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MUNICIPALS FUND Calendar Years ended December 31 Best Quarter (12/31/2023): 7.13 Worst Quarter (03/31/2022): (6.16) The year-to-date return as of the most recent calendar quarter, which ended March 31, 2026, was 0.06 Total returns (%) Before taxes 0.0007 0.0140 0.0101 0.0325 0.0257 0.0019 -0.0331 0.0365 0.0224 0.0419 Total returns (%) Before taxes Calendar Years ended December 31 Best Quarter (12/31/2023): 3.43 Worst Quarter (03/31/2022): (3.08) The year-to-date return as of the most recent calendar quarter, which ended March 31, 2026, was 0.25 WESTERN ASSET SHORT DURATION MUNICIPAL INCOME FUND 0.0491 0.0767 0.0375 0.0209 0.0560 -0.1047 0.0041 0.0214 0.0396 -0.0008 WESTERN ASSET CALIFORNIA MUNICIPALS FUND Total returns (%) Before taxes Calendar Years ended December 31 Best Quarter (12/31/2023): 6.58 Worst Quarter (03/31/2022): (6.32) The year-to-date return as of the most recent calendar quarter, which ended March 31, 2026, was (0.19) -0.0031 -0.0380 0.0311 0.0148 0.0383 WESTERN ASSET SHORT DURATION MUNICIPAL INCOME FUND Total returns (%) Before taxes Calendar Years ended December 31 Best Quarter (12/31/2023): 3.29 Worst Quarter (03/31/2022): (3.21) The year-to-date return as of the most recent calendar quarter, which ended 03/31/2026, was 0.11 N-1A Legg Mason Partners Income Trust 2026-07-01 Investment objective <div style="margin-top:2pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">The fund seeks to maximize current interest income that is excluded from gross income for regular federal income tax purposes to the extent consistent with prudent investment management and the preservation of capital. </div> Fees and expenses of the fund <div style="margin-top:2pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">The accompanying table describes the fees and expenses that you may pay if you buy, hold and sell shares of the fund. <span style="font-weight:bold">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.</span> </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $100,000 in certain funds distributed through Franklin Distributors, LLC (“Franklin Distributors” or the “Distributor”), the fund’s distributor. More information about these and other discounts is available from your Service Agent, in the fund’s Prospectus on page 26 under the heading “Additional information about each share class,” in the appendix titled “Appendix: Waivers and Discounts Available from Certain Service Agents” on page A-1 of the fund’s Prospectus and in the fund’s Statement of Additional Information (“SAI”) on page 88 under the heading “Sales Charge Waivers and Reductions for Class A Shares.” “Service Agents” include 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. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">If you purchase Class I shares or Class IS shares through a Service Agent acting solely as an agent on behalf of its customers, that Service Agent may charge you a commission. Such commissions, if any, are not charged by the fund and are not reflected in the fee table or expense example below. </div> You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $100,000 in certain funds distributed through Franklin Distributors, LLC (“Franklin Distributors” or the “Distributor”), the fund’s distributor. 100000 Shareholder fees(fees paid directly from your investment) 0.0375 0 0 0 0 0 0 0.0100 0 0 0 0 15 15 0 0 0 15 Annual fund operating expenses (%)(expenses that you pay each year as a percentage of the value of your investment) 0.0040 0.0040 0.0040 0.0040 0.0040 0.0040 0.0015 0.0070 0.0025 0 0 0 0.0008 0.0008 0.0008 0.0008 0.0008 0.0008 0.0010 0.0010 0.0023 0.0012 0.0003 0.0012 0.0018 0.0018 0.0031 0.0020 0.0011 0.0020 0.0073 0.0128 0.0096 0.0060 0.0051 0.0060 -0.0008 -0.0007 -0.0001 0.0073 0.0128 0.0088 0.0053 0.0050 0.0060 You may buy Class A shares in amounts of $250,000 or more at net asset value (without an initial sales charge), but if you redeem those shares within 18 months of their purchase, you will pay a contingent deferred sales charge of 1.00%. Other expenses for Class FI shares are estimated for the current fiscal year. Actual expenses may differ from estimates. December 31, 2027 Example <div style="margin-top:2pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">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: </div> <table cellpadding="0" cellspacing="0" style="border-collapse:collapse;font-family:arial narrow;font-size:10pt;border-spacing:0px;width:100%"> <tr style="page-break-inside:avoid"> <td style="width:1%;vertical-align:top;text-align:left;"><span style="font-family:times new roman;font-size:7pt">•</span></td> <td style="width:1%;vertical-align:top;"> </td> <td style="vertical-align:top;text-align:left;"> <div style="margin-top:0pt;margin-bottom:0pt;font-family:arial narrow;font-size:10pt;text-align:left;">You invest $10,000 in the fund for the time periods indicated </div> </td> </tr> </table> <table cellpadding="0" cellspacing="0" style="border-collapse:collapse;font-family:arial narrow;font-size:10pt;border-spacing:0px;width:100%"> <tr style="page-break-inside:avoid"> <td style="width:1%;vertical-align:top;text-align:left;"><span style="font-family:times new roman;font-size:7pt">•</span></td> <td style="width:1%;vertical-align:top;"> </td> <td style="vertical-align:top;text-align:left;"> <div style="margin-top:0pt;margin-bottom:0pt;font-family:arial narrow;font-size:10pt;text-align:left;">Your investment has a 5% return each year and the fund’s operating expenses remain the same (except that any applicable fee waiver or expense reimbursement is reflected only through its expiration date) </div> </td> </tr> </table> <table cellpadding="0" cellspacing="0" style="border-collapse:collapse;font-family:arial narrow;font-size:10pt;border-spacing:0px;width:100%"> <tr style="page-break-inside:avoid"> <td style="width:1%;vertical-align:top;text-align:left;"><span style="font-family:times new roman;font-size:7pt">•</span></td> <td style="width:1%;vertical-align:top;"> </td> <td style="vertical-align:top;text-align:left;"> <div style="margin-top:0pt;margin-bottom:0pt;font-family:arial narrow;font-size:10pt;text-align:left;">You reinvest all distributions and dividends without a sales charge </div> </td> </tr> </table><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">Although your actual costs may be higher or lower, based on these assumptions your costs would be: </div> Number of years you own your shares ($) Number of years you own your shares ($) 447 447 600 600 766 766 1247 1247 230 405 701 1392 130 405 701 1392 90 90 298 298 523 523 1170 1170 54 54 185 185 328 328 743 743 51 51 162 162 283 283 638 638 61 61 192 192 335 335 750 750 Portfolio turnover. The fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the fund’s performance. During the most recent fiscal year, the fund’s portfolio turnover rate was 6% of the average value of its portfolio. 0.06 Principal investment strategies <div style="margin-top:2pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">Under normal circumstances, the fund invests at least 80% of its assets in municipal securities and other investments with similar economic characteristics, the interest on which is exempt from regular federal income tax but which may be subject to the federal alternative minimum tax. The fund’s 80% policy may not be changed without a shareholder vote. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">Municipal securities include debt obligations issued by or on behalf of the states, territories and possessions of the United States, and the District of Columbia, and their political subdivisions, agencies and public authorities, and other qualifying issuers. These securities include participation or other interests in municipal securities issued or backed by banks, insurance companies and other financial institutions. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">The fund normally invests in intermediate-term and long-term municipal securities that have remaining maturities from one to more than thirty years at the time of purchase. The fund focuses on investment grade bonds (that is, securities rated in the Baa/BBB categories or above or, if unrated or deemed to be unrated by the subadviser, determined to be of comparable credit quality by the subadviser), but may invest up to 20% of its assets in below investment grade bonds (commonly known as “high yield” or “junk” bonds). </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">Some municipal securities, such as general obligation issues, are backed by the issuer’s taxing authority, while other municipal securities, such as revenue issues, are backed only by revenues from certain facilities or other sources and not by the issuer itself. </div><div style="margin-top:0pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">The fund may also invest in securities of other open-end or closed-end investment companies, including exchange-traded funds (“ETFs”), that invest primarily in municipal securities. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">Instead of, and/or in addition to, investing directly in particular securities, the fund may use instruments such as derivatives, including options, futures contracts and inverse floating rate instruments issued in tender option bond transactions, and other synthetic instruments that are intended to provide economic exposure to the securities or the issuer or to be used as a hedging technique. The fund may use one or more types of these instruments without limit, subject to applicable regulatory requirements. The fund’s investments in derivative instruments and other investments that provide exposure to the investment focus indicated in the fund’s 80% policy are included in the fund’s 80% basket. For additional information regarding derivatives, see “More on the fund’s investment strategies, investments and risks—Derivatives” in the Prospectus. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">The fund may also engage in a variety of transactions using derivatives in order to change the investment characteristics of its portfolio (such as shortening or lengthening duration) and for other purposes. The fund may leverage its assets by investing proceeds received through tender option bond transactions, which is considered a form of borrowing. See “More on the fund’s investment strategies, investments and risks—Tender option bonds” in the Prospectus. </div> <div style="margin-top:2pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">Under normal circumstances, the fund invests at least 80% of its assets in municipal securities and other investments with similar economic characteristics, the interest on which is exempt from regular federal income tax but which may be subject to the federal alternative minimum tax. The fund’s 80% policy may not be changed without a shareholder vote. </div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">Municipal securities include debt obligations issued by or on behalf of the states, territories and possessions of the United States, and the District of Columbia, and their political subdivisions, agencies and public authorities, and other qualifying issuers. These securities include participation or other interests in municipal securities issued or backed by banks, insurance companies and other financial institutions. </div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">The fund normally invests in intermediate-term and long-term municipal securities that have remaining maturities from one to more than thirty years at the time of purchase. The fund focuses on investment grade bonds (that is, securities rated in the Baa/BBB categories or above or, if unrated or deemed to be unrated by the subadviser, determined to be of comparable credit quality by the subadviser), but may invest up to 20% of its assets in below investment grade bonds (commonly known as “high yield” or “junk” bonds). </div> You may lose part or all of your investment in the fund or your investment may not perform as well as other similar investments. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or by any bank or government agency. <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Market and interest rate risk.</span><span style="font-family:arial narrow"> The market prices of securities held by the fund may go up or down, sometimes rapidly or unpredictably. If the market prices of the fund’s securities fall, the value of your investment in the fund will 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. Changes in market conditions will not typically have the same impact on all types of securities. </span></div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">The value of your investment will generally go down when interest rates rise. A rise in rates tends to have a greater impact on the prices of longer term or duration 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. Recently, there have been inflationary price movements. As a result, fixed income securities markets may experience heightened levels of interest rate volatility and liquidity risk. The U.S. government and the U.S. Federal Reserve, as well as certain foreign governments and central banks, have from time to time taken steps to support financial markets. The U.S. government and the U.S. Federal Reserve may, conversely, reduce market support activities. This and other government intervention may not work as intended, particularly if the efforts are perceived by investors as being unlikely to achieve the desired results. Changes in government activities in this regard, such as changes in interest rate policy, can negatively affect financial markets generally, increase market volatility and reduce the value and liquidity of securities in which the fund invests. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">The maturity of a security may be significantly longer than its duration. A security’s maturity and other features may be more relevant than its duration in determining the security’s sensitivity to other factors affecting the issuer or markets generally such as changes in credit quality or in the yield premium that the market may establish for certain types of securities. </div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Market events risk.</span><span style="font-family:arial narrow"> 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. Ongoing or threatened armed conflicts throughout the world have caused and could continue to cause significant market disruptions and volatility. The hostilities and sanctions resulting from those hostilities have and could continue to have a significant impact on certain fund investments as well as fund performance and liquidity. 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. </span></div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">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 been volatile and may increase in the future. These circumstances could adversely affect </div><div style="margin-top:0pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"> 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. </div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Inflation risk.</span><span style="font-family:arial narrow"> Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as prices go up and the purchasing power of money goes down. The market prices of debt securities generally fall as inflation increases because the purchasing power of the principal and income is expected to be less when paid. Inflation often is accompanied or followed by a recession, or period of decline in economic activity, which may include job loss and other hardships and may cause the value of securities to go down generally. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Credit risk.</span><span style="font-family:arial narrow"> If an issuer or guarantor of a security held by the fund or a counterparty to a financial contract with the fund defaults or its credit is downgraded, or is perceived to be less creditworthy, or if the value of the assets underlying a security declines, the value of your investment will typically 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. Subordinated securities (meaning securities that rank below other securities with respect to claims on the issuer’s assets) are more likely to suffer a credit loss than non-subordinated securities of the same issuer and will be disproportionately affected by a default, downgrade or perceived decline in creditworthiness. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">High yield (“junk”) bonds risk.</span><span style="font-family:arial narrow"> High yield bonds are generally subject to greater credit risks than higher-grade bonds, including the risk of default on the payment of interest or principal. High yield bonds are considered speculative, typically have lower liquidity and are more difficult to value than higher grade bonds. High yield bonds tend to be volatile and more susceptible to adverse events, credit downgrades and negative sentiments and may be difficult to sell at a desired price, or at all, during periods of uncertainty or market turmoil. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Derivatives risk.