LEGG MASON INVESTORS TRUST INC, N-30D, 1998-11-25

LEGG MASON INVESTORS TRUST INC
N-30D, 1998-11-25

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Investment Manager
Legg Mason Fund Adviser, Inc.
Baltimore, MD

Investment Advisers
For American Leading Companies Trust:
Legg Mason Fund Adviser, Inc.
Baltimore, MD

For Balanced Trust:
Bartlett & Co.
Cincinnati, OH

For U.S. Small-Cap Value Trust:
Brandywine Asset Management,Inc.
Wilmington, DE

Board of Directors
John F. Curley, Jr., Chairman
Edward A. Taber, III, President
Richard G. Gilmore
Arnold L. Lehman
Dr. Jill E. McGovern
T. A. Rodgers

Transfer and Shareholder Servicing Agent
Boston Financial Data Services
Boston, MA

Custodian
State Street Bank & Trust Company
Boston, MA

Counsel
Kirkpatrick & Lockhart LLP
Washington, D.C.

Independent Auditors
Ernst & Young LLP
Philadelphia, PA

This report is not to be distributed unless preceded or accompanied by a
prospectus.

Legg Mason Wood Walker, Incorporated
- -------------------------------------------------------------------------------
100 Light Street
P.O. Box 1476, Baltimore, MD 21203-1476
410 o 539 o 0000

LMF-013
11/98

Semi-Annual Report
September 30, 1998

Legg Mason
Investors Trust, Inc.

American Leading
Companies Trust

Balanced Trust

U.S. Small-Cap
Value Trust

<PAGE>

To Our Shareholders,

We are pleased to provide you with Legg Mason Investors Trust's semi-annual
report for the American Leading Companies Trust, the Balanced Trust and the U.S.
Small-Cap Value Trust.

The following table summarizes key statistics for the Primary Class of shares
of each Fund, as of September 30, 1998:

3 Month 12 Month
Total Return(1) Total Return(1)
--------------- ---------------

American Leading Companies Trust -11.9% -1.9%
Balanced Trust -7.1% -0.7%
U.S. Small-Cap Value Trust -21.6% N/A

S&P 500 Stock Composite Index -10.0% +9.1%
Lipper Balanced Fund Index(2) -5.8% +4.8%
Russell 2000 Index -20.2% -19.0%

On the following pages, the portfolio managers for each of the Funds discuss
the investment outlook for the Funds. Long-term investment results for each of
the Funds are shown in the "Performance Information" section of this report.

We hope you will consider using the Trust for investments of additional funds
as they become available. Some shareholders regularly add to their investment in
the Funds by authorizing automatic, monthly transfers from their bank checking
or Legg Mason accounts. Your Financial Advisor will be happy to help you make
these arrangements if you would like to purchase additional shares in this
convenient manner.

The Board of Directors has approved an ordinary income dividend of $.05 per
share to Primary Class shareholders of Balanced Trust, payable on November 6,
1998 to shareholders of record on November 4, 1998.

Sincerely,

/s/ Edward A. Taber, III
_________________________
Edward A. Taber, III
President

November 6, 1998

- ----------
(1) Total return measures investment performance in terms of appreciation or
depreciation in net asset value per share plus dividends and any capital
gain distributions. It assumes that dividends and distributions were
reinvested at the time they were paid.

(2) The Lipper Balanced Fund Index is composed of approximately 30 funds whose
primary objective is to conserve principal by maintaining a balanced
portfolio of stocks and bonds with stock/bond ratio ranges of approximately
60% / 40%.

<PAGE>

Portfolio Managers' Comments
American Leading Companies Trust

Market Commentary

After several years of well above-average returns and favorable results in the
first half of 1998, the stock market's performance in the third quarter was a
cold slap in the face for most investors. It has been some time since investors
were reminded this rudely that stocks can indeed go down as well as up. The
quarter began benignly enough with most stocks making continued upward progress
in the first half of July. The S&P 500 Index and the Dow Jones Industrials
reached what almost certainly will prove to be their yearly highs on July 17th,
and began what appeared to be a normal 5% to 7% correction of the type we've
seen a number of times in the last few years. The market's initial pullback
should have come as a surprise to no one. As we noted in our last letter to you
in July, stock valuation levels at mid-year were stretched at a time when it
seemed clear that the turmoil in Asia was causing a slowdown in global GDP
growth. What began as a normal correction became something far more severe in
August as a number of seemingly isolated, but related, events precipitated a
crisis of confidence and ultimately a full-blown panic in the world's financial
markets.

The straw that broke the camel's back was Russia, specifically the failed
effort to prevent the devaluation of the Russian ruble by restructuring Russia's
external debt. This effort was a colossal failure and created billions in losses
for the banks, brokerage firms and hedge funds that had participated in the
restructuring plan. As rumors of the size of these losses circulated and a
succession of firms, including a who's who of global financial services
entities, disclosed the extent of the hits to their balance sheets, a flight to
safety ensued. Money poured into US Treasury securities, especially the 30-year
bond, whose price surged--dropping its yield to below 5% for the first time
ever. Credit spreads between treasuries and all other fixed income
instruments--mortgage-backs, corporates, foreign bonds--widened to historically
high levels. Unfortunately, widening credit spreads was the exact opposite of
what one hedge fund, Long-Term Capital Management, had been betting would
happen. Long-Term Capital Management ("LTCM"), with about $4 billion in capital,
had (through the magic of borrowed money) made over a $100 billion bet that
credit spreads would narrow. They were therefore short billions of dollars of US
Treasury bonds and long billions of dollars of other fixed income instruments
(principally mortgage-backs it now appears). When treasury bonds surged as other
fixed income prices fell, LTCM lost both sides of its bet simultaneously. Since
it was leveraged more than 25 to 1, LTCM's capital base eroded quickly, dropping
from over $4 billion to under $1 billion in a matter of weeks. Rumors of LTCM's
imminent demise spread like wildfire through the financial markets. The mortgage
market and other asset-backed markets were in chaos. A short squeeze in the
30-year Treasury bond sent yields plummeting to record lows of 4.7% on October
5. The stocks of nearly all financial services companies--banks, insurance
companies and brokerage firms alike--plummeted in price, with many losing
one-third to one-half their value or more in the space of six to eight weeks.
Finally, fearing a total meltdown of the global financial system, the New York
Federal Reserve stepped in and orchestrated a rescue plan in which a consortium
of 14 leading financial institutions put up $3.5 billion for a 90% interest in
LTCM, to provide it sufficient time and liquidity to "realize the inherent value
of the portfolio."

With the LTCM melodrama center stage during the quarter, it is not surprising
that volatility was high and losses were widespread. For the quarter, the S&P
500 Index was down just less than 10%, having declined 19% from its July 17th
high to its August 31st low. The Dow Jones Industrial Average was down about
12%. According to Lipper Analytical Services, the average growth fund was down

<PAGE>

13.4%, the average growth and income fund was down 12.5%, and the average
general equity mutual fund was down about 15%. Small and mid-cap stocks fared
even worse, with the Russell 2000 (the primary small-cap benchmark) down 20%.
All in all, it was the worst quarter in the equity markets since the 4th quarter
of 1987.

Investment Results

Results for the American Leading Companies Trust for the quarter, calendar
year-to-date, one year, and cumulative three year periods ended September 30,
1998 are listed below, along with those of some representative benchmarks:

Third Quarter Year-to-date
1998 1998 One Year Three Years
- --------------------------------------------------------------------------------
American Leading Companies -11.92% -2.12% -1.90% +59.82%

S&P 500 Composite Index -9.95% +6.00% +9.05% +84.31%
Lipper General Equity Funds -14.93% -4.73% -6.12% +46.48%
Dow Jones Industrial Average -11.97% +0.49% +0.48% +73.95%

As illustrated above, results for the quarter were mixed, with the Fund ahead
of the Dow Jones Industrials and the average Lipper General Equity fund but
trailing the S&P 500 Index. The Fund's underperformance in the third quarter is
entirely due to its overweighted position in financial stocks, which were
murdered, and limited exposure to electric utilities and regional Bell operating
companies, which held up reasonably well. You may question the wisdom of both of
those portfolio decisions, but let me explain our thinking. While it is
certainly true that electric utilities provide some downside protection in bad
markets, as regulated monopolies with minimal prospects for growth, they are not
particularly attractive investments for long-term capital appreciation, in our
opinion. On the other hand, financial services companies, while they can be
volatile in times of economic or financial stress, have contributed importantly
to your portfolio returns in the past, and have, we think, a bright outlook for
the future. We took advantage of weakness in the financial sector to add to our
holdings of Chase Manhattan, Citicorp, BancOne and Conseco during the quarter.

Stocks which contributed positively to performance in the quarter included
selected technology stocks (EMC Corporation, Intel and IBM), drug stocks
(Schering-Plough and Merck), and a number of other stocks including Philip
Morris, Fannie Mae, Emerson Electric, Texaco and MCI Worldcom. As previously
noted, by far the worst performing group in the quarter was the financial stocks
(Chase Manhattan, Travelers and Citicorp (now merged as Citigroup), Conseco,
BancOne and Mellon). Other laggards included Diamond Offshore, Philips
Electronics N.V., Mattel, Toys "R" Us and Starwood Hotels & Resorts, owner of
the Sheraton and Westin Hotel chains. Despite their recent poor performance, we
continue to like the prospects for these companies and believe that they could
well be among our best stocks going forward.

Outlook

Despite the trauma of the third quarter, we are reasonably optimistic about
prospects for the equity market for the remainder of this year and into the
next. We view the recent enactment of banking reform legislation in Japan as
quite constructive, as is the recent weakness in the US dollar, which takes
considerable pressure off a number of emerging markets. In fact, in Korea and
Thailand,

<PAGE>

Portfolio Managers' Comments -- Continued
American Leading Companies Trust -- Continued

two of the hardest-hit Asian nations, interest rates have fallen and currencies
have strengthened substantially. In addition, the US equity market has corrected
a good bit of its valuation excess, and many stocks are now trading at very
attractive prices relative to their long-term prospects. We will reposition the
portfolio where appropriate to take advantage of the opportunities which the
market has created.

We were expecting another cut in the Fed funds rate, and on October 15th we
got one--a 25 basis point1 cut in both the Fed funds rate and the discount rate.
We view this as the most constructive development in recent weeks. In contrast
to the first rate cut in September, the equity market responded enthusiastically
to the latest cut, with the Dow Jones Industrials and the S&P 500 both up over
4% on the day. Stocks have remained generally strong since the rate cut,
recovering about half of their 3rd quarter losses in the first three weeks of
October.

On that happy note, we will close. As always, we welcome your comments or
questions.

