Casinos Inc.,
Senior Notes
|
|
9.250
|
%
|
6/1/14
|
|
125,000
|
|
131,562
|
|
Boyd Gaming Corp., Senior Subordinated Notes
|
|
7.125
|
%
|
2/1/16
|
|
40,000
|
|
33,100
|
|
Downstream Development Quapaw, Senior Notes
|
|
12.000
|
%
|
10/15/15
|
|
165,000
|
|
155,925
|
(a)
|
El Pollo Loco Inc., Senior Notes
|
|
11.750
|
%
|
11/15/13
|
|
285,000
|
|
222,300
|
|
El Pollo Loco Inc., Senior Secured Notes
|
|
11.750
|
%
|
12/1/12
|
|
85,000
|
|
85,425
|
|
Harrahs Operating Co. Inc., Senior Bonds
|
|
5.625
|
%
|
6/1/15
|
|
211,000
|
|
140,842
|
|
Harrahs Operating Co. Inc., Senior Notes
|
|
10.750
|
%
|
2/1/16
|
|
229,000
|
|
183,772
|
|
Harrahs Operating Co. Inc., Senior Secured Notes
|
|
10.000
|
%
|
12/15/15
|
|
146,000
|
|
134,685
|
|
Harrahs Operating Co. Inc., Senior Secured Notes
|
|
11.250
|
%
|
6/1/17
|
|
355,000
|
|
375,412
|
|
Indianapolis Downs LLC & Capital Corp., Senior Secured Notes
|
|
11.000
|
%
|
11/1/12
|
|
120,000
|
|
95,250
|
(a)
|
Inn of the Mountain Gods Resort & Casino, Senior Notes
|
|
12.000
|
%
|
11/15/10
|
|
380,000
|
|
186,200
|
(b)(c)
|
Landrys Restaurants Inc., Senior Secured Notes
|
|
11.625
|
%
|
12/1/15
|
|
95,000
|
|
98,800
|
|
MGM MIRAGE Inc., Notes
|
|
6.750
|
%
|
9/1/12
|
|
260,000
|
|
243,100
|
|
MGM MIRAGE Inc., Senior Notes
|
|
8.500
|
%
|
9/15/10
|
|
5,000
|
|
5,013
|
|
MGM MIRAGE Inc., Senior Notes
|
|
6.750
|
%
|
4/1/13
|
|
260,000
|
|
233,350
|
|
MGM Resorts International, Senior Secured Notes
|
|
10.375
|
%
|
5/15/14
|
|
15,000
|
|
16,388
|
|
MGM Resorts International, Senior Secured Notes
|
|
11.125
|
%
|
11/15/17
|
|
40,000
|
|
44,300
|
|
Mohegan Tribal Gaming Authority, Senior Notes
|
|
6.125
|
%
|
2/15/13
|
|
50,000
|
|
40,750
|
|
Mohegan Tribal Gaming Authority, Senior Secured Notes
|
|
11.500
|
%
|
11/1/17
|
|
230,000
|
|
228,850
|
(a)
|
Mohegan Tribal Gaming Authority, Senior Subordinated Notes
|
|
8.000
|
%
|
4/1/12
|
|
30,000
|
|
26,325
|
|
NCL Corp. Ltd., Senior Secured Notes
|
|
11.750
|
%
|
11/15/16
|
|
180,000
|
|
189,000
|
|
Penn National Gaming Inc., Senior Subordinated Notes
|
|
8.750
|
%
|
8/15/19
|
|
40,000
|
|
41,300
|
|
Pinnacle Entertainment Inc., Senior Notes
|
|
8.625
|
%
|
8/1/17
|
|
125,000
|
|
129,375
|
(a)
|
Pinnacle Entertainment Inc., Senior Subordinated Notes
|
|
7.500
|
%
|
6/15/15
|
|
30,000
|
|
28,275
|
|
Pinnacle Entertainment Inc., Senior Subordinated Notes
|
|
8.750
|
%
|
5/15/20
|
|
20,000
|
|
18,625
|
(a)
|
Sbarro Inc., Senior Notes
|
|
10.375
|
%
|
2/1/15
|
|
95,000
|
|
75,525
|
|
Snoqualmie Entertainment Authority, Senior Secured Notes
|
|
4.136
|
%
|
2/1/14
|
|
90,000
|
|
72,225
|
(a)(d)
|
Snoqualmie Entertainment Authority, Senior Secured Notes
|
|
9.125
|
%
|
2/1/15
|
|
15,000
|
|
12,638
|
(a)
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements.
|
|
Western
Asset High Income Fund Inc. 2010 Semi-Annual Report
|
|
3
|
Western
Asset High Income Fund Inc.
Security
|
|
Rate
|
|
Maturity
Date
|
|
Face
Amount
|
|
Value
|
|
Hotels, Restaurants & Leisure
continued
|
|
|
|
|
|
|
|
|
|
Station Casinos Inc., Senior Notes
|
|
6.000
|
%
|
4/1/12
|
|
215,000
|
|
$
|
13,841
|
(b)(c)
|
Station Casinos Inc., Senior Notes
|
|
7.750
|
%
|
8/15/16
|
|
90,000
|
|
6,131
|
(b)(c)
|
Station Casinos Inc., Senior Subordinated Notes
|
|
6.500
|
%
|
2/1/14
|
|
175,000
|
|
2,188
|
(b)(c)
|
Station Casinos Inc., Senior Subordinated Notes
|
|
6.625
|
%
|
3/15/18
|
|
20,000
|
|
115
|
(b)(c)
|
Total Hotels, Restaurants & Leisure
|
|
|
|
|
|
|
|
3,270,587
|
|
Household Durables 0.1%
|
|
|
|
|
|
|
|
|
|
American Greetings Corp., Senior Notes
|
|
7.375
|
%
|
6/1/16
|
|
45,000
|
|
45,112
|
|
American Greetings Corp., Senior Notes
|
|
7.375
|
%
|
6/1/16
|
|
5,000
|
|
5,013
|
|
Total Household Durables
|
|
|
|
|
|
|
|
50,125
|
|
Internet & Catalog Retail 0.7%
|
|
|
|
|
|
|
|
|
|
Netflix Inc., Senior Notes
|
|
8.500
|
%
|
11/15/17
|
|
130,000
|
|
135,850
|
|
QVC Inc., Senior Secured Notes
|
|
7.375
|
%
|
10/15/20
|
|
195,000
|
|
190,612
|
(a)
|
Total Internet & Catalog Retail
|
|
|
|
|
|
|
|
326,462
|
|
Media 5.1%
|
|
|
|
|
|
|
|
|
|
Allbritton Communications Co., Senior Notes
|
|
8.000
|
%
|
5/15/18
|
|
50,000
|
|
49,750
|
(a)
|
Cablevision Systems Corp., Senior Notes
|
|
7.750
|
%
|
4/15/18
|
|
70,000
|
|
70,350
|
(a)
|
Cablevision Systems Corp., Senior Notes
|
|
8.000
|
%
|
4/15/20
|
|
20,000
|
|
20,350
|
(a)
|
CCH II LLC/CCH II Capital Corp., Senior Notes
|
|
13.500
|
%
|
11/30/16
|
|
64,850
|
|
75,875
|
|
CCO Holdings LLC/CCO Holdings Capital Corp., Senior Notes
|
|
7.875
|
%
|
4/30/18
|
|
210,000
|
|
212,100
|
(a)
|
CCO Holdings LLC/CCO Holdings Capital Corp., Senior Notes
|
|
8.125
|
%
|
4/30/20
|
|
160,000
|
|
164,400
|
(a)
|
Cengage Learning Acquisitions Inc., Senior Notes
|
|
10.500
|
%
|
1/15/15
|
|
110,000
|
|
102,850
|
(a)
|
Cengage Learning Acquisitions Inc., Senior Subordinated Notes
|
|
13.250
|
%
|
7/15/15
|
|
90,000
|
|
84,150
|
(a)
|
Charter Communications Operating LLC/Charter Communications Operating
Capital, Senior Secured Notes
|
|
10.875
|
%
|
9/15/14
|
|
290,000
|
|
323,350
|
(a)
|
CSC Holdings Inc., Senior Debentures
|
|
7.875
|
%
|
2/15/18
|
|
230,000
|
|
235,750
|
|
DISH DBS Corp., Senior Notes
|
|
6.625
|
%
|
10/1/14
|
|
20,000
|
|
20,050
|
|
DISH DBS Corp., Senior Notes
|
|
7.750
|
%
|
5/31/15
|
|
70,000
|
|
72,450
|
|
DISH DBS Corp., Senior Notes
|
|
7.875
|
%
|
9/1/19
|
|
115,000
|
|
120,175
|
|
Globo Communicacoes e
Participacoes SA, Bonds
|
|
7.250
|
%
|
4/26/22
|
|
140,000
|
|
146,300
|
(a)
|
NET Servicos de
Comunicacao SA, Bonds
|
|
7.500
|
%
|
1/27/20
|
|
100,000
|
|
105,000
|
(a)
|
Nielsen Finance LLC/Nielsen Finance Co., Senior Subordinated Notes,
step bond
|
|
0.000
|
%
|
8/1/16
|
|
300,000
|
|
287,250
|
|
Univision Communications Inc., Senior Secured Notes
|
|
12.000
|
%
|
7/1/14
|
|
95,000
|
|
102,362
|
(a)
|
UPC Holding BV, Senior Notes
|
|
9.875
|
%
|
4/15/18
|
|
65,000
|
|
65,650
|
(a)
|
Virgin Media Finance PLC, Senior Bonds
|
|
9.500
|
%
|
8/15/16
|
|
20,000
|
|
21,225
|
|
Virgin Media Finance PLC, Senior Notes
|
|
9.125
|
%
|
8/15/16
|
|
90,000
|
|
93,600
|
|
Total Media
|
|
|
|
|
|
|
|
2,372,987
|
|
Multiline Retail 0.6%
|
|
|
|
|
|
|
|
|
|
Neiman Marcus Group Inc., Senior Notes
|
|
9.000
|
%
|
10/15/15
|
|
170,000
|
|
171,275
|
(e)
|
Neiman Marcus Group Inc., Senior Secured Notes
|
|
7.125
|
%
|
6/1/28
|
|
115,000
|
|
104,075
|
|
Total Multiline Retail
|
|
|
|
|
|
|
|
275,350
|
|
Specialty Retail 1.0%
|
|
|
|
|
|
|
|
|
|
Michaels Stores Inc., Senior Subordinated Bonds
|
|
11.375
|
%
|
11/1/16
|
|
110,000
|
|
114,950
|
|
Michaels Stores Inc., Senior Subordinated Notes, step bond
|
|
0.000
|
%
|
11/1/16
|
|
380,000
|
|
340,100
|
|
Total Specialty Retail
|
|
|
|
|
|
|
|
455,050
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements.
4
|
|
Western Asset High Income
Fund Inc. 2010 Semi-Annual Report
|
|
|
Schedule
of investments (unaudited) (contd)
June 30,
2010
Western
Asset High Income Fund Inc.
Security
|
|
Rate
|
|
Maturity
Date
|
|
Face
Amount
|
|
Value
|
|
Textiles, Apparel & Luxury Goods 0.7%
|
|
|
|
|
|
|
|
|
|
Oxford Industries Inc., Senior Secured Notes
|
|
11.375
|
%
|
7/15/15
|
|
245,000
|
|
$
|
270,725
|
|
Phillips-Van Heusen Corp., Senior Notes
|
|
7.375
|
%
|
5/15/20
|
|
80,000
|
|
81,100
|
|
Total Textiles, Apparel & Luxury Goods
|
|
|
|
|
|
|
|
351,825
|
|
Total Consumer Discretionary
|
|
|
|
|
|
|
|
7,948,368
|
|
Consumer
Staples 1.7%
|
|
|
|
|
|
|
|
|
|
Food Products 0.7%
|
|
|
|
|
|
|
|
|
|
Bumble Bee Foods LLC, Senior Secured Notes
|
|
7.750
|
%
|
12/15/15
|
|
160,000
|
|
161,400
|
(a)
|
Michael Foods Inc., Senior Notes
|
|
9.750
|
%
|
7/15/18
|
|
90,000
|
|
92,925
|
(a)
|
Smithfield Foods Inc., Senior Secured Notes
|
|
10.000
|
%
|
7/15/14
|
|
60,000
|
|
66,750
|
(a)
|
Total Food Products
|
|
|
|
|
|
|
|
321,075
|
|
Household Products 0.4%
|
|
|
|
|
|
|
|
|
|
American Achievement Corp., Senior Subordinated Notes
|
|
8.250
|
%
|
4/1/12
|
|
55,000
|
|
54,863
|
(a)
|
Spectrum Brands Holdings Inc., Senior Secured Notes
|
|
9.500
|
%
|
6/15/18
|
|
140,000
|
|
144,550
|
(a)
|
Total Household Products
|
|
|
|
|
|
|
|
199,413
|
|
Tobacco 0.6%
|
|
|
|
|
|
|
|
|
|
Alliance One International Inc., Senior Notes
|
|
10.000
|
%
|
7/15/16
|
|
240,000
|
|
245,400
|
(a)
|
Alliance One International Inc., Senior Notes
|
|
10.000
|
%
|
7/15/16
|
|
40,000
|
|
40,900
|
(a)
|
Total Tobacco
|
|
|
|
|
|
|
|
286,300
|
|
Total Consumer Staples
|
|
|
|
|
|
|
|
806,788
|
|
Energy
11.8%
|
|
|
|
|
|
|
|
|
|
Energy Equipment & Services 1.9%
|
|
|
|
|
|
|
|
|
|
Basic Energy Services Inc., Senior Secured Notes
|
|
11.625
|
%
|
8/1/14
|
|
165,000
|
|
178,200
|
|
Complete Production Services Inc., Senior Notes
|
|
8.000
|
%
|
12/15/16
|
|
110,000
|
|
108,075
|
|
GulfMark Offshore Inc., Senior Subordinated Notes
|
|
7.750
|
%
|
7/15/14
|
|
160,000
|
|
152,800
|
|
Hercules Offshore LLC, Senior Secured Notes
|
|
10.500
|
%
|
10/15/17
|
|
85,000
|
|
75,863
|
(a)
|
Key Energy Services Inc., Senior Notes
|
|
8.375
|
%
|
12/1/14
|
|
190,000
|
|
189,762
|
|
Parker Drilling Co., Senior Notes
|
|
9.125
|
%
|
4/1/18
|
|
140,000
|
|
133,700
|
(a)
|
Transocean Inc, Senior Notes
|
|
6.625
|
%
|
4/15/11
|
|
50,000
|
|
48,815
|
|
Total Energy Equipment & Services
|
|
|
|
|
|
|
|
887,215
|
|
Oil, Gas & Consumable Fuels 9.9%
|
|
|
|
|
|
|
|
|
|
Atlas Pipeline Partners LP, Senior Notes
|
|
8.750
|
%
|
6/15/18
|
|
30,000
|
|
28,050
|
|
Belden & Blake Corp., Secured Notes
|
|
8.750
|
%
|
7/15/12
|
|
365,000
|
|
342,187
|
|
Berry Petroleum Co., Senior Notes
|
|
10.250
|
%
|
6/1/14
|
|
110,000
|
|
118,800
|
|
Chesapeake Energy Corp., Senior Notes
|
|
6.625
|
%
|
1/15/16
|
|
95,000
|
|
97,019
|
|
Compagnie Generale de
Geophysique SA, Senior Notes
|
|
7.500
|
%
|
5/15/15
|
|
55,000
|
|
52,663
|
|
Compagnie Generale de
Geophysique-Veritas, Senior Notes
|
|
9.500
|
%
|
5/15/16
|
|
160,000
|
|
163,200
|
|
CONSOL Energy Inc., Senior Notes
|
|
8.250
|
%
|
4/1/20
|
|
180,000
|
|
188,550
|
(a)
|
Corral Petroleum Holdings AB, Senior Bonds
|
|
2.000
|
%
|
9/18/11
|
|
245,352
|
|
226,951
|
(a)(d)
|
Crosstex Energy LP/Crosstex Energy Finance Corp., Senior Notes
|
|
8.875
|
%
|
2/15/18
|
|
90,000
|
|
90,338
|
|
Denbury Resources Inc., Senior Subordinated Notes
|
|
8.250
|
%
|
2/15/20
|
|
128,000
|
|
134,400
|
|
El Paso Corp., Medium-Term Notes
|
|
7.800
|
%
|
8/1/31
|
|
75,000
|
|
74,498
|
|
El Paso Corp., Notes
|
|
7.875
|
%
|
6/15/12
|
|
200,000
|
|
210,984
|
|
Enterprise Products Operating LLP, Junior Subordinated Notes
|
|
8.375
|
%
|
8/1/66
|
|
120,000
|
|
119,990
|
(d)
|
Enterprise Products Operating LLP, Subordinated Notes
|
|
7.034
|
%
|
1/15/68
|
|
75,000
|
|
69,098
|
(d)
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements.
