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US Small Caps: An Evergreen Opportunity
Citywire Berlin
William Hench, Portfolio Manager
FOR PROFESSIONAL INVESTORS ONLY. NOT TO BE USED OR VIEWED BY RETAIL CLIENTS.
November 2012
Page 1
Why Small Caps?
A Large Opportunity Set
Page 2
US Equities: % Share based on total # of companies
US Equities: % Share based on Mkt Cap
Source: FactSet, as at 30 June 2012
Basis: All publicly listed US domiciled companies.
Micro caps 3.2% Small caps
7%
Mid caps 23.7%
Large caps 66.1%
Micro caps 66.2%
Small caps 16.3%
Mid caps 13.3%
Large caps 4.2%
Small- and micro-cap companies account for 82% of the publicly-traded universe in the US
Exposure to the US Economy
Page 3 Source: FactSet, Compustat, Russell, J.P. Morgan Global Economics Research, J.P. Morgan Asset Management.
Foreign sales as a percentage of total sales is calculated as an unweighted average of individual index
constituent companies’ reported sales figures and does not capture all index members
reporting practices. As at 30 September 2012
•Small-cap stocks are typically more US
centric
•On average, approximately 80% of revenues
within the Russell 2000 originate from the US
Performance
Page 4
Small Caps have outperformed large caps over the long term
Source: Morningstar. As at 30 September 2012
80
130
180
230
280
01/11/02 01/08/03 01/05/04 01/02/05 01/11/05 01/08/06 01/05/07 01/02/08 01/11/08 01/08/09 01/05/10 01/02/11 01/11/11 01/08/12
LM Royce US Small Cap Opp A Inc USD 159.11% Russell 2000 TR USD USD 134.37% S&P 500 TR USD 87.62%
Page 5
The Long-Term Advantage Offered by Small Caps
Source: Royce & Associates, as at 31 December 2011.
CRSP 6-10 S&P 500
Cumulative Total Return 1,003,880.9% 233,474.4%
Average Annual Total Return 11.3% 9.5%
Growth of $10,000 $100,398,086 $23,357,439
*CRSP = Centre for Research in Security Prices
The Cap-Based Portfolio data tracks micro, small, mid and large-cap stocks on monthly and quarterly frequencies. The methodology used to calculate the series differs from the CRSP Stock File Capitalization Decile Indices. For the Cap-Based Portfolios, CRSP ranks all NYSE companies by market capitalization and then divides them into ten equally populated portfolios. Amex and NASDAQ stocks are then placed into the deciles determined by the NYSE breakpoints, based on their market capitalization. The largest capitalizations in each decile serve as the breakpoints that are applied to various exchange groupings. CRSP portfolios 1-2 represent large cap stocks, portfolios 3-5 represent mid-caps, portfolios 6-8 represent small caps, and portfolios 9-10 represent our benchmark micro-caps.
Total Returns from 1926
Page 6
Why Small Caps Now?
Reasons to Consider US Small Caps Now
Page 7
• Valuations: small caps are attractively valued relative to large caps
• M&A activity: cheap valuation, high cash balances and a lack of organic growth should
result in an increase in takeover activity
• Performance over the long term: small caps have historically rebounded strongly from
market declines
Page 8 Source: Bloomberg, as at 30 September 2012.
Not annualised
Valuations
10
12
14
16
18
20
22
Russell 2000 S&P 500
Recent underperformance and compression in multiples creates an attractive entry point
P/E Ratio
Potential for Consolidation
Page 9 Source: Legg Mason as at 30 September 2012.
Small caps trading at cheap valuations are an attractive target for larger companies
Target Acquirer Sector
Premium (previous
day's closing price) Description
COST PLUS INC/CALIFORNIA Bed Bath &
Beyond Consumer Discretionary 18%
Bed, Bath & Beyond completed the purchase of Cost Plus, a discount retailer of home furnishing in May, for $495M including net debt. The transaction was all cash and BBBY's first acquisition since 2003.
LeCROY CORP Teledyne IT 54% LeCroy makes test and measurement instruments such as oscilloscopes. Teledyne announced the acquisition of Lecroy on May 29th for $14.3, valuing Lecroy at $240M.