David E. Nelson, CFA

October 26, 1998
DJIA 8432.21

- ----------
(1) 100 basis points = 1%

<PAGE>

Portfolio Managers' Comments
Balanced Trust

Results for the third quarter and twelve months ended September 30, 1998 for
the Balanced Trust and related benchmarks are reflected in the following table:

Third Quarter
1998 One Year
- -------------------------------------------------------------------------------
Balanced Trust -7.07% -0.71%

Lipper Balanced Fund Index(1) -5.79% +4.82%
S&P 500 Index (large-cap) -9.95% +9.05%
S&P 400 Index (mid-cap) -14.74% -2.21%
Russell 2000 Index (small-cap) -20.15% -19.02%
Lehman Intermediate Government/Corporate Bond Index +4.49% +10.43%

Equity

The stealth bear market we discussed in our last letter finally showed up on
everyone's radar screen this quarter as the Dow Jones shed 1,000 points during
the last week in August. For the quarter, the S&P 500 had a total return of
- -9.95%. Carnage remains most severe in the smaller stocks as witnessed by the
- -20.15% return of the Russell 2000 Index. This is the most significant market
decline in eight years. Although not large by historical standards, the decline
has been particularly noteworthy after the steady and substantial rise of the
market during the 1990s. This market trend combined with the huge cash inflows
into equity mutual funds has created extraordinary expectations among investors.
The threat to those expectations from crumbling foreign economies, hedge fund
blow-ups and the incipient signs of profit problems in American corporations has
resulted in market volatility on a level that we have not witnessed in many
years.

Given the difficult economic conditions that are emerging, investors favored
stocks with a domestic orientation whose products or services are fairly
insensitive to the economy. This certainly was the case in the Balanced Trust,
as TNP, Anheuser-Busch, UST, Inc., and Western Resources were among our top
performing holdings. UST is the dominant company in the smokeless tobacco
business, while TNP and Western Resources are electric utilities based inTexas
and Kansas. Conversely, among the weakest stocks in the portfolio were Travelers
Group (now Citigroup), UCAR, Pioneer-Standard Electronics, and AMR Corporation.
This is not surprising given that investment services, electronics and air
transportation are more leveraged to economic and stock market conditions.

During the quarter, we initiated positions in Hubbell, Anheuser-Busch and
Molex. Hubbell manufactures and sells electrical products for industrial and
utility applications. The market's aversion to small companies has unfairly
punished Hubbell, which has a good record of growth and profitability.
Anheuser-Busch was one of the few large, stable demand companies that we could
identify that was selling for a reasonable valuation. The company is becoming
increasingly dominant in the global beer business. Molex manufactures connecting
devices for the electronics industry. This high quality company has been able to
consistently gain market share versus its competitors because of its innovative
new products and its ability to market these products to industry leaders. We
also added to our positions in Lockheed Martin, Charter One Financial and
Travelers Group.

We eliminated a number of positions during the quarter. Triton Energy was sold
when the auction of the company's oil properties did not bring the expected
bids. This was a big disappointment.

<PAGE>

Portfolio Managers' Comments -- Continued
Balanced Trust -- Continued

Upheaval in the oil markets and uncertainties in the political and economic
regions in which these properties were located overwhelmed our previous
assessment of the inherent worth of the company. Pitney Bowes appreciated nicely
to our valuation target, while York International, Archer Daniels Midland and
Frontier Insurance were all sold because of deteriorating fundamentals which
served to reduce our assessment of their intrinsic value.

Although our significant holdings of small and mid-cap companies had a
negative effect on both our absolute and relative results for the quarter, we
are extremely enthused about the compelling valuations of our equity holdings.

Fixed Income

We stated in the June 30, 1998 quarterly report that we felt that the flat
yield curve that existed at that time was unsustainable and, that it was likely
that the curve would either invert or steepen, with the odds favoring a
steepening. What we did not see were the series of events that would cause the
steepening--a global stock market sell-off and a dramatic flight to quality.

As a result of this global equity market sell-off, US Treasury bonds emerged
as the asset of choice for the quarter. During the past three months, yields on
US Treasury bills declined approximately three-quarters of one percent from
5.10% to 4.36%, while the yield on 30-year Treasury bonds declined by 66 basis
points(2), from 5.63% to 4.97%. More recently, the yield curve has steepened
further with short rates declining significantly as a result of the two recent
easings by the Federal Reserve Board.

With regard to our performance last quarter, the emphasis on high credit
quality paid off as the yields on corporate bonds, particularly lower-rated
corporate bonds, widened in dramatic fashion as fears of a significant recession
rippled through the global financial markets. In fact, the relative performance
of corporate bonds for the past twelve months has been the worst in nine years
and we expect that this trend will persist at least until year end. At the same
time, due to massive liquidations by hedge funds, securities dealers and
speculators, the yields on mortgage securities widened significantly as well,
which detracted somewhat from our results. As a result of this widening in the
mortgage securities sector, we recently sold the last of our premium mortgage
securities and swapped these proceeds into discount mortgage securities, which
reduced the pre-payment risk of the portfolio while maintaining high yields.

Going forward, we believe that a continued emphasis on maintaining high credit
quality is warranted, particularly if the current global economic slowdown
persists or accelerates. With regard to maturity and sector selection, we feel
short to intermediate maturities in seven-year Treasury strips and discount
mortgage securities offer the best relative values.

Thank you for your support and we look forward to your questions and comments.

Woodrow H. Uible, CFA Dale H. Rabiner, CFA
Equity Portfolio Manager Fixed Income Portfolio Manager

October 26, 1998
DJIA 8432.21
- ----------
(1) The Lipper Balanced Fund Index is composed of approximately 30 funds whose
primary objective is to conserve principal by maintaining a balanced
portfolio of stocks and bonds with stock/bond ratio ranges of approximately
60%/40%.
(2) 100 basis points = 1%

<PAGE>

Portfolio Managers' Comments
U.S. Small-Capitalization Value Trust

During the quarter, the U.S. Small-Capitalization Value Trust was down 21.59%,
relative to a 20.15% decline for the Russell 2000, a 17.88% decline for the
Russell 2000 Value, and a 9.95% decline for the S&P 500.

The third quarter was characterized by an extreme "flight to quality" as
economic scares from Asia to Russia to Latin America to US hedge funds drove
investors away from most financial assets with the exception of US Government
fixed-income obligations. For the first time in many quarters, investors began
to fear a downturn in US economic activity. With these varied concerns,
investors who purchased stocks again preferred to focus on larger capitalization
stocks with greater liquidity.

In general, stocks were down sharply in July and August but rebounded in
September. During the first two months, your portfolio performed defensively by
falling significantly less than the Russell 2000 and 2000 Value. During
September's rally, the Russell indices reversed much of the portfolio's
advantage.

For the quarter, the best performing sector was utilities, whose prices were
on average unchanged while the rest of the market declined severely. Our
technology holdings also helped the portfolio's relative performance, as we held
a less-than-benchmark weighting and our holdings declined less than the indices.
Our below-market weighting in financials hurt relative performance, as these
stocks held up relatively well in the quarter. The overweighting of the producer
manufacturing sector (which includes automotive, industrial,metals and mining
and miscellaneous manufacturing as industry categories) also hampered relative
performance as that sector fell more than the market, particularly in September.

In terms of changes to the portfolio's sector weightings, we have continued to
reduce our financial holdings. The strong relative performance in this sector
has led many of the stocks to hit our sell targets. More recently, we have been
sellers of utility stocks. Since these stocks held value as the market declined,
they have increased in relative valuation and have begun to hit our sell points.
The biggest sector increase came in the commercial/industrial services area, as
this year's drop in oil prices has led to much lower valuations for the oil
services companies.

The economy and the stock market have entered a period of increased
volatility. Investors are concerned that worldwide economic problems will,
through the twin channels of reduced export demand and falling US consumer
confidence, finally lower domestic corporate earnings.

Looking ahead, we remain optimistic about the performance opportunity
available from our small-cap value portfolio. Compared to large-cap, small-cap
value stocks are now significantly cheaper than in 1990, which was the beginning
of the last strong small-cap performance cycle. In addition, our research shows
that after previous periods when small-caps lagged large-caps for five years,
over the next five years small-cap returns dominated the rest of the market.
Finally, past small-cap recoveries show that investors do not have to wait until
the economy turns up before small-caps offer attractive returns. In past
economic downturns, small-caps provided strong absolute and relative returns
while

<PAGE>

Portfolio Managers' Comments -- Continued
U.S. Small-Capitalization Value Trust -- Continued

the economy was still in the latter stages of decline. While we are not sure
that we have or will enter an economic slowdown, this research indicates that a
small-cap upsurge can come sooner than today's dire economic concerns might
indicate.

Henry F. Otto Steven M. Tonkovich
Managing Director Managing Director

October 26, 1998
DJIA 8432.21

<PAGE>

Performance Information
Legg Mason Investors Trust, Inc.

Total Return for One Year, Five Years and Life of Funds as of September 30, 1998

The returns shown are based on historical results and are not intended to
indicate future performance. The investment return and principal value of an
investment in each of these Funds will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
Average annual returns tend to smooth out variations in a Fund's return, so
they differ from actual year-to-year results. No adjustment has been made
for any income taxes payable by shareholders.

Each Fund offers two classes of shares: Primary Class and Navigator Class.
The Navigator Class, offered only to certain institutional investors, pays
Fund expenses similar to those paid by the Primary Class, except that
transfer agency fees and shareholder servicing expenses are determined
separately for each class and the Navigator Class does not incur Rule 12b-1
distribution fees. The Navigator Class of Balanced Trust has not commenced
operations.

The Funds' total returns as of September 30, 1998 were as follows:

<TABLE>
<CAPTION>
American Leading Balanced Small-Cap
Companies Trust Trust Value Trust
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Average Annual Total Return
Primary Class:
One Year -1.90% -0.71% N/A
Five Years +13.15 N/A N/A
Life of Class(A) +12.82 +9.27 N/A

Navigator Class:
One Year -0.96% N/A N/A
Life of Class(B) +17.75 N/A N/A

Cumulative Total Return
Primary Class:
One Year -1.90% -0.71% N/A
Five Years +85.44 N/A N/A
Life of Class(A) +84.70 +19.41 -21.20%

Navigator Class:
One Year -0.96% N/A N/A
Life of Class(B) +38.52 N/A -20.26%
-------------------------------------------------------------------------------
</TABLE>

(A) Primary Class inception dates are:
American Leading Companies Trust -- September 1, 1993
Balanced Trust -- October 1, 1996
Small-Cap Value Trust -- June 15, 1998

(B) Navigator Class inception dates are:
American Leading Companies Trust -- October 4, 1996
Small-Cap Value Trust -- June 19, 1998

<PAGE>

Performance Information -- Continued

American Leading Companies Trust

Selected Portfolio Performance*

Strong performers for the 3rd quarter 1998
------------------------------------------------
1. EMC Corporation +27.6%
2. Philip Morris Companies, Inc. +17.0%
3. Intel Corporation +15.7%
4. Amgen Inc. +15.6%
5. Schering-Plough Corporation +13.0%

Weak performers for the 3rd quarter 1998
------------------------------------------------
1. Chase Manhattan Corporation -42.7%
2. Travelers Group, Inc. -38.1%
3. Citicorp -37.7%
4. Philips Electronics N.V. -37.2%
5. Starwood Hotels & Resorts -36.9%

* Securities held for the entire quarter.

