Legg Mason Global Asset Management Trust
Prospectus May 1,
2024
Share class
(Symbol): A (LFLAX), C
(LFLCX), R (—), I (LFLIX), IS (LFLSX)
BRANDYWINEGLOBAL —
FLEXIBLE BOND FUND
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
Current
income and 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 pay other fees, such as brokerage
commissions and other fees to financial intermediaries, which are not reflected
in the tables and examples below.
You may
qualify for sales charge discounts if you and your family invest, or agree to
invest in the future, at least $100,000 in funds distributed through
Franklin Distributors, LLC (“Franklin Distributors” or the “Distributor”), the
fund’s distributor. More information about these and other
discounts is available from your Service Agent, in the fund’s Prospectus on page
33 under the heading “Additional information about each share class,” in the
appendix titled “Appendix: Waivers and Discounts Available from Certain Service
Agents” on page A-1 of the fund’s Prospectus and in the fund’s Statement of
Additional Information (“SAI”) on page 99 under the heading “Sales Charge
Waivers and Reductions for Class A Shares.” “Service Agents” include banks,
brokers, dealers, insurance companies, investment advisers, financial
consultants or advisers, mutual fund supermarkets and other financial
intermediaries that have entered into an agreement with the Distributor to sell
shares of the fund.
If
you purchase Class I shares or Class IS shares through a Service Agent acting
solely as an agent on behalf of its customers, that Service Agent may charge you
a commission. Such commissions, if any, are not charged by the fund and are not
reflected in the fee table or expense example below.
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Shareholder
fees |
(fees paid directly from
your investment) |
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Class A |
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Class C |
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Class R |
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Class I |
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Class IS |
Maximum
sales charge (load) imposed on purchases (as a % of offering price) |
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3.751,2 |
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None |
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None |
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None |
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None |
Maximum
deferred sales charge (load) (as a % of the lower of net asset value at
purchase or redemption)3 |
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None4 |
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1.00 |
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None |
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None |
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None |
Small
account fee5 |
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$15 |
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$15 |
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None |
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None |
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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) |
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Class A |
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Class C |
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Class R |
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Class I |
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Class IS |
Management
fees |
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0.55 |
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0.55 |
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0.55 |
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0.55 |
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0.55 |
Distribution
and/or service (12b-1) fees |
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0.25 |
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1.00 |
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0.50 |
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None |
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None |
Other
expenses |
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0.18 |
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0.15 |
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0.306 |
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0.20 |
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0.10 |
Acquired
fund fees and expenses |
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0.01 |
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0.01 |
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0.01 |
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0.01 |
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0.01 |
Total
annual fund operating expenses7 |
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0.99 |
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1.71 |
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1.36 |
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0.76 |
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0.66 |
Fees
waived and/or expenses reimbursed8 |
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(0.01) |
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(0.01) |
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(0.01) |
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(0.01) |
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(0.01) |
Total
annual fund operating expenses after waiving fees and/or reimbursing
expenses |
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0.98 |
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1.70 |
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1.35 |
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0.75 |
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0.65 |
1 |
The
sales charge is waived for shareholders purchasing Class A shares
through accounts where Franklin Distributors is the broker-dealer of
record (“Distributor Accounts”). |
2 |
Shareholders
purchasing Class A shares through certain Service Agents or in
certain types of accounts may be eligible for a waiver of the sales
charge. For additional information, see “Additional information about each
share class — Sales charges” in the
Prospectus. |
3 |
Maximum
deferred sales charge (load) may be reduced over
time. |
4 |
You may buy Class A shares in amounts of $500,000 or
more at net asset value (without an initial sales charge), but if you
redeem those shares within 18 months of their purchase, you will pay a
contingent deferred sales charge of
1.00%. |
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2 |
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BrandywineGLOBAL— Flexible Bond
Fund |
5 |
If
the value of your account is below $1,000 ($250 for retirement plans that
are not employer-sponsored), the fund may charge you a fee of $3.75 per
account that is determined and assessed quarterly by the fund or your
Service Agent (with an annual maximum of $15.00 per account). Please
contact your Service Agent or the fund for more
information. |
6 |
Other expenses for Class R shares are
estimated for the current fiscal year. Actual expenses may differ from
estimates. |
7 |
Total annual fund operating expenses do not
correlate with the ratios of expenses to average net assets reported in
the financial highlights tables in the fund’s Prospectus and in the fund’s
shareholder reports, which reflect the fund’s operating expenses and do
not include acquired fund fees and
expenses. |
8 |
The
manager has agreed to waive fees and/or reimburse operating expenses
(other than interest, brokerage commissions, dividend and interest expense
on securities sold short, taxes, extraordinary expenses and acquired fund
fees and expenses) so that the ratio of total annual fund operating
expenses will not exceed 1.10% for Class A shares, 1.85% for Class C
shares, 1.35% for Class R shares, 0.75% for Class I shares and 0.65% for
Class IS shares, subject to recapture as described below. In addition, the
ratio of total annual fund operating expenses for Class IS shares will not
exceed the ratio of total annual fund operating expenses for Class I
shares, subject to recapture as described below. These arrangements cannot
be terminated prior to December 31, 2025
without the Board of Trustees’ consent. The manager is permitted to
recapture amounts waived and/or reimbursed to a class within three years
after the fiscal year in which the manager earned the fee or incurred the
expense if the class’ total annual fund operating expenses have fallen to
a level below the limits described above. In no case will the manager
recapture any amount that would result, on any particular business day of
the fund, in the class’ total annual fund operating expenses exceeding the
applicable limits described above or any other lower limit then in effect.
In addition, the manager has agreed to waive the fund’s management fee to
an extent sufficient to offset the net management fee payable in
connection with any investment in an affiliated money market fund. This
management fee waiver is not subject to the recapture provision discussed
above. |
Example
This
example is intended to help you compare the cost of investing in the fund with
the cost of investing in other mutual funds. The example
assumes:
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You
invest $10,000 in the fund for the time periods
indicated |
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Your
investment has a 5% return each year and the fund’s operating expenses
remain the same (except that any applicable fee waiver or expense
reimbursement is reflected only through its expiration
date) |
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You
reinvest all distributions and dividends without a sales
charge |
Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
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Number of years you own your shares
($) |
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1 year |
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3 years |
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5 years |
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10 years |
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Class A
(with or without redemption at end of period) |
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471 |
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677 |
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900 |
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1,540 |
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Class
C (with redemption at end of period) |
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273 |
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538 |
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928 |
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1,828 |
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Class
C (without redemption at end of period) |
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173 |
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538 |
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928 |
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1,828 |
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Class R
(with or without redemption at end of period) |
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137 |
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430 |
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744 |
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1,635 |
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Class I
(with or without redemption at end of period) |
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77 |
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242 |
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422 |
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943 |
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Class IS
(with or without redemption at end of period) |
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66 |
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209 |
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366 |
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821 |
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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 most recent fiscal year, the fund’s portfolio
turnover rate was 138% of the average value of its
portfolio.
Principal investment
strategies
Under
normal market conditions, the fund will invest at least 80% of its net assets in
fixed income securities or other instruments with similar economic
characteristics. The subadviser has broad discretion to invest in multiple types
of fixed income securities including, but not limited to, sovereign debt,
emerging markets debt, corporate debt, high yield debt, bank loans,
supranational issues, Separate Trading of Registered Interest and Principal of
Securities (“STRIPS”), inflation-linked securities and hybrid
securities.
The
fund may invest in fixed income securities issued in foreign currencies and U.S.
dollar denominated securities. The fund can seek investment opportunities
anywhere in the world. Under normal market conditions, the fund’s foreign
currency exposure will be limited to 25% of the fund’s assets. For example, the
fund would be in compliance with this limitation if it invests 75% of its assets
in U.S. dollar-denominated bonds and 25% in bonds denominated in non-U.S.
currencies. Alternatively, the fund could invest more than 25% in bonds
denominated in non-U.S. currencies if it uses derivatives strategies to hedge
the non-U.S. currency exposure back to the U.S. dollar so that the fund would
have no more than 25% exposure to non-U.S.
currencies.
The
fund may invest in derivative instruments such as foreign currency forwards,
bond futures, interest rate futures, index futures, swaps (including interest
rate, total return and inflation swaps), credit default swaps, credit default
swap index products, instruments involved in currency risk management
strategies, options, options on futures and structured credit products. The fund
may use derivatives to enhance total return, as a means of providing additional
exposure to certain types of investments, to hedge against fluctuations in
securities prices, interest rates or currency exchange rates, to change the
effective duration of its portfolio, as a cash flow management technique or as a
substitute for the purchase or sale of securities or currencies. Derivatives are
taken into account when determining compliance with the fund’s 80% investment
policy.
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BrandywineGLOBAL— Flexible Bond
Fund |
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The
fund may invest without limit in securities that are rated or unrated, including
“high yield” or “junk” bonds (that is, securities rated below the Baa/BBB
categories or, if unrated, determined to be of comparable credit quality by the
subadviser).
Under
normal conditions, the dollar-weighted average effective duration of the fund’s
portfolio is expected to range from 0 to 10 years. However, the fund may invest
without limit in securities of any maturity or duration.
The
fund may invest in asset-backed and mortgage-backed securities. Asset-backed
securities may include securities backed by automobile loans, student loans,
credit card receivables or other types of collateral. Mortgage-backed securities
may be backed by pools of residential or commercial mortgage loans and may be
issued by U.S. government agencies or U.S. government-sponsored entities or by
private issuers. The fund will not invest more than 25% of its assets in
asset-backed and mortgage-backed securities that are not issued or guaranteed
by, or comprised of securities issued or guaranteed by, a U.S. government agency
or U.S. government-sponsored
entity.
The
fund may invest up to 25% of its assets in convertible securities, up to 10% of
its assets in preferred equity securities of companies of any size, and up to
10% of its assets in common equity securities of companies of any size.
Derivatives that provide exposure to equity securities (such as stock index
futures) will be taken into account for purposes of the 10% limitation on common
equity securities. In addition, no more than 5% of the fund shall be invested in
any one non-sovereign issue at time of
purchase.
The
fund is classified as “non-diversified,” which means it may invest a larger
percentage of its assets in a smaller number of issuers than a diversified
fund.
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. The relative significance of the risks of investing in
the fund may change over time.
Market and interest
rate risk. The market prices of
securities held by the fund may go up or down, sometimes rapidly or
unpredictably. If the market prices of the fund’s securities fall, the value of
your investment in the fund will decline. The market price of a security may
fall due to general market conditions, such as real or perceived adverse
economic or political conditions or trends, tariffs and trade disruptions,
inflation, substantial economic downturn or recession, changes in interest
rates, lack of liquidity in the bond markets or adverse investor sentiment.
Changes in market conditions will not typically have the same impact on all
types of securities.
The
value of your investment will generally go down when interest rates rise. A rise
in rates tends to have a greater impact on the prices of longer term or duration
securities. A general rise in interest rates may cause investors to move out of
fixed income securities on a large scale, which could adversely affect the price
and liquidity of fixed income securities and could also result in increased
redemptions from the fund. Recently, there have been inflationary price
movements. As a result, fixed income securities markets may experience
heightened levels of interest rate volatility and liquidity risk. The U.S.
Federal Reserve has raised interest rates from historically low levels. It may
continue to raise interest rates. In addition, changes in monetary policy may
exacerbate the risks associated with changing interest rates. Any additional
interest rate increases in the future could cause the value of the fund’s
holdings to decrease. It cannot be predicted when inflation will return to more
normalized levels or how long financial authorities will counter inflationary
pressures with monetary
tightening.
The
maturity of a security may be significantly longer than its duration. A
security’s maturity and other features may be more relevant than its duration in
determining the security’s sensitivity to other factors affecting the issuer or
markets generally such as changes in credit quality or in the yield premium that
the market may establish for certain types of
securities.
Market events
risk. The market values of securities or
other assets will fluctuate, sometimes sharply and unpredictably, due to factors
such as economic events, governmental actions or intervention, actions taken by
the U.S. Federal Reserve or foreign central banks, market disruptions caused by
trade disputes, labor strikes or other factors, political developments, armed
conflicts, economic sanctions and countermeasures in response to sanctions,
major cybersecurity events, the global and domestic effects of widespread or
local health, weather or climate events, 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, wars, 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.
Following Russia’s invasion of Ukraine in 2022, Russian stocks lost all, or
nearly all, of their market value. Other securities or markets could be
similarly affected by past or future geopolitical or other events or conditions.
Furthermore, events involving limited liquidity, defaults, non-performance or
other adverse developments that affect one industry, such as the financial
services industry, or concerns or rumors about any events of these kinds, have
in the past and may in the future lead to market-wide liquidity problems, may
spread to other industries, and could negatively affect the value and liquidity
of the fund’s investments.
Raising
the ceiling on U.S. government debt has become increasingly politicized. Any
failure to increase the total amount that the U.S. government is authorized to
borrow could lead to a default on U.S. government obligations, with
unpredictable consequences for economies and markets in the
U.S.
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BrandywineGLOBAL— Flexible Bond
Fund |
and
elsewhere. Recently, inflation and interest rates have increased and may rise
further. These circumstances 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.
The
United States and other countries are periodically involved in disputes over
trade and other matters, which may result in tariffs, investment restrictions
and adverse impacts on affected companies and securities. For example, the
United States has imposed tariffs and other trade barriers on Chinese exports,
has restricted sales of certain categories of goods to China, and has
established barriers to investments in China. Trade disputes may adversely
affect the economies of the United States and its trading partners, as well as
companies directly or indirectly affected and financial markets generally. The
United States government has prohibited U.S. persons from investing in Chinese
companies designated as related to the Chinese military. These and possible
future restrictions could limit the fund’s opportunities for investment and
require the sale of securities at a loss or make them illiquid. Moreover, the
Chinese government is involved in a longstanding dispute with Taiwan that has
included threats of invasion. If the political climate between the United States
and China does not improve or continues to deteriorate, if China were to attempt
unification of Taiwan by force, or if other geopolitical conflicts develop or
get worse, economies, markets and individual securities may be severely affected
both regionally and globally, and the value of the fund’s assets may go
down.
Issuer
risk. The market price of a security
held by the fund 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 or the
securities markets as a whole, and conversely an industry or sector or the
securities markets may be affected by a change in financial condition or other
event affecting a single issuer. The fund may experience a substantial or
complete loss on an individual security.
Non-diversification
risk. The fund is classified as
“non-diversified,” which means it may invest a larger percentage of its assets
in a smaller number of issuers than a diversified fund. To the extent the fund
invests its assets in a smaller number of issuers, the fund will be more
susceptible to negative events affecting those issuers than a diversified fund.
Portfolio management
risk. The value of your investment may
decrease if the subadviser’s judgment about the quality, relative yield, value
or market trends affecting a particular security, industry, sector or region, or
about interest rates or other market factors, 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.
Model
risk. The subadviser’s investment models
may not adequately take into account certain factors and may result in the fund
having a lower return than if the fund were managed using another model or
investment strategy. When a model or data used in managing the fund contains an
error, or is incorrect or incomplete, any investment decision made in reliance
on the model or data may not produce the desired results and the fund may suffer
losses.
Credit
risk. If an issuer or guarantor of
a security held by the fund or a counterparty to a financial contract with the
fund defaults or its credit is downgraded, or is perceived to be less
creditworthy, or if the value of the assets underlying a security declines, the
value of your investment will typically decline. Changes in actual or perceived
creditworthiness may occur quickly. The fund could be delayed or hindered in its
enforcement of rights against an issuer, guarantor or counterparty. Subordinated
securities (meaning securities that rank below other securities with respect to
claims on the issuer’s assets) are more likely to suffer a credit loss than
non-subordinated securities of the same issuer and will be disproportionately
affected by a default, downgrade or perceived decline in creditworthiness.
Prepayment or call
risk. Many issuers have a right to
prepay their fixed income securities. Issuers may be more likely to prepay their
securities if interest rates fall. If this happens, the fund may not benefit
from the rise in the market price of the securities that normally accompanies a
decline in interest rates, and will be forced to reinvest prepayment proceeds at
a time when yields on securities available in the market are lower than the
yield on prepaid securities. The fund may also lose any premium it paid to
purchase the securities.
Extension
risk. When interest rates rise,
repayments of fixed income securities may occur more slowly than anticipated,
extending the effective duration of these fixed income securities at below
market interest rates and causing their market prices to decline more than they
would have declined due to the rise in interest rates alone. This may cause the
fund’s share price to be more volatile.
High yield (“junk”)
bonds risk. High yield bonds are
generally subject to greater credit risks than higher-grade bonds, including the
risk of default on the payment of interest or principal. High yield bonds
are considered speculative, typically have lower liquidity and are more
difficult to value than higher grade bonds. High yield bonds tend to be volatile
and more susceptible to adverse events, credit downgrades and negative
sentiments and may be difficult to sell at a desired price, or at all, during
periods of uncertainty or market turmoil.
Foreign investments
and emerging markets 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 U.S. exposure, such as less
liquid, less transparent, less regulated 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, reduction of government or central bank
support, inadequate accounting standards and auditing and financial
recordkeeping requirements, lack of information, political,
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BrandywineGLOBAL— Flexible Bond
Fund |
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5 |
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economic,
financial or social instability, terrorism, armed conflicts and other
geopolitical events, and the impact of tariffs and other restrictions on trade
or economic sanctions. Geopolitical or other events such as nationalization or
expropriation could even cause the loss of the fund’s entire investment in one
or more countries.
In
addition, there may be significant obstacles to obtaining information necessary
for investigations into or litigation against issuers located in or operating in
certain foreign markets, particularly emerging market countries, and
shareholders may have limited legal remedies. To the extent the fund focuses its
investments in a single country or only a few countries in a particular
geographic region, economic, political, regulatory or other conditions affecting
such country or region may have a greater impact on fund performance relative to
a more geographically diversified fund.
The
value of investments in foreign currencies or securities denominated in foreign
currencies increases or decreases as the rates of exchange between those
currencies and the U.S. dollar change. Currency conversion costs and
currency fluctuations could erase investment gains or add to investment losses.
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 may choose not to hedge its foreign
currency exposure.
Less
developed markets are more likely to experience problems with the clearing and
settling of trades and the holding of securities by local banks, agents and
depositories. 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).
The
risks of foreign investments are heightened when investing in issuers in
emerging market countries. Emerging market countries tend to have economic,
political and legal systems that are less developed and are less stable than
those of more developed countries. Their economies tend to be less diversified
than those of more developed countries. They typically have fewer medical and
economic resources than more developed countries, and thus they may be less able
to control or mitigate the effects of a pandemic or a natural disaster. They are
often particularly sensitive to market movements because their market prices
tend to reflect speculative expectations. Low trading volumes may result in
a lack of liquidity and in extreme price
volatility.
Sovereign debt
risk. Sovereign government and
supranational debt involve many of the risks of foreign and emerging markets
investments as well as the risk of debt moratorium, repudiation or
renegotiation, and the fund may be unable to enforce its rights against the
issuers. Sovereign debt risk is increased for emerging market issuers.
Mortgage-backed and
asset-backed securities risk. When
market interest rates increase, the market values of mortgage-backed securities
decline. At the same time, mortgage refinancings and prepayments slow, which
lengthens the effective duration of these securities. As a result, the negative
effect of the interest rate increase on the market value of mortgage-backed
securities is usually more pronounced than it is for other types of fixed income
securities, potentially increasing the volatility of the fund. Conversely, when
market interest rates decline, while the value of mortgage-backed securities may
increase, the rate of prepayment of the underlying mortgages also tends to
increase, which shortens the effective duration of these securities.
Mortgage-backed securities are also subject to the risk that underlying
borrowers will be unable to meet their obligations and the value of property
that secures the mortgage may decline in value and be insufficient, upon
foreclosure, to repay the associated loan. Investments in asset-backed
securities are subject to similar risks. The ability of an issuer of
asset-backed securities to enforce its security interest in the underlying
assets may be limited, and therefore certain asset-backed securities present a
heightened level of risk.
Convertible
securities risk. Convertible securities
are subject to stock market and other risks associated with equity securities,
as well as the credit, interest rate and other risks associated with fixed
income securities. Credit risk is the risk that the issuer or obligor will not
make timely payments of principal or interest or that its credit may be
downgraded or perceived to be less creditworthy. Interest rate risk is the risk
that the value of a fixed income security will fall when interest rates rise. A
rise in rates tends to have a greater impact on the prices of longer term or
duration securities. A general rise in interest rates may cause investors to
move out of fixed income securities on a large scale, which could adversely
affect the price and liquidity of fixed income securities. As the market price
of the equity security underlying a convertible security falls, the convertible
security tends to trade on the basis of its yield and other fixed income
characteristics. As the market price of the equity security underlying a
convertible security rises, the convertible security tends to trade on the basis
of its equity conversion features.
Zero coupon bond
risk. Zero coupon securities pay no
interest during the life of the obligation but trade at prices below their
stated maturity value. Because zero coupon securities pay no interest until
maturity, their prices may fluctuate more than other types of securities with
the same maturity.
Derivatives
risk. Using derivatives can increase
fund losses and reduce opportunities for gains, such as when market prices,
interest rates, currencies, or the derivatives themselves behave in a way not
anticipated by the fund’s subadviser. Using derivatives also can have a
leveraging effect and increase fund volatility. Certain derivatives have the
potential for unlimited loss, regardless of the size of the initial investment.
Derivatives may not be available at the time or price desired, may be difficult
to sell, unwind or value, and the counterparty may default on its obligations to
the fund. Derivatives are generally subject to the risks applicable to the
assets, rates, indices or other indicators underlying the derivative. The value
of a derivative may fluctuate more than the underlying assets, rates, indices or
other indicators to which it relates. Use of derivatives may have different tax
consequences for the fund than an investment in the underlying asset, and those
differences may affect the amount, timing and character of income distributed to
shareholders. The U.S. government and foreign governments have adopted and
implemented regulations governing derivatives markets, including mandatory
clearing of certain derivatives, margin and reporting requirements. The ultimate
impact of the regulations remains unclear. Additional regulation of derivatives
may make derivatives more costly, limit their availability or utility, otherwise
adversely affect their performance or disrupt markets.
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6 |
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BrandywineGLOBAL— Flexible Bond
Fund |
Credit
default swap contracts involve heightened risks and may result in losses to the
fund. Credit default swaps may be illiquid and difficult to value. When the fund
sells credit protection via a credit default swap, credit risk increases since
the fund has exposure to both the issuer whose credit is the subject of the swap
and the counterparty to the swap.
Currency derivatives
risk. Currency futures, forwards or
options may not always work as intended, and in specific cases the fund may be
worse off than if it had not used such instrument(s). There may not always be
suitable hedging instruments available. Even where suitable hedging instruments
are available, the portfolio managers may determine not to hedge the fund’s
currency risks. The fund may have less flexibility to meet its investment
objectives if it is unable to, or the portfolio managers choose not to, use
currency derivatives.
Leverage
risk. The value of your investment may
be more volatile if the fund borrows or uses instruments, such as derivatives,
that have a leveraging effect on the fund’s portfolio. Other risks
described in the Prospectus also will be compounded because leverage generally
magnifies the effect of a change in the value of an asset and creates a risk of
loss of value on a larger pool of assets than the fund would otherwise have
had. The fund may also have to sell assets at inopportune times to satisfy
its obligations created by the use of leverage or derivatives. The use of
leverage is considered to be a speculative investment practice and may result in
the loss of a substantial amount, and possibly all, of the fund’s assets. In
addition, the fund’s portfolio will be leveraged if it exercises its right to
delay payment on a redemption, and losses will result if the value of the fund’s
assets declines between the time a redemption request is deemed to be received
by the fund and the time the fund liquidates assets to meet redemption requests.
The
subadviser expects that the implementation of the fund’s investment strategy,
which may include a significant level of investment in derivatives, will have
the effect of creating leverage in the fund in that the fund’s potential
exposure may be greater than its net
assets.
Risks relating to
inflation-indexed securities. The value
of inflation-indexed fixed income securities generally fluctuates in response to
changes in real interest rates, which are in turn tied to the relationship
between nominal interest rates and the rate of inflation. If nominal interest
rates increase at a faster rate than inflation, real interest rates might rise,
leading to a decrease in value of inflation-indexed securities. The fund may
also experience a loss on an inflation-indexed security if there is deflation.
If inflation is lower than expected during the period the fund holds an
inflation-indexed security, the fund may earn less on the security than on a
conventional bond.
Portfolio turnover
risk. Active and frequent trading will
increase a shareholder’s tax liability and the fund’s transaction costs, which
could detract from fund performance.
Illiquidity
risk. Some assets held by the fund may
be or become impossible or difficult to sell and some assets that the fund wants
to invest in may be impossible or difficult to purchase, particularly during
times of market turmoil or due to adverse changes in the conditions of a
particular issuer. These illiquid assets may also be volatile and difficult to
value. Markets may become illiquid quickly. 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. As a
general matter, dealers have been less willing to make markets in recent years.
Federal banking regulations may also cause certain dealers to reduce their
inventories of certain securities, which may further decrease the fund’s ability
to buy or sell such securities. During times of market turmoil, there have been,
and may be, no buyers or sellers for securities in entire asset classes. If the
fund is forced to sell an illiquid asset to meet redemption requests or other
cash needs, or to try to limit losses, the fund may be forced to sell at a
substantial loss or may not be able to sell at all. The fund may not receive its
proceeds from the sale of certain securities for an extended period (for
example, several weeks or even longer). The liquidity of certain assets,
particularly of privately-issued and non-investment grade mortgage-backed
securities, asset-backed securities and collateralized debt obligations, may be
difficult to ascertain and may change over time.
Valuation
risk. The sales price the fund could
receive for 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. Investors 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 involves
subjective judgment, which may prove to be incorrect.
Redemption
risk. The fund may experience heavy
redemptions that could cause the fund to liquidate its assets at inopportune
times or unfavorable prices or increase or accelerate taxable gains or
transaction costs and may negatively affect the fund’s net asset value,
performance, or ability to satisfy redemptions in a timely manner, which could
cause the value of your investment to decline.
Cybersecurity
risk. Like other funds and business
enterprises, the fund, the manager, the subadviser and their service providers
are subject to the risk of cyber incidents occurring from time to time.
Cybersecurity incidents, whether intentionally caused by third parties or
otherwise, 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 subadviser 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, receiving
distributions or receiving timely information regarding the fund or their
investment in the fund. The fund, the manager, and the subadviser 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, the manager, and/or the subadviser.
Cybersecurity incidents may result in financial losses to the fund and its
shareholders, and substantial costs may be incurred in order to prevent or
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BrandywineGLOBAL— Flexible Bond
Fund |
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7 |
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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.
New
ways to carry out cyber attacks continue to develop. 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.
These
and other risks are discussed in more detail in the Prospectus or in the
Statement of Additional Information.
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8 |
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BrandywineGLOBAL— Flexible Bond
Fund |
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 for Class IS shares. The table shows the
average annual total returns of each class of the fund that has been in
operation for at least one full calendar year and also compares the fund’s
performance with the average annual total returns of an index or other
benchmark. Performance prior to May 31, 2016 in the bar
chart and the table is that of the fund’s predecessor. Performance for
classes other than those shown may vary from the performance shown to the extent
the expenses for those classes differ. The fund makes updated performance
information, including its current net asset value, available at www.franklintempleton.com/mutualfunds (select fund
and share class), or by calling the fund at 877-6LM-FUND/656-3863.
The
fund’s past performance (before and after taxes) is not necessarily an
indication of how the fund will perform in the
future.
Sales
charges are not reflected in the accompanying bar chart, and if those charges
were included, returns would be less than those
shown.
This
fund is the successor to an unregistered private fund (the “Predecessor”). The
performance prior to May 31, 2016, in the accompanying bar chart and table
is that of the Predecessor. Immediately prior to the fund commencing operations,
the Predecessor transferred its assets to the fund in exchange for the fund’s
Class IS shares. At the time of transfer, the investment policies, objectives,
guidelines and restrictions of the fund were in all material respects equivalent
to those of the Predecessor. In addition, Brian Kloss, a current portfolio
manager of the fund, served as a portfolio manager to the Predecessor. As a
mutual fund registered under the Investment Company Act of 1940 (the “1940
Act”), the fund is subject to certain restrictions under the 1940 Act to which
the Predecessor was not subject. As a regulated investment company under the
Internal Revenue Code of 1986, as amended (the “Code”), the fund is subject to
certain restrictions under the Code to which the Predecessor was not subject.
Had the Predecessor been registered under the 1940 Act and been subject to the
provisions of the 1940 Act, its investment performance could have been adversely
affected. Similarly, had the Predecessor been subject to provisions of the Code
applicable to regulated investment companies, its investment performance may
have been adversely affected. The performance is shown net of an annual
management fee of 0.80% and other expenses of 0.10% which reflects the expenses
of the Predecessor.
The
Predecessor did not have distribution policies. The Predecessor was an
unregistered private fund, did not qualify as a regulated investment company for
federal income tax purposes and did not pay dividends or
distributions.
Best
Quarter (12/31/2023): 8.21 Worst
Quarter (06/30/2022): (5.69)
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Average annual total returns
(%) |
|
(for periods ended
December 31, 2023) |
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Class
IS |
|
1 year |
|
5 years |
|
|
10 years |
|
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Since
inception |
|
|
|
Inception
date |
|
Return
before taxes |
|
9.74 |
|
4.79 |
|
|
4.07 |
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Return
after taxes on distributions |
|
7.29 |
|
3.02 |
|
|
2.57 |
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Return
after taxes on distributions and sale of fund shares |
|
5.70 |
|
2.93 |
|
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2.50 |
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Other Classes (Return before taxes
only) |
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Class
A |
|
5.23 |
|
3.52 |
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N/A |
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|
3.62 |
|
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|
05/31/2016 |
|
Class
C |
|
7.54 |
|
N/A |
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N/A |
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(2.21) |
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09/30/2021 |
|
Class
I |
|
9.54 |
|
4.69 |
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N/A |
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4.49 |
|
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05/31/2016 |
|
Bloomberg
U.S. Aggregate Index (reflects no deduction for fees, expenses or
taxes)1 |
|
5.53 |
|
1.10 |
|
|
1.81 |
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1 |
For
Class A, Class C and Class I shares, for the period from the class’
inception date to December 31, 2023, the average annual total return
of the Bloomberg U.S. Aggregate Index was 1.09%, (3.73)% and 1.09%,
respectively. |
The after-tax returns are shown only for Class IS
shares, 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
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BrandywineGLOBAL— Flexible Bond
Fund |
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9 |
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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. After-tax returns for classes other than Class IS
will vary from returns shown for Class
IS.
