Legg Mason ETF Investment Trust
Prospectus July 29,
2022
CLEARBRIDGE
ALL CAP GROWTH ESG ETF
NASDAQ (Ticker
Symbol): CACG
The
Securities and Exchange Commission has not approved or disapproved these
securities or determined whether this Prospectus is accurate or complete. Any
statement to the contrary is a crime.
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INVESTMENT
PRODUCTS: NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE
VALUE |
Investment objective
ClearBridge
All Cap Growth ESG ETF (the “fund”) seeks to achieve long-term capital
appreciation.
Fees and expenses of the
fund
The
accompanying table describes the fees and expenses that you may pay if you buy,
hold and sell shares of the fund. You may also be subject to additional fees,
such as brokerage commissions and other fees to financial intermediaries, which
are not reflected in the table and Example below. The management agreement
between Legg Mason ETF Investment Trust (the “Trust”) and Legg Mason Partners
Fund Advisor, LLC (“LMPFA” or the “manager”) (the “Management Agreement”)
provides that the manager will pay all operating expenses of the fund, except
interest expenses, taxes, brokerage expenses, future Rule 12b‑1 fees (if any),
acquired fund fees and expenses, extraordinary expenses and the management fee
payable to the manager under the Management Agreement. The manager will also pay
all subadvisory fees of the fund.
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Shareholder
fees |
(fees paid directly from your
investment) |
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None |
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Annual fund operating expenses
(%) |
(expenses that you pay each
year as a percentage of the value of your
investment) |
Management
fees |
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0.53 |
Distribution
and/or service (12b‑1) fees |
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0.00 |
Other
expenses |
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None |
Total
annual fund operating expenses |
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0.53 |
Example:
This
example is intended to help you compare the cost of investing in the fund with
the cost of investing in other funds. The example assumes:
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You
invest $10,000 in the fund for the time periods
indicated |
• |
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Your
investment has a 5% return each year and the fund’s operating expenses
remain the same (except that any applicable fee waiver or expense
reimbursement is reflected only through its expiration
date) |
You
may also incur usual and customary brokerage commissions and other charges when
buying or selling shares of the fund, which are not reflected in the
example.
Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
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Number of years you own
your shares ($) |
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1 year |
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3 years |
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5 years |
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10 years |
ClearBridge
All Cap Growth ESG ETF |
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54 |
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170 |
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297 |
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665 |
Portfolio turnover.
The fund pays transaction
costs, such as commissions, when it buys and sells securities (or “turns over”
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when shares are held in a taxable account.
These costs, which are not reflected in annual fund operating expenses or in the
example, affect the fund’s performance. During the fiscal year ended
September 30, 2021, the fund’s portfolio turnover rate was 15% of the
average value of its portfolio. During the fiscal period October 1, 2021 to
March 31, 2022, the fund’s portfolio turnover rate was 12% of the average value of its
portfolio.
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2 |
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ClearBridge All Cap Growth ESG
ETF |
Principal investment
strategies
The
fund seeks to invest in a diversified portfolio of large, medium and small
capitalization stocks that have the potential for above-average long-term
earnings and/or cash flow growth and meet its financial and environmental,
social and governance (“ESG”) criteria. Under normal circumstances, the fund
invests at least 80% of its net assets, plus borrowings for investment purposes,
if any, in securities that meet its financial and ESG criteria. The fund’s
subadviser, ClearBridge Investments, LLC (“ClearBridge” or the “subadviser”),
uses a bottom‑up investment process that seeks to find inefficiently
priced companies with strong fundamentals, incentive-driven management teams,
dominant positions in niche markets and/or goods and services that are in high
customer demand. The bottom‑up process used by the subadviser relies
on extensive fundamental research that looks to identify companies with a range
of growth opportunities while evaluating the company’s business model, financial
structure and management acumen.
Research
is conducted by the portfolio managers with input from the sector analysts of
ClearBridge’s Fundamental Research Team. The team utilizes proprietary and
independent research to identify companies whose projected rapid growth in
earnings and cash flow is based on their participation in new products or
markets. For large company growth stocks, the team seeks companies that exhibit
superior balance sheets, exceptional management teams and long-term, consistent
operating histories. The subadviser attempts to complement this core group of
companies with tactical stocks that reflect themes within the prevailing market
environment. When looking at small- and medium‑sized company growth
stocks, the subadviser focuses on companies with rapid earnings growth
potential, unrecognized values, industry leadership and management teams that
have a significant ownership stake.
The
subadviser anticipates using a long-term approach to investing that typically
results in low portfolio turnover. The subadviser, however, may take a more
active approach to the portfolio, depending upon market conditions.
Determination
of whether a company meets the fund’s ESG standards is based on the subadviser’s
proprietary research approach. The subadviser will exercise judgment to
determine ESG best practices based on its over thirty-year history managing ESG
investment strategies through an established proprietary process. The subadviser
utilizes a fundamental, bottom‑up research approach that emphasizes
company analysis, management and stock selection. The subadviser’s propriety
research and analysis generally incorporates information and data obtained from
a variety of third-party research providers as supplementary to the subadviser’s
own proprietary research and analysis. The subadviser has the right to change
the third-party service providers that support this process at any time.
In
addition, certain types of companies are excluded from the investment universe.
Companies in the tobacco and coal industries are excluded, and companies earning
a significant portion of their revenue (in general, approximately 10‑15% or
more) from controversial arms (e.g., nuclear, chemical and biological weapons;
cluster munitions and anti-personnel landmines) or gambling are also excluded.
The subadviser may modify this list of prohibited investments, including revenue
thresholds or any particular exclusion, at any time, without shareholder
approval or notice.
The
ESG evaluation is integrated into a thorough assessment of investment worthiness
based on financial criteria as well as ESG considerations including innovative
workplace policies, employee benefits and programs; environmental management
system strength, eco‑efficiency, and life-cycle analysis; community
involvement, strategic philanthropy, and reputation management; and strong
corporate governance and independence of the board. The ESG analysis is
conducted by the subadviser’s sector analysts on a sector-specific basis, and a
proprietary ESG rating is assigned to each company. The weightings of the E, S
and G factors are determined by the subadviser for each respective sector and
sub‑sectors.
All
companies are assigned a proprietary ClearBridge ESG rating (A, AA, AAA).
Companies that score a rating of “B” are considered uninvestable. The
subadviser’s proprietary ESG ratings assesses whether a company focuses on ESG
factors, integrates ESG factors into its business model, and measures such
efforts. Companies that the subadviser believes have not focused on ESG factors
or have a poor ESG record are assigned a rating of “B.” The subadviser uses a
variety of ESG factors, which may change from time to time, as part of its
rating process. These factors are further described below under “More on the
fund’s investment strategies, investments and risks—Principal investment
strategies.” Further, to the extent that there is a material/substantial issue
with any one of the E, S or G components with respect to a company, such company
will be assigned a “B” rating. The subadviser’s ESG ratings are formally
reviewed at least annually. In addition, the subadviser’s research analysts
monitor the companies included in the fund’s portfolio on an ongoing basis to
assess the continued appropriateness of such ratings.
The
subadviser seeks to invest over the long-term in companies that the subadviser
considers to be of high quality with competitive advantages that can be
maintained as evidenced by high returns on capital, strong balance sheets, and
capable management teams that allocate capital in an efficient manner. The
subadviser seeks to invest in leadership companies where the portfolio managers
believe the market price underestimates the magnitude of future growth.
Leadership may be assessed both quantitatively and qualitatively. The subadviser
seeks to select securities of companies that are category leaders with
characteristics to sustain that position and grow market share consistently. The
subadviser performs rigorous analysis to understand company fundamentals, key
competitive dynamics, and industry structure with the belief that the best
business models win over time. The subadviser seeks to identify social or
economic trends that will have an impact on the economy as a whole to support
multi-year investment opportunities, allowing for compounding of earnings and
cash flow. The subadviser seeks companies with self-funding business models with
significant recurring revenue and businesses with the ability to generate
superior free cash flow over time. In addition, the subadviser takes a
disciplined approach to valuation and stress tests the sustainability of
profitability and growth. The subadviser will also consider emerging companies
with promising future prospects that may not yet have demonstrated substantial
profitability.
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ClearBridge All Cap Growth ESG
ETF |
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3 |
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The
subadviser will utilize fundamental analysis to identify investment candidates
with these attributes, and evaluate industry dynamics, the strength of the
business model and management skill. Valuation will be carefully examined using
a variety of techniques that depend on the type of company being researched.
Methods typically used are discounted cash flow analysis, market implied growth
and returns relative to the subadviser’s expectations, multiple comparisons and
scenario analysis. The subadviser will sell a security if the issuer no longer
meets its financial or ESG
criteria.
It
is also the subadviser’s intention to engage and encourage management to improve
in certain ESG areas identified by the subadviser through the sector analysts’
lead engagement. The subadviser engages and encourages management to improve in
certain ESG areas in a variety of ways, including through ESG engagement
meetings with management personnel of companies to discuss different topics
relevant to the company’s business operations, such as labor standards,
workforce diversity, supply chain, environmental targets, carbon intensity,
reputation, and executive compensation; applying proprietary methodologies to
assess the outcome and progress of these meetings to inform the subadviser’s ESG
rating of the companies; and through proxy voting.
As
of March 31, 2022, the top three sectors represented by the fund’s
underlying investments were information technology, healthcare and communication
services. These sectors may change over time.
Principal risks
Risk
is inherent in all investing. The value of your investment in the fund, as well
as the amount of return you receive on your investment, may fluctuate
significantly. You may lose part or all
of your investment in the fund or your investment may not perform as well as
other similar investments. An investment in the fund is not
insured or guaranteed by the Federal Deposit Insurance Corporation or by any
bank or government agency. The following is a summary
description of certain risks of investing in the fund.
Growth investing
risk. The fund’s growth-oriented
investment style may increase the risks of investing in the fund. Growth
securities typically are very sensitive to market movements because their market
prices tend to reflect future expectations. When it appears those expectations
will not be met, the prices of growth securities typically fall. Growth
securities may also be more volatile than other investments because they often
do not pay dividends. Growth stocks as a group may be out of favor and
underperform the overall equity market while the market concentrates on value
stocks.
Issuer
risk. The market price of a security can
go up or down more than the market as a whole and can perform differently from
the value of the market as a whole, due to factors specifically relating to the
security’s issuer, such as disappointing earnings reports by the issuer,
unsuccessful products or services, loss of major customers, changes in
management, corporate actions, negative perception in the marketplace, or major
litigation or changes in government regulations affecting the issuer or the
competitive environment. An individual security may also be affected by factors
relating to the industry or sector of the issuer. The fund may experience a
substantial or complete loss on an individual security. A change in financial
condition or other event affecting a single issuer may adversely impact the
industry or sector of the issuer or securities markets as a whole.
ESG investment
strategy risk. The fund’s ESG investment strategy limits the
types and number of investment opportunities available to the fund and, as a
result, the fund may underperform other funds that do not have an ESG focus. The
fund’s ESG investment strategy may result in the fund investing in securities or
industry sectors that underperform the market as a whole, or forgoing
opportunities to invest in securities that might otherwise be advantageous to
buy. The fund may also underperform other funds that apply different ESG
standards. In addition, the subadviser may be unsuccessful in creating a
portfolio composed of companies that exhibit positive ESG characteristics. In evaluating a security or issuer based on
ESG criteria, the subadviser may use information and data from third-party
providers of ESG research, which may be incomplete, inaccurate or unavailable.
There is no uniform set of ESG standards, and different third party providers
may provide different or inconsistent information and data. There may be
limitations with respect to availability of ESG data in certain sectors, as well
as limited availability of investments with positive ESG assessments in certain
sectors. As a result, there is a risk that the subadviser may incorrectly assess
a security or issuer. The subadviser’s evaluation of ESG criteria is subjective
and may change over time.
Large capitalization
company risk. Large capitalization
companies may fall out of favor with investors based on market and economic
conditions. In addition, larger companies may not be able to attain the high
growth rates of successful smaller companies and may be less capable of
responding quickly to competitive challenges and industry changes. As a result,
the fund’s value may not rise as much as, or may fall more than, the value of
funds that focus on companies with smaller market capitalizations.
Small and
mid‑capitalization company risk. The
fund will be exposed to additional risks as a result of its investments in the
securities of small and mid‑capitalization companies. Small and
mid‑capitalization companies may fall out of favor with investors; may have
limited product lines, operating histories, markets or financial resources; or
may be dependent upon a limited management group. The prices of securities of
small and mid‑capitalization companies generally are more volatile than those of
large capitalization companies and are more likely to be adversely affected than
large capitalization companies by changes in earnings results and investor
expectations or poor economic or market conditions, including those experienced
during a recession. Securities of small and mid‑capitalization companies may
underperform large capitalization companies, may be harder to sell at times and
at prices the portfolio managers believe appropriate and may have greater
potential for losses.
