Western Asset Income Funds

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM N-Q

 

 

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

 

 

Investment Company Act file number:

    811-02351

 

 

 

Western Asset Income Fund

(Exact Name of Registrant as Specified In Its Charter)

 

 

Address of Principal Executive Offices:   385 East Colorado Boulevard
    Pasadena, CA 91101
Name and address of agent for service:   Richard M. Wachterman, Esq.
    Legg Mason Wood Walker, Incorporated
    100 Light Street
    Baltimore, MD 21202

 

 

Registrant’s telephone number, including area code: (410) 539-0000

 

 

Date of fiscal year end: December 31, 2005

 

 

Date of reporting period: September 30, 2005

Item 1 – Schedule of Investments

Portfolio of Investments

 

September 30, 2005 (Unaudited)

(Amounts in Thousands)

 

Western Asset Income Fund

 

     RATE
     MATURITY
DATE
    PAR/SHARES
    VALUE
    

Long-Term Securities — 97.5%

                         

Corporate Bonds and Notes — 70.9%

                         

Aerospace/Defense — 0.5%

                         

L-3 Communications Corp.

    7.625 %   6/15/12    275    289    

Systems 2001 Asset Trust

    6.664 %   9/15/13    448    480   A
                    
   
                     769    
                    
   

Auto Parts and Equipment — 0.2%

                         

American Axle & Manufacturing Inc.

    5.250 %   2/11/14    300    255    
                    
   

Automotive — 1.0%

                         

Ford Motor Company

    7.450 %   7/16/31    600    468   B

Ford Motor Company

    8.900 %   1/15/32    260    219    

General Motors Corporation

    8.250 %   7/15/23    190    148   B

General Motors Corporation

    8.375 %   7/15/33    760    593   B
                    
   
                     1,428    
                    
   

Banking and Finance — 10.0%

                         

Ford Motor Credit Company

    6.625 %   6/16/08    3,010    2,942    

Ford Motor Credit Company

    7.375 %   10/28/09    1,425    1,376    

Ford Motor Credit Company

    7.375 %   2/1/11    510    488    

Ford Motor Credit Company

    7.250 %   10/25/11    1,615    1,533    

Ford Motor Credit Company

    7.000 %   10/1/13    70    65   B

Fuji Co., Ltd.

    9.870 %   12/31/49    620    692   A,C

General Motors Acceptance Corporation

    6.150 %   4/5/07    570    566    

General Motors Acceptance Corporation

    6.125 %   8/28/07    3,190    3,140    

General Motors Acceptance Corporation

    6.311 %   11/30/07    110    106    

General Motors Acceptance Corporation

    5.625 %   5/15/09    510    468    

HSBC Finance Corporation

    4.750 %   4/15/10    1,790    1,783    

International Lease Finance Corporation

    6.375 %   3/15/09    330    346   B

Residential Capital Corporation

    6.375 %   6/30/10    730    739   A

SB Treasury Company LLC

    9.400 %   12/29/49    600    662   A
                    
   
                     14,906    
                    
   

Banks — 2.3%

                         

Bank of America Corporation

    4.500 %   8/1/10    1,075    1,064    

Bank of America Corporation

    7.800 %   9/15/16    250    304    

BankAmerica Capital III

    4.720 %   1/15/27    215    207   D

BB&T Capital Trust I

    5.850 %   8/18/35    640    631    

Chase Capital II

    4.743 %   2/1/27    725    682   D

RBS Capital Trust III

    5.512 %   9/29/49    570    580   C
                    
   
                     3,468    
                    
   

Building Materials — 0.5%

                         

American Standard, Inc.

    8.250 %   6/1/09    500    553    

Nortek, Inc.

    8.500 %   9/1/14    225    207    
                    
   
                     760    
                    
   

Cable — 1.4%

                         

Comcast Corporation

    7.050 %   3/15/33    160    178    

Cox Communications, Inc.

    4.625 %   1/15/10    510    499    

CSC Holdings Inc.

    7.250 %   7/15/08    700    702    

 

1

Portfolio of Investments

 

September 30, 2005 (Unaudited)

(Amounts in Thousands)

 

Western Asset Income Fund

 

     RATE
     MATURITY
DATE
    PAR/SHARES
    VALUE
    

TCI Communications, Inc.

    8.750 %   8/1/15    160    199    

Tele-Communications, Inc.

