Investment Advisers
For Global Government:
Western Asset Management Company
Pasadena, CA
For International Equity and
Emerging Markets Trusts:
Batterymarch Financial Management Inc.
Boston, MA
Investment Manager
Legg Mason Fund Adviser, Inc.
Baltimore, MD
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, D.C.
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 o 539 o 0000
LMF-042
SEMI-ANNUAL REPORT
JUNE 30, 1997
LEGG MASON
GLOBAL
TRUST, INC.
GLOBAL GOVERNMENT TRUST
INTERNATIONAL EQUITY TRUST
EMERGING MARKETS TRUST
Putting Your Future First
[LEGG MASON LOGO]
FUNDS
<PAGE>
To Our Shareholders,
We are pleased to provide you with a semi-annual report combining the Legg
Mason Global Government Trust, International Equity Trust and Emerging Markets
Trust. Investor interest in the equity securities of companies located overseas
remains keen and net assets in each of our foreign equity funds have increased
substantially since December 31, 1996, while the assets of our global bond fund
have declined slightly.
Beginning on the next page, the portfolio managers responsible for the Global
Trust Portfolios discuss the results for the first half of 1997 and the
investment outlook. Following the Portfolio Managers' Comments, the Funds' total
returns in various periods since their inceptions are shown on page 8. Total
return measures investment performance in terms of appreciation or depreciation
in a portfolio's net assets per share plus dividends and any capital gain
distributions. For each of our funds, we remind you that historical performance
is not indicative of future results, and the principal value of our holdings
will continue to fluctuate so that shares, when redeemed, may be worth more or
less than their original cost.
We hope you consider using the funds in the Global Trust for investments of
additional funds as they become available. Some shareholders have chosen to
regularly add to their investment in the funds by authorizing automatic monthly
transfers from their bank checking or Legg Mason accounts. Your Financial
Advisor will be happy to help you make these arrangements if you would like to
purchase additional shares in this convenient manner.
Sincerely,
/s/ Edward A. Taber, III
-------------------------
Edward A. Taber, III
President
August 11, 1997
<PAGE>
Portfolio Managers' Comments
Global Government Trust
Global bond markets in general have enjoyed declining yields over the past
several years, but they continue to struggle with volatile currency markets. For
US investors, much of the rewards of the global bond market rally this year have
been dissipated by the rising value of the dollar, a phenomenon which gathered
considerable momentum in the first quarter of 1997. Though the Legg Mason Global
Government Trust took steps to hedge a good portion of its foreign currency
exposure, total returns for the first half of 1997 were -0.3%, reflecting a
combination of income, capital gains and currency losses. This performance
exceeded that of the Fund's benchmark, the Salomon Brothers World Government
Bond Index, which returned -1.2%, thanks to successful country selection and the
partial hedging of currency exposure.
For the three years ended June 30, 1997 and since its inception, the Fund
continued to rank highly in the Lipper Analytical Services, Inc. universe of
global income funds. The Fund ranked 31st of 85 funds and 8th of 58 funds, based
on total return, placing it in the 37th and 14th percentiles for these periods,
respectively. The Fund's ranking for the twelve months ended June 30, 1997 was
79 of 138 global income funds. Though we are pleased with the Fund's results,
past performance does not guarantee future results.
Global bond markets for the most part continue to offer attractive returns
relative to the fundamentals of low and stable inflation which prevail
throughout the industrialized countries and, increasingly, in many of the
emerging market countries. The US economy, for example, is experiencing the most
benign inflation it has had since the mid-50s and 60s, when bond yields were 4%
and mortgages were 5%. In the first half of the year, the Consumer Price Index
rose at a 1.4% annual pace, and the Producer Price Index fell at a 3.4% pace; at
the end of last year, these indices were registering +3.3% and +2.8%,
respectively. Not only is measured inflation falling, but gold and commodity
prices are also falling, and a stronger dollar is pushing down import prices.
In continental Europe, the continued weakness of the DM and other core
currencies is benefiting export related sectors. Growth is on course for 2.5%,
as improved business confidence is boosting capital spending and, in economies
such as the UK, Netherlands, Spain and Scandinavia, domestic demand is now
gaining momentum. In Germany, France and Italy however, tight EMU (European
Monetary Union) motivated fiscal policies and still-high unemployment are
hindering consumer confidence and spending. Inflation is set to remain low as
wages should remain subdued and monetary policies remain tight to satisfy EMU
convergence demands. While European bond yields have declined to low levels
relative to the US, markets should be underpinned by low inflation until growth
firms sufficiently to justify higher cash rates, and this still appears to lie
on the distant horizon. The convergence in peripheral market yields has
paralleled improvements in inflationary expectations, but the risk premium has
eroded for unexpected deviation from the recent favourable economic and
political trends. In contrast, the UK market is discounting a higher profile for
rates given above-trend consumer-led growth and little fiscal restraint in the
recent budget.
In Japan, the economy has weathered the recent VAT tax hike, although the
composition of growth remains firmly in the export-related sector. As this
year's fiscal drag fades, consumer spending should firm while record-low
interest rates should nurse the financial sector back to health and support a
further improvement in business investment. Until this trend is more entrenched,
however, official rates are likely to remain low; eventually, expectations of a
return to a more neutral monetary policy should raise yields from their
near-record lows, thus making the Japanese bond market distinctly unattractive
for the foreseeable future.
2
<PAGE>
The US dollar remains supported by stronger growth, higher interest rates
than Germany or Japan, and declining inflation expectations. However, if Japan
and Europe's business cycles reach a more advanced stage as US growth momentum
falters, currency volatility could increase further in coming months. Volatility
could also rise over simmering US-Japan trade frictions and the approach of the
final (and critical) phase of consultation on the launch in January 1999 of
Europe's single currency.
Given this outlook, we believe the Fund currently is positioned to benefit
from the better relative performance we expect in selected European markets with
good fundamentals and relatively high yields, particularly the UK and Sweden.
Likewise, we are attracted to the positive inflation fundamentals and attractive
yields offered in the dollar bloc markets of Canada, Australia, New Zealand and
the US. We plan to continue avoiding the Japanese and yen-bloc markets, and to
have a bias to hedge foreign currency exposure back into dollars. Finally, the
Fund continues to invest in selected emerging market debt securities, notably
those of Argentina and Mexico, though its exposure to these markets has been
scaled back somewhat from prior levels, in recognition of the substantial
narrowing of the incremental spreads which these securities offer.
Western Asset Management Company
August 8, 1997
3
<PAGE>
Portfolio Manager's Comments
International Equity Trust
The return for the Legg Mason International Equity Trust was 13.7% for the
six months ended June 30, 1997 compared with the Morgan Stanley Capital
International Europe, Australia and the Far East Index ("EAFE") return of 11.4%.
For the twelve months ended June 30, 1997, the return for the Fund was 18.7%
compared with 13.2% for the index.
Stock selection overall has been excellent year-to-date, adding value
relative to the index in Japan, where our emphasis is on value factors, and in
Europe, specifically in Germany, France, Italy, Switzerland and Austria. Stock
selection was also strong in the emerging markets of Latin America and Europe.
The continuing good returns reflect, in large measure, the success of our
Stock Selection Model, which tailors our investment approach by country. We seek
to add value at three key levels of the investment process: our Strategic
Themes, stock selection and country allocation. Strategic Themes are designed to
add value in different segments of the market. For stock selection we model
fundamental investment principles, selecting the most promising stocks from each
theme. We combine expectations with our proprietary country model to determine
optimal stock and country target weights.
Market Commentary and Investment Outlook
The Japanese market was volatile during the first half of 1997; after
declining 11.8% in the first quarter, it was the best performing EAFE market in
the second quarter, up 23.7%. The yen strengthened by almost 10% in May, and the
consumption tax increase in April was unexpectedly benign. The fiscal tightening
looming in the 1997 budget, which began April 1, increased the probability of an
economic slump in the near term. Booming exports and loose monetary policy
should limit the downside. The trade surplus with the US, however, raises the
likelihood of US pressure for economic policy changes including structural
changes to the financial system.
Some global investors have begun to increase their exposure to Japan; our
view is that valuations continue to be less attractive in Japan compared with
other markets and that earnings estimate revisions are below average. We
currently underweight this market, searching for investment opportunities.
Europe performed well for the year-to-date, up 14.5%. Among the larger
markets, Germany was up 17.0% while France and the United Kingdom
underperformed, with returns of 9.4% and 9.2%, respectively. The smaller markets
of Switzerland, Spain, Portugal, Greece and the Netherlands all outperformed, as
did the Nordic countries which were up 14.9%.
The French election results cast doubts on the success and timing of the
European Monetary Union ("EMU"). Despite the setback, it seems EMU will go
through although substantially diluted. Coincidentally, we favor the harder
currency countries outside Germany and France such as Belgium, Finland, Norway
and Switzerland, the result of our bottom-up, aggregated valuation, expectations
and technical scores. Looking forward, the UK has attractive valuations, and
earnings are being revised upwards.
Despite the excitement over Hong Kong's return to China, we expect that it
will be business as usual for Hong Kong companies. China will maintain business
conditions for the near future and even has hinted at providing funds for
stability where needed.
4
<PAGE>
The Fund's emerging markets positions in Latin America and Europe contributed
to its return over the EAFE Index. Economic growth, declining inflation and
favorable global capital flows have contributed to the strong markets. These
holdings continue to be attractively priced with good growth prospects at
relatively low price/earnings multiples. The Fund is well-diversified across
countries and industries and maintains its value and mid-capitalization
characteristics.
Charles F. Lovejoy, CFA
August 8, 1997
5
<PAGE>
Portfolio Manager's Comments
Emerging Markets Trust
The return for the Legg Mason Emerging Markets Trust was 21.1% (excluding the
2% redemption fee assessed on shares redeemed within one year of purchase) for
the six months ended June 30, 1997 compared with 17.8% for the Morgan Stanley
Capital International Emerging Markets Free ("MSCI EMF") Index. For the twelve
months ended June 30, 1997, the return for the Fund was 27.4% compared with
12.8% for the index.
The Fund benefited from its exposure to companies in Latin America for the
year-to-date as this region continued to outperform other emerging markets. The
region was up 40.8% for the period, led by Brazil which returned 54.1%.
