Company: MMU
Filing Date: 2025-07-30
Form Type: N-CSR
Source: 0001133228-25-007762
Chunk: 3

Company: WESTERN ASSET MANAGED MUNICIPALS FUND INC.
Filing Date: 2025-07-30
Form: N-CSR
Chunk 3
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 cash equivalents, and tax season selling at the end of the Fund’s fiscal year and was generally not sufficient to absorb the elevated supply levels. The two-year Treasury yield began the reporting period at 4.89% and ended at 3.89%, whereas the ten-year Treasury yield began the reporting period at 4.51% and ended at 4.41%. The muni underperformed its taxable bond counterpart during the twelve-month reporting period. Over that time, the Bloomberg Municipal Bond Index i and the Bloomberg U.S. Aggregate Bond Index ii returned 2.03% and 5.46%, respectively. Q. How did we respond to these changing market conditions? A. A number of adjustments were made to the Fund during the reporting period. We increased the Fund’s duration versus that of the Bloomberg Municipal Bond Index, as we anticipated that gross domestic product (GDP) and inflation to continue to decelerate and contribute to lower interest rates, and that at higher nominal rate levels we believed investors were better compensated for duration risks. From a sector/industry perspective, we increased our allocations to the industrial revenue and health care sectors, while reducing our exposure to the special tax and transportation sectors. In terms of quality positioning, we reduced the Fund’s exposure to securities rated BBB and below and increased exposure to higher rated securities, as credit spreads tightened. During the reporting period, we utilized interest rate futures to manage the Fund’s duration and yield curve exposure. The use of these derivatives contributed to performance. During the reporting period, we utilized leverage in the Fund. We ended the period with leverage as a percentage of total assets of approximately 32%, versus roughly 31% when the period began. The use of leverage contributed to results. Performance review For the twelve months ended May 31, 2025, Western Asset Managed Municipals Fund Inc. returned -0.68% based on its net asset value (NAV) iii and 6.24% based on its New York Stock Exchange (NYSE) market price per share. The Fund’s unmanaged benchmark, the Bloomberg Municipal Bond Index, returned 2.03% for the same period. The Fund has a practice of seeking to maintain a relatively stable level of distributions to shareholders. This practice has no impact on the Fund’s investment strategy and may reduce the Fund’s NAV. The Fund’s manager believes the practice helps maintain the Fund’s competitiveness and may benefit the Fund’s market price and premium/discount to the Fund’s NAV. Certain investors may be subject to the federal