2Q 2021 Product Commentary CLEARBRIDGE INTERNATIONAL GROWTH FUND

Elisa Mazen, Michael Testorf, CFA, Pawel Wroblewski, CFA and Thor Olsson Portfolio Managers

Average annual total returns and fund expenses (%) Key takeaways as of June 30, 2021 • Recent Fund outperformance has been broad- based, led by more defensive, secular growth Since Incept. Expenses companies, with structural and emerging growth Class A 3-mo 1-yr 5-yr 10-yr (02/03/09) Gross Net holdings also contributing. Excluding sales 6.77 29.06 16.17 11.55 14.43 1.10 1.06 charges • Banks and energy are two areas we have mostly Including effects avoided, but our valuation approach to growth of maximum 0.62 21.64 14.80 10.89 13.88 1.10 1.06 helped identify two European banks and a global sales charges oil services provider in the quarter whose MSCI EAFE (Net) 5.17 32.35 10.28 5.89 N/A - - risk/reward were too attractive to overlook. (USD) Performance shown represents past performance and is no guarantee of future • International equity markets have seen rotating results. Current performance may be higher or lower than the performance shown. leadership due to various factors, such as the Investment return and principal value will fluctuate so shares, when redeemed, may be likelihood of interest rate increases and differing 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 monetary policies, moves creating short-term value and the deduction of all Fund expenses. Total return figures are based on the NAV headwinds that should ultimately lead to attractive 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 long-term performance for non-U.S. growth stocks. lower if fees had not been waived in various periods. Returns for less than one year are cumulative. For the most recent month-end information, please visit www.leggmason.com. Market overview Gross expenses are the Fund's total annual operating expenses for the share class(es) Rotation among international equities continued in the second shown. quarter, with growth stocks regaining momentum as bond 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 yields stabilized, commodity prices corrected and investors reductions reduce the Fund's gross expenses. These arrangements cannot be terminated took some profits in previously strong-performing cyclical and 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 low-quality shares. The benchmark MSCI EAFE Index rose higher than the numbers shown in the table above. 5.2% in the second quarter, while the MSCI Emerging Markets The MSCI EAFE Index is a free float-adjusted market-capitalization index designed to measure equity performance, excluding the U.S. and Canada. The MSCI Index added 5.1%. Small-caps in developed markets EAFE Index consists of the following 21 developed market country indexes: , underperformed larger stocks, with the MSCI EAFE Small Cap , , , , , , , , Ireland, , , the , , , , , , , Index adding 4.3%. International growth stocks outperformed and the . value stocks, with the MSCI EAFE Growth Index rising 7.4%

compared to 3.0% for the MSCI EAFE Value Index (Exhibit 1).

INVESTMENT PRODUCTS: NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE

Value, however, remains ahead of growth year to date and We are encouraged that recent outperformance has been over the trailing 12 months, boosted by record-setting fiscal broad-based, with more defensive, secular growth companies and monetary stimulus packages and their impact on the leading, while structural and emerging growth holdings have also contributed. global economy. The latest rotation was reflected in sector leadership flipping Exhibit 1: MSCI Growth vs. Value Performance from the previous quarter, with growth and defensive areas such as health care (+9.3%), consumer staples (+8.4%) and information technology (IT, +8.2%) outperforming, while cyclicals in the energy (+2.9%), financials (+3.2%) and industrials (+3.7%) sectors lagged. This dichotomy was most telling in , where top first-quarter performers like auto parts and travel & leisure gave way to retail, health care and food & beverage companies over the last three months. Within the portfolio, secular growers Nestle, L’Oreal and Diageo were among the top contributors for the quarter. The latter two consumer companies, as well as luxury retailer Source: FactSet. LVMH, were lifted by strong retail spending in China, a Equities have endured quite a roller-coaster ride over the last market further along in its return to normalcy than most 18 months. As pandemic lockdowns were put in place, Western economies and one that has recovered without the outperformance was driven by defensive and compounding same level of stimulus as the U.S., Europe and Japan. growth companies, while cyclicals and value stocks collapsed. Several of our emerging growth holdings also rebounded At the bottom of the recession, amid high earnings strongly after a sharp first-quarter sell-off. These included uncertainty, growth stocks took over, especially what we Canadian e-commerce enablement platform Shopify, which would consider emerging growth and work-from-home continues to thrive from a secular shift to online purchases; beneficiaries. And finally, as positive news on COVID-19 Australian collaboration software maker Atlassian; and Elastic, vaccines emerged and a recovery began, leadership switched a Dutch developer of software for searching and analyzing forcefully into value and cyclicals. On balance, this is not an data. Each of these stocks, as well as several of our other unusual sequence of events during a recession, but the emerging growth holdings, like electronic payment providers magnitude of these moves was both unusual and compressed. Adyen and StoneCo, are key players in the secular trend of Thus, we need to look at this entire cycle to understand where digital transformation occurring at varying levels of speed and we are today. success across global markets. The ClearBridge International Growth Fund had a very strong

