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 | | 811-06444 |
Legg Mason Partners Equity Trust
|
| (Exact name of registrant as specified in charter) |
| | |
| 125 Broad Street, New York, NY | | 10004 |
| (Address of principal executive offices) | | (Zip code) |
Robert I. Frenkel, Esq.
Legg Mason & Co., LLC
300 First Stamford Place, 4th Floor
Stamford, CT 06902
|
| (Name and address of agent for service) |
Registrant’s telephone number, including area code: (800) 451-2010
Date of fiscal year end: August 31
Date of reporting period: February 28, 2007
| ITEM 1. | REPORT TO STOCKHOLDERS. |
The Semi-Annual Report to Stockholders is filed herewith.
SEMI-ANNUAL
REPORT
FEBRUARY 28, 2007
Legg Mason Partners
Aggressive Growth Fund
INVESTMENT PRODUCTS: NOT FDIC INSURED Ÿ NO BANK GUARANTEE Ÿ MAY LOSE VALUE
Legg Mason Partners
Aggressive Growth Fund
Semi-Annual Report • February 28, 2007
What’s
Inside
Fund Objective
The Fund seeks capital appreciation. It seeks to achieve this objective by investing primarily in common stocks of companies that the manager believes are experiencing, or will experience, growth in earnings that exceeds the average rate of earnings growth of the companies which comprise the S&P 500 Index.
Letter from the Chairman
R. JAY GERKEN, CFA
Chairman, President and Chief Executive Officer
Dear Shareholder,
U.S. economic growth was mixed during the six-month reporting period. Gross domestic product (“GDP”)i increased a sharp 5.6% in the first quarter of 2006, its highest reading since the third quarter of 2003. In the second quarter of 2006, GDP growth was 2.6% and it further moderated to 2.0% in the third quarter. The economy then strengthened somewhat in the fourth quarter due, in part, to increased consumer spending. Over this time, GDP growth was 2.5%.
After increasing the federal funds rateii to 5.25% in June—its 17th consecutive rate hike—the Federal Reserve Board (“Fed”)iii paused from raising rates at its next five meetings and again in March 2007 after the reporting period ended. In its statement accompanying the March 2007 meeting, the Fed stated, “Recent indicators have been mixed and the adjustment in the housing sector is ongoing. Nevertheless, the economy seems likely to continue to expand at a moderate pace over coming quarters.” “…the Committee’s predominant policy concern remains the risk that inflation will fail to moderate as expected.”
After treading water during the first half of 2006, stocks rallied sharply and generated strong results during the six-month reporting period. Early in 2006, continued Fed rate hikes, record high oil prices and uncertainty about the economy dragged down the stock market. However, oil prices then retreated, the economy began to weaken and the Fed held rates steady. These factors, combined with continued strong corporate profits, propelled the market higher. Despite a period of weakness late in the period, all told, the S&P 500 Indexiv returned a solid 8.93% during the six months ended February 28, 2007.
Looking at the market more closely, mid-cap stocks outperformed their small- and large- cap counterparts, with the Russell Midcapv, Russell 2000vi, and Russell 1000vii Indexes
Legg Mason Partners Aggressive Growth Fund I
returning 13.50%, 10.76%, and 9.68%, respectively. From an investment style perspective, value stocks slightly outperformed growth stocks, with the Russell 3000 Valueviii and Russell 3000 Growthix Indexes returning 9.87% and 9.67%, respectively.
Performance Review
For the six months ended February 28, 2007, Class A shares of Legg Mason Partners Aggressive Growth Fund excluding sales charges, returned 2.93%. These shares underperformed the Fund’s unmanaged benchmark, the Russell 3000 Growth Index, which returned 9.67% for the same period. The Lipper Multi-Cap Growth Funds Category Average1 increased 9.88% over the same time frame.
| | |
| Performance Snapshot as of February 28, 2007 (excluding sales charges) (unaudited) |
| |
| | | 6 months |
| | |
Aggressive Growth Fund — Class A Shares | | 2.93% |
| |
Russell 3000 Growth Index | | 9.67% |
| |
Lipper Multi-Cap Growth Funds Category Average | | 9.88% |
| |
| The performance shown represents past performance. Past performance is no guarantee of future results and current performance may be higher or lower than the performance shown above. Principal value and investment returns will fluctuate and investors’ shares, when redeemed, may be worth more or less than their original cost. To obtain performance data current to the most recent month-end, please visit our website at www.leggmason.com/InvestorServices. |
| Excluding sales charges, Class B shares returned 2.50%, Class C shares returned 2.59% and Class I (formerly Class Y) shares returned 3.15% over the six months ended February 28, 2007. All share class returns assume the reinvestment of all distributions, including returns of capital, if any, at net asset value and the deduction of all Fund expenses. Returns have not been adjusted to include sales charges that may apply when shares are purchased or the deduction of taxes that a shareholder would pay on Fund distributions. Performance information for Class R shares is not provided as these shares commenced operations on December 28, 2006. |
| Performance figures reflect expense reimbursements and/or fee waivers, without which the performance would have been lower. |
| Total Annual Operating Expenses |
| As of the Fund’s most recent prospectus dated April 16, 2007, the gross total annual operating expenses for Class A, Class B, Class C and Class I were 1.11%, 1.92%, 1.78% and 0.70%, respectively. |
1 | | Lipper, Inc. is a major independent mutual-fund tracking organization. Returns are based on the six-month period ended February 28, 2007, including the reinvestment of all distributions, including returns of capital, if any, calculated among the 519 funds in the Fund’s Lipper category, and excluding sales charges. |
II Legg Mason Partners Aggressive Growth Fund
Special Shareholder Notices
With a goal of moving the mutual funds formerly advised by Citigroup Asset Management (“CAM”) to a more cohesive and rational operating platform, Legg Mason, Inc. recommended a number of governance- and investment-related proposals to streamline and restructure the funds. The Boards of Directors/Trustees of the affected funds have carefully considered and approved these proposals, and, where required, have obtained shareholder approval. As such, the following changes became effective as of the close of business, April 13, 2007:
| • | | Funds Redomiciled and Single Form of Organization Adopted: The legacy CAM funds have been redomiciled to a single jurisdiction and a single form of corporate structure has been introduced. Equity funds have been grouped for organizational and governance purposes with other funds in the fund complex that are predominantly equity funds, and fixed-income funds have been grouped with other funds that are predominantly fixed-income funds. Additionally, the funds have adopted a single form of organization as a Maryland business trust, with all funds operating under uniform charter documents. |
| • | | New Boards Elected: New Boards have been elected for the legacy CAM funds. The 10 Boards previously overseeing the funds have been realigned and consolidated into two Boards, with the remaining Boards each overseeing a distinct asset class or product type: equity or fixed income. |
| • | | Revised Fundamental Investment Policies Instituted: A uniform set of fundamental investment policies has been instituted for most funds, to the extent appropriate. Please note, however, that each fund will continue to be managed in accordance with its prospectus and statement of additional information, as well as any policies or guidelines that may have been established by the fund’s Board or investment manager. |
Certain changes regarding share class pricing and related matters were implemented on November 20, 2006. Please consult the Fund’s current prospectus for more information.
Legg Mason Partners Aggressive Growth Fund III
Information About Your Fund
As you may be aware, several issues in the mutual fund industry have come under the scrutiny of federal and state regulators. Affiliates of the Fund’s manager have, in recent years, received requests for information from various government regulators regarding market timing, late trading, fees, and other mutual fund issues in connection with various investigations. The regulators appear to be examining, among other things, the Fund’s response to market timing and shareholder exchange activity, including compliance with prospectus disclosure related to these subjects. The Fund is not in a position to predict the outcome of these requests and investigations.
Important information with regard to recent regulatory developments that may affect the Fund is contained in the Notes to Financial Statements included in this report.
As always, thank you for your confidence in our stewardship of your assets. We look forward to helping you meet your financial goals.
Sincerely,
R. Jay Gerken, CFA
Chairman, President and Chief Executive Officer
April 16, 2007
IV Legg Mason Partners Aggressive Growth Fund
The information provided is not intended to be a forecast of future events, a guarantee of future results or investment advice. Views expressed may differ from those of the firm as a whole.
RISKS: Keep in mind, the Fund may invest a significant portion of its assets in small- and mid-cap companies, which may be more volatile than an investment that focuses only on large-cap companies. Please see the Fund’s prospectus for more information on these and other risks.
All index performance reflects no deduction for fees, expenses or taxes. Please note an investor cannot invest directly in an index.
i | | Gross domestic product is the market value of goods and services produced by labor and property in a given country. |
ii | | The federal funds rate is the interest rate that banks with excess reserves at a Federal Reserve district bank charge other banks that need overnight loans. |
iii | | The Federal Reserve Board is responsible for the formulation of policies designed to promote economic growth, full employment, stable prices, and a sustainable pattern of international trade and payments. |
iv | | The S&P 500 Index is an unmanaged index of 500 stocks that is generally representative of the performance of larger companies in the U.S. |
v | | The Russell Midcap Index measures the performance of the 800 smallest companies in the Russell 1000 Index, which represents approximately 25% of the total market capitalization of the Russell 1000 Index. |
vi | | The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 8% of the total market capitalization of the Russell 3000 Index. |
vii | | The Russell 1000 Index measures the performance of the 1,000 largest companies in the Russell 3000 Index, which represents approximately 92% of the total market capitalization of the Russell 3000 Index. |
viii | | The Russell 3000 Value Index measures the performance of those Russell 3000 Index companies with lower price-to-book ratios and lower forecasted growth values. (A price-to-book ratio is the price of a stock compared to the difference between a company’s assets and liabilities.) |
ix | | The Russell 3000 Growth Index measures the performance of those Russell 3000 Index companies with higher price-to-book ratios and higher forecasted growth values. |
Legg Mason Partners Aggressive Growth Fund V
Fund at a Glance (unaudited)
Legg Mason Partners Aggressive Growth Fund 2007 Semi-Annual Report 1
Fund Expenses (unaudited)
Example
As a shareholder of the Fund, you may incur two types of costs: (1) transaction costs, including front-end and back-end sales charges (loads) on purchase payments; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
This example is based on an investment of $1,000 invested on September 1, 2006 and held for the six months ended February 28, 2007.
