UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

FORM N-Q

 

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY

 

Investment Company Act file number

811-7362

 

 

Western Asset Municipal Partners Fund Inc.

(Exact name of registrant as specified in charter)

 

55 Water Street, New York, NY

 

10041

(Address of principal executive offices)

 

(Zip code)

 

Robert I. Frenkel, Esq.

Legg Mason & Co., LLC

300 First Stamford Place

Stamford, CT 06902

(Name and address of agent for service)

 

Registrant's telephone number, including area code:

1-800-451-2010

 

 

Date of fiscal year end:

December 31,

 

 

 

 

Date of reporting period:

March 31, 2008

 

 



 

ITEM 1.                  SCHEDULE OF INVESTMENTS

 



 

WESTERN ASSET MUNICIPAL PARTNERS FUND INC.

 

FORM N-Q

MARCH 31, 2008

 



 

Western Asset Municipal Partners Fund Inc.

 

Schedule of Investments (unaudited)

March 31, 2008

 

Face

 

 

 

 

 

 

 

Amount

 

 

 

Security

 

Value

 

MUNICIPAL BONDS — 96.1%

 

 

 

Alabama — 0.4%

 

 

 

$

1,000,000

 

 

 

Alabama State Public School & College Authority, Capital Improvement, 5.000% due 12/1/25

 

$

1,022,250

 

 

 

 

 

 

 

 

 

Arizona — 3.5%

 

 

 

2,855,000

 

 

 

Glendale, AZ, Transportation Excise Tax Revenue, MBIA, 5.000% due 7/1/28

 

2,871,588

 

5,000,000

 

 

 

Salt River Project, Arizona Agricultural Improvement & Power District Electric System Revenue, 5.000% due 1/1/33

 

5,018,750

 

 

 

 

 

Total Arizona

 

7,890,338

 

California — 7.8%

 

 

 

1,000,000

 

 

 

California EFA Revenue, College & University Financing Program, 5.000% due 2/1/26

 

880,360

 

2,000,000

 

 

 

California Housing Finance Agency Revenue, Home Mortgage, 4.800% due 8/1/37

 

1,709,000

 

 

 

 

 

California State, GO:

 

 

 

3,040,000

 

 

 

5.125% due 6/1/24 (a)

 

3,276,299

 

35,000

 

 

 

Unrefunded Balance, 5.125% due 6/1/24

 

35,420

 

1,500,000

 

 

 

California Statewide CDA Revenue, Insured Health Facility L.A., Jewish Home, CA Mortgage Insurance, 5.000% due 11/15/28

 

1,445,700

 

5,000,000

 

 

 

Los Angeles, CA, Department of Water & Power Revenue, Power Systems, Subordinated, FSA, 5.000% due 7/1/35

 

5,008,650

 

1,000,000

 

 

 

Mojave Water Agency, Improvement California District M, GO, Refunding, Electric of 1990-Morongo Basin, AMBAC, 5.000% due 9/1/18

 

1,056,920

 

2,000,000

 

 

 

Southern California Public Power Authority, Project Number 1, 5.250% due 11/1/26

 

1,904,160

 

2,500,000

 

 

 

Turlock, CA, Public Financing Authority, Tax Allocation Revenue, FSA, 5.000% due 9/1/30

 

2,501,600

 

 

 

 

 

Total California

 

17,818,109

 

Colorado — 4.1%

 

 

 

 

 

 

 

Colorado Health Facilities Authority Revenue:

 

 

 

4,350,000

 

 

 

Poudre Valley Health Care, 5.000% due 3/1/25

 

4,066,815

 

5,000,000

 

 

 

Refunding Adventist Health, Sunbelt, 5.250% due 11/15/35 (b)

 

4,735,000

 

495,000

 

 

 

Colorado Springs, CO, Hospital Revenue, 6.375% due 12/15/30 (a)

 

548,549

 

 

 

 

 

Total Colorado

 

9,350,364

 

Florida — 3.3%

 

 

 

2,000,000

 

 

 

Florida State Department of Environmental Protection, Preservation Revenue, Florida Forever, AMBAC, 5.000% due 7/1/21

 

2,089,480

 

4,950,000

 

 

 

Florida State Department of Transportation, Turnpike Revenue, FSA, 4.500% due 7/1/34

 

4,505,886

 

1,000,000

 

 

 

