|
|
|
|
|
|
|
|
|
|
|
|
|
|
Previous: DIVERSIFIED INVESTORS FUNDS GROUP, 497, 1999-06-01 |
Next: STONE ENERGY CORP, S-3, 1999-06-01 |
To Our Shareholders,
We are pleased to provide you with Legg Mason Investors Trust's annual report
for the Primary Class of the American Leading Companies Trust, the Balanced
Trust and the U.S. Small-Capitalization Value Trust.
The following table summarizes key statistics for the Primary Class of shares
of each Fund, as of March 31, 1999:
3-Month 12-Month
Total Return(1) Total Return(1)
American Leading Companies Trust +10.16% +19.52%
Balanced Trust -2.52% -2.69%
U.S. Small-Capitalization Value Trust -10.02% N/A
S&P 500 Stock Composite Index +4.99% +18.46%
Lehman Brothers Intermediate Government/
Corporate Bond Index -0.19% +6.57%
Lipper Balanced Fund Index(2) +1.60% +8.36%
Russell 2000 Index -5.42% -16.26%
On the following pages, the portfolio managers for each of the Funds discuss
the investment outlook for the Funds. Long-term investment results for each of
the Funds are shown in the Performance Information section of this report.
Ernst & Young LLP, independent auditors for the Funds, has completed its
annual audit, and audited financial statements for the fiscal year ended March
31, 1999, are included in this report.
During 1998 and into 1999, the focus on the Year 2000 issue has increased
significantly. As you may know, the Year 2000 issue is a computer programming
problem that affects the ability of computers to correctly process dates of
January 1, 2000, and beyond. The Funds' Year 2000 project is well underway, and
is designed to ensure that the Year 2000 date change will have no adverse impact
on our ability to service our shareholders. The Funds are committed to taking
those steps necessary to protect our investors, including efforts to determine
that the Year 2000 problem will not affect such vital service functions as
shareholder transaction processing and recordkeeping. In addition, we are
continuously monitoring the Year 2000 efforts of our vendors, and will perform
tests with our critical vendors throughout 1999. Although the Funds are taking
steps to ensure that all of their systems will function properly before, during,
and after the Year 2000, the Funds could be adversely affected by
computer-related problems associated with the Year 2000. Contingency plans are
in place to ensure that functions critical to the Funds' operations will
continue without interruption. We are on target to complete this important
project and look forward to continuing extensive testing (including
industry-wide testing) with our industry peers, regulators and vendors
throughout 1999.
- ----------
(1)Total return measures investment performance in terms of appreciation or
depreciation in net asset value per share plus dividends and any capital gain
distributions. It assumes that dividends and distributions were reinvested at
the time they were paid.
(2)The Lipper Balanced Fund Index is composed of approximately 30 funds
whose primary objective is to conserve principal by maintaining a balanced
portfolio of stocks and bonds with stock/bond ratio ranges of approximately
60%/40%.
<PAGE>
For several operational reasons, we are changing the ordinary income dividend
and capital gain distribution payment schedules for these Funds. Our new
schedule will be to make capital gain distributions, if any, in June and
December. We will pay ordinary income dividends, if any, in June, September,
November and December for Balanced Trust; we will pay ordinary income dividends,
if any, in June and December for American Leading Companies and U.S. Small-Cap.
We hope you will consider using the Trust for investments of additional funds
as they become available. Some shareholders regularly add to their investment in
the Funds by authorizing automatic, monthly transfers from their bank checking
or Legg Mason accounts. Your Financial Advisor will be happy to help you make
these arrangements if you would like to purchase additional shares in this
convenient manner.
Sincerely,
/s/ Edward A. Taber, III
---------------------------
Edward A. Taber, III
President
April 26, 1999
2
<PAGE>
Portfolio Managers' Comments
American Leading Companies Trust
Market Commentary
The first quarter of 1999 saw a continuation of performance trends
established in 1998. The major market indices (Dow Jones Industrials and
Standard & Poor's 500) continued to post strong overall returns, but, as in
1998, the strength was concentrated in large-cap growth, technology and Internet
stocks. The following table provides an interesting "Tale of the Tape" for the
first quarter:(1)
FIRST QUARTER RETURN
S&P Top 100 +7.39%
S&P 500 Growth Index +6.88%
S&P 500 Index +4.99%
S&P 500 Value Index +2.85%
Russell Mid-Cap -0.47%
Russell 2000 Growth Index -1.68%
Russell 2000 Index -5.42%
Russell 2000 Value Index -9.69%
As illustrated above, growth beat value-oriented strategies by over 400 basis
points2 (+6.88% to +2.85%) in the large-cap world of the S&P 500, and by 801
basis points (-1.68% to -9.69%) in the small-cap world of the Russell 2000.
Also, large-cap stocks continued to handily outperform their small-cap cohorts
(+6.88% to -5.42%).
Even within the Dow Industrials and the S&P 500, only a few components did
exceptionally well. The S&P 500 index was up 4.7% (excluding dividends) in the
quarter, but the average return of the 500 stocks in the index was only 0.6%,
and the median return was -2.3%. That disparity reflects the outsized
performance of the largest-capitalization companies. According to brokerage firm
Salomon Smith Barney, just 21 big stocks contributed all the S&P 500's return in
the quarter, with the other 479 canceling each other out. One-third of the
performance came from just two stocks, Microsoft Corporation and America Online,
Inc.
For the twelve months ended March 31, 1999, large-capitalization stocks also
substantially outperformed broader measures of stock performance. The S&P 500
index, a benchmark dominated by large-capitalization stocks, returned 18.46%
over the period. The Dow Jones Industrial Average returned 13.17%, trailing the
S&P 500 because of a larger cyclical component and a smaller representation in
technology stocks, which were among the year's best performers. In sharp
contrast to the S&P 500 and Dow Industrials, the Value Line index of 1,700
companies, which includes both large and small companies, was down 18.13% for
the 12-month period ended March 31, 1999. The Russell 2000 index, which measures
the performance of smaller companies, declined 16.26% over the same period.
- -------
(1) Sources: Barron's, April 5, 1999, p. F35; Lipper Analytical Services, Inc.
(2) 100 basis points = 1%.
3
<PAGE>
Portfolio Managers' Comments -- Continued
American Leading Companies Trust -- Continued
Investment Results
Cumulative results for the American Leading Companies Trust for the
three-month, one-year, and three-year periods ended March 31, 1999, are listed
below, along with those of some representative benchmarks:
Three
Months One Year Three Years
- -------------------------------------------------------------------------------
American Leading Companies +10.16% +19.52% +101.54%
S&P 500 Composite Index +4.99% +18.46% +110.09%
Lipper General Equity Funds +0.93% +3.56% +63.33%
Dow Jones Industrial Average +7.03% +13.17% +85.46%
American Leading Companies Trust had a good quarter and year, bettering the
S&P 500, the Lipper General Equity index and the Dow Industrials in both time
frames. For the three-year period, the results were mixed but generally
favorable, with the portfolio bettering the Lipper index and the Dow
Industrials, but trailing the S&P 500 index. The portfolio's good showing in the
quarter and year was primarily attributable to its focus on large-capitalization
stocks, which--as noted above--was the best performing sector in the market over
the last year. Particularly important to performance were the Fund's technology
holdings, especially America Online, which was up 89.5% in the quarter, and
754.9% in the last 12 months. Other important contributors to performance for
the last twelve months included: Amgen Inc., Cisco Systems, Inc., MCI WorldCom,
Inc., IBM Corporation and Intel Corporation. Laggards included: Starwood Hotels
& Resorts Worldwide, Inc., Conseco, Inc., Toys "R" Us, Inc., Mattel, Inc. and
Philip Morris Companies, Inc.
Outlook
In our last quarterly letter, we expressed cautious optimism about the
outlook for 1999. At that time, we were looking for moderate U.S. GDP growth of
2% to 2.5% for the year, with continued low levels of inflation and interest
rates. Based upon the continued strength of the consumer economy in the first
quarter, in addition to an apparent bottoming of the manufacturing sector, we
are now somewhat more optimistic than before about overall GDP growth, which we
think could now be 2.5% to 3.0% or better for the year. At the same time, the
recent rebound in stock prices of many cyclical companies makes us a bit less
sanguine about the outlook for inflation and interest rates. While we see a
recovery in the manufacturing sector as quite healthy on a longer-term basis, it
could begin to put upward pressure on commodity prices and cause the Fed to
alter its neutral bias, to one which leans in favor of tightening (i.e., raising
the Fed Funds rate) to cool off the economy.
In summary, we continue to be reasonably optimistic about the outlook for the
U.S. equity market. We see the recent broadening of the equity market's advance
as quite constructive. It has been a while since the market paid much attention
to valuation, but there seems to be a renewed focus on valuation developing.
This should be very healthy for us, since our approach is valuation sensitive
and focuses on buying good quality companies at reasonable prices.
As always, we welcome your comments or questions.
April 26, 1999 David E. Nelson, CFA
DJIA 10689.67 Portfolio Manager
4
<PAGE>
Portfolio Managers' Comments
Balanced Trust
With the Dow Jones Industrial Average and the Standard & Poor's 500 reaching
new highs, stock market investors may feel cause to celebrate. But the ascent of
these indicators does not at all reflect what is happening in the overall
market. Value stocks, particularly those of smaller capitalizations, once again
significantly underperformed. This persistent trend has frustrated, if not
humbled, value investors as the underperformance of value stocks seems to be
joining death and taxes as one of the three sure things in life!
This extreme divergence of performance between large and small stocks, as
well as growth and value stocks, is unprecedented (based upon available data) in
the history of the U.S. capital markets. Barron's recently reported that the ten
largest stocks in the S&P 500 index are currently valued at 48x earnings. The
popularity of the relatively few market leaders accounts for a high proportion
of the overall market return. In fact, although the S&P returned 5.0% for the
quarter, the median stock in the index actually declined by 2.3%. Today's market
conditions are comparable to, if not in excess of, the two-tier market
experienced in the early 1970s. Just like 27 years ago, investors once again
rationalize these excessive valuations with unrealistic expectations based on
popular themes. The "New Economy" of today is replacing the "One Decision"
stocks of 1972. Investors back then learned the hard way that ignoring
valuations when purchasing stocks can be a costly mistake. We believe history is
on our side and that it is just a matter of time before the market puts value
back in valuations.
The better performing stocks in the portfolio--Citigroup, Union Pacific,
McDonald's, and Anheuser Busch--were once again among the largest market
capitalization stocks in the portfolio. The returns of these companies provided
much of the offset to the weak first quarter performance. As might be expected,
underperformance came from the small- and mid-cap sectors, led by companies such
as Kaydon, Loews, Molex and UCAR.
We made several changes in the portfolio during the quarter. Compaq, Dover,
Service Corp. International, and Mellon Bank represented some of the new
holdings. It has typically been difficult for us to justify technology
investments over the years because of the complexity of evaluating assets in an
industry subject to such a high obsolescence rate. In the case of Compaq, we are
encouraged by their substantial long-term market share in personal computers.