Portfolio Changes

Securities added during the 3rd quarter 1998
------------------------------------------------
BankAmerica Corporation
Foundation Health Systems, Inc.
Seagate Technology, Inc.
United HealthCare Corporation

Securities sold during the 3rd quarter 1998
------------------------------------------------
Aetna, Inc.
Consolidated Edison, Inc.
Edison International
First Health Group Corp.
Fortune Brands, Inc.
RJR Nabisco Holdings Corp.
Rockwell International Corporation
The PMI Group, Inc.
TRW Inc.

<PAGE>

Balanced Trust

Selected Portfolio Performance*

Strong performers for the 3rd quarter 1998
--------------------------------------------------
1. TNP Enterprises, Inc. +13.2%
2. UST, Inc. +9.5%
3. United States Treasury STRIPS
0%, 8/15/05 +8.8%
4. United States Treasury STRIPS
0%, 2/15/05 +8.5%
5. United States Treasury STRIPS
0%, 11/15/04 +8.3%

Weak performers for the 3rd quarter 1998
--------------------------------------------------
1. UCAR International, Inc . -38.3%
2. Travelers Group, Inc. -38.1%
3. Pioneer-Standard Electronics, Inc. -34.4%
4. AMR Corporation -33.4%
5. Latin America Investment Fund, Inc. -31.5%

* Securities held for the entire quarter.

Portfolio Changes

Securities added during the 3rd quarter 1998
--------------------------------------------------
Anheuser-Busch Companies, Inc.
Fannie Mae
6%, 9/1/28
Hubbell Incorporated
Molex Incorporated
Philip Morris Companies, Inc.
United States Treasury Inflation-indexed
Security
3.625%, 1/15/08

Securities sold during the 3rd quarter 1998
--------------------------------------------------
Archer-Daniels-Midland Company
Cendant Corporation Cv.
3%, 2/15/02
Frontier Insurance Group, Inc.
Government National Mortgage Association
8%, 6/15/26
Government National Mortgage Association
8%, 8/15/27
Pitney Bowes, Inc.
RJR Nabisco Holdings Corp.
Triton Energy Ltd.
York International Corporation

<PAGE>

Performance Information -- Continued

U.S. Small-Capitalization Value Trust(+)

Selected Portfolio Performance*

Strong performers for the 3rd quarter 1998
--------------------------------------------------
1. SMART Modular Technologies, Inc. +40.6%
2. Dravo Corporation +37.4%
3. Stratus Computer, Inc. +33.1%
4. Go-Video, Inc. +23.8%
5. Ryan's Family Steak Houses, Inc. +16.5%

Weak performers for the 3rd quarter 1998
--------------------------------------------------
1. Southern Pacific Funding
Corporation -96.4%
2. IMC Mortgage Company -81.4%
3. Hirsch International Corp. -70.3%
4. Elcom International, Inc. -64.4%
5. Nine West Group, Inc. -63.0%

* Securities held for the entire quarter.

(+) Portfolio changes have not been reported for U.S. Small-Cap due to the
volume of trading during the quarter. During the 3rd quarter 1998, the
Fund added 193 securities and sold 4 securities: DAMARK International,
Inc., Zeigler Coal Holding Company, Advanced Health Corporation and
Pediatric Services of America.

<PAGE>

Statement of Net Assets
Legg Mason Investors Trust, Inc.
September 30, 1998 (Unaudited)
(Amounts in Thousands)

American Leading Companies Trust

<TABLE>
<CAPTION>
Shares/Par Value
----------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks and Equity Interests -- 99.2%
Airlines -- 2.3%
Delta Air Lines, Inc. 45 $ 4,376
--------

Automotive -- 2.0%
Ford Motor Company 25 1,174
General Motors Corporation 50 2,734
--------
3,908
--------

Banking -- 12.2%
BankAmerica Corporation 65 3,908
BancOne Corporation 124 5,285
Chase Manhattan Corporation 144 6,228
Citicorp 61 5,669
Mellon Bank Corporation 40 2,203
--------
23,293
--------

Capital Goods -- 3.9%
Emerson Electric Company 60 3,735
General Electric Company 25 1,989
The Boeing Company 48 1,647
--------
7,371
--------

Computer Services and Systems -- 14.5%
Cisco Systems, Inc. 34 2,086(A)
Compaq Computer Corporation 150 4,744
EMC Corporation 84 4,809(A)
Hewlett-Packard Company 17 916
Intel Corporation 66 5,660
International Business Machines Corporation 65 8,320
Seagate Technology, Inc. 50 1,253(A)
--------
27,788
--------
Computer Software -- 0.6%
Microsoft Corporation 10 1,101(A)
--------

Consumer Cyclicals -- 2.7%
Mattel, Inc. 150 4,200
Wal-Mart Stores, Inc. 17 929
--------
5,129
--------
</TABLE>

<PAGE>

Statement of Net Assets -- Continued
Legg Mason Investors Trust, Inc.

American Leading Companies Trust -- Continued

<TABLE>
<CAPTION>
Shares/Par Value
----------------------------------------------------------------------------------------------
<S> <C> <C>
Consumer Staples -- 3.0%
Avon Products, Inc. 100 $ 2,806
Kimberly-Clark Corporation 50 2,025
The Procter & Gamble Company 12 823
--------
5,654
--------

Electrical Equipment -- 3.4%
Philips Electronics N.V. 121 6,458
--------

Energy -- 2.3%
Exxon Corporation 15 1,018
Royal Dutch Petroleum Company 19 905
Texaco, Incorporated 40 2,507
--------
4,430
--------
Financial Services -- 2.4%
Fannie Mae 50 3,212
Travelers Group, Inc. 39 1,463
--------
4,675
--------

Food, Beverage and Tobacco -- 6.9%
Dole Food Company, Inc. 95 3,432
PepsiCo, Inc. 70 2,061
Philip Morris Companies, Inc. 153 7,048
The Coca-Cola Company 12 691
--------
13,232
--------

Health Care -- 4.9%
Foundation Health Systems, Inc. 400 3,750(A)
Johnson & Johnson 14 1,111
United HealthCare Corporation 130 4,550
--------
9,411
--------

Insurance -- 3.6%
American International Group, Inc. 11 855
Conseco, Inc. 200 6,112
--------
6,967
--------

Machinery -- 0.8%
Caterpillar Inc. 36 1,604
--------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Shares/Par Value
----------------------------------------------------------------------------------------------
<S> <C> <C>
Manufacturing -- 0.9%
Minnesota Mining and Manufacturing Company 22 $ 1,621
--------

Media -- 2.9%
America Online, Inc. 50 5,563(A)
--------

Oil and Gas: Drilling and Equipment -- 4.0%
Diamond Offshore Drilling, Inc. 141 3,666
Schlumberger Limited 78 3,924
--------
7,590
--------

Pharmaceuticals -- 11.1%
Amgen Inc. 66 4,987(A)
Bristol-Myers Squibb Company 44 4,570
Merck & Co., Inc. 42 5,442
Pfizer Inc. 10 1,038
Schering-Plough Corporation 51 5,230
--------
21,267
--------

Photo Equipment and Supplies -- 1.1%
Eastman Kodak Company 28 2,165
--------

Real Estate -- 1.9%
Starwood Hotels & Resorts 122 3,721
--------

Retail Sales -- 1.2%
Toys "R" Us, Inc. 136 2,202(A)
--------

Savings and Loan -- 2.0%
H.F. Ahmanson & Company 70 3,907
--------

Telecommunications -- 6.3%
AT&T Corp. 60 3,506
MCI WorldCom, Inc. 174 8,512(A)
--------
12,018
--------

Transportation -- 2.3%
Burlington Northern Santa Fe Corporation 135 4,320
--------

Total Common Stocks and Equity Interests
(Identified Cost-- $171,757) 189,771
----------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

Statement of Net Assets -- Continued
Legg Mason Investors Trust, Inc.

American Leading Companies Trust -- Continued

<TABLE>
<CAPTION>
Shares/Par Value
----------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreements -- 0.6%
Goldman, Sachs & Company
5.64%, dated 9/30/98, to be repurchased at $594 on 10/1/98
(Collateral: $596 Fannie Mae Mortgage-backed securities,
6.50% due 11/1/24, value $609) $ 594 $ 594
Prudential Securities, Inc.
5.60%, dated 9/30/98, to be repurchased at $594 on 10/1/98
(Collateral: $611 Fannie Mae Mortgage-backed securities,
6% due 9/1/13, value $619) 594 594
--------
Total Repurchase Agreements (Identified Cost-- $1,188) 1,188
----------------------------------------------------------------------------------------------
Total Investments-- 99.8% (Identified Cost-- $172,945) 190,959
Other Assets Less Liabilities-- 0.2% 402
--------

Net assets consisting of:
Accumulated paid-in capital applicable to:
12,629 Primary shares outstanding $167,917
5 Navigator shares outstanding 65
Accumulated net operating loss (309)
Undistributed net realized gain on investments 5,674
Unrealized appreciation of investments 18,014
--------

Net assets-- 100.0% $191,361
========
Net asset value per share:
Primary Class $15.15
======
Navigator Class $15.38
======
----------------------------------------------------------------------------------------------
</TABLE>

(A) Non-income producing

See notes to financial statements.

<PAGE>

Statement of Net Assets
Legg Mason Investors Trust, Inc.
September 30, 1998 (Unaudited)
(Amounts in Thousands)

Balanced Trust

<TABLE>
<CAPTION>
Shares/Par Value
------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks and Equity Interests -- 58.8%

Advertising/Media -- 2.2%
A.H. Belo Corporation 34 $ 680
Time Warner, Inc. 6 525
-------
1,205
-------
Aerospace -- 1.6%
Lockheed Martin Corporation 9 857
-------

Automotive -- 1.5%
Ford Motor Company 17 798
-------

Chemicals -- 2.0%
Ferro Corporation 33 656
Potash Corporation of Saskatchewan, Inc. 8 421
-------
1,077
-------
Computer Services and Systems -- 0.9%
First Data Corporation 20 470
-------

Construction and Building Materials -- 1.0%
Martin Marietta Materials, Inc. 12 518
-------

Electrical Equipment and Electronics -- 3.4%
Hubbell Incorporated 10 355
Littelfuse, Inc. 24 477(A)
Molex Incorporated 20 542
Pioneer-Standard Electronics, Inc. 31 199
UCAR International, Inc. 15 263(A)
-------
1,836
-------
Energy -- 1.7%
Phillips Petroleum Company 12 542
Southwestern Energy Company 10 85
YPF Sociedad Anonima ADR 11 286
-------
913
-------

Finance -- 5.6%
Fannie Mae 22 1,413
H&R Block Inc. 19 786
Travelers Group, Inc. 22 818
-------
3,017
-------
</TABLE>

<PAGE>

Statement of Net Assets -- Continued
Legg Mason Investors Trust, Inc.