Seminole Tribe Florida Special Obligation Revenue, 5.250% due 10/1/27 (c)

 

899,620

 

 

 

 

 

Total Florida

 

7,494,986

 

Hawaii — 0.9%

 

 

 

2,000,000

 

 

 

Hawaii State Airport System Revenue, FGIC, 6.000% due 7/1/19 (d)

 

2,054,900

 

 

 

 

 

 

 

 

 

Illinois — 11.1%

 

 

 

 

 

 

 

Chicago, IL, Midway Airport Revenue, MBIA:

 

 

 

2,000,000

 

 

 

5.500% due 1/1/29

 

2,012,040

 

3,750,000

 

 

 

5.625% due 1/1/29 (d)

 

3,742,800

 

5,000,000

 

 

 

Chicago, IL, Park District, GO, Refunding, FGIC, 5.000% due 1/1/29 (e)

 

4,961,350

 

1,000,000

 

 

 

Chicago, IL, Public Building Commission, Building Revenue, Chicago School Reform, FGIC, 5.250% due 12/1/18

 

1,059,010

 

1,500,000

 

 

 

Cook County, IL, Community College District No. 524 Moraine Valley, GO, MBIA, 5.000% due 12/1/25

 

1,531,035

 

2,000,000

 

 

 

Illinois EFA Revenue, Northwestern University, 5.500% due 12/1/13

 

2,177,700

 

 

See Notes to Schedule of Investments.

 

1



 

Western Asset Municipal Partners Fund Inc.

 

Schedule of Investments (unaudited) (continued)

March 31, 2008

 

Face
Amount

 

 

 

Security

 

Value

 

Illinois — 11.1% (continued)

 

 

 

 

 

 

 

Illinois Health Facilities Authority Revenue:

 

 

 

$

1,500,000

 

 

 

Refunding, Lutheran General Health System, 7.000% due 4/1/14

 

$

1,733,580

 

1,850,000

 

 

 

Refunding, SSM Health Care, MBIA, 6.550% due 6/1/13 (f)

 

2,163,520

 

2,000,000

 

 

 

Servantoor Project, FSA, 6.000% due 8/15/12 (f)

 

2,194,080

 

605,000

 

 

 

South Suburban Hospital Project, 7.000% due 2/15/18 (f)

 

709,108

 

1,500,000

 

 

 

Illinois State, GO, First Series, FSA, 5.500% due 5/1/16

 

1,693,815

 

1,500,000

 

 

 

Northern Illinois Municipal Power Agency Power Project Revenue, Prairie State Project, MBIA, 5.000% due 1/1/42

 

1,453,545

 

 

 

 

 

Total Illinois

 

25,431,583

 

Indiana — 3.3%

 

 

 

 

 

 

 

Indiana Bond Bank Revenue:

 

 

 

1,285,000

 

 

 

5.000% due 8/1/23

 

1,299,443

 

715,000

 

 

 

5.000% due 8/1/23 (a)

 

764,285

 

2,390,000

 

 

 

Indiana Health Facility Financing Authority, Hospital Revenue, Community Hospital Project, AMBAC, 5.000% due 5/1/35

 

2,331,039

 

3,000,000

 

 

 

Indiana State DFA Environment Improvement Revenue, USX Corp. Project, 5.250% due 12/1/22

 

3,087,630

 

 

 

 

 

Total Indiana

 

7,482,397

 

Iowa — 0.5%

 

 

 

1,000,000

 

 

 

Iowa Finance Authority, Hospital Facility Revenue, 6.750% due 2/15/16 (a)

 

1,087,640

 

 

 

 

 

 

 

 

 

Kansas — 0.6%

 

 

 

1,430,000

 

 

 

Kansas State Development Finance Authority, Health Facilities Revenue, Sisters of Charity, 6.250% due 12/1/28

 

1,504,603

 

 

 

 

 

 

 

 

 

Maryland — 5.6%

 

 

 

 

 

 

 

Maryland State Health & Higher Educational Facilities Authority Revenue:

 

 

 

3,000,000

 

 

 

Carroll County General Hospital, 6.000% due 7/1/37

 

3,025,350

 

2,500,000

 

 

 

Suburban Hospital, 5.500% due 7/1/16

 

2,654,275

 

 

 

 

 

University of Maryland Medical Systems:

 

 

 

1,000,000

 

 

 

6.750% due 7/1/30 (a)

 

