SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
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Check the appropriate box:
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[X] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
240.14a-11(c) or 240.14a-12
WESTERN ASSET/CLAYMORE U.S. TREASURY INFLATION PROTECTED SECURITIES FUND
------------------------------------------------------------------------
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WESTERN ASSET/CLAYMORE U.S. TREASURY
INFLATION PROTECTED SECURITIES FUND
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 3, 2004
------------------------
To the Shareholders of
WESTERN ASSET/CLAYMORE U.S. TREASURY
INFLATION PROTECTED SECURITIES FUND
The Annual Meeting of Shareholders of Western Asset/Claymore U.S. Treasury
Inflation Protected Securities Fund (the "Fund") will be held in the Board Room,
Fifth Floor, 385 E. Colorado Boulevard, Pasadena, California, on Monday, May 3,
2004 at 11:30 a.m., California time, for the following purposes:
(1) Electing two Trustees, each to hold office for the term indicated;
and
(2) Transacting such other business as may properly come before the
Annual Meeting and any adjournment thereof.
The Board of Trustees has fixed the close of business on March 5, 2004 as
the record date for the determination of shareholders entitled to receive notice
of and to vote at the Annual Meeting and any adjournment thereof.
By Order of the Board of Trustees
Anne S. Kochevar, Secretary
Pasadena, California
March 31, 2004
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON ARE
URGED TO DATE, FILL IN, SIGN AND MAIL THE ENCLOSED PROXY IN THE ACCOMPANYING
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
WESTERN ASSET/CLAYMORE U.S. TREASURY
INFLATION PROTECTED SECURITIES FUND
385 EAST COLORADO BOULEVARD
PASADENA, CALIFORNIA 91101
PROXY STATEMENT
The accompanying proxy is solicited by the Board of Trustees of the Fund
for use at the first annual meeting of shareholders of the Fund, to be held on
May 3, 2004 at 11:30 a.m., California time (the "Annual Meeting"), and at any
adjournment thereof. At the Annual Meeting, shareholders will be asked to
consider the election of two Trustees to the Board of Trustees of the Fund. This
Proxy Statement and the form of proxy were first mailed to shareholders on or
about April 1, 2004.
The Board of Trustees has fixed the close of business on March 5, 2004 as
the record date for the determination of shareholders entitled to notice of and
to vote at the Annual Meeting and any adjournment thereof. As of the close of
business on that date, the Fund had issued and outstanding 29,060,422 common
shares of beneficial interest, no par value ("Common Shares"), and 8,200
preferred shares of beneficial interest, no par value ("Preferred Shares" and,
together with the Common Shares, the "Shares"). The Common Shares and Preferred
Shares are the only classes of shares currently authorized by the Fund. As of
the close of business on March 5, 2004, no person owned of record or, to the
knowledge of the Fund, owned beneficially more than five percent (5%) of the
outstanding Shares of either class, except that Cede & Co., as nominee for
participants in The Depository Trust Company, held of record 29,035,358 Common
Shares (representing approximately 99.9% of the outstanding Common Shares) and
all 8,200 outstanding Preferred Shares. Cede & Co.'s address is 55 Water Street,
25th Floor, New York, New York 10041-0001.
Shareholders of the Fund as of the close of business on March 5, 2004 will
be entitled to one vote for each Share held, and a fractional vote with respect
to fractional Shares, with no cumulative voting rights. Holders of the Preferred
Shares ("Preferred Shareholders") and holders of Common Shares ("Common
Shareholders") will vote separately by class at the Annual Meeting on the
election of Trustees. Common Shareholders and Preferred Shareholders will vote
as a single class on any other matter properly brought before the Annual Meeting
(except as otherwise required by the Fund's Amended and Restated Agreement and
Declaration of Trust (the "Declaration of Trust") and Bylaws and applicable
law). Thirty percent (30%) of the Common Shares of the Fund entitled to vote at
the Annual Meeting and thirty percent (30%) of the Preferred Shares of the Fund
entitled to vote at the Annual Meeting must be represented in person or by proxy
to constitute a quorum for the Annual Meeting.
1
Each shareholder has the right to revoke his or her proxy at any time
before it is voted. A proxy may be revoked by filing with the Secretary of the
Fund a written revocation or a properly executed proxy bearing a later date or
by voting in person at the Annual Meeting. Any shareholder may attend the Annual
Meeting, whether or not he or she has previously given a proxy.
The solicitation of proxies for the Annual Meeting will be made primarily
by mail. However, if necessary to ensure satisfactory representation at the
Annual Meeting, additional solicitation may take place in writing or by
telephone or personal interview by officers of the Fund, who will not receive
compensation from the Fund for such services. As the date of the meeting
approaches, if we have not received your proxies, you may receive a telephone
call from our proxy solicitor, Georgeson Shareholder Communications, Inc.
("GS"), which has been retained to assist shareholders in the voting process.
For these services, the Fund will pay GS a fee that is not expected to exceed
$2,000. The Fund will reimburse brokers and other nominees, in accordance with
New York Stock Exchange approved reimbursement rates, for their expenses in
forwarding solicitation material to the beneficial owners of shares of the Fund.
All expenses incurred in connection with the solicitation of proxies, including
the services of GS, will be borne by the Fund.
Abstentions and "broker non-votes" (i.e., shares held by brokers or
nominees as to which (i) instructions have not been received from the beneficial
owners or the persons entitled to vote and (ii) the broker or nominee does not
have discretionary voting power on a particular matter) will be counted as
shares present for purposes of determining whether a quorum is present, but will
not be counted as having been voted on the matter in question. Assuming that a
quorum would otherwise be present, abstentions and broker non-votes will
accordingly have no effect for the purpose of determining whether a Trustee has
been elected.
Randolph L. Kohn, Gregory B. McShea and Anne S. Kochevar, the persons named
as proxies on the proxy card accompanying this Proxy Statement, were selected by
the Board of Trustees to serve in such capacity. Messrs. Kohn and McShea and Ms.
Kochevar are each officers of the Fund, and Mr. Kohn is also a Trustee of the
Fund. Each executed and returned proxy will be voted in accordance with the
directions indicated thereon or, if no direction is indicated, such proxy will
be voted for the election as Trustees of the Board of Trustees' nominees listed
in this Proxy Statement. Discretionary authority is provided in the proxy as to
any matters not specifically referred to therein. The Board of Trustees is not
aware of any other matters which are likely to be brought before the Annual
Meeting. However, if any such matters properly come before the Annual Meeting,
the persons named in the proxy are fully authorized to vote thereon in
accordance with their judgment and discretion. In matters other than the
election of Trustees, except where a different vote is required by any provision
of law or the Fund's Declaration of Trust or Bylaws, a plurality
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of a quorum of the Shares necessary for the transaction of business at a
shareholders' meeting shall decide any question.
PROPOSAL
ELECTION OF TRUSTEES
The Annual Meeting will constitute the first annual meeting of shareholders
of the Fund. In accordance with the Declaration of Trust, the Trustees were
divided into the following three classes (each a "Class") prior to the initial
public offering of the Common Shares: Class I, whose initial term will expire at
the Annual Meeting; Class II, whose initial term will expire at the Fund's 2005
annual meeting of shareholders; and Class III, whose initial term will expire at
the Fund's 2006 annual meeting of shareholders. At each annual meeting beginning
with the Annual Meeting, successors to the Class of Trustees whose term expires
at that annual meeting shall be elected for a three-year term.
The following table sets forth the nominees who will stand for election at
the Annual Meeting, the Class of Trustees to which they have been designated and
the expiration of their terms if elected:
NOMINEE CLASS EXPIRATION OF TERM IF ELECTED*
------- ------- ------------------------------
Nicholas Dalmaso................................. Class I 2007 Annual Meeting
Michael Larson................................... Class I 2007 Annual Meeting
---------------
* A Trustee shall hold office until the annual meeting for the year in which his
or her term expires and until his or her successor shall be elected and shall
qualify, subject, however, to prior death, resignation, retirement,
disqualification or removal from office.
