2Q 2021 Product Commentary CLEARBRIDGE MID CAP FUND

Brian Angerame and Matthew Lilling, CFA Portfolio Managers

Average annual total returns and fund expenses (%) Key takeaways as of June 30, 2021 • The Fund took a pause as some of our best- performing stocks over the last several quarters Since Incept. Expenses lagged in a strong up market. Class A 3-mo 1-yr 5-yr 10-yr (09/01/98) Gross Net • Excluding sales We remained active in seeding the Portfolio, 4.47 52.38 14.54 11.81 10.56 1.18 1.18 charges adding five new positions while exiting three Including effects others. of maximum -1.53 43.61 13.19 11.15 10.27 1.18 1.18 • Pricing power is a key metric we are assessing sales charges among our portfolio holdings as we believe Russell Midcap 7.50 49.80 15.62 13.24 N/A - - inflation is a more serious threat than S&P MidCap 400 3.64 53.24 14.29 12.40 N/A - - policymakers are willing to admit. That said, we Index like our positioning for a period of rising inflation Performance shown represents past performance and is no guarantee of future results. Current performance may be higher or lower than the performance shown. with companies able to push through price Investment return and principal value will fluctuate, so shares, when redeemed, may be increases above input costs. worth more or less than the original cost. Class A shares have a maximum front-end sales charge of 5.75%.Total returns assume the reinvestment of all distributions at net asset value and the deduction of all Fund expenses. Total return figures are based on the NAV Market overview per share applied to shareholder subscriptions and redemptions, which may differ from the NAV per share disclosed in Fund shareholder reports. Performance would have been Stocks delivered more solid gains in the second quarter as lower if fees had not been waived in various periods. Returns for less than one year are ongoing stimulus, easy monetary policy and strong corporate cumulative. For the most recent month-end information, please visit www.leggmason.com. earnings provided support. The S&P 500 Index rose 3.6% in Gross expenses are the Fund's total annual operating expenses for the share class(es) the quarter while the benchmark Russell Midcap Index shown. advanced 7.5%. Market leadership shifted back to growth after Net expenses are the Fund's total annual operating expenses for the share classes indicated and would reflect contractual fee waivers and/or reimbursements, where these a strong run for value with the Russell Midcap Growth Index reductions reduce the Fund's gross expenses. These arrangements cannot be terminated rising 11.1% to outperform the Russell Midcap Value Index by prior to December 31, 2022 without the Board’s consent. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become 540 basis points (bps). Value still leads by 900 bps year-to-date. higher than the numbers shown in the table above. Investors cannot invest directly in an index, and unmanaged index returns do not reflect Despite growth’s resurgence, market direction was less decisive any fees, expenses or sales charges. and participation broader than in the previous two quarters The Russell Midcap Index measures the performance of the 800 smallest companies in when COVID-19 vaccine approval and the passage of generous the Russell 1000 Index, which represents approximately 25% of the total market capitalization of the Russell 1000 Index. fiscal packages offered a strong bid for value and cyclical The S&P MidCap 400 Index is a market value-weighted index that consists of 400 companies. Growth stocks began to rebound from oversold domestic stocks chosen for market size, liquidity and industry group representation. levels following better-than-expected first-quarter earnings reports and continued to rise through the rest of the quarter after the Federal Reserve (“Fed”) signaled its vigilance in

INVESTMENT PRODUCTS: NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE monitoring a recent spike in inflation. A flattening of the yield sports leagues like UFC and Professional Bull Riders as well as curve following the Fed’s comments also proved beneficial to leading sports agency IMG and its IMG Academy. Streaming longer-duration growth assets. companies are hungry for content, and rights prices for programming owned by Endeavor are rising. Endeavor, as a From a sector standpoint, energy (+15.3%) was the best representative to many of the world’s most well-known performer in the benchmark as crude oil prices rose 25%, athletes, should also benefit from soaring sports salaries. followed by health care (+11.3%), real estate (+10.9%) and Purple Innovation, in the consumer discretionary sector, adds information technology (IT, +9.2%). The income-oriented to innovative, high-growth exposure. The mattress maker utilities (-0.1%) and consumer staples (+1.6%) sectors lagged as operates a direct-to-consumer business that has taken off due did the cyclical industrials (+5.6%), consumer discretionary to its superior marketing technology and the quality of its (+5.8%), and materials (+6.4%) sectors. internally manufactured, unique, purple-colored ”hyper-elastic polymer“ products. The ClearBridge Mid Cap Fund owns a blend of high-quality growth and value stocks built for many types of market We also closed three positions during the quarter, taking environments but trailed the benchmark in the second quarter. profits in semiconductor equipment supplier Lam Research as We have been active and aggressive in shifting the Portfolio it grew out of our market cap range as well as life science over the last 18 months, activity that has been beneficial for diagnostic products maker Bio-Rad Laboratories as it reached our assessment of fair value. Concerns about slowing growth most of the span. The Portfolio took a pause in the second and pricing power, meanwhile, caused us to exit Reynolds quarter as some of our best-performing stocks over the last Consumer Products. several quarters underperformed in a strong up market.

