Legg Mason Inc Company Profile

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.