ANNUAL REPORT
DECEMBER 31, 1999
LEGG MASON
GLOBAL
TRUST, INC.
GLOBAL INCOME TRUST
INTERNATIONAL EQUITY TRUST
EMERGING MARKETS TRUST
EUROPE FUND
PRIMARY CLASS AND CLASS A
LEGG MASON FUNDS
The Art of Investing(SM)
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To Our Shareholders,
We are pleased to provide you with the annual report for the Legg Mason
Global Trust, comprised of the Global Income Trust, International Equity Trust,
Emerging Markets Trust, and Europe Fund, for the year ended December 31, 1999.
With this report, we welcome the Europe Fund and its shareholders to the Legg
Mason Family of Funds. The Europe Fund, formerly a series of the Bartlett
Capital Trust, reorganized as a Legg Mason Fund on October 5, 1999, following
the approval given by its shareholders at a special meeting held on September
23, 1999.
In May 1999, we notified you of changes we were planning to make to the
Global Government Trust. Our changes were approved by the SEC and in September,
Global Government Trust became the Global Income Trust. Along with a new name,
the Fund's investment strategy was changed to permit a larger portion of its
assets to be invested in non-government fixed income securities issued by
international entities. We are hopeful that these changes will benefit the
Fund's shareholders as additional investment opportunities are now available to
Global Income Trust.
Beginning on the next page, the portfolio managers responsible for the Global
Trust portfolios discuss results for 1999 and the investment outlook. The Funds'
total returns for various periods ending December 31, 1999, 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.
PricewaterhouseCoopers LLP, Global Trust's independent accountants, has
completed its annual examination, and audited financial statements for the
fiscal year ended December 31, 1999, are included in this report.
The Board of Directors approved long-term capital gains distributions of
$0.865 and $2.08 per share to shareholders of International Equity Trust and
Europe Fund, respectively, which were paid on November 26, 1999, to shareholders
of record on November 23, 1999.
We are pleased to report that Legg Mason has made a seamless transition into
the new century. Our critical internal and external systems are operating free
of Y2K disruptions. Internal and external operations, including the Fund's
custodian and transfer agency, are running smoothly, and Fund shareholders are
receiving uninterrupted account maintenance and transaction support.
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
February 7, 2000
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Portfolio Managers' Comments
Global Income Trust
Market Overview
Global interest rates climbed last year (with Japan being the notable
exception), making this the second worst year in recorded history for U.S. and
European bond investors. Several factors were behind the rise: 1) fears that a
re-emergence of strong growth worldwide would trigger Central Bank tightening
actions, 2) precautionary hedging and new issuance in advance of the much-feared
Y2K phenomenon, and 3) rising energy prices which began to be reflected in
headline inflation measures. Although the Federal Reserve and the Bank of
England raised interest rates fairly aggressively and the European Central Bank
("ECB") only modestly, Euro bond market yields, helped by policy easing, rose
modestly less than U.S. yields, while longer-dated U.K. yields rose by
substantially less, thanks to surging demand by institutional investors.
Emerging market debt stole the show, however, as spreads tumbled on signs of
renewed economic growth and reduced Y2K fears toward the end of the year.
Currencies were a mixed bag, with the yen and sterling appreciating across the
board and the dollar up sharply against the Euro.
The Japanese economy surprised market expectations by showing increasing
signs of life despite ongoing deflation and a very strong currency. Indeed,
renewed confidence in the Japanese economy drove the stock market significantly
higher and undoubtedly contributed to strong demand for the currency. The U.S.
economy posted another impressive year of growth, while Europe improved
moderately. Real yields reached unusually high levels in the U.S., likely driven
by strong equity markets and tightening monetary policy.
Fund Performance
The Fund's investment strategies produced mixed, but generally positive
results. Globally, sovereign bonds delivered only average returns. Our heavy
underweighting in the Japanese bond market detracted from returns, as they
sharply outperformed most other markets. Modestly long duration in dollar-bloc
markets also detracted from returns, but this was offset by a barbelled yield
curve exposure in both the dollar bloc and Europe, which benefited from flatter
yield curves. The major source of performance gains was exposure to emerging
market debt as it generated stellar returns during the period. Exposure to Greek
securities also contributed to performance as their interest rates converged on
core European rates.
The Fund posted a total return of -3.23% for the twelve months ended December
31, 1999. This contrasts favorably to the performance of the benchmark Salomon
Brothers World Government Bond Index, which was -4.27%.
Market Commentary and Outlook
The New Year is shaping up as one that promises relief from the tensions that
have accumulated in the bond market over the past year. We've already seen some
relief from the terrible spread widening of 1998, but there's room for more
since spreads still remain substantially higher than long-term averages. Where
we have yet to see any relief at all is in the clash between the Federal Reserve
and the robust U.S. economy. The Fed appears to have set itself squarely against
an economy that so far has refused to succumb to higher interest rates, in the
belief that strong demand could generate inflation pressures going forward. The
U.S. bond market was hit with three Fed tightenings last year and has now priced
in the expectation of at least four more by Labor Day.
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The major problem facing the bond market today is not the prospect of higher
inflation, but the uncertainty surrounding the likely course of Fed policy.
Inflation expectations are still relatively sanguine, as measured by the 2.3%
difference between 30-year U.S. Treasury Inflation-Protected Securities ("TIPS")
yields and 30-year Treasury yields. The dollar is relatively strong, commodity
and precious metals prices are weak (with the notable exception of energy
prices), the yield curve is about as flat as it was in late 1994, and real
interest rates are very high. Taken together, these sensitive indicators suggest
that monetary policy is reasonably tight and inflation pressures are all but
absent from the economic fundamentals. Sooner or later, we feel that low
inflation fundamentals will reassert themselves and this in turn will allow
yields to decline to levels more commensurate with 1% to 2% inflation and a
solid currency.
If it weren't for the threat of higher short-term rates, the U.S. bond market
would be the clear winner in the global sweepstakes. Inflation fundamentals look
reasonably good in most major countries, though Japan continues to suffer from
deflation. European bonds have weathered the Central Bank tightening storm a bit
better than their U.S. counterparts, if only because European growth prospects
are less dynamic and unemployment burdens are higher. Still, the Euro has
depreciated significantly against both the dollar and the yen, and this raises
the risk of higher inflation down the road. Plus, yield curves are steeper in
Europe than in the U.S. and U.K., where curves are beginning the process of
inversion, suggesting that the ECB may be erring on the side of monetary ease.
Japanese bond yields have declined to extremely low levels, driven by ongoing
deflationary pressures and a strengthening yen. It will be tough for Japanese
government bonds to compete with other bonds unless deflationary conditions
persist.
Strategy
Consistent with this view, we anticipate remaining overweight duration
exposure in the dollar bloc countries, with a focus on non-sovereign issues, in
anticipation of declining yields. Due to the pronounced flattening of the U.S.
yield curve, we are in the process of shifting from a barbelled to a bulleted
term structure exposure in anticipation of an eventual steepening. This may be
driven by the realization that the Fed will tighten by less than already
expected, or by an eventual move to ease policy in the wake of a significant
slowdown in either inflation or economic growth. We plan to remain barbelled and
broadly neutral on duration in Eurozone government bonds. We will remain
underweight in Japanese bonds, but with a view to reducing our heavily
underweight exposure on weakness. Outside of the major countries, we are
focusing on Greece for its continued convergence appeal, Poland on expectations
of improving fundamentals, and on select Scandinavian issues which have
attractive yields.
We continue to believe that a broadly diversified exposure to sovereign debt
in the major emerging market countries holds the potential to boost total
returns significantly, but we may take a further narrowing of spreads as an
opportunity to lighten exposure somewhat.
In terms of currency exposure, we plan to remain neutral to the global
benchmark until strong evidence of a change in growth patterns emerges, with
opportunistic exposure to non-core European currencies in the meantime.
Western Asset Management Company
February 2, 2000
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Portfolio Managers' Comments
International Equity Trust
Performance
For the year, the total return for International Equity Trust was +20.6% on
an NAV basis, compared with +27.0% for the MSCI EAFE Index. For the second half
of 1999, the return for the Fund was +19.2% on an NAV basis, compared with
+22.1% for the index.
The Fund's shortfall for the year compared with the benchmark was due to the
average underweight in Japan during the period and the underweight in the large,
expensive momentum-driven telecommunications and technology stocks. Clearly, by
year end, investing for "growth at any price" had become a global phenomenon.
The Japanese market returned +61.8% in 1999. The Fund began the year with a
weighting of only 8% in Japan, compared with 21% for the MSCI EAFE Index. At
that time, we found Japanese stocks unattractive compared with other
opportunities. As the effect of government stimulation in Japan began upgrading
the economic numbers, we began to selectively increase the weight in that
market. With the continued convergence of good news in Japan over the year,
especially positive earnings expectations revisions, we continued to find
attractive opportunities. For the year, stock selection in Japan was positive.
At year-end 1999, the Fund's weight in Japan was in line with the benchmark,
30.4% compared with 27.4%.
The Fund's underweight in the U.K. (which was up only +12.5%) and positive
stock selection in that market helped the relative return for the year. In
addition, the Fund's exposure to emerging markets, although minimal, added
value.
Our model for stock selection provides a balance among value, growth,
expectations and technical factors. In the momentum-driven environment of 1999,
only the short-term-oriented technical and expectations components of our model
had a positive spread top to bottom, while the growth and value factors did not.
We did not change our stock selection process to capture what we believed was a
short-lived market environment. We can't predict market conditions but, over the
long term, we believe our balanced model is the best approach for stock
selection.
Market Overview
Japan remains top-rated, with positive expectations and technical rankings.
The necessary structural reforms are taking place and provide the basis for a
sustained, long-term recovery. Ownership of the market has broadened, away from
the majority ownership of cross-holdings by banks and corporations to more
dominant holdings by institutions (roughly 40%). Ignoring currency fluctuations,
we are beginning to see sustainable operating profit growth coming through in
many sectors of the economy. More importantly, corporate restructuring is now
the dynamic driver that is re-rating equities. We expect the market to broaden
from its fixation on technology to focus more on domestic recovery. We believe
Japan remains a good long-term story.
The continental European region can be described as fair value, with
valuations slightly below average when compared to the rest of EAFE.
Fortunately, the slight overvaluation is offset by positive funds flows and
better-than-average earnings estimate revisions. In 1999, the pace of
restructuring and mergers picked up. Over the longer run, the outlook for
European companies is bright.
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The United Kingdom remains our lowest rated region, with all rankings either
negative or neutral. Continued interest rate increases and a strong British
pound relative to the Euro have put a damper on relative attractiveness. The
economy, particularly consumption, has been strong, and the U.K. Monetary Policy
Committee has been vigilant in increasing interest rates to dampen inflation.
Consumption in 1999 was strong, and there are few signs of lessening. Interest
rate concerns will be the primary driver of market expectations for 2000. With
the entry of Wal-Mart and e-tailing growth, consumer prices and retail margins
will remain under pressure. Despite our current low rating, we continue to find
individual stock opportunities in the region.
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 are most predictive of excess return. We maintain a balance among
size, sector and country for the Fund within Japan, continental Europe, the U.K.
and the smaller regions through the combination of sector scoring and portfolio
construction rules.
Looking ahead, the Fund, oriented towards fundamental measures of both value
and growth, has a lower forward P/E than its benchmark, 17.9x compared with
25.7x, and a two-year growth rate in line with the index, 20.5% compared with
21.5%.
Batterymarch Financial Management, Inc.
February 2, 2000
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Portfolio Managers' Comments
Emerging Markets Trust
Performance
For the year, the Emerging Markets Trust return was +101.2% on an NAV basis,
compared with +66.4% for the MSCI Emerging Markets Free Index. For the second
half, the Fund's return was +34.5%, compared with +19.0% for the index.
The Fund significantly outperformed the benchmark for the year. This relative
performance was mostly attributable to positive stock selection across most
markets. Stock selection within India, China, Korea, Thailand, Turkey, South
Africa and Brazil was particularly outstanding and added the most value to the
Fund's relative performance. To some extent, the positive stock selection was
due to holdings in the technology sector, where we believe valuations are not as
stretched as are valuations in some of the more developed markets, while
prospects are perhaps brighter.
With focus on earnings rather than valuation changes, returns for 2000 may
not be as large as experienced in 1999, but they could be sufficient to allow
emerging markets to be one of the most attractive asset classes. With the
favorable investment environment for emerging markets, we continue to find
attractive stocks throughout the world.
Market Commentary
The Latin American rally that began in late October continued in earnest
during December. Latin fixed income spreads continued to tighten and are now
tighter than at any point since the beginning of the Asia crisis in the summer
of 1997. Equities are catching up--with Brazil, Mexico and the
telecommunications and media sectors leading the way. The region returned 58.9%
for the year.
In Brazil, although the decline of nominal interest rates remains stalled due
to inflation concerns, expectations for successful passage of some of the
important fiscal reform measures continue to improve, and we expect inflation
concerns to diminish. In Mexico, we see a very real possibility of an upgrade to
investment grade status following presidential elections in July and we expect
Mexico's cost of capital to decline accordingly, allowing for further multiple
expansion on Mexican equities.
Asia fully participated in the strong global equity markets, with particular
emphasis, as elsewhere, on technology, the Internet and telecoms. The region's
markets rose 69.4% for the year as optimism spread about the sustainability of
the economic rebound. With improving country balance sheets, regional economies
have been able to lower interest rates but to retain stable-to-strong local
currencies. While we retained a bias towards the technology sector in the Fund,
we began to emphasize some domestic recovery plays which have been neglected in
the technology fever.