Stock selection was positive in Asia, adding value in Thailand, Hong Kong,
China and Korea. The Fund was underweighted in the Asian region, where the index
return was weaker, up 2.8% for the year-to-date. The Fund favored Hong Kong and
China over Malaysia which helped the relative return.
The Fund also benefited from investments in the region of Europe, Middle East
and Africa, particularly from strong stock selection in Israel, Greece and South
Africa.
Market Commentary
Despite the continued outperformance of Latin America, valuations remain
attractive compared to other emerging markets and to other broad equity asset
classes, and remain compelling when combined with expectations for continued
improvement in economic and corporate fundamentals throughout the region. By our
estimates, earnings growth of 20% should be available over the next two years.
Yet Latin companies trade at just 13x the coming year's earnings.
The business environments in Asia, in contrast, reflect slowing economic
growth. Markets in the region have been mixed year-to-date, with India and Sri
Lanka up over 30% and negative returns in Thailand, the Philippines and
Malaysia.
Several stock markets in Eastern Europe and the Mediterranean had excellent
returns for the period, with Russia, Greece, Turkey, Hungary and Portugal all
making contributions of 30% or more. With the exception of Turkey, each of these
countries is making progress in economic reform and enjoying the benefits from
lower interest rates, while Turkey and others continue to post strong GDP
growth. This economic reform is a sustained process, and despite the recent
run-up in stock prices, we continue to find attractively priced companies in the
region.
Investment Outlook
Our investment strategy is to seek well-managed, high quality companies which
are expected to participate in the rapid economic growth of emerging markets at
reasonable prices.
In selecting stocks, we research our universe of stocks for attractive growth
opportunities at reasonable valuations and use proprietary measures of growth
and valuation that we tailor to each market. We use both fundamental analysis
(review of management, competitive resources, market position and financial
condition to develop qualitative stock opinions) and quantitative valuation
(earnings expectations, growth, valuation and technical factors).
6
<PAGE>
As the performance gap between Latin America and Asia widens, we are
monitoring the "valuation gap" presented by these regions. While we maintain an
overweight position in Latin America, a strategy that has been beneficial for
the Fund, we would reallocate to Asia when we find opportunities for attractive
growth at reasonable valuations.
Overall, companies in the emerging markets are still growing faster than
anywhere else in the world and at attractive valuations, while the companies in
the Fund have higher growth rates, on average, than the index, and more
attractive valuations. The Fund is well diversified across industry sectors and
invested in 30 markets.
Stephen J. McCarthy, CFA
August 8, 1997
7
<PAGE>
Performance Information
Legg Mason Global Trust, Inc.
Total Return for One Year and Life of Funds, as of June 30, 1997
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.
The Funds' total returns as of June 30, 1997 were as follows:
Global International Emerging
Government Equity Markets
Trust(A) Trust(B) Trust(C,D)
- --------------------------------------------------------------------------------
Average Annual Total Return
One Year 7.14% 18.74% 27.41%
Life of Fund 7.80 16.34 25.04
Cumulative Total Return
One Year 7.14% 18.74% 27.41%
Life of Fund 37.24 43.13 27.67
- --------------------------------------------------------------------------------
(A) Inception of Global Government Trust -- April 15, 1993
(B) Inception of International Equity Trust -- February 17, 1995
(C) Inception of Emerging Markets Trust -- May 28, 1996
(D) Returns do not include the 2.0% redemption fee assessed on shares redeemed
within twelve months of purchase.
8
<PAGE>
Industry Diversification
Legg Mason Global Trust, Inc.
June 30, 1997
International Equity Trust
% of Net Market
Assets Value
- ---------------------------------------------------
(000)
Aerospace 1.8% $ 4,182
Agriculture/Food 0.7 1,643
Air Transport 1.7 3,897
Aluminum 0.8 1,853
Apparel/Textiles 0.2 538
Banks 8.0 18,420
Beverages 1.5 3,563
Business Machines 2.2 4,988
Chemicals 2.2 5,066
Construction 6.0 13,789
Consumer Durables 0.1 247
Containers 0.1 199
Domestic Oil Reserves 0.9 1,990
Drugs/Medicine 1.5 3,392
Electric Utilities 0.5 1,084
Electronics 6.3 14,360
Finance 16.3 37,491
Forest Products N.M. 28
Gas Utilities 0.2 465
Health (Non-Drug) 0.2 520
Hotel/Restaurant 1.0 2,226
Insurance 4.5 10,355
Iron &Steel 0.9 2,136
Miscellaneous 0.9 2,130
Motor Vehicles 5.3 12,345
Non-Ferrous Metals 2.3 5,329
Oil Refining/Distribution 1.6 3,635
Oil Service 1.1 2,629
Paper 0.8 1,899
Photo/Optical 0.8 1,862
Producer Goods 2.7 6,135
Publishing 0.4 967
Railroads/Transit N.M. 25
Real Property 3.3 7,646
Retail (Food) 0.1 308
Retail (Non-Food) 3.2 7,308
Services 3.0 6,955
Telecommunications 9.4 21,720
Tire & Rubber 1.1 2,525
Tobacco 0.3 592
Trucking/Freight 2.5 5,720
Water Transport 0.2 444
Short-term Investments 3.2 7,400
----- -------
Total Investment Portfolio 99.8 230,006
Other Assets Less Liabilities 0.2 347
----- -------
NET ASSETS 100.0% $230,353
===== =======
N.M. Not meaningful
Emerging Markets Trust
% of Net Market
Assets Value
- ---------------------------------------------------
(000)
Agriculture/Food 2.7% $ 1,683
Air Transport 0.1 59
Apparel/Textiles 2.3 1,462
Banks 10.4 6,581
Beverages 2.3 1,427
Business Machines 0.9 548
Chemicals 2.0 1,246
Coal & Uranium 0.4 239
Construction 6.3 3,911
Consumer Durables 1.9 1,168
Domestic Oil Reserves 1.5 966
Drugs/Medicine 0.9 545
Electric Utilities 7.2 4,491
Electronics 3.5 2,173
Finance 4.3 2,667
Gas Utilities 2.1 1,328
Hotel/Restaurant 0.3 210
Iron & Steel 3.9 2,411
Leisure/Luxury 0.5 302
Life Insurance 0.2 118
Media 0.6 368
Miscellaneous 7.0 4,337
Motor Vehicles 2.7 1,702
Non-Ferrous Metals 1.2 733
Oil Service 2.1 1,292
Producer Goods 0.4 272
Publishing 0.6 403
Real Property 2.6 1,617
Retail (Food) 1.1 668
Retail (Non-Food) 2.8 1,731
Services 1.4 851
Telecommunications 16.0 9,964
Tobacco 1.1 709
Trucking/Freight 0.3 218
Water Transport 0.7 446
Short-term Investments 5.1 3,154
----- ------
Total Investment Portfolio 99.4 62,000
Other Assets Less Liabilities 0.6 395
----- ------
NET ASSETS 100.0% $62,395
===== ======
9
<PAGE>
Statement of Net Assets
Legg Mason Global Trust, Inc.
June 30, 1997 (Unaudited)
(Amounts in Thousands)
Global Government Trust
<TABLE>
<CAPTION>
Maturity
Rate Date Currency Par Value
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
Long-Term Debt Securities(A) -- 79.1%
Australian Dollar -- 2.6%
Commonwealth of Australia 10% 2/15/06 AUD 4,500 $ 4,053
------
British Sterling -- 7.9%
Bayerische Hypotheken Bank 7% 2/25/00 GBP 880 1,448
United Kingdom Treasury Stock 10.25% 11/22/99 1,760 3,115
United Kingdom Treasury Stock 7.50% 12/7/06 3,500 5,814
United Kingdom Treasury Stock 8% 6/7/21 1,120 2,055
------
12,432
------
Canadian Dollar -- 2.1%
Government of Canada 8% 6/1/23 CAD 4,000 3,286
------
Czech Koruna -- 3.8%
ABN-Amro Bank N.V. 11% 12/15/97 CZK 205,000 6,007
------
Danish Krone -- 7.0%
Kingdom of Denmark 8% 3/15/06 DKK 65,000 11,017
------
French Franc -- 1.4%
Republic of Ivory Coast
Restructured Loan 0% FRF 23,304 1,616(B,C)
Unstructured Loan 6.875% 9,200 622(B,C)
------
2,238
------
German Deutschmark -- 5.6%
Deutsche Bundesrepublik 6.25% 4/26/06 DEM 7,000 4,201
Exide Holding Europe SA 9.125% 4/15/04 2,500 1,473(F)
Geberit International SA 10.125% 4/15/07 1,000 622(F)
German Unity Fund 8% 1/21/02 4,000 2,614
------
8,910
------
Greek Drachma -- 3.3%
Hellenic Republic Bond 11% 11/26/99 GRD 1,400,000 5,242
------
Italian Lira -- 8.1%
Buoni del Tesoro Poliennali 9% 10/1/98 ITL 10,500,000 6,369
Buoni del Tesoro Poliennali 7.75% 11/1/06 10,300,000 6,439
------
12,808
------
Philippine Peso -- 1.2%
International Finance Corporation 10.25% 4/10/02 PHP 50,000 1,879
------
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Maturity
Rate Date Currency Par Value
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
Portuguese Escudo -- 2.5%
Obrig Do Tes Medio Prazo 11.875% 2/23/00 PTE 600,000 $ 3,945
-------
Spanish Peseta -- 2.2%
Bonos del Estado 7.4% 7/30/99 ESP 500,000 3,545
-------
Slovakian Koruna -- 1.6%
International Finance Corporation 11.75% 8/15/99 SKK 95,000 2,461
-------
Swedish Krona -- 4.7%
Kingdom of Sweden 13% 6/15/01 SEK 45,000 7,336
-------
United States Dollar -- 25.1%
Currency Exchange-Linked Securities -- 1.9%
Morgan Guaranty Trust
Indonesian Rupiah-Linked Note 14% 11/21/01 USD 3,000 2,970(E)
-------
Emerging Markets -- 14.7%
Argentina Bonos de Consolidacion
Previsionales 5.71% 4/1/01 USD 6,365 6,055(D)
Government of Jamaica 9.625% 7/2/02 1,500 1,497(F)
Kingdom of Morocco 6.8125% 1/1/09 6,000 5,460(D)
Republic of Argentina Floating Rate Bond 6.75% 3/31/05 4,700 4,412(D)
Republic of Moldova 9.875% 6/13/02 1,250 1,277
United Mexican States 9.50% 7/16/01 508 517
United Mexican States 11.375% 9/15/16 3,500 3,934
-------
23,152
-------
U.S. Government Obligations -- 8.5%
United States Treasury Bonds 6% 2/15/26 USD 5,000 4,475
United States Treasury Bonds 6.625% 2/15/27 2,500 2,446
United States Treasury Inflation-
Indexed Security 3.375% 1/15/07 2,528 2,467(G)
United States Treasury Notes 6.375% 9/30/01 4,000 4,001
-------
13,389
-------
Total Long-term Debt Securities (Identified Cost-- $124,630) 124,670
------------------------------------------------------------------------------------------------------------------
Short-Term Investments -- 17.8%
Foreign Treasury Bill-Linked Securities(H) -- 2.1%
Bankers Trust Company
Ukranian OVGZ-Linked Note 0% 7/11/97 USD 1,000 1,008
Russian GKO-Linked Note 0% 1/14/98 2,500 2,350
-------
3,358
-------
</TABLE>
11
<PAGE>
Statement of Net Assets -- Continued
Legg Mason Global Trust, Inc.
