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Previous: SAF T LOK INC, S-3, EX-23.2, 2000-08-17 |
Next: WEST HIGHLAND CAPITAL INC/LHG/WHP/PB/BP, SC 13G, 2000-08-17 |
<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 Financial Services Fund:
Legg Mason Fund Adviser, Inc.
Baltimore, MD
For U.S. Small-Cap Value Trust:
Brandywine Asset Management,Inc.
Wilmington, DE
Investment Sub-Adviser for Financial Services Fund
Gray, Seifert &Co., Inc.
New York, NY
Board of Directors
John F. Curley, Jr., Chairman
Edward A. Taber, III, President
Nelson A. Diaz
Richard G. Gilmore
Arnold L. Lehman
Dr. Jill E. McGovern
G. Peter O'Brien
T. A. Rodgers
Transfer and Shareholder Servicing Agent
Boston Financial Data Services
Boston, MA
Custodian
State Street Bank & Trust Company
Boston, MA
Counsel
Kirkpatrick & Lockhart LLP
Washington, D.C.
Independent 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 . 539 . 0000
LMF-013
8/00
Quarterly Report
June 30, 2000
Legg Mason
Investors
Trust, Inc.
American Leading
Companies Trust
Balanced Trust
U.S. Small-Cap
Value Trust
Financial Services
Fund
Primary Class and
Class A
[LM FUNDS LOGO]
The Art of Investing(SM)
<PAGE>
To Our Shareholders,
We are pleased to provide you with Legg Mason Investors Trust's quarterly
report for the Primary Class of the American Leading Companies Trust, the
Balanced Trust and the U.S. Small-Capitalization Value Trust, and for the
Primary Class and Class A of the Financial Services Fund.
The following table summarizes key statistics for the Primary Class of shares
of each Fund, as of June 30, 2000:
<TABLE>
<CAPTION>
3-Month 12-Month
Total Return/1/ Total Return/1/
--------------- ---------------
<S> <C> <C>
American Leading Companies Trust -.57% -10.31%
Balanced Trust -.21% +1.09%
U.S. Small-Capitalization Value Trust -2.68% -20.50%
Financial Services Fund
Primary Class +.54% -11.51%
Class A (including front-end sales charge) -4.00% -15.00%
Class A (excluding front-end sales charge) +.75% -10.78%
S&P 500 Stock Composite Index -2.66% +7.24%
Lipper Large-Cap Value Index -2.13% -2.38%
Lehman Brothers Intermediate Government/
Corporate Bond Index +1.69% +4.23%
Lipper Balanced Fund Index/2/ -1.20% +4.43%
Russell 2000 Index -3.78% +14.32%
Lipper Financial Services Fund Index -1.73% -11.08%
</TABLE>
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.
Sincerely,
/s/ Edward A. Taber, III
------------------------
Edward A. Taber, III
President
July 24, 2000
----------------
/1/Total return measures investment performance in terms of appreciation or
depreciation in net asset value per share plus dividends and any capital gain
distributions. It assumes that dividends and distributions were reinvested at
the time they were paid.
/2/The Lipper Balanced Fund Index is composed of approximately 30 funds whose
primary objective is to conserve principal by maintaining a balanced
portfolio of stocks and bonds with stock/bond ratio ranges of approximately
60%/40%.
<PAGE>
Portfolio Managers' Comments
American Leading Companies Trust
Market Commentary
The stock market's extraordinary volatility, which we discussed in our first
quarter shareholder's letter, continued in the second quarter of 2000. The
technology-dominated NASDAQ Composite started the year at 4,069, was up as much
as 24% to 5,049 by March 10th, then fell 37% to 3,165 on May 23rd, before
recovering to finish the first half at 3,966, down 2.5%. The Dow Industrials and
S&P 500 Index were not as volatile as the NASDAQ, but still covered a lot of
ground. The Dow was up as much as 2% on January 14th, down as much as 14.6% by
March 7th, before rallying a bit to finish down 8.4% for the first half. The S&P
500 fluctuated between a low of 1,333 (-9.1%) on February 25th and a high of
1,527 (+4.3%) on March 24th, before closing at 1,455, down 1% (before dividends)
for the six months. We think it is notable that after considerable gyration all
three major indexes posted negative returns during the period.
The market's leadership rotated sharply in the second quarter -- away from
technology and toward health care and consumer staples. Within the S&P 500
industry groups, medical supplies, pharmaceuticals, beverages, tobacco, and food
all outperformed by a wide margin, while telecom equipment, software and
networking all trailed badly. One explanation for this sea change in relative
performance is a heightened sense of uncertainty about the macro economic
environment. Questions abounded. When would economic growth slow? How much of an
earnings slowdown would we see? When and at what level would interest rates
peak? Given the uncertainty, many investors apparently decided that a more
defensive posture was appropriate.
The problem for the equity markets in general has been rising interest rates.
For the past year the Federal Reserve has been tightening monetary policy in an
effort to slow the growth of aggregate demand. The latest data suggest that
rising rates are beginning to bite. Housing activity has slowed, as have car
sales. Overall retail spending has decelerated sharply in the last three months.
After an extraordinary surge in retail sales in the first quarter, sales grew at
a modest 1.4% in the June quarter. The slowdown in consumer spending should take
real GDP growth in the second quarter down to about 3.6% from the robust 5.5%
posted in the first quarter. That 3.6% rate is right in the 3.5% to 4.0% range
that Fed officials now seem to believe is sustainable for the economy.
With economic growth slowing, there is less pressure on the Fed to continue
raising short-term interest rates. This conclusion is reinforced by the latest
data on producer prices. Outside of the energy sector, there appears to be
little inflation pressure building. The core producer price index (PPI) fell
0.1% in June and is up at an annual rate of only 1.0% in the first half of this
year. Wage pressures are being largely offset by continued strong productivity
growth. With consumer spending slowing and underlying inflation apparently
reasonably well contained, we believe the Federal Reserve was fully justified in
not raising rates further at its late June meeting. Another 25 basis point/1/
hike in the Fed Funds rate is possible, but unlikely in our opinion, at the
Fed's August meeting. Following the August meeting, we believe the Fed will put
monetary policy on hold until after the Presidential election.
With monetary policy likely on hold, the key risk for the market becomes
earnings, or more precisely, the possibility of a widespread earnings slowdown.
Overall corporate earnings growth up to now
----------
/1/100 basis points = 1%.
2
<PAGE>
has been good, though recently not as good as it appears, if one factors out the
huge positive swing in the earnings of energy companies. S&P 500 operating
earnings are expected to be up about 12% year-over-year in the second quarter of
2000, but only 7% if energy and commodities are excluded. While still
respectable, these growth rates represent a slowdown from the nearly 20%
earnings growth recorded last year and in the first quarter of 2000.
Importantly, second quarter earnings growth also represents a disappointment
from prior expectations. As most investors are painfully aware, companies that
fail to meet earnings expectations regularly see their stocks drop 20% or 30% or
even 40% on the news. With an economic slowdown in prospect, the risk of future
disappointments is rising.
Investment Results
Results for the American Leading Companies Trust for the three-month, six-
month, one-year, three-year and five-year periods ended June 30, 2000, are
listed below, along with those of some representative benchmarks:
<TABLE>
<CAPTION>
Three Six One Three Five
Months Months Year Years Years
------------------------------------------------
<S> <C> <C> <C> <C> <C>
American Leading Companies -0.57% -2.86% -10.31% +30.11% +115.35%
S&P 500 Composite Index -2.66% -0.42% +7.24% +71.35% +190.84%
Lipper Large-Cap Value Index -2.13% -1.99% -2.38% +40.73% +125.80%
Dow Jones Industrial Average -3.98% -8.44% -3.27% +43.06% +152.16%
</TABLE>
The Fund had a respectable quarter, bettering the S&P 500, the Lipper Large-
Cap Value Funds Index and the Dow Industrials for the three months. For the
calendar year to date, the Fund bested the Dow Industrials, but trailed the S&P
500 and its peer group index. One-year, three-year and five-year comparisons
show the Fund lagging market benchmarks and its peer group. Shareholders should
note that during the quarter, Lipper moved the Fund from its Large-Cap Core Fund
classification to its Large-Cap Value Fund group. While the Fund currently has a
bit more of a "value" tilt than normal, this will not necessarily always be the
case. On a longer-term basis, we believe the Large-Cap Core classification is
more appropriate, but since we have no control over Lipper's fund classification
scheme, we have adopted Lipper's new designation and peer group here to avoid
confusion.
As noted above, health care was among the best performing sectors in the
second quarter, and the Fund's overweighted position in that area was the
principal reason that the Fund outperformed its benchmark in the quarter.
Technology and telecommunications stocks were generally weak during the quarter,
as were the retailers. Strong performers in the portfolio during the second
quarter included: Foundation Health Systems, Inc., Avon Products Inc., Johnson &
Johnson, UnitedHealth Group Incorporated, Waste Management Inc., Schering Plough
Corp., Starwood Hotels & Resorts, Mellon Financial Corporation, Merck & Co. Inc.
and Hewlett Packard Company. Portfolio laggards included: Tommy Hilfiger Corp.,
Amazon.com Inc., AT&T Corp., Unisys Corp., General Motors Corp., Microsoft
Corporation, Bank One Corp., America Online Inc., Chase Manhattan Corp., and
Bank of America Corporation.
3
<PAGE>
Portfolio Managers' Comments -- Continued
American Leading Companies Trust -- Continued
Outlook
In our judgment, the weight of available evidence suggests that economic
growth is slowing and will slow further in the second half of 2000. At this
point, we see no evidence that the slowdown will turn into a recession. We
believe that the Fed also thinks that economic growth is slowing and has put
monetary policy on hold for the time being.
If, as we expect, no further interest rate increases are in prospect in the
near future, that would be a positive for the equity market, particularly those
sectors, such as financials, which are interest rate sensitive. As a possible
offset to the more favorable interest rate environment that we envision, we also
see the increasing risk of a generalized slowdown in corporate profits. Such a
slowdown is already discounted in many sectors of the market and thus does not
represent as great a risk. We see the risk of disappointment as being highest
where valuations are at extreme levels and where expectations are
unrealistically high.
