Download For investors who prefer a simple and accessible approach to

QS Asset Allocation Funds
A SIMPLE,
BALANCED
APPROACH
TO GROWTH
For investors who prefer a simple and
accessible approach to growth-oriented
investing, QS Asset Allocation Funds are
a smart option. Each of the four professionally
managed funds can provide a portfolio with
the appropriate mix of risk and potential
reward for specific investment profiles.
INVESTMENT PRODUCTS: NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE
WHY DIVERSIFY?
2008
2009
2010
2011
2012
2013
2014
2015
2016
Large-Cap
Growth
11.8%
Bonds
5.2%
Mid-Cap
Blend
40.5%
Small-Cap
Blend
26.9%
Bonds
7.8%
Large-Cap
Value
17.5%
Small-Cap
Blend
38.8%
Large-Cap
Value
13.5%
Large-Cap
Growth
5.7%
Small-Cap
Blend
21.3%
Developed
Foreign
11.2%
Cash
1.8%
Large-Cap
Growth
37.2%
Mid-Cap
Blend
25.5%
Large-Cap
Growth
2.6%
Developed
Foreign
17.3%
Mid-Cap
Blend
34.8%
Mid-Cap
Blend
13.2%
Bonds
0.6%
Large-Cap
Value
17.3%
Bonds
7.0%
Small-Cap
Blend
-33.8%
Developed
Foreign
31.8%
Large-Cap
Growth
16.7%
Large-Cap
Value
0.4%
Mid-Cap
Blend
17.3%
Large-Cap
Growth
33.5%
Large-Cap
Growth
13.1%
Cash
0.0%
Mid-Cap
Blend
13.8%
Mid-Cap
Blend
5.6%
Large-Cap
Value
-36.9%
Small-Cap
Blend
27.2%
Large-Cap
Value
15.5%
Cash
0.1%
Small-Cap
Blend
16.4%
Large-Cap
Value
32.5%
Bonds
6.0%
Developed
Foreign
-0.8%
Large-Cap
Growth
7.1%
Cash
4.7%
Large-Cap
Growth
-38.4%
Large-Cap
Value
19.7%
Developed
Foreign
7.8%
Mid-Cap
Blend
-1.5
Large-Cap
Growth
15.3%
Developed
Foreign
22.8%
Small-Cap
Blend
4.9%
Mid-Cap
Blend
-2.4%
Bonds
2.7%
Large-Cap
Value
-0.2%
Mid-Cap
Blend
-41.5%
Bonds
5.9%
Bonds
6.5%
Small-Cap
Blend
-4.2%
Bonds
4.2%
Cash
0.1%
Cash
0.0%
Large-Cap
Value
-3.8%
Developed
Foreign
1.0%
Small-Cap
Blend
-1.6%
Developed
Foreign
-43.4%
Cash
0.2%
Cash
0.1%
Developed
Foreign
-12.1%
Cash
0.1%
Bonds
-2.0%
Developed
Foreign
-4.9%
Small-Cap
Blend
-4.4%
Cash
0.3%
Bonds are represented by the Bloomberg Barclays
U.S. Aggregate Bond Index. A bond is a debt instrument
through which an investor loans money to an entity
(corporate or governmental) that borrows the money for
a defined period of time and typically at a fixed interest
rate. Bonds are used by companies, municipalities,
states, and U.S. and foreign governments to finance
a variety of projects and activities.
Developed Foreign Stocks are represented
by the MSCI EAFE Index. They are ownership
securities of companies domiciled in larger non-U.S.
countries with long-established economies.
Large-Cap Growth is represented by the Russell
1000 Growth Index, which measures the performance of
those Russell 1000 companies with higher price-to-book
ratios and higher forecasted earnings growth rates.
Large-Cap Value is represented by the Russell
1000 Value Index, which measures the performance of
those Russell 1000 companies with lower price-to-book
ratios and lower forecasted earnings growth rates.
Mid-Cap Blend is represented by the
Russell Midcap Index, which invests in stocks
of various sizes and mixed characteristics,
giving it a middle-of-the-road profile.
Investors cannot invest directly in an index. Unmanaged index returns do not reflect any fees, expenses or sales charges.
Source: Legg Mason. Returns are as of December 31 of specified years.
The table above is presented for informational purposes only and does not represent performance of any specific investment.
Past performance is no guarantee of future results. Diversification does not guarantee a profit or protect against a loss.