|
|
Western
Asset High Income Fund Inc. 2010 Semi-Annual Report
|
|
5
|
Western
Asset High Income Fund Inc.
Security
|
|
Rate
|
|
Maturity
Date
|
|
Face
Amount
|
|
Value
|
|
Oil, Gas & Consumable Fuels continued
|
|
|
|
|
|
|
|
|
|
Griffin Coal Mining Co. Pty Ltd., Senior Notes
|
|
9.500
|
%
|
12/1/16
|
|
10,000
|
|
$ 6,163
|
(a)(b)
|
International Coal Group Inc., Senior Secured Notes
|
|
9.125
|
%
|
4/1/18
|
|
20,000
|
|
20,100
|
|
KazMunaiGaz Finance Sub BV, Senior Notes
|
|
8.375
|
%
|
7/2/13
|
|
100,000
|
|
107,750
|
(a)
|
Linn Energy LLC/Linn Energy Finance Corp., Senior Notes
|
|
8.625
|
%
|
4/15/20
|
|
100,000
|
|
102,875
|
(a)
|
LUKOIL International Finance BV, Bonds
|
|
6.356
|
%
|
6/7/17
|
|
140,000
|
|
142,800
|
(a)
|
MarkWest Energy Partners LP/MarkWest Energy Finance Corp., Senior
Notes
|
|
8.750
|
%
|
4/15/18
|
|
45,000
|
|
45,675
|
|
Murray Energy Corp., Senior Secured Notes
|
|
10.250
|
%
|
10/15/15
|
|
205,000
|
|
205,000
|
(a)
|
OPTI Canada Inc., Senior Secured Notes
|
|
9.000
|
%
|
12/15/12
|
|
100,000
|
|
101,500
|
(a)
|
OPTI Canada Inc., Senior Secured Notes
|
|
8.250
|
%
|
12/15/14
|
|
130,000
|
|
113,750
|
|
Overseas Shipholding Group Inc., Senior Notes
|
|
8.125
|
%
|
3/30/18
|
|
140,000
|
|
138,250
|
|
Peabody Energy Corp., Senior Notes
|
|
7.375
|
%
|
11/1/16
|
|
130,000
|
|
136,012
|
|
Peabody Energy Corp., Senior Notes
|
|
7.875
|
%
|
11/1/26
|
|
40,000
|
|
42,200
|
|
Penn Virginia Resource Partners LP/Penn Virginia Resource Finance
Corp., Senior Notes
|
|
8.250
|
%
|
4/15/18
|
|
90,000
|
|
88,875
|
|
Petrobras International Finance Co., Senior Notes
|
|
6.875
|
%
|
1/20/40
|
|
55,000
|
|
55,725
|
|
Petrohawk Energy Corp., Senior Notes
|
|
9.125
|
%
|
7/15/13
|
|
85,000
|
|
89,038
|
|
Petroplus Finance Ltd., Senior Notes
|
|
6.750
|
%
|
5/1/14
|
|
75,000
|
|
65,625
|
(a)
|
Petroplus Finance Ltd., Senior Notes
|
|
7.000
|
%
|
5/1/17
|
|
60,000
|
|
49,200
|
(a)
|
Plains Exploration & Production Co., Senior Notes
|
|
10.000
|
%
|
3/1/16
|
|
130,000
|
|
139,750
|
|
Plains Exploration & Production Co., Senior Notes
|
|
8.625
|
%
|
10/15/19
|
|
115,000
|
|
117,012
|
|
Quicksilver Resources Inc., Senior Notes
|
|
11.750
|
%
|
1/1/16
|
|
155,000
|
|
171,662
|
|
SandRidge Energy Inc., Senior Toggle Notes
|
|
8.625
|
%
|
4/1/15
|
|
450,000
|
|
439,312
|
(e)
|
Stone Energy Corp., Senior Notes
|
|
8.625
|
%
|
2/1/17
|
|
90,000
|
|
81,450
|
|
Teekay Corp., Senior Notes
|
|
8.500
|
%
|
1/15/20
|
|
220,000
|
|
220,000
|
|
Whiting Petroleum Corp., Senior Subordinated Notes
|
|
7.000
|
%
|
2/1/14
|
|
10,000
|
|
10,250
|
|
Williams Partners LP, Senior Notes
|
|
5.250
|
%
|
3/15/20
|
|
10,000
|
|
10,245
|
(a)
|
Total Oil, Gas & Consumable Fuels
|
|
|
|
|
|
|
|
4,616,947
|
|
Total Energy
|
|
|
|
|
|
|
|
5,504,162
|
|
Financials
15.3%
|
|
|
|
|
|
|
|
|
|
Capital Markets 0.3%
|
|
|
|
|
|
|
|
|
|
Goldman Sachs Group Inc., Subordinated Notes
|
|
6.750
|
%
|
10/1/37
|
|
110,000
|
|
108,169
|
|
Lehman Brothers Holdings Inc., Medium-Term Notes, Senior Notes
|
|
5.250
|
%
|
2/6/12
|
|
140,000
|
|
28,350
|
(b)
|
Total Capital Markets
|
|
|
|
|
|
|
|
136,519
|
|
Commercial Banks 3.5%
|
|
|
|
|
|
|
|
|
|
BAC Capital Trust VI, Capital Securities, Junior Subordinated Notes
|
|
5.625
|
%
|
3/8/35
|
|
140,000
|
|
118,301
|
|
CIT Group Inc., Senior Secured Bonds
|
|
7.000
|
%
|
5/1/14
|
|
104,771
|
|
99,271
|
|
CIT Group Inc., Senior Secured Bonds
|
|
7.000
|
%
|
5/1/15
|
|
44,771
|
|
41,525
|
|
CIT Group Inc., Senior Secured Bonds
|
|
7.000
|
%
|
5/1/16
|
|
134,619
|
|
123,513
|
|
CIT Group Inc., Senior Secured Bonds
|
|
7.000
|
%
|
5/1/17
|
|
444,468
|
|
402,244
|
|
Credit Agricole SA, Subordinated Notes
|
|
8.375
|
%
|
10/13/19
|
|
100,000
|
|
95,000
|
(a)(d)(f)
|
HSBC Bank PLC, Credit-Linked Notes (Russian Agricultural Bank)
|
|
8.900
|
%
|
12/20/10
|
|
1,224,000
|
RUB
|
29,569
|
(a)
|
ICICI Bank Ltd., Subordinated Bonds
|
|
6.375
|
%
|
4/30/22
|
|
140,000
|
|
129,147
|
(a)(d)
|
See Notes to Financial Statements.
6
|
|
Western Asset High Income
Fund Inc. 2010 Semi-Annual Report
|
|
|
Schedule
of investments (unaudited) (contd)
June 30,
2010
Western
Asset High Income Fund Inc.
Security
|
|
Rate
|
|
Maturity
Date
|
|
Face
Amount
|
|
Value
|
|
Commercial Banks continued
|
|
|
|
|
|
|
|
|
|
NB Capital Trust II, Junior Subordinated Notes
|
|
7.830
|
%
|
12/15/26
|
|
140,000
|
|
$
|
135,450
|
|
NB Capital Trust IV, Junior Subordinated Notes
|
|
8.250
|
%
|
4/15/27
|
|
90,000
|
|
88,425
|
|
RSHB Capital, Loan Participation Notes, Senior Secured Bonds
|
|
6.299
|
%
|
5/15/17
|
|
140,000
|
|
139,650
|
(a)
|
RSHB Capital, Loan Participation Notes, Senior Secured Notes
|
|
7.175
|
%
|
5/16/13
|
|
70,000
|
|
74,112
|
(a)
|
RSHB Capital, Loan Participation Notes, Senior Secured Notes
|
|
9.000
|
%
|
6/11/14
|
|
150,000
|
|
169,125
|
(a)
|
Total Commercial Banks
|
|
|
|
|
|
|
|
1,645,332
|
|
Consumer Finance 4.5%
|
|
|
|
|
|
|
|
|
|
FMG Finance Pty Ltd., Senior Secured Notes
|
|
10.625
|
%
|
9/1/16
|
|
125,000
|
|
138,125
|
(a)
|
Ford Motor Credit Co., LLC, Senior Notes
|
|
9.875
|
%
|
8/10/11
|
|
190,000
|
|
199,978
|
|
Ford Motor Credit Co., LLC, Senior Notes
|
|
7.500
|
%
|
8/1/12
|
|
105,000
|
|
107,421
|
|
Ford Motor Credit Co., LLC, Senior Notes
|
|
12.000
|
%
|
5/15/15
|
|
525,000
|
|
608,311
|
|
GMAC Inc., Senior Notes
|
|
7.500
|
%
|
12/31/13
|
|
30,000
|
|
30,225
|
|
GMAC Inc., Senior Notes
|
|
8.300
|
%
|
2/12/15
|
|
30,000
|
|
30,450
|
(a)
|
GMAC Inc., Senior Notes
|
|
8.000
|
%
|
3/15/20
|
|
160,000
|
|
156,800
|
(a)
|
GMAC LLC, Debentures
|
|
0.000
|
%
|
6/15/15
|
|
410,000
|
|
258,300
|
|
GMAC LLC, Senior Bonds
|
|
0.000
|
%
|
12/1/12
|
|
160,000
|
|
134,376
|
|
SLM Corp., Medium-Term Notes, Senior Notes
|
|
8.450
|
%
|
6/15/18
|
|
145,000
|
|
133,994
|
|
SLM Corp., Senior Notes
|
|
8.000
|
%
|
3/25/20
|
|
370,000
|
|
325,450
|
|
Total Consumer Finance
|
|
|
|
|
|
|
|
2,123,430
|
|
Diversified Financial Services 5.3%
|
|
|
|
|
|
|
|
|
|
AES Red Oak LLC, Secured Notes
|
|
9.200
|
%
|
11/30/29
|
|
280,000
|
|
273,000
|
|
Astoria Depositor Corp., Pass-Through Certificates
|
|
8.144
|
%
|
5/1/21
|
|
150,000
|
|
148,500
|
(a)
|
Bank of America Corp., Notes, Preferred Securities
|
|
8.000
|
%
|
1/30/18
|
|
15,000
|
|
14,509
|
(d)(f)
|
Bankrate Inc., Senior Secured Notes
|
|
11.750
|
%
|
7/15/15
|
|
70,000
|
|
69,825
|
(a)
|
Capital One Capital V, Junior Subordinated Notes, Cumulative Trust
Preferred Securities
|
|
10.250
|
%
|
8/15/39
|
|
110,000
|
|
116,738
|
|
CCM Merger Inc., Notes
|
|
8.000
|
%
|
8/1/13
|
|
220,000
|
|
202,400
|
(a)
|
Countrywide Capital III, Junior Subordinated Notes
|
|
8.050
|
%
|
6/15/27
|
|
30,000
|
|
29,843
|
|
Express LLC/Express Finance Corp., Senior Notes
|
|
8.750
|
%
|
3/1/18
|
|
130,000
|
|
132,925
|
(a)
|
Fresenius U.S. Finance II Inc., Senior Notes
|
|
9.000
|
%
|
7/15/15
|
|
140,000
|
|
152,425
|
(a)
|
International Lease Finance Corp., Medium-Term Notes
|
|
6.375
|
%
|
3/25/13
|
|
220,000
|
|
207,350
|
|
International Lease Finance Corp., Medium-Term Notes, Senior Notes
|
|
5.625
|
%
|
9/20/13
|
|
210,000
|
|
190,575
|
|
International Lease Finance Corp., Notes
|
|
5.875
|
%
|
5/1/13
|
|
50,000
|
|
46,375
|
|
International Lease Finance Corp., Senior Notes
|
|
8.750
|
%
|
3/15/17
|
|
90,000
|
|
85,500
|
(a)
|
LBI Escrow Corp., Senior Secured Notes
|
|
8.000
|
%
|
11/1/17
|
|
165,000
|
|
170,362
|
(a)
|
Leucadia National Corp., Senior Notes
|
|
8.125
|
%
|
9/15/15
|
|
120,000
|
|
123,600
|
|
MBNA Capital A, Junior Subordinated Notes
|
|
8.278
|
%
|
12/1/26
|
|
130,000
|
|
127,725
|
|
Midwest Gaming Borrower LLC/Midwest Finance Corp., Senior Secured
Notes
|
|
11.625
|
%
|
4/15/16
|
|
50,000
|
|
49,375
|
(a)
|
TNK-BP Finance SA, Senior Notes
|
|
7.500
|
%
|
7/18/16
|
|
210,000
|
|
218,400
|
(a)
|
Vanguard Health Holdings Co., II LLC, Senior Notes
|
|
8.000
|
%
|
2/1/18
|
|
130,000
|
|
125,450
|
|
Total Diversified Financial Services
|
|
|
|
|
|
|
|
2,484,877
|
|
Insurance 0.3%
|
|
|
|
|
|
|
|
|
|
American International Group Inc., Senior Notes
|
|
8.250
|
%
|
8/15/18
|
|
100,000
|
|
101,750
|
|
MetLife Capital Trust IV, Junior Subordinated Notes
|
|
7.875
|
%
|
12/15/37
|
|
60,000
|
|
57,900
|
(a)
|
Total Insurance
|
|
|
|
|
|
|
|
159,650
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements.
|
|
Western
Asset High Income Fund Inc. 2010 Semi-Annual Report
|
|
7
|
Western
Asset High Income Fund Inc.
