Important 2008 Tax Information Regarding Your Mutual Funds

Important 2008 Tax Information Regarding Your Mutual Funds Managed by WESTERN ASSET CLEARBRIDGE ADVISORS LEGG MASON CAPITAL MANAGEMENT BRANDYWINE GLOBAL BATTERYMARCH This Booklet is a summary of useful tax information for certain Citi SM, Legg Mason Partners, Legg Mason and Western Asset closed-end and open-end funds. It will assist you, as an investor, in the preparation of your 2008 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 www.leggmason.com/individualinvestors or contact your financial advisor. An investor should read the prospectus carefully before investing. Citi SM is a service mark of Citigroup, licensed for use by Legg Mason as the name of funds. Legg Mason and its affiliates, as well as the funds investment managers, are not affiliated with Citigroup. Investments in these funds are not bank deposits or obligations of Citibank. 2009 Legg Mason Investor Services, LLC, Member FINRA, SIPC SKU #00063682

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 Citi SM Cash Reserves 2.72% Citi SM Institutional Cash Reserves 4.33 Citi SM Institutional Liquid Reserves 2.65 Citi SM Institutional U.S. Treasury Reserves ** 100.00 Citi SM Premium Liquid Reserves 2.86 Citi SM Premium U.S. Treasury Reserves ** 100.00 Citi SM U.S. Treasury Reserves ** 100.00 Global Opportunities Bond Fund 1.22 Legg Mason Partners Adjustable Rate Income Fund 3.05 Legg Mason Partners Capital and Income Fund 2.05 Legg Mason Partners Core Bond Fund 14.33 Legg Mason Partners Core Plus Bond Fund 6.06 Legg Mason Partners Global Inflation Management Fund 30.96 Legg Mason Partners Intermediate-Term U.S. Government Fund (a) 6.84 Legg Mason Partners Lifestyle Allocation 30% 4.27 Legg Mason Partners Lifestyle Allocation 50% 3.97 Legg Mason Partners Lifestyle Allocation 70% 2.64 Legg Mason Partners Lifestyle Allocation 85% 1.36 Legg Mason Partners Lifestyle Income Fund 5.66 Legg Mason Partners Short-Term Bond Fund 7.17 Legg Mason Partners Social Awareness Fund 5.37 Legg Mason Partners Strategic Income Fund 1.78 LMP Capital and Income Fund Inc. (SCD) 1.14 Western Asset Absolute Return Portfolio 2.48 Western Asset Core Bond Portfolio 3.75 Western Asset Core Plus Bond Portfolio 7.95 Western Asset Government Money Market Fund 44.05 Western Asset Inflation Indexed Plus Bond Portfolio ** 63.33 Western Asset Inflation Management Fund Inc. (IMF) ** 81.60 Western Asset Institutional Government Money Market Fund 45.12 Western Asset Institutional Money Market Fund 5.37 Western Asset Intermediate Bond Portfolio 10.55 Western Asset Intermediate Plus Bond Portfolio 8.93 Western Asset Limited Duration Bond Portfolio 6.80 Western Asset Money Market Fund 2.90 Western Asset Premier Bond Fund (WEA) 0.80 * 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) Legg Mason Partners Intermediate-Term U.S. Government Fund reorganized into Legg Mason Partners Government Securities Fund on December 15, 2008.

