Legg Mason Income Trust, Inc.

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DhNITUydR2eJII29MOtVmQr6Dm/bIwk0nquomGpfwne5v3+6qnzW4gg5SZIQm5ZF UNf2FWkUnIhpQxp00LqYqA== 0001193125-09-187611.txt : 20090904 0001193125-09-187611.hdr.sgml : 20090904 20090904134005 ACCESSION NUMBER: 0001193125-09-187611 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20090630 FILED AS OF DATE: 20090904 DATE AS OF CHANGE: 20090904 EFFECTIVENESS DATE: 20090904 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LEGG MASON INCOME TRUST INC CENTRAL INDEX KEY: 0000810868 IRS NUMBER: 521519230 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-05029 FILM NUMBER: 091055676 BUSINESS ADDRESS: STREET 1: 100 LIGHT STREET STREET 2: 23RD FLOOR CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 1-800-368-2558 MAIL ADDRESS: STREET 1: 100 LIGHT STREET STREET 2: 23RD FLOOR CITY: BALTIMORE STATE: MD ZIP: 21202 FORMER COMPANY: FORMER CONFORMED NAME: LEGG MASON INCOME TRUST DATE OF NAME CHANGE: 19870428

0000810868 S000000662 Legg Mason Limited Duration Bond Portfolio

C000001901 Primary Class LMLDX

C000001902 Institutional Class LMLIX

0000810868 S000000663 Legg Mason Investment Grade Income Portfolio

C000001903 Institutional Class LIGIX

C000001904 Primary Class LMIGX

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

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES


Investment Company Act file number:		811-05029

Legg Mason Income Trust, Inc.

Name of Registrant:

100 Light Street, Baltimore, MD 21202

Address of Principal Executive Offices:

Robert I. Frenkel, Esq.

Legg Mason & Co., LLC

100 Stamford Place

Stamford, CT 06902

Name and address of agent for service:

Registrant’s telephone number, including area code:

Funds Investor Services at 1-800-822-5544

Institutional Shareholder Services at 1-888-425-6432

Date of fiscal year-end: December 31

Date of reporting period: June 30, 2009

Item 1.

Report to Shareholders.


Semi-Annual Report to Shareholders		1

Portfolio of Investments

Investment Grade Income Portfolio

June 30, 2009 (Unaudited)


	Rate		Maturity Date	Par/Shares		Value
Long-Term Securities — 97.8%
Corporate Bonds and Notes — 75.0%
Aerospace and Defense — 1.0%
L-3 Communications Corp.	7.625	%	6/15/12	$	1,000,000	$	1,002,500
United Technologies Corp.	5.400	%	5/1/35		1,140,000		1,113,785

							2,116,285

Airlines — 0.2%
Continental Airlines Inc.	6.545	%	2/2/19		144,762		133,905
Continental Airlines Inc.	7.256	%	3/15/20		427,062		375,815

							509,720

Automobiles — 0.4%
General Motors Corp.	8.250	%	7/15/23		650,000		79,625	^A
General Motors Corp.	8.375	%	7/15/33		6,070,000		773,925	^A

							853,550

Beverages — 0.4%
Foster’s Finance Corp.	4.875	%	10/1/14		840,000		769,278	^B

Building Products — N.M.
American Standard Inc.	7.625	%	2/15/10		5,000		5,085

Capital Markets — 4.7%
BankAmerica Capital III	1.701	%	1/15/27		585,000		298,982	^C
Goldman Sachs Capital II	5.793	%	12/29/49		2,755,000		1,679,035	^D
Goldman Sachs Group Inc. Senior Notes	6.000	%	5/1/14		470,000		490,520
Lehman Brothers Holdings Capital Trust VII	5.857	%	11/29/49		3,100,000		310	^A,D
Lehman Brothers Holdings Inc.	6.500	%	7/19/17		2,000,000		200	^A
Merrill Lynch and Co. Inc.	6.050	%	8/15/12		190,000		190,502
Merrill Lynch and Co. Inc.	5.700	%	5/2/17		2,400,000		2,058,590
Merrill Lynch and Co. Inc.	6.400	%	8/28/17		1,210,000		1,071,165
Merrill Lynch and Co. Inc.	6.110	%	1/29/37		910,000		702,843
Morgan Stanley	4.750	%	4/1/14		65,000		61,398
Morgan Stanley	6.625	%	4/1/18		1,050,000		1,046,751
The Bear Stearns Cos. Inc.	7.250	%	2/1/18		590,000		621,854
The Goldman Sachs Group Inc.	6.345	%	2/15/34		2,025,000		1,633,685

							9,855,835

Chemicals — 0.5%
Lubrizol Corp.	8.875	%	2/1/19		350,000		406,613
The Dow Chemical Co.	7.375	%	11/1/29		800,000		727,061

							1,133,674

Commercial Banks — 5.5%
CBA Capital Trust I	5.805	%	6/30/49		3,510,000		2,807,263	^B
Comerica Capital Trust II	6.576	%	2/20/37		990,000		584,100	^D
SunTrust Bank	5.000	%	9/1/15		770,000		696,827
SunTrust Capital VIII	6.100	%	12/15/36		1,550,000		1,006,849	^D
SunTrust Preferred Capital I	5.853	%	12/15/49		185,000		125,800	^D
UnionBanCal Corp.	5.250	%	12/16/13		785,000		724,959


2		Semi-Annual Report to Shareholders

Portfolio of Investments - Continued

Investment Grade Income Portfolio - Continued


	Rate		Maturity Date	Par/Shares		Value
Long-Term Securities — Continued
Corporate Bonds and Notes — Continued
Commercial Banks — Continued
Wachovia Capital Trust III	5.800	%	3/15/42	$	2,580,000	$	1,548,000	^D
Wachovia Corp.	5.625	%	10/15/16		2,000,000		1,910,618
Wells Fargo Capital X	5.950	%	12/15/36		1,260,000		932,400
Wells Fargo Capital XIII	7.700	%	12/29/49		1,500,000		1,245,000	^D

							11,581,816

Consumer Finance — 8.8%
American Express Co.	6.800	%	9/1/66		3,930,000		2,829,600	^D
Capital One Financial Corp.	6.750	%	9/15/17		670,000		641,047
Ford Motor Credit Co.	7.375	%	2/1/11		2,390,000		2,163,607
Ford Motor Credit Co.	5.879	%	6/15/11		6,828,000		5,923,290	^C
GMAC LLC	7.500	%	12/31/13		2,687,000		2,082,425	^B
GMAC LLC	0.000	%	6/15/15		40,000		17,200	^E
GMAC LLC	8.000	%	12/31/18		348,000		220,980	^B
GMAC LLC	8.000	%	11/1/31		2,465,000		1,725,500	^B
Nelnet Inc.	7.400	%	9/29/36		1,310,000		725,534	^D
SLM Corp.	5.000	%	10/1/13		1,400,000		1,132,400
SLM Corp.	8.450	%	6/15/18		1,290,000		1,103,576

