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Diversified income opportunitiesScott Bradley, BetaShares & Legg Mason

DIVERSIFIED INCOME OPPORTUNITIES

IMPORTANT INFORMATION

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The information contained in this document is general information only and does not constitute personal financial advice. It does not take into account any person’s financial objectives, situation or needs. It has been prepared by BetaShares Capital Limited (ABN 78 139 566 868, Australian Financial Services Licence No. 341181) (“BetaShares”). The information is provided for information purposes only and is not a recommendation to make any investment or adopt any investment strategy. Past performance is not indicative of future performance. Investments in BetaShares Legg Mason Funds are subject to investment risk and investors may not get back the full amount originally invested. Any person wishing to invest in BetaShares Legg Mason Funds should obtain a copy of the relevant PDS from www.betashares.com.au and obtain financial and tax advice in light of their individual circumstances.

Future outcomes are inherently uncertain. Actual outcomes may differ materially from those contemplated in any opinions, estimates or other forward-looking statements given in this presentation.

THE INCOME CHALLENGE

INTEREST RATES HISTORICALLY LOW

5

Source: Bloomberg, RBA.

Interest Rates

0

1

2

3

4

5

6

7

8

9

10

11

12

13

14

Aug-90 Aug-95 Aug-00 Aug-05 Aug-10 Aug-15

3-year bank term deposit Bloomberg AusBond Composite Index

%

DIVIDEND YIELDS REMAIN ATTRACTIVE

6

Source: Bloomberg. Past performance is not an indicator of future performance, not all investors will be able to obtain the full value of franking credits.

% Interest Rates vs. Dividends

THE CASE FOR ACTIVE: BEWARE OF DIVIDEND TRAPS

7

Source: Bloomberg. Past performance is not an indicator of future performance

S&P/ASX 200 Earnings and Dividends

THE CASE FOR ACTIVE: EQUITY PRICE ALSO VOLATILE

8

S&P/ASX 200 Index

Source: Bloomberg. Past performance is not an indicator of future performance

INVESTMENT OUTLOOK

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► Local economy soft

► Earnings under pressure

► Interest rates likely to stay low, or lower

► Fixed income returns likely to still beat cash

► Defensive income likely to remain well supported

THREE INCOME INVESTMENT OPPORTUNITIES

HIGH INCOME THAT GROWS WITH YOUAUSTRALIA’S FIRST FIXED INCOME ACTIVE ETF

Objective:

► Provide an after-fee return above the Bloomberg AusBond Composite Index over rolling three-year periods.

BETASHARES LEGG MASONAUSTRALIAN BOND FUND (MANAGED FUND)

ASX Code: BNDS

MORE DIVERSIFIED ACTIVE EXPOSURE TO BONDS

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Bloomberg AusBond Composite Index (%)

Sector Allocation as at 30 September 2019

Past performance is not a guarantee of future performance. Note: All weightings are a percentage of total market value adjusted. Total may not sum due to rounding.

Betashares Legg Mason Australian Bond Fund (%)

19

20

14

43

2

0

2

Government

Semi Government

Supranational

Corporate Investment Grade

Covered Bonds

Asset / Mortgage Backed

Cash

52

24

14

9

1

0

0

Government

Semi Government

Supranational

Corporate Investment Grade

Covered Bonds

Asset / Mortgage Backed

Cash

GOOD PERFORMANCE RECORD

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Past performance is not a guarantee of future performance. Note: ^Bloomberg AusBond Composite 0+Y TR AUD.*As the BetaShares Legg Mason Australian Bond Fund (managed fund) (ASX: BNDS) commenced in November 2018, for illustration purposes, the performance of the unlisted Legg Mason Western Asset Australian Bond Fund that was incepted in October 1998, is shown above to illustrate how a comparable fund managed by Western Asset using the same strategy has performed in the past over longer periods. Historic performance of the unlisted fund is not a reliable indicator of the performance of BNDS. Returns are calculated using net asset value per unit at the start and end of the specified period and are after fund management costs, assume reinvestment of any distributions and do not take into account income tax. Current performance may be higher or lower than the performance shown.

