BONDS WITHOUT BORDERS

BONDS WITHOUT BORDERS Discover opportunities in global bond markets While U.S. fixed income investors have traditionally stayed close to home, there are compelling reasons for venturing farther afield. By exploring global fixed income markets, investors open themselves to a world of opportunities and the potential for several important benefits. INVESTMENT PRODUCTS: NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE

DISCOVER THE POTENTIAL OF GLOBAL BONDS The advantages of expanding your horizons Global bonds have always presented a compelling investment opportunity. However, in a rising interest rate environment, their potential benefits become even more important to investors facing increased risks and diminished opportunities from domestic bond portfolios. 1 More opportunities to explore Global fixed income is often underrepresented in many portfolios, which can limit duration decisions and increase risks for domestic-only bond investors. Portfolios may be underallocated to global bonds Expanded opportunity set Nearly two-thirds of developed market sovereign bonds are found outside of the U.S. Broader opportunity set can provide greater real yield potential. 3% 60 trillion 19% Non-U.S. average institutional allocation 56% Non-U.S. market cap 93 trillion Non-U.S. average institutional allocation 59% Non-U.S. market cap Global Equity Market Global Bond Market Equity based on market capitalization of the S&P Global Broad Market Index, as of March 31, 2017. The index covers over 11,000 companies in 52 developed and emerging countries. Global bonds based on the Bank for International Settlements Summary of Debt Securities Outstanding, as of March 31, 2017. Institutional asset allocation data from Greenwich Associates, as of December 31, 2016. International investments are subject to special risks, including currency fluctuations and social, economic and political uncertainties, which could increase volatility. 2

2 Attractive yields and the potential for strong total returns Greater flexibility gives global bond investors multiple ways to potentially enhance returns. Selecting markets with the most attractive yields or favorable economic conditions may lead to strong price appreciation. Active currency management, which exploits movements in exchange rates across countries, offers another source of returns. Comparison of 10-year government bond nominal yields (%) Yields can vary widely between countries, particularly among developed and developing regions. 2.31 United States 10.74 Dominican Republic 0.65 Sweden 0.50 Finland 0.47 Germany 10.27 Turkey 0.08 Japan 7.69 Russia 10.54 Brazil 8.77 South Africa As of June 30, 2017. Source: Bloomberg. The chart displays the yields for the 10-year generic government bond of each country. The country list represents the fi ve highest and lowest yielding countries which received a minimum long-term local currency credit rating of BB- or better by Standard & Poor s. The 10-year generic U.S. treasury bond has been included for reference. Yields represent past performance, are not guaranteed, and are subject to change. The nominal yield is the amount of income earned from a fi xed-income security divided by the security s par value, expressed as a percentage. 3 The benefits of diversification Limiting bond investments to a single country and currency exposes an investor to concentrated interest rate, market and other risks. Conversely, broader exposure may provide important diversification benefits, through exposure to multiple business cycles and other countries with low correlations both to one another and to other asset classes. Global bond market correlations with U.S. bond market 0.6 0.5 0.4 0.3 0.2 0.1 Diversification benefits Investing in only one market exposes portfolios to potentially more risk, including rising interest rates. World economies are generally not synchronized, which creates opportunities for global investors. -0.0-0.1 Greece Russia Portugal Poland Norway India Brazil Italy Mexico Spain South Africa Canada New Zealand U.K. Malaysia Sweden Switzerland Turkey Australia Japan Germany France Indonesia Source: Bloomberg. Data as of June 30, 2007 June 30, 2017. Correlations of the Citigroup World Government Bond Index, broad benchmark for the global sovereign fixed income market, and the JP Morgan Government Bond Index - Emerging Markets, emerging market debt benchmark that tracks local currency bonds issued by Emerging market governments, measured against the Bloomberg Barclays U.S. Aggregate Index, a broad-based bond index comprised of government, corporate, mortgage, and asset-backed issues, rated investment grade or higher, and having at least one year to maturity. Diversification does not guarantee a profit or protect against a loss. 3