							18,565,159

Diversified Financial Services — 10.8%
AGFC Capital Trust I	6.000	%	1/15/67		860,000		180,600	^B,D
AIG SunAmerica Global Financing VI	6.300	%	5/10/11		5,170,000		4,856,982	^B
BAC Capital Trust XI	6.625	%	5/23/36		1,000,000		754,104
BAC Capital Trust XIV	5.630	%	3/15/49		2,730,000		1,365,000	^D
Beaver Valley II Funding	9.000	%	6/1/17		876,000		864,638
Capital One Bank	6.500	%	6/13/13		690,000		682,047
Chase Capital II	1.528	%	2/1/27		1,980,000		1,108,830	^C
Citigroup Capital XXI	8.300	%	12/21/57		970,000		756,430	^D
Citigroup Inc.	6.125	%	8/25/36		1,000,000		744,666
General Electric Capital Corp.	6.750	%	3/15/32		5,000		4,489
General Electric Capital Corp.	6.375	%	11/15/67		2,040,000		1,361,131	^D
HSBC Finance Capital Trust IX	5.911	%	11/30/35		2,500,000		1,321,557	^D
HSBC Finance Corp.	5.500	%	1/19/16		1,260,000		1,185,374
ILFC E-Capital Trust II	6.250	%	12/21/65		2,320,000		858,400	^B,D
JPMorgan Chase and Co.	4.891	%	9/1/15		1,035,000		900,450	^D
TNK-BP Finance SA	7.875	%	3/13/18		100,000		82,500	^B
UBS Preferred Funding Trust V	6.243	%	5/15/49		3,030,000		1,787,700	^D
ZFS Finance USA Trust II	6.450	%	12/15/65		4,990,000		3,792,400	^B,D

							22,607,298

Diversified Telecommunication Services — 2.7%
AT&T Corp.	8.000	%	11/15/31		710,000		819,468
AT&T Inc.	5.100	%	9/15/14		760,000		789,479
AT&T Inc.	5.600	%	5/15/18		500,000		502,699


Semi-Annual Report to Shareholders		3


	Rate		Maturity Date	Par/Shares		Value
Long-Term Securities — Continued
Corporate Bonds and Notes — Continued
Diversified Telecommunication Services — Continued
AT&T Inc.	6.550	%	2/15/39	$	1,440,000	$	1,437,440
Embarq Corp.	7.082	%	6/1/16		430,000		419,934
Verizon Global Funding Corp.	7.750	%	6/15/32		375,000		417,804
Verizon Global Funding Corp.	5.850	%	9/15/35		1,350,000		1,255,634

							5,642,458

Electric Utilities — 4.1%
Commonwealth Edison Co.	5.800	%	3/15/18		1,590,000		1,614,669
Energy Future Holdings Corp.	10.875	%	11/1/17		130,000		94,900
Energy Future Holdings Corp.	11.250	%	11/1/17		3,105,800		1,894,538	^F
FirstEnergy Corp.	7.375	%	11/15/31		2,565,000		2,420,996
Pacific Gas and Electric Co.	6.050	%	3/1/34		1,500,000		1,556,155
The Cleveland Electric Illuminating Co.	7.880	%	11/1/17		850,000		958,041

							8,539,299

Energy Equipment and Services — 1.3%
CenterPoint Energy Resources Corp.	7.875	%	4/1/13		1,010,000		1,077,335
EEB International Ltd.	8.750	%	10/31/14		790,000		815,675	^B
Pride International Inc.	7.375	%	7/15/14		800,000		794,000

							2,687,010

Food and Staples Retailing — 0.6%
Safeway Inc.	6.250	%	3/15/14		120,000		128,777
The Kroger Co.	8.000	%	9/15/29		1,000,000		1,124,633

							1,253,410

Food Products — 0.5%
Ahold Finance USA Inc.	8.250	%	7/15/10		50,000		51,540
Tyson Foods Inc.	7.850	%	4/1/16		1,040,000		1,002,828	^G

							1,054,368

Gas Utilities — 0.2%
Southern Natural Gas Co.	5.900	%	4/1/17		480,000		464,883	^B

Health Care Equipment and Supplies — 0.4%
Hospira Inc.	6.050	%	3/30/17		840,000		820,341

Health Care Providers and Services — 6.0%
Cardinal Health Inc.	5.800	%	10/15/16		550,000		532,371
Coventry Health Care Inc.	5.950	%	3/15/17		1,150,000		901,585
HCA Inc.	6.300	%	10/1/12		1,790,000		1,642,325
HCA Inc.	6.250	%	2/15/13		2,130,000		1,863,750
HCA Inc.	5.750	%	3/15/14		150,000		120,000
HCA Inc.	9.125	%	11/15/14		1,100,000		1,089,000
HCA Inc.	9.250	%	11/15/16		1,380,000		1,359,300
Humana Inc.	6.450	%	6/1/16		600,000		527,950
UnitedHealth Group Inc.	6.000	%	11/15/17		1,610,000		1,533,657
Universal Health Services Inc.	7.125	%	6/30/16		1,450,000		1,455,082


4		Semi-Annual Report to Shareholders

Portfolio of Investments - Continued

Investment Grade Income Portfolio - Continued


	Rate		Maturity Date	Par/Shares		Value
Long-Term Securities — Continued
Corporate Bonds and Notes — Continued
Health Care Providers and Services — Continued
WellPoint Inc.	5.875	%	6/15/17	$	1,560,000	$	1,526,780

							12,551,800

Independent Power Producers and Energy Traders — 1.4%
Dynegy Holdings Inc.	8.750	%	2/15/12		1,690,000		1,639,300
TXU Corp.	6.500	%	11/15/24		2,730,000		1,367,951

							3,007,251

Industrial Conglomerates — 0.7%
General Electric Capital Corp.	5.900	%	5/13/14		1,400,000		1,428,925

Insurance — 5.1%
Ace Ina Holdings Inc.	5.700	%	2/15/17		410,000		408,246
Allstate Corp.	6.500	%	5/15/57		1,450,000		1,065,750	^D
American International Group Inc.	6.250	%	3/15/37		230,000		56,925
ASIF Global Financing XIX	4.900	%	1/17/13		90,000		76,566	^B
Everest Reinsurance Holdings Inc.	6.600	%	5/15/37		760,000		471,200	^D
Hartford Financial Services Group Inc.	8.125	%	6/15/38		825,000		577,500	^D
Liberty Mutual Group	5.750	%	3/15/14		720,000		570,025	^B
Liberty Mutual Group	7.800	%	3/15/37		810,000		453,600	^B
MetLife Inc.	6.400	%	12/15/36		3,325,000		2,377,375	^D
Prudential Financial Inc.	8.875	%	6/15/38		910,000		755,300	^D
The Chubb Corp.	6.375	%	3/29/37		910,000		728,000	^D
The Travelers Cos. Inc.	6.250	%	3/15/37		1,450,000		1,168,648	^D
The Travelers Cos. Inc.	6.250	%	6/15/37		710,000		735,305
Willis North America Inc.	5.125	%	7/15/10		760,000		730,415
Willis North America Inc.	5.625	%	7/15/15		660,000		579,240

							10,754,095

IT Services — 0.3%
Electronic Data Systems Corp.	7.450	%	10/15/29		570,000		688,152

Leisure Equipment and Products — 0.5%
Hasbro Inc.	6.300	%	9/15/17		970,000		944,534	^G

Media — 3.1%
Comcast Cable Holdings LLC	7.125	%	2/15/28		180,000		183,621
Comcast Corp.	6.950	%	8/15/37		1,800,000		1,876,822
Comcast Corp.	6.400	%	5/15/38		750,000		734,184
News America Inc.	6.550	%	3/15/33		1,495,000		1,338,068
Omnicom Group Inc.	6.250	%	7/15/19		590,000		578,802
Omnicom Group Inc.	0.000	%	7/1/38		300,000		288,750	^E,H
Time Warner Entertainment Co. LP	8.375	%	7/15/33		505,000		565,260
Time Warner Inc.	7.700	%	5/1/32		1,015,000		997,406

							6,562,913


Semi-Annual Report to Shareholders		5


	Rate		Maturity Date	Par/Shares		Value
Long-Term Securities — Continued
Corporate Bonds and Notes — Continued
Metals and Mining — 1.3%
Alcoa Inc.	6.000	%	7/15/13	$	260,000	$	254,022
Freeport-McMoRan Copper & Gold Inc.	8.375	%	4/1/17		2,520,000		2,538,900

