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: 811-02853
Name of Registrant: Legg Mason Cash Reserve Trust
Address of Principal Executive Offices: 100 Light Street, Baltimore, MD 21202
Name and address of agent for service:
Richard M. Wachterman, Esq.
Legg Mason Wood Walker, Incorporated
100 Light Street
Baltimore, MD 21202
Registrant’s telephone number, including area code: (410) 539-0000
Date of fiscal year end: August 31, 2005
Date of reporting period: February 28, 2005
Item 1 — Report to Shareholders
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To Our Shareholders,
The Legg Mason Cash Reserve Trust now has $2.1 billion invested in a diversified portfolio of high quality fixed income securities with relatively short maturities.
As this letter is written, the Trust’s annualized yield for the past 7 days is 1.91%.A The average weighted maturity of our portfolio is 33 days.
A complete listing of the Trust’s portfolio holdings at February 28, 2005, appears in this report. Categorized by type, the holdings consist of:
Asset-backed securities | 1.2% | |||
Bonds and medium-term notes | 8.4% | |||
Certificates of deposit | 2.9% | |||
Commercial paper | 8.7% | |||
Government agency obligations | 67.3% | |||
Repurchase agreements | 11.5% | |||
100.0% | ||||
Note that 67.3% of the portfolio was invested in government agency securities and an additional 11.5% in repurchase agreements fully secured by such securities. Although most government agency securities are not backed by the full faith and credit of the U.S. government, all such securities held in the portfolio at February 28, 2005, carry a high rating from one or more of the three principal services which rate fixed income securities (Fitch, Moody’s or Standard & Poor’s).
Sincerely, |
![]() | ![]() | |
John F. Curley, Jr. Chairman | Mark R. Fetting President |
March 29, 2005
A | The yields shown here are for past periods and are not intended to indicate future performance. An investment in the Trust is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Trust seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Trust. |
Expense Example
Legg Mason Cash Reserve Trust
As a shareholder of the Trust, you incur ongoing costs, including management fees; distribution and service (12b-1) fees; and other Trust expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Trust and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested on September 1, 2004, and held through February 28, 2005.
Actual Expenses
The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Trust’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Trust’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 this information to compare the ongoing costs of investing in the Trust and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Beginning Account | Ending Account | Expenses PaidA | ||||||||||
Value | Value | During the Period | ||||||||||
9/1/04 | 2/28/05 | 9/1/04 to 2/28/05 | ||||||||||
Actual | $ | 1,000 | $ | 1,006 | $ | 3.36 | ||||||
Hypothetical (5% return before expenses) | $ | 1,000 | $ | 1,021 | $ | 3.38 |
A | These calculations are based on expenses incurred in the most recent fiscal half-year. The Trust’s annualized six-month expense ratio for that period is 0.68%. The dollar amounts shown as “Expenses Paid” are equal to the annualized expense ratio multiplied by the average value over the period, multiplied by the number of days in the most recent fiscal half-year (181), and divided by 365. |
Statement of Net Assets
Legg Mason Cash Reserve Trust
Rate | Maturity Date | Par | Value | ||||||||||||||
Corporate and Other Bonds — 5.9% | |||||||||||||||||