Performance % of unlisted Legg Mason Western Asset Australian Bond Fund (30 September 2019)*

Total Return Performance of comparable unlisted Legg Mason Fund

BNDS Performance % (30 September 2019)

50

70

90

110

130

150

170

190

210

230

250

Feb-08 Feb-10 Feb-12 Feb-14 Feb-16 Feb-18

Legg Mason Unlisted Fund*

AusBond Composite Index

Index=100 October 2011 1 mth 3 mth 6 mth Since Inception (7 Nov 2018)

Fund (net) (0.49) 2.04 5.21 11.01

Benchmark (0.49) 1.98 5.09 11.12

1 yr p.a. 3 yr p.a. 5 yr p.a. 10 yr p.a.

Fund (net) 11.12 4.77 5.38 6.71

Benchmark^ 11.13 4.59 5.27 5.99

Value Add (net) (0.01) 0.18 0.11 0.72

DIVERSIFICATION WHEN YOU NEED IT

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Source: Bloomberg. Past performance is not an indicator of future performance.*As the BetaShares Legg Mason Australian Bond Fund (managed fund) (ASX: BNDS) commenced in November 2018, for illustration purposes, the performance of the unlisted Legg Mason Western Asset Australian Bond Fund that was incepted in October 1998, is shown above to illustrate how a comparable fund managed by Western Asset using the same strategy has performed in the past over longer periods. Historic performance of the unlisted fund is not a reliable indicator of the performance of BNDS. Returns are calculated using net asset value per unit at the start and end of the specified period and are after fund management costs, assume reinvestment of any distributions and do not take into account income tax. Current performance may be higher or lower than the performance shown.

Strategy Investment Performance During Recent Periods of Equity Market Weakness

BETASHARES LEGG MASONEQUITY INCOME FUND (MANAGED FUND)

ASX Code: EINC

Objectives:

► Exposure to income-orientated Australian shares;

► After-tax income yield above the S&P/ASX 200 Index;

► Grow this income above the rate of inflation.

Past performance is not a guide to future returns. As at 30 September 2019. This strategy is not constrained by a benchmark, however for comparison purposes it is shown against the S&P/ASX 200 Accumulation Index.

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Index Portfolio (%) S&P/ASX 200 (%)ASX 20 37.0 57.9 ASX 50 less 20 23.8 21.3 ASX 100 less 50 20.7 12.9 ASX small ords 12.4 8.0 Ex-Index 2.3 0.0 Cash 3.8 0.0

DIVERSIFIED APPROACH TO GENERATING INCOME

TOP TEN ABSOLUTE WEIGHTS

Past performance is not a guide to future returns. Source: BetaShares, Factset; as at 30 September 2019. 1. Yield forecast is calculated using the weighted average of broker consensus forecasts of each portfolio holding and research conducted by Legg Mason Australia, and excludesthe Fund’s fees and costs. Franking credit benefit assumes a zero tax rate. It is not to be interpreted as the offset achieved by unitholders during this period. Actual yield may differ due to various factors, including changes in the prices of the underlying securities and the number of unitson issue. Neither the yield forecast nor past performance is a guarantee of future results. Not all investors will be able to benefit from the full value of franking credits.

High quality companies with track records of consistently paying and growing dividendsStock Investment thesis Absolute % Franked yield % p.a.1

JB Hi-Fi Global leader in retail cost/revenue efficiency, with significant upside from Good Guys 4.6 6.0

NAB Large bank with a favourable business banking skew 4.5 8.0

ANZ Remains best value bank with a mixture of genuine cost-out and excess capital driving the story 4.3 8.0

Wesfarmers High-quality conglomerate with good long-term track record 3.9 5.5

Telstra Telecom company with attractive yield supported by cash flows and productivity improvements 3.9 6.6

AGL Energy Integrated power generation and retail distribution offer scale and efficiency 3.8 6.7

Woodside Petroleum

Oil and gas production with full development pipeline of growth projects for next 5-7 years 3.7 8.0

Coles High-quality supermarket with solid earnings outlook 3.4 5.3

Coca-Cola Amatil One of largest bottlers of non-alcoholic ready-to-drink beverages in the Asia-Pacific region 3.3 5.5

