N-CSRS

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-10407

Master Portfolio Trust

(Exact name of registrant as specified in charter)

620 Eighth Avenue, 49^th Floor, New York, NY 10018

(Address of principal executive offices) (Zip code)

Robert I. Frenkel, Esq.

Legg Mason & Co., LLC

100 First Stamford Place

Stamford, CT 06902

(Name and address of agent for service)

Registrant’s telephone number, including area code: 1-877-721-1926

Date of fiscal year end: July 31

Date of reporting period: July 31, 2013

ITEM 1. REPORT TO STOCKHOLDERS.

The Annual Report to Stockholders is filed herewith.

Schedule of investments

July 31, 2013

Municipal High Income Portfolio

Security	Rate			Maturity Date		Face Amount		Value
Municipal Bonds — 97.2%
Arizona — 1.4%
Pima County, AZ, IDA Educational Revenue, Noah Webster Basic School		6.125	%		12/15/34	$	1,000,000	$	967,110
Pima County, AZ, IDA Revenue, Tucson Electric Power Co.		5.750	%		9/1/29		8,000,000		8,105,040
University Medical Center Corp., AZ, Hospital Revenue		6.000	%		7/1/24		1,250,000		1,391,400
University Medical Center Corp., AZ, Hospital Revenue		6.500	%		7/1/39		2,000,000		2,193,380
Total Arizona									12,656,930
California — 11.8%
Alhambra, CA, Revenue:
Atherton Baptist Homes		7.500	%		1/1/30		1,640,000		1,727,297
Atherton Baptist Homes		7.625	%		1/1/40		1,500,000		1,575,945
California EFA Revenue:
College and University Financing Program		5.000	%		2/1/14		1,595,000		1,610,822
College and University Financing Program		5.000	%		2/1/15		1,670,000		1,702,866
California State PCFA, Water Furnishing Revenue		5.000	%		11/21/45		10,000,000		8,998,100
California State Public Works Board, Lease Revenue:
California State Prisons LA		5.250	%		10/1/24		4,000,000		4,474,680
California State Prisons LA		5.250	%		10/1/25		2,870,000		3,148,792
California State Prisons LA		5.000	%		10/1/28		3,500,000		3,635,100
Various Capital Projects		5.125	%		10/1/31		2,000,000		2,091,380
California Statewide CDA Revenue:
American Baptist Homes of the West		2.100	%		10/1/19		2,250,000		2,185,110
American Baptist Homes of the West		2.400	%		10/1/20		1,250,000		1,194,987
Lodi Memorial Hospital, California Mortgage Insurance		5.000	%		12/1/37		14,000,000		14,437,640
Senior Living-Presbyterian Homes		4.750	%		11/15/26		1,920,000		1,814,842
Senior Living-Presbyterian Homes		4.875	%		11/15/36		6,000,000		5,198,460
California Statewide CDA, Student Housing Revenue:
Provident Group-Pomona Properties LLC		5.600	%		1/15/36		3,110,000		2,670,650
Provident Group-Pomona Properties LLC		5.750	%		1/15/45		2,230,000		1,879,890
M-S-R Energy Authority, CA, Gas Revenue		7.000	%		11/1/34		29,000,000		35,194,110
Palomar, CA, Pomerado Health Care District, COP		6.750	%		11/1/39		5,000,000		5,317,600
Redding, CA, RDA, Tax Allocation, Shastec Redevelopment Project		5.000	%		9/1/36		1,250,000		1,158,038
Roseville, CA, Natural Gas Finance Authority Revenue		5.000	%		2/15/27		5,000,000		5,148,850
Total California									105,165,159
Colorado — 4.4%
Colorado Educational & Cultural Facilities Authority Revenue, Cheyenne Mountain Charter Academy Foundation		5.375	%		6/15/38		2,585,000		2,437,862

See Notes to Financial Statements.

Municipal High Income Portfolio 2013 Annual Report 37

Schedule of investments (cont’d)

July 31, 2013

Municipal High Income Portfolio

Security	Rate			Maturity Date		Face Amount		Value
Colorado — continued
Colorado Health Facilities Authority Revenue:
Christian Living Communities Project		5.750	%		1/1/37	$	2,000,000	$	2,002,320
The Evangelical Lutheran Good Samaritan Society		6.125	%		6/1/38		7,000,000		7,338,730	(a)
Public Authority for Colorado Energy, Natural Gas Purchase Revenue		6.500	%		11/15/38		20,000,000		23,043,000
Reata South Metropolitan District, CO, GO		7.250	%		6/1/37		4,000,000		3,510,840
Southlands, CO, Metropolitan District No. 1, GO		7.125	%		12/1/34		1,000,000		1,089,990	(a)
Total Colorado									39,422,742
Delaware — 4.7%
Delaware State EDA Revenue, Indian River Power LLC		5.375	%		10/1/45		29,000,000		28,240,490
New Castle County, DE, Revenue, Newark Charter School Inc. Project		5.000	%		9/1/36		1,000,000		940,020
Sussex County, DE, Recovery Zone Facility Revenue, NRG Energy Inc., Indian River Power LLC		6.000	%		10/1/40		12,000,000		12,512,160
Total Delaware									41,692,670
District of Columbia — 0.6%
District of Columbia Revenue:
Friendship Public Charter School Inc.		5.000	%		6/1/32		2,130,000		2,027,526
Friendship Public Charter School Inc.		5.000	%		6/1/42		1,250,000		1,133,312
KIPP Charter School		6.000	%		7/1/33		1,000,000		1,054,140	(b)
KIPP Charter School		6.000	%		7/1/43		1,450,000		1,501,359	(b)
Total District of Columbia									5,716,337
Florida — 1.8%
Bonnet Creek Resort Community Development District, Special Assessment		7.500	%		5/1/34		1,000,000		943,830
Hillsborough County, FL, IDA Revenue, National Gypsum Convention		7.125	%		4/1/30		1,000,000		959,040	(c)
Martin County, FL, IDA Revenue, Indiantown Cogeneration LP Project		4.200	%		12/15/25		3,500,000		3,075,450	(c)
Reunion, FL, East Community Development District, Special Assessment		7.375	%		5/1/33		1,735,000		1,738,487
Reunion, FL, East Community Development District, Special Assessment		7.375	%		5/1/33		765,000		382,500	(f)
Seminole Tribe Florida Special Obligation Revenue		5.750	%		10/1/22		5,000,000		5,329,700	(d)
Seminole Tribe Florida Special Obligation Revenue		5.250	%		10/1/27		3,000,000		3,114,150	(d)
Total Florida									15,543,157
Georgia — 2.7%
Atlanta, GA, Development Authority Educational Facilities Revenue, Science Park LLC Project		5.000	%		7/1/32		5,865,000		6,163,646
DeKalb, Newton & Gwinnett Counties, GA, Joint Development Authority Revenue, GGC Foundation LLC Project		6.125	%		7/1/40		9,000,000		9,740,970

See Notes to Financial Statements.

38 Municipal High Income Portfolio 2013 Annual Report

Municipal High Income Portfolio

Security	Rate			Maturity Date		Face Amount		Value
Georgia — continued
Franklin County, GA, Industrial Building Authority Revenue:
Emmanuel College Inc.		5.750	%		11/1/25	$	1,000,000	$	902,810
Emmanuel College Inc.		6.000	%		11/1/32		2,850,000		2,488,420
Emmanuel College Inc.		6.250	%		11/1/43		3,000,000		2,559,810
Gainesville & Hall County, GA, Development Authority Retirement Community Revenue:
Acts Retirement-Life Communities Inc.		6.375	%		11/15/29		700,000		756,721
Acts Retirement-Life Communities Inc.		6.625	%		11/15/39		1,085,000		1,189,290
Total Georgia									23,801,667
Hawaii — 1.4%
Hawaii State Department of Budget & Finance Special Purpose Revenue:
Craigside Retirement Residence		7.500	%		11/15/15		2,715,000		2,721,489
Craigside Retirement Residence		8.750	%		11/15/29		800,000		899,328
Hawaiian Electric Co.		6.500	%		7/1/39		8,000,000		8,843,120
Total Hawaii									12,463,937
Illinois — 3.1%
Illinois Development Finance Authority Revenue, Citgo Petroleum Corp. Project		8.000	%		6/1/32		3,250,000		3,251,073	(c)
Illinois Finance Authority Revenue:
Park Place of Elmhurst		8.000	%		5/15/30		5,000,000		4,807,750
Park Place of Elmhurst		8.125	%		5/15/40		11,835,000		11,271,062
Refunding, Chicago Charter School Project		5.000	%		12/1/36		3,000,000		2,931,120
Refunding, OSF Healthcare System		5.750	%		11/15/37		2,500,000		2,610,300
Illinois State Finance Authority Revenue, Franciscan Communities Inc.		5.125	%		5/15/43		2,700,000		2,307,582
Total Illinois									27,178,887
Indiana — 2.4%
Indiana State Finance Authority Revenue:
Educational Facilities, Marian University Project		6.375	%		9/15/41		15,000,000		15,327,000
Private Activity Ohio River Bridges East End Crossing Project		5.000	%		7/1/48		5,500,000		4,859,030	(c)
Vanderburgh County, IN, Redevelopment Commission, Redevelopment District Tax Increment Revenue		5.250	%		2/1/31		1,400,000		1,457,246
Total Indiana									21,643,276
Iowa — 0.5%
Iowa State Finance Authority Midwestern Disaster Area Revenue:
Iowa Fertilizer Co. Project		5.000	%		12/1/19		2,900,000		2,850,497
Iowa Fertilizer Co. Project		5.250	%		12/1/25		1,400,000		1,322,146
Total Iowa									4,172,643

See Notes to Financial Statements.

