INVESTMENT MANAGER
Legg Mason Fund Adviser, Inc. REPORT TO SHAREHOLDERS
Baltimore, MD FOR THE PERIOD ENDED
DECEMBER 31, 1995
INVESTMENT ADVISER
Batterymarch Financial Management, Inc.
Boston, MA
THE
BOARD OF DIRECTORS LEGG MASON
John F. Curley, Jr., Chairman GLOBAL
Edward A. Taber, III, President EQUITY
Richard G. Gilmore TRUST
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
PUTTING YOUR FUTURE FIRST
[LEGG MASON FUNDS LOGO]
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
[Recycle Logo] PRINTED ON RECYCLED PAPER
LMF-042
<PAGE>
TO OUR SHAREHOLDERS,
The Legg Mason Global Equity Trust's net asset value increased
from $10.40 to $10.70 during the six months ended December 31, 1995.
Since its February 17, 1995 launch, the Trust has distributed income
dividends of $0.04 per share and a short-term capital gain
distribution of $0.07 per share.*
The Trust seeks to obtain maximum long-term total return through
investments in common stocks of companies located anywhere in the
world, including 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 December 31, 1995,
60% of the Trust's assets were invested in developed countries outside
the U.S., 22% in emerging countries, 11% in the U.S. and 7% in cash.
On the following pages, the Trust's portfolio managers, Charles
Lovejoy and Stephen McCarthy, review the portfolio's structure and
performance and comment on the investment outlook for global equities.
Investments in global equities should be considered a core part of
any well-diversified investment portfolio. We hope you will consider
using the Global 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
February 9, 1996
*Under Internal Revenue Service regulations, short-term capital gain
distributions on mutual fund shares are treated as ordinary income
dividends for tax purposes. Thus, the Trust's short-term capital gain
distribution is included with ordinary income dividends on your 1995
tax reporting statement.
<PAGE>
PORTFOLIO MANAGERS' COMMENTS
Legg Mason Global Equity Trust advanced 8.1%, including dividends,
from its inception on February 17, 1995 through the end of the year.
During the fourth quarter, the Trust rose 0.9%, including dividends.
Global stock markets exhibited a wide range of performance throughout
1995. Morgan Stanley Capital International (MSCI) indices indicate that
the US market gained 38.2% for the year, far surpassing the international
developed Europe, Australia and the Far East (EAFE) markets and the
emerging markets, which returned 11.6% and -9.2%, respectively. The Morgan
Stanley Capital International All Country World (MSCIACW) Index, which
includes all markets at their market capitalization weights, increased
18.2%.
Since inception, Legg Mason Global Equity Trust has been invested
primarily outside the United States. Approximately 11% of the Fund was
allocated to the US, 65% to EAFE markets and 24% to emerging markets. For
comparison the MSCIACW Index had approximately 37% in the US, 55% in EAFE
markets and 8% in emerging markets.
Regional breakdown of the Trust as of December 31, 1995:
<TABLE>
<S> <C>
Europe 33.1%
Japan 21.2
Latin America 9.3
Pacific Rim 15.4
US 10.5
Other markets 3.7
Cash 6.8
</TABLE>
INTERNATIONAL DEVELOPED MARKETS
Among the large developed international markets, Japan had the most
difficult time during the past 12 months, with an index return of 0.9%.
The market was impacted by the Kobe earthquake and by financial
difficulties -- non-performing bank loans, weak growth in exports and a
strong currency early in the year. Late efforts were made to boost the
struggling economy, including a cut in the discount rate to 0.5%, and
signs of a turnaround did not appear until the fourth quarter.
Results were much better in Europe. With inflation under control and
indications of economic recovery, the MSCI Europe Index rose 22.1% with 6%
of this increase due to currency appreciation. The European comeback has
been slow, however, and fiscal policy restraints due to the European
Monetary Union and to unemployment should present further difficulties.
EMERGING MARKETS
Emerging markets as a whole showed disappointing returns. The strong
US performance in 1995 attracted capital that would otherwise have flowed
into the emerging markets. Very few of these markets performed well for
the year, driven by concerns over political and economic stability and by
retrenchment from earlier large investment flows. For example, Mexico's
difficulties, early in the year, surprised many investors and negatively
impacted flows.
None of the three emerging market regions did well in 1995; Emerging
Asia, the Far East and Latin America declined 11.8%, 9.4% and 13.5%,
respectively. Given the continued real growth in these markets, we believe
that the Trust is well positioned for growth at attractive market
valuations in the emerging markets.
