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 811-23096
Legg Mason ETF Investment 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: October 31
Date of reporting period: October 31, 2018
| ITEM 1. | REPORT TO STOCKHOLDERS. |
The Annual Report to Stockholders is filed herewith.
| Annual Report | October 31, 2018 |
LEGG MASON
US DIVERSIFIED CORE ETF
UDBI
| INVESTMENT PRODUCTS: NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE |
Fund objective
The Fund seeks to track the investment results of an index composed of publicly traded U.S. equity securities.
Dear Shareholder,
We are pleased to provide the annual report of Legg Mason US Diversified Core ETF for the twelve-month reporting period ended October 31, 2018. 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 net asset value and market price, |
| • | 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
November 30, 2018
| II | Legg Mason US Diversified Core ETF |
Economic review
Economic activity in the U.S. was mixed during the twelve months ended October 31, 2018 (the “reporting period”). Looking back, the U.S. Department of Commerce reported that fourth quarter 2017 and first quarter 2018 U.S. gross domestic product (“GDP”)i growth was 2.3% and 2.2%, respectively. GDP growth then accelerated to 4.2% during the second quarter of 2018 — the strongest reading since the third quarter of 2014. Finally, the U.S. Department of Commerce’s second reading for third quarter 2018 GDP growth — released after the reporting period ended — was 3.5%. The deceleration in GDP growth in the third quarter of 2018 reflected a downturn in exports and decelerations in nonresidential fixed investment and personal consumption expenditures. Imports increased in the third quarter after decreasing in the second. These movements were partly offset by an upturn in private inventory investment.
Job growth in the U.S. was solid overall and supported the economy during the reporting period. As reported by the U.S. Department of Labor, when the reporting period ended on October 31, 2018, the unemployment rate was 3.7%, versus 4.1% when the period began. October 2018’s reading equaled the lowest unemployment rate since 1969. The percentage of longer-term unemployed also declined during the reporting period. In October 2018, 22.5% of Americans looking for a job had been out of work for more than six months, versus 23.8% when the period began.
Looking back, at its meeting that concluded on September 20, 2017, the Federal Reserve Board (the “Fed”)ii kept the federal funds rateiii on hold, but reiterated its intention to begin reducing its balance sheet, saying, “In October, the Committee will initiate the balance sheet normalization program….” At its meeting that ended on December 13, 2017, the Fed raised rates to a range between 1.25% and 1.50%. As expected, the Fed kept rates on hold at its meeting that concluded on January 31, 2018. However, at its meeting that ended on March 21, 2018, the Fed again raised the federal funds rate, moving it to a range between 1.50% and 1.75%. At its meeting that concluded on June 13, 2018, the Fed raised the federal funds rate to a range between 1.75% and 2.00%. Finally, at its meeting that ended on September 26, 2018, the Fed raised the federal funds rate to a range between 2.00% and 2.25%.
As always, thank you for your confidence in our stewardship of your assets.
Sincerely,
Jane Trust, CFA
President and Chief Executive Officer
November 30, 2018
All investments are subject to risk including the possible loss of principal. Past performance is no guarantee of future results.
| Legg Mason US Diversified Core ETF | III |
Investment commentary (cont’d)
| 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 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 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 | Legg Mason US Diversified Core ETF |
Q. What is the Fund’s investment strategy?
A. Legg Mason US Diversified Core ETF (the “Fund”) seeks to track the investment results of the QS DBI US Diversified Index (the “Underlying Index”). The Underlying Index seeks to provide exposure to equities of U.S. companies and is based on a proprietary methodology created and sponsored by QS Investors, LLC (“QS Investors”), the Fund’s subadviser. The Underlying Index is composed of U.S. companies that are included in the MSCI USA IMI Index.
The proprietary rules-based process initially groups this universe of securities into multiple investment categories based on industries. Within each of these investment categories, securities are weighted by market capitalization. The process then combines those investment categories with more highly correlated historical performance into a smaller number of “clusters.” A cluster is a group of investment categories based on industry that have demonstrated a tendency to behave similarly (high correlation). Thereafter, each of these clusters is equally weighted in the Underlying Index to produce a diversified portfolio. QS Investors anticipates that the number of component securities in the Underlying Index will range from 2,200 to 2,500. The Underlying Index may include large, medium and small capitalization companies. The components of the Underlying Index, and the degree to which these components represent certain sector and industries, may change over time. The Underlying Index’s components are reconstituted annually and rebalanced quarterly. The Underlying Index is reconstituted on a different date from the MSCI USA IMI Index. Securities that are removed from, or added to, the MSCI USA IMI Index are removed from, or considered for inclusion in, the Underlying Index at the next annual reconstitution or quarterly rebalancing of the Underlying Index. The Fund’s portfolio is rebalanced when the Underlying Index is rebalanced or reconstituted. The Fund may trade at times other than when the Underlying Index is rebalanced or reconstituted for a variety of reasons, including when adjustments may be made to its representative sampling process from time to time or when investing cash.
The term “diversified” highlights the purpose of QS Investors’ Diversification Based Investing methodology, which seeks to avoid concentration risks often identified with market cap-weighted funds. The term “core” highlights the segment of the investment universe where the Fund invests — as opposed to introducing value or size biases or investing in niche segments of the market.
The Fund will invest at least 80% of its net assets, plus borrowings for investment purposes, if any, in securities that compose the Underlying Index. The equity securities that the Fund will hold are principally common stocks.
The Fund may invest up to 20% of its net assets in certain index futures, options, options on index futures, swap contracts or other derivatives related to its Underlying Index and its component securities; cash and cash equivalents; other investment companies, including exchange-traded funds; exchange-traded notes; and in securities and other instruments not included in its Underlying Index but which QS Investors believes will help the Fund track its Underlying Index. The Fund may invest in exchange-traded equity index futures to
| Legg Mason US Diversified Core ETF 2018 Annual Report | 1 |
Fund overview (cont’d)
manage industry exposure and for cash management purposes.
Q. What were the overall market conditions during the Fund’s reporting period?
A. U.S. equity markets’ hit all-time highs during the twelve-month reporting period ended October 31, 2018, before dramatically pulling back in the final month. In October 2018, investors appeared to react to rising risk by pivoting away from the growth stocks that had provided most of the gains to that point in 2018 and which had become expensive according to a number of fundamental measures. Despite the pull-back, most of the sectors posted gains, several in double digits. The market generally benefited from strong economic statistics and muted inflation. Only the Materials sector had a meaningfully negative return.
The last months of 2017 saw strong corporate profits and a positive outlook for 2018, driven by the reduction in the corporate tax rates mandated by the U.S. tax overhaul program approved in late December 2017. The housing market, including new home starts, and job growth remained strong, with sentiment positive for both business and consumers. Rising oil prices did not appear to be a headwind for consumers, nor did a season of notable natural disasters across the southern and western US.
Global equities experienced significant volatility during the first quarter of 2018. Despite a backdrop of solid and synchronized global economic growth, most major equity markets including the U.S. entered correction territory in early February 2018. This downturn was followed by a rally and, as the quarter progressed, markets alternated abruptly between “risk on” to “risk off” periods. Investor fears of rapid interest rate increases, potential trade wars between the U.S. and China and the possible regulation of the technology industry caused several sell-offs. The U.S. equity market saw more than twenty days with gains or losses of more than 1%.
Equity market performance in the second quarter of 2018 was positive in the U.S. and only a few other developed markets. As in 2017 and the start of 2018, equity market performance was driven by a narrow segment of stocks; despite bouts of volatility during the first half of 2018, a rally in momentum/growth stocks persisted, as investors seemed to be focused on seeking growth while disregarding valuations. Corporate earnings data was positive, setting the stage for the U.S. Federal Reserve Board (the “Fed”)i to hike rates in June 2018.
In the third quarter of 2018, the U.S. equity market again had the best regional performance. A variety of positive economic and macro data points provided support to equities, including below-average volatility, low jobless claims, strength in manufacturing data, and rising consumer confidence.
The final month of the reporting period proved to be a challenging month for investors, as volatility returned in earnest. Throughout the month, practically every asset class sold off to some extent, both in the U.S. and abroad. Despite a solid start to the third quarter earnings season, no signs of a weakening U.S. economy and no material change in the uncertainty surrounding trade and tariffs, the Russell 3000 Indexii declined -7.4%, realizing the worst one month equity return since September 2011. In this final month, the market also reflected a rotation in terms of style and sector, as investors appeared to
| 2 | Legg Mason US Diversified Core ETF 2018 Annual Report |
reassess the risk of further interest rate hikes and escalating trade tensions with China; there was a movement away from growth/momentum stocks to value opportunities and low volatility, dividend-paying stocks. Cyclical sectors were the largest to sell-off, while more defensive sectors held their ground.
The Fund uses a passive investment approach to achieve its investment objective, and therefore made no change in investment approach in response to market conditions.
Performance review
For the twelve months ended October 31, 2018, Legg Mason US Diversified Core ETF generated a 5.62% return on a net asset value (“NAV”)iii basis and 5.44% based on its market priceiv per share.
The performance table shows the Fund’s total return for the twelve months ended October 31, 2018 based on its NAV and market price as of October 31, 2018. The Fund seeks to track the investment results of the QS DBI US Diversified Index, which returned 5.93% for the same period. The Fund’s broad-based market index, the Russell 3000 Index, returned 6.60% over the same time frame. The Lipper Multi-Cap Core Funds Category Average1 returned 3.43% for the same period. Please note that Lipper performance returns are based on each fund’s NAV.
| Performance Snapshot as of October 31, 2018 (unaudited) | ||||||||
| 6 months | 12 months | |||||||
| Legg Mason US Diversified Core ETF: | ||||||||
$31.40 (NAV) | 1.65 | % | 5.62 | %*† | ||||
$31.40 (Market Price) | 1.62 | % | 5.44 | %*‡ | ||||
| QS DBI US Diversified Index | 1.80 | % | 5.93 | % | ||||
| Russell 3000 Index | 2.70 | % | 6.60 | % | ||||
| Lipper Multi-Cap Core Funds Category Average1 | 0.13 | % | 3.43 | % | ||||
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. Principal value and investment returns will fluctuate so shares, when redeemed or sold in the market, may be worth more or less than their original cost. Performance data current to the most recent month-end is available at www.leggmason.com/etf.
Investors buy and sell shares of an exchange-traded fund (“ETF”) at market price (not NAV) in the secondary market throughout the trading day. These shares are not individually available for direct purchase from or direct redemption to the ETF. Market price returns shown are typically based upon the mid-point between the bid and ask on the Fund’s principal trading market when the Fund’s NAV is determined, which is typically 4:00 p.m. Eastern time (US). These returns do not represent investors’ returns had they traded shares at other times. Performance figures for periods shorter than one year represent cumulative figures and are not annualized.
Information showing the number of days the market price of the Fund’s shares was greater than the Fund’s NAV and the number
| 1 | Lipper, Inc., a wholly-owned subsidiary of Reuters, provides independent insight on global collective investments. Returns are based on the period ended October 31, 2018 including the reinvestment of all distributions, including returns of capital, if any, calculated among the 815 funds for the six-month period and among the 781 funds for the twelve-month period in the Fund’s Lipper category. |
| Legg Mason US Diversified Core ETF 2018 Annual Report | 3 |
Fund overview (cont’d)
of days it was less than the Fund’s NAV (i.e., premium or discount) for various time periods is available by visiting the Fund’s website at www.leggmason.com/etf.
As of the Fund’s current prospectus dated March 1, 2018, the gross total annual fund operating expense ratio for the Fund was 0.30%.
* Total returns are based on changes in NAV or market price, respectively. Returns reflect the deduction of all Fund expenses. Returns do not reflect the deduction of brokerage commissions or taxes that investors pay on distributions or the sale of shares.
† Total return assumes the reinvestment of all distributions at NAV.
‡ Total return assumes the reinvestment of all distributions at market price.
Q. What were the leading contributors to performance?
A. The primary contributors to performance by virtue of return and weight in the Underlying Index were the Consumer Discretionary, Health Care and Information Technology sectors, all of which had double digit returns for the reporting period.
Q. What were the leading detractors from performance?
A. The leading detractors from performance in the Underlying Index were the Energy and Materials sectors. Along with the Industrials sector, these were the only sectors with negative returns for the reporting period.
Looking for additional information?
The Fund’s daily NAV is available on-line at www.leggmason.com/etf. The Fund is traded under the symbol “UDBI” and its closing market price is available on most financial websites. In a continuing effort to provide information concerning the Fund, shareholders may call 1-877-721-1926 (toll free), Monday through Friday from 8:00 a.m. to 5:30 p.m. Eastern time, for the Fund’s current NAV, market price and other information.
Thank you for your investment in Legg Mason US Diversified Core ETF. 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,
QS Investors, LLC
November 20, 2018
RISKS: Equity securities are subject to market and price fluctuations. In rising markets, the value of large-cap stocks may not rise as much as smaller-cap stocks. Small- and mid-cap stocks involve greater risks and volatility than large-cap stocks. Diversification does not guarantee a profit or protect against a loss. The Fund may focus its investments in certain industries, increasing its vulnerability to market volatility. There is no guarantee that the Fund will achieve a high degree of correlation to the index it seeks to track. The Fund does not seek to outperform the index it tracks and does not seek temporary defensive positions when markets decline or appear overvalued. Derivatives, such as options and futures, can be illiquid, may disproportionately increase losses and have a potentially large impact on Fund performance. Please see the Fund’s prospectus for a more complete discussion of these and other risks and the Fund’s investment strategies.
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.
| 4 | Legg Mason US Diversified Core ETF 2018 Annual Report |
Investors seeking financial advice regarding the appropriateness of investing in any securities or investment strategies discussed should consult their financial professional. The Fund’s top five sector holdings (as a percentage of net assets) as of October 31, 2018 were: Consumer Discretionary (13.5%), Information Technology (13.3%), Health Care (12.2%), Industrials (11.9%) and Consumer Staples (10.6%). The Fund’s composition may differ over time.
All investments are subject to risk including the possible loss of principal. Past performance is no guarantee of future results. An index is a statistical composite that tracks a specified financial market sector or rules-based investment process. Unlike a fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by a fund. These expenses negatively impact fund performance. All index performance reflects no deduction for fees, expenses or taxes. Please note that an investor cannot invest directly in an index.
The information provided is not intended to be a forecast of future events, a guarantee of future results or investment advice. Views expressed may differ from those of the firm as a whole.
| i | The 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. |
| ii | The Russell 3000 Index measures the performance of the 3,000 largest U.S. companies based on total market capitalization, which represents approximately 98% of the U.S. equity market. |
| iii | Net Asset Value (“NAV”) is calculated by subtracting total liabilities from total assets and dividing the result by the number of shares outstanding. |
| iv | Market Price is determined by supply and demand. It is the price at which an investor purchases or sells shares of the Fund. The Market Price may differ from the Fund’s NAV. |
| Legg Mason US Diversified Core ETF 2018 Annual Report | 5 |
Investment breakdown (%) as a percent of total investments
| † | The bar graph above represents the composition of the Fund’s investments as of October 31, 2018 and October 31, 2017. The composition of the Fund’s investments is subject to change at any time. |
| * | As of September 28, 2018, the Telecommunication Services sector was broadened to include some companies previously classified in the Consumer Discretionary and Information Technology sectors and renamed the Communication Services sector. |
| 6 | Legg Mason US Diversified Core ETF 2018 Annual Report |
Example
As a shareholder of the Fund, you may incur two types of costs: (1) transaction costs, such as brokerage commissions paid on purchases and sales of Fund shares; and (2) ongoing costs, including management 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 funds.
This example is based on an investment of $1,000 invested on May 1, 2018 and held for the six months ended October 31, 2018.
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 brokerage commissions paid on purchases and sales of Fund Shares. 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 Return2 | 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 | |||||||||||||||||||||||||||||||||||||||||
| 1.65% | $ | 1,000.00 | $ | 1,016.50 | 0.30 | % | $ | 1.52 | 5.00 | % | $1,000.00 | $ | 1,023.69 | 0.30 | % | $ | 1.53 | |||||||||||||||||||||||||||||||||
| 1 | For the six months ended October 31, 2018. |
| 2 | Assumes the reinvestment of all distributions, including returns of capital, if any, at net asset value. Total return is not annualized, as it may not be representative of the total return for the year. Performance figures may reflect fee waivers and/or expense reimbursements. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower. Past performance is no guarantee of future results. |
| 3 | Expenses (net of fee waivers and/or expense reimbursements) are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year (184), then divided by 365. |
| Legg Mason US Diversified Core ETF 2018 Annual Report | 7 |
| Net Asset Value | ||||
| Average annual total returns1 | ||||
| Twelve Months Ended 10/31/18 | 5.62 | % | ||
| Inception* through 10/31/18 | 10.73 | |||
| Cumulative total returns1 | ||||
| Inception date of 12/28/15 through 10/31/18 | 33.62 | % | ||
| Market Price | ||||
| Average annual total returns2 | ||||
| Twelve Months Ended 10/31/18 | 5.44 | % | ||
| Inception* through 10/31/18 | 10.73 | |||
| Cumulative total returns2 | ||||
| Inception date of 12/28/15 through 10/31/18 | 33.61 | % | ||
All figures represent past performance and are not a guarantee of future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when sold, may be worth more or less than their original cost. The returns shown do not reflect the deduction of brokerage commissions or taxes that investors would pay on distributions or the sale of shares. Performance figures may reflect fee waivers and/or expense reimbursements. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower.
