UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Soliciting Material Pursuant to
[_] Confidential, For Use of the SS.240.14a-11(c) or SS.240.14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
WESTERN ASSET/CLAYMORE U.S. TREASURY INFLATION PROTECTED SECURITIES FUND
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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1) Title of each class of securities to which transaction applies:
________________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
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[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
1) Amount previously paid:
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4) Date Filed:
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WESTERN ASSET/CLAYMORE U.S. TREASURY
INFLATION PROTECTED SECURITIES FUND
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 14, 2007
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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 at 2455 Corporate
West Drive, Lisle, Illinois, on Monday, May 14, 2007 at 1:30 p.m., Central time,
for the following purposes:
(1) Electing two Class I Trustees, each to hold office for the term
indicated;
(2) Electing one Class III Trustee, to hold office for the term indicated;
and
(3) 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 16, 2007 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
Melissa J. Nguyen, Secretary
Pasadena, California
March 30, 2007
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 annual meeting of shareholders of the Fund, to be held on May 14,
2007 at 1:30 p.m., Central time (the "Annual Meeting"), and at any adjournment
thereof. At the Annual Meeting, shareholders will be asked to consider the
election of Nicholas Dalmaso, Michael Larson and R. Jay Gerken 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 4, 2007.
The Board of Trustees has fixed the close of business on March 16, 2007 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 29,152,821 common
shares of beneficial interest, no par value (the "Shares"). The Shares
constitute the only outstanding voting securities of the Fund entitled to be
voted at the Annual Meeting.
Shareholders of the Fund as of the close of business on March 16, 2007 will
be entitled to one vote for each Share held, and a fractional vote with respect
to fractional Shares, with no cumulative voting rights. Thirty percent of the
total 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.
Each shareholder has the right to revoke his or her proxy at any time before it
is voted. A proxy, including a proxy given by telephone or via the Internet, may
be revoked by filing with the Secretary of the Fund a written revocation or a
properly executed proxy bearing a later date (including a proxy given by
telephone or on the Internet) 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 (or their designees),
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, Computershare Fund Services, Inc.
("CFS"), which has been retained to assist shareholders in the voting process.
For these services, the Fund will pay CFS a fee that is
1
not expected to exceed $5,000. However, the exact cost will depend on the amount
and types of services rendered. 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 CFS, 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.
R. Jay Gerken, Nicholas Dalmaso and Melissa J. Nguyen, 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. Mr. Gerken and Ms. Nguyen are
each officers of the Fund, and Messrs. Gerken and Dalmaso are Trustees 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' three 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 Amended and Restated Agreement and Declaration of Trust
(the "Declaration of Trust") or Bylaws, a plurality of a quorum of the Shares
necessary for the transaction of business at a shareholders' meeting will decide
any question.
HOW TO SUBMIT A PROXY
Shareholders of record may submit a proxy in respect of their shares by
using any of the following methods:
By Telephone. Submit a proxy by calling the toll-free telephone number
printed on the proxy card. The proxy card should be in hand when making the
call. Easy-to-follow voice prompts allow the shareholder of record to
authenticate his or her identity by entering the validation numbers printed on
the enclosed proxy card, provide voting instructions for the shares, and confirm
that the instructions have been properly recorded.
On the Internet. Submit a proxy by logging onto the Internet website
listed on the proxy card. The proxy card should be in hand when submitting a
proxy online. As with telephone proxy submission, simple instructions
2
allow the shareholder of record to authenticate his or her identity by entering
the validation numbers printed on the enclosed proxy card, provide voting
instructions for the shares, and confirm that the instructions have been
properly recorded.
By Mail. Shareholders of record may complete, sign, and date the proxy
card and return it in the prepaid envelope provided.
Please see the instructions on the enclosed card for telephone touch-tone
proxy submission and Internet proxy submission. Shareholders will have an
opportunity to review their voting instructions and to make any necessary
changes before submitting their voting instructions and terminating their
telephone call or Internet link.
PROPOSAL
ELECTION OF TRUSTEES
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 Shares: Class I, whose term will expire at the Annual Meeting;
Class II, whose term will expire at the Fund's 2008 annual meeting of
shareholders; and Class III, whose term will expire at the Fund's 2009 annual
meeting. At each annual meeting, successors to the Class of Trustees whose term
expires at that annual meeting will 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 2010 Annual Meeting
Michael Larson............................. Class I 2010 Annual Meeting
R. Jay Gerken.............................. Class III 2009 Annual Meeting
--------
* A Trustee will 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.