    9.800 %   2/1/12    375    461    
                    
   
                     2,039    
                    
   

Casino Resorts — 0.7%

                         

Caesars Entertainment Inc.

    8.125 %   5/15/11    250    278    

Harrah’s Operating Company, Inc.

    5.500 %   7/1/10    340    343    

Harrah’s Operating Company, Inc.

    5.750 %   10/1/17    480    470   A
                    
   
                     1,091    
                    
   

Chemicals — 0.7%

                         

The Dow Chemical Company

    7.375 %   11/1/29    800    977    
                    
   

Computer Services and Systems — 0.7%

                         

Electronic Data Systems Corporation

    7.125 %   10/15/09    600    643    

Electronic Data Systems Corporation

    7.450 %   10/15/29    420    440    
                    
   
                     1,083    
                    
   

Containers and Packaging — 0.1%

                         

Graphic Packaging International Corp.

    9.500 %   8/15/13    200    188   B
                    
   

Diversified Financial Services — 3.0%

                         

AIG SunAmerica Global Financing VI

    6.300 %   5/10/11    1,880    2,012   A

Beaver Valley Funding Corp.

    9.000 %   6/1/17    300    356    

Capital One Bank

    5.750 %   9/15/10    310    320   B

Capital One Bank

    6.500 %   6/13/13    330    354    

Capital One Financial Corporation

    8.750 %   2/1/07    350    368    

Capital One Financial Corporation

    7.125 %   8/1/08    90    95    

iStar Financial Inc.

    5.375 %   4/15/10    230    230    

iStar Financial Inc.

    6.000 %   12/15/10    230    236    

Marsh & McLennan Companies, Inc.

    5.150 %   9/15/10    90    89    

Marsh & McLennan Companies, Inc.

    5.875 %   8/1/33    330    299    

Mizuho Preferred Capital Corp. LLC

    8.790 %   12/29/49    110    120   A
                    
   
                     4,479    
                    
   

Drug and Grocery Store Chains — 0.4%

                         

Safeway Inc.

    7.500 %   9/15/09    500    538    
                    
   

Electric — 2.2%

                         

AEP Texas Central Company

    5.500 %   2/15/13    420    430    

American Electric Power Company, Inc.

    5.250 %   6/1/15    490    491   B

Dominion Resources, Inc.

    5.125 %   12/15/09    210    212    

Dominion Resources, Inc.

    5.150 %   7/15/15    350    343    

FirstEnergy Corp.

    6.450 %   11/15/11    60    64    

FirstEnergy Corp.

    7.375 %   11/15/31    710    833    

System Energy Resources, Inc.

    4.875 %   10/1/07    380    378    

Tampa Electric Company

    6.375 %   8/15/12    145    156    

The AES Corporation

    9.500 %   6/1/09    39    42    

The Cleveland Electric Illuminating Company

    5.650 %   12/15/13    300    307    
                    
   
                     3,256    
                    
   

Energy — 6.2%

                     

CenterPoint Energy, Inc.

    6.850 %   6/1/15    1,150    1,266    

DTE Energy Company

    6.375 %   4/15/33    330    339    

 

2

Portfolio of Investments

 

September 30, 2005 (Unaudited)

(Amounts in Thousands)

 

Western Asset Income Fund

 

     RATE
     MATURITY
DATE
    PAR/SHARES
    VALUE
    

Exelon Corporation

    6.750 %   5/1/11    1,500    1,608    

MidAmerican Energy Holdings Company

    5.875 %   10/1/12    500    522    

Pacific Gas and Electric Company

    6.050 %   3/1/34    1,890    1,966    

Peabody Energy Corporation

    6.875 %   3/15/13    285    298    

Sempra Energy

    4.290 %   5/21/08    635    636   D

TXU Corp.

    6.375 %   6/15/06    750    758    

TXU Corp.

    6.550 %   11/15/34    520    483    

TXU Energy Co.

    4.920 %   1/17/06    125    125   D

TXU Energy Co.

    6.125 %   3/15/08    500    513   B

TXU Energy Co.

    7.000 %   3/15/13    370    402    

Xcel Energy, Inc.

    7.000 %   12/1/10    350    382    
                    
   
                     9,298    
                    
   

Environmental Services — 0.3%

                         

Waste Management, Inc.

    7.375 %   5/15/29    415    482    
                    
   

Food, Beverage and Tobacco — 1.9%

                         

Altria Group, Inc.

    7.000 %   11/4/13    305    334    

Altria Group, Inc.

