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Legg Mason Global Multi Strategy Bond Fund
Citywire South West Conference
25-26 April 2013
This document is for Asset Managers, Fund Distributors and Authorised Intermediaries. Not for use by Private Individuals.
Page 1
Legg Mason’s
Investment
Capabilities
A diversified global asset management firm, founded in 1899
Total assets: £437 billion
Approximately 3,100 employees worldwide
Offices in 31 locations
Source: Legg Mason, as at 31 March 2013.
Global
quantitative
equity
Global value
investing
Fundamental
value-based
investing
Small-cap
equities:
US, Europe,
Global
Global
alternative
fund-of-
funds
Quality-
focused
US equity
investing
Emerging
markets
Global fixed
income
Page 2
Pasadena
$181.8bn
Investment professionals: 50
Total staff: 558
New York
$182.0bn
Investment professionals: 26
Total staff: 96
São Paolo
$17.8bn
Investment professionals: 17
Total staff: 70
Melbourne
$15.6bn
Investment professionals: 5
Total staff: 17
London
$38.9bn
Investment professionals: 18
Total staff: 72
Singapore
$4.6bn
Investment professionals: 4
Total staff: 20
Hong Kong
Total staff: 2
Tokyo
$19.4bn
Investment professionals: 8
Total staff: 30
Source: Western Asset, as at 31 March 2013. Assets under management in USD (billions).
1 2
4
5
3
9
6
7
8
Dubai
Total staff: 2
1 2 3 4 5
6 7 8 9
Harnesses the
experience of a
global manager
dedicated to fixed
income investing
Managed by Western Asset, a subsidiary of Legg Mason
Total assets in fixed income: $459.4 billion
8 countries across 5 continents
Total staff: 867
Global breadth and local depth
Page 3
Why are
strategic bond
funds popular?
Maximise returns
Minimise downside
Opportunity to perform throughout the market cycle
Yield
Diversification
Outsource asset allocation
But to be truly Strategic,
you need to be Global…
Page 4
0
15000
30000
US Japan Eurozone UK EM Canada
The UK
bond market
is relatively
small compared
to the rest
of the
developed world
Source: Bank for International Settlements, as at 31 December 2012.
Domestic bond market by nationality of issuer ($bn issuance outstanding, 2012)
Page 5
But not all
strategic
bond funds
are truly global
Largest funds in the IMA Strategic Bond Sector by AUM*
*Source: Source for largest funds by AUM is Morningstar Direct as at 31 March2013. Source for breakdowns is
FundsLibrary, as at 28 February 2013 for Funds A and B and to 31 January 2013 for Funds C and D.
**Developed Europe ex UK. For illustrative purposes only. GMS data is as at 31 March 2013.
51.5 49.5 36.0 56.4 7.8
16.0 10.1
11.7
7.2
23.2
28.4
35.7
34.7
29.2
30.9
1.0 1.0 2.5 1.1
26.6
Fund A Fund B Fund C Fund D GMS Fund
EM
Europe**
North America
UK
100
0
%
Page 6
Flexibility is
the key driver
of diversified
returns in
global fixed
income
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Global High Yield EMD Local Govt
(USD) EMD Govt (USD) EMD Local Govt (USD) UK Gilts Global High Yield
EMD Local Govt
(USD) UK Gilts Global High Yield
EMD Govt (USD) Global Govt
Inflation Linked
Sterling
Non-Gilts Global High Yield
Global Govt
Inflation Linked
Global Govt
Bonds EMD Govt (USD) Global High Yield
Global Govt
Inflation Linked EMD Govt (USD)
EMD Local Govt
(USD) Global High Yield UK Gilts EMD Govt (USD)
Global Govt
Bonds Mortgages
EMD Local Govt
(USD) EMD Govt (USD)
EMD Local Govt
(USD)
Global Govt
Bonds EMD Govt (USD)
EMD Local Govt
(USD) Global Corporate 0-3mth US T-bills Global Corporate
Sterling
Non-Gilts
Global Govt
Inflation Linked
Global Govt
Bonds 0-3mth US T-bills
