December 28, 2012
Summary
Prospectus
Western
Asset
Tax
Free
Reserves
Class
: Ticker Symbol
Before you invest,
you may want to review the fund’s Prospectus, which contains more information about the fund and its risks. You can find the fund’s Prospectus and other information about the fund, including the fund’s statement of additional
information and shareholder reports, online at http://www.leggmason.com/individualinvestors/prospectuses (click on the name of the fund). You can also get this information at no cost by calling the fund at 1-877-721-1926 or 1-203-703-6002 or by
sending an e-mail request to prospectus@leggmason.com, or from your financial intermediary. The fund’s Prospectus, dated December 28, 2012 and as may be amended or supplemented, the fund’s statement of additional information, dated
December 28, 2012 and as may be amended or supplemented, and the independent registered public accounting firm’s report and financial statements in the fund’s annual report to shareholders, dated August 31, 2012, are incorporated by
reference into this Summary Prospectus.
INVESTMENT PRODUCTS: NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE
VALUE
Investment objective
The fund’s investment objectives are to provide shareholders with high levels of current income exempt from federal income taxes, preservation of capital and liquidity.
Fees and expenses of the fund
The
accompanying table describes the fees and expenses that you may pay if you buy and hold shares of the fund.
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Shareholder fees
(fees paid directly from your investment)
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Class A
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Class B
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Class C
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Maximum sales charge (load) imposed on purchases (as a % of offering price)
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None
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None
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None
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Maximum deferred sales charge (load) (as a % of the lower of net asset value at purchase or redemption) (may be reduced over
time)
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Generally,
none
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(If purchased
through
exchange
up to 5.00%
based on fund
originally
purchased)
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(If purchased
through
exchange
up to 1.00%
based on fund
originally
purchased)
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Small account fee
1
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$15
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$15
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$15
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Annual fund operating expenses
(expenses that you pay each year as a percentage of the
value
of your investment)
(%)
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Class A
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Class B
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Class C
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Management fees
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0.45
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0.45
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0.45
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Distribution and service (12b-1) fees
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0.10
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0.50
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0.50
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Other expenses
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0.09
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0.65
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0.08
2
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Total annual fund operating expenses
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0.64
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1.60
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1.03
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Fees waived and/or expenses reimbursed
3
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(0.04)
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(0.50)
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—
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Total annual fund operating expenses after waiving fees and/or reimbursing expenses
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0.60
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1.10
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1.03
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1
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If
your shares are held in a direct account and the value of your account is below $1,000, the fund may charge you a fee of $3.75 per account that is determined and assessed quarterly (with an annual maximum of $15.00 per account). Direct accounts
generally include accounts held in the name of the individual investor on the fund’s books and records.
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2
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”Other expenses” for Class
C shares are estimated for the current fiscal year. Actual expenses may differ from estimates.
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3
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The manager has agreed to waive fees and/or reimburse operating expenses (other than interest, brokerage, taxes, extraordinary expenses and
acquired fund fees and expenses) so that total annual operating expenses are not expected to exceed 0.60% for Class A shares, 1.10% for Class B shares and 1.10% for Class C shares. These arrangements cannot be terminated prior to
December 31, 2014 without the Board of Trustees’ consent. Additional amounts may be voluntarily waived and/or reimbursed from time to time. The manager is permitted to recapture any such amounts waived and/or reimbursed to the class during
the same fiscal year if the class’ total annual operating expenses have fallen to a level below the limit described above.
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Example
This example is intended to help you compare the cost of investing in
the fund with the cost of investing in other mutual funds. The example assumes:
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You invest $10,000 in the fund for the time periods indicated
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Ÿ
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Your investment has a 5% return each year and the fund’s operating expenses remain the same
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Ÿ
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You reinvest all distributions and dividends without a sales charge
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Although your actual costs may be higher or lower, based on these assumptions your costs would be:
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Number of years you own your shares ($)
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1 year
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3 years
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5 years
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10 years
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Class A (with or without redemption at end of period)
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61
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196
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348
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790
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Class B (with redemption at end of period)
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612
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756
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924
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1,638
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Class B (without redemption at end of period)
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112
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456
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824
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1,638
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Class C (with redemption at end of period)
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205
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328
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569
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1,260
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Class C (without redemption at end of period)
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105
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328
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569
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1,260
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The fund invests in securities through an underlying fund: Tax Free Reserves Portfolio. The information above
reflects the direct expenses of the fund and its allocated share of expenses of Tax Free Reserves Portfolio.