    7.750 %   1/15/27    340    396   B

Domino’s, Inc.

    8.250 %   7/1/11    200    210    

R.J. Reynolds Tobacco Holdings, Inc.

    7.250 %   6/1/12    1,360    1,394   B

Tyson Foods, Inc.

    7.000 %   1/15/28    500    547   B
                    
   
                     2,881    
                    
   

Gas and Pipeline Utilities — 2.4%

                         

Dynegy Holdings Inc.

    6.875 %   4/1/11    1,300    1,271   B

Dynegy Holdings Inc.

    8.750 %   2/15/12    735    797    

The Williams Companies, Inc.

    7.500 %   1/15/31    102    108    

The Williams Companies, Inc.

    8.750 %   3/15/32    1,250    1,475    
                    
   
                     3,651    
                    
   

Health Care — 1.1%

                         

Tenet Healthcare Corporation

    6.375 %   12/1/11    1,465    1,366    

Tenet Healthcare Corporation

    6.875 %   11/15/31    250    208    
                    
   
                     1,574    
                    
   

Homebuilding — 0.4%

                         

D.R. Horton, Inc.

    5.250 %   2/15/15    410    384    

Pulte Homes, Inc.

    6.250 %   2/15/13    145    150   B
                    
   
                     534    
                    
   

Insurance — 0.2%

                         

Willis Group North America

    5.125 %   7/15/10    280    280    
                    
   

Investment Banking/Brokerage — 2.1%

                         

J.P. Morgan Capital Trust II

    7.950 %   2/1/27    150    161    

J.P. Morgan Chase & Co.

    5.125 %   9/15/14    1,140    1,137    

J.P. Morgan Chase & Co.

    5.150 %   10/1/15    670    666    

Merrill Lynch & Co., Inc.

    5.000 %   1/15/15    60    60    

Morgan Stanley

    4.750 %   4/1/14    500    482    

The Goldman Sachs Group, Inc.

    6.345 %   2/15/34    555    578    
                    
   
                     3,084    
                    
   

 

3

Portfolio of Investments

 

September 30, 2005 (Unaudited)

(Amounts in Thousands)

 

Western Asset Income Fund

 

     RATE
     MATURITY
DATE
    PAR/SHARES
    VALUE
    

Lodging/Hotels — 0.3%

                         

Hilton Hotels Corporation

    7.625 %   12/1/12    450    506   B
                    
   

Machinery — 0.3%

                         

Case New Holland Incorporated

    9.250 %   8/1/11    475    502    
                    
   

Media — 4.3%

                         

AMFM Inc.

    8.000 %   11/1/08    210    226    

Clear Channel Communications, Inc.

    5.500 %   9/15/14    915    882    

Liberty Media Corporation

    5.370 %   9/17/06    455    458   D

Liberty Media Corporation

    7.875 %   7/15/09    750    789    

Liberty Media Corporation

    8.500 %   7/15/29    130    126    

Liberty Media Corporation

    8.250 %   2/1/30    65    62   B

News America, Inc.

    6.550 %   3/15/33    545    567   B

News America, Inc.

    6.200 %   12/15/34    35    35    

Readers Digest Association, Inc.

    6.500 %   3/1/11    300    305    

Sinclair Broadcast Group, Inc.

    8.750 %   12/15/11    210    221    

Time Warner Entertainment Company, L.P.

    8.375 %   7/15/33    680    851    

Time Warner Inc.

    9.125 %   1/15/13    240    293    

Time Warner Inc.

    7.700 %   5/1/32    885    1,048    

Viacom Inc.

    5.625 %   8/15/12    520    528    
                    
   
                     6,391    
                    
   

Medical Care Facilities — 1.6%

                         

Coventry Health Care, Inc.

    5.875 %   1/15/12    400    406    

HCA, Inc.

    5.250 %   11/6/08    105    103    

HCA, Inc.

    7.875 %   2/1/11    250    268    

HCA, Inc.

    6.300 %   10/1/12    180    179    

HCA, Inc.

    6.250 %   2/15/13    930    919    

HCA, Inc.

    5.750 %   3/15/14    65    62    

Health Care REIT, Inc.

    8.000 %   9/12/12    370    420    
                    
   
                     2,357    
                    
   

Oil and Gas — 6.2%

                         

Amerada Hess Corporation

    7.300 %   8/15/31    1,440    1,680    

Conoco Inc.

