QUARTERLY REPORT
DECEMBER 31, 1998
LEGG MASON
INVESTORS TRUST, INC.
AMERICAN LEADING
COMPANIES TRUST
BALANCED TRUST
U.S. SMALL-CAP
VALUE TRUST
[LEGG MASON FUNDS LOGO APPEARS HERE]
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
2/99
<PAGE>
To Our Shareholders,
We are pleased to provide you with Legg Mason Investors Trust's quarterly
report for the American Leading Companies Trust, the Balanced Trust and the U.S.
Small-Cap Value Trust.
The following table summarizes key statistics for the Primary Class of shares
of each Fund, as of December 31, 1998:
3 Month 12 Month
Total Return(1) Total Return(1)
--------------- ---------------
American Leading Companies Trust +23.95% +21.33%
Balanced Trust +9.00% +5.60%
U.S. Small-Cap Value Trust +10.15% N/A
S&P 500 Stock Composite Index +21.30% +28.58%
Lipper Balanced Fund Index2 +11.51% +15.09%
Russell 2000 Index +16.31% -2.55%
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.
During 1998, attention increasingly focused on the Year 2000 issue. 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 Fund 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 to ensure that functions critical to the
Funds' operations will continue without interruption are under development. 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.
The Board of Directors recently approved a long-term capital gain of $0.26
per share to Primary Class shareholders of American Leading Companies and an
ordinary income dividend of $0.04 per share to shareholders of Balanced Trust,
payable on December 10, 1998 to shareholders of record on December 9, 1998.
- --------------
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 ratios of approximately
60%/40%.
<PAGE>
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 LeggMason accounts. Your Financial Advisor will be happy to help you make
these arrangements if you would like to purchase additional shares in this
convenient manner.
Sincerely,
/s/ Edward A. Taber, III
Edward A. Taber, III
President
February 10, 1999
2
<PAGE>
Portfolio Managers' Comments
American Leading Companies Trust
Market Commentary
What a difference three months makes! When we last wrote you in October, the
stock market had just come off its worst quarter in many years and concern was
widespread that the great bull market of the 1990s had come to an end. As we
write today, the market has just turned in one of its strongest quarterly
performances in history with the S&P 500 and Dow Industrials up 21.3% and 17.6%,
respectively, in the last three months of 1998. For the full year ended December
31, 1998, the S&P 500 returned 28.6% (including dividends), marking the first
time in history that this index has returned more than 20% four years in
succession. The Dow Jones Industrial Average had a total return of 18.2% for the
year, establishing its own record for consecutive double digit gains. Few
predicted this kind of strength at the beginning of 1998, and fewer still
thought it possible after the third quarter market drop. One could reasonably
ask: what accounts for the market's remarkable strength and recuperative powers?
And what, if anything, is the significance to the 10 percentage point
differential between the return of the S&P 500 and the Dow Industrials?
In our opinion, the proximate cause of the market's sharp fourth quarter
rebound was the coordinated easing of monetary policy by US and European central
bankers. Though the US equity market responded skeptically to the US Federal
Reserve's first 25 basis point1 cut in the Fed funds rate in September, it
responded enthusiastically to the second and third cuts, as market participants
became convinced that the Fed and its European counterparts were prepared to
provide whatever monetary stimulus was necessary to avoid the global
deflationary meltdown that had been feared in the wake of the third quarter
Russian debt default and subsequent collapse of the hedge fund, Long-Term
Capital Management.
Once the immediate crisis had passed, investors refocused their attention on
the many positive aspects of what we called in our second quarter shareholders'
letter a near "perfect" environment for investment in the 1990s. These positives
include: low and declining inflation, low and declining interest rates, a record
long US economic expansion, rising real consumer incomes, the lowest
unemployment rate in a generation, the worldwide growth of capitalism, a swing
from deficit to surplus in the US budget, and outstanding corporate financial
performance, including record returns on equity and near-record profit margins.
The market's recent strength is all the more impressive in that it has occurred
in the face of a number of seemingly legitimate concerns including: impeachment,
commodity deflation brought on by worldwide overcapacity in many industries, Y2K
worries, unusual weather patterns brought on by El Nino and La Nina, continuing
problems in Japan and other parts of Asia, and renewed turmoil in Iraq.
Despite the market's strong finish in 1998, some aspects of the market's
advance were unusual. For one thing, the market's strength was quite narrow in
1998. According to work by an equity strategist at Salomon Smith Barney, ten
stocks--MICROSOFT, WAL-MART STORES, GE, Lucent Technologies, CISCO SYSTEMS,
INTEL, IBM, Dell Computer, PFIZER and MERCK--accounted for nearly half of the
gain in the S&P 500 last year. The other 490 stocks in the index rose only 11.8%
on average. Fifty stocks accounted for 94% of the gain, with the median gain of
the other 450 being only 2%. As has been the case for the last couple of years
now, very large capitalization growth stocks substantially outperformed most
other stocks in 1998. The Vanguard Index Growth Portfolio (designed to mimic the
growth half of the S&P
(1) 100 basis points = 1%
3
<PAGE>
Portfolio Managers' Comments -- Continued
American Leading Companies Trust -- Continued
500) was up 42.2% in 1998, while the Vanguard Index Value Portfolio (designed to
mimic the value half of the S&P 500) was up only 14.6%. As noted earlier, the
venerable Dow Jones Industrials trailed the S&P 500 for the year by over ten
percentage points (18.2% vs. 28.6%), due principally to its higher concentration
of cyclically sensitive stocks. The Russell 2000 Index, a widely followed
small-cap benchmark, was actually down 2.6% in 1998. The relative performance of
small- versus large-cap stocks last year was the third worst since 1926,
trailing only 1929 and 1937. In our opinion, the narrowness of the advance last
year was the principal reason that the returns of the vast majority of managed
portfolios trailed the S&P 500.
No commentary on last year's market would be complete without some discussion
of the Internet and Internet stocks. Definitive conclusions will have to await
the history books, but for now, we would make the following observations. The
Internet is the fastest growing medium in the history of the planet. Its impact
is, and will continue to be, profound. According to Peter Drucker, its
development ushers in the fourth stage of the communications revolution--the
first three being: the development of the alphabet and the written word, the
invention of the printing press, and the 20th Century development of mass
communications (radio, television, telephone, telegraph, transistor and
computer). The Internet will change the way most companies do business. It will
create winners and losers. In short, it is a very big deal. In our judgment, it
would be imprudent not to seek investment opportunities in this important new
medium. With that said, failure rates in any new industry are high and many of
the Internet companies now garnering intense investor interest will probably
fall by the wayside over the next several years. Most are young, untested and
unprofitable and do not represent appropriate investment vehicles for a fund
such as American Leading Companies Trust. One clear leader, in our opinion, is
AMERICA ONLINE (AOL), the dominant Internet content provider. In contrast to
many Internet companies, AOL has been exceptionally profitable, generating
substantial free cash flow, and experiencing recent earnings growth rates in
excess of 100% annually. The Fund acquired a 1% position in AOL about 16 months
ago. Through appreciation, AOL has grown to about 5.8% of assets as of year end
1998, despite our having taken some profits late in the year. In addition to
AOL, the Fund owns a number of other established companies--such aS MICROSOFT,
IBM, INTEL, MCIWORLDCOM and CISCO SYSTEMs--which are beneficiaries of the growth
of the Internet. Holdings in these five companies, together with our investment
in AOL, represented about 21% of Fund assets as of December 31, 1998.
Investment Results
Results for the American Leading Companies Trust for the quarter, one year,
and three year periods ended December 31, 1998 are listed below, along with
those of some representative benchmarks:
Fourth Quarter
1998 One Year Three Years*
- --------------------------------------------------------------------------
American Leading Companies +23.95% +21.33% +92.72%
S&P 500 Stock Composite Index +21.30% +28.58% +110.85%
Lipper General Equity Funds +20.25% +14.56% +70.76%
Dow Jones Industrial Average +17.58% +18.15% +90.25%
* Cumulative
4
<PAGE>
American Leading Companies Trust had a good quarter, bettering the S&P 500,
the average Lipper General Equity Fund and the Dow Industrials. For the one and
three year periods, the results were mixed but generally favorable, with the
Fund bettering the Lipper average and the Dow Industrials, but trailing the S&P
500 Index. The portfolio's good showing in the quarter was primarily
attributable to its technology holdings, especially AMERICA ONLINE, which was up
188% in the quarter. Other technology stocks which contributed positively to
performance in the quarter included EMC CORPORATION (sold during the quarter),
INTEL, MCIWORLDCOM and IBM. Other strong performers included selected financials
such as CHASE MANHATTAN and CITIGROUP, and a number of consumer oriented
companies such as AVON PRODUCTS, PEPSICO, WAL-MART STORES and AMGEN. With the
exceptions of AMGEN and BRISTOL MYERS, which were up 38% and 28%, respectively,
in the quarter, most drug stocks trailed the market in the last three months of
the year. SCHERING PLOUGH advanced 6.6%; JOHNSON & JOHNSON, 7.1%; and MERCK,
13.8%. Drug stocks have been important contributors to your portfolio's
performance over the last several years and some consolidation in the quarter is
understandable and probably healthy. Laggards in the quarter included energy
stocks such as DIAMOND OFFSHORE, SCHLUMBERGER, and TEXACO as well as
consumer-related stocks such as MATTEL and DOLE FOODS. Both of these latter two
stocks were hit by problems that we believe are temporary, and we think each has
excellent future prospects and good recovery potential. STARWOOD HOTELS &
RESORTS, owner of the Sheraton and Westin Hotel chains, was once again a
disappointment. We swapped a portion of our STARWOOD holdings for HILTON HOTELS
in October to establish a tax-loss. HILTON has substantially outperformed
STARWOOD since the swap, and while we still own it and like it, we consider
STARWOOD to be more attractive for a current purchase.
