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Name | Symbol | Market | Type |
---|---|---|---|
QS Global Equity Fund Class A (MM) | NASDAQ:CFIPX | NASDAQ | Fund |
Price Change | % Change | Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0 | - |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY
Investment Company Act file number 811-06444
Legg Mason Partners Equity Trust
(Exact name of registrant as specified in charter)
620 Eighth Avenue, 49 th 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)
Registrants telephone number, including area code: 1-877-721-1926
Date of fiscal year end: October 31
Date of reporting period: January 31, 2013
ITEM 1. | SCHEDULE OF INVESTMENTS. |
LEGG MASON PARTNERS EQUITY TRUST
LEGG MASON BATTERYMARCH GLOBAL EQUITY FUND
FORM N-Q
JANUARY 31, 2013
LEGG MASON BATTERYMARCH GLOBAL EQUITY FUND
Schedule of Investments (unaudited) | January 31, 2013 |
SECURITY |
SHARES | VALUE | ||||||
COMMON STOCKS - 97.6% | ||||||||
CONSUMER DISCRETIONARY - 10.0% | ||||||||
Automobiles - 1.3% |
||||||||
Hyundai Motor Co. |
2,242 | $ | 422,077 | |||||
Toyota Motor Corp. |
23,600 | 1,126,513 | ||||||
|
|
|||||||
Total Automobiles |
1,548,590 | |||||||
|
|
|||||||
Hotels, Restaurants & Leisure - 1.1% |
||||||||
Brinker International Inc. |
40,600 | 1,329,244 | ||||||
|
|
|||||||
Media - 4.2% |
||||||||
Comcast Corp., Class A Shares |
23,200 | 883,456 | ||||||
ITV PLC |
583,466 | 1,062,333 | ||||||
Naspers Ltd. |
4,766 | 308,409 | ||||||
Rightmove PLC |
15,925 | 423,308 | ||||||
Time Warner Cable Inc. |
16,100 | 1,438,374 | ||||||
WPP PLC |
64,381 | 1,012,404 | ||||||
|
|
|||||||
Total Media |
5,128,284 | |||||||
|
|
|||||||
Multiline Retail - 1.4% |
||||||||
Macys Inc. |
19,800 | 782,298 | ||||||
Next PLC |
9,968 | 641,539 | ||||||
Target Corp. |
3,600 | 217,476 | ||||||
|
|
|||||||
Total Multiline Retail |
1,641,313 | |||||||
|
|
|||||||
Specialty Retail - 1.1% |
||||||||
Nitori Co., Ltd. |
2,850 | 217,852 | ||||||
PetSmart Inc. |
3,400 | 222,394 | ||||||
TJX Cos. Inc. |
19,400 | 876,492 | ||||||
|
|
|||||||
Total Specialty Retail |
1,316,738 | |||||||
|
|
|||||||
Textiles, Apparel & Luxury Goods - 0.9% |
||||||||
Christian Dior SA |
3,446 | 602,185 | ||||||
Coach Inc. |
10,000 | 510,000 | ||||||
|
|
|||||||
Total Textiles, Apparel & Luxury Goods |
1,112,185 | |||||||
|
|
|||||||
TOTAL CONSUMER DISCRETIONARY |
12,076,354 | |||||||
|
|
|||||||
CONSUMER STAPLES - 9.4% | ||||||||
Beverages - 0.7% |
||||||||
Heineken NV |
11,401 | 801,724 | ||||||
|
|
|||||||
Food & Staples Retailing - 4.1% |
||||||||
CVS Caremark Corp. |
22,000 | 1,126,400 | ||||||
Distribuidora Internacional de Alimentacion SA |
128,820 | 952,220 | ||||||
FamilyMart Co., Ltd. |
15,800 | 635,836 | ||||||
Koninklijke Ahold NV |
57,864 | 850,104 | ||||||
Metro Inc., Class A Shares |
4,400 | 273,158 | ||||||
Wal-Mart Stores Inc. |
16,800 | 1,175,160 | ||||||
|
|
|||||||
Total Food & Staples Retailing |
5,012,878 | |||||||
|
|
|||||||
Food Products - 1.1% |
||||||||
Suedzucker AG |
29,669 | 1,269,770 | ||||||
|
|
|||||||
Household Products - 1.9% |
||||||||
Kimberly-Clark Corp. |
11,600 | 1,038,316 | ||||||
Procter & Gamble Co. |
16,800 | 1,262,688 | ||||||
|
|
|||||||
Total Household Products |
2,301,004 | |||||||
|
|
|||||||
Tobacco - 1.6% |
||||||||
Altria Group Inc. |
10,200 | 343,536 | ||||||
Imperial Tobacco Group PLC |
23,628 | 878,766 | ||||||
Japan Tobacco Inc. |
24,000 | 747,203 | ||||||
|
|
|||||||
Total Tobacco |
1,969,505 | |||||||
|
|
|||||||
TOTAL CONSUMER STAPLES |
11,354,881 | |||||||
|
|
See Notes to Schedule of Investments.