Management
Investment
manager: Franklin Templeton Fund
Adviser, LLC (“FTFA”) (formerly known as Legg Mason Partners Fund Advisor, LLC)
Subadviser: Brandywine Global Investment Management, LLC
(“Brandywine Global”)
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 |
|
Title |
|
Portfolio manager
of the fund since |
| |
|
Michael
Arno, CFA |
|
Portfolio
Manager |
|
2020 |
| |
|
Tracy
Chen, CFA, CAIA |
|
Portfolio
Manager |
|
2016 |
| |
|
Brian
L. Kloss, JD, CPA |
|
Portfolio
Manager |
|
2013 |
| |
|
Renato
Latini, CFA |
|
Portfolio
Manager |
|
2020 |
| |
|
John
P. McIntyre, CFA |
|
Portfolio
Manager |
|
2017 |
| |
|
Anujeet
Sareen, CFA |
|
Portfolio
Manager |
|
2017 |
Purchase and sale of fund
shares
You
may purchase, redeem or exchange shares of the fund each day the New York Stock
Exchange is open, at the fund’s net asset value determined after receipt of your
request in good order, subject to any applicable sales charge.
The
fund’s initial and subsequent investment minimums generally are set forth in the
accompanying table:
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Investment minimum initial/additional investment
($) |
|
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Class A |
|
Class C1 |
|
Class R |
|
Class I |
|
Class IS |
General |
|
1,000/50 |
|
1,000/50 |
|
N/A |
|
1 million/ None2 |
|
N/A |
Uniform
Gifts or Transfers to Minor Accounts |
|
1,000/50 |
|
1,000/50 |
|
N/A |
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1 million/ None2 |
|
N/A |
IRAs |
|
250/50 |
|
250/50 |
|
N/A |
|
1 million/ None2,3 |
|
N/A3 |
SIMPLE
IRAs |
|
None/None |
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None/None |
|
N/A |
|
1 million/ None2 |
|
N/A |
Systematic
Investment Plans |
|
25/25 |
|
25/25 |
|
N/A |
|
1 million/ None2,4 |
|
N/A4 |
Clients
of Eligible Financial Intermediaries |
|
None/None |
|
N/A |
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None/ None |
|
None/ None5 |
|
None/None5 |
Eligible
Investment Programs |
|
None/None |
|
N/A |
|
None/ None |
|
None/
None |
|
None/None |
Omnibus
Retirement Plans |
|
None/None |
|
None/None |
|
None/ None |
|
None/
None |
|
None/None |
Individual
Retirement Plans except as noted |
|
None/None |
|
None/None |
|
N/A |
|
1 million/ None2 |
|
N/A |
Institutional
Investors |
|
1,000/50 |
|
1,000/50 |
|
N/A |
|
1 million/ None |
|
1 million/None |
1 |
Class
C shares are not available for purchase through Distributor Accounts.
|
2 |
Available
to investors investing directly with the fund. |
3 |
IRA
accountholders who purchase Class I or Class IS shares through a Service
Agent acting as agent on behalf of its customers are subject to the
initial and subsequent minimums of $250/$50. If a Service Agent does not
have this arrangement in place with the Distributor, the initial and
subsequent minimums listed in the table apply. Please contact your Service
Agent for more information. |
4 |
Investors
investing through a Systematic Investment Plan who purchase Class I or
Class IS shares through a Service Agent acting as agent on behalf of its
customers are subject to the initial and subsequent minimums of $25/$25.
If a Service Agent does not have this arrangement in place with the
Distributor, the initial and subsequent minimums listed in the table
apply. Please contact your Service Agent for more information.
|
5 |
Individual
investors who purchase Class I shares or Class IS shares through a Service
Agent acting as agent on behalf of its customers are subject to the
initial and subsequent |
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10 |
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BrandywineGLOBAL— Flexible Bond
Fund |
|
minimums
of $1,000/$50. If a Service Agent does not have this arrangement in place
with the Distributor, the initial and subsequent minimums listed in the
table apply. Please contact your Service Agent for more information.
|
Your
Service Agent may impose higher or lower investment minimums, or may impose no
minimum investment requirement.
For
more information about how to purchase, redeem or exchange shares, and to learn
which classes of shares are available to you, you should contact your Service
Agent, or, if you hold your shares or plan to purchase shares through the fund,
you should contact the fund by phone at 877-6LM-FUND/656-3863, by regular mail
at Legg Mason Funds, P.O. Box 33030, St. Petersburg, FL 33733-8030 or by
express, certified or registered mail at Legg Mason Funds, 100 Fountain Parkway,
St. Petersburg, FL 33716-1205.
Tax information
The
fund’s distributions are generally taxable as ordinary income or capital gains.
Payments to
broker/dealers and other financial intermediaries
The
fund’s related companies pay Service Agents for the sale of fund shares,
shareholder services and other purposes. These payments create a conflict of
interest by influencing your Service Agent or its employees or associated
persons to recommend the fund over another investment. Ask your financial
adviser or salesperson or visit your Service Agent’s or salesperson’s website
for more information.
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BrandywineGLOBAL— Flexible Bond
Fund |
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11 |
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More on the fund’s
investment strategies, investments and risks
Important information
The
fund’s investment objective is to provide current income and capital
appreciation.
The
fund’s investment objective may be changed by the Board without shareholder
approval and on notice to shareholders.
There
is no assurance that the fund will meet its investment objective.
Under
normal market conditions, the fund will invest at least 80% of its net assets in
fixed income securities or other instruments with similar economic
characteristics.
The
fund’s 80% investment policy may be changed by the Board without shareholder
approval upon 60 days’ prior notice to shareholders. 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.
The
fund is classified as “non-diversified,” which means it may invest a larger
percentage of its assets in a smaller number of issuers than a diversified fund.
Maturity and duration
The
fund may invest in securities of any maturity. The maturity of a fixed income
security is a measure of the time remaining until the final payment on the
security is due. The weighted average effective duration of the fund’s
portfolio, including derivatives, however, is expected to range from 0 to 10
years. The fund’s investments may be of any duration.
Effective
duration seeks to measure the expected sensitivity of market price to changes in
interest rates, taking into account the anticipated effects of particular
features of a security (for example, some bonds can be prepaid by the issuer).
The assumptions that are made about a security’s features and options when
calculating effective duration may prove to be incorrect. As a result, investors
should be aware that effective duration is not an exact measurement and may not
reliably predict a security’s price sensitivity to changes in yield or interest
rates.
Generally,
the longer a fund’s effective duration, the more sensitive it will be to changes
in interest rates. For example, if interest rates rise by 1%, a fund with a
two-year effective duration would expect the value of its portfolio to decrease
by 2% and a fund with a ten-year effective duration would expect the value of
its portfolio to decrease by 10%, all other factors being equal.
The
maturity of a security may be significantly longer than its effective duration.
A security’s maturity may be more relevant than its effective duration in
determining the security’s sensitivity to other factors such as changes in
credit quality or in the difference in yield between U.S. Treasuries and certain
other types of securities.
Credit quality
The
fund may hold debt securities of any credit quality, whether rated or unrated.
Portfolio turnover
The
fund may engage in active and frequent trading to achieve its investment
objective, resulting in high portfolio turnover.
Derivatives
The
fund may engage in a variety of transactions using derivatives, such as
forwards, futures, options, mortgage derivatives, structured notes and swaps
(including buying and selling credit default swaps). Derivatives are financial
instruments whose value depends upon, or is derived from, the value of something
else, such as one or more underlying investments, indexes or currencies.
Derivatives may be used by the fund for any of the following purposes:
• |
|
As
a hedging technique in an attempt to manage risk in the fund’s portfolio
|
• |
|
As
a substitute for buying or selling securities or currencies
|
• |
|
As
a means of changing investment characteristics of the fund’s portfolio
|
• |
|
As
a cash flow management technique |
• |
|
As
a means of attempting to enhance returns |
• |
|
As
a means of providing additional exposure to types of investments or market
factors |
The
fund from time to time may sell protection on debt securities by entering into
credit default swaps. In these transactions, the fund is generally required to
pay the par (or other agreed-upon) value of a referenced debt security to the
counterparty in the event of a default on or downgrade of the debt security
and/or a similar credit event. In return, the fund receives from the
counterparty a periodic stream of payments over the term of the contract. If no
default occurs, the fund keeps the stream of payments and has no payment
obligations. As the seller, the fund would effectively add leverage to its
portfolio because, in addition to its net assets, the fund would be subject to
loss on the par (or other agreed-upon) value it had
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12 |
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BrandywineGLOBAL— Flexible Bond
Fund |
undertaken
to pay. Credit default swaps may also be structured based on an index or the
debt of a basket of issuers, rather than a single issuer, and may be customized
with respect to the default event that triggers purchase or other factors (for
example, a particular number of defaults within a basket, or defaults by a
particular combination of issuers within the basket, may trigger a payment
obligation).
The
fund may buy credit default swaps to hedge against the risk of default of debt
securities held in its portfolio or for other reasons. As the buyer of a
credit default swap, the fund would make the stream of payments described in the
preceding paragraph to the seller of the credit default swap and would expect to
receive from the seller a payment in the event of a default on the underlying
debt security or other specified event.
Using
derivatives, especially for non-hedging purposes, may involve greater risks to
the fund than investing directly in securities, particularly as these
instruments may be very complex and may not behave in the manner anticipated by
the fund. Certain derivative transactions may have a leveraging effect on the
fund.
Use
of derivatives or similar instruments may have different tax consequences for
the fund than an investment in the underlying asset, and those differences may
affect the amount, timing and character of income distributed to shareholders.
Instead
of, and/or in addition to, investing directly in particular securities, the fund
may use derivatives and other synthetic instruments that are intended to provide
economic exposure to securities, issuers or other measures of market or economic
value. The fund may use one or more types of these instruments without limit,
subject to applicable regulatory requirements.
Registered
investment companies are subject to regulatory limitations on their use of
derivative investments and certain financing transactions (e.g. reverse
repurchase agreements). Among other things, a fund that invests in derivative
instruments beyond a specified limited amount must apply a value-at-risk based
limit to its use of certain derivative instruments and financing transactions
and must adopt and implement a derivatives risk management program. A fund that
uses derivative instruments in a limited amount is not subject to the same
restrictions. Regulatory restrictions may limit the fund’s ability to use
derivatives as part of its investment strategy and may not work as intended to
limit losses from derivatives.
The
fund’s subadviser may choose not to make use of derivatives.
Fixed income securities
Fixed
income securities represent obligations of corporations, governments and other
entities to repay money borrowed, usually at the maturity of the security. These
securities may pay fixed, variable or floating rates of interest. However, some
fixed income securities, such as zero coupon bonds, do not pay current interest
but are issued at a discount from their face values. Other debt instruments,
such as certain mortgage-backed and other asset-backed securities, make periodic
payments of interest and/or principal. Some debt instruments are partially or
fully secured by collateral supporting the payment of interest and principal.
“Fixed income securities” are commonly referred to as “fixed income
instruments,” “fixed income obligations,” “notes,” “loans,” “debt,” “debt
obligations,” “debt instruments,” “debt securities,” “corporate debt,” “bonds”
and “corporate bonds.” Fixed income securities also include certain hybrid
securities, such as preferred stock. When these terms are used in this
Prospectus, they are not intended to be limiting.
Fixed
income securities in which the fund may invest include high yield debt (often
called “junk bonds”); debt securities issued or guaranteed by national
governments, their agencies or instrumentalities and political sub-divisions
(including inflation index linked securities and municipal bonds); debt
securities of supranational organizations such as bonds, debentures and freely
transferable promissory notes; corporate debt securities, including debentures,
bonds (including zero coupon bonds), convertible and non-convertible notes,
commercial paper, certificates of deposits, freely transferable promissory notes
and bankers acceptances issued by industrial, utility, finance, commercial
banking or bank holding company organizations; mortgage-backed securities
(including collateralized debt obligations); asset-backed securities; and
emerging markets debt.
Corporate debt
Corporate
debt securities are fixed income securities usually issued by businesses to
finance their operations. Various types of business entities may issue these
securities, including corporations, trusts, limited partnerships, limited
liability companies and other types of non-governmental legal
entities. Notes, bonds, debentures and commercial paper are the most common
types of corporate debt securities, with the primary difference being their
maturities and secured or unsecured status. Commercial paper has the shortest
term and is usually unsecured. The broad category of corporate debt securities
includes debt issued by U.S. or non-U.S. companies of all kinds, including those
with small, mid and large capitalizations. Corporate debt may carry variable or
floating rates of interest.
Loans
The
primary risk in an investment in loans is that borrowers may be unable to meet
their interest and/or principal payment obligations. Loans in which the fund
invests may be made to finance highly leveraged borrowers which may make such
loans especially vulnerable to adverse changes in economic or market conditions.
Loans in which the fund may invest may be either collateralized or
uncollateralized and senior or subordinate. Investments in uncollateralized
and/or subordinate loans entail a greater risk of nonpayment than do investments
in loans that hold a more senior position in the borrower’s capital structure
and/or are secured with collateral. In addition, loans are generally subject to
illiquidity risk. The fund may acquire an interest in loans by purchasing
participations in and/or assignments of portions of loans from third parties or
by investing in pools of loans, such as collateralized debt obligations as
further described under “Mortgage-backed and asset-backed securities.”
Transactions in loans may settle on a delayed basis. As a result, the proceeds
from the sale of a loan may not be available to make additional investments or
to meet the fund’s
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redemption
obligations. Bank loans may not be considered securities and therefore, the fund
may not have the protections afforded by U.S. federal securities laws with
respect to such investments.
Variable and floating
rate securities
Variable
rate securities reset at specified intervals, while floating rate securities
reset whenever there is a change in a specified index rate. In most cases,
these reset provisions reduce the impact of changes in market interest rates on
the value of the security. However, the value of these securities may
decline if their interest rates do not rise as much, or as quickly, as other
interest rates. Conversely, these securities will not generally increase in
value if interest rates decline. The fund may also invest in inverse floating
rate debt instruments (“inverse floaters”). Interest payments on inverse
floaters vary inversely with changes in interest rates. Inverse floaters pay
higher interest (and therefore generally increase in value) when interest rates
decline, and vice versa. An inverse floater may exhibit greater price volatility
than a fixed rate obligation of similar credit quality.
Foreign and emerging
markets securities
The
fund may invest in both U.S. dollar and non-U.S. dollar denominated securities
of foreign issuers. The value of the fund’s foreign securities may decline
because of unfavorable government actions, political instability or the more
limited availability of accurate information about foreign issuers, as well as
factors affecting the particular issuers. The fund may invest in foreign
securities issued by issuers located in emerging market countries. To the extent
the fund invests in these securities, the risks associated with investment in
foreign issuers will generally be more pronounced.
Sovereign debt
The
fund may invest in sovereign debt, including emerging market sovereign debt.
Sovereign debt securities may include:
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Fixed
income securities issued or guaranteed by governments, governmental
agencies or instrumentalities and their political subdivisions
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Fixed
income securities issued by government-owned, controlled or sponsored
entities |
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Interests
issued for the purpose of restructuring the investment characteristics of
instruments issued by any of the above issuers |
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Participations
in loans between governments and financial institutions
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Fixed
income securities issued by supranational entities such as the World Bank.
A supranational entity is a bank, commission or company established or
financially supported by the national governments of one or more countries
to promote reconstruction or development |
Sovereign
government and supranational debt involve many of the risks of foreign and
emerging markets investments as well as the risk of debt moratorium, repudiation
or renegotiation and the fund may be unable to enforce its rights against the
issuers.
Non-U.S. currency
transactions
The
fund may engage in non-U.S. currency exchange transactions in an effort to
protect against uncertainty in the level of future exchange rates or to enhance
returns based on expected changes in exchange rates. Non-U.S. currency exchange
transactions may take the form of options, futures, options on futures, swaps,
warrants, structured notes, forwards or spot (cash) transactions. The value of
these non-U.S. currency transactions depends on, and will vary based on
fluctuations in, the value of the underlying currency relative to the U.S.
dollar.
Distressed debt
securities
The
fund may invest in distressed debt securities. Distressed debt securities are
debt securities that are subject to bankruptcy proceedings or are in default or
are at imminent risk of being in default. Distressed debt securities are
speculative and involve substantial risk. Generally, the fund will invest in
distressed debt securities when the portfolio managers believe they offer
significant potential for higher returns or can be exchanged for other
securities (e.g., equity securities) that offer this potential. However, there
can be no assurance that the issuer will make an exchange offer or adopt a plan
of reorganization. The fund will generally not receive interest payments on the
distressed debt securities and may incur costs to protect its investment. In
addition, principal may not be repaid. Distressed debt securities and any
securities received in an exchange may be difficult to sell and may be subject
to restriction on resale.
U.S. government
obligations
U.S.
government obligations include U.S. Treasury obligations and other obligations
of, or guaranteed by, the U.S. government, its agencies or government-sponsored
entities. Although the U.S. government guarantees principal and interest
payments on securities issued by the U.S. government and some of its agencies,
such as securities issued by the U.S. Government National Mortgage Association
(“Ginnie Mae”), this guarantee does not apply to losses resulting from declines
in the market value of these securities. U.S. government obligations include
zero coupon securities that make payments of interest and principal only upon
maturity and which therefore tend to be subject to greater volatility than
interest bearing securities with comparable maturities.
Some
of the U.S. government securities that the fund may hold are not guaranteed or
backed by the full faith and credit of the U.S. government, such as those issued
by Fannie Mae (formally known as the Federal National Mortgage Association) and
Freddie Mac (formally known as the Federal Home Loan Mortgage Corporation). The
maximum potential liability of the issuers of some U.S. government obligations
may greatly exceed their current resources, including any legal right to support
from the U.S. government.
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Mortgage-backed and
asset-backed securities
Mortgage-backed
securities may be issued by private issuers, by U.S. government-sponsored
entities such as Fannie Mae or Freddie Mac or by agencies of the U.S.
government, such as Ginnie Mae. Mortgage-backed securities represent direct or
indirect participations in, or are collateralized by and payable from, mortgage
loans secured by real property.
Unlike
mortgage-backed securities issued or guaranteed by agencies of the U.S.
government or government-sponsored entities, mortgage-backed securities issued
by private issuers do not have a government or government-sponsored entity
guarantee (but may have other credit enhancement), and may, and frequently do,
have less favorable collateral, credit risk or other underwriting
characteristics.
Residential
mortgage-backed securities (“RMBS”) are comprised of a pool of mortgage loans
created by banks and other financial institutions. Commercial mortgage-backed
securities (“CMBS”) are a type of mortgage-backed security backed by commercial
mortgages rather than residential real estate.
Asset-backed
securities represent participations in, or are secured by and payable from,
assets such as installment sales or loan contracts, leases, credit card
receivables and other categories of receivables.
Collateralized
mortgage obligations (“CMOs”) are debt obligations collateralized by mortgage
loans or mortgage pass-through securities. CMOs are a type of mortgage-backed
security. CMOs may be collateralized by Ginnie Mae, Fannie Mae or Freddie Mac
Certificates, or may be collateralized by whole loans or private pass-throughs
(referred to as “Mortgage Assets”). Payments of principal and of interest on the
Mortgage Assets, and any reinvestment income thereon, provide the issuer with
income to pay debt service on the CMOs. In a CMO, a series of bonds or
certificates is issued in multiple classes. Each class of CMOs, often referred
to as a “tranche,” is issued at a specified fixed or floating coupon rate and
has a stated maturity or final distribution date. Principal prepayments on the
Mortgage Assets may cause the CMOs to be retired substantially earlier than
their stated maturities or final distribution dates. Interest is paid or accrues
on all classes of the CMOs on a monthly, quarterly or semi-annual basis. The
principal of and interest on the Mortgage Assets may be allocated among the
several classes of a series of a CMO in innumerable ways. As market conditions
change, and particularly during periods of rapid or unanticipated changes in
market interest rates, the attractiveness of the CMO classes and the ability of
the structure to provide the anticipated investment characteristics may be
significantly reduced. Such changes can result in volatility in the market
value, and in some instances reduced liquidity, of the CMO class.
Collateralized
debt obligations (“CDOs”) are a type of asset-backed security. CDOs include
collateralized bond obligations (“CBOs”), collateralized loan obligations
(“CLOs”) and other similarly structured securities. A CBO is a trust or other
special purpose entity which is typically backed by a diversified pool of fixed
income securities (which may include high risk, below investment grade
securities). A CLO is a trust or other special purpose entity that is typically
collateralized by a pool of loans, which may also include, among others,
domestic and non-U.S. senior secured loans, senior unsecured loans, and
subordinated corporate loans, including loans that may be rated below investment
grade or equivalent unrated loans. Like CMOs, CDOs generally issue separate
series or “tranches” which vary with respect to risk and yield. These tranches
can experience substantial losses due to actual defaults, increased sensitivity
to defaults due to collateral default and disappearance of subordinate tranches,
market anticipation of defaults, as well as investor aversion to CDO securities
as a class. Interest on certain tranches of a CDO may be paid in kind (paid in
the form of obligations of the same type rather than cash), which involves
continued exposure to default risk with respect to such payments.
When-issued securities,
delayed delivery, to be announced and forward commitment transactions
Securities
purchased in when-issued, delayed delivery, to be announced or forward
commitment transactions will not be delivered or paid for immediately. Such
transactions involve a risk of loss, for example, if the value of the securities
declines prior to the settlement date. Therefore, these transactions may have a
leveraging effect on the fund, making the value of an investment in the fund
more volatile and increasing the fund’s overall investment exposure. Typically,
no income accrues on securities the fund has committed to purchase prior to the
time delivery of the securities is made.
Zero coupon, pay-in-kind
and deferred interest securities
Zero
coupon, pay-in-kind and deferred interest securities may be used by issuers to
manage cash flow and maintain liquidity. Zero coupon securities pay no interest
during the life of the obligation but are issued at prices below their stated
maturity value. Because zero coupon securities pay no interest until maturity,
their prices may fluctuate more than other types of securities with the same
maturity in the secondary market. However, zero coupon bonds are useful as a
tool for managing duration.
Pay-in-kind
securities have a stated coupon, but the interest is generally paid in the form
of obligations of the same type as the underlying pay-in-kind securities (e.g.,
bonds) rather than in cash. These securities are more sensitive to the credit
quality of the underlying issuer and their secondary market prices may fluctuate
more than other types of securities with the same maturity.
Deferred
interest securities are obligations that generally provide for a period of delay
before the regular payment of interest begins and are issued at a significant
discount from face value.
Certain
zero coupon, pay-in-kind and deferred interest securities are subject to tax
rules applicable to debt obligations acquired with “original issue discount.”
The fund would generally have to accrue income on these securities for federal
income tax purposes before it receives corresponding cash payments. Because the
fund intends to make sufficient annual distributions of its taxable income,
including accrued non-cash income, in order to maintain its federal income tax
status and avoid fund-level income and excise taxes, the fund might be required
to liquidate portfolio securities at a
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disadvantageous
time, or borrow cash, to make these distributions. The fund also accrues income
on these securities prior to receipt for accounting purposes. To the extent it
is deemed collectible, accrued income is taken into account when calculating the
value of these securities and the fund’s net asset value per share, in
accordance with the fund’s valuation policies.
Forward roll transactions
In
a forward roll transaction (also referred to as a mortgage dollar roll), the
fund sells a mortgage-backed security while simultaneously agreeing to purchase
a similar security from the same party (the counterparty) on a specified future
date at a lower fixed price. During the roll period, the fund forgoes principal
and interest paid on the securities. The fund is compensated by the
difference between the current sales price and the forward price for the future
purchase as well as by the interest earned on the cash proceeds of the initial
sale. The fund may enter into a forward roll transaction with the intention of
entering into an offsetting transaction whereby, rather than accepting delivery
of the security on the specified date, the fund sells the security and agrees to
repurchase a similar security at a later time.
Investments
in forward roll transactions involve a risk of loss if the value of the
securities that the fund is obligated to purchase declines below the purchase
price prior to the repurchase date. Forward roll transactions may have a
leveraging effect on the fund (see “When-issued securities, delayed delivery, to
be announced and forward commitment transactions”).
Preferred stock and
convertible securities
The
fund may invest in preferred stock and convertible securities. Preferred
stock represents equity ownership of an issuer that generally entitles the
holder to receive, in preference to the holders of common stock, dividends and a
fixed share of the proceeds resulting from a liquidation of the
company. Preferred stocks may pay dividends at fixed or variable rates.
Convertible fixed income securities convert into shares of common stock of their
issuer. Preferred stock and convertible fixed income securities share investment
characteristics of both fixed income and equity securities. However, the value
of these securities tends to vary more with fluctuations in the underlying
common stock and less with fluctuations in interest rates (unless the conversion
price substantially exceeds the value of the common stock) and tends to exhibit
greater volatility.
Equity securities
Although
the fund invests principally in fixed income securities and related investments,
the fund may from time to time invest in or receive equity securities and
equity-like securities, which 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.
The fund may invest in or receive equity securities for which there exists no
private or public market.
Equity
securities represent an ownership interest in the issuing company. Holders of
equity securities are not creditors of the company, and in the event of the
liquidation of the company, would be entitled to their pro rata share of the
company’s assets, if any, after creditors, including the holders of fixed income
securities, and holders of any senior equity securities are paid. Equity
securities typically fluctuate in price more than fixed income securities.
Warrants
and rights permit, but do not obligate, their holders to subscribe for other
securities. Warrants and rights are subject to the same market risks as stocks,
but may be more volatile in price. An investment in warrants or rights may be
considered speculative. In addition, the value of a warrant or right does not
necessarily change with the value of the underlying securities and a warrant or
right ceases to have value if it is not exercised prior to its expiration date.
Structured instruments
The
fund may invest in various types of structured instruments, including securities
that have demand, tender or put features, or interest rate reset features. These
may include instruments issued by structured investment or special purpose
vehicles or conduits, and may be asset-backed or mortgage-backed securities.
Structured instruments may take the form of participation interests or receipts
in underlying securities or other assets, and in some cases are backed by a
financial institution serving as a liquidity provider. The interest rate or
principal amount payable at maturity on a structured instrument may vary based
on changes in one or more specified reference factors, such as currencies,
interest rates, commodities, indices or other financial indicators. Changes in
the underlying reference factors may result in disproportionate changes in
amounts payable under a structured instrument. Some of these instruments may
have an interest rate swap feature which substitutes a floating or variable
interest rate for the fixed interest rate on an underlying asset or index.
Structured instruments are a type of derivative instrument and the payment and
credit qualities of these instruments derive from the assets embedded in the
structure. For structured securities that have embedded leverage features, small
changes in interest or prepayment rates may cause large and sudden price
movements. Structured instruments are often subject to heightened illiquidity
risk.
Inflation-indexed,
inflation-protected and related securities
Inflation-indexed
and inflation-protected securities are fixed income securities that are
structured to provide protection against inflation and whose principal value or
coupon (interest payment) is periodically adjusted according to the rate of
inflation. If the index measuring inflation falls, the principal value or coupon
of these securities will be adjusted downward. Consequently, the interest
payable on these securities will be reduced. Also, if the principal value of
these securities is adjusted according to the rate of inflation, the adjusted
principal value repaid at maturity may be less than the original principal.
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Inflation-protected
securities denominated in the U.S. dollar include U.S. Treasury Inflation
Protected Securities (“U.S. TIPS”), as well as other bonds issued by U.S. and
non-U.S. government agencies and instrumentalities or corporations and
derivatives related to these securities. U.S. TIPS are inflation-protected
securities issued by the U.S. Department of the Treasury the principal amounts
of which are adjusted daily based upon changes in the rate of inflation (as
currently represented by the non-seasonally adjusted Consumer Price Index for
All Urban Consumers, calculated with a three-month lag). U.S. TIPS pay interest
semi-annually, equal to a fixed percentage of the inflation-adjusted principal
amount. The interest rate on these bonds is fixed at issuance, but over the life
of the bond, this interest may be paid on an increasing or decreasing principal
amount that has been adjusted for inflation. The current market value of U.S.
TIPS is not guaranteed and will fluctuate.
The
value of inflation-indexed and inflation-protected securities held by the fund
fluctuates in response to changes in real interest rates. In addition, if
nominal interest rates increase at a faster rate than inflation, causing real
interest rates to rise, it will lead to a decrease in the value of
inflation-indexed or inflation-protected securities.
The
fund may invest in other fixed-income securities that, in the belief of the
fund’s subadviser, will provide protection against inflation, including floating
rate and other short duration securities. Floating rate securities bear interest
at rates that are not fixed but vary with changes in specified market rates or
indices, such as the prime rate, and at specified intervals.
Credit downgrades and
other credit events
Credit
rating or credit quality of a security is determined at the time of
purchase. If, after purchase, the credit rating on a security is downgraded
or the credit quality deteriorates, or if the duration of a security is
extended, the subadviser will decide whether the security should be held or
sold. Upon the occurrence of certain triggering events or defaults on a security
held by the fund, or if an obligor of such a security has difficulty meeting its
obligations, the fund may obtain a new or restructured security or underlying
assets. In that case, the fund may become the holder of securities or other
assets that it could not purchase or might not otherwise hold (for example,
because they are of lower quality or are subordinated to other obligations of
the issuer) at a time when those assets may be difficult to sell or can be sold
only at a loss. In addition, the fund may incur expenses in an effort to
protect the fund’s interest in securities experiencing these events.
