LEGG MASON INCOME TRUST, INC.:
Legg Mason U.S. Government Intermediate-Term Portfolio
Legg Mason Investment Grade Income Portfolio
Legg Mason High Yield Portfolio
Legg Mason U.S. Government Money Market Portfolio
Primary Shares
Supplement to the Prospectus dated May 1, 1997
The following replaces the section entitled "When-Issued Securities" on page 17
of the Prospectus:
Forward Commitments (the following also applies to Government Money Market)
Each Fund may enter into commitments to purchase U.S. government securities
or other securities on a "forward commitment" basis, including purchases on a
"when-issued" basis or a "to be announced" basis. When such transactions are
negotiated, the price is fixed at the time the commitment is made, but delivery
and payment for the securities takes place at a later date. Such securities are
often the most efficiently priced and have the best liquidity in the bond
market. During the period between a commitment and settlement, no payment is
made by the purchaser for the securities purchased and, thus, no interest
accrues to the purchaser from the transaction. In a to be announced
transaction, a Fund has committed to purchase securities for which all
specific information is not yet known at the time of the trade, particularly
the exact face amount in forward commitment mortgage-backed securities
transactions.
A Fund may sell the securities subject to a forward commitment purchase,
which may result in a gain or loss. When a Fund purchases securities on a
forward commitment basis, it assumes the risks of ownership, including the risk
of price fluctuation, at the time of purchase, not at the time of receipt.
Purchases of forward commitment securities also involve a risk of loss if the
seller fails to deliver after the value of the securities has risen. Depending
on market conditions, a Fund's forward commitment purchases could cause its net
asset value to be more volatile. A Fund will direct State Street to place cash
or U.S. government obligations in a separate account equal to the commitments
of the Fund to purchase securities as a result of its forward commitment
obligation.
Each Fund (other than Government Money Market) may also enter into a
forward commitment to sell only those securities it owns and will do so only
with the intention of actually delivering the securities. The use of forward
commitments enables a Fund to hedge against anticipated changes in interest
rates and prices. In a forward sale, a Fund does not participate in gains or
losses on the security occurring after the commitment date. A Fund will
direct State Street to place the securities in a separate account. Forward
commitments to sell securities also involve a risk of loss if the seller fails
to take delivery after the value of the securities has declined. Further risks
involving forward commitments are discussed in the section "Risks of Futures,
Options and Forward Currency Contracts," below.
Government Intermediate, Investment Grade and Government Money Market each
does not expect that purchases of forward commitments will at any time exceed,
in the aggregate, 20% of its total assets.
October 17, 1997
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NAVIGATOR TAXABLE INCOME FUNDS
Navigator U.S. Government Intermediate-Term Portfolio
Navigator Investment Grade Income Portfolio
Navigator High Yield Portfolio
Supplement to the Prospectus dated May 1, 1997
The following replaces the section entitled "When-Issued Securities" on page 15
of the Prospectus:
Forward Commitments
Each Fund may enter into commitments to purchase U.S. government securities
or other securities on a "forward commitment" basis, including purchases on a
"when-issued" basis or a "to be announced" basis. When such transactions are
negotiated, the price is fixed at the time the commitment is made, but delivery
and payment for the securities takes place at a later date. Such securities are
often the most efficiently priced and have the best liquidity in the bond
market. During the period between a commitment and settlement, no payment is
made by the purchaser for the securities purchased and, thus, no interest
accrues to the purchaser from the transaction. In a to be announced
transaction, a Fund has committed to purchase securities for which all
specific information is not yet known at the time of the trade, particularly
the exact face amount in forward commitment mortgage-backed securities
transactions.
A Fund may sell the securities subject to a forward commitment purchase,
which may result in a gain or loss. When a Fund purchases securities on a
forward commitment basis, it assumes the risks of ownership, including the risk
of price fluctuation, at the time of purchase, not at the time of receipt.
Purchases of forward commitment securities also involve a risk of loss if the
seller fails to deliver after the value of the securities has risen. Depending
on market conditions, a Fund's forward commitment purchases could cause its net
asset value to be more volatile. A Fund will direct State Street to place cash
or U.S. government obligations in a separate account equal to the commitments
of the Fund to purchase securities as a result of its forward commitment
obligation.
Each Fund may also enter into a forward commitment to sell only those
securities it owns and will do so only with the intention of actually delivering
the securities. The use of forward commitments enables a Fund to hedge against
anticipated changes in interest rates and prices. In a forward sale, a Fund
does not participate in gains or losses on the security occurring after the
commitment date. A Fund will direct State Street to place the securities in
a separate account. Forward commitments to sell securities also involve a
risk of loss if the seller fails to take delivery after the value of the
securities has declined. Further risks involving forward commitments are
discussed in the section "Risks of Futures, Options and Forward Currency
Contracts," below.
Government Intermediate and Investment Grade each does not expect that
purchases of forward commitments will at any time exceed, in the aggregate, 20%
of its total assets.
October 17, 1997