NOVELLUS SYSTEMS INC Lam Research IT 28% Novellus is a manufacturer of semi conductor equipments used in the fabrication of integrated circuits. The all-share deal was announced in December 2011 (but completed in 2012) and valued Novellus at $3.3B.
PLX TECHNOLOGY INC IDT IT 43% The $330M cash and share bid on the maker of semiconductor devices has recently been extended.
SOLUTIA INC Eastman Chemical
Materials 42% Eastman Chemical initially announced the acquisition of Solutia, a manufacturer of specialty chemicals and performance materials, in January, in a cash and share deal valuing Solutia at $3.38B.
TALBOTS INC Sycamore Partners
Consumer Discretionary 113% Sycamore, a private equity firm, announced the all cash purchase of Talbots, valuing the retailer of women’s apparel, shoes and accessories at $369M including net debt.
TEMPLE-INLAND INC International
Paper Materials 37%
International Paper completed the acquisition of this manufacturer of packaging products in February, for $4.5B including net debt. The all cash deal represents a 37% premium on the stock price preceding the initial bid in May 2011.
Recent M&A activity
Small Cap Performance Following Major Market Declines
Russell 2000 returns following all peak-to-trough declines of 10% or more since the Russell 2000’s
Inception
Page 10 Source: Royce & Associates, as at 30 September 2012.
*Not annualised
Annualised Returns from Trough (%)
Peak Date Trough Date Drawdown* 6 Months* 1 Year 3 Years
04/29/2011 10/03/2011 -29.1 +38.0 39.64 –
07/13/2007 03/09/2009 -58.9 72.2 97.9 35.3
05/05/2006 06/13/2006 -13.9 18.0 25.3 -6.5
12/28/2004 04/28/2005 -11.8 11.1 34.5 9.4
04/05/2004 08/12/2004 -14.4 23.5 29.2 16.5
03/09/2000 10/09/2002 -44.1 14.7 61.6 26.9
04/21/1998 10/08/1998 -36.5 29.6 39.7 11.4
10/13/1997 01/12/1998 -11.3 11.9 5 7.0
05/24/1996 07/24/1996 -15.4 20.7 34.9 14.9
03/18/1994 12/09/1994 -12.3 18.1 34.7 25.0
02/12/1992 06/25/1992 -12 17.4 25.8 17.0
10/09/1989 10/31/1990 -32.5 46.2 58.6 32
08/25/1987 10/28/1987 -38.9 38 41.8 6.7
07/03/1986 09/16/1986 -14.6 26.7 30.5 12.3
06/24/1983 07/25/1984 -24.1 21 33.8 23.8
06/15/1981 08/12/1982 -26.2 67.1 99.1 28.7
02/08/1980 03/27/1980 -26.3 59.6 81.4 36.2
10/05/1979 10/23/1979 -15.4 7.8 61.3 24.4
Averages 29.6% 46.3% 19.3%
Page 11
Royce & Associates at a glance
Page 12
Royce & Associates
One of the oldest (founded in late 1972) and largest
dedicated small-cap managers
• Chuck Royce, the firm’s founder, is considered one of the
pioneers of small-cap investing
• Small-cap value investing is the core of the business
• Seasoned staff of over 30 investment professionals
Co-ownership of funds
• Officers and employees have approximately $143 million
invested in the Royce Funds
$36 billion in total assets under management
Wholly owned, independent subsidiary of Legg Mason, Inc.
since 1st October 2001
Total invested AUM by Geography
Source Royce & Associates, LLC as at 30 September 2012.
