To Our Shareholders,
We are pleased to provide you with the semi-annual report for the Legg Mason
Global Trust, comprised of the Global Government Trust, International Equity
Trust and Emerging Markets Trust for the six months ended June 30, 1999.
Beginning on the next page, the portfolio managers responsible for the Global
Trust portfolios discuss results for the first half of 1999 and the investment
outlook. The Funds' total returns in various periods since their inceptions are
shown later in this report. 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.
During 1998 and into 1999, focus on the Year 2000 issue increased
significantly. As you know, the Year 2000 issue is a computer programming
problem that affects the ability of computers to correctly process dates of
January 1, 2000, and beyond. The Funds' Year 2000 project is well underway, and
is designed to ensure that the Year 2000 date change will have no adverse impact
on our ability to service our shareholders. The Funds are committed to taking
those steps necessary to protect our investors, including efforts to determine
that the Year 2000 problem will not affect such vital service functions as
shareholder transaction processing and recordkeeping. In addition, we are
continuously monitoring the Year 2000 efforts of our vendors, and will perform
tests with our critical vendors throughout 1999. Although the Funds are taking
steps to ensure that all of their systems will function properly before, during,
and after the Year 2000, the Funds could be adversely affected by
computer-related problems associated with the Year 2000. Contingency plans are
in place to ensure that functions critical to the Funds' operations will
continue without interruption. We are on target to complete this important
project and look forward to continuing extensive testing (including
industry-wide testing) with our industry peers, regulators and vendors
throughout 1999.
For several operational reasons, we have changed the ordinary income dividend
and capital gain distribution payment schedules for these funds. Our new
schedule is to make capital gain distributions, if any, in June and December. As
a result, no dividends or distributions were paid by Emerging Markets. Global
Government paid a short-term capital gain distribution of $0.08 per share to
shareholders of record on June 16, 1999. International Equity paid an ordinary
income dividend of $0.05 per share to shareholders of record on June 2, 1999.
We hope you will consider using the 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 6, 1999
<PAGE>
Portfolio Managers' Comments
Global Government Trust
Market Overview
Year-to-date bond market performance for the various global fixed income
sectors looks like a mirror image of 1998 results. While the sovereign bond
sector (U.S. and globally) was the top performer of 1998, and emerging market
debt was the worst performer, so far in 1999 the reverse is true. Emerging
market debt and high yield bonds, the riskier sectors that suffered sharply in
the currency and liquidity crises of 1998, have had the strongest performance in
the global fixed income market through the first half of the year.
As fears of an overheating economy resurfaced in the U.S. late in the first
quarter, global markets suffered in anticipation of the Fed's reversal of the
emergency monetary policy measures exercised last year. Indeed, the Fed did
raise target short-term rates in the U.S. at the end of the half, but tempered
the move with comments which implied that it was unlikely that multiple
additional hikes, if any, would be necessary.
Bond markets in Europe sold off sharply despite a 0.5% repo cut and economic
releases painting a picture of a mild uptick in activity, but with no
inflationary consequences. This was partly due to concerns over political
leaders, indifference to the weakness of the Euro currency, and expectations
that fiscal slippage is likely to occur in the future.
Early in the year, Brazil became the latest emerging economy to turn to the
International Monetary Fund, and subsequently devalued their currency. Later in
the second quarter, indiscriminate political commentary in Argentina caused a
scare. Asia, however, has recovered sharply, the primary cause of the sector's
sharp rebound.
Japan remains an enigma, with anecdotal evidence and monthly economic reports
pointing to a sluggish economy despite the first quarter GDP posting a
surprisingly strong 7.9% annualized growth, with strength in both the private
and public sector components. Japan outperformed all other markets in the first
half, underpinned by continued repatriation of capital.
The dollar remained strong versus all major currencies as growth remains
steady and equity valuations high. Signs of life in the Japanese economy lead to
a strengthening yen.
Fund Performance
Our first half investment strategies produced mixed results. Globally,
sovereign bonds were poor performers over the period, in aggregate posting
negative returns.
The Fund's small exposure to emerging market debt contributed to performance
as these securities, which began a recovery at the end of the first quarter,
became the best performing sector of the global fixed income market over the
second quarter.
Positive strategies included a small allocation to Greek
securities--convergence trade. Issue selection in the corporate sector also
added to performance.
2
<PAGE>
We continued to be heavily underweighted in Japanese government bonds, which
was detrimental to performance since, although yields retracted some of the
spread narrowing that occurred in the first quarter, Japanese bonds still
outperformed other major bond markets.
Currency
We adopted an overweight duration position in longer-dated European
securities prior to reversing this move midway through the quarter as the
U.S./Europe spread widened and stronger European growth became a real
possibility.
The Fund posted a negative return of 8.65% for the six months ended June 30,
1999. While the strong performance of the emerging market sector and exposure to
the Japanese market helped to mitigate the losses somewhat, the Fund was
positioned to benefit from falling yields. Instead, while global inflation
remained nonexistent, market focus was on growth without regard to the lack of
accompanying inflation. The return for the benchmark Salomon Brothers World
Government Bond Index was -7.17%.
Market Commentary and Outlook
Inflation and Fed tightening hysteria have risen this year even as the dollar
continues its climb to a ten-year high against the vast majority of the world's
currencies. U.S inflation is likely to remain very low, with deflation the more
relevant risk, and the U.S. economy is likely to slow gradually. The Fed is
likely to remain on hold near term, and to eventually resume a policy of easings
as the economy slows or deflation risks mount.
The great difficulty we face today is balancing our belief that the inflation
fundamentals remain very bullish for bonds with the recognition that healthy
economic growth fundamentals have become antagonistic. The near-term direction
of rates will depend on whether the U.S. economy grows by more than the Federal
Reserve feels comfortable with, but the long-term direction should be dictated
by the continuing evidence of tight money and low inflation.
In the Eurozone, supportive bond fundamentals such as low inflation and
sub-trend growth will continue to be undermined by Euro weakness. We anticipate
peripheral European bond markets to resume their convergence to core markets.
Looking forward, it is unlikely that the Euro will continue to experience the
depreciation endured so far this year, especially as European economies are
exhibiting signs of recovery and exporters are now in a much more advantageous
position to gain market share.
Technically, the U.K. only narrowly avoided recession, with first quarter GDP
registering a rise of 0.1% over the previous quarter. The trend is for an
improvement in both the external and domestic environments. Although base rates
declined by 0.5% in the second quarter to 5.0%, which is low by historical
standards, we expect the Bank of England to ease monetary policy as inflation
falls to the lower end of the target range.
3
<PAGE>
Portfolio Managers' Comments -- Continued
Global Government Trust -- Continued
The Japanese economy has stabilized, but with low capacity rates and
inventory overhangs, the likelihood for growth remains flat throughout the year
and the risk is skewed toward another bout of weakness. As the Bank of Japan has
frequently stated, until deflationary pressures abate, the zero interest rate
policy currently in place will be maintained.
Strategy
Consistent with this view, we anticipate remaining overweight duration and
barbelled term structure exposure in the dollar bloc countries in anticipation
of a further decline in yields. In Europe, very attractive fundamentals are
overwhelmed by the weakness of the Euro and by market fears of a relaxation of
tight fiscal discipline. We will therefore remain underweight in terms of
duration in preference to the dollar bloc. We will target an overweight position
in Sweden, Denmark and Greece in anticipation of the resumption of convergence
trends.
We will remain underweight in Japan while better value exists in other
sectors. Although the front end will be anchored by extremely low rates,
increased bond supply and economic recovery concerns will conspire to pressure
longer-dated bond yields higher.
In terms of currency exposure, we plan to remain neutral until strong
evidence of a change in growth patterns emerges with opportunistic exposure to
noncore European currencies.
Fundamentals point to a likely disinversion of the U.K. yield curve, with the
long end benefiting from strong institutional demand and low supply. For this
reason as well as continued declining inflation, we will target a barbelled
exposure in the U.K. as short bonds now anticipate Bank of England tightening.
Western Asset Management Company
August 9, 1999
4
<PAGE>
Portfolio Managers' Comments
International Equity Trust
Performance
The year-to-date return for the International Equity Trust was +1.2%,
compared with +4.0% for the Morgan Stanley Capital International Europe,
Australia and Far East ("EAFE") Index.
EAFE index returns showed a divergence between the Pacific region which
rallied, up 21.9% for the year to date, and Europe which declined 2.3% for the
period. Most of the Fund's performance shortfall relative to the index was due
to the underweighted position in Japan from the beginning of the period. The
Japanese market outperformed the index, up 20.8% for the year to date.
The Fund began the year with a weighting of approximately 8% in Japan
compared with 21% for the index because we found that on most measures of value,
earnings growth, cash flow and earnings revisions, Japanese stocks were
overpriced compared with other international opportunities. During the first
quarter, the effect of government stimulation in Japan began hitting the
economic numbers, upgrading the economy from very negative to less negative, but
boosting investor confidence nevertheless. We bought selectively in Japan as we
expected the effect of government stimulation to wear off.
In the second quarter, a sea change in expectations took place in Japan, as
outlined in the Market Overview which follows. We accelerated building up the
Fund's holdings based on improving factors in our country model, particularly
earnings expectations revisions, which have now turned positive. By the end of
the second quarter, the Fund's weight in Japan was 20.2%, compared with 24.1%
for the index.
In contrast, at the beginning of the year we found valuations in continental
European countries compelling. Stock selection in a number of markets was
positive for the Fund, including Italy, Sweden, Switzerland, Austria and
Belgium. While we continued to underweight the U.K., we believe the Fund had
positive stock selection in this market for the year to date.
The Fund's exposure to emerging markets, although minimal, added
value--including Turkey, Korea, Israel and Mexico, all of which saw strong
returns for the six months. In addition, there was a small positive return for
our active hedging program.
Market Overview
Japan has now seen a convergence of good news. The government released
surprisingly positive GDP numbers, the pace of restructuring picked up sharply
at the corporate level, the recovery in Asia was confirmed, and China
aggressively moved to reflate.
The first quarter GDP figure was probably slightly inflated for political
reasons but the "feel good" factor it created had a substantial impact.
Sentiment improved, driven by a consumption pick-up in metropolitan Tokyo,
public sector spending filtering down to the support industries, and a better
export outlook.
