Private Asset Management

Foreign Equity Funds

LMC Batterymarch US Equity Fund*

Investment Objective

The investment objective of the Batterymarch U.S. Equity Fund is to add value with a disciplined investment process that incorporates rigorous stock selection, effective risk control and cost-efficient trading.

Investment Strategy

Batterymarch combines the analytical sensibility of fundamental investors with the advantages of systematic, quantitative techniques. Bottom-up stock selection is the primary source of value added. A daily process ranks the attractiveness of 3000 liquid stocks across six dimensions used by fundamental investors, namely cash flow, earnings growth, expectations, value, technical and corporate signals. Additionally, ranking stocks across multiple peer groups based on criteria such as market capitalization and style is useful in determining their attractiveness.

A top 100 strategy adds greater alpha in the efficient large cap U.S. equity market, while maintaining risk control and tight tracking error. The largest stocks by market cap are highly correlated to each other and are treated as a separate sector, with their portfolio weights determined by their rankings. Non-Top 100 stocks not ranked “buy” or “hold” are sold as quickly as liquidity permits.

A multifactor risk model optimizes the portfolio, weighing such variables as stock rankings, market capitalization constraints and any client-directed guidelines, including growth or value tilts. The portfolio is always fully invested, and is broadly diversified, with 150 to 200 holdings across all sectors.

Returns for the Period ended: June 30, 2010¹

	1 Mth. %	3 Mth. %	Year to Date %	1 Yr. %	3 Yrs.² %	5 Yrs.² %	10 Yrs.² %	Since Inception² %
LMC Batterymarch US Equity Fund	-4.2	-8.1	-6.1	1.7	-12.0	-4.1	-4.8	N/A
S&P 500³	-4.2	-7.2	-5.4	4.7	-9.8	-3.6	-4.8

Calendar Year Returns

	2009 %	2008 %	2007 %	2006 %	2005 %
LMC Batterymarch US Equity Fund	2.3	-22.6	-7.3	14.9	5.6
S&P 500³	7.4	-21.2	-10.5	15.4	2.3

^* Legg Mason Canada Inc. is the manager and portfolio adviser of Legg Mason Batterymarch U.S. Equity Fund (LMC Batterymarch US Equity Fund). The manager has hired Batterymarch Financial Management, Inc. as portfolio sub-adviser to manage the fund’s portfolio. Batterymarch Financial Management, Inc. and Legg Mason Canada Inc. are wholly-owned subsidiaries of Legg Mason, Inc., a global asset management firm listed on the New York Stock Exchange.

The offering of the fund is not, and under no circumstances is to be construed as, an advertisement or a public offering of such securities. The fund is offered to Canadian resident investors pursuant to certain securities laws exemptions available to investors in their particular province or territory of residence. The fund is offered only in those jurisdictions where it may be lawfully offered for sale. An eligible investor should obtain and refer to the Confidential Offering Memorandum for the Legg Mason Canada Pooled Funds before investing. No securities commissions or similar authority in Canada has reviewed or in any way passed upon this document or the merits of the securities described therein, and any representations to the contrary is an offence.

¹ The rates of return are used only to illustrate the effects of the compound growth rate and are not intended to reflect future values of the mutual funds or returns on the investment in the mutual funds. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing.

² Sceptre Private Asset Management Fund Units are available for institutional and high net worth investors including other funds. Only investors who meet our discretionary account requirements and minimum investment levels will be eligible to purchase these Units.

³In Canadian dollar terms.