Securities of other
investment companies
The
fund may invest in securities of other investment companies to the extent
permitted under the Investment Company Act of 1940, as amended, and the rules
thereunder. If the fund acquires shares of other investment companies, fund
shareholders bear both their proportionate share of expenses in the fund
(including management and advisory fees) and, indirectly, the expenses of the
other investment companies.
Cash management
The
fund may hold cash pending investment, may invest in money market instruments
and may enter into repurchase agreements and reverse repurchase agreements
(which have characteristics like borrowings) for cash management purposes. The
fund may invest in money market funds, which may or may not be affiliated with
the fund’s manager or the subadviser. 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, political or other conditions by taking temporary defensive
positions, including by investing in any type of investment grade,
government, corporate and 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
For
purposes of the fund’s limitations expressed as a percentage of assets or net
assets, the term “assets” or “net assets,” as applicable, means net assets plus
the amount of any borrowings for investment purposes. 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 in percentage
resulting from a change in asset values or characteristics, a sale of securities
or a change in credit quality will not constitute a violation of that
limitation.
Selection process
In
making investment decisions on behalf of the fund, the subadviser combines a
top-down, macroeconomic perspective with a bottom-up sector allocation and
security selection process based on quantitative measures and fundamental
considerations. The macroeconomic perspective is based on global, regional and
country input variables—including economic growth, inflation, monetary policy,
fiscal policy and business cycles—which
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inform
country, currency, duration and credit decisions within the portfolio. In
determining sector allocation and security selection, the portfolio managers
apply quantitative screens to a global universe of thousands of securities,
seeking to identify sectors and securities that, in the portfolio managers’
opinion, offer the potential for greater yield, greater total return, and/or
lower risk. The universe of securities is narrowed to approximately 200
securities by considering a range of factors including sector economics and
risks, yield and option-adjusted spread analysis, and/or the probability of
credit default or coercive restructuring. The universe is then evaluated by the
portfolio managers based on traditional fundamental metrics such as recovery
rate, free cash flow before working capital, debt maturity schedules, strength
of business model, and valuations based on sector and security analysis.
Alongside
traditional financial and economic analyses, the subadviser typically assesses
the potential impacts of material environmental, social and governance (ESG)
factors on an issuer to determine whether, in the subadviser’s view, an issuer’s
ESG practices present a financial opportunity or risk for an investment.
Consideration of ESG factors and risks is only one potential input in the
subadviser’s assessment of eligible investments and, as with any inputs
considered by the subadviser, may not be a determinative factor in the
subadviser’s final decision on whether to purchase (or sell) a security. In
addition, where ESG factors are considered, the weight given to ESG factors may
vary across types of investments, industries, regions and issuers and ESG
factors and weights considered may change over time. The subadviser may not
assess every investment for ESG factors and, when it does, not every ESG factor
may be identified or evaluated.
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.
Market and interest
rate risk. The market prices of
securities held by the fund may go up or down, sometimes rapidly or
unpredictably. If the market prices of the fund’s securities fall, the value of
your investment in the fund will decline. The market price of a security may
fall due to general market conditions, such as real or perceived adverse
economic or political conditions or trends, tariffs and trade disruptions,
inflation, substantial economic downturn or recession, changes in interest or
currency rates, lack of liquidity in the bond markets or adverse investor
sentiment. Changes in market conditions will not typically have the same impact
on all types of securities. The market price of a security may also fall due to
specific conditions that affect a particular sector of the securities market or
a particular issuer. Your fund shares at any point in time may be worth less
than what you invested, even after taking into account the reinvestment of fund
dividends and distributions.
The
market prices of securities may fluctuate significantly when interest rates
change. When interest rates rise, the value of fixed income securities, and
therefore the value of your investment in the fund, generally goes down.
Generally, the longer the maturity or duration of a fixed income security, the
greater the impact of a rise in interest rates on the security’s market price.
However, calculations of duration and maturity may be based on estimates and may
not reliably predict a security’s price sensitivity to changes in interest
rates. Recently, there have been inflationary price movements. As a result,
fixed income securities markets may experience heightened levels of interest
rate volatility and liquidity risk. The U.S. Federal Reserve has raised interest
rates from historically low levels. It may continue to raise interest rates. In
addition, changes in monetary policy may exacerbate the risks associated with
changing interest rates. Any additional interest rate increases in the future
could cause the value of the fund’s holdings to decrease. It cannot be predicted
when inflation will return to more normalized levels or how long financial
authorities will counter inflationary pressures with monetary tightening.
Moreover, securities can change in value in response to other factors, such as
credit risk. In addition, different interest rate measures (such as short- and
long-term interest rates and U.S. and non-U.S. interest rates), or interest
rates on different types of securities or securities of different issuers, may
not necessarily change in the same amount or in the same direction. When
interest rates go down, the fund’s yield will decline. Also, when interest rates
decline, investments made by the fund may pay a lower interest rate, which would
reduce the income received by the fund.
Market events
risk. The market values of securities or
other assets will fluctuate, sometimes sharply and unpredictably, due to factors
such as economic events, governmental actions or intervention, actions taken by
the U.S. Federal Reserve or foreign central banks, market disruptions caused by
trade disputes, labor strikes or other factors, political developments, armed
conflicts, economic sanctions and countermeasures in response to sanctions,
major cybersecurity events, the global and domestic effects of widespread or
local health, weather or climate events, 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, wars, 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.
Following Russia’s invasion of Ukraine in 2022, Russian stocks lost all, or
nearly all, of their market value. Other securities or markets could be
similarly affected by past or future geopolitical or other events or conditions.
Furthermore, events involving limited liquidity, defaults, non-performance or
other adverse developments that affect one industry, such as the financial
services industry, or concerns or rumors about any events of these kinds, have
in the past and may in the future lead to market-wide liquidity problems, may
spread to other industries, and could negatively affect the value and liquidity
of the fund’s investments.
The
long-term impact of the COVID-19 pandemic and its subsequent variants on
economies, markets, industries and individual issuers is not known. Some sectors
of the economy and individual issuers have experienced or may experience
particularly large losses. Periods of extreme volatility in the financial
markets, reduced liquidity of many instruments, increased government debt,
inflation, and disruptions to supply chains, consumer demand and employee
availability, may continue for some time. The U.S. government and the Federal
Reserve, as well as certain foreign governments and central banks, took
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 may not work as intended,
and have resulted in a large expansion of
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government
deficits and debt, the long term consequences of which are not known. In
addition, the COVID-19 pandemic, and measures taken to mitigate its effects,
could result in disruptions to the services provided to the fund by its service
providers.
Raising
the ceiling on U.S. government debt has become increasingly politicized. Any
failure to increase the total amount that the U.S. government is authorized to
borrow could lead to a default on U.S. government obligations, with
unpredictable consequences for economies and markets in the U.S. and elsewhere.
Recently, inflation and interest rates have increased and may rise further.
These circumstances 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.
The
United States and other countries are periodically involved in disputes over
trade and other matters, which may result in tariffs, investment restrictions
and adverse impacts on affected companies and securities. For example, the
United States has imposed tariffs and other trade barriers on Chinese exports,
has restricted sales of certain categories of goods to China, and has
established barriers to investments in China. Trade disputes may adversely
affect the economies of the United States and its trading partners, as well as
companies directly or indirectly affected and financial markets generally. The
United States government has prohibited U.S. persons from investing in Chinese
companies designated as related to the Chinese military. These and possible
future restrictions could limit the fund’s opportunities for investment and
require the sale of securities at a loss or make them illiquid. Moreover, the
Chinese government is involved in a longstanding dispute with Taiwan that has
included threats of invasion. If the political climate between the United States
and China does not improve or continues to deteriorate, if China were to attempt
unification of Taiwan by force, or if other geopolitical conflicts develop or
get worse, economies, markets and individual securities may be severely affected
both regionally and globally, and the value of the fund’s assets may go down.
Issuer
risk. The market price of a security
held by the fund 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 or the
securities markets as a whole, and conversely an industry or sector or the
securities markets may be affected by a change in financial condition or other
event affecting a single issuer. The fund may experience a substantial or
complete loss on an individual security.
Non-diversification
risk. The fund is classified as
“non-diversified,” which means it may invest a larger percentage of its assets
in a smaller number of issuers than a diversified fund. To the extent the fund
invests its assets in a smaller number of issuers, the fund will be more
susceptible to negative events affecting those issuers than a diversified fund.
Portfolio management
risk. The value of your investment may
decrease if the subadviser’s judgment about the quality, relative yield, value
or market trends affecting a particular security, industry, sector or region, or
about interest rates or other market factors, 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.
Model
risk. Investment models may not
adequately take into account certain factors and may result in the fund having a
lower return than if the fund were managed using another model or investment
strategy. In addition, investment models used by the subadviser to evaluate
securities or securities markets are based on certain assumptions concerning the
interplay of market factors. The markets or the prices of individual securities
may be affected by factors not foreseen in developing the models. When a model
or data used in managing the fund contains an error, or is incorrect or
incomplete, any investment decision made in reliance on the model or data may
not produce the desired results and the fund may suffer losses.
Credit
risk. The value of your investment
in the fund could decline if the issuer of a security held by the fund or
another obligor for that security (such as a party offering credit enhancement)
fails to pay, otherwise defaults, is perceived to be less creditworthy, becomes
insolvent or files for bankruptcy. The value of your investment in the fund
could also decline if the credit rating of a security held by the fund is
downgraded or the credit quality or value of any assets underlying the security
declines. Changes in actual or perceived creditworthiness may occur quickly. If
the fund enters into financial contracts (such as certain derivatives,
repurchase agreements, reverse repurchase agreements, and when-issued, delayed
delivery and forward commitment transactions), the fund will be subject to the
credit risk presented by the counterparty. In addition, the fund may incur
expenses in an effort to protect the fund’s interests or to enforce its rights
against an issuer, guarantor or counterparty or may be hindered or delayed in
exercising those rights. Credit risk is broadly gauged by the credit
ratings of the securities in which the fund invests. However, ratings are only
the opinions of the companies issuing them and are not guarantees as to
quality. Securities rated in the lowest category of investment grade
(Baa/BBB) may possess certain speculative characteristics. Credit risk is
typically greatest for the fund’s high yield debt securities (“junk” bonds),
which are rated below the Baa/BBB categories or unrated securities of comparable
quality.
The
fund may invest in subordinated securities, which are securities that rank below
other securities with respect to claims on an issuer’s assets, or securities
which represent interests in pools of such subordinated securities. The fund is
more likely to suffer a credit loss on subordinated securities than on
non-subordinated securities of the same issuer. If there is a default,
bankruptcy or liquidation of the issuer, most subordinated securities are paid
only if sufficient assets remain after payment of the issuer’s non-subordinated
securities. In addition, any recovery of interest or principal may take more
time. As a result, even a perceived decline in creditworthiness of the issuer is
likely to have a greater adverse impact on subordinated securities.
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Prepayment or call
risk. Many fixed income securities give
the issuer the option to repay or call the security prior to its maturity date.
Issuers often exercise this right when interest rates fall. Accordingly, if the
fund holds a fixed income security subject to prepayment or call risk, it may
not benefit fully from the increase in value that other fixed income securities
generally experience when interest rates fall. Upon prepayment of the
security, the fund would also be forced to reinvest the proceeds at then current
yields, which would be lower than the yield of the security that was paid off.
In addition, if the fund purchases a fixed income security at a premium (at a
price that exceeds its stated par or principal value), the fund may lose the
amount of the premium paid in the event of prepayment. Prepayment further tends
to reduce the yield to maturity and the average life of the security.
Extension
risk. When interest rates rise,
repayments of fixed income securities may occur more slowly than anticipated,
extending the effective duration of these fixed income securities at below
market interest rates and causing their market prices to decline more than they
would have declined due to the rise in interest rates alone. This may cause the
fund’s share price to be more volatile.
High yield (“junk”)
bonds risk. High yield bonds, often
called “junk” bonds, have a higher risk of issuer default or may be in default
and are considered speculative. Changes in economic conditions or developments
regarding the individual issuer are more likely to cause price volatility and
weaken the capacity of such securities to make principal and interest payments
than is the case for higher grade debt securities. The value of lower-quality
debt securities often fluctuates in response to company, political, or economic
developments and can decline significantly over short as well as long periods of
time or during periods of general or regional economic difficulty. High yield
bonds may also have lower liquidity as compared to higher-rated securities,
which means the fund may have difficulty selling them at times, and it may have
to apply a greater degree of judgment in establishing a price for purposes of
valuing fund shares. High yield bonds generally are issued by less creditworthy
issuers. Issuers of high yield bonds may have a larger amount of outstanding
debt relative to their assets than issuers of investment grade bonds. In the
event of an issuer’s bankruptcy, claims of other creditors may have priority
over the claims of high yield bond holders, leaving few or no assets available
to repay high yield bond holders. The fund may incur expenses to the extent
necessary to seek recovery upon default or to negotiate new terms with a
defaulting issuer. High yield bonds frequently have redemption features
that permit an issuer to repurchase the security from the fund before it
matures. If the issuer redeems high yield bonds, the fund may have to invest the
proceeds in bonds with lower yields and may lose income.
Foreign investments
and emerging markets 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 U.S. exposure, such as less
liquid, less regulated, less transparent and more volatile markets. The markets
for some foreign securities are relatively new, and the rules and policies
relating to these markets are not fully developed and may change. 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, economic sanctions,
reduction of government or central bank support, inadequate accounting standards
and auditing and financial recordkeeping requirements, lack of information,
political, economic, financial or social instability, terrorism, armed conflicts
and other geopolitical events. Geopolitical or other events such as
nationalization or expropriation could even cause the loss of the fund’s entire
investment in one or more countries.
The
Public Company Accounting Oversight Board, which regulates auditors of U.S.
public companies, may, from time to time, be unable to inspect audit work papers
in certain foreign or emerging market countries. Investors in foreign countries
often have limited rights and few 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. To the extent the fund focuses
its investments in a single country or only a few countries in a particular
geographic region, economic, political, regulatory or other conditions affecting
such country or region may have a greater impact on fund performance relative to
a more geographically diversified fund.
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 may 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
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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 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.
The
risks of foreign investments are heightened when investing in issuers in
emerging market countries. Emerging market countries tend to have economic,
political and legal systems that are less developed and are less stable than
those of more developed countries. Their economies tend to be less diversified
than those of more developed countries. They typically have fewer medical and
economic resources than more developed countries, and thus they may be less able
to control or mitigate the effects of a pandemic or a natural disaster. They are
often particularly sensitive to market movements because their market prices
tend to reflect speculative expectations. Low trading volumes may result in
a lack of liquidity and in extreme price volatility. Investors should be able to
tolerate sudden, sometimes substantial, fluctuations in the value of investments
in emerging markets. Emerging market countries may have policies that
restrict investment by foreigners or that prevent foreign investors from
withdrawing their money at will.
Sovereign debt
risk. Sovereign government and
supranational debt involve many of the risks of foreign and emerging markets
investments as well as the risk of debt moratorium, repudiation or
renegotiation, and the fund may be unable to enforce its rights against the
issuers. Sovereign debt risk is increased for emerging market issuers.
Mortgage-backed and
asset-backed securities risk.
Mortgage-backed securities are particularly susceptible to prepayment and
extension risks, because prepayments on the underlying mortgages tend to
increase when interest rates fall and decrease when interest rates rise.
Prepayments may also occur on a scheduled basis or due to foreclosure. When
market interest rates increase, mortgage refinancings and prepayments slow,
which lengthens the effective duration of these securities. As a result, the
negative effect of the interest rate increase on the market value of
mortgage-backed securities is usually more pronounced than it is for other types
of fixed income securities, potentially increasing the volatility of the fund.
Conversely, when market interest rates decline, while the value of
mortgage-backed securities may increase, the rates of prepayment of the
underlying mortgages tend to increase, which shortens the effective duration of
these securities. Mortgage-backed securities are also subject to the risk that
underlying borrowers will be unable to meet their obligations.
At
times, some of the mortgage-backed securities in which the fund may invest will
have higher than market interest rates and therefore will be purchased at a
premium above their par value. Prepayments may cause losses on securities
purchased at a premium.
The
value of mortgage-backed securities may be affected by changes in credit quality
or value of the mortgage loans or other assets that support the securities. In
addition, for mortgage-backed securities, when market conditions result in an
increase in the default rates on the underlying mortgages and the foreclosure
values of the underlying real estate are below the outstanding amount of the
underlying mortgages, collection of the full amount of accrued interest and
principal on these investments may be doubtful. Such market conditions may
significantly impair the value and liquidity of these investments and may result
in a lack of correlation between their credit ratings and value. Certain types
of real estate may be adversely affected by changing usage trends, such as
office buildings as a result of work-from-home practices and commercial
facilities as a result of an increase in online shopping, which could in turn
result in defaults and declines in value of mortgage-backed securities secured
by such properties. For mortgage derivatives and structured securities that have
embedded leverage features, small changes in interest or prepayment rates may
cause large and sudden price movements. Mortgage derivatives can also become
illiquid and hard to value in declining markets.
Asset-backed
securities are structured like mortgage-backed securities and are subject to
many of the same risks. The ability of an issuer of asset-backed securities to
enforce its security interest in the underlying assets or to otherwise recover
from the underlying obligor may be limited. Certain asset-backed securities
present a heightened level of risk because, in the event of default, the
liquidation value of the underlying assets may be inadequate to pay any unpaid
principal or interest.
Although
interest rates have significantly increased since 2022 through the date of this
Prospectus, the prices of real estate-related assets generally have not
decreased as much as may be expected based on historical correlations between
interest rates and prices of real estate-related assets. This presents an
increased risk of a correction or severe downturn in real estate-related asset
prices, which could adversely impact the value of other investments as well
(such as loans, securitized debt and other fixed income securities). This risk
is particularly present with respect to commercial real estate-related asset
prices, and the value of other investments with a connection to the commercial
real estate sector.
Convertible
securities risk. Convertible securities
are subject to stock market and other risks associated with equity securities,
as well as the credit, interest rate and other risks associated with fixed
income securities. Credit risk is the risk that the issuer or obligor will not
make timely payments of principal or interest or that its credit may be
downgraded or perceived to be less creditworthy. Interest rate risk is the risk
that the value of a fixed income security will fall when interest rates rise. A
rise in rates tends to have a greater impact on the prices of longer term or
duration securities. A general rise in interest rates may cause investors to
move out of fixed income securities on a large scale, which could adversely
affect the price and liquidity of fixed income securities. As the market price
of the equity security underlying a convertible security falls, the convertible
security tends to trade on the basis of its yield and other fixed income
characteristics. As the market price of the equity security underlying a
convertible security rises, the convertible security tends to trade on the basis
of its equity conversion features.
Zero coupon bond
risk. The value of zero coupon bonds is
generally subject to greater fluctuation in response to changes in market
interest rates than bonds which make regular payments of interest. This type of
bond allows an issuer to avoid the need to generate cash to meet current
interest payments. Accordingly, such bonds may involve greater credit risks than
bonds which make regular payments of interest. Even though zero coupon
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bonds
do not pay current interest in cash, the fund is required to accrue interest
income on such investments and may be required to distribute that income at
least annually to shareholders. Thus, the fund could be required at times to
liquidate other investments in order to satisfy its dividend requirements. These
actions may reduce the assets to which the fund’s expenses could otherwise be
allocated and may reduce the fund’s rate of return.
Derivatives
risk. Derivatives involve special risks
and costs and may result in losses to the fund, even when used for hedging
purposes. Using derivatives can increase losses and reduce opportunities for
gains, such as when market prices, interest rates, currencies, or the
derivatives themselves behave in a way not anticipated by the fund’s subadviser,
especially in abnormal market conditions. Using derivatives also can have a
leveraging effect which may increase investment losses and increase the fund’s
volatility, which is the degree to which the fund’s share price may fluctuate
within a short time period. Certain derivatives have the potential for unlimited
loss, regardless of the size of the initial investment. The other parties to
certain derivatives transactions present the same types of credit risk as
issuers of fixed income securities.
The
fund’s counterparty to a derivative transaction may not honor its obligations in
respect to the transaction. In certain cases, the fund may be hindered or
delayed in exercising remedies against or closing out derivative instruments
with a counterparty, which may result in additional losses.
Derivatives
also tend to involve greater illiquidity risk and they may be difficult to
value. The fund may be unable to terminate or sell its derivative positions. In
fact, many over-the-counter derivatives will not have liquidity except through
the counterparty to the instrument. Derivatives are generally subject to the
risks applicable to the assets, rates, indices or other indicators underlying
the derivative. The value of a derivative may fluctuate more than the underlying
assets, rates, indices or other indicators to which it relates. Use of
derivatives or similar instruments may have different tax consequences for the
fund than an investment in the underlying asset, and those differences may
affect the amount, timing and character of income distributed to shareholders.
The fund’s use of derivatives may also increase the amount of taxes payable by
shareholders. The U.S. government and foreign governments have adopted and
implemented regulations governing derivatives markets, including mandatory
clearing of certain derivatives, margin, and reporting requirements. The
ultimate impact of the regulations remains unclear. Additional regulation
of derivatives may make derivatives more costly, limit their availability or
utility, otherwise adversely affect their performance or disrupt markets. The
fund may be exposed to additional risks as a result of the additional
regulations. The extent and impact of the additional regulations are not yet
fully known and may not be for some time.
Investments
by the fund in structured securities, a type of derivative, raise certain tax,
legal, regulatory and accounting issues that may not be presented by direct
investments in securities. These issues could be resolved in a manner that could
hurt the performance of the fund.
Swap
agreements tend to shift the fund’s investment exposure from one type of
investment to another. For example, the fund may enter into interest rate swaps,
which involve the exchange of interest payments by the fund with another party,
such as an exchange of floating rate payments for fixed interest rate payments
with respect to a notional amount of principal. If an interest rate swap
intended to be used as a hedge negates a favorable interest rate movement, the
investment performance of the fund would be less than what it would have been if
the fund had not entered into the interest rate swap.
Credit
default swap contracts involve heightened risks and may result in losses to the
fund. Credit default swaps may be illiquid and difficult to value. If the fund
buys a credit default swap, it will be subject to the risk that the credit
default swap may expire worthless, as the credit default swap would only
generate income in the event of a default on the underlying debt security or
other specified event. As a buyer, the fund would also be subject to credit risk
relating to the seller’s payment of its obligations in the event of a default
(or similar event). If the fund sells a credit default swap, it will be exposed
to the credit risk of the issuer of the obligation to which the credit default
swap relates. As a seller, the fund would also be subject to leverage risk,
because it would be liable for the full notional amount of the swap in the event
of a default (or similar event).
The
absence of a central exchange or market for over-the-counter swap transactions
may lead, in some instances, to difficulties in trading and valuation,
especially in the event of market disruptions. Relatively recent
legislation requires certain swaps to be executed through a centralized exchange
or regulated facility and be cleared through a regulated clearinghouse. Although
this clearing mechanism is generally expected to reduce counterparty credit
risk, it may disrupt or limit the swap market and may not result in swaps being
easier to trade or value. As swaps become more standardized, the fund may not be
able to enter into swaps that meet its investment needs. The fund also may not
be able to find a clearinghouse willing to accept a swap for clearing. In a
cleared swap, a central clearing organization will be the counterparty to the
transaction. The fund will assume the risk that the clearinghouse and/or
the broker through which it holds its position may be unable to perform its
obligations.
The
fund will be required to maintain its positions with a clearing organization
through one or more clearing brokers. The clearing organization will require the
fund to post margin and the broker may require the fund to post additional
margin to secure the fund’s obligations. The amount of margin required may
change from time to time. In addition, cleared transactions may be more
expensive to maintain than over-the-counter transactions and may require the
fund to deposit larger amounts of margin. The fund may not be able to recover
margin amounts if the broker has financial difficulties. Also, the broker may
require the fund to terminate a derivatives position under certain
circumstances. This may cause the fund to lose money.
Futures
are standardized, exchange-traded contracts that obligate a purchaser to buy,
and a seller to sell, a specific amount of an asset on a specified future date
at a specified price. The primary risks associated with the use of futures
contracts are: (a) the imperfect correlation between the change in market
value of the instruments held by the fund and the price of the futures contract;
(b) the possible lack of a liquid secondary market for a futures contract
and the resulting inability to close a futures contract when desired;
(c) losses caused by unanticipated market movements, which are potentially
unlimited; (d) the subadviser’s inability to predict correctly the
direction of securities prices, interest rates, currency exchange rates and
other economic factors; and (e) the possibility that the counterparty will
default in the performance of its obligations.
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An
option is an agreement that, for a premium payment or fee, gives the option
holder (the purchaser) the right but not the obligation to buy (a “call option”)
or sell (a “put option”) the underlying asset (or settle for cash in an amount
based on an underlying asset, rate, or index) at a specified price (the
“exercise price”) during a period of time or on a specified date. The fund may
write a call option where it (i) owns the underlying security (sometimes
referred to as a “covered option”), or (ii) does not own such security
(sometimes referred to as a “naked option”). When the fund purchases an option,
it may lose the total premium paid for it if the price of the underlying
security or other assets decreased, remained the same or failed to increase to a
level at or beyond the exercise price (in the case of a call option) or
increased, remained the same or failed to decrease to a level at or below the
exercise price (in the case of a put option). If a put or call option purchased
by the fund were permitted to expire without being sold or exercised, its
premium would represent a loss to the fund. To the extent that the fund writes
or sells an option, in particular a naked option, if the decline or increase in
the underlying asset is significantly below or above the exercise price of the
written option, the fund could experience a substantial loss.
Risks
associated with the use of derivatives are magnified to the extent that an
increased portion of the fund’s assets is committed to derivatives in general or
is invested in just one or a few types of derivatives.
Currency derivatives
risk. The fund’s use of currency
futures, forwards or options, whether for hedging or speculative purposes, may
not always work as intended, and in specific cases the fund may be worse off
than if it had not used a hedging instrument. Currency derivatives involve
similar risks as other derivatives, including credit, counterparty, leverage and
illiquidity risk. There may not always be suitable hedging instruments
available. Even where suitable hedging instruments are available, the portfolio
managers may determine not to hedge the fund’s currency risks. The fund may have
less flexibility to meet its investment objectives if it is unable to, or the
portfolio managers choose not to, use currency derivatives.
Leverage
risk. The use of traditional borrowing
(including to meet redemption requests), reverse repurchase agreements and
derivatives creates leverage (i.e., a fund’s investment exposures exceed its net
asset value). Leverage increases a fund’s losses when the value of its
investments (including derivatives) declines. Because many derivatives have a
leverage component (i.e., a notional value in excess of the assets needed to
establish or maintain the derivative position), adverse changes in the value or
level of the underlying asset, rate, or index may result in a loss substantially
greater than the amount invested in the derivative itself. In the case of swaps,
the risk of loss generally is related to a notional principal amount, even if
the parties have not made any initial investment. Some derivatives, similar to
short sales, have the potential for unlimited loss, regardless of the size of
the initial investment. Similarly, the fund’s portfolio will be leveraged and
can incur losses if the value of the fund’s assets declines between the time a
redemption request is received or deemed to be received by the fund (which in
some cases may be the business day prior to actual receipt of the transaction
activity by the fund) and the time at which the fund liquidates assets to meet
redemption requests. In the case of redemptions representing a significant
portion of the fund’s portfolio, the leverage effects described above can be
significant and could expose a fund and non-redeeming shareholders to material
losses. Leveraging transactions pursued by the fund may also increase its
duration and sensitivity to interest rate movements.
The
fund may manage some of its derivative positions by offsetting derivative
positions against one another or against other assets. To the extent offsetting
positions do not behave in relation to one another as expected, the fund may
perform as if it were leveraged.
To
the extent the fund purchases securities on margin or sells securities short, it
will create leverage in the fund’s portfolio. To the extent the market prices of
securities pledged to counterparties to secure the fund’s margin account or
short sale decline, the fund may be required to deposit additional funds with
the counterparty to avoid having the pledged securities liquidated to compensate
for the decline.
New
derivatives regulations require the fund, to the extent it uses derivatives
beyond a specified limited amount, to, among other things, comply with certain
overall limits on leverage. These regulations may limit the ability of the fund
to pursue its investment strategies and may not be effective to mitigate the
fund’s risk of loss from derivatives.
Risks relating to
inflation-indexed securities. The value
of inflation-indexed fixed income securities generally fluctuates in response to
changes in real interest rates, which are in turn tied to the relationship
between nominal interest rates and the rate of inflation. Therefore, if
inflation were to rise at a faster rate than nominal interest rates, real
interest rates might decline, leading to an increase in value of
inflation-indexed securities. In contrast, if nominal interest rates increase at
a faster rate than inflation, real interest rates might rise, leading to a
decrease in value of inflation-indexed securities. The principal value of
inflation-indexed securities declines in periods of deflation, and holders of
such securities may experience a loss. Although the holders of U.S. TIPS
receive no less than the par value of the security at maturity, if the fund
purchases U.S. TIPS in the secondary market whose principal values have been
adjusted upward due to inflation since issuance, it may experience a loss if
there is a subsequent period of deflation. If inflation is lower than expected
during the period the fund holds an inflation-indexed security, the fund may
earn less on the security than on a conventional bond.
Any
increase in principal value caused by an increase in the index the
inflation-indexed securities are tied to is taxable in the year the increase
occurs, even though the fund will not receive cash representing the increase at
that time. As a result, the fund could be required at times to liquidate other
investments, including when it is not advantageous to do so, in order to satisfy
the distribution requirements applicable to regulated investment companies under
the Internal Revenue Code of 1986, as amended. See “Taxes” in the SAI.