Actual Expenses
The table below titled “Based on Actual Total Return” provides information about actual account values and actual expenses. You may use the information provided in this table, together with the amount you invested, to estimate the expenses that you paid over the period. To estimate the expenses you paid on your account, divide your ending account value by $1,000 (for example, an $8,600 ending account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled “Expenses Paid During the Period”.
| | | | | | | | | | | | | | | |
| Based on Actual Total Return(1) | | | | | | |
| | | | | |
| | | Actual Total
Return Without
Sales Charges(2) | | | Beginning
Account
Value | | Ending
Account
Value | | Annualized
Expense
Ratio(3) | | | Expenses
Paid During
the Period(4) |
Class A | | 2.93 | % | | $ | 1,000.00 | | $ | 1,029.30 | | 1.12 | % | | $ | 5.64 |
| |
Class B | | 2.50 | | | | 1,000.00 | | | 1,025.00 | | 1.95 | | | | 9.79 |
| |
Class C | | 2.59 | | | | 1,000.00 | | | 1,025.90 | | 1.78 | | | | 8.94 |
| |
Class I(5) | | 3.15 | | | | 1,000.00 | | | 1,031.50 | | 0.71 | | | | 3.58 |
| |
Class R(6) | | (3.12 | ) | | | 1,000.00 | | | 968.80 | | 1.22 | | | | 2.04 |
| |
(1) | | For the six months ended February 28, 2007, unless otherwise noted. |
(2) | | Assumes reinvestment of all distributions, including returns of capital, if any, at net asset value and does not reflect the deduction of the applicable sales charge with respect to Class A shares or the applicable contingent deferred sales charges (“CDSC”) with respect to Class B and C shares. Total return is not annualized, as it may not be representative of the total return for the year. Performance figures may reflect fee waivers and/or expense reimbursements. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower. Past performance is no guarantee of future results. |
(3) | | The expense ratios do not include the non-recurring restructuring and/or reorganization fees. |
(4) | | Expenses (net of fee waivers and/or expense reimbursements) are equal to each class’ respective annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year, then divided by 365. |
(5) | | As of November 20, 2006, Class Y shares were renamed Class I shares. |
(6) | | For the period December 28, 2006 (commencement of operations) to February 28, 2007. |
2 Legg Mason Partners Aggressive Growth Fund 2007 Semi-Annual Report
Fund Expenses (unaudited) (continued)
Hypothetical Example for Comparison Purposes
The table below titled “Based on Hypothetical Total Return” provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio and an assumed rate of return of 5.00% per year before expenses, which is not the Fund’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 the information provided in this table to compare the ongoing costs of investing in the Fund and other funds. To do so, compare the 5.00% hypothetical example relating to the Fund with the 5.00% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table below are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as front-end or back-end sales charges (loads). Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
| | | | | | | | | | | | | | | |
| Based on Hypothetical Total Return(1) | | | | | | |
| | | | | |
| | | Hypothetical
Annualized
Total Return | | | Beginning
Account
Value | | Ending
Account
Value | | Annualized
Expense
Ratio(2) | | | Expenses
Paid During
the Period(3) |
Class A | | 5.00 | % | | $ | 1,000.00 | | $ | 1,019.24 | | 1.12 | % | | $ | 5.61 |
| |
Class B | | 5.00 | | | | 1,000.00 | | | 1,015.12 | | 1.95 | | | | 9.74 |
| |
Class C | | 5.00 | | | | 1,000.00 | | | 1,015.97 | | 1.78 | | | | 8.90 |
| |
Class I(4) | | 5.00 | | | | 1,000.00 | | | 1,021.27 | | 0.71 | | | | 3.56 |
| |
Class R(5) | | 5.00 | | | | 1,000.00 | | | 1,006.42 | | 1.22 | | | | 2.08 |
| |
(1) | | For the six months ended February 28, 2007, unless otherwise noted. |
(2) | | The expense ratios do not include the non-recurring restructuring and/or reorganization fees. |
(3) | | Expenses (net of fee waivers and/or expense reimbursements) are equal to each class’ respective annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year, then divided by 365. |
(4) | | As of November 20, 2006, Class Y shares were renamed Class I shares. |
(5) | | For the period December 28, 2006 (commencement of operations) to February 28, 2007. |
Legg Mason Partners Aggressive Growth Fund 2007 Semi-Annual Report 3
Schedule of Investments (February 28, 2007) (unaudited)
LEGG MASON PARTNERS AGGRESSIVE GROWTH FUND
| | | | | |
| | |
| Shares | | Security | | Value |
| | | | | |
| COMMON STOCKS — 99.9% | | | |
| CONSUMER DISCRETIONARY — 17.6% | | | |
| Media — 17.2% | | | |
| 9,900,000 | | Cablevision Systems Corp., New York Group, Class A Shares* | | $ | 291,654,000 |
| 868,000 | | CBS Corp., Class B Shares | | | 26,343,800 |
| 2,091,000 | | Comcast Corp., Class A Shares* | | | 53,780,520 |
| 17,250,000 | | Comcast Corp., Special Class A Shares* | | | 439,012,500 |
| 1,700,000 | | Discovery Holding Co., Class A Shares* | | | 27,302,000 |
| 771,931 | | Liberty Global Inc., Series A Shares* | | | 22,223,894 |
| 782,848 | | Liberty Global Inc., Series C Shares* | | | 21,340,436 |
| 875,000 | | Liberty Media Holding Corp., Capital Group, Series A Shares* | | | 94,395,000 |
| 4,375,000 | | Liberty Media Holding Corp., Interactive Group, Series A Shares* | | | 103,118,750 |
| 24,000,000 | | Sirius Satellite Radio Inc.* | | | 87,600,000 |
| 19,000,000 | | Time Warner Inc. | | | 386,650,000 |
| 868,000 | | Viacom Inc., Class B Shares* | | | 33,886,720 |
| 5,500,000 | | Walt Disney Co. | | | 188,430,000 |
| 1,100,000 | | World Wrestling Entertainment Inc. | | | 17,512,000 |
| |
| | Total Media | | | 1,793,249,620 |
| |
| Specialty Retail — 0.4% | | | |
| 2,907,200 | | Charming Shoppes Inc.* | | | 36,252,784 |
| 111,900 | | J. Crew Group Inc.* | | | 4,032,876 |
| |
| | Total Specialty Retail | | | 40,285,660 |
| |
| | TOTAL CONSUMER DISCRETIONARY | | | 1,833,535,280 |
| |
| ENERGY — 14.1% | | | |
| Energy Equipment & Services — 8.2% | | | |
| 1,447,500 | | Core Laboratories NV* | | | 114,178,800 |
| 5,099,700 | | Grant Prideco Inc.* | | | 221,377,977 |
| 12,800,000 | | Weatherford International Ltd.* | | | 513,920,000 |
| |
| | Total Energy Equipment & Services | | | 849,476,777 |
| |
| Oil, Gas & Consumable Fuels — 5.9% | | | |
| 15,200,000 | | Anadarko Petroleum Corp. | | | 611,496,000 |
| |
| | TOTAL ENERGY | | | 1,460,972,777 |
| |
| FINANCIALS — 16.1% | | | |
| Capital Markets — 13.7% | | | |
| 1,487,400 | | Cohen & Steers Inc. | | | 62,217,942 |
| 30,000 | | Goldman Sachs Group Inc. | | | 6,048,000 |
| 13,477,996 | | Lehman Brothers Holdings Inc. | | | 987,937,107 |
| 4,400,000 | | Merrill Lynch & Co. Inc. | | | 368,192,000 |
| |
| | Total Capital Markets | | | 1,424,395,049 |
| |
| Diversified Financial Services — 0.5% | | | |
| 897,100 | | CIT Group Inc. | | | 50,659,237 |
| |
See Notes to Financial Statements.
