Legg Mason Martin Currie Asia Long-Term …...Legg Mason Martin Currie Asia Long-Term Unconstrained Fund Investment Week Conference Retreat May 2019 The value of investments and the

Legg Mason Martin Currie

Asia Long-Term Unconstrained Fund

Investment Week Conference Retreat

May 2019

The value of investments and the income from them may go down as well as up and you may not get back the amount you originally invested.

This information is only for use by professional clients, eligible counterparties or qualified investors. It is not aimed at, or for use by, retail clients.

The Asian opportunity

Past performance is not a guide to future returns. GDP data is subject to revision and historic numbers may change.

Source: IMF World Economic Outlook over periods shown to 31 December 2018. GDP is based on the data published by the IMF in October 2018 in US$.

20 year annualised nominal GDP growth

2

10.7

3.3

0

2

4

6

8

10

12

Asia ex Japan G7

Gro

wth

(%

p.a

.)

Powerful secular trends across Asia

3

Source: Statista and Bookings Institute as 28 February 2017. Brooking Institution, The Unprecedented Expansion of the Global Middle Class.

GROWING CONSUMPTION

Forecast of the global middle class population from 2015 to 2030, by region (in millions)

Asia is taking off

Source: Statista and Boeing, ‘Commercial market outlook 2018-2037, July 2018

Estimated annual growth rates for passenger air traffic from 2018 to 2037

(%)

Improved affordability, substantial capacity expansion and increased cross-border trade is

driving passenger and cargo air traffic growth

5.7

4.7

3.8

3.1

0

1

2

3

4

5

6

Asia Pacific World Europe North America

THE infrastructure gap

Source: Statista and McKinsey; HIS Global Insight; ITF; GWI; Various sources (National Statistics), June 2016. Projected infrastructure spending from 2016 to 2030, by region or country.

Projected regional/country infrastructure spend from 2016 - 2030

US

$ t

rilli

ons

Projected Asian

infrastructure

spend

US$29.5

trillion

The level of infrastructure development funded by the public sector.

At projected levels this cannot be maintained so who will bridge the funding gap?90%

15.214.2

10.8

3.42.5

1.0

0

2

4

6

8

10

12

14

16

Non-PRC Asia China United States andCanada

Latin America Middle East Africa

Consumer spending

Source: Statista and Alibaba via Techcrunch. *Gross merchandise volume (GMV); US figure for Black Friday and Cyber Monday is total e-commerce sales.

https://www.statista.com/chart/16063/gmv-for-alibaba-on-singles-day/

E-commerce sales – Singles’ Day sets another sales record

5.7

9.1

14.3

17.8

25.3

30.8

13.9

0

5

10

15

20

25

30

35

2013 2014 2015 2016 2017 2018 2018

US

$ b

illio

n

35.0

57.1

91.2

120.7

168.2

213.5

Cyber Monday &

Black Friday in

the US

GMV for Alibaba on Singles’ Day compared to Black Friday and Cyber Monday

IS Asia A Centre of innovation?

Source; Share of total R&D spending taken from IMF, World Bank and OECD, 2017. Patent application data sourced from WIPO (2018), World Intellectual Property Indicators 2018.

Patent application – Top three countries 2017

0

1

2

3

4

ApplicationsWorldwide

China United States Japan

Applic

atio

ns W

orld

wid

e (

Mill

ions)

2016 2017

43.6%China’s share

of total

applications

Share of total global R&D spending

(%)

0

10

20

30

40

50

2016 2017 2018

Education and automation

Source: Statista and World Economic Forum.

Chart one shows the countries with the most STEM graduates 2016. *STEM, Science, Engineering and Mathematics. https://www.statista.com/chart/7913/the-countries-with-the-most-stem-graduates/

Chart two shows the top-three countries worldwide for manufacturing industry-related robot density in 2017 (in units per 10,000 employees).

Asia accounts for two of the top three countries for both STEM graduates and robot density

4.7

2.6

0.6

0

1

2

3

4

5

China India United States

Mill

ions

Top three countries by STEM graduates Global industrial robot density

710

658

322

200

97 85

0

200

400

600

800

SouthKorea

Singapore Germany UnitedStates

China Globalaverage

Units p

er

10,0

00 e

mplo

yees

Asia’s biggest trading partner is itself

Source: World Bank, WITS as at 31 December 2017.