In Turkey and Russia, macro-economic considerations dominated stock
opportunities and the markets rose most dramatically, up 252% and 247%,
respectively, for the year. The Turkish government has been following a
reformist policy aimed at bringing down near hyper-inflationary monetary growth,
interest rates fell dramatically and the International Monetary Fund ("IMF")
provided a significantly positive stamp of approval for investors. In Russia,
Yeltsin's resignation at year end surprised investors. Stocks had been
recovering, principally on buying from foreign investors who had been locked
into the currency. While the momentum of the price recovery and the valuations
brought back many global fund managers, prospects in Russia remain highly
speculative.
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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 experienced negative fund flows in 1999 in spite of the
dramatic gains. We expect stock prices will continue to increase, driven by
earnings rather than multiple expansion. While the risk for emerging markets is
the U.S. market and the near-perfect correlations we have witnessed recently,
buying opportunities may occur on U.S. market volatility and weakness.
The Fund is well diversified across sectors and markets. The Fund's forward
P/E of 12.5x is lower than 14.2x for the benchmark. The emerging markets index
has a growth-to-P/E ratio of 1.7x, which is very attractive compared with other
investment alternatives. The Fund's growth-to-P/E ratio is even more attractive,
at 2.1x.
Batterymarch Financial Management, Inc.
February 2, 2000
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Portfolio Managers' Comments
Europe Fund
The Fund had a relatively good year, outperforming the MSCI Europe Index
benchmark's return of +15.89% with its total return of +25.41% on Class A
shares. (1) The Fund benefited from an exposure to Europe's better managed and
performing businesses, measured on a global basis, including the likes of NOKIA
and VODAFONE AIRTOUCH, but also from those companies where evidence of tangible
restructuring was more obvious. While general concern has been expressed about
the lack of breadth in global markets generally, and particularly European
equity markets, the converse advantage is that good performing franchises have
been more obviously rewarded in share price terms rather than being lost in the
crowd. Nevertheless, the performance the Fund achieved has come from the overall
portfolio, rather than a concentration in a few individual holdings, and with
this in mind we remain confident in the Fund's future prospects.
Our last annual report ended on an optimistic note. World markets had
recovered from their third quarter 1998 debt-inspired lows, and panic had been
avoided. Concerted Central Bank easing initiated by the U.S. Federal Reserve,
and followed in the U.K. and Europe, appeared to have solved or at least
sidelined events that had previously taken on cataclysmic proportions. Investors
in Europe had the added excitement, although some would say burden, of the debut
of the Euro. The fanfare greeting the new currency, however, was to prove overly
enthusiastic, and since January the currency has only looked one way: down. The
weakness of the Euro was indicative of the problems that beset Europe for the
first six months of the year. Economic growth in Europe remained sluggish when
compared to the U.S., and the evidence of a slight recovery was overshadowed by
the strong rebounds in Asian economies and stock markets. The new European club
also experienced some teething troubles as individual countries sought to
promote their nationals to positions of prominence, causing some angst.
Despite the generally mixed picture, European equity markets continued to
make some headway during the first six months, although dollar returns were
trimmed by the declining currency. Relative returns were disappointing by
international comparisons. However, the bottom-up themes of restructuring and
mergers and acquisitions activity, which we have mentioned in previous reports,
continued to gather momentum. The newly created single marketplace forced
competition on some domestic franchises that had previously been protected by
national boundaries, while our largest corporates faced ever-toughening global
competition. Corporate restructuring was not just a fashionable theme to which
business leaders paid lip service, but an actual necessity. However, by the
second half of the year the picture was looking a little brighter. The early
signs of economic recovery, evident in the first half, were starting to come
through far more. The weaker currency, once seen as a negative, then started to
have a beneficial impact on the Fund's performance. The greater trading
competitiveness that virtual dollar parity afforded Europe's exporters
translated into better industrial production and confidence, while the consumer
side of the market continued in a more buoyant mood. Having entered the year
with interest rates on a downward trend and the threat of recession on the
agenda, we leave the millennium with rates firming and growth forecasts above
trend. The European markets responded to this better climate, moving strongly
ahead to record new highs at the end of the year.
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(1) Excluding the maximum 4.75% sales charge. Return information for Primary
Class shares may be found on page 12.
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As well as the generally better environment, the pace of corporate
restructuring increased significantly in the second half of the year with the
telecommunications sector and related areas leading the way. The first
significant deal involved Olivetti acquiring Telecom Italia through its
subsidiary TECNOST. This proved to be the first in a series of landmark deals,
proving that the new market denied protection to domestic franchises. Later in
the year VODAFONE, which had already acquired Airtouch in the U.S., launched the
largest ever hostile bid to buy MANNESMANN in Germany. This was in response to
MANNESMANN'S acquisition of Orange, the third-placed U.K. wireless operator,
with the strategic logic of creating the first truly global mobile telephony
group in this exciting area. Mobile telephony and the related areas are one of
the few sectors in which Europe excels. Witness the fact that at the year end
NOKIA, the Finnish handset mobile and infrastructure company, became Europe's
largest market capitalised company, and the mobile penetration model is lead by
the European example.
The financial sector proved a close second in terms of dealmaking. Banco
Santander proved to be the consolidator in the Iberian Peninsula, while the
battle still rages for the ownership of NATIONAL WESTMINSTER BANK in the U.K.
Both the ROYAL BANK OF SCOTLAND and the Bank of Scotland are jockeying for
ownership and the deal will be concluded in the New Year. This will continue to
be an ongoing theme throughout Europe, and the increasing openness of the market
will encourage international entrants into this exciting arena.
OUTLOOK
Looking into the next millennium, the picture in Europe looks relatively
robust. Growth appears to be back on course, and the markets are well supported
by the underlying theme of restructuring. European companies are still some way
behind their U.S. peer group in terms of efficiency, which in itself should
allow for further catch-up in terms of performance. Increasingly, European
companies are being recognised as leading players in a global landscape rather
than just their domestic location, and also the European investment map is being
defined more by sector than by country. We remain confident that our
concentration on Europe's quality growth situations will reward investors
further in performance terms, and that Europe's credentials as a diversifying
asset class for the dollar-based investor are intact.
Lombard Odier International Portfolio Management
February 4, 2000
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Performance Information
Legg Mason Global Trust, Inc.
PERFORMANCE COMPARISON OF A $10,000 INVESTMENT AS OF DECEMBER 31, 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 adjustments have been
made for any income taxes payable by shareholders.
The following graphs compare each Fund's total returns against that of
the most closely matched broad-based securities market index. The lines
illustrate the cumulative total return of an initial $10,000 investment
for the periods indicated. The line for each Fund represents the total
return after deducting all Fund investment management and other
administrative expenses and the transaction costs of buying and selling
securities. The line for Class A shares of Europe Fund reflects the
maximum sales charge of 4.75% (the return table shown with the respective
graph provides information both including and excluding the effect of the
maximum sales charge). The line representing the securities market index
for each Fund does not include any transaction costs associated with
buying and selling securities in the index or other administrative
expenses.
Each Fund has two authorized classes of shares: Primary Class and
Navigator Class. Europe Fund has an additional authorized class of shares:
Class A. Information about the Navigator Class, offered only to certain
institutional investors, is contained in a separate report to its
shareholders.
GLOBAL INCOME TRUST -- PRIMARY CLASS
Cumulative Average Annual
Total Return Total Return
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One Year -3.23% -3.23%
Five Years +38.68 +6.76
Life of Class+ +45.98 +5.80
+ Inception Date-- April 15, 1993
[COMPARISON LINE GRAPH APPEARS HERE WITH THE FOLLOWING PLOT POINTS]
Global Income Salomon Brothers
Trust World Government
Primary Class Bond Index(1)
4/15/93 $10,000 $10,000
$10,010 $10,292
$10,438 $10,757
12/93 $10,676 $10,753
$10,361 $10,753
$10,404 $10,825
$10,736 $10,952
12/94 $10,526 $11,005
$11,354 $12,208
$12,114 $12,859
$12,220 $12,725
12/95 $12,716 $13,100
$12,657 $12,854
$12,809 $12,907
$13,244 $13,259
12/96 $13,762 $13,574
$13,310 $13,013
$13,724 $13,407
$13,795 $13,578
12/97 $13,529 $13,606
$13,598 $13,713
$13,790 $13,985
$14,182 $15,150
12/98 $15,085 $15,688
$14,369 $15,083
$13,780 $14,563
$14,381 $15,223
12/99 $14,598 $15,019
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INTERNATIONAL EQUITY TRUST -- PRIMARY CLASS
Cumulative Average Annual
Total Return Total Retun
------------ -----------
One Year +20.58% +20.58%
Life of Class+ +67.65 +11.19
+ Inception Date--February 17, 1995
[COMPARISON LINE GRAPH APPEARS HERE WITH THE FOLLOWING PLOT POINTS]
International
Equity Trust
Primary Class MSCI EAFE Index(2)
2/17/95 $10,000 $10,000
$10,090 $10,624
$10,400 $10,701
$10,720 $11,147
12/95 $10,811 $11,598
$11,438 $11,933
$12,054 $12,122
$11,993 $12,107
12/96 $12,547 $12,300
$12,886 $12,107
$14,313 $13,678
$14,261 $13,582
12/97 $12,816 $12,518
$14,828 $14,360
$15,133 $14,512
$12,098 $12,450
12/98 $13,903 $15,022
$13,804 $15,231
$14,069 $15,618
$14,555 $16,303
12/99 $16,765 $19,072
EMERGING MARKETS TRUST -- PRIMARY CLASS
Cumulative Average Anuual
Total Return Total Retun
------------- -----------
One Year +101.15% +101.15%
Life of Class+ +40.55 +9.93
+ Inception Date--May 28, 1996
[COMPARISON LINE GRAPH APPEARS HERE WITH THE FOLLOWING PLOT POINTS]
Emerging Market
Trust
Primary Class MSCI EMF Index(3)
5/28/96 $10,000 $10,000
$10,020 $10,062
$9,970 $9,698
12/96 $10,540 $9,641
$11,654 $10,457
$12,767 $11,352
$12,205 $10,334
12/97 $9,889 $8,524
$10,351 $9,052
$8,373 $6,916
$6,014 $5,394
12/98 $6,987 $6,364
$8,032 $7,155
$10,451 $8,901
$10,060 $8,443
12/99 $14,055 $10,590
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PERFORMANCE INFORMATION -- CONTINUED
EUROPE FUND -- PRIMARY CLASS
Cumulative Average Annual
Total Return Total Return
One Year +24.44% +24.44%
Life of Class+ +75.99 +26.06
+ Inception Date--July 23, 1997
[COMPARISON LINE GRAPH APPEARS HERE WITH THE FOLLOWING PLOT POINTS]
Europe Fund
Primary Class MSCI Europe Index(4)
7/23/97 $10,000 $10,000
$10,143 $10,343
12/97 $10,068 $10,350
$12,616 $12,452
$13,273 $13,093
$11,522 $11,205
12/98 $14,143 $13,303
$14,091 $13,023
$13,874 $12,982
$13,996 $13,134
12/99 $17,599 $15,418
EUROPE FUND -- CLASS A(5)
Cumulative Total Return Average Annual Total Return
One Year +25.41%* +19.43% +25.41%* +19.43%
Five Years +229.71* +214.08 +26.95* +25.72
Ten Years +223.91* +208.58 +12.47* +11.93
*These figures reflect return information on Class A shares excluding the
maximum 4.75% sales charge which became effective July 21, 1997. The second
column in each section reflects return information including the sales charge.
[COMPARISON LINE GRAPH APPEARS HERE WITH THE FOLLOWING PLOT POINTS]
Europe Fund
Class A MSCI Europe Index(4)
12/89 $9,525 $10,000
$8,842 $9,872
$9,587 $10,757
$7,650 $8,909
$7,568 $9,615
$8,518 $10,084
$8,969 $9,410
$8,544 $10,553
12/91 $8,102 $10,876
$8,108 $10,533
$8,748 $11,528
$8,021 $10,897
$7,521 $10,364
$8,073 $11,041
$8,148 $11,239
$8,906 $12,229
12/93 $9,771 $13,399
$9,522 $13,198
$9,140 $13,022
$9,415 $13,579
$9,357 $13,705
$9,564 $14,551
$10,310 $15,468
$10,861 $16,118
12/95 $11,219 $16,668
$12,505 $17,287
$13,365 $17,740
$13,631 $18,417
$14,757 $20,183
$15,446 $21,167
$16,475 $23,060
$17,516 $24,969
12/97 $17,344 $24,987
$21,807 $30,060
$22,999 $31,607
$19,999 $27,050
$24,602 $32,116
$24,553 $31,438
$24,231 $31,340
$24,491 $31,706
12/99 $30,853 $37,220
12
<PAGE>
(1) The Salomon Brothers World Government Bond Index measures the total return,
in U.S. dollar terms, of a portfolio of the most liquid and highest quality
bonds of each of fourteen countries. Index returns are for the periods
beginning March 31, 1993.
(2) The Morgan Stanley Capital International (MSCI) Europe, Australia and the
Far East (EAFE) Index is an unmanaged index based on share prices of
approximately 1,100 companies listed on stock exchanges around the world.
Twenty countries are included in the index's portfolio. Index returns are
for the periods beginning February 28, 1995.
