Western Asset Intermediate Muni Fund Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Security
|
|
Rate
|
|
|
Maturity
Date
|
|
|
Face
Amount
|
|
|
Value
|
|
|
Washington — 1.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Port of Seattle, WA, Intermediate Lien Revenue, Series 2019
|
|
|
5.000
|
%
|
|
|
4/1/33
|
|
|
$
|
500,000
|
|
|
$
|
628,155
|
(a)
|
|
Washington State Health Care Facilities Authority Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commonspirit Health, Series B, Refunding
|
|
|
5.000
|
%
|
|
|
8/1/26
|
|
|
|
250,000
|
|
|
|
299,862
|
(b)(c)
|
|
Seattle Cancer Care Alliance, Refunding
|
|
|
5.000
|
%
|
|
|
12/1/29
|
|
|
|
170,000
|
|
|
|
222,757
|
|
|
Seattle Cancer Care Alliance, Refunding
|
|
|
5.000
|
%
|
|
|
12/1/30
|
|
|
|
265,000
|
|
|
|
353,985
|
|
|
Seattle Cancer Care Alliance, Refunding
|
|
|
5.000
|
%
|
|
|
9/1/38
|
|
|
|
300,000
|
|
|
|
389,353
|
|
|
Total Washington
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,894,112
|
|
|
West Virginia — 0.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
West Virginia University Revenue, West Virginia Projects, Series B, Refunding
|
|
|
5.000
|
%
|
|
|
10/1/29
|
|
|
|
300,000
|
|
|
|
385,710
|
(b)(c)
|
|
Wisconsin — 3.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Central Brown County, WI, Water Authority System Revenue, Series A, Refunding
|
|
|
5.000
|
%
|
|
|
11/1/35
|
|
|
|
2,105,000
|
|
|
|
2,411,716
|
|
|
La Crosse, WI, Resource Recovery Revenue, Northern States Power Co. Project, Refunding
|
|
|
6.000
|
%
|
|
|
11/1/21
|
|
|
|
2,000,000
|
|
|
|
2,047,340
|
(a)
|
|
Public Finance Authority, WI, Limited Obligation Pilot Revenue, American Dream @ Meadowlands Project
|
|
|
6.500
|
%
|
|
|
12/1/37
|
|
|
|
200,000
|
|
|
|
227,992
|
(d)
|
|
Public Finance Authority, WI, Revenue, Carmelite System Inc., Obligated Group, Series 2020
|
|
|
5.000
|
%
|
|
|
1/1/40
|
|
|
|
150,000
|
|
|
|
181,612
|
|
|
Village of Mount Pleasant, WI, Tax Increment Revenue, Series A
|
|
|
5.000
|
%
|
|
|
4/1/43
|
|
|
|
500,000
|
|
|
|
610,857
|
|
|
Total Wisconsin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,479,517
|
|
|
Total Municipal Bonds (Cost — $177,451,255)
|
|
|
|
|
|
|
|
193,304,857
|
|
|
Municipal Bonds Deposited in Tender Option Bond Trust
(i) — 1.6%
|
|
|
|
|
|
|
|
|
|
|
New York — 1.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New York State Urban Development Corp. Revenue, State Personal Income Tax Revenue Bonds, Bidding Group 3, Series E,
Refunding
(Cost — $2,268,156)
|
|
|
4.000
|
%
|
|
|
3/15/41
|
|
|
|
1,925,000
|
|
|
|
2,280,258
|
|
|
Total Investments before Short-Term Investments (Cost —
$179,719,411)
|
|
|
|
195,585,115
|
|
|
Short-Term Investments — 0.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal Bonds — 0.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arizona — 0.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Phoenix, AZ, IDA, Health Care Facilities Revenue, Mayo Clinic, Series B, SPA - Northern Trust Co.
|
|
|
0.020
|
%
|
|
|
11/15/52
|
|
|
|
500,000
|
|
|
|
500,000
|
(j)(k)
|
See Notes to Financial
Statements.
|
|
|
|
|
|
|
|
|
Western Asset Intermediate Muni Fund Inc. 2021 Semi-Annual Report
|
|
|
|
|
15
|
|
Schedule of investments
(unaudited) (cont’d)
May 31, 2021
Western Asset Intermediate Muni Fund Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Security
|
|
Rate
|
|
|
Maturity
Date
|
|
|
Face
Amount
|
|
|
Value
|
|
|
California — 0.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
California State MFA Revenue, Chevron USA Inc. Project, Series A
|
|
|
0.010
|
%
|
|
|
11/1/35
|
|
|
$
|
100,000
|
|
|
$
|
100,000
|
(j)(k)
|
|
California Statewide CDA, MFH Revenue, IAC Project, Series W-3, Refunding, LOC -
Wells Fargo Bank N.A.
|
|
|
0.020
|
%
|
|
|
4/1/25
|
|
|
|
100,000
|
|
|
|
100,000
|
(a)(j)(k)
|
|
Total California
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
New York — 0.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New York City, NY, GO, Subseries G-6, LOC - Mizuho Bank Ltd.
|
|
|
0.010
|
%
|
|
|
4/1/42
|
|
|
|
200,000
|
|
|
|
200,000
|
(j)(k)
|
|
Total Short-Term Investments (Cost — $900,000)
|
|
|
|
|
|
|
|
900,000
|
|
|
Total Investments — 132.7% (Cost — $180,619,411)
|
|
|
|
|
|
|
|
196,485,115
|
|
|
Auction Rate Cumulative Preferred Stock, at Liquidation Value — (0.4)%
|
|
|
|
|
|
|
|
(600,000
|
)
|
|
Variable Rate Demand Preferred Stock, at Liquidation Value — (32.0)%
|
|
|
|
|
|
|
|
(47,400,000
|
)
|
|
TOB Floating Rate Notes — (1.0)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,445,000
|
)
|
|
Other Assets in Excess of Other Liabilities — 0.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,063,525
|
|
|
Total Net Assets Applicable to Common Shareholders — 100.0%
|
|
|
|
|
|
|
$
|
148,103,640
|
|
See Notes to Financial
Statements.
|
|
|
|
|
|
|
16
|
|
|
|
Western Asset Intermediate Muni Fund Inc. 2021 Semi-Annual Report
|
Western Asset Intermediate Muni Fund Inc.
|
*
|
Non-income producing security.
|
|
(a)
|
Income from this issue is considered a preference item for purposes of calculating the alternative minimum tax (“AMT”).
|
|
(b)
|
Maturity date shown represents the mandatory tender date.
|
|
(c)
|
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.
|
|
(d)
|
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 Directors.
|
|
(e)
|
Securities traded on a when-issued or delayed delivery basis.
|
|
(f)
|
Pre-Refunded bonds are generally escrowed with U.S. government obligations and/or U.S. government agency securities.
|
|
(g)
|
The coupon payment on this security is currently in default as of May 31, 2021.
|
|
(h)
|
The maturity principal is currently in default as of May 31, 2021.
|
|
(i)
|
Represents securities deposited into a special purpose entity, referred to as a Tender Option Bond (“TOB”) trust (Note 1).
