Investment Adviser
Legg Mason Fund Adviser, Inc.
Baltimore, MD
Board of Directors
Raymond A. Mason, Chairman
John F. Curley, Jr., President
Richard G. Gilmore
Arnold L. Lehman
Dr. Jill E. McGovern
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, DC
Independent Accountants
PricewaterhouseCoopers LLP
Baltimore, MD
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 o 539 o 0000
LMF-002
11/98
Semi-Annual Report
September 30, 1998
Legg Mason
Value Trust, Inc.
Special Investment
Trust, Inc.
Total Return Trust, Inc.
[LEGG MASON LOGO]
<PAGE>
To Our Shareholders,
The quarter ended September 30, 1998 was the worst for US equity funds since
the third quarter of 1990, with the average equity fund losing 15% on a total
return basis(1) (compared to a 16% loss in 1990's third quarter) according to
Lipper Analytical Services, Inc.
The following table summarizes key statistics for the Primary Class of shares
of the Legg Mason Value Trust, Special Investment Trust and Total Return Trust,
as of September 30:
<TABLE>
<CAPTION>
3 Month 9 Month 12 Month
Total Return Total Return Total Return
------------ ------------ ------------
<S><C>
Value Trust -11.6% +9.0% +5.0%
Growth Funds(2) -13.4% -0.2% -1.4%
Standard & Poor's 500 Composite Index -10.0% +6.0% +9.1%
Special Investment Trust -20.5% -12.0% -15.5%
Mid Cap Funds(3) -18.2% -9.2% -12.0%
Russell 2000 Index -20.2% -16.2% -19.0%
Total Return Trust -15.8% -12.4% -8.8%
Growth and Income Funds(4) -12.5% -1.9% -1.1%
</TABLE>
As this letter is written on November 2, net asset values per share of each of
the Funds have rebounded, reflecting recent gains in equity markets generally:
<TABLE>
<CAPTION>
Net Asset Value Per Share
Primary Class
---------------------------------------
9/30/98 10/30/98 Change
------- -------- ------
<S><C>
Value Trust $45.68 $51.11 +11.9%
Special Investment Trust 26.20 28.25 +7.8%
Total Return Trust 19.65 21.16 +7.7%
</TABLE>
As always, it is impossible to predict near-term market performance. However,
we believe that any renewed periods of severe market pessimism would provide us
with attractive long-term investment opportunities, as was the case in August
and September.
Investment results for each of the Funds over longer periods of time are shown
in the "Performance Information" section of this report. In this regard, we are
pleased to note that $10,000 invested in the Value Trust, our original equity
fund, at its inception in April 1982 would have grown to $187,600 by September
30, 1998, producing an average annual return of 19.5% over the 16-1/2 year
period. $10,000 invested in a portfolio of common stocks included in Standard
&Poor's 500 Composite Index would have grown to $149,445 over the same period.
All figures assume reinvestment of dividends and other distributions.
On the following pages, Bill Miller, the portfolio manager for Value Trust,
Bill Miller and Lisa Rapuano, Portfolio Managers for Special Investment Trust,
and Nancy Dennin, the portfolio manager for Total Return Trust, discuss the
Funds and the investment outlook.
<PAGE>
The Board of Directors has approved an ordinary income dividend of $.08 per
share to Primary Class shareholders of Total Return Trust, payable on November
6, 1998 to shareholders of record on November 4, 1998. Most shareholders will
receive this distribution in the form of additional shares credited to their
accounts.
Sincerely,
/s/ John F. Curley, Jr.
_______________________
John F. Curley, Jr.
President
November 2, 1998
- ------------
(1) Total return measures investment performance in terms of appreciation or
depreciation in net asset value per share plus dividends and any capital
gain distributions. It assumes that dividends and distributions were
reinvested at the time they were paid.
(2) All growth funds (1,121) as measured by Lipper Analytical Services, Inc.
(3) All funds investing principally in securities of companies with medium-sized
capitalizations (358) as measured by Lipper Analytical Services, Inc.
(4) All growth and income funds (842) as measured by Lipper Analytical Services,
Inc.
2
<PAGE>
Portfolio Managers' Comments
Third Quarter 1998
Value Trust
"I do not claim that all market behavior is a rational response to changes
in the real world. But most of it must be."
Alan Greenspan, September 4, l998
When we last wrote to you at the end of July, the Value Trust was up 23.33%
through the first six months of this year, and the S&P 500 was up 17.71%. Since
then, the stock market suffered its worst quarter of the decade as the S&P fell
9.95%, the Dow 11.97%, general equity funds 14.93%, and growth funds 13.44%.
Your Fund performed better than general equity funds and better than the average
growth fund, but still trailed the S&P, falling 11.64% in the quarter.
The obvious question is what changed since the end of July, and what do we
make of it?
The post morta on the quarter usually cite the crisis in Russia and its
default on its debt as the precipitating event that shocked investors, raised
their sensitivity to risk, and generated fears that the financial crisis that
had been confined to Asia was spreading and may not be containable. Fed Chairman
Greenspan gave credence to these concerns with his "oasis of prosperity" speech,
noting that the US was unlikely to remain unaffected by the financial storms
sweeping the globe.
In mid-September, government officials appeared to be preparing to attempt to
contain the crisis before it reached Latin America. Treasury Secretary Rubin
said it was vital to our national interests that countries such as Brazil (whose
GDP is half the total in Latin America), which have followed International
Monetary Fund prescriptions, not have their progress derailed by forces outside
their control. The administration signaled it was developing a financial aid
package to assist Brazil, reinforcing the determination to try to isolate the
contagion outside this hemisphere. Then Long-Term Capital Management happened.
Long-Term Capital, as you may have read, is a large hedge fund run by an
all-star cast that includes two Nobel prize winning economists, a former Vice
Chairman of the Fed, and several of the most accomplished traders in the
financial community. As a result of substantial losses in the month of August,
it had burned through most of its capital and needed additional equity or credit
to prevent collapse. It was reported that its trading positions exceeded $100
billion, almost all of which were supported by debt. To put this in perspective,
in the Latin debt crisis of the l980's, Chase Manhattan Bank had total exposure
to all of Latin America of $26 billion, an amount sufficient to induce fears of
collapse among investors.
In an extraordinary series of events, the Fed persuaded Long-Term's major
creditors to advance an additional $3.5 billion of credit in exchange for 90%
ownership and effective oversight of the firm. Long-Term's principals earlier
rejected an offer led by investor Warren Buffett that would have transferred the
firm's assets to Buffett in exchange for under $300 million of equity and
another $3 billion or so of credit, along with contributions from AIG and
Goldman Sachs. The rescue was cobbled together quickly due to the collective
fears of the creditors and the Fed that the collapse of Long-Term might have
destabilized financial markets as billions of dollars of assets were liquidated
under duress.
These events stunned and panicked the markets. The crisis that was going to be
contained before it infected Brazil suddenly showed up in Greenwich. It was as
if the Center for Disease Control was preparing to dispatch a team to Africa to
contain the ebola virus and the virus showed up in New York. Risk managers in
banks and brokerage firms began asking clients for additional collateral as the
fear of
3
<PAGE>
Portfolio Managers' Comments -- Continued
loss replaced the desire for profit. A small 25 basis point(1) decrease in
short-term rates by the Fed was deemed insignificant by markets as investors
engaged in a mad scramble for safety and liquidity.
The crescendo was reached on October 8th when the panic to dump stocks
resulted in 920 new lows on the New York Stock Exchange. Yields on T-bills fell
the next day over 20 basis points, a remarkable flight to quality. As is usually
the case in financial markets, when investors en mass frantically desire a
particular asset class, the opportunities typically lie elsewhere.
Just as markets failed to appreciate the effect of the Fed's raising rates a
year and a half ago, we think they underestimate the impact of the modest easing
already experienced. The genesis of the current crisis was that 25 basis point
increase in interest rates, which occurred when inflation was 2.7%. By the end
of 1997, inflation had fallen to 1.4%. Real interest rates thus rose by over 150
basis points in less than nine months. That increase in real rates in the
world's reserve currency led to a shift in risk preference by investors that
gathered momentum as the year progressed, culminating in the panic seen in the
past 60 days.
Beginning shortly after the Fed raised rates last year, investors
systematically began preferring quality and liquidity at the margin. (All
important activity in complex adaptive systems begins at the margin.) They first
sold Thai baht for dollars until the Thai government ran out of dollars and the
currency peg blew apart. This situation was repeated in Korea with the won, in
Malaysia with the ringgit, and so on. They not only sold emerging market
currencies against the dollar, they also sold developed country currencies. They
sold riskier small stocks in favor of safer big stocks. By this spring, they
began to sell the bottom 450 stocks in the S&P 500 in favor of the top 50, whose
performance accounted for all the index's gain. In April, investors began
selling stocks for bonds, then as summer wore on, high yield bonds for
investment grade, then investment grade and mortgage-backed for Treasuries. In
the final scramble in early October, long- and intermediate-term Treasuries were
sold for T-bills.
