UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-22338
Legg Mason Global Asset Management Trust
(Exact name of registrant as specified in charter)
620 Eighth Avenue, 49th Floor, New York, NY 10018
(Address of principal executive offices) (Zip code)
Robert I. Frenkel, Esq.
Legg Mason & Co., LLC
100 First Stamford Place
Stamford, CT 06902
(Name and address of agent for service)
Registrant’s telephone number, including area code: 1-877-721-1926
Date of fiscal year end: May 31
Date of reporting period: May 31, 2017
| ITEM 1. | REPORT TO STOCKHOLDERS |
The Annual Report to Stockholders is filed herewith.
| | |
| Annual Report | | May 31, 2017 |
MARTIN CURRIE
INTERNATIONAL UNCONSTRAINED EQUITY FUND
|
| INVESTMENT PRODUCTS: NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE |
Fund objective
The Fund seeks long-term capital appreciation.
Letter from the president
Dear Shareholder,
We are pleased to provide the annual report of Martin Currie International Unconstrained Equity Fund for the twelve-month reporting period ended May 31, 2017. Please read on for a detailed look at prevailing economic and market conditions during the Fund’s reporting period and to learn how those conditions have affected Fund performance.
As always, we remain committed to providing you with excellent service and a full spectrum of investment choices. We also remain committed to supplementing the support you receive from your financial advisor. One way we accomplish this is through our website, www.leggmason.com. Here you can gain immediate access to market and investment information, including:
| • | | Fund prices and performance, |
| • | | Market insights and commentaries from our portfolio managers, and |
| • | | A host of educational resources. |
We look forward to helping you meet your financial goals.
Sincerely,
Jane Trust, CFA
President and Chief Executive Officer
June 30, 2017
| | |
| II | | Martin Currie International Unconstrained Equity Fund |
Investment commentary
Economic review
The pace of U.S. economic activity fluctuated during the twelve months ended May 31, 2017 (the “reporting period”). Looking back, the U.S. Department of Commerce reported that second quarter 2016 U.S. gross domestic product (“GDP”)i growth was 1.4%. GDP growth for the third quarter of 2016 was 3.5%, the strongest reading in two years. However, fourth quarter 2016 GDP growth then moderated to 2.1%. Finally, the U.S. Department of Commerce’s final reading for first quarter 2017 GDP growth — released after the reporting period ended — was 1.4%. The deceleration in growth reflected downturns in private inventory investment and personal consumption expenditures, along with more modest state and local government spending.
Job growth in the U.S. was solid overall and a tailwind for the economy during the reporting period. When the reporting period ended on May 31, 2017, the unemployment rate was 4.3%, as reported by the U.S. Department of Labor. This was the lowest unemployment rate since May 2001. The percentage of longer-term unemployed also declined over the period. In May 2017, 24.0% of Americans looking for a job had been out of work for more than six months, versus 25.8% when the period began.
Turning to the global economy, in its April 2017 World Economic Outlook Update, the International Monetary Fund (“IMF”)ii said, “Global economic activity is picking up with a long-awaited cyclical recovery in investment, manufacturing, and trade….Stronger activity and expectations of more robust global demand, coupled with agreed restrictions on oil supply, have helped commodity prices recover from their troughs in early 2016….If confidence and market sentiment remain strong, short-term growth could indeed surprise on the upside. But these positive developments should not distract from binding structural impediments to a stronger recovery and a balance of risks that remains tilted to the downside, especially over the medium term.” From a regional perspective, the IMF estimates 2017 growth in the Eurozone will be 1.7%, the same as in 2016. Japan’s economy is expected to expand 1.2% in 2017, compared to 1.0% in 2016. Elsewhere, the IMF projects that overall growth in emerging market countries will accelerate to 4.5% in 2017, versus 4.1% in 2016.
Looking back, after an extended period of maintaining the federal funds rateiii at a historically low range between zero and 0.25%, the Federal Reserve Board (the “Fed”)iv increased the rate at its meeting on December 16, 2015. This marked the first rate hike since 2006. In particular, the U.S. central bank raised the federal funds rate to a range between 0.25% and 0.50%. The Fed then kept rates on hold at each meeting prior to its meeting in mid-December 2016. On December 14, 2016, the Fed raised rates to a range between 0.50% and 0.75%.
After holding rates steady at its meeting that concluded on February 1, 2017, the Fed raised rates to a range between 0.75% and 1.00% at its meeting that ended on March 15, 2017. Finally, at its meeting that concluded on June 14, 2017 — after the reporting period ended — the Fed raised rates to a range between 1.00% and 1.25%. The Fed also said that it planned to reduce its balance sheet, saying, “The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of
| | |
| Martin Currie International Unconstrained Equity Fund | | III |
Investment commentary (cont’d)
agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee currently expects to begin implementing a balance sheet normalization program this year, provided that the economy evolves broadly as anticipated.”
Given the economic challenges in the Eurozone, the European Central Bank (“ECB”)v took a number of actions to stimulate growth and ward off deflation. In December 2015, before the reporting period began, the ECB extended its €60 billion-per-month bond buying program until at least March 2017. In March 2016, the ECB announced that it would increase its bond purchasing program to €80 billion-per-month. It also lowered its deposit rate to -0.4% and its main interest rate to 0%. Finally, in December 2016 — the ECB again extended its bond buying program until December 2017. From April 2017 through December 2017, the ECB will purchase €60 billion-per-month of bonds.
Looking at other developed countries, in the aftermath of the June 2016 U.K. referendum to leave the European Union (“Brexit”), the Bank of Englandvi lowered rates in October 2016 from 0.50% to 0.25% — an all-time low. After holding rates steady at 0.10% for more than five years, in January 2016, the Bank of Japanvii announced that it lowered the rate on current accounts that commercial banks hold with it to -0.10% and kept rates on hold during the reporting period. Elsewhere, the People’s Bank of Chinaviii kept rates steady at 4.35%.
As always, thank you for your confidence in our stewardship of your assets.
Sincerely,
Jane Trust, CFA
President and Chief Executive Officer
June 30, 2017
All investments are subject to risk including the possible loss of principal. Past performance is no guarantee of future results. Forecasts and predictions are inherently limited and should not be relied upon as an indication of actual or future performance.
| | |
| IV | | Martin Currie International Unconstrained Equity Fund |
| i | Gross domestic product (“GDP”) is the market value of all final goods and services produced within a country in a given period of time. |
| ii | The International Monetary Fund (“IMF”) is an organization of 189 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. |
| iii | The federal funds rate is the rate charged by one depository institution on an overnight sale of immediately available funds (balances at the Federal Reserve) to another depository institution; the rate may vary from depository institution to depository institution and from day to day. |
| iv | The Federal Reserve Board (the “Fed”) is responsible for the formulation of U.S. policies designed to promote economic growth, full employment, stable prices and a sustainable pattern of international trade and payments. |
| v | The European Central Bank (“ECB”) is responsible for the monetary system of the European Union and the euro currency. |
| vi | The Bank of England (“BoE”), formally the Governor and Company of the BoE, is the central bank of the United Kingdom. The BoE’s purpose is to maintain monetary and financial stability. |
| vii | The Bank of Japan is the central bank of Japan. The bank is responsible for issuing and handling currency and treasury securities, implementing monetary policy, maintaining the stability of the Japanese financial system and the yen currency. |
| viii | The People’s Bank of China is the central bank of the People’s Republic of China with the power to carry out monetary policy and regulate financial institutions in mainland China. |
| | |
| Martin Currie International Unconstrained Equity Fund | | V |
Fund overview
Q. What is the Fund’s investment strategy?
A. The Fund seeks long-term capital appreciation. Under normal market conditions, the Fund pursues its objective by investing at least 80% of its net assets plus borrowings for investment purposes, if any, in equity and equity related securities of foreign companies and other investments with similar economic characteristics. (The Fund does not currently intend to borrow for investment purposes.) The Fund is generally unconstrained by any particular sector, geography or market capitalization.
We focus on companies that we believe generally have a strong history of offering high and sustainable returns on invested capital over time and seek to acquire securities of companies with reasonable valuations based on our assessment of the company’s long-term potential. When we identify an opportunity that we find attractive, we aim to make a long-term capital commitment.
The equity securities in which the Fund will invest may include common stocks, preferred stocks, securities convertible into common stock, depositary receipts and synthetic foreign equity securitiesi, including international warrants and other instruments with similar economic characteristics. The Fund may use synthetic foreign equity securities to obtain market exposure where direct access is not otherwise available. The Fund may also enter into derivatives as a substitute for buying or selling securities; to obtain market exposure; and to manage cash.
The Fund may seek investment opportunities in any foreign country and under normal market conditions will invest in or have exposure to securities of companies located in at least three foreign countries. The Fund may invest without limit in securities of companies located in any foreign country, including countries with developed or emerging markets. The Fund may invest in companies of any size and market capitalization, but will typically invest in those companies with market capitalizations in excess of $5 billion. The Fund’s portfolio is expected to be highly concentrated, with approximately 25-40 holdings.
While the Fund is generally unconstrained within its equity universe, we seek to be risk aware and to control company risk through due diligence.
Q. What were the overall market conditions during the Fund’s reporting period?
A. International equity markets rose strongly over the twelve-month reporting period ended May 31, 2017. Markets achieved the bulk of the gain over the last six months of the reporting period, having made only marginal progress in the first half of the reporting period. The unexpected outcomes of the U.K. referendum on the European Union membership (“Brexit”) in June 2016 and the U.S. presidential election in November 2016 were significant events for the markets. After a very brief downturn, equity markets disregarded the Brexit outcome and later rallied, following Donald Trump’s U.S. presidential election victory.
Long-term interest rates in the U.S. illustrate how investor sentiment fluctuated during the year. Ten-year Treasury yields fell to a record low, below 1.4%, early in the summer of 2016, but then rose steadily through early November of 2016, before shooting up after Donald Trump’s presidential election success. They peaked just above 2.6% in March
| | |
| Martin Currie International Unconstrained Equity Fund 2017 Annual Report | | 1 |
Fund overview (cont’d)
2017, then faded with expectations of reflation (stimulating the economy by increasing the money supply or by reducing taxes), closing the reporting period around 2.2%. While the Federal Reserve Board (the “Fed”)ii has started to lift short-term interest rates, the European Central Bankiii has held off on such action. This, combined with improving economic confidence and better political outcomes than feared, has driven European markets and the euro higher. Many emerging markets have also regained some positive momentum after several years of poor relative performance. So, after four years of underperforming the U.S. market, international markets have started to outperform.
Q. How did we respond to these changing market conditions?
A. As long-term investors in companies that typically have operations all over the world, we do not usually react to market noise that affects specific markets in the short term. We are much more focused on individual stocks and how they create value for shareholders over the long term. As such, we have continued to identify what we believe to be attractive stocks and the Fund now holds investments in 32 companies.
Performance review
For the twelve months ended May 31, 2017, Class A shares of Martin Currie International Unconstrained Equity Fund, excluding sales charges, returned 17.67%. The Fund’s unmanaged benchmark, the MSCI All-Country World Index ex-U.S.iv, returned 18.24% for the same period. The Lipper International Large-Cap Growth Funds Category Average1 returned 15.09% over the same time frame.
| | | | | | | | |
Performance Snapshot as of May 31, 2017
(unaudited) | |
| (excluding sales charges) | | 6 months | | | 12 months | |
| Martin Currie International Unconstrained Equity Fund: | | | | | | | | |
Class A | | | 23.68 | % | | | 17.67 | % |
Class I | | | 23.98 | % | | | 18.09 | % |
Class IS | | | 23.78 | % | | | 18.03 | % |
| MSCI All-Country World Index ex-U.S. | | | 16.65 | % | | | 18.24 | % |
| Lipper International Large-Cap Growth Funds Category Average1 | | | 17.52 | % | | | 15.09 | % |
The performance shown represents past performance. Past performance is no guarantee of future results and current performance may be higher or lower than the performance shown above. Principal value and investment returns will fluctuate and investors’ shares, when redeemed, may be worth more or less than their original cost. To obtain performance data current to the most recent month-end, please visit our website at www.leggmason.com/mutualfunds.
All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all Fund expenses. Returns have not been adjusted to include sales charges that may apply or the deduction of taxes that a shareholder would pay on Fund distributions. If sales charges were reflected, the performance quoted would be lower. Performance figures for periods shorter than one year represent cumulative figures and are not annualized.
Fund performance figures reflect fee waivers and/or expense reimbursements, without
| 1 | Lipper, Inc., a wholly-owned subsidiary of Reuters, provides independent insight on global collective investments. Returns are based on the period ended May 31, 2017, including the reinvestment of all distributions, including returns of capital, if any, calculated among the 129 funds for the six-month period and among the 123 funds for the twelve-month period in the Fund’s Lipper category, and excluding sales charges, if any. |
| | |
| 2 | | Martin Currie International Unconstrained Equity Fund 2017 Annual Report |
which the performance would have been lower.
| | | | |
| Total Annual Operating Expenses (unaudited) |
As of the Fund’s current prospectus dated September 30, 2016, the gross total annual operating expense ratios for Class A, Class I and Class IS shares were 8.96%, 8.72% and 8.68%, respectively.
