Statement of assets and liabilities (unaudited)
May 31, 2022
Western Asset Municipal Partners
Fund Inc.
|
|
|
|
|
|
|
| Assets: |
|
|
|
|
| Investments, at value (Cost — $225,701,485) |
|
$ |
226,621,109 |
|
| Interest receivable |
|
|
2,927,006 |
|
| Receivable for securities sold |
|
|
515,225 |
|
| Dividends receivable from affiliated investments |
|
|
20 |
|
| Prepaid expenses |
|
|
50,799 |
|
| Total Assets |
|
|
230,114,159 |
|
|
|
| Liabilities: |
|
|
|
|
| Variable Rate Demand Preferred Stock ($50,000 liquidation value per share; 1,330 shares
issued and outstanding) (net of deferred offering costs of $676,641) (Note 5) |
|
|
65,823,359 |
|
| TOB Floating Rate Notes (Note 1) |
|
|
1,855,000 |
|
| Payable for securities purchased |
|
|
1,249,400 |
|
| Distributions payable to Common Shareholders |
|
|
461,655 |
|
| Investment management fee payable |
|
|
103,308 |
|
| Due to custodian |
|
|
10,477 |
|
| Directors’ fees payable |
|
|
4,693 |
|
| Interest expense payable |
|
|
1,610 |
|
| Distributions payable to Auction Rate Cumulative Preferred Stockholders |
|
|
656 |
|
| Accrued expenses |
|
|
1,091,648 |
|
| Total Liabilities |
|
|
70,601,806 |
|
|
Auction Rate Cumulative Preferred Stock (367 shares authorized and issued at $50,000
per share) (Note 6) |
|
|
18,350,000 |
|
| Total Net Assets Applicable to Common Shareholders |
|
$ |
141,162,353 |
|
|
|
| Net Assets Applicable to Common Shareholders: |
|
|
|
|
| Common stock par value ($0.001 par value; 9,719,063 shares issued and outstanding;
100,000,000 common shares authorized) |
|
$ |
9,719 |
|
| Paid-in capital in excess of par value |
|
|
142,039,916 |
|
| Total distributable earnings (loss) |
|
|
(887,282) |
|
| Total Net Assets Applicable to Common Shareholders |
|
$ |
141,162,353 |
|
|
|
| Common Shares Outstanding |
|
|
9,719,063 |
|
|
|
| Net Asset Value Per Common Share |
|
|
$14.52 |
|
See Notes to Financial
Statements.
|
|
|
| Western Asset Municipal Partners Fund Inc. 2022 Semi-Annual Report |
|
21 |
Statement of operations (unaudited)
For the Six Months Ended May 31, 2022
|
|
|
|
|
|
|
| Investment Income: |
|
|
|
|
| Interest |
|
|
$ 3,993,080 |
|
| Dividends from affiliated investments |
|
|
35 |
|
| Total Investment
Income |
|
|
3,993,115 |
|
|
|
| Expenses: |
|
|
|
|
| Investment management fee (Note 2) |
|
|
651,133 |
|
| Liquidity fees (Note 5) |
|
|
256,811 |
|
| Distributions to Variable Rate Demand Preferred Stockholders (Notes 1 and 5) |
|
|
159,598 |
|
| Rating agency fees |
|
|
28,546 |
|
| Audit and tax fees |
|
|
26,139 |
|
| Directors’ fees |
|
|
25,465 |
|
| Legal fees |
|
|
24,072 |
|
| Remarketing fees (Note 5) |
|
|
16,810 |
|
| Transfer agent fees |
|
|
15,222 |
|
| Amortization of Variable Rate Demand Preferred Stock offering costs (Note 5) |
|
|
14,800 |
|
| Fund accounting fees |
|
|
12,400 |
|
| Auction participation fees (Note 6) |
|
|
11,619 |
|
| Interest expense |
|
|
8,198 |
|
| Stock exchange listing fees |
|
|
6,233 |
|
| Auction agent fees |
|
|
5,335 |
|
| Shareholder reports |
|
|
4,728 |
|
| Custody fees |
|
|
648 |
|
| Insurance |
|
|
484 |
|
| Miscellaneous expenses |
|
|
7,519 |
|
| Total Expenses |
|
|
1,275,760 |
|
| Less: Fee waivers and/or expense reimbursements (Note 2) |
|
|
(15) |
|
| Net Expenses |
|
|
1,275,745 |
|
| Net Investment Income |
|
|
2,717,370 |
|
|
|
| Realized and Unrealized Loss on Investments (Notes 1 and 3): |
|
|
|
|
| Net Realized Loss From Unaffiliated
Investment Transactions |
|
|
(2,092,615) |
|
| Change in Net Unrealized Appreciation
(Depreciation) From Unaffiliated Investments |
|
|
(21,030,549) |
|
| Net Loss on Investments |
|
|
(23,123,164) |
|
| Distributions Paid to Auction Rate Cumulative Preferred Stockholders From Net Investment
Income (Notes 1 and 6) |
|
|
(41,525) |
|
| Decrease in Net Assets Applicable to Common Shareholders From Operations |
|
$ |
(20,447,319) |
|
See Notes to Financial
Statements.
|
|
|
|
22 |
|
Western Asset Municipal Partners Fund Inc. 2022 Semi-Annual Report |
Statements of changes in net assets
|
|
|
|
|
|
|
|
|
| For the Six Months Ended May 31, 2022 (unaudited)
and the Year Ended November 30, 2021 |
|
2022 |
|
|
2021 |
|
|
|
|
| Operations: |
|
|
|
|
|
|
|
|
| Net investment income |
|
$ |
2,717,370 |
|
|
$ |
5,897,335 |
|
| Net realized gain (loss) |
|
|
(2,092,615) |
|
|
|
1,666,824 |
|
| Change in net unrealized appreciation (depreciation) |
|
|
(21,030,549) |
|
|
|
1,351,419 |
|
| Distributions paid to Auction Rate Cumulative Preferred Stockholders from net investment
income |
|
|
(41,525) |
|
|
|
(21,731) |
|
| Increase (Decrease) in Net Assets
Applicable to Common Shareholders From Operations |
|
|
(20,447,319) |
|
|
|
8,893,847 |
|
|
|
|
| Distributions to Common Shareholders From (Note 1): |
|
|
|
|
|
|
|
|
| Total distributable earnings |
|
|
(4,033,411) |
|
|
|
(5,539,866) |
|
| Decrease in Net Assets From Distributions
to Common Shareholders |
|
|
(4,033,411) |
|
|
|
(5,539,866) |
|
| Increase (Decrease) in Net Assets
Applicable to Common Shareholders |
|
|
(24,480,730) |
|
|
|
3,353,981 |
|
|
|
|
| Net Assets Applicable to Common Shareholders: |
|
|
|
|
|
|
|
|
| Beginning of period |
|
|
165,643,083 |
|
|
|
162,289,102 |
|
| End of period |
|
$ |
141,162,353 |
|
|
$ |
165,643,083 |
|
See Notes to Financial
Statements.