American Honda Finance Corporation | 2.56% | 4/8/05 | $ | 20,000 | $ | 20,000 | A,B | ||||||||||
FleetBoston Financial Corporation | 7.25% | 9/15/05 | 9,820 | 10,079 | |||||||||||||
General Electric Company | 2.743% | 10/24/05 | 11,625 | 11,632 | A | ||||||||||||
Morgan Stanley | 2.71% | 8/15/05 | 22,000 | 22,016 | A | ||||||||||||
National Rural Utilities Cooperative Finance Corporation | 2.81% | 3/10/05 | 10,000 | 10,001 | A | ||||||||||||
Pfizer Incorporated | 2.69% | 11/4/05 | 13,600 | 13,600 | A | ||||||||||||
Province of Ontario | 6.00% | 2/21/06 | 16,500 | 16,943 | C | ||||||||||||
Wal-Mart Stores, Inc. | 2.36% | 3/16/06 | 20,000 | 19,984 | A | ||||||||||||
Total Corporate and Other Bonds (Identified Cost — $124,255) | 124,255 | ||||||||||||||||
Asset-Backed SecuritiesD — 1.2% | |||||||||||||||||
Honda Auto Receivables Owner Trust 2004-3 | 2.0925% | 11/18/05 | 12,976 | 12,975 | |||||||||||||
Nissan Auto Receivables OwnerTrust 2004-C | 1.93% | 9/15/05 | 7,423 | 7,423 | |||||||||||||
WFS Financial Owner Trust 2004-4 | 2.0878% | 11/17/05 | 5,970 | 5,970 | |||||||||||||
Total Asset-Backed Securities (Identified Cost — $26,368) | 26,368 | ||||||||||||||||
U.S. Government and Agency Obligations — 68.4% | |||||||||||||||||
Fannie Mae | 1.36% to 2.601% | 3/2/05 to 5/27/05 | 508,369 | 507,984 | |||||||||||||
Fannie Mae | 2.46% to 2.55% | 3/23/05 to 10/21/05 | 61,150 | 61,143 | A | ||||||||||||
Federal Home Loan Bank | 1.30% to 2.579% | 3/1/05 to 11/2/05 | 544,750 | 544,219 | |||||||||||||
Federal Home Loan Bank | 2.32% to 2.59% | 3/21/05 to 9/8/05 | 105,400 | 105,391 | A | ||||||||||||
Freddie Mac | 2.30% to 2.604% | 3/8/05 to 9/26/05 | 186,405 | 186,139 | |||||||||||||
Inter-American Development Bank | 2.337% | 3/15/05 | 50,000 | 49,955 | |||||||||||||
Total U.S. Government and Agency Obligations (Identified Cost — $1,454,831) | 1,454,831 | ||||||||||||||||
Rate | Maturity Date | Par | Value | ||||||||||||||
Certificates of Deposit — 3.0% | |||||||||||||||||
Harris Trust & Savings Bank | 2.48% | 3/21/05 | $ | 20,000 | $ | 20,000 | |||||||||||
HSBC Bank | 2.51% | 3/17/05 | 22,000 | 22,000 | |||||||||||||
Wells Fargo Bank NA | 2.52% | 3/22/05 | 21,500 | 21,500 | |||||||||||||
Total Certificates of Deposit (Identified Cost — $63,500) | 63,500 | ||||||||||||||||
Commercial Paper — 8.8% | |||||||||||||||||
Bank One NA | 2.48% | 3/14/05 | 10,000 | 10,000 | A | ||||||||||||
Banque et Caisse d’ Epargne de L’Etat | 2.83% | 6/2/05 | 20,000 | 19,854 | C,E | ||||||||||||
BellSouth Corporation | 2.49% | 3/3/05 | 15,500 | 15,498 | E | ||||||||||||
Bristol-Myers Squibb Company | 2.511% | 3/2/05 | 23,000 | 22,998 | E | ||||||||||||
Caterpillar Inc. | 2.54% | 3/14/05 | 20,000 | 19,982 | E | ||||||||||||
Citigroup Global Markets Holdings Inc. | 2.522% | 3/3/05 | 10,000 | 9,999 | E | ||||||||||||
Danske Corporation | 2.51% | 3/7/05 | 21,000 | 20,991 | E | ||||||||||||
Goldman Sachs Group Incorporated | 2.70% | 7/29/05 | 15,500 | 15,500 | |||||||||||||
KfW International Finance Inc. | 2.474% | 3/11/05 | 24,000 | 23,984 | E | ||||||||||||
National Australia Funding Delaware Inc | 2.526% | 3/23/05 | 29,000 | 28,955 | E | ||||||||||||
Total Commercial Paper (Identified Cost — $187,761) | 187,761 | ||||||||||||||||
Medium-Term Notes — 2.7% | |||||||||||||||||
CIT Group Inc. | 2.98% | 11/4/05 | 22,400 | 22,435 | A | ||||||||||||
Citigroup Global Markets Holdings Inc. | 2.52% | 12/12/05 | 5,000 | 5,003 | A | ||||||||||||
Svenska Handelsbanken Ab | 2.479% | 9/26/05 | 15,300 | 15,295 | C,A | ||||||||||||
Wells Fargo & Company | 2.491% | 6/17/05 | 15,000 | 15,001 | A | ||||||||||||
Total Medium-Term Notes (Identified Cost — $57,734) | 57,734 | ||||||||||||||||
Repurchase Agreements — 11.7% | |||||||||||||||||
