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
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811-10603
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Western Asset Premier Bond Fund
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(Exact name of registrant as
specified in charter)
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55 Water Street, New York, NY
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10041
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(Address of principal executive
offices)
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(Zip code)
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Robert I. Frenkel, Esq.
Legg Mason & Co., LLC
100 First Stamford Place,
Stamford, CT 06902
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(Name and address of agent for
service)
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Registrants telephone number, including
area code:
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(888)777-0102
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Date of fiscal year end:
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December 31
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Date of reporting period:
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June 30,
2010
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ITEM
1. REPORT TO
STOCKHOLDERS.
The
Semi-
Annual
Report to Stockholders is filed herewith.
June 30,
2010
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Semi-Annual Report
Western Asset Premier Bond
Fund (WEA)
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INVESTMENT PRODUCTS: NOT
FDIC INSURED
·
NO BANK
GUARANTEE
·
MAY LOSE VALUE
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II
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Western
Asset Premier Bond Fund
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Fund objective
The Funds investment objective is to provide current
income and capital appreciation.
Whats inside
Letter from the president
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II
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Investment commentary
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III
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Fund highlights
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1
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Fund at a glance
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3
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Quarterly comparison
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4
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Schedule of investments
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5
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Statement of assets and liabilities
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18
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Statement of operations
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19
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Statements of changes in net assets
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20
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Financial highlights
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21
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Notes to financial statements
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22
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Letter from the president
Dear Shareholder,
We are pleased to provide the semi-annual report of
Western Asset Premier Bond Fund for the six-month reporting period ended June 30,
2010.
Please read on for Fund performance information and a
detailed look at prevailing economic and market conditions during the Funds
reporting period.
As always, we remain committed to providing you with
excellent service and a full spectrum of investment choices. We also remain
committed to supplementing the support you receive from your financial advisor.
One way we accomplish this is through our website, www.leggmason.com/cef. Here
you can gain immediate access to market and investment information, including:
·
Fund
prices and performance,
·
Market
insights and commentaries from our portfolio managers, and
·
A
host of educational resources.
We look forward to helping you meet your financial
goals.
Sincerely,
R. Jay Gerken, CFA
President
July 30, 2010
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Western Asset Premier Bond Fund
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III
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Investment commentary
Economic review
While the overall U.S. economy continued to expand
over the six months ended June 30, 2010, several economic data points
weakened toward the end of the reporting period. This, in combination with
sovereign debt woes in Europe, caused investor sentiment to turn negative and
had significant implications for the financial markets.
Looking back, the U.S. Department of Commerce reported
that U.S. gross domestic product (GDP)
i
contracted
four consecutive quarters, beginning in the third quarter of 2008 through the
second quarter of 2009. Economic conditions then began to improve in the third
quarter of 2009, as GDP growth was 1.6%. A variety of factors helped the
economy to regain its footing, including the governments $787 billion stimulus
program. Economic growth then accelerated during the fourth quarter of 2009, as
GDP growth was 5.0%. A slower drawdown in business inventories and renewed
consumer spending were contributing factors spurring the economys higher
growth rate. While the recovery continued during the first half of 2010, it did
so at a more modest pace, as GDP growth was 3.7% during the first quarter of
2010 and an estimated 2.4% during the second quarter. The slower pace of growth
in the second quarter was due, in part, to slower consumer spending, which rose
an annualized 1.6% during the quarter, versus a 1.9% gain over the first three
months of the year.
Even before GDP growth turned positive, there were
signs that the economy was on the mend. The manufacturing sector, as measured
by the Institute for Supply Managements PMI
ii
,
rose to 52.8 in August 2009, the first time it surpassed 50 since January 2008
(a reading below 50 indicates a contraction, whereas a reading above 50
indicates an expansion). While June 2010s PMI reading of 56.2 was lower
than Mays reading of 59.7, manufacturing has now expanded eleven consecutive
months according to PMI data. The manufacturing sectors growth remained fairly
broad-based with thirteen of the eighteen industries tracked by the Institute
for Supply Management expanding during June.
After experiencing sharp job losses in 2009, the U.S.
Department of Labor reported that over one million new positions were added
during the first five months of 2010. Included in that total, however, were
700,000 temporary government jobs tied to the 2010 Census. In June, 225,000 of
these temporary positions were eliminated, offsetting private sector growth and
resulting in a net loss of 125,000 jobs for the month. However, the
unemployment rate fell to 9.5% in June, versus 9.7% and 9.9% in May and
April, respectively.
There was mixed news in the housing market during the
period. According to the National Association of Realtors, existing home sales
increased 7.0% and 8.0% in March and April, respectively, after sales had
fallen for the period from December 2009 through February 2010. The
rebound was largely attributed to people rushing to take advantage of the
governments $8,000 tax credit for first-time home buyers that expired at the
end of April. However, with the end of the tax credit, existing home sales then
declined 2.2% and 5.1% in May and June, respectively. In addition, the
inventory of unsold homes increased 2.5% to 3.99 million in June. Looking at
home prices, the S&P/Case-Shiller Home Price Index
iii
indicated that month-to-month U.S. home prices rose 1.3% in May.
This marked the second straight monthly increase following six consecutive
months of declining prices.
Financial market overview
During the first half of the reporting period, the
financial markets were largely characterized by healthy investor risk appetite
and solid results by lower-quality bonds. However, the market experienced a
sharp sell-off during the second half of the reporting period, during which
risk aversion returned and investors flocked to the relative safety of U.S.
Treasury securities.
Given certain pockets of weakness in the economy,
including elevated unemployment in the U.S., the Federal Reserve Board (Fed)
iv
remained cautious. At its meeting in June 2010, the Fed said it
will maintain the target range for the federal funds rate
v
at 0 to 1/4 percent and continues to anticipate that economic
conditions, including low rates of resource utilization, subdued inflation
trends, and stable inflation expectations, are likely to warrant exceptionally
low levels of the federal funds rate for an extended period.
However, the Fed took several steps in reversing its
accommodative monetary stance. On February 18, 2010, the Fed raised the
discount rate,
IV
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Western
Asset Premier Bond Fund
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Investment commentary (contd)
the interest rate it charges banks for temporary
loans, from 1/2 to 3/4 percent. The Fed also concluded its $1.25 trillion
mortgage securities purchase program at the end of the first quarter of 2010.
However, the Fed left the door open for future stimulus measures if needed. In
the minutes of its June meeting that were released on July 14
th
(after the reporting period
ended), the Fed said, In addition to continuing to develop and test
instruments to exit from the period of unusually accommodative monetary policy,
the Committee would need to consider whether further policy stimulus might
become appropriate if the outlook were to worsen appreciably.
Fixed-income market review
Continuing the trend that began in the second quarter
of 2009, nearly every spread sector (non-Treasury) outperformed equal-duration
vi
Treasuries during the first half
of the reporting period. Over that time, investor confidence was high given encouraging
economic data, continued low interest rates, benign inflation and rebounding
corporate profits. However, robust investor appetite was replaced with
heightened risk aversion toward the end of April and during the month of
May. This was due to the escalating sovereign debt crisis in Europe,
uncertainties regarding new financial reforms in the U.S. and some
worse-than-expected economic data. Most spread sectors then produced positive
absolute returns in June, as investor demand for these securities began to
again increase.
Both short- and long-term Treasury yields fluctuated
during the period but generally moved lower. When the period began, two- and
ten-year Treasury yields were 1.14% and 3.85%, respectively. Two- and ten-year
Treasury yields initially rose, reaching as high as 1.18% and 4.01%,
respectively, in early April. Yields then largely declined amid the investor flight
to quality. On June 30, 2010, two- and ten-year Treasury yields reached
their lows for the reporting period: 0.61% and 2.97%, respectively. Over the
six-month reporting period, the yield curve
vii
flattened,
with longer-term Treasury yields declining more than their shorter-term
counterparts. For the six months ended June 30, 2010, the Barclays Capital
U.S. Aggregate Index
viii
returned 5.33%.
Performance review
For the six months ended June 30, 2010, Western
Asset Premier Bond Fund returned 11.98% based on its net asset value (NAV)
ix
and 9.43% based on its New York Stock Exchange (NYSE) market
price per share. The Funds unmanaged benchmarks, the Barclays Capital U.S.
Corporate High Yield Index
x
and
the Barclays Capital U.S. Credit Index
xi
,
returned 4.51% and 5.62%, respectively, over the same time frame. The Lipper
Corporate Debt Closed-End Funds BBB-Rated Category Average
xii
returned 6.88% for the same period. Please note that Lipper
performance returns are based on each funds NAV.
During this six-month period, the Fund made
distributions to shareholders totaling $0.64 per share, which may have included
a return of capital. The performance table shows the Funds six-month total
return based on its NAV and market price as of June 30, 2010.
Past performance is no guarantee of future results.
Performance Snapshot as of June 30, 2010 (unaudited)
Price Per Share
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6-Month
Total Return*
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$13.21 (NAV)
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11.98%
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$13.93 (Market Price)
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9.43%
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All figures represent past performance and are not a guarantee of
future results.
*Total returns are based on changes in NAV or market price,
respectively. Total returns assume the reinvestment of all distributions,
including returns of capital, if any, in additional shares. Performance figures
for periods shorter than one year represent cumulative figures and are not
annualized.
Looking for additional information?
The Fund is traded under the symbol WEA and its
closing market price is available in most newspapers under the NYSE listings.
The daily NAV is available on-line under the symbol XWEAX on most financial
websites.
Barrons
and the
Wall Street
Journals
Monday edition both carry closed-end fund tables that
provide additional information. In addition, the Fund issues a quarterly press
release that can be found on most major financial websites as well as
www.leggmason.com/cef.
In a continuing effort to provide information concerning
the Fund, shareholders may call 1-888-777-0102 (toll free), Monday through
Friday from 8:00 a.m. to 5:30 p.m. Eastern Time, for the Funds
current NAV, market price and other information.
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Western Asset Premier Bond Fund
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V
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As always, thank you for your confidence in our
stewardship of your assets.
Sincerely,
R. Jay Gerken, CFA
President
July 30, 2010
RISKS:
Bonds are subject to a variety of risks, including interest rate,
credit and inflation risk. As interest rates rise, bond prices fall, reducing
the value of a fixed-income investments price. The Fund may invest in
high-yield bonds, which are rated below investment grade and carry more risk
than higher-rated securities. To the extent that the Fund invests in
asset-backed, mortgage-backed or mortgage-related securities, its exposure to
prepayment and extension risks may be greater than investments in other
fixed-income securities. Leverage may result in greater volatility of NAV and
the market price of common shares and increases a shareholders risk of loss.
The Fund may invest, to a limited extent, in foreign securities, including
emerging markets, which involve additional risks. The Fund may make significant
investments in derivative instruments. Derivative instruments can be illiquid,
may disproportionately increase losses, and have a potentially large impact on
Fund performance.
All investments are subject to risk including the
possible loss of principal. All index performance reflects no deduction for
fees, expenses or taxes. Please note that an investor cannot invest directly in
an index.
The information provided is not intended to be a
forecast of future events, a guarantee of future results or investment advice.
Views expressed may differ from those of the firm as a whole.
i
Gross
domestic product (GDP) is the market value of all final goods and services
produced within a country in a given period of time.
ii
The
Institute for Supply Managements PMI is based on a survey of purchasing executives
who buy the raw materials for manufacturing at more than 350 companies. It
offers an early reading on the health of the manufacturing sector.
iii
The
S&P/Case-Shiller Home Price Index measures the residential housing market,
tracking changes in the value of the residential real estate market in twenty
metropolitan regions across the United States.
iv
The
Federal Reserve Board (Fed) is responsible for the formulation of policies
designed to promote economic growth, full employment, stable prices and a
sustainable pattern of international trade and payments.
v
The
federal funds rate is the rate charged by one depository institution on an
overnight sale of immediately available funds (balances at the Federal Reserve)
to another depository institution; the rate may vary from depository
institution to depository institution and from day to day.
vi
Duration
is the measure of the price sensitivity of a fixed-income security to an
interest rate change of 100 basis points. Calculation is based on the weighted
average of the present values for all cash flows.
vii
The
yield curve is the graphical depiction of the relationship between the yield on
bonds of the same credit quality but different maturities.
viii
The
Barclays Capital U.S. Aggregate Index is a broad-based bond index comprised of
government, corporate, mortgage- and asset-backed issues, rated investment
grade or higher, and having at least one year to maturity.
ix
Net
asset value (NAV) is calculated by subtracting total liabilities and
outstanding preferred stock (if any) from the closing value of all securities
held by the Fund (plus all other assets) and dividing the result (total net
assets) by the total number of the common shares outstanding. The NAV
fluctuates with changes in the market prices of securities in which the Fund
has invested. However, the price at which an investor may buy or sell shares of
the Fund is the Funds market price as determined by supply of and demand for
the Funds shares.
x
The
Barclays Capital U.S. Corporate High Yield Index covers the universe of
fixed-rate, non-investment grade debt, including corporate and non-corporate
sectors. Pay-in-kind (PIK) bonds, Eurobonds and debt issues from countries
designated as emerging markets are excluded, but Canadian and global bonds (SEC
registered) of issuers in non-emerging market countries are included. Original
issue zero coupon bonds, step-up coupon structures and 144-As are also
included.
xi
The
Barclays Capital U.S. Credit Index is an index composed of corporate and
non-corporate debt issues that are investment grade (rated Baa3/BBB- or
higher).
xii
Lipper, Inc.,
a wholly-owned subsidiary of Reuters, provides independent insight on global
collective investments. Returns are based on the six-month period ended June 30,
2010, including the reinvestment of all distributions, including returns of
capital, if any, calculated among the 27 funds in the Funds Lipper category.
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Western Asset Premier Bond Fund 2010 Semi-Annual
Report
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1
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Fund highlights (unaudited)
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Six Months Ended
June 30, 2010
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Year Ended
December 31, 2009
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Net Asset Value
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$154,235,891
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$143,858,719
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Per Share
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$13.21
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$12.39
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Market Value Per Share
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$13.93
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$13.36
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Net Investment Income
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$9,103,355
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$18,942,993
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Per Common Share
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$0.78
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$1.64
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Dividends Paid to Common
Shareholders:
|
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Ordinary Income
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$7,453,665
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$14,754,747
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Per Common Share
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$0.64
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$1.28
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Dividends Paid to
Preferred Shareholders:
|
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Ordinary Income
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$94,883
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$266,195
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Per Common Share
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$0.01
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$0.02
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The Fund
Western Asset Premier Bond Fund (WEA or the Fund)
is a diversified, closed-end management investment company which seeks to
provide current income and capital appreciation for its shareholders by
investing primarily in a diversified portfolio of investment grade bonds.
Substantially all of the Funds net investment income (after payment of
dividends to holders of preferred shares and interest in connection with other
forms of leverage (if applicable)) is distributed to the Funds common
shareholders. A Dividend Reinvestment Plan is available to those common
shareholders of record desiring it. The Funds common shares are listed on the
New York Stock Exchange (NYSE) where they trade under the symbol WEA.
Investment policies
Each limitation below applies only at the time a
transaction is entered into. Any subsequent change in a rating assigned to a
security, or change in the percentage of the Funds assets invested in certain
securities or other instruments, resulting from market fluctuations or other
changes in the Funds total assets, will not require the Fund to dispose of an
investment.
Under normal market conditions, the Fund expects to:
·
Invest
substantially all (but at least 80%) of its total managed assets (the total
assets of the Fund, including any assets attributable to leverage, less accrued
liabilities) in bonds, including corporate bonds, U.S. government and agency
securities and mortgage related securities.
·
Invest
at least 65% of its total managed assets in bonds that at the time of
investment are investment grade quality. The Fund may invest up to 35% of its
total managed assets in bonds of below investment grade quality.
The Fund may invest in securities or instruments other
than bonds (including preferred stock) and may invest up to 10% of its total
managed assets in instruments denominated in currencies other than the U.S.
dollar.
Dividend reinvestment plan
The Fund and American Stock Transfer & Trust
Company LLC (Agent), as the Transfer Agent and Registrar of the Fund, offer a
convenient way to add shares of the Fund to your account. The Fund offers to
all common shareholders a Dividend Reinvestment Plan (Plan). Under the Plan,
cash distributions (e.g., dividends and capital gains) of registered
shareholders (those who own shares in their own name on the Funds records) on
the common shares are automatically invested in shares of the Fund unless the
shareholder elects otherwise by contacting the Agent at the address set forth
below. Shareholders who own shares in a brokerage, bank or other financial
institution account must contact the company where their account is held in
order to participate in the Plan.
As a participant in the Dividend Reinvestment Plan you
will automatically receive your dividend or net capital gains distribution in
newly issued shares of the Fund if the market price of a share on the
2
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Western
Asset Premier Bond Fund 2010 Semi-Annual Report
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Fund highlights (unaudited) (contd)
date of the distribution is at or above the NAV of a
Fund share, minus estimated brokerage commissions that would be incurred upon
the purchase of common shares on the open market. The number of shares to be
issued to you will be determined by dividing the amount of the cash
distribution to which you are entitled (net of any applicable withholding
taxes) by the greater of the NAV per share on such date or 95% of the market
price of a share on such date. If the market price of a share on such
distribution date is below the NAV, minus estimated brokerage commissions that
would be incurred upon the purchase of common shares on the open market, the
Agent will, as agent for the participants, buy shares of the Fund through a
broker on the open market. The price per share of shares purchased for each
participants account with respect to a particular dividend or other
distribution will be the average price (including brokerage commissions,
transfer taxes and any other costs of purchase) of all shares purchased with
respect to that dividend or other distribution. All common shares acquired on
your behalf through the Plan will be automatically credited to an account
maintained on the books of the Agent. Full and fractional shares will be voted
by the Agent in accordance with your instructions.
Additional information regarding the
Plan
The Fund will pay all costs applicable to the Plan,
except for brokerage commissions for open market purchases by the Agent under
the Plan, which will be charged to participants. All shares acquired through
the Plan receive voting rights and are eligible for any stock split, stock
dividend, or other rights accruing to shareholders that the Board of Trustees
may declare.
Registered shareholder may terminate participation in
the Plan at any time by giving notice to the Agent. Such termination will be
effective prior to the record date next succeeding the receipt of such
instructions or by a later date of termination specified in such instructions.
Upon termination, a participant will receive a certificate for the full shares
credited to his or her account or may request the sale of all or part of such
shares. Fractional shares credited to a terminating account will be paid for in
cash at the current market price at the time of termination. Shareholders who
own shares in a brokerage, bank or other financial institution account must
contact the company where their account is held in order to terminate participation
in the Plan.
Dividends and other distributions invested in
additional shares under the Plan are subject to income tax just as if they had
been received in cash. After year end, dividends paid on the accumulated shares
will be included in the Form 1099-DIV information return to the Internal
Revenue Service (IRS) and only one Form 1099-DIV will be sent to
participants each year.
Inquiries regarding the Plan, as well as notices of
termination, should be directed to American Stock Transfer & Trust Company
LLC, 59 Maiden Lane, New York, NY, 10038. Investor Relations Telephone number
1-888-888-0151.
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Western Asset Premier Bond Fund 2010 Semi-Annual
Report
|
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3
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Fund at a glance
(unaudited)
Standard & Poors Debt Ratings
1
(at market value)
Sector Schedule
2
(at
market value)
The
bar graphs above represent the Funds portfolio as of June 30, 2010 and do
not include derivatives such as Futures Contracts and Swaps. The Funds
portfolio is actively managed. As a result the composition of its portfolio
holdings and sectors is subject to change at any time.