Municipal High Income Portfolio 2013 Annual Report 39

Schedule of investments (cont’d)

July 31, 2013

Municipal High Income Portfolio

Security	Rate			Maturity Date		Face Amount		Value
Kentucky — 2.1%
Kentucky Economic Development Finance Authority Hospital Facilities Revenue, Owensboro Medical Health Systems		6.375	%		6/1/40	$	15,000,000	$	16,017,750
Louisville & Jefferson County, KY, Metropolitan Government Health System Revenue, Norton Healthcare Inc.		5.250	%		10/1/36		2,500,000		2,510,850
Total Kentucky									18,528,600
Louisiana — 0.3%
Epps, LA, COP		8.000	%		6/1/18		775,000		417,485
Louisiana Local Government Environmental Facilities, CDA Revenue, Capital Project & Equipment Acquisition Program, ACA		6.550	%		9/1/25		595,000		622,840
Louisiana Public Facilities Authority Revenue, Entergy Louisiana LLC Project		5.000	%		6/1/30		1,535,000		1,576,522
Total Louisiana									2,616,847
Maryland — 5.6%
Maryland Industrial Development Financing Authority, EDR, Our Lady of Good Counsel School		6.000	%		5/1/35		1,000,000		1,016,030
Maryland State EDC, EDR:
Term Project		5.750	%		6/1/35		9,000,000		9,736,830
Transportation Facilities Project		5.750	%		6/1/35		21,625,000		23,395,439
Maryland State EDC, Student Housing Revenue Bonds, University of Maryland, College Park Projects		5.800	%		6/1/38		5,000,000		5,177,800
Maryland State Health & Higher EFA Revenue:
Mercy Medical Center		6.250	%		7/1/31		9,000,000		9,893,070
Washington Christian Academy		5.250	%		7/1/18		250,000		72,500	(f)
Washington Christian Academy		5.500	%		7/1/38		1,170,000		339,300	(f)
Total Maryland									49,630,969
Massachusetts — 3.4%
Boston, MA, Industrial Development Financing Authority Revenue, Roundhouse Hospitality LLC Project		7.875	%		3/1/25		1,120,000		981,669	(c)
Massachusetts State DFA Revenue, Tufts Medical Center Inc.		6.875	%		1/1/41		4,000,000		4,490,760
Massachusetts State HEFA Revenue:
Massachusetts Eye & Ear Infirmary		5.375	%		7/1/35		10,000,000		10,198,700
Suffolk University		5.750	%		7/1/39		13,740,000		14,244,258
Total Massachusetts									29,915,387
Michigan — 2.6%
Detroit, MI, Water Supply System Revenue, Senior Lien		5.250	%		7/1/41		5,000,000		4,570,300
Michigan Finance Authority Revenue, Detroit School District		5.500	%		6/1/21		10,000,000		11,233,100
Michigan State Strategic Fund Limited Obligation Revenue:
Evangelical Homes of Michigan		5.250	%		6/1/32		1,000,000		898,310
Evangelical Homes of Michigan		5.500	%		6/1/47		1,000,000		873,500

See Notes to Financial Statements.

40 Municipal High Income Portfolio 2013 Annual Report

Municipal High Income Portfolio

Security	Rate			Maturity Date		Face Amount		Value
Michigan — continued
Royal Oak, MI, Hospital Finance Authority Revenue, William Beaumont Hospital		8.250	%		9/1/39	$	4,000,000	$	4,816,040
Saline, MI, Economic Development Corp. Revenue, Evangelical Homes of Michigan Project		5.500	%		6/1/47		1,235,000		1,078,772
Total Michigan									23,470,022
Minnesota — 0.2%
St. Paul, MN, Port Authority Lease Revenue:
Regions Hospital Parking Ramp Project		5.000	%		8/1/21		475,000		478,809
Regions Hospital Parking Ramp Project		5.000	%		8/1/36		1,375,000		1,274,075
Total Minnesota									1,752,884
Missouri — 0.5%
Missouri State HEFA Revenue, Lutheran Senior Services		6.000	%		2/1/41		2,000,000		2,076,840
Raytown, MO, Annual Appropriation Supported Tax:
Raytown Live Redevelopment Plan Project 1		5.000	%		12/1/19		1,000,000		1,089,800
Raytown Live Redevelopment Plan Project 1		5.000	%		12/1/20		1,555,000		1,688,714
Total Missouri									4,855,354
New Jersey — 4.4%
New Jersey EDA Revenue, Newark Downtown District Management Corp.		5.125	%		6/15/27		400,000		401,572
New Jersey State EDA Revenue:
Continental Airlines Inc. Project		5.125	%		9/15/23		8,000,000		7,614,240	(c)
Refunding		6.875	%		1/1/37		11,000,000		10,681,880	(c)
Refunding, Gloucester Marine Project		6.625	%		1/1/37		3,485,000		3,499,707
School Facilities Construction		1.650	%		3/1/28		17,500,000		17,330,250	(e)
Total New Jersey									39,527,649
New Mexico — 0.9%
Otero County, NM:
COP, Jail Project Revenue		5.750	%		4/1/18		1,630,000		1,556,878
COP, Jail Project Revenue		6.000	%		4/1/23		500,000		440,600
COP, Jail Project Revenue		7.500	%		12/1/24		5,510,000		5,378,642
COP, Jail Project Revenue		6.000	%		4/1/28		500,000		403,345
Total New Mexico									7,779,465
New York — 6.9%
Brooklyn Arena, NY, Local Development Corp., Barclays Center Project		6.250	%		7/15/40		31,870,000		35,695,994
Dutchess County, NY, Industrial Development Agency, Civic Facility Revenue, Refunding, Bard College		5.000	%		8/1/46		2,500,000		2,517,050
Herkimer County, NY, IDA, Folts Adult Home, FHA, GNMA		5.500	%		3/20/40		945,000		1,000,301
Hudson, NY, Yards Infrastructure Corp. Revenue		5.750	%		2/15/47		10,000,000		10,659,100

See Notes to Financial Statements.

Municipal High Income Portfolio 2013 Annual Report 41

Schedule of investments (cont’d)

July 31, 2013

Municipal High Income Portfolio

Security	Rate			Maturity Date		Face Amount		Value
New York — continued
Nassau County, NY, Industrial Development Agency Revenue, Continuing Care Retirement, Amsterdam at Harborside		6.700	%		1/1/43	$	2,395,000	$	1,310,664
New York City, NY, IDA, Civic Facilities Revenue:
Amboy Properties Corp. Project		6.750	%		6/1/20		1,885,000		1,823,624
Special Needs Facilities Pooled Program		8.125	%		7/1/19		425,000		426,466
Port Authority of New York & New Jersey, Special Obligation Revenue, JFK International Air Terminal LLC		6.000	%		12/1/36		7,000,000		7,800,660
Total New York									61,233,859
Ohio — 1.7%
Cleveland-Cuyahoga County, OH, Port Authority Revenue, Senior Housing, St. Clarence — GEAC, LLC		6.125	%		5/1/26		500,000		481,730
Cuyahoga County, OH, Hospital Facilities Revenue, Canton Inc. Project		7.500	%		1/1/30		2,310,000		2,311,825
Lorain County, OH, Port Authority, Recovery Zone Facility Revenue, U.S. Steel Corp. Project		6.750	%		12/1/40		5,000,000		5,282,650
Miami County, OH, Hospital Facilities Revenue, Refunding & Improvement Upper Valley Medical Center		5.250	%		5/15/26		2,000,000		2,041,760
Ohio State Water Development Authority, Environmental Improvement Revenue, U.S. Steel Corp. Project		6.600	%		5/1/29		5,000,000		5,258,500
Total Ohio									15,376,465
Oklahoma — 1.0%
Oklahoma HFA, Single-Family Mortgage, GNMA		7.997	%		8/1/18		30,000		30,363	(c)
Tulsa County, OK, Industrial Authority, Senior Living Community Revenue:
Montereau Inc. Project		7.125	%		11/1/30		1,000,000		1,074,650
Montereau Inc. Project		7.250	%		11/1/40		7,000,000		7,442,470
Total Oklahoma									8,547,483
Pennsylvania — 5.3%
Dauphin County, PA, General Authority Revenue, Office & Parking, Riverfront Office Center Project		6.000	%		1/1/25		4,390,000		4,398,780
Harrisburg, PA, University Revenue, Harrisburg University of Science and Technology		6.000	%		9/1/36		3,000,000		1,769,580	(f)
Lackawanna County, PA, GO, AGC		6.000	%		9/15/34		4,000,000		4,140,080
Montgomery County, PA, IDA Revenue:
Acts Retirement-Life Communities		5.000	%		11/15/25		3,305,000		3,399,358
Acts Retirement-Life Communities		5.000	%		11/15/26		2,875,000		2,934,167
Acts Retirement-Life Communities		5.000	%		11/15/27		1,670,000		1,692,378
Pennsylvania Economic Development Financing Authority:
Sewer Sludge Disposal Revenue, Philadelphia Biosolids Facility		5.625	%		1/1/19		1,420,000		1,571,074

See Notes to Financial Statements.

