ITEM 1. REPORT TO STOCKHOLDERS.
The
Semi-Annual
Report to Stockholders is filed herewith.
March 31, 2013
Semi-Annual Repor
t
ClearBridge
All Cap Value
Fund
INVESTMENT PRODUCTS: NOT FDIC INSURED NO BANK GUARANTEE MAY
LOSE VALUE
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II
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ClearBridge All Cap Value Fund
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Fund objectives
The Fund seeks long-term capital growth. Current income is a secondary consideration.
Fund and subadviser name changes
Prior to January 1, 2013, the Fund was known as Legg Mason ClearBridge Fundamental All Cap Value Fund. On December 5, 2012, the name of the Funds subadviser changed from ClearBridge Advisors,
LLC to ClearBridge Investments, LLC. There was no change in the Funds investment objective or strategy as a result of these name changes.
Letter from the chairman
Dear Shareholder,
We are pleased to provide the semi-annual report of ClearBridge All Cap Value Fund for the six-month reporting period ended
March 31, 2013. Please read on for Fund performance information and a detailed look at prevailing economic and market conditions during the Funds reporting period.
As always, we remain committed to providing you with excellent service and a full spectrum of investment choices. We also remain committed to supplementing the support you receive from your
financial advisor. One way we accomplish this is through our website, www.leggmason.com/individualinvestors. Here you can gain immediate access to market and investment information, including:
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Fund prices and performance,
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Market insights and commentaries from our portfolio managers, and
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A host of educational resources.
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We look forward to helping you meet your financial goals.
Sincerely,
R. Jay Gerken, CFA
Chairman, President and Chief Executive Officer
April 26, 2013
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ClearBridge All Cap Value Fund
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III
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Investment commentary
Economic review
The U.S. economy continued to grow over the six months ended March 31, 2013 (the reporting period), but it did
so in fits and starts. Looking back, U.S. gross domestic product (GDP)
i
growth, as reported by the U.S. Department of Commerce, was 1.3% in the second quarter of
2012. Economic growth accelerated to 3.1% in the third quarter, partially due to increased private inventory investment, higher federal government spending and moderating imports. However, economic activity sharply moderated in the fourth quarter,
with GDP expanding an anemic 0.4%. This was driven by a reversal of the above factors, as private inventory investment and federal government spending weakened. The reporting period then ended on a positive note, as the U.S. Department of
Commerces initial estimate for first quarter 2013 GDP growth was 2.5%. Accelerating growth was due, in part, to strengthening consumer spending, which rose 3.2% during the first quarter, versus a 1.8% increase during the previous quarter.
While there was some improvement in the U.S. job market, unemployment remained elevated throughout the reporting period. When the period
began, unemployment, as reported by the U.S. Department of Labor, was 7.8%. The unemployment rate fluctuated between 7.8% and 7.9% through January 2013. Unemployment then fell to 7.7% in February and 7.6% in March, the lowest level since December
2008. However, the decline in March was partially due to people leaving the workforce. In addition, the number of longer-term unemployed continues to be a headwind for the economy, as nearly 40% of the 11.7 million people without a job have
been out of work for more than six months.
Meanwhile, the housing market brightened, as sales generally improved and home prices
continued to rebound. According to the National Association of Realtors (NAR), existing-home sales slipped 0.6% on a seasonally adjusted basis in March 2013 versus the previous month, but were 10.3% higher than in March 2012. In
addition, the NAR reported that the median existing-home price for all housing types was $184,300 in March 2013, up 11.8% from March 2012. This marked the thirteenth consecutive month that home prices rose compared to the same period a year earlier.
While the inventory of homes available for sale rose modestly in March to a 4.7 month supply at the current sales pace, it was 16.8% lower than in March 2012.
While manufacturing activity was weak in many international developed countries, it was generally positive in the U.S. Based on the Institute for Supply Managements PMI (PMI)
ii
, the U.S. manufacturing sector expanded for the second straight month in October 2012, with a reading of 51.7 (a reading below 50 indicates a contraction, whereas a reading
above 50 indicates an expansion). The PMI then fell to contraction territory with a reading of 49.5 in November. However, manufacturing expanded over the next four months, with the PMI at 51.3 in March 2013. During March, 14 of the 18 industries
within the PMI expanded.
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IV
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ClearBridge All Cap Value Fund
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Investment commentary (contd)
Market review
Q. How did the Federal Reserve Board
(Fed)
iii
respond to the economic
environment?
A.
The Fed took a number of actions as it sought to meet its dual mandate of fostering maximum
employment and price stability. As has been the case since December 2008, the Fed kept the federal funds rate
iv
at a historically low range between zero and 0.25%. At its
September 2012 meeting, prior to the beginning of the reporting period, the Fed announced a third round of quantitative easing (QE3), which involves purchasing $40 billion each month of agency mortgage-backed securities (MBS)
on an open-end basis. In addition, the Fed further extended the duration that it expects to keep the federal funds rate on hold, until at least mid-2015. At its meeting in December, the Fed announced that it would continue purchasing $40 billion per
month of agency MBS, as well as initially purchasing $45 billion a month of longer-term Treasuries. The Fed also said that it would keep the federal funds rate on hold
as long as the unemployment rate remains above 6.5%, inflation
between one and two years ahead is projected to be no more than a half percentage point above the Committees 2% longer-run goal, and longer-term inflation expectations continue to be well anchored. As expected, at its meeting in March
2013, the Fed said it would continue its asset purchase program. It also stated that When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum
employment and inflation of 2%.
Performance review
For the six months ended March 31, 2013, Class A shares of ClearBridge All Cap Value Fund, excluding sales charges, returned 13.62%. The Funds unmanaged benchmark, the Russell 3000
Value Index
v
, returned 14.11% for the same period. The Lipper Large-Cap Core Funds Category
Average
1
returned 10.58% over the same time frame.
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Performance Snapshot
as of March 31, 2013
(unaudited)
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(excluding sales charges)
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6 months
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ClearBridge All Cap Value Fund:
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Class A
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13.62
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%
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Class B
2
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12.89
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%
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Class C
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13.28
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%
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Class I
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13.90
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%
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Russell 3000 Value Index
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14.11
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%
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Lipper Large-Cap Core Funds Category Average
1
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10.58
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%
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The performance shown represents past performance. Past performance is no guarantee of
future results and current performance may be higher or lower than the performance shown above. Principal value and investment returns will fluctuate and investors shares, when redeemed, may be worth more or less than their original cost. To
obtain performance data current to the most recent month-end, please visit our website at www.leggmason.com/individualinvestors.
All share class returns assume the reinvestment of all distributions, including returns of
capital, if any, at net asset value and the deduction of all Fund expenses. Returns have not been adjusted to include sales charges that may apply or the deduction of taxes that a shareholder would pay on Fund distributions. If sales charges were
reflected, the performance quoted would be lower. Performance figures for periods shorter than one year
1
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Lipper, Inc., a wholly-owned subsidiary of Reuters, provides independent insight on global collective investments. Returns are based on the
six-month period ended March 31, 2013, including the reinvestment of all distributions, including returns of capital, if any, calculated among the 967 funds in the Funds Lipper category, and excluding sales charges.
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2
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Effective July 1, 2011, the Fund no longer offers Class B shares for purchase by new and existing investors. Individual investors who owned
Class B shares on June 30, 2011 may continue to hold those shares but may not add to their Class B share positions except through dividend reinvestment. Class B shares are also available for incoming exchanges.
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ClearBridge All Cap Value Fund
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V
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represent cumulative figures and are not annualized.
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Total Annual Operating Expenses
(unaudited)
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As of the Funds current prospectus dated February 1, 2013, the gross total
annual operating expense ratios for Class A, Class B, Class C and Class I were 1.39%, 2.43%, 1.98% and 0.90%, respectively.
Actual expenses may be higher. For example, expenses may be higher than those shown if
average net assets decrease. Net assets are more likely to decrease and Fund expense ratios are more likely to increase when markets are volatile.
Q. What factors impacted the U.S. stock market during the reporting period?
A.
Despite periods of volatility and several flights to quality, the U.S. stock market generated strong results during the reporting period. The market experienced a setback in
October given renewed concerns about the economy and the upcoming fiscal cliff. While these and other macro issues, including the European sovereign debt crisis and uncertainties surrounding the impact of sequestration, weighed on
investor sentiment at times, the market posted positive results during the last five months of the period. All told, for the six months ended March 31, 2013, the S&P 500 Index
vi
returned 10.19%.
Looking at the U.S. stock
market more closely, mid-cap stocks generated the best returns during the six months ended March 31, 2013, with the Russell Midcap Index
vii
returning 16.21%. In
contrast, large-cap stocks, as measured by the Russell 1000 Index
viii
, returned 11.10% and the small-cap Russell 2000 Index
ix
returned 14.48%. From an investment style perspective, growth and value stocks, as measured by the Russell 3000 Growth
x
and Russell 3000 Value
xi
Indices, returned 8.52% and 14.11%, respectively.
As always, thank you for your confidence in our stewardship of your assets.
Sincerely,
R. Jay Gerken, CFA
Chairman, President and Chief Executive Officer
April 26, 2013
RISKS:
The Fund may invest in small and mid-cap companies that may involve a higher degree of risk and volatility than investments in
large-cap companies. The Fund is subject to certain risks of overseas investing not typically associated with investing in U.S. securities, including economic, political and social factors and currency fluctuations. The Fund may use derivatives,
such as options and futures, which can be illiquid, may disproportionately increase losses, and have a potentially large impact on Fund performance. Please see the Funds prospectus for a more complete discussion of these and other risks, and
the Funds investment strategies.
All investments are subject to risk including the possible loss of principal. Past
performance is no guarantee of future results. All index performance reflects no deduction for fees, expenses or taxes. Please note that an investor cannot invest directly in an index.
The information provided is not intended to be a forecast of future events, a guarantee of future results or investment advice. Views expressed may differ from those of the firm as a whole.
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VI
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ClearBridge All Cap Value Fund
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Investment commentary (contd)
i
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Gross domestic product (GDP) is the market value of all final goods and services produced within a country in a given period of time.
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ii
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The Institute for Supply Managements PMI is based on a survey of purchasing executives who buy the raw materials for manufacturing at more
than 350 companies. It offers an early reading on the health of the manufacturing sector.
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iii
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The Federal Reserve Board (Fed) is responsible for the formulation of policies designed to promote economic growth, full employment,
stable prices and a sustainable pattern of international trade and payments.
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iv
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The federal funds rate is the rate charged by one depository institution on an overnight sale of immediately available funds (balances at the
Federal Reserve) to another depository institution; the rate may vary from depository institution to depository institution and from day to day.
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v
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The Russell 3000 Value Index measures the performance of those Russell 3000 Index companies with lower price-to-book ratios and lower forecasted
growth values. (A price-to-book ratio is the price of a stock compared to the difference between a companys assets and liabilities.) The Russell 3000 Index measures the performance of the 3,000 largest U.S. companies based on total market
capitalization, which represents approximately 98% of the U.S. equity market.
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vi
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The S&P 500 Index is an unmanaged index of 500 stocks and is generally representative of the performance of larger companies in the U.S.
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vii
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The Russell Midcap Index measures the performance of the 800 smallest companies in the Russell 1000 Index, which represents approximately 25% of
the total market capitalization of the Russell 1000 Index.
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viii
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The Russell 1000 Index measures the performance of the 1,000 largest companies in the Russell 3000 Index, which represents approximately 92% of
the total market capitalization of the Russell 3000 Index.
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ix
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The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 8% of
the total market capitalization of the Russell 3000 Index.
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x
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The Russell 3000 Growth Index measures the performance of those Russell 3000 Index companies with higher price-to-book ratios and higher
forecasted growth values.
