1 1Q 2019 Separately Managed Accounts CLEARBRIDGE ALL CAP GROWTH PORTFOLIOS Management team ClearBridge Investments is a well-established global Investment overview investment manager focusing on proprietary research ClearBridge All Cap Growth Portfolios (ACG) seeks long-term capital appreciation and fundamental investing. With over 50 years of through investment in large-, mid-, and small- capitalization stocks that have the experience building portfolios for clients seeking income potential for above average long-term earnings and/or cash flow growth. solutions, high active share or low-volatility, long-tenured portfolio managers provide strong leadership in a centralized investment structure. Investment management team Investment objective Evan Bauman, Seeks: Managing Director Long-term capital appreciation • Portfolio Manager Investment philosophy • Industry since 1996 We believe that: Peter Bourbeau, • Competitive returns may be achieved by investing in a diversified portfolio of large-, medium- and small- Managing Director 1 capitalization stocks that have the potential for above-average long-term growth and returns. • Portfolio Manager • An intensive, bottom-up investment process can help find inefficiently priced companies with strong fundamentals, • Industry since 1991 incentive-driven management teams, dominant positions in niche markets, and/or goods and services customers are practically compelled to use. Richard Freeman, Managing Director • Consistency in our investment process, research, performance and client service is the key to excellence. • Portfolio Manager Portfolio positioning • Industry since 1976 2 • Core growth option, which can be complemented by other investments or asset classes for further diversification. Margaret Vitrano, • Designed for investors looking for a growth portfolio that invests across multiple market capitalizations with a buy- Managing Director and-hold strategy. This strategy does not force buy or sell decisions based on market capitalization. The potential • Portfolio Manager 3 result may be reduced portfolio turnover over time. • Industry since 1996 Key differentiators • The strategy combines the expertise of four seasoned portfolio managers. • High-conviction stock selection that offers potential for growth across market cycles. • Portfolio managers evaluate each position daily and may decide to invest portfolios gradually or all at once based on market conditions, valuations and/or factors they consider to be relevant. All investments involve risk, including loss of principal and there is no guarantee that investment objectives will be met. Risks: In addition to investments in large-capitalization companies, investments may be made in speculative and/or small-cap and mid-cap companies which involve a higher degree of risk and volatility than investments in larger, more established companies. In addition, because the investments may be concentrated in a limited number of industries and companies, the portfolios may involve heightened risk. While most investments are in U.S. companies, investments may also be made in ADRs and other securities of non-U.S. companies in developed and emerging markets which involve risks in addition to those ordinarily associated with investing in domestic securities, including the potentially negative effects of currency fluctuation, political and economic developments, foreign taxation and differences in auditing and other financial standards. These risks are magnified in emerging markets. Active share is a measure of the percentage of stock holdings in a manager’s portfolio that differs from the benchmark index. 1 ACG portfolios invest primarily in large-capitalization stocks, investing much smaller portions of the portfolios in small- and mid-capitalization company stocks. 2 Diversification does not assure a profit or protect against market loss. 3 Market, security and/or other investment considerations may result in higher turnover from time to time. Also, all capitalization ranges will not necessarily be represented in an individual account. • • NO BANK GUARANT EE VALUE MAY LOSE INVESTMENT PRODUCTS: NOT FDIC INSURED