							2,792,922

Multiline Retail — 1.2%
Federated Retail Holdings Inc.	5.350	%	3/15/12		435,000		395,942
Macy’s Retail Holdings Inc.	5.875	%	1/15/13		1,000,000		876,097
May Department Stores Co.	5.750	%	7/15/14		1,070,000		909,760
May Department Stores Co.	6.650	%	7/15/24		490,000		324,513

							2,506,312

Oil, Gas and Consumable Fuels — 9.0%
ConocoPhillips	6.000	%	1/15/20		1,000,000		1,070,705
DCP Midstream LLC	6.750	%	9/15/37		1,830,000		1,520,256	^B
Devon Financing Corp. ULC	7.875	%	9/30/31		560,000		659,405
El Paso Corp.	7.800	%	8/1/31		1,660,000		1,354,077
El Paso Corp.	7.750	%	1/15/32		340,000		276,767
EOG Resources Inc.	5.875	%	9/15/17		700,000		744,519
EOG Resources Inc.	5.625	%	6/1/19		340,000		355,852
Hess Corp.	7.875	%	10/1/29		2,770,000		3,004,469
KazMunaiGaz Exploration Production — GDR	8.375	%	7/2/13		360,000		332,100	^B
Kerr-McGee Corp.	6.950	%	7/1/24		390,000		361,871
Kinder Morgan Energy Partners LP	7.125	%	3/15/12		1,430,000		1,529,098
Pemex Project Funding Master Trust	6.625	%	6/15/35		3,884,000		3,512,814
Tennessee Gas Pipeline Co.	8.375	%	6/15/32		1,000,000		1,087,732
The Williams Cos. Inc.	7.625	%	7/15/19		2,000,000		1,975,000
XTO Energy Inc.	6.100	%	4/1/36		1,270,000		1,230,834

							19,015,499

Pharmaceuticals — 0.1%
Wyeth	5.950	%	4/1/37		290,000		300,013

Real Estate Investment Trusts (REITs) — 1.3%
Health Care REIT Inc.	5.875	%	5/15/15		1,440,000		1,256,052
iStar Financial Inc.	8.000	%	3/15/11		9,000		7,852	^B
iStar Financial Inc.	10.000	%	6/15/14		1,985,000		1,468,900	^B

							2,732,804

Road and Rail — 0.2%
Burlington Northern Rail Road Co.	7.330	%	6/23/10		21,325		21,626	^I
Norfolk Southern Corp.	7.875	%	5/15/43		348,000		350,502

							372,128

Thrifts and Mortgage Finance — 0.6%
BB&T Capital Trust II	6.750	%	6/7/36		1,600,000		1,280,000

Tobacco — 0.1%
Reynolds American Inc.	7.625	%	6/1/16		270,000		270,809


6		Semi-Annual Report to Shareholders

Portfolio of Investments - Continued

Investment Grade Income Portfolio - Continued


	Rate		Maturity Date	Par/Shares		Value
Long-Term Securities — Continued
Corporate Bonds and Notes — Continued
Wireless Telecommunication Services — 2.0%
New Cingular Wireless Services Inc.	8.750	%	3/1/31	$	1,470,000	$	1,791,651
Nextel Communications Inc.	5.950	%	3/15/14		469,000		369,337
Nextel Communications Inc.	7.375	%	8/1/15		1,600,000		1,276,000
Sprint Capital Corp.	6.900	%	5/1/19		920,000		761,300

							4,198,288

Total Corporate Bonds and Notes (Cost — $196,937,704)							157,865,914

Mortgage-Backed Securities — 0.8%
Variable Rate Securities^J — 0.8%
Thornburg Mortgage Securities Trust 2007-4 2A1	6.207	%	9/25/37		1,322,694		955,955
Thornburg Mortgage Securities Trust 2007-4 3A1	6.190	%	9/25/37		1,250,106		803,455

Total Mortgage-Backed Securities (Cost — $2,550,870)							1,759,410

U.S. Government and Agency Obligations — 0.3%
Fixed Rate Securities — 0.3%
United States Treasury Notes	1.750	%	3/31/14		710,000		686,704

Total U.S. Government and Agency Obligations (Cost — $704,600)							686,704

U.S. Government Agency Mortgage-Backed Securities — N.M.
Indexed Securities^C — N.M.
Freddie Mac	4.387	%	9/1/24		40,603		41,250	^K

Total U.S. Government Agency Mortgage-Backed Securities (Cost — $40,628)							41,250

Yankee Bonds^L — 21.4%
Chemicals — 0.2%
Potash Corp. of Saskatchewan Inc.	6.500	%	5/15/19		350,000		377,132

Commercial Banks — 9.4%
AES El Salvador Trust	6.750	%	2/1/16		2,080,000		1,485,540	^B
Banco Mercantil del Norte SA	6.135	%	10/13/16		2,030,000		1,772,695	^B,D
Barclays Bank PLC	7.434	%	9/29/49		2,750,000		1,842,500	^B,D
Barclays Bank PLC	7.700	%	12/31/49		840,000		697,956	^B,D
BOI Capital Funding	5.571	%	2/1/49		426,000		159,750	^B,D
Glitnir Banki Hf	6.330	%	7/28/11		1,100,000		178,750	^A,B,M
Glitnir Banki Hf	6.693	%	6/15/16		1,900,000		190	^A,B,D,M
Glitnir Banki Hf	7.451	%	12/14/49		700,000		70	^A,B,D,M
HBOS Capital Funding LP	6.071	%	6/30/49		1,490,000		543,105	^B,D
HSBC Capital Funding LP	4.610	%	6/27/49		760,000		534,424	^B,D
ICICI Bank Ltd.	6.375	%	4/30/22		702,000		547,459	^B,D
ICICI Bank Ltd.	6.375	%	4/30/22		170,000		132,783	^B,D
Kaupthing Bank Hf	5.750	%	10/4/11		1,340,000		174,200	^A,B,M
Kaupthing Bank Hf	7.625	%	2/28/15		1,700,000		136,000	^A,B,M
Kaupthing Bank Hf	7.125	%	5/19/16		3,585,000		358	^A,B,M


Semi-Annual Report to Shareholders		7


	Rate		Maturity Date	Par/Shares		Value
Long-Term Securities — Continued
Yankee Bonds — Continued
Commercial Banks — Continued
Landsbanki Islands Hf	7.431	%	12/31/49	$	2,250,000	$	225	^A,B,D,M
Natixis	10.000	%	4/29/49		1,270,000		761,848	^B,D
Rabobank Nederland NV	11.000	%	12/29/49		2,596,000		2,888,050	^B,D
Resona Preferred Global Securities	7.191	%	7/30/49		2,520,000		1,839,600	^B,D
Royal Bank of Scotland Group PLC	7.640	%	3/31/49		200,000		81,000	^D
RSHB Capital SA	7.175	%	5/16/13		2,040,000		1,938,000	^B
RSHB Capital SA	7.125	%	1/14/14		1,700,000		1,598,000	^B
RSHB Capital SA	6.299	%	5/15/17		570,000		490,200	^B
Shinsei Finance Cayman Ltd.	6.418	%	7/20/49		3,385,000		1,354,000	^B,^D
Sumitomo Mitsui Banking Corp.	5.625	%	10/15/49		730,000		671,837	^B,^D

							19,828,540

Consumer Finance — 0.5%
Aiful Corp.	6.000	%	12/12/11		2,165,000		1,060,850	^B

Diversified Financial Services — 1.6%
Lukoil International Finance BV	6.356	%	6/7/17		982,000		873,980	^B
Petroplus Finance Ltd.	7.000	%	5/1/17		750,000		622,500	^B
SMFG Preferred Capital	6.078	%	1/29/49		230,000		183,832	^B,^D
TNK-BP Finance SA	7.500	%	7/18/16		870,000		741,675	^B
TNK-BP Finance SA	6.625	%	3/20/17		100,000		79,000	^B
UFJ Finance Aruba AEC	6.750	%	7/15/13		920,000		952,608