3
It is the intention of the persons designated as proxies in the proxy card,
unless otherwise directed therein, to vote at the Annual Meeting for the
election of Messrs. Dalmaso, Larson and Gerken. Each of the nominees has agreed
to serve if elected at the Annual Meeting. If any 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.
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 (385 East Colorado Boulevard, Pasadena,
California 91101). Of the individuals listed below, only Messrs. Dalmaso, Larson
and Gerken are nominees for election at the Annual Meeting.
NUMBER OF
PORTFOLIOS IN SHARES OF
PRINCIPAL FUND OTHER THE FUND
OCCUPATIONS COMPLEX* DIRECTORSHIPS BENEFICIALLY
TERM OF OFFICE AND DURING OVERSEEN HELD BY OWNED
POSITION(S) HELD LENGTH OF TIME THE PAST 5 BY TRUSTEE OR TRUSTEE OR ON MARCH 1,
NAME AND YEAR BORN WITH FUND SERVED YEARS NOMINEE NOMINEE* 2007
------------------ ---------------- ------------------ --------------- ------------- ------------- ------------
Peter Erichsen Trustee and Term expires Vice President, 2 None 250
1956 Chairman of the in 2008; General Counsel
Trustees(1)(2) served since and Secretary
August 2003 of the J. Paul
Getty Trust
(2001-present);
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 Nominee and Term expires Chief 2 Pan American 4,000**
1959 Trustee(1)(2) at the Annual Investment Silver Corp.
Meeting; Officer for (silver
served since William H. mining,
May 2004 Gates III development
(1994-present). and
exploration
company)
(1999-
present).
4
NUMBER OF
PORTFOLIOS IN SHARES OF
PRINCIPAL FUND OTHER THE FUND
OCCUPATIONS COMPLEX* DIRECTORSHIPS BENEFICIALLY
TERM OF OFFICE AND DURING OVERSEEN HELD BY OWNED
POSITION(S) HELD LENGTH OF TIME THE PAST 5 BY TRUSTEE OR TRUSTEE OR ON MARCH 1,
NAME AND YEAR BORN WITH FUND SERVED YEARS NOMINEE NOMINEE* 2007
------------------ ---------------- ------------------ --------------- ------------- ------------- ------------
Ronald A. Nyberg Trustee(1)(2) Term expires Principal of 28 None 587***
1953 in 2008; Ronald A.
served since Nyberg, Ltd., a
August 2003 law firm
specializing in
corporate law,
estate planning
and business
transactions
(2000-present);
Executive Vice
President,
General Counsel
and Corporate
Secretary of
Van Kampen
Investments, an
investment
advisory firm
(1982-1999).
Ronald E. Toupin, Jr. Trustee(1)(2) Term expires Formerly: Vice 26 None None
1958 in 2009; President,
served since Manager and
August 2003 Portfolio
Manager of
Nuveen Asset
Management, an
investment
advisory firm
(1998-1999);
Vice President
and Portfolio
Manager of
Nuveen
Investment
Advisory
Corporation, an
investment
advisory firm
(1992-1999);
Vice President
and Manager of
Nuveen Unit
Investment
Trusts (1991-
1998);
Assistant Vice
President and
Portfolio
Manager of
Nuveen Unit
Trusts (1988-
1990) and John
Nuveen &
Company, Inc.
(1982-1999).
5
NUMBER OF
PORTFOLIOS IN SHARES OF
PRINCIPAL FUND OTHER THE FUND
OCCUPATIONS COMPLEX* DIRECTORSHIPS BENEFICIALLY
TERM OF OFFICE AND DURING OVERSEEN HELD BY OWNED
POSITION(S) HELD LENGTH OF TIME THE PAST 5 BY TRUSTEE OR TRUSTEE OR ON MARCH 1,
NAME AND YEAR BORN WITH FUND SERVED YEARS NOMINEE NOMINEE* 2007
------------------ ---------------- ------------------ --------------- ------------- ------------- ------------
Interested Trustees
Nicholas Dalmaso Nominee and Term expires Senior Managing 28 None None
1965(3) Trustee at the Annual Director and
Meeting; General Counsel
served since of Claymore
August 2003 Securities,
Inc. (2000-
present) and
Claymore
Advisors, LLC
(2003-present);
Director of
Claymore
Investments,
Inc. (2004-
present);
Director of
MACRO
Securities
Depositor, LLC
(2006-present);
Chief Executive
Officer, Chief
Legal Officer
and Chief
Compliance
Officer to
funds in
Claymore
Advisors, LLC
fund complex
(2004-present).
