|
CUSIP 52469G786 Legg Mason Capital Management All Cap Fund - Class A (Information on Sales Charges, Breakpoints, Sales Charge Waivers and Exchanges)
Individual investors can generally invest in Class A, Class B and Class C
shares. Effective July 27, 2007, the fund’s Class 1 shares were closed to
all purchases and incoming exchanges. Investors owning Class 1 shares on
that date may continue to maintain their then-current Class 1 shares, but
are no longer permitted to add to their Class 1 share positions (excluding
reinvestment of dividends and distributions). Institutional and Retirement
Plan Investors and Clients of Eligible Financial Intermediaries should
refer to "Retirement and Institutional Investors – eligible investors"
below for a description of the classes available to them. Each class has different sales charges and expenses, allowing you to choose
a class that may be appropriate for you. When choosing which class of shares to buy, you should consider:
If you are choosing between Class A and Class B shares, it will in almost
all cases be the more economical choice for you to purchase Class A shares
if you plan to purchase shares in an amount of $100,000 or more (whether in
a single purchase or through aggregation of eligible holdings). This is
because of the reduced sales charge available on larger investments of
Class A shares and the lower ongoing expenses of Class A shares compared to
Class B shares. If you intend to invest for only a few years, the effect of Class B contingent deferred sales charges on redemptions made within five years of purchase, as well as the effect of higher expenses of that class, might make an investment in Class C shares more appropriate. There is no initial sales charge on Class C shares, and the contingent deferred sales charge does not apply to shares redeemed one year or more after purchase. However, if you plan to invest a large amount and/or your investment horizon is five years or more, Class C shares might not be as advantageous as Class A shares. The annual distribution and/or service fees on Class C shares may cost you more over the longer term than the front-end sales charge you would have paid for larger purchases of Class A shares. Each class of shares except Class 1 shares is authorized to pay fees for recordkeeping services to Service Agents. As a result, operating expenses of classes that incur new or additional recordkeeping fees may increase over time. You may buy shares:
Your Service Agent may provide shareholder services that differ from the
services provided by other Service Agents. Services provided by your
Service Agent may vary by class. You should ask your Service Agent to
explain the shareholder services it provides for each class and the
compensation it receives in connection with each class. Remember that your
Service Agent may receive different compensation depending on the share
class in which you invest. Your Service Agent may not offer all classes of shares. You should contact your Service Agent for further information. More information about the fund's classes of shares is available through the Legg Mason funds' website. You'll find detailed information about sales charges and ways you can qualify for reduced or waived sales charges, including:
To visit the website, go to http://www.leggmason.com/individualinvestors,
select "Equity" and click on the name of the fund in the dropdown menu. Purchase and sale of fund shares You may purchase, redeem or exchange shares of the fund each day the New
York Stock Exchange is open, at the fund's net asset value determined after
receipt of your request in good order, subject to any applicable
sales charge. The fund's initial and subsequent investment minimums generally are as follows:
Your financial intermediary may impose different investment minimums. For more information about how to purchase, redeem or exchange shares, and to learn which classes of shares are available to you, you should contact your financial intermediary, or, if you hold your shares or plan to purchase shares through the fund, you should contact the fund by phone (Funds Investor Services at 1-800-822-5544 or Institutional Shareholder Services at 1-888-425-6432) or by mail (Legg Mason Funds, P.O. Box 55214, Boston, MA 02205-8504).
The following table compares key features of the fund's classes. You should
review the fee table and example at the front of this Prospectus carefully
before choosing your share class. Your Service Agent can help you choose a
class that may be appropriate for you. Please contact your Service Agent
regarding the availability of Class FI, Class R or Class R1 shares. You may
be required to provide appropriate documentation confirming your
eligibility to invest in these share classes. Your Service Agent may
receive different compensation depending upon which class you choose.
Class A shares You buy Class A shares at the offering price, which is the net asset value
plus a sales charge. You pay a lower rate as the size of your investment
increases to certain levels called breakpoints. You do not pay a sales
charge on the fund's distributions or dividends that you reinvest in
additional Class A shares. The table below shows the rate of sales charge you pay, depending on the amount you purchase. It also shows the amount of broker/dealer compensation that will be paid out of the sales charge if you buy shares from a Service Agent. For Class A shares sold by the distributor, the distributor will receive the sales charge imposed on purchases of Class A shares (or any contingent deferred sales charge paid on redemptions) and will retain the full amount of such sales charge. Service Agents will receive a distribution and/or service fee payable on Class A shares at an annual rate of up to 0.25% of the average daily net assets represented by the Class A shares serviced by them.