They have accomplished this while maintaining a strong financial condition and
an increasing diversity of operations. Of course, a reasonable price/earnings
ratio relative to their growth profile encouraged us to pull the trigger. Dover
has a long history of success as a diversified manufacturer of industrial
products. It recently came into our selection sights as a result of slightly
reduced near-term growth expectations. The market today looks very unkindly on
such developments, and if it is a smaller company the punishment is likely to be
more severe. Service Corp. International is the largest operator of funeral
services in the U.S. The company recently shocked investors with substantially
reduced earnings expectations. After the stock price was cut in half, we decided
to establish a position. We believe their dominant market share, fairly stable
business climate and abundant free cash flow will ultimately reward investors.
Mellon Bank has an enviable record of growth and profitability in providing
numerous financial services. We find the company's earnings multiple attractive
relative to its growth prospects.
Companies eliminated from the portfolio during the quarter included Toys "R"
Us, Columbia/HCA, Littlefuse and Hubbell. These were all disappointments. The
operating fundamentals within each company had deteriorated and as a result, our
calculation of their intrinsic value no longer justified an investment.
5
<PAGE>
Portfolio Managers' Comments -- Continued
Balanced Trust -- Continued
We are frustrated and impatient with the unusual market conditions that have
impacted our results. However, we continue to believe our investment methodology
is based on sound principles and has served the test of time by generating good
results without undue risk. We are as confident of our prospects at this time as
we have ever been.
During the quarter ended March 31, 1999, the yield curve steepened, with
yields on five- to thirty-year Treasuries increasing by 50 basis points.(1)
Short-term rates, on the other hand, remain essentially unchanged. In general,
the quarter was not a favorable period for fixed income investors. This past
February was the single worst one-month performance for the Treasury market in
more than 18 years. The primary reason for the increase in rates was a growing
concern about a persistently strong economy which could potentially lead to
Federal Reserve tightening. More recently, these fears have abated somewhat as
the Federal Reserve has indicated its intention to hold interest rates steady
for the time being.
In last quarter's letter we had indicated that we felt that spread assets
(e.g., corporate bonds, agency securities, mortgage-backed securities,
asset-backed securities) would produce the best returns in the fixed income
markets, with mortgage-backed securities being the asset of choice during
calendar year 1999, as long as interest rate volatility remains comparatively
low. While it is early in the year, our expectations have been confirmed so far,
as mortgages have been the best performing fixed income asset class
year-to-date.
During the quarter, we reduced our position in callable agencies as the yield
spread on these securities had narrowed significantly over the past six months.
The proceeds from these securities were reinvested in additional corporate notes
that offer attractive yields with additional call protection. Although the
spreads on mortgage securities have narrowed considerably over the past quarter,
these spreads are still wide from a historic standpoint and, accordingly, we
intend to retain these securities until spreads narrow further. In the
government sector, we are still finding good value in intermediate-term Treasury
STRIPS and Treasury inflation index bonds.
While we do not forecast interest rates, it seems quite likely that bond
yields will remain in a relatively narrow trading range over the near term as
bonds are fairly valued at this point with bullish and bearish factors balancing
each other. One consideration that we do not believe is fully appreciated in the
marketplace is the reduced supply of Treasury securities due to the sizable
accumulated budget surplus. While it is possible that a prolonged war in Kosovo
and/or other increased expenditures can diminish the surplus, we think it is
likely that a significant surplus will persist which will lead to further future
reductions in financing requirements which, all other things being equal, is
potentially quite bullish for the bond market.
As always, we will monitor the situation closely. Thank you for your
continued support.
Woodrow H. Uible, CFA Dale H. Rabiner, CFA
Equity Portfolio Manager Fixed Income Portfolio Manager
April 26, 1999
DJIA 10689.67
- -------
(1) 100 basis points = 1%.
6
<PAGE>
Portfolio Managers' Comments
U.S. Small-Capitalization Value Trust
Portfolio Manager's Comments
During the quarter, the portfolio was down 10.0%, relative to a -9.7% return
for the Russell 2000 Value, a 5.4% drop for the Russell 2000, and a 5.0% gain
for the Standard & Poor's 500. The first quarter continued the trend begun in
late 1998 where a narrowly-focused group of stocks rose dramatically and drove
the large-cap stock indices to record levels. While the Dow crossed the 10,000
mark, only 33% of U.S. stocks were up in the quarter. Aggressive investor demand
for Internet-oriented stocks and a select list of large-cap growth stocks
generated attractive returns for large-cap and growth indices. Meanwhile, the
rest of the U.S. equity market languished.Over the last seven months,
small-cap value stocks have underperformed by a wide margin relative to both
large-cap stocks and small-cap growth. In this period, the Russell 2000 Value
index gained 4.1%, while the Russell 2000 Growth benchmark was up 33.9% and the
S&P 500 rose 35.5%.
U.S. Small-Cap's value portfolio retained a significant weighting in
economically sensitive sectors, including home-building, metals, chemicals and
transportation. Many stocks in these sectors were off in the quarter despite
evidence that the U.S. economy is continuing to grow at a brisk pace and that
global economic activity is beginning to improve. Transportation was one of the
cyclical sectors that did perform well, as the trucking stocks responded
positively to upbeat economic news. Another area of positive performance was the
oil-related segment of industrial services. An indication that oil prices might
rise (based in part on a new OPEC output agreement) sent these very cheap stocks
soaring. The best performing segment in the portfolio was retail stores. The
portfolio's clothing stores had been out of favor relative to newer retailing
concepts and Internet shopping. However, a good holiday shopping season and
strong consumer sentiment led to increased stock prices. Within the overall
small-cap market, the technology sector had the highest return, with the
Internet stocks leading the performance. Our portfolio held a below-index weight
in technology and had almost no Internet exposure, as these stocks are trading
at very high valuations. Therefore, the portfolio had a lower technology return
and weighting than the indices, which hurt performance relative to the
benchmarks.
The continued weak performance of small-cap stocks has caused many investors
to question whether small-cap stocks and small-cap value stocks will ever return
to favor. For a number of reasons, we firmly believe that small-cap value stocks
are well positioned to outperform in the next market cycle. First, we have seen
previous periods in which large-cap stocks have dominated market performance
similar to the last four and a half years. These periods have always been
followed by an extended run of small-cap outperformance. One such example is the
Nifty Fifty era of the late 1960s and early 1970s. While small-caps badly
trailed large-caps in the 1969 through 1974 period, small-caps more than made up
for the lagged performance in the subsequent years of 1975 through 1983.
Second, investor focus on the Internet has led to a speculative rush into
Web-related stocks. While we observe that the Internet is creating some
revolutionary business changes, we believe that the market has taken valuations
much further than either current fundamentals or the most optimistic predictions
can justify. We have seen extremely exaggerated price movements in the stock of
companies that, while only marginally related to the Internet, have somehow
become the target of Internet-investing interest. An example would be
Books-a-Million, an ignored retailer that saw its stock increase six-fold
overnight when it became the subject of Internet stories.
7
<PAGE>
Portfolio Managers' Comments -- Continued
U.S. Small-Capitalization Value Trust -- Continued
Referring again to the Nifty Fifty, investors can become too focused on a
single market segment and drive valuations beyond reason when talk begins of a
"new era" in business and investing. Once fundamental reality reasserted itself
in the early 1970s, the Nifty Fifty as a group lagged the rest of the market for
a number of years. We see strong parallels between recent events and the earlier
period, which reinforces our belief that small-cap value stocks will again
provide market leadership.
As always, we welcome the opportunity to discuss the portfolio and this
report in more detail. If you have any questions or comments, please contact us.
Henry Otto Steven M. Tonkovich
Managing Director Managing Director
April 26, 1999
DJIA 10689.67
8
<PAGE>
Performance Information
Legg Mason Investors Trust, Inc.
Performance Comparison of a $10,000 Investment as of March 31, 1999
The returns shown on these pages are based on historical results and are
not intended to indicate future performance. The investment return and principal
value of an investment in each of these Funds will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. Average annual returns tend to smooth out variations in a fund's return,
so they differ from actual year-to-year results. No adjustment has been made for
any income taxes payable by shareholders.
The following graphs compare each Fund's total returns against that of a
closely matched broad-based securities market index. The lines illustrate the
cumulative total return of an initial $10,000 investment for the periods
indicated. The line for each Fund represents the total return after deducting
all Fund investment management and other administrative expenses and the
transaction costs of buying and selling portfolio securities. The line
representing the securities market index does not include any transaction costs
associated with buying and selling securities in the index or other
administrative expenses. Both the Legg Mason Funds' results and the indices'
results assume reinvestment of all dividends and distributions.
The American Leading Companies Trust and U.S. Small-Cap Value Trust each
have two classes of shares: Primary Class and Navigator Class. Information about
the Navigator Class, offered only to certain institutional investors, is
contained in a separate report to its shareholders.
American Leading Companies Trust -- Primary Class
Cumulative Average Annual
Total Return Total Return
------------------------------
One Year +19.52% +19.52%
Five Years +159.62% +21.02%
Life of Class(dagger) +152.19% +18.02%
- --------------------------------------------------------------------------------
(dagger) Inception Date -- September 1, 1993
[GRAPHIC APPEARS HERE]
American Leading Standard & Poor's
Companies Trust 500 Stock
Primary Class Composite Index(1)
9/1/93 $10,000 $10,000
3/31/94
3/31/95
3/31/96
3/31/97
3/31/98
3/31/99 25,219 31,329
(1) An unmanaged index of widely held common stocks.
9
<PAGE>
Performance Information -- Continued
Balanced Trust -- Primary Class
Cumulative Average Annual
Total Return Total Return
- ------------------------------------------ ------------------------------------
One Year -2.69% -2.69%
Life of Class(dagger) +26.87% +9.99%
- -------------------------------------------------------------------------------
(dagger) Inception Date -- October 1, 1996
[GRAPHIC APPEARS HERE]
Lehman
S&P 500 Intermediate
Balanced Trust Stock Composite Lipper Balance Govt/Corp
Primary Class Index(2) Fund Index Bond Index(3)
10/1/96 $10,000 $10,000 $10,000 $10,000
3/31/97 10,202 11,124 10,609 10,233
9/30/97 12,026 14,004 12,507 10,819
3/31/98 13,038 16,463 13,708 11,223
9/30/98 11,941 15,315 13,111 11,948
3/31/99 12,687 19,502 14,854 11,960
(1) The Lipper Balanced Fund index is composed of approximately 30 funds whose
primary objective is to conserve principal by maintaining a balanced portfolio
of stocks and bonds with stock/bond ratio ranges of approximately
60%/40%.
(2) An unmanaged index of widely held common stocks.
(3) The Lehman Intermediate Government/Corporate Bond Index includes Government
and Corporate Bond indices, including U.S. Government Treasury and agency
securities, corporate and Yankee bonds. The Index returns are market value
weighted, inclusive of accrued interest, and include bonds with maturities
between 1 and 10 years. The returns for this Index are for the periods beginning
September 30, 1996.