1
LEGG MASON BATTERYMARCH GLOBAL EQUITY FUND
Schedule of Investments (unaudited) (contd) | January 31, 2013 |
SECURITY |
SHARES | VALUE | ||||||
ENERGY - 11.1% | ||||||||
Energy Equipment & Services - 1.7% |
||||||||
Petroleum Geo-Services ASA |
48,400 | $ | 858,511 | |||||
Polarcus Ltd. |
288,343 | 364,196 | * | |||||
ShawCor Ltd., Class A Shares |
12,200 | 490,495 | ||||||
TGS Nopec Geophysical Co. ASA |
10,186 | 380,374 | ||||||
|
|
|||||||
Total Energy Equipment & Services |
2,093,576 | |||||||
|
|
|||||||
Oil, Gas & Consumable Fuels - 9.4% |
||||||||
Canadian Natural Resources Ltd. |
21,100 | 637,189 | ||||||
Eni SpA |
38,547 | 967,751 | ||||||
Exxon Mobil Corp. |
27,125 | 2,440,436 | ||||||
JX Holdings Inc. |
42,900 | 253,333 | ||||||
Phillips 66 |
14,350 | 869,180 | ||||||
Royal Dutch Shell PLC, Class B Shares |
62,915 | 2,289,026 | ||||||
Suncor Energy Inc. |
25,100 | 853,108 | ||||||
Total SA |
18,384 | 996,725 | ||||||
Valero Energy Corp. |
46,300 | 2,024,699 | ||||||
|
|
|||||||
Total Oil, Gas & Consumable Fuels |
11,331,447 | |||||||
|
|
|||||||
TOTAL ENERGY |
13,425,023 | |||||||
|
|
|||||||
FINANCIALS - 21.8% | ||||||||
Commercial Banks - 11.1% |
||||||||
Agricultural Bank of China Ltd., Class H Shares |
470,000 | 255,138 | ||||||
Axis Bank Ltd., GDR |
13,148 | 372,483 | ||||||
Bank of China Ltd. |
1,369,000 | 676,080 | ||||||
Bank of Hawaii Corp. |
10,100 | 485,709 | ||||||
Bank of Montreal |
3,800 | 239,986 | ||||||
Bank of Nova Scotia |
11,400 | 670,353 | ||||||
China Construction Bank Corp., Class H Shares |
505,000 | 435,625 | ||||||
HSBC Holdings PLC |
47,167 | 536,141 | ||||||
ICICI Bank Ltd., ADR |
12,800 | 586,240 | ||||||
Industrial & Commercial Bank of China Ltd., Class H Shares |
449,000 | 338,108 | ||||||
Kasikornbank Public Co., Ltd., NVDR |
99,400 | 661,667 | ||||||
Mizuho Financial Group Inc. |
645,500 | 1,291,776 | ||||||
National Bank of Canada |
8,200 | 652,120 | ||||||
Nordea Bank AB |
63,685 | 702,675 | ||||||
Oversea-Chinese Banking Corp. Ltd. |
103,000 | 813,913 | ||||||
Royal Bank of Canada |
13,600 | 847,034 | ||||||
Sumitomo Mitsui Financial Group Inc. |
23,600 | 947,149 | ||||||
Turkiye Is Bankasi, Class C Shares |
208,234 | 769,593 | ||||||
U.S. Bancorp |
30,600 | 1,012,860 | ||||||
Wells Fargo & Co. |
31,100 | 1,083,213 | ||||||
|
|
|||||||
Total Commercial Banks |
13,377,863 | |||||||
|
|
|||||||
Diversified Financial Services - 1.1% |
||||||||
JPMorgan Chase & Co. |
28,900 | 1,359,745 | ||||||
|
|
|||||||
Insurance - 9.6% |
||||||||
Admiral Group PLC |
22,636 | 439,066 | ||||||
AFLAC Inc. |
26,500 | 1,406,090 | ||||||
Allianz AG, Registered Shares |
7,524 | 1,076,265 | ||||||
Allied World Assurance Co. Holdings AG |
2,900 | 246,007 | ||||||
Allstate Corp. |
27,300 | 1,198,470 | ||||||
American Financial Group Inc. |
8,800 | 374,528 | ||||||
Assurant Inc. |
8,300 | 317,392 | ||||||
AXA SA |
48,324 | 894,980 | ||||||
Hannover Rueckversicherung AG |
12,298 | 992,877 | ||||||
HCC Insurance Holdings Inc. |
7,400 | 286,232 | ||||||
Muenchener Rueckversicherungs-Gesellschaft AG (MunichRe), Registered Shares |
8,415 | 1,546,495 | ||||||
Prudential Financial Inc. |
7,300 | 422,524 | ||||||
Prudential PLC |
43,528 | 661,359 | ||||||
Swiss Re AG |