Page 13
Organisation
Source: Royce & Associates, LLC as at 30 June 2012
Business Management
Average Industry Experience: 36 years | Average Experience with Royce: 25 years
Charles M. Royce Co-Chief Investment Officer W. Whitney George Co-Chief Investment Officer
Jack E. Fockler, Jr. Managing Director John D. Diederich Chief Operating Officer & Managing Director
Assistant Portfolio Managers and Analysts
Average Industry Experience: 16 years Average Experience with Royce: 5 years
John Protos Dana Lambert
Derrik C. Li Dilip P. Badlani
Mark Rayner
Traders
Average Industry Experience: 22 years Average Experience with Royce: 13 years
Dan A. O’Byrne Kenneth D. Smolanoff
Nickolas J. Spiezio Robert M. Fahy
James P. Tyler John S. Lucas, III
Mark A. Salamone Carl Vanderbush
Elizabeth Winslow
Portfolio Managers
Average Industry Experience: 26 years Average Experience with Royce: 11 years
Charles M. Royce Co-Chief Invest Officer
W. Whitney George Co-Chief Investment Officer
Boniface A. Zaino William A. Hench Brendan J. Hartman
Charles R. Dreifus David A. Nadel Jim P. Stoeffel
James A Skinner, III James J. Harvey George Necakov
George U. Wyper Lauren A. Romeo Chris E. Flynn
Jenifer L. Taylor Steven G. McBoyle Christopher D. Clark
Jay S. Kaplan Carl D. Brown Francis D. Gannon
Page 14
Investment Process and Philosophy
Page 15
Legg Mason Royce US Small Cap Opportunity Fund
• Experienced team
– Fund is managed by Bill Hench, who is assisted by Buzz Zaino
– Investment approach used to manage the Fund has been in place for more than 30 years
• Active investment style
– Invests in a diversified portfolio of smaller companies with a preference for micro-cap stocks
– Focuses on companies with a market capitalisation of up to $2.5 billion
– Seeks to purchase companies trading at discounts of at least 30% and preferably 50% of the investment
manager’s estimate of their value as businesses
• Stock pickers
– Bottom-up approach to stock selection is employed
• Benchmark
– Russell 2000 index
Please refer to the prospectus of Legg Mason Global Funds Plc (LMGF) for a full description of the Legg Mason Royce US Small Cap Opportunity Fund.
Source: Legg Mason/S&P/OBSR, as at 30 September 2012 The Legg Mason Royce US Small Cap Opportunity Fund is a sub-fund of Legg Mason Global Funds plc, an umbrella fund established as an open-ended
investment company with variable capital incorporated with limited liability under the laws of Ireland. It qualifies, and is authorised in Ireland by the Financial Regulator as an undertaking for collective investment in transferable securities. Please see the full Prospectus and Key Investor Information
Document (KIID) for Legg Mason Global Funds plc for a full description of risk factors associated with the Fund.
Page 16
Investment Universe – US Smaller Companies
Invest in companies with market caps up to $2.5 billion
Source: Legg Mason, as at 30 September 2012.
Small-Cap Universe
• $500 million - $2.5 billion
• More than 1,100 companies
representing more than
$1.4 trillion in total market
cap
• Greater liquidity, more
research coverage, greater
competition
Portfolio Weight 59.15%
Micro-Cap Universe
• <$500 million
• Approximately 3,000
companies representing
more than $336 billion in
total market cap
• Less liquidity, more
volatility, greater return
potential
Portfolio Weight 35.68%
• Comparable with securities
such as Club Med & WH
Smith
Page 17
Investment Philosophy
Royce employs a disciplined value approach and strives to provide investors with above-
average absolute performance
Royce invests in small-cap companies that are trading significantly below the investment
team’s assessment of their current worth
Royce maintains the same discipline, regardless of market movements and trends
Value Driven
• Focus on companies with low P/B and P/S ratios
• Select securities from the entire small-cap universe, not just the “value” portion
• Use a long-term investment horizon of generally two-to-five years
Value Driven
Smaller Cap Focus
Consistency
Page 18
Portfolio Themes
Portfolio companies fall into one of four distinct themes for tracking purposes:
Unrecognised Asset Values (15% - 30%)
• Example: Gaylord Entertainment (GET) - $2 billion hotel and entertainment group which owns valuable assets
including convention hotels near large cities as well as the rights to the Grand Ole Opry, the legendary country
music show.
Turnarounds (25% - 35%)
• Example: Lender Processing Services (LPS) – $2.4 billion provider of home finance services for the mortgage
industry. A new management team was brought in that shed the company’s non-performing businesses and
refocused it on its core activities.
Undervalued Growth (15% - 30%)
• Example: Lithia Motors (LAD) – $650 million car dealership benefiting from the resurgence of GM and Chrysler
brands.
Interrupted Earnings (15% - 35%)
• Example: Inphi (IPHI) - $390 million analog semiconductor producer. “Broken IPO” type stock, which sold off after
its November 2010 listing.