Section 2 Exempt Interest Income Multi-State Funds In this section you will find information for the Legg Mason multi-state funds that have paid income dividends which are tax-exempt for regular Federal income tax purposes. Citi SM Institutional Legg Mason Legg Mason Legg Mason Legg Mason Tax Free Partners Partners Partners Partners Western Asset Reserves and Citi SM Intermediate-Term Managed Municipal Short Duration AMT Tax Free Municipals Municipals High Income Municipal Tax-Free Reserves Fund Fund Fund Income Fund Fund Alabama 1.81% 1.32% 0.61% 0.46% 1.14% 2.57% Alaska 0.15 0.22 0.40 0.59 0.21 Arizona 0.84 0.37 3.39 1.06 3.01 1.14 Arkansas 0.95 0.19 1.19 1.96 California 0.65 4.57 10.14 10.18 7.97 Colorado 2.01 3.97 4.37 4.00 3.93 4.33 Connecticut 0.65 1.15 1.47 1.02 2.13 Delaware 0.57 0.14 0.13 0.16 0.09 District of Columbia 2.45 0.14 2.72 0.15 1.60 Florida 7.73 4.67 10.96 5.31 2.97 6.64 Georgia 4.84 2.85 2.74 3.61 4.65 0.58 Guam Hawaii 0.59 0.63 Idaho 0.02 0.36 Illinois 4.38 5.02 2.98 4.38 6.27 8.92 Indiana 0.90 4.38 1.46 0.62 1.93 1.07 Iowa 1.39 1.11 0.20 2.65 Kansas 0.75 0.58 0.23 1.17 2.64 Kentucky 0.80 2.05 2.45 1.67 0.59 2.28 Louisiana 1.18 0.60 0.07 1.10 2.20 Maine 0.11 0.10 Maryland 3.35 2.69 1.57 2.17 0.12 Massachusetts 3.72 4.19 3.43 2.71 2.09 4.72 Michigan 1.96 3.41 2.94 3.92 5.57 0.35 Minnesota 1.83 0.29 1.49 0.72 2.46 Mississippi 1.05 0.02 0.72 0.19 2.15 Missouri 0.79 1.22 1.55 1.73 2.11 4.26 Montana 1.20 0.74 0.05 Nebraska 3.48 0.01 0.62 0.01 0.66 Nevada 0.66 1.08 1.01 0.01 3.52 New Hampshire 0.50 0.69 0.47 0.70 0.01 New Jersey 2.73 3.86 7.01 8.19 5.74 New Mexico 0.35 0.31 0.23 1.42 1.07 New York 2.75 5.12 4.51 6.19 6.58 4.35 North Carolina 4.37 1.86 0.89 0.45 0.01 5.40 North Dakota 0.08 0.01 0.03 Ohio 3.52 2.62 5.51 1.03 0.95 2.71 Oklahoma 0.15 0.59 0.39 0.60 Oregon 1.52 1.20 1.57 0.24 0.31 3.60 Pennsylvania 10.25 7.24 1.86 5.79 2.83 13.87 Puerto Rico 0.13 1.14 0.68 Rhode Island 0.52 0.56 0.41 0.23 South Carolina 1.91 0.57 1.96 0.71 0.01 0.19 South Dakota 0.54 0.36 0.10 Tennessee 1.52 3.59 3.91 1.19 3.53 0.26 Texas 7.79 15.94 7.94 18.01 18.52 4.41 U.S. Virgin Islands 0.23 Utah 3.51 0.80 0.09 0.02 0.12 2.48 Vermont 0.27 0.21 0.19 0.07 Virginia 3.11 2.00 0.55 2.89 5.44 5.42 Washington 3.75 2.55 0.27 0.04 0.23 6.08 West Virginia 0.09 0.27 0.19 1.91 Wisconsin 1.43 1.69 0.51 0.48 Wyoming 1.14 0.37 0.27 3.64 0.64 Alternative Minimum Tax Percentages: 14.15% 8.47% 10.30% 16.69% 8.33% %

Section 2 (continued) Exempt Interest Income Multi-State Funds In this section you will find information for the Legg Mason 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 Western Asset Western Asset Institutional Municipal Intermediate Managed Municipal Municipal Municipal Money Muni Municipals High Income Partners Money Market Market Fund Inc. Fund Inc. Fund Inc. Fund Inc. Fund Fund (SBI) (MMU) (MHF) (MNP) Alabama 0.95% 1.23% 2.77% 0.66% 0.01% 0.16% Alaska 0.08 0.45 1.76 0.02 0.83 0.02 Arizona 1.12 0.97 0.20 3.59 2.05 1.42 Arkansas 0.13 0.14 1.92 0.96 California 0.18 0.49 4.62 11.15 7.51 9.13 Colorado 3.24 1.93 6.06 8.75 4.31 5.45 Connecticut 0.45 0.41 2.45 0.69 0.05 Delaware 1.55 0.59 1.33 0.01 District of Columbia 3.98 1.81 3.52 0.87 1.52 Florida 8.97 8.21 2.25 4.76 10.91 3.88 Georgia 4.36 5.63 8.23 5.69 4.58 0.02 Guam Hawaii 0.52 1.10 Idaho 0.43 0.25 Illinois 7.15 5.64 3.13 4.54 1.00 12.05 Indiana 1.75 1.95 2.14 0.86 0.47 3.04 Iowa 0.97 1.29 1.19 0.42 0.58 Kansas 0.26 0.80 0.01 0.23 0.52 0.81 Kentucky 1.38 0.90 2.43 1.02 0.01 Louisiana 0.81 1.03 1.14 0.86 0.22 Maine 0.28 0.11 0.24 Maryland 2.91 5.38 1.50 1.16 1.45 5.75 Massachusetts 4.12 3.76 