Investment Manager
Legg Mason Fund Adviser, Inc.
Baltimore, MD
Investment Adviser
Batterymarch Financial Management, Inc.
Boston, MA
Board of Directors
John F. Curley, Jr., Chairman
Edward A. Taber, III, President
Richard G. Gilmore
Charles F. Haugh
Arnold L. Lehman
Dr. Jill E. McGovern
T. A. Rodgers
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
Coopers & Lybrand L.L.P.
Baltimore, MD
This report is not to be distributed unless preceded or accompanied by a
prospectus.
Legg Mason Wood Walker, Incorporated
- --------------------------------------------------------------------------------
111 South Calvert Street
P.O. Box 1476, Baltimore, MD 21203-1476
410 (bullet) 539 (bullet) 0000
[recycled logo] Printed on Recycled Paper
LMF-070
Report to Shareholders
For the Six Months Ended
June 30, 1996
The
Legg Mason
International
Equity
Trust
Putting Your Future First
[Legg Mason Funds logo]
FUNDS
<PAGE>
To Our Shareholders,
The Legg Mason International Equity Trust's net asset value increased from
$10.70 to $11.93 during the six months ended June 30, 1996. The Fund's
year-to-date total return of 11.50% (appreciation plus reinvested dividends),
surpassed the 4.7% total return of its benchmark, the Morgan Stanley Capital
International Europe, Australia and Far East (MSCI EAFE) index. During the six
months ended June 30, 1996, the Fund had doubled in size to $132 million in
assets and had over 14,000 shareholder accounts.
The Trust seeks to obtain maximum long-term total return through
investments in common stocks of companies located outside the United States.
Additionally, the Trust may invest up to 35% of its assets in the securities of
companies located in developing or emerging countries and markets. As of June
30, 87% of the Trust's assets were invested in developed countries outside the
U.S., 10% in emerging countries and 3% in cash.
On the following pages, Charles Lovejoy, the Trust's portfolio manager,
reviews the portfolio's structure and performance and comments on the investment
outlook for international equities.
Investments in international equities should be considered a core part of
any well-diversified investment portfolio. We hope you will consider using the
International Equity Trust for investments of additional funds as they become
available. Some shareholders take advantage of Legg Mason's Future First
Systematic Investment Plan. Under this plan, you may arrange for automatic
monthly investments in the Trust of $50 or more by authorizing the Trust's
transfer agent, Boston Financial Data Services, to prepare a check each month
drawn on your checking account. Please contact your Investment Executive for
further information.
Sincerely,
/s/ Edward A. Taber, III
Edward A. Taber, III
President
August 15, 1996
<PAGE>
Portfolio Manager's Comments
The return for the Legg Mason International Equity Trust was 11.5%
for the first six months of 1996 compared with the MSCI EAFE Index return
of 4.7%. Since inception on February 17, 1995, the average annual return
for the Fund was 14.6% compared with 14.7% for the Index.
During the six months, European markets outperformed the Index,
returning 6.6% in US dollars, as measured by Morgan Stanley. Markets in
the Nordic countries were strong, up 10.7%. The Japanese market was
relatively weak, in dollar terms, up only 1.2%. The MSCI Emerging Markets
Free Index returned 8.3% for the six months.
The Fund's good performance relative to the EAFE Index is attributed
to both strong stock selection and country allocation, particularly in
Spain and Italy. These markets were buoyed by the expectation of lower
interest rates, as evidence mounted that the Europeans would adhere to
their timetable for monetary union. Our utility holdings in both
countries, in particular, benefited from this. Good stock selection in the
Nordic countries also contributed to positive results.
During the second quarter, the policy of the Fund was changed to
invest in non-US markets. Prior to the change, the Fund was invested
primarily outside the United States, with approximately 10% of the Fund
allocated to the US, 60% to EAFE markets and 30% to emerging markets.