							3,453,595

Diversified Telecommunication Services — 3.3%
British Telecommunications PLC	9.625	%	12/15/30		420,000		465,636	^G
Deutsche Telekom International Finance BV	8.750	%	6/15/30		1,100,000		1,287,802	^G
Deutsche Telekom International Finance BV	9.250	%	6/1/32		670,000		821,790	^G
Telecom Italia Capital	7.200	%	7/18/36		2,070,000		2,007,031
Telefonica Emisiones S.A.U.	5.877	%	7/15/19		800,000		824,794
Telefonica Emisiones S.A.U.	7.045	%	6/20/36		800,000		886,506
VIP Finance Ireland Ltd	8.375	%	4/30/13		680,000		617,100	^B

							6,910,659

Food and Staples Retailing — 0.4%
Delhaize Group	6.500	%	6/15/17		860,000		878,209

Gas Utilities — 0.2%
Intergas Finance BV	6.375	%	5/14/17		450,000		342,000	^B

Insurance — 0.7%
Axa	8.600	%	12/15/30		1,630,000		1,527,047

Media — 0.2%
WPP Finance	8.000	%	9/15/14		350,000		355,435

Metals and Mining — 1.5%
Evraz Group SA	8.875	%	4/24/13		540,000		442,800	^B
Rio Tinto Finance USA Ltd.	9.000	%	5/1/19		640,000		711,362	^G


8		Semi-Annual Report to Shareholders

Portfolio of Investments - Continued

Investment Grade Income Portfolio - Continued


	Rate		Maturity Date	Par/Shares			Value
Long-Term Securities — Continued
Yankee Bonds — Continued
Metals and Mining — Continued
Vale Overseas Ltd.	6.875	%	11/21/36	$	2,178,000		$	2,068,022

								3,222,184

Oil, Gas and Consumable Fuels — 2.7%
Anadarko Finance Co.	6.750	%	5/1/11		10,000			10,408
Anadarko Finance Co.	7.500	%	5/1/31		3,860,000			3,766,468
Gazprom	6.212	%	11/22/16		669,000			558,615	^B
Petrobras International Finance Co.	5.875	%	3/1/18		1,280,000			1,258,128

								5,593,619

Wireless Telecommunication Services — 0.7%
America Movil SA de CV	5.625	%	11/15/17		360,000			351,866
Rogers Wireless Inc.	6.375	%	3/1/14		1,000,000			1,071,870

								1,423,736

Total Yankee Bonds (Cost — $66,314,402)								44,973,006

Preferred Stocks — 0.3%
Fannie Mae	8.250	%			35,925	^shs		48,140	^D,K,N
Freddie Mac	8.375	%			244,245			297,979	^D,K,N
Preferred Blocker Inc.	7.000	%			616			264,918	^B

Total Preferred Stocks (Cost — $4,615,075)								611,037

Total Long-Term Securities (Cost — $271,163,279)								205,937,321

Short-Term Securities — 1.6%
U.S. Government and Agency Obligations — 0.1%
Fannie Mae	0.000	%	1/25/10	$	162,000			161,691	^E,K,O

								161,691

Repurchase Agreements — 1.5%
Deutsche Bank 0.07%, dated 6/30/09, to be repurchased at $1,515,003 on 7/1/09 (Collateral: $1,534,000 Freddie Mac note, 1.722% due 4/27/11, value $1,545,299)					1,515,000			1,515,000
Goldman Sachs & Co. 0.03%, dated 6/30/09, to be repurchased at $1,516,001 on 7/1/09 (Collateral: $1,540,000 Fannie Mae note, 2.750% due 3/13/14, value $1,547,700)					1,516,000			1,516,000

								3,031,000

Total Short-Term Securities (Cost — $3,192,626)								3,192,691


Semi-Annual Report to Shareholders		9


Total Investments — 99.4% (Cost — $274,355,905)^P			$	209,130,012
Other Assets Less Liabilities — 0.6%				1,314,531


Net Assets — 100.0%			$	210,444,543


	Expiration	Actual Contracts	Appreciation/ (Depreciation)
Futures Contracts Purchased^Q
U.S. Treasury Note Futures	September 2009	264	$	(226,570	)


Futures Contracts Written^Q
U.S. Treasury Bond Futures	September 2009	8		(5,079	)
U.S. Treasury Note Futures	September 2009	184		70,643

			$	65,564

^N.M.

Not Meaningful.

^A	Bond is currently in default.

Rule 144a Security - A security purchased pursuant to Rule 144a under the Securities Act of 1933 which may not be resold subject to that rule except to qualified institutional buyers. These securities, which the Fund’s investment adviser has determined to be liquid, unless otherwise noted, represent 23.10% of net assets.

Indexed Security - The rates of interest earned on these securities are tied to the London Interbank Offered Rate (“LIBOR”), the Euro Interbank Offered Rate (“EURIBOR”) Index, the Consumer Price Index (“CPI”), the one-year Treasury Bill Rate or the ten-year Japanese Government Bond Rate. The coupon rates are the rates as of June 30, 2009.

^D	Stepped Coupon Security - A security with a predetermined schedule of interest or dividend rate changes at which time it begins to accrue interest or pay dividends according to the predetermined schedule.

^E	Zero coupon bond - A bond with no periodic interest payments which is sold at such a discount as to produce a current yield to maturity.

^F	Pay-in-Kind (“PIK”) security - A security in which interest or dividends during the initial few years is paid in additional PIK securities rather than in cash.

^G	Credit Linked Security - The rates of interest earned on these securities are tied to the credit rating assigned by Standard & Poor’s Rating Service and/or Moody’s Investors Services.

^H	Convertible Security - Security may be converted into the issuer’s common stock.

^I	Security is valued in good faith at fair value by or under the direction of the Board of Directors.

^J	The coupon rates shown on variable rate securities are the rates at June 30, 2009. These rates vary with the weighted average coupon of the underlying loans.

^K	On September 7, 2008, the Federal Housing Finance Agency placed Fannie Mae and Freddie Mac into conservatorship.

^L	Yankee Bond - A dollar-denominated bond issued in the U.S. by foreign entities.

^M	Illiquid security valued at fair value under the procedures approved by the Board of Directors.

^N	Non-income producing.

^O	All or a portion of this security is collateral to cover futures and options contracts written.

^P	Aggregate cost for federal income tax purposes is substantially the same as book cost. At June 30, 2009, the aggregate gross unrealized appreciation and depreciation of investments for federal income tax purposes were substantially as follows:


Gross unrealized appreciation	$	2,410,374
Gross unrealized depreciation		(67,636,267	)

Net unrealized depreciation	$	(65,225,893	)

^Q	Futures are described in more detail in the notes to financial statements.

See notes to financial statements.


10		Semi-Annual Report to Shareholders

Semi-Annual Report to Shareholders

Statement of Assets and Liabilities

Investment Grade Income Portfolio

June 30, 2009 (Unaudited)


Assets:
Investment securities at market value (Cost - $271,163,279)			$	205,937,321
Short-term securities at value (Cost - $3,192,626)				3,192,691
Cash				235
Interest receivable				3,619,141
Receivable for securities sold				642,731
Receivable for fund shares sold				214,701
Other assets				1,226

Total assets				213,608,046

Liabilities:
Payable for fund shares repurchased	$	1,474,792
Payable for securities purchased		1,386,077
Accrued management fees		78,610
Accrued distribution and service fees		82,162
Income distribution payable		12,059
Futures variation margin payable		5,126
Accrued expenses		124,677

Total liabilities				3,163,503


Net Assets			$	210,444,543


Net assets consist of:
Accumulated paid-in-capital			$	305,566,037
Undistributed net investment income				188,524
Accumulated net realized loss on investments and futures				(29,923,119	)
Net unrealized depreciation of investments and futures				(65,386,899	)

Net Assets			$	210,444,543

Net Asset Value Per Share:
Primary Class (24,873,441 shares outstanding)			$	8.07

Institutional Class (1,208,561 shares outstanding)			$	8.07

See notes to financial statements.