2020, outperforming the benchmark despite these changing Portfolio positioning regimes, even keeping pace amid the first leg of the value rotation in the fourth quarter. The first quarter of 2021, The outstanding performance of our emerging growth bucket however, was the most challenging part of this cycle from a in 2020 caused valuations to rise to uncomfortable levels, performance standpoint. Bonds sold off, the yield curve spurring us to take some profits and begin to reposition into steepened and long-duration assets suffered. In the meantime, more attractively priced structural and secular names. We are low-quality value stocks such as deep cyclicals in the steel, invigorated by the results from many of these new additions to mining and banking industries kept rallying while many of the the portfolio, which are benefiting from an improving high-quality stocks we favor were essentially flat. What we did business cycle as well as company-specific moves. Professional not own led to underperformance for the quarter. This was not services firms Thomson Reuters and Teleperformance, as well a surprise, as such narrow value markets are exactly the type as commercial aircraft maker Airbus, were solid performers. of environment where we would expect to struggle in the short We also saw strong results from Givaudan, a Swiss maker of fragrances and food products. While our more manufacturing- term. oriented holdings like Atlas Copco and Sandvik lagged, we By the second quarter, bond yields stabilized and market believe we are still early in the economic cycle for these types performance clearly broadened, with quality and growth of businesses. participating along with value. In this broader market, Fund performance improved and enabled us to top the benchmark.