Balanced Trust -- Continued

<TABLE>
<CAPTION>
Shares/Par Value
------------------------------------------------------------------------------------------------------
<S> <C> <C>
Food, Beverage and Tobacco -- 5.6%
Anheuser-Busch Companies, Inc. 17 $ 918
McDonald's Corporation 17 1,045
Philip Morris Companies, Inc. 8 368
UST, Inc. 23 680
-------
3,011
-------
Health Care -- 0.4%
Columbia/HCA Healthcare Corporation 10 193
-------

Insurance -- 0.7%
Aetna, Inc. 6 403
-------

Investment Companies -- 2.8%
Blackrock North American Government Income Trust, Inc. 100 1,012
Korea Fund, Inc. 29 178(A)
Latin America Investment Fund, Inc. 21 165
PMC Capital, Inc. 15 167
-------
1,522
-------
Manufacturing -- 4.1%
Fleetwood Enterprises, Inc. 32 966
Kaydon Corporation 32 842
Tyco International Ltd. 8 442
-------
2,250
-------
Multi-Industry -- 1.4%
Loews Corporation 9 776
-------

Real Estate -- 2.6%
Chateau Communities, Inc. 33 922
United Dominion Realty Trust, Inc. 44 501
-------
1,423
-------
Retail Sales -- 2.1%
Jostens, Inc. 31 643
Toys "R" Us, Inc. 30 486(A)
-------
1,129
-------
Savings and Loan -- 3.5%
Charter One Financial, Inc. 42 1,035
Washington Federal, Inc. 34 875
-------
1,910
-------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Rate Maturity Date Shares/Par Value
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Telecommunications -- 3.7%
AT&T Corp. 18 $ 1,052
Century Telephone Enterprises, Inc. 11 496
Cincinnati Bell, Inc. 17 442
-------
1,990
-------
Transportation -- 7.7%
AMR Corporation 18 998(A)
GATX Corporation 23 777
Kansas City Southern Industries, Inc. 34 1,190
Union Pacific Corporation 29 1,236
-------
4,201
-------
Utilities -- 4.3%
Kansas City Power & Light Company 22 670
TNP Enterprises, Inc. 16 562
Western Resources, Inc. 27 1,117
-------
2,349
-------
Total Common Stocks and Equity Interests
(Identified Cost-- $32,247) 31,848
------------------------------------------------------------------------------------------------------
Preferred Stock -- 0.6%
Chiquita Brands International, Inc., 3.75%, Series B, Cv
(Identified Cost-- $395) 7 313
------------------------------------------------------------------------------------------------------
Corporate Bonds and Notes -- 2.3%
Merrill Lynch & Co., Inc. 7.05% 4/15/03 $ 425 425
Toronto-Dominion Bank 7.875% 8/15/04 825 835
-------
Total Corporate Bonds and Notes
(Identified Cost-- $1,265) 1,260
------------------------------------------------------------------------------------------------------
U.S. Government and Agency Obligations -- 37.4%
Inflation-indexed SecuritiesB -- 2.8%
United States Treasury
Inflation-indexed Security 3.625% 7/15/02 to 1/15/08 1,522 1,527
-------

Medium-term Notes -- 2.9%
Fannie Mae 7.37% 4/1/04 300 304
Fannie Mae 8.25% 10/12/04 900 929
Freddie Mac 8.14% 9/29/04 350 361
-------
1,594
-------
</TABLE>

<PAGE>

Statement of Net Assets -- Continued
Legg Mason Investors Trust, Inc.

Balanced Trust -- Continued

<TABLE>
<CAPTION>
Rate Maturity Date Shares/Par Value
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mortgage-backed Securities -- 12.0%
Fannie Mae 6% 12/1/25 to 9/1/28 $ 3,088 $ 3,085
Freddie Mac 6% 3/1/26 72 72
Freddie Mac 6.50% 1/1/26 to 5/1/28 1,330 1,354
Government National Mortgage
Association 8% 4/15/26 to 12/15/27 1,880 1,959
-------
6,470
-------
Treasury Notes/Strips -- 19.7%
United States Treasury Notes 6.25% 5/31/00 2,000 2,057
United States Treasury Notes 6.50% 5/31/01 500 527
United States Treasury Notes 6.25% 6/30/02 500 532
United States Treasury Strips 0% 5/15/00 to 8/15/05 9,600 7,548(C)
-------
10,664
-------

Total U.S. Government and Agency Obligations
(Identified Cost -- $19,479) 20,255
-----------------------------------------------------------------------------------------------------
Repurchase Agreements -- 0.8%
State Street Bank & Trust Company
4.25%, dated 9/30/98, to be repurchased at $457 on 10/1/98
(Collateral: $470 Freddie Mac Mortgage-backed securities,
5.56% due 8/24/00, value $478)
(Identified Cost -- $457) 457 457
-----------------------------------------------------------------------------------------------------
Total Investments -- 99.9% (Identified Cost -- $53,843) 54,133
Other Assets Less Liabilities -- 0.1% 41
-------

Net assets consisting of:
Accumulated paid-in capital applicable to:
4,769 shares outstanding $54,167
Undistributed net investment income 296
Accumulated net realized loss on investments (579)
Unrealized appreciation of investments 290
-------

Net assets-- 100% $54,174
=======
Net asset value per share $11.36
=======
-----------------------------------------------------------------------------------------------------
</TABLE>

(A) Non-income producing
(B) United States Treasury Inflation-indexed Security -- U.S. Treasury
security whose principal value is adjusted daily in accordance with
changes in the Consumer Price Index. Interest is calculated on the basis
of the current adjusted principal value.
(C) STRIPS -- Separate Trading of Registered Interest and Principal of
Securities- A pre-stripped zero-coupon bond that is a direct obligation
of the U.S. Treasury.

See notes to financial statements.

<PAGE>

Statement of Net Assets
Legg Mason Investors Trust, Inc.
September 30, 1998 (Unaudited)
(Amounts in Thousands)

U.S. Small-Capitalization Value Trust
<TABLE>
<CAPTION>
Shares/Par Value
- ----------------------------------------------------------------------------------
<S><C>
Common Stocks and Equity Interests -- 89.6%
Aerospace/Defense -- 1.6%
Alliant Techsystems Inc. 5 $ 311(A)
Allied Research Corporation 3 23(A)
Aviall, Inc. 11 111(A)
EDO Corporation 3 19
Herley Industries, Inc. 3 24(A)
Miltope Group Inc. 2 4(A)
RMI Titanium Company 7 139(A)
SIFCO Industries, Inc. 3 40
------
671
------
Apparel -- 2.7%
G-III Apparel Group, Ltd. 3 6(A)
Gadzooks, Inc. 3 31(A)
Garan, Incorporated 2 56
Genesco Inc. 8 43(A)
LaCrosse Footwear, Inc. 3 24
Marisa Christina, Incorporated 2 4(A)
Nine West Group, Inc. 19 184(A)
Oxford Industries, Inc. 5 141
Paul Harris Stores, Inc. 7 51(A)
Rocky Shoes & Boots, Inc. 2 18(A)
S&K Famous Brands, Inc. 2 18(A)
St. John Knits, Inc. 5 82
Superior Uniform Group Inc. 1 16
Supreme International Corporation 1 13(A)
Syms Corp. 9 99(A)
The Dress Barn, Inc. 7 86(A)
The Gymboree Corporation 13 94(A)
The Timberland Company 3 117(A)
Vans, Inc. 7 55(A)
------
1,138
------
Automotive -- 4.9%
Aftermarket Technology Corp. 8 85(A)
Arvin Industries, Inc. 12 458
Autocam Corporation 2 30
Bandag, Incorporated 12 391
Barnes Group Inc. 5 147
Collins Industries, Inc. 3 13
Defiance, Inc. 2 18
Donnelly Corporation N.M. 1
</TABLE>

<PAGE>

Statement of Net Assets -- Continued
Legg Mason Investors Trust, Inc.

U.S. Small-Capitalization Value Trust -- Continued
<TABLE>
<CAPTION>
Shares/Par Value
- ----------------------------------------------------------------------------------
<S><C>
Automotive -- Continued
Excel Industries, Inc. 7 $ 84
Holiday RV Superstores, Incorporated 2 4(A)
Monaco Coach Corporation 5 68(A)
Monro Muffler Brake, Inc. 5 49(A)
Motorcar Parts and Accessories, Inc. 3 30(A)
R&B, Inc. 4 29(A)
Safety Components International, Inc. 3 42(A)
Simpson Industries, Inc. 3 32
SMC Corporation 3 18(A)
Strattec Security Corporation 2 61(A)
Superior Industries International, Inc. 11 256
TBC Corporation 12 69(A)
The Standard Products Company 7 117
TransPro, Inc. 2 8
------
2,010
------
Chemicals -- 3.5%
A. Schulman, Inc. 19 270
Ethyl Corporation 45 180
Georgia Gulf Corporation 17 261
M. A. Hanna Company 26 296
Quaker Chemical Corporation 2 33
Stepan Company 4 105
Sybron Chemicals, Inc. 1 17(A)
The General Chemical Group Inc. 8 158
Wellman, Inc. 11 138
------
1,458
------
Commercial/Industrial Services -- 3.8%
Allou Health and Beauty, Inc. 3 15(A)
American Buildings Company 1 28(A)
AmeriLink Corporation 2 16(A)
BCT International , Inc. 2 4(A)
Butler Manufacturing Company 4 83
Cameron Ashley Building Products, Inc. 5 56(A)
Cogeneration Corporation of America 2 21(A)
Dames & Moore Group 5 55
Dawson Geophysical Company 2 24(A)
Ellett Brothers, Inc. 1 5
Exponent, Inc. 3 17(A)
Fleming Companies, Inc. 15 181
Franklin Covey Co. 10 192(A)
FTI Consulting, Inc. 1 8(A)
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Shares/Par Value
- ----------------------------------------------------------------------------------
<S><C>
Commercial/Industrial Services -- Continued
Gradco Systems, Inc. 3 $ 6(A)
GRC International, Inc. 3 15(A)
Knape & Vogt Manufacturing Company 2 46
Lawson Products, Inc. 6 128
Maxco, Inc. 1 10(A)
Nash-Finch Company 6 90
Oceaneering International, Inc. 8 113(A)
Olsten Corporation 4 24
Perini Corporation 2 15(A)
Physicians' Specialty Corp. 2 18(A)
PrimeSource Corporation 3 21
REFAC Technology Development Corporation N.M. 1(A)
Robertson-Ceco Corporation 4 32(A)
Rush Enterprises, Inc. 1 15(A)
The Turner Corporation 2 36(A)
Wallace Computer Services, Inc. 17 300
------
1,575
------
Computer Services and Systems -- 2.1%
Advanced Digital Information Corporation 3 24(A)
Ampex Corporation 3 3(A)
Dunn Computer Corporation 2 5(A)
Elcom International, Inc. 14 19(A)
HMT Technology Corporation 7 59(A)
Kentek Information Systems, Inc. 4 24
MTI Technology Corp. 9 60(A)
NeoMagic Corporation 4 48(A)
Procom Technology, Inc. 4 19(A)
Programmer's Paradise, Inc. 2 11(A)
PSC Inc. 4 27(A)
Scan-Optics, Inc. 3 11(A)
STB Systems, Inc. 6 44(A)
Stratus Computer, Inc. 10 323(A)
Structural Dynamics Research Corporation 14 155(A)
The MacNeal-Schwendler Corporation 7 44(A)
------
876
------
Construction and Building Materials -- 3.3%
ABT Building Products Corporation 4 45(A)
Ameron International Corporation 2 56
Aztec Manufacturing Co. 2 21
Beazer Homes USA, Inc. 3 68(A)
Del Webb Corporation 12 251
</TABLE>

<PAGE>

Statement of Net Assets -- Continued
Legg Mason Investors Trust, Inc.

