Legg Mason Partners Institutional Trust
Prospectus December 29, 2023
Western Asset Institutional U.S. Treasury Reserves
Share class
(Symbol): Investor Shares
(LTRXX)
Western Asset Institutional U.S. Treasury Obligations
Money Market Fund
Share class
(Symbol): Investor Shares
(LAIXX)
Western Asset Institutional Government Reserves
Share class
(Symbol): Investor Shares
(LGRXX)
The
Securities and Exchange Commission has not approved or disapproved these
securities or determined whether this Prospectus is accurate or complete. Any
statement to the contrary is a crime.
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INVESTMENT
PRODUCTS: NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE
VALUE |
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2 |
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Western
Asset Money Market Funds |
Western Asset
Institutional U.S. Treasury Reserves
Investment objective
The
fund’s investment objective is to provide shareholders with liquidity and as
high a level of current income from U.S. government obligations as is consistent
with preservation of capital.
Fees and expenses of the
fund
The
accompanying table describes the fees and expenses that you may pay if you buy,
hold and sell Investor Shares of the fund. You may pay other fees, such as
brokerage commissions and other fees to financial intermediaries, which are not
reflected in the tables and examples below.
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Shareholder
fees |
(fees paid directly from
your investment) |
Maximum
sales charge (load) imposed on purchases |
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None |
Maximum
deferred sales charge (load) |
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None |
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Annual fund
operating expenses (%)1
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(expenses that you pay
each year as a percentage of the value of your
investment) |
Management
fees1 |
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0.20 |
Distribution
and/or service (12b‑1) fees2 |
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0.05 |
Other
expenses |
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0.02 |
Total
annual fund operating expenses1 |
|
0.27 |
Fees
waived and/or expenses reimbursed3 |
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(0.04) |
Total
annual fund operating expenses after waiving fees and/or reimbursing
expenses |
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0.23 |
1 |
The fund is a feeder fund
that invests in securities through an underlying mutual fund, U.S.
Treasury Reserves Portfolio. The information in this table and in the
Example below reflects the direct fees and expenses of the fund and its
allocated share of fees and expenses of U.S. Treasury Reserves
Portfolio. Since the fund invests all of its investable
assets in U.S. Treasury Reserves Portfolio, the fund’s management
agreement provides that the investment management fee of the fund will be
reduced by the investment management fee allocated to the fund by U.S.
Treasury Reserves Portfolio. The gross expenses in the financial
highlights do not reflect the reduction in the fund’s management fee by
the amount paid by the fund for its allocable share of the management fee
paid to U.S. Treasury Reserves
Portfolio. |
2 |
Investor
Shares may pay a fee of up to 0.10% of average daily net assets pursuant
to the Fund’s Rule 12b‑1 plan. The Board has determined that, until
December 31, 2024, such payments shall not exceed 0.05% of the class’
average daily net assets. This arrangement cannot be terminated prior to
December 31, 2024 without the Board of Trustees’
consent. |
3 |
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 the ratio of total annual fund
operating expenses will not exceed 0.23% for Investor Shares, subject to
recapture as described below. This arrangement cannot be terminated prior
to December 31,
2024 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 amounts waived and/or reimbursed to the
class during the same fiscal year if the class’ total annual fund
operating expenses have fallen to a level below the limit described above.
In no case will the manager recapture any amount that would result, on any
particular business day of the fund, in the class’ total annual fund
operating expenses exceeding the limit described above or any other lower
limit then in effect. |
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Western Asset Institutional U.S.
Treasury Reserves |
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3 |
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 $10,000 in the fund for the time periods
indicated |
• |
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Your
investment has a 5% return each year and the fund’s operating expenses
remain the same (except that any applicable fee waiver or expense
reimbursement is reflected only through its expiration
date) |
• |
|
You
reinvest all distributions and dividends without a sales
charge |
Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
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Number of years you own
your shares ($) |
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1 year |
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3 years |
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5 years |
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10 years |
Investor
Shares (with or without redemption at end of period) |
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24 |
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94 |
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171 |
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396 |
The
fund is a feeder fund that invests in securities through an underlying mutual
fund, U.S. Treasury Reserves Portfolio, which has the same investment objective
and strategies as the fund. This structure is sometimes known as a
“master/feeder” structure.
Principal investment
strategies
The
fund is a money market fund that, under normal circumstances, invests at least
80% of its net assets in U.S. Treasury obligations. In addition, the fund may
invest in repurchase agreements that are fully collateralized by U.S. Treasury
obligations or cash. U.S. Treasury obligations include, without limitation, U.S.
Treasury bills, notes and bonds; STRIPS, which are individual interest and
principal components of eligible Treasury notes and bonds that are traded as
separate securities; and TIPS, which are inflation-protected securities issued
by the U.S. Treasury, the principal of which increases with inflation and
decreases with deflation, as measured by the Consumer Price
Index.
The
fund holds all of its assets in U.S. Treasury obligations, repurchase agreements
that are fully collateralized by U.S. Treasury obligations, and cash. Therefore,
the fund meets the requirement under Rule 2a‑7 under the Investment Company Act
of 1940, as amended (the “1940 Act”), that a government money market fund invest
at least 99.5% of its total assets in U.S. government securities, cash, and/or
repurchase agreements that are fully collateralized by U.S. government
securities or cash. “Government securities” means any securities issued or
guaranteed as to principal or interest by the United States, or by a person
controlled or supervised by and acting as an instrumentality of the Government
of the United States pursuant to authority granted by the Congress of the United
States; or any certificate of deposit for any of the
foregoing.
As
a government money market fund, the fund tries to maintain a share price of
$1.00. Pursuant to Rule 2a‑7 under the 1940 Act, the fund must follow strict
rules as to the quality, liquidity, diversification and maturity of its
investments.
The
fund may hold cash for cash management and defensive purposes. During unusual
market conditions, the fund may hold up to 100% of its assets in cash. Although
the fund intends to invest in U.S. government securities, an investment in the
fund is neither insured nor guaranteed by the U.S.
government.
Principal risks
You could lose money by investing in the
fund. Although the fund seeks to preserve the
value of your investment at $1.00 per share, it cannot guarantee it will do
so. An investment in the fund is not a bank
account and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency. The fund’s sponsor is not required to
reimburse the fund for losses, and you should not expect that the sponsor will
provide financial support to the fund at any time, including during periods of
market stress.
During
periods of market stress, there could be significant redemptions from money
market funds in general, potentially driving the market prices of money market
instruments down and adversely affecting market liquidity.
The
fund could underperform other short-term debt instruments or money market funds,
or you could lose money, as a result of risks such as:
Market and interest
rate risk. The market prices of
securities held by the fund may go up or down, sometimes rapidly or
unpredictably. While the fund seeks to maintain a $1.00 share price, if the
market prices of the fund’s securities fall, the value of your investment in the
fund could decline. The market price of a security may fall due to general
market conditions, such as real or perceived adverse economic or political
conditions or trends, tariffs and trade disruptions, inflation, substantial
economic downturn or recession, changes in interest rates, lack of liquidity in
the bond markets or adverse investor sentiment.
Market
prices will generally go down when interest rates rise. A rise in rates tends to
have a greater impact on the prices of longer term securities. A general rise in
interest rates may cause investors to move out of fixed income securities on a
large scale, which could adversely affect the price and liquidity of fixed
income securities and could also result in increased redemptions from the fund.
The fund may face a heightened level of interest rate risk due to changes in
monetary policy. When interest rates go down, the fund’s yield will decline.
Also, when interest rates decline, investments made by the fund may pay a lower
interest rate, which would reduce the income received by the fund. Recently,
there have been inflationary price movements, which have caused the fixed income
securities markets to experience heightened levels of interest rate volatility
and
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4 |
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Western
Asset Institutional U.S. Treasury Reserves |
liquidity
risk. The U.S. Federal Reserve has been raising interest rates from historically
low levels. It may continue to raise interest rates. In addition, changes in
monetary policy may exacerbate the risks associated with changing interest
rates. Any additional interest rate increases in the future could cause the
value of the fund’s holdings to decrease. It cannot be predicted when inflation
will return to more normalized levels or how long financial authorities will
counter inflationary pressures with monetary
tightening.
Market events
risk. The market values of securities or
other assets will fluctuate, sometimes sharply and unpredictably, due to factors
such as economic events, governmental actions or intervention, actions taken by
the U.S. Federal Reserve or foreign central banks, market disruptions caused by
trade disputes, labor strikes or other factors, political developments, armed
conflicts, economic sanctions and countermeasures in response to sanctions,
major cybersecurity events, the global and domestic effects of widespread or
local health, weather or climate events, and other factors that may or may not
be related to the issuer of the security or other asset. Economies and financial
markets throughout the world are increasingly interconnected. Economic,
financial or political events, trading and tariff arrangements, public health
events, terrorism, wars, natural disasters and other circumstances in one
country or region could have profound impacts on global economies or markets. As
a result, whether or not the fund invests in securities of issuers located in or
with significant exposure to the countries or markets directly affected, the
value and liquidity of the fund’s investments may be negatively affected.
Following Russia’s invasion of Ukraine in 2022, Russian stocks lost all, or
nearly all, of their market value. Other securities or markets could be
similarly affected by past or future geopolitical or other events or conditions.
Furthermore, events involving limited liquidity, defaults, non‑performance or
other adverse developments that affect one industry, such as the financial
services industry, or concerns or rumors about any events of these kinds, have
in the past and may in the future lead to market-wide liquidity problems, may
spread to other industries, and could negatively affect the value and liquidity
of the fund’s investments.
The
long-term impact of the COVID‑19 pandemic and its subsequent variants on
economies, markets, industries and individual issuers is not known. Some sectors
of the economy and individual issuers have experienced or may experience
particularly large losses. Periods of extreme volatility in the financial
markets, reduced liquidity of many instruments, increased government debt,
inflation, and disruptions to supply chains, consumer demand and employee
availability, may continue for some
time.
Raising
the ceiling on U.S. government debt has become increasingly politicized. Any
failure to increase the total amount that the U.S. government is authorized to
borrow could lead to a default on U.S. government obligations, with
unpredictable consequences for economies and markets in the U.S. and elsewhere.
Recently, inflation and interest rates have increased and may rise further.
These circumstances could adversely affect the value and liquidity of the fund’s
investments, impair the fund’s ability to satisfy redemption requests, and
negatively impact the fund’s
performance.
Credit
risk. An issuer or other obligor (such
as a party providing insurance or other credit enhancement) 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 perceived to be less creditworthy, or the
value of assets underlying a security may decline, causing the value of your
investment to decline. Changes in actual or perceived creditworthiness may occur
quickly. The fund could be delayed or hindered in its enforcement of rights
against an issuer, guarantor or counterparty.
Yield
risk. The amount of income received by
the fund will go up or down depending on variations in short-term interest
rates, and when interest rates are very low or negative 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, if for
example, the fund’s manager discontinued any temporary voluntary fee limitation
or recouped amounts previously waived and/or reimbursed.
Repurchase
agreements risk. Repurchase agreements
could involve certain risks in the event of default or insolvency of the seller,
including losses and possible delays or restrictions upon the fund’s ability to
dispose of the underlying securities. To the extent that, in the meantime, the
value of the securities that the fund has purchased has decreased, the fund
could experience a loss. The use of repurchase agreements may produce income
that is not exempt from state personal income tax.
Portfolio management
risk. The value of your investment may
decrease if the subadviser’s judgment about the quality, relative yield, value
or market trends affecting a particular security, industry, sector or region, or
about interest rates or other market factors, is incorrect or does not produce
the desired results, or if there are imperfections, errors or limitations in the
tools and data used by the subadviser. In addition, the fund’s investment
strategies or policies may change from time to time. Those changes may not lead
to the results intended by the subadviser and could have an adverse effect on
the value or performance of the fund.
Illiquidity
risk. The fund may make investments that
are illiquid or that become illiquid after purchase. The liquidity and value of
investments can deteriorate rapidly, and they may become difficult or impossible
to sell, particularly during times of market turmoil. Illiquid investments may
also be volatile and difficult to value. Markets may become illiquid quickly.
Markets may become illiquid when, for instance, there are few, if any,
interested buyers or sellers or when dealers are unwilling or unable to make a
market for certain securities, including U.S. Treasury securities. During times
of market turmoil, there may be few or no buyers or sellers for securities in
entire asset classes. If the fund is forced to sell an illiquid investment to
meet redemption requests or other cash needs, or to try to limit losses, the
fund may be forced to sell at a substantial loss or may not be able to sell at
all.
Valuation
risk. The sales price the fund could
receive for any particular portfolio investment may differ from the fund’s
valuation of the investment, particularly for securities that trade in thin or
volatile markets or that are valued using a fair value methodology. These
differences may increase significantly and affect fund investments more broadly
during periods of market volatility. Investors who purchase or redeem fund
shares on days when the fund is holding fair-valued securities may receive fewer
or more shares or lower or higher redemption proceeds than they would have
received if the fund had not fair-valued securities or had used a different
valuation methodology. The fund’s ability to value its investments may be
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Western Asset Institutional U.S.
Treasury Reserves |
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5 |
impacted
by technological issues and/or errors by pricing services or other third party
service providers. The valuation of the fund’s investments involves subjective
judgment, which may prove to be incorrect.
Cybersecurity
risk. Like other funds and business
enterprises, the fund, the manager, the subadviser and their service providers
are subject to the risk of cyber incidents occurring from time to time.
Cybersecurity incidents, whether intentionally caused by third parties or
otherwise, may allow an unauthorized party to gain access to fund assets, fund
or customer data (including private shareholder information) or proprietary
information, cause the fund, the manager, the subadviser and/or their service
providers (including, but not limited to, fund accountants, custodians,
sub‑custodians, transfer agents and financial intermediaries) to suffer data
breaches, data corruption or loss of operational functionality, or prevent fund
investors from purchasing, redeeming or exchanging shares, receiving
distributions or receiving timely information regarding the fund or their
investment in the fund. The fund, the manager, and the subadviser have limited
ability to prevent or mitigate cybersecurity incidents affecting third party
service providers, and such third party service providers may have limited
indemnification obligations to the fund, the manager, and/or the subadviser.
Cybersecurity incidents may result in financial losses to the fund and its
shareholders, and substantial costs may be incurred in order to prevent or
mitigate any future cybersecurity incidents. Issuers of securities in which the
fund invests are also subject to cybersecurity risks, and the value of these
securities could decline if the issuers experience cybersecurity incidents.
New
ways to carry out cyber attacks continue to develop. There is a chance that some
risks have not been identified or prepared for, or that an attack may not be
detected, which puts limitations on the fund’s ability to plan for or respond to
a cyber attack.
These
and other risks are discussed in more detail in the Prospectus or in the
Statement of Additional Information.
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6 |
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Western
Asset Institutional U.S. Treasury Reserves |
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 Investor Shares.
The table shows the average annual total returns of Investor
Shares. 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 www.franklintempleton.com/moneymarketfunds
(select fund and 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.
Best
Quarter (12/31/2022): 0.84 Worst Quarter
(12/31/2021): 0.00
The year‑to‑date return as of the
most recent calendar quarter, which ended 09/30/2023, was 3.58
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Average annual total returns
(%) |
(for periods ended
December 31, 2022) |
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1 year |
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5 years |
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Since inception |
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Inception date |
Investor
Shares |
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1.40 |
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1.07 |
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0.66 |
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09/03/2013 |
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Western Asset Institutional U.S.
Treasury Reserves |
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7 |
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Management
Investment
manager: Franklin Templeton Fund
Adviser, LLC (“FTFA”) (formerly known as Legg Mason Partners Fund Advisor, LLC)
Subadviser: Western Asset Management Company, LLC (“Western
Asset”)
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 for Investor Shares generally
are set forth in the accompanying table:
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Investment minimum initial/additional investments
($) |
Institutional
investors purchasing through financial intermediaries |
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1 million/50 |
Investor
Shares are available only through financial intermediaries. Your Service Agent
may impose higher or lower investment minimums, or may impose no minimum
investment requirement. “Service Agents” are banks, brokers, dealers, insurance
companies, investment advisers, financial consultants or advisers, mutual fund
supermarkets and other financial intermediaries that have entered into an
agreement with the distributor to sell shares of the fund.
The
fund normally calculates its net asset value as of each hour from 8:00 a.m.
(Eastern time) until its close of business (normally 2:00 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’s distributions are generally taxable as ordinary income or capital gains.
Payments to
broker/dealers and other financial intermediaries
The
fund’s related companies pay Service Agents for the sale of fund shares,
shareholder services and other purposes. These payments create a conflict of
interest by influencing your Service Agent or its employees or associated
persons to recommend the fund over another investment. Ask your financial
adviser or salesperson or visit your Service Agent’s or salesperson’s website
for more information.