1,105,320

 

1,000,000

 

 

 

6.000% due 7/1/32 (a)

 

1,116,280

 

 

 

 

 

Northeast Maryland Waste Disposal Authority, Solid Waste Revenue, AMBAC:

 

 

 

2,500,000

 

 

 

5.500% due 4/1/15 (d)

 

2,666,100

 

2,000,000

 

 

 

5.500% due 4/1/16 (d)

 

2,115,980

 

 

 

 

 

Total Maryland

 

12,683,305

 

Massachusetts — 3.9%

 

 

 

 

 

 

 

Massachusetts State HEFA Revenue, Partners Health:

 

 

 

2,405,000

 

 

 

5.750% due 7/1/32 (a)

 

2,657,285

 

95,000

 

 

 

5.750% due 7/1/32

 

99,333

 

 

 

 

 

Massachusetts State Water Pollution Abatement Trust Revenue, MWRA Program:

 

 

 

4,665,000

 

 

 

5.750% due 8/1/29

 

4,818,245

 

1,155,000

 

 

 

5.750% due 8/1/29 (a)

 

1,226,136

 

 

 

 

 

Total Massachusetts

 

8,800,999

 

Michigan — 6.1%

 

 

 

1,000,000

 

 

 

Detroit, MI, City School District, GO, School Building & Site Improvement, FGIC, 5.500% due 5/1/17 (a)

 

1,119,030

 

 

 

 

 

Michigan State, Hospital Finance Authority Revenue:

 

 

 

2,500,000

 

 

 

Refunding, Sparrow Hospital Obligated, 5.000% due 11/15/36

 

2,334,300

 

3,000,000

 

 

 

Trinity Health, 5.375% due 12/1/30

 

3,012,660

 

6,890,000

 

 

 

Plymouth-Canton, MI, Community School District, GO, FSA Q-SBLF, 5.000% due 5/1/15

 

7,548,133

 

 

 

 

 

Total Michigan

 

14,014,123

 

 

See Notes to Schedule of Investments.

 

2



 

Western Asset Municipal Partners Fund Inc.

 

Schedule of Investments (unaudited) (continued)

March 31, 2008

 

Face
Amount

 

 

 

Security

 

Value

 

MUNICIPAL BONDS — 96.1% (continued)

 

 

 

Missouri — 1.2%

 

 

 

$

2,500,000

 

 

 

Missouri State Highways & Transit Commission, State Road Revenue, Second Lien, 5.250% due 5/1/20

 

$

2,707,625

 

 

 

 

 

 

 

 

 

New Hampshire — 0.0%

 

 

 

70,000

 

 

 

New Hampshire State HFA, Single-Family Residential Revenue, 6.800% due 7/1/15 (d)

 

71,110

 

 

 

 

 

 

 

 

 

New Jersey — 8.4%

 

 

 

 

 

 

 

New Jersey EDA:

 

 

 

2,500,000

 

 

 

Motor Vehicle Surcharges Revenue, MBIA, 5.250% due 7/1/16

 

2,686,875

 

5,150,000

 

 

 

PCR, Revenue, Public Service Electric and Gas Co. Project, MBIA, 6.400% due 5/1/32 (d)

 

5,216,281

 

5,450,000

 

 

 

Water Facilities Revenue, New Jersey American Water Co. Inc. Project, FGIC, 6.875% due 11/1/34 (d)

 

5,544,884

 

4,215,000

 

 

 

New Jersey Environmental Infrastructure Trust, Refunding, 5.000% due 9/1/19

 

4,613,149

 

1,000,000

 

 

 

New Jersey Health Care Facilities Financing Authority Revenue, Hackensack University Medical Center, 6.000% due 1/1/25

 

1,022,470

 

 

 

 

 

Total New Jersey

 

19,083,659

 

New York — 9.1%

 

 

 

500,000

 

 

 

Nassau County, NY, Industrial Development Agency Revenue, Continuing Care Retirement, Amsterdam at Harborside, 6.700% due 1/1/43

 

489,775

 

 

 

 

 

New York City, NY:

 

 

 

 

 

 

 

GO:

 

 

 

1,980,000

 

 

 

6.000% due 5/15/30 (a)

 

2,148,617

 

20,000

 

 

 

6.000% due 5/15/30

 

21,161

 

1,000,000

 

 

 

Municipal Water Finance Authority, Water & Sewer Systems Revenue,

 

