Western Asset High Income Fund II Inc. (HIX)

N-CSR 1 d716469dncsr.htm WESTERN ASSET HIGH INCOME FUND II INC. (HIX) Western Asset High Income Fund II Inc. (HIX)

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 811-08709

Western Asset High Income Fund II Inc.

(Exact name of registrant as specified in charter)

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

(Address of principal executive offices) (Zip code)

Robert I. Frenkel, Esq.

Legg Mason & Co., LLC

100 First Stamford Place

Stamford, CT 06902

(Name and address of agent for service)

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

Date of fiscal year end: April 30

Date of reporting period: April 30, 2019

ITEM 1.

REPORT TO STOCKHOLDERS.

The Annual Report to Stockholders is filed herewith.

LOGO


Annual Report		April 30, 2019

WESTERN ASSET

HIGH INCOME FUND II

INC. (HIX)

Beginning in April 2021, as permitted by regulations adopted by the Securities and Exchange Commission, the Fund intends to no longer mail paper copies of the Fund’s shareholder reports like this one, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary (such as a broker-dealer or bank). Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.

If you invest through a financial intermediary and you already elected to receive shareholder reports electronically (“e-delivery”), you will not be affected by this change and you need not take any action. If you have not already elected e-delivery, you may elect to receive shareholder reports and other communications from the Fund electronically by contacting your financial intermediary.

You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. That election will apply to all Legg Mason funds held in your account at that financial intermediary. If you are a direct shareholder with the Fund, you can call the Fund at 1-888-888-0151, or write to the Fund by regular mail at P.O. Box 505000, Louisville, KY 40233 or by overnight delivery to Computershare, 462 South 4th Street, Suite 1600, Louisville, KY 40202 to let the Fund know you wish to continue receiving paper copies of your shareholder reports. That election will apply to all Legg Mason Funds held in your account held directly with the fund complex.

LOGO

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


What’s inside
Letter from the chairman			III
Investment commentary			IV
Fund overview			1
Fund at a glance			7
Spread duration			8
Effective duration			9
Schedule of investments			10
Statement of assets and liabilities			28
Statement of operations			29
Statements of changes in net assets			30
Statement of cash flows			31
Financial highlights			32
Notes to financial statements			34
Report of independent registered public accounting firm			50
Board approval of management and subadvisory agreements			51
Additional information			57
Annual chief executive officer and principal financial officer certifications			63
Other shareholder communications regarding accounting matters			64
Dividend reinvestment plan			65
Important tax information			67

Fund objectives

The Fund seeks to maximize current income. As a secondary objective, the Fund seeks capital appreciation to the extent consistent with its objective of seeking to maximize current income.

Under normal market conditions, the Fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in high-yield debt securities. In addition, the Fund may invest up to 35% of its total assets in debt securities of issuers located in emerging market countries.


II		Western Asset High Income Fund II Inc.

Letter from the chairman

LOGO

Dear Shareholder,

We are pleased to provide the annual report of Western Asset High Income Fund II Inc. for the twelve-month reporting period ended April 30, 2019. Please read on for a detailed look at prevailing economic and market conditions during the Fund’s reporting period and to learn how those conditions have affected Fund performance.

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

•

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,

LOGO

Jane Trust, CFA

Chairman, President and Chief Executive Officer

May 31, 2019


Western Asset High Income Fund II Inc.		III

Investment commentary

Economic review

Economic activity in the U.S. was mixed during the twelve months ended April 30, 2019 (the “reporting period”). Looking back, the U.S. Department of Commerce reported that second quarter 2018 U.S. gross domestic product (“GDP”)ⁱ growth was 4.2% — the strongest reading since the third quarter of 2014. Third and fourth quarter 2018 GDP growth was 3.4% and 2.2%, respectively. Finally, the U.S. Department of Commerce’s second reading for first quarter 2019 GDP growth, released after the reporting period ended, was 3.1%. The acceleration in GDP growth during the first quarter of 2019 was attributed to an upturn in state and local government spending, increases in private inventory investment and exports, and a smaller decrease in residential investment. These movements were partly offset by decelerations in personal consumption expenditures and nonresidential fixed investment, along with a downturn in federal government spending. Imports also turned down.

Job growth in the U.S. was solid overall and provided a tailwind for the economy during the reporting period. As reported by the U.S. Department of Labor, when the reporting period ended on April 30, 2019, the unemployment rate was 3.6%, versus 3.8% when the period began. April 2019’s reading was the lowest reading since December 1969. However, the percentage of longer-term unemployed moved higher during the reporting period. In April 2019, 21.1% of Americans looking for a job had been out of work for more than six months, versus 19.4% when the period began.

The Federal Reserve Board (the “Fed”)ⁱⁱ raised interest rates three times during the reporting period and further reduced its balance sheet. As widely expected, the Fed raised the federal funds rateⁱⁱⁱ at its meetings that ended on June 13, 2018 (to a range between 1.75% and 2.00%), September 26, 2018 (to a range between 2.00% and 2.25%) and December 19, 2018 (to a range between 2.25% and 2.50%). However, at its meeting that concluded on January 30, 2019, the Fed kept interest rates on hold and said, “In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate ….” Finally, at its meeting that concluded on March 20, 2019, most Federal Open Market Committee (“FOMC”)^iv members indicated that they did not feel additional rate hikes would be needed in 2019.

As always, thank you for your confidence in our stewardship of your assets.

Sincerely,

LOGO

Jane Trust, CFA

Chairman, President and

Chief Executive Officer

May 31, 2019

All investments are subject to risk including the possible loss of principal. Past performance is no guarantee of future results.


IV		Western Asset High Income Fund II Inc.

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

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

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

^iv	The Federal Open Market Committee (“FOMC”) is a policy-making body of the Federal Reserve System responsible for the formulation of a policy designed to promote economic growth, full employment, stable prices and a sustainable pattern of international trade and payments.


Western Asset High Income Fund II Inc.		V

Fund overview

Q. What is the Fund’s investment strategy?

A. The Fund seeks to maximize current income. As a secondary objective, the Fund seeks capital appreciation to the extent consistent with its objective of seeking to maximize current income. Under normal market conditions, the Fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in high-yield debt securities. The Fund may invest up to 35% of its total assets in debt securities of issuers located in emerging market countries. It may also invest up to 30% of its assets in zero coupon securities, pay-in-kind bonds and deferred payment securities, and up to 20% of its assets in equity securities. The Fund may utilize a variety of derivative instruments for investment or risk management purposes, such as options, futures contracts, swap agreements including credit default swaps. We employ an actively managed approach that is risk-controlled and assimilates top-down macroeconomic views with industry sector insights and bottom-up credit research to derive the general framework for the Fund’s predominantly non-investment grade credit mandate. This framework provides the foundation for how the portfolio is positioned with respect to risk (aggressive, neutral, conservative), as well as identifying sector overweights and underweights.

Risk and weightings are reviewed on a regular basis. Our bottom-up process provides the basis for populating the targeted industry weightings through individual credit selection. Analysts work closely with portfolio managers to determine which credits provide the best risk/reward relationship within their respective sectors. The research team focuses on key fundamental measures such as leverage, cash flow adequacy, liquidity, amortization schedule, underlying asset value and management integrity/track record.

At Western Asset Management Company, LLC (“Western Asset”), the Fund’s subadviser, we utilize a fixed-income team approach, with decisions derived from interaction among various investment management sector specialists. The sector teams are comprised of Western Asset’s senior portfolio management personnel, research analysts and an in-house economist. Under this team approach, management of client fixed-income portfolios will reflect a consensus of interdisciplinary views within the Western Asset organization. The individuals responsible for development of investment strategy, day-to-day portfolio management, oversight and coordination of the Fund are S. Kenneth Leech, Michael C. Buchanan and Christopher F. Kilpatrick.

Q. What were the overall market conditions during the Fund’s reporting period?

A. Fixed income markets generally posted positive results over the twelve-month reporting period ended April 30, 2019. The spread sectors (non-Treasuries) experienced periods of volatility as they were impacted by a number of factors, including overall solid economic growth in the U.S., moderating growth overseas, monetary policy tightening and then a “dovish pivot” by the Federal Reserve Board (the “Fed”)ⁱ, concerns over a global trade war and numerous geopolitical issues.

Both short- and long-term U.S. Treasury yields declined during the reporting period. The yield for the two-year Treasury note began the reporting period at 2.49% and


Western Asset High Income Fund II Inc. 2019 Annual Report		1

Fund overview (cont’d)

ended the period at 2.27%. The low for the period was 2.22% on March 7, 2019 and the high for the period of 2.98% occurred on November 8, 2018. The yield for the ten-year Treasury began the reporting period at 2.95% and ended the period at 2.51%. The low for the period of 2.39% occurred on March 27, 2019 and the peak for the period of 3.24% took place on November 8, 2018.

All told, the Bloomberg Barclays U.S. Aggregate Indexⁱⁱ, returned 5.29% for the twelve months ended April 30, 2019. Comparatively, riskier fixed-income securities, including high-yield bonds, produced mixed results. Over the fiscal year, the Bloomberg Barclays U.S. Corporate High Yield — 2% Issuer Cap Indexⁱⁱⁱ gained 6.74%. Elsewhere, the JPMorgan Emerging Markets Bond Index Global (“EMBI Global”)^iv returned 5.19% for the reporting period.

Q. How did we respond to these changing market conditions?

A. A number of adjustments were made to the Fund’s portfolio during the reporting period. We increased the overall quality of the portfolio by decreasing its allocation to lower rated CCC securities, while increasing its investment-grade credit exposure. From a sector perspective, we increased the Fund’s allocations to the banking industry, and the Consumer Non-Cyclicals¹ and Energy sectors, while reducing the Fund’s exposure to the Consumer Cyclicals² sector, and the insurance industry. In terms of foreign exchange positioning, we increased the Fund’s emerging market currency positions, most notably in the Indonesian rupiah and Mexican peso. Finally, we increased the Fund’s allocations to high-yield bonds and emerging markets debt, and decreased its exposure to floating rate senior secured term loans.

We employed U.S. Treasury futures to manage the duration^v of the Fund. On a standalone basis, these derivatives did not have a material impact on performance. Currency forwards were used to manage the Fund’s currency exposures. They modestly contributed to results over the reporting period on a standalone basis.

During the reporting period, we tactically utilized leverage in the Fund. For example, when volatility increased in the fourth quarter of 2018, we added leverage in the Fund and added to our high-yield and emerging market exposures at attractive valuations. We ended the period with liabilities as a percentage of gross assets of approximately 29%, versus roughly 26% when the period began. The use of leverage contributed to results given the positive total returns posted by our high-yield, investment grade and emerging market positions.

Lastly, at the end of 2018, during a period of extremely heightened volatility, we repurchased over $6 million in shares of the Fund in the secondary market as discounts widened in most closed-end funds. We felt that the selling was overdone and repurchasing Fund shares offered an attractive opportunity for shareholders.

¹	Consumer Non-Cyclicals consists of the following industries: Consumer Products, Food/Beverage, Health Care, Pharmaceuticals, Supermarkets and Tobacco.

²	Consumer Cyclicals consists of the following industries: Automotive, Entertainment, Gaming, Home Construction, Lodging, Retailers, Restaurants, Textiles and other consumer services.


2		Western Asset High Income Fund II Inc. 2019 Annual Report

Performance review

For the twelve months ended April 30, 2019, Western Asset High Income Fund II Inc. returned 6.77% based on its net asset value (“NAV”)^vi and 11.29% based on its New York Stock Exchange (“NYSE”) market price per share. The Fund’s unmanaged benchmarks, the Bloomberg Barclays U.S. Corporate High Yield — 2% Issuer Cap Index and the EMBI Global, returned 6.74% and 5.19%, respectively, for the same period. The Lipper High Yield (Leveraged) Closed-End Funds Category Average^vii returned 5.42% over the same time frame. Please note that Lipper performance returns are based on each fund’s NAV.

During the twelve-month period, the Fund made distributions to shareholders totaling $0.55 per share, of which $0.05 will be treated as a return of capital for tax purposes.* The performance table shows the Fund’s twelve-month total return based on its NAV and market price as of April 30, 2019. Past performance is no guarantee of future results.


Performance Snapshot as of April 30, 2019
Price Per Share	12-Month Total Return**
$7.31 (NAV)		6.77	%†
$6.69 (Market Price)		11.29	%‡

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. Returns reflect the deduction of all Fund expenses, including management fees, operating expenses, and other Fund expenses. Returns do not reflect the deduction of brokerage commissions or taxes that investors may pay on distributions or the sale of shares.

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

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

Q. What were the leading contributors to performance?

A. Security selection was the largest contributor to the Fund’s results during the reporting period. In particular, overweight positions in PetSmart Inc., Altice SA, Petrobras Global Finance BV and Bausch Health Cos. Inc. were additive for returns. PetSmart Inc. delivered solid results, driven by robust growth at its online segment, chewy.com, which also filed for an initial public offering (“IPO”) in late April 2019. Furthermore, a loan amendment was passed towards the end of the reporting period that tightened covenants and increased compensations, sending prices for secured PetSmart Inc. bonds and loans higher. Petrobras Global Finance BV is a Brazilian oil company. Its asset divestment and balance sheet deleveraging plans continued to progress, which benefited it bonds over the reporting period. Bausch Health Cos. Inc. is a multinational specialty pharmaceutical company. Its bonds continued to trade well on improved earnings and solid operational execution. The company also used free cash flow to pay down debt. Global communications firm Altice SA bonds performed well given in-line results at its operating subsidiaries and increased guidance. The company also communicated plans to improve its balance sheet and proactively extend its bond maturity profile, which sent both shorter

*	For the character of distributions paid during the fiscal year ended April 30, 2019, please refer to page 47 of this report.


Western Asset High Income Fund II Inc. 2019 Annual Report		3

Fund overview (cont’d)

maturity Altice Luxemburg SA bonds and Altice France SA bonds significantly higher in price.

Elsewhere, duration positioning was beneficial for returns. More specifically, having a long duration was rewarded as rates moved lower across the yield curve^viii over the reporting period. Finally, from a sector perspective, the Fund’s overweights to the outperforming Financials (i.e. Citigroup, Inc.) and Communication Services sectors contributed to results during the reporting period.

Q. What were the leading detractors from performance?

A. While the Fund outperformed its benchmarks, a handful of positions and strategies were not rewarded. Specifically, the Fund’s overweight to emerging markets debt, both local and hard currency exposures, did not keep pace with its high-yield, investment-grade and bank loan returns. We felt with commodity prices stabilizing, central bank accommodation (including a more measured Fed) and relatively attractive valuations in emerging markets that an overweight was warranted. In particular, overweight exposures to countries such as Argentina, Uruguay, Mexico and Russia detracted from results relative to the benchmarks. Argentina was the main detractor, as it was negatively impacted by its large external financing needs and weakening currency. We continue to maintain a constructive long-term outlook for the country, as President Mauricio Macri’s administration seeks to achieve a primary budget balance in 2019. We also see International Monetary Fund support as a near-term positive and are maintaining the Fund’s overweight position.

From a sector prospective, an underweight to the Information Technology sector was not rewarded. High-yield technology bonds performed well during the reporting period. However, we are maintaining a cautious stance in the sector given the more cyclical and unpredictable fundamental results these companies tend to realize over an economic cycle.

Looking for additional information?

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

In a continuing effort to provide information concerning the Fund, shareholders may call 1-888-777-0102 (toll free), Monday through Friday from 8:00 a.m. to 5:30 p.m. Eastern time, for the Fund’s current NAV, market price and other information.

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

Sincerely,

Western Asset Management Company, LLC

May 31, 2019


4		Western Asset High Income Fund II Inc. 2019 Annual Report

RISKS: The Fund is a diversified closed-end management investment company designed primarily as a long-term investment and not as a trading vehicle. The Fund is not intended to be a complete investment program and, due to the uncertainty inherent in all investments, there can be no assurance that the Fund will achieve its investment objective. The Fund’s common stock is traded on the New York Stock Exchange. Similar to stocks, the Fund’s share price will fluctuate with market conditions and, at the time of sale, may be worth more or less than the original investment. Shares of closed-end funds often trade at a discount to their net asset value. Diversification does not assure against market loss. The Fund’s investments are subject to a number of risks, such as credit risk, inflation risk and interest rate risk. As interest rates rise, bond prices fall, reducing the value of the Fund’s holdings. The Fund may use derivatives, such as options and futures, which can be illiquid, may disproportionately increase losses, and have a potentially large impact on Fund performance. High-yield bonds, known as “junk bonds,” involve greater credit and liquidity risks than investment grade bonds. Foreign securities are subject to certain risks not associated with domestic investing, such as currency fluctuations and changes in political and economic conditions which could result in significant fluctuations. These risks are magnified in emerging markets. The Fund is also permitted purchases of equity securities. Equity securities generally have greater price volatility than fixed income securities. Leverage may result in greater volatility of NAV and the market price of common shares and increases a shareholder’s risk of loss.

Portfolio holdings and breakdowns are as of April 30, 2019 and are subject to change and may not be representative of the portfolio managers’ current or future investments. Please refer to pages 10 through 27 for a list and percentage breakdown of the Fund’s holdings.

The mention of sector breakdowns is for informational purposes only and should not be construed as a recommendation to purchase or sell any securities. The information provided regarding such sectors is not a sufficient basis upon which to make an investment decision. Investors seeking financial advice regarding the appropriateness of investing in any securities or investment strategies discussed should consult their financial professional. The Fund’s top five sector holdings (as a percentage of net assets) as of April 30, 2019 were: Communication Services (24.1%), Energy (22.3%), Financials (17.8%), Consumer Discretionary (17.0%) and Sovereign Bonds (16.9%). The Fund’s portfolio composition is subject to change at any time.

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

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


Western Asset High Income Fund II Inc. 2019 Annual Report		5

Fund overview (cont’d)

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

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

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

^iv	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.

^v	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.

^vi

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

^vii

Lipper, Inc., a wholly-owned subsidiary of Reuters, provides independent insight on global collective investments. Returns are based on the twelve-month period ended April 30, 2019, including the reinvestment of all distributions, including returns of capital, if any, calculated among the 36 funds in the Fund’s Lipper category.

^viii

The yield curve is the graphical depiction of the relationship between the yield on bonds of the same credit quality but different maturities.


6		Western Asset High Income Fund II Inc. 2019 Annual Report

Fund at a glance^† (unaudited)

Investment breakdown (%) as a percent of total investments

LOGO

†

The bar graph above represents the composition of the Fund’s investments as of April 30, 2019 and April 30, 2018 and does not include derivatives, such as futures contracts and forward foreign currency contracts. The Fund is actively managed. As a result, the composition of the Fund’s investments is subject to change at any time.

*	As of September 28, 2018, the Telecommunication Services sector was broadened to include some companies previously classified in the Consumer Discretionary and Information Technology sectors and renamed the Communication Services sector.


Western Asset High Income Fund II Inc. 2019 Annual Report		7

Spread duration (unaudited)

Economic exposure — April 30, 2019

LOGO


Total Spread Duration

HIX		— 5.64 years

Benchmark		— 4.11 years

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



Benchmark		— 80% of Bloomberg Barclays U.S. Corporate High Yield — 2% Issuer Cap Index and 20% of JPMorgan Emerging Markets Bond Index Global

EM		— Emerging Markets

HIX		— Western Asset High Income Fund II Inc.

HY		— High Yield

IG Credit		— Investment Grade Credit


8		Western Asset High Income Fund II Inc. 2019 Annual Report

Effective duration (unaudited)

Interest rate exposure — April 30, 2019

LOGO


Total Effective Duration

HIX		— 6.06 years

Benchmark		— 4.21 years

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



Benchmark		— 80% of Bloomberg Barclays U.S. Corporate High Yield — 2% Issuer Cap Index and 20% of JPMorgan Emerging Markets Bond Index Global

EM		— Emerging Markets

HIX		— Western Asset High Income Fund II Inc.

HY		— High Yield

IG Credit		— Investment Grade Credit


Western Asset High Income Fund II Inc. 2019 Annual Report		9

Schedule of investments

April 30, 2019

Western Asset High Income Fund II Inc.


Security	Rate			Maturity Date		Face Amount†		Value
Corporate Bonds & Notes — 108.4%
Communication Services — 21.8%
Diversified Telecommunication Services — 2.0%
Cogent Communications Group Inc., Senior Secured Notes		5.375	%		3/1/22		1,120,000	$	1,162,000	^(a)(b)
Intelsat Jackson Holdings SA, Senior Notes		5.500	%		8/1/23		1,000,000		910,000
Intelsat Jackson Holdings SA, Senior Secured Notes		8.000	%		2/15/24		2,660,000		2,783,025	^(a)(b)
Telecom Italia Capital SA, Senior Notes		6.000	%		9/30/34		2,660,000		2,473,800
Telecom Italia SpA, Senior Notes		5.303	%		5/30/24		1,220,000		1,220,000	^(a)(b)
UPCB Finance IV Ltd., Senior Secured Notes		5.375	%		1/15/25		300,000		307,410	^(a)
Windstream Services LLC/Windstream Finance Corp., Secured Notes		10.500	%		6/30/24		4,089,000		2,862,300	*^(a)(b)(c)
Windstream Services LLC/Windstream Finance Corp., Secured Notes		9.000	%		6/30/25		1,225,000		826,875	*^(a)(b)(c)
Total Diversified Telecommunication Services									12,545,410
Entertainment — 0.9%
Netflix Inc., Senior Notes		5.875	%		11/15/28		2,755,000		2,913,412	^(b)
Netflix Inc., Senior Notes		6.375	%		5/15/29		2,305,000		2,523,975	^(a)(b)
Total Entertainment									5,437,387
Interactive Media & Services — 0.3%
Match Group Inc., Senior Notes		6.375	%		6/1/24		1,170,000		1,232,887	^(b)
Match Group Inc., Senior Notes		5.000	%		12/15/27		920,000		929,200	^(a)(b)
Total Interactive Media & Services									2,162,087
Media — 12.3%
Altice France SA, Senior Secured Notes		7.375	%		5/1/26		7,950,000		8,074,219	^(a)(b)
Altice France SA, Senior Secured Notes		8.125	%		2/1/27		8,790,000		9,207,525	^(a)(b)
Altice Luxembourg SA, Senior Notes		7.750	%		5/15/22		16,030,000		16,370,637	^(a)(b)
CCO Holdings LLC/CCO Holdings Capital Corp., Senior Notes		5.125	%		5/1/27		4,850,000		4,934,875	^(a)(b)
CCO Holdings LLC/CCO Holdings Capital Corp., Senior Notes		5.875	%		5/1/27		1,100,000		1,145,375	^(a)(b)
CCO Holdings LLC/CCO Holdings Capital Corp., Senior Notes		5.000	%		2/1/28		8,060,000		8,070,075	^(a)(b)
DISH DBS Corp., Senior Notes		5.875	%		11/15/24		5,680,000		4,920,300	^(b)
DISH DBS Corp., Senior Notes		7.750	%		7/1/26		12,709,000		11,406,328	^(b)
Entercom Media Corp., Secured Notes		6.500	%		5/1/27		1,970,000		2,014,325	^(a)
UPC Holding BV, Senior Secured Notes		5.500	%		1/15/28		3,010,000		3,047,625	^(a)(b)
Virgin Media Finance PLC, Senior Notes		6.000	%		10/15/24		1,710,000		1,776,263	^(a)(b)
Virgin Media Secured Finance PLC, Senior Secured Notes		5.250	%		1/15/26		3,600,000		3,675,456	^(a)(b)
Virgin Media Secured Finance PLC, Senior Secured Notes		5.500	%		8/15/26		1,610,000		1,654,323	^(a)
Total Media									76,297,326

See Notes to Financial Statements.


10		Western Asset High Income Fund II Inc. 2019 Annual Report

Western Asset High Income Fund II Inc.