As always, the question for investors remains: where are the best values in
the market? Five years ago, growth was undervalued and technology was
particularly undervalued. After years of spectacular outperformance, we think
that technology in general is at best fairly valued and that many (but not all)
of the largest, most visible technology names are greatly overpriced.
In contrast, outside of the technology arena, many stocks appear undervalued,
with the median price-earnings ratio of the 1,700 stocks in the Value Line index
at only 13.3x earnings. The reappearance of dormant former corporate raiders
such as Carl Icahn and the formation of numerous buyout funds testify to the
opportunities presented by modest valuations in many "old economy" companies.
In closing, we believe that the blow-off and subsequent decline that occurred
in technology and internet stocks in March is a healthy development which has
led to a far less "one dimensional" market than existed last year and in the
first two months of this year. We believe that valuation has begun to matter
again in stock selection, and that bodes well for our style of investment.
As ever, we welcome your comments or questions.
David E. Nelson, CFA
July 26, 2000
DJIA 10699.97
4
<PAGE>
Portfolio Managers' Comments
Balanced Trust
Equity
Like a favorite roller coaster, the stock market provided equal doses of
exhilaration and horror during the first half of 2000, before ending roughly
where it started the year. For "dot.com" enthusiasts, exhilaration came first
and horror later, while for value-oriented investors the sequence was reversed.
The equity segment of the Balanced Trust outpaced the S&P 500 Index during the
quarter, and closed the first half with a 3.7% gain compared to a slight loss
for the index. This satisfying result is certainly in keeping with the
historical resilience of value investing during difficult market periods.
At mid-year some analysts are concerned about an apparent slowing of corporate
profit growth. A number of industry leaders, including Amazon.com, Computer
Associates, Costco Wholesale, Honeywell, and Wachovia recently disclosed
disappointing profit forecasts. This has prompted a reassessment of previously
optimistic growth assumptions, with market volatility rising significantly as
different sectors "rotate" into or out of favor. Careful fundamental analysis is
more crucial than ever, and we are diligently monitoring our companies.
During the second quarter, we initiated one new equity position while
opportunistically increasing or decreasing other holdings. Guidant is new to the
fund. The company is a leader in cardiovascular devices and has a promising new
product pipeline. Concerns about new competition in one of their product lines
prompted a 35% swoon from the March high of $75, and we purchased stock in May
and June at prices below $50.
Disappointing earnings projections from AT&T and the cloud of uncertainty
hanging over the WorldCom-Sprint merger approval caused a rout in the
telecommunications sector. Judging this to be a nice buying opportunity, we
added to our investments in Broadwing and WorldCom. We think both companies are
poised to benefit from continued high growth of data revenues. Meanwhile, Home
Depot and McDonald's traded lower on concerns about interest rates and exchange
rates, and we added to our positions in these excellent consumer growth
companies.
Most of our cutbacks during the latest quarter were completed in order to
raise funds for the aforementioned purchases. In a few cases, we cut back
positions in order to control risk. We like to let our winners run but will
selectively reduce as positions move to 5% or greater. We sold portions of the
following investment positions during the last three months: Anheuser-Busch,
Charter One Financial, Citigroup, Cintas, Disney, Fannie Mae, Martin Marietta
Materials, and SYSCO.
The stock market is fickle, and the short-term trend is bewilderingly random.
In this age of day trading and escalating market volatility, our investment
philosophy remains securely anchored to a simple yet enduring foundation: Common
------
stocks are not merely pieces of paper. They represent shared ownership of a
---------------------------------------------------------------------------
business. Though their value in the short run is totally unpredictable, in the
------------------------------------------------------------------------------
long haul prices will parallel business performance. Our companies are thriving.
----------------------------------------------------
Many are following solid earnings performance with healthy dividend increases,
stock repurchases, and strategic acquisitions. This is creating long-term value
for shareholders, and we're encouraged by it. While we own a diversified
collection of excellent industry leaders, we will be opportunistic if market
volatility allows us to upgrade into even better companies.
During the three months ended June 30, 2000, the fixed income portion of the
Fund sustained its outperformance versus its benchmark, the Lehman Intermediate
Government/Corporate Index. For the quarter, rates along the yield curve
remained virtually unchanged, even in the face of additional
5
<PAGE>
Portfolio Managers' Comments -- Continued
Balanced Trust -- Continued
tightening by the Federal Reserve Board. The key to outperforming the index
during the quarter was primarily based upon favorable sector and/or security
allocation. Our continued overweight position in mortgage-backed securities and
underweight position in longer-dated corporate bonds were the main factors
contributing to the Fund's fixed income segment performance.
In our March 31 portfolio manager's comments, we reiterated our view that
inflation "would remain comparatively benign, and that economic growth, in and
of itself, does not have any bearing on inflation." Further, we expressed the
view that the current inverted yield curve was, in large measure, attributable
to a Federal Reserve policy that was too tight relative to the market's view of
inflation. Recently, as Alan Greenspan has put any future interest rate hikes on
hold pending additional evidence on the strength of the economy, the market, as
a whole, has adopted a more constructive tone and yields have headed toward the
low end of the trading range that has persisted for some time. This movement, in
turn, has led more investors to the so-called spread assets, specifically,
corporate bonds, mortgage-backed securities and agency securities, leading to
favorable performance in these sectors.
With regard to portfolio allocation, during the quarter we sold the remainder
of our inflation-indexed notes, which had performed admirably since we initiated
this position. We also reduced the Fund's holding in Treasury STRIPS, which had
also performed exceptionally well during their holding period. On the buy side,
we increased our holding of Federal National Mortgage Association (Fannie Mae)
debentures, as we believed that the market had over-discounted the political
threats that may or may not arise over the next one-to-two years. In addition,
we initiated a position in the convertible bonds of Waste Management and Hilton
Hotels, which have final maturities of two and six years, respectively. We were
able to acquire both these securities at yields to maturity that are comparable
to their straight debt; thus, we are receiving a call on the common stock "for
free." With the stock of both of these companies selling at the low end of their
price ranges, we believe that these securities have considerable upside
potential with minimum downside risk.
Finally, we are beginning to increase our exposure to select corporate bonds,
as in certain cases we believe that the widening of spreads has been overdone.
We must emphasize, however, that we believe we are in the end stage of the
current economic expansion and that many companies have their best earnings
prospects behind them rather than ahead of them. This, coupled with the fact
that we believe that concerns about event risk are well founded, leads us to
avoid such industries as telecommunications and food, as well as the debt of
those companies that could potentially be involved in restructuring, leveraged
buyouts, and/or other takeovers -- all of which historically have not favored
the bondholder.
Looking forward, we remain optimistic about the fixed income markets, and,
would not be surprised to see the Fed reverse its tightening course,
particularly, if evidence of a slowing economy becomes more pervasive.
As always, we appreciate your continued support.
James B. Hagerty, CFA Dale H. Rabiner, CFA
Peter A. Sorrentino,CFA Fixed Income Portfolio Manager
Equity Portfolio Managers
August 7, 2000
DJIA 10867.01
6
<PAGE>
Portfolio Managers' Comments
U.S. Small-Capitalization Value Trust
For the quarter, the Fund returned -2.7%, compared to a gain of +2.0% for the
Russell 2000 Value and losses of -3.8% for the Russell 2000 and -2.7% for the
S&P 500. Year to date, the Fund is down -8.8%, while the Russell 2000 Value has
gained +5.9%, the Russell 2000 is up +3.0% (well below its high this year), and
the S&P is down -0.4%.
U.S. equity markets remained volatile in the second quarter as investors tried
to anticipate both the U.S. economy's direction and the Federal Reserve Board's
interest rate policy. In June, growing evidence accumulated that recent Fed
hikes in short-term rates had begun to slow economic activity as retail sales,
auto purchases and home buying all decelerated. Investors speculated on whether
this nascent slowdown represented the start of a "soft landing," in which growth
moderates to avoid igniting higher inflation, or the onset of a "hard landing,"
in which the economy slumps faster than the Fed intends, even into recession. By
quarter end, the market consensus was that recent Fed action had caused the
desired cooling of the economy without significantly impairing growth, and that
the Fed would limit further rate increases.
During the quarter, technology stocks again dominated U.S. equity market
returns and remained the highest profile sector. Investors continued to pull
back from the extended valuations in the sector following their dramatic rise in
1999 and early 2000. Disappointing news, particularly among Internet retailers,
as well as concerns about the Microsoft anti-trust case's impact on the
industry, led to sharp technology price declines, though these stocks did recoup
some of their losses in June. Many of these stocks have no earnings and their
strong performance in 1999 and early 2000 was based on speculation that the
companies would benefit generously from the Internet's success. However, early
experience indicates that the Internet is a highly competitive marketplace and
most companies will have much greater difficulty generating attractive profits
than originally anticipated. Small-cap value stocks, meanwhile, experienced much
smaller performance swings in the quarter. These stocks and their very
attractive valuations have been largely ignored as growth stocks moved sharply
up and down.
The Fund performed well when value led the market, which we identify as days
in which the Russell 2000 Value Index return is ahead of the Russell 2000. On
these days, the Fund beat the Russell 2000 Value Index by an average of 40 basis
points/1/ per day. This relationship highlights the substantial return potential
in the Fund's portfolio when value stocks show strength.
The largest benefit to the Fund's relative performance was the technology
sector's poor return for the quarter. Our very low exposure to the overvalued
tech stocks helped performance as these stocks retreated during the quarter.
Biotechs rallied strongly in June, despite their extended valuations, so our
underweighting had a negative impact on relative performance. Our above-
benchmark weighting in economically sensitive areas, such as retailing, home
building and producer manufacturing, also
--------------
/1/100 basis points = 1%.
7
<PAGE>
Managers' Comments -- Continued
U.S. Small-Capitalization Value Trust -- Continued
hurt returns as these sectors reacted negatively to the possibility of a slowing
economy. Other positive sectors included finance, where the portfolio's smaller
banks and insurance companies held up well despite higher interest rates, and
utilities, which were hit harder by rising rates while the Fund held a below-
benchmark weighting.
