Legg Mason Investors Trust N-CSR Certified annual shareholder report (management investment company)

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

Name of Fund: Legg Mason Investors Trust, Inc.

Address of Principal Executive Offices: 100 Light Street, Baltimore, MD 21202

Name and address of agent for service:

Richard M. Wachterman, Esq.
Legg Mason Wood Walker, Incorporated
100 Light Street
Baltimore, MD 21202

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

Date of fiscal year end: March 31, 2005

Date of reporting period: March 31, 2005

Item 1.  Report to Shareholders

American Leading Companies Trust

Balanced Trust

Financial Services Fund

U.S. Small-Capitalization Value Trust

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, Balanced Trust, Financial Services Fund and U.S. Small-Capitalization Value Trust, for the fiscal year ended March 31, 2005.

   The following table summarizes key statistics for the respective classes of each Fund, as of March 31, 2005. For more information about the differences between the Fund share classes included in this report, please contact your Legg Mason Financial Advisor.

		Total ReturnsA
		3 Months		12 Months
American Leading Companies Trust
	Primary Class		-1.18%		+10.12%
	Institutional Class		-0.93%		+11.21%
S&P 500 Stock Composite IndexB			-2.15%		+6.69%
Lipper Large-Cap Value Funds IndexB			-0.83%		+8.45%
Balanced Trust
	Primary Class		-0.98%		+4.02%
	Financial Intermediary Class		-0.89%		+4.53%
	Institutional Class		-0.80%		+4.86%
Lehman Intermediate Government/Credit IndexB			-0.87%		-0.32%
Lipper Balanced Fund IndexB			-1.27%		+5.10%
Financial Services Fund
	Primary Class		-3.31%		+6.89%
	Financial Intermediary ClassC		-3.13%		+7.65%
Lipper Financial Services Fund IndexB			-5.57%		+2.56%
U.S. Small-Capitalization Value Trust
	Primary Class		-2.70%		+9.67%
	Institutional Class		-2.44%		+11.06%
Russell 2000 IndexB			-5.34%		+5.41%

   Long-term investment results for each of the Funds are shown in their respective Performance Information sections within this report.

   Ernst & Young LLP, the Funds’ independent registered public accounting firm, has completed its annual audit, and audited financial statements for the fiscal year ended March 31, 2005, are included in this report.

^A  Total return measures investment performance in terms of appreciation or depreciation in net asset value per share plus dividends and capital gain distributions. It assumes that dividends and distributions were reinvested at the time they were paid. No adjustment has been made for any income taxes payable by shareholders. Past performance does not predict future performance.

^B  See Glossary of Index Definitions on page 98. It is not possible to invest in an index.

^C  Financial Services Class A became the Financial Intermediary Class on July 31, 2004.

Annual Report to Shareholders

2

   Many Primary Class shareholders invest regularly in Fund shares on a dollar cost averaging basis through a program we call Future First. Most do so by authorizing automatic, monthly transfers of $50 or more from their bank checking or Legg Mason accounts. Dollar cost averaging is a convenient and sensible way to invest, as it encourages continued purchases during market downswings, when the best values are available. Of course, it does not ensure a profit nor protect against declines in the value of your investment. Your Legg Mason Financial Advisor will be happy to help you establish a Future First dollar cost averaging account should you wish to do so.

Sincerely,

Mark R. Fetting

President

May 13, 2005

Annual Report to Shareholders

3

Management’s Discussion of Fund Performance

American Leading Companies Trust

   Total returns for the Fund for various periods ended March 31, 2005, are presented below, along with those of some comparative indices:

Average Annual Total Returns

First

Quarter

One

Three

Five

Ten

Since

2005

Year

Years

Years

Years

InceptionA

American Leading Companies Trust

Primary Class

-1.18%

+10.12%

+6.44%

+3.30%

+10.37%

+9.20%

Institutional Class

-0.93%

+11.21%

+7.59%

N/A

N/A

+4.75%

S&P 500 Stock Composite IndexB

-2.15%

+6.69%

+2.75%

-3.16%

+10.79%

+10.40%

Lipper Large-Cap Core Funds IndexB

-2.26%

+4.79%

+1.31%

-4.23%

+9.18%

+8.69%

Lipper Large-Cap Value Funds IndexB

-0.83%

+8.45%

+3.86%

+1.23%

+10.34%

+9.85%

Dow Jones Industrial AverageB

-2.06%

+3.59%

+2.55%

+1.20%

+11.85%

+11.81%

NASDAQ Composite IndexB

-8.10%

+0.25%

+2.71%

-15.25%

+9.36%

+8.92%

The performance data quoted represents past performance and does 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.leggmasonfunds.com; for the Institutional Class please call 1-888-425-6432. 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. Performance figures for periods longer than one year represent average annual returns.

   The major equity market indices — the S&P 500 Index, the Dow Industrials and the NASDAQ Composite Index — went on a bit of a roller coaster ride in the twelve months ended March 31, 2005, as investors swung from moods of optimism to pessimism and back again regarding the outlook for the economy and the stock market.

^A  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 periods beginning August 31, 1993.

^B  See Glossary of Index Definitions on page 98. It is not possible to invest in an index.

Management’s Discussion of Fund Performance — Continued

Annual Report to Shareholders

4

	Total Returns
	Quarter Ended								Year
									Ended
	6/30/04		9/30/04		12/31/04		3/31/05		3/31/05
S&P 500 Stock Composite Index		+1.72%		-1.87%		+9.23%		-2.15%		+6.69%
Dow Jones Industrial Average		+1.24%		-2.90%		+7.59%		-2.06%		+3.59%
NASDAQ Composite Index		+2.69%		-7.37%		+14.69%		-8.10%		+0.25%

   The S&P 500 and Dow Industrials marked time in the first half of the fiscal year, with the positive effects of strong corporate profit growth being offset by rising oil prices and uncertainty over the progress of the war in Iraq. The NASDAQ Composite was the weakest of the major indices during this period — and for the year as a whole — as investors showed a preference for more established, dividend-paying companies over non-dividend payers. The market was also troubled by the longer-term implications of the Federal Reserve Board’s decision to begin raising the Fed Funds rate in June 2004. Following the reelection of President Bush, the market staged a strong rally in the December quarter, but sold off again as concerns about the interest rate and inflation outlook resurfaced in the opening months of calendar 2005.

   The American Leading Companies Trust Primary Class shares outperformed the overall market for the fiscal year ended March 31, 2005, with an average return of 10.12% versus 6.69% for the S&P 500. On a performance contribution basis, which takes into account both price change and portfolio weighting, the leading positive contributors for the fiscal year were: UnitedHealth Group, Devon Energy, WellPoint, Transocean, Tyco International, Phelps Dodge, Altria Group Inc., Nextel Communications, Health Net Inc. and Lloyds TSB Group plc. The strong performance of our managed care holdings — UnitedHealth Group, WellPoint and Health Net Inc. — together with our overweight in energy stocks were the keys to the portfolio’s outperformance for the year. Four of the largest detractors from performance were financial stocks — J.P. Morgan Chase & Co., Citigroup Inc., Fannie Mae and Washington Mutual — which were hurt by rising interest rates. Other detractors included InterActiveCorp, Nokia Oyj – ADR, Merck & Co., Inc., Pfizer Inc., The DIRECTV Group, and Pepsi Bottling Group. For the latest twelve months, we would describe portfolio activity as moderate, with turnover averaging between 20% and 25%. A complete listing of new purchases and liquidations is presented elsewhere in this report. In broad terms, during the year, we expanded the number of holdings in the portfolio by about 10%, from 52 to 57. We also reduced our overall exposure to the financial sector — though we remain over-weighted in this area — cutting back our holdings in mortgage finance, and taking advantage of significant market weakness to establish new positions in two insurance companies: The St. Paul Travelers Companies, Inc. and American International Group. Finally, late in the

Annual Report to Shareholders

5

fiscal year (March 2005), we took advantage of favorable prices to trim our holdings of managed care and energy stocks.

David E. Nelson, CFA

April 19, 2005

DJIA 10,127.41

Annual Report to Shareholders

6

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, 2004, and held through March 31, 2005.

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 during this 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 this 5% hypothetical example with the 5% hypothetical examples for the relevant class that appear in the shareholder reports of the other funds.

		Beginning		Ending		Expenses PaidA
		Account		Account		During the		Annualized
		Value		Value		Period		Expense
		10/1/04		3/31/05		10/1/04 to 3/31/05		Ratio
Primary Class:
	Actual	$	1,000.00	$	1,105.80	$	9.87		1.88%
	Hypothetical (5% return before expenses)		1,000.00		1,015.56		9.45
Institutional Class:
	Actual	$	1,000.00	$	1,111.70	$	4.74		0.90%
	Hypothetical (5% return before expenses)		1,000.00		1,020.44		4.53

^A These calculations are based on expenses incurred in the most recent fiscal half-year. The dollar amount shown as “Expenses Paid” is equal to the annualized expense ratio multiplied by the average value over the period, multiplied by the number of days in the most recent fiscal half-year (182) and divided by 365.

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 a closely matched broad-based securities market 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 include 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. It assumes that dividends and distributions were reinvested at the time they were paid. Average annual returns tend to smooth out variations in a fund’s return, so that they differ from actual year-to-year results. No adjustment has been made for any income taxes payable by shareholders.

Performance Information — Continued

Annual Report to Shareholders

8

Growth of a $10,000 Investment — Primary Class

Periods Ended March 31, 2005

	Cumulative		Average Annual
	Total Return		Total Return
One Year		+10.12%		+10.12%
Five Years		+17.62%		+3.30%
Ten Years		+168.28%		+10.37%

The performance data quoted represents past performance and does 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.leggmasonfunds.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.

Annual Report to Shareholders

9

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

Periods Ended March 31, 2005

	Cumulative		Average Annual
	Total Return		Total Return
One Year		+11.21%		+11.21%
Three Years		+24.53%		+7.59%
Life of Class*		+19.25%		+4.75%
* Inception date: June 14, 2001

The performance data quoted represents past performance and does 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 call 1-888-425-6432. 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 return is for the period beginning May 31, 2001.

Performance Information — Continued

Annual Report to Shareholders

10

Portfolio Composition (As of March 31, 2005)

(As a percentage of net assets)

Top Ten Holdings (As of March 31, 2005)

	% of
Security	Net Assets
UnitedHealth Group Incorporated		5.4%
Nextel Communications, Inc.		5.2%
Tyco International Ltd.		5.0%
Altria Group, Inc.		3.9%
J.P. Morgan Chase & Co.		3.9%
WellPoint Inc.		3.8%
Lloyds TSB Group plc		3.1%
Citigroup Inc.		3.1%
InterActiveCorp		2.8%
Health Net Inc.		2.7%

Annual Report to Shareholders

11

Selected Portfolio Performance ^B

Strongest performers for the year ended March 31, 2005C
1.	Transocean Inc.	+84.5%
2.	Devon Energy Corporation	+65.2%
3.	Anadarko Petroleum Corporation	+48.1%
4.	UnitedHealth Group Incorporated	+48.1%
5.	Apache Corporation	+42.7%
6.	WellPoint Inc.	+38.3%
7.	Johnson & Johnson	+35.0%
8.	Royal Dutch Petroleum Company – ADR	+34.6%
9.	Health Net Inc.	+31.2%
10.	Duke Energy Corporation	+30.0%

Weakest performers for the year ended March 31, 2005C
1.	InterActiveCorp	-29.6%
2.	Fannie Mae	-24.8%
3.	Nokia Oyj – ADR	-23.9%
4.	Merck & Co., Inc.	-23.6%
5.	Pfizer Inc.	-23.3%
6.	Wal Mart Stores, Inc.	-15.2%
7.	J.P. Morgan Chase & Co.	-14.6%
8.	Citigroup Inc.	-10.0%
9.	Newmont Mining Corporation	-8.7%
10.	The DIRECTV Group, Inc.	-6.2%

Portfolio Changes

Securities added during the 1st quarter 2005	Securities sold during the 1st quarter 2005
Amazon.com, Inc. American International Group, Inc. Applied Materials, Inc. Hewlett-Packard Company Sara Lee Corporation Texas Instruments Incorporated	The Kroger Co.

B	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.
C	Securities held for the entire year.

Annual Report to Shareholders

12

Portfolio of Investments

American Leading Companies Trust

March 31, 2005

(Amounts in Thousands)

		Shares/Par		Value
Common Stock and Equity Interests — 97.9%
Consumer Discretionary — 13.1%
Household Durables — 0.3%
	Koninklijke (Royal) Philips Electronics N.V. – ADR		63	$	1,734	A
Internet and Catalog Retail — 4.1%
	Amazon.com, Inc.		260		8,910	A
	InterActiveCorp		850		18,930	A
					27,840
Media — 5.6%
	Liberty Media Corporation		1,500		15,555	A
	The DIRECTV Group, Inc.		900		12,978	A
	Time Warner Inc.		530		9,301	A
					37,834
Specialty Retail — 3.1%
	The Home Depot, Inc.		150		5,736
	The TJX Companies, Inc.		630		15,517
					21,253
Consumer Staples — 7.1%
Beverages — 0.9%
	The Pepsi Bottling Group, Inc.		225		6,266
Food and Staples Retailing — 1.7%
	Albertson’s, Inc.		465		9,602
	Wal-Mart Stores, Inc.		35		1,754
					11,356
Food Products — 0.4%
	Sara Lee Corporation		122		2,704
Household Products — 0.2%
	Kimberly-Clark Corporation		25		1,643

Annual Report to Shareholders

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		Shares/Par		Value
Consumer Staples — Continued
Tobacco — 3.9%
	Altria Group, Inc.		400	$	26,156
Energy — 6.7%
Energy Equipment and Services — 2.1%
	Baker Hughes Incorporated		51		2,269
	Transocean Inc.		230		11,836	A
					14,105
Oil and Gas — 4.6%
	Anadarko Petroleum Corporation		90		6,849
	Apache Corporation		141		8,634
	Devon Energy Corporation		280		13,370
	Royal Dutch Petroleum Company – ADR		34		2,041
					30,894
Financials — 22.6%
Capital Markets — 1.2%
	Merrill Lynch & Co., Inc.		70		3,962
	Morgan Stanley		70		4,008
					7,970
Commercial Banks — 5.4%
	Bank of America Corporation		343		15,144
	Lloyds TSB Group plc		2,350		21,207
					36,351
Diversified Financial Services — 6.9%
	Citigroup Inc.		465		20,897
	J.P. Morgan Chase & Co.		752		26,019
					46,916
Insurance — 3.8%
	American International Group, Inc.		250		13,852
	The St. Paul Travelers Companies, Inc.		318		11,680
					25,532

Portfolio of Investments — Continued

American Leading Companies Trust — Continued

Annual Report to Shareholders

14

		Shares/Par		Value
Financials — Continued
Thrifts and Mortgage Finance — 5.3%
	Countrywide Financial Corporation		150	$	4,869
	Fannie Mae		75		4,084
	MGIC Investment Corporation		180		11,100
	Washington Mutual, Inc.		390		15,405
					35,458
Health Care — 16.2%
Health Care Providers and Services — 11.8%
	Health Net Inc.		550		17,991	A
	UnitedHealth Group Incorporated		380		36,244
	WellPoint Inc.		205		25,697	A
					79,932
Pharmaceuticals — 4.4%
	Bristol-Myers Squibb Company		425		10,820
	Johnson & Johnson		118		7,925
	Merck & Co., Inc.		123		3,982
	Pfizer Inc.		260		6,830
					29,557
Industrials — 10.6%
Aerospace/ Defense — 3.5%
	General Dynamics Corporation		108		11,561
	Lockheed Martin Corporation		200		12,212
					23,773
Industrial Conglomerates — 6.8%
	General Electric Company		340		12,261
	Tyco International Ltd.		1,000		33,800
					46,061
Machinery — 0.3%
	Deere & Company		30		2,014

Annual Report to Shareholders

15

		Shares/Par		Value
Information Technology — 8.6%
Communications Equipment — 2.0%
	Nokia Oyj – ADR		875	$	13,501	A
Computers and Peripherals — 2.9%
	Hewlett-Packard Company		250		5,485
	International Business Machines Corporation		152		13,890
					19,375
Semiconductor Equipment and Production — 2.3%
	Applied Materials, Inc.		200		3,250	A
	Intel Corporation		300		6,969
	Texas Instruments Incorporated		200		5,098
					15,317
Software — 1.4%
	Microsoft Corporation		405		9,789
Materials — 5.7%
Metals and Mining — 5.7%
	Alcoa Inc.		275		8,357
	Newmont Mining Corporation		370		15,633
	Phelps Dodge Corporation		143		14,547
					38,537
Telecommunication Services — 6.7%
Diversified Telecommunication Services — 1.5%
	ALLTEL Corporation		180		9,873
Wireless Telecommunication Services — 5.2%
	Nextel Communications, Inc.		1,250		35,525	A

Portfolio of Investments — Continued

American Leading Companies Trust — Continued

Annual Report to Shareholders

16

		Shares/Par		Value
Utilities — 0.6%
Multi-Utilities and Unregulated Power — 0.6%
	Duke Energy Corporation		140	$	3,921
Total Common Stock and Equity Interests (Identified Cost — $435,813)					661,187
Repurchase Agreements — 2.1%
Bank of America 2.78%, dated 3/31/05, to be repurchased at $7,060 on 4/1/05 (Collateral: $7,215 Freddie Mac discount notes, due 4/26/05, value $7,201)		$	7,059		7,059
Goldman Sachs & Company 2.83%, dated 3/31/05, to be repurchased at $7,060 on 4/1/05 (Collateral: $7,028 Fannie Mae mortgage-backed securities, 6%, due 10/1/34, value $7,212)			7,059		7,059
Total Repurchase Agreements (Identified Cost — $14,118)					14,118
Total Investments — 100.0% (Identified Cost — $449,931)					675,305
Other Assets Less Liabilities — 0.0%					100
Net Assets — 100%				$	675,405

^A Non-income producing.

See notes to financial statements.