Principal investment strategies
The
fund is a money market fund which, under normal market conditions, invests at least 80% of its assets in short-term high quality municipal obligations and interests in municipal obligations that pay interest that is exempt from federal income tax,
including the federal alternative minimum tax. Municipal securities include debt obligations issued by any of the 50 states and their political subdivisions, agencies and public authorities, certain other governmental issuers (such as Puerto Rico,
the U.S. Virgin Islands and Guam) and other qualifying issuers. These securities include participation or other interests in municipal securities and other structured securities such as variable rate demand obligations, tender option bonds,
partnership interests and swap-based securities, many of which may be issued or backed by U.S. or non-U.S. banks.
Some municipal
securities, such as general obligation issues, are backed by the issuer’s taxing authority, while other municipal securities, such as revenue issues, are backed only by revenues from certain facilities or other sources and not by the issuer
itself. The fund invests in securities that, at the time of purchase, are rated by one or more rating agencies in the highest short-term rating category (or, with respect to not more than 3% of its total assets, in the second highest category) or,
if not rated, are determined by the subadviser to be of equivalent quality.
Under normal circumstances, the fund may invest up to 20% of
its assets in investments that pay interest that may be subject to regular federal income tax and/or the federal alternative minimum tax, although for temporary or defensive purposes, the fund
may invest an unlimited amount in such securities.
As a money market fund,
the fund tries to maintain a share price of $1.00, and must follow strict rules as to the credit quality, liquidity, diversification and maturity of its investments. Where required by these rules, the fund’s subadviser or Board of Trustees (the
“Board”) will decide whether a security should be held or sold in the event of credit downgrades or certain other events occurring after purchase.
Certain risks
An investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the 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.
Additionally, you should be aware that a very small number of money market funds in other fund complexes have, in the past, “broken the
buck,” which means that investors did not receive $1.00 per share for their investment in those funds, and any money market fund may do so in the future. You should also be aware that the fund’s manager and its affiliates are under no
obligation to provide financial support to the fund or take other measures to ensure that you receive $1.00 per share for your investment in the fund. You should not invest in the fund with the expectation that any such action will be taken.
There is no assurance that the fund will meet its investment objective.
The fund could underperform other short-term municipal debt instruments or money market funds, or you could lose money, as a result of risks such as:
Market and interest rate risk.
There may be changes in interest rates, lack of liquidity or other disruptions in the bond markets or other adverse market events and conditions. The financial crisis that began in 2008 has caused
a significant decline in the value and liquidity of many securities of issuers worldwide. In response to the crisis, the U.S. and other governments and the Federal Reserve and certain foreign central banks have taken steps to support financial
markets. The withdrawal of this support, failure of efforts in response to the crisis, or investor perception that these efforts are not succeeding could negatively affect financial markets generally as well as the value and liquidity of certain
securities. In addition, policy and legislative changes in the United States and in other countries are changing many aspects of financial regulation. The impact of these changes on the markets, and the practical implications for market
participants, may not be fully known for some time.
Credit
risk.
An issuer or obligor of a security held by the fund or a counterparty to a financial contract with the fund may default or its credit may be downgraded, or the value of assets
underlying a security may decline.
Yield risk.
The amount of income received by the fund will go up or down depending on day-to-day variations in short-term interest rates, and when interest rates are very low the fund’s expenses could
absorb all or a significant portion of the fund’s
income. If interest rates increase, the fund’s yield may not increase
proportionately. For example, the fund’s manager may discontinue any temporary voluntary fee limitation or recoup amounts previously waived and/or reimbursed. In addition, the recent adoption of more stringent regulations governing the
management of money market funds could have a negative effect on the fund’s yield.
Risk of increase in expenses.
Your actual costs of investing in the fund may be higher than the expenses shown in “Annual
fund operating expenses” for a variety of reasons. For example, expense ratios may be higher than those shown if average net assets decrease, or if a fee limitation is changed or terminated.
Tax risk.
The
income on the fund’s municipal securities could become subject to federal income tax due to noncompliant conduct by issuers, unfavorable legislation or litigation or adverse interpretations by regulatory authorities.
Structured securities risk.
The payment and credit qualities of structured securities derive from their underlying assets, and they may behave in ways not anticipated by the fund, or they may not receive tax, accounting or
regulatory treatment anticipated by the fund.
Risks associated
with concentration in the banking industry.
The fund may invest a significant portion of its assets in municipal securities and interests in municipal securities that are issued or
backed by U.S. and non-U.S. banks, and thus will be more susceptible to negative events affecting the worldwide banking industry.
Risks relating to investments in municipal securities.
Municipal issuers may be adversely affected by rising health care costs, increasing unfunded pension liabilities, and by the phasing out of federal programs providing financial support. Unfavorable
conditions and developments relating to projects financed with municipal securities can result in lower revenues to issuers of municipal securities. Issuers often depend on revenues from these projects to make principal and interest payments. The
value of municipal securities can also be adversely affected by changes in the financial condition of one or more individual municipal issuers or insurers of municipal issuers, regulatory and political developments, tax law changes or other
legislative actions, and by uncertainties and public perceptions concerning these and other factors.