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xi
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The Russell 3000 Value Index measures the performance of those Russell 3000 Index companies with lower price-to-book ratios and lower forecasted
growth values.
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ClearBridge All Cap Value Fund 2013 Semi-Annual Report
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1
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Fund at a glance
(unaudited)
Investment breakdown
(%) as a percent of total investments
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The bar graph above represents the composition of the Funds investments as of March 31, 2013 and September 30, 2012. The Fund is actively managed. As a
result, the composition of the Funds investments is subject to change at any time.
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2
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ClearBridge All Cap Value Fund 2013 Semi-Annual Report
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Fund expenses
(unaudited)
Example
As a shareholder of the
Fund, you may incur two types of costs: (1) transaction costs, including front-end and back-end sales charges (loads) on purchase payments, and (2) ongoing costs, including management fees; service and/or distribution (12b-1) fees; and other Fund
expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
This example is based on an investment of $1,000 invested on October 1, 2012 and held for the six months ended
March 31, 2013.
Actual expenses
The table below
titled Based on Actual Total Return provides information about actual account values and actual expenses. You may use the information provided in this table, together with the amount you invested, to estimate the expenses that you paid
over the period. To estimate the expenses you paid on your account, divide your ending account value by $1,000 (for example, an $8,600 ending account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled
Expenses Paid During the Period.
Hypothetical example for comparison purposes
The table below titled Based on Hypothetical Total Return provides information about hypothetical account values and hypothetical
expenses based on the actual expense ratio and an assumed rate of return of 5.00% per year before expenses, which is not the Funds actual return. The hypothetical account values and expenses may not be used to estimate the actual ending
account balance or expenses you paid for the period. You may use the information provided in this table to compare the ongoing costs of investing in the Fund and other funds. To do so, compare the 5.00% hypothetical example relating to the Fund with
the 5.00% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses
shown in the table below are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as front-end or back-end sales charges (loads). Therefore, the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
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Based on actual total return
1
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Based on hypothetical total return
1
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Actual
Total
Return
Without
Sales
Charge
2
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|
Beginning
Account
Value
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|
Ending
Account
Value
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|
Annualized
Expense
Ratio
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|
Expenses
Paid
During
the
Period
3
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|
Hypothetical
Annualized
Total
Return
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|
Beginning
Account
Value
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|
Ending
Account
Value
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|
Annualized
Expense
Ratio
|
|
|
Expenses
Paid
During
the
Period
3
|
|
Class A
|
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|
13.62
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%
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|
$
|
1,000.00
|
|
|
$
|
1,136.20
|
|
|
|
1.39
|
%
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|
$
|
7.40
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|
Class A
|
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|
5.00
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%
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|
$
|
1,000.00
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|
$
|
1,018.00
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|
1.39
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%
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|
$
|
6.99
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|
Class B
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|
12.89
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|
1,000.00
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|
1,128.90
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|
|
2.56
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|
13.59
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Class B
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5.00
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|
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|
1,000.00
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1,012.17
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2.56
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12.84
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Class C
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13.28
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|
1,000.00
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|
1,132.80
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|
1.98
|
|
|
|
10.53
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Class C
|
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5.00
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|
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|
1,000.00
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|
1,015.06
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|
1.98
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|
|
|
9.95
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|
Class I
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|
13.90
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|
1,000.00
|
|
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|
1,139.00
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|
0.88
|
|
|
|
4.69
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Class I
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|
5.00
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|
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|
1,000.00
|
|
|
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1,020.54
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0.88
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|
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|
4.43
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|
1
|
For the six months ended March 31, 2013.
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2
|
Assumes the reinvestment of all distributions, including returns of capital, if any, at net asset value and does not reflect the deduction of the
applicable sales charge with respect to Class A shares or the applicable contingent deferred sales charge (CDSC) with respect to Class B and Class C shares. Total return is not annualized, as it may not be representative of the
total return for the year. Performance figures may reflect compensating balance arrangements, fee waivers and/or expense reimbursements. In the absence of compensating balance arrangements, fee waivers and/or expense reimbursements, the total return
would have been lower. Past performance is no guarantee of future results.
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3
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Expenses (net of compensating balance arrangements, fee waivers and/or expense reimbursements) are equal to each class respective
annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year (182), then divided by 365.
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ClearBridge All Cap Value Fund 2013 Semi-Annual Report
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3
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Schedule of investments
(unaudited)
March 31, 2013
ClearBridge All Cap Value Fund
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Security
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Shares
|
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Value
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Common Stocks
99.1%
|
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Consumer Discretionary
9.3%
|
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Diversified Consumer Services 0.2%
|
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Sothebys Holdings Inc.
|
|
|
|
|
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107,420
|
|
|
$
|
4,018,582
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|
Hotels, Restaurants & Leisure 1.4%
|
|
|
|
|
|
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|
|
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Carnival Corp.
|
|
|
|
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762,230
|
|
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|
26,144,489
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|
Leisure Equipment & Products 1.4%
|
|
|
|
|
|
|
|
|
|
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Mattel Inc.
|
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|
|
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611,850
|
|
|
|
26,792,912
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Media 3.0%
|
|
|
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|
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Walt Disney Co.
|
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|
|
|
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974,070
|
|
|
|
55,327,176
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|
Specialty Retail 3.3%
|
|
|
|
|
|
|
|
|
|
|
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|
Guess? Inc.
|
|
|
|
|
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|
148,380
|
|
|
|
3,684,275
|
|
Home Depot Inc.
|
|
|
|
|
|
|
830,530
|
|
|
|
57,954,384
|
|
Total Specialty Retail
|
|
|
|
|
|
|
|
|
|
|
61,638,659
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|
Total Consumer Discretionary
|
|
|
|
|
|
|
|
|
|
|
173,921,818
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|
Consumer Staples
4.3%
|
|
|
|
|
|
|
|
|
|
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|
Food & Staples Retailing 1.0%
|
|
|
|
|
|
|
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|
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|
Safeway Inc.
|
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|
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|
741,461
|
|
|
|
19,537,497
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|
Food Products 3.3%
|
|
|
|
|
|
|
|
|
|
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|
Unilever PLC
|
|
|
|
|
|
|
935,550
|
|
|
|
39,575,150
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|
Unilever PLC, ADR
|
|
|
|
|
|
|
501,280
|
|
|
|
21,174,067
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|
Total Food Products
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|
|
|
|
|
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|
|
|
|
60,749,217
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|
Total Consumer Staples
|
|
|
|
|
|
|
|
|
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80,286,714
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|
Energy
14.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy Equipment & Services 2.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
Baker Hughes Inc.
|
|
|
|
|
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|
218,670
|
|
|
|
10,148,475
|
|
Halliburton Co.
|
|
|
|
|
|
|
887,200
|
|
|
|
35,851,752
|
|
Total Energy Equipment & Services
|
|
|
|
|
|
|
|
|
|
|
46,000,227
|
|
Oil, Gas & Consumable Fuels 12.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
Chevron Corp.
|
|
|
|
|
|
|
534,520
|
|
|
|
63,511,666
|
|
Devon Energy Corp.
|
|
|
|
|
|
|
675,340
|
|
|
|
38,102,683
|
|
Exxon Mobil Corp.
|
|
|
|
|
|
|
394,500
|
|
|
|
35,548,395
|
|
Hess Corp.
|
|
|
|
|
|
|
619,290
|
|
|
|
44,347,357
|
|
Newfield Exploration Co.
|
|
|
|
|
|
|
332,140
|
|
|
|
7,446,579
|
*
|
Occidental Petroleum Corp.
|
|
|
|
|
|
|
297,590
|
|
|
|
23,322,128
|
|
Peabody Energy Corp.
|
|
|
|
|
|
|
596,740
|
|
|
|
12,621,051
|
|
Total Oil, Gas & Consumable Fuels
|
|
|
|
|
|
|
|
|
|
|
224,899,859
|
|
Total Energy
|
|
|
|
|
|
|
|
|
|
|
270,900,086
|
|
See Notes to Financial Statements.
|
|
|
4
|
|
ClearBridge All Cap Value Fund 2013 Semi-Annual Report
|
Schedule of investments
(unaudited)
(contd)
March 31, 2013
ClearBridge All Cap Value Fund
|
|
|
|
|
|
|
|
|
|
|
|
|
Security
|
|
|
|
|
|
Shares
|
|
|
Value
|
|
Financials
26.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Markets 7.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
BlackRock Inc.
|
|
|
|
|
|
|
110,470
|
|
|
$
|
28,377,534
|
|
Franklin Resources Inc.
|
|
|
|
|
|
|
161,950
|
|
|
|
24,423,679
|
|
Goldman Sachs Group Inc.
|
|
|
|
|
|
|
221,120
|
|
|
|
32,537,808
|
|
Greenhill & Co. Inc.
|
|
|
|
|
|
|
143,340
|
|
|
|
7,651,489
|
|
State Street Corp.
|
|
|
|
|
|
|
617,662
|
|
|
|
36,497,648
|
|
Total Capital Markets
|
|
|
|
|
|
|
|
|
|
|
129,488,158
|
|
Commercial Banks 5.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
First Republic Bank
|
|
|
|
|
|
|
396,390
|
|
|
|
15,308,582
|
|
KeyCorp
|
|
|
|
|
|
|
1,895,270
|
|
|
|
18,876,889
|
|
Regions Financial Corp.
|
|
|
|
|
|
|
3,066,864
|
|
|
|
25,117,616
|
|
U.S. Bancorp
|
|
|
|
|
|
|
1,116,800
|
|
|
|
37,893,024
|
|
Total Commercial Banks
|
|
|
|
|
|
|
|
|
|
|
97,196,111
|
|
Diversified Financial Services 3.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
Citigroup Inc.
|
|
|
|
|
|
|
419,760
|
|
|
|
18,570,183
|
|
JPMorgan Chase & Co.
|
|
|
|
|
|
|
1,038,250
|
|
|
|
49,275,345
|
|
Total Diversified Financial Services
|
|
|
|
|
|
|
|
|
|
|
67,845,528
|
|
Insurance 7.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
Allied World Assurance Co. Holdings AG
|
|
|
|
|
|
|
589,768
|
|
|
|
54,683,289
|
|
Axis Capital Holdings Ltd.
|
|
|
|
|
|
|
798,100
|
|
|
|
33,216,922
|
|
Chubb Corp.
|
|
|
|
|
|
|
544,030
|
|
|
|
47,618,946
|
|
Total Insurance
|
|
|
|
|
|
|
|
|
|
|
135,519,157
|
|
Real Estate Investment Trusts (REITs) 2.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
Pebblebrook Hotel Trust
|
|
|
|
|
|
|
715,025
|
|
|
|
18,440,495
|
|
Weyerhaeuser Co.
|
|
|
|
|
|
|
590,532
|
|
|
|
18,530,894
|
|
Total Real Estate Investment Trusts (REITs)
|
|
|
|
|
|
|
|
|
|
|
36,971,389
|
|
Real Estate Management & Development
1.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
Jones Lang LaSalle Inc.
|
|
|
|
|
|
|
230,540
|
|
|
|
22,917,981
|
|
Total Financials
|
|
|
|
|
|
|
|
|
|
|
489,938,324
|
|
Health Care
10.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
Pharmaceuticals 10.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
GlaxoSmithKline PLC, ADR
|
|
|
|
|
|
|
421,310
|
|
|
|
19,763,652
|
|
Johnson & Johnson
|
|
|
|
|
|
|
575,760
|
|
|
|
46,941,713
|
|
Merck & Co. Inc.
