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Quality Knows No Borders: Why Royce, Why Global and Why European Smaller Companies?
This document is for Asset Managers, Fund Distributors and Authorised Intermediaries. Not for use by Private Individuals.
David Nadel, Director of International Research, Royce & Associates
Citywire Trade Mission, New York, 20-22 June 2011
* Based on 31 May 2011 Fund Data
Agenda
• About Royce & Associates
• Our Funds
• The Case for Global & European Small Caps
• Royce Investment Process
• Risk Management
• Appendix
Page 1
Page 2
Royce & AssociatesOne of the oldest (founded in late 1972) and largest dedicated small-cap managers
in the world
• Chuck Royce, the firm’s founder and co-CIO, was a pioneer in the development of the small-cap value investing discipline
• Whitney George, co-CIO, has worked with Chuck Royce for the last 20 years
• Nearly 40 years of small- and micro-cap value experience
• Apply the same disciplined investment approach, regardless of market movements and trends
• Seasoned staff of 34 professionals
• Actively managing non-US equities since 1998
$42 billion in open- and closed-end fund assets
Strong risk/reward track record
Award winning investment expertise
Co-ownership of funds
• Officers, employees and their affiliates have approximately $149 million invested in the Royce Funds
Wholly owned, independent subsidiary of Legg Mason, Inc. since October 1, 2001
Source Royce & Associates, LLC as of 31 May 2011
15%
81%
4%
Total Invested AUM by Geography
Rest of World
US Equity
European Equity
Page 3
Organisation
Source: Royce & Associates, LLC as of 31 May 2011
Business ManagementAverage Industry Experience: 35 years - Average Experience with Royce: 24 years
Charles M. Royce President and Co-Chief Investment Officer
Jack E. Fockler, Jr. Managing Director
W. Whitney George Co-Chief Investment Officer and Managing Director
John D. DiederichChief Operating Officer and Managing Director
Assistant Portfolio Managers and AnalystsAverage Industry Experience: 18 years Average Experience with Royce: 5 years
Dilip Badlani Dana Serman
Chris E. Flynn Francis Gannon
Mark Rayner John Protos
Christopher Clark Derrick Li
TradersAverage Industry Experience: 22 years Average Experience with Royce: 12 years
Dan O’Byrne Kenneth Smolanoff
Nick Spiezio Robert Fahy
Jim Tyler John Lucas
Mark Salamone Carl Vanderbush Elizabeth Winslow
Portfolio ManagersAverage Industry Experience: 25 years | Average Experience with Royce: 10 years
Charles M. Royce - Co-Chief Investment Officer W. Whitney George Co-Chief Investment Officer
Boniface A. Zaino Steven McBoyle Jim Stoeffel
Charles R. Dreifus William A. Hench George Wyper
James A. Skinner, III James J. Harvey George Necakov
Jenifer Taylor David Nadel Carl Brown
Jay S. Kaplan Lauren Romeo Brendan Hartman
Page 4
Offshore Funds:Multiple Offerings Tailored To Specific Investor Needs
Performance (Cumulative)Since Inception
Fund%
Since Inception Benchmark
%Legg Mason Royce Smaller Companies Fund (inception 1/3/04)Russell 2000 Index +99.44% +56.53%
Legg Mason Royce US Small Cap Opportunity Fund (inception: 8/11/02)Russell 2000 Index +215.35% +149.78%
Legg Mason Royce Global Smaller Companies Fund (inception: 31/12/09)Russell Global Small Cap Index +40.07% +30.47%
Legg Mason Royce European Smaller Companies Fund (inception: 31/12/09)Russell Europe Small Cap Index +35.15% +29.96%
Strong and consistent returns across all strategies:
Source: Legg Mason as at 31 May 2011 NAV to NAV with net income reinvested, without initial charges but reflecting annual management fees for Class A Dist (A) shares in USD for all strategies except Legg Mason Royce European Smaller Companies Fund which is in EUR.
Performance for US strategies is shown versus Russell 2000 Index, Global Smaller Companies is shown versus Russell Global Small Cap Index and European Smaller Companies is shown versus Russell Europe Small Cap Index. Performance is shown cumulative. Past performance is not a guide for future results and may not be
repeated.