Outlook
We are cautiously optimistic about the outlook for 1999. We expect continued
moderate growth of 2% to 2.5% in real US GDP, with continued low levels of
inflation. We see interest rates fluctuating in a fairly narrow range, but
ending the year lower than they are now.
Our chief concern is that in an environment where nominal GDP growth may not
be much more than 4%, top line growth will be difficult to achieve. It is well
known that many commodity producers have been expressing weak demand and pricing
pressure for some time. It is not nearly as well recognized that many consumer
products companies have also had difficulty achieving top line growth recently.
In the last twelve months, Coca-Cola's revenue growth was 2.2%; Procter &
Gamble; 3%; Gillette, 2.4%; Campbell Soup, 1.2%; Colgate-Palmolive, -0.5%;
Heinz, -1.9%; Kellogg, 0.1% and JOHNSON & JOHNSON, 2%. Suffice to say that it
has been a tough environment to grow revenues, and it may well get tougher.
Another concern is that the market's current valuation level leaves little
room for disappointment. At over 30x trailing earnings, 5x book value, 3.7x
revenues and 75x dividends, investors are valuing the market at the highest
level ever. As we noted earlier, the investment environment has been nearly
perfect in the 1990s. Investors are pricing the market as though the environment
will remain nearly perfect indefinitely.
5
<PAGE>
Portfolio Managers' Comments -- Continued
American Leading Companies Trust -- Continued
The combination of high valuations and a possible slowdown in corporate
profit growth argues for some caution. It also argues for concentrating
portfolios on good quality companies, with strong balance sheets, selling at
reasonable prices in relation to future prospects. In short, it argues for doing
in the future what we've tried to do for you in the past.
As always, we welcome your comments or questions.
David E. Nelson, CFA
February 9, 1999
DJIA 9133.03
6
<PAGE>
Balanced Trust
The difficulty, if not the danger, of market timing was underscored once
again in 1998. After numerous years of a steady and sustained increase in stock
prices, 1998 turned out to be one of the most volatile years in market history.
After a decline of nearly 20% during July and August, the stock market
experienced a powerful recovery during the next three months and reached record
highs. Large stocks strongly outperformed small stocks while growth stocks far
outpaced value stocks. The numbers tell the story best. THE WALL STREET JOURNAL
reports that the average mutual fund investing in large growth companies
returned 35.7% during 1998 while small value funds LOST 6.6%. Results for the
quarter and one year ended December 31, 1998 were as follows:
Fourth Quarter
1998 One Year
- ------------------------------------------------------------------------------
Balanced Trust +9.00% +5.60%
Lipper Balanced Fund Index(1) +11.51% +15.09%
S&P 500 Stock Composite Index (large-cap) +21.30% +28.58%
BARRA Value Index(2) +17.43% +14.68%
S&P 400 Index (mid-cap) +28.19% +19.11%
Russell 2000 Index (small-cap) +16.31% -2.55%
Lehman Intermediate Government/Corporate Bond Index +0.30% +8.44%
Equity
The benefit of balanced fund investing was clear during this environment as
the offsetting moves in stocks and bonds helped stabilize the portfolio during
the market tumult. Of course, our approach is value diversified across market
cap lines with a centering on medium-sized companies. Although we avoided some
of the worst extremes of the market as noted above, it continued to be difficult
to perform well as a value investor without substantial exposure to the largest
US companies. This was made apparent by the fact that the 50 largest S&P 500
stocks were up 52% last year while the smallest 100 stocks declined by an
average of 18%.
In general, we were not satisfied with our stock selection in 1998. Our
choices in technology and energy were poor and several stocks, such as COLUMBIA
HCA, TOYS "R" US and WESTERN RESOURCES came up very short of our expectations.
Nonetheless, there were several outstanding contributors to our performance in
1998. These stocks, not surprisingly, were the large companies being favored in
the marketplace: TIME WARNER, FORD, TYCO, MCDONALD'S and CENTURY TELEPHONE. Our
analysis and patience were amply rewarded for identifying these value stocks
with good growth characteristics.
There were very few transactions in the portfolio during the fourth quarter.
We increased our positions in POTASH, H&R BLOCK and LOCKHEED MARTIN. In the case
of POTASH and LOCKHEED MARTIN, these have been very successful long-term
investments for us and recent price declines have created buying opportunities
once again. H&R BLOCK is a more recent investment that we continue to augment at
appropriate prices. Their dominant share of a great business--tax
preparation--has been further enhanced by their offering additional financial
planning products and services to their customers. Our position in MCDONALD'S
was reduced as the price/earnings ratio and long-term growth prospects indicated
increasingly lesser value. It remains a sizable holding due to its sustainable
global growth prospects and attractive financial characteristics.
7
<PAGE>
Portfolio Managers' Comments -- Continued
Balanced Trust -- Continued
We believe the advantage of owning small- to mid-size stocks will return and
the valuation extremes that exist today only make us more confident that the
issue is WHEN and not if this will happen.
Fixed Income
During the quarter ended December 31, 1998, interest rates across the yield
curve increased slightly with yields in the three-to-five year maturities
increasing the most. This back-up in yields was primarily due to a dramatic
lessening of fears in the global financial markets, with a significant number of
investors exiting the relative safe haven of bonds in favor of common stocks
once again. This lessening of fears also resulted in so called "SPREAD ASSETS"
(corporate bonds, mortgage-backed securities, and callable notes) outperforming
Treasury securities during this period.
I am pleased to report that your Fund participated in this narrowing of
spreads, as we had made a significant commitment to mortgage-backed securities
and callable agency issues prior to the start of the fourth quarter and
increased these positions further during the quarter. Specifically, over the
past three months, we eliminated our positions in premium mortgage-backed
securities (Ginnie Mae 8% pass-throughs) and reinvested these proceeds in
additional discount mortgage-backed securities which we expect to produce
superior performance in a narrowing spread environment. In addition, we reduced
our position in US Treasury Strips and increased our exposure to callable and
bullet agency securities, as well as select corporate bonds, which had become
significantly undervalued in the third quarter "FLIGHT TO QUALITY."
Looking forward, the economic backdrop continues to be favorable for fixed
income securities as commodity prices are, for the most part, continuing to fall
and currency and/or financial concerns remain in Japan and Brazil, which may
very well pave the way for additional Federal Reserve easing in the first half
of 1999. Based upon current reported inflation, real short-term interest rates
in the US are still quite high and have considerable room to decline, thus
resulting in a steepening yield curve. This, coupled with an expected decrease
in interest rate volatility, should result in a favorable environment for SPREAD
ASSETS and, in particular, mortgage-backed securities, which we believe should
be the fixed income asset of choice during calendar year 1999.
Thank you for your continued support. We look forward to your questions and
comments.
Woodrow H. Uible, CFA Dale H. Rabiner, CFA
Equity Portfolio Manager Fixed Income Portfolio Manager
February 9, 1999
DJIA 9133.03
- ---------------------
(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 ratios of approximately
60%/40%.
(2) The BARRA Value Index is a capitalization-weighted index constructed by
dividing the stocks in an S&P index into two components (growth or value)
according to book-to-price ratios. The BARRA Value Index is comprised of
companies with higher book-to-price ratios, lower price-to-earnings ratios,
higher dividend yields, and lower historical and predicted earnings growth.
8
<PAGE>
U.S. Small-Capitalization Value Trust
During the quarter, the portfolio was up 10.2% relative to a 16.3% gain for
the Russell 2000, a 9.1% return for the Russell 2000 Value, and 21.3% for the
S&P 500.
1998 was a tumultuous year with wide swings in equity returns brought on by
economic and political surprises both at home and abroad. Despite these
worldwide economic disruptions and domestic uncertainties, large-cap stocks
produced another year of extraordinary returns. Small-caps' much lower returns
seemed to more closely reflect the year's turmoil. For the year, the S&P 500
gained 28.6% while the Russell 2000 benchmark of small-cap stocks declined 2.6%
and the Russell 2000 Value Index was off 6.5%. In the fourth quarter, investors
became less concerned about the potential for a slowing US economy and
downplayed lower corporate earnings growth. Domestic equity markets rebounded
strongly with small-caps able to erase much of their earlier declines. Even
though small-caps had been down much more than large-caps, the big stocks again
led the rebound.
The Fund was defensive in the down periods of the summer and again in early
October. However, in the upsurges beginning in early September, the Fund (and
the Russell 2000 Value) lagged the overall small-cap market. During these
upswings, growth stocks driven by the technology sector dominated the small-cap
market. In particular, extraordinary returns from a few Internet-related stocks
had a large impact on the small-cap market.
Technology was, in fact, the best performing small-cap sector in the fourth
quarter. The positive fourth quarter returns were due to investors' belief that
the semiconductor cycle had bottomed and, perhaps more importantly, the market's
infatuation with all things Internet. These stocks benefited from relatively low
levels of shares trading, coupled with individual investors' belief that the
Internet was revolutionizing the US economy and would bring unbounded profits to
the innovating firms. As a result, Internet stocks experienced enormous, rapid
price increases even though most of these companies are not profitable. The Fund
had a technology underweighting relative to the small-cap market--particularly
in Internet stocks--which meant that technology provided the largest negative
return contribution versus the Russell 2000 for the quarter. Our tech weighting
was higher than the Russell 2000 Value's, so we had a small sector gain versus
this value index.