IAG Insurance company remains attractive, with a strong market position and top-line growth 3.2 4.8

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GOOD PERFORMANCE RECORD

Past performance is not a guide to future returns. Source: Martin Currie Australia. ^ Inception date: 13 February 2018. *As the BetaShares Legg Mason Equity Income Fund (managed fund) (ASX: EINC) commenced in February 2018, for illustration purposes, the performance of theunlisted Legg Mason Martin Currie Equity Income Fund that was incepted in May 2010, is shown above to illustrate how a comparable fund managed by Martin Currie Australia using the same strategy has performed in the past over longer periods. Historic performance of the unlistedfund is not a reliable indicator of the performance of the Fund. Returns are calculated using net asset value per unit at the start and end of the specified period and are after fund management costs, assume reinvestment of any distributions and do not take into account income tax. Returnslonger than one year are annualised. Current performance may be higher or lower than the performance shown 1. Yield forecast is calculated using the weighted average of broker consensus forecasts of each portfolio holding and research conducted by Legg Mason Australia, andexcludes the Fund’s fees and costs. Franking credit benefit assumes a zero tax rate. It is not to be interpreted as the offset achieved by unitholders during this period. Actual yield may differ due to various factors, including changes in the prices of the underlying securities and the numberof units on issue. Neither the yield forecast nor past performance is a guarantee of future results. Not all investors will be able to benefit from the full value of franking credits.

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EINC Forecast Yield % – Next 12 months1

(30 September 2019)

Forecast unfranked portfolio yield 4.7

Forecast franked portfolio yield 6.3

3 yr p.a 5 yr p.a.

Fund (net) 8.30 9.48

Unlisted Legg Mason Martin Currie Equity Income Fund Performance % (30 September 2019)*

Comparable Unlisted Legg Mason Fund vs. S&P/ASX 200Total return performance Indices

1 mth 3 mth 6mth 1 yr p.a.Fund (net) 2.31 4.76 11.01 11.74

EINC Performance % (30 September 2019)^

Index=100 October 2011

0

50

100

150

200

250

300

Oct-11 Oct-12 Oct-13 Oct-14 Oct-15 Oct-16 Oct-17 Oct-18

Legg Mason Unlisted Fund*

S&P/ASX 200

BETASHARES LEGG MASONREAL INCOME FUND (MANAGED FUND)

ASX Code: RINC

Objectives:

► Invests in A-REITs, utility and infrastructure securities;

► A pre-tax income yield above the S&P/ASX 200 Index;

► Grow this income above the rate of inflation.

THREE MAIN SECTORS

Source: Martin Currie Australia. 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. Examples are indicative only,actual portfolio may differ. Image source: Pexels.

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A-REITs Infrastructure Utilities

MORE DIVERSIFIED ACTIVE EXPOSURETO REAL ASSETS

Source: Martin Currie Australia; as at 30 September 2019. Data calculated for the representative Martin Currie Australia Real Income. As the BetaShares Legg Mason Real Income Fund (managed fund) (ASX: RINC) commenced in February 2018, the unlisted Legg Mason Martin Currie Real Income Fund is shown above to illustrate a comparable fund managed by Martin Currie Australia using the same strategy. This strategy is not constrained by a benchmark. 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.

Seeks lower risk by avoiding over-concentration

Example of MixA-REIT Index % RINC %

A-REITs

Retail 43 38

Office 26 12

Industrial 25 7

Other 6 -

Regulated Utilities - 2

Un-Regulated Utilities - 25

Infrastructure - 13

100 100

Greater economic diversification

Top 5 stock weights in portfolio and AREIT index Sector mix for portfolio and AREIT index

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0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

SCG GMG AZJ SCG SGP DXS AGL MGR CEN GPT

S&P/ASX A-REIT 300 Index MCA Real IncomeLegg Mason Martin Currie Real Income Fund

TOP TEN ABSOLUTE WEIGHTS

Past performance is not a guide to future returns. As at 30 September 2019. 1Yield forecast is calculated using the weighted average of broker consensus forecasts of each portfolio holding and research conducted by Legg Mason Australia, and excludes the Fund’s fees and costs.Franking credit benefit assumes a zero tax rate. It is not to be interpreted as the offset achieved by unitholders during this period. Actual yield may differ due to various factors, including changes in the prices of the underlying securities and the number of units on issue. Neither the yieldforecast nor past performance is a guarantee of future results. Not all investors will be able to benefit from the full value of franking credits. The information provided should not be considered a recommendation to purchase or sell any particular security. It should not be assumed that anyof the security transactions discussed here were, or will prove to be, profitable.