1
Source:
Standard & Poors Rating Service. The ratings shown are based on each
portfolio securitys rating as determined by Standard & Poors (S&P),
a Nationally Recognized Statistical Ratings Organization (NRSRO). These
ratings are the opinions of S&P and are not measures of quality or
guarantees of performance. Securities held by the Fund may be rated by other
NRSROs, and these ratings may be higher or lower. The Fund itself has not been
rated by a NRSRO and the credit quality of the investments in the Funds
portfolio does not apply to the stability or safety of the Fund.
2
Expressed
as a percentage of the portfolio.
4
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Western
Asset Premier Bond Fund 2010 Semi-Annual Report
|
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Quarterly comparison of market price
and net asset value (NAV), discount or premium to NAV and average daily volume
of shares traded (unaudited)
|
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Market Price
|
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Net Asset
Value
|
|
Premium/
(Discount)
|
|
Average
Daily Volume/
(Shares)
|
|
September 30, 2009
|
|
$13.02
|
|
|
$11.76
|
|
|
10.71
|
%
|
|
25,709
|
|
|
December 31, 2009
|
|
$13.36
|
|
|
$12.39
|
|
|
7.83
|
%
|
|
39,666
|
|
|
March 31, 2010
|
|
$13.86
|
|
|
$13.04
|
|
|
6.29
|
%
|
|
31,726
|
|
|
June 30, 2010
|
|
$13.93
|
|
|
$13.21
|
|
|
5.45
|
%
|
|
27,811
|
|
|
|
|
Western Asset Premier Bond Fund 2010 Semi-Annual
Report
|
|
5
|
Schedule of investments (unaudited)
June 30, 2010
Western Asset Premier Bond Fund
Security
|
|
Rate
|
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Maturity
Date
|
|
Face
Amount
|
|
Value
|
|
Corporate
Bonds & Notes 60.6%
|
|
|
|
|
|
|
|
|
|
Consumer
Discretionary 8.9%
|
|
|
|
|
|
|
|
|
|
Automobiles 1.5%
|
|
|
|
|
|
|
|
|
|
DaimlerChrysler NA Holding Corp., Notes
|
|
8.500
|
%
|
1/18/31
|
|
1,000,000
|
|
$
|
1,277,450
|
|
DaimlerChrysler North America Holding Corp.,
Notes
|
|
7.300
|
%
|
1/15/12
|
|
1,000,000
|
|
1,077,911
|
|
Total
Automobiles
|
|
|
|
|
|
|
|
2,355,361
|
|
Diversified Consumer Services
0.0%
|
|
|
|
|
|
|
|
|
|
Service Corp. International, Senior Notes
|
|
7.625
|
%
|
10/1/18
|
|
5,000
|
|
5,062
|
|
Service Corp. International, Senior Notes
|
|
7.500
|
%
|
4/1/27
|
|
60,000
|
|
53,100
|
|
Total
Diversified Consumer Services
|
|
|
|
|
|
|
|
58,162
|
|
Hotels, Restaurants &
Leisure 0.9%
|
|
|
|
|
|
|
|
|
|
El Pollo Loco Inc., Senior Notes
|
|
11.750
|
%
|
11/15/13
|
|
395,000
|
|
306,125
|
|
Harrahs Operating Co. Inc., Senior Notes
|
|
10.750
|
%
|
2/1/16
|
|
300,000
|
|
239,250
|
|
Inn of the Mountain Gods Resort &
Casino, Senior Notes
|
|
12.000
|
%
|
11/15/10
|
|
530,000
|
|
257,050
|
(a)(b)
|
Landrys Restaurants Inc., Senior Secured
Notes
|
|
11.625
|
%
|
12/1/15
|
|
110,000
|
|
113,850
|
|
Mohegan Tribal Gaming Authority, Senior
Secured Notes
|
|
11.500
|
%
|
11/1/17
|
|
170,000
|
|
168,300
|
(c)
|
NCL Corp. Ltd., Senior Secured Notes
|
|
11.750
|
%
|
11/15/16
|
|
170,000
|
|
177,650
|
|
Sbarro Inc., Senior Notes
|
|
10.375
|
%
|
2/1/15
|
|
90,000
|
|
71,100
|
|
Snoqualmie Entertainment Authority, Senior
Secured Notes
|
|
4.136
|
%
|
2/1/14
|
|
110,000
|
|
87,725
|
(c)(d)
|
Station Casinos Inc., Senior Notes
|
|
7.750
|
%
|
8/15/16
|
|
205,000
|
|
12,941
|
(a)(b)
|
Station Casinos Inc., Senior Subordinated
Notes
|
|
6.625
|
%
|
3/15/18
|
|
100,000
|
|
75
|
(a)(b)
|
Total
Hotels, Restaurants & Leisure
|
|
|
|
|
|
|
|
1,434,066
|
|
Household Durables 0.0%
|
|
|
|
|
|
|
|
|
|
American Greetings Corp., Senior Notes
|
|
7.375
|
%
|
6/1/16
|
|
20,000
|
|
19,950
|
|
Leisure Equipment &
Products 0.5%
|
|
|
|
|
|
|
|
|
|
Eastman Kodak Co., Senior Notes
|
|
7.250
|
%
|
11/15/13
|
|
760,000
|
|
744,800
|
|
Media 5.3%
|
|
|
|
|
|
|
|
|
|
Cablevision Systems Corp., Senior Notes
|
|
7.750
|
%
|
4/15/18
|
|
30,000
|
|
30,000
|
|
CCH II LLC/CCH II Capital Corp., Senior Notes
|
|
13.500
|
%
|
11/30/16
|
|
108,083
|
|
125,917
|
|
Cengage Learning Acquisitions Inc., Senior
Notes
|
|
10.500
|
%
|
1/15/15
|
|
270,000
|
|
251,100
|
(c)
|
Charter Communications Operating LLC/Charter
Communications Operating Capital, Senior Secured Notes
|
|
10.875
|
%
|
9/15/14
|
|
280,000
|
|
310,800
|
(c)
|
CMP Susquehanna Corp.
|
|
3.531
|
%
|
5/15/14
|
|
14,000
|
|
4,200
|
(b)(c)(d)(e)
|
Comcast Corp.
|
|
5.900
|
%
|
3/15/16
|
|
400,000
|
|
450,779
|
|
Comcast Corp., Notes
|
|
7.050
|
%
|
3/15/33
|
|
1,000,000
|
|
1,154,561
|
|
CSC Holdings Inc., Senior Notes
|
|
6.750
|
%
|
4/15/12
|
|
250,000
|
|
258,750
|
|
DISH DBS Corp., Senior Notes
|
|
7.000
|
%
|
10/1/13
|
|
600,000
|
|
618,000
|
|
DISH DBS Corp., Senior Notes
|
|
7.750
|
%
|
5/31/15
|
|
120,000
|
|
123,600
|
|
DISH DBS Corp., Senior Notes
|
|
7.875
|
%
|
9/1/19
|
|
385,000
|
|
400,400
|
|
News America Holdings Inc.
|
|
8.875
|
%
|
4/26/23
|
|
400,000
|
|
518,929
|
|
Sun Media Corp., Senior Notes
|
|
7.625
|
%
|
2/15/13
|
|
55,000
|
|
55,000
|
|
Time Warner Inc., Senior Debentures
|
|
7.700
|
%
|
5/1/32
|
|
1,150,000
|
|
1,386,939
|
|
Time Warner Inc., Senior Subordinated Notes
|
|
6.875
|
%
|
5/1/12
|
|
1,400,000
|
|
1,525,221
|
|
Univision Communications Inc., Senior Secured
Notes
|
|
12.000
|
%
|
7/1/14
|
|
420,000
|
|
450,450
|
(c)
|
Virgin Media Finance PLC, Senior Bonds
|
|
9.500
|
%
|
8/15/16
|
|
100,000
|
|
105,625
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements.
6
|
|
Western
Asset Premier Bond Fund 2010 Semi-Annual Report
|
|
|
Schedule of investments (unaudited)
(contd)
June 30, 2010
Western Asset Premier Bond Fund
Security
|
|
Rate
|
|
Maturity
Date
|
|
Face
Amount
|
|
Value
|
|
Media continued
|
|
|
|
|
|
|
|
|
|
Virgin Media Finance PLC, Senior Notes
|
|
9.125
|
%
|
8/15/16
|
|
335,000
|
|
$
|
346,725
|
|
Total
Media
|
|
|
|
|
|
|
|
8,116,996
|
|
Multiline Retail 0.4%
|
|
|
|
|
|
|
|
|
|
Neiman Marcus Group Inc., Senior Notes
|
|
9.000
|
%
|
10/15/15
|
|
279,478
|
|
280,177
|
(f)
|
Neiman Marcus Group Inc., Senior Secured
Notes
|
|
7.125
|
%
|
6/1/28
|
|
330,000
|
|
297,000
|
|
Total
Multiline Retail
|
|
|
|
|
|
|
|
577,177
|
|
Specialty Retail 0.1%
|
|
|
|
|
|
|
|
|
|
Michaels Stores Inc., Senior Notes
|
|
10.000
|
%
|
11/1/14
|
|
80,000
|
|
82,600
|
|
Textiles, Apparel &
Luxury Goods 0.2%
|
|
|
|
|
|
|
|
|
|
Oxford Industries Inc., Senior Secured Notes
|
|
11.375
|
%
|
7/15/15
|
|
255,000
|
|
280,500
|
|
Total
Consumer Discretionary
|
|
|
|
|
|
|
|
13,669,612
|
|
Consumer
Staples 5.7%
|
|
|
|
|
|
|
|
|
|
Food & Staples
Retailing 5.6%
|
|
|
|
|
|
|
|
|
|
CVS Corp.
|
|
9.350
|
%
|
1/10/23
|
|
700,000
|
|
724,542
|
(b)(c)
|
CVS Corp.
|
|
5.789
|
%
|
1/10/26
|
|
820,093
|
|
832,477
|
(c)
|
CVS Pass-Through Trust
|
|
7.507
|
%
|
1/10/32
|
|
1,987,591
|
|
2,263,171
|
(c)
|
CVS Pass-Through Trust, Secured Notes
|
|
5.880
|
%
|
1/10/28
|
|
924,214
|
|
948,558
|
|
CVS Pass-Through Trust, Secured Notes
|
|
6.036
|
%
|
12/10/28
|
|
914,662
|
|
935,498
|
|
CVS Pass-Through Trust, Secured Notes
|
|
6.943
|
%
|
1/10/30
|
|
1,899,103
|
|
2,094,407
|
|
Delhaize America Inc., Debentures
|
|
9.000
|
%
|
4/15/31
|
|
166,000
|
|
226,884
|
|
Safeway Inc., Notes
|
|
5.800
|
%
|
8/15/12
|
|
500,000
|
|
543,182
|
|
Total
Food & Staples Retailing
|
|
|
|
|
|
|
|
8,568,719
|
|
Tobacco 0.1%
|
|
|
|
|
|
|
|
|
|
Alliance One International Inc., Senior Notes
|
|
10.000
|
%
|
7/15/16
|
|
160,000
|
|
162,800
|
(c)
|
Total Consumer Staples
|
|
|
|
|
|
|
|
8,731,519
|
|
Energy
8.1%
|
|
|
|
|
|
|
|
|
|
Energy Equipment &
Services 0.8%
|
|
|
|
|
|
|
|
|
|
Complete Production Services Inc., Senior
Notes
|
|
8.000
|
%
|
12/15/16
|
|
150,000
|
|
146,625
|
|
GulfMark Offshore Inc., Senior Subordinated
Notes
|
|
7.750
|
%
|
7/15/14
|
|
270,000
|
|
256,500
|
|
Hercules Offshore LLC, Senior Secured Notes
|
|
10.500
|
%
|
10/15/17
|
|
155,000
|
|
137,562
|
(c)
|
Pride International Inc., Senior Notes
|
|
7.375
|
%
|
7/15/14
|
|
240,000
|
|
239,100
|
|
Sonat Inc., Notes
|
|
7.625
|
%
|
7/15/11
|
|
500,000
|
|
515,787
|
|
Total
Energy Equipment & Services
|
|
|
|
|
|
|
|
1,295,574
|
|
Oil, Gas & Consumable
Fuels 7.3%
|
|
|
|
|
|
|
|
|
|
Anadarko Finance Co., Senior Notes
|
|
7.500
|
%
|
5/1/31
|
|
1,000,000
|
|
841,013
|
|
Belden & Blake Corp., Secured Notes
|
|
8.750
|
%
|
7/15/12
|
|
750,000
|
|
699,375
|
|
Berry Petroleum Co., Senior Notes
|
|
10.250
|
%
|
6/1/14
|
|
160,000
|
|
172,000
|
|
Burlington Resources Finance Co.
|
|
7.400
|
%
|
12/1/31
|
|
450,000
|
|
562,686
|
|
Chesapeake Energy Corp., Senior Notes
|
|
6.375
|
%
|
6/15/15
|
|
480,000
|
|
495,600
|
|
Chesapeake Energy Corp., Senior Notes
|
|
6.625
|
%
|
1/15/16
|
|
30,000
|
|
30,488
|
|
Chesapeake Energy Corp., Senior Notes
|
|
7.250
|
%
|
12/15/18
|
|
300,000
|
|
309,750
|
|
Colorado Interstate Gas Co., Senior Notes
|
|
6.800
|
%
|
11/15/15
|
|
150,000
|
|
172,838
|
|
Compagnie Generale de Geophysique SA, Senior
Notes
|
|
7.500
|
%
|
5/15/15
|
|
210,000
|
|
200,025
|
|
CONSOL Energy Inc., Senior Notes
|
|
8.250
|
%
|
4/1/20
|
|
440,000
|
|
458,700
|
(c)
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements.
|
|
Western Asset Premier Bond Fund 2010 Semi-Annual
Report
|
|
7
|
Western Asset Premier Bond Fund
Security
|
|
Rate
|
|
Maturity
Date
|
|
Face
Amount
|
|
Value
|
|
Oil, Gas & Consumable
Fuels continued
|
|
|
|
|
|
|
|
|
|
DCP Midstream LP
|
|
7.875
|
%
|
8/16/10
|
|
750,000
|
|
$
|
755,497
|
|
Devon Energy Corp., Debentures
|
|
7.950
|
%
|
4/15/32
|
|
310,000
|
|
397,257
|
|
Devon Financing Corp. ULC, Notes
|
|
6.875
|
%
|
9/30/11
|
|
1,000,000
|
|
1,067,665
|
|
El Paso Corp., Medium-Term Notes
|
|
7.800
|
%
|
8/1/31
|
|
190,000
|
|
187,779
|
|
Hess Corp., Notes
|
|
7.875
|
%
|
10/1/29
|
|
1,640,000
|
|
2,018,038
|
|
Hess Corp., Notes
|
|
7.300
|
%
|
8/15/31
|
|
60,000
|
|
70,788
|
|
Kinder Morgan Energy Partners LP, Senior
Notes
|
|
7.125
|
%
|
3/15/12
|
|
500,000
|
|
537,454
|
|
LUKOIL International Finance BV, Bonds
|
|
6.356
|
%
|
6/7/17
|
|
340,000
|
|
345,100
|
(c)
|
OPTI Canada Inc., Senior Secured Notes
|
|
7.875
|
%
|
12/15/14
|
|
45,000
|
|
39,150
|
|
OPTI Canada Inc., Senior Secured Notes
|
|
8.250
|
%
|
12/15/14
|
|
190,000
|
|
165,300
|
|
Petrohawk Energy Corp., Senior Notes
|
|
9.125
|
%
|
7/15/13
|
|
145,000
|
|
151,163
|
|
Plains Exploration & Production Co.,
Senior Notes
|
|
10.000
|
%
|
3/1/16
|
|
140,000
|
|
149,800
|
|
Plains Exploration & Production Co.,
Senior Notes
|
|
8.625
|
%
|
10/15/19
|
|
125,000
|
|
126,563
|
|
Quicksilver Resources Inc., Senior Notes
|
|
11.750
|
%
|
1/1/16
|
|
185,000
|
|
203,963
|
|
Teekay Corp., Senior Notes
|
|
8.500
|
%
|
1/15/20
|
|
310,000
|
|
308,450
|
|
Williams Cos. Inc., Debentures
|
|
7.500
|
%
|
1/15/31
|
|
668,000
|
|
710,566
|
|
Williams Cos. Inc., Senior Notes
|
|
8.750
|
%
|
3/15/32
|
|
63,000
|
|
73,519
|
|
Total
Oil, Gas & Consumable Fuels
|
|
|
|
|
|
|
|
11,250,527
|
|
Total Energy
|
|
|
|
|
|
|
|
12,546,101
|
|
Financials
9.8%
|
|
|
|
|
|
|
|
|
|
Capital Markets 1.3%
|
|
|
|
|
|
|
|
|
|
Goldman Sachs Group Inc., Notes
|
|
6.600
|
%
|
1/15/12
|
|
900,000
|
|
951,879
|
|
Morgan Stanley, Notes
|
|
6.600
|
%
|
4/1/12
|
|
1,000,000
|
|
1,061,245
|
|
Total
Capital Markets
|
|
|
|
|
|
|
|
2,013,124
|
|
Commercial Banks 0.1%
|
|
|
|
|
|
|
|
|
|
ICICI Bank Ltd., Subordinated Bonds
|
|
6.375
|
%
|
4/30/22
|
|
184,000
|
|
169,282
|
(c)(d)
|
Consumer Finance 3.1%
|
|
|
|
|
|
|
|
|
|
Ford Motor Credit Co., LLC, Senior Notes
|
|
7.500
|
%
|
8/1/12
|
|
70,000
|
|
71,580
|
|
Ford Motor Credit Co., LLC, Senior Notes
|
|
12.000
|
%
|
5/15/15
|
|
1,030,000
|
|
1,192,329
|
|
Ford Motor Credit Co., LLC, Senior Notes
|
|
8.000
|
%
|
12/15/16
|
|
680,000
|
|
695,362
|
|
GMAC Inc., Senior Notes
|
|
6.875
|
%
|
8/28/12
|
|
94,000
|
|
94,235
|
|
HSBC Finance Corp.
|
|
4.750
|
%
|
7/15/13
|
|
1,670,000
|
|
1,749,173
|
|
SLM Corp., Senior Notes
|
|
0.476
|
%
|
7/26/10
|
|
1,020,000
|
|
1,019,927
|
(d)
|
Total
Consumer Finance
|
|
|
|
|
|
|
|
4,822,606
|
|
Diversified Financial Services
4.4%
|
|
|
|
|
|
|
|
|
|
AAC Group Holding Corp., Senior Discount
Notes
|
|
10.250
|
%
|
10/1/12
|
|
440,000
|
|
435,600
|
(c)
|
Air 2 US, Notes
|
|
8.027
|
%
|
10/1/19
|
|
373,624
|
|
344,669
|
(c)
|
CCM Merger Inc., Notes
|
|
8.000
|
%
|
8/1/13
|
|
140,000
|
|
128,100
|
(c)
|
Citigroup Inc.
|
|
6.625
|
%
|
6/15/32
|
|
1,000,000
|
|
951,940
|
|
International Lease Finance Corp., Senior
Notes
|
|
8.750
|
%
|
3/15/17
|
|
1,380,000
|
|
1,307,550
|
(c)
|
JPMorgan Chase & Co., Subordinated
Notes
|
|
5.125
|
%
|
9/15/14
|
|
1,300,000
|
|
1,387,269
|
|
Liberty Media LLC
|
|
3.750
|
%
|
2/15/30
|
|
1,860,000
|
|
892,800
|
|
New Communications Holdings Inc., Senior
Notes
|
|
8.750
|
%
|
4/15/22
|
|
91,000
|
|
91,000
|
(c)
|
Smurfit Kappa Funding PLC, Senior Subordinated
Notes
|
|
7.750
|
%
|
4/1/15
|
|
150,000
|
|
148,125
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements.