Strategy Fund Domicile Ratings
US Small Cap Legg Mason Royce Smaller Companies FundLegg Mason Royce US Small Cap Opportunity Fund
Ireland S&P AA, OBSR AAS&P AA
Global Small Cap Legg Mason Royce Global Smaller Companies Fund Ireland
European Small Cap Legg Mason Royce European Smaller Companies Fund Ireland
Page 5
Legg Mason Royce Global Smaller Companies Fund Legg Mason Royce European Smaller Companies Fund Key Facts
Active investment style• Uses a bottom-up approach to select securities
• Focuses primarily on companies with market capitalisations up to $5.0 billion
• Seeks to purchase companies trading at sizeable discounts to the investment manager’s estimate of intrinsic value
• Invests in a focused portfolio of approximately 60-80 companies
Experienced team• Funds co-managed by Whitney George, Co-Chief Investment Officer and David Nadel, Director of International Research
• Royce invests primarily in small-cap equities and has almost 40 years’ experience in the asset class
Please refer to the prospectus of Legg Mason Funds plc for a full description of the Legg Mason Royce Global Smaller Companies Fund and Legg Mason European Smaller Companies Fund..
Page 6
Fund Performance
Performance (%) Cumulative Class A Dist shares (A) 3 M 6 M 1Y Since Inception
Legg Mason Royce Global Smaller Companies Fund (31/12/09) 5.20 16.54 46.65 40.07
Russell Global Small Cap Index (USD) 2.18 12.76 32.04 30.47
Legg Mason Royce European Smaller Companies Fund (31/12/09) 2.55 6.99 30.46 35.15
Russell Europe Small Cap Index (EUR) 2.08 11.57 24.63 29.96
Source: Legg Mason. as at 31 May 2011 NAV to NAV with net income reinvested without initial charges but reflecting annual management fees for Class A Dist (A) shares. Past performance is no guide to future returns and may not be repeated.
Performance for the Legg Mason Global Smaller Companies Fund is shown in USD and for Legg Mason European Smaller Companies Fund is shown in EUR.
Manager’s Track Record
Page 7
Source: Morningstar as at 31 May 2011.There are differences between the Royce Global Value Fund and the Legg Mason Royce Global Smaller Companies Fund including differences in the amount ofassets under management, cash flows, fees and expenses, and applicable regulatory requirements, including investment and borrowing restrictions. The past performance of the Royce Global ValueFund is, therefore, not indicative of the future performance of the Legg Mason Royce Global Smaller Companies Fund. The Royce Global Value Fund has been used to demonstrate the longer termtrack record of the investment manager. The Royce Global Value Fund is US domiciled and is therefore unavailable for investment outside of the US.
Royce Global Value Fund. For illustrative purposes only. This has been used to demonstrate the manager’s long-term track record of investing in global equities
Manager’s Track Record
Page 8
Source: Morningstar as at 31 May 2011.There are differences between the Royce European Smaller Companies Fund and the Legg Mason Royce European Smaller Companies Fund includingdifferences in the amount of assets under management, cash flows, fees and expenses, and applicable regulatory requirements, including investment and borrowing restrictions. The performance of theRoyce European Smaller Companies Fund is shown in USD. The past performance of the Royce Global Value Fund is, therefore, not indicative of the future performance of the Legg Mason RoyceEuropean Smaller Companies Fund. The Royce European Smaller Companies Fund has been used to demonstrate the longer term track record of the investment manager. The RoyceEuropean Smaller Companies Fund is US domiciled and is therefore unavailable for investment outside of the US.
Royce European Smaller Companies Fund. For illustrative purposes only. This has been used to demonstrate the manager’s long-term track record of investing in global equities
Why Global & European Small Caps?Acceptance Varies
Page 9
Within the US:
• Indices and ETFs are now part of the landscape
• Strategic and permanent allocation
Outside the US:
• Small cap is not an accepted asset class
• Used tactically to add “beta” to portfolio
• Companies are viewed opportunistically
• Conditions resemble that in the US 15-20 years ago
Why Global & European Small Cap?Inefficient markets: Under-followed, Under-valued
Page 10
• Investment universe is enormous with more than 19,000 companies
• Analyst coverage is limited
• Institutional investors tend to stay away from small-cap companies as it is harder to put large amounts of capital to work
• Lack of investor focus and analyst coverage creates significant potential under-valuation
• Universe is constantly replenishing itself with IPOs and as larger-cap stocks fall in market capitalisation
Small-cap exposure within broader indices such as MSCI World*:
*Source: Bloomberg , IBES and MSCI as at 31/07/10. All MSCI data is provided “as is”. In no event shall MSCI, its affiliates or any MSCI data provider have any liability of any kind in connection with MSCI data described herein.