Actual expenses may be higher. For example, expenses may be higher than those shown if average net assets decrease. Net assets are more likely to decrease and Fund expense ratios are more likely to increase when markets are volatile.
As a result of expense limitation arrangements, the ratio of total annual fund operating expenses, other than interest, brokerage commissions, dividend expense on short sales, taxes, extraordinary expenses and acquired fund fees and expenses, to average net assets will not exceed 1.35% for Class A shares, 1.00% for Class I shares and 0.90% for Class IS shares. In addition, the ratio of total annual fund operating expenses for Class IS shares will not exceed the ratio of total annual fund operating expenses for Class I shares. Total annual fund operating expenses after waiving fees and/or reimbursing expenses exceed the expense cap for each class as a result of acquired fund fees and expenses. These expense limitation arrangements cannot be terminated prior to December 31, 2018 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 operating expenses have fallen to a level below the expense limitation (“expense cap”) in effect at the time the fees were earned or the expenses incurred. In no case will the manager recapture any amount that would result, on any particular business day of the Fund, in the class’ total annual operating expenses exceeding the expense cap or any other lower limit then in effect.
Q. What were the leading contributors to performance?
A. ARM Holdings was the top contributor to performance over the reporting period. The U.K. semiconductor firm was bought by SoftBank Group. The Japanese telecommunications giant announced a recommended cash offer of £17 per share for ARM Holdings in mid-July 2016, which was at a premium of about 43% to the previous day’s closing price. Taiwan Semiconductor Manufacturing Co., Ltd. was another key positive. Its leadership in the Information Technology sector was reflected once again in revenue growth in 2016 and early 2017. We added to the stock in April 2017, following our annual review. Swedish industrial-tool manufacturer, Atlas Copco AB, also fared well. A cyclical upturn in orders for the group’s mining & construction and air-compressor businesses, led to a re-assessment of short-term earnings expectations. We have taken some profit in this holding, but remain enthusiastic, especially since management recently announced the intention to split off some of the lower-returns businesses within the group’s portfolio.
Q. What were the leading detractors from performance?
A. Danish healthcare firm, Novo Nordisk A/S, was the main detractor from the Fund’s performance over the twelve-month reporting period. Its share price tumbled when the company published quarterly results in early August 2016 and management guided down the outlook for insulin pricing in 2017 and beyond. While some pricing pressure was expected, we were surprised at the extent of downward guidance. That said, we felt
| | |
| Martin Currie International Unconstrained Equity Fund 2017 Annual Report | | 3 |
Fund overview (cont’d)
the stock was oversold and topped up the holding in December 2016. Global supply chain logistics firm Brambles, purchased in the fourth quarter of 2016, was another poor performer. New management has had to contend with sharp de-stocking and a weaker retail environment, especially in the U.S. The business has consistently created value over the past 10 years and new CEO, Graham Chipchase, has experience with delivering on a returns-focused commitment to shareholders at a previous company. In our opinion, he and the team that he assembled are credible and well-equipped to generate higher returns in an industry in which the company has typically dominated. U.K. broadcaster Sky PLC (“Sky”) also detracted from performance. In December 2016, 21st Century Fox (“Fox”) attempted to take over the company following almost a year of poor share price performance by Sky. Although the bid of £10.75 per share was approximately a 40% premium to the undistributed share price, this price was still only around the level at which the stock was trading a year prior. Sky accepted the bid; however, we believe Fox took advantage of share price weakness following a period of elevated investment by Sky.
Q. Were there any significant changes to the Fund during the period?
A. We have added a number of new holdings to the Fund over the reporting period. We are constantly monitoring what is held and researching if there are better alternatives to what is already in the Fund.
In addition to Brambles Ltd., new holdings during the twelve-month reporting period include multinational distribution and outsourcing company Bunzl PLC, which we believe is a one-of-a-kind company with no competitors of a similar scale or breadth; Chinese information technology (“IT”) giant Tencent Holdings Ltd., the main social platform in China with more than 800 million monthly active users and a long history of value creation; Canadian National Railway Co., where we expect the company to leverage its strong pricing power and best-in-class profit margins to deliver further value for shareholders; European media company ProSiebenSat.1 Media SE, which has a stable core German business alongside a credible merger and acquisitions strategy (as demonstrated by Etraveli, its an online travel agent service which doubled in value over two years); and Mettler-Toledo International Inc., the Swiss-headquartered multinational manufacturer of scales and analytical instruments, where we believe the market underestimates the top-line recovery in its industrial-facing business and the amount of value it can extract from more effectively servicing its enormous installed base of instruments.
There were no outright sales over the period, although as mentioned above, ARM Holdings was taken over by SoftBank Group.
In addition to Novo Nordisk A/S, we added to clothing retailer Industria de Diseno Textil SA, consumer goods company Reckitt Benckiser Group PLC and IT services firm Cognizant Technology Solutions Corp., as we viewed them to be underpriced by the market. Among the trims to holdings over the period, we reduced CSL Ltd., the Australian-headquartered biotech, after a strong run in the share price.
| | |
| 4 | | Martin Currie International Unconstrained Equity Fund 2017 Annual Report |
Thank you for your investment in Martin Currie International Unconstrained Equity Fund. As always, we appreciate that you have chosen us to manage your assets and we remain focused on achieving the Fund’s investment goals.
Sincerely,
Tom Walker
Portfolio Manager
Martin Currie Inc.
Ken Hughes
Portfolio Manager
Martin Currie Inc.
June 20, 2017
RISKS: Equity securities are subject to market and price fluctuations. Small- and mid-cap stocks involve greater risks and volatility than large-cap stocks. The Fund may be significantly overweight or underweight in certain companies, industries or market sectors, which may cause the Fund’s performance to be more sensitive to developments affecting those companies, industries or sectors. International investments are subject to special risks, including currency fluctuations as well as social, economic and political uncertainties, which could increase volatility. These risks are magnified in emerging markets. To the extent the Fund focuses its investments in a single country or only a few countries in a 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. Derivatives, such as warrants and other synthetic instruments, can be illiquid, may disproportionately increase losses and have a potentially large impact on Fund performance. In addition to the Fund’s operating expenses, the Fund will indirectly bear the operating expenses of any underlying funds. 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. Please see the Fund’s prospectus for a more complete discussion of these and other risks and the Fund’s investment strategies.
Portfolio holdings and breakdowns are as of May 31, 2017 and are subject to change and may not be representative of the portfolio managers’ current or future investments. Please refer to pages 12 through 14 for a list and percentage breakdown of the Fund’s holdings.
The mention of sector breakdowns is for informational purposes only and should not be construed as a recommendation to purchase or sell any securities. The information provided regarding such sectors is not a sufficient basis upon which to make an investment decision. Investors seeking financial advice regarding the appropriateness of investing in any securities or investment strategies discussed should consult their financial professional. Portfolio holdings are subject to change at any time and may not be representative of the portfolio managers’ current or future investments. The Fund’s top five sector holdings (as a percentage of net assets) as of May 31, 2017 were: Health Care (19.8%), Consumer Staples (18.8%), Industrials (16.9%), Information Technology (15.0%) and Consumer Discretionary (13.2%). The Fund’s portfolio composition is subject to change at any time.
| | |
| Martin Currie International Unconstrained Equity Fund 2017 Annual Report | | 5 |
Fund overview (cont’d)
All investments are subject to risk including the possible loss of principal. Past performance is no guarantee of future results. All index performance reflects no deduction for fees, expenses or taxes. Please note that an investor cannot invest directly in an index.
The information provided is not intended to be a forecast of future events, a guarantee of future results or investment advice. Views expressed may differ from those of the firm as a whole.
| i | Synthetic foreign equity securities are a type of derivative issued by a bank or other financial institution designed to replicate the economic exposure of buying an equity security directly in a particular foreign market. |
| ii | The Federal Reserve Board (the “Fed”) is responsible for the formulation of U.S. policies designed to promote economic growth, full employment, stable prices and a sustainable pattern of international trade and payments. |
| iii | The European Central Bank (“ECB”) is responsible for the monetary system of the European Union and the euro currency. |
| iv | The MSCI All-Country World Index ex-U.S. (“MSCI ACWI ex-U.S.”) is a market capitalization weighted index designed to measure the equity market performance of developed and emerging markets. |
| | |
| 6 | | Martin Currie International Unconstrained Equity Fund 2017 Annual Report |
Fund at a glance† (unaudited)
Investment breakdown (%) as a percent of total investments
| † | The bar graph above represents the composition of the Fund’s investments as of May 31, 2017 and May 31, 2016. The Fund is actively managed. As a result, the composition of the Fund’s investments is subject to change at any time. |
| | |
| Martin Currie International Unconstrained Equity Fund 2017 Annual Report | | 7 |
Fund expenses (unaudited)
Example
As a shareholder of the Fund, you may incur two types of costs: (1) transaction costs, including front-end and back-end sales charges (loads) on purchase payments; and (2) ongoing costs, including management fees; service and/or distribution (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
This example is based on an investment of $1,000 invested on December 1, 2016 and held for the six months ended May 31, 2017.
Actual expenses
The table below titled “Based on Actual Total Return” provides information about actual account values and actual expenses. You may use the information provided in this table, together with the amount you invested, to estimate the expenses that you paid over the period. To estimate the expenses you paid on your account, divide your ending account value by $1,000 (for example, an $8,600 ending account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled “Expenses Paid During the Period”.
Hypothetical example for comparison purposes
The table below titled “Based on Hypothetical Total Return” provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio and an assumed rate of return of 5.00% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use the information provided in this table to compare the ongoing costs of investing in the Fund and other funds. To do so, compare the 5.00% hypothetical example relating to the Fund with the 5.00% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table below are meant to highlight your ongoing costs only and do not reflect any transactional costs such as front-end or back-end sales charges (loads). Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Based on actual total return1 | | | | | | | | | Based on hypothetical total return1 | |
| | | Actual
Total Return
Without
Sales
Charge2 | | | Beginning
Account
Value | | | Ending
Account
Value | | | Annualized
Expense
Ratio | | | Expenses
Paid
During
the
Period3 | | | | | | | | Hypothetical
Annualized
Total Return | | | Beginning
Account
Value | | | Ending
Account
Value | | | Annualized
Expense
Ratio | | | Expenses
Paid
During
the
Period3 | |
| Class A | | | 23.68 | % | | $ | 1,000.00 | | | $ | 1,236.80 | | | | 1.14 | % | | $ | 6.36 | | | | | | | Class A | | | 5.00 | % | | $ | 1,000.00 | | | $ | 1,019.25 | | | | 1.14 | % | | $ | 5.74 | |
| Class I | | | 23.98 | | | | 1,000.00 | | | | 1,239.80 | | | | 0.86 | | | | 4.80 | | | | | | | Class I | | | 5.00 | | | | 1,000.00 | | | | 1,020.64 | | | | 0.86 | | | | 4.33 | |
| Class IS | | | 23.78 | | | | 1,000.00 | | | | 1,237.80 | | | | 0.90 | | | | 5.02 | | | | | | | Class IS | | | 5.00 | | | | 1,000.00 | | | | 1,020.44 | | | | 0.90 | | | | 4.53 | |
| | |
| 8 | | Martin Currie International Unconstrained Equity Fund 2017 Annual Report |
| 1 | For the six months ended May 31, 2017. |
| 2 | Assumes the reinvestment of all distributions, including returns of capital, if any, at net asset value and does not reflect the deduction of the applicable sales charge with respect to Class A shares. Total return is not annualized, as it may not be representative of the total return for the year. Performance figures may reflect compensating balance arrangements, fee waivers and/or expense reimbursements. In the absence of compensating balance arrangements, fee waivers and/or expense reimbursements, the total return would have been lower. Past performance is no guarantee of future results. |
| 3 | Expenses (net of compensating balance arrangements, fee waivers and/or expense reimbursements) are equal to each class’ respective annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year (182), then divided by 365. |
| | |
| Martin Currie International Unconstrained Equity Fund 2017 Annual Report | | 9 |
Fund performance (unaudited)
| | | | | | | | | | | | |
| Average annual total returns | | | | | | | | | |
| Without sales charges1 | | Class A | | | Class I | | | Class IS | |
| Twelve Months Ended 5/31/17 | | | 17.67 | % | | | 18.09 | % | | | 18.03 | % |
| Inception* through 5/31/17 | | | 10.65 | | | | 10.99 | | | | 10.95 | |
| | | |
| With sales charges2 | | Class A | | | Class I | | | Class IS | |
| Twelve Months Ended 5/31/17 | | | 10.94 | % | | | 18.09 | % | | | 18.03 | % |
| Inception* through 5/31/17 | | | 6.37 | | | | 10.99 | | | | 10.95 | |
| | | | |
| Cumulative total returns | | | |
| Without sales charges1 | | | |
| Class A (Inception date of 11/30/15 through 5/31/17) | | | 16.38 | % |
| Class I (Inception date of 11/30/15 through 5/31/17) | | | 16.91 | |
| Class IS (Inception date of 11/30/15 through 5/31/17) | | | 16.85 | |
All figures represent past performance and are not a guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance figures may reflect compensating balance arrangements, fee waivers and/or expense reimbursements. In the absence of compensating balance arrangements, fee waivers and/or expense reimbursements, the total return would have been lower.