|
|
|
|
|
|
|
1,284,550
|
|
|
|
56,815,646
|
|
Novartis AG, ADR
|
|
|
|
|
|
|
801,940
|
|
|
|
57,130,206
|
|
Teva Pharmaceutical Industries Ltd., ADR
|
|
|
|
|
|
|
351,500
|
|
|
|
13,947,520
|
|
Total Health Care
|
|
|
|
|
|
|
|
|
|
|
194,598,737
|
|
See Notes to Financial Statements.
|
|
|
|
|
ClearBridge All Cap Value Fund 2013 Semi-Annual Report
|
|
|
5
|
|
ClearBridge All Cap Value Fund
|
|
|
|
|
|
|
|
|
|
|
|
|
Security
|
|
|
|
|
|
Shares
|
|
|
Value
|
|
Industrials
13.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
Aerospace & Defense 5.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
Boeing Co.
|
|
|
|
|
|
|
437,300
|
|
|
$
|
37,542,205
|
|
Honeywell International Inc.
|
|
|
|
|
|
|
710,610
|
|
|
|
53,544,463
|
|
Raytheon Co.
|
|
|
|
|
|
|
325,820
|
|
|
|
19,154,958
|
|
Total Aerospace & Defense
|
|
|
|
|
|
|
|
|
|
|
110,241,626
|
|
Construction & Engineering 1.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
EMCOR Group Inc.
|
|
|
|
|
|
|
156,212
|
|
|
|
6,621,826
|
|
Fluor Corp.
|
|
|
|
|
|
|
324,930
|
|
|
|
21,552,607
|
|
Jacobs Engineering Group Inc.
|
|
|
|
|
|
|
135,920
|
|
|
|
7,644,141
|
*
|
Total Construction & Engineering
|
|
|
|
|
|
|
|
|
|
|
35,818,574
|
|
Machinery 5.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
Deere & Co.
|
|
|
|
|
|
|
381,170
|
|
|
|
32,772,997
|
|
Dover Corp.
|
|
|
|
|
|
|
440,620
|
|
|
|
32,112,386
|
|
Joy Global Inc.
|
|
|
|
|
|
|
292,370
|
|
|
|
17,401,862
|
|
Oshkosh Corp.
|
|
|
|
|
|
|
309,380
|
|
|
|
13,145,556
|
*
|
Total Machinery
|
|
|
|
|
|
|
|
|
|
|
95,432,801
|
|
Total Industrials
|
|
|
|
|
|
|
|
|
|
|
241,493,001
|
|
Information Technology
12.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
Communications Equipment 3.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
Cisco Systems Inc.
|
|
|
|
|
|
|
1,749,730
|
|
|
|
36,586,854
|
|
Plantronics Inc.
|
|
|
|
|
|
|
130,850
|
|
|
|
5,782,262
|
|
Telefonaktiebolaget LM Ericsson, ADR
|
|
|
|
|
|
|
2,155,050
|
|
|
|
27,153,630
|
|
Total Communications Equipment
|
|
|
|
|
|
|
|
|
|
|
69,522,746
|
|
Computers & Peripherals 1.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
Apple Inc.
|
|
|
|
|
|
|
42,020
|
|
|
|
18,599,313
|
|
Internet Software & Services 1.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
eBay Inc.
|
|
|
|
|
|
|
354,420
|
|
|
|
19,216,652
|
*
|
Semiconductors & Semiconductor Equipment
6.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
Applied Materials Inc.
|
|
|
|
|
|
|
866,280
|
|
|
|
11,677,454
|
|
KLA-Tencor Corp.
|
|
|
|
|
|
|
444,370
|
|
|
|
23,436,074
|
|
Samsung Electronics Co., Ltd., GDR
|
|
|
|
|
|
|
41,500
|
|
|
|
27,888,000
|
|
Teradyne Inc.
|
|
|
|
|
|
|
541,400
|
|
|
|
8,781,508
|
*
|
Texas Instruments Inc.
|
|
|
|
|
|
|
522,440
|
|
|
|
18,536,171
|
|
Veeco Instruments Inc.
|
|
|
|
|
|
|
607,200
|
|
|
|
23,273,976
|
*
|
Total Semiconductors & Semiconductor Equipment
|
|
|
|
|
|
|
|
|
|
|
113,593,183
|
|
See Notes to Financial
Statements.
|
|
|
6
|
|
ClearBridge All Cap Value Fund 2013 Semi-Annual Report
|
Schedule of investments
(unaudited)
(contd)
March 31, 2013
ClearBridge All Cap Value Fund
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Security
|
|
|
|
|
|
|
Shares
|
|
|
Value
|
|
Software 1.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Symantec Corp.
|
|
|
|
|
|
|
|
|
746,400
|
|
|
$
|
18,421,152
|
*
|
Total Information Technology
|
|
|
|
|
|
|
|
|
|
|
|
|
239,353,046
|
|
Materials
4.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chemicals 1.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
E.I. du Pont de Nemours & Co.
|
|
|
|
|
|
|
|
|
389,280
|
|
|
|
19,137,005
|
|
Mosaic Co.
|
|
|
|
|
|
|
|
|
176,640
|
|
|
|
10,529,510
|
|
Total Chemicals
|
|
|
|
|
|
|
|
|
|
|
|
|
29,666,515
|
|
Metals & Mining 2.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BHP Billiton Ltd., ADR
|
|
|
|
|
|
|
|
|
330,370
|
|
|
|
22,607,219
|
|
Nucor Corp.
|
|
|
|
|
|
|
|
|
594,410
|
|
|
|
27,432,022
|
|
Total Metals & Mining
|
|
|
|
|
|
|
|
|
|
|
|
|
50,039,241
|
|
Total Materials
|
|
|
|
|
|
|
|
|
|
|
|
|
79,705,756
|
|
Telecommunication Services
3.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diversified Telecommunication Services
1.4%
|
|
|
|
|
|
|
|
|
|
|
|
AT&T Inc.
|
|
|
|
|
|
|
|
|
712,340
|
|
|
|
26,135,754
|
|
Wireless Telecommunication Services
2.4%
|
|
|
|
|
|
|
|
|
|
|
|
Vodafone Group PLC, ADR
|
|
|
|
|
|
|
|
|
1,607,192
|
|
|
|
45,660,325
|
|
Total Telecommunication Services
|
|
|
|
|
|
|
|
|
|
|
|
|
71,796,079
|
|
Total Investments before Short-Term Investments (Cost
$1,258,954,439)
|
|
|
|
1,841,993,561
|
|
|
|
|
|
|
|
|
Rate
|
|
|
Maturity
Date
|
|
Face
Amount
|
|
|
|
|
Short-Term Investments
0.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repurchase Agreements 0.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest in $91,224,000 joint tri-party repurchase agreement dated 3/28/13 with Deutsche Bank Securities
Inc.; Proceeds at maturity $11,107,247; (Fully collateralized by various U.S. government agency obligations, 0.600% to 0.750% due 2/22/16 to 3/6/17; Market value $11,329,159) (Cost $11,107,000)
|
|
|
0.200
|
%
|
|
4/1/13
|
|
$
|
11,107,000
|
|
|
|
11,107,000
|
|
Total Investments 99.7% (Cost $1,270,061,439#)
|
|
|
|
|
|
|
|
|
|
1,853,100,561
|
|
Other Assets in Excess of Liabilities 0.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
4,966,226
|
|
Total Net Assets 100.0%
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,858,066,787
|
|
*
|
Non-income producing security.
|
#
|
Aggregate cost for federal income tax purposes is substantially the same.
|
|
|
|
Abbreviations used in this schedule:
|
ADR
|
|
American Depositary Receipts
|
GDR
|
|
Global Depositary Receipts
|
See Notes to Financial
Statements.
|
|
|
|
|
ClearBridge All Cap Value Fund 2013 Semi-Annual Report
|
|
|
7
|
|
Statement of assets and liabilities
(unaudited)
March 31, 2013 (unaudited)
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
Investments, at value (Cost $1,270,061,439)
|
|
$
|
1,853,100,561
|
|
Cash
|
|
|
199,705
|
|
Receivable for securities sold
|
|
|
48,630,295
|
|
Dividends and interest receivable
|
|
|
4,787,475
|
|
Receivable for Fund shares sold
|
|
|
1,220,220
|
|
Prepaid expenses
|
|
|
70,930
|
|
Total Assets
|
|
|
1,908,009,186
|
|
|
|
Liabilities:
|
|
|
|
|
Payable for securities purchased
|
|
|
42,464,042
|
|
Payable for Fund shares repurchased
|
|
|
3,263,546
|
|
Investment management fee payable
|
|
|
1,165,908
|
|
Service and/or distribution fees payable
|
|
|
624,231
|
|
Trustees fees payable
|
|
|
73,214
|
|
Accrued expenses
|
|
|
2,351,458
|
|
Total Liabilities
|
|
|
49,942,399
|
|
Total Net Assets
|
|
$
|
1,858,066,787
|
|
|
|
Net
Assets:
|
|
|
|
|
Par value (Note 7)
|
|
$
|
1,205
|
|
Paid-in capital in excess of par value
|
|
|
1,178,940,829
|
|
Undistributed net investment income
|
|
|
2,814,279
|
|
Accumulated net realized gain on investments and foreign currency transactions
|
|
|
93,271,352
|
|
Net unrealized appreciation on investments
|
|
|
583,039,122
|
|
Total Net Assets
|
|
$
|
1,858,066,787
|
|
|
|
Shares
Outstanding:
|
|
|
|
|
Class A
|
|
|
93,857,536
|
|
Class B
|
|
|
11,247,951
|
|
Class C
|
|
|
14,172,501
|
|
Class I
|
|
|
1,189,615
|
|
|
|
Net Asset
Value:
|
|
|
|
|
Class A (and redemption price)
|
|
|
$15.69
|
|
Class B*
|
|
|
$14.33
|
|
Class C*
|
|
|
$14.46
|
|
Class I (and redemption price)
|
|
|
$16.25
|
|
Maximum Public Offering
Price Per Share:
|
|
|
|
|
Class A (based on maximum initial sales charge of 5.75%)
|
|
|
$16.65
|
|
*
|
Redemption price per share is NAV of Class B and Class C shares reduced by a 5.00% and 1.00% CDSC, respectively, if shares are redeemed within one year from
purchase payment (See Note 2).
|
See Notes to Financial Statements.
|
|
|
8
|
|
ClearBridge All Cap Value Fund 2013 Semi-Annual Report
|
Statement of operations
(unaudited)
For the
Six Months Ended March 31, 2013
|
|
|
|
|
|
|
Investment
Income:
|
|
|
|
|
Dividends
|
|
$
|
22,396,748
|
|
Interest
|
|
|
26,027
|
|
Less: Foreign taxes withheld
|
|
|
(317,649)
|
|
Total Investment Income
|
|
|
22,105,126
|
|
|
|
Expenses:
|
|
|
|
|
Investment management fee (Note 2)
|
|
|
6,560,901
|
|
Service and/or distribution fees (Notes 2 and 5)
|
|
|
3,548,948
|
|
Transfer agent fees (Note 5)
|
|
|
3,361,815
|
|
Fund accounting fees
|
|
|
70,360
|
|
Trustees fees
|
|
|
67,041
|
|
Shareholder reports
|
|
|
55,564
|
|
Registration fees
|
|
|
44,624
|
|
Legal fees
|
|
|
28,012
|
|
Audit and tax
|
|
|
22,035
|
|
Insurance
|
|
|
17,972
|
|
Custody fees
|
|
|
6,822
|
|
Miscellaneous expenses
|
|
|
9,552
|
|
Total Expenses
|
|
|
13,793,646
|
|
Net Investment Income
|
|
|
8,311,480
|
|
|
|
Realized and Unrealized
Gain (Loss) on Investments
and Foreign Currency Transactions (Notes 1 and 3):
|
|
|
|
|
Net Realized Gain (Loss) From:
|
|
|
|
|
Investment transactions
|
|
|
94,666,366
|
|
Foreign currency transactions
|
|
|
(13,367)
|
|
Net Realized Gain
|
|
|
94,652,999
|
|
Change in Net Unrealized Appreciation (Depreciation) From
Investments
|
|
|
123,371,905
|
|
Net Gain on Investments and Foreign Currency Transactions
|
|
|
218,024,904
|
|
Increase in Net Assets From Operations
|
|
$
|
226,336,384
|
|
See Notes to Financial
Statements.