*Data represents percentage of small cap within MSCI World Index
14%
15%
71%
Small Caps
Mid Cap
Large Cap
16
6
0
2
4
6
8
10
12
14
16
18
MSCI All Country World Index
Large Cap
Small Cap
Average number of sell-side analysts per stock:
2,414
6,433
-500
500
1,500
2,500
3,500
4,500
5,500
6,500
7,500
MSCI All Country World Index
Large Cap
Small Cap
Universe of Global Small Cap stocks vs. Large Cap Stocks:
Page 11
How Do We Define Smaller Companies?
*Source: FactSet 31 March 2011. ** Primary selection universe
SMid-Cap Universe
• Companies with market caps between $2.5 billion and $5.0 billion
• More than 850 companies representing more than $3 trillion in total market cap*
Small-Cap Universe**
• Companies with market caps between $500 million and $2.5 billion
• More than 3,200 companies representing more than $3.7 trillion in total market cap*
• Greater liquidity, more research coverage, greater competition
Royce invests in global companies with market caps up to $5.0 billion
Micro-Cap Universe**
• Companies with market caps up to $500 million
• More 15,500 companies representing more than $1.4 trillion in total market cap*
• Less liquidity, more volatility, greater return potential
Page 12
Royce Investment Process
*Cap Rate is defined as a company’s EBIT/EV (pre-tax earnings yield)
Balance Sheet Focus: seeks companies that have an asset base funded 50% by equity
Returns on Capital Analysis: seeks companies with return-on-invested-capital hurdle of 15% or greater
Enterprise Conviction: management meetings and Enterprise Conviction Scoring (ECS)
Valuation Analysis: cap rate and returns-adjusted fair value of capital employed pricing models
Initial universe of more than 18,000
stocks
Assets/Equity ratio 60 - 80 stocksCap Rate*ROIC Management meetings
Company meetings will only take place if a stock makes it to this
point in the process
Small & Micro Cap Global Universe
Balance Sheet Focus
Returns on
Capital Analysis
Valuation Analysis
Enterprise Conviction
Portfolio
Page 13
Balance Sheet FocusCompanies with strong balance sheets can better survive difficult times for their industry or sector
Leverage takes into consideration both long-term debt and short-term borrowings
High leverage can significantly burden operations• Constrains use of cash
• Less flexibility to absorb changes in sales & profitability and therefore increases risks
• Less able to absorb external shocks
• Less able to tap into capital markets in time of need
Assets/ Shareholders’ Equity• Focus on the equity ratio (the percentage of a company’s assets funded by shareholders’ equity)
• For non financial companies (2:1 ratio)
– Can reveal potential issues in a way that traditional metrics such as EBITDA and interest coverage may not
– Can be better suited for longer-term analysis that is less effected by cyclicality
– Quasi-debt such as account receivable financing, working-capital-based financing are considered
Returns On Capital Analysis
Return on Investment Capital (ROIC)
• Most complete indication of a company’s ability to generate returns - only includes assets and
liabilities that are employed in generating operating earnings
– Ability to meaningfully compare ROIC vs. WACC*
– Royce’s hurdle rate of 15% helps ensure we focus only on high quality companies
Prefers ROIC to Return on Equity (ROE):
• ROE fails to take into account the capital structure
– The impact of leverage on returns
– ROE is as much a measure of capital structure as profitability
* Weighted Average Cost of Capital
Page 14
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Enterprise Conviction • Meetings with company management, suppliers, clients and customers • Enterprise Conviction Scores which are based on a ranking driven by the five categories shown below; a higher
score represents a better positioned company.
Operating efficiency
Attractiveness of Sector
Company’s competitive position
Operating Efficiency
Financial track record
Extra-financial factors
• Companies get a rating of 0-10 in each of the five categories
• Stocks with a total rating of 0-25 are deemed un-investible
• Stocks with a total rating of 26-50 are investable
Valuation Analysis:
Page 16
Seeks companies trading at a 30%, and preferably a 50% discount , to Royce’s estimate of intrinsic value
Pricing/valuation discount provides a margin of safety and enables accumulation of company’s shares over time
Cap rate pricing model (15% or greater)
• Business buyer’s approach
• Cash on cash return
• Equates to a company’s earnings yield (defined as ebit/enterprise value)
Returns-adjusted fair value of capital employed
• Adjusts last reported capital employed by the ratio of its 5-year mean ROIC (its earnings power) to Royce’s hurdle rate of 15%
Page 17
Stock example:Used Car System Solutions (USS Co) (4732 JP Equity)
(Enterprise Value ÷ Capital Employed*)
(5-year average ROIC ÷ Hurdle Rate**)
(¥135.bn ÷ ¥92 bn)
(26% ÷ 15%)
USS Co trades at a 15% discount to its “no growth” intrinsic value.
