Legg Mason Global Trust, Inc.:
Legg Mason Global Income Trust
Legg Mason International Equity Trust
Legg Mason Emerging Markets Trust
Legg Mason Europe Fund
PRIMARY CLASS AND CLASS A PROSPECTUS April 28, 2000
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THE ART OF INVESTING(SM)
As with all mutual funds, the Securities and Exchange Commission has not passed
upon the accuracy or adequacy of this prospectus, nor has it approved or
disapproved these securities. It is a criminal offense to state otherwise.
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TABLE OF CONTENTS
About the funds:
1 Investment objectives
7 Principal risks
12 Performance
17 Fees and expenses of the funds
20 Management
About your investment:
24 How to invest
28 How to sell your shares
30 Account policies
32 Services for investors
34 Dividends and taxes
36 Financial highlights
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Legg Mason Global Trust, Inc.
[icon] INVESTMENT OBJECTIVES AND POLICIES
GLOBAL INCOME TRUST
Investment objective: Current income and capital appreciation in order to
achieve an attractive total return consistent with prudent investment risk.
Principal investment strategies:
The fund invests at least 75% of its total assets in fixed income securities
rated investment grade by Moody's Investor's Service, Inc. ("Moody's") or
Standard & Poor's, Inc. ("S&P") or, if unrated by Moody's or S&P, judged by
Western Asset Management Company, the fund's adviser, to be of comparable
quality. Up to 25% of the fund's assets may be invested in below investment
grade securities of foreign and domestic issuers, loans of banks and other
financial institutions (which may be below investment grade), convertible
securities, and common and preferred stock.
The types of fixed income securities in which the fund may invest include:
o U.S. and foreign investment-grade corporate debt securities
o U.S. and foreign high-yield corporate debt securities (including those
commonly known as "junk bonds")
o sovereign debt obligations of developed nations
o sovereign debt obligations of emerging market countries
o mortgage-related and asset-backed securities.
The fund will maintain a minimum of 25% of its total assets in debt securities
issued or guaranteed by the U.S. Government or foreign governments, their
agencies, instrumentalities or political subdivisions. The debt securities in
which the fund may invest may be of any maturity, and there are no limits on the
average maturity of the fund's portfolio. The fund may invest in corporate fixed
income securities rated as low as C by Moody's or D by S&P or in non-rated
securities deemed by the adviser to be of comparable quality.
Under normal circumstances, the fund will invest no more than 40% of its total
assets in any one country other than the United States. There is no other limit
on the percentage of assets that may be invested in any one country or currency.
The adviser has a number of proprietary tools which attempt to define the
inter-relationship between bond markets, sectors and maturities. Target
allocation ranges among countries and sector types and prices are established as
part of the adviser's strategy process, monitored daily and re-balanced if
necessary as dictated by macro-economic or company-specific events. This ongoing
screening drives the adviser's discipline for buying, selling or holding any
securities or currency position. The adviser deviates from the discipline only
if exceptional circumstances disrupt the orderly functioning of the markets. The
adviser's management style favors `rotation' among the government, agency,
corporate, and mortgage-backed sectors of the fixed income securities markets,
which may result in high portfolio turnover.
The adviser sells securities when they have realized what the adviser believes
is their potential value or when the adviser believes that they are not likely
to achieve that value in a reasonable period of time.
For temporary defensive purposes, the fund may borrow money or invest without
limit in cash and U.S. dollar-denominated money market instruments including
repurchase agreements. If the fund invests substantially in such instruments,
the fund may not be pursuing its principal investment strategies and the fund
may not achieve its investment objective.
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INTERNATIONAL EQUITY TRUST
Investment objective: Maximum long-term total return.
Principal investment strategies: Batterymarch Financial Management, Inc.
("Batterymarch"), the fund's adviser, currently intends to invest substantially
all of the fund's assets in non-U.S. equity securities.
The primary focus of the adviser is stock selection, with a secondary focus on
country allocation. The adviser uses a bottom-up, quantitative stock selection
process for the developed markets portion of the fund's portfolio. The
cornerstone of this process is a proprietary stock selection model that ranks
more than 2,800 stocks in the fund's principal investable universe by relative
attractiveness on a daily basis. The quantitative factors within this model
measure growth, value, changes in earnings expectations and technical
indicators. Because the same quantitative factors are not effective across all
markets due to individual market characteristics, the adviser adjusts the stock
selection model to include factors in each market that its research indicates
are effective. The adviser runs the stock selection model and re-balances the
portfolio daily, purchasing stocks ranked "buys" by the model and selling stocks
ranked "sells." Stocks are sold when the original reason for purchase no longer
pertains, the fundamentals have deteriorated or portfolio re-balancing warrants.
Region and country allocation for the developed markets portion of the fund is
based on rankings generated by the adviser's proprietary country model. The
adviser examines securities from over 20 international stock markets, with
emphasis on several of the largest: Japan, the United Kingdom, France, Canada
and Germany.
The fund may invest up to 35% of its total assets in emerging market securities.
The adviser's investment strategy for the emerging markets portion of the fund
represents a distinctive combination of tested quantitative methodology and
traditional fundamental analysis. The emerging markets allocation focuses on
higher-quality, dominant companies that the adviser believes to have strong
growth prospects and reasonable valuations. Country allocation for the emerging
markets portion of the portfolio also combines quantitative and fundamental
approaches.
The fund's investment portfolio will normally be diversified across a broad
range of industries and across a number of countries, consistent with the
objective of maximum total return. The adviser may also seek to enhance
portfolio returns through active currency hedging strategies.
The fund is not limited in the amount of its total assets that may be
denominated in a single currency or invested in securities of issuers located in
a single country.
When cash is temporarily available, or for temporary defensive purposes, when
the adviser believes such action is warranted by abnormal market or economic
situations, the fund may invest without limit in cash and U.S.
dollar-denominated money market instruments, including repurchase agreements of
domestic issuers. Such securities will be rated investment grade or, if unrated,
will be determined by the fund's adviser to be investment grade. If the fund
invests substantially in such instruments, the fund may not be pursuing its
principal investment strategies and the fund may not achieve its investment
objective.
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EMERGING MARKETS TRUST
Investment objective: Long-term capital appreciation.
Principal investment strategies:
Batterymarch, the fund's adviser, intends to invest substantially all of the
fund's assets in equity securities and convertible securities of emerging market
issuers.
The fund intends to invest in Asia, Latin America, the Indian Subcontinent,
Southern and Eastern Europe, the Middle East and Africa, although it may not
invest in all these markets at all times and may not invest in any particular
market when it deems investment in that country or region to be inadvisable.
The fund is not limited in the amount of its total assets that may be
denominated in a single currency or invested in securities of issuers located in
a single country.
The adviser focuses on higher-quality, dominant emerging markets companies that
the adviser believes to have strong growth prospects and reasonable valuations,
selected from a principal investable universe of approximately 1,000 stocks. The
adviser's emerging markets investment strategy represents a distinctive
combination of quantitative methodology and traditional fundamental analysis.
Traditional "on-the-ground" fundamental research is combined by the adviser with
tested quantitative valuation disciplines in those markets where reliable data
are available. In determining country allocation, the adviser also merges
quantitative and fundamental approaches. In markets with reliable historical
data, buy and sell decisions are driven by a combination of quantitative
valuations and the adviser's fundamental opinions. Stocks are sold when the
original reason for purchase no longer pertains, the fundamentals have
deteriorated or portfolio re-balancing warrants.
When cash is temporarily available, or for temporary defensive purposes, when
the adviser believes such action is warranted by abnormal market or economic
situations, the fund may invest without limit in cash and U.S.
dollar-denominated money market instruments, including repurchase agreements of
domestic issuers. Such securities will be rated investment grade or, if unrated,
will be determined by the adviser to be of comparable quality. If the fund
invests substantially in such instruments, the fund may not be pursuing its
principal investment strategies and the fund may not achieve its investment
objective.
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EUROPE FUND
Investment objective: Long-term growth of capital.
Principal investment strategies:
Lombard Odier International Portfolio Management, Limited ("Lombard Odier" or
"sub-adviser"), the fund's sub-adviser, under normal circumstances, invests
substantially all of the fund's assets in equity securities of European issuers
that it believes offer above-average potential for capital appreciation. Such
securities include common and preferred stocks, convertible securities, rights
and warrants. The sub-adviser focuses on relatively larger capitalized issuers
with good earnings, growth potential and strong management.
A smaller portion of the fund's assets may be invested in fixed income
securities such as obligations of foreign or domestic governments, government
agencies or municipalities and obligations of foreign or domestic companies. The
sub-adviser will invest in such securities for potential capital appreciation.
Securities in the fund's portfolio may be sold when they attain certain price
targets or when better opportunities arise. Sell decisions also are affected by
the level of subscriptions and redemptions of shares of the fund. The
sub-adviser's investment technique may result in high portfolio turnover.
For temporary defensive purposes, the fund may hold all or a portion of its
total assets in money market instruments, cash equivalents, short-term
government and corporate obligations or repurchase agreements. If the fund
invests substantially in such instruments, the fund may not be pursuing its
principal investment strategies and the fund may not achieve its investment
objective.
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[icon] PRINCIPAL RISKS
In general:
There is no assurance that a fund will meet its investment objective; investors
can lose money by investing in the funds. As with all mutual funds, an
investment in any of these funds is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
Market risk:
International Equity Trust, Emerging Markets Trust and Europe Fund invest
primarily in foreign equity securities. Prices of equity securities generally
fluctuate more than those of other securities, such as debt securities. A fund
may experience a substantial or complete loss on an individual stock. Market
risk may affect a single issuer, industry or section of the economy or may
affect the market as a whole.
Foreign securities risk:
Investments in foreign securities (including those denominated in U.S. dollars)
involve certain risks not typically associated with investments in domestic
issuers. The values of foreign securities are subject to economic and political
developments in the countries and regions where the companies operate, such as
changes in economic or monetary policies, and to changes in exchange rates.
Values may also be affected by foreign tax laws and restrictions on receiving
the investment proceeds from a foreign country. Some foreign governments have
defaulted on principal and interest payments.
In general, less information is publicly available about foreign companies than
about U.S. companies. Foreign companies are generally not subject to the same
accounting, auditing and financial reporting standards as are U.S. companies.
Transactions in foreign securities may be subject to less efficient settlement
practices, including extended clearance and settlement periods. Foreign stock
markets may be less liquid and less regulated than U.S. stock markets.
Some securities issued by foreign governments or their subdivisions, agencies
and instrumentalities may not be backed by the full faith and credit of the
foreign government. Even where a security is backed by the full faith and credit
of a foreign government, it may be difficult for a fund to pursue its rights
against a foreign government in that country's courts.
Emerging markets risk:
The risks of foreign investment are greater for investments in emerging markets.
Emerging market countries typically have economic and political systems that are
less fully developed, and can be expected to be less stable, than those of more
advanced countries. Low trading volumes may result in a lack of liquidity and in
price volatility. Emerging market countries may have policies that restrict
investment by foreigners, or that prevent foreign investors from withdrawing
their money at will.
Because each of the funds may invest a significant amount of its total assets in
emerging market securities, investors should be able to tolerate sudden,
sometimes substantial, fluctuations in the value of their investments. An
investment in any fund that invests in emerging market securities should be
considered speculative.
Currency risk:
Because each of the funds invests significantly in securities denominated in
foreign currencies, the funds may incur currency conversion costs, and may be
affected favorably or unfavorably by changes in the rates of exchange between
those currencies and the U.S. dollar. Currency exchange rates can be volatile
and affected by, among other factors, the general economics of a country, the
actions of the U.S. and foreign governments or central banks, the imposition of
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currency controls, and speculation. A security may be denominated in a currency
that is different from the currency where the issuer is domiciled.
The funds may from time to time hedge a portion of their currency risk, using
currency futures, forwards, or options. However, these instruments may not
always work as intended, and in specific cases a fund may be worse off than if
it had not used a hedging instrument. For most emerging market currencies, there
are not suitable hedging instruments available.
The conversion of certain European currencies into the Euro began on January 1,
1999, and is expected to continue into 2002. Full implementation of the Euro may
be delayed and difficulties with the conversion may significantly impact
European capital markets resulting in increased volatility in world capital
markets. Individual issuers may suffer substantial losses if they or their
suppliers are not adequately prepared for the transition.
Concentration and non-diversification:
Europe Fund invests primarily in securities of European issuers. A fund
concentrating a significant portion of its investment in a single region will be
more susceptible to factors adversely affecting issuers within that region than
would a less concentrated portfolio of securities.
European issuers are subject to the special risks in that region, including
risks related to the introduction of the Euro and the potential for difficulties
in its acceptance and the emergence of more unified economic and financial
governance in the European Monetary Union ("EMU") countries.