Regional breakdown at:
June 30, 1996 December 31, 1995
Europe 46.9% 33.1%
Japan 28.8 21.2
Latin America 4.3 9.3
Pacific Rim 14.3 15.4
US -- 10.5
Other markets 2.2 3.7
Cash 3.5 6.8
Currencies
The Fund continued to benefit from our currency hedging program with
23 basis points (100 basis points=1.0%) of incremental return
year-to-date.
Investment Outlook
European economies have generally been weak, attributable largely to
fiscal austerity. Many European governments are struggling to meet the
budget criteria for monetary union. However, lower interest rates and
continuing declines in most exchange rates compared with the dollar have
improved prospects for growth in the second half of the year.
In Japan, concerns are that short-term interest rates will be higher
by year-end and that negative surprises will continue for the banks.
Foreigners became net sellers in the market in May, after being net buyers
for five years, and Japanese individual investors and investment trusts
have become net buyers of equities.
In contrast to Europe, the economic recovery is already underway in
Japan in response to both fiscal and monetary stimulus as well as a lower
yen compared with the dollar.
Charles F. Lovejoy, CFA
August 15, 1996
2
<PAGE>
Performance Information
Legg Mason Global Trust, Inc.
International Equity Trust
Total Return for One Year and Life of Fund,
as of June 30, 1996
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 the fund 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 the fund's return, so they differ from
actual year-to-year results. No adjustment has been made for any income taxes
payable by shareholders.
The fund's total returns as of June 30, 1996 were as follows:
Cumulative Average Annual
Total Return Total Return
- --------------------------------------------------------------------------------
One Year +15.90% +15.90%
Life of Fund(dagger) +20.54 +14.61
(dagger)Fund inception--February 17, 1995.
Industry Diversification
Legg Mason Global Equity Trust, Inc.
International Equity Trust
June 30, 1996
% of Net Market
Assets Value
- --------------------------------------------------------------------------------
(000)
Aerospace 1.6% $ 2,136
Agriculture/Food 3.1 4,053
Air Transport 1.7 2,267
Aluminum 1.0 1,360
Apparel/Textiles 1.3 1,780
Banks 6.8 8,996
Business Machines 2.6 3,451
Chemicals 5.9 7,859
Coal & Uranium 0.3 350
Construction 6.0 7,967
Consumer Durables 0.4 556
Containers 1.2 1,552
Domestic Oil Reserves 0.9 1,250
Drugs/Medicine 3.8 4,996
Electric Utilities 3.0 4,032
Electronics 7.7 10,177
Finance 12.1 15,973
Gas Utilities 1.0 1,350
Health (Non-Drug) 0.2 220
Hotel/Restaurant 1.1 1,511
Iron &Steel 2.0 2,607
Life Insurance 5.0 6,592
Liquor 0.9 1,197
Miscellaneous 0.5 726
% of Net Market
Assets Value
- --------------------------------------------------------------------------------
(000)
Motor Vehicles 2.3% $ 3,086
Non-ferrous Metals 1.8 2,415
Oil Refining/Distribution 0.6 864
Oil Service 0.1 165
Paper 0.2 238
Photo/Optical 1.3 1,738
Producer Goods 4.7 6,176
Publishing 0.1 111
Railroads/Transit 0.2 214
Real Property 1.9 2,579
Retail (Food) 1.2 1,545
Retail (Non-Food) 2.4 3,206
Services 2.5 3,267
Soap/Housewares 0.1 96
Telecommunications 3.7 4,858
Tire & Rubber 1.9 2,468
Tobacco 0.5 599
Trucking/Freight 0.3 334
Water Transport 0.6 748
Short-Term Investments 2.6 3,507
Total Investment Portfolio 99.1 131,172
Other Assets Less Liabilities 0.9 1,137
Net Assets 100.0% $132,309
3
<PAGE>
Statement of Net Assets
Legg Mason Global Trust, Inc.