Investors buy and sell shares of the Fund at market price, not NAV, in the secondary market throughout the trading day. These shares are not individually available for direct purchase from or direct redemption to the Fund. The Fund’s per share NAV is the value of one share of the Fund and is calculated by dividing the value of total assets less total liabilities by the number of shares outstanding. The NAV return is based on the NAV of the Fund and the market price return is based on the market price per share of the fund. Market price returns shown are typically based upon the mid-point between the bid and ask on the Fund’s principal trading market when the Fund’s NAV is determined, which is typically 4:00 p.m. Eastern time (US). These returns do not represent investors’ returns had they traded shares at other times. NAV and market price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and market price, respectively. As with other exchange-traded funds, NAV returns and market price returns may differ because of factors such as the supply and demand for Fund shares and investors’ assessment of the underlying value of the Fund’s portfolio securities.
| 1 | Assumes the reinvestments of all distributions, including returns of capital, if any, at net asset value. |
| 2 | Assumes the reinvestment of all distributions, including returns of capital, if any, at market price. |
| * | Inception date of the Fund is December 28, 2015. |
| 8 | Legg Mason US Diversified Core ETF 2018 Annual Report |
Historical performance
Value of $10,000 invested in
Legg Mason US Diversified Core ETF vs. QS DBI US Diversified Index and Russell 3000 Index† — December 28, 2015 - October 2018
All figures represent past performance and are not a guarantee of future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when sold, may be worth more or less than their original cost. NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV. The returns shown do not reflect the deduction of brokerage commissions or taxes that investors would pay on distributions or the sale of shares. Performance figures may reflect fee waivers and/or expense reimbursements. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower.
| † | Hypothetical illustration of $10,000 invested in the Legg Mason US Diversified Core ETF on December 28, 2015, assuming the reinvestment of all distributions, including returns of capital, if any, at net asset value through October 31, 2018. The hypothetical illustration also assumes a $10,000 investment in the QS DBI US Diversified Index and the Russell 3000 Index. The Fund’s per share NAV is the value of one share of the Fund and is calculated by dividing the value of total assets less total liabilities by the number of shares outstanding. The NAV return is based on the NAV of the Fund. The QS DBI US Diversified Index (the “Underlying Index”) is an index composed of publicly traded U.S. equity securities that are included in the MSCI USA IMI Index. The Underlying Index is based on a proprietary methodology created and sponsored by QS Investors, LLC, the Fund’s subadviser. The Russell 3000 Index measures the performance of the 3,000 largest U.S. companies based on total market capitalization, which represents approximately 98% of the U.S. equity market. The indices are not subject to the same management and trading expenses as a fund. An index is a statistical composite that tracks a specified financial market, sector, or rules-based investment process. Unlike a fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by a fund. These expenses negatively impact fund performance. All index performance reflects no deduction for fees, expenses or taxes. Please note that an investor cannot invest directly in an index. |
| Legg Mason US Diversified Core ETF 2018 Annual Report | 9 |
October 31, 2018
Legg Mason US Diversified Core ETF
| Security | Shares | Value | ||||||||||||||
| Common Stocks — 99.2% |
| |||||||||||||||
| Communication Services — 4.9% |
| |||||||||||||||
Diversified Telecommunication Services — 1.9% |
| |||||||||||||||
AT&T Inc. | 901 | $ | 27,643 | |||||||||||||
CenturyLink Inc. | 119 | 2,456 | ||||||||||||||
Cogent Communications Holdings Inc. | 11 | 572 | ||||||||||||||
ORBCOMM Inc. | 40 | 381 | * | |||||||||||||
Verizon Communications Inc. | 539 | 30,772 | ||||||||||||||
Vonage Holdings Corp. | 51 | 676 | * | |||||||||||||
Zayo Group Holdings Inc. | 18 | 538 | * | |||||||||||||
Total Diversified Telecommunication Services | 63,038 | |||||||||||||||
Entertainment — 0.8% |
| |||||||||||||||
Activision Blizzard Inc. | 40 | 2,762 | ||||||||||||||
Electronic Arts Inc. | 17 | 1,547 | * | |||||||||||||
Netflix Inc. | 30 | 9,053 | * | |||||||||||||
Take-Two Interactive Software Inc. | 9 | 1,160 | * | |||||||||||||
Twenty-First Century Fox Inc., Class A Shares | 41 | 1,866 | ||||||||||||||
Twenty-First Century Fox Inc., Class B Shares | 13 | 587 | ||||||||||||||
Viacom Inc., Class B Shares | 15 | 480 | ||||||||||||||
Walt Disney Co. | 71 | 8,153 | ||||||||||||||
Total Entertainment | 25,608 | |||||||||||||||
Interactive Media & Services — 1.7% |
| |||||||||||||||
Alphabet Inc., Class A Shares | 16 | 17,449 | * | |||||||||||||
Alphabet Inc., Class C Shares | 16 | 17,228 | * | |||||||||||||
Facebook Inc., Class A Shares | 129 | 19,581 | * | |||||||||||||
TripAdvisor Inc. | 16 | 834 | * | |||||||||||||
Twitter Inc. | 38 | 1,321 | * | |||||||||||||
Total Interactive Media & Services | 56,413 | |||||||||||||||
Media — 0.5% |
| |||||||||||||||
CBS Corp., Class B Shares, Non Voting Shares | 16 | 918 | ||||||||||||||
Charter Communications Inc., Class A Shares | 8 | 2,563 | * | |||||||||||||
Comcast Corp., Class A Shares | 214 | 8,162 | ||||||||||||||
Discovery Inc., Class A Shares | 18 | 583 | * | |||||||||||||
Discovery Inc., Class C Shares | 28 | 821 | * | |||||||||||||
DISH Network Corp., Class A Shares | 10 | 307 | * | |||||||||||||
GCI Liberty Inc., Class A Shares | 10 | 473 | * | |||||||||||||
Liberty Broadband Corp., Class C Shares | 6 | 497 | * | |||||||||||||
Liberty Media Corp-Liberty SiriusXM, Class C Shares | 14 | 578 | * | |||||||||||||
See Notes to Financial Statements.
| 10 | Legg Mason US Diversified Core ETF 2018 Annual Report |
Legg Mason US Diversified Core ETF
| Security | Shares | Value | ||||||||||||||
Media — continued |
| |||||||||||||||
Omnicom Group Inc. | 9 | $ | 669 | |||||||||||||
Total Media | 15,571 | |||||||||||||||
Total Communication Services | 160,630 | |||||||||||||||
| Consumer Discretionary — 13.5% |
| |||||||||||||||
Auto Components — 0.8% |
| |||||||||||||||
Adient PLC | 24 | 730 | ||||||||||||||
American Axle & Manufacturing Holdings Inc. | 37 | 561 | ||||||||||||||
Aptiv PLC | 87 | 6,682 | ||||||||||||||
Autoliv Inc. | 31 | 2,584 | ||||||||||||||
BorgWarner Inc. | 76 | 2,995 | ||||||||||||||
Cooper Tire & Rubber Co. | 13 | 402 | ||||||||||||||
Cooper-Standard Holdings Inc. | 5 | 463 | * | |||||||||||||
Dana Inc. | 40 | 623 | ||||||||||||||
Delphi Technologies PLC | 26 | 558 | ||||||||||||||
Dorman Products Inc. | 8 | 632 | * | |||||||||||||
Fox Factory Holding Corp. | 17 | 913 | * | |||||||||||||
Garrett Motion Inc. | 11 | 167 | * | |||||||||||||
Gentex Corp. | 72 | 1,516 | ||||||||||||||
Gentherm Inc. | 25 | 1,091 | * | |||||||||||||
Goodyear Tire & Rubber Co. | 102 | 2,148 | ||||||||||||||
LCI Industries | 6 | 416 | ||||||||||||||
Lear Corp. | 18 | 2,392 | ||||||||||||||
Modine Manufacturing Co. | 34 | 442 | * | |||||||||||||
Standard Motor Products Inc. | 8 | 433 | ||||||||||||||
Tenneco Inc. | 14 | 482 | ||||||||||||||
Veoneer Inc. | 21 | 705 | * | |||||||||||||
Visteon Corp. | 10 | 790 | * | |||||||||||||
Total Auto Components | 27,725 | |||||||||||||||
Automobiles — 1.0% |
| |||||||||||||||
Ford Motor Co. | 955 | 9,120 | ||||||||||||||
General Motors Co. | 321 | 11,746 | ||||||||||||||
Harley-Davidson Inc. | 28 | 1,070 | ||||||||||||||
Tesla Inc. | 32 | 10,794 | * | |||||||||||||
Thor Industries Inc. | 10 | 697 | ||||||||||||||
Winnebago Industries Inc. | 13 | 358 | ||||||||||||||
Total Automobiles | 33,785 | |||||||||||||||
Diversified Consumer Services — 1.9% |
| |||||||||||||||
Adtalem Global Education Inc. | 74 | 3,747 | * | |||||||||||||
See Notes to Financial Statements.
| Legg Mason US Diversified Core ETF 2018 Annual Report | 11 |
Schedule of investments (cont’d)
October 31, 2018
Legg Mason US Diversified Core ETF
| Security | Shares | Value | ||||||||||||||
Diversified Consumer Services — continued | ||||||||||||||||
American Public Education Inc. | 19 | $ | 622 | * | ||||||||||||
Bright Horizons Family Solutions Inc. | 63 | 7,239 | * | |||||||||||||
Career Education Corp. | 73 | 1,050 | * | |||||||||||||
Carriage Services Inc. | 21 | 400 | ||||||||||||||
Chegg Inc. | 106 | 2,892 | * | |||||||||||||
frontdoor Inc. | 75 | 2,554 | * | |||||||||||||
Graham Holdings Co., Class B Shares | 6 | 3,486 | ||||||||||||||
Grand Canyon Education Inc. | 55 | 6,858 | * | |||||||||||||
H&R Block Inc. | 253 | 6,715 | ||||||||||||||
Houghton Mifflin Harcourt Co. | 164 | 1,099 | * | |||||||||||||
K12 Inc. | 38 | 814 | * | |||||||||||||
Laureate Education Inc., Class A Shares | 54 | 804 | * | |||||||||||||
Regis Corp. | 42 | 707 | * | |||||||||||||
ServiceMaster Global Holdings Inc. | 151 | 6,475 | * | |||||||||||||
Sotheby’s | 49 | 2,058 | * | |||||||||||||
Strategic Education Inc. | 25 | 3,145 | ||||||||||||||
U.S. Service Corp. International | 213 | 8,833 | ||||||||||||||
Weight Watchers International Inc. | 47 | 3,107 | * | |||||||||||||
Total Diversified Consumer Services | 62,605 | |||||||||||||||
Hotels, Restaurants & Leisure — 1.6% |
| |||||||||||||||
Aramark | 15 | 539 | ||||||||||||||
Caesars Entertainment Corp. | 102 | 876 | * | |||||||||||||
Carnival Corp. | 43 | 2,410 | ||||||||||||||
Chipotle Mexican Grill Inc. | 2 | 921 | * | |||||||||||||
Cracker Barrel Old Country Store Inc. | 4 | 635 | ||||||||||||||
Darden Restaurants Inc. | 17 | 1,811 | ||||||||||||||
Dave & Buster’s Entertainment Inc. | 9 | 536 | ||||||||||||||
Domino’s Pizza Inc. | 3 | 806 | ||||||||||||||
Dunkin’ Brands Group Inc. | 10 | 726 | ||||||||||||||
Extended Stay America Inc. | 32 | 521 | ||||||||||||||
Hilton Worldwide Holdings Inc. | 37 | 2,633 | ||||||||||||||
Las Vegas Sands Corp. | 38 | 1,939 | ||||||||||||||
Marriott International Inc., Class A Shares | 31 | 3,624 | ||||||||||||||
Marriott Vacations Worldwide Corp. | 5 | 442 | ||||||||||||||
McDonald’s Corp. | 79 | 13,975 | ||||||||||||||
MGM Resorts International | 48 | 1,281 | ||||||||||||||
Norwegian Cruise Line Holdings Ltd. | 32 | 1,410 | * | |||||||||||||
Royal Caribbean Cruises Ltd. | 17 | 1,780 | * | |||||||||||||
See Notes to Financial Statements.
| 12 | Legg Mason US Diversified Core ETF 2018 Annual Report |
Legg Mason US Diversified Core ETF
| Security | Shares | Value | ||||||||||||||
Hotels, Restaurants & Leisure — continued | ||||||||||||||||
Six Flags Entertainment Corp. | 14 | $ | 754 | |||||||||||||
Starbucks Corp. | 149 | 8,682 | ||||||||||||||
Texas Roadhouse Inc. | 7 | 423 | ||||||||||||||
Vail Resorts Inc. | 3 | 754 | ||||||||||||||
Wendy’s Co. | 39 | 672 | ||||||||||||||
Wyndham Hotels & Resorts Inc. | 7 | 345 | ||||||||||||||
Wynn Resorts Ltd. | 10 | 1,006 | ||||||||||||||
Yum! Brands Inc. | 33 | 2,984 | ||||||||||||||
Total Hotels, Restaurants & Leisure | 52,485 | |||||||||||||||
Household Durables — 0.8% |
| |||||||||||||||
Cavco Industries Inc. | 4 | 802 | * | |||||||||||||
DR Horton Inc. | 81 | 2,913 | ||||||||||||||
Garmin Ltd. | 37 | 2,448 | ||||||||||||||
Helen of Troy Ltd. | 7 | 869 | * | |||||||||||||
Installed Building Products, Inc. | 11 | 335 | * | |||||||||||||
iRobot Corp. | 10 | 882 | * | |||||||||||||
KB Home | 25 | 499 | ||||||||||||||
La-Z-Boy Inc. | 16 | 445 | ||||||||||||||
Leggett & Platt Inc. | 22 | 799 | ||||||||||||||
Lennar Corp., Class A Shares | 62 | 2,665 | ||||||||||||||
M/I Homes Inc. | 15 | 363 | * | |||||||||||||
MDC Holdings Inc. | 14 | 393 | ||||||||||||||
Meritage Homes Corp. | 11 | 410 | * | |||||||||||||
Mohawk Industries Inc. | 14 | 1,746 | * | |||||||||||||
Newell Brands Inc. | 119 | 1,890 | ||||||||||||||
NVR Inc. | 1 | 2,239 | * | |||||||||||||
PulteGroup Inc. | 54 | 1,327 | ||||||||||||||
Taylor Morrison Home Corp., Class A Shares | 25 | 413 | * | |||||||||||||
Tempur Sealy International Inc. | 13 | 601 | * | |||||||||||||
Toll Brothers Inc. | 21 | 707 | ||||||||||||||
TopBuild Corp. | 13 | 593 | * | |||||||||||||
Tupperware Brands Corp. | 12 | 421 | ||||||||||||||
Whirlpool Corp. | 15 | 1,646 | ||||||||||||||
Total Household Durables | 25,406 | |||||||||||||||
Internet & Direct Marketing Retail — 1.7% |
| |||||||||||||||
Amazon.com Inc. | 27 | 43,146 | * | |||||||||||||
Booking Holdings Inc. | 3 | 5,624 | * | |||||||||||||
eBay Inc. | 55 | 1,597 | * | |||||||||||||
See Notes to Financial Statements.
| Legg Mason US Diversified Core ETF 2018 Annual Report | 13 |
Schedule of investments (cont’d)
October 31, 2018
Legg Mason US Diversified Core ETF
| Security | Shares | Value | ||||||||||||||
Internet & Direct Marketing Retail — continued | ||||||||||||||||
Expedia Group Inc. | 12 | $ | 1,505 | |||||||||||||
Groupon Inc. | 97 | 317 | * | |||||||||||||
GrubHub Inc. | 7 | 649 | * | |||||||||||||
MercadoLibre Inc. | 3 | 974 | ||||||||||||||
Qurate Retail Inc. | 58 | 1,273 | * | |||||||||||||
Wayfair Inc. , Class A Shares | 5 | 551 | * | |||||||||||||
Total Internet & Direct Marketing Retail | 55,636 | |||||||||||||||
Media — 0.1% |
| |||||||||||||||
Liberty Global PLC, Class A Shares | 25 | 626 | * | |||||||||||||
Liberty Global PLC, Class C Shares | 15 | 384 | * | |||||||||||||
Sirius XM Holdings Inc. | 144 | 867 | ||||||||||||||
Total Media | 1,877 | |||||||||||||||
Multiline Retail — 2.0% |
| |||||||||||||||
Big Lots Inc. | 26 | 1,079 | ||||||||||||||
Dillard’s Inc., Class A Shares | 5 | 352 | ||||||||||||||
Dollar General Corp. | 127 | 14,145 | ||||||||||||||
Dollar Tree Inc. | 113 | 9,526 | * | |||||||||||||
JC Penney Co. Inc. | 327 | 481 | * | |||||||||||||
Kohl’s Corp. | 86 | 6,513 | ||||||||||||||
Macy’s Inc. | 157 | 5,384 | ||||||||||||||
Nordstrom Inc. | 63 | 4,143 | ||||||||||||||
Ollie’s Bargain Outlet Holdings Inc. | 29 | 2,694 | * | |||||||||||||
Target Corp. | 241 | 20,155 | ||||||||||||||
Total Multiline Retail | 64,472 | |||||||||||||||
Specialty Retail — 1.8% |
| |||||||||||||||
Advance Auto Parts Inc. | 8 | 1,278 | ||||||||||||||
AutoNation Inc. | 10 | 405 | * | |||||||||||||
AutoZone Inc. | 3 | 2,200 | * | |||||||||||||
Best Buy Co. Inc. | 26 | 1,824 | ||||||||||||||
Burlington Stores Inc. | 9 | 1,543 | * | |||||||||||||
CarMax Inc. | 19 | 1,290 | * | |||||||||||||
Five Below Inc. | 4 | 455 | * | |||||||||||||
Foot Locker Inc. | 13 | 613 | ||||||||||||||
Gap Inc. | 30 | 819 | ||||||||||||||
Home Depot Inc. | 107 | 18,819 | ||||||||||||||
L Brands Inc. | 28 | 908 | ||||||||||||||
Lithia Motors Inc., Class A Shares | 6 | 534 | ||||||||||||||
Lowe’s Cos. Inc. | 80 | 7,618 | ||||||||||||||
See Notes to Financial Statements.
| 14 | Legg Mason US Diversified Core ETF 2018 Annual Report |
Legg Mason US Diversified Core ETF
| Security | Shares | Value | ||||||||||||||
Specialty Retail — continued | ||||||||||||||||
Monro Inc. | 7 | $ | 521 | |||||||||||||
Murphy USA Inc. | 5 | 403 | * | |||||||||||||
O’Reilly Automotive Inc. | 8 | 2,566 | * | |||||||||||||
RH | 3 | 347 | * | |||||||||||||
Ross Stores Inc. | 34 | 3,366 | ||||||||||||||
Tiffany & Co. | 12 | 1,336 | ||||||||||||||
TJX Cos. Inc. | 62 | 6,813 | ||||||||||||||
Tractor Supply Co. | 15 | 1,378 | ||||||||||||||
Ulta Beauty Inc. | 6 | 1,647 | * | |||||||||||||
Urban Outfitters Inc. | 12 | 474 | * | |||||||||||||
Williams-Sonoma Inc. | 8 | 475 | ||||||||||||||
Total Specialty Retail | 57,632 | |||||||||||||||
Textiles, Apparel & Luxury Goods — 1.8% |
| |||||||||||||||
Carter’s Inc. | 14 | 1,344 | ||||||||||||||
Columbia Sportswear Co. | 11 | 993 | ||||||||||||||
Crocs Inc. | 20 | 411 | * | |||||||||||||
Deckers Outdoor Corp. | 10 | 1,272 | * | |||||||||||||
Fossil Group Inc. | 24 | 521 | * | |||||||||||||
G-III Apparel Group Ltd | 12 | 478 | * | |||||||||||||
Hanesbrands Inc. | 102 | 1,750 | ||||||||||||||
Lululemon Athletica Inc. | 29 | 4,081 | * | |||||||||||||
Michael Kors Holdings Ltd. | 43 | 2,383 | ||||||||||||||
NIKE Inc., Class B Shares | 349 | 26,189 | ||||||||||||||
PVH Corp. | 20 | 2,416 | ||||||||||||||
Ralph Lauren Corp. | 16 | 2,074 | ||||||||||||||
Skechers U.S.A. Inc. Class A Shares | 44 | 1,257 | * | |||||||||||||
Steven Madden Ltd. | 28 | 876 | ||||||||||||||
Tapestry Inc. | 76 | 3,215 | ||||||||||||||
Under Armour Inc., Class A Shares | 61 | 1,349 | * | |||||||||||||
Under Armour Inc., Class C Shares | 59 | 1,170 | * | |||||||||||||
VF Corp. | 89 | 7,376 | ||||||||||||||
Wolverine World Wide Inc. | 32 | 1,125 | ||||||||||||||
Total Textiles, Apparel & Luxury Goods | 60,280 | |||||||||||||||
Total Consumer Discretionary | 441,903 | |||||||||||||||
| Consumer Staples — 10.6% |
| |||||||||||||||
Beverages — 1.8% |
| |||||||||||||||
Brown-Forman Corp., Class B Shares | 33 | 1,529 | ||||||||||||||
Coca-Cola Co. | 547 | 26,190 | ||||||||||||||
See Notes to Financial Statements.
| Legg Mason US Diversified Core ETF 2018 Annual Report | 15 |
Schedule of investments (cont’d)
October 31, 2018
Legg Mason US Diversified Core ETF
| Security | Shares | Value | ||||||||||||||
Beverages — continued |
| |||||||||||||||
Constellation Brands Inc., Class A Shares | 24 | $ | 4,782 | |||||||||||||
Molson Coors Brewing Co., Class B Shares | 21 | 1,344 | ||||||||||||||
Monster Beverage Corp. | 52 | 2,748 | * | |||||||||||||
PepsiCo Inc. | 191 | 21,465 | ||||||||||||||
Total Beverages | 58,058 | |||||||||||||||
Food & Staples Retailing — 2.0% |
| |||||||||||||||
Casey’s General Stores Inc. | 7 | 883 | ||||||||||||||
Costco Wholesale Corp. | 71 | 16,233 | ||||||||||||||
Kroger Co. | 131 | 3,899 | ||||||||||||||
Performance Food Group Co. | 26 | 762 | * | |||||||||||||
Sprouts Farmers Market Inc. | 28 | 753 | * | |||||||||||||
Sysco Corp. | 89 | 6,348 | ||||||||||||||
US Foods Holding Corp. | 35 | 1,021 | * | |||||||||||||
Walgreens Boots Alliance Inc. | 134 | 10,689 | ||||||||||||||
Walmart Inc. | 236 | 23,666 | ||||||||||||||
Total Food & Staples Retailing | 64,254 | |||||||||||||||
Food Products — 1.8% |
| |||||||||||||||
Archer-Daniels-Midland Co. | 105 | 4,961 | ||||||||||||||
B&G Foods Inc. | 13 | 339 | ||||||||||||||
Bunge Ltd. | 21 | 1,298 | ||||||||||||||
Calavo Growers Inc. | 6 | 582 | ||||||||||||||
Campbell Soup Co. | 25 | 935 | ||||||||||||||
Conagra Brands Inc. | 102 | 3,631 | ||||||||||||||
Darling Ingredients Inc. | 38 | 785 | * | |||||||||||||
Flowers Foods Inc. | 42 | 811 | ||||||||||||||
General Mills Inc. | 96 | 4,205 | ||||||||||||||
Hain Celestial Group Inc. | 23 | 572 | * | |||||||||||||
Hershey Co. | 30 | 3,214 | ||||||||||||||
Hormel Foods Corp. | 67 | 2,924 | ||||||||||||||
Hostess Brands Inc. | 45 | 468 | * | |||||||||||||
Ingredion Inc. | 9 | 911 | ||||||||||||||
J & J Snack Foods Corp. | 3 | 468 | ||||||||||||||
JM Smucker Co. | 21 | 2,275 | ||||||||||||||
John B Sanfilippo & Son Inc. | 6 | 378 | ||||||||||||||
Kellogg Co. | 51 | 3,339 | ||||||||||||||
Kraft Heinz Co. | 115 | 6,322 | ||||||||||||||
Lamb Weston Holdings Inc. | 32 | 2,501 | ||||||||||||||
Lancaster Colony Corp. | 4 | 686 | ||||||||||||||
See Notes to Financial Statements.