4 Legg Mason Partners Aggressive Growth Fund 2007 Semi-Annual Report
Schedule of Investments (February 28, 2007) (unaudited) (continued)
| | | | | |
| | |
| Shares | | Security | | Value |
| | | | | |
| Thrifts & Mortgage Finance — 1.9% | | | |
| 4,500,000 | | Astoria Financial Corp. | | $ | 127,215,000 |
| 4,300,000 | | New York Community Bancorp Inc. | | | 71,982,000 |
| |
| | Total Thrifts & Mortgage Finance | | | 199,197,000 |
| |
| | TOTAL FINANCIALS | | | 1,674,251,286 |
| |
| HEALTH CARE — 31.8% | | | |
| Biotechnology — 15.2% | | | |
| 1,550,000 | | Alkermes Inc.* | | | 25,420,000 |
| 6,800,000 | | Amgen Inc.* | | | 436,968,000 |
| 599,500 | | AP Pharma Inc.* | | | 791,340 |
| 8,000,000 | | Biogen Idec Inc.* | | | 361,520,000 |
| 532,000 | | Genentech Inc.* | | | 44,884,840 |
| 7,000,000 | | Genzyme Corp.* | | | 432,600,000 |
| 4,600,000 | | ImClone Systems Inc.* | | | 132,526,000 |
| 1,050,000 | | Isis Pharmaceuticals Inc.* | | | 9,576,000 |
| 577,575 | | Micromet Inc.* | | | 1,582,556 |
| 6,040,000 | | Millennium Pharmaceuticals Inc.* | | | 65,232,000 |
| 880,000 | | Nabi Biopharmaceuticals* | | | 4,664,000 |
| 2,000,000 | | Vertex Pharmaceuticals Inc.* | | | 61,380,000 |
| 620,665 | | ViaCell Inc.* | | | 3,264,698 |
| |
| | Total Biotechnology | | | 1,580,409,434 |
| |
| Health Care Equipment & Supplies — 0.5% | | | |
| 864,400 | | Biosite Inc.* | | | 45,916,928 |
| 87,500 | | Cytyc Corp.* | | | 2,651,250 |
| |
| | Total Health Care Equipment & Supplies | | | 48,568,178 |
| |
| Health Care Providers & Services — 8.5% | | | |
| 17,027,600 | | UnitedHealth Group Inc. | | | 888,840,720 |
| |
| Life Sciences Tools & Services — 0.0% | | | |
| 200,000 | | Bioveris Corp.* | | | 2,358,000 |
| 750,000 | | Nanogen Inc.* | | | 1,065,000 |
| |
| | Total Life Sciences Tools & Services | | | 3,423,000 |
| |
| Pharmaceuticals — 7.6% | | | |
| 1,188,376 | | Anesiva Inc.* | | | 9,542,659 |
| 1,608,100 | | BioMimetic Therapeutics Inc.* | | | 26,549,731 |
| 8,000,000 | | Forest Laboratories Inc.* | | | 414,080,000 |
| 2,156,000 | | Johnson & Johnson | | | 135,935,800 |
| 5,150,000 | | King Pharmaceuticals Inc.* | | | 96,047,500 |
| 568,303 | | Pfizer Inc. | | | 14,184,843 |
| 800,520 | | Teva Pharmaceutical Industries Ltd., ADR | | | 28,466,491 |
| 3,600,000 | | Valeant Pharmaceuticals International | | | 64,548,000 |
| |
| | Total Pharmaceuticals | | | 789,355,024 |
| |
| | TOTAL HEALTH CARE | | | 3,310,596,356 |
| |
See Notes to Financial Statements.
Legg Mason Partners Aggressive Growth Fund 2007 Semi-Annual Report 5
Schedule of Investments (February 28, 2007) (unaudited) (continued)
| | | | | |
| | |
| Shares | | Security | | Value |
| | | | | |
| INDUSTRIALS — 8.0% | | | |
| Aerospace & Defense — 2.7% | | | |
| 3,179,475 | | L-3 Communications Holdings Inc. | | $ | 276,932,272 |
| |
| Industrial Conglomerates — 4.4% | | | |
| 15,000,000 | | Tyco International Ltd. | | | 462,450,000 |
| |
| Machinery — 0.9% | | | |
| 2,790,500 | | Pall Corp. | | | 96,495,490 |
| |
| | TOTAL INDUSTRIALS | | | 835,877,762 |
| |
| INFORMATION TECHNOLOGY — 12.3% | | | |
| Communications Equipment — 2.5% | | | |
| 3,175,000 | | C-COR Inc.* | | | 43,338,750 |
| 7,500,000 | | Motorola Inc. | | | 138,900,000 |
| 675,072 | | Nokia Oyj | | | 14,728,116 |
| 2,924,928 | | Nokia Oyj, ADR | | | 63,851,178 |
| |
| | Total Communications Equipment | | | 260,818,044 |
| |
| Computers & Peripherals — 2.4% | | | |
| 350,000 | | LaserCard Corp.* | | | 4,406,500 |
| 6,150,000 | | Quantum Corp.* | | | 15,190,500 |
| 4,000,000 | | SanDisk Corp.* | | | 145,680,000 |
| 3,180,150 | | Seagate Technology | | | 85,546,035 |
| |
| | Total Computers & Peripherals | | | 250,823,035 |
| |
| Electronic Equipment & Instruments — 0.2% | | | |
| 689,000 | | Excel Technology Inc.* | | | 18,403,190 |
| |
| Semiconductors & Semiconductor Equipment — 6.0% | | | |
| 5,000,000 | | Broadcom Corp., Class A Shares* | | | 170,450,000 |
| 1,050,000 | | Cabot Microelectronics Corp.* | | | 34,366,500 |
| 3,720,000 | | Cirrus Logic Inc.* | | | 32,252,400 |
| 1,300,000 | | Cree Inc.* | | | 22,880,000 |
| 1,270,000 | | DSP Group Inc.* | | | 26,149,300 |
| 3,280,000 | | Intel Corp. | | | 65,108,000 |
| 14,000,000 | | Micron Technology Inc.* | | | 166,040,000 |
| 4,000,000 | | RF Micro Devices Inc.* | | | 31,920,000 |
| 738,100 | | Standard Microsystems Corp.* | | | 21,087,517 |
| 3,300,000 | | Teradyne Inc.* | | | 53,196,000 |
| |
| | Total Semiconductors & Semiconductor Equipment | | | 623,449,717 |
| |
| Software — 1.2% | | | |
| 1,100,000 | | Advent Software Inc.* | | | 39,820,000 |
| 1,700,000 | | Autodesk Inc.* | | | 69,955,000 |
| 680,800 | | Microsoft Corp. | | | 19,178,136 |
| |
| | Total Software | | | 128,953,136 |
| |
| | TOTAL INFORMATION TECHNOLOGY | | | 1,282,447,122 |
| |
| | TOTAL INVESTMENTS — 99.9% (Cost — $6,539,637,263#) | | | 10,397,680,583 |
| | Other Assets in Excess of Liabilities — 0.1% | | | 5,866,850 |
| |
| | TOTAL NET ASSETS — 100.0% | | $ | 10,403,547,433 |
| |
| * | | Non-income producing security. |
| # | | Aggregate cost for federal income tax purposes is substantially the same. |
| | |
Abbreviation used in this schedule: |
| ADR | | — American Depositary Receipt |
See Notes to Financial Statements.
6 Legg Mason Partners Aggressive Growth Fund 2007 Semi-Annual Report
Statement of Assets and Liabilities (February 28, 2007) (unaudited)
| | | | |
| ASSETS: | | | | |
Investments, at value (Cost — $6,539,637,263) | | $ | 10,397,680,583 | |
Receivable for Fund shares sold | | | 19,683,518 | |
Receivable for securities sold | | | 8,168,283 | |
Dividends receivable | | | 6,100,519 | |
Receivable for litigation proceeds | | | 1,792,234 | |
Receivable from manager | | | 71,494 | |
Prepaid expenses | | | 192,908 | |
| | |
Total Assets | | | 10,433,689,539 | |
| | |
| LIABILITIES: | | | | |
Payable for Fund shares repurchased | | | 14,934,420 | |
Investment management fee payable | | | 5,783,266 | |
Distribution fees payable | | | 4,161,287 | |
Transfer agent fees payable | | | 4,050,360 | |
Due to custodian | | | 230,212 | |
Directors’ fees payable | | | 166,077 | |
Deferred compensation payable | | | 355 | |
Accrued expenses | | | 816,129 | |
| | |
Total Liabilities | | | 30,142,106 | |
| | |
Total Net Assets | | $ | 10,403,547,433 | |
| | |
NET ASSETS: | | | | |
Par value (Note 5) | | $ | 961,633 | |
Paid-in capital in excess of par value | | | 6,554,454,360 | |
Accumulated net investment loss | | | (42,961,114 | ) |
Accumulated net realized gain on investments and foreign currency transactions | | | 33,048,072 | |
Net unrealized appreciation on investments and foreign currencies | | | 3,858,044,482 | |
| | |
Total Net Assets | | $ | 10,403,547,433 | |
| | |
Shares Outstanding: | | | | |
Class A | | | 39,709,483 | |
| |
Class B | | | 21,452,704 | |
| |
Class C | | | 18,923,688 | |
| |
Class I (1) | | | 16,077,383 | |
| |
Class R | | | 86 | |
| |
Net Asset Value: | | | | |
Class A (and redemption price) | | | $112.56 | |
| |
Class B (2) | | | $99.71 | |
| |
Class C (2) | | | $100.63 | |
| |
Class I (and redemption price) (1) | | | $117.59 | |
| |
Class R | | | $112.54 | |
| |
Maximum Public Offering Price Per Share: | | | | |
Class A (based on maximum sales charge of 5.75%) (3) | | | $119.43 | |
| | |
(1) | | As of November 20, 2006, Class Y shares were renamed Class I shares. |
(2) | | Redemption price is NAV of Class B and C shares reduced by a 5.00% and 1.00% CDSC, respectively, if shares are redeemed within one year from purchase payment (See Note 2). |
(3) | | Class A shares maximum initial sales charge increased from 5.00% to 5.75% on November 20, 2006. |
See Notes to Financial Statements.