Annual Report to Shareholders

17

Statement of Assets and Liabilities

American Leading Companies Trust

March 31, 2005

(Amounts in Thousands)

Assets:
	Investment securities at market value (Identified Cost – $435,813)			$	661,187
	Short-term securities at value (Identified Cost – $14,118)				14,118
			Total investments				$	675,305
	Receivable for:
		Fund shares sold						772
		Securities sold						5,281
		Dividend and interest income						1,944
	Other assets							6
								683,308
Liabilities:
	Payable for:
		Fund shares repurchased			532
		Securities purchased			6,097
	Due to:
		Manager			432
		Distributor			557
	Tax withholding liability				118
	Accrued expenses				167
								7,903
Net Assets							$	675,405
Net assets consist of:
	Accumulated paid-in capital applicable to:
		29,933 Primary Class shares outstanding		$	442,367
		957 Institutional Class shares outstanding			17,114
	Undistributed net investment income/(loss)				(16	)
	Accumulated net realized gain/(loss) on investments				(9,412	)
	Unrealized appreciation/(depreciation) of investments and foreign currency				225,352
Net Assets							$	675,405
Net Asset Value Per Share:
	Primary Class						$	21.85
	Institutional Class						$	22.34

See notes to financial statements.

Annual Report to Shareholders

18

Statement of Operations

American Leading Companies Trust

For the Year Ended March 31, 2005

(Amounts in Thousands)

Investment Income:
	Dividends			$	11,594	A
	Interest				99
			Total income				$	11,693
Expenses:
	Management fees				4,668
	Distribution and service fees:
		Primary Class			6,043
	Audit and legal fees				48
	Custodian fees				137
	Directors’ fees and expenses				32
	Registration fees				25
	Reports to shareholders				110
	Transfer agent and shareholder servicing expense:
		Primary Class			411
		Institutional Class			15
	Other expenses				62
					11,551
		Less: Compensating balance credits			(1	)B
			Total expenses					11,550
Net Investment Income								143
Net Realized and Unrealized Gain on Investments:
	Realized gain on investments and foreign currency transactions				31,042
	Change in unrealized appreciation/(depreciation) of investments and foreign currency translations				29,389
Net Realized and Unrealized Gain on Investments								60,431
Change in Net Assets Resulting From Operations							$	60,574

^A Net of foreign taxes withheld of $203.

^B See Note 1, Compensating Balance Credits, in the notes to financial statements.

See notes to financial statements.

Annual Report to Shareholders

19

Statement of Changes in Net Assets

American Leading Companies Trust

(Amounts in Thousands)

			For the Years Ended March 31,
			2005			2004
Change in Net Assets:
Net investment income			$	143		$	404
Net realized gain on investments and foreign currency transactions				31,042			1,042
Change in unrealized appreciation/(depreciation) of investments and foreign currency translations				29,389			152,137
Change in net assets resulting from operations				60,574			153,583
Distributions to shareholders:
	From net investment income:
		Primary Class		(214	)		(86	)
		Institutional Class		(176	)		(120	)
Change in net assets from Fund share transactions:
		Primary Class		10,335			24,999
		Institutional Class		2,595			4,855
Change in net assets				73,114			183,231
Net Assets:
Beginning of year				602,291			419,060
End of year			$	675,405		$	602,291
Undistributed net investment income/(loss)			$	(16	)	$	233

See notes to financial statements.

Annual Report to Shareholders

20

Financial Highlights

American Leading Companies Trust

   Contained below is per share operating performance data for a share of common stock outstanding, total investment return, ratios to average net assets and other supplemental data. This information has been derived from information provided in the financial statements.

Primary Class:

		Years Ended March 31,
		2005			2004			2003			2002			2001
Net asset value, beginning of year		$	19.85		$	14.54		$	18.13		$	18.28		$	18.69
Investment operations:
	Net investment income/(loss)		—	A		.01			(.01	)		(.08	)		(.13	)
	Net realized and unrealized gain/(loss) on investments		2.01			5.30			(3.58	)		(.07	)		(.17	)
	Total from investment operations		2.01			5.31			(3.59	)		(.15	)		(.30	)
Distributions:
	From net investment income		(.01	)		—	B		—			—			—
	From net realized gain on investments		—			—			—			—			(.11	)
	Total distributions		(.01	)		—	B		—			—			(.11	)
Net asset value, end of year		$	21.85		$	19.85		$	14.54		$	18.13		$	18.28
Ratios/supplemental data:
	Total return		10.12	%		36.54	%		(19.80	)%		(.82	)%		(1.65	)%
	Expenses to average net assets		1.88	%		1.90	%		1.92	%		1.93	%		1.95	%
	Net investment income/(loss) to average net assets		(.01	)%		.05	%		(.05	)%		(.47	)%		(.65	)%
	Portfolio turnover rate		19.4	%		19.6	%		19.0	%		22.7	%		31.0	%
Net assets, end of year (in thousands)		$	654,019		$	585,295		$	410,331		$	551,061		$	272,150

^A $(.001) per share.

^B $(.003) per share.

See notes to financial statements.

Annual Report to Shareholders

21

Institutional Class:

		Years Ended March 31,
		2005			2004			2003			2002A
Net asset value, beginning of period		$	20.28		$	14.83		$	18.27		$	19.08
Investment operations:
	Net investment income/(loss)		.21			.20			.15			.09
	Net realized and unrealized gain/(loss) on investments		2.06			5.42			(3.59	)		(.90	)
	Total from investment operations		2.27			5.62			(3.44	)		(.81	)
Distributions:
	From net investment income		(.21	)		(.17	)		—			—
	From net realized gain on investments		—			—			—			—
	Total distributions		(.21	)		(.17	)		—			—
Net asset value, end of period		$	22.34		$	20.28		$	14.83		$	18.27
Ratios/supplemental data:
	Total return		11.21	%		37.96	%		(18.83	)%		(4.25	)%B
	Expenses to average net assets		.90	%		.85	%		.87	%		.87	%C
	Net investment income/(loss) to average net assets		.99	%		1.14	%		1.02	%		.62	%C
	Portfolio turnover rate		19.4	%		19.6	%		19.0	%		22.7	%
Net assets, end of period (in thousands)		$	21,386		$	16,996		$	8,729		$	9,649

^A For the period June 14, 2001 (re-commencement of operations) to March 31, 2002.

B	Not annualized.
C	Annualized.

See notes to financial statements.

Annual Report to Shareholders

22

Management’s Discussion of Fund Performance

Balanced Trust

   Total returns for the Fund for various periods ended March 31, 2005, are presented below, along with those of some comparative indices:

						Average Annual Total Returns
		First
		Quarter		One		Three		Five		Since
		2005		Year		Years		Years		InceptionA
Balanced Trust
	Primary Class		-0.98%		+4.02%		+2.43%		+0.87%		+3.91%
	Financial Intermediary Class		-0.89%		+4.53%		+2.93%		N/A		+2.64%
	Institutional Class		-0.80%		+4.86%		+3.19%		N/A		+2.91%
Lehman Intermediate Government/ Credit IndexB			-0.87%		-0.32%		+5.46%		+6.71%		+6.36%
Lipper Balanced Fund IndexB			-1.27%		+5.10%		+4.64%		+2.09%		+7.29%
S&P 500 Stock Composite IndexB			-2.15%		+6.69%		+2.75%		-3.16%		+8.23%

The performance data quoted represents past performance and does 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.leggmasonfunds.com; for the Financial Intermediary and Institutional Classes please call 1-888-425-6432. 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. Performance figures for periods longer than one year represent average annual returns.

Equity Portfolio

   During the twelve-month period ended March 31, 2005, the equity portfolio generated positive absolute and relative returns. The equity portion of the Fund posted a total return of 9.31% versus 6.69% for the S&P 500 Stock Composite Index. This level of return enabled the overall Fund to close some, but not all, of the performance gap with the Lipper Balanced Fund Index.

   Equity portfolio performance came from two sources during the year, stock selection and sector weighting. Among some of the best performing stocks owned by the Fund were three that were added during the last twelve months: L-3 Communications, up 16%, Praxair, up

^A  The inception date of the Primary Class is October 1, 1996. The inception date of the Financial Intermediary and Institutional Classes is March 16, 2001. Index returns are for periods beginning September 30, 1996.

^B  See the Glossary of Index Definitions on page 98. It is not possible to invest in an index.

Annual Report to Shareholders

23

21%, and topping the list — the shares of Questar, with a total return of 60% since being purchased in May of 2004. Not all of the additions to the Fund contributed to performance, however. Late in the period we added to the Fund’s holdings of Intel, which declined 6.5%, Texas Instruments, down 4%, and Vodafone, down 2%. Beyond the individual securities selected, the Fund benefited from an overweighted allocation to energy and materials companies as well as a less-than-market emphasis on telecommunications, technology and financial services stocks. This is reflective of our strategy to limit the Fund’s exposure to companies negatively impacted by rising interest rates in favor of those that benefit from stronger commodity pricing and increased industrial output.

Fixed Income Portfolio

   During the twelve-month period ended March 31, 2005, the fixed income portfolio delivered a positive relative return with a slightly negative actual return. The total return for the fixed income portfolio was -0.23%, versus -0.32% for the Lehman Intermediate Government/ Credit Index.

   Interest rates moved up during the twelve-month period across all but the longest maturities. The 2-year Treasury note yield was 3.78% on March 31, 2005, 220 basis points^C higher than the year before. The 10-year Treasury note yield was 4.48% at the end of March 2005, 65 basis points higher than 1 year prior.

   The fixed income performance benefited from interest rate as well as term-structure positioning. The duration, i.e., the sensitivity of the price of the fixed income portfolio to changes in interest rates, was held below that of the benchmark while interest rates moved up across most maturities. Holding a barbell structure, more holdings of shorter and longer maturities and less intermediate maturities, also added value to the fixed income portfolio.

Peter Sorrentino, CFA

Troy Snider, CFA

David Francis

April 26, 2005

DJIA 10,151.13

^C  100 basis points = 1%.

Annual Report to Shareholders

24

Expense Example

Balanced Trust

   As a shareholder of the Fund, you incur ongoing costs, including management fees, distribution and service (12b-1) fees on Primary and Financial Intermediary 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, 2004, and held through March 31, 2005.

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 during this 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 this 5% hypothetical example with the 5% hypothetical examples for the relevant class that appear in the shareholder reports of the other funds.

		Beginning		Ending		Expenses PaidA
		Account		Account		During the		Annualized
		Value		Value		Period		Expense
		10/1/04		3/31/05		10/1/04 to 3/31/05		Ratio
Primary Class:
	Actual	$	1,000.00	$	1,040.20	$	9.41		1.85%
	Hypothetical (5% return before expenses)		1,000.00		1,015.71		9.30
Financial Intermediary Class:
	Actual	$	1,000.00	$	1,045.30	$	6.88		1.35%
	Hypothetical (5% return before expenses)		1,000.00		1,018.20		6.79
Institutional Class:
	Actual	$	1,000.00	$	1,048.60	$	5.62		1.10%
	Hypothetical (5% return before expenses)		1,000.00		1,019.45		5.54

^A These calculations are based on expenses incurred in the most recent fiscal half-year. The dollar amount shown as “Expenses Paid” is equal to the annualized expense ratio multiplied by the average value over the period, multiplied by the number of days in the most recent fiscal half-year (182) and divided by 365.

Annual Report to Shareholders

25

Performance Information

Balanced Trust

   The graphs on the following pages compare the Fund’s total returns to that of two closely matched broad-based securities market indices. 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 each of the Financial Intermediary or Institutional Classes, 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 each securities market index do not include any transaction costs associated with buying and selling securities in the indices or other administrative expenses. Both the Fund’s results and the indices’ 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. It assumes that dividends and distributions were reinvested at the time they were paid. Average annual returns tend to smooth out variations in a fund’s return, so that they differ from actual year-to-year results. No adjustment has been made for any income taxes payable by shareholders.

Performance Information — Continued

Annual Report to Shareholders

26

Growth of a $10,000 Investment — Primary Class

Periods Ended March 31, 2005

	Cumulative		Average Annual
	Total Return		Total Return
One Year		+4.02%		+4.02%
Five Years		+4.43%		+0.87%
Life of Class*		+38.50%		+3.91%
* Inception date: October 1, 1996

The performance data quoted represents past performance and does 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.leggmasonfunds.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 September 30, 1996.

Annual Report to Shareholders

27

Growth of a $1,000,000 Investment — Financial Intermediary Class

Periods Ended March 31, 2005

	Cumulative		Average Annual
	Total Return		Total Return
One Year		+4.53%		+4.53%
Three Years		+9.04%		+2.93%
Life of Class*		+11.09%		+2.64%
* Inception date: March 16, 2001

The performance data quoted represents past performance and does 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 call 1-888-425-6432. 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 March 31, 2001.

Performance Information — Continued

Annual Report to Shareholders

28

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

Periods Ended March 31, 2005

	Cumulative		Average Annual
	Total Return		Total Return
One Year		+4.86%		+4.86%
Three Years		+9.88%		+3.19%
Life of Class*		+12.31%		+2.91%
* Inception date: March 16, 2001

The performance data quoted represents past performance and does 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 call 1-888-425-6432. 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 March 31, 2001.

Annual Report to Shareholders

29

Portfolio Composition (As of March 31, 2005)

(As a percentage of net assets)

Top Ten Holdings (As of March 31, 2005)

	% of
Security	Net Assets
United States Treasury Notes, 3.25%, due 8/15/07		2.6%
Medtronic, Inc.		2.4%
Target Corporation		2.2%
United States Treasury STRIPS, 0%, 5/15/07		2.2%
Fannie Mae, 5.5%, 10/1/34		2.2%
Citigroup Inc.		2.1%
United States Treasury Notes, 3.63%, due 7/15/09		2.0%
PepsiCo, Inc.		2.0%
United States Treasury Notes, 3.5%, due 11/15/09		1.9%
General Electric Company		1.9%

Performance Information — Continued

Annual Report to Shareholders

30

Selected Portfolio Performance ^C

	Strongest performers for the year ended March 31, 2005D
1.	EnCana Corp.	+64.7%
2.	Kansas City Southern	+38.6%
3.	Johnson & Johnson	+35.0%
4.	Rio Tinto plc – ADR	+32.4%
5.	BP plc – ADR	+25.7%
6.	Abbott Laboratories	+24.3%
7.	General Electric Company	+21.0%
8.	Union Pacific Corporation	+18.8%
9.	Illinois Tool Works Inc.	+14.3%
10.	Dell Inc.	+14.3%

	Weakest performers for the year ended March 31, 2005D
1.	Fannie Mae	-24.8%
2.	Nokia Oyj – ADR	-23.9%
3.	Applied Materials, Inc.	-23.8%
4.	Wal-Mart Stores, Inc.	-15.2%
5.	Intel Corporation	-13.9%
6.	Citigroup Inc.	-10.0%
7.	SYSCO Corporation	-6.8%
8.	United States Treasury Notes, 6.5%, 10/15/06	-6.6%
9.	Union Pacific Corporation, 6.625%, 2/1/08	-6.3%
10.	Caterpillar Financial Services Corporation, 4.875%, 6/15/07	-5.7%

Portfolio Changes

Securities added during the 1st quarter 2005	Securities sold during the 1st quarter 2005
Cisco Systems, Inc.	Devon Energy Corporation
Fannie Mae, 3.875%, 2/15/10	International Paper Capital Trust, Cv., 5.25%
Fannie Mae, 5.50%, 10/1/34	Microsoft Corporation
Fannie Mae, 4.625%, 10/15/14	Neenah Paper, Inc.
Federal Farm Credit Bank, 1.875%, 1/16/07	Newell Financial Trust I, Cv., 5.25%
Kyphon Inc.	Pfizer Inc.
Lowe’s Companies, Inc.
Pacific Gas & Electric Co., 4.20%, 3/1/11
Schlumberger Limited
Vodafone Group Plc

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.

Annual Report to Shareholders

31

Portfolio of Investments

Balanced Trust

March 31, 2005

(Amounts in Thousands)

		Par/Shares		Value
Common Stocks and Equity Interests — 59.6%
Consumer Discretionary — 6.4%
Hotels, Restaurants and Leisure — 1.5%
	McDonald’s Corporation		29	$	903
Multi-Line Retail — 3.2%
	Target Corporation		26		1,301
	Wal-Mart Stores, Inc.		13		651
					1,952
Specialty Retail — 1.7%
	Lowe’s Companies, Inc.		7		371
	The Home Depot, Inc.		16		627
					998
Consumer Staples — 5.2%
Beverages — 3.3%
	Anheuser-Busch Companies, Inc.		16		734
	PepsiCo, Inc.		23		1,220
					1,954
Food and Drug Retailing — 0.6%
	SYSCO Corporation		10		358
Household Products — 1.3%
	Kimberly-Clark Corporation		12		789
Energy — 11.1%
Oil and Gas — 11.1%
	BP plc – ADR		14		861
	ChevronTexaco Corporation		17		968
	EnCana Corp.		14		972
	Nabors Industries, Ltd.		14		822	A
	Praxair, Inc.		22		1,072

Portfolio of Investments — Continued

Balanced Trust — Continued

Annual Report to Shareholders

32

		Par/Shares		Value
Energy — Continued
Oil and Gas — Continued
	Questar Corporation		20	$	1,161
	Schlumberger Limited		11		768
					6,624
Financials — 8.4%
Diversified Financial Services — 2.1%
	Citigroup Inc.		28		1,268
Financial (Diversified) — 1.2%
	Equity Office Properties Trust		24		723
Insurance — 3.6%
	Lincoln National Corporation		14		632
	Principal Financial Group, Inc.		14		535
	The PMI Group, Inc.		25		954
					2,121
Thrifts and Mortgage Finance — 1.5%
	Fannie Mae		17		920
Health Care — 11.1%
Health Care (Medical Products and Supplies) — 6.8%
	Biomet, Inc.		22		799
	Kyphon Inc.		14		352
	MedImmune, Inc.		40		952	A
	Medtronic, Inc.		28		1,437
	STERIS Corporation		22		556	A
					4,096

Annual Report to Shareholders

33

		Par/Shares		Value
Health Care — Continued
Pharmaceuticals — 4.3%
	Abbott Laboratories		17	$	793
	IVAX Corporation		46		914	A
	Johnson & Johnson		13		873
					2,580
Industrials — 5.4%
Industrial Conglomerates — 1.9%
	General Electric Company		32		1,154
Machinery — 1.1%
	Illinois Tool Works Inc.		7		627
Road and Rail — 2.4%
	Kansas City Southern		44		847	A
	Union Pacific Corporation		9		593
					1,440
Information Technology — 10.2%
Communications Equipment — 2.6%
	Cisco Systems, Inc.		38		680	A
	Nokia Oyj – ADR		34		525	A
	Vodafone Group Plc		13		345
					1,550
Computers and Peripherals — 1.8%
	Dell Inc.		10		384	A
	International Business Machines Corporation		8		694
					1,078
Semiconductor Equipment and Production — 3.4%
	Applied Materials, Inc.		36		582	A
	Intel Corporation		32		743
	Texas Instruments Incorporated		28		714
					2,039