U.S. Small-Capitalization Value Trust -- Continued
<TABLE>
<CAPTION>
Shares/Par Value
- ----------------------------------------------------------------------------------
<S><C>
Construction and Building Materials -- Continued
Dravo Corporation 8 $ 100(A)
Engle Homes, Inc. 6 84
Hovnanian Enterprises, Inc. 11 107(A)
International Aluminum Corporation 2 65
Lone Star Industries, Inc. 4 245
M/I Schottenstein Homes, Inc. 3 56
Patrick Industries, Inc. 2 35
Southern Energy Homes, Inc. 7 48(A)
The Fortress Group, Inc. 6 23
U.S. Home Corporation 5 135(A)
Washington Homes, Inc. 3 16(A)
------
1,355
------
Consumer Durables -- 2.7%
Boston Acoustics, Inc. 3 67
Catalina Lighting, Inc. 3 6(A)
Cobra Electronics Corporation 3 13(A)
Congoleum Corporation 2 13(A)
Conso Products Company 4 24(A)
Dixon Ticonderoga Company 1 9(A)
Flexsteel Industries, Inc. 3 29
Go-Video, Inc. 5 17(A)
Harman International Industries, Incorporated 7 257
Home Products International, Inc. 4 31(A)
Koss Corporation 1 14(A)
Lifetime Hoan Corporation 2 20
Mikasa, Inc. 8 85
Royal Appliance Mfg. Co. 9 36(A)
Samsonite Corporation 8 48(A)
Sola International, Inc. 9 152(A)
The L. S. Starrett Company 3 93
The Rival Company 4 30
The Toro Company 6 128
The York Group, Inc. 5 46
------
1,118
------
Consumer Non-Durables -- 0.5%
American Safety Razor Company 6 63(A)
CCA Industries, Inc. 3 5(A)
Educational Development Corporation 3 7
French Fragrances, Inc. 4 30(A)
Jean Philippe Fragrances, Inc. 3 19(A)
Rural/Metro Corporation 3 26(A)
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Shares/Par Value
- ----------------------------------------------------------------------------------
<S><C>
Consumer Non-Durables -- Continued
Scott's Liquid Gold-Inc. 4 $ 8
Seattle FilmWorks, Inc. 6 17(A)
The Stephan Co. 1 9
------
184
------
Electrical Equipment and Electronics -- 7.6%
Align-Rite International, Inc. 4 42(A)
AlphaNet Solutions, Inc. 2 11(A)
Altron Incorporated 3 39(A)
Amistar Corporation 1 3(A)
Asyst Technologies, Inc. 3 19(A)
Axsys Technologies, Inc. 1 14(A)
Bel Fuse Inc. - Class A 1 18(A)
Bel Fuse Inc. - Class B 1 17(A)
Belden Inc. 14 189
Bell Industries, Inc. 4 44(A)
BTU International, Inc. 2 6(A)
CHS Electronics, Inc. 10 108(A)
CompuCom Systems, Inc. 24 97(A)
C. P. Clare Corporation 5 30(A)
CyberOptics Corporation 1 12(A)
Dallas Semiconductor Corporation 11 302
Electro Scientific Industries, Inc. 3 56(A)
InaCom Corp. 8 157(A)
Integrated Circuit Systems, Inc. 6 65(A)
MagneTek, Inc. 17 184(A)
Marshall Industries 7 146(A)
Methode Electronics, Inc. 14 216
Microsemi Corporation 3 22(A)
Nu Horizons Electroncis Corp. 5 21(A)
Optek Technology, Inc. 2 32(A)
Orbit International Corp. 1 3(A)
Park Electrochemical Corp. 5 63
Percon Incorporated 2 10(A)
Pioneer-Standard Electronics, Inc. 17 105
Powell Industries, Inc. 4 35(A)
RF Monolithics, Inc. 3 25(A)
Richardson Electronics, Ltd. 4 31
Richey Electronics, Inc. 4 25(A)
Savoir TechnologyGroup, Inc. 3 16(A)
Sawtek, Inc. 8 116(A)
SED International Holdings, Inc. 5 26(A)
SEEQ Technology Incorporated 12 11(A)
</TABLE>

<PAGE>

Statement of Net Assets -- Continued
Legg Mason Investors Trust, Inc.

U.S. Small-Capitalization Value Trust -- Continued
<TABLE>
<CAPTION>
Shares/Par Value
- ----------------------------------------------------------------------------------
<S><C>
Electrical Equipment and Electronics -- Continued
SEMX Corporation 3 $ 8(A)
Siliconix Incorporated 2 32(A)
SMART Modular Technologies, Inc. 17 352(A)
The Cherry Corporation 5 56(A)
UCAR International, Inc. 14 245(A)
Unitrode Corporation 6 58(A)
Woodhead Industries, Inc. 5 56
------
3,123
------
Entertainment and Leisure -- 2.0%
Arctic Cat, Inc. 15 136
Boyd Gaming Corporation 8 29(A)
Cannondale Corporation 4 39(A)
Casino America, Inc. 13 33(A)
Fountain Powerboat Industries, Inc. 2 11(A)
Grand Casinos, Inc. 17 133(A)
Midway Games Inc. 15 180(A)
Play By Play Toys & Novelties, Inc. 4 41(A)
PlayCore, Inc. 3 12(A)
Prime Hospitality Corp. 16 111(A)
Quintel Communications, Inc. 9 26(A)
Scientific Games Holdings Corp. 5 94(A)
------
845
------
Financial Services -- 3.3%
Advanta Corp. 18 228
Amplicon, Inc. 3 40
Arcadia Financial Ltd. 21 115(A)
ARM Financial Group, Inc. 7 128
BankAtlantic Bancorp, Inc. 14 102
CPB Inc. 2 38
First Alliance Corporation 6 38(A)
FirstCity Financial Corporation 3 42(A)
IMC Mortgage Company 16 32(A)
Interpool, Inc. 11 130
Resource Bancshares Mortgage Group, Inc. 15 259
Southern Pacific Funding Corporation 11 6(A)
Southwest Securities Group, Inc. 4 80
Stifel Financial Corp. 2 21
Sunrise International Leasing Corporation 3 8(A)
United Companies Financial Corporation 7 52
World Acceptance Corporation 10 53(A)
------
1,372
------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Shares/Par Value
- ----------------------------------------------------------------------------------
<S><C>
Food, Beverage and Tobacco -- 2.7%
Cal-Maine Foods, Inc. 5 $ 23
Chock Full o' Nuts Corporation 4 27(A)
Consolidated Cigar Holdings Inc. 16 164(A)
DIMON, Incorporated 20 211
Eagle Food Centers, Inc. 6 14(A)
General Cigar Holdings, Inc. 8 54(A)
Herbalife International, Inc. 12 110
M&F Worldwide Corp. 5 50(A)
Marsh Supermarkets, Inc. 3 50
Pilgrim's Pride Corporation 7 146
Schweitzer-Mauduit International, Inc. 6 139
Standard Commercial Corporation 5 38
Suprema Specialties, Inc. 1 4(A)
Swisher International Group Inc. 13 79(A)
The Lion Brewery, Inc. 2 8(A)
Todhunter International, Inc. 2 14(A)
------
1,131
------
Gas/Pipeline -- 4.3%
Adams Resources &Energy 2 14(A)
Frontier Oil Corporation 9 56(A)
Gulf Island Fabrication, Inc. 4 68(A)
Lufkin Industries, Inc. 3 68
Marine Drilling Companies, Inc. 12 137(A)
Mitcham Industries, Inc. 2 16(A)
National-Oilwell, Inc. 16 195(A)
Offshore Logistics, Inc. 11 145(A)
Parker Drilling Company 18 91(A)
Pool Energy Services Co. 11 96(A)
Pride International, Inc. 19 154(A)
SEACOR Smit Inc. 6 261(A)
Seitel, Inc. 7 75(A)
Superior Energy Services, Inc. 15 51(A)
Swift Energy Company 7 64(A)
TMBR/Sharp Drilling, Inc. 2 14(A)
Trico Marine Services, Inc. 10 71(A)
Tuboscope Inc. 17 202(A)
Wilshire Oil Company of Texas 1 4(A)
------
1,782
------
Health Care -- 2.5%
American Dental Technologies, Inc. 3 11(A)
American Physicians Service Group, Inc. 2 9(A)
</TABLE>

<PAGE>

Statement of Net Assets -- Continued
Legg Mason Investors Trust, Inc.