Prepayment or call risk.
Many issuers have a right to prepay their securities. If interest rates fall, an issuer may exercise
this right. If this happens, the fund will be forced to reinvest prepayment proceeds at a time when yields on securities available in the market are lower than the yield on the prepaid security.
Extension
risk.
If interest rates rise, repayments of fixed income securities may occur more slowly than anticipated by the market. This may drive the prices of these securities down because
their interest rates are lower than the current interest rate and they remain outstanding longer.
Portfolio selection risk.
The value of your investment may decrease if the subadviser’s judgment about the
quality, relative yield or value of, or market trends affecting, a particular security or sector, or about interest rates generally, is incorrect.
Redemption
risk.
The fund may experience heavy redemptions, particularly during periods of declining or illiquid markets, that could cause the fund to liquidate its assets at inopportune times
or at a loss or depressed value and that could affect the fund’s ability to maintain a $1.00 share price. In addition, the fund may suspend redemptions when permitted by applicable regulations.
These risks are discussed in more detail in the fund’s Prospectus or in the statement of additional information (“SAI”).
The fund is classified as “non-diversified,” which means it may invest a larger percentage of its assets in a smaller number
of issuers than a diversified fund. However, the fund intends to comply with the diversification requirements applicable to money market funds which limit the fund’s ability to invest in the obligations of a single issuer.
Performance
The accompanying bar
chart and table provide some indication of the risks of investing in the fund. The bar chart shows changes in the fund’s performance from year to year for Class A shares. The table shows the average annual total returns of each class of the
fund’s shares offered through this Summary Prospectus that has been in operation for at least one full calendar year. Performance for classes other than those shown may vary from the performance shown to the extent the expenses for those
classes differ. The fund makes updated performance information available at the fund’s website, http://www.leggmason.com/individualinvestors/products/mutual-funds/annualized_performance (select share class), or by calling the fund at
1-877-721-1926 or 1-203-703-6002.
The fund’s past performance is not necessarily an indication of how the fund will perform in the future.
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Total returns (%)
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Best quarter
((12/31/2010)): 0.00
Worst quarter
((03/31/2011)): 0.00
The year-to-date return as of the most recent calendar quarter, which ended
09/30/2012, was 0.01
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Average annual total returns
(for periods ended December 31, 2011)
(%)
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1 year
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Since
inception
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Inception
date
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Class A
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0.01
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0.01
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08/17/2010
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Class B
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(4.99)
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(2.92)
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08/19/2010
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Management
Investment manager:
Legg Mason Partners Fund Advisor, LLC
Subadviser:
Western Asset Management Company
Purchase and sale of fund shares
In general, you may purchase, redeem or exchange shares of the fund during fund business hours on any day on which both the New York Stock Exchange
and the Federal Reserve Bank of New York are open for business, subject to certain exceptions.
The fund’s initial and subsequent
investment minimums generally are as follows:
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Investment minimum initial/additional investments ($)
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Class A
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Class B
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Class C
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General
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1,000/50
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1,000/50
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1,000/50
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Participants in Eligible Sweep Accounts
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None/None
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N/A
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N/A
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Uniform Gifts or Transfers to Minor Accounts
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1,000/50
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1,000/50
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1,000/50
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Systematic Investment Plans
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50/50
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50/50
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50/50
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Clients of Eligible Financial Intermediaries
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None/None
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N/A
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N/A
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Eligible Investment Programs
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None/None
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N/A
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N/A
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Institutional Investors
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1,000/50
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1,000/50
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1,000/50
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Your financial intermediary may impose different investment minimums.
The fund normally calculates its net asset value as of 12:00 noon (Eastern time) and as of the time it closes for business (normally 4:00 p.m.
(Eastern time)) on each fund business day. The fund may close early under certain circumstances. For more information, please contact your financial intermediary, or contact the fund by phone (1-877-721-1926 or 1-203-703-6002).
Tax information
The fund intends to
distribute income that is exempt from regular federal income tax and the federal alternative minimum tax. A portion of the fund’s distributions may be subject to such taxes.
Payments to broker/dealers and other financial intermediaries
The fund’s related
companies may pay broker/dealers or other financial intermediaries (such as a bank or an insurance company) for the sale of fund shares and related services. These payments create a conflict of interest by influencing your broker/dealer or other
intermediary or its employees or associated persons to recommend the fund over another investment. Ask your financial adviser or salesperson or visit your financial intermediary’s or salesperson’s website for more information.
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