 

 

 

 

 

 

5.125% due 6/15/31

 

1,002,410

 

 

 

 

 

TFA Revenue:

 

 

 

635,000

 

 

 

Future Tax Secured, 5.500% due 11/15/17 (a)

 

707,168

 

5,115,000

 

 

 

Unrefunded Balance, Future Tax Secured, 5.500% due 11/15/17

 

5,615,196

 

5,365,000

 

 

 

New York State Dormitory Authority Revenue, Court Facilities Lease, NYC Issue, Non State Supported Debt, AMBAC, 5.500% due 5/15/30

 

5,751,172

 

5,000,000

 

 

 

New York State Urban Development Corp. Revenue, State Personal Income Tax, 5.000% due 3/15/26

 

5,112,150

 

 

 

 

 

Total New York

 

20,847,649

 

North Carolina — 0.5%

 

 

 

1,200,000

 

 

 

North Carolina Medical Care Commission Health Care Facilities Revenue, Novant Health Obligation Group, 5.000% due 11/1/39

 

1,155,000

 

 

 

 

 

 

 

 

 

Ohio — 2.5%

 

 

 

5,000,000

 

 

 

Ohio State Water Development Authority, PCR, Refunding, Loan Fund, Water Quality, 5.250% due 12/1/18

 

5,621,100

 

 

 

 

 

 

 

 

 

Oregon — 0.6%

 

 

 

1,250,000

 

 

 

Multnomah County, OR, Hospital Facilities Authority Revenue, Providence Health Systems, 5.250% due 10/1/18

 

1,302,112

 

 

 

 

 

 

 

 

 

Pennsylvania — 2.4%

 

 

 

 

 

 

 

Philadelphia, PA:

 

 

 

 

 

 

 

Gas Works Revenue, 7th Geneal Ordinance:

 

 

 

2,000,000

 

 

 

5.000% due 10/1/23

 

2,022,620

 

2,685,000

 

 

 

AMBAC, 5.000% due 10/1/17

 

2,855,095

 

500,000

 

 

 

School District, GO, FSA, 5.500% due 2/1/31 (a)

 

547,525

 

 

 

 

 

Total Pennsylvania

 

5,425,240

 

 

See Notes to Schedule of Investments.

 

3



 

Western Asset Municipal Partners Fund Inc.

 

Schedule of Investments (unaudited) (continued)

March 31, 2008

 

Face
Amount

 

 

 

Security

 

Value

 

MUNICIPAL BONDS — 96.1% (continued)

 

 

 

Tennessee — 2.1%

 

 

 

$

4,700,000

 

 

 

Memphis-Shelby County, TN, Airport Authority Revenue, AMBAC, 6.000% due 3/1/24 (d)

 

$

4,771,111

 

 

 

 

 

 

 

 

 

Texas — 11.4%

 

 

 

5,000,000

 

 

 

Aledo, TX, GO, ISD, School Building, PSF, 5.000% due 2/15/30 (e)

 

4,999,700

 

2,000,000

 

 

 

Board of Managers Guadalupe Joint County-City of Seguin Hospital Revenue, Guadalupe Regional Medical Center Project, FHA, 5.500% due 8/15/36

 

2,021,920

 

2,960,000

 

 

 

Harris County, TX, Health Facilities Development Corp., Hospital Revenue, Memorial Hermann Healthcare Systems, 5.250% due 12/1/18

 

3,055,460

 

3,000,000

 

 

 

Houston, TX, Utility System Revenue, Refunding, Combined First Lien, FSA, 5.250% due 5/15/20

 

3,217,020

 

1,000,000

 

 

 

Mesquite, TX, Independent School District No. 1, GO, Capital Appreciation, PSFG, zero coupon bond to yield 5.169% due 8/15/27

 

333,290

 

2,500,000

 

 

 

North Texas Tollway Authority Revenue, 5.750% due 1/1/40

 

2,501,600

 

2,500,000

 

 

 

San Antonio, TX, Electric and Gas, Refunding, 5.000% due 2/1/17

 

2,673,650

 

2,000,000

 

 

 

Tarrant County, TX, Cultural Education Facilities Finance Corp. Revenue, Refunding, Texas Health Resources, 5.000% due 2/15/21

 

2,014,140

 

5,000,000

 

 

 

Texas State Turnpike Authority Revenue, First Tier, AMBAC, 5.500% due 8/15/39

 