US MARKET
The US market had an outstanding year. Driven by a number of forces,
the market far outperformed historical averages. As long-term bond yields
dropped, the return on 30-year US Treasuries exceeded 30%, adding fuel to
the market. Mutual funds continued to be a major catalyst, pouring funds
into the US market at a record rate. Sector leadership for the year was
shared by Technology, Finance and Health Care.
CURRENCIES
The major currencies were strong versus the US dollar through
mid-year, when the dollar staged a turnaround and ended up about where it
had started the year. This initially hurt expectations for companies
exporting to the US, but helped the US investor abroad. We manage currency
exposure in the Trust through currency hedging on a limited amount of
underlying equity positions.
INVESTMENT OUTLOOK
We are already seeing signs that investors are renewing their interest
in both the EAFE and
2
<PAGE>
emerging markets. Valuations look particularly attractive relative to the
US.
The European developed markets should continue their slow recovery;
Belgium, Finland, Spain and Italy have the most positive outlooks. There
should be stronger growth in China this year, and the rest of Asia,
including Japan, should also benefit. Although there are obstacles ahead,
Japan has both monetary and fiscal policy in place to encourage growth,
the yen is back to year-ago levels, the trend in earnings estimates is
rising rapidly and structural reform to the financial sector has begun.
India faces political uncertainties, but corporate results are expected to
be excellent. In Latin America, Argentina, Brazil and Chile continue to
pursue reforms. Macroeconomic changes have released new energies in
Central Europe.
While returns in emerging markets are volatile, the higher growth in
output versus the developed world, at attractive valuations, should offer
investors excellent opportunities over the intermediate term. We remain
optimistic about the opportunity to identify stocks with attractive growth
prospects at reasonable prices in many markets around the world.
As we move into 1996, the Trust retains significant positions outside
the US. It remains well diversified on a regional basis in Europe and
Asia, as well as in the emerging markets, where it maintains an overweight
exposure.
Charles F. Lovejoy, CFA
Stephen J. McCarthy, CFA
February 9, 1996
3
<PAGE>
PERFORMANCE INFORMATION
LEGG MASON GLOBAL TRUST, INC.
GLOBAL EQUITY TRUST
[INSERT GRAPH HERE]
Global Equity Trust MSCI ALL COUNTRY WORLD INDEX
02/17/95 10,000 10,000
03/31/95 10,090 10,439
06/30/95 10,400 10,903
09/30/95 10,720 11,472
12/31/95 10,811 11,962
The returns shown above 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. No adjustment has
been made for any income taxes payable by shareholders.
4
<PAGE>
INDUSTRY DIVERSIFICATION
LEGG MASON GLOBAL TRUST , INC.
GLOBAL EQUITY TRUST
DECEMBER 31, 1995
<TABLE>
<CAPTION>
% of Net Market
(Amounts in Thousands) Assets Value
<S> <C> <C>
Aerospace 0.3% $ 172
Agriculture/Food 2.1 1,377
Air Transport 1.5 969
Aluminum 0.7 444
Apparel/Textiles 1.3 843
Banks 7.1 4,702
Beverages 2.0 1,304
Business Machines 1.0 629
Chemicals 5.0 3,298
Coal & Uranium 0.4 273
Construction 6.4 4,198
Consumer Durables 0.5 364
Containers 1.2 776
Domestic Oil Reserves 0.9 628
Drugs/Medicine 2.2 1,460
Electric Utilities 3.2 2,093
Electronics 6.6 4,359
Finance 8.2 5,398
Gas Utilities 0.9 626
Health (Non-Drug) 1.1 746
Hotel/Restaurant 1.8 1,172
Iron & Steel 3.3 2,164
Leisure/Luxury 0.1 61
Life Insurance 3.5 2,302
Liquor 0.4 277
Media 0.3 185
<CAPTION>
% of Net Market
(Amounts in Thousands) Assets Value
<S> <C> <C>
Miscellaneous 1.9% $ 1,258
Motor Vehicles 2.4 1,594
Non-ferrous Metals 2.9 1,926
Oil Refining/Distribution 1.5 982
Oil Service 0.6 368
Paper 1.6 1,080
Photo/Optical 0.7 459
Pollution Control 0.1 37
Producer Goods 4.1 2,704
Publishing 0.6 420
Railroads/Transit 0.4 263
Real Property 3.2 2,108
Retail (Food) 1.5 968
Retail (Non-Food) 1.8 1,181
Services 2.6 1,722
Soap/Housewares 0.1 94
Telecommunications 2.9 1,913
Tire & Rubber 0.3 222
Tobacco 0.7 491
Trucking/Freight 0.3 211
Water Transport 1.0 633
Short-Term Investments 5.9 3,874
Total Investment Portfolio 99.1 65,328
Other Assets Less Liabilities 0.9 619
NET ASSETS 100.0% $ 65,947
</TABLE>
5
<PAGE>
STATEMENT OF NET ASSETS
LEGG MASON GLOBAL TRUST , INC.