Stock market and
equity securities risk. The stock
markets are volatile and the market prices of the fund’s equity securities may
decline generally. Equity securities may include warrants, rights,
exchange-traded and over‑the‑counter common stocks, preferred stock, depositary
receipts, trust certificates, limited partnership interests and shares of other
investment companies, including exchange-traded funds and real estate investment
trusts. Equity securities may have greater price volatility than other asset
classes, such as fixed income securities, and may fluctuate in
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ClearBridge All Cap Growth ESG
ETF |
price
based on actual or perceived changes in a company’s financial condition and
overall market and economic conditions and perceptions. If the market prices of
the equity securities owned by the fund fall, the value of your investment in
the fund will decline.
Valuation
risk. The sales price the fund could
receive upon the sale of any particular portfolio investment may differ from the
fund’s valuation of the investment, particularly for securities that trade in
thin or volatile markets or that are valued using a fair value methodology.
These differences may increase significantly and affect fund investments more
broadly during periods of market volatility. Authorized Participants who
purchase or redeem fund shares on days when the fund is holding fair-valued
securities may receive fewer or more shares or lower or higher redemption
proceeds than they would have received if the fund had not fair-valued
securities or had used a different valuation methodology. The fund’s ability to
value its investments may be impacted by technological issues and/or errors by
pricing services or other third party service providers. The valuation of the
fund’s investments involve subjective judgment.
Asset class
risk. Securities or other assets in the
fund’s portfolio may underperform in comparison to the general financial
markets, a particular financial market or other asset classes.
Industry or sector
focus risk. Although the fund does not
employ an industry or sector focus, the fund may be susceptible to an increased
risk of loss, including losses due to events that adversely affect the fund’s
investments more than the market as a whole, to the extent that the fund has
greater exposure to the securities of a particular issuer or issuers within the
same industry or sector.
Market events
risk. The market values of securities or
other assets will fluctuate, sometimes sharply and unpredictably, due to changes
in general market conditions, overall economic trends or events, governmental
actions or intervention, actions taken by the U.S. Federal Reserve or foreign
central banks, market disruptions caused by trade disputes or other factors,
political developments, investor sentiment, the global and domestic effects of a
pandemic, and other factors that may or may not be related to the issuer of the
security or other asset. Economies and financial markets throughout the world
are increasingly interconnected. Economic, financial or political events,
trading and tariff arrangements, public health events, terrorism, natural
disasters and other circumstances in one country or region could have profound
impacts on global economies or markets. As a result, whether or not the fund
invests in securities of issuers located in or with significant exposure to the
countries or markets directly affected, the value and liquidity of the fund’s
investments may be negatively affected.
The
rapid and global spread of a highly contagious novel coronavirus respiratory
disease, designated COVID‑19, has resulted in extreme volatility in the
financial markets; reduced liquidity of many instruments; restrictions on
international and, in some cases, local travel; significant disruptions to
business operations (including business closures); strained healthcare systems;
disruptions to supply chains, consumer demand and employee availability; and
widespread uncertainty regarding the duration and long-term effects of this
pandemic. Some sectors of the economy and individual issuers have experienced
particularly large losses. In addition, the COVID‑19 pandemic may result in a
sustained domestic or even global economic downturn or recession, domestic and
foreign political and social instability, damage to diplomatic and international
trade relations and increased volatility and/or decreased liquidity in the
securities markets. Developing or emerging market countries may be more impacted
by the COVID‑19 pandemic as they may have less established health care systems
and may be less able to control or mitigate the effects of the pandemic. The
ultimate economic fallout from the pandemic, and the long-term impact on
economies, markets, industries and individual issuers, are not known. The U.S.
government and the Federal Reserve, as well as certain foreign governments and
central banks, have taken extraordinary actions to support local and global
economies and the financial markets in response to the COVID‑19 pandemic. This
and other government intervention into the economy and financial markets to
address the COVID‑19 pandemic may not work as intended, particularly if the
efforts are perceived by investors as being unlikely to achieve the desired
results. Government actions to mitigate the economic impact of the pandemic have
resulted in a large expansion of government deficits and debt, the long term
consequences of which 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.
Market trading
risk. The fund faces numerous market
trading risks, including the potential lack of an active market for fund shares,
losses from trading in secondary markets, periods of high volatility and
disruptions in the creation/redemption process. Any of these factors, among
others, may lead to the fund’s shares trading at a premium or discount to net
asset value.
Absence of active market. Although shares of the fund are listed for trading
on one or more stock exchanges, there can be no assurance that an active trading
market for such shares will develop or be maintained by market makers or
Authorized Participants. Authorized Participants are not obligated to execute
purchase or redemption orders for Creation Units. In periods of market
volatility, market makers and/or Authorized Participants may be less willing to
transact in fund shares. The absence of an active market for the fund’s shares
may contribute to the fund’s shares trading at a premium or discount to net
asset value.
Shares of the fund may trade at prices other than net
asset value. Shares of the fund
trade on stock exchanges at prices at, above or below the fund’s most recent net
asset value. The net asset value of the fund is calculated at the end of each
business day and fluctuates with changes in the market value of the fund’s
holdings. The trading price of the fund’s shares fluctuates continuously
throughout trading hours based on both market supply of and demand for fund
shares and the underlying value of the fund’s portfolio holdings or net asset
value. As a result, the trading prices of the fund’s shares may deviate
significantly from net asset value during periods of market volatility,
including during periods of high redemption requests or other unusual market
conditions. ANY OF THESE FACTORS, AMONG OTHERS, MAY LEAD TO THE FUND’S SHARES
TRADING AT A PREMIUM OR DISCOUNT TO NET ASSET VALUE.
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ClearBridge All Cap Growth ESG
ETF |
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Assets under
management risk. From time to time, a
third party, LMPFA and/or affiliates of LMPFA or the fund may invest in the fund
and hold its investment for a period of time in order for the fund to achieve
size or scale. There can be no assurance that any such entity will not redeem
its investment, that it will not redeem at an inopportune time for the fund or
that the size of the fund will be maintained at a level necessary to enable the
fund to remain viable. Such redemption may cause the fund to sell assets (or
invest cash) at disadvantageous times or prices, increase or accelerate taxable
gains or transaction costs and may negatively affect the fund’s net asset value,
market price, performance, or ability to satisfy redemptions in a timely manner.
Information
technology sector risk. Companies
in the rapidly changing field of information technology face special risks.
Additionally, companies in this field are dependent upon consumer and business
acceptance as new technologies evolve. Information technology companies face
intense competition and potentially rapid product obsolescence. They are also
heavily dependent on intellectual property rights and may be adversely affected
by the loss or impairment of, or inability to enforce, those rights.
Authorized
Participant concentration risk. Only an
Authorized Participant may engage in creation or redemption transactions
directly with the fund. “Authorized Participants” are broker-dealers that are
permitted to create and redeem shares directly with the fund and who have
entered into agreements with the fund’s distributor. A limited number of
institutions act as Authorized Participants in respect of the fund. To the
extent that these institutions exit the business or are unable to process
creation and/or redemption orders with respect to the fund and no other
Authorized Participant steps forward to create or redeem, in either of these
cases, fund shares may trade at a premium or discount to net asset value and
possibly face trading halts and/or delisting.
Volatility
risk. The market prices of the
securities or other assets in the fund’s portfolio may fluctuate, sometimes
rapidly and unpredictably. The price of a security may fluctuate due to factors
affecting markets generally or particular industries. The market price of a
security or other asset may also be more volatile than the market as a whole.
This volatility may affect the fund’s net asset value. Securities or other
assets in the fund’s portfolio may be subject to price volatility and the prices
may not be any less volatile than the market as a whole and could be more
volatile. Events or financial circumstances affecting individual securities or
sectors may increase the volatility of the fund.
Cybersecurity
risk. Cybersecurity incidents, both
intentional and unintentional, may allow an unauthorized party to gain access to
fund assets, fund or customer data (including private shareholder information),
or proprietary information, cause the fund, the manager, the subadvisers,
Authorized Participants, the relevant listing exchange and/or their service
providers (including, but not limited to, fund accountants, custodians,
sub‑custodians, transfer agents and financial intermediaries) to suffer data
breaches, data corruption or loss of operational functionality or prevent fund
investors from purchasing, redeeming or exchanging shares or receiving
distributions. The fund, the manager, and the subadvisers have limited ability
to prevent or mitigate cybersecurity incidents affecting third party service
providers, and such third party service providers may have limited
indemnification obligations to the fund or the manager. Cybersecurity incidents
may result in financial losses to the fund and its shareholders, and substantial
costs may be incurred in order to prevent or mitigate any future cybersecurity
incidents. Issuers of securities in which the fund invests are also subject to
cybersecurity risks, and the value of these securities could decline if the
issuers experience cybersecurity incidents.
Because
technology is frequently changing, new ways to carry out cyber attacks are
always developing. Therefore, there is a chance that some risks have not been
identified or prepared for, or that an attack may not be detected, which puts
limitations on the fund’s ability to plan for or respond to a cyber attack. Like
other funds and business enterprises, the fund, the manager, the subadvisers,
Authorized Participants, the relevant listing exchange and their service
providers are subject to the risk of cyber incidents occurring from time to
time.
Portfolio management
risk. The value of your investment may
decrease if the subadviser’s judgment about the attractiveness or value of, or
market trends affecting, a particular security, industry, sector or region, or
about market movements, is incorrect or does not produce the desired results, or
if there are imperfections, errors or limitations in the models, tools and data
used by the subadviser. In addition, the fund’s investment strategies or
policies may change from time to time. Those changes may not lead to the results
intended by the subadviser and could have an adverse effect on the value or
performance of the fund.
Trading issues
risk. Trading in fund shares on
NASDAQ may be halted in certain circumstances. There can be no assurance that
the requirements of NASDAQ necessary to maintain the listing of the fund will
continue to be met.
Illiquidity
risk. Illiquidity risk exists when
particular investments are impossible or difficult to sell. Although the fund’s
investments must be liquid at the time of investment, investments may become
illiquid after purchase by the fund, particularly during periods of market
turmoil. Markets may become illiquid when, for instance, there are few, if any,
interested buyers or sellers or when dealers are unwilling or unable to make a
market for certain securities. When the fund holds illiquid investments, the
portfolio may be harder to value, especially in changing markets, which may
contribute to the fund’s shares trading at a premium or discount to net asset
value.
These
and other risks are discussed in more detail in the Prospectus or in the
Statement of Additional Information.
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ClearBridge All Cap Growth ESG
ETF |
Performance
The
accompanying bar chart and table provide some indication of the risks of
investing in the fund. The bar chart
shows changes in the fund’s performance from year to year. The table shows the
average annual total returns of the fund and also compares the fund’s
performance with the average annual total returns of an index or other
benchmark. The fund makes updated performance information,
including its current net asset value, available at www.franklintempleton.com/etfproducts
(select fund), or by calling the fund at 1‑877‑721‑1926.
The fund’s past performance
(before and after taxes) is not necessarily an indication of how the fund will
perform in the
future.
Effective
July 1, 2021, the fund changed its name from ClearBridge All Cap Growth ETF
to ClearBridge All Cap Growth ESG ETF and adopted the fund’s current ESG related
investment strategies.
Best Quarter (06/30/2020): 22.63 Worst
Quarter (03/31/2020): (15.45)
The
year‑to‑date return as of the most recent calendar quarter,
which ended June 30, 2022, was
(29.35)
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Average annual total returns
(%) |
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(for periods ended
December 31, 2021) |
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1 year |
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Since inception |
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Inception date |
Return
before taxes |
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18.44 |
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17.77 |
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05/03/2017 |
Return
after taxes on distributions |
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17.65 |
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17.47 |
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Return
after taxes on distributions and sale of fund shares |
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11.49 |
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14.35 |
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Russell
3000 Growth Index (reflects no deduction for fees, expenses or taxes) |
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25.85 |
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23.67 |
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After‑tax returns are
calculated using the historical highest individual federal marginal income tax
rates and do not reflect the impact of state and local taxes.
Actual after‑tax returns
depend on an investor’s tax situation and may differ from those shown, and the
after‑tax returns shown are not relevant to investors who hold their fund shares
through tax‑advantaged arrangements, such as 401(k) plans or individual
retirement accounts.
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ClearBridge All Cap Growth ESG
ETF |
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Management
Investment
manager: Legg Mason Partners Fund
Advisor, LLC (“LMPFA”)
Subadviser: ClearBridge Investments, LLC (“ClearBridge”)
Portfolio
managers: Primary responsibility for the
day‑to‑day management of the fund lies with the following portfolio managers.
