Western Asset Premier Bond Fund
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Security
|
|
Rate
|
|
|
Maturity
Date
|
|
|
Face
Amount†
|
|
|
Value
|
|
|
Collateralized Mortgage Obligations (m)
— continued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Structured Asset Securities Corp. Mortgage Pass-Through Certificates, 2003-9A
2A2
|
|
|
2.288
|
%
|
|
|
3/25/33
|
|
|
|
42,290
|
|
|
$
|
44,254
|
(d)
|
|
WaMu Mortgage Pass-Through Certificates Series Trust, 2004-AR6 A (1 mo. USD
LIBOR + 0.840%)
|
|
|
0.932
|
%
|
|
|
5/25/44
|
|
|
|
46,522
|
|
|
|
47,018
|
(d)
|
|
Washington Mutual MSC Mortgage Pass- Through Certificates Trust, 2004-RA1
2A
|
|
|
7.000
|
%
|
|
|
3/25/34
|
|
|
|
5,405
|
|
|
|
5,750
|
|
|
Total Collateralized Mortgage Obligations (Cost — $1,299,830)
|
|
|
|
|
|
|
|
1,661,013
|
|
|
Convertible Bonds & Notes — 0.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Communication Services — 0.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Media — 0.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DISH Network Corp., Senior Notes (Cost — $1,147,243)
|
|
|
3.375
|
%
|
|
|
8/15/26
|
|
|
|
1,370,000
|
|
|
|
1,401,510
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
|
|
|
Convertible Preferred Stocks — 0.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy — 0.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil, Gas & Consumable Fuels — 0.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Targa Resources Corp., Non Voting Shares (Cost — $609,000)
|
|
|
9.500
|
%
|
|
|
|
|
|
|
580
|
|
|
|
627,996
|
|
|
Common Stocks — 0.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy — 0.0%††
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy Equipment & Services — 0.0%††
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hercules Offshore Inc. (Escrow)
|
|
|
|
|
|
|
|
|
|
|
16,942
|
|
|
|
10,121
|
*(k)(n)
|
|
Financials — 0.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Markets — 0.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EG Acquisition Corp.
|
|
|
|
|
|
|
|
|
|
|
30,120
|
|
|
|
301,200
|
*
|
|
Total Common Stocks (Cost — $1,053,743)
|
|
|
|
|
|
|
|
311,321
|
|
|
|
|
|
|
|
|
|
|
Rate
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stocks — 0.0%††
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financials — 0.0%††
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diversified Financial Services — 0.0%††
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Backed Trust Certificates (Cost — $0)
|
|
|
7.375
|
%
|
|
|
|
|
|
|
33,900
|
|
|
|
800
|
*(o)
|
|
Total Investments before Short-Term Investments (Cost —
$215,925,651)
|
|
|
|
|
|
|
|
243,385,370
|
|
See Notes to Financial
Statements.
|
|
|
|
|
|
|
|
|
Western Asset Premier Bond Fund 2021 Semi-Annual Report
|
|
|
|
|
17
|
|
Schedule of investments (unaudited)
(cont’d)
June 30, 2021
Western Asset Premier Bond Fund
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Security
|
|
Rate
|
|
|
Shares
|
|
|
Value
|
|
|
Short-Term Investments — 1.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Western Asset Premier Institutional Government Reserves, Premium Shares (Cost — $2,336,489)
|
|
|
0.010
|
%
|
|
|
2,336,489
|
|
|
$
|
2,336,489
|
(p)
|
|
Total Investments** — 140.6% (Cost — $218,262,140)
|
|
|
|
|
|
|
|
245,721,859
|
|
|
Liabilities in Excess of Other Assets — (40.6)%
|
|
|
|
|
|
|
|
|
|
|
(70,962,321
|
)
|
|
Total Net Assets — 100.0%
|
|
|
|
|
|
|
|
|
|
$
|
174,759,538
|
|
See Notes to Financial
Statements.
|
|
|
|
|
|
|
18
|
|
|
|
Western Asset Premier Bond Fund 2021 Semi-Annual Report
|
Western Asset Premier Bond Fund
|
†
|
Face amount denominated in U.S. dollars, unless otherwise noted.
|
|
††
|
Represents less than 0.1%.
|
|
*
|
Non-income producing security.
|
|
**
|
The entire portfolio is subject to lien, granted to the lender, to the extent of the borrowing outstanding and any additional expenses.
|
|
(a)
|
Security is exempt from registration under Rule 144A of the Securities Act of 1933. This security may be resold in transactions that are exempt from
registration, normally to qualified institutional buyers. This security has been deemed liquid pursuant to guidelines approved by the Board of Trustees.
|
|
(b)
|
Securities traded on a when-issued or delayed delivery basis.
|
|
(c)
|
Security is exempt from registration under Regulation S of the Securities Act of 1933. Regulation S applies to securities offerings that are made outside of the
United States and do not involve direct selling efforts in the United States. This security has been deemed liquid pursuant to guidelines approved by the Board of Trustees.
|
|
(d)
|
Variable rate security. Interest rate disclosed is as of the most recent information available. Certain variable rate securities are not based on a published
reference rate and spread but are determined by the issuer or agent and are based on current market conditions. These securities do not indicate a reference rate and spread in their description above.
|
|
(e)
|
Security has no maturity date. The date shown represents the next call date.
|
|
(f)
|
Payment-in-kind security for which the issuer has the option at each interest
payment date of making interest payments in cash or additional securities.
|
|
(g)
|
The maturity principal is currently in default as of June 30, 2021.
|
|
(h)
|
Interest rates disclosed represent the effective rates on senior loans. Ranges in interest rates are attributable to multiple contracts under the same loan.
|
|
(i)
|
Senior loans may be considered restricted in that the Fund ordinarily is contractually obligated to receive approval from the agent bank and/or borrower prior to
the disposition of a senior loan.
|
|
(j)
|
All or a portion of this loan is unfunded as of June 30, 2021. The interest rate for fully unfunded term loans is to be determined.
|
|
(k)
|
Security is valued using significant unobservable inputs (Note 1).
|
|
(l)
|
All or a portion of this security is held by the counterparty as collateral for open reverse repurchase agreements.
|
|
(m)
|
Collateralized mortgage obligations are secured by an underlying pool of mortgages or mortgage pass-through certificates that are structured to direct payments
on underlying collateral to different series or classes of the obligations. The interest rate may change positively or inversely in relation to one or more interest rates, financial indices or other financial indicators and may be subject to an
upper and/or lower limit.
|
|
(n)
|
Security is valued in good faith in accordance with procedures approved by the Board of Trustees (Note 1).
|
|
(o)
|
The coupon payment on this security is currently in default as of June 30, 2021.
|
|
(p)
|
In this instance, as defined in the Investment Company Act of 1940, an “Affiliated Company” represents Fund ownership of at least 5% of the outstanding
voting securities of an issuer, or a company which is under common ownership or control with the Fund. At June 30, 2021, the total market value of investments in Affiliated Companies was $2,336,489 and the cost was $2,336,489 (Note 8).
|
See Notes to Financial
Statements.
|
|
|
|
|
|
|
|
|
Western Asset Premier Bond Fund 2021 Semi-Annual Report
|
|
|
|
|
19
|
|
Schedule of investments (unaudited)
(cont’d)
June 30, 2021
Western Asset Premier Bond Fund
|
|
|
|
|
Abbreviation(s) used in this schedule:
|
|
|
|
|
GBP
|
|
— British Pound
|
|
|
|
|
ICE
|
|
— Intercontinental Exchange
|
|
|
|
|
IDR
|
|
— Indonesian Rupiah
|
|
|
|
|
IO
|
|
— Interest Only
|
|
|
|
|
JSC
|
|
— Joint Stock Company
|
|
|
|
|
LIBOR
|
|
— London Interbank Offered Rate
|
|
|
|
|
MXN
|
|
— Mexican Peso
|
|
|
|
|
OFZ
|
|
— Obligatsyi Federal’novo Zaima (Russian Federal Loan Obligation)
|
|
|
|
|
PIK
|
|
— Payment-In-Kind
|
|
|
|
|
PO
|
|
— Principal Only
|
|
|
|
|
RUB
|
|
— Russian Ruble
|
|
|
|
|
STRIPS
|
|
— Separate Trading of Registered Interest and Principal Securities
|
|
|
|
|
USD
|
|
— United States Dollar
|
At June 30, 2021, the Fund had the following open reverse repurchase agreements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Counterparty
|
|
Rate
|
|
|
Effective
Date
|
|
|
Maturity
Date
|
|
Face Amount
of Reverse
Repurchase
Agreements
|
|
|
Asset Class of Collateral*
|
|
Collateral
Value**
|
|
|
Deutsche Bank AG
|
|
|
0.070
|
%
|
|
|
5/26/2021
|
|
|
8/26/2021
|
|
$
|
12,400,250
|
|
|
U.S. Government & Agency Obligations
|
|
$
|
12,473,375
|
|
|
*
|
Refer to the Schedule of Investments for positions held at the counterparty as collateral for reverse repurchase agreements.
|
|
**
|
Including accrued interest.
|
At
June 30, 2021, the Fund had the following open forward foreign currency contracts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency
Purchased
|
|
|
Currency
Sold
|
|
|
Counterparty
|
|
Settlement
Date
|
|
|
Unrealized
Appreciation
(Depreciation)
|
|
|
USD
|
|
|
40,642
|
|
|
EUR
|
|
|
34,028
|
|
|
BNP Paribas SA
|
|
|
7/19/21
|
|
|
$
|
277
|
|
|
GBP
|
|
|
17,390
|
|
|
USD
|
|
|
24,276
|
|
|
Goldman Sachs Group Inc.