Global Govt
Inflation Linked Mortgages
Sterling
Non-Gilts
Global Govt
Inflation Linked UK Gilts
Global Govt
Bonds Global Corporate
Global Corporate Mortgages Global Govt
Bonds EMD Govt (USD)
EMD Local Govt
(USD)
Sterling
Non-Gilts Global Corporate Mortgages
Global Govt
Inflation Linked
0-3mth US T-bills Sterling
Non-Gilts Global High Yield Mortgages UK Gilts
Global Govt
Inflation Linked Mortgages Global Corporate Mortgages
Mortgages UK Gilts Global Govt
Inflation Linked 0-3mth US T-bills Global Corporate
Global Govt
Bonds Global High Yield
Global Govt
Bonds
UK Gilts Mortgages Global Corporate Sterling
Non-Gilts Global High Yield EMD Govt (USD) 0-3mth US T-bills
Global Govt
Inflation Linked 0-3mth US T-bills 0-3mth US T-Bills
Sterling Non-Gilts 0-3mth US T-bills Global Govt
Bonds UK Gilts
Sterling
Non-Gilts Global High Yield UK Gilts 0-3mth US T-bills
EMD Local Govt
(USD) UK Gilts
Annual Sector Returns 2003-2012 Across Global Bond Sectors
UK Gilts Sterling Non-Gilts
Source: Bloomberg, as at 31 December 2012. 0-3mth US Treasury Bills: Merrill Lynch US Treasury Bills 0-3
Months, EMD Local: JP Morgan Global Bond Index Emerging Market Local Unhedged, EMD (USD): Merrill Lynch USD
Emerging Market Sovereign Plus Index, Global Corporate (USD): Merrill Lynch Global Broad Market Corporate Index,
Global Govt Bonds (USD): Merrill Lynch Global Government Bond Index, Global Govt Inflation Linked (USD): Merrill
Lynch Global Governments, Inflation-Linked Index, Global High Yield (USD): Merrill Lynch Global High Yield Index ,
Mortgages: Merrill Lynch Mortgage Master Index, Sterling Non-Gilts: Merrill Lynch Sterling Non-Gilts (GBP), UK Gilts:
Merrill Lynch UK Gilts (GBP).
Lowest returns
Highest returns
Page 7
The Legg Mason Global Multi Strategy Bond Fund
Page 8
Emerging
Markets Government
Investment
Grade Credit High Yield
1 2
GMS Portfolio -
Ian Edmonds
3
9
7
8
Investment
Approach
Long Term
Value Orientation
Diversified Strategies
Mortgage Backed
Securities
Leverages Western Assets global fixed income capabilities
34 securities 88 securities 140 securities 111 securities 9 securities
Source: Western Asset, as at 3 December 2012. Total number of assets 480..
Page 9
Legg Mason
Global
Multi Strategy
Bond Fund
This Fund may invest in ‘non-investment grade’ bonds, which carry a higher degree of default risk than
‘investment grade’ bonds. It may invest in emerging markets that may be less liquid and may have less reliable
custody arrangements than mature markets and may involve a higher degree of risk. Unlike a bank or building
society account, your money is at risk. The Legg Mason Western Asset Global Multi Strategy Bond Fund is a
sub-fund of Legg Mason Global Fund plc, an umbrella fund established an investment company with variable
capital, and is authorised in the UK by the Financial Services Authority as an undertaking for collective
investment in transferable securities. Source: Legg Mason, as at 31 March 2013.
Focuses on opportunities across all global fixed income sectors
Volatility over 3 years: 4.46%
Net distribution yield: 4.70%
Leverages the expertise of Western Asset Management
Maximum flexibility to be truly strategic
Fund size: £753m
Strategy size: £2.0bn
An active, global approach
Source Western Asset as at 31 March 2013.* Class A Distr. USD launch date 30 August 2002.
Page 10
Flexibility to invest
across global fixed
income markets
Duration flexibility
Global approach
helps to lower
volatility and increase
return
Number of holdings:
Over 400 approx.