8
|
|
Western
Asset Premier Bond Fund 2010 Semi-Annual Report
|
|
|
Schedule of investments (unaudited)
(contd)
June 30, 2010
Western Asset Premier Bond Fund
Security
|
|
Rate
|
|
Maturity
Date
|
|
Face
Amount
|
|
Value
|
|
Diversified Financial Services
continued
|
|
|
|
|
|
|
|
|
|
TNK-BP Finance SA, Senior Notes
|
|
7.875
|
%
|
3/13/18
|
|
220,000
|
|
$
|
229,240
|
(c)
|
UFJ Finance Aruba AEC
|
|
6.750
|
%
|
7/15/13
|
|
500,000
|
|
559,984
|
|
Unitymedia GmbH, Senior Secured Bonds
|
|
8.125
|
%
|
12/1/17
|
|
100,000
|
|
98,000
|
(c)
|
Vanguard Health Holdings Co., II LLC,
Senior Notes
|
|
8.000
|
%
|
2/1/18
|
|
215,000
|
|
206,400
|
|
Total
Diversified Financial Services
|
|
|
|
|
|
|
|
6,780,677
|
|
Insurance 0.7%
|
|
|
|
|
|
|
|
|
|
XL Capital Ltd.
|
|
5.250
|
%
|
9/15/14
|
|
1,000,000
|
|
1,023,226
|
|
Real Estate
Management & Development 0.2%
|
|
|
|
|
|
|
|
|
|
Ashton Woods USA LLC/Ashton Woods Finance
Co., Senior Subordinated Notes, step bond
|
|
0.000
|
%
|
6/30/15
|
|
65,000
|
|
37,700
|
(b)(c)
|
Realogy Corp., Senior Notes
|
|
10.500
|
%
|
4/15/14
|
|
170,000
|
|
144,075
|
|
Realogy Corp., Senior Subordinated Notes
|
|
12.375
|
%
|
4/15/15
|
|
165,000
|
|
124,575
|
|
Total
Real Estate Management & Development
|
|
|
|
|
|
|
|
306,350
|
|
Total Financials
|
|
|
|
|
|
|
|
15,115,265
|
|
Health Care 1.2%
|
|
|
|
|
|
|
|
|
|
Health Care
Providers & Services 1.2%
|
|
|
|
|
|
|
|
|
|
Community Health Systems Inc., Senior Notes
|
|
8.875
|
%
|
7/15/15
|
|
200,000
|
|
206,250
|
|
HCA Inc., Debentures
|
|
7.500
|
%
|
11/15/95
|
|
185,000
|
|
137,825
|
|
HCA Inc., Notes
|
|
6.375
|
%
|
1/15/15
|
|
430,000
|
|
401,512
|
|
HCA Inc., Notes
|
|
7.690
|
%
|
6/15/25
|
|
90,000
|
|
80,550
|
|
HCA Inc., Senior Notes
|
|
6.250
|
%
|
2/15/13
|
|
85,000
|
|
83,513
|
|
HCA Inc., Senior Secured Notes
|
|
9.250
|
%
|
11/15/16
|
|
195,000
|
|
206,700
|
|
HCA Inc., Senior Secured Notes
|
|
9.625
|
%
|
11/15/16
|
|
399,000
|
|
426,930
|
(f)
|
US Oncology Holdings Inc., Senior Notes
|
|
6.643
|
%
|
3/15/12
|
|
283,000
|
|
263,190
|
(d)(f)
|
Total Health Care
|
|
|
|
|
|
|
|
1,806,470
|
|
Industrials 11.8%
|
|
|
|
|
|
|
|
|
|
Aerospace & Defense
1.9%
|
|
|
|
|
|
|
|
|
|
Boeing Co., Notes
|
|
6.125
|
%
|
2/15/33
|
|
600,000
|
|
679,309
|
|
L-3 Communications Corp., Senior Subordinated
Notes
|
|
6.375
|
%
|
10/15/15
|
|
535,000
|
|
535,000
|
|
Northrop Grumman Corp., Debentures
|
|
7.750
|
%
|
2/15/31
|
|
1,000,000
|
|
1,341,072
|
|
Systems 2001 Asset Trust
|
|
6.664
|
%
|
9/15/13
|
|
154,474
|
|
163,743
|
(c)
|
TransDigm Inc., Senior Subordinated Notes
|
|
7.750
|
%
|
7/15/14
|
|
155,000
|
|
155,000
|
(c)
|
Total
Aerospace & Defense
|
|
|
|
|
|
|
|
2,874,124
|
|
Airlines 8.6%
|
|
|
|
|
|
|
|
|
|
America West Airlines Inc., Ambac Assurance
Corp.
|
|
8.057
|
%
|
7/2/20
|
|
2,557,991
|
|
2,494,041
|
|
Continental Airlines Inc.
|
|
7.160
|
%
|
9/24/14
|
|
479,732
|
|
469,898
|
|
Continental Airlines Inc.
|
|
6.820
|
%
|
5/1/18
|
|
913,728
|
|
910,986
|
|
Continental Airlines Inc., Pass-Through
Certificates
|
|
6.900
|
%
|
1/2/18
|
|
908,880
|
|
908,880
|
|
Continental Airlines Inc., Pass-Through
Certificates
|
|
6.545
|
%
|
2/2/19
|
|
1,139,517
|
|
1,145,214
|
|
Continental Airlines Inc., Pass-Through
Certificates
|
|
6.703
|
%
|
6/15/21
|
|
749,748
|
|
747,874
|
|
Continental Airlines Inc., Pass-Through
Certificates, 2000-1 A-1
|
|
8.048
|
%
|
11/1/20
|
|
528,655
|
|
543,193
|
|
DAE Aviation Holdings Inc., Senior Notes
|
|
11.250
|
%
|
8/1/15
|
|
460,000
|
|
455,400
|
(c)
|
Delta Air Lines Inc., Pass-Through
Certificates
|
|
6.619
|
%
|
3/18/11
|
|
51,313
|
|
52,082
|
|
Delta Air Lines Inc., Secured Notes
|
|
8.021
|
%
|
8/10/22
|
|
194,672
|
|
185,426
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements.
|
|
Western Asset Premier Bond Fund 2010 Semi-Annual
Report
|
|
9
|
Western Asset Premier Bond Fund
Security
|
|
Rate
|
|
Maturity
Date
|
|
Face
Amount
|
|
Value
|
|
Airlines continued
|
|
|
|
|
|
|
|
|
|
Delta Air Lines Inc., Senior Secured Notes
|
|
9.500
|
%
|
9/15/14
|
|
75,000
|
|
$
|
78,750
|
(c)
|
Northwest Airlines Corp., Pass-Through
Certificates
|
|
7.575
|
%
|
9/1/20
|
|
536,770
|
|
542,137
|
|
Northwest Airlines Inc.
|
|
0.758
|
%
|
2/6/15
|
|
2,796,423
|
|
2,474,834
|
(d)
|
US Airways Pass-Through Trust
|
|
6.850
|
%
|
1/30/18
|
|
2,552,475
|
|
2,348,277
|
|
Total
Airlines
|
|
|
|
|
|
|
|
13,356,992
|
|
Commercial Services &
Supplies 0.7%
|
|
|
|
|
|
|
|
|
|
ACCO Brands Corp., Senior Secured Notes
|
|
10.625
|
%
|
3/15/15
|
|
220,000
|
|
238,700
|
|
Altegrity Inc., Senior Subordinated Notes
|
|
10.500
|
%
|
11/1/15
|
|
310,000
|
|
294,500
|
(c)
|
DynCorp International LLC/DIV Capital Corp.,
Senior Subordinated Notes
|
|
9.500
|
%
|
2/15/13
|
|
307,000
|
|
315,059
|
|
RSC Equipment Rental Inc./RSC Holdings III
LLC, Senior Secured Notes
|
|
10.000
|
%
|
7/15/17
|
|
170,000
|
|
182,325
|
(c)
|
Total
Commercial Services & Supplies
|
|
|
|
|
|
|
|
1,030,584
|
|
Marine 0.1%
|
|
|
|
|
|
|
|
|
|
Trico Shipping AS, Senior Secured Notes
|
|
11.875
|
%
|
11/1/14
|
|
200,000
|
|
192,000
|
(c)
|
Road & Rail 0.3%
|
|
|
|
|
|
|
|
|
|
Kansas City Southern de Mexico, Senior Notes
|
|
9.375
|
%
|
5/1/12
|
|
100,000
|
|
102,500
|
|
Kansas City Southern de Mexico, Senior Notes
|
|
12.500
|
%
|
4/1/16
|
|
111,000
|
|
132,645
|
|
RailAmerica Inc., Senior Secured Notes
|
|
9.250
|
%
|
7/1/17
|
|
208,000
|
|
217,880
|
|
Total
Road & Rail
|
|
|
|
|
|
|
|
453,025
|
|
Trading Companies &
Distributors 0.2%
|
|
|
|
|
|
|
|
|
|
Ashtead Capital Inc., Notes
|
|
9.000
|
%
|
8/15/16
|
|
129,000
|
|
126,420
|
(c)
|
H&E Equipment Services Inc., Senior Notes
|
|
8.375
|
%
|
7/15/16
|
|
245,000
|
|
230,300
|
|
Total
Trading Companies & Distributors
|
|
|
|
|
|
|
|
356,720
|
|
Total Industrials
|
|
|
|
|
|
|
|
18,263,445
|
|
Information
Technology 0.5%
|
|
|
|
|
|
|
|
|
|
IT Services 0.5%
|
|
|
|
|
|
|
|
|
|
Ceridian Corp., Senior Notes
|
|
12.250
|
%
|
11/15/15
|
|
138,450
|
|
124,605
|
(f)
|
Electronic Data Systems Corp., Notes
|
|
7.450
|
%
|
10/15/29
|
|
500,000
|
|
649,635
|
|
Total
IT Services
|
|
|
|
|
|
|
|
774,240
|
|
Semiconductors &
Semiconductor Equipment 0.0%
|
|
|
|
|
|
|
|
|
|
Freescale Semiconductor Inc., Senior
Subordinated Notes
|
|
10.125
|
%
|
12/15/16
|
|
80,000
|
|
64,000
|
|
Total Information Technology
|
|
|
|
|
|
|
|
838,240
|
|
Materials
3.9%
|
|
|
|
|
|
|
|
|
|
Chemicals 0.7%
|
|
|
|
|
|
|
|
|
|
Dow Chemical Co.
|
|
6.000
|
%
|
10/1/12
|
|
1,000,000
|
|
1,075,247
|
|
Westlake Chemical Corp., Senior Notes
|
|
6.625
|
%
|
1/15/16
|
|
70,000
|
|
67,200
|
|
Total
Chemicals
|
|
|
|
|
|
|
|
1,142,447
|
|
Metals & Mining 1.9%
|
|
|
|
|
|
|
|
|
|
Alcoa Inc.
|
|
5.375
|
%
|
1/15/13
|
|
750,000
|
|
777,605
|
|
CII Carbon LLC
|
|
11.125
|
%
|
11/15/15
|
|
580,000
|
|
564,050
|
(c)
|
Freeport-McMoRan Copper & Gold Inc.,
Senior Notes
|
|
8.375
|
%
|
4/1/17
|
|
730,000
|
|
803,000
|
|
Metals USA Inc., Senior Secured Notes
|
|
11.125
|
%
|
12/1/15
|
|
445,000
|
|
467,250
|
|
Novelis Inc., Senior Notes
|
|
7.250
|
%
|
2/15/15
|
|
115,000
|
|
110,975
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements.
10
|
|
Western
Asset Premier Bond Fund 2010 Semi-Annual Report
|
|
|
Schedule of investments (unaudited) (contd)
June 30, 2010
Western Asset Premier Bond Fund
Security
|
|
Rate
|
|
Maturity
Date
|
|
Face
Amount
|
|
Value
|
|
Metals &
Mining continued
|
|
|
|
|
|
|
|
|
|
Vedanta Resources PLC,
Senior Notes
|
|
8.750
|
%
|
1/15/14
|
|
130,000
|
|
$
|
136,500
|
(c)
|
Total
Metals & Mining
|
|
|
|
|
|
|
|
2,859,380
|
|
Paper &
Forest Products 1.3%
|
|
|
|
|
|
|
|
|
|
Abitibi-Consolidated Co. of Canada, Senior
Secured Notes
|
|
13.750
|
%
|
4/1/11
|
|
192,795
|
|
189,521
|
(a)(c)
|
Appleton Papers Inc.,
Senior Secured Notes
|
|
11.250
|
%
|
12/15/15
|
|
235,000
|
|
199,750
|
(c)
|
NewPage Corp., Senior
Secured Notes
|
|
11.375
|
%
|
12/31/14
|
|
595,000
|
|
539,963
|
|
PE Paper Escrow GmbH,
Senior Secured Notes
|
|
12.000
|
%
|
8/1/14
|
|
100,000
|
|
109,875
|
(c)
|
Weyerhaeuser Co.,
Debentures
|
|
7.375
|
%
|
3/15/32
|
|
1,000,000
|
|
987,909
|
|
Total
Paper & Forest Products
|
|
|
|
|
|
|
|
2,027,018
|
|
Total
Materials
|
|
|
|
|
|
|
|
6,028,845
|
|
Telecommunication
Services 4.8%
|
|
|
|
|
|
|
|
|
|
Diversified
Telecommunication Services 3.1%
|
|
|
|
|
|
|
|
|
|
Cincinnati Bell Telephone
Co., Senior Debentures
|
|
6.300
|
%
|
12/1/28
|
|
25,000
|
|
17,250
|
|
Deutsche Telekom
International Finance BV
|
|
5.250
|
%
|
7/22/13
|
|
600,000
|
|
645,551
|
|
France Telecom SA, Notes
|
|
8.500
|
%
|
3/1/31
|
|
600,000
|
|
825,662
|
|
Hawaiian Telcom Communications Inc., Senior
Subordinated Notes
|
|
12.500
|
%
|
5/1/15
|
|
135,000
|
|
14
|
(a)(b)
|
Intelsat Corp., Senior
Notes
|
|
9.250
|
%
|
8/15/14
|
|
140,000
|
|
143,150
|
|
Intelsat Jackson Holdings
Ltd., Senior Notes
|
|
9.500
|
%
|
6/15/16
|
|
35,000
|
|
36,750
|
|
Intelsat Jackson Holdings
Ltd., Senior Notes
|
|
11.250
|
%
|
6/15/16
|
|
340,000
|
|
362,100
|
|
Level 3 Financing Inc.,
Senior Notes
|
|
9.250
|
%
|
11/1/14
|
|
660,000
|
|
598,950
|
|
Nordic Telephone Co.
Holdings, Senior Secured Bonds
|
|
8.875
|
%
|
5/1/16
|
|
285,000
|
|
292,837
|
(c)
|
Qwest Communications
International Inc., Senior Notes
|
|
7.500
|
%
|
2/15/14
|
|
140,000
|
|
140,350
|
|
Qwest Corp., Senior Notes
|
|
7.875
|
%
|
9/1/11
|
|
390,000
|
|
405,600
|
|
Qwest Corp., Senior Notes
|
|
7.500
|
%
|
10/1/14
|
|
150,000
|
|
159,563
|
|
Wind Acquisition Finance
SA, Senior Bonds
|
|
12.000
|
%
|
12/1/15
|
|
500,000
|
|
517,500
|
(c)
|
Windstream Corp., Senior
Notes
|
|
8.625
|
%
|
8/1/16
|
|
635,000
|
|
639,762
|
|
Total
Diversified Telecommunication Services
|
|
|
|
|
|
|
|
4,785,039
|
|
Wireless
Telecommunication Services 1.7%
|
|
|
|
|
|
|
|
|
|
Cingular Wireless LLC
|
|
6.500
|
%
|
12/15/11
|
|
250,000
|
|
268,801
|
|
Sprint Capital Corp.,
Senior Notes
|
|
8.375
|
%
|
3/15/12
|
|
1,450,000
|
|
1,520,687
|
|
True Move Co., Ltd.
|
|
10.750
|
%
|
12/16/13
|
|
590,000
|
|
579,675
|
(c)
|
True Move Co., Ltd.,
Notes
|
|
10.750
|
%
|
12/16/13
|
|
200,000
|
|
196,500
|
(c)
|
Total
Wireless Telecommunication Services
|
|
|
|
|
|
|
|
2,565,663
|
|
Total
Telecommunication Services
|
|
|
|
|
|
|
|
7,350,702
|
|
Utilities
5.9%
|
|
|
|
|
|
|
|
|
|
Electric
Utilities 3.0%
|
|
|
|
|
|
|
|
|
|
Duke Energy Corp., Notes
|
|
6.250
|
%
|
1/15/12
|
|
250,000
|
|
269,333
|
|
EEB International Ltd.,
Senior Bonds
|
|
8.750
|
%
|
10/31/14
|
|
820,000
|
|
904,050
|
(c)
|
FirstEnergy Corp., Notes
|
|
6.450
|
%
|
11/15/11
|
|
27,000
|
|
28,519
|
|
FirstEnergy Corp., Notes
|
|
7.375
|
%
|
11/15/31
|
|
3,040,000
|
|
3,205,355
|
|
MidAmerican Energy
Holdings Co., Senior Notes
|
|
5.875
|
%
|
10/1/12
|
|
250,000
|
|
270,667
|
|
Total
Electric Utilities
|
|
|
|
|
|
|
|
4,677,924
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements.