Investments of $1,000,000 or more You do not pay an initial sales charge when you buy $1,000,000 or more of
Class A shares. However, if you redeem these Class A shares within one year
of purchase, you will pay a contingent deferred sales charge of 1.00%. Qualifying for a reduced Class A sales charge There are several ways you can combine multiple purchases of Class A shares
of funds sold by the distributor to take advantage of the breakpoints in
the sales charge schedule. In order to take advantage of reductions in
sales charges that may be available to you when you purchase fund shares,
you must inform your Service Agent, Funds Investor Services or
Institutional Shareholder Services if you are eligible for a letter of
intent or a right of accumulation and if you own shares of other funds that
are eligible to be aggregated with your purchases. Certain records, such as
account statements, may be necessary in order to verify your eligibility
for a reduced sales charge.
Waivers for certain Class A investors Class A initial sales charges are waived for certain types of investors,
including:
If you qualify for a waiver of the Class A initial sales charge, you must
notify your Service Agent, Funds Investor Services at 1-800-822-5544 or
Institutional Shareholder Services at 1-888-425-6432 at the time of
purchase and provide sufficient information at the time of purchase to
permit verification that the purchase qualifies for the initial sales
charge waiver. If you want to learn about additional waivers of Class A initial sales
charges, contact your Service Agent, consult the SAI or visit the Legg
Mason funds' website, http://www.leggmason.com/individualinvestors, select
"Equity" and click on the name of the fund in the dropdown menu. Class B shares You buy Class B shares at net asset value with no initial sales charge.
However, if you redeem your Class B shares within five years of your
purchase payment, you will pay a contingent deferred sales charge. The
contingent deferred sales charge decreases as the number of years since
your purchase payment increases.
LMIS generally will pay Service Agents selling Class B shares a commission
of up to 4.00% of the purchase price of the Class B shares they sell. LMIS
will retain the contingent deferred sales charges. The fund pays annual
distribution and/or service fees of up to 1.00% of the average daily net
assets of Class B shares. Service Agents receive an annual distribution
and/or service fee of up to 0.25% of the average daily net assets
represented by the Class B shares serviced by them. Class B conversion After approximately 8 years, Class B shares automatically convert into
Class A shares. This helps you because Class A shares have lower annual
expenses. Your Class B shares will convert to Class A shares as follows:
Class C shares You buy Class C shares at net asset value with no initial sales charge.
However, if you redeem your Class C shares within one year of purchase, you
will pay a contingent deferred sales charge of 1.00%. LMIS generally will pay Service Agents selling Class C shares a commission of up to 1.00% of the purchase price of the Class C shares they sell. LMIS will retain the contingent deferred sales charges and an annual distribution and/or service fee of up to 1.00% of the average daily net assets represented by the Class C shares serviced by these Service Agents until the thirteenth month after purchase. Starting in the thirteenth month after purchase, these Service Agents will receive an annual distribution and/or service fee of up to 1.00% of the average daily net assets represented by the Class C shares serviced by them. Class FI, Class R, Class R1 and Class I shares You buy Class FI, Class R, Class R1 and Class I shares at net asset value
with no initial sales charge and no contingent deferred sales charge when
redeemed. Service Agents receive an annual distribution and/or service fee of up to 0.25% of the average daily net assets represented by Class FI shares serviced by them, up to 0.50% of the average daily net assets represented by Class R shares serviced by them and up to 1.00% of the average daily net assets represented by Class R1 shares serviced by them. Class I shares are not subject to any distribution and/or service fees. Class 1 shares Effective July 27, 2007, the fund's Class 1 shares were closed to all
purchases and incoming exchanges. Investors owning Class 1 shares on that
date may continue to maintain their then-current Class 1 shares, but are no
longer permitted to add to their Class 1 share positions (excluding
reinvestment of dividends and distributions).
The contingent deferred sales charge is based on the net asset value at the
time of purchase or redemption, whichever is less, and therefore you do not
pay a sales charge on amounts representing appreciation or depreciation.