|
|
|
| Western Asset Municipal Partners Fund Inc. 2022 Semi-Annual Report |
|
23 |
Statement of cash flows (unaudited)
For the Six Months Ended May 31, 2022
|
|
|
|
|
|
|
| Increase (Decrease) in Cash: |
|
|
|
|
| Cash Flows from Operating Activities: |
|
|
|
|
| Net decrease in net assets applicable to common shareholders resulting from
operations* |
|
$ |
(20,405,794) |
|
| Adjustments to reconcile net decrease in net assets resulting from operations to net cash
provided (used) by operating activities: |
|
|
|
|
| Purchases of portfolio securities |
|
|
(41,705,315) |
|
| Sales of portfolio securities |
|
|
44,309,674 |
|
| Net purchases, sales and maturities of short-term investments |
|
|
2,582,419 |
|
| Net amortization of premium (accretion of discount) |
|
|
916,502 |
|
| Decrease in receivable for securities sold |
|
|
322,503 |
|
| Decrease in interest receivable |
|
|
130,678 |
|
| Increase in prepaid expenses |
|
|
(44,980) |
|
| Increase in dividends receivable from affiliated investments |
|
|
(20) |
|
| Decrease in payable for securities purchased |
|
|
(5,483,761) |
|
| Amortization of preferred stock offering costs |
|
|
14,800 |
|
| Decrease in investment management fee payable |
|
|
(9,539) |
|
| Decrease in Directors’ fees payable |
|
|
(602) |
|
| Decrease in interest expense payable |
|
|
(474) |
|
| Increase in accrued expenses |
|
|
314,604 |
|
| Net realized loss on investments |
|
|
2,092,615 |
|
| Change in net unrealized appreciation (depreciation) of investments |
|
|
21,030,549 |
|
| Net Cash Provided in Operating
Activities** |
|
|
4,063,859 |
|
|
|
| Cash Flows from Financing Activities: |
|
|
|
|
| Distributions paid on common stock (net of distributions payable) |
|
|
(4,033,412) |
|
| Distributions paid on Auction Rate Cumulative Preferred Stock (net of distributions
payable) |
|
|
(40,924) |
|
| Increase in due to custodian |
|
|
10,477 |
|
| Proceeds from TOB Floating Rate Notes |
|
|
1,855,000 |
|
| Repayment of TOB Floating Rate Notes |
|
|
(1,855,000) |
|
| Net Cash Used by Financing
Activities |
|
|
(4,063,859) |
|
| 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 $9,119 paid for interest on borrowings and $159,598 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, 2022 |
|
| Cash |
|
|
— |
|
| Restricted cash |
|
|
— |
|
| Total cash and restricted cash shown in the Statement of Cash Flows |
|
|
— |
|
See Notes to Financial
Statements.
|
|
|
| |
|
|
| 24 |
|
Western Asset Municipal Partners Fund Inc. 2022 Semi-Annual Report |
Financial highlights
|
|
|
|
|
|
|
|
|
|
|
|
|
| For a common share of capital stock outstanding throughout each year ended
November 30, unless otherwise noted: |
| |
|
20221,2 |
|
20211 |
|
20201 |
|
20191 |
|
20181 |
|
20171 |
|
|
|
|
|
|
|
| Net asset value, beginning of period |
|
$17.04 |
|
$16.70 |
|
$16.57 |
|
$15.63 |
|
$16.37 |
|
$15.90 |
|
|
|
|
|
|
|
| Income (loss) from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
| Net investment income |
|
0.28 |
|
0.61 |
|
0.60 |
|
0.62 |
|
0.67 |
|
0.70 |
| Net realized and unrealized gain (loss) |
|
(2.38) |
|
0.30 |
|
0.12 |
|
1.05 |
|
(0.65) |
|
0.60 |
| Distributions paid to Auction Rate Cumulative Preferred Stockholders from net investment
income |
|
(0.00)3 |
|
(0.00)3 |
|
(0.02) |
|
(0.05) |
|
(0.04) |
|
(0.03) |
| Total income (loss) from
operations |
|
(2.10) |
|
0.91 |
|
0.70 |
|
1.62 |
|
(0.02) |
|
1.27 |
|
|
|
|
|
|
|
| Less distributions to common shareholders from: |
|
|
|
|
|
|
|
|
|
|
|
|
| Net investment income |
|
(0.29)4 |
|
(0.57) |
|
(0.56) |
|
(0.68) |
|
(0.72) |
|
(0.80) |
| Net realized gains |
|
(0.13) |
|
— |
|
(0.01) |
|
— |
|
— |
|
— |
| Total distributions to common
shareholders |
|
(0.42) |
|
(0.57) |
|
(0.57) |
|
(0.68) |
|
(0.72) |
|
(0.80) |
| Net increase from tender and repurchase of Auction Rate Cumulative Preferred Shares |
|
— |
|
— |
|
— |
|
— |
|
0.003 |
|
— |
|
|
|
|
|
|
|
| Net asset value, end of period |
|
$14.52 |
|
$17.04 |
|
$16.70 |
|
$16.57 |
|
$15.63 |
|
$16.37 |
|
|
|
|
|
|
|
| Market price, end of period |
|
$12.89 |
|
$15.79 |
|
$14.70 |
|
$15.12 |
|
$13.60 |
|
$15.14 |
| Total return, based on NAV5,6 |
|
(12.53)% |
|
5.49% |
|
4.41% |
|
10.50% |
|
(0.12)%7 |
|
8.09% |
| Total return, based on Market Price8 |
|
(15.98)% |
|
11.38% |
|
1.11% |
|
16.36% |
|
(5.50)% |
|
7.70% |
|
|
|
|
|
|
|
| Net assets applicable to common shareholders, end of period (millions) |
|
$141 |
|
$166 |
|
$162 |
|
$161 |
|
$152 |
|
$159 |
|
|
|
|
|
|
|
| Ratios to average net assets:9 |
|
|
|
|
|
|
|
|
|
|
|
|
| Gross expenses |
|
1.68%10 |
|
1.49% |
|
1.85% |
|
2.11% |
|
2.09% |
|
1.87% |
| Net expenses11 |
|
1.6810 |
|
1.4912 |
|
1.8512 |
|
2.11 |
|
2.09 |
|
1.87 |
| Net investment income |
|
3.5810 |
|
3.55 |
|
3.67 |
|
3.81 |
|
4.21 |
|
4.31 |
|
|
|
|
|
|
|
| Portfolio turnover rate |
|
18% |
|
11% |
|
31% |
|
19% |
|
14% |
|
24% |
See Notes to Financial
Statements.