On June 30, Russell conducted the annual rebalancing of its indices. Since the
last rebalancing in June 1999, the strong tech and biotech stock returns had
resulted in a Russell 2000 Value Index with some unusual sector weightings (for
a value index), as well as a number of mid-cap holdings. With the current
rebalancing, these unsuitable stocks were removed from the index and the
portfolio characteristics have changed. The index's technology weight dropped by
over half from 14.2% to 6.4%, and finance rose from 25.7% to 31.5%. The average
cap dropped from $950 million to $770 million and the largest stock dropped from
$5.9 billion to $2.4 billion. These adjustments should make the Russell 2000
Value Index more truly representative of small-cap value stocks.
While small-cap growth stocks, particularly tech and biotech, have produced
volatile returns over the last 18 months, small-cap value stocks have had more
stable returns. This relative stability has caused value to lag when the growth
stocks were strongest, such as in the second half of 1999 and again in June
2000. When growth stocks' prices contracted, value performed well, such as in
the March through May period when the Russell 2000 fell -17.3%, the Russell 2000
Value was off -0.5%, and the Fund was up. Because the stocks we invest in are at
valuation discounts cheaper than any time in the last 20 years, they can offer
more than just defensive performance -- they can provide market-leading returns.
These stocks have done so in the past following periods of weak performance. Two
significant triggers exist for improved value performance. The first is the
approaching end to Fed rate increases, signaling lower interest rates and
lifting doubts about continued economic expansion. The second trigger would be
continued disappointments from the Internet companies, such as more firm
closings, further difficulties obtaining financing and additional employee
reductions. Either of these two events should lead investors to expand their
focus from solely growth to include the undervalued market segment. Significant
increased interest in small-cap value stocks would generate strong performance,
since these stocks can appreciate rapidly as new funds flow into the asset
class.
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 F. Otto
Steven M. Tonkovich
Managing Directors
August 7, 2000
DJIA 10867.01
8
<PAGE>
Portfolio Managers' Comments
Financial Services Fund
For the six months ended June 30, 2000, the Legg Mason Financial Services Fund
returned -1.91% for Primary Class shares and -1.48% for Class A shares. By way
of comparison with our benchmarks, the Lipper Financial Services Fund Index was
down -1.54%, the S&P 500 was down -0.42%, and the S&P Financial Index was down
-0.50% for the same period. Although this performance is not exciting, we are
not upset as we continue to operate in a very difficult environment. The market
sell-off in April allowed us to buy some larger-cap financial names at very
attractive prices. We have been hurt by owning smaller-cap names and have
attempted to rebalance the portfolio.
We are more optimistic than we have been in a while. At the very least, the
Federal Reserve has done its job and that, combined with higher fuel prices,
ensures an economic slowdown. We are keeping our fingers crossed that there
will be no recession. Once the seemingly endless interest rate increases stop,
the biggest negative factor will be removed from the group and they can begin to
trade on fundamentals again. The other technical negative surrounding financial
stocks has been the outflow of money from all sectors of the market into
technology. The NASDAQ's decline from 5,000 left the dot.com companies gasping
for breath, and we saw some of this money flow into the more value-oriented
sectors of the market. While we do not see a mass exodus out of the tech
sector, we feel investor sentiment has changed, which should benefit financial
stocks, as investors begin to diversify their holdings.
We have made significant changes in the Fund over the past six months to give
us a better representation in what we feel will be the stocks that benefit from
the money coming out of the tech sector. We bought Citigroup, AXA Financial,
Affiliated Managers Group, and Neuberger Berman, and sold Merrill Lynch, Lehman
Brothers and Bank One. We also had four takeovers: ReliaStar, which was sold
to the Dutch Insurer ING; Paine Webber, which went to UBS; and Ragen McKenzie
and National Bancorp of Alaska, both of which were bought by Wells Fargo. We
feel there will be more mergers over the balance of the year, especially among
the asset management companies.
Thank you for your patience; we are looking forward to a better second half.
Amy LaGuardia, CFA
Miles Seifert
Co-Portfolio Managers
August 7, 2000
DJIA 10867.01
9
<PAGE>
Performance Information
Legg Mason Investors Trust, Inc.
Total Returns for One Year, Five Years, and Life of Class, as of June 30, 2000
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 net asset value per share, plus
dividends and any capital gain distributions. It assumes that dividends and
distributions were reinvested at the time they were paid. The investment
return and principal value of an investment in each of these Funds will
fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost. Average annual returns tend to smooth out
variations in a Fund's return, so that they differ from actual year-to-year
results. No adjustment has been made for any income taxes payable by
shareholders.
Each Fund offers two classes of shares:Primary Class and Navigator Class.
Financial Services Fund also offers Class A shares. The Navigator Classes of
American Leading Companies and Balanced Trust are not currently active.
Information about Navigator Class, offered only to certain institutional
investors, is contained in a separate report to its shareholders.
The Funds' total returns as of June 30, 2000, were as follows:
<TABLE>
<CAPTION>
Financial Services Fund
-----------------------------------
Including Excluding
American Leading Balanced U.S. Small-Cap Maximum Maximum
Companies Trust Trust Value Trust Sales Charge/A/ Sales Charge/A/
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Average Annual Total Return
Primary Class:
One Year -10.31% +1.09% -20.50% N/A -11.51%
Five Years +16.58% N/A N/A N/A N/A
Life of Class/B/ +13.25% +7.76% -13.02% N/A -4.82%
Class A:
One Year N/A N/A N/A -15.00% -10.78%
Life of Class/C/ N/A N/A N/A -6.90% -4.06%
Cumulative Total Return
Primary Class:
One Year -10.31% +1.09% -20.50% N/A -11.51%
Five Years +115.35% N/A N/A N/A N/A
Life of Class/B/ +134.07% +32.35% -24.80% N/A -7.70%
Class A:
One Year N/A N/A N/A -15.00% -10.78%
Life of Class/C/ N/A N/A N/A -10.95% -6.50%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/A/Class A shares are subject to a front-end sales charge which varies depending
on the purchase amount. The maximum charge is 4.75% and it is reduced as the
purchase amount increases. See the prospectus for additional information.
/B/Primary Class inception dates are:
American Leading Companies Trust -- September 1, 1993
Balanced Trust -- October 1, 1996
U.S. Small-Cap Value Trust -- June 15, 1998
Financial Services Fund -- November 16, 1998
/C/Financial Services Fund Class A inception date is November 16, 1998.
10
<PAGE>
American Leading Companies Trust
Selected Portfolio Performance*
<TABLE>
<CAPTION>
Strong performers for the 2nd quarter 2000 Weak performers for the 2nd quarter 2000
--------------------------------------------- ------------------------------------------
<S> <C>
1. Foundation Health Systems, Inc. +62.5% 1. Tommy Hilfiger Corporation -48.3%
2. Avon Products, Inc. +53.1% 2. Amazon.com, Inc. -45.8%
3. Johnson & Johnson +45.4% 3. AT&T Corporation -43.8%
4. UnitedHealth Group Incorporated +43.8% 4. Unisys Corporation -42.9%
5. Waste Management Inc. +38.8% 5. General Motors Corporation -29.9%
6. Schering-Plough Corporation +37.4% 6. Microsoft Corporation -24.7%
7. Starwood Hotels & Resorts 7. Bank One Corporation -22.7%
Worldwide, Inc. +24.0% 8. America Online, Inc. -21.6%
8. Mellon Financial Corporation +23.5% 9. The Chase Manhattan
9. Merck & Co., Inc. +23.3% Corporation -20.8%
10. Hewlett-Packard Company +20.7% 10. Bank of America Corporation -18.0%
</TABLE>
* Securities held for the entire quarter.
Portfolio Changes
<TABLE>
<CAPTION>
Securities added during the 2nd quarter 2000 Securities sold during the 2nd quarter 2000
--------------------------------------------- ------------------------------------------
<S> <C>
The FINOVA Group Inc. Berkshire Hathaway - Class A
Equity Office Properties Trust
Minnesota Mining and Manufacturing
Company (3M)
Sabre Holdings Corporation
Sprint Corporation
</TABLE>
11
<PAGE>
Performance Information -- Continued
Balanced Trust
Selected Portfolio Performance*
<TABLE>
<CAPTION>
Strong performers for the 2nd quarter 2000 Weak performers for the 2nd quarter 2000
-------------------------------------------- ---------------------------------------------
<S> <C>
1. Johnson & Johnson +45.4% 1. AT&T Corporation -43.8%
2. Abbott Laboratories +26.6% 2. Broadwing Inc. -30.3%
3. Mellon Financial Corporation +23.5% 3. Marshall & Ilsley Corporation -28.1%
4. Merck & Co., Inc. +23.3% 4. Microsoft Corporation -24.7%
5. Anheuser-Busch Companies, Inc. +20.0% 5. Time Warner, Inc. -24.0%
6. SYSCO Corporation +18.0% 6. The Home Depot, Inc. -22.6%
7. Emerson Electric Co. +14.2% 7. Dover Corporation -15.3%
8. Chateau Communities, Inc. +10.8% 8. Martin Marietta Materials, Inc. -14.9%
9. Charter One Financial, Inc. +9.5% 9. McDonald's Corporation -12.3%
10. Nortel Networks Corporation +8.3% 10. Dell Computer Corporation -8.6%
</TABLE>
* Securities held for the entire quarter.
Portfolio Changes
<TABLE>
<CAPTION>
Securities added during the 2nd quarter 2000 Securities sold during the 2nd quarter 2000
-------------------------------------------- ---------------------------------------------
<S> <C>
Fannie Mae, 7.125%, 2/15/05 Atlantic Richfield Company (ARCO)
Guidant Corporation U.S. Treasury Inflation-Indexed
Hilton Hotels Corp., 5.00%, 5/15/06 Security, 3.625%, 1/15/08
Waste Management Inc., 4.00%, 2/1/02
</TABLE>
12
<PAGE>
U.S. Small-Capitalization Value Trust(dagger)
Selected Portfolio Performance*
<TABLE>
<CAPTION>
Strong performers for the 2nd quarter 2000 Weak performers for the 2nd quarter 2000
------------------------------------------------ ------------------------------------------------
<S> <C>
1. ASI Solutions Incorporated +109.38% 1. Magellan Health Services, Inc. -74.03%
2. The Lamson & Sessions Co. +105.88% 2. USBANCORP, Inc. -68.33%
3. The First Years Inc. +60.36% 3. Comdial Corporation -66.19%
4. Pediatrix Medical Group, Inc. +60.34% 4. Home Products International, Inc. -65.17%
5. FTI Consulting, Inc. +58.49% 5. Travis Boats & Motors, Inc. -58.49%
6. Ladish Co., Inc. +56.00% 6. Systemax, Inc. -57.53%
7. Lakeland Industries, Inc. +53.85% 7. EZCORP, Inc. -55.56%
8. Chromcraft Revington, Inc. +52.46% 8. ProMedCo Management Company -55.13%
9. Lennox International Inc. +51.43% 9. CKE Restaurants, Inc. -52.94%
10. Penn Engineering & 10. Personal Group of America, Inc. -52.04%
Manufacturing Corp. - Class A +50.88%
</TABLE>
(dagger)Portfolio changes have not been reported for U.S. Small-Cap due to the
heavy volume of trading during the quarter.