Global Income Trust is a non-diversified fund. This means that the percentage of
its assets invested in any single issuer is not limited by the Investment
Company Act of 1940. When the fund's assets are invested in the securities of a
limited number of issuers or it holds a large portion of its assets in a few
issuers, the value of its shares will be more susceptible to any single
economic, political or regulatory event affecting those issuers or their
securities than shares of a diversified fund.
Risks of fixed-income securities:
Global Income Trust invests substantially all of its assets in fixed-income
securities. Europe Fund may invest up to 35% of its total assets in fixed-income
securities. International Equity Trust and Emerging Markets Trust may also
invest in fixed-income securities to a lesser extent.
Interest rate risk -
Fixed income securities are subject to interest rate risk, which is the
possibility that the market prices of the funds' investments may decline due to
an increase in market interest rates. Generally, the longer the maturity of a
fixed-income security, the greater is the effect on its value when rates change.
Certain securities pay interest at variable or floating rates. Variable rate
securities reset at specified intervals, while floating rate securities reset
whenever there is a change in a specified index rate. In most cases, these reset
provisions reduce the effect of market interest rates on the value of the
security. However, some securities do not track the underlying index directly,
but reset based on formulas that can produce an effect similar to leveraging;
others may provide for interest payments that vary inversely with market rates.
The market prices of these securities may fluctuate significantly when interest
rates change.
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Credit risk -
Fixed income securities are also subject to credit risk, i.e., the risk that an
issuer of securities will be unable to pay principal and interest when due, or
that the value of the security will suffer because investors believe the issuer
is less able to pay. This is broadly gauged by the credit ratings of the
securities in which each fund invests. However, ratings are only the opinions of
the agencies issuing them and are not absolute guarantees as to quality.
Moody's considers debt securities rated in the lowest investment grade category
(Baa) to have speculative characteristics. Debt securities rated below
investment grade are deemed by the ratings agencies to be speculative and may
involve major risk or exposure to adverse conditions. Those in the lowest rating
categories may involve a substantial risk of default or may be in default.
Changes in economic conditions or developments regarding the individual issuer
are more likely to cause price volatility and weaken the capacity of such
securities to make principal and interest payments than is the case for higher
grade debt securities.
Call risk -
Many fixed income securities, especially those issued at high interest rates,
provide that the issuer may repay them early. Issuers often exercise this right
when interest rates are low. Accordingly, holders of callable securities may not
benefit fully from the increase in value that other fixed-income securities
experience when rates decline. Furthermore, the fund reinvests the proceeds of
the payoff at current yields, which are lower than those paid by the security
that was paid off.
Investment models:
The proprietary models used by the advisers to evaluate securities markets are
based on the advisers' understanding of the interplay of market factors and do
not assure successful investment. The markets, or the prices of individual
securities, may be affected by factors not foreseen in developing the models.
Portfolio Turnover -
Each fund may have an annual portfolio turnover rate in excess of 100%. High
turnover rates can result in increased trading costs and higher levels of
realized capital gains.
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[icon] PERFORMANCE
Each fund has two authorized classes of shares: Primary Class shares and
Navigator Class shares; Europe Fund has an additional authorized class of
shares: Class A shares. The information provided below for Europe Fund is
primarily for Class A shares which is the class of shares with the longest
history. Its expenses generally are slightly lower, and its performance higher
than Primary Class shares. Each class is subject to different expenses and a
different sales charge structure. The information below provides an indication
of the risks of investing in a fund by showing changes in the fund's performance
from year to year. Annual returns assume reinvestment of dividends and
distributions. Historical performance of a fund does not necessarily indicate
what will happen in the future. Sales charges have not been deducted from total
returns (in the bar chart) for Class A shares. Returns would have been lower had
these charges been deducted.
GLOBAL INCOME TRUST - PRIMARY CLASS SHARES
YEAR BY YEAR TOTAL RETURN AS OF DECEMBER 31 OF EACH YEAR (%)
24%
21%
20.80
18%
15%
12% 11.50
9% 8.22
6%
3%
0%
-1.40 -1.69
- -3% -3.23
1994 1995 1996 1997 1998 1999
DURING THE PAST SIX CALENDAR YEARS:
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Quarter Ended Total Return
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Best quarter: March 31, 1995 7.86%
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Worst quarter: March 31, 1999 -4.75%
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In the following table, average annual total returns for the years ended
December 31, 1999, are compared with the Salomon Brothers World Government Bond
Index.
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1 Year 5 Years Life of Class
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Global Income Trust -3.23% 6.76% 5.80%(a)
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Salomon Brothers World -4.27% 6.42% 5.96%(b)
Government Bond Index
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(a) April 15, 1993 (commencement of operations) to December 31, 1999.
(b) For the period April 30, 1993 to December 31, 1999.
INTERNATIONAL EQUITY TRUST - PRIMARY CLASS SHARES
YEAR BY YEAR TOTAL RETURN AS OF DECEMBER 31 OF EACH YEAR (%)
20.58
18%
16.49
15%
12%
9% 8.49
6%
3%
1.76
0% 1996 1997 1998 1999
DURING THE PAST FOUR CALENDAR YEARS:
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Quarter Ended Total Return
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Best quarter: March 31, 1998 15.70%
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Worst quarter: September 30, 1998 -20.06%
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In the following table, average annual total returns for the years ended
December 31, 1999, are compared with the Morgan Stanley Capital International
Europe, Australia and the Far East (MSCI EAFE) Index.
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1 Year Life of Class
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International Equity Trust 20.58% 11.19%(a)
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MSCI EAFE Index 26.96% 14.27%(b)
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(a) February 17, 1995 (commencement of operations) to December 31, 1999.
(b) For the period February 28, 1995 to December 31, 1999.
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EMERGING MARKETS TRUST - PRIMARY CLASS SHARES
YEAR BY YEAR TOTAL RETURN AS OF DECEMBER 31 OF EACH YEAR (%)
101.15
100%
75%
50%
25%
0%
-6.18
- -25%
- -50%
- -75%
-29.34
1997 1998 1999
DURING THE PAST THREE CALENDAR YEARS:
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Quarter Ended Total Return
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Best quarter: December 31, 1999 39.72%
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Worst quarter: September 30, 1998 -28.18%
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In the following table, average annual total returns for the years ended
December 31, 1999, are compared with the Morgan Stanley Capital International
Emerging Markets Free (MSCI EM Free) Index.
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1 Year Life of Class
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Emerging Markets Trust 101.15% 9.93%(a)
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MSCI EM Free Index 66.41% 1.61%(b)
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(a) May 28, 1996 (commencement of operations) to December 31, 1999.
(b) For the period May 31, 1996 to December 31, 1999.
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EUROPE FUND -- CLASS A SHARES
YEAR BY YEAR TOTAL RETURN AS OF DECEMBER 31 OF EACH YEAR (%)
50%
40% 41.85
30% 29.91 31.53
20% 19.90 17.52 25.41
10% 7.07
0%
-4.23
- -10% -7.17
- -20% -20.56
- -30%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
DURING THE PAST TEN CALENDAR YEARS:
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Quarter Ended Total Return
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Best quarter: December 31, 1999 25.98%
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Worst quarter: September 30, 1990 -20.21%
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In the following table, average annual total returns for the years ended
December 31, 1999, are compared with the Morgan Stanley Capital International
(MSCI) Europe Index.
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1 Year 5 Years 10 Years Life of Class
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Europe Fund Class A 25.41% 26.95% 12.47% 11.09% (a)
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Europe Fund Primary Class 24.44% n/a n/a 26.06% (b)
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MSCI Europe Index 15.89% 22.12% 14.05% 14.16% (c)
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(a) August 19, 1986 (commencement of sale of Class A shares) to December 31,
1999.
(b) July 23, 1997 (commencement of sale of Primary Class shares) to December 31,
1999.
(c) For comparison with Class A shares, the index's return shown in the table is
for the period August 31, 1986 to December 31, 1999. For comparison with
Primary Class shares, the index's return for the period July 31, 1997 to
December 31, 1999 was 19.57%.
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[icon] FEES AND EXPENSES OF THE FUNDS
The table below describes the fees and expenses you will incur directly or
indirectly as an investor in a fund. Each fund pays operating expenses directly
out of its assets so they lower that fund's share price and dividends. Other
expenses include transfer agency, custody, professional and registration fees.
GLOBAL INCOME TRUST, INTERNATIONAL EQUITY TRUST, EMERGING MARKETS TRUST
SHAREHOLDER FEES (fees paid directly from your investment)
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Emerging Markets Trust redemption fee: 2.00%*
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* Proceeds of shares redeemed or exchanged within one year of purchase will be
subject to a 2% redemption fee. The fee is paid directly to the fund and not to
the manager or distributor.
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from fund assets)
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Global Income International Emerging Markets
Primary Class shares of: Trust Equity Trust Trust
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Management fees (a) 0.75% 0.75% 1.00%
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Distribution and service 0.75% 1.00% 1.00%
(12b-1) fees
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Other Expenses 0.40% 0.38% 0.75%
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Total Annual Fund
Operating Expenses (a) 1.90% 2.13% 2.75%
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(a) Legg Mason Fund Adviser, Inc., as manager, has voluntarily agreed to waive
fees so that Primary Class share expenses (exclusive of taxes, interest,
brokerage and extraordinary expenses) do not exceed the following annual rates
of each fund's average daily net assets attributable to Primary Class shares:
for Global Income Trust, 1.90% indefinitely; for International Equity Trust,
2.25% indefinitely; and for Emerging Markets Trust, 2.50% until April 30, 2001.
These voluntary waivers may be terminated at any time. With these waivers,
management fees and total annual fund operating expenses for the fiscal year
ended December 31, 1999 were 0.75% and 2.50%, for Emerging Markets Trust. No fee
waivers were necessary for Global Income Trust or International Equity Trust.
EXAMPLE:
This example helps you compare the cost of investing in a fund with the cost of
investing in other mutual funds. Although your actual costs may be higher or
lower, you would pay the following expenses on a $10,000 investment in a fund,
assuming (1) a 5% return each year, (2) the fund's operating expenses remain the
same as shown in the table above, and (3) you redeem all of your shares at the
end of the time periods shown.
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1 YEAR 3 YEARS 5 YEARS 10 YEARS
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Global Income Trust $193 $597 $1026 $2222
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International Equity Trust $216 $667 $1144 $2462
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Emerging Markets Trust $480 $853 $1454 $3080
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Emerging Markets Trust
(assuming no redemption) $278 $853 $1454 $3080
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EUROPE FUND
SHAREHOLDER FEES
(fees paid directly from your investment)
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Class A Shares Primary Class Shares
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Maximum sales charge (load)
imposed on purchases (as a %
of offering price) (a) 4.75% None
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Maximum deferred sales charge
(as a % of net asset value) (b) None None
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ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from fund assets)
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Class A Shares Primary Class Shares
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Management fees (c) 1.00% 1.00%
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Distribution and/or service
(12b-1) fees 0.25% 1.00%
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Other Expenses 0.54% 0.58%
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Total Annual Fund
Operating Expenses (c) 1.79% 2.58%
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(a) Sales charge waivers and reduced sales charge purchase plans are available
for Class A shares. See "How to Invest."
(b) A contingent deferred sales charge ("CDSC") of 1% of the net asset value of
Class A shares will be imposed on redemptions of shares purchased pursuant to
the front-end sales charge waiver on purchases of $1 million or more of Class A
shares made within one year of the purchase date. See "How to Invest."
(c) Legg Mason Fund Adviser, Inc., as investment adviser to Europe Fund, has
voluntarily agreed to waive fees so that expenses (exclusive of taxes, interest,
brokerage and extraordinary expenses) do not exceed the following annual rates:
1.85% of the fund's average daily net assets attributable to Class A shares; and
2.60% of the fund's average daily net assets attributable to Primary Class
shares. These voluntary waivers will continue until April 30, 2001, and may be
terminated at any time. No fee waivers were necessary for either Class A or
Primary Class shares.
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EXAMPLE:
This example helps you compare the cost of investing in Europe Fund with the
cost of investing in other mutual funds. Although your actual costs may be
higher or lower, you would pay the following expenses on a $10,000 investment in
the fund, assuming (1) a 5% return each year, (2) the fund's operating expenses
remain the same as shown in the table above, and (3) you redeem all of your
shares at the end of the time periods shown. This example also assumes that the
maximum initial sales charge is deducted at the time of purchase.