|
|
|
|
|
|
| Western Asset Municipal Partners Fund Inc. 2022 Semi-Annual Report |
|
25 |
Financial highlights (cont’d)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For a common share of capital stock outstanding throughout each year ended
November 30, unless otherwise noted: |
|
| |
|
20221,2 |
|
|
20211 |
|
|
20201 |
|
|
20191 |
|
|
20181 |
|
|
20171 |
|
|
|
|
|
|
|
| Supplemental data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Auction Rate Cumulative Preferred Stock at Liquidation Value, End of Period
(000s) |
|
|
$18,350 |
|
|
|
$18,350 |
|
|
|
$18,350 |
|
|
|
$18,350 |
|
|
|
$18,350 |
|
|
|
$18,500 |
|
| Variable Rate Demand Preferred Stock at Liquidation Value, End of Period (000s) |
|
|
$66,500 |
|
|
|
$66,500 |
|
|
|
$66,500 |
|
|
|
$66,500 |
|
|
|
$66,500 |
|
|
|
$66,500 |
|
| Asset Coverage Ratio for Auction Rate Cumulative Preferred Stock and Variable Rate Demand
Preferred Stock13 |
|
|
266 |
% |
|
|
295 |
% |
|
|
291 |
% |
|
|
290 |
% |
|
|
279 |
% |
|
|
287 |
% |
| Asset Coverage, per $50,000 Liquidation Value per Share of Auction Rate Cumulative
Preferred Stock and Variable Rate Demand Preferred Stock13 |
|
|
$133,183 |
|
|
|
$147,609 |
|
|
|
$145,633 |
|
|
|
$144,880 |
|
|
|
$139,534 |
|
|
|
$143,580 |
|
| 1 |
Per share amounts have been calculated using the average shares method. |
| 2 |
For the six months ended May 31, 2022 (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 |
Performance figures may reflect compensating balance arrangements, fee waivers and/or expense reimbursements. In the
absence of compensating balance arrangements, fee waivers and/or expense reimbursements, the total return would have been lower. Past performance is no guarantee of future results. Total returns for periods of less than one year are not annualized.
|
| 6 |
The total return calculation assumes that distributions are reinvested at NAV. Past performance is no guarantee of future
results. Total returns for periods of less than one year are not annualized. |
| 7 |
The total return 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 the same. |
| 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 |
The manager has agreed to waive the Fund’s management fee to an extent sufficient to offset the net management fee
payable in connection with any investment in an affiliated money market fund. |
| 12 |
Reflects fee waivers and/or expense reimbursements. |
| 13 |
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.
|
|
|
| |
|
|
| 26 |
|
Western Asset Municipal Partners Fund Inc. 2022 Semi-Annual Report |
Notes to financial statements (unaudited)
1. Organization and significant accounting policies
Western Asset Municipal Partners Fund Inc. (the “Fund”) was incorporated in Maryland on November 24, 1992 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 primary investment objective is to seek a high level of current income which is exempt from regular federal income taxes, consistent with the preservation of capital. As a secondary investment objective, the Fund intends to enhance
portfolio value by purchasing tax-exempt securities that, in the opinion of the investment manager, may appreciate in value relative to other similar obligations in the marketplace.
Under normal market conditions, the Fund pursues its objectives by investing substantially all of its assets in a diversified portfolio of
tax-exempt securities. As a matter of fundamental policy which cannot be changed without shareholder approval, under normal market conditions at least 80% of the Fund’s net assets will be invested in tax-exempt securities. The Fund invests primarily in tax-exempt securities that are rated “investment grade” at the time of purchase by at least one rating agency
and that the subadviser believes do not involve undue risk to income or principal or, if unrated, determined to be of comparable credit quality by the subadviser, but the Fund may invest up to 20% of its net assets in securities rated below
“investment grade” (commonly known as “high yield” or “junk” bonds) at the time of purchase. For credit ratings purposes, pre-refunded bonds are deemed to be unrated. The
subadviser determines the credit quality of pre-refunded 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. 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
|
|
|
| Western Asset Municipal Partners Fund Inc. 2022 Semi-Annual Report |
|
27 |
Notes to financial statements
(unaudited) (cont’d)
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 (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.
|
|
|
|
28 |
|
Western Asset Municipal Partners Fund Inc. 2022 Semi-Annual Report |
GAAP establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and
liabilities at measurement date. These inputs are summarized in the three broad levels listed below:
| • |
|
Level 1 — quoted prices in active markets for identical investments |
| • |
|
Level 2 — other significant observable inputs (including quoted prices for similar investments, interest rates,
prepayment speeds, credit risk, etc.) |
| • |
|
Level 3 — significant unobservable inputs (including the Fund’s own assumptions in determining the fair
value of investments) The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities. |
The following is a summary of the inputs used in valuing the Fund’s assets 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 |
|
|
— |
|
|
$ |
224,082,604 |
|
|
|
— |
|
|
$ |
224,082,604 |
|
| Municipal Bonds Deposited in Tender Option Bond Trust |
|
|
— |
|
|
|
2,538,505 |
|
|
|
— |
|
|
|
2,538,505 |
|
| Total Investments |
|
|
— |
|
|
$ |
226,621,109 |
|
|
|
— |
|
|
$ |
226,621,109 |
|
| † |
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.
|
|
|
| Western Asset Municipal Partners Fund Inc. 2022 Semi-Annual Report |
|
29 |
Notes to financial statements
(unaudited) (cont’d)
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.
(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 stock 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., $50,000 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., $50,000 per outstanding share) of the Auction Rate Cumulative Preferred Stock (“ARCPS”).
(d) 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.
(e) Cash flow information. The Fund invests in securities and distributes
dividends from net investment income and net realized gains, which are paid in cash and may be reinvested at the discretion of shareholders. These activities are reported in the Statements of Changes in Net Assets and additional information on cash
receipts and cash payments is presented in the Statement of Cash Flows.
(f) 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.
|
|
|
|
30 |
|
Western Asset Municipal Partners Fund Inc. 2022 Semi-Annual Report |
(g) 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.
(h) 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.
(i) 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, 2021, 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.
(j) 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
|
|
|
| Western Asset Municipal Partners Fund Inc. 2022 Semi-Annual Report |
|
31 |
Notes to financial statements
(unaudited) (cont’d)
of 0.55% of the Fund’s average weekly net assets. For purposes of calculating this fee, the
aggregate liquidation value of the preferred stock of the Fund 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 a fee monthly, at an annual rate equal to 70% of the net management fee
it receives from the Fund.
The manager has agreed to waive the Fund’s management fee to an extent sufficient to offset the net management fee payable in
connection with any investment in an affiliated money market fund.
During the six months ended May 31, 2022, fees waived and/or expenses reimbursed amounted to
$15, all of which was an affiliated money market fund waiver.