*Securities held for the entire quarter.
13
<PAGE>
Performance Information -- Continued
Financial Services Fund
Selected Portfolio Performance*
<TABLE>
<CAPTION>
Strong performers for the 2nd quarter 2000 Weak performers for the 2nd quarter 2000
---------------------------------------------- ---------------------------------------------
<S> <C>
1. Neuberger Berman Incorporated +65.0% 1. Hooper Holmes, Inc. -53.4%
2. Eli Lilly & Company +58.5% 2. Synopsys Inc. -29.1%
3. Johnson & Johnson +45.4% 3. Marshall & Ilsley Corporation -28.1%
4. Jack Henry & Associates, Inc. +35.9% 4. Pacific Century Financial
5. Cascade Bancorp +31.6% Corporation -28.0%
6. Pfizer Inc. +31.3% 5. The Home Depot, Inc. -22.6%
7. The Kroger Co. +25.6% 6. Target Corporation -22.4%
8. Walgreen Co. +25.0% 7. SunTrust Banks, Inc. -20.9%
9. UnumProvident Corporation +18.0% 8. Wachovia Corporation -19.7%
10. StanCorp Financial Group, Inc. +17.3% 9. Bank of America Corporation -18.0%
10. BancWest Corporation -16.8%
</TABLE>
*Securities held for the entire quarter.
Portfolio Changes
<TABLE>
<CAPTION>
Securities added during the 2nd quarter 2000 Securities sold during the 2nd quarter 2000
---------------------------------------------- -------------------------------------------
<S> <C>
Affiliated Managers Group, Inc. Bank One Corporation
CVB Financial Corp. Community First Bankshares, Inc.
The BISYS Group, Inc. Lehman Brothers Holdings Inc.
MCI WorldCom, Inc.
ReliaStar Financial Corp.
SLM Holding Corporation
</TABLE>
14
<PAGE>
Portfolio of Investments
Legg Mason Investors Trust, Inc.
June 30, 2000 (Unaudited)
(Amounts in Thousands)
American Leading Companies Trust
<TABLE>
<CAPTION>
Shares/Par Value
------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stock and Equity Interests -- 98.4%
Capital Goods -- 3.9%
Electrical Equipment -- 1.7%
General Electric Company 90 $ 4,770
--------
Waste Management -- 2.2%
Waste Management Inc. 330 6,270
--------
Communications Services -- 8.2%
Telecommunications (Long Distance) -- 3.8%
AT&T Corporation 150 4,744
Qwest Communications International Inc. 120 5,962/A/
--------
10,706
--------
Telephone -- 4.4%
US WEST, Inc. 36 3,087
WorldCom, Inc. 205 9,404/A/
--------
12,491
--------
Consumer Cyclicals -- 10.7%
Auto Parts and Equipment -- N.M.
Visteon Corporation 7 79/A/
--------
Automobiles -- 1.6%
Ford Motor Company 50 2,150
General Motors Corporation 40 2,322
--------
4,472
--------
Lodging/Hotels -- 2.1%
Starwood Hotels & Resorts Worldwide, Inc. 185 6,024
--------
Retail (General Merchandise) -- 1.4%
Wal-Mart Stores, Inc. 70 4,034
--------
Retail (Home Shopping) -- 1.7%
Amazon.com, Inc. 130 4,721/A/
--------
Retail (Specialty-Apparel) -- 2.0%
The TJX Companies, Inc. 300 5,625
--------
Retail (Specialty) -- 1.4%
Toys "R" Us, Inc. 273 3,976/A/
--------
Textiles (Apparel) -- 0.5%
Tommy Hilfiger Corporation 194 1,456/A/
--------
</TABLE>
15
<PAGE>
Portfolio of Investments -- Continued
Legg Mason Investors Trust, Inc.
American Leading Companies Trust -- Continued
<TABLE>
<CAPTION>
Shares/Par Value
------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Consumer Staples -- 5.7%
Distributors (Food and Health) -- 1.4%
McKesson HBOC, Inc. 190 $ 3,978
--------
Food -- 0.5%
Sara Lee Corporation 80 1,545
--------
Household Products (Non-Durables) -- 1.0%
Kimberly-Clark Corporation 50 2,869
--------
Personal Care -- 1.6%
Avon Products, Inc. 100 4,450
--------
Retail (Food Chains) -- 1.2%
Albertson's, Inc. 100 3,325
--------
Financials -- 28.9%
Banks (International) -- 2.1%
Lloyds TSB Group plc 640 6,043
--------
Banks (Major Regional) -- 3.4%
Bank One Corporation 256 6,800
Mellon Financial Corporation 78 2,842
--------
9,642
--------
Banks (Money Center) -- 4.8%
Bank of America Corporation 99 4,257
The Chase Manhattan Corporation 200 9,189
--------
13,446
--------
Financial (Diversified) -- 7.8%
Citigroup Inc. 225 13,556
Fannie Mae 90 4,697
The FINOVA Group Inc. 300 3,900
--------
22,153
--------
Insurance (Life/Health) -- 0.7%
Conseco, Inc. 210 2,048
--------
Insurance (Property/Casualty) -- 6.8%
Berkshire Hathaway Inc. - Class B 6 10,560/A/
MGIC Investment Corporation 188 8,568
--------
19,128
--------
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Shares/Par Value
------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Financials -- Continued
Savings and Loan Companies -- 3.3%
Washington Mutual, Inc. 327 $ 9,442
--------
Health Care -- 16.6%
Health Care (Diversified) -- 3.0%
Bristol-Myers Squibb Company 85 4,951
Johnson & Johnson 35 3,566
--------
8,517
--------
Health Care (Drugs/Major Pharmaceuticals) -- 3.6%
Merck & Co., Inc. 78 5,977
Schering-Plough Corporation 80 4,040
--------
10,017
--------
Health Care (Managed Care) -- 10.0%
Aetna Inc. 96 6,175
Foundation Health Systems, Inc. 650 8,450/A/
UnitedHealth Group Incorporated 160 13,720
--------
28,345
--------
Technology -- 23.4%
Computers (Hardware) -- 9.6%
Dell Computer Corporation 30 1,479/A/
Gateway, Inc. 200 11,350/A/
Hewlett-Packard Company 28 3,497
International Business Machines Corporation 100 10,956
--------
27,282
--------
Computers (Software/Services) -- 6.8%
America Online, Inc. 204 10,761/A/
Microsoft Corporation 70 5,600/A/
Unisys Corporation 202 2,949/A/
--------
19,310
--------
Electrical Equipment -- 2.1%
Koninklijke (Royal) Philips Electronics N.V. 125 5,938
--------
Electronics (Semiconductors) -- 2.4%
Intel Corporation 50 6,684
--------
Photography/Imaging -- 2.5%
Eastman Kodak Company 120 7,140
--------
</TABLE>
17
<PAGE>
Portfolio of Investments -- Continued
Legg Mason Investors Trust, Inc.
American Leading Companies Trust -- Continued
<TABLE>
<CAPTION>
Shares/Par Value
------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Transportation -- 1.0%
Airlines -- 0.4%
AMR Corporation 45 $ 1,190/A/
--------
Railroads -- 0.6%
Burlington Northern Santa Fe Corporation 70 1,605
--------
Total Common Stock and Equity Interests (Identified Cost -- $226,331) 278,721
------------------------------------------------------------------------------------------------------------------
Repurchase Agreements -- 2.0%
Bank of America
6.82%, dated 6/30/00, to be repurchased at $2,811 on 7/3/00
(Collateral: $3,135 Freddie Mac mortgage-backed securities,
6.00%, due 9/1/28, value $2,885) $ 2,809 2,809
Goldman, Sachs & Company
6.82%, dated 6/30/00, to be repurchased at $2,811 on 7/3/00
(Collateral: $2,845 Fannie Mae mortgage-backed securities,
8.50%, due 10/1/28, value $2,916) 2,810 2,810
--------
Total Repurchase Agreements (Identified Cost -- $5,618) 5,619
------------------------------------------------------------------------------------------------------------------
Total Investments -- 100.4% (Identified Cost -- $231,949) 284,340
Other Assets Less Liabilities -- (0.4)% (1,012)
--------
Net assets -- 100.0% $283,328
========
Net asset value per share:
Primary Class $18.49
======
------------------------------------------------------------------------------------------------------------------
</TABLE>
/A/Non-income producing.
N.M.--Not meaningful.
18
<PAGE>
Portfolio of Investments
Legg Mason Investors Trust, Inc.
