Edgar Filing: WESTERN ASSET VARIABLE RATE STRATEGIC FUND INC.

Western Asset Variable Rate Strategic Fund Inc.

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: June 30, 2016

ITEM 1.

SCHEDULE OF INVESTMENTS.

WESTERN ASSET VARIABLE RATE STRATEGIC FUND INC. (GFY)

FORM N-Q

JUNE 30, 2016

WESTERN ASSET VARIABLE RATE STRATEGIC FUND INC.


Schedule of investments (unaudited)		June 30, 2016


SECURITY	RATE			MATURITY DATE		FACE AMOUNT†		VALUE
COLLATERALIZED MORTGAGE OBLIGATIONS - 44.7%
Adjustable Rate Mortgage Trust, 2005-11 5A1		0.723	%		2/25/36		153,744	$	125,300	^(a)
Banc of America Funding Corp., 2004-B 6A1		2.082	%		12/20/34		335,701		230,647	^(a)
Banc of America Funding Corp., 2005-E 8A1		2.108	%		6/20/35		388,466		244,997	^(a)
Banc of America Funding Corp., 2015-R3 3A2		1.170	%		4/29/47		1,460,000		1,250,795	^(a)(b)
Bayview Commercial Asset Trust, 2006-1A B2		2.153	%		4/25/36		508,035		341,082	^(a)(b)
Bear Stearns Alt-A Trust, 2004-03 A1		1.093	%		4/25/34		406,165		390,302	^(a)
Bear Stearns Alt-A Trust, 2004-10 1A3		1.453	%		9/25/34		35,578		35,262	^(a)
Bear Stearns ARM Trust, 2004-08 11A1		2.836	%		11/25/34		265,802		261,635	^(a)
Chevy Chase Mortgage Funding Corp., 2004-2A A1		0.723	%		5/25/35		315,248		283,669	^(a)(b)
Chevy Chase Mortgage Funding Corp., 2004-3A A1		0.703	%		8/25/35		303,559		270,841	^(a)(b)
Connecticut Avenue Securities, 2013-C01 M2		5.703	%		10/25/23		300,000		318,365	^(a)
Countrywide Alternative Loan Trust, 2004-6CB A		1.033	%		5/25/34		411,239		395,849	^(a)
Countrywide Alternative Loan Trust, 2005-24 4A1		0.678	%		7/20/35		762,703		640,927	^(a)(c)
Countrywide Alternative Loan Trust, 2008-2R 3A1		6.000	%		8/25/37		552,493		447,282
Countrywide Home Loans, 2004-20 2A1		2.734	%		9/25/34		460,854		320,264	^(a)
Countrywide Home Loans, 2004-R1 2A		6.500	%		11/25/34		59,514		57,429	^(b)
Countrywide Home Loans, 2005-HYB9 3A1A		2.592	%		2/20/36		465,383		409,850	^(a)
Countrywide Home Loans, 2005-R2 2A1		7.000	%		6/25/35		151,862		155,261	^(b)
Countrywide Home Loans, 2006-R2 AF1		0.873	%		7/25/36		122,132		110,962	^(a)(b)
Countrywide Home Loans, Mortgage Pass-Through Trust, 2004-29 2A1		1.113	%		2/25/35		37,224		32,269	^(a)
Countrywide Home Loans, Mortgage Pass-Through Trust, 2005-R1 1AF1		0.813	%		3/25/35		193,754		170,772	^(a)(b)
Credit Suisse Mortgage Trust, 2014-5R 3A1		0.646	%		12/27/36		268,055		260,812	^(a)(b)
Credit Suisse Mortgage Trust, 2015-10R 3A2		1.250	%		10/27/46		1,110,000		895,339	^(a)(b)
Deutsche Mortgage Securities Inc., 2004-4 3AR1		3.348	%		6/25/34		256,130		243,154	^(a)
Downey Savings & Loan Association Mortgage Loan Trust, 2006-AR1 1A1A		1.330	%		3/19/46		236,962		183,184	^(a)
Federal Home Loan Mortgage Corp. (FHLMC), 2638 DI, IO, PAC		5.000	%		5/15/23		101,850		2,001
Federal National Mortgage Association (FNMA), 2013-25 BI, IO		3.000	%		3/25/33		10,910,397		1,230,928	^(c)
Federal National Mortgage Association (FNMA), 2013-62 AI, IO		3.000	%		6/25/33		6,980,393		818,429
Federal National Mortgage Association (FNMA), STRIPS, 347 2, IO		5.000	%		1/25/34		1,107,440		206,949
Federal National Mortgage Association (FNMA), STRIPS, IO, 339 30		5.500	%		8/25/18		157,962		5,072	^(a)
Government National Mortgage Association (GNMA), 2010-H03 FA		1.000	%		3/20/60		139,122		138,739	^(a)(c)
Government National Mortgage Association (GNMA), 2010-H10 FC		1.450	%		5/20/60		114,668		116,041	^(a)(c)
Government National Mortgage Association (GNMA), 2010-H11 FA		1.450	%		6/20/60		655,264		664,550	^(a)(c)
Government National Mortgage Association (GNMA), 2011-H01 AF		0.886	%		11/20/60		1,160,159		1,151,927	^(a)(c)
Government National Mortgage Association (GNMA), 2011-H03 FA		0.936	%		1/20/61		132,553		131,911	^(a)(c)
Government National Mortgage Association (GNMA), 2011-H05 FA		0.936	%		12/20/60		260,523		259,303	^(a)(c)
Government National Mortgage Association (GNMA), 2011-H05 FB		0.936	%		12/20/60		243,952		242,727	^(a)(c)
Government National Mortgage Association (GNMA), 2011-H06 FA		0.886	%		2/20/61		584,042		580,072	^(a)(c)
Government National Mortgage Association (GNMA), 2011-H07 FA		0.936	%		2/20/61		403,449		401,666	^(a)(c)

See Notes to Schedule of Investments.

WESTERN ASSET VARIABLE RATE STRATEGIC FUND INC.