Finance was the sector that provided the portfolio's largest positive return
contribution relative to the benchmarks. Due to strong performance in this
sector prior to the start up of the Fund, we kept a lower weighting in the
financial sector. For the quarter, financials lagged relative to small-cap
stocks and small-cap value stocks. The below-market performance resulted from a
moderation of high valuation levels as well as from debt market disturbances
arising from the problems in Russia and in US-based hedge funds. With weak
sector returns, our portfolio's below-market weighting provided a return boost
relative to the Russell 2000 and the Russell 2000 Value.
Other sectors that aided performance for the year and the quarter included
retailers and transportation, such as trucking. We were overweight in both
sectors, which benefited from continued consumer strength. The largest negative
impacts on portfolio performance, other than technology, came from the oil
services, basic industries, and producer manufacturing sectors. Oil services
stocks were hurt by the decline in drilling and exploration activity following
the slump in oil prices. US chemical, textile, paper, and small manufacturing
companies all faced tough competition from low priced Asian imports following
the Asian economic crisis of late 1997.
9
<PAGE>
Portfolio Managers' Comments -- Continued
U.S. Small-Capitalization Value Trust -- Continued
Looking to 1999, we anticipate continued market volatility as investors sort
through the conflicting economic and corporate profitability trends. Looking at
small-cap stocks we see that for the last five years, the very largest stocks
have driven market returns. Small-caps have trailed badly, with the result that
small-caps are now at an unprecedented valuation discount to large-cap stocks.
In the past, such extended small-cap underperformance and attractive valuations
have led to periods of sustained small-cap returns which have overwhelmed the
previous performance lag. In addition, we believe that the recent frenzy in
Internet stocks is a signal for a change in the market environment. The
speculative rush into these stocks has been led by individual investors and
generally has been accompanied by only cursory attention to the underlying
business or stock price. In the past, such aggressive speculation has ended with
a collapse in the stocks' prices and investors refocusing on earnings and
valuations. The last such rage over technology stocks occurred in early 1996
with an emphasis on networking and Internet stocks. When the enthusiasm cooled,
these stocks plummeted in price, and value dominated the small-cap market for
the next two years. We see strong parallels between that period and the current
one, and we anticipate that all these factors in combination can lead to a
period of attractive small-cap value performance.
We appreciate your support and we look forward to your questions and
comments.
Henry F. Otto Steven M. Tonkovich
Managing Director Managing Director
February 9, 1999
DJIA 9133.03
10
<PAGE>
Performance Information
Legg Mason Investors Trust, Inc.
Total Return for One Year, Five Years and Life of Funds as of December 31, 1998
The returns shown are based on historical results and are not intended
to indicate future performance. Total return measures investment
performance in terms of appreciation or depreciation in a Fund's net asset
value per share plus dividends and any capital gain distributions. It
assumes that dividends and distributions were reinvested at the time they
were paid. The investment return and principal value of an investment in
each of these Funds will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. Average
annual returns tend to smooth out variations in a Fund's return, so they
differ from actual year-to-year results. No adjustment has been made for
any income taxes payable by shareholders.
Each Fund offers two classes of shares: Primary Class and Navigator
Class. The Navigator Class, offered only to certain institutional
investors, pays Fund expenses similar to those paid by the Primary Class,
except that transfer agency fees and shareholder servicing expenses are
determined separately for each class and the Navigator Class does not
incur Rule 12b-1 distribution fees. The Navigator Class of Balanced Trust
has not commenced operations.
The Funds' total returns as of December 31, 1998 were as follows:
American Leading Balanced Small-Cap
Companies Trust Trust Value Trust
- ------------------------------------------------------------------------
Average Annual Total Return
Primary Class:
One Year +21.33% +5.60% N/A
Five Years +17.82 N/A N/A
Life of Class(A) +16.79 +12.42 N/A
Navigator Class(C)
One Year +12.02% N/A N/A
Life of Class(B) +24.30 N/A N/A
Cumulative Total Return
Primary Class:
One Year +21.33% +5.60% N/A
Five Years +127.00 N/A N/A
Life of Class(A) +128.93 +30.16 -13.20%
Navigator Class(C)
One Year +12.02% N/A N/A
Life of Class(B) +60.32 N/A -12.00%
- ------------------------------------------------------------------------
A Primary Class inception dates are: American Leading Companies Trust --
September 1, 1993 Balanced Trust -- October 1, 1996 Small-Cap Value Trust --
June 15, 1998
B Navigator Class inception dates are: American Leading Companies Trust --
October 4, 1996 Small-Cap Value Trust -- June 19, 1998
C Navigator Class shares of American Leading Companies were redeemed on
December 3, 1998. Returns for American Leading Companies Navigator Class are
for the periods ended December 3, 1998
11
<PAGE>
Performance Information -- Continued
American Leading Companies Trust
Selected Portfolio Performance*
Strong performers for the 4th quarter 1998
- ---------------------------------------------------
1. America Online, Inc. +187.6%
2. Avon Products, Inc. +57.7%
3. The Chase Manhattan Corporation +57.4%
4. Cisco Systems, Inc. +50.2%
5. Wal-Mart Stores, Inc. +49.1%
* Securities held for the entire quarter.
Weak performers for the 4th quarter 1998
- ----------------------------------------------------
1. Starwood Hotels & Resorts -25.6%
2. Mattel, Inc. -18.5%
3. Dole Food Company, Inc. -17.0%
4. Texaco, Inc. -15.7%
5. Diamond Offshore Drilling, Inc. -8.9%
Portfolio Changes
Securities added during the 4th quarter 1998
- --------------------------------------------
AMR Corporation
Berkshire Hathaway Inc. - Class B
Hilton Hotels Corporation
MGIC Investment Corporation
Storage Technology Corporation
Transocean Offshore Inc.
Securities sold during the 4th quarter 1998
- -------------------------------------------
Caterpillar Inc.
Delta Air Lines, Inc.
Eastman Kodak Company
EMC Corporation
Emerson Electric Company
Royal Dutch Petroleum Company
Seagate Technology, Inc.
The Boeing Company
The Coca-Cola Company
12
<PAGE>
Balanced Trust
Selected Portfolio Performance*
Strong performers for the 4th quarter 1998
- ---------------------------------------------------
1. Kaydon Corporation +52.3%
2. Korea Fund, Inc. +51.0%
3. Pioneer-Standard Electronics, Inc. +48.5%
4. Cincinnati Bell, Inc. +45.4%
5. Martin Marietta Materials, Inc. +44.0%
* Securities held for the entire quarter.
Weak performers for the 4th quarter 1998
- ---------------------------------------------------
1. PMC Capital, Inc. -23.0%
2. Western Resources, Inc. -19.6%
3. Lockheed Martin Corporation -15.9%
4. United Dominion Realty Trust, Inc. -9.3%
5. Chiquita Brands International, Inc.,
3.75%, Series B, Cv -8.2%
Portfolio Changes
Securities added during the 4th quarter 1998
- --------------------------------------------
Fannie Mae
5.60%, 2/2/01
Federal Farm Credit Bank
5.52%, 2/25/02
Government National Mortgage Association
6%, 8/15/28 to 12/15/28
Safeway Inc.
5.75%, 11/15/00
Securities sold during the 4th quarter 1998
- -------------------------------------------
First Data Corporation
Government National Mortgage Association
8%, 4/15/26 to 12/15/27
Southwestern Energy Company
United States Treasury Strips
0%, 11/15/04
13
<PAGE>
Performance Information -- Continued
U.S. Small-Capitalization Value Trust+
Selected Portfolio Performance*
Strong performers for the 4th quarter 1998
- ---------------------------------------------------
1. Electro Scientific Industries, Inc. +185.4%
2. Bel Fuse Inc. - Class A +160.2%
3. Bel Fuse Inc. - Class B +137.1%
4. Park Electrochemical Corp. +110.1%
5. Procom Technology, Inc. +101.3%
Weak performers for the 4th quarter 1998
- ---------------------------------------------------
1. Southern Pacific Funding
Corporation -86.1%
2. IMC Mortgage Company -85.7%
3. United Companies Financial
Corporation -57.8%
4. Symons International Group, Inc. -55.2%
5. Gulf Island Fabrication, Inc. -54.4%
* Securities held for the entire quarter.
+ Portfolio changes have not been reported for Small-Cap Value Trust due
to the high volume of trading during the quarter.
14
<PAGE>
Portfolio of Investments
Legg Mason Investors Trust, Inc.
