Exhibit 17(d)
Schedule of investments (unaudited)
May 31, 2014
ClearBridge Large Cap Growth Fund
Security | Shares | Value | ||||||
Common Stocks — 98.8% | ||||||||
Consumer Discretionary — 16.6% | ||||||||
Hotels, Restaurants & Leisure — 1.9% | ||||||||
Yum! Brands Inc. | 251,990 | $ | 19,481,347 | |||||
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| |||||||
Internet & Catalog Retail — 3.5% | ||||||||
Amazon.com Inc. | 118,183 | 36,938,097 | * | |||||
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| |||||||
Media — 5.7% | ||||||||
Comcast Corp., Special Class A Shares | 601,620 | 31,187,981 | ||||||
Walt Disney Co. | 340,390 | 28,596,164 | ||||||
|
| |||||||
Total Media | 59,784,145 | |||||||
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| |||||||
Multiline Retail — 1.7% | ||||||||
Target Corp. | 314,940 | 17,875,994 | ||||||
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| |||||||
Specialty Retail — 2.8% | ||||||||
Home Depot Inc. | 371,340 | 29,792,608 | ||||||
|
| |||||||
Textiles, Apparel & Luxury Goods — 1.0% | ||||||||
NIKE Inc., Class B Shares | 136,399 | 10,490,447 | ||||||
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| |||||||
Total Consumer Discretionary | 174,362,638 | |||||||
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| |||||||
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| |||||||
Consumer Staples — 7.5% | ||||||||
Beverages — 4.3% | ||||||||
Anheuser-Busch InBev NV, ADR | 231,830 | 25,482,754 | ||||||
Coca-Cola Co. | 485,520 | 19,862,623 | ||||||
|
| |||||||
Total Beverages | 45,345,377 | |||||||
|
| |||||||
Food & Staples Retailing — 3.2% | ||||||||
CVS Caremark Corp. | 433,379 | 33,942,243 | ||||||
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| |||||||
Total Consumer Staples | 79,287,620 | |||||||
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| |||||||
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| |||||||
Energy — 5.4% | ||||||||
Energy Equipment & Services — 5.4% | ||||||||
Cameron International Corp. | 393,440 | 25,160,488 | * | |||||
Schlumberger Ltd. | 306,090 | 31,845,604 | ||||||
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| |||||||
Total Energy | 57,006,092 | |||||||
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| |||||||
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| |||||||
Financials — 6.3% | ||||||||
Capital Markets — 3.9% | ||||||||
BlackRock Inc. | 83,340 | 25,410,366 | ||||||
Charles Schwab Corp. | 617,900 | 15,577,259 | ||||||
|
| |||||||
Total Capital Markets | 40,987,625 | |||||||
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| |||||||
Diversified Financial Services — 2.4% | ||||||||
CME Group Inc. | 168,898 | 12,160,656 | ||||||
Nasdaq OMX Group Inc. | 351,830 | 13,334,357 | ||||||
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| |||||||
Total Diversified Financial Services | 25,495,013 | |||||||
|
| |||||||
Total Financials | 66,482,638 | |||||||
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| |||||||
|
|
See Notes to Financial Statements.
- 1 -
ClearBridge Large Cap Growth Fund
Security | Shares | Value | ||||||
Health Care — 17.6% | ||||||||
Biotechnology — 7.8% | ||||||||
Amgen Inc. | 98,260 | $ | 11,397,177 | |||||
Biogen Idec Inc. | 115,030 | 36,737,131 | * | |||||
Celgene Corp. | 219,150 | 33,536,525 | * | |||||
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| |||||||
Total Biotechnology | 81,670,833 | |||||||
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| |||||||
Health Care Providers & Services — 2.4% | ||||||||
UnitedHealth Group Inc. | 318,060 | 25,327,118 | ||||||
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| |||||||
Life Sciences Tools & Services — 1.9% | ||||||||
Thermo Fisher Scientific Inc. | 173,022 | 20,228,002 | ||||||
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| |||||||
Pharmaceuticals — 5.5% | ||||||||
Bristol-Myers Squibb Co. | 307,304 | 15,285,301 | ||||||
Johnson & Johnson | 259,820 | 26,361,337 | ||||||
Zoetis Inc. | 532,841 | 16,358,219 | ||||||
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| |||||||
Total Pharmaceuticals | 58,004,857 | |||||||
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| |||||||
Total Health Care | 185,230,810 | |||||||
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| |||||||
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| |||||||
Industrials — 8.8% | ||||||||
Air Freight & Logistics — 2.0% | ||||||||
United Parcel Service Inc., Class B Shares | 199,260 | 20,699,129 | ||||||
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| |||||||
Electrical Equipment — 1.8% | ||||||||
Eaton Corp. PLC | 251,370 | 18,523,455 | ||||||
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| |||||||
Industrial Conglomerates — 1.5% | ||||||||
General Electric Co. | 605,450 | 16,220,005 | ||||||
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| |||||||
Machinery — 1.2% | ||||||||
Caterpillar Inc. | 122,660 | 12,539,532 | ||||||
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| |||||||
Professional Services — 0.5% | ||||||||
Towers Watson & Co., Class A Shares | 46,305 | 5,209,776 | ||||||
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| |||||||
Trading Companies & Distributors — 1.8% | ||||||||
W. W. Grainger Inc. | 75,040 | 19,388,085 | ||||||
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| |||||||
Total Industrials | 92,579,982 | |||||||
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| |||||||
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| |||||||
Information Technology — 34.1% | ||||||||
Communications Equipment — 2.9% | ||||||||
Juniper Networks Inc. | 573,748 | 14,033,876 | * | |||||
QUALCOMM Inc. | 199,450 | 16,045,752 | ||||||
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| |||||||
Total Communications Equipment | 30,079,628 | |||||||
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| |||||||
Internet Software & Services — 11.3% | ||||||||
Akamai Technologies Inc. | 453,664 | 24,652,102 | * | |||||
eBay Inc. | 506,690 | 25,704,384 | * | |||||
Facebook Inc., Class A Shares | 282,620 | 17,889,846 | * |
See Notes to Financial Statements.