Portfolio of Investments — Continued

Balanced Trust — Continued

Annual Report to Shareholders

34

				Maturity
		Rate		Date		Par/Shares		Value
Information Technology — Continued
Software — 1.0%
	Oracle Corporation						50	$	624	A
Telecommunications — 1.4%
	L-3 Communications Holdings, Inc.						12		852
Materials — 1.8%
Metals and Mining — 1.8%
	Rio Tinto plc – ADR						8		1,077
Total Common Stocks and Equity Interests (Identified Cost — $29,303)									35,727
Corporate Bonds and Notes — 11.6%
Aerospace/ Defense — 0.8%
	General Dynamics Corporation		4.500%		8/15/10	$	500		495
Banking and Finance — 0.9%
	Bank of America Corporation		5.125%		11/15/14		330		330
	Caterpillar Financial Services Corporation		4.875%		6/15/07		200		202
									532
Diversified Financials — 0.8%
	SLM Corporation		5.380%		1/31/14		500		500	B
Finance — 1.8%
	General Motors Acceptance Corporation		4.750%		5/19/05		525		525	B
	Ford Motor Credit Company		6.875%		2/1/06		550		558
									1,083
Food — 2.2%
	Kroger Company		6.750%		4/15/12		700		763
	Safeway Inc.		4.800%		7/16/07		525		525
									1,288

Annual Report to Shareholders

35

				Maturity
		Rate		Date		Par/Shares		Value
Investment Banking/ Brokerage — 1.7%
	J.P. Morgan Chase & Co.		3.125%		12/11/06	$	500	$	493
	Merrill Lynch & Co., Inc.		3.700%		4/21/08		500		490
									983
Multi-Line Retail — 0.8%
	Wal-Mart Stores, Inc.		4.550%		5/1/13		475		467
Oil and Gas — 0.5%
	Pacific Gas and Electric Company		4.200%		3/1/11		325		313
Pharmaceuticals — 0.8%
	Abbott Laboratories		3.750%		3/15/11		500		474
Railroads — 1.3%
	Union Pacific Corporation		6.625%		2/1/08		750		793
Total Corporate Bonds and Notes (Identified Cost — $6,939)									6,928
U.S. Government and Agency Obligations — 25.8%
Fixed Rate Securities — 21.9%
	Fannie Mae		3.875%		2/15/10		750		730
	Fannie Mae		4.625%		10/15/14		300		294
	Fannie Mae		5.000%		7/1/18		724		725
	Fannie Mae		5.500%		10/1/34		1,285		1,287
	Federal Farm Credit Bank		1.875%		1/16/07		500		482
	Federal Farm Credit Bank		3.750%		4/9/10		475		458
	Freddie Mac		2.750%		8/15/06		850		838
	Freddie Mac		3.160%		5/7/07		675		664
	Freddie Mac		4.500%		11/15/12		650		644
	United States Treasury Notes		2.375%		8/15/06		700		688
	United States Treasury Notes		2.625%		11/15/06		700		688
	United States Treasury Notes		3.250%		8/15/07		1,600		1,578
	United States Treasury Notes		3.375%		11/15/08		1,000		978
	United States Treasury Notes		3.500%		11/15/09		1,200		1,168

Portfolio of Investments — Continued

Balanced Trust — Continued

Annual Report to Shareholders

36

				Maturity
		Rate		Date		Par/Shares		Value
Fixed Rate Securities — Continued
	United States Treasury Notes		3.625%		7/15/09	$	1,250	$	1,226
	United States Treasury Notes		4.000%		2/15/14		450		434
	United States Treasury Notes		6.500%		10/15/06		250		260
									13,142
Inflation-Indexed Securities — 1.0%
	United States Treasury Inflation-Protected Security		2.000%		1/15/14		568		581	C
Stripped Securities — 2.9%
	United States Treasury STRIPS		0.000%		5/15/07		1,400		1,293	D
	United States Treasury STRIPS		0.000%		5/15/13		625		433	D
									1,726
Total U.S. Government and Agency Obligations (Identified Cost — $15,747)									15,449
U.S. Government Agency Mortgage-Backed Securities — 2.6%
Fixed Rate Securities — 2.6%
	Government National Mortgage Association		5.500%		6/15/34		433		437
	Government National Mortgage Association		6.000%		1/15/29 to
					1/15/34		784		807
	Government National Mortgage Association		7.000%		2/15/28 to
					12/15/31		276		292
Total U.S. Government Agency Mortgage- Backed Securities (Identified Cost — $1,501)									1,536

Annual Report to Shareholders

37

	Par/Shares		Value
Repurchase Agreements — 0.8%
Goldman Sachs & Company 2.83%, dated 3/31/05, to be repurchased at $500 on 4/1/05 (Collateral: $498 Fannie Mae mortgage-backed securities, 6%, due 10/1/34, value $511)	$	500	$	500
Total Repurchase Agreements (Identified Cost — $500)				500
Total Investments — 100.4% (Identified Cost — $53,990)				60,140
Other Assets Less Liabilities — (0.4)%				(215	)
Net Assets — 100.0%			$	59,925

^A Non-income producing.

B	Indexed security — The rates of interest earned on these securities are tied to the Consumer Price Index (“CPI”) or to the London Interbank Offered Rate (“LIBOR”). The coupon rates are the rates as of March 31, 2005.
C	U.S. Treasury Inflation-Protected Security — Treasury security whose principal value is adjusted daily in accordance with changes to the Consumer Price Index for All Urban Consumers. Interest is calculated on the basis of the current adjusted principal value.
D	STRIPS — Separate Trading of Registered Interest and Principal of Securities. This is a pre-stripped zero coupon bond that is a direct obligation of the U.S. Treasury.

See notes to financial statements.

Annual Report to Shareholders

38

Statement of Assets and Liabilities

Balanced Trust

March 31, 2005

(Amounts in Thousands)

Assets:
	Investment securities at market value (Identified Cost – $53,490)			$	59,640
	Short-term securities at value (Identified Cost – $500)				500
			Total investments			$	60,140
	Receivable for:
		Fund shares sold					49
		Dividend and interest income					263
							60,452
Liabilities:
	Payable for:
		Fund shares repurchased			63
		Securities purchased			350
	Due to:
		Manager			20
		Distributor			26
	Tax withholding liability				2
	Accrued expenses				66
							527
Net Assets						$	59,925
Net assets consist of:
	Accumulated paid-in-capital applicable to:
		3,373 Primary Class shares outstanding		$	37,541
		1,949 Financial Intermediary Class shares outstanding			13,648
		56 Institutional Class shares outstanding			1,154
	Undistributed net investment income				253
	Accumulated net realized gain/(loss) on investments				1,179
	Unrealized appreciation/(depreciation) of investments				6,150
Net Assets						$	59,925
Net Asset Value Per Share:
	Primary Class					$	11.15
	Financial Intermediary Class					$	11.13
	Institutional Class					$	11.13
					��

See notes to financial statements.

Annual Report to Shareholders

39

Statement of Operations

Balanced Trust

For the Year Ended March 31, 2005

(Amounts in Thousands)

Investment Income:
	Dividends			$	736	A
	Interest				780
			Total income				$	1,516
Expenses:
	Management fee				447
	Distribution and service fees:
		Primary Class			285
		Financial Intermediary Class			53
	Audit and legal fees				52
	Custodian fee				70
	Directors’ fees and expenses				15
	Registration fees				22
	Reports to shareholders				42
	Transfer agent and shareholder servicing expense:
		Primary Class			55
		Financial Intermediary Class			21
		Institutional Class			1
	Other expenses				20
					1,083
	Less: Compensating balance credits				(1	)B
	Fees waived				(88	)
			Total expenses, net of compensating balance credits and fee waivers					994
Net Investment Income								522
Net Realized and Unrealized Gain on Investments:
	Realized gain on investments				3,738
	Change in unrealized appreciation/(depreciation) of investments				(1,815	)
Net Realized and Unrealized Gain on Investments								1,923
Change in Net Assets Resulting From Operations							$	2,445

^A Net of foreign taxes withheld of $12.

^B See Note 1, Compensating Balance Credits, in the notes to financial statements.

See notes to financial statements.

Annual Report to Shareholders

40

Statement of Changes in Net Assets

Balanced Trust

(Amounts in Thousands)

			For the Years Ended March 31,
			2005			2004
Change in Net Assets:
Net investment income			$	522		$	661
Net realized gain/(loss) on investments				3,738			(486	)
Change in unrealized appreciation/(depreciation) of investments				(1,815	)		10,054
Change in net assets resulting from operations				2,445			10,229
Distributions to shareholders:
	From net investment income:
		Primary Class		(274	)		(471	)
		Financial Intermediary Class		(289	)		(390	)
		Institutional Class		(9	)		(9	)
	From net realized gain on investments:
		Primary Class		(709	)		—
		Financial Intermediary Class		(392	)		—
		Institutional Class		(10	)		—
Change in net assets from Fund share transactions:
		Primary Class		(1,846	)		169
		Financial Intermediary Class		(361	)		(1,808	)
		Institutional Class		123			90
Change in net assets				(1,322	)		7,810
Net Assets:
Beginning of year				61,247			53,437
End of year			$	59,925		$	61,247
Undistributed net investment income			$	253		$	296

See notes to financial statements.

Annual Report to Shareholders

41

Financial Highlights

Balanced Trust

   Contained below is per share operating performance data for a share of common stock outstanding, total investment return, ratios to average net assets and other supplemental data. This information has been derived from information provided in the financial statements.

Primary Class:

		Years Ended March 31,
		2005			2004			2003			2002			2001
Net asset value, beginning of year		$	10.99		$	9.36		$	10.97		$	11.64		$	12.20
Investment operations:
	Net investment income		.08	A		.10	A		.13	A		.11	A,B		.17	A
	Net realized and unrealized gain/(loss) on investments		.37			1.66			(1.57	)		.02	B		(.61	)
	Total from investment operations		.45			1.76			(1.44	)		.13			(.44	)
Distributions:
	From net investment income		(.08	)		(.13	)		(.10	)		(.11	)		(.12	)
	From net realized gain on investments		(.21	)		—			(.07	)		(.69	)		—
	Total distributions		(.29	)		(.13	)		(.17	)		(.80	)		(.12	)
Net asset value, end of year		$	11.15		$	10.99		$	9.36		$	10.97		$	11.64
Ratios/supplemental data:
	Total return		4.02	%		19.03	%		(13.20	)%		.89	%		(3.68	)%
	Expenses to average net assets		1.85	% A		1.85	% A		1.85	% A		1.85	% A		1.85	% A
	Net investment income to average net assets		.70	%A		.94	%A		1.37	% A		1.04	% A,B		1.38	% A
	Portfolio turnover rate		42.4	%		42.1	%		29.5	%		55.4	%		58.4	%
Net assets, end of year (in thousands)			$37,602		$	38,936		$	32,914		$	36,308		$	35,971

^A Net of fees waived by LMFA pursuant to a voluntary expense limitation of 1.85% of average daily net assets. If no fees had been waived by LMFA, the annualized ratio of expenses to average daily net assets would have been as follows: for the years ended March 31, 2005, 2.02%; 2004,1.96%; 2003, 2.03%; 2002, 2.02%; and 2001, 2.00%.

^B As required, effective April 1, 2001, the Fund adopted the provisions of the AICPA Audit and Accounting Guide, Audits of Investment Companies, and began amortizing discount and premium on debt securities. The effect of this adoption for the year ended March 31, 2002, was an increase in the Fund’s net investment income per share of $0.01, a decrease in net realized and unrealized gain/ (loss) per share of $0.01, and an increase in the ratio of net investment income from 0.96% to 1.04%. Per share data and ratios for periods prior to April 1, 2001, have not been restated to reflect this change in accounting.

See notes to financial statements.

Financial Highlights — Continued

Annual Report to Shareholders

42

Financial Intermediary Class:

		Years Ended March 31,
		2005			2004			2003			2002			2001C
Net asset value, beginning of period		$	11.00		$	9.37		$	10.96		$	11.64		$	11.58
Investment operations:
	Net investment income/(loss)		.13	D		.15	D		.20	D		.17	D,E		N.M.	D
	Net realized and unrealized gain/(loss) on investments		.36			1.66			(1.58	)		.01	E		.06
	Total from investment operations		.49			1.81			(1.38	)		.18			.06
Distributions:
	From net investment income		(.15	)		(.18	)		(.14	)		(.17	)		—
	From net realized gain on investments		(.21	)		—			(.07	)		(.69	)		—
	Total distributions		(.36	)		(.18	)		(.21	)		(.86	)		—
Net asset value, end of period		$	11.13		$	11.00		$	9.37		$	10.96		$	11.64
Ratios/supplemental data:
	Total return		4.53	%		19.52	%		(12.72	)%		1.35	%		.52	%F
	Expenses to average net assets		1.35	% D		1.35	% D		1.35	% D		1.35	% D		1.35	%D,G
	Net investment income/(loss) to average net assets		1.21	% D		1.46	% D		1.88	% D		1.55	% D,E		.27	%D,G
	Portfolio turnover rate		42.4	%		42.1	%		29.5	%		55.4	%		58.4	%
Net assets, end of period (in thousands)		$	21,695		$	21,812		$	20,182		$	26,463		$	30,976

C	For the period from March 16, 2001 (commencement of operations) to March 31, 2001.
D	Net of fees waived by LMFA pursuant to a voluntary expense limitation of 1.35% of average daily net assets. If no fees had been waived by LMFA, the annualized ratio of expenses to average daily net assets would have been as follows: for the years ended March 31, 2005, 1.47%; 2004, 1.44%; 2003, 1.46%; 2002, 1.48%; and for the period ended March 31, 2001, 1.45%.

E

As required, effective April 1, 2001, the Fund adopted the provisions of the AICPA Audit and Accounting Guide, Audits of Investment Companies, and began amortizing discount and premium on debt securities. The effect of this adoption for the year ended March 31, 2002, was an increase in the Fund’s net investment income per share of $0.01, a decrease in net realized and unrealized gain/(loss) per share of $0.01, and an increase in the ratio of net investment income from 1.47% to 1.55%. Per share data and ratios for periods prior to April 1, 2001, have not been restated to reflect this change in accounting.

F

Not annualized.

^G Annualized.

N.M. — Not meaningful.

See notes to financial statements.

Annual Report to Shareholders

43

Institutional Class:

		Years Ended March 31,
		2005			2004			2003			2002			2001C
Net asset value, beginning of period		$	11.01		$	9.38		$	10.98		$	11.64		$	11.58
Investment operations:
	Net investment income/(loss)		.17	H		.17	H		.22	H		.19	H,I		N.M.	H
	Net realized and unrealized gain/(loss) on investments		.36			1.68			(1.59	)		.03	I		.06
	Total from investment operations		.53			1.85			(1.37	)		.22			.06
Distributions:
	From net investment income		(.20	)		(.22	)		(.16	)		(.19	)		—
	From net realized gain on investments		(.21	)		—			(.07	)		(.69	)		—
	Total distributions		(.41	)		(.22	)		(.23	)		(.88	)		—
Net asset value, end of period		$	11.13		$	11.01		$	9.38		$	10.98		$	11.64
Ratios/supplemental data:
	Total return		4.86	%		19.87	%		(12.58	)%		1.68	%		.52	%F
	Expenses to average net assets		1.10	% H		1.10	% H		1.10	%H		1.10	% H		1.10	%G,H
	Net investment income/(loss) to average net assets		1.47	% H		1.68	% H		2.14	%H		1.79	% H,I		.52	%G,H
	Portfolio turnover rate		42.4	%		42.1	%		29.5	%		55.4	%		58.4	%
Net assets, end of period (in thousands)		$	628		$	499		$	341		$	391		$	325

^H Net of fees waived by LMFA pursuant to a voluntary expense limitation of 1.10% of average daily net assets. If no fees had been waived by LMFA, the annualized ratio of expenses to average daily net assets would have been as follows: for the years ended March 31, 2005, 1.17%; 2004, 1.12%; 2003, 1.17%; 2002, 1.21%; and for the period ended March 31, 2001, 1.16%.

^I As required, effective April 1, 2001, the Fund adopted the provisions of the AICPA Audit and Accounting Guide, Audits of Investment Companies, and began amortizing discount and premium on debt securities. The effect of this adoption for the year ended March 31, 2002, was an increase in the Fund’s net investment income per share of $0.01, a decrease in net realized and unrealized gain/(loss) per share of $0.01, and an increase in the ratio of net investment income from 1.71% to 1.79%. Per share data and ratios for periods prior to April 1, 2001, have not been restated to reflect this change in accounting.

N.M. — Not meaningful.

See notes to financial statements.

Annual Report to Shareholders

44

Management’s Discussion of Fund Performance

Financial Services Fund

   Total returns for the Fund for various periods ended March 31, 2005, are presented below, along with those of some comparative indices:

						Average Annual Total Returns
		First
		Quarter		One		Three		Five		Since
		2005		Year		Years		Years		InceptionA
Financial Services Fund
	Primary Class		-3.31%		+6.89%		+10.31%		+12.84%		+8.48%
	Financial Intermediary ClassB		-3.13%		+7.65%		+11.13%		+13.69%		+9.30%
S&P 500 Stock Composite IndexC			-2.15%		+6.69%		+2.75%		-3.16%		+2.65%
S&P 500 Financial IndexC			-6.38%		-1.01%		+3.93%		+5.36%		+6.62%
Lipper Financial Services Fund IndexC			-5.57%		+2.56%		+6.08%		+8.06%		+7.08%

The performance data quoted represents past performance and does 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.leggmasonfunds.com; for the Financial Intermediary Class please call 1-888-425-6432. 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. Performance figures for periods longer than one year represent average annual returns.

Market Commentary

   For the twelve months ended March 31, 2005, the S&P 500 returned a positive 6.69%, with most of that gain being achieved in the last two months of 2004. For most of the year the averages were in negative territory as the market was held hostage by: rising interest rates, rising energy prices, the economic ramifications of these worries, the Presidential election and what appeared to be a worsening situation in Iraq. In November, President Bush was successfully reelected, which sparked a much-needed market rally. Unfortunately, the rally was not sustainable as the old worries resurfaced, causing a decline in the S&P 500 of 2.15% for the first quarter of 2005 ending March 31st.