(3) The Morgan Stanley Capital International (MSCI) Emerging Markets Free (EMF)
Index is a market-weighted aggregate of 26 individual emerging country
indices and takes into account local and market restrictions on share
ownership by foreigners. Index returns are for the periods beginning May 31,
1996.
(4) The Morgan Stanley Capital International (MSCI)Europe Index is a
broad-based, unmanaged index based on the share prices of common stocks in
each of fourteen European countries. Index returns are for the periods
beginning July 31, 1997, for Primary Class and December 31, 1989, for Class
A.
(5) Prior to July 21, 1997, the Fund operated as a closed-end fund which
reinvested all dividends and distributions at an average reported sales
price on the New York Stock Exchange. The initial investment for Europe Fund
Class A shares is net of the 4.75% sales charge.
13
<PAGE>
Industry Diversification
Legg Mason Global Trust, Inc.
December 31, 1999
International Equity Trust
% of Net
Assets Value
- --------------------------------------------------------------------------------
(000)
Aerospace 0.4% $ 1,074
Automotive 5.3 15,595
Beverages 1.1 3,172
Chemicals 2.3 6,845
Construction 3.9 11,509
Diversified 5.3 15,571
Drugs, Cosmetics & Health 3.9 11,455
Electrical 0.5 1,516
Electronics 15.0 44,367
Financial 21.2 62,399
Food, Beverage and Tobacco 1.8 5,297
Machinery & Equipment 4.1 12,199
Metal Products 1.9 5,715
Metal Producers 2.0 5,875
Miscellaneous 3.7 10,892
Oil, Gas, Coal & Related 6.0 17,625
Other 0.4 1,251
Paper 2.2 6,389
Printing & Publishing 0.8 2,434
Recreation 1.1 3,364
Retailers 1.3 3,728
Tobacco 0.2 670
Transportation 1.1 3,274
Utilities 11.8 34,915
Short-Term Investments 2.9 8,693
------ --------
Total Investment Portfolio 100.2 295,824
Other Assets Less Liabilities (0.2) (538)
------ --------
NET ASSETS 100.0% $295,286
====== ========
Emerging Markets Trust
% of Net
Assets Value
- --------------------------------------------------------------------------------
(000)
Aerospace 0.6% $ 658
Banks 1.0 1,232
Business Machines 1.7 2,065
Chemicals 1.8 2,200
Coal, Gas & Oil 4.4 5,342
Computer/Software 2.5 2,958
Construction 3.7 4,419
Diversified 5.9 7,176
Drugs/Medicine 2.9 3,498
Electronics 18.5 22,370
Entertainment/Leisure 8.3 9,982
Finance 10.5 12,636
Food, Beverage & Tobacco 2.9 3,525
Forest Products 1.7 2,030
Insurance N.M. 31
Iron and Steel 3.5 4,271
Machinery & Equipment 0.3 373
Miscellaneous 0.3 328
Motor Vehicles 1.9 2,239
Retail (Non-Food) 1.2 1,398
Telecommunications 7.3 8,952
Transportation 0.8 974
Utilities 16.2 19,612
Short-Term Investments 4.6 5,485
------ ---------
Total Investment Portfolio 102.5 123,754
Other Assets Less Liabilities (2.5) (2,996)
------ ---------
NET ASSETS 100.0% $120,758
====== =========
Europe Fund
% of Net
Assets Value
- --------------------------------------------------------------------------------
(000)
Aerospace 1.6% $ 2,122
Automotive 1.2 1,578
Banking 11.0 14,988
Computer Services 7.7 10,474
Diversified 10.0 13,572
Electronics 5.8 7,855
Finance 2.8 3,867
General Industry 3.8 5,205
Insurance 6.6 8,972
Miscellaneous Manufacturing 1.5 1,989
Miscellaneous Services 1.4 $ 1,909
Oil & Gas 8.6 11,665
Pharmaceuticals & Health Care 9.0 12,145
Publishing 1.3 1,753
Retail Sales 4.4 5,983
Telecommunications 19.5 26,522
Transportation 1.1 1,505
Short-Term Investments 1.7 2,289
------ --------
Total Investment Portfolio 99.0 134,393
Other Assets Less Liabilities 1.0 1,295
------ --------
NET ASSETS 100.0% $135,688
======= ========
N.M.-Not meaningful.
14
<PAGE>
Statement of Net Assets
Legg Mason Global Trust, Inc.
December 31, 1999
(Amounts in Thousands)
<TABLE>
<CAPTION>
Global Income Trust
Maturity
Rate Date Currency Par Value
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Long-Term Debt Securities-- 101.7%
Australian Dollar-- 5.6%
DSL Bank 5.75% 9/15/04 AUD 4,000 $ 2,445
KFW International Finance Incorporated 6.25% 7/15/05 3,900 2,443
-------
4,888
-------
British Sterling-- 8.4%
Gallaher Group PLC 6.625% 5/21/09 GBP 750 1,129
Hammerson PLC 7.25% 4/21/28 800 1,377
Lehman Brothers Holdings PLC 6.95% 6/22/04 900 1,406
Luxfer Holdings PLC 10.125% 5/1/09 300 463
Unique Publishing Finance Co. PLC 6.542% 3/30/21 900 1,377
Welcome Break Financial PLC 8.284% 9/1/17 800 1,486
-------
7,238
-------
Danish Krone-- 7.7%
Nykredit 6.00% 10/1/29 DKK 12,014 1,513
Nykredit 7.00% 10/1/29 13,953 1,867
Unikredit Realkredit 7.00% 10/1/29 3,858 515
Unikredit Realkredit 8.00% 10/1/32 19,729 2,730
-------
6,625
-------
Euro-- 8.0%
Corporate-- 6.7%
ABN Amro Bank NV 5.375% 9/8/09 EUR 1,400 1,355
Global Telesystems 10.50% 12/1/06 500 504
Huntsman ICI Chemicals LLC 10.125% 7/1/09 1,100 1,177
Lloyds Bank PLC 5.625% 7/15/49 1,500 1,390
Netia Holdings II B.V. 13.50% 6/15/09 400 412
United Pan-Europe Communications N.V. 10.875% 8/1/09 450 464
Viatel Incorporated 11.50% 3/15/09 500 509
-------
5,811
Foreign Governments-- 1.3%
Buoni del Tesoro Poliennali 6.50% 11/1/27 1,100 1,157
-------
6,968
-------
Greek Drachma-- 3.0%
Hellenic Republic 8.60% 3/26/08 GRD 370,000 1,279
Hellenic Republic 6.30% 1/29/09 440,000 1,329
-------
2,608
-------
</TABLE>
15
<PAGE>
Statement of Net Assets-- Continued
Legg Mason Global Trust, Inc.
<TABLE>
<CAPTION>
Global Income Trust -- Continued
Maturity
Rate Date Currency Par Value
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Hungarian Forint-- 2.0%
Government of Hungary 12.50% 4/12/02 HUF 275,000 $ 1,121
Government of Hungary 12.50% 9/24/02 150,000 620
-------
1,741
-------
Norwegian Krone-- 3.2%
Kingdom of Norway 5.50% 5/15/09 NOK 23,000 2,740
-------
Polish Zloty-- 2.2%
Government of Poland 8.50% 10/12/00 PLN 8,800 1,899
-------
South African Rand-- 2.0%
Republic of South Africa 13.00% 8/31/10 ZAR 11,000 1,721
-------
Swedish Krona-- 0.9%
Statens Bostadsfinansier 5.50% 10/15/03 SEK 7,000 806
-------
Turkish Lira-- 1.6%
Republic of Turkey 72.00% 10/3/01 TRL 280,000,000 734
Republic of Turkey 72.00% 10/3/01 235,000,000 616
-------
1,350
-------
United States Dollar-- 57.1%
Asset-Backed Securities-- 5.1%
Contimortgage Home Equity Loan Trust 6.42% 4/25/14 USD 435 433
First Chicago Master Trust 5.53% 4/15/03 1,000 999(A)
Household Affinity Credit Card
Master Trust 6.583% 2/15/04 1,000 999(A)
Mellon Bank Credit Card Master Trust 6.653% 4/15/03 1,000 1,001(A)
Saxon Asset Securities Trust 6.731% 6/25/14 894 894(A)
SLM Student Loan Trust 1998-2 5.544% 4/25/07 59 58
-------
4,384
-------
Corporate Bonds and Notes-- 15.9%
Adelphia Communications Corporation 7.875% 5/1/09 250 225
American Standard Companies, Inc. 8.25% 6/1/09 250 241
Avis RentACar Incorporated 11.00% 5/1/09 250 264
Blount International Inc. 13.00% 8/1/09 250 265
Charter Communication Holdings LLC 8.625% 4/1/09 250 233
CSC Holdings Incorporated 8.125% 7/15/09 30 30
Dow Chemical Company 7.375% 11/1/29 950 908
EchoStar Communications Corporation 9.375% 2/1/09 250 251
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Maturity
Rate Date Currency Par Value
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Corporate Bonds and Notes -- Continued
Global Crossing Holdings Limited 9.50% 11/15/09 USD 250 $ 249
Heller Financial Incorporated 7.375% 11/1/09 850 828
IBJ Preferred Capital Corporation, LLC 8.79% 12/29/49 500 472(B)
J. L. French Automotive Castings 11.50% 6/1/09 100 103
J. Seagram & Sons 7.60% 12/15/28 1,000 942
Lockheed Martin Corporation 8.20% 12/1/09 1,000 998
Lockheed Martin Corporation 8.50% 12/1/29 300 300
Lyondell Chemical Company 9.625% 5/1/07 250 256
Metromedia Fiber Network Incorporated 10.00% 12/15/09 250 257
Nextel Communications Incorporated 9.375% 11/15/09 250 246
NEXTLINK Communications Inc. 10.75% 6/1/09 250 257
NTL Incorporated 10.75% 4/1/08 500 541(C,D)
Nuevo Grupo Isuacell S A De Cv 14.25% 12/1/06 250 259(D)
Occidental Petroleum Corporation 8.45% 2/15/29 750 778
P&L Coal Holdings Corp. 9.625% 5/15/08 250 248
Petroleos Mexicanos 9.50% 9/15/27 800 800
Petroleos Mexicanos 9.50% 9/15/27 20 20
Primus Telephone Group Incorporated 12.75% 10/15/09 526 546
SB Treasury Company, LLC 5.544% 12/29/49 500 495(B)
Tenneco Incorporated 11.625% 10/15/09 250 255
The AES Corporation 9.50% 6/1/09 250 253
TRW Incorporated 7.75% 6/1/29 1,000 951
Union Pacific Corporation 6.625% 2/1/29 750 633
Verio Incorporated 10.625% 11/15/09 250 258
VoiceStream Wireless Corporation 10.375% 11/15/09 100 103
VoiceStream Wireless Corporation 11.875% 11/15/09 100 61
Wal-Mart Stores, Inc. 6.875% 8/10/09 290 282
-------
13,808
-------
Foreign Governments-- 14.4%
Banque Centrale De Tunisie 8.25% 9/19/27 1,000 814(D)
Kingdom of Morocco 6.844% 1/1/09 1,619 1,465(D)
Kingdom of Morocco 6.844% 1/1/09 110 100(D)
Korea Electric Power Corp 7.75% 4/1/13 420 393(D)
National Republic of Bulgaria 6.50% 7/28/11 1,275 1,009(A,D)
Republic of Argentina 0% 10/15/02 170 128(C,D)
Republic of Argentina 6.813% 3/31/05 861 766(D)
Republic of Argentina 11.75% 4/7/09 825 826(D)
Republic of Argentina 9.75% 9/19/27 263 236(D)
Republic of Brazil 7.00% 4/15/09 360 288(C,D,E)
Republic of Brazil 8.00% 4/15/14 285 211(D,E)
</TABLE>
17
<PAGE>
Statement of Net Assets-- Continued
Legg Mason Global Trust, Inc.
<TABLE>
<CAPTION>
Global Income Trust -- Continued
Maturity
Rate Date Currency Par Value
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Foreign Governments -- Continued
Republic of Colombia 9.75% 4/23/09 USD 550 $ 527(D)
Republic of Panama 6.50% 7/17/14 200 157(A,D)
Republic of Panama 4.25% 7/17/16 200 157(D)
Republic of Panama 9.375% 4/1/29 250 237(D)
Republic of Peru 4.50% 3/7/17 785 544(D)
Republic of Philippines 9.875% 1/15/19 300 295(D)
Republic of Philippines 9.50% 10/21/24 500 506(D)
Republic of South Korea 8.875% 4/15/08 580 610(D)
State of Qatar 9.50% 5/21/09 1,000 1,047(B,D)
United Mexican States 10.375% 2/17/09 50 54(D)
United Mexican States 11.50% 5/15/26 1,535 1,822(D)
United Mexican States 11.50% 5/15/26 230 273(D)
Vnesheconombank 6.906% 12/15/15 25 4(A,B,D)
-------
12,469
-------
Mortgaged-Backed Securities-- 0.3%
GMAC Commercial Mortgage
Securities Inc. 1.089% 7/15/09 7,900 245(F)
-------
U.S. Government and Agency Obligations-- 21.4%
Fannie Mae 6.625% 9/15/09 210 204
Fannie Mae 6.25% 5/15/29 340 303
Fannie Mae 6.50% 1/15/30 5,400 5,088(G)
Fannie Mae 7.50% 1/15/30 3,000 2,966(G)
Fannie Mae 6.21% 8/6/38 60 52
Freddie Mac 6.625% 9/15/09 450 437
Freddie Mac 7.00% 1/15/30 2,400 2,323(G)
Resolution Funding Corporation 0% 10/15/19 3,200 803(H)
United States Treasury Inflation-Indexed
Security 3.625% 1/15/08 1,855 1,766(I)
United States Treasury Inflation-Indexed
Security 3.625% 4/15/28 510 455(I)
United States Treasury Inflation-Indexed
Security 3.875% 4/15/29 3,806 3,553(I)
United States Treasury Notes 5.75% 6/30/01 600 596
United States Treasury Notes 5.875% 11/15/04 60 59
-------
18,605
-------
49,511
-------
Total Long-Term Debt Securities (Identified Cost-- $88,273) 88,095
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Currency Par Value
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Warrants-- N.M.