|
|
(j)
|
Variable rate demand obligations (“VRDOs”) have a demand feature under which the Fund can tender them back to the issuer or liquidity provider on no
more than 7 days notice. The interest rate generally resets on a daily or weekly basis and is determined on the specific interest rate reset date by the remarketing agent, pursuant to a formula specified in official documents for the VRDO, or set at
the highest rate allowable as specified in official documents for the VRDO. VRDOs are benchmarked to the Securities Industry and Financial Markets Association (“SIFMA”) Municipal Swap Index. The SIFMA Municipal Swap Index is compiled from
weekly interest rate resets of tax-exempt VRDOs reported to the Municipal Securities Rulemaking Board’s Short-term Obligation Rate Transparency System.
|
|
(k)
|
Maturity date shown is the final maturity date. The security may be sold back to the issuer before final maturity.
|
See Notes to Financial Statements.
|
|
|
|
|
|
|
|
|
Western Asset Intermediate Muni Fund Inc. 2021 Semi-Annual Report
|
|
|
|
|
17
|
|
Schedule of investments
(unaudited) (cont’d)
May 31, 2021
Western Asset Intermediate Muni Fund Inc.
|
|
|
|
|
Abbreviation(s) used in this schedule:
|
|
|
|
|
AGM
|
|
— Assured Guaranty Municipal Corporation — Insured Bonds
|
|
|
|
|
BAM
|
|
— Build America Mutual — Insured Bonds
|
|
|
|
|
CAB
|
|
— Capital Appreciation Bonds
|
|
|
|
|
CDA
|
|
— Communities Development Authority
|
|
|
|
|
COP
|
|
— Certificates of Participation
|
|
|
|
|
CSCE
|
|
— Charter School Credit Enhancement
|
|
|
|
|
DFA
|
|
— Development Finance Agency
|
|
|
|
|
EDA
|
|
— Economic Development Authority
|
|
|
|
|
EDC
|
|
— Economic Development Corporation
|
|
|
|
|
GO
|
|
— General Obligation
|
|
|
|
|
HEFA
|
|
— Health & Educational Facilities Authority
|
|
|
|
|
IDA
|
|
— Industrial Development Authority
|
|
|
|
|
IDR
|
|
— Industrial Development Revenue
|
|
|
|
|
LOC
|
|
— Letter of Credit
|
|
|
|
|
MFA
|
|
— Municipal Finance Authority
|
|
|
|
|
MFH
|
|
— Multi-Family Housing
|
|
|
|
|
MTA
|
|
— Metropolitan Transportation Authority
|
|
|
|
|
NATL
|
|
— National Public Finance Guarantee Corporation — Insured Bonds
|
|
|
|
|
PCFA
|
|
— Pollution Control Financing Authority
|
|
|
|
|
PEA
|
|
— Public Energy Authority
|
|
|
|
|
SD
|
|
— School District
|
|
|
|
|
SIFMA
|
|
— Securities Industry and Financial Markets Association
|
|
|
|
|
SPA
|
|
— Standby Bond Purchase Agreement — Insured Bonds
|
|
|
|
|
TFA
|
|
— Transitional Finance Authority
|
See Notes to Financial
Statements.
|
|
|
|
|
|
|
18
|
|
|
|
Western Asset Intermediate Muni Fund Inc. 2021 Semi-Annual Report
|
Statement of assets and liabilities (unaudited)
May 31, 2021
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
Investments, at value (Cost — $180,619,411)
|
|
$
|
196,485,115
|
|
|
Interest receivable
|
|
|
2,392,951
|
|
|
Prepaid expenses
|
|
|
56,484
|
|
|
Total Assets
|
|
|
198,934,550
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
Variable Rate Demand Preferred Stock ($25,000 liquidation value per share; 1,896 shares issued and outstanding) (net of
deferred offering costs of $656,091) (Note 5)
|
|
|
46,743,909
|
|
|
TOB Floating Rate Notes (Note 1)
|
|
|
1,445,000
|
|
|
Payable for securities purchased
|
|
|
1,233,338
|
|
|
Distributions payable to Common Shareholders
|
|
|
330,934
|
|
|
Investment management fee payable
|
|
|
91,420
|
|
|
Due to custodian
|
|
|
6,935
|
|
|
Directors’ fees payable
|
|
|
3,045
|
|
|
Interest expense payable
|
|
|
1,923
|
|
|
Distributions payable to Auction Rate Cumulative Preferred Stockholders
|
|
|
11
|
|
|
Accrued expenses
|
|
|
374,395
|
|
|
Total Liabilities
|
|
|
50,230,910
|
|
|
Series M Municipal Auction Rate Cumulative Preferred Stock (24 shares authorized and issued at $25,000 per share) (Note
6)
|
|
|
600,000
|
|
|
Total Net Assets Applicable to Common Shareholders
|
|
$
|
148,103,640
|
|
|
|
|
|
Net Assets Applicable to Common Shareholders:
|
|
|
|
|
|
Common stock par value ($0.001 par value; 14,082,315 shares issued and outstanding; 100,000,000 common shares
authorized)
|
|
$
|
14,082
|
|
|
Paid-in capital in excess of par value
|
|
|
133,197,675
|
|
|
Total distributable earnings (loss)
|
|
|
14,891,883
|
|
|
Total Net Assets Applicable to Common Shareholders
|
|
$
|
148,103,640
|
|
|
|
|
|
Common Shares Outstanding
|
|
|
14,082,315
|
|
|
|
|
|
Net Asset Value Per Common Share
|
|
|
$10.52
|
|
See Notes to Financial
Statements.
|
|
|
|
|
|
|
|
|
Western Asset Intermediate Muni Fund Inc. 2021 Semi-Annual Report
|
|
|
|
|
19
|
|
Statement of operations (unaudited)
For the
Six Months Ended May 31, 2021
|
|
|
|
|
|
|
|
|
|
Investment Income:
|
|
|
|
|
|
Interest
|
|
$
|
3,084,699
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
Investment management fee (Note 2)
|
|
|
534,034
|
|
|
Liquidity fees (Note 5)
|
|
|
183,050
|
|
|
Distributions to Variable Rate Demand Preferred Stockholders (Notes 1 and 5)
|
|
|
35,160
|
|
|
Rating agency fees
|
|
|
29,927
|
|
|
Directors’ fees
|
|
|
25,739
|
|
|
Audit and tax fees
|
|
|
24,029
|
|
|
Legal fees
|
|
|
20,364
|
|
|
Transfer agent fees
|
|
|
15,871
|
|
|
Amortization of Variable Rate Demand Preferred Stock offering costs (Note 5)
|
|
|
13,767
|
|
|
Remarketing fees (Note 5)
|
|
|
11,981
|
|
|
Fund accounting fees
|
|
|
11,194
|
|
|
Shareholder reports
|
|
|
6,531
|
|
|
Stock exchange listing fees
|
|
|
6,233
|
|
|
Auction agent fees
|
|
|
4,389
|
|
|
Interest expense (Note 1)
|
|
|
4,249
|
|
|
Insurance
|
|
|
1,395
|
|
|
Custody fees
|
|
|
1,015
|
|
|
Auction participation fees (Note 6)
|
|
|
149
|
|
|
Miscellaneous expenses
|
|
|
6,555
|
|
|
Total Expenses
|
|
|
935,632
|
|
|
Net Investment Income
|
|
|
2,149,067
|
|
|
|
|
|
Realized and Unrealized Gain on Investments and Futures Contracts (Notes 1, 3 and 4):
|
|
|
|
|
|
Net Realized Gain From:
|
|
|
|
|
|
Investment transactions
|
|
|
642,822
|
|
|
Futures contracts
|
|
|
360,747
|
|
|
Net Realized Gain
|
|
|
1,003,569
|
|
|
Change in Net Unrealized Appreciation (Depreciation) From:
|
|
|
|
|
|
Investments
|
|
|
2,590,732
|
|
|
Futures contracts
|
|
|
23,792
|
|
|
Change in Net Unrealized Appreciation (Depreciation)
|
|
|
2,614,524
|
|
|
Net Gain on Investments and Futures Contracts
|
|
|
3,618,093
|
|
|
Distributions Paid to Auction Rate Cumulative Preferred Stockholders From Net Investment Income (Notes 1 and
6)
|
|
|
(343)
|
|
|
Increase in Net Assets Applicable to Common Shareholders From Operations
|
|
$
|
5,766,817
|
|
See Notes to Financial
Statements.