42 Municipal High Income Portfolio 2013 Annual Report

Municipal High Income Portfolio

Security	Rate			Maturity Date		Face Amount		Value
Pennsylvania — continued
Sewer Sludge Disposal Revenue, Philadelphia Biosolids Facility		6.250	%		1/1/32	$	5,000,000	$	5,238,300
Solid Waste Disposal Revenue, Waste Management Inc. Project		5.100	%		10/1/27		1,000,000		998,930	(c)
Pennsylvania Economic Development Financing Authority, Health Systems Revenue, Albert Einstein Healthcare		6.250	%		10/15/23		5,000,000		5,386,850
Pennsylvania HEFA Revenue, Shippensburg University		6.000	%		10/1/31		3,500,000		3,712,555
Philadelphia, PA, Authority for IDR:
Discovery Charter School Inc. Project		6.250	%		4/1/42		635,000		656,355
Performing Arts Charter School Project		6.000	%		6/15/23		3,500,000		3,438,505	(d)
Philadelphia, PA, Hospitals & Higher EFA Revenue, Temple University Health System		6.250	%		7/1/23		7,000,000		7,418,530
Total Pennsylvania									46,755,442
Puerto Rico — 3.9%
Puerto Rico Electric Power Authority, Power Revenue		5.250	%		7/1/40		9,000,000		7,372,800
Puerto Rico Sales Tax Financing Corp., Sales Tax Revenue		5.000	%		8/1/40		5,000,000		4,577,300
Puerto Rico Sales Tax Financing Corp., Sales Tax Revenue		5.500	%		8/1/42		9,000,000		8,281,170
Puerto Rico Sales Tax Financing Corp., Sales Tax Revenue		6.000	%		8/1/42		7,000,000		6,914,670
Puerto Rico Sales Tax Financing Corp., Sales Tax Revenue		5.250	%		8/1/43		8,500,000		7,450,250
Total Puerto Rico									34,596,190
Rhode Island — 0.1%
Central Falls, RI, Detention Facility Corp., Detention Facilities Revenue, Refunding		7.250	%		7/15/35		990,000		716,701
South Carolina — 0.2%
Newberry County, SC, Special Source Revenue, Refunding J.F. Hawkins Nursing Home, Radian		5.000	%		3/1/30		2,000,000		2,143,060	(a)
Tennessee — 0.1%
Shelby County, TN, Health Educational & Housing Facilities Board Revenue, Trezevant Manor Project		5.750	%		9/1/37		1,000,000		950,040
Texas — 18.6%
Austin-Bergstrom, TX, Landhost Enterprises Inc., Airport Hotel, Senior Bonds		6.750	%		4/1/27		5,025,000		2,407,277	(f)
Burnet County, TX, Public Facility Project Revenue		7.750	%		8/1/29		2,780,000		1,946,000
Central Texas Regional Mobility Authority Revenue		5.750	%		1/1/25		2,500,000		2,743,500
Central Texas Regional Mobility Authority Revenue		5.000	%		1/1/33		3,000,000		2,795,190
Central Texas Regional Mobility Authority Revenue		6.000	%		1/1/41		5,000,000		5,341,100
Central Texas Regional Mobility Authority Revenue		5.000	%		1/1/42		2,000,000		1,798,860
Central Texas Regional Mobility Authority Revenue:
Capital Appreciation		0.000	%		1/1/36		2,800,000		687,036
Capital Appreciation		0.000	%		1/1/38		2,000,000		428,820

See Notes to Financial Statements.

Municipal High Income Portfolio 2013 Annual Report 43

Schedule of investments (cont’d)

July 31, 2013

Municipal High Income Portfolio

Security	Rate			Maturity Date		Face Amount		Value
Texas — continued
Capital Appreciation		0.000	%		1/1/40	$	2,200,000	$	424,380
Clifton, TX, Higher Education Finance Corp., Education Revenue		6.000	%		12/1/30		1,120,000		1,184,366
Clifton, TX, Higher Education Finance Corp., Education Revenue		6.125	%		12/1/40		4,000,000		4,192,800
Dallas-Fort Worth, TX, International Airport Revenue, Joint Improvement		5.000	%		11/1/42		3,455,000		3,243,036	(c)
Grand Parkway Transportation Corp., TX, System Toll Revenue:
Convertible Cabs		0.000	%		10/1/35		4,000,000		2,305,480	(b)
First Tier Toll Revenue		5.500	%		4/1/53		1,000,000		982,500	(b)
Gulf Coast, TX, IDA Revenue, Citgo Petroleum Corp. Project		4.875	%		5/1/25		2,000,000		1,941,560	(c)
Harris County, TX, Cultural Education Facilities Finance Corp. Revenue, Memorial Hermann Healthcare System		0.950	%		6/1/22		5,635,000		5,587,891	(e)
Harris County, TX, Cultural Education Facilities Finance Corp., Medical Facilities Revenue, Baylor College of Medicine		5.625	%		11/15/32		5,135,000		5,515,503
Houston, TX, Airport System Revenue:
Special Facilities, Continental Airlines Inc. Projects		6.125	%		7/15/27		6,645,000		6,537,816	(c)
Special Facilities, Continental Airlines Inc., Terminal Projects		6.500	%		7/15/30		6,500,000		6,665,555	(c)
Special Facilities, Continental Airlines Inc., Terminal Projects		6.625	%		7/15/38		5,000,000		5,150,450	(c)
Maverick County, TX, Public Facility Corp. Project Revenue		6.375	%		2/1/29		520,000		382,512
Midlothian, TX, Development Authority, Tax Increment Contract Revenue		6.200	%		11/15/29		2,500,000		2,508,525
Midlothian, TX, Development Authority, Tax Increment Contract Revenue, Refunding, Subordinated Lien		5.125	%		11/15/26		935,000		935,898
North Texas Tollway Authority Revenue		5.750	%		1/1/33		10,000,000		10,687,500
North Texas Tollway Authority Revenue		6.250	%		1/1/39		2,000,000		2,198,360
Port Corpus Christi, TX, Celanese Project		6.450	%		11/1/30		1,995,000		2,011,519
San Leanna Educational Facilities Corp., Education Revenue:
Saint Edwards University Project		5.000	%		6/1/20		1,000,000		1,051,720
Saint Edwards University Project		5.125	%		6/1/22		2,000,000		2,068,860
Texas Midwest Public Facility Corp. Revenue, Secure Treatment Facility Project		9.000	%		10/1/30		5,000,000		2,750,000	(f)
Texas Municipal Gas Acquisition & Supply Corp. I, Gas Supply Revenue		6.250	%		12/15/26		6,500,000		7,414,290
Texas Private Activity Bond Surface Transportation Corp., Senior Lien, NTE Mobility Partners LLC		6.875	%		12/31/39		28,000,000		31,465,000
Texas Private Activity Bond Surface Transportation Corp. Revenue, LBJ Infrastructure Group LLC		7.000	%		6/30/40		29,460,000		33,562,010
Texas State Public Finance Authority, Charter School Finance Corp. Revenue, Cosmos Foundation Inc.		6.200	%		2/15/40		4,000,000		4,189,680

See Notes to Financial Statements.

44 Municipal High Income Portfolio 2013 Annual Report

Municipal High Income Portfolio

Security	Rate			Maturity Date		Face Amount		Value
Texas — continued
Texas State Public Finance Authority, Charter School Finance Corp. Revenue:
Cosmos Foundation Inc.		6.000	%		2/15/30	$	1,000,000	$	1,075,820
Uplift Education		5.875	%		12/1/36		1,000,000		1,023,030
Willacy County, TX, PFC Project Revenue, County Jail		7.500	%		11/1/25		570,000		527,854
Total Texas									165,731,698
U.S. Virgin Islands — 0.9%
Virgin Islands Public Finance Authority Revenue, Matching Fund Loan		6.750	%		10/1/37		7,500,000		8,076,375
Virginia — 3.0%
Chesterfield County, VA, EDA, Solid Waste and Sewer Disposal Revenue, Virginia Electric Power Co. Project		5.600	%		11/1/31		6,000,000		6,197,880	(c)
Virginia Beach, VA, Development Authority, MFH Revenue:
Residential Rental Hampton Project		7.500	%		10/1/39		2,300,000		2,326,565	(c)
Residential Rental Mayfair Project		7.500	%		10/1/39		2,305,000		2,331,623	(c)
Virginia State Small Business Financing Authority Revenue, Elizabeth River Crossings OpCo LLC Project		5.500	%		1/1/42		8,000,000		7,457,200	(c)
Washington County, VA, IDA Hospital Facilities Revenue, Mountain States Health Alliance		7.750	%		7/1/38		7,500,000		8,580,300
Total Virginia									26,893,568
West Virginia — 0.3%
Pleasants County, WV, PCR, Refunding, County Commission, Allegheny Energy Supply Co., LLC		5.250	%		10/15/37		3,000,000		3,057,360
Wisconsin — 0.4%
Wisconsin State HEFA Revenue:
Aurora Health Care Inc.		6.400	%		4/15/33		1,000,000		1,002,080
Aurora Health Care Inc.		5.625	%		4/15/39		2,000,000		2,085,220
Total Wisconsin									3,087,300
Total Investments before Short-Term Investments (Cost — $859,390,344)									864,700,123
Short-Term Investments — 0.3%
New York — 0.3%
New York City, NY, TFA, Future Tax Secured Revenue, SPA-Dexia Credit Local (Cost — $2,200,000)		0.400	%		8/1/23		2,200,000		2,200,000	(g)(h)
Total Investments — 97.5% (Cost — $861,590,344#)									866,900,123
Other Assets in Excess of Liabilities — 2.5%									22,313,512
Total Net Assets — 100.0%								$	889,213,635

^(a)  Pre-Refunded bonds are escrowed with U.S. government obligations and/or U.S. government agency securities and are considered by the manager to be triple-A rated even if issuer has not applied for new ratings.

^(b)  Security is purchased on a when-issued basis.

^(c)  Income from this issue is considered a preference item for purposes of calculating the alternative minimum tax (“AMT”).

See Notes to Financial Statements.

Municipal High Income Portfolio 2013 Annual Report 45

Schedule of investments (cont’d)

July 31, 2013

Municipal High Income Portfolio

^(d)  Security is exempt from registration under Rule 144A of the Securities Act of 1933. This security may be resold in transactions that are exempt from registration, normally to qualified institutional buyers. This security has been deemed liquid pursuant to guidelines approved by the Board of Trustees, unless otherwise noted.

^(e)  Variable rate security. Interest rate disclosed is as of the most recent information available.

^(f)  The coupon payment on these securities is currently in default as of July 31, 2013.

^(g)  Variable rate demand obligations have a demand feature under which the Fund can tender them back to the issuer or liquidity provider on no more than 7 days notice.

^(h)  Maturity date shown is the final maturity date. The security may be sold back to the issuer before final maturity.

# Aggregate cost for federal income tax purposes is $861,173,108.

Abbreviations used in this schedule:
ACA	— American Capital Assurance — Insured Bonds
AGC	— Assured Guaranty Corporation — Insured Bonds
CDA	— Communities Development Authority
COP	— Certificates of Participation
DFA	— Development Finance Agency
EDA	— Economic Development Authority
EDC	— Economic Development Corporation
EDR	— Economic Development Revenue
EFA	— Educational Facilities Authority
FHA	— Federal Housing Administration
GNMA	— Government National Mortgage Association
GO	— General Obligation
HEFA	— Health & Educational Facilities Authority
HFA	— Housing Finance Authority
IDA	— Industrial Development Authority
IDR	— Industrial Development Revenue
MFH	— Multi-Family Housing
PCFA	— Pollution Control Financing Authority
PCR	— Pollution Control Revenue
PFC	— Public Facilities Corporation
Radian	— Radian Asset Assurance — Insured Bonds
RDA	— Redevelopment Agency
SPA	— Standby Bond Purchase Agreement — Insured Bonds
TFA	— Transitional Finance Authority

See Notes to Financial Statements.