Risk/return over 10
years annualised:
7.67%/7.19%*
ABS/MBS
Inflation-linked
Governments/agencies
Cash/cash equivalents
Investment grade credit
High yield
USD emerging markets
Local emerging markets
Emerging market corporates
Legg Mason Western Asset Global Multi Strategy Fund
Local Emerging Markets
Emerging Market Corporates
USD Emerging Markets
High Yield
Investment Grade Credit
ABS/MBS
Cash/Cash Equivalents
Inflation-linked
Governments/Agencies
0
10
20
30
40
50
60
70
80
90
100
Dec 02 Dec 03 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Dec 09 Dec 10 Dec 11 Dec 12
Per
cent
of P
ortfo
lio (M
arke
t Val
ue)
As of 31 Mar 13
Page 11
Diversified
country and
sector
coverage
US 47%
UK 8%
Eurozone 27%
Brazil 2%
Mexico 2%
South Africa 2%
Turkey 1% Cash 11%
Emerging Market
Investment Grade 15%
High Yield 20%
Government 21%
Investment Grade 13%
Residential Mortgage
Backed 5%
Emerging Market 14%
Asset Backed 1%
Cash & Others 11%
Country breakdown Sector breakdown
Data as at 31 March 2013
AAA 27%
AA 0%
A 14%
BBB 20%
<BBB 28%
Cash 11%
Credit rating breakdown
Distribution Yield 4.70%
Duration 4.07 yrs
Average Rating A
Key Portfolio Statistics
Currency breakdown
93
2
2
2
2
1
1
1
-4
British Pound
Brazilian Real
Mexican Peso
South African Rand
US Dollar
Indian Rupee
Philippine Peso
Turkish Lira
Euro
Page 12
Strong
performance
returns and
consistent
yield
generation
29.64%
-20
-15
-10
-5
0
5
10
15
20
25
30
Distribution Yield % Legg Mason Global Multi Strategy Bond Fund (A) %
Cumulative performance and income generation since inception (in GBP)
Source: Legg Mason as of 31 March 2013, in Sterling. Performance is calculated on a NAV to NAV basis., net income
reinvested, net of fees. Sales charges, taxes and other locally applied costs to be paid by an investor have not been
deducted. Past performance is not an indicator of future results and may not be repeated
Page 13
12 Month rolling
return periods of
the strategy
Source: Legg Mason as at 31 March 2013. NAV to NAV with gross income reinvested without initial charges but
reflecting annual management fees, based in USD for class A shares. *Fund launched on 30 August 2002.
Past performance is not an indicator of future results and may not be repeated
-20
-10
0
10
20
30
40
50
Tot
al R
etur
n (%
)
3-month US$ LIBOR Global Multi-sector Composite
93% (171/183) monthly rolling 1-year periods of positive absolute return
82% (150/183) monthly rolling 1-year periods of positive returns relative to cash
Return Date
Max. Return 41.23% 28 Feb 10
Min. Return -18.55% 28 Feb 09
Rolling 12-Month
Page 14
Exceptional
long-term
risk/reward
profile
The Global Multi Sector Composite has been used to demonstrate the longer term track record of the manager
Risk/Reward Since Inception (31 Oct 1996) to 31 March 2013
Source: Barclays, JP Morgan and Bloomberg as of 31 March 2013, in US Dollars. The data has been used to
demonstrate the longer term track record of the investment manager in managing the Legg Mason Global Multi Strategy
Bond Fund. There are differences between the above composite and the Legg Mason Global Multi Strategy Bond Fund,
including differences in the number of holdings, strategy, the amount of assets under management, cash flows, fees and
expenses, and applicable regulatory requirements, including investment and borrowing restrictions. The past
performance of the above composites is, therefore, not indicative of the future performance of the Legg Mason Global
Multi Strategy Bond Fund. Past performance is not an indicator of future results and may not be repeated.
Page 15
Global and flexible to tap into diversified sources of income
Historically, Global Multi Strategy has performed well in rate rise environments
Page 16
Source: Western Asset 31 December 2012
• The strategy has experienced a number of periods where government
bond yields have risen by around 100 basis points or more in a matter
of months (as highlighted in grey).
• Diversified exposure to high yield corporate bonds has enabled the
manager to maintain performance in rising government bond yield
environments.