East Asia and Pacific import and export flows (%)

Imports

East Asia and Pacific South Asia Rest of World

Exports

East Asia and Pacific South Asia Rest of World

The share of total merchandise trade (export or import) accounted for by the partner in a given year

Ease of doing business

Source: World Bank, Ease of doing business rankings as at May 2018.

Asian countries feature prominently in the top 50 countries for ease of doing business……. With three countries in the top 10

Singapore

2Hong Kong

4South Korea

5

Taiwan

13Thailand

27China

46

However, there is still room for improvement…

Indonesia

73

India

77

Philippines

124

The challenge of investing in Asia

Past performance is not a guide to future returns. GDP data is subject to revision and historic numbers may change. Source: Martin Currie, and IMF World Economic Outlook over periods shown to 31 December 2018. US$ GDP is based on the data published by the IMF in October 2018. Market is the MSCI AC Asia ex Japan,

figures provided include the re-investment of dividends.

GDP versus the market - Rolling 10 year annualised returns

The challenge is to harness the long-term economic

growth in Asia

(10)

(5)

0

5

10

15

20

Retu

rn (

%)

Asia ex Japan nominal GDP

Market performance relative to GDP

The markets do not effectively

capture economic growth

Poor stewardship of capital dilutes

shareholder value

Volatility can impair long-term

returns

Our solution

Quality growth companies deliver

Past performance is not a guide to future returns.

Source: Martin Currie and FactSet as 31 March 2019. Chart shows MSCI AC Asia ex Japan. High Quality & Growth: top tercile of quality (ROIC) and top tercile of growth (EPS change). Low Quality, Low Growth:

bottom tercile of quality (ROIC) and bottom tercile of growth (EPS change). Chart uses a 10 year geometric average for the EPS change and a rolling five year median ROIC.

Asia ex Japan – 30 year style performance

Rolling one year relative returns of High Quality High Growth stocks against Low Quality, Low Growth stocks

(12)

(6)

0

6

12

18

24

30

36

(40%)

(20%)

0%

20%

40%

60%

80%

100%

120%

140%

1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017

Cum

ula

tive I

ndex L

evel

Rela

tive T

ota

l R

etu

rn (

ttm

)

164.9

82.9

(50)

0

50

100

150

200

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Re

turn

(%

)

Composite Gross USD

MSCI AC Asia ex Japan

Cumulative performance since inception

Past performance is not a guide to future returns. The return may increase or decrease as a result of currency fluctuations.

Source: Martin Currie to 31 March 2019. Gross data presented is the Martin Currie Asia Long-Term Unconstrained US$ composite. Gross data is presented without deducting investment advisory fees, broker

commissions, or other expenses that reduce the return to investors. Composite start date 31 July 2008. This strategy is not constrained by a benchmark but we show it versus the MSCI AC Asia ex Japan for

illustrative purposes only. The performance record noted above is clear representation of the strategy’s performance over the period shown. Performance information showing five years (or since inception) in

complete 12 month periods is available upon request. This data is supplementary to the GIPS disclosures provided at the back of this presentation.

Cumulative performance since inception of strategy

ALTU

Delivering an attractive long-term risk/return profile

Past performance is not a guide to future returns. The return may increase or decrease as a result of currency fluctuations.


commissions, or other expenses that reduce the return to investors. Composite start date 31 July 2008. This strategy is not constrained by a benchmark but we show it versus the MSCI AC Asia ex Japan for

illustrative purposes only. The performance record noted above is clear representation of the strategy’s performance over the period shown. Performance information showing five years (or since inception) in

complete 12 month periods is available upon request. Performance displayed is supplementary to the GIPS compliant information at the end of this presentation.

Asia long-term unconstrained since inception

Since inception, the strategy has delivered attractive returns with lower volatility than the broader

equity market

9.6

14.4

5.8

20.8

0

5

10

15

20

25

Annualised return Volatility

(%)

ALTU MSCI AC Asia ex Japan

3.6

(2.6)

4.5

(4.2)

(6)

(4)

(2)

0

2

4

6

Upside participation positive marketmonths (average returns)

Downside participation negativemarket months (average returns)

(%)


Investment process

Accounting diagnostics

Proprietary analysis of overlooked data

*A copy of the PRI’s assessment of Martin Currie and methodology is available on request. **Categorised as Tier 1 signatory to UK Stewardship Code. The trademark shown is that of the respective

owner and is used for descriptive and illustrative purposes only. The company trademark shown is not in any way associated, or to be deemed to be associated, with Martin Currie or its group of

companies.