Global Government Trust--Continued
<TABLE>
<CAPTION>
Par Value
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
Repurchase Agreements -- 15.7%
J.P. Morgan & Company, Inc.
5.90%, dated 6/30/97, to be repurchased at $8,001
on 7/1/97 (Collateral: $8,103 United States Treasury
Notes, 5.50%, due 2/28/99, value $8,180) $8,000 $ 8,000
Lehman Brothers, Inc.
6.10%, dated 6/30/97, to be repurchased at $8,001
on 7/1/97 (Collateral: $8,097 Federal Home Loan
Mortgage Corporation Mortgage-backed securities,
7.50%, due 8/1/26, value $8,176) 8,000 8,000
Prudential Securities, Inc.
5.94%, dated 6/30/97, to be repurchased at $8,001
on 7/1/97 (Collateral: $8,359 Federal Home Loan
Mortgage Corporation Mortgage-backed securities,
7.00%, due 6/1/24, value $8,252) 8,000 8,000
State Street Bank and Trust Company, N.A.
4.25%, dated 6/30/97, to be repurchased at $775
on 7/1/97 (Collateral: $740 United States Treasury
Bonds, 7.875%, due 11/15/07, value $803) 775 775
-------
24,775
-------
Total Short-Term Investments (Identified Cost-- $28,111) 28,133
------------------------------------------------------------------------------------------------------------------
Total Investments-- 96.9% (Identified Cost-- $152,741) 152,803
Other Assets Less Liabilities-- 3.1% 4,840
-------
NET ASSETS CONSISTING OF:
Accumulated paid-in capital applicable to 15,569
shares outstanding $157,451
Overdistributions of net investment income (61)
Accumulated net realized loss on investments and currency (81)
Unrealized depreciation of investments and currency transactions 334
--------
NET ASSETS-- 100.0% $157,643
========
NET ASSET VALUE PER SHARE $10.13
========
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
(A) Listed by currency denomination
(B) Illiquid Security -- A security that cannot be disposed of within seven days
for approximately the price at which the Fund values it.
(C) Non-income producing -- Issuer is in default of interest and principal
payments.
(D) Indexed Security -- The rate of interest earned on each security is tied to
the London Interbank Offered Rate (LIBOR). The coupon rate for each is the
rate as of June 30, 1997.
(E) Total maturity value is linked to the value of the indicated currency at
maturity.
(F) 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 investors.
(G) United States Treasury Inflation-Indexed Securities -- U.S. Treasury
Securities whose principal value is adjusted daily in accordance with
changes to the Consumer Price Index. Interest is calculated on the basis of
the current adjusted principal value.
(H) Total maturity value is linked to the value of the Treasury bills of the
indicated country at maturity.
See notes to financial statements.
12
<PAGE>
Statement of Net Assets
Legg Mason Global Trust, Inc.
June 30, 1997 (Unaudited)
(Amounts in Thousands)
International Equity Trust
<TABLE>
<CAPTION>
Shares/Par Value
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
Common Stocks and Equity Interests -- 95.9%
Australia -- 2.9%
Australia & New Zealand Bank Group Ltd. 162 $ 1,213
Boral Limited 558 1,757
Goodman Fielder Limited 404 595
Reinsurance Australia Corporation Limited 53 162
Santos Limited 478 2,010
Southcorp Holdings Limited 232 870
-------
6,607
-------
Austria -- 1.2%
Bohler-Uddeholm AG 10 799
OMV AG 16 2,024
-------
2,823
-------
Belgium -- 2.9%
Banque Bruxelles Lambert SA 2 556
Compagnie Belge de Participations Paribas SA 34 1,465
Cie Financiere Europeene et d'Outre-Mer SA 3 325
Fortis AG 2 496
Groupe Bruxelles Lambert SA 5 905
Kredietbank NV 1 564
Societe Generale de Belgique 10 887
Solvay 3 1,473
-------
6,671
-------
BRAZIL -- 1.9%
Telecomunicacoes Brasileiras S/A ADR 25 3,839
Usinas Siderurgicas de Minas Gerais S/A ADS 56 611(B)
-------
4,450
-------
Chile -- 0.5%
Companhia de Telecomucicacioes ADR 33 1,080
-------
Denmark -- 2.1%
Danisco A/S 9 563
Den Danske Bank 12 1,197
FLS Industries A/S Manufactures 38 1,271
Sophus Berendsen A/S 9 1,337
Superfos A/S 20 491
-------
4,859
-------
</TABLE>
13
<PAGE>
Statement of Net Assets -- Continued
Legg Mason Global Trust, Inc.
International Equity Trust--Continued
<TABLE>
<CAPTION>
Shares/Par Value
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
Finland -- 1.2%
Kemira OY 17 $ 163
Kesko 54 754
Outokumpu OY 43 843
The Rauma Group N.M. 5
Rautaruukki OY 26 273
UPM-Kymmene Corporation 28 638
-------
2,676
-------
France -- 4.2%
Assurances Generales de France 15 489
Alcatel Alsthom 20 2,480
Bertrand Faure 9 469
Compagnie Francaise d'Etudes et de Construction Technip 4 418
Compagnie Generale de Geophysique SA 4 380(A)
Compagnie Generale des Eaux 21 2,691
Compagnie Generale d'Industrie et de Participations 2 483
Moulinex 9 238(A)
Rhone-Poulenc 39 1,572
Total SA 3 283
Vallourec SA 2 140
-------
9,643
-------
Germany -- 7.9%
Bayerische Hypotheken-und Wechsel-Bank AG 71 2,130
Commerzbank AG 97 2,750
Continental AG 82 2,038
Dresdner Bank AG 69 2,394
Deutsche Pfandbrief-und Hypothekenbank AG 5 276
Deutsche Telekom AG 45 1,078
FAG Kugelfischer Georg Schaefer AG 50 932
IWKA AG 3 916
Schmalbach Lubeca AG 1 292
Thyssen AG 5 1,089
Volkswagen AG 6 4,293
-------
18,188
-------
Greece -- N.M.
Ergo Bank S.A. 1 87
-------
Hong Kong -- 7.3%
Cathay Pacific Airways 439 909
Cheung Kong Holdings 325 3,209
Dah Sing Financial Group 52 288
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Shares/Par Value
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
Hong Kong -- Continued
Dickson Concepts International Ltd. 215 $ 783
Guoco Group Ltd. 208 1,096
FPB Bank Holding Company Limited 408 253
Henderson Land Development Company Ltd. 219 1,943
HKR International Ltd. 484 672
Hok Kwok Land 716 236
Hong Kong Telecommunications Ltd. 183 437
HSBC Holdings plc 86 2,572
Innovative International Holdings 698 365
Peregrine Investment Holdings Limited 256 527
Sun Hung Kai Properties Ltd. 39 469
Wing Hang Bank Ltd. 131 790
Wong's International Holdings Ltd. 501 194
Wong's International Holdings Ltd. - Warrants 100 10(A)
Wheelock & Company, Ltd. 858 2,110
-------
16,863
-------
India -- 0.9%
Great Eastern Shipping GDR 56 452(A)
Hindalco Industries Ltd. GDR 24 859
India Cements Ltd. GDR 30 96(A)
Steel Authority of India Ltd. GDR 43 380(B)
Tata Engineering & Locomotive Company Limited GDR 19 288(A)
-------
2,075
-------
Indonesia -- 0.7%
PT Bank Internasional Indonesia 575 496
PT Gudang Garam 122 512
PT Indocement Tunggal Prakarsa 223 346
PT Mulia Industrindo 350 184
-------
1,538
-------
Ireland -- 2.1%
Allied Irish Banks plc 289 2,220
Bank of Ireland 212 2,323
Irish Life Plc 67 346
-------
4,889
-------
Italy -- 2.9%
Banca Popolare di Bergamo 2 28
Banca Nazionale del Lavoro 71 613
Stet Societa' Finanziaria Telefonica S.p.A. 547 3,189
Telecom Italia 904 2,900
-------
6,730
-------
</TABLE>
15
<PAGE>
Statement of Net Assets -- Continued
Legg Mason Global Trust, Inc.