In addition, you do not pay a contingent deferred sales charge:
Each time you place a request to redeem shares, the fund will first redeem
any shares in your account that are not subject to a contingent deferred
sales charge and then redeem the shares in your account that have been held
the longest. If you redeem shares of a fund sold by the distributor and pay a contingent deferred sales charge, you may, under certain circumstances, reinvest all or part of the redemption proceeds within 60 days and receive pro rata credit for any contingent deferred sales charge imposed on the prior redemption. Please contact your Service Agent for additional information. The distributor receives contingent deferred sales charges as partial compensation for its expenses in selling shares, including the payment of compensation to your Service Agent. Contingent deferred sales charge waivers The contingent deferred sales charge for each share class will generally be
waived:
If you want to learn more about additional waivers of contingent deferred
sales charges, contact your Service Agent, consult the SAI or visit the
Legg Mason funds' website, http://www.leggmason.com/individualinvestors,
select "Equity" and click on the name of the fund in the dropdown menu.
Eligible Investors Retirement Plans "Retirement Plans" include 401(k) plans, 457 plans, employer-sponsored
403(b) plans, profit-sharing plans, non-qualified deferred compensation
plans and other similar employer-sponsored retirement plans. Retirement
Plans do not include individual retirement vehicles, such as traditional
and Roth individual retirement accounts, Coverdell education savings
accounts, individual 403(b)(7) custodial accounts, Keogh plans, SEPs,
SARSEPs, SIMPLE IRAs or similar accounts. Retirement Plans with omnibus accounts held on the books of the fund can generally invest in Class C, Class FI, Class R, Class R1 and Class I shares. Although Retirement Plans with omnibus accounts held on the books of the fund are not subject to minimum initial investment requirements for any of these share classes, certain investment minimums may be imposed by a financial intermediary. The distributor may impose certain additional requirements. Please contact your Service Agent for more information. Class A and Class B shares are no longer offered through Service Agents for Retirement Plans with omnibus accounts held on the books of the fund, with limited exceptions. Class A shares will cease to be available to new Retirement Plan investors through a Service Agent if the Service Agent makes Class FI shares available. Class C shares will cease to be available to new Retirement Plan investors through a Service Agent if the Service Agent makes Class R1 shares available. Please see below for additional information. Other Retirement Plans Other Retirement Plan investors can generally invest in Class A, Class B
and Class C shares. "Other Retirement Plans" include Retirement Plans
investing through brokerage accounts and also include certain Retirement
Plans with direct relationships to the fund that are neither Institutional
Investors nor investing through omnibus accounts. Individual retirement
vehicles, such as IRAs, may also choose among these share classes. Other
Retirement Plans and individual retirement vehicles are treated like
individual investors for purposes of determining sales charges and any
applicable sales charge reductions or waivers. Clients of Eligible Financial Intermediaries Clients of Eligible Financial Intermediaries may invest in Class A, Class
FI or Class I shares. "Clients of Eligible Financial Intermediaries" are
investors who invest in the fund through financial intermediaries that
offer their clients fund shares through investment programs authorized by
LMIS. Such investment programs may include fee-based advisory account
programs and college savings vehicles such as Section 529 plans. The
financial intermediary may impose separate investment minimums. Institutional Investors Institutional Investors may invest in Class I shares if they meet the
$1,000,000 minimum initial investment requirement. Institutional Investors
may also invest in Class A, Class B and Class C shares, which have
different investment minimums, fees and expenses. "Institutional Investors"
generally include corporations, banks, trust companies, insurance
companies, investment companies, foundations, endowments, defined benefit
plans and other similar entities with direct relationships to the fund. Class A and Class B — Retirement Plans Class A and Class B shares are no longer offered through Service Agents to
Retirement Plans with omnibus accounts held on the books of the fund.