Semi-Annual Report to Shareholders		11

Statement of Operations

Investment Grade Income Portfolio

For the Six Months Ended June 30, 2009 (Unaudited)


Investment Income:
Interest	$	9,070,425
Dividends		16,718

Total income				$	9,087,143

Expenses:
Management fees		586,279
Distribution and service fees:
Primary Class		465,624
Audit and legal fees		18,324
Custodian fees		19,264
Directors’ fees and expenses		30,598
Registration fees		17,519
Reports to shareholders:
Primary Class		7,202
Institutional Class		56
Transfer agent and shareholder servicing expense:
Primary Class		78,213
Institutional Class		10,356
Other expenses		18,974

		1,252,409
Less: Fees waived		(247,221	)

Net expenses					1,005,188

Net Investment Income					8,081,955
Net Realized and Unrealized Gain/(Loss) on Investments:
Net realized gain/(loss) on:
Investments		(14,453,054	)
Futures		758,161

					(13,694,893	)
Change in unrealized appreciation/(depreciation) of:
Investments		42,539,643
Futures		(499,021	)

					42,040,622

Net Realized and Unrealized Gain on Investments					28,345,729

Change in Net Assets Resulting From Operations				$	36,427,684

See notes to financial statements.


12		Semi-Annual Report to Shareholders

Semi-Annual Report to Shareholders

Statement of Changes in Net Assets

Investment Grade Income Portfolio


	For the Six Months Ended June 30, 2009			For the Year Ended December 31, 2008
	(Unaudited)

Change in Net Assets:

Net investment income	$	8,081,955		$	22,359,803
Net realized loss		(13,694,893	)		(15,480,095	)
Change in unrealized appreciation/(depreciation)		42,040,622			(97,822,130	)

Change in net assets resulting from operations		36,427,684			(90,942,422	)

Distributions to shareholders from:
Net investment income:
Primary Class		(7,706,076	)		(21,039,955	)
Institutional Class		(403,379	)		(1,065,882	)

Change in net assets from fund share transactions:
Primary Class		(27,683,013	)		(76,519,144	)
Institutional Class		(1,572,634	)		(33,416,476	)

Change in net assets		(937,418	)		(222,983,879	)

Net Assets:

Beginning of period		211,381,961			434,365,840

End of period	$	210,444,543		$	211,381,961

Undistributed net investment income	$	188,524		$	216,024

See notes to financial statements.


Semi-Annual Report to Shareholders		13

Semi-Annual Report to Shareholders

Financial Highlights

Investment Grade Income Portfolio

For a share of each class of capital stock outstanding:

Primary Class:


	Six Months Ended June 30,			Years Ended December 31,
	2009			2008			2007			2006			2005			2004
	(Unaudited)

Net asset value, beginning of period	$	6.96		$	10.11		$	10.49		$	10.40		$	10.81		$	10.88

Investment operations:
Net investment income		.29	^A		.61	^A		.55	^A		.51	^A		.49			.49
Net realized and unrealized gain/(loss)		1.11			(3.16	)		(.35	)		.09			(.31	)		.18


Total from investment operations		1.40			(2.55	)		.20			.60			.18			.67

Distributions from:
Net investment income		(.29	)		(.60	)		(.55	)		(.51	)		(.49	)		(.49	)
Net realized gain on investments		—			—			(.03	)		—	^B		(.10	)		(.25	)


Total distributions		(.29	)		(.60	)		(.58	)		(.51	)		(.59	)		(.74	)


Net asset value, end of period	$	8.07		$	6.96		$	10.11		$	10.49		$	10.40		$	10.81


Total return^C		20.77	%		(26.19	)%		1.93	%		6.01	%		1.69	%		6.29	%

Ratios to Average Net Assets:^D
Total expenses		1.30	%^E		1.28	%		1.28	%		1.33	%		1.30	%		1.27	%
Expenses net of waivers, if any		1.05	%^E		1.00	%		1.00	%		1.00	%		1.00	%		1.00	%
Expenses net of all reductions		1.05	%^E		1.00	%		1.00	%		1.00	%		1.00	%		1.00	%
Net investment income		8.25	%^E		6.78	%		5.32	%		4.98	%		4.64	%		4.47	%

Supplemental Data:
Portfolio turnover rate		7.1	%		15.3	%		47.2	%		65.7	%		51.1	%		74.9	%

Net assets, end of period (in thousands)	$	200,692		$	201,437		$	386,094		$	404,864		$	366,329		$	403,361

^A	Computed using average daily shares outstanding.

^B	Amount less than $.01 per share.

Performance figures may reflect compensating balance credits, fee waivers and/or expense reimbursements. In the absence of compensating balance credits, fee waivers and/or expense reimbursements, the total return would have been lower. Past performance is no guarantee of future results. Total returns for periods less than one year are not annualized.

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

^E	Annualized.

See notes to financial statements.


14		Semi-Annual Report to Shareholders

Semi-Annual Report to Shareholders

Financial Highlights

Investment Grade Income Portfolio

For a share of each class of capital stock outstanding:

Institutional Class:


	Six Months Ended June 30,			Years Ended December 31,
	2009			2008			2007			2006			2005			2004
	(Unaudited)

Net asset value, beginning of period	$	6.97		$	10.11		$	10.49		$	10.41		$	10.82		$	10.89

Investment operations:
Net investment income		.30	^A		.65	^A		.61	^A		.56	^A		.55			.54
Net realized and unrealized gain/(loss)		1.10			(3.14	)		(.36	)		.08			(.31	)		.17


Total from investment operations		1.40			(2.49	)		.25			.64			.24			.71

Distributions from:
Net investment income		(.30	)		(.65	)		(.60	)		(.56	)		(.55	)		(.53	)
Net realized gain on investments		—			—			(.03	)		—	^B		(.10	)		(.25	)


Total distributions		(.30	)		(.65	)		(.63	)		(.56	)		(.65	)		(.78	)


Net asset value, end of period	$	8.07		$	6.97		$	10.11		$	10.49		$	10.41		$	10.82


Total return^C		20.90	%		(25.71	)%		2.44	%		6.45	%		2.27	%		6.85	%

Ratios to Average Net Assets:^D
Total expenses		.93	%^E		.85	%		.74	%		.74	%		.74	%		.74	%
Expenses net of waivers, if any		.55	%^E		.50	%		.50	%		.50	%		.44	%		.47	%
Expenses net of all reductions		.55	%^E		.50	%		.50	%		.50	%		.44	%		.47	%
Net investment income		8.74	%^E		7.24	%		5.95	%		5.47	%		5.26	%		5.02	%

Supplemental Data:
Portfolio turnover rate		7.1	%		15.3	%		47.2	%		65.7	%		51.1	%		74.9	%

Net assets, end of period (in thousands)	$	9,753		$	9,945		$	48,272		$	11,894		$	20,441		$	10,216

^A	Computed using average daily shares outstanding.

^B	Amount less than $.01 per share.

^E	Annualized.

See notes to financial statements.