Under the Fund's classified Board structure, ordinarily only those Trustees
in a single Class may be replaced in any one year, and it would require a
minimum of two years to change a majority of the Board of the Fund under normal
circumstances. This structure, which may be regarded as an "anti-takeover"
measure, may make it more difficult for the Fund's shareholders to change the
majority of Trustees of the Fund and, thus, promotes the continuity of
management.
It is the intention of the persons designated as proxies in the proxy,
unless otherwise directed therein, to vote at the Annual Meeting for the
election of Messrs. Dalmaso and Larson. Each of the nominees has agreed to serve
if elected at the Annual Meeting. If either nominee is unable or unavailable to
serve, the persons named in the proxies will vote the proxies for such other
person as the Board of Trustees may recommend.
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Information Regarding the Trustees. Information about the Trustees and
nominees is set forth below. The address of each Trustee and nominee is c/o the
Fund at its principal business address listed above. Of the individuals listed
below, only Messrs. Dalmaso and Larson are nominees for election at the Annual
Meeting. Mr. Dalmaso currently serves as a Trustee.
NUMBER OF
PORTFOLIOS
IN FUND SHARES
COMPLEX* OTHER BENEFICIALLY
TERM OF OFFICE OVERSEEN DIRECTORSHIPS OWNED ON
POSITION(S) AND LENGTH OF PRINCIPAL OCCUPATIONS DURING THE BY TRUSTEE HELD BY TRUSTEE MARCH 19,
NAME AND AGE HELD WITH FUND TIME SERVED PAST 5 YEARS OR NOMINEE OR NOMINEE 2004
------------ -------------- -------------- -------------------------------- ---------- --------------- ------------
Peter Erichsen Trustee and Term expires Vice President, General Counsel 2 250
Age: 47 Chairman of in 2005; and Secretary of the J. Paul
the Trustees served since Getty Trust (2001- present);
(1)(2) August 2003 Governor of the Philadelphia
Stock Exchange (1999-present);
Chairman of the Philadelphia
Stock Exchange's Audit Committee
(1999-present). Formerly: Vice
President and General Counsel of
the University of Pennsylvania
(1997-2001).
Michael Larson N/A (Nominee) N/A(3) Chief Investment Officer for -- Pan American --
Age: 44 William H. Gates III (1994- Silver Corp.
present). Formerly: Senior (silver mining,
Partner, Fixed Income for Harris development and
Investment Management, 1993; exploration
Chief Fixed Income Officer, company)
Commonwealth Investment Counsel, (1999-present)
1992; Senior Portfolio Manager,
Putnam Management Company, 1989
to 1992; Director, ARCO
Investment Management Company,
1980-1989.
4
NUMBER OF
PORTFOLIOS
IN FUND SHARES
COMPLEX* OTHER BENEFICIALLY
TERM OF OFFICE OVERSEEN DIRECTORSHIPS OWNED ON
POSITION(S) AND LENGTH OF PRINCIPAL OCCUPATIONS DURING THE BY TRUSTEE HELD BY TRUSTEE MARCH 19,
NAME AND AGE HELD WITH FUND TIME SERVED PAST 5 YEARS OR NOMINEE OR NOMINEE 2004
------------ -------------- -------------- -------------------------------- ---------- --------------- ------------
Ronald A. Nyberg Trustee Term expires Founding partner of Nyberg & 2 Trustee of 500
Age: 50 (1)(2) in 2005; Gustafson, a law firm MBIA/ Claymore
served since specializing in corporate law, Managed
August 2003 estate planning and business Duration
transactions (2000-present). Investment
Formerly: Executive Vice Grade Municipal
President, General Counsel and Fund (2003-
Corporate Secretary of Van present);
Kampen Investments, an Trustee of
investment advisory firm Advent Claymore
(1982-1999). Convertible
Securities &
Income Fund
(2003-present);
Trustee of
Dreman/Claymore
Dividend &
Income Fund
(2003-present).
5
NUMBER OF
PORTFOLIOS
IN FUND SHARES
COMPLEX* OTHER BENEFICIALLY
TERM OF OFFICE OVERSEEN DIRECTORSHIPS OWNED ON
POSITION(S) AND LENGTH OF PRINCIPAL OCCUPATIONS DURING THE BY TRUSTEE HELD BY TRUSTEE MARCH 19,
NAME AND AGE HELD WITH FUND TIME SERVED PAST 5 YEARS OR NOMINEE OR NOMINEE 2004
------------ -------------- -------------- -------------------------------- ---------- --------------- ------------
Ronald E. Toupin, Jr. Trustee Term expires Formerly: Vice President, 2 Trustee of --
Age: 45 (1)(2) in 2006; Manager and Portfolio Manager of MBIA/Claymore
served since Nuveen Asset Management, an Managed
August 2003 investment advisory firm Duration
(1998-1999), Vice President and Investment
Portfolio Manager of Nuveen Grade Municipal
Investment Advisory Corporation, Fund (2003-
an investment advisory firm present);
(1992-1999), Vice President and Trustee of
Manager of Nuveen Unit Advent Claymore
Investment Trusts (1991-1998) Convertible
and Assistant Vice President and Securities &
Portfolio Manager of Nuveen Unit Income Fund
Trusts (1988-1990), each of John (2003-present);
Nuveen & Company, Inc. Trustee of
(1982-1999). Dreman/Claymore
Dividend &
Income Fund
(2003-present).
6
NUMBER OF
PORTFOLIOS
IN FUND SHARES
COMPLEX* OTHER BENEFICIALLY
TERM OF OFFICE OVERSEEN DIRECTORSHIPS OWNED ON
POSITION(S) AND LENGTH OF PRINCIPAL OCCUPATIONS DURING THE BY TRUSTEE HELD BY TRUSTEE MARCH 19,
NAME AND AGE HELD WITH FUND TIME SERVED PAST 5 YEARS OR NOMINEE OR NOMINEE 2004
------------ -------------- -------------- -------------------------------- ---------- --------------- ------------
Interested Trustees
Nicholas Dalmaso Trustee and Term expires Senior Managing Director and 2 Director of --
Age: 39 Nominee at the Annual General Counsel of Claymore Flaherty &
(4) Meeting; Securities, Inc. (2001-present) Crumrine/Claymore
served since and Claymore Advisors, LLC Preferred
August 2003 (2003-present); Vice President Securities
and Assistant Secretary of Income Fund,
Flaherty & Crumrine/Claymore Inc.
Preferred Securities Income (2002-present)
Fund, Inc. (2002-present) and and Flaherty &
Flaherty & Crumrine/Claymore Crumrine/Claymore
Total Return Fund, Inc. (2003- Total Return
present); Manager of Claymore Fund, Inc.
Fund Management Company LLC (2003-present);
(2002-present); Vice President Trustee of
of Boyar Value Fund (2003- Advent Claymore
present). Formerly: Assistant Convertible
General Counsel of John Nuveen Securities &
and Company, Inc. (1999-2001); Income Fund
Vice President and Associate (2003-present),
General Counsel of Van Kampen Dreman/Claymore
Investments (1992-1999). Dividend &
Income Fund
(2003-present),
MBIA/Claymore
Managed
Duration
Investment
Grade Municipal
Fund
(2003-present)
and
TS&W/Claymore
Tax Advantaged
Balanced Fund
(2004-present).