^A  The inception date for both the Primary and Financial Intermediary Classes is November 16, 1998. Index returns are for periods beginning October 31, 1998.

^B  On July 31, 2004, Class A shares of the Fund were renamed Financial Intermediary Class shares.

^C  See Glossary of Index Definitions on page 98. It is not possible to invest in an index.

Annual Report to Shareholders

45

Specific Fund Commentary

   For the fiscal year ended March 31, 2005, the Financial Services Fund Primary Class shares returned a positive 6.89%. This compares favorably with a 2.56% return for the Lipper Financial Services Fund Index, a negative 1.01% for the S&P 500 Financial Index and a positive 6.69% return for the S&P 500 Index. Overall, the Fund, with a large exposure to regional banks, did well because long-term bond yields did not go up as much as the market feared despite several short-term increases of Fed Funds rate by the Federal Reserve. We had three banks acquired, which also added to our positive performance. Although it is a financial services fund, not owning the largest insurance brokers AIG and Marsh & McClennan further aided our performance, as those companies were mired in scandal. The Fund’s best performing financial stocks in the fiscal year were: The Bank Holdings, which returned a positive 70.0%; Philadelphia Consolidated, up 33.7%; StanCorp Financial, up 31.6%; and Mercantile Bankshares, up 21.9%. Hurting performance were: Friedman Billings Ramsey, down 36.2%; J.P. Morgan, down 14.6%; Greater Bay Bancorp, down 14.4%; Southern Community, down 15.0%; and Wainwright Bank Trust, down 9.8%. Towards the end of 2004 the Fund’s performance lagged the rest of the market as the rally was centered on other sectors.

Amy L. LaGuardia, CFA

April 25, 2005

DJIA 10,242.47

Annual Report to Shareholders

46

Expense Example

Financial Services Fund

   As a shareholder of the Fund, you incur ongoing costs, including management fees, distribution and service (12b-1) fees on Primary and Financial Intermediary 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, 2004, and held through March 31, 2005.

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 during this 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 this 5% hypothetical example with the 5% hypothetical examples for the relevant class that appear in the shareholder reports of the other funds.

		Beginning		Ending		Expenses PaidA
		Account		Account		During the		Annualized
		Value		Value		Period		Expense
		10/1/04		3/31/05		10/1/04 to 3/31/05		Ratio
Primary Class:
	Actual	$	1,000.00	$	1,068.90	$	11.61		2.25%
	Hypothetical (5% return before expenses)		1,000.00		1,013.71		11.30
Financial Intermediary Class:
	Actual	$	1,000.00	$	1,076.50	$	7.77		1.50%
	Hypothetical (5% return before expenses)		1,000.00		1,017.45		7.54

^A These calculations are based on expenses incurred in the most recent fiscal half-year. The dollar amount shown as “Expenses Paid” is equal to the annualized expense ratio multiplied by the average value over the period, multiplied by the number of days in the most recent fiscal half-year (182) and divided by 365.

Annual Report to Shareholders

47

Performance Information

Financial Services Fund

   The graphs on the following pages compare the Fund’s total returns to that of two closely matched broad-based securities market indices. 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 Financial Intermediary 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 each securities market index do not include any transaction costs associated with buying and selling securities in the indices or other administrative expenses. Both the Fund’s results and the indices’ 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. It assumes that dividends and distributions were reinvested at the time they were paid. Average annual returns tend to smooth out variations in a fund’s return, so that they differ from actual year-to-year results. No adjustment has been made for any income taxes payable by shareholders.

Performance Information — Continued

Annual Report to Shareholders

48

Growth of a $10,000 Investment — Primary Class

Periods Ended March 31, 2005

	Cumulative		Average Annual
	Total Return		Total Return
One Year		+6.89%		+6.89%
Five Years		+82.93%		+12.84%
Life of Class*		+67.93%		+8.48%
* Inception date: November 16, 1998

The performance data quoted represents past performance and does 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.leggmasonfunds.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 October 31, 1998.

Annual Report to Shareholders

49

Growth of a $1,000,000 Investment — Financial Intermediary Class^B

Periods Ended March 31, 2005

	Cumulative		Average Annual
	Total Return		Total Return
One Year		+7.65%		+7.65%
Five Years		+89.90%		+13.69%
Life of Class*		+76.23%		+9.30%
* Inception date: November 16, 1998

The performance data quoted represents past performance and does 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.leggmasonfunds.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	On July 31, 2004, Class A shares of the Fund were renamed Financial Intermediary Class shares. Class A shares were subject to a maximum initial sales charge of 4.75%. Financial Intermediary Class does not have an initial sales charge. The returns shown do not reflect the imposition of an initial sales charge.
C	Index returns are for periods beginning October 31, 1998.

Performance Information — Continued

Annual Report to Shareholders

50

Portfolio Composition (As of March 31, 2005)

(As a percentage of net assets)

Top Ten Holdings (As of March 31, 2005)

	% of
Security	Net Assets
SLM Corporation		3.2%
North Fork Bancorporation, Inc.		3.1%
Commerce Bancshares, Inc.		2.9%
Cascade Bancorp		2.9%
StanCorp Financial Group, Inc.		2.5%
Harbor Florida Bancshares, Inc.		2.4%
Texas Regional Bancshares, Inc.		2.4%
Cullen/Frost Bankers, Inc.		2.4%
SunTrust Banks, Inc.		2.3%
RLI Corp.		2.3%

Annual Report to Shareholders

51

Selected Portfolio Performance^B

	Strongest performers for the year ended March 31, 2005C
1.	The Bank Holdings	+70.0%
2.	EnCana Corp.	+64.7%
3.	Hershey Foods Corporation	+48.4%
4.	Philadelphia Consolidated Holding Corp.	+33.7%
5.	StanCorp Financial Group, Inc.	+31.6%
6.	Mercantile Bankshares Corporation	+21.9%
7.	SLM Corporation	+21.2%
8.	First Community Bancorp	+21.1%
9.	Glacier Bancorp, Inc.	+21.1%
10.	Harbor Florida Bancshares, Inc.	+20.4%

	Weakest performers for the year ended March 31, 2005C
1.	Greater Bay Bancorp	-14.4%
2.	MBNA Corporation	-9.4%
3.	Cascade Financial Corporation	-6.8%
4.	Fidelity Bankshares, Inc.	-5.0%
5.	Hilb, Rogal and Hamilton Company	-4.9%
6.	Northrim BanCorp Inc.	-0.9%
7.	American Equity Investment Life Holding Company	-0.3%
8.	North Fork Bancorporation, Inc.	+1.4%
9.	Sovereign Bancorp, Inc.	+4.0%
10.	Columbia Bancorp	+4.9%

Portfolio Changes

Securities added during the 1st quarter 2005	Securities sold during the 1st quarter 2005
Assurant, Inc.	First Data Corporation
United Financial Corp.	FirstFed Financial Corp.
Willow Grove Bancorp, Inc.	Friedman, Billings, Ramsey Group, Inc.
	MAF Bancorp. Inc.
	Provident Bancorp, Inc.

B	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.
C	Securities held for the entire year.

Performance Information — Continued

Annual Report to Shareholders

52

Portfolio of Investments

Financial Services Fund

March 31, 2005

(Amounts in Thousands)

		Shares/Par		Value
Common Stock and Equity Interests — 94.8%
Consumer Staples — 1.6%
Food Products — 1.6%
	Hershey Foods Corporation		18	$	1,088
Energy — 1.7%
Oil and Gas (Exploration and Production) — 1.7%
	EnCana Corp.		16		1,127
Financials — 88.1%
Banks — 45.5%
	Bancorp Rhode Island, Inc.		20		748
	BB&T Corporation		25		977
	Cascade Bancorp		100		1,941
	Cascade Financial Corporation		50		925
	Columbia Bancorp		40		1,274
	Commerce Bancshares, Inc.		41		1,974
	Cullen/ Frost Bankers, Inc.		35		1,580
	First Community Bancorp		20		886
	First Financial Bankshares, Inc.		19		837
	First State Bancorporation		70		1,188
	Glacier Bancorp, Inc.		50		1,525
	Greater Bay Bancorp		40		976
	M&T Bank Corporation		15		1,531
	Mercantile Bankshares Corporation		25		1,272
	Mid-State Bancshares		35		931
	North Fork Bancorporation, Inc.		75		2,080
	Northrim BanCorp Inc.		40		1,000
	Sound Federal Bancorp, Inc.		40		620
	Summit Bank Corporation		9		137
	SunTrust Banks, Inc.		21		1,535
	Synovus Financial Corp.		45		1,254
	TCF Financial Corporation		50		1,357
	Texas Regional Bancshares, Inc.		53		1,581
	The Bank Holdings		5		88	A

Annual Report to Shareholders

53

		Shares/Par		Value
Financials — Continued
Banks — Continued
	The Bank Holdings – warrants		1	$	8	A
	Wainwright Bank & Trust Company		88		1,057
	Western Sierra Bancorp		40		1,365	A
					30,647
Commercial Banks — 9.7%
	American Pacific Bank		90		1,060	A
	AmericanWest Bancorporation		50		963	A
	Community Capital Bancshares, Inc.		40		470
	First Capital Bancorp		50		1,087	A
	First Keystone Corporation		23		508
	First State Financial Corporation		15		180	A
	Gateway Financial Holdings Inc.		10		180
	GB&T Bancshares, Inc.		4		87
	Gold Banc Corporation, Inc.		50		702
	Southern Community Financial Corporation		33		310
	Sussex Bancorp		15		212
	TD Banknorth, Inc.		25		765	A
					6,524
Diversified Financials — 5.7%
	Financial Federal Corporation		15		530	A
	MBNA Corporation		45		1,105
	SLM Corporation		44		2,183
					3,818
Insurance — 17.1%
	American Equity Investment Life Holding Company		100		1,279
	AmerUs Group Co.		25		1,181
	Assurant Inc.		25		842
	Brown & Brown, Inc.		31		1,429
	Hilb, Rogal and Hamilton Company		30		1,074
	Old Republic International Corporation		55		1,281
	Philadelphia Consolidated Holding Corp.		15		1,163	A
	RLI Corp.		37		1,534
	StanCorp Financial Group, Inc.		20		1,696
					11,479

Portfolio of Investments — Continued

Financial Services Fund — Continued

Annual Report to Shareholders

54

		Shares/Par		Value
Financials — Continued
Investment Banking/Brokerage — 1.4%
	J.P. Morgan Chase & Co.		28	$	968
Savings and Loan Companies — 8.7%
	Fidelity Bankshares, Inc.		45		1,034
	Harbor Florida Bancshares, Inc.		48		1,637
	Partners Trust Financial Group, Inc.		50		530
	Sovereign Bancorp, Inc.		55		1,219
	United Financial Corp.		20		475
	Willow Grove Bancorp, Inc.		60		966
					5,861
Information Technology — 3.4%
Commercial Services and Supplies — 2.2%
	Fiserv, Inc.		37		1,473	A
Computer Services and Systems — 1.2%
	Online Resources Corporation		90		793	A
Total Common Stock and Equity Interests (Identified Cost — $43,722)					63,778
Repurchase Agreements — 3.6%
Bank of America
	2.78%, dated 3/31/05, to be repurchased at $1,213 on 4/1/05 (Collateral: $1,240 Freddie Mac discount notes, due 4/26/05, value $1,238)	$	1,213		1,213
Goldman, Sachs & Company
	2.83%, dated 3/31/05, to be repurchased at $1,213 on 4/1/05 (Collateral: $1,208 Fannie Mae mortgage-backed securities, 6%, due 10/1/34, value $1,240)		1,213		1,213
Total Repurchase Agreements (Identified Cost — $2,426)					2,426
Total Investments — 98.4% (Identified Cost — $46,148)					66,204
Other Assets Less Liabilities — 1.6%					1,080
Net Assets — 100.0%				$	67,284

^A Non-income producing.

See notes to financial statements.

Annual Report to Shareholders

55

Statement of Assets and Liabilities

Financial Services Fund

March 31, 2005

(Amounts in Thousands)

Assets:
	Investment securities at market value (Identified Cost – $43,722)			$63,778
	Short-term securities at value (Identified Cost – $2,426)			2,426
			Total investments		$66,204
	Receivable for:
		Fund shares sold			72
		Securities sold			2,934
		Dividend and interest income			86
					69,296
Liabilities:
	Payable for:
		Fund shares repurchased		48
		Securities purchased		1,809
	Due to:
		Manager		41
		Distributor		57
	Tax withholding liability			1
	Accrued expenses			56
					2,012
Net Assets					$67,284
Net assets consist of:
	Accumulated paid-in-capital applicable to:
		3,921 Primary Class shares outstanding		$39,562
		736 Financial Intermediary Class shares outstanding		7,133
	Undistributed net investment income/(loss)			(8)
	Accumulated net realized gain/(loss) on investments			541
	Unrealized appreciation/(depreciation) of investments			20,056
Net Assets					$67,284
Net Asset Value Per Share:
	Primary Class				$14.32
	Financial Intermediary Class				$15.14

See notes to financial statements.

Annual Report to Shareholders

56

Statement of Operations

Financial Services Fund

For the Year Ended March 31, 2005

(Amounts in Thousands)

Investment Income:
	Dividends			$	1,141	A
	Interest				44
			Total income				$	1,185
Expenses:
	Management fees				678
	Distribution and service fees:
		Primary Class			563
		Financial Intermediary Class			29
	Audit and legal fees				52
	Custodian fees				61
	Directors’ fees and expenses				15
	Registration fees				38
	Reports to shareholders				30
	Transfer agent and shareholder servicing expense:
		Primary Class			37
		Financial Intermediary Class			3
	Other expenses				22
					1,528
		Less: Compensating balance credits			(1	)B
		Fees waived			(86	)
			Total expenses, net of waivers					1,441
Net Investment Loss								(256	)
Net Realized and Unrealized Gain on Investments:
	Realized gain on investments				7,735
	Change in unrealized appreciation/ (depreciation) of investments				(2,951	)
Net Realized and Unrealized Gain on Investments								4,784
Change in Net Assets Resulting From Operations							$	4,528

^A Net of foreign taxes withheld of $2.

^B See Note 1, Compensating Balance Credits, in the notes to financial statements.

See notes to financial statements.

Annual Report to Shareholders

57

Statement of Changes in Net Assets

Financial Services Fund

(Amounts in Thousands)

			For the Years Ended March 31,
			2005			2004
Change in Net Assets:
Net investment loss			$	(256	)	$	(275	)
Net realized gain on investments				7,735			5,050
Change in unrealized appreciation/ (depreciation) of investments				(2,951	)		15,183
Change in net assets resulting from operations				4,528			19,958
Distributions to shareholders:
	From net realized gain on investments:
		Primary Class		(7,893	)		(946	)
		Financial Intermediary Class		(1,550	)		(192	)
Change in net assets from Fund share transactions:
		Primary Class		2,972			1,693
		Financial Intermediary Class		36			(843	)
Change in net assets				(1,907	)		19,670
Net Assets:
Beginning of year				69,191			49,521
End of year			$	67,284		$	69,191
Undistributed net investment income/(loss)			$	(8	)	$	(4	)

See notes to financial statements.

Annual Report to Shareholders

58

Financial Highlights

Financial Services Fund

   Contained below is per share operating performance data for a share of common stock outstanding, total investment return, ratios to average net assets and other supplemental data. This information has been derived from information provided in the financial statements.

Primary Class:

		Years Ended March 31,
		2005			2004			2003			2002			2001
Net asset value, beginning of year		$	15.44		$	11.20		$	12.51		$	11.02		$	9.18
Investment operations:
	Net investment loss		(.07	) A		(.08	) A		(.08	) A		(.09	) A		(.05	) A
	Net realized and unrealized gain on investments		1.10			4.58			(1.23	)		1.58			1.89
	Total from investment operations		1.03			4.50			(1.31	)		1.49			1.84
Distributions:
	From net realized gain on investments		(2.15	)		(.26	)		—			—			—
	Total distributions		(2.15	)		(.26	)		—			—			—
Net asset value, end of year		$	14.32		$	15.44		$	11.20		$	12.51		$	11.02
Ratios/supplemental data:
	Total return		6.89	%		40.27	%		(10.47	)%		13.52	%		20.04	%
	Expenses to average net assets		2.25	% A		2.25	% A		2.25	% A		2.25	% A		2.25	% A
	Net investment loss to average net assets		(.50	)% A		(.58	)% A		(.64	)% A		(.69	)% A		(.55	)% A
	Portfolio turnover rate		28.3	%		29.6	%		38.2	%		28.9	%		37.2	%
Net assets, end of year (in thousands)		$	56,139		$	57,398		$	40,367		$	45,473		$	46,705

^A Net of fees waived by LMFA pursuant to a voluntary expense limitation of 2.25%. If no fees had been waived by LMFA, the annualized ratio of expenses to average daily net assets would have been as follows: for the years ended March 31, 2005, 2.38%; 2004, 2.35%; 2003, 2.46%; 2002, 2.44%; and 2001, 2.71%.

See notes to financial statements.

Annual Report to Shareholders

59

Financial Intermediary Class (formerly Class A shares):

		Years Ended March 31,
		2005			2004			2003			2002			2001
Net asset value, beginning of year		$	16.10		$	11.58		$	12.84		$	11.22		$	9.28
Investment operations:
	Net investment income		.04	B		.03	B		.01	B		.02	B		.03	B
	Net realized and unrealized gain/(loss) on investments		1.15			4.75			(1.27	)		1.60			1.91
	Total from investment operations		1.19			4.78			(1.26	)		1.62			1.94
Distributions:
	From net realized gain on investments		(2.15	)		(.26	)		—						—
	Total distributions		(2.15	)		(.26	)		—			—			—
Net asset value, end of year		$	15.14		$	16.10		$	11.58		$	12.84		$	11.22
Ratios/supplemental data:
	Total return		7.65	%		41.37	% C		(9.81	)% C		14.44	% C		20.91	% C
	Expenses to average net assets		1.50	% B		1.50	% B		1.50	% B		1.50	% B		1.50	% B
	Net investment income to average net assets		.24	%B		.17	%B		.12	%B		.07	%B		.21	%B
	Portfolio turnover rate		28.3	%		29.6	%		38.2	%		28.9	%		37.2	%
Net assets, end of year (in thousands)		$	11,145		$	11,793		$	9,154		$	9,960		$	9,594

B	Net of fees waived by LMFA pursuant to a voluntary expense limitation of 1.50%. If no fees had been waived by LMFA, the annualized ratio of expenses to average daily net assets would have been as follows: for the years ended March 31, 2005, 1.59%; 2004, 1.55%; 2003, 1.65%; 2002, 1.64%; and 2001, 1.91%.
C	Excluding sales charge applicable to Class A shares. Sales charges were eliminated beginning July 31, 2004, when Class A shares were renamed Financial Intermediary Class shares.