Page 19
Royce’s Disciplined Approach
Small & Micro-Cap US Companies
Identify Value Themes
Valuation
Portfolio
• Initial universe of over 4,100 stocks
• Sources of ideas:
– Trade journals
– Previously owned companies
– New low list
– Screens: Low P/B, P/S
Focus on four value themes:
• Unrecognised asset values
• Turnarounds/ Special Situations
• Undervalued growth
• Interrupted earnings
• Companies trading at a 30% and preferably, a 50% discount
• Diversified portfolio of 250-300 stocks
Page 20
Portfolio Construction
• Broad diversification generally among 250 - 300 holdings to help minimise stock specific risk and because
of liquidity/trading considerations
• Portfolio holdings are averaged in over time to help minimise price risk and generally constitute 35 - 50
basis point weightings at the time of purchase
• Position weights are based on valuation and conviction levels
• Positions are cut back when weightings reach 1.0% of portfolio assets and/or when the portfolio manager
determines that company progress is not being met
How Royce Manages a Broadly Diversified Portfolio
• Significant knowledge of the investment universe gained from 40 years of small-cap investing
• Portfolio Managers review all names with significant news flow at the start of each day
• Screen for valuation characteristics such as P/B and P/S
• Diversification is key because it allows sufficient time for turnaround situations to fully develop - it is also a way to
minimise risks that are specific to investing in small caps, including liquidity and trading risks
• Turnover within the investment universe is lower than generally perceived, especially in Industries like Aerospace –
therefore, opportunities remain consistent across the market cycles
Page 21
Page 22
Portfolio Positioning and Performance
Page 23
Legg Mason Royce US Small Cap Opportunity Fund
Source: Legg Mason. As at 30/09/12.
Sector Exposure Relative to Russell 2000
Fund Index Underweight Overweight
Materials 10.45% 5.08%
Industrials 20.20% 14.87%
Information Technology 22.15% 17.29%
Consumer Discretionary 16.85% 14.11%
Energy 6.92% 6.19%
Telecommunication Services 0.40% 0.77%
Consumer Staples 0.84% 3.65%
Utilities 0.00% 3.69%
Financials 13.95% 20.74%
Health Care 3.14% 13.60%
Cash & Cash Equivalents 5.09% 0.00%
Page 24
Fund Composition
Market Capitalisation
Legg Mason Royce US Small Cap Opportunity Fund
0.68
4.49
27.05
32.10
35.68
0.00
7.93
50.60
23.77
17.70
0
10
20
30
40
50
60
5,000-10,000 mil 2,500-5,000 mil 1,000-2,500 mil 500-1,000 mil Less than 500 mil
% o
f F
un
d
$ Millions
Legg Mason Royce US Small Cap Opportunity Fund Russell 2000
Source: FactSet. As at 30/09/12.
Page 25
Portfolio Characteristics
Please refer to “Important Information” for additional details.
Legg Mason Royce US Small Cap Opportunity Fund
Source: FactSet. As at 30/09/12.
Trailing P/E Ratio (Weighted Average) 14.64 14.43
Current Dividend Yield (Weighted Average) 0.87% 1.48%
Portfolio Characteristics Fund* Index
Value Factors
EPS Growth, Trailing 3-5 Years (Weighted Average) -4.95% 5.42%
Price/Book (Weighted Interquartile Average) 1.43 2.34
Price/Sales Ratio 1.09 2.40
Risk Factors over 3 Years
Standard Deviation 25.81% 21.28%
Tracking Error 5.71% 0.00%
Information Ratio -0.25 -
Sharpe Ratio 0.55 0.68
Treynor 11.79 14.37
Alpha -3.05 0.00
Beta 1.20 1.00
R Squared 0.98 1.00
M Squared 11.75 14.46
Weighted Average Cap ($bn) 0.96 1.27
Market Cap
Weighted Median Market Cap ($bn) 0.69 1.16
Page 26
Performance
Annualised Returns (USD)
NAV to NAV with gross income reinvested without initial charges, but reflecting annual management fees, based in USD for Class A Shares. For sector figures: Copyright 2009, Morningstar, In. All Rights Reserved.
Past performance is no guide to future returns and may not be repeated.
Legg Mason Royce US Small Cap Opportunity Fund
Source: Legg Mason. As at 30/09/12.
Page 27
Performance
Calendar Year Returns (USD)
NAV to NAV with gross income reinvested without initial charges, but reflecting annual management fees, based in USD for Class A Distributing Shares. Please refer to “Important Information” for additional details.