U.S. Small-Cap Value Trust -- Primary Class
Cumulative Average Annual
Total Return Total Return
- ----------------------------------------- -------------------------------------
Life of Class(dagger) -21.90% N/A
- -------------------------------------------------------------------------------
(dagger) Inception Date -- June 15, 1998
Russell 2000 Index U.S. Small-Cap Value
6/15/98 $10,000 $10,000
6/30/98 7,985 10,050
9/30/98 9,287 7,880
12/31/98 9,287 8,680
3/31/98 8,784 7,812
(1) The Russell 2000 index measures the performance of the 2,000 smallest
companies in the Russell 3000 index, which represents approximately 11% of the
total market capitalization of the Russell 3000 index. As of the latest
reconstitution, the average market capitalization was approximately $592
million; the median market capitalization was approximately $500 million. The
largest company in the index had an approximate market capitalization of
$1,402.7 million. The returns for this index are for the periods beginning June
30, 1998
10
<PAGE>
American Leading Companies Trust
Selected Portfolio Performance*
Strong performers for the year ended March 31, 1999
- ------------------------------------------------------------------------------
1. America Online, Inc. +754.9%
2. Amgen Inc. +146.0%
3. Cisco Systems, Inc. +140.4%
4. MCI WorldCom, Inc. +105.7%
5. International Business Machines
Corporation +70.6%
* Securities held for the entire year.
Weak performers for the year ended March 31, 1999
- -------------------------------------------------------------------------------
1. Starwood Hotels &Resorts
Worldwide, Inc. -46.5%
2. Conseco, Inc. -45.5%
3. Toys "R" Us, Inc. -37.4%
4. Mattel, Inc. -37.2%
5. Philip Morris Companies, Inc. -15.6%
Portfolio Changes
Securities added during the 1st quarter 1999
- ------------------------------------------------------------------------------
Equity Office Properties Trust
The Learning Company, Inc.
Sara Lee Corporation
Securities sold during the 1st quarter 1999
- ------------------------------------------------------------------------------
Diamond Offshore Drilling, Inc.
Transocean Offshore Inc.
11
<PAGE>
Performance Information -- Continued
Balanced Trust
Selected Portfolio Performance*
Strong performers for the year ended March 31, 1999
- -------------------------------------------------------------------------------
1. Time Warner, Inc. +97.4%
2. Cincinnati Bell, Inc. +54.2%
3. McDonald's Corporation +51.0%
4. Martin Marietta Materials, Inc. +32.1%
5. Ford Motor Company +31.8%
* Securities held for the entire year.
Weak performers for the year ended March 31, 1999
- --------------------------------------------------------------------------------
1. UCAR International, Inc. -55.0%
2. Potash Corporation of Saskatchewan, Inc. -41.1%
3. Fleetwood Enterprises, Inc. -38.5%
4. Western Resources, Inc. -37.6%
5. Lockheed Martin Corporation -33.0%
Portfolio Changes
Securities added during the 1st quarter 1999
- -------------------------------------------------------------------------------
Abbott Laboratories
Associates Corporation of North America
5.5%, 2/15/02
Compaq Computer Corporation
Dover Corporation
Marshall &Ilsley Corporation
Mellon Bank Corporation
Service Corporation International
United States Treasury Notes
5.625%, 5/15/01
United States Treasury Notes
5.25%, 8/15/03
United States Treasury Notes
5.5%, 2/15/08
Securities sold during the 1st quarter 1999
- -------------------------------------------------------------------------------
A.H. Belo Corporation
Century Telephone Enterprises, Inc.
Columbia/HCA HealthCare Corporation
Freddie Mac
8.14%, 9/29/04
Fannie Mae
8.25%, 10/12/04
Hubbell Incorporated
Latin America Investment Fund, Inc.
Littelfuse, Inc.
Loews Corporation
PMC Capital, Inc.
Pioneer-Standard Electronics, Inc.
Toys "R" Us, Inc.
UST, Inc.
United Dominion Realty Trust, Inc.
United States Treasury Notes
6.25%, 5/31/00
Washington Federal, Inc.
12
<PAGE>
U.S. Small-Capitalization Value Trust+
Selected Portfolio Performance*
Strong performers for the period ended March 31, 1999*
- -------------------------------------------------------------------------------
1. Funco, Inc. +55.8%
2. Southwest Securities Group, Inc. +31.8%
3. Alliant Techsystems Inc. +22.8%
4. Specialty Equipment Companies, Inc. +22.1%
5. Travel Ports of America, Inc. +18.4%
+ Portfolio changes have not been reported for U.S. Small-Cap due to the
volume of trading during the quarter.
* Securities held for the period June 30 through March 31, 1999.
Weak performers for the period ended March 31, 1999*
- -------------------------------------------------------------------------------
1. Southern Pacific Funding Corporation -99.0%
2. IMC Mortgage Company -98.5%
3. CHS Electronics, Inc. -82.2%
4. PhyMatrix Corp. -80.5%
5. Quintel Communications, Inc. -77.4%
13
<PAGE>
Statement of Net Assets
Legg Mason Investors Trust, Inc.
March 31, 1999
(Amounts in Thousands)
American Leading Companies Trust
Shares/Par Value
- -------------------------------------------------------------------------------
Common Stocks and Equity Interests -- 93.1%
Airlines -- 1.6%
AMR Corporation 78 $ 4,568(A)
------
Automotive -- 2.0%
Ford Motor Company 25 1,419
General Motors Corporation 50 4,343
------
5,762
------
Banking -- 12.8%
BankAmerica Corporation 74 5,195
Bank One Corporation 124 6,828
Citigroup Inc. 177 11,306
Mellon Bank Corporation 40 2,815
The Chase Manhattan Corporation 133 10,814
------
36,958
------
Capital Goods -- 1.0%
General Electric Company 25 2,766
------
Computer Services and Systems -- 11.3%
Cisco Systems, Inc. 30 3,287(A)
Compaq Computer Corporation 160 5,070
Hewlett-Packard Company 17 1,173
Intel Corporation 60 7,148
International Business Machines Corporation 60 10,635
Storage Technology Corporation 190 5,296(A)
------
32,609
------
Computer Software -- 1.5%
Microsoft Corporation 20 1,792(A)
The Learning Company, Inc. 85 2,465(A)
------
4,257
------
Consumer Cyclicals -- 3.1%
Mattel, Inc. 300 7,463
Wal-Mart Stores, Inc. 17 1,567
------
9,030
------
14
<PAGE>
Shares/Par Value
- -------------------------------------------------------------------------------
Consumer Staples -- 3.3%
Avon Products, Inc. 125 $ 5,883
Kimberly-Clark Corporation 50 2,397
The Procter & Gamble Company 12 1,136
-------
9,416
-------
Electrical Equipment -- 3.9%
Koninklijke (Royal) Philips Electronics N.V. 135 11,129
-------
Energy -- 1.1%
Exxon Corporation 15 1,023
Texaco, Inc. 40 2,270
-------
3,293
-------
Financial Services -- 2.5%
Fannie Mae 50 3,462
MGIC Investment Corporation 110 3,857
-------
7,319
-------
Food, Beverage and Tobacco -- 5.4%
Dole Food Company, Inc. 190 5,652
PepsiCo, Inc. 95 3,723
Philip Morris Companies, Inc. 153 5,384
Sara Lee Corporation 40 990
-------
15,749
-------
Health Care -- 4.9%
Foundation Health Systems, Inc. 500 6,094(A)
Johnson & Johnson 14 1,330
United HealthCare Corporation 130 6,841
-------
14,265
-------
Hotels and Motels -- 0.5%
Hilton Hotels Corporation 100 1,406
-------
Insurance -- 4.7%
American International Group, In 11 1,339
Berkshire Hathaway Inc. - Class B 3 6,113(A)
Conseco, Inc. 200 6,175
-------
13,627
-------
15
<PAGE>
Statement of Net Assets -- Continued
Legg Mason Investors Trust, Inc.
American Leading Companies Trust -- Continued
Shares/Par Value
- -------------------------------------------------------------------------------
Manufacturing -- 0.7%
Minnesota Mining and Manufacturing Compan 28 $ 1,981
-------
Media -- 8.2%
America Online, Inc. 162 23,652(A)
-------
Oil and Gas: Drilling and Equipment -- 0.8%
Schlumberger Limited 40 2,408
-------
Pharmaceuticals -- 9.4%
Amgen Inc. 122 9,135(A)
Bristol-Myers Squibb Company 81 5,235
Merck & Co., Inc. 78 6,254
Pfizer Inc. 10 1,360
Schering-Plough Corporation 93 5,144
-------
27,128
-------
Real Estate -- 3.3%
Equity Office Properties Trust 140 3,561
Starwood Hotels & Resorts Worldwide, Inc. 212 6,055
-------
9,616
-------
Retail Sales -- 1.4%
Toys "R" Us, Inc. 216 4,064(A)
-------
Savings and Loan -- 1.9%
Washington Mutual, Inc. 132 5,407
-------
Telecommunications -- 6.3%
AT& Corp 60 4,789
MCI WorldCom, Inc. 152 13,461(A)
-------
18,250
-------
Transportation -- 1.5%
Burlington Northern Santa Fe Corporation 135 4,438(A)
-------
Total Common Stocks and Equity Interests
(Identified Cost-- $180,876) 269,098
-------
16
<PAGE>
Shares/Par Value
- --------------------------------------------------------------------
Repurchase Agreements -- 7.1%
J.P. Morgan Securities, Inc.
4.95%, dated 3/31/99, to be repurchased
at $10,246 on 4/1/99
(Collateral: $10,852 Freddie Mac
mortgage-backed securities,
6% due 1/1/29, value $10,584) $ 10,245 $10,245
Merrill Lynch & Co., Inc.
4.95%, dated 3/31/99, to be repurchased
at $10,246 on 4/1/99
(Collateral: $10,420 Freddie Mac
mortgage-backed securities,
7.50% due 9/1/99, value $10,573) 10,245 10,245
-------
Total Repurchase Agreements
(Identified Cost -- $20,490) 20,490
-------
Total Investments-- 100.2%
(Identified Cost -- $201,366) 289,588
Other Assets Less Liabilities--(0.2)% (631)
-------
Net assets consisting of:
Accumulated paid-in capital applicable to
14,181 Primary shares outstanding $ 195,411
Undistributed net realized gain on invest 5,324
Unrealized appreciation of investments 88,222
-------
Net assets-- 100.0% $ 288,957
-------
-------
Net asset value per share $ 20.38
-------
-------
- --------------------------------------------------------------------------------
A Non-income producing.
See notes to financial statements.
17
<PAGE>
Statement of Net Assets
Legg Mason Investors Trust, Inc.