It was in this frantic atmosphere that the Fed cut rates. As happened last
year with the increase, no one thought it was significant. But at the locus of
last year's crisis, Asia, things were beginning to improve. Korea and Thailand
had the best performing markets in the world in the third quarter. Both
countries have begun to lower rates and their currencies are beginning to
strengthen. Japan has begun to implement serious banking reform, and its
currency is sharply higher against the dollar. Closer to home, our yield curve
has begun to steepen, a sign of decreasing pressure at the margin on the
economy. Fixed income spreads have begun to narrow. In the nascent recovery in
stocks in the past week, small stocks have outperformed large ones. Risk
preferences are beginning to shift again.
In every case, at the margin investors are slowly demanding lower risk premia.
We think this is evidence the crisis is abating and that the risks of investing
in equities are now lower than they have been in some time. This is not the
majority view.
Lost on those now searching for safety and liquidity is the signal given by
Warren Buffett. The world's most successful investor, who turned his allowance
money into $30 billion, and who has for years preached the virtues of safety and
liquidity, decided in late September to opt for illiquidity and
- --------
(1) 100 basis points = 1%
4
<PAGE>
leverage by bidding for Long-Term Capital's portfolio. Buffett has built his
fortune in part by aggressively investing in assets when their prices are
depressed due to real but overly discounted problems. In the bear market of
1974, when inflation and interest rates were rising, the Middle East was in
turmoil, and politics was convulsed by Watergate, he aggressively bought stocks
at the lowest prices in a generation. Earlier this year, he made a foray into
the silver market when most investors had given up on ever making money in
precious metals.
We agree with Buffett that significant opportunity exists in capital markets
as a result of investors sudden rediscovery of risk. The best opportunities are
probably where the devastation has been greatest: in convergence trades in fixed
income markets (betting that spreads between various types of instruments such
as emerging markets debt and Treasuries will narrow), and in equities in small-
and mid-sized stocks, REITs, and financials. Although the opportunities are
greatest in areas we are not able to invest in, the market's decline in the
third quarter created plenty in our venue. We have used the sell-off to
aggressively buy bank stocks, whose price declines far over-shot their exposure
to global problems, and also to add to a variety of our positions at more
favorable prices.
We bought two new positions in the quarter: United HealthCare and Mirage
Resorts. United is the leading independent HMO in the country, generates free
cash, is repurchasing its stock, is down 50% from its high and trades at 12x
earnings. We believe fair value is at least 50% greater than the present stock
price. Mirage is the leading gaming company whose flagship Bellagio property
just opened in Las Vegas. The stock recently traded at multi-year lows, the
result of the present market malaise and pessimism about the supply/demand
situation in Las Vegas. We think the present price is well below the intrinsic
value of the business.
Two positions were sold: RJR Nabisco, and the long treasury Bond. RJR's
business economics remain under pressure, both from governments and from
competitors. The sell-off gave us a chance to re-deploy that capital more
effectively. The market bid the long Treasury to its highest price and lowest
yield in history and we decided to do our small part in relieving the financial
crisis by letting panicked investors have some of the safety they so desperately
sought. We think we can find lots of stocks that will give us a return greater
than 5% a year, which is what the long bond now promises.
We believe the worst is over in capital markets and that the present situation
favors long-term value investing. The macroeconomic environment of low
inflation, declining interest rates, and moderate growth is positive for
equities. Federal Reserve policy is now engaged in preventing or short
circuiting a credit crunch, and Fed officials have made clear their willingness
to further lower short-term interest rates to preserve the economic expansion.
Stock prices have declined sharply and investors will need time to regain their
confidence. We have put several hundred million dollars of cash reserves to work
during this decline and hope to earn quite satisfactory returns on our
investment.
As always, we appreciate your support and welcome your comments.
Bill Miller, CFA
5
<PAGE>
Portfolio Managers' Comments -- Continued
Special Investment Trust
Our results for various periods ended September 30, 1998 are listed below:
3 Months 1 Year 3 Years 5 Years
- -----------------------------------------------------------------------------
Special Investment Trust -20.49% -15.54% +38.02% +54.50%
Lipper Small Cap Funds -21.52% -20.58% +21.92% +58.37%
Lipper Mid Cap Funds -18.15% -11.95% +30.71% +67.42%
Russell 2000 Index -20.15% -19.02% +17.57% +54.52%
S&P 500 Composite Index -9.95% +9.05% +84.31% +147.92%
The third quarter of 1998 was a very difficult one for investors, especially
investors in smaller companies or companies not perceived as perfectly insulated
from risk. As you can see, in the quarter your Fund outperformed other small-cap
funds and fared almost in line with the Russell 2000 index of smaller companies,
but the large negative return is nonetheless disappointing, and perhaps to some,
frightening. A few words to put this in historical and contextual perspective
are certainly in order.
In its 51 quarter history, Special Investment Trust has had only one other
quarter of negative returns of this magnitude: the fourth quarter of 1987, the
quarter now remembered for the October crash. The Fund was down nearly 28% that
quarter. However, it is important to note that often periods of shake-out such
as the fourth quarter of 1987, and possibly the quarter we just completed, offer
opportunities for future outperformance to investors who have the patience and
time horizon to stay the course. In the twelve months subsequent to our
disappointing performance back in the fourth quarter of 1987, the Fund was up
19.70%. In the subsequent 24 month period, the Fund had an absolute return of
58.07%, for a two year annualized return of 25.77%. In fact, the quarter after
this negative 28% return back in 1987 was the beginning of a very strong six
year run of outperformance for the Fund, in which we outperformed the S&P 500 in
each of the subsequent six years, and had an annualized return of 21.14%, versus
13.57% for the Russell 2000 and 14.84% for the S&P 500.
Of course, events are context dependent--their significance is determined by
the context in which they occur. There are many variables that may make this
period either unique or similar to previous periods, but it is important to note
that we have gone through this type of turmoil before. We do not contend that we
are in the exact situation today as we were back in 1987, but as Mark Twain
said, "History does not repeat itself--it rhymes."
Our focus going forward is as it has always been--to find undervalued small
and medium sized companies, as well as special situations, that we believe will
outperform the broader market over a reasonable time horizon. A benefit of the
current turmoil is that the number of these opportunities, as well as their
potential return, have both increased dramatically. Many of the stocks already
in the portfolio went through wrenching drops in price, even though the
fundamentals were unchanged, or in some cases improving. During August and
September, we took advantage of some of these price drops to aggressively add to
positions that became overwhelmingly mispriced. We also pared back or eliminated
some names that were less attractive and re-deployed the cash into these
mispriced companies. A list of the names we eliminated is found elsewhere in
this report. As a result, our cash position, as high as 10% during the quarter,
has now moved back down to the 2% level.
It is often difficult for investors to act in the face of uncertainty and
volatility, but some anecdotes about stocks in the portfolio to which we were
adding may clarify why we are confident about buying. We were not able to make
our purchases at the absolute low prices, and in fact in many cases we
6
<PAGE>
were a little too early and saw the prices move down further before beginning to
recover. However, we have since been rewarded in some names that have moved
smartly off their lows, some as much as 50% in just a matter of days.
While "the market", which is defined culturally as the S&P 500, held up
reasonably well and continued to have a P/E on 1999 estimates of roughly 19x,
many of the stocks in our portfolio reached far lower valuation levels. As we
have discussed in the past, P/E's are simply one valuation metric we use in
determining the value of a company, and they are often misinterpreted in the
face of other more sophisticated methods of measuring the economic value of a
company. Understanding this, the following examples of low P/E's describe the
extremely low valuations we were seeing in a host of quality companies simply
due to fear, uncertainty and a lack of liquidity in the markets.
Storage Technology, a company that sells sophisticated storage systems to
businesses, is one of these companies. They have repurchased over 20% of
outstanding shares in the last two years, have an ROE of over 20% and are
expected to accelerate earnings and sales growth from below 10% to the 15-20%
range due to an exciting array of new products coming out in the next several
quarters. At its recent low, Storage Tek reached a P/E on 1999 earnings of only
7x. Inacom, a computer services and distribution company that is consolidating
the industry and improving their economic model through a focus on generating
free cash flow, is growing 15-20% and improving their margins. At the low,
Inacom reached a P/E on 1999 earnings of 4.3x. Amerin, a private mortgage
insurer, has what we believe to be a liquidation value of at least $20, yet was
trading at $12-1/2. The company is growing 20% per year by gaining market share
with innovative products and has an ROE in excess of 20%, yet at $12-1/2, the
stock had a 1999 P/E of 5.3x.
The securities added during the quarter share the characteristics of many of
the securities already in the portfolio in which we have been increasing our
positions: low valuations, stock prices down 50% or more from their highs, and
either generating free cash flow and buying back shares or suffering from
material undervaluation because of unwarranted concerns about debt and
liquidity.
Liz Claiborne is a leading apparel company with a management highly sensitive
to shareholder value. Management has repurchased 20% of shares outstanding over
the last six years and dramatically reduced the cash needed to run the business
by trimming inventories, thus increasing the free cash flow and the economic
returns of the business. Liz's stock was driven from $54 in June to $25 at the
low, down 53%, on fears of a global recession and a forecast by the company for
reduced growth in 1999. At these low levels, however, we think these fears are
more than discounted and Liz is an undervalued, high quality business with a
responsive shareholder oriented management.
Phycor is one of our favorite kinds of companies--it suffers from a
misunderstood business model, resulting in a stock price that is down from
$33-1/4 late last year to a low of $3-15/16. We believe they have free cash flow
in a non-growth environment of around $1.40 per share. The physician practice
management industry is certainly not without problems, but we believe that
Phycor's model is viable over the long term.