| 1 | Assumes the reinvestment of all distributions, including returns of capital, if any, at net asset value and does not reflect the deduction of the applicable sales charge with respect to Class A shares. |
| 2 | Assumes the reinvestment of all distributions, including returns of capital, if any, at net asset value. In addition, Class A shares reflect the deduction of the maximum initial sales charge of 5.75%. |
| * | Inception date for Class A, I and IS shares is November 30, 2015. |
| | |
| 10 | | Martin Currie International Unconstrained Equity Fund 2017 Annual Report |
Historical performance
Value of $10,000 invested in
Class A Shares of Martin Currie International Unconstrained Equity Fund vs. MSCI All-Country World Index ex-U.S.† — November 30, 2015 - May 31, 2017
Value of $1,000,000 invested in
Class I and Class IS Shares of Martin Currie International Unconstrained Equity Fund vs. MSCI All-Country World Index ex-U.S.† — November 30, 2015 - May 31, 2017
All figures represent past performance and are not a guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance figures may reflect compensating balance arrangements, fee waivers and/or expense reimbursements. In the absence of compensating balance arrangements, fee waivers and/or expense reimbursements, the total return would have been lower.
| † | Hypothetical illustration of $10,000 invested in Class A shares and $1,000,000 invested in Class I and Class IS shares of Martin Currie International Unconstrained Equity Fund on November 30, 2015 (inception date), assuming the deduction of the maximum initial sales charge of 5.75% at the time of investment for Class A shares and the reinvestment of all distributions, including returns of capital, if any, at net asset value through May 31, 2017. The hypothetical illustration also assumes a $10,000 or $1,000,000 investment, as applicable, in the MSCI All-Country World Index ex-U.S. The MSCI All-Country World Index ex-U.S. is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets. The index is calculated assuming the minimum possible dividend reinvestment. The Index is unmanaged and not subject to the same management and trading expenses as a mutual fund. Please note that an investor cannot invest directly in an index. |
| | |
| Martin Currie International Unconstrained Equity Fund 2017 Annual Report | | 11 |
Schedule of investments
May 31, 2017
Martin Currie International Unconstrained Equity Fund
| | | | | | | | | | | | | | | | |
| Security | | | | | | | | Shares | | | Value | |
| Common Stocks — 100.3% | | | | | | | | | | | | | | | | |
| Consumer Discretionary — 13.2% | | | | | | | | | | | | | | | | |
Media — 4.6% | | | | | | | | | | | | | | | | |
ProSiebenSat.1 Media SE | | | | | | | | | | | 2,509 | | | $ | 106,567 | (a) |
Sky PLC | | | | | | | | | | | 8,897 | | | | 113,693 | (a) |
Total Media | | | | | | | | | | | | | | | 220,260 | |
Specialty Retail — 4.0% | | | | | | | | | | | | | | | | |
Industria de Diseno Textil SA | | | | | | | | | | | 4,673 | | | | 191,094 | (a) |
Textiles, Apparel & Luxury Goods — 4.6% | | | | | | | | | | | | | | | | |
Compagnie Financiere Richemont SA, Registered Shares | | | | | | | | | | | 1,377 | | | | 114,911 | (a) |
Hermes International | | | | | | | | | | | 207 | | | | 102,314 | (a) |
Total Textiles, Apparel & Luxury Goods | | | | | | | | | | | | | | | 217,225 | |
Total Consumer Discretionary | | | | | | | | | | | | | | | 628,579 | |
| Consumer Staples — 18.8% | | | | | | | | | | | | | | | | |
Food Products — 4.5% | | | | | | | | | | | | | | | | |
Kerry Group PLC, Class A Shares | | | | | | | | | | | 2,417 | | | | 213,316 | (a) |
Household Products — 4.7% | | | | | | | | | | | | | | | | |
Reckitt Benckiser Group PLC | | | | | | | | | | | 2,207 | | | | 225,740 | (a) |
Personal Products — 5.7% | | | | | | | | | | | | | | | | |
L’Oreal SA | | | | | | | | | | | 574 | | | | 122,837 | (a) |
Unilever NV, CVA | | | | | | | | | | | 2,625 | | | | 149,522 | (a) |
Total Personal Products | | | | | | | | | | | | | | | 272,359 | |
Tobacco — 3.9% | | | | | | | | | | | | | | | | |
British American Tobacco PLC | | | | | | | | | | | 2,616 | | | | 187,114 | (a) |
Total Consumer Staples | | | | | | | | | | | | | | | 898,529 | |
| Financials — 8.2% | | | | | | | | | | | | | | | | |
Insurance — 8.2% | | | | | | | | | | | | | | | | |
AIA Group Ltd. | | | | | | | | | | | 29,800 | | | | 211,537 | (a) |
Prudential PLC | | | | | | | | | | | 8,107 | | | | 181,630 | (a) |
Total Financials | | | | | | | | | | | | | | | 393,167 | |
| Health Care — 19.8% | | | | | | | | | | | | | | | | |
Biotechnology — 2.7% | | | | | | | | | | | | | | | | |
CSL Ltd. | | | | | | | | | | | 1,316 | | | | 126,494 | (a) |
Health Care Equipment & Supplies — 7.2% | | | | | | | | | | | | | | | | |
Coloplast A/S, Class B Shares | | | | | | | | | | | 1,806 | | | | 154,681 | (a) |
Essilor International SA | | | | | | | | | | | 1,406 | | | | 187,065 | (a) |
Total Health Care Equipment & Supplies | | | | | | | | | | | | | | | 341,746 | |
Life Sciences Tools & Services — 2.4% | | | | | | | | | | | | | | | | |
Mettler-Toledo International Inc. | | | | | | | | | | | 200 | | | | 116,562 | * |
See Notes to Financial Statements.
| | |
| 12 | | Martin Currie International Unconstrained Equity Fund 2017 Annual Report |
Martin Currie International Unconstrained Equity Fund
| | | | | | | | | | | | | | | | |
| Security | | | | | | | | Shares | | | Value | |
Pharmaceuticals — 7.5% | | | | | | | | | | | | | | | | |
Novo Nordisk A/S, Class B Shares | | | | | | | | | | | 4,412 | | | $ | 187,613 | (a) |
Roche Holding AG | | | | | | | | | | | 626 | | | | 171,993 | (a) |
Total Pharmaceuticals | | | | | | | | | | | | | | | 359,606 | |
Total Health Care | | | | | | | | | | | | | | | 944,408 | |
| Industrials — 16.9% | | | | | | | | | | | | | | | | |
Building Products — 2.5% | | | | | | | | | | | | | | | | |
Geberit AG, Registered Shares | | | | | | | | | | | 252 | | | | 118,050 | (a) |
Commercial Services & Supplies — 1.9% | | | | | | | | | | | | | | | | |
Brambles Ltd. | | | | | | | | | | | 11,817 | | | | 91,081 | (a) |
Machinery — 4.7% | | | | | | | | | | | | | | | | |
Atlas Copco AB, Class A Shares | | | | | | | | | | | 2,866 | | | | 106,079 | (a) |
Kone OYJ, Class B Shares | | | | | | | | | | | 2,395 | | | | 118,787 | (a) |
Total Machinery | | | | | | | | | | | | | | | 224,866 | |
Professional Services — 2.9% | | | | | | | | | | | | | | | | |
SGS SA, Registered Shares | | | | | | | | | | | 57 | | | | 135,748 | (a) |
Road & Rail — 2.4% | | | | | | | | | | | | | | | | |
Canadian National Railway Co. | | | | | | | | | | | 1,500 | | | | 116,293 | |
Trading Companies & Distributors — 2.5% | | | | | | | | | | | | | | | | |
Bunzl PLC | | | | | | | | | | | 3,818 | | | | 119,659 | (a) |
Total Industrials | | | | | | | | | | | | | | | 805,697 | |
| Information Technology — 15.0% | | | | | | | | | | | | | | | | |
Internet Software & Services — 3.4% | | | | | | | | | | | | | | | | |
Tencent Holdings Ltd. | | | | | | | | | | | 4,700 | | | | 161,332 | (a) |
IT Services — 4.2% | | | | | | | | | | | | | | | | |
Cognizant Technology Solutions Corp., Class A Shares | | | | | | | | | | | 3,000 | | | | 200,730 | |
Semiconductors & Semiconductor Equipment — 4.1% | | | | | | | | | | | | | | | | |
Taiwan Semiconductor Manufacturing Co., Ltd. | | | | | | | | | | | 29,000 | | | | 195,119 | (a) |
Software — 3.3% | | | | | | | | | | | | | | | | |
Check Point Software Technologies Ltd. | | | | | | | | | | | 1,400 | | | | 156,870 | * |
Total Information Technology | | | | | | | | | | | | | | | 714,051 | |
| Materials — 3.8% | | | | | | | | | | | | | | | | |
Chemicals — 3.8% | | | | | | | | | | | | | | | | |
Croda International PLC | | | | | | | | | | | 3,511 | | | | 179,497 | (a) |
| Telecommunication Services — 4.6% | | | | | | | | | | | | | | | | |
Diversified Telecommunication Services — 2.2% | | | | | | | | | | | | | | | | |
Singapore Telecommunications Ltd. | | | | | | | | | | | 38,100 | | | | 103,525 | (a) |
See Notes to Financial Statements.
| | |
| Martin Currie International Unconstrained Equity Fund 2017 Annual Report | | 13 |
Schedule of investments (cont’d)
May 31, 2017
Martin Currie International Unconstrained Equity Fund
| | | | | | | | | | | | | | | | |
| Security | | | | | | | | Shares | | | Value | |
Wireless Telecommunication Services — 2.4% | | | | | | | | | | | | | | | | |
China Mobile Ltd. | | | | | | | | | | | 10,500 | | | $ | 116,540 | (a) |
Total Telecommunication Services | | | | | | | | | | | | | | | 220,065 | |
Total Investments — 100.3% (Cost — $4,263,313#) | | | | | | | | | | | | | | | 4,783,993 | |
Liabilities in Excess of Other Assets — (0.3)% | | | | | | | | | | | | | | | (13,878 | ) |
Total Net Assets — 100.0% | | | | | | | | | | | | | | $ | 4,770,115 | |
| * | Non-income producing security. |
| (a) | Security is valued in good faith in accordance with procedures approved by the Board of Trustees (See Note 1). |
| # | Aggregate cost for federal income tax purposes is $4,263,521. |
| | |
Abbreviation used in this schedule: |
| CVA | | — Certificaaten van aandelen (Share Certificates) |
| | | | |
| Summary of Investments by Country** (unaudited) | |
| United Kingdom | | | 24.2 | % |
| Switzerland | | | 11.3 | |
| France | | | 8.6 | |
| Denmark | | | 7.2 | |
| United States | | | 6.6 | |
| China | | | 5.8 | |
| Australia | | | 4.5 | |
| Ireland | | | 4.5 | |
| Hong Kong | | | 4.4 | |
| Taiwan | | | 4.1 | |
| Spain | | | 4.0 | |
| Israel | | | 3.3 | |
| Finland | | | 2.5 | |
| Canada | | | 2.4 | |
| Germany | | | 2.2 | |
| Sweden | | | 2.2 | |
| Singapore | | | 2.2 | |
| | | | 100.0 | % |
| ** | As a percentage of total investments. Please note that the Fund holdings are as of May 31, 2017 and are subject to change. |
See Notes to Financial Statements.