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8 |
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Western
Asset Institutional U.S. Treasury Reserves |
Western Asset
Institutional U.S. Treasury Obligations Money Market Fund
Investment objective
The
fund’s investment objective is to seek maximum current income to the extent
consistent with preservation of capital and the maintenance of
liquidity.
Fees and expenses of the
fund
The
accompanying table describes the fees and expenses that you may pay if you buy,
hold and sell Investor Shares of the fund. You may pay other fees, such as
brokerage commissions and other fees to financial intermediaries, which are not
reflected in the tables and examples below.
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Shareholder fees
|
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(fees paid directly from
your investment) |
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Maximum
sales charge (load) imposed on purchases |
|
None |
Maximum
deferred sales charge (load) |
|
None |
| |
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Annual fund
operating expenses (%)1
|
|
|
(expenses that you pay
each year as a percentage of the value of your
investment) |
|
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Management
fees1 |
|
0.25 |
Distribution
and/or service (12b‑1) fees2 |
|
0.05 |
Other
expenses |
|
0.38 |
Total
annual fund operating expenses1 |
|
0.68 |
Fees
waived and/or expenses reimbursed3 |
|
(0.45) |
Total
annual fund operating expenses after waiving fees and/or reimbursing
expenses |
|
0.23 |
1 |
The fund is a feeder fund
that invests in securities through an underlying mutual fund, U.S.
Treasury Obligations Portfolio. The information in this table and in the
Example below reflects the direct fees and expenses of the fund and its
allocated share of fees and expenses of U.S. Treasury Obligations
Portfolio. |
2 |
Investor
Shares may pay a fee of up to 0.10% of average daily net assets pursuant
to the Fund’s Rule 12b‑1 plan. The Board has determined that, until
December 31, 2024, such payments shall not exceed 0.05% of the class’
average daily net assets. This arrangement cannot be terminated prior to
December 31, 2024 without the Board of Trustees’
consent. |
3 |
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 the ratio of total annual fund
operating expenses will not exceed 0.23% for Investor Shares, subject to
recapture as described below. This arrangement cannot be terminated prior
to December 31,
2024 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 amounts waived and/or reimbursed to the
class during the same fiscal year if the class’ total annual fund
operating expenses have fallen to a level below the limit described above.
In no case will the manager recapture any amount that would result, on any
particular business day of the fund, in the class’ total annual fund
operating expenses exceeding the limit described above or any other lower
limit then in effect. |
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Western Asset Institutional U.S.
Treasury Obligations Money Market Fund |
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9 |
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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:
• |
|
You
invest $10,000 in the fund for the time periods
indicated |
• |
|
Your
investment has a 5% return each year and the fund’s operating expenses
remain the same (except that any applicable fee waiver or expense
reimbursement is reflected only through its expiration
date) |
• |
|
You
reinvest all distributions and dividends without a sales
charge |
Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
|
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|
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|
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| |
Number of years you own
your shares ($) |
|
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|
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|
1 year |
|
3 years |
|
5 years |
|
10 years |
Investor
Shares (with or without redemption at end of period) |
|
24 |
|
183 |
|
357 |
|
859 |
The
fund is a feeder fund that invests in securities through an underlying mutual
fund, U.S. Treasury Obligations Portfolio, which has the same investment
objective and strategies as the fund. This structure is sometimes known as a
“master/feeder” structure.
Principal investment
strategies
The
fund is a money market fund that invests all of its assets in direct obligations
of the U.S. Treasury and in repurchase agreements secured by these obligations.
Direct obligations of the U.S. Treasury include U.S. Treasury bills, notes and
bonds; STRIPS, which are individual interest and principal components of
eligible Treasury notes and bonds that are traded as separate securities; and
TIPS, which are inflation-protected securities issued by the U.S. Treasury, the
principal of which increases with inflation and decreases with deflation, as
measured by the Consumer Price Index. The fund may also hold cash for cash
management and defensive purposes. Although the fund invests in U.S. government
obligations, an investment in the fund is neither insured nor guaranteed by the
U.S. government.
As
noted above, the fund invests all of its assets in direct obligations of the
U.S. Treasury and in repurchase agreements secured by U.S. Treasury obligations.
Therefore, the fund meets the requirement under Rule 2a‑7 under the Investment
Company Act of 1940, as amended (the “1940 Act”), that a government money market
fund invest at least 99.5% of its total assets in U.S. government securities,
cash, and/or repurchase agreements that are fully collateralized by U.S.
government securities or cash. In addition, the fund meets the requirement under
Rule 35d‑1 under the 1940 Act, that a fund that includes the term “U.S. Treasury
obligations” in its name invest, under normal circumstances, at least 80% of its
net assets in U.S. Treasury obligations and in repurchase agreements secured by
U.S. Treasury obligations. “Government securities” means any securities issued
or guaranteed as to principal or interest by the United States, or by a person
controlled or supervised by and acting as an instrumentality of the Government
of the United States pursuant to authority granted by the Congress of the United
States; or any certificate of deposit for any of the
foregoing.
As
a government money market fund, the fund tries to maintain a share price of
$1.00. Pursuant to Rule 2a‑7 under the 1940 Act, the fund must follow strict
rules as to the quality, liquidity, diversification and maturity of its
investments.
Principal risks
You could lose money by investing in the
fund. Although the fund seeks to preserve the
value of your investment at $1.00 per share, it cannot guarantee it will do
so. An investment in the fund is not a bank
account and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency. The fund’s sponsor is not required to
reimburse the fund for losses, and you should not expect that the sponsor will
provide financial support to the fund at any time, including during periods of
market stress.
During
periods of market stress, there could be significant redemptions from money
market funds in general, potentially driving the market prices of money market
instruments down and adversely affecting market liquidity.
The
fund could underperform other short-term debt instruments or money market funds,
or you could lose money, as a result of risks such as:
Market and interest
rate risk. The market prices of
securities held by the fund may go up or down, sometimes rapidly or
unpredictably. While the fund seeks to maintain a $1.00 share price, if the
market prices of the fund’s securities fall, the value of your investment in the
fund could decline. The market price of a security may fall due to general
market conditions, such as real or perceived adverse economic or political
conditions or trends, tariffs and trade disruptions, inflation, substantial
economic downturn or recession, changes in interest rates, lack of liquidity in
the bond markets or adverse investor sentiment.
Market
prices will generally go down when interest rates rise. A rise in rates tends to
have a greater impact on the prices of longer term securities. A general rise in
interest rates may cause investors to move out of fixed income securities on a
large scale, which could adversely affect the price and liquidity of fixed
income securities and could also result in increased redemptions from the fund.
The fund may face a heightened level of interest rate risk due to changes in
monetary policy. When interest rates go down, the fund’s yield will decline.
Also, when interest rates decline, investments made by the fund may pay a lower
interest rate, which would reduce the income received by the fund. Recently,
there have been inflationary price movements, which have caused the fixed income
securities markets to experience heightened levels of interest rate volatility
and
|
|
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| |
10 |
|
| |
Western
Asset Institutional U.S. Treasury Obligations Money Market
Fund |
liquidity
risk. The U.S. Federal Reserve has been raising interest rates from historically
low levels. It may continue to raise interest rates. In addition, changes in
monetary policy may exacerbate the risks associated with changing interest
rates. Any additional interest rate increases in the future could cause the
value of the fund’s holdings to decrease. It cannot be predicted when inflation
will return to more normalized levels or how long financial authorities will
counter inflationary pressures with monetary
tightening.
Market events
risk. The market values of securities or
other assets will fluctuate, sometimes sharply and unpredictably, due to factors
such as economic events, governmental actions or intervention, actions taken by
the U.S. Federal Reserve or foreign central banks, market disruptions caused by
trade disputes, labor strikes or other factors, political developments, armed
conflicts, economic sanctions and countermeasures in response to sanctions,
major cybersecurity events, the global and domestic effects of widespread or
local health, weather or climate events, and other factors that may or may not
be related to the issuer of the security or other asset. Economies and financial
markets throughout the world are increasingly interconnected. Economic,
financial or political events, trading and tariff arrangements, public health
events, terrorism, wars, natural disasters and other circumstances in one
country or region could have profound impacts on global economies or markets. As
a result, whether or not the fund invests in securities of issuers located in or
with significant exposure to the countries or markets directly affected, the
value and liquidity of the fund’s investments may be negatively affected.
Following Russia’s invasion of Ukraine in 2022, Russian stocks lost all, or
nearly all, of their market value. Other securities or markets could be
similarly affected by past or future geopolitical or other events or conditions.
Furthermore, events involving limited liquidity, defaults, non‑performance or
other adverse developments that affect one industry, such as the financial
services industry, or concerns or rumors about any events of these kinds, have
in the past and may in the future lead to market-wide liquidity problems, may
spread to other industries, and could negatively affect the value and liquidity
of the fund’s investments.
The
long-term impact of the COVID‑19 pandemic and its subsequent variants on
economies, markets, industries and individual issuers is not known. Some sectors
of the economy and individual issuers have experienced or may experience
particularly large losses. Periods of extreme volatility in the financial
markets, reduced liquidity of many instruments, increased government debt,
inflation, and disruptions to supply chains, consumer demand and employee
availability, may continue for some
time.
Raising
the ceiling on U.S. government debt has become increasingly politicized. Any
failure to increase the total amount that the U.S. government is authorized to
borrow could lead to a default on U.S. government obligations, with
unpredictable consequences for economies and markets in the U.S. and elsewhere.
Recently, inflation and interest rates have increased and may rise further.
These circumstances could adversely affect the value and liquidity of the fund’s
investments, impair the fund’s ability to satisfy redemption requests, and
negatively impact the fund’s
performance.
Credit
risk. An issuer or other obligor (such
as a party providing insurance or other credit enhancement) 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 perceived to be less creditworthy, or the
value of assets underlying a security may decline, causing the value of your
investment to decline. Changes in actual or perceived creditworthiness may occur
quickly. The fund could be delayed or hindered in its enforcement of rights
against an issuer, guarantor or counterparty.
Yield
risk. The amount of income received by
the fund will go up or down depending on variations in short-term interest
rates, and when interest rates are very low or negative 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, if for
example, the fund’s manager discontinued any temporary voluntary fee limitation
or recouped amounts previously waived and/or reimbursed.
Repurchase
agreements risk. Repurchase agreements
could involve certain risks in the event of default or insolvency of the seller,
including losses and possible delays or restrictions upon the fund’s ability to
dispose of the underlying securities. To the extent that, in the meantime, the
value of the securities that the fund has purchased has decreased, the fund
could experience a loss. The use of repurchase agreements may produce income
that is not exempt from state personal income tax.
Portfolio management
risk. The value of your investment may
decrease if the subadviser’s judgment about the quality, relative yield, value
or market trends affecting a particular security, industry, sector or region, or
about interest rates or other market factors, is incorrect or does not produce
the desired results, or if there are imperfections, errors or limitations in the
tools and data used by the subadviser. In addition, the fund’s investment
strategies or policies may change from time to time. Those changes may not lead
to the results intended by the subadviser and could have an adverse effect on
the value or performance of the fund.
Illiquidity
risk. The fund may make investments that
are illiquid or that become illiquid after purchase. The liquidity and value of
investments can deteriorate rapidly, and they may become difficult or impossible
to sell, particularly during times of market turmoil. Illiquid investments may
also be volatile and difficult to value. Markets may become illiquid quickly.
Markets may become illiquid when, for instance, there are few, if any,
interested buyers or sellers or when dealers are unwilling or unable to make a
market for certain securities, including U.S. Treasury securities. During times
of market turmoil, there may be few or no buyers or sellers for securities in
entire asset classes. If the fund is forced to sell an illiquid investment to
meet redemption requests or other cash needs, or to try to limit losses, the
fund may be forced to sell at a substantial loss or may not be able to sell at
all.
Valuation
risk. The sales price the fund could
receive for any particular portfolio investment may differ from the fund’s
valuation of the investment, particularly for securities that trade in thin or
volatile markets or that are valued using a fair value methodology. These
differences may increase significantly and affect fund investments more broadly
during periods of market volatility. Investors who purchase or redeem fund
shares on days when the fund is holding fair-valued securities may receive fewer
or more shares or lower or higher redemption proceeds than they would have
received if the fund had not fair-valued securities or had used a different
valuation methodology. The fund’s ability to value its investments may be
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Western Asset Institutional U.S.
Treasury Obligations Money Market Fund |
|
| |
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11 |
|
impacted
by technological issues and/or errors by pricing services or other third party
service providers. The valuation of the fund’s investments involves subjective
judgment, which may prove to be incorrect.
Cybersecurity
risk. Like other funds and business
enterprises, the fund, the manager, the subadviser and their service providers
are subject to the risk of cyber incidents occurring from time to time.
Cybersecurity incidents, whether intentionally caused by third parties or
otherwise, may allow an unauthorized party to gain access to fund assets, fund
or customer data (including private shareholder information) or proprietary
information, cause the fund, the manager, the subadviser and/or their service
providers (including, but not limited to, fund accountants, custodians,
sub‑custodians, transfer agents and financial intermediaries) to suffer data
breaches, data corruption or loss of operational functionality, or prevent fund
investors from purchasing, redeeming or exchanging shares, receiving
distributions or receiving timely information regarding the fund or their
investment in the fund. The fund, the manager, and the subadviser have limited
ability to prevent or mitigate cybersecurity incidents affecting third party
service providers, and such third party service providers may have limited
indemnification obligations to the fund, the manager, and/or the subadviser.
Cybersecurity incidents may result in financial losses to the fund and its
shareholders, and substantial costs may be incurred in order to prevent or
mitigate any future cybersecurity incidents. Issuers of securities in which the
fund invests are also subject to cybersecurity risks, and the value of these
securities could decline if the issuers experience cybersecurity incidents.
New
ways to carry out cyber attacks continue to develop. There is a chance that some
risks have not been identified or prepared for, or that an attack may not be
detected, which puts limitations on the fund’s ability to plan for or respond to
a cyber attack.
These
and other risks are discussed in more detail in the Prospectus or in the
Statement of Additional Information.
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12 |
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Western
Asset Institutional U.S. Treasury Obligations Money Market
Fund |
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 Investor Shares.
The table shows the average annual total returns of Investor
Shares. 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 www.franklintempleton.com/moneymarketfunds
(select fund and 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.
Best Quarter
(12/31/2022): 0.88 Worst
Quarter (12/31/2021): 0.00
The
year‑to‑date return as of the
most recent calendar quarter, which ended 09/30/2023, was 3.62
|
|
|
|
|
|
|
| |
Average annual total returns (%)
|
(for periods ended
December 31, 2022) |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
1 year |
|
5 years |
|
Since inception |
|
Inception date |
Investor
Shares |
|
1.50 |
|
1.08 |
|
0.67 |
|
09/03/2013 |
|
|
|
|
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| |
Western Asset Institutional U.S.
Treasury Obligations Money Market Fund |
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| |
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13 |
|
Management
Investment
manager: Franklin Templeton Fund
Adviser, LLC (“FTFA”) (formerly known as Legg Mason Partners Fund Advisor, LLC)
Subadviser: Western Asset Management Company, LLC (“Western
Asset”)
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 for Investor Shares generally
are set forth in the accompanying table:
|
| |
Investment minimum initial/additional investments
($) |
Institutional
investors purchasing through financial intermediaries |
|
1 million/50 |
Investor
Shares are available only through financial intermediaries. Your Service Agent
may impose higher or lower investment minimums, or may impose no minimum
investment requirement. “Service Agents” are banks, brokers, dealers, insurance
companies, investment advisers, financial consultants or advisers, mutual fund
supermarkets and other financial intermediaries that have entered into an
agreement with the distributor to sell shares of the fund.
The
fund normally calculates its net asset value as of each hour from 8:00 a.m.
(Eastern time) until its close of business (normally 5:00 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’s distributions are generally taxable as ordinary income or capital gains.
Payments to
broker/dealers and other financial intermediaries
The
fund’s related companies pay Service Agents for the sale of fund shares,
shareholder services and other purposes. These payments create a conflict of
interest by influencing your Service Agent or its employees or associated
persons to recommend the fund over another investment. Ask your financial
adviser or salesperson or visit your Service Agent’s or salesperson’s website
for more information.
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14 |
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Western
Asset Institutional U.S. Treasury Obligations Money Market
Fund |
Western Asset
Institutional Government Reserves
Investment objective
The
fund seeks maximum current income to the extent consistent with preservation of
capital and the maintenance of liquidity.