- 2 -
Schedule of investments (unaudited) (cont’d)
May 31, 2014
ClearBridge Large Cap Growth Fund
Security | Shares | Value | ||||||
Internet Software & Services — continued | ||||||||
Google Inc., Class C Shares | 37,628 | $ | 21,108,555 | * | ||||
Google Inc., Class A Shares | 37,628 | 21,510,046 | * | |||||
LinkedIn Corp., Class A Shares | 48,207 | 7,717,458 | * | |||||
|
| |||||||
Total Internet Software & Services | 118,582,391 | |||||||
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| |||||||
IT Services — 3.1% | ||||||||
Visa Inc., Class A Shares | 153,854 | 33,052,455 | ||||||
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| |||||||
Semiconductors & Semiconductor Equipment — 4.2% | ||||||||
Broadcom Corp., Class A Shares | 535,570 | 17,068,616 | ||||||
Texas Instruments Inc. | 336,321 | 15,800,361 | ||||||
Xilinx Inc. | 249,040 | 11,694,918 | ||||||
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| |||||||
Total Semiconductors & Semiconductor Equipment | 44,563,895 | |||||||
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| |||||||
Software — 6.9% | ||||||||
Check Point Software Technologies Ltd. | 172,343 | 11,112,677 | * | |||||
Citrix Systems Inc. | 341,560 | 21,166,473 | * | |||||
Microsoft Corp. | 556,060 | 22,765,096 | ||||||
Red Hat Inc. | 361,730 | 18,129,908 | * | |||||
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| |||||||
Total Software | 73,174,154 | |||||||
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| |||||||
Technology Hardware, Storage & Peripherals — 5.7% | ||||||||
Apple Inc. | 42,108 | 26,654,364 | ||||||
EMC Corp. | 655,850 | 17,419,376 | ||||||
NetApp Inc. | 436,275 | 16,146,538 | ||||||
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| |||||||
Total Technology Hardware, Storage & Peripherals | 60,220,278 | |||||||
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| |||||||
Total Information Technology | 359,672,801 | |||||||
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| |||||||
Materials — 2.5% | ||||||||
Chemicals — 2.5% | ||||||||
Monsanto Co. | 212,693 | 25,916,642 | ||||||
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| |||||||
Total Investments before Short-Term Investments (Cost — $577,288,030) | 1,040,539,223 | |||||||
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|
See Notes to Financial Statements.
- 3 -
ClearBridge Large Cap Growth Fund
Security | Rate | Maturity Date | Face Amount | Value | ||||||||||||
Short-Term Investments — 1.2% | ||||||||||||||||
Repurchase Agreements — 1.2% | ||||||||||||||||
Interest in $1,600,000,000 joint tri-party repurchase agreement dated 5/30/14 with RBS Securities Inc.; Proceeds at maturity — $9,574,986; (Fully collateralized by various U.S. government obligations, 0.125% to 3.875% due 1/1/15 to 2/15/43; Market value — $9,766,462) | 0.050 | % | 6/2/14 | $ | 9,574,946 | $ | 9,574,946 | |||||||||
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| |||||||||||||||
Interest in $549,443,000 joint tri-party repurchase agreement dated 5/30/14 with Deutsche Bank Securities Inc.; Proceeds at maturity — $3,288,073; (Fully collateralized by various U.S. government obligations, 0.000% to 3.125% due 2/15/15 to 2/15/43; Market value — $3,362,996) | 0.070 | % | 6/2/14 | 3,288,054 | 3,288,054 | |||||||||||
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| |||||||||||||||
Total Short-Term Investments (Cost — $12,863,000) | 12,863,000 | |||||||||||||||
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Total Investments — 100.0% (Cost — $590,151,030#) | 1,053,402,223 | |||||||||||||||
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Other Assets in Excess of Liabilities — 0.0% | 158,255 | |||||||||||||||
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Total Net Assets — 100.0% | $ | 1,053,560,478 | ||||||||||||||
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* | Non-income producing security. |
# | Aggregate cost for federal income tax purposes is substantially the same. |
Abbreviation used in this schedule:
ADR —American Depositary Receipts
See Notes to Financial Statements.
