Edgar Filing: WESTERN ASSET VARIABLE RATE STRATEGIC FUND INC.

Western Asset Variable Rate Strategic Fund Inc.(GFY)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED

MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number 811-21609

Western Asset Variable Rate Strategic Fund Inc.

(Exact name of registrant as specified in charter)

620 Eighth Avenue, 49^th Floor, New York, NY 10018

(Address of principal executive offices) (Zip code)

Robert I. Frenkel, Esq.

Legg Mason & Co., LLC

100 First Stamford Place

Stamford, CT 06902

(Name and address of agent for service)

Registrant’s telephone number, including area code: (888)-777-0102

Date of fiscal year end: September 30

Date of reporting period: December 31, 2018

ITEM 1.

SCHEDULE OF INVESTMENTS.

WESTERN ASSET VARIABLE RATE STRATEGIC FUND INC.

FORM N-Q

DECEMBER 31, 2018

WESTERN ASSET VARIABLE RATE STRATEGIC FUND INC.


Schedule of investments (unaudited)		December 31, 2018


SECURITY	RATE			MATURITY DATE		FACE AMOUNT†		VALUE
COLLATERALIZED MORTGAGE OBLIGATIONS^(a) - 45.4%
Adjustable Rate Mortgage Trust, 2005-11 5A1 (1 mo. USD LIBOR + 0.540%)		3.046	%		2/25/36		86,839	$	62,071	^(b)
Banc of America Funding Corp., 2015-R3 2A2		2.445	%		2/27/37		1,585,047		1,301,502	^(b)(c)
Banc of America Funding Trust, 2004-B 6A1		2.420	%		12/20/34		284,411		225,538	^(b)
Banc of America Funding Trust, 2005-E 8A1 (11th District Cost of Fund + 1.430%, min. coupon of 1.430%)		2.509	%		6/20/35		243,302		175,506	^(b)
Bear Stearns ALT-A Trust, 2004-3 A1 (1 mo. USD LIBOR + 0.640%)		3.146	%		4/25/34		243,664		242,585	^(b)
BX Trust, 2017-IMC A (1 mo. LIBOR + 1.050%)		3.505	%		10/15/32		450,000		449,138	^(b)(c)
CD Mortgage Trust, 2016-CD2 A4		3.526	%		11/10/49		250,000		249,390	^(b)
CD Mortgage Trust, 2017-CD6 XA, IO		0.976	%		11/13/50		6,589,372		382,039	^(b)
Chevy Chase Funding LLC Mortgage-Backed Certificates, 2004-2A A1 (1 mo. USD LIBOR + 0.270%)		2.776	%		5/25/35		198,727		194,232	^(b)(c)
Chevy Chase Funding LLC Mortgage-Backed Certificates, 2004-3A A1 (1 mo. USD LIBOR + 0.250%)		2.756	%		8/25/35		170,629		168,871	^(b)(c)
CHL Mortgage Pass-Through Trust, 2004-20 2A1		3.656	%		9/25/34		308,026		223,304	^(b)
CHL Mortgage Pass-Through Trust, 2004-29 2A1 (1 mo. USD LIBOR + 0.660%)		3.166	%		2/25/35		20,621		20,131	^(b)
CHL Mortgage Pass-Through Trust, 2005-HYB9 3A1A (12 mo. USD LIBOR + 1.750%)		4.592	%		2/20/36		233,573		212,119	^(b)
Citigroup Commercial Mortgage Trust, 2013-375P A		3.251	%		5/10/35		340,000		339,780	^(c)
Commercial Mortgage Trust, 2016-SAVA A (1 mo. LIBOR + 1.720%)		4.069	%		10/15/34		347,748		347,330	^(b)(c)
Countrywide Alternative Loan Trust, 2004-6CB A (1 mo. USD LIBOR + 0.580%)		3.086	%		5/25/34		137,714		137,006	^(b)

See Notes to Schedule of Investments.

WESTERN ASSET VARIABLE RATE STRATEGIC FUND INC.


Schedule of investments (unaudited) (cont’d)		December 31, 2018


SECURITY	RATE			MATURITY DATE		FACE AMOUNT†		VALUE
COLLATERALIZED MORTGAGE OBLIGATIONS^(a)- (continued)
Countrywide Home Loans Reperforming REMIC Trust, 2004-R1 2A		6.500	%		11/25/34		33,288	$	32,685	^(c)
Countrywide Home Loans Reperforming REMIC Trust, 2005-R2 2A1		7.000	%		6/25/35		89,281		89,410	^(c)
Countrywide Home Loans Reperforming REMIC Trust, 2006-R2 AF1 (1 mo. USD LIBOR + 0.420%)		2.926	%		7/25/36		73,319		70,678	^(b)(c)
Credit Suisse Mortgage Trust, 2015-10R 3A2 (Federal Reserve US 12 mo. Cumulative Avg 1 Year CMT + 0.840%)		2.880	%		10/27/46		1,110,000		1,081,920	^(b)(c)
Credit Suisse Mortgage Trust, 2015-2R 7A2		3.742	%		8/27/36		1,200,245		1,081,146	^(b)(c)
Credit Suisse Mortgage Trust, 2018-J1 B2		3.682	%		2/25/48		858,443		809,753	^(b)(c)
DBJPM Mortgage Trust, 2016-C1 ASB		3.038	%		5/10/49		250,000		246,573
Deutsche Mortgage Securities Inc. Mortgage Loan Trust, 2004-4 3AR1		4.677	%		6/25/34		193,722		193,787	^(b)
Federal Home Loan Mortgage Corp. (FHLMC), Structured Agency Credit Risk Debt Notes, 2013-DN1 M2 (1 mo. USD LIBOR + 7.150%)		9.656	%		7/25/23		412,311		481,240	^(b)
Federal Home Loan Mortgage Corp. (FHLMC), Structured Agency Credit Risk Debt Notes, 2015-DNA1 M2 (1 mo. USD LIBOR + 1.850%)		4.356	%		10/25/27		217,205		219,964	^(b)
Federal Home Loan Mortgage Corp. (FHLMC), Structured Agency Credit Risk Debt Notes, 2015-HQ1 M3 (1 mo. USD LIBOR + 3.800%)		6.306	%		3/25/25		260,000		274,044	^(b)
Federal Home Loan Mortgage Corp. (FHLMC), Structured Agency Credit Risk Debt Notes, 2016-DNA3 M2 (1 mo. USD LIBOR + 2.000%)		4.506	%		12/25/28		248,314		250,626	^(b)
Federal Home Loan Mortgage Corp. (FHLMC), Structured Agency Credit Risk Debt Notes, 2016-DNA4 M2 (1 mo. USD LIBOR + 1.300%)		3.806	%		3/25/29		530,000		530,782	^(b)

See Notes to Schedule of Investments.

WESTERN ASSET VARIABLE RATE STRATEGIC FUND INC.


Schedule of investments (unaudited) (cont’d)		December 31, 2018


SECURITY	RATE			MATURITY DATE		FACE AMOUNT†		VALUE
COLLATERALIZED MORTGAGE OBLIGATIONS^(a)- (continued)
Federal Home Loan Mortgage Corp. (FHLMC), Structured Agency Credit Risk Debt Notes, 2016-HQA1 M2 (1 mo. USD LIBOR + 2.750%)		5.256	%		9/25/28		292,748	$	297,281	^(b)
Federal Home Loan Mortgage Corp. (FHLMC), Structured Agency Credit Risk Debt Notes, 2018-HRP1 B2 (1 mo. USD LIBOR + 11.750%)		14.256	%		4/25/43		249,650		288,284	^(b)(c)
Federal Home Loan Mortgage Corp. (FHLMC), Structured Agency Credit Risk Debt Notes, 2017-DNA2 B2 (1 mo. USD LIBOR + 11.250%)		13.756	%		10/25/29		369,257		414,052	^(b)
Federal Home Loan Mortgage Corp. (FHLMC), Structured Agency Credit Risk Debt Notes, 2018-HRP2 B2 (1 mo. USD LIBOR + 10.500%)		13.006	%		2/25/47		520,000		535,492	^(b)(c)
Federal National Mortgage Association (FNMA) - CAS, 2013-C01 M2 (1 mo. USD LIBOR + 5.250%)		7.756	%		10/25/23		296,878		332,434	^(b)
Federal National Mortgage Association (FNMA) - CAS, 2014-C01 M2 (1 mo. USD LIBOR + 4.400%)		6.906	%		1/25/24		340,000		376,175	^(b)
Federal National Mortgage Association (FNMA) - CAS, 2014-C04 1M2 (1 mo. USD LIBOR + 4.900%)		7.406	%		11/25/24		392,232		438,145	^(b)
Federal National Mortgage Association (FNMA) - CAS, 2016-C01 1B (1 mo. USD LIBOR + 11.750%)		14.256	%		8/25/28		258,948		369,998	^(b)
Federal National Mortgage Association (FNMA) - CAS, 2016-C04 1B (1 mo. USD LIBOR + 10.250%)		12.756	%		1/25/29		899,366		1,196,508	^(b)
Federal National Mortgage Association (FNMA) - CAS, 2016-C04 1M1 (1 mo. USD LIBOR + 1.450%)		3.956	%		1/25/29		102,707		103,217	^(b)
Federal National Mortgage Association (FNMA) - CAS, 2016-C04 1M2 (1 mo. USD LIBOR + 4.250%)		6.756	%		1/25/29		950,000		1,049,607	^(b)
Federal National Mortgage Association (FNMA) - CAS, 2016-C06 1B (1 mo. USD LIBOR + 9.250%)		11.756	%		4/25/29		1,009,023		1,272,001	^(b)

See Notes to Schedule of Investments.