90
110
130
150
170
190
210
230
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
5.00%
5.50%
Au
g-0
2
Jan
-03
Jun
-03
No
v-0
3
Ap
r-0
4
Sep
-04
Feb
-05
Jul-
05
Dec
-05
May
-06
Oct
-06
Mar
-07
Au
g-0
7
Jan
-08
Jun
-08
No
v-0
8
Ap
r-0
9
Sep
-09
Feb
-10
Jul-
10
Dec
-10
May
-11
Oct
-11
Mar
-12
Au
g-1
2
10 Year UK Gilts
Legg Mason Western Asset Global Multi Strategy Fund, RH
Yield NAV
Page 17
Diversify and
maximise
sources of
income from
higher yielding
bond sectors
Source: Bloomberg, as at 28 February 2013
1.76
0.89
1.821.35
2.49
3.33
6.46
2.70
6.21
4.103.65
6.59
4.61
2.50 2.32
4.05
0.00
10.00
%
Global bonds offer access to sectors with higher yielding opportunities
0
2
4
6
8
10
Bra
zil
Chi
le
Chi
na
Col
ombi
a
Hun
gary
Indi
a
Indo
nesi
a
Mal
aysi
a
Mex
ico
Per
u
Phi
lippi
nes
Pol
and
Rus
sia
Sou
th A
fric
a
Tur
key
Yie
ld (%
)
Page 18
Diversify and
maximise
sources of
income from
higher yielding
bond sectors
Source: JPM GBI-EM Global Diversified, As of 31 March 2013
Local currency held in the Global Multi-sector strategy
Global bonds offer access to countries with higher yielding opportunities
138
381
512
240
456
796
151
202
722
0
200
400
600
800
1000
Investment-Grade BB B
Ave
rage
Spr
ead
(bps
)
Quality
US Corporate Bonds EM Corporate Bonds EM USD Sovereign Bonds
Source: Barclays , JPMorgan. As of 31 Dec 12
Page 19
Sector
Rotation: US
Dollar
Corporate
Advantage
Source: Barclays/JPMorgan, as at 31 December 2012
Ability to opportunistically invest in Emerging Market bonds provide diversified sources of income and higher yield
Based on current growth expectations, high yield will continue to perform well
Page 20
-6
-4
-2
0
2
4
6
< 0% 0%<--->2% 2%<--->4% 4%<
Per
cent
HY BB B CCC
• When GDP growth is negative, not surprisingly, high yield gets hit hard.
• High growth (+4%) is still acceptable, although not ideal, as companies
begin levering up balance sheets.
• Historically, high-yield has held up reasonably well during periods of
2-4% GDP growth. 0-2% GDP is the sweet spot.
Source: Morgan Stanley/Bloomberg/the Yield Book, as at 31 March 2011. For illustrative purposes only. Note: Chart data dates back to 1985.
Page 21
High-Yield
corporate
credit
fundamentals
still improving
Source: Morgan Stanley, as at 30 September 2012.
Note: Approximately 200 public high-yield issuers.
This is now the seventh quarter in a row of balance sheet improvement – companies continue to delever and liquidity is near record highs
0
2
4
6
8
10
12
14
16
1999 2001 2003 2005 2007 2009 2011
Pe
rce
nt
High-Yield Cash-Debt
4.96
3.51
4.394.04
2.0
3.0
4.0
5.0
6.0
1999 2001 2003 2005 2007 2009 2011
High-Yield Leverage
Median:+138 bps
050
100150200250300350400450
1999 2001 2003 2005 2007 2009 2011
Ba
sis
Po
ints
High-Yield Spread Per Unit of Leverage (SPL)
3.08
3.83
2.5
3.0
3.5
4.0
4.5
1999 2001 2003 2005 2007 2009 2011
High-Yield Interest Coverage
Example of concession for less liquidity
Page 22
Source: Morgan Stanley/Bloomberg/the Yield Book, as at 31 March 2011. Note: Chart data dates back to 1985.
For illustrative purposes only
Carrols Restaurant Burger King Corporation
Largest franchisee of Burger King Burger King franchisor
Coupon 11.25% 9.88%
Issue 150mm Sr Secured 800mm Sr Unsecured
Maturity 15 May 18 15 Oct 18
Ratings B3/B- B3/B-
Yield to Worst (Offer) 10.45% 5.69%
Leverage 5.0x (PF) 4.6x
Net Leverage 3.7x (PF) 3.7x
Coverage 1.9x (PF) 2.3x
1Q12 Same Store Sales 5.90% +4.6% (US systemwide)
Price $103 $113.25
Emerging Market countries are in better shape than those in the developed world
Page 23
Source: JPMorgan. 2012 estimate.