- 4 -
Statement of assets and liabilities (unaudited)
May 31, 2014
Assets: | ||||
Investments, at value (Cost — $590,151,030) | $ | 1,053,402,223 | ||
Cash | 743 | |||
Dividends and interest receivable | 1,812,057 | |||
Receivable for Fund shares sold | 1,146,960 | |||
Prepaid expenses | 84,442 | |||
|
| |||
Total Assets | 1,056,446,425 | |||
|
| |||
Liabilities: | ||||
Payable for Fund shares repurchased | 1,262,032 | |||
Investment management fee payable | 654,480 | |||
Service and/or distribution fees payable | 347,855 | |||
Trustees’ fees payable | 19,230 | |||
Accrued expenses | 602,350 | |||
|
| |||
Total Liabilities | 2,885,947 | |||
|
| |||
Total Net Assets | $ | 1,053,560,478 | ||
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| |||
|
| |||
Net Assets: | ||||
Par value (Note 7) | $ | 369 | ||
Paid-in capital in excess of par value | 558,868,774 | |||
Undistributed net investment income | 9,865 | |||
Accumulated net realized gain on investments | 31,282,229 | |||
Net unrealized appreciation on investments and foreign currencies | 463,399,241 | |||
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| |||
Total Net Assets | $ | 1,053,560,478 | ||
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| |||
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| |||
Shares Outstanding: | ||||
Class A | 23,381,997 | |||
Class B | 599,415 | |||
Class C | 9,092,930 | |||
Class R | 92,085 | |||
Class I | 3,659,826 | |||
Class IS | 71,471 | |||
Net Asset Value: | ||||
Class A (and redemption price) | $ | 29.41 | ||
Class B* | $ | 25.79 | ||
Class C* | $ | 25.13 | ||
Class R (and redemption price) | $ | 28.70 | ||
Class I (and redemption price) | $ | 31.98 | ||
Class IS (and redemption price) | $ | 31.98 | ||
Maximum Public Offering Price Per Share: | ||||
Class A (based on maximum initial sales charge of 5.75%) | $ | 31.20 |
* | 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.
- 5 -
Statement of operations (unaudited)
For the Six Months Ended May 31, 2014
Investment Income: | ||||
Dividends | $ | 7,327,854 | ||
Interest | 2,740 | |||
Less: Foreign taxes withheld | (124,815 | ) | ||
|
| |||
Total Investment Income | 7,205,779 | |||
|
| |||
Expenses: | ||||
Investment management fee (Note 2) | 3,865,072 | |||
Service and/or distribution fees (Notes 2 and 5) | 2,077,077 | |||
Transfer agent fees (Note 5) | 970,955 | |||
Registration fees | 57,013 | |||
Fund accounting fees | 43,571 | |||
Trustees’ fees | 37,503 | |||
Shareholder reports | 24,641 | |||
Legal fees | 18,639 | |||
Audit and tax | 17,548 | |||
Insurance | 8,670 | |||
Custody fees | 2,375 | |||
Miscellaneous expenses | 5,630 | |||
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| |||
Total Expenses | 7,128,694 | |||
|
| |||
Less: Fee waivers and/or expense reimbursements (Notes 2 and 5) | (7,515 | ) | ||
|
| |||
Net Expenses | 7,121,179 | |||
|
| |||
Net Investment Income | 84,600 | |||
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| |||
|
| |||
Realized and Unrealized Gain on Investments and Foreign Currency Transactions (Notes 1 and 3): | ||||
Net Realized Gain from Investment Transactions | 33,995,108 | |||
|
| |||
Change in Net Unrealized Appreciation (Depreciation) From: | ||||
Investments | 26,550,476 | |||
Foreign currencies | 8,965 | |||
|
| |||
Change in Net Unrealized Appreciation (Depreciation) | 26,559,441 | |||
|
| |||
Net Gain on Investments and Foreign Currency Transactions | 60,554,549 | |||
|
| |||
|
| |||
Increase in Net Assets from Operations | $ | 60,639,149 | ||
|
| |||
|
|
See Notes to Financial Statements.
- 6 -
Statements of changes in net assets
For the Six Months Ended May 31, 2014 (unaudited) and the Year Ended November 30, 2013 | 2014 | 2013 | ||||||
Operations: | ||||||||
Net investment income (loss) | $ | 84,600 | $ | (28,974 | ) | |||
Net realized gain | 33,995,108 | 85,080,218 | ||||||
Change in net unrealized appreciation (depreciation) | 26,559,441 | 166,352,499 | ||||||
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|
|
| |||||
Increase in Net Assets From Operations | 60,639,149 | 251,403,743 | ||||||
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|
|
| |||||
Distributions to Shareholders From (Notes 1 and 6): | ||||||||
Net realized gains | (84,517,908 | ) | (55,565,690 | ) | ||||
|
|
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| |||||
Decrease in Net Assets From Distributions to Shareholders | (84,517,908 | ) | (55,565,690 | ) | ||||
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|
|
| |||||
Fund Share Transactions (Note 7): | ||||||||
Net proceeds from sale of shares | 99,218,768 | 156,292,199 | ||||||
Reinvestment of distributions | 79,413,978 | 52,817,516 | ||||||
Cost of shares repurchased | (111,289,060 | ) | (195,213,751 | ) | ||||
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|
|
| |||||
Increase in Net Assets From Fund Share Transactions | 67,343,686 | 13,895,964 | ||||||
|
|
|
| |||||
Increase in Net Assets | 43,464,927 | 209,734,017 | ||||||
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|
|
| |||||
Net Assets: | ||||||||
Beginning of period | 1,010,095,551 | 800,361,534 | ||||||
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|
|
| |||||
End of period* | $ | 1,053,560,478 | $ | 1,010,095,551 | ||||
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*Includes undistributed net investment income and accumulated net investment loss, respectively, of: | $ | 9,865 | $ | (74,735 | ) |
See Notes to Financial Statements.