Governance and sustainability analysis

Higher degree of confidence in management and their use of capital

Due diligence of management

Industry recognition

A+ A+ A+Highest possible ratings by

PRI*

Tier 1Tier 1 ranking by the Financial

Reporting Council**

Our credentials

Martin Currie for Asia Long-Term Unconstrained



commissions, or other expenses that reduce the return to investors. Composite start date 31 July 2008.

Our Asia Long-Term Unconstrained strategy seeks to capture Asian economic growth

with a concentrated, unconstrained portfolio of high quality companies, held for the

long-term

Concentrated Every stock makes an impact Approx. 20-30 stocks

Unconstrained Invest only in the highest conviction ideas Differentiated performance

Quality Translates growth into investor returnsFocus on accounting and

governance

Long-Term Compounding returns Turnover of < 30% since inception

Delivering strong risk adjusted returns

Portfolio

Top 10 Holdings

Holding Sector Country Portfolio (%)

Tencent Holdings Communication Services China 8.0

AIA Financials Hong Kong 7.5

Ping An Insurance Financials China 5.4

HSBC Financials Hong Kong 5.1

Coway Consumer Discretionary Korea 4.8

Infosys Information Technology India 4.7

Guangdong Investment Utilities China 4.6

United Overseas Bank Financials Singapore 4.4

Singapore Technologies Engineering Industrials Singapore 4.4

China Mobile Communication Services China 4.1

Source: Martin Currie as at 31 March 2019. Data calculated for the representative Martin Currie Asia Long-Term Unconstrained account. The information provided should not be considered a recommendation to

purchase or sell any particular security. It should not be assumed that any of the security transactions discussed here were, or will prove to be, profitable.

Quality at a reasonable valuationConsistent style exposure in the portfolio


Source: Martin Currie and UBS PAS as at 31 March 2019. Data calculated for the representative Martin Currie Asia Long-Term Unconstrained account. This strategy is not constrained by a benchmark but we show

it versus the MSCI AC Asia ex Japan for illustrative purposes only. Note that the Net Debt and EV, EBIT metrics exclude holdings in Financials.


March 2019 March 2016 March 2013 March 2019 March 2016 March 2013

Price earnings* 15.0 14.5 14.7 13.1 12.1 11.3

Price book 2.2 1.9 2.5 1.5 1.4 1.6

EV/EBIT 11.6 12.0 12.1 12.6 13.8 10.6

Debt to equity (8.6) (19.5) (11.7) 26.8 24.3 29.6

Return on equity (%)* 14.5 13.2 17.2 11.8 11.2 14.1

Fund risks

Investment in company shares: The fund invests in shares of companies, and the value of these shares can be negatively affected by changes in the company, its industry or

the economy in which it operates.

Geographical focus: This fund invests primarily in Asia, which means that it is more sensitive to local economic, market, political or regulatory events in Asia, and will be more

affected by these events than other funds that invest in a broader range of regions.

Emerging markets investment: The fund may invest in the markets of countries which are smaller, less developed and regulated, and more volatile than the markets of more

developed countries.

Investment in China: The fund invests in China and is subject to the risk of significant change in political, social or economic policy in China, which may negatively affect the

value of such investments.

Concentrated fund: The fund invests in fewer companies than other funds which invest in shares usually do. This means that the fund does not spread its risk as widely as

other funds and will therefore be affected more if an individual company has significant losses.

Fund currency: Changes in exchange rates between the currencies of investments held by the fund and the fund's base currency may negatively affect the value of an

investment and any income received from it.

Derivatives: The use of derivatives can result in greater fluctuations of the fund's value and may cause the fund to lose as much as or more than the amount invested.

Fund operations: The fund is subject to the risk of loss resulting from inadequate or failed internal processes, people or systems or those of third parties such as those

responsible for the custody of its assets, especially to the extent that it invests in developing countries.

23

Appendix

The Asia investment team

Source: Martin Currie as at 31 March 2019.

Specialist Asian equity expertise

Experienced regional experts with skill set to implement the strategy

Dedicated accounting diagnostic supportMoody Analytics

Thanusha Rajapakshe

ACA, CFA

Experience: 13 years

Salinda Perera

ACA

Experience: 7 Years

Fawas Ahamed

ACA, ACCA, ACMA


Niluka Abeygunaratne

CA

Experience: 4 years

Andrew Graham

Head of Asia


Financials

Paul Danes

Portfolio Manager


Technology

Consumer

Tom Wills

Portfolio Manager

Experience: 6 years

CA. CFA® charterholder

Consumer

Healthcare

David Johnston Stewart

Portfolio Manager


Materials

Industrials

Consumer

Robert Campbell

Portfolio Manager


CFA® charterholder

Energy

Financials

Damian Taylor

Portfolio Manager


MBA, CFA® charterholder

Industrials

Consumer

Michael Millar

Portfolio Manager


CA.

