We are a global asset management company. Acting through our subsidiaries, we
provide investment management and related services to institutional and individual
clients, company-sponsored mutual funds and other investment vehicles. We offer
these products and services directly and through various financial intermediaries.
We divide our business into three divisions: Mutual Funds/Managed Services, Institutional
and Wealth Management.
We provide investment management and related services to institutional and
individual clients, company-sponsored investment funds and retail separately
managed account programs. Operating from asset management offices primarily
located in the United States, and also located in nine countries worldwide,
our businesses provide a broad array of investment management products and services.
We offer these products and services directly and through various financial
intermediaries. Our investment advisory services include discretionary management
of separate investment accounts in numerous investment styles for institutional
and individual investors. Our investment products include proprietary mutual
funds ranging from money market and other liquidity products to fixed income
and equity funds managed in a wide variety of investment styles, other domestic
and offshore funds offered to both retail and institutional investors and funds-of-hedge
funds primarily sold to non-U.S. high net worth investors. We believe that our
asset managers' diversification across asset classes, investment styles and
distribution channels helps to mitigate our exposure to the risks created by
changing market environments.
In our Mutual Funds/Managed Services division, we sponsor and manage domestic
and international equity, fixed income and money market mutual funds as well
as closed-end funds and other proprietary funds. The asset managers in this
division also provide asset management services to retail separately managed
account programs, such as wrap programs. This division contains our four asset
managers that primarily focus on managing proprietary investment funds or retail
separately managed account programs:
' Western Asset Management Company's mutual funds business, one of the two
businesses of this global fixed income asset manager headquartered in Pasadena,
California;
' ClearBridge Advisors, an equity asset manager headquartered in New York,
New York;
' Legg Mason Capital Management's mutual funds business, one of the two businesses
of this equity asset manager located in Baltimore, Maryland; and
' Royce & Associates, LLC, a primarily small-cap equity manager located
in New York, New York.
Our Institutional division provides a wide range of asset management services
and products to domestic and international institutional clients. Our Institutional
asset managers are:
' Western Asset Management Company, a global fixed income asset manager headquartered
in Pasadena, California that operates, in addition to its mutual funds business,
an institutional asset management business that is part of our Institutional
division;
' Brandywine Global Investment Management, LLC, an equity and fixed income
manager headquartered in Philadelphia, Pennsylvania;
' Legg Mason Capital Management, an equity asset manager located in Baltimore,
Maryland that operates, in addition to its mutual funds business, an institutional
asset management business that is part of our Institutional division;
' Batterymarch Financial Management, Inc., a U.S., international and emerging
markets equity manager headquartered in Boston, Massachusetts;
' Legg Mason International Equities, an international equity management business
headquartered in London, England;
' Legg Mason Canada Inc., a fixed income and equity manager headquartered in
Toronto, Canada; and
' Legg Mason Real Estate Investors, Inc., which sponsors and manages private
investment vehicles that invest debt and equity in commercial real estate and
is located in Los Angeles, California.
Our Wealth Management division provides customized discretionary asset management
services and products to high net worth individuals and families, endowments,
foundations and institutions. This division also includes our global funds-of-hedge
funds manager that manages products distributed primarily to high net worth
clients outside the United States. Our Wealth Management asset managers are:
' Private Capital Management, L.P., an equity asset manager located in Naples,
Florida;
' Permal Group Ltd, a global funds-of-hedge funds manager headquartered in
London, England;
' Legg Mason Investment Counsel & Trust Company, National Association,
a national banking association that manages fixed income and equity assets and
is headquartered in Baltimore, Maryland;
' Legg Mason Investment Counsel, LLC, an equity, fixed income and balanced
portfolio manager that is headquartered in Baltimore, Maryland;
' Barrett Associates, Inc., an equity asset manager located in New York, New
York;
' Berkshire Asset Management, Inc., an equity, balanced and fixed income portfolio
manager located in Wilkes-Barre, Pennsylvania; and
' Bartlett & Co., a balanced, equity and fixed income portfolio manager
headquartered in Cincinnati, Ohio.
Competition
We are engaged in an extremely competitive business and are subject to substantial
competition in all aspects of our business. Our competition includes, with respect
to one or more aspects of our business, numerous international and domestic
asset management firms and broker-dealers, mutual fund complexes, hedge funds,
commercial banks, insurance companies, other investment companies and other
financial institutions. Many of these organizations offer products and services
that are similar to, or compete with, those we offer and have substantially
more personnel and greater financial resources than we have. Some of these competitors
have proprietary products and distribution channels that make it more difficult
for us to compete with them. In addition, many of our competitors have long-standing
and established relationships with distributors and clients. The principal competitive
factors relating to our business are the quality of advice and services provided
to investors, the performance records of that advice and service, the reputation
of the company providing the services, the price of the services and distribution
relationships and compensation.