December 31, 1998 (Unaudited)
(Amounts in Thousands)
American Leading Companies Trust
Shares/Par Value
- ---------------------------------------------------------------------------
Common Stocks and Equity Interests -- 98.5%
Airlines -- 1.9%
AMR Corporation 78 $ 4,631(A)
- ---------------------------------------------------------------------------
Automotive -- 2.1%
Ford Motor Company 25 1,467
General Motors Corporation 50 3,578
- ---------------------------------------------------------------------------
5,045
Banking -- 13.7%
BankAmerica Corporation 74 4,422
Bank One Corporation 124 6,332
The Chase Manhattan Corporation 144 9,801
Citigroup Inc. 192 9,479
Mellon Bank Corporation 40 2,750
- ---------------------------------------------------------------------------
32,784
Capital Goods -- 1.1%
General Electric Company 25 2,552
- ---------------------------------------------------------------------------
Computer Services and Systems -- 14.8%
Cisco Systems, Inc. 34 3,132(A)
Compaq Computer Corporation 150 6,291
Hewlett-Packard Company 17 1,182
Intel Corporation 63 7,469
International Business Machines Corporation 62 11,455
Storage Technology Corporation 165 5,870(A)
- ---------------------------------------------------------------------------
35,399
- ---------------------------------------------------------------------------
Computer Software -- 0.6%
Microsoft Corporation 10 1,387(A)
- ---------------------------------------------------------------------------
Consumer Cyclicals -- 3.5%
Mattel, Inc. 300 6,844
Wal-Mart Stores, Inc. 17 1,384
- ---------------------------------------------------------------------------
8,228
- ---------------------------------------------------------------------------
15
<PAGE>
Portfolio of Investments -- Continued
Legg Mason Investors Trust, Inc.
American Leading Companies Trust -- Continued
Shares/Par Value
- ---------------------------------------------------------------------------
Consumer Staples -- 3.4%
Avon Products, Inc. 100 $ 4,425
Kimberly-Clark Corporation 50 2,725
The Procter & Gamble Company 12 1,059
- ---------------------------------------------------------------------------
8,209
- ---------------------------------------------------------------------------
Electrical Equipment -- 3.8%
Philips Electronics N.V. 135 9,138
- ---------------------------------------------------------------------------
Energy -- 1.3%
Exxon Corporation 15 1,060
Texaco, Inc. 40 2,115
- ---------------------------------------------------------------------------
3,175
- ---------------------------------------------------------------------------
Financial Services -- 2.4%
Fannie Mae 50 3,700
MGIC Investment Corporation 50 1,991
- ---------------------------------------------------------------------------
5,691
- ---------------------------------------------------------------------------
Food, Beverage and Tobacco -- 6.4%
Dole Food Company, Inc. 105 3,150
PepsiCo, Inc. 95 3,889
Philip Morris Companies, Inc. 153 8,186
- ---------------------------------------------------------------------------
15,225
Health Care -- 5.4%
Foundation Health Systems, Inc. 500 5,969(A)
Johnson & Johnson 14 1,191
United HealthCare Corporation 130 5,598
- ---------------------------------------------------------------------------
12,758
- ---------------------------------------------------------------------------
Hotels and Motels -- 0.8%
Hilton Hotels Corporation 100 1,912
- ---------------------------------------------------------------------------
Insurance -- 4.0%
American International Group, Inc. 11 1,073
Berkshire Hathaway Inc. - Class B 1 2,350(A)
Conseco, Inc. 200 6,112
- ---------------------------------------------------------------------------
9,535
- ---------------------------------------------------------------------------
16
<PAGE>
Shares/Par Value
- ------------------------------------------------------------------------------
Manufacturing -- 0.8%
Minnesota Mining and Manufacturing Company 28 $ 1,991
- ------------------------------------------------------------------------------
Media -- 5.8%
America Online, Inc. 87 13,920A
- ------------------------------------------------------------------------------
Oil and Gas: Drilling and Equipment -- 4.2%
Diamond Offshore Drilling, Inc. 151 3,577
Schlumberger Limited 78 3,598
Transocean Offshore Inc. 110 2,949
- ------------------------------------------------------------------------------
10,124
Pharmaceuticals -- 10.0%
Amgen Inc. 61 6,379(A)
Bristol-Myers Squibb Company 41 5,446
Merck & Co., Inc. 39 5,760
Pfizer Inc. 10 1,229
Schering-Plough Corporation 93 5,138
- ------------------------------------------------------------------------------
23,952
- ------------------------------------------------------------------------------
Real Estate -- 0.6%
Starwood Hotels &Resorts 62 1,407
- ------------------------------------------------------------------------------
Retail Sales -- 1.0%
Toys "R" Us, Inc. 136 2,295(A)
- ------------------------------------------------------------------------------
Savings and Loan -- 2.1%
Washington Mutual, Inc. 132 5,051
- ------------------------------------------------------------------------------
Telecommunications -- 6.9%
AT&TCorp. 60 4,515
MCI WorldCom, Inc. 167 11,993(A)
- ------------------------------------------------------------------------------
16,508
- ------------------------------------------------------------------------------
Transportation -- 1.9%
Burlington Northern Santa Fe Corporation 135 4,556
- ------------------------------------------------------------------------------
Total Common Stocks and Equity Interests
(Identified Cost-- $173,916) 235,473
- ------------------------------------------------------------------------------
17
<PAGE>
Portfolio of Investments -- Continued
Legg Mason Investors Trust, Inc.
American Leading Companies Trust -- Continued
<TABLE>
<CAPTION>
Shares/Par Value
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreements -- 0.9%
Goldman, Sachs & Company
5%, dated 12/31/98, to be repurchased at $1,048 on 1/4/99
(Collateral: $1,067 Fannie Mae Mortgage-backed securities,
6.50% due 8/1/02, value $1,803) $1,048 $ 1,048
Prudential Securities, Inc.
5%, dated 12/31/98, to be repurchased at $1,048 on 1/4/99
(Collateral: $1,061 Freddie Mac Mortgage-backed securities,
7% due 4/1/24, value $1,087) 1,048 1,048
- --------------------------------------------------------------------------------------------
Total Repurchase Agreements (Identified Cost-- $2,096) 2,096
- --------------------------------------------------------------------------------------------
Total Investments-- 99.4% (Identified Cost-- $176,012) 237,569
Other Assets Less Liabilities-- 0.6% 1,345
- --------------------------------------------------------------------------------------------
Net assets-- 100.0% $238,914
- --------------------------------------------------------------------------------------------
Net asset value per share $18.50
- --------------------------------------------------------------------------------------------
</TABLE>
(A) Non-income producing
18
<PAGE>
Portfolio of Investments
Legg Mason Investors Trust, Inc.
December 31, 1998 (Unaudited)
(Amounts in Thousands)
Balanced Trust
Shares/Par Value
- -----------------------------------------------------------------------------
Common Stocks and Equity Interests -- 61.9%
Advertising/Media -- 2.7%
A.H. Belo Corporation 48 $ 957
Time Warner, Inc. 11 683
- -----------------------------------------------------------------------------
1,640
- -----------------------------------------------------------------------------
Aerospace -- 1.2%
Lockheed Martin Corporation 9 720
- -----------------------------------------------------------------------------
Automotive -- 1.5%
Ford Motor Company 15 880
- -----------------------------------------------------------------------------
Chemicals -- 2.9%
Ferro Corporation 35 910
Potash Corporation of Saskatchewan, Inc. 13 830
- -----------------------------------------------------------------------------
1,740
- -----------------------------------------------------------------------------
Construction and Building Materials -- 1.3%
Martin Marietta Materials, Inc. 12 746
- -----------------------------------------------------------------------------
Electrical Equipment and Electronics -- 3.5%
Hubbell Incorporated 10 380
Littelfuse, Inc. 22 423(A)
Molex Incorporated 25 797
Pioneer-Standard Electronics, Inc. 26 244
UCARInternational, Inc. 15 260(A)
- -----------------------------------------------------------------------------
2,104
- -----------------------------------------------------------------------------
Energy -- 1.5%
Phillips Petroleum Company 14 597
YPF Sociedad Anonima ADR 11 307
- -----------------------------------------------------------------------------
904
- -----------------------------------------------------------------------------
Finance -- 6.6%
Citigroup Inc. 22 1,079
Fannie Mae 22 1,628
H&R Block Inc. 27 1,215
- -----------------------------------------------------------------------------
3,922
- -----------------------------------------------------------------------------
19
<PAGE>
Portfolio of Investments -- Continued
Legg Mason Investors Trust, Inc.