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1 YEAR 3 YEARS 5 YEARS 10 YEARS
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Class A shares $649 $1014 $1404 $2490
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Primary Class shares $262 $805 $1375 $2925
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[icon] M A N A G E M E N T
MANAGEMENT AND ADVISERS:
LEGG MASON FUND ADVISER, INC. ("LMFA"), 100 Light Street, Baltimore, Maryland
21202, is the manager of the funds. LMFA is responsible for investment
management and administrative services and for overseeing the funds'
relationships with outside service providers, such as the custodian, transfer
agent, accountants, and lawyers.
LMFA acts as manager or adviser to investment companies with aggregate assets of
about $18.2 billion as of December 31, 1999.
For its services during the fiscal year ended December 31, 1999, each fund paid
LMFA a percentage of its average daily net assets as follows:
Global Income Trust 0.75%
International Equity Trust 0.75%
Emerging Markets Trust 0.75%
Europe Fund 1.00%
Prior to October 6, 1999, Bartlett & Co. served as Europe Fund's manager under
compensation arrangements substantially similar to those with LMFA.
BATTERYMARCH FINANCIAL MANAGEMENT, Inc. ("Batterymarch"), 200 Clarendon Street,
Boston, Massachusetts 02116, is investment adviser to International Equity Trust
and Emerging Markets Trust. Batterymarch is responsible for the actual
investment management of these funds, which includes making investment decisions
and placing orders to buy or sell a particular security.
LMFA pays Batterymarch a monthly fee of 66 2/3% of the fee it receives from
International Equity Trust and a monthly fee of 75% of the fee it receives from
Emerging Markets Trust. Fees paid to Batterymarch are net of any waivers.
Batterymarch acts as investment adviser to institutional accounts, such as
corporate pension plans, mutual funds and endowment funds, as well as to
individual investors. Total assets under management by Batterymarch were
approximately $6.6 billion as of December 31, 1999.
WESTERN ASSET MANAGEMENT COMPANY ("Western Asset"), 117 East Colorado Boulevard,
Pasadena, California 91105, is investment adviser to Global Income Trust.
Western Asset is responsible for the actual investment management of the fund,
which includes making investment decisions and placing orders to buy or sell a
particular security. LMFA pays Western Asset a monthly fee of 53 1/3% of the fee
it receives from Global Income Trust, net of any waivers.
Western Asset acts as investment adviser to investment companies and private
accounts with aggregate assets of about $52.5 billion as of December 31, 1999.
WESTERN ASSET MANAGEMENT COMPANY LIMITED ("Western Asset Ltd."), 155
Bishopsgate, London, England, serves as investment sub-adviser to Global Income
Trust. Western Asset Ltd. is responsible for providing research, analytical and
trading support for the fund's investment programs, as well as exercising
investment discretion for part of the portfolio, subject to the supervision of
Western Asset and LMFA.
For its services and for expenses borne by Western Asset Ltd. under its
sub-advisory agreement, Western Asset pays Western Asset Ltd. a fee at an annual
rate of 0.20% of the fund's average daily net assets, net of any waivers. LMFA
also pays Western Asset Ltd. a sub-administration fee at an annual rate of 0.10%
of the fund's average daily net assets, net of any waivers, for certain
administrative services performed.
-17-
<PAGE>
Western Asset Ltd. renders investment advice to institutional, private and
commingled fund portfolios with assets of about $4.5 billion as of December 31,
1999. Western Asset Ltd. has managed global fixed-income assets for U.S. and
non-U.S. clients since 1984.
LOMBARD ODIER INTERNATIONAL PORTFOLIO MANAGEMENT LIMITED, Norfolk House, 13
Southampton Place, London, England, serves as investment sub-adviser to Europe
Fund. For its services, Lombard Odier receives a monthly fee from LMFA equal to
60% of the fee paid to Legg Mason Fund Adviser by the fund, net of any waivers.
Lombard Odier specializes in advising and managing investment portfolios for
institutional clients and mutual funds. Lombard Odier is an indirect wholly
owned subsidiary of Lombard Odier & Cie, a Swiss private bank.
PORTFOLIO MANAGEMENT:
Batterymarch investment teams have been responsible for the day-to-day
management of International Equity Trust and Emerging Markets Trust since their
inception.
An investment committee at Western Asset is responsible for the day-to-day
management of Global Income Trust.
Neil Worsley and William Lovering are responsible for co-managing Europe Fund.
Mr. Worsley has been Director and Senior Investment Manager of Lombard Odier
since June 1, 1996. Prior thereto, he was an Assistant Director and Senior Fund
Manager. He joined Lombard Odier in 1990. Mr. Lovering has been Assistant
Director of Lombard Odier since June 1, 1996. Prior thereto, he was a Senior
Fund Manager. He joined the firm in 1994. Previously, Mr. Lovering was employed
at Arbuthnot Latham Investment Management.
DISTRIBUTOR OF THE FUNDS' SHARES:
Legg Mason Wood Walker, Incorporated ("Legg Mason"), 100 Light Street,
Baltimore, Maryland, 21202, is the distributor of each fund's shares. Each fund
has adopted a plan under Rule 12b-1 that allows it to pay distribution fees
and/or shareholder service fees for the sale of its shares and for services
provided to shareholders. These fees are calculated daily and paid monthly.
Under each plan, the funds may pay Legg Mason an annual fee equal to 0.50% of
Global Income Trust's average daily net assets attributable to Primary Class
shares, and 0.75% of International Equity Trust's, Emerging Markets Trust's and
Europe Fund's average daily net assets attributable to Primary Class shares; and
an annual service fee from each fund equal to 0.25% of its average daily net
assets attributable to Primary Class shares. For Class A shares, Europe Fund may
pay Legg Mason a service fee at an annual rate of 0.25% of its average daily
Class A net assets.
Because these fees are paid out of the fund's assets on an ongoing basis, over
time these fees will increase the cost of your investment and may cost you more
than paying other types of sales charges.
Legg Mason collects the sales charge imposed on purchases of Class A shares and
any CDSCs that may be imposed on certain redemptions of Class A shares. Legg
Mason reallows a portion of the sales charges on Class A shares to
broker/dealers that have sold such shares in accordance with the Class A
Purchase Schedule and may from time to time reallow the full amount of the sales
charge.
Legg Mason may also pay special additional compensation and promotional
incentives to broker/dealers who sell Class A shares of Europe Fund.
Legg Mason may enter into agreements with other brokers to sell Primary Class
shares of each fund. Legg Mason pays these brokers up to 90% of the service fee
that it receives from a fund for those sales.
-18-
<PAGE>
Each class of shares bears differing class-specific expenses. Salespersons and
others entitled to receive compensation for selling or servicing fund shares may
receive more with respect to one class than another.
LMFA, Batterymarch, Western Asset, Western Asset Ltd. and Legg Mason are wholly
owned subsidiaries of Legg Mason, Inc., a financial services holding company.
-19-
<PAGE>
[icon] H O W T O I N V E S T
To open a regular account or a retirement account, contact a Legg Mason
Financial Advisor, Legg Mason Funds Investor Services ("FIS"), or another entity
that has entered into an agreement with the fund's distributor to sell shares of
the fund. The minimum initial investment is $1,000 and the minimum for each
purchase of additional shares is $100.
Retirement accounts include traditional IRAs, spousal IRAs, Education IRAs, Roth
IRAs, simplified employee pension plans, savings incentive match plans for
employees and other qualified retirement plans. The investment amount for an
Education IRA is $500. Contact your financial adviser, FIS, or other entity
offering the funds to discuss which one might be appropriate for you.
Certain investment methods (for example, through certain retirement plans) may
be subject to lower minimum initial and additional investments. Arrangements may
also be made with some employers and financial institutions for regular
automatic monthly investments of $50 or more in shares of the fund. Contact your
financial adviser or FIS with any questions regarding your investment options.
When placing a purchase order for Europe Fund shares, please specify whether the
order is for Class A shares or Primary Class shares. All purchase orders that
fail to specify a class will automatically be invested in Primary Class shares.
Once your account is open, you may use the following methods to purchase shares
of the fund:
- --------------------------------------------------------------------------------
In Person Give your financial adviser a check for $100 or more
payable to the fund.
- --------------------------------------------------------------------------------
Mail Mail your check, payable to the fund, for $100 or more
to your financial adviser or to Legg Mason Funds
Investor Services at P.O. Box 17023, Baltimore, MD
21297-0356.
- --------------------------------------------------------------------------------
Telephone or Wire Call your financial adviser or FIS at 1-800-822-5544
to transfer available cash balances in your brokerage
account or to transfer money from your bank directly.
Wire transfers may be subject to a service charge by
your bank.
- --------------------------------------------------------------------------------
Internet or TeleFund FIS clients may purchase shares of the fund through
Legg Mason's Internet site at
http://www.leggmasonfunds.com or through a telephone
account management service "TeleFund" at
1-877-6-LMFUNDS.
- --------------------------------------------------------------------------------
Automatic Arrangements may be made with some employers and
Investments financial institutions for regular automatic monthly
investments of $50 or more in shares of the funds. You
may also reinvest dividends from certain unit
investment trust in shares of the fund.
- --------------------------------------------------------------------------------
Future First Contact a Legg Mason Financial Advisor to enroll in
Systematic Legg Mason's Future First Systematic Investment Plan.
Investment Plan Under this plan, you may arrange for automatic monthly
investments in a fund of $50 or more. The transfer
agent will transfer funds monthly from your Legg Mason
account or from your checking/savings account to
purchase shares of the desired fund.
- --------------------------------------------------------------------------------
-20-
<PAGE>
Investments made through entities other than Legg Mason may be subject to
transaction fees or other purchase conditions established by those entities. You
should consult their program literature for further information.
Purchase orders received by your financial adviser, FIS or other authorized
entity before the close of the New York Stock Exchange ("Exchange") (normally
4:00 p.m., Eastern time) will be processed at the fund's net asset value as of
the close of the exchange on that day. Orders received after the close of the
Exchange will be processed at the fund's net asset value as of the close of the
exchange on the next day the exchange is open. Payment must be made within three
business days to Legg Mason.
You will begin to earn dividends on shares of Global Income Trust as of
settlement date, which is normally the third business day after your order is
placed with a financial adviser.
Navigator Class shares, which are not subject to a Rule 12b-1 fee, are offered
through a separate prospectus only to certain investors.
Europe Fund -- Class A Shares Purchase Schedule:
Europe Fund's offering price for Class A share purchases is equal to the net
asset value per share plus a front-end sales charge determined from the
following schedule (which may be amended from time to time):
Sales Charge Sales Charge Dealer Reallowance
as a % of as a % of as a % of
Amount of Purchase Offering Price Net Investment Offering Price
Less than $25,000 4.75% 4.99% 4.00%
$25,000 to $49,999 4.50 4.71 3.75
$50,000 to $99,999 4.00 4.17 3.25
$100,000 to $249,999 3.50 3.63 2.75
$250,000 to $499,999 2.50 2.56 2.00
$500,000 to $999,999 2.00 2.04 1.60
$1 million or more * 0.00 0.00 1.00
* For redemptions made within one year of the purchase date, a CDSC of 1% of the
shares' net value at the time of purchase or sale, whichever is less, may be
charged on redemptions of shares purchased pursuant to the front-end sales
charge waiver for purchases of $1 million or more. See "How to Sell Your Shares"
for a discussion of any CDSC applicable to Class A shares.
Legg Mason will pay the following commissions to brokers that initiate and are
responsible for purchases of Class A shares of any single purchaser of $2
million or more in the aggregate: 0.80% up to $2,999,999, plus 0.50% of the
excess over $3 million up to $20 million, plus 0.25% of the excess over $20
million.
Sales Charge Waivers for Class A Shares:
Purchases of Class A shares made by the following investors will not be subject
to a sales charge:
-21-
<PAGE>
- - certain employee benefit or retirement accounts (subject to the discretion of
Legg Mason)
- - employees of Legg Mason, Inc. and its affiliates
- - registered representatives or full-time employees of broker/dealers that have
dealer agreements with the distributor
- - the children, siblings and parents of such persons
- - broker/dealers, registered investment advisers, financial institutions or
financial planners for the accounts of clients participating in "wrap fee"
advisory programs that adhere to certain standards and that are subject to
agreements between those entities and the distributor
- - purchases of $1,000,000 or more
Investors may be eligible for a reduced sales charge on purchases of Class A
shares through a Right of Accumulation or under a Letter of Intent.
Right of Accumulation:
To receive the Right of Accumulation, investors must give the distributor or
their broker/dealer sufficient information to permit qualification. If
qualified, investors may purchase shares of the fund at the sales charge
applicable to the total of:
o the dollar amount being purchased plus
o the dollar amount of the investors' concurrent purchases of Class A shares of
other Legg Mason funds plus
o the price of all shares of Class A shares of Legg Mason funds already held by
the investor
Letter of Intent:
Investors may execute a Letter of Intent indicating an aggregate amount to be
invested in Class A shares of the fund in the following thirteen months. All
purchases made during that period will be subject to the sales charge applicable
to that aggregate amount.