The restructuring announced by Sony at the end of the first quarter set the
pace for corporate Japan to announce plans to reduce the cost base by reducing
head counts, disposals, mergers and outsourcing, although it will take time for
the positive effects to flow through.
5
<PAGE>
Portfolio Managers' Comments -- Continued
International Equity Trust -- Continued
There is still a caveat on Japan: the market remains expensive and the state
of government finances remains fragile. Debt as a percent of nominal GDP exceeds
120% with a substantial portion of the population now moving towards retirement,
which will hit on both sides--lower tax income and a heavy strain on the social
welfare budget.
In Europe, EMU was initiated at the beginning of the year with much fanfare
and the promise of a "New Era." More recently, inherent contradictions in the
EMU arrangement came to light, as it appears France and Italy will not meet
fiscal targets for the coming year as specified by the Maastricht criteria. The
Euro, which started its life full of promise at 1.17 to the U.S. dollar, appears
to be marching inexorably towards par value.
The U.K.'s entry into the EMU appears to be at least two years away.
Conflicting political views in the U.K. and the relative overvaluation of the
currency make it unlikely that sterling will enter the EMU early. Although
inflation remains the primary focus of rate-setting policy, sterling strength
should help depress inflation. Further rate cuts are possible with the continued
reduction in inflation. This would benefit the market, which is the only major
European market to have an inverted yield curve.
Strategy
We emphasize stock selection, with a secondary focus on country and regional
selection. Our disciplined investment process remains oriented towards long-term
measures of value and growth. Our stock selection process ranks stocks daily
across earnings growth, cash flow, expectations, traditional value and technical
measures. We customize stock selection by market or region, based on which
attributes we feel are most predictive of excess return. We maintain a balance
among size, sector and country for the Fund within Japan, continental Europe and
the U.K. through the combination of sector scoring and portfolio construction
rules.
For Japan, the combination of a further supplementary budget and the recovery
in Asia should come together to show positive second half GDP growth, which
should lead to earnings expectations being further upgraded. The country rating
for Japan remains positive as earnings growth expectations are accelerating.
Our research indicates that Continental Europe currently represents fair
investment value. While the region appears cheap on earnings measures, its
attractiveness is offset by the sluggishness of economic growth, as represented
by our estimate revision measures. We decreased the Fund's exposure to smaller
stocks in favor of the larger "blue chip" names. We currently have a less
favorable ranking for the U.K. market, due to a combination of a neutral value,
growth and technical ratings.
Looking ahead, we believe the Fund is well positioned, with better value than
the benchmark and better growth potential. The Fund has a forward P/E of 15.9x
compared with 22.8x for the index, a 2-year growth rate of 18.9% compared with
16.9%, and a growth-to-P/E ratio of 1.2x compared with 0.7x for the index. We
feel that the Fund is well diversified across countries and industries.
Batterymarch Financial Management, Inc.
August 5, 1999
6
<PAGE>
Portfolio Managers' Comments
Emerging Markets Trust
Performance
The Emerging Markets Trust year-to-date return was 49.6%,(1) compared with
39.9% for the Morgan Stanley Capital International Emerging Markets Free ("EMF")
Index. The Lipper average for emerging markets funds for the period was 34.6%.
Over the longer term, the Fund's average annual total return since inception in
May 28, 1996, to June 30, 1999, was 1.4%, compared with -3.7% for the EMF Index.
The Fund's excellent performance for the six-month period was due to positive
stock selection and to country and regional allocations. Exposure to Asia was
the driving force behind the portfolio's performance as this region
significantly outperformed the EMF Index, up 55.4% for the period. The Fund
outperformed through positive stock selection throughout the region, including
India, Thailand, Hong Kong, China, Korea, Taiwan, and Malaysia. In addition, the
Fund's overweighted positions in China and Malaysia added value.
In Latin America, the Fund benefited from positions in Brazil and Mexico, as
well as the underweighting in the smaller markets. The region was up 31.0%, led
by Mexico, up 52.3% for the period, and Chile, up 28.7%.
The underweight in the Europe, Middle East, Africa region also benefited the
Fund as the return for this region lagged the EMFIndex, up 29.0%. Stock
selection in South Africa and Turkey was positive. Russia was the best
performing market for the MSCI EMF Index in the period, up 133.7% after having
been sold down to unsustainably low levels.
Market Commentary
Expectations for economic and corporate earnings growth in Latin America
bottomed during the second quarter, with Brazil and Mexico both announcing
better-than-expected numbers. Valuations in Latin America remain at substantial
discounts to those in other emerging market regions. We will continue to focus
on the larger markets and the more liquid stocks.
The increase in U.S. interest rates and a return to a neutral bias was well
received by Latin markets and may signal a continued favorable environment for
equities. If the tightening is gradual, Latin markets should continue to perform
well, although momentum will have to come from continued signs of economic
improvement and expectations for earnings growth, not only from interest rate
declines and multiple expansion.
We continue to favor Brazilian companies due to extremely low valuations,
expectations for a stronger-than-anticipated economy in the wake of the first
quarter's devaluation, and earnings growth based on both economic strength and
efficiency improvements. Continued support for equity prices should result from
declining interest rates and increased funds flow into equities from abroad and
from domestic fixed income investments.
In Asia, the consensus forecast had expected the recession to have a
protracted U-shape; it became clear that a V-shape recovery was actually
underway. The markets of Asia that were least affected by
- --------------
(1) Excluding the 2% redemption fee assessed on shares redeemed within one year
of purchase.
7
<PAGE>
Portfolio Managers' Comments -- Continued
Emerging Markets Trust -- Continued
the crisis--Taiwan, the Philippines and Hong Kong -- were the laggard markets as
investors rushed to gain exposure to the recovery potential of the "crisis
economies."
Liquidity is abundant throughout the region as interest rates have fallen to
record low levels. In China, deflation had become deeply rooted as the
government struggled to reform its state-owned enterprises. The government
attempted to reflate a number of times in the past year, but the Asian crisis
hindered its effectiveness; in recent weeks the size and scope of their efforts
dramatically increased, including interest rate cuts. Stock markets in China
reacted very positively.
While Asian markets have been strong, there is the opportunity for further
re-rating as earnings growth comes in stronger than expected. The leadership in
Asian markets in the second half of 1999 is likely to move away from the
interest-sensitive sectors into those sectors experiencing accelerated profit
growth potential. The Fund's focus will be on the domestic consumption plays.
We continue to look for opportunities throughout the Europe, Middle East and
Africa regions. An example is Turkey, where the passage of key reforms in
banking and now social security, together with a low wage increase for the
second half of 1999, suggests that this government is capable of introducing
tough measures to tackle key issues in line with International Monetary Fund
recommendations. In addition, the outlook for Poland and Hungary appears
positive on the resumption of Western European growth.
Strategy
Our investment strategy is to seek well-managed, high quality companies which
are expected to participate in the eventual 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).
Emerging markets continue to offer attractive valuations and are
under-represented in institutional portfolios. Concerns about rising U.S.
short-term interest rates may increase volatility and risk aversion in emerging
markets. Latin America is more vulnerable than Asia to the U.S. environment due
to higher capital needs, proximity and trade links, particularly for Mexico.
Furthermore, an important leg of the bull case for Latin America is continued
domestic rate reductions, especially in Brazil, which become more difficult in
the context of rising U.S. rates.
We feel the Fund is well diversified across industry sectors and invested in
26 markets. At the end of June, the most overweighted markets relative to the
benchmark were Malaysia and China; the most underweighted were Taiwan and South
Africa.
Looking ahead, we believe the Fund has a forward P/E of 10.8x compared with
14.2x for the benchmark. The emerging markets index has a growth-to-P/E ratio of
1.6x, which is very attractive compared with other investment alternatives. The
Fund's growth-to P/E ratio is even more attractive, at 2.6x.
Batterymarch Financial Management, Inc.
August 5, 1999
8
<PAGE>
Performance Information
Legg Mason Global Trust, Inc.
Total Return for One and Five Years and Life of Funds, as of June 30, 1999
The returns shown are based on historical results and are not intended to
indicate future performance. Total return measures investment performance in
terms of appreciation or depreciation in a Fund's net asset value per share,
plus dividends and any capital gain distributions. It assumes that dividends
and distributions were reinvested at the time they were paid. 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 that they differ from actual year-to-year
results. No adjustment has been made for any income taxes payable by
shareholders.
The International Equity Trust has two classes of shares: Primary Class and
Navigator Class. Information about the Navigator Class, offered only to
certain institutional investors, is contained in a separate report to its
shareholders.
The Funds' total returns as of June 30, 1999, were as follows:
Global International Emerging
Government Equity Markets
Trust(A) Trust(B) Trust(C,D)
------------------------------------------------------------------------------
Average Annual Total Return
One Year -0.07% -7.03% +24.82%
Five Years +5.78 N/A N/A
Life of Fund +5.30 +8.13 +1.44
Cumulative Total Return
One Year -0.07% -7.03% +24.82%
Five Years +32.45 N/A N/A
Life of Fund +37.80 +40.69 +4.51
------------------------------------------------------------------------------
(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 12 months of purchase.
9
<PAGE>
Industry Diversification
Legg Mason Global Trust, Inc.
June 30, 1999 (Unaudited)
International Equity Trust
% of Net
Assets Value
- ----------------------------------------------------
(000)
Aerospace 0.8% $ 2,097
Agriculture/Food 1.0 2,466
Air Transport 1.5 3,817
Aluminum 0.2 407
Apparel/Textiles 0.5 1,341
Banks 12.5 31,660
Business Machines 0.9 2,194
Chemicals 3.6 9,168
Construction 4.4 11,092
Consumer Durables N.M. 106
Containers 1.2 3,059
Cosmetics 0.6 1,573
Drugs/Medicine 3.7 9,308
Electric Utilities 1.6 4,147
Electronics 8.9 22,699
Entertainment and Leisure 0.8 2,014
Finance 10.7 27,135
Food, Beverage and Tobacco 2.5 6,271
Forest Products 0.4 1,043
Gas Utilities 1.8 4,651
Insurance 5.2 13,106
Iron and Steel 0.4 955
Miscellaneous 0.6 1,499
Motor Vehicles 4.8 12,282
Non-Ferrous Metals 2.3 5,655
Oil Distribution 5.7 14,521
Paper 1.2 3,033
Photo/Optical 0.3 783
Producer Goods 1.6 4,083
Publishing 1.3 3,220
Railroads/Transit 1.6 4,131
Real Estate 1.2 3,139
Retail (Non-Food) 1.1 2,812
Services 2.2 5,643
Telecommunications 7.6 19,228
Tire and Rubber 1.3 3,187
Trucking/Freight 0.7 1,878
Short-term Investments 0.7 1,794
----- --------
Total Investment Portfolio 97.4 247,197
Other Assets Less Liabilities 2.6 6,547
----- --------
NET ASSETS 100.0% $253,744
===== ========
N.M. -- Not meaningful.