| 16 | Legg Mason US Diversified Core ETF 2018 Annual Report |
Legg Mason US Diversified Core ETF
| Security | Shares | Value | ||||||||||||||
Food Products — continued |
| |||||||||||||||
McCormick & Co. Inc., Non Voting Shares | 20 | $ | 2,880 | |||||||||||||
Mondelez International Inc., Class A Shares | 272 | 11,419 | ||||||||||||||
Post Holdings Inc. | 13 | 1,149 | * | |||||||||||||
Sanderson Farms Inc. | 4 | 394 | ||||||||||||||
TreeHouse Foods Inc. | 12 | 547 | * | |||||||||||||
Tyson Foods Inc., Class A Shares | 49 | 2,936 | ||||||||||||||
Total Food Products | 60,930 | |||||||||||||||
Household Products — 2.0% |
| |||||||||||||||
Church & Dwight Co. Inc. | 34 | 2,019 | ||||||||||||||
Clorox Co. | 21 | 3,117 | ||||||||||||||
Colgate-Palmolive Co. | 151 | 8,992 | ||||||||||||||
Energizer Holdings, Inc. | 15 | 882 | ||||||||||||||
Kimberly-Clark Corp. | 68 | 7,092 | ||||||||||||||
Procter & Gamble Co. | 471 | 41,768 | ||||||||||||||
Spectrum Brands Holdings Inc. | 6 | 390 | ||||||||||||||
WD-40 Co. | 3 | 501 | ||||||||||||||
Total Household Products | 64,761 | |||||||||||||||
Personal Products — 0.9% |
| |||||||||||||||
Avon Products Inc. | 326 | 639 | * | |||||||||||||
Coty Inc., Class A Shares | 273 | 2,880 | ||||||||||||||
Edgewell Personal Care Co. | 35 | 1,679 | * | |||||||||||||
elf Beauty, Inc. | 32 | 339 | * | |||||||||||||
Estee Lauder Cos. Inc., Class A Shares | 122 | 16,768 | ||||||||||||||
Herbalife Nutrition Ltd. | 72 | 3,835 | ||||||||||||||
Inter Parfums Inc. | 21 | 1,239 | ||||||||||||||
Medifast Inc. | 6 | 1,270 | ||||||||||||||
Nu Skin Enterprises Inc. , Class A Shares | 32 | 2,247 | ||||||||||||||
USANA Health Sciences Inc. | 5 | 585 | * | |||||||||||||
Total Personal Products | 31,481 | |||||||||||||||
Tobacco — 2.1% |
| |||||||||||||||
Altria Group Inc. | 489 | 31,805 | ||||||||||||||
Philip Morris International Inc. | 401 | 35,316 | ||||||||||||||
Universal Corp. | 8 | 543 | ||||||||||||||
Vector Group Ltd. | 37 | 500 | ||||||||||||||
Total Tobacco | 68,164 | |||||||||||||||
Total Consumer Staples | 347,648 | |||||||||||||||
See Notes to Financial Statements.
| Legg Mason US Diversified Core ETF 2018 Annual Report | 17 |
Schedule of investments (cont’d)
October 31, 2018
Legg Mason US Diversified Core ETF
| Security | Shares | Value | ||||||||||||||
| Energy — 7.9% |
| |||||||||||||||
Energy Equipment & Services — 3.9% |
| |||||||||||||||
Apergy Corp. | 51 | $ | 1,988 | * | ||||||||||||
Archrock Inc. | 111 | 1,139 | ||||||||||||||
Baker Hughes a GE Co. | 261 | 6,966 | ||||||||||||||
C&J Energy Services Inc. | 56 | 1,052 | * | |||||||||||||
Cactus Inc., Class A Shares | 29 | 970 | * | |||||||||||||
Core Laboratories N.V. | 26 | 2,216 | ||||||||||||||
Diamond Offshore Drilling Inc. | 52 | 737 | * | |||||||||||||
Dril-Quip Inc. | 27 | 1,149 | * | |||||||||||||
Ensco PLC, Class A Shares | 300 | 2,142 | ||||||||||||||
Exterran Corp. | 20 | 418 | * | |||||||||||||
Forum Energy Technologies Inc. | 82 | 735 | * | |||||||||||||
FRANK’S INTERNATIONAL NV | 83 | 589 | ||||||||||||||
Halliburton Co. | 555 | 19,247 | ||||||||||||||
Helix Energy Solutions Group Inc. | 83 | 707 | * | |||||||||||||
Helmerich & Payne Inc. | 63 | 3,924 | ||||||||||||||
Keane Group, Inc. | 56 | 704 | * | |||||||||||||
Matrix Service Co. | 29 | 590 | * | |||||||||||||
McDermott International Inc. | 108 | 835 | * | |||||||||||||
Nabors Industries Ltd. | 248 | 1,232 | ||||||||||||||
National Oilwell Varco Inc. | 236 | 8,685 | ||||||||||||||
Newpark Resources Inc. | 64 | 525 | * | |||||||||||||
Nine Energy Service Inc. | 22 | 815 | * | |||||||||||||
Noble Corp. PLC | 164 | 823 | ||||||||||||||
Oceaneering International Inc. | 67 | 1,269 | * | |||||||||||||
Oil States International Inc. | 48 | 1,069 | * | |||||||||||||
Patterson-UTI Energy Inc. | 140 | 2,330 | ||||||||||||||
ProPetro Holding Corp. | 71 | 1,253 | * | |||||||||||||
Rowan Cos. PLC, Class A Shares | 86 | 1,368 | * | |||||||||||||
RPC Inc. | 44 | 655 | ||||||||||||||
Schlumberger Ltd. | 877 | 44,999 | ||||||||||||||
SEACOR Holdings Inc. | 18 | 864 | * | |||||||||||||
Select Energy Services Inc., Class A Shares | 66 | 631 | * | |||||||||||||
Superior Energy Services Inc. | 72 | 564 | * | |||||||||||||
TechnipFMC PLC | 269 | 7,075 | ||||||||||||||
TETRA Technologies Inc. | 167 | 496 | * | |||||||||||||
Tidewater Inc. | 22 | 591 | * | |||||||||||||
Transocean Ltd. | 271 | 2,984 | ||||||||||||||
See Notes to Financial Statements.
| 18 | Legg Mason US Diversified Core ETF 2018 Annual Report |
Legg Mason US Diversified Core ETF
| Security | Shares | Value | ||||||||||||||
Energy Equipment & Services — continued |
| |||||||||||||||
U.S. Silica Holdings Inc. | 64 | $ | 896 | |||||||||||||
Unit Corp. | 30 | 694 | * | |||||||||||||
Weatherford International PLC | 639 | 863 | ||||||||||||||
Total Energy Equipment & Services | 126,789 | |||||||||||||||
Oil, Gas & Consumable Fuels — 4.0% |
| |||||||||||||||
Anadarko Petroleum Corp. | 55 | 2,926 | ||||||||||||||
Antero Resources Corp. | 37 | 588 | * | |||||||||||||
Apache Corp. | 49 | 1,854 | ||||||||||||||
Cabot Oil & Gas Corp. | 58 | 1,405 | ||||||||||||||
Cheniere Energy Inc. | 24 | 1,450 | * | |||||||||||||
Chesapeake Energy Corp. | 199 | 699 | * | |||||||||||||
Chevron Corp. | 187 | 20,879 | ||||||||||||||
Cimarex Energy Co. | 5 | 397 | ||||||||||||||
Concho Resources Inc. | 24 | 3,338 | * | |||||||||||||
ConocoPhillips | 116 | 8,108 | ||||||||||||||
Continental Resources Inc. | 15 | 790 | * | |||||||||||||
Delek US Holdings Inc. | 20 | 734 | ||||||||||||||
Denbury Resources Inc. | 114 | 393 | * | |||||||||||||
Devon Energy Corp. | 56 | 1,814 | ||||||||||||||
Diamondback Energy Inc. | 12 | 1,348 | ||||||||||||||
Energen Corp. | 15 | 1,080 | * | |||||||||||||
EOG Resources Inc. | 57 | 6,004 | ||||||||||||||
EQT Corp. | 30 | 1,019 | ||||||||||||||
Exxon Mobil Corp. | 411 | 32,749 | ||||||||||||||
Hess Corp. | 21 | 1,205 | ||||||||||||||
HollyFrontier Corp. | 18 | 1,214 | ||||||||||||||
Kinder Morgan Inc. | 201 | 3,421 | ||||||||||||||
Marathon Oil Corp. | 95 | 1,804 | ||||||||||||||
Marathon Petroleum Corp. | 72 | 5,072 | ||||||||||||||
Murphy Oil Corp. | 30 | 956 | ||||||||||||||
Newfield Exploration Co. | 21 | 424 | * | |||||||||||||
Noble Energy Inc. | 55 | 1,367 | ||||||||||||||
Oasis Petroleum Inc. | 51 | 513 | * | |||||||||||||
Occidental Petroleum Corp. | 75 | 5,030 | ||||||||||||||
ONEOK Inc. | 41 | 2,690 | ||||||||||||||
Parsley Energy Inc., Class A Shares | 19 | 445 | * | |||||||||||||
PBF Energy Inc., Class A Shares | 23 | 963 | ||||||||||||||
PDC Energy Inc. | 14 | 594 | * | |||||||||||||
See Notes to Financial Statements.
| Legg Mason US Diversified Core ETF 2018 Annual Report | 19 |
Schedule of investments (cont’d)
October 31, 2018
Legg Mason US Diversified Core ETF
| Security | Shares | Value | ||||||||||||||
Oil, Gas & Consumable Fuels — continued | ||||||||||||||||
Phillips 66 | 43 | $ | 4,421 | |||||||||||||
Pioneer Natural Resources Co. | 17 | 2,504 | ||||||||||||||
QEP Resources Inc. | 62 | 552 | * | |||||||||||||
Range Resources Corp. | 29 | 460 | ||||||||||||||
SM Energy Co. | 22 | 535 | ||||||||||||||
Southwestern Energy Co. | 122 | 652 | * | |||||||||||||
Targa Resources Corp. | 31 | 1,602 | ||||||||||||||
Valero Energy Corp. | 43 | 3,917 | ||||||||||||||
Whiting Petroleum Corp. | 19 | 709 | * | |||||||||||||
Williams Cos Inc. | 121 | 2,944 | ||||||||||||||
WPX Energy Inc. | 58 | 930 | * | |||||||||||||
Total Oil, Gas & Consumable Fuels | 132,499 | |||||||||||||||
Total Energy | 259,288 | |||||||||||||||
| Financials — 9.8% |
| |||||||||||||||
Banks — 1.3% |
| |||||||||||||||
1st Source Corp. | 12 | 559 | ||||||||||||||
Bank of America Corp. | 225 | 6,187 | ||||||||||||||
Bank of Hawaii Corp. | 8 | 628 | ||||||||||||||
BB&T Corp. | 16 | 787 | ||||||||||||||
Citigroup Inc. | 55 | 3,600 | ||||||||||||||
City Holding Co. | 21 | 1,549 | ||||||||||||||
Comerica Inc. | 9 | 734 | ||||||||||||||
East-West Bancorp Inc. | 11 | 577 | ||||||||||||||
Fifth Third Bancorp | 19 | 513 | ||||||||||||||
First Commonwealth Financial Corp. | 79 | 1,067 | ||||||||||||||
First Interstate BancSystem Inc., Class A Shares | 46 | 1,907 | ||||||||||||||
First Republic Bank | 5 | 455 | ||||||||||||||
FNB Corp. | 50 | 592 | ||||||||||||||
Huntington Bancshares Inc. | 61 | 874 | ||||||||||||||
JPMorgan Chase & Co. | 74 | 8,067 | ||||||||||||||
KeyCorp | 26 | 472 | ||||||||||||||
PNC Financial Services Group Inc. | 14 | 1,799 | ||||||||||||||
Regions Financial Corp. | 39 | 662 | ||||||||||||||
Sandy Spring Bancorp Inc. | 35 | 1,244 | ||||||||||||||
SunTrust Banks Inc. | 11 | 689 | ||||||||||||||
Tompkins Financial Corp. | 23 | 1,682 | ||||||||||||||
U.S. Bancorp | 36 | 1,882 | ||||||||||||||
Wells Fargo & Co. | 97 | 5,163 | ||||||||||||||
See Notes to Financial Statements.
| 20 | Legg Mason US Diversified Core ETF 2018 Annual Report |
Legg Mason US Diversified Core ETF
| Security | Shares | Value | ||||||||||||||
Banks — continued | ||||||||||||||||
Zions Bancorp | 15 | $ | 706 | |||||||||||||
Total Banks | 42,395 | |||||||||||||||
Capital Markets — 1.2% |
| |||||||||||||||
Affiliated Managers Group Inc. | 4 | 455 | ||||||||||||||
Ameriprise Financial Inc. | 5 | 636 | ||||||||||||||
Bank of New York Mellon Corp. | 52 | 2,461 | ||||||||||||||
BlackRock Inc. | 6 | 2,469 | ||||||||||||||
Cboe Global Markets Inc. | 8 | 903 | ||||||||||||||
Charles Schwab Corp. | 61 | 2,821 | ||||||||||||||
CME Group Inc. | 16 | 2,932 | ||||||||||||||
E*TRADE Financial Corp. | 13 | 643 | ||||||||||||||
Eaton Vance Corp. | 9 | 405 | ||||||||||||||
FactSet Research Systems Inc. | 4 | 895 | ||||||||||||||
Franklin Resources Inc. | 25 | 763 | ||||||||||||||
Goldman Sachs Group Inc. | 17 | 3,831 | ||||||||||||||
Intercontinental Exchange Inc. | 34 | 2,619 | ||||||||||||||
Invesco Ltd. | 34 | 738 | ||||||||||||||
Janus Henderson Group PLC | 21 | 516 | ||||||||||||||
MarketAxess Holdings Inc. | 3 | 629 | ||||||||||||||
Moody’s Corp. | 11 | 1,600 | ||||||||||||||
Morgan Stanley | 67 | 3,059 | ||||||||||||||
Morningstar Inc. | 5 | 624 | ||||||||||||||
MSCI Inc. | 8 | 1,203 | ||||||||||||||
Nasdaq Inc. | 10 | 867 | ||||||||||||||
Northern Trust Corp. | 16 | 1,505 | ||||||||||||||
Raymond James Financial Inc. | 6 | 460 | ||||||||||||||
S&P Global Inc. | 16 | 2,917 | ||||||||||||||
SEI Investments Co. | 12 | 641 | ||||||||||||||
State Street Corp. | 21 | 1,444 | ||||||||||||||
T Rowe Price Group Inc. | 15 | 1,455 | ||||||||||||||
TD Ameritrade Holding Corp. | 13 | 672 | ||||||||||||||
Total Capital Markets | 40,163 | |||||||||||||||
Consumer Finance — 1.3% |
| |||||||||||||||
Ally Financial Inc. | 106 | 2,693 | ||||||||||||||
American Express Co. | 141 | 14,485 | ||||||||||||||
Capital One Financial Corp. | 93 | 8,305 | ||||||||||||||
Credit Acceptance Corp. | 2 | 849 | * | |||||||||||||
Discover Financial Services | 70 | 4,877 | ||||||||||||||
See Notes to Financial Statements.
| Legg Mason US Diversified Core ETF 2018 Annual Report | 21 |
Schedule of investments (cont’d)
October 31, 2018
Legg Mason US Diversified Core ETF
| Security | Shares | Value | ||||||||||||||
Consumer Finance — continued |
| |||||||||||||||
Encore Capital Group Inc. | 15 | $ | 381 | * | ||||||||||||
FirstCash Inc. | 12 | 965 | ||||||||||||||
Green Dot Corp., Class A Shares | 16 | 1,212 | * | |||||||||||||
Navient Corp. | 96 | 1,112 | ||||||||||||||
OneMain Holdings Inc. | 17 | 485 | * | |||||||||||||
PRA Group Inc. | 16 | 493 | * | |||||||||||||
SLM Corp. | 132 | 1,338 | * | |||||||||||||
Synchrony Financial | 146 | 4,217 | ||||||||||||||
Total Consumer Finance | 41,412 | |||||||||||||||
Diversified Financial Services — 1.4% |
| |||||||||||||||
Berkshire Hathaway Inc., Class B Shares | 197 | 40,440 | ||||||||||||||
Cannae Holdings Inc. | 47 | 868 | * | |||||||||||||
Jefferies Financial Group Inc. | 35 | 751 | ||||||||||||||
Texas Pacific Land Trust | 1 | 760 | ||||||||||||||
Voya Financial Inc. | 34 | 1,488 | ||||||||||||||
Total Diversified Financial Services | 44,307 | |||||||||||||||
Insurance — 1.1% |
| |||||||||||||||
Aflac Inc. | 46 | 1,981 | ||||||||||||||
Allstate Corp. | 23 | 2,202 | ||||||||||||||
American Financial Group Inc. | 4 | 400 | ||||||||||||||
American International Group Inc. | 44 | 1,817 | ||||||||||||||
AON PLC | 15 | 2,343 | ||||||||||||||
Arch Capital Group Ltd. | 21 | 596 | ||||||||||||||
Arthur J Gallagher & Co. | 7 | 518 | ||||||||||||||
Assured Guaranty Ltd. | 11 | 440 | ||||||||||||||
Axis Capital Holdings Ltd. | 9 | 502 | ||||||||||||||
Brown & Brown Inc. | 16 | 451 | ||||||||||||||
CHUBB Ltd. | 32 | 3,997 | ||||||||||||||
Cincinnati Financial Corp. | 5 | 393 | ||||||||||||||
CNO Financial Group Inc. | 22 | 416 | ||||||||||||||
Everest Re Group Ltd. | 3 | 654 | ||||||||||||||
Fidelity National Financial Inc. | 23 | 769 | ||||||||||||||
Hartford Financial Services Group Inc. | 24 | 1,090 | ||||||||||||||
Lincoln National Corp. | 19 | 1,144 | ||||||||||||||
Markel Corp. | 1 | 1,093 | * | |||||||||||||
Marsh & McLennan Cos. Inc. | 28 | 2,373 | ||||||||||||||
MetLife Inc. | 65 | 2,677 | �� | |||||||||||||
Principal Financial Group Inc. | 23 | 1,083 | ||||||||||||||
See Notes to Financial Statements.
