Benefits of investing in the Western Asset Conservative Income Fund Class A

The Fund offers a number of significant benefits:

• exposure to a relatively low risk portfolio of Australian cash and bonds;

• active sector and security selection;

• professional management of your investment with an experienced investment manager;

• diversification benefits that would be difficult to achieve through direct investment;

• disciplined portfolio construction; and

• web-based reporting that includes performance, market commentary and portfolio strategy.

Investor suitability

The Fund may be suitable for investors seeking Australian enhanced cash exposure.

About the Fund

The Fund is an actively managed portfolio of Australian cash and fixed income securities.

The investment process focuses on identifying relative value opportunities in duration management (where duration is a measure of the sensitivity of the price of a fixed income security to a change in interest rates, expressed as a number of years) and yield enhancement. Duration management focuses on anticipating movement in interest rates and is based on expectations for monetary policy. Yield enhancement focuses on identifying securities that offer attractive yield characteristics. The aim is to ensure that securities held are highly liquid and produce consistent investment returns.

How we invest your money

The Fund generally aims to invest within the following guidelines at the time of initiating investment decisions:

Interest rate maturity profile

• Up to three years. Maturity is the weighted average length of time until the principal of the assets must be repaid.

Credit limits (Rating: Max Portfolio Limit / Max Single Issuer Limit)

SHORT-TERM RATINGS*

• A-1+: 100% / 10%

• A-1: 50% / 5%

• A-2: 20% / 3%

LONG-TERM RATINGS*

• AAA: 80% / 10%

• AA: 60% / 5%

• A: 40% / 5%

• BBB: 20% / 3%

Sector limits (Sector: Minimum / Range)

• Cash and Short-Term Instruments: A-2 / 20-100%

• Mortgage and Asset Backed Securities: AAA / 0-50%

• Corporate Bonds: BBB- / 0-40%

• Mortgage and Asset Backed Securities: BBB- / 0-20%

Interest rate duration will generally be positioned within ±0.5 years of the Fund's benchmark.

*The rating categories are based on ratings provided by Standard & Poor's where available. Alternative rating sources (Moody's Investor Services or Western Asset credit ratings) may be used where Standard & Poor's ratings are unavailable.

The Fund may also use certain derivatives to implement investment decisions, to manage cash flows or to facilitate timely exposure to securities.

The Fund will not hold more than 20% of its market value in net derivatives exposure.

The Fund does not intend to borrow.