March 31, 1999
(Amounts in Thousands)
Balanced Trust
Shares/Par Value
- --------------------------------------------------------------------------------
Common Stocks and Equity Interests -- 59.1%
Advertising/Media -- 1.4%
Time Warner, Inc. 11 $ 782
------
Aerospace -- 1.4%
Lockheed Martin Corporation 20 754
------
Automotive -- 1.5%
Ford Motor Company 15 851
------
Chemicals -- 2.6%
Ferro Corporation 30 742
Potash Corporation of Saskatchewan, Inc 13 696
------
1,438
------
Computer Services and Systems-- 1.4%
Compaq Computer Corporation 25 792
------
Construction and Building Materials -- 1.2%
Martin Marietta Materials, Inc. 12 685
------
Electrical Equipment and Electronics -- 1.9%
Molex Incorporated 25 647
UCAR International, Inc. 30 418(A)
------
1,065
------
Energy -- 1.8%
Phillips Petroleum Company 14 662
YPF Sociedad Anonima ADR 11 347
------
1,009
------
Finance -- 8.7%
Citigroup Inc. 21 1,341
Fannie Mae 22 1,524
H&R Block, Inc. 27 1,279
Marshall & Ilsley Corporation 6 305
Mellon Bank Corporation 6 422
------
4,871
------
18
<PAGE>
Shares/Par Value
- -------------------------------------------------------------------------------
Food, Beverage and Tobacco -- 5.8%
Anheuser-Busch Companies, Inc. 15 $1,143
McDonald's Corporation 25 1,133
Philip Morris Companies, Inc. 27 950
------
3,226
------
Health Care -- 0.6%
Abbott Laboratories 7 304
------
Insurance -- 0.8%
Aetna, Inc. 6 457
------
Investment Companies -- 2.3%
Blackrock North American Government
Income Trust, Inc. 100 1,000
Korea Fund, Inc. 29 299(A)
------
1,299
------
Manufacturing -- 5.7%
Dover Corporation 18 592
Fleetwood Enterprises, Inc. 32 916
Kaydon Corporation 39 1,128
Tyco International Ltd. 8 574
------
3,210
------
Real Estate -- 2.2%
Chateau Communities, Inc. 45 1,237
------
Retail -- 0.9%
Jostens, Inc. 24 510
------
Savings and Loan -- 2.5%
Charter One Financial, Inc. 49 1,414
------
Services -- 0.8%
Service Corporation International 32 456
------
19
<PAGE>
Statement of Net Assets -- Continued
Legg Mason Investors Trust, Inc.
Balanced Trust -- Continued
<TABLE>
<CAPTION>
Rate Maturity Date Shares/Par Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Telecommunications -- 3 7%
AT&T Corp. 19 $1,476
Cincinnati Bell, Inc. 15 337
Convergys Corporation 15 257(A)
-----
2,070
-----
Transportation -- 9.2%
AMR Corporation 18 1,025(A)
GATX Corporation 25 807
Kansas City Southern Industries, Inc. 31 1,767
Union Pacific Corporation 29 1,549
-----
5,148
-----
Utilities -- 2.7%
Kansas City Power & Light Company 22 542
TNP Enterprises, Inc. 10 273
Western Resources, Inc. 25 667
-----
1,482
-----
Total Common Stocks and Equity Interests
(Identified Cost-- $29,404) 33,060
- -----------------------------------------------------------------------------------------------------------------------------------
Preferred Stock -- 0.5%
Chiquita Brands International, Inc., 3.75%, Series B, Cv
(Identified Cost-- $395) 7 304
- -----------------------------------------------------------------------------------------------------------------------------------
Corporate Bonds and Notes -- 6.3%
Associates Corporation of
North America 5.50% 2/15/02 $ 900 895
Merrill Lynch & Co., Inc. 6% 11/15/04 1,000 997
Safeway Inc. 5.75% 11/15/00 770 771
Toronto-Dominion Bank 7.875% 8/15/04 825 831
-----
Total Corporate Bonds and Notes
(Identified Cost-- $3,518) 3,494
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Government and Agency Obligations -- 32.2%
Inflation-Indexed Securities B -- 2.7%
United States Treasury
Inflation-Indexed Security 3.625% 7/15/02
to 1/15/08 1,532 1,509
-----
Medium-Term Notes -- 4.9%
Fannie Mae 5.60% 2/2/01 1,300 1,306
Fannie Mae 7.37% 4/1/04 300 300
Federal Farm Credit Bank 5.52% 2/25/02 1,100 1,105
-----
2,711
-----
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Rate Maturity Date Shares/Par Value
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mortgage-Backed Securities -- 13.0%
Fannie Mae 6% 12/1/25 to 10/1/28 $ 3,008 $ 2,925
Freddie Mac 6% 3/1/26 71 69
Freddie Mac 6.50% 1/1/26 to 5/1/28 1,241 1,236
Government National Mortgage
Association 6% 8/15/28 to 12/15/28 3,131 3,043
-------
7,273
-------
Treasury Notes/STRIPS(c) -- 11.6%
United States Treasury Notes 5.625% 5/15/01 350 354
United States Treasury Notes 6.50% 5/31/01 500 515
United States Treasury Notes 6.25% 6/30/02 500 516
United States Treasury Notes 5.25% 8/15/03 900 902
United States Treasury Notes 5.50% 2/15/08 900 910
United States Treasury STRIPS 0% 5/15/00 to 8/15/05 4,300 3,300
-------
6,497
-------
Total U.S. Government and Agency Obligations
(Identified Cost-- $18,078) 17,990
- ---------------------------------------------------------------------------------------------------------------------
Repurchase Agreements -- 1.1%
State Street Bank &Trust Company
3.50%, dated 3/31/99, to be repurchased at $606 on 4/1/99
(Collateral: $630 Sallie Mae student loan-backed notes,
5.13% due 10/25/10, value $625)
(Identified Cost-- $606) 606 606
- ---------------------------------------------------------------------------------------------------------------------
Total Investments -- 99.2% (Identified Cost-- $52,001) 55,454
Other Assets Less Liabilities -- 0.8% 446
-------
Net assets consisting of:
Accumulated paid-in capital applicable to
4,667 Primary shares outstanding $52,907
Undistributed net investment income 390
Undistributed net realized loss on investments (850)
Unrealized appreciation of investments 3,453
------
Net assets-- 100.0% $55,900
=======
Net asset value per share $11.98
=======
<FN>
- ---------------------------------------------------------------------------------------------------------------------
(A) Non-income producing.
(B) United States Treasury Inflation-Indexed Security -- U.S. Treasury security
whose principal value is adjusted daily in accordance with changes in the
Consumer Price Index. Interest is calculated on the basis of the current
adjusted principal value.
(C) STRIPS -- Separate Trading of Registered Interest and Principal of
Securities- A pre-stripped zero-coupon bond that is a direct obligation of the
U.S. Treasury.
See notes to financial statements.
</FN>
</TABLE>
21
<PAGE>
Statement of Net Assets
Legg Mason Investors Trust, Inc.
March 31, 1999
(Amounts in Thousands)
U.S. Small-Capitalization Value Trust
<TABLE>
<CAPTION>
Shares/Par Value
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks and Equity Interests -- 94.8%
Aerospace/Defense -- 1.2%
Alliant Techsystems Inc. 5 $ 365(A)
Allied Research Corporation 3 21(A)
EDO Corporation 4 27
ESCO Electronics Corporation 9 77(A)
Herley Industries, Inc. 3 34(A)
International Airline Support Group, Inc. 2 6(A)
Kaman Corporation 8 105
Merrimac Industries, Inc. 1 5(A)
Miltope Group Inc. 1 1(A)
SIFCO Industries, Inc. 3 24
SPACEHAB, Incorporated 6 40(A)
------
705
------
Apparel -- 7.6%
Ashworth, Inc. 1 4(A)
Brylane Inc. 9 228(A)
Burlington Coat Factory Warehouse Corporation 34 404
Deb Shops, Inc. 2 23
Footstar, Inc. 18 566(A)
Gadzooks, Inc. 4 33(A)
Garan, Incorporated 4 91
Genesco Inc. 19 174(A)
Goody's Family Clothing, Inc. 25 343(A)
LaCrosse Footwear, Inc. 3 16
Maxwell Shoe Company Inc. 6 52(A)
Nautica Enterprises, Inc. 37 421(A)
Nine West Group Inc. 19 474(A)
Oxford Industries, Inc. 6 139
Paul Harris Stores, Inc. 7 52(A)
R.G. Barry Corporation 2 19(A)
S&K Famous Brands, Inc. 3 28(A)
Sport-Haley, Inc. 3 24(A)
St. John Knits, Inc. 12 319
Superior Uniform Group Inc. 1 16
Supreme International Corporation 4 36(A)
Syms Corp. 13 94(A)
Tandy Brands Accessories, Inc. 2 32(A)
The Dress Barn, Inc. 17 229(A)
The Finish Line, Inc. 5 62(A)
The Timberland Company 8 523(A)
Vans, Inc. 10 67(A)
------
4,469
------
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Shares/Par Value
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Automotive -- 2.9%
Aftermarket Technology Corp. 15 $ 99(A)
Arvin Industries, Inc. 12 414
Autocam Corporation 2 19
Bandag, Incorporated 12 346
Barnes Group Inc. 5 96
Collins Industries, Inc. 5 23
Dura Automotive Systems, Inc. 2 66(A)
Durakon Industries, Inc. 2 17(A)
Featherlite Inc. 2 13(A)
Monaco Coach Corporation 4 93(A)
Monro Muffler Brake, Inc. 5 37(A)
Motorcar Parts and Accessories, Inc. 4 49(A)
R&B, Inc. 6 46(A)
Simpson Industries, Inc. 3 31
Strattec Security Corporation 2 65(A)
TBC Corporation 15 88(A)
The Standard Products Company 11 172
------
1,674
------
Chemicals -- 3.6%
A. Schulman, Inc. 19 260
Atlantis Plastics, Inc. 2 20(A)
Ethyl Corporation 57 242
Georgia Gulf Corporation 22 246
M. A. Hanna Company 26 337
NL Industries, Inc. 36 319
Quaker Chemical Corporation 6 78
Stepan Company 4 87
Sybron Chemicals Inc. 4 50(A)
TETRA Technologies, Inc. 9 62(A)
The General Chemical Group Inc. 15 199
Wellman, Inc. 23 200
------
2,100
------
Commercial/Industrial Services -- 6.1%
American Buildings Company 3 62(A)
AmeriLink Corporation 2 17(A)
Aviall, Inc. 14 217(A)
BancTec, Inc. 13 164(A)
BCTInternational , Inc. 3 7(A)
BHA Group Holdings, Inc. 4 35
Budget Group, Inc. 13 156(A)
Butler Manufacturing Company 5 115
</TABLE>
23
<PAGE>
Statement of Net Assets -- Continued
Legg Mason Investors Trust, Inc.