    6.950 %   4/15/29    90    110    

ConocoPhillips

    4.750 %   10/15/12    200    201    

Devon Energy Corporation

    7.950 %   4/15/32    350    446    

El Paso Corporation

    7.625 %   8/16/07    300    305   A

El Paso Corporation

    7.800 %   8/1/31    2,000    2,005    

Kerr-McGee Corporation

    7.875 %   9/15/31    1,315    1,522    

Occidental Petroleum Corporation

    6.750 %   1/15/12    1,000    1,110    

Ocean Energy Inc.

    4.375 %   10/1/07    430    427    

Panhandle Eastern Pipe Line Company

    4.800 %   8/15/08    445    444    

Valero Energy Corporation

    6.875 %   4/15/12    215    236    

Vintage Petroleum, Inc.

    7.875 %   5/15/11    250    261    

XTO Energy, Inc.

    6.250 %   4/15/13    560    598    
                    
   
                     9,345    
                    
   

Paper and Forest Products — 1.8%

                         

Georgia-Pacific Corp.

    9.500 %   12/1/11    325    384    

Georgia-Pacific Corp.

    7.375 %   12/1/25    250    260    

 

4

Portfolio of Investments

 

September 30, 2005 (Unaudited)

(Amounts in Thousands)

 

Western Asset Income Fund

 

     RATE
     MATURITY
DATE
    PAR/SHARES
    VALUE
    

International Paper Company

    5.500 %   1/15/14    330    329    

Weyerhaeuser Company

    6.750 %   3/15/12    995    1,075    

Weyerhaeuser Company

    7.375 %   3/15/32    540    611    
                    
   
                     2,659    
                    
   

Photo Equipment and Supplies — 0.5%

                         

Eastman Kodak Company

    3.625 %   5/15/08    375    351    

Eastman Kodak Company

    7.250 %   11/15/13    345    327   B
                    
   
                     678    
                    
   

Real Estate — 0.2%

                         

Forest City Enterprises, Inc.

    7.625 %   6/1/15    225    239    

Socgen Real Estate Co. LLC

    7.640 %   12/29/49    80    84   A,C
                    
   
                     323    
                    
   

Retail — 0.2%

                         

Toys “R” Us, Inc.

    6.875 %   8/1/06    350    354   B
                    
   

Special Purpose — 13.2%

                         

Ahold Finance USA, Inc.

    8.250 %   7/15/10    355    387    

ASIF Global Financing XIX

    4.900 %   1/17/13    410    403   A

Conoco Funding Company

    6.350 %   10/15/11    470    510    

DaimlerChrysler NA Holding Corporation

    4.314 %   9/10/07    1,570    1,574   D

DaimlerChrysler NA Holding Corporation

    7.300 %   1/15/12    415    451    

DaimlerChrysler NA Holding Corporation

    6.500 %   11/15/13    160    169    

Duke Capital Corporation

    6.250 %   2/15/13    1,200    1,262    

NiSource Finance Corp.

    3.200 %   11/1/06    375    369    

PNPP II Funding Corporation

    9.120 %   5/30/16    2,425    2,826   B

Qwest Capital Funding, Inc.

    7.250 %   2/15/11    1,150    1,095   B

Rabobank Capital Funding Trust II

    5.260 %   12/31/49    115    115   A

Rabobank Capital Funding Trust III

    5.254 %   12/29/49    1,145    1,141   A

Reed Elsevier Capital Inc.

    4.625 %   6/15/12    900    874    

Sithe Independence Funding Corporation

    9.000 %   12/30/13    1,500    1,637    

Sprint Capital Corporation

    8.750 %   3/15/32    1,420    1,904    

TCI Communications Financing III

    9.650 %   3/31/27    3,000    3,285    

The Williams Companies, Inc. Credit Certificate Trust

    6.750 %   4/15/09    1,740    1,770   A
                    
   
                     19,772    
                    
   

Telecommunications — 1.7%

                         

BellSouth Corporation

    4.750 %   11/15/12    320    316    

Emmis Operating Company

    6.875 %   5/15/12    250    249   B

Qwest Communications International Inc.

    7.500 %   2/15/14    850    808   A

Qwest Corporation

    6.875 %   9/15/33    1,000    868   B

Verizon New York Inc.

    6.875 %   4/1/12    340    364    
                    
   
                     2,605    
                    
   

Telecommunications (Cellular/Wireless) — 1.4%

                         

Motorola, Inc.

