Legg Mason Investors Trust, Inc.

N-CSR 1 dncsr.htm LEGG MASON INVESTORS TRUST, INC. Legg Mason Investors Trust, Inc.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF

REGISTERED MANAGEMENT INVESTMENT COMPANIES


Investment Company Act file number:		811-07692

Legg Mason Investors Trust, Inc.

Name of Fund:

100 Light Street, Baltimore, MD 21202

Address of Principal Executive Offices:

Richard M. Wachterman, Esq.

Legg Mason & Co., LLC

100 Light Street

Baltimore, MD 21202

Name and address of agent for service:

Registrant’s telephone number, including area code: (410) 539-0000

Date of fiscal year end: March 31, 2008

Date of reporting period: March 31, 2008

Item 1.

Report to Shareholders

LOGO


Annual Report to Shareholders		1

To Our Shareholders

We are pleased to provide you with Legg Mason Investors Trust’s annual report for American Leading Companies Trust and U.S. Small-Capitalization Value Trust, for the year ended March 31, 2008.


	Total Returns
	3 Months		1 Year
American Leading Companies Trust:
Primary Class	–14.39	%	–16.24	%
Institutional Class	–14.18	%	–15.37	%
S&P 500 Stock Composite Index^A	–9.44	%	–5.08	%

U.S. Small-Capitalization Value Trust:
Primary Class	–4.23	%	–17.94	%
Institutional Class	–4.00	%	–17.17	%
Russell 2000 Index^B	–9.90	%	–13.00	%

The performance data quoted represent past performance and do not guarantee future results. The performance stated may have been due to extraordinary market conditions, which may not be duplicated in the future. Current performance may be lower or higher than the performance data quoted. To obtain the most recent month-end performance information for the Primary Class please visit www.leggmason.com/individualinvestors. For the Institutional Class please visit www.lminstitutionalfunds.com. The investment return and principal value of the Funds will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. Calculations assume reinvestment of dividends and capital gain distributions. Performance would have been lower if fees had not been waived in various periods. Performance figures for periods shorter than one year represent cumulative figures and are not annualized.

PricewaterhouseCoopers LLP, the Funds’ independent registered public accounting firm, has completed its annual audit, and audited financial statements for the fiscal year ended March 31, 2008, are included in this report.

Information about each Fund’s performance over longer periods of time is shown in the respective Performance Information sections within this report. For more information about each Fund’s share classes included in this report, please contact your financial advisor.

Many Primary Class shareholders invest regularly in Fund shares on a dollar cost averaging basis. Most do so by authorizing automatic, monthly transfers of $50 or more

^A	S&P 500 Stock Composite Index — A market capitalization-weighted index, composed of 500 widely held common stocks, that is generally considered representative of the U.S. stock market.

^B	Russell 2000^® Index — An unmanaged index comprised of the 2,000 smallest companies of the 3,000 largest U.S. companies based on market capitalization.


2		Annual Report to Shareholders

from their bank checking or brokerage accounts. Dollar cost averaging is a convenient and sensible way to invest, as it encourages continued purchases over time regardless of fluctuating price levels. Of course, it does not ensure a profit nor protect against declines in the value of your investment. Your financial advisor will be happy to help you establish a dollar cost averaging account should you wish to do so.

Sincerely,

LOGO

Mark R. Fetting

President

April 21, 2008


Annual Report to Shareholders		3

Management’s Discussion of Fund Performance

American Leading Companies

Total returns for the American Leading Companies Trust for various periods ended March 31, 2008, are presented below along with those of some comparative indices^A:


					Average Annual Total Returns Through March 31, 2008
	First Quarter 2008		One Year		Three Years		Five Years		Ten Years		Since Inception^B
American Leading
Companies
Primary Class	–14.39	%	–16.24	%	+0.19	%	+8.62	%	+2.81	%	+7.28	%
Institutional Class	–14.18	%	–15.37	%	+1.20	%	+9.72	%	N/A		+3.16	%
S&P 500 Stock Composite
Index	–9.44	%	–5.08	%	+5.85	%	+11.32	%	+3.50	%	+9.45	%
Dow Jones Industrial
Average	–6.92	%	+1.57	%	+7.75	%	+11.46	%	+5.51	%	+11.02	%
NASDAQ Composite
Index	–13.88	%	–5.12	%	+5.27	%	+11.92	%	+2.70	%	7.99	%^C
S&P Mid-Cap 400 index	–8.85	%	–6.97	%	+7.06	%	+15.10	%	+9.02	%	+12.31	%
Russell 2000 Index	–9.90	%	–13.00	%	+5.06	%	+14.90	%	+4.96	%	+8.73	%
Dow Jones Wilshire 5000
Index	–9.52	%	–5.75	%	+6.37	%	+12.45	%	+3.95	%	+9.37	%
Russell 1000 Growth Index	–10.18	%	–0.75	%	+6.33	%	+9.96	%	+1.28	%	+7.94	%
Russell 1000 Value Index	–8.72	%	–9.99	%	+6.01	%	+13.68	%	+5.54	%	+10.45	%

The performance data quoted represent past performance and do not guarantee future results. The performance stated may have been due to extraordinary market conditions, which may not be duplicated in the future. Current performance may be lower or higher than the performance data quoted. To obtain the most recent month-end performance information for the Primary Class please visit www.leggmason.com/individualinvestors. For the Institutional Class please visit www.lminstitutionalfunds.com. The investment return and principal value of the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. Calculations assume reinvestment of dividends and capital gain distributions. Performance would have been lower if fees had not been waived in various periods.

The fiscal year ended March 31, 2008, was a difficult one for the stock market as the Dow Jones Industrial Average was the only major market index to post a positive return.

^A	See Glossary of Index Definitions on page 76. Although it is not possible to invest directly in an index, it is possible to purchase investment vehicles designed to track the performance of certain indices. Past performance does not guarantee future results.

^B	The inception date of the Primary Class is September 1, 1993. The inception date of the Institutional Class is June 14, 2001. Index returns are for the periods beginning August 31, 1993.

^C	This return does not include reinvestment of dividends or capital distributions.


4		Annual Report to Shareholders

Management’s Discussion of Fund Performance — Continued

Value-based investment styles were especially hard hit during the year, as the Russell 1000 Value Index underperformed the S&P 500 Stock Composite Index (S&P 500) by nearly five percentage points and also underperformed the Russell 1000 Growth Index by over nine percentage points.

The fiscal year began positively with the S&P 500 posting mid-single-digit returns through June 2007. During the summer, and especially in August, deterioration in the subprime mortgage market, which had begun to surface in the spring morphed into a full-blown financial crisis as credit concerns expanded to include more highly rated mortgages and an alphabet soup of structured investment products including collateralized debt obligations (CDO), asset-backed commercial paper (ABCP), mortgage-backed securities (MBS) and the like. Following the Federal Reserve Board’s^D (Fed) initial efforts in August to restore liquidity and confidence to the credit markets, the S&P 500 rallied to an all-time high of 1,565.15 on October 9, 2007, five years to the day from its bear market low of 776.76 on October 9, 2002. The financial crisis took a renewed turn for the worse in the December 2007 and March 2008 quarters, as credit spreads on a broad range of fixed-income instruments widened substantially, subprime mortgage delinquency and default rates spiked up, and massive asset write-downs were recorded by a wide range of financial institutions. As the housing market continued to deteriorate and losses on Wall Street mounted, the financial crisis moved from Wall Street to Main Street. Declining stock prices and weakening home prices, coupled with soaring oil and commodity prices, knocked consumer confidence for a loop, causing a slowdown in consumer spending, which has pushed the economy to the brink of recession. From its closing high in October 2007, the S&P 500 dropped 18.4% to a closing low of 1276.60 on March 17, 2008. Since then, the market has rallied somewhat as the Fed-brokered acquisition of Bear Stearns by JPMorgan Chase and its aggressive measures to restore liquidity to the credit markets appears to have steadied the equity market, at least for the time being.

American Leading Companies Trust (ALC) substantially underperformed its primary benchmark, the S&P 500, during the year ended March 31, 2008, declining 16.24% versus a 5.08% decline in the index. ALC also significantly trailed other major market indices and peer fund averages. Roughly half of ALC’s underperformance relative to the S&P 500 was attributable to its financial holdings, where the Fund entered the year with an overweighted position in what proved to be the worst-performing sector of the market in fiscal 2008. ALC’s financial stocks also performed worse than the sector, on average, with Countrywide Financial Corporation, Citigroup Inc., Ambac Financial Group Inc. (sold during the year), American International Group,

^D	Federal Reserve Board (Fed) — is charged with, among other things, managing the nation’s monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates.


Annual Report to Shareholders		5

Inc., Washington Mutual Inc. and XL Capital Ltd. being the most significant negative contributors. Next on the list of detractors from performance were the managed care stocks – UnitedHealth Group Inc., WellPoint Inc. and Health Net Inc. – whose poor showing accounted for about 20% of the shortfall in Fund results versus the S&P 500. Other significant detractors from performance included: Jabil Circuit, Inc., Sprint Nextel Corp., and UAL Corp., which collectively reduced results by about five and one-half percentage points. There were a few bright spots in the portfolio in an otherwise disappointing year. Nokia Oyj – Sponsored ADR was up 42.0% for the fiscal year and contributed about 125 basis points^E (bps) to performance. In addition, ALC’s energy stocks were up an average of 38.9% versus a 22.1% return for the energy stocks in the S&P 500. This superior stock selection in the energy group helped offset the portfolio’s underweighting in energy versus the benchmark, enabling the portfolio’s energy stocks to match the market’s energy sector in terms of total contribution to return. Finally, despite the fact that consumer discretionary stocks were the second worst-performing sector in the market last year, ALC’s holdings in this group were stronger, on average, and thus contributed positively to relative returns. Amazon.com, Inc. (sold during the year), Apollo Group Inc. (also sold before year end) and The TJX Cos., Inc. were notable positive contributors in this group.

David E. Nelson, CFA

April 21, 2008

DJIA: 12,825.02

^E	100 basis points (bps) = 1%


6		Annual Report to Shareholders

Expense Example

American Leading Companies Trust

As a shareholder of the Fund, you incur ongoing costs, including management fees, distribution and service (12b-1) fees on Primary Class shares, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested on October 1, 2007, and held through March 31, 2008. The ending value assumes dividends were reinvested at the time they were paid.

Actual Expenses

The first line for each class in the table below provides information about actual account values and actual expenses for each class. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During the Period” to estimate the expenses you paid on your account if your shares were held through the entire period.

Hypothetical Example for Comparison Purposes

The second line for each class in the table below provides information about hypothetical account values and hypothetical expenses based on the relevant class’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the class’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare these 5% hypothetical examples with the 5% hypothetical examples for the relevant class that appear in the shareholder reports of other funds.


	Beginning Account Value 10/1/07		Ending Account Value 3/31/08		Expenses Paid^A During the Period 10/1/07 to 03/31/08
Primary Class
Actual	$	1,000.00	$	785.40	$	8.17
Hypothetical (5% return before expenses)		1,000.00		1,015.92		9.22
Institutional Class
Actual	$	1,000.00	$	789.40	$	3.53
Hypothetical (5% return before expenses)		1,000.00		1,021.12		3.99

These calculations are based on expenses incurred in the most recent fiscal half-year. The dollar amounts shown as “Expenses Paid” are equal to the annualized expense ratios of 1.83% and 0.79% for the Primary Class and Institutional Class respectively, multiplied by the average values over the period, multiplied by the number of days in the most recent fiscal half-year (183) and divided by 366.


Annual Report to Shareholders		7

Performance Information

American Leading Companies Trust

The graphs on the following pages compare the Fund’s total returns to that of the S&P 500 Stock Composite Index. The graphs illustrate the cumulative total return of an initial $10,000 investment in the Primary Class and an initial $1,000,000 investment in the Institutional Class, for the periods indicated. The lines for the Fund represent the total return after deducting all Fund investment management and other administrative expenses and the transaction costs of buying and selling securities. The lines representing the securities market index do not take into account any transaction costs associated with buying and selling securities in the index or other administrative expenses. Both the Fund’s results and the index’s results assume reinvestment of all dividends and distributions.

Total return measures investment performance in terms of appreciation or depreciation in a fund’s net asset value per share, plus dividends and any capital gain distributions. Average annual returns tend to smooth out variations in a fund’s return, so that they differ from actual year-to-year results.


8		Annual Report to Shareholders

Performance Information — Continued

Growth of a $10,000 Investment — Primary Class

LOGO

Periods Ended March 31, 2008


	Cumulative Total Return		Average Annual Total Return
One Year	–16.24	%	–16.24	%
Five Years	+51.19	%	+8.62	%
Ten Years	+31.96	%	+2.81	%

The performance data quoted represent past performance and do not guarantee future results. The performance stated may have been due to extraordinary market conditions, which may not be duplicated in the future. Current performance may be lower or higher than the performance data quoted. To obtain the most recent month-end performance information please visit www.leggmason.com/individual investors. The investment return and principal value of the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. Calculations assume reinvestment of dividends and capital gain distributions. Performance would have been lower if fees had not been waived in various periods.

The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.


Annual Report to Shareholders		9

Growth of a $1,000,000 Investment — Institutional Class

LOGO

Periods Ended March 31, 2008


	Cumulative Total Return		Average Annual Total Return
One Year	–15.37	%	–15.37	%
Five Years	+58.99	%	+9.72	%
Life of Class*	+23.58	%	+3.16	%

*	Inception date: June 14, 2001

The performance data quoted represent past performance and do not guarantee future results. The performance stated may have been due to extraordinary market conditions, which may not be duplicated in the future. Current performance may be lower or higher than the performance data quoted. To obtain the most recent month-end performance information please visit www.lminstitutionalfunds.com. The investment return and principal value of the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. Calculations assume reinvestment of dividends and capital gain distributions. Performance would have been lower if fees had not been waived in various periods.

The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

^A	Index returns are for periods beginning May 31, 2001.


10		Annual Report to Shareholders

Performance Information — Continued

Portfolio Composition (as of March 31, 2008)^B

(As a percentage of the portfolio)

LOGO

Top Ten Holdings (as of March 31, 2008)


Security	% of Net Assets
J.P. Morgan Chase and Co.	5.0	%
General Electric Co.	3.6	%
Yahoo! Inc.	3.4	%
American International Group Inc.	3.3	%
Nokia Oyj – ADR	3.2	%
Philip Morris International Inc.	3.0	%
International Business Machines Corp.	2.9	%
Lloyds TSB Group PLC	2.9	%
Texas Instruments Inc.	2.8	%
UAL Corp.	2.8	%

^B	The Fund is actively managed. As a result, the composition of its portfolio holdings and sectors is subject to change at any time.


Annual Report to Shareholders		11

Selected Portfolio Performance ^C


Strongest performers for the year ended March 31, 2008^D
1.	Apache Corp.	+72.2	%
2.	Transocean Inc.	+56.0	%
3.	Devon Energy Corp.	+51.7	%
4.	Anadarko Petroleum Corp.	+47.6	%
5.	Nokia Oyj – ADR	+42.0	%
6.	United States Steel Corp.	+29.1	%
7.	Noble Corp.	+26.6	%
8.	The TJX Cos. Inc.	+24.2	%
9.	International Business Machines Corp.	+24.0	%
10.	Caterpillar Inc.	+19.0	%


Weakest performers for the year ended March 31, 2008^D
1.	Countrywide Financial Corp.	–82.9	%
2.	Washington Mutual Inc.	–73.0	%
3.	Sprint Nextel Corp.	–64.6	%
4.	XL Capital Ltd.	–56.6	%
5.	Citigroup Inc.	–56.3	%
6.	Merrill Lynch and Co. Inc.	–49.1	%
7.	WellPoint Inc.	–45.6	%
8.	Pulte Homes Inc.	–44.4	%
9.	Health Net Inc.	–42.8	%
10.	Centex Corp.	–41.8	%

Portfolio Changes


Securities added during the quarter		Securities sold during the quarter
Capital One Financial Corp.		Ambac Financial Group
Philip Morris International Inc.		Intel Corp.
		XM Satellite Radio Holdings Inc.