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Portfolio
manager |
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Title |
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Portfolio manager
of the fund since |
Evan
Bauman |
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Managing
Director and Portfolio Manager of ClearBridge |
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2017 |
Peter
Bourbeau |
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Managing
Director and Portfolio Manager of ClearBridge |
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2017 |
Aram
E. Green |
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Managing
Director and Portfolio Manager of ClearBridge |
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2021 |
Margaret
Vitrano |
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Managing
Director and Portfolio Manager of ClearBridge |
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2017 |
Purchase and sale of fund
shares
The
fund is an actively managed exchange-traded fund (“ETF”). Individual shares of
the fund are listed on a national securities exchange and are redeemable only by
Authorized Participants in aggregated blocks of shares or multiples thereof
(“Creation Units”).
Individual
shares of the fund may only be purchased and sold in the secondary market
through a broker-dealer at market prices. Because fund shares trade at market
prices rather than at net asset value, fund shares may trade at a price greater
than net asset value (a premium) or less than net asset value (a discount).
When
buying or selling shares in the secondary market, you may incur costs
attributable to the difference between the highest price a buyer is willing to
pay to purchase shares of the fund (bid) and the lowest price a seller is
willing to accept for shares of the fund (ask) (the “bid‑ask spread”).
The
fund will only issue or redeem Creation Units to Authorized Participants who
have entered into agreements with the fund’s distributor. The fund generally
will issue or redeem Creation Units in return for a designated portfolio of
securities (and an amount of cash) that the fund specifies each day.
You
may access recent information, including information on the fund’s net asset
value, market price, premiums and discounts, and bid‑ask spreads, on the fund’s
website at www.franklintempleton.com/etfproducts.
Tax information
The
fund’s distributions are generally taxable and will be taxed as ordinary income,
capital gains, or some combination of both, unless you are investing through a
tax‑advantaged account, such as a 401(k) plan or an individual retirement
account, in which case your distributions may be taxed when withdrawn from such
tax‑advantaged account.
Payments to
broker/dealers and other financial intermediaries
If
you purchase shares of the fund through a broker-dealer or other financial
intermediary (such as a bank), LMPFA or other related companies pay the
intermediary for marketing activities and presentations, educational training
programs, conferences, the development of technology platforms and reporting
systems or other services related to the sale or promotion of the fund. These
payments may create a conflict of interest by influencing the broker-dealer or
other intermediary and your salesperson to recommend the fund over another
investment. Ask your salesperson or visit your financial intermediary’s website
for more information.
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More on the fund’s
investment strategies, investments and risks
Introduction
The
fund is an actively managed exchange-traded fund (“ETF”), and the shares of the
fund are listed for trading on NASDAQ. The market price for a share of the fund
may be different from the fund’s most recent net asset value (“NAV”).
ETFs
are funds that trade like other publicly traded securities. Unlike shares of a
mutual fund, which can be bought and redeemed from the issuing fund by all
shareholders at a price based on NAV, shares of the fund may be purchased or
redeemed directly from the fund at NAV solely by Authorized Participants. Also
unlike shares of a mutual fund, shares of the fund are listed on a national
securities exchange and trade in the secondary market at market prices that
change throughout the day.
Investment objective
The
fund seeks to achieve long-term capital appreciation.
Principal investment
strategies
The
fund attempts to structure a diversified portfolio of large, medium and small
capitalization stocks that have the potential for above-average long-term
earnings and/or cash flow growth and meet its ESG criteria using
a bottom‑up investment process that seeks to find inefficiently priced
companies with strong fundamentals, incentive-driven management teams, dominant
positions in niche markets and/or goods and services that are in high customer
demand. The bottom‑up process used by the subadviser relies on
extensive fundamental research that looks to identify companies with a range of
growth opportunities while evaluating the company’s business model, financial
structure and management acumen. The fund may also invest in companies that the
subadviser believes are making substantial progress toward becoming a leader in
ESG policies. In assessing whether a company is making substantial progress
toward becoming a leader in ESG, the subadviser considers the degree to which
companies acknowledge and respond to the ESG factors that emerge within their
operating arena. The subadviser evaluates a company’s capacity to manage the ESG
drivers of business performance by analyzing corporate policies, management
systems and practices, and a company’s track record in these areas. The
subadviser primarily relies on the company’s public reports and filings in
assessing such progress but is also informed by its engagement with management.
Under
normal circumstances, the fund invests at least 80% of its net assets, plus
borrowings for investment purposes, if any, in securities that meet its
financial and ESG criteria.
The
investment process begins by focusing on a core universe of companies with a
market capitalization of $ 3 billion or more. These companies are
evaluated based on factors such as sustainability and growth dynamics of their
business, the adequacy of their capital to fund growth initiatives and
management’s business strategy and history of execution of the strategy. Other
factors considered by the subadviser may include:
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A
company’s competitors |
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The
cyclicality of its business and recurring revenues
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A
company’s product cycle |
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Clarity
of a company’s business model and vision for growth
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Consistency
of reported operational results |
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Use
of incentives and management’s ownership stake in the company
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Valuation,
including free cash flow yield, price to earnings ratio and price to
earnings growth ratio |
After
identifying companies for potential investment, the subadviser seeks to achieve
diversification of the portfolio across the growth spectrum, including cyclical
companies, stable growth companies and sustainable growth companies. The
subadviser seeks to complement a core group of large capitalization growth
companies with tactical stocks that reflect themes within the prevailing market
environment. When looking at small- and medium‑sized company growth
stocks, the subadviser selects stocks of those companies with rapid earnings
growth potential, unrecognized values, industry leadership and management teams
that have a significant ownership stake.
The
portfolio managers construct a portfolio of companies along the spectrum of
growth rates and valuations, assigning weights accordingly to the team’s
highest-conviction ideas, and adjusting position sizes to manage portfolio risk.
Through its investment process the subadviser seeks to provide balanced and
diversified exposure across the entire growth spectrum (cyclical, stable, and
select), while maintaining high active share (i.e., the extent to which the
fund’s holdings diverge from the fund’s benchmark index).
Determination
of a company’s ESG standards is based on the subadviser’s proprietary research
approach. The subadviser will exercise judgment to determine ESG best practices
based on its over thirty-year history of managing ESG investment strategies
through an established proprietary process. The subadviser’s proprietary ESG
evaluation process is integrated with a
fundamental, bottom‑up research approach that emphasizes company
analysis, management and stock selection. Research analysts integrate ESG
factors during analysis at the company-level, and work directly
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with
the portfolio management team to integrate the ESG factors into the strategy. In
addition, certain types of companies are excluded from the investment universe.
Companies in the tobacco and coal industries are excluded, and companies earning
a significant portion of their revenue (in general, approximately 10‑15% or
more) from controversial arms (e.g., nuclear, chemical and biological weapons;
cluster munitions and anti-personnel landmines) or gambling are also excluded.
The subadviser may modify this list of prohibited investments, including revenue
thresholds or any particular exclusion, at any time, without shareholder
approval or notice. Thus, companies that are selected for inclusion in the
fund’s portfolio meet both the financial and ESG criteria that are part of the
subadviser’s security selection process, with companies being weighted according
to the portfolio management team’s highest-conviction ideas with adjustments to
position sizes in order to manage portfolio risk.
The
subadviser’s propriety research and analysis generally incorporates information
and data obtained from a variety of third-party research providers as
supplementary to the subadviser’s own proprietary research and analysis. The
subadviser has the right to change the third-party service providers that
support this process at any time.
The
ESG evaluation is integrated into a thorough assessment of investment worthiness
based on financial criteria as well as ESG considerations including innovative
workplace policies, employee benefits and programs; environmental management
system strength, eco‑efficiency (the concept of creating more goods
and services while using fewer resources and creating less waste and pollution)
and life-cycle analysis; community involvement, strategic philanthropy and
reputation management; and strong corporate governance and independence of the
board. The subadviser utilizes an integrated approach that does not segment the
investment process into distinct financial and ESG components, rather financial
criteria and ESG factors are considered throughout the investment process.
The
portfolio managers consider various ESG factors, including but not limited to:
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Supply
chain monitoring and standards (ethical sourcing, high degree of
transparency on a company’s global workforce) |
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Environmental
considerations (greenhouse gas emissions targets and achievements, waste
minimization and natural resource scarcity policies, environmental
management systems) |
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The
regulatory framework to which the company is subject
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Workplace
safety standards |
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Labor
relations (labor management, employee sentiment, diversity, employee
training and retention programs, workplace safety standards)
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Community
impact (does the company serve and have a positive impact on the
communities in which they operate through actions such as volunteerism and
strategic giving) |
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Green
products and services (does the company utilize recyclable materials in
production, does the company provide and/or utilize products or services
intended to reduce environmental impact) |
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Continuous
improvements in energy efficiency in products and operations
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Executive
compensation, independence and diversity of the board
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Capital
allocation policy (does company allocate capital in ways that are
consistent with ESG best practices and the best interests of shareholders)
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The
ESG analysis is conducted by the subadviser’s sector analysts on a
sector-specific basis, and a proprietary ESG rating is assigned to each company.
Each sector of the economy (e.g., technology, energy, retail) is likely to face
a different range of issues, given the different business environments in which
the sectors operate. Recognizing this, the subadviser’s sector analysts and
portfolio managers selectively emphasize those particular issues that the
subadviser believes are most relevant to a company’s performance. While ESG
characteristics and weightings are determined by company and sector, they also
share common traits such as transparency, management involvement, innovation,
long-term view, and willingness to engage investors on sustainability matters.
The
subadviser seeks to invest over the long term in companies that the subadviser
considers to be of high quality with competitive advantages that can be
maintained as evidenced by high returns on capital, strong balance sheets, and
capable management teams that allocate capital in an efficient manner. The
subadviser seeks to invest in leadership companies where the portfolio managers
believe the market price underestimates the magnitude of future growth.
Leadership may be assessed both quantitatively and qualitatively. The subadviser
seeks to select securities of companies that are category leaders with
characteristics to sustain that position and grow market share consistently. The
subadviser performs rigorous analysis to understand company fundamentals, key
competitive dynamics and industry structure with the belief that the best
business models win over time. The subadviser seeks to identify social or
economic trends that will have an impact on the economy as a whole to support
multi-year investment opportunities, allowing for compounding of earnings and
cash flow. The subadviser seeks companies with self-funding business models with
significant recurring revenue and businesses with the ability to generate
superior free cash flow over time. In addition, the subadviser takes a
disciplined approach to valuation and stress tests the sustainability of
profitability and growth. The subadviser will also consider emerging companies
with promising future prospects that may not yet have demonstrated substantial
profitability.
The
subadviser will utilize fundamental analysis to identify investment candidates
with these attributes, and evaluate industry dynamics, the strength of the
business model and management skill. Valuation will be carefully examined using
a variety of techniques that depend on the type of
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company
being researched. Methods typically used are discounted cash flow analysis,
market implied growth and returns relative to the subadviser’s expectations,
multiple comparisons and scenario analysis.
It
is also the subadviser’s intention to engage and encourage management to improve
in certain ESG areas identified by the subadviser through the sector analysts’
lead engagements. The subadviser engages and encourages management to improve in
certain ESG areas in a variety of ways, including through ESG engagement
meetings with management personnel of companies to discuss different topics
relevant to the company’s business operations, such as labor standards,
workforce diversity, supply chain, environmental targets, carbon intensity,
reputation, and executive compensation; applying proprietary methodologies to
assess the outcome and progress of these meetings to inform the subadviser’s ESG
rating of the companies; and through proxy voting.
The
portfolio managers will exercise their judgment in applying the ESG ratings
system. All companies are assigned a proprietary ClearBridge ESG rating (A, AA,
AAA). Companies that score a rating of “B” are considered uninvestable. The
subadviser’s proprietary ESG ratings assesses whether a company focuses on ESG
factors, integrates ESG factors into its business model, and measures such
efforts. Companies that the subadviser believes have not focused on ESG factors
or have a poor ESG record are assigned a rating of “B.” Further, to the extent
that there is a material/substantial issue with any one of the E, S or G
components with respect to a company, such company will be assigned a “B”
rating. The subadviser’s ESG ratings are formally reviewed at least annually. In
addition, the subadviser’s research analysts monitor the companies included in
the fund’s portfolio on an ongoing basis to assess the continued appropriateness
of such ratings. The subadviser uses a variety of ESG factors, which may change
from time to time, as part of its rating process.
Proxy
voting is a vital part of the management role. The portfolio managers are guided
by the ClearBridge Proxy Voting Policies and Procedures, which include proxy
guidelines for traditional governance, environmental and social proposals. In
addition, the portfolio managers generally support shareholder proposals that
promote good governance, greater corporate transparency, accountability and
ethical practices.