2
Lowest % return
2007
Highest % return
Because over time, asset classes typically perform differently. The
worst-performing investment one year can be the best the next, and
vice versa. No one can predict which asset class will come out on top.
Small-Cap Blend is represented by the
Russell 2000 Index. A small-cap blend strategy
generally holds both growth and value stocks, to
achieve gains from both styles over the long term.
Cash is represented by the Citigroup 3-Month
U.S. Treasury Bill Index, which consists of negotiable
debt obligations issued by the U.S. government and
backed by its full faith and credit, and that have a
maturity of one year or less.
ELIMINATE THE
GUESSWORK
QS Asset Allocation Funds take the guesswork out of choosing
and combining various asset types to achieve your goals. That
makes them a great choice for investors who seek a simple and
accessible approach to investing.
Offering built-in diversification, the Funds can instantly provide an appropriate
balance of risk and potential reward. They invest in a globally diversified mix
of underlying assets (fixed income and equities), then dynamically manage this
balance over time as market conditions change.
Underlying investments may include low-cost exchange-traded funds (ETFs)
that track certain markets (asset classes), as well as actively managed funds
with a diverse set of strategies and investments, including alternatives (such
as commodities, real estate assets and infrastructure assets).
Matching risk profiles
Each of the four QS Asset Allocation Funds is managed to deliver long-term
capital growth against specific risk ranges, which are controlled by strategic
and tactical allocations across multiple markets and asset classes. This
outcome-oriented focus on long-term risk characteristics is intended
to help easily select funds that appropriately match risk profiles.
Don’t try to time the market
Some people try to get in
and out of investments by
guessing which way the
market is headed. A much
more prudent way to diversify
your portfolio is by allocating
assets strategically based on
your investment goals, then
making incremental course
corrections over time.
The ABCs of QS Asset Allocation Funds
Aggressive to conservative
Select from conservative to
aggressive allocations — from a high
ratio of fixed income/equities for
income-focused investing, to a high
ratio of equities/fixed income for
aggressive growth-focused investing.
Bonds and stocks in one fund
Each of the four Funds contains
underlying mutual funds in two primary
asset classes: equity and fixed income
securities. A single Fund provides
immediate access to investment grade
and high yield bonds and domestic
and international equities of all types.
Control and monitoring
It’s easy to monitor your investments.
Experienced investment managers
actively track and rebalance each
Fund’s holdings. The portfolio’s original
allocation mix is continually monitored
and rebalanced quarterly.
The portfolio managers may allocate Fund assets to any underlying funds in varying amounts in a manner consistent with each Fund’s investment objective. Each Fund’s allocation to each
class will be measured at the time of purchase and may vary thereafter as a result of market movements. The portfolio managers will seek to maintain a level of risk in the Fund similar to that
of each Fund’s composite benchmark. Alternative strategies involve highly speculative investments that employ aggressive investment strategies and carry substantial risk.
There is no assurance that a recommended allocation will prove the ideal allocation in all circumstances. Asset allocation does not assure a profit or protect against a loss.
3
FOUR INVESTMENT GOALS,
FOUR FUND ALLOCATIONS
Real solutions for different investor objectives
Each Fund is managed to deliver long-term capital growth against specific risk ranges.
Conservative
This mix is generally favored by investors who have a shorter time horizon and/or a lower tolerance for short-term market
fluctuations. Its asset allocation is weighted more heavily toward lower-risk, current income-generating asset classes,
such as bonds.
1
2
Conservative
QS Defensive Growth Fund 1
Share class (Symbol): A (SBCPX),
C (LWLAX), I (LMGIX)
Balanced
QS Conservative Growth Fund 2
Share class (Symbol): A (SBBAX),
C (SCBCX), I (LMEIX)
Best for investors who
Best for investors who
Require current income, with long-term capital
growth a secondary consideration, and/or
Are looking for capital growth and current income, and/or
Have a medium-term investment time horizon, and/or
Have a short-to-medium-term investment time
horizon, and/or
Can tolerate some risk
Can tolerate minimal risk
Investment goal
Achieve income as a
primary objective, and longterm growth of capital as
a secondary objective
Investment goal
Achieve an approximate
50/50 ratio of capital
growth and current
income
Asset allocation
15%–45% in underlying
equity funds, 55%–85%
in underlying fixed
income funds
Asset allocation (%) as of June 30, 2017
U.S. Large Cap Equity Funds
U.S. All Cap Equity Funds
U.S. Small/Mid Cap
Equity Funds
Inflation-Sensitive Funds 61.49
International/Global
Equity Funds
Fixed Income Funds
Cash
1
2
Asset allocation (%) as of June 30, 2017
0.28
12.17
U.S. Large Cap Equity Funds
U.S. All Cap Equity Funds
U.S. Small/Mid Cap
Equity Funds
Inflation-Sensitive Funds 39.62
International/Global
Equity Funds
Fixed Income Funds
Cash
2.20
4.93
6.44
12.49
Source: Legg Mason.
