N-CSR 1 d172847dncsr.htm CLEARBRIDGE MID CAP FUND ClearBridge Mid Cap Fund

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM N-CSR

 

 

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-06444

 

 

Legg Mason Partners Investment Trust

(Exact name of registrant as specified in charter)

 

 

620 Eighth Avenue, 47th Floor, New York, NY 10018

(Address of principal executive offices) (Zip code)

 

 

Marc A. De Oliveira

Franklin Templeton

100 First Stamford Place

Stamford, CT 06902

(Name and address of agent for service)

 

 

Registrant’s telephone number, including area code: 1-877-721-1926

Date of fiscal year end: October 31

Date of reporting period: October 31, 2021

 

 

 


ITEM 1.

REPORT TO STOCKHOLDERS.

The Annual Report to Stockholders is filed herewith.

 


LOGO

 

Annual Report   October 31, 2021

CLEARBRIDGE

MID CAP FUND

 

 

 

The Fund intends to no longer mail paper copies of the Fund’s shareholder reports like this one, unless you specifically request paper copies of the reports from the Fund or from your Service Agent or financial intermediary (such as a broker-dealer or bank). Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.

If you already elected to receive shareholder reports electronically (“e-delivery”), you will not be affected by this change and you need not take any action. If you have not already elected e-delivery, you may elect to receive shareholder reports and other communications from the Fund electronically by contacting your Service Agent or, if you are a direct shareholder with the Fund, by calling 1-877-721-1926.

You may elect to receive all future reports in paper free of charge. If you invest through a Service Agent, you can contact your Service Agent to request that you continue to receive paper copies of your shareholder reports. That election will apply to all Legg Mason Funds held in your account at that Service Agent. If you are a direct shareholder with the Fund, you can call the Fund at 1-877-721-1926, or write to the Fund by regular mail at Legg Mason Funds, P.O. Box 9699, Providence, RI 02940-9699 or by express, certified or registered mail to Legg Mason Funds, 4400 Computer Drive, Westborough, MA 01581 to let the Fund know you wish to continue receiving paper copies of your shareholder reports. That election will apply to all Legg Mason Funds held in your account held directly with the fund complex.

 

LOGO

 

INVESTMENT PRODUCTS: NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE


What’s inside  
Letter from the president     II  
Fund overview     1  
Fund at a glance     8  
Fund expenses     9  
Fund performance     11  
Schedule of investments     13  
Statement of assets and liabilities     17  
Statement of operations     19  
Statements of changes in net assets     20  
Financial highlights     21  
Notes to financial statements     27  
Report of independent registered public accounting firm     38  
Additional shareholder information     39  
Statement regarding liquidity risk management program     40  
Additional information     42  
Important tax information     49  

Fund objective

The Fund seeks long-term capital growth.

 

Letter from the president

 

LOGO

 

Dear Shareholder,

We are pleased to provide the annual report of ClearBridge Mid Cap Fund for the twelve-month reporting period ended October 31, 2021. Please read on for a detailed look at prevailing economic and market conditions during the Fund’s reporting period and to learn how those conditions have affected Fund performance.

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.franklintempleton.com. Here you can gain immediate access to market and investment information, including:

 

 

Fund prices and performance,

 

 

Market insights and commentaries from our portfolio managers, and

 

 

A host of educational resources.

We look forward to helping you meet your financial goals.

Sincerely,

 

LOGO

Jane Trust, CFA

President and Chief Executive Officer

November 30, 2021

 

 

II

   ClearBridge Mid Cap Fund


Fund overview

 

Q. What is the Fund’s investment strategy?

A. The Fund seeks long-term capital growth. Under normal circumstances, the Fund invests at least 80% of its net assets, plus any borrowings for investment purposes, if any, in equity securities, or other investments with similar economic characteristics, of medium capitalization companies. Medium capitalization companies are defined as those companies whose market capitalization values are in the range of the market capitalization values of the constituents of the S&P Mid Cap 400 Indexi or the Russell Midcap Indexii, as determined from time to time. The Fund may invest up to 20% of its assets in equity securities of companies other than medium capitalization companies. The Fund may also invest up to 25% of its net assets in securities of foreign issuers.

The Fund pursues a disciplined core investment strategy combining in-depth fundamental and quantitative analysis to identify attractive investment candidates. We obtain market information about the universe of investment candidates and distill that information to select prospective investments. We then establish market-implied growth and return expectations based on current trading prices and challenge those expectations using our insight and proprietary analysis.

While markets are relatively efficient in the long term with economic fundamentals driving asset prices, market inefficiencies often occur, as evidenced by the disproportionate volatility of stock prices relative to publicly available information. We believe this disciplined investment process, employing quantitative and fundamental analysis, can help exploit these market inefficiencies.

Q. What were the overall market conditions during the Fund’s reporting period?

A. Equities delivered robust performance during the twelve-month reporting period ended October 31, 2021 as the approval and subsequent rollout of multiple COVID-19 vaccines combined with accommodative monetary policy and ambitious fiscal spending helped the S&P 500 Indexiii to a gain of 42.91% and the Russell Midcap Index to a return of 45.40%. The market was led by cyclical1 stocks benefiting from the economic recovery, as reopened businesses, greater mobility and a healthy consumer encouraged spending and production, and high-growth technology stocks benefiting from strong secular trends as well as a lingering stay-at-home environment. More defensive, non-cyclical2 sectors trailed.

The reporting period began with positive developments for COVID-19 vaccines and resolution of the U.S. election, which led to a broadening of market leadership from the mega cap growth stocks that had soared during the height of pandemic lockdowns. Positive COVID-19 vaccine trial results from Pfizer/BioNTech and Moderna increased optimism about an eventual return to normal economic activity, sparking a rally in cyclical areas of the market. In the fourth quarter of 2020, value stocks, led by energy and financials,

 

1 

Cyclicals consists of the following industries: automotive, entertainment, gaming, home construction, lodging, retailers, restaurants, textiles, and other consumer services.

 

2 

Non-cyclicals consists of the following industries: consumer products, food/beverage, health care, pharmaceuticals, supermarkets and tobacco.

 

ClearBridge Mid Cap Fund 2021 Annual Report  

 

 1 


Fund overview (cont’d)

 

outperformed growth stocks for the first time since 2018. Stocks also benefited as Joe Biden won the race for president and looked set to govern with a small majority in Congress.

Aggressive fiscal and monetary policies continued unabated in early 2021, helping support consumer demand that, combined with stop-and-start supply chain recovery as COVID-19 rippled through global regions, raised inflation concerns and led to soaring commodity prices. Despite waves of COVID-19 periodically offering a bid to tech stocks that would benefit from a stay-at-home environment, inflation worries led to a steepening yield curve, weighing on high-multiple growth stocks and supporting cyclicals. Amid easing business restrictions and accommodating fiscal and monetary policies, the U.S. economy picked up steam, with business confidence and new jobs numbers increasing steadily.

Markets wavered in September after the Delta variant of COVID-19 put a pause on recovery plays and higher inflation coincided with signals from the Federal Reserve Board that it would reduce its bond buying as early as November and potentially raise the federal funds rate in late 2022 or 2023. Equities delivered a flattish third quarter of 2021 as already-challenging labor and supply shortages and broad-based inflationary pressures intensified, weighing on industrials and materials companies. Energy felt crosswinds from a slowing Chinese economy even while global demand remained strong. Robust third-quarter 2021 corporate earnings, however, suggesting companies have largely been able to absorb inflationary pressures, led to strong gains in October and brought the period to a close on a high note.

Q. How did we respond to these changing market conditions?

A. The Fund seeks to maintain a balance of companies with higher growth profiles as well as others with more attractive valuations by investing across all eleven sectors of the market. Our commitment to constantly improve the risk/reward of the portfolio kept us active during the reporting period in repositioning to capitalize on opportunities, operating quickly by moving on from business models with uncertain visibility and into compounding, high return growth companies and more value-oriented names with quality fundamentals and clear paths to improvement to construct a portfolio that can work in many different market environments.

Several of our new positions were purchased while their business models were under stress from COVID restrictions or the macro environment the pandemic created. Purple Innovation, in the consumer discretionary sector, adds to innovative, high-growth exposure. The mattress maker operates a direct-to-consumer business that has taken off due to its superior marketing technology and the quality of its internally manufactured, unique, purple-colored products.

We have also been finding attractive opportunities in value areas where business fundamentals were improving but had not been acknowledged by the market. Vertiv, a provider of HVAC systems and other support functions for data centers and other

 

 

2

   ClearBridge Mid Cap Fund 2021 Annual Report


commercial customers, is poised to improve margins, and Masonite, a maker of doors for residential construction and renovation is gaining pricing power in a cyclical recovery for housing.

Several portfolio additions should benefit from self-help efforts and new management teams. These included Ashland Global, a specialty chemical company with a sustainable portfolio of chemicals manufactured from renewable sources rather than hydrocarbons, and Resideo Technologies, a home electronics company spun off from Honeywell that focuses on mostly residential comfort, thermal and security solutions. We also purchased ON Semiconductor, whose auto business should benefit from content growth in new cars, the shift to electric vehicles as well as a cyclical inflection in volumes and inventory restocking in 2021. A new CEO has a track record for moving companies to higher-value-add products and improving their margin structures to significantly improve earnings power.

On the growth side, we have been trimming back holdings such as Carvana, Chewy, Lam Research and SolarEdge Technologies amidst strong performance. We still see opportunities for these companies but are seeking to size them appropriately in the portfolio. These actions allow us to maintain growth exposure while cycling profits into companies with a better risk/reward.

Rather than pick cyclical themes, our new additions have been driven by our bottom-up stock picking process. As market risks increase, so does the need for prudent active management and constant due diligence. While macroeconomic factors such as inflation and global trade do not dictate our investment decisions, we see them as informative inputs in our bottom-up, fundamental research. Amid this transition, we continue to drive returns in the portfolio from stock selection and balance the portfolio across growth and value businesses.

Performance review

For the twelve months ended October 31, 2021, Class A shares of ClearBridge Mid Cap Fund, excluding sales charges, returned 49.11%. The Fund’s unmanaged benchmark, the Russell Midcap Index, returned 45.40%. The Lipper Mid-Cap Core Funds Category Averageiv returned 44.63% over the same time frame.

 

ClearBridge Mid Cap Fund 2021 Annual Report  

 

3


Fund overview (cont’d)

 

Performance Snapshot as of October 31, 2021
(unaudited)
 
(excluding sales charges)   6 months     12 months  
ClearBridge Mid Cap Fund:    

Class 13

    8.29     49.59

Class A

    8.11     49.11

Class C

    7.73     48.03

Class R

    7.94     48.63

Class I

    8.27     49.53

Class IS

    8.32     49.68
Russell Midcap Index     7.37     45.40
Lipper Mid-Cap Core Funds Category Average     4.15     44.63

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.franklintempleton.com.

All share class returns assume the reinvestment of all distributions 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 represent cumulative figures and are not annualized.

Fund performance figures reflect fee waivers and/or expense reimbursements, without which the performance would have been lower.

 

Total Annual Operating Expenses (unaudited)

As of the Fund’s current prospectus dated March 1, 2021, the gross total annual fund operating expense ratios for Class 1, Class A, Class C, Class R, Class I and Class IS shares were 0.86%, 1.18%, 1.90%, 1.46%, 0.85% and 0.77%, 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.

As a result of expense limitation arrangements, the ratio of total annual fund operating expenses, other than interest, brokerage, taxes, extraordinary expenses and acquired fund fees and expenses, to average net assets will not exceed 1.20% for Class A shares, 1.95% for Class C shares, 1.45% for Class R shares, 0.85% for Class I shares and 0.75% for Class IS shares. In addition, the ratio of total annual fund operating expenses for Class IS shares will not exceed the ratio of total annual fund operating expenses for Class I shares and the ratio of total fund operating expenses for Class 1 shares will not exceed the total annual fund operating expenses for Class A shares. These expense limitation arrangements cannot be terminated prior to December 31, 2023 without the Board of

 

3 

Class 1 shares of the Fund are closed to all purchases or incoming exchanges. Investors owning Class 1 shares may continue to maintain their then-current Class 1 shares, but are no longer permitted to add to their Class 1 share positions, except through dividend reinvestment.

 

 

4

   ClearBridge Mid Cap Fund 2021 Annual Report


Trustees’ consent. In addition, the manager has agreed to waive the Fund’s management fee to an extent sufficient to offset the net management fee payable in connection with any investment in an affiliated money market fund. This management fee waiver is not subject to the recapture provision discussed below.

The manager is permitted to recapture amounts waived and/or reimbursed to a class during the same fiscal year if the class’ total annual fund 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 manager recapture any amount that would result, on any particular business day of the Fund, in the class’ total annual fund operating expenses exceeding the expense cap or any other lower limit then in effect.

