<strong>Annual</strong> <strong>Report</strong> <strong>to</strong> ShareholdersPortfolio of <strong>Investment</strong>s—Continued<strong>Western</strong> <strong>Asset</strong> Premier Bond Fund—Continued%OFNET ASSETSVALUETotal <strong>Investment</strong>s (Cost—$215,976,229) O 163.8% $163,969,020Other <strong>Asset</strong>s Less Liabilities 8.1% 8,133,044Liquidation value of preferred shares (71.9)% (72,000,000)Net <strong>Asset</strong>s Applicable <strong>to</strong> Common Shareholders 100.0% $100,102,064N.M.—Not Meaningful.A Rule 144a Security – A security purchased pursuant <strong>to</strong> Rule 144a under the Securities Act of 1933 which may not be resold subject <strong>to</strong> that ruleexcept <strong>to</strong> qualified institutional buyers. These securities, which the Fund’s investment adviser has determined <strong>to</strong> be liquid, represent 31.51% of netassets.B Pay-in-Kind (“PIK”) security – A security in which interest or dividends during the initial few years is paid in additional PIK securities rather thanin cash.C Indexed Security – The rates of interest earned on these securities are tied <strong>to</strong> the London Interbank Offered Rate (“LIBOR”), the Euro InterbankOffered Rate (“EURIBOR”) Index, the Consumer Price Index (“CPI”), the one-year Treasury Bill Rate or the ten-year Japanese Government BondRate. The coupon rates are the rates as of December 31, 2008.D Stepped Coupon Security – A security with a predetermined schedule of interest or dividend rate changes at which time it begins <strong>to</strong> accrue interest orpay dividends according <strong>to</strong> the predetermined schedule.E Convertible Security – Security may be converted in<strong>to</strong> the issuer’s common s<strong>to</strong>ck.F Bond is currently in default.G Credit Linked Security – The rates of interest earned on these securities are tied <strong>to</strong> the credit rating assigned by St<strong>and</strong>ard & Poor’s Rating Service<strong>and</strong>/or Moody’s Inves<strong>to</strong>rs Services.H Illiquid security valued at fair value under the procedures approved by the Board of Trustees.I Yankee Bond – A dollar-denominated bond issued in the U.S. by foreign entities.J Stripped Security – Security with interest-only or principal-only payment streams, denoted by a 1 or 2, respectively. For interest-only securities, theamount shown as principal is the notional balance used <strong>to</strong> calculate the amount of interest due.K The coupon rates shown on variable rate securities are the rates at December 31, 2008. These rates vary with the weighted average coupon of theunderlying loans.L On September 7, 2008, the Federal Housing Finance Agency placed Fannie Mae <strong>and</strong> Freddie Mac in<strong>to</strong> Conserva<strong>to</strong>rship.M Non-income producing.N Restricted Security – Security is valued at fair value as determined in good faith by, or under the direction of, the Board of Trustees underprocedures established by the Board of Trustees.O At December 31, 2008, the aggregate gross unrealized appreciation <strong>and</strong> depreciation of investments for federal income tax purposes weresubstantially as follows:Gross unrealized appreciation $ 5,126,536Gross unrealized depreciation (58,271,594)Net unrealized depreciation $(53,145,058)See notes <strong>to</strong> financial statements.24
<strong>Annual</strong> <strong>Report</strong> <strong>to</strong> ShareholdersStatement of <strong>Asset</strong>s <strong>and</strong> LiabilitiesDecember 31, 2008<strong>Western</strong> <strong>Asset</strong> Premier Bond Fund<strong>Asset</strong>s:<strong>Investment</strong> securities at value (cost—$215,976,229) $163,969,020Cash 4,804,721Foreign currency at value (cost—$258,511) 195,205Restricted cash pledged as collateral for swaps 11,300,000Interest receivable 2,957,071Receivable for securities sold 102,387Amounts receivable for open swaps 95,530Unrealized appreciation of swaps 904,097Other assets 15,753Total assets 184,343,784Liabilities:Unrealized depreciation of swaps $10,576,196Payable for securities purchased 742,333Income distribution payable <strong>to</strong> common shareholders 307,606Premiums received for open swaps 272,667Accrued management fee 94,945Amounts payable for open swaps 1,665Accrued expenses 246,308Total liabilities 12,241,720Preferred shares:No par value, 2,880 shares authorized, issued <strong>and</strong> outst<strong>and</strong>ing, $25,000 liquidation value pershare (Note 5) 72,000,000Net <strong>Asset</strong>s Applicable <strong>to</strong> Common Shareholders $100,102,064Composition of Net <strong>Asset</strong>s Applicable <strong>to</strong> Common Shareholders:Common shares, no par value, unlimited number of shares authorized, 11,474,540 sharesissued <strong>and</strong> outst<strong>and</strong>ing (Note 4) $162,385,301Undistributed net investment income 4,620,320Accumulated net realized loss on investments, futures, swaps <strong>and</strong> foreign currencytransactions (5,160,881)Net unrealized depreciation of investments, swaps <strong>and</strong> foreign currency translations (61,742,676)Net <strong>Asset</strong>s Applicable <strong>to</strong> Common Shareholders $100,102,064Net <strong>Asset</strong> Value Per Common Share:($100,102,064 ÷ 11,474,540 common shares issued <strong>and</strong> outst<strong>and</strong>ing) $ 8.72See notes <strong>to</strong> financial statements.25