|
|
|
7/19/21
|
|
|
|
(219)
|
|
|
USD
|
|
|
1,727,453
|
|
|
GBP
|
|
|
1,257,157
|
|
|
Goldman Sachs Group Inc.
|
|
|
7/19/21
|
|
|
|
(11,673)
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(11,615)
|
|
|
|
|
Abbreviation(s) used in this table:
|
EUR — Euro
GBP — British
Pound
USD — United States Dollar
See Notes to Financial Statements.
|
|
|
|
|
|
|
20
|
|
|
|
Western Asset Premier Bond Fund 2021 Semi-Annual Report
|
Statement of assets and liabilities (unaudited)
June 30, 2021
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
Investments in unaffiliated securities, at value (Cost — $215,925,651)
|
|
$
|
243,385,370
|
|
|
Investments in affiliated securities, at value (Cost — $2,336,489)
|
|
|
2,336,489
|
|
|
Foreign currency, at value (Cost — $200,410)
|
|
|
196,531
|
|
|
Cash
|
|
|
5,477
|
|
|
Interest and dividends receivable
|
|
|
2,694,413
|
|
|
Receivable for securities sold
|
|
|
138,402
|
|
|
Unrealized appreciation on forward foreign currency contracts
|
|
|
277
|
|
|
Other receivables
|
|
|
670
|
|
|
Prepaid expenses
|
|
|
6,805
|
|
|
Total Assets
|
|
|
248,764,434
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
Loan payable (Note 5)
|
|
|
57,500,000
|
|
|
Payable for open reverse repurchase agreements (Note 3)
|
|
|
12,400,250
|
|
|
Payable for securities purchased
|
|
|
3,129,928
|
|
|
Distributions payable
|
|
|
782,980
|
|
|
Investment management fee payable
|
|
|
110,388
|
|
|
Unrealized depreciation on forward foreign currency contracts
|
|
|
11,892
|
|
|
Interest expense payable
|
|
|
4,678
|
|
|
Trustees’ fees payable
|
|
|
77
|
|
|
Accrued expenses
|
|
|
64,703
|
|
|
Total Liabilities
|
|
|
74,004,896
|
|
|
Total Net Assets
|
|
$
|
174,759,538
|
|
|
|
|
|
Net Assets:
|
|
|
|
|
|
Common shares, no par value, unlimited number of shares authorized, 11,863,337 shares issued and
outstanding
|
|
$
|
156,268,641
|
|
|
Total distributable earnings (loss)
|
|
|
18,490,897
|
|
|
Total Net Assets
|
|
$
|
174,759,538
|
|
|
|
|
|
Shares Outstanding
|
|
|
11,863,337
|
|
|
|
|
|
Net Asset Value
|
|
$
|
14.73
|
|
See Notes to Financial
Statements.
|
|
|
|
|
|
|
|
|
Western Asset Premier Bond Fund 2021 Semi-Annual Report
|
|
|
|
|
21
|
|
Statement of operations (unaudited)
For the
Six Months Ended June 30, 2021
|
|
|
|
|
|
|
|
|
|
Investment Income:
|
|
|
|
|
|
Interest from unaffiliated investments
|
|
$
|
6,180,840
|
|
|
Interest from affiliated investments
|
|
|
91
|
|
|
Dividends
|
|
|
17,237
|
|
|
Less: Foreign taxes withheld
|
|
|
(34,528)
|
|
|
Total Investment Income
|
|
|
6,163,640
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
Investment management fee (Note 2)
|
|
|
661,278
|
|
|
Interest expense (Notes 3 and 5)
|
|
|
242,188
|
|
|
Audit and tax fees
|
|
|
37,281
|
|
|
Legal fees
|
|
|
29,616
|
|
|
Trustees’ fees
|
|
|
15,857
|
|
|
Transfer agent fees
|
|
|
15,064
|
|
|
Fund accounting fees
|
|
|
14,876
|
|
|
Commitment fees (Note 5)
|
|
|
14,581
|
|
|
Stock exchange listing fees
|
|
|
6,200
|
|
|
Shareholder reports
|
|
|
4,303
|
|
|
Custody fees
|
|
|
2,592
|
|
|
Insurance
|
|
|
1,462
|
|
|
Miscellaneous expenses
|
|
|
4,794
|
|
|
Total Expenses
|
|
|
1,050,092
|
|
|
Less: Fee waivers and/or expense reimbursements (Note 2)
|
|
|
(374)
|
|
|
Net Expenses
|
|
|
1,049,718
|
|
|
Net Investment Income
|
|
|
5,113,922
|
|
|
|
|
|
Realized and Unrealized Gain (Loss) on Investments, Forward Foreign Currency Contracts and Foreign Currency Transactions (Notes 1, 3
and 4):
|
|
|
|
|
|
Net Realized Gain (Loss) From:
|
|
|
|
|
|
Investment transactions in unaffiliated securities
|
|
|
628,679
|
|
|
Forward foreign currency contracts
|
|
|
(64,769)
|
|
|
Foreign currency transactions
|
|
|
7,142
|
|
|
Net Realized Gain
|
|
|
571,052
|
|
|
Change in Net Unrealized Appreciation (Depreciation) From:
|
|
|
|
|
|
Investments in unaffiliated securities
|
|
|
(2,453,850)
|
|
|
Forward foreign currency contracts
|
|
|
55,944
|
|
|
Foreign currencies
|
|
|
(15,964)
|
|
|
Change in Net Unrealized Appreciation (Depreciation)
|
|
|
(2,413,870)
|
|
|
Net Loss on Investments, Forward Foreign Currency Contracts and Foreign Currency Transactions
|
|
|
(1,842,818)
|
|
|
Increase in Net Assets From Operations
|
|
$
|
3,271,104
|
|
See Notes to Financial
Statements.
|
|
|
|
|
|
|
22
|
|
|
|
Western Asset Premier Bond Fund 2021 Semi-Annual Report
|
Statements of changes in net assets
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended June 30, 2021 (unaudited)
and the Year Ended December 31, 2020
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
Operations:
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
$
|
5,113,922
|
|
|
$
|
10,363,674
|
|
|
Net realized gain (loss)
|
|
|
571,052
|
|
|
|
(6,689,965)
|
|
|
Change in net unrealized appreciation (depreciation)
|
|
|
(2,413,870)
|
|
|
|
7,796,490
|
|
|
Increase in Net Assets From Operations
|
|
|
3,271,104
|
|
|
|
11,470,199
|
|
|
|
|
|
|
Distributions to Shareholders From (Note 1):
|
|
|
|
|
|
|
|
|
|
Total distributable earnings
|
|
|
(4,697,882)
|
|
|
|
(9,401,589)
|
|
|
Decrease in Net Assets From Distributions to
Shareholders
|
|
|
(4,697,882)
|
|
|
|
(9,401,589)
|
|
|
|
|
|
|
Fund Share Transactions:
|
|
|
|
|
|
|
|
|
|
Reinvestment of distributions (0 and 1,070 shares issued, respectively)
|
|
|
—
|
|
|
|
15,815
|
|
|
Cost of shares repurchased (0 and 44,671 shares repurchased, respectively) (Note 7)
|
|
|
—
|
|
|
|
(462,743)
|
|
|
Decrease in Net Assets From Fund Share Transactions
|
|
|
—
|
|
|
|
(446,928)
|
|
|
Increase (Decrease) in Net Assets
|
|
|
(1,426,778)
|
|
|
|
1,621,682
|
|
|
|
|
|
|
Net Assets:
|
|
|
|
|
|
|
|
|
|
Beginning of period
|
|
|
176,186,316
|
|
|
|
174,564,634
|
|
|
End of period
|
|
$
|
174,759,538
|
|
|
$
|
176,186,316
|
|
See Notes to Financial
Statements.
|
|
|
|
|
|
|
|
|
Western Asset Premier Bond Fund 2021 Semi-Annual Report
|
|
|
|
|
23
|
|
Statement of cash flows (unaudited)
For the
Six Months Ended June 30, 2021
|
|
|
|
|
|
|
|
|
|
Increase (Decrease) in Cash:
|
|
|
|
|
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
Net increase in net assets resulting from operations
|
|
$
|
3,271,104
|
|
|
Adjustments to reconcile net increase in net assets resulting from operations
to net cash provided (used) by
operating activities:
|
|
|
|
|
|
Purchases of portfolio securities
|
|
|
(55,599,261)
|
|
|
Sales of portfolio securities
|
|
|
47,949,734
|
|
|
Net purchases, sales and maturities of short-term investments
|
|
|
1,229,331
|
|
|
Payment-in-kind
|
|
|
(59,351)
|
|
|
Net inflation adjustment
|
|
|
(2,892)
|
|
|
Net amortization of premium (accretion of discount)
|
|
|
(689,947)
|
|
|
Decrease in receivable for securities sold
|
|
|
2,706,056
|
|
|
Decrease in interest and dividends receivable
|
|
|
51,319
|
|
|
Increase in prepaid expenses
|
|
|
(4,841)
|
|
|
Increase in payable for securities purchased
|
|
|
1,272,861
|
|
|
Decrease in investment management fee payable
|
|
|
(2,484)
|
|
|
Decrease in Trustees’ fees payable
|
|
|
(346)
|
|
|
Increase in interest expense payable
|
|
|
304
|
|
|
Increase in accrued expenses
|
|
|
26,915
|
|
|
Net realized gain on investments
|
|
|
(628,679)
|
|
|
Change in net unrealized appreciation (depreciation) of investments and forward foreign currency
contracts
|
|
|
2,397,906
|
|
|
Net Cash Provided in Operating Activities*
|
|
|
1,917,729
|
|
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
Distributions paid on common stock (net of distributions payable)
|
|
|
(3,914,902)
|
|
|
Increase in payable for open reverse repurchase agreements
|
|
|
1,880,937
|
|
|
Net Cash Used by Financing Activities
|
|
|
(2,033,965)
|
|
|
Net Decrease in Cash and Restricted Cash
|
|
|
(116,236)
|
|
|
Cash and restricted cash at beginning of period
|
|
|
318,244
|
|
|
Cash and restricted cash at end of period
|
|
$
|
202,008
|
|
|
*
|
Included in operating expenses is cash of $256,545 paid for interest and commitment fees on borrowings.
|
|
|
The following table provides a reconciliation of cash (including foreign currency) and restricted cash reported within the Statement of Assets and
Liabilities that sums to the total of such amounts shown on the Statement of Cash Flows.
