<PAGE>
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
Edmund J. Cashman, Jr.
Nelson A. Diaz
Richard G. Gilmore
Arnold L. Lehman
Dr. Jill E. McGovern
G. Peter O'Brien
T. A. Rodgers
Edward A. Taber, III
Transfer and Shareholder Servicing Agent
Boston Financial Data Services
Boston, MA
Custodian
State Street Bank & Trust Company
Boston, MA
Counsel
Kirkpatrick & Lockhart LLP
Washington, D.C.
Independent Auditors
Ernst & Young LLP
Philadelphia, PA
This report is not to be distributed unless preceded or
accompanied by a prospectus.
Legg Mason Wood Walker, Incorporated
---------------------------------------
100 Light Street
P.O. Box 1476, Baltimore, MD 21203-1476
410 . 539 . 0000
LMF-018
4/00
Semi-Annual Report
February 29, 2000
Legg Mason
Cash
Reserve
Trust
[LEGG MASON FUNDS LOGO]
The Art of Investing/SM/
<PAGE>
To Our Shareholders,
The Legg Mason Cash Reserve Trust now has nearly $1.9 billion invested in a
diversified portfolio of high quality fixed income securities with relatively
short maturities.
As this letter is written on March 24, the Trust's annualized yield for the
past 7 days is 5.18%* (an effective yield of 5.31% when the compounding effect
of dividend reinvestments is included). The average weighted maturity of our
portfolio is 54 days.
A complete listing of the Trust's portfolio holdings at February 29, 2000,
appears in this report. You will note that over 70% of the Trust's portfolio is
invested in U.S. government agency securities and repurchase agreements fully
secured by such securities.
You may add to your Cash Reserve Trust account at any time by sending a check
for $500 or more (made payable to Legg Mason Cash Reserve Trust) to:
Legg Mason Cash Reserve Trust
P.O. Box 1476
Baltimore, Maryland 21203-1476
Please include your account number on any checks you send to us.
Sincerely,
/s/ John F. Curley
__________________
John F. Curley, Jr.
Chairman
March 24, 2000
- ------------
*The yields shown here are for past periods and are not intended to indicate
future performance. An investment in this Fund is not insured or guaranteed by
the Federal Deposit Insurance Corporation or any other government agency.
Although the Fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the Fund.
<PAGE>
Statement of Net Assets
Legg Mason Cash Reserve Trust
February 29, 2000 (Unaudited)
(Amounts in Thousands)
<TABLE>
<CAPTION>
Rate Maturity Date Par Value
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Asset-Backed Securities -- 0.5%
Americredit Automobile Receivables Trust 6.04% 2/5/01 $ 10,000 $ 10,000
--------
Total Asset-Backed Securities (Identified Cost -- $10,000) 10,000
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Certificates of Deposit -- 2.1%
Harris Bank 5.85% 4/4/00 20,000 20,000
UBS AG Stamford Branch 5.70% 7/10/00 10,000 9,999/A/
Wilmington Trust 5.70% 7/13/00 9,000 9,000
--------
Total Certificates of Deposit (Identified Cost -- $38,999) 38,999
--------------------------------------------------------------------------------------------------------------------------------
Commercial Paper -- 3.0%
AT&T Corp. 5.99% 7/13/00 5,000 4,999/B,C/
BMW US Capital Corporation 5.76% 3/24/00 4,000 3,985
DaimlerChrysler North America 5.81% 3/23/00 8,000 7,972
Merrill Lynch & Co., Inc. 5.86% 3/14/00 10,000 9,979
Motorola Credit Corporation 5.82% 3/10/00 20,000 19,971
Volkswagon America 5.80% 3/6/00 10,000 9,992
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Total Commercial Paper (Identified Cost -- $56,898) 56,898
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Corporate and Other Bonds -- 8.5%
AT&T Capital Corporation 6.875% 1/16/01 10,000 10,013
African Development Bank 9.30% 7/1/00 4,300 4,350/A/
American General Finance Corporation 7.25% 4/15/00 3,000 3,005
Associates Corporation North America 5.85% to 9.125% 4/1/00 to 1/15/01 15,000 15,000