International Equity Trust
June 30, 1996 (Unaudited)
(Amounts in Thousands) Shares Value
- --------------------------------------------------------------------------------
Common Stocks and Equity Interests -- 95.4%
Argentina -- 0.4%
Inversiones y Representacion 151 $ 508
Australia-- 1.4%
Advance Bank Australia Limited 7 29
QCT Resources Ltd. 264 349
Santos Limited 214 739
Westpac Bank Corporation 181 801
1,918
Belgium -- 3.0%
Banque Bruxelles Lambert SA 1 280
Cie Financiere Europeenne
et d'Outre-Mer SA 3 292
Compagnie Belge de Participations
Paribas SA 31 1,101
Fortis AG 2 251
Groupe Bruxelles Lambert SA 2 329
Societe Generale de Belgique 4 336
Solvay 2 1,424
4,013
Brazil -- 1.1%
Telecomunicacoes Brasileiras S/A
ADR 13 891
Usinas Siderurgicas
de Minas Gerais S/A ADS 56 605(B)
1,496
Canada -- 0.3%
Bank of Montreal 2 59
Brascan, Ltd. 6 108
Canadian Imperial Bank of Commerce 2 64
Shell Canada Limited 4 142
373
Chile -- 0.8%
Companhia de Telecomunicacoes ADR 5 482
Enersis S.A. ADR 18 552
1,034
Denmark -- 0.8%
Den Danske Bank 6 389
SAS Danmark A/S 26 355
SAS Danmark A/S - Rights 104 80(A)
Sophus Berendsen A/S 1 147
Superfos AS 1 47
1,018
(Amounts in Thousands) Shares Value
- --------------------------------------------------------------------------------
Finland -- 2.0%
Kemira OY 94 $ 984
Nokia OY 2 81
Outokumpu OY 8 133
Raision Tehtaat OY 8 478
Raision Tehtaat OY - Rights 8 66(A)
Rautaruukki OY 17 124
Valmet Corporation 45 763
2,629
France -- 5.2%
Christian Dior SA 8 977
Ecco SA 3 691
Ecco Travail Temporaire SA 11 939
Elf Gabon 9 183
Eridania Beghin-Say SA 7 1,160
Etablissements Economiques
du Casino Guichard-Perrachon 27 1,110
Establissements Economiques du Casino
Guichard-Perrachon - Rights 27 42(A)
Groupe Poliet 10 1,061
Roussel-Uclaf 3 672
6,835
Germany -- 2.9%
BASF AG 5 1,445
Bayerische Hypotheken Wechsel-Bank AG 9 207
Continental AG 49 793
Karstadt AG 2 668
Siemens AG 13 722
3,835
Greece -- 0.1%
Ergo Bank S.A. 3 165
Hong Kong -- 3.7%
Amoy Properties Ltd. 188 227
Cathay Pacific Airways 439 805
Dickson Concepts International Ltd. 411 526
Guoco Group Ltd. 101 482
Henderson China Holding Ltd N.M. 1(A)
Henderson Land Development
Company Ltd. 102 764(A)
Hong Kong Telecommunications Ltd. 183 328
HSBC Holdings plc 68 1,020
Kumagai Gumi (Hong Kong) Limited 379 340
Kumagai Gumi (Hong Kong) Ltd. -
Warrants 65 10(A)
Sun Hung Kai Properties Ltd. 39 394
4,897
4
<PAGE>
(Amounts in Thousands) Shares Value
- --------------------------------------------------------------------------------
India -- 1.7%
Great Eastern Shipping GDR 56 $ 466
Hindalco Industries Ltd. GDR 16 656
India Cements Ltd. GDR 30 158(A)
Steel Authority of India Ltd. GDR 43 636(A,B)
Tata Engineering & Locomotive
Company Limited GDR 19 331
2,247
Indonesia -- 1.2%