    7.625 %   11/15/10    350    396    

New Cingular Wireless Services Inc.

    7.500 %   5/1/07    500    522    

New Cingular Wireless Services Inc.

    8.125 %   5/1/12    155    182    

New Cingular Wireless Services Inc.

    8.750 %   3/1/31    475    641    

 

5

Portfolio of Investments

 

September 30, 2005 (Unaudited)

(Amounts in Thousands)

 

Western Asset Income Fund

 

     RATE
     MATURITY
DATE
    PAR/SHARES
    VALUE
    

Nextel Communications, Inc.

    5.950 %   3/15/14    88    90    

Nextel Communications, Inc.

    7.375 %   8/1/15    285    305    
                    
   
                     2,136    
                    
   

Transportation — 0.9%

                         

Continental Airlines, Inc.

    6.545 %   2/2/19    181    178    

Continental Airlines, Inc.

    7.256 %   3/15/20    234    235    

Delta Air Lines, Inc.

    7.570 %   11/18/10    40    39    

Delta Air Lines, Inc.

    6.417 %   7/2/12    400    404    

Delta Air Lines, Inc.

    6.718 %   7/2/24    282    289    

Northwest Airlines Corporation

    7.575 %   9/1/20    83    83    

United Airlines, Inc.

    7.783 %   1/1/14    102    97    
                    
   
                     1,325    
                    
   

Total Corporate Bonds and Notes (Identified Cost - $102,918)

                    105,974    
                    
   

Mortgage-Backed Securities — 0.8%

                         

Glendale Federal Savings Bank 1978-A

    9.125 %   1/25/08    7    7    

Nomura Asset Securities Corporation 1996-MD5

    7.120 %   4/13/39    1,170    1,184    
                    
   
                     1,191    
                    
   

Total Mortgage-Backed Securities (Identified Cost - $1,176)

                    1,191    
                    
   

U.S. Government and Agency Obligations — 3.6%

                         

Fixed Rate Securities — 1.4%

                         

United States Treasury Notes

    4.125 %   8/15/10    1,840    1,832   B

United States Treasury Notes

    4.250 %   8/15/15    210    209    
                    
   
                     2,041    
                    
   

Indexed Securities E — 2.2%

                         

United States Treasury Inflation-Protected Security

    1.875 %   7/15/15    3,264    3,293   B
                    
   

Total U.S. Government and Agency Obligations (Identified Cost - $5,298)

                    5,334    
                    
   

U.S. Government Agency Mortgage-Backed Securities — N.M.

                         

Fannie Mae

    8.000 %   4/25/06    11    11    

Fannie Mae

    11.500 %   11/1/17    9    10    

Fannie Mae

    14.000 %   2/1/18    22    26    

Freddie Mac

    10.250 %   5/1/09    20    22    
                    
   

Total U.S. Government Agency Mortgage-Backed Securities (Identified Cost - $63)

                    69    
                    
   

Yankee Bonds F  — 22.2%

                         

Banking and Finance — 2.3%

                         

AIFUL Corporation

    4.450 %   2/16/10    775    755   A

Corporacion Andina de Fomento

    4.010 %   1/26/07    470    470   D

HBOS Capital Funding LP

    6.071 %   6/30/49    560    590   A,C

HBOS Treasury Services plc

    4.000 %   9/15/09    420    411   A

Mizuho Financial Group, Inc.

    5.790 %   4/15/14    1,100    1,146   A
                    
   
                     3,372    
                    
   

 

6

Portfolio of Investments

 

September 30, 2005 (Unaudited)

(Amounts in Thousands)

 

Western Asset Income Fund

 

     RATE
     MATURITY
DATE
    PAR/SHARES
    VALUE
    

Banks — 0.2%

                         

Sumitomo Mitsui Banking Corporation

    5.625 %   7/29/49    270    269   A
                    
   

Cable — 0.2%

                         

British Sky Broadcasting Group plc

    6.875 %   2/23/09    330    350    
                    
   

Diversified Financial Services — 0.5%

                         

Encana Holdings Finance Corp

    5.800 %   5/1/14    770    811    
                    
   

Electric — 0.5%

                         

Empresa Nacional de Electricidad S.A.