United States Dollar-- N.M.
Firstcom Corporation USD 18 wts $ 0
Republic of Argentina 1 2
-------
Total Warrants (Identified Cost-- $23) 2
- ----------------------------------------------------------------------------------------------------------------------
Short-Term Investments -- 6.4%
Options Purchased -- N.M.
CHF Call / USD Put, February 2000,
Strike Price $1.40 100(J) N.M.
Euribor Futures Call, July 2000,
Strike Price $97.25 280(J) 4
USD Call / ZAR Put, January 2000,
Strike Price ZAR 6.1732 50(J) 5
USD Put / Euro Call, June 2000,
Strike Price $1.06 2,100(J) 32
-------
41
-------
Repurchase Agreements-- 6.4%
Lehman Brothers, Inc.
3.75%, dated 12/31/99, to be repurchased at $538 on
1/3/00 (Collateral:$550 Fannie Mae floating-rate notes,
due 3/23/00, value $549) 538 538
Merrill Lynch Government Securities, Inc.
4.10%, dated 12/31/99, to be repurchased at $5,002 on
1/3/00 (Collateral:$4,915 Fannie Mae notes, due
2/1/05, value $5,273) 5,000 5,000
-------
5,538
-------
Total Short-Term Investments (Identified Cost-- $5,755) 5,579
- ----------------------------------------------------------------------------------------------------------------------
Total Investments-- 108.1% (Identified Cost-- $94,051) 93,676
Other Assets Less Liabilities-- (8.1)% (7,042)
-------
Net assets consisting of:
Accumulated paid-in capital applicable to 9,332 shares outstanding $93,344
Under/(over) distributed net investment income (1,514)
Accumulated net realized gain/(loss) on investment and
foreign currency transactions (5,316)
Unrealized appreciation/(depreciation) of investments and foreign
currency transactions 120
------
Net assets-- 100.0% $86,634
-------
Net asset value per share $9.28
-------
</TABLE>
19
<PAGE>
Statement of Net Assets-- Continued
Legg Mason Global Trust, Inc.
<TABLE>
<CAPTION>
Global Income Trust -- Continued
Actual Appreciation/
Expiration Contracts (Depreciation)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Options Written(K)
U.S. Treasury Bond Futures Call, Strike Price $94 February 00 20 $11
U.S. Treasury Bond Futures Call, Strike Price $96 February 00 30 20
U.S. Treasury Bond Futures Call, Strike Price $98 May 00 15 7
U.S. Treasury Bond Futures Put, Strike Price $88 February 00 1 0
U.S. Treasury Bond Futures Put, Strike Price $90 February 00 16 (5)
U.S. Treasury Bond Futures Put, Strike Price $88 May 00 10 (6)
-------
$27
-------
Futures Contracts Purchased(K)
U.S. Treasury Bond Futures March 00 21 $(29)
U.S. Treasury Bond Futures March 00 3 (11)
-------
$(40)
-------
Futures Contracts Sold(K)
United Kingdom Long Gilt March 00 11 $ 40
U.S. Treasury Bond Futures March 00 89 260
U.S. Treasury Bond Futures March 00 12 23
-------
$323
-------
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(A) 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 December 31, 1999.
(B) Rule 144a Security -- A security purchased pursuant to Rule 144a under the
Securities Act of 1933 which may not be resold subject to that rule except
to qualified institutional investors. These securities represent 2.3% of net
assets.
(C) Stepped Coupon Security -- A bond which amortizes to par by a specific date,
at which time it begins to accrue interest or pay dividends.
(D) Yankee Bond-- A dollar-denominated bond issued in the U.S. by foreign
entities.
(E) Front-Loaded Interest Reduction Bond (FLIRB)-- Security pays a portion of
the coupon in cash and a portion is capitalized as an increase in par.
(F) Stripped Security -- Security with interest-only payment streams. For
interest-only securities, the amount shown as principal is the notional
balance used to calculate the amount of interest due.
(G) When-Issued Security -- Security purchased on a delayed delivery basis.
Final settlement amount and maturity date have not yet been announced.
(H) 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.
(I) 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.
(J) This represents the actual number of contracts.
(K) Options and futures are described in more detail in the notes to financial
statements.
N.M. - Not meaningful.
See notes to financial statements.
20
<PAGE>
Statement of Net Assets
Legg Mason Global Trust, Inc.
December 31, 1999
(Amounts in Thousands)
<TABLE>
<CAPTION>
International Equity Trust
Shares/Par Value
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks and Equity Interests-- 97.2%
Argentina-- 0.3%
Banco de Galicia y Buenos Aires S.A. de C.V. 171 $ 852
--------
Australia-- 3.0%
Amcor Ltd. 193 904
Australia & New Zealand Banking Group Limited 137 1,000
Commonwealth Bank of Australia 42 720
CSR Limited 288 699
Newcrest Mining Limited 190 648(A)
North Limited 593 1,398
Orica Limited 91 492
Pioneer International Limited 235 708
Qantas Airways Limited 499 1,244
WMC Limited 180 994
--------
8,807
--------
Belgium-- 1.0%
Dexia 5 739(A)
Dexia - Strip VVPR 5 N.M.(A)
Kredietbank-Bankverein AG 40 2,129
--------
2,868
--------
Brazil-- 0.5%
Tele Norte Leste Participacoes S.A. ADR 63 1,601(A)
--------
Canada-- 1.6%
Anderson Exploration Ltd. 107 1,274(A)
Bank of Nova Scotia 19 404
Canadian Natural Resources Ltd. 8 200(A)
Dofasco Inc. 64 1,271
Renaissance Energy Ltd. 111 1,115(A)
Sears Canada Inc. 1 39
Stelco Inc. 49 367
--------
4,670
--------
Denmark-- 0.7%
Tele Danmark A/S 28 2,058
--------
Finland-- 0.9%
Nokia Oyj 15 2,684(A)
--------
</TABLE>
21
<PAGE>
Statement of Net Assets-- Continued
Legg Mason Global Trust, Inc.
<TABLE>
<CAPTION>
International Equity Trust -- Continued
Shares/Par Value
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
France-- 9.6%
Assurances Generales de France 5 $ 271
Axa 6 836(A)
Banque Nationale de Paris 21 1,956
Ciments Francais 19 1,304
Compagnie de Saint-Gobain 9 1,636
France Telecom S.A. 14 1,825
Lagardere S.C.A. 22 1,197
Pechiney SA 25 1,794
Pernod-Ricard SA 35 1,980
PSA Peugeot Citroen 9 2,112
Renault SA 17 805
SEITA 40 1,791
Societe Generale 9 2,001
Suez Lyonnaise des Eaux 20 3,237(A)
Suez Lyonnaise des Eaux - Strip 20 N.M.(A)
Total Fina SA 35 4,663
Vivendi 12 1,048
--------
28,456
--------
Germany-- 6.9%
Allianz AG 2 722(A)
BASF AG 48 2,453
Bayer AG 32 1,503
DaimlerChrysler AG 19 1,446(A)
Deutsche Bank AG 28 2,340
Deutsche Pfrandbrief-und Hypothekenbank AG 18 1,372
Deutsche Telekom AG 28 2,008
EM. TV & Merchandising AG 17 1,109(A)
HypoVereinsbank 3 225
Metallgesellschaft AG 54 1,085
Preussag Ag 39 2,161
Siemens AG 31 3,970
--------
20,394
--------
Hong Kong-- 2.4%
HSBC Holdings plc 100 1,402
Hutchison Whampoa Limited 118 1,715
New World Development Company Ltd. 656 1,477
Peregrine Investment Holdings Limited 256 N.M.A,B
Swire Pacific Ltd. 415 2,451
--------
7,045
--------
22
<PAGE>
Shares/Par Value
- ----------------------------------------------------------------------------------------------------------------------
India-- 0.1%
ITC Limited GDR 16 $ 310(C)
--------
Indonesia-- 0.3%
PT Indah Kiat Pulp & Paper Corporation Tbk 2,245 883
--------
Ireland-- 0.4%
Kerry Group Plc 94 1,127(A)
--------
Italy-- 3.8%
Banca Agricola Mantovana 7 66(A)
ENI SpA 485 2,668(A)
Fiat SpA 29 831(A)
Finmeccanica S.p.A. 1,234 1,626(A)
Italgas S.p.A. 231 875(A)
Olivetti S.p.A. 867 2,509(A)
Rolo Banca 1473 40 785(A)
Telecom Italia Mobile (TIM) SpA 103 1,155(A)
Telecom Italia SpA 52 733(A)
--------
11,248
--------
Japan-- 30.4%
Asahi Chemical Industry Co., Ltd. 197 1,012
Canon, Inc. 70 2,782
Chubu Electric Power Co., Inc. 112 1,819(A)
Chugai Pharmceutical Co., Ltd. 97 1,049
Credit Saison Co., Ltd. 32 554(A)
Dai Nippon Printing Co., Ltd. 84 1,340
DAITO TRUST CONSTRUCTION CO., LTD. 43 475(A)
Daiwa Securities Group Inc. 230 3,600
Denso Corporation 74 1,767
Ebara Corporation 94 1,049
Eisai Company, Ltd. 42 811
Fujitsu Limited 112 5,108(A)
Furukawa Electric Co. 144 2,185
Hitachi Ltd. 199 3,194
Honda Motor Co., Ltd. 16 595
Japan Radio Co., Ltd. 39 378
Japan Tobacco, Inc. N.M. 352(A)
Kao Corporation 56 1,598
Kawasaki Kisen Kaisha Ltd. 572 851
Kirin Brewery Company, Ltd. 56 589
Kishu Paper Co., Ltd. 10 16
</TABLE>
23
<PAGE>
Statement of Net Assets-- Continued
Legg Mason Global Trust, Inc.
<TABLE>
<CAPTION>
International Equity Trust -- Continued
Shares/Par Value
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Japan -- Continued
Kyocera Corporation 17 $ 4,409(A)
Marubeni Corporation 234 982
Maruzen Showa Unyu Co., Ltd. 6 11
Matsushita Electric Industrial Company, Ltd. 39 1,080
Mitsubishi Corporation 81 625
Mitsubishi Electric Corporation 108 698
Mitsubishi Rayon Company, Ltd. 538 1,306
Mitsui O.S.K. Lines 189 318
Murata Manufacturing Co., Ltd. 13 3,054
NAMCO LTD. 19 1,231(A)
NEC Corporation 37 882
Nippon Steel Corporation 406 950
Nippon Telegraph & Telephone Corporation (NTT) N.M. 3,134(A)
NTT Mobile Communications Network, Inc. N.M. 3,077(A)
Rengo Co., Ltd. 120 617
Ricoh Company, Ltd. 72 1,357
Rinnai Corporation 2 45
Rohm Company Ltd. 8 3,289
Sankyo Company, Ltd. 9 666(A)
Secom Co., Ltd. 7 771
Sharp Corporation 47 1,203
Shin-Etsu Chemical Co., Ltd. 10 431
Shinki Co., Ltd. 32 781(A)
Shionogi & Co., Ltd. 71 862
Sony Corporation 15 4,508(A)
Sumitomo Forestry Company 11 85(A)
Sumitomo Rubber Industries, Ltd. 87 385
Taisho Pharmaceutical Company, Ltd. 45 1,321(A)
Takeda Chemical Industries 47 2,323
The Bank of Fukuoka, Ltd. 84 583(A)
The Bank of Iwate, Ltd. N.M. 1(A)
The Bank of Tokyo-Mitsubishi, Ltd. 198 2,760(A)
The Nikko Securities Co., Ltd. 40 506
The Sakura Bank, Ltd. 42 243
The Sumitomo Bank, Ltd. 188 2,574
The Tokai Bank Ltd. 102 643
The Tokio Marine & Fire Insurance Co., Ltd. 30 351(A)
TODA CORPORATION 63 242
Tokyo Electric Power 34 917(A)
TOSHIBA CORPORATION 200 1,527(A)
Tostem Corporation 28 503
24
<PAGE>
Shares/Par Value
- -------------------------------------------------------------------------------------------------------------------
Japan -- Continued
Toyota Motor Corporation 114 $ 5,523
Yamaha Motor Co., Ltd. 47 326
Yamanouchi Pharmaceutical Co., Ltd. 17 594(A)
Yamazaki Baking Co., Ltd. 57 619
Yokohama Rubber 140 275
--------
89,712
--------
Mexico-- 0.9%
ALFA, S.A. 308 1,446
Cemex SA de CV 121 677
Fomento Economico Mexicano, S.A. de C.V. 135 603(A)
--------
2,726
--------
Netherlands-- 5.3%
ABN AMRO Holding NV 103 2,568
AEGON N.V. 10 966
ASM Lithography Holding N.V. 7 745(A)
CSM NV 51 1,091(A)
IHC Caland N.V. 9 314
ING Groep N.V. 54 3,233
Koninklijke (Royal) Philips Electronics N.V. 5 721
Royal Dutch Petroleum Company 74 4,554
Unilever NV 20 1,111
VIB N.V. 13 362
--------
15,665
--------
Portugal-- 0.4%
Cimpor-Cimentos de Portugal, SGPS, SA 79 1,311(A)
--------
Singapore-- 2.7%
DBS Land Limited 498 980
DelGro Corporation Limited 237 733(A)
Jardine Strategic Holdings Limited 122 243
Oversea-Chinese Banking Corporation Ltd. 154 1,412(A)
Overseas Union Bank Ltd. 403 2,360(A)
TIBS Holdings Limited 97 112(A)
United Overseas Bank Ltd. 226 1,996
--------
7,836
--------
South Korea-- 1.0%
Hana Bank 38 295
Korea Electric Power Corporation 15 453(A)
Pohang Iron & Steel Company Ltd. 1 83(A)
</TABLE>
25
<PAGE>
Statement of Net Assets-- Continued
Legg Mason Global Trust, Inc.