|
|
|
|
|
ClearBridge All Cap Value Fund 2013 Semi-Annual Report
|
|
|
9
|
|
Statements of changes in net assets
|
|
|
|
|
|
|
|
|
For the Six Months Ended March 31, 2013 (unaudited)
and the Year Ended September 30, 2012
|
|
2013
|
|
|
2012
|
|
|
|
|
Operations:
|
|
|
|
|
|
|
|
|
Net investment income
|
|
$
|
8,311,480
|
|
|
$
|
13,962,596
|
|
Net realized gain
|
|
|
94,652,999
|
|
|
|
50,072,762
|
|
Change in net unrealized appreciation (depreciation)
|
|
|
123,371,905
|
|
|
|
359,056,845
|
|
Increase in Net Assets From Operations
|
|
|
226,336,384
|
|
|
|
423,092,203
|
|
|
|
|
Distributions to
Shareholders From (Notes 1 and 6):
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
(15,000,044)
|
|
|
|
(10,000,045)
|
|
Net realized gains
|
|
|
(37,603,946)
|
|
|
|
|
|
Decrease in Net Assets From Distributions to
Shareholders
|
|
|
(52,603,990)
|
|
|
|
(10,000,045)
|
|
|
|
|
Fund Share Transactions
(Note 7):
|
|
|
|
|
|
|
|
|
Net proceeds from sale of shares
|
|
|
60,554,220
|
|
|
|
132,567,340
|
|
Reinvestment of distributions
|
|
|
51,749,813
|
|
|
|
9,828,941
|
|
Cost of shares repurchased
|
|
|
(183,063,326)
|
|
|
|
(412,088,911)
|
|
Decrease in Net Assets From Fund Share Transactions
|
|
|
(70,759,293)
|
|
|
|
(269,692,630)
|
|
Increase in Net Assets
|
|
|
102,973,101
|
|
|
|
143,399,528
|
|
|
|
|
Net
Assets:
|
|
|
|
|
|
|
|
|
Beginning of period
|
|
|
1,755,093,686
|
|
|
|
1,611,694,158
|
|
End of period*
|
|
$
|
1,858,066,787
|
|
|
$
|
1,755,093,686
|
|
*Includesundistributed net investment income of:
|
|
|
$2,814,279
|
|
|
|
$9,502,843
|
|
See Notes to Financial
Statements.
|
|
|
10
|
|
ClearBridge All Cap Value Fund 2013 Semi-Annual Report
|
Financial highlights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For a share of each class of beneficial interest outstanding throughout each year ended September 30,
unless otherwise noted:
|
|
Class A Shares
1
|
|
2013
2
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
Net asset value, beginning
of period
|
|
|
$14.26
|
|
|
|
$11.24
|
|
|
|
$12.19
|
|
|
|
$11.63
|
|
|
|
$12.39
|
|
|
|
$16.86
|
|
Net investment income
|
|
|
0.08
|
|
|
|
0.13
|
|
|
|
0.08
|
|
|
|
0.13
|
|
|
|
0.10
|
|
|
|
0.16
|
|
Net realized and unrealized gain (loss)
|
|
|
1.81
|
|
|
|
2.98
|
|
|
|
(0.87)
|
|
|
|
0.50
|
|
|
|
(0.69)
|
|
|
|
(3.57)
|
|
Proceeds from settlement of a regulatory matter
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
Total income (loss) from operations
|
|
|
1.89
|
|
|
|
3.11
|
|
|
|
(0.79)
|
|
|
|
0.64
|
|
|
|
(0.59)
|
|
|
|
(3.41)
|
|
|
|
|
|
|
|
|
Less distributions from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
(0.15)
|
|
|
|
(0.09)
|
|
|
|
(0.16)
|
|
|
|
(0.08)
|
|
|
|
(0.17)
|
|
|
|
(0.14)
|
|
Net realized gains
|
|
|
(0.31)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.92)
|
|
Total distributions
|
|
|
(0.46)
|
|
|
|
(0.09)
|
|
|
|
(0.16)
|
|
|
|
(0.08)
|
|
|
|
(0.17)
|
|
|
|
(1.06)
|
|
|
|
|
|
|
|
|
Net asset value, end of
period
|
|
|
$15.69
|
|
|
|
$14.26
|
|
|
|
$11.24
|
|
|
|
$12.19
|
|
|
|
$11.63
|
|
|
|
$12.39
|
|
Total return
3
|
|
|
13.62
|
%
|
|
|
27.80
|
%
|
|
|
(6.72)
|
%
|
|
|
5.49
|
%
4
|
|
|
(4.38)
|
%
|
|
|
(21.45)
|
%
|
|
|
|
|
|
|
|
Net assets, end of period
(millions)
|
|
|
$1,473
|
|
|
|
$1,365
|
|
|
|
$1,193
|
|
|
|
$1,412
|
|
|
|
$1,436
|
|
|
|
$1,675
|
|
|
|
|
|
|
|
|
Ratios to average net assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross expenses
|
|
|
1.39
|
%
5
|
|
|
1.39
|
%
|
|
|
1.34
|
%
|
|
|
1.31
|
%
|
|
|
1.39
|
%
|
|
|
1.18
|
%
|
Net expenses
6
|
|
|
1.39
|
5
|
|
|
1.39
|
|
|
|
1.34
|
|
|
|
1.31
|
|
|
|
1.39
|
|
|
|
1.18
|
|
Net investment income
|
|
|
1.11
|
5
|
|
|
0.98
|
|
|
|
0.61
|
|
|
|
1.13
|
|
|
|
1.00
|
|
|
|
1.09
|
|
|
|
|
|
|
|
|
Portfolio turnover rate
|
|
|
18
|
%
|
|
|
15
|
%
|
|
|
15
|
%
|
|
|
22
|
%
|
|
|
37
|
%
|
|
|
27
|
%
|
1
|
Per share amounts have been calculated using the average shares method.
|
2
|
For the six months ended March 31, 2013 (unaudited).
|
3
|
Performance figures, exclusive of sales charges, may reflect compensating balance arrangements, fee waivers and/or expense reimbursements. In the
absence of compensating balance arrangements, fee waivers and/or expense reimbursements, the total return would have been lower. Past performance is no guarantee of future results. Total returns for periods of less than one year are not annualized.
|
4
|
The total return reflects a payment received due to the settlement of a regulatory matter. Absent this payment, the total return would have been
5.40%. Class A received $1,690,032 related to this distribution.
|
6
|
The impact of compensating balance arrangements, if any, was less than 0.01%.
|
See Notes to Financial Statements.
|
|
|
|
|
ClearBridge All Cap Value Fund 2013 Semi-Annual Report
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For a share of each class of beneficial interest outstanding throughout each year ended September 30,
unless otherwise noted:
|
|
Class B Shares
1
|
|
2013
2
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
Net asset value, beginning
of period
|
|
|
$13.00
|
|
|
|
$10.27
|
|
|
|
$11.24
|
|
|
|
$10.69
|
|
|
|
$11.42
|
|
|
|
$15.63
|
|
Net investment income (loss)
|
|
|
(0.00)
|
3
|
|
|
(0.01)
|
|
|
|
(0.05)
|
|
|
|
0.01
|
|
|
|
0.00
|
3
|
|
|
0.03
|
|
Net realized and unrealized gain (loss)
|
|
|
1.64
|
|
|
|
2.74
|
|
|
|
(0.80)
|
|
|
|
0.46
|
|
|
|
(0.64)
|
|
|
|
(3.31)
|
|
Proceeds from settlement of a regulatory matter
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.08
|
|
|
|
|
|
|
|
|
|
Total income (loss) from operations
|
|
|
1.64
|
|
|
|
2.73
|
|
|
|
(0.85)
|
|
|
|
0.55
|
|
|
|
(0.64)
|
|
|
|
(3.28)
|
|
|
|
|
|
|
|
|
Less distributions from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
|
|
|
|
|
|
|
|
(0.12)
|
|
|
|
|
|
|
|
(0.09)
|
|
|
|
(0.01)
|
|
Net realized gains
|
|
|
(0.31)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.92)
|
|
Total distributions
|
|
|
(0.31)
|
|
|
|
|
|
|
|
(0.12)
|
|
|
|
|
|
|
|
(0.09)
|
|
|
|
(0.93)
|
|
|
|
|
|
|
|
|
Net asset value, end of
period
|
|
|
$14.33
|
|
|
|
$13.00
|
|
|
|
$10.27
|
|
|
|
$11.24
|
|
|
|
$10.69
|
|
|
|
$11.42
|
|
Total return
4
|
|
|
12.89
|
%
|
|
|
26.58
|
%
|
|
|
(7.73)
|
%
|
|
|
5.15
|
%
5
|
|
|
(5.35)
|
%
|
|
|
(22.17)
|
%
|
|
|
|
|
|
|
|
Net assets, end of period
(millions)
|
|
|
$161
|
|
|
|
$172
|
|
|
|
$204
|
|
|
|
$310
|
|
|
|
$426
|
|
|
|
$639
|
|
|
|
|
|
|
|
|
Ratios to average net assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross expenses
|
|
|
2.56
|
%
6
|
|
|
2.43
|
%
|
|
|
2.37
|
%
|
|
|
2.30
|
%
|
|
|
2.41
|
%
|
|
|
2.06
|
%
|
Net expenses
7
|
|
|
2.56
|
6
|
|
|
2.43
|
|
|
|
2.37
|
|
|
|
2.30
|
|
|
|
2.41
|
|
|
|
2.06
|
|
Net investment income (loss)
|
|
|
(0.07)
|
6
|
|
|
(0.06)
|
|
|
|
(0.44)
|
|
|
|
0.07
|
|
|
|
0.01
|
|
|
|
0.21
|
|
|
|
|
|
|
|
|
Portfolio turnover rate
|
|
|
18
|
%
|
|
|
15
|
%
|
|
|
15
|
%
|
|
|
22
|
%
|
|
|
37
|
%
|
|
|
27
|
%
|
1
|
Per share amounts have been calculated using the average shares method.
|
2
|
For the six months ended March 31, 2013 (unaudited).
|
3
|
Amount represents less than $0.01 per share.
|
4
|
Performance figures, exclusive of CDSC, may reflect compensating balance arrangements, fee waivers and/or expense reimbursements. In the absence
of compensating balance arrangements, fee waivers and/or expense reimbursements, the total return would have been lower. Past performance is no guarantee of future results. Total returns for periods of less than one year are not annualized.
|
5
|
The total return reflects a payment received due to the settlement of a regulatory matter. Absent this payment, the total return would have been
4.40%. Class B received $2,632,190 related to this distribution.
|
7
|
The impact of compensating balance arrangements, if any, was less than 0.01%.
|
See Notes to Financial Statements.