Schedule of investments (unaudited) (cont’d)		June 30, 2016


SECURITY	RATE			MATURITY DATE		FACE AMOUNT†		VALUE
COLLATERALIZED MORTGAGE OBLIGATIONS - (continued)
Government National Mortgage Association (GNMA), 2011-H08 FD		0.936	%		2/20/61		373,224	$	371,417	^(a)(c)
Government National Mortgage Association (GNMA), 2011-H09 AF		0.936	%		3/20/61		731,677		728,086	^(a)(c)
Government National Mortgage Association (GNMA), 2011-H11 FB		0.936	%		4/20/61		139,415		138,722	^(a)(c)
Government National Mortgage Association (GNMA), 2012-H18 NA		0.956	%		8/20/62		631,589		629,020	^(a)(c)
Government National Mortgage Association (GNMA), 2012-H23 SA		0.966	%		10/20/62		420,059		418,341	^(a)(c)
Government National Mortgage Association (GNMA), 2012-H23 WA		0.956	%		10/20/62		685,276		682,250	^(a)(c)
GSMPS Mortgage Loan Trust, 2005-RP2 1AF		0.803	%		3/25/35		612,882		521,630	^(a)(b)
GSMPS Mortgage Loan Trust, 2006-RP2 1AF1		0.853	%		4/25/36		304,899		252,325	^(a)(b)
GSMSC Resecuritization Trust, 2014		0.586	%		4/26/37		1,230,000		961,974	^(a)(b)
HarborView Mortgage Loan Trust, 2004-10 4A		2.963	%		1/19/35		198,265		195,070	^(a)
HarborView Mortgage Loan Trust, 2005-14 3A1A		3.024	%		12/19/35		101,404		88,943	^(a)
IMPAC Secured Assets Corp., 2005-2 A1		0.773	%		3/25/36		1,397,389		1,009,755	^(a)
Indymac Index Mortgage Loan Trust, 2004-AR07 A2		1.313	%		9/25/34		181,051		164,578	^(a)
Indymac Index Mortgage Loan Trust, 2004-AR12 A1		1.233	%		12/25/34		224,952		187,495	^(a)
Indymac Index Mortgage Loan Trust, 2005-AR21 4A1		2.956	%		10/25/35		273,215		233,555	^(a)
JPMorgan Chase Commercial Mortgage Securities Trust, 2006-LDP9 AJ		5.411	%		5/15/47		1,210,000		984,928
JPMorgan Chase Commercial Mortgage Securities Trust, 2007-CB18 AJ		5.502	%		6/12/47		690,000		630,806	^(a)
JPMorgan Mortgage Trust, 2005-A3 3A4		2.650	%		6/25/35		271,691		269,978	^(a)
MASTR Adjustable Rate Mortgages Trust, 2003-6 2A1		2.574	%		12/25/33		79,077		76,475	^(a)
MASTR Reperforming Loan Trust, 2005-2 1A1F		0.803	%		5/25/35		916,856		727,053	^(a)(b)
MASTR Reperforming Loan Trust, 2006-2 1A1		4.568	%		5/25/36		344,178		312,895	^(a)(b)
MASTR Reperforming Loan Trust, 2006-2 2A1		3.369	%		5/25/36		112,551		100,215	^(a)(b)
Morgan Stanley Capital I Trust, 2007-HQ11 AJ		5.508	%		2/12/44		660,000		651,214	^(a)(c)
Morgan Stanley Mortgage Loan Trust, 2006-6AR 2A		2.867	%		5/25/36		630,298		526,654	^(a)
Morgan Stanley Re-remic Trust, 2015-R2 1A1		0.957	%		12/26/46		523,876		506,026	^(a)(b)
Morgan Stanley Re-remic Trust, 2015-R2 1B		0.957	%		12/26/46		1,621,253		681,084	^(a)(b)
Morgan Stanley Re-remic Trust, 2015-R4 1A1		0.696	%		8/26/47		912,819		864,573	^(a)(b)
Morgan Stanley Re-remic Trust, 2015-R6 1A1		0.706	%		7/26/45		310,383		289,539	^(a)(b)
Morgan Stanley Re-remic Trust, 2015-R6 2A1		0.699	%		7/26/45		309,853		288,198	^(a)(b)
Morgan Stanley Re-remic Trust, 2015-R6 2B		0.699	%		7/26/45		2,670,000		1,070,818	^(a)(b)
Mortgage IT Trust, 2005-3 A1		0.753	%		8/25/35		376,112		349,765	^(a)
Nomura Resecuritization Trust, 2015-1R 2A2		0.906	%		10/26/36		1,070,000		1,004,171	^(a)(b)
Prime Mortgage Trust, 2006-DR1 2A2		6.000	%		5/25/35		519,690		500,130	^(b)
Residential Accredit Loans Inc., 2004-QA2 A2		0.893	%		6/25/34		290,961		283,592	^(a)
Residential Accredit Loans Inc., 2005-QO4 2A1		0.733	%		12/25/45		306,429		214,572	^(a)
Structured Agency Credit Risk Debt Notes, 2013-DN1 M2		7.603	%		7/25/23		420,000		477,198	^(a)
Structured ARM Loan Trust, 2004-09XS A		0.823	%		7/25/34		480,973		463,942	^(a)
Structured Asset Mortgage Investments Inc., 2004-AR3 1A1		1.048	%		7/19/34		290,465		278,135	^(a)
Structured Asset Mortgage Investments Inc., 2006-AR2 A1		0.683	%		2/25/36		673,501		520,709	^(a)
Structured Asset Mortgage Investments Inc., 2006-AR3 11A1		0.663	%		4/25/36		278,150		200,161	^(a)
Structured Asset Securities Corp., 2005-RF1 A		0.803	%		3/25/35		167,129		137,790	^(a)(b)
Structured Asset Securities Corp., 2005-RF2 A		0.803	%		4/25/35		185,278		153,982	^(a)(b)

See Notes to Schedule of Investments.

WESTERN ASSET VARIABLE RATE STRATEGIC FUND INC.