^C	Individual security performance is measured by the change in the security’s price; for stocks, dividends are assumed to be reinvested at the time they were paid.

^D	Securities held for the entire year.


12		Annual Report to Shareholders

Portfolio of Investments

American Leading Companies Trust

March 31, 2008


	Shares/Par	Value
Common Stocks and Equity Interests — 100.1%
Consumer Discretionary — 12.1%
Automobiles — 0.7%
General Motors Corp.	235,000	$	4,476,750

Household Durables — 3.4%
Centex Corp.	180,000		4,357,800
Lennar Corp.	415,000		7,806,150
Pulte Homes Inc.	570,000		8,293,500

			20,457,450

Internet and Catalog Retail — 1.1%
Expedia Inc.	300,000		6,567,000	^A

Media — 3.6%
The DIRECTV Group Inc.	600,000		14,874,000	^A
Time Warner Inc.	480,000		6,729,600

			21,603,600

Multiline Retail — 1.4%
Sears Holdings Corp.	80,000		8,167,200	^A

Specialty Retail — 1.9%
The TJX Cos. Inc.	340,000		11,243,800

Consumer Staples — 6.8%
Beverages — 1.1%
The Pepsi Bottling Group Inc.	200,000		6,782,000

Food Products — 1.4%
Kraft Foods Inc.	276,809		8,583,847


Annual Report to Shareholders		13


	Shares/Par	Value
Consumer Staples — Continued
Tobacco — 4.3%
Altria Group Inc.	350,000	$	7,770,000
Philip Morris International Inc.	350,000		17,703,000	^A

			25,473,000

Energy — 8.1%
Energy Equipment and Services — 3.6%
Baker Hughes Inc.	71,000		4,863,500
Noble Corp.	175,000		8,692,250
Transocean Inc.	58,000		7,841,600	^A

			21,397,350

Oil, Gas and Consumable Fuels — 4.5%
Anadarko Petroleum Corp.	94,000		5,924,820
Apache Corp.	70,000		8,457,400
Devon Energy Corp.	100,000		10,433,000
Exxon Mobil Corp.	30,000		2,537,400

			27,352,620

Financials — 21.7%
Capital Markets — 1.4%
Merrill Lynch and Co. Inc.	100,000		4,074,000
Morgan Stanley	90,000		4,113,000

			8,187,000

Commercial Banks — 2.9%
Lloyds TSB Group PLC	1,950,000		17,454,011

Consumer Finance — 0.5%
Capital One Financial Corp.	60,000		2,953,200


14		Annual Report to Shareholders

Portfolio of Investments — Continued

American Leading Companies Trust — Continued


	Shares/Par	Value
Financials — Continued
Diversified Financial Services — 9.6%
Bank of America Corp.	395,000	$	14,974,450
Citigroup Inc.	597,500		12,798,450
J.P. Morgan Chase and Co.	700,000		30,065,000

			57,837,900

Insurance — 5.4%
American International Group Inc.	450,000		19,462,500
The Travelers Cos. Inc.	190,000		9,091,500
XL Capital Ltd.	140,000		4,137,000

			32,691,000

Thrifts and Mortgage Finance — 1.9%
Countrywide Financial Corp.	1,330,000		7,315,000
Washington Mutual Inc.	373,000		3,841,900

			11,156,900

Health Care — 10.3%
Biotechnology — 1.1%
Amgen Inc.	160,000		6,684,800	^A
Health Care Providers and Services — 6.0%
Health Net Inc.	268,000		8,254,400	^A
UnitedHealth Group Inc.	480,000		16,492,800
WellPoint Inc.	250,000		11,032,500	^A

			35,779,700

Pharmaceuticals — 3.2%
Johnson and Johnson	180,000		11,676,600
Pfizer Inc.	350,000		7,325,500

			19,002,100


Annual Report to Shareholders		15


	Shares/Par	Value
Industrials — 12.8%
Aerospace and Defense — 4.9%
General Dynamics Corp.	180,000	$	15,006,600
Lockheed Martin Corp.	145,000		14,398,500

			29,405,100

Airlines — 2.8%
UAL Corp.	770,000		16,578,100

Industrial Conglomerates — 3.6%
General Electric Co.	585,000		21,650,850

Machinery — 1.5%
Caterpillar Inc.	119,000		9,316,510

Information Technology — 24.8%
Communications Equipment — 3.2%
Nokia Oyj — ADR	599,703		19,088,546

Computers and Peripherals — 5.6%
Hewlett-Packard Co.	350,000		15,981,000
International Business Machines Corp.	152,000		17,501,280

			33,482,280

Electronic Equipment and Instruments — 2.6%
Flextronics International Ltd.	575,000		5,399,250	^A
Jabil Circuit Inc.	1,100,000		10,406,000

			15,805,250

Internet Software and Services — 5.4%
eBay Inc.	400,000		11,936,000	^A
Yahoo! Inc.	700,000		20,251,000	^A

			32,187,000


16		Annual Report to Shareholders

Portfolio of Investments — Continued

American Leading Companies Trust — Continued


	Shares/Par		Value
Information Technology — Continued
IT Services — 1.5%
Accenture Ltd.		250,000	$	8,792,500

Semiconductors and Semiconductor Equipment — 4.6%
Applied Materials Inc.		550,000		10,730,500
Texas Instruments Inc.		600,000		16,962,000

				27,692,500

Software — 1.9%
Microsoft Corp.		405,000		11,493,900

Materials — 2.0%
Metals and Mining — 2.0%
Alcoa Inc.		50,000		1,803,000
United States Steel Corp.		80,000		10,149,600

				11,952,600

Telecommunication Services — 1.5%
Wireless Telecommunication Services — 1.5%
Sprint Nextel Corp.		1,300,000		8,697,000

Total Common Stocks and Equity Interests (Cost — $451,492,547)				599,993,364

Repurchase Agreements — 0.1%

Goldman Sachs & Co.
2.60%, dated 3/31/08, to be repurchased at $338,466 on 4/1/08 (Collateral: $348,158 Fannie Mae mortgage-backed securities, 5.00% due 10/1/35, value $346,998)	$	338,442		338,442


Annual Report to Shareholders		17


	Shares/Par		Value

JPMorgan Chase and Co. 2.30%, dated 3/31/08, to be repurchased at $338,464 on 4/1/08 (Collateral: $334,000 Fannie Mae note, 5.25%, due 1/15/09, value $345,634)	$	338,442	$	338,442

Total Repurchase Agreements (Cost — $676,884)				676,884

Total Investments — 100.2% (Cost — $452,169,431)^B				600,670,248
Other Assets Less Liabilities — (0.2)%				(925,299	)

Net Assets — 100.0%			$	599,744,949

^A	Non-income producing.

^B	At March 31, 2008, the aggregate gross unrealized appreciation and depreciation of investments for federal income tax purposes were substantially as follows:


Gross unrealized appreciation	$	202,481,431

Gross unrealized depreciation		(56,662,698	)


Net unrealized appreciation	$	145,818,733

ADR

— American Depository Receipt

See notes to financial statements.


18		Annual Report to Shareholders

Statement of Assets and Liabilities

American Leading Companies Trust

March 31, 2008


Assets:
Investment securities at market value (Cost – $451,492,547)			$	599,993,364
Short-term securities at value (Cost – $676,884)				676,884
Receivable for securities sold				1,976,676
Dividends and interest receivable				1,542,971
Receivable for fund shares sold				264,265
Other assets				6,976

Total assets				604,461,136

Liabilities:
Payable for fund shares repurchased	$	3,587,021
Accrued distribution and service fees		462,844
Accrued management fee		365,256
Accrued expenses		301,066

Total liabilities				4,716,187

Net Assets			$	599,744,949

Net assets consist of:
Accumulated paid-in-capital			$	456,037,128
Undistributed net investment income				1,667,958
Accumulated net realized loss on investments and foreign currency transactions				(6,456,548	)
Unrealized appreciation of investments				148,496,411

Net Assets			$	599,744,949

Net Asset Value Per Share:
Primary Class (27,216,359 shares outstanding)			$	19.52

Institutional Class (3,332,677 shares outstanding)			$	20.57

See notes to financial statements.


Annual Report to Shareholders		19

Statement of Operations

American Leading Companies Trust

For the Year Ended March 31, 2008


Investment Income:
Dividends	$	15,360,674
Interest		328,048
Less: Foreign taxes withheld		(81,087	)

Total income				$	15,607,635

Expenses:
Management fees		5,590,730
Distribution and service fees:
Primary Class		7,223,571
Audit and legal fees		40,292
Custodian fees		94,214
Directors’ fees and expenses		67,300
Registration fees		43,904
Reports to shareholders		195,027
Transfer agent and shareholder servicing expense:
Primary Class		469,530
Institutional Class		15,264
Other expenses		78,985

		13,818,817
Less: Compensating balance credits		(5,076	)

Net expenses					13,813,741

Net Investment Income					1,793,894

Net Realized and Unrealized Gain/(Loss) on Investments:

Net realized gain on:
Investments		38,762,908
Foreign currency transactions		20,912

					38,783,820

Change in unrealized appreciation/(depreciation) of:
Investments		(160,516,555	)
Assets and liabilities denominated in foreign currency		(21,681	)

					(160,538,236	)

Net Realized and Unrealized Loss on Investments					(121,754,416	)

Change in Net Assets Resulting From Operations				$	(119,960,522	)

See notes to financial statements.


20		Annual Report to Shareholders

Statement of Changes in Net Assets

American Leading Companies Trust


	For the Year Ended March 31, 2008			For the Year Ended March 31, 2007
Change in Net Assets:

Net investment income (loss)	$	1,793,894		$	(1,390,777	)

Net realized gain		38,783,820			32,569,446

Change in unrealized appreciation/ (depreciation)		(160,538,236	)		20,679,721

Change in net assets resulting from operations		(119,960,522	)		51,858,390

Distributions to shareholders from:
Net investment income:
Primary Class		—			(442,116	)
Institutional Class		—			(122,938	)
Net realized gain on investments:
Primary Class		(44,369,956	)		(39,878,038	)
Institutional Class		(4,690,375	)		(1,711,197	)

Change in net assets from fund share transactions:
Primary Class		(82,074,308	)		(2,542,988	)
Institutional Class		13,294,031			31,278,504

Change in net assets		(237,801,130	)		38,439,617

Net Assets:

Beginning of year		837,546,079			799,106,462

End of year	$	599,744,949		$	837,546,079

Undistributed net investment income and overdistributed net investment income, respectively	$	1,667,958		$	(47,362	)

See notes to financial statements.


Annual Report to Shareholders		21

Financial Highlights

American Leading Companies Trust

For a share of each class of capital stock outstanding:

Primary Class:


	Years Ended March 31,
	2008			2007			2006			2005			2004
Net asset value, beginning of year	$	24.87		$	24.59		$	21.85		$	19.85		$	14.54

Investment operations:
Net investment income/(loss)		.03	^A		(.06	)^A		.01			—	^B		.01
Net realized and unrealized gain/(loss)		(3.81	)		1.64			2.73			2.01			5.30

Total from investment operations		(3.78	)		1.58			2.74			2.01			5.31

Distributions from:
Net investment income		—			(.01	)		—			(.01	)		—	^B
Net realized gain on investments		(1.57	)		(1.29	)		—			—			—

Total distributions		(1.57	)		(1.30	)		—			(.01	)		—

Net asset value, end of year	$	19.52		$	24.87		$	24.59		$	21.85		$	19.85

Total return		(16.24	)%		6.68	%		12.54	%		10.12	%		36.54	%

Ratios to Average Net Assets:^C
Total expenses		1.83	%		1.85	%		1.86	%		1.88	%		1.90	%
Expenses net of waivers, if any		1.83	%		1.85	%		1.86	%		1.88	%		1.90	%
Expenses net of all reductions		1.83	%		1.85	%		1.86	%		1.88	%		1.90	%
Net investment income (loss)		.12	%		(.23	)%		.04	%		(.01	)%		.05	%
Supplemental Data:
Portfolio turnover rate		28.4	%		19.0	%		14.3	%		19.4	%		19.6	%
Net assets, end of year (in thousands)	$	531,186		$	765,000		$	757,630		$	654,019		$	585,295

^A	Computed using average daily shares outstanding.

^B	Amount less than $.01 per share.

Total expenses reflects operating expenses prior to any voluntary expense waivers and/or compensating balance credits. Expenses net of waivers reflects total expenses before compensating balance credits but net of any voluntary expense waivers. Expenses net of all reductions reflects expenses less any compensating balance credits and/or voluntary expense waivers.

See notes to financial statements.


22		Annual Report to Shareholders

Financial Highlights — Continued

American Leading Companies Trust

Institutional Class:


	Years Ended March 31,
	2008			2007			2006			2005			2004
Net asset value, beginning of year	$	25.86		$	25.33		$	22.34		$	20.28		$	14.83

Investment operations:
Net investment income		.31	^A		.23	^A		.22			.21			.20
Net realized and unrealized gain/(loss)		(4.03	)		1.67			2.82			2.06			5.42

Total from investment operations		(3.72	)		1.90			3.04			2.27			5.62

Distributions from:
Net investment income		—			(.08	)		(.05	)		(.21	)		(.17	)
Net realized gain on investments		(1.57	)		(1.29	)		—			—			—

Total distributions		(1.57	)		(1.37	)		(.05	)		(.21	)		(.17	)

Net asset value, end of year	$	20.57		$	25.86		$	25.33		$	22.34		$	20.28

Total return		(15.37	)%		7.77	%		13.63	%		11.21	%		37.96	%

Ratios to Average Net Assets:^C
Total expenses		.79	%		.82	%		.84	%		.90	%		.85	%
Expenses net of waivers, if any		.79	%		.82	%		.84	%		.90	%		.85	%
Expenses net of all reductions		.79	%		.82	%		.84	%		.90	%		.85	%
Net investment income		1.22	%		.90	%		1.09	%		.99	%		1.14	%
Supplemental Data:
Portfolio turnover rate		28.4	%		19.0	%		14.3	%		19.4	%		19.6	%
Net assets, end of year (in thousands)	$	68,559		$	72,546		$	41,476		$	21,386		$	16,996

See notes to financial statements.


Annual Report to Shareholders		23

Management’s Discussion of Fund Performance

U.S. Small-Capitalization Value Trust

Total returns for the U.S. Small-Capitalization Value Trust (“Fund”) for various periods ended March 31, 2008, are presented below, along with those of some comparative indices^A:

Average Annual Total Returns
Through March 31, 2008

First Quarter
2008

One
Year

Three
Years

Five
Years

Since
Inception^B

U.S. Small-Cap Value Trust

Primary Class

–4.23

–17.94

–0.37

+12.17

+5.21

Institutional Class

–4.00

–17.17

+0.63

+13.37

+6.39

Russell 1000 Index

–9.48

–5.40

+6.19

+11.86

+4.02

Russell 1000 Growth Index

–10.18

–0.75

+6.33

+9.96

+1.46

Russell 1000 Value Index

–8.72

–9.99

+6.01

+13.68

+5.72

Russell 2000 Index

–9.90

–13.00

+5.06

+14.90

+5.58

Russell 2000 Value Index

–6.53

–16.88

+4.33

+15.45

+7.93

Russell 2500 Index

–9.37

–11.27

+6.01

+15.67

+7.49

Russell 2500 Value Index

–7.22

–16.54

+4.41

+15.56

+8.36

Russell Midcap Index

–9.98

–8.92

+7.36

+16.31

+8.11

Russell Midcap Value Index

–8.64

–14.12

+6.57

+16.77

+8.62

S&P 500 Stock Composite Index

–9.44

–5.08

+5.85

+11.32

+3.64

The performance data quoted represent past performance and do not guarantee future results. The performance stated may have been due to extraordinary market conditions, which may not be duplicated in the future. Current performance may be lower or higher than the performance data quoted. To obtain the most recent month-end performance information for the Primary Class please visit www.leggmason.com/individual investors. For the Institutional Class please visit www.lminstitutionalfunds.com. The investment return and principal value of the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. Calculations assume reinvestment of dividends and capital gain distributions. Performance would have been lower if fees had not been waived in various periods.