5.49 4.05 2.93 4.92 Michigan 2.74 1.66 2.59 2.61 7.45 3.59 Minnesota 0.73 1.40 1.67 Mississippi 0.08 1.16 0.55 0.16 Missouri 1.04 0.98 2.15 2.18 0.59 1.49 Montana 0.07 1.71 1.63 Nebraska 0.33 0.90 1.34 0.34 Nevada 0.06 0.95 0.28 0.92 0.04 New Hampshire 1.32 0.68 4.04 0.79 0.05 New Jersey 1.90 1.61 1.42 4.22 10.54 8.70 New Mexico 0.54 0.87 1.21 0.14 1.22 New York 2.54 2.12 3.49 5.10 6.73 9.26 North Carolina 3.38 3.90 1.12 0.85 0.68 0.52 North Dakota 0.05 0.13 0.52 Ohio 6.13 2.85 4.98 5.86 2.38 0.99 Oklahoma 0.53 0.59 0.58 Oregon 1.14 2.30 0.84 2.00 0.16 0.51 Pennsylvania 10.61 7.42 5.13 1.92 4.73 2.39 Puerto Rico 0.04 0.11 0.01 0.05 Rhode Island 0.25 0.68 0.64 0.01 South Carolina 1.27 1.10 4.99 2.79 0.15 South Dakota 0.08 0.70 1.38 Tennessee 1.64 2.03 4.09 2.22 1.87 2.55 Texas 9.69 11.22 10.80 5.36 15.57 12.47 U.S. Virgin Islands Utah 1.21 2.17 1.01 0.01 Vermont 0.21 0.51 0.01 Virginia 1.97 1.31 0.43 1.89 3.14 1.62 Washington 2.83 3.04 1.27 0.11 0.02 5.68 West Virginia 0.24 0.05 0.58 1.26 Wisconsin 2.61 3.28 1.31 0.68 0.58 Wyoming 0.01 1.05 1.15 Alternative Minimum Tax Percentages: % 14.22% 11.02% 15.30% 15.59% 17.57%

Section 3 Exempt Interest Income Single State Funds In this section you will find information for the Legg Mason single state funds that have paid income dividends which are tax-exempt for regular Federal income tax purposes. Percentage of Income from Percentage of Percentage of Obligations of Income from Income from Other States, U.S. Alternative Obligations of Puerto Rico Territories and Minimum Fund Name Specified State Specified State Obligations Possessions Tax Percentage Citi SM California Tax Free Reserves California 91.11% 5.86% 3.03% 14.56% Citi SM Connecticut Tax Free Reserves Connecticut 86.05 2.47 11.48 7.95 Citi SM New York Tax Free Reserves New York 96.98 2.56 0.46 17.86 Legg Mason Maryland Tax-Free Income Trust Maryland 98.19 1.22 0.59 Legg Mason Partners California Municipals Fund California 97.39 0.58 2.03 8.61 Legg Mason Partners Intermediate Maturity California Municipals Fund California 90.72 6.64 2.64 2.55 Legg Mason Partners Intermediate Maturity New York Municipals Fund New York 92.25 5.07 2.68 2.35 Legg Mason Partners Massachusetts Municipals Fund Massachusetts 93.05 3.96 2.99 10.25 Legg Mason Partners New Jersey Municipals Fund New Jersey 86.89 5.69 7.42 13.71 Legg Mason Partners New York Municipals Fund New York 97.34 2.66 9.69 Legg Mason Partners Oregon Municipals Fund Oregon 86.15 10.01 3.84 12.74 Legg Mason Partners Pennsylavania Municipals Fund Pennsylvania 95.56 3.52 0.92 5.12 Western Asset California Municipal Money Market Fund California 92.30 5.00 2.70 17.04 Western Asset Massachusetts Municipal Money Market Fund Massachusetts 98.90 1.10 14.68 Western Asset New York Municipal Money Market Fund New York 98.64 0.84 0.52 18.28 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 for 2008, 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. (1) (2) (3) Percentage of Percentage of Income from Payable Income from Foreign Source Fund Name Date Foreign Sources Dividends (3) Legg Mason Emerging Markets Trust 6/20/2008 0.20% (1) 0.20% Legg Mason International Equity Trust 6/20/2008 (2) 12/29/2008 100.00 (2) 100.00 Legg Mason Partners Emerging Markets Equity Fund 12/29/2008 100.00 (1) 100.00 Legg Mason Partners Global Equity Fund 12/29/2008 78.97 (1) 78.97 Legg Mason Partners International All Cap Opportunity Fund 12/29/2008 100.00 (1) 100.00 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. 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. 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.

