Investment Commentary and Annual Report to ... - Western Asset

Annual Report to ShareholdersImportant Tax Information (Unaudited)The following information is provided with respect to the distributions paid to Common Shareholders during the taxable yearended December 31, 2008:January 2008February 2008 -December 2008Ordinary Income:Qualified Dividend Income for Individuals 1.60% 2.01%Dividends Qualifying for the Dividends ReceivedDeduction for Corporations 1.60% 2.01%Interest from Federal Obligations 0.80% 0.80%The following information is provided with respect to the distributions paid to Preferred Shareholders during the taxable yearended December 31, 2008:January 2008February 2008 -December 2008Ordinary Income:Qualified Dividend Income for Individuals — 2.01%Dividends Qualifying for the Dividends ReceivedDeduction for Corporations — 2.01%Interest from Federal Obligations 0.80% 0.80%Additionally, the following summarizes the per share long-term capital gain distributions paid by the Fund during the taxableyear ended December 31, 2008:PayableDate:Long-TermCapital GainCommon Shareholders 5/30/2008 $0.0265Series M Preferred Shareholders 5/27/2008 $ 14.81Series M Preferred Shareholders 6/3/2008 16.27Series M Preferred Shareholders 6/10/2008 15.40Series M Preferred Shareholders 6/17/2008 14.81Series M Preferred Shareholders 6/24/2008 10.74Series W Preferred Shareholders 6/19/2008 $ 41.77The law varies in each state as to whether and what percentage of dividend income attributable to Federal obligations isexempt from state income tax. We recommend that you consult with your tax adviser to determine if any portion of the dividendsyou received is exempt from state income taxes.Please retain this information for your records.44