Q. What were the leading contributors to performance?

A. In absolute terms, the Fund had positive performance in all eleven sectors in which it was invested for the period, with the greatest contributions to returns coming from the information technology (IT), financials and industrials sectors.

Relative to the benchmark, overall stock selection contributed to performance for the period. In particular, stock selection within the health care, financials, communication services, consumer discretionary and consumer staples sectors aided relative returns. Additionally, an underweight allocation to the communication services, IT and utilities sectors and an overweight to the financials sector contributed to relative performance.

In terms of individual Fund holdings, leading contributors to performance included Western Alliance Bancorp and Hartford Financial Services in the financials sector, Aptiv in the consumer discretionary sector, Pioneer Natural Resources in the energy sector and Lam Research in the IT sector.

Q. What were the leading detractors from performance?

A. Relative to the benchmark, overall sector allocation had a negative impact on performance. Specifically, stock selection in the real estate, materials, IT and utilities sectors, underweight allocations to the energy and real estate sectors and an overweight allocation to the consumer staples sector detracted from relative returns.

In terms of individual Fund holdings, leading detractors from performance included positions in Splunk and Black Knight in the IT sector, Clarivate in the industrials sector, Americold Realty in the real estate sector and Purple Innovation in the consumer discretionary sector.

Q. Were there any significant changes to the Fund during the reporting period?

A. A number of Fund positions were bought and sold over the course of the reporting period. The largest new holdings introduced during the period included Marvell Technology and Momentive Global in the IT sector, API Group and Resideo Technologies in the industrials sector and Maravai LifeSciences in the health care sector. The largest positions sold during the reporting period included Bio-Rad Laboratories in the health care sector, Lam Research in the IT sector, Waste Connections and AMETEK in the industrials sector and Progressive in the financials sector.

 

ClearBridge Mid Cap Fund 2021 Annual Report  

 

5


Fund overview (cont’d)

 

Thank you for your investment in ClearBridge Mid Cap Fund. As always, we appreciate that you have chosen us to manage your assets and we remain focused on achieving the Fund’s investment goals.

Sincerely,

 

LOGO

Brian M. Angerame

Portfolio Manager

ClearBridge Investments, LLC

 

LOGO

Matthew Lilling, CFA

Portfolio Manager

ClearBridge Investments, LLC

November 18, 2021

RISKS: The Fund invests in equity securities, which are subject to market and price fluctuations. Mid-cap stocks may be more volatile than large-cap stocks. International investments are subject to special risks, including currency fluctuations and social, economic and political uncertainties, which could increase volatility. These risks are magnified in emerging markets. Emerging markets countries tend to have economic, political and legal systems that are less developed and are less stable than those of more developed countries. The Fund may use derivatives, such as options, which can be illiquid, may disproportionately increase losses, and have a potentially large impact on Fund performance. Please see the Fund’s prospectus for a more complete discussion of these and other risks and the Fund’s investment strategies.

Portfolio holdings and breakdowns are as of October 31, 2021 and are subject to change and may not be representative of the portfolio managers’ current or future investments. The Fund’s top ten holdings (as a percentage of net assets) as of October 31, 2021 were: Aptiv PLC (3.3%), Western Alliance Bancorp (2.9%), Regal Rexnord Corp (2.7%), Hartford Financial Services Group Inc. (2.6%), WillScot Mobile Mini Holdings Corp. (2.6%), Pioneer Natural Resources Co. (2.4%), Vertiv Holdings Co. (2.3%), Performance Food Group Co. (2.2%), Arch Capital Group Ltd. (2.1%) and Masonite International Corp. (2.1%). Please refer to pages 13 through 16 for a list and percentage breakdown of the Fund’s holdings.

The mention of sector breakdowns is for informational purposes only and should not be construed as a recommendation to purchase or sell any securities. The information provided regarding such sectors is not a sufficient basis upon which to make an investment decision. Investors seeking financial advice

 

 

6

   ClearBridge Mid Cap Fund 2021 Annual Report


regarding the appropriateness of investing in any securities or investment strategies discussed should consult their financial professional. The Fund’s top five sector holdings (as a percentage of net assets) as of October 31, 2021 were: industrials (20.6%), information technology (17.4%), consumer discretionary (14.2%), financials (12.9%) and health care (11.8%). The Fund’s portfolio composition is subject to change at any time.

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.

 

i 

The S&P MidCap 400 Index is a market-capitalization-weighted index of the 400 U.S. publicly traded companies with midrange market capitalization between $3.3 billion and $11.8 billion.

 

ii 

The Russell Midcap Index measures the performance of the mid-cap segment of the U.S. equity universe. The Russell Midcap is a subset of the Russell 1000 Index. It includes approximately 800 of the smallest securities based on a combination of their market cap and current index membership. The Russell Midcap represents approximately 31% of the total market capitalization of the Russell 1000 companies. The Russell 1000 Index measures the performance of the large-cap segment of the U.S. equity universe. It is a subset of the Russell 3000 Index and includes approximately 1,000 of the largest securities based on a combination of their market cap and current index membership. The Russell 1000 represents approximately 90% of the U.S. market. 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.

 

iii 

The S&P 500 Index is an unmanaged index of the stocks of 500 leading companies, and is generally representative of the performance of larger companies in the U.S.

 

iv 

Lipper, Inc., a wholly-owned subsidiary of Refinitiv, provides independent insight on global collective investments. Returns are based on the period ended October 31, 2021, including the reinvestment of all distributions, including returns of capital, if any, calculated among the 327 funds for the six-month period and among the 323 funds for the twelve-month period in the Fund’s Lipper category, and excluding sales charges, if any.

 

ClearBridge Mid Cap Fund 2021 Annual Report  

 

7


Fund at a glance (unaudited)

 

Investment breakdown (%) as a percent of total investments

 

LOGO

 

The bar graph above represents the composition of the Fund’s investments as of October 31, 2021 and October 31, 2020. The Fund is actively managed. As a result, the composition of the Fund’s investments is subject to change at any time.

 

 

8

   ClearBridge Mid Cap Fund 2021 Annual Report


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 May 1, 2021 and held for the six months ended October 31, 2021.

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 Fund’s 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.

 

Based on actual total return1                 Based on hypothetical total return1  
     Actual
Total Return
Without
Sales
Charge2
    Beginning
Account
Value
    Ending
Account
Value
    Annualized
Expense
Ratio
   

Expenses
Paid
During

the

Period3

               Hypothetical
Annualized
Total Return
   

Beginning
Account

Value

   

Ending

Account

Value

    Annualized
Expense
Ratio
    Expenses
Paid
During
the
Period3
 
Class 1     8.29   $ 1,000.00     $ 1,082.90       0.82   $ 4.31       Class 1     5.00   $ 1,000.00     $ 1,021.07       0.82   $ 4.18  
Class A     8.11       1,000.00       1,081.10       1.13       5.93       Class A     5.00       1,000.00       1,019.51       1.13       5.75  
Class C     7.73       1,000.00       1,077.30       1.84       9.63       Class C     5.00       1,000.00       1,015.93       1.84       9.35  
Class R     7.94       1,000.00       1,079.40       1.47       7.70       Class R     5.00       1,000.00       1,017.80       1.47       7.48  
Class I     8.27       1,000.00       1,082.70       0.84       4.41       Class I     5.00       1,000.00       1,020.97       0.84       4.28  
Class IS     8.32       1,000.00       1,083.20       0.75       3.94       Class IS     5.00       1,000.00       1,021.42       0.75       3.82  

 

ClearBridge Mid Cap Fund 2021 Annual Report  

 

9


Fund expenses (unaudited) (cont’d)

 

1 

For the six months ended October 31, 2021.

 

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 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.

 

3 

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 (184), then divided by 365.

 

 

10

   ClearBridge Mid Cap Fund 2021 Annual Report


Fund performance (unaudited)

 

Average annual total returns                       
Without sales charges    Class 1      Class A      Class C      Class R      Class I      Class IS  
Twelve Months Ended 10/31/21      49.59      49.11      48.03      48.63      49.53      49.68
Five Years Ended 10/31/21      16.05        15.68        14.88        15.35        16.05        16.17  
Ten Years Ended 10/31/21      14.06        13.74        12.95        13.43        14.14        14.24  
With sales charges    Class 1      Class A      Class C      Class R      Class I      Class IS  
Twelve Months Ended 10/31/21      49.59      40.52      47.03      48.63      49.53      49.68
Five Years Ended 10/31/21      16.05        14.32        14.88        15.35        16.05        16.17  
Ten Years Ended 10/31/21      14.06        13.07        12.95        13.43        14.14        14.24  

 

Cumulative total returns       
Without sales charges1        
Class 1 (10/31/11 through 10/31/21)      272.56
Class A (10/31/11 through 10/31/21)      262.50  
Class C (10/31/11 through 10/31/21)      238.07  
Class R (10/31/11 through 10/31/21)      252.64  
Class I (10/31/11 through 10/31/21)      275.19  
Class IS (10/31/11 through 10/31/21)      278.53  

All figures represent past performance and are not a guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. 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.

 

1 

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 C shares.

 

2 

Class A shares reflect the deduction of the maximum initial sales charges of 5.75%. Class C shares reflect the deduction of a 1.00% CDSC, which applies if shares are redeemed within one year from purchase payment.

 

ClearBridge Mid Cap Fund 2021 Annual Report  

 

11


Fund performance (unaudited) (cont’d)

 

Historical performance

Value of $10,000 invested in

Class A and C Shares of ClearBridge Mid Cap Fund vs Russell Midcap Index† — October 2011 - October 2021

 

LOGO

All figures represent past performance and are not a guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. 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.

 

Hypothetical illustration of $10,000 invested in Class A and C shares of ClearBridge Mid Cap Fund on October 31, 2011, assuming the deduction of the maximum initial sales charge of 5.75% at the time of investment for Class A shares and the reinvestment of all distributions, including returns of capital, if any, at net asset value through October 31, 2021. The hypothetical illustration also assumes a $10,000 investment in the Russell Midcap Index. The Russell Midcap Index (the “Index”) measures the performance of the 800 smallest companies in the Russell 1000 Index, which represents approximately 31% of the total market capitalization of the Russell 1000 Index. 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. 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. The Index is unmanaged and is not subject to the same management and trading expenses of a mutual fund. Please note that an investor cannot invest directly in an index. The performance of the Fund’s other classes may be greater or less than the Class A and C shares’ performance indicated on this chart, depending on whether greater or lesser sales charges and fees were incurred by shareholders investing in the other classes.

 

 

12

   ClearBridge Mid Cap Fund 2021 Annual Report


Schedule of investments

October 31, 2021

 

ClearBridge Mid Cap Fund

(Percentages shown based on Fund net assets)

 

Security                 Shares     Value  
Common Stocks — 97.5%                                
Communication Services — 2.3%                                

Entertainment — 2.3%

                               

Endeavor Group Holdings Inc., Class A Shares

                    750,000     $ 20,160,000  

Live Nation Entertainment Inc.

                    385,000       38,942,750  

Total Communication Services

                            59,102,750  
Consumer Discretionary — 14.2%                                

Auto Components — 4.1%

                               

Aptiv PLC

                    490,000       84,716,100  

Lear Corp.

                    128,000       21,996,800  

Total Auto Components

                            106,712,900  

Diversified Consumer Services — 1.3%

                               

Service Corp. International

                    484,000       33,149,160  

Hotels, Restaurants &Leisure — 2.3%

                               

Carnival Corp.

                    950,000       21,052,000  

Expedia Group Inc.

                    235,000       38,636,350  

Total Hotels, Restaurants & Leisure

                            59,688,350  

Household Durables — 0.4%

                               

Purple Innovation Inc.

                    538,000       10,383,400  * 

Internet & Direct Marketing Retail — 0.9%

                               

Chewy Inc., Class A Shares

                    290,000       21,982,000  * 

Leisure Products — 1.5%

                               

Hasbro Inc.

                    390,000       37,346,400  

Specialty Retail — 3.7%

                               

Carvana Co.

                    148,000       44,870,640  

Petco Health &Wellness Co. Inc.

                    675,000       16,692,750  

Ross Stores Inc.

                    305,000       34,526,000  

Total Specialty Retail

                            96,089,390  

Total Consumer Discretionary

                            365,351,600  
Consumer Staples — 4.0%                                

Food &Staples Retailing — 4.0%

                               

Casey’s General Stores Inc.

                    247,000       47,310,380  

Performance Food Group Co.

                    1,252,000       56,627,960  

Total Consumer Staples

                            103,938,340  
Energy — 2.3%                                

Oil, Gas &Consumable Fuels — 2.3%

                               

Pioneer Natural Resources Co.