| | |
| 14 | | Martin Currie International Unconstrained Equity Fund 2017 Annual Report |
Statement of assets and liabilities
May 31, 2017
| | | | |
|
| Assets: | |
Investments, at value (Cost — $4,263,313) | | $ | 4,783,993 | |
Foreign currency, at value (Cost — $2,539) | | | 2,541 | |
Cash | | | 59,336 | |
Dividends receivable | | | 12,642 | |
Receivable from investment manager | | | 10,264 | |
Receivable for Fund shares sold | | | 100 | |
Prepaid expenses | | | 24,999 | |
Total Assets | | | 4,893,875 | |
|
| Liabilities: | |
Payable to investment manager (Note 2) | | | 59,125 | |
Payable for offering costs | | | 12,179 | |
Trustees’ fees payable | | | 50 | |
Service and/or distribution fees payable | | | 28 | |
Accrued expenses | | | 52,378 | |
Total Liabilities | | | 123,760 | |
| Total Net Assets | | $ | 4,770,115 | |
|
| Net Assets: | |
Par value (Note 7) | | $ | 4 | |
Paid-in capital in excess of par value | | | 4,146,439 | |
Undistributed net investment income | | | 40,009 | |
Accumulated net realized gain on investments and foreign currency transactions | | | 62,837 | |
Net unrealized appreciation on investments and foreign currencies | | | 520,826 | |
| Total Net Assets | | $ | 4,770,115 | |
|
| Net Assets: | |
Class A | | | $134,263 | |
Class I | | | $194,360 | |
Class IS | | | $4,441,492 | |
|
| Shares Outstanding: | |
Class A | | | 11,775 | |
Class I | | | 16,994 | |
Class IS | | | 388,473 | |
|
| Net Asset Value: | |
Class A (and redemption price) | | | $11.40 | |
Class I (and redemption price) | | | $11.44 | |
Class IS (and redemption price) | | | $11.43 | |
| Maximum Public Offering Price Per Share: | |
Class A (based on maximum initial sales charge of 5.75%) | | | $12.10 | |
See Notes to Financial Statements.
| | |
| Martin Currie International Unconstrained Equity Fund 2017 Annual Report | | 15 |
Statement of operations
For the Year Ended May 31, 2017
| | | | |
|
| Investment Income: | |
Dividends | | $ | 93,976 | |
Interest | | | 535 | |
Less: Foreign taxes withheld | | | (9,008) | |
Total Investment Income | | | 85,503 | |
|
| Expenses: | |
Offering costs (Note 1) | | | 68,784 | |
Audit and tax fees | | | 42,420 | |
Registration fees | | | 38,206 | |
Investment management fee (Note 2) | | | 30,877 | |
Fund accounting fees | | | 17,143 | |
Legal fees | | | 15,985 | |
Shareholder reports | | | 13,428 | |
Custody fees | | | 13,097 | |
Fees recaptured by investment manager (Note 2) | | | 1,288 | |
Trustees’ fees | | | 526 | |
Service and/or distribution fees (Notes 2 and 5) | | | 284 | |
Insurance | | | 221 | |
Transfer agent fees (Note 5) | | | 197 | |
Miscellaneous expenses | | | 7,977 | |
Total Expenses | | | 250,433 | |
Less: Fee waivers and/or expense reimbursements (Notes 2 and 5) | | | (213,086) | |
Net Expenses | | | 37,347 | |
| Net Investment Income | | | 48,156 | |
|
Realized and Unrealized Gain (Loss) on Investments
and Foreign Currency Transactions (Notes 1 and 3): | |
Net Realized Gain (Loss) From: | |
Investment transactions | | | 137,765 | |
Foreign currency transactions | | | (5,556) | |
Net Realized Gain | | | 132,209 | |
Change in Net Unrealized Appreciation From: | |
Investments | | | 547,850 | |
Foreign currencies | | | 154 | |
Change in Net Unrealized Appreciation | | | 548,004 | |
| Net Gain on Investments and Foreign Currency Transactions | | | 680,213 | |
| Increase in Net Assets From Operations | | $ | 728,369 | |
See Notes to Financial Statements.
| | |
| 16 | | Martin Currie International Unconstrained Equity Fund 2017 Annual Report |
Statements of changes in net assets
| | | | | | | | |
For the Year Ended May 31, 2017
and the Period Ended May 31, 2016 | | 2017 | | | 2016† | |
|
| Operations: | |
Net investment income | | $ | 48,156 | | | $ | 32,068 | |
Net realized gain (loss) | | | 132,209 | | | | (44,724) | |
Change in net unrealized appreciation (depreciation) | | | 548,004 | | | | (27,178) | |
Increase (Decrease) in Net Assets From Operations | | | 728,369 | | | | (39,834) | |
|
| Distributions to Shareholders From (Notes 1 and 6): | |
Net investment income | | | (43,000) | | | | — | |
Net realized gains | | | (41,964) | | | | — | |
Decrease in Net Assets From Distributions to Shareholders | | | (84,964) | | | | — | |
|
| Fund Share Transactions (Note 7): | |
Net proceeds from sale of shares | | | 76,595 | | | | 4,005,000 | |
Reinvestment of distributions | | | 84,964 | | | | — | |
Cost of shares repurchased | | | (15) | | | | — | |
Increase in Net Assets From Fund Share Transactions | | | 161,544 | | | | 4,005,000 | |
Increase in Net Assets | | | 804,949 | | | | 3,965,166 | |
|
| Net Assets: | |
Beginning of year | | | 3,965,166 | | | | — | |
End of year* | | $ | 4,770,115 | | | $ | 3,965,166 | |
*Includes undistributed net investment income of: | | | $40,009 | | | | $30,098 | |
| † | For the period November 30, 2015 (inception date) to May 31, 2016. |
See Notes to Financial Statements.
| | |
| Martin Currie International Unconstrained Equity Fund 2017 Annual Report | | 17 |
Financial highlights
| | | | | | | | |
For a share of each class of beneficial interest outstanding throughout each year ended May 31,
unless otherwise noted: | |
| Class A Shares1 | | 2017 | | | 20162 | |
| | |
| Net asset value, beginning of year | | | $9.89 | | | | $10.00 | |
|
| Income (loss) from operations: | |
Net investment income | | | 0.09 | | | | 0.07 | |
Net realized and unrealized gain (loss) | | | 1.61 | | | | (0.18) | |
Total income (loss) from operations | | | 1.70 | | | | (0.11) | |
|
| Less distributions from: | |
Net investment income | | | (0.09) | | | | — | |
Net realized gains | | | (0.10) | | | | — | |
Total distributions | | | (0.19) | | | | — | |
| | |
| Net asset value, end of year | | | $11.40 | | | | $9.89 | |
Total return3 | | | 17.67 | % | | | (1.10) | % |
| | |
| Net assets, end of year (000s) | | | $134 | | | | $99 | |
|
| Ratios to average net assets: | |
Gross expenses | | | 6.34 | %4 | | | 9.89 | %5 |
Net expenses6,7 | | | 1.16 | 4 | | | 1.19 | 5 |
Net investment income | | | 0.93 | | | | 1.38 | 5 |
| | |
| Portfolio turnover rate | | | 22 | % | | | 2 | % |
| 1 | Per share amounts have been calculated using the average shares method. |
| 2 | For the period November 30, 2015 (inception date) to May 31, 2016. |
| 3 | Performance figures, exclusive of sales charges, may reflect compensating balance arrangements, fee waivers and/or expense reimbursements. In the absence of compensating balance arrangements, fee waivers and/or expense reimbursements, the total return would have been lower. Past performance is no guarantee of future results. Total returns for the periods of less than one year are not annualized. |
| 4 | Reflects recapture of expenses waived/reimbursed from prior fiscal years. |
| 6 | As a result of an expense limitation arrangement, the ratio of total annual fund operating expenses, other than interest, brokerage commissions, dividend expense on short sales, taxes, extraordinary expenses and acquired fund fees and expenses, to average net assets of Class A shares did not exceed 1.35%. This expense limitation arrangement cannot be terminated prior to December 31, 2018 without the Board of Trustees’ consent. |
| 7 | Reflects fee waivers and/or expense reimbursements. |
See Notes to Financial Statements.
| | |
| 18 | | Martin Currie International Unconstrained Equity Fund 2017 Annual Report |
| | | | | | | | |
For a share of each class of beneficial interest outstanding throughout each year ended May 31,
unless otherwise noted: | |
| Class I Shares1 | | 2017 | | | 20162 | |
| | |
| Net asset value, beginning of year | | | $9.90 | | | | $10.00 | |
|
| Income (loss) from operations: | |
Net investment income | | | 0.12 | | | | 0.08 | |
Net realized and unrealized gain (loss) | | | 1.62 | | | | (0.18) | |
Total income (loss) from operations | | | 1.74 | | | | (0.10) | |
|
| Less distributions from: | |
Net investment income | | | (0.10) | | | | — | |
Net realized gains | | | (0.10) | | | | — | |
Total distributions | | | (0.20) | | | | — | |
| | |
| Net asset value, end of year | | | $11.44 | | | | $9.90 | |
Total return3 | | | 18.09 | % | | | (1.00) | % |
| | |
| Net assets, end of year (000s) | | | $194 | | | | $104 | |
|
| Ratios to average net assets: | |
Gross expenses | | | 5.98 | %4 | | | 9.61 | %5 |
Net expenses6,7 | | | 0.90 | 4 | | | 0.91 | 5 |
Net investment income | | | 1.23 | | | | 1.68 | 5 |
| | |
| Portfolio turnover rate | | | 22 | % | | | 2 | % |
| 1 | Per share amounts have been calculated using the average shares method. |
| 2 | For the period November 30, 2015 (inception date) to May 31, 2016. |
| 3 | Performance figures may reflect compensating balance arrangements, fee waivers and/or expense reimbursements. In the absence of compensating balance arrangements, fee waivers and/or expense reimbursements, the total return would have been lower. Past performance is no guarantee of future results. Total returns for the periods of less than one year are not annualized. |
| 4 | Reflects recapture of fees waived/reimbursed from prior fiscal years. |
| 6 | As a result of an expense limitation arrangement, the ratio of total annual fund operating expenses, other than interest, brokerage commissions, dividend expense on short sales, taxes, extraordinary expenses and acquired fund fees and expenses, to average net assets of Class I shares did not exceed 1.00%. This expense limitation arrangement cannot be terminated prior to December 31, 2018 without the Board of Trustees’ consent. |
| 7 | Reflects fee waivers and/or expense reimbursements. |
See Notes to Financial Statements.
| | |
| Martin Currie International Unconstrained Equity Fund 2017 Annual Report | | 19 |
Financial highlights (cont’d)
| | | | | | | | |
For a share of each class of beneficial interest outstanding throughout each year ended May 31,
unless otherwise noted: | |
| Class IS Shares1 | | 2017 | | | 20162 | |
| | |
| Net asset value, beginning of year | | | $9.90 | | | | $10.00 | |
|
| Income (loss) from operations: | |
Net investment income | | | 0.12 | | | | 0.08 | |
Net realized and unrealized gain (loss) | | | 1.61 | | | | (0.18) | |
Total income (loss) from operations | | | 1.73 | | | | (0.10) | |
|
| Less distributions from: | |
Net investment income | | | (0.10) | | | | — | |
Net realized gains | | | (0.10) | | | | — | |
Total distributions | | | (0.20) | | | | — | |
| | |
| Net asset value, end of year | | | $11.43 | | | | $9.90 | |
Total return3 | | | 18.03 | % | | | (1.00) | % |
| | |
| Net assets, end of year (000s) | | | $4,441 | | | | $3,762 | |
|
| Ratios to average net assets: | |
Gross expenses | | | 6.08 | %4 | | | 9.61 | %5 |
Net expenses6,7 | | | 0.90 | 4 | | | 0.90 | 5 |
Net investment income | | | 1.17 | | | | 1.68 | 5 |
| | |
| Portfolio turnover rate | | | 22 | % | | | 2 | % |
| 1 | Per share amounts have been calculated using the average shares method. |
| 2 | For the period November 30, 2015 (inception date) to May 31, 2016. |
| 3 | Performance figures may reflect compensating balance arrangements, fee waivers and/or expense reimbursements. In the absence of compensating balance arrangements, fee waivers and/or expense reimbursements, the total return would have been lower. Past performance is no guarantee of future results. Total returns for the periods of less than one year are not annualized. |
| 4 | Reflects recapture of expenses waived/reimbursed from prior fiscal years. |
| 6 | As a result of an expense limitation arrangement, the ratio of total annual fund operating expenses, other than interest, brokerage commissions, dividend expense on short sales, taxes, extraordinary expenses and acquired fund fees and expenses, to average net assets of Class IS shares did not exceed 0.90%. 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, 2018 without the Board of Trustees’ consent. |
| 7 | Reflects fee waivers and/or expense reimbursements. |
See Notes to Financial Statements.
| | |
| 20 | | Martin Currie International Unconstrained Equity Fund 2017 Annual Report |
Notes to financial statements
1. Organization and significant accounting policies
Martin Currie International Unconstrained Equity Fund (the “Fund”) is a separate non-diversified investment series of Legg Mason Global Asset Management Trust (the “Trust”). The Trust, a Maryland statutory trust, is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company.