|
|
|
|
|
|
|
20
|
|
|
|
Western Asset Intermediate Muni Fund Inc. 2021 Semi-Annual Report
|
Statements of changes in net assets
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended May 31, 2021 (unaudited)
and the Year Ended November 30, 2020
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
Operations:
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
$
|
2,149,067
|
|
|
$
|
4,066,375
|
|
|
Net realized gain (loss)
|
|
|
1,003,569
|
|
|
|
(1,144,907)
|
|
|
Change in net unrealized appreciation (depreciation)
|
|
|
2,614,524
|
|
|
|
1,196,161
|
|
|
Distributions paid to Auction Rate Cumulative Preferred Stockholders from net investment income
|
|
|
(343)
|
|
|
|
(7,182)
|
|
|
Increase in Net Assets Applicable to Common Shareholders From
Operations
|
|
|
5,766,817
|
|
|
|
4,110,447
|
|
|
|
|
|
|
Distributions to Common Shareholders From (Note 1):
|
|
|
|
|
|
|
|
|
|
Total distributable earnings
|
|
|
(1,985,607)
|
|
|
|
(3,971,213)
|
|
|
Decrease in Net Assets From Distributions to Common
Shareholders
|
|
|
(1,985,607)
|
|
|
|
(3,971,213)
|
|
|
Increase in Net Assets Applicable to Common Shareholders
|
|
|
3,781,210
|
|
|
|
139,234
|
|
|
|
|
|
|
Net Assets Applicable to Common Shareholders:
|
|
|
|
|
|
|
|
|
|
Beginning of period
|
|
|
144,322,430
|
|
|
|
144,183,196
|
|
|
End of period
|
|
$
|
148,103,640
|
|
|
$
|
144,322,430
|
|
See Notes to Financial
Statements.
|
|
|
|
|
|
|
|
|
Western Asset Intermediate Muni Fund Inc. 2021 Semi-Annual Report
|
|
|
|
|
21
|
|
Statement of cash flows (unaudited)
For the
Six Months Ended May 31, 2021
|
|
|
|
|
|
|
|
|
|
Increase (Decrease) in Cash:
|
|
|
|
|
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
Net increase in net assets applicable to common shareholders resulting from operations*
|
|
$
|
5,767,160
|
|
|
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided (used) by operating
activities:
|
|
|
|
|
|
Purchases of portfolio securities
|
|
|
(15,980,066)
|
|
|
Sales of portfolio securities
|
|
|
12,291,857
|
|
|
Net purchases, sales and maturities of short-term investments
|
|
|
(665,194)
|
|
|
Net amortization of premium (accretion of discount)
|
|
|
963,447
|
|
|
Increase in interest receivable
|
|
|
(29,609)
|
|
|
Increase in prepaid expenses
|
|
|
(37,865)
|
|
|
Increase in payable for securities purchased
|
|
|
1,233,338
|
|
|
Amortization of preferred stock offering costs
|
|
|
13,767
|
|
|
Increase in investment management fee payable
|
|
|
5,343
|
|
|
Decrease in Directors’ fees payable
|
|
|
(2,067)
|
|
|
Increase in interest expense payable
|
|
|
1,923
|
|
|
Increase in accrued expenses
|
|
|
206,015
|
|
|
Decrease in payable to broker — net variation margin on futures contracts
|
|
|
(469)
|
|
|
Net realized gain on investments
|
|
|
(642,822)
|
|
|
Change in net unrealized appreciation (depreciation) of investments
|
|
|
(2,590,732)
|
|
|
Net Cash Provided in Operating Activities**
|
|
|
534,026
|
|
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
Distributions paid on common stock (net of distributions payable)
|
|
|
(1,985,607)
|
|
|
Distributions paid on Auction Rate Cumulative Preferred Stock (net of distributions payable)
|
|
|
(354)
|
|
|
Increase in due to custodian
|
|
|
6,935
|
|
|
Proceeds from TOB Floating Rate Notes
|
|
|
1,445,000
|
|
|
Net Cash Used by Financing Activities
|
|
|
(534,026)
|
|
|
Cash and restricted cash at beginning of period
|
|
|
—
|
|
|
Cash and restricted cash at end of period
|
|
|
—
|
|
|
*
|
Does not include distributions paid to Auction Rate Cumulative Preferred Stockholders.
|
|
**
|
Included in operating expenses is cash of $2,326 paid for interest on borrowings and $35,160 paid for distributions to Variable Rate Demand Preferred
Stockholders.
|
|
|
The following table provides a reconciliation of cash 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.
|
|
|
|
|
|
|
|
|
|
May 31, 2021
|
|
|
Cash
|
|
|
—
|
|
|
Restricted cash
|
|
|
—
|
|
|
Total cash and restricted cash shown in the Statement of Cash Flows
|
|
|
—
|
|
See Notes to Financial
Statements.