2 Investment process Idea generation Risk management/ Portfolio construction Fundamental analysis Evaluation discipline Identify companies with strong business Determine valuation considering the size Actively select investments across the growth spectrum, allocated into three models, capital structures and of a business’s addressable market, free Understand security level and portfolio 1 , PEG cash flow yield, P/E, EV/Sales growth buckets (Cyclical, Stable and management teams, generally with level risks. Actively review investment 2 . Identify key risks and potential rationales, position sizes and Ratio Select) with distinct risk/return market capitalizations of $3 billion or downside. greater. diversification metrics. characteristics. Managers are willing to pay a premium for companies with sustainable growth characteristics and 3 . superior ROIC Performance Annualized rates of return - gross and net of fees (%) as of March 31, 2019 - PRELIMINARY Mar ‘19 Q1 ‘19 YTD 1-year 3-year 5-year 10-year 15-year 20-year 7-year All Cap Growth (gross) 13.85 13.85 8.72 14.68 11.75 15.07 18.32 10.00 10.08 1.33 1.09 8.51 13.04 5.56 11.37 All Cap Growth (net) 11.75 14.91 6.81 6.88 13.04 13.10 Russell 3000 Growth Index 16.18 12.06 16.40 16.18 14.14 17.44 9.64 5.63 2.53 S&P 500 Index 1.94 13.65 13.65 9.50 13.51 10.91 12.85 15.92 8.57 6.04 Calendar-year total returns - gross and net of fees (%) ending December 31 2012 2018 2015 2014 2013 2016 2011 2010 2009 2017 -2.77 23.76 9.03 4.59 15.16 All Cap Growth (gross) 21.93 -0.58 18.58 42.17 41.36 All Cap Growth (net) 20.21 5.86 1.54 11.84 -5.62 18.42 -3.49 15.16 38.13 37.34 Russell 3000 Growth Index -2.12 29.59 7.39 5.09 12.44 34.23 15.21 2.18 17.64 37.01 26.46 S&P 500 Index 11.96 1.38 13.69 32.39 16.00 2.11 15.06 21.83 -4.38 The strategy returns shown are preliminary composite returns, subject to future revision (downward or upward). Please visit www.leggmason.com for the latest performance figures. YTD numbers are not annualized. Investors cannot invest directly in an index, and unmanaged index returns do not reflect any fees, expenses or sales charges. Fees: Gross performance shown does not reflect the deduction of investment management fees and certain transaction costs, which will reduce portfolio performance. Net performance includes the deduction of a 3.0% annual wrap fee, which is the maximum anticipated wrap fee for equity and balanced portfolios. Actual fees vary. For fee schedules, contact your financial professional, or if you enter into an agreement directly with Legg Mason Private Portfolio Group (LMPPG), refer to LMPPG’s Form ADV disclosure document. Returns reflect the reinvestment of dividends and other earnings. The investment process may change over time. The characteristics set forth above are intended as a general illustration of some of the criteria the strategy team considers in selecting securities for client portfolios. There is no guarantee that investment objectives will be achieved. Past performance is not a guarantee of future results. Please see GIPS® Endnotes for important additional information regarding the portfolio performance shown and for effects of fees. Management and performance of individual accounts may vary for reasons that include the existence of different implementation practices and model requirements in different investment programs. Separately Managed Accounts (SMAs) are investment services provided by Legg Mason Private Portfolio Group, LLC (LMPPG), a federally registered investment advisor. Client portfolios are managed based on investment instructions or advice provided by one or more of the following Legg Mason-affiliated subadvisors: ClearBridge Investments, LLC and Western Asset Management Company. Management is implemented by LMPPG, the designated subadvisor or, in the case of certain programs, the program sponsor or its designee. 1 Enterprise-Value-To- Sales (EV/Sales): A valuation measure that compares the enterprise value of a company to the company's sales. EV/sales gives investors an idea of how much it costs to buy the company's sales. Generally the lower the EV/sales the more attractive or undervalued the company is believed to be. 2 Price/Earnings To Growth – PEG Ratio: A stock's price-to-earnings ratio divided by the growth rate of its earnings for a specified time period. The price/earnings to growth (PEG) ratio is used to determine a stock's value while taking the company's earnings growth into account, and is considered to provide a more complete picture than the P/E ratio. While a high P/E ratio may make a stock look like a good buy, factoring in the company's growth rate to get the stock's PEG ratio can tell a different story. The lower the PEG ratio, the more the stock may be undervalued given its earnings performance. 3 Return On Invested Capital (ROIC): A calculation used to assess a company's efficiency at allocating the capital under its control to profitable investments. The return on invested capital measure gives a sense of how well a company is using its money to generate returns.