Emerging Markets Trust
% of Net
Assets Value
- ----------------------------------------------------
(000)
Aerospace 1.1% $ 810
Agriculture/Food 0.1 59
Air Transport 0.7 518
Apparel/Textiles 0.6 439
Banks 9.3 6,887
Business Machines 6.8 5,014
Chemicals 2.1 1,531
Coal and Uranium 1.8 1,372
Construction 2.4 1,774
Consumer Durables 1.8 1,344
Domestic Oil Reserves 2.4 1,783
Drugs/Medicine 1.6 1,156
Electric Utilities 4.0 2,942
Electronics 3.2 2,360
Entertainment and Leisure 0.5 407
Finance 7.2 5,369
Food, Beverage and Tobacco 2.6 1,948
Forest Products 0.6 484
Gas Utilities 4.2 3,079
Hotel/Restaurant 0.4 326
Insurance 3.9 2,873
Iron and Steel 2.5 1,841
Media 2.4 1,761
Miscellaneous 3.4 2,511
Motor Vehicles 6.2 4,596
Non-Ferrous Metals 0.3 262
Real Estate 0.4 307
Retail (Non-Food) 1.4 1,057
Soap/Housewares 0.7 492
Telecommunications 18.6 13,771
Water Transport 0.2 125
Short-Term Investments 5.1 3,763
----- -------
Total Investment Portfolio 98.5 72,961
Other Assets Less Liabilities 1.5 1,099
----- -------
NET ASSETS 100.0% $74,060
===== =======
10
<PAGE>
Statement of Net Assets
Legg Mason Global Trust, Inc.
June 30, 1999 (Unaudited)
(Amounts in Thousands)
Global Government Trust
<TABLE>
<CAPTION>
Maturity
Rate Date Currency Par Value
---------------------------------------------------------------------------------------------------------------------
<S><C>
LONG-TERM DEBT SECURITIES -- 96.7%
Australian Dollar -- 5.2%
Commonwealth of Australia 7.50% 9/15/09 AUD 7,150 $ 5,152
-------
British Sterling -- 8.8%
Luxfer Holdings Plc 10.125% 5/1/09 GBP 300 468(A)
Telewest Communications PLC 0% 4/15/09 450 459(A,B)
United Kingdom Treasury Stock 5% 6/7/04 3,300 5,135
United Kingdom Treasury Stock 9% 10/13/08 600 1,198
Welcome Break Financial PLC 8.284% 9/1/17 800 1,478
-------
8,738
-------
Danish Krone -- 10.9%
Kingdom of Denmark 6% 11/15/02 DKK 15,000 2,209
Kingdom of Denmark 6% 11/15/09 45,700 6,875
Nykredit 6% 10/1/29 8,791 1,162
Unikredit Realkredit 6% 10/1/29 3,881 513
-------
10,759
-------
Euro -- 17.5%
Germany -- 10.6%
Deutsche Bundesobligation 5.125% 11/21/00 EUR 2,965 3,142
Deutsche Bundesrepublik 4.75% 7/4/08 7,000 7,330
-------
10,472
-------
Great Britain -- 0.7%
Colt Telecom Group 7.625% 7/31/08 750 394
Esprit Telecom Group plc 11.50% 12/15/07 600 334
-------
728
-------
Italy -- 2.0%
Buoni del Tesoro Poliennali 4.75% 5/1/03 1,919 2,040
-------
Luxemburg -- 0.6%
Geberit International SA 10.125% 4/15/07 1,000 585
-------
Netherlands -- 0.6%
Netia Holdings, B.V. 11% 11/1/07 1,650 539(A,B)
-------
United States -- 3.0%
American Standard Inc. 7.125% 6/1/06 800 824
Huntsman ICI Chemicals LLC 10.125% 7/1/09 1,100 1,141(A)
Tokheim Corporation 11.375% 8/1/08 500 481(A)
Viatel Incorporated 11.50% 3/15/09 500 536
-------
2,982
-------
17,346
-------
</TABLE>
11
<PAGE>
Statement of Net Assets -- Continued
Legg Mason Global Trust, Inc.
Global Government Trust -- Continued
<TABLE>
<CAPTION>
Maturity
Rate Date Currency Par Value
---------------------------------------------------------------------------------------------------------------------
<S><C>
Greek Drachma -- 5.3%
Hellenic Republic 8.60% 3/26/08 GRD 1,440,000 $ 5,260
-------
Hungarian Forint -- 1.2%
Government of Hungary 16% 4/12/00 HUF 274,000 1,141
-------
New Zealand Dollar -- 2.6%
New Zealand Government 10% 3/15/02 NZD 4,400 2,581
-------
South African Rand -- 1.5%
Republic of South Africa 13% 8/31/10 ZAR 10,000 1,463
-------
Swedish Krona -- 3.0%
Statens Bostadsfinansier 5.50% 10/15/03 SEK 25,000 2,983
-------
Turkish Lira -- 1.1%
Republic Of Turkey 0% 2/9/00 TRL 730,000,000 1,084(C)
-------
United States Dollar -- 39.6%
Asset-Backed Security -- 0.5%
Contimortgage Home Equity Loan Trust 6.42% 4/25/14 USD 540 539
-------
Corporate Bonds and Notes -- 6.1%
American Axle & Manufacturing
Holdings, Inc. 9.75% 3/1/09 10 10(A)
American Standard Inc. 8.25% 6/1/09 250 249
IBJ Preferred Capital Corp. LLC 8.79% 12/29/49 500 417(A,D)
Interamericas Communications 14% 10/27/07 500 335
J. L. French Automotive Casting 11.50% 6/1/09 100 102(A)
Lyondell Chemical Company 9.625% 5/1/07 250 256(A)
NEXTLINK Communications
Incorporated 10.75% 6/1/09 250 255
NTL Incorporated 10.75% 4/1/08 500 528(B,D)
Petroleos Mexicanos 8.85% 9/15/07 2,370 2,133(A,D)
Petroleos Mexicanos 9.50% 9/15/27 470 400(A,D)
Resolution Funding Corporation 0% 10/15/19 3,200 835(C)
SB Treasury Company LLC 9.40% 12/29/49 500 491(A,D)
-------
6,011
-------
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Maturity
Rate Date Currency Par Value
---------------------------------------------------------------------------------------------------------------------
<S><C>
U. S. Government and Agency Obligations -- 23.3%
Fannie Mae 6.50% 7/1/29 USD 2,400 $ 2,315(E)
United States Treasury Bonds 6.375% 8/15/27 7,110 7,286
United States Treasury Bonds 3.625% 4/15/28 514 485(F)
United States Treasury Bonds 5.25% 2/15/29 7,640 6,864
United States Treasury Notes 5.75% 4/30/03 3,900 3,907
United States Treasury Notes 3.625% 1/15/08 2,266 2,201(F)
-------
23,058
-------
Foreign Governments -- 9.7%
Federal Republic of Brazil 11.625% 4/15/04 540 502
Kingdom of Morocco 6.063% 1/1/09 1,836 1,469(D)
Republic of Argentina 11.75% 4/7/09 2,560 2,304(D)
Republic of Panama 9.375% 4/1/29 350 329(D)
Republic of South Korea 8.875% 4/15/08 1,000 1,049(D)
State of Qatar 9.50% 5/21/09 1,000 1,012(A,D)
United Mexican States 10.375% 2/17/09 700 707(D)
United Mexican States 11.50% 5/15/26 1,590 1,742(D)
United Mexican States 11.50% 5/15/26 230 251(D)
Vnesheconombank 6.063% 12/15/15 25 4(D,G)
Vnesheconombank 6.063% 12/15/20 1,500 184(D,G)
-------
9,553
-------
Total Long-Term Debt Securities (Identified Cost-- $101,157) 95,668
---------------------------------------------------------------------------------------------------------------------
Warrants(H) -- N.M.
United States Dollar -- N.M.
Republic of Argentina 1 wt 1
-------
Total Warrants (Identified Cost-- $23) 1
---------------------------------------------------------------------------------------------------------------------
Short-Term Investments -- 9.0%
Foreign Currency Options -- 0.2%
Danish Krone -- N.M.
Denmark Government Bond Put, July 99,
strike price DKK 106.67 22,850(I) 32
-------
Euro -- N.M.
Euro Call/Dollar Put, July 99,
strike price $1.06 50,000(I) 16
Euro Call/Sterling Put, December 99,
strike price GBP .6625 7,000(I) 19
-------
35
-------
</TABLE>
13
<PAGE>
Statement of Net Assets -- Continued
Legg Mason Global Trust, Inc.
Global Government Trust -- Continued
<TABLE>
<CAPTION>
Currency Par Value
---------------------------------------------------------------------------------------------------------------------
<S><C>
Short-Term Investments -- Continued
Greek Drachma -- 0.1%
Greece Federal Republic Bond Put, July 99,
strike price GRD 117.15 970,000(I) $ 71
--------
Japanese Yen -- 0.1%
Japan Government Bond Call,
August 99, strike price JPY 102.27 630,000(I) 24
Yen Call/Euro Put, September 99,
strike price JPY120 50,000(I) 39
Yen Call/Sterling Put, December 99,
strike price JPY168 14,000(I) 12
--------
75
--------
Repurchase Agreement -- 8.8%
Merrill Lynch Government Securities, Inc.
