At a Glance

• Primary Benchmark: 60% Russell 1000® Value Index/40% Lehman Government/Credit Index.
• Equity Universe: Holdings generally have a market capitalization greater than $1 billion at purchase. Typically, at least 60% have capitalizations greater than $5 billion at purchase.
• To be considered for purchase, stocks must be substantially undervalued on a P/E, P/B, P/CF, or other valuation basis.
• We focus on industry leaders.
• Our portfolios are well-diversified and carefully structured with regard to economic sensitivity.

Objective

We seek to outpace the long-term performance of a blended hypothetical benchmark (60% Russell 1000 Value Index/40% Lehman U.S. Aggregate Index), while adhering to our value-oriented investment philosophy.

Typical Investment Guidelines

FACTOR		GUIDELINE
Number Of Holdings		60-80
Range Of Stock Weightings At Purchase		1%-3%
Maximum Stock Weighting		6%
Maximum Industry Weighting		15%
Maximum Sector Weighting		35%
Maximum ADR Exposure		15%
Fixed Income Duration		1-10 years
Maximum Weighting In BBB-Rated Bonds		25%

Asset Class Selection

The typical asset allocation of our Domestic Balanced portfolios is 60% equities and 40% fixed income securities. We vary this mix based on our assessments of macroeconomic and market conditions. Among the economic factors we consider are the state of the business cycle, monetary and fiscal policies, inflation trends, and sentiment indicators. The pace of corporate earnings growth is also important: When earnings growth exceeds its long-term average, equities generally—and value equities especially—tend to perform very well. As earnings peak and level off, value stocks tend to struggle and bonds may offer better value. Our Domestic Balanced portfolios typically allocate 50%-70% of assets to equities and 30%-50% of assets to fixed income securities.

Large Cap Value Equity

We typically hold 60-80 stocks in Domestic Balanced portfolios. To begin the stock selection process, we screen all domestic equity securities to identify those with P/E ratios in the bottom 40% and/or P/B or P/CF ratios in the bottom 25%. To the resulting universe of 500-plus stocks, we apply our relative-value screen. We compare each stock's current valuation—as measured by its P/E, P/B, and P/CF ratios, prior sales growth, insider activity, yield, and return on equity—to historical norms, and then select 150 stocks that appear inexpensive relative to the market, their peers, and their historical trading ranges. Through fundamental analysis, we seek to understand why those stocks are undervalued and to identify those companies most likely to return to normal valuation levels.

Domestic Fixed Income

We apply a top-down process when structuring domestic fixed income portfolios. We attempt to uncover undervalued securities by analyzing macroeconomic conditions, business and liquidity cycles, and the level of real (inflation-adjusted) interest rates. We also look for price-spread anomalies, which might signal opportunities among specific sectors or securities. The U.S. economy's growth trend and its current position in both the business and liquidity cycles are key components in determining our investment strategy and the appropriate duration and maturity structure of our fixed income portfolios. In high real-rate environments, we have found that investors are paid to accept additional interest rate risk. As a result, in periods where real interest rates are high, we are more likely to lengthen portfolio duration relative to the Lehman Brothers U.S. Aggregate Index.

Representative Portfolio Characteristics (as of 9/30/2008)*

CHARACTERISTICS	BRANDYWINE	BlendedC
Price/Earnings	10.5	12.0
Price/Book	1.8	1.6
Price/Cash Flow	6.4	7.1
Dividend Yield (%)	3.1	3.1
Avg. Market Cap ($B)	77.5	90.7
Holdings	55	662
Turnover (% last 12 months)	14.8	-

Top Ten Holdings (as of 9/30/2008)*

COMPANY	WEIGHT (%)	COMPANY	WEIGHT (%)
ConocoPhillips	2.7	AT&T	1.8
Devon Energy	2.6	Hewlett-Packard	1.7
IBM	2.6	Burlington Northern	1.6
Bank of America	2.4	Citigroup	1.5
Chevron	2.3	Ace Ltd	1.5

* Supplemental Information. Data as of 9/30/2008. BlendedC = 60% Russell 1000V ; 40% Lehman Gov't/Credit Index.