PT Bank Internasional Indonesia 94 465
PT Gudang Garam 122 523
PT Indocement Tunggal Prakarsa 112 383
PT Mulia Industrindo 175 259
1,630
Ireland -- 1.6%
Allied Irish Banks plc 184 963
Bank of Ireland 176 1,198
2,161
Italy -- 2.5%
Banca Commerciale Italiana 228 460
Banca Popolare di Bergamo 2 29
Riunione Adriatica di Sicurta S.p.A. 55 565
Telecom Italia 658 1,416
Telecom Italia Mobile S.p.A. 371 829
3,299
Japan -- 28.8%
Aoyama Trading Company 21 556
Best Denki Company 2 30
Bridgestone Corporation 55 1,051
Canon Incorporated 48 1,001
Citizen Watch Company 44 367
Dai-Tokyo Fire & Marine Insurance Co. 6 45
Daiichi Pharmaceutical Company Ltd. 52 804
Daiwa Kosho Lease Company Ltd. 77 824
Daiwa Securities Company Ltd. 96 1,238
Eisai Company Ltd. 52 987
Ezaki Glico Company 18 201
Fuji Photo Film Company 29 917
General Sekiyu 98 865
Gunze Limited 52 327
Hitachi Cable 105 881
Hitachi Koki Company 95 938
Inabata & Company 7 53
Iwate (Bank of) Limited 13 777
Jaccs Company 105 959
Katokichi Company 16 388
Kawasaki Heavy Industries 168 853
Kikkoman Corporation 118 966
(Amounts in Thousands) Shares Value
- --------------------------------------------------------------------------------
Japan -- Continued
Kishu Paper Company 162 $ 948
Kitz Corporation 9 47
Kokusai Electric 37 687
Konica Corporation 109 823
Kurimoto Company 33 383
Kyudenko Corporation 4 54
Lion Corporation 16 96
Maruzen Showa Unyu Co. 24 138
Matsushita Electric Industrial Company 26 485
Matsushita Electric Works 29 316
Mitsubishi Heavy Industries Ltd. 119 1,037
Mitsubishi Materials Corporation 68 371
Mitsui Trust & Banking 28 328
Nagase & Company 7 67
National House Industrial Co. 33 516
Nichicon Corporation 69 1,003
Nichimen Corporation 111 498
Nippon Chemical Industrial 78 820
Nippon Credit Bank 167 621
Nippon Denko Company 23 123
Nippon Metal Industry 16 80
Nippon Road Company 5 43
Nippon Shinpan Company 17 121
Nippon Valqua Industries 40 214
Nippondenso Company 2 44
Nishimatsu Construction 40 439
Nissei Sangvo Company 13 218
Nisshin Oil Mills 10 83
Nissho Iwai Corporation 4 23
Okuma Corporation 62 692(A)
Okumura Corporation 97 812
Onward Kashiyama Company Ltd. 16 262
Ricoh Company 110 1,167
Rohm Company 14 927
Sankyo Aluminium Industry Co. 36 211
Sanwa Shutter Corporation 92 866
Sekisui Chemical Co. 57 698
Shikoku Electric Power 20 449
Sony Corporation 10 659
Sumitomo Electric Industries 3 43
Sumitomo Metal Industries 193 593
Takeda Chemical Industries 83 1,472
Tatsuta Electric Wire & Cable 16 94
TDK Corporation 18 1,076
Toagosei Co. Ltd. 7 37
Toda Corporation 5 49
Tokico Ltd. 36 180
Toyota Motor Corporation 24 601
Tsubakimoto Chain Co. 18 123
Ube Industries, Ltd. 12 46(A)
5
<PAGE>
Statement of Net Assets--Continued
Legg Mason Global Trust, Inc.
