Fund gross and net expense ratios are each 0.67%.2,3 Source: Legg Mason and Lipper as of 12/31/09.

Lipper General Muni Debt Funds (average) LM WA MMF Class A (with maximum sales charge) LM WA MMF Class A (without sales charge)

0%

5%

10%

15%

20%

25%

5.25% 3.74%

2.32%

5.05% 4.14%2.91%

5.96% 5.50%4.59%

6.13% 5.82% 5.06%6.55% 6.31% 5.53%

18.16%

23.43%

16.86%

1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS 20 YEARS

Lipper Rank / Category

6/221Lipper Rank / Category

40/248Lipper Rank / Category

3/204Lipper Rank / Category

3/163Lipper Rank / Category

2 /92Lipper Rank / Category

1/48

20 years of outperformance: That’s what we get for being consistent. Legg Mason Western Asset Managed Municipals Fund (SHMMX) has outperformed its peers in Lipper’s General Municipal Debt Funds category for 20 years (as of 12/31/09).1 And over those same 20 years, the Fund’s fundamental investment process and the leadership of its management team haven’t changed.

That’s the kind of consistency investors appreciate.

Performanceshownrepresentspastperformanceandisnoguaranteeoffutureresults.Currentperformancemaybehigherorlowerthantheperformanceshown.Investmentreturnandprincipalvaluewillfluctuate,soshares,whenredeemed,maybeworthmoreorlessthantheoriginalcost.ClassAshareshaveamaximum1front-endsaleschargeof4.25%.Totalreturnsassumethereinvestmentofalldistributionsatnetassetvalue(NAV)andthedeductionofallFundexpenses.Performancedatadonotreflecttrade-dateadjustmentsmadetotheNAVatmonth-end.Performancewouldhavebeenloweriffeeshadnotbeenwaivedinvariousperiods.Forthemostrecentmonth-endinformation,pleasevisitwww.leggmason.com/individualinvestors.

Rankings in the Lipper categories are based on average annual total returns assuming reinvestment of dividends and capital gains, as of December 31, 2009. Each fund is ranked within a universe of funds similar in portfolio characteristics and capitalizations, as defined by Lipper, Inc.

A high Lipper ranking does not necessarily imply that the fund achieved positive results for the period. Rankings are based on performance that does not include sales charges. Results would have been less favorable had sales charges been included.

All investments involve risk, including the possible loss of principal.

1 As measured by annualized return of Legg Mason Western Asset Managed Municipals Fund Class A shares versus Lipper’s General Municipal Debt Funds category.

2 Gross expenses are the Fund’s annual total operating expenses for the share class indicated as of the date of the Fund’s most current prospectus and do not reflect waivers or reimbursements. These expenses include management fees, 12b-1 distribution and service fees, and other expenses.

3 Because the Fund does not currently have fee waivers or reimbursements, gross and net expense ratios are the same.

INVESTMENT PRODUCTS: NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE

Legg Mason Western Asset Managed Municipals Fund is a core, national municipal portfolio that offers potential tax benefits.

What should I know before investing? Fixed-income securities involve interest rate, credit, inflation and reinvestment risks; and possible loss of principal. As interest rates rise, the value of fixed-income securities falls. High-yield bonds possess greater price volatility, illiquidity and possibility of default. Derivatives, such as options and futures, can be illiquid, may disproportionately increase losses, and have a potentially large impact on Fund performance. An investor may be subject to the federal Alternative Minimum Tax, and state and local taxes may apply. Capital gains, if any, are fully taxable.

An investor should consider a fund’s investment objectives, risks, charges and expenses carefully before investing. For a free prospectus, which contains this and other information on any Legg Mason fund, visit www.leggmason.com/individualinvestors. An investor should read the prospectus carefully before investing.

For more information, please contact your financial advisor or visit www.leggmason.com/individualinvestors.

INVESTMENT PRODUCTS: NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE

© 2010 Legg Mason Investor Services, LLC, member FINRA, SIPC. Legg Mason Investor Services, LLC and Western Asset Management Co. are subsidiaries of Legg Mason, Inc. 403533 LMFXO12204 2/10 FN1010203

Our goal To maximize current income exempt from regular federal income tax and preserve capital.

What we invest in The Fund focuses on finding value primarily through investments in municipal securities with maturities of one to 30 years. Investments are mainly of high credit quality, but the Fund can invest in lower-rated, higher-yielding securities — limited to 20% of assets — enabling the managers to seek opportunities and selectively invest in securities that may enhance current income.

Meet Western Asset • One of the world’s largest and leading fixed-income managers • Team-based portfolio management • Over 19 years’ average experience on municipal bond team

Q409 | Outperformance