The
subadviser will sell a security if the issuer no longer meets its financial or
ESG criteria. In addition, the subadviser will seek to replace securities when
the company’s risk/reward profile is no longer favorable due to price
appreciation or if the company’s investment fundamentals have deteriorated
meaningfully relative to original expectations. Securities may also be sold to
permit investment in an issuer considered by the subadviser to be a more
attractive alternative.
As
of March 31, 2022, the top three sectors represented by the fund’s
underlying investments were information technology, healthcare and communication
services. These sectors may change over time.
Equity investments
Equity
securities include exchange-traded and over‑the‑counter (“OTC”) common and
preferred stocks, warrants and rights, securities convertible into equity
securities and securities of other investment companies and of real estate
investment trusts (“REITs”).
Foreign investments
The
fund may invest up to 25% of its net assets (at the time of investment) in
foreign securities. The fund may invest directly in foreign issuers or invest in
depositary receipts.
Cash management
The
fund may hold cash pending investment, and may invest in money market funds and
other money market instruments for cash management purposes. The amount of
assets the fund may hold for cash management purposes will depend on market
conditions and the need to meet expected redemption requests.
Defensive investing
The
fund may depart from its principal investment strategies in response to adverse
market, economic or political conditions by taking temporary defensive
positions, including by investing in any type of money market instruments and
short-term debt securities or holding cash without regard to any percentage
limitations. If a significant amount of the fund’s assets is used for
defensive investing purposes, the fund will be less likely to achieve its
investment objective. Although the subadviser has the ability to take defensive
positions, it may choose not to do so for a variety of reasons, even during
volatile market conditions.
Other investments
The
fund may also use other strategies and invest in other investments that are
described, along with their risks, in the Statement of Additional Information
(“SAI”). However, the fund might not use all of the strategies and
techniques or invest in all of the types of investments described in this
Prospectus or in the SAI.
Percentage and other
limitations
The
fund’s compliance with its investment limitations and requirements described in
this Prospectus is usually determined at the time of investment. If such a
percentage limitation is complied with at the time of an investment, any
subsequent change resulting from a change in asset values or characteristics
will not constitute a violation of that limitation.
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Important information
The
fund’s investment objective is non‑fundamental and may be changed by the Board
of Trustees (the “Board”) without shareholder approval upon notice to
shareholders.
There
is no assurance that the fund will meet its investment objective.
The
fund’s 80% investment policy may be changed by the Board without shareholder
approval upon 60 days’ prior notice to shareholders.
The
fund will consider an issuer to be a “foreign issuer” if the issuer is a
non‑U.S. government (including any sub‑division, agency or instrumentality of a
non‑U.S. government), a supranational entity or any other issuer (including
corporate issuers) organized under the laws of a country outside of the United
States and having a principal place of business outside of the United States.
The fund will consider all other issuers to be “U.S. issuers.”
The
fund’s other investment strategies and policies may be changed from time to time
without shareholder approval, unless specifically stated otherwise in this
Prospectus or in the SAI.
More on risks of
investing in the fund
Following
is more information on the principal risks summarized above and additional risks
of investing in the fund.
Growth investing
risk. The fund’s growth-oriented
investment style may increase the risks of investing in the fund. Growth
securities typically are very sensitive to market movements because their market
prices tend to reflect future expectations. When it appears those expectations
will not be met, the prices of growth securities typically fall. Growth
securities may also be more volatile than other investments because they often
do not pay dividends. Growth stocks as a group may be out of favor and
underperform the overall equity market while the market concentrates on value
stocks.
Issuer
risk. The market price of a security can
go up or down more than the market as a whole and can perform differently from
the value of the market as a whole, due to factors specifically relating to the
security’s issuer, such as disappointing earnings reports by the issuer,
unsuccessful products or services, loss of major customers, changes in
management, corporate actions, negative perception in the marketplace, or major
litigation or changes in government regulations affecting the issuer or the
competitive environment. An individual security may also be affected by factors
relating to the industry or sector of the issuer. The fund may experience a
substantial or complete loss on an individual security. A change in financial
condition or other event affecting a single issuer may adversely impact the
industry or sector of the issuer or securities markets as a whole.
ESG investment
strategy risk. The fund’s ESG investment strategy limits the
types and number of investment opportunities available to the fund and, as a
result, the fund may underperform other funds that do not have an ESG focus. The
fund’s ESG investment strategy may result in the fund investing in securities or
industry sectors that underperform the market as a whole, or forgoing
opportunities to invest in securities that might otherwise be advantageous to
buy. The fund may also underperform other funds that apply different ESG
standards. In addition, the subadviser may be unsuccessful in creating a
portfolio composed of companies that exhibit positive ESG characteristics. In evaluating a security or issuer based on
ESG criteria, the subadviser may use information and data from third-party
providers of ESG research, which may be incomplete, inaccurate or unavailable.
There is no uniform set of ESG standards, and different third party providers
may provide different or inconsistent information and data. There may be
limitations with respect to availability of ESG data in certain sectors, as well
as limited availability of investments with positive ESG assessments in certain
sectors. As a result, there is a risk that the subadviser may incorrectly assess
a security or issuer. The subadviser’s evaluation of ESG criteria is subjective
and may change over time.
Large capitalization
company risk. Large capitalization
companies may fall out of favor with investors based on market and economic
conditions. In addition, larger companies may not be able to attain the high
growth rates of successful smaller companies and may be less capable of
responding quickly to competitive challenges and industry changes. As a result,
the fund’s value may not rise as much as, or may fall more than, the value of
funds that focus on companies with smaller market capitalizations.
Small and
mid‑capitalization company risk. The
fund will be exposed to additional risks as a result of its investments in the
securities of small and mid‑capitalization companies. Small and
mid‑capitalization companies may fall out of favor with investors; may have
limited product lines, operating histories, markets or financial resources; or
may be dependent upon a limited management group. The prices of securities of
small and mid‑capitalization companies generally are more volatile than those of
large capitalization companies and are more likely to be adversely affected than
large capitalization companies by changes in earnings results and investor
expectations or poor economic or market conditions, including those experienced
during a recession. Securities of small and mid‑capitalization companies may
underperform large capitalization companies, may be harder to sell at times and
at prices the portfolio managers believe appropriate and may have greater
potential for losses.
Small fund
risk. When the fund’s size is
small, the fund may experience low trading volume and wide bid/ask spreads. In
addition, the fund may face the risk of being delisted if the fund does not meet
certain conditions of the listing exchange. If the fund were to be required to
delist from the listing exchange, the value of the fund may rapidly decline. In
addition, any resulting liquidation of the fund could cause the fund to incur
elevated transaction costs for the fund and negative tax consequences for its
shareholders. Shareholders of smaller funds may bear proportionally higher
expenses than those of a fund with greater assets.
Stock market and
equity securities risk. The stock
markets are volatile and the market prices of the fund’s equity securities may
decline generally. Equity securities may include warrants, rights, exchange
traded and over‑the‑counter common stocks, preferred stock, depositary receipts,
trust certificates, limited partnership interests and shares of other investment
companies, including exchange-traded funds and real estate investment trusts.
Equity securities may have greater price volatility than other asset classes,
such as fixed income securities, and may fluctuate in
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ClearBridge All Cap Growth ESG
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price
based on actual or perceived changes in a company’s financial condition and
overall market and economic conditions and perceptions. If the market prices of
the equity securities owned by the fund fall, the value of your investment in
the fund will decline.
Valuation
risk. Many factors may influence the
price at which the fund could sell any particular portfolio investment. The
sales price may well differ—higher or lower—from the fund’s last valuation, and
such differences could be significant, particularly for illiquid securities and
securities that trade in relatively thin markets and/or markets that experience
extreme volatility. These differences may increase significantly and affect fund
investments more broadly during periods of market volatility. If market
conditions make it difficult to value some investments, the fund may value these
investments using more subjective methods, such as fair value methodologies.
Valuation methodologies may be further impacted by technological issues and/or
errors by pricing vendors or their personnel. Authorized Participants who
purchase or redeem fund shares on days when the fund is holding fair-valued
securities may receive fewer or more shares, or lower or higher redemption
proceeds, than they would have received if the fund had not fair-valued
securities or had used a different valuation methodology. The value of non‑U.S.
securities, certain fixed income securities and currencies, as applicable, may
be materially affected by events after the close of the markets in which they
are traded, but before the fund determines its net asset value. The fund’s
ability to value its investments may be impacted by technological issues and/or
errors by pricing services or other third party service providers. The valuation
of the fund’s investments involves subjective judgment.
Asset class
risk. Securities or other assets in the
fund’s portfolio may underperform in comparison to the general financial
markets, a particular financial market or other asset classes. This may cause
the fund to underperform other investment vehicles that invest in different
asset classes.
Authorized
Participant concentration risk. Only an
Authorized Participant may engage in creation or redemption transactions
directly with the fund. “Authorized Participants” are broker-dealers that are
permitted to create and redeem shares directly with the fund and who have
entered into agreements with the fund’s distributor. A limited number of
institutions act as Authorized Participants in respect of the fund. To the
extent that these institutions exit the business or are unable to process
creation and/or redemption orders with respect to the fund and no other
Authorized Participant steps forward to create or redeem, in either of these
cases, fund shares may trade at a premium or discount to net asset value and
possibly face trading halts and/or delisting.
Industry or sector
focus risk. Although the fund does not
employ an industry or sector focus, the fund may be susceptible to an increased
risk of loss, including losses due to events that adversely affect the fund’s
investments more than the market as a whole, to the extent that the fund has
greater exposure to the securities of a particular issuer or issuers within the
same industry or sector.
Market events
risk. The market values of securities or
other assets will fluctuate, sometimes sharply and unpredictably, due to changes
in general market conditions, overall economic trends or events, governmental
actions or intervention, actions taken by the U.S. Federal Reserve or foreign
central banks, market disruptions caused by trade disputes or other factors,
political developments, investor sentiment, the global and domestic effects of a
pandemic, and other factors that may or may not be related to the issuer of the
security or other asset. Economies and financial markets throughout the world
are increasingly interconnected. Economic, financial or political events,
trading and tariff arrangements, public health events, terrorism, natural
disasters and other circumstances in one country or region could have profound
impacts on global economies or markets. As a result, whether or not the fund
invests in securities of issuers located in or with significant exposure to the
countries or markets directly affected, the value and liquidity of the fund’s
investments may be negatively affected.
The
rapid and global spread of a highly contagious novel coronavirus respiratory
disease, designated COVID‑19, has resulted in extreme volatility in the
financial markets; reduced liquidity of many instruments; restrictions on
international and, in some cases, local travel; significant disruptions to
business operations (including business closures); strained healthcare systems;
disruptions to supply chains, consumer demand and employee availability; and
widespread uncertainty regarding the duration and long-term effects of this
pandemic. Some sectors of the economy and individual issuers have experienced
particularly large losses. In addition, the COVID‑19 pandemic may result in a
sustained domestic or even global economic downturn or recession, domestic and
foreign political and social instability, damage to diplomatic and international
trade relations and increased volatility and/or decreased liquidity in the
securities markets. Developing or emerging market countries may be more impacted
by the COVID‑19 pandemic as they may have less established health care systems
and may be less able to control or mitigate the effects of the pandemic. The
ultimate economic fallout from the pandemic, and the long-term impact on
economies, markets, industries and individual issuers, are not known. The U.S.
government and the Federal Reserve, as well as certain foreign governments and
central banks, have taken extraordinary actions to support local and global
economies and the financial markets in response to the COVID‑19 pandemic. This
and other government intervention into the economy and financial markets to
address the COVID‑19 pandemic may not work as intended, particularly if the
efforts are perceived by investors as being unlikely to achieve the desired
results. Government actions to mitigate the economic impact of the pandemic have
resulted in a large expansion of government deficits and debt, the long term
consequences of which 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.
Assets under
management risk. From time to time, a
third party, LMPFA and/or affiliates of LMPFA or the fund may invest in the fund
and hold its investment for a period of time in order for the fund to achieve
size or scale. There can be no assurance that any such entity will not redeem
its investment, that it will not redeem at an inopportune time for the fund or
that the size of the fund will be maintained at a level necessary to enable the
fund to remain viable. Such redemption may cause the fund to sell assets (or
invest cash) at disadvantageous times or prices, increase or
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accelerate
taxable gains or transaction costs and may negatively affect the fund’s net
asset value, market price, performance, or ability to satisfy redemptions in a
timely manner.