Schedule of investments (unaudited) (cont’d)		June 30, 2016


SECURITY	RATE			MATURITY DATE		FACE AMOUNT†		VALUE
COLLATERALIZED MORTGAGE OBLIGATIONS - (continued)
Washington Mutual Inc., Mortgage Pass-Through Certificates, 2003-AR8		0.813	%		10/25/45		490,903	$	425,055	^(a)
Washington Mutual Inc., Mortgage Pass-Through Certificates, 2004-AR11		2.596	%		10/25/34		143,822		144,652	^(a)
Washington Mutual Inc., Mortgage Pass-Through Certificates, 2004-AR12 A2A		0.843	%		10/25/44		128,525		123,991	^(a)
Washington Mutual Inc., Mortgage Pass-Through Certificates, 2005-4 CB9		0.853	%		6/25/35		618,710		460,305	^(a)
Washington Mutual Inc., Mortgage Pass-Through Certificates, 2005-AR01 A2A3		1.253	%		1/25/45		102,577		94,272	^(a)
Washington Mutual Inc., Mortgage Pass-Through Certificates, 2005-AR08 2AB3		0.813	%		7/25/45		780,866		690,005	^(a)
Washington Mutual Inc., Mortgage Pass-Through Certificates, 2005-AR13 A1C3		0.943	%		10/25/45		209,358		177,884	^(a)
Wells Fargo Commercial Mortgage Trust, 2015-C31 D		3.852	%		11/15/48		454,630		324,286

TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost - $36,472,732)									35,614,778

ASSET-BACKED SECURITIES - 33.1%
ABFS Mortgage Loan Trust, 2002-3 M1		5.902	%		9/15/33		676,180		530,973
Academic Loan Funding Trust, 2013-1A A		1.253	%		12/26/44		372,998		369,405	^(a)(b)
Ace Securities Corp., 2005-HE3 M4		1.398	%		5/25/35		1,280,000		879,245	^(a)
Adams Mill CLO Ltd., 2014-1A A2		2.058	%		7/15/26		500,000		494,271	^(a)(b)
ALM Loan Funding, 2013-10A B		3.228	%		1/15/25		250,000		244,777	^(a)(b)
Ameriquest Mortgage Securities Inc., 2002-AR1 M1		1.517	%		9/25/32		122,712		112,461	^(a)
Ameriquest Mortgage Securities Inc., 2005-R1 M1		1.128	%		3/25/35		163,259		163,483	^(a)
Apidos CLO, 2013-16A B		3.433	%		1/19/25		400,000		395,646	^(a)(b)
Argent Securities Inc., 2003-W3 M1		1.578	%		9/25/33		24,093		21,050	^(a)
Atrium CDO Corp., 2009-A A		1.974	%		2/28/24		500,000		497,804	^(a)(b)
Bear Stearns Asset-Backed Securities Trust, 2001-3 A1		1.353	%		10/27/32		175,298		163,720	^(a)
Bear Stearns Asset-Backed Securities Trust, 2007-SD1 1A2A		6.000	%		10/25/36		662,255		495,089
Carlyle Global Market Strategies, 2013-4A C		3.428	%		10/15/25		250,000		247,525	^(a)(b)
Cavalry CLO Ltd., 2002A A		1.983	%		1/17/24		250,000		248,683	^(a)(b)
Chase Funding Mortgage Loan Asset-Backed Certificates, 2004-1 1A7		3.985	%		11/25/33		294,518		303,066
Citigroup Mortgage Loan Trust Inc., 2005-OPT1 M1		1.083	%		2/25/35		244,419		237,024	^(a)
Citigroup Mortgage Loan Trust Inc., 2005-OPT4 M2		0.883	%		7/25/35		173,578		173,362	^(a)
Countrywide Asset-Backed Certificates, 2003-5 AF5		5.417	%		2/25/34		631,145		634,590
Countrywide Asset-Backed Certificates, 2004-BC1 M1		1.203	%		2/25/34		106,940		103,389	^(a)
Countrywide Asset-Backed Certificates, 2007-13 2A1		1.353	%		10/25/47		772,070		648,922	^(a)
Countrywide Home Equity Loan Trust, 2006-HW 2A1B		0.592	%		11/15/36		554,343		434,783	^(a)
Credit-Based Asset Servicing and Securitization LLC, 2007-SP1 A4		6.020	%		12/25/37		448,346		469,818	^(b)
Dryden Senior Loan Fund, 2014-31A C		3.483	%		4/18/26		500,000		491,330	^(a)(b)
Dryden Senior Loan Fund, 2014-34A D		4.228	%		10/15/26		250,000		234,048	^(a)(b)
EMC Mortgage Loan Trust, 2004-C A1		0.996	%		3/25/31		25,720		25,623	^(a)(b)
Flatiron CLO Ltd., 2013-1A B		3.383	%		1/17/26		500,000		477,982	^(a)(b)
Greenpoint Home Equity Loan Trust, 2004-4 A		1.002	%		8/15/30		137,729		129,401	^(a)
Greenpoint Manufactured Housing, 1999-3 1A7		7.270	%		6/15/29		156,522		155,180
GSAA Trust, 2006-5 2A3		0.723	%		3/25/36		1,074,861		701,252	^(a)
GSAMP Trust, 2004-OPT B1		2.853	%		11/25/34		57,835		34,848	^(a)
GSAMP Trust, 2004-SEA2 M2		1.703	%		3/25/34		1,247,406		854,540	^(a)
GSRPM Mortgage Loan Trust, 2007-1 A		0.853	%		10/25/46		332,167		273,945	^(a)(b)

See Notes to Schedule of Investments.

WESTERN ASSET VARIABLE RATE STRATEGIC FUND INC.