|
|
|
|
|
|
|
22
|
|
|
|
Western Asset Intermediate Muni Fund Inc. 2021 Semi-Annual Report
|
Financial highlights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For a common share of capital stock outstanding throughout each year ended
November 30,
unless otherwise noted:
|
|
|
|
|
|
|
|
20211,2
|
|
|
20201
|
|
|
20191
|
|
|
20181
|
|
|
20171
|
|
|
20161
|
|
|
|
|
|
|
|
|
|
|
Net asset value, beginning of period
|
|
|
$10.25
|
|
|
|
$10.24
|
|
|
|
$9.75
|
|
|
|
$10.08
|
|
|
|
$9.97
|
|
|
|
$10.47
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
0.15
|
|
|
|
0.29
|
|
|
|
0.32
|
|
|
|
0.35
|
|
|
|
0.39
|
|
|
|
0.41
|
|
|
Net realized and unrealized gain (loss)
|
|
|
0.26
|
|
|
|
0.00
|
3
|
|
|
0.50
|
|
|
|
(0.33)
|
|
|
|
0.15
|
|
|
|
(0.43)
|
|
|
Distributions paid to Auction Rate Cumulative Preferred Stockholders from net investment income3
|
|
|
(0.00)
|
|
|
|
(0.00)
|
|
|
|
(0.00)
|
|
|
|
(0.00)
|
|
|
|
(0.00)
|
|
|
|
(0.00)
|
|
|
Total income (loss) from operations
|
|
|
0.41
|
|
|
|
0.29
|
|
|
|
0.82
|
|
|
|
0.02
|
|
|
|
0.54
|
|
|
|
(0.02)
|
|
|
|
|
|
|
|
|
|
|
Less distributions to common shareholders from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
(0.14)
|
4
|
|
|
(0.28)
|
|
|
|
(0.33)
|
|
|
|
(0.37)
|
|
|
|
(0.43)
|
|
|
|
(0.48)
|
|
|
Total distributions to common shareholders
|
|
|
(0.14)
|
|
|
|
(0.28)
|
|
|
|
(0.33)
|
|
|
|
(0.37)
|
|
|
|
(0.43)
|
|
|
|
(0.48)
|
|
|
Net increase from tender and repurchase of Auction Rate Cumulative Preferred Shares
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.02
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
|
|
$10.52
|
|
|
|
$10.25
|
|
|
|
$10.24
|
|
|
|
$9.75
|
|
|
|
$10.08
|
|
|
|
$9.97
|
|
|
|
|
|
|
|
|
|
|
Market price, end of period
|
|
|
$9.63
|
|
|
|
$9.07
|
|
|
|
$9.21
|
|
|
|
$8.29
|
|
|
|
$9.35
|
|
|
|
$9.53
|
|
|
Total return, based on NAV5,6
|
|
|
4.03
|
%
|
|
|
2.96
|
%
|
|
|
8.51
|
%
|
|
|
0.39
|
%7
|
|
|
5.47
|
%
|
|
|
(0.36)
|
%
|
|
Total return, based on Market Price8
|
|
|
7.78
|
%
|
|
|
1.66
|
%
|
|
|
15.26
|
%
|
|
|
(7.52)
|
%
|
|
|
2.55
|
%
|
|
|
(0.78)
|
%
|
|
|
|
|
|
|
|
|
|
Net assets applicable to common shareholders, end of period (millions)
|
|
|
$148
|
|
|
|
$144
|
|
|
|
$144
|
|
|
|
$137
|
|
|
|
$142
|
|
|
|
$140
|
|
|
|
|
|
|
|
|
|
|
Ratios to average net assets:9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross expenses
|
|
|
1.28
|
%10
|
|
|
1.60
|
%
|
|
|
1.76
|
%
|
|
|
1.76
|
%
|
|
|
1.56
|
%
|
|
|
1.38
|
%
|
|
Net expenses
|
|
|
1.28
|
10
|
|
|
1.60
|
11
|
|
|
1.76
|
|
|
|
1.76
|
|
|
|
1.56
|
|
|
|
1.38
|
|
|
Net investment income
|
|
|
2.94
|
10
|
|
|
2.87
|
|
|
|
3.15
|
|
|
|
3.57
|
|
|
|
3.80
|
|
|
|
3.83
|
|
|
|
|
|
|
|
|
|
|
Portfolio turnover rate
|
|
|
6
|
%
|
|
|
27
|
%
|
|
|
18
|
%
|
|
|
27
|
%
|
|
|
11
|
%
|
|
|
13
|
%
|
See Notes to Financial
Statements.
|
|
|
|
|
|
|
|
|
Western Asset Intermediate Muni Fund Inc. 2021 Semi-Annual Report
|
|
|
|
|
23
|
|
Financial highlights (cont’d)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For a common share of capital stock outstanding throughout each year ended
November 30,
unless otherwise noted:
|
|
|
|
|
|
|
|
20211,2
|
|
|
20201
|
|
|
20191
|
|
|
20181
|
|
|
20171
|
|
|
20161
|
|
|
|
|
|
|
|
|
|
Supplemental data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Auction Rate Cumulative Preferred Stock at Liquidation Value, End of Period (000s)
|
|
|
$600
|
|
|
|
$600
|
|
|
|
$600
|
|
|
|
$600
|
|
|
|
$2,600
|
|
|
|
$2,600
|
|
|
Variable Rate Demand Preferred Stock at Liquidation Value, End of Period (000s)
|
|
|
$47,400
|
|
|
|
$47,400
|
|
|
|
$47,400
|
|
|
|
$47,400
|
|
|
|
$47,400
|
|
|
|
$47,400
|
|
|
Asset Coverage Ratio for Auction Rate Cumulative Preferred Stock and Variable Rate Demand Preferred Stock12
|
|
|
409
|
%
|
|
|
401
|
%
|
|
|
400
|
%
|
|
|
386
|
%
|
|
|
384
|
%
|
|
|
381
|
%
|
|
Asset Coverage, per $25,000 Liquidation Value per Share of Auction Rate Cumulative Preferred Stock and Variable Rate
Demand Preferred Stock12
|
|
|
$102,137
|
|
|
|
$100,168
|
|
|
|
$100,095
|
|
|
|
$96,531
|
|
|
|
$95,977
|
|
|
|
$95,224
|
|
|
1
|
Per share amounts have been calculated using the average shares method.
|
|
2
|
For the six months ended May 31, 2021 (unaudited).
|
|
3
|
Amount represents less than $0.005 per share.
|
|
4
|
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.
|
|
5
|
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.
|
|
6
|
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.
|
|
7
|
The total return based on NAV reflects the impact of the tender and repurchase by the Fund of a portion of its Auction Rate Cumulative Preferred Shares at 85% of
the per share liquidation preference. Absent this transaction, the total return based on NAV would have been 0.19%.
|
|
8
|
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
|
Calculated on the basis of average net assets of common stock shareholders. Ratios do not reflect the effect of dividend payments to auction rate cumulative
preferred stockholders.
|
|
11
|
Reflects fee waivers and/or expense reimbursements.
|
|
12
|
Represents value of net assets plus the liquidation value of the auction rate cumulative preferred stock and variable rate demand preferred stock, if any, at the
end of the period divided by the liquidation value of the auction rate cumulative preferred stock and variable rate demand preferred stock, if any, outstanding at the end of the period.
|
See Notes to Financial Statements.
|
|
|
|
|
|
|
24
|
|
|
|
Western Asset Intermediate Muni Fund Inc. 2021 Semi-Annual Report
|
Notes to financial statements (unaudited)
1. Organization and significant accounting policies
Western Asset Intermediate Muni Fund Inc. (the “Fund”) was incorporated in Maryland on December 19, 1991 and is registered as a diversified, closed-end management investment company under the
Investment Company Act of 1940, as amended (the “1940 Act”). The Board of Directors authorized 100 million shares of $0.001 par value common stock. The Fund’s investment objective is to provide common shareholders a high level of
current income exempt from regular federal income taxes consistent with prudent investing. Under normal market conditions, the Fund invests at least 80% of its total assets in municipal obligations. In addition, under normal market conditions, the
Fund will invest at least 80% of its total assets in debt securities that are, at the time of investment, rated investment grade by a nationally recognized statistical rating organization or, if unrated, of equivalent quality as determined by the
investment manager. For credit ratings purposes, pre-refunded bonds are deemed to be unrated. The subadviser determines the credit quality of prefunded bonds based on the quality of the escrowed collateral and such other factors as the subadviser
deems appropriate.