Section 5 Dividends Received Deduction for Corporations The list below provides corporate shareholders with the percentages of gross ordinary dividends that qualify for the dividends received deduction for corporations. Only those Funds that appear in this section have distributed income that qualifies for this deduction. Payable Qualifying Payable Qualifying Fund Name Date Percentage Date Percentage Barrett Opportunity Fund Inc. 12/12/2008 100.00% % Batterymarch U.S. Small Capitalization Equity Portfolio 6/20/2008 44.94 Legg Mason American Leading Companies Trust 6/20/2008 100.00 12/12/2008 100.00 Legg Mason Classic Valuation Fund 6/20/2008 100.00 Legg Mason Partners 130/30 US Large Cap Equity Fund 12/29/2008 100.00 Legg Mason Partners Appreciation Fund 6/19/2008 83.74 12/29/2008 100.00 10.37 Legg Mason Partners Capital and Income Fund January - September November - December 51.49 10/31/2008 22.59 Legg Mason Partners Capital Fund 6/19/2008 11.79 Legg Mason Partners Convertible Fund January - July 11.45 August - December 11.92 Legg Mason Partners Dividend Strategy Fund 100.00 Legg Mason Partners Equity Fund 100.00 6/19/2008 100.00 Legg Mason Partners Equity Income Builder Fund 9/30/2008 53.79 12/29/2008 55.00 Legg Mason Partners Financial Services Fund 12/12/2008 100.00 Legg Mason Partners Fundamental Value Fund 12/29/2008 100.00 Legg Mason Partners Global Equity Fund 12/29/2008 58.23 Legg Mason Partners Investors Value Fund 100.00 Legg Mason Partners Lifestyle Allocation 30% 3/31/2008 3.27 June - December 3.41 Legg Mason Partners Lifestyle Allocation 50% 3/31/2008 6.92 June - December 7.48 Legg Mason Partners Lifestyle Allocation 70% 6/19/2008 16.89 12/30/2008 16.45 Legg Mason Partners Lifestyle Allocation 85% 6/19/2008 1.33 12/30/2008 32.26 Legg Mason Partners Lifestyle Allocation 100% 6/19/2008 100.00 Legg Mason Partners Lifestyle Income Fund 1/31/2008 2.87 February - December 1.93 Legg Mason Partners S&P 500 Index Fund 6/19/2008 100.00 12/29/2008 100.00 Legg Mason Partners Small Cap Core Fund 6/19/2008 41.89 Legg Mason Partners Small Cap Growth Fund 6/19/2008 18.94 Legg Mason Partners Small Cap Value Fund 12/12/2008 100.00 Legg Mason Partners Social Awareness Fund 3/31/2008 75.58 June - December 72.32 Legg Mason Partners U.S. Large Cap Equity Fund 12/29/2008 100.00 Legg Mason U.S. Small Capitalization Value Trust 6/20/2008 100.00 Legg Mason Value Trust 6/20/2008 100.00 8.34 LMP Capital and Income Fund Inc. (SCD) January - September November - December 64.67 10/31/2008 14.91 Western Asset Core Bond Portfolio 1.36 January - March April - December 0.08 Western Asset Core Plus Bond Portfolio January - March 1.08 April - December 0.84 Western Asset Global High Yield Bond Portfolio 6/19/2008 0.07 12/12/2008 0.30 Western Asset High Income Fund, Inc. (HIF) 1.17 Western Asset High Yield Portfolio 5/29/2008 0.40 July - December 0.78 Western Asset Inflation Indexed Plus Bond Portfolio January - April May - October 0.96 Western Asset Inflation Management Fund Inc. (IMF) 3.07 January - October November - December 2.92 Western Asset Intermediate Bond Portfolio 0.05 Western Asset Intermediate Plus Bond Portfolio 0.38 5/29/2008 0.53 Western Asset Limited Duration Bond Portfolio January - March April - December 2.48 Western Asset Premier Bond Fund (WEA) 1/31/2008 Common 1.60 February - December 2.01 Common & Preferred TN09 4372