Past performance is no guide to future returns and may not be repeated.
Legg Mason Royce US Small Cap Opportunity Fund
Source: Legg Mason. As at 30/09/12.
83.43
16.82
3.50
17.89
-4.61
-47.74
59.13
34.04
-12.39
14.67
47.25
18.33
4.55
18.37
-1.57
-33.79
27.17 26.85
-4.18
14.23
-60
-40
-20
0
20
40
60
80
100
2003 2004 2005 2006 2007 2008 2009 2010 2011 YTD
%
Legg Mason Royce US Small Cap Opportunity Fund - Class A Dist. (A) USD Russell 2000 Index
Page 28
Appendix
Page 29
Top 10 Fund Holdings
Legg Mason Royce US Small Cap Opportunity Fund
Source: Legg Mason. As at 30/09/12.
Security
Jones Group Inc
Pennymac Mor Inv Trst
Apogee Enterprises Inc
Trex Company Inc
Unisys Corp
Kaiser Aluminum Corp
Integ Silicon Solution
UNIFI INC USD0.1
Lasalle Hotel Properties
QUANEX BUILDING P USD0.01
Total
Total Number of Holdings
696 0.71
7.48
276
255 0.73
258 0.72
2,303 0.72
537 0.77
839 0.73
1,128 0.73
1,032 0.82
969 0.78
556 0.78
Market Cap ($m) % of Total Fund
Page 30
Active Share/Tracking Error Positioning
Active share of a fund is a measure of the percentage of stock holdings in a manager's portfolio that differ from the benchmark index. In other words, it’s
a way to estimate how different a fund is from its benchmark.
*Active Share and Mutual Fund Performance (Antti Petajisto – 2010).
Active share is calculated by taking the sum of the absolute value of the differences of the weight of each holding in the portfolio versus the weight of each holding in the benchmark index and dividing by two.
Legg Mason Royce US Small Cap Opportunity Fund
Source: Legg Mason. As at 30/09/12.
Fund
DiversifiedStock Picks
ConcentratedStock Picks
ClosetIndexing
Factor Bets
20%
30%
40%
50%
60%
70%
80%
90%
100%
0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0%
Active S
hare
Tracking Error (Three-Year Annualized)
Current Active Share - Tracking Error Positioning
Page 31
Performance in Market Rebounds
1 Year Performance from Market bottom in 2002*
Royce Opportunity Fund
Source: Morningstar/Bloomberg, as at 7 October 2003. Performance is annualised for the Institutional share class and is presented on a total return basis and reflects the reinvestment of distributions. There are differences between the Royce Opportunity Fund and the Legg Mason Royce US Small Cap Opportunity Fund including differences in 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 Royce Opportunity Fund is, therefore, not indicative of the future performance of the Legg Mason Royce US Small Cap Opportunity Fund. The Royce Opportunity Fund has been used to demonstrate the longer term track record of the investment manager. The Royce Opportunity Fund is US domiciled and is therefore unavailable for investment outside of the US.
1 Year Performance from Market bottom in 2009** Legg Mason Royce US Small Cap Opportunity Fund
Source: Morningstar/Bloomberg, as at 9 March 2010. NAV to NAV with gross income reinvested without initial charges, but reflecting annual management fees, based in
USD for Class A Distributing Shares. Please refer to “Important Information” for additional details.
. Past performance is no guide to future returns and may not be repeated
Class A Distr. (USD)
For illustrative purposes only
Current “Themes”
Page 32
• The fund has exposure to housing related names, which make up 14-15% of the portfolio: Home builders, building materials, decking providers, roofing names, REITs etc.
• The fund has increased its allocation to regional banking and financial related stocks over the last year, making up around 10% of the portfolio
• Consumer related names including retailers make up 15% of the portfolio
• Energy plays poised to benefit from the shale energy boom in the US, represent 5% of the portfolio and growing
• Within Industrials, the fund is invested in several aerospace names which are a particularly bright spot for the US economy
Source Royce & Associates, LLC as at 30 September 2012.
Example: Housing
• The team has steadily built exposure to housing related
names over the last year.
• This exposure includes a variety of names across
different sectors such as builders and wood suppliers,
as well as plumbing-related names and providers of
decking.