June 30, 2000 (Unaudited)
(Amounts in Thousands)
Balanced Trust
<TABLE>
<CAPTION>
Shares/Par Value
------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks and Equity Interests -- 61.6%
Auto Parts and Equipment -- 0.1%
Visteon Corporation 2 $ 27/A/
--------
Automobiles -- 2.0%
Ford Motor Company 17 731
--------
Banking -- 1.2%
Marshall & Ilsley Corporation 10 415
--------
Banks (Major Regional) -- 1.9%
Mellon Financial Corporation 19 692
--------
Beverages -- 1.7%
Anheuser-Busch Companies, Inc. 8 598
--------
Communications Equipment -- 3.1%
Lucent Technologies, Inc. 8 474
Nortel Networks Corporation 9 641
--------
1,115
--------
Computers (Hardware) -- 3.4%
Dell Computer Corporation 14 680/A/
International Business Machines Corporation 5 526
--------
1,206
--------
Computers (Software/Services) -- 2.2%
Microsoft Corporation 10 800/A/
--------
Construction and Building Materials -- 1.2%
Martin Marietta Materials, Inc. 11 425
--------
Distributors (Food and Health) -- 1.2%
SYSCO Corporation 10 421
--------
Electrical Equipment -- 1.4%
Emerson Electric Co. 9 519
--------
Electronics (Semiconductors) -- 1.9%
Intel Corporation 5 669
--------
Entertainment -- 2.5%
The Walt Disney Company 10 388
Time Warner, Inc. 7 494
--------
882
--------
</TABLE>
19
<PAGE>
Portfolio of Investments -- Continued
Legg Mason Investors Trust, Inc.
Balanced Trust -- Continued
<TABLE>
<CAPTION>
Shares/Par Value
------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Financial (Diversified) -- 7.9%
Blackrock North American Government
Income Trust, Inc. 78 $ 760
Chateau Communities, Inc. 20 565
Citigroup Inc. 13 783
Fannie Mae 14 731
--------
2,839
--------
Health Care (Diversified) -- 4.2%
Abbott Laboratories 20 869
Johnson & Johnson 6 652
--------
1,521
--------
Health Care (Drugs/Major Pharmaceuticals) -- 1.9%
Merck & Co., Inc. 9 690
--------
Health Care (Medical Products and Supplies) -- 1.2%
Guidant Corporation 9 421/A/
--------
Machinery (Diversified) -- 1.4%
Dover Corporation 12 487
--------
Manufacturing (Diversified) -- 1.7%
Tyco International Ltd. 13 616
--------
Oil and Gas (Exploration and Production) -- 2.7%
BP Amoco Plc 9 529
Texaco Inc. 8 426
--------
955
--------
Oil and Gas (Refining and Marketing) -- 1.4%
Total Fina Elf SA 7 499
--------
Railroads -- 3.4%
Kansas City Southern Industries, Inc. 8 683
Union Pacific Corporation 14 521
--------
1,204
--------
Restaurants -- 1.6%
McDonald's Corporation 18 576
--------
Retail (Building Supplies) -- 1.2%
The Home Depot, Inc. 9 450
--------
Retail (Drug Stores) -- 1.4%
CVS Corporation 13 520
--------
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Rate Maturity Date Shares/Par Value
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Savings and Loan Companies -- 2.1%
Charter One Financial, Inc. 33 $ 759
--------
Services -- 1.2%
Cintas Corporation 12 440
--------
Telecommunications (Long Distance) -- 1.3%
AT&T Corporation 15 474
--------
Telephone -- 3.2%
Broadwing Inc. 20 519/A/
WorldCom, Inc. 14 642/A/
--------
1,161
--------
Total Common Stocks and Equity Interests (Identified Cost -- $19,204) 22,112
------------------------------------------------------------------------------------------------------------------
Corporate Bonds and Notes -- 13.8%
Banking and Finance -- 5.7%
Associates Corporation of North America 5.500% 2/15/02 $ 400 389
General Electric Capital Corporation 6.290% 12/15/07 1,000 987
Merrill Lynch & Co., Inc. 6.000% 11/15/04 700 662
--------
2,038
--------
Hotels and Restaurants -- 1.3%
Hilton Hotels Corp. 5.000% 5/15/06 600 475
--------
Media -- 1.9%
Tribune Company 6.500% 7/30/04 700 669
--------
Retail (Food Chains) -- 2.1%
Safeway Inc. 5.750% 11/15/00 770 767
--------
Transportation -- 1.5%
Union Pacific Corporation 5.780% 10/15/01 550 537
--------
Waste Management -- 1.3%
Waste Management Inc. 4.000% 2/1/02 500 464
--------
Total Corporate Bonds and Notes (Identified Cost -- $5,030) 4,950
------------------------------------------------------------------------------------------------------------------
U.S. Government and Agency Obligations -- 11.5%
Fixed-Rate Securities -- 9.9%
Fannie Mae 6.770% 9/1/05 375 370
Federal Farm Credit Bank 5.520% 2/25/02 775 757
United States Treasury Notes 6.625% 3/31/02 150 150
United States Treasury Notes 6.500% 5/31/02 - 10/15/06 1,780 1,796
United States Treasury Notes 6.000% 8/15/09 500 496
--------
3,569
--------
</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>
Stripped Securities -- 1.6%
United States Treasury STRIPS/B/ 0.000% 8/15/05 - 5/15/06 $ 800 $ 572
--------
Total U.S. Government and Agency Obligations (Identified Cost -- $4,134) 4,141
------------------------------------------------------------------------------------------------------------------
U.S. Government Agency Mortgage-Backed Securities -- 9.6%
Fixed-Rate Securities -- 9.6%
Fannie Mae 6.000% 1/1/27 539 497
Fannie Mae 7.125% 2/15/05 375 376
Fannie Mae 7.250% 1/15/10 750 758
Government National Mortgage Association 6.000% 8/15/28 - 10/15/28 1,076 991
Government National Mortgage Association 8.000% 2/15/30 797 806
--------
Total U.S. Government Agency Mortgage-Backed Securities (Identified Cost -- $3,496) 3,428
------------------------------------------------------------------------------------------------------------------
Repurchase Agreements -- 3.3%
State Street Corporation
3.50%, dated 6/30/00, to be repurchased at
$1,200 on 7/3/00 (Collateral: $1,330 Federal
Home Loan Bank Note, 5.823%,
due 5/6/09, value $1,240) 1,200 1,200
--------
Total Repurchase Agreements (Identified Cost -- $1,200) 1,200
------------------------------------------------------------------------------------------------------------------
Total Investments -- 99.8% (Identified Cost -- $33,064) 35,831
Other Assets Less Liabilities -- 0.2% 55
--------
Net assets -- 100.0% $ 35,886
========
Net asset value per share:
Primary Class $12.15
======
------------------------------------------------------------------------------------------------------------------
</TABLE>
/A/Non-income producing.
/B/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.
June 30, 2000 (Unaudited)
(Amounts in Thousands)
U.S. Small-Capitalization Value Trust
<TABLE>
<CAPTION>
Shares/Par Value
------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stock and Equity Interests -- 96.4%
Basic Materials -- 6.0%
A. Schulman, Inc. 19 $ 230
Aceto Corporation 1 10
Albemarle Corporation 5 105
American Vanguard Corporation 1 9
Baltek Corporation 1 4/A/
Bayou Steel Corporation 9 20/A/
Carpenter Technology Corporation 17 359
Ethyl Corporation 89 223
FiberMark, Inc. 5 65/A/
Gentek, Inc. 16 181
IMCO Recycling Inc. 13 71
International Specialty Products Inc. 22 125/A/
NCH Corporation 2 87
NL Industries, Inc. 39 593
Penn Virginia Corporation 6 155
Quaker Chemical Corporation 7 116
Quanex Corporation 10 155
Roanoke Electric Steel Corporation 3 41
Stepan Company 7 170
Sylvan, Inc. 3 27/A/
The Anderson's Inc. 6 58
UCAR International, Inc. 14 178/A/
Universal Forest Products, Inc. 3 41
W. R. Grace & Co. 2 24
--------
3,047
--------
Capital Goods -- 16.6%
AAR CORP. 2 18
Acme Electric Corporation 3 25/A/
Alltrista Corporation 6 124/A/
Amcast Industrial Corporation 7 60
American Biltrite, Inc. 3 32
Ampco-Pittsburgh Corporation 7 73
Atchison Casting Corporation 5 31/A/
AVTEAM, Inc. 8 13/A/
Bacou USA, Inc. 6 122/A/
Bairnco Corporation 6 41
Baldwin Technology Company, Inc. 13 28/A/
Ball Corporation 9 296
Ballantyne of Omaha, Inc. 3 5/A/
Butler International, Inc. 7 58/A/
</TABLE>
23
<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>
Capital Goods -- Continued
Butler Manufacturing Company 5 $ 83
Cascade Corporation 9 104
Channell Commercial Corporation 4 53/A/
Chase Industries, Inc. 11 102/A/
Chemfab Corporation 2 27/A/
CIRCOR International, Inc. 1 10
Columbus McKinnon Corporation 10 137
Comfort Systems USA, Inc. 12 46/A/
Commercial Metals Company 11 303
Corrpro Companies, Inc. 5 17/A/
CPAC, Inc. 4 28
Denali Incorporated 3 6/A/
Detroit Diesel Corporation 9 139
Encompass Services Corporation 18 104/A/
Exponent, Inc. 3 28/A/
Fansteel Inc. 5 19/A/
Farrel Corporation 3 4
Featherlite Inc. 4 13/A/
Foamex International Inc. 1 5/A/
Friedman Industries, Incorporated 5 17
Gehl Company 4 50/A/
GenCorp Inc. 14 110
General Cable Corporation 10 78
Gradco Systems, Inc. 5 9/A/
Graham Corporation 1 8/A/
Graphic Packaging International Corp. 21 44/A/
Griffon Corporation 23 129/A/
Interface, Inc. 41 155
Intermet Corporation 20 137
International Airline Support Group, Inc. 2 4/A/
Ivex Packaging Corporation 4 48/A/
Jason Incorporated 11 102/A/
JLG Industries, Inc. 1 17
