Western Asset California Municipal Money Market Fund

Investment Objective

The Fund seeks to provide income exempt from both regular federal income tax and California personal income tax from a portfolio of high quality short-term municipal obligations selected for liquidity and stability of principal.

Investment Strategy

Under normal circumstances the Fund invests at least 80% of its assets in short-term high quality California municipal securities. These may include securities issued by the State of California and certain other municipal issuers, political subdivisions, agencies and public authorities that pay interest that is exempt from regular federal income tax and California personal income tax. All of the securities in which the Fund invests are rated in one of the two highest short-term rating categories, or if unrated, of equivalent quality. All of these securities have remaining maturities of 397 days or less. The Fund maintains a dollar-weighted average portfolio maturity of 90 days or less.

The Fund may invest more than 25% of its assets in participation interests in municipal obligations that are issued by banks and/or backed by bank obligations.

The Fund may invest up to 20% of its assets in three types of structured securities: tender option bonds, partnership interests and swap-based securities. Swap-based securities represent participation interests in a special purpose trust or partnership holding one or more municipal bonds and/or municipal bond interest rate swaps. A typical swap enables the trust or partnership to exchange a municipal bond interest rate for a floating or variable, short-term municipal interest rate.

These structured securities are a type of derivative instrument. Unlike some derivatives, these securities are not designed to leverage the Fund's portfolio or increase its exposure to interest rate risk.

The Fund may purchase securities under arrangements (called when-issued or forward delivery basis) where the securities will not be delivered immediately. The Fund will set aside the assets to pay for these securities at the time of the agreement.

Investment Risks

Although the Fund seeks to preserve the value of your investment at one dollar per share, it is possible to lose money by investing in the Fund, or the Fund could underperform other short-term debt instruments or money market funds if:

• interest rates rise sharply;
• an issuer or guarantor of securities held by the fund defaults or has its credit rating downgraded; or
• the manager's judgment about the value or credit quality of a particular security proves to be incorrect.

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.

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.