13,078 | 973,611 | * | |||||
T&D Holdings Inc. |
42,600 | 525,949 |
See Notes to Schedule of Investments.
2
LEGG MASON BATTERYMARCH GLOBAL EQUITY FUND
Schedule of Investments (unaudited) (contd) | January 31, 2013 |
SECURITY |
SHARES | VALUE | ||||||
Insurance - 9.6% (continued) |
||||||||
Validus Holdings Ltd. |
8,500 | $ | 309,485 | |||||
|
|
|||||||
Total Insurance |
11,671,330 | |||||||
|
|
|||||||
TOTAL FINANCIALS |
26,408,938 | |||||||
|
|
|||||||
HEALTH CARE - 9.7% | ||||||||
Biotechnology - 1.6% |
||||||||
Amgen Inc. |
8,200 | 700,772 | ||||||
Celgene Corp. |
12,200 | 1,207,312 | * | |||||
|
|
|||||||
Total Biotechnology |
1,908,084 | |||||||
|
|
|||||||
Health Care Equipment & Supplies - 0.7% |
||||||||
Abbott Laboratories |
14,000 | 474,320 | ||||||
Baxter International Inc. |
5,800 | 393,472 | ||||||
|
|
|||||||
Total Health Care Equipment & Supplies |
867,792 | |||||||
|
|
|||||||
Health Care Providers & Services - 3.3% |
||||||||
Aetna Inc. |
15,900 | 766,857 | ||||||
LifePoint Hospitals Inc. |
13,600 | 594,456 | * | |||||
McKesson Corp. |
12,900 | 1,357,467 | ||||||
Suzuken Co., Ltd. |
7,600 | 232,874 | ||||||
UnitedHealth Group Inc. |
20,400 | 1,126,284 | ||||||
|
|
|||||||
Total Health Care Providers & Services |
4,077,938 | |||||||
|
|
|||||||
Pharmaceuticals - 4.1% |
||||||||
AbbVie Inc. |
14,000 | 513,660 | ||||||
Bayer AG, Registered Shares |
4,191 | 413,589 | ||||||
Novo Nordisk A/S, Class B Shares |
7,329 | 1,348,503 | ||||||
Orion OYJ, Class B Shares |
26,193 | 731,925 | ||||||
Roche Holding AG |
6,407 | 1,417,911 | ||||||
Shire PLC |
16,379 | 548,896 | ||||||
|
|
|||||||
Total Pharmaceuticals |
4,974,484 | |||||||
|
|
|||||||
TOTAL HEALTH CARE |
11,828,298 | |||||||
|
|
|||||||
INDUSTRIALS - 11.4% | ||||||||
Aerospace & Defense - 5.2% |
||||||||
Alliant Techsystems Inc. |
4,700 | 304,184 | ||||||
BAE Systems PLC |
137,143 | 738,660 | ||||||
Boeing Co. |
21,500 | 1,588,205 | ||||||
Cobham PLC |
27,884 | 93,622 | ||||||
Lockheed Martin Corp. |
14,200 | 1,233,554 | ||||||
Northrop Grumman Corp. |
16,000 | 1,040,640 | ||||||
Raytheon Co. |
25,700 | 1,353,876 | ||||||
|
|
|||||||
Total Aerospace & Defense |
6,352,741 | |||||||
|
|
|||||||
Air Freight & Logistics - 1.0% |
||||||||
Deutsche Post AG |
24,418 | 573,412 | ||||||
United Parcel Service Inc., Class B Shares |
7,800 | 618,462 | ||||||
|
|
|||||||
Total Air Freight & Logistics |
1,191,874 | |||||||
|
|
|||||||
Airlines - 0.5% |
||||||||
Alaska Air Group Inc. |
13,700 | 631,981 | * | |||||
|
|
|||||||
Construction & Engineering - 0.3% |
||||||||
Vinci SA |
5,651 | 287,927 | ||||||
|
|
|||||||
Industrial Conglomerates - 0.3% |
||||||||
NWS Holdings Ltd. |
215,000 | 384,235 | ||||||
|
|
|||||||
Machinery - 1.1% |
||||||||
Duerr AG |
7,060 | 691,539 | ||||||
Tata Motors Ltd., ADR |
22,050 | 609,242 | ||||||
|
|
|||||||
Total Machinery |
1,300,781 | |||||||
|
|
|||||||
Marine - 0.5% |
||||||||
AP Moller - Maersk A/S |
79 | 630,884 | ||||||
|
|
See Notes to Schedule of Investments.
3
LEGG MASON BATTERYMARCH GLOBAL EQUITY FUND
Schedule of Investments (unaudited) (contd) | January 31, 2013 |
SECURITY |
SHARES | VALUE | ||||||
Road & Rail - 1.7% |
||||||||
Central Japan Railway Co. |
7,300 | $ | 638,635 | |||||
East Japan Railway Co. |