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Banks and energy are two areas we have mostly avoided over Tencent and Ping An Insurance, which we had trimmed earlier the last several years, but our valuation approach to growth in the year. The Chinese recovery from COVID-19 has occurred helped us identify several companies in the second quarter with much lower levels of state support than in the West. So whose risk/reward were too attractive to overlook. In banking, far, we have not seen negative impacts on Chinese consumer we initiated a position in BNP Paribas, the largest lender in spending, as retailers continue to use Tencent and Alibaba’s e- Europe. We expect another earnings beat from the bank in the commerce platforms. Zai Lab, the portfolio’s other Chinese second quarter, mainly due to lower cost and provisioning holding, was up significantly in the second quarter, as it levels. BNP is well-capitalized and could resume dividend continues to find new best-in-class molecules for its growing payments in the fourth quarter. The likely granting of portfolio of products for unmet medical needs in high demand permission by the ECB for banks to reduce their capital should and a key focus of the government in the world’s second- lead to further rerating of BNP and the entire sector. Intesa largest economy. Sanpaolo, Italy’s largest bank by assets, was another addition in the quarter and should benefit from a recovery in Southern Outlook Europe. Intesa and BNP should be boosted when EU fiscal spending plans are implemented and loan growth begins to We believe the prospects for non-U.S. stocks are attractive accelerate. Both have strong enough fundamentals to with several major additional uplifts to come from further withstand a likely push out of future interest rate increases. fiscal stimulus in the form of an EU Recovery Fund (that represents 2.7% of eurozone GDP) and additional stimulus Our sustainability orientation has led us to favor renewable from Japan that should help offset the risk of new COVID-19 energy providers such as EDP and SolarEdge over traditional variants impacting the pace of economic reopening. The fossil fuel energy companies. Renewables stocks moved up market has been rotating due to various factors, such as how very strongly over the last several quarters on optimism about investors feel about the likelihood of interest rate moves and huge green stimulus plans in Europe and the U.S., so we took monetary policy. Manufacturing readings in Europe have been profits and sold Vestas and SolarEdge Technologies as very strong and spending is about to ramp up, yet the region valuations became demanding. continues to struggle with supply shortages and high raw materials prices. These headwinds will influence results in the We returned to the energy sector with the purchase of services short term but should be beneficial to the Fund’s structural and equipment provider Schlumberger at what we view as a growth and some secular growth holdings over time. trough in capital spending among oil and gas exploration and Another driver of global equity prices is record investor production companies. As a technology leader, Schlumberger demand. Nearly $1.2 trillion flowed into global equities in the should generate strong free cash flow over the next few years first half of 2021, about 1.5x cumulative flows into the asset as the industry recovers, using its excess cash to gain market class over the last 20 years, according to Bank of America share from smaller players and to expand into new areas of Global Research. Global debt allocations, meanwhile, are at growth. Through its scale, presence, partnerships and their lowest levels in 20 years. This is on top of the historic technology, Schlumberger is targeting expansion into new levels of liquidity being injected into the global financial large addressable markets such as carbon capture, hydrogen, system by central banks and governments. We continue to geothermal and lithium extraction. believe much of these inflows will find their way into international growth stocks, and we have positioned the Fund We have also been active in managing our growth exposure in to optimize our participation in as many attractive the IT and Internet sectors. This has included selling music opportunities across the growth buckets and sectors as streaming service Spotify out of the emerging growth bucket possible. and adding a new position in secular grower Samsung Electronics. Samsung’s DRAM and NAND businesses are global market share leaders with the industry’s most favorable Fund highlights cost structure. Margins and returns in the memory industry During the second quarter, the ClearBridge International have structurally improved post-industry consolidation and the recent cyclical weakness provided us a good entry point. Growth Fund Class A shares generated a return of 6.77%. In Additionally, the South Korean company’s smartphone comparison, the Fund’s unmanaged benchmark, the MSCI business, the largest in the world, should benefit from market EAFE Index, gained 5.17%. share gains and a strong 5G upgrade cycle. On an absolute basis, the Fund delivered gains across nine of The other major area of focus is understanding recent the 10 sectors in which it was invested (out of 11 total), with developments in China. We are closely monitoring the the IT, consumer staples, consumer discretionary and health government’s aggressive regulatory stance toward large care sectors the primary contributors. technology companies, which pressured the recent IPO of rideshare company Didi and has weighed on portfolio holdings

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On a relative basis, overall stock selection and sector allocation Bottom contributors contributed to performance. In particular, stock selection in Ping An Insurance, in the financials sector, is a leading the consumer staples, consumer discretionary, health care and Chinese provider of life and health insurance and related materials sectors and an overweight to the IT sector had the financial services. Continued weakness and slow premium greatest impacts on results. Conversely, stock selection in the growth of the Chinese life insurance market weighed on shares IT sector was a marginal headwind to results. and was compounded by an acquisition offer for Founders Group, which surprised the market and was considered more On a regional basis, stock selection in North America, an or less a bailout by some market participants. overweight to emerging markets and an underweight to Japan MonotaRO, in the industrials sector, operates an online aided results, while stock selection in emerging markets and marketplace for industrial uniforms, tools and related supplies an overweight to North America hurt performance. in Japan. The stock pulled back after strong performance in On an individual stock basis, the largest contributors to previous months and in reaction to a new COVID emergency absolute returns in the quarter included Nestle, Elastic, L’Oreal, declaration in Japan that temporarily reduced activities in certain end markets. Adidas and LVMH. The greatest detractors from absolute returns included positions in Ping An Insurance, TeamViewer, SolarEdge Technologies, in the IT sector, is an -based SolarEdge Technologies, BNP Paribas and MonotaRO. global manufacturer of inverter systems for solar installations. The shares had moved up strongly with renewables stocks In addition to the transactions mentioned above, we closed over the last several quarters on optimism about huge green positions in Legrand in the industrials sector, Morphosys, stimulus plans in Europe and the U.S., but they gave back Hansa Biopharma and Burning Rock Biotech in the health care gains in the most recent quarter on profit taking. sector, and Victoria in the consumer discretionary sector.