Kaman Corporation 17 176
Kellstrom Industries, Inc. 8 37/A/
Ladish Co., Inc. 9 91/A/
Lakeland Industries, Inc. 1 6/A/
Lincoln Electric Holdings, Inc. 4 61
Lindberg Corporation 4 26
Lydall, Inc. 4 46/A/
M&F Worldwide Corp. 15 82/A/
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Shares/Par Value
------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Capital Goods -- Continued
Meadow Valley Corporation 2 $ 8/A/
Met-Pro Corporation 2 20
Milacron Inc. 30 432
Miller Building Systems, Inc. 2 11/A/
NACCO Industries, Inc. 6 214
National Service Industries, Inc. 12 234
Northern Technologies International Corporation 2 15
Northwest Pipe Company 4 52/A/
O.I. Corporation 2 8/A/
Omnova Solutions Inc. 13 84
Park-Ohio Holdings Corp. 7 57/A/
Penn Engineering & Manufacturing Corp. 1 32
Penn Engineering & Manufacturing Corp. - Class A 4 142
Perini Corporation 4 14/A/
Pitt-Des Moines, Inc. 2 42
Pittston Brink's Group 7 96
Raven Industries, Inc. 4 49
Regal-Beloit Corporation 13 212
Riviera Tool Company 1 4/A/
Rock-Tenn Company 22 188
Ryerson Tull, Inc. 6 60
Shiloh Industries, Inc. 4 36/A/
SIFCO Industries, Inc. 3 20
Silgan Holdings Inc. 14 137/A/
Specialty Equipment Companies, Inc. 8 222/A/
SPS Technologies, Inc. 6 234/A
Standard Automotive Corporation 1 8/A/
Standex International Corporation 8 130
Steel Technologies Inc. 8 54
Summa Industries 3 34/A/
Superior TeleCom Inc. 10 95
Supreme Industries, Inc. 9 40/A/
TB Wood's Corporation 4 42
Tech/Ops Sevcon, Inc. 2 18
Tecumseh Products Company 6 218
Terex Corporation 6 79/A/
The Alpine Group, Inc. 3 20/A/
The Carbide/Graphite Group, Inc. 6 23/A/
The Eastern Company 1 18
The IT Group, Inc. 4 18/A/
Tower Automotive, Inc. 10 121/A/
</TABLE>
25
<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>
Capital Goods -- Continued
TransTechnology Corporation 4 $ 43
Trinity Industries, Inc. 11 209
Triumph Group, Inc. 9 248/A/
URS Corporation 5 72/A/
USEC Inc. 3 13
Wabtec Corporation 23 238
Wolverine Tube, Inc. 10 173/A/
Woodward Governor Company 4 119
York International Corporation 8 207
--------
8,450
--------
Consumer Cyclicals -- 32.1%
A.C. Moore Arts & Crafts, Inc. 5 33/A/
A.O. Smith Corporation 9 186
Abercrombie & Fitch Co. 16 193/A/
Ameron International Corporation 3 93
Anchor Gaming 8 393/A/
Arctic Cat, Inc. 20 242
Arvin Industries, Inc. 17 297
ASI Solutions Incorporated 4 37/A/
Bandag, Incorporated 13 310
Bandag, Incorporated - Class A 4 83
Barnes Group Inc. 3 54
Beazer Homes USA, Inc. 6 111/A/
Bell Industries, Inc. 2 5
Bell Microproducts Inc. 7 121/A/
Black Hawk Gaming & Development Company, Inc. 3 18/A/
Boston Acoustics, Inc. 4 41
Boyd Gaming Corporation 46 256/A/
Briggs & Stratton Corporation 7 236
Brookstone, Inc. 3 24/A/
Brown Shoe Company, Inc. 6 73
Building Materials Holding Corporation 9 76/A/
Business Resource Group 1 6/A/
Cache, Inc. 2 8/A/
Cannondale Corporation 2 10/A/
Carriage Services, Inc. 11 36/A/
CDI Corp. 14 287/A/
Centex Construction Products, Inc. 6 132
Central Garden & Pet Company 21 189/A/
Champion Enterprises, Inc. 28 138/A/
Children's Comprehensive Services, Inc. 5 16/A/
Coachmen Industries Inc. 12 136
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
Shares/Par Value
------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Consumer Cyclicals -- Continued
Cobra Electronics Corporation 3 $ 23/A/
Collins Industries, Inc. 5 24
Cooper Tire & Rubber Company 23 257
Cornell Companies, Inc. 3 23/A/
Craftmade International, Inc. 3 18
Crossmann Communities, Inc. 3 54/A/
Cutter & Buck Inc. 3 25/A/
Cybex International, Inc. N.M. 1/A/
D.R. Horton, Inc. 35 468
Dal-Tile International Inc. 22 181/A/
Del Webb Corporation 14 214/A/
Dominion Homes, Inc. 4 23/A/
Donnelly Corporation 3 35
Duckwall-ALCO Stores, Inc. 4 29/A/
Dura Automotive Systems, Inc. 12 132/A/
Edelbrock Corporation 2 24
Engle Homes, Inc. 8 77
EZCORP, Inc. 7 13/A/
Fedders Corporation 20 117
Federal-Mogul Corporation 10 99
Finlay Enterprises, Inc. 7 92/A/
Fleetwood Enterprises, Inc. 22 318
Friedman's, Inc. 13 62
FTI Consulting, Inc. 3 32/A/
Garan, Incorporated 4 84
General Employment Enterprises, Inc. 4 13
Genesco Inc. 19 302/A/
Gerber Childrenswear, Inc. 1 4/A/
Goody's Family Clothing, Inc. 25 138/A/
Hancock Fabrics, Inc. 4 17
Hartmarx Corporation 4 11/A/
Haverty Furniture Companies, Inc. 6 54
Hayes Lemmerz International, Inc. 7 87/A/
Headway Corporate Resources, Inc. 5 15/A/
Homebase, Inc. 23 36/A/
Hovnanian Enterprises, Inc. 16 96/A/
J. Baker, Inc. 4 25
Jo-Ann Stores, Inc. 6 39/A/
Johnson Outdoors Inc. 6 40/A/
Jos. A. Bank Clothiers, Inc. 4 15/A/
K2 Inc. 12 103/A/
Kaufman and Broad Home Corporation 14 271
</TABLE>
27
<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>
Consumer Cyclicals -- Continued
Kellwood Company 20 $ 416
Koss Corporation 2 37/A/
Lakes Gaming, Inc. 8 68/A/
Lennox International Inc. 8 107
Lodgian, Inc. 17 42/A/
M/I Schottenstein Homes, Inc. 6 95
MarineMax, Inc. 3 22/A/
MascoTech, Inc. 35 377
Maxwell Shoe Company Inc. 6 59/A/
Media Arts Group, Inc. 9 36/A/
Michael Anthony Jewelers, Inc. 2 4/A/
Monaco Coach Corporation 6 83/A/
Movie Gallery, Inc. 3 10/A/
Musicland Stores Corporation 12 86/A/
Myers Industries, Inc. 6 63
National Technical Systems, Inc. 6 24
Nautica Enterprises, Inc. 37 398/A/
NCI Building Systems, Inc. 13 265/A/
New England Business Service, Inc. 4 65
Nortek, Inc. 2 47/A/
OfficeMax, Inc. 9 46/A/
One Price Clothing Stores, Inc. 7 18/A/
OroAmerica, Inc. 4 26/A/
OshKosh B'Gosh, Inc. 1 23
Owens Corning 5 50
Oxford Industries, Inc. 6 110
Palm Harbor Homes, Inc. 12 167/A/
Patrick Industries, Inc. 4 22
Paul Harris Stores, Inc. 1 3/A/
Perry Ellis International, Inc. 4 30/A/
Personal Group of America, Inc. 20 58/A/
Piercing Pagoda, Inc. 3 46/A/
Pioneer-Standard Electronics, Inc. 18 265
PremiumWear, Inc. 1 13/A/
Prime Hospitality Corp. 43 403/A/
Pulte Corporation 37 794
Q.E.P. Co., Inc. 2 17/A/
R & B, Inc. 6 16/A/
RCM Technologies, Inc. 3 23/A/
RDO Equipment Co. 8 42/A/
Refac 3 9/A/
Republic Group Incorporated 7 67
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
Shares/Par Value
------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Consumer Cyclicals -- Continued
Royal Appliance Mfg. Co. 5 $ 26/A/
Rural/Metro Corporation 11 18/A/
Rush Enterprises, Inc. 2 8/A/
Russ Berrie and Company, Inc. 14 269
S&K Famous Brands, Inc. 3 23/A/
Savoir Technology Group, Inc. 9 61/A/
Service Corporation International 36 115
Shoe Pavilion, Inc. 5 9/A/
ShopKo Stores, Inc. 9 138/A/
Simpson Industries, Inc. 14 102
Skyline Corporation 7 146
Sola International Inc. 5 25/A/
SOS Staffing Services, Inc. 10 29/A/
Specialty Catalog Corp. 1 3/A/
Sport-Haley, Inc. 3 12/A/
Standard Motor Products, Inc. 9 77
Standard Pacific Corp. 23 226
Steinway Musical Instruments, Inc. 2 40/A/
Stewart Enterprises, Inc. 77 272
Strattec Security Corporation 2 75/A/
Sturm, Ruger & Company, Inc. 8 71
Suburban Lodges of America, Inc. 12 67/A/
Systemax, Inc. 25 96/A/
Tandy Brands Accessories, Inc. 3 25/A/
TBC Corporation 15 67/A/
The Bon-Ton Stores, Inc. 12 27/A/
The Cato Corporation 13 149
The Dixie Group, Inc. 9 35/A/
The Dress Barn, Inc. 17 365/A/
The Elder-Beerman Stores Corp. 5 19/A/
The First Years Inc. 2 22
The L. S. Starrett Company 4 74
The Lamson & Sessions Co. 8 115/A/
The Ryland Group, Inc. 12 254
The Warnaco Group, Inc. 5 40
The York Group, Inc. 6 26/A/
Thomas Group, Inc. 3 27/A/
Toll Brothers, Inc. 25 510/A/
Tractor Supply Company 2 31/A/
Travis Boats & Motors, Inc. 1 8/A/
UniFirst Corporation 12 98
</TABLE>
29
<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>
Consumer Cyclicals -- Continued
United Auto Group, Inc. 4 $ 33/A/
Washington Homes, Inc. 5 32/A/
Westaff, Inc. 12 52/A/
WestPoint Stevens Inc. 2 18
Whitehall Jewellers, Inc. 5 95/A/
Winnebago Industries, Inc. 7 97
Wolohan Lumber Co. 3 33
World Fuel Services Corporation 9 73
--------
16,316
--------
Consumer Staples -- 9.9%
Ark Restaurants Corp. 3 20/A/
Barnett Inc. 12 125/A/
BCT International, Inc. 3 4/A/
Burns International Services Corporation 4 50
Cadmus Communications Corporation 5 46/A/
Cagle's, Inc. 4 27
Catalina Lighting, Inc. 3 13/A/
Chromcraft Revington, Inc. 8 93/A/
CKE Restaurants, Inc. 39 115
Consolidated Graphics, Inc. 3 29/A/
Courier Corporation 2 43
Dave & Busters, Inc. 9 56/A/
Decorator Industries, Inc. 2 10
Department 56, Inc. 12 135/A/
Ellett Brothers, Inc. 5 19
ELXSI Corporation 3 28/A/
Ennis Business Forms, Inc. 12 98
Flexsteel Industries, Inc. 4 50
French Fragrances, Inc. 10 85/A/
Furniture Brands International, Inc. 15 231/A/
Hawkins Chemical, Inc. 3 24
Herbalife International, Inc. 17 147
Home Products International, Inc. 6 21/A/
Hughes Supply, Inc. 17 336
