The Funds are not sold or distributed by Legg Mason Investor Services, LLC ("LMIS") or any affiliate of Legg Mason, Inc. Shares of the funds are bought and sold through non-affiliated broker/dealers and trade on the NYSE/NYSE Alternext. The Fund may employ leverage in the form of loans, preferred stock, reverse repurchase agreements and/or other instruments. If the Fund establishes a segregated account in which it maintains cash and/or liquid securities equal in value to its obligation in respect of the reverse repurchase agreements (or other instruments), these investments are not considered to be a borrowing or a "senior security" for purposes of the asset coverage requirements under the 1940 Act, although they may have the same economic effect as other types of leverage.
Weighted Average Life (WAL) -- The average number of years for which each dollar of unpaid principal on a loan or mortgage remains outstanding. Once calculated, WAL tells how many years it will take to pay half of the outstanding principal.
Effective duration is a duration calculation for bonds with embedded options. Effective duration takes into account that expected cash flows will fluctuate as interest rates change. Please note; duration measures the sensitivity of price (the value of principal) of a fixed-income investment to a change in interest rates.
Distribution Rate is calculated by annualizing the amount of the most recent distribution paid, excluding special distributions, divided by the previous trading day's closing market price. Distributions may include investment income, realized capital gains, and/or return of capital. The Distribution Rate will change based on changes in market price and distribution amounts, may not include all amounts distributed by the fund, and is not a quotation of Fund performance. For more information about a distribution's composition refer to the distribution press release or Section 19 notice located in the press release section of our website.
Interest Rate Risk: As interest rates rise, bond prices fall, reducing the value of the fund.
Investing in a non-diversified fund may entail greater risks than is normally associated with more widely diversified funds.
The fund may use derivatives, such as options and futures, which can be illiquid, may disproportionately increase losses, and have a potentially large impact on fund performance.
The absence of an active secondary market with respect to particular variable and floating rate instruments of U.S. and non-U.S. issuers could make it difficult for the Fund to dispose of a variable or floating-rate note if the issuer defaulted on its payment obligation or during periods that the Fund is not entitled to exercise its demand rights, and the Fund could, for these or other reasons, suffer a loss with respect to such instruments.
High yield bonds involve greater credit and liquidity risks than investment grade bonds.
Foreign securities are subject to certain risks not associated with domestic investing, such as currency fluctuations and changes in political and economic conditions which could result in significant fluctuations. The risks are magnified in emerging markets.
The risks associated with collateralized senior loans are similar to the risks of below-investment grade securities. Issuers of senior loans are more likely to default on their payments of interest and principal owed to the Fund, and such defaults could reduce the Fund's net asset value and income distributions. An economic downturn generally leads to a higher non-payment rate, and a senior loan may lose significant value before a default occurs. Moreover, any specific collateral used to secure a senior loan may decline in value or become illiquid, which would adversely affect the senior loan's value. Economic and other events (whether real or perceived) can reduce the demand for certain senior loans or senior loans generally, which may reduce market prices and cause the Fund's net asset value per share to fall. The frequency and magnitude of such changes cannot be predicted.
‡Net Asset Value (NAV) is a price that reflects the value of the fund's underlying portfolio plus other assets, less the fund's liabilities divided by the number of shares outstanding. However, the price at which an investor may buy or sell common shares of the fund is at the fund's market price as determined by supply of and demand for the fund's common shares, which may be more or less than the fund's NAV.
Unless otherwise specified, all investment managers and Legg Mason Investors Services, LLC, are subsidiaries of Legg Mason Inc.
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