U.S. Small-Capitalization Value Trust -- Continued
<TABLE>
<CAPTION>
Shares/Par Value
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Commercial/Industrial Services -- Continued
Cameron Ashley Building Products, Inc. 6 $ 58(A)
CDI Corp. 14 327(A)
Cogeneration Corporation of America 5 41(A)
CORT Business Services Corporation 7 157(A)
Dames & Moore Group 7 76
Dawson Geophysical Company 3 27(A)
Ellett Brothers, Inc. 5 25
Exponent, Inc. 3 19(A)
FiberMark, Inc. 5 63(A)
Fleming Companies, Inc. 28 239
Franklin Covey Co. 15 130(A)
FTI Consulting, Inc. 3 9(A)
Gradco Systems, Inc. 5 10(A)
GRCInternational, Inc. 3 22(A)
Healthcare Services Group, Inc. 1 9(A)
Kennametal Inc. 20 357
LAI Worldwide, Inc. 2 13(A)
Lawson Products, Inc. 6 119
Leasing Solutions, Inc. 6 13(A)
Mail-Well, Inc. 17 223(A)
Maxco, Inc. 1 7(A)
Merrill Corporation 11 147
Nash-Finch Company 8 69
Olsten Corporation 4 26
Perini Corporation 2 9(A)
Physicians' Specialty Corp. 3 17(A)
PrimeSource Corporation 4 20
REFAC Technology Development Corporation 3 15(A)
Robertson-Ceco Corporation 4 27(A)
Rush Enterprises, Inc. 2 17(A)
SOS Staffing Services, Inc. 6 49(A)
The Turner Corporation 2 34(A)
Tufco Technologies, Inc. 3 19(A)
Veritas DGC Inc. 15 217(A)
Westaff, Inc. 4 21(A)
Winsloew Furniture, Inc. 5 158(A)
Winston Resources, Inc. 2 7(A)
------
3,569
------
Computer Services and Systems -- 0.8%
Autologic Information International, Inc. 1 5(A)
CHS Electronics, Inc. 10 32(A)
Cognitronics Corporation 3 21(A)
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Shares/Par Value
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Computer Services and Systems -- Continued
Kentek Information Systems, Inc. 4 $ 25
MTI Technology Corp. 9 48(A)
MTS Systems Corporation 10 98
NeoMagic Corporation 4 42(A)
ONTRACK Data International Inc. 2 7(A)
PSC Inc. 6 52(A)
Scan-Optics, Inc. 3 9(A)
STB Systems, Inc. 7 57(A)
The MacNeal-Schwendler Corporation 9 56(A)
------
452
------
Construction and Building Materials -- 4.0%
Ameron International Corporation 3 92
Aztec Manufacturing Co. 2 20
Baltek Corporation 1 5(A)
Beazer Homes USA, Inc. 3 69(A)
Building Materials Holding Corporation 9 87(A)
Del Webb Corporation 12 258
Dominion Homes, Inc. 4 32(A)
Engle Homes, Inc. 8 85
Hovnanian Enterprises, Inc. 15 110(A)
Hughes Supply, Inc. 16 373
International Aluminum Corporation 2 57
Kevco, Inc. 3 11(A)
Lone Star Industries, Inc. 8 254
M/I Schottenstein Homes, Inc. 6 107
Patrick Industries, Inc. 2 31
Republic Group Incorporated 7 112
Southern Energy Homes, Inc. 9 46(A)
Standard Pacific Corp. 20 261
The Fortress Group, Inc. 8 15
U.S. Home Corporation 9 304(A)
Washington Homes, Inc. 3 16(A)
------
2,345
------
Consumer Durables -- 3.4%
Boston Acoustics, Inc. 3 41
Catalina Lighting, Inc. 3 8(A)
Chromcraft Revington, Inc. 4 55(A)
Cobra Electronics Corporation 3 13(A)
</TABLE>
25
<PAGE>
Statement of Net Assets -- Continued
Legg Mason Investors Trust, Inc.
U.S. Small-Capitalization Value Trust -- Continued
<TABLE>
<CAPTION>
Shares/Par Value
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Consumer Durables -- Continued
Concord Camera Corp. 7 $ 28(A)
Congoleum Corporation 6 41(A)
Conso International Corporation 5 31(A)
EKCO Group, Inc. 13 45(A)
Flexsteel Industries, Inc. 3 35
Harman International Industries, Incorporated 7 257
Home Products International, Inc. 6 50(A)
Koss Corporation 2 26(A)
Libbey Inc. 12 372
Lifetime Hoan Corporation 5 45
Mikasa, Inc. 8 56
O'Sullivan Industry Holdings, Inc. 3 40(A)
Russ Berrie and Company, Inc. 14 366
Sensory Science Corporation 5 13(A)
Sola International, Inc. 18 216(A)
The L. S. Starrett Company 3 73
The York Group, Inc. 6 47
Windmere-Durable Holdings, Inc. 15 106(A)
------
1,964
------
Consumer Non-Durables -- 0.8%
American Safety Razor Company 9 122(A)
CCA Industries, Inc. 3 4(A)
Day Runner, Inc. 9 110(A)
Educational Development Corporation 3 7
French Fragrances, Inc. 9 50(A)
Jean Philippe Fragrances, Inc. 3 17(A)
Rural/Metro Corporation 10 79(A)
Seattle FilmWorks, Inc. 11 32(A)
The Stephan Co. 3 22
------
443
------
Electrical Equipment and Electronics -- 3.5%
Acme Electric Corporation 3 12(A)
Align-Rite International, Inc. 4 47(A)
AlphaNet Solutions, Inc. 4 14(A)
Amistar Corporation 1 3(A)
Axsys Technologies, Inc. 2 39(A)
Belden Inc. 16 278
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
Shares/Par Value
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Electrical Equipment and Electronics -- Continued
CompuCom Systems, Inc. 24 $ 71(A)
C. P. Clare Corporation 5 18(A)
Diodes Incorporated 3 17(A)
EFTC Corporation 7 32(A)
General Semiconductor, Inc. 25 182(A)
Graham Corporation 1 9(A)
InaCom Corp. 12 94(A)
Integrated Circuit Systems, Inc. 9 161(A)
LaBarge, Inc. 6 14(A)
MagneTek, Inc. 33 279(A)
Marshall Industries 3 34(A)
Microsemi Corporation 4 34(A)
Nu Horizons Electronics Corp. 5 19(A)
Optek Technology, Inc. 2 26(A)
Orbit International Corp. 1 2(A)
Percon Incorporated 2 11(A)
Pioneer-Standard Electronics, Inc. 18 118
Powell Industries, Inc. 6 51(A)
Recoton Corporation 2 31(A)
Reliability Incorporated 2 9(A)
RF Monolithics, Inc. 3 17(A)
Richardson Electronics, Ltd. 8 44
SeaMED Corporation 4 35(A)
SEMX Corporation 2 3(A)
Sparton Corporation 1 8(A)
Spectrum Control, Inc. 4 17(A)
Tech-Sym Corporation 1 25(A)
The Cherry Corporation 5 65(A)
UCAR International, Inc. 14 192(A)
Video Display Corporation 2 11(A)
Woodhead Industries, Inc. 5 51
------
2,073
------
Entertainment and Leisure -- 3.9%
Anchor Gaming 8 359(A)
Arctic Cat, Inc. 20 203
Boyd Gaming Corporation 45 190(A)
Cannondale Corporation 6 49(A)
Equity Marketing, Inc. 3 17(A)
Fountain Powerboat Industries, Inc. 3 13(A)
Holiday RV Superstores, Incorporated 2 5(A)
Inland Entertainment Corporation 3 8(A)
Isle of Capri Casinos, Inc. 13 58(A)
</TABLE>
27
<PAGE>
Statement of Net Assets -- Continued
Legg Mason Investors Trust, Inc.
U.S. Small-Capitalization Value Trust -- Continued
<TABLE>
<CAPTION>
Shares/Par Value
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Entertainment and Leisure -- Continued
Lakes Gaming, Inc. 8 $ 63
Lodgian, Inc. 7 31(A)
MGM Grand Inc. 5 175(A)
Midway Games Inc. 28 239(A)
Park Place Entertainment Corporation 31 231(A)
Play By Play Toys & Novelties, Inc. 4 24(A)
PlayCore, Inc. 3 15(A)
Prime Hospitality Corp. 35 348(A)
Quintel Communications, Inc. 9 8(A)
Scientific Games Holdings Corp. 8 146(A)
Suburban Lodges of America, Inc. 1 8(A)
Winnebago Industries, Inc. 7 104
------
2,294
------
Financial Services -- 4.7%
Advanta Corp. 18 196
Amplicon, Inc. 6 64
AMRESCO, INC. 15 118(A)
Arcadia Financial Ltd. 28 134(A)
ARM Financial Group, Inc. 7 108
BankAtlantic Bancorp, Inc. 14 100
CPB Inc. 2 43
Dain Rauscher Corporation 5 156
Delta Financial Corporation 11 59(A)
Fidelity National Financial, Inc. 19 291
First Alliance Corporation 14 52(A)
FirstCity Financial Corporation 5 53(A)
FirstFed Financial Corp. 14 231(A)
Hambrecht & Quist Group 9 305(A)
Hawthorne Financial Corporation 1 15(A)
IMC Mortgage Company 16 3(A)
Interpool, Inc. 11 148
JWGenesis Financial Corp. 2 20(A)
Merchants Bancshares, Inc. 3 62
Pacific Crest Capital, Inc. 1 14
Parkvale Financial Corporation 3 55
Resource Bancshares Mortgage Group, Inc. 17 220
Southern Pacific Funding Corporation 11 2(A)
Southwest Securities Group, Inc. 7 189
Stifel Financial Corp. 2 19
Sunrise International Leasing Corporation 5 18(A)
United Companies Financial Corporation 20 7
World Acceptance Corporation 10 51(A)
------
2,733
------
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
Shares/Par Value
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Food, Beverage and Tobacco -- 1.9%
Cal-Maine Foods, Inc. 5 $ 25
Chock Full o' Nuts Corporation 6 32(A)
Eagle Food Centers, Inc. 6 17(A)
General Cigar Holdings, Inc. 10 93(A)
Herbalife International, Inc. 20 240
John B. Sanfilippo & Son, Inc. 5 16(A)
M&F Worldwide Corp. 13 91(A)
Marsh Supermarkets, Inc. 3 39
Natural Alternatives International, Inc. 4 19(A)
Pilgrim's Pride Corporation 7 115
Rocky Mountain Chocolate Factory, Inc. 2 6(A)
Schweitzer-Mauduit International, Inc. 10 116
Standard Commercial Corporation 7 33
Suprema Specialties, Inc. 1 6(A)
Swisher International Group, Inc. 22 194(A)
Todhunter International, Inc. 2 15(A)
Weider Nutrition International, Inc. 16 74
------
1,131
------
Gas/Pipeline -- 6.0%
Adams Resources &Energy 3 16
Frontier Oil Corporation 19 96(A)
Gulf Islands Fabrication, Inc. 8 88(A)
Lufkin Industries, Inc. 5 79
Marine Drilling Companies, Inc. 33 362(A)
Mitcham Industries, Inc. 7 28(A)
National-Oilwell, Inc. 36 417(A)
Pool Energy Services Co. 11 161(A)
Pride International, Inc. 36 299(A)
Rowan Companies, Inc. 8 99(A)
Royale Energy, Inc. 1 4(A)
SEACOR Smit Inc. 10 516(A)
Seitel, Inc. 10 132(A)
Superior Energy Services, Inc. 15 52(A)
Swift Energy Company 10 88(A)
Tesoro Petroleum Corporation 9 102(A)
Trico Marine Services, Inc. 15 84(A)
Tuboscope Inc. 32 291(A)
Varco International, Inc. 44 491(A)
World Fuel Services Corporation 9 99
------
3,504
------
</TABLE>
29
<PAGE>
Statement of Net Assets -- Continued
Legg Mason Investors Trust, Inc.