= 0.85 or 85%
Key valuation metrics USS
Price/Earnings 11.98x
Price/Book 1.36x
Price/Cash Flow 8.15x
Cap Rate 16.0%
Dividend Yield 3.35%
EPS growth 14.12%
Net Debt/EBITDA -1.02
Equity ratio 81.0%
Source: Legg Mason as at 10 June 2011. For illustrative purposes only. This does not constitute a recommendation to buy or sell any stock. *Capital employed is defined as Total equity + Gross debt – Gross Cash – Short term investments
**Hurdle rate represents Royce’s in-house hurdle rate of 15%
Japan’s largest used vehicle auction market company with a greater than 30% market share
Returns-adjusted fair-value of capital employed:
Cap rates:
EBIT
Enterprise Value
¥21,940
¥ 135,000
USS trades at a 16% Cap rate
= 16%
Page 17
Page 18
Portfolio Construction
C Box
B Box
A Box
Highest conviction 2.5%-3.5% position weights
Confidence is growing1.5%-2.5% position weights
Newer positions or an existing holdingsbeing decreased;
0.0%-1.5% position weights
Portfolio is comprised of 60-80 stocks
20%allocation
40%allocation
40%allocation
Page 19
Buy & Sell Discipline
• Buy and sell triggers are established for each position around a company’s intrinsic value
• Use cap rate* to ensure the return potential of an investment is commensurate with the risk of equity ownership
• Typically buy companies trading at a cap rate in the mid teens (e.g. ~15%, or 7x pre-tax earnings) and sell when the cap rate trades in the mid single digits (e.g. ~7.5%, or 14x pre-tax earnings)
*Cap rate is defined as a company’s EBIT/EV (pre-tax earnings yield)
Page 20
Risk Reduction Techniques
Risk management is at the core of Royce’s investment process: • Focus primarily on avoiding capital loss rather than managing against a benchmark
• Fund will only invest in companies with strong balance sheets and above-average returns on capital
• Fund seeks companies that are trading at a 30%, and preferably a 50% discount, to their estimate of intrinsic value
• Contrarian approach helps to minimise liquidity risk – buying when others are selling, and selling when others are buying
Additional Risk controls: • Box report system ensures decisions are made incrementally over time
• Both co-managers must agree before a company can move up in the portfolio
• Industry weights are typically limited to 25% of the portfolio
Page 21
Funds performance and diagnostics
Page 22
Performance: Legg Mason Royce Global Smaller Companies Fund
Source: Legg Mason as at 31 May 2011.NAV to NAV with net income reinvested without initial charges but reflecting annual management fees. The Fund was launched on 31 December 2009. Past performance is no guide to future returns and may not
be repeated.
5.20
16.54
46.85
26.85
2.18
12.76
32.04
20.65
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
45.00
50.00
3 Months 6 Months 1 Year Since Inception
Legg Mason Royce Global Smaller Companies Fund (Class A Distr. (A) USD) Russell Global Small Cap Index
Annualised returns
Page 23
Performance: Legg Mason Royce European Smaller Companies Fund
Source: Legg Mason as at 31 May 2011.NAV to NAV with net income reinvested without initial charges but reflecting annual management fees. The Fund was launched on 31 December 2009. Past performance is no guide to future returns and may not
be repeated.