The last 12 months have been an extraordinary period for the U.S. economy and for global financial markets. The relative calm of a year ago was disrupted by a series of unanticipated crises, originating primarily from the collapsing U.S. housing market.

^A	See Glossary of Index Definitions on page 76. Although it is not possible to invest directly in an index, it is possible to purchase investment vehicles designed to track the performance of certain indices. Past performance does not guarantee future results.

^B	The inception date of the Primary Class is June 15, 1998. The inception date of the Institutional Class is June 19, 1998. Index returns are for the periods beginning May 31, 1998.


24		Annual Report to Shareholders

Management’s Discussion of Fund Performance — Continued

Declining U.S. home prices severely impaired the mortgage market and its problem then spread throughout the financial world to infect various banks (domestically and globally), hedge funds, the municipal bond market, investment banks, and money market funds. Investors, financial institutions, and regulators seemed constantly caught off guard by the pervasive impact that the declining value of mortgages had on global financial markets.

U.S. equity returns reflected the troubled times, as stock prices fell through much of the period, including the latest quarter. For the 12 months, larger stocks declined the least, with the S&P 500 Index off –5.1% and the Russell 1000 Index down –5.4%, while the Russell 2000 Index dropped –13.0% and the Russell 2000 Value Index retreated –16.9%. Value stocks also trailed growth over the year, although smaller cap stocks and value stocks performed better relatively in the most recent quarter. The financial stocks were some of the worst performers this last year, reflecting the turmoil among these companies while consumer durable and retailer stock suffered as consumer spending slowed. Materials, commodity, and energy stocks performed quite well as continued global growth pushed demand and prices for their products.

Monetary authorities, particularly the U.S. Federal Reserve Board (Fed)^C, moved aggressively to maintain financial stability. In addition to supporting the Bear Stearns rescue by JPMorgan, the Fed took the historic action of broadening its practices to allow for direct lending to investment banks. The Fed also cut short rates on March 18, 2008 to 2.25%, a full 3.0% reduction from a year ago. As the first quarter of 2008 closed, these measures seemed to succeed, at least for the short-run, in restoring liquidity and relieving stress in the financial markets. News on the economic front also deteriorated over the last year as mortgage delinquencies and foreclosures continued to rise and housing prices continued to fall. Additional reports confirmed that the slowdown was moving from Wall Street to the broader economy as consumer confidence fell, retail sales were weak, and employment softened. The Fed also had to contend with inflation as energy, grains, and other commodities traded near record levels, compounded by a weaker dollar. Globally, economic news was mixed, but growth seemed more resilient outside the U.S.

Over the last year, the Fund’s return trailed the returns for the Russell 2000 Index and Russell 2000 Value Index. The Fund has generally been underweight in the materials stocks, including steel and fertilizer producers, which hurt performance, but overweight in energy services firms, which helped to offset those losses. One negative for the Fund was that its industrial holdings have not benefited as much from the resilient global

^C	Federal Reserve Board (Fed) – is charged with, among other things, managing the nation’s monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates.


Annual Report to Shareholders		25

economy as the typical small cap industrial and its holdings’ returns lagged. In the financial sector, the Fund’s significant position in the mortgage lenders was a negative for it as this group was one of the worst performers for the year. On the other hand, the Fund’s small-cap banks and insurance companies held up relatively well and benefited the Fund’s performance. Finally, utility stocks have been defensive in this difficult year, and the Fund both had an overweight position in these stocks and our holdings performed better than the typical small-cap utility.

During the last year, we reduced the Fund’s holdings in consumer discretionary stocks, while increasing our weighting in energy and information technology stocks. These changes have been the result of both the relative performance of each group and the changes to their valuation within our quantitative models. Our weight in the financial sector is relatively unchanged and this remains the largest sector in about a third of the portfolio.

Henry Otto

Steve Tonkovich

April 24, 2008

DJIA: 12,848.95


26		Annual Report to Shareholders

Expense Example

U.S. Small-Capitalization Value Trust

Actual Expenses

Hypothetical Example for Comparison Purposes


	Beginning Account Value 10/1/07		Ending Account Value 3/31/08		Expenses Paid^A During the Period 10/1/07 to 3/31/08
Primary Class:
Actual	$	1,000.00	$	862.30	$	9.31
Hypothetical (5% return before expenses)		1,000.00		1,015.07		10.08

Institutional Class:
Actual	$	1,000.00	$	866.60	$	4.67
Hypothetical (5% return before expenses)		1,000.00		1,020.07		5.05

These calculations are based on expenses incurred in the most recent fiscal half-year. The dollar amounts shown as “Expenses Paid” are equal to the annualized expense ratios of 2.00% and 1.00% for the Primary Class and Institutional Class respectively, multiplied by the average values over the period, multiplied by the number of days in the most recent fiscal half-year (183) and divided by 366.


Annual Report to Shareholders		27

Performance Information

U.S. Small-Capitalization Value Trust

The graphs on the following pages compare the Fund’s total returns to that of the Russell 2000 Index. The graphs illustrate the cumulative total return of an initial $10,000 investment in the Primary Class and an initial $1,000,000 investment in the Institutional Class, for the periods indicated. The lines for the Fund represent the total return after deducting all Fund investment management and other administrative expenses and the transaction costs of buying and selling securities. The lines representing the securities market index do not take into account any transaction costs associated with buying and selling securities in the index or other administrative expenses. Both the Fund’s results and the index’s results assume reinvestment of all dividends and distributions.


28		Annual Report to Shareholders

Performance Information — Continued

Growth of a $10,000 Investment — Primary Class

LOGO

Periods Ended March 31, 2008


	Cumulative Total Return		Average Annual Total Return
One Year	-17.94	%	-17.94	%
Five Years	+77.54	%	+12.17	%
Life of Class*	+64.44	%	+5.21	%

*	Inception date: June 15, 1998

The performance data quoted represent past performance and do not guarantee future results. The performance stated may have been due to extraordinary market conditions, which may not be duplicated in the future. Current performance may be lower or higher than the performance data quoted. To obtain the most recent month-end performance information please visit www.leggmason.com/individual investors. The investment return and principal value of the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. Calculations assume reinvestment of dividends and capital gain distributions. Performance would have been lower if fees had not been waived in various periods.

The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

^A	Index returns are for periods beginning May 31, 1998.


Annual Report to Shareholders		29

Growth of a $1,000,000 Investment — Institutional Class

LOGO

Periods Ended March 31, 2008


	Cumulative Total Return		Average Annual Total Return
One Year	-17.17	%	-17.17	%
Five Years	+87.29	%	+13.37	%
Life of Class*	+83.20	%	+6.39	%

*	Inception date: June 19, 1998

The performance data quoted represent past performance and do not guarantee future results. The performance stated may have been due to extraordinary market conditions, which may not be duplicated in the future. Current performance may be lower or higher than the performance data quoted. To obtain the most recent month-end performance information please visit www.lminstitutionalfunds.com. The investment return and principal value of the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. Calculations assume reinvestment of dividends and capital gain distributions. Performance would have been lower if fees had not been waived in various periods.

The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

^B	Index returns are for periods beginning June 30, 1998.


30		Annual Report to Shareholders

Performance Information — Continued

Portfolio Composition (as of March 31, 2008)C

(As a percentage of the portfolio)

LOGO

Top Ten Holdings (as of March 31, 2008)


Security	% of Net Assets
Odyssey Re Holdings Corp.	1.4	%
Westar Energy Inc.	1.3	%
Con-way Inc.	1.3	%
SkyWest Inc.	1.2	%
Del Monte Foods Co.	1.1	%
Rent-A-Center Inc.	1.1	%
Stone Energy Corp.	1.1	%
StanCorp Financial Group Inc.	1.1	%
Atmos Energy Corp.	1.1	%
Hanover Insurance Group Inc.	1.1	%

^C	The Fund is actively managed. As a result, the composition of its portfolio holdings and sectors is subject to change at any time.


Annual Report to Shareholders		31

Selected Portfolio Performance ^D


Strongest performers for the year ended March 31, 2008^E
1.	GrafTech International Ltd.	+78.5	%
2.	Stone Energy Corp.	+76.2	%
3.	Hornbeck Offshore Services Inc.	+59.4	%
4.	Ampco-Pittsburgh Corp.	+51.2	%
5.	Industrial Services of America Inc.	+51.0	%
6.	Bristow Group Inc.	+47.2	%
7.	Ameron International Corp.	+43.6	%
8.	Callon Petroleum Co.	+33.3	%
9.	Hastings Entertainment Inc.	+28.9	%
10.	Gulfmark Offshore Inc.	+25.4	%


Weakest performers for the year ended March 31, 2008^E
1.	USEC Inc.	–77.2	%
2.	PFF Bancorp Inc.	–71.6	%
3.	Mesa Air Group Inc.	–68.8	%
4.	YRC Worldwide Inc.	–67.4	%
5.	Provident Bankshares Corp.	–65.6	%
6.	Mercantile Bank Corp.	–65.6	%
7.	Marlin Business Services Corp.	–65.5	%
8.	Big 5 Sporting Goods Corp.	–65.5	%
9.	Tuesday Morning Corp.	–65.1	%
10.	McClatchy Co.	–64.5	%

^D	Individual security performance is measured by the change in the security’s price; for stocks, dividends are assumed to be reinvested at the time they were paid. Portfolio changes are not reported for U.S. Small-Cap due to the Fund’s high volume of trading.

^E	Securities held for the entire year.


32		Annual Report to Shareholders

Portfolio of Investments

U.S. Small-Capitalization Value Trust

March 31, 2008


	Shares/Par	Value
Common Stocks and Equity Interests — 99.3%
Consumer Discretionary — 16.6%
Auto Components — 1.1%
Aftermarket Technology Corp.	3,815	$	74,164	^A
ArvinMeritor Inc.	33,110		414,206
Dorman Products Inc.	11,250		120,937	^A
Modine Manufacturing Co.	14,610		211,699
Superior Industries International Inc.	6,500		134,875
TRW Automotive Holdings Corp.	18,760		438,421	^A

			1,394,302

Distributors — 0.1%
Audiovox Corp.	5,000		53,400	^A
Core-Mark Holding Co. Inc.	900		25,866	^A

			79,266

Diversified Consumer Services — 0.4%
Pre-Paid Legal Services Inc.	12,140		514,857	^A

Hotels, Restaurants and Leisure — 1.9%
Bluegreen Corp.	35,830		240,061	^A
CBRL Group Inc.	27,250		974,733
CEC Entertainment Inc.	12,340		356,379	^A
Domino’s Pizza Inc.	7,100		95,779
Dover Downs Gaming and Entertainment Inc.	5,900		50,209
Frisch’s Restaurants Inc.	5,800		133,400
Interstate Hotels and Resorts Inc.	3,000		14,340	^A
Landry’s Restaurants Inc.	3,100		50,468
Ruth’s Chris Steak House Inc.	1,900		13,129	^A
Speedway Motorsports Inc.	19,740		494,882

			2,423,380

Household Durables — 1.9%
Bassett Furniture Industries Inc.	2,800		34,552
Blyth Inc.	4,700		92,684
Craftmade International Inc.	8,581		69,077
CSS Industries Inc.	17,370		607,255


Annual Report to Shareholders		33


	Shares/Par	Value
Consumer Discretionary — Continued
Household Durables — Continued
Ethan Allen Interiors Inc.	41,530	$	1,180,698
Furniture Brands International Inc.	11,800		138,060
Hooker Furniture Corp.	13,430		300,026
La-Z-Boy Inc.	8,400		70,056

			2,492,408

Internet and Catalog Retail — N.M.
FTD Group Inc.	3,400		45,628
Systemax Inc.	300		3,618

			49,246

Leisure Equipment and Products — 1.2%
Aldila Inc.	5,200		59,280
Escalade Inc.	8,065		71,537
JAKKS Pacific Inc.	34,060		939,034	^A
MarineMax Inc.	15,200		189,392	^A
Polaris Industries Inc.	8,490		348,175

			1,607,418

Media — 1.2%
AH Belo Corp.	7,148		81,702	^A
Alloy Inc.	3,300		24,458	^A
Belo Corp.	35,740		377,772
Cox Radio Inc.	3,500		41,580	^A
Getty Images Inc.	4,670		149,440	^A
Journal Communications Inc.	40,380		298,004
McClatchy Co.	5,720		61,204
Saga Communications Inc.	15,100		84,560	^A
Scholastic Corp.	300		9,081	^A
Valassis Communications Inc.	35,040		380,184	^A

			1,507,985

Multiline Retail — 0.1%
Tuesday Morning Corp.	38,110		197,410	^A


34		Annual Report to Shareholders

Portfolio of Investments — Continued

U.S. Small-Capitalization Value Trust — Continued


	Shares/Par	Value
Consumer Discretionary — Continued
Specialty Retail — 6.9%
Aaron Rents Inc.	5,500	$	118,470
America’s Car-Mart Inc.	1,200		15,108	^A
Asbury Automotive Group Inc.	47,380		651,949
Big 5 Sporting Goods Corp.	20,790		182,328
Build-A-Bear Workshop Inc.	11,510		104,626	^A
Charlotte Russe Holding Inc.	9,280		160,915	^A
Charming Shoppes Inc.	79,696		384,932	^A
Collective Brands Inc.	10,190		123,503	^A
Conn’s Inc.	26,900		438,739	^A
Foot Locker Inc.	6,000		70,620
Genesco Inc.	9,240		213,536	^A
Group 1 Automotive Inc.	30,800		723,184
Hastings Entertainment Inc.	18,850		148,161	^A
Haverty Furniture Cos. Inc.	4,100		43,624
Jos. A Bank Clothiers Inc.	3,998		81,959	^A
Lithia Motors Inc.	18,520		188,163
Penske Automotive Group Inc.	62,150		1,209,439
Rent-A-Center Inc.	78,320		1,437,172	^A
REX Stores Corp.	17,055		335,472	^A
Shoe Carnival Inc.	3,300		44,649	^A
Sonic Automotive Inc.	43,240		888,582
Stage Stores Inc.	20,115		325,863
The Cato Corp.	22,210		331,818
The Dress Barn Inc.	18,260		236,284	^A
Zale Corp.	21,270		420,295	^A

			8,879,391

Textiles, Apparel and Luxury Goods — 1.8%
Brown Shoe Co. Inc.	16,880		254,382
Columbia Sportswear Co.	3,000		132,090
Culp Inc.	3,000		22,560	^A
Jones Apparel Group Inc.	27,260		365,829
K-Swiss Inc.	18,410		291,246
Lakeland Industries Inc.	500		5,845	^A
Maidenform Brands Inc.	8,390		136,505	^A


Annual Report to Shareholders		35


	Shares/Par	Value
Consumer Discretionary — Continued
Textiles, Apparel and Luxury Goods — Continued
Perry Ellis International Inc.	1,700	$	37,111	^A
Skechers U.S.A. Inc.	12,540		253,433	^A
Steven Madden Ltd.	5,423		92,896	^A
The Timberland Co.	35,850		492,221	^A
Unifi Inc.	9,300		26,877	^A
UniFirst Corp.	6,500		241,085

			2,352,080

Consumer Staples — 2.5%
Food Products — 1.5%
Chiquita Brands International Inc.	6,100		140,971	^A
Del Monte Foods Co.	154,390		1,471,337
Monterey Gourmet Foods Inc.	4,100		12,546	^A
Sanderson Farms Inc.	7,700		292,677

			1,917,531

Personal Products — 0.5%
CCA Industries Inc.	2,700		24,516
Elizabeth Arden Inc.	3,000		59,850	^A
Mannatech Inc.	19,500		139,035
NBTY Inc.	7,900		236,605	^A
Nutraceutical International Corp.	10,270		133,510	^A
Parlux Fragrances Inc.	2,100		6,174	^A
Schiff Nutrition International Inc.	10,660		63,853