Information
technology sector risk. Information
technology companies face intense competition, both domestically and
internationally, which may have an adverse effect on profit margins. Like other
technology companies, information technology companies may have limited product
lines, markets, financial resources or personnel. The products of information
technology companies may face obsolescence due to rapid technological
developments, frequent new product introduction, unpredictable changes in growth
rates and competition for the services of qualified personnel. Companies in the
information technology sector are heavily dependent on patent and intellectual
property rights. The loss, or impairment of, or inability to enforce, these
rights may adversely affect the profitability of these companies.
Healthcare sector
risk. The profitability of companies in
the healthcare sector may be adversely affected by the following factors, among
others: extensive government regulations or significant regulatory change,
restrictions on government reimbursement for medical expenses, rising costs of
medical products and services, pricing pressure, an increased emphasis on
outpatient services, a limited number of products, industry innovation, changes
in technologies and other market developments. A number of issuers in the
healthcare sector have recently merged or otherwise experienced consolidation.
The effects of this trend toward consolidation are unknown and may be
far‑reaching. Many healthcare companies are heavily dependent on patent
protection. The expiration of a company’s patents may adversely affect that
company’s profitability. Many healthcare companies are subject to extensive
litigation based on product liability and similar claims. Healthcare companies
are subject to competitive forces that may make it difficult to raise prices
and, in fact, may result in price discounting. Many new products in the
healthcare sector may be subject to regulatory approvals. The process of
obtaining such approvals may be long and costly, and such efforts ultimately may
be unsuccessful. Companies in the healthcare sector may be thinly capitalized
and may be susceptible to product obsolescence.
Market trading risk.
Absence of active market. Although shares of the fund are listed for trading
on one or more stock exchanges, there can be no assurance that an active trading
market for such shares will develop or be maintained by market makers or
Authorized Participants. Authorized Participants are not obligated to execute
purchase or redemption orders for Creation Units. In periods of market
volatility, market makers and/or Authorized Participants may be less willing to
transact in fund shares. The absence of an active market for the fund’s shares
may contribute to the fund’s shares trading at a premium or discount to net
asset value.
Risk of secondary listings. The fund’s shares may be listed or traded on U.S.
and non‑U.S. stock exchanges other than the U.S. stock exchange where the fund’s
primary listing is maintained, and may otherwise be made available to non‑U.S.
investors through funds or structured investment vehicles similar to depositary
receipts. There can be no assurance that the fund’s shares will continue to
trade on any such stock exchange or in any market or that the fund’s shares will
continue to meet the requirements for listing or trading on any exchange or in
any market. The fund’s shares may be less actively traded in certain markets
than in others, and investors are subject to the execution and settlement risks
and market standards of the market where they or their broker direct their
trades for execution. Certain information available to investors who trade fund
shares on a U.S. stock exchange during regular U.S. market hours may not be
available to investors who trade in other markets, which may result in secondary
market prices in such markets being less efficient.
Secondary market trading risk. Shares of the fund may trade in the secondary market
at times when the fund does not accept orders to purchase or redeem shares. At
such times, shares may trade in the secondary market with more significant
premiums or discounts than might be experienced at times when the fund accepts
purchase and redemption orders.
Secondary
market trading in fund shares may be halted by a stock exchange because of
market conditions or for other reasons. In addition, trading in fund shares on a
stock exchange or in any market may be subject to trading halts caused by
extraordinary market volatility pursuant to “circuit breaker” rules on the stock
exchange or market.
Shares
of the fund, similar to shares of other issuers listed on a stock exchange, may
be sold short and are therefore subject to the risk of increased volatility and
price decreases associated with being sold short.
Shares of the fund may trade at prices other than net
asset value. Shares of the fund
trade on stock exchanges at prices at, above or below the fund’s most recent net
asset value. The net asset value of the fund is calculated at the end of each
business day and fluctuates with changes in the market value of the fund’s
holdings. The trading price of the fund’s shares fluctuates continuously
throughout trading hours based on both market supply of and demand for fund
shares and the underlying value of the fund’s portfolio holdings or net asset
value. As a result, the trading prices of the fund’s shares may deviate
significantly from net asset value during periods of market volatility,
including during periods of high redemption requests or other unusual market
conditions. ANY OF THESE FACTORS, AMONG OTHERS, MAY LEAD TO THE FUND’S SHARES
TRADING AT A PREMIUM OR DISCOUNT TO NET ASSET VALUE. However, because shares can
be created and redeemed in Creation Units at net asset value, the subadviser
believes that large discounts or premiums to the net asset value of the fund are
not likely to be sustained over the long term (unlike shares of many closed‑end
funds, which frequently trade at appreciable discounts from, and sometimes at
premiums to, their net asset values). While the creation/redemption feature is
designed to make it more likely that the fund’s shares normally will trade on
stock exchanges at prices close to the fund’s next calculated net asset value,
exchange prices are not expected to correlate exactly with the fund’s net asset
value due to timing reasons, supply and demand imbalances and other factors. In
addition, disruptions to creations and redemptions, including disruptions at
market makers, Authorized Participants, or market participants, or during
periods of significant market volatility, may result in trading prices for
shares of the fund that differ significantly from its net asset value.
Authorized Participants may be less willing to create or redeem fund shares if
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there
is a lack of an active market for such shares or its underlying investments,
which may contribute to the fund’s shares trading at a discount to net asset
value.
Costs of buying or selling fund
shares. Buying or selling fund
shares on an exchange involves two types of costs that apply to all securities
transactions. When buying or selling shares of the fund through a broker, you
will likely incur a brokerage commission and other charges. In addition, you may
incur the cost of the “spread”; that is, the difference between what investors
are willing to pay for fund shares (the “bid” price) and the price at which they
are willing to sell fund shares (the “ask” price). There may also be regulatory
and other charges that are incurred as a result of trading activity. The spread
varies over time for shares of the fund based on trading volume and market
liquidity, and is generally narrower if the fund has more trading volume and
market liquidity and wider if the fund has less trading volume and market
liquidity. In addition, increased market volatility may cause increased spreads.
Because of the costs inherent in buying or selling fund shares, frequent trading
may detract significantly from investment results and an investment in fund
shares may not be advisable for investors who anticipate regularly trading in
fund shares.
Volatility
risk. The value of the securities or
other assets in the fund’s portfolio may fluctuate, sometimes rapidly and
unpredictably. The value of a security or other asset may fluctuate due to
factors affecting markets generally or particular industries. The value of a
security may also be more volatile than the market as a whole. This volatility
may affect the fund’s net asset value. Securities or other assets in the fund’s
portfolio may be subject to price volatility and the prices may not be any less
volatile than the market as a whole and could be more volatile. Events or
financial circumstances affecting individual securities or sectors may increase
the volatility of the fund.
Cybersecurity
risk. Cybersecurity incidents, both
intentional and unintentional, may allow an unauthorized party to gain access to
fund assets, fund or customer data (including private shareholder information),
or proprietary information, cause the fund, the manager, the subadvisers,
Authorized Participants, the relevant listing exchange and/or their service
providers (including, but not limited to, fund accountants, custodians,
sub‑custodians, transfer agents and financial intermediaries) to suffer data
breaches, data corruption or loss of operational functionality or prevent fund
investors from purchasing, redeeming or exchanging shares or receiving
distributions. The fund, the manager, and the subadvisers have limited ability
to prevent or mitigate cybersecurity incidents affecting third party service
providers, and such third party service providers may have limited
indemnification obligations to the fund or the manager. Cybersecurity incidents
may result in financial losses to the fund and its shareholders, and substantial
costs may be incurred in order to prevent or mitigate any future cybersecurity
incidents. Issuers of securities in which the fund invests are also subject to
cybersecurity risks, and the value of these securities could decline if the
issuers experience cybersecurity incidents.
Because
technology is frequently changing, new ways to carry out cyber attacks are
always developing. Therefore, there is a chance that some risks have not been
identified or prepared for, or that an attack may not be detected, which puts
limitations on the fund’s ability to plan for or respond to a cyber attack. Like
other funds and business enterprises, the fund, the manager, the subadvisers,
Authorized Participants, the relevant listing exchange and their service
providers are subject to the risk of cyber incidents occurring from time to
time.
Portfolio management
risk. The value of your investment may
decrease if the subadviser’s judgment about the attractiveness or value of, or
market trends affecting, a particular security, industry, sector or region, or
about market movements, is incorrect or does not produce the desired results, or
if there are imperfections, errors or limitations in the models, tools and data
used by the subadviser. In addition, the fund’s investment strategies or
policies may change from time to time. Those changes may not lead to the results
intended by the subadviser and could have an adverse effect on the value or
performance of the fund.
Trading issues
risk. Trading in shares of the fund on
NASDAQ may be halted due to market conditions or for reasons that, in the view
of NASDAQ, make trading in shares inadvisable. In addition, trading in shares on
NASDAQ is subject to trading halts caused by extraordinary market volatility
pursuant to NASDAQ’s “circuit breaker” rules. There can be no assurance that the
requirements of NASDAQ necessary to maintain the listing of the fund will
continue to be met or will remain unchanged.
Illiquidity
risk. Illiquidity risk exists when
particular investments are impossible or difficult to sell. Although the fund’s
investments must be liquid at the time of investment, investments may become
illiquid after purchase by the fund, particularly during periods of market
turmoil. Markets may become illiquid when, for instance, there are few, if any,
interested buyers or sellers or when dealers are unwilling or unable to make a
market for certain securities. When the fund holds illiquid investments, the
portfolio may be harder to value, especially in changing markets, which may
contribute to the fund’s shares trading at a premium or discount to net asset
value.
Cash management and
defensive investing risk. The value of
the investments held by the fund for cash management or defensive investing
purposes can fluctuate. Like other fixed income securities, they are subject to
risk, including market, interest rate and credit risk. If the fund holds cash
uninvested, the cash will be subject to the credit risk of the depository
institution holding the cash and the fund will not earn income on the cash. If a
significant amount of the fund’s assets is used for cash management or defensive
investing purposes, the fund will be less likely to achieve its investment
objective. Defensive investing may not work as intended and the value of an
investment in the fund may still decline.
Foreign investments
risk. The fund’s investments in
securities of foreign issuers or issuers with significant exposure to foreign
markets involve additional risk as compared to investments in U.S. securities or
issuers with predominantly domestic exposure, such as less liquid, less
regulated, less transparent and more volatile markets. The value of the fund’s
investments may decline because of factors affecting the particular issuer as
well as foreign markets and issuers generally, such as unfavorable or
unsuccessful government actions, tariffs and trade disputes, reduction of
government or central bank support, inadequate accounting standards and auditing
and financial recordkeeping requirements, lack of information and political,
economic, financial or social instability. The Public Company Accounting
Oversight Board, which regulates auditors of U.S. public companies, is unable to
inspect audit work papers in certain foreign countries. Investors in foreign
countries often have limited rights and few
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practical
remedies to pursue shareholder claims, including class actions or fraud claims,
and the ability of the Securities and Exchange Commission, the U.S. Department
of Justice and other authorities to bring and enforce actions against foreign
issuers or foreign persons is limited. Foreign investments may also be adversely
affected by U.S. government or international interventions, restrictions or
economic sanctions, which could negatively affect the value of an investment or
result in the fund selling an investment at a disadvantageous time.
The
value of the fund’s foreign investments may also be affected by foreign tax
laws, special U.S. tax considerations and restrictions on receiving the
investment proceeds from a foreign country. Dividends or interest on, or
proceeds from the sale or disposition of, foreign securities may be subject to
non‑U.S. withholding or other taxes.
It
may be difficult for the fund to pursue claims against a foreign issuer or other
parties in the courts of a foreign country. Some securities issued by non‑U.S.
governments or their subdivisions, agencies and instrumentalities may not be
backed by the full faith and credit of such governments. Even where a security
is backed by the full faith and credit of a government, it may be difficult for
the fund to pursue its rights against the government. In the past, some non‑U.S.
governments have defaulted on principal and interest payments.
If
the fund buys securities denominated in a foreign currency, receives income in
foreign currencies, or holds foreign currencies from time to time, the value of
the fund’s assets, as measured in U.S. dollars, can be affected unfavorably by
changes in exchange rates relative to the U.S. dollar or other foreign
currencies. Currency exchange rates can be volatile, and are affected by factors
such as general economic and political conditions, the actions of the U.S. and
foreign governments or central banks, the imposition of currency controls and
speculation. The fund may be unable or choose not to hedge its foreign currency
exposure.
In
certain foreign markets, settlement and clearance of trades may experience
delays in payment for or delivery of securities not typically associated with
settlement and clearance of U.S. investments. Settlement of trades in these
markets can take longer than in other markets and the fund may not receive its
proceeds from the sale of certain securities for an extended period (possibly
several weeks or even longer) due to, among other factors, low trading volumes
and volatile prices. The custody or holding of securities, cash and other assets
by local banks, agents and depositories in securities markets outside the United
States may entail additional risks. Governments or trade groups may compel local
agents to hold securities in designated depositories that may not be subject to
independent evaluation. Local agents are held only to the standards of care of
their local markets, and thus may be subject to limited or no government
oversight. In extreme cases, the fund’s securities may be misappropriated or the
fund may be unable to sell its securities. In general, the less developed a
country’s securities market is, the greater the likelihood of custody problems.