Legg Mason Partners Aggressive Growth Fund 2007 Semi-Annual Report 7
Statement of Operations (For the six months ended February 28, 2007) (unaudited)
| | | | |
| INVESTMENT INCOME: | | | | |
Dividends | | $ | 28,445,460 | |
Interest | | | 1,722,710 | |
Less: Foreign taxes withheld | | | (22,106 | ) |
| | |
Total Investment Income | | | 30,146,064 | |
| | |
| EXPENSES: | | | | |
Investment management fee (Note 2) | | | 36,787,391 | |
Distribution fees (Notes 2 and 4) | | | 26,708,599 | |
Transfer agent fees (Note 4) | | | 7,019,777 | |
Reorganization and restructuring fees (Note 11) | | | 1,669,733 | |
Shareholder reports (Note 4) | | | 313,142 | |
Directors’ fees | | | 234,170 | |
Legal fees | | | 137,104 | |
Insurance | | | 122,493 | |
Registration fees | | | 117,496 | |
Custody fees | | | 29,848 | |
Audit and tax | | | 20,562 | |
Miscellaneous expenses | | | 15,760 | |
| | |
Total Expenses | | | 73,176,075 | |
Less: Fee waivers and/or expense reimbursements (Notes 2 and 11) | | | (71,494 | ) |
| | |
Net Expenses | | | 73,104,581 | |
| | |
Net Investment Loss | | | (42,958,517 | ) |
| | |
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS (NOTES 1 AND 3): | | | | |
Net Realized Gain From: | | | | |
Investment transactions | | | 37,831,181 | |
Foreign currency transactions | | | 207 | |
| | |
Net Realized Gain | | | 37,831,388 | |
| | |
Change in Net Unrealized Appreciation/Depreciation From: | | | | |
Investments | | | 299,539,682 | |
Foreign currencies | | | (1,754 | ) |
| | |
Change in Net Unrealized Appreciation/Depreciation | | | 299,537,928 | |
| | |
Net Gain on Investments and Foreign Currency Transactions | | | 337,369,316 | |
| | |
Increase in Net Assets From Operations | | $ | 294,410,799 | |
| | |
See Notes to Financial Statements.
8 Legg Mason Partners Aggressive Growth Fund 2007 Semi-Annual Report
Statements of Changes in Net Assets
| | | | | | | | |
| For the six months ended February 28, 2007 (unaudited) and the year ended August 31, 2006 | | | | | | | | |
| | |
| | | 2007 | | | 2006 | |
| OPERATIONS: | | | | | | | | |
Net investment loss | | $ | (42,958,517 | ) | | $ | (83,611,725 | ) |
Net realized gain | | | 37,831,388 | | | | 9,439,939 | |
Change in net unrealized appreciation/depreciation | | | 299,537,928 | | | | 735,033,732 | |
| | |
Increase in Net Assets From Operations | | | 294,410,799 | | | | 660,861,946 | |
| | |
| FUND SHARE TRANSACTIONS (NOTE 5): | | | | | | | | |
Net proceeds from sale of shares | | | 929,808,227 | | | | 1,912,243,361 | |
Cost of shares repurchased | | | (1,098,364,211 | ) | | | (1,698,734,241 | ) |
Net assets of shares issued in connection with merger (Note 7) | | | 54,747,177 | | | | — | |
| | |
Increase (Decrease) in Net Assets From
Fund Share Transactions | | | (113,808,807 | ) | | | 213,509,120 | |
| | |
Increase in Net Assets | | | 180,601,992 | | | | 874,371,066 | |
NET ASSETS: | | | | | | | | |
Beginning of period | | | 10,222,945,441 | | | | 9,348,574,375 | |
| | |
End of period* | | $ | 10,403,547,433 | | | $ | 10,222,945,441 | |
| | |
* Includes accumulated net investment loss of: | | | $(42,961,114) | | | | — | |
| | |
See Notes to Financial Statements.
Legg Mason Partners Aggressive Growth Fund 2007 Semi-Annual Report 9
Financial Highlights
For a share of each class of capital stock outstanding throughout each year ended August 31, unless otherwise noted:
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| Class A Shares(1) | | 2007(2) | | | 2006 | | | 2005 | | | 2004 | | | 2003 | | | 2002 | |
Net Asset Value, Beginning of Period | | $ | 109.36 | | | $ | 101.83 | | | $ | 84.33 | | | $ | 78.36 | | | $ | 62.24 | | | $ | 91.46 | |
| | |
Income (Loss) From Operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment loss | | | (0.33 | ) | | | (0.64 | ) | | | (0.63 | ) | | | (0.71 | ) | | | (0.58 | ) | | | (0.71 | ) |
Net realized and unrealized gain (loss) | | | 3.53 | | | | 8.17 | | | | 18.13 | | | | 6.68 | | | | 16.70 | | | | (28.51 | ) |
| | |
Total Income (Loss) From Operations | | | 3.20 | | | | 7.53 | | | | 17.50 | | | | 5.97 | | | | 16.12 | | | | (29.22 | ) |
| | |
Net Asset Value, End of Period | | $ | 112.56 | | | $ | 109.36 | | | $ | 101.83 | | | $ | 84.33 | | | $ | 78.36 | | | $ | 62.24 | |
| | |
Total Return(3) | | | 2.93 | % | | | 7.39 | % | | | 20.75 | % | | | 7.62 | % | | | 25.90 | % | | | (31.95 | )% |
| | |
Net Assets, End of Period (millions) | | | $4,470 | | | | $4,274 | | | | $3,677 | | | | $2,959 | | | | $2,332 | | | | $1,639 | |
| | |
Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | | | | | | | |
Gross expenses | | | 1.16 | %(4)(5) | | | 1.13 | % | | | 1.21 | % | | | 1.21 | % | | | 1.22 | % | | | 1.21 | % |
Net expenses | | | 1.16 | (4)(5)(6) | | | 1.13 | (6) | | | 1.21 | | | | 1.19 | (6) | | | 1.22 | | | | 1.21 | |
Net investment loss | | | (0.59 | )(4) | | | (0.59 | ) | | | (0.69 | ) | | | (0.82 | ) | | | (0.86 | ) | | | (0.88 | ) |
| | |
Portfolio Turnover Rate | | | 0 | %(7) | | | 5 | % | | | 2 | % | | | 5 | % | | | 1 | % | | | 1 | % |
| | |
(1) | | Per share amounts have been calculated using the average shares method. |
(2) | | For the six months ended February 28, 2007 (unaudited). |
(3) | | Performance figures may reflect fee waivers and/or expense reimbursements. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower. Past performance is no guarantee of future results. Total returns for periods of less than one year are not annualized. |
(5) | | Included in the expense ratios are certain non-recurring restructuring (and reorganization, if applicable) fees that were incurred by the Fund during the period. Without these fees, the gross and net expense ratios both would have been 1.12% (Note 11). |
(6) | | Reflects fee waivers and/or expense reimbursements. |
(7) | | Amount represents less than 1%. |
See Notes to Financial Statements.
10 Legg Mason Partners Aggressive Growth Fund 2007 Semi-Annual Report
Financial Highlights (continued)
For a share of each class of capital stock outstanding throughout each year ended August 31, unless otherwise noted:
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| Class B Shares(1) | | 2007(2) | | | 2006 | | | 2005 | | | 2004 | | | 2003 | | | 2002 | |
Net Asset Value, Beginning of Period | | $ | 97.28 | | | $ | 91.33 | | | $ | 76.25 | | | $ | 71.43 | | | $ | 57.19 | | | $ | 84.73 | |
| | |
Income (Loss) From Operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment loss | | | (0.72 | ) | | | (1.36 | ) | | | (1.23 | ) | | | (1.28 | ) | | | (1.03 | ) | | | (1.26 | ) |
Net realized and unrealized gain (loss) | | | 3.15 | | | | 7.31 | | | | 16.31 | | | | 6.10 | | | | 15.27 | | | | (26.28 | ) |
| | |
Total Income (Loss) From Operations | | | 2.43 | | | | 5.95 | | | | 15.08 | | | | 4.82 | | | | 14.24 | | | | (27.54 | ) |
| | |
Net Asset Value, End of Period | | $ | 99.71 | | | $ | 97.28 | | | $ | 91.33 | | | $ | 76.25 | | | $ | 71.43 | | | $ | 57.19 | |
| | |
Total Return(3) | | | 2.50 | % | | | 6.51 | % | | | 19.78 | % | | | 6.75 | % | | | 24.90 | % | | | (32.50 | )% |
| | |
Net Assets, End of Period (millions) | | | $2,139 | | | | $2,251 | | | | $2,326 | | | | $2,124 | | | | $1,984 | | | | $1,542 | |
| | |
Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | | | | | | | |
Gross expenses | | | 1.98 | %(4)(5) | | | 1.95 | % | | | 2.01 | % | | | 2.03 | % | | | 2.03 | % | | | 2.03 | % |
Net expenses | | | 1.98 | (4)(5)(6) | | | 1.95 | (6) | | | 2.01 | | | | 2.01 | (6) | | | 2.03 | | | | 2.03 | |
Net investment loss | | | (1.41 | )(4) | | | (1.42 | ) | | | (1.49 | ) | | | (1.64 | ) | | | (1.67 | ) | | | (1.70 | ) |
| | |
Portfolio Turnover Rate | | | 0 | %(7) | | | 5 | % | | | 2 | % | | | 5 | % | | | 1 | % | | | 1 | % |
| | |
(1) | | Per share amounts have been calculated using the average shares method. |
(2) | | For the six months ended February 28, 2007 (unaudited). |
(3) | | Performance figures may reflect fee waivers and/or expense reimbursements. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower. Past performance is no guarantee of future results. Total returns for periods of less than one year are not annualized. |
(5) | | Included in the expense ratios are certain non-recurring restructuring (and reorganization, if applicable) fees that were incurred by the Fund during the period. Without these fees, the gross and net expense ratios both would have been 1.95% (Note 11). |
(6) | | Reflects fee waivers and/or expense reimbursements. |
(7) | | Amount represents less than 1%. |
See Notes to Financial Statements.