The following are significant accounting policies consistently followed by the Fund and are in conformity with U.S. generally accepted accounting principles (“GAAP”). Estimates and assumptions are required to be made regarding assets, liabilities and changes in net assets resulting from operations when financial statements are prepared. Changes in the economic environment, financial markets and any other parameters used in determining these estimates could cause actual results to differ. Subsequent events have been evaluated through the date the financial statements were issued.
(a) Investment valuation. Equity securities for which market quotations are available are valued at the last reported sales price or official closing price on the primary market or exchange on which they trade. The valuations for fixed income securities (which may include, but are not limited to, corporate, government, municipal, mortgage-backed, collateralized mortgage obligations and asset-backed securities) and certain derivative instruments are typically the prices supplied by independent third party pricing services, which may use market prices or broker/dealer quotations or a variety of valuation techniques and methodologies. The independent third party pricing services use inputs that are observable such as issuer details, interest rates, yield curves, prepayment speeds, credit risks/spreads, default rates and quoted prices for similar securities. Short-term fixed income securities that will mature in 60 days or less are valued at amortized cost, unless it is determined that using this method would not reflect an investment’s fair value. Investments in open-end funds are valued at the closing net asset value per share of each fund on the day of valuation. When the Fund holds securities or other assets that are denominated in a foreign currency, the Fund will normally use the currency exchange rates as of 4:00 p.m. (Eastern Time). If independent third party pricing services are unable to supply prices for a portfolio investment, or if the prices supplied are deemed by the manager to be unreliable, the market price may be determined by the manager using quotations from one or more broker/dealers or at the transaction price if the security has recently been purchased and no value has yet been obtained from a pricing service or pricing broker. When reliable prices are not readily available, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded, but before the Fund calculates its net asset value, the Fund values these securities as determined in accordance with procedures approved by the Fund’s Board of Trustees.
The Board of Trustees is responsible for the valuation process and has delegated the supervision of the daily valuation process to the Legg Mason North Atlantic Fund Valuation Committee (the “Valuation Committee”). The Valuation Committee, pursuant to the policies
| | |
| Martin Currie International Unconstrained Equity Fund 2017 Annual Report | | 21 |
Notes to financial statements (cont’d)
adopted by the Board of Trustees, is responsible for making fair value determinations, evaluating the effectiveness of the Fund’s pricing policies, and reporting to the Board of Trustees. When determining the reliability of third party pricing information for investments owned by the Fund, the Valuation Committee, among other things, conducts due diligence reviews of pricing vendors, monitors the daily change in prices and reviews transactions among market participants.
The Valuation Committee will consider pricing methodologies it deems relevant and appropriate when making fair value determinations. Examples of possible methodologies include, but are not limited to, multiple of earnings; discount from market of a similar freely traded security; discounted cash-flow analysis; book value or a multiple thereof; risk premium/yield analysis; yield to maturity; and/or fundamental investment analysis. The Valuation Committee will also consider factors it deems relevant and appropriate in light of the facts and circumstances. Examples of possible factors include, but are not limited to, the type of security; the issuer’s financial statements; the purchase price of the security; the discount from market value of unrestricted securities of the same class at the time of purchase; analysts’ research and observations from financial institutions; information regarding any transactions or offers with respect to the security; the existence of merger proposals or tender offers affecting the security; the price and extent of public trading in similar securities of the issuer or comparable companies; and the existence of a shelf registration for restricted securities.
For each portfolio security that has been fair valued pursuant to the policies adopted by the Board of Trustees, the fair value price is compared against the last available and next available market quotations. The Valuation Committee reviews the results of such back testing monthly and fair valuation occurrences are reported to the Board of Trustees quarterly.
The Fund uses valuation techniques to measure fair value that are consistent with the market approach and/or income approach, depending on the type of security and the particular circumstance. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable securities. The income approach uses valuation techniques to discount estimated future cash flows to present value.
GAAP establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are summarized in the three broad levels listed below:
| • | | Level 1 — quoted prices in active markets for identical investments |
| • | | Level 2 — other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) |
| • | | Level 3 — significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments) |
| | |
| 22 | | Martin Currie International Unconstrained Equity Fund 2017 Annual Report |
The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used in valuing the Fund’s assets carried at fair value:
| | | | | | | | | | | | | | | | |
| ASSETS | |
| Description | | Quoted Prices
(Level 1) | | | Other Significant
Observable Inputs
(Level 2) | | | Significant
Unobservable
Inputs
(Level 3) | | | Total | |
| Long-term investments†: | | | | | | | | | | | | | | | | |
Common stocks: | | | | | | | | | | | | | | | | |
Consumer discretionary | | | — | | | $ | 628,579 | | | | — | | | $ | 628,579 | |
Consumer staples | | | — | | | | 898,529 | | | | — | | | | 898,529 | |
Financials | | | — | | | | 393,167 | | | | — | | | | 393,167 | |
Health care | | $ | 116,562 | | | | 827,846 | | | | — | | | | 944,408 | |
Industrials | | | 116,293 | | | | 689,404 | | | | — | | | | 805,697 | |
Information technology | | | 357,600 | | | | 356,451 | | | | — | | | | 714,051 | |
Materials | | | — | | | | 179,497 | | | | — | | | | 179,497 | |
Telecommunication services | | | — | | | | 220,065 | | | | — | | | | 220,065 | |
| Total investments | | $ | 590,455 | | | $ | 4,193,538 | | | | — | | | $ | 4,783,993 | |
| † | See Schedule of Investments for additional detailed categorizations. |
For the year ended May 31, 2017, as a result of the fair value pricing procedures for international equities utilized by the Fund, certain securities have transferred in and out of Level 1 and Level 2 measurements during the period. The Fund’s policy is to recognize transfers between levels as of the end of the reporting period. At May 31, 2017, securities valued at $4,193,538 were classified as Level 2 within the fair value hierarchy because fair value procedures were applied when the change in value of a domestic equity security index suggested that the closing prices on foreign exchanges may no longer have represented the value of those securities at the time of closing of the NYSE.
(b) Foreign currency translation. Investment securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts based upon prevailing exchange rates on the date of valuation. Purchases and sales of investment securities and income and expense items denominated in foreign currencies are translated into U.S. dollar amounts based upon prevailing exchange rates on the respective dates of such transactions.
The Fund does not isolate that portion of the results of operations resulting from fluctuations in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments.
Net realized foreign exchange gains or losses arise from sales of foreign currencies, including gains and losses on forward foreign currency contracts, currency gains or losses realized
| | |
| Martin Currie International Unconstrained Equity Fund 2017 Annual Report | | 23 |
Notes to financial statements (cont’d)
between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the values of assets and liabilities, other than investments in securities, on the date of valuation, resulting from changes in exchange rates.
Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.
(c) Foreign investment risks. The Fund’s investments in foreign securities may involve risks not present in domestic investments. Since securities may be denominated in foreign currencies, may require settlement in foreign currencies or pay interest or dividends in foreign currencies, changes in the relationship of these foreign currencies to the U.S. dollar can significantly affect the value of the investments and earnings of the Fund. Foreign investments may also subject the Fund to foreign government exchange restrictions, expropriation, taxation or other political, social or economic developments, all of which affect the market and/or credit risk of the investments.
(d) Security transactions and investment income. Security transactions are accounted for on a trade date basis. Interest income, adjusted for amortization of premium and accretion of discount, is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date. Foreign dividend income is recorded on the ex-dividend date or as soon as practicable after the Fund determines the existence of a dividend declaration after exercising reasonable due diligence. The cost of investments sold is determined by use of the specific identification method. To the extent any issuer defaults or a credit event occurs that impacts the issuer, the Fund may halt any additional interest income accruals and consider the realizability of interest accrued up to the date of default or credit event.
(e) Distributions to shareholders. Distributions from net investment income and distributions of net realized gains, if any, are declared at least annually. Distributions to shareholders of the Fund are recorded on the ex-dividend date and are determined in accordance with income tax regulations, which may differ from GAAP.
(f) Share class accounting. Investment income, common expenses and realized/unrealized gains (losses) on investments are allocated to the various classes of the Fund on the basis of daily net assets of each class. Fees relating to a specific class are charged directly to that share class.
(g) Compensating balance arrangements. The Fund has an arrangement with its custodian bank whereby a portion of the custodian’s fees is paid indirectly by credits earned on the Fund’s cash on deposit with the bank.
| | |
| 24 | | Martin Currie International Unconstrained Equity Fund 2017 Annual Report |
(h) Offering costs. Costs incurred by the Fund in connection with the commencement of the Fund’s operations are being amortized on a straight line basis over twelve months.
(i) Federal and other taxes. It is the Fund’s policy to comply with the federal income and excise tax requirements of the Internal Revenue Code of 1986 (the “Code”), as amended, applicable to regulated investment companies. Accordingly, the Fund intends to distribute its taxable income and net realized gains, if any, to shareholders in accordance with timing requirements imposed by the Code. Therefore, no federal or state income tax provision is required in the Fund’s financial statements.
Management has analyzed the Fund’s tax positions taken on income tax returns for all open tax years and has concluded that as of May 31, 2017, no provision for income tax is required in the Fund’s financial statements. The Fund’s federal and state income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.
Under the applicable foreign tax laws, a withholding tax may be imposed on interest, dividends and capital gains at various rates.
(j) Reclassification. GAAP requires that certain components of net assets be reclassified to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or net asset value per share. During the current year, the following reclassifications have been made:
| | | | | | | | | | | | |
| | | Undistributed Net
Investment Income | | | Accumulated Net
Realized Gain | | | Paid-in
Capital | |
| (a) | | $ | 10,311 | | | | — | | | $ | (10,311) | |
| (b) | | | (5,556) | | | $ | 5,556 | | | | — | |
| (a) | Reclassifications are due to non-deductible offering costs for tax purposes. |
| (b) | Reclassifications are due to foreign currency transactions treated as ordinary income for tax purposes. |
2. Investment management agreement and other transactions with affiliates
Legg Mason Partners Fund Advisor, LLC (“LMPFA”) is the Fund’s investment manager and Martin Currie Inc. (“Martin Currie”) is the Fund’s subadviser. Western Asset Management Company (“Western Asset”) manages the portion of the Fund’s cash and short-term instruments allocated to it. LMPFA, Martin Currie and Western Asset are wholly-owned subsidiaries of Legg Mason, Inc. (“Legg Mason”).
Under the investment management agreement, the Fund pays an investment management fee, calculated daily and paid monthly, in accordance with the following breakpoint schedule:
| | | | |
| Average Daily Net Assets | | Annual Rate | |
| First $1 billion | | | 0.750 | % |
| Next $1 billion | | | 0.725 | |
| Next $3 billion | | | 0.700 | |
| Next $5 billion | | | 0.675 | |
| Over $10 billion | | | 0.650 | |
| | |
| Martin Currie International Unconstrained Equity Fund 2017 Annual Report | | 25 |
Notes to financial statements (cont’d)
LMPFA provides administrative and certain oversight services to the Fund. LMPFA delegates to the subadviser the day-to-day portfolio management of the Fund, except for the management of the portion of the cash and short-term instruments allocated to Western Asset. For its services, LMPFA pays Martin Currie monthly an aggregate fee equal to 70% of the net management fee it receives from the Fund. For Western Asset’s services to the Fund, LMPFA pays Western Asset monthly 0.02% of the portion of the Fund’s average daily net assets that are allocated to Western Asset by LMPFA.
As a result of expense limitation arrangements between the Fund and LMPFA, the ratio of total annual fund operating expenses, other than interest, brokerage commissions, dividend expense on short sales, taxes, extraordinary expenses and acquired fund fees and expenses, to average net assets of Class A, Class I and Class IS shares did not exceed 1.35%, 1.00% and 0.90%, respectively. In addition, the ratio of total annual fund operating expenses for Class IS shares did not exceed the ratio of total annual fund operating expenses for Class I shares. These expense limitation arrangements cannot be terminated prior to December 31, 2018 without the Board of Trustees’ consent.
During the year ended May 31, 2017, fees waived and/or expenses reimbursed amounted to $213,086.
LMPFA is permitted to recapture amounts waived and/or reimbursed to a class within three years after the fiscal year in which LMPFA earned the fee or incurred the expense if the class’ total annual operating expenses have fallen to a level below the expense limitation (“expense cap”) in effect at the time the fees were earned or the expenses incurred. In no case will LMPFA recapture any amount that would result, on any particular business day of the Fund, in the class’ total annual operating expenses exceeding the expense cap or any other lower limit then in effect.
Pursuant to these arrangements, at May 31, 2017, the Fund had remaining fee waivers and/or expense reimbursements subject to recapture by LMPFA and respective dates of expiration as follows:
| | | | | | | | | | | | |
| | | Class A | | | Class I | | | Class IS | |
| Expires May 31, 2019 | | $ | 4,134 | | | $ | 4,303 | | | $ | 157,796 | |
| Expires May 31, 2020 | | | 5,873 | | | | 7,565 | | | | 199,648 | |
| Fees waived/expense reimbursements subject to recapture | | $ | 10,007 | | | $ | 11,868 | | | $ | 357,444 | |
For the year ended May 31, 2017, LMPFA recaptured $37, $52, and $1,199 for Class A, Class I and Class IS shares, respectively.