GLOBAL EQUITY TRUST
DECEMBER 31, 1995
<TABLE>
<CAPTION>
(Amounts in Thousands) Shares Value
<S> <C> <C>
COMMON STOCKS AND EQUITY
INTERESTS -- 92.3%
Argentina -- 1.4%
Inversiones y Representacion 229 $ 577
Migor SACIFIA ADS 139 330B
907
Australia -- 1.5%
Advance Bank Australia Limited 8 63
Australia and New Zealand Banking
Group Ltd. 70 329
Broken Hill Proprietary Company
Limited 5 78
Mayne Nickless Ltd. 16 69
QCT Resources Ltd. 244 274
Santos Limited 47 138
Schroders Property Fund 22 36
987
Belgium -- 1.7%
Cie Financiere Europeenne et
d'Outre-Mer SA 2 313
Compagnie Belge De Participations
Paribas SA 5 204
Electrabel SA 1 143
Solvay SA 1 434
1,094
Brazil -- 2.8%
Aracruz Celulose S.A. ADR 51 392
Companhia Brasileira Distribuicao
Grupo Pao de Acucar ADS 49 476A,B
Companhia Energetica De Minas ADR 17 385
Iochpe Maxion S.A. ADR 50 137
Usinas Siderurgicas de Minas Gerais
S/A ADS 56 457B
1,847
Canada -- 1.5%
Bank of Montreal 3 55
Brascan, Ltd. 8 135
Canadian Imperial Bank of Commerce 2 60
Imasco, Ltd. 3 61
MacMillan Bloedel Ltd. 6 72
Noranda, Inc. 3 62
Power Financial Corporation 2 49
Shell Canada Limited 4 132
TransCanada Pipelines Ltd. 24 331
957
<CAPTION>
(Amounts in Thousands) Shares Value
<S> <C> <C>
Chile -- 0.8%
Enersis S.A. ADR 18 $ 507
China -- 1.8%
Huaxin Cement Co. Ltd 790 202A
Jilin Chemical Industrial Company 1,592 329A
Shanghai New Asia Fast-Food Company
Ltd. 667 352A
Shanghai Petrochemical Company Ltd. 1,146 330
1,213
Colombia -- 0.6%
Banco Industrial Colombiano S.A.
ADR 12 206
Cementos Diamante S.A. ADR 12 216B
422
Denmark -- 1.4%
Den Danske Bank 3 193
Det Danske Luftfartselskab A/S 4 349
Radiometer A/S 3 222
Sophus Berendsen A/S 1 68
Superfos AS 1 122
954
Finland -- 1.1%
Metsa-Serla OY 1 34
Outokumpu OY 8 125
Raison Tehtaat OY 6 97
Rautaruukki OY 17 104
Repola OY 21 386
746
France -- 3.0%
BIC 1 61
Christian Dior SA 4 367
Compagnie de Navigation Mixte N.M. 14
Compagnie Generale d'Industrie et
de Participations N.M. 59
De Dietrich et Compagnie SA 1 44
Ecco SA 1 197
Ecco Travail Temporaire SA 1 58
Elf Gabon 1 105
Equipements et Composants pour
l'Industrie Automobile N.M. 32
Eridania Beghin-Say SA N.M. 17
Marine-Wendel 1 102
Roussel-Uclaf 1 119
Saint Louis N.M. 53
Societe Nationale Elf Aquitaine 5 368
Sodexho SA 1 382
1,978
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
(Amounts in Thousands) Shares Value
<S> <C> <C>
Germany -- 2.2%
AGIV-AG N.M. $ 2
BASF AG 2 312
Bayer AG 1 317
Bayerische Hypotheken-und Wechsel-
Bank AG 2 41
Berliner Handels-und Frankfurter
Bank 2 55
Commerzbank AG 1 331
Hoechst AG N.M. 54
Viag AG 1 321
1,433
Greece -- 0.7%
Hellenic Bottling Co., S.A. 14 464
Hong Kong -- 3.6%
Amoy Properties Ltd. 188 187
Cathay Pacific Airways 80 122
Citic Pacific Ltd. 50 171
Dickson Concepts International Ltd. 90 84
Guoco Group Ltd. 68 328
Henderson Land Development Company
Ltd. 8 48
Hong Kong Telecommunications Ltd. 183 326
HSBC Holdings plc 29 434
Hutchison Whampoa Limited 64 390
Hysan Development Company Ltd. 23 61
Sun Hung Kai Properties Ltd. 25 205
Tai Cheung Properties 49 38
2,394
India -- 2.1%
Arvind Mills Limited GDR 34 136
Arvind Mills Limited GDS 32 109B
Great Eastern Shipping GDR 56 452
Hindalco Industries Limited GDR 6 205
Tata Engineering & Locomotive
Company Limited GDR 34 449
1,351
Indonesia -- 1.6%
PT Bank Internasional Indonesia 107 353
PT Gudang Garam 28 298
PT Indocement Tunggal Prakarsa 125 418
1,069