WESTERN ASSET VARIABLE RATE STRATEGIC FUND INC.


Schedule of investments (unaudited) (cont’d)		December 31, 2018


SECURITY	RATE			MATURITY DATE		FACE AMOUNT†		VALUE
COLLATERALIZED MORTGAGE OBLIGATIONS^(a)- (continued)
Federal National Mortgage Association (FNMA) - CAS, 2018-C03 1M1 (1 mo. USD LIBOR + 0.680%)		3.186	%		10/25/30		509,923	$	508,819	^(b)
Federal National Mortgage Association (FNMA) REMIC, 2013-25 BI, IO		3.000	%		3/25/33		6,794,465		654,614
Federal National Mortgage Association (FNMA) REMIC, 2013-62 AI, IO		3.000	%		6/25/33		4,733,479		606,317
Federal National Mortgage Association (FNMA) STRIPS, 347 2, IO		5.000	%		1/25/34		658,534		135,414
Galton Funding Mortgage Trust, 2017-1 A22		3.000	%		7/25/56		162,483		157,914	^(b)(c)
Government National Mortgage Association (GNMA), 2010-H03 FA (1 mo. USD LIBOR + 0.550%)		2.872	%		3/20/60		102,622		102,997	^(b)(d)
Government National Mortgage Association (GNMA), 2010-H10 FC (1 mo. USD LIBOR + 1.000%)		3.322	%		5/20/60		82,386		83,492	^(b)(d)
Government National Mortgage Association (GNMA), 2010-H11 FA (1 mo. USD LIBOR + 1.000%)		3.322	%		6/20/60		516,929		525,735	^(b)(d)
Government National Mortgage Association (GNMA), 2011-H01 AF (1 mo. USD LIBOR + 0.450%)		2.764	%		11/20/60		987,703		989,269	^(b)(d)
Government National Mortgage Association (GNMA), 2011-H03 FA (1 mo. USD LIBOR + 0.500%)		2.814	%		1/20/61		104,587		104,877	^(b)(d)
Government National Mortgage Association (GNMA), 2011-H05 FA (1 mo. USD LIBOR + 0.500%)		2.814	%		12/20/60		202,809		203,304	^(b)
Government National Mortgage Association (GNMA), 2011-H05 FB (1 mo. USD LIBOR + 0.500%)		2.814	%		12/20/60		180,461		181,010	^(b)
Government National Mortgage Association (GNMA), 2011-H06 FA (1 mo. USD LIBOR + 0.450%)		2.764	%		2/20/61		447,814		448,509	^(b)(d)
Government National Mortgage Association (GNMA), 2011-H07 FA (1 mo. USD LIBOR + 0.500%)		2.814	%		2/20/61		325,670		326,315	^(b)(d)

See Notes to Schedule of Investments.

WESTERN ASSET VARIABLE RATE STRATEGIC FUND INC.


Schedule of investments (unaudited) (cont’d)		December 31, 2018


SECURITY	RATE			MATURITY DATE		FACE AMOUNT†		VALUE
COLLATERALIZED MORTGAGE OBLIGATIONS^(a)- (continued)
Government National Mortgage Association (GNMA), 2011-H08 FD (1 mo. USD LIBOR + 0.500%)		2.814	%		2/20/61		288,298	$	289,078	^(b)(d)
Government National Mortgage Association (GNMA), 2011-H09 AF (1 mo. USD LIBOR + 0.500%)		2.814	%		3/20/61		581,744		583,160	^(b)
Government National Mortgage Association (GNMA), 2011-H11 FB (1 mo. USD LIBOR + 0.500%)		2.814	%		4/20/61		117,865		118,181	^(b)
Government National Mortgage Association (GNMA), 2012-H18 NA (1 mo. USD LIBOR + 0.520%)		2.834	%		8/20/62		481,445		482,910	^(b)(d)
Government National Mortgage Association (GNMA), 2012-H23 SA (1 mo. USD LIBOR + 0.530%)		2.844	%		10/20/62		337,930		339,143	^(b)(d)
Government National Mortgage Association (GNMA), 2012-H23 WA (1 mo. USD LIBOR + 0.520%)		2.834	%		10/20/62		534,320		535,934	^(b)
GSMPS Mortgage Loan Trust, 2006-RP2 1AF1 (1 mo. USD LIBOR + 0.400%)		2.906	%		4/25/36		220,575		186,206	^(b)(c)
HarborView Mortgage Loan Trust, 2004-10 4A		4.290	%		1/19/35		90,363		89,239	^(b)
HarborView Mortgage Loan Trust, 2005-14 3A1A		4.714	%		12/19/35		51,503		50,849	^(b)
IndyMac INDX Mortgage Loan Trust, 2004-AR7 A2 (1 mo. USD LIBOR + 0.860%)		3.366	%		9/25/34		129,036		121,390	^(b)
JPMBB Commercial Mortgage Securities Trust, 2013-C17 ASB		3.705	%		1/15/47		145,512		147,183
JPMorgan Chase Commercial Mortgage Securities Trust, 2007-CB18 AJ		5.502	%		6/12/47		660,000		545,679	^(b)
JPMorgan Chase Commercial Mortgage Securities Trust, 2015-FL7 C (1 mo. LIBOR + 2.850%)		5.305	%		5/15/28		300,248		300,091	^(b)(c)
JPMorgan Mortgage Trust, 2005-A3 3A4		4.124	%		6/25/35		138,589		141,037	^(b)
Lanark Master Issuer PLC, 2018-1A 1A (3 mo. USD LIBOR + 0.420%)		3.097	%		12/22/69		549,400		550,687	^(b)(c)
LSTAR Securities Investment Ltd., 2017-6 A (1 mo. USD LIBOR + 1.750%)		4.270	%		9/1/22		495,562		495,407	^(b)(c)(e)

See Notes to Schedule of Investments.

WESTERN ASSET VARIABLE RATE STRATEGIC FUND INC.


Schedule of investments (unaudited) (cont’d)		December 31, 2018


SECURITY	RATE			MATURITY DATE		FACE AMOUNT†		VALUE
COLLATERALIZED MORTGAGE OBLIGATIONS^(a)- (continued)
LSTAR Securities Investment Trust Ltd., 2018-2 A1 (1 mo. USD LIBOR + 1.500%)		4.020	%		4/1/23		441,395	$	440,359	^(b)(c)
MASTR Adjustable Rate Mortgages Trust, 2003-6 2A1		3.981	%		12/25/33		39,622		38,412	^(b)
MASTR Reperforming Loan Trust, 2005-2 1A1F (1 mo. USD LIBOR + 0.350%)		2.856	%		5/25/35		703,410		561,007	^(b)(c)
MASTR Reperforming Loan Trust, 2006-2 2A1		3.948	%		5/25/36		75,597		70,005	^(b)(c)
Morgan Stanley Bank of America Merrill Lynch Trust, 2016-C32 ASB		3.514	%		12/15/49		350,000		355,266
Morgan Stanley Capital I Trust, 2017-ASHF A (1 mo. LIBOR + 0.850%)		3.305	%		11/15/34		120,000		119,694	^(b)(c)
Morgan Stanley Mortgage Loan Trust, 2006-6AR 2A		3.858	%		5/25/36		332,244		296,963	^(b)
Morgan Stanley Resecuritization Trust, 2015-R2 1A1 (Federal Reserve US 12 mo. Cumulative Avg 1 Year CMT + 0.710%)		2.763	%		12/27/46		215,887		213,754	^(b)(c)
Morgan Stanley Resecuritization Trust, 2015-R2 1B (Federal Reserve US 12 mo. Cumulative Avg 1 Year CMT + 0.710%)		2.763	%		12/27/46		1,462,612		1,114,833	^(b)(c)
Morgan Stanley Resecuritization Trust, 2015-R6 1A1 (1 mo. USD LIBOR + 0.260%)		2.835	%		7/26/45		152,539		151,242	^(b)(c)
MortgageIT Trust, 2005-3 A1 (1 mo. USD LIBOR + 0.600%)		3.106	%		8/25/35		185,086		181,023	^(b)
MSCG Trust, 2016-SNR A		3.348	%		11/15/34		470,763		459,502	^(b)(c)
New Residential Mortgage Loan Trust, 2015-1A A3		3.750	%		5/28/52		335,683		337,148	^(b)(c)
New Residential Mortgage Loan Trust, 2017-1A A1		4.000	%		2/25/57		512,592		521,464	^(b)(c)
Nomura Asset Acceptance Corp. Alternative Loan Trust, 2007-1 1A4		6.138	%		3/25/47		315,381		319,507	^(b)
Nomura Resecuritization Trust, 2015-1R 2A2 (1 mo. USD LIBOR + 0.190%)		3.775	%		10/26/36		863,051		868,721	^(b)(c)
Prime Mortgage Trust, 2006-DR1 2A2		6.000	%		5/25/35		407,983		325,921	^(c)
RAMP Trust, 2003-SL1 M1		7.305	%		4/25/31		430,917		284,579	^(b)

See Notes to Schedule of Investments.

WESTERN ASSET VARIABLE RATE STRATEGIC FUND INC.