Operational
risk. Your ability to transact with
the fund or the valuation of your investment may be negatively impacted because
of the operational risks arising from factors such as processing errors and
human errors, inadequate or failed internal or external processes, failures in
systems and technology, changes in personnel, and errors caused by third party
service providers or trading counterparties. It is not possible to identify all
of the operational risks that may affect the fund or to develop processes and
controls that completely eliminate or mitigate the occurrence of such failures.
The fund and its shareholders could be negatively impacted as a result.
Redemptions by
affiliated funds and by other significant investors. The fund may be an investment option for mutual
funds and ETFs that are managed by LMPFA and its affiliates, including Franklin
Templeton investment managers, as “funds of funds,” unaffiliated mutual funds
and ETFs and other investors with substantial investments in the fund. As a
result, from time to time, the fund may experience relatively large redemptions
and could be required to liquidate its assets at inopportune times or at a loss
or depressed value, which could cause the value of your investment to decline.
Risk of investing in
fewer issuers. To the extent the
fund invests its assets in a small number of issuers, or in issuers in related
businesses or that are subject to related operating risks, the fund will be more
susceptible to negative events affecting those issuers.
Please
note that there are other factors that could adversely affect your investment
and that could prevent the fund from achieving its investment objective. More
information about risks appears in the SAI. Before investing, you should
carefully consider the risks that you will assume.
Portfolio holdings
On
each business day, before the opening of regular trading on the fund’s primary
listing exchange, the fund will disclose on
www.franklintempleton.com/etfproducts (click on the name of the fund)
information about the fund’s portfolio holdings, including the identities and
quantities of such portfolio holdings, that will form the basis for the fund’s
calculation of its net asset value per share at the end of the business day. A
description of the fund’s policies and procedures with respect to the disclosure
of its portfolio holdings is available in the SAI.
Tax advantaged product
structure
Unlike
many conventional mutual funds which are only bought and sold at closing net
asset values, the shares of the fund have been designed to be created and
redeemed principally in‑kind (although under some circumstances its shares are
created and redeemed entirely or partially for cash) in Creation Units at each
day’s market close. These in‑kind arrangements are designed to mitigate adverse
effects on the fund’s portfolio that could arise from frequent cash purchase and
redemption transactions that affect the net asset value of the fund. Moreover,
in contrast to conventional mutual funds, where frequent redemptions can have an
adverse tax impact on taxable shareholders because of the need to sell portfolio
securities—which, in turn, may generate taxable gain—the in‑kind redemption
mechanism of the fund, to the extent used, generally is not expected to result
in a taxable distribution for shareholders whose shares are not being redeemed
or sold.
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More on fund management
Legg
Mason Partners Fund Advisor, LLC (“LMPFA” or the “manager”) is the fund’s
investment manager. LMPFA, with offices at 280 Park Avenue, New York,
New York 10017, also serves as the investment manager of other Legg
Mason-sponsored funds. LMPFA provides administrative and certain oversight
services to the fund. As of March 31, 2022, LMPFA’s total assets under
management were approximately $212.2 billion.
ClearBridge
Investments, LLC (“ClearBridge” or the “subadviser”) provides the day‑to‑day
portfolio management of the fund, except for any portion of the fund’s cash and
short-term instruments that is allocated to Western Asset Management Company,
LLC (“Western Asset”). ClearBridge has offices at 620 Eighth Avenue, New York,
New York 10018 and is an investment adviser that manages U.S. and international
equity investment strategies for institutional and individual
investors. ClearBridge has been committed to delivering long-term results
through active management for more than 50 years, and bases its investment
decisions on fundamental research and the insights of seasoned portfolio
management teams. ClearBridge has over 30 years of experience managing ESG
investment strategies. As of March 31, 2022, ClearBridge’s total assets
under management (including assets under management for ClearBridge, LLC, an
affiliate of ClearBridge) were approximately $190.7 billion, including
$36.1 billion for which ClearBridge provides non‑discretionary investment
models to managed account sponsors.
Western
Asset manages the portion of the fund’s cash and short-term instruments
allocated to it. Western Asset, established in 1971, has offices at 385 East
Colorado Boulevard, Pasadena, California 91101 and 620 Eighth Avenue, New York,
New York 10018. Western Asset acts as investment adviser to institutional
accounts, such as corporate pension plans, mutual funds and endowment funds. As
of March 31, 2022, the total assets under management of Western Asset and
its supervised affiliates were approximately $444.4 billion.
LMPFA,
ClearBridge and Western Asset are indirect, wholly-owned subsidiaries of
Franklin Resources, Inc. (“Franklin Resources”). Franklin Resources, whose
principal executive offices are at One Franklin Parkway, San Mateo, California
94403, is a global investment management organization operating, together with
its subsidiaries, as Franklin Templeton. As of March 31, 2022, Franklin
Templeton’s asset management operations had aggregate assets under management of
approximately $1.47 trillion.
Portfolio managers
Primary
responsibility for the day‑to‑day management of the fund lies with the following
portfolio managers. The portfolio managers have the ultimate authority to make
portfolio decisions.
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Portfolio
manager |
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Title and recent
biography |
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Portfolio manager
of the fund since |
Evan
Bauman |
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Mr. Bauman
is a Managing Director and Portfolio Manager of ClearBridge.
Mr. Bauman joined the subadviser or a predecessor organization in
1996. He has a BS in Mathematics from Duke University. Mr. Bauman has
24 years of investment industry experience. |
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2017 |
Peter
Bourbeau |
|
Mr. Bourbeau
is a Managing Director and Portfolio Manager of ClearBridge. He joined the
subadviser or its predecessor in 1991. Previously, Mr. Bourbeau was a
Director of Citigroup Global Markets Inc. (“CGMI”) and served as a
Portfolio Manager at Smith Barney Asset Management. Mr. Bourbeau has
30 years of investment industry experience. |
|
2017 |
Aram
E. Green |
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Mr. Green
is a Managing Director and Portfolio Manager of ClearBridge and has 20
years of industry experience. He was formerly an equity analyst at Hygrove
Partners LLC. Mr. Green joined the subadviser in 2006. |
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2021 |
Margaret
Vitrano |
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Ms. Vitrano
is a Managing Director and Portfolio Manager of ClearBridge. Previously,
she was a Senior Research Analyst for Information Technology and
Communications of ClearBridge from 2007 to 2012. Ms. Vitrano joined
the subadviser or its predecessor in 2003. Prior to that, she was a
Director of CGMI and a research analyst at Citigroup. Ms. Vitrano has
24 years of investment industry experience. |
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2017 |
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The
SAI provides information about the compensation of the portfolio managers, other
accounts managed by the portfolio managers and any fund shares held by the
portfolio managers.
Management fee
Pursuant
to the management agreement and subject to the general supervision of the Board,
LMPFA provides or causes to be furnished all investment management, supervisory,
administrative and other services reasonably necessary for the operation of the
fund, including certain distribution services (provided pursuant to a separate
distribution agreement) and investment advisory services (provided pursuant to
separate subadvisory agreements) under a unitary fee structure. The fund is
responsible for paying interest expenses, taxes, brokerage expenses, future
12b‑1 fees (if any), acquired fund fees and expenses, extraordinary expenses and
the management fee payable to LMPFA under the management agreement.
The
fund pays management fees at an annual rate as follows:
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Name of fund |
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Management fee |
ClearBridge
All Cap Growth ESG ETF |
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0.53%
of average daily net assets |
For
the fiscal year ended September 30, 2021, and for the fiscal period
October 1, 2021 to March 31, 2022, the fund paid LMPFA an effective
management fee of 0.53% of the fund’s average daily net assets for management
services.
A
discussion regarding the basis for the Board’s approval of the fund’s management
agreement and subadvisory agreements is available in the fund’s Annual Report
for the period ended September 30, 2020.
Additional information
The
fund enters into contractual arrangements with various parties, including, among
others, the fund’s manager and the subadvisers, who provide services to the
fund. Shareholders are not parties to, or intended (or “third-party”)
beneficiaries of, those contractual arrangements.
This
Prospectus and the SAI provide information concerning the fund that you should
consider in determining whether to purchase shares of the fund. The fund may
make changes to this information from time to time. Neither this Prospectus nor
the SAI is intended to give rise to any contract rights or other rights in any
shareholder, other than rights conferred by federal or state securities laws.
Distribution
Franklin
Distributors, LLC (“Franklin Distributors”), an indirect, wholly-owned
broker/dealer subsidiary of Franklin Resources, located at 100 International
Drive, Baltimore, Maryland 21202, serves as the distributor of Creation Units
for the fund on an agency basis. Franklin Distributors does not maintain a
secondary market in the fund’s shares. Franklin Distributors has no role in
determining the fund’s policies or the securities that are purchased or sold by
the fund.
The
Board has adopted a distribution and service plan (“Plan”) pursuant to Rule
12b‑1 under the Investment Company Act of 1940, as amended (the “1940 Act”).
Under the Plan, the fund is authorized to pay distribution fees in connection
with the sale and distribution of its shares and pay service fees in connection
with the provision of ongoing services to shareholders of the fund and the
maintenance of shareholder accounts in an amount up to 0.25% of its average
daily net assets each year. No Rule 12b‑1 fees are currently paid by the fund,
and there are no current plans to impose these fees.
Additional payments
Franklin
Templeton or its affiliates make payments to broker-dealers, registered
investment advisers, banks or other intermediaries (together, “intermediaries”)
related to marketing activities and presentations, educational training
programs, conferences, the development of technology platforms and reporting
systems, or their making shares of the fund available to their customers
generally and in certain investment programs. Such payments, which may be
significant to the intermediary, are not made by the fund. Rather, such payments
are made by Franklin Templeton or its affiliates from their own resources, which
come directly or indirectly in part from fees paid by the fund. A financial
intermediary may make decisions about which investment options it recommends or
makes available, or the level of services provided, to its customers based on
the payments it is eligible to receive. Therefore, such payments to an
intermediary create conflicts of interest between the intermediary and its
customers and may cause the intermediary to recommend the fund over another
investment. More information regarding these payments is contained in the fund’s
SAI. Please contact your salesperson or other
investment professional for more information regarding any such payments his or
her firm may receive from Franklin Templeton or its affiliates.
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Shareholder information
Additional shareholder information, including how to
buy and sell shares of the fund, is available free of charge by calling
toll-free: 1‑877‑721‑1926 or visiting our website at
www.franklintempleton.com/etfliterature.
Purchasing and selling
shares
Shares
of the fund may be acquired or redeemed directly from the fund only in Creation
Units or multiples thereof, as discussed in the “Creations and redemptions”
section of this Prospectus. Only an Authorized Participant may engage in
creation or redemption transactions directly with the fund. Once created, shares
of the fund generally trade in the secondary market in amounts less than a
Creation Unit.
Shares
of the fund are listed for trading on the secondary market on NASDAQ. Shares can
be bought and sold throughout the trading day like other publicly traded shares.
There is no minimum investment. Although shares are generally purchased and sold
in “round lots” of 100 shares, brokerage firms typically permit investors to
purchase or sell shares in smaller “odd lots” at no per‑share price
differential. The fund’s shares trade on NASDAQ as follows:
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Name of fund |
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Ticker symbol |
ClearBridge
All Cap Growth ESG ETF |
|
CACG |
Share prices are reported
in dollars and cents per share
Buying
or selling fund shares on an exchange or other secondary market involves two
types of costs that may apply to all securities transactions. When buying or
selling shares of the fund through a broker, you may incur a brokerage
commission and other charges. The commission is frequently a fixed amount and
may be a significant proportional cost for investors seeking to buy or sell
small amounts of shares. In addition, you may incur the cost of the “spread,”
that is, any difference between the bid price and the ask price. The spread
varies over time for shares of the fund based on the fund’s trading volume and
market liquidity, and is generally lower if the fund has high trading volume and
market liquidity, and higher if the fund has little trading volume and market
liquidity (which is often the case for funds that are newly launched or small in
size). The fund’s spread may also be impacted by the liquidity of the underlying
securities held by the fund, particularly for newly launched or smaller funds or
in instances of significant volatility of the underlying securities.
Authorized
Participants may acquire shares directly from the fund and may tender their
shares for redemption directly to the fund, at net asset value per share only in
Creation Units.