Ireland -- 0.9%
Allied Irish Banks plc 32 175
Bank of Ireland 16 118
Jefferson Smurfit Group 127 302
595
<CAPTION>
(Amounts in Thousands) Shares Value
<S> <C> <C>
Italy -- 1.7%
Autostrade Concessioni E
Construzioni Autostrade S.p.A. 121 $ 133
Banca Commerciale Italiana 21 45
Banca Popolare di Bergamo 13 173
Riunione Adriatica di Sicurta
S.p.A. 39 442
Telecom Italia Mobile SpA 168 296A
1,089
Japan -- 21.3%
Aoki Corporation 20 84A
Best Denki Company 2 30
Bridgestone Corporation 3 48
Canon Incorporated 2 36
Chugoku Electric Power Company,
Ltd. 7 171
Citizen Watch Company 44 337
Dai-Tokyo Fire & Marine Insurance
Co. 6 46
Daiichi Pharmaceutical Company Ltd. 6 85
Daiwa House Industry Company Ltd. 3 49
Daiwa Kosho Lease Company Ltd. 6 60
Daiwa Securities Company Ltd. 14 214
Eisai Company Ltd. 2 35
Ezaki Glico Company 12 116
Fuji Photo Film Company 3 87
Fujita Corporation 28 126
General Sekiyu 30 274
Gunze Limited 52 315
Hazama Corporation 10 43
Hitachi Cable 7 50
Hitachi Koki Company 7 63
Hitachi Ltd. 5 50
Hokkaido Electric Power 3 72
Hokuriku Electric Power 8 174
House Foods Industry 2 36
Inabata & Company 7 50
Iwate (Bank of) Limited 1 40
JGC Corporation 27 285
Katokichi Company 16 333
Kawasaki Heavy Industries 11 51
Kikkoman Corporation 8 62
Kirin Brewery Company 11 130
Kishu Paper Company 44 262
Kitz Corporation 9 37
Kobe Steel Ltd. 105 324A
Kokusai Electric 2 42
Konica Corporation 6 43
Kurimoto Company 33 336
</TABLE>
7
<PAGE>
STATEMENT OF NET ASSETS -- CONTINUED
LEGG MASON GLOBAL TRUST , INC.
GLOBAL EQUITY TRUST
<TABLE>
<CAPTION>
(Amounts in Thousands) Shares Value
<S> <C> <C>
Japan -- Continued
Kyocera Corporation 1 $ 74
Kyowa Hakko Kogyo 5 47
Kyudenko Corporation 4 53
Kyushu Electric Power 7 168
Lion Corporation 16 94
Makita Corporation 9 144
Maruzen Showa Unyu Co. 24 130
Matsushita Electric Industrial
Company 3 49
Mitsubishi Electric Corporation 37 266
Mitsubishi Heavy Industries Ltd. 41 327
Mitsubishi Materials Corporation 68 352
Mitsui Trust & Banking 39 427
Mizuno Corporation 8 69
Nagase & Company 7 60
National House Industrial Co. 2 37
New Japan Securities 6 39A
Nichicon Corporation 3 44
Nichii Company 2 27
Nichimen Corporation 71 292
Nintendo Company 1 61
Nippon Credit Bank 78 357
Nippon Denko Company 23 87
Nippon Denwa Shisetsu 3 23
Nippon Meat Packers 4 58
Nippon Metal Industry 16 66
Nippon Road 9 76
Nippon Shinpan Company 17 128
Nippon Soda Company 9 55A
Nippon Steel Corporation 17 58
Nippon Valqua Industries 40 188
Nippondenso Company 2 37
Nishimatsu Construction 5 59
Nissei Sangyo Company 13 208
Nisshin Oil Mills 10 75
Nisshin Steel Company 85 343
Nissho Iwai Corporation 4 21
Okuma Corporation 8 75A
Okumura Corporation 4 36
Olympus Optical Company 34 329
Ono Pharmaceutical 1 38
Onward Kashiyama Company Ltd. 2 33
Rohm Company 4 226
Sankyo Aluminium Industry Co. 36 193
Sankyo Company Ltd. 1 23
Santen Pharmaceutical Company 3 68
Sanwa Shutter Corporation 5 36
Sekisui Chemical Co. 5 74
Sekisui House Ltd. 12 153
Shikoku Electric Power 4 92
<CAPTION>
(Amounts in Thousands) Shares Value
<S> <C> <C>
Japan -- Continued
Showa Electric Wire & Cable 24 $ 114
Sony Corporation 1 54
Sumitomo Electric Industries 3 36
Sumitomo Forestry Company, Ltd. 6 92
Sumitomo Marine & Fire Insurance
Co. 32 263
Sumitomo Metal Industries 54 164A
Sumitomo Osaka Cement Co. Ltd. 28 130
SXL Corporation 4 41
Taisei Corporation 9 60
Takeda Chemical Industries 13 214