- 7 -
Financial highlights
For a share of each class of beneficial interest outstanding throughout each year ended November 30, unless otherwise noted:
Class A Shares1 | 20142 | 2013 | 2012 | 2011 | 2010 | 2009 | ||||||||||||||||||
Net asset value, beginning of period | $ | 30.19 | $ | 24.29 | $ | 24.01 | $ | 22.95 | $ | 21.30 | $ | 14.92 | ||||||||||||
Income (loss) from operations: | ||||||||||||||||||||||||
Net investment income (loss) | 0.02 | 0.04 | 0.03 | (0.02 | ) | (0.07 | ) | (0.03 | ) | |||||||||||||||
Net realized and unrealized gain | 1.66 | 7.49 | 3.77 | 1.08 | 1.70 | 6.41 | ||||||||||||||||||
Proceeds from settlement of a regulatory matter | — | — | — | — | 0.02 | — | ||||||||||||||||||
Total income from operations | 1.68 | 7.53 | 3.80 | 1.06 | 1.65 | 6.38 | ||||||||||||||||||
Less distributions from: | ||||||||||||||||||||||||
Net realized gains | (2.46 | ) | (1.63 | ) | (3.52 | ) | — | — | — | |||||||||||||||
Total distributions | (2.46 | ) | (1.63 | ) | (3.52 | ) | — | — | — | |||||||||||||||
Net asset value, end of period | $ | 29.41 | $ | 30.19 | $ | 24.29 | $ | 24.01 | $ | 22.95 | $ | 21.30 | ||||||||||||
Total return3 | 6.13 | % | 33.26 | % | 18.49 | % | 4.62 | % | 7.75 | %4,5 | 42.76 | %5 | ||||||||||||
Net assets, end of period (millions) | $ | 688 | $ | 657 | $ | 535 | $ | 513 | $ | 662 | $ | 1,338 | ||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||
Gross expenses | 1.23 | %6 | 1.24 | % | 1.29 | % | 1.33 | % | 1.40 | % | 1.25 | % | ||||||||||||
Net expenses7 | 1.23 | 6 | 1.24 | 1.29 | 1.33 | 1.40 | 1.25 | |||||||||||||||||
Net investment income (loss) | 0.17 | 6 | 0.17 | 0.13 | (0.09 | ) | (0.33 | ) | (0.16 | ) | ||||||||||||||
Portfolio turnover rate | 9 | % | 17 | % | 12 | % | 41 | % | 14 | % | 13 | % |
1 | Per share amounts have been calculated using the average shares method. |
2 | For the six months ended May 31, 2014 (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 7.65%. Class A received $1,332,739 related to this distribution. |
5 | The total return includes gains from settlement of security litigations. Without these gains, the total return would have been 7.65% and 42.49% for 2010 and 2009, respectively. |
6 | Annualized. |
7 | The impact of compensating balance arrangements, if any, was less than 0.01%. |
See Notes to Financial Statements.
- 8 -
Financial highlights (cont’d)
For a share of each class of beneficial interest outstanding throughout each year ended November 30, unless otherwise noted:
Class B Shares1 | 20142 | 2013 | 2012 | 2011 | 2010 | 2009 | ||||||||||||||||||
Net asset value, beginning of period | $ | 26.92 | $ | 22.02 | $ | 22.27 | $ | 21.46 | $ | 19.46 | $ | 13.73 | ||||||||||||
Income (loss) from operations: | ||||||||||||||||||||||||
Net investment loss | (0.11 | ) | (0.19 | ) | (0.17 | ) | (0.21 | ) | (0.21 | ) | (0.14 | ) | ||||||||||||
Net realized and unrealized gain | 1.44 | 6.72 | 3.44 | 1.02 | 1.56 | 5.87 | ||||||||||||||||||
Proceeds from settlement of a regulatory matter | — | — | — | — | 0.65 | — | ||||||||||||||||||
Total income from operations | 1.33 | 6.53 | 3.27 | 0.81 | 2.00 | 5.73 | ||||||||||||||||||
Less distributions from: | ||||||||||||||||||||||||
Net realized gains | (2.46 | ) | (1.63 | ) | (3.52 | ) | — | — | — | |||||||||||||||
Total distributions | (2.46 | ) | (1.63 | ) | (3.52 | ) | — | — | — | |||||||||||||||
Net asset value, end of period | $ | 25.79 | $ | 26.92 | $ | 22.02 | $ | 22.27 | $ | 21.46 | $ | 19.46 | ||||||||||||
Total return3 | 5.57 | % | 32.01 | % | 17.38 | % | 3.77 | % | 10.28 | %4,5 | 41.73 | %5 | ||||||||||||
Net assets, end of period (millions) | $ | 15 | $ | 19 | $ | 23 | $ | 37 | $ | 62 | $ | 90 | ||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||
Gross expenses | 2.36 | %6 | 2.22 | % | 2.21 | % | 2.16 | % | 2.12 | % | 2.00 | % | ||||||||||||
Net expenses7 | 2.29 | 6,8,9 | 2.22 | 9 | 2.21 | 2.16 | 2.12 | 2.00 | ||||||||||||||||
Net investment loss | (0.90 | )6 | (0.81 | ) | (0.80 | ) | (0.94 | ) | (1.05 | ) | (0.89 | ) | ||||||||||||
Portfolio turnover rate | 9 | % | 17 | % | 12 | % | 41 | % | 14 | % | 13 | % |
1 | Per share amounts have been calculated using the average shares method. |
2 | For the six months ended May 31, 2014 (unaudited). |
3 | 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. |
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 6.94%. Class B received $2,411,941 related to this distribution. |
5 | The total return includes gains from settlement of security litigations. Without these gains, the total return would have been 10.23% and 41.44% for 2010 and 2009, respectively. |
6 | Annualized. |
7 | The impact of compensating balance arrangements, if any, was less than 0.01%. |
8 | Reflects fee waivers and/or expense reimbursements. |
9 | As a result of an expense limitation arrangement, effective December 1, 2012, the ratio of expenses, other than brokerage, interest, taxes, extraordinary expenses and acquired fund fees and expenses, to average net assets of Class B shares did not exceed 2.30%. This expense limitation arrangement cannot be terminated prior to December 31, 2015 without the Board of Trustees’ consent. |
See Notes to Financial Statements.