Symantec, which is a new security this quarter and is already a fairly large
position, is the software company that makes such well known products as ACT!,
Norton Utilities, Norton Anti-Virus and pcAnywhere. They have a number one or
two market share in all their products, have a very strong lineup of new
products hitting the market currently, and should see sales and earnings growth
near 20%. Symantec also has over $4 in cash per share on the balance sheet,
should earn at least $1.45 this year, has returns on equity of over 25% and they
are buying back 5% of their shares. Yet the stock went from $32-5/8 earlier this
year to a low of $8-11/16.
7
<PAGE>
Portfolio Managers' Comments -- Continued
ICO Global is a satellite phone company funded by Deutsche Telekom, British
Telecom, GM Hughes and other large telecommunications companies in which we
bought a small position on the IPO. The IPO market dried up just as the company
needed funding and as a result the stock was priced very attractively, about in
line with the prices paid by the large telecom backers. We actually ended up
selling the common stock in October, not long after purchase and moved the Fund
into the bonds of ICO Global, at a 25% current yield. We believe the bonds
present a similar prospective return with a higher level of security.
The precipitous declines in stock prices in the small-cap sectors have
presented us with many opportunities. We think we are taking advantage of them
as quickly and efficiently as we can. While we cannot with any certainty say
that we know the declines are over, we can state that we believe that stock
prices of many companies have reached extremely attractive levels. It is likely,
in our opinion, that many investors will look back at these low prices ruefully,
thinking "if only" they had bought at those low prices. As described here, we
are very excited about the companies in our portfolio and look forward to
digging through the rubble for more.
Thank you for your continued support, especially in these volatile and
difficult times. As always, we welcome your questions and comments.
Lisa O. Rapuano, CFA
Bill Miller, CFA
-------------------------------------
Total Return Trust
As shown below, the third quarter was a very difficult period for the equity
market and your Fund.
3 Months 1 Year 3 Years
- -------------------------------------------------------------------------------
Total Return Trust -15.84% -8.84% +61.98%
Lipper Growth & Income Funds -12.47% -1.08% +59.18%
S&P 500 Composite Index -9.95% +9.05% +84.31%
Dow Jones Industrial Average -11.97% +0.48% +73.95%
While we obviously never want the Fund to post negative results, this
difficult period has produced very attractive values in the market, and we have
been repositioning the portfolio to take advantage of the opportunities. Most of
the repositioning has occurred in October, and will be detailed in our fourth
quarter report.
The post morta on the third quarter usually cite the Russian crisis and its
debt default as the precipitating event that shocked investors, raised their
sensitivity to risk, and generated fears that the financial crisis that had been
confined to Asia was spreading and may not be containable. For a timeline on the
events that began shortly after the Fed raised rates last year and culminated on
October 8th when the panic to dump stocks resulted in 920 new lows on the New
York Stock Exchange, please see Bill Miller's commentary in the Value Trust
section of this report.
We are occasionally asked why investors should not put the bulk of their money
in index funds, those vehicles created to invest in a portfolio that matches the
S&P 500, whose results will generally track that index. This question comes up
somewhat more frequently when the market is down and the investor is losing
money: "I'm paying someone to lose money for me?"
8
<PAGE>
The main reason not to invest in an index fund is that you do not get the
return of the index, you get a lower return. Funds have expenses, even index
funds, and they also have trading costs. The S&P 500 has neither, but you can't
buy it. Those expenses are the reason why, even if your fund's stocks perfectly
track the index, your fund will underperform that index.
By investing in an index fund, you can be quite confident you will
underperform the index and you will do it consistently, the underperformance
compounding inexorably, creating a larger and larger gap between your returns
and those of the index.
Our goal is to outperform the S&P 500 and our Fund's peer group; something we
obviously didn't achieve in the third quarter, and over the last twelve months.
We invest in large, mid and small-capitalization stocks. The ability to invest
in a broad array of capitalization stocks has served us well in the past.
However, during the infrequent liquidity squeeze periods like the market just
experienced, mid and small-cap companies tend to experience the greatest price
deviation. The economics of the businesses we own have not deteriorated to the
extent the stock price changes would suggest. To look at it on a pure
price/earnings ratio basis, the P/E on the Fund is only 11x 1998 estimated
earnings, and 10x 1999 EPS estimates, multiples that are less than one-half
those of the S&P 500.
We believe the worst is over for the capital markets and that the present
situation favors long-term value investing. The macroeconomic environment of low
inflation, declining interest rates, and moderate growth is positive for
equities. Federal Reserve policy is now engaged in preventing or short
circuiting a credit crunch, and Fed officials have made clear their willingness
to further lower short-term interest rates to preserve the economic expansion.
Despite the difficult third quarter, we believe the Fund is well positioned and
expect to do well over the longer term.
We sold our long bond position toward the end of the quarter. Quantitatively
speaking, at a 5% yield, the long bond trades at 20x earnings, with no growth.
In contrast, there are many equities with yields greater than the long bond,
whose earnings and dividends are growing. Based on interest rates and the value
of the S&P 500 as of September 30, the probability of stocks outperforming bonds
going forward is a very high 88%, according to the more sophisticated valuation
models employed by major Wall Street firms.
As our long-term shareholders are aware, we have a fairly large weighting in
REITs. REIT stock prices have been in a steady decline for most of the year,
resulting in valuation levels not seen for several years. The current yield on
the Morgan Stanley REIT Index is 7.8%. On a relative basis, the yield has
surpassed the 200 basis point(1) spread over the 10-year treasury set in late
1990, the trough of the real estate depression.
Likewise, compared to corporate bonds, the REITs are again in historically
cheap territory. REITs are trading at positive yield spreads to the average
investment-grade bond yield, for probably only the third time in the last 20
years, and only the second time in the seven years since the emergence of REITs
as a true market sector. We believe REITs are very attractive, and have about
15% of the portfolio invested in this sector.
As always, we appreciate you support and welcome your comments.
Nancy Dennin, CFA
October 26, 1998
DJIA 8432.21
- ---------
(1) 100 basis points = 1%
9
<PAGE>
Performance Information
Total Return for One, Five, Ten Years and Life of Funds, as of September 30,
1998
The returns shown are based on historical results and are not intended to
indicate future performance. The investment return and principal value of an
investment in each of these Funds will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
Average annual returns tend to smooth out variations in a Fund's return, so
they differ from actual year-to-year results. No adjustment has been made
for any income taxes payable by shareholders.
Each Fund has two classes of shares: Primary Class and Navigator Class.
The Navigator Class, offered only to certain institutional investors, pays
Fund expenses similar to those paid by the Primary Class, except that
transfer agency fees and shareholder servicing expenses are determined
separately for each class and the Navigator Class does not incur Rule 12b-1
distribution fees.
The Funds' total returns as of September 30, 1998 were as follows:
<TABLE>
<CAPTION>
Special S&P 500
Value Investment Total Return Composite
Trust Trust Trust Index
- ---------------------------------------------------------------------------------------------
<S><C>
Average Annual Total Return
Primary Class:
One Year +5.03% -15.54% -8.84% +9.05%
Five Years +25.44 +9.09 +14.68 +19.91
Ten Years +17.42 +14.34 +13.23 +17.29
Life of Class--Value Trust(A) +19.50 +17.86
Life of Class--Special Investment Trust(A) +12.49 +16.36
Life of Class--Total Return Trust(A) +11.15 +16.74
Navigator Class:
One Year +6.04 -14.70 -7.89 +9.05
Life of Class(B) +33.96 +15.82 +20.97 +26.02
Cumulative Total Return
Primary Class:
One Year +5.03% -15.54% -8.84% +9.05%
Five Years +210.54 +54.50 +98.32 +147.92
Ten Years +398.15 +281.82 +246.38 +392.61
Life of Class--Value Trust(A) +1,776.00 +1,394.45
Life of Class--Special Investment Trust(A) +349.11 +590.48
Life of Class--Total Return Trust(A) +289.45 +631.44
Navigator Class:
One Year +6.04 -14.70 -7.89 +9.05
Life of Class(B) +206.93 +75.63 +107.58 +142.70
- ---------------------------------------------------------------------------------------------
</TABLE>
(A) Primary class inception dates are:
Value Trust--April 16, 1982
Special Investment Trust--December 30, 1985
Total Return Trust--November 21, 1985
(B) Navigator Class inception dates for each fund--December 1, 1994
10
<PAGE>
Value Trust
Illustration of an Assumed Investment of $10,000 made on April 16, 1982
(inception of the Value Trust Primary Class)
[LINE GRAPH APPEARS HERE -- SEE PLOT POINTS BELOW]
Value of original
shares purchased
Value of shares plus shares acquired
acquired through through reinvestment
reinvestment of of capital gain
income dividends distributions
4/16/82 $10,000 $10,000
3/31/83 16,400.97 16,160
3/31/84 19,425.44 18,870.5
3/31/85 24,682.58 23,582.98
3/31/86 34,509.72 32,555.48
3/31/87 37,924.3 35,503.58
3/31/88 34,729.33 32,267.83
3/31/89 41,109.15 37,650.23
3/31/90 44,289.55 39,890.82
3/31/91 43,013.79 37,701.34
3/31/92 51,413.83 44,210.32
3/31/93 59,003.27 50,183.93
3/31/94 62,337.34 52,789.39
3/31/95 68,426.55 57,816.96
3/31/96 97,226.16 82,355.78
3/31/97 129,881.47 110,379.07
3/31/98 201,761 172,947
9/30/98 187,600 161,322
--------------------------------
Selected Portfolio Performance*
Strong performers for the 3rd quarter 1998
-------------------------------------------
1. Dell Computer Corporation +41.7%
2. Philip Morris Companies, Inc. +17.0%
3. The Kroger Co. +16.6%
4. Amgen Inc. +15.6%
5. International Business Machines
Corporation +11.5%
6. Compaq Computer Corporation +11.5%
7. Nokia Oyj +8.1%
8. Fannie Mae +5.8%
9. Seagate Technology, Inc. +5.3%
10. Freddie Mac +5.1%
*Securities held for the entire quarter.