At May 31, 2017, $59,125 was payable to LMPFA by the Fund for reimbursement of fund operating expenses paid by LMPFA on behalf of the Fund.
Legg Mason Investor Services, LLC (‘‘LMIS’’), a wholly-owned broker-dealer subsidiary of Legg Mason, serves as the Fund’s sole and exclusive distributor.
There is a maximum initial sales charge of 5.75% for Class A shares. In certain cases, Class A shares have a 1.00% contingent deferred sales charge (“CDSC”), which applies if
| | |
| 26 | | Martin Currie International Unconstrained Equity Fund 2017 Annual Report |
redemption occurs within 18 months from purchase payment. This CDSC only applies to those purchases of Class A shares, which, when combined with current holdings of other shares of funds sold by LMIS, equal or exceed $1,000,000 in the aggregate. These purchases do not incur an initial sales charge.
For the year ended May 31, 2017, LMIS and its affiliates did not receive any sales charges on sales of the Fund’s Class A shares. In addition, for the year ended May 31, 2017, there were no CDSCs paid to LMIS and its affiliates.
Under a Deferred Compensation Plan (the “Plan”), Trustees may have elected to defer receipt of all or a specified portion of their compensation. A participating Trustee selected one or more funds managed by affiliates of Legg Mason in which his or her deferred trustee’s fees were deemed to be invested. Deferred amounts remain in the Fund until distributed in accordance with the Plan. In May 2015, the Board of Trustees approved an amendment to the Plan so that effective January 1, 2016, no compensation earned after that date may be deferred under the Plan.
All officers and one Trustee of the Trust are employees of Legg Mason or its affiliates and do not receive compensation from the Trust.
As of May 31, 2017, Legg Mason and its affiliates owned 98% of the Fund.
3. Investments
During the year ended May 31, 2017, the aggregate cost of purchases and proceeds from sales of investments (excluding short-term investments) were as follows:
| | | | |
| Purchases | | $ | 1,178,803 | |
| Sales | | | 881,956 | |
At May 31, 2017, the aggregate gross unrealized appreciation and depreciation of investments for federal income tax purposes were as follows:
| | | | |
| Gross unrealized appreciation | | $ | 611,192 | |
| Gross unrealized depreciation | | | (90,720) | |
| Net unrealized appreciation | | $ | 520,472 | |
4. Derivative instruments and hedging activities
During the year ended May 31, 2017, the Fund did not invest in derivative instruments.
5. Class specific expenses, waivers and/or expense reimbursements
The Fund has adopted a Rule 12b-1 shareholder services and distribution plan and under that plan the Fund pays service and/or distribution fees with respect to its Class A shares calculated at the annual rate of 0.25% of the average daily net assets of the class. Service and/or distribution fees are accrued daily and paid monthly.
| | |
| Martin Currie International Unconstrained Equity Fund 2017 Annual Report | | 27 |
Notes to financial statements (cont’d)
For the year ended May 31, 2017, class specific expenses were as follows:
| | | | | | | | |
| | | Service and/or
Distribution Fees | | | Transfer Agent
Fees | |
| Class A | | $ | 284 | | | $ | 51 | |
| Class I | | | — | | | | 123 | |
| Class IS | | | — | | | | 23 | |
| Total | | $ | 284 | | | $ | 197 | |
For the year ended May 31, 2017, waivers and/or expense reimbursements by class were as follows:
| | | | |
| | | Waivers/Expense
Reimbursements | |
| Class A | | $ | 5,873 | |
| Class I | | | 7,565 | |
| Class IS | | | 199,648 | |
| Total | | $ | 213,086 | |
6. Distributions to shareholders by class
| | | | |
| | | Year Ended
May 31, 2017 | |
| Net Investment Income: | | | | |
| Class A | | $ | 1,058 | |
| Class I | | | 1,694 | |
| Class IS | | | 40,248 | |
| Total | | $ | 43,000 | |
| |
| Net Realized Gains: | | | | |
| Class A | | $ | 1,179 | |
| Class I | | | 1,694 | |
| Class IS | | | 39,091 | |
| Total | | $ | 41,964 | |
7. Shares of beneficial interest
At May 31, 2017, the Trust had an unlimited number of shares of beneficial interest authorized with a par value of $0.00001 per share. The Fund has the ability to issue multiple classes of shares. Each class of shares represents an identical interest and has the same rights, except that each class bears certain direct expenses, including those specifically related to the distribution of its shares.
Transactions in shares of each class were as follows:
| | | | | | | | | | | | | | | | |
| | | Year Ended
May 31, 2017 | | | Period Ended
May 31, 2016† | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| Class A | |
| Shares sold | | | 1,536 | | | $ | 15,595 | | | | 10,000 | | | $ | 100,000 | |
| Shares issued on reinvestment | | | 239 | | | | 2,237 | | | | — | | | | — | |
| Net increase | | | 1,775 | | | $ | 17,832 | | | | 10,000 | | | $ | 100,000 | |
| | |
| 28 | | Martin Currie International Unconstrained Equity Fund 2017 Annual Report |
| | | | | | | | | | | | | | | | |
| | | Year Ended
May 31, 2017 | | | Period Ended
May 31, 2016† | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| Class I | |
| Shares sold | | | 6,130 | | | $ | 61,000 | | | | 10,504 | | | $ | 105,000 | |
| Shares issued on reinvestment | | | 362 | | | | 3,388 | | | | — | | | | — | |
| Shares repurchased | | | (2) | | | | (15) | | | | — | | | | — | |
| Net increase | | | 6,490 | | | $ | 64,373 | | | | 10,504 | | | $ | 105,000 | |
|
| Class IS | |
| Shares sold | | | — | | | | — | | | | 380,000 | | | $ | 3,800,000 | |
| Shares issued on reinvestment | | | 8,473 | | | $ | 79,339 | | | | — | | | | — | |
| Net increase | | | 8,473 | | | $ | 79,339 | | | | 380,000 | | | $ | 3,800,000 | |
| † | For the period November 30, 2015 (inception date) to May 31, 2016. |
8. Income tax information and distributions to shareholders
The tax character of distributions paid during the fiscal years ended May 31, was as follows:
| | | | | | | | |
| | | 2017 | | | 2016 | |
| Distributions paid from: | | | | | | | | |
| Ordinary Income | | $ | 84,964 | | | | — | |
As of May 31, 2017, the components of accumulated earnings (losses) on a tax basis were as follows:
| | | | |
| Undistributed ordinary income — net | | $ | 54,592 | |
| Undistributed long-term capital gains — net | | | 56,834 | |
| Total undistributed earnings | | $ | 111,426 | |
| Other book/tax temporary differences(a) | | | (8,372) | |
| Unrealized appreciation (depreciation)(b) | | | 520,618 | |
| Total accumulated earnings (losses) — net | | $ | 623,672 | |
| (a) | Other book/tax temporary differences are attributable to book/tax differences in the timing of the deductibility of various expenses. |
| (b) | The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable to the tax deferral of losses on wash sales. |
9. Recent accounting pronouncement
In October 2016, the U.S. Securities and Exchange Commission adopted new rules and amended existing rules (together, the “final rules”) intended to modernize the reporting and disclosure of information by registered investment companies. In part, the final rules amend Regulation S-X and require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other amendments. The compliance date for the amendments to Regulation S-X is August 1, 2017. Management is currently evaluating the impact that the adoption of the amendments to Regulation S-X will have on the Fund’s financial statements and related disclosures.
| | |
| Martin Currie International Unconstrained Equity Fund 2017 Annual Report | | 29 |
Report of independent registered public accounting firm
To the Board of Trustees of Legg Mason Global Asset Management Trust and to the Shareholders of Martin Currie International Unconstrained Equity Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the Martin Currie International Unconstrained Equity Fund (one of the funds comprising Legg Mason Global Asset Management Trust, the “Fund”) as of May 31, 2017, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for the year then ended and for the period November 30, 2015 (commencement of operations) through May 31, 2016, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities as of May 31, 2017 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
July 18, 2017
| | |
| 30 | | Martin Currie International Unconstrained Equity Fund 2017 Annual Report |
Additional information (unaudited)
Information about Trustees and Officers
The business and affairs of Martin Currie International Unconstrained Equity Fund (the “Fund”) are conducted by management under the supervision and subject to the direction of its Board of Trustees. The business address of each Trustee is c/o Jane Trust, Legg Mason, 100 International Drive, 11th Floor, Baltimore, Maryland 21202. Information pertaining to the Trustees and officers of the Fund is set forth below.
The Statement of Additional Information includes additional information about Trustees and is available, without charge, upon request by calling the Fund at 1-877-721-1926.
| | |
| Independent Trustees† |
| Ruby P. Hearn |
| Year of birth | | 1940 |
| Position(s) with Trust | | Trustee |
| Term of office1 and length of time served2 | | Since 2004 |
| Principal occupation(s) during past five years | | Senior Vice President Emerita of The Robert Wood Johnson Foundation (non-profit) since 2001; Member of the Institute of Medicine since 1982; formerly, Trustee of the New York Academy of Medicine (2004 to 2012); Director of the Institute for Healthcare Improvement (2002 to 2012); Senior Vice President of The Robert Wood Johnson Foundation (1996 to 2001); Fellow of The Yale Corporation (1992 to 1998) |
| Number of funds in fund complex overseen by Trustee | | 18 |
| Other board memberships held by Trustee during past five years | | None |
|
| Arnold L. Lehman |
| Year of birth | | 1944 |
| Position(s) with Trust | | Trustee and Chairman |
| Term of office1 and length of time served2 | | Since 1982 and since 2015 |
| Principal occupation(s) during past five years | | Senior Advisor, Phillips Auctioneer since 2015; Trustee of American Federation of Arts since 1998; formerly, Fellow, Ford Foundation (2015 to 2016); Director of the Brooklyn Museum (1997 to 2015); Director of The Baltimore Museum of Art (1979 to 1997) |
| Number of funds in fund complex overseen by Trustee | | 18 |
| Other board memberships held by Trustee during past five years | | None |
|
| Robin J.W. Masters |
| Year of birth | | 1955 |
| Position(s) with Trust | | Trustee |
| Term of office1 and length of time served2 | | Since 2002 |
| Principal occupation(s) during past five years | | Retired; formerly, Chief Investment Officer of ACE Limited (insurance) (1986 to 2000) |
| Number of funds in fund complex overseen by Trustee | | 18 |
| Other board memberships held by Trustee during past five years | | Director of Cheyne Capital International Limited (investment advisory firm); formerly, Director/Trustee of Legg Mason Institutional Funds plc, WA Fixed Income Funds plc and Western Asset Debt Securities Fund plc. (2007 to 2011) |
| | |
| Martin Currie International Unconstrained Equity Fund | | 31 |
Additional information (unaudited) (cont’d)
Information about Trustees and Officers
| | |
| Independent Trustees† cont’d |
| Jill E. McGovern |
| Year of birth | | 1944 |
| Position(s) with Trust | | Trustee |
| Term of office1 and length of time served2 | | Since 1989 |
| Principal occupation(s) during past five years | | Senior Consultant, American Institute for Contemporary German Studies (AICGS) since 2007; formerly, Chief Executive Officer of The Marrow Foundation (non-profit) (1993 to 2007); Executive Director of the Baltimore International Festival (1991 to 1993); Senior Assistant to the President of The Johns Hopkins University (1986 to 1990) |
| Number of funds in fund complex overseen by Trustee | | 18 |
| Other board memberships held by Trustee during past five years | | Director of International Biomedical Research Alliance; Director of Lois Roth Endowment |
|
| Arthur S. Mehlman |
| Year of birth | | 1942 |
| Position(s) with Trust | | Trustee |
| Term of office1 and length of time served2 | | Since 2002 |
| Principal occupation(s) during past five years | | Retired. Director, The University of Maryland Foundation since 1992; Director, The League for People with Disabilities since 2003; formerly, Director, Municipal Mortgage & Equity LLC (2004 to 2011); Partner, KPMG LLP (international accounting firm) (1972 to 2002) |
| Number of funds in fund complex overseen by Trustee | | Director/Trustee of all Legg Mason Funds consisting of 18 portfolios; Director/Trustee of the Royce Family of Funds consisting of 23 portfolios |
| Other board memberships held by Trustee during past five years | | Director of Municipal Mortgage & Equity, LLC. (2004 to 2011) |
|
| G. Peter O’Brien |
| Year of birth | | 1945 |
| Position(s) with Trust | | Trustee |
| Term of office1 and length of time served2 | | Since 1999 |