Prior to June 1, 2015, this Fund followed different investment policies and strategies
under the name QS Legg Mason Lifestyle Allocation 30%.
Prior to June 1, 2015, this Fund followed different investment strategies under the
name QS Legg Mason Lifestyle Allocation 50%. 4
Asset allocation
35%–65% in underlying
equity funds, 35%–65%
in underlying fixed
income funds
0.36
23.16
3.55
8.78
18.27
6.27
Sector allocations are subject to change at any time. Percentages are based on total
portfolio. This information is provided for information purposes only and should not be
construed as a recommendation to purchase or sell any security.
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.
Access to Legg Mason’s entire affiliate fund family provides access to funds
with complementary risk/return patterns and a diverse source of alpha. Pairing
different active managers gives the QS Asset Allocation Funds greater potential
for growth while keeping the Funds’ overall risk characteristics in line with
existing benchmarks.
Aggressive
This mix is generally favored by investors who have a longer time horizon and/or a higher tolerance for short-term market
fluctuations. Its asset allocation is weighted more heavily toward higher-risk, long-term growth-oriented asset classes,
such as stocks.
3
4
Growth
QS Moderate Growth Fund 3
Share class (Symbol): A (SCGRX),
C (SCGCX), I (LLAIX)
Best for investors who
Best for investors who
Are focused primarily on long-term capital growth, and/or
Are focused solely on growth of capital, and/or
Have a medium-to-long-term investment time
horizon, and/or
Have a long-term investment time horizon, and/or
Can tolerate market fluctuations over time
Can tolerate potentially significant market fluctuations
over time
Investment goal
Achieve long-term
capital growth
Investment goal
Achieve capital
appreciation
Asset allocation
55%–85% in underlying
equity funds, 15%–45%
in underlying fixed
income funds
Asset allocation (%) as of June 30, 2017
0.25
Asset allocation
70%–100% in underlying
equity funds, 0%–30%
in underlying fixed
income funds
Asset allocation (%) as of June 30, 2017
2.58
U.S. Large Cap Equity Funds
U.S. All Cap Equity Funds
19.23
U.S. Small/Mid Cap
Equity Funds
34.58
Inflation-Sensitive Funds
International/Global
23.27
Equity Funds
5.48
Fixed Income Funds
6.27 10.92
Cash
Aggressive growth
QS Growth Fund 4
Share class (Symbol): A (SCHAX),
C (SCHCX), I (LANIX)
These risks are magnified in emerging markets. Small- and mid-cap stocks involve
greater risks and volatility than large-cap stocks. Fixed income securities are subject
to interest rate, credit, inflation and reinvestment risk. As interest rates rise, the value
of fixed income securities falls. In addition to the Fund’s operating expenses, you will
indirectly bear the operating expenses of the underlying funds.
Please refer to the next page for additional risk information.
Totals may not add to 100% due to rounding.
U.S. Large Cap Equity Funds
U.S. All Cap Equity Funds
U.S. Small/Mid Cap
26.98
Equity Funds
Inflation-Sensitive Funds
International/Global
6.26
Equity Funds
Fixed Income Funds
16.83
Cash
3
4
0.27
40.41
6.66
Prior to June 1, 2015, the Fund followed different investment policies and strategies under
the name QS Legg Mason Lifestyle Allocation 70%.
Prior to June 1, 2015, the Fund followed different investment policies and strategies
under the name QS Legg Mason Lifestyle Allocation 85%.
5
UNDERLYING FUNDS,
EXPERIENCED MANAGERS
Each of the QS Asset Allocation Funds draws from the expertise
of seasoned investment managers.