International Equity Trust
(Amounts in Thousands) Shares Value
- --------------------------------------------------------------------------------
Japan -- Continued
Yamanouchi Pharmaceutical 49 $ 1,066
Yodogawa Steel Works, Ltd. 12 92
Yokohama Rubber Company 29 182
38,051
Malaysia -- 3.8%
AMMB Holdings Bhd 47 665
Arab Malaysian Corporation Berhad 165 648
Edaran Otomobil Nasional 88 843
Malayan Cement Bhd 224 539
Malaysian Airline System Bhd 112 357
Rashid Hussain Bhd 251 921
Tan Chong Motor Holdings Berhad 739 1,078
5,051
Mexico -- 1.4%
ALFA, S.A. de C.V. 160 724
Cemex, S.A. de C.V. 144 569
Industrias Penoles SA 133 610
1,903
Netherlands -- 3.8%
ABN Amro Holding N.V. 7 392
Aegon N.V. 8 362
Ahrend Groep NV 6 251
Assurantieconcern Stad Rotterdam N.V 4 163
DSM NV 2 179
Fortis Amev NV 7 208
ING Groep NV 34 1,019
Kondor Wessels Groep NV 4 151
Koninklijke Van Ommeren N.V. 26 1,036
Koninklijke Volker Stevin N.V. 11 833
Twentsche Kabel Holding NV 10 429
5,023
New Zealand -- 0.4%
Fletcher Challenge Paper 123 239(A)
Fletcher Challenge Energy 117 258(A)
497
Norway -- 2.0%
Aker AS 4 71
Den Norske Bank A/S 300 910
Hafslund ASA 11 69
Norsk Hydro AS 19 941
Nycomed ASA 11 151(A)
Saga Petroleum AS 11 165
Transocean AS 10 267(A)
2,574
(Amounts in Thousands) Shares Value
- --------------------------------------------------------------------------------
Philippines -- 0.9%
Fil-Estate Land Inc. 256 $ 327
Fortune Cement Corp. 246 129(A)
Metropolitan Bank & Trust Company 26 736
SM Prime Holdings 72 19
1,211
Portugal -- 0.5%
Portugal Telecom S.A. 26 674(A)
Singapore -- 1.8%
Dairy Farm International Holdings Ltd. 35 29
Goldtron Ltd. 648 514
Hotel Properties 172 305
Jardine Strategic Holdings Ltd. 84 269
Singapore Airlines Ltd. 53 560
Wing Tai Holdings Ltd. 336 714
2,391
South Korea -- N.M.
Samsung Electronics Limited GDS N.M. 7(A)
Spain -- 4.6%
Autopistas del Mare Nostrum SA 5 70
Banco Bilbao Vizcaya 17 689
Banco Central Hispanoamericano 2 49
Banco Santander SA 13 593
Compania Sevillana de Electricidad 80 736
Corporacion Bancaria de Espana SA 10 424
Fuerzas Electricas de Cataluna, SA 107 873
Gas y Electridad SA 9 477
Huarte SA 8 18
Iberdrola S.A. 105 1,080
Tabacalera SA 2 76
Union Electrica Fenosa SA 154 988
6,073
Sweden -- 0.7%
Electrolux AB 13 673
Skane-Gripen AB 17 208
881
Switzerland -- 4.8%
Alusuisse-Lonza Holding AG 1 1,360
CS Holding AG 9 904
Reiseburo Kuoni AG 1 1,205
Rieter Holdings Ltd. 1 135
Schweizerischer Bankverein 6 1,107
Schweizerische Rueckversicherungs
-Gesellschaft 2 1,675
6,386
6
<PAGE>
(Amounts in Thousands) Shares Value
- --------------------------------------------------------------------------------
Thailand -- 1.0%
Bangkok Bank Company Ltd. 33 $ 449
Charoen Pokphand Feedmill Public
Company Limited 45 212
Land and House Public Company Limited 21 268
Siam Cement Public Company Limited 3 128
TelecomAsia Corporation 106 222(A)
1,279
Turkey -- 0.2%
Eregli Demir Ve Celik Fabrikalari
T.A.S. 2,906 322
United Kingdom -- 12.0%
Abbey National 45 376
Albert Fisher Group plc 702 526
Anglian Water plc 64 592
Asda Group plc 245 444