If
real interest rates rise (i.e., if interest rates rise for reasons other than
inflation, for example, due to changes in currency exchange rates), the value of
inflation-indexed securities held by the fund will decline. Moreover, because
the principal amount of inflation-indexed securities would be adjusted downward
during a period of deflation, the fund will be subject to deflation risk with
respect to its investments in these securities. Inflation-
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indexed
securities are tied to indices that are calculated based on rates of inflation
for prior periods. There can be no assurance that such indices will accurately
measure the actual rate of inflation in the prices of goods and services.
Portfolio turnover
risk. Active and frequent trading will
increase a shareholder’s tax liability and the fund’s transaction costs, which
could detract from fund performance.
Illiquidity
risk. Illiquidity risk exists when
particular investments are or may become impossible or difficult to sell and
some assets that the fund wants to invest in may be impossible or difficult to
purchase. Although most of the fund’s investments must be liquid at the time of
investment, investments may be or become illiquid after purchase by the fund,
particularly during periods of market turmoil or due to adverse changes in the
conditions of a particular issuer. Markets may become illiquid quickly. 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. As a general matter, dealers have been less willing to make markets
in recent years. Federal banking regulations may also cause certain dealers to
reduce their inventories of certain securities, which may further decrease the
ability to buy or sell such securities. When the fund holds illiquid
investments, the portfolio may be harder to value, especially in changing
markets, and if the fund is forced to sell these investments to meet redemption
requests or for other cash needs, or to try to limit losses, the fund may be
forced to sell at a loss or may not be able to sell at all. The fund may
experience heavy redemptions that could cause the fund to liquidate its assets
at inopportune times or at a loss or depressed value, which could cause the
value of your investment to decline. In addition, when there is illiquidity in
the market for certain investments, the fund, due to limitations on illiquid
investments, may be unable to achieve its desired level of exposure to a certain
sector, industry or issuer. The liquidity of certain assets, particularly of
privately-issued and non-investment grade mortgage-backed securities,
asset-backed securities and collateralized debt obligations, may be difficult to
ascertain and may change over time. Transactions in less liquid or illiquid
securities may entail transaction costs that are higher than those for
transactions in liquid securities. Further, such securities, once sold, may not
settle for an extended period (for example, several weeks or even longer). The
fund will not receive its sales proceeds until that time, which may constrain
the fund’s ability to meet its obligations (including obligations to redeeming
shareholders).
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. 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. These differences may increase significantly
and affect fund investments more broadly during periods of market volatility.
Investors 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 also 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, which may prove to be incorrect.
Investment in other
investment companies risk. Investments
in other investment companies are subject to market and portfolio selection
risk, as well as portfolio management risk. If the fund acquires shares of
investment companies, including ones affiliated with the fund, shareholders bear
both their proportionate share of expenses in the fund (including management and
advisory fees) and, indirectly, the expenses of the investment companies.
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.
Risk of increase in
expenses. Your actual costs of investing
in the fund may be higher than the expenses shown in “Annual fund operating
expenses” for a variety of reasons. For example, expenses may be higher if the
fund’s average net assets decrease, as a result of redemptions or otherwise, or
if a fee limitation is changed or terminated. Net assets are more likely to
decrease and fund expense ratios are more likely to increase when markets are
volatile.
Transactions by
affiliated funds and by other significant investors. The fund may be an investment option for mutual
funds and ETFs that are managed by Franklin Templeton Fund Adviser, LLC and its
affiliates, including Franklin Templeton investment managers, 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. These transactions may also accelerate the realization of taxable
income to shareholders if such sales of investments result in gains, and may
also increase transaction costs. Similarly, large fund share purchases may
adversely affect the fund’s performance to the extent that the fund is delayed
in investing new cash or otherwise maintains a larger cash position than it
ordinarily would.
Redemption
risk. The fund may experience periods of
heavy redemptions, particularly during periods of declining or illiquid markets,
that could cause the fund to liquidate its assets at inopportune times or
unfavorable prices or increase or accelerate taxable gains or transaction costs
and may
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BrandywineGLOBAL— Flexible Bond
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negatively
affect the fund’s net asset value, performance, or ability to satisfy
redemptions in a timely manner which could cause the value of your investment to
decline. Redemption risk is greater to the extent that the fund has investors
with large shareholdings, short investment horizons, unpredictable cash flow
needs or where one decision maker has control of fund shares owned by separate
fund shareholders, including clients or affiliates of the fund’s manager. In
addition, redemption risk is heightened during periods of overall market
turmoil. The redemption by one or more large shareholders of their holdings in
the fund could hurt performance and/or cause the remaining shareholders in the
fund to lose money.
Environmental,
social and governance (ESG) considerations risk. ESG considerations are one of a number of factors
that the subadviser examines when considering investments for the fund’s
portfolio. In light of this, the issuers in which the fund invests may not be
considered ESG-focused issuers and may have lower or adverse ESG assessments.
Consideration of ESG factors may affect the fund’s exposure to certain issuers
or industries. In addition, ESG considerations assessed as part of the fund’s
investment process may vary across types of eligible investments and issuers.
The subadviser may not assess every investment for ESG factors and, when it
does, not every ESG factor may be identified or evaluated. The subadviser’s
assessment of an issuer’s ESG factors is subjective and may differ from that of
investors, third-party service providers (e.g., ratings providers) and other
funds. As a result, securities selected by the subadviser may not reflect the
beliefs and values of any particular investor. The subadviser also may be
dependent on the availability of timely, complete and accurate ESG data reported
by issuers and/or third party research providers, the timeliness, completeness
and accuracy of which is out of the subadviser’s control. ESG factors are often
not uniformly measured or defined, which could impact the subadviser’s ability
to assess an issuer. While the subadviser views ESG considerations as having the
potential to contribute to the fund’s long-term performance, there is no
guarantee that such results will be achieved.
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 (including those due to cybersecurity incidents), 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 eliminate or
mitigate the occurrence of such failures. The fund and its shareholders could be
negatively impacted as a result.
Cybersecurity
risk. Like other funds and business
enterprises, the fund, the manager, the subadviser and their service providers
are subject to the risk of cyber incidents occurring from time to time.
Cybersecurity incidents, whether intentionally caused by third parties or
otherwise, 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 subadviser 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, receiving
distributions or receiving timely information regarding the fund or their
investment in the fund. The fund, the manager, and the subadviser 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, the manager, and/or the subadviser.
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.
New
ways to carry out cyber attacks continue to develop. 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.
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
A
description of the fund’s policies and procedures with respect to the disclosure
of its portfolio holdings is available in the SAI. The fund posts its complete
portfolio holdings at www.franklintempleton.com/mutualfunds (click on the name
of the fund) on a monthly basis. The fund intends to post its complete portfolio
holdings no later than 14 calendar days following the month-end.
More on fund management
Franklin
Templeton Fund Adviser, LLC (“FTFA” or the “manager”) (formerly known as Legg
Mason Partners Fund Advisor, LLC) is the fund’s investment manager. FTFA, with
offices at 280 Park Avenue, New York, New York 10017, also serves as the
investment manager of other Franklin Templeton-sponsored funds. FTFA provides
administrative and certain oversight services to the fund. As of
December 31, 2023, FTFA’s total assets under management were approximately
$182.93 billion.
Brandywine
Global Investment Management, LLC (“Brandywine Global” or the “subadviser”)
provides the day-to-day portfolio management of the fund. Brandywine Global has
offices at 1735 Market Street, 18th Floor, Philadelphia, Pennsylvania 19103.
Brandywine Global acts as adviser or subadviser to individuals, public funds,
corporations, pension and profit sharing plans, Taft-Hartley Plans, endowments
and foundations, as well as to investment company portfolios. As of
December 31, 2023, Brandywine Global managed approximately $59.3 billion on
a discretionary basis and $0.29 billion on a non-discretionary basis.
FTFA
and Brandywine Global 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,
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together
with its subsidiaries, as Franklin Templeton. As of December 31, 2023,
Franklin Templeton’s asset management operations had aggregate assets under
management of approximately $1.46 trillion.
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 and recent
biography
|
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Portfolio manager
of the fund since
|
Michael
Arno, CFA |
|
Mr.
Arno is a Portfolio Manager and Senior Research Analyst on the Global
Fixed Income team. He is responsible for providing research analysis and
portfolio management on the firm’s global credit, multi-sector, and
emerging market fixed income related strategies. Previously, he had been a
research analyst on the team since 2011 with a focus on global credit and
emerging markets. Mike joined Brandywine Global as a product specialist
within client service in 2006. Prior to joining Brandywine Global in 2006,
Mike was an associate of Vanguard Group (2004-2006). Mike earned a B.S. in
Finance from Temple University. |
|
2020 |
Tracy
Chen, CFA, CAIA |
|
Ms.
Chen joined Brandywine Global in 2008. As Portfolio Manager, she leads
Brandywine Global’s structured credit investing, including investments in
U.S. and European RMBS, CMBS, and ABS as well as CLO and other structured
products. Prior to joining Brandywine Global, she was with UBS Investment
Bank as Director of Structured Products (2006-2008); GMAC Mortgage Group
(2002-2006), focusing on mortgage whole loan pricing and trading; and
Deloitte Consulting (2001-2002). Tracy earned her M.B.A. with a
concentration in Finance from the University of North Carolina at Chapel
Hill. She also holds an M.A. in American Studies and a B.A. from
University of Electronic Science & Technology of China. |
|
2016 |
Brian
L. Kloss, JD, CPA |
|
Mr.
Kloss joined Brandywine Global in 2009. As Portfolio Manager, he leads
Brandywine Global’s credit research capabilities bringing over 20 years of
high yield and distressed debt experience. Previously, Brian was
co-portfolio manager at Dreman Value Management, LLC (2007-2009); high
yield analyst/trader at Gartmore Global Investments (2002-2007); high
yield and equity portfolio manager and general analyst at Penn Capital
Management, Ltd. (2000-2002); an analyst with The Concord Advisory Group,
Ltd. (1998-2000); and an international tax consultant with Deloitte &
Touche LLP (1995-1998). Brian earned his J.D. from Villanova School of Law
and graduated summa cum laude with a B.S. in Accounting from University of
Scranton. He is a member of the New Jersey and Pennsylvania Bar
Associations. |
|
2013 |
Renato
Latini, CFA |
|
Mr.
Latini is a Portfolio Manager and Senior Research Analyst on the Global
Fixed Income team. He is responsible for providing research analysis and
portfolio management on the firm’s global credit and multi-sector fixed
income strategies. Renato joined Brandywine Global in 2006 as a trader on
the team. Prior to joining |
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2020 |
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BrandywineGLOBAL— Flexible Bond
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Brandywine
Global, Renato was an investment analyst at Watson Wyatt Investment
Consulting (2004-2006). He earned a B.A. in Physics and Economics from the
University of Pennsylvania. |
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John
(Jack) P. McIntyre, CFA |
|
Mr.
McIntyre is a Portfolio Manager and has been employed at Brandywine Global
since 1998. Previously, he held positions as market strategist with
McCarthy, Crisanti & Maffei, Inc. (1995-1998); senior fixed income
analyst with Technical Data, a division of Thomson Financial Services
(1992-1995); quantitative associate with Brown Brothers Harriman & Co.
(1990), and investment analyst with the Public Employee Retirement
Administration of Massachusetts (1987-1989). Mr. McIntyre earned an M.B.A.
in Finance from the Leonard N. Stern Graduate School of Business at New
York University and a B.B.A. in Finance from the University of
Massachusetts, Amherst. |
|
2017 |
Anujeet
Sareen, CFA |
|
Mr.
Sareen is a Portfolio Manager and has been employed at Brandywine Global
since 2016. Previously, he was a managing director of global fixed income
and a global macro strategist, as well as a chair of the Currency Strategy
Group at Wellington Management in Boston. Over his 22-year career at
Wellington (1994-2016), he held a variety of roles while cultivating
extensive fixed income and currency management experience. Mr. Sareen
earned a B.A. in Computer Science from Brown University. |
|
2017 |
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
The
fund pays a management fee at an annual rate of 0.55% of its average daily net
assets.
For
the fiscal year ended December 31, 2023, the fund paid FTFA an effective
management fee of 0.54% of the fund’s average daily net assets for management
services. The effective management fee reflects any fees waived by the manager
(including any fees waived in connection with investments by the fund in
affiliated investment companies for which the fund paid a management fee).
A
discussion regarding the basis for the Board’s approval of the fund’s management
agreement and subadvisory agreement is available in the fund’s Semi-Annual
Report for the period ended June 30, 2023.
Expense limitation
The
manager has agreed to waive fees and/or reimburse operating expenses (other than
interest, brokerage commissions, dividend and interest expense on securities
sold short, taxes, extraordinary expenses and acquired fund fees and expenses)
so that the ratio of total annual fund operating expenses will not exceed 1.10%
for Class A shares, 1.85% for Class C shares, 1.35% for Class R shares,
0.75% for Class I shares and 0.65% for Class IS shares, subject to recapture as
described below. In addition, the ratio of total annual fund operating expenses
for Class IS shares will not exceed the ratio of total annual fund operating
expenses for Class I shares, subject to recapture as described below. These
arrangements are expected to continue until December 31, 2025, may be
terminated prior to that date by agreement of the manager and the Board, and may
be terminated at any time after that date by the manager. These arrangements,
however, may be modified by the manager to decrease total annual fund operating
expenses at any time. The manager is also permitted to recapture amounts waived
and/or reimbursed to a class within three years after the fiscal year in which
the manager earned the fee or incurred the expense if the class’ total annual
fund operating expenses have fallen to a level below the limit described above.
In no case will the manager recapture any amount that would result, on any
particular business day of the fund, in the class’ total annual fund operating
expenses exceeding the applicable limits described above or any other lower
limit then in effect. In addition, the manager has agreed to waive the fund’s
management fee to an extent sufficient to offset the net management fee payable
in connection with any investment in an affiliated money market fund. This
management fee waiver is not subject to the recapture provision discussed above.
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Additional information
The
fund enters into contractual arrangements with various parties, including, among
others, the fund’s manager and the subadviser, 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” or the “Distributor”), an indirect,
wholly-owned broker/dealer subsidiary of Franklin Resources, serves as the
fund’s sole and exclusive distributor.
The
fund has adopted a shareholder services and distribution plan pursuant to Rule
12b-1 under the Investment Company Act of 1940, as amended. Under the plan, the
fund pays distribution and/or service fees based on an annualized percentage of
average daily net assets of up to 0.25% for Class A shares; up to 1.00% for
Class C shares and up to 0.50% for Class R shares. Payments by the fund under
its plan go to the Distributor, financial intermediaries and other parties that
provide services in connection with or are otherwise involved in the
distribution of its shares or administration of plans or programs that use its
shares as their funding medium, and to reimburse certain other expenses and
payments. From time to time, the Distributor and/or financial intermediaries may
agree to a reduction or waiver of these fees. These fees are an ongoing
expense and, over time, will increase the cost of your investment and may cost
you more than other types of sales charges. Class I shares and Class IS shares
are not subject to distribution and/or service fees under the plan.
Additional payments
In
addition to payments made to intermediaries under the fund’s shareholder
services and distribution plan and other payments made by the fund for
shareholder services and/or recordkeeping, the Distributor, the manager and/or
their affiliates make payments for distribution, shareholder servicing,
marketing and promotional activities and related expenses out of their profits
and other available sources, including profits from their relationships with the
fund. These payments are not reflected as additional expenses in the fee table
contained in this Prospectus. The recipients of these payments may include the
Distributor and affiliates of the manager, as well as Service Agents through
which investors may purchase shares of the fund, including your Service Agent.
The total amount of these payments is substantial, may be substantial to any
given recipient and may exceed the costs and expenses incurred by the recipient
for any fund-related marketing or shareholder servicing activities. The payments
described in this paragraph are often referred to as “revenue sharing payments.”
Revenue sharing arrangements are separately negotiated between the Distributor,
the manager and/or their affiliates, and the recipients of these payments.
Revenue
sharing payments create an incentive for an intermediary or its employees or
associated persons to recommend or sell shares of the fund to you. Contact your
Service Agent for details about revenue sharing payments it receives or may
receive. Additional information about revenue sharing payments is available in
the SAI. Revenue sharing payments, as well as payments by the fund under the
shareholder services and distribution plan or for recordkeeping and/or
shareholder services, also benefit the manager, the Distributor and their
affiliates to the extent the payments result in more assets being invested in
the fund on which fees are being charged.
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Choosing a share class
The
fund offers multiple share classes. Each share class represents an investment in
the same portfolio of securities, but each has different availability (for
example, not all Service Agents offer all share classes), eligibility criteria,
expense structures and arrangements for shareholder services or distribution,
allowing you to choose the class that best meets your needs. You should read
this section carefully and speak with your Service Agent (if applicable) to
determine which share class is most appropriate for you. When choosing the
appropriate share class, you should consider the following factors:
• |
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the
amount you plan to invest; |
• |
|
the
length of time you expect to own the shares; |
• |
|
the
total costs associated with your investment, including any sales charges
that you pay when you buy or sell fund shares and expenses that are paid
out of fund assets over time; |
• |
|
whether
you qualify for any reduction or waiver of the sales charge;
|
• |
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the
availability of the share class; |
• |
|
the
services that will be available to you and whether you meet any
eligibility criteria; and |
• |
|
the
amount of compensation that your Service Agent will receive.
|
For
example, when choosing between Class A or Class C shares, you should be
aware that, generally speaking, the larger the size of your investment and the
longer your investment horizon, the more likely it will be that Class C shares
will not be as advantageous as Class A shares. The annual distribution
and/or service fees on Class C shares may cost you more over the longer term
than the front-end sales charge and service fees you would pay for larger
purchases of Class A shares. If you are eligible to purchase Class I
shares, you should be aware that Class I shares are not subject to a front-end
sales charge or distribution or service fees and generally have lower annual
expenses than Class A or Class C shares.
Generally
speaking, Class A shares have lower annual operating expenses than Class C
shares but not as low as Class I/Class IS shares. Overall, Class IS shares
generally have the lowest annual expenses of all share classes.
More
information about the fund’s classes of shares is available through the fund’s
website. You’ll find detailed information, free of charge and in a clear and
prominent format, about sales charges and ways you can qualify for reduced or
waived sales charges.
The
fund’s shares are distributed by Franklin Distributors.
Share class features
summary
The
following table summarizes key features of the fund’s share classes. In
addition, you should read carefully this Prospectus, including the fee table and
the expense example at the front of this Prospectus before choosing your share
class. If you are not purchasing shares directly from the fund, you should
contact your Service Agent for help choosing a share class that may be
appropriate for you. Capitalized terms used in the table have the definition
given to them in this Prospectus.
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Minimum initial investments1 |
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Initial sales
charge |
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Contingent deferred
sales charge |
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Annual distribution
and/or service (12b‑1)
fees |
|
Exchange privilege2 |
|
Conversion to Class A
shares |
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Class A |
|
Generally,
$1,000 for all accounts except:
(i) $25
if establishing a Systematic Investment Plan;
(ii) $250
for IRAs; and
(iii) none
for certain fee-based programs and retirement plans |
|
Up
to 3.75%; reduced or
waived
for large purchases
and
certain investors. No charge for purchases of
$500,000
or more |
|
1.00% on purchases
of $500,000 or more if youredeem within 18
months of purchase; waived for certain investors |
|
0.25% of average daily
net assets |
|
Class
A shares of funds sold by the Distributor |
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N/A |
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Class
C |
|
Generally,
$1,000 for all accounts except:
(i) $25
if establishing a Systematic Investment Plan;
(ii) $250
for IRAs; and
(iii) none
for certain fee-based programs and retirement plans |
|
None |
|
1.00% if you redeem
within 1 year of purchase; waived for certain
investors |
|
1.00% of average daily
net assets |
|
Class
C shares of funds sold by the Distributor |
|
Yes;
generally converts to Class A in the month of, or the month following, the
8 year anniversary of the Class C share purchase date (conversion date
occurs typically on a Friday in the middle of the month); please consult
your Service Agent for more information |
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Class
R |
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None |
|
None |
|
None |
|
0.50% of average daily
net assets |
|
Class
R shares of funds sold by the Distributor* |
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No |
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Class
I |
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• $1,000,000;
• Waived for
certain Service Agents with arrangements with the Distributor, Omnibus
Retirement Plans and certain individuals affiliated with Franklin
Templeton;
• However,
investors investing through a Service Agent acting as agent on behalf of
its customers will be subject to the following minimums:
(i) if
investing through a Systematic Investment Plan, $25;
(ii) if
an individual investor, $1,000; and
(iii) none
for certain fee-based programs |
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None |
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None |
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None |
|
Class
I shares of funds sold by the Distributor* |
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No |
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Class
IS |
|
• $1,000,000;
• Waived for
certain Service Agents with arrangements with the Distributor and Omnibus
Retirement Plans
• However,
investors investing through a Service Agent acting as agent on behalf of
its customers will be subject to the following minimums:
(i) if
investing through a Systematic Investment Plan, $25;
(ii) if
an individual investor $1,000; and
(iii) none
for certain fee-based programs |
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None |
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None |
|
None |
|
Class
IS shares of funds sold by the Distributor* |
|
No |
1 |
Please
note that the minimum initial investment amount must be met on a per class
basis. In addition, your Service Agent may impose higher or lower
investment minimums, or may impose no minimum investment requirement.
|
2 |
You
or your Service Agent may instruct the fund to exchange shares of any
class for shares of the same class of any other fund sold by the
Distributor, provided that the fund shares to be acquired in the exchange
are available to new investors in such other fund and that you are
eligible to invest in such shares. For investors investing through
retirement and benefit plans or fee-based programs, you should contact
your Service Agent that administers your plan or sponsors the fee-based
program to request an exchange. Certain retirement plan programs with
exchange features in effect prior to November 20, 2006, as approved
by the Distributor, remain eligible for exchange from Class C shares to
Class A shares in accordance with the program terms. Please see the
SAI for more details. In addition, you may exchange shares of the fund for
another share class of the same fund if you meet the eligibility
requirements of that particular class. Please contact your Service Agent
or the fund about funds available for exchange. |
* |
If
this share class is not available, you may be eligible to exchange into a
different share class of such fund; see “Exchanging shares —
Exchangeability between funds without the same share class” below.
|
Share class availability
You
may buy shares of the fund either directly from the fund or through a Service
Agent. Please note that your Service Agent may not offer all classes of shares
since each Service Agent determines which share class(es) to make available to
its clients. Your Service Agent may receive different compensation for selling
one class of shares than for selling another class, which may depend on, among
other things, the type of investor account and the practices adopted by your
Service Agent. Each class of shares, except Class IS shares, is authorized to
pay fees for recordkeeping services, account servicing, networking, or similar
services to Service Agents. As a result, operating expenses of classes that
incur new or additional recordkeeping fees may increase over time. Certain
Service Agents may impose their own investment fees and maintain their own
practices for purchasing and selling fund shares, including higher or lower
investment minimums or none at all; these practices are not described in this
Prospectus or the SAI and will depend on the policies, procedures and trading
platforms of the Service Agent. Your Service Agent may provide shareholder
services that differ from the services provided by other Service Agents.
Services provided by your Service Agent may vary by class.
Plan
sponsors, plan fiduciaries and other Service Agents may choose to impose
qualification requirements that differ from the fund’s share class eligibility
standards as stated in this Prospectus. In certain cases, this could result in
the selection of a share class with higher distribution and/or service fees than
otherwise would have been incurred. The fund is not responsible for, and has no
control over, the decision of any plan sponsor, plan fiduciary or Service Agent
to impose such differing requirements. Please consult with your plan sponsor,
plan fiduciary or Service Agent for more information about available share
classes.
|
|
|
| |
30 |
|
| |
BrandywineGLOBAL— Flexible Bond
Fund |
Please
contact your Service Agent about the availability of fund shares, the
shareholder services it provides for each class, the compensation it receives in
connection with the sale of each share class and the Service Agent’s practices
and other information.
The following table provides information on the
availability of each share class based on investor type, subject to the share
class’ eligibility requirements. Your Service Agent can help you determine which
share class is appropriate for you. The fund
reserves the right to modify or waive the eligibility policies for share class
availability at any time.
|
|
|
|
|
|
|
|
|
| |
|
|
A |
|
C1 |
|
R |
|
I |
|
IS |
Individual
Investors |
|
✓ |
|
✓ |
|
|
|
✓2, 3 |
|
✓2 |
Omnibus
Retirement Plans |
|
✓ |
|
✓ |
|
✓1 |
|
✓ |
|
✓ |
Individual
Retirement Plans |
|
✓ |
|
✓ |
|
|
|
✓ |
|
|
Clients
of Eligible Financial Intermediaries |
|
✓ |
|
✓ |
|
✓ |
|
✓4 |
|
✓4 |
Institutional
Investors |
|
✓ |
|
✓ |
|
|
|
✓ |
|
✓ |
1 |
Shares
are not available for purchase through accounts where the Distributor is
the broker-dealer of record (“Distributor Accounts”).
|
2 |
Individual
investors investing through a Service Agent may be eligible to invest in
Class I or Class IS shares, if such Service Agent is acting solely as an
agent on behalf of its customers pursuant to an agreement with the
Distributor and such investor’s shares are held in an omnibus account on
the books of the fund. Please contact your Service Agent for more
information. |
3 |
Class
I shares may be purchased directly from the fund by the following persons:
(i) current employees of the manager and its affiliates;
(ii) former employees of the manager and its affiliates with existing
accounts; (iii) current and former board members of investment
companies managed by affiliates of Franklin Resources; (iv) current
and former board members of Franklin Resources; and (v) the
“immediate families” of such persons. “Immediate families” are such
person’s spouse (including the surviving spouse of a deceased board
member), parents, grandparents, and children and grandchildren (including
step-relationships). For such investors, the minimum initial investment is
$1,000 and the minimum for each purchase of additional shares is $50.
Current employees may purchase additional Class I shares through a
systematic investment plan. |
4 |
Investors
who qualify as Clients of Eligible Financial Intermediaries or who
participate in Eligible Investment Programs made available through their
Service Agents (such as investors in fee-based advisory or mutual fund
“wrap” programs) are eligible to purchase, directly or via exchange, Class
I or Class IS shares, among other share classes. In such cases your
ability to hold Class I or Class IS shares may be premised on your
continuing participation in a fee-based advisory or mutual fund wrap
program. Your Service Agent may reserve the right to redeem your Class I
or Class IS shares or exchange your Class I or Class IS shares or exchange
them for Class A shares of the same fund, as applicable, if you
terminate your fee-based advisory or mutual fund wrap program and are no
longer eligible for Class I or Class IS shares. You may be subject to an
initial sales charge in connection with such exchange, and you will be
subject to the annual distribution and/or service fee applicable to
Class A shares. Any redemption may generate a taxable gain or loss
and significantly change the asset allocation of your account.
|
|
|
Omnibus
Retirement Plans are retirement plans held on the books of the fund in a
plan level or omnibus level account and include: (i) 401(k) plans; (ii) 457 plans; (iii)
employer-sponsored 403(b) plans; (iv) profit-sharing plans; (v)
non-qualified deferred compensation plans; (vi) employer-sponsored benefit
plans (including health savings accounts); (vii) defined benefit
plans; (viii) other similar employer-sponsored retirement and benefit
plans; (ix) individual retirement accounts that are administered on the
same IRA recordkeeping platform and that invest in the fund through a
single omnibus account pursuant to a special contractual arrangement with
the fund or the Distributor; and (x) investors who rollover fund shares
from a retirement plan into an individual retirement account administered
on the same retirement plan platform. SIMPLE IRAs are considered Omnibus
Retirement Plans if they are employer-sponsored and held at the plan
level. |
|
Individual Retirement Plans include: (i) retirement plans investing through
brokerage accounts; (ii) certain retirement plans with direct
relationships to the fund that are not Institutional Investors nor
investing through omnibus accounts; and (iii) individual retirement
vehicles not held through an omnibus account, such as: (a) traditional and
Roth IRAs; (b) Coverdell education savings accounts; (c) individual
403(b)(7) custodial accounts; (d) Keogh plans; (e) SEPs; (f) SARSEPs; and
(g) SIMPLE IRAs or similar accounts. Individual Retirement Plans include
plans held at the individual participant level. Individual Retirement
Plans are treated like individual investors for purposes of determining
sales charges and any applicable sales charge reductions or
waivers. |
|
Clients
of Eligible Financial Intermediaries include: investors who invest in the fund through
Service Agents that (a) charge such investors an ongoing fee for advisory,
investment, consulting or similar services, or (b) have entered into an
agreement with the Distributor to offer Class A, Class C, Class R, Class I
or Class IS shares through a no-load network or platform (including
college savings vehicles) (“Eligible Investment Programs”). These
investors may include (i) investors who invest in the fund through the
program of a Service Agent where the investor typically invests $10
million or more in assets under management in accounts with the Service
Agent (“Management Accounts”); (ii) pension and profit sharing plans;
(iii) other employee benefit trusts; (iv) endowments; (v)
foundations; (vi) corporations; (vii) college savings vehicles such
as Section 529 plans; and (viii) direct retail investment platforms
through mutual fund “supermarkets,” where the sponsor links its client’s
account (including IRA accounts on such platforms) to a master account in
the sponsor’s name. |
|
Institutional Investors may include: (i) corporations; (ii) banks; (iii) trust
companies; (iv) insurance companies; (v) investment companies; (vi)
foundations; (vii) endowments; and (viii) other similar entities. The
Distributor or the Service Agent may impose additional eligibility
requirements or criteria to determine if an investor, including the types
of investors listed above, qualifies as an Institutional
Investor. |
|
|
|
|
|
| |
BrandywineGLOBAL— Flexible Bond
Fund |
|
| |
|
31 |
|
To visit the website, go
to www.franklintempleton.com/mutualfunds, and click on the name of the fund. On
the selected fund’s page, scroll to the bottom of the page and click on the
disclosure labeled “Click here for funds sales charge and breakpoint
information.”
|
|
|
| |
32 |
|
| |
BrandywineGLOBAL— Flexible Bond
Fund |
Additional information
about each share class
Class A shares
The
public offering price of Class A shares is the net asset value per share
plus the applicable sales charge, unless you qualify for a sales charge waiver.