46 Municipal High Income Portfolio 2013 Annual Report

Municipal High Income Portfolio

Summary of Investments by Industry† (unaudited)
Industrial revenue	25.7	%
Health care	20.0
Transportation	17.4
Education	16.1
Special tax obligation	5.5
Leasing	4.4
Power	3.2
Solid waste/resource recovery	1.6
Water & sewer	1.6
Other	1.5
Pre-refunded/Escrowed to maturity	1.3
Local general obligation	0.9
Housing	0.6
Short-term investments	0.2
	100.0	%

† As a percentage of total investments. Please note that Portfolio holdings are as of July 31, 2013 and are subject to change.

Ratings table* (unaudited)
Standard & Poor’s/Moody’s/Fitch**
AA/Aa	2.2	%
A	27.9
BBB/Baa	48.4
BB/Ba	5.6
B/B	3.4
A-1/VMIG 1	0.3
NR	12.2
	100.0	%

* As a percentage of total investments.

** The ratings shown are based on each portfolio security’s rating as determined by Standard & Poor’s, Moody’s or Fitch, each a Nationally Recognized Statistical Rating Organization (“NRSRO”). These ratings are the opinions of the NRSRO and are not measures of quality or guarantees of performance. Securities may be rated by other NRSROs, and these ratings may be higher or lower. In the event that a security is rated by multiple NRSROs and receives different ratings, the Portfolio will treat the security as being rated in the lowest rating category received from a NRSRO.

See Notes to Financial Statements.

Municipal High Income Portfolio 2013 Annual Report 47

Statement of assets and liabilities

July 31, 2013

Assets:
Investments, at value (Cost — $861,590,344)	$	866,900,123
Cash		18,048
Receivable for securities sold		17,792,423
Interest receivable		10,379,171
Total Assets		895,089,765
Liabilities:
Payable for securities purchased		5,780,574
Payable for offering costs		2,150
Accrued expenses		93,406
Total Liabilities		5,876,130
Total Net Assets	$	889,213,635
Represented by:
Paid-in-Capital	$	889,213,635

See Notes to Financial Statements.

48 Municipal High Income Portfolio 2013 Annual Report

Statement of operations¹

For the Period Ended July 31, 2013

Investment Income:
Interest	$	34,747,386
Expenses:
Fund accounting fees		64,788
Audit and tax		47,399
Legal fees		44,795
Offering costs		19,386
Organization expenses		14,000
Trustees’ fees		9,238
Custody fees		4,074
Miscellaneous expenses		6,666
Total Expenses		210,346
Net Investment Income		34,537,040
Realized and Unrealized Gain on Investments and Futures Contracts (Notes 1, 3 and 4):
Net Realized Gain from:
Investment transactions		15,271,749
Futures contracts		1,101,950
Net Realized Gain		16,373,699
Change in Net Unrealized Appreciation (Depreciation) from Investments		5,309,778
Net Gain on Investments and Futures Contracts		21,683,477
Increase in Net Assets from Operations	$	56,220,517

¹  For the period November 29, 2012 (commencement of operations) to July 31, 2013.

See Notes to Financial Statements.

Municipal High Income Portfolio 2013 Annual Report 49

Statement of changes in net assets

For the Period Ended July 31, 20131	July 31
Operations:
Net investment income	$	34,537,040
Net realized gain		16,373,699
Change in net unrealized appreciation (depreciation)		5,309,778
Increase in Net Assets From Operations		56,220,517
Capital Transactions:
Proceeds from contributions		1,033,683,543
Value of withdrawals		(200,690,425)
Increase in Net Assets From Capital Transactions		832,993,118
Increase in Net Assets		889,213,635
Net Assets:
Beginning of period		—
End of period	$	889,213,635

¹  For the period November 29, 2012 (commencement of operations) to July 31, 2013.

See Notes to Financial Statements.

50 Municipal High Income Portfolio 2013 Annual Report

Financial highlights

For the year ended July 31, unless otherwise noted:
	20131
Net assets, end of period (millions)		$889
Total return2		(1.50)	%
Ratios to average net assets:
Gross expenses3		0.03	%
Net expenses3,4		0.03
Net investment income3		4.94
Portfolio turnover rate		33	%

¹  For the period November 29, 2012 (commencement of operations) to July 31, 2013.

²  Performance figures may reflect compensating balance arrangements, fee waivers and/or expense reimbursements. In the absence of compensating balance arrangements, fee waivers and/or expense reimbursements, the total return would have been lower. Past performance is no guarantee of future results. Total returns for periods of less than one year are not annualized.

³  Annualized.

⁴  The impact of compensating balance arrangements, if any, was less than 0.01%.

See Notes to Financial Statements.

Municipal High Income Portfolio 2013 Annual Report 51

Notes to financial statements

1. Organization and significant accounting policies

Municipal High Income Portfolio (the “Portfolio”) is a diversified investment series of Master Portfolio Trust (the “Trust”). The Trust, a Maryland statutory trust, is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Declaration of Trust permits the Trustees to issue beneficial interests in the Portfolio. The Portfolio commenced operations on November 29, 2012 and on such date, the Western Asset Municipal High Income Fund transferred all of its investable assets to the Portfolio in exchange for interest in the Portfolio. At July 31, 2013, all investors in the Portfolio were funds advised or administered by the manager of the Portfolio and/or its affiliates.

The following are significant accounting policies consistently followed by the Portfolio and are in conformity with U.S. generally accepted accounting principles (“GAAP”). Estimates and assumptions are required to be made regarding assets, liabilities and changes in net assets resulting from operations when financial statements are prepared. Changes in the economic environment, financial markets and any other parameters used in determining these estimates could cause actual results to differ. Subsequent events have been evaluated through the date the financial statements were issued.

(a) Investment valuation. The valuations for fixed income securities (which may include, but are not limited to, corporate, government, municipal, mortgage-backed, collateralized mortgage obligations and asset-backed securities) and certain derivative instruments are typically the prices supplied by independent third party pricing services, which may use market prices or broker/dealer quotations or a variety of valuation techniques and methodologies. The independent third party pricing services use inputs that are observable such as issuer details, interest rates, yield curves, prepayment speeds, credit risks/spreads, default rates and quoted prices for similar securities. Short-term fixed income securities that will mature in 60 days or less are valued at amortized cost, unless it is determined that using this method would not reflect an investment’s fair value. Futures contracts are valued daily at the settlement price established by the board of trade or exchange on which they are traded. If independent third party pricing services are unable to supply prices for a portfolio investment, or if the prices supplied are deemed by the manager to be unreliable, the market price may be determined by the manager using quotations from one or more broker/dealers or at the transaction price if the security has recently been purchased and no value has yet been obtained from a pricing service or pricing broker. When reliable prices are not readily available, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded, but before the Portfolio calculates its net asset value, the Portfolio values these securities as determined in accordance with procedures approved by the Portfolio’s Board of Trustees.

The Board of Trustees is responsible for the valuation process and has delegated the supervision of the daily valuation process to the Legg Mason North American Fund Valuation Committee (the “Valuation Committee”). The Valuation Committee, pursuant to the policies adopted by the Board of Trustees, is responsible for making fair value determinations,

52 Municipal High Income Portfolio 2013 Annual Report

evaluating the effectiveness of the Portfolio’s pricing policies, and reporting to the Board of Trustees. When determining the reliability of third party pricing information for investments owned by the Portfolio, the Valuation Committee, among other things, conducts due diligence reviews of pricing vendors, monitors the daily change in prices and reviews transactions among the market participants.

The Valuation Committee will consider pricing methodologies it deems relevant and appropriate when making fair value determinations. Examples of possible methodologies include, but are not limited to, multiple of earnings; discount from market of a similar freely traded security; discounted cash-flow analysis; book value or a multiple thereof; risk premium/yield analysis; yield to maturity; and/or fundamental investment analysis. The Valuation Committee will also consider factors it deems relevant and appropriate in light of the facts and circumstances. Examples of possible factors include, but are not limited to, the type of security; the issuer’s financial statements; the purchase price of the security; the discount from market value of unrestricted securities of the same class at the time of purchase; analysts’ research and observations from financial institutions; information regarding any transactions or offers with respect to the security; the existence of merger proposals or tender offers affecting the security; the price and extent of public trading in similar securities of the issuer or comparable companies; and the existence of a shelf registration for restricted securities.

For each portfolio security that has been fair valued pursuant to the policies adopted by the Board of Trustees, the fair value price is compared against the last available and next available market quotations. The Valuation Committee reviews the results of such back testing monthly and fair valuation occurrences are reported to the Board of Trustees quarterly.

The Portfolio uses valuation techniques to measure fair value that are consistent with the market approach and/or income approach, depending on the type of security and the particular circumstance. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable securities. The income approach uses valuation techniques to discount estimated future cash flows to present value.

GAAP establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are summarized in the three broad levels listed below:

Ÿ Level 1 — quoted prices in active markets for identical investments

Ÿ Level 2 — other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

Ÿ Level 3 — significant unobservable inputs (including the Portfolio’s own assumptions in determining the fair value of investments)

The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.

Municipal High Income Portfolio 2013 Annual Report 53

Notes to financial statements (cont’d)

The following is a summary of the inputs used in valuing the Portfolio’s assets carried at fair value:

ASSETS
Description	Quoted Prices (Level 1)		Other Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Municipal bonds†		—	$	864,700,123		—	$	864,700,123
Short-term investments†		—		2,200,000		—		2,200,000
Total investments		—	$	866,900,123		—	$	866,900,123

† See Schedule of Investments for additional detailed categorizations.