Top contributors

Nestle, in the consumer staples sector, is a Swiss-based global packaged foods company. We made a timely material add to the stock during the sell-off of what market participants consider “bond proxies.” Nestle’s strategic vision to reduce lower return on invested capital (ROIC) businesses with limited growth prospects for better ROIC and higher duration of growth opportunities is slowly being appreciated by the market. We believe earnings prospects remain above market consensus. Elastic, in the IT sector, is a Dutch developer of data search and analysis software. Reversal of 10-year bond rates aided multiple expansion, as did solid earnings results and a positive outlook. Recent demand has been broad-based with continued strength in cloud and across product categories including security, observability and search. We were pleased to see a reacceleration in customer growth rates and an increasing number of $1 million+ customers, which suggests the company’s strategy to move up within its enterprise customer base is working. Given a growing pipeline and strong appetite for its solutions, management introduced a medium-term revenue target of $1 billion by fiscal 2023. Adidas, in the consumer discretionary sector, is a German- based global retailer of athletic footwear and apparel. The company announced a new five-year strategy, Owning the Game, with renewed growth targets, which was generally well received by investors. The stock moved primarily as the feared impacts of the Xinjiang cotton controversy did not materialize and Adidas resumed its share buyback plans earlier than anticipated.

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Top 10 equity holdings (%) Definitions and additional terms: Nestle SA 3.4 Please note that an investor cannot invest directly in an index, and unmanaged index ASML Holding NV 3.0 returns do not reflect any fees, expenses or sales charges.

London Stock Exchange Group PLC 2.8 Coronavirus disease (COVID-19) was discovered in 2019 and has not been previously L'Oreal SA 2.6 identified in humans. The Federal Reserve Board ("Fed") is responsible for the formulation of policies Diageo PLC 2.5 designed to promote economic growth, full employment, stable prices and a sustainable LVMH Moet Hennessy Louis Vuitton SE 2.4 pattern of international trade and payments. Gross Domestic Product (GDP) is the market value of all final goods and services adidas AG 2.4 produced within a country in a given period of time. MSCI is an investment research firm that provides indices, portfolio risk and performance TE Connectivity Ltd 2.2 analytics, and governance tools to institutional investors and hedge funds. AIA Group Ltd 2.2 MSCI EAFE Index is a free float-adjusted market-capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Taiwan Semiconductor Manufacturing Co Ltd 2.2 EAFE Index consists of the following 21 developed market country indices: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Sector allocation (%) Switzerland and the United Kingdom. MSCI EAFE Growth Index captures large- and mid-cap securities exhibiting overall Information Technology 21.4 growth style characteristics across Developed Markets countries around the world, excluding the U.S. and Canada. Industrials 18.7 MSCI EAFE Small Cap Index is an index of small-cap representation across developed Consumer Discretionary 12.7 markets countries, excluding the U.S. and Canada. MSCI EAFE Value Index captures large- and mid-cap securities exhibiting overall value Financials 11.5 style characteristics across Developed Markets countries around the world, excluding the U.S. and Canada. Consumer Staples 10.8 MSCI Emerging Markets Index is a free float-adjusted market-capitalization index that Health Care 10.3 is designed to measure equity market performance in the global emerging markets. Communication Services 4.9 The yield curve shows the relationship between yields and maturity dates for a similar class of bonds. Materials 4.7

Utilities 2.0

Energy 1.5 Cash/Other 1.6 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. Small- and mid-cap stocks involve greater risks and volatility than large-cap stocks. The manager’s investment style may become out of favor and/or the manager’s selection process may prove incorrect, which may have a negative impact on the Fund’s performance. As a non-diversified Fund, it is permitted to invest a higher percentage of its assets in any one issuer than a diversified fund, which may magnify the Fund’s losses from events affecting a particular issuer. The Fund may focus its investments in certain regions or industries, increasing its vulnerability to market volatility. 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.

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. CBAX107108 07/21 90096 QCPLT

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