|
|
Western Asset Premier Bond Fund 2010 Semi-Annual Report
|
|
11
|
Western Asset Premier Bond Fund
Security
|
|
Rate
|
|
Maturity
Date
|
|
Face
Amount
|
|
Value
|
|
Gas
Utilities 0.0%
|
|
|
|
|
|
|
|
|
|
Southern Natural Gas Co.,
Senior Notes
|
|
8.000
|
%
|
3/1/32
|
|
20,000
|
|
$
|
22,662
|
|
Independent
Power Producers & Energy Traders 2.3%
|
|
|
|
|
|
|
|
|
|
AES Corp., Senior Notes
|
|
9.750
|
%
|
4/15/16
|
|
360,000
|
|
387,000
|
(c)
|
AES Corp., Senior Notes
|
|
8.000
|
%
|
10/15/17
|
|
525,000
|
|
530,250
|
|
AES Corp., Senior Notes
|
|
8.000
|
%
|
6/1/20
|
|
100,000
|
|
100,500
|
|
Dynegy Holdings Inc.,
Senior Notes
|
|
7.750
|
%
|
6/1/19
|
|
150,000
|
|
103,687
|
|
Edison Mission Energy,
Senior Notes
|
|
7.750
|
%
|
6/15/16
|
|
180,000
|
|
125,100
|
|
Edison Mission Energy,
Senior Notes
|
|
7.625
|
%
|
5/15/27
|
|
179,000
|
|
101,583
|
|
Energy Future Holdings
Corp., Senior Notes
|
|
11.250
|
%
|
11/1/17
|
|
1,881,805
|
|
1,223,173
|
(f)
|
NRG Energy Inc., Senior
Notes
|
|
7.375
|
%
|
2/1/16
|
|
815,000
|
|
810,925
|
|
NRG Energy Inc., Senior
Notes
|
|
7.375
|
%
|
1/15/17
|
|
225,000
|
|
222,750
|
|
Total Independent Power
Producers & Energy Traders
|
|
|
|
|
|
|
|
3,604,968
|
|
Multi-Utilities
0.6%
|
|
|
|
|
|
|
|
|
|
Dominion Resources Inc.,
Senior Notes
|
|
5.700
|
%
|
9/17/12
|
|
770,000
|
|
832,288
|
|
Total
Utilities
|
|
|
|
|
|
|
|
9,137,842
|
|
Total
Corporate Bonds & Notes (Cost $91,896,206)
|
|
|
|
|
|
|
|
93,488,041
|
|
Asset-Backed Securities 27.3%
|
|
|
|
|
|
|
|
|
|
Financials 27.3%
|
|
|
|
|
|
|
|
|
|
Automobiles
0.2%
|
|
|
|
|
|
|
|
|
|
AmeriCredit Automobile Receivables Trust,
2007-CM A3B
|
|
0.381
|
%
|
5/7/12
|
|
393,299
|
|
392,923
|
(d)
|
Diversified
Financial Services 1.6%
|
|
|
|
|
|
|
|
|
|
Global Franchise Trust,
1998-1 A2
|
|
6.659
|
%
|
10/10/11
|
|
674,964
|
|
573,720
|
(c)(e)
|
Green Tree Recreational Equiptment &
Consumer Trust, 1996-C CTFS
|
|
7.650
|
%
|
10/15/17
|
|
156,817
|
|
136,773
|
|
PAMCO CLO, 1997-1A B
|
|
7.910
|
%
|
8/6/10
|
|
877,453
|
|
175,490
|
(a)
|
Pegasus Aviation Lease
Securitization, 2000-1 A2
|
|
8.370
|
%
|
3/25/30
|
|
1,600,000
|
|
584,000
|
(c)(e)
|
Settlement Fee Finance
LLC, 2004-1A A
|
|
9.100
|
%
|
7/25/34
|
|
1,053,017
|
|
947,716
|
(c)(e)
|
Total
Diversified Financial Services
|
|
|
|
|
|
|
|
2,417,699
|
|
Home
Equity 17.8%
|
|
|
|
|
|
|
|
|
|
ABFS Mortgage Loan Trust,
2002-3 M1
|
|
5.902
|
%
|
9/15/33
|
|
1,130,000
|
|
768,279
|
|
ACE Securities Corp.,
2005-SD1 A1
|
|
0.747
|
%
|
11/25/50
|
|
47,618
|
|
46,102
|
(d)
|
Bayview Financial
Acquisition Trust, 2007-B 2A1
|
|
0.647
|
%
|
8/28/47
|
|
1,204,939
|
|
1,127,637
|
(d)
|
Bayview Financial Asset
Trust, 2004-SSRA A1
|
|
0.947
|
%
|
12/25/39
|
|
438,116
|
|
302,300
|
(c)(d)(e)
|
Bayview Financial Asset
Trust, 2007-SR1A A
|
|
0.797
|
%
|
3/25/37
|
|
2,415,822
|
|
1,763,550
|
(c)(d)
|
Bayview Financial Asset
Trust, 2007-SR1A M3
|
|
1.497
|
%
|
3/25/37
|
|
602,586
|
|
241,034
|
(c)(d)
|
Bayview Financial Asset
Trust, 2007-SR1A M4
|
|
1.847
|
%
|
3/25/37
|
|
164,342
|
|
54,233
|
(c)(d)
|
Bear Stearns Asset Backed Securities Trust,
2006-SD3 1P0, STRIPS
|
|
0.000
|
%
|
8/25/36
|
|
1,396,529
|
|
976,034
|
|
Bear Stearns Asset Backed Securities Trust,
2007-SD1 1A3A
|
|
6.500
|
%
|
10/25/36
|
|
1,366,814
|
|
963,467
|
|
Centex Home Equity Loan
Trust, 2003-B AF4
|
|
3.735
|
%
|
2/25/32
|
|
349,152
|
|
300,666
|
|
Citigroup Mortgage Loan
Trust Inc., 2006-SHL1 A1
|
|
0.547
|
%
|
11/25/45
|
|
249,854
|
|
200,480
|
(c)(d)
|
Citigroup Mortgage Loan
Trust Inc., 2007-SHL1 A
|
|
0.747
|
%
|
11/25/46
|
|
1,173,508
|
|
531,536
|
(c)(d)
|
Contimortgage Home Equity
Trust, 1997-4 B1F
|
|
7.330
|
%
|
10/15/28
|
|
475,119
|
|
417,891
|
|
Countrywide Asset-Backed
Certificates, 2007-13 2A1
|
|
1.247
|
%
|
10/25/47
|
|
1,244,607
|
|
846,616
|
(d)
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements.
12
|
|
Western
Asset Premier Bond Fund 2010 Semi-Annual Report
|
|
|
Schedule of investments (unaudited) (contd)
June 30, 2010
Western Asset Premier Bond Fund
Security
|
|
Rate
|
|
Maturity
Date
|
|
Face
Amount
|
|
Value
|
|
Home Equity continued
|
|
|
|
|
|
|
|
|
|
Countrywide Asset-Backed Certificates,
2007-SEA2 1A1
|
|
1.347
|
%
|
8/25/47
|
|
67,794
|
|
$
|
37,409
|
(c)(d)
|
Countrywide Home Equity Loan Trust, 2006-HW
2A1B
|
|
0.487
|
%
|
11/15/36
|
|
664,200
|
|
478,785
|
(d)
|
Countrywide Home Equity Loan Trust, 2007-B A
|
|
0.500
|
%
|
2/15/37
|
|
814,237
|
|
586,877
|
(d)
|
Countrywide Home Equity Loan Trust, 2007-GW A
|
|
0.900
|
%
|
8/15/37
|
|
2,433,232
|
|
1,868,457
|
(d)
|
Credit-Based Asset Servicing and
Securitization, 2004-CB2 M1
|
|
0.867
|
%
|
7/25/33
|
|
2,209,205
|
|
1,477,547
|
(d)
|
Credit-Based Asset Servicing and
Securitization LLC, 2005-RP1 M1
|
|
0.967
|
%
|
1/25/35
|
|
780,000
|
|
676,815
|
(c)(d)
|
CS First Boston Mortgage Securities Corp.,
2004-CF2 2A1
|
|
0.817
|
%
|
5/25/44
|
|
75,376
|
|
72,774
|
(c)(d)
|
Ellington Loan Acquisition Trust, 2007-1 A2A1
|
|
1.347
|
%
|
5/26/37
|
|
287,083
|
|
249,670
|
(c)(d)
|
EMC Mortgage Loan Trust, 2003-B A1
|
|
0.897
|
%
|
11/25/41
|
|
125,798
|
|
110,512
|
(c)(d)
|
First Horizon ABS Trust, 2007-HE1 A
|
|
0.473
|
%
|
9/25/29
|
|
977,608
|
|
722,433
|
(d)
|
Fremont Home Loan Trust, 2006-2 2A2
|
|
0.457
|
%
|
2/25/36
|
|
454,801
|
|
443,442
|
(d)
|
GMAC Mortgage Corp. Loan Trust, 2004-VF1 A1
|
|
1.097
|
%
|
2/25/31
|
|
603,709
|
|
435,198
|
(c)(d)
|
Green Tree Home Improvement Loan Trust,
1996-D HIB2
|
|
8.000
|
%
|
9/15/27
|
|
67,274
|
|
46,916
|
|
GSAA Home Equity Trust, 2006-19 A3A
|
|
0.587
|
%
|
12/25/36
|
|
949,107
|
|
512,525
|
(d)
|
GSAMP Trust, 2003-SEA2 A1
|
|
4.422
|
%
|
7/25/33
|
|
2,169,582
|
|
1,840,146
|
|
Lehman XS Trust, 2006-GP4 3A1A
|
|
0.417
|
%
|
8/25/46
|
|
100,885
|
|
98,783
|
(d)
|
Lehman XS Trust, 2007-1 WF1
|
|
7.000
|
%
|
1/25/37
|
|
1,020,782
|
|
493,882
|
|
Morgan Stanley ABS Capital I, 2003-SD1 A1
|
|
0.847
|
%
|
3/25/33
|
|
25,114
|
|
20,328
|
(d)
|
MSDWCC Heloc Trust, 2003-2 A
|
|
0.607
|
%
|
4/25/16
|
|
174,488
|
|
148,436
|
(d)
|
New Century Home Equity Loan Trust, 2004-2 A2
|
|
0.717
|
%
|
8/25/34
|
|
475,320
|
|
342,866
|
(d)
|
Park Place Securities Inc., 2004-WCW1 M2
|
|
1.027
|
%
|
9/25/34
|
|
1,900,000
|
|
1,596,388
|
(d)
|
Park Place Securities Inc., 2004-WHQ2 M2
|
|
0.977
|
%
|
2/25/35
|
|
750,000
|
|
615,791
|
(d)
|
RAAC Series, 2007-RP1 M1
|
|
0.897
|
%
|
5/25/46
|
|
210,000
|
|
7,193
|
(c)(d)
|
Renaissance Home Equity Loan Trust, 2004-2
AF4
|
|
5.392
|
%
|
7/25/34
|
|
688,960
|
|
682,442
|
|
Renaissance Home Equity Loan Trust, 2005-3
AV3
|
|
0.727
|
%
|
11/25/35
|
|
800,000
|
|
662,360
|
(d)
|
Residential Asset Mortgage Products Inc.,
2004-RZ1 AII
|
|
0.827
|
%
|
3/25/34
|
|
399,792
|
|
232,112
|
(d)
|
Residential Asset Securities Corp., 2001-KS3
AII
|
|
0.807
|
%
|
9/25/31
|
|
300,571
|
|
209,702
|
(d)
|
Residential Asset Securities Corp., 2002-KS2
AI6
|
|
6.228
|
%
|
4/25/32
|
|
756,759
|
|
747,983
|
(d)
|
Residential Asset Securities Corp., 2003-KS8
AI6
|
|
4.830
|
%
|
10/25/33
|
|
1,057,932
|
|
995,530
|
(d)
|
Salomon Brothers Mortgage Securities VII, 2002-CIT1
|
|
0.947
|
%
|
3/25/32
|
|
36,439
|
|
36,287
|
(d)
|
Saxon Asset Securities Trust, 2000-2 MF1
|
|
8.870
|
%
|
7/25/30
|
|
65,485
|
|
65,574
|
(d)
|
Structured Asset Securities Corp., 2002-AL1
A3
|
|
3.450
|
%
|
2/25/32
|
|
922,267
|
|
841,442
|
|
Structured Asset Securities Corp., 2003-AL1 A
|
|
3.357
|
%
|
4/25/31
|
|
131,651
|
|
120,271
|
(c)
|
Structured Asset Securities Corp., 2005-4XS
2A1A
|
|
2.093
|
%
|
3/25/35
|
|
630,180
|
|
451,926
|
(d)
|
Structured Asset Securities Corp., 2007-BC1
A2
|
|
0.397
|
%
|
2/25/37
|
|
723,793
|
|
685,270
|
(d)
|
Wachovia Asset Securitization Inc., 2002-HE1
|
|
0.717
|
%
|
9/27/32
|
|
205,926
|
|
160,683
|
(d)
|
Wachovia Asset Securitization Inc., 2002-HE2
|
|
0.777
|
%
|
12/25/32
|
|
76,074
|
|
55,902
|
(d)
|
Wachovia Asset Securitization Inc., 2003-HE1
|
|
0.637
|
%
|
3/25/33
|
|
28,488
|
|
17,200
|
(d)
|
Total Home Equity
|
|
|
|
|
|
|
|
27,387,682
|
|
Manufactured Housing 7.7%
|
|
|
|
|
|
|
|
|
|
Associates Manufactured Housing Pass Through
Certificates, 1997-CLB2
|
|
8.900
|
%
|
6/15/28
|
|
3,011,259
|
|
3,011,259
|
(e)
|
Associates Manufactured Housing Pass-Through
Certificates, 1997-1 B1
|
|
7.600
|
%
|
6/15/28
|
|
400,000
|
|
421,092
|
(b)(d)
|
Bank of America Manufactured Housing Contract
Trust, 1997-2M
|
|
6.900
|
%
|
4/10/28
|
|
100,000
|
|
141,991
|
(d)
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements.
|
|
Western Asset Premier Bond Fund 2010 Semi-Annual
Report
|
|
13
|
Western Asset Premier Bond Fund
Security
|
|
Rate
|
|
Maturity
Date
|
|
Face
Amount
|
|
Value
|
|
Manufactured Housing
continued
|
|
|
|
|
|
|
|
|
|
Conseco Finance Securitizations Corp., 2002-1
A
|
|
6.681
|
%
|
12/1/33
|
|
405,751
|
|
$
|
414,308
|
(d)
|
Firstfed Corp. Manufactured Housing Contract,
1996-1 B
|
|
8.060
|
%
|
10/15/22
|
|
2,100,000
|
|
2,019,990
|
(c)(e)
|
Green Tree Financial Corp., 1992-2 B
|
|
9.150
|
%
|
1/15/18
|
|
185,719
|
|
115,387
|
|
Green Tree Financial Corp., 1993-1 B
|
|
8.450
|
%
|
4/15/18
|
|
249,015
|
|
226,132
|
|
Greenpoint Manufactured Housing, 1999-5 A5
|
|
7.820
|
%
|
12/15/29
|
|
706,000
|
|
712,176
|
(d)
|
Indymac Manufactured Housing Contract, 1997-1
A5
|
|
6.970
|
%
|
2/25/28
|
|
264,351
|
|
195,750
|
|
Merit Securities Corp., 13 A4
|
|
7.950
|
%
|
12/28/33
|
|
3,169,041
|
|
3,203,915
|
(d)
|
Oakwood Mortgage Investors Inc., 2002-B A3
|
|
6.060
|
%
|
3/15/25
|
|
289,321
|
|
248,774
|
(d)
|
Vanderbilt Mortgage Finance, 1997-B 1B2
|
|
8.155
|
%
|
10/7/26
|
|
439,962
|
|
400,619
|
|
Vanderbilt Mortgage Finance, 1997-C 1B2
|
|
7.830
|
%
|
8/7/27
|
|
115,160
|
|
111,053
|
(d)
|
Vanderbilt Mortgage Finance, 2000-B IB2
|
|
9.250
|
%
|
7/7/30
|
|
836,219
|
|
673,594
|
(d)
|
Total
Manufactured Housing
|
|
|
|
|
|
|
|
11,896,040
|
|
Total
Asset-Backed Securities (Cost $39,381,551)
|
|
|
|
|
|
|
|
42,094,344
|
|
Collateralized
Mortgage Obligations 35.5%
|
|
|
|
|
|
|
|
|
|
American Home Mortgage Investment Trust,
2007-A 4A
|
|
0.797
|
%
|
7/25/46
|
|
853,163
|
|
374,457
|
(c)(d)
|
Bayview Commercial Asset Trust, 2005-3A A2
|
|
0.747
|
%
|
11/25/35
|
|
749,209
|
|
495,901
|
(c)(d)(e)
|
Bayview Commercial Asset Trust, 2005-4A A1
|
|
0.647
|
%
|
1/25/36
|
|
432,568
|
|
301,839
|
(c)(d)
|
BCAP LLC Trust, 2009-RR12 2A2
|
|
0.623
|
%
|
3/26/35
|
|
1,844,014
|
|
608,525
|
(c)(d)(e)
|
Bear Stearns Alt-A Trust, 2004-3 A1
|
|
0.987
|
%
|
4/25/34
|
|
529,709
|
|
400,730
|
(d)
|
Bear Stearns Alt-A Trust, 2004-8 1A
|
|
0.697
|
%
|
9/25/34
|
|
278,244
|
|
225,460
|
(d)
|
Bear Stearns Alt-A Trust, 2005-10 21A1
|
|
3.231
|
%
|
1/25/36
|
|
1,294,559
|
|
730,709
|
(d)
|
Bear Stearns Asset Backed Securities Trust,
2002-AC1 B4
|
|
7.000
|
%
|
1/25/32
|
|
950,501
|
|
165,002
|
(c)
|
Bella Vista Mortgage Trust, 2004-2 A1
|
|
0.717
|
%
|
2/25/35
|
|
2,292,878
|
|
1,413,775
|
(d)
|
BlackRock Capital Finance LP, 1997-R2 B5
|
|
6.188
|
%
|
12/25/35
|
|
442,919
|
|
17,717
|
(c)(d)(e)
|
CBA Commercial Small Balance Commercial
Trust, 2005-1A
|
|
0.667
|
%
|
7/25/35
|
|
1,751,832
|
|
998,544
|
(c)(d)
|
Chevy Chase Mortgage Funding Corp., 2004-3A
A1
|
|
0.597
|
%
|
8/25/35
|
|
1,656,535
|
|
1,017,276
|
(c)(d)
|
Chevy Chase Mortgage Funding Corp., 2004-4A
A1
|
|
0.577
|
%
|
10/25/35
|
|
2,308,619
|
|
1,352,659
|
(c)(d)
|
Chevy Chase Mortgage Funding Corp., 2005-4A
A1
|
|
0.547
|
%
|
10/25/36
|
|
2,142,791
|
|
1,100,012
|
(c)(d)
|
CNL Funding, 1998-1 C2
|
|
1.098
|
%
|
9/18/11
|
|
3,360,000
|
|
1,008,000
|
(c)(d)(e)
|
Countrywide Home Loan Mortgage Pass-Through
Trust, 2004-HYB5 7A1
|
|
2.344
|
%
|
4/20/35
|
|
3,690,205
|
|
2,853,388
|
(d)
|
Countrywide Home Loan Mortgage Pass-Through
Trust, 2005-9 1A1
|
|
0.647
|
%
|
5/25/35
|
|
1,790,942
|
|
1,031,135
|
(d)
|
Countrywide Home Loans, 2004-R1 1AF
|
|
0.747
|
%
|
11/25/34
|
|
1,953,658
|
|
1,605,071
|
(c)(d)
|
Countrywide Home Loans, 2004-R2 1AF1
|
|
0.767
|
%
|
11/25/34
|
|
593,856
|
|
458,625
|
(c)(d)
|
Countrywide Home Loans, 2005-7 1A1
|
|
0.617
|
%
|
3/25/35
|
|
1,538,688
|
|
1,131,377
|
(d)
|
Credit Suisse Mortgage Capital Certificates,
2007-C3 A4
|
|
5.912
|
%
|
6/15/39
|
|
242,000
|
|
230,657
|
(d)
|
GMAC Commercial Mortgage Securities Inc.,
1998-C2 F
|
|
6.500
|
%
|
5/15/35
|
|
1,000,000
|
|
1,053,851
|
(c)
|
Greenpoint Mortgage Funding Trust, 2005-AR5
2A2
|
|
0.617
|
%
|
11/25/46
|
|
3,235,130
|
|
841,134
|
(d)
|
Greenpoint Mortgage Funding Trust, 2005-AR5
3A2
|
|
0.617
|
%
|
11/25/46
|
|
1,951,512
|
|
523,128
|
(d)
|
GSMPS Mortgage Loan Trust, 2001-2 A
|
|
7.500
|
%
|
6/19/32
|
|
1,703,671
|
|
1,463,929
|
(c)(d)
|
GSMPS Mortgage Loan Trust, 2005-RP1 1AF
|
|
0.697
|
%
|
1/25/35
|
|
298,833
|
|
246,380
|
(c)(d)
|
GSMPS Mortgage Loan Trust, 2005-RP1 2A1
|
|
4.624
|
%
|
1/25/35
|
|
1,712,815
|
|
1,428,072
|
(c)(d)
|
GSMPS Mortgage Loan Trust, 2005-RP3 1AF
|
|
0.697
|
%
|
9/25/35
|
|
1,381,587
|
|
1,106,408
|
(c)(d)
|
Harborview Mortgage Loan Trust, 2004-10 4A
|
|
2.680
|
%
|
1/19/35
|
|
485,423
|
|
465,624
|
(d)
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements.