|
|
|
12
|
|
ClearBridge All Cap Value Fund 2013 Semi-Annual Report
|
Financial highlights (contd)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For a share of each class of beneficial interest outstanding throughout each year ended September 30,
unless otherwise noted:
|
|
Class C Shares
1
|
|
2013
2
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
Net asset value, beginning
of period
|
|
|
$13.14
|
|
|
|
$10.35
|
|
|
|
$11.29
|
|
|
|
$10.74
|
|
|
|
$11.45
|
|
|
|
$15.67
|
|
|
|
|
|
|
|
|
Income (loss) from operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
0.03
|
|
|
|
0.05
|
|
|
|
0.00
|
3
|
|
|
0.05
|
|
|
|
0.04
|
|
|
|
0.06
|
|
Net realized and unrealized gain (loss)
|
|
|
1.67
|
|
|
|
2.76
|
|
|
|
(0.81)
|
|
|
|
0.46
|
|
|
|
(0.64)
|
|
|
|
(3.31)
|
|
Proceeds from settlement of a regulatory matter
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.06
|
|
|
|
|
|
|
|
|
|
Total income (loss) from operations
|
|
|
1.70
|
|
|
|
2.81
|
|
|
|
(0.81)
|
|
|
|
0.57
|
|
|
|
(0.60)
|
|
|
|
(3.25)
|
|
|
|
|
|
|
|
|
Less distributions from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
(0.07)
|
|
|
|
(0.02)
|
|
|
|
(0.13)
|
|
|
|
(0.02)
|
|
|
|
(0.11)
|
|
|
|
(0.05)
|
|
Net realized gains
|
|
|
(0.31)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.92)
|
|
Total distributions
|
|
|
(0.38)
|
|
|
|
(0.02)
|
|
|
|
(0.13)
|
|
|
|
(0.02)
|
|
|
|
(0.11)
|
|
|
|
(0.97)
|
|
|
|
|
|
|
|
|
Net asset value, end of
period
|
|
|
$14.46
|
|
|
|
$13.14
|
|
|
|
$10.35
|
|
|
|
$11.29
|
|
|
|
$10.74
|
|
|
|
$11.45
|
|
Total return
4
|
|
|
13.28
|
%
|
|
|
27.15
|
%
|
|
|
(7.41)
|
%
|
|
|
5.27
|
%
5
|
|
|
(4.93)
|
%
|
|
|
(22.00)
|
%
|
|
|
|
|
|
|
|
Net assets, end of period
(millions)
|
|
|
$205
|
|
|
|
$201
|
|
|
|
$201
|
|
|
|
$270
|
|
|
|
$322
|
|
|
|
$428
|
|
|
|
|
|
|
|
|
Ratios to average net assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross expenses
|
|
|
1.98
|
%
6
|
|
|
1.98
|
%
|
|
|
1.97
|
%
|
|
|
1.98
|
%
|
|
|
1.96
|
%
|
|
|
1.83
|
%
|
Net expenses
7
|
|
|
1.98
|
6
|
|
|
1.98
|
|
|
|
1.97
|
|
|
|
1.98
|
|
|
|
1.96
|
|
|
|
1.83
|
|
Net investment income (loss)
|
|
|
0.52
|
6
|
|
|
0.40
|
|
|
|
(0.03)
|
|
|
|
0.43
|
|
|
|
0.45
|
|
|
|
0.43
|
|
|
|
|
|
|
|
|
Portfolio turnover rate
|
|
|
18
|
%
|
|
|
15
|
%
|
|
|
15
|
%
|
|
|
22
|
%
|
|
|
37
|
%
|
|
|
27
|
%
|
1
|
Per share amounts have been calculated using the average shares method.
|
2
|
For the six months ended March 31, 2013 (unaudited).
|
3
|
Amount represents less than $0.01 per share.
|
4
|
Performance figures, exclusive of CDSC, may reflect compensating balance arrangements, fee waivers and/or expense reimbursements. In the absence
of compensating balance arrangements, fee waivers and/or expense reimbursements, the total return would have been lower. Past performance is no guarantee of future results. Total returns for periods of less than one year are not annualized.
|
5
|
The total return reflects a payment received due to the settlement of a regulatory matter. Absent this payment, the total return would have been
4.71%. Class C received $1,468,029 related to this distribution.
|
7
|
The impact of compensating balance arrangements, if any, was less than 0.01%.
|
See Notes to Financial Statements.
|
|
|
|
|
ClearBridge All Cap Value Fund 2013 Semi-Annual Report
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For a share of each class of beneficial interest outstanding throughout each year ended September 30,
unless otherwise noted:
|
|
Class I Shares
1
|
|
2013
2
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
Net asset value, beginning
of period
|
|
|
$14.79
|
|
|
|
$11.64
|
|
|
|
$12.60
|
|
|
|
$12.04
|
|
|
|
$12.80
|
|
|
|
$17.38
|
|
|
|
|
|
|
|
|
Income (loss) from operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
0.12
|
|
|
|
0.21
|
|
|
|
0.15
|
|
|
|
0.26
|
|
|
|
0.19
|
|
|
|
0.24
|
|
Net realized and unrealized gain (loss)
|
|
|
1.87
|
|
|
|
3.09
|
|
|
|
(0.91)
|
|
|
|
0.43
|
|
|
|
(0.73)
|
|
|
|
(3.68)
|
|
Total income (loss) from operations
|
|
|
1.99
|
|
|
|
3.30
|
|
|
|
(0.76)
|
|
|
|
0.69
|
|
|
|
(0.54)
|
|
|
|
(3.44)
|
|
|
|
|
|
|
|
|
Less distributions from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
(0.22)
|
|
|
|
(0.15)
|
|
|
|
(0.20)
|
|
|
|
(0.13)
|
|
|
|
(0.22)
|
|
|
|
(0.22)
|
|
Net realized gains
|
|
|
(0.31)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.92)
|
|
Total distributions
|
|
|
(0.53)
|
|
|
|
(0.15)
|
|
|
|
(0.20)
|
|
|
|
(0.13)
|
|
|
|
(0.22)
|
|
|
|
(1.14)
|
|
|
|
|
|
|
|
|
Net asset value, end of
period
|
|
|
$16.25
|
|
|
|
$14.79
|
|
|
|
$11.64
|
|
|
|
$12.60
|
|
|
|
$12.04
|
|
|
|
$12.80
|
|
Total return
3
|
|
|
13.90
|
%
|
|
|
28.54
|
%
|
|
|
(6.30)
|
%
|
|
|
5.72
|
%
|
|
|
(3.72)
|
%
|
|
|
(21.07)
|
%
|
|
|
|
|
|
|
|
Net assets, end of period
(millions)
|
|
|
$19
|
|
|
|
$17
|
|
|
|
$14
|
|
|
|
$10
|
|
|
|
$2
|
|
|
|
$15
|
|
|
|
|
|
|
|
|
Ratios to average net assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross expenses
|
|
|
0.88
|
%
4
|
|
|
0.90
|
%
|
|
|
0.89
|
%
|
|
|
0.97
|
%
|
|
|
0.83
|
%
|
|
|
0.69
|
%
|
Net expenses
5
|
|
|
0.88
|
4,6
|
|
|
0.90
|
6
|
|
|
0.88
|
6,7
|
|
|
0.97
|
6
|
|
|
0.82
|
6,7
|
|
|
0.69
|
|
Net investment income
|
|
|
1.63
|
4
|
|
|
1.47
|
|
|
|
1.10
|
|
|
|
2.15
|
|
|
|
1.87
|
|
|
|
1.60
|
|
|
|
|
|
|
|
|
Portfolio turnover rate
|
|
|
18
|
%
|
|
|
15
|
%
|
|
|
15
|
%
|
|
|
22
|
%
|
|
|
37
|
%
|
|
|
27
|
%
|
1
|
Per share amounts have been calculated using the average shares method.
|
2
|
For the six months ended March 31, 2013 (unaudited).
|
3
|
Performance figures may reflect compensating balance arrangements, fee waivers and/or expense reimbursements. In the absence of compensating
balance arrangements, fee waivers and/or expense reimbursements, the total return would have been lower. Past performance is no guarantee of future results. Total returns for periods of less than one year are not annualized.
|
5
|
The impact of compensating balance arrangements, if any, was less than 0.01%.
|
6
|
As a result of an expense limitation arrangement, effective September 18, 2009, the ratio of expenses, other than brokerage, interest,
taxes, extraordinary expenses and acquired fund fees and expenses, to average net assets of Class I shares did not exceed 1.00%. This expense limitation arrangement cannot be terminated prior to December 31, 2014 without the Board of
Trustees consent.
|
7
|
Reflects fee waivers and/or expense reimbursements.
|
See Notes to Financial Statements.
|
|
|
14
|
|
ClearBridge All Cap Value Fund 2013 Semi-Annual Report
|
Notes to financial statements
(unaudited)
1. Organization and significant accounting policies
ClearBridge All Cap Value Fund (formerly Legg Mason ClearBridge Fundamental All Cap Value Fund) (the Fund) is a separate diversified investment series of Legg Mason Partners Equity Trust
(the Trust). The Trust, a Maryland statutory trust, is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company.
The following are significant accounting policies consistently followed by the Fund and are in conformity with U.S. generally accepted accounting
principles (GAAP). Estimates and assumptions are required to be made regarding assets, liabilities and changes in net assets resulting from operations when financial statements are prepared. Changes in the economic environment, financial
markets and any other parameters used in determining these estimates could cause actual results to differ. Subsequent events have been evaluated through the date the financial statements were issued.
(a) Investment valuation.
Equity securities for which market quotations are available are valued at the last reported sales price or official closing price on the primary market or exchange on which they trade. The
valuations for fixed income securities (which may include, but are not limited to, corporate, government, municipal, mortgage-backed, collateralized mortgage obligations and asset-backed securities) and certain derivative instruments are typically
the prices supplied by independent third party pricing services, which may use market prices or broker/dealer quotations or a variety of valuation techniques and methodologies. The independent third party pricing services use inputs that are
observable such as issuer details, interest rates, yield curves, prepayment speeds, credit risks/spreads, default rates and quoted prices for similar securities. Short-term fixed income securities that will mature in 60 days or less are valued at
amortized cost, unless it is determined that using this method would not reflect an investments fair value. When the Fund holds securities or other assets that are denominated in a foreign currency, the Fund will normally use the currency
exchange rates as of 4:00 p.m. (Eastern Time). If independent third party pricing services are unable to supply prices for a portfolio investment, or if the prices supplied are deemed by the manager to be unreliable, the market price may be
determined by the manager using quotations from one or more broker/dealers or at the transaction price if the security has recently been purchased and no value has yet been obtained from a pricing service or pricing broker. When reliable prices are
not readily available, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded, but before the Fund calculates its net asset value, the Fund
values these securities as determined in accordance with procedures approved by the Funds Board of Trustees.
The Board of Trustees
is responsible for the valuation process and has delegated the supervision of the daily valuation process to the Legg Mason North American Fund Valuation Committee (the Valuation Committee). The Valuation Committee, pursuant to the
policies adopted by the Board of Trustees, is responsible for making fair value determinations, evaluating the effectiveness of the Funds pricing policies, and reporting to the Board of Trustees. When determining the reliability of third party
|
|
|
|
|
ClearBridge All Cap Value Fund 2013 Semi-Annual Report
|
|
|
15
|
|
pricing information for investments owned by the Fund, the Valuation Committee, among other things, conducts due diligence reviews of pricing vendors, monitors the daily change in prices and
reviews transactions among market participants.
The Valuation Committee will consider pricing methodologies it deems relevant and
appropriate when making fair value determinations. Examples of possible methodologies include, but are not limited to, multiple of earnings; discount from market of a similar freely traded security; discounted cash-flow analysis; book value or a
multiple thereof; risk premium/yield analysis; yield to maturity; and/or fundamental investment analysis. The Valuation Committee will also consider factors it deems relevant and appropriate in light of the facts and circumstances. Examples of
possible factors include, but are not limited to, the type of security; the issuers financial statements; the purchase price of the security; the discount from market value of unrestricted securities of the same class at the time of purchase;
analysts research and observations from financial institutions; information regarding any transactions or offers with respect to the security; the existence of merger proposals or tender offers affecting the security; the price and extent of
public trading in similar securities of the issuer or comparable companies; and the existence of a shelf registration for restricted securities.