Security
|
|
Rate
|
|
Maturity
Date
|
|
Face
Amount
|
|
Value
|
|
Real Estate Investment Trusts (REITs) 0.2%
|
|
|
|
|
|
|
|
|
|
Entertainment Properties Trust, Senior Notes
|
|
7.750
|
%
|
7/15/20
|
|
50,000
|
|
$
|
50,375
|
(a)
|
Host Hotels & Resorts, LP, Senior Notes
|
|
6.375
|
%
|
3/15/15
|
|
20,000
|
|
19,700
|
|
Total Real Estate Investment Trusts (REITs)
|
|
|
|
|
|
|
|
70,075
|
|
Real Estate Management & Development
1.2%
|
|
|
|
|
|
|
|
|
|
Ashton Woods USA LLC/Ashton Woods Finance Co., Senior Subordinated
Notes, step bond
|
|
0.000
|
%
|
6/30/15
|
|
54,600
|
|
31,941
|
(a)(c)
|
Realogy Corp., Senior Notes
|
|
10.500
|
%
|
4/15/14
|
|
590,000
|
|
502,975
|
|
Realogy Corp., Senior Toggle Notes
|
|
11.000
|
%
|
4/15/14
|
|
19,529
|
|
16,404
|
(e)
|
Total Real Estate Management &
Development
|
|
|
|
|
|
|
|
551,320
|
|
Total Financials
|
|
|
|
|
|
|
|
7,171,203
|
|
Health Care 5.0%
|
|
|
|
|
|
|
|
|
|
Health Care Equipment & Supplies 0.5%
|
|
|
|
|
|
|
|
|
|
Biomet Inc., Senior Notes
|
|
10.000
|
%
|
10/15/17
|
|
110,000
|
|
118,800
|
|
Biomet Inc., Senior Notes
|
|
11.625
|
%
|
10/15/17
|
|
40,000
|
|
43,500
|
|
Biomet Inc., Senior Toggle Notes
|
|
10.375
|
%
|
10/15/17
|
|
50,000
|
|
54,000
|
(e)
|
Total Health Care Equipment & Supplies
|
|
|
|
|
|
|
|
216,300
|
|
Health Care Providers & Services 4.5%
|
|
|
|
|
|
|
|
|
|
American Renal Holdings, Senior Secured Notes
|
|
8.375
|
%
|
5/15/18
|
|
110,000
|
|
109,450
|
(a)
|
Capella Healthcare Inc., Senior Notes
|
|
9.250
|
%
|
7/1/17
|
|
50,000
|
|
50,625
|
(a)
|
CRC Health Corp., Senior Subordinated Notes
|
|
10.750
|
%
|
2/1/16
|
|
345,000
|
|
319,125
|
|
HCA Inc., Senior Notes
|
|
6.300
|
%
|
10/1/12
|
|
275,000
|
|
275,000
|
|
HCA Inc., Senior Notes
|
|
6.250
|
%
|
2/15/13
|
|
5,000
|
|
4,938
|
|
HCA Inc., Senior Secured Notes
|
|
9.625
|
%
|
11/15/16
|
|
6,000
|
|
6,435
|
(e)
|
HCA Inc., Senior Secured Notes
|
|
7.875
|
%
|
2/15/20
|
|
275,000
|
|
284,281
|
|
Omnicare Inc., Senior Subordinated Notes
|
|
7.750
|
%
|
6/1/20
|
|
80,000
|
|
82,000
|
|
Tenet Healthcare Corp., Senior Notes
|
|
10.000
|
%
|
5/1/18
|
|
240,000
|
|
266,400
|
(a)
|
Universal Hospital Services Inc., Senior Secured Notes
|
|
4.134
|
%
|
6/1/15
|
|
50,000
|
|
42,250
|
(d)
|
Universal Hospital Services Inc., Senior Secured Notes
|
|
8.500
|
%
|
6/1/15
|
|
190,000
|
|
188,100
|
(e)
|
US Oncology Holdings Inc., Senior Notes
|
|
6.643
|
%
|
3/15/12
|
|
339,000
|
|
316,965
|
(d)(e)
|
US Oncology Inc., Senior Secured Notes
|
|
9.125
|
%
|
8/15/17
|
|
180,000
|
|
185,850
|
|
Total Health Care Providers & Services
|
|
|
|
|
|
|
|
2,131,419
|
|
Total Health Care
|
|
|
|
|
|
|
|
2,347,719
|
|
Industrials 10.4%
|
|
|
|
|
|
|
|
|
|
Aerospace & Defense 1.6%
|
|
|
|
|
|
|
|
|
|
DynCorp International Inc., Senior Notes
|
|
10.375
|
%
|
7/1/17
|
|
80,000
|
|
80,600
|
(a)
|
Freedom Group Inc., Senior Secured Notes
|
|
10.250
|
%
|
8/1/15
|
|
190,000
|
|
198,550
|
(a)
|
Kratos Defense & Security Solutions Inc., Senior Secured
Notes
|
|
10.000
|
%
|
6/1/17
|
|
100,000
|
|
102,000
|
(a)
|
Triumph Group Inc., Senior Notes
|
|
8.625
|
%
|
7/15/18
|
|
150,000
|
|
153,750
|
(a)
|
Wyle Services Corp., Senior Subordinated Notes
|
|
10.500
|
%
|
4/1/18
|
|
205,000
|
|
205,000
|
(a)
|
Total Aerospace & Defense
|
|
|
|
|
|
|
|
739,900
|
|
Airlines 2.5%
|
|
|
|
|
|
|
|
|
|
Continental Airlines Inc., Pass-Through Certificates, Subordinated
Secured Notes
|
|
8.312
|
%
|
4/2/11
|
|
47,099
|
|
46,864
|
|
Continental Airlines Inc., Pass-Through Certificates, Subordinated
Secured Notes
|
|
7.339
|
%
|
4/19/14
|
|
252,246
|
|
241,525
|
|
Continental Airlines Inc., Pass-Through Certificates
|
|
9.250
|
%
|
5/10/17
|
|
15,000
|
|
15,525
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements.
8
|
|
Western Asset High Income
Fund Inc. 2010 Semi-Annual Report
|
|
|
Schedule
of investments (unaudited) (contd)
June 30,
2010
Western
Asset High Income Fund Inc.
Security
|
|
Rate
|
|
Maturity
Date
|
|
Face
Amount
|
|
Value
|
|
Airlines continued
|
|
|
|
|
|
|
|
|
|
DAE Aviation Holdings Inc., Senior Notes
|
|
11.250
|
%
|
8/1/15
|
|
500,000
|
|
$
|
497,500
|
(a)
|
Delta Air Lines Inc., Pass-Through Certificates, Subordinated Secured
Notes
|
|
9.750
|
%
|
12/17/16
|
|
57,014
|
|
59,295
|
|
Delta Air Lines Inc., Senior Secured Notes
|
|
9.500
|
%
|
9/15/14
|
|
65,000
|
|
68,575
|
(a)
|
United Air Lines Inc., Senior Secured Notes
|
|
9.875
|
%
|
8/1/13
|
|
210,000
|
|
216,300
|
(a)
|
Total Airlines
|
|
|
|
|
|
|
|
1,145,584
|
|
Building Products 0.8%
|
|
|
|
|
|
|
|
|
|
GTL Trade Finance Inc., Senior Notes
|
|
7.250
|
%
|
10/20/17
|
|
139,000
|
|
147,688
|
(a)
|
GTL Trade Finance Inc., Senior Notes
|
|
7.250
|
%
|
10/20/17
|
|
130,000
|
|
138,125
|
(a)
|
Rearden G Holdings EINS GmbH, Senior Notes
|
|
7.875
|
%
|
3/30/20
|
|
100,000
|
|
101,500
|
(a)
|
Total Building Products
|
|
|
|
|
|
|
|
387,313
|
|
Commercial Services & Supplies 1.6%
|
|
|
|
|
|
|
|
|
|
ACCO Brands Corp., Senior Secured Notes
|
|
10.625
|
%
|
3/15/15
|
|
160,000
|
|
174,400
|
|
Altegrity Inc., Senior Subordinated Notes
|
|
11.750
|
%
|
5/1/16
|
|
260,000
|
|
237,250
|
(a)
|
Garda World Security Corp., Senior Notes
|
|
9.750
|
%
|
3/15/17
|
|
70,000
|
|
71,400
|
(a)
|
Geo Group Inc., Senior Notes
|
|
7.750
|
%
|
10/15/17
|
|
155,000
|
|
156,937
|
(a)
|
RSC Equipment Rental Inc./RSC Holdings III LLC, Senior Secured Notes
|
|
10.000
|
%
|
7/15/17
|
|
85,000
|
|
91,588
|
(a)
|
Total Commercial Services & Supplies
|
|
|
|
|
|
|
|
731,575
|
|
Construction & Engineering 0.2%
|
|
|
|
|
|
|
|
|
|
Odebrecht Finance Ltd., Senior Notes
|
|
7.500
|
%
|
10/18/17
|
|
100,000
|
|
105,000
|
(a)
|
Electrical Equipment 0.3%
|
|
|
|
|
|
|
|
|
|
NES Rentals Holdings Inc., Senior Secured Notes
|
|
12.250
|
%
|
4/15/15
|
|
130,000
|
|
111,800
|
(a)
|
Machinery 0.1%
|
|
|
|
|
|
|
|
|
|
Case New Holland Inc., Senior Notes
|
|
7.750
|
%
|
9/1/13
|
|
60,000
|
|
61,650
|
(c)
|
Marine 0.5%
|
|
|
|
|
|
|
|
|
|
Trico Shipping AS, Senior Secured Notes
|
|
13.875
|
%
|
11/1/14
|
|
250,000
|
|
241,250
|
(a)
|
Road & Rail 1.9%
|
|
|
|
|
|
|
|
|
|
Kansas City Southern de Mexico, Senior Notes
|
|
12.500
|
%
|
4/1/16
|
|
211,000
|
|
253,200
|
|
Kansas City Southern de Mexico, Senior Notes
|
|
8.000
|
%
|
2/1/18
|
|
380,000
|
|
395,200
|
(a)
|
Kansas City Southern Railway, Senior Notes
|
|
13.000
|
%
|
12/15/13
|
|
20,000
|
|
24,100
|
|
RailAmerica Inc., Senior Secured Notes
|
|
9.250
|
%
|
7/1/17
|
|
213,000
|
|
224,182
|
|
Total Road & Rail
|
|
|
|
|
|
|
|
896,682
|
|
Trading Companies & Distributors 0.6%
|
|
|
|
|
|
|
|
|
|
Ashtead Capital Inc., Notes
|
|
9.000
|
%
|
8/15/16
|
|
100,000
|
|
98,500
|
(a)
|
Ashtead Holdings PLC, Senior Secured Notes
|
|
8.625
|
%
|
8/1/15
|
|
90,000
|
|
89,550
|
(a)
|
H&E Equipment Services Inc., Senior Notes
|
|
8.375
|
%
|
7/15/16
|
|
80,000
|
|
75,600
|
|
Total Trading Companies & Distributors
|
|
|
|
|
|
|
|
263,650
|
|
Transportation 0.3%
|
|
|
|
|
|
|
|
|
|
Syncreon Global Ireland Ltd./Syncreon Global Finance US Inc., Senior
Notes
|
|
9.500
|
%
|
5/1/18
|
|
160,000
|
|
155,200
|
(a)
|
Total Industrials
|
|
|
|
|
|
|
|
4,839,604
|
|
Information Technology 3.0%
|
|
|
|
|
|
|
|
|
|
Communications Equipment 0.4%
|
|
|
|
|
|
|
|
|
|
Lucent Technologies Inc., Debentures
|
|
6.450
|
%
|
3/15/29
|
|
285,000
|
|
189,525
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements.
|
|
Western
Asset High Income Fund Inc. 2010 Semi-Annual Report
|
|
9
|
Western
Asset High Income Fund Inc.