RINC owns monopoly like assets that have limited business cycle risk and seeks to avoid real assets that have riskier cash flows

Security Industry Portfolio1

%Franked Yield1 %

p.a.QualityRating

ü Scentre Group Retail REIT 7.0 6.1 1

ü Aurizon Holdings Railroads & Ports 6.4 5.9 3

üStockland Corporation Diversified REIT 6.2 6.1 2

ü AGL Energy Multi-utility 5.8 6.7 2

ü Contact Energy Multi-utility 5.3 4.6 2

ü Transurban Toll roads 5.3 4.4 1

ü APA Group Unregulated gas & electricity grids 5.3 4.9 1

ü Vicinity Centres Retail REIT 4.8 6.1 2

ü Unibail-Rodamco Retail REIT 4.7 8.4 2

ü SCA Group Retail REIT 3.5 5.8 2

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Comparable Unlisted Legg Mason Fund

GOOD PERFORMANCE RECORD

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Source: Martin Currie.Past performance is not a guide to future returns. Source: Martin Currie Australia. ^ Inception date: 13 February 2018. *As the BetaShares Legg Mason Equity Income Fund (managed fund) (ASX: EINC) commenced in February 2018, for illustration purposes, the performance of the unlisted Legg Mason Martin Currie Real Equity Income Fund that was incepted in October 2011, is shown above to illustrate how a comparable fund managed by Martin Currie Australia using the same strategy has performed in the past over longer periods. Historic performance of the unlisted fund is not a reliable indicator of the performance of the Fund. Returns are calculated using net asset value per unit at the start and end of the specified period and are after fund management costs, assume reinvestment of any distributions and do not take into account income tax. Returns longer than one year are annualised. Current performance may be higher or lower than the performance shown 1. Yield forecast is calculated using the weighted average of broker consensus forecasts of each portfolio holding and research conducted by Legg Mason Australia, and excludes the Fund’s fees and costs. Franking credit benefit assumes a zero-tax rate. It is not to be interpreted as the offset achieved by unitholders during this period. Actual yield may differ due to various factors, including changes in the prices of the underlying securities and the number of units on issue. Neither the yield forecast nor past performance is a guarantee of future results. Not all investors will be able to benefit from the full value of franking credits.

3 yr p.a. 5 yr p.a.

Fund (net) 12.03 15.24

Unlisted Legg Mason Martin Currie Real Income Fund Performance % (30 September 2019)

RINC Forecast Yield % – Next 12 months1

30 September 2019Forecast unfranked portfolio yield 5.3

Forecast franked portfolio yield 5.5

Total return performance Indices1 month 3 month 6 month 1 yr p.a.

Fund (net) (0.31) 4.67 10.10 23.02

RINC Performance^ % (30 September 2019)

0

50

100

150

200

250

300

350

400

Oct-11 Oct-12 Oct-13 Oct-14 Oct-15 Oct-16 Oct-17 Oct-18

Unlisted Legg Mason Fund*

S&P/ASX 200 A-REITs

S&P/ASX Infrastructure Index

Index=100 October 2011

WRAP-UP

� Four leading ACTIVE ETFs – differentiated and compelling solutions

� Highly rated and award-winning investment teams, process and propositions

� Competitive fee structures: BNDS: 0.42% p.a., RINC & EINC: 0.85%p.a., EMMG: 1.00% p.a.*

� BetaShares and Legg Mason - a partnership of two industry leaders

BetaShares a leading ETF Provider Legg Mason a leader in Active Management

24*Other costs may apply, such as transactions costs. See PDS.