</span><span style="font-family:arial narrow"> Using derivatives can increase fund losses and reduce opportunities for gains, such as when market prices, interest rates, or the derivatives themselves, behave in a way not anticipated by the fund’s subadviser. Using derivatives also can have a leveraging effect and increase fund volatility. Certain derivatives have the potential for unlimited loss, regardless of the size of the initial investment. Derivatives may not be available at the time or price desired, may be difficult to sell, unwind or value, and the counterparty may default on its obligations to the fund. Derivatives are generally subject to the risks applicable to the assets, rates, indices or other indicators underlying the derivative. The value of a derivative may fluctuate more than the underlying assets, rates, indices or other indicators to which it relates. Use of derivatives may have different tax consequences for the fund than an investment in the underlying asset, and those differences may affect the amount, timing and character of income distributed to shareholders, including the proportion of income consisting of exempt-interest dividends. The U.S. government and non-U.S. governments have adopted and implemented regulations governing derivatives markets, including mandatory clearing of certain derivatives, margin and reporting requirements. The ultimate impact of the regulations remains unclear. Additional regulation of derivatives may make derivatives more costly, limit their availability or utility, otherwise adversely affect their performance or disrupt markets. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Leverage risk.</span><span style="font-family:arial narrow"> The value of your investment may be more volatile if the fund borrows or uses instruments, such as derivatives, that have a leveraging effect on the fund’s portfolio. Other risks described in the Prospectus also will be compounded because leverage generally magnifies the effect of a change in the value of an asset and creates a risk of loss of value on a larger pool of assets than the fund would otherwise have had. The fund may also have to sell assets at inopportune times to satisfy its obligations created by the use of leverage or derivatives. The use of leverage is considered to be a speculative investment practice and may result in the loss of a substantial amount, and possibly all, of the fund’s assets. In addition, the fund’s portfolio will be leveraged if it exercises its right to delay payment on a redemption, and losses will result if the value of the fund’s assets declines between the time a redemption request is deemed to be received by the fund and the time the fund liquidates assets to meet redemption requests. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Tender option bond risk.</span><span style="font-family:arial narrow"> Tender option bond (“TOB”) transactions expose the fund to leverage and credit risk, and generally involve greater risk than direct investments in fixed rate municipal bonds, including the risk of loss of principal. The interest payments that the fund would typically receive in connection with a TOB transaction (“inverse floaters”) vary inversely with short-term interest rates and will be reduced (and potentially eliminated) when short-term interest rates increase. In addition, the fund will be subject to leverage risk to the extent that the fund uses the proceeds that it receives from a TOB transaction to invest in other securities. The fund’s investment in a TOB will generally underperform the market for fixed rate municipal securities when interest rates rise. The value and market for such inverse floaters can be volatile and can have limited liquidity. Investments in inverse floaters issued in TOB transactions are derivative instruments and, therefore, are also subject to the risks generally applicable to investments in derivatives. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Illiquidity risk.</span><span style="font-family:arial narrow"> Some assets held by the fund may be or become impossible or difficult to sell and some assets that the fund wants to invest in may be impossible or difficult to purchase, particularly during times of market turmoil or due to adverse changes in the conditions of a particular issuer. These illiquid assets 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. As a general matter, dealers have been less willing to make markets in recent years. Federal banking regulations may also cause certain dealers to reduce their inventories of certain securities, which may further decrease the fund’s ability to buy or sell such securities. During times of market turmoil, there have been, and may be, no buyers or sellers for securities in entire asset classes. If the fund is forced to sell an illiquid asset 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. The fund may not receive its proceeds from the sale of certain securities for an extended period (for example, several weeks or even longer). </span></div> <div style="margin-top:0pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Tax risk.</span><span style="font-family:arial narrow"> The income on the fund’s municipal securities could become subject to U.S. federal income tax due to noncompliant conduct by issuers, unfavorable legislation or litigation or adverse interpretations by regulatory authorities. All or a portion of the fund’s dividends that are exempt from regular U.S. federal income tax may nevertheless be taken into account for purposes of the U.S. federal alternative minimum tax. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Prepayment or call risk.</span><span style="font-family:arial narrow"> Many issuers have a right to prepay their fixed income securities. Issuers may be more likely to prepay their securities if interest rates fall. If this happens, the fund may not benefit from the rise in the market price of the securities that normally accompanies a decline in interest rates, and 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. The fund may also lose any premium it paid to purchase the securities. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Extension risk.</span><span style="font-family:arial narrow"> When interest rates rise, repayments of fixed income securities, particularly asset- and mortgage-backed securities, may occur more slowly than anticipated, extending the effective duration of these fixed income securities at below market interest rates and causing their market prices to decline more than they would have declined due to the rise in interest rates alone. This may cause the fund’s share price to be more volatile. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Risk of investing in fewer issuers.</span><span style="font-family:arial narrow"> To the extent the fund invests its assets in a small number of issuers, or in issuers in related businesses or that are subject to related operating risks, the fund will be more susceptible to negative events affecting those issuers. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Risks relating to investments in municipal securities.</span><span style="font-family:arial narrow"> Municipal issuers may be adversely affected by rising health care costs, increasing unfunded pension liabilities, and by the phasing out of federal programs providing financial support. Unfavorable conditions and developments relating to projects financed with municipal securities can result in lower revenues to issuers of municipal securities, potentially resulting in defaults. The value of municipal securities can also be adversely affected by changes in the financial condition of one or more individual municipal issuers or insurers of municipal issuers, regulatory and political developments, tax law changes or other legislative actions, and by uncertainties and public perceptions concerning these and other factors. In the past, a number of municipal issuers defaulted on obligations, were downgraded or commenced insolvency proceedings. Financial difficulties of municipal issuers may experience a resurgence, particularly in the event of economic or market turmoil or a recession. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Investing in ETFs risk.</span><span style="font-family:arial narrow"> Unlike shares of typical mutual funds or unit investment trusts, shares of exchange-traded funds (“ETFs”) are traded on an exchange and may trade throughout a trading day. ETFs are bought and sold based on market values and not at net asset value, and therefore may trade at either a premium or discount to net asset value and may experience volatility in certain market conditions. The fund will pay brokerage commissions in connection with the purchase and sales of shares of ETFs. In addition, the fund will indirectly bear its pro rata share of fees and expenses incurred by an ETF in which it invests, including advisory fees. These expenses are in addition to management fees and other expenses that the fund bears directly in connection with its own operations. Certain ETFs are also subject to portfolio management risk. Investments in ETFs are subject to the risk that the listing exchange may halt trading of an ETF’s shares, in which case the fund would be unable to sell its ETF shares unless and until trading is resumed. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Valuation risk.</span><span style="font-family:arial narrow"> 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 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. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Portfolio management risk.</span><span style="font-family:arial narrow"> 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 models, 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. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Redemption risk.</span><span style="font-family:arial narrow"> The fund may experience heavy redemptions that could cause the fund to liquidate its assets at inopportune times or unfavorable prices or increase or accelerate taxable gains or transaction costs and may negatively affect the fund’s net asset value, performance, or ability to satisfy redemptions in a timely manner, which could cause the value of your investment to decline. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Cybersecurity risk.</span><span style="font-family:arial narrow"> 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 </span></div><div style="margin-top:0pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"> 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. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">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. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">These and other risks are discussed in more detail in the Prospectus or in the Statement of Additional Information. </div> Performance <div style="margin-top:2pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">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 Class A shares. The table shows the average annual total returns of each class of the fund that has been in operation for at least one full calendar year and also compares the fund’s performance with the average annual total returns of a broad measure of market performance. 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, including its current net asset value, available at www.franklintempleton.com/prospectus (select fund and share class), or by calling the fund at 877-6LM-FUND/656-3863. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-style:italic">The fund’s past performance (before and after taxes) is not necessarily an indication of how the fund will perform in the future. </span></div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">Sales charges are not reflected in the accompanying bar chart, and if those charges were included, returns would be less than those shown. </div> The bar chart shows changes in the fund’s performance from year to year for Class A shares. The table shows the average annual total returns of each class of the fund that has been in operation for at least one full calendar year and also compares the fund’s performance with the average annual total returns of a broad measure of market performance. www.franklintempleton.com/prospectus (select fund and share class) 877-6LM-FUND/656-3863 The fund’s past performance (before and after taxes) is not necessarily an indication of how the fund will perform in the future. Sales charges are not reflected in the accompanying bar chart, and if those charges were included, returns would be less than those shown. Best Quarter  2023-12-31 0.0713 Worst Quarter 2022-03-31 -0.0616 year-to-date return 2026-03-31 0.0006 Average annual total returns (%)(for periods ended December 31, 2025) -0.0061 0.0001 0.0172 -0.0061 0.0001 0.0172 0.0100 0.0068 0.0205 0.0167 0.0033 0.0160 0.0345 0.0108 0.0233 0.0348 0.0111 0.0246 2018-03-16 0.0339 0.0102 0.0230 0.0425 0.0080 0.0234 <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">No one index is representative of the fund’s portfolio. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">The after-tax returns are shown only for Class A shares, are calculated using the historical highest individual U.S. federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns for classes other than Class A will vary from returns shown for Class A. Returns after taxes on distributions and sale of fund shares are higher than returns before taxes for certain periods shown because they reflect the tax benefit of capital losses realized on the redemption of fund shares. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">Important data provider notices and terms are available at www.franklintempletondatasources.com. Such information is subject to change. </div> The after-tax returns are shown only for Class A shares, are calculated using the historical highest individual U.S. federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns for classes other than Class A will vary from returns shown for Class A. Returns after taxes on distributions and sale of fund shares are higher than returns before taxes for certain periods shown because they reflect the tax benefit of capital losses realized on the redemption of fund shares. The after-tax returns are shown only for Class A shares, are calculated using the historical highest individual U.S. federal marginal income tax rates and do not reflect the impact of state and local taxes. Returns after taxes on distributions and sale of fund shares are higher than returns before taxes for certain periods shown because they reflect the tax benefit of capital losses realized on the redemption of fund shares. Investment objective <div style="margin-top:2pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">The fund seeks to generate high current income exempt from regular federal income tax while preserving capital. </div> Fees and expenses of the fund <div style="margin-top:2pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">The accompanying table describes the fees and expenses that you may pay if you buy, hold and sell shares of the fund. <span style="font-weight:bold">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.</span> </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $100,000 in certain funds distributed through Franklin Distributors, LLC (“Franklin Distributors” or the “Distributor”), the fund’s distributor. More information about these and other discounts is available from your Service Agent, in the fund’s Prospectus on page 28 under the heading “Additional information about each share class,” in the appendix titled “Appendix: Waivers and Discounts Available from Certain Service Agents” on page A-1 of the fund’s Prospectus and in the fund’s Statement of Additional Information (“SAI”) on page 88 under the heading “Sales Charge Waivers and Reductions for Class A Shares.” “Service Agents” include 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. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">If you purchase Class I shares or Class IS shares through a Service Agent acting solely as an agent on behalf of its customers, that Service Agent may charge you a commission. Such commissions, if any, are not charged by the fund and are not reflected in the fee table or expense example below. </div> You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $100,000 in certain funds distributed through Franklin Distributors, LLC (“Franklin Distributors” or the “Distributor”), the fund’s distributor. 