See notes to financial statements.

Annual Report to Shareholders

60

Management’s Discussion of Fund Performance

U.S. Small-Capitalization Value Trust

   Total returns for the Fund for various periods ended March 31, 2005, are presented below, along with those of some comparative indices:

						Average Annual Total Returns
		First
		Quarter		One		Three		Five		Since
		2005		Year		Years		Years		InceptionA
U.S. Small-Cap Value Trust
	Primary Class		-2.70%		+9.67%		+10.98%		+16.56%		+7.78%
	Institutional Class		-2.44%		+11.06%		+12.26%		+17.78%		+9.04%
Russell 2000 IndexB			-5.34%		+5.41%		+8.05%		+4.01%		+9.50%
Russell 2000 Value IndexB			-3.98%		+9.79%		+11.48%		+15.42%		+9.56%
Russell 1000 Value IndexB			+0.09%		+13.17%		+7.16%		+5.19%		+5.59%
S&P 500 Stock Composite IndexB			-2.15%		+6.69%		+2.75%		-3.16%		+2.69%

The performance data quoted represents past performance and does 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.leggmasonfunds.com; for the Institutional Class please call 1-888-425-6432. 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. Performance figures for periods longer than one year represent average annual returns.

   Over the twelve months ended March 31, 2005, U.S. equity markets experienced moderate gains. These gains were tempered more recently as the markets were broadly negative for the first quarter of 2005. For the last twelve months, value outperformed growth and large-cap stocks outperformed smaller issues. The Russell 1000 Value gained 13.17%, the Russell 2000 Value gained 9.79%, and the S&P 500 rose 6.69%. Looking back to 2004, equity markets closed the year with strong gains as investors focused primarily on the positive news that the U.S. economy appeared sound without overheating or triggering excessive inflation. More recently the Fed raised interest rates to 2.75% in March, the seventh increase since they began moving rates higher in mid-2004. Despite the Fed discounting inflationary pressures and describing the economy as “balanced,” investors seemed more concerned.

^A  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 periods beginning May 31, 1998.

^B  See Glossary of Index Definitions on page 98. It is not possible to invest in an index.

Annual Report to Shareholders

61

   Over this period, the Fund’s Primary Class returned 9.67% net of fees, roughly in line with the Russell 2000 Value return of 9.79%. Although underweight, the Fund’s technology stocks outperformed the average benchmark holdings. The underweight in technology also contributed to performance, as the group was weak for most of the period except for a sharp rally late in 2004. Additionally, the portfolio’s financial holdings continued to outperform the average small-cap financial. The largest negative for performance came from the portfolio’s producer manufacturing and consumer durables, particularly the auto parts manufacturers who were weaker on disappointing domestic auto sales.

Henry F. Otto

Steven M. Tonkovich

April 25, 2005

DJIA 10,242.47

Annual Report to Shareholders

62

Expense Example

U.S. Small-Capitalization Value 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, 2004, and held through March 31, 2005.

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 during this 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 this 5% hypothetical example with the 5% hypothetical examples for the relevant class that appear in the shareholder reports of the other funds.

		Beginning		Ending		Expenses PaidA
		Account		Account		During the		Annualized
		Value		Value		Period		Expense
		10/1/04		3/31/05		10/1/04 to 3/31/05		Ratio
Primary Class:
	Actual	$	1,000.00	$	1,096.70	$	10.45		2.00%
	Hypothetical (5% return before expenses)		1,000.00		1,014.96		10.05
Institutional Class:
	Actual	$	1,000.00	$	1,110.60	$	4.89		0.93%
	Hypothetical (5% return before expenses)		1,000.00		1,020.29		4.68

^A These calculations are based on expenses incurred in the most recent fiscal half-year. The dollar amount shown as “Expenses Paid” is equal to the annualized expense ratio multiplied by the average value over the period, multiplied by the number of days in the most recent fiscal half-year (182) and divided by 365.

Annual Report to Shareholders

63

Performance Information

U.S. Small-Capitalization Value Trust

   The graphs on the following pages compare the Fund’s total returns to that of a closely matched broad-based securities market 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 include 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. It assumes that dividends and distributions were reinvested at the time they were paid. Average annual returns tend to smooth out variations in a fund’s return, so that they differ from actual year-to-year results. No adjustment has been made for any income taxes payable by shareholders.

Performance Information — Continued

Annual Report to Shareholders

64

Growth of a $10,000 Investment — Primary Class

Periods Ended March 31, 2005

	Cumulative		Average Annual
	Total Return		Total Return
One Year		+9.67%		+9.67%
Five Years		+115.20%		+16.56%
Life of Class*		+66.29%		+7.78%
* Inception date: June 15, 1998

The performance data quoted represents past performance and does 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.leggmasonfunds.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 return is for periods beginning May 31, 1998.

Annual Report to Shareholders

65

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

Periods Ended March 31, 2005

	Cumulative		Average Annual
	Total Return		Total Return
One Year		+11.06%		+11.06%
Five Years		+126.65%		+17.78%
Life of Class*		+79.78%		+9.04%
* Inception date: June 19, 1998

The performance data quoted represents past performance and does 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 call 1-888-425-6432. 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 return is for periods beginning June 30, 1998.

Performance Information — Continued

Annual Report to Shareholders

66

Portfolio Composition (As of March 31, 2005)

(As a percentage of net assets)

Top Ten Holdings (As of March 31, 2005)

	% of
Security	Net Assets
Western Digital Corporation		1.5%
Borders Group, Inc.		1.4%
The Commerce Group, Inc.		1.4%
IndyMac Bancorp, Inc.		1.3%
AmerUs Group Co.		1.3%
United Defense Industries, Inc.		1.2%
AGL Resources Inc.		1.1%
York International Corporation		1.1%
WPS Resources Corporation		1.1%
Peoples Energy Corporation		1.0%

Performance Information ^C — Continued

Selected Portfolio Performance ^D

Annual Report to Shareholders

67

Strongest performers for the year ended March 31, 2005E
1.	Building Materials Holding Corporation	+157.2%
2.	United Defense Industries, Inc.	+131.5%
3.	Plains Exploration & Production Company	+87.2%
4.	Horizon Health Corporation	+87.2%
5.	P & F Industries, Inc.	+80.4%
6.	UICI	+68.5%
7.	The Anderson’s Inc.	+67.2%
8.	Safety Insurance Group, Inc.	+66.3%
9.	Energen Corporation	+63.9%
10.	United Fire & Casualty Company	+62.4%

Weakest performers for the year ended March 31, 2005 E
1.	Dura Automotive Systems, Inc.	-63.4%
2.	Dominion Homes, Inc.	-55.5%
3.	Precis, Inc.	-54.4%
4.	Friendly Ice Cream Corporation	-47.3%
5.	OCA Inc.	-46.2%
6.	Culp, Inc.	-42.7%
7.	Boston Communications Group, Inc.	-39.9%
8.	Planar Systems Inc.	-36.7%
9.	La-Z-Boy Incorporated	-34.2%
10.	American Axle & Manufacturing Holdings, Inc.	-32.2%

^C  Portfolio changes are not reported for U.S. Small-Cap due to the Fund’s high volume of trading.

^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.

^E  Securities held for the entire year.

Annual Report to Shareholders

68

Portfolio of Investments

U.S. Small-Capitalization Value Trust

March 31, 2005

(Amounts in Thousands)

		Shares/Par		Value
Common Stock and Equity Interests — 98.7%
Auto and Transportation — 6.4%
	Aftermarket Technology Corp.		39	$	637	A
	Air Methods Corporation		16		127	A
	American Axle & Manufacturing Holdings, Inc.		74		1,813
	ArvinMeritor, Inc.		141		2,184
	Asbury Automotive Group Inc.		48		739	A
	Bandag, Incorporated		16		761	A
	Bandag, Incorporated – Class A		12		492
	Cooper Tire & Rubber Company		68		1,241
	Dana Corporation		19		248
	Dura Automotive Systems, Inc.		38		181	A
	ExpressJet Holdings, Inc.		109		1,244	A
	Featherlite, Inc.		1		4	A
	Mesa Air Group Inc.		61		429	A
	Monaco Coach Corporation		59		958
	Overnite Corporation		5		166
	Pinnacle Airlines Corp.		36		383	A
	R & B, Inc.		11		151	A
	SCS Transportation, Inc.		11		208	A
	Sirva Inc.		69		493	A
	SkyWest, Inc.		113		2,091
	Stoneridge, Inc.		46		562	A
	Superior Industries International, Inc.		39		1,017
	TRW Automotive Holdings Corp.		11		222	A
					16,351
Consumer Discretionary — 25.5%
	American Greetings Corporation		89		2,270
	AnnTaylor Stores Corporation		26		668	A
	Barnes & Noble, Inc.		1		45	A
	Benihana Inc.		8		123	A
	BJ’s Wholesale Club, Inc.		65		2,028	A
	Blair Corporation		4		119
	Blockbuster Inc.		80		705
	Blyth, Inc.		10		318
	Bob Evans Farms, Inc.		52		1,212

Annual Report to Shareholders

69

		Shares/Par		Value
Consumer Discretionary — Continued
	Books-A-Million, Inc.		10	$	89
	Borders Group, Inc.		132		3,519
	Brown Shoe Company, Inc.		37		1,258
	Burlington Coat Factory Warehouse Corporation		60		1,733
	Cadmus Communications Corporation		17		235
	Carriage Services, Inc.		36		201	A
	Champps Entertainment, Inc.		23		207	A
	Charming Shoppes, Inc.		52		424	A
	Chromcraft Revington, Inc.		11		151	A
	Claire’s Stores, Inc.		17		389
	Conn’s, Inc.		13		235	A
	Convergys Corporation		39		575	A
	Correctional Services Corporation		18		46	A
	CSK Auto Corporation		27		480	A
	CSS Industries, Inc.		22		804
	Department 56, Inc.		24		419	A
	Dover Downs Gaming & Entertainment, Inc.		6		76
	Duckwall-ALCO Stores, Inc.		7		118	A
	Duratek, Inc.		12		247	A
	EarthLink, Inc.		63		567	A
	Ethan Allen Interiors Inc.		31		989
	Exponent, Inc.		8		182	A
	Finlay Enterprises, Inc.		18		239	A
	Flexsteel Industries, Inc.		11		187
	Fresh Brands, Inc.		8		62	A
	Friendly Ice Cream Corporation		11		86	A
	Frisch’s Restaurants, Inc.		6		153
	FTI Consulting, Inc.		11		223	A
	Furniture Brands International, Inc.		106		2,303
	GameStop Corporation		1		12	A
	Genesco Inc.		38		1,088	A
	Global Imaging Systems, Inc.		1		21	A
	Group 1 Automotive, Inc.		47		1,226	A
	Haggar Corp.		3		70
	Handleman Company		46		866
	Hastings Entertainment, Inc.		21		141	A

Portfolio of Investments — Continued

U.S. Small-Capitalization Value Trust — Continued

Annual Report to Shareholders

70

		Shares/Par		Value
Consumer Discretionary — Continued
	Haverty Furniture Companies, Inc.		5	$	79
	IKON Office Solutions, Inc.		193		1,907
	Jack in the Box Inc.		64		2,386	A
	JAKKS Pacific, Inc.		13		281	A
	Journal Register Company		45		748	A
	K-Swiss Inc.		14		453
	K2 Inc.		12		160	A
	Kellwood Company		46		1,310
	Kenneth Cole Productions, Inc.		11		306
	Kirkland’s, Inc.		1		14	A
	Koss Corporation		2		49
	La-Z-Boy Incorporated		93		1,300
	Landry’s Restaurants, Inc.		4		101
	Libbey Inc.		25		519
	Linens ’n Things, Inc.		16		407	A
	Lithia Motors, Inc.		22		553
	Maytag Corporation		116		1,623
	Mity Enterprises, Inc.		5		74	A
	Mossimo, Inc.		12		40	A
	Mothers Work, Inc.		4		58	A
	Movado Group, Inc.		13		248
	Navigant International, Inc.		31		423	A
	Opinion Research Corporation		5		34	A
	P & F Industries, Inc.		1		17	A
	Papa John’s International, Inc.		30		1,035	A
	PC Connection, Inc.		5		32
	PDI, Inc.		29		602	A
	Pier 1 Imports, Inc.		26		474
	Point.360		13		46	A
	Pre-Paid Legal Services, Inc.		31		1,032
	Precis, Inc.		18		30	A
	Q.E.P. Co., Inc.		3		36	A
	REX Stores Corporation		22		316	A
	Russell Corporation		66		1,191
	Ryan’s Restaurant Group Inc.		85		1,229	A
	S&K Famous Brands, Inc.		1		20	A

Annual Report to Shareholders

71

		Shares/Par		Value
Consumer Discretionary — Continued
	School Specialty, Inc.		21	$	815	A
	Sharper Image Corporation		22		362	A
	Shoe Carnival, Inc.		7		127	A
	ShopKo Stores, Inc.		60		1,327	A
	Sonic Automotive, Inc.		59		1,333
	SOURCECORP, Incorporated		23		455	A
	Stage Stores, Inc.		37		1,401	A
	Stanley Furniture Company, Inc.		8		388
	StarTek, Inc.		29		491
	Steven Madden, Ltd.		24		392	A
	Strattec Security Corporation		7		364	A
	Tandy Brands Accessories, Inc.		11		162
	Tech Data Corporation		50		1,846	A
	The Bon-Ton Stores, Inc.		18		317
	The Buckle, Inc.		35		1,225
	The Gymboree Corporation		28		345	A
	The Talbots, Inc.		10		333
	Tupperware Corporation		40		808
	United Auto Group, Inc.		57		1,592
	Valassis Communications, Inc.		42		1,482	A
	Vertrue Incorporated		15		546	A
	Waste Holdings, Inc.		24		332
	Water Pik Technologies, Inc.		19		374	A
	Zale Corporation		82		2,449	A
					65,508
Consumer Staples — 3.6%
	Chiquita Brands International, Inc.		73		1,960
	Del Monte Foods Company		9		98	A
	NBTY, Inc.		51		1,287	A
	Ruddick Corporation		84		1,951
	Sanderson Farms, Inc.		11		467

Portfolio of Investments — Continued

U.S. Small-Capitalization Value Trust — Continued

Annual Report to Shareholders

72

		Shares/Par		Value
Consumer Staples — Continued
	Schweitzer-Mauduit International, Inc.		30	$	1,000
	Universal Corporation		52		2,362
	Weider Nutrition International, Inc.		11		66	A
					9,191
Energy — 4.2%
	Cimarex Energy Co.		58		2,250	A
	Encore Acquisition Company		24		991	A
	Energen Corporation		5		320
	EnergySouth, Inc.		6		180
	Forest Oil Corporation		4		178	A
	Plains Exploration & Production Company		37		1,296	A
	Stone Energy Corporation		54		2,599	A
	The Houston Exploration Company		41		2,346	A
	TransMontaigne Inc.		75		596	A
					10,756
Financials — 32.7%
	ABC Bancorp		18		298
	ACE Cash Express, Inc.		11		239	A
	Advanta Corp.		15		306
	Alfa Corporation		49		709
	Allmerica Financial Corporation		18		661	A
	American Financial Group, Inc.		52		1,605
	American National Bankshares Inc.		10		231
	American Shared Hospital Services		6		30
	AmerUs Group Co.		69		3,260
	Anchor BanCorp Wisconsin, Inc.		41		1,138
	Argonaut Group, Inc.		24		517	A
	Arrow Financial Corporation		4		116
	Atlantic American Corporation		6		19	A
	BancFirst Corporation		9		623
	BancorpSouth, Inc.		47		978
	California First National Bancorp		10		120
	Camden National Corporation		12		421
	Capital Title Group, Inc.		4		25

Annual Report to Shareholders

73

		Shares/Par		Value
Financials — Continued
	Ceres Group, Inc.		69	$	375	A
	Chemical Financial Corporation		40		1,315
	Chittenden Corporation		7		169
	Clark, Inc.		28		437
	CNA Surety Corporation		32		437
	Columbia Banking System, Inc.		24		568
	Commercial Federal Corporation		77		2,115
	Community Bank System, Inc.		31		701
	Community Trust Bancorp, Inc.		25		713
	Corrus Bankshares, Inc.		36		1,726
	Delphi Financial Group, Inc.		41		1,752
	Deluxe Corporation		48		1,897
	Direct General Corporation		40		828
	Donegal Group Inc. – Class A		6		100
	Donegal Group Inc. – Class B		3		45
	Downey Financial Corp.		39		2,400
	EMC Insurance Group, Inc.		0		6
	FBL Financial Group, Inc.		56		1,560
	First Commonwealth Financial Corporation		5		73
	First Community Bancshares, Inc.		6		174
	First Financial Corporation		0		6
	First Financial Holdings, Inc.		19		525
	First Financial Service Corporation		5		127
	First M&F Corporation		5		185
	First Mutual Bancshares, Inc.		6		152
	First Place Financial Corp.		4		80
	First United Corporation		8		165
	Firstbank Corporation		1		27
	FirstFed Financial Corp.		26		1,331	A
	Flagstar Bancorp, Inc.		42		827
	Flushing Financial Corporation		32		590
	FNB Corp.		7		137
	FNB Corporation		12		309
	FNB Financial Services Corporation		9		208
	Fremont General Corporation		107		2,351
	Great American Financial Resources, Inc.		39		656