Schedule of investments (unaudited) (cont’d)		December 31, 2018


SECURITY	RATE			MATURITY DATE		FACE AMOUNT†		VALUE
COLLATERALIZED MORTGAGE OBLIGATIONS^(a)- (continued)
Structured Adjustable Rate Mortgage Loan Trust, 2004-9XS A (1 mo. USD LIBOR + 0.370%)		2.876	%		7/25/34		244,311	$	243,731	^(b)
Structured Asset Mortgage Investments II Trust, 2004-AR3 1A1 (1 mo. USD LIBOR + 0.600%)		3.070	%		7/19/34		181,495		178,590	^(b)
Structured Asset Securities Corp., 2005-RF2 A (1 mo. USD LIBOR + 0.350%)		2.856	%		4/25/35		134,939		127,111	^(b)(c)
UBS Commercial Mortgage Trust, 2017-C4 A4		3.563	%		10/15/50		410,000		405,893
WaMu Mortgage Pass-Through Certificates Trust, 2004-AR11 A		4.184	%		10/25/34		78,363		78,487	^(b)
WaMu Mortgage Pass-Through Certificates Trust, 2004-AR12 A2A (1 mo. USD LIBOR + 0.780%)		3.286	%		10/25/44		83,485		83,722	^(b)
WaMu Mortgage Pass-Through Certificates Trust, 2005-4 CB9 (1 mo. USD LIBOR + 0.400%)		2.906	%		6/25/35		388,147		329,829	^(b)
WaMu Mortgage Pass-Through Certificates Trust, 2005-AR1 A2A3 (1 mo. USD LIBOR + 0.800%)		3.306	%		1/25/45		64,837		64,673	^(b)
WaMu Mortgage Pass-Through Certificates Trust, 2005-AR8 2AB3 (1 mo. USD LIBOR + 0.720%)		3.226	%		7/25/45		469,522		468,976	^(b)
WaMu Mortgage Pass-Through Certificates Trust, 2005-AR13 A1B3 (1 mo. USD LIBOR + 0.360%)		2.866	%		10/25/45		306,021		301,251	^(b)
WaMu Mortgage Pass-Through Certificates Trust, 2005-AR13 A1C3 (1 mo. USD LIBOR + 0.490%)		2.996	%		10/25/45		130,511		129,955	^(b)
WaMu Mortgage Pass-Through Certificates Trust, 2006-AR13 2A (11th District Cost of Fund + 1.500%, min. coupon of 1.500%)		2.579	%		10/25/46		264,569		253,195	^(b)
WaMu Mortgage Pass-Through Certificates Trust, 2007-OA2 1A (Federal Reserve US 12 mo. Cumulative Avg 1 Year CMT + 0.700%)		2.857	%		3/25/47		861,178		798,840	^(b)

See Notes to Schedule of Investments.

WESTERN ASSET VARIABLE RATE STRATEGIC FUND INC.


Schedule of investments (unaudited) (cont’d)		December 31, 2018


SECURITY	RATE			MATURITY DATE		FACE AMOUNT†		VALUE
COLLATERALIZED MORTGAGE OBLIGATIONS^(a)- (continued)
Wells Fargo Commercial Mortgage Trust, 2015-C31 D		3.852	%		11/15/48		364,630	$	312,562
Wells Fargo Commercial Mortgage Trust, 2015-NXS3 ASB		3.371	%		9/15/57		140,000		141,303

TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost - $35,762,110)									37,348,622

CORPORATE BONDS & NOTES - 43.5%
COMMUNICATION SERVICES - 4.3%
Diversified Telecommunication Services - 1.4%
AT&T Inc., Senior Notes		3.600	%		2/17/23		810,000		805,745	^(d)
Verizon Communications Inc., Senior Notes (3 mo. USD LIBOR + 1.100%)		3.716	%		5/15/25		380,000		368,768	^(b)(d)

Total Diversified Telecommunication Services									1,174,513

Media - 0.6%
DISH DBS Corp., Senior Notes		6.750	%		6/1/21		130,000		128,986
DISH DBS Corp., Senior Notes		5.875	%		7/15/22		190,000		175,513
DISH DBS Corp., Senior Notes		5.875	%		11/15/24		270,000		218,362

Total Media									522,861

Wireless Telecommunication Services - 2.3%
Sprint Corp., Senior Notes		7.250	%		9/15/21		530,000		543,780
Sprint Corp., Senior Notes		7.625	%		2/15/25		740,000		741,850
Sprint Spectrum Co. LLC/Sprint
Spectrum Co. II LLC/Sprint Spectrum
Co. III LLC, Senior Secured Notes		3.360	%		9/20/21		378,125		374,344	^(c)
Vodafone Group PLC, Senior Notes (3 mo. USD LIBOR + 0.990%)		3.426	%		1/16/24		220,000		214,755	^(b)(d)

Total Wireless Telecommunication Services									1,874,729

TOTAL COMMUNICATION SERVICES									3,572,103

CONSUMER DISCRETIONARY - 2.9%
Auto Components - 0.2%
ZF North America Capital Inc., Senior Notes		4.750	%		4/29/25		200,000		186,382	^(c)

Automobiles - 2.0%
Ford Motor Credit Co. LLC, Senior Notes		5.875	%		8/2/21		250,000		256,545
General Motors Financial Co. Inc., Senior Notes		4.375	%		9/25/21		400,000		401,029	^(d)
General Motors Financial Co. Inc., Senior Notes		4.250	%		5/15/23		1,000,000		979,118	^(d)

Total Automobiles									1,636,692

See Notes to Schedule of Investments.

WESTERN ASSET VARIABLE RATE STRATEGIC FUND INC.


Schedule of investments (unaudited) (cont’d)		December 31, 2018


SECURITY	RATE			MATURITY DATE		FACE AMOUNT†		VALUE
Internet & Direct Marketing Retail - 0.5%
Amazon.com Inc., Senior Notes		1.900	%		8/21/20		370,000	$	364,760	^(d)

Specialty Retail - 0.2%
Home Depot Inc., Senior Notes (3 mo. USD LIBOR + 0.310%)		3.049	%		3/1/22		200,000		198,076	^(b)

TOTAL CONSUMER DISCRETIONARY									2,385,910

CONSUMER STAPLES - 3.7%
Beverages - 0.5%
Anheuser-Busch InBev Finance Inc., Senior Notes (3 mo. USD LIBOR + 1.260%)		3.819	%		2/1/21		440,000		442,541	^(b)(d)

Food & Staples Retailing - 0.7%
Walmart Inc., Senior Notes		1.900	%		12/15/20		560,000		551,371

Food Products - 1.3%
Kraft Heinz Foods Co., Senior Notes		3.950	%		7/15/25		920,000		891,600	^(d)
Smithfield Foods Inc., Senior Notes		2.700	%		1/31/20		220,000		217,078	^(c)

Total Food Products									1,108,678

Tobacco - 1.2%
Altria Group Inc., Senior Notes		9.250	%		8/6/19		350,000		361,788	^(d)
BAT Capital Corp., Senior Notes		2.764	%		8/15/22		450,000		425,394	^(d)
Philip Morris International Inc., Senior Notes		1.875	%		11/1/19		170,000		167,975

Total Tobacco									955,157

TOTAL CONSUMER STAPLES									3,057,747

ENERGY - 5.5%
Energy Equipment & Services - 0.2%
Halliburton Co., Senior Notes		3.250	%		11/15/21		170,000		169,977

Oil, Gas & Consumable Fuels - 5.3%
Anadarko Petroleum Corp., Senior Notes		4.850	%		3/15/21		351,000		359,562	^(d)
BP Capital Markets PLC, Senior Notes		3.561	%		11/1/21		190,000		191,769
Chesapeake Energy Corp., Senior Notes (3 mo. USD LIBOR + 3.250%)		5.686	%		4/15/19		400,000		399,000	^(b)
Chevron Corp., Senior Notes		2.100	%		5/16/21		330,000		323,741	^(d)
Continental Resources Inc., Senior Notes		5.000	%		9/15/22		500,000		497,033
Ensco PLC, Senior Notes		5.200	%		3/15/25		300,000		201,000
Lukoil International Finance BV, Senior Notes		7.250	%		11/5/19		240,000		246,473	^(f)
Occidental Petroleum Corp., Senior Notes		4.100	%		2/1/21		40,000		40,703

See Notes to Schedule of Investments.

WESTERN ASSET VARIABLE RATE STRATEGIC FUND INC.


Schedule of investments (unaudited) (cont’d)		December 31, 2018


SECURITY	RATE			MATURITY DATE		FACE AMOUNT†		VALUE
Oil, Gas & Consumable Fuels - (continued)
Petrobras Global Finance BV, Senior Notes		6.125	%		1/17/22		418,000	$	430,017
Petroleos Mexicanos, Senior Notes		3.500	%		7/23/20		250,000		245,125
Shell International Finance BV, Senior Notes		1.875	%		5/10/21		600,000		584,592	^(d)
Shell International Finance BV, Senior Notes		1.750	%		9/12/21		120,000		116,003
Transcontinental Gas Pipe Line Co. LLC, Senior Notes		7.850	%		2/1/26		210,000		254,212	^(d)
Williams Cos. Inc., Senior Notes		5.250	%		3/15/20		200,000		204,035	^(d)
Williams Cos. Inc., Senior Notes		4.550	%		6/24/24		250,000		252,719	^(d)

Total Oil, Gas & Consumable Fuels									4,345,984

TOTAL ENERGY									4,515,961

FINANCIALS - 19.9%
Banks - 15.8%
ABN AMRO Bank NV, Senior Notes		2.450	%		6/4/20		200,000		197,648	^(c)(d)
ABN AMRO Bank NV, Senior Notes (3 mo. USD LIBOR + 0.570%)		3.261	%		8/27/21		430,000		427,708	^(b)(c)(d)
Banco Santander Chile, Senior Notes		2.500	%		12/15/20		210,000		205,489	^(c)
Banco Santander SA, Senior Notes		3.125	%		2/23/23		200,000		189,270	^(d)
Bank of America Corp., Junior Subordinated Notes (6.250% to 9/5/24 then 3 mo. USD LIBOR + 3.705%)		6.250	%		9/5/24		650,000		643,013	^(b)(g)
Bank of America Corp., Subordinated Notes		4.000	%		1/22/25		660,000		643,449
Citigroup Inc., Junior Subordinated Notes (6.300% to 5/15/24 then 3 mo. USD LIBOR + 3.423%)		6.300	%		5/15/24		570,000		526,538	^(b)(g)
Citigroup Inc., Subordinated Notes		4.400	%		6/10/25		900,000		881,511	^(d)
Cooperatieve Rabobank UA, Junior Subordinated Notes (11.000% to 6/30/19 then 3 mo. USD LIBOR + 10.868%)		11.000	%		6/30/19		260,000		269,425	^(b)(c)(g)
Cooperatieve Rabobank UA, Senior Notes		2.250	%		1/14/20		250,000		247,901	^(d)
Cooperatieve Rabobank UA, Senior Notes		4.750	%		1/15/20		110,000		111,827	^(c)
Cooperatieve Rabobank UA, Senior Notes (3 mo. USD LIBOR + 0.430%)		2.938	%		4/26/21		600,000		597,193	^(b)(d)

See Notes to Schedule of Investments.