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
|
Cash
|
|
|
$202,008
|
|
|
Restricted cash
|
|
|
—
|
|
|
Total cash and restricted cash shown in the Statement of Cash Flows
|
|
|
$202,008
|
|
See Notes to Financial
Statements.
|
|
|
|
|
|
|
24
|
|
|
|
Western Asset Premier Bond Fund 2021 Semi-Annual Report
|
Financial highlights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For a share of common stock outstanding throughout
each year ended December 31, unless otherwise noted:
|
|
|
|
|
20211,2
|
|
|
20201
|
|
|
20191
|
|
|
20181
|
|
|
20171
|
|
|
20161
|
|
|
|
|
|
|
|
|
|
|
Net asset value, beginning of period
|
|
|
$14.85
|
|
|
|
$14.66
|
|
|
|
$13.00
|
|
|
|
$14.51
|
|
|
|
$13.88
|
|
|
|
$13.08
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
0.43
|
|
|
|
0.87
|
|
|
|
0.82
|
|
|
|
0.75
|
|
|
|
0.81
|
|
|
|
0.93
|
|
|
Net realized and unrealized gain (loss)
|
|
|
(0.15)
|
|
|
|
0.10
|
|
|
|
1.63
|
|
|
|
(1.47)
|
|
|
|
0.69
|
|
|
|
0.90
|
|
|
Total income (loss) from operations
|
|
|
0.28
|
|
|
|
0.97
|
|
|
|
2.45
|
|
|
|
(0.72)
|
|
|
|
1.50
|
|
|
|
1.83
|
|
|
|
|
|
|
|
|
|
|
Less distributions from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
(0.40)
|
3
|
|
|
(0.79)
|
|
|
|
(0.79)
|
|
|
|
(0.79)
|
|
|
|
(0.87)
|
|
|
|
(1.03)
|
|
|
Total distributions
|
|
|
(0.40)
|
|
|
|
(0.79)
|
|
|
|
(0.79)
|
|
|
|
(0.79)
|
|
|
|
(0.87)
|
|
|
|
(1.03)
|
|
|
Anti-dilutive impact of repurchase plan
|
|
|
—
|
|
|
|
0.01
|
4
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
|
|
$14.73
|
|
|
|
$14.85
|
|
|
|
$14.66
|
|
|
|
$13.00
|
|
|
|
$14.51
|
|
|
|
$13.88
|
|
|
|
|
|
|
|
|
|
|
Market price, end of period
|
|
|
$14.72
|
|
|
|
$14.17
|
|
|
|
$14.65
|
|
|
|
$12.09
|
|
|
|
$13.81
|
|
|
|
$12.95
|
|
|
Total return, based on NAV5,6
|
|
|
1.91
|
%
|
|
|
7.28
|
%
|
|
|
19.22
|
%
|
|
|
(5.13)
|
%
|
|
|
11.03
|
%
|
|
|
14.47
|
%
|
|
Total return, based on Market Price7
|
|
|
6.78
|
%
|
|
|
2.64
|
%
|
|
|
28.35
|
%
|
|
|
(6.85)
|
%
|
|
|
13.50
|
%
|
|
|
15.27
|
%
|
|
|
|
|
|
|
|
|
|
Net assets, end of period (millions)
|
|
|
$175
|
|
|
|
$176
|
|
|
|
$175
|
|
|
|
$155
|
|
|
|
$173
|
|
|
|
$165
|
|
|
|
|
|
|
|
|
|
Ratios to average net assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross expenses
|
|
|
1.22
|
%8
|
|
|
1.50
|
%
|
|
|
2.14
|
%
|
|
|
1.93
|
%
|
|
|
1.58
|
%
|
|
|
1.44
|
%
|
|
Net expenses9
|
|
|
1.22
|
8,10
|
|
|
1.50
|
|
|
|
2.14
|
|
|
|
1.93
|
|
|
|
1.58
|
|
|
|
1.44
|
|
|
Net investment income
|
|
|
5.94
|
8
|
|
|
6.24
|
|
|
|
5.78
|
|
|
|
5.49
|
|
|
|
5.66
|
|
|
|
6.87
|
|
|
|
|
|
|
|
|
|
|
Portfolio turnover rate
|
|
|
20
|
%
|
|
|
55
|
%
|
|
|
47
|
%
|
|
|
106
|
%
|
|
|
70
|
%
|
|
|
78
|
%
|
|
|
|
|
|
|
|
Supplemental data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan Outstanding, End of Period (000s)
|
|
|
$57,500
|
|
|
|
$57,500
|
|
|
|
$57,000
|
|
|
|
$57,000
|
|
|
|
$58,000
|
|
|
|
$58,000
|
|
|
Asset Coverage Ratio for Loan Outstanding11
|
|
|
404
|
%
|
|
|
406
|
%
|
|
|
406
|
%
|
|
|
372
|
%
|
|
|
398
|
%
|
|
|
385
|
%
|
|
Asset Coverage, per $1,000 Principal Amount of Loan Outstanding11
|
|
|
$4,039
|
|
|
|
$4,064
|
|
|
|
$4,063
|
|
|
|
$3,715
|
|
|
|
$3,979
|
|
|
|
$3,849
|
|
|
Weighted Average Loan (000s)
|
|
|
$57,500
|
|
|
|
$57,448
|
|
|
|
$57,000
|
|
|
|
$56,803
|
|
|
|
$58,000
|
|
|
|
$58,000
|
|
|
Weighted Average Interest Rate on Loan
|
|
|
0.81
|
%
|
|
|
1.48
|
%
|
|
|
3.09
|
%
|
|
|
2.72
|
%
|
|
|
1.79
|
%
|
|
|
1.32
|
%
|
See Notes to Financial
Statements.
|
|
|
|
|
|
|
|
|
Western Asset Premier Bond Fund 2021 Semi-Annual Report
|
|
|
|
|
25
|
|
Financial highlights (cont’d)
|
1
|
Per share amounts have been calculated using the average shares method.
|
|
2
|
For the six months ended June 30, 2021 (unaudited).
|
|
3
|
The actual source of the Fund’s current fiscal year distributions may be from net investment income, return of capital or a combination of both.
Shareholders will be informed of the tax characteristics of the distributions after the close of the fiscal year.
|
|
4
|
The repurchase plan was completed at an average repurchase price of $10.38 for 44,671 shares and $462,743 for the year ended December 31, 2020.
|
|
5
|
Performance figures may reflect compensating balance arrangements, fee waivers and/or expense reimbursements. In the absence of compensating balance
arrangements, fee waivers and/or expense reimbursements, the total return would have been lower. Past performance is no guarantee of future results. Total returns for periods of less than one year are not annualized.
|
|
6
|
The total return calculation assumes that distributions are reinvested at NAV. Past performance is no guarantee of future results. Total returns for periods of
less than one year are not annualized.
|
|
7
|
The total return calculation assumes that distributions are reinvested in accordance with the Fund’s dividend reinvestment plan. Past performance is no
guarantee of future results. Total returns for periods of less than one year are not annualized.
|
|
9
|
The investment adviser has agreed to waive the Fund’s management fee to an extent sufficient to offset the net management fee payable in connection with any
investment in an affiliated money market fund.
|
|
10
|
Reflects fee waivers and/or expense reimbursements.
|
|
11
|
Represents value of net assets plus the loan outstanding at the end of the period divided by the loan outstanding at the end of the period.
|
See Notes to Financial
Statements.
|
|
|
|
|
|
|
26
|
|
|
|
Western Asset Premier Bond Fund 2021 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 Fund’s investment objective is to provide current income and capital appreciation by
investing primarily in a diversified portfolio of investment grade bonds.
The following are significant accounting policies consistently followed by the
Fund and are in conformity with U.S. generally accepted accounting principles (“GAAP”). Estimates and assumptions are required to be made regarding assets, liabilities and changes in net assets resulting from operations when financial
statements are prepared. Changes in the economic environment, financial markets and any other parameters used in determining these estimates could cause actual results to differ. Subsequent events have been evaluated through the date the financial
statements were issued.