However, certain Retirement Plans that held Class B shares prior to
December 1, 2006 are permitted to make additional investments in that
class. Certain existing programs for current and prospective Retirement
Plan investors sponsored by financial intermediaries also remain eligible
to purchase Class A shares. Under these programs, the initial sales charge
and contingent deferred sales charge for Class A shares are waived where:
LMIS does not pay Service Agents selling Class A shares to Retirement Plans
with a direct omnibus relationship with the fund a commission on the
purchase price of Class A shares sold by them. However, for certain
Retirement Plans that are permitted to purchase shares at net asset value,
LMIS may pay Service Agents commissions of up to 1.00% of the purchase
price of the Class A shares that are purchased with regular ongoing plan
contributions. Please contact your Service Agent for more information. Class C — Retirement Plans Retirement Plans with omnibus accounts held on the books of the fund may
buy Class C shares at net asset value without paying a contingent deferred
sales charge. LMIS does not pay Service Agents selling Class C shares to
Retirement Plans with omnibus accounts held on the books of the fund a
commission on the purchase price of Class C shares sold by them. Instead,
immediately after purchase, LMIS may pay these Service Agents an annual
distribution and/or service fee of up to 1.00% of the average daily net
assets represented by the Class C shares serviced by them. Certain Retirement Plan programs with exchange features in effect prior to November 20, 2006, as approved by LMIS, will remain eligible for exchange from Class C shares to Class A shares in accordance with the program terms. Please see the SAI for more details. Class FI shares Class FI shares are offered only to investors who invest in the fund
through certain financial intermediaries and Retirement Plan programs. Class R shares Class R shares are offered only to Retirement Plans with accounts held on
the books of the fund (either at the plan level or at the level of the
financial intermediary). Class R1 shares Class R1 shares are offered only to Retirement Plans with accounts held on
the books of the fund (either at the plan level or at the level of the
financial intermediary). Class I shares Class I shares are offered only to Institutional Investors who meet the
$1,000,000 minimum initial investment requirement, Clients of Eligible
Financial Intermediaries and other investors authorized by LMIS. However,
any investor that held Class I shares prior to November 20, 2006 is
permitted to make additional investments in Class I shares. Certain waivers of these requirements for individuals associated with the fund, Legg Mason or its affiliates are discussed in the SAI. Other considerations Plan sponsors, plan fiduciaries and other financial intermediaries may
choose to impose qualification requirements that differ from the fund’s
share class eligibility standards. In certain cases this could result in
the selection of a share class with higher distribution and/or
service-related fees than otherwise would have been charged. The fund is
not responsible for, and has no control over, the decision of any plan
sponsor, plan fiduciary or financial intermediary to impose such differing
requirements. Please consult with your plan sponsor, plan fiduciary or
financial intermediary for more information about available share classes. Your Service Agent may not offer all share classes. Please contact your Service Agent for additional details.
General Investors may purchase shares from a Service Agent. In addition, certain
investors, including retirement plans purchasing through certain Service
Agents, may purchase shares directly from the fund. When purchasing shares
of the fund, investors must specify whether the purchase is for Class A,
Class B, Class C, Class FI, Class R, Class R1 or Class I shares. Service Agents may charge their
customers an annual account maintenance fee in connection with a brokerage
account through which an investor purchases or holds shares. Accounts held
directly at the transfer agent are not subject to a maintenance fee.
Effective July 27, 2007, the fund's Class 1 shares were closed to all
purchases and incoming exchanges. Investors owning Class 1 shares on that
date may continue to maintain their then-current Class 1 shares, but are no
longer permitted to add to their Class 1 positions (excluding reinvestments
of dividends and distributions). For additional information regarding applicable investment minimums and eligibility requirements, please see the fund's Prospectus. There are minimum investment requirements of $1,000 for initial investments and $50 for subsequent investments for purchases of Class A shares by: (i) current and retired board members of Legg Mason, (ii) current and retired board members of any fund advised by LMPFA or its affiliates (such board members, together with board members of Legg Mason, are referred to herein as "Board Members"), (iii) current employees of Legg Mason and its affiliates, (iv) the "immediate families" of such persons ("immediate families" are such person's spouse, including the surviving spouse of a deceased Board Member, and children under the age of 21) and (v) a pension, profit-sharing or other benefit plan for the benefit of such persons. The fund reserves the right to waive or change minimums, to decline any order to purchase its shares and to suspend the offering of shares from time to time. Purchase orders received by the fund prior to the close of regular trading on the New York Stock Exchange (the "NYSE") on any day the fund calculates its NAV are priced according to the NAV determined on that day (the "trade date"). Orders received by a Service Agent prior to the close of regular trading on the NYSE on any day the fund calculates its NAV are priced according to the NAV determined on that day, provided the order is received by the fund's transfer agent prior to its close of business. Payment must be made with the purchase order. Class I Shares.