21,500 | 1,453,005 | ||||||
|
|
|||||||
Total Road & Rail |
2,091,640 | |||||||
|
|
|||||||
Trading Companies & Distributors - 0.8% |
||||||||
Itochu Corp. |
55,300 | 625,296 | ||||||
Sumitomo Corp. |
29,600 | 382,604 | ||||||
|
|
|||||||
Total Trading Companies & Distributors |
1,007,900 | |||||||
|
|
|||||||
TOTAL INDUSTRIALS |
13,879,963 | |||||||
|
|
|||||||
INFORMATION TECHNOLOGY - 12.8% | ||||||||
Communications Equipment - 3.0% |
||||||||
Brocade Communications Systems Inc. |
150,500 | 860,860 | * | |||||
Cisco Systems Inc. |
112,300 | 2,310,011 | ||||||
QUALCOMM Inc. |
4,500 | 297,135 | ||||||
Riverbed Technolgoy Inc. |
12,800 | 248,320 | * | |||||
|
|
|||||||
Total Communications Equipment |
3,716,326 | |||||||
|
|
|||||||
Computers & Peripherals - 2.7% |
||||||||
Apple Inc. |
5,500 | 2,504,205 | ||||||
Western Digital Corp. |
16,300 | 766,100 | ||||||
|
|
|||||||
Total Computers & Peripherals |
3,270,305 | |||||||
|
|
|||||||
Electronic Equipment, Instruments & Components - 0.1% |
||||||||
Avnet Inc. |
3,100 | 109,616 | * | |||||
|
|
|||||||
Internet Software & Services - 1.0% |
||||||||
AOL Inc. |
26,400 | 809,160 | * | |||||
Google Inc., Class A Shares |
500 | 377,845 | * | |||||
|
|
|||||||
Total Internet Software & Services |
1,187,005 | |||||||
|
|
|||||||
IT Services - 2.1% |
||||||||
Accenture PLC, Class A Shares |
14,500 | 1,042,405 | ||||||
Computer Sciences Corp. |
11,000 | 459,800 | ||||||
Total System Services Inc. |
29,600 | 688,200 | ||||||
Western Union Co. |
22,800 | 324,444 | ||||||
|
|
|||||||
Total IT Services |
2,514,849 | |||||||
|
|
|||||||
Semiconductors & Semiconductor Equipment - 0.8% |
||||||||
Intel Corp. |
48,700 | 1,024,648 | ||||||
|
|
|||||||
Software - 3.1% |
||||||||
Microsoft Corp. |
38,400 | 1,054,848 | ||||||
Oracle Corp. |
64,300 | 2,283,293 | ||||||
Symantec Corp. |
19,000 | 413,630 | * | |||||
|
|
|||||||
Total Software |
3,751,771 | |||||||
|
|
|||||||
TOTAL INFORMATION TECHNOLOGY |
15,574,520 | |||||||
|
|
|||||||
MATERIALS - 6.7% | ||||||||
Chemicals - 4.6% |
||||||||
Air Water Inc. |
18,000 | 230,105 | ||||||
BASF SE |
17,213 | 1,744,941 | ||||||
CF Industries Holdings Inc. |
1,600 | 366,672 | ||||||
Daicel Corp. |
49,000 | 342,402 | ||||||
Monsanto Co. |
6,900 | 699,315 | ||||||
Nissan Chemical Industries Ltd. |
34,500 | 416,890 | ||||||
Syngenta AG |
3,275 | 1,413,931 | ||||||
Yara International ASA |
6,593 | 351,802 | ||||||
|
|
|||||||
Total Chemicals |
5,566,058 | |||||||
|
|
|||||||
Metals & Mining - 1.4% |
||||||||
BHP Billiton PLC |
20,543 | 702,777 | ||||||
Grupo Mexico SA de CV, Series B Shares |
213,246 | 793,303 |
See Notes to Schedule of Investments.
4
LEGG MASON BATTERYMARCH GLOBAL EQUITY FUND
Schedule of Investments (unaudited) (contd) | January 31, 2013 |
SECURITY |
SHARES | VALUE | ||||||
Metals & Mining - 1.4% (continued) |
||||||||
Nevsun Resources Ltd. |
67,400 | $ | 285,170 | |||||
|
|
|||||||
Total Metals & Mining |
1,781,250 | |||||||
|
|
|||||||
Paper & Forest Products - 0.7% |
||||||||
Mondi PLC |
70,919 | 840,207 | ||||||
|
|
|||||||
TOTAL MATERIALS |
8,187,515 | |||||||
|
|
|||||||
TELECOMMUNICATION SERVICES - 2.8% | ||||||||
Diversified Telecommunication Services - 0.6% |
||||||||