14
|
|
Western
Asset Premier Bond Fund 2010 Semi-Annual Report
|
|
|
Schedule of investments (unaudited) (contd)
June 30, 2010
Western Asset Premier Bond Fund
Security
|
|
Rate
|
|
Maturity
Date
|
|
Face
Amount
|
|
Value
|
|
Collateralized Mortgage Obligations continued
|
|
|
|
|
|
|
|
|
|
Harborview Mortgage Loan Trust, 2004-8 3A2
|
|
0.748
|
%
|
11/19/34
|
|
202,842
|
|
$
|
110,025
|
(d)
|
Harborview Mortgage Loan Trust, 2005-9 B10
|
|
2.098
|
%
|
6/20/35
|
|
1,126,807
|
|
90,947
|
(d)
|
Impac CMB Trust, 2004-9 1A1
|
|
1.107
|
%
|
1/25/35
|
|
60,846
|
|
41,036
|
(d)
|
Impac CMB Trust, 2A-10
|
|
0.987
|
%
|
3/25/35
|
|
506,278
|
|
232,003
|
(d)
|
Indymac Index Mortgage Loan Trust, 2005-AR14
BX, STRIPS
|
|
2.400
|
%
|
7/25/35
|
|
2,283,558
|
|
45,671
|
(b)(e)
|
Indymac Index Mortgage Loan Trust, 2007-AR15
2A1
|
|
5.415
|
%
|
8/25/37
|
|
5,676,410
|
|
3,000,198
|
(d)
|
Jefferies & Co., 2009-B 9A
|
|
0.586
|
%
|
11/21/35
|
|
209,040
|
|
332,541
|
(c)(d)(e)
|
JPMorgan Mortgage Trust, 2007-A2 4A2
|
|
5.992
|
%
|
4/25/37
|
|
300,000
|
|
249,123
|
(d)
|
LB-UBS Commercial Mortgage Trust, 2001-C3 X,
STRIPS
|
|
1.131
|
%
|
6/15/36
|
|
2,453,263
|
|
14,454
|
(b)(c)(d)
|
Luminent Mortgage Trust, 2006-6 A1
|
|
0.547
|
%
|
10/25/46
|
|
1,217,677
|
|
678,437
|
(d)
|
MASTR Alternative Loans Trust, PAC, 2003-7
7A1
|
|
0.747
|
%
|
11/25/33
|
|
353,119
|
|
338,270
|
(d)
|
MASTR ARM Trust, 2004-13 3A7
|
|
2.959
|
%
|
11/21/34
|
|
2,000,000
|
|
1,730,246
|
(d)
|
MASTR ARM Trust, 2004-7 6M1
|
|
0.997
|
%
|
8/25/34
|
|
800,000
|
|
593,529
|
(d)
|
Merit Securities Corp., 11PA B3
|
|
2.597
|
%
|
9/28/32
|
|
850,000
|
|
241,115
|
(c)(d)
|
Merrill Lynch Mortgage Investors Inc.,
2005-A2
|
|
2.800
|
%
|
2/25/35
|
|
415,648
|
|
409,209
|
(d)
|
Metropolitan Asset Funding Inc., 1998-BI B1
|
|
8.000
|
%
|
11/20/24
|
|
906,481
|
|
345,414
|
(d)
|
Morgan Stanley Capital I, 1999-LIFE E
|
|
7.094
|
%
|
4/15/33
|
|
1,751,113
|
|
1,751,113
|
(d)
|
Nomura Asset Acceptance Corp., 2004-AR4 1A1
|
|
2.467
|
%
|
12/25/34
|
|
524,325
|
|
479,064
|
(d)
|
Prime Mortgage Trust, 2005-2 2XB, STRIPS
|
|
1.740
|
%
|
10/25/32
|
|
3,652,900
|
|
166,938
|
(d)
|
Prime Mortgage Trust, 2005-5 1X, STRIPS
|
|
0.900
|
%
|
7/25/34
|
|
8,660,691
|
|
307,443
|
(d)
|
Prime Mortgage Trust, 2005-5 1XB, STRIPS
|
|
1.420
|
%
|
7/25/34
|
|
3,138,008
|
|
63,074
|
(d)
|
Regal Trust IV, 1999-1 A
|
|
3.286
|
%
|
9/29/31
|
|
120,428
|
|
113,320
|
(c)(d)
|
Residential Asset Mortgage Products Inc.,
2004-SL4 A5
|
|
7.500
|
%
|
7/25/32
|
|
1,472,326
|
|
1,477,520
|
|
Residential Asset Mortgage
Products, Inc., 2005-SL2 AP0, STRIPS
|
|
0.010
|
%
|
2/25/32
|
|
353,529
|
|
301,128
|
|
Residential Asset Securitization Trust,
2003-A1 A2
|
|
0.847
|
%
|
3/25/33
|
|
474,758
|
|
446,510
|
(d)
|
Sequoia Mortgage Trust, 2003-2 A2
|
|
1.095
|
%
|
6/20/33
|
|
55,177
|
|
44,146
|
(d)
|
Sequoia Mortgage Trust, 2004-10 A1A
|
|
0.658
|
%
|
11/20/34
|
|
30,703
|
|
28,777
|
(d)
|
Sequoia Mortgage Trust, 2004-11 A1
|
|
0.648
|
%
|
12/20/34
|
|
46,885
|
|
39,305
|
(d)
|
Sequoia Mortgage Trust, 2004-12 A1
|
|
0.618
|
%
|
1/20/35
|
|
375,256
|
|
312,762
|
(d)
|
Structured Asset Securities Corp., 1998-RF2 A
|
|
8.487
|
%
|
7/15/27
|
|
500,557
|
|
504,289
|
(c)(d)
|
Structured Asset Securities Corp., 2002-9 A2
|
|
0.647
|
%
|
10/25/27
|
|
1,105,213
|
|
944,785
|
(d)
|
Structured Asset Securities Corp., 2004-NP1 A
|
|
0.747
|
%
|
9/25/33
|
|
271,924
|
|
220,259
|
(b)(c)(d)(e)
|
Structured Asset Securities Corp., 2005-4XS
3A4
|
|
4.790
|
%
|
3/25/35
|
|
890,000
|
|
816,957
|
|
Structured Asset Securities Corp., 2005-RF3
2A
|
|
4.693
|
%
|
6/25/35
|
|
2,290,216
|
|
1,902,114
|
(c)(d)
|
Thornburg Mortgage Securities Trust, 2003-4
A1
|
|
0.667
|
%
|
9/25/43
|
|
1,038,418
|
|
939,470
|
(d)
|
Thornburg Mortgage Securities Trust, 2004-03
A
|
|
0.717
|
%
|
9/25/44
|
|
1,033,707
|
|
950,786
|
(d)
|
Thornburg Mortgage Securities Trust, 2007-4
2A1
|
|
6.207
|
%
|
9/25/37
|
|
840,109
|
|
800,334
|
(d)
|
Thornburg Mortgage Securities Trust, 2007-4
3A1
|
|
6.204
|
%
|
9/25/37
|
|
860,407
|
|
834,828
|
(d)
|
WaMu Mortgage Pass-Through Certificates,
2004-AR13 A2A
|
|
0.745
|
%
|
11/25/34
|
|
2,125,594
|
|
1,471,160
|
(d)
|
WaMu Mortgage Pass-Through Certificates,
2007-HY7 2A3
|
|
5.737
|
%
|
7/25/37
|
|
2,000,000
|
|
1,346,276
|
(d)
|
Washington Mutual Alternative Mortgage
Pass-Through Certificates, 2006-5 3A3
|
|
6.221
|
%
|
7/25/36
|
|
884,117
|
|
464,729
|
|
Washington Mutual Alternative Mortgage Pass-Through
Certificates, 2006-7 A2A
|
|
5.667
|
%
|
9/25/36
|
|
1,519,910
|
|
690,533
|
|
Washington Mutual Alternative Mortgage
Pass-Through Certificates, 2006-7 A3
|
|
6.081
|
%
|
9/25/36
|
|
185,000
|
|
107,385
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements.
|
|
Western Asset Premier Bond Fund 2010 Semi-Annual
Report
|
|
15
|
Western Asset Premier Bond Fund
Security
|
|
Rate
|
|
Maturity
Date
|
|
Face
Amount
|
|
Value
|
|
Collateralized Mortgage Obligations continued
|
|
|
|
|
|
|
|
|
|
Washington Mutual Inc., 2004-AR11
|
|
2.830
|
%
|
10/25/34
|
|
94,413
|
|
$
|
90,556
|
(d)
|
Washington Mutual Inc., 2004-AR12 A2A
|
|
0.765
|
%
|
10/25/44
|
|
205,334
|
|
144,749
|
(d)
|
Washington Mutual Inc., 2005-AR06 2A1A
|
|
0.577
|
%
|
4/25/45
|
|
450,562
|
|
348,242
|
(d)
|
Washington Mutual Inc., 2005-AR8 2A1A
|
|
0.637
|
%
|
7/25/45
|
|
499,756
|
|
388,939
|
(d)
|
Washington Mutual Inc. Mortgage Pass-Through
Certificates, 2004-AR13 A1A
|
|
0.735
|
%
|
11/25/34
|
|
1,511,450
|
|
1,214,075
|
(d)
|
Washington Mutual Inc. Mortgage Pass-Through
Certificates, 2005-AR08 1A1A
|
|
0.617
|
%
|
7/25/45
|
|
33,928
|
|
26,317
|
(d)
|
Washington Mutual Inc. Mortgage Pass-Through
Certificates, 2005-AR13 A1A1
|
|
0.637
|
%
|
10/25/45
|
|
402,633
|
|
313,033
|
(d)
|
Washington Mutual Inc. Mortgage Pass-Through
Certificates, 2005-AR9 A1A
|
|
0.667
|
%
|
7/25/45
|
|
236,418
|
|
183,500
|
(d)
|
Washington Mutual Inc. Pass-Through
Certificates, 2005-AR19 A1A1
|
|
0.617
|
%
|
12/25/45
|
|
825,579
|
|
634,142
|
(d)
|
Washington Mutual Inc., MSC Pass-Through
Certificates, 2004-RA1 2A
|
|
7.000
|
%
|
3/25/34
|
|
60,389
|
|
62,552
|
|
Washington Mutual Mortgage Pass-Through
Certificates, 2006-AR5 3A
|
|
1.361
|
%
|
7/25/46
|
|
1,438,369
|
|
660,358
|
(d)
|
Total
Collateralized Mortgage Obligations (Cost $56,749,366)
|
|
|
|
|
54,693,071
|
|
Mortgage-Backed Security 0.4%
|
|
|
|
|
|
|
|
|
|
FNMA
0.4%
|
|
|
|
|
|
|
|
|
|
Federal National Mortgage Association (FNMA),
Whole Loan (Cost $617,864)
|
|
6.500
|
%
|
8/25/44
|
|
599,465
|
|
664,001
|
|
Sovereign Bonds 3.2%
|
|
|
|
|
|
|
|
|
|
Brazil 3.1%
|
|
|
|
|
|
|
|
|
|
Brazil Nota do Tesouro Nacional
|
|
6.000
|
%
|
5/15/45
|
|
4,700,000
|
BRL
|
4,820,560
|
|
Honduras 0.1%
|
|
|
|
|
|
|
|
|
|
Republic of Honduras
|
|
0.235
|
%
|
10/1/11
|
|
50,891
|
|
50,079
|
(d)
|
Venezuela 0.0%
|
|
|
|
|
|
|
|
|
|
Bolivarian Republic of Venezuela, Collective
Action Securities
|
|
9.375
|
%
|
1/13/34
|
|
2,000
|
|
1,240
|
|
Total Sovereign Bonds (Cost
$4,975,502)
|
|
|
|
|
|
|
|
4,871,879
|
|
U.S. Government & Agency Obligations
1.9%
|
|
|
|
|
|
|
|
|
|
U.S. Government Obligations
1.9%
|
|
|
|
|
|
|
|
|
|
U.S. Treasury Bonds
|
|
4.500
|
%
|
8/15/39
|
|
600,000
|
|
660,844
|
|
U.S. Treasury Notes
|
|
3.625
|
%
|
8/15/19
|
|
570,000
|
|
602,730
|
|
U.S. Treasury Notes
|
|
3.375
|
%
|
11/15/19
|
|
930,000
|
|
963,204
|
|
U.S. Treasury Notes
|
|
3.625
|
%
|
2/15/20
|
|
650,000
|
|
686,765
|
|
Total
U.S. Government & Agency Obligations (Cost $2,759,010)
|
|
|
|
2,913,543
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
|
Common Stocks 0.3%
|
|
|
|
|
|
|
|
|
|
Consumer Discretionary 0.1%
|
|
|
|
|
|
|
|
|
|
Media 0.1%
|
|
|
|
|
|
|
|
|
|
Charter Communications Inc., Class A Shares
|
|
|
|
|
|
4,936
|
|
174,241
|
*
|
Dex One Corp.
|
|
|
|
|
|
1,048
|
|
19,912
|
*
|
SuperMedia Inc.
|
|
|
|
|
|
568
|
|
10,391
|
*
|
Total Consumer Discretionary
|
|
|
|
|
|
|
|
204,544
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements.
16
|
|
Western
Asset Premier Bond Fund 2010 Semi-Annual Report
|
|
|
Schedule of investments (unaudited) (contd)
June 30, 2010
Western Asset Premier Bond Fund
Security
|
|
|
|
|
|
Shares
|
|
Value
|
|
Energy
0.0%
|
|
|
|
|
|
|
|
|
|
Oil, Gas & Consumable
Fuels 0.0%
|
|
|
|
|
|
|
|
|
|
SemGroup Corp., Class A Shares
|
|
|
|
|
|
789
|
|
$
|
20,716
|
*
(e)
|
Industrials
0.1%
|
|
|
|
|
|
|
|
|
|
Building Products 0.1%
|
|
|
|
|
|
|
|
|
|
Nortek Inc.
|
|
|
|
|
|
1,206
|
|
50,652
|
*
|
Materials
0.1%
|
|
|
|
|
|
|
|
|
|
Chemicals 0.1%
|
|
|
|
|
|
|
|
|
|
Georgia Gulf Corp.
|
|
|
|
|
|
8,950
|
|
119,393
|
*
|
Total Common Stocks (Cost
$1,344,491)
|
|
|
|
|
|
|
|
395,305
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rate
|
|
Maturity
Date
|
|
|
|
|
|
Convertible
Preferred Stocks 1.1%
|
|
|
|
|
|
|
|
|
|
Consumer
Discretionary 1.0%
|
|
|
|
|
|
|
|
|
|
Automobiles 1.0%
|
|
|
|
|
|
|
|
|
|
Motors Liquidation Co., Senior Debentures,
Series B
|
|
5.250
|
%
|
3/6/32
|
|
225,000
|
|
1,516,500
|
*
|
Financials
0.1%
|
|
|
|
|
|
|
|
|
|
Diversified Financial Services
0.1%
|
|
|
|
|
|
|
|
|
|
Citigroup Inc.
|
|
7.500
|
%
|
12/15/12
|
|
1,652
|
|
186,676
|
|
Thrifts & Mortgage
Finance 0.0%
|
|
|
|
|
|
|
|
|
|
Federal National Mortgage Association (FNMA)
|
|
5.375
|
%
|
|
|
15
|
|
30,000
|
*
|
Total Financials
|
|
|
|
|
|
|
|
216,676
|
|
Total Convertible Preferred
Stocks (Cost $5,208,200)
|
|
|
|
|
|
|
|
1,733,176
|
|
Preferred
Stocks 3.6%
|
|
|
|
|
|
|
|
|
|
Consumer
Discretionary 1.8%
|
|
|
|
|
|
|
|
|
|
Automobiles 1.8%
|
|
|
|
|
|
|
|
|
|
Corts-Ford Motor Co.
|
|
8.000
|
%
|
|
|
116,210
|
|
2,786,716
|
|
Media 0.0%
|
|
|
|
|
|
|
|
|
|
CMP Susquehanna Radio Holdings Corp.
|
|
0.000
|
%
|
|
|
3,171
|
|
0
|
*
(b)(c)(e)
|
Total Consumer Discretionary
|
|
|
|
|
|
|
|
2,786,716
|
|
Financials
1.8%
|
|
|
|
|
|
|
|
|
|
Diversified Financial Services
1.8%
|
|
|
|
|
|
|
|
|
|
Corp-Backed Trust Certificates
|
|
8.000
|
%
|
|
|
3,970
|
|
93,573
|
|
Corporate-Backed Trust Certificates,
Series 2001-8, Class A-1
|
|
7.375
|
%
|
|
|
33,900
|
|
228,825
|
*
(a)
|
Preferred Plus, Series FMC1 Trust
|
|
8.250
|
%
|
|
|
5,100
|
|
122,400
|
|
Saturns, Series F 2003-5
|
|
8.125
|
%
|
|
|
98,360
|
|
2,360,640
|
|
Total Diversified Financial
Services
|
|
|
|
|
|
|
|
2,805,438
|
|
Thrifts & Mortgage
Finance 0.0%
|
|
|
|
|
|
|
|
|
|
Federal Home Loan Mortgage Corp. (FHLMC)
|
|
5.000
|
%
|
|
|
200
|
|
130
|
*
|
Federal Home Loan Mortgage Corp. (FHLMC)
|
|
5.160
|
%
|
|
|
100
|
|
60
|
*
|
Federal Home Loan Mortgage Corp. (FHLMC)
|
|
8.375
|
%
|
|
|
20,500
|
|
6,970
|
*
(d)
|
Total Thrifts &
Mortgage Finance
|
|
|
|
|
|
|
|
7,160
|
|
Total Financials
|
|
|
|
|
|
|
|
2,812,598
|
|
Total Preferred Stocks (Cost
$4,649,356)
|
|
|
|
|
|
|
|
5,599,314
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements.
|
|
Western Asset Premier Bond Fund 2010 Semi-Annual
Report
|
|
17
|
Western Asset Premier Bond Fund
Security
|
|
|
|
Expiration
Date
|
|
Warrants
|
|
Value
|
|
Warrants 0.0%
|
|
|
|
|
|
|
|
|
|
Buffets Restaurant Holdings
|
|
|
|
4/28/14
|
|
224
|
|
$
|
2
|
*
(b)(e)
|
Charter Communications Inc.
|
|
|
|
11/30/14
|
|
265
|
|
1,060
|
*
|
CNB Capital Trust
|
|
|
|
3/23/19
|
|
3,624
|
|
0
|
*
(b)(c)(e)
|
Nortek Inc.
|
|
|
|
12/7/14
|
|
576
|
|
6,049
|
*
|
SemGroup Corp.
|
|
|
|
11/30/14
|
|
831
|
|
3,946
|
*
(b)
|
Total Warrants (Cost $7,974)
|
|
|
|
|
|
|
|
11,057
|
|
Total Investments Before
Short-Term Investments (Cost $207,589,520)
|
|
|
|
206,463,731
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rate
|
|
Maturity
Date
|
|
Face
Amount
|
|
|
|
Short-Term
Investments 11.3%
|
|
|
|
|
|
|
|
|
|
Time Deposit 1.5%
|
|
|
|
|
|
|
|
|
|
Bank of America Grand Cayman (Cost
$2,300,000)
|
|
0.010
|
%
|
7/1/10
|
|
2,300,000
|
|
2,300,000
|
|
Repurchase Agreement 9.8%
|
|
|
|
|
|
|
|
|
|
Morgan Stanley repurchase agreement dated
6/30/10; Proceeds at maturity $15,116,004; (Fully collateralized by U.S.
government agency obligations, 2.610% due 4/15/14; Market value
$15,493,900) (Cost $15,116,000)
|
|
0.010
|
%
|
7/1/10
|
|
15,116,000
|
|
15,116,000
|
|
Total Short-Term Investments
(Cost $17,416,000)
|
|
|
|
|
|
|
|
17,416,000
|
|
Total Investments 145.2%
(Cost $225,005,520#)
|
|
|
|
|
|
|
|
223,879,731
|
|
Other Assets in Excess of
Liabilities 1.5%
|
|
|
|
|
|
|
|
2,356,160
|
|
Liquidation value of Preferred
Shares (46.7)%
|
|
|
|
|
|
|
|
(72,000,000
|
)
|
Total Net Assets 100.0%
|
|
|
|
|
|
|
|
$
|
154,235,891
|
|
|
Face amount denominated in U.S. dollars, unless
otherwise noted.
|
*
|
Non-income producing security.
|
(a)
|
The coupon payment on these securities is currently
in default as of June 30, 2010.
|
(b)
|
Illiquid security.
|
(c)
|
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 Trustees, unless otherwise noted.
|
(d)
|
Variable rate security. Interest rate disclosed is
that which is in effect at June 30, 2010.
|
(e)
|
Security is valued in good faith at fair value in
accordance with procedures approved by the Board of Trustees (See Note 1).
|
(f)
|
Payment-in-kind security for which part of the
income earned may be paid as additional principal.
|
#
|
Aggregate cost for federal income tax purposes is
substantially the same.
|
|
|
|
Abbreviations used in this schedule:
|
|
|
|
ARM
|
- Adjustable Rate Mortgage
|
|
BRL
|
- Brazilian Real
|
|
CMB
|
- Cash Management Bill
|
|
PAC
|
- Planned Amortization Class
|
|
STRIPS
|
- Separate Trading of Registered Interest and
Principal Securities
|
See Notes to Financial Statements.