- 9 -
For a share of each class of beneficial interest outstanding throughout each year ended November 30, unless otherwise noted:
Class C Shares1 | 20142 | 2013 | 2012 | 2011 | 2010 | 2009 | ||||||||||||||||||
Net asset value, beginning of period | $ | 26.26 | $ | 21.48 | $ | 21.77 | $ | 20.95 | $ | 19.47 | $ | 13.73 | ||||||||||||
Income (loss) from operations: | ||||||||||||||||||||||||
Net investment loss | (0.07 | ) | (0.13 | ) | (0.12 | ) | (0.17 | ) | (0.19 | ) | (0.14 | ) | ||||||||||||
Net realized and unrealized gain | 1.40 | 6.54 | 3.35 | 0.99 | 1.56 | 5.88 | ||||||||||||||||||
Proceeds from settlement of a regulatory matter | — | — | — | — | 0.11 | — | ||||||||||||||||||
Total income from operations | 1.33 | 6.41 | 3.23 | 0.82 | 1.48 | 5.74 | ||||||||||||||||||
Less distributions from: | ||||||||||||||||||||||||
Net realized gains | (2.46 | ) | (1.63 | ) | (3.52 | ) | — | — | — | |||||||||||||||
Total distributions | (2.46 | ) | (1.63 | ) | (3.52 | ) | — | — | — | |||||||||||||||
Net asset value, end of period | $ | 25.13 | $ | 26.26 | $ | 21.48 | $ | 21.77 | $ | 20.95 | $ | 19.47 | ||||||||||||
Total return3 | 5.72 | % | 32.28 | % | 17.63 | % | 3.91 | % | 7.60 | %4,5 | 41.81 | %5 | ||||||||||||
Net assets, end of period (millions) | $ | 229 | $ | 231 | $ | 202 | $ | 214 | $ | 255 | $ | 299 | ||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||
Gross expenses | 2.00 | %6 | 1.97 | % | 2.00 | % | 2.00 | % | 2.03 | % | 1.94 | % | ||||||||||||
Net expenses7 | 2.00 | 6 | 1.97 | 2.00 | 2.00 | 2.03 | 1.94 | |||||||||||||||||
Net investment loss | (0.60 | )6 | (0.57 | ) | (0.58 | ) | (0.77 | ) | (0.95 | ) | (0.84 | ) | ||||||||||||
Portfolio turnover rate | 9 | % | 17 | % | 12 | % | 41 | % | 14 | % | 13 | % |
1 | Per share amounts have been calculated using the average shares method. |
2 | For the six months ended May 31, 2014 (unaudited). |
3 | 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. |
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 7.04%. Class C received $1,561,711 related to this distribution. |
5 | The total return includes gains from settlement of security litigations. Without these gains, the total return would have been 7.55% and 41.59% for 2010 and 2009, respectively. |
6 | Annualized. |
7 | The impact of compensating balance arrangements, if any, was less than 0.01%. |
See Notes to Financial Statements.
- 10 -
Financial highlights (cont’d)
For a share of each class of beneficial interest outstanding throughout each year ended November 30, unless otherwise noted:
Class R Shares1 | 20142 | 2013 | 2012 | 2011 | 2010 | 2009 | ||||||||||||||||||
Net asset value, beginning of period | $ | 29.58 | $ | 23.90 | $ | 23.75 | $ | 22.76 | $ | 21.18 | $ | 14.86 | ||||||||||||
Income (loss) from operations: | ||||||||||||||||||||||||
Net investment loss | (0.03 | ) | (0.06 | ) | (0.04 | ) | (0.09 | ) | (0.12 | ) | (0.06 | ) | ||||||||||||
Net realized and unrealized gain | 1.61 | 7.37 | 3.71 | 1.08 | 1.70 | 6.38 | ||||||||||||||||||
Total income from operations | 1.58 | 7.31 | 3.67 | 0.99 | 1.58 | 6.32 | ||||||||||||||||||
Less distributions from: | ||||||||||||||||||||||||
Net realized gains | (2.46 | ) | (1.63 | ) | (3.52 | ) | — | — | — | |||||||||||||||
Total distributions | (2.46 | ) | (1.63 | ) | (3.52 | ) | — | — | — | |||||||||||||||
Net asset value, end of period | $ | 28.70 | $ | 29.58 | $ | 23.90 | $ | 23.75 | $ | 22.76 | $ | 21.18 | ||||||||||||
Total return3 | 5.94 | % | 32.81 | % | 18.08 | % | 4.35 | % | 7.46 | %4 | 42.53 | %4 | ||||||||||||
Net assets, end of period (000s) | $ | 2,643 | $ | 1,867 | $ | 282 | $ | 218 | $ | 307 | $ | 338 | ||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||
Gross expenses | 1.66 | %5 | 1.66 | % | 1.70 | % | 1.85 | % | 1.83 | % | 1.49 | % | ||||||||||||
Net expenses6,7,8 | 1.58 | 5 | 1.60 | 1.60 | 1.60 | 1.59 | 1.43 | |||||||||||||||||
Net investment loss | (0.18 | )5 | (0.21 | ) | (0.17 | ) | (0.37 | ) | (0.53 | ) | (0.34 | ) | ||||||||||||
Portfolio turnover rate | 9 | % | 17 | % | 12 | % | 41 | % | 14 | % | 13 | % |
1 | Per share amounts have been calculated using the average shares method. |
2 | For the six months ended May 31, 2014 (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. |
4 | The total return includes gains from settlement of security litigations. Without these gains, the total return would have been 7.41% and 42.33% for 2010 and 2009, respectively. |
5 | Annualized. |
6 | The impact of compensating balance arrangements, if any, was less than 0.01%. |
7 | 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 R shares did not exceed 1.60%. This expense limitation arrangement cannot be terminated prior to December 31, 2015 without the Board of Trustees’ consent. |
8 | Reflects fee waivers and/or expense reimbursements. |
See Notes to Financial Statements.