Goldman, Sachs & Company 2.62%, dated 2/28/05, to be repurchased at $122,141 on 3/1/05 (Collateral: $125,485 Federal Home Loan Bank bonds, 2.22% to 2.75%, due 5/15/06 to 6/9/06, value $125,388) | 122,132 | 122,132 |
Par | Value | |||||||||||||||
Repurchase Agreements — Continued | ||||||||||||||||
Merrill Lynch Government Securities, Inc. 2.60%, dated 2/28/05, to be repurchased at $126,098 on 3/1/05 (Collateral: $50,000 Federal Home Loan Bank bonds, 4.25%, due 9/9/09, value $51,498; $76,680 Freddie Mac notes, 3.00% to 5.50%, due 7/15/06 to 9/29/06, value $78,906) | $ | 126,089 | $ | 126,089 | ||||||||||||
Total Repurchase Agreements (Identified Cost — $248,221) | 248,221 | |||||||||||||||
Total Investments, at Amortized Cost and Value — 101.7% | 2,162,670 | |||||||||||||||
Other Assets Less Liabilities — (1.7)% | (35,884 | ) | ||||||||||||||
Net Assets Applicable to 2,126,834 Shares Outstanding — 100.0% | $ | 2,126,786 | ||||||||||||||
Net Asset Value Per Share | $ 1.00 | |||||||||||||||
A | Indexed security — The rates of interest earned on these securities are tied to the London Interbank Offered Rate (“LIBOR”). The coupon rates are the rates as of February 28, 2005. |
B | Rule 144a Security — A security purchased pursuant to Rule 144a under the Securities Act of 1933 which may not be resold subject to that rule except to qualified institutional buyers. This security represents 0.94% of net assets. |
C | Yankee Bond or Certificate of Deposit — A dollar-denominated bond or certificate of deposit issued in the U.S. by foreign entities. |
D | Asset-backed securities – A security which is secured by a pool of assets such as property, mortgages or receivables. |
E | Discount Commercial Paper — Commercial paper which does not make periodic interest payments but is sold at such a discount as to produce a current yield to maturity. The rate shown represents the yield to maturity. |
See notes to financial statements.
Statement of Operations
Legg Mason Cash Reserve Trust
Investment Income: | ||||||||||
Interest | $ | 20,559 | ||||||||
Expenses: | ||||||||||
Management fees | $ | 4,787 | ||||||||
Distribution fees | 1,042 | |||||||||
Audit and legal fees | 73 | |||||||||
Custodian fees | 132 | |||||||||
Registration fees | 48 | |||||||||
Reports to shareholders | 53 | |||||||||
Transfer agent and shareholder servicing expense | 849 | |||||||||
Trustees’ fees and expenses | 31 | |||||||||
Other expenses | 34 | |||||||||
7,049 | ||||||||||
Less: Fees waived | (18 | ) | ||||||||
Compensating balance credits | (4 | ) | ||||||||
Total expenses, net of waivers and compensating balance credits | 7,027 | |||||||||
Net Investment Income | 13,532 | |||||||||
Net Realized Gain/(Loss) on Investments | (47 | ) | ||||||||
Change in Net Assets Resulting From Operations | $ | 13,485 | ||||||||
See notes to financial statements.
Statement of Changes in Net Assets
Legg Mason Cash Reserve Trust
For the | For the | ||||||||
Six Months Ended | Year Ended | ||||||||
February 28, 2005 | August 31, 2004 | ||||||||
(Unaudited) | |||||||||
Change in Net Assets: | |||||||||
Net investment income | $ | 13,532 | $ | 10,463 | |||||
Net realized gain/(loss) on investments | (47 | ) | (1 | ) | |||||
Change in net assets resulting from operations | 13,485 | 10,462 | |||||||
Distributions to shareholders from net investment income | (13,532 | ) | (10,694 | ) | |||||
Change in net assets from Trust share transactions | 38,541 | (242,687 | ) | ||||||
Change in net assets | 38,494 | (242,919 | ) | ||||||
Net Assets: | |||||||||
Beginning of period | 2,088,292 | 2,331,211 | |||||||
End of period | $ | 2,126,786 | $ | 2,088,292 | |||||
See notes to financial statements.