4.95%, dated 6/30/99, to be repurchased
at $8,674 on 7/1/99 (Collateral: $8,675
Fannie Mae medium-term notes,
7.79%, due 9/27/06, value $9,023) USD 8,673 8,673
--------
Total Short-Term Investments (Identified Cost -- $9,012) 8,886
---------------------------------------------------------------------------------------------------------------------
Total Investments -- 105.7% (Identified Cost -- $110,192) 104,555
Other assets less liabilities -- (5.7)% (5,683)
--------
NET ASSETS CONSISTING OF:
Accumulated paid-in capital applicable to
10,941 shares outstanding $112,265
Overdistributions of net investment income (1,640)
Accumulated net realized loss on investments and currency (5,793)
Unrealized depreciation of investments and currency transactions (5,960)
--------
NET ASSETS -- 100.0% $ 98,872
========
NET ASSET VALUE PER SHARE $9.04
=====
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Expiration Actual Appreciation/
Date Contracts (Depreciation)
---------------------------------------------------------------------------------------------------------------------
<S><C>
Options Written(J)
U.S. Treasury Bond Futures Call, Aug 99, strike price $117.00 July 99 8 N.M.
U.S. Treasury Note Futures Call, Sept 99, strike price $108.50 August 99 4 $ (2)
U.S. Treasury Note Futures Call, Sept 99, strike price $110.00 August 99 5 N.M.
U.S. Treasury Bond Futures Call, Sept 99, strike price $118.00 August 99 7 2
U.S. Treasury Bond Futures Call, Dec 99, strike price $116.00 November 99 8 (3)
U.S. Treasury Bond Futures Call, Dec 99, strike price $120.00 November 99 11 1
U.S. Treasury Bond Futures Put, Sept 99, strike pricee $114.00 August 99 2 1
-----
$ (1)
-----
Futures Contracts Purchased(J)
U.S. Treasury Bond Futures September 99 2 $ 2
-----
Futures Contracts Written(J)
U.S. Treasury Bond Futures September 99 4 $ (5)
-----
---------------------------------------------------------------------------------------------------------------------
</TABLE>
(A) 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. These securities represent
7.8% of net assets.
(B) Stepped coupon security -- A bond which amortizes to par by a specific
date, at which time it begins to accrue interest or pay dividends.
(C) Zero-Coupon Bond -- A bond with no periodic interest payments which is
sold at such a discount as to produce a current yield to maturity.
(D) Yankee Bond -- Dollar-denominated bond issued in the U.S. by foreign
entities.
(E) When-issued security -- Security purchased on a delayed-delivery
basis. Final settlement amount and maturity date have not yet been
announced.
(F) United States Treasury Inflation-Indexed Security -- U.S. Treasury
security 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.
(G) 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, 1999.
(H) Non-income producing.
(I) This represents the actual number of contracts.
(J) Options and futures are described in more detail in the notes to
financial statements.
N.M. - Not meaningful.
See notes to financial statements.
15
<PAGE>
Statement of Net Assets
Legg Mason Global Trust, Inc.
June 30, 1999 (Unaudited)
(Amounts in Thousands)
International Equity Trust
<TABLE>
<CAPTION>
Shares/Par Value
---------------------------------------------------------------------------------------------------
<S><C>
Common Stocks and Equity Interests -- 96.7%
Australia -- 3.5%
Amcor Ltd. 193 $ 1,071
Australia & New Zealand Banking Group Limited 137 1,009
Comalco Limited 94 407
Commonwealth Bank of Australia 41 646
GIO Australia Holdings Limited 218 531
John Fairfax Holdings Limited 162 481
National Australia Bank Limited 124 2,053
Newcrest Mining Limited 190 426(A)
Pacific Dunlop Limited 487 702
Qantas Airways Limited 499 1,645
--------
8,971
--------
Austria -- 2.1%
Bank Austria AG 47 2,492
OMV AG 24 2,148
Va Technologie Ag 7 616
--------
5,256
--------
Belgium -- 1.8%
Compagnie Benelux Paribas SA 35 2,339
Dexia Belgium 9 1,280
Fortis AG 30 933
--------
4,552
--------
Brazil -- 0.5%
Tele Norte Leste Participacoes S.A. ADR 73 1,296
--------
Finland -- 0.8%
Kesko Oyj 40 531
Metsa-Serla Oyj 177 1,507
--------
2,038
--------
France -- 10.4%
AGF (Assurances Generales de France) 26 1,242
Axa 12 1,476
Banque Nationale de Paris (BNP) 19 1,608
Bollore Technologies SA 7 1,206
Bouygues Offshore S.A. 18 553
Ciments Francais 31 1,959
Elf Aquitaine SA 18 2,611
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Shares/Par Value
---------------------------------------------------------------------------------------------------
<S><C>
France -- Continued
Eridania Beghin-Say SA 1 $ 172
France Telecom S.A. 32 2,386
Groupe GTM 13 1,351
Lafarge SA 21 1,958
PSA Peugeot Citroen 12 1,908
Sanofi-Synthelabo SA 21 895(A)
SEITA 40 2,280
Societe Generale 6 1,039
Suez Lyonnaise des Eaux 4 649
Suez Lyonnaise des Eaux 12 2,188
Suez Lyonnaise des Eaux - Strip 13 N.M.(A)
Vivendi 11 883
--------
26,364
--------
Germany -- 7.2%
Allianz AG 2 596
BASF AG 28 1,235
Bayer AG 58 2,420
Continental AG 82 1,946
DaimlerChrysler AG 62 5,351
Deutsche Lufthansa AG 14 248
Deutsche Pfrandbrief-und Hypothekenbank AG 23 2,105
Deutsche Telekom AG 26 1,093
HypoVereinsbank 3 214
Preussag Ag 59 3,161
--------
18,369
--------
Greece -- 0.3%
Ergo Bank S.A. 7 711
--------
Hong Kong -- 1.8%
CLP Holdings Limited 423 2,055
Innovative International Holdings - Warrants 70 N.M.(A)
Peregrine Investment Holdings Limited 256 N.M.(B)
Sun Hung Kai Properties Ltd. 276 2,517
--------
4,572
--------
India -- 0.2%
ITC Limited GDR 16 448(C)
--------
Indonesia -- 0.4%
PT Indah Kiat Pulp & Paper Corporation Tbk 2,245 1,037
--------
</TABLE>
17
<PAGE>
Statement of Net Assets -- Continued
Legg Mason Global Trust, Inc.
International Equity Trust -- Continued
<TABLE>
<CAPTION>
Shares/Par Value
---------------------------------------------------------------------------------------------------
<S><C>
Ireland -- 1.7%
Allied Irish Banks plc 132 $ 1,735
Elan Corporation plc 48 1,384(A)
Jefferson Smurfit Group Plc 289 678
Kerry Group Plc 41 487
--------
4,284
--------
Italy -- 5.8%
Assicurazioni Generali 30 1,039
Banca Agricola Mantovana 7 83(A)
Banca Commerciale Italiana 199 1,454
Banca Popolare di Bergamo Credito Varesino SpA 83 1,827
Banca Popolare di Brescia 47 2,009
ENI SpA 353 2,108
Italmobiliare 25 670
Mondadori (Arnoldo) Editore SpA 61 1,048
Rolo Banca 1473 38 861(A)
San Paolo IMI SpA 54 741
Sirti S.p.A. 55 265
Telecom Italia Mobile (TIM) SpA 246 1,469
Unicredito Italiano SpA 250 1,097
--------
14,671
--------
Japan -- 20.2%
Asahi Chemical Industry Co., Ltd. 228 1,265
Asahi Glass Company, Limited 147 954
Chubu Electric Power Co., Inc. 84 1,399
Chugai Pharmaceutical Co., Ltd. 97 1,046
Citizen Watch Co. 242 2,100
Dai Nippon Printing Co., Ltd. 84 1,344
Denki Kagaku Kogyo Kabushiki Kaisha 533 1,167
Denso Corporation 74 1,505
East Japan Railway Company 1 3,063
Ebara Corporation 117 1,392
Eisai Company, Ltd. 60 1,186
Fujikura Ltd. 200 956
Fujitsu Limited 90 1,812
Furukawa Electric Co. 449 2,060
Honda Motor Co., Ltd. 27 1,145
Jaccs Co., Ltd. 99 453
Kao Corporation 56 1,574
Kawasaki Kisen Kaisha Ltd. 683 1,474
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Shares/Par Value
---------------------------------------------------------------------------------------------------
<S><C>
Japan -- Continued
Kishu Paper Co., Ltd. 10 $ 21
Kubota Corporation 305 913
Maruzen Showa Unyu Co., Ltd. 6 12
Matsushita Electric Industrial Company, Ltd. 237 4,604
Minolta Co., Ltd. 75 384
Mitsubishi Rayon Company, Ltd. 215 613
Mitsui O.S.K. Lines 189 406
Nippon Sheet Glass Company Ltd. 395 1,407
Nippon Telegraph & Telephone Corporation (NTT) N.M. 489
Olympus Optical Co., Ltd. 53 784
Rohm Company Ltd. 18 2,820
Sharp Corporation 168 1,986
Shin-Etsu Chemical Co., Ltd. 71 2,377
Sumitomo Realty & Development Co., Ltd. 166 623
Sumitomo Rubber Industries, Ltd. 76 538
Takeda Chemical Industries 26 1,206
The Bank of Iwate, Ltd. N.M. 1
The Bank of Tokyo-Mitsubishi, Ltd. 107 1,524
The Sailor Pen Co., Ltd. 134 975
Tokyo Electric Power 65 1,377
Toyota Motor Corporation 75 2,374
--------
51,329
--------
Mexico -- 1.0%
Telefonos de Mexico SA 602 2,426
--------
Netherlands -- 4.8%
ABN AMRO Holding NV 29 632
AEGON N.V. 20 1,465
ING Groep N.V. 34 1,832
Koninklijke (Royal) Philips Electronics N.V. 24 2,349
Koninklijke Ahold NV 17 575
Koninklijke Van Ommeren N.V. 30 891
NBM-Amstelland N.V. 44 796
Roto Smeets de Boer N.V. 4 126
Royal Dutch Petroleum Company 58 3,402
--------
12,068
--------
New Zealand -- 0.7%
Telecom Corporation of New Zealand Limited 429 1,838
--------
Norway -- N.M.
Ekornes ASA 14 106
--------
</TABLE>
19
<PAGE>
Statement of Net Assets -- Continued
Legg Mason Global Trust, Inc.