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, 2022, such purchase and sale transactions
(excluding accrued interest) were $8,475,000 and $16,730,000, respectively.
3. Investments
During the six months ended May 31, 2022, the aggregate cost of purchases and proceeds from sales of investments (excluding short-term investments) were as follows:
|
|
|
|
|
| Purchases |
|
$ |
41,705,315 |
|
| Sales |
|
|
44,309,674 |
|
At May 31, 2022, 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 |
|
$ |
223,846,485 |
|
|
$ |
6,104,012 |
|
|
$ |
(5,184,388) |
|
|
$ |
919,624 |
|
* Cost of investments for federal income tax purposes includes the value of Inverse Floaters issued in TOB transactions (Note 1).
|
|
|
|
32 |
|
Western Asset Municipal Partners Fund Inc. 2022 Semi-Annual Report |
4. Derivative instruments and hedging activities
During the six months ended May 31, 2022, the Fund did not invest in derivative instruments.
5. Variable rate demand preferred stock
On
March 11, 2015, the Fund completed a private offering of 1,330 shares of Series 1 Variable Rate Demand Preferred Stock (“VRDPS”). Net proceeds from the offering were used by the Fund to repurchase outstanding shares of Series M
Auction Rate Cumulative Preferred Stock (“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.
The table below summarizes the key terms of Series 1 of the VRDPS at May 31, 2022.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Series |
|
Mandatory
Redemption Date |
|
|
Shares |
|
|
Liquidation
Preference
Per Share |
|
|
Aggregate
Liquidation
Value |
|
| Series 1 |
|
|
3/11/2045 |
|
|
|
1,330 |
|
|
$ |
50,000 |
|
|
$ |
66,500,000 |
|
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
|
|
|
| Western Asset Municipal Partners Fund Inc. 2022 Semi-Annual Report |
|
33 |
Notes to financial statements
(unaudited) (cont’d)
to redeem its VRDPS on the mandatory redemption date, March 11, 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 23, 2023. 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 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, 2022 was 0.481%. VRDPS shares issued and outstanding remained constant during the
six months ended May 31, 2022.
6. Auction rate cumulative preferred stock
As of May 31, 2022, the Fund had 367 shares of Preferred Stock outstanding with a liquidation preference of $50,000 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.
On April 2, 1993, the Fund
closed its public offering of 800 shares of $0.001 par value Auction Rate Cumulative Preferred Stock, Series M (“Preferred Stock”), at an offering price of $50,000 per share. On July 20, 2007, the Fund acquired the Preferred Stock of
Western Asset Municipal Partners Fund II Inc. On October 1, 1993, Western Asset Municipal Partners Fund II Inc. closed its public offering of 900 shares of $0.001 par value Preferred Stock at an offering price of $50,000 per share.
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 $50,000 per share (or $45,000 per share), plus any unpaid dividends accrued through March 6, 2015, the expiration date of the tender offer.
|
|
|
|
34 |
|
Western Asset Municipal Partners Fund Inc. 2022 Semi-Annual Report |
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 March 11, 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 1,330 Series M ARCPS, which represented 78.24% of the outstanding
ARCPS. The ARCPS that were not tendered remained outstanding. On April 25, 2018, the Fund repurchased 2 Series M ARCPS in a private transaction at a price equal to 85% of the liquidation preference of $50,000 per share (or $42,500 per share),
plus any unpaid dividends. On June 4, 2018, the Fund repurchased 1 Series M ARCPS in a private transaction at a price equal to 85% of the liquidation preference of $50,000 per share (or $42,500 per share), plus any unpaid dividends. 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.
Dividend rates generally reset every 7 days and are determined by auction procedures. The dividend rate
cannot exceed a certain maximum rate, including in the event of a failed auction. The maximum rate is calculated using the higher of 110% of the taxable equivalent of the short-term municipal bond rate and 110% of the prevailing 30 day AA commercial
paper rate. The Fund may pay higher maximum rates if the rating of the Fund’s Preferred Stock were to be lowered by the rating agencies. To the extent capital gains and other taxable income are allocated to holders of Preferred Shares for tax
purposes, the Fund will likely have to pay higher dividends to holders of Preferred Shares to compensate them for the increased tax liability to them resulting from such allocation. Due to failed auctions experienced by the Fund’s Preferred
Stock starting on February 15, 2008, the Fund pays the applicable maximum rate. The dividend rates ranged from 0.078% to 1.305% during the six months ended May 31, 2022. At May 31, 2022, the dividend rate was 1.305%.
After each auction, the auction agent will pay to each broker/dealer, from monies the Fund provides, a participation fee. For the period of the report and 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 and
December 28, 2009, Citigroup Global Markets Inc. (“CGM”) and Merrill Lynch, Pierce, Fenner & Smith Inc., respectively, reduced their participation fee to an annual rate of 0.05% of the purchase price of the ARCPS, in the case
of a failed auction. Effective June 1, 2010, Wells Fargo Advisors, LLC reduced its participation fee to an annual rate of 0.10% of the purchase price of the ARCPS, in the case of a failed auction. For the six months ended May 31, 2022, the
Fund paid $11,619 to participating broker/ dealers.
The Fund is subject to certain restrictions relating to the Preferred Stock. The Fund may not declare dividends
or make other distributions on shares of common stock or purchase any such shares if, at the time of the declaration, distribution or purchase, asset coverage with
|
|
|
| Western Asset Municipal Partners Fund Inc. 2021 Semi-Annual Report |
|
35 |
Notes to financial statements (unaudited) (cont’d)
respect to the outstanding Preferred Stock would be less than 200%. The Preferred Stock is also
subject to mandatory redemption at $50,000 per share plus any accumulated or unpaid dividends, whether or not declared, if certain requirements relating to the composition of the assets and liabilities of the Fund as set forth in its Articles
Supplementary are not satisfied.
The Preferred Stock Shareholders are entitled to one vote per share and generally vote with the common stock shareholders but vote
separately as a class to elect two directors and on certain matters affecting the rights of the Fund’s Preferred Stock. The issuance of Preferred Stock poses certain risks to holders of common stock, including, among others, the possibility of
greater market price volatility, and in certain market conditions, the yield to holders of common stock may be adversely affected. The Fund is required to maintain certain asset coverages with respect to the Preferred Stock. 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 Preferred Stock in order to meet the applicable requirement. The Preferred Stock is otherwise not
redeemable by holders of the shares. Additionally, failure to meet the foregoing asset requirements would restrict the Fund’s ability to pay dividends to common shareholders.
7. Distributions to common shareholders subsequent to May 31, 2022
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 |
|
| 5/23/2022 |
|
|
6/1/2022 |
|
|
$ |
0.0475 |
|
| 6/23/2022 |
|
|
7/1/2022 |
|
|
$ |
0.0475 |
|
| 7/22/2022 |
|
|
8/1/2022 |
|
|
$ |
0.0475 |
|
| 8/24/2022 |
|
|
9/1/2022 |
|
|
$ |
0.0475 |
|
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, 2022, the Fund did not
repurchase any shares.