100000 Shareholder fees(fees paid directly from your investment) 0.0225 0 0 0 0 0 0 0 0 0 15 15 0 0 0 Annual fund operating expenses (%)(expenses that you pay each year as a percentage of the value of your investment) 0.0030 0.0030 0.0030 0.0030 0.0030 0.0015 0.0050 0.0025 0 0 0.0017 0.0016 0.0029 0.0017 0.0009 0.0062 0.0096 0.0084 0.0047 0.0039 -0.0007 -0.0009 -0.0007 -0.0004 0.0055 0.0096 0.0075 0.0040 0.0035 You may buy Class A shares in amounts of $250,000 or more at net asset value (without an initial sales charge), but if you redeem those shares within 18 months of their purchase, you will pay a contingent deferred sales charge of 0.50%. Other expenses for Class FI shares are estimated for the current fiscal year. Actual expenses may differ from estimates. December 31, 2027 Example <div style="margin-top:2pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">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: </div> <table cellpadding="0" cellspacing="0" style="border-collapse:collapse;font-family:arial narrow;font-size:10pt;border-spacing:0px;width:100%"> <tr style="page-break-inside:avoid"> <td style="width:1%;vertical-align:top;text-align:left;"><span style="font-family:times new roman;font-size:7pt">•</span></td> <td style="width:1%;vertical-align:top;"> </td> <td style="vertical-align:top;text-align:left;"> <div style="margin-top:0pt;margin-bottom:0pt;font-family:arial narrow;font-size:10pt;text-align:left;">You invest $10,000 in the fund for the time periods indicated </div> </td> </tr> </table> <table cellpadding="0" cellspacing="0" style="border-collapse:collapse;font-family:arial narrow;font-size:10pt;border-spacing:0px;width:100%"> <tr style="page-break-inside:avoid"> <td style="width:1%;vertical-align:top;text-align:left;"><span style="font-family:times new roman;font-size:7pt">•</span></td> <td style="width:1%;vertical-align:top;"> </td> <td style="vertical-align:top;text-align:left;"> <div style="margin-top:0pt;margin-bottom:0pt;font-family:arial narrow;font-size:10pt;text-align:left;">Your investment has a 5% return each year and the fund’s operating expenses remain the same (except that any applicable fee waiver or expense reimbursement is reflected only through its expiration date) </div> </td> </tr> </table> <table cellpadding="0" cellspacing="0" style="border-collapse:collapse;font-family:arial narrow;font-size:10pt;border-spacing:0px;width:100%"> <tr style="page-break-inside:avoid"> <td style="width:1%;vertical-align:top;text-align:left;"><span style="font-family:times new roman;font-size:7pt">•</span></td> <td style="width:1%;vertical-align:top;"> </td> <td style="vertical-align:top;text-align:left;"> <div style="margin-top:0pt;margin-bottom:0pt;font-family:arial narrow;font-size:10pt;text-align:left;">You reinvest all distributions and dividends without a sales charge </div> </td> </tr> </table><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">Although your actual costs may be higher or lower, based on these assumptions your costs would be: </div> Number of years you own your shares ($) Number of years you own your shares ($) 280 280 413 413 557 557 976 976 98 98 306 306 531 531 1081 1081 77 77 259 259 457 457 1029 1029 41 41 144 144 256 256 586 586 36 36 122 122 216 216 490 490 Portfolio turnover. The fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the fund’s performance. During the most recent fiscal year, the fund’s portfolio turnover rate was 25% of the average value of its portfolio. 0.25 Principal investment strategies <div style="margin-top:2pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">Under normal circumstances, the fund invests at least 80% of its assets in municipal securities and in participation or other interests in municipal securities issued by banks, insurance companies or other financial institutions. Municipal securities are securities and other investments with similar economic characteristics the interest on which is exempt from regular federal income tax. The fund’s 80% policy may not be changed without a shareholder vote. Interest on municipal securities may be subject to the federal alternative minimum tax. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">Municipal securities include debt obligations issued by or on behalf of the states, territories and possessions of the United States, and the District of Columbia, and their political subdivisions, agencies and public authorities, and other qualifying issuers. These securities include participation or other interests in municipal securities issued or backed by banks, insurance companies and other financial institutions. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">Some municipal securities, such as general obligation issues, are backed by the issuer’s taxing authority, while other municipal securities, such as revenue issues, are backed only by revenues from certain facilities or other sources and not by the issuer itself. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">Although the fund seeks to minimize risk by investing in municipal securities from a number of different states and localities, the fund may, from time to time, invest over 25% of its assets in municipal securities from one state or region. The fund attempts to minimize the volatility in its net asset value per share, although there can be no assurance that this will be the case. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">The fund focuses on investment grade bonds (that is, securities rated in the Baa/BBB categories or above or, if unrated or deemed to be unrated by the subadviser, determined to be of comparable credit quality by the subadviser), but may invest up to 20% of its assets in below investment grade bonds (commonly known as “high yield” or “junk” bonds). </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">Although the fund may invest in securities of any maturity, the fund normally expects to maintain a dollar-weighted average effective duration, as estimated by the subadviser, of three years or less. Effective duration seeks to measure the expected sensitivity of market price to changes in interest rates, taking into account the anticipated effects of structural complexities (for example, some bonds can be prepaid by the issuer). </div><div style="margin-top:0pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">The fund may also invest in securities of other open-end or closed-end investment companies, including exchange-traded funds (“ETFs”), that invest primarily in municipal securities. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">Instead of, and/or in addition to, investing directly in particular securities, the fund may use instruments such as derivatives, including options, futures contracts and inverse floating rate instruments issued in tender option bond transactions and other synthetic instruments that are intended to provide economic exposure to the securities or the issuer or to be used as a hedging technique. The fund may use one or more types of these instruments without limit, subject to applicable regulatory requirements. The fund’s investments in derivative instruments and other investments that provide exposure to the investment focus indicated in the fund’s 80% policy are included in the fund’s 80% basket. For additional information regarding derivatives, see “More on the fund’s investment strategies, investments and risks—Derivatives” in the Prospectus. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">The fund may also engage in a variety of transactions using derivatives in order to change the investment characteristics of its portfolio (such as shortening or lengthening duration) and for other purposes. The fund may leverage its assets by investing proceeds received through tender option bond transactions, which is considered a form of borrowing. See “More on the fund’s investment strategies, investments and risks—Tender option bonds” in the Prospectus. </div> <div style="margin-top:2pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">Under normal circumstances, the fund invests at least 80% of its assets in municipal securities and in participation or other interests in municipal securities issued by banks, insurance companies or other financial institutions. Municipal securities are securities and other investments with similar economic characteristics the interest on which is exempt from regular federal income tax. The fund’s 80% policy may not be changed without a shareholder vote. Interest on municipal securities may be subject to the federal alternative minimum tax. </div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">Municipal securities include debt obligations issued by or on behalf of the states, territories and possessions of the United States, and the District of Columbia, and their political subdivisions, agencies and public authorities, and other qualifying issuers. These securities include participation or other interests in municipal securities issued or backed by banks, insurance companies and other financial institutions. </div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">The fund focuses on investment grade bonds (that is, securities rated in the Baa/BBB categories or above or, if unrated or deemed to be unrated by the subadviser, determined to be of comparable credit quality by the subadviser), but may invest up to 20% of its assets in below investment grade bonds (commonly known as “high yield” or “junk” bonds). </div> You may lose part or all of your investment in the fund or your investment may not perform as well as other similar investments. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or by any bank or government agency. <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Market and interest rate risk.</span><span style="font-family:arial narrow"> The market prices of securities held by the fund may go up or down, sometimes rapidly or unpredictably. If the market prices of the fund’s securities fall, the value of your investment in the fund will 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. Changes in market conditions will not typically have the same impact on all types of securities. </span></div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">The value of your investment will generally go down when interest rates rise. A rise in rates tends to have a greater impact on the prices of longer term or duration 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. Recently, there have been inflationary price movements. As a result, fixed income securities markets may experience heightened levels of interest rate volatility and liquidity risk. The U.S. government and the U.S. Federal Reserve, as well as certain foreign governments and central banks, have from time to time taken steps to support financial markets. The U.S. government and the U.S. Federal Reserve may, conversely, reduce market support activities. This and other government intervention may not work as intended, particularly if the efforts are perceived by investors as being unlikely to achieve the desired results. Changes in government activities in this regard, such as changes in interest rate policy, can negatively affect financial markets generally, increase market volatility and reduce the value and liquidity of securities in which the fund invests. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">The maturity of a security may be significantly longer than its duration. A security’s maturity and other features may be more relevant than its duration in determining the security’s sensitivity to other factors affecting the issuer or markets generally such as changes in credit quality or in the yield premium that the market may establish for certain types of securities. </div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Market events risk.</span><span style="font-family:arial narrow"> 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. Ongoing or threatened armed conflicts throughout the world have caused and could continue to cause significant market disruptions and volatility. The hostilities and sanctions resulting from those hostilities have and could continue to have a significant impact on certain fund investments as well as fund performance and liquidity. 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. </span></div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">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 been volatile and may increase in the future. These circumstances could adversely affect </div><div style="margin-top:0pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"> 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. </div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Inflation risk.</span><span style="font-family:arial narrow"> Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as prices go up and the purchasing power of money goes down. The market prices of debt securities generally fall as inflation increases because the purchasing power of the principal and income is expected to be less when paid. Inflation often is accompanied or followed by a recession, or period of decline in economic activity, which may include job loss and other hardships and may cause the value of securities to go down generally. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Credit risk.</span><span style="font-family:arial narrow"> If an issuer or guarantor of a security held by the fund or a counterparty to a financial contract with the fund defaults or its credit is downgraded, or is perceived to be less creditworthy, or if the value of the assets underlying a security declines, the value of your investment will typically 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. Subordinated securities (meaning securities that rank below other securities with respect to claims on the issuer’s assets) are more likely to suffer a credit loss than non-subordinated securities of the same issuer and will be disproportionately affected by a default, downgrade or perceived decline in creditworthiness. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">High yield (“junk”) bonds risk.</span><span style="font-family:arial narrow"> High yield bonds are generally subject to greater credit risks than higher-grade bonds, including the risk of default on the payment of interest or principal. High yield bonds are considered speculative, typically have lower liquidity and are more difficult to value than higher grade bonds. High yield bonds tend to be volatile and more susceptible to adverse events, credit downgrades and negative sentiments and may be difficult to sell at a desired price, or at all, during periods of uncertainty or market turmoil. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Derivatives risk.</span><span style="font-family:arial narrow"> Using derivatives can increase fund losses and reduce opportunities for gains, such as when market prices, interest rates, or the derivatives themselves behave in a way not anticipated by the fund’s subadviser. Using derivatives also can have a leveraging effect and increase fund volatility. Certain derivatives have the potential for unlimited loss, regardless of the size of the initial investment. Derivatives may not be available at the time or price desired, may be difficult to sell, unwind or value, and the counterparty may default on its obligations to the fund. Derivatives are generally subject to the risks applicable to the assets, rates, indices or other indicators underlying the derivative. The value of a derivative may fluctuate more than the underlying assets, rates, indices or other indicators to which it relates. Use of derivatives may have different tax consequences for the fund than an investment in the underlying asset, and those differences may affect the amount, timing and character of income distributed to shareholders, including the proportion of income consisting of exempt interest dividends, as applicable. The U.S. government and non-U.S. governments have adopted and implemented regulations governing derivatives markets, including mandatory clearing of certain derivatives, margin and reporting requirements. The ultimate impact of the regulations remains unclear. Additional regulation of derivatives may make derivatives more costly, limit their availability or utility, otherwise adversely affect their performance or disrupt markets. </span></div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">Credit default swap contracts involve heightened risks and may result in losses to the fund. Credit default swaps may be illiquid and difficult to value. When the fund sells credit protection via a credit default swap, credit risk increases since the fund has exposure to both the issuer whose credit is the subject of the swap and the counterparty to the swap. </div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Leverage risk.</span><span style="font-family:arial narrow"> The value of your investment may be more volatile if the fund borrows or uses instruments, such as derivatives, that have a leveraging effect on the fund’s portfolio. Other risks described in the Prospectus also will be compounded because leverage generally magnifies the effect of a change in the value of an asset and creates a risk of loss of value on a larger pool of assets than the fund would otherwise have had. The fund may also have to sell assets at inopportune times to satisfy its obligations created by the use of leverage or derivatives. The use of leverage is considered to be a speculative investment practice and may result in the loss of a substantial amount, and possibly all, of the fund’s assets. In addition, the fund’s portfolio will be leveraged if it exercises its right to delay payment on a redemption, and losses will result if the value of the fund’s assets declines between the time a redemption request is deemed to be received by the fund and the time the fund liquidates assets to meet redemption requests. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Tender option bond risk.