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. 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 Directors.
The Board of Directors is responsible for the valuation process and has delegated the supervision of the daily valuation process to the Global Fund Valuation Committee (formerly
|
|
|
|
|
|
|
|
|
Western Asset Intermediate Muni Fund Inc. 2021 Semi-Annual Report
|
|
|
|
|
25
|
|
Notes to financial statements
(unaudited) (cont’d)
known as Legg Mason North Atlantic Fund Valuation Committee prior to March 1, 2021) (the “Valuation Committee”). The Valuation Committee, pursuant to
the policies adopted by the Board of Directors, is responsible for making fair value determinations, evaluating the effectiveness of the Fund’s pricing policies, and reporting to the Board of Directors. 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 Directors, 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 Directors 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.
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)
|
|
|
|
|
|
|
|
26
|
|
|
|
Western Asset Intermediate Muni Fund Inc. 2021 Semi-Annual Report
|
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 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†:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal Bonds
|
|
|
—
|
|
|
$
|
193,304,857
|
|
|
|
—
|
|
|
$
|
193,304,857
|
|
|
Municipal Bonds Deposited in Tender Option Bond Trust
|
|
|
—
|
|
|
|
2,280,258
|
|
|
|
—
|
|
|
|
2,280,258
|
|
|
Total Long-Term Investments
|
|
|
—
|
|
|
|
195,585,115
|
|
|
|
—
|
|
|
|
195,585,115
|
|
|
Short-Term Investments†
|
|
|
—
|
|
|
|
900,000
|
|
|
|
—
|
|
|
|
900,000
|
|
|
Total Investments
|
|
|
—
|
|
|
$
|
196,485,115
|
|
|
|
—
|
|
|
$
|
196,485,115
|
|
|
†
|
See Schedule of Investments for additional detailed categorizations.
|
(b) Tender option bonds. The Fund may enter into tender option bond (“TOB”) transactions and may invest in inverse floating rate
instruments (“Inverse Floaters”) issued in TOB transactions. The Fund may participate either in structuring an Inverse Floater or purchasing an Inverse Floater in the secondary market. When structuring an Inverse Floater, the Fund deposits
securities (typically municipal bonds or other municipal securities) (the “Underlying Bonds”) into a special purpose entity, referred to as a TOB trust. The TOB trust generally issues floating rate notes (“Floaters”) to third
parties and residual interest, Inverse Floaters, to the Fund. The Floaters issued by the TOB trust have interest rates which reset weekly and provide the holders of the Floaters the option to tender their notes back to the TOB trust for redemption
at par at each reset date. The net proceeds of the sale of the Floaters, after expenses, are received by the Fund and may be invested in additional securities. The Inverse Floaters are inverse floating rate debt instruments, as the return on those
bonds is inversely related to changes in a specified interest rate. Distributions on any Inverse Floaters paid to the Fund will be reduced or, in the extreme, eliminated as short-term interest rates rise and will increase when such interest rates
fall. Floaters issued by a TOB trust may be senior to the Inverse Floaters held by the Fund. The value and market for Inverse Floaters can be volatile, and Inverse Floaters can have limited liquidity.
An investment in an Inverse Floater structured by the Fund is accounted for as a secured borrowing. The Underlying Bonds deposited into the TOB trust are included
in the Fund’s Schedule of Investments and a liability for Floaters (TOB floating rate notes) issued by the TOB trust is recognized in the Fund’s Statement of Assets and Liabilities. The carrying amount of the TOB trust’s floating rate
note obligations as reported on the Statement of Assets and Liabilities approximates its fair value. Interest income, including amortization, on the Underlying Bonds is recognized in the Fund’s Statements of Operations. Interest paid to holders
of the Floaters, as well as other expenses related to administration, liquidity, remarketing and trustee services of the TOB trust, are recognized in Interest expense in the Fund’s Statement of Operations.
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Western Asset Intermediate Muni Fund Inc. 2021 Semi-Annual Report
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27
|
|
Notes to financial statements
(unaudited) (cont’d)
(c) Net asset value. The net asset value (“NAV”) of the Fund’s common stock is
determined no less frequently than the close of business on the Fund’s last business day of each week (generally Friday) and on the last business day of the month. It is determined by dividing the value of the net assets available to common
shareholders by the total number of shares of common stock outstanding. For the purpose of determining the NAV per share of the common stock, the value of the Fund’s net assets shall be deemed to equal the value of the Fund’s assets less
(1) the Fund’s liabilities including the aggregate liquidation value (i.e., $25,000 per outstanding share) of the Variable Rate Demand Preferred Stock (“VRDPS”), net of the deferred offering costs, and (2) the aggregate
liquidation value (i.e., $25,000 per outstanding share) of the Auction Rate Cumulative Preferred Stock (“ARCPS”).
(d)
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 gains or losses 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.
(e) 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.
(f) 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 Statement of Changes in Net Assets and additional information on cash receipts and cash payments is presented in the Statement of Cash Flows.
|
|
|
|
|
|
|
28
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Western Asset Intermediate Muni Fund Inc. 2021 Semi-Annual Report
|
(g) 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 subadviser 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 subadviser. 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.
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.
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Western Asset Intermediate Muni Fund Inc. 2021 Semi-Annual Report
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29
|
|
Notes to financial statements
(unaudited) (cont’d)
As of May 31, 2021, the Fund did not have any open OTC derivative transactions with credit related contingent features in a net liability position.
(h) 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. 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.
(i) Distributions to shareholders. Distributions to
common shareholders 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 distribution 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. The Fund intends to satisfy conditions that will enable interest from municipal securities, which is exempt from federal and
certain state income taxes, to retain such tax-exempt status when distributed to the common shareholders of the Fund. Distributions to common shareholders of net realized gains, if any, are taxable and are declared at least annually. Distributions
to common 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.
Distributions to holders of ARCPS are accrued daily and paid on a weekly basis and are determined as described in Note 6. Distributions to holders of VRDPS are accrued on a daily basis and paid monthly as described
in Note 5 and are treated as an operating expense as required by GAAP. For tax purposes, the payments made to the holders of the Fund’s VRDPS are treated as dividends or distributions.
(j) 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.
(k) 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 November 30, 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.
|
|
|
|
|
|
|
30
|
|
|
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Western Asset Intermediate Muni Fund Inc. 2021 Semi-Annual Report
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(l)
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
Legg Mason Partners Fund Advisor, LLC (“LMPFA”) is the Fund’s investment manager and Western Asset Management Company, LLC (“Western
Asset”) is the Fund’s subadviser. LMPFA and Western Asset are indirect, wholly-owned subsidiaries of Franklin Resources, Inc. (“Franklin Resources”).
LMPFA provides administrative and certain oversight services to the Fund. The Fund pays LMPFA an investment management fee, calculated daily and paid monthly, at an annual rate of 0.55% of the Fund’s average
daily net assets. For the purposes of calculating this fee, the aggregate liquidation value of the preferred stock is not deducted in determining the Fund’s average daily net assets.