U.S. Small-Capitalization Value Trust -- Continued
<TABLE>
<CAPTION>
Shares/Par Value
- ----------------------------------------------------------------------------------
<S><C>
Health Care -- Continued
BioSource International, Inc. 2 $ 7(A)
CNS, Inc. 10 37(A)
CompDent Corporation 4 54(A)
Empi, Inc. 4 59(A)
Genesis Health Ventures, Inc. 14 167(A)
Health Power, Inc. 2 6(A)
Medical Resources, Inc. 3 7(A)
Medstone International, Inc. 3 19(A)
Mesa Laboratories, Inc. 2 7(A)
PhyMatrix Corp. 18 67(A)
ProMedCo Management Company 3 21(A)
Raytel Medical Corporation 5 22(A)
SafeGuard Health Enterprises, Inc. 2 12(A)
Sierra Health Services, Inc. 6 124(A)
Specialty Care Network, Inc. 6 7(A)
Star Multi Care Services, Inc. 1 2(A)
Sun Healthcare Group, Inc. 19 123(A)
The West Company, Incorporated 9 244
Utah Medical Products, Inc. 3 21(A)
------
1,026
------
Industrial -- 5.7%
AGCO Corporation 18 121
Alamo Group Inc. 4 54
Allied Products Corporation 5 29
American Biltrite Inc. 1 33(A)
Ampco-Pittsburgh Corporation 5 76
Bairnco Corporation 3 19
Baldwin Technology Company, Inc. 9 50(A)
Channell Commercial Corporation 5 41(A)
Chart Industries, Inc. 3 17
Cincinnati Milacron Inc. 21 319
Colombus McKinnonCorporation 4 81
Commercial Intertech Corp. 6 103
CPAC, Inc. 4 33(A)
DT Industries, Inc. 6 104
Flowserve Corporation 12 243
Foilmark, Inc. 3 6(A)
Gradall Industries, Inc. 4 60(A)
Hardinge, Inc. 5 112
Haskel International, Inc. 2 18
Hirsch International Corp. 5 13(A)
Lydall, Inc. 4 42(A)
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Shares/Par Value
- ----------------------------------------------------------------------------------
<S><C>
Industrial -- Continued
Ocal, Inc. 3 $ 6(A)
O.I. Corporation 2 9(A)
Printware, Inc. 2 6(A)
Regal-Beloit Corporation 8 178
Selas Corporation of America 2 16
Specialty Equipment Companies, Inc. 8 163(A)
Summa Industries 1 12(A)
Supreme Industries, Inc. 2 21(A)
TB Wood's Corporation 2 28
The Carbide/Graphite Group, Inc. 5 51(A)
Trident International, Inc. 2 19(A)
Triple S Plastics, Inc. 2 7(A)
Twin Disc, Incorporated 1 27
Watts Industries, Inc. 15 261
------
2,378
------
Insurance -- 8.7%
Acceptance Insurance Companies Inc. 8 166(A)
Bancinsurance Corporation 2 14(A)
Chartwell Re Corporation 5 142
Donegal Group Inc. 3 52
EMC Insurance Group, Inc. 6 75
Foremost Corporation of America 20 366
Frontier Insurance Group, Inc. 20 266
GAINSCO, Inc. 8 60
Harleysville Group Inc. 16 322
Kaye Group Inc. 4 29
Life USA Holding, Inc. 14 179
MMI Companies, Inc. 8 136
Mobile America Corporation 3 21
NAC Re Corp. 7 360
National Information Group 1 3
National Western Life Insurance Company 1 151(A)
Nymagic, Inc. 3 81
Penn-America Group, Inc. 6 57
Presidential Life Corporation 1 11
PXRE Corporation 6 144
SCPIE Holdings Inc. 4 131
Selective Insurance Group, Inc. 12 226
Symons International Group, Inc. 2 39(A)
The Centris Group, Inc. 4 41
The Midland Company N.M. 9
The Navigators Group, Inc. 5 65(A)
</TABLE>

<PAGE>

Statement of Net Assets -- Continued
Legg Mason Investors Trust, Inc.

U.S. Small-Capitalization Value Trust -- Continued
<TABLE>
<CAPTION>
Shares/Par Value
- ----------------------------------------------------------------------------------
<S><C>
Insurance -- Continued
Trenwick Group Inc. 6 $ 186
UICI 16 264(A)
Unico American Corporation 1 17
------
3,613
------
Metals and Mining -- 7.2%
Alltrista Corporation 6 117(A)
Amcast Industrial Corporation 4 54
Armco Inc. 46 230(A)
Atchison Casting Corporation 4 44(A)
Bayou Steel Corporation 7 27(A)
Chase Industries, Inc. 4 54(A)
Citation Corporation 10 91(A)
Cleveland-Cliffs Inc. 4 172
Commercial Metals Company 6 138
Friedman Industries, Incorporated 2 11
Hexcel Corporation 13 135(A)
Intermet Corporation 13 170
Kaiser Aluminum Corporation 43 262(A)
Keystone Consolidated Industries, Inc. 4 26(A)
Lone Star Technologies, Inc. 12 153(A)
MAXXAM Inc. 3 153(A)
Maverick Tube Corporation 10 66(A)
National Steel Corporation 23 159
NS Group, Inc. 10 59(A)
Penn Engineering &Manufacturing 4 79
Quanex Corporation 4 85
ROHN Industries, Inc. 22 43
Shiloh Industries, Inc. 4 69(A)
Special Metals Corporation 7 73(A)
Steel of West Virginia, Inc. 3 20(A)
Steel Technologies Inc. 5 34
Texas Industries, Inc. 6 161
The Shaw Group Inc. 5 41(A)
Titanium Metals Corporation 17 237
Universal Stainless & Alloy Products, Inc. 3 13(A)
Zemex Corporation 3 17(A)
------
2,993
------
Miscellaneous Manufacturing -- 1.6%
Global Industrial Technologies, Inc. 9 62(A)
Griffon Corporation 10 87(A)
Jason Incorporated 11 80(A)
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Shares/Par Value
- ----------------------------------------------------------------------------------
<S><C>
Miscellaneous Manufacturing -- Continued
Shelby Williams Industries, Inc. 5 $ 56
Standex International Corporation 4 96
TransAct Technologies Incorporated 3 17(A)
TransTechnology Corporation 4 81
U.S. Office Products Company 11 93(A)
Valmont Industries, Inc. 6 77
------
649
------
Process Industries -- 2.6%
Atlantis Plastics, Inc. 2 15(A)
Kaman Corporation 8 140
P.H. Glatfelter Company 5 65
Rock-Tenn Company 16 178
Shorewood Packaging Corporation 11 146(A)
Silgan Holdings Inc. 7 173(A)
The Andersons, Inc. 4 46
The Dexter Corporation 13 306
Uniflex, Inc. 2 8(A)
------
1,077
------
Real Estate -- 0.1%
AMREP Corporation 3 22(A)
ILX Resorts Incorporated 1 2(A)
------
24
------

Restaurants -- 2.2%
Ark Restaurants Corp. 1 15(A)
Cooker Restaurant Corporation 5 52
ELXSI Corporation 2 24(A)
Landry's Seafood Restaurants, Inc. 12 78(A)
Lone Star Steakhouse & Saloon, Inc. 22 168(A)
Luby's Cafeterias, Inc. 8 129
Main Street &Main Inc. 2 7(A)
Max & Erma's Restaurants, Inc. 2 12(A)
NPC International, Inc. 8 89(A)
Piccadilly Cafeterias, Inc. 4 46
Ryan's Family Steak Houses, Inc. 22 266(A)
Sizzler International, Inc. 12 21(A)
------
907
------
Retail -- 1.4%
Books-A-Million, Inc. 7 18(A)
Duckwall-ALCO Stores, Inc. 2 29(A)
</TABLE>

<PAGE>

Statement of Net Assets -- Continued
Legg Mason Investors Trust, Inc.

U.S. Small-Capitalization Value Trust -- Continued
<TABLE>
<CAPTION>
Shares/Par Value
- ----------------------------------------------------------------------------------
<S><C>
Retail -- Continued
EZCORP, Inc. 4 $ 33
Friedman's Inc. 12 81(A)
Funco, Inc. 3 35(A)
Global DirectMail Corp 16 196(A)
Pamida Holdings Corporation 2 10(A)
RDO Equipment Co. 4 36(A)
Rentrak Corporation 4 15(A)
REX Stores Corporation 3 33(A)
Specialty Catalog Corp. 1 5(A)
Tandycrafts, Inc. 5 19(A)
The Bon-Ton Stores, Inc. 5 35(A)
The Sportman's Guide, Inc. 2 9(A)
Travel Ports of America, Inc. 3 7(A)
Wolohan Lumber Co. 3 36
------
597
------
Technology -- 1.0%
BancTec, Inc. 11 164(A)
Cohu, Inc. 4 61
Equinox Systems, Inc. 2 16(A)
Excel Technology, Inc. 6 41(A)
Hurco Companies, Inc. 3 17(A)
K-Tron International 1 19(A)
Moore Products Company 1 25
ThermoQuest Corporation 7 64(A)
Vivid Technologies, Inc. 3 21(A)
------
428
------
Telecommunications -- 0.5%
Blonder Tongue Laboratories, Inc. 2 15(A)
Communication Systems, Inc. 3 37
General Semiconductor, Inc. 11 66(A)
Microdyne Corporation 7 19(A)
Mosaix, Inc. 3 15(A)
Vertex Communications Corporation 2 37(A)
------
189
------
Textiles -- 2.5%
Burlington Industries, Inc. 31 298(A)
Collins & Aikman Corporation 35 243(A)
Concord Fabrics Inc. 1 10(A)
Culp, Inc. 7 53
Dyersburg Corporation 7 28
Galey & Lord, Inc. 5 56(A)
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Shares/Par Value
- ----------------------------------------------------------------------------------
<S><C>
Textiles -- Continued
Guilford Mills, Inc. 14 $ 202
Synthetic Industries, Inc. 3 49(A)
The Dixie Group, Inc. 6 40
Worldtex, Inc. 8 37(A)
------
1,016
------
Transportation -- 4.0%
America West Holdings Corporation 13 163(A)
Arkansas Best Corporation 8 44(A)
Arnold Industries, Inc. 14 196
Consolidated Freightways Corporation 12 100(A)
Covenant Transport, Inc. 4 51(A)
Genesee & Wyoming Inc. 1 17(A)
Hvide Marine Incorporated 8 58(A)
Kitty Hawk, Inc. 7 90(A)
Maritrans Inc. 6 46
Old Dominion Freight Line, Inc. 5 73(A)
P.A.M. Transportation Services, Inc. 5 36(A)
Pittison BAX Group 8 58
RailTex, Inc. 3 39(A)
Roadway Express, Inc. 10 113
Smithway Motor Xpress Corp. 2 12(A)
Transport Corporation of America, Inc. 4 43(A)
U.S. Xpress Enterprises, Inc. 6 71(A)
USFreightways Corporation 14 278
Yellow Corporation 14 185(A)
------
1,673
------
Utilities -- 4.6%
Calpine Corporation 7 140(A)
Chesapeake Utilities Corporation 1 18
Cleco Corporation 9 303
CTG Resources, Inc. 3 85
El Paso Electric Company 23 225(A)
Green Mountain Power Corporation 3 31
Public Service Company of New Mexico 22 495
St. Joseph Light & Power Company 3 59
TNP Enterprises, Inc. 7 230
UniSource Energy Corporation 17 263(A)
Unitil Corporation 2 41
------
1,890
------
Total Common Stocks and Equity Interests
(Identified Cost-- $46,526) 37,098
- ----------------------------------------------------------------------------------
</TABLE>

<PAGE>

Statement of Net Assets -- Continued
Legg Mason Investors Trust, Inc.