Formerly:
Assistant
General Counsel
of John Nuveen
& Company, Inc.
(1999-2001) and
Assistant
General Counsel
of Van Kampen
Investments
(1992-1999).
R. Jay Gerken Nominee, Trustee Term expires Managing 171 None None
1951(4) and President at the Annual Director of
Meeting; Legg Mason &
served since Co., LLC,
March 2007 Chairman,
President and
Chief Executive
Officer of
certain mutual
funds
associated with
Legg Mason &
Co., LLC or its
affiliates
(2005-present);
President of
Legg Mason
Partners Fund
Administration,
LLC ("LMPFA")
(2006-present);
Chairman of
Smith Barney
Fund Management
LLC and Citi
Fund Management
Inc. (2002-
2005);
Chairman,
President and
Chief Executive
Officer of
Travelers
Investment
Adviser, Inc.
(2002-2005).
6
--------
(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. 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 because of his position as an officer of
Claymore Securities, Inc., the Fund's shareholder servicing agent, and
his ownership interest in Claymore Group Inc., the parent company of that
entity.
(4) Mr. Gerken is an "interested person" (as defined above) of the Fund
because of his position as President of the Fund, his positions with
subsidiaries of, and ownership of shares of common stock of, Legg Mason,
Inc., the parent company of the Fund's investment manager, Western Asset
Management Company (the "Investment Manager").
* Each 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 Fund Complex as the Fund.
The Investment Manager serves as subadviser to Western Asset/Claymore
U.S. Treasury Inflation Protected Securities Fund 2. Messrs. Nyberg,
Toupin and Dalmaso also serve as Trustees of Dreman/Claymore Dividend &
Income Fund, MBIA Capital/Claymore Managed Duration Investment Grade
Municipal Fund, TS&W/Claymore Tax-Advantaged Balanced Fund,
Madison/Claymore Covered Call Fund, Fiduciary/Claymore MLP Opportunity
Fund, Fiduciary/Claymore Dynamic Equity Fund, Old Mutual/Claymore Long-
Short Fund and Claymore/Raymond James SB-1 Equity Fund, each of which is
a closed-end management investment company, and Claymore Trust
(consisting of five separate portfolios), Claymore Exchange-Traded Fund
Trust (consisting of nine separate portfolios) and Claymore Exchange
Traded Fund Trust 2 (consisting of two separate portfolios), each an
open-end management investment company. Additionally, Messrs. Nyberg and
Dalmaso serve as Trustees for Advent Claymore Convertible Securities &
Income Fund and Advent/Claymore Enhanced Growth & Income Fund, each a
closed-end investment company. Mr. Gerken also serves as Chairmain,
Trustee or Director of an additional 169 open- and closed-end management
investment companies associated with LMPFA or its affiliates. Each of
these Funds is considered part of the same Fund Complex as the Fund.
** As discussed below under "Share Ownership", Mr. Larson disclaims
beneficial ownership of the Shares of the Fund beneficially owned by
Cascade Investment, L.L.C. and William H. Gates III.
*** Mr. Nyberg shares voting and investment power with respect to these
shares.
7
The following table states the dollar range of equity securities
beneficially owned as of March 1, 2007 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
DOLLAR RANGE OF EQUITY OR NOMINEE IN FAMILY
NAME OF TRUSTEE OR NOMINEE SECURITIES IN THE FUND OF INVESTMENT COMPANIES
-------------------------- ---------------------- ------------------------
Peter C. Erichsen...................... $1 - $10,000 $1 - $10,000
Michael Larson......................... $10,001 - $50,000 $10,001 - $50,000
Ronald A. Nyberg....................... $1 - $10,000 $1 - $10,000
Ronald E. Toupin....................... None None
Interested Trustees
Nicholas Dalmaso....................... None None
R. Jay Gerken.......................... None None
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 Manager, consisting of Messrs. Erichsen,
Larson, 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 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 the independent
registered public accounting firm for the Fund and the scope of the audit and
approves services proposed to be performed by the independent registered public
accounting firm on behalf of the Fund and, under certain circumstances, the
Investment Manager and certain of its affiliates. The Trustees have adopted a
written charter for the Audit Committee, a current copy of which is attached as
Appendix A to this Proxy Statement. The Fund does not currently maintain a
website on which the charter is made available.