Semi-Annual Report to Shareholders		15

Portfolio of Investments

Limited Duration Bond Portfolio

June 30, 2009 (Unaudited)


	Rate		Maturity Date	Par/Shares		Value
Long-Term Securities — 93.5%
Corporate Bonds and Notes — 25.2%
Aerospace and Defense — 0.4%
United Technologies Corp.	5.375	%	12/15/17	$	410,000	$	434,203

Airlines — 1.6%
Continental Airlines Inc.	7.056	%	9/15/09		70,000		69,300
Continental Airlines Inc.	6.900	%	1/2/18		421,853		367,012
Continental Airlines Inc.	6.545	%	2/2/19		376,381		348,153
Continental Airlines Inc.	6.703	%	6/15/21		286,978		241,061
Northwest Airlines Inc.	1.535	%	5/20/14		718,997		539,248	^A

							1,564,774

Capital Markets — 4.2%
Goldman Sachs Capital II	5.793	%	12/29/49		2,080,000		1,267,656	^B
Lehman Brothers Holdings Capital Trust VII	5.857	%	11/29/49		970,000		97	^C
Lehman Brothers Holdings Inc.	6.500	%	7/19/17		340,000		34	^C
Merrill Lynch and Co. Inc.	6.050	%	8/15/12		700,000		701,850
Merrill Lynch and Co. Inc.	6.150	%	4/25/13		720,000		721,017
Morgan Stanley	6.600	%	4/1/12		330,000		349,390
The Bear Stearns Cos. Inc.	6.400	%	10/2/17		200,000		200,355
The Goldman Sachs Group Inc.	1.625	%	7/15/11		530,000		532,881
The Goldman Sachs Group Inc.	6.600	%	1/15/12		350,000		372,654

							4,145,934

Chemicals — 0.1%
The Dow Chemical Co.	5.700	%	5/15/18		90,000		79,535


Commercial Banks — 1.8%
SunTrust Capital VIII	6.100	%	12/15/36		120,000		77,950	^B
Wachovia Capital Trust III	5.800	%	8/29/49		1,960,000		1,176,000	^B
Wells Fargo Capital X	5.950	%	12/15/36		300,000		222,000	^B
Wells Fargo Capital XIII	7.700	%	12/29/49		350,000		290,500	^B

							1,766,450

Commercial Services and Supplies — 0.7%
Waste Management Inc.	7.375	%	8/1/10		650,000		677,340

Consumer Finance — 1.8%
American Express Co.	6.800	%	9/1/66		600,000		432,000	^B
GMAC LLC	7.500	%	12/31/13		853,000		661,075	^D
Nelnet Inc.	7.400	%	9/29/36		380,000		210,460	^B
SLM Corp.	8.450	%	6/15/18		590,000		504,736

							1,808,271

Diversified Financial Services — 3.3%
AGFC Capital Trust I	6.000	%	1/15/67		860,000		180,600	^B,D
General Electric Capital Corp.	2.125	%	12/21/12		1,040,000		1,032,844
General Electric Capital Corp.	6.375	%	11/15/67		675,000		450,374	^B
IBM International Group Capital LLC	5.050	%	10/22/12		950,000		1,016,934


16		Semi-Annual Report to Shareholders

Portfolio of Investments - Continued

Limited Duration Bond Portfolio - Continued


	Rate		Maturity Date	Par/Shares		Value
Long-Term Securities — Continued
Corporate Bonds and Notes — Continued
Diversified Financial Services — Continued
ZFS Finance USA Trust III	1.779	%	12/15/65	$	970,000	$	591,700	^A,D

							3,272,452

Diversified Telecommunication Services — 1.3%
AT&T Inc.	4.850	%	2/15/14		440,000		456,368
Qwest Corp.	7.875	%	9/1/11		230,000		230,000
Verizon Communications Inc.	8.750	%	11/1/18		150,000		177,672
Verizon Wireless Capital LLC	3.750	%	5/20/11		430,000		438,803	^D

							1,302,843

Electric Utilities — 0.5%
Pacific Gas and Electric Co.	4.800	%	3/1/14		500,000		526,391

Food and Staples Retailing — 0.5%
Wal-Mart Stores Inc.	5.800	%	2/15/18		500,000		544,672

Health Care Equipment and Supplies — 0.5%
Hospira Inc.	5.550	%	3/30/12		500,000		520,907

Leisure Equipment and Products — 0.1%
Eastman Kodak Co.	7.250	%	11/15/13		110,000		67,100

Media — 1.4%
The Walt Disney Co.	4.700	%	12/1/12		280,000		300,846
Time Warner Cable Inc.	8.250	%	2/14/14		180,000		201,761
Time Warner Inc.	5.500	%	11/15/11		830,000		857,124

							1,359,731

Multi-Utilities — 0.4%
Dominion Resources Inc.	8.875	%	1/15/19		300,000		357,762

Multiline Retail — 0.3%
Federated Retail Holdings Inc.	5.350	%	3/15/12		330,000		300,370

Office Electronics — 0.3%
Xerox Corp.	5.500	%	5/15/12		330,000		329,097

Oil, Gas and Consumable Fuels — 4.5%
Apache Corp.	6.250	%	4/15/12		520,000		561,971
Devon Financing Corp. ULC	6.875	%	9/30/11		350,000		380,132
El Paso Natural Gas Co.	5.950	%	4/15/17		590,000		567,900
Energy Transfer Partners LP	9.700	%	3/15/19		120,000		137,765
Hess Corp.	6.650	%	8/15/11		510,000		542,810
Kinder Morgan Energy Partners LP	6.750	%	3/15/11		810,000		848,944
Occidental Petroleum Corp.	7.000	%	11/1/13		690,000		789,963
Pemex Project Funding Master Trust	1.250	%	12/3/12		252,000		235,620	^A,D
XTO Energy Inc.	5.650	%	4/1/16		440,000		445,451

							4,510,556


Semi-Annual Report to Shareholders		17


	Rate		Maturity Date	Par/Shares		Value
Long-Term Securities — Continued
Corporate Bonds and Notes — Continued
Real Estate Investment Trusts (REITs) — 0.5%
iStar Financial Inc.	10.000	%	6/15/14	$	650,000	$	481,000	^D

Thrifts and Mortgage Finance — 0.6%
Countrywide Financial Corp.	5.800	%	6/7/12		600,000		603,739

Tobacco — 0.4%
Philip Morris International Inc.	4.875	%	5/16/13		400,000		419,755

Total Corporate Bonds and Notes (Cost — $29,729,589)							25,072,882

Asset-Backed Securities — 11.0%
Fixed Rate Securities — 2.2%
Drive Auto Receivables Trust 2006-1 A4	5.540	%	12/16/13		740,579		741,250	^D
Ford Credit Auto Owner Trust 2009-B A2	2.100	%	11/15/11		790,000		790,475
Prestige Auto Receivables Trust 2005-1A	4.370	%	6/16/12		305,614		303,272	^D
Structured Asset Securities Corp. 2003-AL1	3.357	%	4/25/31		442,935		383,546	^D

							2,218,543

Indexed Securities^A — 8.2%
Asset Backed Funding Certificates 2002-WF2	1.439	%	5/25/32		221,263		119,569
Asset Backed Funding Certificates 2004-OPT2 M1	0.864	%	8/25/33		400,000		211,242
Bank of America Credit Card Trust 2006-A9 A9	0.329	%	2/15/13		1,060,000		1,046,164
Bank of America Credit Card Trust 2008-A1 A1	0.899	%	4/15/13		670,000		664,724
Bear Stearns Asset Backed Securities Inc. 2004-1	0.834	%	6/25/34		1,828,966		963,293
Chase Issuance Trust 2009-A4 A4	1.070	%	6/15/12		760,000		758,780
Citigroup Mortgage Loan Trust Inc. 2007-SHL1 A	0.714	%	11/25/46		1,345,161		503,225	^D
Countrywide Asset-Backed Certificates 2007-13 2A1	1.214	%	10/25/47		874,298		539,877
Countrywide Home Equity Loan Trust 2004-O	0.599	%	2/15/34		347,371		107,304	^E
Lehman XS Trust 2005-5N 3A1A	0.614	%	11/25/35		1,230,859		525,176
Long Beach Mortgage Loan Trust 2006-A A1	0.404	%	5/25/36		994,238		36,101
Nelnet Student Loan Trust 2008-4 A4	2.572	%	4/25/24		1,600,000		1,576,448
RAAC Series 2005-RP1	0.654	%	7/25/37		112,117		109,560	^D
Securitized Asset Backed Receivables LLC 2006-FR3 A2	0.454	%	5/25/36		470,105		302,482
Specialty Underwriting & Residential Finance Trust 2001-BC4 M1	0.914	%	11/25/34		530,000		247,845
Structured Asset Securities Corp. 2007-BC3 1A2	0.454	%	5/25/47		800,000		217,770
WaMu Asset-Backed Certificates 2007-HE1 2A3	0.464	%	1/25/37		800,000		188,745