The following persons are permitted to purchase Class I
shares of the fund: 1) current employees of the fund's manager and its
affiliates; 2) current and former board members of investment companies
managed by affiliates of Legg Mason; 3) current and former board members of
Legg Mason; and 4) the immediate families of such persons. For such
investors, the minimum initial investment is $1,000 and the minimum for
each purchase of additional shares is $50.2 Under certain circumstances, an investor who purchases fund shares pursuant to a fee-based advisory account program of an Eligible Financial Intermediary as authorized by LMIS may be afforded an opportunity to make a conversion between one or more share classes owned by the investor in the same fund to Class I shares of that fund. Such a conversion in these particular circumstances does not cause the investor to realize taxable gain or loss.
Systematic Investment Plan.
Shareholders may make additions to their
accounts at any time by purchasing shares through a service known as the
Systematic Investment Plan. Under the Systematic Investment Plan, the
distributor or the transfer agent is authorized through preauthorized
transfers of at least $50 on a monthly, quarterly, every alternate month,
semi-annual or annual basis to charge the shareholder's account held with a
bank or other financial institution as indicated by the shareholder, to
provide for systematic additions to the shareholder's fund account. A
shareholder who has insufficient funds to complete the transfer will be
charged a fee of up to $25 by the distributor or the transfer agent. The
Systematic Investment Plan authorizes the distributor to apply cash held in
the shareholder's brokerage account to make additions to the account.
Additional information is available from the fund or a Service Agent. Sales Charge Alternatives The following classes of shares are available for purchase. See the
Prospectus for a discussion of who is eligible to purchase certain classes
and of factors to consider in selecting which class of shares to purchase. Class A Shares. Class A shares are sold to investors at the public offering
price, which is the NAV plus an initial sales charge, as described in the
fund's Prospectus. Members of the selling group may receive a portion of the sales charge as described in the Prospectus and may be deemed to be underwriters of the fund as defined in the 1933 Act. Sales charges are calculated based on the aggregate of purchases of Class A shares of the fund made at one time by any "person," which includes an individual and his or her spouse and children under the age of 21, or a trustee or other fiduciary of a single trust estate or single fiduciary account. For additional information regarding sales charge reductions, see "Sales Charge Waivers and Reductions" below. Purchases of Class A shares of $1,000,000 or more will be made at NAV without any initial sales charge, but will be subject to a contingent deferred sales charge of 1.00% on redemptions made within 12 months of purchase. The contingent deferred sales charge is waived in the same circumstances in which the contingent deferred sales charge applicable to Class B and C shares is waived. See "Contingent Deferred Sales Charge Provisions" and "Waivers of Contingent Deferred Sales Charge" below. Class B and Class C Shares. Class B and Class C shares are sold without an
initial sales charge but are subject to a contingent deferred sales charge
payable upon certain redemptions. See "Contingent Deferred Sales Charge
Provisions" below. Class 1 Shares. Effective July 27, 2007, the fund's Class 1 shares were
closed to all purchases and incoming exchanges. Class FI, Class R, Class R1 and Class I Shares. Class FI, Class R, Class R1
and Class I shares are sold at NAV with no initial sales charge and no
contingent deferred sales charge upon redemption. Sales Charge Waivers and Reductions Initial Sales Charge Waivers. Purchases of Class A shares may be made at
NAV without an initial sales charge in the following circumstances:
In order to obtain such discounts, the purchaser must provide sufficient
information at the time of purchase to permit verification that the