Fees and expenses of the
fund
The
accompanying table describes the fees and expenses that you may pay if you buy,
hold and sell Investor Shares of the fund. You may pay other fees, such as
brokerage commissions and other fees to financial intermediaries, which are not
reflected in the tables and examples below.
|
| |
Shareholder fees
|
|
|
(fees paid directly from
your investment) |
|
|
Maximum
sales charge (load) imposed on purchases |
|
None |
Maximum
deferred sales charge (load) |
|
None |
| |
|
|
Annual fund
operating expenses (%)1
|
|
|
(expenses that you pay
each year as a percentage of the value of your
investment) |
|
|
Management
fees1 |
|
0.18 |
Distribution
and/or service (12b‑1) fees2 |
|
0.05 |
Other
expenses |
|
0.02 |
Total
annual fund operating expenses1 |
|
0.25 |
Fees
waived and/or expenses reimbursed3 |
|
(0.02) |
Total
annual fund operating expenses after waiving fees and/or reimbursing
expenses |
|
0.23 |
1 |
The fund is a feeder fund
that invests in securities through an underlying mutual fund, Government
Portfolio. The information in this table and in the Example below reflects
the direct fees and expenses of the fund and its allocated share of fees
and expenses of Government Portfolio. Since the fund
invests all of its investable assets in Government Portfolio, the fund’s
management agreement provides that the investment management fee of the
fund will be reduced by the investment management fee allocated to the
fund by Government Portfolio. The gross expenses in the financial
highlights do not reflect the reduction in the fund’s management fee by
the amount paid by the fund for its allocable share of the management fee
paid to Government Portfolio. |
2 |
Investor
Shares may pay a fee of up to 0.10% of average daily net assets pursuant
to the Fund’s Rule 12b‑1 plan. The Board has determined that, until
December 31, 2024, such payments shall not exceed 0.05% of the class’
average daily net assets. This arrangement cannot be terminated prior to
December 31, 2024 without the Board of Trustees’
consent. |
3 |
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 the ratio of total annual fund
operating expenses will not exceed 0.23% for Investor Shares, subject to
recapture as described below. This arrangement cannot be terminated prior
to December 31,
2024 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 amounts waived and/or reimbursed to the
class during the same fiscal year if the class’ total annual fund
operating expenses have fallen to a level below the limit described above.
In no case will the manager recapture any amount that would result, on any
particular business day of the fund, in the class’ total annual fund
operating expenses exceeding the limit described above or any other lower
limit then in effect. |
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| |
Western Asset Institutional
Government Reserves |
|
| |
|
15 |
|
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:
• |
|
You
invest $10,000 in the fund for the time periods
indicated |
• |
|
Your
investment has a 5% return each year and the fund’s operating expenses
remain the same (except that any applicable fee waiver or expense
reimbursement is reflected only through its expiration
date) |
• |
|
You
reinvest all distributions and dividends without a sales
charge |
Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
|
|
|
|
|
|
|
| |
Number of years you own
your shares ($) |
|
|
|
|
|
|
|
|
|
|
1 year |
|
3 years |
|
5 years |
|
10 years |
Investor
Shares (with or without redemption at end of period) |
|
24 |
|
90 |
|
162 |
|
373 |
The
fund is a feeder fund that invests in securities through an underlying mutual
fund, Government Portfolio, which has the same investment objective and
strategies as the fund. This structure is sometimes known as a “master/feeder”
structure.
Principal investment
strategies
The
fund is a money market fund that invests exclusively in short-term U.S.
government securities, including U.S. Treasuries and securities issued or
guaranteed by the U.S. government or its agencies, authorities,
instrumentalities or sponsored entities and in repurchase agreements
collateralized by government securities. These securities may pay interest at
fixed, floating or adjustable rates or may be issued at a discount. U.S.
government securities are not necessarily backed by the full faith and credit of
the United States. The fund may also hold cash for cash management and defensive
purposes. Although the fund invests in U.S. government securities, an investment
in the fund is neither insured nor guaranteed by the U.S.
government.
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, if not rated,
are determined by the subadviser to be of equivalent
quality.
As
noted above, the fund invests exclusively in short-term U.S. government
securities and in repurchase agreements collateralized by government securities.
Therefore, the fund meets the requirement under Rule 2a‑7 under the Investment
Company Act of 1940, as amended (the “1940 Act”), that a government money market
fund invest at least 99.5% of its total assets in U.S. government securities,
cash, and/or repurchase agreements that are fully collateralized by U.S.
government securities or cash. In addition, the fund meets the requirement under
Rule 35d‑1 under the 1940 Act that a fund that includes the term “government” in
its name invest, under normal circumstances, at least 80% of its net assets in
U.S. government securities and/or repurchase agreements that are collateralized
by U.S. government securities. “Government securities” means any securities
issued or guaranteed as to principal or interest by the United States, or by a
person controlled or supervised by and acting as an instrumentality of the
Government of the United States pursuant to authority granted by the Congress of
the United States; or any certificate of deposit for any of the
foregoing.
As
a government money market fund, the fund tries to maintain a share price of
$1.00. Pursuant to Rule 2a‑7 under the 1940 Act, the fund must follow strict
rules as to the quality, liquidity, diversification and maturity of its
investments.
Principal risks
You could lose money by investing in the
fund. Although the fund seeks to preserve the
value of your investment at $1.00 per share, it cannot guarantee it will do
so. An investment in the fund is not a bank
account and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency. The fund’s sponsor is not required to
reimburse the fund for losses, and you should not expect that the sponsor will
provide financial support to the fund at any time, including during periods of
market stress.
During
periods of market stress, there could be significant redemptions from money
market funds in general, potentially driving the market prices of money market
instruments down and adversely affecting market liquidity.
The
fund could underperform other short-term debt instruments or money market funds,
or you could lose money, as a result of risks such as:
Market and interest
rate risk. The market prices of
securities held by the fund may go up or down, sometimes rapidly or
unpredictably. While the fund seeks to maintain a $1.00 share price, if the
market prices of the fund’s securities fall, the value of your investment in the
fund could decline. The market price of a security may fall due to general
market conditions, such as real or perceived adverse economic or political
conditions or trends, tariffs and trade disruptions, inflation, substantial
economic downturn or recession, changes in interest rates, lack of liquidity in
the bond markets or adverse investor sentiment.
Market
prices will generally go down when interest rates rise. A rise in rates tends to
have a greater impact on the prices of longer term securities. A general rise in
interest rates may cause investors to move out of fixed income securities on a
large scale, which could adversely affect the price and liquidity of fixed
income securities and could also result in increased redemptions from the fund.
The fund may face a heightened level of interest
|
|
|
| |
16 |
|
| |
Western
Asset Institutional Government Reserves |
rate
risk due to changes in monetary policy. When interest rates go down, the fund’s
yield will decline. Also, when interest rates decline, investments made by the
fund may pay a lower interest rate, which would reduce the income received by
the fund. Recently, there have been inflationary price movements, which have
caused the fixed income securities markets to experience heightened levels of
interest rate volatility and liquidity risk. The U.S. Federal Reserve has been
raising interest rates from historically low levels. It may continue to raise
interest rates. In addition, changes in monetary policy may exacerbate the risks
associated with changing interest rates. Any additional interest rate increases
in the future could cause the value of the fund’s holdings to decrease. It
cannot be predicted when inflation will return to more normalized levels or how
long financial authorities will counter inflationary pressures with monetary
tightening.
Market events
risk. The market values of securities or
other assets will fluctuate, sometimes sharply and unpredictably, due to factors
such as economic events, governmental actions or intervention, actions taken by
the U.S. Federal Reserve or foreign central banks, market disruptions caused by
trade disputes, labor strikes or other factors, political developments, armed
conflicts, economic sanctions and countermeasures in response to sanctions,
major cybersecurity events, the global and domestic effects of widespread or
local health, weather or climate events, and other factors that may or may not
be related to the issuer of the security or other asset. Economies and financial
markets throughout the world are increasingly interconnected. Economic,
financial or political events, trading and tariff arrangements, public health
events, terrorism, wars, natural disasters and other circumstances in one
country or region could have profound impacts on global economies or markets. As
a result, whether or not the fund invests in securities of issuers located in or
with significant exposure to the countries or markets directly affected, the
value and liquidity of the fund’s investments may be negatively affected.
Following Russia’s invasion of Ukraine in 2022, Russian stocks lost all, or
nearly all, of their market value. Other securities or markets could be
similarly affected by past or future geopolitical or other events or conditions.
Furthermore, events involving limited liquidity, defaults, non‑performance or
other adverse developments that affect one industry, such as the financial
services industry, or concerns or rumors about any events of these kinds, have
in the past and may in the future lead to market-wide liquidity problems, may
spread to other industries, and could negatively affect the value and liquidity
of the fund’s investments.
The
long-term impact of the COVID‑19 pandemic and its subsequent variants on
economies, markets, industries and individual issuers is not known. Some sectors
of the economy and individual issuers have experienced or may experience
particularly large losses. Periods of extreme volatility in the financial
markets, reduced liquidity of many instruments, increased government debt,
inflation, and disruptions to supply chains, consumer demand and employee
availability, may continue for some
time.
Raising
the ceiling on U.S. government debt has become increasingly politicized. Any
failure to increase the total amount that the U.S. government is authorized to
borrow could lead to a default on U.S. government obligations, with
unpredictable consequences for economies and markets in the U.S. and elsewhere.
Recently, inflation and interest rates have increased and may rise further.
These circumstances could adversely affect the value and liquidity of the fund’s
investments, impair the fund’s ability to satisfy redemption requests, and
negatively impact the fund’s
performance.
Credit
risk. An issuer or other obligor (such
as a party providing insurance or other credit enhancement) 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 perceived to be less creditworthy, or the
value of assets underlying a security may decline, causing the value of your
investment to decline. Changes in actual or perceived creditworthiness may occur
quickly. The fund could be delayed or hindered in its enforcement of rights
against an issuer, guarantor or counterparty.
Yield
risk. The amount of income received by
the fund will go up or down depending on variations in short-term interest
rates, and when interest rates are very low or negative 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, if for
example, the fund’s manager discontinued any temporary voluntary fee limitation
or recouped amounts previously waived and/or reimbursed.
Repurchase
agreements risk. Repurchase agreements
could involve certain risks in the event of default or insolvency of the seller,
including losses and possible delays or restrictions upon the fund’s ability to
dispose of the underlying securities. To the extent that, in the meantime, the
value of the securities that the fund has purchased has decreased, the fund
could experience a loss. The use of repurchase agreements may produce income
that is not exempt from state personal income tax.
Portfolio management
risk. The value of your investment may
decrease if the subadviser’s judgment about the quality, relative yield, value
or market trends affecting a particular security, industry, sector or region, or
about interest rates or other market factors, is incorrect or does not produce
the desired results, or if there are imperfections, errors or limitations in the
tools and data used by the subadviser. In addition, the fund’s investment
strategies or policies may change from time to time. Those changes may not lead
to the results intended by the subadviser and could have an adverse effect on
the value or performance of the fund.
Illiquidity
risk. The fund may make investments that
are illiquid or that become illiquid after purchase. The liquidity and value of
investments can deteriorate rapidly, and they may become difficult or impossible
to sell, particularly during times of market turmoil. Illiquid investments may
also be volatile and difficult to value. Markets may become illiquid quickly.
Markets may become illiquid when, for instance, there are few, if any,
interested buyers or sellers or when dealers are unwilling or unable to make a
market for certain securities, including U.S. Treasury securities. During times
of market turmoil, there may be few or no buyers or sellers for securities in
entire asset classes. If the fund is forced to sell an illiquid investment to
meet redemption requests or other cash needs, or to try to limit losses, the
fund may be forced to sell at a substantial loss or may not be able to sell at
all.
Valuation
risk. The sales price the fund could
receive for any particular portfolio investment may differ from the fund’s
valuation of the investment, particularly for securities that trade in thin or
volatile markets or that are valued using a fair value methodology. These
differences may increase
|
|
|
|
|
| |
Western Asset Institutional
Government Reserves |
|
| |
|
17 |
|
significantly
and affect fund investments more broadly during periods of market volatility.
Investors who purchase or redeem fund shares on days when the fund is holding
fair-valued securities may receive fewer or more shares or lower or higher
redemption proceeds than they would have received if the fund had not
fair-valued securities or had used a different valuation methodology. The fund’s
ability to value its investments may be impacted by technological issues and/or
errors by pricing services or other third party service providers. The valuation
of the fund’s investments involves subjective judgment, which may prove to be
incorrect.
Cybersecurity
risk. Like other funds and business
enterprises, the fund, the manager, the subadviser and their service providers
are subject to the risk of cyber incidents occurring from time to time.
Cybersecurity incidents, whether intentionally caused by third parties or
otherwise, may allow an unauthorized party to gain access to fund assets, fund
or customer data (including private shareholder information) or proprietary
information, cause the fund, the manager, the subadviser and/or their service
providers (including, but not limited to, fund accountants, custodians,
sub‑custodians, transfer agents and financial intermediaries) to suffer data
breaches, data corruption or loss of operational functionality, or prevent fund
investors from purchasing, redeeming or exchanging shares, receiving
distributions or receiving timely information regarding the fund or their
investment in the fund. The fund, the manager, and the subadviser have limited
ability to prevent or mitigate cybersecurity incidents affecting third party
service providers, and such third party service providers may have limited
indemnification obligations to the fund, the manager, and/or the subadviser.
Cybersecurity incidents may result in financial losses to the fund and its
shareholders, and substantial costs may be incurred in order to prevent or
mitigate any future cybersecurity incidents. Issuers of securities in which the
fund invests are also subject to cybersecurity risks, and the value of these
securities could decline if the issuers experience cybersecurity incidents.
New
ways to carry out cyber attacks continue to develop. There is a chance that some
risks have not been identified or prepared for, or that an attack may not be
detected, which puts limitations on the fund’s ability to plan for or respond to
a cyber attack.
These
and other risks are discussed in more detail in the Prospectus or in the
Statement of Additional Information.
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18 |
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Western
Asset Institutional Government Reserves |
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 Investor Shares.
The table shows the average annual total returns of Investor
Shares. 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 www.franklintempleton.com/moneymarketfunds
(select fund and 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.
Best Quarter
(12/31/2022): 0.86 Worst
Quarter (12/31/2021): 0.00
The
year‑to‑date return as of the
most recent calendar quarter, which ended 09/30/2023, was 3.63
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Average annual total returns (%)
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(for periods ended
December 31, 2022) |
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1 year |
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5 years |
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Since inception |
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Inception date |
Investor
Shares |
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1.48 |
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1.10 |
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0.69 |
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09/03/2013 |
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Western Asset Institutional
Government Reserves |
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19 |
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Management
Investment
manager: Franklin Templeton Fund
Adviser, LLC (“FTFA”) (formerly known as Legg Mason Partners Fund Advisor, LLC)
Subadviser: Western Asset Management Company, LLC (“Western
Asset”)
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 for Investor Shares generally
are set forth in the accompanying table:
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Investment minimum initial/additional investments
($) |
Institutional
investors purchasing through financial intermediaries |
|
1 million/50 |
Investor
Shares are available only through financial intermediaries. Your Service Agent
may impose higher or lower investment minimums, or may impose no minimum
investment requirement. “Service Agents” are banks, brokers, dealers, insurance
companies, investment advisers, financial consultants or advisers, mutual fund
supermarkets and other financial intermediaries that have entered into an
agreement with the distributor to sell shares of the fund.
The
fund normally calculates its net asset value as of each hour from 8:00 a.m.
(Eastern time) until its close of business (normally 5:00 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’s distributions are generally taxable as ordinary income or capital
gains.
Payments to
broker/dealers and other financial intermediaries
The
fund’s related companies pay Service Agents for the sale of fund shares,
shareholder services and other purposes. These payments create a conflict of
interest by influencing your Service Agent or its employees or associated
persons to recommend the fund over another investment. Ask your financial
adviser or salesperson or visit your Service Agent’s or salesperson’s website
for more information.
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Western
Asset Institutional Government Reserves |
More on the funds’
investment strategies, investments and risks
Important information
Each
fund is a money market fund. Pursuant to Rule 2a‑7 under the Investment Company
Act of 1940, as amended, money market funds must follow strict rules about the
quality, liquidity, diversification, maturity and other features of securities
they purchase. Each fund tries to maintain a share price of $1.00 while paying
income to shareholders. However, no money market fund guarantees that you will
receive your money back.
Western
Asset Institutional U.S. Treasury Reserves’ (“Institutional U.S. Treasury
Reserves”) investment objective is to provide shareholders with liquidity and as
high a level of current income from U.S. government obligations as is consistent
with preservation of capital. For purposes of its investment objective, the fund
considers income attributable to repurchase agreements that are fully
collateralized by U.S. Treasury obligations to be income from U.S. government
obligations. Western Asset Institutional U.S. Treasury Obligations Money Market
Fund’s (“Institutional U.S. Treasury Obligations Fund”) investment objective is
to seek maximum current income to the extent consistent with preservation of
capital and the maintenance of liquidity. Western Asset Institutional Government
Reserves’ (“Institutional Government Reserves”) investment objective is to seek
maximum current income to the extent consistent with preservation of capital and
the maintenance of liquidity. Each fund’s investment objective may be changed by
the Board of Trustees (the “Board”) without shareholder approval and on notice
to shareholders.
