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Annual Report
March 31, 1999
Legg Mason
Investors Trust, Inc.
American Leading
Companies Trust
U.S. Small-Cap
Value Trust
Navigator Class
LEGG
MASON
FUNDS
LOGO
HOW TO INVEST (SM)
<PAGE>
To Our Shareholders,
We are pleased to provide you with Legg Mason Investors Trust's annual report
for the Navigator Class of the American Leading Companies Trust and the U.S.
Small-Capitalization Value Trust.
The following table summarizes key statistics for the Navigator Class of
shares of each Fund, as of March 31, 1999:
<TABLE>
<CAPTION>
3-Month
Total Return(1)
--------------------
<S> <C>
American Leading Companies Trust(2) N/A
U.S. Small-Capitalization Value Trust -9.74%
S&P 500 Stock Composite Index +4.99%
Russell 2000 Index -5.42%
</TABLE>
The Navigator shares for American Leading Companies were redeemed on December
3, 1998. The following report includes market commentary from the Primary Class
report for the year ended March 31, 1999.
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
- ---------
(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) American Leading Companies Navigator shares were redeemed on December 3,
1998.
<PAGE>
this important project and look forward to continuing extensive testing
(including industry-wide testing) with our industry peers, regulators and
vendors throughout 1999.
For several operational reasons, we are changing the ordinary income dividend
and capital gain distribution payment schedules for these Funds. Our new
schedule will be to pay ordinary income dividends and to make capital gain
distributions, if any, in June and December.
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/ EdwardA. 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
points(2) (+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
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
U.S. Small-Capitalization Value Trust
During the quarter, the portfolio was down 9.7%, comparable 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.
5
<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
6
<PAGE>
Performance Information
Legg Mason Investors Trust, Inc.
PERFORMANCE COMPARISON OF A $50,000 INVESTMENT
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 $50,000 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 administrative expenses or transaction costs
associated with buying and selling securities in the index. 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 Primary Class, offered to retail investors, is
contained in a separate report to its shareholders.
AMERICAN LEADING COMPANIES TRUST -- NAVIGATOR CLASs
Cumulative Average Annual
Total Return Total Return
- -----------------------------------------------------------------
3/31/98-12/3/98* +1.84% N/A
Life of Class (dagger) +60.32 +24.30%
- -----------------------------------------------------------------
* American Leading Companies Navigator shares were redeemed on
December 3, 1998.
(dagger )Inception Date -- October 4, 1996
GRAPH HERE
American Leading Companies Standard & Poor's 500
Trust Navigator Class Stock Composite Index(1)
10/4/96 $50,000 $50,000
3/31/97 57,588 55,620
9/30/97 69,932 70,220
3/31/98 78,712 82,315
9/30/98 69,261 76,575
12/3/98 80,160 87,825
(1)An unmanaged index of widely held common stocks. Index returns are for the
periods beginning September 30, 1996. The ending value for the index is as of
November 30, 1998.
7
<PAGE>
Performance Information -- Continued
U.S. SMALL-CAP VALUE TRUST -- NAVIGATOR CLASs
Cumulative Average Annual
Total Return Total Return
- ----------------------------------------------------------------------
Life of Class (dagger) -20.56% N/A
- ----------------------------------------------------------------------
(dagger) Inception Date -- June 19, 1998. Data as of March 31, 1999.
GRAPH HERE
U.S. Small-Cap Value Russell 2000
Trust Navigator Class Index(1)
6/19/98 $50,000 $50,000
9/30/98 39,869 39,925
12/31/98 44,002 46,440
3/31/99 39,720 43,923
(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. The returns for this
index are for the periods beginning June 30, 1998.
8
<PAGE>
Performance Information -- Continued
U.S. Small-Capitalization Value Trust (dagger)
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%
(dagger) 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%
9
<PAGE>
Statement of Net Assets
Legg Mason Investors Trust, Inc.
March 31, 1999
(Amounts in Thousands)
American Leading Companies Trust
<TABLE>
<CAPTION>
Shares/Par Value
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
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
--------
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Shares/Par Value
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
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, Inc. 11 1,339
Berkshire Hathaway Inc. - Class B 3 6,113(A)
Conseco, Inc. 200 6,175
--------
13,627
--------
</TABLE>
11
<PAGE>
Statement of Net Assets -- Continued
Legg Mason Investors Trust, Inc.
American Leading Companies Trust -- Continued
<TABLE>
<CAPTION>
Shares/Par Value
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Manufacturing -- 0.7%
Minnesota Mining and Manufacturing Company 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&T 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
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Shares/Par Value
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
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 investments 5,324
Unrealized appreciation of investments 88,222
---------
Net assets -- 100.0% $288,957
===== ========
Net asset value per share
Primary Class $20.38
======
- ------------------------------------------------------------------------------------------------------------------------
<FN>
(A) Non-income producing.