</span><span style="font-family:arial narrow"> Tender option bond (“TOB”) transactions expose the fund to leverage and credit risk, and generally involve greater risk than direct investments in fixed rate municipal bonds, including the risk of loss of principal. The interest payments that the fund would typically receive in connection with a TOB transaction (“inverse floaters”) vary inversely with short-term interest rates and will be reduced (and potentially eliminated) when short-term interest rates increase. In addition, the fund will be subject to leverage risk to the extent that the fund uses the proceeds that it receives from a TOB transaction to invest in other securities. The fund’s investment in a TOB will generally underperform the market for fixed rate municipal securities when interest rates rise. The value and market for such inverse floaters can be volatile and can have limited liquidity. Investments in inverse floaters issued in TOB transactions are derivative instruments and, therefore, are also subject to the risks generally applicable to investments in derivatives. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Illiquidity risk.</span><span style="font-family:arial narrow"> Some assets held by the fund may be or become impossible or difficult to sell and some assets that the fund wants to invest in may be impossible or difficult to purchase, particularly during times of market turmoil or due to adverse changes in the conditions of a particular issuer. These illiquid assets 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. As a general matter, dealers have been less willing to make markets in recent years. Federal banking regulations may also cause certain dealers to reduce their inventories of certain securities, which may further decrease the fund’s ability to buy or sell such securities. During times of market turmoil, there have been, and may be, no buyers or sellers for securities in entire asset classes. If the fund is forced to sell an illiquid asset to meet </span></div><div style="margin-top:0pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"> 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. The fund may not receive its proceeds from the sale of certain securities for an extended period (for example, several weeks or even longer). </div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Tax risk.</span><span style="font-family:arial narrow"> The income on the fund’s municipal securities could become subject to U.S. federal income tax due to noncompliant conduct by issuers, unfavorable legislation or litigation or adverse interpretations by regulatory authorities. All or a portion of the fund’s dividends that are exempt from regular U.S. federal income tax may nevertheless be taken into account for purposes of the U.S. federal alternative minimum tax. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Prepayment or call risk.</span><span style="font-family:arial narrow"> Many issuers have a right to prepay their fixed income securities. Issuers may be more likely to prepay their securities if interest rates fall. If this happens, the fund may not benefit from the rise in the market price of the securities that normally accompanies a decline in interest rates, and 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. The fund may also lose any premium it paid to purchase the securities. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Extension risk.</span><span style="font-family:arial narrow"> When interest rates rise, repayments of fixed income securities, particularly asset- and mortgage- backed securities, may occur more slowly than anticipated, extending the effective duration of these fixed income securities at below market interest rates and causing their market prices to decline more than they would have declined due to the rise in interest rates alone. This may cause the fund’s share price to be more volatile. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Risk of investing in fewer issuers.</span><span style="font-family:arial narrow"> To the extent the fund invests its assets in a small number of issuers, or in issuers in related businesses or that are subject to related operating risks, the fund will be more susceptible to negative events affecting those issuers. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Risks relating to investments in municipal securities.</span><span style="font-family:arial narrow"> Municipal issuers may be adversely affected by rising health care costs, increasing unfunded pension liabilities, and by the phasing out of federal programs providing financial support. Unfavorable conditions and developments relating to projects financed with municipal securities can result in lower revenues to issuers of municipal securities, potentially resulting in defaults. The value of municipal securities can also be adversely affected by changes in the financial condition of one or more individual municipal issuers or insurers of municipal issuers, regulatory and political developments, tax law changes or other legislative actions, and by uncertainties and public perceptions concerning these and other factors. In the past, a number of municipal issuers defaulted on obligations, were downgraded or commenced insolvency proceedings. Financial difficulties of municipal issuers may experience a resurgence, particularly in the event of economic or market turmoil or a recession. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Transportation bond risk.</span><span style="font-family:arial narrow"> Certain facility revenue bonds are payable from and secured by the revenue from the ownership and operation of particular facilities, such as airports, highways, port authorities or other transit facilities. Airport operating income may be affected by the general stability of the airline industry and on the ability of airlines to meet their obligations under agreements with airports. Similarly, payment on bonds related to other facilities is dependent on revenues from the projects, such as use fees from ports, tolls on turnpikes and bridges and rents from buildings. Therefore, payment may be adversely affected by reduction in revenues due to such factors and increased cost of maintenance or decreased use of a facility. Fuel costs, transportation taxes and fees, and availability of fuel also affect other transportation-related securities, as do the presence of alternate forms of transportation, such as public transportation. The portfolio manager cannot predict what effect conditions may have on revenues which are required for payment on these bonds. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Investing in ETFs risk.</span><span style="font-family:arial narrow"> Unlike shares of typical mutual funds or unit investment trusts, shares of exchange-traded funds (“ETFs”) are traded on an exchange and may trade throughout a trading day. ETFs are bought and sold based on market values and not at net asset value, and therefore may trade at either a premium or discount to net asset value and may experience volatility in certain market conditions. The fund will pay brokerage commissions in connection with the purchase and sales of shares of ETFs. In addition, the fund will indirectly bear its pro rata share of fees and expenses incurred by an ETF in which it invests, including advisory fees. These expenses are in addition to management fees and other expenses that the fund bears directly in connection with its own operations. Certain ETFs are also subject to portfolio management risk. Investments in ETFs are subject to the risk that the listing exchange may halt trading of an ETF’s shares, in which case the fund would be unable to sell its ETF shares unless and until trading is resumed. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Valuation risk.</span><span style="font-family:arial narrow"> 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 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. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Portfolio management risk.</span><span style="font-family:arial narrow"> 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 models, 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. </span></div> <div style="margin-top:0pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Redemption risk.</span><span style="font-family:arial narrow"> The fund may experience heavy redemptions that could cause the fund to liquidate its assets at inopportune times or unfavorable prices or increase or accelerate taxable gains or transaction costs and may negatively affect the fund’s net asset value, performance, or ability to satisfy redemptions in a timely manner, which could cause the value of your investment to decline. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Cybersecurity risk.</span><span style="font-family:arial narrow"> 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. </span></div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">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. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">These and other risks are discussed in more detail in the Prospectus or in the Statement of Additional Information. </div> Performance <div style="margin-top:2pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">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 Class A shares. The table shows the average annual total returns of each class of the fund that has been in operation for at least one full calendar year and also compares the fund’s performance with the average annual total returns of a broad measure of market performance and an additional index with characteristics relevant to the fund. 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, including its current net asset value, available at www.franklintempleton.com/prospectus (select fund and share class), or by calling the fund at 877-6LM-FUND/656-3863. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-style:italic">The fund’s past performance (before and after taxes) is not necessarily an indication of how the fund will perform in the future. </span></div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">Sales charges are not reflected in the accompanying bar chart, and if those charges were included, returns would be less than those shown. </div> The bar chart shows changes in the fund’s performance from year to year for Class A shares. The table shows the average annual total returns of each class of the fund that has been in operation for at least one full calendar year and also compares the fund’s performance with the average annual total returns of a broad measure of market performance and an additional index with characteristics relevant to the fund. www.franklintempleton.com/prospectus (select fund and share class) 877-6LM-FUND/656-3863 The fund’s past performance (before and after taxes) is not necessarily an indication of how the fund will perform in the future. Sales charges are not reflected in the accompanying bar chart, and if those charges were included, returns would be less than those shown. Best Quarter  2023-12-31 0.0343 Worst Quarter 2022-03-31 -0.0308 year-to-date return 2026-03-31 0.0025 Average annual total returns (%)(for periods ended December 31, 2025) 0.0175 0.0089 0.0127 0.0175 0.0089 0.0127 0.0206 0.0109 0.0133 0.0382 0.0100 0.0115 0.0435 0.0154 0.0164 0.0460 0.0160 0.0181 2017-09-15 0.0425 0.0080 0.0234 0.0411 0.0129 0.0164 <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">No one index is representative of the fund’s portfolio. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">The after-tax returns are shown only for Class A shares, are calculated using the historical highest individual U.S. federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns for classes other than Class A will vary from returns shown for Class A. Returns after taxes on distributions and sale of fund shares are higher than returns before taxes for certain periods shown because they reflect the tax benefit of capital losses realized on the redemption of fund shares. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">Important data provider notices and terms are available at www.franklintempletondatasources.com. Such information is subject to change. </div> The after-tax returns are shown only for Class A shares, are calculated using the historical highest individual U.S. federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns for classes other than Class A will vary from returns shown for Class A. Returns after taxes on distributions and sale of fund shares are higher than returns before taxes for certain periods shown because they reflect the tax benefit of capital losses realized on the redemption of fund shares. The after-tax returns are shown only for Class A shares, are calculated using the historical highest individual U.S. federal marginal income tax rates and do not reflect the impact of state and local taxes. Returns after taxes on distributions and sale of fund shares are higher than returns before taxes for certain periods shown because they reflect the tax benefit of capital losses realized on the redemption of fund shares. Investment objective <div style="margin-top:2pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">The fund seeks to provide California investors with as high a level of current income exempt from regular federal income taxes and California state personal income taxes as is consistent with the preservation of capital. </div> Fees and expenses of the fund <div style="margin-top:2pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">The accompanying table describes the fees and expenses that you may pay if you buy, hold and sell shares of the fund. <span style="font-weight:bold">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.</span> </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $100,000 in certain funds distributed through Franklin Distributors, LLC (“Franklin Distributors” or the “Distributor”), the fund’s distributor. More information about these and other discounts is available from your Service Agent, in the fund’s Prospectus on page 28 under the heading “Additional information about each share class,” in the appendix titled “Appendix: Waivers and Discounts Available from Certain Service Agents” on page A‑1 of the fund’s Prospectus and in the fund’s Statement of Additional Information (“SAI”) on page 88 under the heading “Sales Charge Waivers and Reductions for Class A Shares.” “Service Agents” include 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. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">If you purchase Class I shares or Class IS shares through a Service Agent acting solely as an agent on behalf of its customers, that Service Agent may charge you a commission. Such commissions, if any, are not charged by the fund and are not reflected in the fee table or expense example below. </div> You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $100,000 in certain funds distributed through Franklin Distributors, LLC (“Franklin Distributors” or the “Distributor”), the fund’s distributor. 100000 Shareholder fees(fees paid directly from your investment) 0.0375 0 0 0 0 0 0.0100 0 0 0 15 15 0 0 0 Annual fund operating expenses (%)(expenses that you pay each year as a percentage of the value of your investment) 0.0045 0.0045 0.0045 0.0045 0.0045 0.0015 0.0070 0.0025 0 0 0.0015 0.0015 0.0015 0.0015 0.0015 0.0019 0.0018 0.0031 0.0020 0.0011 0.0034 0.0033 0.0046 0.0035 0.0026 0.0094 0.0148 0.0116 0.0080 0.0071 -0.0016 -0.0010 -0.0004 0.0094 0.0148 0.0100 0.0070 0.0067 You may buy Class A shares in amounts of $250,000 or more at net asset value (without an initial sales charge), but if you redeem those shares within 18 months of their purchase, you will pay a contingent deferred sales charge of 1.00%. Other expenses for Class FI shares are estimated for the current fiscal year. Actual expenses may differ from estimates. December 31, 2027 Example <div style="margin-top:2pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">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: </div> <table cellpadding="0" cellspacing="0" style="border-collapse:collapse;font-family:arial narrow;font-size:10pt;border-spacing:0px;width:100%"> <tr style="page-break-inside:avoid"> <td style="width:1%;vertical-align:top;text-align:left;"><span style="font-family:times new roman;font-size:7pt">•</span></td> <td style="width:1%;vertical-align:top;"> </td> <td style="vertical-align:top;text-align:left;"> <div style="margin-top:0pt;margin-bottom:0pt;font-family:arial narrow;font-size:10pt;text-align:left;">You invest $10,000 in the fund for the time periods indicated </div> </td> </tr> </table> <table cellpadding="0" cellspacing="0" style="border-collapse:collapse;font-family:arial narrow;font-size:10pt;border-spacing:0px;width:100%"> <tr style="page-break-inside:avoid"> <td style="width:1%;vertical-align:top;text-align:left;"><span style="font-family:times new roman;font-size:7pt">•</span></td> <td style="width:1%;vertical-align:top;"> </td> <td style="vertical-align:top;text-align:left;"> <div style="margin-top:0pt;margin-bottom:0pt;font-family:arial narrow;font-size:10pt;text-align:left;">Your investment has a 5% return each year and the fund’s operating expenses remain the same (except that any applicable fee waiver or expense reimbursement is reflected only through its expiration date) </div> </td> </tr> </table> <table cellpadding="0" cellspacing="0" style="border-collapse:collapse;font-family:arial narrow;font-size:10pt;border-spacing:0px;width:100%"> <tr style="page-break-inside:avoid"> <td style="width:1%;vertical-align:top;text-align:left;"><span style="font-family:times new roman;font-size:7pt">•</span></td> <td style="width:1%;vertical-align:top;"> </td> <td style="vertical-align:top;text-align:left;"> <div style="margin-top:0pt;margin-bottom:0pt;font-family:arial narrow;font-size:10pt;text-align:left;">You reinvest all distributions and dividends without a sales charge </div> </td> </tr> </table><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">Although your actual costs may be higher or lower, based on these assumptions your costs would be: </div> Number of years you own your shares ($) Number of years you own your shares ($) 467 467 663 663 875 875 1486 1486 251 468 808 1622 151 468 808 1622 102 102 353 353 624 624 1395 1395 72 72 246 246 434 434 980 980 68 68 223 223 391 391 879 879 Portfolio turnover. The fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the fund’s performance. During the most recent fiscal year, the fund’s portfolio turnover rate was 6% of the average value of its portfolio. 