U.S. Small-Capitalization Value Trust -- Continued
<TABLE>
<CAPTION>
Shares/Par Value
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Health Care -- 1.8%
American Dental Technologies, Inc. 5 $ 20(A)
American Physicians Service Group, Inc. 2 4(A)
Beverly Enterprises, Inc. 10 50(A)
BioSource International, Inc. 4 17(A)
CompDent Corporation 4 50(A)
Genesis Health Ventures, Inc. 24 117(A)
Horizon Health Corporation 1 9(A)
Integrated Health Services, Inc. 35 194(A)
Medstone International, Inc. 3 19(A)
Mesa Laboratories, Inc. 2 9(A)
NovaCare, Inc. 23 40(A)
PharMerica, Inc. 16 80(A)
PhyMatrix Corp. 18 31(A)
ProMedCo Management Company 9 41(A)
Raytel Medical Corporation 6 24(A)
RehabCare Group, Inc. 2 33(A)
Response Oncology, Inc. 7 20(A)
Sheridan Healthcare, Inc. 6 47(A)
Sierra Health Services, Inc. 6 82(A)
Specialty Care Network, Inc. 6 4A
Sun Healthcare Group, Inc. 45 45A
Unilab Corporation 28 88A
Utah Medical Products, Inc. 3 19A
------
1,043
------
Industrial -- 5.9%
ACX Technologies, Inc. 20 260A
AGCO Corporation 43 282
Alamo Group Inc. 4 31
Allied Products Corporation 9 26
American Biltrite, Inc. 3 47
Ampco-Pittsburgh Corporation 7 65
Applied Industrial Technologies, Inc. 15 168
Bairnco Corporation 6 26
Baldwin Technology Company, Inc. 13 39A
Bridgeport Machines, Inc. 4 23A
Cascade Corporation 8 80
Channell Commercial Corporation 5 43A
Chart Industries, Inc. 3 18
Commercial Intertech Corp. 10 108
CPAC, Inc. 4 27
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
Shares/Par Value
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Industrial -- Continued
DT Industries, Inc. 7 $ 51
Flowserve Corporation 16 255
Foilmark, Inc. 3 5(A)
Gehl Company 4 52(A)
Gradall Industries, Inc. 6 7(A)
Hardinge, Inc. 6 88
Haskel International, Inc. 3 31
Hirsch International Corp. 5 11(A)
ITEQ, Inc. 19 39(A)
Lindsay Manufacturing Co. 5 95
Lydall, Inc. 4 36(A)
Milacron Inc. 27 420
O.I. Corporation 2 9(A)
Plasma-Therm, Inc. 2 5(A)
Printware, Inc. 2 5(A)
Regal-Beloit Corporation 13 238
Selas Corporation of America 2 13
Specialty Equipment Companies, Inc. 8 227(A)
Stewart & Stevenson Services, Inc. 6 48
Summa Industries 3 27(A)
Supreme Industries, Inc. 5 35(A)
TB Wood's Corporation 4 45
The Carbide/Graphite Group, Inc. 6 62(A)
The Middleby Corporation 5 19(A)
Triple S Plastics, Inc. 2 5(A)
Twin Disc, Incorporated 1 21
Watts Industries, Inc. 20 264
York Research Corporation 3 14(A)
------
3,441
------
Insurance -- 8.1%
Acceptance Insurance Companies Inc. 10 130(A)
Amerin Corporation 10 199(A)
AmerUs Life Holdings, Inc. 22 528
Bancinsurance Corporation 2 13(A)
Capital Re Corporation 23 393
Chartwell Re Corporation 6 105
Donegal Group Inc. 3 42
EMC Insurance Group, Inc. 6 71
Foremost Corporation of America 20 402
</TABLE>
31
<PAGE>
Statement of Net Assets -- Continued
Legg Mason Investors Trust, Inc.
U.S. Small-Capitalization Value Trust -- Continued
<TABLE>
<CAPTION>
Shares/Par Value
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Insurance -- Continued
Frontier Insurance Group, Inc. 27 $ 322
Harleysville Group Inc. 16 302
Kaye Group Inc. 4 31
Life USA Holding, Inc. 14 145
Merchants Group, Inc. 1 21
MMI Companies, Inc. 12 185
Mobile America Corporation 5 14
NAC Re Corp. 7 392
National Western Life Insurance Company 1 137(A)
Nymagic, Inc. 3 42
Penn-America Group, Inc. 6 68
Presidential Life Corporation 1 13
PXRE Corporation 9 164
SCPIEHoldings Inc. 4 114
Selective Insurance Group, Inc. 21 372
Standard Management Corporation 5 31(A)
The Centris Group, Inc. 8 81
The Midland Company 3 82
The Navigators Group, Inc. 6 85(A)
Trenwick Group Inc. 6 180
Unico American Corporation 4 43
------
4,707
------
Metals and Mining -- 7.6%
Alltrista Corporation 6 113(A)
Armco Inc. 78 346(A)
Atchison Casting Corporation 5 44(A)
Bayou Steel Corporation 8 26(A)
Carpenter Technology Corporation 21 555
Century Aluminum Corporation 4 21
Chase Industries, Inc. 11 84(A)
Citation Corporation 11 116(A)
Cleveland-Cliffs Inc. 7 245
Commercial Metals Company 9 188
Friedman Industries, Incorporated 4 16
Intermet Corporation 19 249
Kaiser Aluminum Corporation 43 232(A)
Metals USA, Inc. 26 227(A)
National Steel Corporation 23 187
Niagara Corporation 4 23(A)
Northwest Pipe Company 4 73(A)
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
Shares/Par Value
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Metals and Mining -- Continued
Penn Engineering &Manufacturing Corp. 4 $ 82
Quanex Corporation 10 160
ROHN Industries, Inc. 34 76(A)
RTI International Metals, Inc. 15 139(A)
Shiloh Industries, Inc. 4 45(A)
Special Metals Corporation 11 55(A)
Steel Technologies Inc. 8 60
Texas Industries, Inc. 15 360
The Shaw Group Inc. 8 110(A)
Titanium Metals Corporation 17 97
Universal Stainless & Alloy Products, Inc. 4 26(A)
Webco Industries, Inc. 4 19(A)
Wolverine Tube, Inc. 10 215(A)
Wyman-Gordon Company 25 230(A)
Zemex Corporation 3 14(A)
------
4,433
------
Miscellaneous Manufacturing -- 4.4%
A.O. Smith Corporation 9 169
Columbus McKinnon Corporation 10 199
Core Materials Corporation 2 5(A)
Global Industrial Technologies, Inc. 9 93(A)
Griffon Corporation 21 142(A)
Hexcel Corporation 23 165(A)
Jason Incorporated 11 90(A)
MascoTech, Inc. 32 502
Metrika Systems Corporation 4 31(A)
MFRI, Inc. 1 4(A)
NACCO Industries, Inc. 3 222
Q.E.P. Co., Inc. 1 8(A)
Robbins & Myers, Inc. 1 9
RPC, Inc. 5 34
Shelby Williams Industries, Inc. 7 63
Standex International Corporation 8 179
The Dexter Corporation 13 394
The Eastern Company 1 20
TransAct Technologies Incorporated 3 7(A)
TransTechnology Corporation 4 64
U.S. Office Products Company 11 46(A)
Valmont Industries, Inc. 6 88
WPI Group, Inc. 4 14(A)
------
2,548
------
</TABLE>
33
<PAGE>
Statement of Net Assets -- Continued
Legg Mason Investors Trust, Inc.
U.S. Small-Capitalization Value Trust -- Continued
<TABLE>
<CAPTION>
Shares/Par Value
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Process Industries -- 2.1%
Buckeye Technologies Inc. 24 $ 341(A)
P.H. Glatfelter Company 23 252
Rock-Tenn Company 22 337
Silgan Holdings Inc. 13 217(A)
The Anderson's, Inc. 5 58
------
1,205
------
Real Estate -- 0.3%
AMREP Corporation 5 25(A)
Bluegreen Corporation 13 65(A)
DeWolfe Companies, Inc. 2 15(A)
Grubb & Ellis Company 14 89(A)
ILX Resorts Incorporated 1 2(A)
------
196
------
Restaurants -- 1.8%
Ark Restaurants Corp. 3 26(A)
Blimpie International, Inc. 6 15
Cooker Restaurant Corporation 6 33
ELXSI Corporation 3 26(A)
Landry's Seafood Restaurants, Inc. 22 140(A)
Lone Star Steakhouse & Saloon, Inc. 25 253(A)
Luby's, Inc. 8 135
Main Street &Main Inc. 6 20(A)
Max & Erma's Restaurants, Inc. 2 12(A)
Piccadilly Cafeterias, Inc. 4 45
Rainforest Cafe, Inc. 10 50(A)
Ryan's Family Steak Houses, Inc. 22 269(A)
Sizzler International, Inc. 12 22(A)
------
1,046
------
Retail -- 2.8%
Barnett Inc. 6 48(A)
Blair Corporation 7 104
Boise Cascade Office Products Corporation 30 334(A)
Coldwater Creek Inc. 2 22(A)
Cole National Corporation 3 49(A)
Duckwall-ALCO Stores, Inc. 4 34(A)
EZCORP, Inc. 5 34
Finlay Enterprises, Inc. 7 77(A)
Friedman's Inc. 13 112
Funco, Inc. 3 73(A)
Garden Ridge Corporation 6 44(A)
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
Shares/Par Value
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Retail -- Continued
Lands' End, Inc. 8 $ 291(A)
Oneida Ltd. 9 148
Pamida Holdings Corporation 3 10(A)
Piercing Pagoda, Inc. 3 29(A)
RDO Equipment Co. 6 57(A)
REX Stores Corporation 5 53(A)
Specialty Catalog Corp. 1 4(A)
Sport Supply Group, Inc. 2 12(A)
The Bon-Ton Stores, Inc. 10 71(A)
The Sportman's Guide, Inc. 2 12(A)
Travel Ports of America, Inc. 3 9(A)
Wolohan Lumber Co. 3 41
------
1,668
------
Technology -- 0.6%
Cohu, Inc. 4 86
Equinox Systems, Inc. 2 19(A)
Excel Technology, Inc. 6 59(A)
Hurco Companies, Inc. 4 19(A)
K-Tron International, Inc. 2 38(A)
Moore Products Company 1 25
ThermoQuest Corporation 7 80(A)
Vivid Technologies, Inc. 5 22(A)
------
348
------
Telecommunications -- 0.4%
Applied Signal Technology, Inc. 6 36(A)
Blonder Tongue Laboratories, Inc. 6 28(A)
Communication Systems, Inc. 3 30
Davox Corporation 5 30(A)
Hector Communications Corporation 2 14(A)
Tollgrade Communications, Inc. 2 35(A)
Vertex Communications Corporation 4 56(A)
------
229
------
Textiles -- 1.1%
Burlington Industries, Inc. 45 297(A)
Concord Fabrics Inc. 2 7(A)
</TABLE>
35
<PAGE>
Statement of Net Assets -- Continued
Legg Mason Investors Trust, Inc.