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 registered public accounting firm the
matters required to be discussed by Statements on Auditing Standards No. 61
("SAS 61"). SAS 61 requires the independent registered public accounting firm 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
8
authoritative guidance or consensus; (3) the process used by management in
formulating particularly sensitive accounting estimates and the basis for the
independent registered public accounting firm'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 registered public accounting firm required by Independence Standards
Board Standard No. 1 (requiring the independent registered public accounting
firm to make written disclosures to and discuss with the Audit Committee various
matters relating to the independent registered public accounting firm's
independence), and has discussed with such independent registered public
accounting firm the independence of such independent registered public
accounting firm. 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
Michael Larson
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
Manager, consisting of Messrs. Erichsen, Larson, 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
current copy of which is attached 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 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 Manager, shareholders or any other source deemed to be
appropriate by the Governance and Nominating Committee. Candidates properly
submitted by shareholders (as described below) will be considered and evaluated
on the same basis as candidates recommended by other sources.
9
The policy of the Governance and Nominating Committee is 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. 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 2006, the Board of Trustees held five meetings, the Audit
Committee held four meetings and the Governance and Nominating Committee held
two meetings. Each Trustee attended at least 75% of the aggregate of the total
number of 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. Each current Trustee except Messrs.
Erichsen and Gerken attended the Fund's annual shareholder meeting in May 2006;
Mr. Gerken was not a Trustee of the Fund at the time of the Fund's annual
shareholder meeting in May 2006.
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, at the Fund's shareholder servicing agent, Claymore
Securities, Inc., 2455 Corporate West Drive, Lisle, Illinois 60532. 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.
Trustee Compensation. Trustees of the Fund who are affiliated persons of
the Fund, the Investment Manager, or Claymore Securities, Inc. receive no salary
or fees from the Fund. Each other Trustee of the Fund receives a fee of $15,000
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 $2,000 per year for serving in that
capacity. The Audit Committee Chairman and the Governance and Nominating
Committee Chairman each receive an additional $1,500 annually for serving in
their respective capacities. Members of the Audit Committee and the Governance
and Nominating Committee receive $500 for each committee meeting attended.
10
For the fiscal year ended December 31, 2006, the Trustees received the
compensation set forth in the following table for serving as Trustees of the
Fund and as Trustees of the other funds in the same "Fund Complex."
PENSION OR TOTAL COMPENSATION
AGGREGATE RETIREMENT BENEFITS ESTIMATED ANNUAL FROM THE FUND AND
NAME OF TRUSTEE OR COMPENSATION FROM ACCRUED AS PART OF BENEFITS UPON ITS FUND COMPLEX
NOMINEE THE FUND FUND'S EXPENSES RETIREMENT PAID TO TRUSTEES(1)
------------------ ----------------- ------------------- ---------------- -------------------
Peter C. Erichsen......... $25,000 $0 $0 $ 50,000
Michael Larson............ $24,000 $0 $0 $ 48,000
Ronald A. Nyberg.......... $25,500 $0 $0 $313,000
Ronald E. Toupin.......... $25,500 $0 $0 $265,500
Interested Trustees
Nicholas Dalmaso.......... $ 0 $0 $0 $ 0
R. Jay Gerken............. $ 0 $0 $0 $ 0
--------
(1) Represents aggregate compensation paid to each Trustee during the fiscal
year ended December 31, 2006 for serving as Trustees to the Fund and
other funds in the Fund Complex. Messrs. Erichsen, Larson, Nyberg,
Toupin, Dalmaso and Gerken serve as Trustees to 2, 2, 28, 26, 28 and 171
funds in the Fund Complex, respectively.
During 2006, the Fund paid no remuneration to its officers, all of whom
were also officers or employees of the Investment Manager, Claymore Securities,
Inc. or their respective affiliates.