| 22 | Legg Mason US Diversified Core ETF 2018 Annual Report |
Legg Mason US Diversified Core ETF
| Security | Shares | Value | ||||||||||||||
Insurance — continued | ||||||||||||||||
Progressive Corp. | 37 | $ | 2,579 | |||||||||||||
Prudential Financial Inc. | 26 | 2,438 | ||||||||||||||
Reinsurance Group of America Inc. | 4 | 569 | ||||||||||||||
Renaissancere Holdings Ltd. | 4 | 489 | ||||||||||||||
Torchmark Corp. | 5 | 423 | ||||||||||||||
Travelers Cos. Inc. | 17 | 2,127 | ||||||||||||||
Unum Group | 16 | 580 | ||||||||||||||
Willis Towers Watson PLC | 5 | 716 | ||||||||||||||
Total Insurance | 36,860 | |||||||||||||||
Mortgage Real Estate Investment Trusts (REITs) — 2.2% |
| |||||||||||||||
AG Mortgage Investment Trust Inc. | 46 | 796 | ||||||||||||||
AGNC Investment Corp. | 458 | 8,171 | ||||||||||||||
Annaly Capital Management Inc. | 1,314 | 12,969 | ||||||||||||||
Anworth Mortgage Asset Corp. | 108 | 471 | ||||||||||||||
Apollo Commercial Real Estate Finance Inc. | 162 | 3,031 | ||||||||||||||
Arbor Realty Trust Inc. | 96 | 1,160 | ||||||||||||||
ARMOUR Residential REIT Inc. | 54 | 1,176 | ||||||||||||||
Blackstone Mortgage Trust Inc., Class A Shares | 107 | 3,610 | ||||||||||||||
Capstead Mortgage Corp. | 111 | 761 | ||||||||||||||
Chimera Investment Corp. | 184 | 3,422 | ||||||||||||||
Colony Credit Real Estate Inc. | 133 | 2,838 | ||||||||||||||
Dynex Capital Inc. | 105 | 608 | ||||||||||||||
Exantas Capital Corp. | 91 | 1,032 | ||||||||||||||
Granite Point Mortgage Trust Inc. | 34 | 633 | ||||||||||||||
Hannon Armstrong Sustainable Infrastructure Capital Inc. | 71 | 1,473 | ||||||||||||||
Invesco Mortgage Capital Inc. | 122 | 1,840 | ||||||||||||||
Ladder Capital Corp. | 93 | 1,566 | ||||||||||||||
MFA Financial Inc. | 483 | 3,347 | ||||||||||||||
New Residential Investment Corp. | 360 | 6,437 | ||||||||||||||
New York Mortgage Trust Inc. | 233 | 1,431 | ||||||||||||||
PennyMac Mortgage Investment Trust | 78 | 1,506 | ||||||||||||||
Ready Capital Corp. | 28 | 429 | ||||||||||||||
Redwood Trust Inc. | 94 | 1,543 | ||||||||||||||
Starwood Property Trust Inc. | 308 | 6,690 | ||||||||||||||
TPG RE Finance Trust Inc. | 33 | 654 | ||||||||||||||
Two Harbors Investment Corp. | 330 | 4,848 | ||||||||||||||
Total Mortgage Real Estate Investment Trusts (REITs) | 72,442 | |||||||||||||||
See Notes to Financial Statements.
| Legg Mason US Diversified Core ETF 2018 Annual Report | 23 |
Schedule of investments (cont’d)
October 31, 2018
Legg Mason US Diversified Core ETF
| Security | Shares | Value | ||||||||||||||
Thrifts & Mortgage Finance — 1.3% |
| |||||||||||||||
Axos Financial Inc. | 43 | $ | 1,305 | * | ||||||||||||
Beneficial Bancorp Inc. | 65 | 1,016 | ||||||||||||||
Capitol Federal Financial Inc. | 136 | 1,688 | ||||||||||||||
Dime Community Bancshares Inc. | 23 | 371 | ||||||||||||||
Essent Group Ltd. | 77 | 3,035 | ||||||||||||||
Federal Agricultural Mortgage Corp. (FAMC), Class C Shares | 10 | 698 | ||||||||||||||
First Defiance Financial Corp. | 30 | 817 | ||||||||||||||
Flagstar Bancorp Inc. | 31 | 955 | * | |||||||||||||
HomeStreet Inc. | 35 | 909 | * | |||||||||||||
Kearny Financial Corp. | 74 | 958 | ||||||||||||||
LendingTree Inc. | 9 | 1,815 | * | |||||||||||||
Meridian Bancorp Inc. | 49 | 776 | ||||||||||||||
Meta Financial Group Inc. | 24 | 606 | ||||||||||||||
MGIC Investment Corp. | 361 | 4,408 | * | |||||||||||||
New York Community Bancorp Inc. | 456 | 4,368 | ||||||||||||||
NMI Holdings Inc., Class A Shares | 48 | 1,015 | * | |||||||||||||
Northfield Bancorp Inc. | 47 | 619 | ||||||||||||||
Northwest Bancshares Inc. | 105 | 1,695 | ||||||||||||||
OceanFirst Financial Corp. | 57 | 1,443 | ||||||||||||||
Ocwen Financial Corp | 175 | 613 | * | |||||||||||||
Oritani Financial Corp. | 27 | 394 | ||||||||||||||
Provident Financial Services Inc. | 67 | 1,635 | ||||||||||||||
Radian Group Inc. | 207 | 3,972 | ||||||||||||||
TFS Financial Corp. | 48 | 706 | ||||||||||||||
United Financial Bancorp Inc. | 78 | 1,205 | ||||||||||||||
Walker & Dunlop Inc. | 19 | 797 | ||||||||||||||
Washington Federal Inc. | 67 | 1,887 | ||||||||||||||
Waterstone Financial Inc. | 24 | 392 | ||||||||||||||
WSFS Financial Corp. | 37 | 1,574 | ||||||||||||||
Total Thrifts & Mortgage Finance | 41,672 | |||||||||||||||
Total Financials | 319,251 | |||||||||||||||
| Health Care — 12.2% |
| |||||||||||||||
Biotechnology — 1.9% |
| |||||||||||||||
AbbVie Inc. | 134 | 10,432 | ||||||||||||||
ACADIA Pharmaceuticals Inc. | 35 | 682 | ||||||||||||||
Agios Pharmaceuticals Inc. | 13 | 820 | * | |||||||||||||
Alexion Pharmaceuticals Inc. | 18 | 2,017 | * | |||||||||||||
Alkermes PLC | 9 | 367 | ||||||||||||||
See Notes to Financial Statements.
| 24 | Legg Mason US Diversified Core ETF 2018 Annual Report |
Legg Mason US Diversified Core ETF
| Security | Shares | Value | ||||||||||||||
Biotechnology — continued |
| |||||||||||||||
Alnylam Pharmaceuticals Inc. | 8 | $ | 643 | * | ||||||||||||
Amgen Inc. | 58 | 11,182 | ||||||||||||||
Array BioPharma Inc. | 48 | 778 | * | |||||||||||||
Biogen Inc. | 17 | 5,173 | * | |||||||||||||
BioMarin Pharmaceutical Inc. | 12 | 1,106 | * | |||||||||||||
Bluebird Bio Inc. | 4 | 459 | * | |||||||||||||
Blueprint Medicines Corp. | 10 | 608 | * | |||||||||||||
Celgene Corp. | 61 | 4,368 | * | |||||||||||||
Exact Sciences Corp. | 18 | 1,279 | * | |||||||||||||
Exelixis Inc. | 38 | 527 | * | |||||||||||||
FibroGen Inc. | 9 | 386 | * | |||||||||||||
Gilead Sciences Inc. | 117 | 7,977 | ||||||||||||||
Incyte Corp. | 14 | 908 | * | |||||||||||||
Ionis Pharmaceuticals Inc. | 10 | 496 | * | |||||||||||||
Ligand Pharmaceuticals | 3 | 494 | * | |||||||||||||
Loxo Oncology Inc. | 6 | 916 | * | |||||||||||||
Neurocrine Biosciences Inc. | 9 | 964 | * | |||||||||||||
Regeneron Pharmaceuticals Inc. | 6 | 2,035 | * | |||||||||||||
Sage Therapeutics Inc. | 5 | 643 | * | |||||||||||||
Sarepta Therapeutics Inc. | 5 | 669 | * | |||||||||||||
Seattle Genetics Inc. | 11 | 617 | * | |||||||||||||
Ultragenyx Pharmaceutical Inc. | 7 | 339 | * | |||||||||||||
United Therapeutics Corp. | 5 | 554 | * | |||||||||||||
Vertex Pharmaceuticals Inc. | 20 | 3,389 | * | |||||||||||||
Total Biotechnology | 60,828 | |||||||||||||||
Health Care Equipment & Supplies — 2.2% |
| |||||||||||||||
Abbott Laboratories | 149 | 10,272 | ||||||||||||||
ABIOMED Inc. | 4 | 1,365 | ||||||||||||||
Align Technology Inc. | 6 | 1,327 | ||||||||||||||
Avanos Medical Inc. | 11 | 623 | * | |||||||||||||
Baxter International Inc. | 49 | 3,063 | ||||||||||||||
Becton Dickinson and Co. | 21 | 4,840 | ||||||||||||||
Boston Scientific Corp. | 106 | 3,831 | * | |||||||||||||
Cantel Medical Corp. | 5 | 396 | ||||||||||||||
Cooper Cos. Inc. | 4 | 1,033 | ||||||||||||||
Danaher Corp. | 58 | 5,765 | ||||||||||||||
Dentsply Sirona Inc. | 24 | 831 | ||||||||||||||
Dexcom Inc. | 7 | 929 | * | |||||||||||||
See Notes to Financial Statements.
| Legg Mason US Diversified Core ETF 2018 Annual Report | 25 |
Schedule of investments (cont’d)
October 31, 2018
Legg Mason US Diversified Core ETF
| Security | Shares | Value | ||||||||||||||
Health Care Equipment & Supplies — continued | ||||||||||||||||
Edwards Lifesciences Corp. | 15 | $ | 2,214 | |||||||||||||
Globus Medical Inc., Class A Shares | 15 | 793 | * | |||||||||||||
Hill-Rom Holdings Inc. | 6 | 504 | ||||||||||||||
Hologic Inc. | 26 | 1,014 | * | |||||||||||||
IDEXX Laboratories Inc. | 8 | 1,697 | * | |||||||||||||
Insulet Corp. | 6 | 529 | * | |||||||||||||
Integra LifeSciences Holdings Corp. | 8 | 429 | * | |||||||||||||
Intuitive Surgical Inc. | 9 | 4,691 | * | |||||||||||||
LivaNova PLC | 9 | 1,008 | ||||||||||||||
Masimo Corp. | 7 | 809 | * | |||||||||||||
Medtronic PLC | 113 | 10,150 | ||||||||||||||
Neogen Corp. | 5 | 304 | * | |||||||||||||
Penumbra Inc. | 5 | 680 | * | |||||||||||||
ResMed Inc. | 15 | 1,589 | ||||||||||||||
STERIS PLC | 8 | 874 | ||||||||||||||
Stryker Corp. | 31 | 5,029 | ||||||||||||||
Teleflex Inc. | 4 | 963 | ||||||||||||||
Varian Medical Systems Inc. | 8 | 955 | * | |||||||||||||
West Pharmaceutical Services Inc. | 6 | 635 | ||||||||||||||
Zimmer Biomet Holdings Inc. | 19 | 2,158 | ||||||||||||||
Total Health Care Equipment & Supplies | 71,300 | |||||||||||||||
Health Care Providers & Services — 1.9% |
| |||||||||||||||
Aetna Inc. | 26 | 5,158 | ||||||||||||||
AmerisourceBergen Corp. | 10 | 880 | ||||||||||||||
Anthem Inc. | 19 | 5,236 | ||||||||||||||
Cardinal Health Inc. | 17 | 860 | ||||||||||||||
Centene Corp. | 15 | 1,955 | * | |||||||||||||
Cigna Corp. | 19 | 4,062 | ||||||||||||||
CVS Health Corp. | 76 | 5,502 | ||||||||||||||
DaVita Inc. | 8 | 539 | * | |||||||||||||
Encompass Health Corp. | 8 | 538 | ||||||||||||||
Express Scripts Holding Co. | 46 | 4,461 | * | |||||||||||||
HCA Healthcare Inc. | 24 | 3,205 | ||||||||||||||
Henry Schein Inc. | 8 | 664 | * | |||||||||||||
Humana Inc. | 11 | 3,525 | ||||||||||||||
Laboratory Corp. of America Holdings | 5 | 803 | * | |||||||||||||
McKesson Corp. | 16 | 1,996 | ||||||||||||||
Mednax Inc. | 12 | 495 | * | |||||||||||||
See Notes to Financial Statements.
| 26 | Legg Mason US Diversified Core ETF 2018 Annual Report |
Legg Mason US Diversified Core ETF
| Security | Shares | Value | ||||||||||||||
Health Care Providers & Services — continued | ||||||||||||||||
Molina Healthcare Inc. | 5 | $ | 634 | * | ||||||||||||
Quest Diagnostics Inc. | 7 | 659 | ||||||||||||||
UnitedHealth Group Inc. | 70 | 18,294 | ||||||||||||||
Universal Health Services Inc., Class B Shares | 4 | 486 | ||||||||||||||
WellCare Health Plans Inc. | 4 | 1,104 | * | |||||||||||||
Total Health Care Providers & Services | 61,056 | |||||||||||||||
Health Care Technology — 2.0% |
| |||||||||||||||
Allscripts Healthcare Solutions Inc. | 237 | 2,823 | * | |||||||||||||
athenahealth Inc. | 48 | 6,122 | * | |||||||||||||
Castlight Health Inc., Class B Shares | 184 | 454 | * | |||||||||||||
Cerner Corp. | 354 | 20,277 | * | |||||||||||||
Computer Programs & Systems Inc. | 22 | 550 | ||||||||||||||
Evolent Health Inc., Class A Shares | 89 | 1,976 | * | |||||||||||||
HealthStream Inc. | 27 | 710 | ||||||||||||||
HMS Holdings Corp. | 109 | 3,141 | * | |||||||||||||
Inovalon Holdings Inc., Class A Shares | 74 | 696 | * | |||||||||||||
Medidata Solutions Inc. | 69 | 4,851 | * | |||||||||||||
NextGen Healthcare Inc. | 66 | 975 | * | |||||||||||||
Omnicell Inc. | 47 | 3,323 | * | |||||||||||||
Tabula Rasa HealthCare Inc. | 25 | 1,847 | * | |||||||||||||
Teladoc Health Inc. | 67 | 4,646 | * | |||||||||||||
Veeva Systems Inc., Class A Shares | 145 | 13,246 | * | |||||||||||||
Vocera Communications Inc. | 31 | 1,076 | * | |||||||||||||
Total Health Care Technology | 66,713 | |||||||||||||||
Life Sciences Tools & Services — 2.3% |
| |||||||||||||||
Accelerate Diagnostics Inc. | 18 | 269 | * | |||||||||||||
Agilent Technologies Inc. | 95 | 6,155 | ||||||||||||||
Bio-Rad Laboratories Inc., Class A Shares | 7 | 1,910 | * | |||||||||||||
Bio-Techne Corp. | 13 | 2,180 | ||||||||||||||
Bruker Corp. | 42 | 1,316 | ||||||||||||||
Cambrex Corp. | 11 | 586 | * | |||||||||||||
Charles River Laboratories International Inc. | 19 | 2,315 | * | |||||||||||||
Illumina Inc. | 41 | 12,757 | * | |||||||||||||
IQVIA Holdings Inc. | 47 | 5,778 | * | |||||||||||||
Medpace Holdings, Inc. | 16 | 834 | * | |||||||||||||
Mettler-Toledo International Inc. | 8 | 4,374 | * | |||||||||||||
NeoGenomics Inc. | 47 | 867 | * | |||||||||||||
PerkinElmer Inc. | 37 | 3,200 | ||||||||||||||
See Notes to Financial Statements.
| Legg Mason US Diversified Core ETF 2018 Annual Report | 27 |
Schedule of investments (cont’d)
October 31, 2018
Legg Mason US Diversified Core ETF
| Security | Shares | Value | ||||||||||||||
Life Sciences Tools & Services — continued | ||||||||||||||||
PRA Health Sciences Inc. | 14 | $ | 1,356 | * | ||||||||||||
Syneos Health Inc. | 15 | 684 | * | |||||||||||||
Thermo Fisher Scientific Inc. | 111 | 25,935 | ||||||||||||||
Waters Corp. | 22 | 4,173 | * | |||||||||||||
Total Life Sciences Tools & Services | 74,689 | |||||||||||||||
Pharmaceuticals — 1.9% |
| |||||||||||||||
Allergan PLC | 18 | 2,844 | ||||||||||||||
Bristol-Myers Squibb Co. | 90 | 4,549 | ||||||||||||||
Catalent Inc. | 24 | 968 | * | |||||||||||||
Eli Lilly & Co. | 53 | 5,747 | ||||||||||||||
Jazz Pharmaceuticals PLC | 5 | 794 | * | |||||||||||||
Johnson & Johnson | 140 | 19,599 | ||||||||||||||
Merck & Co. Inc. | 144 | 10,600 | ||||||||||||||
Mylan NV | 31 | 969 | ||||||||||||||
Nektar Therapeutics | 12 | 464 | * | |||||||||||||
Perrigo Co. PLC | 11 | 773 | ||||||||||||||
Pfizer Inc. | 312 | 13,435 | ||||||||||||||
Zoetis Inc. | 26 | 2,344 | ||||||||||||||
Total Pharmaceuticals | 63,086 | |||||||||||||||
Total Health Care | 397,672 | |||||||||||||||
| Industrials — 11.9% |
| |||||||||||||||
Aerospace & Defense — 0.9% |
| |||||||||||||||
Arconic Inc. | 28 | 569 | ||||||||||||||
Boeing Co. | 24 | 8,517 | ||||||||||||||
BWX Technologies Inc. | 8 | 468 | ||||||||||||||
General Dynamics Corp. | 9 | 1,553 | ||||||||||||||
Harris Corp. | 7 | 1,041 | ||||||||||||||
Hexcel Corp. | 11 | 644 | ||||||||||||||
L3 Technologies Inc. | 2 | 379 | ||||||||||||||
Lockheed Martin Corp. | 10 | 2,938 | ||||||||||||||
Northrop Grumman Corp. | 7 | 1,834 | ||||||||||||||
Raytheon Co. | 12 | 2,100 | ||||||||||||||
Rockwell Collins Inc. | 11 | 1,408 | ||||||||||||||
Spirit AeroSystems Holdings Inc., Class A Shares | 11 | 924 | ||||||||||||||
Textron Inc. | 19 | 1,019 | ||||||||||||||
TransDigm Group Inc. | 2 | 661 | ||||||||||||||
United Technologies Corp. | 28 | 3,478 | ||||||||||||||
Total Aerospace & Defense | 27,533 | |||||||||||||||
See Notes to Financial Statements.
| 28 | Legg Mason US Diversified Core ETF 2018 Annual Report |
Legg Mason US Diversified Core ETF
| Security | Shares | Value | ||||||||||||||
Air Freight & Logistics — 1.1% |
| |||||||||||||||
CH Robinson Worldwide Inc. | 25 | $ | 2,226 | |||||||||||||
Expeditors International of Washington Inc. | 39 | 2,620 | ||||||||||||||
FedEx Corp. | 55 | 12,119 | ||||||||||||||
Forward Air Corp. | 7 | 420 | ||||||||||||||
Hub Group Inc. , Class A Shares | 9 | 412 | * | |||||||||||||
United Parcel Service Inc., Class B Shares | 152 | 16,194 | ||||||||||||||
XPO Logistics Inc. | 26 | 2,324 | * | |||||||||||||
Total Air Freight & Logistics | 36,315 | |||||||||||||||
Building Products — 1.0% |
| |||||||||||||||
Aaon, Inc. | 20 | 690 | ||||||||||||||
Allegion PLC | 25 | 2,143 | ||||||||||||||
American Woodmark Corp. | 6 | 363 | * | |||||||||||||
AO Smith Corp. | 41 | 1,867 | ||||||||||||||
Apogee Enterprises Inc. | 17 | 614 | ||||||||||||||
Armstrong World Industries Inc. | 19 | 1,173 | * | |||||||||||||
Builders FirstSource Inc. | 47 | 582 | * | |||||||||||||
Continental Building Products Inc. | 15 | 417 | * | |||||||||||||
CSW Industrials Inc. | 9 | 414 | * | |||||||||||||
Fortune Brands Home & Security Inc. | 40 | 1,793 | ||||||||||||||
Gibraltar Industries Inc. | 13 | 463 | * | |||||||||||||
Griffon Corp. | 25 | 303 | ||||||||||||||
JELD-WEN Holding Inc. | 46 | 748 | * | |||||||||||||
Johnson Controls International PLC | 242 | 7,737 | ||||||||||||||
Lennox International Inc. | 11 | 2,320 | ||||||||||||||
Masco Corp. | 81 | 2,430 | ||||||||||||||
Masonite International Corp. | 12 | 665 | * | |||||||||||||
Owens Corning | 25 | 1,182 | ||||||||||||||
Patrick Industries Inc. | 12 | 522 | * | |||||||||||||
PGT Innovations Inc. | 33 | 668 | * | |||||||||||||
Quanex Building Products Corp. | 23 | 341 | ||||||||||||||
Resideo Technologies Inc. | 19 | 400 | * | |||||||||||||
Simpson Manufacturing Co. Inc. | 17 | 970 | ||||||||||||||
Trex Co. Inc. | 22 | 1,349 | * | |||||||||||||
Universal Forest Products Inc. | 27 | 763 | ||||||||||||||
USG Corp. | 22 | 929 | ||||||||||||||
Total Building Products | 31,846 | |||||||||||||||
See Notes to Financial Statements.