BankAmerica Corporation 9.75% 7/1/00 4,000 4,044
Chase Manhattan Corporation 10.125% 11/1/00 10,000 10,246
DaimlerChrysler North America 5.806% 6/30/00 10,000 9,998/B/
Fleet Financial Group 7.125% 5/1/00 10,000 10,030
Ford Motor Credit Company 6.375% 10/6/00 10,000 9,992
GTE Corporation 6.155% 6/12/00 10,000 9,998/B/
International Leasing Finance Corporation 7.00% 5/15/00 2,500 2,509
Monsanto Company 6.00% 7/1/00 4,000 4,003
Morgan Stanley Dean Witter Discover 6.25% 3/15/00 5,000 5,002
Norwest Corporation 6.00% 3/15/00 2,500 2,501
Quebec Province 9.125% 3/1/00 10,000 10,000/A/
Salomon Smith Barney Holdings Incorporated 5.875% to 6.50% 2/1/01 to 3/1/00 25,000 24,923
Wal-Mart Stores Inc. 5.85% to 9.10% 6/1/00 to 7/15/00 14,000 14,034
Walt Disney Company 5.83% 5/5/00 10,000 9,997
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Total Corporate and Other Bonds (Identified Cost -- $159,645) 159,645
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</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Rate Maturity Date Par Value
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Medium-Term Notes -- 12.3%
Associates Corporation North America 6.32% 6/16/00 $ 4,000 $ 4,007
Beneficial Corporation 6.31% to 6.49% 7/18/00 to 9/27/00 10,000 10,020
Chrysler Financial Corporation 5.25% to 5.95% 4/6/00 to 10/19/00 13,000 12,948
Chrysler Financial Corporation 5.97% 1/29/01 5,000 5,005/B/
CIT Group Incorporated 5.85% 5/26/00 6,000 5,996
Credit Suisse First Boston Incorporated 5.59% 6/8/00 10,000 9,998/C/
Eaton Corporation 6.165% 4/17/00 10,000 10,000/B/
Ford Motor Credit Company 7.60% 3/29/00 5,000 5,009
General Electric Capital Corporation 5.925% to 6.12% 5/1/00 to 8/15/00 20,180 20,186
General Motors Acceptance Corporation 5.40% to 7.125% 5/10/00 to 2/26/01 8,000 7,942
Heller Financial Incorporated 6.328% 2/2/01 10,000 10,016
J.P. Morgan & Co. Incorporated 5.60% 6/23/00 10,000 10,000
John Deere Capital Corporation 5.729% to 6.27% 7/13/00 to 10/11/00 13,000 13,004
Morgan Stanley Dean Witter Discover 5.89% 3/20/00 20,000 20,000
National Rural Utilities 6.141% 6/26/00 5,000 5,000/B/
Norwest Corporation 5.31% to 7.125% 3/31/00 to 10/15/00 15,000 15,007
Sanwa Business Credit Corporation 6.50% to 6.54% 6/20/00 to 8/15/00 15,000 15,029/C/
SBC Communications 6.50% 8/15/00 10,000 10,029
Statoil 6.25% 10/10/00 10,000 9,979/A/
TCI Communications Incorporated 6.46% 3/6/00 1,000 1,000
Texaco Capital Incorporated 5.11% 5/3/00 10,000 9,999
Textron Financial Corporation 6.098% 2/2/01 10,000 10,000/B,C/
US Leasing Capital Corporation 5.79% 1/23/01 10,000 9,931
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Total Medium-Term Notes (Identified Cost -- $230,105) 230,105
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U.S. Government and Agency Obligations -- 52.3%
Fannie Mae 4.98% to 5.82% 3/2/00 to 5/11/00 169,000 168,255
Federal Agricultural Mortgage Corporation 5.68% 3/13/00 40,000 39,924
Federal Home Loan Bank 5.14% to 5.82% 3/1/00 to 6/14/00 185,000 184,457
Freddie Mac 5.58% to 5.8% 3/7/00 to 4/25/00 489,005 486,902
Sallie Mae 5.62% 3/20/00 30,000 29,911
Tennessee Valley Authority 5.61% to 5.62% 3/16/00 to 3/27/00 70,000 69,768
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Total U.S. Government and Agency Obligations (Identified Cost -- $979,217) 979,217
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</TABLE>
3
<PAGE>
Statement of Net Assets -- Continued
Legg Mason Cash Reserve Trust
<TABLE>
<CAPTION>
Par Value
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreements -- 20.1%
J.P. Morgan Securities, Inc.
5.75%, dated 2/29/00, to be repurchased at $159,518 on 3/1/00
(Collateral: $141,475 Fannie Mae notes, 5.75% - 6.50%, due
12/15/08 - 11/29/09, value $134,388; $30,465 Freddie Mac notes,
6.00%, due 6/22/01, value $30,728) $159,492 $ 159,492
Merrill Lynch Government Securities, Inc.