Please refer to our GIPS compliant presentation, which includes performance footnotes, fee schedules, index descriptions and disclosures. The data represent the aggregate characteristics of all securities held in the representative portfolio, an actual commission account not subject to taxation. Data is obtained from FactSet and Russell. It should not be assumed that investments in any top ten holdings listed were or will prove to be profitable. Top ten holdings may no longer be held in client portfolios. The holdings of any particular account may vary based on any investment restrictions applicable to the account. This information is for illustrative purposes only, is subject to change at any time and should not be considered investment advice or a recommendation to buy or sell any particular security. In accordance with Rule 206(4)-1 under the Investment Advisors Act of 1940, upon request, we will furnish you with a list of all recommendations made by Brandywine within the immediately preceding twelve months. There is no guarantee that holding securities with relatively high (or low) price-to-earnings, price-to-book, or price-to-cash flow will cause the portfolio to outperform its benchmark or index.

The Russell 1000^® Value Index is a trademark of the Frank Russell Company.

Russel™ is a trademark of the Frank Russell Company.

Representative Sector Weights (as of 9/30/2008)*

* Supplemental Information. Data as of 9/30/2008. BlendedC = 60% Russell 1000V ; 40% Lehman Gov't/Credit Index.

The data represent the aggregate characteristics of all securities held in the representative portfolio, an actual commission account not subject to taxation. Data is obtained from FactSet and Russell. Sector weights are included for informational purposes only and should not be perceived as investment recommendations. It should not be assumed that investments in any sectors listed were or will prove to be profitable. The sector weights of any particular account may vary based on any investment restrictions applicable to the account.

The Russell 1000^® Value Index is a trademark of the Frank Russell Company.

Russel™ is a trademark of the Frank Russell Company.

Quarterly Portfolio Manager Commentary (as of 9/30/2008)

You should not assume that investments or strategies discussed in this commentary were or will be profitable, or that the investment decisions Brandywine Global makes in the future will be profitable or equal to the investment performance discussed in this commentary. The data and information presented in a Brandywine Global commentary is believed to be accurate and reliable as of the date recorded. Brandywine Global will not undertake to update the data and information presented at a later date. This commentary may not reflect the current views of the featured speaker and may not reflect current or sudden market activity.

Annualized Composite Returns (as of 9/30/2008)

PERIOD	GROSS	NET	BlendedC	BlendedB	EXCESS GROSS RETURN
					BlendedC	BlendedB
QTD	-5.86	-6.09	-4.32	-5.68	-1.54	-0.18
YTD	-14.11	-14.76	-11.79	-12.05	-2.32	-2.06
1 Year	-16.84	-17.68	-13.79	-12.71	-3.05	-4.13
3 Year	2.14	1.28	1.66	1.72	0.48	0.42
5 Year	6.46	5.62	5.75	4.59	0.71	1.87
7 Year	6.06	5.26	5.42	4.21	0.64	1.85
10 Year	7.33	6.54	5.60	4.14	1.73	3.19
Since Inception** 4/1/1994	9.93	9.13	8.66	8.05	1.27	1.88

Calendar Year Composite Returns (as of 9/30/2008)

YEAR	GROSS	NET	BLENDEDC	BLENDEDB	# of ACCTS	MARKET VALUE ($MM)	FIRM ASSETS ($MM)	STD. DEV. (%)
2008	-14.11	-14.76	-11.79	-12.05	4	313	37,570	0.00
2007	3.41	2.46	2.90	6.33	5	433	49,208	0.00
2006	17.57	16.77	14.57	10.88	5	362	39,241	0.00
2005	6.81	6.08	5.26	3.98	5	314	26,332	0.00
2004	10.97	10.20	11.49	8.24	4	269	18,547	0.00
2003	21.87	21.04	19.54	18.76	3	223	12,680	0.00
2002	-7.98	-8.63	-5.09	-9.53	1	167	7,990	0.00
2001	8.41	7.67	0.11	-3.68	1	242	7,772	0.00
2000	16.14	15.34	9.31	-0.92	1	235	6,683	0.00
1999	6.56	5.82	3.64	11.40	1	217	6,583	0.00
1998	12.66	11.88	13.84	21.35	1	218	7,327	0.00

Data as of 9/30/2008. BlendedC = 60% Russell 1000V ; 40% Lehman Gov't/Credit Index, BlendedB = 60% S&P 500 Index ; 40% Lehman Gov't/Credit Index.