| Legg Mason US Diversified Core ETF 2018 Annual Report | 29 |
Schedule of investments (cont’d)
October 31, 2018
Legg Mason US Diversified Core ETF
| Security | Shares | Value | ||||||||||||||
Commercial Services & Supplies — 0.9% |
| |||||||||||||||
ACCO Brands Corp. | 40 | $ | 323 | |||||||||||||
Brady Corp., Class A Shares | 11 | 443 | ||||||||||||||
Brink’s Co. | 16 | 1,061 | ||||||||||||||
Cimpress NV | 4 | 500 | ||||||||||||||
Cintas Corp. | 15 | 2,728 | ||||||||||||||
Clean Harbors Inc. | 11 | 748 | * | |||||||||||||
Copart Inc. | 42 | 2,054 | * | |||||||||||||
Covanta Holding Corp. | 53 | 779 | ||||||||||||||
Deluxe Corp. | 17 | 803 | ||||||||||||||
Healthcare Services Group Inc. | 26 | 1,055 | ||||||||||||||
Herman Miller Inc. | 16 | 527 | ||||||||||||||
KAR Auction Services Inc. | 21 | 1,196 | ||||||||||||||
Matthews International Corp., Class A Shares | 10 | 416 | ||||||||||||||
McGrath RentCorp. | 11 | 587 | ||||||||||||||
Mobile Mini Inc. | 14 | 576 | ||||||||||||||
MSA Safety Inc. | 6 | 627 | ||||||||||||||
Multi-Color Corp. | 6 | 319 | ||||||||||||||
Pitney Bowes Inc. | 68 | 450 | ||||||||||||||
Republic Services Inc. | 30 | 2,180 | ||||||||||||||
Rollins Inc. | 27 | 1,598 | ||||||||||||||
Stericycle Inc. | 12 | 600 | * | |||||||||||||
UniFirst Corp. | 3 | 448 | ||||||||||||||
US Ecology Inc. | 7 | 490 | ||||||||||||||
Viad Corp. | 9 | 431 | ||||||||||||||
Waste Connections Inc. | 47 | 3,593 | ||||||||||||||
Waste Management Inc. | 67 | 5,994 | ||||||||||||||
Total Commercial Services & Supplies | 30,526 | |||||||||||||||
Construction & Engineering — 1.3% |
| |||||||||||||||
AECOM | 132 | 3,846 | * | |||||||||||||
Aegion Corp. | 38 | 736 | * | |||||||||||||
Argan Inc. | 20 | 880 | ||||||||||||||
Comfort Systems USA Inc. | 35 | 1,872 | ||||||||||||||
Dycom Industries Inc. | 22 | 1,493 | * | |||||||||||||
EMCOR Group Inc. | 46 | 3,265 | ||||||||||||||
Fluor Corp. | 118 | 5,176 | ||||||||||||||
Granite Construction Inc. | 40 | 1,829 | ||||||||||||||
Great Lakes Dredge & Dock Corp. | 154 | 895 | * | |||||||||||||
Jacobs Engineering Group Inc. | 102 | 7,659 | ||||||||||||||
See Notes to Financial Statements.
| 30 | Legg Mason US Diversified Core ETF 2018 Annual Report |
Legg Mason US Diversified Core ETF
| Security | Shares | Value | ||||||||||||||
Construction & Engineering — continued | ||||||||||||||||
KBR Inc. | 91 | $ | 1,800 | |||||||||||||
MasTec Inc. | 48 | 2,088 | * | |||||||||||||
MYR Group Inc. | 17 | 568 | * | |||||||||||||
NV5 Global Inc. | 15 | 1,171 | * | |||||||||||||
Primoris Services Corp. | 27 | 572 | ||||||||||||||
Quanta Services Inc. | 122 | 3,806 | ||||||||||||||
Tutor Perini Corp. | 56 | 868 | * | |||||||||||||
Valmont Industries Inc. | 15 | 1,865 | ||||||||||||||
Wilscot Corp. | 57 | 846 | * | |||||||||||||
Total Construction & Engineering | 41,235 | |||||||||||||||
Electrical Equipment — 0.8% |
| |||||||||||||||
Acuity Brands Inc. | 6 | 754 | ||||||||||||||
AMETEK Inc. | 43 | 2,884 | ||||||||||||||
Eaton Corp. PLC | 79 | 5,662 | ||||||||||||||
Emerson Electric Co. | 117 | 7,942 | ||||||||||||||
EnerSys | 8 | 637 | ||||||||||||||
Generac Holdings Inc. | 17 | 862 | * | |||||||||||||
Hubbell Inc. | 10 | 1,017 | ||||||||||||||
NVENT Electric PLC | 16 | 391 | ||||||||||||||
Regal Beloit Corp. | 6 | 430 | ||||||||||||||
Rockwell Automation Inc. | 24 | 3,954 | ||||||||||||||
Sensata Technologies Holding | 36 | 1,688 | ||||||||||||||
Thermon Group Holdings Inc. | 18 | 388 | * | |||||||||||||
Total Electrical Equipment | 26,609 | |||||||||||||||
Industrial Conglomerates — 1.6% |
| |||||||||||||||
3M Co. | 91 | 17,314 | ||||||||||||||
General Electric Co. | 1,361 | 13,746 | ||||||||||||||
Honeywell International Inc. | 114 | 16,510 | ||||||||||||||
Roper Technologies Inc. | 16 | 4,526 | ||||||||||||||
Total Industrial Conglomerates | 52,096 | |||||||||||||||
Machinery — 0.8% |
| |||||||||||||||
AGCO Corp. | 6 | 336 | ||||||||||||||
Allison Transmission Holdings Inc. | 12 | 529 | ||||||||||||||
Barnes Group Inc. | 6 | 340 | ||||||||||||||
Caterpillar Inc. | 32 | 3,882 | ||||||||||||||
Cummins Inc. | 8 | 1,094 | ||||||||||||||
Deere & Co. | 16 | 2,167 | ||||||||||||||
Donaldson Co. Inc. | 10 | 513 | ||||||||||||||
See Notes to Financial Statements.
| Legg Mason US Diversified Core ETF 2018 Annual Report | 31 |
Schedule of investments (cont’d)
October 31, 2018
Legg Mason US Diversified Core ETF
| Security | Shares | Value | ||||||||||||||
Machinery — continued | ||||||||||||||||
Dover Corp. | 13 | $ | 1,077 | |||||||||||||
ESCO Technologies Inc. | 8 | 490 | ||||||||||||||
Flowserve Corp. | 11 | 505 | ||||||||||||||
Fortive Corp. | 15 | 1,114 | ||||||||||||||
Graco Inc. | 15 | 609 | ||||||||||||||
IDEX Corp. | 6 | 761 | ||||||||||||||
Illinois Tool Works Inc. | 14 | 1,786 | ||||||||||||||
Ingersoll-Rand PLC | 10 | 959 | ||||||||||||||
ITT Inc. | 14 | 707 | ||||||||||||||
Lincoln Electric Holdings Inc. | 5 | 405 | ||||||||||||||
Middleby Corp. | 5 | 561 | * | |||||||||||||
Nordson Corp. | 5 | 613 | ||||||||||||||
Oshkosh Corp. | 7 | 393 | ||||||||||||||
PACCAR Inc. | 31 | 1,773 | ||||||||||||||
Parker-Hannifin Corp. | 6 | 910 | ||||||||||||||
Pentair PLC | 16 | 642 | ||||||||||||||
Snap-on Inc. | 5 | 770 | ||||||||||||||
Standex International Corp. | 4 | 324 | ||||||||||||||
Stanley Black & Decker Inc. | 7 | 816 | ||||||||||||||
Toro Co. | 8 | 451 | ||||||||||||||
WABCO Holdings Inc. | 5 | 537 | * | |||||||||||||
Wabtec Corp. | 9 | 738 | ||||||||||||||
Woodward Inc. | 6 | 442 | ||||||||||||||
Xylem Inc. | 15 | 984 | ||||||||||||||
Total Machinery | 27,228 | |||||||||||||||
Professional Services — 1.0% |
| |||||||||||||||
ASGN Inc. | 15 | 1,006 | * | |||||||||||||
CBIZ Inc. | 30 | 665 | * | |||||||||||||
CoStar Group Inc. | 9 | 3,253 | * | |||||||||||||
Dun & Bradstreet Corp. | 10 | 1,423 | ||||||||||||||
Equifax Inc. | 25 | 2,536 | ||||||||||||||
Exponent Inc. | 12 | 605 | ||||||||||||||
FTI Consulting Inc. | 13 | 898 | * | |||||||||||||
ICF International Inc. | 8 | 589 | ||||||||||||||
IHS Markit Ltd. | 103 | 5,411 | ||||||||||||||
Insperity Inc. | 12 | 1,318 | ||||||||||||||
Kelly Services Inc., Class A Shares | 19 | 446 | ||||||||||||||
Korn/Ferry International | 20 | 903 | ||||||||||||||
See Notes to Financial Statements.
| 32 | Legg Mason US Diversified Core ETF 2018 Annual Report |
Legg Mason US Diversified Core ETF
| Security | Shares | Value | ||||||||||||||
Professional Services — continued | ||||||||||||||||
ManpowerGroup Inc. | 18 | $ | 1,373 | |||||||||||||
Nielsen Holdings PLC | 68 | 1,767 | ||||||||||||||
Resources Connection Inc. | 33 | 539 | ||||||||||||||
Robert Half International Inc. | 23 | 1,392 | ||||||||||||||
TransUnion | 33 | 2,170 | ||||||||||||||
TriNet Group Inc. | 18 | 846 | * | |||||||||||||
TrueBlue Inc. | 21 | 490 | * | |||||||||||||
Verisk Analytics Inc. | 36 | 4,314 | * | |||||||||||||
WageWorks Inc. | 11 | 438 | * | |||||||||||||
Total Professional Services | 32,382 | |||||||||||||||
Road & Rail — 1.3% |
| |||||||||||||||
AMERCO | 2 | 653 | ||||||||||||||
Avis Budget Group Inc. | 18 | 506 | ||||||||||||||
CSX Corp. | 130 | 8,952 | ||||||||||||||
Genesee & Wyoming Inc., Class A Shares | 10 | 792 | * | |||||||||||||
J.B. Hunt Transport Services Inc. | 17 | 1,880 | ||||||||||||||
Kansas City Southern | 18 | 1,835 | ||||||||||||||
Knight-Swift Transportation Holdings Inc. | 26 | 832 | ||||||||||||||
Landstar System Inc. | 7 | 701 | ||||||||||||||
Norfolk Southern Corp. | 43 | 7,217 | ||||||||||||||
Old Dominion Freight Line Inc. | 11 | 1,435 | ||||||||||||||
Ryder System Inc. | 9 | 498 | ||||||||||||||
Union Pacific Corp. | 119 | 17,400 | ||||||||||||||
Werner Enterprises Inc. | 13 | 418 | ||||||||||||||
Total Road & Rail | 43,119 | |||||||||||||||
Trading Companies & Distributors — 1.2% |
| |||||||||||||||
Air Lease Corp. | 30 | 1,143 | ||||||||||||||
Aircastle Ltd. | 32 | 622 | ||||||||||||||
Applied Industrial Technologies Inc. | 15 | 986 | ||||||||||||||
Beacon Roofing Supply Inc. | 19 | 530 | ||||||||||||||
BMC Stock Holdings Inc. | 55 | 921 | * | |||||||||||||
DXP Enterprises Inc. | 18 | 572 | * | |||||||||||||
Fastenal Co. | 126 | 6,478 | ||||||||||||||
GATX Corp. | 19 | 1,424 | ||||||||||||||
GMS Inc. | 23 | 378 | * | |||||||||||||
H&E Equipment Services Inc. | 22 | 530 | ||||||||||||||
HD Supply Holdings Inc. | 83 | 3,118 | * | |||||||||||||
Herc Holdings Inc. | 12 | 385 | * | |||||||||||||
See Notes to Financial Statements.
| Legg Mason US Diversified Core ETF 2018 Annual Report | 33 |
Schedule of investments (cont’d)
October 31, 2018
Legg Mason US Diversified Core ETF
| Security | Shares | Value | ||||||||||||||
Trading Companies & Distributors — continued | ||||||||||||||||
Kaman Corp. | 14 | $ | 889 | |||||||||||||
MRC Global Inc. | 52 | 823 | * | |||||||||||||
MSC Industrial Direct Co. Inc. , Class A Shares | 24 | 1,945 | ||||||||||||||
NOW Inc. | 48 | 616 | * | |||||||||||||
Rush Enterprises Inc., Class A Shares | 17 | 602 | ||||||||||||||
SiteOne Landscape Supply Inc. | 14 | 953 | * | |||||||||||||
Titan Machinery Inc. | 34 | 484 | * | |||||||||||||
Triton International Ltd. | 35 | 1,126 | ||||||||||||||
United Rentals Inc. | 37 | 4,443 | * | |||||||||||||
Univar Inc. | 37 | 911 | * | |||||||||||||
Veritiv Corp. | 16 | 533 | * | |||||||||||||
W.W. Grainger Inc. | 21 | 5,963 | ||||||||||||||
Watso Inc. | 10 | 1,482 | ||||||||||||||
WESCO International Inc. | 26 | 1,305 | * | |||||||||||||
Total Trading Companies & Distributors | 39,162 | |||||||||||||||
Total Industrials | 388,051 | |||||||||||||||
| Information Technology — 13.3% |
| |||||||||||||||
Communications Equipment — 2.6% |
| |||||||||||||||
Acacia Communications Inc. | 17 | 586 | * | |||||||||||||
Arista Networks Inc. | 14 | 3,225 | * | |||||||||||||
Arris International PLC | 62 | 1,542 | ||||||||||||||
Ciena Corp. | 44 | 1,375 | * | |||||||||||||
Cisco Systems Inc. | 1,186 | 54,259 | ||||||||||||||
CommScope Holding Co. Inc. | 57 | 1,371 | * | |||||||||||||
EchoStar Corp., Class A Shares | 12 | 487 | * | |||||||||||||
F5 Networks Inc. | 17 | 2,980 | * | |||||||||||||
Finisar Corp. | 57 | 951 | * | |||||||||||||
InterDigital Inc. | 7 | 497 | ||||||||||||||
Juniper Networks Inc. | 93 | 2,722 | ||||||||||||||
Lumentum Holdings Inc. | 10 | 547 | * | |||||||||||||
Motorola Solutions Inc. | 42 | 5,148 | ||||||||||||||
NETGEAR Inc. | 7 | 388 | * | |||||||||||||
Netscout Systems Inc. | 17 | 429 | * | |||||||||||||
Oclaro Inc. | 77 | 633 | * | |||||||||||||
Palo Alto Networks Inc. | 25 | 4,576 | * | |||||||||||||
Plantronics Inc. | 13 | 767 | ||||||||||||||
Ubiquiti Networks Inc. | 12 | 1,117 | ||||||||||||||
ViaSat Inc. | 21 | 1,339 | * | |||||||||||||
See Notes to Financial Statements.
| 34 | Legg Mason US Diversified Core ETF 2018 Annual Report |
Legg Mason US Diversified Core ETF
| Security | Shares | Value | ||||||||||||||
Communications Equipment — continued |
| |||||||||||||||
Viavi Solutions Inc. | 54 | $ | 623 | * | ||||||||||||
Total Communications Equipment | 85,562 | |||||||||||||||
Electronic Equipment, Instruments & Components — 0.9% |
| |||||||||||||||
Amphenol Corp., Class A Shares | 37 | 3,312 | ||||||||||||||
Anixter International Inc. | 7 | 460 | ||||||||||||||
Arrow Electronics Inc. | 13 | 880 | ||||||||||||||
Avnet Inc. | 21 | 841 | ||||||||||||||
Badger Meter Inc. | 10 | 491 | ||||||||||||||
Belden Inc. | 6 | 324 | ||||||||||||||
CDW Corp. | 22 | 1,980 | ||||||||||||||
Cognex Corp. | 20 | 857 | ||||||||||||||
Coherent Inc. | 4 | 493 | * | |||||||||||||
Corning Inc. | 100 | 3,195 | ||||||||||||||
Dolby Laboratories Inc., Class A Shares | 9 | 619 | ||||||||||||||
Flex Ltd. | 84 | 660 | ||||||||||||||
FLIR Systems Inc. | 16 | 741 | ||||||||||||||
IPG Photonics Corp. | 4 | 534 | * | |||||||||||||
Itron Inc. | 8 | 417 | * | |||||||||||||
Jabil Inc. | 20 | 495 | ||||||||||||||
Keysight Technologies Inc. | 26 | 1,484 | * | |||||||||||||
Knowles Corp. | 30 | 485 | * | |||||||||||||
Littelfuse | 3 | 544 | ||||||||||||||
Methode Electronics Inc. | 11 | 326 | ||||||||||||||
National Instruments Corp. | 21 | 1,028 | ||||||||||||||
OSI Systems Inc. | 5 | 346 | * | |||||||||||||
Plexus Corp. | 8 | 467 | * | |||||||||||||
Rogers Corp. | 5 | 615 | * | |||||||||||||
TE Connectivity Ltd. | 45 | 3,394 | ||||||||||||||
Trimble Inc. | 37 | 1,383 | * | |||||||||||||
Vishay Intertechnology Inc. | 25 | 458 | ||||||||||||||
Zebra Technologies Corp., Class A | 6 | 998 | * | |||||||||||||
Total Electronic Equipment, Instruments & Components | 27,827 | |||||||||||||||
Internet Software & Services — 0.1% |
| |||||||||||||||
GoDaddy Inc., Class A Shares | 14 | 1,024 | * | |||||||||||||
IAC/InterActiveCorp | 7 | 1,376 | * | |||||||||||||
j2 Global Inc. | 6 | 437 | ||||||||||||||
Total Internet Software & Services | 2,837 | |||||||||||||||
See Notes to Financial Statements.
| Legg Mason US Diversified Core ETF 2018 Annual Report | 35 |
Schedule of investments (cont’d)
October 31, 2018
Legg Mason US Diversified Core ETF
| Security | Shares | Value | ||||||||||||||
IT Services — 2.4% |
| |||||||||||||||
Accenture PLC, Class A Shares | 41 | $ | 6,462 | |||||||||||||
Akamai Technologies Inc. | 12 | 867 | * | |||||||||||||
Alliance Data Systems Corp. | 2 | 412 | ||||||||||||||
Automatic Data Processing Inc. | 31 | 4,467 | ||||||||||||||
Broadridge Financial Solutions Inc. | 5 | 585 | ||||||||||||||
Cognizant Technology Solutions Corp., Class A Shares | 42 | 2,899 | ||||||||||||||
DXC Technology Co. | 23 | 1,675 | ||||||||||||||
EPAM Systems Inc. | 8 | 956 | * | |||||||||||||
Fidelity National Information Services Inc. | 23 | 2,394 | ||||||||||||||
First Data Corp., Class A Shares | 47 | 881 | * | |||||||||||||
Fiserv Inc. | 29 | 2,300 | * | |||||||||||||
FleetCor Technologies Inc. | 4 | 800 | * | |||||||||||||
Gartner Inc. | 5 | 738 | * | |||||||||||||
Global Payments Inc. | 5 | 571 | ||||||||||||||
International Business Machines Corp. | 60 | 6,926 | ||||||||||||||
Jack Henry & Associates Inc. | 4 | 599 | ||||||||||||||
Leidos Holdings Inc. | 17 | 1,101 | ||||||||||||||
Mastercard Inc., Class A Shares | 64 | 12,651 | ||||||||||||||
Paychex Inc. | 23 | 1,506 | ||||||||||||||
PayPal Holdings Inc. | 81 | 6,819 | * | |||||||||||||
Sabre Corp. | 18 | 444 | ||||||||||||||
Square Inc., Class A Shares | 25 | 1,836 | * | |||||||||||||
Total System Services, Inc. | 6 | 547 | ||||||||||||||
VeriSign Inc. | 6 | 855 | ||||||||||||||
Visa Inc., Class A Shares | 121 | 16,680 | ||||||||||||||
WEX Inc. | 5 | 880 | * | |||||||||||||
Worldpay, Inc., Class A Shares | 22 | 2,021 | * | |||||||||||||
Zillow Group Inc., Class C Shares | 12 | 483 | * | |||||||||||||
Total IT Services | 79,355 | |||||||||||||||
Semiconductors & Semiconductor Equipment — 2.3% |
| |||||||||||||||
Advanced Micro Devices Inc. | 80 | 1,457 | ||||||||||||||
Analog Devices Inc. | 28 | 2,344 | ||||||||||||||
Applied Materials Inc. | 79 | 2,597 | ||||||||||||||
Broadcom Inc. | 35 | 7,822 | ||||||||||||||
Cypress Semiconductor Corp. | 30 | 388 | ||||||||||||||
Entegris Inc. | 29 | 770 | ||||||||||||||
First Solar Inc. | 14 | 585 | * | |||||||||||||
Integrated Device Technology Inc. | 20 | 936 | * | |||||||||||||
Intel Corp. | 373 | 17,486 | ||||||||||||||
See Notes to Financial Statements.