Security	Rate			Maturity Date		Face Amount†		Value
Wireless Telecommunication Services — 6.3%
CSC Holdings LLC, Senior Notes		6.625	%		10/15/25		2,510,000	$	2,673,150	^(a)(b)
CSC Holdings LLC, Senior Notes		10.875	%		10/15/25		5,649,000		6,510,473	^(a)(b)
CSC Holdings LLC, Senior Notes		5.375	%		2/1/28		1,000,000		1,018,750	^(a)(b)
CSC Holdings LLC, Senior Notes		6.500	%		2/1/29		1,930,000		2,075,956	^(a)
Sprint Capital Corp., Senior Notes		6.875	%		11/15/28		2,200,000		2,112,000	^(b)
Sprint Capital Corp., Senior Notes		8.750	%		3/15/32		5,170,000		5,441,425	^(b)
Sprint Communications Inc., Senior Notes		7.000	%		8/15/20		2,300,000		2,392,000	^(b)
Sprint Communications Inc., Senior Notes		11.500	%		11/15/21		4,285,000		4,949,175	^(b)
Sprint Corp., Senior Notes		7.250	%		9/15/21		4,400,000		4,620,000	^(b)
Sprint Corp., Senior Notes		7.875	%		9/15/23		110,000		114,862	^(b)
T-Mobile USA Inc., Senior Notes		6.000	%		3/1/23		1,900,000		1,959,375	^(b)
T-Mobile USA Inc., Senior Notes		6.500	%		1/15/26		310,000		332,382	^(b)
VEON Holdings BV, Senior Notes		7.504	%		3/1/22		1,620,000		1,787,233	^(d)
VEON Holdings BV, Senior Notes		7.504	%		3/1/22		700,000		772,261	^(a)(b)
Vimpel Communications Via VIP Finance Ireland Ltd. OJSC, Senior Notes		7.748	%		2/2/21		2,300,000		2,491,822	^(a)(b)
Total Wireless Telecommunication Services									39,250,864
Total Communication Services									135,693,074
Consumer Discretionary — 12.6%
Auto Components — 2.4%
Adient Global Holdings Ltd., Senior Notes		4.875	%		8/15/26		5,333,000		4,359,727	^(a)(b)
Adient US LLC, Senior Secured Notes		7.000	%		5/15/26		1,290,000		1,323,863	^(a)(e)
American Axle & Manufacturing Inc., Senior Notes		6.250	%		4/1/25		209,000		210,852
American Axle & Manufacturing Inc., Senior Notes		6.250	%		3/15/26		1,650,000		1,658,250	^(b)
American Axle & Manufacturing Inc., Senior Notes		6.500	%		4/1/27		4,121,000		4,166,578	^(b)
JB Poindexter & Co. Inc., Senior Notes		7.125	%		4/15/26		3,110,000		3,187,750	^(a)(b)
Total Auto Components									14,907,020
Diversified Consumer Services — 2.2%
Carriage Services Inc., Senior Notes		6.625	%		6/1/26		3,420,000		3,539,700	^(a)(b)
Prime Security Services Borrower LLC/ Prime Finance Inc., Secured Notes		9.250	%		5/15/23		2,910,000		3,072,450	^(a)(b)
Prime Security Services Borrower LLC/ Prime Finance Inc., Senior Secured Notes		5.250	%		4/15/24		820,000		824,100	^(a)
Prime Security Services Borrower LLC/ Prime Finance Inc., Senior Secured Notes		5.750	%		4/15/26		2,670,000		2,703,909	^(a)
Service Corp. International, Senior Notes		7.500	%		4/1/27		2,090,000		2,408,725	^(b)
Weight Watchers International Inc., Senior Notes		8.625	%		12/1/25		1,000,000		875,000	^(a)
Total Diversified Consumer Services									13,423,884

See Notes to Financial Statements.


Western Asset High Income Fund II Inc. 2019 Annual Report		11

Schedule of investments (cont’d)

April 30, 2019

Western Asset High Income Fund II Inc.


Security	Rate			Maturity Date		Face Amount†			Value
Hotels, Restaurants & Leisure — 3.0%
1011778 BC ULC/New Red Finance Inc., Senior Secured Notes		4.250	%		5/15/24		2,950,000		$	2,913,125	^(a)
Carrols Restaurant Group Inc., Secured Notes		8.000	%		5/1/22		1,910,000			1,955,362	^(b)
Saga PLC, Senior Notes		3.375	%		5/12/24		3,910,000	^GBP		4,543,582	^(d)
Silversea Cruise Finance Ltd., Senior Secured Notes		7.250	%		2/1/25		1,803,000			1,949,494	^(a)(b)
Viking Cruises Ltd., Senior Notes		6.250	%		5/15/25		2,950,000			3,068,000	^(a)(b)
Viking Cruises Ltd., Senior Notes		5.875	%		9/15/27		750,000			748,125	^(a)
VOC Escrow Ltd., Senior Secured Notes		5.000	%		2/15/28		3,270,000			3,261,825	^(a)(b)
Total Hotels, Restaurants & Leisure										18,439,513
Household Durables — 0.5%
Lennar Corp., Senior Notes		5.000	%		6/15/27		3,140,000			3,209,669	^(b)
Specialty Retail — 4.1%
Hertz Corp., Senior Notes		5.875	%		10/15/20		2,520,000			2,523,150	^(b)
Maxeda DIY Holding BV, Senior Secured Notes		6.125	%		7/15/22		3,082,000	^EUR		3,455,064	^(d)
Party City Holdings Inc., Senior Notes		6.625	%		8/1/26		6,400,000			6,360,128	^(a)(b)
PetSmart Inc., Senior Secured Notes		5.875	%		6/1/25		9,690,000			8,830,012	^(a)(b)
Sally Holdings LLC/Sally Capital Inc., Senior Notes		5.625	%		12/1/25		4,670,000			4,670,000	^(b)
Total Specialty Retail										25,838,354
Textiles, Apparel & Luxury Goods — 0.4%
CBR Fashion Finance BV, Senior Secured Notes		5.125	%		10/1/22		1,000,000	^EUR		1,087,074	^(d)
Hanesbrands Inc., Senior Notes		4.875	%		5/15/26		1,300,000			1,308,125	^(a)(b)
Total Textiles, Apparel & Luxury Goods										2,395,199
Total Consumer Discretionary										78,213,639
Consumer Staples — 1.7%
Food Products — 0.9%
Pilgrim’s Pride Corp., Senior Notes		5.750	%		3/15/25		330,000			336,600	^(a)
Pilgrim’s Pride Corp., Senior Notes		5.875	%		9/30/27		5,365,000			5,552,775	^(a)(b)
Total Food Products										5,889,375
Household Products — 0.8%
Spectrum Brands Inc., Senior Notes		6.125	%		12/15/24		1,720,000			1,775,900	^(b)
Spectrum Brands Inc., Senior Notes		5.750	%		7/15/25		3,060,000			3,145,068	^(b)
Total Household Products										4,920,968
Total Consumer Staples										10,810,343
Energy — 21.4%
Energy Equipment & Services — 0.8%
KCA Deutag UK Finance PLC, Senior Secured Notes		7.250	%		5/15/21		2,990,000			2,646,150	^(a)
Pride International LLC, Senior Notes		7.875	%		8/15/40		920,000			731,400	^(b)
Transocean Inc., Senior Notes		9.000	%		7/15/23		378,000			405,878	^(a)(b)
Transocean Inc., Senior Notes		6.800	%		3/15/38		1,035,000			822,825	^(b)
Total Energy Equipment & Services										4,606,253

See Notes to Financial Statements.


12		Western Asset High Income Fund II Inc. 2019 Annual Report

Western Asset High Income Fund II Inc.


Security	Rate			Maturity Date		Face Amount†		Value
Oil, Gas & Consumable Fuels — 20.6%
Andeavor Logistics LP/Tesoro Logistics Finance Corp., Senior Notes		6.375	%		5/1/24		810,000	$	854,044	^(b)
Berry Petroleum Co. Escrow		—			—		1,550,000		0	*^(f)(g)(h)
Blue Racer Midstream LLC/Blue Racer Finance Corp., Senior Notes		6.125	%		11/15/22		2,260,000		2,293,900	^(a)(b)
Blue Racer Midstream LLC/Blue Racer Finance Corp., Senior Notes		6.625	%		7/15/26		690,000		708,113	^(a)(b)
Cheniere Corpus Christi Holdings LLC, Senior Secured Notes		5.875	%		3/31/25		1,120,000		1,209,600	^(b)
Chesapeake Energy Corp., Senior Notes		6.875	%		11/15/20		4,340,000		4,520,370	^(b)
Chesapeake Energy Corp., Senior Notes		5.375	%		6/15/21		940,000		935,300	^(b)
Chesapeake Energy Corp., Senior Notes		5.750	%		3/15/23		700,000		694,750	^(b)
Chesapeake Energy Corp., Senior Notes		8.000	%		6/15/27		5,810,000		5,709,937	^(b)
Continental Resources Inc., Senior Notes		4.900	%		6/1/44		3,220,000		3,281,454	^(b)
Ecopetrol SA, Senior Notes		5.375	%		6/26/26		5,000,000		5,362,750	^(b)
Ecopetrol SA, Senior Notes		5.875	%		5/28/45		2,500,000		2,587,625	^(b)
Gazprom OAO Via Gaz Capital SA, Senior Notes		6.510	%		3/7/22		2,550,000		2,747,324	^(a)(b)
Genesis Energy LP/Genesis Energy Finance Corp., Senior Notes		6.250	%		5/15/26		3,180,000		3,164,100	^(b)
KazMunayGas National Co. JSC, Senior Notes		4.750	%		4/19/27		3,000,000		3,112,056	^(a)(b)
Kinder Morgan Inc., Senior Notes		7.750	%		1/15/32		1,950,000		2,572,437	^(b)
Lukoil International Finance BV, Senior Notes		4.563	%		4/24/23		2,040,000		2,100,865	^(a)(b)
Lukoil International Finance BV, Senior Notes		4.750	%		11/2/26		1,230,000		1,273,286	^(a)(b)
Magnum Hunter Resources Corp. Escrow		—			—		8,070,000		0	*^(f)(g)(h)
MEG Energy Corp., Senior Notes		6.375	%		1/30/23		80,000		75,900	^(a)
MEG Energy Corp., Senior Notes		7.000	%		3/31/24		8,210,000		7,817,480	^(a)(b)
NGPL PipeCo LLC, Senior Notes		7.768	%		12/15/37		1,900,000		2,341,750	^(a)(b)
Oasis Petroleum Inc., Senior Notes		6.500	%		11/1/21		3,238,000		3,213,715	^(b)
Oasis Petroleum Inc., Senior Notes		6.875	%		1/15/23		3,540,000		3,548,850	^(b)
Petrobras Global Finance BV, Senior Notes		4.375	%		5/20/23		800,000		811,200
Petrobras Global Finance BV, Senior Notes		5.999	%		1/27/28		4,320,000		4,433,400	^(b)
Petrobras Global Finance BV, Senior Notes		5.750	%		2/1/29		10,320,000		10,371,600	^(b)
Petrobras Global Finance BV, Senior Notes		6.750	%		1/27/41		6,620,000		6,759,914
Petroleos de Venezuela SA, Senior Notes		6.000	%		5/16/24		620,000		139,500	*^(c)(d)
Petroleos Mexicanos, Senior Notes		6.500	%		6/2/41		2,970,000		2,744,310
Range Resources Corp., Senior Notes		5.000	%		3/15/23		1,295,000		1,264,736	^(b)
Range Resources Corp., Senior Notes		4.875	%		5/15/25		5,660,000		5,235,500	^(b)
Rockies Express Pipeline LLC, Senior Notes		7.500	%		7/15/38		1,330,000		1,497,854	^(a)(b)
Rockies Express Pipeline LLC, Senior Notes		6.875	%		4/15/40		1,430,000		1,562,275	^(a)(b)
Shelf Drilling Holdings Ltd., Senior Notes		8.250	%		2/15/25		70,000		68,950	^(a)

See Notes to Financial Statements.


Western Asset High Income Fund II Inc. 2019 Annual Report		13

Schedule of investments (cont’d)

April 30, 2019

Western Asset High Income Fund II Inc.


Security	Rate			Maturity Date		Face Amount†		Value
Oil, Gas & Consumable Fuels — continued
Targa Resources Partners LP/Targa Resources Partners Finance Corp., Senior Notes		5.875	%		4/15/26		1,400,000	$	1,477,437	^(b)
Targa Resources Partners LP/Targa Resources Partners Finance Corp., Senior Notes		6.500	%		7/15/27		1,150,000		1,234,813	^(a)
Targa Resources Partners LP/Targa Resources Partners Finance Corp., Senior Notes		5.000	%		1/15/28		6,525,000		6,426,864	^(b)
Targa Resources Partners LP/Targa Resources Partners Finance Corp., Senior Notes		6.875	%		1/15/29		1,430,000		1,547,975	^(a)
Transportadora de Gas del Sur SA, Senior Notes		6.750	%		5/2/25		7,600,000		6,916,000	^(a)(b)
Whiting Petroleum Corp., Senior Notes		6.250	%		4/1/23		1,530,000		1,570,162	^(b)
Whiting Petroleum Corp., Senior Notes		6.625	%		1/15/26		1,540,000		1,541,463	^(b)
Williams Cos. Inc., Senior Notes		3.700	%		1/15/23		1,040,000		1,058,081	^(b)
Williams Cos. Inc., Senior Notes		4.550	%		6/24/24		1,280,000		1,349,851	^(b)
Williams Cos. Inc., Senior Notes		7.500	%		1/15/31		780,000		983,988	^(b)
Williams Cos. Inc., Senior Notes		5.750	%		6/24/44		3,900,000		4,252,841	^(b)
WPX Energy Inc., Senior Notes		8.250	%		8/1/23		1,070,000		1,226,488	^(b)
YPF SA, Senior Notes		6.950	%		7/21/27		4,430,000		3,782,998	^(a)
Total Oil, Gas & Consumable Fuels									128,383,806
Total Energy									132,990,059
Financials — 16.6%
Banks — 12.0%
Bank of America Corp., Junior Subordinated Notes (6.500% to 10/23/24 then 3 mo. USD LIBOR + 4.174%)		6.500	%		10/23/24		2,550,000		2,802,042	^(b)(i)(j)
Barclays Bank PLC, Subordinated Notes		10.179	%		6/12/21		1,970,000		2,228,498	^(a)(b)
Barclays Bank PLC, Subordinated Notes		7.625	%		11/21/22		2,950,000		3,221,075	^(b)
Barclays PLC, Junior Subordinated Notes (8.000% to 6/15/24 then 5 year Treasury Constant Maturity Rate + 5.672%)		8.000	%		6/15/24		2,120,000		2,236,600	^(b)(i)(j)
BBVA Bancomer SA, Subordinated Notes (5.125% to 1/17/28 then 5 year Treasury Constant Maturity Rate + 2.650%)		5.125	%		1/18/33		3,000,000		2,853,750	^(a)(j)
BNP Paribas SA, Junior Subordinated Notes (7.375% to 8/19/25 then USD 5 year ICE Swap Rate + 5.150%)		7.375	%		8/19/25		1,820,000		1,969,468	^(a)(b)(i)(j)
CIT Group Inc., Senior Notes		5.000	%		8/15/22		1,060,000		1,105,050	^(b)
CIT Group Inc., Senior Notes		5.000	%		8/1/23		2,801,000		2,929,846	^(b)
Citigroup Inc., Junior Subordinated Notes (5.950% to 5/15/25 then 3 mo. USD LIBOR + 3.905%)		5.950	%		5/15/25		2,900,000		3,040,287	^(b)(i)(j)
Citigroup Inc., Junior Subordinated Notes (6.300% to 5/15/24 then 3 mo. USD LIBOR + 3.423%)		6.300	%		5/15/24		10,120,000		10,531,277	^(b)(i)(j)
Credit Agricole SA, Junior Subordinated Notes (8.375% to 10/13/19 then 3 mo. USD LIBOR + 6.982%)		8.375	%		10/13/19		1,710,000		1,757,025	^(a)(b)(i)(j)

See Notes to Financial Statements.


14		Western Asset High Income Fund II Inc. 2019 Annual Report

Western Asset High Income Fund II Inc.


Security	Rate			Maturity Date		Face Amount†			Value
Banks — continued
Credit Agricole SA, Junior Subordinated Notes (8.125% to 12/23/25 then USD 5 year ICE Swap Rate + 6.185%)		8.125	%		12/23/25		2,510,000		$	2,864,362	^(a)(b)(i)(j)
HSBC Holdings PLC, Junior Subordinated Notes (6.000% to 5/22/27 then USD 5 year ICE Swap Rate + 3.746%)		6.000	%		5/22/27		2,640,000			2,649,491	^(b)(i)(j)
HSBC Holdings PLC, Junior Subordinated Notes (6.500% to 3/23/28 then USD 5 year ICE Swap Rate + 3.606%)		6.500	%		3/23/28		4,100,000			4,175,399	^(b)(i)(j)
Intesa Sanpaolo SpA, Subordinated Notes		5.017	%		6/26/24		5,930,000			5,726,414	^(a)
Intesa Sanpaolo SpA, Subordinated Notes		5.710	%		1/15/26		7,490,000			7,322,522	^(a)(b)
JPMorgan Chase & Co., Junior Subordinated Notes (6.000% to 8/1/23 then 3 mo. USD LIBOR + 3.300%)		6.000	%		8/1/23		1,570,000			1,649,505	^(b)(i)(j)
JPMorgan Chase & Co., Junior Subordinated Notes (6.100% to 10/1/24 then 3 mo. USD LIBOR + 3.330%)		6.100	%		10/1/24		2,410,000			2,561,203	^(b)(i)(j)
Royal Bank of Scotland Group PLC, Junior Subordinated Notes (7.648% to 9/30/31 then 3 mo. USD LIBOR + 2.500%)		7.648	%		9/30/31		3,530,000			4,486,136	^(b)(i)(j)
Royal Bank of Scotland Group PLC, Junior Subordinated Notes (8.625% to 8/15/21 then USD 5 year ICE Swap Rate + 7.598%)		8.625	%		8/15/21		1,370,000			1,476,175	^(b)(i)(j)
Santander UK Group Holdings PLC, Junior Subordinated Notes (7.375% to 6/24/22 then GBP 5 year Swap Rate + 5.543%)		7.375	%		6/24/22		1,640,000	^GBP		2,278,343	^(d)(i)(j)
TC Ziraat Bankasi AS, Senior Notes		5.125	%		9/29/23		2,530,000			2,216,697	^(a)(b)
UniCredit SpA, Subordinated Notes (7.296% to 4/2/29 then USD 5 year ICE Swap Rate + 4.914%)		7.296	%		4/2/34		2,840,000			2,897,540	^(a)(j)
Total Banks										74,978,705
Capital Markets — 2.0%
Credit Suisse Group AG, Junior Subordinated Notes (7.250% to 9/12/25 then USD 5 year ICE Swap Rate + 4.332%)		7.250	%		9/12/25		3,920,000			4,078,270	^(a)(b)(i)(j)
Donnelley Financial Solutions Inc., Senior Notes		8.250	%		10/15/24		2,080,000			2,121,600	^(b)
Goldman Sachs Group Inc., Subordinated Notes		6.750	%		10/1/37		2,320,000			2,867,078	^(b)
UBS Group Funding Switzerland AG, Senior Notes (7.000% to 1/31/24 then USD 5 year ICE Swap Rate + 4.344%)		7.000	%		1/31/24		3,290,000			3,431,832	^(a)(i)(j)
Total Capital Markets										12,498,780
Consumer Finance — 0.5%
Navient Corp., Senior Notes		5.875	%		10/25/24		1,170,000			1,181,700	^(b)
Navient Corp., Senior Notes		6.750	%		6/15/26		1,990,000			2,010,079
Total Consumer Finance										3,191,779
Diversified Financial Services — 1.9%
AerCap Ireland Capital DAC/AerCap Global Aviation Trust, Senior Notes		4.625	%		10/30/20		890,000			910,261
AerCap Ireland Capital DAC/AerCap Global Aviation Trust, Senior Notes		4.625	%		7/1/22		1,390,000			1,444,157
ASP AMC Merger Sub Inc., Senior Notes		8.000	%		5/15/25		2,220,000			1,437,450	^(a)(b)

See Notes to Financial Statements.


Western Asset High Income Fund II Inc. 2019 Annual Report		15

Schedule of investments (cont’d)

April 30, 2019

Western Asset High Income Fund II Inc.


Security	Rate			Maturity Date		Face Amount†			Value
Diversified Financial Services — continued
DAE Funding LLC, Senior Notes		5.750	%		11/15/23		993,000		$	1,042,650	^(a)
International Lease Finance Corp., Senior Notes		6.250	%		5/15/19		310,000			310,358
International Lease Finance Corp., Senior Notes		8.250	%		12/15/20		2,160,000			2,329,086	^(b)
International Lease Finance Corp., Senior Notes		5.875	%		8/15/22		760,000			819,096	^(b)
Nationwide Building Society, Junior Subordinated Notes (6.875% to 6/20/19 then GBP 5 year Swap Rate + 4.880%)		6.875	%		6/20/19		1,140,000	^GBP		1,499,095	^(d)(i)(j)
Travelport Corporate Finance PLC, Senior Secured Notes		6.000	%		3/15/26		1,700,000			1,831,750	^(a)(b)
Total Diversified Financial Services										11,623,903
Insurance — 0.2%
MetLife Capital Trust IV, Junior Subordinated Notes		7.875	%		12/15/37		1,100,000			1,371,359	^(a)(b)
Total Financials										103,664,526
Health Care — 9.5%
Health Care Providers & Services — 5.6%
Air Medical Group Holdings Inc., Senior Notes		6.375	%		5/15/23		1,020,000			940,950	^(a)(b)
BioScrip Inc., First Lien Notes ((Highest of Federal Funds Rate + 0.500%, Prime Rate and 1 mo. LIBOR (subject to 1.000% floor) + 1.000%) or 1 mo. LIBOR (subject to 1.000% floor) + 6.000%, or 1 mo. LIBOR (subject to 1.000% floor) + 7.000%)		9.500	%		6/30/22		4,552,000			4,756,840	^(f)(g)(j)(k)
Centene Corp., Senior Notes		5.625	%		2/15/21		1,020,000			1,037,850	^(b)
Centene Corp., Senior Notes		6.125	%		2/15/24		810,000			849,487	^(b)
Centene Corp., Senior Notes		4.750	%		1/15/25		1,860,000			1,891,620	^(b)
CHS/Community Health Systems Inc., Senior Secured Notes		8.000	%		3/15/26		2,200,000			2,145,000	^(a)(b)
DaVita Inc., Senior Notes		5.125	%		7/15/24		2,460,000			2,466,150	^(b)
DaVita Inc., Senior Notes		5.000	%		5/1/25		2,500,000			2,455,475	^(b)
HCA Inc., Senior Notes		5.625	%		9/1/28		5,760,000			6,148,800	^(b)
HCA Inc., Senior Notes		7.500	%		11/15/95		2,205,000			2,271,150	^(b)
HCA Inc., Senior Secured Notes		5.250	%		6/15/26		1,090,000			1,165,802	^(b)
Magellan Health Inc., Senior Notes		4.900	%		9/22/24		4,030,000			3,939,325
Tenet Healthcare Corp., Secured Notes		5.125	%		5/1/25		2,500,000			2,528,125	^(b)
Tenet Healthcare Corp., Secured Notes		6.250	%		2/1/27		2,000,000			2,087,500	^(a)(b)
Total Health Care Providers & Services										34,684,074
Pharmaceuticals — 3.9%
Bausch Health Americas Inc., Senior Notes		8.500	%		1/31/27		4,660,000			5,088,138	^(a)
Bausch Health Cos. Inc., Senior Notes		5.875	%		5/15/23		840,000			849,618	^(a)(b)
Bausch Health Cos. Inc., Senior Notes		6.125	%		4/15/25		5,510,000			5,585,763	^(a)(b)
Bausch Health Cos. Inc., Senior Notes		9.000	%		12/15/25		500,000			555,625	^(a)(b)
Bausch Health Cos. Inc., Senior Secured Notes		7.000	%		3/15/24		740,000			781,625	^(a)(b)
Teva Pharmaceutical Finance Co. BV, Senior Notes		2.950	%		12/18/22		6,330,000			5,923,374
Teva Pharmaceutical Finance Netherlands III BV, Senior Notes		2.200	%		7/21/21		3,814,000			3,665,865

See Notes to Financial Statements.


16		Western Asset High Income Fund II Inc. 2019 Annual Report

Western Asset High Income Fund II Inc.