Required Vote. A plurality of votes cast at the Annual Meeting with
respect to a particular Class of Trustees is required to elect a Trustee nominee
as a member of that Class of Trustees. Thus, with respect to Class I, the two
Trustee nominees who receive the greatest number of votes properly cast with
respect to Class I will be elected as Trustees of Class I and, with respect to
Class III, the Trustee nominee who receives the greatest number of votes
properly cast with respect to Class I will be elected as a Trustee of Class I.
The Trustees unanimously recommend that shareholders vote to elect Messrs.
Dalmaso and Larson as Class I Trustees and Mr. Gerken as a Class III Trustee to
the Board of Trustees.
11
INFORMATION CONCERNING THE INVESTMENT
MANAGER AND THE FUND'S OFFICERS
The Investment Manager is a subsidiary of Legg Mason, Inc., a holding
company which, through its subsidiaries, is engaged in providing investment
advisory services to individuals and institutions. The address of Legg Mason,
Inc. is 100 Light Street, Baltimore, Maryland 21202. The Investment Manager's
address is 385 East Colorado Boulevard, Pasadena, California 91101. An affiliate
of the Investment Manager, 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 OF THE
PRINCIPAL FUND
OCCUPATION(S) BENEFICIALLY
POSITION(S) HELD TERM OF OFFICE AND LENGTH DURING THE PAST 5 OWNED ON
NAME AND YEAR BORN WITH FUND OF TIME SERVED(1) YEARS MARCH 1, 2007
------------------ ---------------------- -------------------------- ---------------------- --------------
R. Jay Gerken Trustee and President Served since March 2007 See "Election of None
1951 Trustees" above.
Marie K. Karpinski Treasurer and Served since August 2003 Vice President, Legg None
1949 Principal Financial Mason & Co., LLC
and Accounting Officer (2005-present); Vice
100 Light Street President and Chief
Baltimore, MD 21202 Financial Officer
(1986-present) and
Treasurer (1986-2006)
of all Legg Mason
retail, open-end
investment companies;
Vice President, Legg
Mason Wood Walker,
Incorporated (1992-
2005); Treasurer and
Principal Financial
and Accounting Officer
of Western
Asset/Claymore U.S.
Treasury Inflation
Protected Securities
Fund 2 (2004-present);
Principal Financial
and Accounting Officer
of Western Asset
Funds, Inc. (1990-
present), Western
Asset Income Fund and
Western Asset Premier
Bond Fund (2001-
present); Treasurer of
Western Asset Funds,
Inc. (1990-2006),
Western Asset Income
Fund and Western Asset
Premier Bond Fund
(2001-2006).
12
SHARES OF THE
PRINCIPAL FUND
OCCUPATION(S) BENEFICIALLY
POSITION(S) HELD TERM OF OFFICE AND LENGTH DURING THE PAST 5 OWNED ON
NAME AND YEAR BORN WITH FUND OF TIME SERVED(1) YEARS MARCH 1, 2007
------------------ ---------------------- -------------------------- ---------------------- --------------
Steven M. Hill Assistant Treasurer Served since May 2004 Senior Managing None
1964 Director of Claymore
Advisors, LLC and
2455 Corporate West Drive Claymore Securities,
Lisle, IL 60532 Inc. (2005-present).
Chief Financial
Officer of Claymore
Group Inc. (2005-
2006). Managing
Director of Claymore
Advisors, LLC and
Claymore Securities,
Inc. (2003-2005).
Chief Financial and
Accounting Officer and
Treasurer or Assistant
Treasurer of all
closed-end investment
companies in the
Claymore fund complex.
Previously, Treasurer
of Henderson Global
Funds and Operations
Manager for Henderson
Global Investors
(North America) Inc.
(2002-2003), Managing
Director, FrontPoint
Partners LLC (2001-
2002); Vice President,
Nuveen Investments
(1999-2001).
Susan C. Curry Assistant Treasurer Served since February 2007 Director of Tax -- None
1966 Mutual Funds, Legg
Mason & Co., LLC
125 Broad St. (2005-present);
New York, NY 10004 Director of Tax --
Mutual Funds,
Citigroup (2004-2005);
Assistant Treasurer,
Western Asset Funds,
Inc., Western Asset
Income Fund, Western
Asset Premier Bond
Fund and Western
Asset/Claymore U.S.