International Equity Trust--Continued
<TABLE>
<CAPTION>
Shares/Par Value
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
Japan -- 12.5%
Canon Incorporated 48 $ 1,307
Citizen Watch Company 181 1,396
Cosmo Oil Company 6 29
Daiichi Pharmaceutical Company Ltd. 60 1,057
Daiwa Kosho Lease Company Ltd. 77 595
Daiwa Securities Company Ltd. 101 797
Eisai Company Ltd. N.M. 3
Fuji Photo Film Company 29 1,166
Fujitsu Ltd. 111 1,540
Furukawa Electric 236 1,501
Hitachi Cable 105 868
Iwate (Bank of) Limited 18 1,009
Jaccs Company 105 778
Katokichi Company 16 285
Kishu Paper Company 54 199
Kitz Corporation 9 37
Konica Corporation 109 695
Kyudenko Corporation 4 34
Maruzen Showa Unyu Co. 6 25
Matsushita Electric Industrial Company 27 544
Mitsubishi Materials Corporation 68 272
Mitsui Trust & Banking 177 1,335
National House Industrial Co. 33 435
NEC Corporation 41 572
Nichicon Corporation 43 581
Nichimen Corporation 111 382
Nippon Densetsu 21 150
Nippon Oil Company 238 1,301
Nippon Valqua Industries 40 133
NTN Corp. 94 526
Onward Kashiyama Company Ltd. 16 265
Ricoh Company 110 1,440
Rohm Company 14 1,440
Sanwa Shutter Corporation 92 835
Shikoku Electric Power 20 344
Sony Corporation 10 872
Sumitomo Electric Industries 3 50
Taiyo Yuden Co. 12 198
Takeda Chemical Industries 83 2,332
TDK Corporation 19 1,394
Yamaichi Securities Company 29 86
-------
28,808
-------
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Shares/Par Value
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
Malaysia -- 2.7%
AFFIN Holdings Bhd 120 $ 285
AMMB Holdings Bhd 95 590
Arab Malaysian Corporation Berhad 173 644
Edaran Otomobil Nasional 88 750
Malaysian Airline System Bhd 112 280
Malayan Cement Bhd 280 468
Oriental Holdings Bhd 22 166
Rashid Hussain Bhd 88 558
Tan Chong Motor Holding Berhad 974 1,836
UMW Holdings Bhd 113 533
-------
6,110
-------
Mexico -- 1.2%
ALFA, S.A. de C.V. 312 2,130
Telefonos de Mexico SA 280 670
-------
2,800
-------
Netherlands -- 7.0%
ABN Amro Holding N.V. 29 544
Aegon N.V. 17 1,162
Ahrend Groep N.V. 10 655
Assurantiecomcern Stad Rotterdam N.V. 5 206
DSM NV 11 1,047
Fortis Amev NV 7 323
Hollandsche Beton Groep N.V. 2 479
ING Groep NV 42 1,943
Internatio - Muller NV 46 1,435
Kon Ten Cate NV 3 182
Koninklijke Boskalis Westminster N.V. 50 973
Koninklijke Nedlloyd 26 739
Koninklijke Van Ommeren N.V. 43 1,681
NBM-Amstelland N.V. 31 834
NBM-Amstelland N.V. - Coupons 31 19(A)
Roto Smeets D Boerd 17 834
Volker Wessels Stevin N.V. 84 2,368
Twentsche Kabel Holding 11 586
-------
16,010
-------
New Zealand -- 2.0%
Fletcher Challenge Energy 161 486
Fletcher Challenge Paper 322 781
Fletcher Challenge Forests 19 28
Telecom Corporation of New Zealand Limited 669 3,406
-------
4,701
-------
</TABLE>
17
<PAGE>
Statement of Net Assets -- Continued
Legg Mason Global Trust, Inc.
International Equity Trust--Continued
<TABLE>
<CAPTION>
Shares/Par Value
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
Norway -- 2.3%
Aker RGI ASA 18 $ 348
Aker RGI ASA - B Shares 4 62
Den Norske Bank A/S 479 1,876
Elkem ASA 17 337
Hafslund ASA 11 59
Kverneland ASA 14 384
Norsk Hydro AS 13 680
Nycomed ASA 32 461
Saga Petroleum AS 57 1,087
-------
5,294
-------
Philippines -- 0.7%
Fortune Cement Corp. 369 90
Philippine Long Distance Telephone Company 49 1,577
-------
1,667
-------
Portugual -- 0.6%
Portugal Telecom S.A. 37 1,483
-------
Singapore -- 2.3%
DBS Land Limited 336 1,062
Jardine Strategic Holdings Ltd. 84 318
Singapore Airlines Ltd. 127 1,137
United Overseas Bank Ltd. 31 319
Van Der Horst Ltd. 165 304
Wing Tai Holdings Ltd. 739 2,130
-------
5,270
-------
South Korea -- 0.5%
Yukong Ltd. 48 1,165
-------
Spain -- 2.8%
Autopistas del Mare Nostrum SA 5 84
Banco Bilbao Vizcaya 25 2,022
Banco Central Hispanoamericano 10 355
Fuerazs Electricas de Cataluna, SA 49 464
Iberdrola S.A. 140 1,762
Tabacalera SA 2 81
Union Electrica Fenosa SA 186 1,689
-------
6,457
-------
Sweden -- 1.9%
Granges AB 12 161(A)
Mo och Domsjo AB 15 484
Volvo AB 139 3,725
-------
4,370
-------
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Shares/Par Value
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
Switzerland -- 9.2%
Alusuisse-Lonza Holding AG 2 $ 1,690
Ascom Holding AG N.M 461(A)
Credit Suisse Holding AG 11 1,387
Danzas Holding AG 1 156
Georg Fischer AG 1 987
Holderbank Financiere Glarus AG 2 2,064
Kuoni Reisen Holdings AG 1 2,226
Rieter Holdings Ltd. 1 469
Schweizerische Bankgesells 3 3,283
Schweizerische Bankverein 12 3,156(A)
Schweizerische Ruckvericherungs-Gesellschaft 2 3,239
Swissair AG 1 639(A)
Valora Holdings AG 7 1,444
-------
21,201
-------
Thailand -- 0.9%
Bangkok Bank Company Ltd. 225 1,546
Charoen Pokphand Feedmill Public Company Limited 45 118
Siam Cement Public Company Limited 15 265
TelecomAsia Corporation 106 127(A)
-------
2,056
-------
Turkey -- 0.1%
Yapi Kredi Bank 11,420 261
Yapi Kredi Bank - Rights 3,961 38(A)
-------
299
-------
United Kingdom -- 10.5%
Abbey National 26 350
Anglian Water plc 99 1,080
Asda Group plc 237 489
Barclays PLC 39 772
Bass PLC 131 1,603
British Aerospace PLC 72 1,609
British Airways plc 82 938
British Telecommunications plc 98 726
Burton Group plc 575 1,125
Daily Mail and General Trust 5 129
General Electric 84 499
Ladbroke Group plc 263 1,034
Lloyds TSB Group plc 511 5,256
Marley PLC 573 1,183
Misys plc 19 423
PowerGen plc 33 395
Prudential Corporation 232 2,271
</TABLE>
19
<PAGE>
Statement of Net Assets -- Continued
Legg Mason Global Trust, Inc.
International Equity Trust--Continued
<TABLE>
<CAPTION>
Shares/Par Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C>
United Kingdom -- Continued
Royal & Sun Alliance Insurance Group plc 29 $ 217
Scottish & Newcastle PLC 103 1,106
Thames Water plc 205 2,353
W.H. Smith Group plc 98 589
--------
24,147
--------
Total Common Stocks and Equity Interests (Identified Cost-- $184,342) 221,017
- --------------------------------------------------------------------------------------------------------------------------
Preferred Stock--0.7%
Brazil -- 0.5%
Companhia de Tecidos Notre Minas 700 273
Telecomunicacoes Brasileiras 5,200 789
--------
1,062
--------
Italy -- 0.2%
IFI Istituto Finanziario 41 515
--------
United Kingdom -- N.M.
Wessex Water plc 14 12
--------
Total Preferred Stocks (Identified Cost-- $1,383) 1,589
- --------------------------------------------------------------------------------------------------------------------------
Repurchase Agreement -- 3.2%
Prudential Securities, Inc.
5.94%, dated 6/30/97, to be repurchased at $7,401
on 7/1/97 (Collateral: $8,219 Federal Home Loan
Mortgage Corporation Mortgage-backed securities,
7.00%, due 12/1/25, value $8,111)
(Identified Cost-- $7,400) $7,400 7,400
- --------------------------------------------------------------------------------------------------------------------------
Total Investments-- 99.8% (Identified Cost-- $193,125) 230,006
Other Assets Less Liabilities-- 0.2% 347
--------
NET ASSETS CONSISTING OF:
Accumulated paid-in capital applicable to 16,761 shares outstanding $189,621
Undistributed net investment income 874
Undistributed net realized gain on investments and currency transactions 2,988
Unrealized appreciation of investments and currency transactions 36,870
--------
NET ASSETS -- 100.0% $230,353
========
NET ASSET VALUE PER SHARE $13.74
========
- --------------------------------------------------------------------------------------------------------------------------
</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 investors.
N.M. Not meaningful
See notes to financial statements.
20
<PAGE>
Statement of Net Assets
Legg Mason Global Trust, Inc.
June 30, 1997 (Unaudited)
(Amounts in Thousands)
Emerging Markets Trust
<TABLE>
<CAPTION>
Shares/Par Value
- ---------------------------------------------------------------------------------------------------------------------------
<S><C>
Common Stocks and Equity Interests -- 84.4%
Argentina -- 2.8%
Banco Frances del Rio de la Plata S.A. 33 $ 360
IRSA Inversiones y Representaciones S.A. 132 578
Quilmes Industrial SA (ADR) 24 277
Siderca S.A. 217 561
------
1,776
------
Brazil -- 10.5%
Brazil Realty S.A. GDS 16 394(B)
Centrais Electricas Braseiras S/A 2,053 1,148
Companhia de Eletricidade do Estado da Bahia 5,270 485(A)
Companhia Paulista de Forca e Luz 1,800 303(A)
Companhia Siderurgica Nacional 11,190 369
Light - Servicos de Eletricidade S/A 1,065 530
Lojas Arapua SA GDR 2 28(B)
Multicanal Participacoes S.A. ADR 9 117
Telecomunicacoes Brasileiras S/A ADR 9 1,293
Telecomunicacoes Brasileiras S/A 9,847 1,335(A)
Uniao de Bancos Brasileiros SA GDS 14 527(A)
------
6,529
------
Chile -- 2.6%
Banco Santander Chile ADR 13 187
Chilectra S.A. ADR 15 439
CIA de Telecomunicaciones de Chile S.A. ADR 13 439
Sociedad Quimica y Minera de Chile ADR 9 582
------
1,647
------
China -- 4.1%
Beijing Datang Power 300 138(A)
Bengang Steel Plates Co., Ltd. 700 217(A)
Brilliance China Automotive Holdings, Ltd. 60 615
China International Marine Containers Ltd. 50 59(A)
Guangdong Electric Power Development Co., Ltd. 150 123
Guangdong Kelon Electric Holding 150 143
Heilongjiang Electric Power Co. Ltd. 120 96
Huaneng Power International, Inc. ADR 10 265(A)
Huaxin Cement Co. Ltd. 560 103(A)
Inner Mongolia Erdos Cashmere Products Co. Ltd. 298 250
Jiangxi Copper Company Ltd. 500 137(A,B)
Shandong Huaneng Power Company Ltd. ADR 22 241
Shenzhen Expressway Company Limited 300 82(A,B)
Shenzhen Konka Electronics Group Limited 50 74
------
2,543
------
</TABLE>
21
<PAGE>
Statement of Net Assets -- Continued
Legg Mason Global Trust, Inc.