Security	Rate			Maturity Date		Face Amount†			Value
Pharmaceuticals — continued
Teva Pharmaceutical Finance Netherlands III BV, Senior Notes		2.800	%		7/21/23		2,000,000		$	1,820,567
Total Pharmaceuticals										24,270,575
Total Health Care										58,954,649
Industrials — 7.0%
Air Freight & Logistics — 0.1%
XPO Logistics Inc., Senior Notes		6.500	%		6/15/22		754,000			773,793	^(a)(b)
Airlines — 0.7%
Continental Airlines Pass-Through Trust		5.983	%		4/19/22		3,332,480			3,515,600	^(b)
Delta Air Lines, Inc., Pass-Through Trust		8.021	%		8/10/22		637,936			701,410	^(b)
Total Airlines										4,217,010
Building Products — 0.9%
Standard Industries Inc., Senior Notes		5.000	%		2/15/27		3,170,000			3,122,450	^(a)(b)
Standard Industries Inc., Senior Notes		4.750	%		1/15/28		2,345,000			2,254,131	^(a)(b)
Total Building Products										5,376,581
Commercial Services & Supplies — 2.5%
GFL Environmental Inc., Senior Notes		8.500	%		5/1/27		2,340,000			2,443,568	^(a)
United Rentals North America Inc., Senior Notes		5.500	%		7/15/25		230,000			238,740
United Rentals North America Inc., Senior Notes		6.500	%		12/15/26		7,840,000			8,408,400	^(b)
United Rentals North America Inc., Senior Notes		5.500	%		5/15/27		156,000			161,070
United Rentals North America Inc., Senior Notes		4.875	%		1/15/28		4,075,000			4,054,625	^(b)
Total Commercial Services & Supplies										15,306,403
Containers & Packaging — 0.3%
Hercule Debtco Sarl, Senior Secured Notes (6.750% Cash or 7.500% PIK)		6.750	%		6/30/24		2,050,000	^EUR		2,208,905	^(a)(l)
Industrial Conglomerates — 0.3%
General Electric Co., Junior Subordinated Notes (5.000% to 1/21/21 then 3 mo. USD LIBOR + 3.330%)		5.000	%		1/21/21		1,780,000			1,687,947	^(b)(i)(j)
Machinery — 0.7%
Allison Transmission Inc., Senior Notes		5.000	%		10/1/24		570,000			578,647	^(a)(b)
Allison Transmission Inc., Senior Notes		4.750	%		10/1/27		1,690,000			1,664,329	^(a)(b)
Cleaver-Brooks Inc., Senior Secured Notes		7.875	%		3/1/23		1,020,000			999,600	^(a)(b)
Park-Ohio Industries Inc., Senior Notes		6.625	%		4/15/27		926,000			930,630	^(b)
Total Machinery										4,173,206
Marine — 0.5%
Navios Maritime Acquisition Corp./Navios Acquisition Finance U.S. Inc., Senior Secured Notes		8.125	%		11/15/21		3,610,000			3,014,350	^(a)(b)
Trading Companies & Distributors — 0.8%
Beacon Roofing Supply Inc., Senior Notes		4.875	%		11/1/25		5,380,000			5,196,811	^(a)(b)

See Notes to Financial Statements.


Western Asset High Income Fund II Inc. 2019 Annual Report		17

Schedule of investments (cont’d)

April 30, 2019

Western Asset High Income Fund II Inc.


Security	Rate			Maturity Date		Face Amount†		Value
Transportation Infrastructure — 0.2%
Neovia Logistics Services LLC/SPL Logistics Finance Corp., Senior Secured Notes		8.875	%		8/1/20		1,355,000	$	1,365,976	^(a)(b)
Total Industrials									43,320,982
Information Technology — 2.1%
Semiconductors & Semiconductor Equipment — 0.4%
Amkor Technology Inc., Senior Notes		6.625	%		9/15/27		2,330,000		2,378,785	^(a)
Software — 0.4%
CDK Global Inc., Senior Notes		5.875	%		6/15/26		1,300,000		1,374,750	^(b)
j2 Cloud Services LLC/j2 Global Co-Obligor Inc., Senior Notes		6.000	%		7/15/25		840,000		878,850	^(a)(b)
Total Software									2,253,600
Technology Hardware, Storage & Peripherals — 1.3%
Dell International LLC/EMC Corp., Senior Notes		7.125	%		6/15/24		740,000		782,886	^(a)(b)
Seagate HDD Cayman, Senior Notes		4.750	%		6/1/23		1,700,000		1,718,260	^(b)
Seagate HDD Cayman, Senior Notes		4.750	%		1/1/25		850,000		831,540	^(b)
Seagate HDD Cayman, Senior Notes		4.875	%		6/1/27		495,000		476,621
Western Digital Corp., Senior Notes		4.750	%		2/15/26		4,688,000		4,535,640	^(b)
Total Technology Hardware, Storage & Peripherals									8,344,947
Total Information Technology									12,977,332
Materials — 12.5%
Chemicals — 0.6%
Braskem America Finance Co., Senior Notes		7.125	%		7/22/41		700,000		817,250	^(b)(d)
Braskem Netherlands Finance BV, Senior Notes		3.500	%		1/10/23		600,000		595,356	^(d)
Mexichem SAB de CV, Senior Notes		5.875	%		9/17/44		2,000,000		2,011,000	^(a)
Total Chemicals									3,423,606
Construction Materials — 0.3%
Cemex SAB de CV, Senior Secured Notes		6.125	%		5/5/25		1,530,000		1,599,615	^(a)(b)
Containers & Packaging — 3.9%
ARD Securities Finance SARL, Senior Secured Notes (8.750% PIK)		8.750	%		1/31/23		5,607,204		5,558,141	^(a)(b)(l)
Ardagh Packaging Finance PLC/Ardagh Holdings USA Inc., Senior Notes		7.250	%		5/15/24		1,130,000		1,194,749	^(a)(b)
Ardagh Packaging Finance PLC/Ardagh Holdings USA Inc., Senior Notes		6.000	%		2/15/25		7,158,000		7,229,580	^(a)(b)
Berry Global Inc., Secured Notes		4.500	%		2/15/26		2,130,000		2,071,425	^(a)(b)
Greif Inc., Senior Notes		6.500	%		3/1/27		2,930,000		3,025,225	^(a)
Pactiv LLC, Senior Notes		7.950	%		12/15/25		920,000		947,600	^(b)
Pactiv LLC, Senior Notes		8.375	%		4/15/27		4,310,000		4,450,075	^(b)
Total Containers & Packaging									24,476,795

See Notes to Financial Statements.


18		Western Asset High Income Fund II Inc. 2019 Annual Report

Western Asset High Income Fund II Inc.


Security	Rate			Maturity Date		Face Amount†		Value
Metals & Mining — 6.6%
Alcoa Nederland Holding BV, Senior Notes		6.750	%		9/30/24		1,020,000	$	1,083,750	^(a)(b)
Alcoa Nederland Holding BV, Senior Notes		7.000	%		9/30/26		2,450,000		2,652,125	^(a)(b)
Alcoa Nederland Holding BV, Senior Notes		6.125	%		5/15/28		2,416,000		2,518,680	^(a)(b)
Metals & Mining — continued
Anglo American Capital PLC, Senior Notes		4.125	%		4/15/21		590,000		599,881	^(a)(b)
Anglo American Capital PLC, Senior Notes		4.875	%		5/14/25		2,040,000		2,154,425	^(a)(b)
ArcelorMittal, Senior Notes		7.000	%		10/15/39		3,200,000		3,678,983	^(b)
First Quantum Minerals Ltd., Senior Notes		7.000	%		2/15/21		1,944,000		1,982,880	^(a)(b)
Freeport-McMoRan Inc., Senior Notes		4.000	%		11/14/21		1,060,000		1,074,575	^(b)
Freeport-McMoRan Inc., Senior Notes		3.550	%		3/1/22		760,000		755,250	^(b)
Freeport-McMoRan Inc., Senior Notes		6.875	%		2/15/23		1,870,000		1,979,863	^(b)
Freeport-McMoRan Inc., Senior Notes		3.875	%		3/15/23		910,000		903,175	^(b)
Freeport-McMoRan Inc., Senior Notes		4.550	%		11/14/24		4,605,000		4,587,731	^(b)
Freeport-McMoRan Inc., Senior Notes		5.400	%		11/14/34		1,320,000		1,245,750	^(b)
Freeport-McMoRan Inc., Senior Notes		5.450	%		3/15/43		5,310,000		4,818,825	^(b)
Hudbay Minerals Inc., Senior Notes		7.250	%		1/15/23		1,180,000		1,228,675	^(a)(b)
Hudbay Minerals Inc., Senior Notes		7.625	%		1/15/25		690,000		721,050	^(a)(b)
Midwest Vanadium Pty Ltd., Senior Secured Notes		13.250	%		2/15/18		2,862,131		10,733	*^(a)(m)
Southern Copper Corp., Senior Notes		3.875	%		4/23/25		1,000,000		1,014,773	^(b)
Teck Resources Ltd., Senior Notes		8.500	%		6/1/24		2,780,000		2,974,717	^(a)(b)
Vale Overseas Ltd., Senior Notes		4.375	%		1/11/22		1,784,000		1,824,140	^(b)
Vale Overseas Ltd., Senior Notes		6.875	%		11/21/36		2,960,000		3,449,880	^(b)
Total Metals & Mining									41,259,861
Paper & Forest Products — 1.1%
Mercer International Inc., Senior Notes		6.500	%		2/1/24		1,039,000		1,075,365	^(b)
Mercer International Inc., Senior Notes		7.375	%		1/15/25		3,300,000		3,491,812	^(a)(b)
Suzano Austria GmbH, Senior Notes		5.750	%		7/14/26		2,250,000		2,401,875	^(a)(b)
Total Paper & Forest Products									6,969,052
Total Materials									77,728,929
Real Estate — 1.9%
Equity Real Estate Investment Trusts (REITs) — 1.7%
CoreCivic Inc., Senior Notes		4.125	%		4/1/20		290,000		292,265	^(b)
CoreCivic Inc., Senior Notes		5.000	%		10/15/22		1,440,000		1,443,600	^(b)
CoreCivic Inc., Senior Notes		4.625	%		5/1/23		200,000		195,060	^(b)
CoreCivic Inc., Senior Notes		4.750	%		10/15/27		1,340,000		1,160,775
MGM Growth Properties Operating Partnership LP/MGP Finance Co-Issuer Inc., Senior Notes		4.500	%		1/15/28		3,230,000		3,116,950	^(b)
MPT Operating Partnership LP/MPT Finance Corp., Senior Notes		6.375	%		3/1/24		1,020,000		1,075,335	^(b)

See Notes to Financial Statements.


Western Asset High Income Fund II Inc. 2019 Annual Report		19

Schedule of investments (cont’d)

April 30, 2019

Western Asset High Income Fund II Inc.


Security	Rate			Maturity Date		Face Amount†			Value
Equity Real Estate Investment Trusts (REITs) —continued
MPT Operating Partnership LP/MPT Finance Corp., Senior Notes		5.250	%		8/1/26		1,590,000		$	1,625,775	^(b)
MPT Operating Partnership LP/MPT Finance Corp., Senior Notes		5.000	%		10/15/27		1,732,000			1,740,660	^(b)
Total Equity Real Estate Investment Trusts (REITs)										10,650,420
Real Estate Management & Development — 0.2%
WeWork Cos. Inc., Senior Notes		7.875	%		5/1/25		1,140,000			1,132,875	^(a)(b)
Total Real Estate										11,783,295
Utilities — 1.3%
Electric Utilities — 0.2%
Pampa Energia SA, Senior Notes		7.375	%		7/21/23		1,160,000			1,046,900	^(b)(d)
Gas Utilities — 0.7%
Suburban Propane Partners LP/Suburban Energy Finance Corp., Senior Notes		5.875	%		3/1/27		4,850,000			4,740,875	^(b)
Independent Power and Renewable Electricity Producers — 0.4%
Minejesa Capital BV, Senior Secured Notes		4.625	%		8/10/30		2,380,000			2,313,748	^(a)(b)
Total Utilities										8,101,523
Total Corporate Bonds & Notes (Cost — $621,698,744)										674,238,351
Sovereign Bonds — 16.9%
Argentina — 2.7%
Argentina POM Politica Monetaria, Bonds (Argentina Central Bank 7 Day Repo Reference Rate)		70.354	%		6/21/20		70,470,000	^ARS		1,580,310	^(j)
Argentine Republic Government International Bond, Senior Notes		6.875	%		4/22/21		1,510,000			1,271,435
Argentine Republic Government International Bond, Senior Notes		5.625	%		1/26/22		10,570,000			8,249,991
Provincia de Buenos Aires, Senior Notes		9.125	%		3/16/24		4,330,000			3,285,387	^(a)
Provincia de Buenos Aires, Senior Notes		7.875	%		6/15/27		3,650,000			2,445,500	^(a)
Total Argentina										16,832,623
Brazil — 1.5%
Brazil Notas do Tesouro Nacional Serie F, Notes		10.000	%		1/1/21		4,502,000	^BRL		1,195,747
Brazil Notas do Tesouro Nacional Serie F, Notes		10.000	%		1/1/23		24,359,000	^BRL		6,552,023
Brazilian Government International Bond, Senior Notes		4.625	%		1/13/28		1,500,000			1,507,875
Total Brazil										9,255,645
Costa Rica — 0.3%
Costa Rica Government International Bond, Senior Notes		7.158	%		3/12/45		2,000,000			1,952,500	^(a)
Dominican Republic — 0.2%
Dominican Republic International Bond, Senior Notes		5.500	%		1/27/25		1,500,000			1,554,375	^(a)
Ecuador — 1.4%
Ecuador Government International Bond, Senior Notes		10.750	%		3/28/22		2,120,000			2,379,700	^(a)
Ecuador Government International Bond, Senior Notes		9.650	%		12/13/26		5,960,000			6,369,750	^(a)
Total Ecuador										8,749,450

See Notes to Financial Statements.


20		Western Asset High Income Fund II Inc. 2019 Annual Report

Western Asset High Income Fund II Inc.


Security	Rate			Maturity Date		Face Amount†			Value
Egypt — 0.4%
Egypt Government International Bond, Senior Notes		7.600	%		3/1/29		2,230,000		$	2,252,523	^(a)
Ghana — 0.4%
Ghana Government International Bond, Senior Notes		8.125	%		3/26/32		2,720,000			2,702,320	^(a)
Guatemala — 0.4%
Guatemala Government Bond, Senior Notes		4.375	%		6/5/27		2,370,000			2,327,577	^(a)
Honduras — 0.4%
Honduras Government International Bond, Senior Notes		6.250	%		1/19/27		2,450,000			2,584,750	^(a)
Hungary — 0.3%
Hungary Government International Bond, Senior Notes		5.750	%		11/22/23		1,658,000			1,840,935
Indonesia — 3.0%
Indonesia Government International Bond, Senior Notes		3.850	%		7/18/27		5,760,000			5,803,793	^(a)
Indonesia Government International Bond, Senior Notes		3.500	%		1/11/28		10,190,000			10,027,103
Indonesia Treasury Bond, Senior Notes		7.000	%		5/15/22		41,810,000,000	^IDR		2,935,502
Total Indonesia										18,766,398
Ivory Coast — 0.1%
Ivory Coast Government International Bond, Senior Notes		5.750	%		12/31/32		452,500			428,065	^(a)
Mexico — 0.4%
Mexican Bonos, Bonds		6.500	%		6/9/22		30,000,000	^MXN		1,520,101
Mexico Government International Bond, Senior Notes		3.750	%		1/11/28		1,000,000			983,450
Total Mexico										2,503,551
Nigeria — 0.2%
Nigeria Government International Bond, Senior Notes		7.143	%		2/23/30		1,130,000			1,128,655	^(d)
Poland — 1.0%
Republic of Poland Government Bond		2.500	%		7/25/27		23,620,000	^PLN		6,028,232
Russia — 1.2%
Russian Federal Bond — OFZ		7.750	%		9/16/26		490,380,000	^RUB		7,542,628
Sri Lanka — 0.6%
Sri Lanka Government International Bond, Senior Notes		6.850	%		3/14/24		1,920,000			1,944,849	^(a)
Sri Lanka Government International Bond, Senior Notes		7.850	%		3/14/29		1,930,000			1,989,444	^(a)
Total Sri Lanka										3,934,293
Turkey — 1.0%
Turkey Government International Bond, Senior Notes		4.250	%		4/14/26		3,900,000			3,252,132
Turkey Government International Bond, Senior Notes		4.875	%		10/9/26		3,875,000			3,314,660
Total Turkey										6,566,792
Ukraine — 0.7%
Ukraine Government International Bond, Senior Notes		7.750	%		9/1/20		2,480,000			2,487,291	^(a)
Ukraine Government International Bond, Senior Notes		7.375	%		9/25/32		2,000,000			1,768,700	^(a)
Total Ukraine										4,255,991

See Notes to Financial Statements.


Western Asset High Income Fund II Inc. 2019 Annual Report		21

Schedule of investments (cont’d)

April 30, 2019

Western Asset High Income Fund II Inc.


Security	Rate			Maturity Date		Face Amount†			Value
Uruguay — 0.5%
Uruguay Government International Bond, Senior Notes		9.875	%		6/20/22		82,160,000	^UYU	$	2,354,988	^(d)
Uruguay Government International Bond, Senior Notes		8.500	%		3/15/28		21,960,000	^UYU		542,434	^(d)
Total Uruguay										2,897,422
Venezuela — 0.2%
Venezuela Government International Bond, Senior Notes		8.250	%		10/13/24		2,000,000			597,500	*^(c)(d)
Venezuela Government International Bond, Senior Notes		9.375	%		1/13/34		1,164,000			382,665	*^(c)
Total Venezuela										980,165
Total Sovereign Bonds (Cost — $106,288,313)										105,084,890
Senior Loans — 9.5%
Communication Services — 1.4%
Diversified Telecommunication Services — 0.1%
UnityMedia Hessen GmbH & Co. KG, Term Loan Senior Facility B (1 mo. USD LIBOR + 2.250%)		4.723	%		9/30/25		720,000			719,800	^(j)(n)(o)
Media — 1.3%
Charter Communications Operating LLC, Term Loan B (1 mo. USD LIBOR + 2.000%)		4.490	%		4/30/25		5,332,385			5,352,365	^(j)(n)(o)
iHeartCommunications Inc., Term Loan		—			5/1/26		300,000			301,625	^(p)
Lamar Media Corp., Term Loan B (1 mo. USD LIBOR + 1.750%)		4.250	%		3/14/25		2,371,025			2,378,420	^(j)(n)(o)
Total Media										8,032,410
Total Communication Services										8,752,210
Consumer Discretionary — 4.4%
Diversified Consumer Services — 0.5%
Prime Security Services Borrower LLC, Term Loan B1 (1 mo. USD LIBOR + 2.750%)		5.233	%		5/2/22		3,040,102			3,048,642	^(j)(n)(o)(p)
Hotels, Restaurants & Leisure — 3.1%
Aramark Services Inc., USD Term Loan B3 (1 mo. USD LIBOR + 1.750%)		4.233	%		3/11/25		6,995,668			6,998,586	^(j)(n)(o)
Hilton Worldwide Finance LLC, Term Loan B2 (1 mo. USD LIBOR + 1.750%)		4.227	%		10/25/23		11,087,185			11,140,314	^(j)(n)(o)
Wyndham Hotels & Resorts Inc., Term Loan B (1 mo. USD LIBOR + 1.750%)		4.233	%		5/30/25		1,128,066			1,128,268	^(j)(n)(o)
Total Hotels, Restaurants & Leisure										19,267,168
Specialty Retail — 0.7%
PetSmart Inc., Term Loan B2 (1 mo. USD LIBOR + 4.250%)		6.730	%		3/11/22		4,507,523			4,357,648	^(j)(n)(o)
Textiles, Apparel & Luxury Goods — 0.1%
TOMS Shoes LLC, Initial Term Loan (3 mo. USD LIBOR + 5.500%)		8.080	%		10/30/20		543,507			421,218	^(g)(j)(n)(o)
Total Consumer Discretionary										27,094,676

See Notes to Financial Statements.


22		Western Asset High Income Fund II Inc. 2019 Annual Report

Western Asset High Income Fund II Inc.


Security	Rate			Maturity Date		Face Amount†		Value
Financials — 0.6%
Diversified Financial Services — 0.6%
Travelport Finance (Luxembourg) SARL, First Lien Term Loan		—			3/18/26		1,900,000	$	1,861,050	^(p)
Travelport Finance (Luxembourg) SARL, Initial Term Loan (3 mo. USD LIBOR + 2.500%)		5.184	%		3/17/25		1,892,668		1,892,127	^(j)(n)(o)
Total Financials									3,753,177
Industrials — 0.7%
Air Freight & Logistics — 0.7%
Avolon TLB Borrower 1 (US) LLC, Term Loan B3 (1 mo. USD LIBOR + 2.000%)		4.487	%		1/15/25		4,632,573		4,637,984	^(j)(n)(o)
Information Technology — 0.9%
IT Services — 0.9%
First Data Corp., 2024 New Dollar Term Loan A (1 mo. USD LIBOR + 2.000%)		4.481	%		4/26/24		5,620,650		5,626,310	^(j)(n)(o)
Materials — 1.0%
Containers & Packaging — 1.0%
Berry Global Inc., Term Loan Q (1 mo. USD LIBOR + 2.000%)		4.481	%		10/3/22		6,044,004		6,042,553	^(j)(n)(o)
Real Estate — 0.4%
Equity Real Estate Investment Trusts (REITs) — 0.4%
Iron Mountain Information Management LLC, Term Loan B (1 mo. USD LIBOR + 1.750%)		4.233	%		1/2/26		2,214,408		2,178,424	^(g)(j)(n)(o)
Utilities — 0.1%
Electric Utilities — 0.1%
Panda Temple Power LLC, Second Lien Term Loan (1 mo. USD LIBOR + 8.000% PIK)		10.481	%		2/7/23		861,946		861,586	^(j)(l)(n)(o)
Total Senior Loans (Cost — $58,378,227)									58,946,920
U.S. Government & Agency Obligations — 3.1%
U.S. Government Obligations — 3.1%
U.S. Treasury Notes		1.875	%		1/31/22		4,000,000		3,960,469
U.S. Treasury Notes		1.750	%		3/31/22		4,000,000		3,945,469
U.S. Treasury Notes		1.875	%		8/31/22		3,400,000		3,359,625	^(q)
U.S. Treasury Notes		1.625	%		5/31/23		1,000,000		975,000	^(q)
U.S. Treasury Notes		2.750	%		8/31/23		4,000,000		4,078,437	^(q)
U.S. Treasury Notes		2.125	%		3/31/24		3,000,000		2,978,086	^(q)
Total U.S. Government & Agency Obligations (Cost — $18,979,696)									19,297,086

See Notes to Financial Statements.


Western Asset High Income Fund II Inc. 2019 Annual Report		23

Schedule of investments (cont’d)

April 30, 2019

Western Asset High Income Fund II Inc.

Security

Value

Common Stocks — 1.1%

Consumer Discretionary — 0.0%

Hotels, Restaurants & Leisure — 0.0%

Bossier Escrow Shares

166,350

34,784

*^(f)(g)

Energy — 0.9%

Energy Equipment & Services — 0.3%

Hercules Offshore Inc. (Escrow)

96,800

72,568

*^(f)(g)

KCAD Holdings I Ltd.

533,873,172

1,663,015

*^(f)(g)

Total Energy Equipment & Services

1,735,583

Oil, Gas & Consumable Fuels — 0.6%

Berry Petroleum Corp.

205,277

2,331,946

Montage Resources Corp.

122,990

1,367,649

*^(b)

MWO Holdings LLC

1,069

81,693

*^(f)(g)

Total Oil, Gas & Consumable Fuels

3,781,288

Total Energy

5,516,871

Utilities — 0.2%

Electric Utilities — 0.2%

Panda Temple Power LLC

56,930

1,223,995

*^(g)

Total Common Stocks (Cost — $21,890,365)

6,775,650

Rate

Maturity
Date

Face
Amount†

Convertible Bonds & Notes — 0.9%

Communication Services — 0.9%

Interactive Media & Services — 0.1%

Twitter Inc., Senior Notes

1.000

9/15/21

780,000

754,755

^(b)

Media — 0.8%

DISH Network Corp., Senior Notes

2.375

3/15/24

5,940,000

5,185,375

^(b)

Total Convertible Bonds & Notes (Cost — $5,891,214)

5,940,130

Preferred Stocks — 0.6%

Financials — 0.6%

Banks — 0.6%

GMAC Capital Trust I (3 mo. USD LIBOR + 5.785%) (Cost — $3,419,137)

8.469

155,800

4,097,540

^(b)(j)

See Notes to Financial Statements.