British Aerospace PLC 72 1,096
Burton Group plc 284 683
Daily Mail and General Trust 5 108
Imperial Chemical Industries plc 83 1,021
Lloyds Abbey Life PLC 143 1,128
Lloyds TSB Group plc 315 1,539
Marley PLC 462 926
National Grid Group 359 952
Ocean Group plc 11 75
Pilkington plc 215 604
Premier Oil PLC 385 179
Prudential Corporation 224 1,411
Scottish & Newcastle PLC 117 1,193
South West Water plc 6 58
Southern Water plc 75 1,161
Standard Chartered Bank PLC 102 1,019
Yorkshire Water PLC 74 759
15,850
Total Common Stocks and Equity Interests
(Identified Cost -- $118,318) 126,231
Preferred Stocks-- 1.1%
Brazil -- 0.6%
Banco Itau S.A. 500 203
Companhia de Tecidos Norte de Minas 1,370 540
743
(Amounts in Thousands) Shares Value
- --------------------------------------------------------------------------------
Italy -- 0.5%
Autostrade Concessioni E Construzioni
Autostrade S.p.A. 393 $ 680
United Kingdom -- N.M.
Wessex Water Plc 14 11
Total Preferred Stocks
(Identified Cost-- $1,230) 1,434
Principal
Amount
---------
Repurchase Agreement -- 2.6%
Prudential Securities, Inc.
5.48% dated 6-28-96, to be
repurchased at $3,509
on 7-1-96 (Collateral:
$3,728 Federal National
Mortgage Association
Mortgage-backed securities,
6.5% due 4-01-09, value $3,618)
(Identified Cost-- $3,507) $ 3,507 3,507
Total Investments -- 99.1%
(Identified Cost-- $123,055) 131,172
Other Assets Less Liabilities-- 0.9% 1,137
Net assets consisting of:
Accumulated paid-in capital
applicable to 11,093 shares
outstanding 120,353
Undistributed net investment
income 476
Undistributed net realized gain
on investments and currency
transactions 3,382
Unrealized appreciation of
investments and currency
transactions 8,098
Net assets-- 100.0% $132,309
Net asset value per share $11.93
(A) Non-income producing
(B) Rule 144a Security -- a security purchased pursuant to Rule 144a under the
Securities Act of 1933 which may not be resold subject to that rule except
to qualified institutional buyers.
N.M. Not meaningful
See notes to financial statements.
7
<PAGE>
Statement of Operations
Legg Mason Global Trust, Inc.
International Equity Trust
For the Six Months Ended June 30, 1996 (Unaudited)
(Amounts in Thousands)
- --------------------------------------------------------------------------------
Investment Income:
Dividends $1,608
Interest 217
Less foreign income tax expense (192)
$ 1,633
Expenses:
Management fee 386
Distribution and service fees 514
Custodian fee 149
Transfer agent and shareholder servicing expense 62
Legal and audit fees 27
Registration fees 26
Reports to shareholders 18
Directors' fees 3
Other expenses 8
1,193
Less fees waived (36)
Total expenses, net of waivers 1,157
Net Investment Income 476
Net Realized and Unrealized Gain:
Realized gain on:
Investments 3,810
Foreign currency transactions 95
Unrealized appreciation of investments and
assets and liabilities
denominated in foreign currencies 6,261
Net Realized and Unrealized Gain 10,166
Increase in Net Assets Resulting from Operations $10,642
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
Legg Mason Global Trust, Inc.