There
is no assurance that a fund will meet its investment objective.
Institutional
U.S. Treasury Reserves, under normal circumstances, invests at least 80% of its
net assets in U.S. Treasury obligations. In addition, Institutional U.S.
Treasury Reserves may invest in repurchase agreements that are fully
collateralized by U.S. Treasury obligations or cash. Institutional U.S. Treasury
Obligations Fund invests all of its assets in direct obligations of the U.S.
Treasury and in repurchase agreements secured by U.S. Treasury obligations.
Institutional Government Reserves invests all of its assets in U.S. government
securities and in repurchase agreements secured by such securities. Shareholders
will be provided with 60 days’ notice before any change in a fund’s policy to
invest at least 80% of its net assets plus any borrowings for investment
purposes in the particular type of investment suggested by its name. “Government
securities” means any securities issued or guaranteed as to principal or
interest by the United States, or by a person controlled or supervised by and
acting as an instrumentality of the Government of the United States pursuant to
authority granted by the Congress of the United States; or any certificate of
deposit for any of the foregoing.
The
subadviser will generally seek to place direct investment orders for
Institutional U.S. Treasury Obligations Fund with minority-, women-, and
veteran-owned broker-dealers, subject to the subadviser’s duty to seek best
execution.
Each
fund’s investment strategies and policies may be changed from time to time
without shareholder approval, unless specifically stated otherwise in this
Prospectus or in the Statement of Additional Information (“SAI”).
Credit quality
Institutional
U.S. Treasury Reserves holds all of its assets in U.S. Treasury obligations,
repurchase agreements that are fully collateralized by U.S. Treasury
obligations, and cash. Institutional U.S. Treasury Obligations Fund may invest
only in direct obligations of the U.S. Treasury and repurchase agreements
secured by these obligations. Institutional Government Reserves 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, if not rated, are
determined by the subadviser to be of equivalent quality. In addition, each
security, at the time of purchase by the fund, has been determined by the
subadviser to present minimal credit risk. Where required by applicable rules,
the fund’s subadviser or Board will decide whether a security should be held or
sold in the event of certain credit events occurring after purchase.
Maturity
Each
fund invests in securities that, at the time of purchase, are treated under
applicable regulations as having remaining maturities of 397 days or less. For
example, in determining the remaining maturity of a security for the purposes of
these regulations, features such as a floating or variable rate of interest or a
demand feature may be taken into account under some circumstances. Each fund
maintains a dollar weighted average maturity of not more than 60 days. In
addition, each fund maintains a dollar weighted average life of not more than
120 days. Where required by applicable rules, if, after purchase, payment upon
maturity does not occur or the maturity on a security is extended, a fund’s
subadviser or Board will decide whether the security should be held or
sold.
Liquidity
Each
fund must follow strict rules with respect to the liquidity of its portfolio
securities including daily and weekly liquidity requirements. In addition, a
fund may not purchase illiquid securities if, immediately after the acquisition,
more than 5% of the fund’s total assets would be invested in illiquid
securities. Illiquid securities are those that, as determined by the subadviser,
may not be disposed of in the ordinary course of business within seven days at
approximately the value ascribed to them by a fund. Securities that are deemed
liquid at the time of purchase by a fund may become illiquid following
purchase.
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Western Asset Money Market
Funds |
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21 |
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Money market instruments
Money
market instruments are short-term IOUs issued by banks or other non‑governmental
issuers, the U.S. or non‑U.S. governments, or state or local governments. Money
market instruments generally have maturity dates of 13 months or less, and may
pay interest at fixed, floating or adjustable rates, or may be issued at a
discount. Money market instruments may include certificates of deposit, bankers’
acceptances, variable rate demand securities (where the interest rate is reset
periodically and the holder may demand payment from the issuer or another
obligor at any time), preferred shares, fixed-term obligations, commercial paper
(short-term unsecured debt), asset-backed commercial paper, other asset-backed
securities and repurchase agreements. Asset-backed commercial paper refers to a
debt security with an original term to maturity of up to 270 days that may
be backed by consumer loans or other types of receivables. Payments due on
asset-backed commercial paper are supported by cash flows from underlying
assets, or one or more liquidity or credit support providers, or both.
U.S. Treasury obligations
U.S.
Treasury obligations are direct debt obligations issued by the U.S. government.
Treasury bills, with maturities normally from 4 weeks to 52 weeks, are
typically issued at a discount as they pay interest only upon maturity. Treasury
bills are non‑callable. Treasury notes have a maturity between two and ten years
and typically pay interest semi-annually, while Treasury bonds have a maturity
of over ten years and pay interest semi-annually. Treasuries also include
STRIPS, TIPS and FRNs. STRIPS are Treasury obligations with separately traded
principal and interest component parts that are transferable through the federal
book-entry system. Because payments on STRIPS are made only at maturity, during
periods of changing interest rates, STRIPS may be more volatile than unstripped
U.S. Treasury obligations with comparable maturities. TIPS are Treasury
Inflation-Protected Securities, the principal of which increases with inflation
and decreases with deflation, as measured by the U.S. Consumer Price Index. At
maturity, a TIPS holder is entitled to the adjusted principal or original
principal, whichever is greater. TIPS pay interest twice a year, at a fixed
rate. The rate is applied to the adjusted principal; so, like the principal,
interest payments rise with inflation and fall with deflation. However, because
the interest rate is fixed, TIPS may lose value when market interest rates
increase, particularly during periods of low inflation. FRNs are floating rate
notes that are indexed to the most recent 13‑week Treasury bill auction High
Rate, and which pay interest quarterly. U.S. Treasury obligations typically
offer lower interest rates than other obligations.
U.S. government
obligations-Institutional Government Reserves only
U.S.
government obligations include U.S. Treasury obligations and other obligations
of, or guaranteed by, the U.S. government, its agencies or government-sponsored
entities. Although the U.S. government guarantees principal and interest
payments on securities issued by the U.S. government and some of its agencies,
such as securities issued by the U.S. Government National Mortgage Association
(“Ginnie Mae”), this guarantee does not apply to losses resulting from declines
in the market value of these securities. U.S. government obligations include
zero coupon securities that make payments of interest and principal only upon
maturity and which therefore tend to be subject to greater volatility than
interest bearing securities with comparable maturities.
Some
of the U.S. government securities that a fund may hold are not guaranteed or
backed by the full faith and credit of the U.S. government, such as those issued
by Fannie Mae (formally known as the Federal National Mortgage Association) and
Freddie Mac (formally known as the Federal Home Loan Mortgage Corporation). The
maximum potential liability of the issuers of some U.S. government obligations
may greatly exceed their current resources, including any legal right to support
from the U.S. government.
When-issued securities,
delayed delivery, to be announced and forward commitment transactions
Securities
purchased in when-issued, delayed delivery, to be announced or forward
commitment transactions will not be delivered or paid for immediately.
Institutional U.S. Treasury Reserves will not invest in securities on a to be
announced basis. Such transactions involve a risk of loss, for example, if the
value of the securities declines prior to the settlement date. Therefore, these
transactions may have a leveraging effect on a fund, making the value of an
investment in the fund more volatile and increasing the fund’s overall
investment exposure. Typically, no income accrues on securities a fund has
committed to purchase prior to the time delivery of the securities is made.
Financial Industry Regulatory Authority (“FINRA”) rules may impose mandatory
margin requirements for certain types of when-issued, to be announced or forward
commitment transactions, with limited exceptions.
Repurchase agreements
In
a repurchase agreement, a fund purchases securities from a counterparty, upon
the agreement of the counterparty to repurchase the securities from the fund at
a later date, and at a specified price, which is typically higher than the
purchase price paid by the fund. The securities purchased serve as the fund’s
collateral for the obligation of the counterparty to repurchase the securities.
If the counterparty does not repurchase the securities, the fund is entitled to
sell the securities, but the fund may not be able to sell them for the price at
which they were purchased, thus causing a loss. Additionally, if the
counterparty becomes insolvent, there is some risk that the fund will not have a
right to the securities, or the immediate right to sell the securities.
Reverse repurchase
agreements and other borrowings-each fund other than Institutional U.S. Treasury
Reserves
Each
fund may borrow money as a means of raising money to satisfy redemption requests
or for other temporary or emergency purposes by entering into reverse repurchase
agreements or other borrowing transactions. In a reverse repurchase agreement, a
fund sells securities to a counterparty, in return for cash, and the fund agrees
to repurchase the securities at a later date and for a higher price,
representing the cost to the fund for the money
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22 |
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Western
Asset Money Market Funds |
borrowed.
Although the funds do not intend to use these transactions for leveraging
purposes, reverse repurchase agreements and other borrowing transactions may
make the value of an investment in a fund more volatile and increase the fund’s
overall investment exposure.
Cash management and
defensive investing
Each
fund may also hold cash uninvested for cash management and defensive purposes.
For example, in the event of unusual circumstances when the subadviser deems it
appropriate, each fund may, without limit, hold cash uninvested.
If
a fund holds cash uninvested, the fund may be subject to risk with respect to
the depository institution holding the cash. In addition, a fund will not earn
income on those assets. If a fund takes a temporary defensive position, it will
be more difficult for the fund to achieve its investment objective. Although the
subadviser has the ability to take defensive positions, it may choose not to do
so for a variety of reasons, even during volatile market conditions.
Defaults and other
adverse events
In
the event that a portfolio security of a fund experiences a default or certain
other adverse events, Rule 2a‑7 under the 1940 Act imposes certain requirements.
Upon the occurrence of (i) a default with respect to a portfolio security
(other than an immaterial default unrelated to the financial condition of the
issuer), (ii) a portfolio security ceasing to be an eligible security (e.g., no
longer presents minimal credit risks), or (iii) an event of insolvency
occurring with respect to the issuer of a portfolio security or the provider of
any demand feature or guarantee, the fund will dispose of such security as soon
as practicable consistent with achieving an orderly disposition of the security,
absent a finding by the Board that disposal of the portfolio security would not
be in the best interests of the fund (which determination may take into account,
among other factors, market conditions that could affect the orderly disposition
of the portfolio security).
Other investments
Each
fund may also use other strategies and invest in other investments that are
described, along with their risks, in the Statement of Additional Information
(“SAI”). However, a fund might not use all of the strategies and techniques
or invest in all of the types of investments described in this Prospectus or in
the SAI.
Selection process
In
selecting individual securities, the subadviser:
• |
|
Uses
fundamental credit analysis to estimate the relative value and
attractiveness of various securities and sectors |
• |
|
Measures
the potential impact of supply/demand imbalances for fixed versus variable
rate securities and for obligations of different
issuers |
• |
|
Measures
the yields available for securities with different maturities and a
security’s maturity in light of the outlook for interest rates to identify
individual securities that offer return advantages at similar risk
levels |
Because
the funds are subject to maturity limitations on the investments they may
purchase, many of their investments are held until maturity. The subadviser may
sell a security before maturity when it is necessary to do so to meet redemption
requests or regulatory requirements. The subadviser may also sell a security if
the subadviser believes the issuer is no longer as creditworthy, or in order to
adjust the average weighted maturity of a fund’s portfolio (for example, to
reflect changes in the subadviser’s expectations concerning interest rates), or
when the subadviser believes there is superior value in other market sectors or
industries.
Investment structure
Each
fund does not invest directly in securities but instead invests through an
underlying mutual fund having the same investment objective and strategies under
a master/feeder structure. Unless otherwise indicated, references to the fund,
called a feeder fund, in this Prospectus include the underlying master fund.
Each fund may stop investing in its corresponding underlying fund at any
time, and will do so if a fund’s Board believes it to be in the best interests
of the fund’s shareholders. Each fund could then invest in one or more other
mutual funds or pooled investment vehicles, or could invest directly in
securities. Investors should note that other feeder funds may invest in the same
underlying mutual fund. Those other funds may have lower fees and/or expenses,
and correspondingly higher performance, than your fund. In addition, large
purchases or redemptions by one feeder fund could negatively affect the
performance of other feeder funds that invest in the same master fund.
More on risks of
investing in the funds
Following
is more information on the principal risks summarized above and additional risks
of investing in the funds.
You
could lose money by investing in a fund. Although each fund seeks to preserve
the value of your investment at $1.00 per share, it cannot guarantee it will do
so. An investment in a fund is not a bank account and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Each fund’s sponsor is not required to reimburse the fund for losses,
and you should not expect that the sponsor will provide financial support to a
fund at any time, including during periods of market stress.
During
periods of market stress, there could be significant redemptions from money
market funds in general, potentially driving the market prices of money market
instruments down and adversely affecting market liquidity.
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Western Asset Money Market
Funds |
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23 |
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Each
fund’s respective portfolio does not currently intend to avail itself of the
ability to impose discretionary liquidity fees on fund redemptions (such fee not
to exceed two percent of the value of the shares redeemed), as permitted under
Rule 2a‑7 under the 1940 Act. However, the board of each portfolio has informed
the fund that the board reserves the right to change the portfolio’s policy
regarding the imposition of discretionary liquidity fees if the portfolio’s
board of trustees determines that a liquidity fee is in the best interests of
the portfolio. In the event that discretionary liquidity fees are imposed in the
future, the fund would be required to pass such fees through to you on the same
terms and conditions as imposed by the fund’s portfolio.
Each
fund could underperform other short-term debt instruments or money market funds,
or you could lose money, as a result of risks such as:
Market and interest
rate risk. The market prices of a fund’s
securities may go up or down, sometimes rapidly or unpredictably. While each
fund seeks to maintain a $1.00 share price, if the market prices of the
securities owned by a fund fall, the value of your investment in the fund could
decline. Market prices may fall due to general market conditions, such as real
or perceived adverse economic or political conditions or trends, tariffs and
trade disruptions, inflation, substantial economic downturn or recession,
changes in interest rates, lack of liquidity in the bond markets or adverse
investor sentiment. Changes in market conditions will not typically have the
same impact on all types of securities. The market price of a security may also
fall due to specific conditions that affect a particular sector of the
securities market or a particular issuer.
The
market prices of securities may fluctuate significantly when interest rates
change and the fund may face a heightened level of interest rate risk due to
certain changes in monetary policy. When interest rates rise, the market price
of fixed income securities generally goes down. Generally, the longer the
maturity of a fixed income security, the greater the impact of a rise in
interest rates on the security’s market price. Moreover, securities can change
in value in response to other factors, such as credit risk. In addition,
different interest rate measures (such as short- and long-term interest rates
and U.S. and non‑U.S. interest rates), or interest rates on different types of
securities or securities of different issuers, may not necessarily change in the
same amount or in the same direction. When interest rates go down, a fund’s
yield will decline. Also, when interest rates decline, investments made by a
fund may pay a lower interest rate, which would reduce the income received by
the fund. Recently, there have been inflationary price movements, which have
caused the fixed income securities markets to experience heightened levels of
interest rate volatility and liquidity risk. The U.S. Federal Reserve has been
raising interest rates from historically low levels. It may continue to raise
interest rates. In addition, changes in monetary policy may exacerbate the risks
associated with changing interest rates. Any additional interest rate increases
in the future could cause the value of the fund’s holdings to decrease. It
cannot be predicted when inflation will return to more normalized levels or how
long financial authorities will counter inflationary pressures with monetary
tightening.
Market events
risk. The market values of securities or
other assets will fluctuate, sometimes sharply and unpredictably, due to factors
such as economic events, governmental actions or intervention, actions taken by
the U.S. Federal Reserve or foreign central banks, market disruptions caused by
trade disputes or other factors, political developments, armed conflicts,
economic sanctions and countermeasures in response to sanctions, major
cybersecurity events, the global and domestic effects of widespread or local
health, weather or climate events, and other factors that may or may not be
related to the issuer of the security or other asset. Economies and financial
markets throughout the world are increasingly interconnected. Economic,
financial or political events, trading and tariff arrangements, public health
events, terrorism, wars, natural disasters and other circumstances in one
country or region could have profound impacts on global economies or markets. As
a result, whether or not a fund invests in securities of issuers located in or
with significant exposure to the countries or markets directly affected, the
value and liquidity of a fund’s investments may be negatively affected.
Following Russia’s invasion of Ukraine, Russian stocks lost all, or nearly all,
of their market value. Other securities or markets could be similarly affected
by past or future geopolitical or other events or conditions. Furthermore,
events involving limited liquidity, defaults, non‑performance or other adverse
developments that affect one industry, such as the financial services industry,
or concerns or rumors about any events of these kinds, have in the past and may
in the future lead to market-wide liquidity problems, may spread to other
industries, and could negatively affect the value and liquidity of a fund’s
investments.