International Equity Trust -- Continued
<TABLE>
<CAPTION>
Shares/Par Value
---------------------------------------------------------------------------------------------------
<S><C>
Portugal -- 1.2%
BPI-SGPS, SA 54 $ 1,133
Cimpor-Cimentos de Portugal, SGPS, SA 76 1,965
--------
3,098
--------
Singapore -- 2.0%
Oversea-Chinese Banking Corporation Ltd. 88 734
Singapore Airlines Ltd. 202 1,923
TIBS Holdings Limited 589 1,059
United Overseas Bank Ltd. 184 1,287
--------
5,003
--------
South Korea -- 0.7%
Korea Electric Power Corporation 15 608
Samsung Electronics 9 1,030
--------
1,638
--------
Spain -- 3.6%
Argentaria, Caja Postal y Banco Hipotecario de Espana, SA 22 507
Banco Bilbao Vizcaya S.A. 43 617
Banco Santander Central Hispano, SA 286 2,973
Endesa S.A. 37 797
Iberdrola S.A. 74 1,124
Tabacalera S.A. 89 1,788
Telefonica S.A. 27 1,318
--------
9,124
--------
Sweden -- 1.7%
Electrolux AB 93 1,940
Hennes & Mauritz AB (H&M) 54 1,343
Mo och Domsjo AB 20 455
Svanska Handelsbanken AB 56 668
--------
4,406
--------
Switzerland -- 6.6%
Credit Suisse Group 24 4,074
Georg Fischer AG N.M. 130
Holderbank Financiere Glarus AG 1 1,764
Nestle SA 1 1,810
Novartis N.M. 263(A)
Rieter Holdings Ltd. 1 676
Schweizerische Ruckvericherungs-Gesellschaft 1 1,189
Swisscom AG 1 536(A)
UBS AG 16 4,804
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Shares/Par Value
---------------------------------------------------------------------------------------------------
<S><C>
Switzerland -- Continued
Verwaltungs-und Privat-Bank AG N.M. $ 151
Zurich Allied AG 3 1,421(A)
--------
16,818
--------
Turkey -- 0.8%
Akbank T.A.S. 44,356 652
Aksigorta A.S. 20,193 562
Yapi ve Kredi Bankasi A.S. 61,449 888
--------
2,102
--------
United Kingdom -- 16.9%
Abbey National plc 36 670
Amvescap Plc 108 962
AstraZeneca Group plc 63 2,417
Barclays PLC 81 2,359
Barratt Developments plc 38 211
BG plc 337 2,054
BP Amoco Plc 91 1,637
British Energy PLC 113 966
British Telecommunications plc 233 3,897
British Vita plc 25 95
Centrica plc 847 1,989(A)
CGU PLC 121 1,744
Diageo plc 75 790
George Wimpey plc 455 1,084
Hilton Group plc 508 2,031
Lex Service plc 190 1,744
Lloyds TSB Group plc 216 2,937
Misys plc 80 680
National Westminster Bank PLC 90 1,897
PowerGen plc 184 1,979
Reuters Group PLC 17 222
Royal Bank of Scotland Group plc 95 1,951
Scottish & Newcastle plc 103 1,073
Scottish and Southern Energy plc 20 203
SmithKline Beecham Plc 70 914
Tesco plc 636 1,650
Thames Water plc 41 655
Vodafone Group plc 110 2,156
WPP Group plc 226 1,911
--------
42,878
--------
Total Common Stocks and Equity Interests (Identified Cost-- $234,222) 245,403
---------------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
Statement of Net Assets -- Continued
Legg Mason Global Trust, Inc.
International Equity Trust -- Continued
<TABLE>
<CAPTION>
Shares/Par Value
---------------------------------------------------------------------------------------------------
<S><C>
Repurchase Agreements -- 0.7%
Goldman, Sachs & Company
5%, dated 6/30/99, to be repurchased at
$1,794 on 7/1/99 (Collateral: $1,984 Fannie
Mae mortgage-backed securities, 6%, due 2/1/29,
value $1,862) (Identified Cost-- $1,794) $ 1,794 $ 1,794
---------------------------------------------------------------------------------------------------
Total Investments-- 97.4% (Identified Cost-- $236,016) 247,197
Other assets less liabilities-- 2.6% 6,547
--------
NET ASSETS CONSISTING OF:
Accumulated paid-in capital applicable to:
19,908 Primary Class shares outstanding $233,251
4 Navigator Class shares outstanding 50
Overdistributions of net investment income (4,582)
Accumulated net realized gain on investments
and currency transactions 13,820
Unrealized appreciation of investments
and currency transactions 11,205
--------
NET ASSETS-- 100.0% $253,744
========
NET ASSET VALUE PER SHARE:
PRIMARY CLASS $12.74
======
NAVIGATOR CLASS $12.72
======
---------------------------------------------------------------------------------------------------
</TABLE>
(A)Non-income producing.
(B)In bankruptcy proceedings and non-income producing.
(C)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. This security represents 0.2%
of net assets.
ADR - American Depository Receipt.
GDR - Global Depository Receipt.
N.M. - Not meaningful.
See notes to financial statements
22
<PAGE>
Statement of Net Assets
Legg Mason Global Trust, Inc.
June 30, 1999 (Unaudited)
(Amounts in Thousands)
Emerging Markets Trust
<TABLE>
<CAPTION>
Shares/Par Value
---------------------------------------------------------------------------------------------------------------------
<S><C>
Common Stocks and Equity Interests -- 84.3%
Argentina -- 0.8%
IRSA Inversiones y Representaciones S.A. GDS 10 $ 313
Telefonica de Argentina S.A. ADR 10 307
-------
620
-------
Brazil -- 3.6%
Centrais Electricas Braseiras S.A. 22,900 434
Companhia Brasileira de Distribuicao Grupo Pao de Acucar ADR 16 299
Tele Centro Sul Participacoes S.A. 10 527
Tele Norte Leste Participacoes S.A. 58 1,084
Telecomunicacoes Brasileiros S.A. 6,247 291(A)
-------
2,635
-------
Chile -- 0.8%
Sociedad Quimica y Minera de Chile SA ADR 17 598
Sociedad Quimica y Minera de Chile SA ADR - Rights N.M. 13(A)
-------
611
-------
China -- 7.0%
Bengang Steel Plates Co., Ltd. 1,000 244
Brilliance China Automotive Holdings Limited 193 2,848
China East Airline Corporation Limited 2,000 266(A)
China Southern Airlines Company Limited 1,000 255(A)
Jiangxi Copper Company Ltd. 2,000 263
Jilin Chemical Industrial Company Limited 5,000 606
Konka Group Co., Ltd. 425 474
Zhejiang Southeast Electric Power Co., Ltd. 500 221
-------
5,177
-------
Croatia -- 0.4%
Pliva d.d. GDR 20 303(B)
-------
Egypt -- 2.3%
Arabian International Construction 25 165(A)
EFG-Hermes Holding, S.A.E. GDR 8 95(A,B)
Egyptian Company for Mobile Service (MobiNil) 30 676(A)
International Food Egypt 5 59(A)
Miraco International B.V. 2 38(A)
Orascom Construction Industries (OCI) 15 202(A)
Orascom Projects & Touristic Development 27 158(A)
Oriental Weavers Company 14 293
-------
1,686
-------
</TABLE>
23
<PAGE>
Statement of Net Assets -- Continued
Legg Mason Global Trust, Inc.