Treasury Inflation
Protected Securities
Fund 2 (2007-present);
Partner, Deloitte &
Touche (1990-2004).
13
SHARES OF THE
PRINCIPAL FUND
OCCUPATION(S) BENEFICIALLY
POSITION(S) HELD TERM OF OFFICE AND LENGTH DURING THE PAST 5 OWNED ON
NAME AND YEAR BORN WITH FUND OF TIME SERVED(1) YEARS MARCH 1, 2007
------------------ ---------------------- -------------------------- ---------------------- --------------
Erin K. Morris Assistant Treasurer Served since August 2003 Assistant Vice None
1966 President and Manager,
Funds Accounting, Legg
100 Light Street Mason & Co., LLC
Baltimore, MD 21202 (2005-present);
Assistant Vice
President of Legg
Mason Wood Walker,
Incorporated (2002-
2005); Treasurer of
Legg Mason Income
Trust, Inc., Legg
Mason Tax-Free Income
Fund, Western Asset
Income Fund, Western
Asset Funds, Inc. and
Western Asset Premier
Bond Fund (2006-
present); Assistant
Treasurer of Western
Asset/Claymore U.S.
Treasury Inflation
Protected Securities
Fund 2 (2004-present);
Assistant Treasurer,
Western Asset Income
Fund, Western Asset
Funds, Inc., Western
Asset Premier Bond
Fund, Legg Mason
Income Trust, Inc. and
Legg Mason Tax-Free
Income Fund (2001-
2006); Manager, Funds
Accounting, Legg Mason
Wood Walker,
Incorporated (2000-
2005).
14
SHARES OF THE
PRINCIPAL FUND
OCCUPATION(S) BENEFICIALLY
POSITION(S) HELD TERM OF OFFICE AND LENGTH DURING THE PAST 5 OWNED ON
NAME AND YEAR BORN WITH FUND OF TIME SERVED(1) YEARS MARCH 1, 2007
------------------ ---------------------- -------------------------- ---------------------- --------------
Todd F. Kuehl Chief Compliance Served since February 2007 Vice President, Legg None
1969 Officer Mason & Co., LLC
(2006-present); Chief
100 Light Street Compliance Officer of
Baltimore, MD 21202 Western Asset/Claymore
U.S. Treasury
Inflation Protected
Securities Fund 2,
Western Asset Funds,
Inc., Western Asset
Premier Bond Fund,
Western Asset Income
Fund (2007-present)
and Barrett Growth
Fund and Barrett
Opportunity Fund
(2006-present); Branch
Chief, Division of
Investment Management,
U.S. Securities and
Exchange Commission
(2002-2006).
Melissa J. Nguyen Secretary Served since February 2006 Vice President and None
1978 Assistant General
Counsel of Claymore
2455 Corporate West Drive Securities, Inc.
Lisle, IL 60532 (2005-present);
Secretary, Western
Asset/Claymore U.S.
Treasury Inflation
Protected Securities
Fund 2, MBIA
Capital/Claymore
Managed Duration
Investment Grade
Municipal Fund,
Claymore Exchange-
Traded Fund Trust,
Claymore Exchange
Traded Fund Trust 2
and Claymore/Raymond
James SB-1 Equity Fund
(2006-present) and
Claymore Trust (2005-
present). Formerly,
Associate, Vedder,
Price, Kaufman &
Kammholz, P.C. (2003-
2005).
15
--------
(1) Each officer holds 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.
SHAREHOLDER PROPOSALS FOR 2008 ANNUAL MEETING
Proposals that shareholders wish to present to the 2008 Annual Meeting and
to have included in the Fund's proxy materials relating to such meeting pursuant
to Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), must be delivered to the Secretary of the Fund not less than
120 days prior to April 4, 2008.
Shareholders who wish to propose one or more nominees for election as
Trustees, or to make another proposal, at the 2008 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 60 days prior to
April 4, 2008 and no later than 45 days prior to April 4, 2008.
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.
SHARE OWNERSHIP INFORMATION
As of March 16, 2007, all Trustees, nominees for Trustee and officers of
the Fund as a group beneficially owned less than 1% of the outstanding Shares of
the Fund on such date. As of March 16, 2007, Cede & Co., as nominee for
participants in The Depository Trust Company, held of record 29,132,968 Shares
(representing approximately 99.93% of the outstanding Shares). Cede & Co.'s
address is 55 Water Street, 25th Floor, New York, New York 10041-0001. As of
March 16, 2007, the persons shown in the table below owned, to the knowledge of
the Fund, beneficially more than five percent of the outstanding Shares.