Portfolio of Investments — Continued

U.S. Small-Capitalization Value Trust — Continued

Annual Report to Shareholders

74

		Shares/Par		Value
Financials — Continued
	Greater Bay Bancorp		13	$	327
	Greene County Bancshares, Inc.		4		115
	Harrington West Financial Group, Inc.		8		127
	Hilb, Rogal and Hamilton Company		12		426
	HMN Financial, Inc.		6		186
	Hudson United Bancorp		71		2,513
	IBERIABANK Corporation		5		264
	IndyMac Bancorp, Inc.		97		3,295
	Infinity Property & Casualty Corporation		40		1,247
	International Bancshares Corporation		10		354
	Irwin Financial Corporation		57		1,319
	ITLA Capital Corporation		7		365	A
	John H. Harland Company		50		1,732
	Lakeland Financial Corporation		6		215
	LandAmerica Financial Group, Inc.		31		1,571
	MAF Bancorp, Inc.		28		1,153
	MainSource Financial Group, Inc.		9		188
	Meadowbrook Insurance Group, Inc.		48		250	A
	Merchants Bancshares, Inc.		4		113
	National Western Life Insurance Company		4		667	A
	NBT Bancorp Inc.		16		351
	NCO Group, Inc.		59		1,157	A
	NetBank, Inc.		30		251
	North Central Bancshares, Inc.		3		100
	North Valley Bancorp		11		213
	Northrim BanCorp Inc.		8		203
	Nymagic, Inc.		3		81
	Odyssey Re Holdings Corp.		101		2,524
	Ohio Casualty Corporation		21		472	A
	Old Point Financial Corporation		2		50
	Oriental Financial Group Inc.		10		227
	PAB Bankshares, Inc.		14		192
	Parkvale Financial Corporation		9		242
	PennFed Financial Services, Inc.		1		19
	Penns Woods Bancorp, Inc.		4		191
	Peoples Bancorp Inc.		19		511

Annual Report to Shareholders

75

		Shares/Par		Value
Financials — Continued
	PFF Bancorp, Inc.		27	$	742
	Presidential Life Corporation		33		540
	Provident Bankshares Corporation		24		797
	Raymond James Financial, Inc.		10		300
	Republic Bancorp, Inc.		108		1,463
	Republic First Bancorp, Inc.		11		155	A
	Rewards Network Inc.		50		208	A
	S&T Bancorp, Inc.		8		283
	Safety Insurance Group, Inc.		27		823
	Sierra Bancorp		6		137
	Simmons First National Corporation		8		208
	Southwest Bancorp, Inc.		11		196
	StanCorp Financial Group, Inc.		4		373
	Sterling Financial Corporation		15		544	A
	Stewart Information Services Corporation		29		1,069
	Taylor Capital Group, Inc.		6		182
	Texas United Bancshares, Inc.		3		62
	The Commerce Group, Inc.		57		3,508
	The Navigators Group, Inc.		22		745	A
	The Peoples Holding Company		15		463
	Timberland Bancorp, Inc.		6		142
	Triad Guaranty Inc.		20		1,050	A
	TriCo Bancshares		14		284
	Trustmark Corporation		63		1,836
	21st Century Insurance Group		41		566
	UICI		84		2,042
	Unico American Corporation		5		52	A
	United Bankshares, Inc.		18		593
	United Community Financial Corp.		10		109
	United Fire & Casualty Company		7		220
	United Rentals, Inc.		27		546	A
	United Security Bancshares, Inc.		6		159
	Universal American Financial Corp.		30		514	A
	Washington Banking Company		4		65
	Washington Federal, Inc.		24		555
	WesBanco, Inc.		15		402

Portfolio of Investments — Continued

U.S. Small-Capitalization Value Trust — Continued

Annual Report to Shareholders

76

		Shares/Par		Value
Financials — Continued
	West Coast Bancorp		13	$	309
	Westcorp		35		1,484
	World Acceptance Corporation		23		574	A
	WSFS Financial Corporation		4		210
	Yadkin Valley Bank and Trust Company		6		87
					84,171
Health Care — 2.8%
	Albany Molecular Research, Inc.		53		545	A
	American Equity Investment Life Holding Company		47		606
	AMN Healthcare Services, Inc.		2		24	A
	Apria Healthcare Group Inc.		79		2,536	A
	Atrion Corporation		2		87
	BioScrip, Inc.		20		118	A
	CONMED Corporation		4		105	A
	Hanger Orthopedic Group, Inc.		13		75	A
	Horizon Health Corporation		5		221	A
	IOMED, Inc.		8		17	A
	Magellan Health Services, Inc.		3		92	A
	MedQuist Inc.		4		47	A
	National Dentex Corporation		7		136	A
	National Home Health Care Corp.		12		137
	OCA Inc.		107		453	A
	Odyssey Healthcare, Inc.		74		867	A
	Owens & Minor, Inc.		38		1,040
	Pediatric Services of America, Inc.		9		111	A
	Tutogen Medical, Inc.		14		34	A
					7,251
Industrials — N.M.
	Teleflex Incorporated		2		92
Information Technology — 5.2%
	Avnet, Inc.		7		133	A
	CalAmp Corporation		40		244	A
	Catalyst Semiconductor, Inc.		37		157	A

Annual Report to Shareholders

77

		Shares/Par		Value
Information Technology — Continued
	Cherokee International Corporation		11	$	77	A
	Corillian Corporation		77		268	A
	CyberOptics Corporation		18		221	A
	Dynamics Research Corporation		12		202	A
	En Pointe Technologies, Inc.		10		35	A
	ePlus inc		17		201	A
	Hi-Shear Technology Corporation		3		9	A
	Innodata Isogen, Inc.		13		48	A
	Journal Communications, Inc.		13		210
	MEMC Electronic Materials, Inc.		87		1,166	A
	OmniVision Technologies, Inc.		81		1,223	A
	Pervasive Software Inc.		32		149	A
	Planar Systems Inc.		2		22	A
	Pomeroy Computer Resources, Inc.		11		164	A
	QAD Inc.		4		36
	Sensient Technologies Corporation		84		1,817
	Silicon Storage Technology, Inc.		145		538	A
	Staktek Holdings Inc.		24		97	A
	SYNNEX Corporation		6		96	A
	TALK America Holdings, Inc.		54		351	A
	TESSCO Technologies Incorporated		8		113	A
	The Allied Defense Group, Inc.		0		10	A
	The Reynolds and Reynolds Company		3		78
	TSR, Inc.		7		58
	TTM Technologies, Inc.		13		135	A
	United Industrial Corporation		20		583
	United Online, Inc.		117		1,226	A
	Western Digital Corporation		298		3,799	A
					13,466
Materials — 6.5%
	Ameron International Corporation		15		522
	Bluegreen Corporation		36		466	A
	Building Materials Holding Corporation		24		1,050
	Culp, Inc.		20		118	A
	Encore Wire Corporation		38		383	A

Portfolio of Investments — Continued

U.S. Small-Capitalization Value Trust — Continued

Annual Report to Shareholders

78

		Shares/Par		Value
Materials — Continued
	Ennis Business Forms, Inc.		2	$	29
	Gibraltar Industries Inc.		21		464
	Hercules Incorporated		122		1,765	A
	Hines Horticulture, Inc.		38		159	A
	Mod-Pac Corporation		2		38	A
	Northwest Pipe Company		2		42	A
	Perini Corporation		17		232	A
	Potlatch Corporation		13		598
	RPM International, Inc.		43		779
	Scheid Vineyards Inc.		1		9	A
	Silgan Holdings Inc.		15		975
	The Anderson’s Inc.		7		220
	The Keith Companies, Inc.		14		244	A
	The Lubrizol Corporation		25		1,024
	U. S. Concrete, Inc.		4		22	A
	United Defense Industries, Inc.		42		3,062
	United-Guardian, Inc.		2		16
	Universal Forest Products, Inc.		32		1,228
	URS Corporation		0		6	A
	Worthington Industries, Inc.		22		414
	York International Corporation		72		2,829
					16,694
Miscellaneous — 0.1%
	Hawkins, Inc.		16		186
Producer Durables — 3.7%
	AGCO Corporation		83		1,520	A
	All American Semiconductor, Inc.		8		38	A
	Axcelis Technologies, Inc.		107		778	A
	Beazer Homes USA, Inc.		17		823
	Briggs & Stratton Corporation		40		1,456
	Craftmade International, Inc.		9		207
	Cycle Country Accessories Corp.		10		52	A
	Dominion Homes, Inc.		4		68	A

Annual Report to Shareholders

79

		Shares/Par		Value
Producer Durables — Continued
	Ducommun Incorporated		13	$	252	A
	Ecology and Environment, Inc.		3		24
	Electro Scientific Industries, Inc.		16		318	A
	Hector Communications Corporation		6		125
	inTEST Corporation		2		7	A
	Key Technology, Inc.		6		60	A
	Kulicke and Soffa Industries, Inc.		92		577	A
	Mesa Laboratories, Inc.		2		23
	Rayovac Corporation		20		815	A
	Standard Pacific Corp.		23		1,632
	Standex International Corporation		25		683
	Summa Industries		7		64
	WCI Communities, Inc.		4		114	A
					9,636
Utilities — 8.0%
	AGL Resources Inc.		83		2,903
	Atmos Energy Corporation		46		1,234
	Boston Communications Group, Inc.		36		253	A
	Central Vermont Public Service Corporation		19		429
	Chesapeake Utilities Corporation		10		261
	CT Communications, Inc.		13		137
	Duquesne Light Holdings Inc.		102		1,826
	Green Mountain Power Corporation		1		18
	IDACORP, Inc.		24		672
	New Jersey Resources Corporation		4		187
	Nicor Inc.		10		356
	Peoples Energy Corporation		63		2,624
	PNM Resources Inc.		69		1,841
	South Jersey Industries, Inc.		19		1,094
	Southwest Gas Corporation		4		104
	The Laclede Group, Inc.		4		129

Portfolio of Investments — Continued

U.S. Small-Capitalization Value Trust — Continued

Annual Report to Shareholders

80

		Shares/Par		Value
Utilities — Continued
	Vectren Corporation		46	$	1,212
	WGL Holdings Inc.		81		2,498
	WPS Resources Corporation		51		2,720
					20,498
Total Common Stock and Equity Interests (Identified Cost — $201,981)					253,800
Repurchase Agreements — 1.6%
Bank of America 2.78%, dated 3/31/05, to be repurchased at $2,020 on 4/1/05 (Collateral: $2,065 Freddie Mac discount notes, due 4/26/05, value $2,061)		$	2,020		2,020
Goldman Sachs & Company 2.83%, dated 3/31/05, to be repurchased at $2,020 on 4/1/05 (Collateral: $2,011 Fannie Mae mortgage-backed securities, 6%, due 10/1/34, value $2,064)			2,020		2,020
Total Repurchase Agreements (Identified Cost — $4,040)					4,040
Total Investments — 100.3% (Identified Cost — $206,021)					257,840
Other Assets Less Liabilities — (0.3)%					(772	)
				$	257,068
Net Assets — 100.0%

^A Non-income producing.

N.M. — Not meaningful.

See notes to financial statements.

Annual Report to Shareholders

81

Statement of Assets and Liabilities

U.S. Small-Capitalization Value Trust

March 31, 2005

(Amounts in Thousands)

Assets:
	Investment securities at market value (Identified Cost – $201,981)			$	253,800
	Short-term securities at value (Identified Cost – $4,040)				4,040
			Total investments				$	257,840
	Receivable for:
		Fund shares sold						116
		Securities sold						429
		Dividend and interest income						278
								258,663
Liabilities:
	Payable for:
		Fund shares repurchased			594
		Securities purchased			509
	Due to:
		Manager			176
		Distributor			202
	Accrued expenses				114
								1,595
Net Assets							$	257,068
Net assets consist of:
	Accumulated paid-in-capital applicable to:
		16,817 Primary Class shares outstanding		$	177,781
		920 Institutional Class shares outstanding			11,468
	Undistributed net investment income/(loss)				(10	)
	Accumulated net realized gain/(loss) on investments				16,010
	Unrealized appreciation/(depreciation) of investments				51,819
Net Assets							$	257,068
��
Net Asset Value Per Share:
	Primary Class						$	14.43
	Institutional Class						$	15.59

See notes to financial statements.

Annual Report to Shareholders

82

Statement of Operations

U.S. Small-Capitalization Value Trust

For the Year Ended March 31, 2005

(Amounts in Thousands)

Investment Income:
	Dividends				$	3,824
	Interest					103
			Total income					$	3,927
Expenses:
	Management fees					1,927
	Distribution and service fees:
		Primary Class				2,317
	Audit and legal fees					43
	Custodian fees					117
	Directors’ fees and expenses					22
	Registration fees					22
	Reports to shareholders					67
	Transfer agent and shareholder servicing expense:
		Primary Class				186
		Institutional Class				1
	Other expenses					52
						4,754
		Less: Compensating balance credits				(1	)A
				Fees waived		(8	)
			Total expenses, net of waivers						4,745
Net Investment Loss									(818	)
Net Realized and Unrealized Gain on Investments:
	Realized gain on investments					30,922
	Change in unrealized appreciation/(depreciation) of investments					(7,166	)
Net Realized and Unrealized Gain on Investments									23,756
Change in Net Assets Resulting From Operations								$	22,938

^A See Note 1, Compensating Balance Credits, in the notes to financial statements.

See notes to financial statements.

Annual Report to Shareholders

83

Statement of Changes in Net Assets

U.S. Small-Capitalization Value Trust

(Amounts in Thousands)

			For the Years Ended March 31,
			2005			2004
Change in Net Assets:
Net investment loss			$	(818	)	$	(1,138	)
Net realized gain on investments				30,922			18,818
Change in unrealized appreciation/(depreciation) of investments				(7,166	)		74,959
Change in net assets resulting from operations				22,938			92,639
Distributions to shareholders:
	From net realized gain on investments:
		Primary Class		(22,962	)		(1,392	)
		Institutional Class		(1,094	)		(54	)
Change in net assets from Fund share transactions:
		Primary Class		17,719			(5,749	)
		Institutional Class		3,765			1,222
Change in net assets				20,366			86,666
Net Assets:
Beginning of year				236,702			150,036
End of year			$	257,068		$	236,702
Undistributed net investment income/(loss)			$	(10	)	$	(4	)

See notes to financial statements.

Annual Report to Shareholders

84

Financial Highlights

U.S. Small-Capitalization Value Trust

   Contained below is per share operating performance data for a share of common stock outstanding, total investment return, ratios to average net assets and other supplemental data. This information has been derived from information provided in the financial statements.

Primary Class:

		Years Ended March 31,
		2005			2004			2003			2002			2001
Net asset value, beginning of year		$	14.52		$	8.93		$	11.73		$	9.05		$	7.45
Investment operations:
	Net investment income/(loss)		(.05	)		(.07	) A		(.06	) A		(.06	) A		(.02	) A
	Net realized and unrealized gain/(loss) on investments		1.38			5.75			(2.74	)		2.74			1.62
	Total from investment operations		1.33			5.68			(2.80	)		2.68			1.60
Distributions:
	From net realized gain on investments		(1.42	)		(.09	)		—			—			—
	Total distributions		(1.42	)		(.09	)		—			—			—
Net asset value, end of year		$	14.43		$	14.52		$	8.93		$	11.73		$	9.05
Ratios/supplemental data:
	Total return		9.67	%		63.71	%		(23.87	)%		29.61	%		21.48	%
	Expenses to average net assets		2.00	%		2.00	% A		2.00	% A		2.00	% A		2.00	% A
	Net investment income/(loss) to average net assets		(.39	)%		(.61	)% A		(.52	)% A		(.82	)% A		(.21	)% A
	Portfolio turnover rate		46.7	%		44.3	%		61.0	%		32.1	%		60.7	%
Net assets, end of year (in thousands)			$242,719		$	226,351		$	144,447		$	182,201		$	68,629
A	Net of fees waived by LMFA pursuant to a voluntary expense limitation of 2.00% of average daily net assets. If no fees had been waived by LMFA, the annualized ratio of expenses to average daily net assets would have been as follows: for the years ended March 31, 2004, 2.05%; 2003, 2.13%; 2002, 2.24%; and 2001, 2.46%.

See notes to financial statements.

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85

Institutional Class:

		Years Ended March 31,
		2005			2004			2003			2002			2001
Net asset value, beginning of year		$	15.39		$	9.36		$	12.16		$	9.30		$	7.59
Investment operations:
	Net investment income/(loss)		.09			.05			.05	B		(.02	) B		.02	B
	Net realized and unrealized gain/(loss) on investments		1.53			6.07			(2.85	)		2.88			1.69
	Total from investment operations		1.62			6.12			(2.80	)		2.86			1.71
Distributions:
	From net realized gain on investments		(1.42	)		(.09	)		—			—			—
	Total distributions		(1.42	)		(.09	)		—			—			—
Net asset value, end of year		$	15.59		$	15.39		$	9.36		$	12.16		$	9.30
Ratios/supplemental data:
	Total return		11.06	%		65.49	%		(23.03	)%		30.75	%		22.53	%
	Expenses to average net assets		.93	%		.98	%		1.00	% B		1.00	% B		1.00	% B
	Net investment income/(loss) to average net assets		.69	%		.41	%		.50	%B		.18	%B		.82	%B
	Portfolio turnover rate		46.7	%		44.3	%		61.0	%		32.1	%		60.7	%
Net assets, end of year (in thousands)			$14,349		$	10,351		$	5,589		$	5,529		$	711
B	Net of fees waived by LMFA pursuant to a voluntary expense limitation of 1.00% of average daily net assets. If no fees had been waived by the adviser, the annualized ratio of expenses to average daily net assets would have been as follows: for the years ended March 31, 2003, 1.05%; 2002, 1.20%; and 2001, 1.43%.

See notes to financial statements.

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86

Notes to Financial Statements

Legg Mason Investors Trust, Inc.
(Amounts in Thousands)

1. Organization and Significant Accounting Policies:

   The Legg Mason Investors Trust, Inc. (“Corporation”), consisting of American Leading Companies Trust (“American Leading Companies”), Balanced Trust (“Balanced Trust”), Financial Services Fund (“Financial Services”) 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 offers Primary Class and Institutional Class shares. The Institutional Class of Financial Services is not currently active. American Leading Companies, Balanced Trust and Financial Services also offer an additional class of shares: Financial Intermediary Class. The Financial Intermediary Class of American Leading Companies is not currently active. The Financial Intermediary Class of Financial Services was formerly known as Class A. 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 and Financial Intermediary Class shares, and transfer agent and shareholder servicing expenses, which are determined separately for each class.

   Preparation of the financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. 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 available market quotations or, lacking such quotations, at fair value as determined under policies approved by the Board of Directors. A 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 expects to realize on the current sale of those securities. Further, because of the inherent uncertainty of valuation, those estimated values may differ significantly 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, 2005, there were no fair valued securities.

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87

Security Transactions

   Security transactions are recorded on the trade date. Realized gains and losses from security transactions are reported on an identified cost basis for both financial reporting and federal income tax purposes.