							8,118,305

Variable Rate Securities^F — 0.6%
Green Tree 2008-MH1 A1	7.000	%	4/25/38		662,757		647,311	^D

Total Asset-Backed Securities (Cost — $16,665,013)							10,984,159

Mortgage-Backed Securities — 21.0%
Fixed Rate Securities — 2.3%
Residential Asset Mortgage Products Inc. 2005-SL1	8.000	%	5/25/32		994,185		890,728


18		Semi-Annual Report to Shareholders

Portfolio of Investments - Continued

Limited Duration Bond Portfolio - Continued


	Rate		Maturity Date	Par/Shares		Value
Long-Term Securities — Continued
Mortgage-Backed Securities — Continued
Fixed Rate Securities — Continued
Washington Mutual MSC Mortgage Pass-Through Certificates Series 2004-RA1	7.000	%	3/25/34	$	1,379,837	$	1,331,543

							2,222,271

Indexed Securities^A — 13.5%
Banc of America Mortgage Securities 2005-F	5.012	%	7/25/35		1,615,328		1,036,287
Bayview Commercial Asset Trust 2005-2A A2	0.664	%	8/25/35		508,002		248,494	^D
Bear Stearns Alt-A Trust 2007-1 1A1	0.474	%	1/25/47		1,474,582		588,843
Bear Stearns ARM Trust 2004-10	4.960	%	1/25/35		228,141		166,501
Countrywide Alternative Loan Trust 2005-59 1A1	0.644	%	11/20/35		1,199,559		541,775
Countrywide Alternative Loan Trust 2006-0A2 A5	0.545	%	5/20/46		1,516,251		578,644
CS First Boston Mortgage Securities Corp. 2004-AR5 7A2	3.637	%	6/25/34		449,253		375,578
First Horizon Alternative Mortgage Securities 2006-FA8 1A8	0.684	%	2/25/37		336,574		148,991
Greenpoint Mortgage Funding Trust 2006-AR7 1A1B	0.434	%	12/25/46		505,840		300,756
Harborview Mortgage Loan Trust 2004-8 3A2	0.713	%	11/29/34		348,772		162,626
HomeBanc Mortgage Trust 2004-2 A1	0.684	%	12/25/34		718,388		541,319
HomeBanc Mortgage Trust 2005-1 A1	0.564	%	3/25/35		1,157,710		540,378
Impac CMB Trust 2004-6 1A2	1.094	%	10/25/34		217,600		114,104
IndyMac Inda Mortgage Loan Trust 2007-AR7 1A1	6.151	%	11/25/37		730,863		476,777
JPMorgan Mortgage Trust 2004-A1 1A1	4.333	%	10/25/33		1,563,295		1,419,417
JPMorgan Mortgage Trust 2004-A1 1A1	4.804	%	2/25/34		488,338		439,894
MASTR Adjustable Rate Mortgages Trust 2004-13	3.649	%	11/21/34		3,000,000		1,890,427
MASTR Adjustable Rate Mortgages Trust 2006-OA2 1A1	2.239	%	12/25/46		953,030		271,614
MASTR Specialized Loan Trust 2006-01 A	0.614	%	12/25/35		368,528		206,252	^D
Sequoia Mortgage Trust 2003-2 A2	1.447	%	6/20/33		281,854		212,318
Structured Asset Mortgage Investments Inc. 2006-AR2 A1	0.544	%	2/25/36		647,610		255,715
Structured Asset Mortgage Investments Inc. 2006-AR7 A1A	0.524	%	8/25/36		1,139,347		469,305
WaMu Alternative Mortgage Pass-Through Certificates 2006-AR01 A1B	0.634	%	2/25/36		1,116,950		229,666
WaMu Mortgage Pass-Through Certificates 2003-AR10	4.672	%	10/25/33		1,730,751		1,428,384
WaMu Mortgage Pass-Through Certificates 2003-AR8 A	4.242	%	8/25/33		372,632		324,412
WaMu Mortgage Pass-Through Certificates 2004-AR08 A1	0.858	%	6/25/44		440,698		235,924
WaMu Mortgage Pass-Through Certificates 2006-AR4 DA	2.409	%	6/25/46		742,075		254,903

							13,459,304

Variable Rate Securities^F — 5.2%
Banc of America Funding Corp. 2004-B	5.256	%	12/20/34		281,309		185,745
Chase Mortgage Finance Corp. 2007-A1 2A3	4.077	%	2/25/37		595,698		510,215


Semi-Annual Report to Shareholders		19


	Rate		Maturity Date	Par/Shares		Value
Long-Term Securities — Continued
Mortgage-Backed Securities — Continued
Variable Rate Securities — Continued
Citigroup Mortgage Loan Trust Inc. 2007-AR4 2A1A	5.451	%	3/25/37	$	1,533,554	$	926,652
Citigroup Mortgage Loan Trust Inc. 2007-AR8 1A1A	5.722	%	8/25/47		841,579		521,602
Countrywide Alternative Loan Trust 2004-33 1A1	4.979	%	12/25/34		156,093		104,700
Countrywide Alternative Loan Trust 2004-33 2A1	5.185	%	12/25/34		111,904		59,050	^E
JPMorgan Mortgage Trust 2006-A2 5A1	5.122	%	11/25/33		232,139		202,888
Nomura Asset Acceptance Corp. 2004-AR4 1A1	4.873	%	12/25/34		810,136		700,769	^E
Prime Mortgage Trust 2005-2	7.412	%	10/25/32		732,815		634,343
Structured Adjustable Rate Mortgage Loan Trust 2005-12 3A1	5.613	%	6/25/35		572,189		337,873
WaMu Mortgage Pass Through Certificates 2005-AR4	4.668	%	4/25/35		200,000		110,904
WaMu Mortgage Pass-Through Certificates 2004-AR14 A1	4.224	%	1/25/35		1,011,738		890,456

							5,185,197

Total Mortgage-Backed Securities (Cost — $32,940,812)							20,866,772

U.S. Government and Agency Obligations — 10.6%
Fixed Rate Securities — 1.8%
Federal Home Loan Bank	1.625	%	7/27/11		570,000		573,136
Freddie Mac	2.125	%	3/23/12		1,180,000		1,190,670	^G

							1,763,806

Treasury Inflation-Protected Securities^H — 8.8%
United States Treasury Inflation-Protected Security	0.875	%	4/15/10		8,137,437		8,137,437	^I
United States Treasury Inflation-Protected Security	3.875	%	4/15/29		518,812		658,243	^I

							8,795,680

Total U.S. Government and Agency Obligations (Cost — $10,433,980)							10,559,486

