Investment Commentary and Annual Report to ... - Western Asset

Annual Report to ShareholdersPortfolio of InvestmentsDecember 31, 2008Western Asset Premier Bond Fund%OFNET ASSETSRATEMATURITYDATEPAR/SHARESVALUELong-Term Securities 163.8%Corporate Bonds and Notes 87.1%Aerospace and Defense 2.7%DRS Technologies Inc. 6.625% 2/1/16 $ 300,000 $ 300,000L-3 Communications Corp. 6.375% 10/15/15 535,000 500,225Northrop Grumman Corp. 7.750% 2/15/31 1,000,000 1,221,215Sequa Corp. 11.750% 12/1/15 90,000 34,200 ASequa Corp. 13.500% 12/1/15 96,176 30,776 A,BThe Boeing Co. 6.125% 2/15/33 600,000 625,1042,711,520Airlines 11.4%America West Airlines Inc. 8.057% 7/2/20 2,774,887 1,803,676Continental Airlines Inc. 7.160% 3/24/13 763,314 557,219Continental Airlines Inc. 6.900% 1/2/18 977,786 782,229Continental Airlines Inc. 6.820% 5/1/18 913,728 676,158Continental Airlines Inc. 6.545% 2/2/19 1,788,051 1,430,440Continental Airlines Inc. 8.048% 11/1/20 657,360 525,888Continental Airlines Inc. 6.703% 6/15/21 819,937 614,953DAE Aviation Holdings Inc. 11.250% 8/1/15 460,000 188,600 ANorthwest Airlines Corp. 7.575% 9/1/20 683,006 464,444Northwest Airlines Inc. 3.186% 8/6/13 3,107,137 1,988,568 CUnited Air Lines Inc. 7.032% 10/1/10 144,872 133,283United Air Lines Inc. 7.186% 4/1/11 30,413 28,588United Air Lines Inc. 6.602% 9/1/13 383,827 360,798US Airways Pass-Through Trust 6.850% 1/30/18 2,628,393 1,839,87511,394,719Auto Components 0.1%Visteon Corp. 8.250% 8/1/10 122,000 37,820Visteon Corp. 12.250% 12/31/16 313,000 75,120 A112,940Automobiles 1.7%DaimlerChrysler NA Holding Corp. 7.300% 1/15/12 1,000,000 864,380DaimlerChrysler NA Holding Corp. 8.500% 1/18/31 1,000,000 731,222General Motors Corp. 8.375% 7/15/33 420,000 73,5001,669,102Building Products 0.5%Associated Materials Inc. 0.000% 3/1/14 675,000 374,625 DNortek Inc. 8.500% 9/1/14 185,000 42,550NTK Holdings Inc. 0.000% 3/1/14 500,000 107,500 D524,6758