(a) Investment valuation. The valuations for fixed income
securities (which may include, but are not limited to, corporate, government, municipal, mortgage-backed, collateralized mortgage obligations and asset-backed securities) and certain derivative instruments are typically the prices supplied by
independent third party pricing services, which may use market prices or broker/dealer quotations or a variety of valuation techniques and methodologies. The independent third party pricing services typically use inputs that are observable such as
issuer details, interest rates, yield curves, prepayment speeds, credit risks/spreads, default rates and quoted prices for similar securities. Investments in open-end funds are valued at the closing net asset
value per share of each fund on the day of valuation. Futures contracts are valued daily at the settlement price established by the board of trade or exchange on which they are traded. Equity securities for which market quotations are available are
valued at the last reported sales price or official closing price on the primary market or exchange on which they trade. When the Fund holds securities or other assets that are denominated in a foreign currency, the Fund will normally use the
currency exchange rates as of 4:00 p.m. (Eastern Time). If independent third party pricing services are unable to supply prices for a portfolio investment, or if the prices supplied are deemed by the manager to be unreliable, the market price may be
determined by the manager using quotations from one or more broker/dealers or at the transaction price if the security has recently been purchased and no value has yet been obtained from a pricing service or pricing broker. When reliable prices are
not readily available, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded, but before the Fund calculates its net asset value, the Fund
values these securities as determined in accordance with procedures approved by the Fund’s Board of Trustees.
The Board of Trustees is responsible
for the valuation process and has delegated the supervision of the daily valuation process to the Global Fund Valuation Committee (formerly known as Legg Mason North Atlantic Fund Valuation Committee prior to March 1, 2021) (the
|
|
|
|
|
|
|
|
|
Western Asset Premier Bond Fund 2021 Semi-Annual Report
|
|
|
|
|
27
|
|
Notes to financial statements
(unaudited) (cont’d)
“Valuation Committee”). The Valuation Committee, pursuant to the policies adopted by the Board of Trustees, is responsible for making fair value
determinations, evaluating the effectiveness of the Fund’s pricing policies, and reporting to the Board of Trustees. When determining the reliability of third party pricing information for investments owned by the Fund, the Valuation Committee,
among other things, conducts due diligence reviews of pricing vendors, monitors the daily change in prices and reviews transactions among market participants.
The Valuation Committee will consider pricing methodologies it deems relevant and appropriate when making fair value determinations. Examples of possible methodologies include, but are not limited to, multiple of
earnings; discount from market of a similar freely traded security; discounted cash-flow analysis; book value or a multiple thereof; risk premium/yield analysis; yield to maturity; and/or fundamental investment analysis. The Valuation Committee will
also consider factors it deems relevant and appropriate in light of the facts and circumstances. Examples of possible factors include, but are not limited to, the type of security; the issuer’s financial statements; the purchase price of the
security; the discount from market value of unrestricted securities of the same class at the time of purchase; analysts’ research and observations from financial institutions; information regarding any transactions or offers with respect to the
security; the existence of merger proposals or tender offers affecting the security; the price and extent of public trading in similar securities of the issuer or comparable companies; and the existence of a shelf registration for restricted
securities.
For each portfolio security that has been fair valued pursuant to the policies adopted by the Board of Trustees, the fair value price is
compared against the last available and next available market quotations. The Valuation Committee reviews the results of such back testing monthly and fair valuation occurrences are reported to the Board of Trustees quarterly.
The Fund uses valuation techniques to measure fair value that are consistent with the market approach and/or income approach, depending on the type of security and
the particular circumstance. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable securities. The income approach uses valuation techniques to discount estimated future
cash flows to present value.
|
|
|
|
|
|
|
28
|
|
|
|
Western Asset Premier Bond Fund 2021 Semi-Annual Report
|
GAAP establishes a disclosure hierarchy
that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are summarized in the three broad levels listed below:
|
•
|
|
Level 1 — quoted prices in active markets for identical investments
|
|
•
|
|
Level 2 — other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)
|
|
•
|
|
Level 3 — significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)
|
The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those
securities.
The following is a summary of the inputs used in valuing the Fund’s assets and liabilities carried at fair value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
Description
|
|
Quoted Prices
(Level 1)
|
|
|
Other Significant
Observable Inputs
(Level 2)
|
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
|
Total
|
|
|
Long-Term Investments†:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Bonds & Notes
|
|
|
—
|
|
|
$
|
189,583,306
|
|
|
|
—
|
|
|
$
|
189,583,306
|
|
|
Sovereign Bonds
|
|
|
—
|
|
|
|
18,910,986
|
|
|
|
—
|
|
|
|
18,910,986
|
|
|
Senior Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Discretionary
|
|
|
—
|
|
|
|
4,828,946
|
|
|
$
|
672,750
|
|
|
|
5,501,696
|
|
|
Other Senior Loans
|
|
|
—
|
|
|
|
8,803,279
|
|
|
|
—
|
|
|
|
8,803,279
|
|
|
U.S. Government & Agency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations
|
|
|
—
|
|
|
|
12,772,354
|
|
|
|
—
|
|
|
|
12,772,354
|
|
|
Asset-Backed Securities
|
|
|
—
|
|
|
|
3,811,109
|
|
|
|
—
|
|
|
|
3,811,109
|
|
|
Collateralized Mortgage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations
|
|
|
—
|
|
|
|
1,661,013
|
|
|
|
—
|
|
|
|
1,661,013
|
|
|
Convertible Bonds & Notes
|
|
|
—
|
|
|
|
1,401,510
|
|
|
|
—
|
|
|
|
1,401,510
|
|
|
Convertible Preferred Stocks
|
|
|
—
|
|
|
|
627,996
|
|
|
|
—
|
|
|
|
627,996
|
|
|
Common Stocks:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy
|
|
|
—
|
|
|
|
—
|
|
|
|
10,121
|
|
|
|
10,121
|
|
|
Financials
|
|
$
|
301,200
|
|
|
|
—
|
|
|
|
—
|
|
|
|
301,200
|
|
|
Preferred Stocks
|
|
|
—
|
|
|
|
800
|
|
|
|
—
|
|
|
|
800
|
|
|
Total Long-Term Investments
|
|
|
301,200
|
|
|
|
242,401,299
|
|
|
|
682,871
|
|
|
|
243,385,370
|
|
|
Short-Term Investments†
|
|
|
2,336,489
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,336,489
|
|
|
Total Investments
|
|
$
|
2,637,689
|
|
|
$
|
242,401,299
|
|
|
$
|
682,871
|
|
|
$
|
245,721,859
|
|
|
Other Financial Instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward Foreign Currency Contracts††
|
|
|
—
|
|
|
$
|
277
|
|
|
|
—
|
|
|
$
|
277
|
|
|
Total
|
|
$
|
2,637,689
|
|
|
$
|
242,401,576
|
|
|
$
|
682,871
|
|
|
$
|
245,722,136
|
|
|
|
|
|
|
|
|
|
|
Western Asset Premier Bond Fund 2021 Semi-Annual Report
|
|
|
|
|
29
|
|
Notes to financial statements
(unaudited) (cont’d)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
Description
|
|
Quoted Prices
(Level 1)
|
|
|
Other Significant
Observable Inputs
(Level 2)
|
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
|
Total
|
|
|
Other Financial Instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward Foreign Currency Contracts††
|
|
|
—
|
|
|
$
|
11,892
|
|
|
|
—
|
|
|
$
|
11,892
|
|
|
†
|
See Schedule of Investments for additional detailed categorizations.
|
|
††
|
Reflects the unrealized appreciation (depreciation) of the instruments.
|
(b) Futures contracts. The Fund uses futures contracts generally to gain exposure to, or hedge against, changes in interest rates or gain
exposure to, or hedge against, changes in certain asset classes. A futures contract represents a commitment for the future purchase or sale of an asset at a specified price on a specified date.
Upon entering into a futures contract, the Fund is required to deposit cash or securities with a broker in an amount equal to a certain percentage of the contract
amount. This is known as the ‘‘initial margin’’ and subsequent payments (‘‘variation margin’’) are made or received by the Fund each day, depending on the daily fluctuation in the value of the contract. For
certain futures, including foreign denominated futures, variation margin is not settled daily, but is recorded as a net variation margin payable or receivable. The daily changes in contract value are recorded as unrealized appreciation or
depreciation in the Statement of Operations and the Fund recognizes a realized gain or loss when the contract is closed.
Futures contracts involve, to
varying degrees, risk of loss in excess of the amounts reflected in the financial statements. In addition, there is the risk that the Fund may not be able to enter into a closing transaction because of an illiquid secondary market.
(c) Forward foreign currency contracts. The Fund enters into a forward foreign currency
contract to hedge exposure of bond positions or in an attempt to increase the Fund’s return. A forward foreign currency contract is an agreement between two parties to buy and sell a currency at a set price with delivery and settlement at a
future date. The contract is marked-to-market daily and the change in value is recorded by the Fund as an unrealized gain or loss. When a forward foreign currency
contract is closed, through either delivery or offset by entering into another forward foreign currency contract, the Fund recognizes a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the
value of the contract at the time it is closed.
Forward foreign currency contracts involve elements of market risk in excess of the amounts reflected on
the Statement of Assets and Liabilities. The Fund bears the risk of an unfavorable change in the foreign exchange rate underlying the forward foreign currency contract. Risks may also arise upon entering into these contracts from the potential
inability of the counterparties to meet the terms of their contracts.
|
|
|
|
|
|
|
30
|
|
|
|
Western Asset Premier Bond Fund 2021 Semi-Annual Report
|
(d) Loan
participations. The Fund may invest in loans arranged through private negotiation between one or more financial institutions. The Fund’s investment in any such loan may be in the form of a
participation in or an assignment of the loan. In connection with purchasing participations, the Fund generally will have no right to enforce compliance by the borrower with the terms of the loan agreement related to the loan, or any rights of off-set against the borrower and the Fund may not benefit directly from any collateral supporting the loan in which it has purchased the participation.