2.55
6.99
30.46
23.69
2.06
11.57
24.63
20.32
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
3 Months 6 Months 1 Year Since Inception
Legg Mason Royce European Smaller Companies Fund (Class A Distr. (A) EUR Russell Europe Small Cap Index (EUR)
Annualised returns
Page 24
Portfolio DiagnosticsLegg Mason Royce Global Smaller Companies Fund
Source: Royce & Associates, LLC as 31 May 2011
Fund Net Assets $8.0 millionNumber of Holdings 71Weighted Average Market Cap $2,880 million
Portfolio Characteristics
Portfolio Market Cap Breakdown
FundWeighted Average P/E Ratio 15.3xWeights Average P/B Ratio 2.5x
Metrics
Portfolio Concentration
Top 10 Holdings 26.79% < $500 Million 5.0%$500 Million - $1.0 Billion 10.9%$1.0 Billion - $2.5 Billion 42.0%$2.5 Billion - $5.0 Billion 32.3%$5.0 Billion - $10.0 Billion 6.7%$10.0 Billion - $15.0 Billion 2.3%>$15.0 Billion 0.9%
Page 25
Portfolio DiagnosticsLegg Mason Royce European Smaller Companies Fund
Source: Royce & Associates, LLC as 31 May 2011
Fund Net Assets $2.0 millionNumber of Holdings 75Weighted Average Market Cap $2,226 million
Portfolio Characteristics
< $500 Million 12.5%$500 Million - $1.0 Billion 20.7%$1.0 Billion - $2.5 Billion 36.3%$2.5 Billion - $5.0 Billion 22.8%$5.0 Billion - $10.0 Billion 6..0%$10.0 Billion - $15.0 Billion 0.0%>$15.0 Billion 1.8%
Portfolio Market Cap Breakdown
FundWeighted Average P/E Ratio 15.1xWeights Average P/B Ratio 2.4x
Metrics
Portfolio Concentration
Top 10 Holdings 22.91%
Page 26
Legg Mason Royce Global Smaller Companies Fund
Source: Royce & Associates as at 31 Mary 2011
Top 10 Positions % of Portfolio Company Description
Semperit AG Holding 3.22 Manufacturer of specialised rubber products including rubber escalator handrails and hoses
Santen Pharmaceutical Company 3.21 Pharmaceutical company specialising in ophthalmic products
Mayr-Melnholf Karton AG 3.07 Processes recycled cardboard and produces carton board for packaging
Teradyne AG 2.89 US-based company supplier of automatic test equipment
Benesse Holding, Inc. 2.66 Japanese provider of tutoring, foreign-language courses and nursing homes
Allied Nevada Gold Corporation 2.52 US-based gold mining and exploration company
Ashmore Group 2.50 One of the world's leading investment managers dedicated to emerging markets
USS Co., Ltd. 2.26 Management of used vehicle auction
FamilyMart Co., Ltd. 2.25 Japan-based company that operates a chain of convenience stores
NU Skin Enterprises Inc. Cl. A 2.21 Personal care products
Page 27
Legg Mason Royce European Smaller Companies Fund
Source: Royce & Associates as at 31 May 2011
Top 10 Positions % of Portfolio Company Description
Burckhardt Compression 2.86 Manufacturer of reciprocating processors used for oil refining, chemical and petrochemical industries
Pfeiffer Vacuum Technology 2.50 Manufactures vacuum pumps used in healthcare, semiconductors and other industries
Mayr-Melnholf Karton AG 2.41 Processes recycled cardboard and produces carton board for packaging
Semperit AG Holding 2.32 Manufacturer of specialised rubber products including rubber escalator handrails and hoses
SMA Solar Technology AG 2..22 A leader manufacturer in the production of solar inverters
Takkt AG 2.21 Leading B2B direct marketing specialist for business equipment
Ashmore Group 2.17 One of the world's leading investment managers dedicated to emerging markets
Hochschild Mining 2.15 Underground precious metals producer focusing on high grade silver and gold deposits
Lamprell 2.06 Specialists in rig upgrade and refurbishment
Carl Zeiss Meditec AG 2.01 Medical technology company specialised in ophthalmology and neuro/ENT surgery.
Page 28
Portfolio Sector Breakdown
Source: Royce & Associates as at 31 May 2011
Sector % of Portfolio
Material 23.51
Information Technology 14.22
Industrials 13.75
Health Care 12.52
Financials 11.9
Consumer Discretionary 11.04
Consumer Staples 9.02
Energy 7.14
Treasuries & Cash -3.11
Legg Mason Royce Global Smaller Companies Fund Legg Mason Royce European Smaller Companies Fund
Sector % of Portfolio
Material 16.26
Health Care 15.51
Industrials 15.4
Information Technology 14.12
Financials 13.01
Consumer Discretionary 12.79
Energy 7.56
Consumer Staples 3.7
Treasuries & Cash 1.64
Page 29
Portfolio Country Breakdown
Source: Royce & Associates as at 31 May 2011
Country % of PortfolioUnited States 19.44Japan 16.41Canada 8.19Germany 7.16Austria 6.29South Africa 6.00Australia 5.47Hong Kong 5.22United Kingdom 4.55Belgium 3.34South Korea 2.83France 2.77Switzerland 2.15China 1.91Peru 1.89U.A.E 1.67Italy 1.37Brazil 1.29Mexico 1.27Egypt 1.18Norway 1.15Denmark 0.80Turkey 0.75Cash -3.11
Legg Mason Royce Global Smaller Companies Fund Legg Mason Royce European Smaller Companies Fund*Country % of PortfolioGermany 17.04France 15.30South Africa 8.98United Kingdom 8.93Switzerland 8.08Austria 4.72Norway 4.00Belgium 3.74U.A.E. 3.68Australia 2.85Denmark 2.31Egypt 2.23Peru 2.15Turkey 2.15Italy 2.13Mexico 1.74Greece 1.58Finland 1.48Netherlands 1.16Spain 1.02Hong Kong 0.97Jersey 0.95Ireland 0.74Sweden 0.41Cash 1.64
* For Legg Mason European Smaller Companies Fund at least 80% of stocks must be listed in EMEA.