U.S. Small-Capitalization Value Trust -- Continued
<TABLE>
<CAPTION>
Shares/Par Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Textiles -- Continued
Decorator Industries, Inc. 1 $ 7
Dyersburg Corporation 8 13
Galey & Lord, Inc. 9 38(A)
Guilford Mills, Inc. 5 46
Interface, Inc. 9 82
Lakeland Industries, Inc. 1 5(A)
Quaker Fabric Corporation 2 11(A)
Synthetic Industries, Inc. 5 78(A)
The Dixie Group, Inc. 7 51
------
635
------
Transportation -- 6.0%
America West Holdings Corporation 31 587(A)
Arkansas Best Corporation 14 97(A)
Arnold Industries, Inc. 17 245
Boyd Bros. Transportation Inc. 2 17(A)
Circle International Group, Inc. 7 95
Consolidated Delivery & Logistics, Inc. 3 10(A)
Consolidated Freightways Corporation 15 172(A)
Covenant Transport, Inc. 6 82(A)
Dynamex Inc. 2 5(A)
Genesee & Wyoming Inc. 3 31(A)
Hvide Marine Incorporated 11 48(A)
Kitty Hawk, Inc. 12 97(A)
Offshore Logistics, Inc. 16 184(A)
Old Dominion Freight Line, Inc. 5 59(A)
P.A.M. Transportation Services, Inc. 5 45(A)
Pittison BAX Group 14 100
RailTex, Inc. 6 66(A)
Roadway Express, Inc. 15 254
Smithway Motor Xpress Corp. 3 21(A)
The Greenbrier Companies, Inc. 10 92
Transport Corporation of America, Inc. 5 55(A)
USA Truck, Inc. 3 35(A)
USFreightways Corporation 17 542
U.S. Xpress Enterprises, Inc. 8 95(A)
Varlen Corporation 11 240
Yellow Corporation 14 238(A)
------
3,512
------
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
Shares/Par Value
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Utilities -- 1.5%
Calpine Corporation 4 $ 156(A)
El Paso Electric Company 23 177(A)
Public Service Company of New Mexico 22 379
TNP Enterprises, Inc. 7 190
------
902
------
Total Common Stocks and Equity Interests
(Identified Cost-- $67,277) 55,369
- ---------------------------------------------------------------------------------------------------------------------
Repurchase Agreements -- 4.8%
J.P. Morgan Securities, Inc.
4.95%, dated 3/31/99, to be repurchased at $1,409 on 4/1/99
(Collateral: $1,492 Government National Mortgage Association
mortgage-backed securities, 6% due 1/1/29, value $1,455) $1,409 1,409
Merrill Lynch & Co., Inc.
4.95%, dated 3/31/99, to be repurchased at $1,409 on 4/1/99
(Collateral: $1,433 Fannie Mae mortgage-backed securities,
7% due 5/1/28, value $1,460) 1,408 1,408
------
Total Repurchase Agreements (Identified Cost-- $2,817) 2,817
- ---------------------------------------------------------------------------------------------------------------------
Total Investments-- 99.6% (Identified Cost-- $70,094) 58,186
Other Assets Less Liabilities-- 0.4% 219
------
Net assets consisting of:
Accumulated paid-in capital applicable to:
7,475 Primary shares outstanding $69,296
5 Navigator shares outstanding 50
Undistributed net realized gain on investments 967
Unrealized depreciation of investments (11,908)
--------
Net assets-- 100% $58,405
------
------
Net asset value per share:
Primary Class $7.81
------
------
Navigator Class $7.88
------
------
<FN>
(A) Non-income producing.
</FN>
</TABLE>
See notes to financial statements.
37
<PAGE>
Statements of Operations
Legg Mason Investors Trust, Inc.
(Amounts in Thousands)
<TABLE>
<CAPTION>
Year Ended 3/31/99
----------------------------------------------------
U.S.
American Leading Balanced Small-Capitalization
Companies Trust Trust Value Trust(A)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Income:
Dividends(B) $ 3,001 $ 773 $ 412
Interest 450 1,359 193
------- ----- ------
Total income 3,451 2,132 605
------- ----- ------
Expenses:
Management fee 1,655 420 330
Distribution and service fees 2,207 420 388
Transfer agent and shareholder servicing expense 156 44 42
Audit and legal fees 40 40 19
Custodian fee 98 69 94
Directors' fees 5 5 3
Organization expense 8 17 --
Registration fees 32 21 21
Reports to shareholders 62 22 26
Other expenses 6 3 1
------- ----- ------
4,269 1,061 924
Less fees waived -- (26) (148)
------- ----- ------
Total expenses, net of waivers 4,269 1,035 776
------- ----- ------
Net Investment Income (Loss) (818) 1,097 (171)
------- ----- ------
Net Realized and Unrealized Gain (Loss) on Investments:
Realized gain (loss) on investments 8,963 (841) 1,138
Change in unrealized appreciation (depreciation) of investments 37,543 (1,810) (11,908)
------- ----- ------
Net Realized and Unrealized Gain (Loss) on Investments 46,506 (2,651) (10,770)
- -----------------------------------------------------------------------------------------------------------------------
Change in Net Assets Resulting From Operations $ 45,688 $(1,554) $(10,941)
- -----------------------------------------------------------------------------------------------------------------------
<FN>
(A) Commencement of operations -- June 15, 1998.
(B) Net of foreign taxes withheld of $24, $1 and $0, respectively.
</FN>
</TABLE>
See notes to financial statements.
38
<PAGE>
Statements of Changes in Net Assets
Legg Mason Investors Trust, Inc.
(Amounts in Thousands)
<TABLE>
<CAPTION>
U.S. Small-
American Leading Balanced Capitalization
Companies Trust Trust Value Trust
------------------ --------------------- -------------
6/15/98(A)
Year Ended Year Ended to
3/31/99 3/31/98 3/31/99 3/31/98 3/31/99
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Change in Net Assets:
Net investment income (loss) $ (818) $ (429) $ 1,097 $ 597 $ (171)
Net realized gain (loss) on investments 8,963 17,728 (841) 752 1,138
Change in unrealized appreciation (depreciation)
of investments 37,543 27,211 (1,810) 5,491 (11,908)
- ------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations 45,688 44,510 (1,554) 6,840 (10,941)
Distributions to shareholders:
From net investment income:
Primary Class -- -- (902) (484) --
Navigator Class -- -- NA NA --
From net realized gain on investments:
Primary Class (8,688) (17,081) (490) (302) --
Navigator Class -- (7) NA NA --
Change in net assets from Fund share transactions:
Primary Class 51,631 68,104 11,085 23,759 69,295
Navigator Class (82) 15 NA NA 50
- -----------------------------------------------------------------------------------------------------------------------
Change in net assets 88,549 95,541 8,139 29,813 58,404
Net Assets:
Beginning of period 200,408 104,867 47,761 17,948 1
- -----------------------------------------------------------------------------------------------------------------------
End of period $288,957 $200,408 $55,900 $47,761 $58,405
- -----------------------------------------------------------------------------------------------------------------------
Undistributed net investment income (loss) $ -- $ -- $ 400 $ 205 $--
- -----------------------------------------------------------------------------------------------------------------------
<FN>
(A) Commencement of operations.
NA Not applicable.
</FN>
</TABLE>
See notes to financial statements.
39
<PAGE>
Financial Highlights
Legg Mason Investors Trust, Inc.
Contained below is per share operating performance data for a share of
common stock outstanding, total investment return, ratios to average net assets
and other supplemental data. This information has been derived from information
provided in the financial statements.
<TABLE>
<CAPTION>
Investment Operations Distributions
--------------------------------------------- ------------------------------------
Net Asset Net Net Realized Total From From Net Net Asset
Value, Investment and unrealized From Net Realized Value,
Beginning Income Gain (Loss) on Investment Investment Gain on Total End of
of Year (Loss) Investments Operations Income Investments Distribution Year
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
American Leading Companies Trust
-- Primary Class
Years Ended Mar. 31,
1999 $17.78 $(.06) $3.38 $3.32 $-- $ (.72) $ (.72) $20.38
1998 14.74 (.04)(A) 4.93 4.89 -- (1.85) (1.85) 17.78
1997 12.23 .01(A) 3.00 3.01 (.02) (.48) (.50) 14.74
1996 10.18 .07(A) 2.08 2.15 (.10) -- (.10) 12.23
1995 9.69 .12(A) .48 .60 (.11) -- (.11) 10.18
Balanced Trust
-- Primary Class
Years Ended Mar. 31,
1999 $12.62 $.22(B) $(.56) $(.34) $(0.19) $(.11) $(.30) $11.98
1998 10.16 .21(B) 2.58 2.79 (.21) (.12) (.33) 12.62
1997(D) 10.00 .09(B) .11 .20 (.04) -- (.04) 10.16
U.S. Small-Capitalization Value Trust
-- Primary Class
Period Ended Mar. 31,
1999(E) $10.00 $(.02)(C) $(2.17) $(2.19) $-- $-- $-- $ 7.81
</TABLE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
----------------------------------------------------------------
Net
Investment Net Assets,
Expenses Income (Loss) Portfolio End of
Total to Average to Average Turnover Year
Return Net Assets Net Assets Rate (in thousands)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
American Leading Companies Trust
-- Primary Class
Years Ended Mar. 31,
1999 19.52% 1.93% (.37)% 47.6% $288,957
1998 35.18% 1.95%(A) (.28)%(A) 51.4% 200,326
1997 24.73% 1.95%(A) .05%(A) 55.7% 104,812
1996 21.24% 1.95%(A) .69%(A) 43.4% 76,100
1995 6.24% 1.95%(A) 1.21%(A) 30.5% 59,985
Balanced Trust
-- Primary Class
Years Ended Mar. 31,
1999 (2.69)% 1.85%(B) 1.96%(B) 50.0% $ 55,900
1998 27.80% 1.85%(B) 2.08%(B) 34.5% 47,761
1997(D) 2.02(F) 1.85%(G) 2.52%(B,G) 5.1%(G) 17,948
U.S. Small-Capitalization Value Trust
-- Primary Class
Period Ended Mar. 31,
1999(E) (21.90)%(F) 2.00%(C,G) (.44)%(C,G) 29.5%(G) $ 58,365
<FN>
(A) Net of fees waived pursuant to a voluntary expense limitation of 1.95% of
average daily net assets. If no fees had been waived by LMFA, the annualized
ratio of expenses to average daily net assets for the years ended March 31,
1995, 1996, 1997, and 1998, would have been 2.12%, 2.20%, 2.06%, and 1.99%,
respectively.
(B) Net of fees waived pursuant to a voluntary expense limitation of 1.85% of
average daily net assets. If no fees had been waived by LMFA, the annualized
ratio of expenses to average daily net assets for the period October 1, 1996, to
March 31, 1997, for the years ended March 31, 1998 and 1999, would have been
3.03%, 2.14% and 1.90%, respectively.
(C) Net of fees waived pursuant to a voluntary expense limitation of 2.00% of
average daily net assets. If no fees had been waived by LMFA, the annualized
ratio of expenses to average daily net assets for the period June 15, 1998, to
March 31, 1999, would have been 2.38%.
(D) For the period October 1, 1996 (commencement of operations) to March 31,
1997.
(E) For the period June 15, 1998 (commencement of operations) to March 31,
1999.
(F) Not annualized.
(G) Annualized.
</FN>
</TABLE>
See notes to financial statements.
40
<PAGE>
Notes to Financial Statements
Legg Mason Investors Trust, Inc.
(Amounts in Thousands)
- --------------------------------------------------------------------------------
1. Significant Accounting Policies:
The Legg Mason Investors Trust, Inc. ("Corporation"), consisting of the
American Leading Companies Trust ("American Leading Companies"), the Balanced
Trust ("Balanced Trust") and the U.S. Small-Capitalization Value Trust ("U.S.
Small-Cap") (each a "Fund"), is registered under the Investment Company Act of
1940, as amended, as an open-end, diversified investment company.
Each Fund consists of two classes of shares:Primary Class, offered since
September 1, 1993, for American Leading Companies Trust; since October 1, 1996,
for Balanced Trust; and since June 15, 1998, for U.S. Small-Cap; and Navigator
Class, offered to certain institutional investors since October 4, 1996, for
American Leading Companies Trust; and since June 19, 1998, for U.S. Small-Cap.