CONSIDERATIONS� Investment risk: The value of an investor’s portfolio can fluctuate. Risks include:

- Market risk with equities and bonds- Interest rate and credit risk with bonds

� No guarantees: Future outcomes are uncertain – desired return outcome may not be achieved

� General information only: Today’s presentation does not take into account any person’s individual circumstances and is not personal financial advice

� Professional advice: Investors should seek professional financial advice before investing

� Research: See relevant PDS for more information about risks

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DISCLAIMERThe information contained in this document is general information only and does not constitute personal financial advice. It does not take into account any person’s financial objectives, situation or needs. The information is provided for informationpurposes only and is not a recommendation to make any investment or adopt any investment strategy. Past performance is not indicative of future performance. Investments in BetaShares Legg Mason Funds are subject to investment risk andinvestors may not get back the full amount originally invested. Any person wishing to invest in BetaShares Legg Mason Funds should obtain a copy of the relevant PDS from www.betashares.com.au and obtain financial and tax advice in light of theirindividual circumstances. Future outcomes are inherently uncertain. Actual outcomes may differ materially from those contemplated in any opinions, estimates or other forward-looking statements given in this presentation. BetaShares Capital Ltd(ABN 78 139 566 868 AFSL 341181) (BetaShares) is the issuer and responsible entity of the BetaShares Legg Mason Australian Bond Fund (Managed Fund) (ARSN 608 058 493), BetaShares Legg Mason Emerging Markets Fund (Managed Fund)(ARSN 629 322 247) BetaShares Legg Mason Equity Income Fund (managed fund) (ARSN 621 856 406) and BetaShares Legg Mason Real Income Fund (managed fund) (ARSN 621 862 619) (‘Managed Funds). BetaShares hasappointed Legg Mason Asset Management Australia Ltd (ABN 76 004 835 849 AFSL 240827) (Legg Mason Australia) as investment manager for the Managed funds. Legg Mason Australia is part of the Global Legg Mason Inc. group. MartinCurrie Australia, a division within Legg Mason Australia, provides the investment management services for the BetaShares Legg Mason Equity Income Fund (managed fund) and BetaShares Legg Mason Real Income Fund (managed fund).Martin Currie Australia is the fund manager of the Funds. Any reference to ‘Legg Mason Australia’ or ‘Martin Currie Australia’ is a reference to Legg Mason Asset Management Australia Limited. Western Asset Management, a division within LeggMason Australia, provides the investment management services for the BetaShares Legg Mason Australian Bond Fund (Managed Fund). Western Asset Management is the fund manager of the Funds. Any reference to ‘Legg Mason Australia’ or‘Western Asset Management’ is a reference to Legg Mason Asset Management Australia Limited. Before making an investment decision you should read the Product Disclosure Statement (PDS) for the Fund carefully and consider, with or withoutthe assistance of a financial advisor, whether such an investment is appropriate in light of your particular investment needs, objectives and financial circumstances. The PDS is available and can be obtained by contacting BetaShareson 1300 487 577 or Legg Mason Australia on 1800 679 541 or at www.betashares.com.au or www.leggmason.com.au. This information does not take into account the investment objectives, financial objectives or particular needs of any particularperson. Neither BetaShares, Legg Mason Australia, nor any of their related parties guarantees any performance or the return of capital invested. Past performance is not necessarily indicative of future performance. Investments are subject to risks,including, but not limited to, possible delays in payments and loss of income or capital invested. There are risks associated with an investment in the Funds, including market risk, individual security risk and market making risk. Although statements offact in this presentation have been obtained from and are based upon sources Legg Mason Asset Management Australia Limited ABN 76 004 835 849 believe to be reliable, we do not guarantee their accuracy, and any such information may beincomplete or condensed. All opinions and estimates included in this communication constitute our judgement as of the date of this communication and are subject to change without notice. The Lonsec Rating (assigned as follows: Legg MasonMartin Currie Emerging Markets Fund – May 2019, Legg Mason Martin Currie Equity Income Fund - October 2018; Betashares Legg Mason Equity Income fund (managed fund) (ASX:EINC) - February 2018; Legg Mason Martin Currie Real IncomeFund - March 2018; Betashares Legg Mason Real Income fund (managed fund) (ASX:RINC) - February 