Weak performers for the 3rd quarter 1998
-------------------------------------------
1. PennCorp Financial Group, Inc. -89.3%
2. Foundation Health Systems, Inc. -64.5%
3. The Bear Stearns Companies, Inc. -45.6%
4. Circus Circus Enterprises, Inc. -44.3%
5. Chase Manhattan Corporation -42.7%
6. Storage Technology Corporation -41.4%
7. BankBoston Corporation -40.7%
8. Hilton Hotels Corporation -40.1%
9. Citicorp -37.7%
10. Philips Electronics N.V. -37.2%
Portfolio Changes
Securities added during the 3rd quarter 1998
--------------------------------------------
Mirage Resorts, Incorporated
United HealthCare Corporation
Securities sold during the 3rd quarter 1998
-------------------------------------------
RJR Nabisco Holdings Corp.
United States Treasury Bonds, 6.625%, 02/15/27
11
<PAGE>
Performance Information -- Continued
Special Investment Trust
Illustration of an Assumed Investment of $10,000 made on December 30, 1985
(inception of the Special Investment Trust Primary Class)
[LINE GRAPH APPEARS HERE -- SEE PLOT POINTS BELOW]
Value of original
shares purchased
Value of shares plus shares acquired
acquired through through reinvestment
reinvestment of of capital gain
income dividends distributions
12/30/85 $10,000 $10,000
3/31/86 11,530 11,530
3/31/87 13,073 13,050.76
3/31/88 11,219.7 11,106.84
3/31/89 13,125.95 12,981.74
3/31/90 15,142.97 14,889.53
3/31/91 18,391.89 17,776.51
3/31/92 22,154.2 21,249.28
3/31/93 24,481.5 23,528.14
3/31/94 29,708.01 28,511.3
3/31/95 27,814.8 26,706.89
3/31/96 35,733.08 34,291
3/31/97 39,870.52 38,344.53
3/31/98 56,969 54,898
9/30/98 44,911 43,404
--------------------------------
Selected Portfolio Performance*
Strong performers for the 3rd quarter 1998
------------------------------------------
1. Olsen & Associates AG +9.7%
2. America Online, Inc. +5.0%
3. Hadco Corp. +4.0%
4. Gateway 2000, Inc. +3.0%
5. Bell & Howell Company +0.5%
6. Hollywood Entertainment Corp. +0.5%
7. Northeast Utilities System -1.1%
8. Players International, Inc. -4.4%
9. Western Digital Corporation -9.0%
10. Calenergy Company, Inc. -11.9%
*Securities held for the entire quarter.
Weak performers for the 3rd quarter 1998
-----------------------------------------
1. PennCorp Financial Group, Inc. -89.3%
2. Mego Financial Corp. -77.3%
3. Cell Genesys, Inc. -62.8%
4. Magellan Health Services, Inc. -57.4%
5. ICG Communications -53.9%
6. Circus Circus Enterprises, Inc. -44.3%
7. Storage Technology Corporation -41.4%
8. InaCom Corp. -40.6%
9. Orion Capital Corporation -36.1%
10. Amerin Corporation -35.3%
Portfolio Changes
Securities added during the 3rd quarter 1998
--------------------------------------------
ICO Global Communications (Holdings) Limited
Liz Claiborne, Inc.
PhyCor, Inc.
Symantec Corporation
Securities sold during the 3rd quarter 1998
-------------------------------------------
The Bear Stearns Companies, Inc.
Danaher Corporation
John Alden Financial Corporation
Madge Networks N.V.
Mirage Resorts, Incorporated
Philip Services Corp.
Sun Healthcare Group Inc.
12
<PAGE>
Total Return Trust
Illustration of an Assumed Investment of $10,000 made on November 21, 1985
(inception of the Total Return Trust Primary Class)
[LINE GRAPH APPEARS HERE -- SEE PLOT POINTS BELOW]
Value of original
shares purchased
Value of shares plus shares acquired
acquired through through reinvestment
reinvestment of of capital gain
income dividends distributions
11/21/85 $10,000 $10,000
3/31/86 10,780 10,780
3/31/87 11,884.09 11,673.03
3/31/88 10,675 10,295.43
3/31/89 12,293 11,689.85
3/31/90 12,720.53 11,874.31
3/31/91 12,714.62 11,498.61
3/31/92 15,714.56 13,884.21
3/31/93 18,839.3 16,234.03
3/31/94 19,701.15 16,637.21
3/31/95 19,916.82 16,637.21
3/31/96 26,535.98 21,341.73
3/31/97 32,992.2 26,102.28
3/31/98 46,995 37,430
9/30/98 38,945 30,894
--------------------------------
Selected Portfolio Performance*
Strong performers for the 3rd quarter 1998
---------------------------------------------
1. International Business Machines
Corporation +11.5%
2. Briggs & Stratton Corporation +9.9%
3. UST, Inc. +9.5%
4. RJR Nabisco Holdings Corp. +6.1%
5. Mid-America Apartment
Communities, Inc. -1.7%
6. Illinova Corporation -4.4%
7. Nationwide Health Properties, Inc. -5.8%
8. Walden Residential Properties, Inc. -6.1%
9. Telefonos de Mexico S.A. ADR -7.9%
10. AK Steel Holding Corporation -8.0%
*Securities held for the entire quarter.
Weak performers for the 3rd quarter 1998
---------------------------------------------
1. Tupperware Corporation -58.2%
2. The Bear Stearns Companies, Inc. -45.6%
3. Chase Manhattan Corporation -42.7%
4. J.C. Penney Company, Inc. -37.9%
5. Starwood Hotels & Resorts -36.9%
6. Toys "R" Us, Inc. -31.3%
7. Olin Corporation -31.2%
8. BankAmerica Corporation -30.4%
9. LaSalle Re Holdings Ltd. -29.7%
10. Northrop Grumman Corporation -29.2%
Portfolio Changes
Securities added during the 3rd quarter 1998
--------------------------------------------
Brunswick Corporation
Securities sold during the 3rd quarter 1998
----------------------------------------------
Chrysler Corporation
Dynex Capital, Inc.
Fannie Mae
Hercules, Inc.
Hutchinson Technology, Inc. Bonds, 6%, 3/15/05
United States Treasury Bonds, 6%, 3/15/05
13
<PAGE>
Statement of Net Assets
September 30, 1998 (Unaudited)
(Amounts in Thousands)
Legg Mason Value Trust, Inc.