16
SHAREHOLDER NAME AND ADDRESS SHARE HOLDINGS PERCENTAGE OWNED
---------------------------- -------------- ----------------
Cascade Investment, L.L.C. and William H. Gates
III (as sole member of Cascade Investment,
L.L.C.)(1)(2)
Cascade Investment, L.L.C. -- 2365 Carillon
Point, Kirkland, WA 98033
William H. Gates III -- One Microsoft Way,
Redmond, WA 98052............................ 2,270,200 7.79%
Wachovia Corporation(3) One Wachovia Center,
Charlotee, NC 28288-0137..................... 1,848,047 6.34%
--------
(1) Based on information obtained from a Schedule 13D filed with the
Securities and Exchange Commission on April 12, 2006.
(2) Mr. Larson is the Business Manager of Cascade Investment, L.L.C. and has
voting and investment power with respect the Shares held by Cascade
Investment, L.L.C, but disclaims any beneficial ownership of the Shares
beneficially owned by Cascade Investment, L.L.C. and Mr. Gates.
(3) Based on information obtained from a Schedule 13G filed with the
Securities and Exchange Commission on February 6, 2007.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 30(h) of the 1940 Act and Section 16(a) of the Exchange Act require
the Fund's officers and Trustees, the Investment Manager, certain affiliates of
the Investment Manager, 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 2006, all such filing requirements were met, except with respect to Ms.
Nguyen, the Fund's Secretary, who, due to an administrative oversight, made a
late filing of an initial Form 3 with respect to the Fund. Ms. Nguyen did not
own or dispose of Shares of the Fund during the reporting period.
17
ANNUAL REPORT TO SHAREHOLDERS
The Fund's Annual Report to Shareholders for the fiscal year ended December
31, 2006 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., 2455 Corporate West Drive, Lisle, Illinois 60532 or
you may call 866-233-4001.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board of Trustees has selected
PricewaterhouseCoopers LLP as the independent registered public accounting firm
of the Fund for the fiscal year ending December 31, 2007, 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 termination by a
majority of the outstanding Shares of the Fund. Representatives of
PricewaterhouseCoopers LLP are not currently expected to attend the Annual
Meeting.
The following table presents fees billed in each of the Fund's last two
fiscal years for services rendered to the Fund by PricewaterhouseCoopers LLP:
FISCAL YEAR ENDED AUDIT FEES AUDIT-RELATED FEES TAX FEES ALL OTHER FEES
----------------- ---------- ------------------ -------- --------------
December 31, 2005................ $27,200 $6,500 $1,050 $0
December 31, 2006................ $28,800 $ 0 $1,100 $0
"Audit Fees" represents fees billed for each of the last two fiscal years
for professional services rendered for the audit of the Fund's financial
statements for those fiscal years 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 each of the last two fiscal
years for assurance and related services reasonably related to the performance
of the audit of the Fund's annual financial statements for those years.
"Tax Fees" represents fees billed for each of the last two fiscal years for
professional services related to tax compliance, tax advice and tax planning,
including preparation of federal and state income tax returns 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 last two
fiscal years.
18
For the Fund's fiscal years ended December 31, 2005 and December 31, 2006,
PricewaterhouseCoopers LLP billed aggregate non-audit fees in the amounts of
$202,047 and $348,454, respectively, to the Fund, the Investment Manager and any
entity controlling, controlled by or under common control with the Investment
Manager that provides ongoing services to the Fund.
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 July 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
Manager and any entity controlling, controlled by or under common control with
the Investment Manager 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. No "Audit-Related Fees," "Tax-Fees" and "Other Fees" set forth in the
table above were waived pursuant to paragraph (c)(7)(i)(c) of Rule 2-01 of
Regulation S-X. PricewaterhouseCoopers LLP billed "Audit-Related Fees" in the
amount of $127,460 and $145,000, respectively, for non-audit services (a SAS 70
audit to review and test operating effectiveness of controls placed in operation
for the Investment Manager and a review of the Investment Manager's Australian
Superannuation Circular) 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 fiscal years ended December 31, 2005 and December 31, 2006.