(b) Interest income and expenses. Interest income consists of interest accrued and discount earned (including both original issue and market discount adjusted for amortization of premium) on the investments of the Portfolio. Expenses of the Portfolio are accrued daily. The Portfolio bears all costs of its operations other than expenses specifically assumed by the manager.

(c) Method of allocation. Net investment income of the Portfolio is allocated pro rata, based on respective ownership interests, among the Fund and other investors in the Portfolio (the “Holders”) at the time of such determination. Gross realized gains and/or losses of the Portfolio are allocated to the Holders in a manner such that, the net asset values per share of each Holder, after each such allocation is closer to the total of all Holders’ net asset values divided by the aggregate number of shares outstanding for all Holders.

(d) Futures contracts. The Portfolio uses futures contracts generally to gain exposure to, or hedge against, changes in interest rates or gain exposure to, or hedge against, changes in certain asset classes. A futures contract represents a commitment for the future purchase or sale of an asset at a specified price on a specified date.

Upon entering into a futures contract, the Portfolio is required to deposit cash or cash equivalents with a broker in an amount equal to a certain percentage of the contract amount. This is known as the “initial margin” and subsequent payments (“variation margin”) are made or received by the Portfolio each day, depending on the daily fluctuation in the value of the contract. The daily changes in contract value are recorded as unrealized gains or losses in the Statement of Operations and the Portfolio recognizes a realized gain or loss when the contract is closed.

Futures contracts involve, to varying degrees, risk of loss in excess of the amounts reflected in the financial statements. In addition, there is the risk that the Portfolio may not be able to enter into a closing transaction because of an illiquid secondary market.

(e) Securities traded on a when-issued basis. The Portfolio may trade securities on a when-issued basis. In a when-issued transaction, the securities are purchased or sold by the Portfolio with payment and delivery taking place in the future in order to secure what is considered to be an advantageous price and yield to the Portfolio at the time of entering into the transaction.

54 Municipal High Income Portfolio 2013 Annual Report

Purchasing such securities involves risk of loss if the value of the securities declines prior to settlement. These securities are subject to market fluctuations and their current value is determined in the same manner as for other securities.

(f) Credit and market risk. The Portfolio invests in high-yield instruments that are subject to certain credit and market risks. The yields of high-yield obligations reflect, among other things, perceived credit and market risks. The Portfolio’s investments in securities rated below investment grade typically involves risks not associated with higher rated securities including, among others, greater risk related to timely and ultimate payment of interest and principal, greater market price volatility and less liquid secondary market trading.

(g) Security transactions and investment income. Security transactions are accounted for on a trade date basis. Interest income, adjusted for amortization of premium and accretion of discount, is recorded on the accrual basis. The cost of investments sold is determined by use of the specific identification method. To the extent any issuer defaults or a credit event occurs that impacts the issuer, the Portfolio may halt any additional interest income accruals and consider the realizability of interest accrued up to the date of default or credit event.

(h) Compensating balance arrangements. The Portfolio has an arrangement with its custodian bank whereby a portion of the custodian’s fees is paid indirectly by credits earned on the Portfolio’s cash on deposit with the bank.

(i) Income taxes. The Portfolio is classified as a partnership for federal income tax purposes. As such, each investor in the Portfolio is treated as owner of its proportionate share of the net assets, income, expenses and realized and unrealized gains and losses of the Portfolio. Therefore, no federal income tax provision is required. It is intended that the Portfolio’s assets will be managed so an investor in the Portfolio can satisfy the requirements of Subchapter M of the Internal Revenue Code.

Management has analyzed the Portfolio’s tax positions taken on income tax returns for all open tax years and has concluded that as of July 31, 2013, no provision for income tax is required in the Portfolio’s financial statements. The Portfolio’s federal and state income tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.

2. Investment management agreement and other transactions with affiliates

Legg Mason Partners Fund Advisor, LLC (“LMPFA”) is the Portfolio’s investment manager and Western Asset Management Company (“Western Asset”) is the Portfolio’s subadviser. LMPFA and Western Asset are wholly-owned subsidiaries of Legg Mason, Inc. (“Legg Mason”).

Under the investment management agreement, the Portfolio does not pay an investment management fee.

Municipal High Income Portfolio 2013 Annual Report 55

Notes to financial statements (cont’d)

All officers and one Trustee of the Trust are employees of Legg Mason or its affiliates and do not receive compensation from the Trust.

3. Investments

During the period ended July 31, 2013, the aggregate cost of purchases and proceeds from sales of investments (excluding short-term investments) were as follows:

Purchases	$	328,719,892
Sales		325,824,015

At July 31, 2013, the aggregate gross unrealized appreciation and depreciation of investments for federal income tax purposes were as follows:

Gross unrealized appreciation	$	34,176,999
Gross unrealized depreciation		(28,449,984)
Net unrealized appreciation	$	5,727,015

4. Derivative instruments and hedging activities

GAAP requires enhanced disclosure about an entity’s derivative and hedging activities.

At July 31, 2013, the Portfolio did not have any derivative instruments outstanding.

The following table provides information about the effect of derivatives and hedging activities on the Portfolio’s Statement of Operations for the period ended July 31, 2013. The table provides additional detail about the amounts and sources of gains (losses) realized on derivatives during the period.

AMOUNT OF REALIZED GAIN (LOSS) ON DERIVATIVES RECOGNIZED
	Interest Rate Risk
Futures contracts	$	1,101,950

During the period ended July 31, 2013, the volume of derivative activity for the Portfolio was as follows:

	Average Market Value
Futures contracts (to sell)†	$	30,189,250

† At July 31, 2013, there were no open positions held in this derivative.

5. Legal matters

On or about May 30, 2006, John Halebian, a purported shareholder of Western Asset New York Tax Free Money Market Fund (formerly known as Citi^SM New York Tax Free Reserves), a series of Legg Mason Partners Money Market Trust, formerly a series of CitiFunds Trust III (the “Subject Trust”), filed a complaint in the United States District Court for the Southern District of New York against the persons who were then the independent trustees of the Subject Trust. The Subject Trust was also named in the complaint as a nominal defendant.

56 Municipal High Income Portfolio 2013 Annual Report

The complaint raised derivative claims on behalf of the Subject Trust and putative class claims against the then independent trustees in connection with the 2005 sale of Citigroup’s asset management business to Legg Mason and the related approval of new investment advisory agreements by the trustees and shareholders. In the derivative claim, the plaintiff alleged that the independent trustees had breached their fiduciary duty to the Subject Trust and its shareholders by failing to negotiate lower fees or to seek competing bids from other qualified investment advisers in connection with Citigroup’s sale to Legg Mason. In the claims brought on behalf of a putative class of shareholders, the plaintiff alleged that the echo voting provisions applicable to the proxy solicitation process violated the 1940 Act and constituted a breach of fiduciary duty. The relief sought included rescission of the advisory agreement and an award of costs and attorney fees.

In advance of filing the complaint, Plaintiff’s lawyers had made written demand for relief on the Board of the Subject Trust, and the Board’s independent trustees formed a demand review committee to investigate those matters raised in the demand, and the expanded set of matters subsequently raised in the complaint. The demand review committee recommended that the action demanded by Plaintiff would not be in the best interests of the Subject Trust. The independent trustees of the Subject Trust considered the committee’s report, adopted the recommendation of the committee, and directed counsel to move to dismiss the complaint.

The Federal district court dismissed the complaint in its entirety in July 2007. In May 2011, the U.S. Court of Appeals for the Second Circuit affirmed the district court’s dismissal as to the class claims, and remanded the remaining claim relating to the demand review committee that had examined the derivative claim to the district court with instructions to convert the motion to dismiss into a motion for summary judgment. In July 2012, the district court granted summary judgment in favor of the defendants. In August 2012, Plaintiff filed an appeal, and the matter is now before the U.S. Court of Appeals for the Second Circuit.

Municipal High Income Portfolio 2013 Annual Report 57

Report of independent registered public

accounting firm

The Board of Trustees and Shareholders

Master Portfolio Trust:

We have audited the accompanying statement of assets and liabilities of Municipal High Income Portfolio (the “Portfolio”), a series of Master Portfolio Trust, including the schedule of investments, as of July 31, 2013, and the related statement of operations, the statement of changes in net assets, and the financial highlights for the period from November 29, 2012 (commencement of operations) to July 31, 2013. These financial statements and financial highlights are the responsibility of the Portfolio’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of July 31, 2013 by correspondence with the custodian and brokers or by other appropriate alternative procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Municipal High Income Portfolio as of July 31, 2013, and the results of its operations, the changes in its net assets, and the financial highlights for the period from November 29, 2012 (commencement of operations) to July 31, 2013, in conformity with U.S. generally accepted accounting principles.

New York, New York

September 19, 2013

58 Municipal High Income Portfolio 2013 Annual Report

Additional information (unaudited)

Information about Trustees and Officers

The business and affairs of Municipal High Income Portfolio (the “Portfolio”) are conducted by management under the supervision and subject to the direction of its Board of Trustees. The business address of each Trustee is c/o Kenneth D. Fuller, 100 International Drive, 5th Floor, Baltimore, Maryland 21202. Information pertaining to the Trustees and officers of the Portfolio is set forth below.

The Statement of Additional Information includes additional information about Trustees and is available, without charge, upon request by calling the Portfolio at 1-877-721-1926.