5,098,350

 

 

 

 

 

Total Texas

 

25,915,130

 

Virginia — 1.4%

 

 

 

2,915,000

 

 

 

Greater Richmond, VA, Convention Center Authority, Hotel Tax Revenue, Convention Center Expansion Project, 6.125% due 6/15/20 (a)

 

3,178,079

 

 

 

 

 

 

 

 

 

Washington — 5.4%

 

 

 

2,900,000

 

 

 

Chelan County, WA, Public Utility District, Chelan Hydro System No.1, Construction Revenue, AMBAC, 5.450% due 7/1/37 (d)

 

2,858,008

 

2,000,000

 

 

 

Port of Seattle, WA, Revenue, Refunding, Intermediate Lien, MBIA, 5.000% due 3/1/30

 

1,986,740

 

4,650,000

 

 

 

Seattle, WA, GO, FSA, 5.750% due 12/1/28 (a)

 

4,968,618

 

2,400,000

 

 

 

Washington State Public Power Supply System Revenue, Nuclear Project No. 1, MBIA, 5.125% due 7/1/17

 

2,460,504

 

 

 

 

 

Total Washington

 

12,273,870

 

 

 

 

 

TOTAL INVESTMENTS BEFORE SHORT-TERM INVESTMENTS
(Cost — $217,291,424)

 

218,987,282

 

 

 

 

 

 

 

 

 

SHORT-TERM INVESTMENTS — 3.9%

 

 

 

Alaska — 0.3%

 

 

 

600,000

 

 

 

Alaska State Housing Finance Corp., Home Mortgage Revenue, SPA-Landesbank Baden-Wurttemburg, 1.950%, 4/3/08 (g)

 

600,000

 

100,000

 

 

 

Valdez, AK Marine Term Revenue, Refunding, EXXON Pipeline CO., Project, Series B, 0.900%, 4/1/08 (g)

 

100,000

 

 

 

 

 

Total Alaska

 

700,000

 

Delaware — 0.0%

 

 

 

100,000

 

 

 

University of Delaware Revenue, SPA-Bank of America, 1.250%, 4/1/08 (g)

 

100,000

 

 

 

 

 

 

 

 

 

Colorado — 1.3%

 

 

 

3,000,000

 

 

 

Colorado HFA, Multi-Family Hunters, FNMA, LIQ-FNMA, 2.000%, 4/2/08 (g)

 

3,000,000

 

 

 

 

 

 

 

 

 

Florida — 0.4%

 

 

 

800,000

 

 

 

Polk County, FL, School Board COP, Master Lease Program, FSA, LOC-Dexia Credit Local, 2.060%, 4/3/08 (g)

 

800,000

 

 

 

 

 

 

 

 

 

Missouri — 1.1%

 

 

 

2,400,000

 

 

 

Kansas City, MO, IDA, Revenue, Ewing Marion Kauffman, 1.300%, 4/1/08 (g)

 

2,400,000

 

 

See Notes to Schedule of Investments.

 

4



 

Western Asset Municipal Partners Fund Inc.

 

Schedule of Investments (unaudited) (continued)

March 31, 2008

 

Face
Amount

 

 

 

Security

 

Value

 

Missouri — 1.1% (continued)

 

 

 

$

100,000

 

 

 

Missouri State HEFA, Revenue, Washington University, SPA-Dexia Credit Local, 1.250%, 4/1/08 (g)

 

$

100,000

 

 

 

 

 

Total Missouri

 

2,500,000

 

New York — 0.1%

 

 

 

200,000

 

 

 

Long Island, NY, Power Authority, Subordinated, LOC-State Street Bank & Trust Co., 1.220%, 4/1/08 (g)

 

200,000

 

 

 

 

 

 

 

 

 

Texas — 0.1%

 

 

 

200,000

 

 

 

Gulf Coast Waste Disposal Authority, TX, PCR, Amoco Oil, 0.900%, 4/1/08 (g)

 

200,000

 

100,000

 

 

 

Texas Water Development Board Revenue, Refunding, Subordinated Lien A, SPA-JP Morgan Chase Bank, 1.250%, 4/1/08 (g)

 

100,000

 

 

 

 

 

Total Texas

 

300,000

 

Kentucky — 0.6%

 

 

 

1,400,000

 

 

 

Christian County Association of County Leasing Trust Lease Program, LOC-U.S. Bank N.A., 1.300%, 4/1/08 (g)

 

1,400,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Total SHORT-TERM INVESTMENTS
(Cost — $9,000,000)

 

9,000,000

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL INVESTMENTS — 100.0% (Cost — $226,291,424#)

 

$

227,987,282

 

 


(a) 

Pre-Refunded bonds are escrowed with government obligations and/or government agency securities and are considered by the Manager to be triple-A rated even if issuer has not applied for new ratings.