Tatsuta Electric Wire & Cable 30 153
TDK Corporation 6 306
Toagosei Co. Ltd. 7 37
Toda Corporation 5 43
Tohoku Electric Power 2 53
Tokico Ltd. 36 180
Toppan Printing Company 25 329
Toshiba Corporation 31 243
Toyo Ink Manufacturing Company 29 143
Toyota Motor Corporation 3 64
Tsubakimoto Chain Co. 18 108
Ube Industries, Ltd. 12 45A
Yamanouchi Pharmaceutical 14 301
Yodogawa Steel Works, Ltd. 12 94
Yokohama Rubber Company 29 176
14,014
Malaysia -- 0.8%
AMMB Holdings Bhd 26 297
Arab Malaysian Corporation Berhard 56 203
500
Mexico -- 2.8%
ALFA, S.A. de C.V. 43 548
Cemex, S.A. de C.V. 159 578
Fomento Economico Mexicano,
S.A. de C.V. 218 489
Grupo Simec, S.A. de C.V. ADR 41 259A
1,874
Netherlands -- 2.8%
ABN Amro Holding N.V. 7 333
ACF Holding N.V. 2 44A
Aegon N.V. 2 77
Ahrend Groep NV 2 49
Assurantieconcern Stad Rotterdam
N.V. 5 134
Fortis Amev NV 3 194
Getronics NV 1 61
Hagemeyer N.V. 3 146
Hollandsche Benton Groep N.V. N.M. 46
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
(Amounts in Thousands) Shares Value
<S> <C> <C>
Netherlands -- Continued
ING Groep NV 2 $ 140
Internatio-Muller NV 1 48
Kondor Wessels Groep NV 4 131
Koninklijke Bijenkorf Beheer 1 33
Koninklijke Van Ommeren N.V. 2 66
Koninklijke Volker Stevin N.V. 1 73
Macintosh N.V. 3 76
Otra, NV 1 18
Twentsche Kabel Holding NV 5 172
1,841
New Zealand -- 0.8%
Fletcher Challenge Ltd. 94 216
Lion Nathan Ltd. 82 197
Telecom Corporation of New Zealand
Limited 23 98
511
Norway -- 1.3%
Aker AS 4 49
Den Norske Bank A/S 78 205
Hafslund Nycomed 11 276
Norsk Hydro AS 4 181
Transocean AS 10 178A
889
Peru -- 0.9%
CPT Telefonica del Peru S.A. 262 561
Philippines -- 1.5%
C & P Homes, Inc. 508 373A
Metropolitan Bank & Trust Company 20 387
SM Prime Holdings 758 217A
977
Portugal -- 1.7%
Cimpor Cimentos de Portugal SA 26 429
Engil Sociedade de Construcao
Civil, S.A. 33 280A
Portugal Telecom S.A. 22 423A
1,132
Singapore -- 0.4%
Dairy Farm International Holdings
Ltd. 35 32
Jardine Strategic Holdings Ltd. 84 257
289
South Korea -- 0.6%
Samsung Electric Company GDS 7 383A
Spain -- 3.1%
Autopistas del Mare Nostrum SA 5 70
Banco Bilbao Vizcaya 2 76
<CAPTION>
(Amounts in Thousands) Shares Value
<S> <C> <C>
Spain -- Continued
Banco Central Hispanoamericano 2 $ 49
Banco Popular Espanol SA N.M. 55
Banco Santander SA 1 65
Compania Sevillana de Electricidad 12 92
Corporacion Bancaria de Espana SA 10 400
Dragados & Construcciones SA 4 47
Energia e Industrias Aragonesas 28 107
Fuerzas Electricas de Cataluna, SA 24 171
Gas y Electridad SA N.M. 22
Huarte SA 8 37
Iberdrola S.A. 44 400
Tabacalera SA 2 57
Union Electrica Fenosa SA 70 418
2,066
Sweden -- 1.3%
Atlas Copco AB 22 344
Electrolux AB 1 31
Incentive AB 2 92
Skane-Gripen AB 21 198
Svenska Cellulosa AB 6 85
Svenska Handelsbanken, Inc. 6 125
875
Switzerland -- 1.9%
Alusuisse-Lonza Holding AG N.M. 317
Baloise Holding Ltd. N.M. 62
Forbo Holding AG 1 321
Reiseburo Kuoni AG N.M. 176
Swissair AG 1 364A
Zellweger Luwa AG N.M. 34A
1,274
Taiwan -- 0.4%
Acer, Inc. GDR 7 86A,B
Siliconware Precision Industries
Company GDR 10 157A,B
243
Thailand -- 1.6%
Bangkok Bank Company Ltd. 47 572
Land and House Public Company
Limited 20 325
TelecomAsia Corporation Public
Company Limited 69 184A
1,081
Turkey -- 0.2%
Petkim Petrokimya Holdings A.S. 310 158
United Kingdom -- 8.0%
Abbey National 38 380
Albert Fisher Group plc 76 56
</TABLE>
9
<PAGE>
STATEMENT OF NET ASSETS -- CONTINUED