Security
|
|
Rate
|
|
Maturity
Date
|
|
Face
Amount
|
|
Value
|
|
Electronic Equipment, Instruments &
Components 0.9%
|
|
|
|
|
|
|
|
|
|
Jabil Circuit Inc., Senior Notes
|
|
8.250
|
%
|
3/15/18
|
|
10,000
|
|
$
|
10,650
|
|
KEMET Corp., Senior Secured Notes
|
|
10.500
|
%
|
5/1/18
|
|
160,000
|
|
159,200
|
(a)
|
NXP BV/NXP Funding LLC, Senior Secured Notes
|
|
7.875
|
%
|
10/15/14
|
|
280,000
|
|
258,300
|
|
Total Electronic
Equipment, Instruments & Components
|
|
|
|
|
|
|
|
428,150
|
|
IT Services 1.2%
|
|
|
|
|
|
|
|
|
|
Ceridian Corp., Senior Notes
|
|
12.250
|
%
|
11/15/15
|
|
143,775
|
|
130,116
|
(e)
|
First Data Corp., Senior Notes
|
|
9.875
|
%
|
9/24/15
|
|
60,000
|
|
45,900
|
|
First Data Corp., Senior Notes
|
|
10.550
|
%
|
9/24/15
|
|
395,298
|
|
291,532
|
(e)
|
GXS Worldwide Inc., Senior Secured Notes
|
|
9.750
|
%
|
6/15/15
|
|
70,000
|
|
67,200
|
(a)
|
Total IT Services
|
|
|
|
|
|
|
|
534,748
|
|
Semiconductors & Semiconductor Equipment
0.3%
|
|
|
|
|
|
|
|
|
|
Freescale Semiconductor Inc., Senior Secured Notes
|
|
9.250
|
%
|
4/15/18
|
|
50,000
|
|
49,625
|
(a)
|
Freescale Semiconductor Inc., Senior Subordinated Notes
|
|
10.125
|
%
|
12/15/16
|
|
30,000
|
|
24,150
|
|
Freescale Semiconductor Inc., Senior Toggle Notes
|
|
9.125
|
%
|
12/15/14
|
|
57,776
|
|
51,999
|
(e)
|
Total Semiconductors & Semiconductor
Equipment
|
|
|
|
|
|
|
|
125,774
|
|
Software 0.2%
|
|
|
|
|
|
|
|
|
|
Aspect Software Inc., Senior Secured Notes
|
|
10.625
|
%
|
5/15/17
|
|
105,000
|
|
105,525
|
(a)
|
Total Information Technology
|
|
|
|
|
|
|
|
1,383,722
|
|
Materials 8.4%
|
|
|
|
|
|
|
|
|
|
Chemicals 2.0%
|
|
|
|
|
|
|
|
|
|
Ashland Inc., Senior Notes
|
|
9.125
|
%
|
6/1/17
|
|
265,000
|
|
291,500
|
(a)
|
CF Industries Inc., Senior Notes
|
|
6.875
|
%
|
5/1/18
|
|
20,000
|
|
20,400
|
|
CF Industries Inc., Senior Notes
|
|
7.125
|
%
|
5/1/20
|
|
80,000
|
|
82,200
|
|
Georgia Gulf Corp., Senior Secured Notes
|
|
9.000
|
%
|
1/15/17
|
|
110,000
|
|
112,200
|
(a)
|
Ineos Finance PLC, Senior Secured Notes
|
|
9.000
|
%
|
5/15/15
|
|
100,000
|
|
100,250
|
(a)
|
Kerling PLC, Senior Secured Notes
|
|
10.625
|
%
|
1/28/17
|
|
93,000
|
EUR
|
115,290
|
(a)
|
Solutia Inc., Senior Notes
|
|
8.750
|
%
|
11/1/17
|
|
95,000
|
|
99,275
|
|
Solutia Inc., Senior Notes
|
|
7.875
|
%
|
3/15/20
|
|
120,000
|
|
120,300
|
|
Total Chemicals
|
|
|
|
|
|
|
|
941,415
|
|
Containers & Packaging 1.3%
|
|
|
|
|
|
|
|
|
|
Ball Corp., Senior Notes
|
|
6.625
|
%
|
3/15/18
|
|
30,000
|
|
30,150
|
|
Berry Plastics Corp., Senior Secured Notes
|
|
9.500
|
%
|
5/15/18
|
|
230,000
|
|
211,600
|
(a)
|
Graham Packaging Co. L.P., Senior Subordinated Notes
|
|
9.875
|
%
|
10/15/14
|
|
30,000
|
|
30,825
|
|
Radnor Holdings Inc., Senior Notes
|
|
11.000
|
%
|
3/15/11
|
|
100,000
|
|
0
|
(b)(c)(g)
|
Solo Cup Co., Senior Secured Notes
|
|
10.500
|
%
|
11/1/13
|
|
135,000
|
|
140,231
|
|
Viskase Cos. Inc., Senior Secured Notes
|
|
9.875
|
%
|
1/15/18
|
|
190,000
|
|
191,900
|
(a)
|
Viskase Cos. Inc., Senior Secured Notes
|
|
9.875
|
%
|
1/15/18
|
|
20,000
|
|
20,200
|
(a)
|
Total Containers & Packaging
|
|
|
|
|
|
|
|
624,906
|
|
Metals & Mining 2.2%
|
|
|
|
|
|
|
|
|
|
Evraz Group SA, Notes
|
|
8.875
|
%
|
4/24/13
|
|
100,000
|
|
103,100
|
(a)
|
Evraz Group SA, Notes
|
|
9.500
|
%
|
4/24/18
|
|
100,000
|
|
100,950
|
(a)
|
Metals USA Inc., Senior Secured Notes
|
|
11.125
|
%
|
12/1/15
|
|
370,000
|
|
390,350
|
|
Ryerson Holding Corp., Senior Discount Notes
|
|
0.000
|
%
|
2/1/15
|
|
280,000
|
|
137,200
|
(a)
|
Vale Overseas Ltd., Notes
|
|
8.250
|
%
|
1/17/34
|
|
62,000
|
|
73,081
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements.
10
|
|
Western Asset High Income
Fund Inc. 2010 Semi-Annual Report
|
|
|
Schedule
of investments (unaudited) (contd)
June 30,
2010
Western
Asset High Income Fund Inc.
Security
|
|
Rate
|
|
Maturity
Date
|
|
Face
Amount
|
|
Value
|
|
Metals & Mining continued
|
|
|
|
|
|
|
|
|
|
Vale Overseas Ltd., Notes
|
|
6.875
|
%
|
11/21/36
|
|
100,000
|
|
$
|
104,501
|
|
Vedanta Resources PLC, Senior Notes
|
|
8.750
|
%
|
1/15/14
|
|
100,000
|
|
105,500
|
(a)
|
Total Metals & Mining
|
|
|
|
|
|
|
|
1,014,682
|
|
Paper & Forest Products 2.9%
|
|
|
|
|
|
|
|
|
|
Abitibi-Consolidated Co. of Canada, Senior Secured Notes
|
|
13.750
|
%
|
4/1/11
|
|
105,491
|
|
104,228
|
(a)(b)
|
Appleton Papers Inc., Senior Secured Notes
|
|
11.250
|
%
|
12/15/15
|
|
346,000
|
|
295,830
|
(a)
|
Georgia-Pacific LLC, Senior Notes
|
|
8.250
|
%
|
5/1/16
|
|
170,000
|
|
182,113
|
(a)
|
NewPage Corp., Senior Secured Notes
|
|
11.375
|
%
|
12/31/14
|
|
220,000
|
|
200,750
|
|
Smurfit Capital Funding PLC, Debentures
|
|
7.500
|
%
|
11/20/25
|
|
200,000
|
|
178,500
|
|
Verso Paper Holdings LLC, Senior Subordinated Notes
|
|
11.375
|
%
|
8/1/16
|
|
80,000
|
|
68,600
|
|
Verso Paper Holdings LLC, Senior Secured Notes
|
|
11.500
|
%
|
7/1/14
|
|
225,000
|
|
243,562
|
|
Verso Paper Holdings LLC, Senior Secured Notes
|
|
9.125
|
%
|
8/1/14
|
|
80,000
|
|
76,800
|
|
Total Paper & Forest Products
|
|
|
|
|
|
|
|
1,350,383
|
|
Total Materials
|
|
|
|
|
|
|
|
3,931,386
|
|
Telecommunication Services
10.1%
|
|
|
|
|
|
|
|
|
|
Diversified Telecommunication Services 5.7%
|
|
|
|
|
|
|
|
|
|
Axtel SAB de CV, Senior Notes
|
|
7.625
|
%
|
2/1/17
|
|
250,000
|
|
222,500
|
(a)
|
Axtel SAB de CV, Senior Notes
|
|
9.000
|
%
|
9/22/19
|
|
8,000
|
|
7,160
|
(a)
|
CC Holdings GS V LLC, Senior Secured Notes
|
|
7.750
|
%
|
5/1/17
|
|
90,000
|
|
95,625
|
(a)
|
Cincinnati Bell Telephone Co., Senior Debentures
|
|
6.300
|
%
|
12/1/28
|
|
25,000
|
|
17,375
|
|
Hawaiian Telcom Communications Inc., Senior Subordinated Notes
|
|
12.500
|
%
|
5/1/15
|
|
110,000
|
|
11
|
(b)(c)
|
Inmarsat Finance PLC, Senior Notes
|
|
7.375
|
%
|
12/1/17
|
|
200,000
|
|
205,500
|
(a)
|
Intelsat Intermediate Holding Co., Ltd., Senior Discount Notes
|
|
9.500
|
%
|
2/1/15
|
|
40,000
|
|
40,900
|
|
Intelsat Jackson Holdings Ltd., Senior Notes
|
|
9.500
|
%
|
6/15/16
|
|
325,000
|
|
342,875
|
|
Intelsat Jackson Holdings Ltd., Senior Notes
|
|
11.250
|
%
|
6/15/16
|
|
90,000
|
|
96,300
|
|
Intelsat Jackson Holdings Ltd., Senior Notes
|
|
11.500
|
%
|
6/15/16
|
|
430,000
|
|
457,950
|
|
Level 3 Financing Inc., Senior Notes
|
|
9.250
|
%
|
11/1/14
|
|
80,000
|
|
73,000
|
|
Level 3 Financing Inc., Senior Notes
|
|
10.000
|
%
|
2/1/18
|
|
100,000
|
|
89,000
|
(a)
|
Qwest Communications International Inc., Senior Notes
|
|
8.000
|
%
|
10/1/15
|
|
20,000
|
|
20,650
|
(a)
|
TW Telecom Holdings Inc., Senior Notes
|
|
8.000
|
%
|
3/1/18
|
|
170,000
|
|
174,250
|
(a)
|
UBS Luxembourg SA for OJSC Vimpel Communications, Loan Participation
Notes
|
|
8.250
|
%
|
5/23/16
|
|
130,000
|
|
134,225
|
(a)
|
Valor Telecommunications Enterprises LLC/Finance Corp., Senior Notes
|
|
7.750
|
%
|
2/15/15
|
|
100,000
|
|
102,060
|
|
Vimpel Communications, Loan Participation Notes
|
|
8.375
|
%
|
4/30/13
|
|
100,000
|
|
106,300
|
(a)
|
Wind Acquisition Holdings Finance SpA, Senior Notes
|
|
12.250
|
%
|
7/15/17
|
|
280,000
|
|
256,200
|
(a)(e)
|
Windstream Corp., Senior Notes
|
|
8.625
|
%
|
8/1/16
|
|
240,000
|
|
243,000
|
|
Total Diversified Telecommunication Services
|
|
|
|
|
|
|
|
2,684,881
|
|
Wireless Telecommunication Services 4.4%
|
|
|
|
|
|
|
|
|
|
Cricket Communications Inc., Senior Secured Notes
|
|
7.750
|
%
|
5/15/16
|
|
200,000
|
|
205,000
|
|
Sprint Capital Corp., Global Notes
|
|
6.900
|
%
|
5/1/19
|
|
160,000
|
|
145,600
|
|
Sprint Capital Corp., Senior Notes
|
|
8.375
|
%
|
3/15/12
|
|
385,000
|
|
405,694
|
|
Sprint Capital Corp., Senior Notes
|
|
6.875
|
%
|
11/15/28
|
|
150,000
|
|
125,250
|
|
Sprint Capital Corp., Senior Notes
|
|
8.750
|
%
|
3/15/32
|
|
610,000
|
|
585,600
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements.
|
|
Western
Asset High Income Fund Inc. 2010 Semi-Annual Report
|
|
11
|
Western
Asset High Income Fund Inc.