                    325,000       60,768,500  
Financials — 12.9%                                

Banks — 6.8%

                               

Fifth Third Bancorp

                    1,110,000       48,318,300  

 

See Notes to Financial Statements.

 

ClearBridge Mid Cap Fund 2021 Annual Report  

 

13


Schedule of investments (cont’d)

October 31, 2021

 

ClearBridge Mid Cap Fund

(Percentages shown based on Fund net assets)

 

Security                 Shares     Value  

Banks — continued

                               

First Republic Bank

                    240,000     $ 51,919,200  

Western Alliance Bancorp

                    645,000       74,878,050  

Total Banks

                            175,115,550  

Insurance — 4.8%

                               

Arch Capital Group Ltd.

                    1,300,000       54,366,000  

Hartford Financial Services Group Inc.

                    930,000       67,824,900  

Total Insurance

                            122,190,900  

Mortgage Real Estate Investment Trusts (REITs) —1.3%

                               

Starwood Property Trust Inc.

                    1,350,000       34,384,500  

Total Financials

                            331,690,950  
Health Care — 11.8%                                

Biotechnology — 1.2%

                               

Horizon Therapeutics PLC

                    256,300       30,732,933  * 

Health Care Providers & Services — 1.1%

                               

Molina Healthcare Inc.

                    92,000       27,206,240  * 

Health Care Technology — 0.2%

                               

Definitive Healthcare Corp.

                    145,159       5,826,682  * 

Life Sciences Tools & Services — 8.2%

                               

Avantor Inc.

                    1,250,000       50,475,000  

Bio-Techne Corp.

                    70,000       36,655,500  

ICON PLC

                    111,000       31,831,470  

Maravai LifeSciences Holdings Inc., Class A Shares

                    984,000       41,613,360  

Syneos Health Inc.

                    560,000       52,270,400  

Total Life Sciences Tools & Services

                            212,845,730  

Pharmaceuticals — 1.1%

                               

Catalent Inc.

                    200,000       27,572,000  * 

Total Health Care

                            304,183,585  
Industrials — 20.6%                                

Building Products — 6.6%

                               

Masonite International Corp.

                    452,823       54,343,288  

Resideo Technologies Inc.

                    1,750,000       43,155,000  

Trane Technologies PLC

                    212,000       38,357,160  

Zurn Water Solutions Corp.

                    900,000       32,652,000  

Total Building Products

                            168,507,448  

Construction & Engineering — 4.5%

                               

API Group Corp.

                    2,250,000       49,005,000  *(a) 

WillScot Mobile Mini Holdings Corp.

                    1,925,000       66,893,750  * 

Total Construction & Engineering

                            115,898,750  

 

See Notes to Financial Statements.

 

 

14

   ClearBridge Mid Cap Fund 2021 Annual Report


    

 

    

 

ClearBridge Mid Cap Fund

(Percentages shown based on Fund net assets)

 

Security                 Shares     Value  

Electrical Equipment — 5.0%

                               

Regal Rexnord Corp.

                    460,664     $ 70,172,947  

Vertiv Holdings Co.

                    2,300,000       59,064,000  

Total Electrical Equipment

                            129,236,947  

Machinery — 2.0%

                               

ATS Automation Tooling Systems Inc.

                    625,000       21,265,959  

RBC Bearings Inc.

                    130,000       30,410,900  

Total Machinery

                            51,676,859  

Professional Services — 1.3%

                               

Clarivate PLC

                    1,450,000       34,002,500  * 

Road & Rail — 1.2%

                               

Old Dominion Freight Line Inc.

                    92,000       31,404,200  

Total Industrials

                            530,726,704  
Information Technology — 17.4%                                

Electronic Equipment, Instruments & Components — 4.5%

                               

CDW Corp.

                    200,000       37,330,000  

Keysight Technologies Inc.

                    260,000       46,805,200  

Teledyne Technologies Inc.

                    74,000       33,242,280  

Total Electronic Equipment, Instruments & Components

                            117,377,480  

Semiconductors & Semiconductor Equipment — 4.9%

                               

Marvell Technology Inc.

                    755,000       51,717,500  

ON Semiconductor Corp.

                    970,000       46,627,900  

SolarEdge Technologies Inc.

                    79,000       28,019,720  

Total Semiconductors & Semiconductor Equipment

                            126,365,120  

Software — 8.0%

                               

Aspen Technology Inc.

                    198,000       31,024,620  

Autodesk Inc.

                    87,000       27,632,070  

Black Knight Inc.

                    543,500       38,104,785  

DocuSign Inc.

                    54,000       15,027,660  

Momentive Global Inc.

                    1,429,013       32,752,978  

NCR Corp.

                    785,000       31,038,900  

Splunk Inc.

                    185,000       30,491,700  

Total Software

                            206,072,713  

Total Information Technology

                            449,815,313  
Materials — 4.7%                                

Chemicals — 3.1%

                               

Ashland Global Holdings Inc.

                    535,000       51,365,350  

Sensient Technologies Corp.

                    305,000       29,158,000  

Total Chemicals

                            80,523,350  

 

See Notes to Financial Statements.

 

ClearBridge Mid Cap Fund 2021 Annual Report  

 

15


Schedule of investments (cont’d)

October 31, 2021

 

ClearBridge Mid Cap Fund

(Percentages shown based on Fund net assets)

 

Security                 Shares     Value  

Containers & Packaging — 1.6%

                               

Ball Corp.

                    460,000     $ 42,080,800  

Total Materials

                            122,604,150  
Real Estate — 3.8%                                

Equity Real Estate Investment Trusts (REITs) — 3.8%

                               

Alexandria Real Estate Equities Inc.

                    248,000       50,626,720  

Americold Realty Trust

                    745,000       21,955,150  

Sun Communities Inc.

                    125,000       24,497,500  

Total Real Estate

                            97,079,370  
Utilities — 3.5%                                

Electric Utilities — 1.3%

                               

Eversource Energy

                    380,000       32,262,000  

Multi-Utilities — 2.2%

                               

Ameren Corp.

                    465,000       39,194,850  

DTE Energy Co.

                    165,000       18,702,750  

Total Multi-Utilities

                            57,897,600  

Total Utilities

                            90,159,600  

Total Investments before Short-Term Investments (Cost — $1,416,078,883)

 

    2,515,420,862  
     Rate                       
Short-Term Investments — 2.5%                                

JPMorgan 100% U.S. Treasury Securities Money Market Fund, Institutional Class

    0.006             51,830,550       51,830,550  

Western Asset Premier Institutional U.S. Treasury Reserves, Premium Shares

    0.010             12,957,637       12,957,637   (b)  

Total Short-Term Investments (Cost — $64,788,187)

                            64,788,187  

Total Investments — 100.0% (Cost — $1,480,867,070)

                            2,580,209,049  

Liabilities in Excess of Other Assets — (0.0)%††

                            (130,795

Total Net Assets — 100.0%

                          $ 2,580,078,254  

 

††

Represents less than 0.1%.

 

*

Non-income producing security.

 

(a) 

Security is exempt from registration under Rule 144A of the Securities Act of 1933. This security may be resold in transactions that are exempt from registration, normally to qualified institutional buyers. This security has been deemed liquid pursuant to guidelines approved by the Board of Trustees.

 

(b) 

In this instance, as defined in the Investment Company Act of 1940, an “Affiliated Company” represents Fund ownership of at least 5% of the outstanding voting securities of an issuer, or a company which is under common ownership or control with the Fund. At October 31, 2021, the total market value of investments in Affiliated Companies was $12,957,637 and the cost was $12,957,637 (Note 8).

 

See Notes to Financial Statements.

 

 

16

   ClearBridge Mid Cap Fund 2021 Annual Report


Statement of assets and liabilities

October 31, 2021

 

Assets:         

Investments in unaffiliated securities, at value (Cost — $1,467,909,433)

   $ 2,567,251,412  

Investments in affiliated securities, at value (Cost — $12,957,637)

     12,957,637  

Receivable for Fund shares sold

     9,001,128  

Dividends and interest receivable

     529,761  

Prepaid expenses

     64,802  

Total Assets

     2,589,804,740  
Liabilities:         

Payable for securities purchased

     5,145,761  

Payable for Fund shares repurchased

     2,086,751  

Investment management fee payable

     1,533,495  

Transfer agent fees payable

     497,062  

Service and/or distribution fees payable

     345,406  

Trustees’ fees payable

     5,493  

Accrued expenses

     112,518  

Total Liabilities

     9,726,486  
Total Net Assets    $ 2,580,078,254  
Net Assets:         

Par value (Note 7)

   $ 528  

Paid-in capital in excess of par value

     1,196,438,423  

Total distributable earnings (loss)

     1,383,639,303  
Total Net Assets    $ 2,580,078,254  

 

See Notes to Financial Statements.

 

ClearBridge Mid Cap Fund 2021 Annual Report  

 

17


Statement of assets and liabilities (cont’d)

October 31, 2021

 

Net Assets:         

Class 1

     $4,556,494  

Class A

     $1,411,091,122  

Class C

     $30,727,508  

Class R

     $71,030,535  

Class I

     $545,009,013  

Class IS

     $517,663,582  
Shares Outstanding:         

Class 1

     92,541  

Class A

     30,332,188  

Class C

     889,214  

Class R

     1,582,788  

Class I

     10,279,534  

Class IS

     9,653,224  
Net Asset Value:         

Class 1 (and redemption price)

     $49.24  

Class A (and redemption price)

     $46.52  

Class C*

     $34.56  

Class R (and redemption price)

     $44.88  

Class I (and redemption price)

     $53.02  

Class IS (and redemption price)

     $53.63  
Maximum Public Offering Price Per Share:         

Class A (based on maximum initial sales charge of 5.75%)

     $49.36  

 

*

Redemption price per share is NAV of Class C shares reduced by a 1.00% CDSC if shares are redeemed within one year from purchase payment (Note 2).

 

See Notes to Financial Statements.

 

 

18

   ClearBridge Mid Cap Fund 2021 Annual Report


Statement of operations

For the Year Ended October 31, 2021

 

Investment Income:         

Dividends

   $ 20,584,420  

Interest from unaffiliated investments

     1,308  

Interest from affiliated investments

     536  

Less: Foreign taxes withheld

     (27,308)  

Total Investment Income

     20,558,956  
Expenses:         

Investment management fee (Note 2)

     16,083,806  

Service and/or distribution fees (Notes 2 and 5)

     3,785,426  

Transfer agent fees (Note 5)

     2,506,169  

Legal fees

     114,904  

Registration fees

     111,074  

Trustees’ fees

     105,758  

Fund accounting fees

     87,106  

Audit and tax fees

     38,582  

Shareholder reports

     33,082  

Insurance

     17,899  

Custody fees

     12,530  

Interest expense

     1,030  

Miscellaneous expenses

     9,511  

Total Expenses

     22,906,877  

Less: Fee waivers and/or expense reimbursements (Notes 2 and 5)

     (41,513)  

Net Expenses

     22,865,364  
Net Investment Loss      (2,306,408)  
Realized and Unrealized Gain (Loss) on Investments and Foreign Currency Transactions (Notes 1 and 3):         

Net Realized Gain (Loss) From:

        

Investment transactions in unaffiliated securities

     287,663,717  

Foreign currency transactions

     (44)  

Net Realized Gain

     287,663,673  

Change in Net Unrealized Appreciation (Depreciation) From Unaffiliated Investments

     559,498,609  
Net Gain on Investments and Foreign Currency Transactions      847,162,282  
Increase in Net Assets From Operations    $ 844,855,874  

 

See Notes to Financial Statements.

 

ClearBridge Mid Cap Fund 2021 Annual Report  

 

19


Statements of changes in net assets

 

 

For the Years Ended October 31,    2021      2020  
Operations:                  

Net investment income (loss)

   $ (2,306,408)      $ 1,809,337  

Net realized gain

     287,663,673        134,686,211  

Change in net unrealized appreciation (depreciation)

     559,498,609        (62,680,775)  

Increase in Net Assets From Operations

     844,855,874        73,814,773  
Distributions to Shareholders From (Notes 1 and 6):                  

Total distributable earnings

     (132,747,881)        (139,924,160)  

Decrease in Net Assets From Distributions to Shareholders

     (132,747,881)        (139,924,160)  
Fund Share Transactions (Note 7):                  

Net proceeds from sale of shares

     402,119,558        265,458,878  

Reinvestment of distributions

     128,010,633        134,948,251  

Cost of shares repurchased

     (404,303,098)        (465,014,206)  

Increase (Decrease) in Net Assets From Fund Share Transactions

     125,827,093        (64,607,077)  

Increase (Decrease) in Net Assets

     837,935,086        (130,716,464)  
Net Assets:                  

Beginning of year

     1,742,143,168        1,872,859,632  

End of year

   $ 2,580,078,254      $ 1,742,143,168  

 

See Notes to Financial Statements.