Legg Mason Partners Aggressive Growth Fund 2007 Semi-Annual Report 11
Financial Highlights (continued)
For a share of each class of capital stock outstanding throughout each year ended August 31, unless otherwise noted:
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| Class C Shares(1) | | 2007(2) | | | 2006 | | | 2005 | | | 2004 | | | 2003 | | | 2002 | |
Net Asset Value, Beginning of Period | | $ | 98.09 | | | $ | 91.94 | | | $ | 76.69 | | | $ | 71.79 | | | $ | 57.44 | | | $ | 85.03 | |
| | |
Income (Loss) From Operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment loss | | | (0.63 | ) | | | (1.21 | ) | | | (1.17 | ) | | | (1.22 | ) | | | (0.99 | ) | | | (1.20 | ) |
Net realized and unrealized gain (loss) | | | 3.17 | | | | 7.36 | | | | 16.42 | | | | 6.12 | | | | 15.34 | | | | (26.39 | ) |
| | |
Total Income (Loss) From Operations | | | 2.54 | | | | 6.15 | | | | 15.25 | | | | 4.90 | | | | 14.35 | | | | (27.59 | ) |
| | |
Net Asset Value, End of Period | | $ | 100.63 | | | $ | 98.09 | | | $ | 91.94 | | | $ | 76.69 | | | $ | 71.79 | | | $ | 57.44 | |
| | |
Total Return(3) | | | 2.59 | % | | | 6.69 | % | | | 19.89 | % | | | 6.83 | % | | | 24.98 | % | | | (32.45 | )% |
| | |
Net Assets, End of Period (millions) | | | $1,904 | | | | $1,900 | | | | $1,782 | | | | $1,611 | | | | $1,415 | | | | $1,076 | |
| | |
Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | | | | | | | |
Gross expenses | | | 1.81 | %(4)(5) | | | 1.80 | % | | | 1.93 | % | | | 1.95 | % | | | 1.96 | % | | | 1.95 | % |
Net expenses | | | 1.81 | (4)(5)(6) | | | 1.78 | (6) | | | 1.93 | | | | 1.93 | (6) | | | 1.96 | | | | 1.95 | |
Net investment loss | | | (1.24 | )(4) | | | (1.24 | ) | | | (1.40 | ) | | | (1.56 | ) | | | (1.60 | ) | | | (1.62 | ) |
| | |
Portfolio Turnover Rate | | | 0 | %(7) | | | 5 | % | | | 2 | % | | | 5 | % | | | 1 | % | | | 1 | % |
| | |
(1) | | Per share amounts have been calculated using the average shares method. |
(2) | | For the six months ended February 28, 2007 (unaudited). |
(3) | | Performance figures may reflect fee waivers and/or expense reimbursements. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower. Past performance is no guarantee of future results. Total returns for periods of less than one year are not annualized. |
(5) | | Included in the expense ratios are certain non-recurring restructuring (and reorganization, if applicable) fees that were incurred by the Fund during the period. Without these fees, the gross and net expense ratios both would have been 1.78% (Note 11). |
(6) | | Reflects fee waivers and/or expense reimbursements. |
(7) | | Amount represents less than 1%. |
See Notes to Financial Statements.
12 Legg Mason Partners Aggressive Growth Fund 2007 Semi-Annual Report
Financial Highlights (continued)
For a share of each class of capital stock outstanding throughout each year ended August 31, unless otherwise noted:
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| Class I Shares(1)(2) | | 2007(3) | | | 2006 | | | 2005 | | | 2004 | | | 2003 | | | 2002 | |
Net Asset Value, Beginning of Period | | $ | 114.00 | | | $ | 105.71 | | | $ | 87.18 | | | $ | 80.67 | | | $ | 63.81 | | | $ | 93.38 | |
| | |
Income (Loss) From Operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment loss | | | (0.10 | ) | | | (0.19 | ) | | | (0.25 | ) | | | (0.36 | ) | | | (0.30 | ) | | | (0.41 | ) |
Net realized and unrealized gain (loss) | | | 3.69 | | | | 8.48 | | | | 18.78 | | | | 6.87 | | | | 17.16 | | | | (29.16 | ) |
| | |
Total Income (Loss) From Operations | | | 3.59 | | | | 8.29 | | | | 18.53 | | | | 6.51 | | | | 16.86 | | | | (29.57 | ) |
| | |
Net Asset Value, End of Period | | $ | 117.59 | | | $ | 114.00 | | | $ | 105.71 | | | $ | 87.18 | | | $ | 80.67 | | | $ | 63.81 | |
| | |
Total Return(4) | | | 3.15 | % | | | 7.84 | % | | | 21.25 | % | | | 8.07 | % | | | 26.42 | % | | | (31.67 | )% |
| | |
Net Assets, End of Period (millions) | | | $1,891 | | | | $1,798 | | | | $1,564 | | | | $1,186 | | | | $876 | | | | $178 | |
| | |
Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | | | | | | | |
Gross expenses | | | 0.74 | %(5)(6) | | | 0.71 | % | | | 0.79 | % | | | 0.80 | % | | | 0.81 | % | | | 0.82 | % |
Net expenses | | | 0.74 | (5)(6)(7) | | | 0.70 | (7) | | | 0.79 | | | | 0.78 | (7) | | | 0.81 | | | | 0.82 | |
Net investment loss | | | (0.17 | )(5) | | | (0.17 | ) | | | (0.27 | ) | | | (0.40 | ) | | | (0.43 | ) | | | (0.49 | ) |
| | |
Portfolio Turnover Rate | | | 0 | %(8) | | | 5 | % | | | 2 | % | | | 5 | % | | | 1 | % | | | 1 | % |
| | |
(1) | | Per share amounts have been calculated using the average shares method. |
(2) | | As of November 20, 2006, Class Y shares were renamed Class I shares. |
(3) | | For the six months ended February 28, 2007 (unaudited). |
(4) | | Performance figures may reflect fee waivers and/or expense reimbursements. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower. Past performance is no guarantee of future results. Total returns for periods of less than one year are not annualized. |
(6) | | Included in the expense ratios are certain non-recurring restructuring (and reorganization, if applicable) fees that were incurred by the Fund during the period. Without these fees, the gross and net expense ratios both would have been 0.71% (Note 11). |
(7) | | Reflects fee waivers and/or expense reimbursements. |
(8) | | Amount represents less than 1%. |
See Notes to Financial Statements.
Legg Mason Partners Aggressive Growth Fund 2007 Semi-Annual Report 13
Financial Highlights (continued)
For a share of each class of capital stock outstanding throughout each year ended August 31, unless otherwise noted:
| | | | |
| |
| Class R Shares(1) | | 2007(2) | |
Net Asset Value, Beginning of Period | | $ | 116.16 | |
| | |
Loss From Operations: | | | | |
Net investment loss | | | (0.13 | ) |
Net realized and unrealized loss | | | (3.49 | ) |
| | |
Total Loss From Operations | | | (3.62 | ) |
| | |
Net Asset Value, End of Period | | $ | 112.54 | |
| | |
Total Return(3) | | | (3.12 | )% |
| | |
Net Assets, End of Period (000s) | | | $10 | |
| | |
Ratios to Average Net Assets: | | | | |
Gross expenses | | | 1.22 | %(4)(5) |
Net expenses | | | 1.22 | (4)(5) |
Net investment loss | | | (0.65 | )(4) |
| | |
Portfolio Turnover Rate | | | 0 | %(6) |
| | |
(1) | | Per share amounts have been calculated using the average shares method. |
(2) | | For the period December 28, 2006 (inception date) to February 28, 2007 (unaudited). |
(3) | | Performance figures may reflect fee waivers and/or expense reimbursements. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower. Past performance is no guarantee of future results. Total returns for periods of less than one year are not annualized. |
(5) | | Included in the expense ratios are certain non-recurring restructuring (and reorganization, if applicable) fees that were incurred by the Fund during the period. Without these fees, the gross and net expense ratios both would have been 1.22% (Note 11). |
(6) | | Amount represents less than 1%. |
See Notes to Financial Statements.
14 Legg Mason Partners Aggressive Growth Fund 2007 Semi-Annual Report
Notes to Financial Statements (unaudited)
| 1. | Organization and Significant Accounting Policies |
Legg Mason Partners Aggressive Growth Fund, Inc. (the “Fund”), a Maryland corporation, is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as a diversified, open-end management investment company.
Effective as of close of business, April 13, 2007, the Fund is known as Legg Mason Partners Aggressive Growth Fund and is a separate diversified series of Legg Mason Partners Equity Trust (the “New Trust”). The New Trust, a Maryland business trust, is registered under 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”). Estimates and assumptions are required to be made regarding assets, liabilities and changes in net assets resulting from operations when financial statements are prepared. Changes in the economic environment, financial markets and any other parameters used in determining these estimates could cause actual results to differ.
(a) Investment Valuation. Equity securities for which market quotations are available are valued at the last sale price or official closing price on the primary market or exchange on which they trade. Debt securities are valued at the mean between the bid and asked prices provided by an independent pricing service that are based on transactions in debt obligations, quotations from bond dealers, market transactions in comparable securities and various other relationships between securities. When prices are not readily available, or are determined not to reflect fair value, 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 may value these investments at fair value as determined in accordance with the procedures approved by the Fund’s Board of Trustees. Short-term obligations with maturities of 60 days or less are valued at amortized cost, which approximates market value.
(b) Repurchase Agreements. When entering into repurchase agreements, it is the Fund’s policy that its custodian or a third party custodian take possession of the underlying collateral securities, the market value of which at least equals the principal amount of the repurchase transaction, including accrued interest. To the extent that any repurchase transaction exceeds one business day, the value of the collateral is marked-to-market to ensure the adequacy of the collateral. If the seller defaults, and the market value of the collateral declines 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) Security Transactions and Investment Income. Security transactions are accounted for on a trade date basis. Interest income, adjusted for amortization of premium and accretion of discount, is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date. Foreign dividend income is recorded on the ex-dividend date or as soon as practical after the Fund determines the existence of a dividend declaration after exercising reasonable due diligence. The cost of investments sold is determined by use of the specific identification method. To the extent any issuer defaults on an expected interest payment, the Fund’s policy is to generally halt any additional interest income accruals and consider the realizability of interest accrued up to the date of default.
Legg Mason Partners Aggressive Growth Fund 2007 Semi-Annual Report 15
Notes to Financial Statements (unaudited) (continued)
(d) 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.