7
NUMBER OF
PORTFOLIOS
IN FUND SHARES
COMPLEX* OTHER BENEFICIALLY
TERM OF OFFICE OVERSEEN DIRECTORSHIPS OWNED ON
POSITION(S) AND LENGTH OF PRINCIPAL OCCUPATIONS DURING THE BY TRUSTEE HELD BY TRUSTEE MARCH 19,
NAME AND AGE HELD WITH FUND TIME SERVED PAST 5 YEARS OR NOMINEE OR NOMINEE 2004
------------ -------------- -------------- -------------------------------- ---------- --------------- ------------
Randolph L. Kohn Trustee and Term expires President, Western Asset/ 2 --
Age: 57 President in 2006; Claymore U.S. Treasury Inflation
(5) served since Protected Securities Fund 2
August 2003 (2004-present), a closed-end
fund. Formerly: Director, Global
Client Services and Marketing,
Western Asset Management Company
(1984-2002); Director
(1996-2001) and Chairman
(2000-2001), Arroyo Seco, Inc.;
Director of Marketing, American
Express Asset Management (1982-
1984); Director of Marketing,
First Asset Management
(1979-1982); Marketing
Executive, Kemper Financial
Services (1975-1979).
---------------
(1) Member of the Audit Committee of the Board of Trustees.
(2) Member of the Governance and Nominating Committee of the Board of Trustees.
(3) Mr. Larson does not currently serve on the Board of Trustees. If he is
elected at the Annual Meeting, his term will expire in 2007.
(4) Mr. Dalmaso may be deemed to be an "interested person" (as defined in
section 2(a)(19) of the Investment Company Act of 1940, as amended (the
"1940 Act")) of the Fund on the basis of his position as an officer of
Claymore Securities, Inc., the Fund's shareholder servicing agent, and his
ownership interest in the parent company of that entity.
(5) Mr. Kohn is an "interested person" (as defined above) of the Fund on the
basis of his former employment with the Fund's investment adviser, Western
Asset Management Company (the "Investment Adviser"), and certain of its
affiliated entities (as disclosed above), his position as President of the
Fund and his ownership of certain shares of common stock of Legg Mason,
Inc., the Investment Adviser's parent company.
* Each current Trustee also serves as a Trustee of Western Asset/Claymore U.S.
Treasury Inflation Protected Securities Fund 2, a closed-end investment
company, which is considered part of the same
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Fund Complex as the Fund. The Investment Adviser also serves as subadviser
to Western Asset/ Claymore U.S. Treasury Inflation Protected Securities Fund
2. Mr. Larson does not currently oversee any other investment company in the
Fund Complex.
The following table states the dollar range of equity securities
beneficially owned as of March 19, 2004 by each Trustee and nominee in the Fund
and, on an aggregate basis, in any registered investment companies overseen or
to be overseen by the Trustee or nominee in the same "family of investment
companies."
AGGREGATE DOLLAR RANGE
OF EQUITY SECURITIES IN
ALL FUNDS OVERSEEN OR TO
BE OVERSEEN BY TRUSTEE
OR NOMINEE IN FAMILY
DOLLAR RANGE OF EQUITY OF INVESTMENT
NAME OF NOMINEE SECURITIES IN THE FUND COMPANIES
--------------- ---------------------- ------------------------
Peter C. Erichsen.................................. $1 - $10,000 $1 - $10,000
Michael Larson..................................... $0 $0
Ronald A. Nyberg................................... $1 - $10,000 $1 - $10,000
Ronald E. Toupin................................... $0 $0
Interested Trustees
Nicholas Dalmaso*.................................. $0 $0
Randolph L. Kohn*.................................. $0 $0
---------------
* As described above, Messrs. Dalmaso and Kohn are or may be deemed to be
Interested Persons of the Fund.
As of March 19, 2004, all Trustees, nominees for Trustees and officers of
the Fund as a group beneficially owned less than 1% of the outstanding Common
Shares or Preferred Shares on such date.
Audit Committee. The Board of Trustees has established an Audit Committee
composed solely of Trustees who are not "interested persons" (as defined in the
1940 Act) of the Fund or the Investment Adviser, consisting of Messrs. Erichsen,
Nyberg and Toupin. Each member of the Audit Committee is "independent," as
independence for audit committee members is defined in the currently applicable
listing standards of the New York Stock Exchange, on which the Common Shares of
the Fund are listed and traded. The Audit Committee provides oversight with
respect to the accounting and financial reporting policies and procedures of the
Fund and, among other things, considers the selection of independent public
accountants for the Fund and the scope of the audit and approves services
proposed to be performed by those accountants on behalf of the Fund and, under
certain circumstances, the Investment Adviser and
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certain affiliates. The Trustees have adopted a written charter for the Audit
Committee, a copy of which is attached as Appendix A hereto.
The Audit Committee of the Fund has submitted the following report:
The Audit Committee has reviewed and discussed with management of the Fund
the audited financial statements for the last fiscal year. The Audit Committee
has discussed with the Fund's independent accountants the matters required to be
discussed by Statements on Auditing Standards No. 61 (SAS 61). SAS 61 requires
independent accountants to communicate to the Audit Committee matters including,
if applicable: (1) methods used to account for significant unusual transactions;
(2) the effect of significant accounting policies in controversial or emerging
areas for which there is a lack of authoritative guidance or consensus; (3) the
process used by management in formulating particularly sensitive accounting
estimates and the basis for the accountant's conclusions regarding the
reasonableness of those estimates; and (4) disagreements with management over
the application of accounting principles and certain other matters. The Audit
Committee has received the written disclosures and the letter from the Fund's
independent accountants required by Independence Standards Board Standard No. 1
(requiring accountants to make written disclosures to and discuss with the Audit
Committee various matters relating to the accountants' independence), and has
discussed with such accountants the independence of such accountants. Based on
the foregoing review and discussions, the Audit Committee recommended to the
Trustees the inclusion of the audited financial statements for the last fiscal
year in the Fund's annual report to shareholders.
Ronald E. Toupin (Chairman)
Peter C. Erichsen
Ronald A. Nyberg
Governance and Nominating Committee. The Board of Trustees has established
a Governance and Nominating Committee composed solely of Trustees who are not
"interested persons" (as defined in the 1940 Act) of the Fund or the Investment
Adviser, consisting of Messrs. Erichsen, Nyberg (Chairman) and Toupin. The
Governance and Nominating Committee meets to select nominees for election as
Trustees of the Fund and consider other matters of Board policy. The Trustees
have adopted a written charter for the Governance and Nominating Committee, a
copy of which is included as Appendix B to this Proxy Statement. The Fund does
not currently maintain a website on which the charter is made available.
The Governance and Nominating Committee requires that Trustee candidates
have a college degree or equivalent business experience, but has not otherwise
established specific, minimum qualifications that must be met by an individual
to be considered by the Committee for nomination as a Trustee. The Governance
and Nominating Committee may take into account a wide variety of factors in
considering
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Trustee candidates, including, but not limited to: (i) availability and
commitment of a candidate to attend meetings and perform his or her
responsibilities to the Board of Trustees, (ii) relevant industry and related
experience, (iii) educational background, (iv) financial expertise, (v) an
assessment of the candidate's ability, judgment and expertise and (vi) overall
diversity of the Board's composition. The Governance and Nominating Committee
may consider candidates for Trustee recommended by the Fund's current Trustees,
officers, Investment Adviser, shareholders or any other source deemed to be
appropriate by the Governance and Nominating Committee. Mr. Larson was
recommended to the Governance and Nominating Committee of the Board of Trustees
for consideration as a nominee by management of the Investment Adviser.
Candidates properly submitted by shareholders (as described below) will be
considered and evaluated on the same basis as candidates recommended by other
sources.
It is the policy of the Governance and Nominating Committee to consider
nominees recommended by shareholders to serve as Trustee, provided that any such
recommendation is submitted in writing to the Fund, to the attention of the
Secretary, at the address of the principal executive offices of the Fund, not
less than one hundred and twenty calendar days nor more than one hundred and
thirty-five calendar days prior to the date of the meeting at which the nominee
would be elected and that such shareholder recommendation contains the
information about such nominee required by the Fund's procedures for
shareholders to submit nominee candidates, which are a part of the Governance
and Nominating Committee's Charter (see Appendix B to this Proxy Statement). The
Governance and Nominating Committee has full discretion to reject nominees
recommended by shareholders, and there is no assurance that any such person so
recommended and considered by the Governance and Nominating Committee will be
nominated for election to the Fund's Board of Trustees.