</FN>
</TABLE>
See notes to financial statements.
13
<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>
14
<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)
BCT International , Inc. 3 7(A)
BHA Group Holdings, Inc. 4 35
Budget Group, Inc. 13 156(A)
Butler Manufacturing Company 5 115
</TABLE>
15
<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)
GRC International, 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>
16
<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>
17
<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>
18
<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>
19
<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>
20
<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>
21
<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 4(A)
Sun Healthcare Group, Inc. 45 45(A)
Unilab Corporation 28 88(A)
Utah Medical Products, Inc. 3 19(A)
--------
1,043
--------
Industrial -- 5.9%
ACX Technologies, Inc. 20 260(A)
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 39(A)
Bridgeport Machines, Inc. 4 23(A)
Cascade Corporation 8 80
Channell Commercial Corporation 5 43(A)
Chart Industries, Inc. 3 18
Commercial Intertech Corp. 10 108
CPAC, Inc. 4 27
</TABLE>
22
<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 78(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>
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>
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
SCPIE Holdings 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>
24
<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>
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>
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>
26
<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>
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>
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>
28
<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.
29
<PAGE>
Statements of Operations
Legg Mason Investors Trust, Inc.
(Amounts in Thousands)
<TABLE>
<CAPTION>
Year Ended 3/31/99
----------------------------------------------
U.S.
American Leading Small-Capitalization
Companies Trust Value Trust(A)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Income:
Dividends(B) $ 3,001 $ 412
Interest 450 193
--------- ---------
Total income 3,451 605
--------- ---------
Expenses:
Management fee 1,655 330
Distribution and service fees 2,207 388
Transfer agent and shareholder servicing expense 156 42
Audit and legal fees 40 19
Custodian fee 98 94
Directors' fees 5 3
Organization expense 8 --
Registration fees 32 21
Reports to shareholders 62 26
Other expenses 6 1
--------- ---------
4,269 924
Less fees waived -- (148)
--------- ---------
Total expenses, net of waivers 4,269 776
--------- ---------
Net Investment Income (Loss) (818) (171)
--------- ---------
Net Realized and Unrealized Gain (Loss) on Investments:
Realized gain (loss) on investments 8,963 1,138
Change in unrealized appreciation (depreciation) of investments 37,543 (11,908)
--------- ---------
Net Realized and Unrealized Gain (Loss) on Investments 46,506 (10,770)
- ----------------------------------------------------------------------------------------------------------------------
Change in Net Assets Resulting From Operations $ 45,688 $(10,941)
- ----------------------------------------------------------------------------------------------------------------------
<FN>
(A) Commencement of operations -- June 15, 1998.
(B) Net of foreign taxes withheld of $24 and $0, respectively.
</FN>
</TABLE>
See notes to financial statements.
30
<PAGE>
Statements of Changes in Net Assets
Legg Mason Investors Trust, Inc.
(Amounts in Thousands)
<TABLE>
<CAPTION>
U.S. Small-
American Leading Capitalization
Companies Trust Value Trust
----------------------------- -------------------
6/15/98(A)
Year Ended to
3/31/99 3/31/98 3/31/99
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Change in Net Assets:
Net investment income (loss) $ (818) $ (429) $ (171)
Net realized gain (loss) on investments 8,963 17,728 1,138
Change in unrealized appreciation (depreciation)
of investments 37,543 27,211 (11,908)
- ----------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations 45,688 44,510 (10,941)
Distributions to shareholders:
From net investment income:
Primary Class -- -- --
Navigator Class -- -- --
From net realized gain on investments:
Primary Class (8,688) (17,081) --
Navigator Class -- (7) --
Change in net assets from Fund share transactions:
Primary Class 51,631 68,104 69,295
Navigator Class (82) 15 50
- ----------------------------------------------------------------------------------------------------------------------------
Change in net assets 88,549 95,541 58,404
Net Assets:
Beginning of period 200,408 104,867 1
- ----------------------------------------------------------------------------------------------------------------------------
End of period $288,957 $200,408 $58,405
- ----------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income (loss) $ -- $ -- $ --
- ----------------------------------------------------------------------------------------------------------------------------
<FN>
(A) Commencement of operations.
</FN>
</TABLE>
See notes to financial statements.