The Navigator Class of Balanced Trust has not commenced operations. Information
about the Navigator Class is contained in a separate report to its shareholders.
The income and expenses of each of these Funds are allocated proportionately to
the two classes of shares based on daily net assets, except for Rule 12b-1
distribution fees, which are charged only on Primary Class shares, and transfer
agent and shareholder servicing expenses, which are determined separately for
each class.
Security Valuation
Securities traded on national securities exchanges are valued at the last
quoted sales price. Over-the-counter securities and listed securities for which
no sales price is available are valued at the mean between the latest bid and
asked prices. Securities for which market quotations are not readily available
are valued at fair value as determined by management and approved in good faith
by the Board of Directors. Fixed income securities with 60 days or less
remaining to maturity are valued using the amortized cost method, which
approximates current market value.
Investment Income and Distributions to Shareholders
Interest income and expenses are recorded on the accrual basis. Bond
premiums are amortized for financial reporting and federal income tax purposes.
Bond discounts, other than original issue and zero-coupon bonds, are not
amortized for financial reporting and federal income tax purposes. Dividend
income and distributions to shareholders are allocated at the class level and
are recorded on the ex-dividend date. Dividends from net investment income, if
available, will be paid annually for American Leading Companies and U.S.
Small-Cap, and quarterly for Balanced Trust. Net capital gain distributions,
which are calculated at the Fund level, are declared and paid after the end of
the tax year in which the gain is realized. Distributions are determined in
accordance with federal income tax regulations which may differ from those
determined in accordance with generally accepted accounting principles;
accordingly, periodic reclassifications are made within the Fund's capital
accounts to reflect federal income and gains available for distribution under
federal income tax regulations.
Security Transactions
Security transactions are recorded on the trade date. Realized gains and
losses from security transactions are reported on an identified cost basis for
both financial reporting and federal income tax purposes. At March 31, 1999,
receivables for securities sold and payables for securities purchased for each
Fund were as follows:
Receivable for Payable for
Securities Sold Securities Purchased
- -------------------------------------------------------------------------------
American Leading Companies $-- $2,252
Balanced Trust 368 156
U.S. Small-Cap 31 --
41
<PAGE>
Notes to Financial Statements -- Continued
- --------------------------------------------------------------------------------
Deferred Organizational Expenses
Deferred organizational expenses of $89 for American Leading Companies, $86
for Balanced Trust and $43 for U.S. Small-Cap are being amortized on a straight
line basis over 5 years commencing on the date their respective operations
began.
Federal Income Taxes
No provision for federal income or excise taxes is required since each Fund
intends to qualify or to continue to qualify as a regulated investment company
and distribute all of its taxable income to its shareholders.
Use of Estimates
The preparation of the financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.
2. Investment Transactions:
For the year ended March 31, 1999, investment transactions (excluding
short-term investments) were as follows:
<TABLE>
<CAPTION>
Purchases Proceeds From Sales
- -----------------------------------------------------------------------------------------
<S> <C> <C>
American Leading Companies $146,551 $101,760
Balanced Trust 38,214 26,869
U.S. Small-Cap 76,822 10,683
</TABLE>
At March 31, 1999, cost, gross unrealized appreciation and gross
unrealized depreciation based on the cost of securities for federal income
tax purposes for each Fund were as follows:
<TABLE>
<CAPTION>
Net
Appreciation/
Cost Appreciation (Depreciation) (Depreciation)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
American Leading Companies $201,554 $95,343 $(7,309) $88,034
Balanced Trust 52,010 5,619 (2,175) 3,444
U.S. Small-Cap 70,094 3,100 (15,008) (11,908)
</TABLE>
Balanced Trust had capital loss carryforwards for federal income tax
purposes at March 31, 1999, of $552, which expire in 2007.
3. Repurchase Agreements:
All repurchase agreements are fully collateralized by obligations issued by
the U.S. Government or its agencies and such collateral is in the possession of
the Funds' custodian. The value of such collateral includes accrued interest.
Risks arise from the possible delay in recovery or potential loss of rights in
the collateral should the issuer of the repurchase agreement fail financially.
The Funds' investment advisers, acting under the supervision of their Board of
Directors, review the value of the collateral and the creditworthiness of those
banks and dealers with which the Funds enter into repurchase agreements to
evaluate potential risks.
42
<PAGE>
- -------------------------------------------------------------------------------
4. Transactions With Affiliates:
Each Fund has a management agreement with Legg Mason Fund Adviser, Inc.
("LMFA"). Pursuant to their respective agreements, LMFAprovides the Funds with
management and administrative services for which each Fund pays a fee, computed
daily and payable monthly at an annual rate of each Fund's respective average
daily net assets.
LMFA has agreed to waive its fees in any month to the extent a Fund's
expenses (exclusive of taxes, interest, brokerage and extraordinary expenses)
exceed during that month certain annual rates of that Fund's average daily net
assets. The following chart shows the annual rate of management fees; expense
limits and their expiration dates; total management fees waived; and management
fees payable for each Fund:
<TABLE>
<CAPTION>
Year Ended
March 31, 1999 At March 31, 1999
--------------------------------
Management Expense Expense Limitation Management Management
Fund Fee Limitation Expiration Date Fees Waived Fees Payable
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
American Leading Companies 0.75% 1.95% Indefinitely $-- $194
Balanced Trust 0.75% 1.85% July 31, 1999 26 38
U.S. Small-Cap 0.85% 2.00% July 31, 1999 148 --
</TABLE>
Bartlett & Co. ("Bartlett") serves as investment adviser to Balanced Trust.
Bartlett is responsible for the actual investment activity of the Fund. LMFA
pays Bartlett a fee for its services, computed daily and payable monthly, at an
annual rate equal to 662/3% of the fee received by LMFA.
Brandywine Asset Management, Inc. ("Brandywine") serves as investment
adviser to U.S. Small-Cap. Brandywine is responsible for the actual investment
activity of the Fund. LMFA pays Brandywine a fee for its services, computed
daily and payable monthly, at an annual rate equal to 58.8% of the fee received
by LMFA.
Legg Mason Wood Walker, Incorporated ("Legg Mason"), a member of the New
York Stock Exchange, serves as distributor of the Funds. Legg Mason receives an
annual distribution fee and an annual service fee based on each Fund's Primary
Class's average daily net assets, computed daily and payable monthly as follows:
<TABLE>
<CAPTION>
At March 31, 1999
-------------------
Distribution Servic Distribution and Service
Fund Fee Fee Fees Payable
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
American Leading Companies 0.75% 0.25% $232
Balanced Trust 0.50% 0.25% 36
U.S. Small-Cap 0.75% 0.25% 50
</TABLE>
No brokerage commissions were paid to Legg Mason or its affiliates during
the year ended March 31, 1999.
Legg Mason also has an agreement with the Funds' transfer agent to assist
it with some of its duties. For this assistance, Legg Mason was paid the
following amounts by the transfer agent for the year ended March 31, 1999:
American Leading Companies, $42; Balanced Trust, $14; and U.S. Small-Cap, $14.
LMFA, Legg Mason, Bartlett and Brandywine are corporate affiliates and
wholly owned subsidiaries of Legg Mason, Inc.
43
<PAGE>
Notes to Financial Statements -- Continued
- -------------------------------------------------------------------------------
5. Line of Credit:
The Funds, along with certain other Legg Mason Funds, participate in a $200
million line of credit ("Credit Agreement") to be utilized as an emergency
source of cash in the event of unanticipated, large redemption requests by
shareholders. Pursuant to the Credit Agreement, each participating Fund is
liable only for principal and interest payments related to borrowings made by
that Fund. Borrowings under the line of credit bear interest at prevailing
short-term interest rates. For the year ended March 31, 1999, the Funds had no
borrowings under the line of credit.
6. Fund Share Transactions:
At March 31, 1999, there were 250,000, 125,000 and 50,000 shares authorized
at $.001 par value for the Primary Class of American Leading Companies Trust,
Balanced Trust and U.S. Small-Cap, respectively. Share transactions were as
follows:
<TABLE>
<CAPTION>
Reinvestment
Sold of Distributions Repurchased Net Change
----------------- ----------------- ----------------- ----------------
Shares Amount Shares Amount Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
American Leading Companies
--Primary Class
Year Ended March 31, 1999 4,801 $84,561 502 $8,514 (2,390) $(41,444) 2,913 $ 51,631
Year Ended March 31, 1998 4,484 74,695 1,074 16,848 (1,402) (23,439) 4,156 68,104
Balanced Trust
--Primary Class
Year Ended March 31, 1999 2,261 $27,489 112 $1,362 (1,492) $(17,766) 881 $ 11,085
Year Ended March 31, 1998 2,418 28,311 67 771 (465) (5,323) 2,020 23,759
U.S. Small-Cap
--Primary Class
Period Ended March 31, 1999(A) 9,383 $85,160 -- $ -- (1,909) $(15,865) 7,474 $69,295
</TABLE>
(A) For the period June 15, 1998 (commencement of operations) to March 31,
1999.
44
<PAGE>
Report of Ernst & Young LLP, Independent Auditors
To the Shareholders and Directors of Legg Mason Investors Trust, Inc.:
We have audited the accompanying statements of net assets of Legg Mason
Investors Trust, Inc. (the "Corporation") (comprised of the American Leading
Companies Trust, the Balanced Trust, and the U.S. Small-Capitalization Value
Trust) as of March 31, 1999, and the related statements of operations, the
statements of changes in net assets, and the financial highlights (Primary
Class) for each of the periods indicated therein. These financial statements and
financial highlights are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of March 31, 1999, by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective portfolios constituting Legg Mason Investors Trust, Inc. at
March 31, 1999, and the results of their operations, the changes in their net
assets, and their financial highlights (Primary Class) for each of the periods
indicated therein, in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
May 6, 1999
45
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE>
Annual Report
March 31, 1999
Legg Mason
Investors Trust, Inc.
American Leading
Companies Trust
Balanced Trust
U.S. Small-Cap
Value Trust
Primary Class
(LEGG MASON FUNDS LOGO)
HOW TO INVEST (SM)
Investment Manager
Legg Mason Fund Adviser, Inc.
Baltimore, MD
Investment Advisers
For American Leading Companies Trust:
Legg Mason Fund Adviser, Inc.
Baltimore, MD
For Balanced Trust:
Bartlett & Co.
Cincinnati, OH
For U.S. Small-Cap Value Trust:
Brandywine Asset Management,Inc.
Wilmington, DE
Board of Directors
John F. Curley, Jr., Chairman
Edward A. Taber, III, President
Richard G. Gilmore
Arnold L. Lehman
Dr. Jill E. McGovern
T. A. Rodgers
Transfer and Shareholder Servicing Agent
Boston Financial Data Services
Boston, MA
Custodian
State Street Bank & Trust Company
Boston, MA
Counsel
Kirkpatrick & Lockhart LLP
Washington, D.C.
Independent Auditors
Ernst & Young LLP
Philadelphia, PA
This report is not to be distributed unless preceded or
accompanied by a prospectus.
LEGG MASON WOOD WALKER, INCORPORATED
- -------------------------------------------------------------------------------
100 Light Street
P.O. Box 1476, Baltimore, MD 21203-1476
410 o 539 o 0000
LMF-013
5/99
|
|