<TABLE>
<CAPTION>
Shares/Par Value
- ----------------------------------------------------------------------------------------------------
<S><C>
Common Stocks and Equity Interests -- 91.6%
Automotive -- 3.1%
Chrysler Corporation 1,725 $ 82,584
Ford Motor Company 550 25,816
General Motors Corporation 1,200 65,625
----------
174,025
----------
Banking -- 13.2%
BankAmerica Corporation 1,500 90,188
BankBoston Corporation 3,369 111,167
Chase Manhattan Corporation 4,100 177,325
Citicorp 1,850 171,934
Fleet Financial Group, Inc. 669 49,141
Lloyds TSB Group plc 8,011 89,751
Zions Bancorporation 1,403 57,252
----------
746,758
----------
Computer Services and Systems -- 21.5%
Compaq Computer Corporation 5,790 183,109
Dell Computer Corporation 9,600 631,200(A)
International Business Machines Corporation 1,275 163,200
Seagate Technology, Inc. 2,000 50,125(A)
Storage Technology Corporation 5,740 146,011(A,B)
Western Digital Corporation 4,000 43,000(A)
----------
1,216,645
----------
Electrical Equipment -- 1.8%
Philips Electronics N.V. 1,900 101,413
----------
Entertainment -- 3.0%
Circus Circus Enterprises, Inc. 5,200 49,075(A,B)
MGM Grand, Inc. 2,570 59,271(A)
Mirage Resorts, Incorporated 3,537 59,236(A)
----------
167,582
----------
Finance -- 9.0%
Fannie Mae 3,200 205,600
Freddie Mac 2,000 98,875
MBNA Corporation 4,245 121,525
The Bear Stearns Companies, Inc. 2,725 84,305
----------
510,305
----------
Food, Beverage and Tobacco -- 3.7%
PepsiCo, Inc. 1,700 50,044
Philip Morris Companies, Inc. 3,400 156,612
----------
206,656
----------
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Shares/Par Value
- ----------------------------------------------------------------------------------------------------
<S><C>
Food Merchandising -- 2.1%
The Kroger Co. 2,400 $ 120,000(A)
----------
Health Care -- 4.5%
Columbia/HCA Healthcare Corporation 4,800 96,300
Foundation Health Systems, Inc. 8,105 75,984(A,B)
United HealthCare Corporation 2,300 80,500
----------
252,784
----------
Hotels and Motels -- 1.5%
Hilton Hotels Corporation 4,780 81,559
----------
Insurance -- 4.6%
Ambac Financial Group, Inc. 766 36,768
Conseco, Inc. 2,700 82,519
General Re Corporation 550 111,650
MBIA, Inc. 510 27,381
Penncorp Financial Group, Inc. 1,900 4,156(B)
----------
262,474
----------
Manufacturing -- 1.3%
Danaher Corporation 2,400 72,000
----------
Media -- 7.9%
America Online, Inc. 4,025 447,781(A)
----------
Motion Pictures andServices -- 0.3%
Metro-Goldwyn-Mayer, Inc. 1,200 16,650(A)
----------
Pharmaceuticals -- 2.0%
Amgen Inc. 1,500 113,344(A)
----------
Real Estate -- 2.1%
Starwood Hotels & Resorts 3,909 119,224
----------
Retail Sales -- 1.8%
Toys "R" Us, Inc. 6,300 101,981(A)
----------
Savings and Loan -- 2.3%
H.F. Ahmanson & Company 554 30,719
Washington Mutual, Inc. 3,000 101,250
----------
131,969
----------
</TABLE>
15
<PAGE>
Statement of Net Assets--Continued
Legg Mason Value Trust, Inc.--Continued
<TABLE>
<CAPTION>
Shares/Par Value
- ----------------------------------------------------------------------------------------------------
<S><C>
Telecommunications -- 5.9%
MCI WorldCom, Inc. 3,178 $ 155,333(A)
Nokia Oyj 1,400 109,812
Telefonos de Mexico S.A. ADR 1,600 70,800
----------
335,945
----------
Total Common Stocks and Equity Interests
(Identified Cost-- $3,386,492) 5,179,095
- ----------------------------------------------------------------------------------------------------
Repurchase Agreements -- 5.3%
Goldman, Sachs & Company
5.64%, dated 9/30/98, to be repurchased at $100,391 on 10/1/98
(Collateral: $103,105 Fannie Mae Mortgage-backed securities,
6% due 8/1/13, value $103,138) $ 100,375 100,375
J.P. Morgan Securities, Inc.
5.60%, dated 9/30/98, to be repurchased at $100,391 on 10/1/98
(Collateral: $102,112 Fannie Mae Mortgage-backed securities,
6.50% due 4/1/28 - 9/1/28, value $104,210) 100,376 100,376
Prudential Securities, Inc.
5.60%, dated 9/30/98, to be repurchased at $100,391 on 10/1/98
(Collateral: $102,953 Fannie Mae Mortgage-backed securities,
6% due 9/1/13, value $104,287) 100,376 100,376
----------
Total Repurchase Agreements (Identified Cost -- $301,127) 301,127
- ----------------------------------------------------------------------------------------------------
Total Investments-- 96.9% (Identified Cost-- $3,687,619) 5,480,222
Other Assets Less Liabilities-- 3.1% 174,026
----------
Net assets consisting of:
Accumulated paid-in capital applicable to:
114,956 Primary shares outstanding $3,432,844
8,693 Navigator shares outstanding 347,365
Accumulated net operating loss (5,877)
Undistributed net realized gain on investments 87,275
Unrealized appreciation of investments 1,792,641
----------
Net assets-- 100.0% $5,654,248
==========
Net asset value per share:
Primary Class $45.68
======
Navigator Class $46.33
======
- ----------------------------------------------------------------------------------------------------
</TABLE>
(A) Non-income producing
(B) Affiliated Companies--As defined in the Investment Company Act of 1940, an
"Affiliated Company" represents fund ownership of at least 5% of the
outstanding voting securities of the issuer. At September 30, 1998, the
total market value of Affiliated Companies was $275,226 and the identified
cost was $477,467.
See notes to financial statments.
16
<PAGE>
Statement of Net Assets
September 30, 1998 (Unaudited)
(Amounts in Thousands)
Legg Mason Special Investment Trust, Inc.
<TABLE>
<CAPTION>
Shares/Par Value
- ----------------------------------------------------------------------------------------------------
<S><C>
Common Stocks and Equity Interests -- 98.6%
Advertising -- 4.8%
WPP Group plc 13,250 $ 61,103
----------
Banking -- 2.1%
Peoples Heritage Financial Group, Inc. 1,500 26,906
----------
Biotechnology -- 0.3%
Cell Genesys, Inc. 1,225 3,905(A)
----------
Computer Services and Systems -- 25.2%
Bell & Howell Company 1,000 25,938(A)
Gateway 2000, Inc. 1,800 93,825(A)
ICG Communications 1,708 28,814(A)
InaCom Corp. 1,361 25,679(A,B)
Quantum Corporation 2,165 34,363(A)
Storage Technology Corporation 2,000 50,875(A)
Symantec Corporation 2,500 32,969(A)
Western Digital Corporation 2,700 29,025(A)
----------
321,488
----------
Computer Software -- 1.8%
Sybase, Inc. 3,700 22,316(A)
----------
Electronics - Semiconductor -- 2.4%
Hadco Corp. 1,255 30,434(A,B)
----------
Energy -- 6.3%
Calenergy Company, Inc. 1,150 30,475(A)
Northeast Utilities System 3,000 50,250(A)
----------
80,725
----------
Entertainment -- 7.7%
Circus Circus Enterprises, Inc. 1,800 16,987(A)
Hollywood Entertainment Corp. 3,224 43,930(A,B)
Hollywood Park, Inc. 2,515 26,093(A,B)
Players International, Inc. 2,485 11,804(A,B)
----------
98,814
----------
Finance -- 5.7%
Amerin Corporation 1,700 32,088(A,B)
Mego Financial Corp. 300 234(A)
United Asset Management Corporation 1,850 39,775
----------
72,097
----------
</TABLE>
17
<PAGE>
Statement of Net Assets-- Continued
Legg Mason Special Investment Trust, Inc.--Continued
<TABLE>
<CAPTION>
Shares/Par Value
- ----------------------------------------------------------------------------------------------------
<S><C>
Food, Beverage and Tobacco -- 2.0%
Cott Corporation 4,700 $ 25,262(B)
----------
Health Care -- 3.5%
Magellan Health Services, Inc. 2,000 21,625(A,B)
PhyCor, Inc. 4,500 22,500(A,B)
----------
44,125
----------
Insurance -- 8.1%
CMAC Investment Corporation 560 24,360
Enhance Financial Services Group, Inc. 1,110 32,814
Orion Capital Corporation 1,200 42,825
PennCorp Financial Group, Inc. 1,800 3,938(B)
----------
103,937
----------
Media -- 21.1%
America Online, Inc. 2,335 259,769(A)
USA Networks,Inc. 520 10,107(A)
----------
269,876
----------
Miscellaneous -- 0.2%
Olsen & Associates AG 300 2,173(A,C)
----------
Networking Products -- 3.2%
Cabletron Systems, Inc. 3,662 41,200(A)
----------
Real Estate -- 2.2%
Dynex Capital, Inc. 1,763 14,877
LASER Mortgage Management, Inc. 1,795 13,462(B)
----------
28,339
----------
Specialty Retail -- 1.1%
Liz Claiborne, Inc. 525 13,748
----------
Telecommunications -- 0.9%
ICO Global Communications (Holdings) Limited 1,136 11,356
----------
Total Common Stocks and Equity Interests
(Identified Cost-- $1,032,794) 1,257,804
- ----------------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Shares/Par Value
- ----------------------------------------------------------------------------------------------------
<S><C>
Repurchase Agreements -- 1.9%
Goldman, Sachs & Company
5.64%, dated 9/30/98, to be repurchased at $8,280 on 10/1/98
(Collateral: $8,303 Fannie Mae Mortgage-backed securities,
6.50% due 11/1/24, value $8,479) $ 8,279 $ 8,279
J.P. Morgan Securities, Inc.
5.60%, dated 9/30/98, to be repurchased at $8,280 on 10/1/98
(Collateral: $8,422 Fannie Mae Mortgage-backed securities,
6.50% due 9/1/28, value $8,595) 8,279 8,279
Prudential Securities, Inc.
5.60%, dated 9/30/98, to be repurchased at $8,280 on 10/1/98
(Collateral: $8,496 Fannie Mae Mortgage-backed securities,
6% due 9/1/13, value $8,606) 8,279 8,279
----------
Total Repurchase Agreements (Identified Cost -- $24,837) 24,837
- ----------------------------------------------------------------------------------------------------
Total Investments-- 100.5% (Identified Cost-- $1,057,631) 1,282,641
Other Assets Less Liabilities-- (0.5)% (6,468)
----------
Net assets consisting of:
Accumulated paid-in capital applicable to:
46,815 Primary shares outstanding $1,016,206
1,818 Navigator shares outstanding 40,301
Accumulated net operating loss (6,949)
Undistributed net realized gain on investments 1,605
Unrealized appreciation of investments 225,010
----------
Net assets-- 100.0% $1,276,173
==========
Net asset value per share:
Primary Class $26.20
======
Navigator Class $27.20
======
- ----------------------------------------------------------------------------------------------------
</TABLE>
(A) Non-income producing
(B) Affiliated Companies--As defined in the Investment Company Act of 1940, an
"Affiliated Company" represents Fund ownership of at least 5% of the
outstanding voting securities of the issuer. At September 30, 1998, the
total market value of Affiliated Companies was $256,815 and the identified
cost was $384,501.