** Supplemental Information.

Organization: Brandywine Global Investment Management, LLC (the "Firm") is a wholly owned, independently operated, subsidiary of Legg Mason, Inc. The Firm has prepared and presented this report in compliance with the Global Investment Performance Standards (GIPS®). For the periods July 1, 2000 through June 30, 2006, the Firm has been verified by Kreischer Miller. A verification includes assessing whether the Firm (1) complied with the composite construction requirements of the GIPS standards on a firm-wide basis, and (2) designed its processes and procedures to calculate and present performance results in compliance with the GIPS standards. Copies of the verification reports are available upon request. Disclosed total firm assets represent the total market value of all discretionary and nondiscretionary, fee-paying and non-fee-paying assets under the Firm's management. Composite Description: Domestic Balanced Composite (the "Composite") inception date is April 1, 1994. The Composite creation date is April 1, 1994. The Composite includes all fully-discretionary, fee-paying, domestic balanced accounts with no minimum market requirement and no investment restrictions invested in our domestic equity and domestic fixed income products. The portfolios are usually invested in approximately 60 - 80 positions representing 11 countries. Leverage is not used in this composite. There is no minimum account size on the composite level. The Composite is benchmarked to a blend of indexes - and is rebalanced monthly: (I) 60% S&P 500 and 40% Lehman Brothers U.S. Aggregate; (II) 60% S&P 500 and 40% Lehman Brothers Gov't/Credit and (III) 60% Russell 1000 Value and 40% Lehman Brothers U.S. Aggregate. The S&P 500 is a broad measure of U.S. domestic large cap stocks. The 500 stocks in this capitalization-weighted index are chosen based on industry representation, liquidity, and stability. The Lehman Brothers U.S. Aggregate® Index represents securities that are SEC-registered, taxable, and dollar denominated. The index covers the U.S. investment grade fixed-rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities. The Lehman Brothers U.S. Government/Credit Index® includes treasuries, agencies, publicly issued U.S. corporate and foreign debentures, that meet specified maturity, liquidity, and quality requirements. It excludes securitized debt. The Russell 1000 Value Index offers investors access to the large-cap value segment of the U.S. equity universe. The Russell 1000 Value is constructed to provide a barometer of the large-cap value market. Performance Calculation: Preliminary data, if so noted, reflects unreconciled data for the most recent reporting period. Portfolios are valued daily on a trade date basis and include dividends and interest as well as all realized and unrealized capital gains and losses. Return calculations at the portfolio level are time-weighted to account for periodic contributions and withdrawals. Performance results are calculated on a before tax, total return basis. Prior to July 1, 2007, portfolios were included in the Composite beginning with the first full quarter of performance through the last full quarter of performance. After July 1, 2007, portfolios are included in the Composite beginning with the first full month of performance through the last full month of performance. The Composite returns consist of size-weighted portfolio returns using beginning of period values to weight the portfolio returns. Monthly linking of interim performance results is used to calculate quarterly and annual returns. Composite valuations and returns are computed in U.S. Dollars ("USD"). The results are presented in USD or in other currencies (to accommodate overseas investors), the latter by converting monthly USD returns into other currency returns using the appropriate currency exchange rate returns. Gross returns reflect the deduction of trading expenses. Net of fee returns reflect the deduction of trading expenses and the highest investment management fees charged within the composite membership as stated in the fee schedule below. Composite dispersion is calculated using the asset-weighted standard deviation method for all portfolios that were in the Composite for the entire year. Composite dispersion is not presented for periods with five or fewer portfolios. The number of accounts and market values are as of the end of the period. Past performance is no guarantee of future results. A complete list describing the Firm's composites as well as any additional information regarding the Firm's policies for calculating and reporting performance results is available upon request. As a result of our internal review process during the quarter ended September 30, 2007, the performance results shown reflect certain immaterial revisions to performance information previously reported by the Firm for periods through June 30, 2007. Fee Schedule: Institutional Client Separate Account Management Fee Schedule (minimum initial investment $10 million): 0.700% on the first $10 million; 0.500% on the next $40 million; 0.40 0% on any portion of assets in excess of $50 million. Private Client Account Management (SMA) Fee Schedule (minimum initial investment $250,000): 1.000% on the first $5 million; 0.900% on the next $5 million; 0.700% on the next $10 million; 0.600% on the next $30 million; 0.500% on the next $20 million; 0.400% on the next $30 million; 0300% on any portion of assets in excess of $100 million. Additional information on the Firm's fee schedule can be found in Form ADV Part II which is available upon request.