Emerging Markets Trust -- Continued
<TABLE>
<CAPTION>
Shares/Par Value
---------------------------------------------------------------------------------------------------------------------
<S><C>
Greece -- 2.4%
Alpha Credit Bank 15 $ 970
Hellenic Telecommunications Organization SA (OTE) 38 804
-------
1,774
-------
Hong Kong -- 3.1%
China National Aviation Company Limited 2,000 381
China Pharmaceutical Enterprise and Investment Corporation Limited 4,249 860
Guangdong Brewery Holdings Limited 5,000 374(A)
Gzi Transport Limited 1,500 329
Legend Holdings Limited 400 384
-------
2,328
-------
Hungary -- 1.4%
OTP Bank Rt. 13 538
Synergon Information Systems GDR 43 495(A,B)
-------
1,033
-------
India -- 4.2%
Hindustan Lever Ltd. 9 494
NIIT Limited 13 619(A)
Satyam Computer Services Limited 35 1,023
Software Solution Integrated Limited 53 530
Videsh Sanchar Nigam Ltd. GDR 40 421(B)
-------
3,087
-------
Indonesia -- 1.3%
PT Bank Internasional Indonesia - Warrants 54 1(A)
PT Lippo Bank Tbk 3,461 187
PT Lippo Bank Tbk - Rights 12,460 207(A)
PT Ramayana Lestari Sentosa Tbk 764 541
-------
936
-------
Israel -- 2.0%
Bank Hapoalim 145 372
Makhteshim-Agan Industries Ltd. 149 333(A)
NICE Systems Ltd. ADR 12 321(A)
Orbotech Ltd. 9 459(A)
-------
1,485
-------
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Shares/Par Value
---------------------------------------------------------------------------------------------------------------------
<S><C>
Malaysia(C) -- 4.7%
Arab Malaysian Finance Berhad 450 $ 524
Commerce Asset-Holding Berhad 355 862
Lingui Developments Berhad 470 486
Malaysian Pacific Industries Berhad 146 407
Tanjong PLC 169 409
Technology Resources Industry Berhad 1,020 821
-------
3,509
-------
Mexico -- 12.2%
Carso Global Telecom 106 671
Cemex SA de CV 236 1,164
Controladora Comercial Mexicana S.A. de C.V. 468 488(A)
Corporation GEO, S.A. de C.V. 102 433(A)
Fomento Economico Mexicana, SA de C.V. ADR 20 794
Grupo Carso SA de CV 124 575
Grupo Elektra, SA de CV 890 519
Grupo Financiero Banamex Accival, SA de CV (Banacci) 235 598(A)
Grupo Televisa S.A. ADR 20 896(A)
Telefonos de Mexico SA 728 2,933
-------
9,071
-------
Namibia -- 1.0%
Namibian Minerals Corporation 204 712(A)
-------
Philippines -- 1.4%
First Philippine Holdings Corporation 400 452
Manila Electric Company 158 568
-------
1,020
-------
Poland -- 1.8%
Orbis S.A. 38 327(A)
Softbank S.A. 12 412
Telekomunikacja Polska S.A. 81 570
-------
1,309
-------
Romania -- 0.4%
Societe Generale Romania Fund 5 273(A)
-------
Singapore --1.1%
Total Access Communication Public Company Limited 250 800(A)
-------
</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 Africa -- 5.2%
Anglo American plc 14 $ 640
Rembrandt Group Limited 161 1,339
Sasol Limited 193 1,378
Southern Africa Fund, Inc. 40 466(A)
-------
3,823
-------
South Korea --15.8%
Hana Bank 60 881
Hyundai Motor Company Ltd. 30 711
Korea Electric Power Corporation 67 2,784
Korea Electric Power Corporation ADR 15 308
Korea Telecom Corporation 10 663(A)
Korea Telecom Corporation ADR 16 607(A)
LG Electronics Inc 30 829
LG Information & Communication 10 740
LG Insurance Company LTD. 9 845
Pohang Iron & Steel Company Ltd. 3 315
Samsung Electronics 14 1,514
Samsung Fire & Marine Insurance 1 1,029
Ssangyong Oil Refining Company Ltd. 20 518
-------
11,744
-------
Taiwan -- 4.3%
Asustek Computer, Inc. 35 394
Cathay Life Insurance Co., Ltd. 150 539
China Development Industrial Bank Inc. 143 356(A)
D-Link Corporation 300 720(A)
Evergreen Marine Corporation 100 125
Far East Textile Ltd. 100 149(A)
Taiwan Semiconductor Manufacturing Company 118 449(A)
Yuanta Securities Corporation 250 453(A)
-------
3,185
-------
Thailand -- 0.9%
Shin Corporations Public Company Limited 152 707
-------
Turkey -- 4.0%
Akbank T.A.S. 30,714 451
Aksigorta A.S. 17,000 473
Alfa Menkul Degerler A.S. 22,000 82(A)
Finansbank A.S. 99,001 340(A)
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
Shares/Par Value
---------------------------------------------------------------------------------------------------------------------
<S><C>
Turkey -- Continued
Vestel Electronick Sanayi ve Ticaret A.S. $ 8,000 $ 872(A)
Yapi ve Kredi Bankasi A.S. 54,104 782
-------
3,000
-------
Ukraine -- 0.1%
Societe Generale Ladenburg Thalmann Ukraine Fund Limited 3 115(A)
-------
United States -- 2.1%
Global TeleSystems Group, Inc. 19 1,531(A)
-------
Total Common Stocks and Equity Interests (Identified Cost-- $48,462) 62,474
---------------------------------------------------------------------------------------------------------------------
Preferred Shares -- 9.1%
Brazil -- 7.1%
Banco do Estado Sao Paulo S.A. - Banespa 17,000 725(A)
Banco Itau S.A. 490 252
Companhia Energetica de Minas Gerais 23,232 486
Companhia Paranaense de Energia-Copel ADR 84 704
Companhia Vale do Rio Doce 27 524
Eletropaulo Metropolitana - Eletricidade de Sao Paulo S.A. 2,100 93
Empresa Brasileira de Aeronautica S.A. 255 438
Gerdau S.A. 44,105 735
Petroleo Brasileiro S.A. 8,200 1,274
Tele Centro Oeste Celular Participacoes S.A. - Rights 560 N.M.
-------
5,231
-------
Thailand -- 2.0%
Siam Commercial Bank Public Company Limited 660 940(A)
Siam Commercial Bank Public Company Limited - Warrants 860 554(A)
-------
1,494
-------
Total Preferred Shares (Identified Cost-- $5,566) 6,725
---------------------------------------------------------------------------------------------------------------------
Repurchase Agreements -- 5.1%
Goldman, Sachs & Company
5%, dated 6/30/99, to be repurchased at $3,763
on 7/1/99 (Collateral: $4,162 Fannie Mae
mortgage-backed securities, 6%, due 2/1/29, value $3,906)
(Identified Cost-- $3,762) 3,762 3,762
---------------------------------------------------------------------------------------------------------------------
Total Investments -- 98.5% (Identified Cost -- $57,791) 72,961
Other assets less liabilities -- (1.5)% 1,099
-------
NET ASSETS -- 100.0% $74,060
=======
</TABLE>
27
<PAGE>
Statement of Net Assets -- Continued
Legg Mason Global Trust, Inc.
Emerging Markets Trust -- Continued
<TABLE>
<CAPTION>
Shares/Par Value
---------------------------------------------------------------------------------------------------------------------
<S><C>
NET ASSETS CONSISTING OF:
Accumulated paid-in capital applicable to
7,109 shares outstanding $ 82,324
Accumulated net operating loss (106)
Accumulated net realized loss on investments and foreign currency transactions (23,306)
Unrealized appreciation of investments and foreign currency transactions 15,148
--------
NET ASSETS -- 100.0% $74,060
=======
NET ASSET VALUE PER SHARE $10.42
======
---------------------------------------------------------------------------------------------------------------------
</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. These securities represent
1.8% of net assets.
(C)As of February 15, 1999, the repatriation of proceeds held since August
31, 1998, from the sale of Malaysian securities cannot be accomplished
without a levy until at least September 1, 1999. The Fund's Malaysian
securities are therefore considered illiquid and are being fair valued
following procedures approved by the Board of Directors.
ADR - American Depository Receipt.
GDR - Global Depository Receipt.
GDS - Global Depository Shares.
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 6/30/99
------------------------------------------
Global International Emerging
Government Equity Markets
Trust Trust Trust
------------------------------------------------------------------------------------------------------------------
<S><C>
Investment Income:
Interest $ 3,240 $ 175 $ 14
Dividends -- 3,996 552
Less: Foreign tax withheld -- (483) (35)
-------- -------- -------
Total income 3,240 3,688 531
-------- -------- -------
Expenses:
Management fee 413 948 250
Distribution and service fees 413 1,263 250
Transfer agent and shareholder servicing expense 38 146 41
Audit and legal fees 26 33 25
Custodian fee 111 272 125
Directors' fees 3 5 3
Organization expense -- 7 7
Registration fees 7 11 13
Reports to shareholders 15 17 8
Other expenses 4 5 24
-------- -------- -------
1,030 2,707 746
Less fees waived -- -- (122)
-------- -------- -------
Total expenses, net of waivers 1,030 2,707 624
-------- -------- -------
Net Investment Income 2,210 981 (93)
-------- -------- -------
Net Realized and Unrealized Gain (Loss) on Investments:
Realized gain (loss) on:
Investments, options and futures (511) 28,728 (695)
Foreign currency transactions (4,410) (28) (194)
-------- -------- -------
(4,921) 28,700 (889)
-------- -------- -------
Change in unrealized appreciation (depreciation) of:
Investments, options and futures (7,246) (26,693) 22,482
Assets and liabilities denominated in foreign currencies (18) 57 (16)
-------- -------- -------
(7,264) (26,636) 22,466
------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain (Loss) on Investments (12,185) 2,064 21,577
------------------------------------------------------------------------------------------------------------------
Change in Net Assets Resulting From Operations $ (9,975) $ 3,045 $21,484
------------------------------------------------------------------------------------------------------------------
</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
6/30/99 12/31/98 6/30/99 12/31/98 6/30/99 12/31/98
-------------------------------------------------------------------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited)
<S><C>
Change in Net Assets:
Net investment income (loss) $ 2,210 $ 5,616 $ 981 $ 144 $ (93) $ 51
Net realized gain (loss) on
investments, options, futures
and foreign currency transactions (4,921) 4,201 28,700 (9,181) (889) (20,750)
Change in unrealized appreciation
(depreciation) of investments and
assets and liabilities denominated
in foreign currencies (7,264) 3,200 (26,636) 25,859 22,466 293
-------------------------------------------------------------------------------------------------------------------
Change in net assets resulting
from operations (9,975) 13,017 3,045 16,822 21,484 (20,406)
Distributions to shareholders:
From net investment income:
Primary Class (1,832) (5,948) (992) (2,768) -- --
Navigator Class N/A N/A (1) (1) N/A N/A
From net realized gain on investments:
Primary Class (881) (744) -- -- -- --
Navigator Class N/A N/A -- -- N/A N/A
Change in net assets from Fund share
transactions:
Primary Class (9,245) (22,252) (6,874) 16,808 10,235 (2,555)
Navigator Class N/A N/A -- 50 N/A N/A
-------------------------------------------------------------------------------------------------------------------
Change in net assets (21,933) (15,927) (4,822) 30,911 31,719 (22,961)
Net Assets:
Beginning of period 120,805 136,732 258,566 227,655 42,341 65,302
-------------------------------------------------------------------------------------------------------------------
End of period $ 98,872 $120,805 $253,744 $258,566 $74,060 $ 42,341
-------------------------------------------------------------------------------------------------------------------
Under/(over) distributed
net investment income $ (1,640) $ (2,018) $ (4,582) $ (4,570) $ (106) $ (13)
-------------------------------------------------------------------------------------------------------------------
</TABLE>
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
------------------------------------------ ---------------------------------------
Net Realized and
Unrealized Gain
(Loss) on Invest- From
Net Asset Net ments, Options, Total From In Excess Net
Value, Investment Futures and From Net of Net Realized
Beginning Income Foreign Currency Investment Investment Investment Gain on
of Period (Loss) Transactions Operations Income Income Investments
--------------------------------------------------------------------------------------------------------------------
<S><C>
Global Government Trust
--Primary Class
Six Months Ended
June 30, 1998* $10.14 $ .18 $(1.04) $ (.86) $ (.16) $ -- $(.08)