Security
|
|
Rate
|
|
Maturity
Date
|
|
Face
Amount
|
|
Value
|
|
Wireless Telecommunication Services continued
|
|
|
|
|
|
|
|
|
|
True Move Co., Ltd., Notes
|
|
10.750
|
%
|
12/16/13
|
|
595,000
|
|
$ 587,562
|
(a)
|
Total Wireless Telecommunication Services
|
|
|
|
|
|
|
|
2,054,706
|
|
Total Telecommunication Services
|
|
|
|
|
|
|
|
4,739,587
|
|
Utilities 5.0%
|
|
|
|
|
|
|
|
|
|
Electric Utilities 1.5%
|
|
|
|
|
|
|
|
|
|
EEB International Ltd., Senior Bonds
|
|
8.750
|
%
|
10/31/14
|
|
100,000
|
|
110,750
|
(a)
|
Reliant Energy Mid-Atlantic Power Holdings LLC, Senior Notes
|
|
9.681
|
%
|
7/2/26
|
|
230,000
|
|
239,200
|
|
Texas Competitive Electric Holdings Co. LLC, Senior Notes
|
|
10.250
|
%
|
11/1/15
|
|
545,000
|
|
362,425
|
|
Total Electric Utilities
|
|
|
|
|
|
|
|
712,375
|
|
Gas Utilities 0.3%
|
|
|
|
|
|
|
|
|
|
Suburban Propane Partners LP/Suburban Energy Finance Corp., Senior
Notes
|
|
7.375
|
%
|
3/15/20
|
|
120,000
|
|
122,100
|
|
Independent Power Producers & Energy Traders
3.2%
|
|
|
|
|
|
|
|
|
|
AES Corp., Senior Notes
|
|
9.375
|
%
|
9/15/10
|
|
100,000
|
|
101,000
|
|
Colbun SA, Senior Notes
|
|
6.000
|
%
|
1/21/20
|
|
100,000
|
|
104,782
|
(a)
|
Dynegy Holdings Inc., Senior Debentures
|
|
7.625
|
%
|
10/15/26
|
|
180,000
|
|
111,600
|
|
Dynegy Inc., Bonds
|
|
7.670
|
%
|
11/8/16
|
|
160,000
|
|
140,800
|
|
Edison Mission Energy, Senior Notes
|
|
7.750
|
%
|
6/15/16
|
|
110,000
|
|
77,000
|
|
Edison Mission Energy, Senior Notes
|
|
7.200
|
%
|
5/15/19
|
|
120,000
|
|
74,400
|
|
Edison Mission Energy, Senior Notes
|
|
7.625
|
%
|
5/15/27
|
|
115,000
|
|
65,837
|
|
Energy Future Holdings Corp., Senior Notes
|
|
10.875
|
%
|
11/1/17
|
|
330,000
|
|
245,850
|
|
Energy Future Holdings Corp., Senior Notes
|
|
11.250
|
%
|
11/1/17
|
|
79,182
|
|
51,865
|
(e)
|
Mirant Americas Generation LLC, Senior Notes
|
|
9.125
|
%
|
5/1/31
|
|
290,000
|
|
268,250
|
|
Mirant Mid Atlantic LLC, Pass-Through Certificates
|
|
10.060
|
%
|
12/30/28
|
|
48,715
|
|
52,247
|
|
NRG Energy Inc., Senior Notes
|
|
7.250
|
%
|
2/1/14
|
|
190,000
|
|
193,087
|
|
NRG Energy Inc., Senior Notes
|
|
7.375
|
%
|
1/15/17
|
|
30,000
|
|
29,775
|
|
Total Independent Power Producers & Energy
Traders
|
|
|
|
|
|
|
|
1,516,493
|
|
Total Utilities
|
|
|
|
|
|
|
|
2,350,968
|
|
Total Corporate Bonds & Notes (Cost
$40,949,597)
|
|
|
|
|
|
|
|
41,023,507
|
|
Collateralized
Senior Loans 1.3%
|
|
|
|
|
|
|
|
|
|
Consumer
Discretionary 0.4%
|
|
|
|
|
|
|
|
|
|
Auto Components 0.4%
|
|
|
|
|
|
|
|
|
|
Allison Transmission Inc., Term Loan B
|
3.050 - 3.110
|
%
|
8/7/14
|
|
214,125
|
|
195,590
|
(h)
|
Energy
0.7%
|
|
|
|
|
|
|
|
|
|
Energy Equipment & Services 0.5%
|
|
|
|
|
|
|
|
|
|
Turbo Beta Ltd., Term Loan
|
|
14.500
|
%
|
3/15/18
|
|
252,955
|
|
219,438
|
(c)(h)
|
Oil, Gas & Consumable Fuels 0.2%
|
|
|
|
|
|
|
|
|
|
Ashmore Energy International, Synthetic Revolving Credit Facility
|
|
3.000
|
%
|
3/30/12
|
|
16,243
|
|
15,153
|
(h)
|
Ashmore Energy International, Term Loan
|
|
3.533
|
%
|
3/30/14
|
|
107,867
|
|
100,631
|
(h)
|
Total Oil, Gas & Consumable Fuels
|
|
|
|
|
|
|
|
115,784
|
|
Total Energy
|
|
|
|
|
|
|
|
335,222
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements.
12
|
|
Western Asset High Income
Fund Inc. 2010 Semi-Annual Report
|
|
|
Schedule
of investments (unaudited) (contd)
June
30, 2010
Western
Asset High Income Fund Inc.
Security
|
|
Rate
|
|
Maturity
Date
|
|
Face
Amount
|
|
Value
|
|
Utilities
0.2%
|
|
|
|
|
|
|
|
|
|
Electric Utilities 0.2%
|
|
|
|
|
|
|
|
|
|
Texas Competitive Electric Holdings Co. LLC, Term Loan B3
|
3.850 - 4.033
|
%
|
10/10/14
|
|
99,489
|
|
$ 73,792
|
(h)
|
Total Collateralized Senior Loans (Cost
$664,407)
|
|
|
|
|
|
|
|
604,604
|
|
Convertible
Bonds & Notes 0.6%
|
|
|
|
|
|
|
|
|
|
Industrials
0.6%
|
|
|
|
|
|
|
|
|
|
Marine 0.6%
|
|
|
|
|
|
|
|
|
|
Horizon Lines Inc., Senior Notes (Cost $287,666)
|
|
4.250
|
%
|
8/15/12
|
|
330,000
|
|
273,900
|
|
Sovereign
Bonds 3.7%
|
|
|
|
|
|
|
|
|
|
Argentina 0.8%
|
|
|
|
|
|
|
|
|
|
Republic of Argentina, Senior Bonds
|
|
7.000
|
%
|
9/12/13
|
|
409,000
|
|
358,897
|
|
Republic of Argentina, GDP Linked Securities, Senior Bonds
|
|
1.330
|
%
|
12/15/35
|
|
65,000
|
EUR
|
5,119
|
(d)
|
Total Argentina
|
|
|
|
|
|
|
|
364,016
|
|
Brazil 0.6%
|
|
|
|
|
|
|
|
|
|
Brazil Nota do Tesouro
Nacional, Notes
|
|
10.000
|
%
|
1/1/12
|
|
512,000
|
BRL
|
262,014
|
|
Brazil Nota do Tesouro
Nacional, Notes
|
|
10.000
|
%
|
1/1/17
|
|
45,000
|
BRL
|
21,323
|
|
Total Brazil
|
|
|
|
|
|
|
|
283,337
|
|
Colombia 0.2%
|
|
|
|
|
|
|
|
|
|
Republic of Colombia, Senior Notes
|
|
7.375
|
%
|
3/18/19
|
|
100,000
|
|
117,500
|
|
Indonesia 0.4%
|
|
|
|
|
|
|
|
|
|
Republic of Indonesia, Senior Bonds
|
|
10.250
|
%
|
7/15/22
|
|
539,000,000
|
IDR
|
67,361
|
|
Republic of Indonesia, Senior Bonds
|
|
11.000
|
%
|
9/15/25
|
|
297,000,000
|
IDR
|
38,041
|
|
Republic of Indonesia, Senior Bonds
|
|
10.250
|
%
|
7/15/27
|
|
378,000,000
|
IDR
|
45,000
|
|
Republic of Indonesia, Senior Bonds
|
|
9.750
|
%
|
5/15/37
|
|
408,000,000
|
IDR
|
44,582
|
|
Total Indonesia
|
|
|
|
|
|
|
|
194,984
|
|
Turkey 1.0%
|
|
|
|
|
|
|
|
|
|
Republic of Turkey, Senior Notes
|
|
7.000
|
%
|
6/5/20
|
|
12,000
|
|
13,320
|
|
Republic of Turkey, Senior Notes
|
|
6.875
|
%
|
3/17/36
|
|
417,000
|
|
432,637
|
|
Total Turkey
|
|
|
|
|
|
|
|
445,957
|
|
Venezuela 0.7%
|
|
|
|
|
|
|
|
|
|
Bolivarian Republic of Venezuela, Global Senior Bonds
|
|
8.500
|
%
|
10/8/14
|
|
12,000
|
|
9,270
|
|
Bolivarian Republic of Venezuela
|
|
5.750
|
%
|
2/26/16
|
|
386,000
|
|
243,180
|
(a)
|
Bolivarian Republic of Venezuela
|
|
7.650
|
%
|
4/21/25
|
|
16,000
|
|
8,680
|
|
Bolivarian Republic of Venezuela, Collective Action Securities,
Global Senior Bonds
|
|
9.375
|
%
|
1/13/34
|
|
53,000
|
|
33,125
|
|
Bolivarian Republic of Venezuela, Collective Action Securities, Notes
|
|
10.750
|
%
|
9/19/13
|
|
28,000
|
|
24,500
|
|
Total Venezuela
|
|
|
|
|
|
|
|
318,755
|
|
Total Sovereign Bonds (Cost $1,916,582)
|
|
|
|
|
|
|
|
1,724,549
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
|
Common
Stocks 1.4%
|
|
|
|
|
|
|
|
|
|
Consumer
Discretionary 1.1%
|
|
|
|
|
|
|
|
|
|
Media 1.1%
|
|
|
|
|
|
|
|
|
|
Charter Communications Inc.
|
|
|
|
|
|
10,703
|
|
377,816
|
*
(g)
|
Charter Communications Inc., Class A Shares
|
|
|
|
|
|
3,836
|
|
135,411
|
*
|
SuperMedia Inc.
|
|
|
|
|
|
237
|
|
4,329
|
*
|
Total Consumer Discretionary
|
|
|
|
|
|
|
|
517,556
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements.
|
|
Western
Asset High Income Fund Inc. 2010 Semi-Annual Report
|
|
13
|
Western
Asset High Income Fund Inc.
Security
|
|
|
|
|
|
Shares
|
|
Value
|
|
Energy 0.1%
|
|
|
|
|
|
|
|
|
|
Oil, Gas & Consumable Fuels 0.1%
|
|
|
|
|
|
|
|
|
|
SemGroup Corp., Class A Shares
|
|
|
|
|
|
867
|
|
$ 22,754
|
*
(g)
|
Industrials 0.0%
|
|
|
|
|
|
|
|
|
|
Building Products 0.0%
|
|
|
|
|
|
|
|
|
|
Nortek Inc.
|
|
|
|
|
|
229
|
|
9,624
|
*
|
Materials 0.2%
|
|
|
|
|
|
|
|
|
|
Chemicals 0.2%
|
|
|
|
|
|
|
|
|
|
Applied Extrusion Technologies Inc., Class B Shares
|
|
|
|
|
|
1,091
|
|
2,455
|
*
(c)(g)
|
Georgia Gulf Corp.
|
|
|
|
|
|
6,273
|
|
83,682
|
*
|
Total Materials
|
|
|
|
|
|
|
|
86,137
|
|
Total Common Stocks (Cost $877,180)
|
|
|
|
|
|
|
|
636,071
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rate
|
|
|
|
Shares
|
|
|
|
Convertible Preferred Stocks
0.9%
|
|
|
|
|
|
|
|
|
|
Financials 0.9%
|
|
|
|
|
|
|
|
|
|
Diversified Financial Services
0.9%
|
|
|
|
|
|
|
|
|
|
Bank of America Corp.
|
|
7.250
|
%
|
|
|
290
|
|
263,320
|
|
Citigroup Inc.
|
|
7.500
|
%
|
|
|
1,352
|
|
152,776
|
|
Total Convertible Preferred
Stocks (Cost $422,035)
|
|
|
|
|
|
|
|
416,096
|
|
Preferred Stocks 1.9%
|
|
|
|
|
|
|
|
|
|
Financials 1.9%
|
|
|
|
|
|
|
|
|
|
Commercial Banks 0.3%
|
|
|
|
|
|
|
|
|
|
Santander Finance Preferred SA Unipersonal
|
|
10.500
|
%
|
|
|
5,575
|
|
148,630
|
|
Diversified Financial Services
1.6%
|
|
|
|
|
|
|
|
|
|
Citigroup Capital XII
|
|
8.500
|
%
|
|
|
14,100
|
|
353,381
|
(d)
|
Preferred Plus, Trust, Series FRD-1
|
|
7.400
|
%
|
|
|
3,190
|
|
70,818
|
|
Saturns, Series F 2003-5
|
|
8.125
|
%
|
|
|
14,030
|
|
336,720
|
|
Total Diversified Financial
Services
|
|
|
|
|
|
|
|
760,919
|
|
Total Preferred Stocks (Cost
$799,973)
|
|
|
|
|
|
|
|
909,549
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expiration
Date
|
|
Warrants
|
|
|
|
Warrants 0.0%
|
|
|
|
|
|
|
|
|
|
Buffets Restaurant Holdings
|
|
|
|
4/28/14
|
|
169
|
|
2
|
*
(c)(g)
|
Charter Communications Inc.
|
|
|
|
11/30/14
|
|
209
|
|
836
|
*
|
Nortek Inc.
|
|
|
|
12/7/14
|
|
340
|
|
3,908
|
*
|
SemGroup Corp.
|
|
|
|
11/30/14
|
|
912
|
|
5,018
|
*
|
Turbo Beta Ltd.
|
|
|
|
11/1/14
|
|
1
|
|
0
|
*
(c)(g)
|
Total Warrants (Cost $4,751)
|
|
|
|
|
|
|
|
9,764
|
|
Total Investments before
Short-Term Investments (Cost $45,922,191)
|
|
|
|
|
45,598,040
|
|
See Notes to Financial Statements.
14
|
|
Western Asset High Income
Fund Inc. 2010 Semi-Annual Report
|
|
|
Schedule
of investments (unaudited) (contd)
June
30, 2010
Western
Asset High Income Fund Inc.
Security
|
|
Rate
|
|
Maturity
Date
|
|
Face
Amount
|
|
Value
|
|
Short-Term Investments 1.2%
|
|
|
|
|
|
|
|
|
|
U.S. Government Agency 0.1%
|
|
|
|
|
|
|
|
|
|
Federal National Mortgage Association (FNMA), Discount Notes (Cost
$23,994)
|
|
0.190
|
%
|
8/19/10
|
|
24,000
|
|
$
23,994
|
(i)(j)
|
Repurchase Agreement 1.1%
|
|
|
|
|
|
|
|
|
|
Morgan Stanley tri-party repurchase agreement dated 6/30/10; Proceeds
at maturity $547,000; (Fully collateralized by U.S. government agency
obligations, 0.500% due 10/29/10; Market value $561,211) (Cost $547,000)
|
|
0.020
|
%
|
7/1/10
|
|
547,000
|
|
547,000
|
|
Total Short-Term Investments (Cost $570,994)
|
|
|
|
|
|
|
|
570,994
|
|
Total Investments 98.7% (Cost $46,493,185#)
|
|
|
|
|
|
|
|
46,169,034
|
|
Other Assets in Excess of Liabilities 1.3%
|
|
|
|
|
|
|
|
621,592
|
|
Total Net Assets 100.0%
|
|
|
|
|
|
|
|
$46,790,626
|
|
|
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)
|
The
coupon payment on these securities is currently in default as of June 30,
2010.
|
(c)
|
Illiquid
security.
|
(d)
|
Variable
rate security. Interest rate disclosed is that which is in effect at June 30,
2010.
|
(e)
|
Payment-in-kind
security for which part of the income earned may be paid as additional
principal.
|
(f)
|
Security
has no maturity date. The date shown represents the next call date.
|
(g)
|
Security
is valued in good faith at fair value in accordance with procedures approved
by the Board of Directors (See Note 1).
|
(h)
|
Interest
rates disclosed represent the effective rates on collateralized senior loans.