Meetings. During 2003, the Board of Trustees held two meetings, the Audit
Committee held one meeting and the Governance and Nominating Committee did not
meet (although it did meet in January 2004). Each Trustee attended each of the
meetings of the Board of Trustees and the Committees of the Board of Trustees on
which he served. The Fund's policies require the Trustees to attend the Fund's
annual shareholder meetings, and annual meetings are generally expected to be
held in connection with a regularly scheduled meeting of the Board of Trustees
in order to facilitate attendance.
Shareholder Communications. The Board of Trustees provides a process for
shareholders to send communications to the Board of Trustees. Shareholders may
mail written communications to the attention of the Board of Trustees, care of
the Fund's Secretary, to the Fund's shareholder servicing agent, Claymore
Securities, Inc., 210 N. Hale Street, Wheaton, IL 60187. The written
communication must include the shareholder's name, be signed by the shareholder,
refer to the Fund, and include the class and number of shares held by the
shareholder as of a recent date.
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Trustee Compensation. Trustees of the Fund who are affiliated persons of
the Fund, the Investment Adviser, or Claymore Securities, Inc. receive no salary
or fees from the Fund. Each other Trustee of the Fund receives a fee of $8,000
annually for serving as a Trustee of the Fund, and a fee of $1,000 and related
expenses for each meeting of the Board of Trustees attended. The Chairman of the
Board of Trustees receives an additional $1,500 per year for serving in that
capacity. Audit Committee members receive $500 for each meeting, and the Audit
Committee Chairman receives an additional $1,500 annually. Other committee
members receive $500 per meeting.
It is estimated that the current Trustees will receive the amounts set
forth in the following table for their services as Trustees during the fiscal
year ending December 31, 2004. For the calendar year ended December 31, 2003,
the Trustees received the compensation set forth in the following table for
serving as Trustees of the Fund and as Trustees of other funds in the same "Fund
Complex."
PENSION OR TOTAL COMPENSATION
AGGREGATE RETIREMENT BENEFITS ESTIMATED ANNUAL FROM THE FUND AND
COMPENSATION FROM ACCRUED AS PART OF BENEFITS UPON ITS FUND COMPLEX
NAME OF PERSON THE FUND(1) FUND'S EXPENSES RETIREMENT PAID TO TRUSTEES(2)
-------------- ----------------- ------------------- ---------------- -------------------
Peter C. Erichsen........ $16,500 0 0 $5,953
Ronald A. Nyberg......... $15,000 0 0 $5,408
Ronald E. Toupin......... $16,500 0 0 $5,953
Interested Trustees
Nicholas Dalmaso(3)...... 0 0 0 0
Randolph Kohn(3)......... 0 0 0 0
---------------
(1) Since the Fund has not completed a full fiscal year, compensation is
estimated based upon future payments expected to be made by the Fund during
the fiscal year ending December 31, 2004.
(2) Includes amounts actually received in 2003 from the Fund. Because Western
Asset/Claymore U.S. Treasury Inflation Protected Securities Fund 2, which is
considered part of the same Fund Complex as the Fund, had not commenced
operations in 2003, the Trustees did not receive compensation for serving on
its Board of Trustees during 2003.
(3) As described above, Messrs. Dalmaso and Kohn are or may be deemed to be
Interested Persons of the Fund.
During 2003, the Fund paid no remuneration to its officers, all of whom
were also officers or employees of the Investment Adviser, Claymore Securities,
Inc. or their respective affiliates.
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Required Vote. Election of each of Mr. Dalmaso and Mr. Larson to the Board
of Trustees of the Fund requires the affirmative vote of a plurality of the
Common Shares entitled to vote on the election of Trustees and present in person
or represented by proxy at the Annual Meeting and the affirmative vote of a
plurality of the Preferred Shares entitled to vote on the election of Trustees
and present in person or represented by proxy at the Annual Meeting.
INFORMATION CONCERNING THE INVESTMENT
ADVISER AND THE FUND'S OFFICERS
The Investment Adviser is a subsidiary of Legg Mason, Inc., a holding
company which, through its subsidiaries, is engaged in providing securities
brokerage, investment advisory, corporate and public finance, and mortgage
banking services to individuals, institutions, corporations and municipalities,
and the provision of other financial services. The address of Legg Mason, Inc.
is 100 Light Street, Baltimore, Maryland 21202. The Investment Adviser's address
is 385 East Colorado Boulevard, Pasadena, California 91101. An affiliate of the
Investment Adviser, Legg Mason Fund Adviser, Inc., 100 Light Street, Baltimore,
Maryland 21202, serves as the Fund's administrator.
Information regarding the executive officers of the Fund and their
ownership of Shares of the Fund is set forth below. Unless otherwise noted, the
address of each officer is c/o the Fund at the address listed above.
SHARES
TERM OF OFFICE BENEFICIALLY
POSITION(S) HELD AND LENGTH PRINCIPAL OCCUPATION(S) OWNED ON
NAME AND AGE WITH FUND OF TIME SERVED(1) DURING THE PAST 5 YEARS MARCH 19, 2004
------------ ---------------- ------------------- ----------------------- --------------
Randolph L. Kohn Trustee and Served since August See "Election of --
Age: 57 President 2003 Trustees" on page 8
above.
Gregory B. McShea Vice President Served since August Head of Compliance, --
Age: 37 2003 Western Asset
Management Company
(2003-present); Vice
President, Western
Asset/Claymore U.S.
Treasury Inflation
Protected Securities
Fund 2
13
SHARES
TERM OF OFFICE BENEFICIALLY
POSITION(S) HELD AND LENGTH PRINCIPAL OCCUPATION(S) OWNED ON
NAME AND AGE WITH FUND OF TIME SERVED(1) DURING THE PAST 5 YEARS MARCH 19, 2004
------------ ---------------- ------------------- ----------------------- --------------
(2004-present).
Formerly: Associate
General Counsel and
Compliance Director,
Private Client Group,
Legg Mason Wood Walker,
Incorporated, a
brokerage firm ("LMWW")
(1997-2003).
Marie K. Karpinski Treasurer and Served since August Vice President, LMWW --
Age: 55 Principal 2003 (1992- present); Vice
Financial and President and Treasurer
100 Light Street Accounting Officer of all Legg Mason
Baltimore, MD 21202 retail funds, open-end
investment companies
(1986-present); Vice
President and Treasurer
of Legg Mason Charles
Street Trust, Inc., an
open-end investment
company (1998-present);
Treasurer and Principal
Financial and
Accounting Officer of
Pacific American Income
Shares, Inc.
(closed-end investment
14
SHARES
TERM OF OFFICE BENEFICIALLY
POSITION(S) HELD AND LENGTH PRINCIPAL OCCUPATION(S) OWNED ON
NAME AND AGE WITH FUND OF TIME SERVED(1) DURING THE PAST 5 YEARS MARCH 19, 2004
------------ ---------------- ------------------- ----------------------- --------------
company) (2001-
present), Western Asset
Funds, Inc.
(1990-present), Western
Asset Premier Bond Fund
(2001-present), and
Western Asset/ Claymore
U.S. Treasury Inflation
Protected Securities
Fund 2 (2004-present).
Formerly: Assistant
Treasurer of Pacific
American Income Shares,
Inc. (1988-2001).