			663,543

Tobacco — 0.5%
Universal Corp.	10,460		685,444

Energy — 7.5%
Energy Equipment and Services — 4.5%
Allis-Chalmers Energy Inc.	1,300		17,927	^A
Basic Energy Services Inc.	4,800		105,984	^A
Bristow Group Inc.	10,110		542,604	^A
Bronco Drilling Co. Inc.	9,480		152,723	^A
Cal Dive International Inc.	14,435		149,835	^A


36		Annual Report to Shareholders

Portfolio of Investments — Continued

U.S. Small-Capitalization Value Trust — Continued


	Shares/Par	Value
Energy — Continued
Energy Equipment and Services — Continued
Complete Production Services Inc.	6,900	$	158,286	^A
Grey Wolf Inc.	81,960		555,689	^A
Gulfmark Offshore Inc.	13,230		723,945	^A
Hercules Offshore Inc.	900		22,608	^A
Hornbeck Offshore Services Inc.	9,080		414,684	^A
Key Energy Services Inc.	1,300		17,446	^A
Lufkin Industries Inc.	6,500		414,830
Oil States International Inc.	14,800		663,188	^A
Parker Drilling Co.	7,300		47,158	^A
PHI Inc.	1,100		34,694	^A
Pioneer Drilling Co.	22,200		353,646	^A
SEACOR Holdings Inc.	1,500		128,040	^A
Superior Well Services Inc.	17,180		375,727	^A
Trico Marine Services Inc.	6,700		261,099	^A
Union Drilling Inc.	15,400		269,346	^A
Unit Corp.	900		50,985	^A
W-H Energy Services Inc.	5,800		399,330	^A

			5,859,774

Oil, Gas and Consumable Fuels — 3.0%
Alon USA Energy Inc.	9,030		137,346
Brigham Exploration Co.	47,680		289,418	^A
Callon Petroleum Co.	19,250		348,232	^A
Delek US Holdings Inc.	23,400		296,478
Overseas Shipholding Group Inc.	2,000		140,080
Rosetta Resources Inc.	2,000		39,475	^A
St Mary Land and Exploration Co.	600		23,100
Stone Energy Corp.	27,070		1,416,032	^A
Swift Energy Co.	7,300		328,427	^A
USEC Inc.	28,820		106,634	^A
VAALCO Energy Inc.	600		2,982	^A
W&T Offshore Inc.	20,400		695,844

			3,824,048


Annual Report to Shareholders		37


	Shares/Par	Value
Financials — 35.8%
Capital Markets — N.M.
FirstCity Financial Corp.	1,100	$	6,930	^A
SWS Group Inc.	4,200		51,366

			58,296

Commercial Banks — 15.4%
1st Source Corp.	7,500		157,875
American National Bankshares Inc.	9,480		199,080
Ameris Bancorp	4,200		67,452
Arrow Financial Corp.	11,087		249,347
BancFirst Corp.	11,008		503,946
BancorpSouth Inc.	18,160		420,586
Cadence Financial Corp.	5,300		84,641
Camden National Corp.	11,750		397,620
Cathay General Bancorp	17,670		366,299
Chemical Financial Corp.	19,211		457,990
Citizens Banking Corp.	60,334		749,951
City Bank	6,000		133,620
Columbia Banking System Inc.	18,943		423,944
Community Bank System Inc.	21,210		520,918
Community Trust Bancorp Inc.	20,876		611,667
F.N.B. Corp.	50,840		793,612
First Bancorp	7,078		141,065
First Community Bancshares Inc.	11,450		417,009
First M&F Corp.	10,686		154,947
First Merchants Corp.	7,500		214,050
First Midwest Bancorp Inc.	16,290		452,373
First United Corp.	8,086		160,265
Firstbank Corp.	1,201		16,096
FNB Corp.	6,737		70,738
Fulton Financial Corp.	76,210		936,621
German American Bancorp Inc.	9,870		125,546
Great Southern Bancorp Inc.	5,600		87,416
Greene Bancshares Inc.	2,900		51,301
Harleysville National Corp.	2,270		32,733
IBERIABANK Corp.	5,775		255,544


38		Annual Report to Shareholders

Portfolio of Investments — Continued

U.S. Small-Capitalization Value Trust — Continued


	Shares/Par	Value
Financials — Continued
Commercial Banks — Continued
Independent Bank Corp.	10,370	$	107,641
International Bancshares Corp.	41,106		928,173
Lakeland Financial Corp.	11,060		250,509
Macatawa Bank Corp.	6,725		70,007
MainSource Financial Group Inc.	16,214		251,319
Mercantile Bank Corp.	2,455		25,336
Merchants Bancshares Inc.	4,200		96,096
National Penn Bancshares Inc.	22,683		412,604
NBT Bancorp Inc.	35,190		781,218
Northrim BanCorp Inc.	8,820		160,348
Old Point Financial Corp.	1,971		37,710
PAB Bankshares Inc.	13,520		185,900
Pacific Capital Bancorp	19,150		411,725
Park National Corp.	6,600		467,610
Penns Woods Bancorp Inc.	4,680		155,142
Peoples Bancorp Inc.	11,558		278,663
Prosperity Bancshares Inc.	4,100		117,506
Provident Bankshares Corp.	16,505		177,264
Renasant Corp.	9,102		204,795
Republic First Bancorp Inc.	14,418		71,081	^A
Royal Bancshares of Pennsylvania Inc.	1,450		20,981
S&T Bancorp Inc.	7,900		254,143
Sierra Bancorp	5,840		126,202
Simmons First National Corp.	8,290		246,462
Southwest Bancorp Inc.	10,460		183,155
Susquehanna Bancshares Inc.	23,890		486,639
Taylor Capital Group Inc.	5,564		91,361
TriCo Bancshares	13,377		231,556
Trustmark Corp.	52,630		1,172,596
Union Bankshares Corp.	5,800		112,346
United Bankshares Inc.	17,670		470,905
Univest Corp. of Pennsylvania	9,970		261,114
Washington Trust Bancorp Inc.	6,100		151,402
WesBanco Inc.	14,410		356,071
West Bancorporation	7,700		101,332


Annual Report to Shareholders		39


	Shares/Par	Value
Financials — Continued
Commercial Banks — Continued
West Coast Bancorp	9,230	$	134,666
Whitney Holding Corp.	36,820		912,768
Wintrust Financial Corp.	2,400		83,880
Yadkin Valley Financial Corp.	6,100		77,165

			19,919,643

Consumer Finance — 0.6%
AmeriCredit Corp.	43,930		442,375	^A
Credit Acceptance Corp.	11,550		179,371	^A
Nelnet Inc.	12,880		151,340
World Acceptance Corp.	1,700		54,145	^A

			827,231

Diversified Financial Services — 0.6%
Asset Acceptance Capital Corp.	32,820		316,057
California First National Bancorp	6,600		63,756
Financial Federal Corp.	12,340		269,135
Marlin Business Services Corp.	8,180		61,677	^A
Medallion Financial Corp.	1,800		16,272

			726,897

Insurance — 14.6%
21st Century Holding Co.	800		10,248
American Equity Investment Life Holding Co.	54,000		501,120
American Physicians Capital Inc.	900		41,724
Amtrust Financial Services Inc.	5,600		90,776
Baldwin and Lyons Inc.	1,300		33,384
CNA Surety Corp.	43,930		675,643	^A
Conseco Inc.	46,960		478,992	^A
Delphi Financial Group Inc.	42,825		1,251,775
Donegal Group Inc. — Class A	7,245		126,063
Donegal Group Inc. — Class B	3,672		65,912
Eastern Insurance Holdings Inc.	1,000		14,480
EMC Insurance Group Inc.	5,962		160,318
FBL Financial Group Inc.	35,900		1,022,791
First Mercury Financial Corp.	1,700		29,597	^A


40		Annual Report to Shareholders

Portfolio of Investments — Continued

U.S. Small-Capitalization Value Trust — Continued


	Shares/Par	Value
Financials — Continued
Insurance — Continued
FPIC Insurance Group Inc.	900	$	42,426	^A
Hallmark Financial Services Inc.	1,900		21,204	^A
Hanover Insurance Group Inc.	33,270		1,368,728
Harleysville Group Inc.	18,260		659,003
Horace Mann Educators Corp.	43,930		767,897
Infinity Property and Casualty Corp.	24,980		1,039,168
IPC Holdings Ltd.	5,900		165,200
Max Capital Group Ltd.	5,300		138,807
Meadowbrook Insurance Group Inc.	47,090		367,773
Mercer Insurance Group Inc.	1,900		33,041
Mercury General Corp.	440		19,496
Montpelier Re Holdings Ltd.	9,100		146,055
National Interstate Corp.	8,090		188,902
National Western Life Insurance Co.	3,200		693,728
Navigators Group Inc.	7,300		397,120	^A
Nymagic Inc.	8,190		185,995
Odyssey Re Holdings Corp.	48,290		1,774,658
Platinum Underwriters Holdings Ltd.	4,900		159,054
PMA Capital Corp.	3,300		28,182	^A
Presidential Life Corp.	32,770		571,509
ProAssurance Corp.	3,300		177,639	^A
ProCentury Corp.	12,240		220,320
RLI Corp.	8,590		425,806
Safety Insurance Group Inc.	22,205		757,857
SeaBright Insurance Holdings	9,280		136,694	^A
Selective Insurance Group Inc.	25,170		601,060
Specialty Underwriters’ Alliance Inc.	6,400		27,264	^A
StanCorp Financial Group Inc.	29,610		1,412,693
State Auto Financial Corp.	15,790		459,963
Stewart Information Services Corp.	1,700		47,583
The Phoenix Cos. Inc.	50,540		617,093
Unico American Corp.	5,200		48,880	^A
United America Indemnity Ltd.	2,100		40,446	^A
United Fire and Casualty Co.	14,416		539,158


Annual Report to Shareholders		41


	Shares/Par	Value
Financials — Continued
Insurance — Continued
Unitrin Inc.	1,500	$	53,010
Universal Insurance Holdings Inc.	3,600		13,608

			18,849,843

Thrifts and Mortgage Finance — 4.6%
Anchor Bancorp Wisconsin Inc.	30,680		582,000
Corus Bankshares Inc.	71,470		695,403
First Defiance Financial Corp.	2,902		53,252
First Financial Holdings Inc.	13,720		321,871
First Financial Service Corp.	6,382		152,211
First Place Financial Corp.	15,382		199,966
FirstFed Financial Corp.	14,780		401,277	^A
Flushing Financial Corp.	16,930		297,629
Harrington West Financial Group Inc.	7,555		61,724
HMN Financial Inc.	5,900		136,172
Legacy Bancorp Inc.	800		11,176
NewAlliance Bancshares Inc.	10,200		125,052
North Central Bancshares Inc.	2,300		66,953
Parkvale Financial Corp.	8,590		230,556
PFF Bancorp Inc.	19,080		158,746
Timberland Bancorp Inc.	12,640		147,256
United Financial Bancorp Inc.	1,600		17,728
Washington Federal Inc.	56,447		1,289,249
Webster Financial Corp.	28,530		795,131
WSFS Financial Corp.	4,000		197,120

			5,940,472

Health Care — 1.5%
Biotechnology — 0.1%
Trimeris Inc.	10,290		67,091	^A

Health Care Equipment and Supplies — 0.1%
Cardiac Science Corp.	5,100		42,585	^A
HealthTronics Inc.	3,300		10,692	^A
National Dentex Corp.	2,022		26,064	^A


42		Annual Report to Shareholders

Portfolio of Investments — Continued

U.S. Small-Capitalization Value Trust — Continued


	Shares/Par	Value
Health Care — Continued
Health Care Equipment and Supplies — Continued
Span-America Medical Systems Inc.	300	$	3,540
Theragenics Corp.	3,400		13,396	^A

			96,277

Health Care Providers and Services — 1.2%
Advocat Inc.	2,700		29,376	^A
Apria Healthcare Group Inc.	33,460		660,835	^A
Healthspring Inc.	5,600		78,848	^A
LifePoint Hospitals Inc.	27,160		746,085	^A
Lincare Holdings Inc.	1,000		28,110	^A
Universal American Financial Corp.	7,600		80,560	^A

			1,623,814

Life Sciences Tools and Services — 0.1%
Albany Molecular Research Inc.	7,900		95,906	^A

Pharmaceuticals — N.M.
Caraco Pharmaceutical Laboratories Ltd.	1,100		19,745	^A
King Pharmaceuticals Inc.	4,060		35,322	^A

			55,067

Industrials — 16.8%
Aerospace and Defense — 0.1%
Astronics Corp.	600		11,592	^A
Herley Industries Inc.	1,400		14,476	^A
SIFCO Industries Inc.	4,700		48,410	^A

			74,478

Air Freight and Logistics — 0.7%
ABX Air Inc.	48,080		141,355	^A
Air T Inc.	1,100		10,582
Atlas Air Worldwide Holdings Inc.	2,200		121,000	^A
Pacer International Inc.	26,950		442,789
Park-Ohio Holdings Corp.	9,700		152,387	^A

			868,113


Annual Report to Shareholders		43


	Shares/Par	Value
Industrials — Continued
Airlines — 2.2%
Alaska Air Group Inc.	4,500	$	88,290	^A
Mesa Air Group Inc.	54,620		128,357	^A
Pinnacle Airlines Corp.	17,000		148,410	^A
Republic Airways Holdings Inc.	43,930		951,524	^A
SkyWest Inc.	71,360		1,507,123

			2,823,704

Building Products — 2.2%
Ameron International Corp.	5,580		521,897
Lennox International Inc.	34,620		1,245,282
NCI Building Systems Inc.	9,050		219,010	^A
Simpson Manufacturing Co. Inc.	11,960		325,073
U.S. Home Systems Inc.	2,600		9,438	^A
Universal Forest Products Inc.	17,180		553,196

			2,873,896

Commercial Services and Supplies — 2.1%
Comforce Corp.	12,730		26,606	^A
COMSYS IT Partners Inc.	1,700		14,382	^A
Deluxe Corp.	30,840		592,436
Ennis Inc.	18,060		303,047
Heidrick and Struggles International Inc.	2,100		68,313
Herman Miller Inc.	4,500		110,565
Industrial Services of America Inc.	3,400		33,932
Kelly Services Inc.	12,730		261,729
Kforce Inc.	1,500		13,260	^A
Kimball International Inc.	6,100		65,392
Knoll Inc.	17,280		199,411
Korn/Ferry International	5,800		98,020	^A
Mobile Mini Inc.	4,300		81,700	^A
PeopleSupport Inc.	4,900		44,688	^A
RCM Technologies Inc.	1,200		4,632	^A
TrueBlue Inc.	29,910		401,990	^A
United Stationers Inc.	3,800		181,260	^A
Virco Manufacturing	9,300		48,639


44		Annual Report to Shareholders

Portfolio of Investments — Continued

U.S. Small-Capitalization Value Trust — Continued


	Shares/Par	Value
Industrials — Continued
Commercial Services and Supplies — Continued
Volt Information Sciences Inc.	8,980	$	152,301	^A
VSE Corp.	1,200		33,876
WCA Waste Corp.	4,200		25,536	^A

			2,761,715

Construction and Engineering — 0.4%
Michael Baker Corp.	900		20,214	^A
Northwest Pipe Co.	2,900		123,221	^A
Perini Corp.	10,700		387,661	^A

			531,096

Electrical Equipment — 1.9%
A.O. Smith Corp.	16,190		532,165
Acuity Brands Inc.	9,260		397,717
GrafTech International Ltd.	45,800		742,418	^A
Plug Power Inc.	19,600		60,956	^A
Regal-Beloit Corp.	18,460		676,190
SL Industries Inc.	100		1,990	^A
Superior Essex Inc.	2,300		64,676	^A
Technology Research Corp.	300		855

			2,476,967

Industrial Conglomerates — N.M.
Standex International Corp.	42		938

Machinery — 3.2%
Accuride Corp.	26,210		214,398	^A
Actuant Corp.	11,360		343,185
American Railcar Industries Inc.	2,500		50,825
Ampco-Pittsburgh Corp.	4,700		202,053
Baldwin Technology Co.	600		1,542	^A
Columbus McKinnon Corp.	20		620	^A
Crane Co.	10,490		423,271
Gardner Denver Inc.	12,998		482,226	^A
Gehl Co.	8,590		145,515	^A
Hurco Cos. Inc.	2,800		130,984	^A