Balanced Trust -- Continued
<TABLE>
<CAPTION>
Shares/Par Value
- -----------------------------------------------------------------------------------
<S> <C> <C>
Food, Beverage and Tobacco -- 6.1%
Anheuser-Busch Companies, Inc. 16 $ 1,070
McDonald's Corporation 18 1,341
Philip Morris Companies Inc. 9 455
UST, Inc. 22 767
- -----------------------------------------------------------------------------------
3,633
- -----------------------------------------------------------------------------------
Health Care -- 0.3%
Columbia/HCA Healthcare Corporation 8 188
- -----------------------------------------------------------------------------------
Insurance -- 0.7%
Aetna, Inc. 6 432
- -----------------------------------------------------------------------------------
Investment Companies -- 2.7%
Blackrock North American Government Income Trust, Inc. 100 1,013
Korea Fund, Inc. 29 268A
Latin America Investment Fund, Inc. 21 172
PMCCapital, Inc. 15 128
- -----------------------------------------------------------------------------------
1,581
- -----------------------------------------------------------------------------------
Manufacturing -- 5.1%
Fleetwood Enterprises, Inc. 31 1,077
Kaydon Corporation 34 1,362
Tyco International Ltd. 8 604
- -----------------------------------------------------------------------------------
3,043
- -----------------------------------------------------------------------------------
Multi-Industry -- 1.5%
Loews Corporation 9 904
- -----------------------------------------------------------------------------------
Real Estate -- 2.4%
Chateau Communities, Inc. 34 996
United Dominion Realty Trust, Inc. 44 454
- -----------------------------------------------------------------------------------
1,450
- -----------------------------------------------------------------------------------
Retail -- 2.0%
Jostens, Inc. 30 786
Toys "R" Us, Inc. 25 422A
- -----------------------------------------------------------------------------------
1,208
- -----------------------------------------------------------------------------------
Savings and Loan -- 3.7%
Charter One Financial, Inc. 45 1,249
Washington Federal, Inc. 35 934
- -----------------------------------------------------------------------------------
2,183
- -----------------------------------------------------------------------------------
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Rate Maturity Date Shares/Par Value
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Telecommunications -- 4.4%
AT&T Corp. 19 $ 1,430
Century Telephone Enterprises, Inc. 8 506
Cincinnati Bell, Inc. 18 681
- ---------------------------------------------------------------------------------------------------------------
2,617
- ---------------------------------------------------------------------------------------------------------------
Transportation -- 8.3%
AMR Corporation 18 1,069(A)
GATX Corporation 25 928
Kansas City Southern Industries, Inc. 33 1,623
Union Pacific Corporation 29 1,307
- ---------------------------------------------------------------------------------------------------------------
4,927
- ---------------------------------------------------------------------------------------------------------------
Utilities -- 3.5%
Kansas City Power & Light Company 22 652
TNP Enterprises, Inc. 14 531
Western Resources, Inc. 27 898
- ---------------------------------------------------------------------------------------------------------------
2,081
- ---------------------------------------------------------------------------------------------------------------
Total Common Stocks and Equity Interests
(Identified Cost-- $32,243) 36,903
- ---------------------------------------------------------------------------------------------------------------
Preferred Stock -- 0.5%
Chiquita Brands International, Inc., 3.75%, Series B, Cv
(Identified Cost-- $395) 7 287
- ---------------------------------------------------------------------------------------------------------------
Corporate Bonds and Notes -- 4.3%
Merrill Lynch & Co., Inc. 6% 11/15/04 $1,000 1,004
Safeway Inc. 5.75% 11/15/00 770 772
Toronto-Dominion Bank 7.875% 8/15/04 825 833
- ---------------------------------------------------------------------------------------------------------------
Total Corporate Bonds and Notes
(Identified Cost-- $2,623) 2,609
- ---------------------------------------------------------------------------------------------------------------
U.S. Government and Agency Obligations -- 32.2%
Inflation-indexed SecuritiesB -- 2.5%
United States Treasury
Inflation-indexed Security 3.625% 7/15/02 to 1/15/08 1,529 1,509
- ---------------------------------------------------------------------------------------------------------------
Medium-term Notes -- 6.7%
Fannie Mae 5.60% 2/2/01 1,300 1,318
Fannie Mae 7.37% 4/1/04 300 301
Fannie Mae 8.25% 10/12/04 900 922
Federal Farm Credit Bank 5.52% 2/25/02 1,100 1,115
Freddie Mac 8.14% 9/29/04 350 358
- ---------------------------------------------------------------------------------------------------------------
4,014
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
Portfolio of Investments -- Continued
Legg Mason Investors Trust, Inc.
Balanced Trust -- Continued
<TABLE>
<CAPTION>
Rate Maturity Date Shares/Par Value
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mortgage-backed Securities -- 12.6%
Fannie Mae 6% 12/1/25 to 10/1/28 $3,057 $ 3,019
Freddie Mac 6% 3/1/26 72 71
Freddie Mac 6.50% 1/1/26 to 5/1/28 1,283 1,292
Government National Mortgage
Association 6% 8/15/28 to 12/15/28 3,144 3,116
- ---------------------------------------------------------------------------------------------------------------------
7,498
- ---------------------------------------------------------------------------------------------------------------------
Treasury Notes/Stripsc -- 10.4%
United States Treasury Notes 6.25% 5/31/00 1,000 1,021
United States Treasury Notes 6.50% 5/31/01 500 521
United States Treasury Notes 6.25% 6/30/02 500 525
United States Treasury Strips 0% 5/15/00 to 8/15/05 5,100 4,109
- ---------------------------------------------------------------------------------------------------------------------
6,176
- ---------------------------------------------------------------------------------------------------------------------
Total U.S. Government and Agency Obligations
(Identified Cost-- $18,947) 19,197
- ---------------------------------------------------------------------------------------------------------------------
Repurchase Agreements -- 0.7%
State Street Bank &Trust Company
3.50%, dated 12/31/98, to be repurchased at $407 on 1/4/99
(Collateral: $420 Freddie Mac Mortgage-backed securities,
5.02% due 11/5/99, value $427)
(Identified Cost-- $407) 407 407
- ---------------------------------------------------------------------------------------------------------------------
Total Investments-- 99.6% (Identified Cost-- $54,615) 59,403
Other Assets Less Liabilities-- 0.4% 228
- ---------------------------------------------------------------------------------------------------------------------
Net assets-- 100.0% $59,631
- ---------------------------------------------------------------------------------------------------------------------
Net asset value per share $12.29
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
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.
22
<PAGE>
Portfolio of Investments
Legg Mason Investors Trust, Inc.
December 31, 1998 (Unaudited)
(Amounts in Thousands)
U.S. Small-Capitalization Value Trust
Shares/Par Value
- ------------------------------------------------------------------------------
COMMON STOCKS AND EQUITY INTERESTS -- 95.5%
Aerospace/Defense -- 1.3%
Alliant Techsystems Inc. 5 $ 387A
Allied Research Corporation 3 25A
Aviall, Inc. 12 142A
EDO Corporation 4 34
ESCO Electronics Corporation 5 49A
Herley Industries, Inc. 3 34A
Merrimac Industries, Inc. 1 7A
Miltope Group Inc. 2 3A
SIFCO Industries, Inc. 3 40
SPACEHAB, Incorporated 6 64A
- ------------------------------------------------------------------------------
785
- ------------------------------------------------------------------------------
Apparel -- 4.9%
Ashworth, Inc. 3 17A
Burlington Coat Factory Warehouse Corporation 9 140
Deb Shops, Inc. 2 30
Footstar, Inc. 18 443A
G-III Apparel Group, Ltd. 3 10A
Gadzooks, Inc. 6 43A
Garan, Incorporated 4 104
Genesco Inc. 19 107A
Goody's Family Clothing, Inc. 14 140A
LaCrosse Footwear, Inc. 3 25
Marisa Christina Incorporated 2 3A
Maxwell Shoe Company Inc. 5 50A
Nine West Group Inc. 19 299A
Oxford Industries, Inc. 5 130
Paul Harris Stores, Inc. 7 58A
R.G. Barry Corporation 2 24A
Rocky Shoes & Boots, Inc. 2 13A
S&K Famous Brands, Inc. 3 30A
St. John Knits, Inc. 12 315
Superior Uniform Group Inc. 1 19
Supreme International Corporation 4 44A
Syms Corp. 13 114A
Tandy Brands Accessories, Inc. 2 35A
The Dress Barn, Inc. 17 251A
The Finish Line, Inc. 5 38A
The Gymboree Corporation 13 80A
The Timberland Company 8 378A
Vans, Inc. 10 65A
- ------------------------------------------------------------------------------
3,005
- ------------------------------------------------------------------------------
23
<PAGE>
Portfolio of Investments -- Continued
Legg Mason Investors Trust, Inc.
U.S. Small-Capitalization Value Trust -- Continued
Shares/Par Value
- -----------------------------------------------------------------------------
Automotive -- 3.8%
Aftermarket Technology Corp. 15 $ 114A
Arvin Industries, Inc. 12 513
Autocam Corporation 2 40
Bandag, Incorporated 12 491
Barnes Group Inc. 5 150
Collins Industries, Inc. 5 20
Defiance, Inc. 4 26
Durakon Industries, Inc. 2 16A
Excel Industries, Inc. 7 117
Featherlite Inc. 2 14A
Monaco Coach Corporation 4 107A
Monro Muffler Brake, Inc. 5 38A
Motorcar Parts and Accessories, Inc. 3 30A
R&B, Inc. 4 34A
Safety Components International, Inc. 3 51A
Simpson Industries, Inc. 3 31
SMC Corporation 4 16A
Strattec Security Corporation 2 69A
Superior Industries International, Inc. 5 136
TBC Corporation 15 103A
The Standard Products Company 11 216
- -----------------------------------------------------------------------------
2,332
- -----------------------------------------------------------------------------
Chemicals -- 4.0%
A. Schulman, Inc. 19 433
Atlantis Plastics, Inc. 2 18A
Ethyl Corporation 45 262
Georgia Gulf Corporation 20 318
M. A. Hanna Company 26 324
Quaker Chemical Corporation 6 99
Stepan Company 4 104
Sybron Chemicals Inc. 2 28A
The Dexter Corporation 13 393
The General Chemical Group Inc. 15 211
Wellman, Inc. 23 229
- -----------------------------------------------------------------------------
2,419
- -----------------------------------------------------------------------------
Commercial/Industrial Services -- 5.4%
American Buildings Company 3 81A
AmeriLink Corporation 2 18A
BCTInternational , Inc. 3 9A
BHA Group Holdings, Inc. 4 53
Budget Group, Inc. 13 202A
Butler Manufacturing Company 5 110
24
<PAGE>
Shares/Par Value
- -----------------------------------------------------------------------------
Commercial/Industrial Services -- Continued
Cameron Ashley Building Products, Inc. 5 $ 65A
Caribiner International, Inc. 15 136A
CDI Corp. 4 75A
Cogeneration Corporation of America 5 44A
CORT Business Services Corporation 7 165A
Dames & Moore Group 7 88
Dawson Geophysical Company 3 24A
Ellett Brothers, Inc. 1 6
Exponent, Inc. 3 20A
Fleming Companies, Inc. 28 289
Franklin Covey Co. 10 164A
FTI Consulting, Inc. 3 10A
Gradco Systems, Inc. 3 8A
GRCInternational, Inc. 3 21A
Halter Marine Group, Inc. 10 50A
Healthcare Services Group, Inc. 1 9A
Kennametal Inc. 15 323
Lamalie Associates, Inc. 2 13A
Lawson Products, Inc. 6 133
Leasing Solutions, Inc. 2 6A
Mail-Well, Inc. 17 191A
Maxco, Inc. 1 9A
Merrill Corporation 1 15
Nash-Finch Company 8 117
Olsten Corporation 4 31
Perini Corporation 2 11A
Physicians' Specialty Corp. 3 21A
PrimeSource Corporation 4 24
REFAC Technology Development Corporation 1 10A
Robertson-Ceco Corporation 4 29A
Rush Enterprises, Inc. 2 16A
SOS Staffing Services, Inc. 6 46A
The Turner Corporation 2 44A
Veritas DGC Inc. 15 199A
Wallace Computer Services, Inc. 11 282
Winsloew Furniture, Inc. 5 140A
- -----------------------------------------------------------------------------
3,307
- -----------------------------------------------------------------------------
Computer Services and Systems -- 1.5%
Ampex Corporation 3 3A
Autologic Information International, Inc. 1 5A
Cognitronics Corporation 2 14A
Dunn Computer Corporation 2 6A
25
<PAGE>
Portfolio of Investments -- Continued
Legg Mason Investors Trust, Inc.