(b) 

Variable rate security.  Interest rate disclosed is that which is in effect at March 31, 2008.

(c) 

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, unless otherwise noted.

(d) 

Income from this issue is considered a preference item for purposes of calculating the alternative minimum tax (“AMT”).

(e) 

All or a portion of this security is segregated for open futures contracts and extended settlements.

(f) 

Bonds are escrowed to maturity by government obligations and/or U.S. government agency securities and are considered by the Manager to be triple-A rated even if issuer has not applied for new ratings.

(g) 

Variable rate demand obligations have a demand feature under which the Fund can tender them back to the issuer on no more than 7 days notice.  Date shown is the date of the next interest rate change.

#

Aggregate cost for federal income tax purposes is substantially the same.

 

 

 

Abbreviations used in this schedule:

 

AMBAC - Ambac Assurance Corporation - Insured Bonds

 

CDA - Community Development Authority

 

COP - Certificate of Participation

 

DFA - Development Finance Agency

 

EDA - Economic Development Authority

 

EFA - Educational Facilities Authority

 

FGIC - Financial Guaranty Insurance Company - Insured Bonds

 

FHA - Federal Housing Administration

 

FNMA - Federal National Mortgage Association

 

FSA - Financial Security Assurance - Insured Bonds

 

GO - General Obligation

 

HEFA - Health & Educational Facilities Authority

 

HFA - Housing Finance Authority

 

IDA - Industrial Development Authority

 

ISD - Independent School District

 

LIQ - Liquidity Facility

 

LOC - Letter of Credit

 

MBIA - Municipal Bond Investors Assurance Corporation - Insured Bonds

 

MWRA - Massachusetts Water Resources Authority

 

PCR - Pollution Control Revenue

 

PSF - Permanent School Fund

 

See Notes to Schedule of Investments.

 

5



 

Western Asset Municipal Partners Fund Inc.

 

Schedule of Investments (unaudited) (continued)

March 31, 2008

 

 

PSFG - Permanent School Fund Guaranty

 

Q-SBLF - Qualified School Board Loan Fund

 

SPA - Standby Bond Purchase Agreement

 

TFA - Transitional Finance Authority

 

Summary of Investments by Industry †

 

 

 

 

 

 

 

Hospitals

 

15.8

%

Pre-Refunded/Escrowed to Maturity

 

14.0

 

Transportation

 

12.9

 

Water & Sewer

 

11.3

 

Local General Obligation

 

9.9

 

Electric

 

8.2

 

Special Tax

 

7.1

 

Industrial Development

 

5.9

 

Other Revenue

 

3.8

 

Education

 

3.2

 

Leasing

 

3.0

 

Housing: Multi-Family

 

1.3

 

Resource Recovery

 

0.9

 

Housing

 

0.8

 

State General Obligation

 

0.8

 

Public Facilities

 

0.6

 

Housing: Single Family

 

0.3

 

Pollution Control

 

0.1

 

Utilities

 

0.1

 

 

 

100

%

 

Ratings Table † (March 31, 2008) (unaudited)

 

S&P/Moody’s/Fitch

 

 

 

AAA/Aaa

 

63.5

%

AA/Aa

 

17.1

 

A

 

13.9

 

BBB/Baa

 

5.3

 

NR

 

0.2

 

 

 

100

%

 


† As a percentage of total investments.

‡ S&P primary rating; Moody’s secondary, then Fitch.

See pages 7 and 8 for definitions of ratings.

 

See Notes to Schedule of Investments.

 

6



 

Bond Ratings (unaudited)

 

The definitions of the applicable rating symbols are set forth below:

 

Standard & Poor’s Ratings Service (“Standard & Poor’s”) — Ratings from “AA” to “CCC” may be modified by the addition of a plus (+) or minus (-) sign to show relative standings within the major rating categories.