Schedule of investments (unaudited) (cont’d)		June 30, 2016


SECURITY	RATE			MATURITY DATE		FACE AMOUNT†		VALUE
ASSET-BACKED SECURITIES - (continued)
Home Equity Mortgage Trust, 2006-2 2A1		0.613	%		7/25/36		346,055	$	166,352	^(a)
Indymac Seconds Asset Backed Trust, 2006-A A		0.713	%		6/25/36		2,218,197		436,910	^(a)
IXIS Real Estate Capital Trust, 2005-HE4 A3		1.133	%		2/25/36		32,065		31,877	^(a)
Lehman XS Trust, (Structured Asset Securities Corp.), 2005-1 2A2		1.957	%		7/25/35		587,737		566,116	^(a)
Lehman XS Trust, 2005-5N 3A1A		0.753	%		11/25/35		235,288		201,069	^(a)
Lehman XS Trust, 2006-8 2A4A		0.713	%		6/25/36		1,895,303		1,183,386	^(a)
Long Beach Mortgage Loan Trust, 2001-3 M1		1.278	%		9/25/31		147,283		137,026	^(a)
Long Beach Mortgage Loan Trust, 2002-1 2M1		1.578	%		5/25/32		121,996		119,845	^(a)
Madison Park Funding Ltd., 2013-11A C		3.388	%		10/23/25		250,000		242,482	^(a)(b)
Marathon CLO Ltd., 2015-8A C		4.683	%		7/18/27		250,000		206,723	^(a)(b)
Morgan Stanley Capital Inc., 2003-NC9 M		1.578	%		9/25/33		596,176		536,584	^(a)
Morgan Stanley Capital Inc., 2004-HE8 A7		1.513	%		9/25/34		74,135		68,707	^(a)
Morgan Stanley Capital Inc., 2004-HES M2		2.328	%		6/25/34		978,280		908,648	^(a)
New Century Home Equity Loan Trust, 2004-3 M1		1.383	%		11/25/34		638,898		571,480	^(a)
Novastar Home Equity Loan, 2004-1 M3		1.278	%		6/25/34		690,000		650,563	^(a)
Option One Mortgage Loan Trust, 2005-1 A4		1.253	%		2/25/35		70,054		69,813	^(a)
Option One Mortgage Loan Trust, 2005-3 M4		1.073	%		8/25/35		1,040,000		450,879	^(a)
Origen Manufactured Housing Contract Trust, 2007-A A2		2.291	%		4/15/37		461,196		389,799	^(a)
Park Place Securities Inc., 2004-WHQ2 M2		1.398	%		2/25/35		208,023		207,804	^(a)
Park Place Securities Inc., 2005-WHQ1 M6		1.623	%		3/25/35		830,000		561,065	^(a)
People’s Choice Home Loan Securities Trust, 2004-2 M1		1.353	%		10/25/34		115,096		113,992	^(a)
RAAC Series, 2006-RP2 A		0.696	%		2/25/37		209,292		207,636	^(a)(b)
RAAC Series, 2006-RP3 A		0.716	%		5/25/36		532,857		484,835	^(a)(b)
RAAC Series, 2007-RP3 M1		1.246	%		10/25/46		1,019,362		391,684	^(a)(b)
Regatta IV Funding Ltd., 2014-1A D		4.138	%		7/25/26		250,000		223,536	^(a)(b)
Renaissance Home Equity Loan Trust, 2003-1 A		1.313	%		6/25/33		581,338		554,533	^(a)
Renaissance Home Equity Loan Trust, 2003-2 A		1.333	%		8/25/33		71,289		66,496	^(a)
Renaissance Net Interest Margin Trust, 2007-2 N		8.353	%		6/25/37		128,633		1	*^(b)(d)(e)
Residential Asset Mortgage Products Inc., 2003-RS7 MII1		1.578	%		8/25/33		32,117		28,638	^(a)
Residential Asset Mortgage Products Inc., 2003-RZ4 A7		5.290	%		6/25/33		8,667		8,860
Residential Asset Mortgage Products Inc., 2003-SL1 M1		7.347	%		4/25/31		544,131		324,110	^(a)
Residential Asset Securities Corp., 2005-EMX3 M5		1.103	%		9/25/35		1,250,000		968,131	^(a)
Residential Asset Securities Corp., 2006-KS2 M3		0.863	%		3/25/36		1,260,000		839,551	^(a)
Residential Funding Mortgage Securities Trust, 2006-HSA3 A		0.583	%		5/25/36		824,837		742,051	^(a)
SACO I Trust, 2006-3 A3		0.913	%		4/25/36		199,830		352,355	^(a)
SACO I Trust, 2006-4 A1		0.793	%		3/25/36		204,399		339,203	^(a)
Saratoga Investment Corp. CLO Ltd., 2013-1A A1		1.934	%		10/20/23		250,000		249,266	^(a)(b)
SLM Student Loan Trust, 2013-B B		3.000	%		5/16/44		700,000		689,889	^(b)
Structured Asset Investment Loan Trust, 2004-9 M4		2.403	%		10/25/34		117,619		89,259	^(a)
Structured Asset Securities Corp., 2007-BC3 2A3		0.633	%		5/25/47		290,000		240,179	^(a)
Venture CDO Ltd., 2014-16A A3L		3.378	%		4/15/26		500,000		464,441	^(a)(b)

TOTAL ASSET-BACKED SECURITIES (Cost - $26,545,449)									26,333,009

CORPORATE BONDS & NOTES - 41.2%
CONSUMER DISCRETIONARY - 4.4%
Auto Components - 0.4%
Goodyear Tire & Rubber Co., Senior Bonds		5.125	%		11/15/23		90,000		93,375
ZF North America Capital Inc., Senior Notes		4.750	%		4/29/25		200,000		203,374	^(b)

Total Auto Components									296,749

See Notes to Schedule of Investments.

WESTERN ASSET VARIABLE RATE STRATEGIC FUND INC.