Nippon Telegraph & Telephone Corp. |
16,500 | 691,071 | ||||||
|
|
|||||||
Wireless Telecommunication Services - 2.2% |
||||||||
America Movil SAB de CV, Series L Shares, ADR |
31,100 | 782,476 | ||||||
KDDI Corp. |
18,000 | 1,338,509 | ||||||
Softbank Corp. |
15,600 | 556,138 | ||||||
|
|
|||||||
Total Wireless Telecommunication Services |
2,677,123 | |||||||
|
|
|||||||
TOTAL TELECOMMUNICATION SERVICES |
3,368,194 | |||||||
|
|
|||||||
UTILITIES - 1.9% | ||||||||
Electric Utilities - 0.7% |
||||||||
Enel SpA |
177,601 | 774,564 | ||||||
|
|
|||||||
Multi-Utilities - 1.2% |
||||||||
Centrica PLC |
52,729 | 292,866 | ||||||
GDF Suez |
58,094 | 1,191,878 | ||||||
|
|
|||||||
Total Multi-Utilities |
1,484,744 | |||||||
|
|
|||||||
TOTAL UTILITIES |
2,259,308 | |||||||
|
|
|||||||
TOTAL COMMON STOCKS
(Cost - $101,303,385) |
118,362,994 | |||||||
|
|
|||||||
PREFERRED STOCKS - 0.8% | ||||||||
FINANCIALS - 0.3% | ||||||||
Commercial Banks - 0.3% |
||||||||
Itau Unibanco Holding SA |
24,300 | 419,165 | ||||||
|
|
|||||||
MATERIALS - 0.5% | ||||||||
Metals & Mining - 0.5% |
||||||||
Metalurgica Gerdau SA |
51,600 | 577,580 | ||||||
|
|
|||||||
TOTAL PREFERRED STOCKS
(Cost - $899,170) |
996,745 | |||||||
|
|
|||||||
TOTAL INVESTMENTS BEFORE SHORT-TERM INVESTMENTS
(Cost - $102,202,555) |
119,359,739 | |||||||
|
|
MATURITY
DATE |
FACE
AMOUNT |
|||||||||||||||
SHORT-TERM INVESTMENTS - 0.0% | ||||||||||||||||
Repurchase Agreements - 0.0% |
||||||||||||||||
Interest in $675,000,000 joint tri-party repurchase agreement dated 1/31/13 with RBS Securities Inc.; Proceeds at maturity - $4,000; (Fully collateralized by various U.S. government obligations, 0.000% to 11.250% due 2/15/15 to 8/15/41; Market value - $4,080) (Cost - $4,000) |
0.130 | % | 2/1/13 | $ | 4,000 | 4,000 | ||||||||||
|
|
|||||||||||||||
TOTAL INVESTMENTS - 98.4 %
(Cost - $102,206,555#) |
119,363,739 | |||||||||||||||
Other Assets in Excess of Liabilities - 1.6% |
1,986,412 | |||||||||||||||
|
|
|||||||||||||||
TOTAL NET ASSETS - 100.0% | $ | 121,350,151 | ||||||||||||||
|
|
* | Non-income producing security. |
# | Aggregate cost for federal income tax purposes is substantially the same. |
Abbreviations used in this schedule:
ADR | American Depositary Receipts |
See Notes to Schedule of Investments.
5
LEGG MASON BATTERYMARCH GLOBAL EQUITY FUND
Schedule of Investments (unaudited) (contd) | January 31, 2013 |
GDR | Global Depositary Receipts | |
NVDR | Non Voting Depositary Receipt |
Summary of Investments by Country** |
||||
United States |
45.2 | % | ||
Japan |
10.6 | |||
United Kingdom |
8.0 | |||
Germany |
7.0 | |||
Canada |
4.1 | |||
Switzerland |
3.4 | |||
France |
3.3 | |||
Denmark |
1.7 | |||
Italy |
1.5 | |||
China |
1.4 | |||
Netherlands |
1.4 | |||
Norway |
1.3 | |||
Mexico |
1.3 | |||
India |
1.3 | |||
Jersey |
1.3 | |||
Ireland |
0.9 | |||
Brazil |
0.8 | |||
Spain |
0.8 | |||
Singapore |
0.7 | |||
Turkey |
0.6 | |||
Finland |
0.6 | |||
Sweden |
0.6 | |||
Bermuda |
0.6 | |||
Thailand |
0.6 | |||
South Korea |
0.4 | |||
Cayman Islands |
0.3 | |||
South Africa |
0.3 | |||
Short - Term Investments |
0.0 | | ||
|
||||
100.0 | % | |||
|
** | As a percentage of total investments. Please note that Fund holdings are as of January 31, 2013 and are subject to change. |
| Represents less than 0.1%. |