If a Letter of Intent is executed within 90 days of a prior purchase of Class A
shares, the prior purchase may be included under the Letter of Intent and an
adjustment will be made to the applicable sales charge. The adjustment will be
based on the current net asset value of the fund.
If the total amount of purchases does not equal the aggregate amount covered by
the Letter of Intent after the thirteenth month, you will be required to pay the
difference between the sales charges paid at the reduced rate and the sales
charge applicable to the purchases actually made.
Shares having a value equal to 5% of the amount specified in the Letter of
Intent will be held in escrow during the thirteen month period (while remaining
registered in your name) and will be subject to redemption to assure any
necessary payment to the distributor of a higher applicable sales charge.
-22-
<PAGE>
[icon] H O W T O S E L L Y O U R S H A R E S
You may use any of the following methods to sell shares of the funds:
- --------------------------------------------------------------------------------
Telephone Call your financial adviser or FIS at 1-800-822-5544 or
entity offering a fund to request a redemption. Please have
the following information ready when you call: the name of
the fund, the number of shares (or dollar amount) to be
redeemed and your shareholder account number.
Proceeds will be credited to your brokerage account or a
check will be sent to you, at your direction, at no charge to
you. Wire requests will be subject to a fee of $12. Be sure
that your financial adviser has your bank account information
on file.
- --------------------------------------------------------------------------------
Internet FIS clients may request a redemption of fund shares through
Legg Mason's Internet site at http://www.leggmasonfunds.com
or through TeleFund at 1-877-6-LMFUNDS.
- --------------------------------------------------------------------------------
Mail Send a letter to a fund requesting redemption of your shares.
The letter should be signed by all of the owners of the
account and their signatures guaranteed without
qualification. You may obtain a signature guarantee from most
banks or securities dealers.
- --------------------------------------------------------------------------------
The funds will follow reasonable procedures to ensure the validity of any
telephone or Internet redemption requests, such as requesting identifying
information from users or employing identification numbers. Unless you specify
that you do not wish to have telephone redemption privileges, you may be held
responsible for any fraudulent telephone order.
Fund shares will be sold at the next net asset value calculated after your
redemption request is received by your financial adviser, FIS or other entity
offering the fund.
Redemption orders will be processed promptly. You will generally receive the
proceeds within a week. Payment of the proceeds of redemptions of shares that
were recently purchased by check or acquired through reinvestment of
distributions on such shares may be delayed for up to 10 days from the purchase
date in order to allow for the check to clear.
Additional documentation may be required from corporations, executors,
partnerships, administrators, trustees or custodians.
Redemptions made through entities other than Legg Mason may be subject to
transaction fees or other conditions established by those entities. You should
consult their program literature for further information.
Each fund has reserved the right under certain conditions to redeem its shares
in kind by distributing portfolio securities in payment for redemptions.
-23-
<PAGE>
Europe Fund -- Contingent Deferred Sales Charges:
If you redeem any Class A shares within one year that were purchased without a
sales charge because the purchase totaled $1,000,000 or more, you will be
subject to a Contingent Deferred Sales Charge ("CDSC") of 1% of the lower of the
original purchase price or the net asset value of such shares at the time of
redemption. You may exchange such shares purchased without a sales charge for
Class A shares of another Legg Mason fund without being charged a CDSC. You will
be subject to a CDSC if you redeem shares acquired through exchange.
Class A shares that are redeemed will not be subject to the CDSC to the extent
that the value of such shares represents (i) reinvestment of dividends or other
distributions or (ii) shares redeemed more than one year after their purchase.
The amount of any CDSC will be paid to Legg Mason.
Emerging Markets Trust Redemption Fee:
The fund is intended for long-term investors. Short-term "market timers" who
engage in frequent purchases and redemptions affect the fund's investment
planning and create additional transaction costs. For this reason, the fund
imposes a 2% redemption fee on all redemptions, including exchanges, of fund
shares held for less than one year. The fee will be paid directly to the fund to
help offset the costs imposed on it by short-term trading in emerging markets.
The fund will use the "first-in, first-out" method to determine the one year
holding period for CDSC's and redemptions. The date of redemption or exchange
will be compared with the earliest purchase date of shares held in the account.
The fee will not apply to any shares purchased through reinvestment of dividends
or other distributions or to shares held in retirement plans; however, it will
apply to shares held in IRA accounts (including IRA-based plans) and to shares
purchased through automatic investment plans.
-24-
<PAGE>
[icon] ACCOUNT POLICIES
Calculation of Net Asset Value:
Net asset value per Class A share and Primary Class share is determined daily as
of the close of the Exchange, on every day the Exchange is open. The Exchange is
normally closed on all national holidays and Good Friday. To calculate each
fund's Class A share or Primary Class share price, the fund's assets
attributable to that class of shares are valued and totaled, liabilities
attributable to that class of shares are subtracted, and the resulting net
assets are divided by the number of the class of shares outstanding. Each fund's
securities are valued on the basis of market quotations or, lacking such
quotations, at fair value as determined under policies approved by the Board of
Directors.
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. Securities with remaining maturities of
60 days or less are valued at amortized cost.
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 Trust are
valued on the basis of valuations furnished by a 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.
To the extent that a fund has portfolio securities that are primarily listed on
foreign exchanges that trade on days when the fund does not price its shares,
the net asset value of the fund may change on days when shareholders will not be
able to purchase or redeem the fund's shares.
Other:
Fund shares may not be held in, or transferred to, an account with any firm that
does not have an agreement with Legg Mason or its affiliates.
If your account falls below $500, the fund may ask you to increase your balance.
If, after 60 days, your account is still below $500, the fund may close your
account and send you the proceeds. A fund will not redeem accounts that fall
below $500 solely as a result of a reduction in net asset value per share.
Each fund reserves the right to:
o Reject any order for shares or suspend the offering of shares for a period
of time.
o Change its minimum investment amounts.
o Delay sending out redemption proceeds for up to seven days. Each fund
expects to use this authority only in cases of very large redemptions or
excessive trading or during unusual market conditions. Each fund may delay
redemptions beyond seven days, or suspend redemptions, only as permitted by
the SEC.
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<PAGE>
[icon] SERVICES FOR INVESTORS
For further information regarding any of the services below, please contact your
financial adviser or other entity offering the funds for sale.
Confirmations and Account Statements:
You will receive from Legg Mason a confirmation after each transaction involving
Class A shares or Primary Class shares (except a reinvestment of dividends or
capital gain distributions and purchases made through the Future First
Systematic Investment Plan or through automatic investments).
Legg Mason or the entity through which you invest will send you account
statements monthly unless there has been no activity in the account, in which
case you will receive statements quarterly. Legg Mason will send you statements
quarterly if you participate in the Future First Systematic Investment Plan or
if you purchase shares through automatic investments.
Systematic Withdrawal Plan:
If you are purchasing or already own shares of a fund with a net asset value of
$5,000 or more, you may elect to make systematic withdrawals from the fund. The
minimum amount for each withdrawal is $50. You should not purchase shares of the
fund when you are a participant in the plan.
Exchange Privilege:
Fund shares may be exchanged for the corresponding class of shares of any of the
other Legg Mason funds, provided these funds are eligible for sale in your state
of residence. You can request an exchange in writing or by phone. Be sure to
read the current prospectus for any fund into which you are exchanging.
Other than the redemption fee imposed on exchanges of shares of Emerging
Markets, there is currently no fee for exchanges; however, you may be subject to
a sales charge when exchanging into a fund that has one. As described above
under the heading 'Contingent Deferred Sales Charges', a CDSC may apply to the
redemption of Class A shares acquired through an exchange. In addition, an
exchange of a fund's shares will be treated as a sale of the shares and any gain
on the transaction may be subject to tax.
Each fund reserves the right to:
o terminate or limit the exchange privilege of any shareholder who makes more
than four exchanges from the fund in one calendar year
o terminate or modify the exchange privilege after 60 days' written notice to
shareholders
Europe Fund -- Reinstatement Privilege:
If you have redeemed your Class A shares, you may reinstate your fund account
without a sales charge up to the dollar amount redeemed by purchasing shares
within 90 days of the redemption. Within 90 days of a redemption, contact Legg
Mason or your broker/dealer and notify them of your desire to reinstate and give
them an order for the amount to be purchased. The reinstatement will be made at
the net asset value next determined after the notification and purchase order
have been received by the transfer agent.
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<PAGE>
[icon] DIVIDENDS AND TAXES
Global Income Trust declares and pays any dividends from its net investment
income monthly. International Equity Trust, Emerging Markets Trust and Europe
Fund each declares and pays any such dividends on an annual basis.
Distributions of substantially all net capital gain (the excess of any net
long-term capital gain over net short-term capital loss) and any net realized
gains from foreign currency transactions, generally are declared and paid after
the end of the taxable year in which the gain is realized. A second distribution
of net capital gain may be necessary in some years to avoid imposition of a
federal excise tax.
Your dividends and other distributions will be automatically reinvested in the
same class of shares of a fund, unless you elect to receive your dividends
and/or other distributions in cash. To change your election, you must notify the
fund at least 10 days before the next dividend and/or other distribution is to
be paid. You may also request that your dividends and distributions be
reinvested in shares of another eligible Legg Mason fund.
If the postal or other delivery service is unable to deliver your check, your
distribution option will automatically be converted to having all dividends and
other distributions reinvested in fund shares. No interest will accrue on
amounts represented by uncashed distribution or redemption checks.
Fund dividends and other distributions are taxable to investors (other than
retirement plans and other tax-exempt investors) whether received in cash or
reinvested in additional shares of a fund. Dividends from investment company
taxable income (which includes net investment income and net short-term capital
gains) are taxable as ordinary income. Distributions of a fund's net capital
gain will be taxable as long-term capital gain, regardless of how long you have
held your fund shares.
The sale or exchange of fund shares may result in a taxable gain or loss,
depending on whether the proceeds are more or less than the cost of your shares.
Each fund's dividend and interest income, and gains realized from disposition of
foreign securities, may be subject to income, withholding or other taxes imposed
by foreign countries and U.S. possessions.
A tax statement is sent to you at the end of each year detailing the tax status
of your distributions.
Each fund will withhold 31% of all dividends, capital gain distributions and
redemption proceeds payable to individuals and certain other non-corporate
shareholders who do not provide the fund with a valid taxpayer identification
number. Each fund will also withhold 31% of all dividends and capital gain
distributions payable to shareholders who are otherwise subject to backup
withholding.
Because each investor's tax situation is different, please consult your tax
advisor about federal, state and local tax considerations.
-27-
<PAGE>
[GRAPHIC] FINANCIAL HIGHLIGHTS
The following financial highlights table is intended to help you understand each
fund's financial performance for the past five years or since inception. Total
return represents the rate that an investor would have earned (or lost) on an
investment in a fund, assuming reinvestment of all dividends and distributions.
This information has been audited by PricewaterhouseCoopers LLP, whose report,
along with the fund's financial statements, is incorporated by reference into
the Statement of Additional Information (see back cover) and is included in the
annual report. The annual report is available upon request by calling toll-free
1-800-822-5544.