WHEN INVESTING GLOBALLY, CHOOSE AN EXPERIENCED GUIDE Brandywine Global: A pioneer in global fixed income With over 25 global fixed income experience, Brandywine Global is a demonstrated leader in the asset class. The firm combines expertise in value and fixed income investing with a global perspective to bring differentiated investment options to clients worldwide. A proven approach to global fixed income Analyze secular and political trends Examine and monitor long-term shifts in inflation, policy changes, and debt and pension liability trends Macroeconomic research Examine business and liquidity cycles Evaluate each country s inflation pressures, employment, fiscal and monetary policy, and interest rates Macroeconomic driven By taking the broadest view, Brandywine Global can identify the most attractive investment opportunities across markets and avoid the biases inherent in country- or sector-specific research. Establish investment themes to drive the security selection process Value oriented The firm s global fixed income team focuses on global bonds that offer the best combination of high real yields, undervalued currencies, and attractive fundamentals given the macroeconomic outlook. Country Invest in countries with high real yields and valuation anomalies, as well as positive economic developments that may drive changes in interest rates Currency Actively manage currency exposures to help protect principal or opportunistically add value by taking advantage of or protecting against movements in exchange rates between countries Credit Macroeconomic outlook determines credit-quality bias and opportunistic exposure to corporate bonds and mortgages By investing with a long-term focus in higher real-yielding countries and their bond markets, Brandywine Global s fixed income funds have generated aboveaverage income over time. Actively managed Brandywine Global actively and holistically targets three primary sources of alpha, or the three Cs of country, currency, and credit. Furthermore, their global fixed income team refrains from managing to global bond indices, which tend to be skewed toward the biggest issuers of debt. 4

MULTIPLE ROUTES FOR GOING ABROAD Diversified investment strategies with track records in generating income and total return Brandywine Global offers investors multiple choices for accessing the world of global bonds. Each fund provides a differentiated path to exploring the diverse corners of global bond markets, while all benefit from the deep experience and thoughtful approach for which Brandywine Global is well known. Fund Name Applications Overview Legg Mason BW Global Opportunities Bond Fund Add diversification Provide potential for higher income and returns to a fixed income portfolio The Fund offers a traditional approach to global fixed income, seeking to maximize total return while exploring the full universe of global bonds, including sovereign debt, investment grade and high yield corporates, and mortgages. Sovereign focused Legg Mason BW Absolute Return Opportunities Fund Add diversification Protect against a rising-rate environment, with the potential for positive returns in varying market conditions Using an unconstrained approach that seeks to provide positive returns independent of market cycles, the Fund maintains a focus on global bonds and has the flexibility to generate alpha by taking both long and short exposures to interest rates, currencies, and credit markets. Credit focused Legg Mason BW Alternative Credit Fund Add diversification to fixed income or alternatives allocations Access differentiated sources of returns and low correlations with traditional asset classes The Fund relies on differentiated sources of performance and low correlation with traditional asset classes to generate positive returns and provide access to the investment team s best ideas in global credit. Style Global Bond Global Unconstrained Bond Global Long-Short Credit Investment objective Maximize total return Generate positive returns regardless of market cycles Investment universe Currency management Able to take long or short positions 1 Alternative strategy categorization Global sovereign bond, credit, and currency markets with long-term debt ratings above BB Unhedged but actively managed. Will invest in undervalued currencies and hedge overvalued currencies back to the U.S. dollar. Global sovereign bond, credit, and currency markets with long-term debt ratings above B Unhedged but actively managed. Will take long positions in undervalued currencies and short positions in overvalued currencies. Lipper Category: Alternative Global MACRO Funds Generate positive returns regardless of market cycles Duration range 1 to 10 Years -5 to 5 Years -10 to 10 Years Mutual fund tickers A: GOBAX, C: LGOCX, I: GOBIX, IS: GOBSX Broad credit sectors, including corporates, structured products, and EM, as well as select developed/em sovereigns Majority U.S. dollar exposure with typically no more than 20% in foreign currency exposure. Lipper Category: Alternative Credit Focus Funds A: LROAX, C: LAOCX, I: LROIX A: LMAPX, C: LMAQX, I: LMANX, IS: LMAMX Inception date 11/1/2006 (IS Shares) 2/28/2011 (A & I Shares) 8/31/2010 (IS Shares) 1 Short selling is a speculative strategy. Unlike the possible loss on a security that is purchased, there is no limit on the amount of loss on an appreciating security that is sold short. Please see back cover for Lipper category definitions. 5