See Notes to Schedule of Investments.
6
Notes to Schedule of Investments (unaudited)
1. Organization and significant accounting policies
Legg Mason Batterymarch Global Equity Fund (the Fund) is a separate diversified investment series of Legg Mason Partners Equity Trust (the Trust). The Trust, a Maryland statutory trust, is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company.
The following are significant accounting policies consistently followed by the Fund and are in conformity with U.S. generally accepted accounting principles (GAAP).
(a) Investment valuation. Equity securities for which market quotations are available are valued at the last reported sales price or official closing price on the primary market or exchange on which they trade. The valuations for fixed income securities (which may include, but are not limited to, corporate, government, municipal, mortgage-backed, collateralized mortgage obligations and asset-backed securities) and certain derivative instruments are typically the prices supplied by independent third party pricing services, which may use market prices or broker/dealer quotations or a variety of valuation techniques and methodologies. The independent third party pricing services use inputs that are observable such as issuer details, interest rates, yield curves, prepayment speeds, credit risks/spreads, default rates and quoted prices for similar securities. Short-term fixed income securities that will mature in 60 days or less are valued at amortized cost, unless it is determined that using this method would not reflect an investments fair value. When the Fund holds securities or other assets that are denominated in a foreign currency, the Fund will normally use the currency exchange rates as of 4:00 p.m. (Eastern Time). If independent third party pricing services are unable to supply prices for a portfolio investment, or if the prices supplied are deemed by the manager to be unreliable, the market price may be determined by the manager using quotations from one or more broker/dealers or at the transaction price if the security has recently been purchased and no value has yet been obtained from a pricing service or pricing broker. When reliable prices are not readily available, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded, but before the Fund calculates its net asset value, the Fund values these securities as determined in accordance with procedures approved by the Funds 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 American 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 Funds 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 issuers financial statements; the purchase price of the security; the discount from market value of unrestricted securities of the same class at the time of purchase; analysts research and observations from financial institutions; information regarding any transactions or offers with respect to the security; the existence of merger proposals or tender offers affecting the security; the price and extent of public trading in similar securities of the issuer or comparable companies; and the existence of a shelf registration for restricted securities.