0.06 Principal investment strategies <div style="margin-top:2pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">Under normal circumstances, the fund invests at least 80% of its assets in California municipal securities and other investments with similar economic characteristics, the interest on which is exempt from regular federal income tax and California state personal income tax but which may be subject to the federal alternative minimum tax. If the interest income on a municipal security meets these standards, the fund will treat the municipal security as qualifying for purposes of the fund’s 80% investment policy even if the issuer is located outside of the State of California. The fund’s 80% policy may not be changed without a shareholder vote. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">California municipal securities include debt obligations issued by or on behalf of the states, territories and possessions of the United States, and the District of Columbia, and their political subdivisions, agencies and public authorities, and other qualifying issuers. These securities include participation or other interests in municipal securities issued or backed by banks, insurance companies and other financial institutions. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">The fund normally invests in intermediate-term and long-term municipal securities that have remaining maturities from one to more than thirty years at the time of purchase. The fund focuses on investment grade bonds (that is, securities rated in the Baa/BBB categories or above or, if unrated or deemed to be unrated by the subadviser, determined to be of comparable credit quality by the subadviser), but may invest up to 20% of its assets in below investment grade bonds (commonly known as “high yield” or “junk” bonds). </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">Some municipal securities, such as general obligation issues, are backed by the issuer’s taxing authority, while other municipal securities, such as revenue issues, are backed only by revenues from certain facilities or other sources and not by the issuer itself. </div><div style="margin-top:0pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">The fund may also invest in securities of other open‑end or closed‑end investment companies, including exchange-traded funds (“ETFs”), that invest primarily in municipal securities. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">Instead of, and/or in addition to, investing directly in particular securities, the fund may use instruments such as derivatives, including options, futures contracts and inverse floating rate instruments issued in tender option bond transactions, and other synthetic instruments that are intended to provide economic exposure to the securities or the issuer or to be used as a hedging technique. The fund may use one or more types of these instruments without limit, subject to applicable regulatory requirements. The fund’s investment in derivative instruments and other investments that provide exposure to the investment focus indicated in the fund’s 80% policy are included in the fund’s 80% basket. For additional information regarding derivatives, see “More on the fund’s investment strategies, investments and risks—Derivatives” in the Prospectus. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">The fund may also engage in a variety of transactions using derivatives in order to change the investment characteristics of its portfolio (such as shortening or lengthening duration) and for other purposes. The fund may leverage its assets by investing proceeds received through tender option bond transactions, which is considered a form of borrowing. See “More on the fund’s investment strategies, investments and risks—Tender option bonds” in the Prospectus. </div> <div style="margin-top:2pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">Under normal circumstances, the fund invests at least 80% of its assets in California municipal securities and other investments with similar economic characteristics, the interest on which is exempt from regular federal income tax and California state personal income tax but which may be subject to the federal alternative minimum tax. If the interest income on a municipal security meets these standards, the fund will treat the municipal security as qualifying for purposes of the fund’s 80% investment policy even if the issuer is located outside of the State of California. The fund’s 80% policy may not be changed without a shareholder vote. </div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">California municipal securities include debt obligations issued by or on behalf of the states, territories and possessions of the United States, and the District of Columbia, and their political subdivisions, agencies and public authorities, and other qualifying issuers. These securities include participation or other interests in municipal securities issued or backed by banks, insurance companies and other financial institutions. </div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">The fund normally invests in intermediate-term and long-term municipal securities that have remaining maturities from one to more than thirty years at the time of purchase. The fund focuses on investment grade bonds (that is, securities rated in the Baa/BBB categories or above or, if unrated or deemed to be unrated by the subadviser, determined to be of comparable credit quality by the subadviser), but may invest up to 20% of its assets in below investment grade bonds (commonly known as “high yield” or “junk” bonds). </div> You may lose part or all of your investment in the fund or your investment may not perform as well as other similar investments. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or by any bank or government agency. <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Market and interest rate risk.</span><span style="font-family:arial narrow"> The market prices of securities held by the fund may go up or down, sometimes rapidly or unpredictably. If the market prices of the fund’s securities fall, the value of your investment in the fund will 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. Changes in market conditions will not typically have the same impact on all types of securities. </span></div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">The value of your investment will generally go down when interest rates rise. A rise in rates tends to have a greater impact on the prices of longer term or duration 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. Recently, there have been inflationary price movements. As a result, fixed income securities markets may experience heightened levels of interest rate volatility and liquidity risk. The U.S. government and the U.S. Federal Reserve, as well as certain foreign governments and central banks, have from time to time taken steps to support financial markets. The U.S. government and the U.S. Federal Reserve may, conversely, reduce market support activities. This and other government intervention may not work as intended, particularly if the efforts are perceived by investors as being unlikely to achieve the desired results. Changes in government activities in this regard, such as changes in interest rate policy, can negatively affect financial markets generally, increase market volatility and reduce the value and liquidity of securities in which the fund invests. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">The maturity of a security may be significantly longer than its duration. A security’s maturity and other features may be more relevant than its duration in determining the security’s sensitivity to other factors affecting the issuer or markets generally such as changes in credit quality or in the yield premium that the market may establish for certain types of securities. </div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Market events risk.</span><span style="font-family:arial narrow"> 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. Ongoing or threatened armed conflicts throughout the world have caused and could continue to cause significant market disruptions and volatility. The hostilities and sanctions resulting from those hostilities have and could continue to have a significant impact on certain fund investments as well as fund performance and liquidity. 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. </span></div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">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 been volatile and may increase in the future. These circumstances could adversely affect </div><div style="margin-top:0pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">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. </div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Inflation risk.</span><span style="font-family:arial narrow"> Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as prices go up and the purchasing power of money goes down. The market prices of debt securities generally fall as inflation increases because the purchasing power of the principal and income is expected to be less when paid. Inflation often is accompanied or followed by a recession, or period of decline in economic activity, which may include job loss and other hardships and may cause the value of securities to go down generally. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Credit risk.</span><span style="font-family:arial narrow"> If an issuer or guarantor of a security held by the fund or a counterparty to a financial contract with the fund defaults or its credit is downgraded, or is perceived to be less creditworthy, or if the value of the assets underlying a security declines, the value of your investment will typically 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. Subordinated securities (meaning securities that rank below other securities with respect to claims on the issuer’s assets) are more likely to suffer a credit loss than non‑subordinated securities of the same issuer and will be disproportionately affected by a default, downgrade or perceived decline in creditworthiness. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Risks associated with focusing on investments in California municipal securities.</span><span style="font-family:arial narrow"> The fund focuses its investments in California municipal securities. The fund may be affected significantly by adverse economic, political or other events affecting California municipal issuers. Certain issuers of California municipal securities have experienced serious financial difficulties in the past and reoccurrence of these difficulties may impair the ability of certain California issuers to pay principal or interest on their obligations. Provisions of the California Constitution and State statutes that limit the taxing and spending authority of California governmental entities may impair the ability of California issuers to pay principal and/or interest on their obligations. Future California political and economic developments, constitutional amendments, legislative measures, executive orders, administrative regulations, litigation and voter initiatives could have an adverse effect on the debt obligations of California issuers. Also, the fund may be more volatile than a more geographically diverse fund. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">High yield (“junk”) bonds risk.</span><span style="font-family:arial narrow"> High yield bonds are generally subject to greater credit risks than higher-grade bonds, including the risk of default on the payment of interest or principal. High yield bonds are considered speculative, typically have lower liquidity and are more difficult to value than higher grade bonds. High yield bonds tend to be volatile and more susceptible to adverse events, credit downgrades and negative sentiments and may be difficult to sell at a desired price, or at all, during periods of uncertainty or market turmoil. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Derivatives risk.</span><span style="font-family:arial narrow"> Using derivatives can increase fund losses and reduce opportunities for gains, such as when market prices, interest rates, or the derivatives themselves, behave in a way not anticipated by the fund’s subadviser. Using derivatives also can have a leveraging effect and increase fund volatility. Certain derivatives have the potential for unlimited loss, regardless of the size of the initial investment. Derivatives may not be available at the time or price desired, may be difficult to sell, unwind or value, and the counterparty may default on its obligations to the fund. Derivatives are generally subject to the risks applicable to the assets, rates, indices or other indicators underlying the derivative. The value of a derivative may fluctuate more than the underlying assets, rates, indices or other indicators to which it relates. Use of derivatives may have different tax consequences for the fund than an investment in the underlying asset, and those differences may affect the amount, timing and character of income distributed to shareholders, including the proportion of income consisting of exempt-interest dividends. The U.S. government and non‑U.S. governments have adopted and implemented regulations governing derivatives markets, including mandatory clearing of certain derivatives, margin and reporting requirements. The ultimate impact of the regulations remains unclear. Additional regulation of derivatives may make derivatives more costly, limit their availability or utility, otherwise adversely affect their performance or disrupt markets. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Leverage risk.</span><span style="font-family:arial narrow"> The value of your investment may be more volatile if the fund borrows or uses instruments, such as derivatives, that have a leveraging effect on the fund’s portfolio. Other risks described in the Prospectus also will be compounded because leverage generally magnifies the effect of a change in the value of an asset and creates a risk of loss of value on a larger pool of assets than the fund would otherwise have had. The fund may also have to sell assets at inopportune times to satisfy its obligations created by the use of leverage or derivatives. The use of leverage is considered to be a speculative investment practice and may result in the loss of a substantial amount, and possibly all, of the fund’s assets. In addition, the fund’s portfolio will be leveraged if it exercises its right to delay payment on a redemption, and losses will result if the value of the fund’s assets declines between the time a redemption request is deemed to be received by the fund and the time the fund liquidates assets to meet redemption requests. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Tender option bond risk.</span><span style="font-family:arial narrow"> Tender option bond (“TOB”) transactions expose the fund to leverage and credit risk, and generally involve greater risk than direct investments in fixed rate municipal bonds, including the risk of loss of principal. The interest payments that the fund would typically receive in connection with a TOB transaction (“inverse floaters”) vary inversely with short-term interest rates and will be reduced (and potentially eliminated) when short-term interest rates increase. In addition, the fund will be subject to leverage risk to the extent that the fund uses the proceeds that it receives from a TOB transaction to invest in other securities. The fund’s investment in a TOB will generally underperform the market for fixed rate municipal securities when interest rates rise. The value and market for such inverse floaters can be volatile and can have limited liquidity. Investments in inverse floaters issued in TOB transactions are derivative instruments and, therefore, are also subject to the risks generally applicable to investments in derivatives. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Illiquidity risk.