Developed
Markets
Europe
Spain
UK
Colombia
Mexico
US
Japan (-9.26% Fiscal Deficit,
218% Debt)
Germany
France
Italy (-2.29% Fiscal Deficit,
129% Debt)
Emerging Markets Asia
Brazil
0
20
40
60
80
100
120
140
-10 -8 -6 -4 -2 0 Fiscal Deficit (%)
Deb
t (%
of G
DP
)
200
Developed
Markets
Europe
Spain
UK
Colombia
Mexico
US
Japan (-9.26% Fiscal Deficit,
218% Debt)
Germany
France
Italy (-2.29% Fiscal Deficit,
129% Debt)
Emerging MarketsAsia
Brazil
0
20
40
60
80
100
120
140
-10-8-6-4-20Fiscal Deficit (%)
Deb
t (%
of G
DP
)
Source: JPMorgan. 2012 Estimate as of 31 Dec 11
200
General Government Deficit and Debt
Risk Comparison between Developing and Developed Government Bond Markets
Page 24
Legg Mason
Global Multi
Strategy Bond
Fund - Summary
Focuses on opportunities across all global fixed income sectors
Volatility over 3 years: 4.46%
Net distribution yield: 4.70%
Leverages the expertise of Western Asset Management
Maximum flexibility to be truly strategic
This Fund may invest in ‘non-investment grade’ bonds, which carry a higher degree of default risk than
‘investment grade’ bonds. It may invest in emerging markets that may be less liquid and may have less reliable
custody arrangements than mature markets and may involve a higher degree of risk. Unlike a bank or building
society account, your money is at risk. The Legg Mason Western Asset Global Multi Strategy Bond Fund is a
sub-fund of Legg Mason Global Fund plc, an umbrella fund established an investment company with variable
capital, and is authorised in the UK by the Financial Services Authority as an undertaking for collective
investment in transferable securities. Source: Legg Mason, as at 31 March 2013.
Page 25
Appendix
Source: JPMorgan and Barclays. Data shown as at 31 January. # of countries, market cap, yield and duration shown using EMBI Broad for US Dollar Sovereign EM, CEMBI Broad for US
Dollar Corporate EM, GBI-EM Broad for Local Currency Sovereign EM.
Page 26
US Dollar
Sovereign
Emerging
Markets
US Dollar
Corporate
Emerging
Markets
Local Currency
Sovereign
Emerging
Markets
UK Government
Bonds
UK Corporate
Bonds
Benchmark JPM EM Bond Index
(EMBI)
JPM Corporate EM Bond
Index (CEMBI)
JPM Government Bond
Index (GBI-EM)
Barclays Sterling Gilts
Index
Barclays Sterling non-Gilts
Index
Description USD denominated debt of
sovereign/quasi-sovereign
issuers
USD denominated debt
issued by corporate entities
Liquid, local currency debt
of sovereign issuers
GBP denominated UK
Government Bonds
GBP denominated UK
Corporate Bonds
Currency denomination USD USD Local Currency GBP GBP
Other names Hard currency Sovereign
External Debt
Hard Currency Corporate
Corporate external debt
Local Currency Bonds
Local Market Debt
UK Government Bonds
UK Gilts
Sterling Corporates
UK Corporates
Average rating (S&P) BB+ BBB BBB+ AA A
# of countries: 55 30 17 1 1
Market Cap (USD bn) 571 624 1,568 1,106 502
Yield (%) 4.7% 4.8% 5.5% 1.9% 3.5%
Duration (years) 7.0 5.6 5.0 9.2 7.8
EMD is now primarily IG and 4 times the size of the UK IG and HY markets combined
Available on major platforms
Page 27
Find out more at:
www.leggmason.co.uk
www.globalbondmasters.co.uk
Or contact UK Sales Support & Client Services on: t: 020 7070 7444 e: [email protected]
• Aviva Life
• James Hay
• Merchant Investors
• AllFunds
• Ascentric
• Aviva Wrap
• Axa Elevate
• Cofunds
• Fidelity Funds Network
• Hargreaves Lansdown Vantage
• Novia
• Nucleus
• Scottish Widows Retirement Account
• Skandia Investment Solutions
• Standard Life (Fundzone and Wrap)
• Transact
• Zurich Platform
Annual
Management
Charge
Legg Mason Global Multi Strategy Bond Fund Class A Inc. (M) GBP 1.25%
Legg Mason Global Multi Strategy Bond Fund Class X Inc. (M) GBP 0.625%
Page 28
Biography Ian Edmonds
Portfolio Manager, GMS
Ian has been part of Western Asset since 1996 when it was acquired from Lehman
Brothers, and has been involved with the Global Multi Strategy Bond Fund since its
inception. His research focus is on the European high yield market, and he is a
member of Western Assets Global Credit Committee which helps determine the
company’s credit strategies. Ian started his career in 1990 at Bacon & Woodrow as a
trainee Actuary before joining Lehman Brothers Global Asset Management in 1994
as a research analyst.