Schedule of investments (unaudited) (cont’d)		June 30, 2016


SECURITY	RATE			MATURITY DATE		FACE AMOUNT†		VALUE
Automobiles - 2.2%
Ford Motor Credit Co., LLC, Senior Notes		5.875	%		8/2/21		250,000	$	287,047	^(c)
General Motors Financial Co. Inc., Senior Notes		4.375	%		9/25/21		400,000		422,592
General Motors Financial Co. Inc., Senior Notes		4.250	%		5/15/23		1,000,000		1,029,672

Total Automobiles									1,739,311

Diversified Consumer Services - 0.0%
Service Corp. International, Senior Notes		7.625	%		10/1/18		30,000		33,450

Hotels, Restaurants & Leisure - 0.5%
Choctaw Resort Development Enterprise, Senior Notes		7.250	%		11/15/19		200,000		190,000	^(b)
MGM Resorts International, Senior Notes		7.625	%		1/15/17		230,000		237,475

Total Hotels, Restaurants & Leisure									427,475

Media - 1.3%
Comcast Corp., Senior Notes		6.500	%		1/15/17		400,000		411,763	^(c)
DISH DBS Corp., Senior Notes		6.750	%		6/1/21		400,000		415,500
DISH DBS Corp., Senior Notes		5.875	%		7/15/22		190,000		185,250

Total Media									1,012,513

TOTAL CONSUMER DISCRETIONARY									3,509,498

CONSUMER STAPLES - 2.4%
Beverages - 0.6%
Anheuser-Busch InBev Finance Inc., Senior Notes		1.897	%		2/1/21		440,000		453,641	^(a)

Food Products - 1.3%
Kraft Heinz Foods Co., Senior Notes		3.950	%		7/15/25		920,000		1,002,162	^(b)(c)

Tobacco - 0.5%
Altria Group Inc., Senior Notes		9.250	%		8/6/19		350,000		431,789	^(c)

TOTAL CONSUMER STAPLES									1,887,592

ENERGY - 6.5%
Energy Equipment & Services - 0.3%
Ensco PLC, Senior Notes		5.200	%		3/15/25		300,000		208,875	^(c)

Oil, Gas & Consumable Fuels - 6.2%
Anadarko Petroleum Corp., Senior Notes		6.375	%		9/15/17		49,000		51,590
Chesapeake Energy Corp., Senior Notes		3.878	%		4/15/19		400,000		303,000	^(a)
Continental Resources Inc., Senior Notes		5.000	%		9/15/22		500,000		491,250	^(c)
Ecopetrol SA, Senior Notes		4.250	%		9/18/18		240,000		249,000	^(c)
Enterprise Products Operating LLC, Junior Subordinated Notes		8.375	%		8/1/66		80,000		70,584	^(a)(c)
Enterprise Products Operating LLC, Junior Subordinated Notes		7.034	%		1/15/68		120,000		126,479	^(a)(c)
LUKOIL International Finance BV, Bonds		6.356	%		6/7/17		210,000		218,461	^(f)
LUKOIL International Finance BV, Senior Notes		7.250	%		11/5/19		240,000		269,076	^(f)
Petrobras Global Finance BV, Senior Notes		3.000	%		1/15/19		1,230,000		1,142,670	^(c)
Petroleos Mexicanos, Senior Notes		3.500	%		7/23/20		250,000		250,402
Rosneft Finance SA, Senior Notes		7.875	%		3/13/18		200,000		216,500	^(f)
Shell International Finance BV, Senior Notes		1.875	%		5/10/21		600,000		603,598
Transcontinental Gas Pipe Line Co., LLC, Senior Notes		7.850	%		2/1/26		210,000		261,807	^(b)
Whiting Petroleum Corp., Senior Notes		5.000	%		3/15/19		500,000		462,500
Williams Cos. Inc., Senior Notes		4.550	%		6/24/24		250,000		230,875

Total Oil, Gas & Consumable Fuels									4,947,792

TOTAL ENERGY									5,156,667

FINANCIALS - 19.4%
Banks - 13.8%
Bank of America Corp., Junior Subordinated Notes		6.250	%		9/5/24		650,000		660,952	^(a)(g)
Bank of America Corp., Senior Notes		3.750	%		7/12/16		600,000		600,291	^(c)
Bank of America Corp., Subordinated Notes		4.000	%		1/22/25		660,000		673,958	^(c)

See Notes to Schedule of Investments.

WESTERN ASSET VARIABLE RATE STRATEGIC FUND INC.


Schedule of investments (unaudited) (cont’d)		June 30, 2016


SECURITY	RATE			MATURITY DATE		FACE AMOUNT†		VALUE
Banks - (continued)
Barclays Bank PLC, Senior Notes		5.000	%		9/22/16		200,000	$	201,702	^(c)
Citigroup Inc., Junior Subordinated Bonds		6.300	%		5/15/24		570,000		567,806	^(a)(g)
Citigroup Inc., Subordinated Bonds		4.400	%		6/10/25		900,000		942,785	^(c)
Cooperatieve Rabobank U.A., Junior Subordinated Notes		11.000	%		6/30/19		260,000		311,025	^(a)(b)(c)(g)
Credit Agricole SA, Junior Subordinated Notes		8.375	%		10/13/19		620,000		695,299	^(a)(b)(c)(g)
JPMorgan Chase & Co., Junior Subordinated Bonds		5.150	%		5/1/23		1,320,000		1,287,132	^(a)(c)(g)
M&T Bank Corp., Junior Subordinated Bonds		6.875	%		8/1/16		570,000		572,850	^(c)(g)
M&T Bank Corp., Junior Subordinated Bonds		6.450	%		2/15/24		1,190,000		1,279,250	^(a)(c)(g)
PNC Financial Services Group Inc., Junior Subordinated Bonds		4.850	%		6/1/23		990,000		950,400	^(a)(c)(g)
Wachovia Capital Trust III, Junior Subordinated Bonds		5.570	%		8/1/16		1,800,000		1,779,818	^(a)(c)(g)
Wells Fargo & Co., Senior Notes		3.500	%		3/8/22		450,000		483,067	^(c)

Total Banks									11,006,335

Capital Markets - 2.1%
Bank of New York Mellon Corp., Junior Subordinated Notes		4.500	%		6/20/23		1,340,000		1,290,179	^(a)(c)(g)
Goldman Sachs Capital III, Junior Subordinated Bonds		4.000	%		8/1/16		506,000		379,587	^(a)(g)

Total Capital Markets									1,669,766

Consumer Finance - 1.7%
Ally Financial Inc., Senior Notes		8.000	%		3/15/20		225,000		253,688
American Express Co., Senior Notes		2.650	%		12/2/22		517,000		524,527	^(c)
HSBC Finance Corp., Senior Notes		6.676	%		1/15/21		500,000		560,804	^(c)

