1. Q110 | Investment Ideas
Go anywhere.
INVESTMENT PRODUCTS: NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE
1
In choosing open-end funds for investment, the Fund will favor Legg Mason products when available. In such cases, the Legg
Mason-affiliated fund must offer access to an asset class or employ a strategy which Permal wishes to utilize and, in Permal’s
judgment, the Legg Mason-affiliated fund can accommodate the Fund’s investments.
Investing in 4D: The four dimensions of flexibility
Geography
The Fund can move anywhere around the globe in search of opportunities.
And it does so with a focus on risk management and a top-down worldview.
Asset class
Investments can range from the traditional stocks, bonds and cash to commodities,
currencies, hedge funds, REITs, and master limited partnerships.
Investment vehicles
Permal can choose from open-end1
, closed-end and exchange-traded funds (ETFs).
And the Fund’s open architecture allows for investment in funds both inside and
outside the Legg Mason family of managers.
Asset allocation
The first three dimensions of flexibility come together in the fourth: The Fund’s wide
investment bands allow it to adjust asset allocation as market conditions change.
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2
3
4
Legg Mason PermalTactical Allocation Fund (LPTAX)
blends traditional and alternative asset classes to
seek out opportunities in all market environments.
This fund-of-funds invests using four dimensions of
flexibility — resulting in a “go anywhere” fund that
offers investors key advantages.
2. The fourth dimension: asset allocation
Compared with traditional portfolios that have static asset allocations, the Fund has much greater
latitude to increase or reduce the scale of its investments in different asset classes. Its equity
allocation, for example, can range from a conservative 20% of total assets to a more-robust 80%.
So when opportunity knocks, Permal is ready at the door: It can emphasize assets with the most favorable pros-
pects and trim others accordingly.
Legg Mason Permal Tactical Allocation Fund Traditional 60/30/10 strategy
Asset class Allocation ranges and investments Allocations and investments
Equity:
U.S.
International
Emerging markets
20% – 80%
Open-end funds
Closed-end funds
Exchange-traded funds
60%
Equity securities
Fixed income:
U.S. government
Corporates
Bank loans
Convertible bonds
International
Emerging markets
TIPS
10% – 60%
Open-end funds
Closed-end funds
Exchange-traded funds
Exchange-traded notes
30%
Fixed-income securities
Cash equivalents:
T-bills 0% – 40%
T-bills
Money market funds
Cash
10%
T-bills
Money market funds
Cash
Alternatives (including long or
short strategies):
Commodities
Real estate
Infrastructure
Foreign currencies
Hedge fund strategies
0% – 40%
Open-end funds
Closed-end funds
Exchange-traded funds
Exchange-traded notes
Master limited partnerships
Hedge fund strategies
0%
In choosing open-end funds for investment, the Fund will favor Legg Mason products when available. In such cases, the Legg Mason-affiliated fund
must offer access to an asset class or employ a strategy which Permal wishes to utilize and, in Permal’s judgment, the Legg Mason-affiliated fund can
accommodate the Fund’s investments.
The use of tactical allocation strategies and alternative investments involves additional risks. The Fund is not intended to be a complete investment
program and may not be suitable for all investors. See last page for details.
3. A focus on risk management
Legg Mason PermalTactical Allocation Fund delivered solid returns during the past year, with
significantly lower equity exposure than its benchmark, which is composed of 60% global
equities, 30% bonds and 10%Treasury bills.
** Annualized for period since inception through April 30, 2010. Source: Legg Mason.
See last page for descriptions of Index Blend and S&P 500 Index.
Performance shown represents past performance and is no guarantee of future results.
Current performance may be higher or lower than the performance shown. Investment
return and principal value will fluctuate, so shares, when redeemed, may be worth more
or less than the original cost. Class A shares reflect a maximum front-end sales charge
As of March 31, 2010 As of April 30, 2010
Without sales charges With sales charges Without sales charges With sales charges Expenses
Symbol 1-yr
Since
inception 1-yr
Since
inception 1-yr
Since
inception** 1-yr
Since
inception** Gross2
Net3
Class A LPTAX – 24.88 – 17.67 23.38 24.58 16.29 17.70 3.63 1.82
Class C LPTCX – 23.95 – 22.95 22.37 23.60 21.37 23.60 4.25 2.57
Class I LPTIX – 25.19 – 25.19 23.69 24.88 23.69 24.88 3.17 1.57
Class FI LPTFX – 24.88 – 24.88 23.38 24.58 23.38 24.58 3.77 1.82
Index Blend – – 27.14 – 27.14 24.48 26.22 24.48 26.22 – –
S&P 500 – – 39.37 – 39.37 38.84 39.39 38.84 39.39 – –
Average annual total returns & fund expenses (%) Inception date: 4/13/09
Risk measures As of April 30, 2010
Returns (%) As of April 30, 2010
2
Gross expenses are the Fund’s total annual operating expenses for the share class(es) indicated as of the date of the Fund’s most current prospectus and do
not reflect fee waivers or reimbursements. These expenses include management fees, 12b-1 distribution and service fees, and other expenses.
3
Net expenses are the Fund’s total annual operating expenses for the share class(es) indicated as of the date of the Fund’s most current prospectus and reflect contrac-
tual fee waivers and/or reimbursements. The Fund’s manager has contractually agreed to waive fees and/or reimburse operating expenses for certain share classes
until April 30, 2012, so that the total operating expenses are not expected to exceed 1.75% for Class A, 2.50% for Class C, 1.50% for Class I and 1.75% for Class FI of the
Fund’s average daily net assets attributable to each share class. Not all underlying Fund expenses are subject to these fee waivers and/or reimbursements.