2018); Legg Mason BetaShares Australian Bond Fund (managed fund) (ASX: BNDS) – April 2019) presented in this document are published byLonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421445. The Ratings are limited to “General Advice” (as defined in the Corporations Act 2001 (Cth)) and based solely on consideration of the investment merits of the financial products. Pastperformance information is for illustrative purposes only and is not indicative of future performance. They are not a recommendation to purchase, sell or hold Legg Mason Asset Management Australia Limited products, and you should seekindependent financial advice before investing in these products. The Ratings are subject to change without notice and Lonsec assumes no obligation to update the relevant documents following publication. Lonsec receives a fee from the FundManager for researching the products using comprehensive and objective criteria. For further information regarding Lonsec’s Ratings methodology, please refer to our website at: http://www.beyond.lonsec.com.au/intelligence/lonsec-ratings. TheZenith Investment Partners (“Zenith”) Australian Financial Services License No. 226872 rating (Betashares Legg Mason Equity Income Fund (managed fund) (ASX:EINC) - October 2018; Betashares Legg Mason Real Income Fund (managed fund)(ASX:RINC) – October 2018 Legg Mason Martin Currie Equity Income Fund - June 2018; Legg Mason Martin Currie Emerging Markets Fund - November 2018 ; Legg Mason Martin Currie Real Income Fund - June 2018) referred to in thisdocument is limited to “General Advice” (s766B Corporations Act 2001) for Wholesale clients only. This advice has been prepared without taking into account the objectives, financial situation or needs of any individual and issubject to change at any time without prior notice. It is not a specific recommendation to purchase, sell or hold the relevant product(s). Investors should seek independent financial advice before making an investment decision and shouldconsider the appropriateness of this advice in light of their own objectives, financial situation and needs. Investors should obtain a copy of, and consider the PDS or offer document before making any decision and refer to the full Zenith ProductAssessment available on the Zenith website. Past performance is not an indication of future performance. Zenith usually charges the product issuer, fund manager or related party to conduct Product Assessments. Full details regarding Zenith’smethodology, ratings definitions and regulatory compliance are available on our Product Assessments and at http://www.zenithpartners.com.au/RegulatoryGuidelines.© 2018 Morningstar, Inc. All rights reserved. The Morningstar Rating is an assessment of a fund’s past performance – based on both return and risk – which shows how similar investments compare with their competitors. A high rating alone isinsufficient basis for an investment decision. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. Anygeneral advice or ‘class service’ have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892) and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financialsituation or needs. Refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement beforemaking any decision to invest. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product’s futureperformance. To obtain advice tailored to your situation, contact a professional financial adviser.The Legg Mason Western Asset Australian Bond Fund received an overall rating of 5 stars out of 106 Bonds – Australia funds as of 31 May 2019. The Morningstar Analyst Rating for the Legg Mason Western Asset Australian Bond strategy is Silveras at October 2018.The Morningstar Analyst Rating™ for Legg Mason Martin Currie Real Income Fund is ‘Neutral’ as at 14 March 2018. © 2018 FE Money Management. All rights reserved. The information, data, analyses, and opinions contained herein (1) include theproprietary information of FE Money Management and Lonsec (2) may not be copied or redistributed (3) do not constitute investment advice offered by FE Money Management or Lonsec (4) are provided solely for informational purposes andtherefore are not an offer to buy or sell a security (5) are not warranted to be correct, complete, or accurate. FE Money Management and Lonsec shall not be responsible for any trading decisions, damages, or other losses resulting from, or relatedto, this information, data, analyses, or opinions or their use. FE Money Management and Lonsec does not guarantee that a fund will perform in line with its Fund Manager of the Year award as it reflects past performance only. Likewise, the FundManager of the Year award should not be any sort of guarantee or assessment of the creditworthiness of a fund or of its underlying securities and should not be used as the sole basis for making any investment decision.

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