Global value investing
Volatility-managed
Small-cap equity
Legg Mason BW Diversified Large
Cap Value Fund
QS Global Dividend Fund
Royce Small-Cap Value Fund
Global quantitative equity
QS International Equity Fund
QS U.S. Large Cap Equity Fund
Inflation-sensitive
Quality-focused equity
QS Strategic Real Return Fund
ClearBridge Aggressive Growth Fund
ClearBridge Appreciation Fund
ClearBridge Mid Cap Fund
ClearBridge Small Cap Growth Fund
ClearBridge International Value Fund
“The key to long-term success
in multi-strategy equity
investing is selecting highquality companies through
rigorous research and analysis.”
Scott Glasser
Co-Chief Investment Officer
ClearBridge Investments
Fixed income
Western Asset Core Bond Fund
Western Asset Core Plus Bond Fund
Western Asset High Yield Fund
Western Asset Macro Opportunities Fund
“Our successful approach
emphasizes the pursuit of both
growth and income as we
seek to invest in companies
with sustainable and growing
dividend streams.”
Stephen Lanzendorf, CFA
Portfolio Manager
QS Investors
“Our success in fixed income
investing is driven by three
essential elements: a teambased approach to management,
a deep bench of investment
professionals, and a long-term
fundamental value approach.”
Ken Leech
Chief Investment Officer
Western Asset
Each underlying fund may engage in active and frequent trading, resulting in higher portfolio turnover and transaction costs. 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. Certain of the underlying funds may engage in short selling, which is
a speculative strategy that involves special risks. 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. The model
used to manage a fund’s assets provides no assurance that the recommended allocation will either maximize returns or minimize risks. There is no assurance that a recommended allocation will prove
the ideal allocation in all circumstances. Derivatives, such as options and futures, can be illiquid, may disproportionately increase losses, and have a potentially large impact on fund performance.
6
A MULTI-ASSET SPECIALIST
INVESTMENT MANAGER
The investment manager of the QS Asset Allocation Funds
is QS Investors, a global equity and multi-asset class solutions
manager with nearly $22 billion in assets under management.
†
QS Investors counts thoughtful asset allocation and innovative risk management as two of its
core competencies. With significant experience in managing multi-asset class portfolios, the firm
employs a consultative approach to global asset management — an approach that includes:
Market awareness
Dynamically weights opportunities
in response to changing conditions
in economy and world markets
Risk management
Combines quantitative research with
analysis of behavioral investing patterns
to construct diversified portfolios designed
to mitigate risk and smooth returns
Management team QS Investors’ portfolio management team, with long-term investment experience, is responsible
for day-to-day management of funds.
Industry since
1996
Adam Petryk, CFA
Head of Multi-Asset and Solutions
Holds a BS in Computer
Engineering from the University
of Waterloo, Ontario, Canada and
an MS in Electrical Engineering
from the University of Waterloo.
Industry since
1987
Thomas Picciochi
Head of Multi-Asset
Portfolio Management
Implementation
Holds a BA from University
of Miami and an MBA from
University of Miami
Industry since
Ellen Tessler
Portfolio Manager,
Member of Portfolio
Management
Implementation Group
Holds a BBA and MBA
from Pace University
1999
As of June 30, 2017.
†
7
Brandywine Global
Clarion Partners
ClearBridge Investments
EnTrustPermal
Martin Currie
QS Investors
RARE Infrastructure
Legg Mason is a leading global investment company committed to helping clients reach
their financial goals through long-term, actively managed investment strategies.
•
$741 billion*
in assets invested
worldwide in a broad
mix of equities, fixedincome, alternatives
and cash strategies
•
A diverse family of
specialized investment
managers, each with
its own independent
approach to research
and analysis
•
Over a century of
experience in identifying
opportunities and
delivering astute
investment solutions
to clients
Royce & Associates
Western Asset
LeggMason.com
* As of June 30, 2017.
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.
© 2017 Legg Mason Investor Services, LLC, member FINRA, SIPC. Legg Mason Investor Services, LLC and all investment managers
mentioned are subsidiaries of Legg Mason, Inc. 744997 QSIN117252 7/17
BEFORE INVESTING, CAREFULLY CONSIDER A FUND’S INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES.
YOU CAN FIND THIS AND OTHER INFORMATION IN EACH PROSPECTUS, AND SUMMARY PROSPECTUS, IF AVAILABLE,
AT WWW.LEGGMASON.COM. PLEASE READ THE PROSPECTUS CAREFULLY.