| 36 | Legg Mason US Diversified Core ETF 2018 Annual Report |
Legg Mason US Diversified Core ETF
| Security | Shares | Value | ||||||||||||||
Semiconductors & Semiconductor Equipment — continued |
| |||||||||||||||
KLA-Tencor Corp. | 16 | $ | 1,465 | |||||||||||||
Lam Research Corp. | 13 | 1,842 | ||||||||||||||
Marvell Technology Group Ltd. | 50 | 820 | ||||||||||||||
Maxim Integrated Products Inc. | 27 | 1,351 | ||||||||||||||
Microchip Technology Inc. | 19 | 1,250 | ||||||||||||||
Micron Technology Inc. | 87 | 3,282 | * | |||||||||||||
NVIDIA Corp. | 47 | 9,909 | ||||||||||||||
ON Semiconductor Corp. | 47 | 799 | * | |||||||||||||
Qorvo Inc. | 15 | 1,103 | * | |||||||||||||
QUALCOMM Inc. | 110 | 6,918 | ||||||||||||||
Semtech Corp. | 12 | 539 | * | |||||||||||||
Skyworks Solutions Inc. | 14 | 1,215 | ||||||||||||||
Teradyne Inc. | 26 | 896 | ||||||||||||||
Texas Instruments Inc. | 71 | 6,591 | ||||||||||||||
Xilinx Inc. | 25 | 2,134 | ||||||||||||||
Total Semiconductors & Semiconductor Equipment | 74,499 | |||||||||||||||
Software — 2.4% |
| |||||||||||||||
Adobe Inc. | 26 | 6,390 | * | |||||||||||||
ANSYS Inc. | 4 | 598 | * | |||||||||||||
Autodesk Inc. | 15 | 1,939 | * | |||||||||||||
Cadence Design Systems Inc. | 14 | 624 | * | |||||||||||||
CDK Global Inc. | 6 | 343 | ||||||||||||||
Citrix Systems Inc. | 10 | 1,025 | ||||||||||||||
Dell Technologies Inc. Class V | 13 | 1,175 | * | |||||||||||||
Fortinet Inc. | 8 | 657 | * | |||||||||||||
Intuit Inc. | 14 | 2,954 | ||||||||||||||
LogMeIn Inc. | 6 | 517 | ||||||||||||||
Microsoft Corp. | 369 | 39,413 | ||||||||||||||
Oracle Corp. | 155 | 7,570 | ||||||||||||||
PTC Inc. | 11 | 907 | * | |||||||||||||
Red Hat Inc. | 11 | 1,888 | * | |||||||||||||
salesforce.com Inc. | 38 | 5,215 | * | |||||||||||||
ServiceNow Inc. | 11 | 1,991 | * | |||||||||||||
Splunk Inc. | 7 | 699 | * | |||||||||||||
SS&C Technologies Holdings Inc. | 10 | 512 | ||||||||||||||
Symantec Corp. | 64 | 1,162 | ||||||||||||||
Synopsys Inc. | 6 | 537 | * | |||||||||||||
Tyler Technologies | 2 | 423 | * | |||||||||||||
VMware Inc., Class A Shares | 7 | 990 | * | |||||||||||||
See Notes to Financial Statements.
| Legg Mason US Diversified Core ETF 2018 Annual Report | 37 |
Schedule of investments (cont’d)
October 31, 2018
Legg Mason US Diversified Core ETF
| Security | Shares | Value | ||||||||||||||
Software — continued |
| |||||||||||||||
Workday Inc., Class A Shares | 10 | $ | 1,330 | * | ||||||||||||
Total Software | 78,859 | |||||||||||||||
Technology Hardware, Storage & Peripherals — 2.6% |
| |||||||||||||||
Apple Inc. | 345 | 75,507 | ||||||||||||||
Hewlett Packard Enterprise Co. | 127 | 1,937 | ||||||||||||||
HP Inc. | 133 | 3,210 | ||||||||||||||
NetApp Inc. | 24 | 1,884 | ||||||||||||||
Seagate Technology PLC | 30 | 1,207 | ||||||||||||||
Western Digital Corp. | 24 | 1,033 | ||||||||||||||
Total Technology Hardware, Storage & Peripherals | 84,778 | |||||||||||||||
Total Information Technology | 433,717 | |||||||||||||||
| Materials — 5.5% |
| |||||||||||||||
Chemicals — 0.8% |
| |||||||||||||||
Air Products & Chemicals Inc. | 10 | 1,544 | ||||||||||||||
Albemarle Corp. | 7 | 695 | ||||||||||||||
Cabot Corp. | 7 | 341 | ||||||||||||||
Celanese Corp. | 9 | 872 | ||||||||||||||
CF Industries Holdings Inc. | 15 | 720 | ||||||||||||||
Chemours Co. | 18 | 594 | ||||||||||||||
DowDuPont Inc. | 132 | 7,117 | ||||||||||||||
Eastman Chemical Co. | 9 | 705 | ||||||||||||||
Ecolab Inc. | 11 | 1,685 | ||||||||||||||
FMC Corp. | 9 | 703 | ||||||||||||||
HB Fuller Co. | 8 | 356 | ||||||||||||||
International Flavors & Fragrances Inc. | 5 | 723 | ||||||||||||||
Linde PLC | 14 | 2,317 | ||||||||||||||
LyondellBasell Industries NV, Class A Shares | 18 | 1,607 | ||||||||||||||
Mosaic Co. | 20 | 619 | ||||||||||||||
Newmarket Corp. | 1 | 386 | ||||||||||||||
Olin Corp. | 16 | 323 | ||||||||||||||
PolyOne Corp. | 10 | 323 | ||||||||||||||
PPG Industries Inc. | 13 | 1,366 | ||||||||||||||
RPM International Inc. | 8 | 489 | ||||||||||||||
Scotts Miracle-Gro Co. | 5 | 334 | ||||||||||||||
Sensient Technologies Corp. | 5 | 324 | ||||||||||||||
Sherwin-Williams Co. | 4 | 1,574 | ||||||||||||||
Total Chemicals | 25,717 | |||||||||||||||
See Notes to Financial Statements.
| 38 | Legg Mason US Diversified Core ETF 2018 Annual Report |
Legg Mason US Diversified Core ETF
| Security | Shares | Value | ||||||||||||||
Containers & Packaging — 0.8% |
| |||||||||||||||
AptarGroup Inc. | 18 | $ | 1,835 | |||||||||||||
Avery Dennison Corp. | 19 | 1,724 | ||||||||||||||
Ball Corp. | 84 | 3,763 | ||||||||||||||
Bemis Co. Inc. | 23 | 1,053 | ||||||||||||||
Berry Global Group Inc. | 35 | 1,527 | * | |||||||||||||
Crown Holdings Inc. | 37 | 1,565 | * | |||||||||||||
Graphic Packaging Holding Co. | 79 | 870 | ||||||||||||||
Greif Inc., Class A Shares | 10 | 473 | ||||||||||||||
International Paper Co. | 95 | 4,309 | ||||||||||||||
Myers Industries Inc. | 22 | 349 | ||||||||||||||
Owens-Illinois Inc. | 36 | 564 | * | |||||||||||||
Packaging Corp. of America | 26 | 2,387 | ||||||||||||||
Sealed Air Corp. | 42 | 1,359 | ||||||||||||||
Silgan Holdings Inc. | 20 | 480 | ||||||||||||||
Sonoco Products Co. | 29 | 1,583 | ||||||||||||||
WestRock Co. | 59 | 2,535 | ||||||||||||||
Total Containers & Packaging | 26,376 | |||||||||||||||
Metals & Mining — 3.9% |
| |||||||||||||||
AK Steel Holding Corp. | 397 | 1,469 | ||||||||||||||
Alcoa Corp. | 222 | 7,768 | ||||||||||||||
Allegheny Technologies Inc. | 142 | 3,676 | * | |||||||||||||
Carpenter Technology Corp. | 53 | 2,311 | ||||||||||||||
Century Aluminum Co. | 100 | 794 | * | |||||||||||||
Cleveland-Cliffs Inc. | 318 | 3,422 | ||||||||||||||
Coeur Mining Inc. | 251 | 1,200 | * | |||||||||||||
Commercial Metals Co. | 132 | 2,516 | ||||||||||||||
Compass Minerals International Inc. | 37 | 1,795 | ||||||||||||||
Freeport-McMoRan Inc. | 1,635 | 19,048 | ||||||||||||||
Haynes International Inc. | 17 | 492 | ||||||||||||||
Hecla Mining Co. | 519 | 1,246 | ||||||||||||||
Kaiser Aluminum Corp. | 19 | 1,812 | ||||||||||||||
Materion Corp. | 34 | 1,932 | ||||||||||||||
McEwen Mining Inc. | 229 | 449 | ||||||||||||||
Newmont Mining Corp. | 646 | 19,974 | ||||||||||||||
Nucor Corp. | 378 | 22,347 | ||||||||||||||
Reliance Steel & Aluminum Co. | 88 | 6,945 | ||||||||||||||
Royal Gold Inc. | 84 | 6,437 | ||||||||||||||
Schnitzer Steel Industries Inc., Class A Shares | 21 | 565 | ||||||||||||||
Steel Dynamics Inc. | 283 | 11,207 | ||||||||||||||
See Notes to Financial Statements.
| Legg Mason US Diversified Core ETF 2018 Annual Report | 39 |
Schedule of investments (cont’d)
October 31, 2018
Legg Mason US Diversified Core ETF
| Security | Shares | Value | ||||||||||||||
Metals & Mining — continued |
| |||||||||||||||
SunCoke Energy Inc. | 46 | $ | 515 | * | ||||||||||||
TimkenSteel Corp. | 45 | 523 | * | |||||||||||||
United States Steel Corp. | 215 | 5,704 | ||||||||||||||
Warrior Met Coal Inc. | 53 | 1,484 | ||||||||||||||
Worthington Industries Inc. | 52 | 2,178 | ||||||||||||||
Total Metals & Mining | 127,809 | |||||||||||||||
Total Materials | 179,902 | |||||||||||||||
| Real Estate — 2.5% |
| |||||||||||||||
Equity Real Estate Investment Trusts (REITs) — 2.5% |
| |||||||||||||||
Alexandria Real Estate Equities Inc. | 5 | 611 | ||||||||||||||
American Campus Comunities Inc. | 9 | 356 | ||||||||||||||
American Homes 4 Rent, Class A Shares | 17 | 358 | ||||||||||||||
American Tower Corp. | 33 | 5,142 | ||||||||||||||
Apartment Investment & Management Co., Class A Shares | 12 | 516 | ||||||||||||||
Apple Hospitality REIT Inc. | 43 | 695 | ||||||||||||||
Ashford Hospitality Trust Inc. | 100 | 515 | ||||||||||||||
AvalonBay Communities Inc. | 12 | 2,105 | ||||||||||||||
Boston Properties Inc. | 13 | 1,570 | ||||||||||||||
Brandywine Realty Trust | 23 | 323 | ||||||||||||||
Brixmor Property Group Inc. | 31 | 502 | ||||||||||||||
Colony Capital Inc. | 68 | 399 | ||||||||||||||
CoreCivic Inc. | 21 | 472 | ||||||||||||||
CoreSite Realty Corp. | 5 | 469 | ||||||||||||||
Cousins Properties Inc. | 62 | 515 | ||||||||||||||
Crown Castle International Corp. | 30 | 3,262 | ||||||||||||||
CubeSmart | 15 | 435 | ||||||||||||||
CyrusOne Inc. | 8 | 426 | ||||||||||||||
DiamondRock Hospitality Co. | 51 | 533 | ||||||||||||||
Digital Realty Trust Inc. | 17 | 1,755 | ||||||||||||||
Duke Realty Corp. | 30 | 827 | ||||||||||||||
EastGroup Properties Inc. | 5 | 479 | ||||||||||||||
Equinix Inc. | 6 | 2,272 | ||||||||||||||
Equity Residential | 30 | 1,949 | ||||||||||||||
Essex Property Trust Inc. | 6 | 1,505 | ||||||||||||||
Extra Space Storage Inc. | 10 | 901 | ||||||||||||||
Federal Realty Investment Trust | 7 | 868 | ||||||||||||||
First Industrial Realty Trust Inc. | 13 | 399 | ||||||||||||||
Forest City Realty Trust Inc., Class A Shares | 24 | 604 | ||||||||||||||
Front Yard Residential Corp. | 66 | 612 | ||||||||||||||
See Notes to Financial Statements.
| 40 | Legg Mason US Diversified Core ETF 2018 Annual Report |
Legg Mason US Diversified Core ETF
| Security | Shares | Value | ||||||||||||||
Equity Real Estate Investment Trusts (REITs) — continued | ||||||||||||||||
Gaming and Leisure Properties Inc. | 19 | $ | 640 | |||||||||||||
GEO Group Inc. | 18 | 398 | ||||||||||||||
Global Net Lease Inc. | 27 | 547 | ||||||||||||||
HCP Inc. | 40 | 1,102 | ||||||||||||||
Healthcare Trust of America Inc., Class A Shares | 43 | 1,129 | ||||||||||||||
Hospitality Properties Trust | 48 | 1,230 | ||||||||||||||
Host Hotels & Resorts Inc. | 69 | 1,319 | ||||||||||||||
Invitation Homes Inc. | 54 | 1,182 | ||||||||||||||
Iron Mountain Inc. | 18 | 551 | ||||||||||||||
Kilroy Realty Corp. | 8 | 551 | ||||||||||||||
Kimco Realty Corp. | 36 | 579 | ||||||||||||||
Lamar Advertising Co., Class A Shares | 8 | 587 | ||||||||||||||
LaSalle Hotel Properties | 20 | 660 | ||||||||||||||
Liberty Property Trust | 13 | 544 | ||||||||||||||
Macerich Co. | 12 | 619 | ||||||||||||||
Mid-America Apartment Communities Inc. | 9 | 879 | ||||||||||||||
National Health Investors Inc. | 5 | 367 | ||||||||||||||
National Retail Properties Inc. | 11 | 514 | ||||||||||||||
Omega Healthcare Investors Inc. | 16 | 534 | ||||||||||||||
Paramount Group Inc. | 24 | 343 | ||||||||||||||
Park Hotels & Resorts Inc. | 22 | 640 | ||||||||||||||
Pebblebrook Hotel Trust | 11 | 371 | ||||||||||||||
PotlatchDeltic Corp. | 10 | 363 | ||||||||||||||
Prologis Inc. | 68 | 4,384 | ||||||||||||||
Public Storage | 14 | 2,877 | ||||||||||||||
Ramco-Gershenson Properties Trust | 47 | 624 | ||||||||||||||
Realty Income Corp. | 21 | 1,266 | ||||||||||||||
Regency Centers Corp. | 12 | 760 | ||||||||||||||
Rexford Industrial Realty Inc. | 18 | 570 | ||||||||||||||
RLJ Lodging Trust | 22 | 428 | ||||||||||||||
SBA Communications Corp. | 11 | 1,784 | * | |||||||||||||
Senior Housing Properties Trust | 21 | 337 | ||||||||||||||
Simon Property Group Inc. | 24 | 4,405 | ||||||||||||||
SL Green Realty Corp. | 8 | 730 | ||||||||||||||
STAG Industrial Inc. | 14 | 370 | ||||||||||||||
Sun Communities Inc. | 14 | 1,407 | ||||||||||||||
Sunstone Hotel Investors Inc. | 24 | 347 | ||||||||||||||
Taubman Centers Inc. | 13 | 715 | ||||||||||||||
Terreno Realty Corp. | 21 | 786 | ||||||||||||||
See Notes to Financial Statements.
| Legg Mason US Diversified Core ETF 2018 Annual Report | 41 |
Schedule of investments (cont’d)
October 31, 2018
Legg Mason US Diversified Core ETF
| Security | Shares | Value | ||||||||||||||
Equity Real Estate Investment Trusts (REITs) — continued | ||||||||||||||||
UDR Inc. | 23 | $ | 901 | |||||||||||||
Uniti Group Inc. | 39 | 746 | ||||||||||||||
Ventas Inc. | 29 | 1,683 | ||||||||||||||
VEREIT Inc. | 174 | 1,275 | ||||||||||||||
Vornado Realty Trust | 31 | 2,111 | ||||||||||||||
Welltower Inc. | 32 | 2,114 | ||||||||||||||
Weyerhaeuser Co. | 71 | 1,891 | ||||||||||||||
WP Carey Inc. | 8 | 528 | ||||||||||||||
Xenia Hotels & Resorts Inc. | 18 | 370 | ||||||||||||||
Total Real Estate | 80,433 | |||||||||||||||
| Utilities — 7.1% |
| |||||||||||||||
Building Products — 0.0% |
| |||||||||||||||
Universal Display Corp. | 6 | 738 | ||||||||||||||
Electric Utilities — 2.8% |
| |||||||||||||||
ALLETE Inc. | 11 | 814 | ||||||||||||||
Alliant Energy Corp. | 37 | 1,590 | ||||||||||||||
American Electric Power Co., Inc. | 91 | 6,676 | ||||||||||||||
Duke Energy Corp. | 132 | 10,907 | ||||||||||||||
Edison International | 65 | 4,510 | ||||||||||||||
El Paso Electric Co. | 10 | 571 | ||||||||||||||
Entergy Corp. | 31 | 2,602 | ||||||||||||||
Evergy Inc. | 49 | 2,744 | ||||||||||||||
Eversource Energy | 55 | 3,479 | ||||||||||||||
Exelon Corp. | 175 | 7,667 | ||||||||||||||
FirstEnergy Corp. | 94 | 3,504 | ||||||||||||||
Hawaiian Electric Industries Inc. | 26 | 970 | ||||||||||||||
IDACORP Inc. | 12 | 1,119 | ||||||||||||||
MGE Energy Inc. | 9 | 562 | ||||||||||||||
NextEra Energy Inc. | 87 | 15,007 | ||||||||||||||
OGE Energy Corp. | 31 | 1,121 | ||||||||||||||
Otter Tail Corp. | 13 | 586 | ||||||||||||||
PG&E Corp. | 102 | 4,775 | * | |||||||||||||
Pinnacle West Capital Corp. | 23 | 1,892 | ||||||||||||||
PNM Resources Inc. | 20 | 768 | ||||||||||||||
Portland General Electric Co. | 21 | 947 | ||||||||||||||
PPL Corp. | 138 | 4,195 | ||||||||||||||
Southern Co. | 193 | 8,691 | ||||||||||||||
Xcel Energy Inc. | 93 | 4,558 | ||||||||||||||
Total Electric Utilities | 90,255 | |||||||||||||||
See Notes to Financial Statements.