LEGG MASON GLOBAL TRUST , INC.
GLOBAL EQUITY TRUST
<TABLE>
<CAPTION>
(Amounts in Thousands) Shares Value
<S> <C> <C>
United Kingdom -- Continued
Anglian Water plc 6 $ 55
Associated British Foods PLC 65 375
Brixton Estate plc 27 73
BTR plc 20 100
Commercial Union plc 15 146
Daily Mail and General Trust 4 88
Guardian Royal Exchange plc 45 192
Hazlewood Foods plc 84 128
IMI plc 48 244
Imperial Chemical Industries plc 30 355
Kwik Save Group plc 7 51
Lex Service plc 35 167
Lloyds Abbey Life plc 46 320
Lloyds TSB Group plc 106 547
National Grid Group 4 14
National Westminster Bank PLC 7 66
Northumbrian Water Group plc 3 62
Ocean Group plc 11 64
Pentland Group plc 31 54
Pilkington plc 51 160
Royal Bank of Scotland Group plc 31 284
Severn Trent Water plc 5 57
Smithkline Beecham -- Units 6 62
South West Water plc 6 46
Southern Water plc 6 63
T & N plc 149 375
Thames Water plc 9 78
The Merchants Trust Plc 12 56
Transport Development Group plc 15 44
Vaux Group plc 34 149
Whitbread plc 17 176
Willis Corroon Group plc 31 68
Yorkshire Electricity plc 6 61
Yorkshire Water PLC 5 49
5,265
United States -- 10.5%
AlliedSignal, Inc. 1 62
Aluminum Company of America 2 127
American Electric Power Company 3 125
Amoco Corporation 1 93
Applied Materials, Inc. 3 134A
Barnett Banks, Inc. 1 83
Boston Scientific Corporation 1 64A
Bruno's, Inc. N.M. 1
Cambridge Technology Partners, Inc. 3 144A
Capital Cities/ABC, Inc. 2 185
Chesapeake Energy Corporation 8 254A
Compass Bancshares Inc. 2 53
ConAgra, Inc. 3 120
<CAPTION>
(Amounts in Thousands) Shares Value
<S> <C> <C>
United States -- Continued
Consolidated Edison Company of New
York, Inc. 4 $ 125
Dover Corporation 4 133
Duriron Company, Inc. 3 68
Esterline Technologies Corporation 3 76A
Exxon Corporation 4 280
First America Bank Corporation 2 102
First Chicago NBD Corporation 3 107
Franchise Finance Corporation
America 4 97
Healthsouth Corporation 2 58A
Heinz (H.J.) Company 1 30
Huntington Bancshares, Inc. 3 74
IDEX Corporation 2 81
JLG Industries, Inc. 3 89
Johnson & Johnson 3 240
Kimberly Clark Corporation 1 110
Kroger Company 3 109A
Logicon, Inc. 2 60
LSI Logic Corporation 3 108A
MediSense, Inc. 1 25A
Medtronic, Inc. 2 101
Mercantile Bankshares Corporation 4 97
Merck & Company, Inc. 3 210
Meridian Bancorp Incorporated 2 98
Nike, Inc. 2 167
Novellus Systems, Inc. 1 27A
Oneok, Inc. 10 222
PennCorp Financial Group, Inc. 10 285
Peoples Heritage Financial Group,
Inc. 4 86
PepsiCo, Inc. 2 134
PNC Bank Corporation 7 222
PPG Industries, Inc. 3 133
Public Service Company of Colorado 5 177
Reading & Bates Corporation 4 61A
Robert Half International
Incorporated 2 100A
Robotic Vision Systems, Inc. 1 22A
S3, Inc. 1 14A
Scientific Games Holdings
Corporation N.M. 8A
Service Corporation International 6 282
Sonoco Products Company 2 58
Southwestern Public Service Company 8 246
The Coca-Cola Company 2 156
Trident Microsystems, Inc. 1 31A
Unicom Corporation 3 82
Union Bank 2 87
United Waste Systems, Inc. 1 37A
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
(Amounts in Thousands) Shares Value
<S> <C> <C>
United States -- Continued
UST, Inc. 4 $ 137
Wendy's International, Inc. 4 87
Williams Companies, Inc. 2 70
Wilmington Trust Corporation 2 68
6,922
Total Common Stocks and Equity
Interests
(Identified Cost -- $58,994) 60,862
</TABLE>
<TABLE>
<CAPTION>
PREFERRED STOCKS -- 0.2%
<S> <C> <C>
Germany -- 0.2%
Fresenius AG 1 95
United Kingdom -- N.M.