18
|
|
Western
Asset Premier Bond Fund 2010 Semi-Annual Report
|
|
|
Statement of assets and liabilities (unaudited)
June 30, 2010
Assets:
|
|
|
|
Investments, at value
(Cost $225,005,520)
|
|
$223,879,731
|
|
Foreign currency, at value
(Cost $147,290)
|
|
148,462
|
|
Cash
|
|
8
|
|
Interest receivable
|
|
2,240,420
|
|
Deposits with brokers for
swap contracts
|
|
300,000
|
|
Unrealized appreciation on
swaps
|
|
78,028
|
|
Receivable for securities
sold
|
|
32,843
|
|
Premiums paid for open swaps
|
|
7,348
|
|
Receivable for open swap
contracts
|
|
5,176
|
|
Prepaid expenses
|
|
17,585
|
|
Total
Assets
|
|
226,709,601
|
|
|
|
|
|
Liabilities:
|
|
|
|
Unrealized depreciation on
swaps
|
|
230,672
|
|
Investment management fee
payable
|
|
79,602
|
|
Premiums received for open
swaps
|
|
30,366
|
|
Administration fee payable
|
|
20,520
|
|
Trustees fees payable
|
|
11,010
|
|
Payable for open swap
contracts
|
|
3,667
|
|
Accrued expenses
|
|
97,873
|
|
Total
Liabilities
|
|
473,710
|
|
|
|
|
|
Preferred
Shares:
|
|
|
|
No par value, 2,880 shares
authorized, issued and outstanding, $25,000 liquidation value per share (Note
7)
|
|
72,000,000
|
|
Total
Net Assets
|
|
$154,235,891
|
|
|
|
|
|
Net
Assets:
|
|
|
|
Common shares, no par value, unlimited number
of shares authorized, 11,676,912 shares issued and outstanding (Note 5)
|
|
$164,245,917
|
|
Undistributed net
investment income
|
|
10,790,679
|
|
Accumulated net realized
loss on investments, swap contracts and foreign currency transactions
|
|
(19,523,691)
|
|
Net unrealized
depreciation on investments, swap contracts and foreign currencies
|
|
(1,277,014)
|
|
Total
Net Assets
|
|
$154,235,891
|
|
|
|
|
|
Shares
Outstanding
|
|
11,676,912
|
|
|
|
|
|
Net
Asset Value
|
|
$13.21
|
|
See Notes to Financial Statements.
|
|
Western Asset Premier Bond Fund 2010 Semi-Annual
Report
|
|
19
|
Statement of operations (unaudited)
For the Six Months Ended June 30, 2010
Investment Income:
|
|
|
|
Interest
|
|
$ 9,758,277
|
|
Dividends
|
|
292,985
|
|
Total
Investment Income
|
|
10,051,262
|
|
|
|
|
|
Expenses:
|
|
|
|
Investment management fee
(Note 2)
|
|
609,962
|
|
Legal fees
|
|
127,199
|
|
Excise tax (Note 1)
|
|
30,356
|
|
Shareholder reports
|
|
29,714
|
|
Audit and tax
|
|
29,414
|
|
Custody fees
|
|
27,866
|
|
Preferred shares auction
agent fee expense
|
|
24,379
|
|
Transfer agent fees
|
|
16,885
|
|
Rating agency fees
|
|
12,901
|
|
Stock exchange listing fees
|
|
8,273
|
|
Trustees fees
|
|
7,049
|
|
Insurance
|
|
2,052
|
|
Miscellaneous expenses
|
|
21,857
|
|
Total
Expenses
|
|
947,907
|
|
Net Investment Income
|
|
9,103,355
|
|
|
|
|
|
Realized and Unrealized Gain (Loss) on
Investments, Swap Contracts and Foreign Currency Transactions (Notes 1, 3 and
4):
|
|
|
|
Net Realized Gain (Loss)
From:
|
|
|
|
Investment transactions
|
|
1,369,002
|
|
Swap contracts
|
|
801,836
|
|
Foreign currency
transactions
|
|
(126,742)
|
|
Net
Realized Gain
|
|
2,044,096
|
|
Change in Net Unrealized
Appreciation/Depreciation From:
|
|
|
|
Investments
|
|
6,443,455
|
|
Swap contracts
|
|
(580,696)
|
|
Foreign currencies
|
|
1,386
|
|
Change
in Net Unrealized Appreciation/Depreciation
|
|
5,864,145
|
|
Net Gain on Investments, Swap Contracts and
Foreign Currency Transactions
|
|
7,908,241
|
|
Distributions Paid to Auction Rate Preferred
Stockholders From Net Investment Income
|
|
(94,883)
|
|
Increase in Net Assets From Operations
|
|
$16,916,713
|
|
See Notes to Financial Statements.
20
|
|
Western
Asset Premier Bond Fund 2010 Semi-Annual Report
|
|
|
Statements of changes in net assets
For the Six Months Ended June 30, 2010 (unaudited)
and the Year Ended December 31, 2009
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
Operations:
|
|
|
|
|
|
Net investment income
|
|
$ 9,103,355
|
|
$ 18,942,993
|
|
Net realized gain (loss)
|
|
2,044,096
|
|
(16,122,408)
|
|
Change in net unrealized
appreciation/depreciation
|
|
5,864,145
|
|
54,601,517
|
|
Dividends paid to auction
rate preferred stockholders from net investment income
|
|
(94,883)
|
|
(266,195)
|
|
Increase
in Net Assets From Operations
|
|
16,916,713
|
|
57,155,907
|
|
|
|
|
|
|
|
Distributions to Shareholders From (Note 1):
|
|
|
|
|
|
Net investment income
|
|
(7,453,665)
|
|
(14,754,747)
|
|
Decrease
in Net Assets From Distributions to Shareholders
|
|
(7,453,665)
|
|
(14,754,747)
|
|
|
|
|
|
|
|
Fund Share Transactions:
|
|
|
|
|
|
Reinvestment of
distributions (70,151 and 132,221 shares issued, respectively)
|
|
914,124
|
|
1,355,495
|
|
Increase
in Net Assets From Fund Share Transactions
|
|
914,124
|
|
1,355,495
|
|
Increase in Net Assets
|
|
10,377,172
|
|
43,756,655
|
|
|
|
|
|
|
|
Net Assets:
|
|
|
|
|
|
Beginning of period
|
|
143,858,719
|
|
100,102,064
|
|
End of
period*
|
|
$154,235,891
|
|
$143,858,719
|
|
*Includes undistributed
net investment income of:
|
|
$10,790,679
|
|
$9,235,872
|
|
See Notes to Financial Statements.
|
|
Western Asset Premier Bond Fund 2010 Semi-Annual
Report
|
|
21
|
Financial highlights
For a share of capital stock
outstanding throughout each year ended December 31, unless otherwise
noted:
|
|
2010
1
|
|
2009
|
|
2008
|
|
2007
|
|
2006
|
|
2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
asset value, beginning of period
|
|
$12.39
|
|
$8.72
|
|
$14.26
|
|
$15.15
|
|
$14.93
|
|
$15.52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) from operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
2
|
|
0.78
|
|
1.64
|
|
1.46
|
|
1.27
|
|
1.37
|
|
1.37
|
|
Net realized and
unrealized gain (loss)
|
|
0.69
|
|
3.33
|
|
(5.64)
|
|
(0.60)
|
|
0.45
|
|
(0.55)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid to auction rate preferred
stockholders from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
(0.01)
|
|
(0.02)
|
|
(0.19)
|
|
(0.25)
|
|
(0.30)
|
|
(0.21)
|
|
Net realized gains
|
|
|
|
|
|
(0.02)
|
|
(0.09)
|
|
(0.01)
|
|
|
|
Total
income (loss) from operations
|
|
1.46
|
|
4.95
|
|
(4.39)
|
|
0.33
|
|
1.51
|
|
0.61
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less distributions paid to common shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
(0.64)
|
|
(1.28)
|
|
(1.05)
|
|
(0.97)
|
|
(1.10)
|
|
(1.20)
|
|
Net realized gains
|
|
|
|
|
|
(0.10)
|
|
(0.25)
|
|
(0.19)
|
|
|
|
Total
Distributions
|
|
(0.64)
|
|
(1.28)
|
|
(1.15)
|
|
(1.22)
|
|
(1.29)
|
|
(1.20)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
asset value, end of period
|
|
$13.21
|
|
$12.39
|
|
$8.72
|
|
$14.26
|
|
$15.15
|
|
$14.93
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
price, end of period
|
|
$13.93
|
|
$13.36
|
|
$8.90
|
|
$13.13
|
|
$15.15
|
|
$13.72
|
|
Total
return, based on NAV
3
|
|
11.98
|
%
|
60.98
|
%
|
(32.45)
|
%
|
2.17
|
%
|
10.67
|
%
|
4.31
|
%
|
Total
return, based on Market Price
3,4
|
|
9.43
|
%
|
68.84
|
%
|
(24.60)
|
%
|
(5.79)
|
%
|
20.43
|
%
|
(7.83)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of period (000s)
|
|
$154,236
|
|
$143,859
|
|
$100,102
|
|
$163,544
|
|
$173,707
|
|
$171,010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios
to average net assets:
5,6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross expenses
|
|
1.30
|
%
7
|
1.95
|
%
|
2.06
|
%
|
1.72
|
%
|
1.86
|
%
|
1.63
|
%
|
Net expenses
|
|
1.30
|
7
|
1.95
|
|
2.06
|
8
|
1.71
|
8
|
1.86
|
8
|
1.63
|
8
|
Net expenses, excluding
interest expense
|
|
1.30
|
7
|
1.95
|
|
1.83
|
8
|
1.15
|
8
|
1.15
|
8
|
1.13
|
8
|
Net investment income
|
|
12.46
|
7
|
15.94
|
|
10.68
|
|
6.76
|
|
7.18
|
|
7.58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio
turnover rate
|
|
12
|
%
|
29
|
%
|
45
|
%
|
90
|
%
|
65
|
%
|
41
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Auction
Rate Preferred Stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Amount Outstanding (000s)
|
|
$72,000
|
|
$72,000
|
|
$72,000
|
|
$72,000
|
|
$72,000
|
|
$72,000
|
|
Asset Coverage
9
|
|
313
|
%
|
300
|
%
|
239
|
%
|
327
|
%
|
341
|
%
|
337
|
%
|
Involuntary Liquidating Preference Per Share
(000s)
|
|
25
|
|
25
|
|
25
|
|
25
|
|
25
|
|
25
|
|
1
|
For the six months ended June 30, 2010
(unaudited).
|
2
|
Per share amounts have been calculated using the
average shares method.
|
3
|
Performance figures may reflect fee waivers and/or
expense reimbursements. In the absence of fee waivers and/or expense
reimbursements, the total return would have been lower. Past performance is
no guarantee of future results. Total returns for periods of less than one
year are not annualized.
|
4
|
The total return calculation assumes that
distributions are reinvested in accordance with the Funds dividend
reinvestment plan. Past performance is no guarantee of future results. Total
returns for periods of less than one year are not annualized.
|
5
|
Calculated on the basis of average net assets of
common stock shareholders. Ratios do not reflect the effect of dividend
payments to preferred stockholders,
|
6
|
Gross expenses reflects operating expenses prior to
any voluntary expense waivers and/or compensating balance arrangements. Net
expenses reflects expenses less any compensating balance credits and/or
voluntary expense waivers.
|
7
|
Annualized.
|
8
|
The impact of compensating balance arrangements to
the expense ratio was less than 0.01%.
|
9
|
Asset coverage on preferred shares equals net assets
of common shares plus the redemption value of the preferred shares divided by
the value of outstanding preferred stock.
|
See Notes to Financial Statements.
22
|
Western
Asset Premier Bond Fund 2010 Semi-Annual Report
|
|
Notes to financial statements (unaudited)
1. Organization and significant accounting policies
Western Asset Premier Bond Fund (the Fund) is
registered under the Investment Company Act of 1940, as amended (the 1940 Act),
as a diversified, closed-end management investment company. The Fund commenced
investment operations on March 28, 2002.
The Funds investment objective is to provide current
income and capital appreciation by investing primarily in a diversified
portfolio of investment grade bonds. The Fund currently seeks to achieve its
investment objective by investing substantially all of its assets in bonds,
including corporate bonds, U.S. government and agency securities and
mortgage-related securities. The ability of the issuers of the securities held
by the Fund to meet their obligations might be affected by, among other things,
economic developments in a specific state, industry or region.
The following are significant accounting policies
consistently followed by the Fund and are in conformity with U.S. generally
accepted accounting principles (GAAP). Estimates and assumptions are required
to be made regarding assets, liabilities and changes in net assets resulting
from operations when financial statements are prepared. Changes in the economic
environment, financial markets and any other parameters used in determining
these estimates could cause actual results to differ. Subsequent events have
been evaluated through the date the financial statements were issued.
(a) Investment valuation.
Debt securities are valued at the last quoted bid price provided by an
independent pricing service that are based on transactions in debt obligations,
quotations from bond dealers, market transactions in comparable securities and
various other relationships between securities. Publicly traded foreign
government debt securities are typically traded internationally in the
over-the-counter market, and are valued at the bid price as of the close of
business of that market. Equity securities for which market quotations are
readily available are valued at the last reported sales price or official
closing price on the primary market or exchange on which they trade. When
prices are not readily available, or are determined not to reflect fair value,
such as when the value of a security has been significantly affected by events
after the close of the exchange or market on which the security is principally
traded, but before the Fund calculates its net asset value, the Fund values
these securities at fair value as determined in accordance with procedures
approved by the Funds Board of Trustees. Short-term obligations with
maturities of 60 days or less are valued at the amortized cost, which
approximates fair value.
The Fund has adopted Financial Accounting Standards
Board Codification Topic 820 (ASC Topic 820). ASC Topic 820 establishes a
single definition of fair value, creates a three-tier hierarchy as a framework
for measuring fair value based on inputs used to value the Funds investments,
and requires additional disclosure about fair value. The hierarchy of inputs is
summarized below.
·
Level
1 quoted prices in active markets for identical investments
·
Level
2 other significant observable inputs (including quoted prices for similar
investments, interest rates, prepayment speeds, credit risk, etc.)
·
Level
3 significant unobservable inputs (including the Funds own assumptions in
determining the fair value of investments)
The inputs or methodology used for valuing securities
are not necessarily an indication of the risk associated with investing in
those securities.
The Fund uses valuation techniques to measure fair
value that are consistent with the market approach and/or income approach,
depending on the type of the security and the particular circumstance. The
market approach uses prices and other relevant information generated by market
transactions involving identical or comparable securities. The income approach
uses valuation techniques to convert future amounts of cash flow to a single
present amount.
|
Western Asset Premier Bond Fund 2010 Semi-Annual
Report
|
23
|
The following is a summary of the inputs used in
valuing the Funds assets carried at fair value:
Description
|
|
Quoted Prices
(Level 1)
|
|
Other Significant
Observable Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total
|
|
Long-term investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate bonds &
notes
|
|
|
|
|
$
|
93,483,841
|
|
|
$
|
4,200
|
|
$
|
93,488,041
|
|
Asset-backed securities
|
|
|
|
|
|
37,561,648
|
|
|
|
4,532,696
|
|
|
42,094,344
|
|
Collateralized mortgage
obligations
|
|
|
|
|
|
53,800,900
|
|
|
|
892,171
|
|
|
54,693,071
|
|
Mortgage-backed security
|
|
|
|
|
|
664,001
|
|
|
|
|
|
|
664,001
|
|
Sovereign bonds
|
|
|
|
|
|
4,871,879
|
|
|
|
|
|
|
4,871,879
|
|
U.S. government &
agency obligations
|
|
|
|
|
|
2,913,543
|
|
|
|
|
|
|
2,913,543
|
|
Common stocks
|
|
$
|
374,589
|
|
|
|
|
|
|
20,716
|
|
|
395,305
|
|
Convertible preferred
stocks
|
|
|
186,676
|
|
|
1,546,500
|
|
|
|
|
|
|
1,733,176
|
|
Preferred stocks
|
|
|
5,599,314
|
|
|
|
|
|
|
0
|
|
|
5,599,314
|
|
Warrants
|
|
|
1,060
|
|
|
9,995
|
|
|
|
2
|
|
|
11,057
|
|
Total
long-term investments
|
|
$
|
6,161,639
|
|
$
|
194,852,307
|
|
|
$
|
5,449,785
|
|
$
|
206,463,731
|
|
Short-term
investments
|
|
|
|
|
|
17,416,000
|
|
|
|
|
|
|
17,416,000
|
|
Total
investments
|
|
$
|
6,161,639
|
|
$
|
212,268,307
|
|
|
$
|
5,449,785
|
|
$
|
223,879,731
|
|
Other financial
instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit default swaps on corporate issues
buy protection
|
|
|
|
|
|
(126,191
|
)
|
|
|
|
|
|
(126,191
|
)
|
Credit default swaps on credit indices sell
protection
|
|
|
|
|
|
(49,471
|
)
|
|
|
|
|
|
(49,471
|
)
|
Total
other financial instruments
|
|
|
|
|
$
|
(175,662
|
)
|
|
|
|
|
$
|
(175,662
|
)
|
Total
|
|
$
|
6,161,639
|
|
$
|
212,092,645
|
|
|
$
|
5,449,785
|
|
$
|
223,704,069
|
|
See Schedule of Investments for additional detailed
categorizations.