Page 29
Important Information
Page 30
Composite disclosure
As of 31 December 2012
No. of Gross Total Net Total Benchmark Gross Total Benchmark Total Internal Mkt. Value Percentage of Firm Assets Accts Return Return Total Return 3-Yr St Dev 3-Yr St Dev Dispersion (US$mil) Firm Assets (US$mil)
2003 1 23.44% 22.96% 20.53% 6.99% 6.33% -na- $95 0.06% $148,3332004 1 13.05% 12.60% 10.41% 6.69% 5.87% -na- $174 0.09% $197,8372005 1 3.74% 3.32% 1.28% 5.83% 5.47% -na- $316 0.13% $249,2332006 1 7.75% 7.32% 8.66% 4.93% 4.20% -na- $374 0.07% $510,1722007 3 7.79% 7.36% 6.94% 4.02% 3.49% -na- $1,349 0.22% $621,4932008 4 -13.71% -14.06% -7.00% 8.86% 8.03% -na- $1,673 0.33% $505,6602009 4 32.92% 32.41% 23.29% 11.44% 9.21% -na- $2,133 0.44% $482,2182010 3 10.16% 9.72% 9.44% 11.91% 9.60% -na- $2,436 0.54% $453,9092011 3 3.74% 3.32% 6.42% 8.94% 6.46% -na- $2,635 0.59% $443,1402012 4 11.96% 11.52% 10.47% 5.88% 5.11% -na- $3,041 0.66% $461,891
Global Multi-Sector (USD Unhedged) CompositeComposite Inception: 11/1/96 | Composite Creation: 11/1/96
Description: Western Asset’s Global Multi-Sector (USD Unhedged) composite includes portfolios that employ an active, team-managed investment approach around a long-term,
value-oriented investment philosophy. These portfolios use diversified strategies and all sectors of the fixed-income market in seeking to add value while minimizing risk. The
approach is to construct a strategic multi-sector high-yield portfolio by investing in global fixed-income markets and currencies. Primarily, these are mortgage-backed and asset-
backed securities, high-yield corporate securities, investment-grade corporate securities and emerging market securities.
Objective: Exceed the benchmark return by 200 basis points annually over the course of a market cycle. Provide income and capital appreciation.
Benchmark Description: The current benchmark is a blend of the Barclays Global Aggregate Bond Index (50%), the JP Morgan Emerging Markets Bond Index Plus (EMBI+) (25%),
and the Barclays U.S. High Yield 2% Issuer Cap Bond Index (25%). The Barclays Global Aggregate Bond Index provides a broad-based measure of the global investment-grade
fixed income markets. The JP Morgan Emerging Markets Bond Index Plus (EMBI+) tracks total returns for traded external debt instruments in the emerging markets. The instruments
include external-currency-denominated Brady bonds, loans and Eurobonds, as well as US dollar denominated local markets instruments. The Barclays U.S. High Yield 2% Issuer
Capped Bond Index is the 2% Issuer Cap component of the Barclays U.S. Corporate High Yield Bond index. The Barclays U.S. High Yield Bond Index covers the universe of fixed
rate, non-investment grade debt. From 1/1/2002 to 9/30/2005, the Custom Index was comprised of 50% Lehman Global Aggregate Index; 25% Lehman Brothers US High Yield
Index; 25% JP Morgan EMBI+ Index.
Base Currency: USD | Composite Minimum: US$25 million as of 4/1/07 (previously $5 million)
Fee Schedule: .40 of 1% on first US$100 million, .20 of 1% on amounts over US$100 million.
Examination Period: The composite has been examined for the period from November 1, 1996 to December 31, 2012.
Page 31
Western Asset has prepared and presented this report in compliance with the Global Investment Performance Standards (GIPS®).
For GIPS purposes, the firm is defined as Western Asset, a fixed-income investment manager comprised of Western Asset Management Company, Western Asset Management Company Limited, Western Asset Management Company Pte. Ltd. and
Western Asset Management Company Pty Ltd, with offices in Pasadena, New York, London, Singapore and Melbourne. Each Western Asset company is a wholly owned subsidiary of Legg Mason Inc. (“Legg Mason”), but operates autonomously and
Western Asset, as a firm, is held out to the public as a separate entity. Western Asset Management Company was founded in 1971.