Wessex Water Plc 14 11
Total Preferred Stocks
(Identified Cost -- $71) 106
</TABLE>
Principal
Amount
<TABLE>
<CAPTION>
CORPORATE BONDS -- 0.7%
<S> <C> <C>
India -- 0.5%
Tata Iron & Steel Company
2.25% 4-1-99 $ 349 312
Taiwan -- 0.2%
United Micro Electronics
Corporation, Ltd.
1.25% 6-8-04 138 174B
Total Corporate Bonds
(Identified Cost -- $583) 486
</TABLE>
<TABLE>
<CAPTION>
REPURCHASE AGREEMENT -- 5.9%
<S> <C> <C>
Morgan Stanley & Co. Incorporated
5.9% dated 12-29-95, to be
repurchased at $3,877 on 1-2-96
(Collateral: $4,045 Federal
National Mortgage Association
Mortgage- backed securities, 5.5%
due 7-1-99, value $3,957)
(Identified Cost - $3,874) 3,874 3,874
Total Investments -- 99.1%
(Identified Cost -- $63,522) $65,328
Other Assets Less
Liabilities -- 0.9% 619
NET ASSETS -- 100.0% $65,947
</TABLE>
<TABLE>
<CAPTION>
(Amounts in Thousands)
<S> <C> <C>
NET ASSETS CONSISTING OF:
Accumulated paid-in capital
applicable to 6,163 shares
outstanding $64,633
Accumulated net realized loss on
investments and currency
transactions (523)
Unrealized appreciation of
investments and currency
transactions 1,837
NET ASSETS -- 100.0% $65,947
NET ASSET VALUE PER SHARE $10.70
</TABLE>
(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.
11
<PAGE>
STATEMENT OF OPERATIONS
LEGG MASON GLOBAL TRUST , INC.
GLOBAL EQUITY TRUST
<TABLE>
<CAPTION>
February 17, 1995A
to
(Amounts in Thousands) December 31, 1995
<S> <C> <C>
INVESTMENT INCOME:
Dividends $ 695
Interest 216
Less foreign income tax expense (72)
$ 839
EXPENSES:
Management fee 227
Distribution and service fees 303
Custodian fee 180
Legal and audit fees 46
Transfer agent and shareholder servicing expense 44
Registration fees 42
Reports to shareholders 23
Directors' fees 4
Other expenses 13
882
Less fees waived (201)
Total expenses, net of waivers 681
NET INVESTMENT INCOME 158
NET REALIZED AND UNREALIZED GAIN (LOSS):
Realized gain (loss):
Investments (136)
Foreign currency transactions 47
Unrealized appreciation of investments and assets and liabilities denominated
in foreign currencies 1,837
NET REALIZED AND UNREALIZED GAIN 1,748
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $1,906
</TABLE>
(A) COMMENCEMENT OF OPERATIONS.
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
LEGG MASON GLOBAL TRUST , INC.
GLOBAL EQUITY TRUST
<TABLE>
<CAPTION>
February 17,
1995A
to
(Amounts in Thousands) December 31, 1995
<S> <C>
INCREASE IN NET ASSETS:
Net investment income $ 158
Net realized loss on investments and currency transactions (89)
Unrealized appreciation of investments and assets and liabilities
denominated in foreign currencies 1,837
Increase in net assets resulting from operations 1,906
Distributions to shareholders:
Net investment income (158)
In excess of net realized gain on investments and currency transactions (434)
Increase in net assets from Fund share transactions 64,632
Increase in net assets 65,946
NET ASSETS:
Beginning of period 1
End of period (including overdistributions of net investment income of $2) $65,947
</TABLE>
(A) COMMENCEMENT OF OPERATIONS.