For each portfolio security that has been fair valued pursuant to the policies adopted by the Board of Trustees, the fair value price is compared against the last available and next available market
quotations. The Valuation Committee reviews the results of such back testing monthly and fair valuation occurrences are reported to the Board of Trustees quarterly.
The Fund uses valuation techniques to measure fair value that are consistent with the market approach and/or income approach, depending on the type of security and the particular circumstance. The
market approach uses prices and other relevant information generated by market transactions involving identical or comparable securities. The income approach uses valuation techniques to discount estimated future cash flows to present value.
GAAP establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at
measurement date. These inputs are summarized in the three broad levels listed below:
|
|
Level 1 quoted prices in active markets for identical investments
|
|
|
Level 2 other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit
risk, etc.)
|
|
|
Level 3 significant unobservable inputs (including the Funds own assumptions in determining the fair value of investments)
|
The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with
investing in those securities.
|
|
|
16
|
|
ClearBridge All Cap Value Fund 2013 Semi-Annual Report
|
Notes to financial statements
(unaudited)
(contd)
The following is a summary of the inputs used in valuing the Funds assets carried at fair value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
Description
|
|
Quoted Prices
(Level 1)
|
|
|
Other Significant
Observable Inputs
(Level 2)
|
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
|
Total
|
|
Common stocks
|
|
$
|
1,841,993,561
|
|
|
|
|
|
|
|
|
|
|
$
|
1,841,993,561
|
|
Short-term investments
|
|
|
|
|
|
$
|
11,107,000
|
|
|
|
|
|
|
|
11,107,000
|
|
Total investments
|
|
$
|
1,841,993,561
|
|
|
$
|
11,107,000
|
|
|
|
|
|
|
$
|
1,853,100,561
|
|
|
See Schedule of Investments for additional detailed categorizations.
|
(b) Repurchase agreements.
The Fund may enter into repurchase
agreements with institutions that its investment adviser has determined are creditworthy. Each repurchase agreement is recorded at cost. Under the terms of a typical repurchase agreement, the Fund acquires a debt security subject to an obligation of
the seller to repurchase, and of the Fund to resell, the security at an agreed-upon price and time, thereby determining the yield during the Funds holding period. When entering into repurchase agreements, it is the Funds policy that its
custodian or a third party custodian, acting on the Funds behalf, take possession of the underlying collateral securities, the market value of which, at all times, at least equals the principal amount of the repurchase transaction, including
accrued interest. To the extent that any repurchase transaction maturity exceeds one business day, the value of the collateral is marked-to-market and measured against the value of the agreement in an effort to ensure the adequacy of the collateral.
If the counterparty defaults, the Fund generally has the right to use the collateral to satisfy the terms of the repurchase transaction. However, if the market value of the collateral declines during the period in which the Fund seeks to assert its
rights or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of the collateral by the Fund may be delayed or limited.
(c) Foreign currency translation.
Investment securities and
other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts based upon prevailing exchange rates on the date of valuation. Purchases and sales of investment securities and income and expense items
denominated in foreign currencies are translated into U.S. dollar amounts based upon prevailing exchange rates on the respective dates of such transactions.
The Fund does not isolate that portion of the results of operations resulting from fluctuations in foreign exchange rates on investments from the fluctuations arising from changes in market prices
of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments.
Net realized
foreign exchange gains or losses arise from sales of foreign currencies, including gains and losses on forward foreign currency contracts, currency gains or losses realized between the trade and settlement dates on securities transactions, and the
difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Funds books and the U.S. dollar equivalent of the
|
|
|
|
|
ClearBridge All Cap Value Fund 2013 Semi-Annual Report
|
|
|
17
|
|
amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the values of assets and liabilities, other than investments in securities, on the date
of valuation, resulting from changes in exchange rates.
Foreign security and currency transactions may involve certain considerations
and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility
of political or economic instability.
(d) Foreign investment risks.
The Funds investments in foreign securities may involve risks not present in domestic investments. Since securities may be denominated in foreign currencies, may require
settlement in foreign currencies or pay interest or dividends in foreign currencies, changes in the relationship of these foreign currencies to the U.S. dollar can significantly affect the value of the investments and earnings of the Fund. Foreign
investments may also subject the Fund to foreign government exchange restrictions, expropriation, taxation or other political, social or economic developments, all of which affect the market and/or credit risk of the investments.
(e) REIT distributions.
The character of distributions received from Real Estate Investment Trusts (REITs) held by the Fund is generally comprised of net investment income, capital gains, and
return of capital. It is the policy of the Fund to estimate the character of distributions received from underlying REITs based on historical data provided by the REITs. After each calendar year end, REITs report the actual tax character of these
distributions. Differences between the estimated and actual amounts reported by the REITs are reflected in the Funds records in the year in which they are reported by the REITs by adjusting related investment cost basis, capital gains and
income, as necessary.
(f) Security transactions and investment
income.
Security transactions are accounted for on a trade date basis. Interest income, adjusted for amortization of premium and accretion of discount, is recorded on the accrual
basis. Dividend income is recorded on the ex-dividend date. Foreign dividend income is recorded on the ex-dividend date or as soon as practicable after the Fund determines the existence of a dividend declaration after exercising reasonable due
diligence. The cost of investments sold is determined by use of the specific identification method. To the extent any issuer defaults or a credit event occurs that impacts the issuer, the Fund may halt any additional interest income accruals and
consider the realizability of interest accrued up to the date of default or credit event.
(g) Distributions to shareholders.
Distributions from net investment income and distributions of net realized gains, if any,
are declared at least annually. Distributions to shareholders of the Fund are recorded on the ex-dividend date and are determined in accordance with income tax regulations, which may differ from GAAP.
(h) Share class accounting.
Investment income, common expenses and realized/unrealized gains (losses) on investments are allocated to the various classes of the
|
|
|
18
|
|
ClearBridge All Cap Value Fund 2013 Semi-Annual Report
|
Notes to financial statements
(unaudited)
(contd)
Fund on the basis of daily net assets of each class. Fees relating to a specific class are charged directly to that share class.
(i) Compensating balance arrangements.
The Fund has an
arrangement with its custodian bank whereby a portion of the custodians fees is paid indirectly by credits earned on the Funds cash on deposit with the bank.
(j) Federal and other taxes.
It is the Funds policy to
comply with the federal income and excise tax requirements of the Internal Revenue Code of 1986 (the Code), as amended, applicable to regulated investment companies. Accordingly, the Fund intends to distribute its taxable income and net
realized gains, if any, to shareholders in accordance with timing requirements imposed by the Code. Therefore, no federal or state income tax provision is required in the Funds financial statements.
Management has analyzed the Funds tax positions taken on income tax returns for all open tax years and has concluded that as of March 31,
2013, no provision for income tax is required in the Funds financial statements. The Funds federal and state income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are
subject to examination by the Internal Revenue Service and state departments of revenue.
Under the applicable foreign tax laws, a
withholding tax may be imposed on interest, dividends and capital gains at various rates.
(k) Reclassification.
GAAP requires that certain components of net assets be reclassified to reflect permanent differences
between financial and tax reporting. These reclassifications have no effect on net assets or net asset value per share.
2. Investment
management agreement and other transactions with affiliates
Legg Mason Partners Fund Advisor, LLC (LMPFA) is the Funds
investment manager and ClearBridge Investments, LLC (formerly ClearBridge Advisors, LLC) (ClearBridge) is the Funds subadviser. Western Asset Management Company (Western Asset) manages the Funds cash and
short-term instruments. LMPFA, ClearBridge and Western Asset are wholly-owned subsidiaries of Legg Mason, Inc. (Legg Mason).
Under the investment management agreement, the Fund pays an investment management fee, calculated daily and paid monthly, in accordance with the
following breakpoint schedule:
|
|
|
|
|
Average Daily Net Assets
|
|
Annual Rate
|
|
First $1.5 billion
|
|
|
0.75
|
%
|
Next $0.5 billion
|
|
|
0.70
|
|
Next $0.5 billion
|
|
|
0.65
|
|
Next $1.0 billion
|
|
|
0.60
|
|
Over $3.5 billion
|
|
|
0.50
|
|
|
|
|
|
|
ClearBridge All Cap Value Fund 2013 Semi-Annual Report
|
|
|
19
|
|
LMPFA provides administrative and certain oversight services to the Fund. LMPFA delegates to the
subadviser the day-to-day portfolio management of the Fund, except for the management of cash and short-term instruments, which is provided by Western Asset. For its services, LMPFA pays ClearBridge and Western Asset an aggregate fee equal to 70% of
the net management fee it receives from the Fund.
As a result of an expense limitation arrangement between the Fund and LMPFA, the ratio
of expenses other than brokerage, interest, taxes, extraordinary expenses and acquired fund fees and expenses, to average net assets of Class I shares did not exceed 1.00%. This expense limitation arrangement cannot be terminated prior to
December 31, 2014 without the Board of Trustees consent.
The investment manager is permitted to recapture amounts waived or
reimbursed to a class during the same fiscal year if the class total annual operating expenses have fallen to a level below the expense limitation (expense cap) in effect at the time the fees were earned or the expense incurred. In
no case will the investment manager recapture any amount that would result, on any particular business day of the Fund, in the class total annual operating expenses exceeding the expense cap or any other lower limit then in effect.
Legg Mason Investor Services, LLC (LMIS), a wholly-owned broker-dealer subsidiary of Legg Mason, serves as the Funds sole and
exclusive distributor.
There is a maximum initial sales charge of 5.75% for Class A shares. There is a contingent deferred sales
charge (CDSC) of 5.00% on Class B shares, which applies if redemption occurs within 12 months from purchase payment. This CDSC declines by 1.00% per year until no CDSC is incurred. Class C shares have a 1.00% CDSC, which applies if
redemption occurs within 12 months from purchase payment. In certain cases, Class A shares have a 1.00% CDSC, which applies if redemption occurs within 18 months from purchase payment (or within 12 months for shares purchased prior to
August 1, 2012). This CDSC only applies to those purchases of Class A shares, which, when combined with current holdings of other shares of funds sold by LMIS, equal or exceed $1,000,000 in the aggregate. These purchases do not incur an
initial sales charge.
For the six months ended March 31, 2013, LMIS and its affiliates received sales charges of $174,968 on sales
of the Funds Class A shares. In addition, for the six months ended March 31, 2013, CDSCs paid to LMIS and its affiliates were:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A
|
|
|
Class B
|
|
|
Class C
|
|
CDSCs
|
|
$
|
299
|
|
|
$
|
69,856
|
|
|
$
|
1,111
|
|
The Fund had adopted an unfunded, non-qualified deferred compensation plan (the Plan) which allowed
non-interested trustees (Independent Trustees) to defer the receipt of all or a portion of their fees earned until a later date specified by the Independent Trustees. The deferred balances are reported in the Statement of Assets and
Liabilities under Trustees fees payable and are considered a general obligation of the Fund and any payments made pursuant to the Plan will be made from the Funds general assets. The Plan was terminated effective January 1, 2007.
|
|
|
20
|
|
ClearBridge All Cap Value Fund 2013 Semi-Annual Report
|
Notes to financial statements
(unaudited)
(contd)
This change had no effect on fees previously deferred. As of March 31, 2013, the Fund had accrued $79,358 as deferred compensation payable.
All officers and one Trustee of the Trust are employees of Legg Mason or its affiliates and do not receive compensation from the Trust.