Annual Report to Shareholders		45


	Shares/Par	Value
Industrials — Continued
Machinery — Continued
Kennametal Inc.	7,900	$	232,497
Mueller Industries Inc.	26,160		754,716
NACCO Industries Inc.	200		16,188
NN Inc.	17,515		170,421
The Timken Co.	29,685		882,238
Wabash National Corp.	4,400		39,556

			4,090,235

Marine — 0.1%
International Shipholding Corp.	5,500		105,490	^A
TBS International Ltd.	3,200		96,640	^A

			202,130

Road and Rail — 2.7%
Arkansas Best Corp.	18,060		575,391
Con-way Inc.	32,870		1,626,407
P.A.M. Transportation Services Inc.	7,200		112,032	^A
Ryder System Inc.	700		42,637
Saia Inc.	11,300		179,218	^A
USA Truck Inc.	1,000		12,910	^A
Werner Enterprises Inc.	25,380		471,053
YRC Worldwide Inc.	36,430		477,962	^A

			3,497,610

Trading Companies and Distributors — 1.2%
Applied Industrial Technologies Inc.	7,900		236,131
GATX Corp.	5,700		222,699
H&E Equipment Services Inc.	300		3,771	^A
Rush Enterprises Inc.	2,400		38,016	^A
TAL International Group Inc.	5,500		129,635
United Rentals Inc.	47,190		889,060	^A
Willis Lease Finance Corp.	800		10,056	^A

			1,529,368


46		Annual Report to Shareholders

Portfolio of Investments — Continued

U.S. Small-Capitalization Value Trust — Continued


	Shares/Par	Value
Information Technology — 6.3%
Communications Equipment — 0.2%
ADC Telecommunications Inc.	10,070	$	121,646	^A
Communications Systems Inc.	800		8,616
Performance Technologies Inc.	1,480		6,778	^A
Sycamore Networks Inc.	44,800		163,968	^A

			301,008

Computers and Peripherals — 0.2%
Adaptec Inc.	6,400		18,816	^A
Hauppauge Digital Inc.	3,100		10,416	^A
Hutchinson Technology Inc.	11,600		184,556	^A
Key Tronic Corp.	10,370		26,858	^A
Rackable Systems Inc.	6,600		60,192	^A

			300,838

Electronic Equipment and Instruments — 3.3%
ADDvantage Technologies Group Inc.	4,700		16,262	^A
Anixter International Inc.	7,100		454,684	^A
Benchmark Electronics Inc.	53,900		967,505	^A
CPI International Inc.	1,400		13,888	^A
CTS Corp.	3,500		37,450
DDi Corp.	2,100		9,744	^A
Frequency Electronics Inc.	1,800		14,004
Insight Enterprises Inc.	18,230		319,025	^A
PC Connection Inc.	2,800		22,176	^A
RadiSys Corp.	3,500		35,315	^A
SYNNEX Corp.	37,710		800,206	^A
Tech Data Corp.	11,400		373,920	^A
TTM Technologies Inc.	27,400		310,168	^A
Vishay Intertechnology Inc.	74,705		676,827	^A
Wireless Telecom Group Inc.	39,190		60,745	^A
Wireless Xcessories Group Inc.	3,200		4,160	^A
Zones Inc.	11,900		97,699	^A

			4,213,778


Annual Report to Shareholders		47


	Shares/Par	Value
Information Technology — Continued
Internet Software and Services — 0.7%
RealNetworks Inc.	20,100	$	115,173	^A
United Online Inc.	67,350		711,216

			826,389

IT Services — 0.1%
Computer Task Group Inc.	2,000		8,240	^A
Edgewater Technology Inc.	1,300		6,851	^A
Ness Technologies Inc.	4,600		43,654	^A
StarTek Inc.	2,860		26,341	^A
TSR Inc.	7,100		29,820

			114,906

Semiconductors and Semiconductor Equipment — 1.8%
Advanced Energy Industries Inc.	17,280		229,133	^A
Axcelis Technologies Inc.	9,600		53,760	^A
Integrated Silicon Solution Inc.	6,500		39,325	^A
Kulicke and Soffa Industries Inc.	18,550		88,669	^A
MKS Instruments Inc.	41,950		897,730	^A
Nanometrics Inc.	1,900		13,585	^A
ON Semiconductor Corp.	16,800		95,424	^A
Photronics Inc.	26,550		253,552	^A
RF Micro Devices Inc.	47,360		125,978	^A
Rudolph Technologies Inc.	7,700		75,229	^A
Sigma Designs Inc.	7,100		160,957	^A
Ultra Clean Holdings Inc.	15,500		151,900	^A
White Electronic Designs Corp.	1,900		8,580	^A
Zoran Corp.	11,900		162,554	^A

			2,356,376

Software — N.M.
Dynamics Research Corp.	900		9,099	^A
Pervasive Software Inc.	2,000		7,800	^A
Versant Corp.	789		19,804	^A

			36,703


48		Annual Report to Shareholders

Portfolio of Investments — Continued

U.S. Small-Capitalization Value Trust — Continued


	Shares/Par	Value
Materials — 5.0%
Chemicals — 2.4%
Hercules Inc.	25,860	$	472,979
ICO Inc.	6,600		45,804	^A
Material Sciences Corp.	1,400		10,864	^A
Olin Corp.	66,850		1,320,956
PolyOne Corp.	52,810		336,400	^A
RPM International Inc.	19,570		409,796
Spartech Corp.	1,600		13,520
Westlake Chemical Corp.	33,180		432,999

			3,043,318

Construction Materials — 0.5%
Eagle Materials Inc.	1,700		60,435
Headwaters Inc.	39,390		519,554	^A
U.S. Concrete Inc.	31,130		118,294	^A

			698,283

Containers and Packaging — 1.1%
Rock-Tenn Co.	1,500		44,955
Silgan Holdings Inc.	26,620		1,321,150

			1,366,105

Metals and Mining — 0.7%
A.M. Castle and Co.	800		21,600
Gibraltar Industries Inc.	24,882		291,866
Worthington Industries Inc.	39,100		659,617

			973,083

Paper and Forest Products — 0.3%
Buckeye Technologies Inc.	22,400		249,984	^A
Schweitzer-Mauduit International Inc.	3,700		85,618

			335,602

Telecommunication Services — 0.2%
Diversified Telecommunication Services — 0.2%
Cincinnati Bell Inc.	48,070		204,778	^A


Annual Report to Shareholders		49


	Shares/Par	Value
Telecommunication Services — Continued
Wireless Telecommunication Services — N.M.
USA Mobility Inc.	2,300	$	16,422	^A

Utilities — 7.1%
Electric Utilities — 3.3%
Allete Inc.	6,200		239,444
Great Plains Energy Inc.	27,050		666,782
IDACORP Inc.	32,670		1,049,034
Portland General Electric Co.	27,900		629,145
Westar Energy Inc.	72,560		1,652,191

			4,236,596

Gas Utilities — 3.1%
AGL Resources Inc.	10,270		352,466
Atmos Energy Corp.	55,080		1,404,540
Nicor Inc.	17,280		579,053
Southwest Gas Corp.	7,300		204,108
The Laclede Group Inc.	10,300		366,989
WGL Holdings Inc.	35,080		1,124,665

			4,031,821

Multi-Utilities — 0.7%
Avista Corp.	12,900		252,324
Black Hills Corp.	10,960		392,149
PNM Resources Inc.	2,940		36,662
Puget Energy Inc.	9,160		236,969

			918,104

Total Common Stocks and Equity Interests (Cost — $136,152,772)			128,412,980


50		Annual Report to Shareholders

Portfolio of Investments — Continued

U.S. Small-Capitalization Value Trust — Continued


	Shares/Par		Value
Repurchase Agreements — 1.5%
Goldman Sachs & Co. 2.60%, dated 3/31/08, to be repurchased at $931,536 on 4/1/08 (Collateral: $956,416 Fannie Mae mortgage-backed securities, 5.00%, due 10/1/35, value $953,228)	$	931,469	$	931,469
JPMorgan Chase and Co. 2.30%, dated 3/31/08, to be repurchased at $931,528 on 4/1/08 (Collateral: $936,000 Freddie Mac bond, 5.45% due 9/2/11, value $952,100)		931,468		931,468

Total Repurchase Agreements (Cost — $1,862,937)				1,862,937

Total Investments — 100.8% (Cost — $138,015,709)^B				130,275,917
Other Assets Less Liabilities — (0.8)%				(984,905	)

Net Assets — 100.0%			$	129,291,012

N.M. Not Meaningful.

^A	Non-income producing.

^B	At March 31, 2008, the aggregate gross unrealized appreciation and depreciation of investments for federal income tax purposes were substantially as follows:


Gross unrealized appreciation	$	14,591,458
Gross unrealized depreciation		(22,333,888	)

Net unrealized depreciation	$	(7,742,430	)

See notes to financial statements.


Annual Report to Shareholders		51

Statement of Assets and Liabilities

U.S. Small-Capitalization Value Trust

March 31, 2008


Assets:
Investment securities at market value (Cost – $136,152,772)			$	128,412,980
Short-term securities at value (Cost – $1,862,937)				1,862,937
Receivable for securities sold				2,289,105
Dividends and interest receivable				191,822
Receivable for fund shares sold				144,534

Total assets				132,901,378
Liabilities:
Payable for securities purchased	$	2,452,067
Payable for fund shares repurchased		858,976
Accrued distribution and service fees		167,789
Accrued management fee		4,705
Accrued expenses		126,829

Total liabilities				3,610,366

Net Assets			$	129,291,012

Net assets consist of:
Accumulated paid-in-capital			$	136,477,688
Undistributed net investment income				318,019
Accumulated net realized gain on investments				235,097
Net unrealized depreciation on investments				(7,739,792	)

Net Assets			$	129,291,012

Net Asset Value Per Share:
Primary Class (10,952,917 shares outstanding)			$	9.50

Institutional Class (2,287,795 shares outstanding)			$	11.05

See notes to financial statements.


52		Annual Report to Shareholders

Statement of Operations

U.S. Small-Capitalization Value Trust

For the Year Ended March 31, 2008


Investment Income:
Dividends	$	3,936,382
Interest		161,985
Other income		625

Total income				$	4,098,992

Expenses:
Management fees		1,558,494
Distribution and service fees:
Primary Class		1,640,158
Audit and legal fees		37,388
Custodian fees		46,970
Directors’ fees and expenses		67,348
Registration fees		39,463
Reports to shareholders		103,996
Transfer agent and shareholder servicing expense:
Primary Class		147,614
Institutional Class		13,702
Other expenses		18,338

		3,673,471
Less: Fees Waived		(86,298	)
Compensating balance credits		(2,357	)

Net expenses					3,584,816

Net Investment Income					514,176
Net Realized and Unrealized Gain/(Loss) on Investments:
Net realized gain on investments		20,425,094
Change in unrealized appreciation/(depreciation) of investments		(56,545,169	)

Net Realized and Unrealized Loss on Investments					(36,120,075	)

Change in Net Assets Resulting From Operations				$	(35,605,899	)

See notes to financial statements.


Annual Report to Shareholders		53

Statement of Changes in Net Assets

U.S. Small-Capitalization Value Trust


	For the Year Ended March 31, 2008			For the Year Ended March 31, 2007
Change in Net Assets:

Net investment income (loss)	$	514,176		$	(55,095	)

Net realized gain		20,425,094			30,763,772

Change in unrealized appreciation/ (depreciation)		(56,545,169	)		(14,450,301	)

Change in net assets resulting from operations		(35,605,899	)		16,258,376
Distributions to shareholders from:
Net realized gain on investments:
Primary Class		(23,950,967	)		(26,097,530	)
Institutional Class		(3,985,324	)		(3,413,743	)
Change in net assets from fund share transactions:
Primary Class		(49,660,316	)		(12,106,583	)
Institutional Class		673,996			(878,578	)

Change in net assets		(112,528,510	)		(26,238,058	)

Net Assets:

Beginning of year		241,819,522			268,057,580

End of year	$	129,291,012		$	241,819,522

Undistributed net investment income and accumulated net investment loss, respectively	$	318,019		$	(39,434	)

See notes to financial statements.


54		Annual Report to Shareholders

Financial Highlights

U.S. Small-Capitalization Value Trust

For a share of each class of capital stock outstanding:

Primary Class:


	Years Ended March 31,
	2008			2007			2006			2005			2004
Net asset value, beginning of year	$	13.73		$	14.51		$	14.43		$	14.52		$	8.93

Investment operations:
Net investment income/(loss)		.01	^A		(.02	)^A		(.06	)		(.05	)		(.07	)
Net realized and unrealized gain/(loss)		(2.30	)		.98			1.77			1.38			5.75

Total from investment operations		(2.29	)		.96			1.71			1.33			5.68

Distributions from:
Net realized gain on investments		(1.94	)		(1.74	)		(1.63	)		(1.42	)		(.09	)

Total distributions		(1.94	)		(1.74	)		(1.63	)		(1.42	)		(.09	)

Net asset value, end of year	$	9.50		$	13.73		$	14.51		$	14.43		$	14.52

Total return		(17.94	)%		7.00	%		12.63	%		9.67	%		63.71	%

Ratios to Average Net Assets:^B
Total expenses		2.05	%		2.04	%		2.01	%		2.00	%		2.05	%
Expenses net of waivers, if any		2.00	%		2.00	%		2.00	%		2.00	%		2.00	%
Expenses net of all reductions		2.00	%		2.00	%		2.00	%		2.00	%		2.00	%
Net investment income (loss)		.10	%		(.15	)%		(.40	)%		(.39	)%		(.61	)%
Supplemental Data:
Portfolio turnover rate		31.7	%		28.9	%		30.9	%		46.7	%		44.3	%
Net assets, end of year (in thousands)	$	104,013		$	207,926		$	232,061		$	242,719		$	226,351

^A	Computed using average daily shares outstanding.

See notes to financial statements.


Annual Report to Shareholders		55

Institutional Class:


	Years Ended March 31,
	2008			2007			2006			2005			2004
Net asset value, beginning of year	$	15.48		$	15.99		$	15.59		$	15.39		$	9.36

Investment operations:
Net investment income		.16	^A		.13	^A		—	^C		.09			.05
Net realized and unrealized gain/(loss)		(2.65	)		1.10			2.03			1.53			6.07

Total from investment operations		(2.49	)		1.23			2.03			1.62			6.12

Distributions from:
Net realized gain on investments		(1.94	)		(1.74	)		(1.63	)		(1.42	)		(.09	)

Total distributions		(1.94	)		(1.74	)		(1.63	)		(1.42	)		(.09	)

Net asset value, end of year	$	11.05		$	15.48		$	15.99		$	15.59		$	15.39

Total return		(17.17	)%		8.09	%		13.81	%		11.06	%		65.49	%

Ratios to Average Net Assets:^B
Total expenses		1.01	%		1.00	%		.98	%		.93	%		.98	%
Expenses net of waivers, if any		1.00	%		1.00	%		.98	%		.93	%		.98	%
Expenses net of all reductions		1.00	%		1.00	%		.98	%		.93	%		.98	%
Net investment income		1.13	%		.85	%		.66	%		.69	%		.41	%
Supplemental Data:
Portfolio turnover rate		31.7	%		28.9	%		30.9	%		46.7	%		44.3	%
Net assets, end of year (in thousands)	$	25,278		$	33,894		$	35,997		$	14,349		$	10,351

^C	Amount less than $.01 per share.

See notes to financial statements.


56		Annual Report to Shareholders

Notes to Financial Statements

Legg Mason Investors Trust, Inc.

1. Organization and Significant Accounting Policies:

The Legg Mason Investors Trust, Inc. (“Corporation”), consisting of American Leading Companies Trust (“American Leading Companies”) and U.S. Small-Capitalization Value Trust (“U.S. Small-Cap”) (each a “Fund”), is registered under the Investment Company Act of 1940, as amended (“1940 Act”), as an open-end, diversified investment company.