Erin K. Morris Assistant Served since August Assistant Vice --
Age: 37 Treasurer 2003 President of LMWW
(2002- present);
100 Light Street Assistant Treasurer of
Baltimore, MD 21202 Legg Mason Income
Trust, Inc., Legg Mason
Cash Reserve Trust,
Legg Mason Tax Exempt
Trust, Inc. (open-end
investment companies),
Legg Mason Tax-Free
Income Fund, Pacific
American Income Shares,
Inc., Western Asset
15
SHARES
TERM OF OFFICE BENEFICIALLY
POSITION(S) HELD AND LENGTH PRINCIPAL OCCUPATION(S) OWNED ON
NAME AND AGE WITH FUND OF TIME SERVED(1) DURING THE PAST 5 YEARS MARCH 19, 2004
------------ ---------------- ------------------- ----------------------- --------------
Funds, Inc., Western
Asset Premier Bond Fund
(2001-present), and
Western Asset/ Claymore
U.S. Treasury Inflation
Protected Securities
Fund 2 (2004-present);
Manager, Fund
Accounting, LMWW (2000-
present). Formerly:
Assistant Manager, Fund
Accounting, LMWW (1993-
2000).
Anne S. Kochevar Secretary Served since August Managing Director, --
Age: 40 2003 Compliance, Claymore
Securities, Inc.
210 N. Hale Street (2002-present) and
Wheaton, IL 60187 Claymore Advisors, LLC
(2003-present);
Secretary, Western
Asset/ Claymore U.S.
Treasury Inflation
Protected Securities
Fund 2 (2004-present)
and Dreman/Claymore
Dividend & Income Fund
(2003-present). Vice
President, TS&W/
16
SHARES
TERM OF OFFICE BENEFICIALLY
POSITION(S) HELD AND LENGTH PRINCIPAL OCCUPATION(S) OWNED ON
NAME AND AGE WITH FUND OF TIME SERVED(1) DURING THE PAST 5 YEARS MARCH 19, 2004
------------ ---------------- ------------------- ----------------------- --------------
Claymore Tax-
Advantaged Balanced
Fund (2004-present).
Formerly: Advertising
Principal, Allstate
Financial Services
(2001-2002); Compliance
Coordinator, John
Nuveen & Company, Inc.
(2000-2001); Vice
President & Compliance
Director of: Van Kampen
Management Inc., an
investment advisory
firm (1999-2000); Van
Kampen Investments
(1992-2000); Van Kampen
Investment Advisory
Corp. (1999-2000); Van
Kampen Funds Inc.
(1999-2000); Van Kampen
Asset Management Inc.
(1999-2000); Van Kampen
Advisors
Inc.(1999-2000).
---------------
(1) Each officer shall hold office until his or her respective successor is
chosen and qualified, or in each case until he or she sooner dies, resigns,
is removed with or without cause or becomes disqualified.
17
SHAREHOLDER PROPOSALS FOR 2005 ANNUAL MEETING
Proposals that shareholders wish to present to the 2005 Annual Meeting and
to have included in the Fund's proxy materials relating to such meeting must be
delivered to the Secretary of the Fund not less than 120 days prior to April 1,
2005.
Shareholders who wish to make a proposal at the 2005 Annual
Meeting -- other than one that will be included in the Fund's proxy
materials -- should notify the Fund not less than 45 days prior to April 1,
2005.
Shareholders who wish to propose one or more nominees for election as
Trustees, or to make a proposal fixing the number of Trustees, at the 2005
annual meeting must provide written notice to the Fund (including all required
information) so that such notice is received in good order by the Fund no
earlier than January 31, 2005 and no later than February 15, 2005.
The proper submission of a shareholder proposal does not guarantee that it
will be included in the Fund's proxy materials or presented at a shareholder
meeting. Shareholder proposals are subject to the requirements of applicable law
and the Fund's Declaration of Trust and Bylaws.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 30(h) of the 1940 Act and Section 16(a) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), require the Fund's officers and
Trustees, the Investment Adviser, certain affiliates of the Investment Adviser,
and persons who beneficially own more than ten percent of a registered class of
the Fund's equity securities, among others, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission ("SEC") and the
New York Stock Exchange. These persons are required by SEC regulation to furnish
the Fund with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons, the Fund believes that,
during 2003, all such filing requirements were met, except with respect to Peter
H. Stutz, a portfolio manager employed by the Investment Adviser who, due to an
administrative oversight, filed an initial Form 3 with respect to the Fund one
day late. Mr. Stutz does not own Shares of the Fund.
18
ANNUAL REPORT TO SHAREHOLDERS
The Fund's Annual Report to Shareholders for the fiscal year ended December
31, 2003 contains financial and other information pertaining to the Fund. The
Fund will furnish without charge to each person whose proxy is being solicited,
upon request of such person, a copy of the Annual Report to Shareholders.
Requests for copies of the Annual Report to Shareholders should be directed to
Western Asset/Claymore U.S. Treasury Inflation Protected Securities Fund, c/o
Claymore Securities, Inc., 210 N. Hale Street, Wheaton, IL 60187 or you may call
866-233-4001.
INDEPENDENT ACCOUNTANTS
The Audit Committee of the Board of Trustees has selected
PricewaterhouseCoopers LLP as the independent public accountants of the Fund for
the fiscal year ending December 31, 2004, and the Board of Trustees, including a
majority of the Trustees who are not "interested persons" (as defined in the
1940 Act) of the Fund, has unanimously ratified such selection.
PricewaterhouseCoopers LLP's service is subject to removal by a majority of the
outstanding Shares of the Fund. Representatives of PricewaterhouseCoopers LLP
are currently expected to attend the meeting, and may, as they see fit, make a
statement and/or respond to appropriate questions.
The following table presents fees billed in the Fund's initial fiscal year
(September 30, 2003 to December 31, 2003) for services rendered to the Fund by
PricewaterhouseCoopers LLP:
FISCAL YEAR ENDED AUDIT FEES AUDIT-RELATED FEES TAX FEES ALL OTHER FEES
----------------- ---------- ------------------ -------- --------------
December 31, 2003 $59,000 $14,000 $4,200 N/A
"Audit Fees" represents fees billed for the Fund's initial fiscal year for
professional services rendered for the audit of the Fund's seed financial
statements and annual financial statements for that fiscal year and services
that are normally provided by the accountant in connection with statutory or
regulatory filings or engagements for that fiscal year.
"Audit Related Fees" represents fees billed for the Fund's initial fiscal
year for assurance and related services reasonably related to the performance of
the audit of the Fund's annual financial statements for that year, including a
review of rating agency compliance testing for the Fund's Preferred Shares.
"Tax Fees" represents fees billed for the Fund's initial fiscal year for
professional services related to tax compliance, tax advice and tax planning,
including preparation of federal and state income tax returns, review of excise
tax distribution requirements and preparation of excise tax returns.
"All Other Fees" represents fees, if any, billed for other products and
services rendered by PricewaterhouseCoopers LLP to the Fund for the Fund's
initial fiscal year.
19
For the Fund's initial fiscal year ended December 31, 2003,
PricewaterhouseCoopers LLP billed aggregate non-audit fees in the amount of
$901,550 to the Fund, the Investment Adviser and any entity controlling,
controlled by or under common control with the Investment Adviser.
Pre-Approval Policies of the Audit Committee. The Audit Committee has
determined that all work performed for the Fund by PricewaterhouseCoopers LLP
will be pre-approved by the full Audit Committee and, therefore, has not adopted
pre-approval procedures. Since the Fund's inception in August 2003, all audit
and non-audit services performed by PricewaterhouseCoopers LLP for the Fund, and
all non-audit services performed by PricewaterhouseCoopers LLP for the
Investment Adviser and any entity controlling, controlled by or under common
control with the Investment Adviser that provides ongoing services to the Fund
(a "Service Affiliate"), to the extent that such services related directly to
the operations and financial reporting of the Fund, have been pre-approved by
the Audit Committee. The percentage of "Audit-Related Fees," "Tax-Fees" and
"Other Fees" set forth in the table above that were waived pursuant to 17 CFR
210.2-01(c)(7)(i)(c) was zero.
PricewaterhouseCoopers LLP did not bill any fees for non-audit services
that required pre-approval by the Audit Committee pursuant to paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X during the Fund's initial fiscal year.