Values include any premiums paid or received with respect to
swap contracts.
Following is a reconciliation of investments in which
significant unobservable inputs (Level 3) were used in determining fair value:
Investments
In Securities
|
|
Corporate
Bonds &
Notes
|
|
Asset-
Backed
Securities
|
|
Collateralized
Mortgaged
Obligations
|
|
Common
Stocks
|
|
Preferred
Stocks
|
|
Warrants
|
|
Total
|
|
Balance as of December 31, 2009
|
|
|
|
|
$3,926,578
|
|
|
|
|
$18,940
|
|
$
|
3
|
|
$
|
7,348
|
|
$3,952,869
|
|
Accrued premiums/discounts
|
|
|
|
|
49,571
|
|
$
|
565
|
|
|
|
|
|
|
|
|
|
50,136
|
|
Realized gain/(loss)
1
|
|
|
|
|
(67,696
|
)
|
|
1,976
|
|
|
|
|
|
|
|
|
|
(65,720
|
)
|
Change in unrealized appreciation (depreciation)
2
|
|
|
|
|
160,002
|
|
|
(11,064
|
)
|
1,776
|
|
|
(3
|
)
|
2,648
|
|
153,359
|
|
Net purchases (sales)
|
|
|
|
|
(55,246
|
)
|
|
228,781
|
|
|
|
|
|
|
|
|
|
173,535
|
|
Transfers in to Level 3
|
|
$4,200
|
|
573,720
|
|
|
671,913
|
|
|
|
|
|
|
|
|
|
1,249,833
|
|
Transfers out of Level 3
|
|
|
|
|
(54,233
|
)
|
|
|
|
|
|
|
|
|
(9,994
|
)
|
(64,227
|
)
|
Balance as of
June 30, 2010
|
|
$4,200
|
|
$4,532,696
|
|
$
|
892,171
|
|
$20,716
|
|
$
|
0
|
*
|
$
|
2
|
|
$5,449,785
|
|
Net change in unrealized appreciation
(depreciation) for investments in securities still held at June 30, 2010
2
|
|
|
|
|
$
129,280
|
|
$
|
(11,064
|
)
|
$
1,776
|
|
$
|
(3
|
)
|
$
|
(1
|
)
|
$
119,988
|
|
*
Value is less than $1.
1
This amount is included in net realized gain (loss) from
investment transactions in the accompanying Statement of Operations.
2
This amount is included in the change in net unrealized
appreciation (depreciation) in the accompanying Statement of Operations. Change
in unrealized appreciation (depreciation) includes net unrealized appreciation
(depreciation) resulting from changes in investment values during the reporting
period and the reversal of previously recorded unrealized appreciation
(depreciation) when gains or losses are realized.
(b) Repurchase agreements.
The
Fund may enter into repurchase agreements with institutions that its investment
adviser has determined are creditworthy. Each repurchase agreement is recorded
at cost. Under the terms of a typical repurchase agreement, a fund takes
possession of an underlying debt obligation subject to an obligation of the
seller to repurchase, and of the fund to resell, the obligation at an
agreed-upon price and time, thereby determining the yield during a funds
holding period. When entering into repurchase agreements, it is the Funds
policy that its custodian or a third party custodian, acting on the Funds
behalf, take possession of the underlying collateral securities,
24
|
Western
Asset Premier Bond Fund 2010 Semi-Annual Report
|
|
Notes to financial statements (unaudited) (contd)
the market value of which, at all times, at least
equals the principal amount of the repurchase transaction, including accrued
interest. To the extent that any repurchase transaction maturity exceeds one
business day, the value of the collateral is marked to market and measured
against the value of the agreement in an effort to ensure the adequacy of the
collateral. If the counterparty defaults, the Fund generally has the right to
use the collateral to satisfy the terms of the repurchase transaction. However,
if the market value of the collateral declines during the period in which the
Fund seeks to assert its rights or if bankruptcy proceedings are commenced with
respect to the seller of the security, realization of the collateral by the
Fund may be delayed or limited.
(c) Foreign currency translation.
Investment securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollar amounts based upon prevailing
exchange rates on the date of valuation. Purchases and sales of investment
securities and income and expense items denominated in foreign currencies are
translated into U.S. dollar amounts based upon prevailing exchange rates on the
respective dates of such transactions.
The Fund does not isolate that portion of the results
of operations resulting from fluctuations in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss on investments.
Net realized foreign exchange gains or losses arise
from sales of foreign currencies, including gains and losses on forward foreign
currency contracts, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Funds books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in
the values of assets and liabilities, other than investments in securities, on
the date of valuation, resulting from changes in exchange rates.
Foreign security and currency transactions may involve
certain considerations and risks not typically associated with those of U.S.
dollar denominated transactions as a result of, among other factors, the
possibility of lower levels of governmental supervision and regulation of
foreign securities markets and the possibility of political or economic
instability.
(d) Swap agreements.
The
Fund may invest in swaps for the purpose of managing its exposure to interest
rate, credit or market risk, or for other purposes. The use of swaps involves
risks that are different from those associated with ordinary portfolio
transactions.
Swap contracts are marked to market daily and changes
in value are recorded as unrealized appreciation/(depreciation). Gains or
losses are realized upon termination of the swap agreement. Periodic payments
and premiums received or made by the Fund are recognized in the Statement of
Operations as realized gains or losses, respectively. Collateral, in the form
of restricted cash or securities, may be required to be held in segregated
accounts with the Funds custodian in compliance with the terms of the swap
contracts. Securities held as collateral for swap contracts are identified in
the Schedule of Investments and restricted cash, if any, is identified on the Statement
of Assets and Liabilities. Risks may exceed amounts recorded in the Statement
of Assets and Liabilities. These risks include changes in the returns of the
underlying instruments, failure of the counterparties to perform under the
contracts terms, and the possible lack of liquidity with respect to the swap
agreements.
Payments received or made at the beginning of the
measurement period are reflected as a premium or deposit, respectively, on the
Statement of Assets and Liabilities. These upfront payments are amortized over
the life of the swap and are recognized as realized gain or loss in the
Statement of Operations. A liquidation payment received or made at the
termination of the swap is recognized as realized gain or loss in the Statement
of Operations. Net periodic payments received or paid by the Fund are
recognized as realized gain or loss at the time of receipt or payment in the
Statement of Operations.
|
Western Asset Premier Bond Fund 2010 Semi-Annual
Report
|
25
|
As disclosed in the Fair Values of Derivatives
Statement of Assets and Liabilities table that follows each Funds summary of
open swap contracts, the aggregate fair value of credit default swaps in a net
liability position as of June 30, 2010 was $238,430. The aggregate fair
value of assets posted as collateral, net of assets received as collateral, for
all swaps was $89,969. If a defined credit event had occurred as of June 30,
2010, the swaps credit-risk-related contingent features would have been
triggered and the Fund would have been required to pay up to $21,666,202 less
the value of the contracts related reference obligations.
Credit default swaps.
The Fund may enter into credit default swap (CDS)
contracts for investment purposes, to manage its credit risk or to add
leverage. CDS agreements involve one party making a stream of payments to
another party in exchange for the right to receive a specified return in the
event of a default by a third party, typically corporate or sovereign issuers,
on a specified obligation, or in the event of a write-down, principal
shortfall, interest shortfall or default of all or part of the referenced
entities comprising a credit index. The Fund may use a CDS to provide
protection against defaults of the issuers (i.e., to reduce risk where the Fund
has exposure to a sovereign issuer) or to take an active long or short position
with respect to the likelihood of a particular issuers default. As a seller of
protection, the Fund generally receives an upfront payment or a stream of
payments throughout the term of the swap provided that there is no credit
event. If the Fund is a seller of protection and a credit event occurs, as
defined under the terms of that particular swap agreement, the maximum
potential amount of future payments (undiscounted) that the Fund could be
required to make under a credit default swap agreement would be an amount equal
to the notional amount of the agreement. These amounts of potential payments
will be partially offset by any recovery of values from the respective
referenced obligations. As a seller of protection, the Fund effectively adds
leverage to its portfolio because, in addition to its total net assets, the
Fund is subject to investment exposure on the notional amount of the swap. As a
buyer of protection, the Fund generally receives an amount up to the notional
value of the swap if a credit event occurs.
Implied spreads are the theoretical prices a lender
receives for credit default protection. When spreads rise, market perceived
credit risk rises and when spreads fall, market perceived credit risk falls.
The implied credit spread of a particular referenced entity reflects the cost
of buying/selling protection and may include upfront payments required to enter
into the agreement. Wider credit spreads and decreasing market values, when
compared to the notional amount of the swap, represent a deterioration of the
referenced entitys credit soundness and a greater likelihood or risk of
default or other credit event occurring as defined under the terms of the
agreement. Credit spreads utilized in determining the period end market value
of credit default swap agreements on corporate or sovereign issues are
disclosed in the Notes to Financial Statements and serve as an indicator of the
current status of the payment/performance risk and represent the likelihood or
risk of default for credit derivatives. For credit default swap agreements on
asset-backed securities and credit indices, the quoted market prices and
resulting values, particularly in relation to the notional amount of the
contract as well as the annual payment rate, serve as an indication of the
current status of the payment/performance risk.
The Funds maximum risk of loss from counterparty
risk, as the protection buyer, is the fair value of the contract (this risk is
mitigated by the posting of collateral by the counterparty to the Fund to cover
the Funds exposure to the counterparty). As the protection seller, the Funds
maximum risk is the notional amount of the contract. Credit default swaps are
considered to have credit risk-related contingent features since they require
payment by the protection seller to the protection buyer upon the occurrence of
a defined credit event.
Entering into a CDS agreement involves, to varying
degrees, elements of credit, market and documentation risk in excess of the
related amounts recognized on the Statement of Assets and Liabilities. Such
risks involve the possibility that there will be no liquid market for these
agreements, that the counterparty to the agreement may default on its
obligation to perform or disagree as to the
26
|
Western
Asset Premier Bond Fund 2010 Semi-Annual Report
|
|
Notes to financial statements (unaudited) (contd)
meaning of the contractual terms in the agreement, and
that there will be unfavorable changes in net interest rates.
(e) Credit and market risk.
Investments in securities that are collateralized by residential real estate
mortgages are subject to certain credit and liquidity risks. When market
conditions result in an increase in default rates of the underlying mortgages
and foreclosure values of underlying real estate properties are materially
below the outstanding amount of these underlying mortgages, collection of the
full amount of accrued interest and principal on these investments may be
doubtful. Such market conditions may significantly impair the value and
liquidity of these investments and may result in a lack of correlation between their
credit ratings and values.
(f) Security transactions and investment income.
Security transactions are accounted for on a trade date basis. Interest
income, adjusted for amortization of premium and accretion of discount, is
recorded on the accrual basis. Dividend income is recorded on the ex-dividend
date. The cost of investments sold is determined by use of the specific
identification method. To the extent any issuer defaults 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.
(g) Distributions to shareholders.
Distributions from net investment income for 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 are recorded on the
ex-dividend date and are determined in accordance with income tax regulations,
which may differ from GAAP.
(h) Single sourced securities.
Certain securities held by the Fund at June 30, 2010 are valued based on a
price provided by a single source or dealer. The prices provided may differ
from the value that would be realized if the securities were sold. As of June 30,
2010, 14.35% of the securities held by the Fund were either fair valued
securities or were valued based on a price provided by a single independent
pricing service or dealer (single source securities).
(i) Federal and other taxes.
It
is the Funds policy to comply with the federal income and excise tax
requirements of the Internal Revenue Code of 1986 (the Code), as amended,
applicable to regulated investment companies. Accordingly, the Fund intends to
distribute its taxable income and net realized gains, if any, to shareholders
in accordance with timing requirements imposed by the Code. Therefore, no
federal income tax provision is required in the Funds financial statements.
However, due to the timing of when distributions are made, the Fund may be
subject to an excise tax of 4% of the amount by which 98% of the Funds annual
taxable income exceeds the distributions from such taxable income for the year.
The Fund has accrued $30,356 of Federal excise tax attributable to the six
months ended June 30, 2010.
Management has analyzed the Funds tax positions taken
on federal income tax returns for all open tax years and has concluded that as
of June 30, 2010, no provision for income tax is required in the Funds
financial statements. The Funds federal and state income and federal excise
tax returns for tax years for which the applicable statutes of limitations have
not expired are subject to examination by Internal Revenue Service and state
departments of revenue.
(j) Reclassification.
GAAP requires that certain components of net assets be reclassified to reflect
permanent differences between financial and tax reporting. These
reclassifications have no effect on net assets or net asset value per share.
2. Investment management agreement and other transactions with
affiliates
The Fund has a management agreement with Western Asset
Management Company (Western Asset). Pursuant to the terms of the management
agreement, the Fund pays Western Asset an
|
Western Asset Premier Bond Fund 2010 Semi-Annual
Report
|
27
|
annual fee, payable monthly, in an amount equal to
0.55% of the average weekly value of the Funds total managed assets. Total
managed assets means the total assets of the Fund (including any assets
attributable to leverage) minus accrued liabilities. The liquidation preference
of any Preferred Shares outstanding is not considered a liability. Pursuant to
a Portfolio Management Agreement between Western Asset and Western Asset
Management Company Limited (WAML), Western Asset pays a portion of the fees
it receives from the Fund to WAML at an annual rate of 0.425% of the average
weekly value of the Funds total managed assets that WAML manages. Western
Asset Management Company Pte. Ltd. (Western Singapore) and Western Asset
Management Company Ltd (Western Japan) are additional subadvisers to the Fund
under portfolio management agreements between Western Asset and Western
Singapore, and Western Asset and Western Japan.
Western Singapore and Western Japan provide certain
subadvisory services to the Fund relating to currency transactions and
investments in non-U.S. dollar-denominated securities and related foreign
currency instruments in Asia (excluding Japan) and Japan, respectively. The
Funds current management fee remains unchanged. WAML will continue to provide
subadvisory services with respect to other aspects of the non-U.S.
dollar-denominated portions of the Funds investment portfolio.
Under the terms of the administration services
agreement among the Fund, Western Asset pays (not the Fund) Legg Mason Partners
Funds Advisor, LLC (LMPFA), a monthly fee at an annual rate of 0.125% of the
Funds average weekly total managed assets, subject to a monthly minimum fee of
$12,500.
LMPFA, Western Asset, WAML, Western Singapore and
Western Japan are wholly-owned subsidiaries of Legg Mason, Inc.
3. Investments
During the six months ended June 30, 2010, the
aggregate cost of purchases and proceeds from sales of investments (excluding
short-term investments) and U.S Government & Agency Obligations were
as follows:
|
|
Investments
|
|
U.S. Government &
Agency Obligations
|
|
|
Purchases
|
|
$23,303,254
|
|
$940,684
|
|
|
|
Sales
|
|
32,513,893
|
|
68,801
|
|
|
|
At June 30, 2010, the aggregate gross unrealized
appreciation and depreciation of investments for federal income tax purposes
were substantially as follows:
Gross unrealized
appreciation
|
|
|
|
$ 20,844,256
|
|
|
|
Gross unrealized
depreciation
|
|
|
|
(21,970,045
|
)
|
|
|
Net
unrealized depreciation
|
|
|
|
$ (1,125,789
|
)
|
|
|
28
|
|
Western Asset Premier Bond
Fund 2010 Semi-Annual Report
|
|
|
Notes to financial statements (unaudited) (contd)
At June 30, 2010, the Fund had the following open
swap contracts:
CREDIT
DEFAULT SWAPS ON CORPORATE ISSUES BUY PROTECTION
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Swap Counterparty
(Reference Entity)
|
|
Notional
Amount
2
|
|
Termination
Date
|
|
Periodic
Payments
Made
by the
Fund
|
|
Market
Value
|
|
Upfront
Premiums
Paid/
(Received)
|
|
Unrealized
Appreciation/
(Depreciation)
|
|
Goldman Sachs Group, Inc.
(Assured Guaranty Municipal Corp.,
0.480%, due 11/15/13)
|
|
$
100,000
|
|
3/20/11
|
|
5.000%
Quarterly
|
|
$ 1,335
|
|
$ (748
|
)
|
|
$ 2,083
|
|
|
Goldman Sachs Group, Inc.
(Assured Guaranty Municipal Corp.,
0.480%, due 11/15/13)
|
|
120,000
|
|
3/20/11
|
|
5.000%
Quarterly
|
|
1,602
|
|
(810
|
)
|
|
2,412
|
|
|
Goldman Sachs Group, Inc.
(Assured Guaranty Municipal Corp.,
0.480%, due 11/15/13)
|
|
70,000
|
|
3/20/13
|
|
5.000%
Quarterly
|
|
5,265
|
|
(421
|
)
|
|
5,686
|
|
|
Goldman Sachs Group, Inc.
(Assured Guaranty Municipal Corp.,
0.480%, due 11/15/13)
|
|
80,000
|
|
3/20/13
|
|
5.000%
Quarterly
|
|
6,017
|
|
(288
|
)
|
|
6,305
|
|
|
Goldman Sachs Group, Inc.
(Assured Guaranty Municipal Corp.,
0.480%, due 11/15/13)
|
|
100,000
|
|
3/20/15
|
|
5.000%
Quarterly
|
|
11,739
|
|
922
|
|
|
10,817
|
|
|
Goldman Sachs Group, Inc.
(Assured Guaranty Municipal Corp.,
0.480%, due 11/15/13)
|
|
120,000
|
|
3/20/15
|
|
5.000%
Quarterly
|
|
14,087
|
|
1,543
|
|
|
12,544
|
|
|
Goldman Sachs Group, Inc.
(Assured Guaranty Municipal Corp.,
0.480%, due 11/15/13)
|
|
130,000
|
|
3/20/20
|
|
5.000%
Quarterly
|
|
16,411
|
|
3,330
|
|
|
13,081
|
|
|
Goldman Sachs Group, Inc.
(Assured Guaranty Municipal Corp.,
0.480%, due 11/15/13)
|
|
50,000
|
|
3/20/20
|
|
5.000%
Quarterly
|
|
6,312
|
|
1,553
|
|
|
4,759
|
|
|
Goldman Sachs Group, Inc.
(Citigroup Inc., 6.500%, due 1/18/11)
|
|
1,700,000
|
|
3/20/14
|
|
4.700%
Quarterly
|
|
(181,201
|
)
|
|
|
|
(181,201
|
)
|
|
Goldman Sachs Group, Inc.
(CVS Corporation, 4.875%, due 9/15/14)
|
|
2,000,000
|
|
12/20/14
|
|
0.680%
Quarterly
|
|
(7,758
|
)
|
(28,099
|
)
|
|
20,341
|
|
|
Total
|
|
$4,470,000
|
|
|
|
|
|
$(126,191
|
)
|
$(23,018
|
)
|
|
$(103,173
|
)
|
|
CREDIT
DEFAULT SWAPS ON CREDIT INDICES SELL PROTECTION
3
Swap Counterparty
(Reference Entity)
|
|
Notional
Amount
2
|
|
Termination
Date
|
|
Periodic
Payments
Received
by the
Fund
|
|
Market
Value
4
|
|
Upfront
Premiums
Paid/
(Received)
|
|
Unrealized
Appreciation/
(Depreciation)
|
|
Merrill Lynch & Co., Inc.