 

AAA

Bonds rated “AAA” have the highest rating assigned by Standard & Poor’s. Capacity to pay interest and repay principal is extremely strong.

 

 

 

AA

Bonds rated “AA” have a very strong capacity to pay interest and repay principal and differ from the highest rated issues only in a small degree.

 

 

 

A

Bonds rated “A” have a strong capacity to pay interest and repay principal although they are somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories.

 

 

 

BBB

Bonds rated “BBB” are regarded as having an adequate capacity to pay interest and repay principal. Whereas they normally exhibit adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal for bonds in this category than in higher rated categories.

 

 

 

BB, B,

Bonds rated “BB”, “B”, “CCC”, “CC” and “C” are regarded, on balance, as predominantly speculative with respect

CCC, CC
and C

 

to capacity to pay interest and repay principal in accordance with the terms of the obligation. “BB” represents the lowest degree of speculation and “C” the highest degree of speculation. While such bonds will likely have some quality and protective characteristics, these are outweighed by large uncertainties or major risk exposures to adverse conditions.

 

 

 

D

Bonds rated “D” are in default and payment of interest and/or repayment of principal is in arrears.

 

Moody’s Investors Service (“Moody’s”) — Numerical modifiers 1, 2 and 3 may be applied to each generic rating from “Aa” to “Caa,” where 1 is the highest and 3 the lowest ranking within its generic category.

 

Aaa

Bonds rated “Aaa” are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as “gilt edge.” Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes can be visualized as most unlikely to impair the fundamentally strong position of such issues.

 

 

 

Aa

Bonds rated “Aa” are judged to be of high quality by all standards. Together with the “Aaa” group they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in “Aaa” securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in “Aaa” securities.

 

 

 

A

Bonds rated “A” possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment some time in the future.

 

 

 

Baa

Bonds rated “Baa” are considered as medium grade obligations, i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well.

 

 

 

Ba

Bonds rated “Ba” are judged to have speculative elements; their future cannot be considered as well assured. Often the protection of interest and principal payments may be very moderate and therefore not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class.

 

 

 

B

Bonds rated “B” generally lack characteristics of desirable investments. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small.

 

 

 

Caa

Bonds rated “Caa” are of poor standing. These may be in default, or present elements of danger may exist with respect to principal or interest.

 

7



 

Bond Ratings (unaudited) (continued)

 

Ca

Bonds rated “Ca” represent obligations which are speculative in a high degree. Such issues are often in default or have other marked short-comings.

 

 

 

C

Bonds rated “C” are the lowest class of bonds and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.

 

Short-Term Security Ratings (unaudited)

 

SP-1

Standard & Poor’s highest rating indicating very strong or strong capacity to pay principal and interest; those issues determined to possess overwhelming safety characteristics are denoted with a plus (+) sign.

 

 

 

A-1

Standard & Poor’s highest commercial paper and variable-rate demand obligation (VRDO) rating indicating that the degree of safety regarding timely payment is either overwhelming or very strong; those issues determined to possess overwhelming safety characteristics are denoted with a plus (+) sign.

 

 

 

VMIG 1

Moody’s highest rating for issues having a demand feature — VRDO.

 

 

 

MIG1

Moody’s highest rating for short-term municipal obligations.

 

 

 

P-1

Moody’s highest rating for commercial paper and for VRDO prior to the advent of the VMIG 1 rating.

 

8



 

Notes to Schedule of Investments (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 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.

 

The following are significant accounting policies consistently followed by the Fund and are in conformity with U.S. generally accepted accounting principles (“GAAP”).

 

(a) Financial Futures Contracts. The Fund may enter into financial futures contracts typically to hedge a portion of the portfolio. Upon entering into a financial futures contract, the Fund is required to deposit cash or securities as initial margin, equal to a certain percentage of the contract amount (initial margin deposit). Additional securities are also segregated up to the current market value of the financial futures contracts. Subsequent payments, known as “variation margin,” are made or received by the Fund each day, depending on the daily fluctuations in the value of the underlying financial instruments. For foreign denominated futures, variation margins are not settled daily. The Fund recognizes an unrealized gain or loss equal to the fluctuation in the value.  When the financial futures contracts are closed, a realized gain or loss is recognized equal to the difference between the proceeds from (or cost of) the closing transactions and the Fund’s basis in the contracts.