5.77%, dated 2/29/00, to be repurchased at $216,698 on 3/1/00
(Collateral: $224,990 Fannie Mae notes, 0% - 7.20%,
due 11/30/00 - 1/15/30, value $221,161) 216,663 216,663
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Total Repurchase Agreements (Identified Cost -- $376,155) 376,155
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Total investments, at amortized cost and value -- 98.8% 1,851,019/D/
Other assets less liabilities -- 1.2% 22,426
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Net assets applicable to 1,873,388 shares outstanding -- 100.0% $1,873,445
==========
Net asset value per share $1.00
=====
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</TABLE>
/A/ Yankee Bond or Certificate of Deposit -- Dollar-denominated bond or
certificate of deposit issued in the U.S. by foreign entities.
/B/ The rate of interest earned on this security is tied to the London
Interbank Offered Rate (LIBOR). The coupon rate shown is the rate at
February 29, 2000.
/C/ 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.
/D/ Also represents cost for federal income tax purposes.
See notes to financial statements.
4
<PAGE>
Statement of Operations
Legg Mason Cash Reserve Trust
For the Six Months Ended February 29, 2000
(Amounts in Thousands) (Unaudited)
<TABLE>
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Income:
Interest $49,382
Expenses:
Management fee $4,163
Distribution fee 892
Transfer agent and shareholder servicing expense 725
Audit and legal fees 45
Custodian fee 120
Registration fees 79
Reports to shareholders 59
Trustees' fees 7
Other expenses 16
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Total expenses 6,106
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Net Investment Income 43,276
Net Realized Gain/(Loss) on Investments 0
-------------------------------------------------------------------------------------------------------
Change in Net Assets Resulting From Operations $43,276
=======
</TABLE>
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Statement of Changes in Net Assets
Legg Mason Cash Reserve Trust
(Amounts in Thousands)
<TABLE>
<CAPTION>
For the Six For the
Months Ended Year Ended
February 29, 2000 August 31, 1999
-------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
Change in Net Assets:
Net investment income $ 43,276 $ 70,120
Net realized gain/(loss) on investments 0 (2)
---------- ----------
Change in net assets resulting from operations 43,276 70,118
Distributions to shareholders from net investment income (43,276) (70,120)
Change in net assets from Trust share transactions 96,225 354,610
---------- ----------
Change in net assets 96,225 354,608
Net Assets:
Beginning of period 1,777,220 1,422,612
-------------------------------------------------------------------------------------------------------
End of period $1,873,445 $1,777,220
========== ==========
</TABLE>
See notes to financial statements.
5
<PAGE>
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. This information has been derived from information
provided in the financial statements.
<TABLE>
<CAPTION>
Investment Operations
--------------------------------------
Distributions
Net Asset Net Realized Total From Net Asset
Value, Net Gain From Net Value,
Beginning Investment (Loss) on Investment Investment End of
of Period Income Investments Operations Income Period
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Six Months Ended
Feb. 29, 2000* $1.00 $.02 -- $.02 $(.02) $1.00
Years Ended Aug. 31,
1999 1.00 .04 (Nil) .04 (.04) 1.00
1998 1.00 .05 Nil .05 (.05) 1.00
1997 1.00 .05 Nil .05 (.05) 1.00
1996 1.00 .05 Nil .05 (.05) 1.00
1995 1.00 .05 Nil .05 (.05) 1.00
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data
------------------------------------------------------------
Net Net
Investment Assets,
Expenses Income End of
Total to Average to Average Period
Return Net Assets Net Assets (in millions)
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Six Months Ended
Feb. 29, 2000* 4.89%/A/ .69%/A/ 4.85%/A/ $1,873
Years Ended Aug. 31,
1999 4.46% .75% 4.37% 1,777
1998 4.96% .78% 4.86% 1,423
1997 4.84% .75% 4.73% 1,343
1996 4.92% .70% 4.81% 1,224
1995 5.08% .71% 5.03% 1,153
- ----------------------------------------------------------------------------------------------
</TABLE>
/A/ Annualized.
* Unaudited.
See notes to financial statements.
-----------------------------------------
Notes to Financial Statements
Legg Mason Cash Reserve Trust
(Amounts in Thousands) (Unaudited)
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1. Significant Accounting Policies:
The Legg Mason Cash Reserve Trust ("Trust") is registered under the
Investment Company Act of 1940, as amended, as an open-end, diversified
management investment company. The policies set forth below are in conformity
with generally accepted accounting principles.
Security Valuation
Portfolio securities are valued under the amortized cost method, which
approximates current market value. Under this method, securities are valued
at cost when purchased and, thereafter, a constant proportionate amortization
of any discount or premium is recorded until maturity of the security.