• Valuations are still low but the sector seems to be
bottoming and a number of factors are supportive
including:
– Historically low mortgage rates
– High affordability
– The existence of pent-up demand
– Prices have declined 30% nationwide since 2006
peaks
– Significant capacity has been taken out
Page 33 Source top chart: US Department of Commerce: Census Bureau, as at 01 August 2012. Source: Bloomberg, as at 31 August 2012.
. Bottom chart rebased to 100.
70
90
110
130
150
170
190
Dec 10 Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12
Toll Brothers Russell 2000
400
800
1200
1600
2000
2400
Dec 95 Dec 97 Dec 99 Dec 01 Dec 03 Dec 05 Dec 07 Dec 09 Dec 11
Housing Starts: Total: New Privately Owned Housing Units Started
Example: Banks
• The fund’s exposure to banking and other related
financial stocks (around 10%) is now probably close to
historical highs for the strategy.
• The team has also recently added to community banks
where there are good underlying regional economies:
(e.g. Washington D.C. area; Virginia).
• Small-cap banks posted among the best 4Q11 Russell
2000 industry performance and this strong performance
has continued YTD.
• Banks held in portfolio are full service regional/local
banks benefiting from commercial & industrial loan
growth in areas where the larger players have pulled
out.
• They are plays on undervalued assets and are also
ways to play an improving housing market.
Page 34 Source: Bloomberg, as at 31 August 2012. Rebased to 100.
95
100
105
110
115
120
125
130
135
Dec 11 Jan 12 Feb 12 Mar 12 Apr 12 May 12 Jun 12 Jul 12 Aug 12
Washington Federal Russell 2000
Example: Aerospace
• 2012 will be another record year in terms of production
level. 2013 and 2014 should also be record years.
• The large commercial jet backlog is also the highest it
has ever been.*
• US manufacturers and suppliers are benefiting from a
weak US$.
• Barnes ($1.14 billion market cap), a long term portfolio
holding, is a manufacturer of precision metal parts and
distributor of industrial supplies. The company has been
benefiting from improving prospects for its aerospace
clients.
Page 35 Source: Bloomberg, as at 31 August 2012. Rebased to 100.
*According to Aerospace Market News as of 30 September 2011.
90
110
130
150
170
190
210
230
250
270
Jun 09 Dec 09 Jun 10 Dec 10 Jun 11 Dec 11 Jun 12
Barnes Russell 2000
Page 36
Legg Mason Royce US Small Cap Opportunity Fund – Investment Team
History & Background
William A Hench, Portfolio Manager and Senior Analyst
2002 – present:
• Portfolio Manager and Senior Analyst
• 20 years investment industry experience
• Portfolio Manager of the Legg Mason Royce US Small Cap Opportunity Fund since 2009.
Previous Investment Experience:
• J P Morgan
• Cooper and Lybrand
Years of Industry
Experience Years at Royce
Other Portfolio Managers
Boniface “Buzz” A Zaino
Managing Director and Assistant Portfolio Manager
MBA, Columbia University
44 14
Traders
Robert Fahy
BA, State University of New York, Albany
23 14
Mark A. Salamone
BA, University of Maryland
13 9
Legg Mason Royce US Small Cap Opportunity Fund
Source: Royce & Associates, as at 30 June 2012.
Page 37
Important Information
The Legg Mason Royce US Small Cap Opportunity Fund is a sub-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 FSA.
Royce & Associates is affiliated with Legg Mason through common control and ownership by Legg Mason, Inc. Legg Mason provides its clients with
access to Royce & Associates primarily through its range of Irish and UK authorised funds in which Royce & Associates serves as investment manager
or sub-investment manager.
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. Fluctuations in
exchange rates can affect the value of the Fund and the income from it.
This Fund is offered solely to non-US investors under the terms and conditions of the Fund’s current prospectus - please refer to the Key Investor
Information Document (KIID) and Prospectus documentation, which describe the full risk factors associated with this Fund.
These Funds may acquire shares in companies with relatively small market capitalisations and may involve a higher degree of risk.
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 Services Authority. Client Services 0207 070 7444
November 2012
Ref:8355
Past performance is no guide to future returns and may not be repeated.
This document is for Asset Managers, Fund Distributors and Authorised Intermediaries. Not for use by Private Individuals.
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