Years Ended Dec. 31,
1998 9.60 .37 .70 1.07 (.47) -- (.06)
1997 10.41 .54 (.71) (.17) (.48) (.05) (.11)
1996 10.33 .59 .21 .80 (.62) -- (.10)
1995 9.54 .63 1.32 1.95 (1.16) -- --
1994 10.27 .57(A) (.71) (.14) (.59) -- --
International Equity Trust
--Primary Class
Six Months Ended
June 30, 1999* $12.64 $ .04 $ .11 $ .15 $ (.05) $ -- $ --
Years Ended Dec. 31,
1998 11.78 .01 .99 1.00 (.14) -- --
1997 12.09 .02 .19 .21 (.08) -- (.44)
1996 10.70 .02(B) 1.74 1.76 (.05) -- (.32)
1995(D) 10.00 .04(B) .77 .81 (.04) -- --
Emerging Markets Trust
--Primary Class
Six Months Ended
June 30, 1999* $ 6.96 $(.01)(C) $ 3.47 $ 3.46 $ -- $ -- $ --
Years Ended Dec. 31,
1998 9.85 .01(C) (2.90) (2.89) -- -- --
1997 10.51 (.02)(C) (.63) (.65) (.01) -- --
1996(E) 10.00 (.03)(C) .57 .54 (.03) -- --
--------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Distributions Ratios/Supplemental Data
--------------------------- ---------------------------------------------------------------
In Excess Net
Ne of Net Net Asset Investment Net Assets,
Realized Value, Expenses Income (Loss) Portfolio End of
Be Gain on Total End of Total to Average to Average Turnover Period
ofInvestments Distributions Period Return Net Assets Net Assets Rate (in thousands)
-----------------------------------------------------------------------------------------------------------------------------
<S><C>
Global Government Trust
--Primary Class
Six Months Ended
June 30, 1998* $ -- $ (.24) $ 9.04 (8.65)%(F) 1.87%(G) 4.01%(G) 314%(G) $ 98,872
Years Ended Dec. 31,
1998 -- (.53) 10.14 11.50% 1.87% 4.51% 288% 120,805
1997 -- (.64) 9.60 (1.69)% 1.86% 5.39% 241% 136,732
1996 -- (.72) 10.41 8.22% 1.86% 5.80% 172% 161,549
1995 -- (1.16) 10.33 20.80% 1.81% 5.72% 169% 153,954
1994 -- (.59) 9.54 (1.40)% 1.34%(A) 5.71%(A) 127% 145,415
International Equity Trust
--Primary Class
Six Months Ended
June 30, 1999* $ -- $ (.05) $12.74 1.19%(F) 2.14%(G) .78%(G) 138%(G) $253,699
Years Ended Dec. 31,
1998 -- (.14) 12.64 8.49% 2.14% .06% 72% 258,521
1997 -- (.52) 11.78 1.76% 2.17% .17% 59% 227,655
1996 -- (.37) 12.09 16.49% 2.25%(B) .21%(B) 83% 167,926
1995(D) (.07) (.11) 10.70 8.11%(F) 2.25%(B,G) .52%(B,G) 58%(G) 65,947
Emerging Markets Trust
--Primary Class
Six Months Ended
June 30, 1999* $ -- $ -- $10.42 49.57%(F) 2.50%(C,G) (.38)%(C,G) 165%(G) $ 74,060
Years Ended Dec. 31,
1998 -- -- 6.96 (29.34)% 2.50%(C) .09%(C) 76% 42,341
1997 -- (.01) 9.85 (6.18)% 2.50%(C) (.76)%(C) 63% 65,302
1996(E) -- (.03) 10.51 5.40%(F) 2.50%(C,G) (.68)%(C,G) 46%(G) 21,206
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(A) Net of fees waived by LMFA for expenses in excess of voluntary expense
limitations of 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. If no fees had been waived by LMFA, the annualized
ratio of expenses to average daily net assets for 1994 would have been
1.82%.
(B) Netof fees waived by LMFA pursuant to a voluntary expense limitation
of 2.25%. If no fees had been waived by LMFA, the annualized ratio of
expenses to average daily net assets for each period would have been
as follows: 1996, 2.32%; and 1995, 2.91%.
(C) Net of fees waived by LMFA pursuant to a voluntary expense limitation
of 2.50%. If no fees had been waived by LMFA, the annualized ratio of
expenses to average daily net assets for each period would have been
as follows: for the six months ended June 30, 1999, 2.99%; 1998,
2.78%; 1997, 2.86%; and 1996, 3.71%.
(D) For the period February 17, 1995 (commencement of operations) to
December 31, 1995.
(E) For the period May 28, 1996 (commencement of operations) to December
31, 1996.
(F) Not annualized.
(G) 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. ("Corporation"), consisting of the
Global Government Trust ("Global Government"), the International Equity
Trust ("International Equity"), and the Emerging Markets Trust ("Emerging
Markets") (each a "Fund"), is registered under the Investment Company Act
of 1940, as amended, as an open-end investment company. International
Equity and Emerging Markets are diversified; Global Government is
non-diversified.
Each Fund consists of two classes of shares: Primary Class, offered
since April 15, 1993, for Global Government; since February 17, 1995, for
International Equity; and since May 28, 1996, for Emerging Markets; and
Navigator Class, offered to certain institutional investors since May 5,
1998, for International Equity. The Navigator Class of Global Government
and Emerging Markets has not commenced operations. Information about the
Navigator Class, offered only to certain institutional investors, is
contained in a separate report to its shareholders. The income and
expenses of International Equity are allocated proportionately to the two
classes of shares based on daily net assets, except for Rule 12b-1
distribution fees, which are charged only on Primary Class shares, and
transfer agent and shareholder servicing expenses, which are determined
separately for each class.
Security Valuation
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.
Foreign Currency Translation
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 is reflected as a component of such
gains or losses.
Investment Income and Distributions to Shareholders
Interest income and expenses are recorded on the accrual basis. Bond
premiums are amortized for financial reporting and federal income tax
purposes. Bond discounts, other than original issue and zero-coupon bonds,
are not amortized for financial reporting and federal income tax purposes.
Dividend income and distributions to shareholders are allocated at the
class level and are recorded on the ex-dividend date. Dividends from net
investment income, if available, will be paid monthly for Global
Government, and annually for International Equity and Emerging Markets.
Net capital gain distributions, which are calculated at the
32
<PAGE>
--------------------------------------------------------------------------
composite level, are declared and paid after the end of the tax year
in which the gain is realized. At June 30, 1999, there were no dividends
payable for Global Government, International Equity or Emerging Markets.
There also were no capital gain distributions payable for any of the
Funds. Distributions are determined in accordance with federal income tax
regulations, which may differ from those determined in accordance with
generally accepted accounting principles; accordingly, periodic
reclassifications are made within a Fund's capital accounts to reflect
income and gains available for distribution under federal income tax
regulations.
Security 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, 1999, receivables for securities sold and payables for securities
purchased for each Fund were as follows:
Receivable for Payable for
Securities Sold Securities Purchased
----------------------------------------------------------------------
Global Government $ 113 $13,721
International Equity 8,354 3,154
Emerging Markets 502 390
Deferred Organizational Expense
Deferred organizational expenses of $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. Legg
Mason Fund Adviser, Inc. ("LMFA") has agreed that in the event it redeems
any of its shares during such period, it will reimburse the Fund for any
unamortized organization costs in the same proportion as the number of
shares to be redeemed bears to the number of shares that were initially
purchased by LMFA and remain outstanding at the time of redemption.
Federal Income Taxes
No provision for federal income or excise taxes is required since
each Fund intends to continue to qualify as a regulated investment company
and distribute substantially all of its taxable income to its
shareholders.
Use of Estimates
Preparation of the financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates.
2. Investment Transactions:
For the six months ended June 30, 1999, investment transactions
(excluding short-term investments) were as follows:
<TABLE>
<CAPTION>
Purchases Proceeds From Sales
--------------------------------------- -------------------------------------
U.S. Gov't. Securities Other U.S. Gov't. Securities Other
-----------------------------------------------------------------------------------------------------------------
<S><C>
Global Government $33,590 $124,110 $33,036 $136,657
International Equity -- 166,840 -- 177,283
Emerging Markets -- 40,125 -- 35,893
</TABLE>
33
<PAGE>
Notes to Financial Statements -- Continued
Legg Mason Global Trust, Inc.
--------------------------------------------------------------------------
At June 30, 1999, cost, gross unrealized appreciation and gross
unrealized depreciation based on the cost of securities for federal income
tax purposes for each Fund were as follows:
<TABLE>
<CAPTION>
Net
Appreciation/
Cost Appreciation Depreciation (Depreciation)
------------------------------------------------------------------------------------------------
<S><C>
Global Government $110,192 $ 479 $ (6,116) $ (5,637)
International Equity 236,016 24,317 (13,136) 11,181
Emerging Markets 57,791 17,306 (2,136) 15,170
</TABLE>
Unused capital loss carryforwards for federal income tax purposes at
June 30, 1999, were as follows: International Equity, $14,099 which expire
in December 2006; Emerging Markets Trust, $11 which expire in December
2004, $606 which expire in December 2005 and $20,951 which expire in
December 2006. Global Government had no capital loss carryforwards.
3. Repurchase Agreements:
All repurchase agreements are fully collateralized by obligations
issued by the U.S. Government or its agencies, and such collateral is in
the possession of the Funds' custodian. The value of such collateral
includes accrued interest. Risks arise from the possible delay in recovery
or potential loss of rights in the collateral should the issuer of the
repurchase agreement fail financially. The Funds' investment advisers,
acting under the supervision of the Board of Directors, review the value
of the collateral and the creditworthiness of those banks and dealers with
which the Funds enter into repurchase agreements to evaluate potential
risks.
4. Options and Futures:
As part of its investment program, Global Government may utilize
options and futures. International Equity and Emerging Markets may also
utilize options and futures to a limited extent. Options may be written
(sold) or purchased by these Funds. When a Fund purchases a put or call
option, the premium paid is recorded as an investment and its value is
marked-to-market daily. When a Fund writes a call or put option, an amount
equal to the premium received by the Fund is recorded as a liability and
its value is marked-to-market daily.
When options, whether written or purchased, expire, are exercised or
are closed (by entering into a closing purchase or sale transaction), the
Fund realizes a gain or loss as described in the chart below:
<TABLE>
<CAPTION>
<S><C>
Purchased option: Impact on the Fund:
The option expires Realize a loss in the amount of the cost of the option.
--------------------------------------------------------------------------------------------------------------------------
The option is closed through a Realize a gain or loss depending on whether the proceeds from the closing sale
closing sale transaction transaction are greater or less than the cost of the option.
--------------------------------------------------------------------------------------------------------------------------
The Fund exercises a call option The cost of the security purchased through the exercise of the option will be
increased by the premium originally paid to purchase the option.
--------------------------------------------------------------------------------------------------------------------------
The Fund exercises a put option Realize a gain or loss from the sale of the underlying security. The proceeds of that
sale will be reduced by the premium originally paid to purchase the put option.