| Principal occupation(s) during past five years | | Retired. Trustee Emeritus of Colgate University; Board Member, Hill House, Inc. (residential home care); Board Member, Bridges School (pre- school); formerly, Managing Director, Equity Capital Markets Group of Merrill Lynch & Co. (1971 to 1999) |
| Number of funds in fund complex overseen by Trustee | | Director/Trustee of all Legg Mason funds consisting of 18 portfolios; Director/Trustee of the Royce Family of Funds consisting of 23 portfolios |
| Other board memberships held by Trustee during past five years | | Director of TICC Capital Corp. |
| | |
| 32 | | Martin Currie International Unconstrained Equity Fund |
| | |
| Independent Trustees† cont’d |
| S. Ford Rowan |
| Year of birth | | 1943 |
| Position(s) with Trust | | Trustee |
| Term of office1 and length of time served2 | | Since 2002 |
| Principal occupation(s) during past five years | | Chairman, National Center for Critical Incident Analysis, since 2004; Consultant to University of Maryland University College, since 2013; formerly, Lecturer in Organizational Sciences, George Washington University (2000 to 2014); Trustee, St. John’s College (2006 to 2012); Consultant, Rowan & Blewitt Inc. (management consulting) (1984 to 2007); Lecturer in Journalism, Northwestern University (1980 to 1993); Director, Santa Fe Institute (1999 to 2008) |
| Number of funds in fund complex overseen by Trustee | | 18 |
| Other board memberships held by Trustee during past five years | | None |
|
| Robert M. Tarola |
| Year of birth | | 1950 |
| Position(s) with Trust | | Trustee |
| Term of office1 and length of time served2 | | Since 2004 |
| Principal occupation(s) during past five years | | President of Rights Advisory LLC (corporate finance and governance consulting) since 2008; Executive Vice President and Chief Financial Officer, Southcoast Health System, Inc. (healthcare provider network) since 2015; Member, Investor Advisory Group of the Public Company Accounting Oversight Board since 2009; formerly, Senior Vice President and Chief Financial Officer of The Howard University (2009 to 2013) (higher education and health care); Senior Vice President and Chief Financial Officer of W.R. Grace & Co. (specialty chemicals) (1999 to 2008) and MedStar Health, Inc. (healthcare) (1996 to 1999); Partner, Price Waterhouse, LLP (accounting and auditing) (1984 to 1996) |
| Number of funds in fund complex overseen by Trustee | | 18 |
| Other board memberships held by Trustee during past five years | | Director of American Kidney Fund (renal disease assistance); Director of XBRL International, Inc. (global data standard setting); Director of Vista Outdoor, Inc. (consumer outdoor recreation brands) |
| | |
| | |
| Martin Currie International Unconstrained Equity Fund | | 33 |
Additional information (unaudited) (cont’d)
Information about Trustees and Officers
| | |
| Interested Trustee |
| Jane Trust3 | | |
| Year of birth | | 1962 |
| Position(s) with Trust | | Trustee, President and Chief Executive Officer |
| Term of office1 and length of time served2 | | Since 2015 |
| Principal occupation(s) during past five years | | Managing Director of Legg Mason & Co., LLC (“Legg Mason & Co.”) (since 2016); Officer and/or Trustee/Director of 154 funds associated with Legg Mason Partners Fund Advisor, LLC (“LMPFA”) or its affiliates (since 2015); President and Chief Executive Officer of LMPFA (since 2015); formerly, Senior Vice President of LMPFA (2015); Director of ClearBridge, LLC (formerly, Legg Mason Capital Management, LLC) (2007 to 2014); Managing Director of Legg Mason Investment Counsel & Trust Co. (2000 to 2007) |
| Number of funds in fund complex overseen by Trustee | | 147 |
Other board memberships held by Trustee during past
five years | | None |
| | |
| Executive Officers |
Richard F. Sennett Legg Mason 100 International Drive, 7th Floor, Baltimore, MD 21202 | | |
| Year of birth | | 1970 |
| Position(s) with Trust | | Principal Financial Officer |
| Term of office1 and length of time served2 | | Since 2011 |
| Principal occupation(s) during past five years | | Principal Financial Officer and Treasurer of certain mutual funds associated with Legg Mason & Co. or its affiliates (since 2011 and since 2013); Managing Director of Legg Mason & Co. and Senior Manager of the Treasury Policy group for Legg Mason & Co.’s Global Fiduciary Platform (since 2011); formerly, Chief Accountant within the SEC’s Division of Investment Management (2007 to 2011); Assistant Chief Accountant within the SEC’s Division of Investment Management (2002 to 2007) |
| |
Robert I. Frenkel Legg Mason 100 First Stamford Place, 6th Floor, Stamford, CT 06902 | | |
| Year of birth | | 1954 |
| Position(s) with Trust | | Secretary and Chief Legal Officer |
| Term of office1 and length of time served2 | | Since 2007 |
| Principal occupation(s) during past five years | | Vice President and Deputy General Counsel of Legg Mason (since 2006); Managing Director and General Counsel of — U.S. Mutual Funds for Legg Mason & Co. (since 2006) and Legg Mason & Co. predecessors (since 1994); Secretary and Chief Legal Officer of certain mutual funds associated with Legg Mason & Co. or its affiliates (since 2006) and Legg Mason & Co. predecessors (prior to 2006) |
| | |
| 34 | | Martin Currie International Unconstrained Equity Fund |
| | |
| Executive Officers cont’d |
Ted P. Becker
Legg Mason 620 Eighth Avenue, 49th Floor, New York, NY 10018 | | |
| Year of birth | | 1951 |
| Position(s) with Trust | | Vice President and Chief Compliance Officer |
| Term of office1 and length of time served2 | | Since 2007 |
| Principal occupation(s) during past five years | | Director of Global Compliance at Legg Mason (since 2006); Chief Compliance Officer of LMPFA (since 2006); Managing Director of Compliance of Legg Mason & Co. (since 2005); Chief Compliance Officer of certain mutual funds associated with Legg Mason & Co. or its affiliates (since 2006) and Legg Mason & Co. predecessors (prior to 2006) |
| |
Christopher Berarducci Legg Mason 620 Eighth Avenue, 49th Floor, New York, NY 10018 | | |
| Year of birth | | 1974 |
| Position(s) with Trust | | Treasurer |
| Term of office1 and length of time served2 | | Since 2010 |
| Principal occupation(s) during past five years | | Director of Legg Mason & Co. (since 2015); Treasurer of certain mutual funds associated with Legg Mason & Co. or its affiliates (since 2010); formerly, Vice President of Legg Mason & Co. (2011 to 2015); Assistant Controller of certain mutual funds associated with Legg Mason & Co. or its affiliates (prior to 2010) |
| |
Susan Kerr Legg Mason 620 Eighth Avenue, 49th Floor, New York, NY 10018 | | |
| Year of birth | | 1949 |
| Position(s) with Trust | | Chief Anti-Money Laundering Compliance Officer |
| Term of office1 and length of time served2 | | Since 2013 |
| Principal occupation(s) during past five years | | Assistant Vice President of Legg Mason & Co. and Legg Mason Investor Services, LLC (“LMIS”) (since 2010); Chief Anti-Money Laundering Compliance Officer of certain mutual funds associated with Legg Mason & Co. or its affiliates (since 2013) and Anti-Money Laundering Compliance Officer of LMIS (since 2012); Senior Compliance Officer of LMIS (since 2011); formerly, AML Consultant, DTCC (2010); AML Consultant, Rabobank Netherlands, (2009); First Vice President, Director of Marketing & Advertising Compliance and Manager of Communications Review Group at Citigroup Inc. (1996 to 2008) |
| | |
| Martin Currie International Unconstrained Equity Fund | | 35 |
Additional information (unaudited) (cont’d)
Information about Trustees and Officers
| | |
| Executive Officers cont’d |
Jenna Bailey Legg Mason 100 First Stamford Place, 6th Floor, Stamford, CT 06902 | | |
| Year of birth | | 1978 |
| Position(s) with Trust | | Identity Theft Prevention Officer |
| Term of office1 and length of time served2 | | Since 2015 |
| Principal occupation(s) during past five years | | Identity Theft Prevention Officer of certain mutual funds associated with Legg Mason & Co. or its affiliates (since 2015); Compliance Officer of Legg Mason & Co. (since 2013); Assistant Vice President of Legg Mason & Co. (since 2011); formerly, Associate Compliance Officer of Legg Mason & Co. (2011 to 2013) |
Jeanne M. Kelly Legg Mason 620 Eighth Avenue, 49th Floor, New York, NY 10018 | | |
| Year of birth | | 1951 |
| Position(s) with Trust | | Senior Vice President |
| Term of office1 and length of time served2 | | Since 2007 |
| Principal occupation(s) during past five years | | Senior Vice President of certain mutual funds associated with Legg Mason & Co. or its affiliates (since 2007); Senior Vice President of LMPFA (since 2006); President and Chief Executive Officer of LMAS and LMFAM (since 2015); Managing Director of Legg Mason & Co. (since 2005) and Legg Mason & Co. predecessors (prior to 2005); formerly, Senior Vice President of LMFAM (2013 to 2015) |
| † | Trustees who are not “interested persons” of the Fund within the meaning of Section 2(a)(19) of the Investment Company Act of 1940, as amended (the “1940 Act”). Each of the Independent Trustees serves on the standing committees of the Board of Trustees, which include the Audit Committee (chair: Arthur S. Mehlman), the Nominating Committee (co-chairs: G. Peter O’Brien and Jill E. McGovern), and the Independent Trustees Committee (chair: Arnold L. Lehman). |
| 1 | Each Trustee and officer serves until his or her respective successor has been duly elected and qualified or until his or her earlier death, resignation, retirement or removal. |
| 2 | Indicates the earliest year in which the Trustee became a board member for a fund in the Legg Mason fund complex or the officer took such office. |
| 3 | Ms. Trust is an “interested person” of the Fund, as defined in the 1940 Act, because of her position with LMPFA and/or certain of its affiliates. |
| | |
| 36 | | Martin Currie International Unconstrained Equity Fund |
Important tax information (unaudited)
The following information is provided with respect to the distributions paid during the taxable year ended May 31, 2017:
| | | | | | | | |
| Record date: | | | 12/6/2016 | | | | 12/20/2016 | |
| Payable date: | | | 12/7/2016 | | | | 12/21/2016 | |
| Ordinary income: | | | | | | | | |
Qualified dividend income for individuals | | | 42.51 | % | | | 87.58 | % |
| Foreign source income | | | 47.71 | %* | | | 88.70 | %* |
| Foreign taxes paid per share | | | — | | | | $0.008444 | |
| Qualified short-term capital gain per share | | | $0.102870 | | | | — | |
| * | Expressed as a percentage of the cash distribution grossed-up for foreign taxes |
The foreign taxes paid represent taxes incurred by the Fund on income received by the Fund from foreign sources. Foreign taxes paid may be included in taxable income with an offsetting deduction from gross income or may be taken as a credit for taxes paid to foreign governments. You should consult your tax adviser regarding the appropriate treatment of foreign taxes paid.
The following information is applicable to non-U.S. resident shareholders:
The Qualified short-term capital gains distributions paid by the Fund to shareholders of record on December 6, 2016 is eligible for exemption from U.S. withholding tax for nonresident aliens and foreign corporations.
Please retain this information for your records.
| | |
| Martin Currie International Unconstrained Equity Fund | | 37 |
Martin Currie
International Unconstrained Equity Fund
Trustees
Ruby P. Hearn
Arnold L. Lehman
Chairman
Robin J.W. Masters
Jill E. McGovern
Arthur S. Mehlman
G. Peter O’Brien
S. Ford Rowan
Robert M. Tarola
Jane Trust
Investment manager
Legg Mason Partners Fund Advisor, LLC
Subadviser
Martin Currie Inc.
Custodian
State Street Bank and Trust Company
Transfer agent
BNY Mellon Investment Servicing (US) Inc.
4400 Computer Drive
Westborough, MA 01581
Independent registered public accounting firm
PricewaterhouseCoopers LLP
Baltimore, MD
Martin Currie International Unconstrained Equity Fund
The Fund is a separate investment series of Legg Mason Global Asset Management Trust, a Maryland statutory trust.
Martin Currie International Unconstrained Equity Fund
Legg Mason Funds
620 Eighth Avenue, 49th Floor
New York, NY 10018
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the SEC’s website at www.sec.gov. The Fund’s Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C., and information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. To obtain information on Form N-Q, shareholders can call the Fund at 1-877-721-1926.
Information on how the Fund voted proxies relating to portfolio securities during the prior 12-month period ended June 30th of each year and a description of the policies and procedures that the Fund uses to determine how to vote proxies related to portfolio transactions are available (1) without charge, upon request, by calling the Fund at 1-877-721-1926, (2) at www.leggmason.com/mutualfunds and (3) on the SEC’s website at www.sec.gov.