Each Fund consists of three classes of shares: Primary Class, Institutional Class and Financial Intermediary Class. The Financial Intermediary Class is not currently active in either Fund. The income and expenses of the Funds are allocated proportionately to each class of shares based on daily net assets, except for Rule 12b-1 distribution and service fees, which are charged only on Primary Class shares, and transfer agent and shareholder servicing expenses, which are determined separately for each class.

Preparation of the financial statements in accordance with accounting principles generally accepted in the United States of America 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. The following is a summary of significant accounting policies followed by the Funds in the preparation of their financial statements:

Security Valuation

Equity securities traded on national securities exchanges are valued at the last quoted sales price, except securities traded on the Nasdaq Stock Market, Inc. (“NASDAQ”) which are valued in accordance with the NASDAQ Official Closing Price. Over the counter securities are valued at the mean between the latest bid and asked prices as furnished by dealers who make markets in such securities or by an independent pricing service. Fixed income securities, for which market quotations are readily available, are valued at current market value.

Each Fund’s securities are valued on the basis of readily available market quotations or, lacking such quotations, at fair value as determined under policies approved by and under the general oversight of the Board of Directors. In determining fair value, all relevant qualitative and quantitative factors known to a Fund are considered. These factors are subject to change over time and are reviewed periodically. Each Fund may use fair value pricing instead of market quotations to value one or more securities if the Fund believes that, because of special circumstances, doing so would more accurately reflect the prices the Fund would expect to realize on the current sale of those securities. Further, because of the inherent uncertainty of fair valuation, those estimated values may differ significantly from quoted or published values or from the values that would have been used had a ready market for the investments existed, and the differences could be material. At March 31, 2008, there were no fair valued securities in either of the Funds.


Annual Report to Shareholders		57

Security Transactions

Security transactions are accounted for as of 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.

For the year ended March 31, 2008, security transactions (excluding short-term investments were:)


	Purchases		Proceeds From Sales
American Leading Companies	$	223,764,712	$	317,349,236
U.S. Small-Cap		60,322,150		125,674,158

Foreign Currency Translation

Assets and liabilities initially expressed in non-U.S. currencies are translated into U.S. dollars using currency exchange rates determined prior to the close of trading on the New York Stock Exchange, usually at 2:00 p.m. Eastern time. Purchases and sales of securities and income and expenses are translated into U.S. dollars at the prevailing market rates on the dates of such transactions. The effects of changes in non-U.S. currency exchange rates on investment securities and other assets and liabilities are included with the net realized and unrealized gain or loss on investment securities for each fund.

Repurchase Agreements

The Funds may engage in repurchase agreement transactions. Under the terms of a typical repurchase agreement, a fund takes possession of an underlying debt obligation subject to an obligation of the seller to repurchase, and of the fund to resell, the debt obligation at an agreed-upon price and time, thereby determining the yield during a fund’s holding period. This arrangement results in a fixed rate of return that is not subject to market fluctuations during the fund’s holding period. The value of the collateral is at all times at least equal to the total amount of the repurchase obligation, including interest. In the event of counterparty default, a fund has the right to use the collateral to satisfy the terms of the repurchase agreement. However, there could be potential loss to the fund in the event the fund is delayed or prevented from exercising its right to dispose of the collateral securities, including the risk of a possible decline in the value of the collateral securities during the period in which the fund seeks to assert its rights. The Funds’ investment advisers review the value of the collateral and the creditworthiness of those banks and dealers with which the Fund’s enter into repurchase agreements to evaluate potential risks.


58		Annual Report to Shareholders

Notes to Financial Statements — Continued

Legg Mason Investors Trust, Inc. — Continued

Compensating Balance Credits

Each fund has an arrangement with their custodian bank whereby a portion of the custodian’s fee is paid indirectly by credits earned on the Funds’ cash on deposit with the bank. This deposit arrangement is an alternative to purchasing overnight investments.

Commission Recapture

American Leading Companies has entered into a directed brokerage agreement with State Street Bank & Trust Company (“State Street”). Under the agreement, State Street Bank will rebate to the Fund a percentage of commissions generated by the Fund. Such payments are included with realized gain/(loss) on investment transactions. During the fiscal year ended March 31, 2008, the Fund did not receive any commission rebates.

Investment Income and Distributions to Shareholders

Interest income and expenses are recorded on the accrual basis. Bond premiums and discounts are amortized for financial reporting and federal income tax purposes. Dividend income is recorded on the ex-dividend date. Dividends from net investment income, if available, are determined at the class level and paid annually for each Fund. Distributions from net realized capital gains, which are calculated at the Fund level, are declared and paid annually in June, if available. An additional distribution may be made in December, to the extent necessary, in order to comply with federal excise tax requirements. Distributions are determined in accordance with federal income tax regulations, which may differ from those determined in accordance with accounting principles generally accepted in the United States of America. Accordingly, periodic reclassifications are made within each Fund’s capital accounts to reflect income and gains available for distribution under federal income tax regulations.

Foreign Taxes

The Funds are subject to foreign income taxes imposed by certain countries in which each invests. Foreign income taxes are accrued by the Funds and withheld from dividend and interest income.

Other

In the normal course of business, each Fund enters into contracts that provide general indemnifications. Each Fund’s maximum exposure under these arrangements is dependent on claims that may be made against that Fund in the future and, therefore, cannot be estimated. However, based on experience, the risk of material loss from such claims is considered remote.

2. Federal Income Taxes:

It is each Fund’s policy to comply with the federal income and excise tax requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated


Annual Report to Shareholders		59

investment companies. Accordingly, each Fund intends to distribute substantially all of its taxable income and net realized gains, if any, to shareholders each year. Therefore, no federal income tax provision is required in either Fund’s financial statements.

Management has analyzed each Fund’s tax positions taken on federal income tax returns for all open tax years and has concluded that as of March 31, 2008, no provision for income tax would be required in either Fund’s financial statements. Each Fund’s federal and state income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.

Under the applicable foreign tax laws, a withholding tax may be imposed on interest, dividends and capital gains at various rates.

Reclassifications:

Accounting principles generally accepted in the United States of America require that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or net asset values per share. During the current year, the following reclassifications have been made:


Fund		Undistributed Net Investment Income			Accumulated Net Realized Gain/(Loss)			Paid-in Capital
American Leading Companies	(A)	$	1,253,574		$	(484,494	)	$	(769,080	)
	(B)		(1,332,146	)		1,332,146			—
U.S. Small-Cap	(C)	$	(115,504	)	$	(461,329	)	$	576,833
	(D)		(41,329	)		41,329			—

^A	Other book/tax temporary differences are attributable primarily to the deferral of post-October capital losses for tax purposes and the book/tax differences in the timing of the deductibility of various expenses.

^B	Reclassifications are primarily due to foreign currency transactions treated as ordinary income for tax purposes and a prior year tax net operating loss which offsets short-term capital gains.

^C	Reclassifications are primarily due to distributions related to the redemption of Fund shares.

^D	Reclassifications are primarily due to a prior year tax net operating loss which offsets short-term capital gains for tax purposes.


60		Annual Report to Shareholders

Notes to Financial Statements — Continued

Legg Mason Investors Trust, Inc. — Continued

Distributions to Shareholders:

The tax character of distributions paid during the fiscal year ended March 31, 2008 was as follows:


	American Leading Companies		U.S. Small-Cap
Distributions paid from:
Ordinary Income	$	1,708,893	$	4,083,013
Net Long-term Capital Gains		47,351,438		23,853,278

Total Distributions Paid	$	49,060,331	$	27,936,291

The tax character of distributions paid during the fiscal years ended March 31, 2007 was as follows:


	American Leading Companies		U.S. Small-Cap
Distributions paid from:
Ordinary Income	$	561,353	$	3,029,792
Net Long-term Capital Gains		41,592,935		26,481,481

Total Distributions Paid	$	42,154,288	$	29,511,273

Accumulated Earnings on a Tax Basis:

As of March 31, 2008, the components of accumulated earnings on a tax basis were as follows:


	American Leading Companies			U.S. Small-Cap
Undistributed ordinary income — net	$	1,759,209		$	453,975
Undistributed long-term capital gains — net		—			237,735

Total undistributed earnings	$	1,759,209		$	691,710
Other book/tax temporary differences		(3,865,715	)^A		(135,956	)^C

Unrealized appreciation/(depreciation)		145,814,327	^B		(7,742,430	)^D

Total accumulated earnings/(losses) — net	$	143,707,821		$	(7,186,676	)

^A	Other book/tax temporary differences are attributable primarily to the deferral of post-October capital losses for tax purposes and the book/tax differences in the timing of the deductibility of various expenses.

^B	The difference between book-basis and tax-basis unrealized appreciation/(depreciation) is attributable primarily to the tax deferral of losses on wash sales and the book/tax difference in the treatment of distributions from certain securities.

^C	Other book/tax temporary differences are attributable primarily to the book/tax differences in the timing of the deductibility of various expenses.

^D	The difference between book-basis and tax-basis unrealized appreciation/(depreciation) is attributable primarily to the tax deferral of losses on wash sales.


Annual Report to Shareholders		61

Tax Cost of Investments:

As of March 31, 2008, the aggregate cost of investments for federal income tax purposes were as follows:


American Leading Companies	$	454,851,515
U.S. Small-Cap	$	138,018,347

3. Transactions With Affiliates:

American Leading Companies has an investment advisory and management agreement with Legg Mason Capital Management, Inc. (“LMCM”). Pursuant to the agreement, LMCM provides American Leading Companies with investment advisory, management and administrative services for which the Fund pays a fee, computed daily and payable monthly, at an annual rate of the Fund’s average daily net assets.

U.S. Small-Cap has a management agreement with Legg Mason Fund Adviser, Inc. (“LMFA”). Pursuant to the agreement, LMFA provides U.S. Small-Cap with management and administrative services for which the Fund pays a fee, computed daily and payable monthly, at an annual rate of the Fund’s average daily net assets.

The following chart summarizes the management fees for each of the Funds:


Fund	Management Fee	Asset Breakpoint
American Leading Companies	0.70%	on assets up to $2 billion
	0.65%	on assets in excess of $2 billion

U.S. Small-Cap	0.85%	on assets up to $100 million
	0.75%	on assets $100 million – $1 billion
	0.65%	on assets in excess of $1 billion

LMCM and LMFA have voluntarily agreed to waive their 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 until August 1, 2008. For the year ended March 31, 2008, LMFA waived distribution fees in the amount of $86,298 for U.S. Small-Cap.

The following chart summarizes the expense limitations for each of the Funds:


Fund	Primary Class Expense Limitation		Institutional Class Expense Limitation
American Leading Companies	1.95	%	0.95	%
U.S. Small-Cap	2.00	%	1.00	%


62		Annual Report to Shareholders

Notes to Financial Statements — Continued

Legg Mason Investors Trust, Inc. — Continued

Brandywine Global Investment Management, LLC (“Brandywine Global”) serves as investment adviser to U.S. Small-Cap. Brandywine Global is responsible, subject to the general supervision of LMFA, for the actual investment activity of the Fund. LMFA pays Brandywine Global 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 Investor Services, LLC (“LMIS”), serves as the Funds’ distributor. LMIS 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:


Fund	Distribution Fee		Service Fee
American Leading Companies
Primary Class	0.75	%	0.25	%
U.S. Small-Cap
Primary Class	0.75	%	0.25	%

LMFA serves as administrator to American Leading Companies under an administrative services agreement with LMCM. For LMFA’s services to American Leading Companies, LMCM (not the Fund) pays LMFA a fee, calculated daily and payable monthly, of 0.05% of the average daily net assets of the Fund.

LM Fund Services, Inc. (“LMFS”) a registered transfer agent, had an agreement with the Funds’ transfer agent pursuant to which LMFS received payments from the Funds’ transfer agent with respect to accounts where third parties provided certain services to the Funds. These payments were used to offset the Funds’ expenses for such services. These payments totaled $39,125 for American Leading Companies; and $11,531 for U.S. Small-Cap for the year ended March 31, 2008. The agreement was terminated effective August 1, 2007 and LMFS no longer receives payments from the Funds’ transfer agent.

LMCM, LMFA, Brandywine Global, LMIS, and LMFS are wholly owned subsidiaries and corporate affiliates of Legg Mason, Inc.

Under a Deferred Compensation Plan (the “Plan”), directors may elect to defer receipt of all or a specified portion of their compensation. A participating director may select one or more funds in which his or her deferred director’s fees will be deemed to be invested. Deferred amounts remain in the fund until distributed in accordance with the Plan.

4. Line of Credit:

The Funds, along with certain other Legg Mason Funds, participate in a $400 million line of credit (“Credit Agreement”) to be used for temporary or emergency purposes. Pursuant to the Credit Agreement, each participating fund is liable only for principal


Annual Report to Shareholders		63

and interest payments related to borrowings made by that fund. Borrowings under the Credit Agreement bear interest at a rate equal to the prevailing federal funds rate plus the federal funds rate margin. The Funds made no borrowings under the Credit Agreement during the fiscal year ended March 31, 2008.

5. Fund Share Transactions:

At March 31, 2008, there were 250,000,000, and 50,000,000 shares authorized at $.001 par value for the Primary Classes of American Leading Companies, and U.S. Small-Cap, respectively. At March 31, 2008, there were 100,000,000, and 50,000,000 shares authorized at $.001 par value for the Financial Intermediary Classes of American Leading Companies, and U.S. Small-Cap, respectively (the Financial Intermediary Class of each Fund is not currently operational). At March 31, 2008, there were 250,000,000, and 50,000,000 shares authorized at $.001 par value for the Institutional Classes of American Leading Companies, and U.S. Small-Cap, respectively.

Share transactions are detailed below:

American Leading Companies Trust


	Year Ended March 31, 2008					Year Ended March 31, 2007
	Shares		Amount			Shares		Amount
Primary Class
Shares sold	2,357,186		$	56,648,242		3,500,222		$	84,946,094
Shares issued on reinvestment	1,793,915			42,205,622		1,614,446			38,909,898
Shares repurchased	(7,694,594	)		(180,928,172	)	(5,165,072	)		(126,398,980	)

Net Decrease	(3,543,493	)	$	(82,074,308	)	(50,404	)	$	(2,542,988	)

Institutional Class
Shares sold	978,756		$	24,402,089		1,926,906		$	50,116,952
Shares issued on reinvestment	188,146			4,645,699		72,560			1,795,611
Shares repurchased	(639,339	)		(15,753,757	)	(831,821	)		(20,634,059	)

Net Increase	527,563		$	13,294,031		1,167,645		$	31,278,504


64		Annual Report to Shareholders

Notes to Financial Statements — Continued

Legg Mason Investors Trust, Inc. — Continued

U.S. Small-Capitalization Value Trust


	Year Ended March 31, 2008					Year Ended March 31, 2007
	Shares		Amount			Shares		Amount
Primary Class
Shares sold	546,261		$	6,603,007		1,158,306		$	16,222,500
Shares issued on reinvestment	2,093,967			22,785,853		1,848,900			25,280,312
Shares repurchased	(6,828,085	)		(79,049,176	)	(3,859,371	)		(53,609,395	)

Net Decrease	(4,187,857	)	$	(49,660,316	)	(852,165	)	$	(12,106,583	)

Institutional Class
Shares sold	822,469		$	11,074,327		633,277		$	9,832,820
Shares issued on reinvestment	319,399			3,985,324		223,291			3,413,743
Shares repurchased	(1,043,915	)		(14,385,655	)	(918,276	)		(14,125,141	)

Net Increase (Decrease)	97,953		$	673,996		(61,708	)	$	(878,578	)

6. Recent Accounting Pronouncements

In June 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation 48 (“FIN 48” or the “Interpretation”), Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement 109. FIN 48 supplements FASB Statement 109, Accounting for Income Taxes and establishes financial reporting rules regarding recognition, measurement, presentation, and disclosure in its financial statements of tax positions that a fund has taken or expects to take on a tax return. FIN 48 became effective for fiscal periods beginning after December 15, 2006. Effective April 1, 2007, the Fund adopted FIN 48. There was no material impact to the financial statements or disclosure thereto as a result of this adoption.