International Multifoods Corporation 4 66
JLK Direct Distribution Inc. 17 86/A/
La-Z-Boy Incorporated 4 50
Landry's Seafood Restaurants, Inc. 22 186/A/
Lawson Products, Inc. 6 143
Luby's, Inc. 16 127
Mail-Well, Inc. 17 144/A/
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
Shares/Par Value
------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Consumer Staples -- Continued
Marsh Supermarkets, Inc. 3 $ 52
Metals USA, Inc. 29 134
Michael Foods, Inc. 9 208
Mikasa, Inc. 8 84
Nash-Finch Company 5 43
Nature's Sunshine Products, Inc. 13 94
NPC International, Inc. 5 41/A/
Oneida Ltd. 5 87
Pilgrim's Pride Corporation 9 63
Pilgrim's Pride Corporation - Class A 4 21
PrimeSource Corporation 4 18
R.H. Phillips, Inc. 4 10/A/
Rainforest Cafe, Inc. 19 55/A/
Ryan's Family Steak Houses, Inc. 30 249/A/
Sanderson Farms, Inc. 3 26
Scheid Vineyards Inc. 2 5
Schlotzsky's, Inc. 5 29/A/
Schweitzer-Mauduit International, Inc. 12 149
Sizzler International, Inc. 19 50/A/
Standard Commercial Corporation 9 40
Star Buffet, Inc. 2 7/A/
Suprema Specialties, Inc. 1 11/A/
The Rowe Companies 10 39
The Standard Register Company 16 221
Todhunter International, Inc. 2 16/A/
Universal Corporation 25 522
USANA, Inc. 3 9/A/
Wallace Computer Services, Inc. 8 82
WLR Foods, Inc. 12 57/A/
--------
5,029
--------
Energy -- 0.5%
Adams Resources & Energy 3 36
Friede Goldman International Inc. 11 102/A/
Holly Corporation 6 74
Mercury Air Group, Inc. 6 27/A/
Petroleum Development Corporation 5 26/A/
--------
265
--------
</TABLE>
31
<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>
Financials -- 17.1%
Advanta Corp. 18 $ 216
Alliance Bancorp of New England, Inc. 1 7
AMERCO 10 202/A/
American Business Financial Services, Inc. 1 11
AmerUs Life Holdings, Inc. 22 454
Amplicon, Inc. 6 59
AMREP Corporation 3 17/A/
Atlantic American Corporation 1 4/A/
Avis Group Holdings, Inc. 22 411/A/
Bancinsurance Corporation 2 10/A/
Bank United Corp. 2 63
BankAtlantic Bancorp, Inc. 30 112
Bay View Capital Corporation 13 131
Bluegreen Corporation 17 48/A/
BSB Bancorp, Inc. 7 136
BYL Bancorp 2 16
Camco Financial Corporation 1 13
Capital Crossing Bank 2 18/A/
Community Bank System, Inc. 2 44
Corrus Bankshares, Inc. 11 291
Credit Acceptance Corporation 10 58/A/
Delphi Financial Group, Inc. 14 485/A/
Delta Financial Corporation 11 17/A/
DeWolfe Companies, Inc. 2 16/A/
Dime Community Bancshares 3 42
Dollar Thrifty Automotive Group, Inc. 8 138/A/
Donegal Group Inc. 6 36
Downey Financial Corp. 12 336
Electro Rent Corporation 6 73/A/
Enhance Financial Services Group, Inc. 29 423
First Citizens Bancshares Inc. 6 357
First Essex Bancorp, Inc. 2 35
First Republic Bank 3 62/A/
FirstFed Financial Corp. 15 209/A/
Flagstar Bancorp, Inc. 9 76
FPIC Insurance Group, Inc. 3 45/A/
GA Financial, Inc. 4 43
GBC Bancorp 2 59
Hamilton Bancorp Inc. 8 131/A/
Harleysville Group Inc. 10 166
Hawthorne Financial Corporation 4 28/A/
Healthcare Recoveries, Inc. 7 25/A/
IBERIABANK Corporation 5 72
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
Shares/Par Value
------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Financials -- Continued
Industrial Bancorp, Inc. 1 $ 15
Interpool, Inc. 20 190
Interstate National Dealer Services, Inc. 3 17/A/
ITLA Capital Corporation 5 71/A/
Jefferies Group, Inc. 6 125
Kaye Group Inc. 4 26
LandAmerica Financial Group, Inc. 9 213
MAF Bancorp, Inc. 5 89
Matrix Bancorp, Inc. 2 10/A/
McGrath Rentcorp 8 127
Merchants Bancshares, Inc. 3 55
Merchants Group, Inc. 1 17
MetroWest Bank 4 23
National City Bancorporation 7 96/A/
National Equipment Services, Inc. 5 29/A/
National Western Life Insurance Company 3 187/A/
Onyx Acceptance Corporation 2 9/A/
Pacific Crest Capital, Inc. 2 26
Parkvale Financial Corporation 5 81
Penn Treaty American Corporation 6 97/A/
PFF Bancorp, Inc. 3 51
Philadelphia Consolidated Holding Corp. 3 44/A/
Professionals Group, Inc. 4 108/A/
Raymond James Financial, Inc. 3 61
Republic Security Financial Corporation 5 24
Rollins Truck Leasing Corp. 16 112
Selective Insurance Group, Inc. 1 17
Silverleaf Resorts, Inc. 3 8/A/
Standard Management Corporation 5 17/A/
State Auto Financial Corporation 3 36
Sterling Financial Corporation 6 70/A/
Stewart Information Services Corporation 10 139/A/
TFC Enterprises, Inc. 10 19/A/
The Commerce Group, Inc. 26 770
The Midland Company 3 83
Three Rivers Bancorp, Inc. 5 33
Trammell Crow Company 21 227/A/
Unico American Corporation 4 25
Union Acceptance Corporation 1 5/A/
USBANCORP, Inc. 10 36
World Acceptance Corporation 14 74/A/
WSFS Financial Corporation 1 8
--------
8,665
--------
</TABLE>
33
<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>
Health Care -- 2.3%
Air Methods Corporation 3 $ 8/A/
American Physicians Service Group, Inc. 2 6/A/
AmeriPath, Inc. 16 140/A/
Beverly Enterprises, Inc. 80 225/A/
Capital Senior Living Corporation 14 40/A/
Castle Dental Centers, Inc. 5 9/A/
Coast Dental Services, Inc. 5 8/A/
Curative Health Services, Inc. 7 41/A/
DVI, Inc. 3 50/A/
Healthcare Services Group, Inc. 8 34/A/
Hi-Tech Pharmacal Co., Inc. 2 10/A/
Horizon Health Corporation 4 24/A/
Lifemark Corporation 2 10/A/
Magellan Health Services, Inc. 7 8/A/
Mesa Laboratories, Inc. 2 9/A/
Minntech Corporation 2 14
Monarch Dental Corporation 7 23/A/
Moore Medical Corporation 2 13/A/
Niagara Corporation 5 22/A/
Ocular Sciences, Inc. 5 60/A/
OrthAlliance, Inc. 5 29/A/
Pediatrix Medical Group, Inc. 11 123/A/
ProMedCo Management Company 16 17/A/
Radiologix, Inc. 15 54/A/
Raytel Medical Corporation 6 10/A/
Serologicals Corporation 15 74/A/
Sierra Health Services, Inc. 20 64/A/
Superior Uniform Group Inc. 1 11
Utah Medical Products, Inc. 3 22/A/
--------
1,158
--------
Technology -- 4.0%
Alliant Techsystems Inc. 5 317/A/
Applied Signal Technology, Inc. 6 67
Avant! Corporation 24 453/A/
Blonder Tongue Laboratories, Inc. 3 20/A/
Comdial Corporation 5 22/A/
Del Global Technologies Corp. 5 52/A/
EDO Corporation 4 26
Esterline Technologies Corporation 4 54/A/
Gerber Scientific, Inc. 7 78
GTECH Holdings Corporation 25 576/A/
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
Shares/Par Value
------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Technology -- Continued
Herley Industries, Inc. 3 $ 53/A/
Hurco Companies, Inc. 4 17/A/
K-Tron International, Inc. 2 33/A/
NeoMagic Corporation 20 59/A/
Paravant Inc. 1 4/A/
Printronix, Inc. 4 53/A/
PSC Inc. 9 72/A/
ScanSoft, Inc. 3 7/A/
Software Spectrum, Inc. 3 49/A/
--------
2,012
--------
Transportation -- 6.0%
Alaska Air Group, Inc. 6 155/A/
America West Holdings Corporation 32 548/A/
Amtran, Inc. 2 21/A/
Arkansas Best Corporation 14 141/A/
Arnold Industries, Inc. 19 224
Boyd Bros. Transportation Inc. 2 9/A/
CD&L, Inc. 5 7/A/
Consolidated Freightways Corporation 4 16/A/
Covenant Transport, Inc. 11 90/A/
Dynamex Inc. 2 4/A/
Genesee & Wyoming Inc. 3 49/A/
Hawaiian Airlines, Inc. 28 73/A/
Midway Airlines Corporation 6 30/A/
Oglebay Norton Company 3 84
Old Dominion Freight Line, Inc. 5 51/A/
P.A.M. Transportation Services, Inc. 6 59/A/
RailWorks Corporation 3 24/A/
Roadway Express, Inc. 15 349
Smithway Motor Xpress Corp. 3 5/A/
The Greenbrier Companies, Inc. 11 78
Transport Corporation of America, Inc. 5 31/A/
U.S. Xpress Enterprises, Inc. 11 89/A/
USA Truck, Inc. 6 37/A/
USFreightways Corporation 5 133
Wisconsin Central Transportation Corporation 33 426/A/
Yellow Corporation 20 294/A/
--------
3,027
--------
</TABLE>
35
<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 -- 1.9%
Bangor Hydro-Electric Company 5 $ 106
EnergySouth, Inc. 3 51
Maine Public Service Company 1 24
Public Service Company of New Mexico 32 492
RGS Energy Group, Inc. 12 276
--------
949
--------
Total Common Stock and Equity Interests (Identified Cost -- $62,015) 48,918
------------------------------------------------------------------------------------------------------------------
Repurchase Agreements -- 3.4%
Goldman, Sachs & Company
6.82%, dated 6/30/00, to be repurchased at $1,742
on 7/3/00 (Collateral: $1,764 Fannie Mae mortgage-backed
securities, 8.50%, due 10/1/28, value $1,807) $1,741 1,741
--------
Total Repurchase Agreements (Identified Cost -- $1,741) 1,741
------------------------------------------------------------------------------------------------------------------
Total Investments -- 99.8% (Identified Cost -- $63,756) $ 50,659
Other Assets Less Liabilities -- 0.2% 88
--------
Net assets -- 100.0% $ 50,747
========
Net asset value per share:
Primary Class $7.25
=====
Navigator Class $7.41
=====
------------------------------------------------------------------------------------------------------------------
</TABLE>
/A/Non-income producing.