The Audit Committee has considered whether the provision of the non-audit
services rendered by PricewaterhouseCoopers LLP since the Fund's inception to
the Investment Adviser and any Service Affiliate that were not required to be
pre-approved by the Audit Committee pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the independence of
PricewaterhouseCoopers LLP.
ADJOURNMENT
In the absence of a quorum at the Annual Meeting, or, even if a quorum is
so present, in the event that sufficient votes in favor of a proposal set forth
in the Notice of Annual Meeting are not received by the time scheduled for the
Annual Meeting, the persons named as proxies may propose one or more
adjournments of the Annual Meeting after the date set for the original Annual
Meeting, with no other notice than announcement at the Annual Meeting, to permit
further solicitation of proxies with respect to such proposal. In addition, if,
in the judgment of the persons named as proxies, it is advisable to defer action
on a proposal, the persons named as proxies may propose one or more adjournments
of the Annual Meeting with respect to such proposal for a reasonable time. Any
adjournments with respect to a proposal will require the affirmative vote of a
plurality of the Shares of the Fund entitled to vote thereon present in person
or represented by proxy at the session of the Annual Meeting to be adjourned.
The persons named as proxies
20
will vote in favor of such adjournment those proxies which they are entitled to
vote in favor of the proposal in question. They will vote against any such
adjournment those proxies required to be voted against such proposal. The costs
of any additional solicitation and of any adjourned session will be borne by the
Fund. Any proposals for which sufficient favorable votes have been received by
the time of the Annual Meeting may be acted upon and, if so, such action will be
final regardless of whether the Annual Meeting is adjourned to permit additional
solicitation with respect to any other proposal.
OTHER BUSINESS
The Fund is not aware of any other matters to be presented for action at
the Annual Meeting. However, if any such other matters are properly presented,
it is the intention of the persons designated in the enclosed proxy to vote in
accordance with their best judgment.
By Order of the Board of Trustees
Anne S. Kochevar, Secretary
March 31, 2004
21
APPENDIX A
WESTERN ASSET/CLAYMORE U.S. TREASURY INFLATION
PROTECTED SECURITIES FUND
WESTERN ASSET/CLAYMORE U.S. TREASURY INFLATION
PROTECTED SECURITIES FUND 2
AUDIT COMMITTEE CHARTER
AS OF JANUARY 20, 2004
The Board of Trustees (the "Board") of Western Asset/Claymore U.S. Treasury
Inflation Protected Securities Fund and Western Asset/Claymore U.S. Treasury
Inflation Protected Securities Fund 2 (each a "Fund" and, collectively, the
"Funds") has adopted this Charter to govern the activities of the Audit
Committee of the Board with respect to its oversight of each Fund. This Charter
applies separately to each Fund and its Board and Audit Committee, and shall be
interpreted accordingly.
The Audit Committee of the Board shall be comprised entirely of
"independent" Trustees, as such term is interpreted for purposes of Section
10A(m)(3) of the Securities Exchange Act of 1934, as amended, and the listing
standards of the New York Stock Exchange (the "Exchange"). The Audit Committee
shall have at least three members, who shall collectively satisfy the
independence and expertise requirements of the Exchange.
The purposes of the Audit Committee shall be:
(a) to assist with the Board's oversight of the integrity of the
Fund's financial statements, the Fund's compliance with legal and
regulatory requirements, the qualifications and independence of the Fund's
independent auditors, and the performance of the Fund's internal control
systems and independent auditors;
(b) to oversee generally the Fund's accounting and financial reporting
policies and practices, the Fund's internal controls and, as appropriate,
the internal controls of certain service providers;
(c) to oversee generally the quality and objectivity of the Fund's
financial statements and the independent audit thereof;
(d) to act as a liaison between the Fund's independent auditors and
the full Board; and
(e) to prepare the report required by applicable rules of the
Securities and Exchange Commission to be included in the annual proxy
statement of the Fund.
A-1
To carry out its purposes and responsibilities, the Audit Committee shall
have the duty and power to:
(a) be directly responsible for the appointment, termination,
compensation, and oversight of the work of the independent auditors engaged
by the Fund for the purpose of preparing or issuing an audit report or
performing other audit, review or attest services for the Fund, including
resolution of disagreements between management and the independent auditors
regarding financial reporting. The independent auditors shall report
directly to the Audit Committee, and the Audit Committee shall have
ultimate authority for all audit engagement fees and terms. The Board and
the Fund's shareholders shall have such rights to approve, ratify and
replace the Fund's independent auditors as are provided by applicable law.
(b) consider the independence of the Fund's independent auditors, and
in connection therewith to obtain at least annually formal written reports
from the auditors regarding the auditors' independence, including a
delineation of all relationships between the auditors and the Fund, discuss
with the auditors any disclosed relationships or services that may impact
the objectivity and independence of the auditors, and if so determined by
the Audit Committee, recommend that the Board take appropriate action to
satisfy itself of the independence of the auditors.
(c) meet with the Fund's independent auditors, including private
meetings, as necessary (i) to review the arrangements for and scope of the
annual audit and any special audits; (ii) to discuss any matters of concern
relating to the Fund's financial statements, including any adjustments to
such statements recommended by the independent auditors, or other results
of said audit; (iii) to consider the independent auditors' comments with
respect to the Fund's financial policies, procedures and internal
accounting controls and the responses of Claymore Advisors, LLC and Western
Asset Management Company (each a "Manager"), as applicable, thereto; and
(iv) to review the form of opinion the auditors propose to render to the
Board and the Fund's shareholders.
(d) discuss with management and the independent auditors the Fund's
annual financial statements, including any narrative discussion by
management concerning the Fund's financial condition and investment
performance.
(e) discuss with management the Fund's semi-annual financial
statements, including, any narrative discussion by management concerning
the Fund's financial condition and investment performance.
(f) review major issues regarding accounting principles and financial
statement presentations, including, to the extent applicable: (A) any
significant changes in management's selection or application of accounting
principles for the Fund, and major issues as to the adequacy of the Fund's
internal controls and any special audit steps adopted in light of material
control deficiencies;
A-2
(B) analyses prepared by management and/or the independent auditors setting
forth significant reporting issues and judgments made in connection with
the preparation of the Fund's financial statements, including analyses of
the effects of alternative GAAP methods on the financial statements; and
(C) the effect of regulatory and accounting initiatives, as well as
off-balance sheet structures, on the Fund's financial statements.
(g) consider the effect upon the Fund of any changes in accounting
principles or practices proposed by the Managers or the auditors.
(h) pre-approve, to the extent contemplated by applicable regulations,
audit and non-audit services rendered to the Fund by the auditors and
non-audit services rendered to the Managers and certain of their affiliates
by the auditors, and review the fees charged by the auditors for such
services; provided, however, that the Audit Committee may implement
policies and procedures pursuant to which services are pre-approved other
than by the full Audit Committee, subject to the requirement that the full
Audit Committee be notified in a timely manner of each such service.
(i) establish procedures for (A) the receipt, retention, and treatment
of complaints received by the Fund regarding accounting, internal
accounting controls, or auditing matters, and (B) the confidential,
anonymous submission by employees of the Fund, the Fund's investment
adviser(s), administrator, principal underwriter (if any) or any other
provider of accounting-related services for the Fund of concerns regarding
questionable accounting or auditing matters.
(j) if and to the extent that the Fund intends to have employees, set
clear policies for the hiring by the Fund of employees or former employees
of the Fund's independent auditors.
(k) obtain and review at least annually a report from the independent
auditors describing (i) the independent auditors' internal quality-control
procedures and (ii) any material issues raised by the independent auditors'
most recent internal quality-control review or peer review or by any
governmental or other professional inquiry or investigation performed
within the preceding five years respecting one or more independent audits
carried out by the independent auditors, and any steps taken to address any
such issues.