The Fund assumes the credit risk of the borrower, the lender that is selling the participation and any other persons interpositioned between the Fund and the borrower. In the event of the insolvency of the lender
selling the participation, the Fund may be treated as a general creditor of the lender and may not benefit from any off-set between the lender and the borrower.
(e) Unfunded loan commitments. The Fund may enter into certain credit agreements where all or
a portion of the total amount committed may be unfunded. The Fund is obligated to fund these commitments at the borrower’s discretion. The commitments are disclosed in the accompanying Schedule of Investments. At June 30, 2021, the Fund
had sufficient cash and/or securities to cover these commitments.
(f) Stripped securities. The Fund may invest in ‘‘Stripped Securities,’’ a term used collectively for components, or strips, of fixed income securities. Stripped Securities can be principal only securities
(“PO”), which are debt obligations that have been stripped of unmatured interest coupons, or interest only securities (“IO”), which are unmatured interest coupons that have been stripped from debt obligations. The market value of
Stripped Securities will fluctuate in response to changes in economic conditions, rates of prepayment, interest rates and the market’s perception of the securities. However, fluctuations in response to interest rates may be greater in Stripped
Securities than for debt obligations of comparable maturities that pay interest currently. The amount of fluctuation may increase with a longer period of maturity.
The yield to maturity on IO’s is sensitive to the rate of principal repayments (including prepayments) on the related underlying debt obligation and principal payments may have a material effect on yield to
maturity. If the underlying debt obligation experiences greater than anticipated prepayments of principal, the Fund may not fully recoup its initial investment in IO’s.
(g) Reverse repurchase agreements. The Fund may enter into reverse repurchase agreements. Under the terms of a typical reverse repurchase
agreement, a fund sells a security subject to an obligation to repurchase the security from the buyer at an agreed upon time and price. In the event the buyer of securities under a reverse repurchase agreement files for bankruptcy or becomes
insolvent, the Fund’s use of the proceeds of the agreement may be restricted pending a determination by the counterparty, or its trustee or
|
|
|
|
|
|
|
|
|
Western Asset Premier Bond Fund 2021 Semi-Annual Report
|
|
|
|
|
31
|
|
Notes to financial statements
(unaudited) (cont’d)
receiver, whether to enforce the Fund’s obligation to repurchase the securities. In entering into reverse repurchase agreements, the Fund will pledge cash,
U.S. government securities or other liquid debt obligations at least equal in value to its obligations with respect to reverse repurchase agreements or will take other actions permitted by law to cover its obligations. If the market value of the
collateral declines during the period, the Fund may be required to post additional collateral to cover its obligation. Cash collateral that has been pledged to cover obligations of the Fund under reverse repurchase agreements, if any, will be
reported separately in the Statement of Assets and Liabilities. Securities pledged as collateral are noted in the Schedule of Investments. Interest payments made on reverse repurchase agreements are recognized as a component of “Interest
expense” on the Statement of Operations. In periods of increased demand for the security, the Fund may receive a fee for use of the security by the counterparty, which may result in interest income to the Fund.
(h) Securities traded on a when-issued and delayed delivery basis. The Fund may trade
securities on a when-issued or delayed delivery basis. In when-issued and delayed delivery transactions, the securities are purchased or sold by the Fund with payment and delivery taking place in the future in order to secure what is considered to
be an advantageous price and yield to the Fund at the time of entering into the transaction.
Purchasing such securities involves risk of loss if the
value of the securities declines prior to settlement. These securities are subject to market fluctuations and their current value is determined in the same manner as for other securities.
(i) Inflation-indexed bonds. Inflation-indexed bonds are fixed income securities whose principal value or interest rate is periodically
adjusted according to the rate of inflation. As the index measuring inflation changes, the principal value or interest rate of inflation-indexed bonds will be adjusted accordingly. Inflation adjustments to the principal amount of inflation-indexed
bonds are reflected as an increase or decrease to investment income on the Statement of Operations. Repayment of the original bond principal upon maturity (as adjusted for inflation) is guaranteed in the case of U.S. Treasury inflation-indexed
bonds. For bonds that do not provide a similar guarantee, the adjusted principal value of the bond repaid at maturity may be less than the original principal.
(j) Cash flow information. The Fund invests in securities and distributes dividends from net investment income and net realized gains, which
are paid in cash and may be reinvested at the discretion of shareholders. These activities are reported in the Statements of Changes in Net Assets and additional information on cash receipts and cash payments is presented in the Statement of Cash
Flows.
(k) 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.
|
|
|
|
|
|
|
32
|
|
|
|
Western Asset Premier Bond Fund 2021 Semi-Annual Report
|
The Fund does not isolate that portion of
the results of operations resulting from fluctuations in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain
or loss on investments.
Net realized foreign exchange gains or losses arise from sales of foreign currencies, including gains and losses on forward
foreign currency contracts, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s
books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the values of assets and liabilities, other than investments in securities, on the date of
valuation, resulting from changes in exchange rates.
Foreign security and currency transactions may involve certain considerations and risks not
typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or
economic instability.
(l) Credit and market risk. The Fund invests in high-yield
and emerging market instruments that are subject to certain credit and market risks. The yields of high-yield and emerging market debt obligations reflect, among other things, perceived credit and market risks. The Fund’s investments in
securities rated below investment grade typically involve risks not associated with higher rated securities including, among others, greater risk related to timely and ultimate payment of interest and principal, greater market price volatility and
less liquid secondary market trading. The consequences of political, social, economic or diplomatic changes may have disruptive effects on the market prices of investments held by the Fund. The Fund’s investments in non-U.S. dollar denominated securities may also result in foreign currency losses caused by devaluations and exchange rate fluctuations.
Investments in securities that are collateralized by 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 the foreclosure values of underlying real estate properties are materially below the outstanding amount of these underlying mortgages, collection of the full amount of accrued interest and principal on these investments may be
doubtful. Such market conditions may significantly impair the value and liquidity of these investments and may result in a lack of correlation between their credit ratings and values.
|
|
|
|
|
|
|
|
|
Western Asset Premier Bond Fund 2021 Semi-Annual Report
|
|
|
|
|
33
|
|
Notes to financial statements
(unaudited) (cont’d)
(m) Foreign investment risks. The Fund’s investments in foreign securities may involve
risks not present in domestic investments. Since securities may be denominated in foreign currencies, may require settlement in foreign currencies or may pay interest or dividends in foreign currencies, changes in the relationship of these foreign
currencies to the U.S. dollar can significantly affect the value of the investments and earnings of the Fund. Foreign investments may also subject the Fund to foreign government exchange restrictions, expropriation, taxation or other political,
social or economic developments, all of which affect the market and/or credit risk of the investments.
(n) Counterparty risk and
credit-risk-related contingent features of derivative instruments. The Fund may invest in certain securities or engage in other transactions where the Fund is exposed to counterparty credit risk in
addition to broader market risks. The Fund may invest in securities of issuers, which may also be considered counterparties as trading partners in other transactions. This may increase the risk of loss in the event of default or bankruptcy by the
counterparty or if the counterparty otherwise fails to meet its contractual obligations. The Fund’s investment adviser attempts to mitigate counterparty risk by (i) periodically assessing the creditworthiness of its trading partners,
(ii) monitoring and/or limiting the amount of its net exposure to each individual counterparty based on its assessment and (iii) requiring collateral from the counterparty for certain transactions. Market events and changes in overall
economic conditions may impact the assessment of such counterparty risk by the investment adviser. In addition, declines in the values of underlying collateral received may expose the Fund to increased risk of loss.
With exchange traded and centrally cleared derivatives, there is less counterparty risk to the Fund since the exchange or clearinghouse, as counterparty to such
instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, the credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law,
the Fund does not have a contractual right of offset against a clearing broker or clearinghouse in the event of a default of the clearing broker or clearinghouse.
The Fund has entered into master agreements, such as an International Swaps and Derivatives Association, Inc. Master Agreement (“ISDA Master Agreement”) or similar agreement, with certain of its
derivative counterparties that govern over-the-counter (“OTC”) derivatives and provide for general obligations, representations, agreements, collateral posting
terms, netting provisions in the event of default or termination and credit related contingent features. The credit related contingent features include, but are not limited to, a percentage decrease in the Fund’s net assets or net asset value
per share over a specified period of time. If these credit related contingent features were triggered, the derivatives counterparty could terminate the positions and demand payment or require additional collateral.
|
|
|
|
|
|
|
34
|
|
|
|
Western Asset Premier Bond Fund 2021 Semi-Annual Report
|
Under an ISDA Master Agreement, the Fund
may, under certain circumstances, offset with the counterparty certain derivative financial instruments’ payables and/or receivables with collateral held and/or posted and create one single net payment. However, absent an event of default by
the counterparty or a termination of the agreement, the terms of the ISDA Master Agreements do not result in an offset of reported amounts of financial assets and financial liabilities in the Statement of Assets and Liabilities across transactions
between the Fund and the applicable counterparty. The enforceability of the right to offset may vary by jurisdiction.
Collateral requirements differ by
type of derivative. Collateral or margin requirements are set by the broker or exchange clearinghouse for exchange traded derivatives while collateral terms are contract specific for OTC traded derivatives. Cash collateral that has been pledged to
cover obligations of the Fund under derivative contracts, if any, will be reported separately in the Statement of Assets and Liabilities. Securities pledged as collateral, if any, for the same purpose are noted in the Schedule of Investments.
As of June 30, 2021, the Fund held forward foreign currency contracts with credit related contingent features which had a liability position of
$11,892. If a contingent feature in the master agreements would have been triggered, the Fund would have been required to pay this amount to its derivatives counterparties.