The
fund’s primary listing exchange is NASDAQ. NASDAQ is open for trading Monday
through Friday and is closed on weekends and the following holidays: New Year’s
Day, Martin Luther King, Jr. Day, Presidents’ Day, Good Friday, Memorial Day,
Juneteenth National Independence Day, Independence Day, Labor Day, Thanksgiving
Day and Christmas Day.
Section 12(d)(1)
of the 1940 Act restricts investments by investment companies in the securities
of other investment companies. Registered investment companies are permitted to
invest in the fund beyond the limits set forth in Section 12(d)(1), subject
to certain terms and conditions set forth in SEC rules or in exemptive relief as
applicable. In order for a registered investment company to invest in shares of
the fund beyond the limitations of Section 12(d)(1), the registered
investment company must generally enter into an agreement with the fund.
Frequent purchases and
redemptions of fund shares
The
Board has evaluated the risks of frequent purchases and redemptions of fund
shares (“market timing”) activities by the fund’s shareholders. The Board noted
that the fund’s shares can only be purchased and redeemed directly from the fund
in Creation Units by Authorized Participants and that the vast majority of
trading in the fund’s shares occurs on the secondary market. Because the
secondary market trades do not involve the fund directly, it is unlikely those
trades would cause many of the harmful effects of market timing, including
dilution, disruption of portfolio management, increases in the fund’s trading
costs and the realization of capital gains.
With
respect to trades directly with the fund, to the extent they are effected
in‑kind, those trades do not cause any of the harmful effects (as previously
noted) that may result from frequent cash trades. To the extent that the fund
permits or requires trades to be effected in whole or in part in cash, the Board
noted that those trades could result in dilution to the fund and increased
transaction costs, which could negatively impact the fund’s ability to achieve
its investment objective. However, the Board noted that direct trading by
Authorized Participants is critical to ensuring that the fund’s shares trade at
or close to net asset value. The fund also employs fair valuation pricing to
minimize potential dilution from market timing. The fund imposes transaction
fees on in‑kind purchases and redemptions of fund shares to cover the custodial
and other costs incurred by the fund in effecting in‑kind trades. These fees may
increase if an investor substitutes cash in part or in whole for securities,
reflecting the fact that the fund’s trading costs increase in those
circumstances. Given this structure, the Board determined that it is not
necessary to apply policies and procedures to the fund to detect and deter
market timing.
Book entry
Shares
are held in book-entry form, which means that no stock certificates are issued.
The Depository Trust Company (“DTC”) or its nominee is the record owner of all
outstanding shares of the fund and is recognized as the owner of all shares for
all purposes.
|
|
|
|
|
|
|
ClearBridge All Cap Growth ESG
ETF |
|
|
|
|
19 |
|
Investors
owning shares are beneficial owners as shown on the records of DTC or its
participants. DTC serves as the securities depository for all shares.
Participants in DTC include securities brokers and dealers, banks, trust
companies, clearing corporations and other institutions that directly or
indirectly maintain a custodial relationship with DTC. As a beneficial owner of
shares, you are not entitled to receive physical delivery of stock certificates
or to have shares registered in your name, and you are not considered a
registered owner of shares. Therefore, to exercise any right as an owner of
shares, you must rely upon the procedures of DTC and its participants. These
procedures are the same as those that apply to any other stocks that you hold in
book entry or “street name” form.
Fund share trading prices
The
trading prices of the fund’s shares in the secondary market generally differ
from the fund’s daily net asset value and are affected by market forces such as
the supply of and demand for ETF shares and underlying securities held by the
fund, economic conditions and other factors. Information regarding the intraday
value of shares of the fund, also known as the “intra‑day indicative value”
(“IIV”), is disseminated every 15 seconds throughout each trading day by the
national securities exchange on which the fund’s shares are listed or by market
data vendors or other information providers. The IIV is based on the current
market value of the securities and/or cash required to be deposited in exchange
for a Creation Unit but does not include a reduction for the fees, operating
expenses or transaction costs incurred by the fund. The IIV does not necessarily
reflect the precise composition of the current portfolio of securities held by
the fund at a particular point in time or the best possible valuation of the
current portfolio. Therefore, the IIV should not be viewed as a “real-time”
update of the fund’s net asset value, which is computed only once a day. The IIV
is generally determined by using both current market quotations and/or price
quotations obtained from broker-dealers and other market intermediaries that may
trade in the portfolio securities held by the fund. The quotations of certain
fund holdings may not be updated during U.S. trading hours if such holdings do
not trade in the United States and thus may not reflect the current fair value
of those securities. The fund is not involved in, or responsible for, the
calculation or dissemination of the IIV nor makes any representation or warranty
as to its accuracy. Further, the dissemination of the fund’s IIV is not a
regulatory requirement for the fund or the exchange on which the fund’s shares
are listed, and the availability of this information may be discontinued
(without prior notice) at a future time.
Calculation of net asset
value
The
fund’s net asset value per share is the value of its assets minus its
liabilities divided by the number of shares outstanding.
The
fund calculates its net asset value every day the New York Stock Exchange (the
“NYSE”) is open. The fund generally values its securities and other assets and
calculates its net asset value as of the scheduled close of regular trading on
the NYSE, normally at 4:00 p.m. (Eastern time). If the NYSE closes at a time
other than the scheduled closing time, the fund will calculate its net asset
value as of the scheduled closing time. The NYSE is closed on certain holidays
listed in the SAI.
Valuation
of the fund’s securities and other assets is performed in accordance with
procedures approved by the Board. Under the procedures, assets are valued as
follows:
• |
|
Equity
securities and certain derivative instruments that are traded on an
exchange are valued at the closing price (which may be reported at a
different time than the time at which the fund’s NAV is calculated) or, if
that price is unavailable or deemed by the manager not representative of
market value, the last sale price. Where a security is traded on more than
one exchange (as is often the case overseas), the security is generally
valued at the price on the exchange considered by the manager to be the
primary exchange. In the case of securities not traded on an exchange, or
if exchange prices are not otherwise available, the prices are typically
determined by independent third party pricing services that use a variety
of techniques and methodologies. |
• |
|
The
valuations for fixed income 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 fair valuation techniques and methodologies.
|
• |
|
The
valuations of securities traded on foreign markets and certain fixed
income securities will generally be based on prices determined as of the
earlier closing time of the markets on which they primarily trade, unless
a significant event has occurred. When the fund holds securities or other
assets that are denominated in a foreign currency, the fund will use the
currency exchange rates, generally determined as of 4:00 p.m. (London
time). Foreign markets are open for trading on weekends and other days
when the fund does not price its shares. Therefore, the value of the
fund’s shares may change on days when you will not be able to purchase or
sell the fund’s shares. |
• |
|
Investments
in ETFs and closed‑end funds listed on an exchange are valued at the
closing sale or official closing price on that exchange. Investments in
open‑end funds other than ETFs are valued at the net asset value per share
of the class of the underlying fund held by the fund as determined on each
business day. |
• |
|
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. When such prices or quotations
are not available, or when the manager believes that they are unreliable,
the manager may price securities using fair value procedures. These
procedures permit, among other things, the use of a formula or other
method that takes into consideration market indices, yield curves and
other specific adjustments to determine fair value. Fair value of a
security is the amount, as determined by the manager in good faith, that
the fund might reasonably expect to receive upon a current sale of the
security. The fund may also use fair value procedures if the manager
determines that a significant event has occurred between the time at which
a market price is determined and the time at which the fund’s net asset
value is calculated. |
|
|
|
|
|
20 |
|
|
|
ClearBridge All Cap Growth ESG
ETF |
Many
factors may influence the price at which the fund could sell any particular
portfolio investment. The sales price may well differ—higher or lower—from the
fund’s last valuation, and such differences could be significant, particularly
for securities that trade in relatively thin markets and/or markets that
experience extreme volatility. Moreover, valuing securities using fair value
methodologies involves greater reliance on judgment than valuing securities
based on market quotations. A fund that uses fair value methodologies may value
those securities higher or lower than another fund using market quotations or
its own fair value methodologies to price the same securities. There can be no
assurance that a fund could obtain the value assigned to a security if it were
to sell the security at approximately the time at which the fund determines its
net asset value.
As
of September 8, 2022, these procedures designate the manager to
perform the determination of fair value. The manager generally uses
independent third party pricing services subject to appropriate
oversight.
Premium/Discount
Information
Information
regarding how often the shares of the fund traded on the applicable exchange at
a price above (at a premium) or below (at a discount) the NAV of the fund for
the most recently completed calendar year, and the most recently completed
calendar quarters since that year, can be found at
www.franklintempleton.com/etfproducts (select fund).
|
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|
|
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|
ClearBridge All Cap Growth ESG
ETF |
|
|
|
|
21 |
|
Dividends, other
distributions and taxes
Dividends and other
distributions
The
fund generally pays dividends and distributes capital gain, if any, once in
December and at such other times as are necessary. Shares will generally begin
to earn dividends on the settlement date of purchase. The fund may pay
additional distributions and dividends in order to avoid a federal tax.
Dividends
and other distributions on shares of the fund are distributed on a pro rata
basis to beneficial owners of such shares. Dividend payments are made through
DTC participants and indirect participants to beneficial owners then of record
with proceeds received from the fund.
The
Board reserves the right to revise the dividend policy or postpone the payment
of dividends if warranted in the Board’s judgment due to unusual circumstances.
Reinvestment of
distributions
Distributions
are paid in cash. No dividend reinvestment service is provided by the fund.
Broker-dealers may make available the DTC book-entry Dividend Reinvestment
Service for use by beneficial owners of the fund for reinvestment of their
dividend distributions. Beneficial owners should contact their broker to
determine the availability and costs of the service and the details of
participation therein. Brokers may require beneficial owners to adhere to
specific procedures and timetables. If this service is available and used,
dividend distributions of both income and realized gains will be automatically
reinvested in additional whole shares of the fund purchased in the secondary
market.
Taxes
The
following discussion is very general, applies only to shareholders who are U.S.
persons, and does not address shareholders subject to special rules, such as
those who hold fund shares through an IRA, 401(k) plan or other tax‑advantaged
account. Except as specifically noted, the discussion is limited to federal
income tax matters, and does not address state, local, foreign or non‑income
taxes. Further information regarding taxes, including certain federal income tax
considerations relevant to non‑U.S. persons, is included in the SAI. Because
each shareholder’s circumstances are different and special tax rules may apply,
you should consult your tax adviser about federal, state, local and/or foreign
tax considerations that may be relevant to your particular situation.
In
general, selling shares and receiving dividends and distributions are taxable
events. Distributions of investment income that the fund reports as “qualified
dividend income” may be eligible to be taxed to noncorporate shareholders at the
reduced rates applicable to long-term capital gain if certain requirements are
satisfied. Distributions of net capital gain reported by the fund as capital
gain dividends are taxable to you as long-term capital gain regardless of how
long you have owned your shares. Noncorporate shareholders ordinarily pay tax at
reduced rates on long-term capital gain.
If
the fund redeems Creation Units in cash, it may recognize more capital gains
than it will if it redeems Creation Units in‑kind. If the fund realizes capital
gains in excess of realized capital losses in any fiscal year, it generally
expects to make capital gain distributions. You may receive distributions that
are attributable to appreciation of portfolio securities that happened before
you made your investment but had not been realized at the time you made your
investment, or that are attributable to capital gains or other income that,
although realized by the fund, had not yet been distributed at the time you made
your investment. Unless you purchase shares through a tax‑advantaged account,
these distributions will be taxable to you even though they economically
represent a return of a portion of your investment. You may want to avoid buying
shares when the fund is about to declare a dividend or capital gain
distribution. You should consult your tax adviser before buying shares no matter
when you are investing.
A
Medicare contribution tax is imposed at the rate of 3.8% on all or a portion of
net investment income of U.S. individuals if their income exceeds specified
thresholds, and on all or a portion of undistributed net investment income of
certain estates and trusts. Net investment income generally includes for this
purpose dividends and capital gain distributions paid by the fund and gain on
the redemption, sale or exchange of fund shares.
A
dividend declared by the fund in October, November or December and paid during
January of the following year will, in certain circumstances, be treated as paid
on December 31 for tax purposes.
The
fund’s investment in certain foreign securities, foreign currencies or foreign
currency derivatives may affect the amount, timing, and character of fund
distributions to shareholders.
Capital
gain or loss realized upon a sale of fund shares is generally treated as a
long-term gain or loss if the shares have been held for more than one year. Any
capital gain or loss realized upon a sale of fund shares held for one year or
less is generally treated as short-term gain or loss, except that any capital
loss on the sale of shares held for six months or less is treated as long-term
capital loss to the extent that capital gain dividends were paid with respect to
such shares.
By
law, if you do not provide your proper taxpayer identification number and
certain required certifications, you may be subject to backup withholding on any
distributions of income, capital gains or proceeds from the sale of your shares.