9. Transactions with affiliated company
As defined by the 1940 Act, an affiliated company is one in which the Fund owns 5% or more of the outstanding voting securities, or a company which is under common
ownership or control with the Fund. The following company was considered an affiliated company for
|
|
|
|
36 |
|
Western Asset Municipal Partners Fund Inc. 2022 Semi-Annual Report |
all or some portion of the
six months ended May 31, 2022. The following transactions were effected in such company for the six months ended May 31, 2022.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Affiliate
Value at November 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Purchased |
|
|
Sold |
|
| |
|
Cost |
|
|
Shares |
|
|
Cost |
|
|
Shares |
|
| Western Asset Premier Institutional Government Reserves, Premium Shares |
|
|
$82,419 |
|
|
|
$2,116,747 |
|
|
|
2,116,747 |
|
|
|
$2,199,166 |
|
|
|
2,199,166 |
|
| |
|
Realized
Gain (Loss) |
|
|
|
|
|
Dividend
Income |
|
|
Net Increase
(Decrease) in Unrealized Appreciation
(Depreciation) |
|
|
Affiliate
Value at May 31, 2022 |
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| (cont’d) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Western Asset Premier Institutional Government Reserves, Premium Shares |
|
|
— |
|
|
|
|
|
|
|
$35 |
|
|
|
— |
|
|
|
— |
|
10. Recent accounting pronouncement
In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2020-04,
Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate Reform on Financial Reporting. In January 2021, the FASB issued ASU No. 2021-01, with further amendments to
Topic 848. The amendments in the ASUs provide optional temporary accounting recognition and financial reporting relief from the effect of certain types of contract modifications due to the planned discontinuation of the LIBOR and other
interbank-offered based reference rates as of the end of 2021 and 2023. The ASUs are 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 these ASUs 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.
***
|
|
|
| Western Asset Municipal Partners Fund Inc. 2021 Semi-Annual Report |
|
37 |
Notes to financial statements
(unaudited) (cont’d)
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 the overnight and one-, three-, six- and twelve-month USD LIBOR settings immediately following the LIBOR publication on Friday, June 30, 2023. All other LIBOR settings, including the one-week and two-month USD LIBOR settings, have ceased publication as of January 1, 2022. There remains uncertainty regarding the nature of any replacement rate and the
impact of the transition from LIBOR on the Fund’s transactions and the financial markets generally. As such, the potential effect of a transition away from LIBOR on the Fund or the Fund’s investments cannot yet be determined.
***
On February 24, 2022, Russia
engaged in military actions in the sovereign territory of Ukraine. The current political and financial uncertainty surrounding Russia and Ukraine may increase market volatility and the economic risk of investing in securities in these countries and
may also cause uncertainty for the global economy and broader financial markets. The ultimate fallout and long-term impact from these events are not known. The Fund will continue to assess the impact on valuations and liquidity and will take any
potential actions needed in accordance with procedures approved by the Board of Directors.
|
|
|
|
38 |
|
Western Asset Municipal Partners Fund Inc. 2022 Semi-Annual Report |
Board approval of management and subadvisory agreements (unaudited)
Background
The Investment Company Act of 1940, as amended (the “1940 Act”), requires that the Board of Directors (the “Board”) of Western Asset Municipal
Partners Fund Inc. (the “Fund”), including a majority of its members who are not considered to be “interested persons” under the 1940 Act (the “Independent Directors”) voting separately, approve on an annual basis the
continuation of the investment management agreement (the “Management Agreement”) between the Fund and the Fund’s manager, Legg Mason Partners Fund Advisor, LLC (the “Manager”), and the
sub-advisory agreement (the “Sub-Advisory Agreement”) between the Manager and Western Asset Management Company, LLC (the
“Sub-Adviser”), an affiliate of the Manager, with respect to the Fund.
At an
in-person meeting (the “Contract Renewal Meeting”) held on May 10-11, 2022, the Board, including the Independent Directors, considered and approved the
continuation of each of the Management Agreement and the Sub-Advisory Agreement for an additional one-year period. To assist in its consideration of the renewal of each
of the Management Agreement and the Sub-Advisory Agreement, the Board received and considered extensive information (together with the information provided at the Contract Renewal Meeting, the “Contract
Renewal Information”) about the Manager and the Sub-Adviser, as well as the management and sub-advisory arrangements for the Fund and the other closed-end funds in the same complex under the Board’s purview (the “Franklin Templeton/Legg Mason Closed-end Funds”), certain portions of which are discussed
below.
A presentation made by the Manager and the Sub-Adviser to the Board at the Contract Renewal Meeting in connection
with the Board’s evaluation of each of the Management Agreement and the Sub-Advisory Agreement encompassed the Fund and other Franklin Templeton/Legg Mason
Closed-end Funds. In addition to the Contract Renewal Information, the Board received performance and other information throughout the year related to the respective services rendered by the Manager and the Sub-Adviser to the Fund. The Board’s evaluation took into account the information received throughout the year and also reflected the knowledge and experience gained as members of the Boards of the Fund and
other Franklin Templeton/Legg Mason Closed-end Funds with respect to the services provided to the Fund by the Manager and the Sub-Adviser. The information received and
considered by the Board (including its various committees) both in conjunction with the Contract Renewal Meeting and throughout the year was both written and oral. The contractual arrangements discussed below are the product of multiple years of
review and negotiation and information received and considered by the Board during those years.
At a meeting held by video conference on April 19, 2022, the
Independent Directors, in preparation for the Contract Renewal Meeting, met in a private session with their independent legal counsel to review the Contract Renewal Information regarding the Franklin Templeton/Legg Mason Closed-end Funds, including the Fund, received to date. No
See Notes to Financial Statements.
|
|
|
| Western Asset Municipal Partners Fund Inc. |
|
39 |
Board approval of management and subadvisory agreements (unaudited) (cont’d)
representatives of the Manager or the Sub-Adviser
participated in this meeting. Following the April 19, 2022 meeting, the Independent Directors submitted certain questions and requests for additional information to management. The Independent Directors also met in private sessions with their
independent legal counsel to consider the Contract Renewal Information and management’s responses to the Independent Directors’ questions and requests for additional information in advance of and during the Contract Renewal Meeting. The
discussion below reflects all of these reviews.
The Manager provides the Fund with investment advisory and administrative services pursuant to the Management
Agreement and the Sub-Adviser provides the Fund with investment sub-advisory services pursuant to the Sub-Advisory Agreement. The
discussion below covers both the advisory and administrative functions being rendered by the Manager, each such function being encompassed by the Management Agreement, and the investment sub-advisory functions
being rendered by the Sub-Adviser pursuant to the Sub-Advisory Agreement.