3. Investments
During the six
months ended March 31, 2013, the aggregate cost of purchases and proceeds from sales of investments (excluding short-term investments) were as follows:
|
|
|
|
|
Purchases
|
|
$
|
313,177,485
|
|
Sales
|
|
|
374,527,684
|
|
At March 31, 2013, the aggregate gross unrealized appreciation and depreciation of investments for federal
income tax purposes were substantially as follows:
|
|
|
|
|
Gross unrealized appreciation
|
|
$
|
593,938,402
|
|
Gross unrealized depreciation
|
|
|
(10,899,280)
|
|
Net unrealized appreciation
|
|
$
|
583,039,122
|
|
4. Derivative instruments and hedging activities
GAAP requires enhanced disclosure about an entitys derivative and hedging activities.
During the six months ended
March 31, 2013, the Fund did not invest in any derivative instruments.
5. Class specific expenses
The Fund has adopted a Rule 12b-1 distribution plan and
under that plan the Fund pays a service fee with respect to its Class A, Class B and Class C shares calculated at the annual rate of 0.25% of the average daily net assets of each respective class. The Fund also pays a distribution fee with
respect to its Class B and Class C shares calculated at the annual rate of 0.75% of the average daily net assets of each respective class. Service and distribution fees are accrued daily and paid monthly.
For the six months ended March 31, 2013, class specific expenses were as follows:
|
|
|
|
|
|
|
|
|
|
|
Service and/or
Distribution Fees
|
|
|
Transfer Agent
Fees
|
|
Class A
|
|
$
|
1,733,729
|
|
|
$
|
2,505,677
|
|
Class B
|
|
|
820,950
|
|
|
|
643,669
|
|
Class C
|
|
|
994,269
|
|
|
|
203,798
|
|
Class I
|
|
|
|
|
|
|
8,671
|
|
Total
|
|
$
|
3,548,948
|
|
|
$
|
3,361,815
|
|
|
|
|
|
|
ClearBridge All Cap Value Fund 2013 Semi-Annual Report
|
|
|
21
|
|
6. Distributions to shareholders by class
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
March 31, 2013
|
|
|
Year Ended
September 30, 2012
|
|
Net Investment
Income:
|
|
|
|
|
|
|
|
|
Class A
|
|
$
|
13,721,130
|
|
|
$
|
9,490,504
|
|
Class B
|
|
|
|
|
|
|
|
|
Class C
|
|
|
1,024,157
|
|
|
|
330,471
|
|
Class I
|
|
|
254,757
|
|
|
|
179,070
|
|
Total
|
|
$
|
15,000,044
|
|
|
$
|
10,000,045
|
|
|
|
|
Net Realized
Gains:
|
|
|
|
|
|
|
|
|
Class A
|
|
$
|
28,895,846
|
|
|
|
|
|
Class B
|
|
|
3,832,721
|
|
|
|
|
|
Class C
|
|
|
4,517,685
|
|
|
|
|
|
Class I
|
|
|
357,694
|
|
|
|
|
|
Total
|
|
$
|
37,603,946
|
|
|
|
|
|
7. Shares of beneficial interest
At March 31, 2013, the Trust had an unlimited number of shares of beneficial interest authorized with a par value of $0.00001 per share. The Fund has the ability to issue multiple classes of
shares. Each class of shares represents an identical interest and has the same rights, except that each class bears certain direct expenses, including those specifically related to the distribution of its shares.
Transactions in shares of each class were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
March
31, 2013
|
|
|
Year Ended
September 30,
2012
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
Class
A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares sold
|
|
|
3,658,898
|
|
|
$
|
53,593,509
|
|
|
|
8,843,000
|
|
|
$
|
117,371,850
|
|
Shares issued on reinvestment
|
|
|
3,010,096
|
|
|
|
41,990,817
|
|
|
|
745,035
|
|
|
|
9,350,186
|
|
Shares repurchased
|
|
|
(8,515,193)
|
|
|
|
(124,595,182)
|
|
|
|
(20,108,667)
|
|
|
|
(266,177,918)
|
|
Net decrease
|
|
|
(1,846,199)
|
|
|
$
|
(29,010,856)
|
|
|
|
(10,520,632)
|
|
|
$
|
(139,455,882)
|
|
|
|
|
|
|
Class
B
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares sold
|
|
|
11,814
|
|
|
$
|
149,384
|
|
|
|
28,129
|
|
|
$
|
343,298
|
|
Shares issued on reinvestment
|
|
|
298,453
|
|
|
|
3,817,214
|
|
|
|
|
|
|
|
|
|
Shares repurchased
|
|
|
(2,292,469)
|
|
|
|
(30,710,828)
|
|
|
|
(6,616,095)
|
|
|
|
(80,496,800)
|
|
Net decrease
|
|
|
(1,982,202)
|
|
|
$
|
(26,744,230)
|
|
|
|
(6,587,966)
|
|
|
$
|
(80,153,502)
|
|
|
|
|
|
|
Class
C
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares sold
|
|
|
226,415
|
|
|
$
|
3,053,729
|
|
|
|
618,964
|
|
|
$
|
7,524,309
|
|
Shares issued on reinvestment
|
|
|
418,901
|
|
|
|
5,395,440
|
|
|
|
27,789
|
|
|
|
322,635
|
|
Shares repurchased
|
|
|
(1,800,317)
|
|
|
|
(24,229,700)
|
|
|
|
(4,720,054)
|
|
|
|
(57,446,380)
|
|
Net decrease
|
|
|
(1,155,001)
|
|
|
$
|
(15,780,531)
|
|
|
|
(4,073,301)
|
|
|
$
|
(49,599,436)
|
|
|
|
|
22
|
|
ClearBridge All Cap Value Fund 2013 Semi-Annual Report
|
Notes to financial statements
(unaudited)
(contd)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
March
31, 2013
|
|
|
Year Ended
September 30,
2012
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
Class
I
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares sold
|
|
|
245,421
|
|
|
$
|
3,757,598
|
|
|
|
540,825
|
|
|
$
|
7,327,883
|
|
Shares issued on reinvestment
|
|
|
37,861
|
|
|
|
546,342
|
|
|
|
12,047
|
|
|
|
156,120
|
|
Shares repurchased
|
|
|
(231,505)
|
|
|
|
(3,527,616)
|
|
|
|
(579,091)
|
|
|
|
(7,967,813)
|
|
Net increase (decrease)
|
|
|
51,777
|
|
|
$
|
776,324
|
|
|
|
(26,219)
|
|
|
$
|
(483,810)
|
|
|
|
|
|
|
ClearBridge All Cap Value Fund
|
|
|
23
|
|
Board approval of management and subadvisory agreements
(unaudited)
At a meeting of the Trusts Board of Trustees, the Board considered the re-approval for an annual period of the management agreement pursuant
to which Legg Mason Partners Fund Advisor, LLC (the Manager) provides the Fund with investment advisory and administrative services, the sub-advisory agreement pursuant to which ClearBridge Investments, LLC (formerly ClearBridge
Advisors, LLC) (ClearBridge) provides day-to-day management of the Funds portfolio, and the sub-advisory agreement pursuant to which Western Asset Management Company (Western Asset and, together with ClearBridge, the
Sub-Advisers) provides day-to-day management of the Funds cash and short-term instruments. (The management agreement and sub-advisory agreements are collectively referred to as the Agreements.) The Manager and the
Sub-Advisers are wholly-owned subsidiaries of Legg Mason, Inc. The Trustees who are not interested persons (as defined in the Investment Company Act of 1940, as amended (the Independent Trustees)) of the Fund were assisted in
their review by Fund counsel and independent legal counsel and met with independent legal counsel in executive sessions separate from representatives of the Manager and the Sub-Advisers. The Independent Trustees requested and received information
from the Manager and the Sub-Advisers they deemed reasonably necessary for their review of the Agreements and the performance of the Manager and the Sub-Advisers. Included was information about the Manager, the Sub-Advisers and the Funds
distributor, as well as the management, sub-advisory and distribution arrangements for the Fund and other funds overseen by the Board. This information was initially reviewed by a special committee of the Independent Trustees and then by the full
Board.
In voting to approve the Agreements, the Independent Trustees considered whether the approval of the Agreements would be in the
best interests of the Fund and its shareholders, an evaluation based on several factors including those discussed below.
Nature, extent
and quality of the services provided to the fund under the management agreement and sub-advisory agreements
The Board received and
considered information regarding the nature, extent and quality of services provided to the Fund by the Manager and the Sub-Advisers under the Management Agreement and Sub-Advisory Agreements, respectively, during the past year. The Trustees also
considered the Managers supervisory activities over the Sub-Advisers. In addition, the Independent Trustees received and considered other information regarding the administrative and other services rendered to the Fund and its shareholders by
the Manager. The Board noted information received at regular meetings throughout the year related to the services rendered by the Manager in its management of the Funds affairs and the Managers role in coordinating the activities of the
Sub-Advisers and the Funds other service providers. The Boards evaluation of the services provided by the Manager and the Sub-Advisers took into account the Boards knowledge and familiarity gained as Trustees of funds in the Legg
Mason fund complex, including the scope and quality of the investment management and other capabilities of the Manager and the Sub-Advisers and the quality of the Managers administrative and other services. The
|
|
|
24
|
|
ClearBridge All Cap Value Fund
|
Board approval of management and subadvisory agreements
(unaudited)
(contd)
Board observed that the scope of services provided by the Manager had expanded over time as a result of regulatory and other developments, including maintaining and monitoring its own and the
Funds compliance programs. The Board reviewed information received from the Manager and the Funds Chief Compliance Officer regarding the Funds compliance policies and procedures established pursuant to Rule 38a-1 under the
Investment Company Act of 1940, as amended.
The Board reviewed the qualifications, backgrounds and responsibilities of the Funds
senior personnel and the portfolio management team primarily responsible for the day-to-day portfolio management of the Fund. The Board considered the degree to which the Manager implemented organizational changes to improve investment results and
the services provided to the Legg Mason fund complex. The Board also considered, based on its knowledge of the Manager and the Managers affiliates, the financial resources available to the Managers parent organization, Legg Mason, Inc.
The Board also considered the division of responsibilities among the Manager and the Sub-Advisers and the oversight provided by the
Manager. The Board also considered the Managers and ClearBridges brokerage policies and practices, the standards applied in seeking best execution, their policies and practices regarding soft dollars, and the existence of quality
controls applicable to brokerage allocation procedures. In addition, management also reported to the Board on, among other things, its business plans, recent organizational changes, portfolio manager compensation plan and policy regarding portfolio
managers ownership of fund shares.
The Board concluded that, overall, it was satisfied with the nature, extent and quality of
services provided (and expected to be provided) under the respective Agreement by the Manager and the Sub-Advisers.
Fund performance
The Board received and reviewed performance information for the Fund and for all retail and institutional large-cap value funds (the
Performance Universe) selected by Lipper, Inc. (Lipper), an independent provider of investment company data. The Board was provided with a description of the methodology Lipper used to determine the similarity of the Fund
with the funds included in the Performance Universe. The Trustees noted that they also had received and discussed with management at periodic intervals information on the investment performance of the Fund in comparison to similar mutual funds and
benchmark performance indices. The information comparing the Funds performance to that of the Performance Universe was for the one-, three-, five- and ten-year periods ended June 30, 2012. The Fund performed below the median performance of the
funds in the Performance Universe for the one-, three-, five- and ten-year periods. The Board also reviewed performance information provided by the Manager for periods ended September 30, 2012, which showed that the Funds performance was
better than the Lipper category average during the third quarter. The Trustees then discussed with representatives of management the portfolio management strategy of the Funds
|
|
|
|
|
ClearBridge All Cap Value Fund
|
|
|
25
|
|
portfolio managers and the reasons for the Funds underperformance versus the Performance Universe during certain periods under review. The Trustees noted that the Funds portfolio
managers are very experienced, and that the Manager and ClearBridge were committed to providing the resources necessary to assist the Funds portfolio managers and improve Fund performance. Based on its review, the Board generally was satisfied
with managements efforts to improve performance going forward. The Board determined to continue to evaluate the Funds performance and directed the Independent Trustees performance committee to continue to periodically review Fund
performance with the Manager and report to the full Board during periods between Board meetings.