Financial Highlights
Legg Mason Cash Reserve Trust
Contained below is per share operating performance data for a share of common stock outstanding, total investment return, ratios to average net assets and other supplemental data. Total returns assume that dividends and distributions were reinvested at the time they were paid. This information has been derived from information provided in the financial statements.
For the Six | Years Ended August 31, | ||||||||||||||||||||||||
Months Ended | |||||||||||||||||||||||||
February 28, 2005 | 2004 | 2003 | 2002 | 2001 | 2000 | ||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||
Net asset value, beginning of period | $1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | ||||||||||||||
Net investment income | .01 | .005 | .01 | .02 | .05 | .05 | |||||||||||||||||||
Distributions from net investment income | (.01) | (.005) | (.01) | (.02) | (.05) | (.05) | |||||||||||||||||||
Net asset value, end of period | $1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | ||||||||||||||
Ratios/supplemental data: | |||||||||||||||||||||||||
Total return | .64% | A | .49% | .69% | 1.56% | 4.89% | 5.36% | ||||||||||||||||||
Expenses to average net assets | .68% | B | .67% | .70% | .69% | .67% | .68% | ||||||||||||||||||
Net investment income to average net assets | 1.30% | B | .47% | .68% | 1.55% | 4.74% | 5.25% | ||||||||||||||||||
Net assets, end of period (in millions) | $2,127 | $ | 2,088 | $ | 2,331 | $ | 2,439 | $ | 2,291 | $ | 1,950 | ||||||||||||||
A | Not annualized. |
B | Annualized. |
See notes to financial statements.
Notes to Financial Statements
Legg Mason Cash Reserve Trust
1. Organization and Significant Accounting Policies:
Security Valuation
Security Transactions
Investment Income and Dividends to Shareholders
Federal Income Taxes
The Trust intends to retain realized capital gains that may be offset against available capital loss carryforwards for federal income tax purposes. During the six months ended February 28, 2005, the Trust had realized losses of $47. As of August 31, 2004, the Trust had a capital loss carryforward of $18 which expires in 2011.
Other
In the normal course of business, the Trust enters into contracts that provide general indemnifications. The Trust’s maximum exposure under these arrangements is dependent on claims that may be made against the Trust in the future and, therefore, cannot be estimated; however, based on experience, the risk of material loss from such claims is considered remote.
2. Repurchase Agreements:
3. Transactions With Affiliates:
4. Trust Share Transactions:
Six Months Ended | Year Ended | |||||||
2/28/05 | 8/31/04 | |||||||
Sold | $ | 3,177,471 | $ | 6,331,379 | ||||
Reinvestment of Distributions | 12,554 | 10,076 | ||||||
Repurchased | (3,151,484 | ) | (6,584,142 | ) | ||||
Net Change | $ | 38,541 | $ | (242,687 | ) | |||
Investment Manager
Legg Mason Fund Adviser, Inc. Baltimore, MD |
Investment Adviser
Western Asset Management Company Pasadena, CA |
Board of Trustees
John F. Curley, Jr., Chairman | |
Mark R. Fetting, President | |
Dr. Ruby P. Hearn | |
Arnold L. Lehman | |
Robin J.W. Masters | |
Dr. Jill E. McGovern | |
Arthur S. Mehlman | |
G. Peter O’Brien | |
S. Ford Rowan | |
Robert M. Tarola |
Officers
Marie K. Karpinski, Vice President and Treasurer | |
Gregory T. Merz, Vice President and Chief Legal Officer | |
Amy M. Olmert, Vice President and Chief Compliance Officer | |
Richard M. Wachterman, Secretary | |
Erin K. Morris, Assistant Treasurer | |
Jennifer P. Streaks, Assistant Secretary |
Transfer and Shareholder Servicing Agent
Boston Financial Data Services Braintree, MA |
Custodian
State Street Bank & Trust Company Boston, MA |
Counsel
Kirkpatrick & Lockhart Nicholson Graham LLP Washington, DC |
Independent Registered Public Accounting Firm
Ernst & Young LLP Philadelphia, PA |