This report is submitted for the general information of the shareholders of Martin Currie International Unconstrained Equity Fund. This report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by a current prospectus.
Investors should consider the Fund’s investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other important information about the Fund. Please read the prospectus carefully before investing.
www.leggmason.com
© 2017 Legg Mason Investor Services, LLC
Member FINRA, SIPC
Legg Mason Funds Privacy and Security Notice
Your Privacy and the Security of Your Personal Information is Very Important to the Legg Mason Funds
This Privacy and Security Notice (the “Privacy Notice”) addresses the Legg Mason Funds’ privacy and data protection practices with respect to nonpublic personal information the Funds receive. The Legg Mason Funds include any funds sold by the Funds’ distributor, Legg Mason Investor Services, LLC, as well as Legg Mason-sponsored closed-end funds and certain closed-end funds managed or sub-advised by Legg Mason or its affiliates. The provisions of this Privacy Notice apply to your information both while you are a shareholder and after you are no longer invested with the Funds.
The Type of Nonpublic Personal Information the Funds Collect About You
The Funds collect and maintain nonpublic personal information about you in connection with your shareholder account. Such information may include, but is not limited to:
| • | | Personal information included on applications or other forms; |
| • | | Account balances, transactions, and mutual fund holdings and positions; |
| • | | Online account access user IDs, passwords, security challenge question responses; and |
| • | | Information received from consumer reporting agencies regarding credit history and creditworthiness (such as the amount of an individual’s total debt, payment history, etc.). |
How the Funds Use Nonpublic Personal Information About You
The Funds do not sell or share your nonpublic personal information with third parties or with affiliates for their marketing purposes, or with other financial institutions or affiliates for joint marketing purposes, unless you have authorized the Funds to do so. The Funds do not disclose any nonpublic personal information about you except as may be required to perform transactions or services you have authorized or as permitted or required by law. The Funds may disclose information about you to:
| • | | Employees, agents, and affiliates on a “need to know” basis to enable the Funds to conduct ordinary business or comply with obligations to government regulators; |
| • | | Service providers, including the Funds’ affiliates, who assist the Funds as part of the ordinary course of business (such as printing, mailing services, or processing or servicing your account with us) or otherwise perform services on the Funds’ behalf, including companies that may perform marketing services solely for the Funds; |
| • | | The Funds’ representatives such as legal counsel, accountants and auditors; and |
| • | | Fiduciaries or representatives acting on your behalf, such as an IRA custodian or trustee of a grantor trust. |
|
| NOT PART OF THE ANNUAL REPORT |
Legg Mason Funds Privacy and Security Notice (cont’d)
Except as otherwise permitted by applicable law, companies acting on the Funds’ behalf are contractually obligated to keep nonpublic personal information the Funds provide to them confidential and to use the information the Funds share only to provide the services the Funds ask them to perform.
The Funds may disclose nonpublic personal information about you when necessary to enforce their rights or protect against fraud, or as permitted or required by applicable law, such as in connection with a law enforcement or regulatory request, subpoena, or similar legal process. In the event of a corporate action or in the event a Fund service provider changes, the Funds may be required to disclose your nonpublic personal information to third parties. While it is the Funds’ practice to obtain protections for disclosed information in these types of transactions, the Funds cannot guarantee their privacy policy will remain unchanged.
Keeping You Informed of the Funds’ Privacy and Security Practices
The Funds will notify you annually of their privacy policy as required by federal law. While the Funds reserve the right to modify this policy at any time they will notify you promptly if this privacy policy changes.
The Funds’ Security Practices
The Funds maintain appropriate physical, electronic and procedural safeguards designed to guard your nonpublic personal information. The Funds’ internal data security policies restrict access to your nonpublic personal information to authorized employees, who may use your nonpublic personal information for Fund business purposes only.
Although the Funds strive to protect your nonpublic personal information, they cannot ensure or warrant the security of any information you provide or transmit to them, and you do so at your own risk. In the event of a breach of the confidentiality or security of your nonpublic personal information, the Funds will attempt to notify you as necessary so you can take appropriate protective steps. If you have consented to the Funds using electronic communications or electronic delivery of statements, they may notify you under such circumstances using the most current email address you have on record with them.
In order for the Funds to provide effective service to you, keeping your account information accurate is very important. If you believe that your account information is incomplete, not accurate or not current, or if you have questions about the Funds’ privacy practices, write the Funds using the contact information on your account statements, email the Funds by clicking on the Contact Us section of the Funds’ website at www.leggmason.com, or contact the Fund at 1-877-721-1926.
|
| NOT PART OF THE ANNUAL REPORT |
www.leggmason.com
© 2017 Legg Mason Investor Services, LLC Member FINRA, SIPC
MCXX282736 7/17 SR17-3115
The registrant has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller.
| ITEM 3. | AUDIT COMMITTEE FINANCIAL EXPERT. |
The Board of Trustees of the registrant has determined that Arthur S. Mehlman the Chairman of the Board’s Audit Committee and Robert M. Tarola, possess the technical attributes identified in Instruction 2(b) of Item 3 to Form N-CSR to qualify as “audit committee financial experts,” and have designated Mr. Mehlman and Mr. Tarola as the Audit Committee’s financial experts. Mr. Mehlman and Mr. Tarola are “independent” Trustees pursuant to paragraph (a) (2) of Item 3 to Form N-CSR.
| ITEM 4. | PRINCIPAL ACCOUNTANT FEES AND SERVICES. |
a) Audit Fees. The aggregate fees billed in the last two fiscal years ending May 31, 2016 and May 31, 2017 (the “Reporting Periods”) for professional services rendered by the Registrant’s principal accountant (the “Auditor”) for the audit of the Registrant’s annual financial statements, or services that are normally provided by the Auditor in connection with the statutory and regulatory filings or engagements for the Reporting Periods, were $0 in May 31, 2016 and $17,650 in May 31, 2017.
b) Audit-Related Fees. The aggregate fees billed in the Reporting Period for assurance and related services by the Auditor that are reasonably related to the performance of the Registrant’s financial statements were $0 in May 31, 2016 and $0 in May 31, 2017.
(c) Tax Fees. The aggregate fees billed in the Reporting Periods for professional services rendered by the Auditor for tax compliance, tax advice and tax planning (“Tax Services”) were $0 in May 31, 2016 and $2,750 in May 31, 2017. These services consisted of (i) review or preparation of U.S. federal, state, local and excise tax returns; (ii) U.S. federal, state and local tax planning, advice and assistance regarding statutory, regulatory or administrative developments, and (iii) tax advice regarding tax qualification matters and/or treatment of various financial instruments held or proposed to be acquired or held.
There were no fees billed for tax services by to the service affiliates during the Reporting Periods that required pre-approval by the Audit Auditors Committee.
d) All Other Fees. The aggregate fees for other fees billed in the Reporting Periods for products and services provided by the Auditor were $0 in May 31, 2016 and $396 in May 31, 2017, other than the services reported in paragraphs (a) through (c) of this item for the Legg Mason Global Asset Management Trust.
All Other Fees. There were no other non-audit services rendered by the Auditor to Legg Mason Partners Fund Advisors, LLC (“LMPFA”), and any entity controlling, controlled by or under common control with LMPFA that provided ongoing services to Legg Mason Global Asset Management Trust requiring pre-approval by the Audit Committee in the Reporting Period.
(e) Audit Committee’s pre–approval policies and procedures described in paragraph (c)
(7) of Rule 2-01 of Regulation S-X.
(1) The Charter for the Audit Committee (the “Committee”) of the Board of each registered investment company (the “Fund”) advised by LMPFA or one of their affiliates (each, an “Adviser”) requires that the Committee shall approve (a) all audit and permissible non-audit services to be provided to the Fund and (b) all permissible non-audit services to be provided by the Fund’s independent auditors to the Adviser and any Covered Service Providers if the engagement relates directly to the operations and financial reporting of the Fund. The Committee may implement policies and procedures by which such services are approved other than by the full Committee.
The Committee shall not approve non-audit services that the Committee believes may impair the independence of the auditors. As of the date of the approval of this Audit Committee Charter, permissible non-audit services include any professional services (including tax services), that are not prohibited services as described below, provided to the Fund by the independent auditors, other than those provided to the Fund in connection with an audit or a review of the financial statements of the Fund. Permissible non-audit services may not include: (i) bookkeeping or other services related to the accounting records or financial statements of the Fund; (ii) financial information systems design and implementation; (iii) appraisal or valuation services, fairness opinions or contribution-in-kind reports; (iv) actuarial services; (v) internal audit outsourcing services; (vi) management functions or human resources; (vii) broker or dealer, investment adviser or investment banking services; (viii) legal services and expert services unrelated to the audit; and (ix) any other service the Public Company Accounting Oversight Board determines, by regulation, is impermissible.
Pre-approval by the Committee of any permissible non-audit services is not required so long as: (i) the aggregate amount of all such permissible non-audit services provided to the Fund, the Adviser and any service providers controlling, controlled by or under common control with the Adviser that provide ongoing services to the Fund (“Covered Service Providers”) constitutes not more than 5% of the total amount of revenues paid to the independent auditors during the fiscal year in which the permissible non-audit services are provided to (a) the Fund, (b) the Adviser and (c) any entity controlling, controlled by or under common control with the Adviser that provides ongoing services to the Fund during the fiscal year in which the services are provided that would have to be approved by the Committee; (ii) the permissible non-audit services were not recognized by the Fund at the time of the engagement to be non-audit services; and (iii) such services are promptly brought to the attention of the Committee and approved by the Committee (or its delegate(s)) prior to the completion of the audit.
(2) For the Legg Mason Global Asset Management Trust, the percentage of fees that were approved by the audit committee, with respect to: Audit-Related Fees were 100% and 100% for May 31, 2016 and May 31, 2017; Tax Fees were 100% and 100% for May 31, 2016 and May 31, 2017; and Other Fees were 100% and 100% for May 31, 2016 and May 31, 2017.
(f) N/A
(g) Non-audit fees billed by the Auditor for services rendered to Legg Mason Global Asset Management Trust, LMPFA and any entity controlling, controlled by, or under common control with LMPFA that provides ongoing services to Legg Mason Global Asset Management Trust during the reporting period were $0 in May 31, 2016 and $29,464 in May 31, 2017.
(h) Yes. Legg Mason Global Asset Management Trust’s Audit Committee has considered whether the provision of non-audit services that were rendered to Service Affiliates, which were not pre-approved (not requiring pre-approval), is compatible with maintaining the Accountant’s independence. All services provided by the Auditor to the Legg Mason Global Asset Management Trust or to Service Affiliates, which were required to be pre-approved, were pre-approved as required.
| ITEM 5. | AUDIT COMMITTEE OF LISTED REGISTRANTS. |
| | a) | The independent board members are acting as the registrant’s audit committee as specified in Section 3(a)(58)(B) of the Exchange Act .The Audit Committee consists of the following Board members: |
Ruby P. Hearn
Arnold L. Lehman
Robin J.W. Masters
Jill E. McGovern
Arthur S. Mehlman
G. Peter O’Brien
S. Ford Rowan
Robert M. Tarola
| ITEM 6. | SCHEDULE OF INVESTMENTS. |
Included herein under Item 1.
| ITEM 7. | DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable.
| ITEM 8. | PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable.
| ITEM 9. | PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. |
Not applicable.
| ITEM 10. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. |
Not applicable.
| ITEM 11. | CONTROLS AND PROCEDURES. |
(a) The registrant’s principal executive officer and principal financial officer have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a- 3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective as of a date within 90 days of the filing date of this report that includes the disclosure required by this paragraph, based on their evaluation of the disclosure controls and procedures required by Rule 30a-3(b) under the 1940 Act and 15d-15(b) under the Securities Exchange Act of 1934.
(b) There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are likely to materially affect the registrant’s internal control over financial reporting.
(a) (1) Code of Ethics attached hereto.
Exhibit 99.CODE ETH
(a) (2) Certifications pursuant to section 302 of the Sarbanes-Oxley Act of 2002 attached hereto.
Exhibit 99.CERT
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 attached hereto.
Exhibit 99.906CERT
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this Report to be signed on its behalf by the undersigned, there unto duly authorized.
| | |
| Legg Mason Global Asset Management Trust |
| |
| By: | | /s/ Jane Trust |
| | Jane Trust |
| | Chief Executive Officer |
| |
| Date: | | July 25, 2017 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| | |
| By: | | /s/ Jane Trust |
| | Jane Trust |
| | Chief Executive Officer |
| |
| Date: | | July 25, 2017 |
| |
| By: | | /s/ Richard F. Sennett |
| | Richard F. Sennett |
| | Principal Financial Officer |
| |
| Date: | | July 25, 2017 |