(CDX HY 8)
|
|
$21,666,202
|
|
6/20/12
|
|
0.860%
Quarterly
|
|
$(49,471
|
)
|
|
|
|
$(49,471
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
If
the Fund is a buyer of protection and a credit event occurs, as defined under
the terms of that particular swap agreement, the Fund will either (i) receive
from the seller of protection an amount equal to the notional amount of the
swap and deliver the underlying securities comprising the referenced index or (ii) receive
a net settlement amount in the form of cash or securities equal to the notional
amount of the swap less the recovery value of the underlying securities
comprising the referenced index.
2
The
maximum potential amount the Fund could be required to make as a seller of
credit protection or receive as a buyer of credit protection if a credit event
occurs as defined under the terms of that particular swap agreement.
3
If
the Fund is a seller of protection and a credit event occurs, as defined under
the terms of that particular swap agreement, the Fund will either (i) pay
to the buyer of protection an amount equal to the notional amount of the swap
and take delivery of the referenced obligation or underlying securities
comprising the referenced index or (ii) pay a net settlement amount in the
form of cash or securities equal to the notional amount of the swap less the
recovery value of the referenced obligation or underlying securities comprising
the referenced index.
4
The
quoted market prices and resulting values for credit default swap agreements on
asset-backed securities and credit indices serve as an indicator of the current
status of the payment/performance risk and represent the likelihood of an
expected liability (or profit) for the credit derivative if the notional amount
of the swap agreement had been closed/sold as of the period end. Decreasing
market values when compared to the notional amount of the swap, represent a
deterioration of the referenced entitys credit soundness and a greater
likelihood of risk of default or other credit event occurring as defined under
the terms of the agreement.
Percentage
shown is an annual percentage rate.
|
|
Western
Asset Premier Bond Fund 2010 Semi-Annual Report
|
|
29
|
4. Derivative instruments and hedging activities
Financial Accounting Standards Board Codification
Topic 815 requires enhanced disclosure about an entitys derivative and hedging
activities.
Below is a table, grouped by derivative type that
provides information about the fair value and the location of derivatives
within the Statement of Assets and Liabilities at June 30, 2010.
ASSET
DERIVATIVES
1
|
|
|
|
|
|
|
Credit
Contracts Risk
|
|
Swap contracts
2
|
|
$85,376
|
|
LIABILITY
DERIVATIVES
1
|
|
|
|
|
|
|
Credit
Contracts Risk
|
|
Swap contracts
2
|
|
$261,038
|
|
1
Generally, the balance sheet location for asset derivatives is
receivables/net unrealized appreciation(depreciation) and for liability
derivatives is payables/net unrealized appreciation(depreciation).
2
Values
include premiums paid/(received) on swap contracts which are shown separately
in the Statement of Assets and Liabilities.
The following tables provide information about the
effect of derivatives and hedging activities on the Funds Statement of
Operations for the six months ended June 30, 2010. The first table
provides additional detail about the amounts and sources of gains/(losses)
realized on derivatives during the period. The second table provides additional
information about the changes in unrealized appreciation/(depreciation)
resulting from the Funds derivatives and hedging activities during the period.
AMOUNT
OF REALIZED GAIN OR (LOSS) ON DERIVATIVES RECOGNIZED
|
|
|
|
|
|
|
Credit
Contracts Risk
|
|
Swap contracts
|
|
$801,836
|
|
CHANGE
IN UNREALIZED APPRECIATION/DEPRECIATION ON DERIVATIVES RECOGNIZED
|
|
|
|
Credit
Contracts Risk
|
|
Swap contracts
|
|
$(580,696)
|
|
During the six months ended June 30, 2010, the
volume of derivative activity for the Fund was as follows:
|
|
Average Notional Balance
|
|
Credit default swap
contracts (to buy protection)
|
|
$ 4,474,914
|
|
|
Credit default swap
contracts (to sell protection)
|
|
21,666,202
|
|
|
The Fund has several credit related contingent
features that if triggered would allow its derivatives counterparties to close
out and demand payment or additional collateral to cover their exposure from
the Fund. Credit related contingent features are established between the Fund
and its derivatives counterparties to reduce the risk that the Fund will not
fulfill its payment obligations to its counterparties. These triggering
features include, but are not limited to, a percentage decrease in the Funds
net assets and/or a percentage decrease in the Funds Net Asset Value or NAV.
The contingent features are established within the Funds International Swap
and Derivatives Association, Inc. master agreements which govern positions
in swaps, over-the-counter options, and forward currency exchange contracts for
each individual counterparty.
30
|
|
Western Asset Premier Bond
Fund 2010 Semi-Annual Report
|
|
|
Notes to financial statements (unaudited) (contd)
As of June 30, 2010, the total value of swap
positions with credit related contingent features in a net liability position
was $238,430. If a contingent feature would have been triggered as of June 30,
2010, the Fund would have been required to pay this amount in cash to its
counterparties. The Fund posted collateral for its swap transactions in the
amount of $300,000.
5. Common shares
Of the 11,676,912 shares of common stock outstanding
at June 30, 2010, Western Asset owns 15,042 shares.
6. Distributions subsequent to June 30, 2010
On May 19, 2010, the Board of Directors of the
Fund declared three dividend distributions in the amount of $0.110 per share,
payable on July 30, 2010, August 31, 2010, and September 30,
2010 to shareholders of record on July 15, 2010, August 13, 2010, and
September 15, 2010, respectively.
7. Preferred shares
There are 2,880 shares of Auction Market Preferred
Shares (Preferred Shares) authorized. The Preferred Shares have rights as set
forth in the Funds Agreement and Declaration of Trust, as amended to date, and
its Bylaws, as amended to date (the Bylaws), or as otherwise determined by
the Trustees. The 2,880 Preferred Shares outstanding consist of two series,
1,440 shares of Series M and 1,440 shares of Series W. The Preferred
Shares have a liquidation value of $25,000 per share, plus any accumulated but
unpaid dividends whether or not earned or declared.
Dividends on the Series M and Series W
Preferred Shares are cumulative and are paid at a rate typically reset every
seven and twenty-eight days, respectively, based on the results of an auction.
The weekly auctions for Series M and W have all failed during the fiscal
year 2009; consequently, the dividend rate paid on the preferred shares has
moved to the maximum rate as defined in the prospectus. Since mid-February 2008,
holders of auction-rate preferred shares (ARPS) issued by the Fund have been
impacted by the lack of liquidity, which has similarly affected ARPS holders in
many of the nations closed-end funds. Since then, regularly scheduled auctions
for ARPS issued by the Fund have consistently failed because of insufficient
demand (bids to buy shares) to meet the supply (shares offered for sale) at
each auction. While repeated auction failures have affected the liquidity for
ARPS, they do not constitute a default or automatically alter the credit
quality of the ARPS, and ARPS holders have continued to receive dividends at
the defined maximum rate. The maximum rate is calculated at 150% of the reference
rates, which is the 7-day AA Financial Composite Commercial Paper rate for Series M
and the 30-day AA Commercial Paper rate for Series W. Dividend rates
ranged from 0.105% to 0.542% between January 1, 2010 to June 30,
2010.
The Preferred Shares are redeemable at the option of
the Fund, in whole or in part, on the second business day preceding any
dividend payment date at $25,000 per share plus any accumulated but unpaid
dividends.
The Fund is subject to certain restrictions relating
to the Preferred Stock. The Fund may not declare dividends or make other
distributions on shares of common stock or purchase any such shares if, at the
time of the declaration, distribution or purchase, asset coverage with respect
to the outstanding Preferred Stock would be less than 200%. The Preferred Stock
is also subject to mandatory redemption at $25,000 per share plus any
accumulated or unpaid dividends, whether or not declared, if certain
requirements relating to the composition of the assets and liabilities of the
Fund as set forth in Bylaws are not satisfied.
The Preferred Stock Shareholders are entitled to one
vote per share and generally vote with the common shareholders but vote
separately as a class to elect two trustees and on certain matters affecting the
rights of the Preferred Stock. The issuance of Preferred Stock poses certain
risks to
|
|
Western
Asset Premier Bond Fund 2010 Semi-Annual Report
|
|
31
|
holders of common stock, including, among others, the possibility
of greater market price volatility, and in certain market conditions, the yield
to holders of common stock may be adversely affected. The Fund is required to
maintain certain asset coverages with respect to the Preferred Stock. If the
Fund fails to maintain these coverages and does not cure any such failure
within the required time period, the Fund is required to redeem a requisite
number of shares of the Preferred Stock in order to meet the applicable
requirement. The Preferred Stock is otherwise not redeemable by holders of the
shares. Additionally, failure to meet the foregoing asset coverage requirements
would restrict the Funds ability to pay dividends to common shareholders.
After each auction, the auction agent will pay to each
broker/dealer, from monies the Fund provides, a participation fee. For the
period of the report and for all previous periods since the ARPS have been
outstanding, the participation fee has been paid at the annual rate of 0.25% of
the purchase price of the ARPS that the broker/dealer places at the auction.
Since January 1, 2010, the participation fee has been reduced to an annual
rate of 0.05% of the purchase price of the ARPS, in the case of failed
auctions.
8. Trustee compensation
Each Independent Trustee receives an aggregate fee of
$70,000 annually for serving on the combined Board of Trustees/Directors of the
Fund, Western Asset Income Fund and Western Asset Funds, Inc. Each Trustee
also receives a fee of $7,500 and related expenses for each meeting of the Board
or of a committee attended in-person and a fee of $2,500 for participating in
each telephonic meeting. The Chairman of the Board and the Chairman of the
Audit Committee each receive an additional $25,000 per year for serving in such
capacities. Each member of the Audit Committee receives a fee of $6,000 for
serving as a member of the Audit Committee. Other committee members receive a
fee of $3,000 for serving as a member of each committee upon which they serve.
All such fees are allocated among the Fund, Western Asset Income Fund and
Western Asset Funds, Inc. according to each such investment companys
annual net assets. Trustee Ronald Olson receives from Western Asset an
aggregate fee of $70,000 annually for serving on the combined Board of
Trustees/Directors of the Fund, Western Asset Income Fund and Western Asset
Funds, Inc., as well as a fee of $7,500 and related expenses for each
meeting of the Board attended in person and a fee of $2,500 for participating
in each telephonic meeting.
9. Capital loss carryforward
As of December 31, 2009, the Fund had a net
capital loss carryforward of approximately $19,934,533, of which $3,000,112
expires in 2016 and $16,934,421 expires in 2017. These amounts will be
available to offset any future taxable capital gains.
32
|
|
Western
Asset Premier Bond Fund 2010 Semi-Annual Report
|
|
|
Notes to financial statements (unaudited) (contd)
10. Shareholder meeting results
The Funds annual meeting of shareholders was held on June 1,
2010. Of the 11,658,818 common shares outstanding, the following shares were
voted in the meeting:
Election of Trustees:
|
|
For
|
|
Withheld
|
|
Ronald J. Arnault
|
|
11,116,552
|
|
119,890
|
|
Anita L. DeFrantz
|
|
11,112,932
|
|
123,510
|
|
Ronald L. Olson
|
|
10,404,981
|
|
831,461
|
|
Jaynie Miller Studenmund
|
|
11,112,950
|
|
123,492
|
|
Avedick B. Poladian
|
|
11,113,686
|
|
122,756
|
|
Of the 2,880 preferred shares outstanding, the
following shares were voted in the meeting:
Election of Trustees:
|
|
For
|
|
Withheld
|
|
Ronald J. Arnault
|
|
602
|
|
198
|
|
Anita L. DeFrantz
|
|
602
|
|
198
|
|
William E.B. Siart
|
|
602
|
|
198
|
|
Jaynie Miller Studenmund
|
|
602
|
|
198
|
|
Avedick B. Poladian
|
|
602
|
|
198
|
|
R. Jay Gerken
|
|
602
|
|
198
|
|
Ronald L. Olson
|
|
602
|
|
198
|
|
Ronald J. Arnault, Anita L. DeFrantz, Ronald L. Olson,
Avedick B. Poladian, and Jaynie Miller Studenmund were elected as Trustees of
the Fund by owners of its common shares and preferred shares voting together as
a single class.
Mr. Gerken and Mr. Siart are the Preferred
Trustees to be elected by a plurality vote of the preferred shares, voting as a
separate class. The Fund did not achieve a quorum with respect to the election
of the Preferred Trustees. R. Jay Gerken and William E.B. Siart will serve as
Preferred Trustees of the Fund until the annual meeting of shareholders in the
year 2011 or thereafter when respective successors are duly elected and
qualified.
Western Asset Premier Bond Fund
Trustees
William E. B. Siart
Chairman
R. Jay Gerken
Ronald J. Arnault
Anita L. DeFrantz
Ronald L. Olson
Avedick B. Poladian
Jaynie Miller Studenmund
Officers
R. Jay Gerken
President
Kaprel Ozsolak
Principal Financial and Accounting Officer
Todd F. Kuehl
Chief Compliance Officer
Erin K. Morris
Treasurer
Robert I. Frenkel
Secretary and Chief Legal Officer
|
|
Investment advisers
Western Asset Management Company
385 East Colorado Boulevard
Pasadena, CA 91101
Western Asset Management Company Limited
10 Exchange Square
London, England EC2A2EN
Western Asset Management Company Pte. Ltd.
1 George Street #23-01
Singapore 049145
Western Asset Management Company Ltd
36F Shin-Marunouchi Building
5-1 Maranouchi 1-Chronu Chiyoda-Ku
Tokyo 100-6536
Custodian
State Street Bank and Trust Company
1 Lincoln Street
Boston, MA 02111
|
|
Counsel
Ropes & Gray LLP
1211 Avenue of the Americas
New York, NY 10036
Independent registered public accounting firm
PricewaterhouseCoopers LLP
100 East Pratt Street
Baltimore, MD 21202
Transfer agent
American Stock Transfer & Trust Company LLC
59 Maiden Lane
New York, NY 10038
|
Privacy policy
We are committed to keeping nonpublic personal
information about you secure and confidential. This notice is intended to help
you understand how we fulfill this commitment. From time to time, we may
collect a variety of personal information about you, including:
·
Information
we receive from you on applications and forms, via the telephone, and through
our websites;
·
Information
about your transactions with us, our affiliates, or others (such as your
purchases, sales, or account balances); and
·
Information
we receive from consumer reporting agencies.
We do not disclose nonpublic personal information
about our customers or former customers, except to our affiliates (such as
broker-dealers or investment advisers with the Legg Mason family of companies)
or as is otherwise permitted by applicable law or regulation. For example, we
may share this information with others in order to process your transactions or
service an account. We may also provide this information to companies that
perform marketing services on our behalf, such as printing and mailing, or to
other financial institutions with whom we have joint marketing agreements. When
we enter into such agreements, we will require these companies to protect the
confidentiality of this information and to use it only to perform the services
for which we hired them.
With respect to our internal security procedures, we
maintain physical, electronic, and procedural safeguards to protect your
nonpublic personal information, and we restrict access to this information.
If you decide at some point either to close your
account(s) or become an inactive customer, we will continue to adhere to
our privacy policies and practices with respect to your nonpublic personal
information.
|
|
|
|
|
|
|
NOT PART OF THE SEMI-ANNUAL REPORT
|
|
|
|
|
|
|
|
Western Asset Premier Bond Fund
Western Asset Premier Bond Fund
55 Water Street
New York, NY 10041
Notice is hereby given in accordance with Section 23(c) of
the Investment Company Act of 1940, as amended, that from time to time the Fund
may purchase at market prices, shares of its Common Stock in the open market.
The Fund files its complete schedule of portfolio
holdings with the Securities and Exchange Commission (SEC) for the first and
third quarters of each fiscal year on Form N-Q. The Funds Forms N-Q are
available on the SECs website at www.sec.gov. The Funds Forms N-Q may be
reviewed and copied at the SECs Public Reference Room in Washington D.C.,
and information on the operation of the Public Reference Room may be
obtained by calling 1-800-SEC-0330. To obtain information on Form N-Q from
the Fund, shareholders can call 1-888-777-0102.
Information on how the Fund voted proxies relating to
portfolio securities during the prior 12-month period ended June 30th of
each year and a description of the policies and procedures that the Fund uses
to determine how to vote proxies related to portfolio transactions are
available (1) without charge, upon request, by calling 1-888-777-0102, (2) on
the Funds website at www.leggmason.com/cef and (3) on the SECs website
at www.sec.gov.
This report is transmitted to the shareholders of
Western Asset Premier Bond Fund for their information. This is not a
prospectus, circular or representation intended for use in the purchase or sale
of shares of the Fund or any securities mentioned in this report.
American Stock
Transfer & Trust Company
59 Maiden Lane
New York, New York 10038
WASX012842 (08/10) SR10-1160
ITEM
2.
CODE OF ETHICS.
Not
applicable.
ITEM
3.
AUDIT COMMITTEE FINANCIAL
EXPERT.
Not
applicable.
ITEM
4.
PRINCIPAL ACCOUNTANT FEES
AND SERVICES.
Not
applicable.
ITEM
5.
AUDIT COMMITTEE OF LISTED
REGISTRANTS.
Not
applicable.
ITEM
6.
SCHEDULE OF INVESTMENTS.
Included
herein under Item 1.
ITEM 7.
DISCLOSURE OF PROXY VOTING
POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not
applicable.
ITEM 8.
PORTFOLIO MANAGERS OF
CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not
applicable.
ITEM 9.
PURCHASES OF EQUITY
SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED
PURCHASERS.
Not
applicable.
ITEM 10.
SUBMISSION OF MATTERS TO A
VOTE OF SECURITY HOLDERS.
Not
applicable.
ITEM 11.
CONTROLS AND PROCEDURES.
(a)
The
registrants principal executive officer and principal financial officer have
concluded that the registrants disclosure controls and procedures (as defined
in Rule 30a- 3(c) under the Investment Company Act of 1940, as
amended (the 1940 Act)) are effective as of a date within 90 days of the
filing date of this report that includes the disclosure required by this
paragraph, based on their evaluation of the disclosure controls and procedures
required by Rule 30a-3(b) under the 1940 Act and 15d-15(b) under
the Securities Exchange Act of 1934.
(b)
There were no
changes in the registrants internal control over financial reporting (as
defined in Rule 30a-3(d) under the 1940 Act) that occurred during the
registrants last fiscal half-year (the registrants second fiscal half-year in
the case of an annual report) that have materially affected, or are likely to
materially affect the registrants internal control over financial reporting.
ITEM
12.
EXHIBITS.
(a) (1)
Not applicable.
Exhibit 99.CODE
ETH
(a) (2) Certifications
pursuant to section 302 of the Sarbanes-Oxley Act of 2002 attached hereto.
Exhibit 99.CERT
(b) Certifications
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 attached hereto.
Exhibit 99.906CERT
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934 and the Investment
Company Act of 1940, the registrant has duly caused this Report to be signed on
its behalf by the undersigned, there unto duly authorized.
Western Asset Premier Bond Fund
By:
|
/s/
R. Jay
Gerken
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(R. Jay Gerken)
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President
and Trustee
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Western Asset Premier Bond Fund
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Date:
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August
30, 2010
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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:
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/s/
R. Jay Gerken
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(R. Jay Gerken)
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President
and Trustee
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Western Asset Premier Bond Fund
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Date:
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August
30, 2010
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By:
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/s/
Kaprel Ozsolak
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(Kaprel Ozsolak)
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Principal
Financial and Accounting Officer
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Western Asset Premier Bond Fund
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Date:
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August
30, 2010
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Grafico Azioni Western Asset Premier (NYSE:WEA)
Storico
Da Giu 2024 a Lug 2024
Grafico Azioni Western Asset Premier (NYSE:WEA)
Storico
Da Lug 2023 a Lug 2024