- 11 -
For a share of each class of beneficial interest outstanding throughout each year ended November 30, unless otherwise noted:
Class I Shares1 | 20142 | 2013 | 2012 | 2011 | 2010 | 2009 | ||||||||||||||||||
Net asset value, beginning of period | $ | 32.56 | $ | 25.96 | $ | 25.32 | $ | 24.12 | $ | 22.28 | $ | 15.55 | ||||||||||||
Income from operations: | ||||||||||||||||||||||||
Net investment income | 0.08 | 0.17 | 0.15 | 0.05 | 0.05 | 0.04 | ||||||||||||||||||
Net realized and unrealized gain | 1.80 | 8.06 | 4.01 | 1.15 | 1.79 | 6.69 | ||||||||||||||||||
Total income from operations | 1.88 | 8.23 | 4.16 | 1.20 | 1.84 | 6.73 | ||||||||||||||||||
Less distributions from: | ||||||||||||||||||||||||
Net realized gains | (2.46 | ) | (1.63 | ) | (3.52 | ) | — | — | — | |||||||||||||||
Total distributions | (2.46 | ) | (1.63 | ) | (3.52 | ) | — | — | — | |||||||||||||||
Net asset value, end of period | $ | 31.98 | $ | 32.56 | $ | 25.96 | $ | 25.32 | $ | 24.12 | $ | 22.28 | ||||||||||||
Total return3 | 6.35 | % | 33.81 | % | 19.03 | % | 4.98 | % | 8.26 | %4 | 43.28 | %4 | ||||||||||||
Net assets, end of period (millions) | $ | 117 | $ | 101 | $ | 40 | $ | 48 | $ | 132 | $ | 110 | ||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||
Gross expenses | 0.89 | %5 | 0.80 | % | 0.81 | % | 1.08 | % | 0.88 | % | 0.92 | % | ||||||||||||
Net expenses6,7 | 0.89 | 5 | 0.80 | 0.81 | 1.03 | 8 | 0.88 | 0.92 | ||||||||||||||||
Net investment income | 0.51 | 5 | 0.59 | 0.61 | 0.19 | 0.20 | 0.20 | |||||||||||||||||
Portfolio turnover rate | 9 | % | 17 | % | 12 | % | 41 | % | 14 | % | 13 | % |
1 | Per share amounts have been calculated using the average shares method. |
2 | For the six months ended May 31, 2014 (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. |
4 | The total return includes gains from settlement of security litigations. Without these gains, the total return would have been 8.21% and 42.96% for 2010 and 2009, respectively. |
5 | Annualized. |
6 | The impact of compensating balance arrangements, if any, was less than 0.01%. |
7 | 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 1.05%. This expense limitation arrangement cannot be terminated prior to December 31, 2015 without the Board of Trustees’ consent. |
8 | Reflects fee waivers and/or expense reimbursements. |
See Notes to Financial Statements.
- 12 -
Financial highlights (cont’d)
For a share of each class of beneficial interest outstanding throughout each year ended November 30, unless otherwise noted:
Class IS Shares1 | 20142 | 20133 | ||||||
Net asset value, beginning of period | $ | 32.56 | $ | 27.11 | ||||
Income from operations: | ||||||||
Net investment income | 0.09 | 0.16 | ||||||
Net realized and unrealized gain | 1.79 | 5.29 | ||||||
Total income from operations | 1.88 | 5.45 | ||||||
Less distributions from: | ||||||||
Net realized gains | (2.46 | ) | — | |||||
Total distributions | (2.46 | ) | — | |||||
Net asset value, end of period | $ | 31.98 | $ | 32.56 | ||||
Total return4 | 6.35 | % | 20.10 | % | ||||
Net assets, end of period (000s) | $ | 2,286 | $ | 129 | ||||
Ratios to average net assets: | ||||||||
Gross expenses5 | 0.91 | % | 0.89 | % | ||||
Net expenses5,6,7,8 | 0.85 | 0.79 | ||||||
Net investment income5 | 0.56 | 0.76 | ||||||
Portfolio turnover rate | 9 | % | 17 | %9 |
1 | Per share amounts have been calculated using the average shares method. |
2 | For the six months ended May 31, 2014 (unaudited). |
3 | For the period March 15, 2013 (inception date) to November 30, 2013. |
4 | 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 | Annualized. |
6 | The impact of compensating balance arrangements, if any, was less than 0.01%. |
7 | As a result of an expense limitation arrangement, the ratio of expenses, other than brokerage, interest, taxes, extraordinary expenses and acquired fund fees and expenses, to average net assets of Class IS shares did not exceed those of Class I shares. This expense limitation arrangement cannot be terminated prior to December 31, 2015 without the Board of Trustees’ consent. |
8 | Reflects fee waivers and/or expense reimbursements. |
9 | For the period December 1, 2012 to November 30, 2013. |
See Notes to Financial Statements.