The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments.
Net realized foreign exchange gains or losses arise from sales of foreign currencies, including gains and losses on forward foreign currency contracts, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities, at the date of valuation, resulting from changes in exchange rates.
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.
(e) Distributions to Shareholders. Distributions from net investment income and distributions of net realized gains, if any, are declared at least annually. Distributions to shareholders of the Fund are recorded on the ex-dividend date and are determined in accordance with income tax regulations, which may differ from GAAP.
(f) Class Accounting. Investment income, common expenses and realized/unrealized gain (loss) on investments are allocated to the various classes of the Fund on the basis of daily net assets of each class. Fees relating to a specific class are charged directly to that class.
(g) Federal and Other Taxes. It is the Fund’s policy to comply with the federal income and excise tax requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies. Accordingly, the Fund intends to distribute substantially all of its income and net realized gains on investments, if any, to shareholders each year. Therefore, no federal income tax provision is required in the Fund’s financial statements. Under the applicable foreign tax laws, a withholding tax may be imposed on interest, dividends and capital gains at various rates.
(h) Reclassification. GAAP requires that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or net asset values per share.
16 Legg Mason Partners Aggressive Growth Fund 2007 Semi-Annual Report
Notes to Financial Statements (unaudited) (continued)
| 2. | Investment Management Agreement and Other Transactions with Affiliates |
Legg Mason Partners Fund Advisor, LLC (“LMPFA”) is the Fund’s investment manager and ClearBridge Advisors, LLC (“ClearBridge”), formerly known as CAM North America LLC., is the Fund’s subadviser. LMPFA and ClearBridge are wholly-owned subsidiaries of Legg Mason.
Under the investment management agreement, the Fund pays an investment management fee which is calculated daily and paid monthly at an annual rate of the Fund’s average daily net assets as follows:
| | | |
| |
| Average Daily Net Assets | | Annual Rate | |
First $1 billion | | 0.750 | % |
Next $1 billion | | 0.725 | |
Next $3 billion | | 0.700 | |
Next $5 billion | | 0.675 | |
Over $10 billion | | 0.650 | |
| | |
LMPFA provides administrative and certain oversight services to the Fund. LMPFA delegates to the subadviser the day-to-day portfolio management of the Fund, except for the management of cash and short-term investments. For its services, LMPFA pays ClearBridge 70% of the net management fee it receives from the Fund.
During the six months ended February 28, 2007, the Fund was reimbursed for expenses in the amount of $71,494.
Citigroup Global Markets Inc. (“CGM”), Legg Mason Investor Services, LLC (“LMIS”) and PFS Investments Inc. (“PFS”) serve as distributors of the Fund. LMIS is a wholly-owned broker-dealer subsidiary of Legg Mason.
There is a maximum initial sales charge of 5.75% for Class A shares. Effective November 20, 2006, the maximum initial sales charge on Class A shares of the Fund increased from 5.00% to 5.75% for shares purchased on or after that date. There is a contingent deferred sales charge (“CDSC”) of 5.00% on Class B shares, which applies if redemption occurs within one year from purchase payment. This CDSC declines thereafter by 1.00% per year until no CDSC is incurred. Class C shares have a 1.00% CDSC, which applies if redemption occurs within one year from purchase payment. In certain cases, Class A shares have a 1.00% CDSC, which applies if redemption occurs within one year from purchase payment. This CDSC only applies to those purchases of Class A shares, which, when combined with current holdings of Class A shares, equal or exceed $1,000,000 in the aggregate. These purchases do not incur an initial sales charge.
For the six months ended February 28, 2007, LMIS and its affiliates received sales charges of approximately $216,000 on sales of the Fund’s Class A shares. In addition, for the six months ended February 28, 2007, CDSCs paid to LMIS and its affiliates were approximately:
| | | | | | | | | |
| | | |
| | | Class A | | Class B | | Class C |
CDSCs | | $ | 1,000 | | $ | 538,000 | | $ | 67,000 |
| |
Legg Mason Partners Aggressive Growth Fund 2007 Semi-Annual Report 17
Notes to Financial Statements (unaudited) (continued)
As of the close of business, December 1, 2006, the Fund assumed a liability for deferred compensation in the amount of $355 due to the merger with Legg Mason Partners Health Sciences Fund.
Certain officers and one Trustee of the Fund are employees of Legg Mason or its affiliates and do not receive compensation from the Fund.
During the six months ended February 28, 2007, the aggregate cost of purchases and proceeds from sales of investments were as follows:
| | | |
Purchases | | $ | 9,512,350 |
| |
Sales | | | 192,018,590 |
| |
At February 28, 2007, the aggregate gross unrealized appreciation and depreciation of investments for federal income tax purposes were substantially as follows:
| | | | |
Gross unrealized appreciation | | $ | 4,586,778,296 | |
Gross unrealized depreciation | | | (728,734,976 | ) |
| | |
Net unrealized appreciation | | $ | 3,858,043,320 | |
| | |
| 4. | Class Specific Expenses |
The Fund has adopted a Rule 12b-1 distribution plan and under that plan the Fund pays a service fee with respect to its Class A, B, C and R shares calculated at the annual rate of 0.25% of the average daily net assets of each respective class. The Fund also pays a distribution fee with respect to its Class B, C and R shares calculated at the annual rate of 0.75%, 0.75% and 0.25% of the average daily net assets of each class, respectively. Distribution fees are accrued daily and paid monthly.
For the six months ended February 28, 2007, class specific expenses were as follows:
| | | | | | | | | |
| | | |
| | | Distribution
Fees | | Transfer Agent Fees | | Shareholder
Reports
Expenses |
Class A | | $ | 5,597,025 | | $ | 3,692,522 | | $ | 128,516 |
Class B | | | 11,332,233 | | | 2,662,431 | | | 100,031 |
Class C | | | 9,779,332 | | | 662,974 | | | 57,769 |
Class I* | | | — | | | 1,850 | | | 26,826 |
Class R** | | | 9 | | | — | | | — |
| |
Total | | $ | 26,708,599 | | $ | 7,019,777 | | $ | 313,142 |
| |
| * | | As of November 20, 2006, Class Y shares were renamed Class I shares. |
| ** | | For the period December 28, 2006 (commencement of operations) to February 28, 2007. |
18 Legg Mason Partners Aggressive Growth Fund 2007 Semi-Annual Report
Notes to Financial Statements (unaudited) (continued)
At February 28, 2007, the Fund had 100 million shares of capital stock authorized with a par value of $0.01 per share. The Fund has the ability to issue multiple classes of shares. Each share of a class represents an identical interest in the Fund and has the same rights, except that each class bears certain direct expenses, including those specifically related to the distribution of its shares.
Transactions in shares of each class were as follows:
| | | | | | | | | | | | | | |
| | |
| | | Six Months Ended
February 28, 2007 | | | Year Ended
August 31, 2006 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
Class A | | | | | | | | | | | | | | |
Shares sold | | 3,924,903 | | | $ | 451,988,954 | | | 8,920,885 | | | $ | 966,672,149 | |
Shares repurchased | | (3,464,348 | ) | | | (398,006,150 | ) | | (5,954,155 | ) | | | (642,793,027 | ) |
Shares issued with merger | | 171,021 | | | | 19,764,046 | | | — | | | | — | |
| | |
Net Increase | | 631,576 | | | $ | 73,746,850 | | | 2,966,730 | | | $ | 323,879,122 | |
| | |
Class B | | | | | | | | | | | | | | |
Shares sold | | 763,008 | | | $ | 77,753,270 | | | 2,306,292 | | | $ | 223,382,138 | |
Shares repurchased | | (2,675,278 | ) | | | (273,734,280 | ) | | (4,629,359 | ) | | | (446,639,925 | ) |
Shares issued with merger | | 221,548 | | | | 22,725,893 | | | — | | | | — | |
| | |
Net Decrease | | (1,690,722 | ) | | $ | (173,255,117 | ) | | (2,323,067 | ) | | $ | (223,257,787 | ) |
| | |
Class C | | | | | | | | | | | | | | |
Shares sold | | 1,256,396 | | | $ | 129,209,976 | | | 3,446,082 | | | $ | 336,518,154 | |
Shares repurchased | | (1,817,594 | ) | | | (187,020,555 | ) | | (3,458,299 | ) | | | (336,155,352 | ) |
Shares issued with merger | | 118,445 | | | | 12,257,238 | | | — | | | | — | |
| | |
Net Increase (Decrease) | | (442,753 | ) | | $ | (45,553,341 | ) | | (12,217 | ) | | $ | 362,802 | |
| | |
Class I† | | | | | | | | | | | | | | |
Shares sold | | 2,282,393 | | | $ | 270,846,027 | | | 3,446,510 | | | $ | 385,670,920 | |
Shares repurchased | | (1,978,055 | ) | | | (239,603,226 | ) | | (2,466,011 | ) | | | (273,145,937 | ) |
| | |
Net Increase | | 304,338 | | | $ | 31,242,801 | | | 980,499 | | | $ | 112,524,983 | |
| | |
Class R‡ | | | | | | | | | | | | | | |
Shares sold | | 86 | | | $ | 10,000 | | | — | | | | — | |
| | |
Net Increase | | 86 | | | $ | 10,000 | | | — | | | | — | |
| | |
| † | | As of November 20, 2006, Class Y shares were renamed Class I shares. |
| ‡ | | For the period December 28, 2006 (commencement of operations) to February 28, 2007. |
| 6. | Capital Loss Carryforward |
On August 31, 2006, the Fund had a net capital loss carryforward of approximately $1,117,565 which expires in 2011. This amount will be available to offset any future taxable gains.