Independent Trustees†:
Elliott J. Berv
Year of birth	1943
Position(s) with Trust	Trustee
Term of office1 and length of time served2	Since 1989
Principal occupation(s) during past five years	President and Chief Executive Officer, Catalyst (consulting) (since 1984); formerly, Chief Executive Officer, Rocket City Enterprises (media) (2000 to 2005)
Number of funds in fund complex overseen by Trustee	52
Other board memberships held by Trustee	World Affairs Council (since 2009); Board Member, American Identity Corp. (doing business as Morpheus Technologies) (biometric information management) (since 2001); formerly, Director, Lapoint Industries (industrial filter company) (2002 to 2007); formerly, Director, Alzheimer’s Association (New England Chapter) (1998 to 2008)
A. Benton Cocanougher
Year of birth	1938
Position(s) with Trust	Trustee
Term of office1 and length of time served2	Since 1991
Principal occupation(s) during past five years	Retired; Dean Emeritus and Professor Emeritus, Texas A&M University (since 2008); Interim Dean, George Bush School of Government and Public Service, Texas A&M University (2009 to 2010); A.P. Wiley Professor, Texas A&M University (2001 to 2008); Interim Chancellor, Texas A&M University System (2003 to 2004); Dean of the Mays Business School, Texas A&M University (1987 to 2001)
Number of funds in fund complex overseen by Trustee	52
Other board memberships held by Trustee	Formerly, Director, First American Bank, Texas (1994 to 1999); formerly, Director, Randle Foods, Inc. (1991 to 1999); formerly, Director, Petrolon, Inc. (engine lubrication products) (1991 to 1994)

Municipal High Income Portfolio 59

Additional information (unaudited) (cont’d)

Information about Trustees and Officers

Independent Trustees cont’d
Jane F. Dasher
Year of birth	1949
Position(s) with Trust	Trustee
Term of office1 and length of time served2	Since 1999
Principal occupation(s) during past five years	Chief Financial Officer, Long Light Capital, LLC, formerly known as Korsant Partners, LLC (a family investment company) (since 1997)
Number of funds in fund complex overseen by Trustee	52
Other board memberships held by Trustee	None
Mark T. Finn
Year of birth	1943
Position(s) with Trust	Trustee
Term of office1 and length of time served2	Since 1989
Principal occupation(s) during past five years	Adjunct Professor, College of William & Mary (since 2002); Chairman, Chief Executive Officer and Owner, Vantage Consulting Group, Inc. (investment management) (since 1988); Principal/Member, Balvan Partners (investment management) (2002 to 2009)
Number of funds in fund complex overseen by Trustee	52
Other board memberships held by Trustee	None
Stephen R. Gross
Year of birth	1947
Position(s) with Trust	Trustee
Term of office1 and length of time served2	Since 1986
Principal occupation(s) during past five years	Chairman Emeritus (since 2011) and formerly Chairman, HLB Gross Collins, P.C. (accounting and consulting firm) (1974 to 2011); Executive Director of Business Builders Team, LLC (since 2005); Principal, Gross Consulting Group, LLC (since 2011); CEO, Gross Capital Advisors, LLC (since 2011); CEO, Trusted CFO Solutions, LLC (since 2011)
Number of funds in fund complex overseen by Trustee	52
Other board memberships held by Trustee	None
Richard E. Hanson, Jr.
Year of birth	1941
Position(s) with Trust	Trustee
Term of office1 and length of time served2	Since 1985
Principal occupation(s) during past five years	Retired; formerly Headmaster, The New Atlanta Jewish Community High School, Atlanta, Georgia (1996 to 2000)
Number of funds in fund complex overseen by Trustee	52
Other board memberships held by Trustee	None

60 Municipal High Income Portfolio

Independent Trustees cont’d
Diana R. Harrington
Year of birth	1940
Position(s) with Trust	Trustee and Chair
Term of office1 and length of time served2	Since 1992 and since 2013
Principal occupation(s) during past five years	Babson Distinguished Professor of Finance, Babson College (since 1992)
Number of funds in fund complex overseen by Trustee	52
Other board memberships held by Trustee	None
Susan M. Heilbron
Year of birth	1945
Position(s) with Trust	Trustee
Term of office1 and length of time served2	Since 1994
Principal occupation(s) during past five years	Retired; formerly, President, Lacey & Heilbron (communications consulting) (1990 to 2002); formerly, General Counsel and Executive Vice President, The Trump Organization (1986 to 1990); formerly, Senior Vice President, New York State Urban Development Corporation (1984 to 1986); formerly, Associate, Cravath, Swaine & Moore (1980 to 1984) and (1977 to 1979)
Number of funds in fund complex overseen by Trustee	52
Other board memberships held by Trustee	Formerly, Director, Lincoln Savings Bank, FSB (1991 to 1994); formerly, Director, Trump Shuttle, Inc. (air transportation) (1989 to 1990); formerly, Director, Alexander’s Inc. (department store) (1987 to 1990)
Susan B. Kerley
Year of birth	1951
Position(s) with Trust	Trustee
Term of office1 and length of time served2	Since 1992
Principal occupation(s) during past five years	Investment Consulting Partner, Strategic Management Advisors, LLC (investment consulting) (since 1990)
Number of funds in fund complex overseen by Trustee	52
Other board memberships held by Trustee	Director and Trustee (since 1990) and formerly, Chairman (2005 to 2012) of various series of MainStay Family of Funds (66 funds); Investment Company Institute (ICI) Board of Governors (since 2006); ICI Executive Committee (since 2011); Chairman of the Independent Directors Council (since 2012)

Municipal High Income Portfolio 61

Additional information (unaudited) (cont’d)

Information about Trustees and Officers

Independent Trustees cont’d
Alan G. Merten
Year of birth	1941
Position(s) with Trust	Trustee
Term of office1 and length of time served2	Since 1990
Principal occupation(s) during past five years	President Emeritus (since 2012) and formerly, President, George Mason University (1996 to 2012)
Number of funds in fund complex overseen by Trustee	52
Other board memberships held by Trustee	Director Emeritus, Cardinal Financial Corporation (since 2006); Trustee, First Potomac Realty Trust (since 2005); Director, DeVry Inc. (educational services) (since 2012); formerly, Director, Xybernaut Corporation (information technology) (2004 to 2006); formerly, Director, Digital Net Holdings, Inc. (2003 to 2004); formerly, Director, Comshare, Inc. (information technology) (1985 to 2003)
R. Richardson Pettit
Year of birth	1942
Position(s) with Trust	Trustee
Term of office1 and length of time served2	Since 1990
Principal occupation(s) during past five years	Retired; formerly, Duncan Professor of Finance, University of Houston (1977 to 2006); previous academic or management positions include: University of Washington, University of Pennsylvania and Purdue University
Number of funds in fund complex overseen by Trustee	52
Other board memberships held by Trustee	None
Interested Trustee and Officer:
Kenneth D. Fuller3
Year of birth	1958
Position(s) with Trust	Trustee, President, and Chief Executive Officer
Term of office1 and length of time served2	Since 2013
Principal occupation(s) during past five years	Managing Director of Legg Mason & Co., LLC (“Legg Mason & Co.”) (since 2013); Officer and/or Trustee/Director of 164 funds associated with Legg Mason Fund Advisor, LLC (“LMPFA”) or its affiliates (since 2013); President and Chief Executive Officer of LMPFA (since 2013); President and Chief Executive Officer of LM Asset Services, LLC (“LMAS”) (formerly a registered investment adviser) (since 2013); formerly, Senior Vice President of LMPFA (2012 to 2013); formerly, Director of Legg Mason & Co. (2012 to 2013); formerly, Vice President of Legg Mason & Co. (2009 to 2012); formerly, Vice President – Equity Division of T. Rowe Price Associates (1993 to 2009), as well as Investment Analyst and Portfolio Manager for certain asset allocation accounts (2004 to 2009).
Number of funds in fund complex overseen by Trustee	153
Other board memberships held by Trustee	None

62 Municipal High Income Portfolio

Additional Officers:
Ted P. Becker Legg Mason 620 Eighth Avenue, 49th Floor, New York, NY 10018
Year of birth	1951
Position(s) with Trust	Chief Compliance Officer
Term of office1 and length of time served2	Since 2007
Principal occupation(s) during past five years	Director of Global Compliance at Legg Mason (since 2006); Chief Compliance Officer of LMPFA (since 2006); Managing Director of Compliance of Legg Mason & Co. (since 2005); Chief Compliance Officer of certain mutual funds associated with Legg Mason & Co. or its affiliates (since 2006)
Susan Kerr Legg Mason 620 Eighth Avenue, 49th Floor, New York, NY 10018
Year of birth	1949
Position(s) with Trust	Chief Anti-Money Laundering Compliance Officer
Term of office1 and length of time served2	Since 2013
Principal occupation(s) during past five years	Assistant Vice President of Legg Mason & Co. and Legg Mason Investor Services, LLC (“LMIS”) (since 2010); Chief Anti-Money Laundering Compliance Officer of certain mutual funds associated with Legg Mason & Co. or its affiliates (since 2013) and Anti-Money Laundering Compliance Officer of LMIS (since 2012); Senior Compliance Officer of LMIS (since 2011); formerly, AML Consultant, DTCC (2010); formerly, AML Consultant, Rabobank Netherlands, (2009); formerly, First Vice President, Director of Marketing & Advertising Compliance and Manager of Communications Review Group at Citigroup Inc. (1996 to 2008)
Vanessa A. Williams Legg Mason 100 First Stamford Place, 6th Floor, Stamford, CT 06902
Year of birth	1979
Position(s) with Trust	Identity Theft Prevention Officer
Term of office1 and length of time served2	Since 2011
Principal occupation(s) during past five years	Vice President of Legg Mason & Co. (since 2012); Identity Theft Prevention Officer of certain mutual funds associated with Legg Mason & Co. or its affiliates (since 2011); formerly Chief Anti-Money Laundering Compliance Officer of certain mutual funds associated with Legg Mason & Co. or its affiliates (2011 to 2013); formerly, Senior Compliance Officer of Legg Mason & Co. (2008 to 2011); formerly, Compliance Analyst of Legg Mason & Co. (2006 to 2008) and Legg Mason & Co. predecessors (prior to 2006)

Municipal High Income Portfolio 63

Additional information (unaudited) (cont’d)