Page 30
Co-Portfolio Managers
W. Whitney George is Co-Chief Investment Officer, Portfolio Manager and a Managing Director of Royce & Associates, LLC, investment adviser to The Royce Funds. Mr. George manages Royce Low-Priced Stock Fund and Royce Focus Trust, a closed-end portfolio. He also co-manages Royce Premier Fund with Charles
Royce, Royce Value Fund with Jay Kaplan, Royce Global Value Fund with David Nadel, Royce SMid-Cap Value Fund with Steven McBoyle and Royce Focus Value Fund with George Wyper. In addition, he serves as assistant portfolio manager for Royce Micro-Cap, Value Plus and Global Select Funds as well as Royce Capital Fund–Micro-Cap Portfolio. He serves on the portfolio management team of Royce Mid-Cap Fund with Carl Brown, Brendan Hartman and James Stoeffel. He has 29 years of investment industry experience.
Prior to joining Royce & Associates in 1991, Mr. George held positions with Dominick & Dominick, Inc., WR Lazard & Laidlaw, Inc., Laidlaw, Adams & Peck and Oppenheimer & Co. Inc. He is a graduate of Trinity College.
David A. Nadel is a Portfolio Manager and Director of International Research for Royce & Associates, LLC, investment adviser to The Royce Funds.
Mr. Nadel joined the firm in 2006 and previously was a Senior Portfolio Manager at Neuberger Berman Inc. (2004-2006) and a Senior Analyst at Pequot Capital Management Inc. (2001-2003). He was also named to the 1999 and 2000 Institutional Investor All-American Research Teams. Mr. Nadel started his career at the French advisory firm Lazard Frerès & Co., and also worked in Hong Kong for Value Partners Group Ltd, Asia's largest hedge fund manager.
Mr. Nadel holds a bachelor's degree from Williams College and a master's degree from Harvard University, as well as a Master of Business Administration from Harvard Business School.
Summary
Key points: Legg Mason Royce Global Smaller Companies Fund and Legg Mason Royce European Smaller Companies Fund
• Small / Mid Cap investment strategy. Concentrated portfolios of 60 – 80 stocks with market caps below $5 billion at time of purchase. More than 50% of Funds net assets are invested in companies with market caps between $500 million and $2.5 billion.
• Funds are co-managed by Whitney George, co-CIO of Royce and David Nadel, Director of International Research.
• Focus on higher quality names, defined as companies with low leverage and high ROIC.
• Attempt to purchase companies at a discount to intrinsic value.
• Both Funds were launched on 31 December 2009; the Legg Mason Royce Global Smaller Companies Fund has $8.4M in AUM and the Legg Mason Royce European Smaller Companies Fund has $2.4M in AUM as of 31 May 2011.
Page 31
Source: Legg Mason As at 31 May 2011
Page 32
Important Information
The Legg Mason Royce Global Smaller Companies Fund and the Legg Mason Royce European Smaller Companies Fund are sub-funds 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 and Associates is affiliated with Legg Mason through common control and ownership by Legg Mason, Inc.. Legg Mason provides its clients with access to Royce and Associates primarily through its range of Irish and UK authorised funds in which Royce and 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 presentation is for use by Professional Clients and Eligible Counterparties. It is not aimed at, or for use by, Retail Clients.
This Fund is offered solely to non-US investors under the terms and conditions of the Fund’s current prospectus - please refer to the Simplified Prospectus 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 020 7070 7444.
June 2011 6889
This document is for use by asset managers, fund distributors and authorised intermediaries. Not for use by private individuals.