On December 1, 2006, the Fund acquired the assets and certain liabilities of the Legg Mason Partners Health Sciences Fund, pursuant to a plan of reorganization approved by
Legg Mason Partners Aggressive Growth Fund 2007 Semi-Annual Report 19
Notes to Financial Statements (unaudited) (continued)
Legg Mason Partners Health Sciences Fund shareholders on November 20, 2006. Total shares issued by the Fund and the total net assets of Legg Mason Partners Health Sciences Fund and the Fund on the date of the transfer were as follows:
| | | | | | | | |
| | | |
| Acquired Fund | | Shares Issued
by the Fund | | Total Net Assets of the
Acquired Fund | | Total Net Assets
of the Fund |
Legg Mason Partners Health Sciences Fund | | 511,014 | | $ | 54,747,177 | | $ | 10,785,330,413 |
| |
The total net assets of Legg Mason Partners Health Sciences Fund before acquisition included unrealized appreciation of $2,033,044, accumulated net realized loss of $3,665,751 and accumulated net investment loss of $2,597. Total net assets of the Fund immediately after the transfer were $10,840,077,590. The transaction was structured to qualify as a tax-free reorganization under the Internal Revenue Code of 1986, as amended.
On May 31, 2005, the U.S. Securities and Exchange Commission (“SEC”) issued an order in connection with the settlement of an administrative proceeding against Smith Barney Fund Management LLC (“SBFM”), the Fund’s prior investment manager, and CGM, relating to the appointment of an affiliated transfer agent for the Smith Barney family of mutual funds (the “Funds”).
The SEC order finds that SBFM and CGM willfully violated Section 206(1) of the Investment Advisers Act of 1940 (the “Advisers Act”). Specifically, the order finds that SBFM and CGM knowingly or recklessly failed to disclose to the boards of the Funds in 1999 when proposing a new transfer agent arrangement with an affiliated transfer agent that: First Data Investors Services Group (“First Data”), the Funds’ then existing transfer agent, had offered to continue as transfer agent and do the same work for substantially less money than before; and that Citigroup Asset Management (“CAM”), the Citigroup business unit that, at the time, included the Fund’s investment manager and other investment advisory companies, had entered into a side letter with First Data under which CAM agreed to recommend the appointment of First Data as sub-transfer agent to the affiliated transfer agent in exchange for, among other things, a guarantee by First Data of specified amounts of asset management and investment banking fees to CAM and CGM. The order also finds that SBFM and CGM willfully violated Section 206(2) of the Advisers Act by virtue of the omissions discussed above and other misrepresentations and omissions in the materials provided to the Funds’ boards, including the failure to make clear that the affiliated transfer agent would earn a high profit for performing limited functions while First Data continued to perform almost all of the transfer agent functions, and the suggestion that the proposed arrangement was in the Funds’ best interests and that no viable alternatives existed. SBFM and CGM do not admit or deny any wrongdoing or liability. The settlement does not establish wrongdoing or liability for purposes of any other proceeding.
The SEC censured SBFM and CGM and ordered them to cease and desist from violations of Sections 206(1) and 206(2) of the Advisers Act. The order required Citigroup to pay $208.1 million, including $109 million in disgorgement of profits, $19.1 million in
20 Legg Mason Partners Aggressive Growth Fund 2007 Semi-Annual Report
Notes to Financial Statements (unaudited) (continued)
interest, and a civil money penalty of $80 million. Approximately $24.4 million has already been paid to the Funds, primarily through fee waivers. The remaining $183.7 million, including the penalty, has been paid to the U.S. Treasury and will be distributed pursuant to a plan submitted for the approval of the SEC. At this time, there is no certainty as to how the above-described proceeds of the settlement will be distributed, to whom such distributions will be made, the methodology by which such distributions will be allocated, and when such distributions will be made. The order also required that transfer agency fees received from the Funds since December 1, 2004, less certain expenses, be placed in escrow and provided that a portion of such fees might be subsequently distributed in accordance with the terms of the order. On April 3, 2006, an aggregate amount of approximately $9 million was distributed to the affected Funds.
The order required SBFM to recommend a new transfer agent contract to the Funds’ boards within 180 days of the entry of the order; if a Citigroup affiliate submitted a proposal to serve as transfer agent or sub-transfer agent, SBFM and CGM would have been required, at their expense, to engage an independent monitor to oversee a competitive bidding process. On November 21, 2005, and within the specified timeframe, the Fund’s Board selected a new transfer agent for the Fund. No Citigroup affiliate submitted a proposal to serve as transfer agent. Under the order, SBFM also must comply with an amended version of a vendor policy that Citigroup instituted in August 2004.
Although there can be no assurance, the Fund’s manager does not believe that this matter will have a material adverse effect on the Fund.
On December 1, 2005, Citigroup completed the sale of substantially all of its global asset management business, including SBFM, to Legg Mason.
9. Legal Matters
Beginning in August 2005, five class action lawsuits alleging violations of federal securities laws and state law were filed against CGM and SBFM, (collectively, the “Defendants”) based on the May 31, 2005 settlement order issued against the Defendants by the SEC as described in Note 8. The complaints seek injunctive relief and compensatory and punitive damages, removal of SBFM as the investment manager for the Smith Barney family of funds, rescission of the Funds’ management and other contracts with SBFM, recovery of all fees paid to SBFM pursuant to such contracts, and an award of attorneys’ fees and litigation expenses.
On October 5, 2005, a motion to consolidate the five actions and any subsequently filed, related action was filed. That motion contemplates that a consolidated amended complaint alleging substantially similar causes of action will be filed in the future.
As of the date of this report, the Fund’s manager believes that resolution of the pending lawsuit will not have a material effect on the financial position or results of operations of the Fund or the ability of the Fund’s manager and its affiliates to continue to render services to the Fund under their respective contracts.
* * *
Legg Mason Partners Aggressive Growth Fund 2007 Semi-Annual Report 21
Notes to Financial Statements (unaudited) (continued)
Beginning in June 2004, class action lawsuits alleging violations of the federal securities laws were filed against CGM and a number of its then affiliates, including SBFM and Salomon Brothers Asset Management Inc (“SBAM”), which were then investment adviser or manager to certain of the funds (the “Managers”), substantially all of the mutual funds then managed by the Managers (the “Defendant Funds”), and Board members of the Defendant Funds (collectively, the “Defendants”). The complaints alleged, among other things, that CGM created various undisclosed incentives for its brokers to sell Smith Barney and Salomon Brothers funds. In addition, according to the complaints, the Managers caused the Defendant Funds to pay excessive brokerage commissions to CGM for steering clients towards proprietary funds. The complaints also alleged that the defendants breached their fiduciary duty to the Defendant Funds by improperly charging Rule 12b-1 fees and by drawing on fund assets to make undisclosed payments of soft dollars and excessive brokerage commissions. The complaints also alleged that the Defendant Funds failed to adequately disclose certain of the allegedly wrongful conduct. The complaints sought injunctive relief and compensatory and punitive damages, rescission of the Defendant Funds’ contracts with the Managers, recovery of all fees paid to the Managers pursuant to such contracts and an award of attorneys’ fees and litigation expenses.
On December 15, 2004, a consolidated amended complaint (the “Complaint”) was filed alleging substantially similar causes of action. On May 27, 2005, all of the Defendants filed motions to dismiss the Complaint. On July 26, 2006, the court issued a decision and order (1) finding that plaintiffs lacked standing to sue on behalf of the shareholders of the Funds in which none of the plaintiffs had invested and dismissing those Funds from the case (although stating that they could be brought back into the case if standing as to them could be established), and (2) other than one stayed claim, dismissing all of the causes of action against the remaining Defendants, with prejudice, except for the cause of action under Section 36(b) of the 1940 Act, which the court granted plaintiffs leave to replead as a derivative claim.
On October 16, 2006, plaintiffs filed their Second Consolidated Amended Complaint (“Second Amended Complaint”) which alleges derivative claims on behalf of nine funds identified in the Second Amended Complaint, including the Fund, under Section 36(b) of the 1940 Act, against CAM, SBAM, SBFM and CGM as investment advisers to the identified funds, as well as CGM as a distributor for the identified funds (collectively, the “Second Amended Complaint Defendants”). The Second Amended Complaint alleges no claims against any of the Funds or any of their Board members. Under Section 36(b), the Second Amended Complaint alleges similar facts and seeks similar relief against the Second Amended Complaint Defendants as the Complaint.
Additional lawsuits arising out of these circumstances and presenting similar allegations and requests for relief may be filed in the future.
On September 16, 2005, the staff of the SEC informed SBFM and SBAM that the staff is considering recommending that the SEC institute administrative proceedings against SBFM and SBAM for alleged violations of Section 19(a) and 34(b) of the 1940 Act (and
22 Legg Mason Partners Aggressive Growth Fund 2007 Semi-Annual Report
Notes to Financial Statements (unaudited) (continued)
related Rule 19a-1). The notification is a result of an industry wide inspection by the SEC and is based upon alleged deficiencies in disclosures regarding dividends and distributions paid to shareholders of certain funds. Section 19(a) and related Rule 19a-1 of the 1940 Act generally require funds that are making dividend and distribution payments to provide shareholders with a written statement disclosing the source of the dividends and distributions, and, in particular, the portion of the payments made from each of net investment income, undistributed net profits and/or paid-in capital. In connection with the contemplated proceedings, the staff may seek a cease and desist order and/or monetary damages from SBFM or SBAM.