24		Western Asset High Income Fund II Inc. 2019 Annual Report

Western Asset High Income Fund II Inc.

Security

Rate

Maturity
Date

Face
Amount†

Value

Non-U.S. Treasury Inflation Protected Securities — 0.1%

Argentina — 0.1%

Bonos de la Nacion Argentina con Ajuste por CER, Bonds (Cost — $594,762)

4.000

3/6/20

24,282,160

^ARS

478,930

Total Investments before Short-Term Investments (Cost — $837,140,458)

874,859,497

Short-Term Investments — 0.4%

Sovereign Bonds — 0.2%

Argentina Treasury Bill (Cost — $1,205,617)

(92.424

5/31/19

38,350,000

^ARS

1,076,696

^(r)

Money Market Funds — 0.2%

Dreyfus Government Cash Management, Institutional Shares (Cost — $1,114,431)

2.452

1,114,431

1,114,431

Total Short-Term Investments (Cost — $2,320,048)

2,191,127

Total Investments — 141.0% (Cost — $839,460,506)

877,050,624

Liabilities in Excess of Other Assets — (41.0)%

(254,905,343

)

Total Net Assets — 100.0%

622,145,281

†	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.

^(b)	All or a portion of this security is pledged as collateral pursuant to the loan agreement (Note 5).

^(c)	The coupon payment on these securities is currently in default as of April 30, 2019.

^(d)

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

^(e)	Securities traded on a when-issued or delayed delivery basis.

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

^(g)	Security is valued using significant unobservable inputs (Note 1).

^(h)	Value is less than $1.

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

^(j)

Variable rate security. Interest rate disclosed is as of the most recent information available. Certain variable rate securities are not based on a published reference rate and spread but are determined by the issuer or agent and are based on current market conditions. These securities do not indicate a reference rate and spread in their description above.

^(k)	Restricted security (Note 8).

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

^(m)	The maturity principal is currently in default as of April 30, 2019.

See Notes to Financial Statements.


Western Asset High Income Fund II Inc. 2019 Annual Report		25

Schedule of investments (cont’d)

April 30, 2019

Western Asset High Income Fund II Inc.

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

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

^(p)	All or a portion of this loan is unfunded as of April 30, 2019. The interest rate for fully unfunded term loans is to be determined.

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

^(r)	Rate shown represents yield-to-maturity.


Abbreviations used in this schedule:

ARS		— Argentine Peso

BRL		— Brazilian Real

CER		— Coeficente de Establilzacion de Referencia

EUR		— Euro

GBP		— British Pound

ICE		— Intercontinental Exchange

IDR		— Indonesian Rupiah

JSC		— Joint Stock Company

LIBOR		— London Interbank Offered Rate

MXN		— Mexican Peso

OJSC		— Open Joint Stock Company

PIK		— Payment-In-Kind

PLN		— Polish Zloty

RUB		— Russian Ruble

USD		— United States Dollar

UYU		— Uruguayan Peso

At April 30, 2019, the Fund had the following open reverse repurchase agreements:

Counterparty

Rate

Effective
Date

Maturity
Date

Face Amount
of Reverse
Repurchase
Agreements

Asset Class of Collateral*

Collateral
Value

Deutsche Bank Securities Inc.

2.600

4/11/2019

7/10/2019

11,123,000

U.S. Government & Agency Obligations

11,391,148

*	Refer to the Schedule of Investments for positions held at the counterparty as collateral for reverse repurchase agreements.

See Notes to Financial Statements.


26		Western Asset High Income Fund II Inc. 2019 Annual Report

Western Asset High Income Fund II Inc.

At April 30, 2019, the Fund had the following open forward foreign currency contracts:

Currency
Purchased

Currency
Sold

Counterparty

Settlement
Date

Unrealized
Appreciation

BRL

6,330,000

USD

1,602,045

Barclays Bank PLC

7/17/19

2,236

USD

5,905,597

EUR

5,205,657

Barclays Bank PLC

7/17/19

27,039

USD

394,962

GBP

300,000

Barclays Bank PLC

7/17/19

2,170

USD

4,711,713

GBP

3,584,060

Barclays Bank PLC

7/17/19

19,069

USD

1,622,578

BRL

6,330,000

Citibank N.A.

7/17/19

18,296

Total

68,810


Abbreviations used in this table:

BRL		— Brazilian Real

EUR		— Euro

GBP		— British Pound

USD		— United States Dollar

See Notes to Financial Statements.


Western Asset High Income Fund II Inc. 2019 Annual Report		27

Statement of assets and liabilities

April 30, 2019



Assets:
Investments, at value (Cost — $839,460,506)	$	877,050,624
Foreign currency, at value (Cost — $932,589)		911,756
Interest receivable		13,574,195
Receivable for securities sold		9,542,931
Unrealized appreciation on forward foreign currency contracts		68,810
Prepaid expenses		39,316
*Total Assets*		*901,187,632*

Liabilities:
Loan payable (Note 5)		246,500,000
Payable for securities purchased		16,481,144
Payable for open reverse repurchase agreements (Note 3)		11,123,000
Distributions payable		3,917,186
Investment management fee payable		559,745
Interest payable		259,322
Directors’ fees payable		7,197
Accrued expenses		194,757
*Total Liabilities*		*279,042,351*
Total Net Assets	$	622,145,281

Net Assets:
Par value ($0.001 par value; 85,156,216 shares issued and outstanding; 100,000,000 shares authorized)	$	85,156
Paid-in capital in excess of par value		752,543,350
Total distributable earnings (loss)		(130,483,225)
Total Net Assets	$	622,145,281

Shares Outstanding		85,156,216

Net Asset Value		$7.31

See Notes to Financial Statements.


28		Western Asset High Income Fund II Inc. 2019 Annual Report

Statement of operations

For the Year Ended April 30, 2019



Investment Income:
Interest	$	59,469,354
Dividends		646,022
Less: Foreign taxes withheld		(86,012)
*Total Investment Income*		*60,029,364*

Expenses:
Interest expense (Note 5)		7,608,987
Investment management fee (Note 2)		6,899,396
Transfer agent fees		262,941
Directors’ fees		160,191
Audit and tax fees		80,354
Stock exchange listing fees		44,180
Legal fees		42,895
Shareholder reports		27,620
Insurance		9,184
Custody fees		7,844
Fund accounting fees		7,333
Miscellaneous expenses		21,272
*Total Expenses*		*15,172,197*
Less: Fee waivers and/or expense reimbursements (Note 2)		(89,023)
*Net Expenses*		*15,083,174*
Net Investment Income		44,946,190

Realized and Unrealized Gain (Loss) on Investments, Futures Contracts, Forward Foreign Currency Contracts and Foreign Currency Transactions (Notes 1, 3 and 4):
Net Realized Gain (Loss) From:
Investment transactions		(32,465,759)
Futures contracts		140,411
Forward foreign currency contracts		439,203
Foreign currency transactions		(281,090)
*Net Realized Loss*		*(32,167,235)*
Change in Net Unrealized Appreciation (Depreciation) From:
Investments		25,921,904
Futures contracts		(152,041)
Forward foreign currency contracts		(83,337)
Foreign currencies		3,771
*Change in Net Unrealized Appreciation (Depreciation)*		*25,690,297*
Net Loss on Investments, Futures Contracts, Forward Foreign Currency Contracts and Foreign Currency Transactions		(6,476,938)
Increase in Net Assets From Operations	$	38,469,252

See Notes to Financial Statements.


Western Asset High Income Fund II Inc. 2019 Annual Report		29

Statements of changes in net assets


For the Years Ended April 30,	2019		2018

Operations:
Net investment income	$	44,946,190	$	48,116,064
Net realized loss		(32,167,235)		(1,530,249)
Change in net unrealized appreciation (depreciation)		25,690,297		(30,956,293)
*Increase in Net Assets From Operations*		*38,469,252*		*15,629,522*

Distributions to Shareholders From (Note 1):
Total distributable earnings^(a)		(42,981,123)		(49,234,034)
Return of capital		(3,911,661)		(634,897)
*Decrease in Net Assets From Distributions to Shareholders*		*(46,892,784)*		*(49,868,931)*

Fund Share Transactions:
Cost of shares repurchased (1,047,640 and 0 shares repurchased, respectively)		(6,268,230)		—
*Decrease in Net Assets From Fund Share Transactions*		*(6,268,230)*		—
*Decrease in Net Assets*		*(14,691,762)*		*(34,239,409)*

Net Assets:
Beginning of year		636,837,043		671,076,452
End of year^(b)	$	622,145,281	$	636,837,043

^(a)	Distributions from net investment income and from realized gains are no longer required to be separately disclosed (Note 10). For the year ended April 30, 2018, distributions from net investment income were $49,234,034.

^(b)	Parenthetical disclosure of undistributed net investment income is no longer required (Note 10). For the year ended April 30, 2018, end of year net assets included overdistributed net investment income of $(4,562,937).

See Notes to Financial Statements.


30		Western Asset High Income Fund II Inc. 2019 Annual Report

Statement of cash flows

For the Year Ended April 30, 2019



Increase (Decrease) in Cash:
Cash Provided (Used) by Operating Activities:
Net increase in net assets resulting from operations	$	38,469,252
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided (used) by operating activities:
Purchases of portfolio securities		(897,677,309)
Sales of portfolio securities		893,672,062
Net purchases, sales and maturities of short-term investments		11,464,136
Payment-in-kind		(423,208)
Net amortization of premium (accretion of discount)		(6,251,808)
Increase in receivable for securities sold		(274,234)
Increase in interest receivable		(1,582,033)
Decrease in prepaid expenses		681
Decrease in payable for securities purchased		(15,865,930)
Decrease in investment management fee payable		(17,280)
Decrease in Directors’ fees payable		(4,706)
Increase in interest payable		84,832
Increase in accrued expenses		85,151
Decrease in payable to broker — variation margin on open futures contracts		(14,500)
Net realized loss on investments		32,465,759
Change in net unrealized appreciation (depreciation) of investments and forward foreign currency contracts		(25,838,567)
Net Cash Provided by Operating Activities*		*28,292,298*

Cash Flows From Financing Activities:
Distributions paid on common stock		(46,897,873)
Proceeds from loan facility borrowings		11,500,000
Increase in payable for reverse repurchase agreements		11,123,000
Payment for shares repurchased		(6,268,230)
*Net Cash Used in Financing Activities*		*(30,543,103)*
Net Decrease in Cash and Restricted Cash		(2,250,805)
Cash and restricted cash at beginning of year		3,162,561
Cash and restricted cash at end of year	$	911,756

*	Included in operating expenses is cash of $7,524,155 paid for interest on borrowings.

The following table provides a reconciliation of cash and restricted cash reported within the Statement of Assets and Liabilities that sums to the total of such amounts shown on the Statement of Cash Flows.


	April 30, 2019
Cash	$	911,756
Restricted cash		—
Total cash and restricted cash shown in the Statement of Cash Flows	$	911,756

See Notes to Financial Statements.


Western Asset High Income Fund II Inc. 2019 Annual Report		31

Financial highlights


For a share of capital stock outstanding throughout each year ended April 30:
	2019¹			2018¹			2017¹			2016¹			2015¹

Net asset value, beginning of year		$7.39			$7.78			$7.12			$8.57			$9.47

Income (loss) from operations:
Net investment income		0.52			0.56			0.66			0.73			0.79
Net realized and unrealized gain (loss)		(0.06)			(0.37)			0.69			(1.36)			(0.86)
*Total income (loss) from operations*		*0.46*			*0.19*			*1.35*			*(0.63)*			*(0.07)*

Less distributions from:
Net investment income		(0.50)			(0.57)			(0.63)			(0.82)			(0.83)
Return of capital		(0.05)			(0.01)			(0.06)			—			—
*Total distributions*		*(0.55)*			*(0.58)*			*(0.69)*			*(0.82)*			*(0.83)*
Anti-dilutive impact of repurchase plan		0.01	²		—			—			—			—

Net asset value, end of year		$7.31			$7.39			$7.78			$7.12			$8.57

Market price, end of year		$6.69			$6.55			$7.42			$6.90			$8.15
*Total return, based on NAV^3,4*		*6.77*	%		*2.41*	%		*19.76*	%		*(7.12)*	%		*(0.65)*	%
*Total return, based on Market Price⁵*		*11.29*	%		*(4.15)*	%		*18.36*	%		*(4.40)*	%		*(4.54)*	%

Net assets, end of year (millions)		$622			$637			$671			$614			$738

Ratios to average net assets:
Gross expenses		2.47	%		1.97	%		1.73	%		1.59	%		1.45	%
Net expenses		2.45	⁶		1.97			1.73			1.59			1.45
Net investment income		7.31			7.26			8.72			9.78			8.90

Portfolio turnover rate		105	%		91	%		77	%		65	%		41	%

Supplemental data:
Loan Outstanding, End of Year (000s)		$246,500			$235,000			$240,000			$240,000			$260,000
Asset Coverage Ratio for Loan Outstanding⁷		352	%		371	%		380	%		356	%		384	%
Asset Coverage, per $1,000 Principal Amount of Loan Outstanding⁷		$3,524			$3,710			$3,796			$3,557			$3,840
Weighted Average Loan (000s)		$242,889			$239,548			$240,000			$241,803			$251,712
Weighted Average Interest Rate on Loan		3.08	%		2.17	%		1.41	%		1.05	%		0.91	%

See Notes to Financial Statements.


32		Western Asset High Income Fund II Inc. 2019 Annual Report

¹	Per share amounts have been calculated using the average shares method.

²	The repurchase plan was completed at an average repurchase price of $5.98 for 1,047,640 shares and $6,268,230 for the year ended April 30, 2019.

³	Performance figures may reflect compensating balance arrangements, fee waivers and/or expense reimbursements. In the absence of compensating balance arrangements, fee waivers and/or expense reimbursements, the total return would have been lower. Past performance is no guarantee of future results.

⁴	The total return calculation assumes that distributions are reinvested at NAV. Past performance is no guarantee of future results.

⁵	The total return calculation assumes that distributions are reinvested in accordance with the Fund’s dividend reinvestment plan. Past performance is no guarantee of future results.

⁶	Reflects fee waivers and/or expense reimbursements.

⁷	Represents value of net assets plus the loan outstanding at the end of the period divided by the loan outstanding at the end of the period.

See Notes to Financial Statements.


Western Asset High Income Fund II Inc. 2019 Annual Report		33

Notes to financial statements

1. Organization and significant accounting policies

Western Asset High Income Fund II 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 maximize current income by investing at least 80% of its net assets, plus any borrowings for investment purposes, in high-yield debt securities. As a secondary objective, the Fund seeks capital appreciation to the extent consistent with its objective of seeking to maximize current income.

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

(a) Investment valuation. The valuations for fixed income securities (which may include, but are not limited to, corporate, government, municipal, mortgage-backed, collateralized mortgage obligations and asset-backed securities) and certain derivative instruments are typically the prices supplied by independent third party pricing services, which may use market prices or broker/dealer quotations or a variety of valuation techniques and methodologies. The independent third party pricing services use inputs that are observable such as issuer details, interest rates, yield curves, prepayment speeds, credit risks/spreads, default rates and quoted prices for similar securities. Investments in open-end funds are valued at the closing net asset value per share of each fund on the day of valuation. Futures contracts are valued daily at the settlement price established by the board of trade or exchange on which they are traded. Equity securities for which market quotations are available are valued at the last reported sales price or official closing price on the primary market or exchange on which they trade. When the Fund holds securities or other assets that are denominated in a foreign currency, the Fund will normally use the currency exchange rates as of 4:00 p.m. (Eastern Time). If independent third party pricing services are unable to supply prices for a portfolio investment, or if the prices supplied are deemed by the manager to be unreliable, the market price may be determined by the manager using quotations from one or more broker/dealers or at the transaction price if the security has recently been purchased and no value has yet been obtained from a pricing service or pricing broker. When reliable prices are not readily available, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded, but before the Fund calculates its net asset value, the Fund values these securities as determined in accordance with procedures approved by the Fund’s Board of Directors.

The Board of Directors is responsible for the valuation process and has delegated the super-vision of the daily valuation process to the Legg Mason North Atlantic Fund Valuation


34		Western Asset High Income Fund II Inc. 2019 Annual Report

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

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

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

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

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

•

Level 1 — quoted prices in active markets for identical investments

•

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

•

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


Western Asset High Income Fund II Inc. 2019 Annual Report		35

Notes to financial statements (cont’d)

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

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


ASSETS
Description	Quoted Prices (Level 1)		Other Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Total
Long-term investments†:
Corporate bonds & notes:
Energy		—	$	132,990,059	$	0	*	$	132,990,059
Health care		—		54,197,809		4,756,840			58,954,649
Other corporate bonds & notes		—		482,293,643		—			482,293,643
Sovereign bonds		—		105,084,890		—			105,084,890
Senior loans:
Consumer discretionary		—		26,673,458		421,218			27,094,676
Real estate		—		—		2,178,424			2,178,424
Other senior loans		—		29,673,820		—			29,673,820
U.S. government & agency obligations		—		19,297,086		—			19,297,086
Common stocks:
Consumer discretionary		—		—		34,784			34,784
Energy	$	3,699,595		—		1,817,276			5,516,871
Utilities		—		—		1,223,995			1,223,995
Convertible bonds & notes		—		5,940,130		—			5,940,130
Preferred stocks		4,097,540		—		—			4,097,540
Non-U.S. Treasury inflation protected securities		—		478,930		—			478,930
Total long-term investments		7,797,135		856,629,825		10,432,537			874,859,497
Short-term investments†:
Sovereign bonds		—		1,076,696		—			1,076,696
Money market funds		1,114,431		—		—			1,114,431
Total short-term investments		1,114,431		1,076,696		—			2,191,127
Total investments	$	8,911,566	$	857,706,521	$	10,432,537		$	877,050,624
Other financial instruments:
Forward foreign currency contracts		—	$	68,810		—		$	68,810
Total	$	8,911,566	$	857,775,331	$	10,432,537		$	877,119,434

†	See Schedule of Investments for additional detailed categorizations.

*	Amount represents less than $1.


36		Western Asset High Income Fund II Inc. 2019 Annual Report

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


Investments in Securities	Balance as of April 30, 2018			Accrued premiums/ discounts		Realized gain (loss)¹		Change in unrealized appreciation (depreciation)²		Purchases
Corporate bonds & notes:
Consumer discretionary	$	2,647,579			—		—		—	$	293,355
Energy		0	*		—		—		—		—
Health care		4,756,840		$	8,206		—	$	(8,206)		—
Senior loans:
Consumer discretionary		2,786,165			(4,308)	$	(451,273)		693,729		1,609,635
Energy		129,100			5		100		22,677		—
Real estate		—			3,763		(34,956)		(13,264)		3,946,348
Common stocks:
Consumer discretionary		2,871,201			—		1,760,590		(2,503,717)		0	*
Energy		6,308,022			—		2		5,246,725		—
Industrials		426,407			—		(850,686)		425,322		—
Utilities		1,081,670			—		—		142,325		—
Preferred stocks:
Industrials		500,399			—		(3,806,177)		3,321,428		—
Total	$	21,507,383		$	7,666	$	(3,382,400)	$	7,327,019	$	5,849,338


Investments in Securities (cont’d)	Sales		Transfers into Level 3³		Transfers out of Level 3		Balance as of April 30, 2019			Net change in unrealized appreciation (depreciation) for investments in securities still held at April 30, 2019²
Corporate bonds & notes:
Consumer discretionary	$	(2,940,934)		—		—		—			—
Energy		—		—		—	$	0	*		—
Health care		—		—		—		4,756,840		$	(8,206)
Senior loans:
Consumer discretionary		(4,633,948)	$	421,218		—		421,218			—
Energy		(151,882)		—		—		—			—
Real estate		(1,723,467)		—		—		2,178,424			(13,264)
Common stocks:
Consumer discretionary		(2,093,290)		—		—		34,784			34,784
Energy		(9,737,473)		—		—		1,817,276			(1,193,429)
Industrials		(1,043)		—		—		—			—
Utilities		—		—		—		1,223,995			142,325
Preferred stocks:
Industrials		(15,650)		—		—		—			—
Total	$	(21,297,687)	$	421,218		—	$	10,432,537		$	(1,037,790)


Western Asset High Income Fund II Inc. 2019 Annual Report		37

Notes to financial statements (cont’d)

*	Amount represents less than $1.

¹	This amount is included in net realized gain (loss) from investment transactions in the accompanying Statement of Operations.

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

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

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

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

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

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

Non-deliverable forward foreign currency exchange contracts are settled with the counter-party in cash without the delivery of foreign currency.

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


38		Western Asset High Income Fund II Inc. 2019 Annual Report

(d) Loan participations. The Fund may invest in loans arranged through private negotiation between one or more financial institutions. The Fund’s investment in any such loan may be in the form of a participation in or an assignment of the loan. In connection with purchasing participations, the Fund generally will have no right to enforce compliance by the borrower with the terms of the loan agreement related to the loan, or any rights of off-set against the borrower and the Fund may not benefit directly from any collateral supporting the loan in which it has purchased the participation.

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

(e) Unfunded loan commitments. The Fund may enter into certain credit agreements where all or a portion of which may be unfunded. The Fund is obligated to fund these commitments at the borrower’s discretion. The commitments are disclosed in the accompanying Schedule of Investments. At April 30, 2019, the Fund had sufficient cash and/or securities to cover these commitments.

(f) Repurchase agreements. The Fund may enter into repurchase agreements with institutions that its subadviser has determined are creditworthy. Each repurchase agreement is recorded at cost. Under the terms of a typical repurchase agreement, the Fund acquires a debt security subject to an obligation of the seller to repurchase, and of the Fund to resell, the security at an agreed-upon price and time, thereby determining the yield during the Fund’s holding period. When entering into repurchase agreements, it is the Fund’s policy that its custodian or a third party custodian, acting on the Fund’s behalf, take possession of the underlying collateral securities, the market value of which, at all times, at least equals the principal amount of the repurchase transaction, including accrued interest. To the extent that any repurchase transaction maturity exceeds one business day, the value of the collateral is marked-to-market and measured against the value of the agreement in an effort to ensure the adequacy of the collateral. If the counterparty defaults, the Fund generally has the right to use the collateral to satisfy the terms of the repurchase transaction. However, if the market value of the collateral declines during the period in which the Fund seeks to assert its rights or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of the collateral by the Fund may be delayed or limited.

(g) Reverse repurchase agreements. The Fund may enter into reverse repurchase agreements. Under the terms of a typical reverse repurchase agreement, a fund sells a security subject to an obligation to repurchase the security from the buyer at an agreed upon time and price. In the event the buyer of securities under a reverse repurchase agreement files for bankruptcy or becomes insolvent, the Fund’s use of the proceeds of the agreement may be restricted pending a determination by the counterparty, or its trustee or receiver, whether to enforce the Fund’s obligation to repurchase the securities. In entering


Western Asset High Income Fund II Inc. 2019 Annual Report		39

Notes to financial statements (cont’d)

into reverse repurchase agreements, the Fund will maintain cash, U.S. government securities or other liquid debt obligations at least equal in value to its obligations with respect to reverse repurchase agreements or will take other actions permitted by law to cover its obligations. If the market value of the collateral declines during the period, the Fund may be required to post additional collateral to cover its obligation. Cash collateral that has been pledged to cover obligations of the Fund under reverse repurchase agreements, if any, will be reported separately in the Statement of Assets and Liabilities. Securities pledged as collateral are noted in the Schedule of Investments. Interest payments made on reverse repurchase agreements are recognized as a component of “Interest expense” on the Statement of Operations. In periods of increased demand for the security, the Fund may receive a fee for use of the security by the counterparty, which may result in interest income to the Fund.