| 42 | Legg Mason US Diversified Core ETF 2018 Annual Report |
Legg Mason US Diversified Core ETF
| Security | Shares | Value | ||||||||||||||
Gas Utilities — 1.6% |
| |||||||||||||||
Atmos Energy Corp. | 124 | $ | 11,542 | |||||||||||||
Chesapeake Utilities Corp. | 21 | 1,669 | ||||||||||||||
National Fuel Gas Co. | 93 | 5,049 | ||||||||||||||
New Jersey Resources Corp. | 105 | 4,736 | ||||||||||||||
Northwest Natural Holding Co. | 34 | 2,203 | ||||||||||||||
ONE Gas Inc. | 64 | 5,050 | ||||||||||||||
South Jersey Industries Inc. | 95 | 2,806 | ||||||||||||||
Southwest Gas Holdings Inc. | 57 | 4,404 | ||||||||||||||
Spire Inc. | 54 | 3,919 | ||||||||||||||
UGI Corp. | 210 | 11,143 | ||||||||||||||
Total Gas Utilities | 52,521 | |||||||||||||||
Multi-Utilities — 2.7% |
| |||||||||||||||
Ameren Corp. | 86 | 5,554 | ||||||||||||||
Avista Corp. | 23 | 1,183 | ||||||||||||||
Black Hills Corp. | 19 | 1,130 | ||||||||||||||
CenterPoint Energy Inc. | 141 | 3,808 | ||||||||||||||
CMS Energy Corp. | 101 | 5,001 | ||||||||||||||
Consolidated Edison Inc. | 117 | 8,892 | ||||||||||||||
Dominion Energy Inc. | 235 | 16,784 | ||||||||||||||
DTE Energy Co. | 70 | 7,868 | ||||||||||||||
MDU Resources Group Inc. | 68 | 1,697 | ||||||||||||||
NiSource Inc. | 106 | 2,688 | ||||||||||||||
NorthWestern Corp. | 17 | 999 | ||||||||||||||
Public Service Enterprise Group Inc. | 181 | 9,671 | ||||||||||||||
SCANA Corp. | 60 | 2,403 | ||||||||||||||
Sempra Energy | 92 | 10,131 | ||||||||||||||
Unitil Corp. | 13 | 618 | ||||||||||||||
Vectren Corp. | 30 | 2,146 | ||||||||||||||
WEC Energy Group Inc. | 115 | 7,866 | ||||||||||||||
Total Multi-Utilities | 88,439 | |||||||||||||||
Total Utilities | 231,953 | |||||||||||||||
Total Common Stocks (Cost — $2,769,531) | 3,240,448 | |||||||||||||||
| Investments in Underlying Funds — 0.3% | ||||||||||||||||
Schwab US Broad Market ETF (Cost — $9,338) | 150 | 9,773 | ||||||||||||||
| Shares/Units | ||||||||||||||||
| Master Limited Partnerships — 0.0% | ||||||||||||||||
| Energy — 0.0% | ||||||||||||||||
Oil & Gas Storage & Transportation — 0.0% | ||||||||||||||||
Tallgrass Energy GP LP (Cost — $738) | 32 | 696 | ||||||||||||||
Total Investments before Short-Term Investments (Cost — $2,779,607) |
| 3,250,917 | ||||||||||||||
See Notes to Financial Statements.
| Legg Mason US Diversified Core ETF 2018 Annual Report | 43 |
Schedule of investments (cont’d)
October 31, 2018
Legg Mason US Diversified Core ETF
| Security | Rate | Shares | Value | |||||||||||||
| Short-Term Investments — 0.4% | ||||||||||||||||
Invesco Treasury Portfolio, Institutional Class (Cost — $12,904) | 2.064% | 12,904 | $ | 12,904 | ||||||||||||
Total Investments — 99.9% (Cost — $2,792,511) | 3,263,821 | |||||||||||||||
Other Assets in Excess of Liabilities — 0.1% | 2,130 | |||||||||||||||
Total Net Assets — 100.0% | $ | 3,265,951 | ||||||||||||||
| * | Non-income producing security. |
Abbreviations used in this schedule: | ||
| ETF | — Exchange-Traded Fund | |
| REIT | — Real Estate Investment Trust | |
See Notes to Financial Statements.
| 44 | Legg Mason US Diversified Core ETF 2018 Annual Report |
Statement of assets and liabilities
October 31, 2018
| Assets: | ||||
Investments, at value (Cost — $2,792,511) | $ | 3,263,821 | ||
Cash | 8 | |||
Dividends and interest receivable | 2,978 | |||
Total Assets | 3,266,807 | |||
| Liabilities: | ||||
Investment management fee payable | 856 | |||
Total Liabilities | 856 | |||
| Total Net Assets | $ | 3,265,951 | ||
| Net Assets: | ||||
Par value (Note 5) | $ | 1 | ||
Paid-in capital in excess of par value | 2,601,919 | |||
Undistributed net investment income | 42,479 | |||
Accumulated net realized gain on investments | 150,242 | |||
Net unrealized appreciation on investments | 471,310 | |||
| Total Net Assets | $ | 3,265,951 | ||
| Shares Outstanding | 104,000 | |||
| Net Asset Value | $31.40 | |||
See Notes to Financial Statements.
| Legg Mason US Diversified Core ETF 2018 Annual Report | 45 |
For the Year Ended October 31, 2018
| Investment Income: | ||||
Dividends and distributions | $ | 68,564 | ||
Return of capital (Note 1 (g)) | (4,681) | |||
Net Dividends and Distributions | 63,883 | |||
Interest | 142 | |||
Less: Foreign taxes withheld | (25) | |||
Total Investment Income | 64,000 | |||
| Expenses: | ||||
Investment management fee (Note 2) | 10,012 | |||
Total Expenses | 10,012 | |||
| Net Investment Income | 53,988 | |||
| Realized and Unrealized Gain (Loss) on Investments (Notes 1 and 3): | ||||
Net Realized Gain From: | ||||
Investment transactions | 150,539 | |||
REIT distributions | 1,346 | |||
Net Realized Gain | 151,885 | |||
Change in Net Unrealized Appreciation (Depreciation) From Investments | (23,605) | |||
| Net Gain on Investments | 128,280 | |||
| Increase in Net Assets From Operations | $ | 182,268 | ||
See Notes to Financial Statements.
| 46 | Legg Mason US Diversified Core ETF 2018 Annual Report |
Statements of changes in net assets
| For the Years Ended October 31, | 2018 | 2017 | ||||||
| Operations: | �� | |||||||
Net investment income | $ | 53,988 | $ | 53,776 | ||||
Net realized gain | 151,885 | 100,054 | ||||||
Change in net unrealized appreciation (depreciation) | (23,605) | 377,853 | ||||||
Increase in Net Assets From Operations | 182,268 | 531,683 | ||||||
| Distributions to Shareholders From (Note 1): | ||||||||
Net investment income | (53,000) | (58,000) | ||||||
Net realized gains | (88,944) | — | ||||||
Decrease in Net Assets From Distributions to Shareholders | (141,944) | (58,000) | ||||||
Increase in Net Assets | 40,324 | 473,683 | ||||||
| Net Assets: | ||||||||
Beginning of year | 3,225,627 | 2,751,944 | ||||||
End of year* | $ | 3,265,951 | $ | 3,225,627 | ||||
*Includes undistributed net investment income of: | $42,479 | $39,513 | ||||||
See Notes to Financial Statements.
| Legg Mason US Diversified Core ETF 2018 Annual Report | 47 |
| For a share of beneficial interest outstanding throughout each year ended October 31, unless otherwise noted: | ||||||||||||
| 20181 | 20171 | 20161,2 | ||||||||||
| Net asset value, beginning of year | $31.02 | $26.46 | $25.02 | |||||||||
| Income from operations: | ||||||||||||
Net investment income | 0.52 | 0.52 | 0.42 | |||||||||
Net realized and unrealized gain | 1.23 | 4.60 | 1.02 | |||||||||
Total income from operations | 1.75 | 5.12 | 1.44 | |||||||||
| Less distributions from: | ||||||||||||
Net investment income | (0.51) | (0.56) | — | |||||||||
Net realized gains | (0.86) | — | — | |||||||||
Total distributions | (1.37) | (0.56) | — | |||||||||
| Net asset value, end of year | $31.40 | $31.02 | $26.46 | |||||||||
Total return, based on NAV3 | 5.62 | % | 19.62 | % | 5.76 | % | ||||||
| Net assets, end of year (000s) | $3,266 | $3,226 | $2,752 | |||||||||
| Ratios to average net assets: | ||||||||||||
Gross expenses | 0.30 | % | 0.30 | % | 0.30 | %4 | ||||||
Net expenses | 0.30 | 0.30 | 0.30 | 4 | ||||||||
Net investment income | 1.62 | 1.79 | 1.93 | 4 | ||||||||
| Portfolio turnover rate5 | 24 | % | 29 | % | 22 | % | ||||||
| 1 | Per share amounts have been calculated using the average shares method. |
| 2 | For the period December 28, 2015 (inception date) to October 31, 2016. |
| 3 | Performance figures may reflect fee waivers and/or expense reimbursements. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower. The total return calculation assumes that distributions are reinvested at NAV. Past performance is no guarantee of future results. Total returns for periods of less than one year are not annualized. |
| 4 | Annualized. |
| 5 | Portfolio turnover excludes the value of portfolio securities received or delivered as a result of in-kind fund share transactions. |
See Notes to Financial Statements.
| 48 | Legg Mason US Diversified Core ETF 2018 Annual Report |
1. Organization and significant accounting policies
Legg Mason US Diversified Core ETF (the “Fund”) is a separate diversified investment series of Legg Mason ETF Investment 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 Fund is an exchange-traded fund (“ETF”). ETFs are funds that trade like other publicly-traded securities. The Fund is designed to track an index. Similar to shares of an index mutual fund, each share of the Fund represents an ownership interest in an underlying portfolio of securities intended to track an index. Unlike shares of a mutual fund, which can be bought from and redeemed by the issuing fund by all shareholders at a price based on net asset value (“NAV”), shares of the Fund may be directly purchased from and redeemed by the Fund at NAV solely by certain large institutional investors who have entered into agreements with the Fund’s distributor (“Authorized Participants”). Also unlike shares of a mutual fund, shares of the Fund are listed on a national securities exchange and trade in the secondary market at market prices that change throughout the day.
Shares of the Fund are listed and traded at market prices on NASDAQ. The market price for the Fund’s shares may be different from the Fund’s NAV. The Fund issues and redeems shares at NAV only in blocks of a specified number of shares or multiples thereof (“Creation Units”). Only Authorized Participants may purchase or redeem Creation Units directly with the Fund at NAV. Creation Units are issued and redeemed generally in-kind for a basket of securities and/or cash. Except when aggregated in Creation Units, shares of the Fund are not redeemable securities. Shareholders who are not Authorized Participants may not redeem shares directly from the Fund at NAV.
The Fund seeks to track the investment results of the QS DBI US Diversified Index (the “Underlying Index”). The Underlying Index seeks to provide exposure to equities of U.S. companies and is based on a proprietary methodology created and sponsored by QS Investors, LLC, the Fund’s subadviser.
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,
| Legg Mason US Diversified Core ETF 2018 Annual Report | 49 |
Notes to financial statements (cont’d)
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. Prior to December 1, 2017, short-term fixed income securities that would mature in 60 days or less were valued at amortized cost, unless it was 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 use the currency exchange rates, generally determined as of 4:00 p.m. (London Time) (4:00 p.m. Eastern Time prior to October 1, 2018). 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 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.
| 50 | Legg Mason US Diversified Core ETF 2018 Annual Report |
For each portfolio security that has been fair valued pursuant to the policies adopted by the Board of Trustees, the fair value price is compared against the last available and next available market quotations. The Valuation Committee reviews the results of such back testing monthly and fair valuation occurrences are reported to the Board of Trustees quarterly.
The Fund uses valuation techniques to measure fair value that are consistent with the market approach and/or income approach, depending on the type of security and the particular circumstance. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable securities. The income approach uses valuation techniques to discount estimated future cash flows to present value.
GAAP establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are summarized in the three broad levels listed below:
| • | Level 1 — quoted prices in active markets for identical investments |
| • | Level 2 — other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) |
| • | Level 3 — significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments) |
The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used in valuing the Fund’s assets carried at fair value:
| ASSETS | ||||||||||||||||
| Description | Quoted Prices (Level 1) | Other Significant Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | ||||||||||||
| Long-term investments†: | ||||||||||||||||
Common stocks | $ | 3,240,448 | — | — | $ | 3,240,448 | ||||||||||
Investments in underlying funds | 9,773 | — | — | 9,773 | ||||||||||||
Master limited partnerships | 696 | — | — | 696 | ||||||||||||
| Total long-term investments | 3,250,917 | — | — | 3,250,917 | ||||||||||||
| Short-term investments† | 12,904 | — | — | 12,904 | ||||||||||||
| Total investments | $ | 3,263,821 | — | — | $ | 3,263,821 | ||||||||||
| † | See Schedule of Investments for additional detailed categorizations. |
(b) 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
| Legg Mason US Diversified Core ETF 2018 Annual Report | 51 |
Notes to financial statements (cont’d)
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.
(c) Security transactions and investment income. Security transactions are accounted for on a trade date basis. Interest income (including interest income from payment-in-kind securities), adjusted for amortization of premium and accretion of discount, is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date for dividends received in cash and/or securities. Foreign dividend income is recorded on the ex-dividend date or as soon as practicable after the Fund determines the existence of a dividend declaration after exercising reasonable due diligence. The cost of investments sold is determined by use of the specific identification method. To the extent any issuer defaults or a credit event occurs that impacts the issuer, the Fund may halt any additional interest income accruals and consider the realizability of interest accrued up to the date of default or credit event.
(d) 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.
(e) REIT distributions. The character of distributions received from Real Estate Investment Trusts (‘‘REITs’’) held by the Fund is generally comprised of net investment income, capital gains, and return of capital. It is the policy of the Fund to estimate the character of distributions received from underlying REITs based on historical data provided by the REITs. After each calendar year end, REITs report the actual tax character of these distributions. Differences between the estimated and actual amounts reported by the REITs are reflected in the Fund’s records in the year in which they are reported by the REITs by adjusting related investment cost basis, capital gains and income, as necessary.
(f) Federal and other taxes. It is the Fund’s policy to comply with the federal income and excise tax requirements of the Internal Revenue Code of 1986 (the “Code”), as amended, applicable to regulated investment companies. Accordingly, the Fund intends to distribute its taxable income and net realized gains, if any, to shareholders in accordance with timing requirements imposed by the Code. Therefore, no federal or state income tax provision is required in the Fund’s financial statements.
Management has analyzed the Fund’s tax positions taken on income tax returns for all open tax years and has concluded that as of October 31, 2018, 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.
| 52 | Legg Mason US Diversified Core ETF 2018 Annual Report |
Under the applicable foreign tax laws, a withholding tax may be imposed on interest, dividends and capital gains at various rates.
(g) 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 | |||||||
| (a) | $ | 1,978 | $ | (1,978) | ||||
| (a) | Reclassifications are due to book/tax differences in the treatment of real estate investment trusts and other book/tax differences. |
2. Investment management agreement and other transactions with affiliates
Legg Mason Partners Fund Advisor, LLC (“LMPFA”) is the Fund’s investment manager and QS Investors, LLC (“QS Investors”) is the Fund’s subadviser. Western Asset Management Company, LLC (formerly Western Asset Management Company) (“Western Asset”) manages the portion of the Fund’s cash and short-term instruments allocated to it. LMPFA, QS Investors and Western Asset are wholly-owned subsidiaries of Legg Mason, Inc. (“Legg Mason”).
LMPFA provides administrative and certain oversight services to the Fund. LMPFA delegates to the subadviser the day-to-day portfolio management of the Fund. The Fund is responsible for paying interest expenses, taxes, brokerage expenses, future 12b-1 fees (if any), acquired fund fees and expenses, extraordinary expenses and the management fee payable to LMPFA under the investment management agreement.
Under the investment management agreement and subject to the general supervision of the Fund’s Board of Trustees, LMPFA provides or causes to be furnished all investment management, supervisory, administrative and other services reasonably necessary for the operation of the Fund, including certain distribution services (provided pursuant to a separate distribution agreement) and investment advisory services (provided pursuant to separate subadvisory agreements) under a unitary fee structure. The Fund pays an investment management fee, calculated daily and paid monthly, at an annual rate of 0.30% of the Fund’s average daily net assets.
As compensation for its subadvisory services, LMPFA pays QS Investors monthly 90% of the management fee paid by the Fund to LMPFA, net of (i) all fees and expenses incurred by LMPFA under the investment management agreement (including without limitation any subadvisory fee paid to another subadviser to the Fund) and (ii) expense waivers, if any, and reimbursements. LMPFA pays Western Asset monthly a fee of 0.02% of the portion of the Fund’s average daily net assets allocated to Western Asset for the management of cash and other short-term instruments, net of expense waivers, if any, and reimbursements.
Legg Mason Investor Services, LLC, a wholly-owned broker-dealer subsidiary of Legg Mason, serves as the distributor of Creation Units for the Fund on an agency basis.
| Legg Mason US Diversified Core ETF 2018 Annual Report | 53 |
Notes to financial statements (cont’d)
The Fund’s Board of Trustees has adopted a Rule 12b-1 shareholder services and distribution plan and under that plan, the Fund is authorized to pay service and/or distribution fees calculated at an annual rate of up to 0.25% of its average daily net assets. No service and/or distribution fees are currently paid by the Fund, and there are no current plans to impose these fees.
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 October 31, 2018, Legg Mason and its affiliates owned 51% of the Fund.
3. Investments
During the year ended October 31, 2018, the aggregate cost of purchases and proceeds from sales of investments (excluding in-kind transactions and short-term investments) were as follows:
| Purchases | $ | 804,003 | ||
| Sales | 884,557 |
During the year ended October 31, 2018, there were no in-kind transactions (See Note 5).
At October 31, 2018, the aggregate cost of investments and the aggregate gross unrealized appreciation and depreciation of investments for federal income tax purposes were as follows:
| Cost | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Appreciation | |||||||||||||
| Securities | $ | 2,793,381 | $ | 635,515 | $ | (165,075) | $ | 470,440 | ||||||||
4. Derivative instruments and hedging activities
During the year ended October 31, 2018, the Fund did not invest in derivative instruments.
5. Fund share transactions
At October 31, 2018, the Trust had an unlimited number of shares of beneficial interest authorized with a par value of $0.00001 per share. Fund shares are issued and redeemed by the Fund only in Creation Units or Creation Unit aggregations, where 100,000 shares of the Fund constitute a Creation Unit. Such transactions are generally on an in-kind basis, with a separate cash payment, which is a balancing cash component to equate the transaction to the net asset value per share of the Fund on the transaction date. Transactions in capital shares of the Fund are disclosed in detail in the Statement of Changes in Net Assets. Authorized Participants are subject to standard creation and redemption transaction fees to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units. Creations and redemptions for cash (when cash creations and redemptions are available or specified) may be subject to an additional variable fee.
| 54 | Legg Mason US Diversified Core ETF 2018 Annual Report |
6. Income tax information and distributions to shareholders
The tax character of distributions paid during the fiscal years ended October 31, was as follows:
| 2018 | 2017 | |||||||
| Distributions paid from: | ||||||||
| Ordinary income | $ | 59,546 | $ | 58,000 | ||||
| Net long-term capital gains | 82,398 | — | ||||||
| Total distributions paid | $ | 141,944 | $ | 58,000 | ||||
As of October 31, 2018, the components of accumulated earnings (losses) on a tax basis were as follows:
| Undistributed ordinary income — net | $ | 67,821 | ||
| Undistributed long-term capital gains — net | 125,769 | |||
| Total undistributed earnings | $ | 193,590 | ||
| Unrealized appreciation (depreciation)(a) | 470,441 | |||
| Total accumulated earnings (losses) — net | $ | 664,031 |
| (a) | The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable to the tax deferral of losses on wash sales. |
| Legg Mason US Diversified Core ETF 2018 Annual Report | 55 |
Report of independent registered public accounting firm
To the Board of Trustees of Legg Mason ETF Investment Trust and Shareholders of Legg Mason US Diversified Core ETF
Opinion on the financial statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Legg Mason US Diversified Core ETF (one of the funds constituting Legg Mason ETF Investment Trust, referred to hereafter as the “Fund”) as of October 31, 2018, the related statement of operations for the year ended October 31, 2018 and the statement of changes in net assets and financial highlights for each of the two years in the period ended October 31, 2018, including the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of October 31, 2018, the results of its operations for the year then ended, and the changes in its net assets and financial highlights for each of the two years in the period ended October 31, 2018 in conformity with accounting principles generally accepted in the United States of America.