Withholding is also imposed if the IRS requires it. When withholding is
required, the amount will be 24% of any distributions or proceeds paid.
Fund
distributions and gains from the sale of your fund shares generally are subject
to state and local taxes.
|
|
|
|
|
22 |
|
|
|
ClearBridge All Cap Growth ESG
ETF |
Creations and redemptions
Prior
to trading in the secondary market, shares of the fund are “created” at NAV by
market makers, large investors and institutions only in block‑size Creation
Units or multiples thereof. Each “creator” or “Authorized Participant” enters
into an authorized participant agreement with Franklin Distributors, the fund’s
distributor. Only an Authorized Participant may create or redeem Creation Units
directly with the fund.
The
fund may issue or redeem Creation Units in return for a specified amount of cash
or a designated portfolio of securities and/or cash that the fund specifies each
day. To the extent cash is used, an Authorized Participant must transfer cash in
an amount equal to the value of the Creation Unit(s) purchased and the
applicable transaction fee. An Authorized Participant also may effect a creation
transaction by depositing into the fund a designated portfolio of securities
(including any portion of such securities for which cash may be substituted) and
a specified amount of cash approximating the holdings of the fund in exchange
for a specified number of Creation Units (a “Creation Basket”). The composition
of each Creation Basket will be determined in accordance with board-approved
policies and procedures applicable to the construction of creation and
redemption baskets, and subject to acceptance by Franklin Distributors. Creation
and redemption baskets may differ and the fund will accept “custom baskets.”
More information regarding custom baskets is contained in the fund’s SAI.
Redemption
proceeds will be paid in cash or in kind. If redemption proceeds are paid in
kind, shares will be redeemed in Creation Units for a designated portfolio of
securities (including any portion of such securities for which cash may be
substituted) held by the fund (“Fund Securities”) and a specified amount of
cash. The composition of redemption proceeds will be determined in accordance
with board-approved policies and procedures applicable to the construction of
creation and redemption baskets. Except when aggregated in Creation Units,
shares are not redeemable by the fund.
The
prices at which creations and redemptions occur are based on the next
calculation of net asset value after a creation or redemption order is received
in an acceptable form under the authorized participant agreement.
In
the event of a system failure or other interruption, including disruptions at
market makers or Authorized Participants, orders to purchase or redeem Creation
Units either may not be executed according to the fund’s instructions or may not
be executed at all, or the fund may not be able to place or change orders.
To
the extent the fund engages in in‑kind transactions, the fund intends to comply
with the U.S. federal securities laws in accepting securities for deposit and
satisfying redemptions with redemption securities by, among other means,
assuring that any securities accepted for deposit and any securities used to
satisfy redemption requests will be sold in transactions that would be exempt
from registration under the Securities Act of 1933 (the “1933 Act”). Further, an
Authorized Participant that is not a “qualified institutional buyer,” as such
term is defined in Rule 144A under the 1933 Act, will not be able to receive
restricted securities eligible for resale under Rule 144A.
Information
about the procedures regarding creation and redemption of Creation Units
(including the cut‑off times for receipt of creation and redemption orders) is
included in the fund’s SAI.
Because
new shares may be created and issued on an ongoing basis, at any point during
the life of the fund a “distribution,” as such term is used in the 1933 Act, may
be occurring. Broker-dealers and other persons are cautioned that some
activities on their part may, depending on the circumstances, result in their
being deemed participants in a distribution in a manner that could render them
statutory underwriters subject to the prospectus delivery and liability
provisions of the 1933 Act. Any determination of whether one is an underwriter
must take into account all the relevant facts and circumstances of each
particular case.
Broker-dealers
should also note that dealers who are not “underwriters” but are participating
in a distribution (as contrasted to ordinary secondary transactions), and thus
dealing with shares that are part of an “unsold allotment” within the meaning of
Section 4(a)(3)(C) of the 1933 Act, would be unable to take advantage of
the prospectus delivery exemption provided by Section 4(a)(3) of the 1933
Act. For delivery of prospectuses to exchange members, the prospectus delivery
mechanism of Rule 153 under the 1933 Act is available only with respect to
transactions on a national securities exchange.
Costs associated
with creations and redemptions.
Authorized Participants are charged standard creation and redemption transaction
fees to offset transfer and other transaction costs associated with the issuance
and redemption of Creation Units. The standard creation and redemption
transaction fees are set forth in the table below. The standard creation
transaction fee is charged to the Authorized Participant on the day such
Authorized Participant creates a Creation Unit, and is the same regardless of
the number of Creation Units purchased by the Authorized Participant on the
applicable business day. Similarly, the standard redemption transaction fee is
charged to the Authorized Participant on the day such Authorized Participant
redeems a Creation Unit, and is the same regardless of the number of Creation
Units redeemed by the Authorized Participant on the applicable business day.
Creations and redemptions for cash (when cash creations and redemptions (in
whole or in part) are available or specified) are also subject to an additional
charge (as shown in the table below). This charge is intended to compensate for
brokerage, tax, foreign exchange, execution, market impact and other costs and
expenses related to cash transactions. Investors who use the services of a
broker or other financial intermediary to acquire or dispose of fund shares may
pay fees for such services.
The
following table shows, as of March 31, 2022, the standard creation and
redemption transaction fees, the additional charge for creations and the maximum
additional charge for redemptions (as described above):
|
|
|
|
|
|
|
ClearBridge All Cap Growth ESG
ETF |
|
|
|
|
23 |
|
|
|
|
|
|
|
|
|
|
Standard Creation/ Redemption Transaction Fee ($) |
|
Additional Charge for Creations* (%) |
|
Maximum Additional Charge for Redemptions**
(%) |
ClearBridge
All Cap Growth ESG ETF |
|
350 |
|
2.0 |
|
2.0 |
* |
This
amount, reflected as a percentage of the NAV per Creation Unit, generally
will be equal to the costs and expenses incurred by a fund in connection
with such cash transactions and is not subject to a maximum limit.
|
** |
As
a percentage of the NAV per Creation Unit inclusive of the standard
redemption transaction fee. |
|
|
|
|
|
24 |
|
|
|
ClearBridge All Cap Growth ESG
ETF |
Financial highlights
The
financial highlights table is intended to help you understand the performance of
the fund for the past five years, unless otherwise noted. Total return
represents the rate that a shareholder would have earned (or lost) on a fund
share assuming reinvestment of all dividends and distributions. Unless otherwise
noted, this information has been audited by the fund’s independent registered
public accounting firm, PricewaterhouseCoopers LLP, whose report, along with the
fund’s financial statements, is incorporated by reference into the fund’s SAI
(see back cover) and is included in the fund’s annual report. The fund’s annual
report is available upon request by calling toll-free 1‑877‑721‑1926 or via the
following hyperlink: (
https://www.sec.gov/Archives/edgar/data/1645194/000119312522165670/d301939dncsr.htm).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For a share of beneficial interest outstanding
throughout each year ended March 31, unless otherwise
noted: |
|
|
|
20221,2 |
|
|
20211,3 |
|
|
20201,3 |
|
|
20191,3 |
|
|
20181,3 |
|
|
20171,4 |
|
|
|
|
|
|
|
|
Net asset value,
beginning of period |
|
|
$48.58 |
|
|
|
$39.47 |
|
|
|
$31.66 |
|
|
|
$31.39 |
|
|
|
$26.16 |
|
|
|
$24.84 |
|
|
|
|
|
|
|
|
Income (loss) from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income |
|
|
0.03 |
|
|
|
0.14 |
|
|
|
0.21 |
|
|
|
0.24 |
|
|
|
0.17 |
|
|
|
0.06 |
|
Net
realized and unrealized gain (loss) |
|
|
(1.91) |
|
|
|
9.18 |
|
|
|
7.86 |
|
|
|
0.21 |
|
|
|
5.13 |
|
|
|
1.26 |
|
Total income (loss) from
operations |
|
|
(1.88) |
|
|
|
9.32 |
|
|
|
8.07 |
|
|
|
0.45 |
|
|
|
5.30 |
|
|
|
1.32 |
|
|
|
|
|
|
|
|
Less distributions from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income |
|
|
(0.10) |
|
|
|
(0.21) |
|
|
|
(0.22) |
|
|
|
(0.18) |
|
|
|
(0.07) |
|
|
|
— |
|
Net
realized gains |
|
|
(1.38) |
|
|
|
— |
|
|
|
(0.04) |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total
distributions |
|
|
(1.48) |
|
|
|
(0.21) |
|
|
|
(0.26) |
|
|
|
(0.18) |
|
|
|
(0.07) |
|
|
|
— |
|
|
|
|
|
|
|
|
Net asset value,
end of period |
|
|
$45.22 |
|
|
|
$48.58 |
|
|
|
$39.47 |
|
|
|
$31.66 |
|
|
|
$31.39 |
|
|
|
$26.16 |
|
Total return, based on NAV5
|
|
|
(4.22) |
% |
|
|
23.67 |
% |
|
|
25.60 |
% |
|
|
1.55 |
% |
|
|
20.28 |
% |
|
|
5.31 |
% |
|
|
|
|
|
|
|
Net assets, end of
period (000s) |
|
|
$194,459 |
|
|
|
$218,597 |
|
|
|
$181,576 |
|
|
|
$128,221 |
|
|
|
$64,356 |
|
|
|
$36,627 |
|
|
|
|
|
|
|
|
Ratios to average net assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
expenses |
|
|
0.53 |
%6 |
|
|
0.53 |
% |
|
|
0.53 |
% |
|
|
0.53 |
% |
|
|
0.53 |
% |
|
|
0.53 |
%6 |
Net
expenses |
|
|
0.53 |
6 |
|
|
0.53 |
|
|
|
0.53 |
|
|
|
0.53 |
|
|
|
0.53 |
|
|
|
0.53 |
6 |
Net
investment income |
|
|
0.12 |
6 |
|
|
0.30 |
|
|
|
0.60 |
|
|
|
0.80 |
|
|
|
0.59 |
|
|
|
0.62 |
6 |
|
|
|
|
|
|
|
Portfolio turnover
rate7
|
|
|
12 |
% |
|
|
15 |
% |
|
|
17 |
% |
|
|
16 |
% |
|
|
15 |
% |
|
|
2 |
% |
1 |
Per
share amounts have been calculated using the average shares method.
|
2 |
For
the period October 1, 2021 through March 31, 2022.
|
3 |
For
the year ended September 30. |
4 |
For
the period May 3, 2017 (inception date) to September 30, 2017.
|
5 |
Performance
figures may reflect fee waivers and/or expense reimbursements. In the
absence of fee waivers and/or expense reimbursements, the total return
would have been lower. The total return calculation assumes that
distributions are reinvested at NAV. Past performance is no guarantee of
future results. Total returns for periods of less than one year are not
annualized. |
7 |
Portfolio
turnover excludes the value of portfolio securities received or delivered
as a result of in‑kind fund share transactions.
|
|
|
|
|
|
|
|
ClearBridge All Cap Growth ESG
ETF |
|
|
|
|
25 |
|
ClearBridge
All Cap Growth ESG ETF
You
may visit www.franklintempleton.com/etfliterature for a free copy of a
Prospectus, Statement of Additional Information (“SAI”) or an Annual or
Semi-Annual Report.
Shareholder
reports Additional information about the
fund’s investments is available in the fund’s Annual and Semi-Annual Reports to
shareholders. In the fund’s Annual Report, you will find a discussion of the
market conditions and investment strategies that significantly affected the
fund’s performance during its last fiscal period. The independent registered
public accounting firm’s report and financial statements in the fund’s Annual
Report are incorporated by reference into (are legally a part of) this
Prospectus.
The
fund sends only one report to a household if more than one account has the same
last name and same address. Contact your Service Agent or the fund if you do not
want this policy to apply to you.
Statement of
additional information The SAI provides
more detailed information about the fund and is incorporated by reference into
(is legally a part of) this Prospectus.
You
can make inquiries about the fund or obtain shareholder reports or the SAI
(without charge) by contacting your Service Agent, by calling the fund at
1‑877‑721‑1926, or by writing to the fund at BNY Mellon, Attn: Legg Mason Funds,
4400 Computer Drive, Westborough, MA 01581.
Reports
and other information about the fund are available on the EDGAR Database on the
Securities and Exchange Commission’s Internet site at
http://www.sec.gov. Copies of this information may be obtained for a
duplicating fee by electronic request at the following E‑mail address:
[email protected].
If
someone makes a statement about the fund that is not in this Prospectus, you
should not rely upon that information. Neither the fund nor the Distributor is
offering to sell shares of the fund to any person to whom the fund may not
lawfully sell its shares.
(Investment
Company Act
file
no. 811‑23096)