Information about Trustees and Officers

Additional Officers cont’d
Robert I. Frenkel Legg Mason 100 First Stamford Place, 6th Floor, Stamford, CT 06902
Year of birth	1954
Position(s) with Trust	Secretary and Chief Legal Officer
Term of office1 and length of time served2	Since 2007
Principal occupation(s) during past five years	Vice President and Deputy General Counsel of Legg Mason (since 2006); Managing Director and General Counsel of Global Mutual Funds for Legg Mason & Co. (since 2006) and Legg Mason & Co. predecessors (since 1994); Secretary and Chief Legal Officer of certain mutual funds associated with Legg Mason & Co. or its affiliates (since 2006) and Legg Mason & Co. predecessors (prior to 2006)
Thomas C. Mandia Legg Mason 100 First Stamford Place, 6th Floor, Stamford, CT 06902
Year of birth	1962
Position(s) with Trust	Assistant Secretary
Term of office1 and length of time served2	Since 2007
Principal occupation(s) during past five years	Managing Director and Deputy General Counsel of Legg Mason & Co. (since 2005) and Legg Mason & Co. predecessors (prior to 2005); Secretary of LMPFA (since 2006); Assistant Secretary of certain mutual funds associated with Legg Mason & Co. or its affiliates (since 2006) and Legg Mason & Co. predecessors (prior to 2006); Secretary to LMAS (since 2002)
Richard F. Sennett Legg Mason 100 International Drive, 5th Floor, Baltimore, MD 21202
Year of birth	1970
Position(s) with Trust	Principal Financial Officer
Term of office1 and length of time served2	Since 2011
Principal occupation(s) during past five years	Principal Financial Officer of certain mutual funds associated with Legg Mason & Co. or its affiliates (since 2011); Managing Director of Legg Mason & Co. and Senior Manager of the Treasury Policy group for Legg Mason & Co.’s Global Fiduciary Platform (since 2011); formerly, Chief Accountant within the SEC’s Division of Investment Management (2007 to 2011); formerly, Assistant Chief Accountant within the SEC’s Division of Investment Management (2002 to 2007)

64 Municipal High Income Portfolio

Additional Officers cont’d
James Crowley Legg Mason 620 Eighth Avenue, 49th Floor, New York, NY 10018
Year of birth	1966
Position(s) with Trust	Treasurer
Term of office1 and length of time served2	Since 2011
Principal occupation(s) during past five years	Vice President of Legg Mason & Co. (since 2010); Treasurer of certain mutual funds associated with Legg Mason & Co. or its affiliates (since 2011); formerly, Controller of certain mutual funds associated with Legg Mason & Co. or its affiliates (prior to 2011); formerly, Controller of Security Fair Valuation and Project Management for Legg Mason & Co. or its affiliates (prior to 2010)
Jeanne M. Kelly Legg Mason 620 Eighth Avenue, 49th Floor, New York, NY 10018
Year of birth	1951
Position(s) with Trust	Senior Vice President
Term of office1 and length of time served2	Since 2007
Principal occupation(s) during past five years	Senior Vice President of certain mutual funds associated with Legg Mason & Co. or its affiliates (since 2007); Senior Vice President of LMPFA (since 2006); Managing Director of Legg Mason & Co. (since 2005) and Legg Mason & Co. predecessors (prior to 2005)

† Trustees who are not “interested persons” of the Portfolio within the meaning of section 2(a)(19) of the 1940 Act.

¹  Each Trustee and officer serves until his or her respective successor has been duly elected and qualified or until his or her earlier death, resignation, retirement or removal.

²  Indicates the earliest year in which the Trustee became a board member for a fund in the Legg Mason fund complex or the officer took such office.

³  Effective June 1, 2013, Mr. Fuller was appointed to the position of President and Chief Executive Officer. Prior to this date, R. Jay Gerken served as Chairman, President and Chief Executive Officer. Mr. Gerken retired effective May 31, 2013. Mr. Fuller is an “interested person” of the Portfolio, as defined in the 1940 Act, because of his position with LMPFA and/or certain of its affiliates.

Municipal High Income Portfolio 65

ITEM 2. CODE OF ETHICS.

The registrant has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller.

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.

The Board of Trustees of the registrant has determined that Stephen R. Gross and Jane F. Dasher, possess the technical attributes identified in Instruction 2(b) of Item 3 to Form N-CSR to qualify as “audit committee financial experts,” and have designated Mr. Gross and Ms. Dasher as the Audit Committee’s financial experts. Mr. Gross and Ms. Dasher are “independent” Trustees pursuant to paragraph (a) (2) of Item 3 to Form N-CSR.

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

a) Audit Fees. The aggregate fees billed in the last fiscal year ending July 31, 2013 (the “Reporting Periods”) for professional services rendered by the Registrant’s principal accountant (the “Auditor”) for the audit of the Registrant’s annual financial statements, or services that are normally provided by the Auditor in connection with the statutory and regulatory filings or engagements for the Reporting Periods, was in 2013.

b) Audit-Related Fees. The aggregate fees billed in the Reporting Period for assurance and related services by the Auditor that are reasonably related to the performance of the Registrant’s financial statements was $0 in 2013.

In addition, there were no Audit-Related Fees billed in the Reporting Period for assurance and related services by the Auditor to the Registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the Master Portfolio Trust (“service affiliates”), that were reasonably related to the performance of the annual audit of the service affiliates. Accordingly, there were no such fees that required pre-approval by the Audit Committee for the Reporting Periods.

c) Tax Fees. The aggregate fees billed in the Reporting Periods for professional services rendered by the Auditor for tax compliance, tax advice and tax planning (“Tax Services”) was $0 in 2013. These services consisted of (i) review or preparation of U.S. federal, state, local and excise tax returns; (ii) U.S. federal, state and local tax planning, advice and assistance regarding statutory, regulatory or administrative developments, and (iii) tax advice regarding tax qualification matters and/or treatment of various financial instruments held or proposed to be acquired or held.

There were no fees billed for tax services by the Auditors to service affiliates during the Reporting Periods that required pre-approval by the Audit Committee.

d) All Other Fees. There were no other fees billed in the Reporting Periods for products and services provided by the Auditor, other than the services reported in paragraphs (a) through (c) of this Item for the Master Portfolio Trust.

All Other Fees. There were no other non-audit services rendered by the Auditor to Legg Mason Partners Fund Advisors, LLC (“LMPFA”), and any entity controlling, controlled by or under common control with LMPFA that provided ongoing services to Master Portfolio Trust requiring pre-approval by the Audit Committee in the Reporting Period.

(e) Audit Committee’s pre–approval policies and procedures described in paragraph (c) (7) of Rule 2-01 of Regulation S-X.

(1) The Charter for the Audit Committee (the “Committee”) of the Board of each registered investment company (the “Fund”) advised by LMPFA or one of their affiliates (each, an “Adviser”) requires that the Committee shall approve (a) all audit and permissible non-audit services to be provided to the Fund and (b) all permissible non-audit services to be provided by the Fund’s independent auditors to the Adviser and any Covered Service Providers if the engagement relates directly to the operations and financial reporting of the Fund. The Committee July implement policies and procedures by which such services are approved other than by the full Committee.

The Committee shall not approve non-audit services that the Committee believes July impair the independence of the auditors. As of the date of the approval of this Audit Committee Charter, permissible non-audit services include any professional services (including tax services), that are not prohibited services as described below, provided to the Fund by the independent auditors, other than those provided to the Fund in connection with an audit or a review of the financial statements of the Fund. Permissible non-audit services July not include: (i) bookkeeping or other services related to the accounting records or financial statements of the Fund; (ii) financial information systems design and implementation; (iii) appraisal or valuation services, fairness opinions or contribution-in-kind reports; (iv) actuarial services; (v) internal audit outsourcing services; (vi) management functions or human resources; (vii) broker or dealer, investment adviser or investment banking services; (viii) legal services and expert services unrelated to the audit; and (ix) any other service the Public Company Accounting Oversight Board determines, by regulation, is impermissible.

Pre-approval by the Committee of any permissible non-audit services is not required so long as: (i) the aggregate amount of all such permissible non-audit services provided to the Fund, the Adviser and any service providers controlling, controlled by or under common control with the Adviser that provide ongoing services to the Fund (“Covered Service Providers”) constitutes not more than 5% of the total amount of revenues paid to the independent auditors during the fiscal year in which the permissible non-audit services are provided to (a) the Fund, (b) the Adviser and (c) any entity controlling, controlled by or under common control with the Adviser that provides ongoing services to the Fund during the fiscal year in which the services are provided that would have to be approved by the Committee; (ii) the permissible non-audit services were not recognized by the Fund at the time of the engagement to be non-audit services; and (iii) such services are promptly brought to the attention of the Committee and approved by the Committee (or its delegate(s)) prior to the completion of the audit.

(2) For the Master Portfolio Trust, the percentage of fees that were approved by the audit committee, with respect to: Audit-Related Fees were 100% for 2013; Tax Fees were 100% for 2013; and Other Fees were 100% for 2013.

(f) N/A

(g) Non-audit fees billed by the Auditor for services rendered to Master Portfolio Trust, LMPFA and any entity controlling, controlled by, or under common control with LMPFA that provides ongoing services to Master Portfolio Trust during the reporting period were $0 in 2013.

(h) Yes. Master Portfolio Trust’s Audit Committee has considered whether the provision of non-audit services that were rendered to Service Affiliates, which were not pre-approved (not requiring pre-approval), is compatible with maintaining the Accountant’s independence. All services provided by the Auditor to the Master Portfolio Trust or to Service Affiliates, which were required to be pre-approved, were pre-approved as required.

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.

a) The independent board members are acting as the registrant’s audit committee as specified in Section 3(a)(58)(B) of the Exchange Act. The Audit Committee consists of the following Board members:

Elliott J. Berv

A. Benton Cocanougher

Jane F. Dasher

Mark T. Finn

Stephen R. Gross

Richard E. Hanson, Jr.

Diana R. Harrington

Susan M. Heilbron

Susan B. Kerley

Alan G. Merten

R. Richardson Pettit

b) Not applicable.

ITEM 6. SCHEDULE OF INVESTMENTS.

Included herein under Item 1.

ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

Not applicable.

ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

Not applicable.

ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.

Not applicable.

ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

Not applicable.

ITEM 11. CONTROLS AND PROCEDURES.

(a) The registrant’s principal executive officer and principal financial officer have concluded that the registrant’s

disclosure controls and procedures (as defined in Rule 30a- 3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective as of a date within 90 days of the filing date of this report that includes the disclosure required by this paragraph, based on their evaluation of the disclosure controls and procedures required by Rule 30a-3(b) under the 1940 Act and 15d-15(b) under the Securities Exchange Act of 1934

(b) There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are likely to materially affect the registrant’s internal control over financial reporting

ITEM 12. EXHIBITS.