The financial statements and financial highlights of the Fund as of October 31, 2016 and for the period December 28, 2015 (inception) through October 31, 2016 (not presented herein, other than the financial highlights) were audited by other auditors whose report dated December 21, 2016 expressed an unqualified opinion on those financial statements and financial highlights.
Basis for opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of October 31, 2018 by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Baltimore, Maryland
December 19, 2018
We have served as the auditor of one or more investment companies in Legg Mason investment company group since at least 1973. We have not determined the specific year we began serving as auditor.
| 56 | Legg Mason US Diversified Core ETF 2018 Annual Report |
Additional information (unaudited)
Information about Trustees and Officers
The business and affairs of Legg Mason US Diversified Core ETF (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† | ||
| Paul R. Ades | ||
| Year of birth | 1940 | |
| Position(s) with Trust | Trustee | |
| Term of office1 and length of time served2 | Since 1983 | |
| Principal occupation(s) during past five years | Paul R. Ades, PLLC (law firm) (since 2000) | |
| Number of funds in fund complex overseen by Trustee | 48 | |
| Other board memberships held by Trustee during past five years | None | |
| Andrew L. Breech | ||
| Year of birth | 1952 | |
| Position(s) with Trust | Trustee | |
| Term of office1 and length of time served2 | Since 1991 | |
| Principal occupation(s) during past five years | President, Dealer Operating Control Service, Inc. (automotive retail management) (since 1985) | |
| Number of funds in fund complex overseen by Trustee | 48 | |
| Other board memberships held by Trustee during past five years | None | |
| Dwight B. Crane | ||
| Year of birth | 1937 | |
| Position(s) with Trust | Trustee | |
| Term of office1 and length of time served2 | Since 1981 | |
| Principal occupation(s) during past five years | Professor Emeritus, Harvard Business School (since 2007); formerly, Professor, Harvard Business School (1969 to 2007); Independent Consultant (since 1969) | |
| Number of funds in fund complex overseen by Trustee | 48 | |
| Other board memberships held by Trustee during past five years | None | |
| Legg Mason US Diversified Core ETF | 57 |
Additional information (unaudited) (cont’d)
Information about Trustees and Officers
| Independent Trustees† cont’d | ||
| Althea L. Duersten | ||
| Year of birth | 1951 | |
| Position(s) with Trust | Trustee | |
| Term of office1 and length of time served2 | Since 2014 | |
| Principal occupation(s) during past five years | Retired (since 2011); formerly, Chief Investment Officer, North America, JPMorgan Chase (investment bank) and member of JPMorgan Executive Committee (2007 to 2011) | |
| Number of funds in fund complex overseen by Trustee | 48 | |
| Other board memberships held by Trustee during past five years | None | |
| Frank G. Hubbard | ||
| Year of birth | 1937 | |
| Position(s) with Trust | Trustee | |
| Term of office1 and length of time served2 | Since 1993 | |
| Principal occupation(s) during past five years | President, Fealds, Inc. (business development) (since 2016); formerly, President, Avatar International Inc. (business development) (1998 to 2015) | |
| Number of funds in fund complex overseen by Trustee | 48 | |
| Other board memberships held by Trustee during past five years | None | |
| Howard J. Johnson | ||
| Year of birth | 1938 | |
| Position(s) with Trust | Trustee and Chairman | |
| Term of office1 and length of time served2 | From 1981 to 1998 and since 2000 (Chairman since 2013) | |
| Principal occupation(s) during past five years | Chief Executive Officer, Genesis Imaging LLC (technology company) (since 2003) | |
| Number of funds in fund complex overseen by Trustee | 48 | |
| Other board memberships held by Trustee during past five years | None | |
| Jerome H. Miller | ||
| Year of birth | 1938 | |
| Position(s) with Trust | Trustee | |
| Term of office1 and length of time served2 | Since 1995 | |
| Principal occupation(s) during past five years | Retired | |
| Number of funds in fund complex overseen by Trustee | 48 | |
| Other board memberships held by Trustee during past five years | None | |
| 58 | Legg Mason US Diversified Core ETF |
| Independent Trustees† cont’d | ||
| Ken Miller | ||
| Year of birth | 1942 | |
| Position(s) with Trust | Trustee | |
| Term of office1 and length of time served2 | Since 1983 | |
| Principal occupation(s) during past five years | Retired; formerly, President, Young Stuff Apparel Group, Inc. (apparel manufacturer), division of Li & Fung (1963 to 2012) | |
| Number of funds in fund complex overseen by Trustee | 48 | |
| Other board memberships held by Trustee during past five years | None | |
| John J. Murphy | ||
| Year of birth | 1944 | |
| Position(s) with Trust | Trustee | |
| Term of office1 and length of time served2 | Since 2002 | |
| Principal occupation(s) during past five years | President (since 2017) and formerly, Founder and Senior Principal (1983 to 2017), Murphy Capital Management (investment management); and Senior Vice President, Peapack-Gladstone Bank (commercial bank) (since 2017) | |
| Number of funds in fund complex overseen by Trustee | 48 | |
| Other board memberships held by Trustee during past five years | Trustee, UBS Funds (24 funds) (since 2008); Trustee, Consulting Group Capital Markets Funds (11 funds) (since 2002); Director, Fort Dearborn Income Securities, Inc. (2013 to 2016) | |
| Thomas F. Schlafly | ||
| Year of birth | 1948 | |
| Position(s) with Trust | Trustee | |
| Term of office1 and length of time served2 | Since 1983 | |
| Principal occupation(s) during past five years | Chairman, The Saint Louis Brewery, LLC (brewery) (since 2012); formerly, President, The Saint Louis Brewery, Inc. (1989 to 2012); Senior Counsel (since 2017) and formerly, Partner (2009 to 2016), Thompson Coburn LLP (law firm) | |
| Number of funds in fund complex overseen by Trustee | 48 | |
| Other board memberships held by Trustee during past five years | Director, Citizens National Bank of Greater St. Louis (since 2006) | |
| Legg Mason US Diversified Core ETF | 59 |
Additional information (unaudited) (cont’d)
Information about Trustees and Officers
| Interested Trustee and Officer | ||
| Jane Trust, CFA3 | ||
| Year of birth | 1962 | |
| Position(s) with Trust | Trustee, President and Chief Executive Officer | |
| Term of office1 and length of time served2 | Since 2015 | |
| Principal occupation(s) during past five years | Senior Managing Director of Legg Mason & Co., LLC (“Legg Mason & Co.”) (since 2018); Managing Director of Legg Mason & Co. (2016 to 2018); Officer and/or Trustee/Director of 147 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 | 138 | |
| Other board memberships held by Trustee during past five years | None |
| Additional Officers | ||
Ted P. Becker Legg Mason 620 Eighth Avenue, 49th Floor, New York, NY 10018 | ||
| Year of birth | 1951 | |
| Position(s) with Trust | Chief Compliance Officer | |
| Term of office1 and length of time served2 | Since 2007 | |
| Principal occupation(s) during 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) | |
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) | |
| 60 | Legg Mason US Diversified Core ETF |
| Additional Officers cont’d | ||
Jenna Bailey Legg Mason 100 First Stamford Place, 5th Floor, Stamford, CT 06902 | ||
| Year of birth | 1978 | |
| Position(s) with Trust | Identity Theft Prevention Officer | |
| Term of office1 and length of time served2 | Since 2015 | |
| Principal occupation(s) during 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) | |
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— 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) | |
Thomas C. Mandia Legg Mason 100 First Stamford Place, 6th Floor, Stamford, CT 06902 | ||
| Year of birth | 1962 | |
| Position(s) with Trust | Assistant Secretary | |
| Term of office1 and length of time served2 | Since 2007 | |
| Principal occupation(s) during past five years | Managing Director and Deputy General Counsel of Legg Mason & Co. (since 2005) and Legg Mason & Co. predecessors (prior to 2005); Secretary of LMPFA (since 2006); Assistant Secretary of certain mutual funds associated with Legg Mason & Co. or its affiliates (since 2006) and Legg Mason & Co. predecessors (prior to 2006); Secretary of LM Asset Services, LLC (“LMAS”) (since 2002) and Legg Mason Fund Asset Management, Inc. (“LMFAM”) (since 2013) (formerly registered investment advisers) | |
| Legg Mason US Diversified Core ETF | 61 |
Additional information (unaudited) (cont’d)
Information about Trustees and Officers
| Additional Officers cont’d | ||
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) | |
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 2014 | |
| 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) | |
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 (the “1940 Act”). |
| 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. |
| 62 | Legg Mason US Diversified Core ETF |
Important tax information (unaudited)
The following information is provided with respect to the distributions paid during the taxable year ended October 31, 2018:
| Record date: | 12/27/2017 | |||
| Payable date: | 12/29/2017 | |||
| Ordinary income: | ||||
Qualified dividend income for individuals | 86.44 | % | ||
Dividends qualifying for the dividends | ||||
received deduction for corporations | 82.76 | % | ||
| Long-term capital gain dividend | $0.791837 |
Please retain this information for your records.
| Legg Mason US Diversified Core ETF | 63 |
Legg Mason
US Diversified Core ETF
Trustees
Paul R. Ades
Andrew L. Breech
Dwight B. Crane
Althea L. Duersten
Frank G. Hubbard
Howard J. Johnson
Chairman
Jerome H. Miller
Ken Miller
John J. Murphy
Thomas F. Schlafly
Jane Trust
Investment manager
Legg Mason Partners Fund Advisor, LLC
Subadviser
QS Investors, LLC
Custodian
The Bank of New York Mellon (“BNY”)*
Transfer agent
BNY Mellon Investment Servicing
(US) Inc. (“BNY Mellon”)*
4400 Computer Drive
Westborough, MA 01581
Independent registered public accounting firm
PricewaterhouseCoopers LLP
Baltimore, MD
| * | Effective July 16, 2018, BNY became custodian and BNY Mellon became transfer agent. |
Legg Mason US Diversified Core ETF
The Fund is a separate investment series of Legg Mason ETF Investment Trust, a Maryland statutory trust.
Legg Mason US Diversified Core ETF
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. 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/etf and (3) on the SEC’s website at www.sec.gov.
This report is submitted for the general information of the shareholders of Legg Mason US Diversified Core ETF . 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
© 2018 Legg Mason Investors Services, LLC
Member FINRA, SIPC
ETF Index Disclaimers
The MSCI World ex-US Index (the “MSCI Index”) was used by QS Investors, LLC (“QS Investors”), the Fund’s subadviser, as the reference universe for selection of the component securities included in the QS DBI Developed ex-US Diversified Index (the “QS DBI Index” or the “Underlying Index”). MSCI Inc. does not in any way sponsor, support, promote or endorse the QS DBI Index or the Legg Mason Developed ex-US Diversified Core ETF (the “Fund”). MSCI Inc. was not and is not involved in any way in the creation, calculation, maintenance or review of the QS DBI Index. The MSCI Index was provided on an “as is” basis. MSCI Inc., its affiliates and any other person or entity involved in or related to compiling, computing or creating the MSCI Index (collectively, the “MSCI Parties”) expressly disclaim all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose). Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including without limitation lost profits) or any other damages in connection with the MSCI Index, the QS DBI Index, or the Fund.
The Fund is not sponsored, promoted, sold or supported in any other manner by Solactive AG nor does Solactive AG offer any express or implicit guarantee or assurance either with regard to the results of using the Underlying Index and/or Underlying Index trade marks or the Underlying Index Price at any time or in any other respect. The Underlying Index is calculated and published by Solactive AG. Solactive AG uses its best efforts to ensure that the Underlying Index is calculated correctly. Irrespective of its obligations towards the Fund, Solactive AG has no obligation to point out errors in the Underlying Index to third parties including but not limited to investors and/or financial intermediaries of the Fund. Neither publication of the Underlying Index by Solactive AG nor the licensing of the Underlying Index or Underlying Index trade marks for the purpose of use in connection with the Fund constitutes a recommendation by Solactive AG to invest capital in this Fund nor does it in any way represent an assurance or opinion of Solactive AG with regard to any investment in this Fund.
QS Investors does not guarantee the accuracy and/or the completeness of the Underlying Index or any data included therein, and QS Investors shall not have any liability for any errors, omissions or interruptions therein. QS Investors makes no warranty, express or implied, as to results to be obtained by the Fund, owners of the shares of the Fund or any other person or entity from the use of the Underlying Index or any data included therein, either in connection with the Fund or for any other use. QS Investors makes no express or implied warranties, and expressly disclaims all warranties of merchantability or fitness for a particular purpose or use with respect to the Underlying Index or any data included therein. Without limiting any of the foregoing, in no event shall QS Investors have any liability for any special, punitive, direct, indirect or consequential damages (including lost profits) arising out of matters relating to the use of the Underlying Index, even if notified of the possibility of such damages.
www.leggmason.com
© 2018 Legg Mason Investor Services, LLC Member FINRA, SIPC
ETFF323377 12/18-3502
| ITEM 2. | CODE OF ETHICS. |
The registrant has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller.
| ITEM 3. | AUDIT COMMITTEE FINANCIAL EXPERT. |
The Board of Trustees of the registrant has determined that Dwight B. Crane, 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 Dwight B. Crane as the Audit Committee’s financial experts. Dwight B. Crane is an “independent” Trustees pursuant to paragraph (a) (2) of Item 3 to Form N-CSR.
| ITEM 4. | PRINCIPAL ACCOUNTANT FEES AND SERVICES. |
a) Audit Fees. The aggregate fees billed in the last fiscal period ending October 31, 2017 and October 31, 2018 (the “Reporting Period”) 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 Period, were $80,000 in October 31, 2017 and $140,000 in October 31, 2018.
b) Audit-Related Fees. The aggregate fees billed in the Reporting Period for assurance and related services by the Auditor that are reasonably related to the performance of the Registrant’s financial statements were $0 in October 31, 2017 and $52,489 in October 31, 2018.
In addition, there were no Audit-Related Fees billed in the Reporting Period for assurance and related services by the Auditor to the Registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the Legg Mason ETF Investment Trust (“service affiliates”), that were reasonably related to the performance of the annual audit of the service affiliates. Accordingly, there were no such fees that required pre-approval by the Audit Committee for the Reporting Period.
(c) Tax Fees. The aggregate fees billed in the Reporting Period for professional services rendered by the Auditor for tax compliance, tax advice and tax planning (“Tax Services”) were $12,500 in October 31, 2017 and $0 in October 31, 2018. These services consisted of (i) review or preparation of U.S. federal, state, local and excise tax returns; (ii) U.S. federal, state and local tax planning, advice and assistance regarding statutory, regulatory or administrative developments, and (iii) tax advice regarding tax qualification matters and/or treatment of various financial instruments held or proposed to be acquired or held.
There were no fees billed for tax services by the Auditors to service affiliates during the Reporting Period that required pre-approval by the Audit 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 October 31, 2017 and $0 in October 31, 2018, other than the services reported in paragraphs (a) through (c) of this item for the Legg Mason ETF Investment 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 ETF Investment Trust requiring pre-approval by the Audit Committee in the Reporting Period.
(e) Audit Committee’s pre–approval policies and procedures described in paragraph (c) (7) of Rule 2-01 of Regulation S-X.
(1) The Charter for the Audit Committee (the “Committee”) of the Board of each registered investment company (the “Fund”) advised by LMPFA or one of their affiliates (each, an “Adviser”) requires that the Committee shall approve (a) all audit and permissible non-audit services to be provided to the Fund and (b) all permissible non-audit services to be provided by the Fund’s independent auditors to the Adviser and any Covered Service Providers if the engagement relates directly to the operations and financial reporting of the Fund. The Committee may implement policies and procedures by which such services are approved other than by the full Committee.
The Committee shall not approve non-audit services that the Committee believes may impair the independence of the auditors. As of the date of the approval of this Audit Committee Charter, permissible non-audit services include any professional services (including tax services), that are not prohibited services as described below, provided to the Fund by the independent auditors, other than those provided to the Fund in connection with an audit or a review of the financial statements of the Fund. Permissible non-audit services may not include: (i) bookkeeping or other services related to the accounting records or financial statements of the Fund; (ii) financial information systems design and implementation; (iii) appraisal or valuation services, fairness opinions or contribution-in-kind reports; (iv) actuarial services; (v) internal audit outsourcing services; (vi) management functions or human resources; (vii) broker or dealer, investment adviser or investment banking services; (viii) legal services and expert services unrelated to the audit; and (ix) any other service the Public Company Accounting Oversight Board determines, by regulation, is impermissible.
Pre-approval by the Committee of any permissible non-audit services is not required so long as: (i) the aggregate amount of all such permissible non-audit services provided to the Fund, the Adviser and any service providers controlling, controlled by or under common control with the Adviser that provide ongoing services to the Fund (“Covered Service Providers”) constitutes not more than 5% of the total amount of revenues paid to the independent auditors during the fiscal year in which the permissible non-audit services are provided to (a) the Fund, (b) the Adviser and (c) any entity controlling, controlled by or under common control with the Adviser that provides ongoing services to the Fund during the fiscal year in which the services are provided that would have to be approved by the Committee; (ii) the permissible non-audit services were not recognized by the Fund at the time of the engagement to be non-audit services; and (iii) such services are promptly brought to the attention of the Committee and approved by the Committee (or its delegate(s)) prior to the completion of the audit.
(2) For the Legg Mason ETF Investment Trust, the percentage of fees that were approved by the audit committee, with respect to: Audit-Related Fees were 100% and 100% for October 31, 2017 and October 31, 2018; Tax Fees were 100% and 100% for October 31, 2017 and October 31, 2018; and Other Fees were 100% and 100% for October 31, 2017 and October 31, 2018.
(f) N/A
(g) Non-audit fees billed by the Auditor for services rendered to Legg Mason ETF Investment Trust, LMPFA and any entity controlling, controlled by, or under common control with LMPFA that provides ongoing services to Legg Mason ETF Investment Trust during the reporting period were $160,000 in October 31, 2017 and $678,000 in October 31, 2018.
(h) Yes. Legg Mason ETF Investment Trust’s Audit Committee has considered whether the provision of non-audit services that were rendered to Service Affiliates, which were not pre-approved (not requiring pre-approval), is compatible with maintaining the Accountant’s independence. All services provided by the Auditor to the Legg Mason ETF Investment Trust or to Service Affiliates, which were required to be pre-approved, were pre-approved as required.
| ITEM 5. | AUDIT COMMITTEE OF LISTED REGISTRANTS. |
| a) | The independent board members are acting as the registrant’s audit committee as specified in Section 3(a)(58)(B) of the Exchange Act . The Audit Committee consists of the following Board members: |
Paul R. Ades
Andrew L. Breech
Dwight B. Crane
Althea L. Duersten
Frank G. Hubbard
Howard J. Johnson
Jerome H. Miller
Ken Miller
John J. Murphy
Thomas F. Schlafly
| b) | Not applicable |
| ITEM 6. | SCHEDULE OF INVESTMENTS. |
Included herein under Item 1.
| ITEM 7. | DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable.
| ITEM 8. | PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable.
| ITEM 9. | PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. |
Not applicable.
| ITEM 10. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. |
Not applicable.
| ITEM 11. | CONTROLS AND PROCEDURES. |
| (a) | The registrant’s principal executive officer and principal financial officer have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a- 3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective as of a date within 90 days of the filing date of this report that includes the disclosure required by this paragraph, based on their evaluation of the disclosure controls and procedures required by Rule 30a-3(b) under the 1940 Act and 15d-15(b) under the Securities Exchange Act of 1934. |
| (b) | There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are likely to materially affect the registrant’s internal control over financial reporting. |
| ITEM 12. | EXHIBITS. |
(a) (1) Code of Ethics attached hereto.
Exhibit 99.CODE ETH
(a) (2) Certifications pursuant to section 302 of the Sarbanes-Oxley Act of 2002 attached hereto.
Exhibit 99.CERT
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 attached hereto.
Exhibit 99.906CERT
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this Report to be signed on its behalf by the undersigned, there unto duly authorized.
Legg Mason ETF Investment Trust
| By: | /s/ Jane Trust | |
| Jane Trust | ||
| Chief Executive Officer |
Date: December 27, 2018
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| By: | /s/ Jane Trust | |
| Jane Trust | ||
| Chief Executive Officer | ||
| Date: | December 27, 2018 | |
| By: | /s/ Richard F. Sennett | |
| Richard F. Sennett | ||
| Principal Financial Officer | ||
| Date: | December 27, 2018 | |