(h) Securities traded on a when-issued and delayed delivery basis. The Fund may trade securities on a when-issued or delayed delivery basis. In when-issued and delayed delivery transactions, the securities are purchased or sold by the Fund with payment and delivery taking place in the future in order to secure what is considered to be an advantageous price and yield to the Fund at the time of entering into the transaction.

Purchasing such securities involves risk of loss if the value of the securities declines prior to settlement. These securities are subject to market fluctuations and their current value is determined in the same manner as for other securities.

(i) Cash flow information. The Fund invests in securities and distributes dividends from net investment income and net realized gains, which are paid in cash and may be reinvested at the discretion of shareholders. These activities are reported in the Statement of Changes in Net Assets and additional information on cash receipts and cash payments is presented in the Statement of Cash Flows.

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

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

Net realized foreign exchange gains or losses arise from sales of foreign currencies, including gains and losses on forward foreign currency contracts, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net


40		Western Asset High Income Fund II Inc. 2019 Annual Report

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.

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

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

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


Western Asset High Income Fund II Inc. 2019 Annual Report		41

Notes to financial statements (cont’d)

With exchange traded and centrally cleared derivatives, there is less counterparty risk to the Fund since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, the credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, the Fund does not have a contractual right of offset against a clearing broker or clearinghouse in the event of a default of the clearing broker or clearinghouse.

The Fund has entered into master agreements, such as an International Swaps and Derivatives Association, Inc. Master Agreement (“ISDA Master Agreement”) or similar agreement, with certain of its derivative counterparties that govern over-the-counter derivatives and provide for general obligations, representations, agreements, collateral posting terms, netting provisions in the event of default or termination and credit related contingent features. The credit related contingent features include, but are not limited to, a percentage decrease in the Fund’s net assets or NAV over a specified period of time. If these credit related contingent features were triggered, the derivatives counterparty could terminate the positions and demand payment or require additional collateral.

Under an ISDA Master Agreement, the Fund may, under certain circumstances, offset with the counterparty certain derivative financial instruments’ payables and/or receivables with collateral held and/or posted and create one single net payment. However, absent an event of default by the counterparty or a termination of the agreement, the terms of the ISDA Master Agreements do not result in an offset of reported amounts of financial assets and financial liabilities in the Statement of Assets and Liabilities across transactions between the Fund and the applicable counterparty. The enforceability of the right to offset may vary by jurisdiction.

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

As of April 30, 2019, the Fund did not have any open OTC derivative transactions with credit related contingent features in a net liability position.

(n) Security transactions and investment income. Security transactions are accounted for on a trade date basis. Interest income (including interest income from payment-in-kind securities), adjusted for amortization of premium and accretion of discount, is recorded on the accrual basis. Paydown gains and losses on mortgage- and asset-backed securities are recorded as adjustments to interest income. Dividend income is recorded on the ex-dividend date for dividends received in cash and/or securities. Foreign dividend income is recorded on the ex-dividend date or as soon as practicable after the Fund determines the existence of a dividend declaration after exercising reasonable due


42		Western Asset High Income Fund II Inc. 2019 Annual Report

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.

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

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

(q) Federal and other taxes. It is the Fund’s policy to comply with the federal income and excise tax requirements of the Internal Revenue Code of 1986 (the “Code”), as amended, applicable to regulated investment companies. Accordingly, the Fund intends to distribute its taxable income and net realized gains, if any, to shareholders in accordance with timing requirements imposed by the Code. Therefore, no federal or state income tax provision is required in the Fund’s financial statements.

Management has analyzed the Fund’s tax positions taken on income tax returns for all open tax years and has concluded that as of April 30, 2019, no provision for income tax is required in the Fund’s financial statements. The Fund’s federal and state income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.

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

(r) Reclassification. GAAP requires that certain components of net assets be reclassified to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or net asset value per share. During the current year, the following reclassifications have been made:


	Total Distributable Earnings (Loss)		Paid-in Capital
(a)	$	2,458,757	$	(2,458,757)

^(a)	Reclassifications are due to the expiration of a capital loss carryfoward.

2. Investment management agreement and other transactions with affiliates

Legg Mason Partners Fund Advisor, LLC (“LMPFA”) is the Fund’s investment manager. Western Asset Management Company, LLC (formerly Western Asset Management Company) (“Western Asset”), Western Asset Management Company Limited (“Western Asset Limited”) and Western Asset Management Company Pte. Ltd. (“Western Asset Singapore”)


Western Asset High Income Fund II Inc. 2019 Annual Report		43

Notes to financial statements (cont’d)

are the Fund’s subadvisers. LMPFA, Western Asset, Western Asset Limited and Western Asset Singapore 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 0.80% of the Fund’s average weekly net assets plus the proceeds of any outstanding borrowings used for leverage and any proceeds from the issuance of preferred stock.

LMPFA delegates to Western Asset the day-to-day portfolio management of the Fund. Western Asset Limited and Western Asset Singapore provide certain subadvisory services to the Fund relating to currency transactions and investments in non-U.S. dollar denominated debt securities. Western Asset Limited and Western Asset Singapore do not receive any compensation from the Fund and are paid by Western Asset for their services to the Fund. For its services, LMPFA pays Western Asset monthly 70% of the net management fee it receives from the Fund. In turn, Western Asset pays Western Asset Limited and Western Asset Singapore a monthly subadvisory fee in an amount equal to 100% of the management fee paid to Western Asset on the assets that Western Asset allocates to each such non-U.S. subadviser to manage.

Effective December 1, 2018, LMPFA implemented a voluntary investment management fee waiver of 0.025% that will continue until November 30, 2019.

During the year ended April 30, 2019, fees waived and/or expenses reimbursed amounted to $89,023.

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

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

3. Investments

During the year ended April 30, 2019, the aggregate cost of purchases and proceeds from sales of investments (excluding short-term investments) and U.S. Government & Agency Obligations were as follows:


	Investments		U.S. Government & Agency Obligations
Purchases	$	844,100,506	$	53,576,803
Sales		850,787,638		42,884,424

At April 30, 2019, the aggregate cost of investments and the aggregate gross unrealized appreciation and depreciation of investments for federal income tax purposes were as follows:


	Cost		Gross Unrealized Appreciation		Gross Unrealized Depreciation		Net Unrealized Appreciation
Securities	$	845,113,302	$	64,236,817	$	(32,299,495)	$	31,937,322
Forward foreign currency contracts		—		68,810		—		68,810


44		Western Asset High Income Fund II Inc. 2019 Annual Report

Transactions in reverse repurchase agreements for the Fund during the year ended April 30, 2019 were as follows:


Average Daily Balance*	Weighted Average Interest Rate*	Maximum Amount Outstanding
$8,727,802	2.636%	$11,123,000

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

Interest rates on reverse repurchase agreements ranged from 2.450% to 2.720% during the year ended April 30, 2019. Interest expense incurred on reverse repurchase agreements totaled $123,533.

4. Derivative instruments and hedging activities

Below is a table, grouped by derivative type, that provides information about the fair value and the location of derivatives within the Statement of Assets and Liabilities at April 30, 2019.


ASSET DERIVATIVES¹
	Foreign Exchange Risk
Forward foreign currency contracts	$	68,810

¹	Generally, the balance sheet location for asset derivatives is receivables/net unrealized appreciation (depreciation) and for liability derivatives is payables/net unrealized appreciation (depreciation).

The following tables provide information about the effect of derivatives and hedging activities on the Fund’s Statement of Operations for the year ended April 30, 2019. The first table provides additional detail about the amounts and sources of gains (losses) realized on derivatives during the period. The second table provides additional information about the change in unrealized appreciation (depreciation) resulting from the Fund’s derivatives and hedging activities during the period.


AMOUNT OF REALIZED GAIN (LOSS) ON DERIVATIVES RECOGNIZED
	Interest Rate Risk		Foreign Exchange Risk		Total
Futures contracts	$	140,411		—	$	140,411
Forward foreign currency contracts		—	$	439,203		439,203
Total	$	140,411	$	439,203	$	579,614

CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON DERIVATIVES RECOGNIZED
	Interest Rate Risk		Foreign Exchange Risk		Total
Futures contracts	$	(152,041)		—	$	(152,041)
Forward foreign currency contracts		—	$	(83,337)		(83,337)
Total	$	(152,041)	$	(83,337)	$	(235,378)


Western Asset High Income Fund II Inc. 2019 Annual Report		45

Notes to financial statements (cont’d)

During the year ended April 30, 2019, the volume of derivative activity for the Fund was as follows:


	Average Market Value
Futures contracts (to sell)†	$	151,562
Forward foreign currency contracts (to buy)		1,177,076
Forward foreign currency contracts (to sell)		6,579,846

†	At April 30, 2019, there were no open positions held in this derivative.

The following table presents the Fund’s OTC derivative assets and liabilities by counterparty net of amounts available for offset under an ISDA Master Agreement and net of the related collateral pledged (received) by the Fund as of April 30, 2019.


Counterparty	Gross Assets Subject to Master Agreements¹		Gross Liabilities Subject to Master Agreements		Net Assets (Liabilities) Subject to Master Agreements		Collateral Pledged (Received)		Net Amount²
Barclays Bank PLC	$	50,514		—	$	50,514		—	$	50,514
Citibank N.A.		18,296		—		18,296		—		18,296
Total	$	68,810		—	$	68,810		—	$	68,810

¹	Absent an event of default or early termination, derivative assets and liabilities are presented gross and not offset in the Statement of Assets and Liabilities.

²	Represents the net amount receivable (payable) from (to) the counterparty in the event of default.

5. Loan

The Fund has a revolving credit agreement with Pershing LLC that allows the Fund to borrow up to an aggregate amount of $300,000,000, subject to approval by Pershing LLC, and renews daily for a 180-day term unless notice to the contrary is given to the Fund. The interest on the loan is calculated at a variable rate based on the one-month LIBOR plus any applicable margin. To the extent of the borrowing outstanding, the Fund is required to maintain collateral in a special custody account at the Fund’s custodian on behalf of Pershing LLC. The Fund’s credit agreement contains customary covenants that, among other things, may limit the Fund’s ability to pay distributions in certain circumstances, incur additional debt, change its fundamental investment policies and engage in certain transactions, including mergers and consolidations, and require asset coverage ratios in addition to those required by the 1940 Act. In addition, the credit agreement may be subject to early termination under certain conditions and may contain other provisions that could limit the Fund’s ability to utilize borrowing under the agreement. Interest expense related to this loan for the year ended April 30, 2019 was $7,484,514. For the year ended April 30, 2019, the Fund had an average daily loan balance outstanding of $242,889,041 and the weighted average interest rate was 3.08%. At April 30, 2019, the Fund had $246,500,000 of borrowings outstanding.


46		Western Asset High Income Fund II Inc. 2019 Annual Report

6. Distributions subsequent to April 30, 2019

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


Record Date	Payable Date		Amount
4/18/2019		5/1/2019	$	0.0460
5/24/2019		6/3/2019	$	0.0460
6/21/2019		7/1/2019	$	0.0465
7/19/2019		8/1/2019	$	0.0465
8/23/2019		9/3/2019	$	0.0465

7. Stock repurchase program

On November 16, 2015, the Fund announced that the Fund’s Board of Directors (the “Board”) had authorized the Fund to repurchase in the open market up to approximately 10% of the Fund’s outstanding common stock when the Fund’s shares are trading at a discount to net asset value. The Board has directed management of the Fund to repurchase shares of common stock at such times and in such amounts as management reasonably believes may enhance stockholder value. The Fund is under no obligation to purchase shares at any specific discount levels or in any specific amounts.

During the year April 30, 2019, the Fund repurchased and retired 1.22% of its common shares outstanding under the repurchase plan. The weighted average discount per share on these repurchases was 14.20% for the year April 30, 2019. Shares repurchased and the corresponding dollar amount are included in the Statement of Changes in Net Assets. The anti-dilutive impact of these share repurchases is included in the Financial Highlights.

Since the commencement of the stock repurchase program through April 30, 2019, the Fund repurchased 1,047,640 shares or 1.22% of its common shares outstanding for a total amount of $6,268,230.

8. Restricted securities

The following Fund investment is restricted as to resale.


Security	Face Amount		Acquisition Date		Cost		Value at 4/30/2019			Value Per Unit		Percent of Net Assets
BioScrip Inc., First Lien Notes, 9.500%, due 6/30/22	$	4,552,000		6/17	$	4,520,979	$	4,756,840	^(a)	$	104.50		0.76	%

^(a)	Security is valued in good faith in accordance with procedures approved by the Board of Directors.

9. Income tax information and distributions to shareholders

The tax character of distributions paid during the fiscal years ended April 30, was as follows:


	2019		2018
Distributions paid from:
Ordinary income	$	42,981,123	$	49,234,034
Tax return of capital		3,911,661		634,897
Total distributions paid	$	46,892,784	$	49,868,931


Western Asset High Income Fund II Inc. 2019 Annual Report		47

Notes to financial statements (cont’d)

As of April 30, 2019, the components of accumulated earnings (losses) on a tax basis were as follows:


Deferred capital losses*	$	(157,779,640)
Other book/tax temporary differences^(a)		(4,670,875)
Unrealized appreciation (depreciation)^(b)		31,967,290
Total accumulated earnings (losses) — net	$	(130,483,225)

*	These capital losses have been deferred in the current year as either short-term or long-term losses. The losses will be deemed to occur on the first day of the next taxable year in the same character as they were originally deferred and will be available to offset future taxable capital gains.

^(a)

Other book/tax temporary differences are attributable to book/tax differences in the realization for tax purposes of unrealized gains (losses) on certain foreign currency contracts, difference between cash and accrual basis distributions paid, the accrual of interest income on securities in default, the tax deferral of losses on straddles and book/tax differences in the timing of the deductibility of various expenses.

^(b)	The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable to the tax deferral of losses on wash sales and the difference between book and tax amortization methods for premiums on fixed income securities.

10. Recent accounting pronouncements

The Fund has made a change in accounting principle and adopted the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Update 2017-08 (“ASU 2017-08”), Premium Amortization on Purchased Callable Debt Securities. ASU 2017-08 shortens the amortization period for certain callable debt securities held at a premium; specifically, requiring the premium to be amortized to the earliest call date. Prior to ASU 2017-08, premiums on callable debt securities were generally amortized to maturity date. ASU 2017-08 is intended to more closely align the amortization period with the expectations incorporated into the market pricing on the underlying security. ASU 2017-08 does not require an accounting change for securities held at discount; the discount continues to be amortized to maturity date. Upon evaluation, the Fund has concluded that the change in accounting principle does not materially impact the financial statement amounts.

The Fund has adopted the disclosure provisions on Financial Accounting Standards Board Accounting Standards Update 2016-18 (“ASU 2016-18”), Statement of Cash Flows (Topic 230) — Restricted Cash. ASU 2016-18 is effective for fiscal years, and interim periods within those fiscal years, beginning December 15, 2017. ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Prior to the issuance of ASU 2016-18, GAAP did not include specific guidance on the cash flow classification and presentation of changes in restricted cash or restricted cash equivalents. Upon evaluation, the Fund has concluded that ASU 2016-18 does not materially impact the financial statement amounts; however, as required, additional or enhanced disclosure has been included.

In August 2018, the Securities and Exchange Commission released its Final Rule on Disclosure Update and Simplification (the “Final Rule”) which is intended to simplify an issuer’s disclosure compliance efforts by removing redundant or outdated disclosure requirements without significantly altering the mix of information provided to investors.


48		Western Asset High Income Fund II Inc. 2019 Annual Report

Effective with the current reporting period, the Fund adopted the Final Rule with the most notable impacts being that the Fund is no longer required to present the components of distributable earnings on the Statement of Assets and Liabilities or the sources of distributions to shareholders and the amount of undistributed net investment income on the Statements of Changes in Net Assets. The tax components of distributable earnings and distributions to shareholders continue to be disclosed within the Notes to Financial Statements.

The Fund has adopted the disclosure provisions of the Financial Accounting Standards Board Accounting Standards Update No. 2018-13, Fair Value Measurement (Topic 820) — Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”) which introduces new fair value disclosure requirements as well as eliminates and modifies certain existing fair value disclosure requirements. ASU 2018-13 would be effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years; however, management has elected to early adopt ASU 2018-13. The impact of the Fund’s adoption was limited to changes in the Fund’s financial statement disclosures regarding fair value, primarily those disclosures related to transfers between levels of the fair value hierarchy.


Western Asset High Income Fund II Inc. 2019 Annual Report		49

Report of independent registered public accounting firm

To the Board of Directors and Shareholders of

Western Asset High Income II Fund Inc.

Opinion on the financial statements

We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Western Asset High Income Fund II Inc. (the “Fund”) as of April 30, 2019, the related statements of operations and cash flows for the year ended April 30, 2019 and the statement of changes in net assets and the financial highlights for each of the two years in the period ended April 30, 2019, including the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of April 30, 2019, the results of its operations and its cash flows for the year then ended and the changes in its net assets and the financial highlights for each of the two years in the period ended April 30, 2019 in conformity with accounting principles generally accepted in the United States of America.

The financial statements of the Fund as of and for the year ended April 30, 2017 and the financial highlights for each of the periods ended on or prior to April 30, 2017 (not presented herein, other than the financial highlights) were audited by other auditors whose report dated June 22, 2017 expressed an unqualified opinion on those financial statements and financial highlights.

Basis for opinion

These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of April 30, 2019 by correspondence with the custodian, agent banks and brokers; when replies were not received, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

/s/PricewaterhouseCoopers LLP

Baltimore, Maryland

June 21, 2019

We have served as the auditor of one or more investment companies in Legg Mason investment company group since at least 1973. We have not been able to determine the specific year we began serving as auditor.


50		Western Asset High Income Fund II Inc. 2019 Annual Report

Board approval of management and subadvisory agreements (unaudited)

Background

The Investment Company Act of 1940, as amended (the “1940 Act”), requires that the Board of Directors (the “Board”) of Western Asset High Income Fund II Inc. (the “Fund”), including a majority of its members who are not considered to be “interested persons” under the 1940 Act (the “Independent Directors”) voting separately, approve on an annual basis the continuation of the investment management contract (the “Management Agreement”) with the Fund’s manager, Legg Mason Partners Fund Advisor, LLC (the “Manager”), and the sub-advisory agreements (individually, a “Sub-Advisory Agreement,” and collectively, the “Sub-Advisory Agreements”) with the Manager’s affiliates, Western Asset Management Company, LLC (“Western Asset”), Western Asset Management Company Pte. Ltd. in Singapore (“Western Asset Singapore”), and Western Asset Management Company Limited in London (“Western Asset London”). Western Asset, Western Asset Singapore, and Western Asset London collectively are hereinafter referred to as the “Sub-Advisers,” and Western Asset Singapore and Western Asset London together are hereinafter referred to as the “Non-U.S. Sub-Advisers.” At a meeting (the “Contract Renewal Meeting”) held in-person on November 7 and 8, 2018, the Board, including the Independent Directors, considered and approved the continuation of each of the Management Agreement and the Sub-Advisory Agreements for an additional one-year term. To assist in its consideration of the renewals of the Management Agreement and the Sub-Advisory Agreements, the Board received and considered a variety of information (together with the information provided at the Contract Renewal Meeting, the “Contract Renewal Information”) about the Manager and the Sub-Advisers, as well as the management and sub-advisory arrangements for the Fund and the other closed-end funds in the same complex under the Board’s supervision (the “Legg Mason Closed-end Funds”), certain portions of which are discussed below. A presentation made by the Manager and Western Asset to the Board at the Contract Renewal Meeting in connection with its evaluations of the Management Agreement and the Sub-Advisory Agreements encompassed the Fund and other Legg Mason Closed-end Funds. In addition to the Contract Renewal Information, the Board received performance and other information throughout the year related to the respective services rendered by the Manager and the Sub-Advisers to the Fund. The Board’s evaluation took into account the information received throughout the year and also reflected the knowledge and familiarity gained as members of the Boards of the Fund and other Legg Mason Closed-end Funds with respect to the services provided to the Fund by the Manager and the Sub-Advisers.

At a meeting held by conference call on October 31, 2018, the Independent Directors in preparation for the Contract Renewal Meeting met in a private session with their independent counsel to review Contract Renewal Information in respect of the Legg Mason Closed-end Funds, including the Fund, received to date. No representatives of the Manager or Western Asset participated in this meeting. The discussion below reflects all of these reviews.

The Manager provides the Fund with investment advisory and administrative services pursuant to the Management Agreement and the Sub-Advisers together provide, or in the case


Western Asset High Income Fund II Inc.		51

Board approval of management and subadvisory agreements (unaudited) (cont’d)

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

Board approval of management agreement and sub-advisory agreements

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

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

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

The Board reviewed the qualifications, backgrounds, and responsibilities of the Fund’s senior personnel and the portfolio management team primarily responsible for the day-to-day portfolio management of the Fund. The Board also considered, based on its knowledge of the Manager and its affiliates, the Contract Renewal Information and the Board’s discussions with the Manager and Western Asset at the Contract Renewal Meeting, the general reputation and investment performance records of the Manager, Western Asset and their affiliates and the financial resources available to the corporate parent of the Manager and the Sub-Advisers, Legg Mason, Inc. (“Legg Mason”), to support their activities in respect of the Fund and the other Legg Mason Closed-end Funds.

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


52		Western Asset High Income Fund II Inc.

each Non-U.S. Sub-Adviser helps to provide portfolio management services to the Fund pursuant to a separate Sub-Advisory Agreement with Western Asset.

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

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

Fund performance

The Board received and considered information regarding Fund performance, including information and analyses (the “Broadridge Performance Information”) for the Fund, as well as for a group of funds (the “Performance Universe”) selected by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent provider of investment company data. The Board was provided with a description of the methodology Broadridge used to determine the similarity of the Fund with the funds included in the Performance Universe. The Performance Universe included the Fund and all leveraged high yield closed-end funds, as classified by Broadridge, regardless of asset size. The number of funds in the Performance Universe ranged from eighteen funds for the 10-year period ended June 30, 2018 to 34 funds for the 1-year period ended such date. The Board noted that it had received and discussed with the Manager and Western Asset information throughout the year at periodic intervals comparing the Fund’s performance against its benchmark and its peer funds as selected by Broadridge.

The Broadridge Performance Information comparing the Fund’s performance to that of the Performance Universe based on net asset value per share showed, among other things, that the Fund’s performance was ranked in the fifth quintile among the funds in the Performance Universe for each of the 1-, 3- and 5-year periods ended June 30, 2018 and in the third quintile among the funds in the Performance Universe for the 5-year period ended such date. In these performance rankings, the first quintile represents funds with the best performance among the funds in the Performance Universe and the fifth quintile represents funds with poorest performance among the funds in the Performance Universe. The Fund’s performance was worse than the median performance of the Performance Universe for each of the 1-, 3-, 5- and 10-year periods ended June 30, 2018. The Fund’s performance for the 10-year period was achieved, in part, by a predecessor portfolio management team. In addition to the Fund’s performance relative to the Performance Universe, the Board considered the Fund’s performance in absolute terms and the Fund’s performance relative to its benchmark for each of the 1-, 3- and 5-year periods ended June 30, 2018. On a net asset value basis, the Fund underperformed its benchmark for each of the 1-, 3- and 5-year periods.


Western Asset High Income Fund II Inc.		53

Board approval of management and subadvisory agreements (unaudited) (cont’d)

Based on the reviews and discussions of Fund performance and considering other relevant factors, including an agreement by the Manager to implement a Management Fee Waiver (the “Fee Waiver”) of 0.025% for a one-year period beginning December 1, 2018 and ending November 30, 2019 and factors noted above, the Board, while expressing its disappointment with Fund performance, concluded, under the circumstances, that continuation of the Management Agreement and the Sub-Advisory Agreements for an additional one-year period would be consistent with the interests of the Fund and its shareholders.

Management fees and expense ratios

The Board reviewed and considered the management fee (the “Management Fee”) payable by the Fund to the Manager under the Management Agreement and the sub-advisory fees (the “Sub-Advisory Fees”) payable to the Sub-Advisers under the Sub-Advisory Agreements in light of the nature, extent and overall quality of the management, investment advisory and other services provided by the Manager and the Sub-Advisers. The Board noted that the Sub-Advisory Fee payable to Western Asset under the Western Asset Sub-Advisory Agreement is paid by the Manager, not the Fund, and, accordingly, that the retention of Western Asset does not increase the fees or expenses otherwise incurred by the Fund’s shareholders. Similarly, the Board noted that the Sub-Advisory Fee payable to each of the Non-U.S. Sub-Advisers under its Sub-Advisory Agreement with Western Asset is paid by Western Asset, not the Fund, and, accordingly, that the retention of such Non-U.S. Sub-Adviser does not increase the fees or expenses otherwise incurred by the Fund’s shareholders.