In September 2006, the FASB released Statement of Financial Accounting Standards No. 157 “Fair Value Measurements” (“FAS 157”). FAS 157 establishes an authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair-value measurements. For registered investment companies, the application of FAS 157 is required for fiscal years, beginning after November 15, 2007 and interim periods within those fiscal years. Management has evaluated the implication of FAS 157 and does not believe the adoption of FAS 157 will materially impact the amount recorded in the financial statements, however, additional disclosure will be required in subsequent reports.


Annual Report to Shareholders		65

In March 2008, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. FAS 161 requires enhanced disclosures about a fund’s derivative and hedging activities, including how such activities are accounted for and their effect on a fund’s financial position, performance and cash flows. Management is currently evaluating the impact the adoption of FAS 161 will have on the Funds’ financial statements and related disclosures.

The Funds’ investment policies do not permit the Funds to engage in derivative transactions. Unless the Funds’ policies change to permit engaging in derivative transactions, FAS 161 will have no impact on the Funds’ disclosures.


66		Annual Report to Shareholders

Report of Independent Registered Public Accounting Firm

To the Board of Directors of Legg Mason Investors Trust, Inc. and Shareholders of American Leading Companies Trust and U.S. Small-Capitalization Value Trust:

In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of American Leading Companies Trust and U.S. Small-Capitalization Value Trust (comprising Legg Mason Investors Trust, Inc., the “Funds”) at March 31, 2008, the results of each of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at March 31, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

Baltimore, Maryland

May 27, 2008


Annual Report to Shareholders		67

Important Tax Information (Unaudited):

The following information is provided with respect to the distributions paid during the taxable year ended March 31, 2008:


	American Leading Companies					U.S. Small-Cap
Record Date:		6/20/2007		12/12/2007			6/20/2007			12/12/2007
Payable Date:		6/22/2007		12/14/2007			6/22/2007			12/14/2007

Ordinary Income:
Qualified Dividend Income For Individuals		—		100.00	%		61.24	%		100.00	%
Dividends Qualifying for the Dividends Received Deduction for Corporations		—		100.00	%		74.78	%		74.78	%

Long-Term Capital Gain	$	0.094770	$	1.424000		$	0.329860		$	1.346600

Additionally, American Leading Companies and U.S. Small-Cap designate $99,149 and $410,534, respectively, paid in connection with the redemption of Fund shares as long-term capital gain dividends for the taxable year ended March 31, 2008.

Please retain this information for your records.


68		Annual Report to Shareholders

Directors and Officers

The table below provides information about each of the Corporation’s directors and officers, including biographical information about their business experience and information about their relationships with Legg Mason, Inc. and its affiliates. The mailing address of each director and officer is 100 Light Street, Attn: Fund Secretary, 32nd Floor, Baltimore, Maryland 21202.


Name, (Year of Birth) and Position with Corporation	Term of Office and Length of Time Served^A	Number of Funds in Fund Complex Overseen	Other Directorships Held	Principal Occupation(s) During the Past Five Years
INDEPENDENT DIRECTORS^B:

Hearn, Ruby P. (1940) Director	Since 2004	14	None	Senior Vice President Emerita of The Robert Wood Johnson Foundation (non-profit) since 2001. Formerly: Senior Vice President of The Robert Wood Johnson Foundation (1996- 2001).

Lehman, Arnold L. (1944) Lead Independent Director	Since 1993	14	None	Director of the Brooklyn Museum since 1997; Trustee of American Federation of Arts since 1998. Formerly: Director of The Baltimore Museum of Art (1979-1997).

Masters, Robin J.W. (1955) Director	Since 2002	14	Director of Cheyne Capital International Limited (investment advisory firm). Director/Trustee of Legg Mason Asian Funds plc, Legg Mason Institutional Funds plc, Western Asset Fixed Income Funds plc., and Western Asset Debt Securities Fund plc.	Retired. Formerly: Chief Investment Officer of ACE Limited (insurance) (1986-2000).

McGovern, Jill E. (1944) Director	Since 1993	14	None	Senior Consultant, American Institute for Contemporary German Studies (AICGS) since 2007. Formerly: Chief Executive Officer of The Marrow Foundation (non-profit) (1993- 2007); Executive Director of the Baltimore International Festival (1991-1993); Senior Assistant to the President of The Johns Hopkins University (1986-1990).


Annual Report to Shareholders		69


Name, (Year of Birth) and Position with Corporation	Term of Office and Length of Time Served^A	Number of Funds in Fund Complex Overseen	Other Directorships Held	Principal Occupation(s) During the Past Five Years
Mehlman, Arthur S. (1942) Director	Since 2002	Director/Trustee of all Legg Mason funds consisting of 14 portfolios; Director/Trustee of the Royce Family of Funds consisting of 27 portfolios.	Director of Municipal Mortgage & Equity, LLC.	Retired. Formerly: Partner, KPMG LLP (international accounting firm) (1972-2002).

O’Brien, G. Peter (1945) Director	Since 1999	Director/Trustee of all Legg Mason funds consisting of 14 portfolios; Director/Trustee of the Royce Family of Funds consisting of 27 portfolios.	Director of Technology Investment Capital Corp.	Retired. Trustee Emeritus of Colgate University; Board Member, Hill House, Inc. (residential home care); Board Member, Bridges School (pre- school). Formerly: Managing Director, Equity Capital Markets Group of Merrill Lynch & Co. (1971-1999).

Rowan, S. Ford (1943) Director	Since 2002	14	None	Chairman, National Center for Critical Incident Analysis, National Defense University, since 2004; Director of Santa Fe Institute (scientific research institute) since 1999. Formerly: Consultant, Rowan & Blewitt Inc. (management consulting) (1984-2007).

Tarola, Robert M. (1950) Director	Since 2004	14	None	Senior Vice President of W. R. Grace & Co. (specialty chemicals) since 1999. Member, Standing Advisory Group of the Public Company Accounting Oversight Board since 2007. Formerly: Chief Financial Officer of W. R. Grace & Co. (specialty chemicals) (1999-2008) and of MedStar Health, Inc. (healthcare) (1996-1999); Partner, Price Waterhouse, LLP (accounting and auditing) (1984-1996).

INTERESTED DIRECTORS^C:

Curley Jr., John F. (1939) Chairman and Director	Since 1993	14	None	Chairman of the Board of all Legg Mason Funds. Formerly: Vice Chairman and Director of Legg Mason, Inc. and Legg Mason Wood Walker, Incorporated (1982-1998); Director of Legg Mason Fund Adviser, Inc. (1982-1998) and Western Asset Management Company (1986-1998) (each a registered investment adviser).


70		Annual Report to Shareholders

Directors and Officers — Continued


Name, (Year of Birth) and Position with Corporation	Term of Office and Length of Time Served^A	Number of Funds in Fund Complex Overseen	Other Directorships Held	Principal Occupation(s) During the Past Five Years
Fetting, Mark R. (1954) President and Director	Since 2002	President and Director/Trustee of all Legg Mason funds consisting of 14 portfolios; Director/Trustee of the Royce Family of Funds consisting of 27 portfolios.	None	President, CEO and Director Legg Mason, Inc. since 2008. Formerly: Senior Executive Vice President of Legg Mason, Inc., Director and/or officer of various Legg Mason, Inc. affiliates (2000-2008). Division President and Senior Officer of Prudential Financial Group, Inc. and related companies, including fund boards and consulting services to subsidiary companies (1991-2000); Partner, Greenwich Associates (financial consulting); Vice President, T. Rowe Price Group, Inc.

EXECUTIVE OFFICERS^D:

Karpinski, Marie K. (1949) Vice President and Chief Financial Officer	Since 1993	14	None	Vice President and Chief Financial Officer of all Legg Mason Funds. Vice President and Treasurer of Legg Mason Fund Adviser, Inc. Vice President and Principal Financial and Accounting Officer of Western Asset Funds, Inc., Western Asset Income Fund and Western Asset Premier Bond Fund; Treasurer and Principal Financial and Accounting Officer of Western Asset/Claymore Inflation- Linked Securities & Income Fund (2003-present), and Western Asset/Claymore Inflation-Linked Opportunities & Income Fund (2004-present).

Merz, Gregory T. (1958) Vice President and Chief Legal Officer	Since 2003	14	None	Vice President and Deputy General Counsel of Legg Mason, Inc. since 2003. Formerly: Associate General Counsel, Fidelity Investments (1993- 2002).

Wachterman, Richard M. (1947) Secretary	Since 2004	14	None	Associate General Counsel of Legg Mason, Inc. since 2004. Formerly: Managing Director, Victory Capital Management, Inc. (investment management) (1993-2003).


Annual Report to Shareholders		71


Name, (Year of Birth) and Position with Corporation	Term of Office and Length of Time Served^A	Number of Funds in Fund Complex Overseen	Other Directorships Held	Principal Occupation(s) During the Past Five Years
Becker, Ted P. (1951) Vice President and Chief Compliance Officer	Since 2007	14	None	Director of Global Compliance at Legg Mason (2006 to present); Managing Director of Compliance at Legg Mason & Co. (2005 to present); Chief Compliance Officer with certain mutual funds associated with Legg Mason & Co. (since 2006); Chief Compliance Officer of Legg Mason Partners Funds and certain affiliates; Managing Director of Compliance at Citigroup Asset Management (2002 to 2005). Prior to 2002, Managing Director-Internal Audit & Risk Review at Citigroup Inc.

Hughes, Wm. Shane (1968) Treasurer	Since 2006	11	None	Assistant Vice President and Manager, Funds Accounting of Legg Mason & Co., LLC since 2005. Formerly: Assistant Vice President of Legg Mason Wood Walker, Incorporated (2002-2005) and Manager, Funds Accounting, Legg Mason Wood Walker, Incorporated (1997-2005).

ADDITIONAL INFORMATION ABOUT THE CORPORATION’S DIRECTORS AND OFFICERS IS CONTAINED IN THE STATEMENT OF ADDITIONAL INFORMATION, AVAILABLE WITHOUT CHARGE UPON REQUEST BY CALLING 1-800-822-5544 OR ON THE SECURITIES AND EXCHANGE COMMISSION WEBSITE

(http://www.sec.gov).

Officers of the Corporation are elected annually to serve until their successors are elected and qualified. Directors of the Corporation serve a term of indefinite length until their retirement, in accordance with the Board’s retirement policy, resignation or removal, and stand for re-election by shareholders only as and when required by the 1940 Act.

^B	Each of the Independent Directors serves on the standing committees of the Board of Directors, which include the Audit Committee (chair: Arthur Mehlman), the Nominating Committee (co-chairs: Peter O’Brien and Jill McGovern), and the Independent Directors Committee (chair: Arnold Lehman).

Mr. Curley and Mr. Fetting are considered to be interested persons, as defined in the 1940 Act, of the Corporation on the basis of their current or former employment with the Funds’ investment advisers or its affiliated entities (including the Funds’ principal underwriter) and Legg Mason, Inc., the parent holding company of these entities as well as their ownership of Legg Mason, Inc. stock.

^D	Officers of the Corporation are interested persons (as defined in the 1940 Act).


72		Annual Report to Shareholders

Board Consideration of Legg Mason American Leading Companies Trust’s Investment Advisory and Management Agreement

At its November 2007 meeting, the Board of Directors (the “Board”), including all of the Independent Directors, approved the continuation of the Investment Advisory and Management Agreement (the “Agreement”) between Legg Mason Capital Management, Inc. (the “Adviser”) and Legg Mason Investors Trust, Inc., on behalf of Legg Mason American Leading Companies Trust (“American Leading Companies”). In voting to approve the continuation of the Agreement, the Board considered whether continuance would be in the best interest of American Leading Companies and its shareholders, an evaluation largely based on the nature and quality of the services provided under the Agreement and the overall fairness of the Agreement to American Leading Companies. In considering the Agreement, the Board did not identify any single factor or item of information as all-important or controlling. Based on its evaluation of all material factors, including those described below, the Board concluded that the terms of the Agreement are reasonable and fair and that the continuation of the Agreement is in the best interest of American Leading Companies and its shareholders.

Prior to the Board action, the Independent Directors met as a committee to consider their recommendation as to continuance of the Agreement. As part of the process to consider the Agreement, legal counsel to American Leading Companies requested certain information from the Adviser on behalf of the Independent Directors, and in response, the Adviser provided an extensive report that addressed specific factors designed to inform the Board’s consideration of the Agreement. Counsel also provided the Independent Directors and the Board with a memorandum detailing their responsibilities pertaining to the continuance of the Agreement.

In addition to the November meeting, the Independent Directors meeting as a committee held an additional meeting in October 2007 at which they reviewed and analyzed materials relating to the Agreement. The Independent Directors also retained independent consultants to assist them in their review and analysis of the Agreement. The Board meets at least another three times per year in order to oversee the Legg Mason Funds, including meetings at which the portfolio manager of American Leading Companies or others submit or make presentations and discuss performance, compliance and other applicable issues. The Board also drew upon its long association with the Adviser and its personnel and the Board members’ familiarity with the Adviser’s culture and the manner in which it has sought to strengthen and enhance itself.

With respect to the nature, scope and quality of the services provided, the Board considered the experience and commitment of the Adviser’s personnel and its efforts to build and support a strong service team. The Board also considered the nature and quality of the Adviser’s investment process. In assessing performance, the Board compared American Leading Companies’ returns to the average of an appropriate Lipper category, a specified benchmark index and a peer group of investment


Annual Report to Shareholders		73

companies pursuing similar strategies, all over multiple time periods. The Board noted American Leading Companies’ performance record and the measures that the Adviser was taking in an effort to achieve attractive long-term performance. The Board also considered the level of service provided by the Adviser and its affiliates to American Leading Companies, including oversight of the transfer agent and the custodian and preparation of regulatory filings. The Board considered the Adviser’s procedures for executing portfolio transactions for American Leading Companies. The Board also reviewed the Adviser’s report on its policies and procedures for the selection of brokers and dealers and on obtaining research from brokers.

In determining whether the terms of the Agreement are reasonable and fair, the Board considered the terms and fee structure of the Agreement. In that connection, the Board considered the costs to the Adviser in providing services to American Leading Companies and profitability for the Adviser and its affiliates from their overall association with American Leading Companies. The Board reviewed information about the advisory fee schedule and overall expense ratio of American Leading Companies and comparable fee schedules and expense ratios of a peer group of funds. In considering whether any economies of scale experienced by the Adviser in providing services to American Leading Companies were shared with American Leading Companies, the Board noted that American Leading Companies’ advisory fee structure provides for a reduction of the effective fee rate as asset levels increase and that the Adviser has voluntarily waived fees for American Leading Companies. Finally, the Board considered other benefits accruing to the Adviser and its affiliates by virtue of their relationship to American Leading Companies.

After an evaluation of all material factors, including those in the foregoing discussion, the Board concluded that the continuation of the Agreement is in the best interest of American Leading Companies.


74		Annual Report to Shareholders

Board Consideration of Legg Mason U.S. Small-Capitalization Value Trust’s Investment Advisory Agreement and Management Agreement

At its November 2007 meeting, the Board of Directors (the “Board”), including all of the Independent Directors, approved the continuation of the Management Agreement between Legg Mason Fund Adviser, Inc. (the “Manager”) and Legg Mason Investors Trust, Inc., on behalf of Legg Mason U.S. Small-Capitalization Value Trust (“U.S. Small-Cap”), and the Investment Advisory Agreement between the Manager and Brandywine Global Investment Management, LLC (the “Adviser”) (each an “Agreement”). In voting to approve the continuation of each Agreement, the Board considered whether continuance would be in the best interest of U.S. Small-Cap and its shareholders, an evaluation largely based on the nature and quality of the services provided under each Agreement and the overall fairness of each Agreement to U.S. Small-Cap. In considering each Agreement, the Board did not identify any single factor or item of information as all-important or controlling. Based on its evaluation of all material factors, including those described below, the Board concluded that the terms of each Agreement are reasonable and fair and that the continuation of each Agreement is in the best interest of U.S. Small-Cap and its shareholders.