For each portfolio security that has been fair valued pursuant to the policies adopted by the Board of Trustees, the fair value price is compared against the last available and next available market quotations. The Valuation Committee reviews the results of such back testing monthly and fair valuation occurrences are reported to the Board of Trustees quarterly.
The Fund uses valuation techniques to measure fair value that are consistent with the market approach and/or income approach, depending on the type of security and the particular circumstance. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable securities. The income approach uses valuation techniques to discount estimated future cash flows to present value.
GAAP establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are summarized in the three broad levels listed below:
7
Notes to Schedule of Investments (unaudited) (continued)
|
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 Funds 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 Funds 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 |
$ | 118,362,994 | | | $ | 118,362,994 | ||||||||||
Preferred stocks |
996,745 | | | 996,745 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total long-term investments |
$ | 119,359,739 | | | $ | 119,359,739 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Short-term investments |
| $ | 4,000 | | 4,000 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total investments |
$ | 119,359,739 | $ | 4,000 | | $ | 119,363,739 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Other financial instruments: |
||||||||||||||||
Forward foreign currency contracts |
| $ | 64,940 | | 64,940 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 119,359,739 | $ | 68,940 | | $ | 119,428,679 | |||||||||
|
|
|
|
|
|
|
|
| See Schedule of Investments for additional detailed categorizations. |
(b) Repurchase agreements. The Fund may enter into repurchase agreements with institutions that its investment adviser has determined are creditworthy. Each repurchase agreement is recorded at cost. Under the terms of a typical repurchase agreement, the Fund acquires a debt security subject to an obligation of the seller to repurchase, and of the Fund to resell, the security at an agreed-upon price and time, thereby determining the yield during the Funds holding period. When entering into repurchase agreements, it is the Funds policy that its custodian or a third party custodian, acting on the Funds behalf, take possession of the underlying collateral securities, the market value of which, at all times, at least equals the principal amount of the repurchase transaction, including accrued interest. To the extent that any repurchase transaction maturity exceeds one business day, the value of the collateral is marked-to-market and measured against the value of the agreement in an effort to ensure the adequacy of the collateral. If the counterparty defaults, the Fund generally has the right to use the collateral to satisfy the terms of the repurchase transaction. However, if the market value of the collateral declines during the period in which the Fund seeks to assert its rights or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of the collateral by the Fund may be delayed or limited.
(c) Foreign investment risks. The Funds investments in foreign securities may involve risks not present in domestic investments. Since securities may be denominated in foreign currencies, may require settlement in foreign currencies or pay interest or dividends in foreign currencies, changes in the relationship of these foreign currencies to the U.S. dollar can significantly affect the value of the investments and earnings of the Fund. Foreign investments may also subject the Fund to foreign government exchange restrictions, expropriation, taxation or other political, social or economic developments, all of which affect the market and/or credit risk of the investments.
(d) Forward foreign currency contracts. The Fund enters into a forward foreign currency contract to hedge against foreign currency exchange rate risk on its non-U.S. dollar denominated securities or to facilitate settlement of a foreign currency denominated portfolio transaction. A forward foreign currency contract is an agreement between two parties to buy and sell a currency at a set price with delivery and settlement at a future date. The contract is marked-to-market daily and the change in value is recorded by the Fund as an unrealized gain or loss. When a forward foreign currency
8
Notes to Schedule of Investments (unaudited) (continued)
contract is closed, through either delivery or offset by entering into another forward foreign currency contract, the Fund recognizes a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value of the contract at the time it is closed.