U.S. Small-Capitalization Value Trust -- Continued
Shares/Par Value
- ------------------------------------------------------------------------------
Computer Services and Systems -- Continued
Elcom International, Inc. 14 $ 28A
HMT Technology Corporation 8 96A
Kentek Information Systems, Inc. 4 22
MTITechnology Corp. 9 39A
MTS Systems Corporation 10 131
NeoMagic Corporation 4 93A
ONTRACK Data International Inc. 2 11A
Procom Technology, Inc. 4 37A
PSC Inc. 6 59A
Scan-Optics, Inc. 3 10A
STB Systems, Inc. 7 49A
Structural Dynamics Research Corporation 14 274A
The MacNeal-Schwendler Corporation 7 50A
- ------------------------------------------------------------------------------
927
- ------------------------------------------------------------------------------
Construction and Building Materials -- 3.8%
ABT Building Products Corporation 7 70A
Ameron International Corporation 3 96
Aztec Manufacturing Co. 2 22
Baltek Corporation N.M. 5A
Beazer Homes USA, Inc. 3 83A
Building Materials Holdings Corporation 2 28A
Del Webb Corporation 12 328
Dominion Homes, Inc. 4 44A
Engle Homes, Inc. 8 124
Hovnanian Enterprises, Inc. 14 118A
International Aluminum Corporation 2 68
Kevco, Inc. 3 18A
Lone Star Industries, Inc. 8 302
M/I Schottenstein Homes, Inc. 3 66
Oakwood Homes Corporation 17 258
Patrick Industries, Inc. 2 35
Republic Group Incorporated 7 148
Southern Energy Homes, Inc. 9 53A
Standard Pacific Corp. 12 168
The Fortress Group, Inc. 8 19
U.S. Home Corporation 7 246A
Washington Homes, Inc. 3 19A
- ------------------------------------------------------------------------------
2,318
- ------------------------------------------------------------------------------
Consumer Durables -- 3.2%
Boston Acoustics, Inc. 3 67
Catalina Lighting, Inc. 3 6A
Cobra Electronics Corporation 3 16A
26
<PAGE>
Shares/Par Value
- ------------------------------------------------------------------------------
Consumer Durables -- Continued
Concord Camera Corp. 7 $ 35A
Congoleum Corporation 3 27A
Conso International Corporation 4 23A
Flexsteel Industries, Inc. 3 35
Go-Video, Inc. 5 15A
Harman International Industries, Incorporated 7 267
Home Products International, Inc. 4 36A
Koss Corporation 2 26A
Lifetime Hoan Corporation 5 45
Mikasa, Inc. 8 97
Oneida Ltd. 9 129
O'Sullivan Industry Holdings, Inc. 3 30A
Russ Berrie and Company, Inc. 14 329
Sola International, Inc. 18 309A
The L. S. Starrett Company 3 93
The Rival Company 5 70
The Toro Company 6 177
The York Group, Inc. 6 61
Windmere-Durable Holdings, Inc. 8 58A
- ------------------------------------------------------------------------------
1,951
- ------------------------------------------------------------------------------
Consumer Non-Durables -- 0.5%
American Safety Razor Company 9 105A
CCA Industries, Inc. 3 4A
Dixon Ticonderoga Company 2 23A
Educational Development Corporation 3 6
French Fragrances, Inc. 9 63A
Jean Philippe Fragrances, Inc. 3 16A
Rural/Metro Corporation 3 35A
Scott's Liquid Gold-Inc. 4 6
Seattle FilmWorks, Inc. 11 49A
The Stephan Co. 3 26
- ------------------------------------------------------------------------------
333
- ------------------------------------------------------------------------------
Electrical Equipment and Electronics -- 5.5%
Acme Electric Corporation 3 14A
Align-Rite International, Inc. 4 48A
AlphaNet Solutions, Inc. 4 15A
Amistar Corporation 1 3A
Axsys Technologies, Inc. 2 32A
Bel Fuse Inc. - Class A 1 48A
Bel Fuse Inc. - Class B 1 41
Belden Inc. 16 345
Bell Industries, Inc. 4 42A
27
<PAGE>
Portfolio of Investments -- Continued
Legg Mason Investors Trust, Inc.
U.S. Small-Capitalization Value Trust -- Continued
Shares/Par Value
- ------------------------------------------------------------------------------
Electrical Equipment and Electronics -- Continued
BTU International, Inc. 2 $ 7A
CHS Electronics, Inc. 10 168A
C. P. Clare Corporation 5 25A
CompuCom Systems, Inc. 24 85A
Diodes Incorporated 2 9A
EFTC Corporation 7 35A
Electro Scientific Industries, Inc. 4 159A
InaCom Corp. 12 180A
Integrated Circuit Systems, Inc. 9 157A
Keithley Instruments, Inc. 3 26
LaBarge, Inc. 6 15A
MagneTek, Inc. 33 385A
Marshall Industries 3 61
Methode Electronics, Inc. 14 225
Microsemi Corporation 4 47A
Nu Horizons Electronics Corp. 5 24A
Optek Technology, Inc. 2 34A
Orbit International Corp. 1 2A
Park Electrochemical Corp. 5 132
Percon Incorporated 2 10A
Pioneer-Standard Electronics, Inc. 17 156
Powell Industries, Inc. 6 58A
Recoton Corporation 2 39A
Reliability Incorporated 2 9A
RFMonolithics, Inc. 3 26A
Richardson Electronics, Ltd. 8 81
Richey Electronics, Inc. 4 38A
Savoir TechnologyGroup, Inc. 3 26A
SEMX Corporation 3 9A
Siliconix Incorporated 4 85A
Sparton Corporation 1 8A
Spectrum Control, Inc. 4 18A
Tech-Sym Corporation 1 27A
The Cherry Corporation 5 73A
UCAR International, Inc. 14 242A
Woodhead Industries, Inc. 5 69
- ------------------------------------------------------------------------------
3,338
- ------------------------------------------------------------------------------
Entertainment and Leisure -- 2.8%
Arctic Cat, Inc. 20 208
Boyd Gaming Corporation 45 148A
Cannondale Corporation 6 52A
Equity Marketing, Inc. 2 13A
28
<PAGE>
Shares/Par Value
- ------------------------------------------------------------------------------
Entertainment and Leisure -- Continued
Fountain Powerboat Industries, Inc. 3 $ 14A
Grand Casinos, Inc. 31 247A
Holiday RV Superstores, Incorporated 2 5A
Isle of Capri Casinos, Inc. 13 50A
JAKKS Pacific, Inc. 2 24A
Lodgian, Inc. 7 35A
Midway Games Inc. 28 303A
Play By Play Toys & Novelties, Inc. 4 27A
PlayCore, Inc. 3 14A
Primadonna Resorts, Inc. 16 139A
Prime Hospitality Corp. 19 203A
Quintel Communications, Inc. 9 17A
Scientific Games Holdings Corp. 5 91A
Suburban Lodges of America, Inc. 1 9A
Winnebago Industries, Inc. 7 112
- ------------------------------------------------------------------------------
1,711
- ------------------------------------------------------------------------------
Financial Services -- 3.5%
Advanta Corp. 18 234
Amplicon, Inc. 6 93
AMRESCO, INC. 15 134A
Arcadia Financial Ltd. 28 102A
ARMFinancial Group, Inc. 7 160
Bank Plus Corporation 10 45A
BankAtlantic Bancorp, Inc. 14 91
CPB Inc. 2 42
Dain Rauscher Corporation 5 136
First Alliance Corporation 7 27A
FirstCity Financial Corporation 5 69A
Hambrecht & Quist Group 9 200A
Hawthorne Financial Corporation 1 16A
IMC Mortgage Company 16 4A
Interpool, Inc. 11 184
JWGenesis Financial Corp. 2 12A
Pacific Crest Capital, Inc. 1 15
Parkvale Financial Corporation 3 54
Resource Bancshares Mortgage Group, Inc. 17 283
Southern Pacific Funding Corporation 11 1A
Southwest Securities Group, Inc. 7 135
Stifel Financial Corp. 2 21
Sunrise International Leasing Corporation 3 10A
United Companies Financial Corporation 7 22
World Acceptance Corporation 10 62A
- ------------------------------------------------------------------------------
2,152
- ------------------------------------------------------------------------------
29
<PAGE>
Portfolio of Investments -- Continued
Legg Mason Investors Trust, Inc.