<TABLE>
<CAPTION>
International Equity Trust -- Continued
Shares/Par Value
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
South Korea -- Continued
Samsung Electronics 8 $ 1,893
Samsung Fire & Marine Insurance 6 199(A)
Samsung Fire & Marine Insurance - Rights 1 10(A)
--------
2,933
--------
Spain-- 2.9%
Banco Bilbao Vizcaya S.A. 62 880
Banco Santander Central Hispano, SA 111 1,257
Fomento do Construcciones y Contratas S.A. 47 953
Hidroelectrica del Cantabrico, SA 62 872(A)
Iberdrola S.A. 84 1,170
Repsol-YPF, S.A. 97 2,256(A)
Telefonica S.A. 53 1,329
--------
8,717
--------
Sweden-- 2.6%
Electrolux AB 59 1,471
Mo och Domsjo AB 33 1,178
Sandvik AB 36 1,140
Svenska Cellulosa AB 65 1,919
Volvo AB 73 1,890
--------
7,598
--------
Switzerland-- 5.0%
Credit Suisse Group 15 2,952
Julius Baer Holding Ltd. N.M. 680
Nestle SA 1 1,356
Novartis 1 1,020(A)
Roche Holding AG N.M. 368(A)
Schweizerische Rueckversicherungs-Gesellschaft 1 1,921
Swisscom AG 5 1,921(A)
UBS AG 4 1,188(A)
Valora Holding AG 5 1,284
Zurich Allied AG 4 2,067(A)
--------
14,757
--------
Thailand-- 0.9%
Bangkok Bank Public Company Limited 498 1,256
The Siam Cement Public Company Limited 44 1,446
--------
2,702
--------
26
<PAGE>
Shares/Par Value
- ----------------------------------------------------------------------------------------------------------------------
Turkey-- 1.4%
Aksigorta A.S. 20,193 $ 1,229
Alcatel Teletas Telekomunikasyon Endustri ve Ticaret A.S. 2,213 490(A)
Dogan Sirketler Grubu Holding A.S. 27,536 812(A)
Eregli Demir ve Celik Fabrikalari T.A.S. 15,501 643
Koc Holding A.S. 5,712 1,053
--------
4,227
--------
United Kingdom-- 12.2%
Arjo Wiggins Appleton p.l.c. 241 812
ARM Holdings plc 44 2,941(A)
AstraZeneca Group plc 25 1,047
Baltimore Technologies plc 4 338(A)
Barclays PLC 72 2,072
Bowthorpe plc 45 787
BP Amoco plc 91 921
Britax International plc 126 242
British Telecommunications plc 198 4,796
Centrica plc 712 2,068(A)
Cookson Group plc 147 592
Enterprise Inns plc 54 355(A)
George Wimpey plc 597 1,070
Glaxo Wellcome plc 16 448
Glynwed International plc 192 744
Henlys Group plc 12 85(A)
Independent Insurance Group plc 12 53(A)
Lex Service plc 182 1,094
Logica plc 68 1,765
Millennium & Copthorne Hotels plc 75 462(A)
National Westminster Bank PLC 40 859
Pilkington plc 179 244
Rolls-Royce plc 310 1,078
Royal Bank of Scotland Group plc 69 1,229
Severn Trent plc 37 371
Signet Group plc 727 770(A)
The Mayflower Corporation plc 83 291(A)
The Sage Group plc 221 2,706(A)
Trinity Mirror plc 102 1,090
Vodafone Group plc 548 2,731
W.H. Smith Group plc 24 186
</TABLE>
27
<PAGE>
Statement of Net Assets-- Continued
Legg Mason Global Trust, Inc.
<TABLE>
<CAPTION>
International Equity Trust -- Continued
Shares/Par Value
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
United Kingdom -- Continued
William Morrison Supermarkets plc 449 $ 964(A)
Wolseley plc 96 733
--------
35,944
--------
Total Common Stocks and Equity Interests (Identified Cost-- $238,580) 287,131
- ----------------------------------------------------------------------------------------------------------------------
Repurchase Agreement-- 3.0%
Bank of America
3.10%, dated 12/31/99, to be repurchased at $8,696 on 1/3/00
(Collateral:$10,230 Freddie Mac mortgage-backed securities, 6%, due
9/1/28, value $9,695)
(Identified Cost-- $8,693) $ 8,693 8,693
- ----------------------------------------------------------------------------------------------------------------------
Total Investments-- 100.2% (Identified Cost-- $247,273) 295,824
Other Assets Less Liabilities-- (0.2)% (538)
--------
Net assets consisting of:
Accumulated paid-in capital applicable to:
20,746 Primary Class shares outstanding $244,122
4 Navigator Class shares outstanding 50
Overdistributions of net investment income (1,029)
Accumulated net realized gain/(loss) on investments
and currency transactions 3,549
Unrealized appreciation/(depreciation) of investments
and currency transactions 48,594
-------
Net assets -- 100.0% $295,286
--------
Net asset value per share:
Primary Class $14.23
--------
Navigator Class $14.26
--------
- ----------------------------------------------------------------------------------------------------------------------
(A) Non-income producing.
(B) In bankruptcy proceedings.
(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. These securities represent 0.1% of net
assets.
N.M. - Not meaningful.
See notes to financial statements.
28
<PAGE>
Statement of Net Assets
Legg Mason Global Trust, Inc.
December 31, 1999
(Amounts in Thousands)
Emerging Markets Trust
Shares/Par Value
- ----------------------------------------------------------------------------------------------------------------------
Common Stocks and Equity Interests-- 89.7%
Argentina-- 0.7%
Banco de Galicia y Buenos Aires S.A de C.V. ADR 23 $ 458
IRSA Inversiones y Representaciones S.A. GDR 10 327
--------
785
--------
Brazil-- 6.4%
Companhia Siderurgica Nacional 17,300 670(A)
Embratel Participacoes S.A. 92,300 1,543(A)
Petroleo Brasileiro S.A. 12,200 2,701(A)
Tele Centro Sul Participacoes S.A. ADR 8 681
Tele Norte Leste Participacoes S.A. ADR 84 2,137(A)
--------
7,732
--------
Chile-- 0.2%
Sociedad Quimica y Minera de Chile SA ADR 8 256
Sociedad Quimica y Minera de Chile SA ADR - Rights N.M. 11(A)
--------
267
--------
China-- 4.2%
Brilliance China Automotive Holdings Limited 591 1,883
China Travel International Investment Hong Kong Limited 2,000 288
Huaneng Power International, Inc. 3,000 714(A)
Jiangxi Copper Company Ltd. 2,870 321
Konka Group Co., Ltd. 700 531
Shenyang Public Utility Holdings Company Limited 5,000 701(A)
Shenzhen Expressway Company Limited 2,000 317(B)
Zhejiang Expressway Co. Ltd. 2,000 304(A)
--------
5,059
--------
Croatia-- 0.2%
Pliva d.d. GDR 20 266(B)
--------
Egypt-- 1.2%
Egyptian Company for Mobile Service (MobiNil) 30 1,375(A)
International Food Egypt 5 59(A)
--------
1,434
--------
Greece-- 1.7%
Alpha Credit Bank 15 1,181
Hellenic Telecommunications Organization SA (OTE) 38 889
--------
2,070
--------
</TABLE>
29
<PAGE>
Statement of Net Assets-- Continued
Legg Mason Global Trust, Inc.
<TABLE>
<CAPTION>
Emerging Markets Trust -- Continued
Shares/Par Value
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Hong Kong-- 3.7%
Brilliance China Automotive Holdings Limited 103 $ 356(A)
China Everbright Limited 300 245(A)
China Pharmaceutical Enterprise and Investment
Corporation Limited - Warrants 95 2(A)
China Telecom (Hong Kong) Limited 230 1,435(A)
Guangdong Brewery Holdings Limited 5,000 244(A)
GZI Transport Limited 1,500 230(A)
Legend Holdings Limited 250 619(A)
TCL International Holdings Limited 2,000 1,389(A)
--------
4,520
--------
Hungary-- 1.0%
OTP Bank Rt. 13 756(A)
Synergon Information Systems GDR 43 412(A,B)
--------
1,168
--------
India-- 15.1%
Cipla Ltd. 35 1,119(A)
HCL Technologies LTD 30 400(A)
Himachal Futuristic Communications, Ltd. 225 3,504(A)
Hughes Software Systems 31 2,962(A)
Infosys Technologies Limited 6 1,835
Ranbaxy Laboratories Limited 100 2,122(A)
Vikas WSP Limited 2 38(A)
VisualSoft (India) Limited 7 1,259(A)
Zee Telefilms Ltd. 200 5,024
--------
18,263
--------
Indonesia-- 1.8%
PT Bank Internasional Indonesia - Warrants 54 N.M.(A)
PT Hanjaya Mandala Sampoerna Tbk 325 827(A)
PT Lippo Bank Tbk 18,921 677
PT Ramayana Lestari Sentosa Tbk 764 645(A)
--------
2,149
--------
Israel-- 1.9%
Bank Hapoalim 145 451
Makhteshim-Agan Industries Ltd. 149 260(A)
NICE Systems Ltd. ADR 12 574(A)
Orbotech Ltd. 13 1,023(A)
--------
2,308
--------
30
<PAGE>
Shares/Par Value
- ----------------------------------------------------------------------------------------------------------------------
Malaysia-- 4.7%
Arab Malaysian Finance Berhad 800 $ 884
Commerce Asset-Holding Berhad 355 911
Lingui Developments Berhad 470 502(A)
Magnum Corporation Berhad 900 673
Malaysian Pacific Industries Berhad 146 941
Resorts World Berhad 484 1,389
Technology Resources Industries Berhad 602 372
--------
5,672
--------
Mexico-- 11.7%
Alfa, S.A. 295 1,385
Carso Global Telecom 119 1,118
Cemex SA de CV N.M. N.M.(A)
Cemex SA de CV - Warrants 3 14(A)
Cemex SA de CV ADR 68 1,903(A)
Consorcio Ara, S.A. de C.V. 225 373(A)
Corporation GEO, S.A. de C.V. 206 776(A)
Fomento Economico Mexicana, SA de C.V. ADR 30 1,335
Grupo Financiero Banamex Accival, SA de CV (Banacci) 357 1,432(A)
Grupo Televisa S.A. ADR 35 2,389(A)
Telefonos de Mexico SA 614 3,435
--------
14,160
--------
Namibia-- 1.0%
Namibian Minerals Corporation 204 1,246(A)
--------
Philippines-- 1.0%
First Philippine Holdings Corporation 700 599(A)
Manila Electric Company 209 598
--------
1,197
--------
Poland-- 1.0%
Orbis S.A. 38 329(A)
Softbank S. A. 12 397(A)
Telekomunikacja Polska S.A. 81 533(A)
--------
1,259
--------
Russia-- 0.2%
OAO LUKoil ADR 5 232
--------
Singapore-- 0.9%
Total Access Communication Public Company Limited 286 1,127(A)
--------
</TABLE>
31
<PAGE>
Statement of Net Assets-- Continued
Legg Mason Global Trust, Inc.