The
long-term impact of the COVID‑19 pandemic and its subsequent variants on
economies, markets, industries and individual issuers is not known. Some sectors
of the economy and individual issuers have experienced or may experience
particularly large losses. Periods of extreme volatility in the financial
markets, reduced liquidity of many instruments, increased government debt,
inflation, and disruptions to supply chains, consumer demand and employee
availability, may continue for some time. The U.S. government and the Federal
Reserve, as well as certain foreign governments and central banks, took
extraordinary actions to support local and global economies and the financial
markets in response to the COVID‑19 pandemic. This and other government
intervention into the economy and financial markets may not work as intended,
and have resulted in a large expansion of government deficits and debt, the long
term consequences of which are not known. In addition, the COVID‑19 pandemic,
and measures taken to mitigate its effects, could result in disruptions to the
services provided to a fund by its service providers.
Raising
the ceiling on U.S. government debt has become increasingly politicized. Any
failure to increase the total amount that the U.S. government is authorized to
borrow could lead to a default on U.S. government obligations, with
unpredictable consequences for economies and markets in the U.S. and elsewhere.
Recently, inflation and interest rates have increased and may rise further.
These circumstances could adversely affect the value and liquidity of a fund’s
investments, impair a fund’s ability to satisfy redemption requests, and
negatively impact a fund’s performance.
Credit
risk. An issuer or other obligor (such
as a party providing insurance or other credit enhancement) may fail to make the
required payments on securities held by a fund. Debt securities also go up or
down in value based on the perceived creditworthiness of issuers or other
obligors. If an obligor for a security held by a fund fails to pay, otherwise
defaults or is perceived to be less creditworthy, a security’s credit rating is
downgraded, which could happen rapidly, or the credit quality or value of any
underlying assets declines, the value of your investment in the fund could
decline significantly, particularly in certain market environments. If a single
entity provides credit enhancement to more than one of a fund’s investments, the
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Western
Asset Money Market Funds |
adverse
effects resulting from the downgrade or default of that entity’s credit will
increase the adverse effects on the fund. If a fund enters into a financial
contract (such as a repurchase agreement or reverse repurchase agreement) the
fund will be subject to the credit risk presented by the counterparty. In
addition, a fund may incur expenses in an effort to protect the fund’s interests
or to enforce its rights or may be hindered or delayed in exercising those
rights.
Although
a fund’s investments may be treated as short-term securities for the purposes of
meeting regulatory maturity limitations, the actual maturity of a security may
be longer, and the security’s value may decline on the basis of perceived longer
term credit risk of the issuer.
Upon
the occurrence of certain triggering events or defaults on a security held by a
fund, or if the subadviser believes that an obligor of such a security may have
difficulty meeting its obligations, the fund may obtain a new or restructured
security or underlying assets. In that case, a fund may become the holder of
securities or assets that it could not purchase or might not otherwise hold (for
example, because they are of lower quality or are subordinated to other
obligations of the issuer) at a time when those assets may be difficult to sell
or can be sold only at a loss. Any of these events may cause you to lose
money.
Yield
risk. The funds invest in short-term
money market instruments. As a result, the amount of income received by a fund
will go up or down depending on variations in short-term interest rates.
Investing in high quality, short-term instruments may result in a lower yield
(the income on your investment) than investing in lower quality or longer-term
instruments. When interest rates are very low or negative, a fund’s expenses
could absorb all or a significant portion of the fund’s income, and, if a fund’s
expenses exceed the fund’s income, the fund may be unable to maintain its $1.00
share price. If interest rates increase, a fund’s yield may not increase
proportionately. For example, the funds’ manager may discontinue any temporary
voluntary fee limitation or recoup amounts previously waived and/or reimbursed.
Additionally, inflation may outpace and diminish fund investment returns over
time.
A
money market fund is also required to maintain liquidity levels based on the
characteristics and anticipated liquidity needs of its shareholders. A fund with
greater liquidity needs may have a lower yield than money market funds with a
different shareholder base. There can be no assurance that an investment in a
fund will not be adversely affected by reforms to money market regulation that
may be adopted by the U.S. Securities and Exchange Commission or other
regulatory authorities.
Risk of increase in
expenses. Your actual costs of investing
in a fund may be higher than the expenses shown in “Annual fund operating
expenses” for a variety of reasons. For example, expenses may be higher if a
fund’s average net assets decrease, as a result of redemptions or otherwise, or
if a fee limitation is changed or terminated.
Prepayment or call
risk (Institutional Government Reserves). Many issuers have a right to prepay their
securities. Issuers may be more likely to prepay their securities if interest
rates fall. If this happens, a 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 prepaid securities.
Extension risk
(Institutional Government Reserves). 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 management
risk. The value of your investment may
decrease if the subadviser’s judgment about the quality, relative yield, value
or market trends affecting a particular security, industry, sector or region, or
about interest rates or other market factors, is incorrect or does not produce
the desired results, or if there are imperfections, errors or limitations in the
tools and data used by the subadviser. In addition, a fund’s investment
strategies or policies may change from time to time. Those changes may not lead
to the results intended by the subadviser and could have an adverse effect on
the value or performance of a fund.
Illiquidity
risk. Illiquidity risk exists when
particular investments are or may become impossible or difficult to sell or
impossible or difficult to purchase. Although most of the fund’s investments
must be liquid at the time of investment, investments may become illiquid after
purchase by a fund, particularly during periods of market turmoil. Markets may
become illiquid quickly. Markets may become illiquid when, for instance, there
are few, if any, interested buyers or sellers or when dealers are unwilling or
unable to make a market for certain securities, including U.S. Treasury
securities. As a general matter, dealers have been less willing to make markets
in recent years. When a fund holds illiquid investments, the portfolio may be
harder to value, especially in changing markets, and if a fund is forced to sell
these investments to meet redemption requests or for other cash needs, or to try
to limit losses, the fund may be forced to sell at a substantial loss or may not
be able to sell at all. A fund may experience heavy redemptions that could cause
the fund to liquidate its assets at inopportune times or at a loss or depressed
value, which could cause the value of your investment to decline. In addition,
when there is illiquidity in the market for certain investments, a fund, due to
limitations on illiquid investments, may be unable to achieve its desired level
of exposure to a certain sector.
Valuation
risk. The sales price a fund could
receive for any particular portfolio investment may differ from the fund’s
valuation of the investment, particularly for securities that trade in thin or
volatile markets or that are valued using a fair value methodology. These
differences may increase significantly and affect fund investments more broadly
during periods of market volatility. Investors who purchase or redeem fund
shares on days when a fund is holding fair-valued securities may receive fewer
or more shares or lower or higher redemption proceeds than they would have
received if the fund had not fair-valued securities or had used a different
valuation methodology. A fund’s ability to value its investments may also be
impacted by technological issues and/or errors by pricing services or other
third party service providers. The valuation of a fund’s investments involves
subjective judgment.
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Western Asset Money Market
Funds |
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25 |
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Risk relating to
investments by other funds. Other funds,
including affiliated funds, may invest in a fund. From time to time, a fund may
experience relatively large redemptions or investments from these funds as a
result of their rebalancing their portfolios or for other reasons. In the event
of such redemptions or investments, a fund could be required to sell securities
or to invest cash at a time when it is not advantageous to do so.
Repurchase
agreements risk. Repurchase agreements
could involve certain risks in the event of default or insolvency of the seller,
including losses and possible delays or restrictions upon a fund’s ability to
dispose of the underlying securities. To the extent that, in the meantime, the
value of the securities that a fund has purchased has decreased, a fund could
experience a loss. The use of repurchase agreements may produce income that is
not exempt from state personal income tax.
Operational
risk. Your ability to transact with
a fund or the valuation of your investment may be negatively impacted because of
the operational risks arising from factors such as processing errors and human
errors, inadequate or failed internal or external processes, failures in systems
and technology (including those due to cybersecurity incidents), changes in
personnel, and errors caused by third party service providers or trading
counterparties. It is not possible to identify all of the operational risks that
may affect a fund or to develop processes and controls that eliminate or
mitigate the occurrence of such failures. A fund and its shareholders could be
negatively impacted as a result.
Cybersecurity
risk. Like other funds and business
enterprises, a fund, the manager, the subadviser and their service providers are
subject to the risk of cyber incidents occurring from time to time.
Cybersecurity incidents, whether intentionally caused by third parties or
otherwise, may allow an unauthorized party to gain access to fund assets, fund
or customer data (including private shareholder information) or proprietary
information, cause a fund, the manager, the subadviser and/or their service
providers (including, but not limited to, fund accountants, custodians,
sub‑custodians, transfer agents and financial intermediaries) to suffer data
breaches, data corruption or loss of operational functionality, or prevent fund
investors from purchasing, redeeming or exchanging shares, receiving
distributions or receiving timely information regarding a fund or their
investment in the fund. A fund, the manager, and the subadviser have limited
ability to prevent or mitigate cybersecurity incidents affecting third party
service providers, and such third party service providers may have limited
indemnification obligations to the fund, the manager, and/or the subadviser.
Cybersecurity incidents may result in financial losses to a fund and its
shareholders, and substantial costs may be incurred in order to prevent or
mitigate any future cybersecurity incidents. Issuers of securities in which a
fund invests are also subject to cybersecurity risks, and the value of these
securities could decline if the issuers experience cybersecurity incidents.
New
ways to carry out cyber attacks continue to develop. There is a chance that some
risks have not been identified or prepared for, or that an attack may not be
detected, which puts limitations on a fund’s ability to plan for or respond to a
cyber attack.
Money market fund
regulatory risk. Money market funds and
the securities they invest in are subject to comprehensive regulations. The
enactment of new legislation or regulations, as well as changes in
interpretation and enforcement of current laws, may affect the manner of
operation, performance and/or yield of money market funds and could limit a
fund’s investment flexibility and reduce its ability to generate returns. In
July 2023, the SEC adopted amendments to money market fund regulations. A fund’s
operations will be impacted as it comes into compliance with the new
regulations.
Negative interest
rate environment. A negative interest
rate environment could impact a fund’s ability to maintain a stable $1.00 share
price. During a negative interest rate environment, a fund may reduce the number
of shares outstanding on a pro rata basis through reverse stock splits, negative
dividends or other “share cancellation” mechanisms to seek to maintain a stable
$1.00 price per share, to the extent permissible by applicable law.
Alternatively, a fund may discontinue using the amortized cost method of
valuation to maintain a stable $1.00 price per share and establish a fluctuating
net asset value per share rounded to four decimal places by using available
market quotations or equivalents.
Please
note that there are other factors that could adversely affect your investment
and that could prevent a fund from achieving its investment objective. More
information about risks appears in the SAI. Before investing, you should
carefully consider the risks that you will assume.
Portfolio holdings
A
description of the funds’ policies and procedures with respect to the disclosure
of portfolio securities is available in the SAI. Each fund intends to make
complete portfolio holdings information as of the last business day of each
month available at www.franklintempleton.com/moneymarketfunds (click on the name
of the fund) no later than five business days after month‑end. Monthly portfolio
holdings information will be available on each fund’s website for at least six
months after posting.
For
information about a fund, please visit the fund’s website,
www.franklintempleton.com/moneymarketfunds, and click on the name of the
fund.
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26 |
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Western
Asset Money Market Funds |
More on fund management
Franklin
Templeton Fund Adviser, LLC (“FTFA” or the “manager”) (formerly known as Legg
Mason Partners Fund Advisor, LLC) is each fund’s investment manager. FTFA, with
offices at 280 Park Avenue, New York, New York 10017, also serves as the
investment manager of other Franklin Templeton-sponsored funds. FTFA provides
administrative and certain oversight services to the funds. As of
September 30, 2023, FTFA’s total assets under management were approximately
$171.9 billion.
Western
Asset Management Company, LLC (“Western Asset”) provides the day‑to‑day
portfolio management of each fund as subadviser. Western Asset, established in
1971, has offices at 385 East Colorado Boulevard, Pasadena, California 91101 and
620 Eighth Avenue, New York, New York 10018. Western Asset acts as investment
adviser to institutional accounts, such as corporate pension plans, mutual funds
and endowment funds. As of September 30, 2023, the total assets under
management of Western Asset and its supervised affiliates were approximately
$365.2 billion.
FTFA
pays the subadviser a portion of the management fee that it receives from each
fund. The funds do not pay any additional advisory or other fees for advisory
services provided by Western Asset.
FTFA
and Western Asset are indirect, wholly-owned subsidiaries of Franklin Resources,
Inc. (“Franklin Resources”). Franklin Resources, whose principal executive
offices are at One Franklin Parkway, San Mateo, California 94403, is a global
investment management organization operating, together with its subsidiaries, as
Franklin Templeton. As of September 30, 2023, Franklin Templeton’s asset
management operations had aggregate assets under management of approximately
$1.37 trillion.
Management fee
Each
of Institutional U.S. Treasury Reserves, Institutional U.S. Treasury Obligations
Fund, and Institutional Government Reserves pays a management fee at an annual
rate that decreases as assets increase, as follows: 0.250% on assets up to and
including $1 billion; 0.225% on assets over $1 billion, up to and
including $2 billion; 0.200% on assets over $2 billion, up to and
including $5 billion; 0.175% on assets over $5 billion, up to and
including $10 billion; and 0.150% on assets over $10 billion.
For
the fiscal year ended August 31, 2023, each of the following funds paid
FTFA an effective management fee equal to the following percentages of the
fund’s average daily net assets for management services:
|
| |
Fund |
|
Fee rate (%) |
Institutional
U.S. Treasury Reserves |
|
0.16% |
Institutional
U.S. Treasury Obligations Fund |
|
0.11% |
Institutional
Government Reserves |
|
0.16% |
A
discussion regarding the basis for the Board’s approval of each fund’s
management agreement and subadvisory agreement is available in that fund’s
Annual Report for the period ended August 31, 2023.
Expense limitation
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 for Investor Shares will not
exceed the following percentages of the class’ average daily net assets, subject
to recapture as described below:
|
| |
Fund |
|
Limit (%) |
Institutional
U.S. Treasury Reserves—Investor Shares |
|
0.23 |
Institutional
U.S. Treasury Obligations Fund—Investor Shares |
|
0.23 |
Institutional
Government Reserves—Investor Shares |
|
0.23 |
These
arrangements are expected to continue until December 31, 2024, may be
terminated prior to that date by agreement of the manager and the Board, and may
be terminated at any time after that date by the manager. Additional amounts may
be voluntarily waived and/or reimbursed from time to time. The manager is also
permitted to recapture amounts waived and/or reimbursed to a class during the
same fiscal year if the class’ total annual operating expenses have fallen to a
level below the limit described above. In no case will the manager recapture any
amount that would result, on any particular business day of a fund, in the
class’ total annual operating expenses exceeding the applicable limit described
above, or any other lower limit then in effect.
Additional information
Each
fund enters into contractual arrangements with various parties, including, among
others, each fund’s manager and the subadviser, who provide services to the
funds. Shareholders are not parties to, or intended (or “third-party”)
beneficiaries of, those contractual arrangements.
This
Prospectus and the SAI provide information concerning each fund that you should
consider in determining whether to purchase shares of a fund. A fund may make
changes to this information from time to time. Neither this Prospectus nor the
SAI is intended to give rise to any contract rights or other rights in any
shareholder, other than rights conferred by federal or state securities
laws.
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Western Asset Money Market
Funds |
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27 |
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Recordkeeping fees
Each
fund 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.
Distribution
Franklin
Distributors, LLC (“Franklin Distributors” or the “Distributor”), an indirect,
wholly-owned broker/dealer subsidiary of Franklin Resources, serves as each
fund’s sole and exclusive distributor.
Each
fund has adopted a shareholder services and distribution plan pursuant to Rule
12b‑1 under the Investment Company Act of 1940, as amended. Under the plan, each
fund pays distribution and/or service fees, based on annualized percentages of
average daily net assets, of up to 0.10% for Investor Shares. The Board has
determined that, until December 31, 2024, such payments shall not exceed
0.05% of average daily net assets attributable to Investor Shares. This
arrangement cannot be terminated prior to December 31, 2024 without the
Board of Trustees’ consent. From time to time, the Distributor and/or financial
intermediaries may agree to a reduction or waiver of these fees. These fees are
an ongoing expense and, over time, will increase the cost of your investment and
may cost you more than other types of sales charges.
Additional payments
In
addition to payments made to intermediaries under a fund’s shareholder services
and distribution plan and other payments made by the fund for shareholder
services and/or recordkeeping, the Distributor, the manager and/or their
affiliates make payments for distribution, shareholder servicing, marketing and
promotional activities and related expenses out of their profits and other
available sources, including profits from their relationships with the funds.