(l) review with the independent auditors any audit problems or
difficulties encountered in the course of their audit work and management's
responses thereto.
(m) discuss with management any press releases discussing the Fund's
investment performance and other financial information about the Fund, as
well as any financial information and earnings guidance provided by
management to analysts or rating agencies. The Audit Committee may
discharge this responsibility by discussing the general types of
information to be disclosed by the Fund
A-3
and the form of presentation (i.e., a case-by-case review is not required)
and need not discuss in advance each such release of information.
(n) discuss with management its guidelines and policies with respect
to risk assessment and risk management.
(o) review such other matters or information that it believes may be
relevant to the auditors, the audit engagement or the Fund's financial
policies and procedures or internal accounting controls.
(p) report its activities to the full Board on a regular basis.
The Audit Committee shall also have the power to make such recommendations
with respect to the above and other matters as it may deem necessary or
appropriate.
The Audit Committee shall meet on a regular basis and be empowered to hold
special meetings, as circumstances require. Any action of the Audit Committee
may be taken without a meeting if at least a majority of the members of the
Audit Committee consent thereto in writing.
At least annually, the Audit Committee shall meet separately with the
independent auditors and separately with the representatives of Fund management
responsible for the financial and accounting operations of the Fund. The Audit
Committee shall regularly meet with the Treasurer of the Fund and may seek to
meet with internal auditors, if any, for the Manager as circumstances warrant.
The Audit Committee shall have the resources and authority appropriate to
discharge its responsibilities, including the authority to retain special
counsel and other experts or consultants. The Fund shall provide the necessary
funding, as determined by the Audit Committee, to compensate the Fund's
independent auditors and any advisers employed by the Audit Committee, as well
as for the payment of ordinary administrative expenses of the Audit Committee
that are necessary or appropriate in carrying out its duties. The Audit
Committee may request any officer or employee of the Fund or of any of the
Fund's service providers or the Fund's outside counsel or independent auditors
to attend a meeting of the Audit Committee or to meet with any member of, or
consultants to, the Audit Committee.
Nothing in this Charter shall be construed to reduce the responsibilities
or liabilities of the Manager(s) or the Fund's independent auditors. The
function of the Audit Committee shall be oversight; it shall be the
responsibility of the Manager(s) to maintain appropriate systems for accounting
and internal control; the independent auditors' responsibility to plan and carry
out a proper audit and report thereon to the Board and shareholders, as required
by law; and management's and the independent auditors' responsibility to
determine that the Fund's financial statements are accurate and complete and in
accordance with generally accepted accounting principles. Members of the Audit
Committee are not employees of the Funds and, in serving on this Audit
Committee, are not, and do not hold themselves out to
A-4
be, acting as auditors. As such, it is not the duty or responsibility of the
Audit Committee or its members to conduct "field work" or other types of
auditing or accounting reviews or procedures. Each member of the Audit Committee
shall be entitled to rely on (i) the integrity of those persons and
organizations within management and outside the Fund from which the Audit
Committee receives information and (ii) the accuracy of financial and other
information provided to the Audit Committee by such persons or organizations
absent actual knowledge to the contrary.
The performance of the Audit Committee shall be reviewed at least annually
by the Board.
A-5
APPENDIX B
WESTERN ASSET/CLAYMORE U.S. TREASURY INFLATION
PROTECTED SECURITIES FUND
WESTERN ASSET/CLAYMORE U.S. TREASURY INFLATION
PROTECTED SECURITIES FUND 2
GOVERNANCE AND NOMINATING COMMITTEE CHARTER
AS OF JANUARY 20, 2004
Purposes and Organization
The purpose of the Governance and Nominating Committee of the Board of
Trustees (the "Board") of Western Asset/Claymore U.S. Treasury Inflation
Protected Securities Fund and Western Asset/ Claymore U.S. Treasury Inflation
Protected Securities Fund 2 (each a "Fund") is to review matters pertaining to
the composition, committees, and operations of the Board. Members of the
Committee may not be "interested persons" of a Fund, as such term is defined in
the Investment Company Act of 1940, as amended ("Interested Persons").(1) The
Committee shall have the following duties and powers:
(1) To evaluate and recommend all candidates for election or
appointment as members of the Board and recommend the appointment of
members and chairs of each Board Committee.
(2) To review policy matters affecting the operation of the Board and
Board committees and make such recommendations to the Board as deemed
appropriate by the Committee.
(3) To evaluate periodically the effectiveness of the Board and Board
Committees and make such recommendations to the Board as deemed appropriate
by the Committee.
The Committee shall have the resources and authority appropriate to
discharge its responsibilities.
The Committee shall meet on a regular basis and be empowered to hold
special meetings, as circumstances require. Any action of the Committee shall be
taken by the affirmative vote of a majority of the members. Any action of the
Committee may be taken without a meeting if at least a majority of the members
of the Committee consent thereto in writing.
---------------
(1) As contemplated by certain rules under the Investment Company Act of 1940,
as amended, the selection and nomination of candidates for election as
members of the Board who are not Interested Persons shall be made by the
incumbent members of the Board who are not Interested Persons.
B-1
QUALIFICATIONS FOR TRUSTEE NOMINEES
The Committee requires that Trustee candidates have a college degree or
equivalent business experience. The Committee may take into account a wide
variety of factors in considering Trustee candidates, including (but not limited
to): (i) availability and commitment of a candidate to attend meetings and
perform his or her responsibilities on the Board, (ii) relevant industry and
related experience, (iii) educational background, (iv) financial expertise, (v)
an assessment of the candidate's ability, judgment and expertise and (v) overall
diversity of the Board's composition.
IDENTIFICATION OF NOMINEES
In identifying potential nominees for the Board, the Committee may consider
candidates recommended by one or more of the following sources: (i) a Fund's
current Trustees, (ii) a Fund's officers, (iii) a Fund's investment adviser(s),
(iv) a Fund's shareholders (see below) and (v) any other source the Committee
deems to be appropriate. The Committee may, but is not required to, retain a
third party search firm at the expense of the Funds to identify potential
candidates.
CONSIDERATION OF CANDIDATES RECOMMENDED BY SHAREHOLDERS
The Committee will consider and evaluate nominee candidates properly
submitted by shareholders on the same basis as it considers and evaluates
candidates recommended by other sources. Appendix A to this Charter, as it may
be amended from time to time by the Committee, sets forth procedures that must
be followed by shareholders to properly submit a nominee candidate to the
Committee (recommendations not properly submitted in accordance with Appendix A
will not be considered by the Committee).
B-2
PROCEDURES FOR SHAREHOLDERS TO SUBMIT NOMINEE CANDIDATES
(AS OF JANUARY 20, 2004)
A Fund shareholder must follow the following procedures in order to
properly submit a nominee recommendation for the Committee's consideration.
1. The shareholder must submit any such recommendation (a "Shareholder
Recommendation") in writing to the Fund, to the attention of the Secretary,
at the address of the principal executive offices of the Fund.
2. The Shareholder Recommendation must be delivered to or mailed and
received at the principal executive offices of the Fund not less than one
hundred and twenty (120) calendar days nor more than one hundred and
thirty-five (135) calendar days prior to the date of the Board or
shareholder meeting at which the nominee would be elected.