A BOND VETERAN WITH A GLOBAL VISION Brandywine Global believes in the power of value investing. Acting with conviction and discipline, the firm looks beyond shortterm, conventional thinking to deliver long-term value. Known for its strong history of managing assets for prestigious institutional investors around the world, Brandywine Global brings its leading investment strategies to individuals through a range of Legg Mason mutual funds. Why Brandywine Global? Founded in 1986, the firm s global presence includes offices in the U.S. and Canada, Europe, and Asia. With over 25 experience managing global bonds, Brandywine Global is a pioneer in global fixed income investing. The team s top-down, macrodriven, value-oriented approach has produced proven track records across differentiated investment solutions. A team approach to finding value across fixed income markets Brandywine Global s fixed income team is led by industry veterans with extensive experience identifying value in global sovereign and corporate bond markets, as well as mortgages and structured credit. The investment team thrives in a culture that encourages intellectual curiosity, respects diverse viewpoints, and invites candid discussion. They challenge one another and conventional thinking to make better investment decisions. David F. Hoffman, CFA Managing Director, Portfolio Manager Stephen S. Smith Managing Director, Portfolio Manager Jack P. McIntyre, CFA Portfolio Manager Anujeet Sareen, CFA Portfolio Manager 35+ experience 35+ experience 29+ experience 22+ experience Gary P. Herbert, CFA Portfolio Manager, Head of Global Credit 25+ experience Brian Kloss, JD, CPA Portfolio Manager, Head of High Yield 18+ experience Tracy Chen, CFA, CAIA Portfolio Manager, Head of Structured Credit 19+ experience 6