    8.500 %   4/1/09    670    737   B
                    
   

Foreign Governments — 8.8%

                         

Federative Republic of Brazil

    14.500 %   10/15/09    180    234   B

Federative Republic of Brazil

    12.000 %   4/15/10    210    257   B

Federative Republic of Brazil

    4.313 %   4/15/12    148    146   D

Federative Republic of Brazil

    4.313 %   4/15/12    231    227   D

Federative Republic of Brazil

    12.250 %   3/6/30    760    1,046   B

Federative Republic of Brazil

    11.000 %   8/17/40    340    417   B

Quebec Province

    7.220 %   7/22/36    650    934    

Republic of Chile

    4.069 %   1/28/08    150    151   D

Republic of Colombia

    11.750 %   2/25/20    290    403    

Republic of Panama

    9.625 %   2/8/11    120    143   B

Republic of Panama

    10.750 %   5/15/20    230    320    

Republic of Panama

    9.375 %   1/16/23    130    164    

Republic of Peru

    5.000 %   3/7/17    284    280   C

Republic of Peru

    8.750 %   11/21/33    230    278    

Republic of South Africa

    7.375 %   4/25/12    250    281    

Republic of South Africa

    6.500 %   6/2/14    260    284    

Russian Federation

    5.000 %   3/31/30    1,950    2,241   C

United Mexican States

    8.375 %   1/14/11    1,290    1,484    

United Mexican States

    11.500 %   5/15/26    960    1,541   B

United Mexican States

    8.300 %   8/15/31    340    425    

United Mexican States

    7.500 %   4/8/33    1,660    1,926    
                    
   
                     13,182    
                    
   

Insurance — 0.9%

                         

Axa

    8.600 %   12/15/30    550    724    

Oil Insurance Ltd

    5.150 %   8/15/33    220    219   A,C

XL Capital Ltd.

    5.250 %   9/15/14    500    482    
                    
   
                     1,425    
                    
   

Manufacturing (Diversified) — 1.0%

                         

Tyco International Group SA

    6.375 %   10/15/11    1,450    1,546    
                    
   

Oil and Gas — 1.4%

                         

Gazprom

    9.625 %   3/1/13    50    62   A

Gazprom

    9.625 %   3/1/13    20    25    

Petrobras International Finance Company (PIFCO)

    9.750 %   7/6/11    345    414    

Petroliam Nasional Berhad

    7.625 %   10/15/26    1,260    1,543   A
                    
   
                     2,044    
                    
   

Special Purpose — 3.6%

                         

Deutsche Telekom International Finance BV

    8.750 %   6/15/30    500    646    

Molson Coors Capital Finance ULC

    4.850 %   9/22/10    480    476   A

 

7

Portfolio of Investments

 

September 30, 2005 (Unaudited)

(Amounts in Thousands)

 

Western Asset Income Fund

 

     RATE
     MATURITY
DATE
    PAR/SHARES
    VALUE
      

Petrozuata Finance, Inc.

    8.220 %   4/1/17      3,205      3,061     A

Resona Preferred Global Securities Limited

    7.191 %   12/29/49      765      792     A,C

UFJ Finance Aruba AEC

    6.750 %   7/15/13      355      390      
                      
   
                         5,365      
                      
   

Telecommunications — 2.2%

                               

British Telecommunications plc

    8.875 %   12/15/30      330      448      

France Telecom SA

    8.500 %   3/1/31      560      750      

Tele Norte Leste Participacoes S.A.

    8.000 %   12/18/13      410      433      

Telecom Italia Capital S.p.A.

    5.250 %   11/15/13      750      745      

Telecom Italia Capital S.p.A.

    4.950 %   9/30/14      695      673     A

Telus Corporation

    7.500 %   6/1/07      250      261      
                      
   
                         3,310      
                      
   

Telecommunications (Cellular/Wireless) — 0.2%

                               

Rogers Wireless Communications Inc.

    6.375 %   3/1/14      300      302      
                      
   

Utilities — 0.4%

                               

United Utilities plc

    5.375 %   2/1/19      580      569      
                      
   

Total Yankee Bonds (Identified Cost - $30,293)

                        33,277      
                      
   

Total Long-Term Securities (Identified Cost - $139,748)

                        145,843      
                      
   

Investment of Collateral From Securities Lending — 12.0%

                               

State Street Navigator Securities Lending Prime Portfolio

                 17,990 shs      17,990      
                      
   

Total Investment of Collateral From Securities Lending (Identified Cost - $17,990)

                        17,990      
                      
   

Short-Term Securities — 1.0%

                               

Repurchase Agreements — 1.0%

                               