(o) Security transactions and investment income. Security transactions are accounted for on a trade date basis. Interest income (including
interest income from payment-in-kind securities), adjusted for amortization of premium and accretion of discount, is recorded on the accrual basis. Paydown gains and
losses on mortgage- and asset-backed securities are recorded as adjustments to interest income. Dividend income is recorded on the ex-dividend date for dividends received in cash and/or securities. 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.
(p) Distributions to
shareholders. Distributions from net investment income of the Fund, if any, are declared quarterly and paid on a monthly basis. The actual source of the Fund’s monthly distributions may be from net investment income, return of
capital or a combination of both. Shareholders will be informed of the tax characteristics of the distributions after the close of the fiscal year. Distributions of net realized gains, if any, are declared at least annually. Distributions to
shareholders of the Fund are recorded on the ex-dividend date and are determined in accordance with income tax regulations, which may differ from GAAP.
(q) Compensating balance arrangements. The Fund has an arrangement with its custodian bank whereby a portion of the custodian’s fees is
paid indirectly by credits earned on the Fund’s cash on deposit with the bank.
|
|
|
|
|
|
|
|
|
Western Asset Premier Bond Fund 2021 Semi-Annual Report
|
|
|
|
|
35
|
|
Notes to financial statements
(unaudited) (cont’d)
(r) Federal and other taxes. It is the Fund’s policy to comply with the federal income
and excise tax requirements of the Internal Revenue Code of 1986 (the “Code”), as amended, applicable to regulated investment companies. Accordingly, the Fund intends to distribute its taxable income and net realized gains, if any, to
shareholders in accordance with timing requirements imposed by the Code. Therefore, no federal or state income tax provision is required in the Fund’s financial statements.
Management has analyzed the Fund’s tax positions taken on income tax returns for all open tax years and has concluded that as of December 31, 2020, no provision for income tax is required in the
Fund’s financial statements. The Fund’s federal and state income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and
state departments of revenue.
Under the applicable foreign tax laws, a withholding tax may be imposed on interest, dividends and capital gains at
various rates.
(s) 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, LLC (“Western Asset”). Pursuant to the terms of the management agreement, the Fund pays Western Asset an annual fee, payable monthly, in an amount equal to 0.55% of the average
weekly value of the Fund’s total managed assets. “Total managed assets” means the total assets of the Fund (including any assets attributable to leverage) minus accrued liabilities (other than liabilities representing leverage).
Pursuant to a Portfolio Management Agreement between Western Asset and Western Asset Management Company Limited (“Western London”), Western Asset pays monthly a portion of the fees it receives from the Fund to Western London at an annual
rate of 0.425% of the average weekly value of the Fund’s total managed assets that Western London manages. Western Asset Management Company Pte. Ltd. (“Western Asset Singapore”) and Western Asset Management Company Ltd (“Western
Asset Japan”) are additional investment advisers to the Fund under portfolio management agreements between Western Asset and Western Asset Singapore, and Western Asset and Western Asset Japan.
Western Asset Singapore and Western Asset Japan provide certain advisory 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.
Under the terms of the administration services agreement between Western Asset and Legg Mason Partners Fund Advisor, LLC (“LMPFA”), Western Asset pays LMPFA a monthly fee at an annual rate of 0.125% of
the Fund’s average weekly total managed assets, subject to a monthly minimum fee of $12,500.
|
|
|
|
|
|
|
36
|
|
|
|
Western Asset Premier Bond Fund 2021 Semi-Annual Report
|
The investment adviser has agreed to waive the Fund’s management fee to an extent sufficient to offset the net
management fee payable in connection with any investment in an affiliated money market fund (the “affiliated money market fund waiver”).
During the six months ended June 30, 2021, fees waived and/or expenses reimbursed amounted to $374, all of which included an affiliated money market fund
waiver.
LMPFA, Western Asset, Western London, Western Asset Singapore and Western Asset Japan are indirect, wholly-owned subsidiaries of Franklin
Resources, Inc. (“Franklin Resources”).
During periods in which the Fund utilizes financial leverage, the fees paid to the investment adviser
will be higher than if the Fund did not utilize leverage because the fees are calculated as a percentage of the Fund’s assets, including those investments purchased with leverage.
All officers and one Trustee of the Fund are employees of Franklin Resources or its affiliates and do not receive compensation from the Fund.
3. Investments
During the six months ended June 30, 2021, 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
|
|
$
|
48,312,626
|
|
|
$
|
7,286,635
|
|
|
Sales
|
|
|
38,227,238
|
|
|
|
9,722,496
|
|
At June 30, 2021, the aggregate cost of investments and the aggregate gross unrealized appreciation and depreciation of
investments for federal income tax purposes were substantially as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
|
|
|
Gross
Unrealized
Appreciation
|
|
|
Gross
Unrealized
Depreciation
|
|
|
Net
Unrealized
Appreciation
(Depreciation)
|
|
|
Securities
|
|
$
|
218,262,140
|
|
|
$
|
28,662,714
|
|
|
$
|
(1,202,995)
|
|
|
$
|
27,459,719
|
|
|
Forward foreign currency contracts
|
|
|
—
|
|
|
|
277
|
|
|
|
(11,892)
|
|
|
|
(11,615)
|
|
|
|
|
|
|
|
|
|
|
Western Asset Premier Bond Fund 2021 Semi-Annual Report
|
|
|
|
|
37
|
|
Notes to financial statements
(unaudited) (cont’d)
Transactions in reverse repurchase agreements for the Fund during the six months ended June 30, 2021 were as follows:
|
|
|
|
|
|
|
|
|
|
|
Average Daily
Balance*
|
|
Weighted Average
Interest Rate*
|
|
|
Maximum Amount
Outstanding
|
|
|
$11,230,322
|
|
|
0.134
|
%
|
|
$
|
12,459,750
|
|
|
*
|
Averages based on the number of days that the Fund had reverse repurchase agreements outstanding.
|
Interest rates on reverse repurchase agreements ranged from 0.07% to 0.19% during the six months ended June 30, 2021. Interest expense incurred on reverse
repurchase agreements totaled $7,578.
4. Derivative instruments and hedging activities
Below is a table, grouped by derivative type, that provides information about the fair value and the location of derivatives within the Statement of Assets and
Liabilities at June 30, 2021.
|
|
|
|
|
|
|
|
|
|
|
ASSET DERIVATIVES1
|
|
|
|
|
|
|
|
Foreign
Exchange Risk
|
|
|
Forward foreign currency contracts
|
|
|
|
|
|
$
|
277
|
|
|
|
|
LIABILITY DERIVATIVES1
|
|
|
|
|
|
|
|
Foreign
Exchange Risk
|
|
|
Forward foreign currency contracts
|
|
|
|
|
|
$
|
11,892
|
|
|
1
|
Generally, the balance sheet location for asset derivatives is receivables/net unrealized appreciation and for liability derivatives is payables/net unrealized
depreciation.
|
The following tables provide information about the effect of derivatives and hedging activities on the Fund’s
Statement of Operations for the six months ended June 30, 2021. The first table provides additional detail about the amounts and sources of gains (losses) realized on derivatives during the period. The second table provides additional
information about the change in unrealized appreciation (depreciation) resulting from the Fund’s derivatives and hedging activities during the period.
|
|
|
|
|
|
|
AMOUNT OF REALIZED GAIN (LOSS) ON DERIVATIVES RECOGNIZED
|
|
|
|
|
Foreign
Exchange Risk
|
|
|
Forward foreign currency contracts
|
|
$
|
(64,769)
|
|
|
|
|
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON DERIVATIVES RECOGNIZED
|
|
|
|
|
Foreign
Exchange Risk
|
|
|
Forward foreign currency contracts
|
|
$
|
55,944
|
|
|
|
|
|
|
|
|
38
|
|
|
|
Western Asset Premier Bond Fund 2021 Semi-Annual Report
|
During the six months ended June 30,
2021, the volume of derivative activity for the Fund was as follows:
|
|
|
|
|
|
|
|
|
Average
Market Value
|
|
|
Forward foreign currency contracts (to buy)
|
|
$
|
77,787
|
|
|
Forward foreign currency contracts (to sell)
|
|
|
1,642,880
|
|
The following table presents the Fund’s OTC derivative assets and liabilities by counterparty net of amounts available for
offset under an ISDA Master Agreement and net of the related collateral pledged (received) by the Fund as of June 30, 2021.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Counterparty
|
|
Gross Assets
Subject to
Master
Agreements1
|
|
|
Gross
Liabilities
Subject
to
Master
Agreements1
|
|
|
Net Assets
(Liabilities)
Subject to
Master
Agreements
|
|
|
Collateral
Pledged
(Received)
|
|
|
Net
Amount2
|
|
|
BNP Paribas SA
|
|
$
|
277
|
|
|
|
—
|
|
|
$
|
277
|
|
|
|
—
|
|
|
$
|
277
|
|
|
Goldman Sachs Group Inc.
|
|
|
—
|
|
|
$
|
(11,892)
|
|
|
|
(11,892)
|
|
|
|
—
|
|
|
|
(11,892)
|
|
|
Total
|
|
$
|
277
|
|
|
$
|
(11,892)
|
|
|
$
|
(11,615)
|
|
|
|
—
|
|
|
$
|
(11,615)
|
|
|
1
|
Absent an event of default or early termination, derivative assets and liabilities are presented gross and not offset in the Statement of Assets and Liabilities.
|
|
2
|
Represents the net amount receivable (payable) from (to) the counterparty in the event of default.