31
<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
----------------------------------- --------------------------------------
From
Net Asset Net Net Realized Total 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 Distributions Year
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AMERICAN LEADING COMPANIES
-- Navigator Class
Years Ended Mar. 31,
1999(C) $17.95 $ .08 $.23 $.31 $-- $ (.46) $ (.46) $17.80
1998 14.71 .10(A) 4.99 5.09 -- (1.85) (1.85) 17.95
1997(D) 13.30 .07(A) 1.94 2.01 (.12) (.48) (.60) 14.71
U.S. SMALL-CAPITALIZATION VALUE TRUST
-- Navigator Class
Period Ended March 31,
1999(E) $ 9.92 $ .05(B) $(2.09) $(2.04) $-- $-- $-- $ 7.88
- ----------------------------------------------------------------------------------------------------------------------
</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
-- Navigator Class
Years Ended Mar. 31,
1999(C) 1.84%(F) .94%(A,G) .65%(A,G) 47.6%(G) $--
1998 36.68% .93%(A) .74%(A) 51.4% 82
1997(D) 15.16%(F) .86%(A,G) .98%(A,G) 55.7%(G) 55
U.S. SMALL-CAPITALIZATION VALUE TRUST
-- Navigator Class
Period Ended March 31,
1999(E) (20.56)%(F) .90%(B,G) .71%(B,G) 29.5%(G) $40
- ----------------------------------------------------------------------------------------------------------------------
<FN>
(a) Net of fees waived pursuant to a voluntary expense limitation of 0.95% 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 period October 4, 1996, to
March 31, 1997, for the year ended March 31, 1998 ,and for the period ended
December 3, 1998, would have been 0.97%, 0.98% and 0.95%, respectively.
(b) Net of fees waived pursuant to a voluntary expense limitation of 1.00% 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 19, 1998, to
March 31, 1999, would have been 1.28%.
(c) American Leading Companies Navigator shares were redeemed on December 3,
1998, and information is for the period then ended.
(d) For the period October 4, 1996 (commencement of sale of Navigator Class
shares) to March 31, 1997.
(e) For the period June 19, 1998 (commencement of sale of Navigator Class
shares) to March 31, 1999.
(f) Not annualized.
(g) Annualized.
</FN>
</TABLE>
See Notes to Financial Statements.
32
<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. 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. 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 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.
33
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
- -------------------------------------------------------------------------------
At March 31, 1999, receivables for securities sold and payables for
securities purchased for each Fund were as follows:
<TABLE>
<CAPTION>
Receivable for Payable for
Securities Sold Securities Purchased
- -------------------------------------------------------------------------------------------
<S> <C> <C>
American Leading Companies $-- $2,252
U.S. Small-Cap 31 --
</TABLE>
Deferred Organizational Expenses
Deferred organizational expenses of $89 for American Leading
Companies 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 substantially 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
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
U.S. Small-Cap 70,094 3,100 (15,008) (11,908)
</TABLE>
34
<PAGE>
- -------------------------------------------------------------------------------
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.
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 Management
Management Expense Expense Limitation Fees Fees
Fund Fee Limitation Expiration Date Waived Payable
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
American Leading Companies 0.75% 0.95% Indefinitely $ -- $194
U.S. Small-Cap 0.85% 1.00% July 31, 1999 148 --
</TABLE>
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, Inc. ("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 Service Distribution and Service
Fund Fee Fee Fees Payable
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
American Leading Companies 0.75% 0.25% $232
U.S. Small-Cap 0.75% 0.25% 50
</TABLE>
35
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
- -------------------------------------------------------------------------------
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; and U.S. Small-Cap, $14.
LMFA, Legg Mason and Brandywine are corporate affiliates and wholly
owned subsidiaries of Legg Mason, Inc.
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 for the Navigator Class of American Leading Companies
Trust, Balanced Trust and U.S. Small-Cap, respectively. The Navigator
Class of Balanced Trust has not commenced operations. 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>
American Leading Companies
--Navigator Class
Period Ended December 3, 1998 -- $-- -- $-- (5) $(82) (5) $(82)
Year Ended March 31, 1998 1 15 -- -- -- -- 1 15
U.S. Small-Cap
--Navigator Class
Period Ended March 31, 1999(A) 5 $50 -- $-- -- $-- 5 $50
<FN>
(a) For the period June 19, 1998 (commencement of sale of Navigator Class)
to March 31, 1999.
</FN>
</TABLE>
36
<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. (American Leading Companies Trust and U.S.
Small-Capitalization Value Trust) (the "Funds") as of March 31, 1999, and the
related statements of operations, the statements of changes in net assets and
the financial highlights (Navigator Class) for each of the periods indicated
therein. These financial statements and financial highlights are the
responsibility of the Funds' 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 Legg
Mason American Leading Companies Trust and Legg Mason U.S. Small-Capitalization
Value Trust at March 31, 1999, and the results of their operations, the changes
in their net assets and their financial highlights (Navigator Class) for each of
the periods indicated therein, in conformity with generally accepted accounting
principles.
Philadelphia,Pennsylvania
May 6, 1999
37
<PAGE>
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<PAGE>
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<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE>
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
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