- 13 -
Notes to financial statements (unaudited)
1. Organization and significant accounting policies
ClearBridge Large Cap Growth 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 investment’s 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 Fund’s 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 Fund’s pricing policies, and reporting to the Board of Trustees. When determining the reliability of third party 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 issuer’s 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
- 14 -
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 Fund’s 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.
The following is a summary of the inputs used in valuing the Fund’s 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† | $ | 1,040,539,223 | — | — | $ | 1,040,539,223 | ||||||||||
Short-term investments† | — | $ | 12,863,000 | — | 12,863,000 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total investments | $ | 1,040,539,223 | $ | 12,863,000 | — | $ | 1,053,402,223 | |||||||||
|
|
|
|
|
|
|
|
† | 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 Fund’s holding period. When entering into repurchase agreements, it is the Fund’s policy that its custodian or a third party custodian, acting on the Fund’s 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.
- 15 -
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 Fund’s books and the U.S. dollar equivalent of the 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 Fund’s 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) 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.
(f) 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.
(g) Compensating balance arrangements. The Fund has an arrangement with its custodian bank whereby a portion of the custodian’s fees is paid indirectly by credits earned on the Fund’s cash on deposit with the bank.
(h) Share class accounting. Investment income, common expenses and realized/unrealized gains (losses) on investments are allocated to the various classes of the 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) Federal and other taxes. It is the Fund’s 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 Fund’s financial statements.
Management has analyzed the Fund’s tax positions taken on income tax returns for all open tax years and has concluded that as of May 31, 2014, no provision for income tax is required in the Fund’s financial statements. The Fund’s 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.
- 16 -
(j) 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 Fund’s investment manager and ClearBridge Investments, LLC (“ClearBridge”) is the Fund’s subadviser. Western Asset Management Company (“Western Asset”) manages the Fund’s 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 a investment management fee, calculated daily and paid monthly, in accordance with the following breakpoint schedule:
Average Daily Net Assets | Annual Rate | |||
First $1 billion | 0.750 | % | ||
Next $1 billion | 0.725 | |||
Next $3 billion | 0.700 | |||
Next $5 billion | 0.675 | |||
Over $10 billion | 0.650 |
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 expense limitation arrangements 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 B, Class R and Class I shares did not exceed 2.30%, 1.60% and 1.05% respectively. In addition, total annual fund operating expenses for Class IS shares will not exceed total annual fund operating expenses for Class I shares. These expense limitation arrangements cannot be terminated prior to December 31, 2015 without the Board of Trustees’ consent.
During the six months ended May 31, 2014, fees waived and/or expenses reimbursed amounted to $7,515.
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 expenses 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 Fund’s 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. 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 May 31, 2014, LMIS and its affiliates retained sales charges of $36,767 on sales of the Fund’s Class A shares. In addition, for the six months ended May 31, 2014, CDSCs paid to LMIS and its affiliates were:
Class A | Class B | Class C | ||||||||||
CDSCs | $ | 62 | $ | 2,932 | $ | 858 |
All officers and one Trustee of the Trust are employees of Legg Mason or its affiliates and do not receive compensation from the Trust.
- 17 -
3. Investments
During the six months ended May 31, 2014, the aggregate cost of purchases and proceeds from sales of investments (excluding short-term investments) were as follows:
Purchases | $ | 98,082,070 | ||
Sales | 94,048,332 |
At May 31, 2014, the aggregate gross unrealized appreciation and depreciation of investments for federal income tax purposes were substantially as follows:
Gross unrealized appreciation | $ | 464,821,478 | ||
Gross unrealized depreciation | (1,570,285 | ) | ||
|
| |||
Net unrealized appreciation | $ | 463,251,193 | ||
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4. Derivative instruments and hedging activities
GAAP requires enhanced disclosure about an entity’s derivative and hedging activities.
During the six months ended May 31, 2014, the Fund did not invest in any derivative instruments.
5. Class specific expenses, waivers and/or expense reimbursements
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, Class C, and Class R 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, Class C and Class R shares calculated at the annual rate of 0.75%, 0.75% and 0.25% of the average daily net assets of each class, respectively. Service and distribution fees are accrued daily and paid monthly.