WESTERN ASSET VARIABLE RATE STRATEGIC FUND INC.


Schedule of investments (unaudited) (cont’d)		December 31, 2018


SECURITY	RATE			MATURITY DATE		FACE AMOUNT†		VALUE
Banks - (continued)
Credit Agricole SA, Junior Subordinated Notes (8.375% to 10/13/19 then 3 mo. USD LIBOR + 6.982%)		8.375	%		10/13/19		620,000	$	637,050	^(b)(c)(g)
JPMorgan Chase & Co., Junior Subordinated Notes (5.150% to 5/1/23 then 3 mo. USD LIBOR + 3.250%)		5.150	%		5/1/23		1,320,000		1,260,732	^(b)(g)
M&T Bank Corp., Junior Subordinated Notes (6.450% to 2/15/24 then 3 mo. USD LIBOR + 3.610%)		6.450	%		2/15/24		1,190,000		1,222,725	^(b)(g)
Nordea Bank Abp, Subordinated Notes		4.875	%		5/13/21		310,000		315,472	^(c)(d)
PNC Financial Services Group Inc., Junior Subordinated Notes (4.850% to 6/1/23 then 3 mo. USD LIBOR + 3.040%)		4.850	%		6/1/23		990,000		908,325	^(b)(g)
Royal Bank of Canada, Senior Notes (3 mo. USD LIBOR + 0.390%)		2.910	%		4/30/21		240,000		238,067	^(b)
Santander UK Group Holdings PLC, Senior Notes		3.571	%		1/10/23		200,000		191,614	^(d)
Sumitomo Mitsui Banking Corp., Senior Notes		2.092	%		10/18/19		560,000		553,885	^(d)
Toronto-Dominion Bank, Senior Notes		3.250	%		6/11/21		50,000		50,222
U.S. Bank N.A., Senior Notes (3 mo. USD LIBOR + 0.320%)		2.828	%		4/26/21		640,000		637,761	^(b)(d)
Wachovia Capital Trust III Ltd., Junior Subordinated Bonds (the greater of 3 mo. USD LIBOR + 0.930% or 5.570%)		5.570	%		3/11/19		1,800,000		1,630,350	^(b)(d)(g)
Wells Fargo & Co., Senior Notes		3.500	%		3/8/22		450,000		448,703	^(d)

Total Banks									13,035,878

Capital Markets - 1.8%
Bank of New York Mellon Corp., Junior Subordinated Notes (4.500% to 6/20/23 then 3 mo. USD LIBOR + 2.460%)		4.500	%		6/20/23		1,340,000		1,157,050	^(b)(g)
Credit Suisse AG, Senior Notes		3.625	%		9/9/24		250,000		245,485
Goldman Sachs Capital III Ltd. (3 mo. USD LIBOR + 0.770%, 4.000% floor)		4.000	%		3/11/19		43,000		29,658	^(b)(g)

Total Capital Markets									1,432,193

See Notes to Schedule of Investments.

WESTERN ASSET VARIABLE RATE STRATEGIC FUND INC.


Schedule of investments (unaudited) (cont’d)		December 31, 2018


SECURITY	RATE			MATURITY DATE		FACE AMOUNT†		VALUE
Consumer Finance - 0.9%
Ally Financial Inc., Senior Notes		8.000	%		3/15/20		225,000	$	233,438
American Express Co., Senior Notes		2.650	%		12/2/22		517,000		500,606	^(d)

Total Consumer Finance									734,044

Diversified Financial Services - 0.6%
International Lease Finance Corp., Senior Notes		8.625	%		1/15/22		290,000		322,626	^(d)
International Lease Finance Corp., Senior Notes		5.875	%		8/15/22		190,000		199,178

Total Diversified Financial Services									521,804

Insurance - 0.8%
Ambac Assurance Corp., Subordinated Notes		5.100	%		6/7/20		4,066		5,428	^(c)
Ambac LSNI LLC, Senior Secured Notes (3 mo. USD LIBOR + 5.000%)		7.803	%		2/12/23		18,518		18,611	^(b)(c)
MetLife Inc., Junior Subordinated Notes (5.250% to 6/15/20 then 3 mo. USD LIBOR + 3.575%)		5.250	%		6/15/20		680,000		655,180	^(b)(g)

Total Insurance									679,219

TOTAL FINANCIALS									16,403,138

HEALTH CARE - 3.2%
Biotechnology - 0.2%
Gilead Sciences Inc., Senior Notes		1.850	%		9/20/19		180,000		178,409

Health Care Equipment & Supplies - 1.0%
Becton Dickinson and Co., Senior Notes		3.734	%		12/15/24		139,000		134,450
Becton Dickinson and Co., Senior Notes (3 mo. USD LIBOR + 1.030%)		3.769	%		6/6/22		250,000		245,178	^(b)(d)
Medtronic Inc., Senior Notes		3.500	%		3/15/25		440,000		438,625	^(d)

Total Health Care Equipment & Supplies									818,253

Health Care Providers & Services - 1.3%
CVS Health Corp., Senior Notes		3.350	%		3/9/21		900,000		897,899	^(d)
Humana Inc., Senior Notes		2.500	%		12/15/20		140,000		137,953

Total Health Care Providers & Services									1,035,852

See Notes to Schedule of Investments.

WESTERN ASSET VARIABLE RATE STRATEGIC FUND INC.


Schedule of investments (unaudited) (cont’d)		December 31, 2018


SECURITY	RATE			MATURITY DATE		FACE AMOUNT†		VALUE
Pharmaceuticals - 0.7%
Teva Pharmaceutical Finance IV BV, Senior Notes		3.650	%		11/10/21		30,000	$	28,443
Teva Pharmaceutical Finance Netherlands III BV, Senior Notes		1.700	%		7/19/19		500,000		493,489
Teva Pharmaceutical Finance Netherlands III BV, Senior Notes		2.200	%		7/21/21		60,000		55,186

Total Pharmaceuticals									577,118

TOTAL HEALTH CARE									2,609,632

INDUSTRIALS - 2.4%
Aerospace & Defense - 0.7%
General Dynamics Corp., Senior Notes (3 mo. USD LIBOR + 0.380%)		2.998	%		5/11/21		370,000		368,873	^(b)(d)
United Technologies Corp., Senior Notes (3 mo. USD LIBOR + 0.650%)		3.279	%		8/16/21		200,000		199,323	^(b)(d)

Total Aerospace & Defense									568,196

Airlines - 0.3%
Air 2 US Pass-Through Certificates		8.027	%		10/1/19		3,216		3,266	^(c)
American Airlines Group Inc., Pass-Through Certificates Trust, 2016-1 A		4.100	%		1/15/28		226,088		225,457
Delta Air Lines Inc., Pass-Through Certificates Trust, 2007-1 B		8.021	%		8/10/22		26,894		29,297

Total Airlines									258,020

Commercial Services & Supplies - 0.0%
United Rentals North America Inc., Senior Notes		6.500	%		12/15/26		20,000		19,750

Electrical Equipment - 0.2%
ABB Finance USA Inc., Senior Notes		2.800	%		4/3/20		140,000		139,494

Industrial Conglomerates - 1.2%
General Electric Co., Junior Subordinated Notes (5.000% to 1/21/21 then 3 mo. USD LIBOR + 3.330%)		5.000	%		1/21/21		1,312,000		1,005,320	^(b)(d)(g)

TOTAL INDUSTRIALS									1,990,780

INFORMATION TECHNOLOGY - 0.4%
Technology Hardware, Storage & Peripherals - 0.4%
Dell International LLC/EMC Corp., Senior Secured Notes		4.420	%		6/15/21		340,000		339,634	^(c)(d)

MATERIALS - 0.8%
Chemicals - 0.3%
Equate Petrochemical BV, Senior Notes		3.000	%		3/3/22		280,000		271,216	^(c)

See Notes to Schedule of Investments.

WESTERN ASSET VARIABLE RATE STRATEGIC FUND INC.