purchase qualifies for the elimination of the sales charge. All existing retirement plan shareholders who purchased Class A shares at NAV prior to November 20, 2006, are permitted to purchase additional Class A shares at NAV. Certain existing programs for current and prospective retirement plan investors sponsored by financial intermediaries approved by LMIS prior to November 20, 2006 will also remain eligible to purchase Class A shares at NAV. Accumulation Privilege Please see the fund's Prospectus for information regarding accumulation privileges. Letter of Intent Helps you take advantage of breakpoints in Class A sales charges. You may purchase Class A shares of funds sold by the distributor over a 13-month period and pay the same sales charge, if any, as if all shares had been purchased at once. You have a choice of seven Asset Level Goal amounts, as follows:
Each time you make a Class A purchase under a Letter of Intent, you will be
entitled to pay the sales charge that is applicable to the amount of your
Asset Level Goal. For example, if your Asset Level Goal is $100,000, any
Class A investments you make under a Letter of Intent would be subject to
the sales charge of the specific fund you are investing in for purchases of
$100,000. Sales charges and breakpoints vary among the funds sold by the
distributor. When you enter into a Letter of Intent, you agree to purchase in Eligible Accounts over a thirteen (13) month period Eligible Fund Purchases in an amount equal to the Asset Level Goal you have selected, less any Eligible Prior Purchases. For this purpose, shares are valued at the public offering price (including any sales charge paid) calculated as of the date of purchase, plus any appreciation in the value of the shares as of the date of calculation, except for Eligible Prior Purchases, which are valued at current value as of the date of calculation. Your commitment will be met if at any time during the 13-month period the value, as so determined, of eligible holdings is at least equal to your Asset Level Goal. All reinvested dividends and distributions on shares acquired under the Letter will be credited towards your Asset Level Goal. You may include any Eligible Fund Purchases towards the Letter, including shares of classes other than Class A shares. However, a Letter of Intent will not entitle you to a reduction in the sales charge payable on any shares other than Class A shares, and if the shares are subject to a contingent deferred sales charge, you will still be subject to that contingent deferred sales charge with respect to those shares. You must make reference to the Letter of Intent each time you make a purchase under the Letter. Eligible Fund Purchases.
Generally, any shares of a fund sold by the
distributor may be credited towards your Asset Level Goal. Shares of money
market funds sold by the distributor acquired by exchange from other funds
offered with a sales charge may be credited toward your Asset Level Goal. The eligible funds may change from time to time. Investors should check with their Service Agent to see which funds may be eligible. Eligible Accounts. Purchases may be made through any account in your name,
or in the name of your spouse or your children under the age of 21. You may
need to provide certain records, such as account statements, in order to
verify your eligibility for reduced sales charges. Contact your Service
Agent to see which accounts may be credited toward your Asset Level Goal. Eligible Prior Purchases. You may also credit towards your Asset Level Goal
any Eligible Fund Purchases made in Eligible Accounts at any time prior to
entering into the Letter of Intent that have not been sold or redeemed,
based on the current price of those shares as of the date of calculation. Increasing the Amount of the Letter of Intent. You may at any time increase
your Asset Level Goal. You must, however, contact your Service Agent, or if
you purchase your shares directly through the transfer agent, contact the
transfer agent, prior to making any purchases in an amount in excess of
your current Asset Level Goal. Upon such an increase, you will be credited
by way of additional shares at the then-current offering price for the
difference between: (a) the aggregate sales charges actually paid for
shares already purchased under the Letter of Intent and (b) the aggregate
applicable sales charges for the increased Asset Level Goal. The 13-month
period during which the Asset Level Goal must be achieved will remain
unchanged. Sales and Exchanges. Shares acquired pursuant to a Letter of Intent, other
than Escrowed Shares as defined below, may be redeemed or exchanged at any
time, although any shares that are redeemed prior to meeting your Asset
Level Goal will no longer count towards meeting your Asset Level Goal.