Additionally, the Board received and considered information and analyses prepared by Broadridge (the “Broadridge Expense Information”) comparing the Management Fee and the Fund’s overall expenses with those of funds in an expense group (the “Expense Group”) selected and provided by Broadridge. The comparison was based upon the constituent funds’ latest fiscal years. The Expense Group consisted of the Fund and ten other leveraged high yield closed-end funds, as classified by Broadridge. The eleven funds in the Expense Group had average net common share assets ranging from $314.8 million to $2.143 billion. Four of the other Expense Group funds were larger than the Fund and six funds were smaller.

The Broadridge Expense Information, comparing the Management Fee as well as the Fund’s actual total expenses to the Fund’s Expense Group, showed, among other things, that the Management Fee on a contractual basis was ranked fourth among the funds in the Expense Group (first being lowest and, therefore, best in these expense component rankings). The Broadridge Expense Information also showed that the Fund’s actual Management Fee (i.e., giving effect to any voluntary fee waivers implemented by the Manager with respect to the Fund and by the managers of the other Expense Group funds) was ranked fifth among the funds in the Expense Group whether compared on a common share assets only or on the basis of both common share assets and leveraged assets. The Fund’s actual total expenses ranked fourth among the funds in the Expense Group compared on a common share assets


54		Western Asset High Income Fund II Inc.

only basis and ranked fifth among the funds in the Expense Group compared on the basis of common share assets and leveraged assets. Each of the Fund’s expense components was better (i.e., lower) than the Expense Group median for that expense component. The Board took into consideration that the Fee Waiver will reduce the Fund’s expenses while in effect.

The Board also reviewed Contract Renewal Information regarding fees charged by the Manager to other U.S. clients investing primarily in an asset class similar to that of the Fund, including, where applicable, institutional and separate accounts. The Board was advised that the fees paid by such institutional, separate account and other clients (collectively, “institutional clients”) generally are lower, and may be significantly lower, than the Management Fee. The Contract Renewal Information discussed the significant differences in scope of services provided to the Fund and to institutional clients. Among other things, institutional clients have fewer compliance, administration and other needs than the Fund and the Fund is subject not only to heightened regulatory requirements relative to institutional clients but also to requirements for listing on the New York Stock Exchange. The Contract Renewal Information noted further that the Fund is provided with administrative services, office facilities, Fund officers (including the Fund’s chief executive, chief financial and chief compliance officers), and that the Manager coordinates and oversees the provision of services to the Fund by other fund service providers. The Contract Renewal Information included information regarding management fees paid by open-end mutual funds in the same complex (the “Legg Mason Open-end Funds”) and such information indicated that the management fees paid by the Legg Mason Closed-end Funds generally were higher than those paid by the Legg Mason Open-end Funds. The Manager, in response to an inquiry from the Board as to the reasons for the fee differential, provided information as to differences between the services provided to the Fund and the other Legg Mason Closed-end Funds and the services provided to the Legg Mason Open-end Funds. The Board considered the fee comparisons in light of the different services provided in managing these other types of clients and funds.

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

Manager profitability

The Board, as part of the Contract Renewal Information, received an analysis of the profitability to the Manager and its affiliates in providing services to the Fund for the Manager’s fiscal years ended March 31, 2018 and March 31, 2017. The Board also received profitability information with respect to the Legg Mason fund complex as a whole. In addition, the Board received Contract Renewal Information with respect to the Manager’s revenue and cost allocation methodologies used in preparing such profitability data. The profitability to each of the Sub-Advisers was not considered to be a material factor in the Board’s considerations since Western Asset’s Sub-Advisory Fee is paid by the Manager, not the Fund,


Western Asset High Income Fund II Inc.		55

Board approval of management and subadvisory agreements (unaudited) (cont’d)

and the Sub-Advisory Fee for each Non-U.S. Sub-Adviser is paid by Western Asset, not the Fund. The profitability analysis presented to the Board as part of the Contract Renewal Information indicated that profitability to the Manager had increased by 1 percent during the period covered by the analysis but remained at a level that the Board did not consider to be excessive in light of judicial guidance and the nature, extent and overall quality of the investment advisory and other services provided to the Fund but merited continued monitoring at its current level. The Board noted that the Fee Waiver will reduce the Fund’s profitability to the Manager and its affiliates while in effect.

Economies of scale

The Board received and discussed Contract Renewal Information concerning whether the Manager realizes economies of scale if the Fund’s assets grow. The Board noted that because the Fund is a closed-end fund with no current plans to seek additional assets beyond maintaining its dividend reinvestment plan, any significant growth in its assets generally will occur through appreciation in the value of the Fund’s investment portfolio, rather than sales of additional shares in the Fund. The Board determined that the Management Fee structure, which incorporates no breakpoints reducing the Management Fee at specified increased asset levels, was appropriate under present circumstances.

Other benefits to the manager and the sub-advisers

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

* * *

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


56		Western Asset High Income Fund II Inc.

Additional information (unaudited)

Information about Directors and Officers

The business and affairs of Western Asset High Income Fund II Inc. (the “Fund”) are conducted by management under the supervision and subject to the direction of its Board of Directors. The business address of each Director is c/o Jane Trust, Legg Mason, 100 International Drive, 11th Floor, Baltimore, Maryland 21202. Information pertaining to the Directors and officers of the Fund is set forth below.

The Fund’s annual proxy statement includes additional information about Directors and is available, without charge, upon request by calling the Fund at 1-888-777-0102.


Independent Directors^†

Robert D. Agdern

Year of birth		1950
Position(s) held with Fund¹		Director and Member of Nominating and Audit Committees, Class I
Term of office¹ and length of time served		Since 2015
Principal occupation(s) during past five years		Member of the Advisory Committee of the Dispute Resolution Research Center at the Kellogg Graduate School of Business, Northwestern University (2002 to 2016); formerly, Deputy General Counsel responsible for western hemisphere matters for BP PLC (1999 to 2001); formerly, Associate General Counsel at Amoco Corporation responsible for corporate, chemical, and refining and marketing matters and special assignments (1993 to 1998) (Amoco merged with British Petroleum in 1998 forming BP PLC).
Number of portfolios in fund complex overseen by Director (including the Fund)		23
Other board memberships held by Director during past five years		None

Carol L. Colman

Year of birth		1946
Position(s) held with Fund¹		Director and Member of Nominating and Audit Committees, Class III
Term of office¹ and length of time served		Since 2002
Principal occupation(s) during past five years		President, Colman Consulting Company (consulting)
Number of portfolios in fund complex overseen by Director (including the Fund)		23
Other board memberships held by Director during past five years		None

Daniel P. Cronin

Year of birth		1946
Position(s) held with Fund¹		Director and Member of Nominating and Audit Committees, Class I
Term of office¹ and length of time served		Since 2007
Principal occupation(s) during past five years		Retired; formerly, Associate General Counsel, Pfizer Inc. (prior to and including 2004)
Number of portfolios in fund complex overseen by Director (including the Fund)		23
Other board memberships held by Director during past five years		None


Western Asset High Income Fund II Inc.		57

Additional information (unaudited) (cont’d)

Information about Directors and Officers


Independent Directors^† cont’d

Paolo M. Cucchi

Year of birth		1941
Position(s) held with Fund¹		Director and Member of Nominating and Audit Committees, Class II
Term of office¹ and length of time served		Since 2007
Principal occupation(s) during past five years		Emeritus Professor of French and Italian (since 2014) and formerly, Vice President and Dean of The College of Liberal Arts (1984 to 2009) and Professor of French and Italian (2009 to 2014) at Drew University
Number of portfolios in fund complex overseen by Director (including the Fund)		23
Other board memberships held by Director during past five years		None

William R. Hutchinson

Year of birth		1942
Position(s) held with Fund¹		Director and Member of Nominating and Audit Committees, Class III
Term of office¹ and length of time served		Since 2003
Principal occupation(s) during past five years		President, W.R. Hutchinson & Associates Inc. (Consulting) (since 2001)
Number of portfolios in fund complex overseen by Director (including the Fund)		23
Other board memberships held by Director during past five years		Director (Non-Executive Chairman of the Board (since December 1, 2009)), Associated Banc Corp. (banking) (since 1994)

Eileen A. Kamerick

Year of birth		1958
Position(s) held with Fund¹		Director and Member of Nominating and Audit Committees, Class I
Term of office¹ and length of time served		Since 2013
Principal occupation(s) during past five years		National Association of Corporate Directors Board Leadership Fellow and financial expert (since 2016); Adjunct Professor, The University of Chicago Law School (since 2018); Adjunct Professor, Washington University in St. Louis and University of Iowa law schools (since 2007); formerly, Senior Advisor to the Chief Executive Officer and Executive Vice President and Chief Financial Officer of ConnectWise, Inc. (software and services company) (2015 to 2016); Chief Financial Officer, Press Ganey Associates (health care informatics company) (2012 to 2014); Managing Director and Chief Financial Officer, Houlihan Lokey (international investment bank) (2010 to 2012)
Number of portfolios in fund complex overseen by Director (including the Fund)		23
Other board memberships held by Director during past five years		Trustee of AIG Funds and Anchor Series Trust (since 2018; Hochschild Mining plc (precious metals company) (since 2016); Director of Associated Banc-Corp (financial services company) (since 2007); Westell Technologies, Inc. (technology company) (2003 to 2016)


58		Western Asset High Income Fund II Inc.


Independent Directors^† cont’d

Nisha Kumar²

Year of birth		1970
Position(s) held with Fund¹		Director and Member of Nominating and Audit Committees, Class II
Term of office¹ and length of time served		Since 2019
Principal occupation(s) during past five years		Managing Director and the Chief Financial Officer and Chief Compliance Officer of Greenbriar Equity Group, LP (since 2011); formerly, Chief Financial Officer and Chief Administrative Officer of Rent the Runway, Inc. (2011); Executive Vice President and Chief Financial Officer of AOL LLC, a subsidiary of Time Warner Inc. (2007 to 2009). Member of the Council on Foreign Relations
Number of portfolios in fund complex overseen by Director (including the Fund)		23
Other board memberships held by Director during past five years		Director of the India Fund, Inc. (since 2016); GB Flow Investment LLC; and SEKO Global Logistics Network, LLC; formerly, Director of Aberdeen Income Credit Strategies Fund (2017 to 2018); Director of The Asia Tigers Fund, Inc. (2016 to 2018)

Interested Director and Officer

Jane Trust, CFA³

Year of birth		1962
Position(s) held with Fund¹		Director, Chairman, President and Chief Executive Officer, Class III
Term of office¹ and length of time served		Since 2015
Principal occupation(s) during past five years		Senior Managing Director of Legg Mason & Co., LLC (“Legg Mason & Co.”) (since 2018); Managing Director of Legg Mason & Co. (2016 to 2018); Officer and/or Trustee/Director of 141 funds associated with Legg Mason Partners Fund Advisor, LLC (“LMPFA”) or its affiliates (since 2015); President and Chief Executive Officer of LMPFA (since 2015); formerly, Senior Vice President of LMPFA (2015); Director of ClearBridge, LLC (formerly, Legg Mason Capital Management, LLC) (2007 to 2014); Managing Director of Legg Mason Investment Counsel & Trust Co. (2000 to 2007)
Number of portfolios in fund complex overseen by Director (including the Fund)		132
Other board memberships held by Director during past five years		None


Western Asset High Income Fund II Inc.		59

Additional information (unaudited) (cont’d)

Information about Directors and Officers


Additional Officers

Todd F. Kuehl Legg Mason 100 International Drive, 9th Floor, Baltimore, MD 21202

Year of birth		1969
Position(s) held with Fund¹		Chief Compliance Officer
Term of office¹ and length of time served		Since 2017
Principal occupation(s) during past five years		Managing Director of Legg Mason & Co. (since 2011); Chief Compliance Officer of certain mutual funds associated with Legg Mason & Co. or its affiliates (since 2006); formerly, Chief Compliance Officer of Legg Mason Private Portfolio Group (prior to 2010); formerly, Branch Chief, Division of Investment Management, U.S. Securities and Exchange Commission (2002 to 2006)

Jenna Bailey Legg Mason 100 First Stamford Place, 5th Floor, Stamford, CT 06902

Year of birth		1978
Position(s) held with Fund¹		Identity Theft Prevention Officer
Term of office¹ and length of time served		Since 2015
Principal occupation(s) during past five years		Identity Theft Prevention Officer of certain mutual funds associated with Legg Mason & Co. or its affiliates (since 2015); Compliance Officer of Legg Mason & Co. (since 2013); Assistant Vice President of Legg Mason & Co. (since 2011); formerly, Associate Compliance Officer of Legg Mason & Co. (2011 to 2013)

Robert I. Frenkel Legg Mason 100 First Stamford Place, 6th Floor, Stamford, CT 06902

Year of birth		1954
Position(s) held with Fund¹		Secretary and Chief Legal Officer
Term of office¹ and length of time served		Since 2003
Principal occupation(s) during past five years		Vice President and Deputy General Counsel of Legg Mason (since 2006); Managing Director and General Counsel — U.S. Mutual Funds for Legg Mason & Co. (since 2006) and Legg Mason & Co. predecessors (since 1994); Secretary and Chief Legal Officer of certain mutual funds associated with Legg Mason & Co. or its affiliates (since 2006) and Legg Mason & Co. predecessors (prior to 2006)


60		Western Asset High Income Fund II Inc.


Additional Officers cont’d

Thomas C. Mandia Legg Mason 100 First Stamford Place, 6th Floor, Stamford, CT 06902

Year of birth		1962
Position(s) held with Fund¹		Assistant Secretary
Term of office¹ and length of time served		Since 2006
Principal occupation(s) during past five years		Managing Director and Deputy General Counsel of Legg Mason & Co. (since 2005) and Legg Mason & Co. predecessors (prior to 2005); Secretary of LMPFA (since 2006); Assistant Secretary of certain mutual funds associated with Legg Mason & Co. or its affiliates (since 2006) and Legg Mason & Co. predecessors (prior to 2006); Secretary of LM Asset Services, LLC (“LMAS”) (since 2002) and Legg Mason Fund Asset Management, Inc. (“LMFAM”) (since 2013) (formerly registered investment advisers)

Richard F. Sennett Legg Mason 100 International Drive, 7th Floor, Baltimore, MD 21202

Year of birth		1970
Position(s) held with Fund¹		Principal Financial Officer
Term of office¹ and length of time served		Since 2011
Principal occupation(s) during past five years		Principal Financial Officer and Treasurer of certain mutual funds associated with Legg Mason & Co. or its affiliates (since 2011 and since 2013); Managing Director of Legg Mason & Co. and Senior Manager of the Treasury Policy group for Legg Mason & Co.’s Global Fiduciary Platform (since 2011); Chief Accountant within the SEC’s Division of Investment Management (2007 to 2011); formerly, Assistant Chief Accountant within the SEC’s Division of Investment Management (2002 to 2007)

Jennifer S. Berg Legg Mason 100 International Drive, 7th Floor, Baltimore, MD 21202

Year of birth		1973
Position(s) held with Fund¹		Treasurer
Term of office¹ and length of time served		Since 2018
Principal occupation(s) during past five years		Director of Legg Mason & Co. (since 2014); Treasurer of certain mutual funds associated with Legg Mason & Co. or its affiliates (since 2018); formerly, Vice President of Legg Mason & Co. (2011 to 2014)


Western Asset High Income Fund II Inc.		61

Additional information (unaudited) (cont’d)

Information about Directors and Officers


Additional Officers cont’d

Jeanne M. Kelly Legg Mason 620 Eighth Avenue, 49th Floor, New York, NY 10018

Year of birth		1951
Position(s) held with Fund¹		Senior Vice President
Term of office¹ and length of time served		Since 2007
Principal occupation(s) during past five years		Senior Vice President of certain mutual funds associated with Legg Mason & Co. or its affiliates (since 2007); Senior Vice President of LMPFA (since 2006); President and Chief Executive Officer of LMAS and LMFAM (since 2015); Managing Director of Legg Mason & Co. (since 2005) and Legg Mason & Co. predecessors (prior to 2005); formerly, Senior Vice President of LMFAM (2013 to 2015)

^†	Directors who are not “interested persons” of the Fund within the meaning of Section 2(a)(19) of the Investment Company Act of 1940, as amended (the “1940 Act”).

The Fund’s Board of Directors is divided into three classes: Class I, Class II and Class III. The terms of office of the Class I, II and III Directors expire at the Annual Meetings of Stockholders in the year 2020, year 2021 and year 2019, respectively, or thereafter in each case when their respective successors are duly elected and qualified. The Fund’s executive officers are chosen each year, to hold office until their successors are duly elected and qualified.

²	Effective January 1, 2019, Ms. Kumar became a Director.

³	Ms. Trust is an “interested person” of the Fund as defined in the 1940 Act because Ms. Trust is an officer of LMPFA and certain of its affiliates.


62		Western Asset High Income Fund II Inc.

Annual chief executive officer and principal financial officer certifications (unaudited)

The Fund’s Chief Executive Officer (“CEO”) has submitted to the NYSE the required annual certification and the Fund also has included the Certifications of the Fund’s CEO and Principal Financial Officer required by Section 302 of the Sarbanes-Oxley Act in the Fund’s Form N-CSR filed with the SEC for the period of this report.


Western Asset High Income Fund II Inc.		63

Other shareholder communications regarding accounting

matters (unaudited)

The Fund’s Audit Committee has established guidelines and procedures regarding the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters (collectively, “Accounting Matters”). Persons with complaints or concerns regarding Accounting Matters may submit their complaints to the Chief Compliance Officer (“CCO”). Persons who are uncomfortable submitting complaints to the CCO, including complaints involving the CCO, may submit complaints directly to the Fund’s Audit Committee Chair. Complaints may be submitted on an anonymous basis.

The CCO may be contacted at:

Legg Mason & Co., LLC

Compliance Department

620 Eighth Avenue, 49th Floor

New York, New York 10018

Complaints may also be submitted by telephone at 1-800-742-5274. Complaints submitted through this number will be received by the CCO.


64		Western Asset High Income Fund II Inc.

Dividend reinvestment plan (unaudited)

Unless you elect to receive distributions in cash (i.e., opt-out), all dividends, including any capital gain dividends and return of capital distributions, on your Common Stock will be automatically reinvested by Computershare Trust Company, N.A., as agent for the stockholders (the “Plan Agent”), in additional shares of Common Stock under the Fund’s Dividend Reinvestment Plan (the “Plan”). You may elect not to participate in the Plan by contacting the Plan Agent. If you do not participate, you will receive all cash distributions paid by check mailed directly to you by Computershare Trust Company, N.A., as dividend paying agent.

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

(1) If the market price of the Common Stock (plus $0.03 per share commission) on the payment date (or, if the payment date is not a NYSE trading day, the immediately preceding trading day) is equal to or exceeds the net asset value per share of the Common Stock at the close of trading on the NYSE on the payment date, the Fund will issue new Common Stock at a price equal to the greater of (a) the net asset value per share at the close of trading on the NYSE on the payment date or (b) 95% of the market price per share of the Common Stock on the payment date.

(2) If the net asset value per share of the Common Stock exceeds the market price of the Common Stock (plus $0.03 per share commission) at the close of trading on the NYSE on the payment date, the Plan Agent will receive the dividend or distribution in cash and will buy Common Stock in the open market, on the NYSE or elsewhere, for your account as soon as practicable commencing on the trading day following the payment date and terminating no later than the earlier of (a) 30 days after the dividend or distribution payment date, or (b) the payment date for the next succeeding dividend or distribution to be made to the stockholders; except when necessary to comply with applicable provisions of the federal securities laws. If during this period: (i) the market price (plus $0.03 per share commission) rises so that it equals or exceeds the net asset value per share of the Common Stock at the close of trading on the NYSE on the payment date before the Plan Agent has completed the open market purchases or (ii) if the Plan Agent is unable to invest the full amount eligible to be reinvested in open market purchases, the Plan Agent will cease purchasing Common Stock in the open market and the Fund shall issue the remaining Common Stock at a price per share equal to the greater of (a) the net asset value per share at the close of trading on the NYSE on the day prior to the issuance of shares for reinvestment or (b) 95% of the then current market price per share.

Common Stock in your account will be held by the Plan Agent in non-certificated form. Any proxy you receive will include all shares of Common Stock you have received under the Plan. You may withdraw from the Plan (i.e., opt-out) by notifying the Plan Agent in writing at 462 South 4th Street, Suite 1600, Louisville, KY 40202 or by calling the Plan Agent at 1-888-888-0151. Such withdrawal will be effective immediately if notice is received by the Plan Agent not less than ten business days prior to any dividend or distribution record date;


Western Asset High Income Fund II Inc.		65

Dividend reinvestment plan (unaudited) (cont’d)

otherwise such withdrawal will be effective as soon as practicable after the Plan Agent’s investment of the most recently declared dividend or distribution on the Common Stock.

Plan participants who sell their shares will be charged a service charge (currently $5.00 per transaction) and the Plan Agent is authorized to deduct brokerage charges actually incurred from the proceeds (currently $0.05 per share commission). There is no service charge for reinvestment of your dividends or distributions in Common Stock. However, all participants will pay a pro rata share of brokerage commissions incurred by the Plan Agent when it makes open market purchases. Because all dividends and distributions will be automatically reinvested in additional shares of Common Stock, this allows you to add to your investment through dollar cost averaging, which may lower the average cost of your Common Stock over time. Dollar cost averaging is a technique for lowering the average cost per share over time if the Fund’s net asset value declines. While dollar cost averaging has definite advantages, it cannot assure profit or protect against loss in declining markets.

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

The Fund reserves the right to amend or terminate the Plan if, in the judgment of the Board of Directors, the change is warranted. The Plan may be terminated, amended or supplemented by the Fund upon notice in writing mailed to stockholders at least 30 days prior to the record date for the payment of any dividend or distribution by the Fund for which the termination or amendment is to be effective. Upon any termination, you will be sent cash for any fractional share of Common Stock in your account. You may elect to notify the Plan Agent in advance of such termination to have the Plan Agent sell part or all of your Common Stock on your behalf. Additional information about the Plan and your account may be obtained from the Plan Agent at 462 South 4th Street, Suite 1600, Louisville, KY 40202 or by calling the Plan Agent at 1-888-888-0151.


66		Western Asset High Income Fund II Inc.

Important tax information (unaudited)

The following information is provided with respect to the distributions paid during the taxable year ended April 30, 2019:


Record date:	Monthly		Monthly
Payable date:	May 2018 to December 2018		January 2019 to April 2019
Ordinary income:
Qualified dividend income for individuals	1.61	%	5.90	%**
Dividends qualifying for the dividends
received deduction for corporations	1.20	%	5.68	%**
Interest from Federal Obligations*	0.44	%	1.10	%**
Tax return of capital	—		33.53	%***

The following information is applicable to non-U.S. resident shareholders:


Record date:	Monthly	Monthly
Payable date:	May 2018 to December 2018	January 2019 to April 2019
Qualified net interest income	55.00%	45.00%**

The percentages indicated above represent the portion of the ordinary distributions that are Qualified Net Interest Income and Qualified Short-Term Capital Gains and are eligible for exemption from U.S. withholding tax for nonresident aliens and foreign corporations.

*	The law varies in each state as to whether and what percentage of dividend income attributable to Federal obligations is exempt from state income tax. We recommend that you consult with your tax adviser to determine if any portion of the dividends you received is exempt from state income taxes.

**	Expressed as a percentage of the distributions paid reduced by the return of capital.

***	Expressed as a percentage of the cash distributions paid.

Please retain this information for your records.


Western Asset High Income Fund II Inc.		67

Western Asset

High Income Fund II Inc.