Sales charges
The
following table shows the front-end sales charge that you may pay, depending on
the amount you purchase. You pay a lower rate as the size of your investment
increases to certain levels called breakpoints. You do not pay a sales charge on
the fund’s distributions or dividends that you reinvest in additional
Class A shares.
It
also shows the amount of compensation that will be paid to your Service Agent
out of the sales charge if you buy shares from a Service Agent. As shown below,
the sales charge may be allocated between your Service Agent and the
Distributor. Service Agents will receive a distribution and/or service fee
payable on Class A shares at an annual rate of up to 0.25% of the average
daily net assets represented by the Class A shares serviced by them. The
Distributor may not pay Service Agents selling Class A shares to Omnibus
Retirement Plans a commission on the purchase price of Class A shares sold
by them. However, for Omnibus Retirement Plans that are permitted to purchase
shares at net asset value, the Distributor may pay Service Agents commissions of
up to 1.00% of the purchase price of the Class A shares that are purchased
with regular ongoing plan contributions. Please contact your Service Agent for
more information.
|
|
|
|
|
|
|
|
|
|
|
| |
Amount of investment |
|
Sales charge
as a % of
offering price |
|
|
Sales charge
as a % of net
amount
invested |
|
|
Service Agent
commission as
a % of
offering price |
|
Less
than $100,000 |
|
|
3.75 |
|
|
|
3.90 |
|
|
|
3.50 |
|
$100,000
but less than $250,000 |
|
|
3.25 |
|
|
|
3.36 |
|
|
|
3.00 |
|
$250,000
but less than $500,000 |
|
|
2.25 |
|
|
|
2.30 |
|
|
|
2.25 |
|
$500,000
or more1 |
|
|
-0- |
|
|
|
-0- |
|
|
|
up to 1.00 |
|
1 |
The
Distributor may pay a commission of up to 1.00% to a Service Agent for
purchase amounts of $500,000 or more. In such cases, starting in the
thirteenth month after purchase, the Service Agent will also receive an
annual distribution and/or service fee of up to 0.25% of the average daily
net assets represented by the Class A shares held by its
clients. Prior to the thirteenth month, the Distributor will retain
this fee. Where the Service Agent does not receive the payment of
this commission, the Service Agent will instead receive the annual
distribution and/or service fee starting immediately after
purchase. Please contact your Service Agent for more information.
|
Reductions, waivers or
elimination of sales charges for Class A shares
Larger purchases
You
may reduce or eliminate your Class A front-end sales charge by purchasing
greater quantities. You pay a lower rate as the size of your investment
increases to the breakpoint levels indicated in the chart above. You do not pay
an initial sales charge when you buy $500,000 or more of Class A shares.
However, if you redeem these Class A shares within 18 months of purchase,
you will pay a contingent deferred sales charge of 1.00%. Please see “Contingent
deferred sales charges—Class A and Class C shares” below.
Letter of intent and
accumulation privilege
There are several ways you can combine Eligible
Purchases (as defined below) within Eligible Accounts (as defined below) to take
advantage of the breakpoints in the Class A sales charge schedule. In
order to take advantage of reductions in sales charges that may be available to
you when you purchase fund shares, you must inform your Service Agent or the
fund if you believe you are eligible for a letter of intent or a right of
accumulation. Whether you made Eligible Purchases through one or more Service
Agents, directly from the fund or through a combination of the foregoing, it is
your responsibility to inform your Service Agent or the fund if you own Eligible
Purchases that you believe are eligible to be aggregated with your purchases.
If you do not do so, you may not receive all
sales charge reductions for which you are eligible. Account statements
may be necessary in order to verify your eligibility for a reduced sales
charge.
Eligible
Purchases include: (i) any class of shares of any other Legg Mason or
Franklin Templeton fund other than shares of such funds offered through
separately managed accounts that are managed by a Franklin Templeton affiliate;
and (ii) units of a Section 529 Plan managed by a Franklin Templeton
affiliate. For purposes of a letter of intent and the accumulation privilege,
Legg Mason and Franklin Templeton funds include BrandywineGLOBAL funds,
ClearBridge Investments funds, Martin Currie funds, and Western Asset funds.
They do not include the funds in the
Franklin
Templeton Variable Insurance Products Trust, Legg Mason Partners Variable Equity
Trust, Legg Mason Partners Variable Income Trust or Legg Mason Partners Money
Market Trust (except for shares held in Distributor Accounts). Please contact
your Service Agent or the fund for more information.
Eligible
Accounts include shares of Legg Mason and Franklin Templeton funds registered to
(or held by a financial intermediary for):
|
• |
|
Your
“family member,” defined as your spouse or domestic partner, as recognized
by applicable state law, or your children; |
|
|
|
|
|
| |
BrandywineGLOBAL— Flexible Bond
Fund |
|
| |
|
33 |
|
|
• |
|
You
jointly with one or more family members; |
|
• |
|
You
jointly with one or more persons who are not family members if that other
person has not included the value of the jointly-owned shares for purposes
of the accumulation privilege (as described below) for that person’s
separate investments in Legg Mason or Franklin Templeton fund shares;
|
|
• |
|
A
Coverdell Education Savings account for which you or a family member is
the identified responsible person; |
|
• |
|
A
trustee/custodian of an IRA (which includes a Roth IRA and an employer
sponsored IRA such as a SIMPLE IRA) or your non-ERISA covered 403(b) plan
account, if the shares are registered/recorded under your or a family
member’s Social Security number; |
|
• |
|
A
529 college savings plan over which you or a family member has investment
discretion and control; |
|
• |
|
Any
entity over which you or a family member has individual or shared
authority, as principal, has investment discretion and control (for
example, an UGMA/UTMA account for a child on which you or a family member
is the custodian, a trust on which you or a family member is the trustee,
a business account (not to include retirement plans) for your solely owned
business (or the solely owned business of a family member) on which you or
a family member is the authorized signer); or |
|
• |
|
A
trust established by you or a family member as grantor.
|
Legg
Mason and Franklin Templeton fund shares held through an administrator or
trustee/custodian of an Employer Sponsored Retirement Plan (see definition
below) such as a 401(k) plan do not qualify for the accumulation privilege.
Legg
Mason and Franklin Templeton fund assets held in multiple Employer Sponsored
Retirement Plans (as defined below) may be combined in order to qualify for
sales charge breakpoints at the plan level if the plans are sponsored by the
same employer.
An
“Employer Sponsored Retirement Plan” is a Qualified Retirement Plan (as defined
below), ERISA covered 403(b) plan or certain non-qualified deferred compensation
arrangements that operate in a similar manner to a Qualified Retirement Plan,
such as 457 plans and executive deferred compensation arrangements, but not
including employer sponsored IRAs. A “Qualified Retirement Plan” is an employer
sponsored pension or profit sharing plan that qualifies under section 401(a) of
the Internal Revenue Code, including 401(k), money purchase pension, profit
sharing and defined benefit plans.
Letter of intent. You may qualify for a reduced front-end sales charge
by signing a “Letter of Intent”. A Letter of Intent allows you to combine the
current or cost value, whichever is higher, of Eligible Purchases in Eligible
Accounts with the value that you intend to purchase within the next 13 months,
which would, if bought all at once, qualify you for a reduced sales charge. In
addition, current holdings under the accumulation privilege may be included in
the Letter of Intent. Shares or units redeemed or sold prior to reaching the
threshold for a reduced sales charge will not be counted for these purposes. The
13-month period begins when the Letter of Intent is received by the fund or your
Service Agent and you must inform your Service Agent or the fund that later
purchases are subject to a Letter of Intent. Account statements may be necessary
in order to verify your eligibility. If you hold Eligible Purchases in accounts
at two or more Service Agents, please contact your Service Agent to determine
which shares/units may be credited toward the Letter of Intent. Certain
directors, trustees and fiduciaries may be entitled to combine accounts in
determining their sales charge.
During
the term of the Letter of Intent, the fund will hold Class A shares
representing up to 5% of the indicated amount in an escrow account for payment
of the sales charge due if you do not meet the intended asset level goal during
the 13-month term of the Letter of Intent. If the full amount is not purchased
during the 13-month period, shares in the amount of any sales charge due, based
on the amount of actual purchases will be redeemed from your account.
Accumulation privilege. The accumulation privilege allows you to combine the
current or cost value, whichever is higher, of Eligible Purchases in Eligible
Accounts with the dollar amount of your next purchase of Class A shares in
determining whether you qualify for a breakpoint and a reduced front-end sales
charge. The current value of shares is determined by multiplying the number of
shares as of the day prior to your current purchase by their public offering
price. The cost value of shares is determined by aggregating the amount of
Eligible Purchases in Eligible Accounts (including reinvested dividends and
capital gains, but excluding capital appreciation), less any withdrawals, as of
the date prior to your current purchase. The cost value of Eligible Purchases in
Eligible Accounts, however, may only be aggregated for share purchases that took
place within 18 months of your current purchase or your letter of intent start
date, if applicable. You must inform your Service Agent or the fund if you are
eligible for the accumulation privilege and of the other Eligible Purchases you
own that are eligible to be aggregated with your purchases. Account statements
may be necessary in order to verify your eligibility. If you hold Eligible
Purchases in accounts at two or more Service Agents, please contact your Service
Agent to determine which Eligible Purchases may be credited toward the
accumulation privilege.
Waivers for certain
Class A investors
Class A
initial sales charges are waived for certain types of investors, including:
• |
|
Shareholders
investing in Class A shares through Distributor Accounts
|
• |
|
Investors
who redeemed at least the same amount of Class A shares of a fund
sold by the Distributor in the past 90 days, if the investor’s Service
Agent is notified |
• |
|
Directors
and officers of any Franklin Templeton sponsored fund
|
• |
|
Employees
of Franklin Resources and its subsidiaries |
• |
|
Investors
investing through certain retirement plans |
|
|
|
| |
34 |
|
| |
BrandywineGLOBAL— Flexible Bond
Fund |
• |
|
Investors
who rollover fund shares from an employer-sponsored retirement plan into
an individual retirement account administered on the same retirement plan
platform |
• |
|
Franklin
Templeton donor-advised funds (such as the Franklin or Fiduciary Trust
Charitable Programs) or investors purchasing through such funds
|
If
you qualify for a waiver of the Class A initial sales charge, you must
notify your Service Agent or the fund at 877-6LM-FUND/656-3863 at the time of
purchase and provide sufficient information at the time of purchase to permit
verification that the purchase qualifies for the initial sales charge waiver.
Different
Service Agents may impose different sales loads or offer different ways to
reduce sales loads. These variations are described at the end of this Prospectus
in the appendix titled “Appendix: Waivers and Discounts Available from Certain
Service Agents.”
For additional
information regarding waivers of Class A initial sales charges, contact
your Service Agent or the fund, consult the SAI or visit
www.franklintempleton.com/mutualfunds and click on the name of the fund. On the
selected fund’s page, scroll to the bottom of the page and click on the
disclosure labeled “Click here for funds sales charge and breakpoint
information.”
Class C shares
You
buy Class C shares at net asset value with no initial sales charge. However, if
you redeem your Class C shares within one year of purchase, you will pay a
contingent deferred sales charge of 1.00%. Omnibus Retirement Plans may not be
subject to a contingent deferred sales charge.
Except
as noted below, the Distributor generally will pay Service Agents selling Class
C shares a commission of up to 1.00% of the purchase price of the Class C shares
they sell. The Distributor will retain the contingent deferred sales charges and
an annual distribution and/or service fee of up to 1.00% of the average daily
net assets represented by the Class C shares serviced by these Service Agents
until the thirteenth month after purchase. Starting in the thirteenth month
after purchase, these Service Agents will receive an annual distribution and/or
service fee of up to 1.00% of the average daily net assets represented by the
Class C shares serviced by them.
The
Distributor may not pay Service Agents selling Class C shares to Omnibus
Retirement Plans a commission on the purchase price of Class C shares sold by
them. Instead, immediately after purchase, the Distributor may pay these Service
Agents an annual distribution and/or service fee of up to 1.00% of the average
daily net assets represented by the Class C shares serviced by them.
Class C share conversion
Except
as noted below, Class C shares automatically convert to Class A shares
after the shares have been held for 8 years from the purchase date; the shares
will be converted in the month of, or the month following, the 8-year
anniversary of purchase. The monthly conversion processing date typically occurs
around the middle of every month and generally falls on a Friday. It is the
responsibility of your Service Agent and not the fund or the Distributor to
ensure that you are credited with the proper holding period. If your Service
Agent does not have records verifying that your shares have been held for at
least 8 years, your Service Agent may not convert your Class C shares to
Class A shares. Group retirement plans held in an omnibus recordkeeping
platform through a Service Agent that does not track participant-level share lot
aging may not convert Class C shares to Class A shares. Customers of
certain Service Agents may be subject to different terms or conditions, as set
by their Service Agent, in connection with such conversions. Please refer to the
appendix titled “Appendix: Waivers and Discounts Available from Certain Service
Agents” on page A-1 of this Prospectus or contact your Service Agent for more
information.
For
Class C shares that have been acquired through an exchange from another fund
sold by the Distributor, the purchase date is calculated from the date the
shares were originally acquired in the other fund. When Class C shares that a
shareholder acquired through a purchase or exchange convert, any other Class C
shares that the shareholder acquired as reinvested dividends and distributions
related to those shares also will convert into Class A shares on a pro rata
basis.
All
conversions from Class C shares to Class A shares will be based on the per
share net asset value without the imposition of any sales load, fee or other
charge. The conversion from Class C shares to Class A shares is not
considered a taxable event for federal income tax purposes.
Contingent deferred sales
charges – Class A and Class C shares
The
contingent deferred sales charge is based on the net asset value at the time of
purchase or redemption, whichever is less, and therefore you do not pay a sales
charge on amounts representing appreciation or depreciation.
In
addition, you do not pay a contingent deferred sales charge:
• |
|
When
you exchange shares for shares of the same share class of another fund
sold by the Distributor |
• |
|
On
shares representing reinvested distributions and dividends
|
• |
|
On
shares no longer subject to the contingent deferred sales charge
|
Each
time you place a request to redeem shares, the fund will first redeem any shares
in your account that are not subject to a contingent deferred sales charge and
then redeem the shares in your account that have been held the longest.
|
|
|
|
|
| |
BrandywineGLOBAL— Flexible Bond
Fund |
|
| |
|
35 |
|
If
you redeem shares of a fund sold by the Distributor and pay a contingent
deferred sales charge, you may, under certain circumstances, reinvest all or
part of the redemption proceeds within 90 days in any other fund sold by the
Distributor and receive pro rata credit for any contingent deferred sales charge
imposed on the prior redemption. Please contact your Service Agent or the fund
for additional information.
The
Distributor receives contingent deferred sales charges as partial compensation
for its expenses in selling shares, including the payment of compensation to
your Service Agent.
Contingent deferred sales
charge waivers
The
contingent deferred sales charge for each share class will generally be waived:
• |
|
On
payments made through certain systematic withdrawal plans
|
• |
|
On
certain distributions from a retirement plan |
• |
|
For
certain Omnibus Retirement Plans |
• |
|
For
involuntary redemptions of small account balances
|
• |
|
For
12 months following the death or disability of a shareholder
|
• |
|
On
redemptions with respect to investors where the Distributor did not pay
the Service Agent a commission |
• |
|
On
redemptions of Class A shares purchased by or through a Franklin
Templeton donor-advised fund (such as the Franklin or Fiduciary Trust
Charitable Programs) |
To
have your contingent deferred sales charge waived, you or your Service Agent
must let the fund know at the time you redeem shares that you qualify for such a
waiver.
Different
Service Agents may offer different contingent deferred sales charge waivers.
These variations are described at the end of this Prospectus in the appendix
titled “Appendix: Waivers and Discounts Available from Certain Service Agents.”
For additional
information regarding waivers of contingent deferred sales charges, contact your
Service Agent or the fund, consult the SAI or visit the fund’s website,
www.franklintempleton.com/mutualfunds, and click on the name of the fund. On the
selected fund’s page, scroll to the bottom of the page and click on the
disclosure labeled “Click here for funds sales charge and breakpoint
information.”
Class R shares
You
buy Class R shares at net asset value with no initial sales charge and no
contingent deferred sales charge when redeemed.
Service
Agents receive an annual distribution and/or service fee of up to 0.50% of the
average daily net assets represented by the Class R shares serviced by them.
Class I and Class IS
shares
You
buy Class I or Class IS shares at net asset value with no initial sales charge,
no contingent deferred sales charge when redeemed and no asset-based fee for
sales or distribution. However, if you purchase Class I or Class IS shares
through a Service Agent acting solely as an agent on behalf of its customers
pursuant to an agreement with the Distributor, that Service Agent may charge you
a commission in an amount determined and separately disclosed to you by the
Service Agent.
Because
the fund is not a party to any commission arrangement between you and your
Service Agent, any purchases and redemptions of Class I or Class IS shares will
be made by the fund at the applicable net asset value (before imposition of the
sales commission). Any commissions charged by a Service Agent are not reflected
in the fees and expenses listed in the fee table or expense example in this
Prospectus nor are they reflected in the performance in the bar chart and table
in this Prospectus because these commissions are not charged by the fund.
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36 |
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BrandywineGLOBAL— Flexible Bond
Fund |
Buying shares
|
| |
|
|
Generally |
|
You
may buy shares at their net asset value next determined after receipt by
your Service Agent or the transfer agent of your purchase request in good
order, plus any applicable sales charge.
The
fund may not be available for sale in certain states. Prospective
investors should inquire as to whether the fund is available for sale in
their state of residence.
You
must provide the following information for your order to be
processed:
• Name of
fund being bought
• Class of
shares being bought
• Dollar
amount or number of shares being bought (as applicable)
• Account
number (if existing account) |
|
|
Through a Service
Agent |
|
You
should contact your Service Agent to open an account and make arrangements
to buy shares.
Your
Service Agent may charge an annual account maintenance fee. |
|
|
Through
the
fund |
|
Investors
should contact the fund at 877-6LM-FUND/656-3863 to open an account and
make arrangements to buy shares.
For
initial purchases, complete and send your account application to the fund
at one of the following addresses:
Regular
Mail:
Legg Mason
Funds
P.O. Box
33030
St. Petersburg, FL
33733-8030
Express,
Certified or Registered Mail:
Legg Mason
Funds
100 Fountain
Parkway
St. Petersburg, FL
33716-1205
Subsequent
purchases should be sent to the same address. Enclose a check to pay for
the shares. The fund will accept checks from other fund families and
investment companies as long as the registration name on your fund account
is the same as that listed on the check. |
|
|
Through a
systematic investment plan |
|
You
may authorize your Service Agent or the fund transfer agent to transfer
funds automatically from (i) a regular bank account, (ii) cash held in a
brokerage account with a Service Agent, (iii) another fund sold by the
Distributor or (iv) certain money market funds, in order to buy
shares on a regular basis.
• Amounts
transferred must meet the applicable minimums (see “Purchase and sale of
fund shares”)
• If you do
not have sufficient funds in your account on a transfer date, you may be
charged a fee
• For
amounts transferred from other funds sold by the Distributor, please see
the section titled “Exchanging shares—Through a systematic exchange plan”
in such fund’s prospectus
For more
information, please contact your Service Agent or the fund, or consult the
SAI. |
|
|
Franklin
Templeton
VIP Services® |
|
You
may be eligible for Franklin Templeton VIP Services® if you currently have
$500,000 or more invested in Franklin Templeton affiliated funds based
solely on shares registered directly with the fund and excluding shares
held indirectly through brokerage accounts. Franklin Templeton VIP
Services®
shareholders enjoy enhanced services and transaction capabilities. Please
contact Shareholder Services at (800) 632-2301 for additional information
on this program. |
Additional information
about purchases
If
you pay with a check or electronic transfer (ACH) that does not clear or if your
payment is not received in a timely manner, your purchase may be cancelled and
you may be liable for any loss to the fund. Please note that the fund will not
accept cash, third-party checks, credit card convenience checks, pre-paid debit
cards, non-bank money orders, traveler’s checks or checks drawn on foreign banks
for purchase of fund shares. The fund and its agents have the right to reject or
cancel any purchase due to nonpayment.
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BrandywineGLOBAL— Flexible Bond
Fund |
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37 |
|
Account registration
changes
Changes
in registration or certain account options for accounts held directly with the
fund must be made in writing. Medallion signature guarantees may be required.
(See “Other things to know about transactions—Medallion signature guarantees”
below.) All correspondence must include the account number and must be sent to
one of the following addresses:
Regular
Mail:
Legg Mason Funds
P.O. Box 33030
St. Petersburg, FL
33733-8030
Express,
Certified or Registered Mail:
Legg Mason Funds
100 Fountain Parkway
St. Petersburg, FL
33716-1205
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38 |
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| |
BrandywineGLOBAL— Flexible Bond
Fund |
Exchanging shares
|
|
|
|
|
| |
|
|
Generally |
|
You
or your Service Agent may instruct the fund to exchange shares of any
class for shares of the same class of any other fund sold by the
Distributor, provided that the fund shares to be acquired in the exchange
are available to new investors in such other fund and you are eligible to
invest in such shares. Additionally, if the fund into which you wish to
exchange your shares does not offer the class of shares in which you are
currently invested, you may be able to exchange for a different share
class (see “Exchangeability between funds without the same share class”
below).
In
addition, you may exchange shares of a fund for a different share class of
the same fund provided you meet the eligibility requirements of the share
class into which you are exchanging. You may exchange shares of the fund
for the same class of shares (or a different share class, if permitted) of
other funds sold by the Distributor on any day that both the fund and the
fund into which you are exchanging are open for business. Please contact
your Service Agent or the fund about funds available for exchange.
An
exchange of shares of one fund for shares of another fund is considered a
sale and generally results in a capital gain or loss for federal income
tax purposes, unless you are investing through an IRA, 401(k) or other
tax-advantaged account. An exchange of shares of one class directly for
shares of another class of the same fund normally should not be taxable
for federal income tax purposes. You should talk to your tax professional
before making an exchange.
The
exchange privilege is not intended as a vehicle for short-term trading.
The fund may suspend or terminate your exchange privilege if you engage in
a pattern of excessive exchanges. |
| |
Exchangeability
between funds without the same share class |
|
If the fund you are exchanging
into does not offer your share class, you may be able to exchange your
shares for a different share class. |
|
Exchange from share class |
|
Exchangeable for |
|
|
|
Class I |
|
Class A shares of Franklin U.S. Government Money
Fund, Advisor Class or Class Z |
|
|
|
Class IS |
|
Advisor Class, Class Z or Class R6 |
|
|
| |
| |
| |
Class R |
|
Class FI |
|
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| |
| |
| |
| |
|
|
|
Franklin Templeton
offers a distinctive family of funds tailored to help meet the varying
needs of large and small investors |
|
You
may exchange shares at their net asset value next determined after receipt
by your Service Agent or the transfer agent of your exchange request in
good order.
• If you
bought shares through a Service Agent, contact your Service Agent to learn
which funds your Service Agent makes available to you for exchanges
• If you
bought shares directly from the fund, contact the fund at
877-6LM-FUND/656-3863 to learn which funds are available to you for
exchanges
• Generally,
exchanges may be made only between accounts that have identical
registrations, unless you send written instructions with a signature
guarantee
• Not all
funds offer all classes
• Some funds
are offered only in a limited number of states. Your Service Agent or the
fund will provide information about the funds offered in your state
Always
be sure to read the prospectus of the fund into which you are exchanging
shares.
|
| |
Investment
minimums, sales charges and other requirements |
|
• In most
instances, your shares will not be subject to an initial sales charge or a
contingent deferred sales charge at the time of the exchange. You may be
charged an initial or contingent deferred sales charge if the shares being
exchanged were not subject to a sales charge
• Except as
noted above, your contingent deferred sales charge (if any) will continue
to be measured from the date of your original purchase of shares subject
to a contingent deferred sales charge, and you will be subject to the
contingent deferred sales charge of the fund that you originally
purchased
• You will
generally be required to meet the minimum investment requirement for the
class of shares of the fund or share class into which your exchange is
made (except in the case of systematic exchange plans or in exchanges of
an entire account balance)
• Your
exchange will also be subject to any other requirements of the fund or
share class into which you are exchanging shares
• The fund
may suspend or terminate your exchange privilege if you engage in a
pattern of excessive exchanges
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| |
BrandywineGLOBAL— Flexible Bond
Fund |
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| |
|
39 |
|
|
| |
| |
By
telephone |
|
Contact
your Service Agent or, if you hold shares directly with the fund, call the
fund at 877-6LM-FUND/656-3863 for information. Exchanges are priced at the
net asset value next determined. Telephone exchanges may be made only
between accounts that have identical registrations and may be made on any
day the New York Stock Exchange (“NYSE”) is open. |
| |
By mail |
|
Contact
your Service Agent or, if you hold shares directly with the fund, write to
the fund at one of the following addresses:
Regular
Mail:
Legg Mason
Funds
P.O. Box
33030
St. Petersburg, FL
33733-8030
Express,
Certified or Registered Mail:
Legg Mason
Funds
100 Fountain
Parkway
St. Petersburg, FL
33716-1205 |
| |
Through a
systematic exchange plan |
|
You
may be permitted to schedule automatic exchanges of shares of the fund for
shares of other funds available for exchange. All requirements for
exchanging shares described above apply to these exchanges. In
addition:
• Exchanges
may be made monthly, every alternate month, quarterly, semi-annually
or annually
• Each
exchange must meet the applicable investment minimums for systematic
investment plans (see “Purchase and sale of fund shares”)
For more
information, please contact your Service Agent or the fund or consult the
SAI. |
|
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| |
40 |
|
| |
BrandywineGLOBAL— Flexible Bond
Fund |
Redeeming shares
|
| |
|
|
Generally |
|
You
may redeem shares at their net asset value next determined after receipt
by your Service Agent or the fund transfer agent of your redemption
request in good order, less any applicable contingent deferred sales
charge. Redemptions made through your Service Agent may be subject to
transaction fees or other conditions as set by your Service Agent.
If
the shares are held by a fiduciary or corporation, partnership or similar
entity, other documents may be required. |
| |
Redemption
proceeds |
|
Your
redemption proceeds normally will be sent within 2 business days after
your request is received in good order, but in any event within 7 days,
regardless of the method the fund uses to make such payment (e.g., check,
wire or electronic transfer (ACH)). If you make a redemption request
before the fund has collected payment for the purchase of shares, the fund
may delay your proceeds until payment is collected, for up to 10
days.
Your
redemption proceeds may be delayed, or your right to receive redemption
proceeds suspended beyond 7 days, if the NYSE is closed (other than on
weekends or holidays) or trading is restricted, if an emergency exists, or
otherwise as permitted by order of the Securities and Exchange Commission
(“SEC”).
If
you have a brokerage account with a Service Agent, your redemption
proceeds may be sent to your Service Agent. Your redemption proceeds can
be sent by check to your address of record or by wire or electronic
transfer (ACH) to a bank account designated by you. To change the bank
account designated to receive wire or electronic transfers, you will be
required to deliver a new written authorization and may be asked to
provide other documents. You may be charged a fee by your bank on a
wire or an electronic transfer (ACH).
In
other cases, unless you direct otherwise, your proceeds will be paid by
check mailed to your address of record.
Under
normal circumstances, the fund expects to meet redemption requests by
using cash or cash equivalents in its portfolio and/or selling portfolio
assets to generate cash. The fund also may pay redemption proceeds using
cash obtained through borrowing arrangements that may be available from
time to time.
The
fund may pay all or a portion of your redemption proceeds by giving you
securities (for example, if the fund reasonably believes that a cash
redemption may have a substantial impact on the fund and its remaining
shareholders). You may pay transaction costs to dispose of the securities,
and you may receive less for them than the price at which they were valued
for purposes of the redemption.
The
fund has available an unsecured revolving credit facility (the “Global
Credit Facility”) that may be used as an additional source of liquidity to
fund redemptions of shares. There can be no assurance that the Global
Credit Facility will remain available to the fund generally or that any
available credit under the Global Credit Facility will be available to the
fund when the fund seeks to draw on the Global Credit Facility.
During
periods of deteriorating or stressed market conditions, when an increased
portion of the fund’s portfolio may be comprised of investments that have
lower liquidity, or during extraordinary or emergency circumstances, the
fund may be more likely to pay redemption proceeds with cash obtained
through short-term borrowing arrangements (if available) or by giving you
securities. |
| |
By mail |
|
Contact
your Service Agent or, if you hold shares directly with the fund, write to
the fund at one of the following addresses:
Regular
Mail:
Legg Mason
Funds
P.O. Box
33030
St. Petersburg, FL
33733-8030
Express,
Certified or Registered Mail:
Legg Mason
Funds
100 Fountain
Parkway
St. Petersburg, FL
33716-1205
Your
written request must provide the following:
• The fund
name, the class of shares being redeemed and your account number
• The dollar
amount or number of shares being redeemed
• Signature
of each owner exactly as the account is registered
• Medallion
signature guarantees, as applicable (see “Other things to know about
transactions”) |
By
telephone |
|
If
your account application permits, you may be eligible to redeem shares by
telephone. Contact your Service Agent or, if you |
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|
| |
BrandywineGLOBAL— Flexible Bond
Fund |
|
| |
|
41 |
|
|
| |
| |
|
|
hold
shares directly with the fund, call 877-6LM-FUND/656-3863 for more
information. Please have the following information ready when you
call:
• Name of
fund being redeemed
• Class of
shares being redeemed
• The dollar
amount or number of shares being redeemed
• Account
number |
| |
Systematic
withdrawal plans |
|
You
may be permitted to schedule automatic redemptions of a portion of your
shares. To qualify, you must own shares of the fund with a value of at
least $5,000 and each automatic redemption must be at least $50 per
transaction per month. For retirement plans subject to mandatory
distribution requirements, the minimum withdrawal amounts will not
apply.