Management fees and expense ratios
The Board reviewed and considered the contractual management fee (the Contractual Management Fee) payable by the Fund to the
Manager in light of the nature, extent and quality of the management and sub-advisory services provided by the Manager and the Sub-Advisers, respectively. The Board noted that the Manager, and not the Fund, pays the sub-advisory fees to the
Sub-Advisers and, accordingly, that the retention of the Sub-Advisers does not increase the fees and expenses incurred by the Fund.
The
Board also reviewed information regarding the fees the Manager and ClearBridge charged any of their U.S. clients investing primarily in an asset class similar to that of the Fund including, where applicable, institutional separate and commingled
accounts and retail managed accounts. The Manager reviewed with the Board the significant differences in the scope of services provided to the Fund and to such other clients, noting that the Fund is provided with regulatory compliance and
administrative services, office facilities and Fund officers (including the Funds chief financial, chief legal and chief compliance officers), and that the Manager coordinates and oversees the provision of services to the Fund by other fund
service providers, including the Sub-Advisers. The Board considered the fee comparisons in light of the scope of services required to manage these different types of accounts.
The Board received an analysis of complex-wide management fees provided by the Manager, which, among other things, set out a framework of fees based on asset classes. Management also discussed with
the Board the Funds distribution arrangements, including how amounts received by the Funds distributor are expended, and the fees received and expenses incurred in connection with such arrangements by affiliates of the Manager.
Additionally, the Board received and considered information comparing the Funds Contractual Management Fee and the Funds
overall expense ratio with those of a group of 15 retail front-end load large-cap value funds selected by Lipper as comparable to the Fund (the Expense Group), and a broader group of funds selected by Lipper consisting of all retail
front-end load large-cap value funds (the Expense Universe). This information showed that the Funds Contractual Management Fee was higher than the median of management fees paid by the funds in the Expense
|
|
|
26
|
|
ClearBridge All Cap Value Fund
|
Board approval of management and subadvisory agreements
(unaudited)
(contd)
Group and higher than the average management fee paid by the funds in the Expense Universe, and that the Funds total expense ratio was higher than the median of the total expense ratios of
the funds in the Expense Group and higher than the average total expense ratio of the funds in the Expense Universe. The Trustees noted that the Funds total expense ratio was impacted by transfer agent costs that were higher than the average
transfer agent costs of the funds in the Expense Group and the Expense Universe and reviewed managements efforts to reduce such costs. The Trustees also noted the Managers fee waiver and/or expense reimbursement arrangement, if any.
Manager profitability
The Board received and considered a profitability analysis of the Manager and its affiliates in providing services to the Fund. The Board also
received profitability information with respect to the Legg Mason fund complex as a whole. In addition, the Board received information with respect to the Managers allocation methodologies used in preparing this profitability data as well as a
report from an outside consultant that had reviewed the Managers methodology. The Board also noted the profitability percentage ranges determined by appropriate court cases to be reasonable given the services rendered to investment companies.
The Board determined that the Managers profitability was not excessive in light of the nature, extent and quality of the services provided to the Fund.
Economies of scale
The Board received and considered information regarding whether
there have been economies of scale with respect to the management of the Fund as the Funds assets grow, whether the Fund has appropriately benefited from any economies of scale, and whether there is potential for realization of any further
economies of scale. The Board considered whether economies of scale in the provision of services to the Fund were being passed along to the shareholders.
The Board noted that the Manager instituted breakpoints in the Funds Contractual Management Fee, reflecting the potential for reducing the Contractual Management Fee as the Funds assets
grow. The Board noted that the Funds assets exceeded the specified asset level at which one or more breakpoints to its Contractual Management Fee are triggered. Accordingly, the Fund and its shareholders realized economies of scale because the
total expense ratio of the Fund was lower than it would have been if no breakpoints were in place. The Board also noted that to the extent the Funds assets increase over time, the Fund and its shareholders should realize other economies of
scale as certain expenses, such as fixed fund fees, become a smaller percentage of overall assets. The Board noted that it appeared that the benefits of any economies of scale also would be appropriately shared with shareholders through increased
investment in fund management and administration resources.
Taking all of the above into consideration, the Board determined that the
management fee was reasonable in light of the comparative performance and expense information and the nature, extent and quality of the services provided to the Fund under the Agreements.
|
|
|
|
|
ClearBridge All Cap Value Fund
|
|
|
27
|
|
Other benefits to the
manager
The Board considered other benefits received by the Manager and its affiliates, including the Sub-Advisers, as a result of the
Managers relationship with the Fund, including the opportunity to offer additional products and services to Fund shareholders.
In
light of the costs of providing investment management and other services to the Fund and the Managers ongoing commitment to the Fund, the profits and other ancillary benefits that the Manager and its affiliates received were considered
reasonable.
Based on their discussions and considerations, including those described above, the Trustees approved the Management
Agreement and the Sub-Advisory Agreements to continue for another year.
No single factor reviewed by the Board was identified by the
Board as the principal factor in determining whether to approve the Management Agreement and the Sub-Advisory Agreements.
ClearBridge
All Cap Value Fund
Trustees
Paul R. Ades
Andrew L. Breech
Dwight B. Crane
R. Jay Gerken
Chairman
Frank G. Hubbard
Howard
J. Johnson
Jerome H. Miller
Ken Miller
John J. Murphy
Thomas F. Schlafly
Jerry A. Viscione
Investment manager
Legg Mason Partners Fund
Advisor,
LLC
Subadviser
ClearBridge Investments, LLC
Distributor
Legg Mason Investor
Services, LLC
Custodian
State Street Bank and Trust Company
Co-transfer agents
Boston Financial
Data Services, Inc.
2000 Crown Colony Drive
Quincy, MA 02169
BNY Mellon Asset Servicing
4400 Computer Drive
Westborough, MA
01581
Independent registered public accounting firm
KPMG LLP
345 Park Avenue
New York, NY 10154
ClearBridge All Cap Value Fund
The Fund is a separate investment series of Legg Mason
Partners Equity Trust, a Maryland statutory trust.
ClearBridge All Cap Value Fund
Legg Mason Funds
620 Eighth Avenue,
49th Floor
New York, NY 10018
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third
quarters of each fiscal year on Form N-Q. The Funds Forms N-Q are available on the SECs website at www.sec.gov. The Funds Forms N-Q may be reviewed and copied at the SECs Public Reference Room in Washington D.C., and
information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. To obtain information on Form N-Q , shareholders can the call Fund at 1-877-721-1926.
Information on how the Fund voted proxies relating to portfolio securities during the prior 12-month period ended June 30th of each year and a description of the policies and procedures that the
Fund uses to determine how to vote proxies relating to portfolio transactions are available (1) without charge, upon request, by calling the Fund at 1-877-721-1926, (2) on the Funds website at www.leggmason.com/individualinvestors and
(3) on the SECs website at www.sec.gov.
This
report is submitted for the general information of shareholders of ClearBridge All Cap Value Fund. This report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by a current prospectus.
Investors should consider
the Funds investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other important information about the Fund. Please read the prospectus carefully before investing.
www.leggmason.com/individualinvestors
©2013 Legg Mason Investors Services, LLC
Member FINRA, SIPC
Legg Mason Funds Privacy and Security Notice
Your Privacy and the Security of Your Personal Information is Very Important to the Legg Mason Funds
This Privacy and Security Notice (the Privacy Notice) addresses the Legg Mason Funds privacy and data protection practices with
respect to nonpublic personal information the Funds receive. The Legg Mason Funds include any funds sold by the Funds distributor, Legg Mason Investor Services, LLC, as well as Legg Mason-sponsored closed-end funds and certain closed-end funds
managed or sub-advised by Legg Mason or its affiliates. The provisions of this Privacy Notice apply to your information both while you are a shareholder and after you are no longer invested with the Funds.
The Type of Nonpublic Personal Information the Funds Collect About You
The Funds collect and maintain nonpublic personal information about you in connection with your shareholder account. Such information may include, but is not limited to:
|
|
Personal information included on applications or other forms;
|
|
|
Account balances, transactions, and mutual fund holdings and positions;
|
|
|
Online account access user IDs, passwords, security challenge question responses; and
|
|
|
Information received from consumer reporting agencies regarding credit history and creditworthiness (such as the amount of an individuals
total debt, payment history, etc.).
|
How the Funds Use Nonpublic Personal Information About You
The Funds do not sell or share your nonpublic personal information with third parties or with affiliates for their marketing purposes, or with
other financial institutions or affiliates for joint marketing purposes, unless you have authorized the Funds to do so. The Funds do not disclose any nonpublic personal information about you except as may be required to perform transactions or
services you have authorized or as permitted or required by law. The Funds may disclose information about you to:
|
|
Employees, agents, and affiliates on a need to know basis to enable the Funds to conduct ordinary business or comply with obligations
to government regulators;
|
|
|
Service providers, including the Funds affiliates, who assist the Funds as part of the ordinary course of business (such as printing,
mailing services, or processing or servicing your account with us) or otherwise perform services on the Funds behalf, including companies that may perform marketing services solely for the Funds;
|
|
|
The Funds representatives such as legal counsel, accountants and auditors; and
|
|
|
Fiduciaries or representatives acting on your behalf, such as an IRA custodian or trustee of a grantor trust.
|
|
NOT PART OF THE SEMI-ANNUAL REPORT
|
Legg Mason Funds Privacy and Security Notice (contd)
Except as otherwise permitted by applicable law, companies acting on
the Funds behalf are contractually obligated to keep nonpublic personal information the Funds provide to them confidential and to use the information the Funds share only to provide the services the Funds ask them to perform.
The Funds may disclose nonpublic personal information about you when necessary to enforce their rights or protect against fraud, or as permitted or
required by applicable law, such as in connection with a law enforcement or regulatory request, subpoena, or similar legal process. In the event of a corporate action or in the event a Fund service provider changes, the Funds may be required to
disclose your nonpublic personal information to third parties. While it is the Funds practice to obtain protections for disclosed information in these types of transactions, the Funds cannot guarantee their privacy policy will remain
unchanged.
Keeping You Informed of the Funds Privacy and Security Practices
The Funds will notify you annually of their privacy policy as required by federal law. While the Funds reserve the right to modify this policy at
any time they will notify you promptly if this privacy policy changes.
The Funds Security Practices
The Funds maintain appropriate physical, electronic and procedural safeguards designed to guard your nonpublic personal information. The
Funds internal data security policies restrict access to your nonpublic personal information to authorized employees, who may use your nonpublic personal information for Fund business purposes only.
Although the Funds strive to protect your nonpublic personal information, they cannot ensure or warrant the security of any information you provide
or transmit to them, and you do so at your own risk. In the event of a breach of the confidentiality or security of your nonpublic personal information, the Funds will attempt to notify you as necessary so you can take appropriate protective steps.
If you have consented to the Funds using electronic communications or electronic delivery of statements, they may notify you under such circumstances using the most current email address you have on record with them.
In order for the Funds to provide effective service to you, keeping your account information accurate is very important. If you believe that your
account information is incomplete, not accurate or not current, or if you have questions about the Funds privacy practices, write the Funds using the contact information on your account statements, email the Funds by clicking on the Contact Us
section of the Funds website at www.leggmason.com, or contact the Fund at 1-877-721-1926.
Revised April 2011
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NOT PART OF THE SEMI-ANNUAL REPORT
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www.leggmason.com/individualinvestors
©2013 Legg Mason Investor Services, LLC Member FINRA, SIPC
FD1118 5/13 SR13-1915
Not applicable