(C) Private placement
See notes to financial statements.
19
<PAGE>
Statement of Net Assets
September 30, 1998 (Unaudited)
(Amounts in Thousands)
Legg Mason Total Return Trust, Inc.
<TABLE>
<CAPTION>
Shares/Par Value
- ----------------------------------------------------------------------------------------------------
<S><C>
Common Stocks and Equity Interests -- 96.4%
Aerospace/Defense -- 3.3%
Northrop Grumman Corporation 267 $ 19,520
----------
Automotive -- 5.3%
Ford Motor Company 300 14,081
General Motors Corporation 310 16,953
----------
31,034
----------
Banking -- 14.8%
BankAmerica Corporation 245 14,731
Chase Manhattan Corporation 360 15,570
Fleet Financial Group, Inc. 180 13,219
Lloyds TSB Group plc 2,222 24,899
Union Planters Corporation 372 18,698
----------
87,117
----------
Chemicals -- 3.2%
Olin Corporation 645 18,489
----------
Computer Services and Systems -- 7.3%
International Business Machines Corporation 335 42,880
----------
Consumer Products -- 1.8%
Brunswick Corporation 150 1,940
Tupperware Corporation 721 8,472
----------
10,412
----------
Electric Utilities -- 6.4%
Edison International 685 17,596
Illinova Corporation 690 19,794
----------
37,390
----------
Finance -- 3.4%
The Bear Stearns Companies, Inc. 377 11,656
United Asset Management Corporation 391 8,400
----------
20,056
----------
Food, Beverage and Tobacco -- 6.2%
RJR Nabisco Holdings Corp. 650 16,372
UST, Inc. 685 20,250
----------
36,622
----------
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Shares/Par Value
- ----------------------------------------------------------------------------------------------------
<S><C>
Insurance -- 9.0%
American Financial Group Inc. 420 $ 13,597
Enhance Financial Services Group, Inc. 611 18,051
IPC Holdings Limited 463 10,649
LaSalle Re Holdings Ltd. 404 10,764
----------
53,061
----------
Manufacturing -- 7.2%
Briggs & Stratton Corporation 1,028 42,264
----------
Oil Refining and Marketing -- 1.6%
Ultramar Diamond Shamrock Corporation 416 9,469
----------
Real Estate -- 15.1%
Crescent Real Estate Equities Company 215 5,429
Mid-America Apartment Communities, Inc. 490 12,674
National Golf Properties, Inc. 531 14,663
Nationwide Health Properties, Inc. 600 13,500
Regency Realty Corporation 505 11,574
Starwood Hotels & Resorts 304 9,272
Tanger Factory Outlet Centers, Inc. 498 11,296(B)
Walden Residential Properties, Inc. 450 10,350
----------
88,758
----------
Retail Sales -- 4.6%
J.C. Penney Company, Inc. 281 12,632
Toys "R" Us, Inc. 895 14,481(A)
----------
27,113
----------
Savings and Loan -- 2.1%
Washington Federal, Inc. 486 12,158
----------
Steel Products -- 3.4%
AK Steel Holding Corporation 682 11,215
British Steel plc 472 8,585
----------
19,800
----------
Telecommunications -- 1.7%
Telefonos de Mexico S.A. ADR 231 10,226
----------
Total Common Stocks and Equity Interests
(Identified Cost -- $518,507) 566,369
- ----------------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
Statement of Net Assets--Continued
Legg Mason Total Return Trust, Inc.--Continued
<TABLE>
<CAPTION>
Shares/Par Value
- ----------------------------------------------------------------------------------------------------
<S><C>
Repurchase Agreements -- 3.6%
Goldman, Sachs & Company
5.64%, dated 9/30/98, to be repurchased at $7,135 on 10/1/98
(Collateral: $7,135 Fannie Mae Mortgage-backed securities,
6.50% due 11/1/24, value $7,306) $ 7,134 $ 7,134
J.P. Morgan Securities, Inc.
5.60%, dated 9/30/98, to be repurchased at $7,135 on 10/1/98
(Collateral: $7,257 Fannie Mae Mortgage-backed securities,
6.50% due 9/1/28, value $7,406) 7,134 7,134
Prudential Securities, Inc.
5.60%, dated 9/30/98, to be repurchased at $7,135 on 10/1/98
(Collateral: $7,318 Fannie Mae Mortgage-backed securities,
6% due 9/1/13, value $7,412) 7,134 7,134
----------
Total Repurchase Agreements (Identified Cost -- $21,402) 21,402
- ----------------------------------------------------------------------------------------------------
Total Investments-- 100.0% (Identified Cost-- $539,909) 587,771
Other Assets Less Liabilities-- N.M. 34
----------
Net assets consisting of:
Accumulated paid-in capital applicable to:
29,129 Primary shares outstanding $ 483,642
782 Navigator shares outstanding 12,937
Undistributed net investment income 2,993
Undistributed net realized gain on investments 40,361
Unrealized appreciation of investments 47,872
----------
Net assets --100.0% $ 587,805
==========
Net asset value per share:
Primary Class $19.65
======
Navigator Class $19.78
======
- ----------------------------------------------------------------------------------------------------
</TABLE>
(A) Non-income producing.
(B) Affiliated Company--As defined in the Investment Company Act of 1940 an
"Affiliated Company" represents Fund ownership of at least 5% of the
outstanding voting securities of the issuer. At September 30, 1998, the
total market value of Affiliated Companies was $11,296 and the identified
cost was $12,892.
N.M. Not meaningful
See notes to financial statements.
22
<PAGE>
Statements of Operations
(Amounts in Thousands) (Unaudited)
<TABLE>
<CAPTION>
Six Months Ended 9/30/98
---------------------------------------------
Value Special Investment Total Return
Trust Trust Trust
- --------------------------------------------------------------------------------------------------------
<S><C>
Investment Income:
Dividends:
Affiliated companies $ -- $ 682 $ 254
Other securities(A) 25,110 4,141 11,634
Interest 15,618 2,182 1,542
--------- --------- ---------
Total income 40,728 7,005 13,430
--------- --------- ---------
Expenses:
Investment advisory fee 18,895 5,659 2,609
Distribution and service fees 25,672 7,449 3,393
Transfer agent and shareholder servicing expense 1,058 447 204
Audit and legal fees 89 47 26
Custodian fee 397 178 95
Directors' fees 9 9 6
Registration fees 223 57 44
Reports to shareholders 222 115 42
Other expenses 80 17 10
--------- --------- ---------
46,645 13,978 6,429
Less expenses reimbursed (40) (24) --
--------- --------- ---------
Total expenses, net of reimbursement 46,605 13,954 6,429
--------- --------- ---------
Net Investment Income (Loss) (5,877) (6,949) 7,001
--------- --------- ---------
Net Realized and Unrealized Gain (Loss) on Investments:
Realized gain (loss) on investments(B) 87,603 1,252 40,444
Change in unrealized appreciation (depreciation)
of investments (530,210) (341,543) (172,219)
--------- --------- ---------
Net Realized and Unrealized Gain (Loss) on Investments (442,607) (340,291) (131,775)
- --------------------------------------------------------------------------------------------------------
Change in Net Assets Resulting from Operations $(448,484) $(347,240) $(124,774)
- --------------------------------------------------------------------------------------------------------
</TABLE>
(A) Net of foreign taxes withheld of $14, $23 and $146, respectively.
(B) Includes net realized losses of $561 for Special Investment Trust on sale of
shares of Affiliated Companies. Value Trust and Total Return Trust did not
sell any shares of Affiliated Companies during the period.
See notes to financial statements.