Emerging Markets Trust--Continued
<TABLE>
<CAPTION>
Shares/Par Value
- ---------------------------------------------------------------------------------------------------------------------------
<S><C>
Colombia -- 1.1%
Banco Industrial Colombiano ADR 18 $ 328
Cementos Diamante S.A. ADR 28 351(A,B)
------
679
------
Croatia -- 0.8%
Zagrebacka Banka GDR 15 486(B)
------
Czech Republic -- 0.4%
SPT Telecom a.s. 1 144(A)
Tabak a.s. 1 129
------
273
------
Egypt -- 1.9%
Al-Ahram Beverages Co. GDR 11 215(A,B)
Commercial International Bank Egypt GDR 14 281(B)
Egypt International Pharmaceuticals 3 198
Egypt Investment Company Ltd. 15 219(A,B)
International Food Egypt 5 91(A)
Misr International Bank, GDR 12 208(A)
------
1,212
------
Greece -- 1.9%
Athens Medical Care S.A. 22 173(A)
Attica Enterprises S.A. 20 193
Hellenic Telecommunication Organization S.A. 17 406
Hellenic Telecommunication Organization S.A. - Rights 17 2(A)
Intracom S.A. 4 198
National Bank of Greece S.A. 2 214
------
1,186
------
Hong Kong -- 3.3%
Cheung Kong (Holdings) Ltd. 18 178
China Pharmaceutical Enterprise and Investment Corporation Limited 1,155 191
China Resources Enterprise Limited 80 392
Citic Pacific Ltd. 22 137
Guangdong Investment Ltd. 180 271
Guangdong Investment Ltd. - Rights 180 8(A)
Hang Seng Bank Limited 10 143
New World Development Company Ltd. 20 119
Pacific Ports Company Ltd. 500 100(A)
Sa Sa International Holdings Limited 50 16(A)
Shanghai Industrial Holdings Limited 40 249
Tingyi (Cayman Islands) Holding Co. 1,140 284
------
2,088
------
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Shares/Par Value
- ---------------------------------------------------------------------------------------------------------------------------
<S><C>
Hungary -- 1.4%
BorsodChem Rt. 9 $ 373
Graboplast Rt. 3 145
Gyogyszergyarszolgaltatasi Resz. (EGIS Rt.) 2 128
Zalakeramia Rt. GDR 33 256(A,B)
------
902
------
India -- 4.9%
Hindalco Industries Ltd. GDR 10 350
India Access 25 288(A)
Larsen & Toubro Ltd. GDS 15 254(A)
Reliance Industries GDR 35 805(A)
State Bank of India GDR 14 358(A)
Tata Engineering & Locomotive Co. Ltd. GDR 11 161(A,B)
Tata Engineering & Locomotive Co. Ltd. GDR 15 235(A)
Videsh Sanchar Nigam Ltd. GDR 29 596(B)
------
3,047
------
Indonesia -- 2.6%
PT Bank Internasional Indonesia 446 385
PT Bank Internasional Indonesia - Warrants 29 11(A)
PT Hanjaya Mandala Sampoerna 57 217
PT Lippo Bank 290 298
PT Matahari Putra Prima 130 262
PT Semen Gresik 120 269
PT Telekomunikasi Indonesia 100 164(A)
------
1,606
------
Israel -- 2.0%
Agis Industries Limited 15 158
Bank Leumi Le - Israel 83 125
Formula Systems (1985) Ltd. 8 137(A)
Israel Chemicals Limited 120 141(A)
Makhteshim Chemical Works Limited 23 153
NICE - Systems Ltd. ADR 6 176(A)
Orbotech, Ltd. 5 159
Teva Pharmaceutical Industries Ltd. ADR 3 168
------
1,217
------
Malaysia -- 8.6%
Affin Holdings Berhad 90 214
Arab Malaysian Finance Berhad 156 331
Asas Dunia Berhad 32 103
Carlsberg Brewery Malaysia BHD 45 232
DCB Holdings Berhad 73 231(A)
IJM Corporation Bhd 75 157
</TABLE>
23
<PAGE>
Statement of Net Assets -- Continued
Legg Mason Global Trust, Inc.
Emerging Markets Trust--Continued
<TABLE>
<CAPTION>
Shares/Par Value
- ---------------------------------------------------------------------------------------------------------------------------
<S><C>
Malaysia -- Continued
Malayan Banking BHD 53 $ 556
Malayan Cement Bhd 133 222
New Straits Times Press Bhd. 43 252
Oriental Holdings Berhad 29 218
Rashid Hussain Bhd 29 181
Road Builder Holdings Bhd 51 241
Rothmans of Pall Mall (Malaysia) Berhad 34 334
Sime Darby Bhd 77 256
Sime UEP Properties Berhad 101 218
Star Publications (Malaysia) 72 308
Tanjong PLC 88 303
Telekom Malaysia Bhd 55 257
Tenaga Nasional Berhad 108 526
UMW Holdings Berhad 48 226
------
5,366
------
Mexico -- 9.2%
ALFA, S.A. de C.V. 71 485
Biper S.A. de C.V. 910 355(A)
Carso Global Telecom 133 536
Corporation GEO, S.A. de C.V. 85 491(A)
Desc S.A. de C.V. (Series B) 72 528
Desc S.A. de C.V. (Series C) N.M. 3
Empaques Ponderosa, S.A. de C.V. 315 260
Fomento Economico Mexicana, SA de C.V. 70 417
Grupo Financiero Banamex Accival, SA de CV 55 141(A)
Grupo Industrial Maseca SA de CV 354 387
Organizacion Soriana SA de CV 220 551
Pepsi-Gemex S.A. ADR 42 525
Telefonos de Mexico SA 237 567
Tubos de Acero de Mexico SA ADR 28 522(A)
------
5,768
------
Namibia -- 0.7%
Namibian Minerals Corporation 104 455(A)
------
Peru -- 0.9%
Telfonica del Peru S.A. ADR 21 550
------
Philippines -- 2.2%
Belle Corporation 1,031 301(A)
Fil-Estate Land, Inc. 600 175
Manila Electric Company 25 125
Metropolitan Bank & Trust Company 9 191
Philippine Long Distance Telephone Company 11 342
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Shares/Par Value
- ---------------------------------------------------------------------------------------------------------------------------
<S><C>
Philippines -- Continued
SM Prime Holdings 240 $ 71
Southeast Asia Cement Holdings, Inc. 3,216 156(A)
-------
1,361
-------
Poland -- 2.1%
ARGOS Holding S.A. 8 200(A)
Bank Handlowy W. Warszawie 60 692(A)
NFI Hetman S.A. 11 41(A)
NFI Jedenasty S.A. 14 39(A)
NFI Octave S.A. 15 41(A)
NFI Progress S.A. 14 42(A)
NFI Trezeci S.A. 16 47(A)
NFI Zachodni S.A. 13 41(A)
Sokolowskie Zaklady Miesne S.A. 110 154
-------
1,297
-------
Portugal -- 1.4%
Cimpor Cimentos de Portugal S.A. 15 350
Colep -- Companhia Portuguesa de Embalagens 17 270(A)
Portugal Telecom S.A. 7 262
-------
882
-------
Russia -- 1.5%
Lukoil Holding ADR 4 343
Taftneft ADR 6 607(A,B)
-------
950
-------
Slovenia -- 0.7%
Blagovno Trgovinski Center's GDR 25 240(A,B)
SKB Banka GDR 6 186(A,B)
-------
426
-------
South Africa -- 3.6%
Anglo American Corporation of South Africa Ltd. 3 199
Barlow Limited 12 131
De Beers Centenary AG 5 166
Gencor Limited 53 245
Nedcor Limited 6 122
Rembrandt Group Limited 15 160
Sasol Limited 18 240
Southern Africa Fund, Inc. 55 969
-------
2,232
-------
</TABLE>
25
<PAGE>
Statement of Net Assets -- Continued
Legg Mason Global Trust, Inc.