Portfolio Team

Stephen S. Smith
Managing Director & Portfolio Manager

Steve is co-lead portfolio manager for the firm's Global Fixed Income and related strategies. He joined the firm in 1991, bringing with him 23 years of industry experience. Previously, Steve was with Mitchell Hutchins Asset Management, Inc. as managing director of taxable fixed income (1988-1991); Provident Capital Management, Inc. as senior vice president overseeing taxable fixed income (1984-1988); Munsch & Smith Management as a founding partner (1980-1984), and First Pennsylvania Bank as vice president and portfolio manager in the fixed income division (1976-1980). Steve earned a B.S. in Economics and Business Administration from Xavier University. He is a member of the firm's Executive Board.

Scott L. Kuensell, CFA
Managing Director & Portfolio Manager

Scott serves as lead portfolio manager for Brandywine Global's Traditional Large Cap Value Equity strategy and is responsible for research coverage of the aerospace/defense, automotive, packaged goods, and retail sectors, contributing insights and stock recommendations to all of the firm's Large Cap Value Equity strategies. He joined the firm in 1995, bringing with him 17 years of industry experience. Previously, Scott was director of institutional equity sales and manager of Schroder, Wertheim and Company, Inc.'s Philadelphia office (1979-1995). He is a CFA charterholder and earned an A.B. in Psychology from Princeton University.

Paul R. Lesutis, CFA
Managing Director & Portfolio Manager

Paul serves as co-lead portfolio manager of our Fundamental Large Cap Value Equity strategy. In addition, he is responsible for research coverage of the banking and paper and forest products industries, contributing insights and stock recommendations to all of the firm's Large Cap Value Equity strategies. Paul joined the firm in 1991 and has 30+ years of industry experience. Previously, he served as executive vice president, chief investment officer and portfolio manager with Provident Capital Management, Inc. (1984-1991); director of equity research and portfolio manager with First Pennsylvania Bank (1971-1984), and a securities analyst with E.I. du Pont de Nemours (1966-1971). Paul is a CFA charterholder and earned an M.B.A. from Drexel University and a B.S. in Accounting from St. Joseph's University. He is a member of the firm's Executive Board.

Earl J. Gaskins
Managing Director & Portfolio Manager

Earl serves as co-lead portfolio manager for our Fundamental Large Cap Value Equity strategy and is lead portfolio manager for our Socially Responsible Large Cap Value Equity strategy. In addition, he is responsible for research coverage of the chemicals and energy sectors, contributing insights and stock recommendations to all of the firm?s Large Cap Value Equity strategies. Earl joined the firm in 1996, bringing with him 18 years of industry experience. Previously, he was vice president, portfolio manager, and director of research with Provident Capital Management, Inc. (1985-1996); director of the Office of Community Development of the City of Philadelphia (1980-1985), and a securities analyst with Provident National Bank (1973-1980). Earl earned a J.D. from Temple University and a B.A. in Political Science from Yale University.

Francis A. Scotland
Director of Global Macro Research

As Brandywine Global's director of global macro research, Francis contributes his extensive knowledge toward development of the firm's proprietary macro research facility and the furtherance of its Global Fixed Income and related strategies. He joined the firm in January 2006, bringing with him 25 years of industry experience. Previously, he was editor-in-chief, chief global strategist and former principal of the BCA Research Group, one of the world's leading independent research and investment strategy firms (1984-2005), and an economist with the Bank of Canada (1977-1984). Francis earned an M.A. in Economics from the University of Western Ontario and a B.A. in Economics from Queen's University in Ontario.

Jack P. McIntyre, CFA
Associate Portfolio Manager, Senior Research Analyst

As associate portfolio manager and senior research analyst for the firm's Global Fixed Income and related strategies, Jack provides valuable analytical and strategic insight. He joined the firm in 1998, bringing with him 11 years of industry experience. Previously, he held positions as market strategist with McCarthy, Crisanti & Maffei, Inc. (1995-1998); senior fixed income analyst with Technical Data, a division of Thomson Financial Services (1992-1995); quantitative associate with Brown Brothers Harriman & Co. (1990), and investment analyst with the Public Employee Retirement Administration of Massachusetts (1987-1989). Jack is a CFA charterholder and earned an M.B.A. in Finance from the Leonard N. Stern Graduate School of Business at New York University and a B.B.A. in Finance from the University of Massachusetts, Amherst.