3 1 as of March 31, 2019 Portfolio information Sector weightings (%) Top ten equity holdings (%) UnitedHealth Group Inc 5.24 BM Portfolio Comcast Corp 4.12 33.94 31.96 Information Technology 3.74 Amazon.com Inc 17.93 Health Care 14.17 Alphabet Inc 3.70 14.09 11.42 Communication Services 3.10 Microsoft Corp 15.04 8.27 Consumer Discretionary 3.05 Broadcom Inc 8.24 Industrials 12.16 Visa Inc 2.54 1.93 Materials 4.13 2.37 Autodesk Inc 3.29 5.54 Consumer Staples Twitter Inc 2.02 Financials 3.20 4.47 2.01 Facebook Inc Energy 2.53 0.83 Total 31.89 Real Estate 1.03 2.45 0.00 0.04 Utilities 3.34 Cash 0.00 (%) Market capitalization Characteristics Portfolio BM Portfolio BM 62.17 57.23 Above $50B 1784 87 Number of Holdings 16.84 $25 - $50B 13.47 1.19 Dividend Yield 1.18 20.80 $10 - $25B 10.95 21.14 Forecasted P/E Ratio -1 Year 20.10 8.43 4.91 $3 - $10B 8.50 6.40 Price/Book Ratio 0.22 0 - $3B 4.98 Long-Term EPS Growth 15.82 14.84 92.58 Weighted Median Market Capitalization 100.25 181.62 Weighted Average Market Capitalization 254.53 2 — Preliminary Performance statistics (gross of fees) (based on 10-year period ended March 31, 2019) 3 (%) Risk/return profile Growth of $100,000 20 All Cap Growth All Cap Growth Russell 3000 Growth Index 18.32 Rate of return $498,913 $537,857 15 600K Standard deviation 14.76 Russell 3000 Growth Index 500K 10 Rate of return 17.44 400K 13.53 Standard deviation 300K 5 S&P 500 Index 200K Rate of return 15.92 100K 0 12.69 Standard deviation Annualized rate of return (%) 15 20 25 10 5 0 0K Risk (% annualized standard deviation) 2019 2009 2011 2013 2015 2017 Up/Down market capture ratios (%) Modern portfolio statistics -0.06 Alpha All Cap Growth Russell 3000 Growth Index 1.06 Beta 4 1.19 Sharpe ratio 0.94 R-Squared 2 The strategy returns shown are preliminary composite returns, subject to future revision (downward or upward). Please visit www.leggmason.com for the latest 1.08 1.00 performance figures. YTD numbers are not annualized. 0 Investors cannot invest directly in an index, and 1.00 1.08 unmanaged index returns do not reflect any fees, expenses or sales charges. -2 Down Up 81 positive months 39 negative months 1 Source: FactSet. Portfolio characteristics are based on a model portfolio, not an actual client account. The model portfolio is a hypothetical portfolio whereby the portfolio characteristics are based on simulated trading and account activity of a client account invested in this strategy. The model portfolio assumes no withdrawals, contributions or client-imposed restrictions. Portfolio characteristics of individual client accounts may differ from those of the model portfolio as a result of account size, client-imposed restrictions, the timing of client investments, market conditions, contributions, withdrawals and other factors. 2 Source: Legg Mason. 3 For illustrative purposes only. Assumes no withdrawals or contributions. These statistics are based on gross-of-fees quarterly composite returns, were calculated assuming reinvestment of dividends and income, and take into account both realized and unrealized capital gains and losses.