Emerging Markets Trust--Continued
<TABLE>
<CAPTION>
Shares/Par Value
- ---------------------------------------------------------------------------------------------------------------------------
<S><C>
South Korea -- 3.8%
Cho Hung Bank GDR 16 $ 115(A,B)
Dong-Ah Construction Industrial Company EDR N.M. 3(A)
Dong-Ah Construction Industrial Company EDR 4 35(A)
Dong-Ah Construction Industrial Company EDR 6 59(A)
Hana Bank GDR 17 248(A)
Kookmin Bank Ltd. GDS 17 369(B)
Kookmin Bank Ltd. 7 97(A)
Korea Electric Power Corporation ADR 11 206
Korea Electric Power Corporation 10 298
Korea Fund 3 49
Pohang Iron & Steel Company Ltd. 3 185
SK Telecom Co. Ltd. N.M. 67
SK Telecom Co. Ltd. ADR 20 201
Samsung Electronics Co. 1 86
Yukong Ltd. GDR 27 155(B)
Yukong Ltd. GDR 36 201
------
2,374
------
Taiwan -- 2.7%
Asia Cement Corporation GDS 17 261(B)
Asustek Computer Inc. GDR 22 249
China Steel GDR 14 298(B)
Evergreen Marine Corporation 11 181(A,B)
President Enterprises GDR 9 158(A)
Teco Electric & Machinery GDR 18 357(A,B)
Yang Ming Marine Transport GDR 13 155(A,B)
------
1,659
------
Thailand -- 3.5%
Bangkok Bank Public Company Limited 46 314
Electricity Generating Public Company Limited 160 392
K.R. Precision Public Company Limited 31 223
PTT Exploration & Production Public Company Limited 26 372
Siam Cement Public Company Limited 18 311
Siam Makro Public Company Ltd. 182 498
Thai Farmers Bank Public Company Limited 13 55
------
2,165
------
Turkey -- 1.4%
Aksigorta 1,876 119
Aselsan Askeri Elektronik A.S. 1,968 136
Baticim Bati Anadolu Cimento Sanayii A.S. 1,341 149
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
Shares/Par Value
- ---------------------------------------------------------------------------------------------------------------------------
<S><C>
Turkey -- Continued
Dogan Sirketler Grubu Holding A.S. 3,926 $ 100(A)
Hurriyet Gazetecilik ve Matbaacilik A.S. 1,597 97
Sasa Sun'i Sentetik ve Elyaf 3,724 170
Turkiye Garanti Bankasi A.S. 750 28
Turkiye Garanti Bankasi A.S. - Coupons 1,353 33(A)
Yapi ve Kredi Bankasi A.S. 1,734 40
Yapi ve Kredi Bankasi A.S. - Coupons 1,426 14(A)
------
886
------
United States -- 0.4%
ECI Telecommunications Limited 5 152
Electric Fuel Corporation 17 110
------
262
------
Venezuela -- 1.1%
Compania Anonima Nacional Telefonos de Venezuela ADS 15 656
------
Zimbabwe -- 0.3%
Meikles Africa Limited 85 210(A)
------
Total Common Stocks and Equity Interests (Identified Cost-- $45,935) 52,690
---------------------------------------------------------------------------------------------------------------------
Preferred Shares -- 9.3%
Brazil -- 9.3%
Bompreco Supermercados Nordeste GDR 14 373(B)
Companhia de Tecidos Norte de Minas-Coteminas 620 242
Companhia Energetica de Minas ADR 7 347
Companhia Paranaense de Energia-Copel 30,000 557(A)
Companhia Riogrand Telecom 320 485
Ericsson Telecomunicacoes S/A 9,300 553(A)
Gerdau SA 4,872 88(A)
Itausa Investimentos Itau S/A 598 550(A)
Lojas Arapua, SA 13,900 226
Petroleo Brasileiro S/A 2,230 619
Sadia - Concordia S/A Industria E Comercio 440 458
Siderurgica Riograndense S/A 3,000 114(A)
Telecomunicacoes Brasileiras S/A ADR 3,561 540
Telecomunicacoes de Minas Gerais 3,439 609
Uniao de Bancos Brasileiros SA 706 26
------
Total Preferred Shares (Identified Cost -- $4,527) 5,787
---------------------------------------------------------------------------------------------------------------------
Convertible Bonds -- 0.6%
China -- 0.3%
Qingling Motors Company Ltd., 3.5%, 1/22/02 $ 200 196
------
</TABLE>
27
<PAGE>
Statement of Net Assets -- Continued
Legg Mason Global Trust, Inc.
Emerging Markets Trust--Continued
<TABLE>
<CAPTION>
Shares/Par Value
- ---------------------------------------------------------------------------------------------------------------------------
<S><C>
Malaysia -- N.M.
AMMB Holdings Bhd, 7.5%, 5/8/02 $ 255 $ 1(A)
ARAB Malaysia Financial BHD, 7.5%, 5/22/02 56 20(A)
-------
21
-------
Taiwan -- 0.3%
Far Eastern Department Stores, 3.00%, 7/6/01 140 152
-------
Total Convertible Bonds (Identified Cost-- $469) 369
---------------------------------------------------------------------------------------------------------------------
Repurchase Agreement -- 5.1%
Prudential Securities, Inc.
5.94%, dated 6/30/97, to be repurchased at
$3,155 on 7/1/97 (Collateral: $3,656
Federal National Mortgage Association
Mortgage-backed securities, 7.00%, due
4/1/26, value $3,603)
(Identified Cost-- $3,154) 3,154 3,154
---------------------------------------------------------------------------------------------------------------------
Total Investments-- 99.4% (Identified Cost-- $54,085) 62,000
Other Assets Less Liabilities-- 0.6% 395
-------
NET ASSETS CONSISTING OF:
Accumulated paid-in capital applicable to 4,902 shares outstanding $53,998
Overdistributions of net investment income (86)
Undistributed net realized gain on investments and currency transactions 569
Unrealized appreciation of investments and currency transactions 7,914
-------
NET ASSETS-- 100.0% $62,395
=======
NET ASSET VALUE PER SHARE $12.73
======
- ---------------------------------------------------------------------------------------------------------------------------
</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.
28
<PAGE>
Statements of Operations
Legg Mason Global Trust, Inc.
(Amounts in Thousands) (Unaudited)
<TABLE>
<CAPTION>
Six Months Ended 6/30/97
-----------------------------------------
Global International Emerging
Government Equity Markets
Trust Trust Trust
- -----------------------------------------------------------------------------------------------------------------------
<S><C>
Investment Income:
Interest $ 5,936 $ 138 $ 102
Dividends -- 3,355 475
Less: Foreign tax expense (14) (397) (29)
------- ------- ------
Total income 5,922 3,096 548
------- ------- ------
Expenses:
Management fee 588 716 207
Distribution and service fees 588 955 207
Custodian fee 157 207 107
Transfer agent and shareholder servicing expense 55 104 31
Audit and legal fees 41 29 32
Reports to shareholders 16 28 8
Registration fees 3 28 19
Organization expense 13 7 7
Other expenses 5 9 2
Directors' fees 3 3 3
------- ------- ------
1,469 2,086 623
Less fees waived -- -- (107)
------- ------- ------
Total expenses, net of waivers 1,469 2,085 516
------- ------- ------
NET INVESTMENT INCOME 4,453 1,010 32
------- ------- ------
Net Realized and Unrealized Gain (Loss) on Investments:
Realized gain (loss) on:
Investments (1,987) 1,394 626
Foreign currency transactions 1,957 (164) (46)
------- ------- ------
(30) 1,230 580
------- ------- ------
Change in unrealized appreciation of:
Investments, options, and futures (4,871) 24,073 6,733
Assets and liabilities denominated in foreign currencies (25) 6 (1)
------- ------- ------
(4,896) 24,079 6,732
------- ------- ------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (4,926) 25,309 7,312
- -----------------------------------------------------------------------------------------------------------------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ (473) $26,319 $7,344
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
29
<PAGE>
Statements of Changes in Net Assets
Legg Mason Global Trust, Inc.
(Amounts in Thousands)
<TABLE>
<CAPTION>
Global International Emerging
Government Equity Markets
Trust Trust Trust
----------------------- ---------------------- ------------------------
Six Months Year Six Months Year Six Months Year
Ended Ended Ended Ended Ended Ended
6/30/97 12/31/96 6/30/97 12/31/96 6/30/97 12/31/96(A)
- ---------------------------------------------------------------------------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited)
<S><C>
Change in Net Assets:
Net investment income $ 4,453 $ 8,899 $ 1,010 $ 261 $ 32 $ (57)
Net realized gain (loss) on
investments, options, futures
and foreign currency transactions (30) 724 1,230 6,713 580 (13)
Change in unrealized appreciation of
investments and assets and liabilities
denominated in foreign currencies (4,896) 2,457 24,079 10,954 6,732 1,182
---------------------------------------------------------------------------------------------------------------------
Change in net assets resulting
from operations (473) 12,080 26,319 17,928 7,344 1,112
Distributions to shareholders:
From net investment income (4,045) (9,293) -- (620) -- (59)
From net realized gain on investments -- (1,528) -- (4,209) -- --
Change in net assets from
Fund share transactions 612 6,336 36,108 88,880 33,845 20,152
---------------------------------------------------------------------------------------------------------------------
Change in net assets (3,906) 7,595 62,427 101,979 41,189 21,205
Net Assets:
Beginning of period 161,549 153,954 167,926 65,947 21,206 1
---------------------------------------------------------------------------------------------------------------------
End of period $157,643 $161,549 $230,353 $167,926 $62,395 $21,206
---------------------------------------------------------------------------------------------------------------------
Under/(over) distributions
of net investment income $ (61) $ (469) $ 874 $ (136) $ (86) $ (118)
---------------------------------------------------------------------------------------------------------------------
</TABLE>
(A) For the period May 28, 1996 (commencement of operations) to December
31, 1996.
See notes to financial statements.
30
<PAGE>
Financial Highlights
Legg Mason Global Trust, Inc.