|
5. Loan
The Fund has a revolving credit
agreement with National Australia Bank Limited (“Credit Agreement”) that allows the Fund to borrow up to an aggregate amount of $72,000,000. The Credit Agreement automatically renews daily for a six month term unless notice to the contrary
is given to the Fund. The final scheduled maturity date for the Credit Agreement is December 13, 2021. The Fund pays a commitment fee at an annual rate of 0.20%, on the unutilized portion of the loan. The interest on the loan is calculated at a
variable rate based on the prime rate, federal funds rate or LIBOR, plus any applicable margin. Securities held by the Fund are subject to a lien granted to National Australia Bank Limited, to the extent of the borrowing outstanding and any
additional expenses. The Fund’s Credit Agreement contains customary covenants that, among other things, may limit the Fund’s ability to pay distributions in certain circumstances, incur additional debt, change its fundamental investment
policies and engage in certain transactions, including mergers and consolidations, and require asset coverage ratios in addition to those required by the 1940 Act. In addition, the Credit Agreement may be subject to early termination under certain
conditions and may contain other provisions that could limit the Fund’s ability to utilize borrowing under the agreement. For the six months ended June 30, 2021, the Fund incurred a commitment fee in the amount of $14,581. Interest expense
related to this loan for the six months ended June 30, 2021 was $234,254. For the six months ended June 30, 2021, the Fund had an average daily loan balance outstanding of $57,500,000 and the weighted average interest rate was 0.81%. At
June 30, 2021, the Fund had $57,500,000 of borrowings outstanding.
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|
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|
|
|
|
|
|
Western Asset Premier Bond Fund 2021 Semi-Annual Report
|
|
|
|
|
39
|
|
Notes to financial statements
(unaudited) (cont’d)
6. Distributions subsequent to June 30, 2021
The following distributions have been declared by the Fund’s Board of Trustees and are payable subsequent to the period end of this report:
|
|
|
|
|
|
|
Record Date
|
|
Payable Date
|
|
Amount
|
|
6/23/2021
|
|
7/1/2021
|
|
$0.0660
|
|
7/23/2021
|
|
8/2/2021
|
|
$0.0660
|
|
8/24/2021
|
|
9/1/2021
|
|
$0.0660
|
|
9/23/2021
|
|
10/1/2021
|
|
$0.0660
|
7. Stock repurchase program
On November 20, 2015, the Fund announced that the Fund’s Board of Trustees (the “Board”) had authorized the Fund to repurchase in the open market up to approximately 10% of the Fund’s
outstanding common stock when the Fund’s shares are trading at a discount to net asset value. The Board has directed management of the Fund to repurchase shares of common stock at such times and in such amounts as management reasonably believes
may enhance shareholder value. The Fund is under no obligation to purchase shares at any specific discount levels or in any specific amounts. During the six months ended June 30, 2021, the Fund did not repurchase any shares.
Since the commencement of the stock repurchase program through June 30, 2021, the Fund repurchased 44,671 shares or 0.38% of its common shares outstanding for
a total amount of $462,743.
8. Transactions with affiliated company
As defined by the 1940 Act, an affiliated company is one in which the Fund owns 5% or more of the outstanding voting securities, or a company which is under common ownership or control with the Fund. The following
company was considered an affiliated company for all or some portion of the six months ended June 30, 2021. The following transactions were effected in such company for the six months ended June 30, 2021.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Affiliate
Value at
December 31,
2020
|
|
|
Purchased
|
|
|
Sold
|
|
|
|
|
Cost
|
|
|
Shares
|
|
|
Cost
|
|
|
Shares
|
|
|
Western Asset Premier Institutional Government Reserves, Premium Shares
|
|
$
|
3,565,819
|
|
|
$
|
23,070,197
|
|
|
|
23,070,197
|
|
|
$
|
24,299,527
|
|
|
|
24,299,527
|
|
|
|
|
|
|
|
|
40
|
|
|
|
Western Asset Premier Bond Fund 2021 Semi-Annual Report
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(cont’d)
|
|
Realized
Gain (Loss)
|
|
|
Interest
Income
|
|
|
Net Increase
(Decrease) in
Unrealized
Appreciation
(Depreciation)
|
|
|
Affiliate
Value at
June 30,
2021
|
|
|
Western Asset Premier Institutional Government Reserves, Premium Shares
|
|
|
—
|
|
|
$
|
91
|
|
|
|
—
|
|
|
$
|
2,336,489
|
|
9. Deferred capital losses
As of December 31, 2020, the Fund had deferred capital losses of $9,819,688, which have no expiration date, that will be available to offset future taxable capital gains.
10. Recent accounting pronouncement
In March
2020, the Financial Accounting Standards Board issued Accounting Standards Update No. 2020-04, Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate Reform on Financial
Reporting (the “ASU”). The amendments in the ASU provide optional temporary financial reporting relief from the effect of certain types of contract modifications due to the planned discontinuation of the London Interbank Offered Rate
and other interbank-offered based reference rates as of the end of 2021. The ASU is effective for certain reference rate-related contract modifications that occur during the period March 12, 2020 through December 31, 2022. Management has
reviewed the requirements and believes the adoption of this ASU will not have a material impact on the financial statements.
11.
Other matters
The outbreak of the respiratory illness COVID-19 (commonly referred to as
“coronavirus”) has continued to rapidly spread around the world, causing considerable uncertainty for the global economy and financial markets. The ultimate economic fallout from the pandemic, and the long-term impact on economies,
markets, industries and individual issuers, are not known. The COVID-19 pandemic could adversely affect the value and liquidity of the Fund’s investments and negatively impact the Fund’s performance.
In addition, the outbreak of COVID-19, and measures taken to mitigate its effects, could result in disruptions to the services provided to the Fund by its service providers.
***
The Fund’s investments, payment
obligations, and financing terms may be based on floating rates, such as the London Interbank Offered Rate, or “LIBOR,” which is the offered rate for short-term Eurodollar deposits between major international banks. On March 5, 2021,
the ICE Benchmark Administration, the administrator of LIBOR, stated that it will cease the publication of (i) the overnight and one-, three-, six- and twelve-month
USD LIBOR settings immediately following the LIBOR publication on Friday, June 30, 2023 and (ii) all other LIBOR settings, including the one-week and two-month
USD LIBOR settings, immediately
|
|
|
|
|
|
|
|
|
Western Asset Premier Bond Fund 2021 Semi-Annual Report
|
|
|
|
|
41
|
|
Notes to financial statements
(unaudited) (cont’d)
following the LIBOR publication on Friday, December 31, 2021. There remains uncertainty regarding the nature of any replacement rate and the impact of the
transition from LIBOR on the Fund’s transactions and the financial markets generally. As such, the potential effect of a transition away from LIBOR on the Fund or the Fund’s investments cannot yet be determined.
|
|
|
|
|
|
|
42
|
|
|
|
Western Asset Premier Bond Fund 2021 Semi-Annual Report
|
Additional shareholder information (unaudited)
Results of annual meeting of shareholders
The Annual Meeting of Shareholders of Western Asset Premier Bond Fund was held on May 14, 2021 for the purpose of considering and voting upon the proposal
presented at the Meeting. The following table provides information concerning the matters voted upon at the Meeting:
Election of
Trustees
|
|
|
|
|
|
|
|
|
|
|
Nominees
|
|
Votes
FOR
|
|
|
Votes
WITHHELD
|
|
|
Robert Abeles, Jr
|
|
|
7,604,481
|
|
|
|
2,311,588
|
|
|
Jane F. Dasher
|
|
|
7,621,142
|
|
|
|
2,294,927
|
|
|
Anita L. DeFrantz
|
|
|
7,220,959
|
|
|
|
2,695,110
|
|
|
Susan B. Kerley
|
|
|
7,636,407
|
|
|
|
2,279,662
|
|
|
Michael Larson
|
|
|
7,654,712
|
|
|
|
2,261,357
|
|
|
Ronald L. Olson
|
|
|
8,744,622
|
|
|
|
1,171,447
|
|
|
Avedick B. Poladian
|
|
|
7,631,370
|
|
|
|
2,284,699
|
|
|
William E.B. Siart
|
|
|
7,612,976
|
|
|
|
2,303,093
|
|
|
Jaynie M. Studenmund
|
|
|
7,653,297
|
|
|
|
2,262,772
|
|
|
Peter J. Taylor
|
|
|
7,657,900
|
|
|
|
2,258,169
|
|
|
Jane Trust
|
|
|
8,821,130
|
|
|
|
1,094,939
|
|
At June 30, 2021, the Trustees of the Fund were Robert Abeles, Jr, Jane F. Dasher, Anita L. DeFrantz, Susan B. Kerley, Michael
Larson, Ronald L. Olson, Avedick B. Poladian, William E.B. Siart, Jaynie M. Studenmund, Peter J. Taylor and Jane Trust.
|
|
|
|
|
|
|
|
|
Western Asset Premier Bond Fund
|
|
|
|
|
43
|
|
Dividend reinvestment plan (unaudited)
The Fund and Computershare Inc. (“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
Fund’s 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 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
participant’s 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.
|
|
|
|
|
|
|
44
|
|
|
|
Western Asset Premier Bond Fund
|
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 Computershare Inc., 462 South 4th Street, Suite 1600, Louisville, KY 40202. Investor Relations Telephone number
1-888-888-0151.
|
|
|
|
|
|
|
|
|
Western Asset Premier Bond Fund
|
|
|
|
|
45
|
|
Western Asset
Premier Bond Fund
Trustees
Robert Abeles, Jr
Jane F. Dasher
Anita L. DeFrantz
Susan B. Kerley
Michael Larson
Ronald L. Olson
Avedick B. Poladian
William E.B. Siart
Chairman
Jaynie M. Studenmund
Peter J. Taylor
Jane Trust
Officers
Jane Trust
President and Chief Executive Officer
Christopher Berarducci
Treasurer and Principal Financial Officer
Ted P. Becker
Chief Compliance Officer
Jenna Bailey
Identity Theft Prevention Officer
Marc A. De Oliveira
Secretary and Chief Legal Officer
Thomas C. Mandia
Assistant Secretary
Jeanne M. Kelly
Senior Vice President
Western Asset Premier Bond Fund
620 Eighth Avenue
47th Floor New York,
NY 10018
Investment advisers
Western Asset Management Company, LLC
Western Asset Management Company Limited
Western Asset Management Company Pte. Ltd.