 

 

20

   ClearBridge Mid Cap Fund 2021 Annual Report


Financial highlights

 

For a share of each class of beneficial interest outstanding throughout each year ended October 31:  
Class 1 Shares1    2021      2020      2019      2018      2017  
Net asset value, beginning of year      $35.25        $36.39        $33.04        $35.86        $30.50  
Income (loss) from operations:               

Net investment income

     0.04        0.10        0.16        0.15        0.13  

Net realized and unrealized gain (loss)

     16.62        1.52        4.59        (0.79)        5.72  

Total income (loss) from operations

     16.66        1.62        4.75        (0.64)        5.85  
Less distributions from:               

Net investment income

     (0.00) 2        (0.22)        (0.17)        (0.02)        (0.14)  

Net realized gains

     (2.67)        (2.54)        (1.23)        (2.16)        (0.35)  

Total distributions

     (2.67)        (2.76)        (1.40)        (2.18)        (0.49)  
Net asset value, end of year      $49.24        $35.25        $36.39        $33.04        $35.86  

Total return3

     49.59      4.57      15.01      (1.94)      19.30
Net assets, end of year (000s)      $4,556        $3,247        $3,700        $3,586        $3,737  
Ratios to average net assets:               

Gross expenses

     0.82      0.86      0.85      0.85      0.89

Net expenses4

     0.82 5        0.85 5        0.85 5        0.85        0.86 5  

Net investment income

     0.09        0.30        0.48        0.43        0.39  
Portfolio turnover rate      30      31      20      21 %6        32

 

1 

Per share amounts have been calculated using the average shares method.

 

2 

Amount represents less than 0.005%.

 

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.

 

4 

As a result of an expense limitation arrangement, the ratio of total annual fund operating expenses for Class 1 shares did not exceed the ratio of total annual fund operating expenses for Class A shares. This expense limitation arrangement cannot be terminated prior to December 31, 2023 without the Board of Trustees’ consent. In addition, the manager has agreed to waive the Fund’s management fee to an extent sufficient to offset the net management fee payable in connection with any investment in an affiliated money market fund.

 

5 

Reflects fee waivers and/or expense reimbursements.

 

6 

Excludes securities delivered as a result of a redemption in-kind.

 

See Notes to Financial Statements.

 

ClearBridge Mid Cap Fund 2021 Annual Report  

 

21


Financial highlights (cont’d)

 

For a share of each class of beneficial interest outstanding throughout each year ended October 31:  
Class A Shares1    2021      2020      2019      2018      2017  
Net asset value, beginning of year      $33.53        $34.76        $31.60        $34.48        $29.35  
Income (loss) from operations:               

Net investment income (loss)

     (0.09)        (0.01)        0.05        0.04        0.02  

Net realized and unrealized gain (loss)

     15.75        1.45        4.40        (0.75)        5.51  

Total income (loss) from operations

     15.66        1.44        4.45        (0.71)        5.53  
Less distributions from:               

Net investment income

            (0.13)        (0.06)        (0.01)        (0.05)  

Net realized gains

     (2.67)        (2.54)        (1.23)        (2.16)        (0.35)  

Total distributions

     (2.67)        (2.67)        (1.29)        (2.17)        (0.40)  
Net asset value, end of year      $46.52        $33.53        $34.76        $31.60        $34.48  

Total return2

     49.11      4.23      14.66      (2.26)      18.92
Net assets, end of year (millions)      $1,411        $983        $1,043        $893        $990  
Ratios to average net assets:               

Gross expenses

     1.13      1.18      1.18      1.18      1.21

Net expenses3,4

     1.13        1.17        1.17        1.18        1.18  

Net investment income (loss)

     (0.22)        (0.02)        0.15        0.11        0.07  
Portfolio turnover rate      30      31      20      21 %5        32

 

1 

Per share amounts have been calculated using the average shares method.

 

2 

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.

 

3 

As a result of an expense limitation arrangement, the ratio of total annual fund operating expenses, other than interest, brokerage, taxes, extraordinary expenses and acquired fund fees and expenses, to average net assets of Class A shares did not exceed 1.20%. This expense limitation arrangement cannot be terminated prior to December 31, 2023 without the Board of Trustees’ consent. In addition, the manager has agreed to waive the Fund’s management fee to an extent sufficient to offset the net management fee payable in connection with any investment in an affiliated money market fund.

 

4 

Reflects fee waivers and/or expense reimbursements.

 

5 

Excludes securities delivered as a result of a redemption in-kind.

 

See Notes to Financial Statements.

 

 

22

   ClearBridge Mid Cap Fund 2021 Annual Report


For a share of each class of beneficial interest outstanding throughout each year ended October 31:  
Class C Shares1   2021     2020     2019     2018     2017  
Net asset value, beginning of year     $25.68       $27.28       $25.18       $28.08       $24.09  
Income (loss) from operations:          

Net investment loss

    (0.29)       (0.18)       (0.12)       (0.15)       (0.17)  

Net realized and unrealized gain (loss)

    11.84       1.12       3.45       (0.59)       4.51  

Total income (loss) from operations

    11.55       0.94       3.33       (0.74)       4.34  
Less distributions from:          

Net realized gains

    (2.67)       (2.54)       (1.23)       (2.16)       (0.35)  

Total distributions

    (2.67)       (2.54)       (1.23)       (2.16)       (0.35)  
Net asset value, end of year     $34.56       $25.68       $27.28       $25.18       $28.08  

Total return2

    48.03     3.51     13.87     (2.91)     18.11
Net assets, end of year (000s)     $30,728       $27,205       $40,099       $144,687       $180,067  
Ratios to average net assets:          

Gross expenses

    1.87     1.90     1.84     1.85     1.91

Net expenses3,4

    1.87       1.89       1.84       1.85       1.89  

Net investment loss

    (0.96)       (0.72)       (0.46)       (0.56)       (0.63)  
Portfolio turnover rate     30     31     20     21 %5       32

 

1 

Per share amounts have been calculated using the average shares method.

 

2 

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.

 

3 

As a result of an expense limitation arrangement, the ratio of total annual fund operating expenses, other than interest, brokerage, taxes, extraordinary expenses and acquired fund fees and expenses, to average net assets of Class C shares did not exceed 1.95%. This expense limitation arrangement cannot be terminated prior to December 31, 2023 without the Board of Trustees’ consent. In addition, the manager has agreed to waive the Fund’s management fee to an extent sufficient to offset the net management fee payable in connection with any investment in an affiliated money market fund.

 

4 

Reflects fee waivers and/or expense reimbursements.

 

5 

Excludes securities delivered as a result of a redemption in-kind.

 

See Notes to Financial Statements.

 

ClearBridge Mid Cap Fund 2021 Annual Report  

 

23


Financial highlights (cont’d)

 

For a share of each class of beneficial interest outstanding throughout each year ended October 31:  
Class R Shares1   2021     2020     2019     2018     2017  
Net asset value, beginning of year     $32.53       $33.80       $30.78       $33.73       $28.75  
Income (loss) from operations:          

Net investment loss

    (0.21)       (0.10)       (0.04)       (0.05)       (0.07)  

Net realized and unrealized gain (loss)

    15.23       1.41       4.29       (0.74)       5.40  

Total income (loss) from operations

    15.02       1.31       4.25       (0.79)       5.33  
Less distributions from:          

Net investment income

          (0.04)                    

Net realized gains

    (2.67)       (2.54)       (1.23)       (2.16)       (0.35)  

Total distributions

    (2.67)       (2.58)       (1.23)       (2.16)       (0.35)  
Net asset value, end of year     $44.88       $32.53       $33.80       $30.78       $33.73  

Total return2

    48.63     3.96     14.35     (2.55)     18.62
Net assets, end of year (000s)     $71,031       $48,683       $47,229       $49,462       $58,680  
Ratios to average net assets:          

Gross expenses

    1.46     1.46     1.46     1.46     1.49

Net expenses3,4

    1.45       1.45       1.45       1.45       1.45  

Net investment loss

    (0.53)       (0.31)       (0.12)       (0.16)       (0.21)  
Portfolio turnover rate     30     31     20     21 %5       32

 

1 

Per share amounts have been calculated using the average shares method.

 

2 

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.

 

3 

As a result of an expense limitation arrangement, the ratio of total annual fund operating expenses, other than interest, brokerage, taxes, extraordinary expenses and acquired fund fees and expenses, to average net assets of Class R shares did not exceed 1.45%. This expense limitation arrangement cannot be terminated prior to December 31, 2023 without the Board of Trustees’ consent. In addition, the manager has agreed to waive the Fund’s management fee to an extent sufficient to offset the net management fee payable in connection with any investment in an affiliated money market fund.

 

4 

Reflects fee waivers and/or expense reimbursements.

 

5 

Excludes securities delivered as a result of a redemption in-kind.

 

See Notes to Financial Statements.

 

 

24

   ClearBridge Mid Cap Fund 2021 Annual Report


For a share of each class of beneficial interest outstanding throughout each year ended October 31:  
Class I Shares1    2021      2020      2019      2018      2017  
Net asset value, beginning of year      $37.79        $38.80        $35.12        $37.99        $32.29  
Income (loss) from operations:               

Net investment income

     0.03        0.11        0.17        0.16        0.15  

Net realized and unrealized gain (loss)

     17.87        1.63        4.90        (0.85)        6.06  

Total income (loss) from operations

     17.90        1.74        5.07        (0.69)        6.21  
Less distributions from:               

Net investment income

     (0.00) 2        (0.21)        (0.16)        (0.02)        (0.16)  

Net realized gains

     (2.67)        (2.54)        (1.23)        (2.16)        (0.35)  

Total distributions

     (2.67)        (2.75)        (1.39)        (2.18)        (0.51)  
Net asset value, end of year      $53.02        $37.79        $38.80        $35.12        $37.99  

Total return3

     49.53      4.60      15.03      (1.96)      19.33
Net assets, end of year (millions)      $545        $345        $389        $530        $716  
Ratios to average net assets:               

Gross expenses

     0.84      0.85      0.87      0.86      0.92

Net expenses4,5

     0.84        0.84        0.85        0.85        0.85  

Net investment income

     0.07        0.31        0.48        0.44        0.40  
Portfolio turnover rate      30      31      20      21 %6        32

 

1 

Per share amounts have been calculated using the average shares method.

 

2 

Amount represents less than 0.005%.

 

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.

 

4 

As a result of an expense limitation arrangement, the ratio of total annual fund operating expenses, other than interest, brokerage, taxes, extraordinary expenses and acquired fund fees and expenses, to average net assets of Class I shares did not exceed 0.85%. This expense limitation arrangement cannot be terminated prior to December 31, 2023 without the Board of Trustees’ consent. In addition, the manager has agreed to waive the Fund’s management fee to an extent sufficient to offset the net management fee payable in connection with any investment in an affiliated money market fund.

 

5 

Reflects fee waivers and/or expense reimbursements.

 

6 

Excludes securities delivered as a result of a redemption in-kind.

 

See Notes to Financial Statements.

 

ClearBridge Mid Cap Fund 2021 Annual Report  

 

25


Financial highlights (cont’d)

 

For a share of each class of beneficial interest outstanding throughout each year ended October 31:  
Class IS Shares1    2021      2020      2019      2018      2017  
Net asset value, beginning of year      $38.17        $39.17        $35.45        $38.31        $32.55  
Income (loss) from operations:               

Net investment income

     0.08        0.14        0.21        0.20        0.18  

Net realized and unrealized gain (loss)

     18.06        1.66        4.94        (0.85)        6.11  

Total income (loss) from operations

     18.14        1.80        5.15        (0.65)        6.29  
Less distributions from:               

Net investment income

     (0.01)        (0.26)        (0.20)        (0.05)        (0.18)  

Net realized gains

     (2.67)        (2.54)        (1.23)        (2.16)        (0.35)  

Total distributions

     (2.68)        (2.80)        (1.43)        (2.21)        (0.53)  
Net asset value, end of year      $53.63        $38.17        $39.17        $35.45        $38.31  

Total return2

     49.68      4.70      15.16      (1.86)      19.45
Net assets, end of year (millions)      $518        $335        $350        $351        $419  
Ratios to average net assets:               

Gross expenses

     0.76      0.77      0.77      0.76      0.79

Net expenses3,4

     0.75        0.75        0.75        0.75        0.75  

Net investment income

     0.17        0.39        0.58        0.54        0.48  
Portfolio turnover rate      30      31      20      21 %5        32

 

1 

Per share amounts have been calculated using the average shares method.