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 Realized and
Unrealized Gain
(Loss) on Invest- In Excess
Net Asset Net ments, Options, Total Net of Net
Value, Investment Futures and From Net Realized Realized
Beginning Income Foreign Currency Investment Investment Gain on Gain on
of Period (Loss) Transactions Operations Income Investments Investments
- -------------------------------------------------------------------------------------------------------------------------
<S><C>
Global Government Trust
Six Months Ended
June 30, 1997* $10.41 $ .29 $(.31) $(.02) $ (.26) $ -- $ --
Years Ended Dec. 31,
1996 10.33 .59 .21 .80 (.62) (.10) --
1995 9.54 .63(A) 1.32 1.95 (1.16) -- --
1994 10.27 .57(A) (.71) (.14) (.59) -- --
1993(D) 10.00 .36(A) .31 .67 (.36) (.04) --
International Equity Trust
Six Months Ended
June 30, 1997* $12.09 $ .06(B) $1.59 $1.65 $ -- $ -- $ --
Year Ended Dec. 31,
1996 10.70 .02(B) 1.74 1.76 (.05) (.32) --
1995(E) 10.00 .04(B) .77 .81 (.04) -- (.07)
Emerging Markets Trust
Six Months Ended
June 30, 1997* $10.51 $ .04(C) $2.18 $2.22 $ -- $ -- $ --
Year Ended Dec. 31,
1996(F) 10.00 (.03)(C) .57 .54 (.03) -- --
</TABLE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
-----------------------------------------------------------------------
Net
Net Asset Investment Average Net Assets,
Value, Expenses Income (Loss) Portfolio Commission End of
Total End of Total to Average to Average Turnover Rate Period
Distributions Period Return Net Assets Net Assets Rate Paid(G) (in thousands)
- -----------------------------------------------------------------------------------------------------------------------------------
<S><C>
Global Government Trust
Six Months Ended
June 30, 1997* $ (.26) $10.13 (.27)%(H) 1.87%(I) 5.68%(I) 176%(I) $ -- $157,643
Years Ended Dec. 31,
1996 (.72) 10.41 8.22% 1.86% 5.80% 172% -- 161,549
1995 (1.16) 10.33 20.80% 1.81%(A) 5.72%(A) 169% -- 153,954
1994 (.59) 9.54 (1.40)% 1.34%(A) 5.71%(A) 127% -- 145,415
1993(D) (.40) 10.27 6.76%(H) .27%(A,I) 5.41%(A,I) 128%(I) -- 161,072
International Equity Trust
Six Months Ended
June 30, 1997* $ -- $13.74 13.65%(H) 2.19%(I) 1.06%(I) 45%(I) $.0109 $230,353
Year Ended Dec. 31,
1996 (.37) 12.09 16.49% 2.25%(B) .21%(B) 83% .0083 167,926
1995(E) (.11) 10.70 8.11%(H) 2.25%(B,I) .52%(B,I) 58%(I) -- 65,947
Emerging Markets Trust
Six Months Ended
June 30, 1997* $ -- $12.73 21.12%(H) 2.50%(C,I) .15%(C,I) 50%(I) $.0056 $ 62,395
Year Ended Dec. 31, 1996(F) (.03) 10.51 5.40%(H) 2.50%(C,I) (.68)%(C,I) 46%(I) .0061 21,206
</TABLE>
- ------------
(A) Net of fees waived and reimbursements made by the manager for expenses in
excess of voluntary expense limitations of 0.2% until September 30, 1993;
0.35% until December 31, 1993; 0.5% until January 31, 1994; 0.7% until
February 28, 1994; 0.9% until March 31, 1994; 1.1% until April 30, 1994;
1.3% until May 31, 1994; 1.5% until June 30, 1994; 1.7% until July 31, 1994;
and 1.9% indefinitely.
(B) Net of fees waived and/or expenses reimbursed pursuant to a voluntary
expense limitation of 2.25%.
(C) Net of fees waived and/or expenses reimbursed pursuant to a voluntary
expense limitation of 2.50%.
(D) For the period April 15,1993 (commencement of operations) to December 31,
1993.
(E) For the period February 17, 1995 (commencement of operations) to December
31, 1995.
(F) For the period May 28, 1996 (commencement of operations) to December 31,
1996.
(G) Pursuant to SEC regulations effective for fiscal years beginning after
September 1, 1995, this is the average commission rate paid on securities
purchased and sold by the Funds. The regulations for average commission
rates are not applicable to non-equity funds.
(H) Not annualized
(I) Annualized
* Unaudited
See notes to financial statements.
31
<PAGE>
Notes to Financial Statements
Legg Mason Global Trust, Inc.
(Amounts in Thousands) (Unaudited)
--------------------------------------------------------------------------
1. Significant Accounting Policies:
The Legg Mason Global Trust, Inc. ("Trust"), consisting of the Global
Government Trust ("Global Government"), the International Equity Trust
("International Equity"), and the Emerging Markets Trust ("Emerging
Markets") (each separately referred to as a "Fund" and collectively as the
"Funds"), is registered under the Investment Company Act of 1940, as
amended, as an open-end, diversified investment company.
Security Valuation
Each Fund's securities are valued on the basis of market quotations
or, lacking such quotations, at fair value as determined under the
guidance of the Board of Directors. Securities for which market quotations
are readily available are valued at the last sale price of the day for a
comparable position, or, in the absence of any such sales, the last
available bid price for a comparable position. Where a security is traded
on more than one market, which may include foreign markets, the securities
are generally valued on the market considered by each Fund's adviser to be
the primary market. Each Fund will value its foreign securities in U.S.
dollars on the basis of the then-prevailing exchange rates.
Most securities held by Global Government are valued on the basis of
valuations furnished by an independent service which utilizes both
dealer-supplied valuations and electronic data processing techniques which
take into account appropriate factors such as institutional-size trading
in similar groups of securities, yield, quality, coupon rate, maturity,
type of issue, trading characteristics and other data. Fixed income
securities with 60 days or less remaining to maturity are valued using the
amortized cost method, which approximates current market value.
Currency Transactions
The books and records of the Funds 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 are reflected as a component of such
gains or losses.
Investment Income and Distributions to Shareholders
Income and expenses are recorded on the accrual basis. Bond premiums
are amortized using the yield-to-maturity method for financial reporting
and tax purposes. Bond discounts, other than original issue, are not
amortized. Dividends from net investment income are declared and paid
monthly for Global Government, and are declared and paid annually for
International Equity and Emerging Markets. Dividends payable are recorded
on the ex-dividend date. At June 30, 1997, there were no dividends payable
for any of the Funds in the Trust.
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
June 30, 1997, receivables for securities sold and not yet delivered and
payables for securities purchased and not yet received for each of the
Funds were as follows:
Receivable for Payable for
Securities Sold Securities Purchased
---------------------------------------------------------------------
Global Government $14,590 $30,647
International Equity 286 1,296
Emerging Markets -- 302
32
<PAGE>
--------------------------------------------------------------------------
Options and Futures
Upon the purchase of a put option or a call option by a fund, the
premium paid is recorded as an investment, the value of which is
marked-to-market daily. When a purchased option expires, the fund will
realize a loss in the amount of the cost of the option. When a fund enters
into a closing sale transaction, the fund will realize a gain or loss
depending on whether the proceeds from the closing sale transaction are
greater or less than the cost of the option. When a fund exercises a put
option, it will realize a gain or loss from the sale of the underlying
security and the proceeds from such sale will be decreased by the premium
originally paid. When a fund exercises a call option, the cost of the
security which the fund purchases upon exercise will be increased by the
premium originally paid.
When a fund writes a call option or a put option, an amount equal to
the premium received by the fund is recorded as a liability, the value of
which is marked-to-market daily. When a written option expires, the fund
realizes a gain equal to the amount of the premium received. When a fund
enters into a closing purchase transaction, the fund realizes a gain (or
loss if the cost of the closing purchase transaction exceeds the premium
received when the option was sold) without regard to any unrealized gain
or loss on the underlying security, and the liability related to the
option is eliminated. When a written call option is exercised, the fund
realizes a gain or loss from the sale of the underlying security and the
proceeds from such sale are increased by the premium originally received.
When a written put option is exercised, the amount of the premium
originally received will reduce the cost of the security that the fund
purchased upon exercise.
Upon entering into a futures contract, the fund is required to
deposit with the broker an amount of cash or cash equivalents equal to a
certain percentage of the contract amount. This is known as the "initial
margin." Subsequent payments ("variation margin") are made or received by
the fund each day, depending on the daily fluctuation of the value of the
contract. The daily changes in contract value are recorded as unrealized
gains or losses and the fund recognizes a realized gain or loss when the
contract is closed. Futures contracts are valued daily at the settlement
price established by the board of trade or exchange on which they are
traded.
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 the 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.
Deferred Organizational Expense
Deferred organizational expenses of $128 for Global Government, $71
for International Equity, and $73 for Emerging Markets are being amortized
on a straight-line basis over 5 years beginning on the date each
respective fund began operations.
Federal Income Taxes
No provision for federal income or excise taxes is required since the
Funds intend to continue to qualify as regulated investment companies and
distribute all of their taxable income to their shareholders.
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.
33
<PAGE>
Notes to Financial Statements -- Continued
Legg Mason Global Trust, Inc.
(Amounts in Thousands)
--------------------------------------------------------------------------
2. Financial Instruments:
As part of its investment program, each Fund may utilize forward
currency exchange contracts and repurchase agreements. The nature and
risks of these financial instruments and the reasons for using them are
set forth more fully in the Trust's Prospectus and Statement of Additional
Information.
Emerging Markets
Each 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 and, with respect to Global
Government, by governments of emerging market countries. Future economic
or political developments could adversely affect the liquidity or value,
or both, of such securities.
Forward Currency Exchange Contracts
Forward foreign currency contracts are marked-to-market daily using
foreign currency exchange rates supplied by an independent pricing
service. The change in a contract's market value is recorded by a Fund as
an unrealized gain or loss. When the contract is closed or delivery is
taken, the Fund records a realized gain or loss equal to the difference
between the value of the contract at the time it was opened and the value
at the time it was closed.
The use of forward foreign currency contracts does not eliminate
fluctuations in the underlying prices of the Fund's securities, but it
does establish a rate of exchange that can be achieved in the future.
These forward foreign currency contracts involve market risk in excess of
amounts reflected in the Financial Statements. Although forward foreign
currency contracts used for hedging purposes limit the risk of loss due to
a decline in the value of the hedged currency, they also limit any
potential gain that might result should the value of the currency
increase. In addition, the Funds could be exposed to risks if the
counterparties to the contracts are unable to meet the terms of their
contracts. Each Fund's adviser will enter into forward foreign currency
contracts only with parties approved by the Board of Directors because
there is a risk of loss to the Funds if the counterparties do not complete
the transaction.
At June 30, 1997, open forward currency exchange contracts for Global
Government were as follows:
Contract to
Settlement --------------------------------------------- Unrealized
Date Receive Deliver Gain/(Loss)
- --------------------------------------------------------------------------------
7/31/97 DEM 16,000 JPY 1,070,560 $ (189)
7/31/97 DEM 12,750 GBP 4,445 (67)
7/31/97 DEM 22,427 ITL 22,000,000 (41)
8/29/97 DEM 16,941 USD 10,000 (244)
8/29/97 DEM 4,414 GBP 1,600 (118)
8/29/97 DEM 13,557 USD 8,000 (193)
8/29/97 JPY 4,100,000 DEM 60,344 1,333
8/29/97 USD 10,600 GBP 6,500 (205)
8/29/97 GBP 6,500 USD 10,607 198
8/29/97 USD 7,400 JPY 845,820 (44)
8/29/97 USD 6,074 AUD 8,000 24
8/29/97 DEM 5,986 ITL 5,900,000 (18)
------
$ 436
======
For the six months ended June 30, 1997, International Equity and
Emerging Markets had not entered into any forward currency contracts.