Western Asset Management
Company Ltd
Custodian
The Bank
of New York Mellon
Independent registered public accounting firm
PricewaterhouseCoopers LLP
100 East Pratt Street
Baltimore, MD 21202
Legal counsel
Ropes & Gray LLP
1211 Avenue of the Americas
New York, NY 10036
Transfer agent
Computershare Inc.
462 South 4th Street,
Suite 1600 Louisville, KY 40202
New York Stock Exchange Symbol
WEA
Legg Mason Funds Privacy and Security Notice
Your Privacy and the Security of Your Personal Information is Very Important to the Legg Mason Funds
This Privacy and Security Notice (the “Privacy Notice”) addresses the Legg Mason Funds’ privacy and data protection practices with respect to
nonpublic personal information the Funds receive. The Legg Mason Funds include any funds sold by the Funds’ distributor, Franklin Distributors, LLC, as well as Legg Mason-sponsored closed-end funds. The
provisions of this Privacy Notice apply to your information both while you are a shareholder and after you are no longer invested with the Funds.
The Type of Nonpublic Personal Information the Funds Collect About You
The Funds collect and
maintain nonpublic personal information about you in connection with your shareholder account. Such information may include, but is not limited to:
|
•
|
|
Personal information included on applications or other forms;
|
|
•
|
|
Account balances, transactions, and mutual fund holdings and positions;
|
|
•
|
|
Bank account information, legal documents, and identity verification documentation;
|
|
•
|
|
Online account access user IDs, passwords, security challenge question responses; and
|
|
•
|
|
Information received from consumer reporting agencies regarding credit history and creditworthiness (such as the amount of an individual’s total debt,
payment history, etc.).
|
How the Funds Use Nonpublic Personal Information About You
The Funds do not sell or share your nonpublic personal information with third parties or with affiliates for their marketing purposes, or with other financial
institutions or affiliates for joint marketing purposes, unless you have authorized the Funds to do so. The Funds do not disclose any nonpublic personal information about you except as may be required to perform transactions or services you have
authorized or as permitted or required by law.
The Funds may disclose information about you to:
|
•
|
|
Employees, agents, and affiliates on a “need to know” basis to enable the Funds to conduct ordinary business, or to comply with obligations to
government regulators;
|
|
•
|
|
Service providers, including the Funds’ affiliates, who assist the Funds as part of the ordinary course of business (such as printing, mailing services, or
processing or servicing your account with us) or otherwise perform services on the Funds’ behalf, including companies that may perform statistical analysis, market research and marketing services solely for the Funds;
|
|
•
|
|
Permit access to transfer, whether in the United States or countries outside of the United States to such Funds’ employees, agents and affiliates and
service providers as required to enable the Funds to conduct ordinary business, or to comply with obligations to government regulators;
|
|
•
|
|
The Funds’ representatives such as legal counsel, accountants and auditors to enable the Funds to conduct ordinary business, or to comply with obligations
to government regulators;
|
|
•
|
|
Fiduciaries or representatives acting on your behalf, such as an IRA custodian or trustee of a grantor trust.
|
|
|
|
NOT PART OF THE
SEMI-ANNUAL REPORT
|
Legg Mason Funds Privacy and Security Notice (cont’d)
Except as otherwise permitted by applicable law, companies acting on the Funds’
behalf, including those outside the United States, are contractually obligated to keep nonpublic personal information the Funds provide to them confidential and to use the information the Funds share only to provide the services the Funds ask them
to perform. The Funds may disclose nonpublic personal information about you when necessary to enforce their rights or protect against fraud, or as permitted or required by applicable law, such as in connection with a law enforcement or regulatory
request, subpoena, or similar legal process. In the event of a corporate action or in the event a Fund service provider changes, the Funds may be required to disclose your nonpublic personal information to third parties. While it is the Funds’
practice to obtain protections for disclosed information in these types of transactions, the Funds cannot guarantee their privacy policy will remain unchanged.
Keeping You Informed of the Funds’ Privacy and Security Practices
The Funds will notify
you annually of their privacy policy as required by federal law. While the Funds reserve the right to modify this policy at any time they will notify you promptly if this privacy policy changes.
The Funds’ Security Practices
The
Funds maintain appropriate physical, electronic and procedural safeguards designed to guard your nonpublic personal information. The Funds’ internal data security policies restrict access to your nonpublic personal information to authorized
employees, who may use your nonpublic personal information for Fund business purposes only.
Although the Funds strive to protect your nonpublic personal
information, they cannot ensure or warrant the security of any information you provide or transmit to them, and you do so at your own risk. In the event of a breach of the confidentiality or security of your nonpublic personal information, the Funds
will attempt to notify you as necessary, so you can take appropriate protective steps. If you have consented to the Funds using electronic communications or electronic delivery of statements, they may notify you under such circumstances using the
most current email address you have on record with them.
In order for the Funds to provide effective service to you, keeping your account information
accurate is very important. If you believe that your account information is incomplete, not accurate or not current, if you have questions about the Funds’ privacy practices, or our use of your nonpublic personal information, write the Funds
using the contact information on your account statements, email the Funds by clicking on the Contact Us section of the Funds’ website at www.leggmason.com, or contact the Fund at
1-888-777-0102.
Revised April
2018
Legg Mason California Consumer Privacy Act Policy
Although much of the personal information we collect is “nonpublic personal information” subject to federal law, residents of California may, in certain circumstances, have additional rights under the
California Consumer Privacy Act (“CCPA”). For example, if you are a broker,
|
|
|
NOT PART OF THE
SEMI-ANNUAL REPORT
|
Legg Mason Funds Privacy and Security Notice (cont’d)
dealer, agent, fiduciary, or representative acting by or on behalf of, or for, the
account of any other person(s) or household, or a financial advisor, or if you have otherwise provided personal information to us separate from the relationship we have with personal investors, the provisions of this Privacy Policy apply to your
personal information (as defined by the CCPA).
|
•
|
|
In addition to the provisions of the Legg Mason Funds Security and Privacy Notice, you may have the right to know the categories and specific pieces of personal
information we have collected about you.
|
|
•
|
|
You also have the right to request the deletion of the personal information collected or maintained by the Funds.
|
If you wish to exercise any of the rights you have in respect of your personal information, you should advise the Funds by contacting them as set forth below. The
rights noted above are subject to our other legal and regulatory obligations and any exemptions under the CCPA. You may designate an authorized agent to make a rights request on your behalf, subject to the identification process described below. We
do not discriminate based on requests for information related to our use of your personal information, and you have the right not to receive discriminatory treatment related to the exercise of your privacy rights.
We may request information from you in order to verify your identity or authority in making such a request. If you have appointed an authorized agent to make a
request on your behalf, or you are an authorized agent making such a request (such as a power of attorney or other written permission), this process may include providing a password/passcode, a copy of government issued identification, affidavit or
other applicable documentation, i.e. written permission. We may require you to verify your identity directly even when using an authorized agent, unless a power of attorney has been provided. We reserve the right to deny a request submitted by an
agent if suitable and appropriate proof is not provided.
For the 12-month period prior to the date of this
Privacy Policy, the Legg Mason Funds have not sold any of your personal information; nor do we have any plans to do so in the future.
Contact
Information
Address: Data Privacy Officer, 100 International Dr., Baltimore, MD 21202
Email: DataProtectionOfficer@franklintempleton.com
Phone: 1-800-396-4748
Revised October 2020
|
|
|
NOT PART OF THE
SEMI-ANNUAL REPORT
|
Western Asset Premier Bond Fund
Western Asset Premier Bond Fund
620 Eighth Avenue
47th Floor
New York, NY 10018
Notice is hereby given in accordance with Section 23(c) of the Investment Company Act of 1940, as amended, that from time to time the Fund may purchase, at market prices, shares of its stock.
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each
fiscal year as an exhibit to its reports on Form N-PORT. The Fund’s Forms N-PORT are available on the SEC’s website at www.sec.gov. To obtain information on
Form N-PORT, shareholders can call the Fund at 1-888-777-0102.
Information on how the Fund voted proxies relating to portfolio securities during the prior 12-month period ended June 30th
of each year and a description of the policies and procedures that the Fund uses to determine how to vote proxies related to portfolio transactions are available (1) without charge, upon request, by calling 1-888-777-0102, (2) at www.lmcef.com and (3) on the SEC’s website at www.sec.gov.
This report is transmitted to the shareholders of Western Asset Premier Bond Fund for their information. This is not a prospectus, circular or representation intended for use in the purchase of shares of the Fund
or any securities mentioned in this report.
Computershare Inc.
462 South 4th Street, Suite 1600
Louisville, KY 40202
WASX012842 8/21 SR21-4228