In February 1996, Legg Mason, Inc. acquired Lehman Brothers Global Asset Management, Ltd. and renamed the acquired entity Western Asset Management Company Limited, at which time it was incorporated into the definition of Western Asset. In
September 2000, Western established Western Asset Management Company (Asia) Pte. Ltd. in Singapore. The office expanded in December 2003 when Legg Mason acquired Rothschild Asset Management (Singapore) Limited, thereby forming Western
Asset Management Company (Asia), a division of Legg Mason Asset Management (Asia) Pte Ltd (“LMAMA”). In October 2006, Legg Mason reorganized its Singapore operations, and LMAMA was renamed Western Asset Management Company Pte. Ltd.
(“Western Singapore”).
In December 2005, Legg Mason, Inc. acquired a substantial part of Citigroup’s worldwide asset management business. Citigroup’s North American fixed income asset management business was integrated into the legal entity Western Asset Management
Company, and the fixed income asset management business of Citigroup Asset Management Limited (“CAM Ltd”), located in London, was integrated into Western Asset Management Company Limited. As part of the Citigroup acquisition, Western Asset
opened Western Asset Management Company Pty Ltd (“Western Australia”), located in Melbourne Australia. The fixed income asset management business of Citigroup Asset Management Australia Limited was integrated into Western Australia. Similarly,
the fixed income asset management business of Citicorp Investment Bank (Singapore) Limited, and its affiliates in Singapore, was integrated into Western Singapore. In 2006, the accounts from these Citigroup offices transitioned to Western Asset, at which
time they were incorporated into the definition of the firm. The linking of the historical track records of composites previously managed by Citigroup Asset Management meet the portability requirements set forth by GIPS®.
Western Asset’s retail separately managed account business is currently managed by ClearBridge Asset Management, Inc.(“ClearBridge”), a subsidiary of Legg Mason, through an arrangement whereby portfolio managers of Western Asset manage the
accounts as dual hatted employees of ClearBridge. These portfolio managers have access to Western Asset’s fixed income investment resources, expertise and investment outlook and follow Western Asset’s investment process. Western Asset is in the
process of combining the fixed income portion of these separately managed accounts with Western Asset’s current structure.
2.Both Western Asset Management Company and Western Asset Management Company Limited are registered investment advisers and are regulated by the Securities and Exchange Commission. Western Asset Management Company Limited is also
authorized and regulated by the Financial Services Authority in the United Kingdom. Western Singapore is registered as an investment adviser in Singapore and regulated by the Monetary Authority of Singapore and is currently undergoing registration with
the SEC. Western Australia is licensed and regulated by the Australian Financial Services and the Australian Securities & Investments Commission.
The Firm has been verified for the period from January 1, 1993 through December 31, 2004.
Net investment results reflect the deduction of investment advisory fees, while the gross investment results do not. Actual returns will be reduced by advisory fees and any other expenses that may be incurred in the management of an investment account.
For each strategy shown, net performance results have been reduced by the amount of the highest fee charged to any Western Asset client employing that particular strategy during the period under consideration. Actual fees may vary depending on, among
other things, the applicable fee schedule and portfolio size. Western Asset’s fees are available upon request and also may be found in Part II of Western’s Form ADV.
All returns are gross of withholding tax on interest and capital gains as are the indices.
Investment fees have an effect on the investment results obtained by a client. For example, assume that a client places $1,000,000 under Western’s management and the firm achieves for the client a 10% compound annual return on a gross basis over ten
years. If an advisory fee of .325% of average assets under management for the ten years were charged and deducted from the returns, the resulting compound return would be reduced from 10% per year to 9.6425% per year. The ending dollar value of the
account would be reduced from $2,593,742 to $2,510,668.
The portfolios in the composites are all actual, fee-paying and performance fee-paying, fully discretionary accounts managed by the Firm for at least one full month. Investment results shown are for taxable and tax-exempt accounts and include the
reinvestment of all earnings. Any possible tax liabilities incurred by the taxable accounts have not been reflected in the performance.
The minimum asset size for inclusion in Western Asset’s US dollar based Core, Core Full Discretion, Long Duration, Limited Duration, Enhanced Cash, Intermediate and Corporate Composites is $25 million. The minimum asset size for inclusion in Western
Asset’s US dollar based High Yield Composite is $20 million. The minimum asset size for inclusion in Western Asset’s US dollar based TIPS Composite is $15 million. The minimum asset size for inclusion in Western Asset’s Bank Loan Composite is $10
million. The minimum asset size for inclusion in Western Asset’s US dollar based Emerging Market Composite is $5 million. The minimum asset size for inclusion in Western Asset’s US dollar based Index Plus Composite is $25 million as of 1/1/2003
(previously $3 million). There is currently no minimum asset size requirement for inclusion in Western Asset’s Absolute Return or Commodity Plus Composites. The minimum asset size for inclusion in US dollar based Global Multi-Sector, Global Sovereign,
Global Inflation-linked, Non US Core, and Global Core Full Discretion Composites is $5 million. The minimum asset size for inclusion in the non-dollar based composites is 5 million in local currency.