Goldman, Sachs & Company
3.8%, dated 9/30/05, to be repurchased at $1,557 on 10/3/05 (Collateral: Federal Home Loan Bank notes, 2.22% due 6/9/06, value $1,590)

               $ 1,557      1,557      
                      
   

Total Short-Term Securities (Identified Cost - $1,557)

                        1,557      
                      
   

Total Investments (Identified Cost - $159,295) — 110.6%

                      $ 165,390      

Obligation to Return Collateral For Securities Lending — (12.0)%

                        (17,990 )    

Other Assets Less Liabilities — 1.4%

                        2,160      
                      
   

Net Assets — 100.0%

                      $ 149,561      
                      
   

 

A Rule 144a Security - A security purchased pursuant to Rule 144a under the Securities Act of 1933 which may not be resold subject to that rule except to qualified institutional buyers. These securities represents 13.2% of net assets.

 

B All or a portion of this security is on loan.

 

8

Western Asset Income Fund

September 30, 2005

 

C Stepped coupon security - A security with a predetermined schedule of interest or dividend rate changes, at which time it begins to accrue interest or pay dividends.

 

D Indexed security - The rate of interest earned on this security is tied to the London Interbank Offered Rate (“LIBOR”). The coupon rate is the rate as of September 30, 2005.

 

E Treasury Inflation-Protected Security - Treasury security whose principal value is adjusted daily in accordance with changes to the Consumer Price Index for All Urban Consumers. Interest is calculated on the basis of the current adjusted principal value.

 

F Yankee Bond - A dollar denominated bond issued in the U.S. by foreign entities.

 

9

Security Valuation

 

Securities owned by the Fund for which market quotations are readily available are valued at current market value. Current market value means the last sale price of the day or, in the absence of any such sales, the bid price obtained from quotation reporting systems, pricing services or other approved methods. Other assets and securities for which no quotations are readily available are valued at fair value pursuant to procedures adopted by the Board of Directors. The factors considered making such valuations are subject to change over time and are reviewed periodically. The values assigned to fair value investments are based on available information and do not necessarily represent amounts that might ultimately be realized, since such amounts depend on future developments inherent in long-term investments. Further, because of the inherent uncertainty of valuation, such estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and the differences could be material.

 

Securities Lending

 

The Fund lends its securities to approved brokers to earn additional income and receives cash and U.S. government securities as collateral against the loans. Cash collateral received is invested in a money market pooled account by the Fund’s lending agent. Collateral is maintained over the life of the loan in an amount not less than 100% of the value of loaned securities. At September 30, 2005, the market value of the securities on loan to broker-dealers was $17,626 for which the Fund received collateral of $17,990 in cash. Such collateral is in the possession of the Fund’s custodian. The cash was invested in the State Street Navigator Securities Lending Prime Portfolio and is included in the Fund’s schedule of investments. As with other extensions of credit, the Fund may bear the risk of delay in recovery or even loss of rights to the collateral should the borrower of the securities fail financially.

 

Other information regarding the Fund is available in the Fund’s most recent Report to Shareholders. This information is available on the Securities and Exchange Commission’s website (www.sec.gov).

 

10

Item 2 – Controls and Procedures

 

  (a) Western Asset Income Fund’s (the “Registrant”) principal executive and principal financial officers have concluded, based on their evaluation of the Registrant’s disclosure controls and procedures as of a date within 90 days of the filing date of this report, that the Registrant’s disclosure controls and procedures are reasonably designed to ensure that information required to be disclosed by the Registrant on Form N-Q is recorded, processed, summarized and reported within the required time periods in the Securities and Exchange Commission’s rules and forms and that information required to be disclosed by the Registrant in the reports that it files or submits on Form N-Q is accumulated and communicated to the Registrant’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

 

  (b) There were no changes in the Registrant’s internal control over financial reporting during the Registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the internal control over financial reporting.

 

Item 3 – Exhibits

 

Certifications pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 – filed as an exhibit 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 Income Fund
By:   /s/    JAMES W. HIRSCHMANN        
   

James W. Hirschmann

President

Western Asset Income Fund

Date: November 29, 2005

 

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/    JAMES W. HIRSCHMANN        
   

James W. Hirschmann

President

Western Asset Income Fund

Date: November 29, 2005

By:   /s/    MARIE K. KARPINSKI        
   

Marie K. Karpinski

Treasurer and Principal Financial and Accounting Officer

Western Asset Income Fund

Date: November 25, 2005