The
following conditions apply:
• Redemptions
may be made monthly, quarterly, semi-annually or annually. Redemptions may
be processed on the 1st, 5th, 10th, 15th, 20th and 25th days of the month, if
no day is indicated, redemptions will be made on the 20th day of the
month.
• If your
shares are subject to a contingent deferred sales charge, the charge will
be required to be paid upon redemption. However, the charge will be waived
if your automatic redemptions do not exceed 1% monthly, 3% quarterly, 6%
semiannually or 12% annually of your account’s net asset value, depending
on the frequency of your plan.
• Your
Service Agent may impose a lower minimum amount for each automatic
redemption on a monthly and quarterly basis.
For more
information, please contact your Service Agent or the fund or consult the
SAI. |
|
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|
| |
42 |
|
| |
BrandywineGLOBAL— Flexible Bond
Fund |
Other things to know
about transactions
When
you buy, exchange or redeem shares, your request must be in good order. This
means you have provided the following information, without which your request
may not be processed:
• |
|
In
the case of a purchase (including a purchase as part of an exchange
transaction), the class of shares being bought |
• |
|
In
the case of an exchange or redemption, the class of shares being exchanged
or redeemed (if you own more than one class) |
• |
|
Dollar
amount or number of shares being bought, exchanged or redeemed
|
• |
|
In
certain circumstances, the signature of each owner exactly as the account
is registered (see “Redeeming shares”) |
In
certain circumstances, such as during periods of market volatility, severe
weather and emergencies, shareholders may experience difficulties placing
exchange or redemption orders by telephone. In that case, shareholders should
consider using the fund’s other exchange and redemption procedures described
under “Exchanging shares” and “Redeeming shares.”
The
transfer agent or the fund will employ reasonable procedures to confirm that any
telephone, electronic or other exchange or redemption request is genuine, which
may include recording calls, asking the caller to provide certain personal
identification information, employing identification numbers, sending you a
written confirmation or requiring other confirmation procedures from time to
time. If these procedures are followed, neither the fund nor its agents will
bear any liability for these transactions, subject to applicable law.
The
fund does not consider the U.S. Postal Service or private delivery services to
be its agents. Therefore, deposits in the mail or with such delivery services,
or receipt at the fund’s post office box, of purchase requests or redemption
orders, do not constitute receipt by the fund or its transfer agent.
Purchase,
redemption and exchange requests mailed to Franklin Templeton’s address in San
Mateo, California, rather than to the address set forth in the “Buying shares”
and “Redeeming shares” sections above, will be date- and time-stamped when
received in San Mateo. If these requests are in good order, such orders will be
priced at the next net asset value calculated after the date and time indicated
by the stamp on the request.
The
fund has the right to:
• |
|
Suspend
the offering of shares permanently or for a period of time
|
• |
|
Waive
or change minimum initial and additional investment amounts
|
• |
|
Reject
any purchase or exchange order |
• |
|
Change,
revoke or suspend the exchange privilege |
• |
|
Suspend
telephone transactions |
• |
|
Suspend
or postpone redemptions of shares on any day when trading on the NYSE is
restricted or as otherwise permitted by the SEC |
• |
|
Redeem
shares if information provided in the application should prove to be
incorrect in any manner judged by the fund to be material (e.g., in a
manner such as to render the shareholder ineligible to purchase shares of
that class) |
• |
|
Delay
sending out redemption proceeds for up to seven days if, in the judgment
of the subadviser, the fund could be adversely affected by immediate
payment. The fund may delay redemptions beyond seven days, or suspend
redemptions, only as permitted by the SEC or the Investment Company Act of
1940, as amended |
The
fund may be required to close your account after a period of inactivity, as
determined by applicable U.S. state or territory abandoned or unclaimed property
laws and regulations, and transfer your shares to the appropriate U.S. state or
territory. If your shares are transferred to an applicable U.S. state or
territory from an IRA account, that could be treated as a taxable distribution
from your IRA to you. For more information on unclaimed property and how to
maintain an active account, please contact your Service Agent or the fund’s
transfer agent.
For
your protection, the fund or your Service Agent may request additional
information in connection with large redemptions, unusual activity in your
account, or otherwise to ensure your redemption request is in good order. Please
contact your Service Agent or the fund for more information.
Medallion signature
guarantees
To
be in good order, you may be asked to include a Medallion signature guarantee
with your redemption request if you:
• |
|
are
redeeming shares and sending the proceeds to an address or bank account
not currently on file or to an account in another fund sold by the
Distributor with a different account registration
|
• |
|
are
redeeming more than $250,000 worth of shares |
• |
|
changed
your account registration or your address within 15 calendar days
|
• |
|
want
the check paid to someone other than the account owner(s)
|
• |
|
are
transferring the redemption proceeds to an account with a different
registration |
For
other types of transactions involving changes to your account registration
information, please contact the fund or your Service Agent.
|
|
|
|
|
| |
BrandywineGLOBAL— Flexible Bond
Fund |
|
| |
|
43 |
|
When
a Medallion signature guarantee is called for, the shareholder should have a
Medallion signature guarantee stamped under his or her signature. You can obtain
a signature guarantee from most banks, dealers, brokers, credit unions and
federal savings and loan institutions, national securities exchanges, registered
securities associations and clearing agencies (each an “Eligible Guarantor
Institution”), but not from a notary public.
The
fund and its agents reserve the right to reject any Medallion signature
guarantee pursuant to written signature guarantee standards or procedures, which
may be revised in the future to permit them to reject Medallion signature
guarantees from Eligible Guarantor Institutions. The fund may change the
signature guarantee requirements from time to time without prior notice to
shareholders.
|
|
|
| |
44 |
|
| |
BrandywineGLOBAL— Flexible Bond
Fund |
Restrictions on the
availability of the fund outside the United States
The
distribution of this Prospectus and the offering of shares of the fund are
restricted in certain jurisdictions. This Prospectus is not an offer or
solicitation in any jurisdiction where such offer or solicitation is unlawful,
where the person making an offer or solicitation is not authorized to make it or
a person receiving an offer or solicitation may not lawfully receive it or may
not lawfully invest in the fund. Investors should inform themselves as to the
legal requirements within their own country before investing in the fund.
This
Prospectus, and the offer of shares hereunder, are not directed at persons
outside the United States. In particular, the fund is not intended to be
marketed to prospective investors in any member state of the European Union,
Iceland, Liechtenstein or Norway (collectively, the “European Economic Area” or
“EEA”). No notification or application has been made to the competent authority
of any member state of the EEA under the Alternative Investment Fund Managers
Directive (or any applicable legislation or regulations made thereunder) to
market the fund to investors in the EEA and it is not intended that any such
notification or application shall be made.
U.S.
citizens with addresses in the United States, and non-U.S. citizens who reside
in the United States and have U.S. addresses, are permitted to establish
accounts with the fund. For these purposes, the “United States” and “U.S.”
include U.S. territories.
The
fund generally does not permit persons who do not reside in the United States or
who do not have U.S. addresses to establish accounts. Therefore, U.S. citizens
residing in foreign countries, as well as non-U.S. citizens residing in foreign
countries, generally will not be permitted to establish accounts with the fund.
For
further information, you or your Service Agent may contact the fund at
877-6LM-FUND/656-3863.
Anti-money laundering
Federal
anti-money laundering regulations require all financial institutions to obtain,
verify and record information that identifies each person who opens an account.
When you sign your account application, you may be asked to provide additional
information in order for the fund to verify your identity in accordance with
these regulations. If you are opening the account in the name of a legal entity
(e.g. partnership, limited liability company, business trust, corporation,
etc.), you may also be required to supply the identity of the beneficial owners
and a control individual with management authority, prior to the opening of your
account. Accounts may be restricted and/or closed, and the monies withheld,
pending verification of this information or as otherwise required under these
and other federal regulations.
Small account
fees/Mandatory redemptions
Small
accounts may be subject to a small account fee or to mandatory redemption, as
described below. Please contact your Service Agent or the fund for information
on the policy applicable to your account.
Small account fees
To
offset the relatively higher impact on fund expenses of servicing smaller
accounts, the fund may charge you a fee of $3.75 per account that is determined
and assessed quarterly by your Service Agent or by the Distributor for
Distributor Accounts on the next-to-last business day of the quarter (with an
annual maximum of $15.00 per account) if the value of your account is below
$1,000 (if applicable, $250 for retirement plans that are not
employer-sponsored) for any reason (including declines in net asset value). The
small account fee will be charged by redeeming shares in your account. If the
value of your account is $3.75 or less, the amount in the account may be
exhausted to pay the small account fee. If your Service Agent or the Distributor
assesses a small account fee, the small account fee will not be assessed on
systematic investment plans until the end of the first quarter after the account
has been established for 21 months. Payment of the small account fee through a
redemption of fund shares may result in tax consequences to you (see “Taxes” for
more information).
The
small account fee will not be charged on, if applicable: (i) retirement
plans (but will be charged on other plans that are not employer-sponsored such
as traditional and Roth individual retirement accounts, Coverdell education
savings accounts, individual 403(b)(7) custodial accounts, Keogh plans, SEPs,
SARSEPs, SIMPLE IRAs or similar accounts); (ii) Franklin Templeton funds
that have been closed to subsequent purchases for all classes;
(iii) accounts that do not have a valid address as evidenced by mail being
returned to the fund or its agents; (iv) Class R, Class I and Class IS
shares; and (v) for new accounts (except for new accounts opened by way of
an exchange), a small account fee will not be charged during the calendar
quarter in which you open your account.
If
your share class is no longer offered, you may not be able to bring your account
up to the minimum investment amount (although you may exchange into existing
accounts of other funds sold by the Distributor in which you hold the same share
class, to the extent otherwise permitted by those funds and subject to any
applicable sales charges).
The
small account fee is calculated on a fund-by-fund basis. If you have accounts in
multiple funds, they will not be aggregated for the purpose of calculating the
small account fee.
Some
shareholders who hold accounts in Classes A and C of the same fund may have
those accounts aggregated for the purposes of these calculations. Please contact
the fund or your Service Agent for more information.
Small account balance
liquidations
The
fund reserves the right to ask you to bring your account up to a minimum
investment amount determined by your Service Agent if your account has been open
for more than one year and the aggregate value of the fund shares in your
account is less than $500. You will be notified in writing
|
|
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|
|
| |
BrandywineGLOBAL— Flexible Bond
Fund |
|
| |
|
45 |
|
and
will have 30 days to make an additional investment to bring your account value
up to the required level. If you choose not to do so within this 30-day period,
the fund may close your account and send you the redemption proceeds. You will
not be charged a contingent deferred sales charge, if applicable, if your
account is closed for this reason. If your share class is no longer offered, you
may not be able to bring your account up to the minimum investment amount.
If
your account is closed, you will not be eligible to have your account reinstated
without imposition of any sales charges that may apply to your new purchase.
Please contact your Service Agent for more information. Any redemption of fund
shares may result in tax consequences to you (see “Taxes” for more information).
This
policy does not apply to: (i) certain broker-controlled accounts
established through the National Securities Clearing Corporation’s Networking
system; (ii) Class A accounts established pursuant to a conversion
from Class C or C1, and any remaining Class C or C1 accounts involved in the
conversion with a low balance due to the conversion; (iii) tax-advantaged
retirement plan accounts; (iv) accounts with an active systematic
investment plan; (v) accounts held through a 529 college saving program;
(vi) accounts that do not have a valid address as evidenced by mail being
returned to the fund or its agents, (vii) Coverdell Education Saving Plan
accounts; and (viii) accounts identified to us by the applicable Service
Agent as being fee-based accounts.
General
The
fund may, with prior notice, change the minimum size of accounts subject to
mandatory redemption, which may vary by class, implement fees for other small
accounts or change the amount of the fee for small direct accounts.
Subject
to applicable law, the fund may, with prior notice, adopt other policies from
time to time requiring mandatory redemption of shares in certain circumstances.
For more information,
please contact your Service Agent or the fund or consult the SAI.
Frequent trading of fund
shares
The
Board has adopted the following policies and procedures with respect to frequent
trading in fund shares (“Frequent Trading Policy”).
The
fund does not intend to accommodate short-term or frequent purchases and
redemptions of fund shares that may be detrimental to the fund. For example,
this type of trading activity could interfere with the efficient management of
the fund’s portfolio or materially increase the fund’s transaction costs,
administrative costs or taxes.
In
addition, since the fund may invest in foreign securities, it may be vulnerable
to a form of short-term trading that is sometimes referred to as “time-zone
arbitrage.” Time-zone arbitrage occurs when an investor seeks to take advantage
of delays between changes in the value of a mutual fund’s portfolio holdings and
the reflection of those changes in the fund’s net asset value per share. These
delays are more likely to occur in the case of foreign investments, due to
differences between the times during which the fund’s international portfolio
securities trade on foreign markets and the time as of which the fund’s net
asset value is calculated (generally as of the close of the NYSE). Time-zone
arbitrage traders seek to purchase or redeem shares of a fund based on events
occurring after foreign market closing prices are established, but before
calculation of the fund’s net asset value. This can result in the value of the
fund’s shares being diluted. One of the objectives of the fund’s fair value
pricing procedures is to minimize the possibility of this type of arbitrage;
however, there can be no assurance that the fund’s valuation procedures will be
successful in eliminating it.
Since
the fund may invest in securities that are, or may be, restricted, unlisted,
traded infrequently, thinly traded, or relatively illiquid (“relatively illiquid
securities”), it may be particularly vulnerable to arbitrage short-term trading.
Such arbitrage traders may seek to take advantage of a possible differential
between the last available market prices for one or more of those relatively
illiquid securities that are used to calculate the fund’s net asset value and
the latest indications of market values for those securities. One of the
objectives of the fund’s fair value pricing procedures is to minimize the
possibilities of this type of arbitrage; however, there can be no assurance that
the fund’s valuation procedures will be successful in eliminating it.
Through
its transfer agent, the fund performs ongoing monitoring of shareholder trading
in shares of the fund and other Franklin Templeton affiliated funds in order to
try and identify shareholder trading patterns that suggest an ongoing short-term
trading strategy. If shareholder trading patterns identified by the transfer
agent through monitoring or from other information regarding the shareholder’s
trading activity in non-Franklin Templeton affiliated funds leads the transfer
agent to reasonably conclude that such trading may be detrimental to the fund as
described in this Frequent Trading Policy, the transfer agent, on behalf of the
fund, may temporarily or permanently bar future purchases into the fund or,
alternatively, may limit the amount, number or frequency of any future purchases
and/or the method by which you may request future purchases and redemptions
(including purchases and/or redemptions by an exchange or transfer between the
fund and any other mutual fund).
In
considering an investor’s trading patterns, the fund may consider, among other
factors, the investor’s trading history both directly and, if known, through
financial intermediaries, in the fund, in other Franklin Templeton affiliated
funds, in non-Franklin Templeton affiliated mutual funds, or in accounts under
common control or ownership. The transfer agent may also reject any purchase
request, whether or not it represents part of any ongoing trading pattern, if
the manager or the fund’s transfer agent reasonably concludes that the amount of
the requested transaction may disrupt or otherwise interfere with the efficient
management of the fund’s portfolio. In determining what actions should be taken,
the fund’s transfer agent may consider a variety of factors, including the
potential impact of such remedial actions on the fund and its shareholders. If
the fund is a “fund of
|
|
|
| |
46 |
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BrandywineGLOBAL— Flexible Bond
Fund |
funds,”
the fund’s transfer agent may consider the impact of the trading activity and of
any proposed remedial action on both the fund and the affiliated underlying
funds in which the fund invests.
Frequent trading
through financial intermediaries. You
are an investor subject to this Frequent Trading Policy whether you are a direct
shareholder of the fund or you are investing indirectly in the fund through a
financial intermediary, such as a broker-dealer, bank, trust company, insurance
company product such as an annuity contract, investment advisor, or an
administrator or trustee of an IRS-recognized tax-advantaged savings plan such
as a 401(k) retirement plan and a 529 college savings plan.
Some
financial intermediaries maintain master accounts with the fund on behalf of
their customers (“omnibus accounts”). The fund has entered into “information
sharing agreements” with these financial intermediaries, which permit the fund
to obtain, upon request, information about the trading activity of the
intermediary’s customers that invest in the fund. If the fund’s transfer agent
identifies omnibus account level trading patterns that have the potential to be
detrimental to the fund, the transfer agent may, in its sole discretion, request
from the financial intermediary information concerning the trading activity of
its customers. Based upon its review of the information, if the transfer agent
determines that the trading activity of any customer may be detrimental to the
fund, it may, in its sole discretion, request the financial intermediary to
restrict or limit further trading in the fund by that customer. There can be no
assurance that the transfer agent’s monitoring of omnibus account level trading
patterns will enable it to identify all short-term trading by a financial
intermediary’s customers.
Record ownership
If
you hold shares through a Service Agent, your Service Agent may establish and
maintain your account and be the shareholder of record. In the event that the
fund holds a shareholder meeting, your Service Agent, as record holder, will be
entitled to vote your shares and may seek voting instructions from you. If you
do not give your Service Agent voting instructions, your Service Agent, under
certain circumstances, may nonetheless be entitled to vote your shares.
Confirmations and account
statements
If
you bought shares directly from the fund, you will receive a confirmation from
the fund after each transaction (except a reinvestment of dividends or capital
gain distributions, an investment made through the Systematic Investment Plan,
exchanges made through a systematic exchange plan and withdrawals made through
the Systematic Withdrawal Plan). Shareholders will receive periodic account
statements.
To
assist you in the management of your account you may direct the transfer agent
to send copies of your confirmations and/or periodic statements to another party
whom you designate, at no charge.
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BrandywineGLOBAL— Flexible Bond
Fund |
|
| |
|
47 |
|
Dividends, other
distributions and taxes
Dividends and other
distributions
The
fund generally pays dividends quarterly from its net investment income, if any,
and from short-term capital gain (if any). Shares will generally begin to earn
dividends on the settlement date of purchase. The fund generally distributes
long-term capital gain, if any, once in December and at such other times as are
necessary. The fund may pay additional distributions and dividends in order to
avoid a federal tax.
You
can elect to receive dividends and/or other distributions in cash.
Unless
you elect to receive dividends and/or other distributions in cash, your
dividends and capital gain distributions will be automatically reinvested in
shares of the same class you hold, at the net asset value determined on the
reinvestment date. You do not pay a sales charge on reinvested distributions or
dividends.
If
you hold shares directly with the fund and you elect to receive dividends and/or
distributions in cash, you have the option to receive such dividends and/or
distributions via a direct deposit to your bank account or by check.
If
you hold Class A or Class C shares directly with the fund, you may instruct
the fund to have your dividends and/or distributions invested in the
corresponding class of shares of another fund sold by the Distributor (excluding
Western Asset Government Reserves), subject to the following conditions:
• |
|
You
meet the minimum initial investment requirement of the other fund; and
|
• |
|
The
other fund is available for sale in your state. |
To
change those instructions, you must notify your Service Agent or the fund at
least three days before the next distribution is to be paid.
Please
contact your Service Agent or the fund to discuss what options are available to
you for receiving your dividends and other distributions.
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.
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 professional about federal, state, local and/or
foreign tax considerations that may be relevant to your particular situation.
In
general, redeeming shares, exchanging shares and receiving dividends and
distributions (whether received in cash or reinvested in additional shares or
shares of another fund) are all taxable events. An exchange between classes of
shares of the same fund normally is not taxable for federal income tax purposes,
whether or not the shares are held in a taxable account.
The
following table summarizes the tax status of certain transactions related to the
fund.
|
| |
Transaction |
|
Federal income tax status |
Redemption
or exchange of shares |
|
Usually
capital gain or loss; long-term only if shares are owned more than one
year |
Dividends
of investment income and distributions of net short-term capital gain |
|
Ordinary
income, or in certain cases qualified dividend income |
Distributions
of net capital gain (excess of net long-term capital gain over net
short-term
capital loss) |
|
Long-term
capital gain if reported as capital gain dividends by the
fund |
Distributions
attributable to short-term capital gains are taxable to you as ordinary income.
Distributions attributable to qualified dividend income received by the fund, if
any, 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 realizes capital gains in excess of realized capital losses in any
fiscal year, it generally expects to make capital gain distributions to
shareholders. 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
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48 |
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BrandywineGLOBAL— Flexible Bond
Fund |
to
avoid buying shares when the fund is about to declare a dividend or capital gain
distribution. You should consult your tax professional 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 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
in December for tax purposes.
If
the fund meets certain requirements with respect to its holdings, it may elect
to “pass through” to shareholders foreign taxes that it pays, in which case each
shareholder will include the amount of such taxes in computing gross income, but
will be eligible to claim a credit or deduction for such taxes, subject to
generally applicable limitations on such deductions and credits. If the fund
does not so elect, the foreign taxes paid or withheld will nonetheless reduce
the fund’s taxable income. In addition, 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.
After
the end of each year, your Service Agent or the fund will provide you with
information about the distributions and dividends you received and any
redemptions of shares during the previous year. Because each shareholder’s
circumstances are different and special tax rules may apply, you should consult
your tax professional about your investment in the fund.
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BrandywineGLOBAL— Flexible Bond
Fund |
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| |
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49 |
|
Share price
You
may buy, exchange or redeem shares at their net asset value next determined
after receipt of your request in good order, adjusted for any applicable sales
charge. The fund’s net asset value per share is the value of its assets minus
its liabilities divided by the number of shares outstanding. Net asset value is
calculated separately for each class of shares.
The
fund calculates its net asset value every day 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.
In
order to buy, redeem or exchange shares at a certain day’s price, you must place
your order with your Service Agent or the fund transfer agent before the
scheduled close of regular trading on the NYSE on that day to receive that day’s
price. If the NYSE closes early on that day, you must place your order prior to
the scheduled closing time. It is the responsibility of the Service Agent to
transmit all orders to buy, exchange or redeem shares to the fund transfer agent
on a timely basis.
Valuation
of the fund’s securities and other assets is performed in accordance with the
valuation policy approved by the Board. The fund’s manager serves as the fund’s
valuation designee for purposes of compliance with Rule 2a-5 under the
Investment Company Act of 1940, as amended. Under the valuation policy, assets
are valued as follows:
• |
|
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.
|
• |
|
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 net asset value 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. Investments
in mutual funds 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. |
• |
|
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 in which they primarily trade. The
prices of foreign equity securities typically are adjusted using a fair
value model developed by an independent third party pricing service to
estimate the value of those securities at the time of closing of the NYSE.
When the fund holds securities or other assets that are denominated in a
foreign currency, the fund will normally use the currency exchange rates
as of 4:00 p.m. (Eastern time). 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 redeem the fund’s shares.
|
• |
|
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 will price securities in accordance with the valuation policy.
Among other things, the use of a formula or other method that takes into
consideration market indices, yield curves and other specific adjustments
may be used 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. Fair
value procedures may also be used 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.
|
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. Fair value methodologies may value 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 the
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. Investors who purchase or redeem fund shares on days when the fund is
holding fair-valued securities may receive a greater or lesser number of shares,
or higher or lower redemption proceeds, than they would have received if the
fund had not fair-valued the security or had used a different methodology.
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50 |
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BrandywineGLOBAL— Flexible Bond
Fund |
Financial highlights
The
financial highlights tables are intended to help you understand the performance
of each class for the past five years, unless otherwise noted. Class R shares of
the fund had not begun operations as of the date of this Prospectus and
therefore have no financial highlights to report. The returns for Class R shares
will differ from those of other classes to the extent that their expenses
differ. Certain information reflects financial results for a single fund share.
Total return represents the rate that an investor would have earned (or lost) on
an investment in the fund, assuming reinvestment of all dividends and other
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 877-6LM-FUND/656-3863 or via the following hyperlink: (
https://www.sec.gov/Archives/edgar/data/1474103/000119312524054984/d497618dncsr.htm).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
For a share of each class of beneficial interest
outstanding throughout each year ended
December 31: |
|
Class A Shares1 |
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
| |
Net asset value,
beginning of year |
|
|
$9.41 |
|
|
|
$10.89 |
|
|
|
$11.09 |
|
|
|
$10.01 |
|
|
|
$9.59 |
|
|
|
|
|
| |
Income (loss) from operations: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income |
|
|
0.53 |
|
|
|
0.28 |
|
|
|
0.27 |
|
|
|
0.29 |
|
|
|
0.25 |
|
Net
realized and unrealized gain (loss) |
|
|
0.31 |
|
|
|
(1.48) |
|
|
|
(0.18) |
|
|
|
1.18 |
|
|
|
0.75 |
|
Total income
(loss) from operations |
|
|
0.84 |
|
|
|
(1.20) |
|
|
|
0.09 |
|
|
|
1.47 |
|
|
|
1.00 |
|
|
|
|
|
| |
Less distributions from: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income |
|
|
(0.50) |
|
|
|
(0.24) |
|
|
|
(0.27) |
|
|
|
(0.30) |
|
|
|
(0.46) |
|
Net
realized gains |
|
|
— |
|
|
|
— |
|
|
|
(0.02) |
|
|
|
(0.09) |
|
|
|
(0.12) |
|
Return
of capital |
|
|
— |
|
|
|
(0.04) |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total
distributions |
|
|
(0.50) |
|
|
|
(0.28) |
|
|
|
(0.29) |
|
|
|
(0.39) |
|
|
|
(0.58) |
|
|
|
|
|
| |
Net asset value,
end of year |
|
|
$9.75 |
|
|
|
$9.41 |
|
|
|
$10.89 |
|
|
|
$11.09 |
|
|
|
$10.01 |
|
Total return2 |
|
|
9.33 |
% |
|
|
(11.15) |
% |
|
|
0.79 |
% |
|
|
14.84 |
% |
|
|
10.41 |
% |
|
|
|
|
| |
Net assets, end of
year (000s) |
|
|
$45,310 |
|
|
|
$23,467 |
|
|
|
$20,721 |
|
|
|
$18,028 |
|
|
|
$165 |
|
|
|
|
|
| |
Ratios to average net assets: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Gross
expenses |
|
|
0.98 |
% |
|
|
1.10 |
% |
|
|
1.07 |
% |
|
|
1.97 |
% |
|
|
4.05 |
% |
Net
expenses3,4 |
|
|
0.97 |
|
|
|
1.04 |
|
|
|
0.95 |
|
|
|
0.96 |
|
|
|
0.98 |
|
Net
investment income |
|
|
5.55 |
|
|
|
2.81 |
|
|
|
2.41 |
|
|
|
2.73 |
|
|
|
2.45 |
|
|
|
|
|
| |
Portfolio turnover
rate |
|
|
138 |
% |
|
|
122 |
% |
|
|
55 |
% |
|
|
104 |
% |
|
|
356 |
% |
1 |
Per
share amounts have been calculated using the average shares method.
|
2 |
Performance
figures, exclusive of sales charges, may reflect compensating balance
arrangements, fee waivers and/or expense reimbursements. In the absence of
compensating balance arrangements, fee waivers and/or expense
reimbursements, the total return would have been lower. Past performance
is no guarantee of future results. |
3 |
Reflects
fee waivers and/or expense reimbursements. |
4 |
As
a result of an expense limitation arrangement, the ratio of total annual
fund operating expenses, other than interest, brokerage commissions,
dividend and interest expense on securities sold short, taxes,
extraordinary expenses and acquired fund fees and expenses, to average net
assets of Class A shares did not exceed 1.10%. This expense
limitation arrangement cannot be terminated prior to December 31,
2025 without the Board of Trustees’ consent. In addition, the manager has
agreed to waive the Fund’s management fee to an extent sufficient to
offset the net management fee payable in connection with any investment in
an affiliated money market fund. |
|
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| |
BrandywineGLOBAL— Flexible Bond
Fund |
|
| |
|
51 |
|
|
|
|
|
|
|
|
|
|
|
|
| |
For a share of each class of beneficial interest
outstanding throughout each year ended
December 31: |
|
Class C Shares1 |
|
2023 |
|
2022 |
|
|
20212 |
|
|
|
| |
Net asset value,
beginning of year |
|
$9.35 |
|
|
$10.88 |
|
|
|
$11.03 |
|
|
| |
Income (loss) from operations: |
|
|
| |
|
| |
Net
investment income |
|
0.46 |
|
|
0.28 |
|
|
|
0.03 |
|
Net
realized and unrealized gain (loss) |
|
0.32 |
|
|
(1.56) |
|
|
|
(0.10) |
|
Total income
(loss) from operations |
|
0.78 |
|
|
(1.28) |
|
|
|
(0.07) |
|
|
| |
Less distributions from: |
|
|
| |
|
| |
Net
investment income |
|
(0.45) |
|
|
(0.18) |
|
|
|
(0.06) |
|
Net
realized gains |
|
— |
|
|
— |
|
|
|
(0.02) |
|
Return
of capital |
|
— |
|
|
(0.07) |
|
|
|
— |
|
Total
distributions |
|
(0.45) |
|
|
(0.25) |
|
|
|
(0.08) |
|
|
|
| |
Net asset value,
end of year |
|
$9.68 |
|
|
$9.35 |
|
|
|
$10.88 |
|
Total
return3 |
|
8.54% |
|
|
(11.79) |
% |
|
|
(0.68) |
% |
|
|
| |
Net assets, end of
year (000s) |
|
$4,483 |
|
|
$1,280 |
|
|
|
$43 |
|
|
| |
Ratios to average net assets: |
|
|
| |
|
| |
Gross
expenses |
|
1.70% |
|
|
1.86 |
%4 |
|
|
2.05 |
%5 |
Net
expenses6,7 |
|
1.70 |
|
|
1.80 |
4 |
|
|
1.85 |
5 |
Net
investment income |
|
4.92 |
|
|
2.91 |
|
|
|
1.07 |
5 |
|
|
| |
Portfolio turnover
rate |
|
138% |
|
|
122 |
% |
|
|
55 |
%8 |
1 |
Per
share amounts have been calculated using the average shares method.