U.S. Small-Capitalization Value Trust -- Continued
Shares/Par Value
- ------------------------------------------------------------------------------
Food, Beverage and Tobacco -- 2.9%
Cal-Maine Foods, Inc. 5 $ 20
Chock Full o' Nuts Corporation 6 37A
Consolidated Cigar Holdings Inc. 19 336A
DIMON, Incorporated 11 82
Eagle Food Centers, Inc. 6 19A
General Cigar Holdings, Inc. 10 87A
Herbalife International, Inc. 18 259
John B. Sanfilippo & Son, Inc. 5 21A
M&F Worldwide Corp. 13 131A
Marsh Supermarkets, Inc. 3 60
Natural Alternatives International, Inc. 2 18A
Nutrition For Life International, Inc. 1 3
Pilgrim's Pride Corporation 7 140
Schweitzer-Mauduit International, Inc. 10 156
Standard Commercial Corporation 7 60
Suprema Specialties, Inc. 1 6A
Swisher International Group Inc. 22 195A
The Lion Brewery, Inc. 2 9A
Todhunter International, Inc. 2 16A
Weider Nutrition International, Inc. 16 99
- ------------------------------------------------------------------------------
1,754
- ------------------------------------------------------------------------------
Gas/Pipeline -- 4.3%
Adams Resources &Energy 3 15
Frontier Oil Corporation 18 87A
Gulf Islands Fabrication, Inc. 8 65A
Lufkin Industries, Inc. 5 89
Marine Drilling Companies, Inc. 33 253A
Mitcham Industries, Inc. 5 24A
National-Oilwell, Inc. 27 302A
Offshore Logistics, Inc. 16 188A
Parker Drilling Company 18 56A
Pool Energy Services Co. 11 113A
Pride International, Inc. 36 256A
Royale Energy, Inc. 1 4A
SEACOR Smit Inc. 10 475A
Seitel, Inc. 10 118A
Superior Energy Services, Inc. 15 41A
Swift Energy Company 10 77A
Tesoro Petroleum Corporation 9 113A
TMBR/Sharp Drilling, Inc. 2 8A
Trico Marine Services, Inc. 15 72A
Tuboscope Inc. 32 262A
30
<PAGE>
Shares/Par Value
- ------------------------------------------------------------------------------
Gas/Pipeline -- Continued
World Fuel Services Corporation 2 $ 25
- ------------------------------------------------------------------------------
2,643
- ------------------------------------------------------------------------------
Health Care -- 2.7%
American Dental Technologies, Inc. 5 19A
American Physicians Service Group, Inc. 2 8A
BioSource International, Inc. 4 11A
CompDent Corporation 4 42A
Empi, Inc. 4 93A
Genesis Health Ventures, Inc. 22 194A
Horizon Health Corporation 1 10A
Integrated Health Services, Inc. 21 295A
Medstone International, Inc. 3 18A
Mesa Laboratories, Inc. 2 7A
NovaCare, Inc. 23 57A
PharMerica, Inc. 32 193A
PhyMatrix Corp. 18 39A
ProMedCo Management Company 9 53A
Raytel Medical Corporation 5 22A
RehabCare Group, Inc. 2 41A
Response Oncology, Inc. 7 27A
SafeGuard Health Enterprises, Inc. 2 8A
Sheridan Healthcare, Inc. 3 26A
Sierra Health Services, Inc. 6 133A
Specialty Care Network, Inc. 6 8A
Sun Healthcare Group, Inc. 45 295A
The West Company, Incorporated 1 34
Utah Medical Products, Inc. 3 22A
- ------------------------------------------------------------------------------
1,655
- ------------------------------------------------------------------------------
Industrial -- 5.9%
AGCO Corporation 43 339
Alamo Group Inc. 4 45
Allied Products Corporation 9 54
American Biltrite, Inc. 1 29
Ampco-Pittsburgh Corporation 5 57
Applied Industrial Technologies, Inc. 12 161
Bairnco Corporation 6 39
Baldwin Technology Company, Inc. 9 51A
Cascade Corporation 8 119
Channell Commercial Corporation 5 41A
Chart Industries, Inc. 3 21
Colombus McKinnon Corporation 10 178
Commercial Intertech Corp. 6 72
CPAC, Inc. 4 28
31
<PAGE>
Portfolio of Investments -- Continued
Legg Mason Investors Trust, Inc.
U.S. Small-Capitalization Value Trust -- Continued
Shares/Par Value
- ------------------------------------------------------------------------------
Industrial -- Continued
DT Industries, Inc. 7 $ 113
Flowserve Corporation 12 199
Foilmark, Inc. 3 5A
Gehl Company 4 54A
Gradall Industries, Inc. 6 86A
Hardinge, Inc. 6 114
Haskel International, Inc. 3 29
Hirsch International Corp. 5 15A
ITEQ, Inc. 9 19A
Lindsay Manufacturing Co. 5 71
Lydall, Inc. 4 51A
Milacron Inc. 25 477
O.I. Corporation 2 11A
Ocal, Inc. 3 11A
Plasma-Therm, Inc. 2 8A
Printware, Inc. 2 6A
Regal-Beloit Corporation 13 304
Robbins & Myers, Inc. N.M. 11
Selas Corporation of America 2 17
Specialty Equipment Companies, Inc. 8 222A
Summa Industries 1 13A
Supreme Industries, Inc. 5 45A
TB Wood's Corporation 3 35
The Carbide/Graphite Group, Inc. 5 68A
The Middleby Corporation 5 18A
Trident International, Inc. 4 32A
Triple S Plastics, Inc. 2 7A
Twin Disc, Incorporated 1 23
Watts Industries, Inc. 20 324
York Research Corporation 3 9A
- ------------------------------------------------------------------------------
3,631
- ------------------------------------------------------------------------------
Insurance -- 10.3%
Acceptance Insurance Companies Inc. 10 194A
Amerin Corporation 10 232A
AmerUs Life Holdings, Inc. 22 492
Bancinsurance Corporation 2 12A
Capital Re Corporation 23 457
Chartwell Re Corporation 6 145
Donegal Group Inc. 3 53
EMC Insurance Group, Inc. 6 76
Fidelity National Financial, Inc. 16 497
Foremost Corporation of America 20 420
32
<PAGE>
Shares/Par Value
- ------------------------------------------------------------------------------
Insurance -- Continued
Frontier Insurance Group, Inc. 27 $ 349
GAINSCO, Inc. 8 51
Harleysville Group Inc. 16 403
Kaye Group Inc. 4 33
Life USA Holding, Inc. 14 175
Merchants Group, Inc. 1 21
MMI Companies, Inc. 12 201
Mobile America Corporation 5 20
NAC Re Corp. 7 343
National Western Life Insurance Company 1 153A
Nymagic, Inc. 3 66
Penn-America Group, Inc. 6 56
Presidential Life Corporation 1 14
PXRE Corporation 6 140
SCPIEHoldings Inc. 4 127
Selective Insurance Group, Inc. 21 425
Standard Management Corporation 1 9A
Symons International Group, Inc. 4 28A
The Centris Group, Inc. 8 75
The Midland Company 3 82
The Navigators Group, Inc. 6 95A
Trenwick Group Inc. 6 209
UICI 25 617A
Unico American Corporation 1 16
- ------------------------------------------------------------------------------
6,286
- ------------------------------------------------------------------------------
Metals and Mining -- 7.0%
Alltrista Corporation 6 139A
Amcast Industrial Corporation 2 34
Armco Inc. 78 341A
Atchison Casting Corporation 4 41A
Bayou Steel Corporation 8 34A
Carpenter Technology Corporation 1 37
Century Aluminum Corporation 4 35
Chase Industries, Inc. 11 115A
Citation Corporation 10 121A
Cleveland-Cliffs Inc. 7 290A
Commercial Metals Company 9 261
Friedman Industries, Incorporated 4 21
Hexcel Corporation 23 195A
Intermet Corporation 19 243
Kaiser Aluminum Corporation 43 208A
Keystone Consolidated Industries, Inc. 4 29A
33
<PAGE>
Portfolio of Investments -- Continued
Legg Mason Investors Trust, Inc.