When entering into a forward foreign currency contract, the Fund bears the risk of an unfavorable change in the foreign exchange rate underlying the forward foreign currency contract. Risks may also arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of their contracts.
(e) Foreign currency translation. Investment securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts based upon prevailing exchange rates on the date of valuation. Purchases and sales of investment securities and income and expense items denominated in foreign currencies are translated into U.S. dollar amounts based upon prevailing exchange rates on the respective dates of such transactions.
Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.
(f) Counterparty risk and credit-risk-related contingent features of derivative instruments. The Fund may invest in certain securities or engage in other transactions, where the Fund is exposed to counterparty credit risk in addition to broader market risks. The Fund may invest in securities of issuers, which may also be considered counterparties as trading partners in other transactions. This may increase the risk of loss in the event of default or bankruptcy by the counterparty or if the counterparty otherwise fails to meet its contractual obligations. The Funds investment manager attempts to mitigate counterparty risk by (i) periodically assessing the creditworthiness of its trading partners, (ii) monitoring and/or limiting the amount of its net exposure to each individual counterparty based on its assessment and (iii) requiring collateral from the counterparty for certain transactions. Market events and changes in overall economic conditions may impact the assessment of such counterparty risk by the investment manager. In addition, declines in the values of underlying collateral received may expose the Fund to increased risk of loss.
The Fund has entered into master agreements with certain of its derivative counterparties that provide for general obligations, representations, agreements, collateral, events of default or termination and credit related contingent features. The credit related contingent features include, but are not limited to, a percentage decrease in the Funds net assets or NAV over a specified period of time. If these credit related contingent features were triggered, the derivatives counterparty could terminate the positions and demand payment or require additional collateral.
As of January 31, 2013, the Fund did not have any open derivative transactions with credit related contingent features in a net liability position.
(g) Security transactions. Security transactions are accounted for on a trade date basis.
2. Investments
At January 31, 2013, the aggregate gross unrealized appreciation and depreciation of investments for federal income tax purposes were substantially as follows:
Gross unrealized appreciation |
$ | 18,237,557 | ||
Gross unrealized depreciation |
(1,080,373 | ) | ||
|
|
|||
Net unrealized appreciation |
$ | 17,157,184 | ||
|
|
At January 31, 2013, the Fund had the following open forward foreign currency contracts:
FOREIGN CURRENCY |
COUNTERPARTY |
LOCAL
CURRENCY |
MARKET
VALUE |
SETTLEMENT
DATE |
UNREALIZED
GAIN |
|||||||||||||
Contracts to Sell: | ||||||||||||||||||
Japanese Yen |
State Street Bank & Trust Co. | 120,626,000 | $ | 1,319,195 | 2/14/13 | $ | 64,940 |
3. Derivative instruments and hedging activities
GAAP requires enhanced disclosure about an entitys derivative and hedging activities.
9
Notes to Schedule of Investments (unaudited) (continued)
The following is a summary of the Funds derivative instruments categorized by risk exposure at January 31, 2013.
Forward Foreign
Currency Contracts |
||||
Primary Underlying Risk |
Unrealized
Appreciation |
|||
Foreign Exchange Risk |
$ | 64,940 |
During the period ended January 31, 2013, the volume of derivative activity for the Fund was as follows:
Average market value | ||||
Forward foreign currency contracts (to sell) |
$ | 1,233,739 |
10
ITEM 2. | CONTROLS AND PROCEDURES. |
(a) | The registrants principal executive officer and principal financial officer have concluded that the registrants 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 registrants internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the registrants last fiscal quarter that have materially affected, or are likely to materially affect the registrants internal control over financial reporting. |
ITEM 3. | EXHIBITS. |
Certifications pursuant to Rule 30a-2(a) under the Investment Company Act of 1940, as amended, are attached hereto.
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, thereunto duly authorized.
Legg Mason Partners Equity Trust | ||
By | /s/ R. J AY G ERKEN | |
R. Jay Gerken | ||
Chief Executive Officer | ||
Date: |
March 26, 2013 |
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/ R. J AY G ERKEN | |
R. Jay Gerken | ||
Chief Executive Officer | ||
Date: |
March 26, 2013 |
|
By | /s/ R ICHARD F. S ENNETT | |
Richard F. Sennett | ||
Principal Financial Officer | ||
Date: |
March 26, 2013 |
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