Board Approval of Management Agreement and Sub-Advisory Agreement
The Independent Directors
were advised by separate independent legal counsel throughout the process. Prior to voting, the Independent Directors received a memorandum discussing the legal standards for their consideration of the proposed continuation of the Management
Agreement and the Sub-Advisory Agreement. The Independent Directors considered the Management Agreement and Sub-Advisory Agreement separately in the course of their
review. In doing so, they noted the respective roles of the Manager and the Sub-Adviser in providing services to the Fund.
In approving the continuation of the Management Agreement and Sub-Advisory Agreement, the Board, including the Independent
Directors, considered a variety of factors, including those factors discussed below. No single factor reviewed by the Board was identified by the Board as the principal factor in determining whether to approve the continuation of the Management
Agreement and the Sub-Advisory Agreement. Each Director may have attributed different weight to the various factors in evaluating the Management Agreement and the
Sub-Advisory Agreement.
After considering all relevant factors and information, the Board, exercising its reasonable
business judgment, determined that the continuation of the Management Agreement and Sub-Advisory Agreement were in the best interests of the Fund’s shareholders and approved the continuation of each such
agreement for an additional one-year period.
Nature, Extent and Quality of the Services under the
Management Agreement and Sub-Advisory Agreement
The Board received and considered Contract Renewal Information
regarding the nature, extent, and quality of services provided to the Fund by the Manager and the Sub-Adviser
See Notes to Financial Statements.
|
|
|
|
40 |
|
Western Asset Municipal Partners Fund Inc. |
under the Management
Agreement and the Sub-Advisory Agreement, respectively, during the past year. The Board noted information received at regular meetings throughout the year related to the services provided by the Manager in its
management of the Fund’s affairs and the Manager’s role in coordinating the activities of the Sub-Adviser and the Fund’s other service providers. The Board observed that the scope of services
provided by the Manager and the Sub-Adviser, and of the undertakings required of the Manager and Sub-Adviser in connection with those services, including maintaining and
monitoring their own and the Fund’s compliance programs had expanded over time as a result of regulatory, market and other developments. The Board also noted that on a regular basis it received and reviewed information from the Manager and the Sub-Adviser regarding the Fund’s compliance policies and procedures established pursuant to Rule 38a-1 under the 1940 Act. The Board also considered the risks associated
with the Fund borne by the Manager, the Sub-Adviser and their affiliates, including entrepreneurial, operational, reputational, litigation and regulatory risks, as well as the Manager’s and the Sub-Adviser’s risk management processes.
The Board reviewed the qualifications, backgrounds, and responsibilities of the
Manager’s senior personnel and the Sub-Adviser’s portfolio management team primarily responsible for the day-to-day
portfolio management of the Fund. The Board also considered, based on its knowledge of the Manager and its affiliates, the financial resources of Franklin Resources, Inc., the parent organization of the Manager and the
Sub-Adviser. The Board recognized the importance of having a fund manager with significant resources.
The Board considered
the division of responsibilities between the Manager and the Sub-Adviser under the Management Agreement and the Sub-Advisory Agreement, respectively, including the
Manager’s coordination and oversight of the services provided to the Fund by the Sub-Adviser and other fund service providers. The Management Agreement permits the Manager to delegate certain of its
responsibilities, including its investment advisory duties thereunder, provided that the Manager, in each case, will supervise the activities of the delegee.
In
reaching its determinations regarding continuation of the Management Agreement and the Sub-Advisory Agreement, the Board took into account that Fund stockholders, in pursuing their investment goals and
objectives, may have purchased their shares of the Fund based upon the reputation and the investment style, philosophy and strategy of the Manager and the Sub-Adviser, as well as the resources available to the
Manager and the Sub-Adviser.
The Board concluded that, overall, the nature, extent, and quality of the management and other
services provided (and expected to be provided) to the Fund, under the Management Agreement and the Sub-Advisory Agreement were satisfactory.
|
|
|
| Western Asset Municipal Partners Fund Inc. |
|
41 |
Board approval of management and subadvisory agreements (unaudited) (cont’d)
Fund Performance
The Board received and considered information regarding Fund performance, including information and analyses (the “Broadridge Performance Information”) for the
Fund, as well as for a group of funds (the “Performance Universe”) selected by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent third-party provider of investment company data. The Board was provided with a
description of the methodology Broadridge used to determine the similarity of the Fund with the funds included in the Performance Universe. It was noted that while the Board found the Broadridge Performance Information generally useful, they
recognized its limitations, including that the data may vary depending on the end date selected, and that the results of the performance comparisons may vary depending on the selection of the peer group and its composition over time. The Board also
noted that Board members had received and discussed with the Manager and the Sub-Adviser information throughout the year at periodic intervals comparing the Fund’s performance against its benchmark and
against the Fund’s peers. In addition, the Board considered the Fund’s performance in view of overall financial market conditions.
The information
comparing the Fund’s performance to that of its Performance Universe, consisting of the Fund and all leveraged closed-end general and insured municipal debt funds classified by Broadridge, regardless of
asset size, showed, among other data, that based on net asset value per share, the Fund’s performance was below the median for the 1-, 3-, 5- and 10-year periods ended December 31, 2021. The Board noted the explanations from the Manager and the Sub-Adviser regarding
the Fund’s relative performance versus the Performance Universe for the various periods.
Based on the reviews and discussions of Fund performance and
considering other relevant factors, including those noted above, the Board concluded, under the circumstances, that continuation of the Management Agreement and the Sub-Advisory Agreement for an additional one-year period would be consistent with the interests of the Fund and its stockholders.
Management and Sub-Advisory Fees and Expense Ratios
The Board reviewed and considered the contractual management fee (the
“Contractual Management Fee”) and the actual management fee (the “Actual Management Fee”) payable by the Fund to the Manager under the Management Agreement and the sub-advisory fee (the “Sub-Advisory Fee”) payable by the Manager to the Sub-Adviser under the Sub-Advisory Agreement in view of the nature, extent
and overall quality of the management, investment advisory and other services provided by the Manager and the Sub-Adviser, respectively. The Board noted that the
Sub-Advisory Fee is paid by the Manager, not the Fund, and, accordingly, that the retention of the Sub-Adviser does not increase the fees or expenses otherwise incurred
by the Fund’s stockholders.
|
|
|
|
42 |
|
Western Asset Municipal Partners Fund Inc. |
In addition, the Board
received and considered information and analyses prepared by Broadridge (the “Broadridge Expense Information”) comparing the Contractual Management Fee and the Actual Management Fee and the Fund’s total actual expenses with those of
funds in an expense group (the “Expense Group”), as well as a broader group of funds, each selected and provided by Broadridge. The comparison was based upon the constituent funds’ latest fiscal years. It was noted that while the
Board found the Broadridge Expense Information generally useful, they recognized its limitations, including that the data may vary depending on the selection of the peer group.