<TABLE>
<CAPTION>
Emerging Markets Trust -- Continued
Shares/Par Value
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
South Africa-- 4.4%
Anglo American plc 14 $ 882
Impala Platinum Holdings Limited 9 356
Rembrandt Group Limited 161 1,529
Sappi Limited 33 326
Sasol Limited 193 1,628
Southern Africa Fund, Inc. 40 591(A)
--------
5,312
--------
South Korea-- 13.3%
Hana Bank 100 779
Hyundai Electronics Industries Co 30 637(A)
KNC 100 370(A)
Korea Electric Power Corporation 50 1,550(A)
Korea Electric Power Corporation ADR 15 251
Korea Telecom Corporation 10 1,576(A)
Korea Telecom Corporation ADR 16 1,166(A)
Korea Thrunet Co., Ltd. 5 339(A)
Korea Tobacco & Ginseng Corporation 20 442(A)
LG Information & Communication 9 1,490(A)
Pohang Iron & Steel Company Ltd. 3 284(A)
Samsung Electronics 21 5,012
Samsung Fire & Marine Insurance 19 593(A)
Samsung Fire & Marine Insurance - Rights 4 31(A)
Shinsegae Department Store Company 15 758(A)
Ssangyong Oil Refining Company Ltd. 30 790(A)
--------
16,068
--------
Taiwan-- 4.8%
Asustek Computer, Inc. 100 1,055(A)
China Development Industrial Bank Inc. 450 717(A)
D-Link Corporation 400 867(A)
Evergreen Marine Corporation 800 658
Formosa Chemicals & Fibre Corporation 190 240(A)
Hon Hai Precision Industry Co., Ltd 50 373(A)
Taiwan Semiconductor Manufacturing Company 293 1,556(A)
Yuanta Securities Corporation 288 310(A)
--------
5,776
--------
32
<PAGE>
Shares/Par Value
- ----------------------------------------------------------------------------------------------------------------------
Thailand-- 1.4%
Bank Of Ayudhya Public Company Limited 1,050 $ 446(A)
Shin Corporations Public Company Limited 125 1,179
--------
1,625
--------
Turkey-- 6.1%
Dogan Sirketler Grubu Holding A.S. 104,000 3,068(A)
Netas Northern Electric Telekomunikasyon A.S. 19,520 2,591
Vestel Electronik Sanayi ve Ticaret A.S. 7,000 1,678(A)
--------
7,337
--------
United States-- 1.1%
Global TeleSystems Group, Inc. 38 1,309(A)
--------
Total Common Stocks and Equity Interests (Identified Cost-- $68,671) 108,341
- ----------------------------------------------------------------------------------------------------------------------
Preferred Shares-- 8.2%
Brazil-- 7.2%
Banco Bradesco S.A. 117,200 919
Banco Bradesco S.A. - Rights 6,270 25(A)
Banco Itau S.A. 4,800 412
Companhia Cervejaria Brahma ADR 45 627
Companhia Paranaense de Energia-Copel ADR 53 490
Companhia Siderurgica de Tubarao 20,000 326
Companhia Vale do Rio Doce 40 1,107
Eletropaulo Metropolitana - Eletricidade de Sao Paulo S.A. 18,800 1,218(A)
Empresa Brasileira de Aeronautica S.A. 145 654(A)
Gerdau S.A. 44,105 1,172
Globo Cabo S.A. ADR 13 234(A)
IKPC - Industrias Klabin de Papel e Celulose S.A. 23 19
Itausa - Investimentos Itau S.A. 570 590
Ultrapar Participacoes SA ADR 16 189(A)
Votorantim Celulose e Papel S.A. 16,100 740
--------
8,722
--------
Thailand-- 1.0%
Siam Commercial Bank Public Company Limited 660 806(A)
Siam Commercial Bank Public Company Limited - Warrants 860 400(A)
--------
1,206
--------
Total Preferred Shares (Identified Cost-- $6,616) 9,928
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
33
<PAGE>
Statement of Net Assets-- Continued
Legg Mason Global Trust, Inc.
<TABLE>
<CAPTION>
Emerging Markets Trust -- Continued
Shares/Par Value
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Repurchase Agreement-- 4.6%
Bank of America
3.10%, dated 12/31/99, to be repurchased at $5,487 on 1/3/00
(Collateral:$6,113 Freddie Mac mortgage-backed securities, 6%, due
9/1/28, value $5,626)
(Identified Cost-- $5,485) $ 5,485 $ 5,485
- ----------------------------------------------------------------------------------------------------------------------
Total Investments-- 102.5% (Identified Cost-- $80,772) 123,754
Other Assets Less Liabilities-- (2.5)% (2,996)
--------
Net assets consisting of:
Accumulated paid-in capital applicable to 8,624 shares outstanding $ 99,564
Accumulated net investment income/(loss) (794)
Accumulated net realized gain/(loss) on investments and
currency transactions (17,111)
Unrealized appreciation/(depreciation) of investments and
currency transactions 39,099
--------
Net assets-- 100.0% $120,758.
--------
Net asset value per share $14.00
--------
- ----------------------------------------------------------------------------------------------------------------------
</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 0.8% of net
assets.
N.M. - Not meaningful.
ADR - American Depository Receipt
GDR - Global Depository Receipt
See notes to financial statements.
34
<PAGE>
Statement of Net Assets
Legg Mason Global Trust, Inc.
December 31, 1999
(Amounts in Thousands)
<TABLE>
<CAPTION>
Europe Fund
Shares/Par Value
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks and Equity Interests-- 91.1%
Finland-- 4.0%
Nokia Oyj 30 $ 5,386
--------
France-- 17.3%
Aventis S.A. 57 3,291
Axa 25 3,498
Banque Nationale de Paris 27 2,505
Elf Aquitaine SA N.M. N.M.
France Telecom S.A. 22 2,858
Societe Generale 8 1,824(A)
STMicroelectronics 16 2,519
Total Fina SA 32 4,284
Vivendi 30 2,670
--------
23,449
--------
Germany-- 8.6%
BASF AG 54 2,765
Epcos AG 25 1,872(A)
Mannesmann AG 22 5,205
Preussag AG 34 1,913
--------
11,755
--------
Greece-- 1.1%
Alpha Credit Bank 19 1,493
--------
Ireland-- 3.6%
Allied Irish Banks plc 122 1,383
Anglo Irish Bank Corporation plc 635 1,478
CRH plc 92 1,989
--------
4,850
--------
Italy-- 3.7%
Tecnost SpA 753 2,843(A)
Unicredito Italiano SpA 444 2,181
--------
5,024
--------
Netherlands-- 9.5%
AEGON N.V. 29 2,846
Equant 8 942(A)
Getronics NV 28 2,228(A)
Koninklijke (Royal) Philips Electronics N.V. 25 3,464
Koninklijke Ahold NV 56 1,656
VNU NV 33 1,753
--------
12,889
--------
</TABLE>
35
<PAGE>
Statement of Net Assets-- Continued
Legg Mason Global Trust, Inc.
<TABLE>
<CAPTION>
Europe Fund -- Continued
Shares/Par Value
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Portugal-- 1.7%
Portugal Telecom S.A. 207 $ 2,276
--------
Spain-- 2.3%
Telefonica S.A. 127 3,184(A)
--------
Sweden-- 6.4%
Hennes & Mauritz AB 50 1,660
Skandia Forsakrings AB 87 2,629
Telefonaktienbolaget LM Ericsson 69 4,452
--------
8,741
--------
Switzerland-- 5.8%
Adecco SA 2 1,909
Credit Suisse Group 11 2,116
Roche Holding AG 50 3,869
--------
7,894
--------
United Kingdom-- 27.1%
BP Amoco Plc 510 5,148
British Aerospace PLC 323 2,122
British Telecommunications plc 190 4,594
Glaxo Wellcome plc 92 2,608
Granada Group plc 172 1,732
Hays plc 163 2,600
Kingfisher plc 240 2,666
National Westminster Bank PLC 69 1,491
Royal Bank of Scotland Group plc 113 2,007
Shell Transport & Trading Company 269 2,234
SmithKline Beecham Plc 187 2,376
Stagecoach Holdings plc 586 1,505
Vodafone Group plc 757 3,773
WPP Group plc 121 1,892
--------
36,748
--------
Total Common Stocks and Equity Interests (Identified Cost-- $93,134) 123,689
- ----------------------------------------------------------------------------------------------------------------------
Preferred Shares-- 6.2%
Germany-- 6.2%
Marschollek, Lautenschlaeger und Partner AG 8 2,375
Porsche AG 1 1,578
SAP AG 7 4,462
--------
Total Preferred Shares (Identified Cost-- $6,341) 8,415
- ----------------------------------------------------------------------------------------------------------------------
36
<PAGE>
Shares/Par Value
- -------------------------------------------------------------------------------------------------------------------
Repurchase Agreement-- 1.7%
State Street Bank &Trust Company
2.50%, dated 12/31/99, to be repurchased at $2,289
on 1/3/00 (Collateral:$2,315 U.S. Treasury Inflation-
Indexed Securities, 3.63%, due 1/15/08, value $2,471)
(Identified Cost-- $2,289) $ 2,289 $ 2,289
- ----------------------------------------------------------------------------------------------------------------------
Total Investments-- 99.0% (Identified Cost-- $101,764) 134,393
Other Assets Less Liabilities-- 1.0% 1,295
--------
Net assets consisting of:
Accumulated paid-in capital applicable to:
2,038 Primary Class shares outstanding $ 51,943
2,741 Class A shares outstanding 45,193
14 Navigator Class shares outstanding (668)
Accumulated net investment income/(loss) (257)
Accumulated net realized gain/(loss) on investments and
foreign currency transactions 6,868
Unrealized appreciation/(depreciation) of investments and
foreign currency transactions 32,609
----------
Net assets-- 100.0% $135,688
--------
Net asset value per share:
Primary Class $27.90
--------
Class A $28.61
--------
Navigator Class $28.73
--------
Maximum offering price per share:
(net asset value plus sales charge of 4.75% of offering price)
Class A $30.04
--------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
(A) Non-income producing.
N.M. - Not meaningful.
See notes to financial statements.
37
<PAGE>
Statements of Operations
Legg Mason Global Trust, Inc.
(Amounts in Thousands)
<TABLE>
<CAPTION>
Year Ended 12/31/99
--------------------------------------------
Global International Emerging
Income Equity Markets Europe
Trust Trust Trust Fund
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income:
Interest $ 6,689 $ 263 $ 73 $ 77
Dividends -- 5,803 975 1,587
Less foreign tax withheld (15) (732) (79) (121)
------- -------- -------- --------
Total income 6,674 5,334 969 1,543
------- -------- -------- --------
Expenses:
Management fee 772 1,932 674 1,084
Distribution and service fees 772 2,575 674 609
Transfer agent and shareholder servicing expense 72 262 96 73
Audit and legal fees 81 59 51 56
Custodian fees 207 558 287 274
Directors' fees 5 11 6 32
Organization expense -- 14 15 72
Registration fees 7 15 18 58
Reports to shareholders 20 51 20 23
Other expenses 21 14 10 16
------- -------- -------- --------
1,957 5,491 1,851 2,297
Less fees waived -- -- (166) --
------- -------- -------- --------
Total expenses, net of waivers 1,957 5,491 1,685 2,297
------- -------- -------- --------
NET INVESTMENT INCOME/(LOSS) 4,717 (157) (716) (754)
------- -------- -------- --------
Net Realized and Unrealized Gain/(Loss) on Investments:
Realized gain/(loss) on:
Investments, options and futures (4,460) 39,978 5,578(A) 20,942
Foreign currency transactions (3,537) (264) (337) (3,164)
------- -------- -------- --------
(7,997) 39,714 5,241 17,778
------- -------- -------- --------
Change in unrealized appreciation/(depreciation) of:
Investments, options and futures (1,189) 10,677 46,418(B) 10,212
Assets and liabilities denominated in foreign currencies 5 75 (1) (6)
------- -------- -------- --------
(1,184) 10,752 46,417 10,206
------- -------- -------- --------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS (9,181) 50,466 51,658 27,984
- -------------------------------------------------------------------------------------------------------------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $(4,464) $50,309 $50,942 $27,230
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(A) Net of foreign taxes of $808.
(B) Net of deferred foreign taxes of $3,876.
See notes to financial statements.
38
<PAGE>
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
Legg Mason Global Trust, Inc.
(Amounts in Thousands)
Global International Emerging
Income Equity Markets Europe
Trust Trust Trust Fund
------------------- ------------------- ---------------------------------------
Years Ended Years Ended Years Ended Years Ended
12/31/99 12/31/98 12/31/99 12/31/98 12/31/99 12/31/98 12/31/99 12/31/98
- --------------------------------------------------------------------------------------------------------------------------
Change in Net Assets:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net investment income/(loss) $ 4,717 $ 5,616 $ (157) $ 144 $ (716) $ 51 $ (754) $ (179)
Net realized gain/(loss) on
investments, options, futures
and foreign currency transactions (7,997) 4,201 39,714 (9,181) 5,241 (20,750) 17,778 13,074
Change in unrealized appreciation/
(depreciation) of investments,
options, futures and assets and
liabilities denominated in
foreign currencies (1,184) 3,200 10,752 25,859 46,417 293 10,206 10,360
- -------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting
from operations (4,464) 13,017 50,309 16,822 50,942 (20,406) 27,230 23,255
Distributions to shareholders:
From net investment income:
Primary Class (657) (5,948) (992) (2,768) -- -- (132) (355)
Class A N/A N/A N/A N/A N/A N/A (166) (862)
Navigator Class N/A N/A (1) (1) N/A N/A (1) (4)
In excess of net investment income:
Primary Class (4,035) -- -- -- -- -- -- --
From net realized gain on
investments:
Primary Class (881) (744) (16,590) -- -- -- (3,892) (4,213)
Class A N/A N/A N/A N/A N/A N/A (5,428) (8,621)
Navigator Class N/A N/A (3) -- N/A N/A (27) (31)
Change in net assets from Fund share transactions:
Primary Class (24,134) (22,252) 3,997 16,808 27,475 (2,555) 17,600 34,008
Class A N/A N/A N/A N/A N/A N/A 10,439 (3,590)
Navigator Class N/A N/A -- 50 N/A N/A 87 (10,189)
- -------------------------------------------------------------------------------------------------------------------------
Change in net assets (34,171) (15,927) 36,720 30,911 78,417 (22,961) 45,710 29,398
Net Assets:
Beginning of year 120,805 136,732 258,566 227,655 42,341 65,302 89,978 60,580
- -------------------------------------------------------------------------------------------------------------------------
End of year $ 86,634 $120,805 $295,286 $258,566 $120,758 $ 42,341 $135,688 $89,978
- -------------------------------------------------------------------------------------------------------------------------
Under/(over) distributed
net investment income $ (1,514) $ (2,018) $ (1,029) $ (4,570) $ (794) $ (13) $ (257) $ (836)
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
39
<PAGE>
Financial Highlights
Legg Mason Global Trust, Inc.