U.S. Small-Capitalization Value Trust -- Continued
<TABLE>
<CAPTION>
Shares/Par Value
- -----------------------------------------------------------------------------------------------
<S><C>
Repurchase Agreements -- 11.9%
Goldman, Sachs & Company
5.64%, dated 9/30/98, to be repurchased at $2,460 on 10/1/98
(Collateral: $2,467 Fannie Mae Mortgage-backed securities,
6.50% due 11/1/24, value $2,520) $ 2,459 $ 2,459
Prudential Securities, Inc.
5.60%, dated 9/30/98, to be repurchased at $2,460 on 10/1/98
(Collateral: $2,525 Fannie Mae Mortgage-backed securities,
6% due 9/1/13, value $2,558) 2,460 2,460
-------
Total Repurchase Agreements (Identified Cost -- $4,919) 4,919
- -----------------------------------------------------------------------------------------------
Total Investments -- 101.5% (Identified Cost -- $51,445) 42,017
Other Assets Less Liabilities -- (1.5)% (634)
-------
Net assets consisting of:
Accumulated paid-in capital applicable to:
5,245 Primary shares outstanding $50,798
5 Navigator shares outstanding 50
Accumulated net operating loss (2)
Accumulated net realized loss on investments (35)
Unrealized depreciation of investments (9,428)
-------
Net assets-- 100% $41,383
=======
Net asset value per share:
Primary Class $7.88
=======
Navigator Class $7.91
=======
- -----------------------------------------------------------------------------------------------
</TABLE>

(A) Non-income producing
N.M. Not meaningful

See notes to financial statements.

<PAGE>

Statements of Operations
Legg Mason Investors Trust, Inc.
(Amounts in Thousands) (Unaudited)
<TABLE>
<CAPTION>
Six Months Ended 9/30/98
------------------------------------------------------
U.S.
American Leading Balanced Small-Capitalization
Companies Trust Trust Value Trust(A)
- -----------------------------------------------------------------------------------------------------------------------------
<S><C>
Investment Income:
Dividends $ 1,396 $ 359 $ 109
Interest 298 698 104
-------- ------- -------
Total income 1,694 1,057 213
-------- ------- -------
Expenses:
Management fee 770 204 91
Distribution and service fees 1,027 204 107
Transfer agent and shareholder servicing expense 76 18 9
Audit and legal fees 19 19 7
Custodian fee 43 33 21
Directors' fees 3 3 1
Organization expense 8 9 N.M.
Registration fees 24 13 6
Reports to shareholders 41 9 4
Other expenses 2 1 1
-------- ------- -------
2,013 513 247
Less fees waived (10) (10) (32)
-------- ------- -------
Total expenses, net of waivers 2,003 503 215
-------- ------- -------
Net Investment Income (Loss) (309) 554 (2)
-------- ------- -------
Net Realized and Unrealized Gain (Loss) on Investments:

Realized gain (loss) on investments 6,018 (560) (35)
Change in unrealized appreciation (depreciation) of investments (32,665) (4,973) (9,428)
-------- ------- -------
Net Realized and Unrealized Gain (Loss) on Investments (26,647) (5,533) (9,463)
- -----------------------------------------------------------------------------------------------------------------------------
Change in Net Assets Resulting from Operations $(26,956) $(4,979) $(9,465)
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>

(A) Commencement of operations -- June 15, 1998.
N.M. Not meaningful.

See notes to financial statements.

<PAGE>

Statements of Changes in Net Assets
Legg Mason Investors Trust, Inc.
(Amounts in Thousands)
<TABLE>
<CAPTION>
U.S. Small-
American Leading Balanced Capitalization
Companies Trust Trust Value Trust
-----------------------------------------------------------------
Six Months Year Six Months Year 6/15/98(A)
Ended Ended Ended Ended to
9/30/98 3/31/98 9/30/98 3/31/98 9/30/98
- --------------------------------------------------------------------------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited)
<S><C>
Change in Net Assets:

Net investment income (loss) $ (309) $ (429) $ 554 $ 597 $ (2)

Net realized gain (loss) on investments 6,018 17,728 (560) 752 (35)

Change in unrealized appreciation (depreciation)
of investments (32,665) 27,211 (4,973) 5,491 (9,428)
- --------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations (26,956) 44,510 (4,979) 6,840 (9,465)
Distributions to shareholders:
From net investment income:
Primary Class -- -- (463) (484) --
Navigator Class -- -- N/A N/A --
From net realized gain on investments:
Primary Class (5,391) (17,081) (490) (302) --
Navigator Class (2) (7) N/A N/A --
Change in net assets from Fund share transactions:
Primary Class 23,302 68,104 12,345 23,759 50,797
Navigator Class -- 15 N/A N/A 50
- --------------------------------------------------------------------------------------------------------------------------
Change in net assets (9,047) 95,541 6,413 29,813 41,382

Net Assets:
Beginning of period 200,408 104,867 47,761 17,948 1
- --------------------------------------------------------------------------------------------------------------------------
End of period $191,361 $200,408 $54,174 $47,761 $41,383
- --------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income (loss),
end of period $ (309) $ -- $ 296 $ 205 $ (2)
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>

(A) Commencement of operations.
N/A Not applicable

See notes to financial statements.

<PAGE>

Financial Highlights
Legg Mason Investors Trust, Inc.

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

<TABLE>
<CAPTION>
Investment Operations Distributions
-------------------------------------- --------------------------------------
From
Net Asset Net Net Realized Total From Net Net Asset
Value, Investment and Unrealized From Net Realized Value,
Beginning Income Gain (Loss) on Investment Investment Gain on Total End of
of Period (Loss) Investments Operations Income Investments Distributions Period
- ---------------------------------------------------------------------------------------------------------------------------------
<S><C>
American Leading Companies
-- Primary Class
Six Months Ended
Sept. 30, 1998* $17.78 $(.02)(A) $(2.15) $(2.17) $ -- $ (.46) $ (.46) $15.15
Years Ended Mar. 31,
1998 14.74 (.04)(A) 4.93 4.89 -- (1.85) (1.85) 17.78
1997 12.23 .01(A) 3.00 3.01 (.02) (.48) (.50) 14.74
1996 10.18 .07(A) 2.08 2.15 (.10) -- (.10) 12.23
1995 9.69 .12(A) .48 .60 (.11) -- (.11) 10.18
1994(F) 10.00 .06(A) (.34) (.28) (.03) -- (.03) 9.69

-- Navigator Class
Six Months Ended
Sept. 30, 1998* $17.95 $ .06(B) $(2.17) $(2.11) $ -- $ (.46) $ (.46) $15.38
Years Ended Mar. 31,
1998 14.71 .10(B) 4.99 5.09 -- (1.85) (1.85) 17.95
1997(G) 13.30 .07(B) 1.94 2.01 (.12) (.48) (.60) 14.71

Balanced Trust
-- Primary Class
Six Months Ended
Sept. 30, 1998* $12.62 $ .11(C) $(1.16) $(1.05) $(.10) $ (.11) $ (.21) $11.36
Years Ended Mar. 31,
1998 10.16 .21(C) 2.58 2.79 (.21) (.12) (.33) 12.62
1997(H) 10.00 .09(C) .11 .20 (.04) -- (.04) 10.16
- ---------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
Ratios/Supplemental Data
---------------------------------------------------------------
Net
Investment Net Assets,
Expenses Income (Loss) Portfolio End of
Total to Average to Average Turnover Period
Return Net Assets Net Assets Rate (in thousands)
- -----------------------------------------------------------------------------------------------
<S><C>
American Leading Companies
-- Primary Class
Six Months Ended
Sept. 30, 1998* (12.47)%(K) 1.95%(A,L) (.30)%(A,L) 61.2%(L) $191,291
Years Ended Mar. 31,
1998 35.18% 1.95%(A) (.28)%(A) 51.4% 200,326
1997 24.73% 1.95%(A) .05%(A) 55.7% 104,812
1996 21.24% 1.95%(A) .69%(A) 43.4% 76,100
1995 6.24% 1.95%(A) 1.21%(A) 30.5% 59,985
1994(F) (2.86)%(K) 1.95%(A,L) 1.14%(A,L) 21.0%(L) 55,022

-- Navigator Class
Six Months Ended
Sept. 30, 1998* (12.01)%(K) .95%(B,L) .70%(B,L) 61.2%(L) $ 70
Years Ended Mar. 31,
1998 36.68% .93%(B) .74%(B) 51.4% 82
1997(G) 15.16%(K) .86%(B,L) .98%(B,L) 55.7% 55

Balanced Trust
-- Primary Class
Six Months Ended
Sept. 30, 1998* (8.41)%(K) 1.85%(C,L) 2.04%(C,L) 31.3%(L) $ 54,174
Years Ended Mar. 31,
1998 27.80% 1.85%(C) 2.08%(C) 34.5% 47,761
1997(H) 2.02%(K) 1.85%(C,L) 2.52%(C,L) 5.1%(L) 17,948
- -----------------------------------------------------------------------------------------------
</TABLE>

(A) Net of fees waived pursuant to a voluntary expense limitation of 1.95%
of average daily net assets. If no fees had been waived by LMFA, the
annualized ratio of expenses to average daily net assets for the period
September 1, 1993 to March 31, 1994, for the years ended March 31, 1995,
1996, 1997, 1998 and for the six months ended September 30, 1998 would
have been 2.28%, 2.12%, 2.20%, 2.06%, 1.99% and 1.96%, respectively.
(B) Net of fees waived pursuant to a voluntary expense limitation of 0.95%
of average daily net assets. If no fees had been waived by LMFA, the
annualized ratio of expenses to average daily net assets for the period
October 4, 1996 to March 31, 1997, for the year ended March 31, 1998 and
for the six months ended September 30, 1998 would have been 0.97%, 0.98%
and 0.96%, respectively.
(C) Net of fees waived 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 for the period
October 1, 1996 to March 31, 1997, for the year ended March 31, 1998 and
for the six months ended September 30, 1998 would have been 3.03%, 2.14%
and 1.89%, respectively.
(D) Net of fees waived 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 for the period
June 15, 1998 to September 30, 1998 would have been 2.30%.
(E) Net of fees waived pursuant to a voluntary expense limitation of 1.00%
of average daily net assets. If no fees had been waived by LMFA, the
annualized ratio of expenses to average daily net assets for the period
June 19, 1998 to September 30, 1998 would have been 1.24%.
(F) For the period September 1, 1993 (commencement of operations) to March
31, 1994.
(G) For the period October 4, 1996 (commencement of sale of Navigator Class
shares) to March 31, 1997.
(H) For the period October 1, 1996 (commencement of operations) to March 31,
1997.
(I) For the period June 15, 1998 (commencement of operations) to September
30, 1998.
(J) For the period June 19, 1998 (commencement of sale of Navigator Class
shares) to September 30, 1998.
(K) Not annualized
(L) Annualized
* Unaudited

See notes to financial statements.

<PAGE>

Financial Highlights -- Continued
Legg Mason Investors Trust, Inc.