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Brandywine Global Clarion Partners Legg Mason is a leading global investment company committed to helping clients reach their financial goals through long-term, actively managed investment strategies. ClearBridge Investments EnTrustPermal Martin Currie QS Investors RARE Infrastructure A broad mix of equities, fixed-income, alternatives and cash strategies invested worldwide A diverse family of specialized investment managers, each with its own independent approach to research and analysis Over a century of experience in identifying opportunities and delivering astute investment solutions to clients Royce & Associates Western Asset LeggMason.com LIPPER CATEGORIES: Alternative Global MACRO Funds (AGM): Funds that, by prospectus language, invest around the world using economic theory to justify the decision-making process. The strategy is typically based on forecasts and analysis about interest rate trends, the general flow of funds, political changes, government policies, intergovernmental relations, and other broad systemic factors. These funds generally trade a wide range of markets and geographic regions, employing a broad range of trading ideas and instruments. Alternative Credit Focus Funds (AFC): Funds that, by prospectus language, invest in a wide range of credit structured vehicles by using either fundamental credit research analysis or quantitative credit portfolio modeling trying to benefit from any changes in credit quality, credit spreads, and market liquidity. Real yields are calculated by adjusting stated yields to compensate for inflation expectations over the time period during which the yields are expected to be paid. Alpha is a measure of portfolio performance versus a benchmark, relative to the volatility of that benchmark. An alpha greater than zero suggests that the portfolio has outperformed during the period by means other than adding volatility. The S&P 500 Index is an unmanaged index of 500 stocks that is generally representative of the performance of larger companies in the U.S. Indexes are unmanaged, and not available for direct investment. Index returns do not include fees or sales charges. Credit quality is a measure of a bond issuer s ability to repay interest and principal in a timely manner. The credit ratings shown are based on each portfolio security s rating as provided by Standard and Poor s, Moody s Investors Service and/or Fitch Ratings, Ltd. And typically range from AAA (highest) to D (lowest), or an equivalent and/or similar rating. For this purpose, Brandywine Global Investment Management assigns each security the middle rating from these three agencies. When only two agencies provide ratings, the lower of the two ratings will be assigned. When only one agency assigns a rating, that rating will be used. Securities that are unrated by all three agencies are reflected as such. The credit quality of the investments in the Funds portfolio does not apply to the stability or safety of the Fund. These ratings are updated monthly and may change over time. Please note, the Fund itself has not been rated by an independent rating agency. What should I know before investing? Risks applying to the Global Opportunities Bond Fund, Absolute Return Opportunities Fund and Alternative Credit Fund: Fixed-income securities involve interest rate, credit, inflation, and reinvestment risks; and possible loss of principal. As interest rates rise, the value of fixed-income securities falls. Asset-backed, mortgage-backed or mortgage-related securities are subject to prepayment and extension risks. High yield bonds are subject to greater price volatility, illiquidity, and possibility of default. International investments are subject to special risks, including currency fluctuations and social, economic and political uncertainties, which could increase volatility. These risks are magnified in emerging markets. Derivatives, such as options and futures, can be illiquid, may disproportionately increase losses, and have a potentially large impact on Fund performance. As a non-diversified Fund, it is permitted to invest a higher percentage of its assets in any one issuer than a diversified fund, which may magnify the Fund s losses from events affecting a particular issuer. Leverage may increase volatility and possibility of loss. Active management does not ensure gains or protect against market declines. Additional Fund risks Absolute Return Opportunities Fund: Short selling is a speculative strategy. Unlike the possible loss on a security that is purchased, there is no limit on the amount of loss on an appreciating security that is sold short. Equity securities are subject to price fluctuation and possible loss of principal. The portfolio manager does not attempt to keep the portfolio structure or the Fund s performance consistent with any designated stock, bond or market index and during times of market rallies, the Fund may not perform as well as other Funds that seek to outperform an index. Alternative Credit Fund: The Fund may use derivatives to a significant extent, which could result in substantial losses and greater volatility in the fund s net assets. Active and frequent trading may increase a shareholder s tax liability and transaction costs, which could detract from fund performance. As a non-diversified Fund, it is permitted to invest a higher percentage of its assets in any one issuer than a diversified fund, which may magnify the Fund s losses from events affecting a particular issuer. The manager s investment style may become out of favor and/or the manager s selection process may prove incorrect, which may have a negative impact on the Fund s performance. Diversification does not guarantee a profit or protect against a loss. Any information, statement or opinion set forth herein is general in nature, is not directed to or based on the financial situation or needs of any particular investor, and does not constitute, and should not be construed as, investment advice, forecast of future events, a guarantee of future results, or a recommendation with respect to any particular security or investment strategy or type of retirement account. Investors seeking financial advice regarding the appropriateness of investing in any securities or investment strategies should consult their financial professional. 2017 Legg Mason Investor Services, LLC. Member FINRA, SIPC. Legg Mason Investor Services, LLC and all entities mentioned above are subsidiaries of Legg Mason, Inc. 769669 BWXX378885 11/17 BEFORE INVESTING, CAREFULLY CONSIDER A FUND S INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES. YOU CAN FIND THIS AND OTHER INFORMATION IN EACH PROSPECTUS, AND SUMMARY PROSPECTUS, IF AVAILABLE, AT WWW.LEGGMASON.COM. PLEASE READ THE PROSPECTUS CAREFULLY.