Beta Standard deviation Up-capture ratio Down-capture ratio
Class A* 0.94 8.35% 0.94 0.87
Index Blend 1.00 8.48% 1.00 1.00
Class A* 0.61 8.35% 0.56 0.41
S&P 500 1.00 11.65% 1.00 1.00
Index Blend 0.68 8.48% 0.60 0.54
S&P 500 1.00 11.65% 1.00 1.00
* Without sales charge For period May 1, 2009 through April 30, 2010. Source: Legg Mason and Zephyr StyleAdvisor.
0
7
14
21
28
Class A*
One-year Since inception
Index Blend Class A* Index Blend
* Without sales charge
In a strong period for
equities, Legg Mason
Permal Tactical Allocation
Fund generated equity-
like returns — by
significantly investing
in fixed income.
of 5.75%. One-year returns for Class C shares reflect a CDSC of 1.0%. Performance
for other share classes will vary due to differences in sales charge structure and
class expenses. Total returns assume the reinvestment of all distributions at net
asset value and the deduction of all Fund expenses. Performance data do not reflect
trade date adjustments made to the NAV at month-end. Performance would have
been lower if fees had not been waived in various periods. To obtain the most recent
month-end information, please visit www.leggmason.com/individualinvestors.
The Fund’s equity
market-based risk
was low by a wide
margin.
The Fund’s volatility
was significantly
lower than the
market’s.
The Fund declined
less than the
market did.
4. Evolution of an allocation
Legg Mason PermalTactical Allocation Fund shifts its asset allocation as it scours the globe for
opportunities. Over time, the allocation will reflect wherever Permal sees the best potential for
superior risk-adjusted returns.
*
Data as of April 30, 2009.
**
Treasury Inflation-Protected Securities.
Percentages are based on total portfolio as of date indicated, are subject to change at any time and do not include trade-date activity. For informational purposes only and not
to be considered a recommendation to purchase or sell any security. Certain portfolio holdings may be held through the Fund’s subsidiary, Tactical Allocation Fund, Ltd., an ex-
empted company incorporated in the Cayman Islands. Data for Class A shares. Totals may not add to 100.0% due to rounding. Source: Legg Mason.
Detailed asset allocation(%)
At Inception At 10/31/09 At 4/30/10
Fixed Income 47.25 51.15 37.26
Fixed Income Blend 7.00 8.25 12.06
International Debt 6.87 8.07 8.08
Investment Grade Corp. Bonds 6.78 7.95 –
Agency Mortgage Debt 6.78 11.06 4.01
High Yield Corp. Bonds 6.25 2.08 2.12
Bank Loans 6.00 3.96 4.03
TIPS** 4.78 4.91 2.94
Convertible Bonds 2.79 4.87 4.02
Equity 36.51 36.25 49.76
US Equity 23.60 21.33 35.55
Intl. Developed Equity 7.98 11.19 11.40
Emerging Markets Equity 4.93 3.73 2.81
Alternatives 9.34 8.56 11.95
Hedge Fund Strategies 4.80 3.92 3.80
Real Assets 4.54 4.64 5.21
Foreign Currency – – 2.94
Cash Cash Equivalents 6.89 4.03 1.02
47.25%
36.51%
9.34%
6.89%
51.19%
36.25%
8.56%
4.03%
37.26%
49.76%
11.95%
1.02%
At inception* At 10/31/09 At 4/30/10
“Now we’ve shifted more assets into
stocks and alternative strategies,
and out of bonds.”
Christopher Zuehlsdorff, portfolio manager
“While shifting among fixed-income sectors, we continued
to overweight fixed income through 2009, which helped
generate a solid return, with relatively low volatility.”
Christopher Zuehlsdorff, portfolio manager
5. About the Permal Group
Permal is a global pioneer in the use of multi-manager funds. Its approach has
passed the test of time: Permal has invested through many market cycles during
its 36-year history.
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As of March 31, 2010.
New York
Permal Group, Inc.
Permal Asset Management, Inc.
SEC Registered Investment Advisor Boston
Permal Capital Management, LLC
SEC Registered Investment Advisor
Dubai
DFSA Regulated
Hong Kong
SFC Regulated
Singapore
Mas Regulated
Tokyo
Paris
Nassau, Bahamas
The St. James Bank Trust Co. Limited
CBB Regulated
WP Fund Services Ltd.
Securities Board Regulated
London
Permal Investment Management Services Limited
FSA Authorized and Regulated
The Permal advantage:
• Permal is one of the world’s oldest and largest alternative
fund-of-funds managers
• $17.4 billion under management4
• Seeks above-average returns over time while maintaining
a lower risk profile than traditional investments
• Disciplined and rigorous investment and risk
management processes
• Active reallocation among managers and strategies to poten-
tially capitalize on opportunities wherever they may materialize
• Exceptional combination of experience, asset allocation
expertise and global reach
The information advantage:
• Legg Mason’s Permal Group affiliate
manages the Fund.
• With over 36 years of experience, Permal
has gained direct access to some of the
world’s best-known — and most exclu-
sive — investment minds. This wealth
of insights informs asset allocation and
investment decisions.
In global pursuit of
opportunities
Permal truly goes anywhere for
investment opportunities — both in the
markets and on the ground. Its offices
are strategically located in key financial
centers: NewYork, London, Singapore,
Dubai, Paris, Boston, Hong Kong,Tokyo
and Nassau.
Meet the investment team
Legg Mason PermalTactical Allocation Fund is managed by
a team of seasoned investment professionals.
Portfolio managers
Christopher Zuehlsdorff, CFA
Alexander Pillersdorf
Investment committee
Isaac Souede, CEO
James Hodge, CIO
Robert Kaplan, EVP
Judy Tchou, EVP