Schedule of investments (unaudited) (cont’d)		December 31, 2018


SECURITY	RATE			MATURITY DATE		FACE AMOUNT†		VALUE
Metals & Mining - 0.5%
Anglo American Capital PLC, Senior Notes		4.125	%		4/15/21		320,000	$	319,335	^(c)
Vale Overseas Ltd., Senior Notes		4.375	%		1/11/22		63,000		64,260

Total Metals & Mining									383,595

TOTAL MATERIALS									654,811

UTILITIES - 0.4%
Electric Utilities - 0.4%
FirstEnergy Corp., Senior Notes		2.850	%		7/15/22		290,000		282,877	^(d)

TOTAL CORPORATE BONDS & NOTES (Cost - $36,152,218)									35,812,593

ASSET-BACKED SECURITIES - 26.0%
ACIS CLO Ltd., 2015-6A A1 (3 mo. USD LIBOR + 1.590%)		4.131	%		5/1/27		170,000		170,082	^(b)(c)
Ameriquest Mortgage Securities Inc., Asset-Backed Pass-Through Certificates, 2002-AR1 M1 (1 mo. USD LIBOR + 1.065%)		3.386	%		9/25/32		82,667		82,856	^(b)
Ameriquest Mortgage Securities Inc., Asset-Backed Pass-Through Certificates, 2005-R7 M2 (1 mo. USD LIBOR + 0.500%)		3.006	%		9/25/35		270,000		270,997	^(b)
Apex Credit CLO Ltd., 2017-1A A1 (3 mo. USD LIBOR + 1.470%)		3.957	%		4/24/29		200,000		200,030	^(b)(c)
Ares XLIV CLO Ltd., 2017-44A C (3 mo. USD LIBOR + 3.450%)		5.886	%		10/15/29		250,000		242,779	^(b)(c)
Ares XXVII CLO Ltd., 2013-2A XR (3 mo. USD LIBOR + 0.900%)		3.409	%		7/28/29		112,500		112,500	^(b)(c)
Argent Securities Inc., Asset-Backed Pass-Through Certificates, 2003-W3 M1 (1 mo. USD LIBOR + 1.125%)		3.631	%		9/25/33		24,093		23,960	^(b)
Bear Stearns Asset-Backed Securities Trust, 2007-SD1 1A2A		6.000	%		10/25/36		510,107		387,152
Bowman Park CLO Ltd., 2014-1A AR (3 mo. USD LIBOR + 1.180%)		3.857	%		11/23/25		250,000		249,835	^(b)(c)
Carlyle Global Market Strategies US CLO Ltd., 2017-2A A1B (3 mo. USD LIBOR + 1.220%)		3.689	%		7/20/31		250,000		248,950	^(b)(c)
Carlyle Global Market Strategies US CLO Ltd., 2017-2A C (3 mo. USD LIBOR + 3.700%)		6.169	%		7/20/31		250,000		245,008	^(b)(c)
Chase Funding Trust, 2004-1 1A7		4.985	%		11/25/33		198,384		205,716	^(b)

See Notes to Schedule of Investments.

WESTERN ASSET VARIABLE RATE STRATEGIC FUND INC.


Schedule of investments (unaudited) (cont’d)		December 31, 2018


SECURITY	RATE			MATURITY DATE		FACE AMOUNT†		VALUE
ASSET-BACKED SECURITIES - (continued)
Citigroup Mortgage Loan Trust Inc., 2005-OPT1 M1 (1 mo. USD LIBOR + 0.630%)		3.136	%		2/25/35		231,724	$	230,335	^(b)
Conseco Finance Corp., 1997-4 M1		7.220	%		2/15/29		319,939		328,219	^(b)
Countrywide Asset-Backed Certificates, 2003-5 AF5		5.138	%		2/25/34		532,866		549,367	^(b)
Countrywide Asset-Backed Certificates, 2007-13 2A1 (1 mo. USD LIBOR + 0.900%)		3.406	%		10/25/47		578,844		573,941	^(b)
Countrywide Home Equity Loan Trust, 2006-HW 2A1B (1 mo. USD LIBOR + 0.150%)		2.605	%		11/15/36		332,177		291,750	^(b)
Credit-Based Asset Servicing & Securitization LLC, 2007-SP1 A4		5.582	%		12/25/37		208,723		212,679	^(b)(c)
GM Financial Automobile Leasing Trust, 2017-2 A2B (1 mo. USD LIBOR + 0.300%)		2.770	%		1/21/20		185,617		185,607	^(b)
GreenPoint Home Equity Loan Trust, 2004-4 A (1 mo. USD LIBOR + 0.280%)		2.720	%		8/15/30		50,920		49,336	^(b)
Grippen Park CLO Ltd., 2017-1A D (3 mo. USD LIBOR + 3.300%)		5.769	%		1/20/30		500,000		479,695	^(b)(c)
GSAA Home Equity Trust, 2006-5 2A3 (1 mo. USD LIBOR + 0.270%)		2.776	%		3/25/36		722,551		496,735	^(b)
GSAMP Trust, 2004-OPT B1 (1 mo. USD LIBOR + 2.400%)		4.045	%		11/25/34		47,651		39,668	^(b)
GSRPM Mortgage Loan Trust, 2007-1 A (1 mo. USD LIBOR + 0.400%)		2.906	%		10/25/46		249,030		235,953	^(b)(c)
Halcyon Loan Advisors Funding Ltd., 2015-2A AR (3 mo. USD LIBOR + 1.080%)		3.570	%		7/25/27		250,000		248,403	^(b)(c)
Hertz Vehicle Financing II LP, 2017-1A A		2.960	%		10/25/21		900,000		892,548	^(c)
Home Equity Loan Trust, 2006-HSA3 A (1 mo. USD LIBOR + 0.130%)		2.636	%		5/25/36		459,237		437,248	^(b)
Home Equity Mortgage Loan Asset-Backed Trust, 2006-A A (1 mo. USD LIBOR + 0.260%)		2.766	%		6/25/36		2,041,552		266,900	^(b)
Jamestown CLO X Ltd., 2017-10A A2 (3 mo. USD LIBOR + 1.850%)		4.299	%		7/17/29		250,000		246,694	^(b)(c)
Lehman XS Trust, 2006-8 2A4A (1 mo. USD LIBOR + 0.260%)		2.766	%		6/25/36		1,505,589		1,249,338	^(b)

See Notes to Schedule of Investments.

WESTERN ASSET VARIABLE RATE STRATEGIC FUND INC.


Schedule of investments (unaudited) (cont’d)		December 31, 2018


SECURITY	RATE			MATURITY DATE		FACE AMOUNT†		VALUE
ASSET-BACKED SECURITIES - (continued)
Long Beach Mortgage Loan Trust, 2001-3 M1 (1 mo. USD LIBOR + 0.825%)		3.331	%		9/25/31		36,742	$	38,396	^(b)
Long Beach Mortgage Loan Trust, 2002-1 2M1 (1 mo. USD LIBOR + 1.125%)		3.631	%		5/25/32		73,559		74,441	^(b)
Magnetite IX CLO Ltd., 2014-9A A1R (3 mo. USD LIBOR + 1.000%)		3.490	%		7/25/26		230,360		230,255	^(b)(c)
Midocean Credit CLO VII, 2017-7A B (3 mo. USD LIBOR + 1.900%)		4.336	%		7/15/29		250,000		245,982	^(b)(c)
Morgan Stanley ABS Capital I Inc. Trust, 2004-HE5 M2 (1 mo. USD LIBOR + 1.875%)		4.381	%		6/25/34		680,242		674,171	^(b)
Mosaic Solar Loan Trust, 2018-2GS A		4.200	%		2/22/44		100,844		100,714	^(c)
Neuberger Berman Loan Advisers CLO Ltd., 2017-24A C (3 mo. USD LIBOR + 2.450%)		4.900	%		4/19/30		250,000		249,410	^(b)(c)
New Century Home Equity Loan Trust, 2004-3 M1 (1 mo. USD LIBOR + 0.930%)		3.436	%		11/25/34		638,898		638,554	^(b)
NovaStar Mortgage Funding Trust, 2004-1 M3 (1 mo. USD LIBOR + 0.825%)		3.331	%		6/25/34		577,679		572,982	^(b)
OneMain Financial Issuance Trust, 2016-3A A		3.830	%		6/18/31		925,000		935,375	^(c)
Option One Mortgage Loan Trust, 2005-1 A4 (1 mo. USD LIBOR + 0.800%)		3.306	%		2/25/35		2,401		2,406	^(b)
Option One Mortgage Loan Trust, 2005-3 M4 (1 mo. USD LIBOR + 0.930%)		3.436	%		8/25/35		520,000		450,959	^(b)
Origen Manufactured Housing Contract Trust, 2007-A A2		4.755	%		4/15/37		315,274		306,657	^(b)
OSCAR U.S. Funding Trust VI LLC, 2017-1A A2A		2.300	%		5/11/20		26,644		26,666	^(c)
People’s Choice Home Loan Securities Trust, 2004-2 M1 (1 mo. USD LIBOR + 0.900%)		3.406	%		10/25/34		12,373		12,416	^(b)
RAAC Trust, 2006-RP2 A (1 mo. USD LIBOR + 0.250%)		2.756	%		2/25/37		1,197		1,200	^(b)(c)

See Notes to Schedule of Investments.

WESTERN ASSET VARIABLE RATE STRATEGIC FUND INC.


