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

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Annual Report to ShareholdersNotes to Financial Statements—ContinuedUnder the terms of the Administration Agreement among the Fund, Western Asset and Legg Mason Fund Adviser, Inc.(“LMFA”), Western Asset pays LMFA, 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 $12,500.7. 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 andrelated expenses for each meeting of the Board or of a committee attended in-person and a fee of $2,500 for participating in eachtelephonic meeting. The Chairman of the Board and the Chairman of the Audit Committee each receive an additional $25,000 peryear for serving in such capacities. Each member of the Audit Committee receives a fee of $6,000 for serving as a member of theAudit Committee. Other committee members receive a fee of $3,000 for serving as a member of each committee upon which theyserve. All such fees are allocated among the Fund, Western Asset Income Fund and Western Asset Funds, Inc. according to eachsuch investment company’s annual net assets. Trustee Ronald Olson receives from Western Asset an aggregate fee of $70,000annually for serving on the combined Board of Trustees/Directors of the Fund, Western Asset Income Fund and Western AssetFunds, 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 $2,500for participating in each telephonic meeting.8. Recent Accounting Pronouncements:In March 2008, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting StandardsNo. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 is effective for fiscal years andinterim periods beginning after November 15, 2008. FAS 161 requires enhanced disclosures about a fund’s derivative and hedgingactivities, including how such activities are accounted for and their effect on a fund’s financial position, performance and cashflows. Management is currently evaluating the impact the adoption of FAS 161 will have on the Fund’s financial statements andrelated disclosures.42
Annual Report to ShareholdersReport of Independent Registered Public Accounting FirmTo the Board of Trustees and Shareholders of Western Asset Premier Bond Fund:In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments, and the relatedstatements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financialposition of Western Asset Premier Bond Fund (the “Fund”) at December 31, 2008, the results of its operations, the changes inits net assets, and the financial highlights for each of the periods presented, in conformity with accounting principles generallyaccepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financialstatements”) are the responsibility of the Fund’s management; our responsibility is to express an opinion on these financial statementsbased on our audits. We conducted our audits of these financial statements in accordance with the standards of the PublicCompany Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used andsignificant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits,which included confirmation of securities at December 31, 2008 by correspondence with the custodian and brokers, provide areasonable basis for our opinion.PricewaterhouseCoppers LLPBaltimore, MarylandFebruary 27, 200943
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