REVISED as of April 25, Important 2011 Tax Information Regarding Your Mutual Funds

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1 REVISED as of April 25, 2012 Important 2011 Tax Information Regarding Your Mutual Funds Managed by WESTERN ASSET CLEARBRIDGE ADVISORS LEGG MASON CAPITAL MANAGEMENT BRANDYWINE GLOBAL BATTERYMARCH ATTENTION: The 2011 Legg Mason Tax Guide was revised as of April 25, 2012 to update information under the heading Section 2 Exempt Interest Income Multi-State Funds Legg Mason Western Asset Managed Municipal Fund. The updated data applies only to Legg Mason Western Asset Managed Municipals Fund. This Booklet is a summary of useful tax information for certain Legg Mason and Western Asset closedend and open-end funds. It will assist you, as an investor, in the preparation of your 2011 Federal and state income tax returns. We recommend that you consult your tax advisor for assistance with how this information will impact your specific tax situation. IMPORTANT INFORMATION The tax information contained herein is provided for informational purposes only and should not be construed as legal or tax advice. Legg Mason does not provide legal or tax advice to taxpayers. This material and any tax-related statements are not intended or written to be used, and cannot be used or relied upon, by any such taxpayer for the purpose of avoiding tax penalties. Please consult an attorney or tax professional for assistance as to how this information will impact your specific tax situation. All investments involve risk, including possible loss of principal. Please see the fund prospectus for risk details. Investors should consider a fund s investment objectives, risks, charges, and expenses carefully before investing. The prospectus contains this and other information about a fund. To obtain a free prospectus, please go to or contact your financial advisor. An investor should read the prospectus carefully before investing. Please note that 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 Closed-End 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 nationally recognized stock exchanges Legg Mason Investor Services, LLC, Member FINRA, SIPC SKU # FN

2 Section 1 Income from Federal Obligations Certain states may exempt the portion of dividends (reported in Box 1 on Form 1099-DIV) derived from assets backed by the full faith and credit of the U.S. Government.* The table below provides the percentages of those dividends available for this exclusion. Fund Name Percentage Legg Mason BW Absolute Return Opportunities Fund 4.28% Legg Mason BW Global Opportunities Bond Fund Legg Mason Investment Counsel Social Awareness Fund 5.74 Legg Mason Lifestyle Allocation 30% 5.37 Legg Mason Lifestyle Allocation 50% 4.73 Legg Mason Lifestyle Allocation 70% 4.00 Legg Mason Lifestyle Allocation 85% 1.93 Legg Mason Strategic Real Return Fund Legg Mason Target Retirement Legg Mason Target Retirement Legg Mason Target Retirement Legg Mason Target Retirement Legg Mason Target Retirement Fund 5.65 Legg Mason Western Asset Core Bond Fund Legg Mason Western Asset Core Plus Bond Fund Legg Mason Western Asset Global Inflation Management Fund Legg Mason Western Asset Mortgage Backed Securities Fund 0.86 Legg Mason Western Asset Short-Term Bond Fund 3.91 Legg Mason Western Asset SMASh Series C Fund 1.41 Legg Mason Western Asset SMASh Series M Fund 1.50 Legg Mason Western Asset Strategic Income Fund 5.78 LMP Capital and Income Fund (SCD) 0.81 Western Asset Core Bond Portfolio 9.56 Western Asset Core Plus Bond Portfolio 5.93 Western Asset Global Multi-Sector Portfolio 3.54 Western Asset Government Money Market Fund Western Asset Inflation Indexed Plus Bond Portfolio ** Western Asset Inflation Management Fund Inc. (IMF) ** Western Asset Institutional Cash Reserves 1.38 Western Asset Institutional Government Reserves Western Asset Institutional Liquid Reserves 2.52 Western Asset Institutional Money Market Fund (a) Western Asset Institutional U.S. Treasury Reserves ** Western Asset Intermediate Bond Portfolio 7.34 Western Asset Limited Duration Bond Portfolio 6.71 Western Asset Liquid Reserves 5.96 Western Asset Money Market Fund 3.88 Western Asset Premium Liquid Reserves 3.36 Western Asset Premium U.S. Treasury Reserves ** Western Asset Total Return Unconstrained Portfolio Western Asset U.S. Treasury Reserves** * Includes U.S. Treasury Bills, U.S. Treasury Notes, U.S. Treasury Bonds, and obligations issued by the Federal Home Loan Bank, Federal Credit Banks and the Student Loan Marketing Association. ** These Funds have met the quarterly asset requirements for California, Connecticut and New York resident shareholders. (a) Western Asset Institutional Money Market Fund reorganized into Western Asset Institutional Liquid Reserves at the close of business on June 17th, 2011.