International Equity Trust
<TABLE>
<CAPTION>
For the February 17, 1995(A)
Six Months Ended to
(Amounts in Thousands) June 30, 1996 December 31, 1995
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> (Unaudited)
Change in Net Assets:
Net investment income $ 476 $ 158
Net realized gain on investments and currency transactions 3,905 (89)
Change in net unrealized appreciation of investments and currency transactions 6,261 1,837
Increase in net assets resulting from operations 10,642 1,906
Distributions to shareholders:
Net investment income -- (158)
In excess of net realized gain on investments -- (434)
Increase in net assets from Fund share transactions 55,720 64,632
Increase in net assets 66,362 65,946
Net Assets:
Beginning of period 65,947 1
End of period (including undistributed net investment income of $476) $132,309 $65,947
</TABLE>
(A) Commencement of operations.
See notes to financial statements.
8
<PAGE>
Financial Highlights
Legg Mason Global Trust, Inc.
International Equity 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>
For the Six February 17, 1995(A)
Months Ended to
June 30, 1996 December 31, 1995
- ----------------------------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C>
Per Share Operating Performance:
Net asset value, beginning of period $10.70 $10.00
Net investment income 0.05(B) 0.04(B)
Net realized and unrealized gain on investments and currency transactions 1.18 0.77
Total from investment operations 1.23 0.81
Distributions to shareholders:
Net investment income -- (0.04)
In excess of net realized gain on investments -- (0.07)
Net asset value, end of period $11.93 $10.70
Total return 11.50%(C) 8.11%(C)
Ratios/Supplemental Data:
Ratios to average net assets:
Expenses 2.25%(B,D) 2.25%(B,D)
Net investment income 0.93%(B,D) 0.52%(B,D)
Portfolio turnover rate 118.30%(D) 57.58%(D)
Average commission rate paid(E) $.0084 --
Net assets, end of period (in thousands) $132,309 $65,947
</TABLE>
(A) Commencement of operations.
(B) Net of fees waived pursuant to a voluntary expense limitation of
2.25%.
(C) Not annualized
(D) Annualized
(E) Pursuant to SEC regulations adopted effective for fiscal years
beginning after September 1, 1995, this is the average commission
rate paid on securities purchased and sold by the Fund.
See notes to financial statements.
9
<PAGE>
Notes to Financial Statements
Legg Mason Global Trust, Inc.
International Equity Trust
(Amounts in Thousands) (Unaudited)
- --------------------------------------------------------------------------------
1. Significant Accounting Policies:
The Legg Mason Global Trust, Inc. ("Corporation"), consisting of the
International Equity Trust ("Fund"), Global Government Trust, and Emerging
Markets is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company. The
financial statements of the other portfolios of the Corporation are
included in separate reports to shareholders.
Security Valuation
All securities for which market quotations are readily available are
valued at the last sales price, or if no sales price is available at that
time, at the mean between the latest bid and asked prices. Securities that
are traded over-the-counter are valued at the mean between the latest bid
and asked prices. If market or bid and asked quotations are not available,
securities will be valued as determined in good faith by the Board of
Directors.
Currency Transactions
The books and records of the Fund are maintained in U.S. dollars.
Foreign currency amounts are translated into U.S. dollars on the following
basis:
(i) market value of investment securities, assets and liabilities at
the closing daily rate of exchange, and
(ii) purchases and sales of investment securities, interest
income and expenses at the rate of exchange prevailing on the
respective date of such transactions.
The effect of changes in foreign exchange rates on realized and
unrealized security gains or losses is reflected as a component of such
gains or losses.
Investment Income and Dividends to Shareholders
Income and expenses are recorded on the accrual basis. Dividends are
declared and paid annually. Dividends payable are recorded on the dividend
ex-date.
Security Transactions
Security transactions are recorded on the trade date. Realized gains
and losses from security transactions are reported on an identified cost
basis.
Deferred Organizational Expense
Deferred organizational expenses of $71 are being amortized on a
straight-line basis over 5 years beginning on the date operations began.
Federal Income Taxes
No provision for federal income or excise taxes is required since the
Fund intends to continue to qualify as a regulated investment company and
distribute all of its taxable income to its shareholders.