Prior to the Board action, the Independent Directors met as a committee to consider their recommendation as to continuance of each Agreement. As part of the process to consider each Agreement, legal counsel to U.S. Small-Cap requested certain information from the Manager and the Adviser on behalf of the Independent Directors, and in response, the Manager and the Adviser provided extensive reports that addressed specific factors designed to inform the Board’s consideration of each Agreement. Counsel also provided the Independent Directors and the Board with a memorandum detailing their responsibilities pertaining to the continuance of each Agreement.

In addition to the November meeting, the Independent Directors meeting as a committee held an additional meeting in October 2007 at which they reviewed and analyzed materials relating to each Agreement. The Independent Directors also retained independent consultants to assist them in their review and analysis of each Agreement. The Board meets at least another three times per year in order to oversee the Legg Mason Funds, including meetings at which the portfolio managers of U.S. Small-Cap or others submit or make presentations and discuss performance, compliance and other applicable issues. The Board also drew upon its long association with the Manager, the Adviser and their personnel and the Board members’ familiarity with their culture and the manner in which the management entities have sought to strengthen and enhance themselves.

With respect to the nature, scope and quality of the services provided, the Board considered the experience and commitment of the Manager’s and the Adviser’s personnel and their efforts to build and support a strong service team. The Board also considered the nature and quality of the Adviser’s investment process. In assessing


Annual Report to Shareholders		75

performance, the Board compared U.S. Small-Cap’s returns to the average of an appropriate Lipper category, a specified benchmark index and a peer group of investment companies pursuing similar strategies, all over multiple time periods. The Board noted U.S. Small-Cap’s performance record and the measures that the Manager and the Adviser were taking in an effort to achieve attractive long-term performance. The Board also considered the level of service provided by the Manager to U.S. Small-Cap, including oversight of the transfer agent and the custodian and preparation of regulatory filings. The Board considered the Adviser’s procedures for executing portfolio transactions for U.S. Small-Cap. The Board also reviewed the Adviser’s report on its policies and procedures for the selection of brokers and dealers and on obtaining research from brokers.

In determining whether the terms of each Agreement are reasonable and fair, the Board considered the terms and fee structure of each Agreement. In that connection, the Board considered the costs to the Manager and the Adviser in providing services to U.S. Small-Cap and profitability for the Manager and its affiliates from their overall association with U.S. Small-Cap. The Board reviewed information about the advisory fee schedule and overall expense ratio of U.S. Small-Cap and comparable fee schedules and expense ratios of a peer group of funds. In considering whether any economies of scale experienced by the Manager and the Adviser in providing services to U.S. Small-Cap were shared with U.S. Small-Cap, the Board noted that U.S. Small-Cap’s advisory fee structure provides for a reduction of the effective fee rate as asset levels increase and that the Manager has voluntarily waived fees for U.S. Small Cap. The Board also compared U.S. Small-Cap’s advisory fee schedule to the advisory fees charged by the Manager and the Adviser to their other accounts managed in a similar style. In that connection, the Board considered the differences in the level of services provided and the differences in responsibility of the Manager and the Adviser to U.S. Small-Cap and to the other accounts. Finally, the Board considered other benefits accruing to the Manager, the Adviser and their affiliates by virtue of their relationship to U.S. Small-Cap.

After an evaluation of all material factors, including those in the foregoing discussion, the Board concluded that the continuation of each Agreement is in the best interest of U.S. Small-Cap.


76		Annual Report to Shareholders

Glossary of Index Definitions

Dow Jones Industrial Average — A total return price-weighted average based on the price movements of 30 blue chip stocks, computed by reinvesting quarterly dividends on a monthly basis.

Dow Jones Wilshire 5000 Index — A market capitalization-weighted index composed of over 5,000 equity securities for companies considered by the investment community to be U.S. companies, and is generally considered representative of the U.S. equity market.

NASDAQ Composite Index — A market capitalization price-only index that tracks the performance of domestic common stocks traded on the regular NASDAQ market, as well as National Market System traded foreign common stocks and ADRs.

Russell 1000 Index — Measures the performance of the 1,000 largest companies in the Russell 3000 Index, which represents approximately 92% of the total market capitalization of the Russell 3000 Index.

Russell 1000 Growth Index — Measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values.

Russell 1000 Value Index — Measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values.

Russell 2000 Index — An unmanaged index comprised of the 2,000 smallest companies of the 3,000 largest U.S. companies based on market capitalization.

Russell 2000 Value Index — Measures the performance of those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values.

Russell 2500 Index — The Russell 2500 Index offers investors access to the small to mid-cap segment of the U.S. equity universe, commonly referred to as “smid” cap. The Russell 2500 is constructed to provide a comprehensive and unbiased barometer for the small to mid-cap segment and is completely reconstituted annually to ensure larger stocks do not distort the performance and characteristics of the true small to mid-cap opportunity set. The Russell 2500 includes the smallest 2500 securities in the Russell 3000.

Russell 2500 Value Index — The Russell 2500 Value Index offers investors access to the small to mid-cap value segment of the U.S. equity universe. The Russell 2500 Value is constructed to provide a comprehensive and unbiased barometer of the small to mid-cap value market. Based on ongoing empirical research of investment manager behavior, the methodology used to determine value probability approximates the aggregate small to mid-cap value manager’s opportunity set.

Russell Midcap Index — The Russell Midcap Index measures the performance of the 800 smallest companies in the Russell 1000 Index, as ranked by total market capitalization, which represents approximately 35% of the total market capitalization of the Russell 1000 Index.

Russell Midcap Value Index — The Russell Midcap Value Index offers investors access to the mid-cap value segment of the U.S. equity universe. The Russell Midcap Value Index is constructed to provide a comprehensive and unbiased barometer of the mid-cap value market. Based on ongoing empirical research of investment manager behavior, the methodology used to determine value probability approximates the aggregate mid-cap value manager’s opportunity set.


Annual Report to Shareholders		77

S&P 500 Stock Composite Index — A market capitalization-weighted index, composed of 500 widely held common stocks, that is generally considered representative of the U.S. stock market.

S&P Mid-Cap 400 Index — A market capitalization-weighted index, composed of 400 stocks, that is generally considered representative of mid-sized U.S. companies.

Notes

Fund Information

Investment Managers

For American Leading Companies Trust:

Legg Mason Capital Management, Inc.

Baltimore, MD

For U.S. Small-Cap Value Trust:

Legg Mason Fund Adviser, Inc.

Baltimore, MD

Investment Advisers

For American Leading Companies Trust:

Legg Mason Capital Management, Inc.

Baltimore, MD

For U.S. Small-Cap Value Trust:

Brandywine Global Investment Management, LLC

Philadelphia, PA

Board of Directors

John F. Curley, Jr., Chairman

Mark R. Fetting, President

Dr. Ruby P. Hearn

Arnold L. Lehman

Robin J.W. Masters

Dr. Jill E. McGovern

Arthur S. Mehlman

G. Peter O’Brien

S. Ford Rowan

Robert M. Tarola

Officers

Marie K. Karpinski, Vice President and Chief Financial Officer

Gregory T. Merz, Vice President and Chief Legal Officer

Ted P. Becker, Vice President and Chief Compliance Officer

Wm. Shane Hughes, Treasurer

Susan C. Curry, Assistant Treasurer

William S. Kirby, Assistant Treasurer

Richard M. Wachterman, Secretary

Peter J. Ciliberti, Assistant Secretary

Transfer and Shareholder Servicing Agent

Boston Financial Data Services

Braintree, MA

Custodian

State Street Bank & Trust Company

Boston, MA

Counsel

Kirkpatrick & Lockhart Preston Gates Ellis LLP

Washington, DC

Independent Registered Public Accounting Firm

PricewaterhouseCoopers LLP

Baltimore, MD

About the Legg Mason Funds


Equity Funds American Leading Companies Trust Classic Valuation Fund Growth Trust Special Investment Trust U.S. Small-Capitalization Value Trust Value Trust Specialty Fund Opportunity Trust Global Funds Emerging Markets Trust International Equity Trust Taxable Bond Funds Investment Grade Income Portfolio Limited Duration Bond Portfolio Tax-Free Bond Fund Maryland Tax-Free Income Trust		Legg Mason, Inc., based in Baltimore, Maryland, has built its reputation, at least in part, on the success of the Legg Mason Funds, introduced in 1979. The primary purpose of our funds is to enable investors to diversify their portfolios across various asset classes and, consequently, enjoy the stability and growth prospects generally associated with diversification.
		The success of our funds is contingent on the experience, discipline, and acumen of our fund managers. We believe the quality of our managers is crucial to investment success. Unlike many firms, which focus on a particular asset class or the fluctuations of the market, at Legg Mason we focus on providing a collection of top-notch managers in all the major asset classes.
		Information about the policies and procedures that each Fund uses to determine how to vote proxies relating to its portfolio securities is contained in the Statement of Additional Information, available without charge upon request by calling 1-800-822-5544 or on the Securities and Exchange Commission’s (“SEC”) website (http://www.sec.gov). Information regarding how each Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is also available on the SEC’s website or through the Legg Mason Funds’ website at www.leggmason.com/individualinvestors.
		Each Fund files a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. You may obtain a free copy of each Fund’s portfolio holdings as filed on Form N-Q, by contacting each Fund at the appropriate phone number, address or website listed below. Additionally, each Fund’s Form N-Q is available on the SEC’s website (http://www.sec.gov) or may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information about the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.

This report must be preceded or accompanied by a free prospectus. Investors should consider each Fund’s investment objectives, risks, charges, and expenses carefully before investing. The prospectus contains this and other important information about each Fund. For a free prospectus for this or any other Legg Mason Fund, visit www.leggmason.com/individualinvestors. Please read the prospectus carefully before investing.


Legg Mason Funds		Legg Mason Investor Services-Institutional
For Primary Class Shareholders		For R, FI and I Class Shareholders
c/o BFDS		c/o BFDS, P.O. Box 8037
P.O. Box 55214		Boston, MA 02206-8037
Boston, MA 02205-8504		888-425-6432
800-822-5544		www.lminstitutionalfunds.com
www.leggmason.com/individualinvestors


Legg Mason Investor Services, LLC, Distributor
A Legg Mason, Inc. Subsidiary
LMF-013/A (05/08) TN08-2138

Item 2.

Code of Ethics Applicable to Registrant’s Principal Executive Officer and Principal Financial Officer

(a)

Legg Mason Investors Trust, Inc. (“Registrant”) has adopted a Code of Ethics, as defined in the instructions to Form N-CSR that applies to the Registrant’s President and Treasurer, which is designed to deter wrongdoing and to promote:

•

Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

Page 1 of 5

•

Full, fair, accurate, timely and understandable disclosure in reports and documents the Registrant files with, or submits to, the SEC or in other public communications made by the Registrant;

•

Compliance with applicable governmental laws, rules and regulations;

•

Prompt internal reporting of violations of the Code of Ethics to an appropriate person or persons identified in the Code of Ethics; and

•

Accountability for adherence to the Code of Ethics.

(b)

No response required.

(c)

Not applicable.

(d)

The Registrant has not granted a waiver, including an implicit waiver, from a provision of the Code of Ethics to the Registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions during the period covered by this report.

(e)

Not applicable.

(f)

A copy of the Code of Ethics is attached as Exhibit 12(a)(1) to this Form N-CSR.

Item 3.

Audit Committee Financial Expert


(a)	(1)	The Registrant’s Board of Directors have determined that the Registrant has at least one Audit Committee financial expert serving on its Audit Committee.
(a)	(2)	The Audit Committee’s financial experts are Mr. Arthur S. Mehlman and Mr. Robert M. Tarola. They are “independent” as defined in Form N-CSR Item 3(a)(2).

Item 4.

Principal Accounting Fees and Services


(a)		Audit Fees

		PricewaterhouseCoopers LLP

		Fiscal Year Ended March 31, 2007 – $55,200

		Fiscal Year Ended March 31, 2008 – $50,060

Page 2 of 5


(b)	Audit-Related Fees

	There were no additional fees billed to the Registrant during either of the last two fiscal years in addition to those disclosed in Item 4(a).

	There were no fees billed to the Registrant for assurance and related services that required preapproval by the Audit Committee pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X during the Registrant’s last two fiscal years.

(c)	Tax Fees

	PricewaterhouseCoopers LLP

	Fiscal Year Ended March 31, 2007 – $4,400

	Fiscal Year Ended March 31, 2008 – $4,800

	Services include preparation of federal and state income tax returns and preparation of excise tax returns.

	There were no fees billed to the Registrant for tax services that required preapproval by the Audit Committee pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X during the Registrant’s last two fiscal years.

(d)	All Other Fees

	There were no fees billed to the Registrant during either of the last two fiscal years in addition to those disclosed in Item 4(a) through Item 4(c) above.

	There were no fees billed to the Registrant for services not included in Items 4(a) through 4(c) above that required preapproval by the Audit Committee pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X during the Registrant’s last two fiscal years.

(e)	(1)	The Audit Committee’s policy is to delegate to its chairperson the authority to preapprove items prior to the next meeting of the Committee. Such preapprovals are reported at the next quarterly meeting of the Audit Committee.

	(2)	There were no services provided to the Registrant that were approved by the Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

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		There were no fees billed to the Registrant for services where pre-approval by the Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X during the Registrant’s last two fiscal years.

(f)		The percentage of hours expended by the principal accountant’s engagement to audit the Registrant’s financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountants’ full-time, permanent employees was zero.

(g)		Non-Audit Fees for services rendered to Registrant or Registrant’s investment manager and any entity controlling, controlled by, or under common control with the investment manager.

		PricewaterhouseCoopers LLP

		Fiscal Year Ended March 31, 2007 – $953,316

		Fiscal Year Ended March 31, 2008 – $1,249,000

(h)		The members of the Registrant’s Audit Committee have considered whether the non-audit services that were rendered by the Registrant’s principal accountant to the Registrant’s investment adviser and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the Registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X are compatible with maintaining the principal accountant’s independence.

Item 5.

Audit Committee of Listed Registrants

The Registrant is not a listed issuer as defined in Rule 10A-3 under the Securities Exchange Act of 1934.

Item 6.

Schedule of Investments

The schedule of investments in securities of unaffiliated issuers is included in the annual report.

Item 7.

Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies

Not applicable.

Item 8.

Portfolio Managers of Closed-End Management Investment Companies

Not applicable.

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Item 9.

Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers

Not applicable.

Item 10.

Submission of Matters to a Vote of Security Holders

The Nominating Committee will accept recommendations for nominations from shareholders. Shareholders may forward recommendations to the Legal Compliance Department at 100 Light Street, 32nd Floor, Baltimore, Maryland 21202, Attn.: Fund Secretary.

Item 11.

Controls and Procedures

(a)

The Registrant’s principal executive and principal financial officers have concluded, based on their evaluation of the effectiveness of the design and operation of the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) as of a date within 90 days of the filing date of this report, that the Registrant’s disclosure controls and procedures are reasonably designed to ensure that information required to be disclosed by the Registrant on Form N-CSR is recorded, processed, summarized and reported within the time periods specified in the SEC’s rule and forms and that information required to be disclosed by the Registrant in the reports that it files or submits on Form N-CSR is accumulated and communicated to the Registrant’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

(b)

There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) during the Registrant’s second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

Item 12.

Exhibits

(a)

File the exhibits listed below as part of this Form.

(1)

The Registrant’s Code of Ethics applicable to Registrant’s principal executive officer and principal financial officer is attached hereto.

(2)

Separate certifications for the Registrant’s chief executive officer and chief financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940 are attached hereto.

(b)

Separate certifications for the Registrant’s chief executive officer and chief financial officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Legg Mason Investors Trust, Inc.

By:		/s/ Mark R. Fetting
Mark R. Fetting
President, Legg Mason Investors Trust, Inc.
Date: June 5, 2008

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.


By:		/s/ Mark R. Fetting
Mark R. Fetting
President, Legg Mason Investors Trust, Inc.
Date: June 5, 2008


By:		/s/ Marie K. Karpinski
Marie K. Karpinski
Vice President and Chief Financial Officer, Legg Mason Investors Trust, Inc.
Date: June 5, 2008