4 ® ClearBridge All Cap Growth SMA GIPS Strategy Inception Date: July 1996. Composite Creation Date: June 2008. Reporting Currency: USD. Endnotes Composite Total Return Benchmark Number of % of Bundled Total Return Period Composite 3 Total Firm Benchmark 3 Total Percentage of (Net, %) Dispersion (%) Portfolios Yr. St. Dev. (*Pure Gross, Fee Portfolios Yr. St. Dev. Firm Assets Return (%) Composite Assets at End Assets at End (%) (%) of Period (USD in the %) of Period Composite million) ($MM) -2.77 -2.12 2,357 100 0.47 12.78 12.47 1,836.5 1.7 106,083.4 2018 -5.62 23.76 29.59 2,180 100 0.43 11.67 10.77 2,158.3 1.8 119,187.1 2017 20.21 11.50 5.86 2,076 100 0.53 12.54 7.39 1,823.4 1.8 100,936.9 2016 9.03 1.54 2015 5.09 1,918 100 0.38 11.97 10.95 1,887.0 2.0 92,536.4 4.59 2014 15.16 12.44 1,751 100 0.32 10.94 9.87 1,937.9 1.9 100,721.5 11.84 12.66 37.34 1,557 100 1.05 14.40 34.23 1,709.9 2.0 85,024.7 2013 41.36 18.42 21.93 15.21 7,533 100 0.69 18.02 16.21 1,278.2 2.3 54,624.3 2012 2011 -3.49 2.18 7,976 100 0.68 20.46 18.43 1,243.9 2.4 50,870.8 -0.58 n/a 2010 17.64 8,995 100 0.88 18.58 n/a 1,440.2 2.6 55,366.5 15.16 2009 38.13 42.17 37.01 11,897 100 2.52 n/a n/a 1,697.6 3.2 53,522.7 *Pure gross of fee returns do not reflect the deduction of any expenses, including transaction costs, Terms and definitions: and are presented as supplemental to the net of fee returns. Dividend yield is determined by dividing a stock’s annual dividends per share by the current Compliance Statement: market price per share. Dividend yield is a financial ratio that shows how much a company pays out ClearBridge Investments, LLC claims compliance with the Global Investment Performance Standards in dividends. (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. is the previous day’s closing price of the stock divided by the consensus earnings per P/E (Year 1) ClearBridge Investments, LLC has been independently verified for the periods January 1, 1997 - share (EPS) of fiscal year 1 (FY1) provided by I/B/E/S. Forecasts are inherently limited and should not December 31, 2017. The verification reports are available upon request. be relied upon as indicators of future performance. Verification assesses whether (1) the firm has complied with all the composite construction price-to-book ratio (P/B) The is a stock’s price divided by the stock’s per share book value. requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. Earnings per share (EPS) is the portion of a company’s profit allocated to each outstanding share of Verification does not ensure the accuracy of any specific composite presentation. a common stock. Firm Information: represents the value at which half the portfolio’s Weighted median market capitalization ClearBridge Investments, LLC (“ClearBridge”) is a wholly owned subsidiary of Legg Mason, Inc. market capitalization weight falls above and half falls below. (“Legg Mason”). The investment advisory business now known as ClearBridge was registered in Weighted average market capitalization represents the average value of the companies held September 2005 to facilitate Legg Mason’s acquisition of substantially all the equity asset in the portfolio. When that figure is weighted, the impact of each company’s capitalization on the management businesses known as Citigroup Asset Management. These former businesses serve overall average is proportional to the total market value of its shares. as the foundation of ClearBridge and its claim of GIPS compliance for institutional accounts through predecessor firms, effective as of January 1997. In June 2008, ClearBridge combined this business Market capitalization measures the number of outstanding common shares of a given with its retail business to form a single GIPS firm. As of April 1, 2013 and January 1, 2016, corporation multiplied by the latest price per share. ClearBridge’s affiliates, Global Currents Investment Management, LLC, and ClearBridge, LLC, Standard deviation measures the risk or volatility of an investment’s return over a particular time respectively, have become part of the ClearBridge GIPS firm. period; the greater the number, the greater the risk. Composite Information: measures the manager’s overall performance to the benchmark’s overall up capture ratio The The ClearBridge All Cap Growth SMA composite consists of discretionary wrap accounts with an performance, considering only quarters that are positive in the benchmark. An Up Capture Ratio of account minimum of US $25,000. Accounts within the composite seek long-term capital appreciation by investing in a mix of large, mid and small capitalization stocks believed to have more than 1.0 indicates a manager who outperforms the relative benchmark in the benchmark’s substantial growth potential. The strategy is implemented by Legg Mason Private Portfolio Group, positive quarters. LLC (LMPPG). LMPPG claims compliance with the Global Investment Performance Standards down capture ratio is the ratio of the manager’s overall performance to the benchmark’s The (GIPS®) and has been independently verified for the periods January 1, 2013 - December 31, 2017. overall performance, considering only quarters that are negative in the benchmark. A Down