   For the year ended March 31, 2005, investment transactions (excluding short-term investments and U.S. government securities) were:

	Purchases		Proceeds From Sales
American Leading Companies	$	138,838	$	119,809
Balanced Trust		24,936		28,236
Financial Services		18,501		25,396
U.S. Small-Cap		112,722		111,511

   Transactions in U.S. government securities for Balanced Trust were purchases of $12,403 and proceeds from sales of $5,515. There were no transactions in U.S. government securities for the other Funds.

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 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.

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 a fund to resell, the 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

Notes to Financial Statements — Continued

Legg Mason Investors Trust, Inc. — Continued

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88

the creditworthiness of those banks and dealers with which the Funds enter into repurchase agreements to evaluate potential risks.

Commission Recapture

   American Leading Companies has entered into a directed brokerage agreement with State Street Bank. Under the agreement, State Street Bank will rebate to the Fund a percentage of commissions generated by the Fund. During the year ended March 31, 2005, no commissions were recaptured.

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 American Leading Companies, Financial Services and U.S. Small-Cap, and quarterly for Balanced Trust. Distributions from net realized 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.

Compensating Balance Credits

   The Funds have 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. For the year ended March 31, 2005, compensating balance credits of $1 were earned by each of American Leading Companies, Balanced Trust, Financial Services and U.S. Small-Cap.

Other

   In the normal course of business, the Funds enter 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:

   No provision for federal income or excise taxes is required since each Fund intends to continue to qualify as a regulated investment company and distribute substantially all of its taxable income and capital gains to its shareholders. Because federal income tax regulations

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differ from U.S. generally accepted accounting principles, income and capital gain distributions determined in accordance with tax regulations may differ from net investment income and realized gains recognized for financial reporting purposes. Additionally, net short-term realized gains and gains/(losses) on foreign currency transactions are treated as “ordinary income” for tax purposes. Accordingly, the character of distributions and composition of net assets for tax purposes may differ from those reflected in the accompanying financial statements.

   Distributions during the years ended March 31, 2005 and 2004, were characterized as follows for tax purposes:

	American
	Leading				Balanced				Financial				U.S.
	Companies				Trust				Services				Small-Cap
	For the Years Ended March 31,
	2005		2004		2005		2004		2005		2004		2005		2004
Ordinary income	$	390	$	206	$	572	$	870	$	521	$	—	$	5,482	$	—
Long-term capital gains		—		—		1,111		—		8,922		1,138		18,574		1,446
Total distributions	$	390	$	206	$	1,683	$	870	$	9,443	$	1,138	$	24,056	$	1,446

   The tax basis components of net assets at March 31, 2005, were:

	American
	Leading			Balanced			Financial			U.S.
	Companies			Trust			Services			Small-Cap
Unrealized appreciation	$	246,113		$	7,463		$	20,349		$	58,957
Unrealized depreciation		(20,895	)		(1,313	)		(293	)		(7,138	)
Net unrealized appreciation/(depreciation)		225,218			6,150			20,056			51,819
Undistributed ordinary income		—			297			58			1,879
Undistributed long-term capital gains		—			1,143			483			14,131
Capital loss carryforwards		(9,278	)		—			—			—
Other temporary differences		(16	)		(8	)		(8	)		(10	)
Paid-in capital		459,481			52,343			46,695			189,249
Net assets	$	675,405		$	59,925		$	67,284		$	257,068

   The difference between book and tax basis unrealized depreciation is primarily due to the tax deferral of wash sale losses.

   The Funds intend to retain realized capital gains that may be offset against available capital loss carryforwards for federal income tax purposes. During the current fiscal year, American Leading Companies and Balanced Trust utilized $30,429 and $1,441, respectively,

Notes to Financial Statements — Continued

Legg Mason Investors Trust, Inc. — Continued

Annual Report to Shareholders

90

of capital loss carryforwards to offset current year realized gains. Unused capital loss carryforwards for federal income tax purposes at March 31, 2005, were:

		American
		Leading		Balanced		Financial		U.S.
Expiring in		Companies		Trust		Services		Small-Cap
	2009	$	—	$	—	$	—	$	—
	2010		—		—		—		—
	2011		4,042		—		—		—
	2012		5,236		—		—		—

   For financial reporting purposes, capital accounts and distributions to shareholders are adjusted to reflect the tax character of permanent book/tax differences. For the year ended March 31, 2005, the Funds recorded the following permanent reclassifications. Reclassifications are primarily due to the tax treatment of net operating losses, gain/(loss) on foreign currency transactions, and reclassifications of gains/losses on paydown securities. Results of operations and net assets were not affected by these reclassifications.

	American
	Leading			Balanced			Financial			U.S.
	Companies			Trust			Services			Small-Cap
Undistributed net investment income	$	(2	)	$	7		$	251		$	812
Accumulated realized gain/(loss)		30			(7	)		(251	)		(812	)
Accumulated paid-in capital		(28	)		—			—			—

   At March 31, 2005, the cost of investments for federal income tax purposes for each Fund was:

American Leading Companies	$	450,065
Balanced Trust		53,990
Financial Services		46,148
U.S. Small-Cap		206,021

3. Transactions With Affiliates:

   American Leading Companies has an investment advisory and management agreement with Legg Mason Funds Management, Inc. (“LMFM”). Pursuant to the agreement, LMFM 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.

   Balanced Trust, Financial Services and U.S. Small-Cap have management agreements with Legg Mason Fund Adviser, Inc. (“LMFA”). Pursuant to their respective agreements, LMFA

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provides these Funds with management and administrative services for which these Funds pay a fee, computed daily and payable monthly, at an annual rate of each Fund’s average daily net assets.

   LMFM 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, 2005. The following charts summarize the management fees and expense limitations for each of the Funds:

Management Fees

				Year Ended
				March 31, 2005
	Management			Management
Fund	Fee		Asset Breakpoint	Fees Waived
American Leading Companies		0.75%	$0 – $1 billion	$	—
		0.65%	in excess of $1 billion
Balanced Trust		0.75%	all asset levels		43
Financial Services		1.00%	$0 – $100 million		64
		0.75%	$100 million – $1 billion
		0.65%	in excess of $1 billion
U.S. Small-Cap		0.85%	$0 – $100 million		—
		0.75%	$100 million – $1 billion
		0.65%	in excess of $1 billion

Expense Limitations

			Financial
			Intermediary		Institutional
Fund	Primary Class		Class		Class
American Leading Companies		1.95%		N/A		0.95%
Balanced Trust		1.85%		1.35%		1.10%
Financial Services		2.25%		1.50%		N/A
U.S. Small-Cap		2.00%		N/A		1.00%

   Barrett Associates, Inc. (“Barrett”), formerly Gray, Seifert & Co., Inc., serves as investment adviser to Financial Services. Barrett is responsible for the actual investment activity of

N/A — Not applicable.

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92

Notes to Financial Statements — Continued

Legg Mason Investors Trust, Inc. — Continued

the Fund. LMFA pays Barrett a fee for its services, computed daily and payable monthly, at an annual rate of 60% of the fee received by LMFA.

   Bartlett & Co. (“Bartlett”) serves as investment adviser to Balanced Trust. Bartlett is responsible for the actual investment activity of the Fund. LMFA pays Bartlett a fee for its services, computed daily and payable monthly, at an annual rate equal to 66  2/3% of the fee received by LMFA.

   Brandywine Asset Management, LLC (“Brandywine”) serves as investment adviser to U.S. Small-Cap. Brandywine is responsible for the actual investment activity of the Fund. LMFA pays Brandywine a fee for its services, computed daily and payable monthly, at an annual rate equal to 58.8% of the fee received by LMFA.

   Legg Mason Wood Walker, Incorporated (“Legg Mason”), a member of the New York Stock Exchange, serves as distributor of the Funds. Legg Mason receives an annual distribution fee and an annual service fee based on each Fund’s Primary Class’s (and with respect to Financial Services and Balanced Trust, Financial Intermediary Class’s) average daily net assets, computed daily and payable monthly as follows:

						Year Ended
						March 31, 2005
						Distribution and
		Distribution		Service		Service Fees
Fund		Fee		Fee		Voluntarily Waived
American Leading Companies
	Primary Class		0.75%		0.25%	$	—
Balanced Trust
	Primary Class		0.50%		0.25%		35
	Financial Intermediary Class		N/A		0.25%		10
Financial Services
	Primary Class		0.75%		0.25%		22
	Financial Intermediary Class		N/A		0.25%		—
U.S. Small-Cap
	Primary Class		0.75%		0.25%		8

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93

   For the year ended March 31, 2005, American Leading Companies paid $5 in brokerage commissions to Legg Mason or its affiliates. No brokerage commissions were paid to Legg Mason or its affiliates by Balanced Trust, Financial Services, or U.S. Small-Cap during this period.

   LMFA serves as administrator to American Leading Companies under an administrative services agreement with LMFM. For LMFA’s services to American Leading Companies, LMFM (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, has an agreement with the Funds’ transfer agent to assist it with some of its duties. For this assistance, the transfer agent paid LMFS the following amounts for the year ended March 31, 2005: American Leading Companies, $118; Balanced Trust, $16; Financial Services, $12; and U.S. Small-Cap, $52.

   LMFM, LMFA, Barrett, Bartlett, Brandywine, Legg Mason, and LMFS are wholly owned subsidiaries and corporate affiliates of Legg Mason, Inc.

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 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 year ended March 31, 2005.

5. Fund Share Transactions:

   At March 31, 2005, there were 250,000, 375,000, 125,000, and 50,000 shares authorized at $.001 par value for the Primary Classes of American Leading Companies, Balanced Trust, Financial Services and U.S. Small-Cap, respectively. At March 31, 2005, there were 100,000, 125,000, 225,000 and 100,000 shares authorized at $.001 par value for the Financial Intermediary classes of American Leading Companies, Balanced Trust, Financial Services and U.S. Small-Cap, respectively. At March 31, 2005, there were 250,000, 125,000, 125,000 and 50,000 shares authorized at $.001 par value for the Institutional Classes of

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94

Notes to Financial Statements — Continued

Legg Mason Investors Trust, Inc. — Continued

American Leading Companies, Balanced Trust, Financial Services and U.S. Small-Cap, respectively. Share transactions are detailed below:

		American Leading Companies Trust
		Primary Class						Institutional Class
		Years Ended						Years Ended
		3/31/05			3/31/04			3/31/05			3/31/04
Shares:
	Sold		4,111			5,130			315			379
	Reinvestment of Distributions		10			5			8			6
	Repurchased		(3,667	)		(3,878	)		(204	)		(136	)
	Net Change		454			1,257			119			249
Amount:
	Sold	$	84,872		$	95,233		$	6,670		$	7,248
	Reinvestment of Distributions		205			82			177			120
	Repurchased		(74,742	)		(70,316	)		(4,252	)		(2,513	)
	Net Change	$	10,335		$	24,999		$	2,595		$	4,855

		Balanced Trust
								Financial
		Primary Class						Intermediary Class						Institutional Class
		Years Ended						Years Ended						Years Ended
		3/31/05			3/31/04			3/31/05			3/31/04			3/31/05			3/31/04
Shares:
	Sold		748			1,280			105			27			14			15
	Reinvestment of Distributions		86			44			60			36			2			1
	Repurchased		(1,003	)		(1,297	)		(200	)		(233	)		(5	)		(7	)
	Net Change		(169	)		27			(35	)		(170	)		11			9
Amount:
	Sold	$	8,260		$	13,305		$	1,179		$	279		$	159		$	158
	Reinvestment of Distributions		955			453			662			369			18			8
	Repurchased		(11,061	)		(13,589	)		(2,202	)		(2,456	)		(54	)		(76	)
	Net Change	$	(1,846	)	$	169		$	(361	)	$	(1,808	)	$	123		$	90

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95

		Financial Services Fund
								Financial
		Primary Class						Intermediary Class
		Years Ended						Years Ended
		3/31/05			3/31/04			3/31/05			3/31/04
Shares:
	Sold		325			576			17			40
	Reinvestment of Distributions		531			62			42			5
	Repurchased		(652	)		(527	)		(56	)		(103	)
	Net Change		204			111			3			(58	)
Amount:
	Sold	$	4,861		$	8,002		$	261		$	600
	Reinvestment of Distributions		7,705			922			643			74
	Repurchased		(9,594	)		(7,231	)		(868	)		(1,517	)
	Net Change	$	2,972		$	1,693		$	36		$	(843	)

		U.S. Small-Cap Value Trust
		Primary Class						Institutional Class
		Years Ended						Years Ended
		3/31/05			3/31/04			3/31/05			3/31/04
Shares:
	Sold		2,509			2,752			342			403
	Reinvestment of Distributions		1,585			106			71			4
	Repurchased		(2,868	)		(3,449	)		(166	)		(331	)
	Net Change		1,226			(591	)		247			76
Amount:
	Sold	$	35,707		$	33,666		$	5,200		$	5,310
	Reinvestment of Distributions		22,470			1,374			1,094			54
	Repurchased		(40,458	)		(40,789	)		(2,529	)		(4,142	)
	Net Change	$	17,719		$	(5,749	)	$	3,765		$	1,222

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Notes to Financial Statements — Continued

Legg Mason Investors Trust, Inc. — Continued

6. Subsequent Event:

   On April 1, 2005, Legg Mason Capital Management, Inc. (“LMCM”) replaced LMFM as Investment Manager of American Leading Companies. LMCM and LMFM are both wholly owned subsidiaries of Legg Mason, Inc. and the advisory personnel who managed the Fund as employees of LMFM will continue to do so as employees of LMCM. The compensation arrangements between the Fund and LMCM are identical to the previous arrangements between the Fund and LMFM.

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Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors
Legg Mason Investors Trust, Inc.:

   We have audited the accompanying statements of assets and liabilities, including the portfolios of investments, of Legg Mason Investors Trust, Inc. (comprising, respectively, the American Leading Companies Trust, Balanced Trust, Financial Services Fund and U.S. Small-Capitalization Value Trust) (the “Funds”) as of March 31, 2005, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

   We conducted our audits in accordance with 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 and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of March 31, 2005, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.

   In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respective Funds constituting Legg Mason Investors Trust, Inc. at March 31, 2005, the results 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 their financial highlights for each of the periods presented therein, in conformity with U.S. generally accepted accounting principles.

Philadelphia, Pennsylvania

May 13, 2005

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98

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.

   Lehman Intermediate Government/ Credit Index — A total return index consisting of investment grade corporate debt issues of U.S. government agencies and the U.S. Treasury. The debt issues all maintain maturities within a range of 1 to 10 years.

   Lipper Balanced Fund Index — An index comprised of the 30 largest funds in the Lipper universe of 645 balanced funds.

   Lipper Financial Services Fund Index — An index comprised of the 10 largest funds in the Lipper universe of 117 financial services funds.

   Lipper Large-Cap Core Funds Index — An index comprised of the 30 largest funds in the Lipper universe of 951 large-cap core funds.

   Lipper Large-Cap Value Funds Index — An index comprised of the 30 largest funds in the Lipper universe of 444 large-cap value funds.

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

   Russell 2000 Index — Measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 8% of the total market capitalization of the Russell 3000 Index.

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

   S&P Financial Index — A capitalization-weighted, price-only index representing 9 financial groups and 53 financial companies.

   S&P 500 Stock Composite Index — A market capitalization-weighted index, including reinvestment of dividends and capital gain distributions, that is generally considered representative of the U.S. stock market.

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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, c/o Legal and Compliance Department, 23rd Floor, Baltimore, Maryland 21202.

Name, (Year of Birth),	Number of Legg Mason
Position(s) and	Funds Overseen and	Principal Occupation(s)
Year Elected	Other Directorships	During the Past Five Years
INDEPENDENT DIRECTORS:A
Hearn, Ruby P. (1940) Director since 2004 B	Director/Trustee of all Legg Mason funds (consisting of 23 portfolios).	Senior Vice President Emerita of The Robert Wood Johnson Foundation since 2001. Formerly: Senior Vice President of The Robert Wood Johnson Foundation (1996-2001).
Lehman, Arnold L. (1944) Director since 1993 B	Director/Trustee of all Legg Mason funds (consisting of 23 portfolios).	Director of The Brooklyn Museum of Art 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 B	Director/Trustee of all Legg Mason funds (consisting of 23 portfolios); Chairman of the Board of Directors of Cap-a-Laige Ltd. (management company for charitable trust).	Retired. Director of Bermuda SMARTRISK (non-profit) since 2001. Formerly: Chief Investment Officer of ACE Limited (insurance) (1986-2000).
McGovern, Jill E. (1944) Director since 1993 B	Director/Trustee of all Legg Mason funds (consisting of 23 portfolios).	Chief Executive Officer of The Marrow Foundation since 1993. Formerly: Executive Director of the Baltimore International Festival (1991-1993); Senior Assistant to the President of The Johns Hopkins University (1986-1990).
Mehlman, Arthur S. (1942) Director since 2002 B	Director/Trustee of all Legg Mason funds (consisting of 23 portfolios); Trustee of The Royce Family of Funds (consisting of 21 portfolios); Director of Municipal Mortgage & Equity, LLC.	Retired. Director of The League for People with Disabilities, Inc.; Director of University of Maryland Foundation and University of Maryland College Park Foundation (non-profits). Formerly: Partner, KPMG LLP (international accounting firm) (1972-2002).
O’Brien, G. Peter (1945) Director since 1999 B	Director/Trustee of all Legg Mason funds (consisting of 23 portfolios); Trustee of The Royce Family of Funds (consisting of 21 portfolios); Director of Renaissance Capital Greenwich Funds; and Director of Technology Investment Capital Corp.	Trustee of Colgate University; President of Hill House, Inc. (residential home care). Formerly: Managing Director, Equity Capital Markets Group of Merrill Lynch & Co. (1971-1999).