Although there can be no assurance, the Fund’s manager believes that this matter is not likely to have a material adverse effect on the Fund.
| 11. | Special Shareholder Meeting and Reorganization |
Shareholders approved a number of initiatives designed to streamline and restructure the fund complex. These matters generally are expected to be implemented in 2007. As noted in the proxy materials, Legg Mason will pay for a portion of the costs related to these initiatives. The portions of the costs that are borne by the Fund will be recognized in the period during which the expense is incurred. Such expenses relate to obtaining shareholder votes for proposals presented in the proxy, the election of board members, retirement of board members, as well as printing, mailing, and soliciting proxies. The portions of these costs borne by the Fund and reflected in the Statement of Operations are deemed extraordinary and, therefore, not subject to the expense limitation agreements, if applicable. See also “Additional Shareholder Information” at the end of this report.
| 12. Recent | Accounting Pronouncements |
During June 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation 48 (“FIN 48” or the “Interpretation”), Accounting for Uncertainty in Income
Taxes—an interpretation of FASB Statement 109. FIN 48 supplements FASB Statement 109, Accounting for Income Taxes, by defining the confidence level that a tax position must meet in order to be recognized in the financial statements. FIN 48 prescribes a comprehensive model for how a fund should recognize, measure, present, and disclose in its financial statements uncertain tax positions that the fund has taken or expects to take on a tax return. FIN 48 requires that the tax effects of a position be recognized only if it is “more likely than not” to be sustained based solely on its technical merits. Management must be able to conclude that the tax law, regulations, case law, and other objective information regarding the technical merits sufficiently support the position’s sustainability with a likelihood of more than 50 percent. FIN 48 is effective for fiscal periods beginning after December 15, 2006, which for this Fund will be September 1, 2007. At adoption, the financial statements must be adjusted to reflect only those tax positions that are more likely than not to be sustained as of the adoption date. Management of the Fund has determined that adopting FIN 48 will not have a material impact on the Fund’s financial statements.
* * *
Legg Mason Partners Aggressive Growth Fund 2007 Semi-Annual Report 23
Notes to Financial Statements (unaudited) (continued)
On September 20, 2006, FASB released Statement of Financial Accounting Standards No. 157 Fair Value Measurements (“FAS 157”). FAS 157 establishes an authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair value measurements. The application of FAS 157 is required for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. At this time, management is evaluating the implications of FAS 157 and its impact on the financial statements has not yet been determined.
24 Legg Mason Partners Aggressive Growth Fund 2007 Semi-Annual Report
Additional Shareholder Information (unaudited)
Results of a Special Meeting of Shareholders
On January 12, 2007, a Special Meeting of Shareholders was held to vote on various proposals recently approved by the Fund’s Board Members. The following tables provide the number of votes cast for, against or withheld, as well as the number of abstentions and broker non-votes as to the following proposals: (1) Election of Board Members and (2) Revise, Remove and Convert Fundamental Investment Policies.
1. Election of Board Members
| | | | | | | | |
| Nominees: | | Votes For | | Authority
Withheld | | Abstentions | | Broker
Non-Votes |
Paul R. Ades | | 50,131,114.044 | | 1,064,965.199 | | 0.000 | | 0.000 |
Andrew L. Breech | | 50,146,689.772 | | 1,049,389.471 | | 0.000 | | 0.000 |
Dwight B. Crane | | 50,119,930.548 | | 1,076,148.695 | | 0.000 | | 0.000 |
Robert M. Frayn, Jr. | | 50,109,227.437 | | 1,086,851.806 | | 0.000 | | 0.000 |
Frank G. Hubbard | | 50,137,213.087 | | 1,058,866.156 | | 0.000 | | 0.000 |
Howard J. Johnson | | 50,135,388.238 | | 1,060,691.005 | | 0.000 | | 0.000 |
David E. Maryatt | | 50,123,081.042 | | 1,072,998.201 | | 0.000 | | 0.000 |
Jerome H. Miller | | 50,130,537.102 | | 1,065,542.141 | | 0.000 | | 0.000 |
Ken Miller | | 50,142,445.017 | | 1,053,634.226 | | 0.000 | | 0.000 |
John J. Murphy | | 50,145,297.672 | | 1,050,781.571 | | 0.000 | | 0.000 |
Thomas F. Schlafly | | 50,125,295.239 | | 1,070,784.004 | | 0.000 | | 0.000 |
Jerry A. Viscione | | 50,139,766.118 | | 1,056,313.125 | | 0.000 | | 0.000 |
R. Jay Gerken, CFA | | 50,127,625.042 | | 1,068,454.201 | | 0.000 | | 0.000 |
| |
2. Revise, Remove and Convert Fundamental Investment Policies
| | | | | | | | |
| Items Voted On | | Votes For | | Votes Against | | Abstentions | | Broker Non-Votes |
Revise: | | | | | | | | |
Borrowing Money | | 44,177,707.250 | | 1,286,449.708 | | 716,953.285 | | 5,014,969.000 |
Underwriting | | 44,227,855.408 | | 1,214,606.543 | | 738,648.292 | | 5,014,969.000 |
Lending | | 44,162,286.347 | | 1,286,689.044 | | 732,134.852 | | 5,014,969.000 |
Issuing Senior Securities | | 44,187,548.859 | | 1,262,580.845 | | 730,980.539 | | 5,014,969.000 |
Real Estate | | 44,238,404.859 | | 1,212,098.406 | | 730,606.978 | | 5,014,969.000 |
Commodities | | 44,175,856.122 | | 1,266,389.863 | | 738,864.258 | | 5,014,969.000 |
Concentration | | 44,183,371.241 | | 1,254,721.991 | | 743,017.011 | | 5,014,969.000 |
Remove: | | | | | | | | |
Fundamental Policy | | | | | | | | |
Relating to Diversification | | 44,156,418.257 | | 1,292,670.654 | | 732,021.332 | | 5,014,969.000 |
Convert: | | | | | | | | |
Fundamental to | | | | | | | | |
Non-Fundamental | | 44,017,765.861 | | 1,414,235.453 | | 749,108.929 | | 5,014,969.000 |
| |
Legg Mason Partners Aggressive Growth Fund 25
Legg Mason Partners Aggressive Growth Fund
| | |
TRUSTEES Paul R. Ades Andrew L. Breech Dwight B. Crane Robert M. Frayn, Jr. R. Jay Gerken, CFA
Chairman Frank G. Hubbard Howard J. Johnson David E. Maryatt Jerome H. Miller Ken Miller John J. Murphy Thomas F. Schlafly Jerry A. Viscione | | INVESTMENT MANAGER Legg Mason Partners Fund Advisor, LLC SUBADVISER ClearBridge Advisors, LLC DISTRIBUTORS Citigroup Global Markets Inc. Legg Mason Investor Services, LLC PFS Investments Inc. CUSTODIAN State Street Bank and Trust Company TRANSFER AGENT PFPC Inc. 4400 Computer Drive Westborough, Massachusetts 01581 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM KPMG LLP 345 Park Avenue New York, New York 10154 |
This report is submitted for the general information of the shareholders of Legg Mason Partners Aggressive Growth Fund but it may also be used as sales literature when preceded or accompanied by the current Prospectus.
This report must be preceded or accompanied by a free prospectus. Investors should consider the Fund’s investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other important information about the Fund. Please read the prospectus carefully before investing.
www.leggmason.com/InvestorServices
©2007 Legg Mason Investor Services, LLC
Member NASD, SIPC
Legg Mason Partners
Aggressive Growth Fund
The Fund is a separate investment fund of the Legg Mason Partners Equity Trust, a Maryland business trust.
LEGG MASON PARTNERS AGGRESSIVE GROWTH FUND
Legg Mason Partners Funds
125 Broad Street
10th Floor, MF-2
New York, New York 10004
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the SEC’s website at www.sec.gov. The Fund’s Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C., and information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. To obtain information on Form N-Q from the Fund, shareholders can call Legg Mason Partners Shareholder Services at 1-800-451-2010.
Information on how the Fund voted proxies relating to portfolio securities during the prior 12-month period ended June 30th of each year, and a description of the policies and procedures that the Fund uses to determine how to vote proxies related to portfolio transactions is available (1) without charge, upon request, by calling 1-800-451-2010, (2) on the Fund’s website at www.leggmason.com/InvestorServices and (3) on the SEC’s website at www.sec.gov.
Not Applicable
| ITEM 3. | AUDIT COMMITTEE FINANCIAL EXPERT. |
Not Applicable
| ITEM 4. | Principal Accountant Fees and Services |
Not Applicable
| ITEM 5. | AUDIT COMMITTEE OF LISTED REGISTRANTS. |
Not applicable.
| ITEM 6. | SCHEDULE OF INVESTMENTS. |
Included herein under Item 1.
| ITEM 7. | DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable.
| ITEM 9. | PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. |
Not applicable.
| ITEM 10. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. |
Not applicable.
| ITEM 11. | CONTROLS AND PROCEDURES. |
| | (a) | The registrant’s principal executive officer and principal financial officer have concluded that the registrant’s 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 registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the registrant’s last fiscal half-year (the registrant’s second fiscal half-year in the case of an annual report) that have materially affected, or are likely to materially affect the registrant’s internal control over financial reporting. |
(a) (1) Not applicable.
Exhibit 99.CODE ETH
(a) (2) Certifications pursuant to section 302 of the Sarbanes-Oxley Act of 2002 attached hereto.
Exhibit 99.CERT
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 attached hereto.
Exhibit 99.906CERT
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, there unto duly authorized.
Legg Mason Partners Equity Trust
| | |
By: | | /s/ R. Jay Gerken |
| | | (R. Jay Gerken) |
| | Chief Executive Officer of Legg Mason Partners Equity Trust |
Date: May 7, 2007
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. Jay Gerken |
| | (R. Jay Gerken) |
| | Chief Executive Officer of Legg Mason Partners Equity Trust |
Date: May 7, 2007
| | |
By: | | /s/ Kaprel Ozsolak |
| | (Kaprel Ozsolak) |
| | Chief Financial Officer of Legg Mason Partners Equity Trust |
Date: May 7, 2007