Schedule of investments (unaudited) (cont’d)		December 31, 2018


SECURITY	RATE			MATURITY DATE		FACE AMOUNT†		VALUE
ASSET-BACKED SECURITIES - (continued)
RAAC Trust, 2006-RP3 A (1 mo. USD LIBOR + 0.270%)		2.776	%		5/25/36		353,531	$	348,141	^(b)(c)
RAMP Trust, 2003-RS7 MII1 (1 mo. USD LIBOR + 1.125%)		3.631	%		8/25/33		19,566		19,249	^(b)
RASC Trust, 2005-KS12 M4 (1 mo. USD LIBOR + 0.640%)		3.146	%		1/25/36		460,000		419,093	^(b)
RASC Trust, 2006-KS2 M3 (1 mo. USD LIBOR + 0.410%)		2.916	%		3/25/36		1,260,000		1,130,759	^(b)
Renaissance Home Equity Loan Trust, 2003-2 A (1 mo. USD LIBOR + 0.880%)		3.195	%		8/25/33		68,502		67,260	^(b)
SACO I Trust, 2006-3 A3 (1 mo. USD LIBOR + 0.460%)		2.966	%		4/25/36		98,780		97,288	^(b)
SACO I Trust, 2006-4 A1 (1 mo. USD LIBOR + 0.340%)		2.846	%		3/25/36		93,574		91,661	^(b)
Seneca Park CLO Ltd., 2014-1A AR (3 mo. USD LIBOR + 1.120%)		3.569	%		7/17/26		219,698		219,704	^(b)(c)
SLM Private Credit Student Loan Trust, 2006-A A5 (3 mo. USD LIBOR + 0.290%)		3.078	%		6/15/39		84,842		82,380	^(b)
SLM Private Credit Student Loan Trust, 2007-A A4A (3 mo. USD LIBOR + 0.240%)		3.028	%		12/16/41		600,000		585,070	^(b)
SLM Student Loan Trust, 2006-10 A6 (3 mo. USD LIBOR + 0.150%)		2.640	%		3/25/44		960,000		935,291	^(b)
SMB Private Education Loan Trust, 2016-C A2A		2.340	%		9/15/34		770,405		744,944	^(c)
Structured Asset Investment Loan Trust, 2004-9 M4 (1 mo. USD LIBOR + 1.950%)		4.456	%		10/25/34		117,619		116,152	^(b)
Structured Asset Securities Corp. Mortgage Loan Trust, 2006-GEL4 M1 (1 mo. USD LIBOR + 0.380%)		2.886	%		10/25/36		830,000		820,524	^(b)(c)
Terwin Mortgage Trust, 2004-5HE M1 (1 mo. USD LIBOR + 0.885%)		3.391	%		6/25/35		445,682		443,107	^(b)
THL Credit Wind River CLO Ltd., 2016-1A BR (3 mo. USD LIBOR + 1.650%)		4.086	%		7/15/28		250,000		244,626	^(b)
Towd Point Mortgage Trust, 2017-1 A1		2.750	%		10/25/56		486,488		478,346	^(b)(c)

See Notes to Schedule of Investments.

WESTERN ASSET VARIABLE RATE STRATEGIC FUND INC.


Schedule of investments (unaudited) (cont’d)		December 31, 2018


SECURITY	RATE			MATURITY DATE		FACE AMOUNT†			VALUE
ASSET-BACKED SECURITIES - (continued)
Tryon Park CLO Ltd., 2013-1A A1SR (3 mo. USD LIBOR + 0.890%)		3.326	%		4/15/29		250,000		$	247,125	^(b)(c)
Venture XXVIII CLO Ltd., 2017-28A A2 (3 mo. USD LIBOR + 1.110%)		3.579	%		7/20/30		300,000			294,099	^(b)(c)

TOTAL ASSET-BACKED SECURITIES (Cost - $20,414,404)										21,399,684

SOVEREIGN BONDS - 3.2%
Brazil - 0.9%
Brazil Notas do Tesouro Nacional Serie F, Notes		10.000	%		1/1/21		1,885,000	^BRL		508,719
Brazil Notas do Tesouro Nacional Serie F, Notes		10.000	%		1/1/23		833,000	^BRL		225,174
Brazil Notas do Tesouro Nacional Serie F, Notes		10.000	%		1/1/27		108,000	^BRL		29,133

Total Brazil										763,026

Mexico - 1.3%
Mexican Bonos, Bonds		6.500	%		6/9/22		15,090,000	^MXN		721,399
Mexico Government International Bond, Senior Notes		6.750	%		9/27/34		85,000			97,142	^(d)
Mexico Government International Bond, Senior Notes		5.550	%		1/21/45		210,000			212,992	^(d)

Total Mexico										1,031,533

Qatar - 0.2%
Qatar Government International Bond, Senior Notes		3.875	%		4/23/23		200,000			202,586	^(f)

Russia - 0.5%
Russian Foreign Bond - Eurobond, Senior Notes		12.750	%		6/24/28		254,000			402,257	^(f)

United Arab Emirates - 0.3%
Abu Dhabi Government International Bond, Senior Notes		2.500	%		10/11/22		270,000			262,594	^(c)

TOTAL SOVEREIGN BONDS (Cost - $3,156,584)										2,661,996

MORTGAGE-BACKED SECURITIES - 2.9%
FNMA - 1.0%
Federal National Mortgage Association (FNMA)		3.525	%		2/1/29		540,000			540,337	^(e)(h)
Federal National Mortgage Association (FNMA)		3.000	%		1/1/49		300,000			292,435	⁽ⁱ⁾

Total FNMA										832,772

See Notes to Schedule of Investments.

WESTERN ASSET VARIABLE RATE STRATEGIC FUND INC.


Schedule of investments (unaudited) (cont’d)		December 31, 2018


SECURITY	RATE			MATURITY DATE		FACE AMOUNT†		VALUE
GNMA - 1.9%
Government National Mortgage Association (GNMA)		6.500	%		8/15/34		98,999	$	110,123	^(d)
Government National Mortgage Association (GNMA) II (1 mo. USD LIBOR + 1.190%)		3.486	%		7/20/60		105,661		108,070	^(b)(d)
Government National Mortgage Association (GNMA) II (UST Yield Curve CMT 1 year + 1.094%)		3.755	%		8/20/58		102,601		104,483	^(b)(d)
Government National Mortgage Association (GNMA) II (UST Yield Curve CMT 1 year + 1.253%)		3.909	%		7/20/60		106,704		109,196	^(b)(d)
Government National Mortgage Association (GNMA) II (UST Yield Curve CMT 1 year + 1.385%)		4.047	%		12/20/59		111,578		114,365	^(b)(d)
Government National Mortgage Association (GNMA) II (UST Yield Curve CMT 1 year + 1.410%)		4.000	%		12/20/59		473,057		485,800	^(b)(d)
Government National Mortgage Association (GNMA) II (UST Yield Curve CMT 1 year + 1.440%)		4.100	%		10/20/59-1/20/60		530,773		546,150	^(b)(d)

Total GNMA									1,578,187

TOTAL MORTGAGE-BACKED SECURITIES (Cost - $2,390,939)									2,410,959


						SHARES
PREFERRED STOCKS - 2.2%
FINANCIALS - 2.2%
Capital Markets - 2.2%
Northern Trust Corp.		5.850	%				23,300		578,073
State Street Corp. (5.900% to 3/15/24 then 3 mo. USD LIBOR + 3.108%)		5.900	%				49,000		1,199,520	^(b)

TOTAL FINANCIALS									1,777,593

INDUSTRIALS - 0.0%
Marine - 0.0%
Tricer Tracking Preferred Equity Certificates (8.000% PIK)		8.000	%				781,762		624	^(e)(h)(j)

TOTAL PREFERRED STOCKS (Cost - $1,918,212)									1,778,217

See Notes to Schedule of Investments.

WESTERN ASSET VARIABLE RATE STRATEGIC FUND INC.


Schedule of investments (unaudited) (cont’d)		December 31, 2018

SECURITY

RATE

MATURITY
DATE

FACE
AMOUNT†

VALUE

SENIOR LOANS - 1.8%

COMMUNICATION SERVICES - 1.0%

Diversified Telecommunication Services - 0.2%

Virgin Media Bristol LLC, Term Loan K (1 mo. LIBOR + 2.500%)

4.955

1/15/26

137,809

131,022

^(b)(k)(l)

Media - 0.8%

Univision Communications Inc., 2017 Term Loan (1 mo. LIBOR + 2.750%)

5.272

3/15/24

752,488

684,011

^(b)(k)(l)

TOTAL COMMUNICATION SERVICES

815,033

CONSUMER DISCRETIONARY - 0.3%

Specialty Retail - 0.3%

Michaels Stores Inc., 2018 Term Loan B (1 mo. LIBOR + 2.500%)

4.970-5.022

1/30/23

236,637

227,369

^(b)(k)(l)

INDUSTRIALS - 0.3%

Airlines - 0.3%

American Airlines Inc., 2018 Term Loan (1 mo. LIBOR + 1.750%)

4.256

6/27/25

288,840

272,999

^(b)(k)(l)

INFORMATION TECHNOLOGY - 0.2%

IT Services - 0.2%

First Data Corp., 2024 Term Loan A (1 mo. LIBOR + 2.000%)

4.504

4/26/24

200,923

192,509

^(b)(k)(l)

TOTAL SENIOR LOANS
(Cost - $1,583,320)

1,507,910

U.S. GOVERNMENT & AGENCY OBLIGATIONS - 0.3%

U.S. Government Obligations - 0.3%

U.S. Treasury Notes
(Cost - $277,799)

2.000

6/30/24

290,000

282,076

EXPIRATION
DATE

CONTRACTS

NOTIONAL
AMOUNT†

PURCHASED OPTIONS - 0.0%

EXCHANGE-TRADED PURCHASED OPTIONS - 0.0%

Eurodollar 1-Year Mid Curve Futures, Put @ $97.00
(Cost - $5,688)

2/15/19

75,000

375

SHARES

COMMON STOCKS - 0.0%

INDUSTRIALS - 0.0%

Marine - 0.0%

Tricer HoldCo, S.C.A.
(Cost - $13,316)

1,628

*^(e)(h)

TOTAL INVESTMENTS BEFORE SHORT-TERM INVESTMENTS
(Cost - $101,674,590)

103,202,434

See Notes to Schedule of Investments.