</span><span style="font-family:arial narrow"> Some assets held by the fund may be or become impossible or difficult to sell and some assets that the fund wants to invest in may be impossible or difficult to purchase, particularly during times of market turmoil or due to adverse changes in the conditions of a particular issuer. These illiquid assets may also be volatile and difficult to value. Markets may become illiquid quickly. Markets may become illiquid when, for </span></div><div style="margin-top:0pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">instance, there are few, if any, interested buyers or sellers or when dealers are unwilling or unable to make a market for certain securities. As a general matter, dealers have been less willing to make markets in recent years. Federal banking regulations may also cause certain dealers to reduce their inventories of certain securities, which may further decrease the fund’s ability to buy or sell such securities. During times of market turmoil, there have been, and may be, no buyers or sellers for securities in entire asset classes. If the fund is forced to sell an illiquid asset 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. The fund may not receive its proceeds from the sale of certain securities for an extended period (for example, several weeks or even longer). </div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Tax risk.</span><span style="font-family:arial narrow"> The income on the fund’s municipal securities could become subject to U.S. federal income and/or California state personal income taxes due to noncompliant conduct by issuers, unfavorable legislation or litigation or adverse interpretations by regulatory authorities. All or a portion of the fund’s dividends that are exempt from regular U.S. federal income tax may nevertheless be taken into account for purposes of the U.S. federal alternative minimum tax. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Prepayment or call risk.</span><span style="font-family:arial narrow"> Many issuers have a right to prepay their fixed income securities. Issuers may be more likely to prepay their securities if interest rates fall. If this happens, the fund may not benefit from the rise in the market price of the securities that normally accompanies a decline in interest rates, and 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. The fund may also lose any premium it paid to purchase the securities. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Extension risk.</span><span style="font-family:arial narrow"> When interest rates rise, repayments of fixed income securities, particularly asset-and mortgage-backed securities, may occur more slowly than anticipated, extending the effective duration of these fixed income securities at below market interest rates and causing their market prices to decline more than they would have declined due to the rise in interest rates alone. This may cause the fund’s share price to be more volatile. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Risks relating to investments in municipal securities.</span><span style="font-family:arial narrow"> Municipal issuers may be adversely affected by rising health care costs, increasing unfunded pension liabilities, and by the phasing out of federal programs providing financial support. Unfavorable conditions and developments relating to projects financed with municipal securities can result in lower revenues to issuers of municipal securities, potentially resulting in defaults. The value of municipal securities can also be adversely affected by changes in the financial condition of one or more individual municipal issuers or insurers of municipal issuers, regulatory and political developments, tax law changes or other legislative actions, and by uncertainties and public perceptions concerning these and other factors. In the past, a number of municipal issuers defaulted on obligations, were downgraded or commenced insolvency proceedings. Financial difficulties of municipal issuers may experience a resurgence, particularly in the event of economic or market turmoil or a recession. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Industrial development bonds risk.</span><span style="font-family:arial narrow"> Industrial development bonds (“IDBs”) are issued by public authorities to obtain funds to provide financing for privately-operated facilities for business and manufacturing, housing, sports, convention or trade show facilities, airport, mass transit, port and parking facilities, air or water pollution control facilities, and certain facilities for water supply, gas, electricity or sewerage or solid waste disposal. Although IDBs are issued by municipal authorities, the payment of principal and interest on IDBs is dependent solely on the ability of the user of the facilities financed by the bonds to meet its financial obligations and the pledge, if any, of the real and personal property being financed as security for such payments. IDBs are considered municipal securities if the interest paid is exempt from regular U.S. federal income tax. Interest earned on IDBs may be subject to the U.S. federal alternative minimum tax. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Investing in ETFs risk.</span><span style="font-family:arial narrow"> Unlike shares of typical mutual funds or unit investment trusts, shares of exchange-traded funds (“ETFs”) are traded on an exchange and may trade throughout a trading day. ETFs are bought and sold based on market values and not at net asset value, and therefore may trade at either a premium or discount to net asset value and may experience volatility in certain market conditions. The fund will pay brokerage commissions in connection with the purchase and sales of shares of ETFs. In addition, the fund will indirectly bear its pro rata share of fees and expenses incurred by an ETF in which it invests, including advisory fees. These expenses are in addition to management fees and other expenses that the fund bears directly in connection with its own operations. Certain ETFs are also subject to portfolio management risk. Investments in ETFs are subject to the risk that the listing exchange may halt trading of an ETF’s shares, in which case the fund would be unable to sell its ETF shares unless and until trading is resumed. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Valuation risk.</span><span style="font-family:arial narrow"> 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 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. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Portfolio management risk.</span><span style="font-family:arial narrow"> 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 models, 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. </span></div> <div style="margin-top:0pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Redemption risk.</span><span style="font-family:arial narrow"> The fund may experience heavy redemptions that could cause the fund to liquidate its assets at inopportune times or unfavorable prices or increase or accelerate taxable gains or transaction costs and may negatively affect the fund’s net asset value, performance, or ability to satisfy redemptions in a timely manner, which could cause the value of your investment to decline. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Cybersecurity risk.</span><span style="font-family:arial narrow"> 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. </span></div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">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. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">These and other risks are discussed in more detail in the Prospectus or in the Statement of Additional Information. </div> Performance <div style="margin-top:2pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">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 Class A shares. The table shows the average annual total returns of each class of the fund that has been in operation for at least one full calendar year and also compares the fund’s performance with the average annual total returns of a broad measure of market performance and an additional index with characteristics relevant to the fund. 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, including its current net asset value, available at www.franklintempleton.com/prospectus (select fund and share class), or by calling the fund at 877‑6LM‑FUND/656‑3863. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-style:italic">The fund’s past performance (before and after taxes) is not necessarily an indication of how the fund will perform in the future. </span></div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">Sales charges are not reflected in the accompanying bar chart, and if those charges were included, returns would be less than those shown. </div> The bar chart shows changes in the fund’s performance from year to year for Class A shares. The table shows the average annual total returns of each class of the fund that has been in operation for at least one full calendar year and also compares the fund’s performance with the average annual total returns of a broad measure of market performance and an additional index with characteristics relevant to the fund. www.franklintempleton.com/prospectus (select fund and share class) 877‑6LM‑FUND/656‑3863 The fund’s past performance (before and after taxes) is not necessarily an indication of how the fund will perform in the future. Sales charges are not reflected in the accompanying bar chart, and if those charges were included, returns would be less than those shown. Best Quarter 2023-12-31 0.0658 Worst Quarter 2022-03-31 -0.0632 year‑to‑date return 2026-03-31 -0.0019 Average annual total returns (%)(for periods ended December 31, 2025) 0.0003 -0.0038 0.0144 0.0003 -0.0044 0.0135 0.0127 0.0032 0.0179 0.0243 -0.0005 0.0133 0.0417 0.0068 0.0205 0.0421 0.0074 0.0129 2019-08-09 0.0425 0.0080 0.0234 0.0411 0.0076 0.0229 <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">No one index is representative of the fund’s portfolio. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">The after‑tax returns are shown only for Class A shares, are calculated using the historical highest individual U.S. federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after‑tax returns depend on an investor’s tax situation and may differ from those shown. After‑tax returns for classes other than Class A will vary from returns shown for Class A. Returns after taxes on distributions and sale of fund shares are higher than returns before taxes for certain periods shown because they reflect the tax benefit of capital losses realized on the redemption of fund shares. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:8pt;font-family:arial narrow;">Important data provider notices and terms are available at www.franklintempletondatasources.com. Such information is subject to change. </div> The after‑tax returns are shown only for Class A shares, are calculated using the historical highest individual U.S. federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after‑tax returns depend on an investor’s tax situation and may differ from those shown. After‑tax returns for classes other than Class A will vary from returns shown for Class A. Returns after taxes on distributions and sale of fund shares are higher than returns before taxes for certain periods shown because they reflect the tax benefit of capital losses realized on the redemption of fund shares. The after‑tax returns are shown only for Class A shares, are calculated using the historical highest individual U.S. federal marginal income tax rates and do not reflect the impact of state and local taxes. Returns after taxes on distributions and sale of fund shares are higher than returns before taxes for certain periods shown because they reflect the tax benefit of capital losses realized on the redemption of fund shares. Investment objective <div style="margin-top:2pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">The fund seeks to generate high current income exempt from regular federal income tax while preserving capital. </div> Fees and expenses of the fund <div style="margin-top:2pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">The accompanying table describes the fees and expenses that you may pay if you buy, hold and sell Class C2 shares of the fund. <span style="font-weight:bold">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.</span> </div> Shareholder fees(fees paid directly from your investment) 0 0 15 Annual fund operating expenses (%)(expenses that you pay each year as a percentage of the value of your investment) 0.0030 0.0065 0.0019 0.0114 Example <div style="margin-top:2pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">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: </div> <table cellpadding="0" cellspacing="0" style="border-collapse:collapse;font-family:arial narrow;font-size:10pt;border-spacing:0px;width:100%"> <tr style="page-break-inside:avoid"> <td style="width:1%;vertical-align:top;text-align:left;"><span style="font-family:times new roman;font-size:7pt">•</span></td> <td style="width:1%;vertical-align:top;"> </td> <td style="vertical-align:top;text-align:left;"> <div style="margin-top:0pt;margin-bottom:0pt;font-family:arial narrow;font-size:10pt;text-align:left;">You invest $10,000 in the fund for the time periods indicated </div> </td> </tr> </table> <table cellpadding="0" cellspacing="0" style="border-collapse:collapse;font-family:arial narrow;font-size:10pt;border-spacing:0px;width:100%"> <tr style="page-break-inside:avoid"> <td style="width:1%;vertical-align:top;text-align:left;"><span style="font-family:times new roman;font-size:7pt">•</span></td> <td style="width:1%;vertical-align:top;"> </td> <td style="vertical-align:top;text-align:left;"> <div style="margin-top:0pt;margin-bottom:0pt;font-family:arial narrow;font-size:10pt;text-align:left;">Your investment has a 5% return each year and the fund’s operating expenses remain the same (except that any applicable fee waiver or expense reimbursement is reflected only through its expiration date) </div> </td> </tr> </table> <table cellpadding="0" cellspacing="0" style="border-collapse:collapse;font-family:arial narrow;font-size:10pt;border-spacing:0px;width:100%"> <tr style="page-break-inside:avoid"> <td style="width:1%;vertical-align:top;text-align:left;"><span style="font-family:times new roman;font-size:7pt">•</span></td> <td style="width:1%;vertical-align:top;"> </td> <td style="vertical-align:top;text-align:left;"> <div style="margin-top:0pt;margin-bottom:0pt;font-family:arial narrow;font-size:10pt;text-align:left;">You reinvest all distributions and dividends without a sales charge </div> </td> </tr> </table><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">Although your actual costs may be higher or lower, based on these assumptions your costs would be: </div> Number of years you own your shares ($) Number of years you own your shares ($) 116 116 362 362 627 627 1240 1240 Portfolio turnover. The fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the fund’s performance. During the most recent fiscal year, the fund’s portfolio turnover rate was 25% of the average value of its portfolio. 0.25 Principal investment strategies <div style="margin-top:2pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">Under normal circumstances, the fund invests at least 80% of its assets in municipal securities and in participation or other interests in municipal securities issued by banks, insurance companies or other financial institutions. Municipal securities are securities and other investments with similar economic characteristics the interest on which is exempt from regular federal income tax. The fund’s 80% policy may not be changed without a shareholder vote. Interest on municipal securities may be subject to the federal alternative minimum tax. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">Municipal securities include debt obligations issued by or on behalf of the states, territories and possessions of the United States, and the District of Columbia, and their political subdivisions, agencies and public authorities, and other qualifying issuers. These securities include participation or other interests in municipal securities issued or backed by banks, insurance companies and other financial institutions. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">Some municipal securities, such as general obligation issues, are backed by the issuer’s taxing authority, while other municipal securities, such as revenue issues, are backed only by revenues from certain facilities or other sources and not by the issuer itself. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">Although the fund seeks to minimize risk by investing in municipal securities from a number of different states and localities, the fund may, from time to time, invest over 25% of its assets in municipal securities from one state or region. The fund attempts to minimize the volatility in its net asset value per share, although there can be no assurance that this will be the case. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">The fund focuses on investment grade bonds (that is, securities rated in the Baa/BBB categories or above or, if unrated or deemed to be unrated by the subadviser, determined to be of comparable credit quality by the subadviser), but may invest up to 20% of its assets in below investment grade bonds (commonly known as “high yield” or “junk” bonds). </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">Although the fund may invest in securities of any maturity, the fund normally expects to maintain a dollar-weighted average effective duration, as estimated by the subadviser, of three years or less. Effective duration seeks to measure the expected sensitivity of market price to changes in interest rates, taking into account the anticipated effects of structural complexities (for example, some bonds can be prepaid by the issuer). </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">The fund may also invest in securities of other open‑end or closed‑end investment companies, including exchange-traded funds (“ETFs”), that invest primarily in municipal securities. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">Instead of, and/or in addition to, investing directly in particular securities, the fund may use instruments such as derivatives, including options, futures contracts and inverse floating rate instruments issued in tender option bond transactions and other synthetic instruments that are intended to provide economic exposure to the securities or the issuer or to be used as a hedging technique. The fund may use one or more types of these instruments without limit, subject to applicable regulatory requirements. The fund’s investments in derivative instruments and other investments that provide exposure to the investment focus indicated in the fund’s 80% policy are included in the fund’s 80% basket. For additional information regarding derivatives, see “More on the fund’s investment strategies, investments and risks—Derivatives” in the Prospectus. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">The fund may also engage in a variety of transactions using derivatives in order to change the investment characteristics of its portfolio (such as shortening or lengthening duration) and for other purposes. The fund may leverage its assets by investing proceeds received through tender option bond transactions, which is considered a form of borrowing. See “More on the fund’s investment strategies, investments and risks—Tender option bonds” in the Prospectus. </div> <div style="margin-top:2pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">Under normal circumstances, the fund invests at least 80% of its assets in municipal securities and in participation or other interests in municipal securities issued by banks, insurance companies or other financial institutions. Municipal securities are securities and other investments with similar economic characteristics the interest on which is exempt from regular federal income tax. The fund’s 80% policy may not be changed without a shareholder vote. Interest on municipal securities may be subject to the federal alternative minimum tax. </div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">Municipal securities include debt obligations issued by or on behalf of the states, territories and possessions of the United States, and the District of Columbia, and their political subdivisions, agencies and public authorities, and other qualifying issuers. These securities include participation or other interests in municipal securities issued or backed by banks, insurance companies and other financial institutions. </div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">The fund focuses on investment grade bonds (that is, securities rated in the Baa/BBB categories or above or, if unrated or deemed to be unrated by the subadviser, determined to be of comparable credit quality by the subadviser), but may invest up to 20% of its assets in below investment grade bonds (commonly known as “high yield” or “junk” bonds). </div> You may lose part or all of your investment in the fund or your investment may not perform as well as other similar investments. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or by any bank or government agency. <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Market and interest rate risk.</span><span style="font-family:arial narrow"> The market prices of securities held by the fund may go up or down, sometimes rapidly or unpredictably. If the market prices of the fund’s securities fall, the value of your investment in the fund will 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. Changes in market conditions will not typically have the same impact on all types of securities. </span></div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">The value of your investment will generally go down when interest rates rise. A rise in rates tends to have a greater impact on the prices of longer term or duration 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. Recently, there have been inflationary price movements. As a result, fixed income securities markets may experience heightened levels of interest rate volatility and liquidity risk. The U.S. government and the U.S. Federal Reserve, as well as certain foreign governments and central banks, have from time to time </div><div style="margin-top:0pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"> taken steps to support financial markets. The U.S. government and the U.S. Federal Reserve may, conversely, reduce market support activities. This and other government intervention may not work as intended, particularly if the efforts are perceived by investors as being unlikely to achieve the desired results. Changes in government activities in this regard, such as changes in interest rate policy, can negatively affect financial markets generally, increase market volatility and reduce the value and liquidity of securities in which the fund invests. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">The maturity of a security may be significantly longer than its duration. A security’s maturity and other features may be more relevant than its duration in determining the security’s sensitivity to other factors affecting the issuer or markets generally such as changes in credit quality or in the yield premium that the market may establish for certain types of securities. </div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Market events risk.</span><span style="font-family:arial narrow"> 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. Ongoing or threatened armed conflicts throughout the world have caused and could continue to cause significant market disruptions and volatility. The hostilities and sanctions resulting from those hostilities have and could continue to have a significant impact on certain fund investments as well as fund performance and liquidity. 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. </span></div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">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 been volatile and may increase in the future. 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. </div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Inflation risk.</span><span style="font-family:arial narrow"> Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as prices go up and the purchasing power of money goes down. The market prices of debt securities generally fall as inflation increases because the purchasing power of the principal and income is expected to be less when paid. Inflation often is accompanied or followed by a recession, or period of decline in economic activity, which may include job loss and other hardships and may cause the value of securities to go down generally. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Credit risk.</span><span style="font-family:arial narrow"> If an issuer or guarantor of a security held by the fund or a counterparty to a financial contract with the fund defaults or its credit is downgraded, or is perceived to be less creditworthy, or if the value of the assets underlying a security declines, the value of your investment will typically 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. Subordinated securities (meaning securities that rank below other securities with respect to claims on the issuer’s assets) are more likely to suffer a credit loss than non‑subordinated securities of the same issuer and will be disproportionately affected by a default, downgrade or perceived decline in creditworthiness. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">High yield (“junk”) bonds risk.</span><span style="font-family:arial narrow"> High yield bonds are generally subject to greater credit risks than higher-grade bonds, including the risk of default on the payment of interest or principal. High yield bonds are considered speculative, typically have lower liquidity and are more difficult to value than higher grade bonds. High yield bonds tend to be volatile and more susceptible to adverse events, credit downgrades and negative sentiments and may be difficult to sell at a desired price, or at all, during periods of uncertainty or market turmoil. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Derivatives risk.</span><span style="font-family:arial narrow"> Using derivatives can increase fund losses and reduce opportunities for gains, such as when market prices, interest rates, or the derivatives themselves behave in a way not anticipated by the fund’s subadviser. Using derivatives also can have a leveraging effect and increase fund volatility. Certain derivatives have the potential for unlimited loss, regardless of the size of the initial investment. Derivatives may not be available at the time or price desired, may be difficult to sell, unwind or value, and the counterparty may default on its obligations to the fund. Derivatives are generally subject to the risks applicable to the assets, rates, indices or other indicators underlying the derivative. The value of a derivative may fluctuate more than the underlying assets, rates, indices or other indicators to which it relates. Use of derivatives may have different tax consequences for the fund than an investment in the underlying asset, and those differences may affect the amount, timing and character of income distributed to shareholders, including the proportion of income consisting of exempt interest dividends, as applicable. The U.S. government and non‑U.S. governments have adopted and implemented regulations governing derivatives markets, including mandatory clearing of certain derivatives, margin and reporting requirements. The ultimate impact of the regulations remains unclear. Additional regulation of derivatives may make derivatives more costly, limit their availability or utility, otherwise adversely affect their performance or disrupt markets. </span></div><div style="margin-top:0pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">Credit default swap contracts involve heightened risks and may result in losses to the fund. Credit default swaps may be illiquid and difficult to value. When the fund sells credit protection via a credit default swap, credit risk increases since the fund has exposure to both the issuer whose credit is the subject of the swap and the counterparty to the swap. </div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Leverage risk. </span><span style="font-family:arial narrow">The value of your investment may be more volatile if the fund borrows or uses instruments, such as derivatives, that have a leveraging effect on the fund’s portfolio. Other risks described in the Prospectus also will be compounded because leverage generally magnifies the effect of a change in the value of an asset and creates a risk of loss of value on a larger pool of assets than the fund would otherwise have had. The fund may also have to sell assets at inopportune times to satisfy its obligations created by the use of leverage or derivatives. The use of leverage is considered to be a speculative investment practice and may result in the loss of a substantial amount, and possibly all, of the fund’s assets. In addition, the fund’s portfolio will be leveraged if it exercises its right to delay payment on a redemption, and losses will result if the value of the fund’s assets declines between the time a redemption request is deemed to be received by the fund and the time the fund liquidates assets to meet redemption requests. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Tender option bond risk. </span><span style="font-family:arial narrow">Tender option bond (“TOB”) transactions expose the fund to leverage and credit risk, and generally involve greater risk than direct investments in fixed rate municipal bonds, including the risk of loss of principal. The interest payments that the fund would typically receive in connection with a TOB transaction (“inverse floaters”) vary inversely with short-term interest rates and will be reduced (and potentially eliminated) when short-term interest rates increase. In addition, the fund will be subject to leverage risk to the extent that the fund uses the proceeds that it receives from a TOB transaction to invest in other securities. The fund’s investment in a TOB will generally underperform the market for fixed rate municipal securities when interest rates rise. The value and market for such inverse floaters can be volatile and can have limited liquidity. Investments in inverse floaters issued in TOB transactions are derivative instruments and, therefore, are also subject to the risks generally applicable to investments in derivatives. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Illiquidity risk.</span><span style="font-family:arial narrow"> Some assets held by the fund may be or become impossible or difficult to sell and some assets that the fund wants to invest in may be impossible or difficult to purchase, particularly during times of market turmoil or due to adverse changes in the conditions of a particular issuer. These illiquid assets 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. As a general matter, dealers have been less willing to make markets in recent years. Federal banking regulations may also cause certain dealers to reduce their inventories of certain securities, which may further decrease the fund’s ability to buy or sell such securities. During times of market turmoil, there have been, and may be, no buyers or sellers for securities in entire asset classes. If the fund is forced to sell an illiquid asset 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. The fund may not receive its proceeds from the sale of certain securities for an extended period (for example, several weeks or even longer). </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Tax risk.</span><span style="font-family:arial narrow"> The income on the fund’s municipal securities could become subject to U.S. federal income tax due to noncompliant conduct by issuers, unfavorable legislation or litigation or adverse interpretations by regulatory authorities. All or a portion of the fund’s dividends that are exempt from regular U.S. federal income tax may nevertheless be taken into account for purposes of the U.S. federal alternative minimum tax. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Prepayment or call risk.</span><span style="font-family:arial narrow"> Many issuers have a right to prepay their fixed income securities. Issuers may be more likely to prepay their securities if interest rates fall. If this happens, the fund may not benefit from the rise in the market price of the securities that normally accompanies a decline in interest rates, and 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. The fund may also lose any premium it paid to purchase the securities. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Extension risk.</span><span style="font-family:arial narrow"> When interest rates rise, repayments of fixed income securities, particularly asset- and mortgage- backed securities, may occur more slowly than anticipated, extending the effective duration of these fixed income securities at below market interest rates and causing their market prices to decline more than they would have declined due to the rise in interest rates alone. This may cause the fund’s share price to be more volatile. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Risk of investing in fewer issuers.</span><span style="font-family:arial narrow"> To the extent the fund invests its assets in a small number of issuers, or in issuers in related businesses or that are subject to related operating risks, the fund will be more susceptible to negative events affecting those issuers. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Risks relating to investments in municipal securities.