Directors

Robert D. Agdern

Carol L. Colman

Daniel P. Cronin

Paolo M. Cucchi

William R. Hutchinson

Eileen A. Kamerick

Nisha Kumar*

Jane Trust

Chairman

Officers

Jane Trust

President and Chief Executive Officer

Richard F. Sennett

Principal Financial Officer

Todd F. Kuehl

Principal Financial Officer

Jenna Bailey

Identity Theft Prevention Officer

Robert I. Frenkel

Secretary and Chief Legal Officer

Thomas C. Mandia

Assistant Secretary

Jennifer S. Berg

Treasurer

Jeanne M. Kelly

Senior Vice President

*	Effective January 1, 2019, Ms. Kumar became a Director.

Western Asset High Income Fund II Inc.

620 Eighth Avenue

49th Floor

New York, NY 10018

Investment Manager

Legg Mason Partners Fund Advisor, LLC

Subadvisers

Western Asset Management Company, LLC

Western Asset Management Company Limited

Western Asset Management Company Pte. Ltd.

Custodian

The Bank of New York Mellon

Transfer agent

Computershare Inc.

462 South 4^th Street, Suite 1600

Louisville, KY 40202

Independent registered public accounting firm

PricewaterhouseCoopers LLP Baltimore, MD

Legal counsel

Simpson Thacher &

Bartlett LLP

425 Lexington Avenue

New York, NY 10017

New York Stock Exchange Symbol

HIX

Legg Mason Funds Privacy and Security Notice

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

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

The Type of Nonpublic Personal Information the Funds Collect About You

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

•

Personal information included on applications or other forms;

•

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

•

Bank account information, legal documents, and identity verification documentation;

•

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

•

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

How the Funds Use Nonpublic Personal Information About You

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

•

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

•

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

•

Permit access to transfer, whether in the United States or countries outside of the United States to such Funds’ employees, agents and affiliates and service providers as required to enable the Funds to conduct ordinary business, or to comply with obligations to government regulators;

NOT PART OF THE ANNUAL REPORT

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

•

The Funds’ representatives such as legal counsel, accountants and auditors to enable the Funds to conduct ordinary business, or to comply with obligations to government regulators;

•

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

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

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

Keeping You Informed of the Funds’ Privacy and Security Practices

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

The Funds’ Security Practices

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

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

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

Revised April 2018

NOT PART OF THE ANNUAL REPORT

Western Asset High Income Fund II Inc.

620 Eighth Avenue

49th Floor

New York, NY 10018

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

The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. Previously, the Fund filed a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-PORT and N-Q are available on the SEC’s website at www.sec.gov. To obtain information on Forms N-PORT and N-Q, shareholders can call the Fund at 1-888-777-0102.

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

This report is transmitted to the shareholders of Western Asset High Income Fund II Inc. for their information. This is not a prospectus, circular or representation intended for use in the purchase of shares of the Fund or any securities mentioned in this report.

Computershare Inc.

462 South 4th Street, Suite 1600

Louisville, KY 40202

WAS04049 6/19 SR19-3616

ITEM 2.

CODE OF ETHICS.

The registrant has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller.

ITEM 3.

AUDIT COMMITTEE FINANCIAL EXPERT.

The Board of Directors of the registrant has determined that Eileen A. Kamerick, a member of the Board’s Audit Committee, possesses the technical attributes identified in Instruction 2(b) of Item 3 to Form N-CSR to qualify as an “audit committee financial expert” and that she is independent for purposes of this item.

ITEM 4.

PRINCIPAL ACCOUNTANT FEES AND SERVICES.

(a) Audit Fees. The aggregate fees billed in the previous fiscal years ending April 30, 2018 and April 30, 2019 (the “Reporting Periods”) for professional services rendered by the Registrant’s principal accountant (the “Auditor”) for the audit of the Registrant’s annual financial statements, or services that are normally provided by the Auditor in connection with the statutory and regulatory filings or engagements for the Reporting Periods, were $129,984 in April 30, 2018 and $28,890 in April 30, 2019.

(b) Audit-Related Fees. The aggregate fees billed in the Reporting Period for assurance and related services by the Auditor that are reasonably related to the performance of the Registrant’s financial statements were $927 in April 30, 2018 and $0 in April 30, 2019.

In addition, there were no Audit-Related Fees billed in the Reporting Period for assurance and related services by the Auditor to the Registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the Western Asset High Income Fund II Inc. (“service affiliates”), that were reasonably related to the performance of the annual audit of the service affiliates. Accordingly, there were no such fees that required pre-approval by the Audit Committee for the Reporting Period.

(c) Tax Fees. The aggregate fees billed in the Reporting Periods for professional services rendered by the Auditor for tax compliance, tax advice and tax planning (“Tax Services”) were $4,000 in April 30, 2018 and $0 in April 30, 2019. These services consisted of (i) review or preparation of U.S. federal, state, local and excise tax returns; (ii) U.S. federal, state and local tax planning, advice and assistance regarding statutory, regulatory or administrative developments, and (iii) tax advice regarding tax qualification matters and/or treatment of various financial instruments held or proposed to be acquired or held.

There were no fees billed for tax services by the Auditors to service affiliates during the Reporting Periods that required pre-approval by the Audit Committee.

(d) All Other Fees. The aggregate fees for other fees billed in the Reporting Periods for products and services provided by the Auditor, other than the services reported in paragraphs (a) through (c) of this Item for the Western Asset High Income Fund II Inc. were $0 in April 30, 2018 and $0 in April 30, 2019.

All Other Fees. There were no other non-audit services rendered by the Auditor to Legg Mason Partners Fund Advisors, LLC (“LMPFA”), and any entity controlling, controlled by or under common control with LMPFA that provided ongoing services to Western Asset High Income Fund II Inc. requiring pre-approval by the Audit Committee in the Reporting Period.

(e) Audit Committee’s pre—approval policies and procedures described in paragraph (c) (7) of Rule 2-01 of Regulation S-X.

(1) The Charter for the Audit Committee (the “Committee”) of the Board of each registered investment company (the “Fund”) advised by LMPFA or one of their affiliates (each, an “Adviser”) requires that the Committee shall approve (a) all audit and permissible non-audit services to be provided to the Fund and (b) all permissible non-audit services to be provided by the Fund’s independent auditors to the Adviser and any Covered Service Providers if the engagement relates directly to the operations and financial reporting of the Fund. The Committee may implement policies and procedures by which such services are approved other than by the full Committee.

The Committee shall not approve non-audit services that the Committee believes may impair the independence of the auditors. As of the date of the approval of this Audit Committee Charter, permissible non-audit services include any professional services (including tax services), that are not prohibited services as described below, provided to the Fund by the independent auditors, other than those provided to the Fund in connection with an audit or a review of the financial statements of the Fund. Permissible non-audit services may not include: (i) bookkeeping or other services related to the accounting records or financial statements of the Fund; (ii) financial information systems design and implementation; (iii) appraisal or valuation services, fairness opinions or contribution-in-kind reports; (iv) actuarial services; (v) internal audit outsourcing services; (vi) management functions or human resources; (vii) broker or dealer, investment adviser or investment banking services; (viii) legal services and expert services unrelated to the audit; and (ix) any other service the Public Company Accounting Oversight Board determines, by regulation, is impermissible.

Pre-approval by the Committee of any permissible non-audit services is not required so long as: (i) the aggregate amount of all such permissible non-audit services provided to the Fund, the Adviser and any service providers controlling, controlled by or under common control with the Adviser that provide ongoing services to the Fund (“Covered Service Providers”) constitutes not more than 5% of the total amount of revenues paid to the independent auditors during the fiscal year in which the permissible non-audit services are provided to (a) the Fund, (b) the Adviser and (c) any entity controlling, controlled by or under common control with the Adviser that provides ongoing services to the Fund during the fiscal year in which the services are provided that would have to be approved by the Committee; (ii) the permissible non-audit services were not recognized by the Fund at the time of the engagement to be non-audit services; and (iii) such services are promptly brought to the attention of the Committee and approved by the Committee (or its delegate(s)) prior to the completion of the audit.

(2) For the Western Asset High Income Fund II Inc., the percentage of fees that were approved by the audit committee, with respect to: Audit-Related Fees were 100% and 100% for April 30, 2018 and April 30, 2019; Tax Fees were 100% and 100% for April 30, 2018 and April 30, 2019; and Other Fees were 100% and 100% for April 30, 2018 and April 30, 2019.

(f) N/A

(g) Non-audit fees billed by the Auditor for services rendered to Western Asset High Income Fund II Inc., LMPFA and any entity controlling, controlled by, or under common control with LMPFA that provides ongoing services to Western Asset High Income Fund II Inc. during the reporting period were $472,645 in April 30, 2018 and $678,000 in April 30, 2019.

(h) Yes. Western Asset High Income Fund II Inc.’s Audit Committee has considered whether the provision of non-audit services that were rendered to Service Affiliates, which were not pre-approved (not requiring pre-approval), is compatible with maintaining the Accountant’s independence. All services provided by the Auditor to the Western Asset High Income Fund II Inc. or to Service Affiliates, which were required to be pre-approved, were pre-approved as required.

ITEM 5.

AUDIT COMMITTEE OF LISTED REGISTRANTS.

a) Registrant has a separately-designated standing Audit Committee established in accordance with Section 3(a)58(A) of the Exchange Act. The Audit Committee consists of the following Board members:

Robert D. Agdern

William R. Hutchinson

Paolo M. Cucchi

Daniel P. Cronin

Carol L. Colman

Leslie H. Gelb*

Eileen A. Kamerick

Nisha Kumar **

Dr. Riordan Roett*

*	Messrs. Gelb and Roett retired as Board and Audit Committee members as of December 31, 2018.

**	Effective January 1, 2019, Ms. Kumar became a Director and Audit Committee member.

b) 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

Western Asset Management Company, LLC

Proxy Voting Policies and Procedures

BACKGROUND

An investment adviser is required to adopt and implement policies and procedures that we believe are reasonably designed to ensure that proxies are voted in the best interest of clients, in accordance with fiduciary duties and SEC Rule 206(4)-6 under the Investment Advisers Act of 1940 (“Advisers Act”). The authority to vote the proxies of our clients is established through investment management agreements or comparable documents. In addition to SEC requirements governing advisers, long-standing fiduciary standards and responsibilities have been established for ERISA accounts. Unless a manager of ERISA assets has been expressly precluded from voting proxies, the Department of Labor has determined that the responsibility for these votes lies with the investment manager.

POLICY

As a fixed income only manager, the occasion to vote proxies is very rare. However, the Firm has adopted and implemented policies and procedures that we believe are reasonably designed to ensure that proxies are voted in the best interest of clients, in accordance with our fiduciary duties and SEC Rule 206(4)- 6 under the Investment Advisers Act of 1940 (“Advisers Act”). In addition to SEC requirements governing advisers, our proxy voting policies reflect the long-standing fiduciary standards and responsibilities for ERISA accounts. Unless a manager of ERISA assets has been expressly precluded from voting proxies, the Department of Labor has determined that the responsibility for these votes lies with the Investment Manager.

While the guidelines included in the procedures are intended to provide a benchmark for voting standards, each vote is ultimately cast on a case-by-case basis, taking into consideration the Firm’s contractual obligations to our clients and all other relevant facts and circumstances at the time of the vote (such that these guidelines may be overridden to the extent the Firm deems appropriate).

In exercising its voting authority, Western Asset will not consult or enter into agreements with officers, directors or employees of Legg Mason Inc. or any of its affiliates (other than Western Asset affiliated companies) regarding the voting of any securities owned by its clients.

PROCEDURE

Responsibility and Oversight

The Western Asset Legal and Compliance Department (“Compliance Department”) is responsible for administering and overseeing the proxy voting process. The gathering of proxies is coordinated through the Corporate Actions area of Investment Support (“Corporate Actions”). Research analysts and portfolio managers are responsible for determining appropriate voting positions on each proxy utilizing any applicable guidelines contained in these procedures.

Client Authority

The Investment Management Agreement for each client is reviewed at account start-up for proxy voting instructions. If an agreement is silent on proxy voting, but contains an overall delegation of discretionary authority or if the account represents assets of an ERISA plan, Western Asset will assume responsibility for proxy voting. The Legal and Compliance Department maintains a matrix of proxy voting authority.

Proxy Gathering

Registered owners of record, client custodians, client banks and trustees (“Proxy Recipients”) that receive proxy materials on behalf of clients should forward them to Corporate Actions. Proxy Recipients for new clients (or, if Western Asset becomes aware that the applicable Proxy Recipient for an existing client has changed, the Proxy Recipient for the existing client) are notified at start-up of appropriate routing to Corporate Actions of proxy materials received and reminded of their responsibility to forward all proxy materials on a timely basis. If Western Asset personnel other than Corporate Actions receive proxy materials, they should promptly forward the materials to Corporate Actions.

Proxy Voting

Once proxy materials are received by Corporate Actions, they are forwarded to the Legal and Compliance Department for coordination and the following actions:

Proxies are reviewed to determine accounts impacted.

Impacted accounts are checked to confirm Western Asset voting authority.

Legal and Compliance Department staff reviews proxy issues to determine any material conflicts of interest. (See conflicts of interest section of these procedures for further information on determining material conflicts of interest.)

If a material conflict of interest exists, (i) to the extent reasonably practicable and permitted by applicable law, the client is promptly notified, the conflict is disclosed and Western Asset obtains the client’s proxy voting instructions, and (ii) to the extent that it is not reasonably practicable or permitted by applicable law to notify the client and obtain such instructions (e.g., the client is a mutual fund or other commingled vehicle or is an ERISA plan client), Western Asset seeks voting instructions from an independent third party.

Legal and Compliance Department staff provides proxy material to the appropriate research analyst or portfolio manager to obtain their recommended vote. Research analysts and portfolio managers determine votes on a case-by-case basis taking into the account the voting guidelines contained in these procedures. For avoidance of doubt, depending on the best interest of each individual client, Western Asset may vote the same proxy differently for different clients. The analyst’s or portfolio manager’s basis for their decision is documented and maintained by the Legal and Compliance Department.

Legal and Compliance Department staff votes the proxy pursuant to the instructions received in (d) or (e) and returns the voted proxy as indicated in the proxy materials.

Timing

Western Asset personnel act in such a manner to ensure that, absent special circumstances, the proxy gathering, and proxy voting steps noted above can be completed before the applicable deadline for returning proxy votes.

Recordkeeping

Western Asset maintains records of proxies voted pursuant to Section 204-2 of the Advisers Act and ERISA DOL Bulletin 94-2. These records include:

A copy of Western Asset’s policies and procedures.

Copies of proxy statements received regarding client securities.

A copy of any document created by Western Asset that was material to making a decision how to vote proxies.

Each written client request for proxy voting records and Western Asset’s written response to both verbal and written client requests.

A proxy log including:

Issuer name;

Exchange ticker symbol of the issuer’s shares to be voted;

Committee on Uniform Securities Identification Procedures (“CUSIP”) number for the shares to be voted;

A brief identification of the matter voted on;

Whether the matter was proposed by the issuer or by a shareholder of the issuer;

Whether a vote was cast on the matter;

A record of how the vote was cast; and

Whether the vote was cast for or against the recommendation of the issuer’s management team.

Records are maintained in an easily accessible place for five years, the first two in Western Asset’s offices.

Disclosure

Western Asset’s proxy policies are described in the firm’s Part 2A of Form ADV. Clients will be provided a copy of these policies and procedures upon request. In addition, upon request, clients may receive reports on how their proxies have been voted.

Conflicts of Interest

All proxies are reviewed by the Legal and Compliance Department for material conflicts of interest.

Issues to be reviewed include, but are not limited to:

Whether Western (or, to the extent required to be considered by applicable law, its affiliates) manages assets for the company or an employee group of the company or otherwise has an interest in the company;

Whether Western or an officer or director of Western or the applicable portfolio manager or analyst responsible for recommending the proxy vote (together, “Voting Persons”) is a close relative of or has a personal or business relationship with an executive, director or person who is a candidate for director of the company or is a participant in a proxy contest; and

Whether there is any other business or personal relationship where a Voting Person has a personal interest in the outcome of the matter before shareholders.

Voting Guidelines

Western Asset’s substantive voting decisions turn on the particular facts and circumstances of each proxy vote and are evaluated by the designated research analyst or portfolio manager. The examples outlined below are meant as guidelines to aid in the decision making process.

Guidelines are grouped according to the types of proposals generally presented to shareholders. Part I deals with proposals which have been approved and are recommended by a company’s board of directors; Part II deals with proposals submitted by shareholders for inclusion in proxy statements; Part III addresses issues relating to voting shares of investment companies; and Part IV addresses unique considerations pertaining to foreign issuers.

Board Approved Proposals

The vast majority of matters presented to shareholders for a vote involve proposals made by a company itself that have been approved and recommended by its board of directors. In view of the enhanced corporate governance practices currently being implemented in public companies, Western Asset generally votes in support of decisions reached by independent boards of directors. More specific guidelines related to certain board-approved proposals are as follows:

Matters relating to the Board of Directors

Western Asset votes proxies for the election of the company’s nominees for directors and for board- approved proposals on other matters relating to the board of directors with the following exceptions:

Votes are withheld for the entire board of directors if the board does not have a majority of independent directors or the board does not have nominating, audit and compensation committees composed solely of independent directors.

Votes are withheld for any nominee for director who is considered an independent director by the company and who has received compensation from the company other than for service as a director.

Votes are withheld for any nominee for director who attends less than 75% of board and committee meetings without valid reasons for absences.

Votes are cast on a case-by-case basis in contested elections of directors.

Matters relating to Executive Compensation

Western Asset generally favors compensation programs that relate executive compensation to a company’s long-term performance. Votes are cast on a case-by-case basis on board-approved proposals relating to executive compensation, except as follows:

Except where the firm is otherwise withholding votes for the entire board of directors, Western Asset votes for stock option plans that will result in a minimal annual dilution.

Western Asset votes against stock option plans or proposals that permit replacing or repricing of underwater options.

Western Asset votes against stock option plans that permit issuance of options with an exercise price below the stock’s current market price.

Except where the firm is otherwise withholding votes for the entire board of directors, Western Asset votes for employee stock purchase plans that limit the discount for shares purchased under the plan to no more than 15% of their market value, have an offering period of 27 months or less and result in dilution of 10% or less.

Matters relating to Capitalization

The management of a company’s capital structure involves a number of important issues, including cash flows, financing needs and market conditions that are unique to the circumstances of each company. As a result, Western Asset votes on a case-by-case basis on board-approved proposals involving changes to a company’s capitalization except where Western Asset is otherwise withholding votes for the entire board of directors.

Western Asset votes for proposals relating to the authorization of additional common stock.

Western Asset votes for proposals to effect stock splits (excluding reverse stock splits).

Western Asset votes for proposals authorizing share repurchase programs.

Matters relating to Acquisitions, Mergers, Reorganizations and Other Transactions

Western Asset votes these issues on a case-by-case basis on board-approved transactions.

Matters relating to Anti-Takeover Measures

Western Asset votes against board-approved proposals to adopt anti-takeover measures except as follows:

Western Asset votes on a case-by-case basis on proposals to ratify or approve shareholder rights plans.

Western Asset votes on a case-by-case basis on proposals to adopt fair price provisions.

Other Business Matters

Western Asset votes for board-approved proposals approving such routine business matters such as changing the company’s name, ratifying the appointment of auditors and procedural matters relating to the shareholder meeting.

Western Asset votes on a case-by-case basis on proposals to amend a company’s charter or bylaws.

Western Asset votes against authorization to transact other unidentified, substantive business at the meeting.

II.

Shareholder Proposals

SEC regulations permit shareholders to submit proposals for inclusion in a company’s proxy statement. These proposals generally seek to change some aspect of a company’s corporate governance structure or to change some aspect of its business operations. Western Asset votes in accordance with the recommendation of the company’s board of directors on all shareholder proposals, except as follows:

Western Asset votes for shareholder proposals to require shareholder approval of shareholder rights plans.

Western Asset votes for shareholder proposals that are consistent with Western Asset’s proxy voting guidelines for board-approved proposals.

Western Asset votes on a case-by-case basis on other shareholder proposals where the firm is otherwise withholding votes for the entire board of directors.

III.

Voting Shares of Investment Companies

Western Asset may utilize shares of open or closed-end investment companies to implement its investment strategies. Shareholder votes for investment companies that fall within the categories listed in Parts I and II above are voted in accordance with those guidelines.

Western Asset votes on a case-by-case basis on proposals relating to changes in the investment objectives of an investment company taking into account the original intent of the fund and the role the fund plays in the clients’ portfolios.

Western Asset votes on a case-by-case basis all proposals that would result in increases in expenses (e.g., proposals to adopt 12b-1 plans, alter investment advisory arrangements or approve fund mergers) taking into account comparable expenses for similar funds and the services to be provided.

IV.

Voting Shares of Foreign Issuers

In the event Western Asset is required to vote on securities held in non-U.S. issuers – i.e. issuers that are incorporated under the laws of a foreign jurisdiction and that are not listed on a U.S. securities exchange or the NASDAQ stock market, the following guidelines are used, which are premised on the existence of a sound corporate governance and disclosure framework. These guidelines, however, may not be appropriate under some circumstances for foreign issuers and therefore apply only where applicable.

Western Asset votes for shareholder proposals calling for a majority of the directors to be independent of management.

Western Asset votes for shareholder proposals seeking to increase the independence of board nominating, audit and compensation committees.

Western Asset votes for shareholder proposals that implement corporate governance standards similar to those established under U.S. federal law and the listing requirements of U.S. stock exchanges, and that do not otherwise violate the laws of the jurisdiction under which the company is incorporated.

Western Asset votes on a case-by-case basis on proposals relating to (1) the issuance of common stock in excess of 20% of a company’s outstanding common stock where shareholders do not have preemptive rights, or (2) the issuance of common stock in excess of 100% of a company’s outstanding common stock where shareholders have preemptive rights.

RETIREMENT ACCOUNTS

For accounts subject to ERISA, as well as other Retirement Accounts, Western Asset is presumed to have the responsibility to vote proxies for the client. The Department of Labor (“DOL”) has issued a bulletin that states that investment managers have the responsibility to vote proxies on behalf of Retirement Accounts unless the authority to vote proxies has been specifically reserved to another named fiduciary. Furthermore, unless Western Asset is expressly precluded from voting the proxies, the DOL has determined that the responsibility remains with the investment manager.

In order to comply with the DOL’s position, Western Asset will be presumed to have the obligation to vote proxies for its Retirement Accounts unless Western Asset has obtained a specific written instruction indicating that: (a) the right to vote proxies has been reserved to a named fiduciary of the client, and (b) Western Asset is precluded from voting proxies on behalf of the client. If Western Asset does not receive such an instruction, Western Asset will be responsible for voting proxies in the best interests of the Retirement Account client and in accordance with any proxy voting guidelines provided by the client.

Western Asset Management Company Limited

Proxy Voting and Corporate Actions Policy

NOTE: Below policy relating to Proxy Voting and Corporate Actions is a global policy for all Western Asset affiliates. As compliance with the Policy is monitored by Western Asset Pasadena affiliate, the Policy has been adopted from US Compliance Manual and therefore all defined terms are those defined in the US Compliance Manual rather than UK Compliance Manual.

As a fixed income only manager, the occasion to vote proxies is very rare. However, the Firm has adopted and implemented policies and procedures that we believe are reasonably designed to ensure that proxies are voted in the best interest of clients, in accordance with our fiduciary duties and SEC Rule 206(4)-6 under the Investment Advisers Act of 1940 (“Advisers Act”). In addition to SEC requirements governing advisers, our proxy voting policies reflect the long-standing fiduciary standards and responsibilities for ERISA accounts. Unless a manager of ERISA assets has been expressly precluded from voting proxies, the Department of Labor has determined that the responsibility for these votes lies with the Investment Manager.

RESPONSIBILITY AND OVERSIGHT

CLIENT AUTHORITY

PROXY GATHERING

PROXY VOTING

Once proxy materials are received by Corporate Actions, they are forwarded to the Legal and Compliance Department for coordination and the following actions:

Proxies are reviewed to determine accounts impacted.

Impacted accounts are checked to confirm Western Asset voting authority.

Legal and Compliance Department staff provides proxy material to the appropriate research analyst or portfolio manager to obtain their recommended vote. Research analysts and portfolio managers determine votes on a case-by-case basis taking into account the voting guidelines contained in these procedures. For avoidance of doubt, depending on the best interest of each individual client, Western Asset may vote the same proxy differently for different clients. The analyst’s or portfolio manager’s basis for their decision is documented and maintained by the Legal and Compliance Department.