WESTERN ASSET VARIABLE RATE STRATEGIC FUND INC.


Schedule of investments (unaudited) (cont’d)		December 31, 2018


SECURITY	RATE			SHARES		VALUE
SHORT-TERM INVESTMENTS - 1.2%
Dreyfus Government Cash Management, Institutional Shares (Cost - $965,206)		2.471	%		965,206	$	965,206

TOTAL INVESTMENTS - 126.5% (Cost - $102,639,796)							104,167,640
Liabilities in Excess of Other Assets - (26.5)%							(21,806,810	)

TOTAL NET ASSETS - 100.0%						$	82,360,830

†	Face amount/notional amount denominated in U.S. dollars, unless otherwise noted.

*	Non-income producing security.

(a)

Collateralized mortgage obligations are secured by an underlying pool of mortgages or mortgage pass-through certificates that are structured to direct payments on underlying collateral to different series or classes of the obligations. The interest rate may change positively or inversely in relation to one or more interest rates, financial indices or other financial indicators and may be subject to an upper and/or lower limit.

(b)

Variable rate security. Interest rate disclosed is as of the most recent information available. Certain variable rate securities are not based on a published reference rate and spread but are determined by the issuer or agent and are based on current market conditions. These securities do not indicate a reference rate and spread in their description above.

(c)

Security is exempt from registration under Rule 144A of the Securities Act of 1933. This security may be resold in transactions that are exempt from registration, normally to qualified institutional buyers. This security has been deemed liquid pursuant to guidelines approved by the Board of Directors.

(d)	All or a portion of this security is held by the counterparty as collateral for open reverse repurchase agreements.

(e)	Security is valued using significant unobservable inputs (Note 1).

(f)

Security is exempt from registration under Regulation S of the Securities Act of 1933. Regulation S applies to securities offerings that are made outside of the United States and do not involve direct selling efforts in the United States. This security has been deemed liquid pursuant to guidelines approved by the Board of Directors.

(g)	Security has no maturity date. The date shown represents the next call date.

(h)	Security is valued in good faith in accordance with procedures approved by the Board of Directors (Note 1).

(i)	This security is traded on a to-be-announced (“TBA”) basis. At December 31, 2018, the Fund held TBA securities with a total cost of $288,094.

(j)	Payment-in-kind security for which the issuer has the option at each interest payment date of making interest payments in cash or additional securities.

(k)	Interest rates disclosed represent the effective rates on senior loans. Ranges in interest rates are attributable to multiple contracts under the same loan.

(l)	Senior loans may be considered restricted in that the Fund ordinarily is contractually obligated to receive approval from the agent bank and/or borrower prior to the disposition of a senior loan.

See Notes to Schedule of Investments.

WESTERN ASSET VARIABLE RATE STRATEGIC FUND INC.


Schedule of investments (unaudited) (cont’d)		December 31, 2018

Abbreviations used in this schedule:


BRL		— Brazilian Real
CAS		— Connecticut Avenue Securities
CLO		— Collateral Loan Obligation
CMT		— Constant Maturity Treasury
IO		— Interest Only
LIBOR		— London Interbank Offered Rate
MXN		— Mexican Peso
PIK		— Payment-In-Kind
REMIC		— Real Estate Mortgage Investment Conduit
STRIPS		— Separate Trading of Registered Interest and Principal Securities
USD		— United States Dollar
UST		— United States Treasury

At December 31, 2018, the Fund had the following open reverse repurchase agreements:


Counterparty	Rate			Effective Date		Maturity Date			Face Amount of Reverse Repurchase Agreements		Asset Class of Collateral^*	Collateral Value
											Collateralized Mortgage Obligations	$	919,587
Bank of America Securities LLC		2.760	%		12/6/2018		1/4/2019		$	890,000	Mortgage-Backed Securities		104,483
Bank of America Securities LLC		2.800	%		12/17/2018		2/15/2019			892,000	Mortgage-Backed Securities		962,798
Bank of America Securities LLC		2.800	%		12/21/2018		1/22/2019			1,117,000	Collateralized Mortgage Obligations		1,315,584
Barclays Bank PLC		2.600	%		6/14/2018		TBD	^**		265,819	Sovereign Bonds		310,134
Barclays Bank PLC		2.680	%		11/30/2018		1/3/2019			1,295,000	Collateralized Mortgage Obligations		1,457,154
Barclays Bank PLC		2.780	%		12/3/2018		3/4/2019			466,000	Mortgage-Backed Securities		510,906
Morgan Stanley & Co. Inc.		3.382	%		11/5/2018		2/4/2019			3,379,000	Corporate Bonds & Notes		3,441,415
RBC Capital Markets		3.450	%		12/3/2018		3/1/2019			2,135,237	Corporate Bonds & Notes		2,273,717
RBC Capital Markets		3.480	%		12/11/2018		3/11/2019			2,899,750	Corporate Bonds & Notes		3,104,786
RBC Capital Markets		3.500	%		12/19/2018		3/18/2019			8,852,817	Corporate Bonds & Notes		9,334,418

									$	22,192,623		$	23,734,982

See Notes to Schedule of Investments.

WESTERN ASSET VARIABLE RATE STRATEGIC FUND INC.


Schedule of investments (unaudited) (cont’d)		December 31, 2018

*	Refer to the Schedule of Investments for positions held at the counterparty as collateral for reverse repurchase agreements.

**	TBD-To Be Determined; These reverse repurchase agreements have no maturity dates because they are renewed daily and can be terminated by either the Fund or the counterparty in accordance with the terms of the agreements.


SCHEDULE OF WRITTEN OPTIONS

Exchange-Traded Written Options
SECURITY	EXPIRATION DATE		STRIKE PRICE		CONTRACTS		NOTIONAL AMOUNT†		VALUE
Eurodollar 1-Year Mid Curve Futures, Put		2/15/19	$	96.88		30	$	75,000	$	188
U.S. Treasury 5-Year Notes Futures, Call		1/25/19		114.00		8		8,000		6,250
U.S. Treasury 5-Year Notes Futures, Call		2/22/19		114.00		8		8,000		7,187

Total Exchange-Traded Written Options (Premiums received - $8,214)									$	13,625

†	Notional amount denominated in U.S. dollars, unless otherwise noted.

At December 31, 2018, the Fund had the following open futures contracts:


	Number of Contracts		Expiration Date		Notional Amount		Market Value		Unrealized Appreciation (Depreciation)
Contracts to Buy:
90-Day EuroDollar		109		12/19	$	26,403,569	$	26,527,875	$	124,306
90-Day EuroDollar		51		6/20		12,397,854		12,431,887		34,033
U.S. Treasury 2-Year Notes		21		3/19		4,435,630		4,458,562		22,932
U.S. Treasury 5-Year Notes		40		3/19		4,512,061		4,587,500		75,439
U.S. Treasury 10-Year Notes		65		3/19		7,742,425		7,931,016		188,591

										445,301

Contracts to Sell:
90-Day EuroDollar		150		3/19		36,462,810		36,483,750		(20,940	)
U.S. Treasury Long-Term Bonds		9		3/19		1,254,078		1,314,000		(59,922	)

										(80,862	)

Net unrealized appreciation on open futures contracts									$	364,439

At December 31, 2018, the Fund had the following open forward foreign currency contracts:


Currency Purchased		Currency Sold			Counterparty	Settlement Date		Unrealized Appreciation (Depreciation)
MXN	14,070,000		USD	737,634	Citibank N.A.		1/18/19	$	(23,655	)
USD	31,304		BRL	119,000	Goldman Sachs Group Inc.		1/18/19		637
ARS	831,000		USD	18,010	Citibank N.A.		3/26/19		1,797
ARS	1,270,000		USD	28,675	Citibank N.A.		3/26/19		1,595

See Notes to Schedule of Investments.

WESTERN ASSET VARIABLE RATE STRATEGIC FUND INC.


Schedule of investments (unaudited) (cont’d)		December 31, 2018


Currency Purchased		Currency Sold			Counterparty	Settlement Date		Unrealized Appreciation (Depreciation)
ARS	689,000		USD	14,683	JPMorgan Chase & Co.		3/26/19	$	1,739
ARS	1,510,000		USD	31,789	Goldman Sachs Group Inc.		3/29/19		4,080

Total								$	(13,807	)

Abbreviations used in this table:


ARS		— Argentine Peso
BRL		— Brazilian Real
MXN		— Mexican Peso
USD		— United States Dollar

At December 31, 2018, the Fund had the following open swap contracts:


CENTRALLY CLEARED INTEREST RATE SWAPS
	NOTIONAL AMOUNT			TERMINATION DATE		PAYMENTS MADE BY THE FUND†	PAYMENTS RECEIVED BY THE FUND†	UPFRONT PREMIUMS PAID (RECEIVED)			UNREALIZED APPRECIATION (DEPRECIATION)
		2,633,000			12/31/20	2.600% annually	Daily Federal Funds Effective Rate annually		—		$	(11,731	)
		868,000	^GBP		10/26/21	1.271% semi-annually	6-Month GBP LIBOR semi-annually	$	421			(525	)
		1,065,000	^GBP		10/30/21	1.385% annually	3-Month GBP LIBOR annually		—			(1,609	)
		2,500,000			6/28/23	1.238% semi-annually	3-Month LIBOR quarterly		(2,347	)		144,604
		2,540,000			7/9/23	2.902% semi-annually	3-Month LIBOR quarterly		97			(35,182	)
		8,954,000			3/20/24	3-Month LIBOR quarterly	Daily Federal Funds Effective Rate + 0.310% quarterly		281			15,231
		19,100,000			7/5/28	3.000% semi-annually	3-Month LIBOR quarterly		(108,943	)		(344,263	)

Total								$	(110,491	)	$	(233,475	)

†	Percentage shown is an annual percentage rate.