Contained below is per share operating performance data for a Primary
Class share and, with respect to Europe Fund, for a Class 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 Year (Loss) Transactions Operations Income Income Investments
- -----------------------------------------------------------------------------------------------------------------------------------
Global Income Trust
-Primary Class
Years Ended
Dec. 31,
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1999 $10.14 $ .40 $(.74) $ (.34) $ (.01) $ (.43) $(.08)
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) -- --
International Equity
Trust
-Primary Class
Years Ended
Dec. 31,
- --------------------------------------------------------------------------------------------------------------------------------
1999 $12.64 $-- $2.51 $ 2.51 $ (.05) $ -- $ (.87)
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)
- --------------------------------------------------------------------------------------------------------------------------------
1995C 10.00 .04(B) .77 .81 (.04) -- --
Emerging Markets
Trust
-Primary Class
Years Ended
Dec. 31,
- --------------------------------------------------------------------------------------------------------------------------------
1999 $ 6.96 $(.08)(F) $7.12 $ 7.04 $ -- $ -- $ --
1998 9.85 .01(F) (2.90) (2.89) -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
1997 10.51 (.02)(F) (.63) (.65) (.01) -- --
1996G 10.00 (.03)(F) .57 .54 (.03) -- --
- --------------------------------------------------------------------------------------------------------------------------------
<PAGE>
Ratios/Supplemental Data
----------------------------- ----------------------------------------------------------
In Excess Net
of Net Net Asset Investment
Realized Value, Expenses Income (Loss) Portfolio
Gain on Total End of Total to Average to Average Turnover
Investments Distributions Year Return(A) Net Assets Net Assets Rate
- ------------------------------------------------------------------------------------------------------------------------------------
Global Income Trust
-Primary Class
Years Ended
Dec. 31,
- ------------------------------------------------------------------------------------------------------------------------------------
1999 $ -- $ (.52) $ 9.28 (3.23)% 1.90% 4.58% 354%
1998 -- (.53) 10.14 11.50% 1.87% 4.51% 288%
- ------------------------------------------------------------------------------------------------------------------------------------
1997 -- (.64) 9.60 (1.69)% 1.86% 5.39% 241%
1996 -- (.72) 10.41 8.22% 1.86% 5.80% 172%
- ------------------------------------------------------------------------------------------------------------------------------------
1995 -- (1.16) 10.33 20.80% 1.81% 5.72% 169%
International Equity
Trust
-Primary Class
Years Ended
Dec. 31,
- ------------------------------------------------------------------------------------------------------------------------------------
1999 $ -- $ (.92) $14.23 20.58% 2.13% (.06)% 148%
1998 -- (.14) 12.64 8.49% 2.14% .06% 72%
- ------------------------------------------------------------------------------------------------------------------------------------
1997 -- (.52) 11.78 1.76% 2.17% .17% 59%
1996 -- (.37) 12.09 16.49% 2.25%(B) .21%(B) 83%
- ------------------------------------------------------------------------------------------------------------------------------------
1995C (.07) (.11) 10.70 8.11%(D) 2.25%(B,E) .52%(B,E) 58%(E)
Emerging Markets
Trust
-Primary Class
Years Ended
Dec. 31,
- ------------------------------------------------------------------------------------------------------------------------------------
1999 $ -- $ -- $14.00 101.15% 2.50%(F) (1.06)%(F) 123%
1998 -- -- 6.96 (29.34)% 2.50%(F) .09%(F) 76%
- ------------------------------------------------------------------------------------------------------------------------------------
1997 -- (.01) 9.85 (6.18)% 2.50%(F) (.76)%(F) 63%
1996G -- (.03) 10.51 5.40%(D) 2.50%(F,E) (.68)%(F,E) 46%(E)
- ------------------------------------------------------------------------------------------------------------------------------------
<PAGE>
-----------------
Net Assets,
End of
Year
(in thousands)
- ------------------------------------------
Global Income Trust
-Primary Class
Years Ended
Dec. 31,
- -----------------------------------------
1999 $ 86,634
1998 120,805
- -----------------------------------------
1997 136,732
1996 161,549
- -----------------------------------------
1995 153,954
International Equity
Trust
-Primary Class
Years Ended
Dec. 31,
- -----------------------------------------
1999 $295,236
1998 258,521
- -----------------------------------------
1997 227,655
1996 167,926
- -----------------------------------------
1995C 65,947
Emerging Markets
Trust
-Primary Class
Years Ended
Dec. 31,
- -----------------------------------------
1999 $120,758
1998 42,341
- -----------------------------------------
1997 65,302
1996G 21,206
- -----------------------------------------
</TABLE>
40
<PAGE>
<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 Year (Loss) Transactions Operations Income Income Investments
- ------------------------------------------------------------------------------------------------------------------------------------
Europe Fund(H)
-Primary Class
Years Ended
Dec. 31,
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1999 $24.39 $(.29)(I) $5.97 $5.68 $ (.07) $ -- $ (2.10)
1998 20.86 .11(J) 8.09 8.20 (.36) -- (4.31)
- ------------------------------------------------------------------------------------------------------------------------------------
1997(K) 26.56 (.10)(J) .23 .13 -- -- (5.83)
-Class A
Years Ended
Dec. 31,
- ------------------------------------------------------------------------------------------------------------------------------------
1999 $24.77 $(.09)(I) $6.10 $6.01 $ (.07) $ -- $(2.10)
1998 20.97 .02(L) 8.52 8.54 (.43) -- (4.31)
- ------------------------------------------------------------------------------------------------------------------------------------
1997 24.24 (.05)(L) 4.11 4.06 -- -- (7.33)
1996 21.13 .02 6.34 6.36 -- -- (3.25)
- ------------------------------------------------------------------------------------------------------------------------------------
1995 17.68 .01 3.50 3.51 (.06) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
<PAGE>
Ratios/Supplemental Data
----------------------------- -----------------------------------------------------------
In Excess Net
of Net Net Asset Investment
Realized Value, Expenses Income (Loss) Portfolio
Gain on Total End of Total to Average to Average Turnover
Investments Distributions Year Return(A) Net Assets Net Assets Rate
- ------------------------------------------------------------------------------------------------------------------------------------
Europe Fund(H)
-Primary Class
Years Ended
Dec. 31,
- ------------------------------------------------------------------------------------------------------------------------------------
1999 $ -- $ (2.17) $27.90 24.44% 2.58% (1.15)% 93%
1998 -- (4.67) 24.39 40.48% 2.51%(J) (1.15)%(J) 103%
- ------------------------------------------------------------------------------------------------------------------------------------
1997(K) -- (5.83) 20.86 .68%(D) 2.50%(J,E) (1.79)%(J,E) 123%(E)
-Class A
Years Ended
Dec. 31,
- ------------------------------------------------------------------------------------------------------------------------------------
1999 $ -- $ (2.17) $28.61 25.41% 1.79% (.38)% 93%
1998 -- (4.74) 24.77 41.85% 1.81%(L) (.10)%(L) 103%
- ------------------------------------------------------------------------------------------------------------------------------------
1997 -- (7.33) 20.97 17.52% 1.90%(L) (.12)%(L) 123%
1996 -- (3.25) 24.24 31.53% 2.00% .10% 109%
- ------------------------------------------------------------------------------------------------------------------------------------
1995 -- (.06) 21.13 19.90% 2.10% .10% 148%
- ------------------------------------------------------------------------------------------------------------------------------------
<PAGE>
-----------------------
Net Assets,
End of
Year
(in thousands)
- ------------------------------------------------
Europe Fund(H)
-Primary Class
Years Ended
Dec. 31,
- ------------------------------------------------
1999 $56,871
1998 32,325
- ------------------------------------------------
1997(K) 302
-Class A
Years Ended
Dec. 31,
- ------------------------------------------------
1999 $78,429
1998 57,406
- ------------------------------------------------
1997 52,253
1996 70,991
- ------------------------------------------------
1995 62,249
- ------------------------------------------------
</TABLE>
(A) Excluding sales charge for Europe Fund's Class A shares.
(B) Net of 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) For the period February 17, 1995 (commencement of operations) to December
31, 1995.
(D) Not annualized.
(E) Annualized.
(F) 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:
1999, 2.75%; 1998, 2.78%; 1997, 2.86%; and 1996, 3.71%.
(G) For the period May 28, 1996 (commencement of operations) to December 31,
1996.
(H) The financial information for Europe Fund Class A shares for the years
ended December 31, 1994 through 1996, is for the Worldwide Value Fund,
Bartlett Europe Fund's and Legg Mason Europe Fund's predecessor. The
financial information for the year ended December 31, 1997, is for Bartlett
Europe Fund and Worldwide Value Fund. The financial information for the
year ended December 31, 1998, is for the Bartlett Europe Fund. The
financial information for the year ended December 31, 1999, is for the Legg
Mason Europe Fund and the Bartlett Europe Fund.
(I) Computed using average monthly shares outstanding.
(J) Net of fees waived pursuant to a voluntary expense limitation of 2.50%
until April 30, 1998; and 2.60% indefinitely. If no fees had been waived,
the annualized ratio of expenses to average daily net assets for each
period would have been as follows:1998, 2.59%; 1997, 2.68%.
(K) For the period July 23, 1997 (commencement of operations of this class) to
December 31, 1997.
(L) The expense ratio shown reflects both the operations of Worldwide Value
Fund,Bartlett Europe Fund's predecessor, prior to its merger with Bartlett
Europe Fund on July 21, 1997, and Bartlett Europe Fund's operations
throughDecember 31, 1997. For the period July 21 to December 31, 1997, the
Fund's annualized expense ratio was 1.71%, net of fees waived pursuant to a
voluntary expense limitation of 1.75% until April 30, 1998; and 1.85%
indefinitely. If no fees had been waived, the annualized ratio of expenses
to average daily net assets for each period would have been as follows:
1998, 1.89%; 1997, 2.08%.
See notes to financial statements.
41
<PAGE>
Notes to Financial Statements
Legg Mason Global Trust, Inc.
(Amounts in Thousands)
- --------------------------------------------------------------------------------
1. Significant Accounting Policies:
The Legg Mason Global Trust, Inc. ("Corporation"), consisting of the
Global Income Trust ("Global Income"), the International Equity Trust
("International Equity"), the Emerging Markets Trust ("Emerging Markets")
and the Europe Fund ("Europe Fund") (each a "Fund"), is registered under
the Investment Company Act of 1940, as amended, as an open-end investment
company. International Equity, Emerging Markets and Europe Fund are
diversified; Global Income is non-diversified.
Each Fund consists of at least two classes of shares: Primary Class,
offered since April 15, 1993, for Global Income; since February 17, 1995,
for International Equity; since May 28, 1996, for Emerging Markets; and
since July 23, 1997, for Europe Fund; and Navigator Class, offered to
certain institutional investors since May 5, 1998, for International
Equity and since August 21, 1997, for Europe Fund. The Navigator Class of
Global Income and Emerging Markets has not commenced operations. Europe
Fund has an additional class of shares: Class A. The income and expenses
of International Equity and Europe Fund are allocated proportionately to
the two and three classes of shares, respectively, based on daily net
assets, except for Rule 12b-1 distribution fees, which are charged only on
Primary Class shares, and with respect to Europe Fund, PrimaryClass and
Class A shares, and transfer agent and shareholder servicing expenses,
which are determined separately for each class.
On October 5, 1999, Europe Fund, which had no previous operating
history, acquired all of the assets and assumed the liabilities of
Bartlett Europe Fund. On July 21, 1997, Bartlett Europe Fund, which had no
previous operating history, acquired the assets and assumed the
liabilities of Worldwide Value Fund, Inc. Prior to July 21, 1997,
Worldwide Value Fund, Inc. was a closed-end registered investment company
whose single class of shares traded on the New York Stock Exchange
("NYSE").
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 Income 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.
42
<PAGE>
- --------------------------------------------------------------------------------
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. 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 Income, and annually for International Equity, Emerging Markets
and Europe Fund. Net capital gain distributions, which are calculated at
the composite level, are declared and paid after the end of the tax year
in which the gain is realized. At December 31, 1999, there were no
dividends or 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
December 31, 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 Income $2,956 $11,779
International Equity -- --
Emerging Markets 6 145
Europe Fund -- --
Deferred Organizational Expense
Deferred organizational expenses of $71 for International Equity, $73
for Emerging Markets, and $210 for Europe Fund are being amortized on a
straight-line basis not to exceed 5 years, beginning on the date each
respective Fund began operations. Legg Mason Fund Adviser, Inc. ("LMFA"),
the Funds' investment manager, 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 qualify, or to continue to qualify, as a regulated
investment company and distribute substantially all of its taxable income
to its shareholders.
Foreign Taxes
Each Fund is subject to foreign income taxes imposed by certain
countries in which it invests. Foreign income taxes are accrued by each
Fund and withheld from dividend and interest income.
Gains realized upon disposition of Indian, Malaysian and Thai
securities held by each Fund are subject to capital gains tax in those
countries. The tax on realized gains is paid prior to repatriation of
sales proceeds. As of December 31, 1999, there was a deferred tax
liability accrued on net unrealized gains of $3,876 in Emerging Markets.