3 Section 2 Exempt Interest Income Multi-State Funds In this section you will find information for the Legg Mason and Western Asset multi-state funds that have paid income dividends which are tax-exempt for regular Federal income tax purposes. Western Asset Western Asset Institutional Legg Mason Legg Mason Legg Mason Legg Mason Institutional AMT Tax Free Western Asset Western Asset Western Asset Western Asset Free Reserves and Intermediate-Term Managed Municipal Short Duration Municipal Western Asset Municipals Municipals High Income Municipal Money Market Tax Free Fund Fund Fund Income Fund Fund Reserves Alabama 0.46% 0.86% % 0.77% 1.99% 1.89% Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Guam Hawaii Idaho 0.06 Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania * Puerto Rico * Rhode Island * South Carolina * South Dakota 0.01* Tennessee * Texas * U.S. Virgin Islands * Utah * Vermont * Virginia * Washington * West Virginia * Wisconsin * Wyoming * Other U.S. Territories * Alternative Minimum Tax Percentages: 4.25% 4.72% 7.94% 2.09% % 17.21% *Note: These percentages have been revised.

4 Section 2 (continued) Exempt Interest Income Multi-State Funds In this section you will find information for the Western Asset multi-state funds that have paid income dividends which are tax-exempt for regular Federal income tax purposes. Western Asset Western Asset Western Asset Western Asset Municipal Western Asset Western Asset Municipal Intermediate Managed Defined Municipal Municipal Money Muni Municipals Opportunity High Income Partners Market Fund Inc. Fund Inc. Trust Inc. Fund Inc. Fund Inc. Fund (SBI) (MMU) (MTT) (MHF) (MNP) Alabama 1.05% % % % % % Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Guam Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi 1.53 Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Puerto Rico Rhode Island South Carolina South Dakota 0.45 Tennessee Texas U.S. Virgin Islands Utah Vermont 0.46 Virginia Washington West Virginia Wisconsin Wyoming Other U.S. Territories Alternative Minimum Tax Percentages: 15.02% 8.37% 10.29% 5.77% 14.36% 4.78%

5 Section 3 Exempt Interest Income Single State Funds In this section you will find information for the Legg Mason and Western Asset single state funds that have paid income dividends which are tax-exempt for regular Federal income tax purposes. Percentage of Income from Obligations of Percentage of Puerto Rico, Percentage of Income from U.S. Virgin Income from Alternative Specified Obligations of Islands and Obligations of Minimum Tax Fund Name State Specified State Guam Other States Percentage Legg Mason Investment Counsel Maryland Tax-Free Income Trust Maryland 90.42% 9.58% % 5.03% Legg Mason Western Asset California Municipals Fund California Legg Mason Western Asset Intermediate Maturity California Municipals Fund California Legg Mason Western Asset Intermediate Maturity New York Municipals Fund New York Legg Mason Western Asset Massachusetts Municipals Fund Massachusetts Legg Mason Western Asset New Jersey Municipals Fund New Jersey Legg Mason Western Asset New York Municipals Fund New York Legg Mason Western Asset Oregon Municipals Fund Oregon Legg Mason Western Asset Pennsylvania Municipals Fund Pennsylvania Western Asset California Municipal Money Market Fund California Western Asset California Tax Free Money Market Fund California Western Asset Connecticut Municipal Money Market Fund Connecticut Western Asset Massachusetts Municipal Money Market Fund Massachusetts Western Asset New York Municipal Money Market Fund New York Western Asset New York Tax Free Money Market Fund New York Section 4 Foreign Tax Credits This information is provided for those shareholders electing to take the foreign tax credit for Federal income tax purposes. Shareholders taking an itemized deduction for foreign taxes paid: Include the amount shown in Box 6 on Form 1099-DIV as an itemized deduction on Schedule A (Form 1040). Shareholders electing to claim the Foreign Tax Credit on either Form 1116 ( Foreign Tax Credit ) for individuals, or Form 1118 ( Foreign Tax Credit - Corporations ) for corporate shareholders: Please note that shareholders claiming a foreign tax credit on income passed through from a mutual fund are no longer required to report foreign source income and foreign taxes paid on a country-by-country basis. Please refer to the instructions for Form 1116 or consult your tax professional for further assistance. Percentage of Percentage of Income from Payable Income from Foreign Source Fund Name Date Foreign Sources Dividends (3) Legg Mason Batterymarch Emerging Markets Trust 12/28/ % (1) % Legg Mason Batterymarch International Equity Trust 6/15/ (2) /28/ (2) Legg Mason Esemplia Emerging Markets Equity Fund 12/28/ (1) Legg Mason Global Currents International All Cap Opportunity Fund 12/28/ (1) Legg Mason Global Currents International Small Cap Opportunity Fund Legg Mason Lifestyle Allocation 30% Legg Mason Lifestyle Allocation 50% Legg Mason Lifestyle Allocation 70% 12/9/ (2) /28/ (2) /2011-9/ /29/ (2) /2011-9/ /29/ (2) /15/ /29/ (2) Legg Mason Lifestyle Allocation 85% 12/29/ (1) (1) To determine your share of the Fund s foreign source income, multiply the total foreign source percentage indicated by the amount shown in Box 1a of Form 1099-DIV. (2) To determine your share of the Fund s foreign source income, multiply the total foreign source percentage indicated by the distribution received on the indicated date. Do not multiply this percentage by the amount shown on Box 1a of Form 1099-DIV. (3) As a result of lower tax rates on qualified dividends, in computing your foreign tax credit, you must make certain adjustments based on your foreign source qualified dividends. To compute your amount of foreign source qualified dividends, multiply the foreign QDI percentage by the amount shown in Box 1a of Form 1099-DIV.