U.S. Small-Capitalization Value Trust -- Continued
Shares/Par Value
- ------------------------------------------------------------------------------
Metals and Mining -- Continued
Maverick Tube Corporation 10 $ 53A
MAXXAM Inc. 3 161A
Metals USA, Inc. 14 136A
National Steel Corporation 23 162
Niagra Corporation 4 22A
Northwest Pipe Company 1 19A
NS Group, Inc. 10 42A
Penn Engineering &Manufacturing Corp. 4 87
Quanex Corporation 10 232
ROHN Industries, Inc. 34 118A
RTI International Metals, Inc. 15 207A
Shiloh Industries, Inc. 4 50A
Special Metals Corporation 11 100A
Steel Technologies Inc. 7 44
Texas Industries, Inc. 8 207
The Shaw Group Inc. 8 63A
Titanium Metals Corporation 17 143
Universal Stainless & Alloy Products, Inc. 3 19A
Webco Industries, Inc. 1 9A
Wolverine Tube, Inc. 10 214A
Zemex Corporation 3 17A
- ------------------------------------------------------------------------------
4,249
- ------------------------------------------------------------------------------
Miscellaneous Manufacturing -- 3.4%
A.O. Smith Corporation 9 219
Core Materials Corporation 2 6A
Global Industrial Technologies, Inc. 9 94A
Griffon Corporation 20 207A
Jason Incorporated 11 89A
MascoTech, Inc. 30 521
Metrika Systems Corporation 3 26A
MFRI, Inc. 1 6A
NACCO Industries, Inc. 3 276
Q.E.P. Co., Inc. 1 9A
RPC, Inc. 5 39
Shelby Williams Industries, Inc. 7 79
Standex International Corporation 8 215
The Eastern Company 1 23
TransAct Technologies Incorporated 3 8A
TransTechnology Corporation 4 81
U.S. Office Products Company 11 44A
Valmont Industries, Inc. 6 87
Zomax Optical Media, Inc. 3 44A
- ------------------------------------------------------------------------------
2,073
- ------------------------------------------------------------------------------
34
<PAGE>
Shares/Par Value
- ------------------------------------------------------------------------------
Process Industries -- 1.8%
Kaman Corporation 8 $ 132
P.H. Glatfelter Company 8 95
Rock-Tenn Company 22 371
Shorewood Packaging Corporation 11 221A
Silgan Holdings Inc. 7 203A
The Anderson's, Inc. 5 56
Uniflex, Inc. 2 10A
- ------------------------------------------------------------------------------
1,088
- ------------------------------------------------------------------------------
Real Estate -- 0.2%
AMREP Corporation 5 31A
Bluegreen Corporation 9 69A
ILX Resorts Incorporated 1 2A
Kennedy-Wilson, Inc. 2 16A
- ------------------------------------------------------------------------------
118
- ------------------------------------------------------------------------------
Restaurants -- 1.8%
Ark Restaurants Corp. 2 15A
Blimpie International, Inc. 6 13
Cooker Restaurant Corporation 6 38
ELXSI Corporation 3 32A
Landry's Seafood Restaurants, Inc. 22 164A
Lone Star Steakhouse & Saloon, Inc. 25 227A
Luby's, Inc. 8 124
Main Street &Main Inc. 2 6A
Max & Erma's Restaurants, Inc. 2 12A
NPC International, Inc. 8 97A
Piccadilly Cafeterias, Inc. 4 44
Ryan's Family Steak Houses, Inc. 22 276A
Sizzler International, Inc. 12 26A
- ------------------------------------------------------------------------------
1,074
- ------------------------------------------------------------------------------
Retail -- 3.7%
Barnett Inc. 6 76A
Blair Corporation 5 104
Boise Cascade Office Products Corporation 34 454A
Brylane Inc. 9 219A
Coldwater Creek Inc. 2 26A
Cole National Corporation 3 46A
Duckwall-ALCO Stores, Inc. 2 30A
EZCORP, Inc. 4 33
Finlay Enterprises, Inc. 3 26A
Friedman's Inc. 13 128A
Funco, Inc. 3 58A
Garden Ridge Corporation 6 58A
35
<PAGE>
Portfolio of Investments -- Continued
Legg Mason Investors Trust, Inc.
U.S. Small-Capitalization Value Trust -- Continued
Shares/Par Value
- ------------------------------------------------------------------------------
Retail -- Continued
Global DirectMail Corp 16 $ 365A
Lands' End, Inc. 8 226A
Pamida Holdings Corporation 3 14A
Piercing Pagoda, Inc. 3 31A
RDO Equipment Co. 4 30A
Rentrak Corporation 4 12A
REX Stores Corporation 5 62A
Specialty Catalog Corp. 1 5A
Sport Supply Group, Inc. 2 14A
Stein Mart, Inc. 12 81A
Tandycrafts, Inc. 5 18A
The Bon-Ton Stores, Inc. 10 74A
The Sportman's Guide, Inc. 2 15A
Travel Ports of America, Inc. 3 7A
Wolohan Lumber Co. 3 42
- ------------------------------------------------------------------------------
2,254
- ------------------------------------------------------------------------------
Technology -- 0.9%
BancTec, Inc. 13 167A
Cohu, Inc. 4 81
Equinox Systems, Inc. 2 24A
Excel Technology, Inc. 6 59A
Hurco Companies, Inc. 3 14A
K-Tron International, Inc. 2 39A
Moore Products Company 1 29
ThermoQuest Corporation 7 85A
Vivid Technologies, Inc. 5 33A
- ------------------------------------------------------------------------------
531
- ------------------------------------------------------------------------------
Telecommunications -- 0.6%
Applied Signal Technology, Inc. 4 47A
Blonder Tongue Laboratories, Inc. 6 37A
Communication Systems, Inc. 3 38
Davox Corporation 5 37A
General Semiconductor, Inc. 14 111A
Microdyne Corporation 7 34A
Tollgrade Communications, Inc. 2 40A
Vertex Communications Corporation 2 32A
- ------------------------------------------------------------------------------
376
- ------------------------------------------------------------------------------
Textiles -- 1.9%
Burlington Industries, Inc. 45 494A
Concord Fabrics Inc. 2 9A
36
<PAGE>
Shares/Par Value
- ------------------------------------------------------------------------------
Textiles -- Continued
Culp, Inc. 7 $ 53
Decorator Industries, Inc. 1 9
Dyersburg Corporation 8 24
Galey & Lord, Inc. 9 74A
Guilford Mills, Inc. 19 310
Lakeland Industries, Inc. 1 6A
Quaker Fabric Corporation 2 12A
Synthetic Industries, Inc. 5 79A
The Dixie Group, Inc. 7 58
Worldtex, Inc. 8 28A
- ------------------------------------------------------------------------------
1,156
- ------------------------------------------------------------------------------
Transportation -- 5.7%
America West Holdings Corporation 31 524A
Arkansas Best Corporation 14 83A
Arnold Industries, Inc. 17 266
Boyd Bros. Transportation Inc. 2 13A
Circle International Group, Inc. 7 133
Consolidated Delivery & Logistics, Inc. 2 5A
Consolidated Freightways Corporation 15 232A
Covenant Transport, Inc. 6 98A
Dynamex Inc. 2 7A
Genesee & Wyoming Inc. 3 37A
Hvide Marine Incorporated 11 55A
Kitty Hawk, Inc. 12 134A
Maritrans Inc. 7 43
Old Dominion Freight Line, Inc. 5 59A
P.A.M. Transportation Services, Inc. 5 47A
Pittison BAX Group 14 160
RailTex, Inc. 6 66A
Roadway Express, Inc. 15 215
Smithway Motor Xpress Corp. 3 20A
The Greenbrier Companies, Inc. 3 37
Transport Corporation of America, Inc. 5 58A
U.S. Xpress Enterprises, Inc. 8 123A
USA Truck, Inc. 3 39A
USFreightways Corporation 17 481
Varlen Corporation 11 252
Yellow Corporation 14 262A
- ------------------------------------------------------------------------------
3,449
- ------------------------------------------------------------------------------
37
<PAGE>
Portfolio of Investments -- Continued
Legg Mason Investors Trust, Inc.
U.S. Small-Capitalization Value Trust -- Continued
<TABLE>
<CAPTION>
Shares/Par Value
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Utilities -- 2.2%
Calpine Corporation 7 $ 174A
CTG Resources, Inc. 4 92
El Paso Electric Company 23 203A
Green Mountain Power Corporation 3 28
Public Service Company of New Mexico 22 456
St. Joseph Light & Power Company 3 58
TNP Enterprises, Inc. 7 250
UniSource Energy Corporation 6 80A
- -------------------------------------------------------------------------------------------
1,341
- -------------------------------------------------------------------------------------------
Total Common Stocks and Equity Interests
(Identified Cost-- $63,129) 58,256
- -------------------------------------------------------------------------------------------
Repurchase Agreements -- 4.6%
Goldman, Sachs & Company
5%, dated 12/31/98, to be repurchased at $1,385 on 1/4/99
(Collateral: $1,410 Fannie Mae Mortgage-backed securities,
6.50% due 8/1/02, value $1,431) $1,384 1,384
Prudential Securities, Inc.
5%, dated 12/31/98, to be repurchased at $1,385 on 1/4/99
(Collateral: $1,394 Government National Mortgage Association
Mortgage-backed securities, 7% due 11/15/28, value $1,433) 1,384 1,384
- -------------------------------------------------------------------------------------------
Total Repurchase Agreements (Identified Cost-- $2,768) 2,768
- -------------------------------------------------------------------------------------------
Total Investments -- 100.1% (Identified Cost -- $65,897) 61,024
Other Assets Less Liabilities -- (0.1)% (36)
-------
NET ASSETS -- 100% $60,968
=======
NET ASSETS VALUE PER SHARE:
PRIMARY CLASS $8.68
=====
NAVIGATOR CLASS $8.73
=====
- --------------------------------------------------------------------------------------------
</TABLE>
(A) Non-income producing
N.M. Not meaningful
38
<PAGE>
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