 

2 

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.

 

3 

As a result of an expense limitation arrangement, the ratio of total annual fund operating expenses, other than interest, brokerage, taxes, extraordinary expenses and acquired fund fees and expenses, to average net assets of Class IS shares did not exceed 0.75%. In addition, the ratio of total annual fund operating expenses for Class IS shares did not exceed the ratio of total annual fund operating expenses for Class I shares. These expense limitation arrangements cannot be terminated prior to December 31, 2023 without the Board of Trustees’ consent. In addition, the manager has agreed to waive the Fund’s management fee to an extent sufficient to offset the net management fee payable in connection with any investment in an affiliated money market fund.

 

4 

Reflects fee waivers and/or expense reimbursements.

 

5 

Excludes securities delivered as a result of a redemption in-kind.

 

See Notes to Financial Statements.

 

 

26

   ClearBridge Mid Cap Fund 2021 Annual Report


Notes to financial statements

 

1. Organization and significant accounting policies

ClearBridge Mid Cap Fund (the “Fund”) is a separate diversified investment series of Legg Mason Partners Investment Trust (prior to September 1, 2021, known as 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 typically 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. Investments in open-end funds are valued at the closing net asset value per share of each fund on the day of valuation. 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 Global Fund Valuation Committee (known as Legg Mason North Atlantic Fund Valuation Committee prior to March 1, 2021) (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

 

ClearBridge Mid Cap Fund 2021 Annual Report  

 

27


Notes to financial statements (cont’d)

 

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 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.

 

 

28

   ClearBridge Mid Cap Fund 2021 Annual Report


    

 

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†   $ 2,515,420,862                 $ 2,515,420,862  
Short-Term Investments†     64,788,187                   64,788,187  
Total Investments   $ 2,580,209,049                 $ 2,580,209,049  

 

See Schedule of Investments for additional detailed categorizations.

(b) 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 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.

(c) 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 may 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,

 

ClearBridge Mid Cap Fund 2021 Annual Report  

 

29


Notes to financial statements (cont’d)

 

expropriation, taxation or other political, social or economic developments, all of which affect the market and/or credit risk of the investments.

(d) Security transactions and investment income. Security transactions are accounted for on a trade date basis. Interest income (including interest income from payment-in-kind securities), adjusted for amortization of premium and accretion of discount, is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date for dividends received in cash and/or securities. 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.

(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 Fund’s 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) 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) 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.

(h) 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.

(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 October 31, 2021, no provision for income tax is

 

 

30

   ClearBridge Mid Cap Fund 2021 Annual Report


    

 

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.

(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. During the current year, the Fund had no reclassifications.

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, LLC (“Western Asset”) manages the portion of the Fund’s cash and short-term instruments allocated to it. LMPFA, ClearBridge and Western Asset are indirect, wholly-owned subsidiaries of Franklin Resources, Inc. (“Franklin Resources”).

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 billion        0.750
Next $1 billion        0.700  
Next $3 billion        0.650  
Next $5 billion        0.600  
Over $10 billion        0.550  

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 the portion of the Fund’s cash and short-term instruments allocated to Western Asset. For its services, LMPFA pays ClearBridge a fee monthly, at an annual rate equal to 70% of the net management fee it receives from the Fund. For Western Asset’s services to the Fund, LMPFA pays Western Asset monthly 0.02% of the portion of the Fund’s average daily net assets that are allocated to Western Asset by LMPFA.

As a result of expense limitation arrangements between the Fund and LMPFA, the ratio of total annual fund operating expenses, other than interest, brokerage, taxes, extraordinary expenses and acquired fund fees and expenses, to average net assets of Class A, Class C, Class R, Class I and Class IS shares did not exceed 1.20%, 1.95%, 1.45%, 0.85% and 0.75%, respectively. In addition, the ratio of total annual fund operating expenses for Class IS shares did not exceed the ratio of total annual fund operating expenses for Class I shares and the ratio of total annual fund operating expenses for Class 1 shares did not exceed the ratio of total annual fund operating expenses for Class A shares. These expense

 

ClearBridge Mid Cap Fund 2021 Annual Report  

 

31


Notes to financial statements (cont’d)

 

limitation arrangements cannot be terminated prior to December 31, 2023 without the Board of Trustees’ consent. In addition, the manager has agreed to waive the Fund’s management fee to an extent sufficient to offset the net management fee payable in connection with any investment in an affiliated money market fund (the “affiliated money market fund waiver”). The affiliated money market fund waiver is not subject to the recapture provision discussed below.

During the year ended October 31, 2021, fees waived and/or expenses reimbursed amounted to $41,513, which included an affiliated money market fund waiver of $502.

LMPFA is permitted to recapture amounts waived and/or reimbursed to a class during the same fiscal year if the class’ total annual fund 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 LMPFA recapture any amount that would result, on any particular business day of the Fund, in the class’ total annual fund operating expenses exceeding the expense cap or any other lower limit then in effect.

Franklin Distributors, LLC (known as Legg Mason Investor Services, LLC prior to July 7, 2021) (“Franklin Distributors”) serves as the Fund’s sole and exclusive distributor. Franklin Distributors is an indirect, wholly-owned broker-dealer subsidiary of Franklin Resources. There is a maximum initial sales charge of 5.75% for Class A shares. There is a contingent deferred sales charge (“CDSC”) of 1.00% on Class C shares, 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 Legg Mason funds, equal or exceed $1,000,000 in the aggregate. These purchases do not incur an initial sales charge.

For the year ended October 31, 2021, sales charges retained by and CDSCs paid to Franklin Distributors and its affiliates, if any, were as follows:

 

        Class A        Class C  
Sales charges      $ 303,672           
CDSCs        493        $ 29  

All officers and one Trustee of the Trust are employees of Franklin Resources or its affiliates and do not receive compensation from the Trust.

3. Investments

During the year ended October 31, 2021, the aggregate cost of purchases and proceeds from sales of investments (excluding short-term investments) were as follows:

 

Purchases      $ 655,584,861  
Sales        719,219,529  

 

 

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   ClearBridge Mid Cap Fund 2021 Annual Report


    

 

At October 31, 2021, the aggregate cost of investments and the aggregate gross unrealized appreciation and depreciation of investments for federal income tax purposes were as follows:

 

      Cost      Gross
Unrealized
Appreciation
     Gross
Unrealized
Depreciation
     Net
Unrealized
Appreciation
 
Securities    $ 1,481,393,399      $ 1,115,929,390      $ (17,113,740)      $ 1,098,815,650  

4. Derivative instruments and hedging activities

During the year ended October 31, 2021, the Fund did not invest in derivative instruments.

5. Class specific expenses, waivers and/or expense reimbursements

The Fund has adopted a Rule 12b-1 shareholder services and distribution plan and under that plan the Fund pays service and/or distribution fees with respect to its Class A, Class C and Class R shares calculated at the annual rate of 0.25%, 1.00% and 0.50% of the average daily net assets of each class, respectively. Service and/or distribution fees are accrued daily and paid monthly.

For the year ended October 31, 2021, class specific expenses were as follows:

 

        Service and/or
Distribution Fees
       Transfer
Agent Fees
 
Class 1               $ 3,372  
Class A      $ 3,159,403          1,789,327  
Class C        309,002          39,931  
Class R         317,021          136,427  
Class I                 457,460  
Class IS                 79,652  
Total      $ 3,785,426        $ 2,506,169  

 

Amounts shown are exclusive of expense reimbursements. For the year ended October 31, 2021, the service and/or distribution fees reimbursed amounted to $63 and $6 for Class A and Class R shares, respectively.

For the year ended October 31, 2021, waivers and/or expense reimbursements by class were as follows:

 

        Waivers/Expense
Reimbursements
 
Class 1      $ 1  
Class A        345  
Class C        7  
Class R        3,311  
Class I        100  
Class IS        37,749  
Total      $ 41,513  

 

ClearBridge Mid Cap Fund 2021 Annual Report  

 

33


Notes to financial statements (cont’d)

 

6. Distributions to shareholders by class

 

        Year Ended
October 31, 2021
       Year Ended
October 31, 2020
 
Net Investment Income:                      
Class 1      $ 288        $ 24,115  
Class A                 4,079,753  
Class R                 63,143  
Class I        21,871          2,228,463  
Class IS        77,857          2,404,579  
Total      $ 100,016        $ 8,800,053  
Net Realized Gains:                      
Class 1      $ 243,628        $ 254,523  
Class A        77,921,876          75,934,185  
Class C        2,788,840          3,660,829  
Class R        3,991,325          3,585,229  
Class I        24,486,292          25,239,219  
Class IS        23,215,904          22,450,122  
Total      $ 132,647,865        $ 131,124,107  

7. Shares of beneficial interest

At October 31, 2021, 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:

 

     Year Ended
October 31, 2021
     Year Ended
October 31, 2020
 
      Shares      Amount      Shares      Amount  
Class 1                                    
Shares sold                            
Shares issued on reinvestment      6,463      $ 243,916        7,951      $ 278,638  
Shares repurchased      (6,028)        (261,446)        (17,516)        (564,992)  
Net increase (decrease)      435      $ (17,530)        (9,565)      $ (286,354)  
Class A                                    
Shares sold      2,619,905      $ 108,711,993        2,504,650      $ 79,351,496  
Shares issued on reinvestment      2,117,883        75,714,321        2,333,633        77,765,180  
Shares repurchased      (3,726,697)        (152,861,858)        (5,529,044)        (173,460,805)  
Net increase (decrease)      1,011,091      $ 31,564,456        (690,761)      $ (16,344,129)  

 

 

34

   ClearBridge Mid Cap Fund 2021 Annual Report


    

 

     Year Ended
October 31, 2021
     Year Ended
October 31, 2020
 
      Shares      Amount      Shares      Amount  
Class C                                    
Shares sold      124,154      $ 3,874,263        99,762      $ 2,519,766  
Shares issued on reinvestment      101,437        2,711,401        135,700        3,469,754  
Shares repurchased      (395,717)        (12,212,758)        (645,848)        (15,500,675)  
Net decrease      (170,126)      $ (5,627,094)        (410,386)      $ (9,511,155)  
Class R                                    
Shares sold      336,797      $ 13,315,471        571,080      $ 17,234,320  
Shares issued on reinvestment      114,104        3,946,862        107,930        3,486,150  
Shares repurchased      (364,883)        (14,444,906)        (579,722)        (17,786,929)  
Net increase      86,018      $ 2,817,427        99,288      $ 2,933,541  
Class I                                    
Shares sold      3,045,613      $ 147,797,820        2,262,484      $ 78,467,503  
Shares issued on reinvestment      558,663        22,704,657        678,419        25,456,878  
Shares repurchased      (2,460,840)        (115,458,578)        (3,819,266)        (130,209,973)  
Net increase (decrease)      1,143,436      $ 55,043,899        (878,363)      $ (26,285,592)  
Class IS                                    
Shares sold      2,662,179      $ 128,420,011        2,662,344      $ 87,885,793  
Shares issued on reinvestment      552,272        22,689,476        646,124        24,491,651  
Shares repurchased      (2,326,990)        (109,063,552)        (3,481,573)        (127,490,832)  
Net increase (decrease)      887,461      $ 42,045,935        (173,105)      $ (15,113,388)  

8. Transactions with affiliated company

As defined by the 1940 Act, an affiliated company is one in which the Fund owns 5% or more of the outstanding voting securities, or a company which is under common ownership or control with the Fund. The following company was considered an affiliated company for all or some portion of the year ended October 31, 2021. The following transactions were effected in such company for the year ended October 31, 2021.

 

     Affiliate
Value at
October 31, 2020
    

 

Purchased

     Sold  
      Cost      Shares      Cost      Shares  
Western Asset Premier Institutional U.S. Treasury Reserves, Premium Shares    $ 3,072,910      $ 80,702,402        80,702,402      $ 70,817,675        70,817,675  

 

ClearBridge Mid Cap Fund 2021 Annual Report  

 

35


Notes to financial statements (cont’d)

 

(cont’d)          Realized
Gain (Loss)
     Interest
Income
     Net Increase
(Decrease) in
Unrealized
Appreciation
(Depreciation)
     Affiliate
Value at
October 31,
2021
 
Western Asset Premier Institutional U.S. Treasury Reserves, Premium Shares                $ 536             $ 12,957,637  

9. Income tax information and distributions to shareholders

The tax character of distributions paid during the fiscal years ended October 31, was as follows:

 

        2021        2020  
Distributions paid from:                      
Ordinary income      $ 100,016        $ 8,934,778  
Net long-term capital gains        132,647,865          130,989,382  
Total distributions paid      $ 132,747,881        $ 139,924,160  

As of October 31, 2021, the components of distributable earnings (loss) on a tax basis were as follows:

 

Undistributed ordinary income — net      $ 47,116,562  
Undistributed long-term capital gains — net        237,748,260  
Total undistributed earnings      $ 284,864,822  
Other book/tax temporary differences(a)        (41,169)  
Unrealized appreciation (depreciation)(b)        1,098,815,650  
Total distributable earnings (loss) — net      $ 1,383,639,303  

 

(a) 

Other book/tax temporary differences are attributable to book/tax differences in the timing of the deductibility of various expenses.