Telecoms

Healthcare

Zhang Yu

Associate Investment Analyst

Experience: < 1 year

CFA® Levels I, II and III

Healthcare

Issues Themes Earnings Valuations

The pressure on global liquidity is starting to

ease and will ease further; the US Fed has

signalled an earlier than anticipated exit from

its balance sheet normalization process and

other central banks have become more

‘dovish’ in response to turbulence in financial

asset markets and softer economic data in H2

2018;

Trade friction – remains an unresolved issue;

growing optimism that China / US will

compromise has recently been tested but still

seems the realistic outcome

US dollar strength no longer as strong a

headwind to Asian and Emerging Markets

Pace of global expansion continues to slacken;

stimulus efforts suggest Asian economic

growth will gather pace in H2 2019

Cash to spend – Asian non-financial

corporations are sitting on approximately

US$2 trillion of cash & equivalents (over

20% of their market capitalisation)

Employment levels remain high and

incomes are growing, which supports

consumption of consumer goods and

services

Significant investment underway in

technology, healthcare and advanced

manufacturing

Asians are underinsured relative to

developed economies. As incomes rise,

the demand for insurance protection and

retirement planning will grow

The ratio of earnings upgrades to downgrades is

very depressed, but has seen a slight

improvement recently

2018 earnings declined slightly yoy, a significant

miss relative to consensus expectations in early

2018 (+15% yoy); negligible growth is currently

forecast for 2019 (+2% yoy vs an estimated +7%

only a few months ago)

Growth in 2019 is expected to be the second

consecutive year of below long-term trend

growth, however a strong (+13%) rebound is

tentatively predicted for 2020; given current

macro softness, further earnings downgrades are

possible

Catalysts for a stabilisation and reversal include:

▪ signs of more supportive policy action in the

region,

▪ an end to the bout of US$ strength

▪ lower raw materials & energy prices

▪ an easing of trade tensions between the US

and China

Despite the market rebound in 2019,

valuations are reasonable with

prospective PBR below but earnings-

based metrics above their 10 year

averages (the market has bounced

ahead of an earnings recovery)

Current valuation levels, combined with

further evidence of a bottoming of

earnings expectations, historically

positive for absolute returns

From a long-term perspective, current

market implied CFROI (cash flow return

on investment) seems unrealistically low

and suggests future cash returns are

being mis-priced

Outlook


Source: Martin Currie and FactSet, data as at 28 February 2019.

GIPS performance disclosure notesGross performance in US$ - Asia Long-Term Unconstrained composite

Martin Currie, the firm, encompasses Martin Currie Investment Management Ltd and Martin Currie Inc. Martin Currie claims compliance with the Global Investment Performance Standards (GIPS®)

and has prepared and presented this report in compliance with the GIPS Standards. Martin Currie has been independently verified for the periods April 1996 to December 2016. The verification

reports are available upon request. Verification assesses whether 1) the firm has complied with all the composite construction 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. Verif ication does not ensure the accuracy of any specific composite

presentations. 2. The segregated and pooled investment vehicles within the composite have the objective of capturing Asian GDP growth using a long only equity strategy and it will seek to achieve

an absolute return over the longer term. Portfolios will invest directly or indirectly primarily in equities of companies based in Asia or carrying out significant business activities in Asia. The

investment strategy is unconstrained by index, sector, country or market capitalisation. The portfolios in the composite may invest in emerging markets countries. The portfolios invest in shares of

companies and the value of these shares could be negatively affected by changes in the company or its industry of the economy in which it operates. Emerging markets or less developed countries

may face more political, economic or structural challenges than developed countries. Accordingly, investment in emerging markets is generally characterised by higher levels of risk than investment

in fully developed markets. The composite portfolios may hold a limited number of investments. If one of these investments falls in value this can have a greater impact on the portfolio’s value than if

it held a larger number of investments. The composite portfolios typically have an all-cap approach and therefore may invest in some smaller companies which may be riskier and less liquid than

larger companies. The composite portfolios may invest in derivatives to obtain, increase or reduce exposure to underlying assets. The use of derivatives may restrict potential gains and may result

in greater fluctuations of returns for the portfolios. Certain types of derivatives may become difficult to purchase or sell in such market conditions.. 3. The composite was created July 2008. The

index used is the MSCI All Countries Asia ex. Japan Index (gross income). 4. The returns are gross of investment management fees and reflect the reinvestment of interest or other earnings.