These payments are not reflected as additional expenses in the fee tables
contained in this Prospectus. The recipients of these payments may include the
Distributor and affiliates of the manager, as well as Service Agents through
which investors may purchase shares of a fund, including your Service Agent. The
total amount of these payments is substantial, may be substantial to any given
recipient and may exceed the costs and expenses incurred by the recipient for
any fund-related marketing or shareholder servicing activities. The payments
described in this paragraph are often referred to as “revenue sharing payments.”
Revenue sharing arrangements are separately negotiated between the Distributor,
the manager and/or their affiliates, and the recipients of these payments.
Revenue
sharing payments create an incentive for an intermediary or its employees or
associated persons to recommend or sell shares of a fund to you. Contact your
Service Agent for details about revenue sharing payments it receives or may
receive. Additional information about revenue sharing payments is available in
the SAI. Revenue sharing payments, as well as payments by the funds under the
shareholder services and distribution plan, or for recordkeeping and/or
shareholder services, also benefit the manager, the Distributor and their
affiliates to the extent the payments result in more assets being invested in a
fund on which fees are being charged.
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28 |
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Western
Asset Money Market Funds |
Buying shares
Shares
of the funds are offered continuously and purchases may be made on any day the
funds are open for business, as described under “Share price/Fund business days”
below.
Each
fund may offer one or more additional classes of shares. Only Investor Shares
are offered through this Prospectus.
You
may set up an account to buy shares only through banks, brokers, dealers,
insurance companies, investment advisers, financial consultants or advisers,
mutual fund supermarkets and other financial intermediaries that have entered
into an agreement with the Distributor to sell shares of the funds (each called
a “Service Agent”).
You
should contact your Service Agent to open an account to 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.
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| |
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|
Generally |
|
You
may buy shares of a fund on any day that the fund is open for business, as
described under “Share price/Fund business days.” Shares are sold at their
net asset value next determined after receipt by your Service Agent or the
transfer agent of your purchase request in good order.
A
fund may not be available for sale in certain states. Prospective
investors should inquire as to whether a fund is available for sale in
their state of residence.
You
must provide the following information for your order to be
processed:
• Name of
fund being bought
• Class of
shares being bought
• Dollar
amount or number of shares being bought
• Account
number (if existing account) |
| |
Through a
Service Agent |
|
You
should contact your Service Agent to open an account and make arrangements
to buy shares. You must contact your Service Agent to arrange for the
wiring of federal funds.
Your
Service Agent may charge an annual account maintenance fee. |
| |
Through a fund |
|
Investors
should contact the funds at 1‑877‑721‑1926 or 1‑203‑703‑6002 to open an
account and make arrangements to buy shares.
You
must contact the funds at 1‑877‑721‑1926 or 1‑203‑703‑6002 to arrange for
the wiring of federal funds. If you are purchasing by check, enclose a
check to pay for the shares.
Orders
may be received by mail as follows:
Regular
Mail:
BNY
Mellon
Attn: Western Asset
Money Market Funds
P.O. Box
534447
Pittsburgh, PA
15253-4447
Overnight
Mail:
BNY
Mellon
Attn:
534447
500 Ross Street,
154‑0520
Pittsburgh, PA
15262
If
you pay by check and your check does not clear in due course, your
purchase will be canceled and you will be responsible for any expenses and
losses to a fund.
If
a fund does not receive your purchase wire by the close of the Federal
Reserve wire transfer system on the day you placed your order, your order
will be canceled and you could be liable for any losses or fees incurred
by the fund or its agents.
Purchase
requests placed by telephone during the fund service desk’s hours of
operation and received in good order will be accepted for processing at
the net asset value next determined. The fund service desk’s normal hours
of operations are |
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Western Asset Money Market
Funds |
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29 |
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between
8:00 a.m. and 5:30 p.m. (Eastern time) each fund business day. |
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When shares begin
to earn dividends |
|
If
your order for a purchase to be made in federal funds is received by a
fund in good order prior to the fund’s close of business on a fund
business day, shares purchased will normally be entitled to receive
dividends declared on that day and orders received after the fund’s close
of business on a fund business day will normally begin to earn dividends
on the following business day.
If
you pay by check, your shares generally begin to earn dividends on the
fund business day following receipt of the check.
If
you are purchasing through a Service Agent, you should check with your
Service Agent to determine when your purchase order will be
effective. |
Your account statement
will have more information on who to contact if you want to buy, exchange or
redeem shares, or you can contact your fund between 8:00 a.m. and 5:30 p.m.
(Eastern time) at 1‑877‑721‑1926 or 1‑203‑703‑6002.
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30 |
|
| |
Western
Asset Money Market Funds |
Exchanging shares
|
| |
|
|
Generally |
|
You
may exchange shares of a fund for Investor Shares, if offered, of any
other Western Asset money market fund made available to you on any day
that both the fund and the fund into which you are exchanging are open for
business. An exchange of shares of one fund for shares of another fund is
generally a taxable transaction, but you will not have any gain or loss on
an exchange so long as the fund whose shares you exchange maintains a net
asset value of $1.00 per share. |
|
|
Franklin Templeton
offers a distinctive family of money market funds tailored to help meet
the varying needs of large and small investors |
|
You
may exchange shares at the final net asset value calculated on a fund
business day after receipt by your Service Agent or the transfer agent of
your exchange request in good order.
• If you are
a customer of a Service Agent, contact your Service Agent to learn which
funds your Service Agent makes available to you for exchanges. Other
shareholders should contact the funds at 1‑877‑721‑1926 or
1‑203‑703‑6002
• Exchanges
may be made only between accounts that have identical registrations
• The
exchange privilege may be changed or terminated at any time
Always
be sure to read the prospectus of the fund into which you are exchanging
shares. |
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|
Investment minimums
and other requirements |
|
Your
exchange will be subject to the requirements of the fund into which you
are exchanging shares. |
|
|
By
telephone |
|
You
may place exchange orders by telephone if your account permits. Contact
your Service Agent or, if you hold shares directly with a fund, call the
fund at 1‑877‑721‑1926 or 1‑203‑703‑6002. |
|
|
By mail |
|
Contact
your Service Agent or, if you hold shares directly with a fund, write to
the fund as follows:
Regular
Mail:
BNY
Mellon
Attn: Western Asset
Money Market Funds
P.O. Box
534447
Pittsburgh, PA
15253-4447
Overnight
Mail:
BNY
Mellon
Attn:
534447
500 Ross Street,
154‑0520
Pittsburgh, PA
15262 |
Your account statement
will have more information on who to contact if you want to buy, exchange or
redeem shares, or you can contact your fund between 8:00 a.m. and 5:30 p.m.
(Eastern time) at 1‑877‑721‑1926 or 1‑203‑703‑6002.
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| |
Western Asset Money Market
Funds |
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31 |
|
Redeeming shares
|
| |
|
|
Generally |
|
You
may redeem shares of a fund on any day that the fund is open for business,
as described under “Share price/Fund business days” below. Shares are
redeemed at their net asset value next determined after receipt by your
Service Agent or the transfer agent of your redemption request in good
order.
If
the shares are held by a fiduciary or corporation, partnership or similar
entity, other documents may be required.
Contact
your Service Agent or, if you hold shares directly with a fund, call the
fund at 1‑877‑721‑1926 or 1‑203‑703‑6002 to redeem shares of the
fund. |
|
|
Redemption
proceeds |
|
For Institutional U.S. Treasury Obligations
Fund: If your request is received in good order by your Service
Agent or the transfer agent prior to the time the fund makes its final net
asset value calculation on any day the fund is open for business (normally
5:00 p.m. (Eastern time)), your redemption proceeds normally will be sent
that day, but in any event within 7 days. However, if you make a
redemption request before the fund has collected payment for the purchase
of shares, the fund may delay your proceeds until payment is collected,
for up to 10 days.
Your
redemption proceeds may be delayed, or your right to receive redemption
proceeds suspended beyond 7 days, if the NYSE is closed (other than on
weekends or holidays) or trading is restricted, if an emergency exists, or
otherwise as permitted by the rules of or by the order of the SEC.
For Institutional U.S. Treasury Reserves:
You normally will receive your redemption proceeds in federal funds on the
business day on which you sell your shares, or if your redemption request
is received in good order by your Service Agent or the transfer agent
after the fund makes its final net asset value calculation on that
business day (normally 2:00 p.m. (Eastern time)), on the next business
day. The fund may delay payment for one business day under certain
circumstances and may delay beyond one business day if Fedwire or the
applicable Federal Reserve Bank is closed on the day your redemption
proceeds would otherwise be paid, or in the circumstances described
below.
Your
redemption proceeds may be delayed, or your right to receive redemption
proceeds suspended beyond 7 days, if the NYSE is closed (other than on
weekends or holidays) or trading is restricted, if an emergency exists, or
otherwise as permitted by the rules of or by the order of the SEC.
For Institutional Government Reserves: You
normally will receive your redemption proceeds in federal funds on the
business day on which you sell your shares, or if your redemption request
is received in good order by your Service Agent or the transfer agent
after the fund makes its final net asset value calculation on that
business day (normally 5:00 p.m. (Eastern time)), on the next business
day.
The
fund may provide for the postponement of redemption and payment of
redemption proceeds beyond one business day only as follows: (A) for
any period during which there is a non‑routine closure of the Fedwire or
applicable Federal Reserve Banks; (B) for any period: (1) during
which the New York Stock Exchange (“NYSE”) is closed other than customary
week‑end and holiday closings; or (2) during which trading on the
NYSE is restricted; (C) for any period during which an emergency
exists as a result of which: (1) disposal by the fund of securities
owned by it is not reasonably practicable; or (2) it is not
reasonably practicable for the fund to fairly determine the net asset
value of shares of the fund; (D) for any period as the Securities and
Exchange Commission (“SEC”) may by order permit for the protection of
shareholders of the fund; (E) for any period during which the SEC
has, by rule or regulation, deemed that: (1) trading shall be
restricted; or (2) an emergency exists; or (F) for any period
during which the fund, as part of a necessary liquidation of the fund, has
properly postponed and/or suspended redemption of shares and payment in
accordance with federal securities laws.
For all funds: You generally are entitled to
receive dividends on fund shares through the business day prior to the day
on which your proceeds are sent to you.
If
you hold your shares through a Service Agent, your Service Agent may have
its own earlier deadlines for the receipt of a redemption request. Your
sale or redemption proceeds will be sent by federal wire to your Service
Agent. You should check with your Service Agent to determine when your
proceeds will be available to you.
If
you hold your shares through a fund and have designated a bank account on
your application form, you may have the proceeds sent by federal wire or
by electronic transfer (ACH) to that bank account. To change the bank
account designated to receive wire or electronic transfers, you will be
required to deliver a new written authorization and may be asked to
provide other documents. You may be charged a fee on a wire or an
electronic transfer (ACH). In other cases, unless you direct otherwise,
your proceeds will be paid by check mailed to your address of
record.
Under
normal circumstances, each fund expects to meet redemption requests by
using cash or cash equivalents in its portfolio. |
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32 |
|
| |
Western
Asset Money Market Funds |
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| |
| |
|
|
The
funds reserve the right to pay redemption proceeds by giving you
securities instead of cash (for example, if a fund reasonably believes
that a cash redemption may have a substantial impact on the fund and its
remaining shareholders). You may pay transaction costs to dispose of the
securities, you may owe capital gain tax on the sale of the securities and
you may receive less than the price at which they were valued for purposes
of the redemption.
During
periods of deteriorating or stressed market conditions, or during
extraordinary or emergency circumstances, a fund may be more likely to pay
redemption proceeds by giving you securities. |
|
|
By mail |
|
Contact
your Service Agent or, if you hold shares directly with a fund, write to
the fund as follows:
Regular
Mail:
BNY
Mellon
Attn: Western Asset
Money Market Funds
P.O. Box
534447
Pittsburgh, PA
15253-4447
Overnight
Mail:
BNY
Mellon
Attn:
534447
500 Ross Street,
154‑0520
Pittsburgh, PA
15262
Your
written request must provide the following:
• The fund
name, the class of shares being redeemed and your account number
• The dollar
amount or number of shares being redeemed
• Signature
of each owner exactly as the account is registered
• Signature
guarantees, as applicable (see “Other things to know about
transactions”) |
|
|
By
telephone |
|
If
your account application permits, you may be eligible to redeem shares by
telephone. Contact your Service Agent or, if you hold shares directly with
a fund, call the fund at 1‑877‑721‑1926 or 1‑203‑703‑6002.
Please
have the following information ready when you place your redemption
request:
• Name of
fund being redeemed
• Class of
shares being redeemed
• Account
number
If
you hold your shares directly with a fund and your telephonic redemption
request is placed with the fund service desk during the fund service
desk’s hours of operation and received in good order, your request will be
accepted for processing at the net asset value next determined. The fund
service desk’s normal hours of operations are between 8:00 a.m. and
5:30 p.m. (Eastern time) each fund business day. |
|
|
Liquidity
fees |
|
Each
fund’s respective portfolio does not currently intend to avail itself of
the ability to impose discretionary liquidity fees on fund redemptions
(such fee not to exceed two percent of the value of the shares redeemed),
as permitted under Rule 2a‑7 under the 1940 Act. However, each fund’s
portfolio reserves the right to charge discretionary liquidity fees if the
portfolio’s board of trustees determines that a liquidity fee is in the
best interests of the portfolio. In the event that discretionary liquidity
fees are imposed in the future, the fund would be required to pass such
fees through to you on the same terms and conditions as imposed by the
fund’s portfolio. |
|
|
Liquidation |
|
Each
fund reserves the right to permanently suspend redemptions and liquidate
if the Board of the fund determines that it is not in the best interests
of the fund to continue operating. |
Your account statement
will have more information on who to contact if you want to buy, exchange or
redeem shares, or you can contact your fund between 8:00 a.m. and 5:30 p.m.
(Eastern time) at 1‑877‑721‑1926 or 1‑203‑703‑6002.
|
|
|
|
|
| |
Western Asset Money Market
Funds |
|
| |
|
33 |
|
Other things to know
about transactions
When
you buy, exchange or redeem shares, your request must be in good order. This
means you have provided the following information, without which your request
may not be processed:
• |
|
In
the case of a purchase (including a purchase as part of an exchange
transaction), the class of shares being bought |
• |
|
In
the case of an exchange or redemption, the class of shares being exchanged
or redeemed (if you own more than one class) |
• |
|
Dollar
amount or number of shares being bought, exchanged or
redeemed |
• |
|
In
certain circumstances, the signature of each owner exactly as the account
is registered (see “Redeeming shares”) |
In
certain circumstances, such as during periods of market volatility, severe
weather and emergencies, shareholders may experience difficulties placing
exchange or redemption orders by telephone. In that case, shareholders should
consider using a fund’s other exchange and redemption procedures described under
“Exchanging shares” and “Redeeming shares.”
The
transfer agent or the funds will employ reasonable procedures to confirm that
any telephone, electronic or other exchange or redemption request is genuine,
which may include recording calls, asking the caller to provide certain personal
identification information, employing identification numbers, sending you a
written confirmation or requiring other confirmation procedures from time to
time. If these procedures are followed, neither a fund nor its agents will bear
any liability for these transactions, subject to applicable law.
Each
fund does not consider the U.S. Postal Service or private delivery services to
be its agents. Therefore, deposits in the mail or with such delivery services,
or receipt at a fund’s post office box, of purchase requests or redemption
orders, do not constitute receipt by a fund or its transfer agent.
Each
fund has the right to:
• |
|
Suspend
the offering of shares permanently or for a period of
time |
• |
|
Waive
or change minimum initial and additional investment
amounts |
• |
|
Reject
any purchase or exchange order |
• |
|
Change,
revoke or suspend the exchange privilege |
• |
|
Suspend
telephone transactions |
• |
|
Suspend
or postpone redemptions of shares on any day when trading on the NYSE is
restricted or as otherwise permitted by the SEC |
• |
|
Redeem
shares if information provided in the application should prove to be
incorrect in any manner judged by the fund to be material (e.g., in a
manner such as to render the shareholder ineligible to purchase shares of
that class) |
Each fund
may be required to close your account after a period of inactivity, as
determined by applicable U.S. state or territory abandoned or unclaimed property
laws and regulations, and transfer your shares to the appropriate U.S. state or
territory. If your shares are transferred to an applicable U.S. state or
territory from an IRA account, that could be treated as a taxable distribution
from your IRA to you. For more information on unclaimed property and how to
maintain an active account, please contact your Service Agent or the fund’s
transfer agent.
For
your protection, the funds or your Service Agent may request additional
information in connection with large redemptions, unusual activity in your
account, or otherwise to ensure your redemption request is in good order. Please
contact your Service Agent or the funds for more information.