Dennis W. Dow
Head Trader, Fixed Income

Dennis is the head trader for the firm's Global Fixed Income and related strategies. He joined Brandywine Global in 2000, bringing with him eight years of industry experience. Previously, Dennis was with Merrill Lynch Asset Management as vice president and portfolio manager (1992-1999). He holds his Series 3 license and earned a B.A. in Accounting, with a concentration in Finance, from Rutgers University School of Business.

Bryan C. Raynor
Quantitative Analyst/Fixed Income Trader

Bryan joined the firm's Global Fixed Income team in 2003 and is responsible for providing quantitative analysis for the Global Fixed Income and related strategies as well as trade execution. Previously, he held positions with Prudential Financial (1997-2003) as an associate both with the quantitative modeling & research group and on the global bond desk. Bryan is a 2008 Level III CFA candidate, holds his Series 3, and earned both a M.S. and B.A. in Physics from Rutgers University.

Brian Hess
Research Analyst

Brian is a research analyst for the firm's Global Fixed Income and related strategies. In this role, he is responsible for tracking and analyzing economic and market data. Prior to joining Brandywine Global in 2003, he served as a trading assistant at Bear Stearns & Co (2003) and on the analytics desk at Bloomberg LP (2002). Brian earned a B.A. in both Economics and Politics from Ursinus College.

Tracy Chen, CFA
Senior Research Analyst - Credit Specialist

As the Global Fixed Income team's credit specialist, Tracy is responsible for research and analysis on corporate and mortgage backed credits throughout the global bond market. She joined the firm in August 2008, bringing with her 13 years of experience. Prior to joining Brandywine Global, she was with UBS Investment Bank as director of the fixed income valuation group (2006-2008), GMAC Mortgage Group as a mortgage pricing analyst (2003-2006), Deloitte Consulting as a senior corporate strategy consultant (2001-2003), and J&A Securities Ltd. in Shenzhen, China as an international corporate finance associate (1995-1997). Tracy earned an MBA with a concentration in Finance from Kenan-Flagler Business School at the University of North Carolina, an M.A. in American Studies from Sichuan University in Chengdu, China, and a B.A. in English for Scientific Purposes from University of Electronic Science & Technology of China in Chengdu, China. Tracy is a CFA charterholder and was published in the Spring 2007 edition of The Journal of Structured Finance.

Min Tian
Global Macro Research Specialist

As a global macro research specialist, Min provides support to Francis Scotland, director of macroeconomic research. Min maintains a financial/economic database and internal website, which are used to support research tasks as well as respond to research requests from members of the Global Fixed Income team. Min joined the firm in October 2006. Previously, she worked as a data analyst for the Bank of New York (2006) and as a research assistant for the University of Delaware (2005-2006). Min earned a M.S. in Agricultural Economics from the University of Delaware and a B.S. in Pharmacy from West China University of Medical Science.

Travis Crumley
Assistant Trader, Fixed Income

Travis is an assistant trader for the firm's Global Fixed Income and related strategies. Prior to joining the trading group in June 2008, he provided quantitative and fundamental analysis and support as a fixed income client service associate. His additional experience within the industry includes serving as funds investor services assistant with Legg Mason (2004-2005). Travis earned a B.A. in Communications from the University of Delaware. He is also commercially licensed and instrumented rated by the Federal Aviation Administration to operate single and multi engine aircraft.

Tamer Elshourbagy
Research Analyst

Tamer is a member our Large Cap Value Equity team and is responsible for research coverage of the retail, restaurant, and transportation industries. Prior to joining Brandywine Global in 2001, Tamer served as an international corporate actions administrator for the Vanguard Group (1999-2001). He earned a B.S in Finance from Pennsylvania State University.

Donna Van Vlack
Vice President, Equity Trader

Donna is the lead trader for the firm's Large Cap Value Equity portfolios. Donna joined the firm in 1996, bringing with her 19 years of industry experience. Previously, she was a trader with Caxton Corporation (1995); vice president and head trader with Chesapeake Partners Management Company (1993-1995); vice president with UBS Securities, Inc. (1991-1993); vice president with Dillon, Read & Co. (1986-1991); vice president and head of trading with Avatar Associates (1982-1985), and a trader with Soros Fund Management (1978-1981). Donna earned a B.A. in History and Political Science from Wellesley College.