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
<S><C>
--------------------------------------------------------------------------------------------------------------------------
Written option: Impact on the Fund:
The option expires Realize a gain equal to the amount of the premium received.
--------------------------------------------------------------------------------------------------------------------------
The option is closed through a Realize a gain or loss without regard to any unrealized gain or loss on the
closing purchase transaction underlying security and eliminate the option liability. The Fund will realize a
loss in this transaction if the cost of the closing purchase exceeds the premium
received when the option was written.
--------------------------------------------------------------------------------------------------------------------------
A written call option is exercised Realize a gain or loss from the sale of the underlying security. The proceeds of that
by the option purchaser sale will be increased by the premium originally received when the option was
written.
--------------------------------------------------------------------------------------------------------------------------
A written put option is exercised The amount of the premium originally received will reduce the cost of the security
by the option purchaser that the Fund purchased when the option was exercised.
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
There were no options written during the six months ended June 30,
1999.
Upon entering into a futures contract, the Fund is required to
deposit with the broker cash or cash equivalents in an amount 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 in 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.
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 of profit if the market price of the underlying
security increases and the option is exercised. The risk in writing a 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.
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, the 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, 1999, for
International Equity and Emerging Markets.
5. Financial Instruments:
Emerging Market Securities
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.
35
<PAGE>
Notes to Financial Statements -- Continued
Legg Mason Global Trust, Inc.
--------------------------------------------------------------------------
Forward Currency Exchange Contracts
As part of its investment program, each Fund may utilize forward
currency exchange contracts. The nature and risks of these financial
instruments and the reasons for using them are set forth more fully in the
Corporation's Prospectus and Statement of Additional Information.
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, 1999, open forward currency exchange contracts were as
follows:
Global Government:
<TABLE>
<CAPTION>
Contract to
Settlement -------------------------------------------------- Unrealized
Date Receive Deliver Gain/(Loss)
-----------------------------------------------------------------------------------------
<S><C>
07/02/99 EUR 2,738 USD 2,828 $ (1)
07/02/99 GBP 1,626 USD 2,561 3
07/22/99 USD 4,551 AUD 6,795 58
07/22/99 AUD 3,982 USD 2,600 33
07/22/99 USD 2,194 CAD 3,242 (9)
07/22/99 CAD 8,032 USD 5,489 (33)
07/22/99 USD 6,700 DKK 46,323 268
07/22/99 DKK 27,184 USD 3,847 (73)
07/22/99 USD 13,750 EUR 13,065 260
07/22/99 EUR 12,828 USD 13,801 (555)
07/22/99 USD 10,543 GBP 6,596 145
07/22/99 GBP 4,969 USD 7,935 (101)
07/22/99 USD 5,758 GRD 1,779,806 129
07/22/99 GRD 1,992,702 USD 6,323 (20)
07/22/99 USD 12,300 JPY 1,482,189 8
07/22/99 JPY 4,170,447 USD 34,963 (376)
07/22/99 USD 2,650 NZD 4,998 3
07/22/99 USD 5,968 SEK 49,890 83
07/22/99 ZAR 4,415 USD 700 28
08/19/99 USD 2,838 EUR 2,738 11
08/19/99 EUR 11,591 USD 12,032 (39)
08/19/99 USD 632 GBP 398 5
08/19/99 USD 2,200 ZAR 14,034 (101)
-----
$(274)
=====
</TABLE>
36
<PAGE>
--------------------------------------------------------------------------
International Equity:
<TABLE>
<CAPTION>
Contract to
Settlement -------------------------------------------------- Unrealized
Date Receive Deliver Gain/(Loss)
-----------------------------------------------------------------------------------------
<S><C>
7/26/99 USD 5,057 EUR 4,766 $ 134
7/26/99 USD 2,488 EUR 2,411 (3)
7/27/99 USD 2,532 EUR 2,380 74
7/27/99 EUR 2,380 USD 2,576 (117)
7/27/99 USD 2,601 JPY 311,208 18
7/28/99 USD 1,781 JPY 218,716 (34)
7/28/99 USD 742 JPY 91,124 (14)
-----
$ 58
=====
</TABLE>
Euro Conversion
On January 1, 1999, the Euro became the official currency of the
countries in the European Economic and Monetary Union (EEMU). EEMU member
countries include Austria, Belgium, Finland, France, Germany, Ireland,
Italy, Luxembourg, the Netherlands, Portugal and Spain. Government bonds
issued by member countries were redenominated into Euro on January 1,
1999. Corporations based in member countries have until 2002 to
redenominate their existing bonds. New issuances of corporate and
government bonds from member countries will be denominated in Euro. The
redenomination into Euro has not had and is not expected to have a
material impact on the Funds' operations.
6. Transactions With Affiliates:
Each Fund has a management agreement with LMFA. Pursuant to their
respective agreements, LMFA 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.
LMFA has agreed to waive its fees in any month (exclusive of taxes,
interest, brokerage and extraordinary expenses) as shown in the following
chart:
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1999 At June 30, 1999
-------------------------------------
Management Management
Management Expense Expense Limitation Fees Fees
Fund Fee Limitation Expiration Date Waived Payable
----------------------------------------------------------------------------------------------------------------------
<S><C>
Global Government 0.75% 1.90% Indefinite $ -- $ 62
International Equity
--Primary 0.75% 2.25% Indefinite $ -- $ 157
--Navigator 0.75% 1.25% Indefinite $ -- N.M.
Emerging Markets 1.00% 2.50% May 1, 2000 $122 $ 27
</TABLE>
--------------
N.M. -- Not meaningful.
37
<PAGE>
Notes to Financial Statements -- Continued
Legg Mason Global Trust, Inc.
--------------------------------------------------------------------------
Western Asset Management Company ("Adviser") serves as investment
adviser to Global Government. The Adviser is responsible for the actual
investment activity of the Fund, for which LMFA pays a fee at an annual
rate equal to 53 1/3% of the fee received by LMFA from Global Government.
Western Asset Global Management, Ltd. ("WAGM") serves as investment
sub-adviser to Global Government. The Adviser (not the Fund) pays WAGMa
fee at an annual rate equal to 26 2/3% of the fee received by the Adviser
from LMFA. LMFA pays WAGM a sub-administration fee at an annual rate equal
to 13 1/3% of the fee received by LMFA from Global Government.
Batterymarch Financial Management, Inc. ("Batterymarch") serves as
investment adviser to International Equity and Emerging Markets.
Batterymarch is responsible for the actual investment activity of these
Funds. LMFA pays Batterymarch a fee for its services at an annual rate
equal to 66 2/3% of the fee received by LMFA from International Equity and
75% of the fee received from Emerging Markets.
Legg Mason Wood Walker, Incorporated ("Legg Mason"), a member of the
New York Stock Exchange, serves as distributor of the Funds. Legg Mason
receives an annual distribution fee and an annual service fee based on
each Fund's Primary Class's average daily net assets, calculated daily and
payable monthly as follows:
At June 30, 1999
------------------------
Distribution Service Distribution and Service
Fee Fee Fees Payable
--------------------------------------------------------------------------
Global Government .50% .25% $ 62
International Equity .75 .25 209
Emerging Markets .75 .25 55
Legg Mason also has an agreement with the Funds' transfer agent to
assist with some of its duties. For this assistance, the transfer agent
paid Legg Mason the following amounts for the six months ended June 30,
1999: Global Government, $12; International Equity, $39 and Emerging
Markets, $14.
LMFA, Batterymarch, the Adviser, WAGM and Legg Mason are corporate
affiliates and are wholly owned subsidiaries of Legg Mason, Inc.
7. Line of Credit:
The Funds, along with certain other Legg Mason Funds, participate in
a $200 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, 1999, the Funds had no borrowings under the line of
credit.
38
<PAGE>
--------------------------------------------------------------------------
8. Fund Share Transactions:
At June 30, 1999, there were 1,000,000 shares authorized at $.001 par
value for all portfolios of the Corporation. 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
--Primary Class
Six Months Ended June 30, 1999 738 $ 7,167 264 $2,485 (1,974) $(18,897) (972) $ (9,245)
Year Ended Dec. 31, 1998 2,308 22,709 615 6,032 (5,251) (50,993) (2,328) (22,252)
International Equity
--Primary Class
Six Months Ended June 30, 1999 2,032 25,837 77 972 (2,655) (33,683) (546) (6,874)
Year Ended Dec. 31, 1998 5,900 77,550 221 2,717 (4,995) (63,459) 1,126 16,808
--Navigator Class
Six Months Ended June 30, 1999 -- -- -- -- -- -- -- --
May 5, 1998(A) to Dec. 31, 1998 4 50 -- -- -- -- 4 50
Emerging Markets
--Primary Class
Six Months Ended June 30, 1999 1,859 16,640 -- -- (836) (6,405) 1,023 10,235
Year Ended Dec. 31, 1998 1,965 16,510 -- -- (2,505) (19,065) (540) (2,555)
</TABLE>
--------------
(A)Commencement of sale of Navigator Class shares.
39
<PAGE>
Investment Advisers
For Global Government:
Western Asset Management Company
Pasadena, CA
For International Equity and Semi-Annual Report
Emerging Markets: June 30, 1999
Batterymarch Financial Management, Inc.
Boston, MA Legg Mason
Global
Investment Manager Trust, Inc.
Legg Mason Fund Adviser, Inc.
Baltimore, MD
Global Government Trust
Board of Directors
John F. Curley, Jr., Chairman International Equity Trust
Edward A. Taber, III, President
Richard G. Gilmore Emerging Markets Trust
Arnold L. Lehman
Dr. Jill E. McGovern
T. A. Rodgers Primary Shares
Transfer and Shareholder Servicing Agent
Boston Financial Data Services [LOGO HERE]
Boston, MA
HOW TO INVEST(SM)
Custodian
State Street Bank & Trust Company
Boston, MA
Counsel
Kirkpatrick & Lockhart LLP Washington, D.C.
Independent Accountants
PricewaterhouseCoopers LLP
Baltimore, MD
This report is not to be distributed unless preceded or
accompanied by a prospectus.
Legg Mason Wood Walker, Incorporated
---------------------------------------
100 Light Street
P.O. Box 1476, Baltimore, MD 21203-1476
410 o 539 o 0000
LMF-042