Equity Funds American Leading Companies Trust Classic Valuation Fund Growth Trust Special Investment Trust U.S. Small-Capitalization Value Trust Value Trust Specialty Funds Balanced Trust Financial Services Fund Opportunity Trust Global Funds Emerging Markets Trust Global Income Trust International Equity Trust Taxable Bond Funds Core Bond Fund High Yield Portfolio Investment Grade Income Portfolio Limited Duration Bond Portfolio Tax-Free Bond Funds Maryland Tax-Free Income Trust Pennsylvania Tax-Free Income Trust Tax-Free Intermediate-Term Income Trust Money Market Funds Cash Reserve Trust Tax Exempt Trust U.S. Government Money Market Portfolio | Legg Mason, Inc., based in Baltimore, Maryland, has built its reputation, at least in part, on the success of the Legg Mason Funds, introduced in 1979. The primary purpose of our funds is to enable investors to diversify their portfolios across various asset classes and, consequently, enjoy the stability and growth prospects generally associated with diversification. The success of our funds is contingent on the experience, discipline, and acumen of our fund managers. We believe the quality of our managers is crucial to investment success. Unlike many firms, which focus on a particular asset class or the fluctuations of the market, at Legg Mason we focus on providing a collection of top-notch managers in all the major asset classes. Information about the policies and procedures that the Trust uses to determine how to vote proxies relating to its portfolio securities is contained in the Statement of Additional Information, available without charge upon request by calling 1-800-822-5544 or on the Securities and Exchange Commission (“SEC”) website (http://www.sec.gov). Information regarding how the Trust voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is also available on the SEC’s website or through the Trust’s website at www.leggmasonfunds.com/aboutlmf. The Trust files a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Trust’s Form N-Q is available on the SEC’s website or may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information about the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. |
This report is not to be distributed unless preceded or accompanied by a prospectus.
Legg Mason Funds
Legg Mason Wood Walker, Incorporated
LMF-018
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Item 2. Code of Ethics.
Not applicable for semi-annual reports.
Item 3. Audit Committee Financial Expert.
Not applicable for semi-annual reports.
Item 4. Principal Accountant Fees and Services.
Not applicable for semi-annual reports.
Item 5. Audit Committee of Listed Registrants.
The Registrant is not a listed issuer as defined in Rule 10A-3 under the Securities Exchange Act of 1934.
Item 6. Schedule of Investments
The schedule of investments in securities of unaffiliated issuers is included as part of the report to shareholders filed under Item 1 of this Form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
The Registrant is not a closed-end management investment company.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
The Registrant is not a closed-end management investment company.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers.
The Registrant is not a closed-end management investment company.
Item 10. Submission of Matters to a Vote of Security Holders.
The Nominating Committee will accept recommendations for nominations from shareholders. Shareholders may forward recommendations to the Fund Secretary at 100 Light Street, 23rd Floor, Baltimore, Maryland 21201, Attn: Fund Secretary.
Item 11. Controls and Procedures.
(a) The Registrant’s principal executive and principal financial officers have concluded, based on their evaluation of the effectiveness of the design and operation of the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) as of a date within 90 days of the filing date of this report, that the Registrant’s disclosure controls and procedures are reasonably designed to ensure that information required to be disclosed by the Registrant on Form N-CSR is recorded, processed, summarized and reported within the time periods specified in the SEC’s rule and forms and that information required to be disclosed by the Registrant in the reports that it files or submits on Form N-CSR is accumulated and communicated to the Registrant’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
(b) There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) during the Registrant’s second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.
Item 12. Exhibits.
(a) | (1) Not applicable for semi-annual reports. | |||
(a) | (2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto. | |||
(b) | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 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 Cash Reserve Trust
By: /s/ Mark R. Fetting
Mark R. Fetting
President, Legg Mason Cash Reserve Trust
Date: April 29, 2005
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/ Mark R. Fetting
Mark R. Fetting
President, Legg Mason Cash Reserve Trust
Date: April 29, 2005
By: /s/ Marie K. Karpinski
Marie K. Karpinski
Treasurer, Legg Mason Cash Reserve Trust
Date: April 29, 2005