The Broadridge Expense Information showed that the Fund’s Contractual Management Fee was below the median. The Broadridge Expense Information also showed that the
Fund’s Actual Management Fee was below the median compared on the basis of common share assets and was equal to the median compared on the basis of leveraged assets. The Broadridge Expense Information also showed that the Fund’s actual
total expenses were below the median based on both common share assets and leveraged assets. The Board took into account management’s discussion of the Fund’s expenses.
The Board also reviewed Contract Renewal Information regarding fees charged by the Manager and/or the Sub-Adviser to other U.S.
clients investing primarily in an asset class similar to that of the Fund, including, where applicable, institutional and separate accounts. The Manager reviewed with the Board the differences in services provided to these different types of
accounts, noting that the Fund is provided with certain administrative services, office facilities, and Fund officers, and that the Fund is subject not only to heightened regulatory requirements relative to institutional clients but also to
requirements for listing on the New York Stock Exchange, and that the Manager coordinates and oversees the provision of services to the Fund by other fund service providers. The Board considered the fee comparisons in view of the different services
provided in managing these other types of clients and funds.
The Board considered the overall management fee, the fees of the
Sub-Adviser and the amount of the management fee retained by the Manager after payment of the subadvisory fee in each case in view of the services rendered for those amounts. The Board also received an
analysis of complex-wide management fees provided by the Manager, which, among other things, set out a framework of fees based on asset classes.
Taking all of the
above into consideration, as well as the factors identified below, the Board determined that the management fee and the Sub-Advisory Fee were reasonable in view of the nature, extent and overall quality of the
management, investment advisory and other services provided by the Manager and the Sub-Adviser to the Fund under the Management Agreement and the Sub-Advisory Agreement,
respectively.
|
|
|
| Western Asset Municipal Partners Fund Inc. |
|
43 |
Board approval of management and subadvisory agreements (unaudited) (cont’d)
Manager Profitability
The Board, as part of the Contract Renewal Information, received an analysis of the profitability to the Manager and its affiliates in providing services to the Fund for
the Manager’s fiscal years ended September 30, 2021 and September 30, 2020. The Board also received profitability information with respect to the Franklin Templeton/Legg Mason fund complex as a whole. In addition, the Board received
Contract Renewal Information with respect to the Manager’s revenue and cost allocation methodologies used in preparing such profitability data. It was noted that the allocation methodologies had been reviewed by an outside consultant. The
profitability to the Sub-Adviser was not considered to be a material factor in the Board’s considerations since the Sub-Advisory Fee is paid by the Manager, not the
Fund, although the Board noted the affiliation of the Manager with the Sub-Adviser. The profitability of the Manager and its affiliates was considered by the Board to be reasonable in view of the nature,
extent and quality of services provided to the Fund.
Economies of Scale
The Board received and discussed Contract Renewal Information concerning whether the Manager realizes economies of scale if the Fund’s assets grow. The Board noted
that because the Fund is a closed-end fund it has limited ability to increase its assets. The Board determined that the Management Fee structure was appropriate under the circumstances. For similar reasons as
stated above with respect to the Sub-Adviser’s profitability and the costs of the Sub-Adviser’s provision of services, the Board did not consider the potential
for economies of scale in the Sub-Adviser’s management of the Fund to be a material factor in the Board’s consideration of the Sub-Advisory Agreement.
Other Benefits to the Manager and the Sub-Adviser
The Board considered other benefits received by the Manager, the Sub-Adviser and their affiliates as a result of their
relationship with the Fund, including the opportunity to offer additional products and services to the Fund’s shareholders. In view of the costs of providing investment management and other services to the Fund and the ongoing commitment of the
Manager and the Sub-Adviser to the Fund, the Board considered that the ancillary benefits that the Manager and its affiliates, including the Sub-Adviser, were
reasonable.
|
|
|
|
44 |
|
Western Asset Municipal Partners Fund Inc. |
Additional shareholder information (unaudited)
Results of annual meeting of shareholders
The Annual Meeting of Shareholders of Western Asset Municipal Partners Fund Inc. was held on April 8, 2022, 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
|
|
|
|
|
|
|
|
|
|
|
|
|
| Nominees |
|
Common
Shares
and
Preferred
Shares,
voting
together,
Voted
FOR
Election |
|
|
Common
Shares
and
Preferred
Shares,
voting
together,
WITHHELD |
|
|
Common
Shares
and
Preferred
Shares,
voting
together,
ABSTAIN |
|
| Robert D. Agdern |
|
|
8,249,589 |
|
|
|
217,241 |
|
|
|
226,031 |
|
| William R. Hutchinson |
|
|
8,229,919 |
|
|
|
233,690 |
|
|
|
229,252 |
|
| Eileen A. Kamerick |
|
|
8,237,404 |
|
|
|
232,995 |
|
|
|
222,462 |
|
At May 31, 2022, in addition to Robert D. Agdern, William R. Hutchinson and Eileen A. Kamerick, the other Directors of the Fund were
as follows:
Carol L.Colman
Daniel P. Cronin
Paolo M. Cucchi
Nisha Kumar
Jane Trust
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, 2022.
|
|
|
|
|
|
|
|
|
| FOR |
|
AGAINST |
|
|
ABSTAIN |
|
| 8,499,976 |
|
|
53,124 |
|
|
|
139,761 |
|
|
|
|
| Western Asset Municipal Partners Fund Inc. |
|
45 |
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;
See Notes to Financial Statements.
|
|
|
|
46 |
|
Western Asset Municipal Partners Fund Inc. |
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.
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.
|
|
|
| Western Asset Municipal Partners Fund Inc. |
|
47 |
Western Asset
Municipal Partners 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
George P. Hoyt
Secretary and Chief Legal Officer
Thomas C. Mandia*
Senior Vice President
Jeanne M. Kelly
Senior Vice President
Western Asset Municipal
Partners 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
900 G Street NW
Washington, DC 20001
New York Stock Exchange Symbol
MNP
* Effective
February 10, 2022, Mr. Mandia became a Senior Vice President.
Legg Mason Funds Privacy and Security Notice
Your Privacy and the Security of Your Personal Information is Very
Important to the Legg Mason Funds
This Privacy and Security Notice (the “Privacy Notice”) addresses the Legg Mason Funds’ privacy and
data protection practices with respect to nonpublic personal information the Funds receive. The Legg Mason Funds include any funds sold by the Funds’ distributor, Franklin Distributors, LLC, as well as Legg Mason-sponsored closed-end funds. The provisions of this Privacy Notice apply to your information both while you are a shareholder and after you are no longer invested with the Funds.