Medallion signature
guarantees
To
be in good order, your redemption request must include a Medallion signature
guarantee if you:
• |
|
are
redeeming shares and sending the proceeds to an address or bank account
not currently on file or to an account in another Western Asset money
market fund sold by the Distributor with a different account
registration |
• |
|
changed
your account registration or your address within 30 calendar
days |
• |
|
want
the check paid to someone other than the account
owner(s) |
• |
|
are
transferring the redemption proceeds to an account with a different
registration |
For
other types of transactions involving changes to your account registration
information, please contact the fund or your Service Agent.
When
a Medallion signature guarantee is called for, the shareholder should have a
Medallion signature guarantee stamped under his or her signature. You can obtain
a signature guarantee from most banks, dealers, brokers, credit unions and
federal savings and loan institutions, national securities exchanges, registered
securities associations and clearing agencies (each an “Eligible Guarantor
Institution”), but not from a notary public.
Each
fund and its agents reserve the right to reject any Medallion signature
guarantee pursuant to written signature guarantee standards or procedures, which
may be revised in the future to permit them to reject Medallion signature
guarantees from Eligible Guarantor Institutions. A fund may change the signature
guarantee requirements from time to time without prior notice to
shareholders.
Restrictions on the
availability of the funds outside the United States
The
distribution of this Prospectus and the offering of shares of the funds are
restricted in certain jurisdictions. This Prospectus is not an offer or
solicitation in any jurisdiction where such offer or solicitation is unlawful,
where the person making an offer or solicitation is not authorized to make
|
|
|
| |
34 |
|
| |
Western
Asset Money Market Funds |
it
or a person receiving an offer or solicitation may not lawfully receive it or
may not lawfully invest in the funds. Investors should inform themselves as to
the legal requirements within their own country before investing in the
funds.
This
Prospectus, and the offer of shares hereunder, are not directed at persons
outside the United States. In particular, a fund is not intended to be marketed
to prospective investors in any member state of the European Union, Iceland,
Liechtenstein or Norway (collectively, the “European Economic Area” or “EEA”).
No notification or application has been made to the competent authority of any
member state of the EEA under the Alternative Investment Fund Managers Directive
(or any applicable legislation or regulations made thereunder) to market a fund
to investors in the EEA and it is not intended that any such notification or
application shall be made.
U.S.
citizens with addresses in the United States, and non‑U.S. citizens who reside
in the United States and have U.S. addresses, are permitted to establish
accounts with a fund. For these purposes, the “United States” and “U.S.” include
U.S. territories.
A
fund generally does not permit persons who do not reside in the United States or
who do not have U.S. addresses to establish accounts. Therefore, U.S. citizens
residing in foreign countries, as well as non‑U.S. citizens residing in foreign
countries, generally will not be permitted to establish accounts with a
fund.
For
further information, you or your Service Agent may contact the funds at
1‑877‑721‑1926 or 1‑203‑703‑6002.
Anti-money laundering
Federal
anti-money laundering regulations require all financial institutions to obtain,
verify and record information that identifies each person who opens an account.
When you sign your account application, you may be asked to provide additional
information in order for a fund to verify your identity in accordance with these
regulations. If you are opening the account in the name of a legal entity (e.g.
partnership, limited liability company, business trust, corporation, etc.), you
may also be required to supply the identity of the beneficial owners and a
control individual with management authority, prior to the opening of your
account. Accounts may be restricted and/or closed, and the monies withheld,
pending verification of this information or as otherwise required under these
and other federal regulations.
Small account
balances/Mandatory redemptions
Each
fund reserves the right to ask you to bring your account up to a minimum
investment amount determined by your Service Agent if the aggregate value of the
fund shares in your account is less than $500 for any reason (including solely
due to declines in net asset value and/or failure to invest at least $500 within
a reasonable period). You will be notified in writing and will have 60 days to
make an additional investment to bring your account value up to the required
level. If you choose not to do so within this 60‑day period, the fund may close
your account and send you the redemption proceeds. If your share class is no
longer offered, you may not be able to bring your account up to the minimum
investment amount. Some shareholders who hold accounts in multiple classes of
the same fund may have those accounts aggregated for the purposes of these
calculations. If your account is closed, you will not be eligible to have your
account reinstated without imposition of any sales charges that may apply to
your new purchase.
Please
contact your Service Agent for more information. Any redemption of fund shares
may result in tax consequences to you (see “Taxes” for more information). Each
fund may, with prior notice, change the minimum size of accounts subject to
mandatory redemption, which may vary by class, or implement fees for small
accounts.
Subject
to applicable law, a fund may, with prior notice, adopt other policies from time
to time requiring mandatory redemption of shares in certain circumstances.
For more information,
please contact your Service Agent or the funds or consult the SAI.
Frequent trading of fund
shares
Money
market funds are often used by investors for short-term investments, in place of
bank checking or saving accounts, or for cash management purposes. Investors
value the ability to add and withdraw their funds quickly, without restriction.
For this reason the funds’ Board has not adopted policies and procedures, or
imposed restrictions such as minimum holding periods, in order to deter frequent
purchases and redemptions of money market fund shares. The Board also believes
that money market funds, such as the funds, are not typically targets of abusive
trading practices. However, some investors may seek to take advantage of a
short-term disparity between a fund’s yield and current market yields, which
could have the effect of reducing the fund’s yield. In addition, frequent
purchases and redemptions of fund shares could increase a fund’s transaction
costs and may interfere with the efficient management of the fund’s portfolio,
which could detract from the fund’s performance.
Reduction in number of
shares
In
order to maintain a $1.00 per share net asset value, if the value of a fund’s
assets were to decline, the fund could, if authorized by the Board, reduce the
number of its outstanding shares through a reverse stock split. If this happens,
although each share would continue to be valued at $1.00 per share, each
shareholder will own fewer shares of the fund and lose money. A fund could do
this in a negative interest rate environment. By investing in a fund, you agree
to this reduction should it become necessary to maintain a $1.00 per share net
asset value.
Record ownership
|
|
|
|
|
| |
Western Asset Money Market
Funds |
|
| |
|
35 |
|
If
you hold shares through a Service Agent, your Service Agent may establish and
maintain your account and be the shareholder of record. In the event that a fund
holds a shareholder meeting, your Service Agent, as record holder, will be
entitled to vote your shares and may seek voting instructions from you. If you
do not give your Service Agent voting instructions, your Service Agent, under
certain circumstances, may nonetheless be entitled to vote your shares.
|
|
|
| |
36 |
|
| |
Western
Asset Money Market Funds |
Dividends, other
distributions and taxes
Dividends and other
distributions
Each
fund calculates its net income and declares dividends each business day when it
makes its final net asset value calculation. See “Buying shares” above for
information about when recently purchased shares begin to earn dividends and
“Redeeming shares” above for information about when shares redeemed cease to
earn dividends. Dividends are distributed once a month, on or before the last
business day of the month.
You
can elect to receive dividends and/or other distributions in cash.
Unless
you elect to receive dividends and/or other distributions in cash, your
dividends and capital gain distributions will be automatically reinvested in
shares of the same class you hold, at the net asset value determined on the
reinvestment date.
If
you hold shares directly with a fund and you elect to receive dividends and/or
distributions in cash, you have the option to receive such dividends and/or
distributions via a direct deposit to your bank account or, provided that the
dividend and/or distribution is $10.00 or more, by check. If you choose to
receive dividends and/or distributions via check, amounts less than $10.00 will
automatically be reinvested in fund shares as described above.
If
you do not want dividends and/or distributions in amounts less than $10.00 to be
reinvested in fund shares, you must elect to receive dividends and distributions
via a direct deposit to your bank account.
The
Board reserves the right to revise the dividend policy or postpone the payment
of dividends if warranted in the Board’s judgment due to unusual
circumstances.
Taxes
The
following discussion is very general, applies only to shareholders who are U.S.
persons, and does not address shareholders subject to special rules, such as
those who hold fund shares through an IRA, 401(k) plan or other tax‑advantaged
account. Except as specifically noted, the discussion is limited to federal
income tax matters, and does not address state, local, foreign or non‑income
taxes. Further information regarding taxes, including certain federal income tax
considerations relevant to non‑U.S. persons, is included in the SAI. Because
each shareholder’s circumstances are different and special tax rules may apply,
you should consult your tax professional about federal, state, local and/or
foreign tax considerations that may be relevant to your particular
situation.
You
normally will have to pay federal income tax on any dividends and other
distributions you receive from a fund, whether the distributions are paid in
cash or additional shares. Distributions of net capital gain (the excess of net
long-term capital gain over net short-term capital loss) that are reported by a
fund as capital gain dividends are taxable to you as long-term capital gain
regardless of how long you have owned your shares. Other distributions are
generally taxable as ordinary income. The funds do not expect any distributions
to be treated as qualified dividend income, which for noncorporate shareholders
may be taxed at reduced rates.
If
you redeem shares or exchange them for shares of another fund, it is generally a
taxable event. However, you will not have any gain or loss on the redemption or
exchange so long as the fund whose shares you redeem or exchange maintains a net
asset value of $1.00 per share.
A
Medicare contribution tax is imposed at the rate of 3.8% on all or a portion of
net investment income of U.S. individuals if their income exceeds specified
thresholds and on all or a portion of undistributed net investment income of
certain estates and trusts. Net investment income generally includes for this
purpose dividends and capital gain distributions, if any, paid by a fund.
A
dividend declared by a fund in October, November or December and paid during
January of the following year will, in certain circumstances, be treated as paid
in December for tax purposes.
After
the end of each year, your Service Agent or fund will provide you with
information about the distributions and dividends you received. Because each
shareholder’s circumstances are different and special tax rules may apply, you
should consult your tax professional about your investment in a fund.
|
|
|
|
|
| |
Western Asset Money Market
Funds |
|
| |
|
37 |
|
Share price/Fund business
days
You
may buy or redeem shares at their net asset value (“NAV”) next determined after
receipt of your request in good order. You may exchange shares at the final NAV
calculated on a fund business day after receipt of your request in good
order.
Each
fund uses the amortized cost method to value its portfolio securities. Using
this method, a fund constantly amortizes over the remaining life of a security
the difference between the principal amount due at maturity and the cost of the
security to the fund. This method of valuation is designed to permit a money
market fund to maintain a constant NAV of $1.00 per share, but there is no
guarantee that it will do so.
Each
fund’s NAV per share is the value of its assets minus its liabilities divided by
the number of shares outstanding. NAV is calculated separately for each class of
shares. Each fund is open for business and calculates its NAV every day on which
both the NYSE and the Federal Reserve Bank of New York (“FRBNY”) are open for
business. Therefore, the funds will be closed on the days on which the following
holidays are observed: New Year’s Day, Martin Luther King, Jr. Day, Presidents’
Day, Good Friday, Memorial Day, Juneteenth National Independence Day,
Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day and
Christmas Day. Both the NYSE and FRBNY are also closed on weekends and may be
closed because of an emergency or other unanticipated event. In the event the
Federal Reserve wire payment system is open and the NYSE is open, a fund may
close for purchase or redemption transactions if—due to an emergency or other
unanticipated event—the bond markets are closed for business as recommended by
the Securities Industry and Financial Markets Association (“SIFMA”). In the
event the NYSE does not open for business because of an emergency or other
unanticipated event, a fund may, but is not required to, open for purchase or
redemption transactions if the Federal Reserve wire payment system is open and
the bond markets are open.
Each
fund typically calculates its NAV as of each hour from 8:00 a.m. (Eastern time)
until its close of business on each fund business day. However, a fund could,
without advance notice, determine not to make one or more intraday calculations
on a given day for a number of reasons such as unusual conditions in the bond,
credit or other markets or unusual fund purchase or redemption activity. If a
fund determined not to make an intraday calculation, purchases or redemptions
would be effected at the next determined intraday or closing NAV, which may be
greater or less than the price at which the purchase or redemption would
otherwise have been effected.
On
any day when the NYSE, the FRBNY or the bond markets (as recommended by SIFMA)
close early due to an unanticipated event, or if trading on the NYSE is
restricted, an emergency arises or as otherwise permitted by the SEC, each fund
reserves the right to close early and make its final NAV calculation as of the
time of its early close.
Each
fund normally closes for business at the following times: Institutional U.S.
Treasury Reserves at 2:00 p.m. (Eastern time), Institutional U.S. Treasury
Obligations Fund at 5:00 p.m. (Eastern time), and Institutional Government
Reserves at 5:00 p.m. (Eastern time). When SIFMA recommends an early close to
the bond markets on a business day before or after a day on which a holiday is
celebrated, each fund reserves the right to close at or prior to the SIFMA
recommended closing time. For calendar year 2024, SIFMA recommends an early
close of the bond markets on March 28, 2024; May 24, 2024; July 3,
2024; November 29, 2024; December 24, 2024 and December 31, 2024. The schedule
may be changed by SIFMA due to market conditions.
To determine whether
a fund is open for business, please call the fund at 1‑877‑721‑1926 or
1‑203‑703‑6002. The fund service desk is
generally open between 8:00 a.m. and 5:30 p.m. (Eastern time) but may close
early under certain circumstances. You should contact your Service Agent to
determine whether your Service Agent will be open for business.
It
is the responsibility of the Service Agent to transmit all orders to buy,
exchange or redeem shares to the transfer agent on a timely basis.
|
|
|
| |
38 |
|
| |
Western
Asset Money Market Funds |
Financial highlights
Western Asset Institutional U.S. Treasury Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
For a share of each class of beneficial interest
outstanding throughout each year ended August 31: |
|
Investor Shares |
|
2023 |
|
|
2022 |
|
|
20211 |
|
|
20201 |
|
|
20191 |
|
|
|
|
|
| |
Net asset value,
beginning of year |
|
|
$1.000 |
|
|
|
$1.000 |
|
|
|
$1.000 |
|
|
|
$1.000 |
|
|
|
$1.000 |
|
|
|
|
|
| |
Income (loss) from operations: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income |
|
|
0.041 |
|
|
|
0.004 |
|
|
|
0.000 |
2 |
|
|
0.008 |
|
|
|
0.021 |
|
Net
realized gain (loss) |
|
|
0.000 |
2 |
|
|
(0.000 |
)2 |
|
|
(0.000 |
)2 |
|
|
0.001 |
3 |
|
|
(0.000 |
)2 |
Total income from
operations |
|
|
0.041 |
|
|
|
0.004 |
|
|
|
0.000 |
2 |
|
|
0.009 |
|
|
|
0.021 |
|
|
|
|
|
| |
Less distributions from: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income |
|
|
(0.041 |
) |
|
|
(0.004 |
) |
|
|
(0.000 |
)2 |
|
|
(0.009 |
) |
|
|
(0.021 |
) |
Total
distributions |
|
|
(0.041 |
) |
|
|
(0.004 |
) |
|
|
(0.000 |
)2 |
|
|
(0.009 |
) |
|
|
(0.021 |
) |
|
|
|
|
| |
Net asset value,
end of year |
|
|
$1.000 |
|
|
|
$1.000 |
|
|
|
$1.000 |
|
|
|
$1.000 |
|
|
|
$1.000 |
|
Total return4
|
|
|
4.19 |
% |
|
|
0.38 |
% |
|
|
0.01 |
% |
|
|
0.87 |
% |
|
|
2.11 |
% |
|
|
|
|
| |
Net assets, end of
year (millions) |
|
|
$1,436 |
|
|
|
$3,884 |
|
|
|
$5,695 |
|
|
|
$3,757 |
|
|
|
$2,502 |
|
|
|
|
|
| |
Ratios to average net assets: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Gross
expenses5,6
|
|
|
0.42 |
% |
|
|
0.40 |
% |
|
|
0.41 |
% |
|
|
0.41 |
% |
|
|
0.43 |
% |
Net
expenses5,7,8
|
|
|
0.23 |
|
|
|
0.14 |
|
|
|
0.09 |
|
|
|
0.22 |
|
|
|
0.23 |
|
Net
investment income |
|
|
3.80 |
|
|
|
0.29 |
|
|
|
0.01 |
|
|
|
0.76 |
|
|
|
2.09 |
|
1 |
Per share amounts have been
calculated using the average shares method.
|
2 |
Amount represents less than
$0.0005 or greater than $(0.0005) per share.
|
3 |
Calculation of the net
realized gain per share does not correlate to the aggregate realized loss
presented in the Statement of Operations due to the timing of sales and
repurchases of Fund shares. |
4 |
Performance figures may
reflect fee waivers and/or expense reimbursements. In the absence of fee
waivers and/or expense reimbursements, the total return would have been
lower. Past performance is no guarantee of future results.
|
5 |
Includes the Fund’s share of
U.S. Treasury Reserves Portfolio’s allocated expenses.