Ranges in interest rates are attributable to multiple contracts under the
same loan.
|
(i)
|
Rate
shown represents yield-to-maturity.
|
(j)
|
All
or a portion of this security is held at the broker as collateral for open
futures contracts.
|
#
|
Aggregate
cost for federal income tax purposes is substantially the same.
|
|
Abbreviations
used in this schedule:
|
|
|
|
BRL
Brazilian Real
|
|
EUR
Euro
|
|
GDP
Gross Domestic Product
|
|
IDR
Indonesian Rupiah
|
|
OJSC
Open Joint Stock Company
|
|
RUB
Russian Ruble
|
See Notes to Financial Statements.
|
|
Western
Asset High Income Fund Inc. 2010 Semi-Annual Report
|
|
15
|
Statement
of assets and liabilities (unaudited)
June 30,
2010
Assets:
|
|
|
|
Investments, at value (Cost $46,493,185)
|
|
$ 46,169,034
|
|
Interest and dividends receivable
|
|
937,458
|
|
Receivable for securities sold
|
|
196,949
|
|
Receivable from broker variation margin on open
futures contracts
|
|
4,578
|
|
Unrealized appreciation on forward currency
contracts
|
|
3,228
|
|
Prepaid expenses
|
|
15,315
|
|
Total Assets
|
|
47,326,562
|
|
|
|
|
|
Liabilities:
|
|
|
|
Payable for securities purchased
|
|
295,491
|
|
Foreign currency overdraft, at value (Cost
$102,673)
|
|
101,320
|
|
Investment management fee payable
|
|
26,810
|
|
Directors fees payable
|
|
2,120
|
|
Accrued foreign capital gains tax
|
|
759
|
|
Unrealized depreciation on forward currency
contracts
|
|
142
|
|
Due to custodian
|
|
58
|
|
Accrued expenses
|
|
109,236
|
|
Total Liabilities
|
|
535,936
|
|
Total Net Assets
|
|
$ 46,790,626
|
|
|
|
|
|
Net Assets:
|
|
|
|
Par value ($0.001 par value; 5,186,530 shares
issued and outstanding; 100,000,000 shares authorized)
|
|
$
5,187
|
|
Paid-in capital in excess of par value
|
|
57,669,533
|
|
Undistributed net investment income
|
|
669,694
|
|
Accumulated net realized loss on investments,
futures contracts and foreign currency transactions
|
|
(11,221,245)
|
|
Net unrealized depreciation on investments,
futures contracts and foreign currencies
|
|
(332,543)
|
|
Total Net Assets
|
|
$ 46,790,626
|
|
|
|
|
|
Shares Outstanding
|
|
5,186,530
|
|
|
|
|
|
Net Asset Value
|
|
$9.02
|
|
Net
of accrued foreign capital gains tax of $759.
See Notes to Financial Statements.
16
|
|
Western Asset High Income
Fund Inc. 2010 Semi-Annual Report
|
|
|
Statement
of operations (unaudited)
For
the Six Months Ended June 30, 2010
Investment Income:
|
|
|
|
Interest
|
|
$ 2,310,939
|
|
Dividends
|
|
59,367
|
|
Less: Foreign taxes withheld
|
|
(1,752)
|
|
Total Investment Income
|
|
2,368,554
|
|
|
|
|
|
Expenses:
|
|
|
|
Investment management fee (Note 2)
|
|
164,638
|
|
Audit and tax
|
|
34,265
|
|
Shareholder reports
|
|
26,347
|
|
Transfer agent fees
|
|
16,995
|
|
Legal fees
|
|
15,146
|
|
Stock exchange listing fees
|
|
10,443
|
|
Directors fees
|
|
5,638
|
|
Custody fees
|
|
3,208
|
|
Insurance
|
|
885
|
|
Miscellaneous expenses
|
|
3,737
|
|
Total Expenses
|
|
281,302
|
|
Less: Compensating balance arrangements (Note 1)
|
|
(187)
|
|
Net Expenses
|
|
281,115
|
|
Net Investment Income
|
|
2,087,439
|
|
|
|
|
|
Realized
and Unrealized Gain (Loss) on Investments, Futures Contracts and Foreign
Currency Transactions (Notes 1, 3 and 4):
|
|
|
|
Net Realized Gain From:
|
|
|
|
Investment transactions
|
|
596,615
|
|
Futures contracts
|
|
12,141
|
|
Foreign currency transactions
|
|
16,857
|
|
Net Realized Gain
|
|
625,613
|
|
Change in Net Unrealized Appreciation/Depreciation
From:
|
|
|
|
Investments
|
|
(652,674)
|
|
Futures contracts
|
|
(11,834)
|
|
Foreign currencies
|
|
2,674
|
|
Change in Net Unrealized
Appreciation/Depreciation
|
|
(661,834)
|
|
Net Loss on Investments,
Futures Contracts and Foreign Currency Transactions
|
|
(36,221)
|
|
Increase in Net Assets from
Operations
|
|
$ 2,051,218
|
|
Net
of change of $759 in accrued foreign capital gains tax.
See Notes to Financial Statements.
|
|
Western
Asset High Income Fund Inc. 2010 Semi-Annual Report
|
|
17
|
Statements
of changes in net assets
For the Six Months Ended
June 30, 2010 (unaudited)
and the Year Ended
December 31, 2009
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
Operations:
|
|
|
|
|
|
Net investment income
|
|
$ 2,087,439
|
|
$ 4,663,916
|
|
Net realized gain (loss)
|
|
625,613
|
|
(6,953,805)
|
|
Change in net unrealized appreciation/depreciation
|
|
(661,834)
|
|
20,557,415
|
|
Increase in Net Assets From
Operations
|
|
2,051,218
|
|
18,267,526
|
|
|
|
|
|
|
|
Distributions to Shareholders
From (Note 1):
|
|
|
|
|
|
Net investment income
|
|
(2,329,836)
|
|
(4,512,951)
|
|
Decrease in Net Assets From
Distributions to Shareholders
|
|
(2,329,836)
|
|
(4,512,951)
|
|
|
|
|
|
|
|
Fund Share Transactions:
|
|
|
|
|
|
Reinvestment of distributions (15,431 and 26,504
shares reissued, respectively)
|
|
142,664
|
|
204,982
|
|
Increase in Net Assets From
Fund Share Transactions
|
|
142,664
|
|
204,982
|
|
Increase (Decrease) in Net
Assets
|
|
(135,954)
|
|
13,959,557
|
|
|
|
|
|
|
|
Net Assets:
|
|
|
|
|
|
Beginning of period
|
|
46,926,580
|
|
32,967,023
|
|
End of period*
|
|
$46,790,626
|
|
$46,926,580
|
|
* Includes undistributed net investment income of:
|
|
$669,694
|
|
$912,091
|
|
See Notes to Financial Statements.
18
|
|
Western Asset High Income
Fund Inc. 2010 Semi-Annual Report
|
|
|
Financial
highlights
For a share of capital stock outstanding throughout each year ended
December 31, unless otherwise noted:
|
|
2010
1
|
|
2009
|
|
2008
|
|
2007
|
|
2006
|
|
2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, beginning of
period
|
|
$9.07
|
|
$6.41
|
|
$10.19
|
|
$10.88
|
|
$10.50
|
|
$10.72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
0.40
|
|
0.90
|
|
0.86
|
|
0.79
|
|
0.72
|
|
0.70
|
|
Net realized and unrealized gain (loss)
|
|
(0.00)
|
2
|
2.64
|
|
(3.81)
|
|
(0.74)
|
|
0.35
|
|
(0.21)
|
|
Total income (loss) from
operations
|
|
0.40
|
|
3.54
|
|
(2.95)
|
|
0.05
|
|
1.07
|
|
0.49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less distributions from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
(0.45)
|
|
(0.88)
|
|
(0.83)
|
|
(0.74)
|
|
(0.69)
|
|
(0.71)
|
|
Total distributions
|
|
(0.45)
|
|
(0.88)
|
|
(0.83)
|
|
(0.74)
|
|
(0.69)
|
|
(0.71)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
|
$9.02
|
|
$9.07
|
|
$6.41
|
|
$10.19
|
|
$10.88
|
|
$10.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market price, end of period
|
|
$9.88
|
|
$9.23
|
|
$5.96
|
|
$8.99
|
|
$9.86
|
|
$8.99
|
|
Total return, based on NAV
3,4
|
|
4.45
|
%
|
58.66
|
%
|
(30.63)
|
%
|
0.37
|
%
|
10.57
|
%
5
|
4.80
|
%
|
Total return, based on Market
Price
4
|
|
12.36
|
%
|
73.50
|
%
|
(26.23)
|
%
|
(1.64)
|
%
|
17.97
|
%
|
(5.29)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets, end of period
(000s)
|
|
$46,791
|
|
$46,927
|
|
$32,967
|
|
$52,400
|
|
$55,920
|
|
$53,968
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios to average net assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross expenses
|
|
1.20
|
%
6
|
1.31
|
%
|
1.22
|
%
|
1.09
|
%
|
1.21
|
%
|
1.30
|
%
|
Net expenses
7
|
|
1.20
|
6
|
1.31
|
|
1.22
|
|
1.09
|
|
1.21
|
8
|
1.30
|
|
Net investment income
|
|
8.88
|
6
|
11.76
|
|
9.61
|
|
7.40
|
|
6.81
|
|
6.66
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio turnover rate
|
|
49
|
%
|
78
|
%
|
46
|
%
|
78
|
%
|
89
|
%
|
46
|
%
|
1
|
For
the six months ended June 30, 2010 (unaudited).
|
2
|
Amount
represents less than $0.01 per share.
|
3
|
Performance
figures may reflect fee waivers and/or expense reimbursements. In the absence
of fee waivers and/or expense reimbursements, the total return would have
been lower. Past performance is no guarantee of future results. Total returns
for periods of less than one year are not annualized.
|
4
|
The
total return calculation assumes that distributions are reinvested in
accordance with the Funds dividend reinvestment plan. Past performance is no
guarantee of future results. Total returns for periods of less than one year
are not annualized.
|
5
|
The
prior investment manager fully reimbursed the Fund for losses incurred
resulting from an investment transaction error. Without this reimbursement,
total return would not have changed.
|
6
|
Annualized.
|
7
|
The
impact of compensating balance arrangements, if any, was less than 0.01%.
|
8
|
Reflects
fee waivers and/or expense reimbursements.
|
See Notes to Financial Statements.
|
|
Western
Asset High Income Fund Inc. 2010 Semi-Annual Report
|
|
19
|
Notes
to financial statements (unaudited)
1.
Organization and significant accounting policies
Western
Asset High Income Fund Inc. (the Fund) was incorporated in Maryland and is
registered as a diversified, closed-end management investment company under the
Investment Company Act of 1940, as amended (the 1940 Act). The Fund seeks to
maintain a high level of current income by investing at least 80% of its net
assets, plus any borrowings for investment purposes, in high-yield debt
securities issued by U.S. and foreign corporations and foreign governments. As
a secondary objective, the Fund seeks capital appreciation.
The
following are significant accounting policies consistently followed by the Fund
and are in conformity with U.S. generally accepted accounting principles (GAAP).
Estimates and assumptions are required to be made regarding assets, liabilities
and changes in net assets resulting from operations when financial statements
are prepared. Changes in the economic environment, financial markets and any
other parameters used in determining these estimates could cause actual results
to differ. Subsequent events have been evaluated through the date the financial
statements were issued.
(a) Investment
valuation.
Debt securities are valued at the mean between the
last quoted bid and asked prices provided by an independent pricing service
that are based on transactions in debt obligations, quotations from bond
dealers, market transactions in comparable securities and various other
relationships between securities. Publicly traded foreign government debt
securities are typically traded internationally in the over-the-counter market,
and are valued at the mean between the last quoted bid and asked prices as of
the close of business of that market. 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 prices are not readily
available, or are determined not to reflect fair value, such as when the value
of a security has been significantly affected by events after the close of the
exchange or market on which the security is principally traded, but before the
Fund calculates its net asset value, the Fund values these securities at fair
value as determined in accordance with procedures approved by the Funds Board
of Directors. Short-term obligations with maturities of 60 days or less are
valued at amortized cost, which approximates fair value.
The
Fund has adopted Financial Accounting Standards Board Codification Topic 820 (ASC
Topic 820). ASC Topic 820 establishes a single definition of fair value,
creates a three-tier hierarchy as a framework for measuring fair value based on
inputs used to value the Funds investments, and requires additional disclosure
about fair value. The hierarchy of inputs is summarized below.
·
|
Level
1 quoted prices in active markets for identical investments
|
|
|
·
|
Level
2 other significant observable inputs (including quoted prices for similar
investments, interest rates, prepayment speeds, credit risk, etc.)
|
|
|
·
|
Level
3 significant unobservable inputs (including the Funds own assumptions in
determining the fair value of investments)
|
The
inputs or methodology used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities.
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 the
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
convert future amounts of cash flow to a single present amount.
20
|
|
Western Asset High Income
Fund Inc. 2010 Semi-Annual Report
|
|
|
Notes
to financial statements (unaudited) (contd)
The
following is a summary of the inputs used in valuing the Funds assets carried
at fair value:
Description
|
|
Quoted
Prices
(Level 1)
|
|
Other
Significant
Observable Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total
|
|
Long-term investments:
|
|
|
|
|
|
|
|
|
|
Corporate bonds & notes
|
|
|
|
|
|
|
$41,023,507
|
|
|
|
$ 0
|
*
|
|
|
$41,023,507
|
|
|
Collateralized senior loans
|
|
|
|
|
|
|
604,604
|
|
|
|
|
|
|
|
604,604
|
|
|
Convertible bonds & notes
|
|
|
|
|
|
|
273,900
|
|
|
|
|
|
|
|
273,900
|
|
|
Sovereign bonds
|
|
|
|
|
|
|
1,724,549
|
|
|
|
|
|
|
|
1,724,549
|
|
|
Common stocks:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer discretionary
|
|
|
$ 139,740
|
|
|
|
377,816
|
|
|
|
|
|
|
|
517,556
|
|
|
Energy
|
|
|
|
|
|
|
|
|
|
|
22,754
|
|
|
|
22,754
|
|
|
Materials
|
|
|
83,682
|
|
|
|
|
|
|
|
2,455
|
|
|
|
86,137
|
|
|
Other common stocks
|
|
|
9,624
|
|
|
|
|
|
|
|
|
|
|
|
9,624
|
|
|
Convertible preferred stocks
|
|
|
416,096
|
|
|
|
|
|
|
|
|
|
|
|
416,096
|
|
|
Preferred stocks
|
|
|
556,168
|
|
|
|
353,381
|
|
|
|
|
|
|
|
909,549
|
|
|
Warrants
|
|
|
836
|
|
|
|
8,926
|
|
|
|
2
|
|
|
|
9,764
|
|
|
Total long-term investments
|
|
|
$1,206,146
|
|
|
|
$44,366,683
|
|
|
|
$25,211
|
|
|
|
$45,598,040
|
|
|
Short-term investments
|
|
|
|
|
|
|
570,994
|
|
|
|
|
|
|
|
570,994
|
|
|
Total investments
|
|
|
$1,206,146
|
|
|
|
$44,937,677
|
|
|
|
$25,211
|
|
|
|
$46,169,034
|
|
|
Other financial instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Futures contracts
|
|
|
(11,834
|
)
|
|
|
|
|
|
|
|
|
|
|
(11,834
|
)
|
|
Forward foreign currency contracts
|
|
|
|
|
|
|
3,086
|
|
|
|
|
|
|
|
3,086
|
|
|
Total other financial instruments
|
|
|
$ (11,834
|
)
|
|
|
$ 3,086
|
|
|
|
|
|
|
|
$ (8,748
|
)
|
|
Total
|
|
|
$1,194,312
|
|
|
|
$44,940,763
|
|
|
|
$25,211
|
|
|
|
$46,160,286
|
|
|
*
Value is less than $1.
