Western Asset New York Tax Free Money Market Fund

Investment Objective

The Fund's investment objectives are to provide shareholders with high levels of current income exempt from federal, New York State and New York City personal income taxes, preservation of capital and liquidity.

Investment Strategy

Under normal circumstances, the Fund invests at least 80% of its assets in short-term high quality municipal obligations and interests in municipal obligations ("New York municipal securities") whose interest is exempt from both federal income tax, including the alternative minimum tax ("AMT"), and New York State and New York City personal income taxes. This policy may not be changed without shareholder approval. Except for this policy, the Fund's investment objectives and strategies may be changed without shareholder approval.

New York municipal securities include debt obligations issued by the State of New York and its political subdivisions, agencies and public authorities, certain other qualifying governmental issuers (such as Puerto Rico, the U.S. Virgin Islands and Guam) or other qualifying issuers, participation or other interests in these securities and other structured securities. Although municipal securities are issued by qualifying issuers, payments of principal and interest on municipal securities may be derived solely from revenues from certain facilities, mortgages or private industries, and may not be backed by the issuers themselves.

The rate of interest paid on these securities normally is lower than the rate of interest paid on fully taxable securities.

Subject to this 80% policy, the Fund may purchase municipal obligations whose interest is subject to New York State and New York City personal income taxes and/or the AMT and other high quality securities that pay interest that is subject to state and federal income taxes. These investments would cause the amount of the Fund's income that is subject to tax to increase.

The Fund may invest in participation or other interests in New York municipal securities that are issued by U.S. and non-U.S. banks, insurance companies or other financial institutions. The Fund may invest more than 25% of its assets in participation interests in New York municipal securities that are issued by banks and/or backed by bank obligations. In a participation interest, the bank sells undivided interests in a municipal obligation it owns. These interests may be supported by a bank letter of credit or guarantee. The interest rate generally is adjusted periodically, and the holder can sell back to the issuer after a specified notice period. If interest rates rise or fall, the rates on participation interests and other variable rate instruments generally will be readjusted.

Investment Risks

An investment in a money market fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although a money market fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.

The Fund's yield may be affected by changes in interest rates and changes in credit ratings. Because the Fund concentrates its holdings in a specific state, economic and political developments in that state may adversely affect the Fund. 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. Please see the Fund's prospectus for additional fund specific risks.

Investment Management

Managed By Western Asset

• Best known as an active fixed-income manager offering products spanning the yield curve and the globe.
• Founded in 1971, the Firm's philosophy centers upon a team approach that unites groups of specialists dedicated to different market sectors.