|
6 |
The gross expenses do not
reflect the reduction in the Fund’s management fee, pursuant to the Fund’s
investment management agreement, by the amount paid by the Fund for its
allocable share of the management fee paid by U.S. Treasury Reserves
Portfolio. |
7 |
As a result of an expense
limitation arrangement, effective December 27, 2018, the ratio of
total annual fund operating expenses, other than interest, brokerage,
taxes, extraordinary expenses and acquired fund fees and expenses, to
average net assets of Investor Shares did not exceed 0.23%. This expense
limitation arrangement cannot be terminated prior to December 31,
2023 without the Board of Trustees’ consent. Additional amounts may be
voluntarily waived and/or reimbursed from time to time. Prior to
December 27, 2018, the expense limitation was 0.35%.
|
8 |
Reflects fee waivers and/or
expense reimbursements. |
|
| |
| |
|
|
Western Asset Money Market
Funds |
|
| |
|
39 |
|
Western Asset Institutional U.S. Treasury Obligations
Money Market Fund
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
For a share of each class of beneficial interest
outstanding throughout each year ended August 31: |
|
Investor Shares |
|
2023 |
|
|
2022 |
|
|
20211 |
|
|
20201 |
|
|
20191 |
|
|
|
|
|
| |
Net asset value,
beginning of year |
|
|
$1.000 |
|
|
|
$1.000 |
|
|
|
$1.000 |
|
|
|
$1.000 |
|
|
|
$1.000 |
|
|
|
|
|
| |
Income (loss) from operations: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income |
|
|
0.042 |
|
|
|
0.004 |
|
|
|
0.000 |
2 |
|
|
0.008 |
|
|
|
0.021 |
|
Net
realized gain (loss)2
|
|
|
0.000 |
|
|
|
(0.000 |
) |
|
|
0.000 |
|
|
|
0.000 |
|
|
|
(0.000 |
) |
Total income from
operations |
|
|
0.042 |
|
|
|
0.004 |
|
|
|
0.000 |
2 |
|
|
0.008 |
|
|
|
0.021 |
|
|
|
|
|
| |
Less distributions from: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income |
|
|
(0.042 |
) |
|
|
(0.004 |
) |
|
|
(0.000 |
)2 |
|
|
(0.008 |
) |
|
|
(0.021 |
) |
Total
distributions |
|
|
(0.042 |
) |
|
|
(0.004 |
) |
|
|
(0.000 |
)2 |
|
|
(0.008 |
) |
|
|
(0.021 |
) |
|
|
|
|
| |
Net asset value,
end of year |
|
|
$1.000 |
|
|
|
$1.000 |
|
|
|
$1.000 |
|
|
|
$1.000 |
|
|
|
$1.000 |
|
Total return3
|
|
|
4.29 |
% |
|
|
0.42 |
% |
|
|
0.02 |
% |
|
|
0.82 |
% |
|
|
2.12 |
% |
|
|
|
|
| |
Net assets, end of
year (000s) |
|
|
$6,342 |
|
|
|
$10,274 |
|
|
|
$4,451 |
|
|
|
$4,532 |
|
|
|
$4,540 |
|
|
|
|
|
| |
Ratios to average net assets: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Gross
expenses4 |
|
|
0.73 |
% |
|
|
0.96 |
% |
|
|
1.02 |
% |
|
|
1.03 |
% |
|
|
0.98 |
% |
Net
expenses4,5,6
|
|
|
0.23 |
|
|
|
0.16 |
|
|
|
0.07 |
|
|
|
0.20 |
|
|
|
0.22 |
|
Net
investment income |
|
|
4.08 |
|
|
|
0.55 |
|
|
|
0.01 |
|
|
|
0.82 |
|
|
|
2.09 |
|
1 |
Per share amounts have been
calculated using the average shares method.
|
2 |
Amount represents less than
$0.0005 or greater than $(0.0005) per share.
|
3 |
Performance figures may
reflect fee waivers and/or expense reimbursements. In the absence of fee
waivers and/or expense reimbursements, the total return would have been
lower. Past performance is no guarantee of future results.
|
4 |
Includes the Fund’s share of
U.S. Treasury Obligations Portfolio’s allocated expenses.
|
5 |
As a result of an expense
limitation arrangement, effective December 27, 2018, the ratio of
total annual fund operating expenses, other than interest, brokerage,
taxes, extraordinary expenses and acquired fund fees and expenses, to
average net assets of Investor Shares did not exceed 0.23%. This expense
limitation arrangement cannot be terminated prior to December 31,
2023 without the Board of Trustees’ consent. Additional amounts may be
voluntarily waived and/or reimbursed from time to time. Prior to
December 27, 2018, the expense limitation was 0.35%.
|
6 |
Reflects fee waivers and/or
expense reimbursements. |
|
| |
| |
40 |
|
| |
Western
Asset Money Market Funds |
Western Asset Institutional Government Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
For a share of each class of beneficial interest
outstanding throughout each year ended August 31: |
|
Investor Shares |
|
2023 |
|
|
2022 |
|
|
20211 |
|
|
20201 |
|
|
20191 |
|
|
|
|
|
| |
Net asset value,
beginning of year |
|
|
$1.000 |
|
|
|
$1.000 |
|
|
|
$1.000 |
|
|
|
$1.000 |
|
|
|
$1.000 |
|
|
|
|
|
| |
Income (loss) from operations: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income |
|
|
0.042 |
|
|
|
0.004 |
|
|
|
0.000 |
2 |
|
|
0.009 |
|
|
|
0.021 |
|
Net
realized gain (loss)2
|
|
|
0.000 |
|
|
|
(0.000 |
) |
|
|
0.000 |
|
|
|
(0.000 |
) |
|
|
(0.000 |
) |
Total income from
operations |
|
|
0.042 |
|
|
|
0.004 |
|
|
|
0.000 |
2 |
|
|
0.009 |
|
|
|
0.021 |
|
|
|
|
|
| |
Less distributions from: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income |
|
|
(0.042 |
) |
|
|
(0.004 |
) |
|
|
(0.000 |
)2 |
|
|
(0.009 |
) |
|
|
(0.021 |
) |
Total
distributions |
|
|
(0.042 |
) |
|
|
(0.004) |
|
|
|
(0.000 |
)2 |
|
|
(0.009 |
) |
|
|
(0.021 |
) |
|
|
|
|
| |
Net asset value,
end of year |
|
|
$1.000 |
|
|
|
$1.000 |
|
|
|
$1.000 |
|
|
|
$1.000 |
|
|
|
$1.000 |
|
Total return3
|
|
|
4.27 |
% |
|
|
0.43 |
% |
|
|
0.01 |
% |
|
|
0.87 |
% |
|
|
2.15 |
% |
|
|
|
|
| |
Net assets, end of
year (millions) |
|
|
$1,061 |
|
|
|
$2,585 |
|
|
|
$1,956 |
|
|
|
$1,687 |
|
|
|
$807 |
|
|
|
|
|
| |
Ratios to average net assets: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Gross
expenses4,5
|
|
|
0.40 |
% |
|
|
0.40 |
% |
|
|
0.40 |
% |
|
|
0.41 |
% |
|
|
0.42 |
% |
Net
expenses4,6,7
|
|
|
0.23 |
|
|
|
0.13 |
|
|
|
0.09 |
|
|
|
0.22 |
|
|
|
0.22 |
|
Net
investment income |
|
|
3.89 |
|
|
|
0.41 |
|
|
|
0.01 |
|
|
|
0.73 |
|
|
|
2.13 |
|
1 |
Per share amounts have been
calculated using the average shares method.
|
2 |
Amount represents less than
$0.0005 or greater than $(0.0005) per share.
|
3 |
Performance figures may
reflect fee waivers and/or expense reimbursements. In the absence of fee
waivers and/or expense reimbursements, the total return would have been
lower. Past performance is no guarantee of future results.
|
4 |
Includes the Fund’s share of
Government Portfolio’s allocated expenses.
|
5 |
The gross expenses do not
reflect the reduction in the Fund’s management fee, pursuant to the Fund’s
investment management agreement, by the amount paid by the Fund for its
allocable share of the management fee paid by Government Portfolio.
|
6 |
Reflects fee waivers and/or
expense reimbursements. |
7 |
As a result of an expense
limitation arrangement, effective December 27, 2018, the ratio of
total annual fund operating expenses, other than interest, brokerage,
taxes, extraordinary expenses and acquired fund fees and expenses, to
average net assets of Investor Shares did not exceed 0.23%. This expense
limitation arrangement cannot be terminated prior to December 31,
2023 without the Board of Trustees’ consent. Additional amounts may be
voluntarily waived and/or reimbursed from time to time. Prior to
December 27, 2018, the expense limitation was 0.35%.
|
|
| |
| |
|
|
Western Asset Money Market
Funds |
|
| |
|
41 |
|
Legg Mason Funds Privacy and Security Notice
Your Privacy and the
Security of Your Personal Information is Very Important to the Legg Mason Funds
This
Privacy and Security Notice (the “Privacy Notice”) addresses the Legg Mason
Funds’ privacy and data protection practices with respect to nonpublic personal
information the Funds receive. The Legg Mason Funds include the Western Asset
Money Market Funds sold by the Funds’ distributor, Franklin Distributors, LLC,
as well as Legg Mason-sponsored closed‑end funds. The provisions of this Privacy
Notice apply to your information both while you are a shareholder and after you
are no longer invested with the Funds.
The Type of Nonpublic
Personal Information the Funds Collect About You
The
Funds collect and maintain nonpublic personal information about you in
connection with your shareholder account. Such information may include, but is
not limited to:
• |
|
Personal
information included on applications or other
forms; |
• |
|
Account
balances, transactions, and mutual fund holdings and
positions; |
• |
|
Bank
account information, legal documents, and identity verification
documentation; and |
• |
|
Online
account access user IDs, passwords, security challenge question
responses. |
How the Funds Use
Nonpublic Personal Information About You
The
Funds do not sell or share your nonpublic personal information with third
parties or with affiliates for their marketing purposes, unless you have
authorized the Funds to do so. The Funds do not disclose any nonpublic personal
information about you except as may be required to perform transactions or
services you have authorized or as permitted or required by law.
The
Funds may disclose information about you to:
• |
|
Employees,
agents, and affiliates on a “need to know” basis to enable the Funds to
conduct ordinary business or to comply with obligations to government
regulators; |
• |
|
Service
providers, including the Funds’ affiliates, who assist the Funds as part
of the ordinary course of business (such as printing, mailing services, or
processing or servicing your account with us) or otherwise perform
services on the Funds’ behalf, including companies that may perform
statistical analysis, market research and marketing services solely for
the Funds; |
• |
|
Permit
access to transfer, whether in the United States or countries outside of
the United States to such Funds’ employees, agents and affiliates and
service providers as required to enable the Funds to conduct ordinary
business, or to comply with obligations to government
regulators; |
• |
|
The
Funds’ representatives such as legal counsel, accountants and auditors to
enable the Funds to conduct ordinary business, or to comply with
obligations to government regulators; |
• |
|
Fiduciaries
or representatives acting on your behalf, such as an IRA custodian or
trustee of a grantor trust. |
Except
as otherwise permitted by applicable law, companies acting on the Funds’ behalf,
including those outside the United States, are contractually obligated to keep
nonpublic personal information the Funds provide to them confidential and to use
the information the Funds share only to provide the services the Funds ask them
to perform.
The
Funds may disclose nonpublic personal information about you when necessary to
enforce their rights or protect against fraud, or as permitted or required by
applicable law, such as in connection with a law enforcement or regulatory
request, subpoena, or similar legal process. In the event of a corporate action
or in the event a Fund service provider changes, the Funds may be required to
disclose your nonpublic personal information to third parties. While it is the
Funds’ practice to obtain protections for disclosed information in these types
of transactions, the Funds cannot guarantee their privacy policy will remain
unchanged.
Keeping You Informed of
the Funds’ Privacy and Security Practices
The
Funds will notify you annually of their privacy policy as required by federal
law. While the Funds reserve the right to modify this policy at any time, they
will notify you promptly if this privacy policy changes.
The Funds’ Security
Practices
The
Funds maintain appropriate physical, electronic and procedural safeguards
designed to guard your nonpublic personal information. The Funds’ internal data
security policies restrict access to your nonpublic personal information to
authorized employees, who may use your nonpublic personal information for Fund
business purposes only.
Although
the Funds strive to protect your nonpublic personal information, they cannot
ensure or warrant the security of any information you provide or transmit to
them, and you do so at your own risk. In the event of a breach of the
confidentiality or security of your nonpublic personal information, the Funds
will attempt to notify you as necessary so you can take appropriate protective
steps. If you have consented to the Funds using electronic communications or
electronic delivery of statements, they may notify you under such circumstances
using the most current email address you have on record with them.
In
order for the Funds to provide effective service to you, keeping your account
information accurate is very important. If you believe that your account
information is incomplete, not accurate or not current, if you have questions
about the Funds’ privacy practices, or our use of your nonpublic personal
information, write the Funds using the contact information on your account
statements, email the Funds by clicking on the Contact Us section of the Funds’
website at www.franklintempleton.com, or contact the Funds at 1‑877‑721‑1926 for
the Western Asset Money Market Funds or 1‑888‑777‑0102 for the Legg
Mason-sponsored closed‑end funds.
Revised
October 2022
|
THIS PAGE IS
NOT PART OF THE PROSPECTUS |
Legg Mason California
Consumer Privacy Act Policy
Although
much of the personal information we collect is “nonpublic personal information”
subject to federal law, residents of California may, in certain circumstances,
have additional rights under the California Consumer Privacy Act (“CCPA”). For
example, if you are a broker, dealer, agent, fiduciary, or representative acting
by or on behalf of, or for, the account of any other person(s) or household, or
a financial advisor, or if you have otherwise provided personal information to
us separate from the relationship we have with personal investors, the
provisions of this Privacy Policy apply to your personal information (as defined
by the CCPA).
In
addition to the provisions of the Legg Mason Funds Security and Privacy Notice,
you may have the right to know the categories and specific pieces of personal
information we have collected about you.
You
also have the right to request the deletion of the personal information
collected or maintained by the Funds.
If
you wish to exercise any of the rights you have in respect of your personal
information, you should advise the Funds by contacting them as set forth below.
The rights noted above are subject to our other legal and regulatory obligations
and any exemptions under the CCPA. You may designate an authorized agent to make
a rights request on your behalf, subject to the identification process described
below. We do not discriminate based on requests for information related to our
use of your personal information, and you have the right not to receive
discriminatory treatment related to the exercise of your privacy rights.
We
may request information from you in order to verify your identity or authority
in making such a request. If you have appointed an authorized agent to make a
request on your behalf, or you are an authorized agent making such a request
(such as a power of attorney or other written permission), this process may
include providing a password/passcode, a copy of government issued
identification, affidavit or other applicable documentation, i.e. written
permission. We may require you to verify your identity directly even when using
an authorized agent, unless a power of attorney has been provided. We reserve
the right to deny a request submitted by an agent if suitable and appropriate
proof is not provided.
For
the 12‑month period prior to the date of this Privacy Policy, the Legg Mason
Funds have not sold any of your personal information; nor do we have any plans
to do so in the future.
Contact Information
Address:
Data Privacy Officer, 100 International Dr., Baltimore, MD 21202
Phone:
1‑800‑396‑4748
Revised
October 2022
|
THIS PAGE IS
NOT PART OF THE PROSPECTUS |
Western Asset
Institutional U.S.
Treasury Reserves
Institutional U.S.
Treasury Obligations Money Market Fund
Institutional Government
Reserves
Investor Shares
You
may visit www.franklintempleton.com/moneymarketfundsliterature for a free copy
of a Prospectus, Statement of Additional Information (“SAI”) or an Annual or
Semi-Annual Report.
Each
fund sends only one report to a household if more than one account has the same
last name and same address. Contact your Service Agent or the fund if you do not
want this policy to apply to you.
Statement of
additional information The SAI provides
more detailed information about the funds and is incorporated by reference into
(is legally a part of) this Prospectus.
You
can make inquiries about the funds or obtain shareholder reports or the SAI
(without charge) by contacting your Service Agent, by calling the funds at
1‑877‑721‑1926 or 1‑203‑703‑6002, or by writing to the funds at BNY Mellon,
Attn: Western Asset Money Market Funds, P.O. Box 534447, Pittsburgh, PA
15253-4447.
Reports
and other information about the funds are available on the EDGAR Database on the
Securities and Exchange Commission’s Internet site at
http://www.sec.gov. Copies of this information may be obtained for a
duplicating fee by electronic request at the following E‑mail address:
[email protected].
If
someone makes a statement about the funds that is not in this Prospectus, you
should not rely upon that information. Neither the funds nor the Distributor is
offering to sell shares of a fund to any person to whom the fund may not
lawfully sell its shares.
(Investment
Company Act
file
no. 811‑06740)