Investment Operations
---------------------
Net Realized and
Net Asset Net Unrealized Gain(Loss)
Value, Investment on Investments, Options, Total From
Years Ended Beginning Income Futures and Foreign Investment
Dec. 31, of Year (Loss) Currency Transactions Operations
----------- --------- ---------- --------------------- ----------
Global
Income Trust
Primary Class
1999 $10.14 $0.40 ($0.74) ($0.34)
1998 9.60 0.37 0.70 1.07
1997 10.41 0.54 (0.71) (0.17)
1996 10.33 0.59 0.21 0.80
1995 9.54 0.63 1.32 1.95
International
Equity Trust
Primary Class
1999 $12.64 $-- $2.51 $2.51
1998 11.78 0.01 0.99 1.00
1997 12.09 0.02 0.19 0.21
1996 10.70 0.02B 1.74 1.76
1995C 10.00 0.04B 0.77 0.81
Emerging
Markets Trust
Primary Class
1999 $6.96 $(.08)F $7.12 $7.04
1998 9.85 0.01F (2.90) (2.89)
1997 10.51 (0.02)F (0.63) (0.65)
1996G 10.00 (0.03)F 0.57 0.54
Europe FundH
Primary Class
1999 $24.39 $(0.29)I $5.97 $5.68
1998 20.86 0.11J 8.09 8.20
1997K 26.56 0.10)J 0.23 0.13
Class A
1999 $24.77 $(0.09)I $6.10 $6.01
1998 20.97 0.02L 8.52 8.54
1997 24.24 (0.05)L 4.11 4.06
1996 21.13 0.02 6.34 6.36
1995 17.68 0.01 3.50 3.51
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<PAGE>
Distributions
-------------
In Excess Net
In Excess From Net of Net Asset
Years From Net of Net Realized Realized Value,
Ended Investment Investment Gain on Gain on Total End of
Dec. 31, Income Income Investments Investments Distributions Year
- -------- ---------- ---------- ----------- ----------- ------------- ------
Global
Income Trust
Primary Class
1999 ($0.01) ($0.43) ($0.08) $ -- ($0.52) $ 9.28
1998 (0.47) -- (0.06) -- (0.53) 10.14
1997 (0.48) (0.05) (0.11) -- (0.64) 9.60
1996 (0.62) -- (0.10) -- (0.72) 10.41
1995 (1.16) -- -- -- (1.16) 10.33
International
Equity Trust
Primary Class
1999 ($0.05) $-- ($0.87) $ -- ($0.92) $14.23
1998 (0.14) -- -- -- (0.14) 12.64
1997 (0.08) -- (0.44) -- (0.52) 11.78
1996 (0.05) -- (0.32) -- (0.37) 12.09
1995C (0.04) -- -- (0.07) (0.11) 10.70
Emerging
Markets Trust
Primary Class
1999 $ -- $ -- $ -- $ -- $ -- $14.00
1998 -- -- -- -- -- 6.96
1997 (0.01) -- -- -- (0.01) 9.85
1996G (0.03) -- -- -- (0.03) 10.51
Europe FundH
Primary Class
1999 ($0.07) $ -- ($2.10) $ -- ($2.17) $27.90
1998 (0.36) -- (4.31) -- (4.67) 24.39
1997K -- -- (5.83) -- (5.83) 20.86
Class A
1999 ($0.07) $ -- ($2.10) $ -- ($2.17) $28.61
1998 (0.43) -- (4.31) -- (4.74) 24.77
1997 -- -- (7.33) -- (7.33) 20.97
1996 -- -- (3.25) -- (3.25) 24.24
1995 (0.06) -- -- -- (0.06) 21.13
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<PAGE>
Ratios/Supplemental Data
------------------------
Net
Investment
Expenses Income (Loss) Portfolio Net Assets,
Years Ended Total to Average to Average Turnover End of Year
Dec. 31, ReturnA Net Assets Net Assets Rate (in thousands)
----------- ------- ---------- ---------- -------- ------------
Global
Income Trust
Primary Class
1999 (3.23)% 1.90% 4.58% 354% $ 86,634
1998 11.50% 1.87% 4.51% 288% 120,805
1997 (1.69)% 1.86% 5.39% 241% 136,732
1996 8.22% 1.86% 5.80% 172% 161,549
1995 20.80% 1.81% 5.72% 169% 153,954
International
Equity Trust
Primary Class
1999 20.58% 2.13% (0.06)% 148% $295,236
1998 8.49% 2.14% 0.06% 72% 258,521
1997 1.76% 2.17% 0.17% 59% 227,655
1996 16.49% 2.25%B 0.21%B 83% 167,926
1995C 8.11%D 2.25%B,E .52%B,E 58%E 65,947
Emerging
Markets Trust
Primary Class
1999 101.15% 2.50%F (1.06)%F 123% $120,758
1998 (29.34)% 2.50%F 0.09%F 76% 42,341
1997 (6.18)% 2.50%F (0.76)%F 63% 65,302
1996G 5.40%D 2.50%F,E (0.68)%F,E 46%E 21,206
Europe FundH
Primary Class
1999 24.44% 2.58% (1.15)% 93% $56,871
1998 40.48% 2.51%J (1.15)%J 103% 32,325
1997K 0.68%D 2.50%J,E (1.79)%J,E 123%E 302
Class A
1999 25.41% 1.79% (0.38)% 93% $78,429
1998 41.85% 1.81%L (0.10)%L 103% 57,406
1997 17.52% 1.90%L (0.12)%L 123% 52,253
1996 31.53% 2.00% 0.10% 109% 70,991
1995 19.90% 2.10% 0.10% 148% 62,249
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<PAGE>
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. 6%; 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 through
December 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 expense
to average daily net assets for each period would have been as follows:
1998, 1.89%; 1997, 2.08%.
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<PAGE>
Legg Mason Global Trust, Inc.
The following additional information about the funds is available upon request
and without charge:
Statement of Additional Information (SAI) -The SAI is filed with the Securities
and Exchange Commission (SEC) and is incorporated by reference into (is
considered part of) the prospectus. The SAI provides further information and
additional details about each fund and its policies.
Annual and Semi-annual Reports - Additional information about each fund's
investments is available in the funds' annual and semi-annual reports to
shareholders. In the funds' annual report, you will find a discussion of the
market conditions and investment strategies that significantly affected each
fund's performance during its last fiscal year.
To request the SAI or any reports to shareholders, or to obtain more
information:
o call toll-free 1-800-822-5544
o visit us on the Internet via http://www.leggmasonfunds.com
o write to us at: Legg Mason Wood Walker, Incorporated
100 Light Street, P.O. Box 1476
Baltimore, MD 21203-1476
Information about the funds, including the SAI, can be reviewed and copied at
the SEC's Public Reference Room in Washington, D.C. Information on the operation
of the Public Reference Room may be obtained by calling the SEC at
1-202-942-8090. Reports and other information about the fund are available on
the EDGAR database on the SEC's Internet site at http://www.sec.gov. Investors
may also obtain this information, after paying a duplicating fee, by electronic
request at the following e-mail address: [email protected] or by writing the
SEC's, Public Reference Section, Washington, DC 20549-0102.
LMF-041 SEC file number 811-7418
-32-
<PAGE>
Navigator Global Funds:
- ----------------------
Navigator Class of Legg Mason Global Income Trust
Navigator Class of Legg Mason International Equity Trust
Navigator Class of Legg Mason Emerging Markets Trust
Navigator Class of Legg Mason Europe Fund
NAVIGATOR SHARES PROSPECTUS April 28, 2000
logo
THE ART OF INVESTING(SM)
As with all mutual funds, the Securities and Exchange Commission has not passed
upon the accuracy or adequacy of this prospectus, nor has it approved or
disapproved these securities. It is a criminal offense to state otherwise.
<PAGE>
TABLE OF CONTENTS
About the funds:
3 Investment objectives
7 Principal risks
10 Performance
15 Fees and expenses of the funds
17 Management
About your investment:
19 How to invest
21 How to sell your shares
22 Account policies
23 Services for investors
24 Distributions and taxes
25 Financial highlights
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<PAGE>
Legg Mason Global Trust, Inc.
[icon] INVESTMENT OBJECTIVES AND POLICIES
GLOBAL INCOME TRUST
Investment objective: Current income and capital appreciation in order to
achieve an attractive total return consistent with prudent investment risk.
Principal investment strategies:
The fund invests at least 75% of its total assets in fixed income securities
rated investment grade by Moody's Investor's Service, Inc. ("Moody's") or
Standard & Poor's, Inc. ("S&P") or, if unrated by Moody's or S&P, judged by
Western Asset Management Company, the fund's adviser, to be of comparable
quality. Up to 25% of the fund's assets may be invested in below investment
grade securities of foreign and domestic issuers, loans of banks and other
financial institutions (which may be below investment grade), convertible
securities, and common and preferred stock.
The types of fixed income securities in which the fund may invest include:
o U.S. and foreign investment-grade corporate debt securities
o U.S. and foreign high-yield corporate debt securities (including those
commonly known as "junk bonds")
o sovereign debt obligations of developed nations
o sovereign debt obligations of emerging market countries
o mortgage-related and asset-backed securities.
The fund will maintain a minimum of 25% of its total assets in debt securities
issued or guaranteed by the U.S. Government or foreign governments, their
agencies, instrumentalities or political subdivisions. The debt securities in
which the fund may invest may be of any maturity, and there are no limits on the
average maturity of the fund's portfolio. The fund may invest in corporate fixed
income securities rated as low as C by Moody's or D by S&P or in non-rated
securities deemed by the adviser to be of comparable quality.
Under normal circumstances, the fund will invest no more than 40% of its total
assets in any one country other than the United States. There is no other limit
on the percentage of assets that may be invested in any one country or currency.
The adviser has a number of proprietary tools which attempt to define the
inter-relationship between bond markets, sectors and maturities. Target
allocation ranges among countries and sector types and prices are established as
part of the adviser's strategy process, monitored daily and re-balanced if
necessary as dictated by macro-economic or company-specific events. This ongoing
screening drives the adviser's discipline for buying, selling or holding any
securities or currency position. The adviser deviates from the discipline only
if exceptional circumstances disrupt the orderly functioning of the markets. The
adviser's management style favors `rotation' among the government, agency,
corporate, and mortgage-backed sectors of the fixed income securities markets,
which may result in high portfolio turnover.
The adviser sells securities when they have realized what the adviser believes
is their potential value or when the adviser believes that they are not likely
to achieve that value in a reasonable period of time.
For temporary defensive purposes, the fund may borrow money or invest without
limit in cash and U.S. dollar-denominated money market instruments including
repurchase agreements. If the fund invests substantially in such instruments,
the fund may not be pursuing its principal investment strategies and the fund
may not achieve its investment objective.
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<PAGE>
INTERNATIONAL EQUITY TRUST
Investment objective: Maximum long-term total return.
Principal investment strategies:
Batterymarch Financial Management, Inc. ("Batterymarch"), the fund's adviser,
currently intends to invest substantially all of the fund's assets in non-U.S.
equity securities.
The primary focus of the adviser is stock selection, with a secondary focus on
country allocation. The adviser uses a bottom-up, quantitative stock selection
process for the developed markets portion of the fund's portfolio. The
cornerstone of this process is a proprietary stock selection model that ranks
more than 2,800 stocks in the fund's principal investable universe by relative
attractiveness on a daily basis. The quantitative factors within this model
measure growth, value, changes in earnings expectations and technical
indicators. Because the same quantitative factors are not effective across all
markets due to individual market characteristics, the adviser adjusts the stock
selection model to include factors in each market that its research indicates
are effective. The adviser runs the stock selection model and re-balances the
portfolio daily, purchasing stocks ranked "buys" by the model and selling stocks
ranked "sells." Stocks are sold when the original reason for purchase no longer
pertains, the fundamentals have deteriorated or portfolio re-balancing warrants.
Region and country allocation for the developed markets portion of the fund is
based on rankings generated by the adviser's proprietary country model. The
adviser examines securities from over 20 international stock markets, with
emphasis on several of the largest: Japan, the United Kingdom, France, Canada
and Germany.
The fund may invest up to 35% of its total assets in emerging market securities.
The adviser's investment strategy for the emerging markets portion of the fund
represents a distinctive combination of tested quantitative methodology and
traditional fundamental analysis. The emerging markets allocation focuses on
higher-quality, dominant companies that the adviser believes to have strong
growth prospects and reasonable valuations. Country allocation for the emerging
markets portion of the portfolio also combines quantitative and fundamental
approaches.
The fund's investment portfolio will normally be diversified across a broad
range of industries and across a number of countries, consistent with the
objective of maximum total return. The adviser may also seek to enhance
portfolio returns through active currency hedging strategies.
The fund is not limited in the amount of its total assets that may be
denominated in a single currency or invested in securities of issuers located in
a single country.
When cash is temporarily available, or for temporary defensive purposes, when
the adviser believes such action is warranted by abnormal market or economic
situations, the fund may invest without limit in cash and U.S.
dollar-denominated money market instruments, including repurchase agreements of
domestic issuers. Such securities will be rated investment grade or, if unrated,
will be determined by the fund's adviser to be investment grade. If the fund
invests substantially in such instruments, the fund may not be pursuing its
principal investment strategies and the fund may not achieve its investment
objective.
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<PAGE>
EMERGING MARKETS TRUST
Investment objective: Long-term capital appreciation.
Principal investment strategies:
Batterymarch, the fund's adviser, intends to invest substantially all of the
fund's assets in equity securities and convertible securities of emerging market
issuers.
The fund intends to invest in Asia, Latin America, the Indian Subcontinent,
Southern and Eastern Europe, the Middle East and Africa, although it may not
invest in all these markets at all times and may not invest in any particular
market when it deems investment in that country or region to be inadvisable.
The fund is not limited in the amount of its total assets that may be
denominated in a single currency or invested in securities of issuers located in
a single country.
The adviser focuses on higher-quality, dominant emerging markets companies that
the adviser believes to have strong growth prospects and reasonable valuations,
selected from a principal investable universe of approximately 1,000 stocks. The
adviser's emerging markets investment strategy represents a distinctive
combination of quantitative methodology and traditional fundamental analysis.