</span><span style="font-family:arial narrow"> Municipal issuers may be adversely affected by rising health care costs, increasing unfunded pension liabilities, and by the phasing out of federal programs providing financial support. Unfavorable conditions and developments relating to projects financed with municipal securities can result in lower revenues to issuers of municipal securities, potentially resulting in defaults. The value of municipal securities can also be adversely affected by changes in the financial condition of one or more individual municipal issuers or insurers of municipal issuers, regulatory and political developments, tax law changes or other legislative actions, and by uncertainties and public perceptions concerning these and other factors. In the past, a number of municipal issuers defaulted on obligations, were downgraded or commenced insolvency proceedings. Financial difficulties of municipal issuers may experience a resurgence, particularly in the event of economic or market turmoil or a recession. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Transportation bond risk.</span><span style="font-family:arial narrow"> Certain facility revenue bonds are payable from and secured by the revenue from the ownership and operation of particular facilities, such as airports, highways, port authorities or other transit facilities. Airport operating income may be affected by the general stability of the airline industry and on the ability of airlines to meet their obligations under agreements with airports. Similarly, payment on bonds related to other facilities is dependent on revenues from the projects, such as use fees from ports, tolls on turnpikes and bridges and rents from buildings. Therefore, payment may be adversely affected by reduction in revenues due to such factors and increased cost of maintenance or </span></div><div style="margin-top:0pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">decreased use of a facility. Fuel costs, transportation taxes and fees, and availability of fuel also affect other transportation-related securities, as do the presence of alternate forms of transportation, such as public transportation. The portfolio manager cannot predict what effect conditions may have on revenues which are required for payment on these bonds. </div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Investing in ETFs risk.</span><span style="font-family:arial narrow"> Unlike shares of typical mutual funds or unit investment trusts, shares of exchange-traded funds (“ETFs”) are traded on an exchange and may trade throughout a trading day. ETFs are bought and sold based on market values and not at net asset value, and therefore may trade at either a premium or discount to net asset value and may experience volatility in certain market conditions. The fund will pay brokerage commissions in connection with the purchase and sales of shares of ETFs. In addition, the fund will indirectly bear its pro rata share of fees and expenses incurred by an ETF in which it invests, including advisory fees. These expenses are in addition to management fees and other expenses that the fund bears directly in connection with its own operations. Certain ETFs are also subject to portfolio management risk. Investments in ETFs are subject to the risk that the listing exchange may halt trading of an ETF’s shares, in which case the fund would be unable to sell its ETF shares unless and until trading is resumed. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Valuation risk.</span><span style="font-family:arial narrow"> 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 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. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Portfolio management risk.</span><span style="font-family:arial narrow"> 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 models, 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. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Redemption risk.</span><span style="font-family:arial narrow"> The fund may experience heavy redemptions that could cause the fund to liquidate its assets at inopportune times or unfavorable prices or increase or accelerate taxable gains or transaction costs and may negatively affect the fund’s net asset value, performance, or ability to satisfy redemptions in a timely manner, which could cause the value of your investment to decline. </span></div> <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-family:arial narrow;font-size:10pt;color:#47829e">Cybersecurity risk.</span><span style="font-family:arial narrow"> 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. </span></div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">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. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">These and other risks are discussed in more detail in the Prospectus or in the Statement of Additional Information. </div> Performance <div style="margin-top:2pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">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 Class C2 shares. The table shows the average annual total returns of Class C2 shares of the fund and also compares the fund’s performance with the average annual total returns of a broad measure of market performance and an additional index with characteristics relevant to the fund. 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, including its current net asset value, available at www.franklintempleton.com/prospectus (select fund and share class), or by calling the fund at 877‑6LM‑FUND/656‑3863. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;"><span style="font-style:italic">The fund’s past performance (before and after taxes) is not necessarily an indication of how the fund will perform in the future. </span></div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">Sales charges are not reflected in the accompanying bar chart, and if those charges were included, returns would be less than those shown. </div> The bar chart shows changes in the fund’s performance from year to year for Class C2 shares. The table shows the average annual total returns of Class C2 shares of the fund and also compares the fund’s performance with the average annual total returns of a broad measure of market performance and an additional index with characteristics relevant to the fund. www.franklintempleton.com/prospectus (select fund and share class) 877‑6LM‑FUND/656‑3863 The fund’s past performance (before and after taxes) is not necessarily an indication of how the fund will perform in the future. Sales charges are not reflected in the accompanying bar chart, and if those charges were included, returns would be less than those shown. Best Quarter 2023-12-31 0.0329 Worst Quarter 2022-03-31 -0.0321 year‑to‑date return 2026-03-31 0.0011 Average annual total returns (%)(for periods ended December 31, 2025) 0.0383 0.0083 0.0093 2020-11-02 0.0383 0.0083 0.0093 0.0309 0.0092 0.0100 0.0425 0.0080 0.0119 0.0411 0.0129 0.0134 <div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">No one index is representative of the fund’s portfolio. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">After‑tax returns are calculated using the historical highest individual U.S. federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after‑tax returns depend on an investor’s tax situation and may differ from those shown. After‑tax returns for classes other than Class C2 will vary from returns shown for Class C2. Returns after taxes on distributions and sale of fund shares are higher than returns before taxes for certain periods shown because they reflect the tax benefit of capital losses realized on the redemption of fund shares. </div><div style="margin-top:8pt;margin-bottom:0pt;font-size:10pt;font-family:arial narrow;">Important data provider notices and terms are available at www.franklintempletondatasources.com. Such information is subject to change. </div> After‑tax returns are calculated using the historical highest individual U.S. federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after‑tax returns depend on an investor’s tax situation and may differ from those shown. After‑tax returns for classes other than Class C2 will vary from returns shown for Class C2. Returns after taxes on distributions and sale of fund shares are higher than returns before taxes for certain periods shown because they reflect the tax benefit of capital losses realized on the redemption of fund shares. After‑tax returns are calculated using the historical highest individual U.S. federal marginal income tax rates and do not reflect the impact of state and local taxes. Returns after taxes on distributions and sale of fund shares are higher than returns before taxes for certain periods shown because they reflect the tax benefit of capital losses realized on the redemption of fund shares. Maximum deferred sales charge (load) may be reduced over time. For Class IS shares, for the period from the class’ inception date to December 31, 2025, the average annual total return of the Bloomberg Municipal Bond Index was 2.47%. The sales charge is waived for shareholders purchasing Class A shares through accounts where Franklin Distributors is the broker-dealer of record (“Distributor Accounts”). Shareholders purchasing Class A shares through certain Service Agents or in certain types of accounts may be eligible for a waiver of the sales charge. For additional information, see “Additional information about each share class — Sales charges” in the Prospectus. Maximum deferred sales charge (load) may be reduced over time. You may buy Class A shares in amounts of $250,000 or more at net asset value (without an initial sales charge), but if you redeem those shares within 18 months of their purchase, you will pay a contingent deferred sales charge of 0.50%. If the value of your account is below $1,000, the fund may charge you a fee of $3.75 per account that is determined and assessed quarterly by the fund or your Service Agent (with an annual maximum of $15.00 per account). Please contact your Service Agent or the fund for more information. If the value of your account is below $1,000, the fund may charge you a fee of $3.75 per account that is determined and assessed quarterly by the fund or your Service Agent (with an annual maximum of $15.00 per account). Please contact your Service Agent or the fund for more information. Other expenses for Class FI shares are estimated for the current fiscal year. Actual expenses may differ from estimates. 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 0.55% for Class A shares, 1.05% for Class C shares, 0.75% for Class FI shares, 0.40% for Class I shares and 0.35% for Class IS shares, subject to recapture as described below. In addition, the ratio of total annual fund operating expenses for Class IS shares will not exceed the ratio of total annual fund operating expenses for Class I shares, subject to recapture as described below. These arrangements cannot be terminated prior to December 31, 2027 without the Board of Trustees’ consent. The manager is permitted to recapture amounts waived and/or reimbursed to a class within two years after the fiscal year in which the manager earned the fee or incurred the expense if the class’ total annual fund operating expenses have fallen to a level below the limits 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 applicable limits described above or any other lower limit then in effect. In addition, the manager has agreed to waive the fund’s management fee to an extent sufficient to offset the net management fee payable in connection with any investment in an affiliated money market fund. This management fee waiver is not subject to the recapture provision discussed above. The sales charge is waived for shareholders purchasing Class A shares through accounts where Franklin Distributors is the broker-dealer of record (“Distributor Accounts”). Shareholders purchasing Class A shares through certain Service Agents or in certain types of accounts may be eligible for a waiver of the sales charge. For additional information, see “Additional information about each share class — Sales charges” in the Prospectus. For Class IS shares, for the period from the class’ inception date to December 31, 2025, the average annual total return of the Bloomberg Municipal Bond Index was 2.18%. For Class IS shares, for the period from the class’ inception date to December 31, 2025, the average annual total return of the Bloomberg Municipal 3 Year (2-4) Index was 1.66%. The sales charge is waived for shareholders purchasing Class A shares through accounts where Franklin Distributors is the broker-dealer of record (“Distributor Accounts”). Shareholders purchasing Class A shares through certain Service Agents or in certain types of accounts may be eligible for a waiver of the sales charge. For additional information, see “Additional information about each share class — Sales charges” in the Prospectus. Maximum deferred sales charge (load) may be reduced over time. You may buy Class A shares in amounts of $250,000 or more at net asset value (without an initial sales charge), but if you redeem those shares within 18 months of their purchase, you will pay a contingent deferred sales charge of 1.00%. If the value of your account is below $1,000, the fund may charge you a fee of $3.75 per account that is determined and assessed quarterly by the fund or your Service Agent (with an annual maximum of $15.00 per account). Please contact your Service Agent or the fund for more information. Other expenses for Class FI shares are estimated for the current fiscal year. Actual expenses may differ from estimates. 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 0.85% for Class FI shares, 0.55% for Class I shares and 0.52% for Class IS shares, subject to recapture as described below. In addition, the ratio of total annual fund operating expenses for Class IS shares will not exceed the ratio of total annual fund operating expenses for Class I shares, subject to recapture as described below. These arrangements cannot be terminated prior to December 31, 2027 without the Board of Trustees’ consent. The manager is permitted to recapture amounts waived and/or reimbursed to a class within two years after the fiscal year in which the manager earned the fee or incurred the expense if the class’ total annual fund operating expenses have fallen to a level below the limits 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 applicable limits described above or any other lower limit then in effect. In addition, the manager has agreed to waive the fund’s management fee to an extent sufficient to offset the net management fee payable in connection with any investment in an affiliated money market fund. This management fee waiver is not subject to the recapture provision discussed above. Total annual fund operating expenses (after waiving fees and/or reimbursing expenses, as applicable) are higher than the expense cap amounts for Class FI, Class I and Class IS as a result of interest expense. For Class IS shares, for the period from the class’ inception date to December 31, 2025, the average annual total return of the Bloomberg Municipal Bond Index was 1.50%. For Class IS shares, for the period from the class’ inception date to December 31, 2025, the average annual total return of the Bloomberg California Municipal Bond Index was 1.44%. Maximum deferred sales charge (load) may be reduced over time. If the value of your account is below $1,000, the fund may charge you a fee of $3.75 per account that is determined and assessed quarterly by the fund or your Service Agent (with an annual maximum of $15.00 per account). Please contact your Service Agent or the fund for more information. Other expenses for Class FI shares are estimated for the current fiscal year. Actual expenses may differ from estimates. 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 0.77% for Class A shares, 1.32% for Class C shares, 0.80% for Class FI shares, 0.45% for Class I shares and 0.42% for Class IS shares, subject to recapture as described below. In addition, the ratio of total annual fund operating expenses for Class 1 shares will not exceed the ratio of total annual fund operating expenses for Class A shares, subject to recapture as described below. The ratio of total annual fund operating expenses for Class IS shares will not exceed the ratio of total annual fund operating expenses for Class I shares, subject to recapture as described below. These arrangements cannot be terminated prior to December 31, 2027 without the Board of Trustees’ consent. The manager is permitted to recapture amounts waived and/or reimbursed to a class within two years after the fiscal year in which the manager earned the fee or incurred the expense if the class’ total annual fund operating expenses have fallen to a level below the limits 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 applicable limits described above or any other lower limit then in effect. In addition, the manager has agreed to waive the fund’s management fee to an extent sufficient to offset the net management fee payable in connection with any investment in an affiliated money market fund. This management fee waiver is not subject to the recapture provision discussed above. Total annual fund operating expenses (after waiving fees and/or reimbursing expenses, as applicable) are higher than the expense cap amounts for Class FI, Class I and Class IS as a result of interest expense. You may buy Class A shares in amounts of $250,000 or more at net asset value (without an initial sales charge), but if you redeem those shares within 18 months of their purchase, you will pay a contingent deferred sales charge of 1.00%.