Dividends to Shareholders
Dividends are declared daily and paid monthly. Dividends payable are
recorded on the dividend record date. Net investment income for dividend
purposes consists of interest accrued, plus original issue and market
discount earned, less amortization of market premium and accrued expenses. At
February 29, 2000, dividends payable of $3,657 were accrued.
6
<PAGE>
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Investment Transactions
Security transactions are recorded on the trade date. Realized gains and
losses from security transactions are reported on an identified cost basis
for both financial reporting and federal income tax purposes.
Federal Income Taxes
No provision for federal income or excise taxes is required since the
Trust intends to continue to qualify as a regulated investment company and
distribute substantially all of its taxable income to its shareholders.
Use of Estimates
Preparation of the financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.
2. Repurchase Agreements
All repurchase agreements are fully collateralized by obligations issued
by the U.S. Government or its agencies, and such collateral is in the
possession of the Trust's custodian. The value of such collateral includes
accrued interest. Risks arise from the possible delay in recovery or
potential loss of rights in the collateral should the issuer of the
repurchase agreement fail financially. The Trust's investment adviser reviews
the value of the collateral and the creditworthiness of those banks and
dealers with which the Trust enters into repurchase agreements to evaluate
potential risks.
3. Transactions With Affiliates:
The Trust has a management agreement with Legg Mason Fund Adviser, Inc.
("LMFA"). Pursuant to this agreement, LMFA provides the Trust with management
and administrative services, for which the Trust pays a fee at an annual rate
ranging from 0.50% of the first $500 million of average daily net assets of
the Trust to 0.40% of average daily net assets in excess of $2 billion.
Management fees of $674 were payable to LMFA at February 29, 2000.
Western Asset Management Company ("Adviser") serves as investment adviser
to the Trust. The Adviser is responsible for the actual investment activity
of the Trust. LMFA pays the Adviser a fee at an annual rate equal to 30% of
the fee received by LMFA. For the six months ended February 29, 2000, the
advisory fee was $1,249.
Legg Mason Wood Walker, Incorporated ("Legg Mason"), a member of the New
York Stock Exchange, serves as distributor of the Trust. Legg Mason may
receive an annual distribution fee of up to 0.15% of the Trust's average
daily net assets. However, Legg Mason has agreed to limit such fees paid by
the Trust to 0.10% indefinitely. Distribution and service fees of $142 were
payable to LeggMason at February 29, 2000.
Legg Mason also has an agreement with the Trust's transfer agent to assist
it with certain of its duties. For this assistance, the transfer agent paid
Legg Mason $296 for the six months ended February 29, 2000.
The Adviser, LMFA and Legg Mason are corporate affiliates and are wholly
owned subsidiaries of Legg Mason, Inc.
7
<PAGE>
Notes to Financial Statements -- Continued
-----------------------------------------------------------------------------
4. Trust Share Transactions:
The Trust is authorized to issue an unlimited number of full and
fractional shares of beneficial interest (without par value). At February 29,
2000, net assets consisted of paid-in capital of $1,873,388 and accumulated
net realized gain of $57. Since the Trust has sold and redeemed shares at a
constant net asset value of $1.00 per share, the number of shares represented
by such sales and redemptions is the same as the amounts shown below for such
transactions:
<TABLE>
<CAPTION>
Reinvestment
Sold of Distributions Repurchased Net Change
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Six Months Ended Feb. 29, 2000 $2,818,738 $41,595 $(2,764,108) $ 96,225
Year Ended August 31, 1999 5,305,974 67,169 (5,018,533) 354,610
</TABLE>
8
<PAGE>
Legg Mason offers a wide range of mutual funds to meet investors' varying
financial needs and investment goals. The funds are listed below:
Equity Funds: Specialty Funds:
Value Trust, Inc. Market Neutral Trust
Special Investment Trust, Inc. Balanced Trust
Total Return Trust, Inc. Financial Services Fund
American Leading Companies Opportunity Trust
Trust
Classic Valuation Fund
Focus Trust, Inc.
U.S. Small-Capitalization
Value Trust
Global Funds: Taxable Bond Funds:
Global Income Trust U.S. Government Intermediate-Term
Europe Fund Portfolio
International Equity Trust Investment Grade Income Portfolio
Emerging Markets Trust High Yield Portfolio
Tax-Free Bond Funds: Money Market Funds:
Tax-Free Intermediate-Term U.S. Government Money Market
Income Trust Portfolio
Maryland Tax-Free Income Trust Cash Reserve Trust
Pennsylvania Tax-Free Income Trust Tax Exempt Trust, Inc.
For information on the specific risks, charges, and expenses associated with any
Legg Mason fund, please consult a Legg Mason Financial Advisor for a prospectus.
Read it carefully before investing or sending money.
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