See Schedule of Investments for additional
detailed categorizations.
Following
is a reconciliation of investments in which significant unobservable inputs
(Level 3) were used in determining fair value:
|
|
|
|
|
|
Common
Stocks
|
|
|
|
|
|
|
|
|
|
Investments
In Securities
|
|
Corporate
Bonds &
Notes
|
|
Asset-
Backed
Securities
|
|
Consumer
Discretionary
|
|
Energy
|
|
Materials
|
|
Escrowed
Shares
|
|
Preferred
Stocks
|
|
Warrants
|
|
Total
|
|
Balance as of
December 31, 2009
|
|
$ 273,880
|
|
|
$ 0
|
*
|
|
$ 0
|
*
|
|
$20,804
|
|
|
$2,455
|
|
|
$ 0
|
*
|
|
$ 0
|
*
|
|
$ 4,333
|
|
|
$301,472
|
|
Accrued
premiums/discounts
|
|
27,201
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,201
|
|
Realized gain/ (loss)
1
|
|
(10,295
|
)
|
|
(493,850
|
)
|
|
(22,000
|
)
|
|
|
|
|
|
|
|
|
|
|
(4,880
|
)
|
|
|
|
|
(531,025
|
)
|
Change in unrealized
appreciation (depreciation)
2
|
|
34,703
|
|
|
493,850
|
|
|
22,000
|
|
|
1,950
|
|
|
|
|
|
(0
|
)*
|
|
4,880
|
|
|
4,595
|
|
|
561,978
|
|
Net purchases (sales)
|
|
(325,489
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(325,489
|
)
|
Transfers into Level 3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transfers out of Level 3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8,926
|
)
|
|
(8,926
|
)
|
Balance as of
June 30, 2010
|
|
$ 0
|
*
|
|
|
|
|
|
|
|
$22,754
|
|
|
$2,455
|
|
|
|
|
|
|
|
|
$ 2
|
|
|
$ 25,211
|
|
Net change in unrealized
appreciation (depreciation) for investments in securities still held at
June 30, 2010
2
|
|
|
|
|
|
|
|
|
|
|
$ 1,950
|
|
|
|
|
|
|
|
|
|
|
|
$ 2
|
|
|
$ 1,952
|
|
*
Value is less than $1.
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.
|
|
Western
Asset High Income Fund Inc. 2010 Semi-Annual Report
|
|
21
|
(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, a fund takes possession of an underlying debt obligation
subject to an obligation of the seller to repurchase, and of the fund to
resell, the obligation at an agreed-upon price and time, thereby determining
the yield during a funds holding period. When entering into repurchase
agreements, it is the Funds policy that its custodian or a third party
custodian, acting on the Funds behalf, take possession of the underlying
collateral securities, the market value of which, at all times, at least equals
the principal amount of the repurchase transaction, including accrued interest.
To the extent that any repurchase transaction maturity exceeds one business
day, the value of the collateral is marked to market and measured against the
value of the agreement in an effort to ensure the adequacy of the collateral.
If the counterparty defaults, the Fund generally has the right to use the collateral
to satisfy the terms of the repurchase transaction. However, if the market
value of the collateral declines during the period in which the Fund seeks to
assert its rights or if bankruptcy proceedings are commenced with respect to
the seller of the security, realization of the collateral by the Fund may be
delayed or limited.
(c) Forward
foreign currency contracts.
The Fund may enter into a
forward foreign currency contract to hedge against foreign currency exchange
rate risk on its non-U.S. dollar denominated securities or to facilitate
settlement of a foreign currency denominated portfolio transaction. A forward
foreign currency contract is an agreement between two parties to buy and sell a
currency at a set price with delivery and settlement at a future date. The
contract is marked-to-market daily and the change in value is recorded by the
Fund as an unrealized gain or loss. When a forward foreign currency contract is
closed, through either delivery or offset by entering into another forward
foreign currency contract, the Fund 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.
(d) Futures
contracts.
The Fund may use futures contracts to gain exposure
to, or hedge against, changes in the value of interest rates or foreign
currencies. 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.
(e) Loan
participations.
The Fund may invest in loans arranged through
private negotiation between one or more financial institutions. The Funds
investment in any such loan may be in the form of a participation in or an
assignment of the loan. In connection with purchasing participations, the Fund
generally will have no right to enforce compliance by the borrower with the
terms of the loan agreement related to the loan, or any rights of off-set
against the borrower and the Fund may not benefit directly from any collateral
supporting the loan in which it has purchased the participation.
22
|
|
Western Asset High Income
Fund Inc. 2010 Semi-Annual Report
|
|
|
Notes
to financial statements (unaudited) (contd)
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.
(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 Funds books and the
U.S. dollar equivalent of the amounts actually received or paid. Net unrealized
foreign exchange gains and losses arise from changes in the values of assets
and liabilities, other than investments in securities, on the date of
valuation, resulting from changes in exchange rates.
Foreign
security and currency transactions may involve certain considerations and risks
not typically associated with those of U.S. dollar denominated transactions as
a result of, among other factors, the possibility of lower levels of
governmental supervision and regulation of foreign securities markets and the
possibility of political or economic instability.
(g) Credit
and market risk.
The Fund invests in high-yield and emerging market
instruments that are subject to certain credit and market risks. The yields of
high-yield and emerging market debt obligations reflect, among other things,
perceived credit and market risks. The Funds investment in securities rated
below investment grade typically involve risks not associated with higher rated
securities including, among others, greater risk related to timely and ultimate
payment of interest and principal, greater market price volatility and less
liquid secondary market trading. The consequences of political, social,
economic or diplomatic changes may have disruptive effects on the market prices
of investments held by the Fund. The Funds investment in non-U.S. dollar
denominated securities may also result in foreign currency losses caused by
devaluations and exchange rate fluctuations.
(h) Security
transactions and investment income.
Security transactions are
accounted for on a trade date basis. Interest income, adjusted for amortization
of premium and accretion of discount, is recorded on the accrual basis.
Dividend income is recorded on the ex-dividend date. 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.
(i) Distributions
to shareholders.
Distributions from net investment income for the
Fund, if any, are declared and paid on a monthly basis. Distributions of net
realized gains, if any, are declared at least annually. Distributions are
recorded on the ex-dividend date and are determined in accordance with income
tax regulations, which may differ from GAAP.
(j) Compensating
balance arrangements.
The Fund has an arrangement with its
custodian bank whereby a portion of the custodians fees is paid indirectly by
credits earned on the Funds cash on deposit with the bank. The amount is shown
as a reduction of expenses in the Statement of Operations.
|
|
Western
Asset High Income Fund Inc. 2010 Semi-Annual Report
|
|
23
|
(k) Federal
and other taxes.
It is the Funds policy to comply with the federal
income and excise tax requirements of the Internal Revenue Code of 1986 (the Code),
as amended, applicable to regulated investment companies. Accordingly, the Fund
intends to distribute its taxable income and net realized gains, if any, to
shareholders in accordance with timing requirements imposed by the Code.
Therefore, no federal income tax provision is required in the Funds financial
statements.
Management
has analyzed the Funds tax positions taken on federal income tax returns for
all open tax years and has concluded that as of June 30, 2010, no
provision for income tax is required in the Funds financial statements. The
Funds federal and state income and federal excise tax returns for tax years
for which the applicable statutes of limitations have not expired are subject
to examination by Internal Revenue Service and state departments of revenue.
Under
the applicable foreign tax laws, a withholding tax may be imposed on interest,
dividends and capital gains at various rates. Realized gains upon disposition
of Indonesian securities held by the Fund are subject to capital gains tax in
that country. As of June 30, 2010, there were $759 of capital gains tax
liabilities accrued on unrealized gains.
(l) 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 Funds investment manager.
Western Asset Management Company (Western Asset), Western Asset Management
Company Pte. Ltd. in Singapore (Western Singapore) and Western Asset
Management Company Limited in London (Western Asset Limited) are the Funds
subadvisers. LMPFA, Western Asset, Western Singapore and Western Asset Limited
are wholly-owned subsidiaries of Legg Mason, Inc. (Legg Mason).
LMPFA
provides administrative and certain oversight services to the Fund. The Fund
pays LMPFA an investment management fee, calculated daily and paid monthly, at
an annual rate of 0.70% of the Funds average weekly net assets.
LMPFA
has delegated to Western Asset the day-to-day portfolio management of the Fund.
For its services, LMPFA pays Western Asset 70% of the net management fee it
receives from the Fund. Western Singapore and Western Asset Limited provide certain
advisory services to the Fund relating to currency transactions and investments
in non-U.S. dollar denominated securities. Western Singapore and Western Asset
Limited do not receive any compensation from the Fund. Western Asset pays
Western Singapore and Western Asset Limited a subadvisory fee of 0.30% on the
assets managed by each subadviser.
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 June 30, 2010, the aggregate cost of purchases and
proceeds from sales of investments (excluding short-term investments) were as
follows:
Purchases
|
|
|
|
$22,734,673
|
|
|
Sales
|
|
|
|
23,150,126
|
|
|
At
June 30, 2010, the aggregate gross unrealized appreciation and
depreciation of investments for federal income tax purposes were substantially
as follows:
Gross
unrealized appreciation
|
|
$ 2,508,611
|
|
Gross
unrealized depreciation
|
|
(2,832,762
|
)
|
Net
unrealized depreciation
|
|
$
(324,151
|
)
|
24
|
|
Western Asset High Income
Fund Inc. 2010 Semi-Annual Report
|
|
|
Notes
to financial statements (unaudited) (contd)
At
June 30, 2010, the Fund had the following open forward foreign currency
contracts:
Foreign Currency
|
|
Counterparty
|
|
Local
Currency
|
|
Market
Value
|
|
Settlement
Date
|
|
Unrealized
Gain/(Loss)
|
|
Contracts to Sell:
|
|
|
|
|
|
|
|
|
|
|
|
Euro
|
|
Citibank, N.A.
|
|
92,435
|
|
$113,061
|
|
8/17/10
|
|
$3,228
|
|
Euro
|
|
Citibank, N.A.
|
|
100,000
|
|
122,313
|
|
8/17/10
|
|
(142
|
)
|
Net unrealized gain on open
forward foreign currency contracts
|
|
|
|
|
|
|
|
$3,086
|
|
|
|
|
|
|
|
|
|
|
|
At June 30, 2010, the Fund had the following
open futures contracts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Counterparty
|
|
Number
of
Contracts
|
|
Expiration
Date
|
|
Basis
Value
|
|
Market
Value
|
|
Unrealized
Gain/(Loss)
|
|
Contracts to Buy:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury Bonds
|
|
Credit Suisse (USA) LLC
|
|
4
|
|
9/10
|
|
$ 529,552
|
|
$ 543,250
|
|
$ 13,698
|
|
Contracts to Sell:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury 5-Year Notes
|
|
Credit Suisse (USA) LLC
|
|
17
|
|
9/10
|
|
1,986,445
|
|
2,011,977
|
|
(25,532
|
)
|
Net unrealized loss on open
futures contracts
|
|
|
|
|
|
|
|
|
|
$(11,834
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.
Derivative instruments and hedging activities
Financial
Accounting Standards Board Codification Topic 815 requires enhanced disclosure
about an entitys derivative 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 June 30, 2010.
|
|
Interest
Rate
Contracts Risk
|
|
Foreign
Exchange
Contracts Risk
|
|
Total
|
|
Forward foreign currency contracts
|
|
|
|
|
$3,228
|
|
|
$
3,228
|
|
|
Futures contracts
2
|
|
$13,698
|
|
|
|
|
|
13,698
|
|
|
Total
|
|
$13,698
|
|
|
$3,228
|
|
|
$16,926
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITY DERIVATIVES
1
|
|
|
|
|
|
|
|
|
|
|
Interest
Rate
Contracts Risk
|
|
Foreign
Exchange
Contracts Risk
|
|
Total
|
|
Forward foreign currency contracts
|
|
|
|
|
$(142
|
)
|
|
$
(142
|
)
|
|
Futures contracts
2
|
|
$(25,532
|
)
|
|
|
|
|
(25,532
|
)
|
|
Total
|
|
$(25,532
|
)
|
|
$(142
|
)
|
|
$(25,674
|
)
|
|
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).
|
2
|
Includes
cumulative appreciation/depreciation of futures contracts as reported in the
footnotes. Only current days variation margin is reported within the
receivables and/or payables of the Statement of Assets and Liabilities.
|
The
following tables provide information about the effect of derivatives and
hedging activities on the Funds Statement of Operations for the six months
ended June 30, 2010. 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 changes in
unrealized appreciation/(depreciation) resulting from the Funds derivatives
and hedging activities during the period.