 

The risks associated with entering into financial futures contracts include the possibility that a change in the value of the contract may not correlate with the changes in the value of the underlying financial instruments. In addition, investing in financial futures contracts involves the risk that the Fund could lose more than the initial margin deposit and subsequent payments required for a futures transaction. Risks may also arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of their contracts.

 

(b) Concentration of Credit Risk. Since the Fund invests a portion of its assets in obligations of issuers within a single state, it may be subject to possible concentration risks associated with economic, political, or legal developments or industrial or regional matters specifically affecting that state.

 

(c) Security Transactions.  Security transactions are accounted for on a trade date basis.

 

2.  Investment Valuation

 

Effective January 1, 2008, the Fund adopted Statement of Financial Accounting Standards No. 157 (“FAS 157”).  FAS 157 establishes a single definition of fair value, creates a three-tier hierarchy as a framework for measuring fair value based on inputs used to value the Fund’s investments, and requires additional disclosure about fair value.  The hierarchy of inputs is summarized 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)

 

Securities are valued based on transactions in municipal obligations, quotations from municipal bond dealers, market transactions in comparable securities and various other relationships between securities. When prices are not readily available, or are determined not to reflect fair value, the Fund may value these securities at fair value as determined in accordance with the procedures approved by the Fund’s Board of Directors. Short-term obligations with maturities of 60 days or less are valued at amortized cost, which approximates fair value.

 

The following is a summary of the inputs used in valuing the Fund’s assets carried at fair value:

 

9



 

Notes to Schedule of Investments (unaudited) (continued)

 

 

 

March 31, 2008

 

Quoted Prices
(Level 1)

 

Other Significant
Observable Inputs
(Level 2)

 

Significant
Unobservable
Inputs
(Level 3)

 

Investments in Securities

 

$

227,987,282

 

 

$

227,987,282

 

 

Other Financial Instruments*

 

(153,750

)

(153,750

)

 

 

Total

 

$

227,833,532

 

(153,750

)

$

227,987,282

 

 

 


* Other financial instruments include future contracts.

 

3.  Investments

 

At March 31, 2008, the aggregate gross unrealized appreciation and depreciation of investments for federal income tax purposes were substantially as follows:

 

Gross unrealized appreciation

 

$

5,805,835

 

Gross unrealized depreciation

 

(4,109,977

)

Net unrealized appreciation

 

$

1,695,858

 

 

At March 31, 2008, the Fund had the following open futures contracts:

 

 

 

Number of
Contracts

 

Expiration
Date

 

Basis
Value

 

Market
Value

 

Unrealized
Loss

 

Contracts to Sell:

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury Bonds

 

50

 

6/08

 

$

5,786,094

 

$

5,939,844

 

$

(153,750

)

 

4. Recent Accounting Pronouncement

 

In March 2008, the Financial Accounting Standards Board (“FASB”) issued the Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (“FAS 161”). FAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. FAS 161 requires enhanced disclosures about the Fund’s derivative and hedging activities, including how such activities are accounted for and their effect on the Fund’s financial position, performance and cash flows. Management is currently evaluating the impact the adoption of FAS 161 will have on the Fund’s financial statements and related disclosures.

 

10



 

ITEM 2.                 CONTROLS AND PROCEDURES.

 

(a)           The registrant’s principal executive officer and principal financial officer have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a- 3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective as of a date within 90 days of the filing date of this report that includes the disclosure required by this paragraph, based on their evaluation of the disclosure controls and procedures required by Rule 30a-3(b) under the 1940 Act and 15d-15(b) under the Securities Exchange Act of 1934.

 

(b)           There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the registrant’s last fiscal quarter that have materially affected, or are likely to materially affect the registrant’s internal control over financial reporting.

 

ITEM 3.                 EXHIBITS.

 

Certifications pursuant to Rule 30a-2(a) under the Investment Company Act of 1940, as amended, are attached hereto.

 



 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Western Asset Municipal Partners Fund

 

 

 

By

/s/ R. Jay Gerken

 

R. Jay Gerken

 

Chief Executive Officer

 

 

 

 

 

Date: May 28, 2008

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

 

By

/s/ R. Jay Gerken

 

R. Jay Gerken

 

Chief Executive Officer

 

 

 

Date: May 28, 2008

 

 

 

 

 

By

/s/ Kaprel Ozsolak

 

Kaprel Ozsolak

 

Chief Financial Officer

 

 

 

Date: May 28, 2008