The Type of Nonpublic Personal Information the Funds Collect About You
The Funds collect and maintain nonpublic personal information about you in connection with your shareholder account. Such information may include, but is not limited
to:
| • |
|
Personal information included on applications or other forms; |
| • |
|
Account balances, transactions, and mutual fund holdings and positions; |
| • |
|
Bank account information, legal documents, and identity verification documentation; |
| • |
|
Online account access user IDs, passwords, security challenge question responses; and |
| • |
|
Information received from consumer reporting agencies regarding credit history and creditworthiness (such as the amount of
an individual’s total debt, payment history, etc.). |
How the Funds Use Nonpublic Personal Information About You
The Funds do not sell or share your nonpublic personal information with third parties or with affiliates for their marketing purposes, or with other
financial institutions or affiliates for joint marketing purposes, unless you have authorized the Funds to do so. The Funds do not disclose any nonpublic personal information about you except as may be required to perform transactions or services
you have authorized or as permitted or required by law.
The Funds may disclose information about you to:
| • |
|
Employees, agents, and affiliates on a “need to know” basis to enable the Funds to conduct ordinary business, or
to comply with obligations to government regulators; |
| • |
|
Service providers, including the Funds’ affiliates, who assist the Funds as part of the ordinary course of business
(such as printing, mailing services, or processing or servicing your account with us) or otherwise perform services on the Funds’ behalf, including companies that may perform statistical analysis, market research and marketing services solely
for the Funds; |
| • |
|
Permit access to transfer, whether in the United States or countries outside of the United States to such Funds’
employees, agents and affiliates and service providers as required to enable the Funds to conduct ordinary business, or to comply with obligations to government regulators; |
| • |
|
The Funds’ representatives such as legal counsel, accountants and auditors to enable the Funds to conduct ordinary
business, or to comply with obligations to government regulators; |
| • |
|
Fiduciaries or representatives acting on your behalf, such as an IRA custodian or trustee of a grantor trust.
|
|
| NOT PART OF THE SEMI-ANNUAL
REPORT |
Legg Mason Funds Privacy and Security Notice (cont’d)
Except as otherwise permitted by applicable law, companies acting on the Funds’ behalf,
including those outside the United States, are contractually obligated to keep nonpublic personal information the Funds provide to them confidential and to use the information the Funds share only to provide the services the Funds ask them to
perform. The Funds may disclose nonpublic personal information about you when necessary to enforce their rights or protect against fraud, or as permitted or required by applicable law, such as in connection with a law enforcement or regulatory
request, subpoena, or similar legal process. In the event of a corporate action or in the event a Fund service provider changes, the Funds may be required to disclose your nonpublic personal information to third parties. While it is the Funds’
practice to obtain protections for disclosed information in these types of transactions, the Funds cannot guarantee their privacy policy will remain unchanged.
Keeping You Informed of the Funds’ Privacy and Security Practices
The Funds will notify you annually of their privacy policy as
required by federal law. While the Funds reserve the right to modify this policy at any time they will notify you promptly if this privacy policy changes.
The Funds’ Security Practices
The Funds maintain appropriate physical, electronic and procedural safeguards designed to guard
your nonpublic personal information. The Funds’ internal data security policies restrict access to your nonpublic personal information to authorized employees, who may use your nonpublic personal information for Fund business purposes only.
Although the Funds strive to protect your nonpublic personal information, they cannot ensure or warrant the security of any information you provide or transmit to
them, and you do so at your own risk. In the event of a breach of the confidentiality or security of your nonpublic personal information, the Funds will attempt to notify you as necessary, so you can take appropriate protective steps. If you have
consented to the Funds using electronic communications or electronic delivery of statements, they may notify you under such circumstances using the most current email address you have on record with them.
In order for the Funds to provide effective service to you, keeping your account information accurate is very important. If you believe that your account information is
incomplete, not accurate or not current, if you have questions about the Funds’ privacy practices, or our use of your nonpublic personal information, write the Funds using the contact information on your account statements, email the Funds by
clicking on the Contact Us section of the Funds’ website at www.franklintempleton.com, or contact the Fund at
1-888-777-0102.
Revised April 2018
Legg Mason California Consumer Privacy Act Policy
Although much of the personal information we collect is “nonpublic personal information” subject to federal law, residents of California may, in certain
circumstances, have additional rights under the California Consumer Privacy Act (“CCPA”). For example, if you are a broker,
|
| NOT PART OF THE SEMI-ANNUAL
REPORT |
Legg Mason Funds Privacy and Security Notice (cont’d)
dealer, agent, fiduciary, or representative acting by or on behalf of, or for, the account of any
other person(s) or household, or a financial advisor, or if you have otherwise provided personal information to us separate from the relationship we have with personal investors, the provisions of this Privacy Policy apply to your personal
information (as defined by the CCPA).
| • |
|
In addition to the provisions of the Legg Mason Funds Security and Privacy Notice, you may have the right to know the
categories and specific pieces of personal information we have collected about you. |
| • |
|
You also have the right to request the deletion of the personal information collected or maintained by the Funds.
|
If you wish to exercise any of the rights you have in respect of your personal information, you should advise the Funds by contacting them as set
forth below. The rights noted above are subject to our other legal and regulatory obligations and any exemptions under the CCPA. You may designate an authorized agent to make a rights request on your behalf, subject to the identification process
described below. We do not discriminate based on requests for information related to our use of your personal information, and you have the right not to receive discriminatory treatment related to the exercise of your privacy rights.
We may request information from you in order to verify your identity or authority in making such a request. If you have appointed an authorized agent to make a request
on your behalf, or you are an authorized agent making such a request (such as a power of attorney or other written permission), this process may include providing a password/passcode, a copy of government issued identification, affidavit or other
applicable documentation, i.e. written permission. We may require you to verify your identity directly even when using an authorized agent, unless a power of attorney has been provided. We reserve the right to deny a request submitted by an agent if
suitable and appropriate proof is not provided.
For the 12-month period prior to the date of this Privacy Policy, the Legg
Mason Funds have not sold any of your personal information; nor do we have any plans to do so in the future.
Contact Information
Address: Data Privacy Officer, 100 International Dr., Baltimore, MD 21202
Email: DataProtectionOfficer@franklintempleton.com
Phone: 1-800-396-4748
Revised October 2020
|
| NOT PART OF THE SEMI-ANNUAL
REPORT |
Western Asset Municipal Partners Fund Inc.
Western Asset Municipal Partners 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.franklintempleton.com and (3) on the SEC’s website at www.sec.gov.
Quarterly performance, semi-annual and annual reports, current net asset value and other information regarding the Fund may be found on Franklin Templeton’s website,
which can be accessed at www.franklintempleton.com. Any reference to Franklin Templeton’s website in this report is intended to allow investors public access to information regarding the Fund and does not, and is not intended to, incorporate
Franklin Templeton’s website in this report.
This report is transmitted to the shareholders of Western Asset Municipal Partners 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
WASX010083 7/22 SR22-4439