However, complete liquidation of purchases made under a Letter of Intent
prior to meeting the Asset Level Goal will result in the cancellation of
the Letter. See "Failure to Meet Asset Level Goal" below. Exchanges in
accordance with the fund's Prospectus are permitted, and shares so
exchanged will continue to count towards your Asset Level Goal, as long as
the exchange results in an Eligible Fund Purchase. Cancellation of Letter of Intent. You may cancel a Letter of Intent by
notifying your Service Agent in writing, or if you purchase your shares
directly through the transfer agent, by notifying the transfer agent in
writing. The Letter will be automatically cancelled if all shares are sold
or redeemed as set forth above. See "Failure to Meet Asset Level Goal"
below. Escrowed Shares. Shares equal in value to five percent (5%) of your Asset
Level Goal as of the date your Letter of Intent (or the date of any
increase in the amount of the Letter) is accepted will be held in escrow
during the term of your Letter. The Escrowed Shares will be included in the
total shares owned as reflected in your account statement and any dividends
and capital gains distributions applicable to the Escrowed Shares will be
credited to your account and counted towards your Asset Level Goal or paid
in cash upon request. The Escrowed Shares will be released from escrow if
all the terms of your Letter are met. Failure to Meet Asset Level Goal. If the total assets under your Letter of
Intent within its 13-month term are less than your Asset Level Goal whether
because you made insufficient Eligible Fund Purchases, redeemed all of your
holdings or cancelled the Letter before reaching your Asset Level Goal, you
will be liable for the difference between: (a) the sales charge actually
paid and (b) the sales charge that would have applied if you had not
entered into the Letter. You may, however, be entitled to any breakpoints
that would have been available to you under the accumulation privilege. An
appropriate number of shares in your account will be redeemed to realize
the amount due. For these purposes, by entering into a Letter of Intent,
you irrevocably appoint your Service Agent, or if you purchase your shares
directly through the transfer agent, the transfer agent, as your
attorney-in-fact for the purposes of holding the Escrowed Shares and
surrendering shares in your account for redemption. If there are
insufficient assets in your account, you will be liable for the difference.
Any Escrowed Shares remaining after such redemption will be released to
your account. Contingent Deferred Sales Charge Provisions "Contingent deferred sales charge shares" are: (a) Class B shares,
(b) Class C shares and (c) Class A shares that were purchased without an
initial sales charge but are subject to a contingent deferred sales charge.
A contingent deferred sales charge may be imposed on certain redemptions of
these shares. Any applicable contingent deferred sales charge will be assessed on the NAV at the time of purchase or redemption, whichever is less. Class C shares and Class A shares that are contingent deferred sales charge shares are subject to a 1.00% contingent deferred sales charge if redeemed within 12 months of purchase. In circumstances in which the contingent deferred sales charge is imposed on Class B shares, the amount of the charge will depend on the number of years since the shareholder made the purchase payment from which the amount is being redeemed, as further described in the Prospectus. Solely for purposes of determining the number of years since a purchase payment, all purchase payments made during a month will be aggregated and deemed to have been made on the last day of the preceding statement month. The following table sets forth the rates of the charge for redemptions of Class B shares by shareholders.
Class B shares will convert automatically to Class A shares approximately
eight years after the date on which they were purchased and thereafter will
no longer be subject to any distribution fees. There will also be converted
at that time such proportion of Class B dividend shares (Class B shares
that were acquired through the reinvestment of dividends and distributions)
owned by the shareholder as the total number of his or her Class B shares
converting at the time bears to the total number of outstanding Class B
shares (other than Class B dividend shares) owned by the shareholder. In determining the applicability of any contingent deferred sales charge, it will be assumed that a redemption is made first of shares representing capital appreciation, next of shares representing the reinvestment of dividends and capital gain distributions, next of shares that are not subject to the contingent deferred sales charge and finally of other shares held by the shareholder for the longest period of time. The length of time that contingent deferred sales charge shares acquired through an exchange have been held will be calculated from the date the shares exchanged were initially acquired in one of the other funds sold by the distributor. For federal income tax purposes, the amount of the contingent deferred sales charge will reduce the gain or increase the loss, as the case may be, on the amount realized on redemption. The fund's distributor receives contingent deferred sales charges in partial consideration for its expenses in selling shares. Waivers of Contingent Deferred Sales Charge The contingent deferred sales charge will be waived on: (a) exchanges (see
"Exchange Privilege"); (b) automatic cash withdrawals in amounts equal to
or less than 2.00% per month of the shareholder's account balance at the
time the withdrawals commence, up to a maximum of 12.00% in one year (see
"Automatic Cash Withdrawal Plan"); (c) redemptions of shares within 12
months following the death or disability (as defined in the Code) of the
shareholder; (d) mandatory post-retirement distributions from retirement