6 Section 5 Dividends Received Deduction for Corporations The list below provides corporate shareholders with the percentages of their gross ordinary dividends that qualifies for the dividends received deduction for corporations. Only those Funds that appear in this section have distributed income that qualifies for this deduction. Fund Name Payable Qualifying Payable Qualifying Date Percentage Date Percentage Legg Mason Batterymarch Global Equity Fund 12/28/ % % Legg Mason Batterymarch S&P 500 Index Fund 12/28/ Legg Mason Batterymarch U.S. Large Cap Equity Fund 12/28/ Legg Mason Batterymarch U.S. Small Capitalization Equity Portfolio 6/15/ Legg Mason BW Diversified Large Cap Value Fund 12/9/ /28/ Legg Mason Capital Management All Cap Fund 12/28/ Legg Mason Capital Management Disciplined Equity Research Fund 12/9/ /28/ Legg Mason Capital Management Opportunity Trust 6/30/ Legg Mason Capital Management Value Trust 12/28/ Legg Mason ClearBridge Appreciation Fund 12/28/ Legg Mason ClearBridge Dividend Strategy Fund (a) 3/31/ /15/ (b) Legg Mason ClearBridge Equity Fund Legg Mason ClearBridge Equity Income Builder Fund 3/31/ June - December Legg Mason ClearBridge Fundamental All Cap Value Fund 12/28/ Legg Mason ClearBridge Large Cap Value Fund Legg Mason ClearBridge Mid Cap Growth Fund 12/9/ Legg Mason Investment Counsel Financial Services Fund 12/8/ Legg Mason Investment Counsel Social Awareness Fund 3/31/ June - December Legg Mason Lifestyle Allocation 30% 3/31/ June - December 9.23 Legg Mason Lifestyle Allocation 50% 3/31/ June - December Legg Mason Lifestyle Allocation 70% 6/15/ /29/ Legg Mason Lifestyle Allocation 85% 12/29/ Legg Mason Lifestyle Allocation 100% (c) 4/19/ (a) Legg Mason Clearbridge Dividend Strategy Fund reorganized into Legg Mason Equity Income Builder Fund at the close of business on April 29 th, (b) Legg Mason ClearBridge Dividend Strategy Fund reclassified $ of the long-term term capital gain distribution paid on April 15, 2011 to ordinary income. The entire $ of ordinary income qualfies for the dividends received deduction for corporations. The remaining $ of the April 15, 2011 distribution was longterm capital gain. (c) Legg Mason Lifestyle 100% Fund reorganized into Legg Mason Lifestyle 85% Fund at the close of business on April 21 st, 2011.

7 Section 5 Dividends Received Deduction for Corporations (continued) The list below provides corporate shareholders with the percentages of their gross ordinary dividends that qualifies for the dividends received deduction for corporations. Only those Funds that appear in this section have distributed income that qualifies for this deduction. Fund Name Payable Qualifying Payable Qualifying Date Percentage Date Percentage Legg Mason Manager Select Large Cap Growth Fund 12/9/ % 12/14/ % Western Manager Select Large Cap Value Fund 12/9/ /28/ /14/ Legg Mason Permal Tactical Allocation Fund 12/29/ Legg Mason Strategic Real Return Fund 12/29/ Legg Mason Target Retirement Fund 6/15/ /29/ Legg Mason Target Retirement /15/ /29/ Legg Mason Target Retirement /15/ /29/ Legg Mason Target Retirement /15/ /29/ Legg Mason Target Retirement /15/ /29/ Legg Mason Target Retirement /15/ /29/ Legg Mason Target Retirement /15/ /29/ Legg Mason Target Retirement /15/ /29/ Legg Mason Target Retirement /15/ /29/ LMP Capital and Income Fund Inc. (SCD) 3/25/ June - December Western Asset Core Plus Bond Portfolio Western Asset Global Partners Income Fund Inc. (GDF) 1/31/ March - December 2/28/ January - August /28/ /30/ November - December 0.32 Western Asset Intermediate Bond Portfolio 1/31/ February - December Western Asset High Income Fund, Inc. (HIF) 1/28/ March - December 2/25/ Western Asset High Income Fund II Inc. (HIX) Western Asset High Income Opportunity Fund Inc. (HIO) January - April 0.85 May - Decmber 0.75 January - September 0.72 November - December 10/28/ Western Asset High Yield Portfolio 2/28/ June - December 0.79 Western Asset Managed High Income Fund Inc. (MHY) Western Asset Variable Rate Strategic Fund Inc. (GFY) January - March 0.45 May - December /29/ January - December 0.03