Directors and Officers — Continued

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Name, (Year of Birth),	Number of Legg Mason
Position(s) and	Funds Overseen and	Principal Occupation(s)
Year Elected	Other Directorships	During the Past Five Years
Rowan, S. Ford (1943) Director since 2002 B	Director/Trustee of all Legg Mason funds (consisting of 23 portfolios).	Consultant, Rowan & Blewitt Inc. (management consulting); Chairman, National Center for Critical Incident Analysis, National Defense University, since 2004; Director of Santa Fe Institute (scientific research institute) since 1999; Director of Annapolis Center for Science-Based Public Policy since 1995.
Tarola, Robert M. (1950) Director since 2004 B	Director/Trustee of all Legg Mason funds (consisting of 23 portfolios).	Senior Vice President and Chief Financial Officer of W.R. Grace & Co. (specialty chemicals) since 1999.
INTERESTED DIRECTORS:C
Curley, John F., Jr. (1939) Chairman and Director since 1993B	Chairman and Director/Trustee of all Legg Mason funds (consisting of 23 portfolios).	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).
Fetting, Mark R. (1954) President since 2001; Director since 2002 B	President and Director/Trustee of all Legg Mason funds (consisting of 23 portfolios); Trustee of The Royce Family of Funds (consisting of 21 portfolios).	Senior Executive Vice President of Legg Mason, Inc.; Director and/or officer of various Legg Mason affiliates since 2000. Formerly: 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; Vice President, T. Rowe Price Group, Inc.
EXECUTIVE OFFICERS:D
Karpinski, Marie K. (1949) Vice President and Treasurer since 1993 B	Vice President and Treasurer of all Legg Mason funds (consisting of 23 portfolios).	Vice President and Treasurer of all Legg Mason funds. Vice President and Treasurer of Legg Mason Fund Adviser, Inc.; Treasurer of Western Asset Funds, Inc.; Treasurer and Principal Financial and Accounting Officer of Pacific American Income Shares, Inc., Western Asset Premier Bond Fund, Western Asset/ Claymore U.S. Treasury Inflation Protected Securities Fund, and Western Asset/ Claymore U.S. Treasury Inflation Protected Securities Fund 2.

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Name, (Year of Birth),	Number of Legg Mason
Position(s) and	Funds Overseen and	Principal Occupation(s)
Year Elected	Other Directorships	During the Past Five Years
Merz, Gregory T. (1958) Vice President and Chief Legal Officer since 2003B	Vice President and Chief Legal Officer of all Legg Mason funds (consisting of 23 portfolios)	Vice President and Deputy General Counsel of Legg Mason, Inc. since 2003. Formerly: Associate General Counsel, Fidelity Investments (1993-2002); Associate, Debevoise & Plimpton (law firm)(1985-1993).
Olmert, Amy M. (1963) Vice President and Chief Compliance Officer since 2004B	Vice President and Chief Compliance Officer of all Legg Mason funds (consisting of 23 portfolios).	Senior Vice President of Legg Mason, Inc. since 2004. Chief Compliance Officer of all Legg Mason funds, Western Asset Funds, Inc., Pacific American Income Shares, Inc., Western Asset Premier Bond Fund, Western Asset/ Claymore U.S. Treasury Inflation Protected Securities Fund, and Western Asset/ Claymore U.S. Treasury Inflation Protected Securities Fund 2 since 2004. Formerly: Managing Director, Deutsche Asset Management (1997-2004).

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).

^A 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).

B	Directors of the Funds serve a term of indefinite length until their resignation or removal and stand for re-election by shareholders only as and when required by the 1940 Act. Officers of the Funds are elected annually to serve until their successors are elected and qualified.
C	Mr. Curley and Mr. Fetting are considered to be interested persons (as defined in the 1940 Act) of the Funds by virtue of being both employees of Legg Mason Wood Walker, Incorporated, the principal underwriter of the Funds, and as owners of common stock of Legg Mason, Inc.
D	Officers of the Funds are interested persons (as defined in the 1940 Act).

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Directors and Officers — Continued

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

   At its November 2004 meeting, the Board of Directors (the “Board”), including all of the Independent Directors, approved the continuation of the Investment Advisory and Management Agreement between Legg Mason Funds Management, Inc., now Legg Mason Capital Management, Inc. (the “Adviser”) and Legg Mason American Leading Companies Trust (“American Leading Companies”) (the “Agreement”). In voting to approve the continuation of the Agreement, the Board considered whether continuance would be in the best interests 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 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 interests of American Leading Companies and its shareholders.

   Prior to the Board action, the Independent Directors met as a committee to consider its recommendation as to continuance of the Agreement. As part of the process to consider the Agreement, legal counsel to American Leading Companies on behalf of the Independent Directors requested certain information from the Adviser, 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.

   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 the Adviser’s efforts to build and support a strong investment 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 those of appropriate Lipper category averages, specified benchmark indices and a peer group of investment companies pursuing similar strategies, all over multiple time periods. The Board also considered American Leading Companies’ performance in the context of the risk undertaken by the portfolio manager. The Board noted the Fund’s good performance and considered the measures the Adviser was taking in its efforts to further enhance performance. Finally, the Board considered the level of service provided by the Adviser to American Leading Companies shareholders.

   The Board considered the Adviser’s procedures for executing portfolio transactions for American Leading Companies and the Adviser’s report on the quality of its trade executions on behalf of American Leading Companies. The Board also reviewed the Adviser’s report on

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its policies and procedures for the selection of brokers and dealers and for obtaining research from those brokers and dealers.

   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 further noted that American Leading Companies’ advisory fee structure provides for a reduction of the effective fee rate as asset levels increase. The Board also compared American Leading Companies’ advisory fee schedule to the advisory fees charged by the Adviser to its other accounts, including sub-advisory fees charged to other registered funds and fees for institutional accounts. In that connection, the Board considered the differences in the level of services provided and the differences in responsibility of the Adviser to American Leading Companies and to other accounts. Finally, the Board considered the benefits accruing to the Adviser and its affiliates by virtue of their relationship to American Leading Companies.

   In addition to the November meeting at which the Agreement was reviewed, the Board meets at least another three times per year in order to oversee American Leading Companies, 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 draws upon its long association with the Adviser and its personnel, and the members’ familiarity with their culture, and the manner in which it has sought to strengthen and enhance itself.

Annual Report to Shareholders

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Board Consideration of Legg Mason Balanced Trust’s Investment Advisory and Management Agreement and Sub-Advisory Agreement

   At its November 2004 meeting, the Board of Directors (the “Board”), including all of the Independent Directors, approved the continuation of the Investment Advisory and Management Agreement between Legg Mason Fund Adviser, Inc. (the “Adviser”) and Legg Mason Balanced Trust (“Balanced Trust”) and the Sub-Advisory Agreement between the Adviser and Bartlett & Co. (the “Sub-Adviser”) (each an “Agreement”). In voting to approve the continuation of each Agreement, the Board considered whether continuance would be in the best interests of Balanced Trust 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 Balanced Trust. In considering each Agreement, the Board did not identify any single factor or 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 interests of Balanced Trust and its shareholders.

   Prior to the Board action, the Independent Directors met as a committee to consider its recommendations as to continuance of each Agreement. As part of the process to consider each Agreement, legal counsel to Balanced Trust on behalf of the Independent Directors requested certain information from the Adviser and the Sub-Adviser, and in response, the Adviser and the Sub-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.

   With respect to the nature, scope and quality of the services provided, the Board considered the experience and commitment of the Adviser’s and the Sub-Adviser’s personnel and their efforts to build and support a strong service team. The Board also considered the nature and quality of the Sub-Adviser’s investment process. In assessing performance, the Board compared Balanced Trust’s returns to those of appropriate Lipper category averages, specified benchmark indices and a peer group of investment companies pursuing similar strategies, all over multiple time periods. The Board also considered Balanced Trust’s performance in the context of the risk undertaken by the portfolio manager. The Board considered the measures that the Sub-Adviser was taking in its efforts to improve performance. Finally, the Board considered the level of service provided by the Adviser to Balanced Trust shareholders.

   The Board considered the Sub-Adviser’s procedures for executing portfolio transactions for Balanced Trust and the Sub-Adviser’s report on the quality of its trade executions on behalf of Balanced Trust. The Board also reviewed the Sub-Adviser’s report on its policies and procedures for the selection of brokers and dealers and for obtaining research from those brokers and dealers.

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   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 Adviser and the Sub-Adviser in providing services to Balanced Trust and profitability for the Adviser and the Sub-Adviser and their affiliates from their overall association with Balanced Trust. The Board reviewed information about the advisory fee schedule and overall expense ratio of Balanced Trust and comparable fee schedules and expense ratios of a peer group of funds. The Board considered that, while Balanced Trust’s advisory fee structure does not provide for a reduction of payments, the current fees appear fair and reasonable in relation to the present asset size of Balanced Trust. The Board also compared Balanced Trust’s advisory fee schedule to the advisory fees charged by the Adviser and the Sub-Adviser to their other accounts, including fees for institutional accounts. In that connection, the Board considered the differences in the level of services provided and the differences in responsibility of the Adviser and the Sub-Adviser to Balanced Trust and to other accounts. Finally, the Board considered the benefits accruing to the Adviser and the Sub-Adviser and their affiliates by virtue of their relationship to Balanced Trust.

   In addition to the November meeting at which each Agreement was reviewed, the Board meets at least another three times per year in order to oversee Balanced Trust, including meetings at which the portfolio manager of Balanced Trust or others submit or make presentations and discuss performance, compliance and other applicable issues. The Board also draws upon its long association with the Adviser, the Sub-Adviser and their personnel, and the members’ familiarity with their culture and the manner in which they have sought to strengthen and enhance themselves.

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Board Consideration of Legg Mason Financial Services Fund’s Investment Advisory and Management Agreement and Sub-Advisory Agreement

   At its November 2004 meeting, the Board of Directors (the “Board”), including all of the Independent Directors, approved the continuation of the Investment Advisory and Management Agreement between Legg Mason Fund Adviser, Inc. (the “Adviser”) and Legg Mason Financial Services Fund (“Financial Services”) and the Sub-Advisory Agreement between the Adviser and Barrett Associates, Inc. (the “Sub-Adviser”) (each an “Agreement”). In voting to approve the continuation of each Agreement, the Board considered whether continuance would be in the best interests of Financial Services 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 Financial Services. In considering each Agreement, the Board did not identify any single factor or 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 interests of Financial Services and its shareholders.

   Prior to the Board action, the Independent Directors met as a committee to consider its recommendations as to continuance of each Agreement. As part of the process to consider each Agreement, legal counsel to Financial Services on behalf of the Independent Directors requested certain information from the Adviser and the Sub-Adviser, and in response, the Adviser and the Sub-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.

   With respect to the nature, scope and quality of the services provided, the Board considered the experience and commitment of the Adviser’s and the Sub-Adviser’s personnel and their efforts to build and support a strong service team. The Board also considered the nature and quality of the Sub-Adviser’s investment process. In assessing performance, the Board compared Financial Services’ returns to those of appropriate Lipper category averages, specified benchmark indices and a peer group of investment companies pursuing similar strategies, all over multiple time periods. The Board also considered Financial Services’ performance in the context of the risk undertaken by the portfolio manager. The Board reviewed the transition in portfolio management leadership that was underway and noted Financial Services’ overall positive performance record. Finally, the Board considered the level of service provided by the Adviser to Financial Services shareholders.

   The Board considered the Sub-Adviser’s procedures for executing portfolio transactions for Financial Services and the Sub-Adviser’s report on the quality of its trade executions on behalf of Financial Services. The Board also reviewed the Sub-Adviser’s report on its policies and procedures for the selection of brokers and dealers and for obtaining research from those brokers and dealers.

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   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 Adviser and the Sub-Adviser in providing services to Financial Services and profitability for the Adviser and the Sub-Adviser and their affiliates from their overall association with Financial Services. The Board reviewed information about the advisory fee schedule and overall expense ratio of Financial Services and comparable fee schedules and expense ratios of a peer group of funds. In considering whether any economies of scale experienced by the Adviser and the Sub-Adviser in providing services to Financial Services were shared with Financial Services, the Board further noted that Financial Services’ advisory fee structure provides for a reduction of the effective fee rate as asset levels increase. The Board also compared Financial Services’ advisory fee schedule to the advisory fees charged by the Adviser and the Sub-Adviser to their other accounts, including fees for institutional accounts. In that connection, the Board considered the differences in the level of services provided and the differences in responsibility of the Adviser and the Sub-Adviser to Financial Services and to other accounts. Finally, the Board considered the benefits accruing to the Adviser, the Sub-Adviser and their affiliates by virtue of their relationship to Financial Services.

   In addition to the November meeting at which each Agreement was reviewed, the Board meets at least another three times per year in order to oversee Financial Services, including meetings at which the portfolio manager of Financial Services or others submit or make presentations and discuss performance, compliance and other applicable issues. The Board also draws upon its long association with the Adviser, the Sub-Adviser and their personnel, and the members’ familiarity with their culture and the manner in which they have sought to strengthen and enhance themselves.

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

   At its November 2004 meeting, the Board of Directors (the “Board”), including all of the Independent Directors, approved the continuation of the Investment Advisory and Management Agreement between Legg Mason Fund Adviser, Inc. (the “Adviser”) and Legg Mason U.S. Small-Capitalization Value Trust (“U.S. Small-Cap”) and the Sub-Advisory Agreement between the Adviser and Brandywine Asset Management, LLC (the “Sub-Adviser”) (each an “Agreement”). In voting to approve the continuation of each Agreement, the Board considered whether continuance would be in the best interests 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 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 interests of U.S. Small-Cap and its shareholders.

   Prior to the Board action, the Independent Directors met as a committee to consider its recommendations as to continuance of each Agreement. As part of the process to consider each Agreement, legal counsel to U.S. Small-Cap on behalf of the Independent Directors requested certain information from the Adviser and the Sub-Adviser, and in response, the Adviser and the Sub-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.

   With respect to the nature, scope and quality of the services provided, the Board considered the experience and commitment of the Adviser’s and Sub-Adviser’s personnel and their efforts to build and support a strong service team. The Board also considered the nature and quality of the Sub-Adviser’s investment process. In assessing performance, the Board compared U.S. Small-Cap’s returns to those of appropriate Lipper category averages, specified benchmark indices and a peer group of investment companies pursuing similar strategies, all over multiple time periods. The Board also considered U.S. Small-Cap’s performance in the context of the risk undertaken by the portfolio manager. The Board noted the Fund’s good performance and considered the measures that the Sub-Adviser was taking in its efforts to further enhance performance. Finally, the Board considered the level of service provided by the Adviser to U.S. Small-Cap shareholders.

   The Board considered the Sub-Adviser’s procedures for executing portfolio transactions for U.S. Small-Cap and the Sub-Adviser’s report on the quality of its trade executions on behalf of U.S. Small-Cap. The Board also reviewed the Sub-Adviser’s report on its policies

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and procedures for the selection of brokers and dealers and for obtaining research from those brokers and dealers.

   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 Adviser and the Sub-Adviser in providing services to U.S. Small-Cap and profitability for the Adviser and the Sub-Adviser and their 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 Adviser and the Sub-Adviser in providing services to U.S. Small-Cap were shared with U.S. Small-Cap, the Board further noted that U.S. Small-Cap’s advisory fee structure provides for a reduction of the effective fee rate as asset levels increase. The Board also compared U.S. Small-Cap’s advisory fee schedule to the advisory fees charged by the Adviser and the Sub-Adviser to their other accounts. In that connection, the Board considered the differences in the level of services provided and the differences in responsibility of the Adviser and the Sub-Adviser to U.S. Small-Cap and to other accounts. Finally, the Board considered the benefits accruing to the Adviser, the Sub-Adviser and their affiliates by virtue of their relationship to U.S. Small-Cap.

   In addition to the November meeting at which each Agreement was reviewed, the Board meets at least another three times per year in order to oversee U.S. Small-Cap, including meetings at which the portfolio manager of U.S. Small-Cap or others submit or make presentations and discuss performance, compliance and other applicable issues. The Board also draws upon its long association with the Adviser, the Sub-Adviser and their personnel, and the members’ familiarity with their culture, and the manner in which they have sought to strengthen and enhance themselves.

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;

•   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)	On August 12, 2004, the Registrant’s Code of Ethics for Principal Executive and Financial Officers was amended. The amended Code is set forth as an exhibit to this filing. A brief description of the amendment is set forth below:

•   The fifth bullet point of Section IV has been revised to clarify that it applies to employment positions.

•   The sixth bullet point of Section IV has been revised to require that Covered Persons report any employment positions they (or a member of their immediate family) hold with a service provider to a fund.

•   Footnote one to the third bullet point in Section II has been added. That third bullet of Section II states that a Covered Officer should confer with the Chief Legal Officer if the Covered Officer will serve as director of any public company. There is an exception to the requirement to confer with the Chief Legal Officer if the directorship is of the Legg Mason Funds or their investment advisers or any affiliated person thereof. Footnote one clarifies that the exception does not apply to a company that is affiliated with a fund because the fund owns 5% of the company’s stock, or because the company owns more than 5% of the fund’s stock and the company is not part of the Legg Mason complex.

(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

     The directors of the Registrant’s determined that its board has at least one audit committee financial expert serving on its Audit Committee.

     Mr. Arthur S. Mehlman is the Audit Committee financial expert. He is “independent.”

Item 4. Principal Accounting Fees and Services

(a)	Audit Fees
	Fiscal Year Ended March 31, 2004 — $91,200 Fiscal Year Ended March 31, 2005 — $95,200
(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 (a) above.
	Ernst & Young LLP did not bill fees for assurance and related services that required pre-approval 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
	Fiscal Year Ended March 31, 2004 — $20,000 Fiscal Year Ended March 31, 2005 — $22,600
	Services include preparation of federal and state income tax returns and preparation of excise tax returns.
	Ernst & Young LLP did not bill fees for tax services that required pre-approval 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 by Ernst & Young LLP during either of the last two fiscal years in addition to those disclosed in items (a) through (c) above.

Ernst & Young LLP did not bill fees for services not included in Items 4(a) through (c) above that required pre-approval 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 delegation to its Chairperson of the authority to pre-approve items for which a decision may be desired prior to the next meeting of the Committee. Such pre-approvals 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.

	Ernst & Young LLP did not bill fees 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.
	Fiscal Year Ended March 31, 2004 — $0 Fiscal Year Ended March 31, 2005 — $473,333
(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

     The Registrant is not a closed-end management investment company.

Item 8. Portfolio Managers of Closed-End Management Investment Companies

     The Registrant is not a closed-end management investment company.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers

     The Registrant is not a closed-end management investment company.

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 Fund Secretary at 100 Light Street, 23rd Floor, Baltimore, Maryland 21201, 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)	Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(3)	The Registrant is not a closed-end management investment company.

(b)   Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.

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: May 27, 2005

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:  May 27, 2005

By: /s/ Marie K. Karpinski

Marie K. Karpinski
Treasurer, Legg Mason Investors Trust, Inc.
Date:  May 27, 2005