|
2 |
For
the period September 30, 2021 (inception date) to December 31,
2021. |
3 |
Performance
figures, exclusive of CDSC, may reflect compensating balance arrangements,
fee waivers and/or expense reimbursements. In the absence of compensating
balance arrangements, fee waivers and/or expense reimbursements, the total
return would have been lower. Past performance is no guarantee of future
results. Total returns for periods of less than one year are not
annualized. |
4 |
Reflects
recapture of fees waived and/or expenses reimbursed from prior fiscal
years. |
6 |
Reflects
fee waivers and/or expense reimbursements. |
7 |
As
a result of an expense limitation arrangement, the ratio of total annual
fund operating expenses, other than interest, brokerage commissions,
dividend and interest expense on securities sold short, taxes,
extraordinary expenses and acquired fund fees and expenses, to average net
assets of Class C shares did not exceed 1.85%. This expense limitation
arrangement cannot be terminated prior to December 31, 2025 without
the Board of Trustees’ consent. In addition, the manager has agreed to
waive the Fund’s management fee to an extent sufficient to offset the net
management fee payable in connection with any investment in an affiliated
money market fund. |
8 |
For
the year ended December 31, 2021. |
|
|
|
| |
52 |
|
| |
BrandywineGLOBAL— Flexible Bond
Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
For a share of each class of beneficial interest
outstanding throughout each year ended
December 31: |
|
Class I Shares1 |
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
| |
Net asset value,
beginning of year |
|
|
$9.41 |
|
|
|
$10.90 |
|
|
|
$11.10 |
|
|
|
$10.01 |
|
|
|
$9.59 |
|
|
|
|
|
| |
Income (loss) from operations: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income |
|
|
0.55 |
|
|
|
0.31 |
|
|
|
0.28 |
|
|
|
0.36 |
|
|
|
0.28 |
|
Net
realized and unrealized gain (loss) |
|
|
0.32 |
|
|
|
(1.49) |
|
|
|
(0.16) |
|
|
|
1.13 |
|
|
|
0.75 |
|
Total income
(loss) from operations |
|
|
0.87 |
|
|
|
(1.18) |
|
|
|
0.12 |
|
|
|
1.49 |
|
|
|
1.03 |
|
|
|
|
|
| |
Less distributions from: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income |
|
|
(0.52) |
|
|
|
(0.26) |
|
|
|
(0.30) |
|
|
|
(0.31) |
|
|
|
(0.49) |
|
Net
realized gains |
|
|
— |
|
|
|
— |
|
|
|
(0.02) |
|
|
|
(0.09) |
|
|
|
(0.12) |
|
Return
of capital |
|
|
— |
|
|
|
(0.05) |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total
distributions |
|
|
(0.52) |
|
|
|
(0.31) |
|
|
|
(0.32) |
|
|
|
(0.40) |
|
|
|
(0.61) |
|
|
|
|
|
| |
Net asset value,
end of year |
|
|
$9.76 |
|
|
|
$9.41 |
|
|
|
$10.90 |
|
|
|
$11.10 |
|
|
|
$10.01 |
|
Total return2 |
|
|
9.54 |
% |
|
|
(10.86) |
% |
|
|
1.05 |
% |
|
|
15.00 |
% |
|
|
10.84 |
% |
|
|
|
|
| |
Net assets, end of
year (000s) |
|
|
$282,910 |
|
|
|
$150,839 |
|
|
|
$115,293 |
|
|
|
$22,371 |
|
|
|
$126 |
|
|
|
|
|
| |
Ratios to average net assets: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Gross
expenses |
|
|
0.75 |
% |
|
|
0.85 |
% |
|
|
0.82 |
% |
|
|
1.69 |
% |
|
|
3.75 |
% |
Net
expenses3,4 |
|
|
0.75 |
|
|
|
0.75 |
|
|
|
0.70 |
|
|
|
0.68 |
|
|
|
0.68 |
|
Net
investment income |
|
|
5.76 |
|
|
|
3.16 |
|
|
|
2.55 |
|
|
|
3.30 |
|
|
|
2.75 |
|
|
|
|
|
| |
Portfolio turnover
rate |
|
|
138 |
% |
|
|
122 |
% |
|
|
55 |
% |
|
|
104 |
% |
|
|
356 |
% |
1 |
Per
share amounts have been calculated using the average shares method.
|
2 |
Performance
figures may reflect compensating balance arrangements, fee waivers and/or
expense reimbursements. In the absence of compensating balance
arrangements, fee waivers and/or expense reimbursements, the total return
would have been lower. Past performance is no guarantee of future results.
|
3 |
Reflects
fee waivers and/or expense reimbursements. |
4 |
As
a result of an expense limitation arrangement, the ratio of total annual
fund operating expenses, other than interest, brokerage commissions,
dividend and interest expense on securities sold short, taxes,
extraordinary expenses and acquired fund fees and expenses, to average net
assets of Class I shares did not exceed 0.75%. This expense limitation
arrangement cannot be terminated prior to December 31, 2025 without
the Board of Trustees’ consent. In addition, the manager has agreed to
waive the Fund’s management fee to an extent sufficient to offset the net
management fee payable in connection with any investment in an affiliated
money market fund. |
|
|
|
|
|
| |
BrandywineGLOBAL— Flexible Bond
Fund |
|
| |
|
53 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
For a share of each class of beneficial interest
outstanding throughout each year ended
December 31: |
|
Class IS Shares1 |
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
| |
Net asset value,
beginning of year |
|
|
$9.42 |
|
|
|
$10.91 |
|
|
|
$11.11 |
|
|
|
$10.02 |
|
|
|
$9.59 |
|
|
|
|
|
| |
Income (loss) from operations: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income |
|
|
0.56 |
|
|
|
0.30 |
|
|
|
0.29 |
|
|
|
0.32 |
|
|
|
0.28 |
|
Net
realized and unrealized gain (loss) |
|
|
0.33 |
|
|
|
(1.47) |
|
|
|
(0.17) |
|
|
|
1.18 |
|
|
|
0.76 |
|
Total income
(loss) from operations |
|
|
0.89 |
|
|
|
(1.17) |
|
|
|
0.12 |
|
|
|
1.50 |
|
|
|
1.04 |
|
|
|
|
|
| |
Less distributions from: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income |
|
|
(0.53) |
|
|
|
(0.28) |
|
|
|
(0.30) |
|
|
|
(0.32) |
|
|
|
(0.49) |
|
Net
realized gains |
|
|
— |
|
|
|
— |
|
|
|
(0.02) |
|
|
|
(0.09) |
|
|
|
(0.12) |
|
Return
of capital |
|
|
— |
|
|
|
(0.04) |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total
distributions |
|
|
(0.53) |
|
|
|
(0.32) |
|
|
|
(0.32) |
|
|
|
(0.41) |
|
|
|
(0.61) |
|
|
|
|
|
| |
Net asset value,
end of year |
|
|
$9.78 |
|
|
|
$9.42 |
|
|
|
$10.91 |
|
|
|
$11.11 |
|
|
|
$10.02 |
|
Total return2 |
|
|
9.74 |
% |
|
|
(10.77) |
% |
|
|
1.09 |
% |
|
|
15.12 |
% |
|
|
10.87 |
% |
|
|
|
|
| |
Net assets, end of
year (000s) |
|
|
$91,073 |
|
|
|
$48,214 |
|
|
|
$106,752 |
|
|
|
$27,676 |
|
|
|
$6,140 |
|
|
|
|
|
| |
Ratios to average net assets: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Gross
expenses |
|
|
0.65 |
% |
|
|
0.71 |
% |
|
|
0.77 |
% |
|
|
1.66 |
% |
|
|
3.73 |
%3 |
Net
expenses4,5 |
|
|
0.65 |
|
|
|
0.65 |
|
|
|
0.65 |
|
|
|
0.65 |
|
|
|
0.65 |
3 |
Net
investment income |
|
|
5.80 |
|
|
|
2.96 |
|
|
|
2.65 |
|
|
|
2.99 |
|
|
|
2.78 |
|
|
|
|
|
| |
Portfolio turnover
rate |
|
|
138 |
% |
|
|
122 |
% |
|
|
55 |
% |
|
|
104 |
% |
|
|
356 |
% |
1 |
Per
share amounts have been calculated using the average shares method.
|
2 |
Performance
figures may reflect compensating balance arrangements, fee waivers and/or
expense reimbursements. In the absence of compensating balance
arrangements, fee waivers and/or expense reimbursements, the total return
would have been lower. Past performance is no guarantee of future results.
|
3 |
Reflects
recapture of fees waived and/or expenses reimbursed from prior fiscal
years. |
4 |
Reflects
fee waivers and/or expense reimbursements. |
5 |
As
a result of an expense limitation arrangement, the ratio of total annual
fund operating expenses, other than interest, brokerage commissions,
dividend and interest expense on securities sold short, taxes,
extraordinary expenses and acquired fund fees and expenses, to average net
assets of Class IS shares did not exceed 0.65%. In addition, the ratio of
total annual fund operating expenses for Class IS shares did not exceed
the ratio of total annual fund operating expenses for Class I shares.
These expense limitation arrangements cannot be terminated prior to
December 31, 2025 without the Board of Trustees’ consent. In
addition, the manager has agreed to waive the Fund’s management fee to an
extent sufficient to offset the net management fee payable in connection
with any investment in an affiliated money market fund.
|
|
|
|
| |
54 |
|
| |
BrandywineGLOBAL— Flexible Bond
Fund |
Appendix: Waivers and Discounts Available from Certain
Service Agents
The
availability of certain sales charge waivers and discounts will depend on
whether you purchase your shares directly from the fund or through a financial
intermediary. Financial intermediaries may have different policies and
procedures regarding the availability of front-end sales load waivers or
contingent deferred (back-end) sales load waivers, which are discussed below. In
all instances, it is the purchaser’s responsibility to notify the fund or the
purchaser’s financial intermediary at the time of purchase of any relationship
or other facts qualifying the purchaser for sales charge waivers or discounts.
For waivers and discounts not available through a particular financial
intermediary, shareholders will have to purchase fund shares directly from the
fund or through another financial intermediary to receive these waivers or
discounts.
The
information below has been provided by the named financial intermediaries.
Please contact the applicable financial intermediary with any questions
regarding how it applies the policies described below and for assistance in
determining whether you may qualify for a particular sales charge waiver or
discount.
MERRILL LYNCH
Purchases
or sales of front-end (i.e., Class A) or level-load (i.e., Class C) mutual fund
shares through a Merrill platform or account will be eligible only for the
following sales load waivers (front-end, contingent deferred, or back-end
waivers) and discounts, which differ from those disclosed elsewhere in this
fund’s Prospectus. Purchasers will have to buy mutual fund shares directly from
the mutual fund company or through another intermediary to be eligible for
waivers or discounts not listed below.
It
is the client’s responsibility to notify Merrill at the time of purchase or sale
of any relationship or other facts that qualify the transaction for a waiver or
discount. A Merrill representative may ask for reasonable documentation of such
facts and Merrill may condition the granting of a waiver or discount on the
timely receipt of such documentation.
Additional
information on waivers and discounts is available in the Merrill Sales Load
Waiver and Discounts Supplement (the “Merrill SLWD Supplement”) and in the
Mutual Fund Investing at Merrill pamphlet at ml.com/funds. Clients are
encouraged to review these documents and speak with their financial advisor to
determine whether a transaction is eligible for a waiver or discount.
Front-end Sales Load
Waivers Available at Merrill
• |
|
Shares
of mutual funds available for purchase by employer-sponsored retirement,
deferred compensation, and employee benefit plans (including health
savings accounts) and trusts used to fund those plans provided the shares
are not held in a commission-based brokerage account and shares are held
for the benefit of the plan. For purposes of this provision,
employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs,
SAR-SEPs or Keogh plans |
• |
|
Shares
purchased through a Merrill investment advisory program
|
• |
|
Brokerage
class shares exchanged from advisory class shares due to the holdings
moving from a Merrill investment advisory program to a Merrill brokerage
account |
• |
|
Shares
purchased through the Merrill Edge Self-Directed platform
|
• |
|
Shares
purchased through the systematic reinvestment of capital gains
distributions and dividend reinvestment when purchasing shares of the same
mutual fund in the same account |
• |
|
Shares
exchanged from level-load shares to front-end load shares of the same
mutual fund in accordance with the description in the Merrill SLWD
Supplement |
• |
|
Shares
purchased by eligible employees of Merrill or its affiliates and their
family members who purchase shares in accounts within the employee’s
Merrill Household (as defined in the Merrill SLWD Supplement)
|
• |
|
Shares
purchased by eligible persons associated with the fund as defined in this
Prospectus (e.g., the fund’s officers or trustees)
|
• |
|
Shares
purchased from the proceeds of a mutual fund redemption in front-end load
shares provided: (1) the repurchase is in a mutual fund within the
same fund family; (2) the repurchase occurs within 90 calendar days
from the redemption trade date; and (3) the redemption and purchase
occur in the same account (known as Rights of Reinstatement). Automated
transactions (i.e., systematic purchases and withdrawals) and purchases
made after shares are automatically sold to pay Merrill’s account
maintenance fees are not eligible for Rights of Reinstatement
|
Contingent Deferred Sales
Charge (“CDSC”) Waivers on Front-end, Back-end, and Level Load Shares Available
at Merrill
• |
|
Shares
sold due to the client’s death or disability (as defined by Internal
Revenue Code Section 22e(3)) |
• |
|
Shares
sold pursuant to a systematic withdrawal program subject to Merrill’s
maximum systematic withdrawal limits as described in the Merrill SLWD
Supplement |
• |
|
Shares
sold due to return of excess contributions from an IRA account
|
• |
|
Shares
sold as part of a required minimum distribution for IRA and retirement
accounts due to the investor reaching the qualified age based on
applicable IRS regulation |
|
|
|
|
|
| |
BrandywineGLOBAL— Flexible Bond
Fund |
|
| |
|
A‑1 |
|
• |
|
Front-end
or level-load shares held in commission-based, non-taxable retirement
brokerage accounts (e.g., traditional, Roth, rollover, SEP IRAs, Simple
IRAs, SAR-SEPs or Keogh plans) that are transferred to fee-based accounts
or platforms and exchanged for a lower cost share class of the same mutual
fund |
Front-end Load Discounts
Available at Merrill: Breakpoints, Rights of Accumulation & Letters of
Intent
• |
|
Breakpoint
discounts, as described in this Prospectus, where the sales load is at or
below the maximum sales load that Merrill permits to be assessed to a
front-end load purchase, as described in the Merrill SLWD Supplement
|
• |
|
Rights
of Accumulation (“ROA”), as described in the Merrill SLWD Supplement,
which entitle clients to breakpoint discounts based on the aggregated
holdings of mutual fund family assets held in accounts in their Merrill
Household |
• |
|
Letters
of Intent (“LOI”), which allow for breakpoint discounts on eligible new
purchases based on anticipated future eligible purchases within a fund
family at Merrill, in accounts within your Merrill Household, as further
described in the Merrill SLWD Supplement |
AMERIPRISE FINANCIAL
Class A Shares
Front-End Sales Charge Waivers Available at Ameriprise Financial:
The
following information applies to Class A share purchases if you have an
account with or otherwise purchase fund shares through Ameriprise Financial:
Effective
January 15, 2021, shareholders purchasing fund shares through an Ameriprise
Financial retail brokerage account are eligible for the following front-end
sales charge waivers, which may differ from those disclosed elsewhere in this
fund’s Prospectus or SAI:
• |
|
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b)
plans, profit sharing and money purchase pension plans and defined benefit
plans). For purposes of this provision, employer-sponsored retirement
plans do not include SEP IRAs, Simple IRAs or SAR-SEPs.
|
• |
|
Shares
purchased through reinvestment of capital gains distributions and dividend
reinvestment when purchasing shares of the same fund (but not any other
fund within the same fund family). |
• |
|
Shares
exchanged from Class C shares of the same fund in the month of or
following the 7-year anniversary of the purchase date. To the extent that
this Prospectus elsewhere provides for a waiver with respect to exchanges
of Class C shares or conversions of Class C shares following a shorter
holding period, that waiver will apply. |
• |
|
Employees
and registered representatives of Ameriprise Financial or its affiliates
and their immediate family members. |
• |
|
Shares
purchased by or through qualified accounts (including IRAs, Coverdell
Education Savings Accounts, 401(k)s, 403(b) TSCAs subject to ERISA and
defined benefit plans) that are held by a covered family member, defined
as an Ameriprise Financial advisor and/or the advisor’s spouse, advisor’s
lineal ascendant (mother, father, grandmother, grandfather, great
grandmother, great grandfather), advisor’s lineal descendant (son,
step-son, daughter, step-daughter, grandson, granddaughter, great
grandson, great granddaughter) or any spouse of a covered family member
who is a lineal descendant. |
• |
|
Shares
purchased from the proceeds of redemptions within the same fund family,
provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same
account, and (3) redeemed shares were subject to a front-end or
deferred sales load (i.e. Rights of Reinstatement).
|
MORGAN STANLEY WEALTH
MANAGEMENT
Front-end Sales Charge
Waivers on Class A Shares available at Morgan Stanley Wealth Management:
Shareholders
purchasing Fund shares through a Morgan Stanley Wealth Management brokerage
account will be eligible only for the following front-end sales charge waivers
with respect to Class A shares, which may differ from and may be more
limited than those disclosed elsewhere in this Fund’s Prospectus or SAI.
• |
|
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b)
plans, profit sharing and money purchase pension plans and defined benefit
plans). For purposes of this provision, employer-sponsored retirement
plans do not include SEP IRAs, Simple IRAs, SAR-SEPs or Keogh plans
|
• |
|
Morgan
Stanley employee and employee-related accounts according to Morgan
Stanley’s account linking rules |
• |
|
Shares
purchased through reinvestment of dividends and capital gains
distributions when purchasing shares of the same fund
|
• |
|
Shares
purchased through a Morgan Stanley self-directed brokerage account
|
• |
|
Class
C (i.e., level-load) and Class C2 shares, as applicable, that are no
longer subject to a contingent deferred sales charge and are converted to
Class A shares of the same fund pursuant to Morgan Stanley Wealth
Management’s share class conversion program |
• |
|
Shares
purchased from the proceeds of redemptions within the same fund family,
provided (i) the repurchase occurs within 90 days’ following the
redemption, (ii) the redemption and purchase occur in the same
account, and (iii) redeemed shares were subject to a front-end or
deferred sales charge. |
• |
|
Morgan
Stanley, on your behalf, can convert Class P shares, as applicable, to
Class A shares, generally on a tax-free basis, without clients being
subject to a front-end sales charge. |
|
|
|
| |
A‑2 |
|
| |
BrandywineGLOBAL— Flexible Bond
Fund |
In
addition, effective November 12, 2021, for the purpose of calculating
rights of accumulation and letters of intent with respect to purchases made in a
Morgan Stanley Wealth Management brokerage account, the following definition for
“Eligible Purchases” applies. This definition may be more limited than the one
contained in this Fund’s Prospectus or SAI. It is the shareholder’s
responsibility to inform Morgan Stanley at the time of purchase of any
relationship, holdings, or other facts qualifying the purchaser for a discount.
Morgan Stanley can ask for documentation of such circumstance. Shareholders
should contact Morgan Stanley if they have questions.
Eligible Purchases
include:
• |
|
Any
class of shares of any Franklin Templeton or Legg Mason fund that is
registered in the U.S.; and |
• |
|
Units
of a Section 529 Plan where Franklin Templeton or Legg Mason is the
program manager. |
For
purposes of this section, Franklin Templeton and Legg Mason funds also include
BrandywineGLOBAL funds, ClearBridge Investments funds, Martin Currie funds,
Western Asset funds and certain other funds managed by affiliated investment
advisers. They do not include the funds in the Franklin Templeton Variable
Insurance Products Trust, Legg Mason Partners Variable Equity Trust or Legg
Mason Partners Variable Income Trust.
RAYMOND JAMES &
ASSOCIATES, INC., RAYMOND JAMES FINANCIAL SERVICES, INC. AND EACH ENTITY’S
AFFILIATES (“RAYMOND JAMES”)
Effective
March 1, 2019, shareholders purchasing fund shares through a Raymond James
platform or account, or through an introducing broker-dealer or independent
registered investment adviser for which Raymond James provides trade execution,
clearance, and/or custody services, are eligible only for the following load
waivers (front-end sales charge waivers and contingent deferred, or back-end,
sales charge waivers) and discounts, which may differ from those disclosed
elsewhere in this fund’s Prospectus or SAI.
Front-End Sales Charge
Waivers on Class A Shares Available at Raymond James
• |
|
Shares
purchased in an investment advisory program. |
• |
|
Shares
purchased within the same fund family through a systematic reinvestment of
capital gains distributions and dividend reinvestment when purchasing
shares of the same fund (but not any other fund within the fund family).
|
• |
|
Employees
and registered representatives of Raymond James or its affiliates and
their family members as designated by Raymond James.
|
• |
|
Shares
purchased from the proceeds of redemptions within the same fund family,
provided (1) the repurchase occurs with 90 days following the
redemption, (2) the redemption and purchase occur in the same
account, and (3) redeemed shares were subject to a front-end or
deferred sales load (known as Rights of Reinstatement).
|
• |
|
A
shareholder in the fund’s Class C shares will have their shares converted
at net asset value to Class A shares (or the appropriate share class)
of the fund if the shares are no longer subject to a contingent deferred
sales charge and the conversion is in line with the policies and
procedures of Raymond James. |
Contingent Deferred Sales
Charge Waivers on Class A and Class C Shares Available at Raymond James
• |
|
Death
or disability of the shareholder. |
• |
|
Shares
sold as part of a systematic withdrawal plan as described in the fund’s
Prospectus. |
• |
|
Return
of excess contributions from an IRA Account. |
• |
|
Shares
sold as part of a required minimum distribution for IRA and retirement
accounts due to the shareholder reaching the qualified age based on
applicable IRS regulations as described in the fund’s Prospectus.
|
• |
|
Shares
sold to pay Raymond James fees but only if the transaction is initiated by
Raymond James. |
• |
|
Shares
acquired through a right of reinstatement. |
Front-End Load Discounts
Available at Raymond James: Breakpoints, Rights of Accumulation, and/or Letters
of Intent
• |
|
Breakpoints
as described in the fund’s Prospectus. |
• |
|
Rights
of accumulation (“ROA”), which entitle shareholders to breakpoint
discounts, will be automatically calculated based on the aggregated
holding of the fund family assets held by accounts within the purchaser’s
household at Raymond James. Eligible fund family assets not held at
Raymond James may be included in the calculation of rights of accumulation
only if the shareholder notifies his or her financial advisor about such
assets. |
• |
|
Letters
of intent which allow for breakpoint discounts based on anticipated
purchases within a fund family over a 13-month time period. Eligible fund
family assets not held at Raymond James may be included in the calculation
of letters of intent only if the shareholder notifies his or her financial
advisor about such assets. |
EDWARD D.
JONES & CO., L.P. (“EDWARD JONES”)
Policies Regarding Transactions Through
Edward Jones:
Effective
on or after January 1st, 2024, the following
information supersedes prior information with respect to transactions and
positions held in fund shares through an Edward Jones system. Clients of Edward
Jones (also referred to as “shareholders”) purchasing fund shares on the Edward
Jones
|
|
|
|
|
| |
BrandywineGLOBAL— Flexible Bond
Fund |
|
| |
|
A‑3 |
|
commission
and fee-based platforms are eligible only for the following sales charge
discounts (also referred to as “breakpoints”) and waivers, which can differ from
discounts and waivers described elsewhere in the mutual fund Prospectus or
statement of additional information (“SAI”) or through another broker-dealer. In
all instances, it is the shareholder’s responsibility to inform Edward Jones at
the time of purchase of any relationship, holdings of Franklin Templeton and
Legg Mason Funds (including holdings of 529 Plans where Franklin Templeton or
Legg Mason serve as the primary distributor), or other facts qualifying the
purchaser for discounts or waivers. Edward Jones can ask for documentation of
such circumstance. Shareholders should contact Edward Jones if they have
questions regarding their eligibility for these discounts and waivers.
Breakpoints
• |
|
Breakpoint
pricing, otherwise known as volume pricing, at dollar thresholds as
described in the Prospectus. |
Rights of Accumulation
(“ROA”)
• |
|
The
applicable sales charge on a purchase of Class A shares is determined
by taking into account all share classes (except certain money market
funds and any assets held in group retirement plans) of the Franklin
Templeton and Legg Mason Funds held by the shareholder or in an account
grouped by Edward Jones with other accounts for the purpose of providing
certain pricing considerations (“pricing groups”). If grouping assets as a
shareholder, this includes all share classes held on the Edward Jones
platform and/or held on another platform. The inclusion of eligible fund
family assets in the ROA calculation is dependent on the shareholder
notifying Edward Jones of such assets at the time of calculation. Money
market funds are included only if such shares were sold with a sales
charge at the time of purchase or acquired in exchange for shares
purchased with a sales charge. |
• |
|
The
employer maintaining a SEP IRA plan and/or SIMPLE IRA plan may elect to
establish or change ROA for the IRA accounts associated with the plan to a
plan-level grouping as opposed to including all share classes at a
shareholder or pricing group level. |
• |
|
ROA
is determined by calculating the higher of cost minus redemptions or
market value (current shares x NAV). |
• |
|
Through
a LOI, shareholders can receive the sales charge and breakpoint discounts
for purchases shareholders intend to make over a 13-month period from the
date Edward Jones receives the LOI. The LOI is determined by calculating
the higher of cost or market value of qualifying holdings at LOI
initiation in combination with the value that the shareholder intends to
buy over a 13-month period to calculate the front-end sales charge and any
breakpoint discounts. Each purchase the shareholder makes during that
13-month period will receive the sales charge and breakpoint discount that
applies to the total amount. The inclusion of eligible fund family assets
in the LOI calculation is dependent on the shareholder notifying Edward
Jones of such assets at the time of calculation. Purchases made before the
LOI is received by Edward Jones are not adjusted under the LOI and will
not reduce the sales charge previously paid. Sales charges will be
adjusted if LOI is not met. |
• |
|
If
the employer maintaining a SEP IRA plan and/or SIMPLE IRA plan has elected
to establish or change ROA for the IRA accounts associated with the plan
to a plan-level grouping, LOIs will also be at the plan-level and may only
be established by the employer. |
Sales Charge Waivers
Sales
charges are waived for the following shareholders and in the following
situations:
• |
|
Associates
of Edward Jones and its affiliates and other accounts in the same pricing
group (as determined by Edward Jones under its policies and procedures) as
the associate. This waiver will continue for the remainder of the
associate’s life if the associate retires from Edward Jones in
good-standing and remains in good standing pursuant to Edward Jones’
policies and procedures. |
• |
|
Shares
purchased in an Edward Jones fee-based program. |
• |
|
Shares
purchased through reinvestment of capital gains distributions and dividend
reinvestment. |
• |
|
Shares
purchased from the proceeds of redeemed shares of the same fund family so
long as the following conditions are met: the proceeds are from the sale
of shares within 60 days of the purchase, the sale and purchase are made
from a share class that charges a front load and one of the following:
|
|
• |
|
The
redemption and repurchase occur in the same account.
|
|
• |
|
The
redemption proceeds are used to process an: IRA contribution, excess
contributions, conversion, recharacterizing of contributions, or
distribution, and the repurchase is done in an account within the same
Edward Jones grouping for ROA. |
• |
|
Shares
exchanged into Class A shares from another share class so long as the
exchange is into the same fund and was initiated at the discretion of
Edward Jones. Edward Jones is responsible for any remaining CDSC due to
the fund company, if applicable. Any future purchases are subject to the
applicable sales charge as disclosed in the Prospectus.
|
• |
|
Exchanges
from Class C shares to Class A shares of the same fund,
generally, in the 84th month following the anniversary of the purchase
date or earlier at the discretion of Edward Jones.
|
• |
|
Purchases
of Class 529-A shares through a rollover from either another education
savings plan or a security used for qualified distributions.
|
• |
|
Purchases
of Class 529 shares made for recontribution of refunded amounts.
|
Contingent Deferred Sales
Charge (“CDSC”) Waivers
If
the shareholder purchases shares that are subject to a CDSC and those shares are
redeemed before the CDSC is expired, the shareholder is responsible to pay the
CDSC except in the following conditions:
|
|
|
| |
A‑4 |
|
| |
BrandywineGLOBAL— Flexible Bond
Fund |
• |
|
The
death or disability of the shareholder. |
• |
|
Systematic
withdrawals with up to 10% per year of the account value.
|
• |
|
Return
of excess contributions from an Individual Retirement Account (IRA).
|
• |
|
Shares
redeemed as part of a required minimum distribution for IRA and retirement
accounts if the redemption is taken in or after the year the shareholder
reaches qualified age based on applicable IRS regulations.
|
• |
|
Shares
redeemed to pay Edward Jones fees or costs in such cases where the
transaction is initiated by Edward Jones. |
• |
|
Shares
exchanged in an Edward Jones fee-based program. |
• |
|
Shares
acquired through NAV reinstatement. |
• |
|
Shares
redeemed at the discretion of Edward Jones for Minimum Balances, as
described below. |
Other Important Information Regarding
Transactions Through Edward Jones
Minimum Purchase Amounts
• |
|
Initial
purchase minimum: $250 |
• |
|
Subsequent
purchase minimum: none |
Minimum Balances
• |
|
Edward
Jones has the right to redeem at its discretion fund holdings with a
balance of $250 or less. The following are examples of accounts that are
not included in this policy: |
|
• |
|
A
fee-based account held on an Edward Jones platform
|
|
• |
|
A
529 account held on an Edward Jones platform |
|
• |
|
An
account with an active systematic investment plan or LOI
|
Exchanging Share Classes
• |
|
At
any time it deems necessary, Edward Jones has the authority to exchange at
NAV a shareholder’s holdings in a fund to Class A shares of the same
fund. |
JANNEY MONTGOMERY SCOTT
LLC (“JANNEY”)
Effective
May 1, 2020, if you purchase fund shares through a Janney brokerage
account, you will be eligible for the following load waivers (front-end sales
charge waivers and contingent deferred sales charge (“CDSC”), or back-end sales
charge, waivers) and discounts, which may differ from those disclosed elsewhere
in this fund’s Prospectus or SAI.