N.M. -- Not meaningful.
36
<PAGE>
Portfolio of Investments
Legg Mason Investors Trust, Inc.
June 30, 2000 (Unaudited)
(Amounts in Thousands)
Financial Services Fund
<TABLE>
<CAPTION>
Shares/Par Value
------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stock and Equity Interests -- 97.7%
Capital Goods -- 0.8%
Electrical Equipment -- 0.8%
Solectron Corporation 8 $ 335/A/
--------
Consumer Cyclicals -- 4.9%
Retail (Building Supplies) -- 1.0%
The Home Depot, Inc. 8 400
--------
Retail (Department Stores) -- 1.4%
Kohl's Corporation 10 556/A/
--------
Retail (General Merchandise) -- 1.6%
Target Corporation 5 290
Wal-Mart Stores, Inc. 6 346
--------
636
--------
Services (Commercial and Consumer) -- 0.9%
Cintas Corporation 10 367
--------
Consumer Staples -- 6.6%
Food -- 2.2%
Hershey Foods Corporation 8 364
Riviana Foods, Inc. 13 233
Wm. Wrigley Jr. Company 4 304
--------
901
--------
Retail (Drug Stores) -- 2.3%
CVS Corporation 10 400
Walgreen Co. 17 547
--------
947
--------
Retail (Food Chains) -- 2.1%
Safeway Inc. 9 397/A/
The Kroger Co. 20 441/A/
--------
838
--------
Financials -- 68.9%
Banking -- 25.0%
BancWest Corporation 17 275
Cascade Bancorp 17 196
CCB Financial Corporation 7 241
Centennial Bancorp 36 311/A/
City National Corporation 15 521
Colorado Business Bankshares, Inc. 16 214
Commerce Bancshares, Inc. 17 491
Cullen/Frost Bankers, Inc. 15 395
</TABLE>
37
<PAGE>
Portfolio of Investments -- Continued
Legg Mason Investors Trust, Inc.
Financial Services Fund -- Continued
<TABLE>
<CAPTION>
Shares/Par Value
------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Financials -- Continued
Banking -- Continued
CVB Financial Corp. 20 $ 316
First Security Corporation 30 407
Greater Bay Bancorp 15 701
Marshall & Ilsley Corporation 13 539
Mercantile Bankshares Corporation 13 388
Mid-State Bancshares 20 545
Mississippi Valley Bancshares, Inc. 12 291
National Bancorp of Alaska, Inc. 9 305
North Fork Bancorporation, Inc. 33 499
Pacific Capital Bancorp 15 376
Pacific Century Financial Corporation 30 439
Seacoast Banking Corporation of Florida 10 256
Southwest Bancorporation of Texas, Inc. 20 415/A/
TCF Financial Corporation 23 591
Texas Regional Bancshares, Inc. 22 558
Wilmington Trust Corporation 8 321
Zions Bancorporation 12 528
--------
10,119
--------
Banks (Major Regional) -- 17.9%
BB&T Corporation 23 549
Comerica Incorporated 15 673
Fifth Third Bancorp 12 759
Firstar Corporation 27 569
FleetBoston Financial Corporation 21 714
Northern Trust Corporation 10 651
Old Kent Financial Corporation 17 449
State Street Corporation 8 848
SunTrust Banks, Inc. 12 525
U.S. Bancorp 15 289
Wachovia Corporation 10 515
Wells Fargo Company 18 698
--------
7,239
--------
Banks (Money Center) -- 0.8%
Bank of America Corporation 8 344
--------
Financial (Diversified) -- 3.3%
Citigroup Inc. 11 663
Financial Federal Corporation 10 174/A/
Morgan Stanley Dean Witter & Co. 6 499
--------
1,336
--------
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
Shares/Par Value
------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Financials -- Continued
Insurance (Life/Health) -- 5.8%
American General Corporation 8 $ 506
Jefferson-Pilot Corporation 11 621
Lincoln National Corporation 14 506
Protective Life Corporation 16 426
UnumProvident Corporation 15 301
--------
2,360
--------
Insurance (Multi-Line) -- 2.2%
American International Group, Inc. 3 353
StanCorp Financial Group, Inc. 17 546
--------
899
--------
Insurance (Property/Casualty) -- 1.2%
Philadelphia Consolidated Holding Corp. 30 504/A/
--------
Investment Banking/Brokerage -- 4.2%
A.G. Edwards, Inc. 10 390
AXA Financial, Inc. 14 476
Merrill Lynch & Co., Inc. 3 345
Paine Webber Group Inc. 11 500
--------
1,711
--------
Investment Management -- 5.9%
Affiliated Managers Group, Inc. 10 455/A/
Neuberger Berman Incorporated 14 651
T. Rowe Price Associates, Inc. 15 638
Waddell & Reed Financial, Inc. 20 656
--------
2,400
--------
Savings and Loan Companies -- 2.6%
Harbor Florida Bancshares, Inc. 30 313
Washington Mutual, Inc. 25 722
--------
1,035
--------
Health Care -- 7.3%
Health Care (Diversified) -- 1.1%
Johnson & Johnson 4 448
--------
Health Care (Drugs/Major Pharmaceuticals) -- 4.1%
Elan Corporation plc 8 363/A/
Eli Lilly & Company 7 699
Pfizer Inc. 13 605
--------
1,667
--------
</TABLE>
39
<PAGE>
Portfolio of Investments -- Continued
Legg Mason Investors Trust, Inc.
Financial Services Fund -- Continued
<TABLE>
<CAPTION>
Shares/Par Value
------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Health Care -- Continued
Health Care (Medical Products and Supplies) -- 1.7%
Guidant Corporation 8 $ 371/A/
Medtronic, Inc. 6 299
--------
670
--------
Health Care (Specialized Services) -- 0.4%
Hooper Holmes, Inc. 22 176
--------
Technology -- 9.2%
Computers (Hardware) -- 1.6%
International Business Machines Corporation 6 657
--------
Computers (Software/Services) -- 2.6%
Jack Henry & Associates, Inc. 15 752
Synopsys Inc. 8 277/A/
--------
1,029
--------
Services (Computer Systems) -- 1.0%
Computer Sciences Corporation 6 411/A/
--------
Services (Data Processing) -- 4.0%
DST Systems, Inc. 7 495/A/
Fiserv, Inc. 14 605/A/
The BISYS Group, Inc. 9 523/A/
--------
1,623
--------
Total Common Stock and Equity Interests (Identified Cost -- $39,267) 39,608
------------------------------------------------------------------------------------------------------------------
Repurchase Agreements -- 2.3%
Goldman, Sachs & Company
6.82%, dated 6/30/00, to be purchased at $936
on 7/3/00 (Collateral: $948 Fannie Mae mortgage-backed
securities, 8.50%, due 10/1/28, value $971) $ 936 936
--------
Total Repurchase Agreements (Identified Cost -- $936) 936
------------------------------------------------------------------------------------------------------------------
Total Investments -- 100.0% (Identified Cost -- $40,203) 40,544
Other Assets Less Liabilities -- N.M. 5
--------
Net assets -- 100.0% $ 40,549
========
Net asset value per share:
Primary Class $9.23
=====
Net asset value and redemption price per share -- Class A $9.35
=====
Maximum offering price per share -- Class A $9.82
=====
------------------------------------------------------------------------------------------------------------------
</TABLE>
/A/Non-income producing.
N.M. - Not meaningful.
40
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE>
[LEGG MASON FUNDS LOGO]
The Art of Investing/SM/
Legg Mason offers a wide range of mutual funds to meet investors' varying
financial needs and investment goals. The funds are listed below:
Equity Funds: Specialty Funds:
Value Trust, Inc. Market Neutral Trust
Special Investment Trust, Inc. Balanced Trust
Total Return Trust, Inc. Financial Services Fund
American Leading Companies Opportunity Trust
Trust
Classic Valuation Fund
Focus Trust, Inc.
U.S. Small-Capitalization
Value Trust
Global Funds: Taxable Bond Funds:
Global Income Trust U.S. Government Intermediate-Term
Europe Fund Portfolio
International Equity Trust Investment Grade Income Portfolio
Emerging Markets Trust High Yield Portfolio
Tax-Free Bond Funds: Money Market Funds:
Tax-Free Intermediate-Term U.S. Government Money Market
Income Trust Portfolio
Maryland Tax-Free Income Trust Cash Reserve Trust
Pennsylvania Tax-Free Income Trust Tax Exempt Trust, Inc.
For information on the specific risks, charges, and expenses associated with any
Legg Mason fund, please consult a Legg Mason Financial Advisor for a prospectus.
Read it carefully before investing or sending money.
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