plans or IRAs commencing on or after attainment of age 70 1/2 (except that
shareholders who purchased shares subject to a contingent deferred sales
charge prior to May 23, 2005 will be "grandfathered" and will be eligible
to obtain the waiver at age 59 1/2 by demonstrating such eligibility at the time of
redemption); (e) involuntary redemptions; (f) redemptions of shares to
effect a combination of the fund with any investment company by merger,
acquisition of assets or otherwise; (g) tax-free returns of an excess
contribution to any retirement plan; and (h) certain redemptions of shares
of the fund in connection with lump-sum or other distributions made by
eligible retirement plans or redemption of shares by participants in
certain "wrap fee" or asset allocation programs sponsored by broker/dealers
and other financial institutions that have entered into agreements with the
distributor or the manager. The contingent deferred sales charge is waived on Class C shares purchased by retirement plan omnibus accounts held on the books of the fund. A shareholder who has redeemed shares from other funds sold by the distributor may, under certain circumstances, reinvest all or part of the redemption proceeds within 60 days and receive pro rata credit for any contingent deferred sales charge imposed on the prior redemption. Contingent deferred sales charge waivers will be granted subject to confirmation by the distributor or the transfer agent of the shareholder's status or holdings, as the case may be. Grandfathered Retirement Program with Exchange Features Certain retirement plan programs authorized prior to November 20, 2006
(collectively, the "Grandfathered Retirement Program") to offer eligible
retirement plan investors the opportunity to exchange all of their Class C
shares for Class A shares of an applicable Legg Mason Partners fund are
permitted to maintain such share class exchange feature for current and
prospective retirement plan investors. Under the Grandfathered Retirement Program Class C shares may be purchased by plans investing less than $3,000,000. Class C shares are eligible for exchange into Class A shares not later than eight years after the plan joins the program. They are eligible for exchange in the following circumstances: If a participating plan's total Class C holdings in all non-money market Legg Mason Partners funds equal at least $3,000,000, at the end of the fifth year after the date the participating plan enrolled in the Grandfathered Retirement Program, the participating plan will be offered the opportunity to exchange all of its Class C shares for Class A shares of the fund. Such participating plans will be notified of the pending exchange in writing within 30 days after the fifth anniversary of the enrollment date and, unless the exchange offer has been rejected in writing, the exchange will occur on or about the 90th day after the fifth anniversary date. If the participating plan does not qualify for the five-year exchange to Class A shares, a review of the participating plan's holdings will be performed each quarter until either the participating plan qualifies or the end of the eighth year. Any participating plan that has not previously qualified for an exchange into Class A shares will be offered the opportunity to exchange all of its Class C shares for Class A shares of the same fund regardless of asset size at the end of the eighth year after the date the participating plan enrolled in the Grandfathered Retirement Program. Such plans will be notified of the pending exchange in writing approximately 60 days before the eighth anniversary of the enrollment date and, unless the exchange has been rejected in writing, the exchange will occur on or about the eighth anniversary date. Once an exchange has occurred, a participating plan will not be eligible to acquire additional Class C shares, but instead may acquire Class A shares of the same fund. Any Class C shares not converted will continue to be subject to the distribution fee. For further information regarding this Program, contact your Service Agent or the transfer agent. Participating plans that enrolled in the Grandfathered Retirement Program prior to June 2, 2003 should contact the transfer agent for information regarding Class C exchange privileges applicable to their plan.
Automatic Cash Withdrawal Plan An automatic cash withdrawal plan (the "Withdrawal Plan") is available to
shareholders as described in the Prospectus. To the extent withdrawals
under the Withdrawal Plan exceed dividends, distributions and appreciation
of a shareholder's investment in the fund, there will be a reduction in the
value of the shareholder's investment, and continued withdrawal payments
may reduce the shareholder's investment and ultimately exhaust it.
Withdrawal payments should not be considered as income from investment in
the fund. Furthermore, as it generally would not be advantageous to a
shareholder to make additional investments in the fund at the same time he
or she is participating in the Withdrawal Plan, purchases by such
shareholder in amounts of less than $5,000 ordinarily will not be
permitted. The Withdrawal Plan will be carried over on exchanges between
funds sold by the distributor or classes of the fund. All dividends and
distributions on shares in the Withdrawal Plan are reinvested automatically
at NAV in additional shares of the fund.
For additional information, shareholders should contact their Service Agent. A shareholder who purchases shares directly through the transfer agent may continue to do so and applications for participation in the Withdrawal Plan should be sent to the transfer agent. Withdrawals may be scheduled on any day of the month; however, if the shareholder does not specify a day, the transfer agent will schedule the withdrawal on the 25th day (or the next business day if the 25th day is a weekend or holiday) of the month. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||