LMPFA delegates to Western Asset the day-to-day portfolio management of the Fund. For its services, LMPFA pays Western Asset monthly 70% of the net management fee it receives from the Fund.
All officers and one Director of the Fund are employees of Franklin Resources or its affiliates and do not receive compensation from the Fund.
The Fund is permitted to purchase or sell securities, typically short-term variable rate demand obligations, from or to certain other affiliated funds or portfolios
under specified conditions outlined in procedures adopted by the Board of Directors. The procedures have been designed to provide assurance that any purchase or sale of securities by the Fund from or to another fund or portfolio that is, or could be
considered, an affiliate by virtue of having a common investment manager or subadviser (or affiliated investment manager or subadviser), common Directors and/or common officers complies with Rule 17a-7 under the 1940 Act. Further, as defined under
the procedures, each transaction is effected at the current market price. For the six months ended May 31, 2021, such purchase and sale transactions (excluding accrued interest) were $6,850,000 and $8,550,000, respectively.
3. Investments
During the six months ended
May 31, 2021, the aggregate cost of purchases and proceeds from sales of investments (excluding short-term investments) were as follows:
|
|
|
|
|
|
|
Purchases
|
|
$
|
15,980,066
|
|
|
Sales
|
|
|
12,291,857
|
|
|
|
|
|
|
|
|
|
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Western Asset Intermediate Muni Fund Inc. 2021 Semi-Annual Report
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|
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|
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31
|
|
Notes to financial statements
(unaudited) (cont’d)
At May 31, 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
|
|
|
Securities
|
|
$
|
179,174,411
|
|
|
$
|
15,871,617
|
|
|
$
|
(5,913)
|
|
|
$
|
15,865,704
|
|
|
*
|
Cost of investments for federal income tax purposes includes the value of Inverse Floaters issued in TOB transactions (Note 1).
|
4. Derivative instruments and hedging activities
At May 31, 2021, the Fund did not have any derivative instruments outstanding.
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 May 31, 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
|
|
|
|
|
Interest
Rate Risk
|
|
|
Futures contracts
|
|
$
|
360,747
|
|
|
|
|
|
|
|
|
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON DERIVATIVES RECOGNIZED
|
|
|
|
|
Interest
Rate Risk
|
|
|
Futures contracts
|
|
$
|
23,792
|
|
During the six months ended May 31, 2021, the volume of derivative activity for the Fund was as follows:
|
|
|
|
|
|
|
|
|
Average Market
Value
|
|
|
Futures contracts (to sell)†
|
|
$
|
1,359,241
|
|
|
†
|
At May 31, 2021, there were no open positions held in this derivative.
|
5. Variable rate demand preferred stock
On February 25, 2015, the Fund completed a
private offering of 1,896 shares of Series 1 VRDPS. Net proceeds from the offering were used by the Fund to repurchase outstanding shares of Series M Municipal ARCPS that had been accepted for payment pursuant to the tender offer (see Note 6).
Offering costs incurred by the Fund in connection with the VRDPS issuance are being amortized to expense over the life of the VRDPS.
|
|
|
|
|
|
|
32
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Western Asset Intermediate Muni Fund Inc. 2021 Semi-Annual Report
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The table below summarizes the key terms
of Series 1 of the VRDPS at May 31, 2021.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series
|
|
Mandatory
Redemption Date
|
|
|
Shares
|
|
|
Liquidation
Preference
Per Share
|
|
|
Aggregate
Liquidation
Value
|
|
|
Series 1
|
|
|
2/25/2045
|
|
|
|
1,896
|
|
|
$
|
25,000
|
|
|
$
|
47,400,000
|
|
The VRDPS shares are not listed on any securities exchange or automated quotation system. For financial reporting purposes, the
VRDPS shares are considered debt of the Fund; therefore, the liquidation value, which approximates fair value of the VRDPS shares, is recorded as a liability on the Statement of Assets and Liabilities.
Holders of VRDPS have the right to tender their VRDPS shares for remarketing at a price equal to the liquidation preference amount plus all accumulated but unpaid
dividends and at a date which is no earlier than the seventh day following delivery of the notice to the tender and paying agent. The VRDPS shares include a liquidity feature that allows VRDPS holders to have their shares purchased by the liquidity
provider with whom the Fund has contracted in the event of a failed remarketing where purchase orders are not sufficient in number to be matched with the sale orders. The Fund is required to redeem the VRDPS shares owned by the liquidity provider
after six months of continuous, unsuccessful remarketing. The Fund pays a monthly remarketing fee at the annual rate of 0.05% of the liquidation value of each VRDPS share outstanding on the first calendar day of the preceding calendar month. These
fees are shown as remarketing fees on the Statement of Operations.
Holders of VRDPS are entitled to receive monthly cumulative cash dividends, payable
on the first business day of each calendar month, at a variable rate set weekly by the remarketing agent. The dividend rate is generally based upon a spread over a base rate and cannot exceed a maximum rate. In the event of a failed remarketing, the
dividend rate will reset to the maximum rate. The maximum rate is determined, in part, based upon the long-term rating assigned to the VRDPS. In the event the Fund fails to make a scheduled dividend payment, all outstanding shares of the VRDPS are
subject to mandatory tender.
Subject to certain conditions, the VRDPS shares may be redeemed, in whole or in part, at any time at the option of the
Fund. The redemption price per share is equal to the liquidation value per share plus any accumulated but unpaid dividends. The Fund is required to redeem its VRDPS on the mandatory redemption date, February 25, 2045. In addition, the Fund is
required to redeem certain of the VRDPS shares if the Fund fails to maintain certain asset coverage and rating agency guidelines.
The Fund is a party to
a fee agreement with the liquidity provider that requires monthly payment of an annual liquidity fee. These fees are shown as liquidity fees on the Statement of Operations. The fee agreement between the Fund and the liquidity provider is scheduled
to terminate on June 24, 2022. The Fund has the right, which is exercisable 120 to 90 days prior to the scheduled termination date, to request that the liquidity provider extend the term of the agreement for an additional period. The Fund may
also terminate the agreement early. In the event the fee agreement is not renewed or is terminated in advance, and the Fund does not enter into a fee agreement with an alternate liquidity provider, the VRDPS
|
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Western Asset Intermediate Muni Fund Inc. 2021 Semi-Annual Report
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|
|
|
|
33
|
|
Notes to financial statements
(unaudited) (cont’d)
will be subject to mandatory purchase by the liquidity provider prior to the termination of the fee agreement. The Fund is required to redeem any VRDPS purchased by
the liquidity provider six months after the purchase date.
The VRDPS ranks senior to the Fund’s outstanding common stock and on parity with any
other preferred stock. The Fund may not declare dividends or make other distributions on shares of its common stock unless the Fund has declared and paid full cumulative dividends on the VRDPS, due on or prior to the date of the common stock
dividend or distribution, and meets the VRDPS asset coverage and rating agency requirements.
The holders of the VRDPS have one vote per share and vote
together with the holders of common stock of the Fund as a single class except on matters affecting only the holders of VRDPS or the holders of common stock. Pursuant to the 1940 Act, holders of the VRDPS have the right to elect two Directors of the
Fund, voting separately as a class.