AMOUNT OF REALIZED GAIN OR (LOSS)
ON DERIVATIVES RECOGNIZED
|
|
Interest
Rate
Contracts Risk
|
|
Foreign
Exchange
Contracts Risk
|
|
Total
|
|
Forward foreign currency contracts
|
|
|
|
|
$14,541
|
|
|
$ 14,541
|
|
|
Futures contracts
|
|
$12,141
|
|
|
|
|
|
12,141
|
|
|
Total
|
|
$12,141
|
|
|
$14,541
|
|
|
$ 26,682
|
|
|
|
|
Western
Asset High Income Fund Inc. 2010 Semi-Annual Report
|
|
25
|
CHANGE IN UNREALIZED
APPRECIATION/DEPRECIATION ON DERIVATIVES RECOGNIZED
|
|
Interest
Rate
Contracts Risk
|
|
Foreign
Exchange
Contracts Risk
|
|
Total
|
|
Forward foreign currency contracts
|
|
|
|
|
$3,086
|
|
|
$ 3,086
|
|
|
Futures contracts
|
|
$(11,834
|
)
|
|
|
|
|
(11,834
|
)
|
|
Total
|
|
$(11,834
|
)
|
|
$3,086
|
|
|
$
(8,748
|
)
|
|
During
the six months ended June 30, 2010, the volume of derivative activity for
the Fund was as follows:
|
|
Average
Market Value
|
|
Forward foreign currency contracts (to sell)
|
|
$ 121,619
|
|
|
Futures contracts (to buy)
|
|
360,964
|
|
|
Futures contracts (to sell)
|
|
1,412,613
|
|
|
The
Fund has several credit related contingent features that if triggered would
allow its derivatives counterparties to close out and demand payment or
additional collateral to cover their exposure from the Fund. Credit related
contingent features are established between the Fund and its derivatives
counterparties to reduce the risk that the Fund will not fulfill its payment
obligations to its counterparties. These triggering features include, but are
not limited to, a percentage decrease in the Funds net assets and/or a
percentage decrease in the Funds Net Asset Value or NAV. The contingent
features are established within the Funds International Swap and Derivatives
Association, Inc. master agreements which govern positions in swaps,
over-the-counter options, and forward currency exchange contracts for each
individual counterparty.
5.
Distributions subsequent to June 30, 2010
On
May 17, 2010, the Funds Board declared distributions in the amount of
$0.0750 per share, payable on July 30, 2010 and August 27, 2010 to
shareholders of record on July 23, 2010 and August 20, 2010,
respectively.
On
August 16, 2010, the Funds Board declared distributions in the amount of
$0.0750 per share, payable on September 24, 2010, October 29, 2010
and November 26, 2010 to shareholders of record on September 17,
2010, October 22, 2010 and November 19, 2010, respectively.
6.
Capital loss carryforward
As
of December 31, 2009, the Fund had a net capital loss carryforward of
approximately $10,644,023, of which $1,248,443 expires in 2010, $2,400,268
expires in 2016 and $6,995,312 expires in 2017. These amounts will be available
to offset any future taxable capital gains.
26
|
|
Western Asset High Income
Fund Inc.
|
|
|
Additional
shareholder information (unaudited)
Result
of annual meeting of shareholders
The
Annual Meeting of Shareholders of Western Asset High Income Fund Inc. was held
on April 30, 2010, 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
|
|
Common
Shares
Votes For
|
|
Common
Shares
Votes Withheld
|
|
Daniel P. Cronin
|
|
4,373,802
|
|
|
181,608
|
|
William R. Hutchinson
|
|
4,372,402
|
|
|
183,008
|
|
Jeswald W. Salacuse
|
|
4,365,961
|
|
|
189,449
|
|
At
June 30, 2010, in addition to Daniel P. Cronin, William R. Hutchinson and
Jeswald W. Salacuse, the other Directors of the Fund were as follows:
Carol
L. Colman
Paolo M. Cucchi
Leslie H. Gelb
Riordan Roett
R. Jay Gerken, CFA
|
|
Western
Asset High Income Fund Inc.
|
|
27
|
Dividend
reinvestment plan (unaudited)
Pursuant
to certain rules of the SEC the following additional disclosure is
provided.
Pursuant
to the Funds Dividend Reinvestment and Cash Purchase Plan (Plan)
shareholders whose shares of Common Stock are registered in their own names
will be deemed to have elected to have all distributions automatically
reinvested by American Stock Transfer & Trust Company (Plan Agent)
in Fund shares pursuant to the Plan, unless such shareholders elect to receive
distributions in cash. Shareholders who elect to receive distributions in cash will
receive all distributions in cash paid by check in dollars mailed directly to
the shareholder by American Stock Transfer & Trust Company, as
dividend paying agent. Shareholders who do not wish to have distributions
automatically reinvested should notify the Plan Agent. In the case of
shareholders, such as banks, brokers or nominees, that hold shares for others
who are beneficial owners, the Plan Agent will administer the Plan on the basis
of the number of shares certified from time to time by the shareholders as
representing the total amount registered in such shareholders names and held
for the account of beneficial owners that have not elected to receive
distributions in cash. Investors that own shares registered in the name of a
bank, broker or other nominee should consult with such nominee as to
participation in the Plan through such nominee, and may be required to have
their shares registered in their own names in order to participate in the Plan.
The
Plan Agent serves as agent for the shareholders in administering the Plan. If
the Directors of the Fund declare a distribution payable either in the Funds
Common Stock or in cash, nonparticipants in the Plan will receive cash and
participants in the Plan will receive Common Stock, to be issued by the Fund or
purchased by the Plan Agent in the open market, as provided below. If the
market price per share on the valuation date equals or exceeds net asset value
per share on that date, the Fund will issue new shares to participants at net
asset value; provided, however, if the net asset value is less than 95% of the
market price on the valuation date, then such shares will be issued at 95% of
the market price. The valuation date will be the distribution payment date or,
if that date is not a NYSE trading day, the next preceding trading day. If net
asset value exceeds the market price of Fund shares at such time, or if the
Fund should declare a distribution payable only in cash, the Plan Agent will,
as agent for the participants, buy Fund shares in the open market, on the NYSE
or elsewhere, for the participants accounts on, or shortly after, the payment
date. If, before the Plan Agent has completed its purchases, the market price
exceeds the net asset value of a Fund share, the average per share purchase price
paid by the Plan Agent may exceed the net asset value of the Funds shares,
resulting in the acquisition of fewer shares than if the distribution had been
paid in shares issued by the Fund on the dividend payment date. Because of the
foregoing difficulty with respect to open-market purchases, the Plan provides
that if the Plan Agent is unable to invest the full distribution amount in
open-market purchases during the purchase period or if the market discount
shifts to a market premium during the purchase period, the Plan Agent will
cease making open-market purchases and will receive the uninvested portion of
the distribution amount in newly issued shares at the close of business on the
last purchase date.
Participants
have the option of making additional cash payments to the Plan Agent, monthly,
in a minimum amount of $250, for investment in the Funds Common Stock. The
Plan Agent will use all such funds received from participants to purchase Fund
shares in the open market on or about the first business day of each month. Any
voluntary cash payments received more than 30 days prior to these dates will be
returned by the Plan Agent, and interest will not be paid on any uninvested
cash payments. To avoid unnecessary cash accumulations, and also to allow ample
time for receipt and processing by the Plan Agent, it is suggested that
participants send in voluntary cash payments to be received by the Plan Agent
approximately ten days before an applicable purchase date specified above. A
participant may withdraw a voluntary cash payment by written notice if the
notice is received by the Plan Agent not less than 48 hours before such payment
is to be invested.
28
|
|
Western Asset High Income
Fund Inc.
|
|
|
Dividend
reinvestment plan (unaudited) (contd)
The
Plan Agent maintains all shareholder accounts in the Plan and furnishes written
confirmations of all transactions in an account, including information needed
by shareholders for personal and tax records. Shares in the account of each
Plan participant will be held by the Plan Agent in the name of the participant,
and each shareholders proxy will include those shares purchased pursuant to
the Plan.
There
is no charge to participants for reinvesting distributions or voluntary cash
payments. The Plan Agents fees for the reinvestment of distributions and
voluntary cash payments will be paid by the Fund. There will be no brokerage
charges with respect to shares issued directly by the Fund as a result of
distributions payable either in stock or in cash. However, each participant
will pay a pro rata share of brokerage commissions incurred with respect to the
Plan Agents open market purchases in connection with the reinvestment of
distributions and voluntary cash payments made by the participant or any
distributions payable only in cash. Brokerage charges for purchasing small
amounts of stock for individual accounts through the Plan are expected to be
less than the usual brokerage charges for such transactions, because the Plan Agent
will be purchasing stock for all participants in blocks and prorating the lower
commission thus attainable.
The
reinvestment of distributions under the Plan will not relieve participants of
any income tax which may be payable on such distributions.
Participants
may terminate their accounts under the Plan by notifying the Plan Agent in
writing. Such termination will be effective immediately if notice is received
by the Plan Agent not less than ten days prior to any distribution record date.
Upon termination, the Plan Agent will send the participant a certificate for
the full shares held in the account and a cash adjustment for any fractional
shares to be delivered to each shareholder without charge.
Experience
under the Plan may indicate that changes in the Plan are desirable.
Accordingly, the Fund and the Plan Agent reserve the right to terminate the
Plan as applied to any voluntary cash payments made and any distribution paid
subsequent to notice of the termination sent to members of the Plan at least 30
days before the record date for such distribution. The Plan also may be amended
by the Fund or the Plan Agent, but (except when necessary or appropriate to
comply with applicable law, rules or policies of a regulatory authority)
only by at least 30 days written notice to participants in the Plan. All
correspondence concerning the Plan should be directed to the Plan Agent at 59
Maiden Lane, New York, New York 10038.
Western
Asset
High
Income Fund Inc.
Directors
Carol
L. Colman
Daniel
P. Cronin
Paolo
M. Cucchi
Leslie
H. Gelb
R.
Jay Gerken, CFA
Chairman
William
R. Hutchinson
Riordan
Roett
Jeswald
W. Salacuse
Officers
R.
Jay Gerken, CFA
President and
Chief Executive Officer
Kaprel
Ozsolak
Chief Financial Officer
Ted
P. Becker
Chief Compliance Officer
John
Chiota
Identity Theft Protection 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 High Income Fund Inc.
55
Water Street
New York, NY 10041
Investment
manager
Legg
Mason Partners Fund Advisor, LLC
Subadviser
Western
Asset Management Company
Western
Asset Management Company Limited
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
59 Maiden Lane
New York, NY 10038
|
|
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
HIF
|
Privacy
policy
We
are committed to keeping nonpublic personal information about you secure and
confidential. This notice is intended to help you understand how we fulfill
this commitment. From time to time, we may collect a variety of personal
information about you, including:
·
Information
we receive from you on applications and forms, via the telephone, and through
our websites;
·
Information
about your transactions with us, our affiliates, or others (such as your
purchases, sales, or account balances); and
·
Information
we receive from consumer reporting agencies.
We
do not disclose nonpublic personal information about our customers or former
customers, except to our affiliates (such as broker-dealers or investment
advisers within the Legg Mason family of companies) or as is otherwise
permitted by applicable law or regulation. For example, we may share this
information with others in order to process your transactions or service an
account. We may also provide this information to companies that perform
marketing services on our behalf, such as printing and mailing, or to other
financial institutions with whom we have joint marketing agreements. When we
enter into such agreements, we will require these companies to protect the
confidentiality of this information and to use it only to perform the services
for which we hired them.
With
respect to our internal security procedures, we maintain physical, electronic,
and procedural safeguards to protect your nonpublic personal information, and
we restrict access to this information.
If
you decide at some point either to close your account(s) or become an
inactive customer, we will continue to adhere to our privacy policies and
practices with respect to your nonpublic personal information.
|
|
|
|
|
|
|
NOT PART OF THE SEMI-ANNUAL REPORT
|
|
|
|
|
|
|
|
Western
Asset High Income Fund Inc.
Western
Asset High Income Fund Inc.
55 Water Street
New York, NY 10041
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 Funds Forms N-Q are available on the SECs website
at www.sec.gov. The Funds Forms N-Q may be reviewed and copied at the SEC
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 Funds website at
www.leggmason.com/cef and (3) on the SECs website at www.sec.gov.
This
report is transmitted to the shareholders of the Western Asset High Income Fund
Inc. for their information. This is not a prospectus, circular or
representation intended for use in the purchase of shares of the Fund or any
securities mentioned in this report.
American
Stock
Transfer & Trust Company
59 Maiden Lane
New York, NY 10038
WASX010084
8/10 SR10-1154
ITEM 2.
CODE OF ETHICS.
Not
applicable.
ITEM 3.
AUDIT COMMITTEE FINANCIAL EXPERT.
Not
applicable.
ITEM 4.
PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not
applicable.
ITEM 5.
AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not
applicable.
ITEM 6.
SCHEDULE OF INVESTMENTS.
Included
herein under Item 1.
ITEM 7.
DISCLOSURE OF PROXY VOTING POLICIES AND
PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not
applicable.
ITEM 8.
PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT
INVESTMENT COMPANIES.
Not
applicable.
ITEM 9.
PURCHASES OF EQUITY SECURITIES BY CLOSED-END
MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not
applicable.
ITEM 10.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS.
Not
applicable.
ITEM 11.
CONTROLS AND PROCEDURES.
(a)
The
registrants principal executive officer and principal financial officer have
concluded that the registrants 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 registrants internal control over financial reporting
(as defined in Rule 30a-3(d) under the 1940 Act) that occurred during
the registrants last fiscal half-year (the registrants second fiscal
half-year in the case of an annual report) that have materially affected, or
are likely to materially affect the registrants 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 High Income Fund Inc.
By:
|
/s/
R. Jay Gerken
|
|
|
(R. Jay Gerken)
|
|
Chief
Executive Officer of
|
|
Western Asset High Income Fund Inc.
|
|
|
Date:
|
August
31, 2010
|
Pursuant
to the requirements of the Securities Exchange Act of 1934 and the Investment
Company Act of 1940, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates indicated.
By:
|
/s/
R. Jay Gerken
|
|
|
(R. Jay Gerken)
|
|
Chief
Executive Officer of
|
|
Western Asset High Income Fund Inc.
|
|
|
Date:
|
August
31, 2010
|
|
|
By:
|
/s/
Kaprel Ozsolak
|
|
|
(Kaprel Ozsolak)
|
|
Chief
Financial Officer of
|
|
Western Asset High Income Fund Inc.
|
|
|
Date:
|
August
31, 2010
|
Western Asset High Income Fund Inc. (NYSE:HIF)
Historical Stock Chart
From Jun 2024 to Jul 2024
Western Asset High Income Fund Inc. (NYSE:HIF)
Historical Stock Chart
From Jul 2023 to Jul 2024