 

(b) 

The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable to the tax deferral of losses on wash sales.

10. Recent accounting pronouncement

In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2020-04, Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate Reform on Financial Reporting. In January 2021, the FASB issued ASU No. 2021-01, with further amendments to Topic 848. The amendments in the ASUs provide optional temporary accounting recognition and financial reporting relief from the effect of certain types of contract modifications due to the planned discontinuation of the LIBOR and other interbank-offered based reference rates as of the end of 2021 and 2023. The ASUs are effective for certain reference rate-related contract modifications that occur during the period March 12, 2020 through December 31, 2022. Management has reviewed the requirements and believes the adoption of these ASUs will not have a material impact on the financial statements.

 

 

36

   ClearBridge Mid Cap Fund 2021 Annual Report


    

 

11. Other matter

The outbreak of the respiratory illness COVID-19 (commonly referred to as “coronavirus”) has continued to rapidly spread around the world, causing considerable uncertainty for the global economy and financial markets. The ultimate economic fallout from the pandemic, and the long-term impact on economies, markets, industries and individual issuers, are not known. The COVID-19 pandemic could adversely affect the value and liquidity of the Fund’s investments, impair the Fund’s ability to satisfy redemption requests, and negatively impact the Fund’s performance. In addition, the outbreak of COVID-19, and measures taken to mitigate its effects, could result in disruptions to the services provided to the Fund by its service providers.

 

ClearBridge Mid Cap Fund 2021 Annual Report  

 

37


Report of independent registered public accounting firm

 

To the Board of Trustees of Legg Mason Partners Investment Trust and Shareholders of ClearBridge Mid Cap Fund

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of ClearBridge Mid Cap Fund (one of the funds constituting Legg Mason Partners Investment Trust, referred to hereafter as the “Fund”) as of October 31, 2021, the related statement of operations for the year ended October 31, 2021, the statement of changes in net assets for each of the two years in the period ended October 31, 2021, including the related notes, and the financial highlights for each of the five years in the period ended October 31, 2021 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of October 31, 2021, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended October 31, 2021 and the financial highlights for each of the five years in the period ended October 31, 2021 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of October 31, 2021 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

/s/PricewaterhouseCoopers LLP

Baltimore, Maryland

December 17, 2021

We have served as the auditor of one or more investment companies in the Franklin Templeton Group of Funds since 1948.

 

 

38

   ClearBridge Mid Cap Fund 2021 Annual Report


Additional shareholder information (unaudited)

 

Results of special meeting of shareholders

A special meeting of shareholders was held on June 15, 2021 for shareholders of record as of March 1, 2021 (the “Record Date”) to elect the Board of Trustees of the Trust. Shareholders of the Fund and each other series of the Trust voted together as a single class to elect the Board.

Shareholders of the Trust voted as indicated below (vote totals are rounded to the nearest whole number). Effective July 1, 2021, the Board is composed of the following Trustees:

 

Trustee    For      Withheld  
Paul R. Ades      34,818,031,380        864,701,681  
Andrew L. Breech      34,891,912,353        790,820,707  
Althea L. Duersten      34,730,529,034        952,204,027  
Stephen R. Gross      34,874,507,049        808,226,012  
Susan M. Heilbron      34,856,171,717        826,561,344  
Howard J. Johnson      34,814,514,173        868,218,888  
Arnold L. Lehman      34,848,857,750        833,875,311  
Robin J.W. Masters      34,921,642,190        761,090,871  
Jerome H. Miller      34,813,954,150        868,778,910  
Ken Miller      34,616,366,023        1,066,367,039  
G. Peter O’Brien      34,889,564,576        793,168,485  
Thomas F. Schlafly      34,849,538,606        833,194,455  
Jane Trust      34,981,181,494        701,551,567  

The above Trustees have also been elected to serve as board members of other mutual funds within the Franklin Templeton fund complex.

 

ClearBridge Mid Cap Fund  

 

39


Statement regarding liquidity risk management program (unaudited)

 

Each Fund has adopted and implemented a written Liquidity Risk Management Program (the “LRMP”) as required by Rule 22e-4 under the Investment Company Act of 1940 (the “Liquidity Rule”). The LRMP is designed to assess and manage each Fund’s liquidity risk, which is defined as the risk that the Fund could not meet requests to redeem shares issued by the Fund without significant dilution of remaining investors’ interests in the Fund. In accordance with the Liquidity Rule, the LRMP includes policies and procedures that provide for: (1) assessment, management, and review (no less frequently than annually) of each Fund’s liquidity risk; (2) classification of each Fund’s portfolio holdings into one of four liquidity categories (Highly Liquid, Moderately Liquid, Less Liquid, and Illiquid); (3) for Funds that do not primarily hold assets that are Highly Liquid, establishing and maintaining a minimum percentage of the Fund’s net assets in Highly Liquid investments (called a “Highly Liquid Investment Minimum” or “HLIM”); and (4) prohibiting the Fund’s acquisition of Illiquid investments that would result in the Fund holding more than 15% of its net assets in Illiquid assets. The LRMP also requires reporting to the Securities and Exchange Commission (“SEC”) (on a non-public basis) and to the Board if the Fund’s holdings of Illiquid assets exceed 15% of the Fund’s net assets. Funds with HLIMs must have procedures for addressing HLIM shortfalls, including reporting to the Board and, with respect to HLIM shortfalls lasting more than seven consecutive calendar days, reporting to the SEC (on a non-public basis).

The Director of Liquidity Risk within the Investment Risk Management Group (the “IRMG”) is the appointed Administrator of the LRMP. The IRMG maintains the Investment Liquidity Committee (the “ILC”) to provide oversight and administration of policies and procedures governing liquidity risk management for Franklin Templeton and Legg Mason products and portfolios. The ILC includes representatives from Franklin Templeton’s Risk, Trading, Global Compliance, Legal, Investment Compliance, Investment Operations, Valuation Committee, Product Management and Global Product Strategy.

In assessing and managing each Fund’s liquidity risk, the ILC considers, as relevant, a variety of factors, including the Fund’s investment strategy and the liquidity of its portfolio investments during both normal and reasonably foreseeable stressed conditions; its short and long-term cash flow projections; and its cash holdings and access to other funding sources including the Funds’ interfund lending facility and line of credit. Classification of the Fund’s portfolio holdings in the four liquidity categories is based on the number of days it is reasonably expected to take to convert the investment to cash (for Highly Liquid and Moderately Liquid holdings) or sell or dispose of the investment (for Less Liquid and Illiquid investments), in current market conditions without significantly changing the investment’s market value.

Each Fund primarily holds liquid assets that are defined under the Liquidity Rule as “Highly Liquid Investments,” and therefore is not required to establish an HLIM. Highly Liquid

 

 

40

   ClearBridge Mid Cap Fund


    

 

Investments are defined as cash and any investment reasonably expected to be convertible to cash in current market conditions in three business days or less without the conversion to cash significantly changing the market value of the investment.

At meetings of the Funds’ Board of Trustees/Directors held in November 2021, the Program Administrator provided a written report to the Board addressing the adequacy and effectiveness of the program for the year ended December 31, 2020. The Program Administrator report concluded that (i.) the LRMP, as adopted and implemented, remains reasonably designed to assess and manage each Fund’s liquidity risk; (ii.) the LRMP, including the Highly Liquid Investment Minimum (“HLIM”) where applicable, was implemented and operated effectively to achieve the goal of assessing and managing each Fund’s liquidity risk; and (iii.) each Fund was able to meet requests for redemption without significant dilution of remaining investors’ interests in the Fund.

 

ClearBridge Mid Cap Fund  

 

41


Additional information (unaudited)

Information about Trustees and Officers

 

The business and affairs of ClearBridge Mid Cap Fund (the “Fund”) are conducted by management under the supervision and subject to the direction of its Board of Trustees. The business address of each Trustee is c/o Jane Trust, Legg Mason, 100 International Drive, 11th Floor, Baltimore, Maryland 21202. Information pertaining to the Trustees and officers of the Fund is set forth below.

Previously, the mutual funds of Legg Mason Global Asset Management Trust were overseen by one group of Trustees, and the mutual funds of Legg Mason Partners Investment Trust and Legg Mason Partners Variable Equity Trust (collectively, the “Funds”) were overseen by a different group of Trustees. A joint proxy statement was mailed to solicit shareholder approval for the election of a single slate of Trustees. Shareholders approved the proposed Trustees during a joint special meeting of shareholders on June 15, 2021. Effective July 1, 2021, the Trustees listed below oversee all of the Funds.

The Statement of Additional Information includes additional information about Trustees and is available, without charge, upon request by calling the Fund at 1-877-721-1926.

 

Independent Trustees†    
Paul R. Ades  
Year of birth   1940
Position(s) with Trust   Trustee
Term of office1 and length of time served2   Since 1983
Principal occupation(s) during the past five years   Paul R. Ades, PLLC (law firm) (since 2000)
Number of funds in fund complex overseen by Trustee   61
Other board memberships held by Trustee during the past five years   None
Andrew L. Breech  
Year of birth   1952
Position(s) with Trust   Trustee
Term of office1 and length of time served2   Since 1991
Principal occupation(s) during the past five years   President, Dealer Operating Control Service, Inc. (automotive retail management) (since 1985)
Number of funds in fund complex overseen by Trustee   61
Other board memberships held by Trustee during the past five years   None

 

 

42

   ClearBridge Mid Cap Fund


    

 

Independent Trustees (cont’d)    
Althea L. Duersten*  
Year of birth   1951
Position(s) with Trust   Trustee and Chair of the Board
Term of office1 and length of time served2   Since 2014 (Chair of the Board since 2021)
Principal occupation(s) during the past five years   Retired (since 2011); formerly, Chief Investment Officer, North America, JPMorgan Chase (investment bank) and member of JPMorgan Executive Committee (2007 to 2011)
Number of funds in fund complex overseen by Trustee   61
Other board memberships held by Trustee during the past five years   Formerly, Non-Executive Director, Rokos Capital Management LLP (2019 to 2020)
Stephen R. Gross  
Year of birth   1947
Position(s) with Trust   Trustee
Term of office1 and length of time served2   Since 1986
Principal occupation(s) during the past five years   Chairman Emeritus (since 2011) and formerly, Chairman, HLB Gross Collins, P.C. (accounting and consulting firm) (1979 to 2011); Executive Director of Business Builders Team, LLC (since 2005); Principal, Gross Consulting Group, LLC (since 2011); CEO, Gross Capital Partners, LLC (since 2014); CEO, Trusted CFO Solutions, LLC (since 2011)
Number of funds in fund complex overseen by Trustee   61
Other board memberships held by Trustee during the past five years   None
Susan M. Heilbron  
Year of birth   1945
Position(s) with Trust   Trustee
Term of office1 and length of time served2   Since 1991
Principal occupation(s) during the past five years   Retired; formerly, President, Lacey & Heilbron (communications consulting) (1990 to 2002); General Counsel and Executive Vice President, The Trump Organization (1986 to 1990); Senior Vice President, New York State Urban Development Corporation (1984 to 1986); Associate, Cravath, Swaine & Moore LLP (1980 to 1984 and 1977 to 1979)
Number of funds in fund complex overseen by Trustee   61
Other board memberships held by Trustee during the past five years   Formerly, Director, Lincoln Savings Bank FSB (1991 to 1994); Director, Trump Shuttle, Inc. (air transportation) (1989 to 1990); Director, Alexander’s Inc. (department store) (1987 to 1990)

 

ClearBridge Mid Cap Fund  

 

43


Additional information (unaudited) (cont’d)

Information about Trustees and Officers

 