The annualized dividend rate for the VRDPS shares for the six months ended May 31, 2021 was 0.149%. VRDPS
shares issued and outstanding remained constant during the six months ended May 31, 2021.
6. Municipal auction rate cumulative
preferred stock
On January 28, 2002, the Fund issued 2,000 shares of Series M Municipal ARCPS.
On January 22, 2015, the Fund announced that it had commenced an issuer tender offer for up to 100% of its outstanding ARCPS at a price equal to 90% of the
liquidation preference of $25,000 per share (or $22,500 per share), plus any unpaid dividends accrued through February 20, 2015, the expiration date of the tender offer.
The Fund’s tender offer was conditioned upon the Fund closing on the private offering of VRDPS with an aggregate liquidation preference at least equal to the aggregate liquidation preference of ARCPS accepted
for tender.
On February 25, 2015, the Fund announced the final results for its issuer tender offer and all shares that were validly tendered and
not withdrawn during the offering period were accepted for payment. The Fund accepted for payment 1,896 ARCPS, which represented 94.8% of outstanding ARCPS. The ARCPS that were not tendered will remain outstanding. The difference between the
liquidation preference of the ARCPS and the actual purchase price of the tendered ARCPS was recognized by the Fund in the Statement of Changes in Net Assets as an increase in net assets applicable to common shares resulting from the tender and
repurchase of the ARCPS by the Fund.
On November 27, 2018, the Fund repurchased 80 Series M ARCPS in a private transaction at a price equal to 85%
of the liquidation preference of $25,000 per share (or $21,250 per share), plus any unpaid dividends. The difference between the liquidation preference of the ARCPS and the actual repurchase price of the repurchased ARCPS was recognized by the Fund
in the Statement of Changes in Net Assets as an increase in net assets applicable to common shares resulting from the tender and repurchase of the ARCPS by the Fund.
At May 31, 2021, the Fund had 24 shares of ARCPS outstanding with a liquidation preference of $25,000 per share plus an amount equal to accumulated but unpaid dividends (whether or not earned or declared) and
subject to certain restrictions, are redeemable in whole or in part.
|
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|
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34
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Western Asset Intermediate Muni Fund Inc. 2021 Semi-Annual Report
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The ARCPS’ dividends are cumulative
at a rate determined at an auction and the dividend period is typically 7 days. The dividend rate cannot exceed a certain maximum rate, including in the event of a failed auction, unless the Board of Directors of the Fund authorizes an increased
maximum rate. To the extent capital gains and other taxable income are allocated to holders of ARCPS for tax purposes, the Fund will likely have to pay higher dividends to holders of ARCPS to compensate them for the increased tax liability to them
resulting from such allocation. Due to failed auctions experienced by the Fund’s ARCPS starting on February 14, 2008, the Fund pays the applicable maximum rate, which is calculated using the higher of 110% of the taxable equivalent of the
short-term municipal bond rate and 110% of the prevailing 30-days “AA” Composite Commercial Paper Rate. The Fund may pay higher maximum rates if the rating of the Fund’s ARCPS were to be lowered by the rating agencies. The dividend
rates ranged from 0.077% to 0.173% during the six months ended May 31, 2021. At May 31, 2021, the dividend rate was 0.095%.
The ARCPS are
redeemable under certain conditions by the Fund, or subject to mandatory redemption (if the Fund is in default of certain coverage requirements) at a redemption price equal to the liquidation preference, which is the sum of $25,000 per share plus
accumulated and unpaid dividends.
The Fund is required to maintain certain asset coverages with respect to the ARCPS. If the Fund fails to maintain
these coverages and does not cure any such failure within the required time period, the Fund is required to redeem a requisite number of the ARCPS in order to meet the applicable requirement. Additionally, failure to meet the foregoing asset
coverage requirements would restrict the Fund’s ability to pay dividends to common shareholders.
Citigroup Global Markets Inc. (“CGM”),
an indirect wholly-owned subsidiary of Citigroup, Inc., acts as a broker/dealer in connection with the auction of ARCPS. For all previous periods since the ARCPS have been outstanding, the participation fee has been paid at the annual rate of 0.25%
of the purchase price of the ARCPS that the broker/dealer places at the auction. However, on August 3, 2009, CGM reduced its participation fee to an annual rate of 0.05% of the purchase price of the ARCPS, in the case of a failed auction. For
the six months ended May 31, 2021, CGM earned $149 as a participating broker/dealer.
7. Distributions to common shareholders
subsequent to May 31, 2021
The following distributions to common shareholders have been declared by the Fund’s Board of Directors and are
payable subsequent to the period end of this report:
|
|
|
|
|
|
|
|
|
|
|
Record Date
|
|
Payable Date
|
|
|
Amount
|
|
|
5/21/2021
|
|
|
6/1/2021
|
|
|
$
|
0.0235
|
|
|
6/23/2021
|
|
|
7/1/2021
|
|
|
$
|
0.0235
|
|
|
7/23/2021
|
|
|
8/2/2021
|
|
|
$
|
0.0235
|
|
|
8/24/2021
|
|
|
9/1/2021
|
|
|
$
|
0.0235
|
|
|
|
|
|
|
|
|
|
|
Western Asset Intermediate Muni Fund Inc. 2021 Semi-Annual Report
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|
|
|
|
35
|
|
Notes to financial statements
(unaudited) (cont’d)
8. Stock repurchase program
On
November 16, 2015, the Fund announced that the Fund’s Board of Directors (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 stockholder 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 May 31, 2021, the Fund did not repurchase any shares.
9. Deferred capital losses
As of
November 30, 2020, the Fund had deferred capital losses of $2,201,264, 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 following the LIBOR publication on Friday, December 31, 2021. There remains uncertainty
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36
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Western Asset Intermediate Muni Fund Inc. 2021 Semi-Annual Report
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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.
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Western Asset Intermediate Muni Fund Inc. 2021 Semi-Annual Report
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37
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Additional shareholder information (unaudited)
Results of annual meeting of shareholders
The Annual Meeting of Shareholders of Western Asset Intermediate Muni Fund Inc. was held on April 9, 2021, for the purpose of considering and voting upon the
proposals presented at the Meeting. The following table provides information concerning the matters voted upon at the Meeting:
Election of directors
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Nominees
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Common Shares
and
Preferred
Shares, voting
together,
Voted FOR Election
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Common Shares
and Preferred
Shares, voting
together,
WITHHELD
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ABSTAIN
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Eileen A. Kamerick
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9,692,565
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2,589,969
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76,391
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Jane Trust
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12,079,758
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201,498
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77,669
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At May 31, 2021, in addition to Eileen A. Kamerick and Jane Trust, the other Directors of the Fund were as follows:
Robert D. Agdern
Carol L. Colman
Daniel P. Cronin
Paolo M. Cucchi
William R. Hutchinson
Nisha Kumar
Ratification of Selection of Independent Registered Public Accountants
To ratify the selection of PricewaterhouseCoopers LLP (“PwC”) as independent registered public accountants of the Fund for the fiscal year ended November 30, 2021.