Traditional "on-the-ground" fundamental research is combined by the adviser with
tested quantitative valuation disciplines in those markets where reliable data
are available. In determining country allocation, the adviser also merges
quantitative and fundamental approaches. In markets with reliable historical
data, buy and sell decisions are driven by a combination of quantitative
valuations and the adviser's fundamental opinions. Stocks are sold when the
original reason for purchase no longer pertains, the fundamentals have
deteriorated or portfolio re-balancing warrants.
When cash is temporarily available, or for temporary defensive purposes, when
the adviser believes such action is warranted by abnormal market or economic
situations, the fund may invest without limit in cash and U.S.
dollar-denominated money market instruments, including repurchase agreements of
domestic issuers. Such securities will be rated investment grade or, if unrated,
will be determined by the adviser to be of comparable quality. If the fund
invests substantially in such instruments, the fund may not be pursuing its
principal investment strategies and the fund may not achieve its investment
objective.
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<PAGE>
EUROPE FUND
Investment objective: Long-term growth of capital.
Principal investment strategies:
Lombard Odier International Portfolio Management, Limited ("Lombard Odier" or
"sub-adviser"), the fund's sub-adviser, under normal circumstances, invests
substantially all of the fund's assets in equity securities of European issuers
that it believes offer above-average potential for capital appreciation. Such
securities include common and preferred stocks, convertible securities, rights
and warrants. The sub-adviser focuses on relatively larger capitalized issuers
with good earnings, growth potential and strong management.
A smaller portion of the fund's assets may be invested in fixed income
securities such as obligations of foreign or domestic governments, government
agencies or municipalities and obligations of foreign or domestic companies. The
sub-adviser will invest in such securities for potential capital appreciation.
Securities in the fund's portfolio may be sold when they attain certain price
targets or when better opportunities arise. Sell decisions also are affected by
the level of subscriptions and redemptions of shares of the fund. The
sub-adviser's investment technique may result in high portfolio turnover.
For temporary defensive purposes, the fund may hold all or a portion of its
total assets in money market instruments, cash equivalents, short-term
government and corporate obligations or repurchase agreements. If the fund
invests substantially in such instruments, the fund may not be pursuing its
principal investment strategies and the fund may not achieve its investment
objective.
-6-
<PAGE>
[icon] PRINCIPAL RISKS
In general:
There is no assurance that a fund will meet its investment objective; investors
can lose money by investing in the funds. As with all mutual funds, an
investment in any of these funds is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
Market risk:
International Equity Trust, Emerging Markets Trust and Europe Fund invest
primarily in foreign equity securities. Prices of equity securities generally
fluctuate more than those of other securities, such as debt securities. A fund
may experience a substantial or complete loss on an individual stock. Market
risk may affect a single issuer, industry or section of the economy or may
affect the market as a whole.
Foreign securities risk:
Investments in foreign securities (including those denominated in U.S. dollars)
involve certain risks not typically associated with investments in domestic
issuers. The values of foreign securities are subject to economic and political
developments in the countries and regions where the companies operate, such as
changes in economic or monetary policies, and to changes in exchange rates.
Values may also be affected by foreign tax laws and restrictions on receiving
the investment proceeds from a foreign country. Some foreign governments have
defaulted on principal and interest payments.
In general, less information is publicly available about foreign companies than
about U.S. companies. Foreign companies are generally not subject to the same
accounting, auditing and financial reporting standards as are U.S. companies.
Transactions in foreign securities may be subject to less efficient settlement
practices, including extended clearance and settlement periods. Foreign stock
markets may be less liquid and less regulated than U.S. stock markets.
Some securities issued by foreign governments or their subdivisions, agencies
and instrumentalities may not be backed by the full faith and credit of the
foreign government. Even where a security is backed by the full faith and credit
of a foreign government, it may be difficult for a fund to pursue its rights
against a foreign government in that country's courts.
Emerging markets risk:
The risks of foreign investment are greater for investments in emerging markets.
Emerging market countries typically have economic and political systems that are
less fully developed, and can be expected to be less stable, than those of more
advanced countries. Low trading volumes may result in a lack of liquidity and in
price volatility. Emerging market countries may have policies that restrict
investment by foreigners, or that prevent foreign investors from withdrawing
their money at will.
Because each of the funds may invest a significant amount of its total assets in
emerging market securities, investors should be able to tolerate sudden,
sometimes substantial, fluctuations in the value of their investments. An
investment in any fund that invests in emerging market securities should be
considered speculative.
Currency risk:
Because each of the funds invests significantly in securities denominated in
foreign currencies, the funds may incur currency conversion costs, and may be
affected favorably or unfavorably by changes in the rates of exchange between
those currencies and the U.S. dollar. Currency exchange rates can be volatile
and affected by, among other factors, the general economics of a country, the
actions of the U.S. and foreign governments or central banks, the imposition of
currency controls, and speculation. A security may be denominated in a currency
that is different from the currency where the issuer is domiciled.
-7-
<PAGE>
The funds may from time to time hedge a portion of their currency risk, using
currency futures, forwards, or options. However, these instruments may not
always work as intended, and in specific cases a fund may be worse off than if
it had not used a hedging instrument. For most emerging market currencies, there
are not suitable hedging instruments available.
The conversion of certain European currencies into the Euro began on January 1,
1999, and is expected to continue into 2002. Full implementation of the Euro may
be delayed and difficulties with the conversion may significantly impact
European capital markets resulting in increased volatility in world capital
markets. Individual issuers may suffer substantial losses if they or their
suppliers are not adequately prepared for the transition.
Concentration and non-diversification:
Europe Fund invests primarily in securities of European issuers. A fund
concentrating a significant portion of its investment in a single region will be
more susceptible to factors adversely affecting issuers within that region than
would a less concentrated portfolio of securities.
European issuers are subject to the special risks in that region, including
risks related to the introduction of the Euro and the potential for difficulties
in its acceptance and the emergence of more unified economic and financial
governance in the European Monetary Union ("EMU") countries.
Global Income Trust is a non-diversified fund. This means that the percentage of
its assets invested in any single issuer is not limited by the Investment
Company Act of 1940. When the fund's assets are invested in the securities of a
limited number of issuers or it holds a large portion of its assets in a few
issuers, the value of its shares will be more susceptible to any single
economic, political or regulatory event affecting those issuers or their
securities than shares of a diversified fund.
Risks of fixed-income securities:
Global Income Trust invests substantially all of its assets in fixed-income
securities. Europe Fund may invest up to 35% of its total assets in fixed-income
securities. International Equity Trust and Emerging Markets Trust may also
invest in fixed-income securities to a lesser extent.
Interest rate risk -
Fixed income securities are subject to interest rate risk, which is the
possibility that the market prices of the funds' investments may decline due to
an increase in market interest rates. Generally, the longer the maturity of a
fixed-income security, the greater is the effect on its value when rates change.
Certain securities pay interest at variable or floating rates. Variable rate
securities reset at specified intervals, while floating rate securities reset
whenever there is a change in a specified index rate. In most cases, these reset
provisions reduce the effect of market interest rates on the value of the
security. However, some securities do not track the underlying index directly,
but reset based on formulas that can produce an effect similar to leveraging;
others may provide for interest payments that vary inversely with market rates.
The market prices of these securities may fluctuate significantly when interest
rates change.
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<PAGE>
Credit risk -
Fixed income securities are also subject to credit risk, i.e., the risk that an
issuer of securities will be unable to pay principal and interest when due, or
that the value of the security will suffer because investors believe the issuer
is less able to pay. This is broadly gauged by the credit ratings of the
securities in which each fund invests. However, ratings are only the opinions of
the agencies issuing them and are not absolute guarantees as to quality.
Moody's considers debt securities rated in the lowest investment grade category
(Baa) to have speculative characteristics. Debt securities rated below
investment grade are deemed by the ratings agencies to be speculative and may
involve major risk or exposure to adverse conditions. Those in the lowest rating
categories may involve a substantial risk of default or may be in default.
Changes in economic conditions or developments regarding the individual issuer
are more likely to cause price volatility and weaken the capacity of such
securities to make principal and interest payments than is the case for higher
grade debt securities.
Call risk -
Many fixed income securities, especially those issued at high interest rates,
provide that the issuer may repay them early. Issuers often exercise this right
when interest rates are low. Accordingly, holders of callable securities may not
benefit fully from the increase in value that other fixed-income securities
experience when rates decline. Furthermore, the fund reinvests the proceeds of
the payoff at current yields, which are lower than those paid by the security
that was paid off.
Investment models:
The proprietary models used by the advisers to evaluate securities markets are
based on the advisers' understanding of the interplay of market factors and do
not assure successful investment. The markets, or the prices of individual
securities, may be affected by factors not foreseen in developing the models.
Portfolio Turnover -
Each fund may have an annual portfolio turnover rate in excess of 100%. High
turnover rates can result in increased trading costs and higher levels of
realized capital gains.
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<PAGE>
[icon] PERFORMANCE
The information below provides an indication of the risks of investing in a fund
by showing changes in the fund's performance from year to year. As of the date
of this prospectus, the Navigator Classes of Global Income Trust and Emerging
Markets Trust have not yet commenced operations; the Navigator Classes of
International Equity Trust and Europe Fund commenced operations on May 5, 1998
and August 21, 1997. The returns presented for Global Income Trust and Emerging
Markets Trust are for the funds' Primary Class shares, which are not offered in
this prospectus. Navigator Class and Primary Class shares are invested in the
same portfolio of securities, and the annual returns for each class of shares
would differ only to the extent that the Navigator Class would pay lower
expenses, and therefore would have higher returns. Annual returns assume
reinvestment of dividends and distributions. Historical performance of a fund
does not necessarily indicate what will happen in the future.
GLOBAL INCOME TRUST - PRIMARY CLASS SHARES
YEAR BY YEAR TOTAL RETURN AS OF DECEMBER 31 OF EACH YEAR (%)
24%
21%
20.80
18%
15%
12% 11.50
9% 8.22
6%
3%
0%
-1.40 -1.69
- -3% -3.23
1994 1995 1996 1997 1998 1999
DURING THE PAST SIX CALENDAR YEARS:
- --------------------------------------------------------------------------------
Quarter Ended Total Return
- --------------------------------------------------------------------------------
Best quarter: March 31, 1995 7.86%
- --------------------------------------------------------------------------------
Worst quarter: March 31, 1999 -4.75%
- --------------------------------------------------------------------------------
In the following table, average annual total returns for the years ended
December 31, 1999, are compared with the Salomon Brothers World Government Bond
Index.
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<PAGE>
- --------------------------------------------------------------------------------
1 Year 5 Years Life of Class
- --------------------------------------------------------------------------------
Global Income Trust -3.23% 6.76% 5.80%(a)
- --------------------------------------------------------------------------------
Salomon Brothers World
Government Bond Index -4.27% 6.42% 5.96% (b)
- --------------------------------------------------------------------------------
(a) April 15, 1993 (commencement of operations) to December 31, 1999.
(b) For the period April 30, 1993 to December 31, 1999.
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<PAGE>
INTERNATIONAL EQUITY TRUST - NAVIGATOR CLASS SHARES
YEAR BY YEAR TOTAL RETURN AS OF DECEMBER 31 OF EACH YEAR (%)
25%
21.69
20%
15%
10%
5%
0% 1999
DURING THE PAST CALENDAR YEAR
- --------------------------------------------------------------------------------
Quarter Ended Total Return
- --------------------------------------------------------------------------------
Best quarter: December 31, 1998 15.34%
- --------------------------------------------------------------------------------
Worst quarter: September 30, 1998 -19.89%
- --------------------------------------------------------------------------------
In the following table, average annual total returns for the years ended
December 31, 1999, are compared with the Morgan Stanley Capital International
Europe, Australia and the Far East (MSCI EAFE) Index.
- --------------------------------------------------------------------------------
1 Year Life of Class
- --------------------------------------------------------------------------------
International Equity
Trust - Navigator Class 21.69% 6.05%(a)
- --------------------------------------------------------------------------------
MSCI EAFE Index 14.27% 18.00%(b)
- --------------------------------------------------------------------------------
(a) May 5, 1998 (commencement of operations of Navigator Class) to December 31,
1999.
(b) For the period April 30, 1998 to December 31, 1999.