Stocks that took a breather included Performance Food Group, Outlook which declined on negative sentiment toward its planned Pricing power is one of the key fundamentals we are currently assessing among our portfolio holdings as we believe inflation acquisition of convenience store distributor Core-Mark, as well is a more serious threat than policymakers are willing to as Hartford Financial, which received an unsolicited takeover admit. The CEOs we engage with every day mention higher bid and traded off when the deal didn’t come through. A lot of inflation as a key concern going forward. When inflation these corporate actions are near-term performance headwinds spikes, investors find out quickly who has legitimate pricing but we believe are positive moves for the long term. The Fund power to offset rising raw material and transport costs. The also saw some give-back among banks such as Western U.S. has not seen real inflation in 40 years, and we are also Alliance Bancorp as the yield curve flattened and recent strong closely monitoring consumer behavior and how they will react performers ON Semiconductor and Casey’s General Stores. to rising prices.

Portfolio positioning Current inflation is partly a function of massive liquidity but also the global supply chain and employment disruptions We remain active in positioning the Portfolio and continue to caused by COVID-19. With goods like semiconductors for find good opportunities in new positions like ATS Automation autos and other high-end applications scarce and Tooling Systems, a Canadian company that integrates manufacturers struggling to bring on labor and capacity, the automation equipment in many levels of manufacturing natural response is to raise prices to capture as much value as supply chain in such industries as health care, food and possible. We also like our positioning for a period of rising beverage, as well as lithium battery production. The more inflation with companies like Casey’s, Waste Connections and complex the manufacturing process, the more efficiency ATS Masonite that are able to maintain strong pricing power and systems can add. New purchase Sensient Technologies, in the push through price increases above input costs. materials sector, also serves the food, as well as cosmetics and personal care, markets as a supplier of flavors, colors and As bottom-up active managers, we are looking forward to a additives. As demand for natural and more healthy consumer time in the second half of this year or into 2022 when the products increases, Sensient should benefit. COVID-19 narrative fades away and fundamentals begin to matter more. Corporate earnings have been outstanding since Endeavor Group, in the communication services sector, was the early stages of the recovery, but we expect to see a the largest new addition in the second quarter. Endeavor owns separation of high-quality franchises driven by strong

2 execution and sound balance sheets from lower-quality Alphabet and Facebook continue to build data centers to companies as stimulus measures fade and liquidity returns to support cloud migration and broader digital transformation. more normal levels. Avantor (AVTR), in the health care sector, is a chemicals and Despite recent performance headwinds, we will continue to materials provider to the global life sciences, advanced manage a diversified portfolio of high-return growth technologies and research industries. The stock rose after the companies and more value-oriented names with visible paths company announced intentions to double its cleanroom to improvement with the potential to be successful in a manufacturing environments and increase its single-use manufacturing capacity to accommodate greater customer normalizing market and macro environment. demand for monoclonal antibodies, cell and gene therapies for oncology and other diseases, and vaccines as a result of the Fund highlights COVID-19 pandemic.

For the quarter ended June 30, 2021, the ClearBridge Mid Cap Aptiv (APTV), in the consumer discretionary sector, provides Fund — Class A shares had a cumulative return of 4.47%, a range of solutions for the auto industry, including excluding the effects of sales charges. In comparison, the autonomous driving technologies, safety technologies, Fund’s unmanaged benchmark, the Russell Midcap Index, components and wiring. The company posted strong first- gained 7.50%. quarter increases in both revenue and earnings, benefiting from strong consumer demand for autos, and initiatives by On an absolute basis, the Fund had gains across eight of the 11 auto manufacturers toward greater technological integration sectors in which it was invested during the quarter. The and progress toward increased electric vehicle production. leading contributors were the IT, health care and industrials sectors, while the consumer staples sector was the primary Bottom contributors detractor. The bottom individual contributors for the quarter included:

On a relative basis, overall stock selection and sector allocation ON Semiconductor (ON), in the IT sector, manufactures and detracted from performance. Specifically, stock selection in the sells semiconductor components for various electronic devices consumer staples, financials, materials, energy and consumer worldwide. The downward movement in the stock price discretionary sectors and an underweight to the real estate largely reflected the movement of the wider semiconductor sector hurt results. On the positive side, stock selection in the industry, which underperformed the market in the second health care and industrials sectors contributed to relative quarter due to industry-wide peaking growth rates and returns. extended lead times, creating headwinds to positive earnings On an individual stock basis, the biggest contributors to revisions. While the wider semiconductor industry faces near- absolute returns in the second quarter were Vertiv, Avantor, term challenges to a peaking product cycle, the global lack of Aptiv, Syneos Health and Marvell Technology. The largest supply provides compelling long-term growth prospects. detractors from absolute returns were Performance Food Regal Beloit (RBC), in the industrials sector, is a global Group, Casey’s General Stores, Hartford Financial, ON Semiconductor and Regal Beloit. manufacturer of motors, bearings, gearing, conveying, blowers, electric components and couplings. The company’s share price In addition to the transactions listed above, we initiated a declined after the announcement of Regal Beloit’s intention to position in Molina Healthcare in the health care sector. merge with the process and motion control business of rival Rexnord. Top contributors Performance Food Group (PFGC), in the consumer staples The leading individual contributors for the quarter included: sector, is a food service distributor to over 200,000 locations Vertiv (VRT), in the industrials sector, is a market leader in including independent and chain restaurants. The company’s thermal and power management solutions for the data center, share price declined during the quarter on negative sentiment communications infrastructure and industrial markets. The toward its planned acquisition of convenience store distributor company posted strong quarterly earnings that beat Core-Mark. expectations, which helped propel the stock price higher. Vertiv continues to benefit from attractive end markets as hyperscale cloud providers such as Amazon.com, Microsoft,

3 Top 10 equity holdings (%) Definitions and additional terms: Aptiv PLC 3.3 Please note that an investor cannot invest directly in an index, and unmanaged index Western Alliance Bancorp 2.9 returns do not reflect any fees, expenses or sales charges.

Vertiv Holdings Co 2.7 A basis point (bp, or bps) is equal to 1/100th of 1%, or 0.01%. Avantor Inc 2.6 Coronavirus disease (COVID-19) was discovered in 2019 and has not been previously Hartford Financial Services Group Inc/The 2.5 identified in humans. Gross domestic product (GDP) is the market value of all final goods and services Pioneer Natural Resources Co 2.3 produced within a country in a given period of time. Performance Food Group Co 2.2 The Russell 2000 Index is an unmanaged list of common stocks that is frequently used as a general performance measure of U.S. stocks of small and/or midsize companies. Arch Capital Group Ltd 2.2 Russell Midcap Growth Index is an unmanaged index of those companies in the Keysight Technologies Inc 2.1 Russell Midcap Index chosen for their growth orientation. Syneos Health Inc 2.1 The Russell Midcap Index is a complete subset of both the Russell 1000 and the Russell 3000. The Russell Midcap Index is used by institutional portfolio managers. The range of market caps covered in this 800-member index goes from about $1 billion on the Sector allocation (%) low end to approximately $20 billion. Industrials 22.7 S&P 500 Index is an unmanaged index of common stock performance. Information Technology 17.6 Consumer Discretionary 15.0 Financials 13.1 Health Care 11.3 Consumer Staples 4.2 Materials 4.0 Utilities 3.8 Real Estate 3.1

Communication Services 2.3

Energy 2.3

Cash/Other 0.6 Percentages are based on total portfolio as of quarter end and are subject to change at any time. For informational purposes only and not to be considered a recommendation to purchase or sell any security.

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What should I know before investing? Equity securities are subject to price fluctuation and possible loss of principal. International investments are subject to special risks, including currency fluctuations and social, economic and political uncertainties, which could increase volatility. These risks are magnified in emerging markets. Small- and mid-cap stocks involve greater risks and volatility than large-cap stocks. Short selling is a speculative strategy. Unlike the possible loss on a security that is purchased, there is no limit on the amount of loss on an appreciating security that is sold short. Derivatives, such as options and futures, can be illiquid, may disproportionately increase losses, and have a potentially large impact on Fund performance.

Any information, statement or opinion set forth herein is general in nature, is not directed to or based on the financial situation or needs of any particular investor, and does not constitute, and should not be construed as, investment advice, forecast of future events, a guarantee of future results, or a recommendation with respect to any particular security or investment strategy or type of retirement account. Investors seeking financial advice regarding the appropriateness of investing in any securities or investment strategies should consult their financial professional. Portfolio holdings and sector allocations may not be representative of the portfolio manager's current or future investment and are subject to change at any time. ©2021 Franklin Distributors, LLC. Member FINRA/SIPC. ClearBridge Investments, LLC, and Franklin Distributors, LLC are Franklin Templeton affiliated companies.. CBAX107120 07/21 90153 QCPLT

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