Front-end sales charge*
waivers on Class A shares available at Janney
• |
|
Shares
purchased through reinvestment of capital gains distributions and dividend
reinvestment when purchasing shares of the same fund (but not any other
fund within the fund family). |
• |
|
Shares
purchased by employees and registered representatives of Janney or its
affiliates and their family members as designated by Janney.
|
• |
|
Shares
purchased from the proceeds of redemptions within the same fund family,
provided (1) the repurchase occurs within ninety (90) days
following the redemption, (2) the redemption and purchase occur in
the same account, and (3) redeemed shares were subject to a front-end
or deferred sales load (i.e., right of reinstatement).
|
• |
|
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b)
plans, profit sharing and money purchase pension plans and defined benefit
plans). For purposes of this provision, employer-sponsored retirement
plans do not include SEP IRAs, Simple IRAs, SAR-SEPs or Keogh plans.
|
• |
|
Shares
acquired through a right of reinstatement. |
• |
|
Class
C shares that are no longer subject to a contingent deferred sales charge
and are converted to Class A shares of the same fund pursuant to
Janney’s policies and procedures. |
CDSC waivers on
Class A and C shares available at Janney
• |
|
Shares
sold upon the death or disability of the shareholder.
|
• |
|
Shares
sold as part of a systematic withdrawal plan as described in the fund’s
Prospectus. |
• |
|
Shares
purchased in connection with a return of excess contributions from an IRA
account. |
• |
|
Shares
sold as part of a required minimum distribution for IRA and other
retirement accounts due to the shareholder reaching age 701⁄2 as described in the fund’s
Prospectus. |
• |
|
Shares
sold to pay Janney fees but only if the transaction is initiated by
Janney. |
• |
|
Shares
acquired through a right of reinstatement. |
• |
|
Shares
exchanged into the same share class of a different fund.
|
|
|
|
|
|
| |
BrandywineGLOBAL— Flexible Bond
Fund |
|
| |
|
A‑5 |
|
Front-end sales charge*
discounts available at Janney: breakpoints, rights of accumulation, and/or
letters of intent
• |
|
Breakpoints
as described in the fund’s Prospectus. |
• |
|
Rights
of accumulation (“ROA”), which entitle shareholders to breakpoint
discounts, will be automatically calculated based on the aggregated
holding of fund family assets held by accounts within the purchaser’s
household at Janney. Eligible fund family assets not held at Janney may be
included in the ROA calculation only if the shareholder notifies his or
her financial advisor about such assets. |
• |
|
Letters
of intent which allow for breakpoint discounts based on anticipated
purchases within a fund family, over a 13-month time period. Eligible fund
family assets not held at Janney Montgomery Scott may be included in the
calculation of letters of intent only if the shareholder notifies his or
her financial advisor about such assets. |
*
Also referred to as an “initial sales charge.”
OPPENHEIMER &
CO. INC.
Effective
May 15, 2020, shareholders purchasing fund shares through an
Oppenheimer & Co. Inc. (“OPCO”) platform or account are eligible only
for the following load waivers (front-end sales charge waivers and contingent
deferred, or back-end, sales charge waivers) and discounts, which may differ
from those disclosed elsewhere in this fund’s Prospectus or SAI.
Front-end Sales Load
Waivers on Class A Shares available at OPCO
• |
|
Employer-sponsored
retirement, deferred compensation and employee benefit plans (including
health savings accounts) and trusts used to fund those plans, provided
that the shares are not held in a commission-based brokerage account and
shares are held for the benefit of the plan |
• |
|
Shares
purchased by or through a 529 Plan |
• |
|
Shares
purchased through a OPCO affiliated investment advisory program
|
• |
|
Shares
purchased through reinvestment of capital gains distributions and dividend
reinvestment when purchasing shares of the same fund (but not any other
fund within the fund family) |
• |
|
Shares
purchased from the proceeds of redemptions within the same fund family,
provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same
account, and (3) redeemed shares were subject to a front-end or
deferred sales load (known as Rights of Restatement).
|
• |
|
A
shareholder in the fund’s Class C shares will have their shares converted
at net asset value to Class A shares (or the appropriate share class)
of the fund if the shares are no longer subject to a CDSC and the
conversion is in line with the policies and procedures of OPCO
|
• |
|
Employees
and registered representatives of OPCO or its affiliates and their family
members |
• |
|
Directors
or Trustees of the fund, and employees of the fund’s investment adviser or
any of its affiliates, as described in this Prospectus
|
CDSC Waivers on A, B and
C Shares available at OPCO
• |
|
Death
or disability of the shareholder |
• |
|
Shares
sold as part of a systematic withdrawal plan as described in the fund’s
Prospectus |
• |
|
Return
of excess contributions from an IRA Account |
• |
|
Shares
sold as part of a required minimum distribution for IRA and retirement
accounts due to the shareholder reaching the qualified age based on
applicable IRS regulations as described in the Prospectus
|
• |
|
Shares
sold to pay OPCO fees but only if the transaction is initiated by OPCO
|
• |
|
Shares
acquired through a right of reinstatement |
Front-end load Discounts
Available at OPCO: Breakpoints, Rights of Accumulation & Letters of
Intent
• |
|
Breakpoints
as described in this Prospectus. |
• |
|
Rights
of Accumulation (ROA) which entitle shareholders to breakpoint discounts
will be automatically calculated based on the aggregated holding of fund
family assets held by accounts within the purchaser’s household at OPCO.
Eligible fund family assets not held at OPCO may be included in the ROA
calculation only if the shareholder notifies his or her financial advisor
about such assets. |
BAIRD
Effective
June 15, 2020, shareholders purchasing fund shares through a Baird platform
or account will only be eligible for the following sales charge waivers
(front-end sales charge waivers and CDSC waivers) and discounts, which may
differ from those disclosed elsewhere in this Prospectus or the SAI
Front-End Sales Charge
Waivers on Class A-shares Available at Baird
• |
|
Shares
purchased through reinvestment of capital gains distributions and dividend
reinvestment when purchasing shares of the same fund
|
• |
|
Shares
purchased by employees and registered representatives of Baird or its
affiliate and their family members as designated by Baird
|
|
|
|
| |
A‑6 |
|
| |
BrandywineGLOBAL— Flexible Bond
Fund |
• |
|
Shares
purchased from the proceeds of redemptions from another Legg
Mason-sponsored fund, provided (1) the repurchase occurs within 90
days following the redemption, (2) the redemption and purchase occur
in the same accounts, and (3) redeemed shares were subject to a
front-end or deferred sales charge (known as rights of reinstatement)
|
• |
|
A
shareholder in the funds’ Class C Shares will have their share converted
at net asset value to Class A shares of the fund if the shares are no
longer subject to CDSC and the conversion is in line with the policies and
procedures of Baird |
• |
|
Employer-sponsored
retirement plans or charitable accounts in a transactional brokerage
account at Baird, including 401(k) plans, 457 plans, employer-sponsored
403(b) plans, profit sharing and money purchase pension plans and defined
benefit plans. For purposes of this provision, employer-sponsored
retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs
|
CDSC Waivers on
Class A and C shares Available at Baird
• |
|
Shares
sold due to death or disability of the shareholder
|
• |
|
Shares
sold as part of a systematic withdrawal plan as described in the fund’s
Prospectus |
• |
|
Shares
bought due to returns of excess contributions from an IRA Account
|
• |
|
Shares
sold as part of a required minimum distribution for IRA and retirement
accounts due to the shareholder reaching the qualified age based on
applicable Internal Revenue Service regulations as described in the Fund’s
Prospectus |
• |
|
Shares
sold to pay Baird fees but only if the transaction is initiated by Baird
|
• |
|
Shares
acquired through a right of reinstatement |
Front-End Sales Charge
Discounts Available at Baird: Breakpoints and/or Rights of Accumulations
• |
|
Breakpoints
as described in this Prospectus |
• |
|
Rights
of accumulations which entitles shareholders to breakpoint discounts will
be automatically calculated based on the aggregated holding of Legg
Mason-sponsored fund assets held by accounts within the purchaser’s
household at Baird. Eligible Legg Mason-sponsored fund assets not held at
Baird may be included in the rights of accumulations calculation only if
the shareholder notifies his or her financial advisor about such assets
|
• |
|
Letters
of Intent (LOI) allow for breakpoint discounts based on anticipated
purchases of Legg Mason-sponsored funds through Baird, over a 13-month
period of time |
STIFEL,
NICOLAUS & COMPANY, INCORPORATED AND ITS BROKER DEALER AFFILIATES
(“STIFEL”)
Effective
December 1, 2023, shareholders purchasing or holding fund shares, including
existing fund shareholders, through a Stifel, Nicolaus & Company,
Incorporated or affiliated platform that provides trade execution, clearance,
and/or custody services, will be eligible for the following sales charge load
waivers (including front-end sales charge waivers and contingent deferred, or
back-end, (“CDSC”) sales charge waivers) and discounts, which may differ from
those disclosed elsewhere in the Fund’s Prospectus or SAI.
Class A Shares
As
described elsewhere in this Prospectus, Stifel may receive compensation out of
the front-end sales charge if you purchase Class A shares through Stifel.
Rights of Accumulation
• |
|
Rights
of accumulation (“ROA”) that entitle shareholders to breakpoint discounts
on front-end sales charges will be calculated by Stifel based on the
aggregated holding of all assets in all classes of shares of Franklin
Templeton and Legg Mason funds held by accounts within the purchaser’s
household at Stifel. Eligible fund family assets not held at Stifel may be
included in the calculation of ROA only if the shareholder notifies his or
her financial advisor about such assets. |
• |
|
The
employer maintaining a SEP IRA plan and/or SIMPLE IRA plan may elect to
establish or change ROA for the IRA accounts associated with the plan to a
plan-level grouping as opposed to including all share classes at a
shareholder or pricing group level. |
Front-end Sales Charge
Waivers on Class A Shares Available at Stifel
Sales
charges may be waived for the following shareholders and in the following
situations:
• |
|
Class C shares that have been held for
more than seven (7) years may be converted to Class A or other Front-end share
class(es) shares of the same fund pursuant to Stifel’s policies and
procedures. To the extent that this Prospectus elsewhere provides for a
waiver with respect to the exchange or conversion of such shares following
a shorter holding period, those provisions shall continue to apply.
|
• |
|
Shares
purchased by employees and registered representatives of Stifel or its
affiliates and their family members as designated by Stifel.
|
• |
|
Shares
purchased in an Stifel fee-based advisory program, often referred to as a
“wrap” program. |
• |
|
Shares
purchased through reinvestment of capital gains distributions and dividend
reinvestment when purchasing shares of the same or other fund within the
fund family. |
|
|
|
|
|
| |
BrandywineGLOBAL— Flexible Bond
Fund |
|
| |
|
A‑7 |
|
• |
|
Shares
purchased from the proceeds of redeemed shares of the same fund family so
long as the proceeds are from the sale of shares from an account with the
same owner/beneficiary within 90 days of the purchase. For the absence of
doubt, shares redeemed through a Systematic Withdrawal Plan are not
eligible for rights of reinstatement. |
• |
|
Shares
from rollovers into Stifel from retirement plans to IRAs.
|
• |
|
Shares
exchanged into Class A shares from another share class so long as the
exchange is into the same fund and was initiated at the direction of
Stifel. Stifel is responsible for any remaining CDSC due to the fund
company, if applicable. Any future purchases are subject to the applicable
sales charge as disclosed in the prospectus. |
• |
|
Purchases
of Class 529-A shares through a rollover from another 529 plan.
|
• |
|
Purchases
of Class 529-A shares made for reinvestment of refunded amounts.
|
• |
|
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b)
plans, profit sharing and money purchase pension plans and defined benefit
plans). For purposes of this provision, employer-sponsored retirement
plans do not include SEP IRAs, Simple IRAs or SAR-SEPs.
|
• |
|
All
other sales charge waivers and reductions described elsewhere in the
fund’s prospectus or SAI still apply. |
Contingent Deferred Sales
Charges Waivers on Class A and C Shares
• |
|
Death
or disability of the shareholder or, in the case of 529 plans, the account
beneficiary. |
• |
|
Shares
sold as part of a systematic withdrawal plan not to exceed 12% annually.
|
• |
|
Return
of excess contributions from an IRA Account. |
• |
|
Shares
sold as part of a required minimum distribution for IRA and retirement
accounts due to the shareholder reaching the qualified age based on
applicable IRS regulations. |
• |
|
Shares
acquired through a right of reinstatement. |
• |
|
Shares
sold to pay Stifel fees or costs in such cases where the transaction is
initiated by Stifel. |
• |
|
Shares
exchanged or sold in a Stifel fee-based program.
|
• |
|
All
other sales charge waivers and reductions described elsewhere in the
fund’s prospectus or SAI still apply. |
Share Class Conversions
in Advisory Accounts
• |
|
Stifel
continually looks to provide our clients with the lowest cost share class
available based on account type. Stifel reserves the right to convert
shares to the lowest cost share class available at Stifel upon transfer of
shares into an advisory program. |
PFS INVESTMENTS INC.
(“PFSI”)
Policies Regarding Fund
Purchases on the PSS Platform
The
following information supersedes all prior information with respect to
transactions and positions held in fund shares purchased through PFSI and held
on the mutual fund platform of its affiliate, Primerica Shareholder Services
(“PSS”). Clients of PFSI (also referred to as “shareholders”) purchasing fund
shares on the PSS platform are eligible only for the following share classes,
sales charge discounts (also referred to as “breakpoints”) and waivers, which
can differ from share classes, discounts and waivers described elsewhere in this
Prospectus or the related statement of additional information (“SAI”) or through
another broker-dealer. In all instances, it is the shareholder’s responsibility
to inform PFSI at the time of a purchase of all holdings of the Franklin
Templeton and Legg Mason Funds on the PSS platform, or other facts qualifying
the purchaser for discounts or waivers. PFSI may request reasonable
documentation of such facts and condition the granting of any discount or waiver
on the timely receipt of such documents. Shareholders should contact PSS if they
have questions regarding their eligibility for these discounts and waivers.
Share Classes
Shareholders
purchasing fund shares on the PSS platform are eligible only for the following
share classes:
• |
|
Class A
shares are available in non-retirement accounts, individual retirement
accounts (IRA), SEP IRAs, SIMPLE IRAs, Keogh Plans, and all other account
types. |
• |
|
Class
A1 and Class C shares are available only in accounts that already hold
such shares. |
Breakpoints
• |
|
Breakpoint
pricing at dollar thresholds as described in the prospectus of the fund
you are purchasing. |
Rights of Accumulation
(“ROA”)
• |
|
The
applicable sales charge on a purchase of Class A or Class A1 shares
is determined by taking into account all share classes (except any assets
held in group retirement plans) of the Franklin Templeton and Legg Mason
Funds held by the shareholder on the PSS platform. The inclusion of
eligible fund family assets in the ROA calculation is dependent on the
shareholder notifying PFSI of such assets at the time of calculation.
Shares of money market funds are included only if such shares were
acquired in exchange for shares of another Franklin Templeton or Legg
Mason Fund purchased with a sales charge. No shares of the Franklin
Templeton and Legg Mason Funds held by the shareholder away from the PSS
platform, will be granted ROA with shares of any Franklin Templeton or
Legg Mason Fund purchased on the PSS platform. |
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A‑8 |
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BrandywineGLOBAL— Flexible Bond
Fund |
• |
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Any
SEP IRA plan, any SIMPLE IRA plan or any Payroll Deduction Plan (“PDP”) on
the PSS platform will be defaulted to plan-level grouping for purposes of
ROA, which allows each participating employee ROA with all other eligible
shares held in plan accounts on the PSS platform. At any time, a
participating employee may elect to exercise a one-time option to change
grouping for purposes of ROA to shareholder- level grouping, which allows
the plan account of the electing employee ROA with her other eligible
holdings on the PSS platform, but not with all other eligible participant
holdings in the plan. Eligible shares held in plan accounts electing
shareholder-level grouping will not be available for purposes of ROA to
plan accounts electing plan-level grouping. |
• |
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ROA
is determined by calculating the higher of cost minus redemptions or
current market value (current shares x NAV). |
Letter of Intent (“LOI”)
• |
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By
executing a LOI, shareholders can receive the sales charge and breakpoint
discounts for purchases shareholders intend to make over a 13-month period
through PFSI, from the date PSS receives the LOI. The purchase price of
the LOI is determined by calculating the higher of cost or market value of
qualifying holdings at LOI initiation in combination with the dollar
amount the shareholder intends to invest over a 13-month period to arrive
at total investment for purposes of determining any breakpoint discount
and the applicable front-end sales charge. Each purchase the shareholder
makes during that 13-month period will receive the sales charge and
breakpoint discount that applies to the projected total investment.
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• |
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Only
holdings of Franklin Templeton and Legg Mason Funds on the PSS platform
are eligible for inclusion in the LOI calculation and the shareholder must
notify PFSI of all eligible assets at the time of calculation.
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• |
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Purchases
made before the LOI is received by PSS are not adjusted under the LOI, and
the LOI will not reduce any sales charge previously paid. Sales charges
will be automatically adjusted if the total purchases required by the LOI
are not met. |
• |
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If
an employer maintaining a SEP IRA plan, SIMPLE IRA or non-IRA PDP plan on
the PSS platform has elected to establish or change ROA for the IRA
accounts associated with the plan to a plan-level grouping, LOIs will also
be at the plan-level and may only be established by the employer. LOIs are
not available to PDP IRA plans on the PSS platform with plan-level
grouping for purposes of ROA, but are available to any participating
employee that elects shareholder-level grouping for purposes of ROA.
|
Sales Charge Waivers
Sales
charges are waived for the following shareholders and in the following
situations:
• |
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Shares
purchased through reinvestment of capital gains distributions and dividend
reinvestment. |
• |
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Shares
purchased with the proceeds of redeemed shares of either the Franklin
Templeton or Legg Mason fund families so long as the following conditions
are met: 1) the proceeds are from the sale of shares within 90 days of the
purchase, 2) the sale and purchase are made in the same share class and
the same account or the purchase is made in an individual retirement
account with proceeds from liquidations in a non-retirement account, and
3) the redeemed shares were subject to a front-end or deferred sales load.
Automated transactions (i.e., systematic purchases and withdrawals), full
or partial transfers or rollovers of retirement accounts, and purchases
made after shares are automatically sold to pay account maintenance fees
are not eligible for this sales charge waiver. |
• |
|
Shares
exchanged into Class A or Class A1 shares from another share class so
long as the exchange is into the same fund and was initiated at the
discretion of PFSI. PFSI is responsible for any remaining CDSC due to the
fund company, if applicable. Any future purchases are subject to the
applicable sales charge as disclosed in the prospectus.
|
Policies Regarding Fund
Purchases That Are Not Held on the PSS Platform
Class
R shares are available through PFSI only in 401(k) plans covering a business
owner with no employees, commonly referred to as a one-participant 401(k) plan
or solo 401(k) and which are not held on the PSS platform.
D.A. DAVIDSON
Effective
September 1, 2021, shareholders purchasing Fund shares including existing
Fund shareholders through a D.A. Davidson &. Co. (“D.A. Davidson”) platform
or account, or through an introducing broker-dealer or independent registered
investment advisor for which D.A. Davidson provides trade execution, clearance,
and/or custody services, will be eligible for the following sales charge waivers
(front-end sales charge waivers and contingent deferred, or back-end, sales
charge waivers) and discounts, which may differ from those disclosed elsewhere
in this Prospectus or the Fund’s SAI.
Front-End Sales Charge
Waivers on Class A Shares available at D.A. Davidson
• |
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Shares
purchased within the same fund family through a systematic reinvestment of
capital gains and dividend distributions. |
• |
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Employees
and registered representatives of D.A. Davidson or its affiliates and
their family members as designated by D.A. Davidson.
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• |
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Shares
purchased from the proceeds of redemptions within the same fund family,
provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same
account, and (3) redeemed shares were subject to a front-end or
deferred sales charge (known as Rights of Reinstatement).
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• |
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A
shareholder in the Fund’s Class C Shares will have their shares converted
at net asset value to Class A Shares (or the appropriate share class)
of the Fund if the shares are no longer subject to a CDSC and the
conversion is consistent with D.A. Davidson’s policies and procedures.
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BrandywineGLOBAL— Flexible Bond
Fund |
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A‑9 |
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CDSC Waivers on
Class A and Class C Shares available at D.A. Davidson
• |
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Death
or disability of the shareholder. |
• |
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Shares
sold as part of a systematic withdrawal plan as described in the Fund’s
prospectus. |
• |
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Return
of excess contributions from an IRA account. |
• |
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Shares
sold as part of a required minimum distribution for IRA or other
qualifying retirement accounts pursuant to the Internal Revenue Code.
|
• |
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Shares
acquired through a right of reinstatement. |
Front-end sales charge
discounts available at D.A. Davidson: breakpoints, rights of accumulation and/or
letters of intent
• |
|
Breakpoints
as described in this Prospectus. |
• |
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Rights
of accumulation which entitle shareholders to breakpoint discounts will be
automatically calculated based on the aggregated holding of fund family
assets held by accounts within the purchaser’s household at D.A. Davidson.
Eligible fund family assets not held at D.A. Davidson may be included in
the calculation of rights of accumulation only if the shareholder notifies
his or her financial advisor about such assets. |
• |
|
Letters
of intent which allow for breakpoint discounts based on anticipated
purchases within a fund family, over a 13-month time period. Eligible fund
family assets not held at D.A. Davidson may be included in the calculation
of letters of intent only if the shareholder notifies his or her financial
advisor about such assets. |
J.P. MORGAN SECURITIES
LLC
Effective
September 29, 2023, if you purchase or hold fund shares through an
applicable J.P. Morgan Securities LLC brokerage account, you will be eligible
for the following sales charge waivers (front-end sales charge waivers and
contingent deferred sales charge (“CDSC”), or back-end sales charge, waivers),
share class conversion policy and discounts, which may differ from those
disclosed elsewhere in this fund’s prospectus or Statement of Additional
Information (“SAI”).
Front-end sales charge
waivers on Class A shares available at J.P. Morgan Securities LLC
• |
|
Shares
exchanged from Class C (i.e., level-load) shares that are no longer
subject to a CDSC and are exchanged into Class A shares of the same
fund pursuant to J.P. Morgan Securities LLC’s share class exchange policy.
|
• |
|
Qualified
employer-sponsored defined contribution and defined benefit retirement
plans, nonqualified deferred compensation plans, other employee benefit
plans and trusts used to fund those plans. For purposes of this
provision, such plans do not include SEP IRAs, SIMPLE IRAs, SAR-SEPs or
501(c)(3) accounts. |
• |
|
Shares
of funds purchased through J.P. Morgan Securities LLC Self-Directed
Investing accounts. |
• |
|
Shares
purchased through rights of reinstatement. |
• |
|
Shares
purchased through reinvestment of capital gains distributions and dividend
reinvestment when purchasing shares of the same fund (but not any other
fund within the fund family). |
• |
|
Shares
purchased by employees and registered representatives of J.P. Morgan
Securities LLC or its affiliates and their spouse or financial dependent
as defined by J.P. Morgan Securities LLC. |
Class C to Class A
share conversion
• |
|
A
shareholder in the fund’s Class C shares will have their shares converted
by J.P. Morgan Securities LLC to Class A shares (or the appropriate
share class) of the same fund if the shares are no longer subject to a
CDSC and the conversion is consistent with J.P. Morgan Securities LLC’s
policies and procedures. |
CDSC waivers on
Class A and C shares available at J.P. Morgan Securities LLC
• |
|
Shares
sold upon the death or disability of the shareholder.
|
• |
|
Shares
sold as part of a systematic withdrawal plan as described in the fund’s
prospectus. |
• |
|
Shares
purchased in connection with a return of excess contributions from an IRA
account. |
• |
|
Shares
sold as part of a required minimum distribution for IRA and retirement
accounts pursuant to the Internal Revenue Code. |
• |
|
Shares
acquired through a right of reinstatement. |
Front-end load discounts
available at J.P. Morgan Securities LLC: breakpoints, rights of
accumulation & letters of intent
• |
|
Breakpoints
as described in the prospectus. |
• |
|
Rights
of Accumulation (“ROA”) which entitle shareholders to breakpoint discounts
as described in the fund’s prospectus will be automatically calculated
based on the aggregated holding of fund family assets held by accounts
within the purchaser’s household at J.P. Morgan Securities LLC. Eligible
fund family assets not held at J.P. Morgan Securities LLC (including 529
program holdings, where applicable) may be included in the ROA calculation
only if the shareholder notifies their financial advisor about such
assets. |
• |
|
Letters
of Intent (“LOI”) which allow for breakpoint discounts based on
anticipated purchases within a fund family, through J.P. Morgan Securities
LLC, over a 13-month period of time (if applicable).
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A‑10 |
|
| |
BrandywineGLOBAL— Flexible Bond
Fund |
Franklin Templeton Funds Privacy and Security Notice
Franklin
Templeton* is committed to safeguarding your personal information. This notice
is designed to provide you with a summary of the non-public personal information
Franklin Templeton may collect and maintain about current or former individual
investors; our policy regarding the use of that information; and the measures we
take to safeguard the information. We do not sell individual investors’
non-public personal information to anyone and only share it as described in this
notice.
Information We Collect
When
you invest with us, you provide us with your non-public personal information. We
collect and use this information to service your accounts and respond to your
requests. The non-public personal information we may collect falls into the
following categories:
• |
|
Information
we receive from you or your financial intermediary on applications or
other forms, whether we receive the form in writing or electronically. For
example, this information may include your name, address, tax
identification number, birth date, investment selection, beneficiary
information, and your personal bank account information and/or email
address if you have provided that information. |
• |
|
Information
about your transactions and account history with us, or with other
companies that are part of Franklin Templeton, including transactions you
request on our website or in our app. This category also includes your
communications to us concerning your investments.
|
• |
|
Information
we receive from third parties (for example, to update your address if you
move, obtain or verify your email address or obtain additional information
to verify your identity). |
• |
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Information
collected from you online, such as your IP address or device ID and data
gathered from your browsing activity and location. (For example, we may
use cookies to collect device and browser information so our website
recognizes your online preferences and device information.) Our website
contains more information about cookies and similar technologies and ways
you may limit them. |
• |
|
Other
general information that we may obtain about you such as demographic
information. |
Disclosure Policy
To
better service your accounts and process transactions or services you requested,
we may share non-public personal information with other Franklin Templeton
companies. From time to time we may also send you information about
products/services offered by other Franklin Templeton companies although we will
not share your non-public personal information with these companies without
first offering you the opportunity to prevent that sharing.
We
will only share non-public personal information with outside parties in the
limited circumstances permitted by law. For example, this includes situations
where we need to share information with companies who work on our behalf to
service or maintain your account or process transactions you requested, when the
disclosure is to companies assisting us with our own marketing efforts, when the
disclosure is to a party representing you, or when required by law (for example,
in response to legal process). Additionally, we will ensure that any outside
companies working on our behalf, or with whom we have joint marketing
agreements, are under contractual obligations to protect the confidentiality of
your information, and to use it only to provide the services we asked them to
perform.
Confidentiality and
Security
Our
employees are required to follow procedures with respect to maintaining the
confidentiality of our investors’ non-public personal information. Additionally,
we maintain physical, electronic and procedural safeguards to protect the
information. This includes performing ongoing evaluations of our systems
containing investor information and making changes when appropriate.
At
all times, you may view our current privacy notice on our website at
https://www.franklintempleton.com/help/privacy-policy or contact us for a copy
at (800) 632-2301.
*For
purposes of this privacy notice Franklin Templeton shall refer to the following
entities:
Fiduciary
Trust International of the South (FTIOS), as custodian for individual retirement
plans
Franklin
Advisers, Inc.
Franklin
Distributors, LLC, including as program manager of the Franklin Templeton 529
College Savings Plan and the NJBEST 529 College Savings Plan
Franklin
Mutual Advisers, LLC
Franklin,
Templeton and Mutual Series Funds
Franklin
Templeton Institutional, LLC
Franklin
Templeton Investments Corp., Canada
Franklin
Templeton Investments Management, Limited UK
Templeton
Asset Management, Limited
Templeton
Global Advisors, Limited
Templeton
Investment Counsel, LLC
If
you are a customer of other Franklin Templeton affiliates and you receive
notices from them, you will need to read those notices separately.
|
THIS PAGE IS
NOT PART OF THE PROSPECTUS |
BrandywineGLOBAL —
Flexible Bond Fund
You
may visit www.franklintempleton.com/mutualfundsliterature 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 year. 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
877-6LM-FUND/656-3863, or by writing to the fund at Legg Mason Funds, P.O. Box
33030, St. Petersburg, FL 33733-8030.
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. 811-22338)
BWXX275918ST
05/24
© 2024 Franklin Templeton. All
rights reserved.