Independent Trustees (cont’d)    
Howard J. Johnson  
Year of birth   1938
Position(s) with Trust   Trustee
Term of office1 and length of time served2   From 1981 to 1998 and since 2000
Principal occupation(s) during the past five years   Retired; formerly, Chief Executive Officer, Genesis Imaging LLC (technology company) (2003 to 2012)
Number of funds in fund complex overseen by Trustee   61
Other board memberships held by Trustee during the past five years   None
Arnold L. Lehman  
Year of birth   1944
Position(s) with Trust   Trustee
Term of office1 and length of time served2   Since 1982
Principal occupation(s) during the past five years   Senior Advisor, Phillips (auction house) (since 2015); formerly, Fellow, Ford Foundation (2015 to 2016); Director of the Brooklyn Museum (1997 to 2015)
Number of funds in fund complex overseen by Trustee   61
Other board memberships held by Trustee during the past five years   Trustee of American Federation of Arts (since 2002)
Robin J. W. Masters  
Year of birth   1955
Position(s) with Trust   Trustee
Term of office1 and length of time served2   Since 2002
Principal occupation(s) during the past five years   Retired; formerly, Chief Investment Officer of ACE Limited (insurance) (1986 to 2000)
Number of funds in fund complex overseen by Trustee   61
Other board memberships held by Trustee during the past five years   Director of HSBC Managed Portfolios Limited and HSBC Specialist Funds Limited (since 2020); formerly, Director of Cheyne Capital International Limited (investment advisory firm) (2005 to 2020); Director/Trustee of Legg Mason Institutional Funds plc, Western Asset Fixed Income Funds plc and Western Asset Debt Securities Fund plc. (2007 to 2011)
Jerome H. Miller  
Year of birth   1938
Position(s) with Trust   Trustee
Term of office1 and length of time served2   Since 1995
Principal occupation(s) during the past five years   Retired; formerly, President, Shearson Lehman Asset Management (1991 to 1993), Vice Chairman, Shearson Lehman Hutton Inc. (1989 to 1992) and Senior Executive Vice President, E.F. Hutton Group Inc. (1986 to 1989)
Number of funds in fund complex overseen by Trustee   61
Other board memberships held by Trustee during the past five years   None

 

 

44

   ClearBridge Mid Cap Fund


    

 

Independent Trustees (cont’d)    
Ken Miller  
Year of birth   1942
Position(s) with Trust   Trustee
Term of office1 and length of time served2   Since 1983
Principal occupation(s) during the past five years   Retired; formerly, President, Young Stuff Apparel Group, Inc. (apparel manufacturer), division of Li &Fung (1963 to 2012)
Number of funds in fund complex overseen by Trustee   61
Other board memberships held by Trustee during the past five years   None
G. Peter O’Brien  
Year of birth   1945
Position(s) with Trust   Trustee
Term of office1 and length of time served2   Since 1999
Principal occupation(s) during the past five years   Retired, Trustee Emeritus of Colgate University (since 2005); Board Member, Hill House, Inc. (residential home care) (since 1999); formerly, Board Member, Bridges School (pre-school) (2006 to 2017); Managing Director, Equity Capital Markets Group of Merrill Lynch &Co. (1971 to 1999)
Number of funds in fund complex overseen by Trustee   Trustee of Legg Mason funds consisting of 61 portfolios; Director/Trustee of the Royce Family of Funds consisting of 16 portfolios
Other board memberships held by Trustee during the past five years   Formerly, Director of TICC Capital Corp. (2003 to 2017)
Thomas F. Schlafly  
Year of birth   1948
Position(s) with Trust   Trustee
Term of office1 and length of time served2   Since 1983
Principal occupation(s) during the past five years   Chairman, The Saint Louis Brewery, LLC (brewery) (since 2012); formerly, President, The Saint Louis Brewery, Inc. (1989 to 2012); Senior Counsel (since 2017) and formerly, Partner (2009 to 2016), Thompson Coburn LLP (law firm)
Number of funds in fund complex overseen by Trustee   61
Other board memberships held by Trustee during the past five years   Director, CNB St. Louis Bank (since 2020); formerly, Director, Citizens National Bank of Greater St. Louis (2006 to 2020)

 

ClearBridge Mid Cap Fund  

 

45


Additional information (unaudited) (cont’d)

Information about Trustees and Officers

 

Interested Trustee and Officer    
Jane Trust, CFA3  
Year of birth   1962
Position(s) with Trust   Trustee, President and Chief Executive Officer
Term of office1 and length of time served2   Since 2015
Principal occupation(s) during the past five years   Senior Vice President, Fund Board Management, Franklin Templeton (since 2020); Officer and/or Trustee/Director of 132 funds associated with LMPFA or its affiliates (since 2015); President and Chief Executive Officer of LMPFA (since 2015); formerly, Senior Managing Director (2018 to 2020) and Managing Director (2016 to 2018) of Legg Mason &Co., LLC (“Legg Mason &Co.”); Senior Vice President of LMPFA (2015)
Number of funds in fund complex overseen by Trustee   130
Other board memberships held by Trustee during the past five years   None
 
Additional Officers    

Ted P. Becker

Franklin Templeton

620 Eighth Avenue, 47th Floor, New York, NY 10018

 
Year of birth   1951
Position(s) with Trust   Chief Compliance Officer
Term of office1 and length of time served2   Since 2007
Principal occupation(s) during the past five years   Vice President, Global Compliance of Franklin Templeton (since 2020); Chief Compliance Officer of LMPFA (since 2006); Chief Compliance Officer of certain funds associated with Legg Mason & Co. or its affiliates (since 2006); formerly, Director of Global Compliance at Legg Mason, Inc. (2006 to 2020); Managing Director of Compliance of Legg Mason & Co. (2005 to 2020)

Susan Kerr

Franklin Templeton

620 Eighth Avenue, 47th Floor, New York, NY 10018

 
Year of birth   1949
Position(s) with Trust   Chief Anti-Money Laundering Compliance Officer
Term of office1 and length of time served2   Since 2013
Principal occupation(s) during the past five years   Senior Compliance Analyst, Franklin Templeton (since 2020); Chief Anti-Money Laundering Compliance Officer of certain funds associated with Legg Mason & Co. or its affiliates (since 2013) and Anti-Money Laundering Compliance Officer (since 2012), Senior Compliance Officer (since 2011) and Assistant Vice President (since 2010) of Franklin Distributors, LLC; formerly, Assistant Vice President of Legg Mason &Co. (2010 to 2020)

 

 

46

   ClearBridge Mid Cap Fund


    

 

Additional Officers (cont’d)    

Jenna Bailey

Franklin Templeton

100 First Stamford Place, 5th Floor, Stamford, CT 06902

 
Year of birth   1978
Position(s) with Trust   Identity Theft Prevention Officer
Term of office1 and length of time served2   Since 2015
Principal occupation(s) during the past five years   Senior Compliance Analyst of Franklin Templeton (since 2020); Identity Theft Prevention Officer of certain funds associated with Legg Mason & Co. or its affiliates (since 2015); formerly, Compliance Officer of Legg Mason & Co. (2013 to 2020); Assistant Vice President of Legg Mason & Co. (2011 to 2020)

Marc A. De Oliveira

Franklin Templeton

100 First Stamford Place, 6th Floor, Stamford, CT 06902

 
Year of birth   1971
Position(s) with Trust   Secretary and Chief Legal Officer
Term of office1 and length of time served2   Since 2020
Principal occupation(s) during the past five years   Associate General Counsel of Franklin Templeton (since 2020); Assistant Secretary of certain funds associated with Legg Mason & Co. or its affiliates (since 2006); formerly, Managing Director (2016 to 2020) and Associate General Counsel of Legg Mason & Co. (2005 to 2020)

Thomas C. Mandia

Franklin Templeton

100 First Stamford Place, 6th Floor, Stamford, CT 06902

 
Year of birth   1962
Position(s) with Trust   Senior Vice President
Term of office1 and length of time served2   Since 2020
Principal occupation(s) during the past five years   Senior Associate General Counsel of Franklin Templeton (since 2020); Secretary of LMPFA (since 2006); Assistant Secretary of certain funds associated with Legg Mason & Co. or its affiliates (since 2006); Secretary of LM Asset Services, LLC (“LMAS”) (since 2002) and Legg Mason Fund Asset Management, Inc. (“LMFAM”) (since 2013) (formerly registered investment advisers); formerly, Managing Director and Deputy General Counsel of Legg Mason & Co. (2005 to 2020)

 

ClearBridge Mid Cap Fund  

 

47


Additional information (unaudited) (cont’d)

Information about Trustees and Officers

 

Additional Officers (cont’d)    

Christopher Berarducci

Franklin Templeton

620 Eighth Avenue, 47th Floor, New York, NY 10018

 
Year of birth   1974
Position(s) with Trust   Treasurer and Principal Financial Officer
Term of office1 and length of time served2   Since 2014 and 2019
Principal occupation(s) during the past five years   Vice President, Fund Administration and Reporting, Franklin Templeton (since 2020); Treasurer (since 2010) and Principal Financial Officer (since 2019) of certain funds associated with Legg Mason & Co. or its affiliates; formerly, Managing Director (2020), Director (2015 to 2020), and Vice President (2011 to 2015) of Legg Mason & Co.

Jeanne M. Kelly

Franklin Templeton

620 Eighth Avenue, 47th Floor, New York, NY 10018

 
Year of birth   1951
Position(s) with Trust   Senior Vice President
Term of office1 and length of time served2   Since 2007
Principal occupation(s) during the past five years   U.S. Fund Board Team Manager, Franklin Templeton (since 2020); Senior Vice President of certain funds associated with Legg Mason & Co. or its affiliates (since 2007); Senior Vice President of LMPFA (since 2006); President and Chief Executive Officer of LMAS and LMFAM (since 2015); formerly, Managing Director of Legg Mason & Co. (2005 to 2020); Senior Vice President of LMFAM (2013 to 2015)

 

Trustees who are not “interested persons” of the Fund within the meaning of Section 2(a)(19) of the Investment Company Act of 1940, as amended (the “1940 Act”).

 

*

Effective January 1, 2021, Ms. Duersten became Chair.

 

1 

Each Trustee and officer serves until his or her respective successor has been duly elected and qualified or until his or her earlier death, resignation, retirement or removal.

 

2 

Indicates the earliest year in which the Trustee became a board member for a fund in the Legg Mason fund complex or the officer took such office.

 

3 

Ms. Trust is an “interested person” of the Fund, as defined in the 1940 Act, because of her position with LMPFA and/or certain of its affiliates.

 

 

48

   ClearBridge Mid Cap Fund


Important tax information (unaudited)

 

By mid-February, tax information related to a shareholder’s proportionate share of distributions paid during the preceding calendar year will be received, if applicable. Please also refer to www.franklintempleton.com for per share tax information related to any distributions paid during the preceding calendar year. Shareholders are advised to consult with their tax advisors for further information on the treatment of these amounts on their tax returns.

The following tax information for the Fund is required to be furnished to shareholders with respect to income earned and distributions paid during its fiscal year.

The Fund hereby reports the following amounts, or if subsequently determined to be different, the maximum allowable amounts, for the fiscal year ended October 31, 2021:

 

        Pursuant to:        Amount Reported  
Long-Term Capital Gain Dividends Distributed        §852(b)(3)(C)          $132,647,865  
Income Eligible for Dividends Received Deduction (DRD)        §854(b)(1)(A)          $15,835,300  
Qualified Dividend Income Earned (QDI)        §854(b)(1)(B)          $16,966,593  
Qualified Business Income Dividends Earned        §199A                     $3,112,599  
Short-Term Capital Gain Dividends Distributed        §871(k)(2)(C)          $100,016  

 

ClearBridge Mid Cap Fund  

 

49


ClearBridge

Mid Cap Fund

 

Trustees*

Paul R. Ades

 

Andrew L. Breech

Althea L. Duersten**

Chair

Stephen R. Gross

Susan M. Heilbron

Howard J. Johnson

Arnold L. Lehman

Robin J. W. Masters

Jerome H. Miller

Ken Miller

G. Peter O’Brien

Thomas F. Schlafly

Jane Trust

Investment manager

Legg Mason Partners Fund Advisor, LLC

Subadviser

ClearBridge Investments, LLC

Distributor

Franklin Distributors, LLC†

Custodian

The Bank of New York Mellon

Transfer agent

BNY Mellon Investment Servicing (US) Inc.

4400 Computer Drive

Westborough, MA 01581

Independent registered public accounting firm

PricewaterhouseCoopers LLP Baltimore, MD

 

*

During a June 15, 2021 special meeting of shareholders, a new group of Trustees were elected to oversee the mutual funds of Legg Mason Global Asset Management Trust, Legg Mason Partners Investment Trust (prior to September 1, 2021, known as Legg Mason Partners Equity Trust) and Legg Mason Partners Variable Equity Trust, effective July 1, 2021.

**

Effective January 1, 2021, Ms. Duersten became Chair.

Effective July 7, 2021, Legg Mason Investor Services, LLC was renamed Franklin Distributors, LLC.

 

ClearBridge Mid Cap Fund

The Fund is a separate investment series of Legg Mason Partners Investment Trust, a Maryland statutory trust.