2. Financial Instruments:
As part of the Fund's investment program, the Fund may utilize
forward currency exchange contracts and repurchase agreements. The nature
and risk of these financial instruments and the reasons for using them are
set forth more fully in the Fund's Prospectus and Statement of Additional
Information.
Emerging Markets
The Fund has investments in securities denominated in the currencies
of emerging market countries, as well as in securities issued by companies
located in emerging market countries. Future economic or political
developments could adversely affect the liquidity and value of such
securities.
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 Fund'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.
Forward Currency Exchange Contracts
The Fund may enter into foreign forward currency exchange contracts
to hedge against adverse changes in the relationship of the U.S. dollar to
foreign currencies. Risks arise from the possible inability of
counterparties to meet the terms of their contracts and from movements in
currency values.
10
<PAGE>
Forward currency contracts are valued using the forward rate. As of June
30, 1996 the Fund had entered into the following currency contracts:
Settlement Contracts to Unrealized
Date Receive Deliver Gain/(Loss)
- --------------------------------------------------------------------------------
09/13/96 USD 1,255 CHF 1,574 $ (12)
09/13/96 CHF 1,574 USD 1,263 4
3. Investment Transactions:
Investment transactions for the six months ended June 30, 1996
(excluding short-term securities) were as follows:
Purchases $113,743
Proceeds from sales 57,653
At June 30, 1996, the cost of securities for federal income tax
purposes was $123,055. Aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was $10,712
and aggregate gross unrealized depreciation for all securities in which
there was an excess of tax cost over value was $2,595.
4. Fund Share Transactions:
At June 30, 1996, there were 1,000,000 shares authorized at $.001 par
value for all portfolios of the Corporation (including the Fund).
Transactions in Fund shares were as follows.
For the Six February 17, 1995(A)
Months Ended to
June 30, 1996 December 31, 1995
- --------------------------------------------------------------------------------
Shares Amount Shares Amount
- --------------------------------------------------------------------------------
Sold 5,280 $59,729 6,453 $67,708
Reinvestment of
distributions -- -- 55 587
Repurchased (350) (4,009) (345) (3,663)
- --------------------------------------------------------------------------------
Net increase 4,930 $55,720 6,163 $64,632
- --------------------------------------------------------------------------------
(A) Commencement of operations.
5. Transactions with Affiliates:
The Fund has a management agreement with Legg Mason Fund Adviser,
Inc. ("Manager"), a corporate affiliate of Legg Mason Wood Walker,
Incorporated ("Legg Mason"), a member of the New York Stock Exchange and
the distributor for the Fund. Under this agreement, the Manager provides
the Fund with management and administrative services for which the Fund
pays a fee at an annual rate of 0.75% of average daily net assets of the
Fund. Legg Mason and the Adviser have voluntarily agreed to waive their
fees and to reimburse the Fund for its expenses (exclusive of taxes,
interest, brokerage and extraordinary expenses) to the extent necessary to
limit total operating expenses to 2.25%, until December 31, 1996. For the
six months ended June 30, 1996, management fees of $36 were waived and
management fees of $65 were payable.
Batterymarch Financial Management, Inc. ("Adviser"), a wholly owned
subsidiary of Legg Mason, Inc., serves as the Fund's adviser. The Adviser
is responsible for the actual investment activity of the Fund. The Manager
pays the Adviser a fee for its services at an annual rate equal to 67% of
the fee received by the Manager.
Legg Mason, as distributor of the Fund, receives an annual
distribution fee of 0.75% and an annual service fee of 0.25% of the Fund's
average daily net assets, calculated daily and payable monthly. At June
30, 1996, distribution and service fees of $105 were payable to the
distributor. Legg Mason also has an agreement with the Fund's transfer
agent to assist with certain of its duties. For this assistance, Legg
Mason was paid $19 by the transfer agent for the six months ended June 30,
1996.
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