Legal and Compliance Department staff votes the proxy pursuant to the instructions received in (d) or (e) and returns the voted proxy as indicated in the proxy materials.

TIMING

Western Asset personnel act in such a manner to ensure that, absent special circumstances, the proxy gathering and proxy voting steps noted above can be completed before the applicable deadline for returning proxy votes.

RECORDKEEPING

Western Asset maintains records of proxies voted pursuant to Section 204-2 of the Advisers Act and ERISA DOL Bulletin 94-2. These records include:

A copy of Western Asset’s policies and procedures.

Copies of proxy statements received regarding client securities.

A copy of any document created by Western Asset that was material to making a decision how to vote proxies.

Each written client request for proxy voting records and Western Asset’s written response to both verbal and written client requests.

A proxy log including:

•

Issuer name;

•

Exchange ticker symbol of the issuer’s shares to be voted;

•

Committee on Uniform Securities Identification Procedures (“CUSIP”) number for the shares to be voted;

•

A brief identification of the matter voted on;

•

Whether the matter was proposed by the issuer or by a shareholder of the issuer;

•

Whether a vote was cast on the matter;

•

A record of how the vote was cast; and

•

Whether the vote was cast for or against the recommendation of the issuer’s management team.

Records are maintained in an easily accessible place for five years, the first two in Western Asset’s offices.

DISCLOSURE

CONFLICT OF INTEREST

All proxies are reviewed by the Legal and Compliance Department for material conflicts of interest. Issues to be reviewed include, but are not limited to:

Whether there is any other business or personal relationship where a Voting Person has a personal interest in the outcome of the matter before shareholders.

VOTING GUIDELINES

BOARD APPROVAL PROPOSALS

Matters relating to the Board of Directors – Western Asset votes proxies for the election of the company’s nominees for directors and for board-approved proposals on other matters relating to the board of directors with the following exceptions:

Votes are withheld for any nominee for director who is considered an independent director by the company and who has received compensation from the company other than for service as a director.

Votes are withheld for any nominee for director who attends less than 75% of board and committee meetings without valid reasons for absences.

Votes are cast on a case-by-case basis in contested elections of directors.

Matters relating to Executive Compensation – Western Asset generally favors compensation programs that relate executive compensation to a company’s long-term performance. Votes are cast on a case-by- case basis on board-approved proposals relating to executive compensation, except as follows:

Except where the firm is otherwise withholding votes for the entire board of directors, Western Asset votes for stock option plans that will result in a minimal annual dilution.

Western Asset votes against stock option plans or proposals that permit replacing or repricing of underwater options.

Western Asset votes against stock option plans that permit issuance of options with an exercise price below the stock’s current market price.

Matters relating to Capitalization – The management of a company’s capital structure involves a number of important issues, including cash flows, financing needs and market conditions that are unique to the circumstances of each company. As a result, Western Asset votes on a case-by-case basis on board- approved proposals involving changes to a company’s capitalization except where Western Asset is otherwise withholding votes for the entire board of directors.

Western Asset votes for proposals relating to the authorization of additional common stock;

Western Asset votes for proposals to effect stock splits (excluding reverse stock splits);

Western Asset votes for proposals authorizing share repurchase programs;

Matters relating to Acquisitions, Mergers, Reorganizations and Other Transactions;

Western Asset votes these issues on a case-by-case basis on board-approved transactions;

Matters relating to Anti-Takeover Measures – Western Asset votes against board-approved proposals to adopt anti-takeover measures except as follows:

Western Asset votes on a case-by-case basis on proposals to ratify or approve shareholder rights plans;

Western Asset votes on a case-by-case basis on proposals to adopt fair price provisions.

Other Business Matters – Western Asset votes for board-approved proposals approving such routine business matters such as changing the company’s name, ratifying the appointment of auditors and procedural matters relating to the shareholder meeting.

Western Asset votes on a case-by-case basis on proposals to amend a company’s charter or bylaws;

Western Asset votes against authorization to transact other unidentified, substantive business at the meeting.

SHAREHOLDER PROPOSALS

Western Asset votes for shareholder proposals to require shareholder approval of shareholder rights plans;

Western Asset votes for shareholder proposals that are consistent with Western Asset’s proxy voting guidelines for board-approved proposals;

Western Asset votes on a case-by-case basis on other shareholder proposals where the firm is otherwise withholding votes for the entire board of directors.

VOTING SHARES OF INVESTMENT COMPANIES

VOTING SHARES OF FOREIGN ISSUERS

Western Asset votes for shareholder proposals calling for a majority of the directors to be independent of management;

Western Asset votes for shareholder proposals seeking to increase the independence of board nominating, audit and compensation committees;

Western Asset votes for shareholder proposals that implement corporate governance standards similar to those established under U.S. federal law and the listing requirements of U.S. stock exchanges and that do not otherwise violate the laws of the jurisdiction under which the company is incorporated;

RETIREMENT ACCOUNTS

Furthermore, unless Western Asset is expressly precluded from voting the proxies, the DOL has determined that the responsibility remains with the investment manager.

CORPORATE ACTIONS

Western Asset must pay strict attention to any corporate actions that are taken with respect to issuers whose securities are held in client accounts. For example, Western Asset must review any tender offers, rights offerings, etc., made in connection with securities owned by clients. Western Asset must also act in a timely manner and in the best interest of each client with respect to any such corporate actions.

Western Asset Management Company Pte. Ltd. (“WAMS”)

Compliance Policies and Procedures

Proxy Voting

WAMS has adopted and implemented policies and procedures that we believe are reasonably designed to ensure that proxies are voted in the best interest of clients, in accordance with our fiduciary duties and the applicable laws and regulations. In addition to SEC requirements governing advisers, our proxy voting policies reflect the long-standing fiduciary standards and responsibilities for ERISA accounts.

In exercising its voting authority, WAMS will not consult or enter into agreements with officers, directors or employees of Legg Mason Inc. or any of its affiliates (other than Western Asset affiliated companies) regarding the voting of any securities owned by its clients.

Procedure

Responsibility and Oversight

The Western Asset Legal and Compliance Department is responsible for administering and overseeing the proxy voting process. The gathering of proxies is coordinated through the Corporate Actions area of Investment Support (“Corporate Actions”). Research and portfolio managers are determining appropriate voting positions on each proxy utilizing any applicable guidelines contained in these procedures.

Client Authority

Proxy Gathering

Registered owners of record, client custodians, client banks and trustees (“Proxy Recipients”) that receive proxy materials on behalf of clients should forward them to Corporate Actions. Proxy Recipients for new clients (or, if Western Asset becomes aware that the applicable Proxy Recipients for an existing client has changed, the Proxy Recipient for the existing client) are notified at start-up of appropriate routing to Corporate Actions of proxy materials received and reminded to their responsibility to forward all proxy materials on a timely basis. If Western Asset personnel other than Corporate Actions receive proxy materials, they should promptly forward the materials to Corporate Actions.

Proxy Voting

Once proxy materials are received by Corporate Actions, they are forwarded to the Legal and Compliance Department for coordination and the following actions:

Proxies are reviewed to determine accounts impacted.

Impacted accounts are checked to confirm Western Asset voting authority.

Legal and Compliance Department staff reviews proxy issues to determine any material conflicts of interest. [See conflicts of interest section of these procedures for further information on determining material conflicts of interest.]

If a material conflict of interest exists, (4.1) to the extent reasonably practicable and permitted by applicable law, the client is promptly notified, the conflict is disclosed and Western Asset obtains the client’s proxy voting instructions, and (4.2) to the extent that it is not reasonably practicable or permitted by applicable law to notify the client and obtain such instructions (e.g., the client is a mutual fund or other commingled vehicle or is an ERISA plan client), Western Asset seeks voting instructions from an independent third party.

Legal and Compliance Department staff votes the proxy pursuant to the instructions received in (4) or (5) and returns the voted proxy as indicated in the proxy materials.

Timing

Recordkeeping

Western Asset maintains records of proxies voted pursuant to Section 204-2 of the Advisers Act and ERISA DOL Bulletin 94-2. These records include:

•

A copy of Western Asset’s policies and procedures.

•

Copies of proxy statements received regarding client securities.

•

A copy of any document created by Western Asset that was material to making a decision how to vote proxies.

•

Each written client request for proxy voting records and Western Asset’s written response to both verbal and written client requests.

•

A proxy log including:

•

Issuer name;

•

Exchange ticker symbol of the issuer’s shares to be voted;

•

Committee on Uniform Securities Identification Procedures (“CUSIP”) number for the shares to be voted;

•

A brief identification of the matter voted on;

•

Whether the matter was proposed by the issuer or by a shareholder of the issuer;

•

Whether a vote was cast on the matter;

•

A record of how the vote was cast; and

Whether the vote was cast for or against the recommendation of the issuer’s management team. Records are maintained in an easily accessible plan for five years, the first two in Western Asset’s offices.

Disclosure

Conflicts of Interest

All proxies are reviewed by the Legal and Compliance Department for material conflicts of interest. Issues to be reviewed include, but are not limited to:

•

Whether Western (or, to the extent required to be considered by applicable law, it affiliates) manages assets for the company or an employee group of the company or otherwise has an interest in the company;

•

Whether there is any other business or personal relationship where a Voting Person has a personal interest in the outcome of the matter before shareholders.

Voting Guidelines

Guidelines are grouped according to the types of proposals generally presented to shareholders. Part 1 deals with proposals which have been approved and are recommended by a company’s board of directors; Part 2 deals with proposals submitted by shareholders for inclusion in proxy statements; Part 3 addresses issues relating to voting shares of investment companies; and Part 4 addresses unique considerations pertaining to foreign issuers.

Part 1 - Board Approved Proposals

•

Matters relating to the Board of Directors.

Western Asset votes proxies for the election of the company’s nominees for directors and for board-approved proposals on other matters relating to the board of directors with the following exceptions:

•

Votes are withheld for any nominee for director who is considered an independent director by the company and who has received compensation from the company other than for service as a director.

•

Votes are withheld for any nominee for director who attends less than 75% of board and committee meetings without valid reasons for absences.

•

Votes are cast on a case-by-case basis in contested elections of directors.

•

Matters relating to Executive Compensation.

•

Except where the firm is otherwise withholding votes for the entire board of directors, Western Asset votes for stock option plans that will result in a minimal annual dilution.

•

Western Asset votes against stock option plans or proposals that permit replacing or re-pricing of underwater options.

•

Western Asset votes against stock option plans that permit issuance of options with an exercise price below the stock’s current market price.

•

Matters relating to Capitalization.

The management of a company’s capital structure involves a number of important issues, including cash flows, financing needs and market conditions that are unique to the circumstance of each company. As a result, Western Asset votes on a case-by-case basis on board-approved proposals involving changes to a company’s capitalization except where Western Asset is otherwise withholding votes for the entire board of directors.

•

Western Asset votes for proposals relating to the authorization of additional common stock.

•

Western Asset votes for proposals to effect stock splits (excluding reverse stock splits).

•

Western Asset votes for proposals authorizing share repurchase programs.

•

Matters relating to Acquisitions, Mergers, Reorganizations and Other Transactions. Western Asset votes these issues on a case-by-case basis on board-approved transactions.

•

Matters relating to Anti-Takeover Measures. Western Asset votes against board-approved proposals to adopt anti-takeover measures except as follows:

•

Western Asset votes on a case-by-case basis on proposals to ratify or approve shareholder right plans.

•

Western Asset votes on a case-by-case basis on proposals to adopt fair price provisions.

•

Other Business Matters. Western Asset votes for board-approved proposals approving such routine business matters such as changing the company’s name, ratifying the appointment of auditors and procedural matters relating to the shareholder meeting.

•

Western Asset votes on a case-by-case basis on proposals to amend a company’s charter or bylaws.

•

Western Asset votes against authorization to transact other unidentified, substantive business at the meeting.

Part 2 - Shareholder Proposals SEC regulations permit shareholders to submit proposals for inclusion in a company’s proxy voting statement. These proposals generally seek to change some aspect of a company’s corporate governance structure or to changes some aspect of its business operations. Western Asset votes in accordance with the recommendation of the company’s board of directors on all shareholder proposals, except as follows:

•

Western Asset votes for shareholder proposals to require shareholder approval of shareholder rights plans.

•

Western Asset votes for shareholder proposals that are consistent with Western Asset’s proxy voting guidelines for board-approved proposals.

•

Western Asset votes on a case-by-case basis on other shareholder proposals where the firm is otherwise withholding votes for the entire board of directors.

Part 3 - Voting Shares of Investment Companies Western Asset may utilize shares of open or closed-end investment companies to implement its investment strategies. Shareholder votes for investment companies that fall within the categories listed in Parts 1 and 2 above are voted in accordance with those guidelines.

•

Western Asset votes on a case-by-case basis all proposals that would result in increases in expenses (e.g. proposals to adopt 12b-1 plans, alter investment advisory arrangements or approve fund mergers) taking into account comparable expenses for similar funds and the services to be provided.

Part 4 - Voting Shares of Foreign Issuers

In the event Western Asset is required to vote on securities held in non-U.S. issuers –i.e. issuers that are incorporated under the laws of a foreign jurisdiction and that are not listed on a U.S. securities exchange or the NASDAQ stock market, the following guidelines are used, which are premised on the existence of a sound corporate governance disclosure foreign issuers and therefore apply only where applicable.

•

Western Asset votes for shareholder proposals calling for a majority of the directors to be independent of management.

•

Western Asset votes for shareholder proposals seeking to increase the independence of board nominating, audit and compensation committees.

•

Western Asset votes on a case-by-case basis on proposals relating to (1) the issuance of common stock in excess of 20% of a company’s outstanding common stock where shareholders do not have pre-emptive rights, or (2) the issuance of common stock in excess of 100% of a company’s outstanding common stock where shareholders have pre-emptive rights.

Retirement Accounts

In order to comply with the DOL’s position, Western Asset will be presumed to have the obligation to vote proxies for its Retirement Accounts unless Western Asset has obtained a specific written instruction indicating that: (1) the right to vote proxies has been reserved to a named fiduciary of the client, and (2) Western Asset is precluded from voting proxies on behalf of the client. If Western Asset does not receive such an instruction, Western Asset will be responsible for voting proxies in the best interests of the Retirement Account client and in accordance with any proxy voting guidelines provided by the client.

ITEM 8.

INVESTMENT PROFESSIONALS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

(a)(1):


NAME AND ADDRESS	LENGTH OF TIME SERVED	PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
S. Kenneth Leech Western Asset 385 East Colorado Blvd. Pasadena, CA 91101	Since 2014	Responsible for the day-to-day management with other members of the Fund’s portfolio management team; Chief Investment Officer of Western Asset from 1998 to 2008 and since 2014; Senior Advisor/Chief Investment Officer Emeritus of Western Asset from 2008-2013; Co- Chief Investment Officer of Western Asset from 2013-2014.

Michael C. Buchanan Western Asset 385 East Colorado Blvd. Pasadena, CA 91101	Since 2006	Responsible for the day-to-day management with other members of the Fund’s portfolio management team; employed by Western Asset Management as an investment professional for at least the past five years; Managing Director and head of U.S. Credit Products from 2003-2005 at Credit Suisse Asset Management

Christopher F. Kilpatrick Western Asset 385 East Colorado Blvd. Pasadena, CA 91101	Since 2012	Responsible for the day-to-day management with other members of the Fund’s portfolio management team; employed by Western Asset Management as an investment professional for at least the past five years.

(a)(2): DATA TO BE PROVIDED BY FINANCIAL CONTROL

The following tables set forth certain additional information with respect to the fund’s portfolio managers for the fund. Unless noted otherwise, all information is provided as of April 30, 2019.

Other Accounts Managed by Portfolio Managers

The table below identifies the number of accounts (other than the fund) for which the fund’s portfolio managers have day-to-day management responsibilities and the total assets in such accounts, within each of the following categories:

registered investment companies, other pooled investment vehicles, and other accounts. For each category, the number of accounts and total assets in the accounts where fees are based on performance is also indicated.

Name of PM

Type of Account

Number of
Accounts
Managed

Total Assets
Managed

Number of
Accounts
Managed for
which
Advisory
Fee is
Performance
-Based

Assets
Managed for
which
Advisory Fee
is
Performance-
Based

S. Kenneth Leech‡

Other Registered Investment Companies

105

162.5 billion

None

Other Pooled Vehicles

263

79.0 billion

1.5 billion

Other Accounts

588

194.9 billion

12.6 billion

Michael C. Buchanan ‡

Other Registered Investment Companies

17.2 billion

None

Other Pooled Vehicles

20.2 billion

716 million

Other Accounts

175

70.4 billion

4.6 billion

Christopher Kilpatrick ‡

Other Registered Investment Companies

3.0 billion

None

Other Pooled Vehicles

437 million

None

Other Accounts

None

‡

The numbers above reflect the overall number of portfolios managed by employees of Western Asset Management Company (“Western Asset”). Mr. Leech is involved in the management of all the Firm’s portfolios, but they are not solely responsible for particular portfolios. Western Asset’s investment discipline emphasizes a team approach that combines the efforts of groups of specialists working in different market sectors. They are responsible for overseeing implementation of Western Asset’s overall investment ideas and coordinating the work of the various sector teams. This structure ensures that client portfolios benefit from a consensus that draws on the expertise of all team members.

(a)(3): Investment Professional Compensation

With respect to the compensation of the investment professionals, Western Asset’s compensation system assigns each employee a total compensation range, which is derived from annual market surveys that benchmark each role with its job function and peer universe. This method is designed to reward employees with total compensation reflective of the external market value of their skills, experience, and ability to produce desired results. Standard compensation includes competitive base salaries, generous employee benefits, and a retirement plan.

In addition, the subadviser’s employees are eligible for bonuses. These are structured to closely align the interests of employees with those of the subadviser, and are determined by the professional’s job function and pre-tax performance as measured by a formal review process. All bonuses are completely discretionary. The principal factor considered is an investment professional’s investment performance versus appropriate peer groups and benchmarks (e.g., a securities index and with respect to a fund, the benchmark set forth in the fund’s Prospectus to which the fund’s average annual total returns are compared or, if none, the benchmark set forth in the fund’s annual report). Performance is reviewed on a 1, 3 and 5 year basis for compensation—with 3 years having the most emphasis. The subadviser may also measure an investment professional’s pre-tax investment performance against other benchmarks, as it determines appropriate. Because investment professionals are generally responsible for multiple accounts (including the funds) with similar investment strategies, they are generally compensated on the performance of the aggregate group of similar accounts, rather than a specific account. Other factors that may be considered when making bonus decisions include client service, business development, length of service to the subadviser, management or supervisory responsibilities, contributions to developing business strategy and overall contributions to the subadviser’s business.

Finally, in order to attract and retain top talent, all professionals are eligible for additional incentives in recognition of outstanding performance. These are determined based upon the factors described above and include Legg Mason stock options and long-term incentives that vest over a set period of time past the award date.

Potential Conflicts of Interest

The subadviser has adopted compliance policies and procedures to address a wide range of potential conflicts of interest that could directly impact client portfolios. For example, potential conflicts of interest may arise in connection with the management of multiple portfolios (including portfolios managed in a personal capacity). These could include potential conflicts of interest related to the knowledge and timing of a portfolio’s trades, investment opportunities and broker selection. Portfolio managers are privy to the size, timing, and possible market impact of a portfolio’s trades.

It is possible that an investment opportunity may be suitable for both a portfolio and other accounts managed by a portfolio manager, but may not be available in sufficient quantities for both the portfolio and the other accounts to participate fully. Similarly, there may be limited opportunity to sell an investment held by a portfolio and another account. A conflict may arise where the portfolio manager may have an incentive to treat an account preferentially as compared to a portfolio because the account pays a performance-based fee or the portfolio manager, the subadviser or an affiliate has an interest in the account. The subadviser has adopted procedures for allocation of portfolio transactions and investment opportunities across multiple client accounts on a fair and equitable basis over time. Eligible accounts that can participate in a trade generally share the same price on a pro-rata allocation basis, taking into account differences based on factors such as cash availability, investment restrictions and guidelines, and portfolio composition versus strategy.

With respect to securities transactions, the subadviser determines which broker or dealer to use to execute each order, consistent with their duty to seek best execution of the transaction. However, with respect to certain other accounts (such as pooled investment vehicles that are not registered investment companies and other accounts managed for organizations and individuals), the subadviser may be limited by the client with respect to the selection of brokers or dealers or may be instructed to direct trades through a particular broker or dealer. In these cases, trades for a portfolio in a particular security may be placed separately from, rather than aggregated with, such other accounts. Having separate transactions with respect to a security may temporarily affect the market price of the security or the execution of the transaction, or both, to the possible detriment of a portfolio or the other account(s) involved. Additionally, the management of multiple portfolios and/or other accounts may result in a portfolio manager devoting unequal time and attention to the management of each portfolio and/or other account. The subadviser’s team approach to portfolio management and block trading approach seeks to limit this potential risk.

The subadviser also maintains a gift and entertainment policy to address the potential for a business contact to give gifts or host entertainment events that may influence the business judgment of an employee. Employees are permitted to retain gifts of only a nominal value and are required to make reimbursement for entertainment events above a certain value. All gifts (except those of a de minimis value) and entertainment events that are given or sponsored by a business contact are required to be reported in a gift and entertainment log which is reviewed on a regular basis for possible issues.

Employees of the subadviser have access to transactions and holdings information regarding client accounts and the subadviser’s overall trading activities. This information represents a potential conflict of interest because employees may take advantage of this information as they trade in their personal accounts. Accordingly, the subadviser maintains a Code of Ethics that is compliant with Rule 17j-1 under the Investment Company Act of 1940, as amended, and Rule 204A-1 under the Investment Advisers Act of 1940, to address personal trading. In addition, the Code of Ethics seeks to establish broader principles of good conduct and fiduciary responsibility in all aspects of the subadviser’s business. The Code of Ethics is administered by the Legal and Compliance Department and monitored through the subadviser’s compliance monitoring program.

The subadviser may also face other potential conflicts of interest with respect to managing client assets, and the description above is not a complete description of every conflict of interest that could be deemed to exist. The subadviser also maintains a compliance monitoring program and engages independent auditors to conduct a SOC1/ISAE 3402 audit on an annual basis. These steps help to ensure that potential conflicts of interest have been addressed.

Investment Professional Securities Ownership

The table below identifies the dollar range of securities beneficially owned by the named investment professional as of April 30, 2019.


Investment Professional(s)	Dollar Range of Portfolio Securities Beneficially Owned
S. Kenneth Leech		E
Christopher F. Kilpatrick		A
Michael C. Buchanan		A

Dollar Range ownership is as follows:

A: none

B: $1 - $10,000

C: 10,001 - $50,000

D: $50,001 - $100,000

E: $100,001 - $500,000

F: $500,001 - $1 million

G: over $1 million

ITEM 9.

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


	(a)		(b)		(c)		(d)
Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
May 1 through May 31		0		0		0		8,620,385
June 1 through June 30		0		0		0		8,620,385
July 1 through July 31		0		0		0		8,620,385
August 1 through August 31		0		0		0		8,620,385
September 1 through September 30		0		0		0		8,620,385
October 1 through October 31		366,293	$	6.23		366,293		8,254,092
November 1 through November 30		221,194	$	6.01		221,194		8,032,898
December 1 through December 31		460,153	$	5.77		460,153		7,572,745
January 1 through January 31		0		0		0		7,572,745
February 1 through February 28		0		0		0		7,572,745
March 1 through March 31		0		0		0		7,572,745
April 1 through April 30		0		0		0		7,572,745
Total

ITEM 10.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

Not applicable.

ITEM 11.

CONTROLS AND PROCEDURES.

(a)

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

(b)

There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are likely to materially affect the registrant’s internal control over financial reporting

ITEM 12.

DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

Not applicable.

ITEM 13.

EXHIBITS.

(a) (1) Code of Ethics attached hereto.

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 II Inc.


By:		/s/ Jane Trust
		Jane Trust
		Chief Executive Officer

Date: June 26, 2019

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/ Jane Trust
		Jane Trust
		Chief Executive Officer

Date: June 26, 2019


By:		/s/ Richard F. Sennett
		Richard F. Sennett
		Principal Financial Officer

Date: June 26, 2019