PricewaterhouseCoopers LLP did not bill any "Tax Fees" or "All Other Fees" 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 fiscal years ended December 31,
2005 and December 31, 2006. The Audit Committee has considered whether the
provision of the non-audit services rendered by PricewaterhouseCoopers LLP to
the Investment Manager 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
present) if 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
19
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 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
Melissa J. Nguyen, Secretary
March 30, 2007
20
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
REVISED AS OF SEPTEMBER 12, 2005
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 oversee the preparation of 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; (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.
A-2
(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 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.
A-3
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 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 Audit Committee shall assess its own performance at least annually.
A-4
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 MAY 3, 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").(*) 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.
----------
(*) 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).
Appendix A
PROCEDURES FOR SHAREHOLDERS TO SUBMIT NOMINEE CANDIDATES
(As of May 3, 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
B-2
thirty-five (135) calendar days prior to the date of the Board or shareholder
meeting at which the nominee would be elected.
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 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-3
WESTERN ASSET/CLAYMORE U.S. TREASURY INFLATION PROTECTED
SECURITIES FUND
Using a BLACK INK pen, mark your votes with an X as shown in [X]
this example. Please do not write outside the designated areas.
ELECTRONIC VOTING INSTRUCTIONS
YOU CAN VOTE BY INTERNET OR TELEPHONE! AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK!
Instead of mailing your proxy, you may choose one of the two voting methods
outlined below to vote your proxy.
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
PROXIES SUBMITTED BY THE INTERNET OR TELEPHONE MUST BE RECEIVED BY 11:59 P.M.,
EASTERN TIME, ON MAY 13, 2007.
(COMPUTER) VOTE BY INTERNET
- Log on to the Internet and go
to WWW.INVESTORVOTE.COM
- Follow the steps outlined on the secured website.
(PHONE) VOTE BY TELEPHONE
- Call toll free 1-800-652-VOTE (8683) within the United States,
Canada & Puerto Rico any time on a touch tone telephone. There is
NO CHARGE to you for the call.
- Follow the instructions provided by the recorded message.
ANNUAL MEETING PROXY CARD 123456 C0123456789 12345
- IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE
PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. -
--------------------------------------------------------------------------------
A ELECTION OF CLASS I TRUSTEES
FOR WITHHOLD
01 - NICHOLAS DALMASO [ ] [ ]
FOR WITHHOLD
02 - MICHAEL LARSON [ ] [ ]
B ELECTION OF CLASS III TRUSTEE
FOR WITHHOLD
03 - R. JAY GERKEN [ ] [ ]
With discretionary power upon such other matters as may properly come before the
meeting or any adjournment thereof.
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 AND FOR THE ELECTION AS CLASS III TRUSTEE OF THE NOMINEE OF THE
BOARD OF TRUSTEES.
C NON-VOTING ITEMS
CHANGE OF ADDRESS -- Please print new address below.
---------------------------------------------------
COMMENTS -- Please print your comments below.
---------------------------------------------------
D AUTHORIZED SIGNATURES -- THIS SECTION MUST BE COMPLETED FOR YOUR VOTE TO BE
COUNTED. -- DATE AND SIGN BELOW
Please sign this Proxy exactly as your name(s) appear(s) above. 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.
Date (mm/dd/yyyy) -- Please print date below.
/ /
---------------------------------------------------
Signature 1 -- Please keep signature within the box.
---------------------------------------------------
Signature 2 -- Please keep signature within the box.
---------------------------------------------------
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 matter 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 and return your proxy vote in the enclosed postage
paid envelope. Your vote must be received prior to the Annual Meeting of
Shareholders, May 14, 2007.
Thank you in advance for your prompt consideration of this matter.
Sincerely,
Western Asset/Claymore U.S. Treasury Inflation Protected Securities Fund
- IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE
PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.-
--------------------------------------------------------------------------------
PROXY -- WESTERN ASSET/CLAYMORE U.S. TREASURY INFLATION PROTECTED SECURITIES
FUND
COMMON SHARES
ANNUAL MEETING OF SHAREHOLDERS - MAY 14, 2007
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 R. Jay Gerken,
Melissa J. Nguyen and Nicholas Dalmaso, 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 at 2455 Corporate West Drive, Lisle, Illinois, on May 14, 2007, at 1:30
p.m., Central 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.