ClearBridge Mid Cap Fund

Legg Mason Funds

620 Eighth Avenue, 47th 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 as an exhibit to its reports on Form N-PORT. The Fund’s Forms N-PORT are available on the SEC’s website at www.sec.gov. To obtain information on Form N-PORT, shareholders can call the 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 related to portfolio transactions are available (1) without charge, upon request, by calling the Fund at 1-877-721-1926, (2) at www.franklintempleton.com and (3) on the SEC’s website at www.sec.gov.

 

This report is submitted for the general information of the shareholders of ClearBridge Mid Cap 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 Fund’s 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.franklintempleton.com

© 2021 Franklin Distributors, LLC, Member FINRA/SIPC. All rights reserved.


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, Franklin Distributors, LLC, as well as Legg Mason-sponsored closed-end funds. 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;

 

 

Bank account information, legal documents, and identity verification documentation;

 

 

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 individual’s 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 to 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 statistical analysis, market research and marketing services solely for the Funds;

 

 

Permit access to transfer, whether in the United States or countries outside of the United States to such Funds’ employees, agents and affiliates and service providers as required to enable the Funds to conduct ordinary business, or to comply with obligations to government regulators;

 

 

The Funds’ representatives such as legal counsel, accountants and auditors to enable the Funds to conduct ordinary business, or to comply with obligations to government regulators;

 

 

Fiduciaries or representatives acting on your behalf, such as an IRA custodian or trustee of a grantor trust.

 

NOT PART OF THE ANNUAL REPORT


Legg Mason Funds Privacy and Security Notice (cont’d)

 

Except as otherwise permitted by applicable law, companies acting on the Funds’ behalf, including those outside the United States, 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, if you have questions about the Funds’ privacy practices, or our use of your nonpublic personal information, 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.franklintempleton.com, or contact the Fund at 1-877-721-1926.

Revised April 2018

Legg Mason California Consumer Privacy Act Policy

Although much of the personal information we collect is “nonpublic personal information” subject to federal law, residents of California may, in certain circumstances, have additional rights under the California Consumer Privacy Act (“CCPA”). For example, if you are a broker,

 

NOT PART OF THE ANNUAL REPORT


Legg Mason Funds Privacy and Security Notice (cont’d)

 

dealer, agent, fiduciary, or representative acting by or on behalf of, or for, the account of any other person(s) or household, or a financial advisor, or if you have otherwise provided personal information to us separate from the relationship we have with personal investors, the provisions of this Privacy Policy apply to your personal information (as defined by the CCPA).

 

 

In addition to the provisions of the Legg Mason Funds Security and Privacy Notice, you may have the right to know the categories and specific pieces of personal information we have collected about you.

 

 

You also have the right to request the deletion of the personal information collected or maintained by the Funds.

If you wish to exercise any of the rights you have in respect of your personal information, you should advise the Funds by contacting them as set forth below. The rights noted above are subject to our other legal and regulatory obligations and any exemptions under the CCPA. You may designate an authorized agent to make a rights request on your behalf, subject to the identification process described below. We do not discriminate based on requests for information related to our use of your personal information, and you have the right not to receive discriminatory treatment related to the exercise of your privacy rights.

We may request information from you in order to verify your identity or authority in making such a request. If you have appointed an authorized agent to make a request on your behalf, or you are an authorized agent making such a request (such as a power of attorney or other written permission), this process may include providing a password/passcode, a copy of government issued identification, affidavit or other applicable documentation, i.e. written permission. We may require you to verify your identity directly even when using an authorized agent, unless a power of attorney has been provided. We reserve the right to deny a request submitted by an agent if suitable and appropriate proof is not provided.

For the 12-month period prior to the date of this Privacy Policy, the Legg Mason Funds have not sold any of your personal information; nor do we have any plans to do so in the future.

Contact Information

Address: Data Privacy Officer, 100 International Dr., Baltimore, MD 21202

Email: DataProtectionOfficer@franklintempleton.com

Phone: 1-800-396-4748

Revised October 2020

 

NOT PART OF THE ANNUAL REPORT


www.franklintempleton.com

© 2021 Franklin Distributors, LLC, Member FINRA/SIPC. All rights reserved.

FD01593 12/21 SR21-4296


ITEM 2.

CODE OF ETHICS.

The registrant has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller.

 

ITEM 3.

AUDIT COMMITTEE FINANCIAL EXPERT.

The Board of Trustees of the registrant has determined that Stephen R. Gross possesses the technical attributes identified in Instruction 2(b) of Item 3 to Form N-CSR to qualify as an “audit committee financial expert,” and has designated Stephen R. Gross as the Audit Committee’s financial expert. Stephen R. Gross is an “independent” Trustees pursuant to paragraph (a)(2) of Item 3 to Form N-CSR.

 

ITEM 4.

PRINCIPAL ACCOUNTANT FEES AND SERVICES.

a) Audit Fees. The aggregate fees billed in the last two fiscal years ending October 31, 2020 and October 31, 2021 (the “Reporting Periods”) for professional services rendered by the Registrant’s principal accountant (the “Auditor”) for the audit of the Registrant’s annual financial statements, or services that are normally provided by the Auditor in connection with the statutory and regulatory filings or engagements for the Reporting Periods, were $325,110 in October 31, 2020 and $325,110 in October 31, 2021.

b) Audit-Related Fees. The aggregate fees billed in the Reporting Period for assurance and related services by the Auditor that are reasonably related to the performance of the Registrant’s financial statements were $0 in October 31, 2020 and $0 in October 31, 2021.

(c) Tax Fees. The aggregate fees billed in the Reporting Periods for professional services rendered by the Auditor for tax compliance, tax advice and tax planning (“Tax Services”) were $0 in October 31, 2020 and $100,500 in October 31, 2021. These services consisted of (i) review or preparation of U.S. federal, state, local and excise tax returns; (ii) U.S. federal, state and local tax planning, advice and assistance regarding statutory, regulatory or administrative developments, and (iii) tax advice regarding tax qualification matters and/or treatment of various financial instruments held or proposed to be acquired or held.

There were no fees billed for tax services by the Auditors to service affiliates during the Reporting Periods that required pre-approval by the Audit Committee.

d) All Other Fees.

The aggregate fees billed in the Reporting Periods for products and services provided by the Auditor, other than the services reported in paragraphs (a) through (c) for the Item 4 for the Legg Mason Partners Investment Trust., were $0 in October 31, 2020 and $0 in October 31, 2021.

All Other Fees. There were no other non-audit services rendered by the Auditor to Legg Mason Partners Fund Advisors, LLC (“LMPFA”), and any entity controlling, controlled by or under common control with LMPFA that provided ongoing services to Legg Mason Partners Investment Trust requiring pre-approval by the Audit Committee in the Reporting Period.

(e) Audit Committee’s pre–approval policies and procedures described in paragraph (c) (7) of Rule 2-01 of Regulation S-X.

(1) The Charter for the Audit Committee (the “Committee”) of the Board of each registered investment company (the “Fund”) advised by LMPFA or one of their affiliates (each, an “Adviser”) requires that the Committee shall approve (a) all audit and permissible non-audit services to be provided to the Fund and (b) all permissible non-audit services to be provided by the Fund’s independent auditors to the Adviser and any Covered Service Providers if the


engagement relates directly to the operations and financial reporting of the Fund. The Committee may implement policies and procedures by which such services are approved other than by the full Committee.

The Committee shall not approve non-audit services that the Committee believes may impair the independence of the auditors. As of the date of the approval of this Audit Committee Charter, permissible non-audit services include any professional services (including tax services), that are not prohibited services as described below, provided to the Fund by the independent auditors, other than those provided to the Fund in connection with an audit or a review of the financial statements of the Fund. Permissible non-audit services may not include: (i) bookkeeping or other services related to the accounting records or financial statements of the Fund; (ii) financial information systems design and implementation; (iii) appraisal or valuation services, fairness opinions or contribution-in-kind reports; (iv) actuarial services; (v) internal audit outsourcing services; (vi) management functions or human resources; (vii) broker or dealer, investment adviser or investment banking services; (viii) legal services and expert services unrelated to the audit; and (ix) any other service the Public Company Accounting Oversight Board determines, by regulation, is impermissible.

Pre-approval by the Committee of any permissible non-audit services is not required so long as: (i) the aggregate amount of all such permissible non-audit services provided to the Fund, the Adviser and any service providers controlling, controlled by or under common control with the Adviser that provide ongoing services to the Fund (“Covered Service Providers”) constitutes not more than 5% of the total amount of revenues paid to the independent auditors during the fiscal year in which the permissible non-audit services are provided to (a) the Fund, (b) the Adviser and (c) any entity controlling, controlled by or under common control with the Adviser that provides ongoing services to the Fund during the fiscal year in which the services are provided that would have to be approved by the Committee; (ii) the permissible non-audit services were not recognized by the Fund at the time of the engagement to be non-audit services; and (iii) such services are promptly brought to the attention of the Committee and approved by the Committee (or its delegate(s)) prior to the completion of the audit.

(2) For the Legg Mason Partners Investment Trust, the percentage of fees that were approved by the audit committee, with respect to: Audit-Related Fees were 100% and 100% for October 31, 2020 and October 31, 2021; Tax Fees were 100% and 100% for October 31, 2020 and October 31, 2021; and Other Fees were 100% and 100% for October 31, 2020 and October 31, 2021.

(f) N/A

(g) Non-audit fees billed by the Auditor for services rendered to Legg Mason Partners Investment Trust, LMPFA and any entity controlling, controlled by, or under common control with LMPFA that provides ongoing services to Legg Mason Partners Investment Trust during the reporting period were $857,833 in October 31, 2020 and $1,558,348 in October 31, 2021.

(h) Yes. Legg Mason Partners Investment Trust’s Audit Committee has considered whether the provision of non-audit services that were rendered to Service Affiliates, which were not pre-approved (not requiring pre-approval), is compatible with maintaining the Accountant’s independence. All services provided by the Auditor to the Legg Mason Partners Investment Trust or to Service Affiliates, which were required to be pre-approved, were pre-approved as required.

 

ITEM 5.

AUDIT COMMITTEE OF LISTED REGISTRANTS.

 

  a)

The independent board members are acting as the registrant’s audit committee as specified in Section 3(a)(58)(B) of the Exchange Act. The Audit Committee consists of the following Board members:


Paul R. Ades

Andrew L. Breech

Althea L. Duersten**

Stephen R. Gross

Susan M. Heilbron

Howard J. Johnson

Arnold L. Lehman

Robin J. W. Masters

Jerome H. Miller

Ken Miller

G. Peter O’Brien

Thomas F. Schlafly

 

*

During a June 15, 2021 special meeting of shareholders, a new group of Trustees were elected to oversee the mutual funds of Legg Mason Global Asset Management Trust, Legg Mason Partners Investment Trust (prior to September 1, 2021, known as Legg Mason Equity Trust) and Legg Mason Partners Variable Equity Trust, effective July 1, 2021.

**

Effective January 1, 2021, Ms. Duersten became Chair.

 

  b)

Not applicable.

 

ITEM 6.

SCHEDULE OF INVESTMENTS.

Included herein under Item 1.

 

ITEM 7.

DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

Not applicable.

 

ITEM 8.

PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

Not applicable.

 

ITEM 9.

PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.

Not applicable.

 

ITEM 10.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

Not applicable.

 

ITEM 11.

CONTROLS AND PROCEDURES.

 

  (a)

The registrant’s principal executive officer and principal financial officer have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a- 3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective as of a date within 90 days of the filing date of this report that includes the disclosure required by this paragraph, based on their evaluation of the disclosure controls and procedures required by Rule 30a-3(b) under the 1940 Act and 15d-15(b) under the Securities Exchange Act of 1934.

 

  (b)

There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the second fiscal


  quarter of the period covered by this report that have materially affected, or are likely to materially affect the registrant’s internal control over financial reporting.

 

ITEM 12.

DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

Not applicable.

 

ITEM 13.

EXHIBITS.

(a) (1) Code of Ethics attached hereto.

Exhibit  99.CODE ETH

(a) (2)  Certifications pursuant to section 302 of the Sarbanes-Oxley Act of 2002 attached hereto.

Exhibit 99.CERT

(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 attached hereto.

Exhibit 99.906CERT

 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this Report to be signed on its behalf by the undersigned, there unto duly authorized.

Legg Mason Partners Investment Trust

 

By:  

/s/ Jane Trust

  Jane Trust
  Chief Executive Officer
Date:   December 22, 2021

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By:  

/s/ Jane Trust

  Jane Trust
  Chief Executive Officer
Date:   December 22, 2021
By:  

/s/ Christopher Berarducci

  Christopher Berarducci
  Principal Financial Officer
Date:   December 22, 2021