Dividends and interest are paid net of irrecoverable taxes. Investment management fees will vary depending on the portfolio size and investment mandate. A standard fee schedule has been

attached. 5. The Standard Deviation results shown are calculated using monthly data. 6. The composite dispersion is represented by the highest and lowest constituent portfolios included the

composite for the entire reporting period.7. Three year annualised standard deviation measure is not presented when there are less than 36 months of data. 8. A complete list and description of

composites and performance results is available upon request. 9. Additional information regarding policies for the valuation of portfolios and for the calculation and reporting of returns is available

upon request.

Asia Long-Term

Unconstrained

Fee

(%)

Pooled funds

1.00Minimum investment £1m

Segregated Mandates

First US$50m, £40m, €45m 0.75

Next US$50m, £40m, €45m 0.75

Next US$100m, £80m, €90m 0.75

Next US$150m, £120m, €135m 0.70

Next US$350m, £280m, €315m 0.65

Total Return % Annualised Volatility Account Performance

three years

Composite BMark Composite IndexNo. of

A/Cs

Dispersion

(AW)Highest Lowest Market Value % TFA

2018 -9.41 -14.12 13.37 14.81 2 N/A -9.50 -9.74 434,176,829.00 6.04

2017 36.73 42.08 12.48 14.99 3 0.51 37.30 35.71 462,056,087.92 5.43

2016 4.62 5.76 12.46 15.05 3 0.10 3.99 3.75 420,987,409.08 6.31

2015 -5.90 -8.90 11.42 13.36 3 0.34 -10.05 -10.81 496,294,763.23 6.42

2014 6.26 5.11 10.89 13.42 4 0.22 3.29 2.77 1,171,078,248.95 13.25

2013 10.40 3.33 12.76 18.66 3 0.45 10.07 8.80 565,975,362.22 6.14

2012 26.77 22.70 13.76 20.82 3 N/A 26.48 25.64 411,237,867.47 5.31

2011 0.21 -17.07 16.38 25.06 2 N/A -0.17 -0.75 206,930,215.33 2.22

2010 24.70 19.93 N/A N/A 2 N/A 24.16 23.53 176,330,843.51 0.96

2009 45.50 72.53 N/A N/A 2 N/A 44.91 44.45 121,917,195.09 0.63

Aug 08 to end Dec 08 -24.79 -38.97 N/A N/A 2 N/A -25.05 -25.05 64,672,716.71 0.45

Important information

Information has been prepared from sources believed reliable. It is not guaranteed in any way by any Legg Mason, Inc. company or affiliate (together "Legg

Mason").

Before investing you should read the application form Prospectus and KIID.The fund documents may be obtained free of charge in English, French, German,

Italian and Spanish from LMGF plc’s registered office at Riverside Two, Sir John Rogerson’s Quay, Grand Canal Dock, Dublin 2, Ireland, from LMGF plc’s

administrator, BNY Mellon Fund Services (Ireland) Limited, or from www.leggmasonglobal.com.

This financial promotion is issued by Legg Mason Investments (Ireland) Limited, registered office 6th Floor, Building Three, Number One Ballsbridge, 126

Pembroke Road, Ballsbridge, Dublin 4, D04 EP27, Ireland. Registered in Ireland, Company No. 271887. Authorised and regulated by the Central Bank of

Ireland.

Issued by Legg Mason Investments (Ireland) Limited, registered office 6th Floor, Building Three, Number One Ballsbridge, 126 Pembroke Road, Ballsbridge,

Dublin 4, D04 EP27, Ireland. Registered in Ireland, Company No. 271887. Authorised and regulated by the Central Bank of Ireland.

Individual securities are examples only and are not recommendations to buy or sell an investment.

Opinions expressed are subject to change without notice and do not consider the needs of investors.

In the UK this financial promotion is issued 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 UK Financial Conduct Authority.

This information is only for use by professional clients. It is not aimed at, retail clients. Not for onward distribution.

May 2019

28

Documents

Legg Mason Martin Currie Asia Long-Term …...Legg Mason Martin Currie Asia Long-Term Unconstrained Fund Investment Week Conference Retreat May 2019 The value of investments and the