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<PAGE>
EMERGING MARKETS TRUST - PRIMARY CLASS SHARES
YEAR BY YEAR TOTAL RETURN AS OF DECEMBER 31 OF EACH YEAR (%)
101.15
100%
75%
50%
25%
0%
-6.18
- -25%
-29.34
- -50%
1997 1998 1999
DURING THE PAST THREE CALENDAR YEARS:
- --------------------------------------------------------------------------------
Quarter Ended Total Return
- --------------------------------------------------------------------------------
Best quarter: December 31, 1999 39.72%
- --------------------------------------------------------------------------------
Worst quarter: September 30, 1998 -28.18%
- --------------------------------------------------------------------------------
In the following table, average annual total returns for the years ended
December 31, 1999, are compared with the Morgan Stanley Capital International
Emerging Markets Free (MSCI EM Free) Index.
- --------------------------------------------------------------------------------
1 Year Life of Class
- --------------------------------------------------------------------------------
Emerging Markets Trust 101.15% 9.93%(a)
- --------------------------------------------------------------------------------
MSCI EM Free Index 66.41% 1.61%(b)
- --------------------------------------------------------------------------------
(a) May 28, 1996 (commencement of operations) to December 31, 1999.
(b) For the period May 31, 1996 to December 31, 1999.
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<PAGE>
EUROPE FUND - NAVIGATOR CLASS SHARES
YEAR BY YEAR TOTAL RETURN AS OF DECEMBER 31 OF EACH YEAR (%)
42.51
40%
30%
25.49
20%
10%
0%
1998 1999
DURING THE PAST TWO CALENDAR YEARS:
- --------------------------------------------------------------------------------
Quarter Ended Total Return
- --------------------------------------------------------------------------------
Best quarter: December 31, 1999 26.11%
- --------------------------------------------------------------------------------
Worst quarter: September 30, 1998 -12.96%
- --------------------------------------------------------------------------------
In the following table, average annual total returns for the years ended
December 31, 1999, are compared with the Morgan Stanley Capital International
(MSCI) Europe Index.
- --------------------------------------------------------------------------------
1 Year Life of Class
- --------------------------------------------------------------------------------
Europe Fund -
Navigator Class 25.49% 30.41% (a)
- --------------------------------------------------------------------------------
MSCI Europe Index 15.89% 23.42% (b)
- --------------------------------------------------------------------------------
(a) August 21, 1997 (commencement of operations of Navigator Class) to December
31, 1999.
(b) For the period August 31, 1997 to December 31, 1999.
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<PAGE>
[icon] FEES AND EXPENSES OF THE FUNDS
The table below describes the fees and expenses you will incur directly or
indirectly as an investor in a fund. Each fund pays operating expenses directly
out of its assets so they lower that fund's share price and dividends. Other
expenses include transfer agency, custody, professional and registration fees.
SHAREHOLDER FEES (fees paid directly from your investment)
- --------------------------------------------------------------------------------
Emerging Markets Trust redemption fee: 2.00%*
- --------------------------------------------------------------------------------
* Proceeds of shares redeemed or exchanged within one year of purchase will be
subject to a 2% redemption fee. The fee is paid directly to the fund and not to
the manager or distributor.
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from fund assets)
- --------------------------------------------------------------------------------
Navigator Class Global International Emerging
shares of: Income Trust Equity Trust Markets Trust Europe Fund
- --------------------------------------------------------------------------------
Management fees (a) 0.75% 0.75% 1.00% 1.00%
- --------------------------------------------------------------------------------
Distribution and
service (12b-1) fees None None None None
- --------------------------------------------------------------------------------
Other Expenses 0.40% 0.50% 0.75% 0.52%
- --------------------------------------------------------------------------------
Total Annual Fund
Operating Expenses (a) 1.15% 1.25% 1.75% 1.52%
- --------------------------------------------------------------------------------
(a) Legg Mason Fund Adviser, Inc., as manager, has voluntarily agreed to waive
fees so that Navigator Class share expenses (exclusive of taxes, interest,
brokerage and extraordinary expenses) do not exceed the following annual rates
of each fund's average daily net assets attributable to Navigator Class shares:
for Global Income Trust, 1.15% indefinitely; for International Equity Trust,
1.25% indefinitely; and for Emerging Markets Trust, 1.50%, and Europe Fund,
1.60%, until April 30, 2001. The voluntary waivers may be terminated at any
time. With these waivers, management fees and total annual fund operating
expenses for the fiscal year ended December 31, 1999 were 0.75% and 1.50%, for
Emerging Markets Trust. No fee waivers were necessary for Global Income Trust,
International Equity Trust and Europe Fund.
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<PAGE>
EXAMPLE:
This example helps you compare the cost of investing in a fund with the cost of
investing in other mutual funds. Although your actual costs may be higher or
lower, you would pay the following expenses on a $10,000 investment in a fund,
assuming (1) a 5% return each year, (2) the fund's operating expenses remain the
same as shown in the table above, and (3) you redeem all of your shares at the
end of the time periods shown.
- --------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
Global Income Trust $117 $365 $633 $1398
- --------------------------------------------------------------------------------
International Equity Trust $127 $397 $686 $1511
- --------------------------------------------------------------------------------
Emerging Markets Trust $381 $551 $949 $2062
- --------------------------------------------------------------------------------
Emerging Markets Trust
(assuming no redemption) $178 $551 $949 $2062
- --------------------------------------------------------------------------------
Europe Fund $156 $483 $834 $1824
- --------------------------------------------------------------------------------
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<PAGE>
[icon] M A N A G E M E N T
MANAGEMENT AND ADVISERS:
LEGG MASON FUND ADVISER, INC. ("LMFA"), 100 Light Street, Baltimore, Maryland
21202, is the manager of the funds. LMFA is responsible for investment
management and administrative services and for overseeing the funds'
relationships with outside service providers, such as the custodian, transfer
agent, accountants, and lawyers.
LMFA acts as manager or adviser to investment companies with aggregate assets of
about $18.2 billion as of December 31, 1999.
For its services during the fiscal year ended December 31, 1999, each fund paid
LMFA a percentage of its average daily net assets as follows:
Global Income Trust 0.75%
International Equity Trust 0.75%
Emerging Markets Trust 0.75%
Europe Fund 1.00%
Prior to October 6, 1999, Bartlett & Co. served as Europe Fund's manager under
compensation arrangements substantially similar to those with LMFA.
BATTERYMARCH FINANCIAL MANAGEMENT ("Batterymarch"), 200 Clarendon Street,
Boston, Massachusetts 02116, is investment adviser to International Equity Trust
and Emerging Markets Trust. Batterymarch is responsible for the actual
investment management of these funds, which includes making investment decisions
and placing orders to buy or sell a particular security.
LMFA pays Batterymarch a monthly fee of 66 2/3% of the fee it receives from
International Equity Trust and a monthly fee of 75% of the fee it receives from
Emerging Markets Trust. Fees paid to Batterymarch are net of any waivers.
Batterymarch acts as investment adviser to institutional accounts, such as
corporate pension plans, mutual funds and endowment funds, as well as to
individual investors. Total assets under management by Batterymarch were
approximately $6.6 billion as of December 31, 1999.
WESTERN ASSET MANAGEMENT COMPANY ("Western Asset"), 117 East Colorado Boulevard,
Pasadena, California 91105, is investment adviser to Global Income Trust.
Western Asset is responsible for the actual investment management of the fund,
which includes making investment decisions and placing orders to buy or sell a
particular security. LMFA pays Western Asset a monthly fee of 53 1/3% of the fee
it receives from Global Income Trust, net of any waivers.
Western Asset acts as investment adviser to investment companies and private
accounts with aggregate assets of about $52.5 billion as of December 31, 1999.
WESTERN ASSET MANAGEMENT COMPANY LIMITED ("Western Asset Ltd."), 155
Bishopsgate, London, England, serves as investment sub-adviser to Global Income
Trust. Western Asset Ltd. is responsible for providing research, analytical and
trading support for the fund's investment programs, as well as exercising
investment discretion for part of the portfolio, subject to the supervision of
Western Asset and LMFA.
For its services and for expenses borne by Western Asset Ltd. under its
sub-advisory agreement, Western Asset pays Western Asset Ltd. a fee at an annual
rate of 0.20% of the fund's average daily net assets, net of any waivers. LMFA
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<PAGE>
also pays Western Asset Ltd. a sub-administration fee at an annual rate of 0.10%
of the fund's average daily net assets, net of any waivers, for certain
administrative services performed.
Western Asset Ltd. renders investment advice to institutional, private and
commingled fund portfolios with assets of over about $4.5 billion as of December
31, 1999. Western Asset Ltd. has managed global fixed-income assets for U.S. and
non-U.S. clients since 1984.
LOMBARD ODIER INTERNATIONAL PORTFOLIO MANAGEMENT LIMITED, Norfolk House, 13
Southampton Place, London, England, serves as investment sub-adviser to Europe
Fund. For its services, Lombard Odier receives a monthly fee from LMFA equal to
60% of the fee paid to Legg Mason Fund Adviser by the fund, net of any waivers.
Lombard Odier specializes in advising and managing investment portfolios for
institutional clients and mutual funds. Lombard Odier is an indirect wholly
owned subsidiary of Lombard Odier & Cie, a Swiss private bank.
PORTFOLIO MANAGEMENT:
Batterymarch investment teams have been responsible for the day-to-day
management of International Equity Trust and Emerging Markets Trust since their
inception.
An investment committee at Western Asset is responsible for the day-to-day
management of Global Income Trust.
Neil Worsley and William Lovering are responsible for co-managing Europe Fund.
Mr. Worsley has been Director and Senior Investment Manager of Lombard Odier
since June 1, 1996. Prior thereto, he was an Assistant Director and Senior Fund
Manager. He joined Lombard Odier in 1990. Mr. Lovering has been Assistant
Director of Lombard Odier since June 1, 1996. Prior thereto, he was a Senior
Fund Manager. He joined the firm in 1994. Previously, Mr. Lovering was employed
at Arbuthnot Latham Investment Management.
Distributor of the funds' shares:
Legg Mason Wood Walker, Incorporated ("Legg Mason"), 100 Light Street,
Baltimore, Maryland 21202, distributes the fund's shares pursuant to an
Underwriting Agreement. Each Underwriting Agreement obligates Legg Mason to pay
certain expenses in connection with offering fund shares, including compensation
to its financial advisers, the printing and distribution of prospectuses,
statements of additional information and shareholder reports (after these have
been printed and mailed to existing shareholders at the funds' expense),
supplementary sales literature and advertising materials.
Legg Mason, LMFA, Batterymarch, Western Asset, and Western Asset Ltd. may pay
non-affiliated entities out of their own assets to support the distribution of
Navigator Class shares and shareholder servicing.
LMFA, Batterymarch, Western Asset, Western Asset Ltd. and Legg Mason are wholly
owned subsidiaries of Legg Mason, Inc., a financial services holding company.
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<PAGE>
[icon] H O W T O I N V E S T
Navigator Class shares are currently offered for sale only to:
o Institutional Clients of Legg Mason Trust Company for which they exercise
discretionary investment management responsibility and accounts of the
customers with such Institutional Clients ("Customers").
o Qualified retirement plans managed on a discretionary basis and having net
assets of at least $200 million.
o Any qualified retirement plan having net assets of at least $300 million.
o Clients of Bartlett & Co. who, as of December 19, 1996, were shareholders
of Bartlett Short Term Bond Fund or Bartlett Fixed Income Fund and for
whom Bartlett acts as an ERISA fiduciary.
o Any qualified retirement plan of Legg Mason, Inc. or of any of its
affiliates.
o Certain institutions who were clients of Fairfield Group, Inc. as of
February 28, 1999 for investment of their own monies and monies for which
they act in a fiduciary capacity.
o Shareholders of Class Y shares of Bartlett Europe Fund or Bartlett
Financial Services Fund on October 5, 1999.
o Any open-end management investment company advised or managed by LMFA or
by any person controlling, controlled by, or under common control with
LMFA.
Eligible investors may purchase Navigator Class shares through a brokerage
account at Legg Mason. The minimum initial investment is $50,000 and the minimum
for each purchase of additional shares is $100. Institutional Clients may set
different minimums for their Customers' investments in accounts invested in
Navigator Class shares.
Customers of certain Institutional Clients that have omnibus accounts with the
fund's transfer agent can purchase shares through those Institutions. The
distributor may pay such Institutional Clients for account servicing.
Institutional Clients may charge their Customers for services provided in
connection with the purchase and redemption of shares. Information concerning
these services and any applicable charges will be provided by the Institutional
Clients. This Prospectus should by read by Customers in connection with any such
information received by Institutional Clients. Any such fees, charges or
requirements imposed by Institutional Clients will be in addition to the fees
and requirements of this Prospectus.
Certain institutions that have agreements with Legg Mason or the fund may be
authorized to accept purchase and redemption orders on their behalf. Once the
authorized institution accepts the order, you will receive the next determined
net asset value. You should consult with your institution to determine the time
by which it must receive your order to get that day's share price. It is the
institution's responsibility to transmit your order to the fund in a timely
fashion.