Additional information regarding policies for calculating and reporting returns is available upon request.
The dispersion of annual returns is measured by the standard deviation of the asset-weighted portfolio returns represented within the composite. Periods with five or fewer accounts are not statistically representative and are not presented.
The total return for the UK Core Composite, UK Long Duration Composite, UK Corporate Only Composite, UK High Alpha Composite and the UK Unconstrained Composite is in Sterling. The total return for the Euro Core Full Discretion Composite, Euro
Corporate Composite and Global Corporate Euro Composite Hedged is in Euro. All other composite total returns are expressed in US Dollars.
Futures and options may be used occasionally to hedge market exposure or add incremental value to the portfolio. At no time would the use of derivatives result in the portfolios being leveraged. Where portfolio guidelines permit, futures and options are
used from time to time to implement new portfolio strategies with minimum cost to the portfolio. Multi-currency portfolios use forward foreign exchange transactions frequently to hedge currency risk.
To receive a complete list and description of Western Asset’s composites and/or a presentation that adheres to the GIPS standards, please contact Veronica A. Amici at 626•844•9535 or [email protected].
For strategies starting mid-year, the return shown in the inception year is for the composite and index since inception. All returns for strategies with inception prior to 1/1/97 are available upon request.
Included in calculating the Enhanced Cash Composite’s performance is the enhanced cash portion of all accounts included in the US Index Plus Composite.
All data shown is as of period-end. Past investment results are not necessarily indicative of future investment results.
Composite disclosure
Page 32
This is a sub-fund (Fund) of Legg Mason Global Funds plc, an umbrella fund with segregated liability between sub-funds, established as an open-ended investment
company with variable capital and incorporated with limited liability under the laws of Ireland with registered number 278601. It qualifies, and is authorised in Ireland by
the Central Bank of Ireland as an undertaking for collective investment in transferable securities and is a section 264 Scheme as recognised by the Financial Conduct
Authority.
This document does not constitute an invitation to invest. Past performance is no guide to future returns and may not be repeated. The value of investments and the
income from them can go down as well as up and investors may not get back the amounts originally invested. The value of investments and the income from them can
be affected by changes in interest rates, in exchange rates, general market conditions, political, social and economic developments and other variable factors. Unlike a
bank or building society account, your money is at risk. This Fund may invest in ‘non-investment grade‘ bonds, which carry a higher degree of default risk than
‘investment grade‘ bonds. This Fund may invest in emerging markets that may be less liquid and may have less reliable custody arrangements than mature markets and
may involve a higher degree of risk. The fund will invest in certain types of financial derivative instruments for efficient portfolio management, investment purposes and/or
hedging. The use of these instruments involve higher levels of risk including but not limited to market risk, liquidity risk, counterparty risk, operations risk and legal risk.
This Fund is offered solely to non-US investors under the terms and conditions of the Fund‘s current prospectus – please refer to the KIID and Prospectus, which
describe the full objective and risk factors associated with this Fund. Before investing you should carefully read the Prospectus. Copies of prospectuses, simplified
prospectus, semi-annual and annual reports, if published, may be obtained at: BNY Mellon Investment Servicing (International) Limited, Riverside Two, Sir John
Rogerson‘s Quay, Grand Canal Dock, Dublin 2, Ireland.
This document is for use by Professional Clients and Eligible Counterparties. It is not aimed at, or for use by, Retail Clients. This information has been prepared from
sources believed reliable but is not guaranteed by Legg Mason Investments (Europe) Limited and is not a complete summary or statement of all available data. Opinions
expressed are subject to change without notice and do not take into account the particular investment objectives, financial situation or needs of individual investors.
Issued and approved by Legg Mason Investments (Europe) Limited, registered office 201 Bishopsgate, London, EC2M 3AB. Registered in England and Wales, Company
No. 1732037. Authorised and regulated by the Financial Conduct Authority. Client Services +44 (0) 20 7070 7444.
This document is for use by Asset Managers, Fund Distributors and Authorised Intermediaries. Not for use by Private Individuals.
April 2013 P0336
Important information
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