3. The Shareholder Recommendation must include: (i) a statement in
writing setting forth (A) the name, age, date of birth, business address,
residence address and nationality of the person recommended by the
shareholder (the "candidate"); (B) the class or series and number of all
shares of the Fund owned of record or beneficially by the candidate, as
reported to such shareholder by the candidate; (C) any other information
regarding the candidate called for with respect to director nominees by
paragraphs (a), (d), (e) and (f) of Item 401 of Regulation S-K or paragraph
(b) of Item 22 of Rule 14a-101 (Schedule 14A) under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), adopted by the Securities and
Exchange Commission (or the corresponding provisions of any regulation or
rule subsequently adopted by the Securities and Exchange Commission or any
successor agency applicable to the Fund); (D) any other information
regarding the candidate that would be required to be disclosed if the
candidate were a nominee in a proxy statement or other filing required to
be made in connection with solicitation of proxies for election of Trustees
or directors pursuant to Section 14 of the Exchange Act and the rules and
regulations promulgated thereunder; and (E) whether the recommending
shareholder believes that the candidate is or will be an "interested
person" of the Fund (as defined in the Investment Company Act of 1940, as
amended) and, if not an "interested person," information regarding the
candidate that will be sufficient for the Fund to make such determination;
(ii) the written and signed consent of the candidate to be named as a
nominee and to serve as a Trustee if elected; (iii) the recommending
shareholder's name as it appears on the Fund's books; (iv) the class or
series and number of all shares of the Fund owned beneficially and of
record by the recommending shareholder; and (v) a description of all
arrangements or understandings between
B-3
the recommending shareholder and the candidate and any other person or
persons (including their names) pursuant to which the recommendation is
being made by the recommending shareholder. In addition, the Committee may
require the candidate to furnish such other information as it may
reasonably require or deem necessary to determine the eligibility of such
candidate to serve on the Board.
B-4
3643-PS-04
WESTERN ASSET/CLAYMORE U.S. TREASURY INFLATION PROTECTED SECURITIES FUND
Dear Shareholder,
Please take note of the important information enclosed with this Proxy Ballot.
There is an issue related to the management and operation of your Fund that
requires your immediate attention and approval. This is discussed in detail in
the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to vote
your shares.
Please mark the boxes on this proxy card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy vote in the enclosed
postage paid envelope. Your vote must be received prior to the Annual Meeting of
Shareholders, May 3, 2004.
Thank you in advance for your prompt consideration of this matter.
Sincerely,
Western Asset/Claymore U.S. Treasury Inflation Protected Securities Fund
DETACH HERE
--------------------------------------------------------------------------------
WESTERN ASSET/CLAYMORE U.S. TREASURY INFLATION PROTECTED SECURITIES FUND
COMMON SHARES
ANNUAL MEETING OF SHAREHOLDERS - MAY 3, 2004
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
TRUSTEES OF WESTERN ASSET/CLAYMORE U.S. TREASURY INFLATION PROTECTED
SECURITIES FUND
The undersigned, revoking all prior proxies, hereby appoints Randolph L. Kohn,
Gregory B. McShea and Anne S. Kochevar and each of them, attorneys and proxies
of the undersigned, each with full power of substitution, to attend the Annual
Meeting of the Shareholders of Western Asset/Claymore U.S. Treasury Inflation
Protected Securities Fund, a Massachusetts business trust (the "Fund"), to be
held in the Board Room, Fifth Floor, 385 E. Colorado Blvd., Pasadena,
California, on May 3, 2004, at 11:30 a.m., California time, and at any
adjournments thereof, and thereat to vote as indicated all common shares of
beneficial interest of the Fund which the undersigned would be entitled to vote
if personally present with respect to the matters listed on the reverse, which
are more fully described in the Notice of Meeting and Proxy Statement of the
Fund, receipt of which is acknowledged by the undersigned.
PLEASE VOTE, DATE, SIGN ON REVERSE AND RETURN PROMPTLY
USING THE ENCLOSED ENVELOPE.
Please sign this Proxy exactly as your name(s) appear(s) on the reverse side.
Joint owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign. If a corporation, this signature
should be that of an authorized officer who should state his or her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
WESTERN ASSET/CLAYMORE U.S. TREASURY INFLATION PROTECTED SECURITIES FUND
C/O EQUISERVE TRUST COMPANY, N.A.
P.O. BOX 8694
EDISON, NJ 08818-8694
DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL
[X] Please mark
vote as in
this example
WESTERN ASSET/CLAYMORE U.S. TREASURY INFLATION PROTECTED SECURITIES FUND
1. Election of Class I Trustees.
(01) NICHOLAS DALMASO
(02) MICHAEL LARSON
FOR [ ] [ ] WITHHELD
ALL FROM ALL
NOMINEES NOMINEES
[ ] For all nominees except as noted above
With discretionary power upon such other matters as may properly come before the
meeting or any adjournment thereof.
Mark box at right if an address change or comment has been noted on the reverse
side of this card. [ ]
THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION AS CLASS I TRUSTEES OF THE NOMINEES OF THE BOARD
OF TRUSTEES.
Please be sure to sign and date this Proxy.
Signature: --------------------------------- Date: -----------
Signature: --------------------------------- Date: -----------
WESTERN ASSET/CLAYMORE U.S. TREASURY INFLATION PROTECTED SECURITIES FUND
Dear Shareholder,
Please take note of the important information enclosed with this Proxy Ballot.
There is an issue related to the management and operation of your Fund that
requires your immediate attention and approval. This is discussed in detail in
the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to vote
your shares.
Please mark the boxes on this proxy card to indicate how your shares will be
voted. Then sign the card, detached it and return your proxy vote in the
enclosed postage paid envelope. Your vote must be received prior to the Annual
Meeting of Shareholders, May 3, 2004.
Thank you in advance for your prompt consideration of this matter.
Sincerely,
Western Asset/Claymore U.S. Treasury Inflation Protected Securities Fund
DETACH HERE
WESTERN ASSET/CLAYMORE U.S. TREASURY INFLATION PROTECTED SECURITIES FUND
PREFERRED SHARES
ANNUAL MEETING OF SHAREHOLDERS - MAY 3, 2004
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
TRUSTEES OF WESTERN ASSET/CLAYMORE U.S. TREASURY INFLATION PROTECTED
SECURITIES FUND
The undersigned, revoking all prior proxies, hereby appoints Randolph L. Kohn,
Gregory B. McShea and Anne S. Kochevar, and each of them, attorneys and proxies
of the undersigned, each with full power of substitution, to attend the Annual
Meeting of the Shareholders of Western Asset/Claymore U.S. Treasury Inflation
Protected Securities Fund, a Massachusetts business trust (the "Fund"), to be
held in the Board Room, Fifth Floor, 385 E. Colorado Blvd., Pasadena,
California, on May 3, 2004, at 11:30 a.m., California time, and at any
adjournments thereof, and thereat to vote as indicated all preferred shares of
beneficial interest of the Fund which the undersigned would be entitled to vote
if personally present with respect to the matters listed on the reverse, which
are more fully described in the Notice of Meeting and Proxy Statement of the
Fund, receipt of which is acknowledged by the undersigned.
PLEASE VOTE, DATE, SIGN ON REVERSE AND RETURN PROMPTLY
USING THE ENCLOSED ENVELOPE.
Please sign this Proxy exactly as your name(s) appear(s) on the reverse side.
Joint owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign. If a corporation, this signature
should be that of an authorized officer who should state his or her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
WESTERN ASSET/CLAYMORE U.S. TREASURY INFLATION PROTECTED SECURITIES FUND
C/O EQUISERVE TRUST COMPANY, N.A.
P.O. BOX 8694
EDISON, NJ 08818-8694
DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL
[X] Please mark
vote as in
this example
WESTERN ASSET/CLAYMORE U.S. TREASURY INFLATION PROTECTED SECURITIES FUND
1. Election of Class I Trustees.
(01) NICHOLAS DALMASO
(02) MICHAEL LARSON
FOR [ ] [ ] WITHHELD
ALL FROM ALL
NOMINEES NOMINEES
[ ] For all nominees except as noted above
With discretionary power upon such other matters as may properly come before the
meeting or any adjournment thereof.
Mark box at right if an address change or comment has been noted on the reverse
side of this card. [ ]
THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION AS CLASS I TRUSTEES OF THE NOMINEES OF THE BOARD
OF TRUSTEES.
Please be sure to sign and date this Proxy.
Signature: --------------------------------- Date: -----------
Signature: --------------------------------- Date: -----------