Capture The verification reports are available upon request. Verification assesses whether (1) the firm has Ratio of less than 1.0 indicates a manager who outperforms the relative benchmark in the complied with all the composite construction requirements of the GIPS standards on a firm-wide benchmark’s negative quarters and protects more of a portfolio’s value during down markets. basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. Verification does not ensure the accuracy of any specific Alpha is a measure of performance vs. a benchmark on a risk-adjusted basis. A positive alpha of composite presentation. The main risks of this strategy are General Investment Risk, Industry and 1.0 means the portfolio has outperformed its benchmark index by 1%. Correspondingly, a similar Issuer Concentration Risk, Small Cap Risk, Mid Cap Risk, High Volatility Risk, and Non-U.S. negative alpha would indicate an underperformance of 1%. Alpha is a measure of the difference Investment Risk. between actual returns and expected performance measuring sensitivity to index movements. Input and Calculation Data: Beta measures the sensitivity of an investment to the movement of its benchmark. A beta higher The fee schedule currently in effect is 3.00% on all assets. Net of fee composite returns are than 1.0 indicates the investment has been more volatile than the benchmark and a beta of less calculated by reducing each monthly composite pure gross rate of return by the highest “bundled” than 1.0 indicates that the investment has been less volatile than the benchmark. fee charged (3.00%) annually, prorated to a monthly ratio. The “bundled” fee includes transaction costs, investment management, custodial, and other administrative fees. Effective January 1, 2013, is a risk-adjusted measure, calculated using standard deviation and excess return to Sharpe ratio the number of portfolios reflects a change from prior periods due to an aggregation of accounts as determine reward per unit of risk. The higher the Sharpe ratio, the better a portfolio’s historical risk- reported by one sponsor. As of January 2014, the internal dispersion of annual returns is measured adjusted performance. by the asset-weighted standard deviation of portfolio returns included in the composite for the R-squared measures the strength of the linear relationship between a fund and its benchmark. R- entire year. For prior years, the equal-weighted standard deviation was used. The composite squared at 1.00 implies perfect linear relationship and zero implies no relationship exists. employed a 10% significant cash flow policy which was discontinued in January 2012. A list of Any information, statement or opinion set forth herein is general in nature, is not directed composite descriptions is available upon request. Policies for valuing portfolios, calculating performance, and preparing compliant presentations are available upon request. Past performance to or based on the financial situation or needs of any particular investor, and does not is not necessarily indicative of future results. constitute, and should not be construed as, investment advice, forecast of future events, Benchmark Information: a guarantee of future results, or a recommendation with respect to any particular The Russell 3000® Growth Index measures the performance of those Russell 3000 Index security or investment strategy or type of retirement account. Investors seeking financial companies with higher price-to-book ratios and higher forecasted growth values. Benchmark returns advice regarding the appropriateness of investing in any securities or investment are not covered by the report of independent verifiers. strategies should consult their financial professional. The S&P 500 Index is a broad-based measurement of changes in stock market conditions based on www.leggmason.com the average performance of 500 widely held common stocks. Investors cannot invest directly in an ©2019 Legg Mason Investor Services, LLC. Member FINRA, SIPC. Legg Mason Investor Services, index and unmanaged index returns do not reflect any fees, expenses or sales charges. The index is LLC and ClearBridge Investments, LLC are subsidiaries of Legg Mason, Inc. not managed and not subject to management or brokerage commissions. Dividends are subject to reinvestment. 3P 869869 SAM6016 FN1413022 D5292 The investment strategies described herein are those of Legg Mason Private Portfolio Group, LLC (LMPPG). These materials are being provided for illustrative and informational purposes only. The information contained herein is obtained from multiple sources that are believed to be reliable. However, such information has not been verified, and may be different from the information included in documents and materials created by the sponsor firm in whose investment program a client participates. Some sponsor firms may require that these LMPPG materials are preceded or accompanied by investment profiles or other documents or materials prepared by such sponsor firms, which will be provided upon a client’s request. For additional information, documents and/or materials, please speak to your Financial Advisor.
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