Total Consumer Finance									1,339,019

Diversified Financial Services - 0.6%
International Lease Finance Corp., Senior Notes		8.750	%		3/15/17		490,000		512,432

Insurance - 0.9%
MetLife Inc., Junior Subordinated Bonds		5.250	%		6/15/20		680,000		676,600	^(a)(c)(g)

Real Estate Investment Trusts (REITs) - 0.3%
CTR Partnership LP/CareTrust Capital Corp., Senior Notes		5.875	%		6/1/21		200,000		201,000

TOTAL FINANCIALS									15,405,152

HEALTH CARE - 1.0%
Health Care Equipment & Supplies - 1.0%
Becton, Dickinson & Co., Senior Notes		3.734	%		12/15/24		300,000		323,715	^(c)
Medtronic Inc., Senior Notes		3.500	%		3/15/25		440,000		480,198

TOTAL HEALTH CARE									803,913

INDUSTRIALS - 2.7%
Airlines - 0.4%
Air 2 US, Notes		8.027	%		10/1/19		23,893		24,968	^(b)
American Airlines, Pass Through Trust, Secured Bonds		4.100	%		1/15/28		250,000		263,438
Delta Air Lines Inc., Pass-Through Certificates, Secured Notes		8.021	%		8/10/22		40,474		46,394

Total Airlines									334,800

Construction & Engineering - 0.5%
Brundage-Bone Concrete Pumping Inc., Senior Secured Notes		10.375	%		9/1/21		200,000		203,000	^(b)
Odebrecht Finance Ltd., Senior Notes		4.375	%		4/25/25		500,000		221,000	^(b)

Total Construction & Engineering									424,000

See Notes to Schedule of Investments.

WESTERN ASSET VARIABLE RATE STRATEGIC FUND INC.


Schedule of investments (unaudited) (cont’d)		June 30, 2016


SECURITY	RATE			MATURITY DATE		FACE AMOUNT†		VALUE
Industrial Conglomerates - 1.8%
General Electric Co., Junior Subordinated Bonds		5.000	%		1/21/21		1,312,000	$	1,393,672	^(a)(c)(g)

TOTAL INDUSTRIALS									2,152,472

INFORMATION TECHNOLOGY - 0.8%
Electronic Equipment, Instruments & Components - 0.3%
Interface Security Systems Holdings Inc./Interface Security Systems LLC, Senior Secured Notes		9.250	%		1/15/18		260,000		250,679

IT Services - 0.1%
First Data Corp., Senior Secured Notes		6.750	%		11/1/20		65,000		68,054	^(b)

Technology Hardware, Storage & Peripherals - 0.4%
Diamond 1 Finance Corp./Diamond 2 Finance Corp., Senior Secured Notes		4.420	%		6/15/21		340,000		350,333	^(b)

TOTAL INFORMATION TECHNOLOGY									669,066

MATERIALS - 1.6%
Chemicals - 0.2%
Jac Holding Corp., Senior Secured Notes		11.500	%		10/1/19		143,000		150,865	^(b)

Construction Materials - 0.8%
Cemex SAB de CV, Senior Secured Notes		5.378	%		10/15/18		650,000		667,875	^(a)(b)(c)

Metals & Mining - 0.6%
Vale Overseas Ltd., Senior Notes		4.375	%		1/11/22		500,000		469,850	^(c)

TOTAL MATERIALS									1,288,590

TELECOMMUNICATION SERVICES - 2.4%
Diversified Telecommunication Services - 1.1%
AT&T Inc., Senior Notes		3.600	%		2/17/23		810,000		846,189	^(c)
Cincinnati Bell Telephone Co., LLC, Senior Debentures		6.300	%		12/1/28		45,000		42,705

Total Diversified Telecommunication Services									888,894

Wireless Telecommunication Services - 1.3%
Sprint Corp., Senior Notes		7.250	%		9/15/21		530,000		454,475
Sprint Corp., Senior Notes		7.625	%		2/15/25		740,000		589,225

Total Wireless Telecommunication Services									1,043,700

TOTAL TELECOMMUNICATION SERVICES									1,932,594

TOTAL CORPORATE BONDS & NOTES (Cost - $30,927,551)									32,805,544

MORTGAGE-BACKED SECURITIES - 2.7%
GNMA - 2.7%
Government National Mortgage Association (GNMA)		6.500	%		8/15/34		173,957		202,339	^(c)
Government National Mortgage Association (GNMA) II		1.738	%		8/20/58		133,044		135,190	^(a)(c)
Government National Mortgage Association (GNMA) II		2.080	%		10/20/59-1/20/60		693,962		712,717	^(a)(c)
Government National Mortgage Association (GNMA) II		2.041	%		12/20/59		146,712		150,389	^(a)(c)
Government National Mortgage Association (GNMA) II		2.050	%		12/20/59		611,712		626,682	^(a)(c)
Government National Mortgage Association (GNMA) II		1.615	%		7/20/60		141,046		143,699	^(a)(c)
Government National Mortgage Association (GNMA) II		1.902	%		7/20/60		144,544		147,255	^(a)(c)

TOTAL MORTGAGE-BACKED SECURITIES (Cost - $2,104,356)									2,118,271

See Notes to Schedule of Investments.

WESTERN ASSET VARIABLE RATE STRATEGIC FUND INC.