23
<PAGE>
Statements of Changes in Net Assets
(Amounts in Thousands)
<TABLE>
<CAPTION>
Value Special Investment Total Return
Trust Trust Trust
------------------------ -------------------------- ----------------------
Six Months Year Six Months Year Six Months Year
Ended Ended Ended Ended Ended Ended
9/30/98 3/31/98 9/30/98 3/31/98 9/30/98 3/31/98
- ----------------------------------------------------------------------------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited)
<S><C>
Change in Net Assets:
Net investment income (loss) $ (5,877) $ (915) $ (6,949) $ (13,486) $ 7,001 $ 11,268
Net realized gain (loss) on investments 87,603 265,457 1,252 141,560 40,444 35,393
Change in unrealized appreciation
(depreciation) of investments (530,210) 1,219,286 (341,543) 320,630 (172,219) 134,822
- ----------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting
from operations (448,484) 1,483,828 (347,240) 448,704 (124,774) 181,483
Distributions to shareholders:
From net investment income:
Primary Class -- (1,871) -- -- (7,210) (9,038)
Navigator Class -- (833) -- -- (323) (356)
From net realized gain on investments:
Primary Class (100,928) (184,252) (115,697) (55,315) (18,764) (43,292)
Navigator Class (4,085) (6,674) (4,377) (2,378) (466) (1,205)
Change in net assets from Fund share
transactions:
Primary Class 973,401 1,330,278 121,728 232,869 19,562 195,828
Navigator Class 244,271 49,445 3,124 5,656 1,453 4,401
- ----------------------------------------------------------------------------------------------------------------------------
Change in net assets 664,175 2,669,921 (342,462) 629,536 (130,522) 327,821
Net Assets:
Beginning of period 4,990,073 2,320,152 1,618,635 989,099 718,327 390,506
- ----------------------------------------------------------------------------------------------------------------------------
End of period $5,654,248 $4,990,073 $1,276,173 $1,618,635 $ 587,805 $718,327
- ----------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income (loss)
end of period $ (5,877) $ -- $ (6,949) $ -- $ 2,993 $ 3,525
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
24
<PAGE>
Financial Highlights
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
------------------------------------- --------------------------------------
From
Net Asset Net Net Realized Total From Net Net Asset
Value, Investment and Unrealized From Net Realized Value,
Beginning Income Gain (Loss) on Investment Investment Gain on Total End of
of Period (Loss) Investments Operations Income Investments Distributions Period
- -------------------------------------------------------------------------------------------------------------------------
<S><C>
Value Trust
--Primary Class
Six Months Ended
Sept. 30, 1998* $50.10 $(.06) $ (3.37) $ (3.43) $ -- $ (.99) $ (.99) $45.68
Years Ended Mar. 31,
1998 34.11 (.02) 18.37 18.35 (.04) (2.32) (2.36) 50.10
1997 26.99 .13 8.68 8.81 (.16) (1.53) (1.69) 34.11
1996 20.21 .19 8.00 8.19 (.17) (1.24) (1.41) 26.99
1995 18.50 .10 1.70 1.80 (.05) (.04) (.09) 20.21
1994 17.81 .08 .92 1.00 (.11) (.20) (.31) 18.50
--Navigator Class
Six Months Ended
Sept. 30, 1998* $50.57 $ .09 $ (3.34) $ (3.25) $ -- $ (.99) $ (.99) $46.33
Years Ended Mar. 31,
1998 34.30 .35 18.55 18.90 (.31) (2.32) (2.63) 50.57
1997 27.08 .41 8.75 9.16 (.41) (1.53) (1.94) 34.30
1996 20.27 .43 8.02 8.45 (.40) (1.24) (1.64) 27.08
1995(A) 18.76 .12 1.40 1.52 (.01) -- (.01) 20.27
Special Investment Trust
--Primary Class
Six Months Ended
Sept. 30, 1998* $36.02 $(.15) $ (7.02) $ (7.17) $ -- $(2.65) $(2.65) $26.20
Years Ended Mar. 31,
1998 26.55 (.31) 11.28 10.97 -- (1.50) (1.50) 36.02
1997 25.09 (.23) 3.10 2.87 -- (1.41) (1.41) 26.55
1996 19.96 -- 5.60 5.60 -- (.47) (.47) 25.09
1995 21.56 (.06) (1.31) (1.37) -- (.23) (.23) 19.96
1994 17.91 (.11) 3.93 3.82 (.03) (.14) (.17) 21.56
--Navigator Class
Six Months Ended
Sept. 30, 1998* $37.12 $ .02 $ (7.29) $ (7.27) $ -- $(2.65) $(2.65) $27.20
Years Ended Mar. 31,
1998 27.04 -- 11.58 11.58 -- (1.50) (1.50) 37.12
1997 25.26 .02 3.17 3.19 -- (1.41) (1.41) 27.04
1996 20.03 .09 5.78 5.87 (.17) (.47) (.64) 25.26
1995(A) 19.11 .07 .85 .92 -- -- -- 20.03
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data
----------------------------------------------------------------
Net
Investment Net Assets,
Expenses Income (Loss) Portfolio End of
Total to Average to Average Turnover Period
Return Net Assets Net Assets Rate (in thousands)
- ---------------------------------------------------------------------------------------------
<S><C>
Value Trust
--Primary Class
Six Months Ended
Sept. 30, 1998* (7.02)%(B) 1.70%(C) (.25)%(C) 16.54%(C) $5,251,550
Years Ended Mar. 31,
1998 55.34% 1.73% (.1)% 12.9% 4,810,409
1997 33.59% 1.77% .4% 10.5% 2,236,400
1996 42.09% 1.82% .8% 19.6% 1,450,774
1995 9.77% 1.81% .5% 20.1% 986,325
1994 5.65% 1.82% .5% 25.5% 912,418
--Navigator Class
Six Months Ended
Sept. 30, 1998* (6.59)%(B) .73%(C) .72%(C) 16.54%(C) $ 402,698
Years Ended Mar. 31,
1998 56.90% .73% .9% 12.9% 179,664
1997 34.97% .77% 1.4% 10.5% 83,752
1996 43.53% .82% 1.8% 19.6% 52,332
1995(A) 8.11%(B) .82%(C) 1.8%(C) 20.1%(C) 36,519
Special Investment Trust
--Primary Class
Six Months Ended
Sept. 30, 1998* (21.17)%(B) 1.84%(C) (.94)%(C) 33.72%(C) $1,226,708
Years Ended Mar. 31,
1998 42.88% 1.86% (1.1)% 29.8% 1,555,336
1997 11.58% 1.92% (.9)% 29.2% 947,684
1996 28.47% 1.96% -- 35.6% 792,240
1995 (6.37)% 1.93% (.2)% 27.5% 612,093
1994 21.35% 1.94% (.6)% 16.7% 565,486
--Navigator Class
Six Months Ended
Sept. 30, 1998* (20.79)%(B) .78%(C) .11%(C) 33.72%(C) $ 49,465
Years Ended Mar. 31,
1998 44.42% .80% -- 29.8% 63,299
1997 12.81% .85% .1% 29.2% 41,415
1996 29.85% .88% 1.0% 35.6% 35,731
1995(A) 4.81%(B) .90%(C) 1.0%(C) 27.5%(C) 26,123
- ---------------------------------------------------------------------------------------------
</TABLE>
(A) For the period December 1, 1994 (commencement of sale of Navigator Class
shares) to March 31, 1995.
(B) Not annualized
(C) Annualized
* Unaudited
See notes to financial statements.
25
<PAGE>
Financial Highlights -- Continued
<TABLE>
<CAPTION>
Investment Operations Distributions
------------------------------------- --------------------------------------
From
Net Asset Net Net Realized Total From Net Net Asset
Value, Investment and Unrealized From Net Realized Value,
Beginning Income Gain (Loss) on Investment Investment Gain on Total End of
of Period (Loss) Investments Operations Income Investments Distributions Period
- -------------------------------------------------------------------------------------------------------------------------
<S><C>
Total Return Trust
--Primary Class
Six Months Ended
Sept. 30, 1998* $24.63 $.23 $ (4.32) $ (4.09) $(.25) $ (.64) $ (.89) $19.65
Years Ended Mar. 31,
1998 19.39 .44 7.23 7.67 (.40) (2.03) (2.43) 24.63
1997 16.45 .46 3.47 3.93 (.43) (.56) (.99) 19.39
1996 12.79 .48 3.69 4.17 (.51) -- (.51) 16.45
1995 13.54 .33 (.19) .14 (.29) (.60) (.89) 12.79
1994 13.61 .36 .24 .60 (.33) (.34) (.67) 13.54
--Navigator Class
Six Months Ended
Sept. 30, 1998* $24.87 $.34 $ (4.35) $ (4.01) $(.44) $ (.64) $(1.08) $19.78
Years Ended Mar. 31,
1998 19.53 .66 7.29 7.95 (.58) (2.03) (2.61) 24.87
1997 16.52 .65 3.48 4.13 (.56) (.56) (1.12) 19.53
1996 12.83 .62 3.72 4.34 (.65) -- (.65) 16.52
1995(A) 12.66 .15 .25 .40 (.06) (.17) (.23) 12.83
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data
----------------------------------------------------------------
Net
Investment Net Assets,
Expenses Income (Loss) Portfolio End of
Total to Average to Average Turnover Period
Return Net Assets Net Assets Rate (in thousands)
- ---------------------------------------------------------------------------------------------
<S><C>
Total Return Trust
--Primary Class
Six Months Ended
Sept. 30, 1998* (17.13)%(B) 1.87%(C) 1.98%(C) 38.0%(C) $ 572,338
Years Ended Mar. 31,
1998 42.44% 1.88% 2.1% 20.6% 700,535
1997 24.33% 1.93% 2.6% 38.4% 380,458
1996 33.23% 1.95% 3.2% 34.7% 267,010
1995 1.09% 1.93% 2.5% 61.9% 194,767
1994 4.57% 1.94% 2.7% 46.6% 184,284
- --Navigator Class
Six Months Ended
Sept. 30, 1998* (16.70)%(B) .82%(C) 3.03%(C) 38.0%(C) $ 15,467
Years Ended Mar. 31,
1998 43.94% .83% 3.1% 20.6% 17,792
1997 25.67% .86% 3.7% 38.4% 10,048
1996 34.67% .94% 4.2% 34.7% 7,058
1995(A) 2.28%(B) .86%(C) 3.6%(C) 61.9%(C) 4,823
- ---------------------------------------------------------------------------------------------
</TABLE>
(A) For the period December 1, 1994 (commencement of sale of Navigator Class
shares) to March 31, 1995.