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For
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Against
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Abstain
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12,190,291
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77,681
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90,953
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38
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Western Asset Intermediate Muni Fund Inc.
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Dividend reinvestment plan (unaudited)
Unless you elect to receive distributions in cash (i.e., opt-out), all dividends, including any capital gain dividends and return of capital distributions, on your
Common Stock will be automatically reinvested by Computershare Trust Company, N.A., as agent for the stockholders (the “Plan Agent”), in additional shares of Common Stock under the Fund’s Dividend Reinvestment Plan (the
“Plan”). You may elect not to participate in the Plan by contacting the Plan Agent. If you do not participate, you will receive all cash distributions paid by check mailed directly to you by Computershare Trust Company, N.A., as dividend
paying agent.
If you participate in the Plan, the number of shares of Common Stock you will receive will be determined as follows:
(1) If the market price of the Common Stock (plus $0.03 per share commission) on the payment date (or, if the payment date is not a NYSE trading
day, the immediately preceding trading day) is equal to or exceeds the net asset value per share of the Common Stock at the close of trading on the NYSE on the payment date, the Fund will issue new Common Stock at a price equal to the greater of
(a) the net asset value per share at the close of trading on the NYSE on the payment date or (b) 95% of the market price per share of the Common Stock on the payment date.
(2) If the net asset value per share of the Common Stock exceeds the market price of the Common Stock (plus $0.03 per share commission) at the close
of trading on the NYSE on the payment date, the Plan Agent will receive the dividend or distribution in cash and will buy Common Stock in the open market, on the NYSE or elsewhere, for your account as soon as practicable commencing on the trading
day following the payment date and terminating no later than the earlier of (a) 30 days after the dividend or distribution payment date, or (b) the payment date for the next succeeding dividend or distribution to be made to the
stockholders; except when necessary to comply with applicable provisions of the federal securities laws. If during this period: (i) the market price (plus $0.03 per share commission) rises so that it equals or exceeds the net asset value per
share of the Common Stock at the close of trading on the NYSE on the payment date before the Plan Agent has completed the open market purchases or (ii) if the Plan Agent is unable to invest the full amount eligible to be reinvested in open
market purchases, the Plan Agent will cease purchasing Common Stock in the open market and the Fund shall issue the remaining Common Stock at a price per share equal to the greater of (a) the net asset value per share at the close of trading on
the NYSE on the day prior to the issuance of shares for reinvestment or (b) 95% of the then current market price per share.
Common Stock in your
account will be held by the Plan Agent in non-certificated form. Any proxy you receive will include all shares of Common Stock you have received under the Plan. You may withdraw from the Plan (i.e., opt-out) by notifying the Plan Agent in writing at
462 South 4th Street, Suite 1600, Louisville, KY 40202 or by calling the Plan Agent at 1-888-888-0151. Such withdrawal will be effective immediately if notice is received by the Plan Agent not less than ten business days prior to any dividend or
distribution record date; otherwise such withdrawal will be effective as soon as practicable after the Plan Agent’s investment of the most recently declared dividend or distribution on the Common Stock.
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Western Asset Intermediate Muni Fund Inc.
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39
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Dividend reinvestment plan
(unaudited) (cont’d)
Plan participants who sell their shares will be charged a service charge (currently $5.00 per transaction) and the Plan Agent is authorized to deduct brokerage
charges actually incurred from the proceeds (currently $0.05 per share commission). There is no service charge for reinvestment of your dividends or distributions in Common Stock. However, all participants will pay a pro rata share of brokerage
commissions incurred by the Plan Agent when it makes open market purchases. Because all dividends and distributions will be automatically reinvested in additional shares of Common Stock, this allows you to add to your investment through dollar cost
averaging, which may lower the average cost of your Common Stock over time. Dollar cost averaging is a technique for lowering the average cost per share over time if the Fund’s net asset value declines. While dollar cost averaging has definite
advantages, it cannot assure profit or protect against loss in declining markets.
Automatically reinvesting dividends and distributions does not mean
that you do not have to pay income taxes due upon receiving dividends and distributions. Investors will be subject to income tax on amounts reinvested under the Plan.
The Fund reserves the right to amend or terminate the Plan if, in the judgment of the Board of Directors, the change is warranted. The Plan may be terminated, amended or supplemented by the Fund upon notice in
writing mailed to stockholders at least 30 days prior to the record date for the payment of any dividend or distribution by the Fund for which the termination or amendment is to be effective. Upon any termination, you will be sent cash for any
fractional share of Common Stock in your account. You may elect to notify the Plan Agent in advance of such termination to have the Plan Agent sell part or all of your Common Stock on your behalf. Additional information about the Plan and your
account may be obtained from the Plan Agent at 462 South 4th Street, Suite 1600, Louisville, KY 40202 or by calling the Plan Agent at 1-888-888-0151.
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40
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Western Asset Intermediate Muni Fund Inc.
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Western Asset
Intermediate Muni Fund Inc.
Directors
Robert D. Agdern
Carol L. Colman
Daniel P. Cronin
Paolo M. Cucchi
William R. Hutchinson
Eileen A. Kamerick
Nisha Kumar
Jane Trust
Chairman
Officers
Jane Trust
President and Chief Executive Officer
Christopher Berarducci
Treasurer and Principal Financial Officer
Fred Jensen
Chief Compliance Officer
Jenna Bailey
Identity Theft Prevention Officer
George P. Hoyt
Secretary and Chief Legal Officer
Thomas C.
Mandia
Assistant Secretary
Jeanne M. Kelly
Senior Vice President
Western Asset Intermediate Muni Fund Inc.
620 Eighth Avenue
47th Floor
New York, NY 10018
Investment manager
Legg Mason Partners Fund Advisor, LLC
Subadviser
Western Asset Management Company,
LLC
Custodian
The Bank of New
York Mellon
Transfer agent
Computershare Inc.
462 South 4th Street, Suite 1600
Louisville, KY 40202
Auction agent
Deutsche Bank
60 Wall Street
New York, NY 10005
Independent registered public accounting firm
PricewaterhouseCoopers LLP Baltimore, MD
Legal
counsel
Simpson Thacher & Bartlett LLP
425
Lexington Avenue
New York, NY 10017
New York Stock Exchange Symbol
SBI
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, Legg Mason Investor Services, 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:
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Personal information included on applications or other forms;
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Account balances, transactions, and mutual fund holdings and positions;
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Bank account information, legal documents, and identity verification documentation;
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Online account access user IDs, passwords, security challenge question responses; and
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Information received from consumer reporting agencies regarding credit history and creditworthiness (such as the amount of an individual’s total debt,
payment history, etc.).
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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:
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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;
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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;
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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;
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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;
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Fiduciaries or representatives acting on your behalf, such as an IRA custodian or trustee of a grantor trust.
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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,
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NOT PART OF THE
SEMI-ANNUAL REPORT
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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).
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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.
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You also have the right to request the deletion of the personal information collected or maintained by the Funds.
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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
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NOT PART OF THE
SEMI-ANNUAL REPORT
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Western Asset Intermediate Muni Fund Inc.
Western Asset Intermediate Muni Fund Inc.
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 Intermediate Muni Fund Inc. 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
WASX010074 7/21 SR21-4186