43
<PAGE>
Notes to Financial Statements-- Continued
Legg Mason Global Trust, Inc.
- --------------------------------------------------------------------------------
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 year ended December 31, 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> <C> <C> <C>
Global Income $117,987 $223,188 $121,901 $238,017
International Equity -- 368,379 -- 385,812
Emerging Markets -- 96,465 -- 77,554
Europe Fund -- 116,702 -- 98,611
</TABLE>
At December 31, 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> <C> <C> <C>
Global Income $ 94,148 $ 1,698 $ (2,170) $ (472)
International Equity 248,346 57,598 (10,120) 47,478
Emerging Markets 81,618 45,196 (3,060) 42,136
Europe Fund 101,780 34,727 (2,114) 32,613
</TABLE>
Unused capital loss carryforwards for federal income tax purposes at
December 31, 1999, were as follows: Emerging Markets, $17,084 which expire
in December 2006; and Global Income, $4,319 which expire in December 2007.
International Equity and Europe Fund 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
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 their investment programs, Global Income and Europe Fund
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.
44
<PAGE>
- --------------------------------------------------------------------------------
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> <C> <C> <C> <C> <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 transaction closing sale 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.
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
closing purchase transaction loss on the 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
by the option purchaser proceeds of the 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
by the option purchaser of the security that the Fund purchased when the option was exercised.
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
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.
Activity in call and put options during the year ended December 31,
1999, was as follows:
<TABLE>
<CAPTION>
Calls Puts
----------------------------------- -----------------------------------
Actual Actual
Global Income Contracts Premiums Contracts Premiums
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Options Outstanding December 31, 1998 -- $-- -- $--
Options Written 1,203 322 138 81
Options Closed (301) (222) (55) (36)
Options Expired (821) (34) (52) (25)
Options Exercised (16) (12) (4) (1)
----------------------------------------------------------------------------------------------------------
Options Outstanding December 31, 1999 65 $ 54 27 $19
==========================================================================================================
</TABLE>
45
<PAGE>
Notes to Financial Statements-- Continued
Legg Mason Global Trust, Inc.
- --------------------------------------------------------------------------------
Upon entering into a futures contract, the Fund is required to
deposit with the broker an amount of cash or cash equivalents equal to a
certain percentage of the contract amount. This is known as the "initial
margin." Subsequent payments ("variation margin") are made or received by
the Fund each day, depending on the daily fluctuation 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 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.
The open futures positions and related appreciation or depreciation
at December 31, 1999, for Global Income are listed at the end of its
statement of net assets.
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 Income,
by governments of emerging market countries. Future economic or political
developments could adversely affect the liquidity or value, or both, of
such securities.
Forward Currency Exchange Contracts
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.
46
<PAGE>
- --------------------------------------------------------------------------------
At December 31, 1999, open forward currency exchange contracts were as follows:
International Equity:
<TABLE>
<CAPTION>
Contract to
Settlement -------------------------------------------------------------------------- Unrealized
Date Receive Deliver Gain/(Loss)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
02/08/00 USD 2,587 EUR 2,478 $82
02/08/00 EUR 2,478 USD 2,526 (21)
-----
$61
-----
Global Income:
Contract to
Settlement -------------------------------------------------------------------------- Unrealized
Date Receive Deliver Gain/(Loss)
- -------------------------------------------------------------------------------------------------------------------
01/18/00 USD 4,324 AUD 6,714 $ (85)
01/18/00 CAD 3,158 USD 2,127 62
01/18/00 USD 5,994 DKK 41,518 368
01/18/00 DKK 22,354 USD 3,108 (79)
01/18/00 USD 32,160 EUR 29,992 1,906
01/18/00 EUR 42,184 USD 44,636 (2,084)
01/18/00 USD 9,113 GBP 5,604 59
01/18/00 GBP 3,183 USD 5,138 4
01/18/00 USD 26,764 JPY 2,787,836 539
01/18/00 JPY 5,245,764 USD 50,964 (607)
01/18/00 USD 2,884 NOK 22,800 37
01/18/00 USD 2,648 NZD 5,199 (70)
01/18/00 NZD 5,199 USD 2,649 69
01/18/00 USD 403 SEK 3,355 8
01/27/00 SEK 3,355 USD 395 --
01/27/00 USD 5,473 EUR 5,307 116
01/27/00 EUR 9,340 USD 9,688 (260)
-----
$ (17)
-----
</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.
47
<PAGE>
Notes to Financial Statements-- Continued
Legg Mason Global Trust, Inc.
- --------------------------------------------------------------------------------
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 to the extent each Fund's expenses
(exclusive of taxes, interest, brokerage and extraordinary expenses)
exceed during any month certain annual rates. The following chart shows
annual rates of management fees; expense limits and their expiration
dates; management fees waived; and management fees payable for each Fund:
<TABLE>
<CAPTION>
Year Ended
December 31, 1999 At December 31, 1999
---------------------------------------
Management Management
Management Expense Expense Limitation Fees Fees
Fund Fee Limitation Expiration Date Waived Payable
- --------------------------------------------------------------------------------------------------------------------------
Global Income
<S> <C> <C> <C> <C>
--Primary Class 0.75% 1.90% Indefinite $-- $ 57
International Equity
--Primary Class 0.75% 2.25% Indefinite -- 175
--Navigator Class 0.75% 1.25% Indefinite -- N.M.*
Emerging Markets
--Primary Class 1.00% 2.50% May 1, 2000 166 68
Europe Fund
--Primary Class 1.00% 2.60% May 1, 2000 -- 46
--Class A 1.00% 1.85% May 1, 2000 -- 64
--Navigator Class 1.00% 1.60% May 1, 2000 -- N.M.*
- --------------------------------------------------------------------------------------------------------------------------
*N.M. - Not meaningful.
</TABLE>
Western Asset Management Company ("WAM") serves as investment adviser
to Global Income. WAM 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 Income.
Western Asset Global Management, Ltd. ("WAGM") serves as investment
sub-adviser to Global Income. WAM (not the Fund) pays WAGM a fee at an
annual rate equal to 26 2/3% of the fee received by WAM 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 Income.
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.
Lombard Odier International Portfolio Management Limited ("Lombard
Odier") serves as investment sub-adviser to Europe Fund. LMFA pays Lombard
Odier a fee for its services at an annual rate equal to 60% of the fee
actually paid to LMFA by the Fund (net of any waivers).
Prior to October 6, 1999, Bartlett & Co. served as Europe Fund's
manager under compensation arrangements substantially similar to those
with the current manager. For its services during the fiscal year ended
December 31, 1999, the Fund paid Bartlett & Co. a fee equal to 1% of its
average net assets.
48
<PAGE>
- --------------------------------------------------------------------------------
Worldwide had an administration contract with LMFA for which
LMFA received from Worldwide a monthly fee at an annual rate of .20% of
Worldwide's net assets, based on the net assets on the last business day
of each month. This rate was reduced on net asset values in excess of $100
million.
On July 15, 1997, the shareholders of the Bartlett Europe Fund
(predecessor to Europe Fund) approved an Investment Management and
Administration Agreement ("Agreement"). Under the Agreement, the Adviser
received for its services an advisory fee, computed daily and payable
monthly, at 1.00% of the Fund's average daily net assets.
Legg Mason Wood Walker, Incorporated ("Legg Mason"), a member of the
NYSE, serves as distributor of the Funds. Legg Mason receives an annual
distribution fee and an annual service fee based on each Fund's respective
Class's average daily net assets, calculated daily and payable monthly, as
follows:
<TABLE>
<CAPTION>
At December 31, 1999
-------------------------
Distribution Service Distribution and Service
Fee Fee Fees Payable
- -------------------------------------------------------------------------------------------
Global Income
<S> <C> <C> <C>
Primary Class 0.50% 0.25% $ 57
International Equity
Primary Class 0.75 0.25 233
Emerging Markets
Primary Class 0.75 0.25 91
Europe Fund
Primary Class 0.75 0.25 46
Class A -- 0.25 16
</TABLE>
Legg Mason also has an agreement with the Funds' transfer agent to
assist with certain of its duties. For this assistance, the transfer agent
paid Legg Mason the following amounts for the year ended December 31,
1999: Global Income, $23; International Equity, $84; Emerging Markets,
$28; and Europe Fund $18.
LMFA, Batterymarch, WAM, 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 year
ended December 31, 1999, the Funds had no borrowings under the line of
credit.
8. Acquisition of Bartlett Europe Fund and Reorganization of Worldwide Value
Fund, Inc.:
On October 5, 1999,Europe Fund, a series of Legg Mason Global Trust,
Inc. which had no previous operating history, acquired all the net assets
of the Bartlett Europe Fund, a series of Bartlett Capital Trust, an
open-end management investment company, pursuant to a plan of
reorganization approved by Bartlett Europe Fund shareholders on September
23, 1999.
49
<PAGE>
Notes to Financial Statements-- Continued
Legg Mason Global Trust, Inc.
- --------------------------------------------------------------------------------
On July 18, 1997, Bartlett Europe Fund, a series of the Bartlett
Capital Trust, acquired all the net assets of Worldwide Value Fund, Inc.
pursuant to a plan of reorganization approved by Worldwide's shareholders
on April 30, 1997. The acquisition was accomplished by a tax-free exchange
of 3,357 shares of Worldwide (valued at $88,660) outstanding on July 18,
1997. The net assets of Worldwide ($88,660, including $18,092 of
unrealized appreciation and $12,991 of undistributed net capital gain)
were merged into the newly-created Bartlett Europe Fund. Prior to the
reorganization, Worldwide Value Fund, Inc. was a closed-end mutual fund
whose shares traded on the NYSE.
9. Fund Share Transactions:
At December 31, 1999, there were 1,375,000 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
- ---------------------------------------------------------------------------------------------------------------------------
Global Income
--Primary Class
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Year Ended Dec. 31, 1999 1,244 $11,828 545 $ 5,064 (4,370) $(41,026) (2,581) $(24,134)
Year Ended Dec. 31, 1998 2,308 22,709 615 6,032 (5,251) (50,993) (2,328) (22,252)
International Equity
--Primary Class
Year Ended Dec. 31, 1999 4,502 $58,763 1,330 $17,182 (5,540) $(71,948) 292 $ 3,997
Year Ended Dec. 31, 1998 5,900 77,550 221 2,717 (4,995) (63,459) 1,126 16,808
--Navigator Class
Year Ended Dec. 31, 1999 -- $-- -- $-- -- $-- -- $--
May 5, 1998(A) to Dec. 31, 1998 4 50 -- -- -- -- 4 50
Emerging Markets
--Primary Class
Year Ended Dec. 31, 1999 4,066 $41,341 -- $-- (1,528) $(13,866) 2,538 $27,475
Year Ended Dec. 31, 1998 1,965 16,510 -- -- (2,505) (19,065) (540) (2,555)
Europe Fund
--Primary Class
Year Ended Dec. 31, 1999 1,158 $28,649 157 $ 3,876 (602) $(14,925) 713 $17,600
Year Ended Dec. 31, 1998 1,279 33,629 194 4,541 (162) (4,162) 1,311 34,008
--Class A
Year Ended Dec. 31, 1999 1,804 $45,451 186 $ 4,735 (1,567) $(39,747) 423 $10,439
Year Ended Dec. 31, 1998 415 10,886 253 6,156 (842) (20,632) (174) (3,590)
--Navigator Class
Year Ended Dec. 31, 1999 3 $ 64 1 $ 28 N.M. $ (5) 4 $ 87
Year Ended Dec. 31, 1998 9 219 1 35 (382) (10,443) (372) (10,189)
-----------
(A)Commencement of sale of Navigator Class shares.
</TABLE>
50
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Directors of Legg Mason Global Trust, Inc.:
In our opinion, the accompanying statements of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Global Income Trust, International Equity Trust, Emerging Markets Trust, and
Europe Fund (comprising the Primary Class and Class A of the Legg Mason Global
Trust, Inc., hereafter referred to as the "Funds") at December 31, 1999, and the
results of their operations, the changes in their net assets and the financial
highlights for each of the fiscal periods presented, in conformity with
accounting principles generally accepted in the United States. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Funds' management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with auditing
standards generally accepted in the United States, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1999, by correspondence with custodians and brokers, provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
February 10, 2000
51
<PAGE>
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<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE>
Investment Advisers
For Global Income Trust: For Europe Fund:
Western Asset Management Company Legg Mason Fund Adviser, Inc.
Pasadena, CA Baltimore, MD
For International Equity and
Emerging Markets Trusts:
Batterymarch Financial Management, Inc.
Boston, MA
Investment Sub-Adviser
For Europe Fund: For Global Income Fund:
Lombard Odier International Portfolio Western Asset Global
Management Management, Ltd.
London, England London, England
Investment Manager
Legg Mason Fund Adviser, Inc.
Baltimore, MD
Board of Directors
John F. Curley, Jr., Chairman
Edward A. Taber, III, President
Richard G. Gilmore
Arnold L. Lehman
Dr. Jill E. McGovern
G. Peter O'Brien
T. A. Rodgers
Transfer and Shareholder Servicing Agent
Boston Financial Data Services
Boston, MA
Custodian
State Street Bank & Trust Company
Boston, MA
Counsel
Kirkpatrick & Lockhart LLP
Washington, D.C.
Independent Accountants
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
2/00