(B) Not annualized
(C) Annualized
* Unaudited
See notes to financial statements.
26
<PAGE>
Notes to Financial Statements
Value Trust
Special Investment Trust
Total Return Trust
(Amounts in Thousands) (Unaudited)
- --------------------------------------------------------------------------------
1. Significant Accounting Policies:
The Legg Mason Value Trust, Inc. ("Value Trust"), the Legg Mason Special
Investment Trust, Inc. ("Special Investment Trust") and the Legg Mason Total
Return Trust, Inc. ("Total Return Trust") (each a "Fund") are registered
under the Investment Company Act of 1940, as amended, each as an open-end,
diversified investment company.
Each Fund consists of two classes of shares: Primary Class, offered since
1982 for Value Trust, and since 1985 for Special Investment Trust and Total
Return Trust; and Navigator Class, offered to certain institutional
investors since December 1, 1994 for each Fund. The income and expenses of
each of these Funds are allocated proportionately to the two classes of
shares based on daily net assets, except for Rule 12b-1 distribution fees,
which are charged only on Primary Class shares, and transfer agent and
shareholder servicing expenses, which are determined separately for each
class.
Security Valuation
Securities traded on national securities exchanges are valued at the last
quoted sales price. Over-the-counter securities and listed securities for
which no sales price is available are valued at the mean between the latest
bid and asked prices. Securities for which market quotations are not readily
available are valued at fair value as determined by management and approved
in good faith by the Board of Directors. Fixed income securities with 60
days or less remaining to maturity are valued using the amortized cost
method, which approximates current market value.
Investment Income and Distributions to Shareholders
Interest income and expenses are recorded on the accrual basis. Bond
premiums are amortized for financial reporting and federal income tax
purposes. Bond discounts, other than original issue and zero-coupon bonds,
are not amortized. Dividend income and distributions to shareholders are
allocated at the class level and are recorded on the ex-dividend date.
Dividends from net investment income, if available will be paid quarterly
for Value Trust and Total Return Trust, and annually for Special Investment
Trust. Net capital gain distributions, which are calculated at the composite
level, are declared and paid after the end of the tax year in which the gain
is realized.
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. At September
30, 1998, receivables for securities sold but not yet delivered and payables
for securities purchased but not yet received for each of the Funds were as
follows:
Receivable for Payable for
Securities Sold Securities Purchased
------------------------------------------------------------
Value Trust $0 $10,265
Special Investment Trust 0 0
Total Return Trust 0 676
Federal Income Taxes
No provision for federal income or excise taxes is required since each
Fund intends to continue to qualify as a regulated investment company and
distribute all of its taxable income to its shareholders.
27
<PAGE>
Notes to Financial Statements -- Continued
- --------------------------------------------------------------------------------
Use of Estimates
The 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. Investment Transactions:
For the six months ended September 30, 1998, investment transactions
(excluding short-term investments) were as follows:
Purchases Proceeds from Sales
------------------------------------------------------------
Value Trust $1,525,973 $411,982
Special Investment Trust 277,243 243,365
Total Return Trust 154,323 123,772
At September 30, 1998, cost, aggregate gross unrealized appreciation and
gross unrealized depreciation based on the cost of securities for federal
income tax purposes for each Fund were as follows:
Cost Appreciation (Depreciation)
------------------------------------------------------------------
Value Trust $3,687,619 $2,426,207 $(633,604)
Special Investment Trust 1,057,631 479,735 (254,725)
Total Return Trust 539,909 101,972 (54,110)
3. 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 Funds' 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 Funds' investment adviser, acting
under the supervision of their Board of Directors, reviews the value of the
collateral and the creditworthiness of those banks and dealers with which
the Funds enter into repurchase agreements to evaluate potential risks.
4. Transactions with Affiliates:
Each Fund has an investment advisory and management agreement with Legg
Mason Fund Adviser, Inc. ("LMFA"). Pursuant to their respective agreements,
LMFA provides the Funds with investment advisory, management and
administrative services for which each Fund pays a fee, computed daily and
payable monthly at annual rates of each Fund's average daily net assets as
follows: for Value Trust and Special Investment Trust, 1% for the first $100
million, 0.75% between $100 million and $1 billion and 0.65% in excess of $1
billion; and for Total Return Trust, 0.75% for such assets.
LMFA has agreed to waive indefinitely its fees in any month to the extent
Total Return Trust's expenses (exclusive of taxes, interest, brokerage and
extraordinary expenses) exceed during that month an annual rate of 1.95% of
average daily net assets for Primary Shares and 0.95% for Navigator Shares.
The Funds' agreements with LMFA provide that expense reimbursements be made
to Value Trust and Special Investment Trust for audit fees and compensation
of the Funds' independent directors. At September 30, 1998, amounts due to
LMFA were $2,996, $775, and $365, for Value Trust, Special Investment Trust
and Total Return Trust, respectively.
Legg Mason Wood Walker, Incorporated ("Legg Mason"), a member of the New
York Stock Exchange, serves as distributor of the Funds. Legg Mason receives
an annual distribution fee and an annual service fee, computed daily and
payable monthly from each of the Funds at annual rates based on the average
daily net assets of each Fund's Primary Class as follows: Value Trust, 0.70%
and 0.25%; Special Investment Trust and
28
<PAGE>
- --------------------------------------------------------------------------------
Total Return Trust, 0.75% and 0.25%, for distribution and service fees,
respectively. At September 30, 1998, distribution and service fees due to
Legg Mason were as follows: Value Trust, $4,060; Special Investment Trust,
$996; and Total Return Trust, $474.
Value Trust paid $5 in brokerage commissions to Legg Mason for Fund
security transactions for the six months ended September 30, 1998. Total
Return Trust and Special Investment Trust paid no brokerage commissions to
Legg Mason for the six months ended September 30, 1998.
Legg Mason also has an agreement with the Funds' transfer agent to assist
it with some of its duties. For this assistance, Legg Mason was paid the
following amounts by the transfer agent for the six months ended September
30, 1998: Value Trust, $337; Special Investment Trust, $137; and Total
Return Trust, $53.
LMFA and Legg Mason are corporate affiliates and wholly owned
subsidiaries of Legg Mason, Inc.
5. Line of Credit:
The Funds, along with certain other Legg Mason Funds, participate in a
$150 million line of credit ("Credit Agreement") to be utilized as an
emergency source of cash in the event of unanticipated, large redemption
requests by shareholders. Pursuant to the Credit Agreement, each
participating fund is liable only for principal and interest payments
related to borrowings made by that Fund. Borrowings under the line of credit
bear interest at prevailing short-term interest rates. For the six months
ended September 30, 1998, the Funds had no borrowings under the line of
credit.
6. Fund Share Transactions:
At September 30, 1998, there were 200,000, 100,000 and 50,000 shares
authorized at $.001 par value for the Primary class of Value Trust, Special
Investment Trust and Total Return Trust, respectively. At September 30,
1998, there were 100,000 shares authorized at $.001 par value for the
Navigator class of Value Trust. The Navigator class of Special Investment
Trust and Total Return Trust each have 50,000 shares authorized at $.001 par
value.
Share transactions were as follows:
<TABLE>
<CAPTION>
Reinvestment
Sold of Distributions Repurchased Net Change
---------------- ---------------- ----------------- ------------------
Shares Amount Shares Amount Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------------------------------
<S><C>
Value Trust
--Primary Class
Six Months Ended Sept. 30, 1998 30,043 $1,523,856 1,918 $ 96,627 (13,026) $(647,082) 18,935 $ 973,401
Year Ended March 31, 1998 42,311 1,841,372 4,360 179,702 (16,212) (690,796) 30,459 1,330,278
--Navigator Class
Six Months Ended Sept. 30, 1998 5,509 $ 263,059 70 $ 3,570 (439) $ (22,358) 5,140 $ 244,271
Year Ended March 31, 1998 1,680 74,966 150 6,238 (719) (31,759) 1,111 49,445
Special Investment Trust
--Primary Class
Six Months Ended Sept. 30, 1998 7,990 $ 254,395 3,610 $113,983 (7,960) $(246,650) 3,640 $ 121,728
Year Ended March 31, 1998 13,850 441,297 1,933 54,702 (8,297) (263,130) 7,486 232,869
--Navigator Class
Six Months Ended Sept. 30, 1998 186 $ 5,552 133 $ 4,339 (206) $ (6,767) 113 $ 3,124
Year Ended March 31, 1998 587 19,039 81 2,349 (494) (15,732) 174 5,656
Total Return Trust
--Primary Class
Six Months Ended Sept. 30, 1998 3,494 $ 82,235 1,092 $ 25,149 (3,905) $ (87,822) 681 $ 19,562
Year Ended March 31, 1998 9,633 216,730 2,451 50,878 (3,259) (71,780) 8,825 195,828
--Navigator Class
Six Months Ended Sept. 30, 1998 106 $ 2,301 34 $ 782 (73) $ (1,630) 67 $ 1,453
Year Ended March 31, 1998 265 5,997 75 1,559 (140) (3,155) 200 4,401
</TABLE>
29