Schedule of investments (unaudited) (cont’d)		June 30, 2016


SECURITY	RATE			MATURITY DATE		FACE AMOUNT†			VALUE
MUNICIPAL BONDS - 0.5%
NORTH CAROLINA - 0.5%
North Carolina State Education Assistance Authority Revenue, Student Loan Backed Notes (Cost - $378,999)		1.538	%		10/25/41		400,000		$	379,944	^(a)

SENIOR LOANS - 3.3%
CONSUMER DISCRETIONARY - 1.3%
Media - 1.0%
Univision Communications Inc., Term Loan C4		4.000	%		3/1/20		773,102			769,305	^(h)(i)

Specialty Retail - 0.3%
Michaels Stores Inc., Term Loan B		3.750	%		1/28/20		243,108			242,753	^(h)(i)

TOTAL CONSUMER DISCRETIONARY										1,012,058

HEALTH CARE - 0.3%
Health Care Providers & Services - 0.3%
Envision Healthcare Corp., Initial Term Loan		4.250	%		5/25/18		234,344			234,637	^(h)(i)

INDUSTRIALS - 0.4%
Airlines - 0.4%
American Airlines Inc., New Term Loan		3.250	%		6/27/20		291,795			288,604	^(h)(i)

INFORMATION TECHNOLOGY - 0.3%
IT Services - 0.3%
First Data Corp., Extended 2021 Term Loan		4.452	%		3/24/21		243,558			243,162	^(h)(i)

TELECOMMUNICATION SERVICES - 1.0%
Diversified Telecommunication Services - 1.0%
Intelsat Jackson Holdings SA, Term Loan B2		3.750	%		6/30/19		711,984			647,015	^(h)(i)
Virgin Media Investment Holdings Ltd., USD Term Loan F		3.649	%		6/30/23		168,330			164,363	^(h)(i)

TOTAL TELECOMMUNICATION SERVICES										811,378

TOTAL SENIOR LOANS (Cost - $2,600,584)										2,589,839

SOVEREIGN BONDS - 5.0%
Brazil - 2.9%
Federative Republic of Brazil, Notes		10.000	%		1/1/21		7,582,000	^BRL		2,206,862
Federative Republic of Brazil, Senior Notes		10.000	%		1/1/17		384,000	^BRL		117,717

Total Brazil										2,324,579

Mexico - 1.5%
United Mexican States, Medium-Term Notes		6.750	%		9/27/34		85,000			115,388	^(c)
United Mexican States, Senior Bonds		6.500	%		6/9/22		15,090,000	^MXN		863,928
United Mexican States, Senior Notes		5.550	%		1/21/45		210,000			252,262	^(c)

Total Mexico										1,231,578

Russia - 0.6%
Russian Foreign Bond - Eurobond, Senior Bonds		12.750	%		6/24/28		254,000			446,470	^(f)

TOTAL SOVEREIGN BONDS (Cost - $4,165,073)										4,002,627


						SHARES
COMMON STOCKS - 0.0%
INDUSTRIALS - 0.0%
Marine - 0.0%
DeepOcean Group Holding AS							3,101			16,811	*^(d)(j)

TELECOMMUNICATION SERVICES - 0.0%
Diversified Telecommunication Services - 0.0%
Axtel SAB de CV, ADR							5,390			12,720	*^(b)

TOTAL COMMON STOCKS (Cost - $88,122)										29,531

See Notes to Schedule of Investments.

WESTERN ASSET VARIABLE RATE STRATEGIC FUND INC.


Schedule of investments (unaudited) (cont’d)		June 30, 2016


SECURITY	RATE			SHARES		VALUE
PREFERRED STOCKS - 2.7%
FINANCIALS - 2.7%
Capital Markets - 2.7%
Northern Trust Corp.		5.850	%		28,000	$	778,120
State Street Corp.		5.900	%		49,000		1,381,310	^(a)

TOTAL PREFERRED STOCKS (Cost - $1,975,960)							2,159,430

TOTAL INVESTMENTS BEFORE SHORT-TERM INVESTMENTS (Cost - $105,258,826)							106,032,973

SHORT-TERM INVESTMENTS - 1.0%
State Street Institutional U.S. Government Money Market Fund, Premier Class (Cost - $839,054)		0.238	%		839,054		839,054

TOTAL INVESTMENTS - 134.2% (Cost - $106,097,880#)							106,872,027
Liabilities in Excess of Other Assets - (34.2)%							(27,260,519	)

TOTAL NET ASSETS - 100.0%						$	79,611,508

*	Non-income producing security.

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

(a)	Variable rate security. Interest rate disclosed is as of the most recent information available.

(b)

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, unless otherwise noted.

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

(d)	Illiquid security.

(e)	The coupon payment on these securities is currently in default as of June 30, 2016.

(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, unless otherwise noted.

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

(h)	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.

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

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

#	Aggregate cost for federal income tax purposes is substantially the same.

Abbreviations used in this schedule:


ADR		— American Depositary Receipts
ARM		— Adjustable Rate Mortgage
BRL		— Brazilian Real
CDO		— Collateralized Debt Obligation
CLO		— Collateral Loan Obligation
IO		— Interest Only
MXN		— Mexican Peso
PAC		— Planned Amortization Class
STRIPS		— Separate Trading of Registered Interest and Principal Securities

This Schedule of Investments is unaudited and is intended to provide information about the Fund’s portfolio holdings 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 primary 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. Short-term fixed income securities that will mature in 60 days or less are valued at amortized cost, unless it is determined that using this method would not reflect an investment’s fair value. 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 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.

Notes to Schedule of Investments (unaudited) (continued)

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.

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		—	$	35,614,778		—	$	35,614,778
Asset-backed securities		—		26,333,009		—		26,333,009
Corporate bonds & notes		—		32,805,544		—		32,805,544
Mortgage-backed securities		—		2,118,271		—		2,118,271
Municipal bonds		—		379,944		—		379,944
Senior loans		—		2,589,839		—		2,589,839
Sovereign bonds		—		4,002,627		—		4,002,627
Common stocks:
Industrials		—		—	$	16,811		16,811
Telecommunication Services		—		12,720		—		12,720
Preferred stocks	$	2,159,430		—		—		2,159,430

Total long-term investments	$	2,159,430	$	103,856,732	$	16,811	$	106,032,973

Short-term investments†	$	839,054		—		—	$	839,054

Total investments	$	2,998,484	$	103,856,732	$	16,811	$	106,872,027

Other financial instruments:
Futures contracts	$	398,928		—		—	$	398,928

Total	$	3,397,412	$	103,856,732	$	16,811	$	107,270,955


LIABILITIES
DESCRIPTION	QUOTED PRICES (LEVEL 1)		OTHER SIGNIFICANT OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		TOTAL
Other financial instruments:
Forward foreign currency contracts		—	$	134,551		—	$	134,551
OTC credit default swaps on corporate issues - buy protection‡		—		1,047		—		1,047
Centrally cleared interest rate swaps		—		77,605		—		77,605

Total		—	$	213,203		—	$	213,203

†	See Schedule of Investments for additional detailed categorizations.