Purchase orders received by Legg Mason before the close of the New York Stock
Exchange ("Exchange") (normally 4:00 p.m. Eastern time) will be processed at the
fund's net asset value as of the close of the Exchange on that day. Each fund is
open for business every day the Exchange is open. Orders received after the
close of the Exchange will be processed at the fund's net asset value as of the
close of the exchange on the next day the Exchange is open. Payment must be made
within three business days to the selling organization.
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<PAGE>
You will begin to earn dividends on shares of Global Income Trust as of
settlement date, which is normally the third business day after you order is
placed.
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<PAGE>
[icon] H O W T O S E L L Y O U R S H A R E S
To redeem your shares by telephone:
o Call 1-800-822-5544
Please have available the number of shares (or dollar amount) to be redeemed and
the account number.
The funds will follow reasonable procedures to ensure the validity of any
telephone redemption request, such as requesting identifying information from
callers or employing identification numbers. Unless you specify that you do not
wish to have telephone redemption privileges, you may be held responsible for
any fraudulent telephone order.
Customers of Institutional Clients may redeem only in accordance with
instructions and limitations pertaining to their account at the Institution.
Redemption orders received by Legg Mason before the close of the Exchange will
be transmitted to the fund's transfer agent. Your order will be processed at
that day's net asset value. Redemption orders received by Legg Mason after the
close of the Exchange will be processed at the closing net asset value on the
next day the Exchange is open.
Your order will be processed promptly and you will generally receive the
proceeds by mail to the name and address on the account registration within a
week. You may also have your telephone redemption requests paid by a direct wire
to a previously designated domestic commercial bank account
Payment of the proceeds of redemptions of shares that were recently purchased by
check or acquired through reinvestment of dividends on such shares may be
delayed for up to 10 days from the purchase date in order to allow for the check
to clear.
Each fund has reserved the right under certain conditions to redeem its shares
in kind by distributing portfolio securities in payment for redemptions.
Emerging Markets Trust Redemption Fee:
The fund is intended for long-term investors. Short-term "market timers" who
engage in frequent purchases and redemptions affect the fund's investment
planning and create additional transaction costs. For this reason, the fund
imposes a 2% redemption fee on all redemptions, including exchanges, of fund
shares held for less than one year. The fee will be paid directly to the fund to
help offset the costs imposed on it by short-term trading in emerging markets.
The fund will use the "first-in, first-out" method to determine the one-year
holding period. The date of redemption or exchange will be compared with the
earliest purchase date of shares held in the account. The fee will not apply to
any shares purchased through reinvestment of dividends or other distributions or
to shares held in retirement plans; however, it will apply to shares held in IRA
accounts (including IRA-based plans) and to shares purchased through automatic
investment plans.
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<PAGE>
[icon] A C C O U N T P O L I C I E S
Calculation of Net Asset Value:
Net asset value per Navigator Class share is determined daily as of the close of
the Exchange on every day the Exchange is open. The Exchange is normally closed
on all national holidays and Good Friday. To calculate each fund's Navigator
Class share price, the fund's assets attributable to Navigator Class shares are
valued and totaled, liabilities attributable to Navigator Class shares are
subtracted, and the resulting net assets are divided by the number of Navigator
Class shares outstanding. Each fund's securities are valued on the basis of
market quotations or, lacking such quotations, at fair value as determined under
policies approved by the Board of Directors.
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. Securities with remaining maturities of
60 days or less are valued at amortized cost.
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 Trust are
valued on the basis of valuations furnished by a 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.
To the extent that a fund has portfolio securities that are primarily listed on
foreign exchanges that trade on days when the fund does not price its shares,
the net asset value of the fund may change on days when shareholders will not be
able to purchase or redeem the fund's shares.
Other:
Fund shares may not be held in, or transferred to, an account with any firm that
does not have an agreement with Legg Mason or its affiliates.
Each fund reserves the right to:
o Reject any order for shares or suspend the offering of shares for a period
of time.
o Change its minimum investment amounts.
o Delay sending out redemption proceeds for up to seven days. This generally
applies only in cases of very large redemptions or excessive trading or
during unusual market conditions. Each fund may delay redemptions beyond
seven days, or suspend redemptions, only as permitted by the SEC.
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<PAGE>
[icon] S E R V I C E S F O R I N V E S T O R S
Confirmations and Account Statements:
Confirmations will be sent to Institutional Clients after each transaction
involving Navigator Class shares which will include the total number of shares
being held in safekeeping by the transfer agent. The transfer agent will send
confirmations of each purchase and redemption transaction (except a reinvestment
of dividends or capital gain distributions). Beneficial ownership of shares by
Customer accounts will be recorded by the Institutional Client and reflected in
their regular account statements.
Exchange Privilege:
Navigator Class shares of this fund may be exchanged for shares of the Legg
Mason Money Market Funds or Navigator Class shares of any of the other Legg
Mason funds, provided these funds are eligible for sale in your state of
residence. You can request an exchange in writing or by phone. Be sure to read
the current prospectus for any fund into which you are exchanging.
Other than the redemption fee imposed on exchanges of Emerging Markets Trust,
there is currently no fee for exchanges; however, you may be subject to a sales
charge when exchanging into a fund that has one. In addition, an exchange of a
fund's shares will be treated as a sale of the shares, and any gain on the
transaction may be subject to tax.
Each fund reserves the right to:
o Terminate or limit the exchange privilege of any shareholder who makes
more than four exchanges from the fund in one calendar year.
o Terminate or modify the exchange privilege after 60 days' written notice
to shareholders.
Some Institutional Clients may not offer all of the Navigator Funds for
exchange.
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<PAGE>
[icon] DISTRIBUTIONS AND TAXES
Global Income Trust declares and pays any dividends from its net investment
income monthly. International Equity Trust, Emerging Markets Trust and Europe
Fund each declares and pays such dividends on an annual basis.
Distributions of substantially all net capital gain (the excess of any net
long-term capital gain over net short-term capital loss) and any net realized
gains from foreign currency transactions generally are declared and paid after
the end of the taxable year in which the gain is realized. A second distribution
of net capital gain may be necessary in some years to avoid imposition of a
federal excise tax.
Your dividends and other distributions will be automatically reinvested in
additional Navigator Class shares of a fund, unless you elect to receive them in
cash. If you wish to begin receiving dividends and/or distributions in cash, you
must notify the fund at least 10 days before the next dividend and/or other
distribution is to be paid. You may also request that your dividends and
distributions be reinvested in Navigator Class shares of another Legg Mason
fund.
If the postal or other delivery service is unable to deliver your distribution
check, your distribution option will automatically be converted to having all
dividends and other distributions reinvested in fund shares. No interest will
accrue on amounts represented by uncashed distribution or redemption checks.
Fund dividends and other distributions are taxable to investors (other than
retirement plans and other tax-exempt investors) whether received in cash or
reinvested in additional Navigator Class shares of a fund. Dividends from
investment company taxable income (which includes net investment income and net
short-term capital gains) are taxable as ordinary income. Distributions of a
fund's net capital gain, if any, will be taxable as long-term capital gain,
regardless of how long you have held your fund shares.
The sale or exchange of fund shares may result in a taxable gain or loss,
depending on whether the proceeds are more or less than the cost of your shares.
Each fund's dividend and interest income, and gains realized from disposition of
foreign securities, may be subject to income, withholding or other taxes imposed
by foreign countries and U.S. possessions.
A tax statement is sent to you at the end of each year detailing the tax status
of your distributions.
Each fund will withhold 31% of all dividends, capital gain distributions and
redemption proceeds payable to individuals and certain other non-corporate
shareholders who do not provide the fund with a valid taxpayer identification
number. Each fund will also withhold 31% of all dividends and capital gain
distributions payable to shareholders who are otherwise subject to backup
withholding.
Because each investor's tax situation is different, please consult your tax
adviser about federal, state and local tax considerations.
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<PAGE>
[GRAPHIC] FINANCIAL HIGHLIGHTS
The following financial highlights table is intended to help you understand each
fund's financial performance for the past five years or since inception. Total
return represents the rate that an investor would have earned (or lost) on an
investment in a fund, assuming reinvestment of all dividends and distributions.
This information has been audited by PricewaterhouseCoopers LLP, whose report,
along with the fund's financial statements, is incorporated by reference into
the Statement of Additional Information (see back cover) and is included in the
annual report. The annual report is available upon request by calling toll-free
1-800-822-5544.
Investment Operations
---------------------
Net Realized and
Unrealized Gain
(Loss) on Invest-
Net Asset Net ments, Options,
Value, Investment Futures and Total From
Beginning Income Foreign Currency Investment
of Period (Loss) Transactions Operations
--------- ---------- ---------------- ----------
International
Equity Trust
Year Ended
Dec.31, 1999 $12.64 $0.11 $2.52 $2.63
Period Ended
Dec.31, 1998A 14.21 0.10 (1.44) (1.34)
Europe Fund B
Years Ended Dec.31,
1999 $24.78 ($0.03) $6.15 $6.12
1998 21.01 0.22C 8.37 8.59
1997D 25.61 (0.04)C 1.27 1.23
Distributions
-------------
From From Net Net Asset
Net Realized Value,
Investment Gain on Total End of
Income Investments Distributions Period
---------- ----------- ------------- --------
International
Equity Trust
Year Ended
Dec.31, 1999 ($0.14) ($0.87) ($1.01) $14.26
Period Ended
Dec.31, 1998A (0.23) -- (0.23) 12.64
Europe Fund B
Years Ended Dec.31,
1999 ($0.07) ($2.10) ($2.17) $28.73
1998 (0.51) (4.31) (4.82) 24.78
1997D --- (5.83) (5.83) 21.01
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<PAGE>
Ratios/Supplemental Data
------------------------
Net
Investment
Expenses Income (Loss) Portfolio Net Assets,
Total to Average to Average Turnover End of Period
Return Net Assets Net Assets Rate (in thousands)
------ ---------- ------------ -------- ------------
International
Equity Trust
Year Ended
Dec.31, 1999 21.69% 1.25% 0.82% 148% $50
Period Ended
Dec.31, 1998A (9.42)%E 1.04%F 1.17%F 72%F 45
Europe Fund B
Years Ended Dec.31,
1999 25.49% 1.52% -0.10% 93% $389
1998 42.50% 1.55%C 1.31%C 103% 247
1997D 4.9%E 1.31%C,F (0.60)%C,F 123% 8,025
A For the period May 5, 1998 (commencement of sale of Navigator shares) to
December 31, 1998.
B The financial information for Europe Fund Navigator Class for the years
ended December 31, 1997 and 1998, is for Bartlett Europe Fund Class Y. The
financial information for the year ended December 31, 1999, is for the Legg
Mason Europe and the Bartlett Europe Fund Class Y.
C Net of fees waived pursuant to a voluntary expense limitation of 1.50% until
April 30, 1998; and 1.60% indefinitely. If no fee had been waived, the
annualized ratio of expense to average daily net assets for each period
would have been as follows: 1998, 1.63%; 1997, 1.49%.
D For the period August 21, 1997 (commencement of operations of this class) to
December 31, 1997.
E Not annualized.
F Annualized.
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<PAGE>
Legg Mason Global Trust, Inc.
The following additional information about the funds is available upon request
and without charge:
Statement of Additional Information (SAI) -The SAI is filed with the Securities
and Exchange Commission (SEC) and is incorporated by reference into (is
considered part of) the prospectus. The SAI provides further information and
additional details about each fund and its policies.
Annual and Semi-Annual Reports - Additional information about each fund's
investments is available in the funds' annual and semi-annual reports to
shareholders. In the funds' annual report, you will find a discussion of the
market conditions and investment strategies that significantly affected each
fund's performance during its last fiscal year.
To request the SAI or any reports to shareholders, or to obtain more
information:
o call toll-free 1-800-822-5544
o visit us on the Internet via http://www.leggmasonfunds.com
o write to us at: Legg Mason Wood Walker, Incorporated
100 Light Street, P.O. Box 1476
Baltimore, MD 21203-1476
Information about the funds, including the SAI, can be reviewed and copied at
the SEC's Public Reference Room in Washington, D.C. Information on the operation
of the Public Reference Room may be obtained by calling the SEC at
1-202-942-8090. Reports and other information about the fund are available on
the EDGAR database on the SEC's Internet site at http://www.sec.gov. Investors
may also obtain this information, after paying a duplicating fee, by electronic
request at the following e-mail address: [email protected] or by writing the
SEC's Public Reference Section, Washington, DC 20549-0102.
LMF-159 SEC file number 811-7418
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