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.
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.
There is the risk that the income from a Fund's bond portfolio will decline if and when the Fund invests the proceeds from matured, traded, or called bonds at market interest rates that are below the portfolio's current earnings rate. In the case of leveraged funds, income risk also refers to the risk that the short-term rates paid on the fund's preferred stock will rise, reducing the earnings available to pay common share dividends.
Certain investors may be subject to the federal Alternative Minimum Tax (AMT), and state and local taxes may apply. Capital gains, if any, are fully taxable.
‡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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