<TABLE>
<CAPTION>
Investment Operations Distributions
-------------------------------------- --------------------------------------
From
Net Asset Net Net Realized Total From Net Net Asset
Value, Investment and Unrealized From Net Realized Value,
Beginning Income Gain (Loss) on Investment Investment Gain on Total End of
of Period (Loss) Investments Operations Income Investments Distributions Period
- ---------------------------------------------------------------------------------------------------------------------------------
<S><C>
U.S. Small-Capitalization Value Trust
-- Primary Class
Six Months Ended
Sept. 30, 1998*(I) $10.00 $ --(D) $(2.12) $(2.12) $ -- $ -- $ -- $ 7.88

-- Navigator Class
Six Months Ended
Sept. 30, 1998*(J) $ 9.92 $ .03(E) $(2.04) $(2.01) $ -- $ -- $-- $ 7.91
- ---------------------------------------------------------------------------------------------------------------------------------

-- Navigator Class
Six Months Ended
Sept. 30, 1998*(J) (20.26)%(K) .94%(E,L) 1.04%(E,L) 3.6%(L) $ 40
- -----------------------------------------------------------------------------------------------
</TABLE>

See notes to financial statements.

<PAGE>

Notes to Financial Statements
Legg Mason Investors Trust, Inc.
(Amounts in Thousands) (Unaudited)

- --------------------------------------------------------------------------------

1. Significant Accounting Policies:
The Legg Mason Investors Trust, Inc. ("Corporation"), consisting of the
American Leading Companies Trust ("American Leading Companies"), the
Balanced Trust ("Balanced Trust") and the U.S. Small-Capitalization Value
Trust ("U.S. Small-Cap") (each a "Fund"), is registered under the Investment
Company Act of 1940, as amended, as an open-end, diversified investment
company.
Each Fund consists of two classes of shares:Primary Class, offered since
September 1, 1993 for American Leading Companies Trust; since October 1,
1996 for Balanced Trust; and since June 15, 1998 for U.S. Small-Cap; and
Navigator Class, offered to certain institutional investors since October 4,
1996 for American Leading Companies Trust; and since June 19, 1998 for U.S.
Small-Cap. The Navigator Class of Balanced Trust has not commenced
operations. The income and expenses of each of these Funds are allocated
proportionately to the two classes of shares based on daily net assets,
except for Rule 12b-1 distribution fees, which are charged only on Primary
Class shares, and transfer agent and shareholder servicing expenses, which
are determined separately for each class.

Security Valuation
Securities traded on national securities exchanges are valued at the last
quoted sales price. Over-the-counter securities and listed securities for
which no sales price is available are valued at the mean between the latest
bid and asked prices. Securities for which market quotations are not readily
available are valued at fair value as determined by management and approved
in good faith by the Board of Directors. Fixed income securities with 60
days or less remaining to maturity are valued using the amortized cost
method, which approximates current market value.

Investment Income and Distributions to Shareholders
Interest income and expenses are recorded on the accrual basis. Bond
premiums are amortized for financial reporting and federal income tax
purposes. Bond discounts, other than original issue and zero-coupon bonds,
are not amortized. Dividend income and distributions to shareholders are
allocated at the class level and are recorded on the ex-dividend date.
Dividends from net investment income, if available, will be paid annually
for American Leading Companies and U.S. Small-Cap, and quarterly for
Balanced Trust. Net capital gain distributions, which are calculated at the
composite level, are declared and paid after the end of the tax year in
which the gain is realized.

Investment 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. At September
30, 1998, receivables for securities sold but not yet delivered and payables
for securities purchased but not yet received for each Fund were as follows:

Receivable for Payable for
Securities Sold Securities Purchased
-------------------------------------------------------------------
American Leading Companies $ -- $ --
Balanced Trust -- 216
U.S. Small-Cap -- 901

<PAGE>

Notes to Financial Statements -- Continued

- --------------------------------------------------------------------------------

Deferred Organizational Expenses
Deferred organizational expenses of $89 for American Leading Companies,
$86 for Balanced Trust and $43 for U.S. Small-Cap are being amortized on a
straight line basis over 5 years commencing on the date their respective
operations began.

Federal Income Taxes
No provision for federal income or excise taxes is required since each
Fund intends to qualify or to continue to qualify as a regulated investment
company and distribute all of its taxable income to its shareholders.

Use of Estimates
The preparation of the financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates.

2. Investment Transactions:
For the six months ended September 30, 1998, investment transactions
(excluding short-term investments) were as follows:

Purchases Proceeds from Sales
--------------------------------------------------------------
American Leading Companies $ 97,363 $ 58,746
Balanced Trust 21,105 7,947
U.S. Small-Cap 46,897 337

At September 30, 1998, cost, aggregate gross unrealized appreciation and
gross unrealized depreciation based on the cost of securities for federal
income tax purposes for each Fund were as follows:

<TABLE>
<CAPTION>
Net
Appreciation/
Cost Appreciation (Depreciation) (Depreciation)
-------------------------------------------------------------------------------
<S><C>
American Leading Companies $172,945 $38,809 $(20,795) $18,014
Balanced Trust 53,843 3,396 (3,106) 290
U.S. Small-Cap 51,445 635 (10,063) (9,428)
</TABLE>

3. Repurchase Agreements:
All repurchase agreements are fully collateralized by obligations issued
by the U.S. Government or its agencies and such collateral is in the
possession of the Funds' custodian. The value of such collateral includes
accrued interest. Risks arise from the possible delay in recovery or
potential loss of rights in the collateral should the issuer of the
repurchase agreement fail financially. The Funds' investment advisers,
acting under the supervision of their Board of Directors, review the value
of the collateral and the creditworthiness of those banks and dealers with
which the Funds enter into repurchase agreements to evaluate potential
risks.

<PAGE>

- --------------------------------------------------------------------------------

4. Transactions with Affiliates:
Each Fund has a management agreement with Legg Mason Fund Adviser, Inc.
("LMFA"). Pursuant to their respective agreements, LMFAprovides the Funds
with management and administrative services for which each Fund pays a fee,
computed daily and payable monthly at an annual rate of each Fund's
respective average daily net assets as follows: 0.75% for American Leading
Companies and Balanced Trust; and 0.85% for U.S. Small-Cap.
LMFA has agreed to waive its fees in any month to the extent a Fund's
expenses (exclusive of taxes, interest, brokerage and extraordinary
expenses) exceed during that month annual rates of that Fund's average daily
net assets as follows: for American Leading Companies Primary Class, 1.95%
indefinitely; American Leading Companies Navigator Class, 0.95%
indefinitely; for Balanced Trust, 1.85% until July 31, 1999; for U.S.
Small-Cap Primary Class, 2.00% until July 31, 1999; and for U.S. Small-Cap
Navigator Class, 1.00% until July 31, 1999. For the six months ended
September 30, 1998, management fees of $10, $10 and $32 were waived for
American Leading Companies, Balanced Trust and U.S. Small-Cap, respectively;
and $116, $31 and $18 were due to LMFA by American Leading Companies,
Balanced Trust and U.S. Small-Cap, respectively.
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 662/3% of the fee received by LMFA.
Brandywine Asset Management, Inc. ("Brandywine") serves as investment
adviser to U.S. Small-Cap. Brandywine is responsible for the actual
investment activity of the Fund. LMFA pays Brandywine a fee for its
services, computed daily and payable monthly, at an annual rate equal to
58.8% of the fee received by LMFA.
Legg Mason Wood Walker, Inc. ("Legg Mason"), a member of the New York
Stock Exchange, serves as distributor for the Funds. Legg Mason receives an
annual distribution fee and an annual service fee, computed daily and
payable monthly, from each of the Funds at annual rates based on the average
daily net assets of each Fund's Primary Class as follows: American Leading
Companies and U.S. Small-Cap, 0.75% and 0.25%; and Balanced Trust, 0.50% and
0.25%. At September 30, 1998, distribution and service fees due to the
distributor were as follows: American Leading Companies, $157; Balanced
Trust, $33; and U.S. Small-Cap, $32.
No brokerage commissions were paid to Legg Mason or its affiliates during
the six months ended September 30, 1998.
Legg Mason also has an agreement with the Funds' transfer agent to assist
it with some of its duties. For this assistance, Legg Mason was paid the
following amounts by the transfer agent for the six months ended September
30, 1998: American Leading Companies, $18; Balanced Trust, $7; and U.S.
Small-Cap, $3.
LMFA, Legg Mason, Bartlett and Brandywine are corporate affiliates and
wholly owned subsidiaries of Legg Mason, Inc.

5. Line of Credit:
The Funds, along with certain other Legg Mason Funds, participate in a
$150 million line of credit ("Credit Agreement") to be utilized as an
emergency source of cash in the event of unanticipated, large redemption
requests by shareholders. Pursuant to the Credit Agreement, each
participating Fund is liable only for principal and interest payments
related to borrowings made by that Fund. Borrowings under the line of credit
bear interest at prevailing short-term interest rates. For the six months
ended September 30, 1998, the Funds had no borrowings under the line of
credit.

<PAGE>

Notes to Financial Statements -- Continued

- --------------------------------------------------------------------------------

6. Fund Share Transactions:

At September 30, 1998, there were 250,000, 125,000 and 50,000 shares
authorized at $.001 par value for the Primary Class of American Leading
Companies Trust, Balanced Trust and U.S. Small-Cap, respectively; and there
were 250,000, 125,000 and 50,000 shares authorized at $.001 for the
Navigator Class of American Leading Companies Trust, Balanced Trust and U.S.
Small-Cap, respectively. Share transactions were as follows:

<TABLE>
<CAPTION>
Reinvestment
Sold of Distributions Repurchased Net Change
------------------ ------------------ ---------------------- -------------------
Shares Amount Shares Amount Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------------------------------------------
<S><C>
American Leading Companies
--Primary Class
Six Months Ended Sept. 30, 1998 1,930 $32,953 315 $ 5,286 (884) $(14,937) 1,361 $ 23,302
Year Ended March 31, 1998 4,484 74,695 1,074 16,848 (1,402) (23,439) 4,156 68,104

--Navigator Class
Six Months Ended Sept. 30, 1998 -- $ -- -- $ -- -- $ -- -- $ --
Year Ended March 31, 1998 1 15 -- -- -- -- 1 15

Balanced Trust
--Primary Class
Six Months Ended Sept. 30, 1998 1,489 $18,318 77 $ 937 (583) $ (6,910) 983 $ 12,345
Year Ended March 31, 1998 2,418 28,311 67 771 (465) (5,323) 2,020 23,759

U.S. Small-Cap
--Primary Class
Six Months Ended Sept. 30, 1998(A) 5,692 $54,741 -- $ -- (447) $ (3,944) 5,245 $ 50,797

--Navigator Class
Six Months Ended Sept. 30, 1998(B) 5 $ 50 -- $ -- -- $ -- 5 $ 50
</TABLE>

(A) For the period June 15, 1998 (commencement of operations) to September
30, 1998.
(B) For the period June 19, 1998 (commencement of sale of Navigator Class)
to September 30, 1998.

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