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
FINANCIAL HIGHLIGHTS
LEGG MASON GLOBAL TRUST , INC.
GLOBAL 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>
February 17,
1995A
to
December 31, 1995
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $10.00
Net investment income 0.04B
Net realized and unrealized gain on investments and currency transactions 0.77
Total from investment operations 0.81
Distributions to shareholders:
Net investment income (0.04)
In excess of net investment income (0.01)
In excess of net realized gain on investments (0.06)
Net asset value, end of period $10.70
Total return 8.11%C
RATIOS/SUPPLEMENTAL DATA:
Ratios to average net assets:
Expenses 2.25%B,D
Net investment income 0.52%B,D
Portfolio turnover rate 57.58%D
Net assets, end of period (in thousands) $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
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS
LEGG MASON GLOBAL TRUST , INC.
GLOBAL EQUITY TRUST
(Amounts in Thousands)
1. SIGNIFICANT ACCOUNTING POLICIES:
The Legg Mason Global Trust, Inc. ("Trust"), consisting of the Global
Equity Trust ("Fund") and the Global Government Trust, 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
portfolio of the Trust is included in a separate report 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 Translations
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 quarterly. 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 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
governments of 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. Forward currency contracts are valued using the
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
LEGG MASON GLOBAL TRUST , INC.
GLOBAL EQUITY TRUST
(Amounts in Thousands)
forward rate. As of December 31, 1995, the Fund had entered into the
following currency contracts:
<TABLE>
<CAPTION>
Settlement Unrealized
Contracts to Sell Date Gain/(Loss)
<S> <C> <C> <C>
1,190 Deutschmarks 02/06/96 $ 10
4,750 French Francs 02/29/96 (15)
32,001 Japanese Yen 01/08/96 10
103,055 Japanese Yen 01/30/96 18
193,761 Japanese Yen 02/29/96 34
547 Swiss Francs 02/29/96 *
$ 57
<CAPTION>
Settlement Unrealized
Contracts to Buy Date Gain/(Loss)
<S> <C> <C> <C>
1,190 Deutschmarks 02/06/96 $ 2
4,750 French Francs 02/29/96 8
32,001 Japanese Yen 01/08/96 (12)
103,055 Japanese Yen 01/30/96 (25)
547 Swiss Francs 02/29/96 1
$ (26)
*LESS THAN ONE U.S. THOUSAND.
</TABLE>
3. INVESTMENT TRANSACTIONS:
Investment transactions for the period ended December 31, 1995
(excluding short-term securities) were as follows:
<TABLE>
<S> <C>
Purchases $ 78,093
Proceeds from sales 17,939
</TABLE>
At December 31, 1995, the cost of securities for federal income tax
purposes was $63,525. Aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was $4,203
and aggregate gross unrealized depreciation for all securities in which
there was an excess of tax cost over value was $2,400.
4. FUND SHARE TRANSACTIONS:
At December 31, 1995, there were 1,000,000 shares authorized at $.001
par value for all portfolios of the Trust (including the Fund).
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
February 17, 1995+
to
December 31, 1995
Shares Amount
<S> <C> <C>
Sold 6,453 $67,708
Reinvestment of distributions 55 587
Repurchased (345 ) (3,663)
Net increase 6,163 $64,632
</TABLE>
+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, 1995. For the period
ended December 31, 1995, management fees of $201 were waived. At December
31, 1995, management fees of $9 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
December 31, 1995, distribution and service fees of $53 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 $14 by the transfer agent for the period ended December 31,
1995.
16
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND DIRECTORS OF
LEGG MASON GLOBAL TRUST, INC.:
We have audited the accompanying statement of net assets of the Legg
Mason Global Equity Trust, (one of the portfolios comprising the Legg
Mason Global Trust, Inc.) as of December 31, 1995, and the related
statement of operations, the statement of changes in net assets and the
financial highlights for the period from February 17, 1995 (commencement
of operations) to December 31, 1995. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1995 by correspondence
with the custodian and brokers. An audit also includes assessing the
accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Legg Mason Global Equity Trust of Legg Mason Global Trust,
Inc. as of December 31, 1995, and the results of its operations, changes
in its net assets, and financial highlights for the period February 17,
1995 (commencement of operations) to December 31, 1995, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
February 1, 1996
17