‡	Value includes any premium paid or received with respect to swap contracts.

Notes to Schedule of Investments (unaudited) (continued)

2. Investments

At June 30, 2016, the aggregate gross unrealized appreciation and depreciation of investments for federal income tax purposes were substantially as follows:


Gross unrealized appreciation	$	5,494,935
Gross unrealized depreciation		(4,720,788	)

Net unrealized appreciation	$	774,147

At June 30, 2016, 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
Barclays Capital Inc.		1.80%		2/22/2016	TBD**		$ 256,087	Sovereign Bonds		$ 367,650
Barclays Capital Inc.		1.85%		2/22/2016	TBD**		203,100	Corporate Bonds & Notes		249,000
Barclays Capital Inc.		1.95%		2/22/2016	TBD**		1,203,050	Corporate Bonds & Notes		1,810,545
Barclays Capital Inc.		(1.00)%		4/1/2016	TBD**		296,250	Corporate Bonds & Notes		469,850
Deutsche Bank AG		0.75%		6/22/2016	9/22/2016		8,026,100	Collateralized Mortgage Obligations		6,654,772
								Mortgage-Backed Securities		2,118,271
Deutsche Bank AG		1.41%		6/30/2016	7/29/2016		910,336	Collateralized Mortgage Obligations		1,230,928
Morgan Stanley		1.25%		4/25/2016	7/25/2016		6,404,700	Corporate Bonds & Notes		6,889,519
Morgan Stanley		1.40%		4/25/2016	7/25/2016		570,900	Corporate Bonds & Notes		676,600
Morgan Stanley		1.75%		4/25/2016	7/25/2016		1,413,300	Corporate Bonds & Notes		1,968,274
Morgan Stanley		1.25%		5/12/2016	8/10/2016		3,683,000	Corporate Bonds & Notes		4,019,679
Royal Bank of Canada		1.10%		4/4/2016	7/5/2016		3,580,813	Corporate Bonds & Notes		3,876,547
Royal Bank of Canada		1.10%		6/14/2016	9/13/2016		954,625	Corporate Bonds & Notes		992,593
Royal Bank of Canada		1.95%		6/16/2016	9/16/2016		591,000	Collateralized Mortgage Obligations		640,927
Royal Bank of Canada		2.05%		6/16/2016	9/16/2016		523,000	Collateralized Mortgage Obligations		651,214

							$ 28,616,261			$ 32,616,369

*	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.

At June 30, 2016, the Fund had the following open futures contracts:


	Number of Contracts		Expiration Date		Basis Value		Market Value		Unrealized Appreciation
Contracts to Buy:
U.S. Treasury 10-Year Notes		104		9/16	$	13,501,432	$	13,830,375	$	328,943
U.S. Treasury Ultra Long-Term Bonds		6		9/16		1,048,265		1,118,250		69,985

Net unrealized appreciation on open futures contracts									$	398,928

At June 30, 2016, the Fund had the following open forward foreign currency contracts:

Currency
Purchased

Currency
Sold

Counterparty

Settlement
Date

Unrealized
Depreciation

USD

796,813

BRL

3,000,000

Citibank N.A.

7/14/16

$(134,551)

Abbreviations used in this table:


BRL		— Brazilian Real
USD		— United States Dollar

Notes to Schedule of Investments (unaudited) (continued)

At June 30, 2016, the Fund had the following open swap contracts:


CENTRALLY CLEARED INTEREST RATE SWAPS
CENTRAL COUNTERPARTY	NOTIONAL AMOUNT		TERMINATION DATE		PAYMENTS MADE BY THE FUND†		PAYMENTS RECEIVED BY THE FUND†		UPFRONT PREMIUMS PAID (RECEIVED)			UNREALIZED DEPRECIATION
Chicago Mercantile Exchange	$	2,500,000		6/28/23		1.238% semi-annually		3-Month LIBOR quarterly	$	(3,126	)	$	(6,168	)
Chicago Mercantile Exchange		25,000,000		6/28/26		1.454% semi-annually		3-Month LIBOR quarterly		(43,829	)		(71,437	)

Total	$	27,500,000							$	(46,955	)	$	(77,605	)



OTC CREDIT DEFAULT SWAPS ON CORPORATE ISSUES - BUY PROTECTION¹
SWAP COUNTERPARTY (REFERENCE ENTITY)	NOTIONAL AMOUNT²		TERMINATION DATE		IMPLIED CREDIT SPREAD AT JUNE 30, 2016³			PERIODIC PAYMENTS MADE BY THE FUND†	MARKET VALUE			UPFRONT PREMIUMS PAID (RECEIVED)		UNREALIZED DEPRECIATION
Goldman Sachs Group Inc. (Assured Guaranty Municipal Corp., 0.480%, due 3/20/20)	$	10,000		3/20/20		2.05	%	5.000% quarterly	$	(1,047	)	$	119	$	(1,166	)

⁽¹⁾

If the Fund is a buyer of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) receive from the seller of protection an amount equal to the notional amount of the swap and deliver the referenced obligation or the underlying securities comprising the referenced index or (ii) receive a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation or the underlying securities comprising the referenced index.

⁽²⁾	The maximum potential amount the Fund could be required to pay as a seller of credit protection or receive as a buyer of credit protection if a credit event occurs as defined under the terms of that particular swap agreement.

⁽³⁾

Implied credit spreads, utilized in determining the market value of credit default swap agreements on corporate or sovereign issues as of period end, serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default for the credit derivative. The implied credit spread of a particular referenced entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the agreement. Wider credit spreads represent a deterioration of the referenced entity’s credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. A credit spread identified as “Defaulted” indicates a credit event has occurred for the referenced entity or obligation.

†	Percentage shown is an annual percentage rate.

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:		August 22, 2016

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:		August 22, 2016

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

Date:		August 22, 2016