For the six months ended May 31, 2014, class specific expenses were as follows:
Service and/or Distribution Fees | Transfer Agent Fees | |||||||
Class A | $ | 839,174 | $ | 624,305 | ||||
Class B | 86,883 | 49,959 | ||||||
Class C | 1,145,123 | 237,864 | ||||||
Class R | 5,897 | 4,345 | ||||||
Class I | — | 53,819 | ||||||
Class IS | — | 663 | ||||||
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|
|
| |||||
Total | $ | 2,077,077 | $ | 970,955 | ||||
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|
|
|
For the six months ended May 31, 2014, waivers and/or expense reimbursements by class were as follows:
Waivers/Expense Reimbursements | ||||
Class A | — | |||
Class B | $ | 6,218 | ||
Class C | — | |||
Class R | 978 | |||
Class I | — | |||
Class IS | 319 | |||
|
| |||
Total | $ | 7,515 | ||
|
|
6. Distributions to shareholders by class
Six Months Ended May 31, 2014 | Year Ended November 30, 2013 | |||||||
Net Realized Gains: | ||||||||
Class A | $ | 53,436,088 | $ | 35,887,325 | ||||
Class B | 1,729,704 | 1,694,250 | ||||||
Class C | 21,533,008 | 15,164,769 | ||||||
Class R | 176,713 | 19,397 | ||||||
Class I | 7,632,592 | 2,799,949 | ||||||
Class IS | 9,803 | — | * | |||||
|
|
|
| |||||
Total | $ | 84,517,908 | $ | 55,565,690 | ||||
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|
|
* | For the period March 15, 2013 (inception date) to November 30, 2013. |
7. Shares of beneficial interest
At May 31, 2014, 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.
- 18 -
Transactions in shares of each class were as follows:
Six Months Ended May 31, 2014 | Year Ended November 30, 2013 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Class A | ||||||||||||||||
Shares sold | 1,700,114 | $ | 48,747,534 | 2,662,469 | $ | 71,607,624 | ||||||||||
Shares issued on reinvestment | 1,896,218 | 51,937,397 | 1,534,899 | 34,934,304 | ||||||||||||
Shares repurchased | (1,975,476 | ) | (56,703,572 | ) | (4,463,265 | ) | (115,101,762 | ) | ||||||||
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|
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|
| |||||||||
Net increase (decrease) | 1,620,856 | $ | 43,981,359 | (265,897 | ) | $ | (8,559,834 | ) | ||||||||
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| |||||||||
Class B | ||||||||||||||||
Shares sold | 2,117 | $ | 52,980 | 7,592 | $ | 181,734 | ||||||||||
Shares issued on reinvestment | 70,513 | 1,702,175 | 80,416 | 1,646,924 | ||||||||||||
Shares repurchased | (186,384 | ) | (4,727,226 | ) | (428,054 | ) | (9,954,337 | ) | ||||||||
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|
| |||||||||
Net decrease | (113,754 | ) | $ | (2,972,071 | ) | (340,046 | ) | $ | (8,125,679 | ) | ||||||
|
|
|
|
|
|
|
| |||||||||
Class C | ||||||||||||||||
Shares sold | 291,058 | $ | 7,138,713 | 487,930 | $ | 11,362,069 | ||||||||||
Shares issued on reinvestment | 884,236 | 20,770,704 | 736,933 | 14,687,079 | ||||||||||||
Shares repurchased | (865,403 | ) | (21,263,539 | ) | (1,827,404 | ) | (41,392,316 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) | 309,891 | $ | 6,645,878 | (602,541 | ) | $ | (15,343,168 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Class R | ||||||||||||||||
Shares sold | 27,207 | $ | 772,404 | 59,872 | $ | 1,636,759 | ||||||||||
Shares issued on reinvestment | 5,786 | 154,878 | 867 | 19,397 | ||||||||||||
Shares repurchased | (4,033 | ) | (112,858 | ) | (9,414 | ) | (242,021 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase | 28,960 | $ | 814,424 | 51,325 | $ | 1,414,135 | ||||||||||
|
|
|
|
|
|
|
|
Six Months Ended May 31, 2014 | Year Ended November 30, 2013 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Class I | ||||||||||||||||
Shares sold | 1,294,230 | $ | 40,234,511 | 2,477,396 | $ | 71,380,538 | ||||||||||
Shares issued on reinvestment | 162,765 | 4,839,021 | 62,595 | 1,529,812 | ||||||||||||
Shares repurchased | (905,234 | ) | (28,341,830 | ) | (986,032 | ) | (28,523,280 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase | 551,761 | $ | 16,731,702 | 1,553,959 | $ | 44,387,070 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Class IS | ||||||||||||||||
Shares sold | 71,589 | $ | 2,272,626 | 3,981 | * | $ | 123,475 | * | ||||||||
Shares issued on reinvestment | 329 | 9,803 | — | * | — | * | ||||||||||
Shares repurchased | (4,427 | ) | (140,035 | ) | (1 | )* | (35 | )* | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase | 67,491 | $ | 2,142,394 | 3,980 | * | $ | 123,440 | * | ||||||||
|
|
|
|
|
|
|
|
* | For the period March 15, 2013 (inception date) to November 30, 2013. |
8. Recent accounting pronouncement
The Fund has adopted the disclosure provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Update 2011-11 (“ASU 2011-11”), Balance Sheet (Topic 210) — Disclosures about Offsetting Assets and Liabilities along with the related scope clarification provisions of FASB Accounting Standards Update 2013-01 (“ASU 2013-01”) entitled Balance Sheet (Topic 210) — Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. ASU 2011-11 is intended to enhance disclosures on the offsetting of financial assets and liabilities by requiring entities to disclose both gross and net information about financial instruments and transactions that are either offset in the statement of assets and liabilities or subject to a master netting agreement or similar arrangement. ASU 2013-01 limits the scope of ASU 2011-11’s disclosure requirements on offsetting to financial assets and financial liabilities related to derivatives, repurchase and reverse repurchase agreements, and securities lending and securities borrowing transactions.
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