(a) (1) Code of Ethics attached hereto.

Exhibit 99.CODE ETH

(a) (2) Certifications pursuant to section 302 of the Sarbanes-Oxley Act of 2002 attached hereto.

Exhibit 99.CERT

(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 attached hereto.

Exhibit 99.906CERT

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this Report to be signed on its behalf by the undersigned, there unto duly authorized.

Master Portfolio Trust
By:	/s/    Kenneth D. Fuller
	Kenneth D. Fuller
	Chief Executive Officer
	Master Portfolio Trust
Date: September 25, 2013

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By:	/s/    Kenneth D. Fuller
	Kenneth D. Fuller
	Chief Executive Officer
	Master Portfolio Trust
Date: September 25, 2013
By:	/s/    Richard F. Sennett
	Richard F. Sennett
	Principal Financial Officer
	Master Portfolio Trust
Date: September 25, 2013

EX-99.CODE

I. Covered Officers/Purpose of the Code

This code of ethics (the “Code”) for Legg Mason Partners Funds (“Funds” and each a, “Company”) applies to each Company’s Chief Executive Officer, Chief Administrative Officer, Chief Financial Officer and Controller (the “Covered Officers”¹) for the purpose of promoting:

• honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

• full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files with, or submits to, the Securities and Exchange Commission (“SEC”) and in other public communications made by the Company;

• compliance with applicable laws and governmental rules and regulations;

• the prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and

• accountability for adherence to the Code.

Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest.

II. Administration of Code

The Funds’ CCO is responsible for administration of this Code, including granting pre-approvals (see Section III below) and waivers (as described in Section VI below), applying this Code in specific situations in which questions are presented under it and interpreting this Code in any particular situation.

III. Covered Officers Should Ethically Handle Actual and Apparent Conflicts of Interest

Overview. A “conflict of interest” occurs when a Covered Officer’s private interest interferes with the interests of, or his service to, the Company. For example, a conflict of interest would arise if a Covered Officer, or a member of his family, receives improper personal benefits as a result of his position with the Company.

Certain conflicts of interest arise out of the relationships between Covered Officers and the Company and already are subject to conflict of interest provisions in the Investment Company Act of 1940 (“Investment Company Act”) and the Investment Advisers Act of 1940 (“Investment Advisers Act”). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the Company because of their status as “affiliated

¹  Including persons performing similar functions.

1

persons” of the Company. The compliance programs and procedures of the Company and its investment adviser are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code (see Section VII below).

Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or as a result of, the contractual relationship between a Company and the investment adviser of which the Covered Officers are also officers or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for a Company or for the adviser, or for both), be involved in establishing policies and implementing decisions that will have different effects on the adviser and a Company. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Company and the adviser and is consistent with the performance by the Covered Officers of their duties as officers of a Company. Thus, if performed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, such activities will be deemed to have been handled ethically. In addition, it is recognized by the Funds’ Boards of Directors\Trustees (“Boards”) that the Covered Officers may also be officers or employees of one or more other investment companies covered by this or other codes.

Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act. The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of the Company.

Each Covered Officer must:

• not use his personal influence or personal relationships improperly to influence investment decisions or financial reporting (e.g. through fraudulent accounting practices) by the Company whereby the Covered Officer² would benefit personally to the detriment of the Company;

• not cause the Company to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than for the benefit of the Company; and

• not use material non-public knowledge of portfolio transactions made or contemplated for the Company to trade personally or cause others to trade personally in contemplation of the market affect of such transactions.

²  Any activity or relationship that would present a conflict for a Covered Officer would also present a conflict for the Covered Officer if a member of a Covered Officer’s family (spouse, minor children and any account over which a Covered Officer is deemed to have beneficial interest) engages in such an activity or has such a relationship.

2

There are some potential conflict of interest situations that should always be discussed with the CCO, if material. Examples are as follows:

(1) service as a director on the board of any public or private company;

(2) any ownership interest in, or any consulting or employment relationship with, any of the Company’s service providers, other than its investment adviser;

(3) a direct or indirect financial interest in commissions, transaction charges or spreads paid by the Company for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer’s employment, such as compensation or equity ownership; and

4) the receipt of any gifts or the conveyance of any value (including entertainment ) from any company with which the Company has current or prospective business dealings, except:

(a) any non-cash gifts of nominal value (nominal value is less than $100); and

(b) customary and reasonable meals and entertainment at which the giver is present, such as the occasional business meal or sporting event.

IV. Disclosure and Compliance

Each Covered Officer:

• should be familiar with his or her responsibilities in connection with the disclosure requirements generally applicable to the Company;

• should not knowingly misrepresent, or knowingly cause others to misrepresent, facts about the Company to others, whether within or outside the Company, including to the Company’s directors and auditors, and to governmental regulators and self-regulatory organizations;

• should, to the extent appropriate within his or her area of responsibility, consult with other officers and employees of the Funds and the investment adviser with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Funds file with, or submit to, the SEC and in other public communications made by the Funds; and

• is responsible to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations.

V. Reporting and Accountability

Each Covered Officer must:

• upon adoption of the Code (or thereafter as applicable, upon becoming a Covered Officer), affirm in writing to the Board that the Covered Officer has received, read, and understands the Code;

3

• annually thereafter affirm to the Board that he or she has complied with the requirements of the Code;

• annually disclose affiliations and other relationships related to conflicts of interest;

• not retaliate against any other Covered Officer or any employee of the Funds or their affiliated persons for reports of potential violations that are made in good faith; and

• notify the CCO promptly if he knows of any violation of this Code (failure to do so is itself a violation of this Code).

In rendering decisions and interpretations and in conducting investigations of potential violations under the Code, the CCO may, at his discretion, consult with such persons as he determines to be appropriate, including, but not limited to, a senior legal officer of the Company or its investment adviser or its affiliates, independent auditors or other consultants, subject to any requirement to seek pre-approval from the Company’s audit committee for the retention of independent auditors to perform permissible non-audit services. The Funds will follow these procedures in investigating and enforcing the Code:

• the CCO will take all appropriate action to investigate any potential violation of which he becomes aware;

• if, after investigation the CCO believes that no violation has occurred, the CCO is not required to take any further action;

• any matter that the CCO believes is a violation will be reported to the Directors of the Fund who are not “interested persons” as defined in the Investment Company Act the (“Non-interested Directors”)

• if the Non-interested Directors of the Board concur that a violation has occurred, it will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the investment adviser or its board; or a recommendation to dismiss the Covered Officer; and

• any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules.

The CCO shall submit an annual report to the Board describing any waivers granted.

VI. Waivers³

A Covered Officer may request a waiver of any of the provisions of the Code by submitting a written request for such waiver to the CCO, setting forth the basis of such request and explaining how the waiver would be consistent with the standards of conduct described herein. The CCO shall review such request and make a determination thereon in writing, which shall be binding.

³  For purposes of this Code, Item 2 of Form N-CSR defines “waiver” as “the approval by a Company of a material departure from a provision of the Code” and includes an “implicit waiver,” which means a Company’s failure to take action within a reasonable period of time regarding a material departure from a provision of the Code that has been made known to an executive officer of the Company.

4

In determining whether to waive any provisions of this Code, the CCO shall consider whether the proposed waiver is consistent with honest and ethical conduct and other purposes of this Code.

VII. Other Policies and Procedures

This Code shall be the sole code of ethics adopted by the Funds for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder. Insofar as other policies or procedures of the Funds, the Funds’ investment advisers, principal underwriters, or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code. The codes of ethics of the funds and the investment advisers and principal underwriters under Rule 17j-1 of the Investment Company Act and the Legg Mason Code of Conduct as well as other policies of the Fund’s investment advisers or their affiliates are separate requirements applying to the Covered Officers and others, and are not part of this Code.

VIII. Amendments

Any amendments to this Code must be approved or ratified by a majority vote of the Board, including a majority of Non-interested Directors.

IX. Confidentiality

All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the appropriate Board and Company and their respective counsel, counsel to the non-Interested Directors or independent auditors or other consultants referred to in Section V above.

X. Internal Use

The Code is intended solely for the internal use by the Funds and does not constitute an admission, by or on behalf of any Company, as to any fact, circumstance, or legal conclusion.

5

EX-99.CERT

CERTIFICATIONS PURSUANT TO SECTION 302

EX-99.CERT

CERTIFICATIONS

I, Kenneth D. Fuller, certify that:

1. I have reviewed this report on Form N-CSR of Master Portfolio Trust – Municipal High Income Portfolio;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: September 25, 2013	/s/ Kenneth D. Fuller
	Kenneth D. Fuller
	Chief Executive Officer

I, Richard F. Sennett, certify that:

1. I have reviewed this report on Form N-CSR of Master Portfolio Trust – Municipal High Income Portfolio;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial information included in this report, and the financial statements on which the financial information is based, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: September 25, 2013	/s/ Richard F. Sennett
	Richard F. Sennett
	Principal Financial Officer

EX-99.906CT

CERTIFICATIONS PURSUANT TO SECTION 906

EX-99.906CERT

CERTIFICATION

Kenneth D. Fuller, Chief Executive Officer, and Richard F. Sennett, Principal Financial Officer of Master Portfolio Trust – Municipal High Income Portfolio (the “Registrant”), each certify to the best of his knowledge that:

1. The Registrant’s periodic report on Form N-CSR for the period ended July 31, 2013 (the “Form N-CSR”) fully complies with the requirements of section 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Chief Executive Officer	Principal Financial Officer
Master Portfolio Trust -	Master Portfolio Trust -
Municipal High Income Portfolio	Municipal High Income Portfolio
/s/ Kenneth D. Fuller	/s/ Richard F. Sennett
Kenneth D. Fuller	Richard F. Sennett
Date: September 25, 2013	Date: September 25, 2013

This certification is being furnished to the Securities and Exchange Commission solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Form N-CSR with the Commission.