*	Notional amount denominated in U.S. dollars, unless otherwise noted.

Abbreviations used in this table:


GBP		— British Pound
LIBOR		— London Interbank Offered Rate

This Schedule of Investments is unaudited and is intended to provide information about the Fund’s investments as of the date of the schedule. Other information regarding the Fund is available in the Fund’s most recent annual or semi-annual shareholder report.

See Notes to Schedule of Investments.

Notes to Schedule of Investments (unaudited)

1. Organization and significant accounting policies

Western Asset Variable Rate Strategic Fund Inc. (the “Fund”) was incorporated in Maryland on August 3, 2004 and is registered as a non-diversified, closed-end management investment company under the Investment Company Act of 1940, as amended (the “1940 Act”). The Board of Directors authorized 100 million shares of $0.001 par value common stock. The Fund’s investment objective is to maintain a high level of current income. The Fund invests primarily in variable rate instruments of U.S. and non-U.S. issuers, including U.S. and non-U.S. investment grade and high-yield debt, senior loans, emerging market debt and derivatives related to these securities.

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

(a) Investment valuation. The valuations for fixed income securities (which may include, but are not limited to, corporate, government, municipal, mortgage-backed, collateralized mortgage obligations and asset-backed securities) and certain derivative instruments are typically the prices supplied by independent third party pricing services, which may use market prices or broker/dealer quotations or a variety of valuation techniques and methodologies. The independent third party pricing services use inputs that are observable such as issuer details, interest rates, yield curves, prepayment speeds, credit risks/spreads, default rates and quoted prices for similar securities. Investments in open-end funds are valued at the closing net asset value per share of each fund on the day of valuation. Futures contracts are valued daily at the settlement price established by the board of trade or exchange on which they are traded. Equity securities for which market quotations are available are valued at the last reported sales price or official closing price on the primary market or exchange on which they trade. When the Fund holds securities or other assets that are denominated in a foreign currency, the Fund will normally use the currency exchange rates as of 4:00 p.m. (Eastern Time). If independent third party pricing services are unable to supply prices for a portfolio investment, or if the prices supplied are deemed by the manager to be unreliable, the market price may be determined by the manager using quotations from one or more broker/dealers or at the transaction price if the security has recently been purchased and no value has yet been obtained from a pricing service or pricing broker. When reliable prices are not readily available, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded, but before the Fund calculates its net asset value, the Fund values these securities as determined in accordance with procedures approved by the Fund’s Board of Directors.

The Board of Directors is responsible for the valuation process and has delegated the supervision of the daily valuation process to the Legg Mason North Atlantic Fund Valuation Committee (the “Valuation Committee”). The Valuation Committee, pursuant to the policies adopted by the Board of Directors, is responsible for making fair value determinations, evaluating the effectiveness of the Fund’s pricing policies, and reporting to the Board of

Notes to Schedule of Investments (unaudited) (continued)

Directors. When determining the reliability of third party pricing information for investments owned by the Fund, the Valuation Committee, among other things, conducts due diligence reviews of pricing vendors, monitors the daily change in prices and reviews transactions among market participants.

The Valuation Committee will consider pricing methodologies it deems relevant and appropriate when making fair value determinations. Examples of possible methodologies include, but are not limited to, multiple of earnings; discount from market of a similar freely traded security; discounted cash-flow analysis; book value or a multiple thereof; risk premium/yield analysis; yield to maturity; and/or fundamental investment analysis. The Valuation Committee will also consider factors it deems relevant and appropriate in light of the facts and circumstances. Examples of possible factors include, but are not limited to, the type of security; the issuer’s financial statements; the purchase price of the security; the discount from market value of unrestricted securities of the same class at the time of purchase; analysts’ research and observations from financial institutions; information regarding any transactions or offers with respect to the security; the existence of merger proposals or tender offers affecting the security; the price and extent of public trading in similar securities of the issuer or comparable companies; and the existence of a shelf registration for restricted securities.

For each portfolio security that has been fair valued pursuant to the policies adopted by the Board of Directors, the fair value price is compared against the last available and next available market quotations. The Valuation Committee reviews the results of such back testing monthly and fair valuation occurrences are reported to the Board of Directors quarterly.

The Fund uses valuation techniques to measure fair value that are consistent with the market approach and/or income approach, depending on the type of security and the particular circumstance. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable securities. The income approach uses valuation techniques to discount estimated future cash flows to present value.

GAAP establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are summarized in the three broad levels listed below:

•

Level 1 – quoted prices in active markets for identical investments

•

Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

•

Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.

Notes to Schedule of Investments (unaudited) (continued)

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


ASSETS
DESCRIPTION	QUOTED PRICES (LEVEL 1)		OTHER SIGNIFICANT OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		TOTAL
Long-Term Investments†:
Collateralized Mortgage Obligations		—	$	36,853,215	$	495,407	$	37,348,622
Corporate Bonds & Notes		—		35,812,593		—		35,812,593
Asset-Backed Securities		—		21,399,684		—		21,399,684
Sovereign Bonds		—		2,661,996		—		2,661,996
Mortgage-Backed Securities		—		1,870,622		540,337		2,410,959
Preferred Stocks:
Financials	$	1,777,593		—		—		1,777,593
Industrials		—		—		624		624
Senior Loans		—		1,507,910		—		1,507,910
U.S. Government & Agency Obligations		—		282,076		—		282,076
Purchased Options		375		—		—		375
Common Stocks		—		—		2		2

Total Long-Term Investments		1,777,968		100,388,096		1,036,370		103,202,434

Short-Term Investments†		965,206		—		—		965,206

Total Investments	$	2,743,174	$	100,388,096	$	1,036,370	$	104,167,640

Other Financial Instruments:
Futures Contracts	$	445,301		—		—	$	445,301
Forward Foreign Currency Contracts		—	$	9,848		—		9,848
Centrally Cleared Interest Rate Swaps		—		159,835		—		159,835

Total Other Financial Instruments	$	445,301	$	169,683		—	$	614,984

Total	$	3,188,475	$	100,557,779	$	1,036,370	$	104,782,624

Notes to Schedule of Investments (unaudited) (continued)


LIABILITIES
DESCRIPTION	QUOTED PRICES (LEVEL 1)		OTHER SIGNIFICANT OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		TOTAL
Other Financial Instruments:
Written Options	$	13,625		—		—	$	13,625
Futures Contracts		80,862		—		—		80,862
Forward Foreign Currency Contracts		—	$	23,655		—		23,655
Centrally Cleared Interest Rate Swaps		—		393,310		—		393,310

Total	$	94,487	$	416,965		—	$	511,452

†	See Schedule of Investments for additional detailed categorizations.

The following is a reconciliation of investments in which significant unobservable inputs (Level 3) were used in determining fair value:


Investments in Securities	Balance as of September 30, 2018		Accrued premiums/ discounts		Realized gain (loss)		Change in unrealized appreciation (depreciation)¹			Purchases
Collateralized Mortgage Obligations	$	541,797	$	34	$	24	$	(5,154	)		—
Corporate Bonds & Notes:
Industrials		29,546		58		—		(307	)		—
Mortgage-Backed Securities		—		—		—		—		$	540,337
Preferred Stocks:
Industrials		7,818		—		—		(7,194	)		—
Common Stocks:
Industrials		5,958		—		—		(5,956	)		—

Total	$	585,119	$	92	$	24	$	(18,611	)	$	540,337

Notes to Schedule of Investments (unaudited) (continued)


Investments in Securities (cont’d)	Sales			Transfers into Level 3		Transfers out of Level 3²			Balance as of December 31, 2018		Net change in unrealized appreciation (depreciation) for investments in securities still held at December 31, 2018¹
Collateralized Mortgage Obligations	$	(41,294	)		—		—		$	495,407	$	(5,154	)
Corporate Bonds & Notes:
Industrials		—			—	$	(29,297	)		—		—
Mortgage-Backed Securities		—			—		—			540,337		—
Preferred Stocks:
Industrials		—			—		—			624		(7,194	)
Common Stocks:
Industrials		—			—		—			2		(5,956	)

Total	$	(41,294	)		—	$	(29,297	)	$	1,036,370	$	(18,304	)

The Fund’s policy is to recognize transfers between levels as of the end of the reporting period.

¹	Change in unrealized appreciation (depreciation) includes net unrealized appreciation (depreciation) resulting from changes in investment values during the reporting period and the reversal of previously recorded unrealized appreciation (depreciation) when gains or losses are realized.

²	Transferred out of Level 3 as a result of the availability of a quoted price in an active market for an identical investment or the availability of other significant observable inputs.

ITEM 2.

CONTROLS AND PROCEDURES.

(a)

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

(b)

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

ITEM 3.

EXHIBITS.

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

SIGNATURES

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

Western Asset Variable Rate Strategic Fund Inc.


By		/s/ JANE TRUST
		Jane Trust
		Chief Executive Officer

Date:		February 25, 2019

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



By		/s/ JANE TRUST
		Jane Trust
		Chief Executive Officer

Date:		February 25, 2019

By		/s/ RICHARD F. SENNETT
		Richard F. Sennett
		Principal Financial Officer

Date:		February 25, 2019