34
<PAGE>
--------------------------------------------------------------------------
3. Investment Transactions:
For the six months ended June 30, 1997, investment transactions
(excluding short-term investments) were as follows:
Proceeds
Purchases from Sales
------------------------------------------------------
Global Government $121,854 $139,228
International Equity 77,415 42,424
Emerging Markets 41,047 9,511
At June 30, 1997, 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)
-------------------------------------------------------------------------
Global Government $152,741 $ 5,152 $(5,090)
International Equity 193,125 41,587 (4,706)
Emerging Markets 54,085 10,440 (2,525)
Emerging Markets Trust has unused capital loss carryforwards for
federal income tax purposes of $11 which expires in December 2004.
4. Options and Futures:
As part of its investment program, Global Government may utilize
options and futures. The risk associated with purchasing options is
limited to the premium originally paid. Options written by a fund involve,
to varying degrees, risk of loss in excess of the option value reflected
in the Statement of Net Assets. The risk in writing a covered call option
is that a fund may forego the opportunity for profit if the market price
of the underlying security increases and the option is exercised. The risk
in writing a covered put option is that a fund may incur a loss if the
market price of the underlying security decreases and the option is
exercised. In addition, there is the risk a fund may not be able to enter
into a closing transaction because of an illiquid secondary market or, for
over-the-counter options, because of the counterparty's inability to
perform. There were no options written during the six months ended June
30, 1997.
The Funds enter into futures contracts as a hedge against anticipated
changes in interest rates. There are several risks in connection with the
use of futures contracts as a hedging device. Futures contracts involve,
to varying degrees, risk of loss in excess of amounts reflected in the
financial statements. The change in the value of futures contracts
primarily corresponds with the value of their underlying instruments,
which may not correlate with the change in the value of the hedged
instruments. In addition, there is the risk that a Fund may not be able to
enter into a closing transaction because of an illiquid secondary market.
There were no open futures contracts at June 30, 1997.
5. Transactions with Affiliates:
Each 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 Funds. Pursuant to their respective agreements,
the Manager provides the Funds with 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: Global
Government and International Equity, 0.75%; Emerging Markets, 1.00%.
The Manager has agreed to waive its fees to the extent each Fund's
expenses (exclusive of taxes, interest, brokerage and extraordinary
expenses) exceed during any month the following annual rates: 1.90% of
average net assets for Global Government; 2.25% for International Equity
and 2.50% for Emerging Markets. Fees in excess of these limits will be
waived indefinitely for Global Government and through May 1, 1998 for
35
<PAGE>
Notes to Financial Statements -- Continued
Legg Mason Global Trust, Inc.
(Amounts in Thousands)
--------------------------------------------------------------------------
5. Transactions with Affiliates -- Continued
International Equity and Emerging Markets. For the six months ended June
30, 1997 management fees of $107 were waived for Emerging Markets. No fees
were waived for Global Government or International Equity. At June 30,
1997 amounts due to the Manager were as follows: Global Government, $98,
International Equity, $138, and Emerging Markets, $32.
Western Asset Management Company ("Adviser"), a wholly owned
subsidiary of Legg Mason, Inc., and a corporate affiliate of the Manager
and Legg Mason, serves as investment adviser to Global Government. The
Adviser is responsible for the actual investment activity of the Fund, for
which the Manager pays a fee at an annual rate equal to 531/3% of the fee
received by it.
Batterymarch Financial Management, Inc. ("Batterymarch"), a wholly
owned subsidiary of Legg Mason, Inc., and a corporate affiliate of the
Manager and Legg Mason, serves as the adviser to International Equity and
Emerging Markets. Batterymarch is responsible for the actual investment
activity of these Funds. The Manager pays Batterymarch a fee for its
services at an annual rate equal to 66% of the fee received by the Manager
from International Equity and 75% of the fee received from Emerging
Markets.
Legg Mason, as distributor of the Funds, receives an annual
distribution fee of 0.50% for Global Government and 0.75% for
International Equity and Emerging Markets, and an annual service fee of
0.25% of each Fund's average daily net assets, calculated daily and
payable monthly. At June 30, 1997, distribution and service fees due to
the distributor were as follows:Global Government, $98, International
Equity, $183 and Emerging Markets, $47.
Legg Mason also has an agreement with the Funds' transfer agent to
assist with certain of its duties. For this assistance, Legg Mason was
paid the following amounts by the transfer agent for the six months ended
June 30, 1997: $15 for Global Government; $30 for International Equity;
and $8 for Emerging Markets.
6. Line of Credit:
The Funds, along with certain other Legg Mason Funds, participate in
a $75 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 June 30, 1997, the Funds had no borrowings under the line of
credit.
7. Fund Share Transactions:
At June 30, 1997, there were 1,000,000 shares authorized at $.001 par
value for all portfolios of the Trust. Share transactions were as follows:
<TABLE>
<CAPTION>
Reinvestment
Sold of Distributions Repurchased Net Change
----------------- ---------------- ----------------- ----------------
Shares Amount Shares Amount Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------------------------------------------
<S><C>
Global Government
Six Months Ended June 30, 1997 1,319 $ 13,392 350 $ 3,556 (1,612) $(16,336) 57 $ 612
Year Ended December 31, 1996 3,220 33,097 936 9,577 (3,551) (36,338) 605 6,336
International Equity
Six Months Ended June 30, 1997 5,494 69,067 -- -- (2,621) (32,959) 2,873 36,108
Year Ended December 31, 1996 8,861 102,294 404 4,782 (1,540) (18,196) 7,725 88,880
Emerging Markets
Six Months Ended June 30, 1997 3,016 35,371 -- -- (132) (1,526) 2,884 33,845
Period Ended December 31, 1996(+) 2,092 20,888 5 59 (79) (793) 2,018 20,154
</TABLE>
(+) For the period May 28, 1996 (commencement of operations) to
December 31, 1996.
36
<PAGE>
Legg Mason Family of Funds
Equity Funds
LEGG MASON BALANCED TRUST
Growth and Income--An equity mutual fund which seeks long-term capital
appreciation and current income in order to achieve an attractive total
investment return consistent with reasonable risk.
LEGG MASON TOTAL RETURN TRUST
Growth and Income--An equity mutual fund with investment objectives of capital
appreciation and current income.
LEGG MASON AMERICAN LEADING COMPANIES TRUST
Growth--A large capitalization equity mutual fund which seeks long-term capital
appreciation and current income consistent with prudent investment management.
LEGG MASON VALUE TRUST
Growth--An equity mutual fund which seeks long-term growth of capital using the
"Value Approach" to investing.
LEGG MASON SPECIAL INVESTMENT TRUST
Aggressive Growth--An equity mutual fund which seeks capital appreciation.
It invests principally in securities of companies that are involved in
restructurings or other special situations, or are out of favor with, or not
closely followed by the market.
Global Funds*
LEGG MASON EMERGING MARKETS TRUST
Aggressive Growth--A mutual fund which is designed for investors seeking
long-term growth possibilities available in emerging markets.
LEGG MASON INTERNATIONAL EQUITY TRUST
Aggressive Growth--A diversified, professionally managed portfolio seeking
maximum long-term total return by investing primarily in common stocks of
companies located outside the United States.
LEGG MASON GLOBAL GOVERNMENT TRUST
Growth and Income--A global bond fund which seeks to provide a competitive total
return by investing primarily in a global portfolio of high quality debt
securities of U.S. and foreign governments, their agencies and
instrumentalities, denominated in various currencies.
Taxable Bond Funds
LEGG MASON U.S. GOVERNMENT INTERMEDIATE-TERM PORTFOLIO
Conservative Income--A mutual fund which seeks to achieve high current income
consistent with prudent investment risk and liquidity needs.
LEGG MASON INVESTMENT GRADE INCOME PORTFOLIO
Income--A mutual fund which seeks to provide investors with a high level of
current income through a diversified portfolio of debt instruments.
LEGG MASON HIGH YIELD PORTFOLIO
Growth and Income--A fund which seeks to provide high current income, and as a
secondary objective, seeks capital appreciation. Under normal circumstances, the
Fund will invest a majority of its total assets in high yield fixed income
securities commonly known as "junk" bonds. The Fund may invest up to 25% of
total assets in foreign securities.
Tax-Free Bond Funds(+)
LEGG MASON TAX-FREE
INTERMEDIATE-TERM INCOME TRUST
Tax-Free Income--A fund which seeks a high level of current income exempt from
federal income tax consistent with prudent investment risk.
LEGG MASON MARYLAND TAX-FREE INCOME TRUST
Tax-Free Income--A fund whose objective is a high level of current income exempt
from federal, Maryland state, and local income taxes.
LEGG MASON PENNSYLVANIA TAX-FREE INCOME TRUST
Tax-Free Income--A fund which seeks a high level of current income exempt from
federal income tax and Pennsylvania personal income tax.
Money Market Funds(++)
LEGG MASON U.S. GOVERNMENT MONEY MARKET PORTFOLIO
A professionally managed portfolio seeking high current income consistent with
liquidity and conservation of principal.
LEGG MASON CASH RESERVE TRUST
A diversified management investment company investing in money market
instruments to achieve stability of principal and current income consistent with
stability of principal.
LEGG MASON TAX EXEMPT TRUST
A money market fund seeking to produce high current income exempt from federal
income tax, to preserve capital and to maintain liquidity.
(*) Investment in foreign securities involves increased risks, such as currency
rate fluctuations, foreign taxation and political changes.
(+) Income produced from the tax-free funds may be subject to state and local
taxes. Long-term capital gain distributions generally are taxable. A
portion of each Fund's dividends may be subject to the federal alternative
minimum tax.
(++) An investment in any of these Funds is neither insured nor guaranteed by
the U.S. Government and there can be no guarantee that these Funds will
maintain a stable $1 share price.
For a prospectus containing more complete information, including charges and
expenses on any of the Legg Mason funds, call 1-800-577-8589. Please read the
prospectus carefully before investing or sending money.
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