U.S. Government Agency Mortgage-Backed Securities — 10.9%
Fixed Rate Securities — 5.8%
Fannie Mae	8.500	%	6/1/10 to 8/1/11		334		343	^G
Fannie Mae	6.500	%	7/1/13 to 10/1/32		804,788		860,809	^G
Fannie Mae	9.500	%	7/1/14		272		278	^G
Fannie Mae	11.000	%	12/1/15		9,348		10,212	^G
Fannie Mae	12.500	%	1/1/18		18,789		22,037	^G
Fannie Mae	9.000	%	11/1/21		56,399		60,923	^G
Fannie Mae	7.000	%	12/1/26 to 1/1/33		2,979,471		3,265,876	^G
Fannie Mae	6.000	%	11/1/27		102		108	^G
Freddie Mac	9.000	%	1/1/17 to 1/1/21		50,007		55,123	^G
Freddie Mac	8.500	%	6/1/21		1,263		1,365	^G
Freddie Mac	8.000	%	2/1/31		167,679		183,676	^G
Freddie Mac	7.000	%	4/1/32		1,064,588		1,155,632	^G
Government National Mortgage Association	6.000	%	5/15/14 to 11/15/28		132,018		140,221


20		Semi-Annual Report to Shareholders

Portfolio of Investments - Continued

Limited Duration Bond Portfolio - Continued


	Rate		Maturity Date	Par/Shares		Value
Long-Term Securities — Continued
U.S. Government Agency Mortgage-Backed Securities — Continued
Fixed Rate Securities — Continued
Government National Mortgage Association	9.000	%	6/15/22 to 9/15/22	$	1,408	$	1,528

							5,758,131

Indexed Securities^A — 4.8%
Fannie Mae	4.332	%	10/1/34		586,746		600,936	^G
Fannie Mae	4.328	%	1/1/35		741,400		755,450	^G
Fannie Mae	4.772	%	2/1/35		439,553		455,076	^G
Fannie Mae	4.965	%	3/1/35		2,911,996		3,025,439	^G

							4,836,901

Stripped Securities — 0.3%
Government National Mortgage Association	8.125	%	6/16/26		1,208,591		168,751	^J,K1
Government National Mortgage Association	8.175	%	8/16/26		893,890		114,414	^J,K1

							283,165

Total U.S. Government Agency Mortgage-Backed Securities (Cost — $11,008,017)							10,878,197

Yankee Bonds^L — 14.6%
Beverages — 0.4%
Diageo Capital PLC	5.200	%	1/30/13		350,000		364,007

Capital Markets — 0.9%
Deutsche Bank AG	6.000	%	9/1/17		900,000		918,101

Commercial Banks — 3.4%
Glitnir Banki Hf	5.815	%	1/21/11		1,550,000		251,875	^A,C,D,J
Glitnir Banki Hf	6.693	%	6/15/16		50,000		5	^B,C,D,J
Kaupthing Bank Hf	4.958	%	1/15/10		190,000		24,700	^A,C,D,J
Kaupthing Bank Hf	5.750	%	10/4/11		420,000		54,600	^C,D,J
Kaupthing Bank Hf	7.625	%	2/28/15		330,000		26,400	^C,D,J
Landsbanki Islands Hf	6.100	%	8/25/11		620,000		18,600	^C,D,J
Landsbanki Islands Hf	7.431	%	12/31/49		240,000		24	^B,C,D,J
Lloyds TSB Group PLC	2.800	%	4/2/12		1,900,000		1,918,620	^D,E
Resona Preferred Global Securities	7.191	%	12/29/49		830,000		605,900	^B,D
Shinsei Finance Cayman Ltd.	6.418	%	1/29/49		640,000		256,000	^B,D
Westpac Banking Corp.	2.500	%	5/25/12		210,000		208,492	^D

							3,365,216

Diversified Financial Services — 2.4%
Aiful Corp.	5.000	%	8/10/10		1,280,000		780,800	^D
MUFG Capital Finance 1 Ltd.	6.346	%	7/29/49		600,000		525,246	^B
TNK-BP Finance SA	6.875	%	7/18/11		1,090,000		1,058,663	^D

							2,364,709

Diversified Telecommunication Services — 3.3%
British Telecommunications PLC	9.125	%	12/15/10		520,000		552,278	^M


Semi-Annual Report to Shareholders		21


	Rate		Maturity Date	Par/Shares			Value
Long-Term Securities — Continued
Yankee Bonds — Continued
Diversified Telecommunication Services — Continued
Deutsche Telekom International Finance BV	8.500	%	6/15/10	$	650,000		$	683,582	^M
France Telecom SA	7.750	%	3/1/11		570,000			616,473	^M
Koninklijke (Royal) KPN NV	8.000	%	10/1/10		680,000			713,509
Telefonica Emisiones S.A.U.	1.346	%	2/4/13		790,000			738,739	^A

								3,304,581

Health Care Equipment and Supplies — 0.5%
Baxter Finco BV	4.750	%	10/15/10		520,000			538,694

Industrial Conglomerates — 1.6%
Tyco International Group SA	6.375	%	10/15/11		1,480,000			1,559,523

Insurance — 0.4%
Merna Reinsurance Ltd.	2.970	%	7/7/10		400,000			372,560	^A,^D

Metals and Mining — 0.2%
Vale Overseas Ltd.	6.250	%	1/23/17		250,000			252,066

Oil, Gas and Consumable Fuels — 0.9%
Anadarko Finance Co.	6.750	%	5/1/11		870,000			905,496

Wireless Telecommunication Services — 0.6%
Rogers Wireless Inc.	6.375	%	3/1/14		520,000			557,373

Total Yankee Bonds (Cost — $18,517,483)								14,502,326

Preferred Stocks — 0.2%
Fannie Mae	8.250	%			15,950	shs		21,373	^B,G,N
Freddie Mac	8.375	%			21,700			26,474	^B,G,N
Home Ownership Funding Corp.	1.000	%			500			48,010	^D,F,J,N
Home Ownership Funding Corp. II	1.000	%			1,400			134,430	^D,F,J,N

Total Preferred Stocks (Cost — $2,478,698)								230,287

Total Long-Term Securities (Cost — $121,773,592)								93,094,109

Short-Term Securities — 3.4%
Repurchase Agreements — 3.4%
Deutsche Bank 0.07%, dated 6/30/09, to be repurchased at $1,669,003 on 7/1/09 (Collateral: $1,690,000 Freddie Mac notes, 1.722%, due 4/27/11, value $1,702,379)				$	1,669,000			1,669,000
Goldman Sachs & Co. 0.03%, dated 6/30/09, to be repurchased at $1,670,001 on 7/1/09 (Collateral: $1,700,000 Fannie Mae notes, 2.75%, due 3/13/14, value $1,708,500)					1,670,000			1,670,000

Total Short-Term Securities (Cost — $3,339,000)								3,339,000


22		Semi-Annual Report to Shareholders

Portfolio of Investments - Continued

Limited Duration Bond Portfolio - Continued


Total Investments — 96.9% (Cost — $125,112,592)^O				96,433,109
Other Assets Less Liabilities — 3.1%				3,106,356


Net Assets — 100.0%			$	99,539,465


	Expiration	Actual Contracts	Appreciation/ (Depreciation)
Futures Contracts Purchased^P
Eurodollar Futures	March 2010	31		920
Eurodollar Futures	September 2010	114		53,055
U.S. Treasury Note Futures	September 2009	69		(88,064	)

			$	(34,089	)

Futures Contracts Written^P
U.S. Treasury Note Futures	September 2009	23	$	(1,865	)

^N.M.

Not Meaningful.

^B	Stepped Coupon Security - A security with a predetermined schedule of interest or dividend rate changes at which time it begins to accrue interest or pay dividends according to the predetermined schedule.

^C	Bond is currently in default.

^E	Security is valued in good faith at fair value by or under the direction of the Board of Directors.

^F	The coupon rates shown on variable rate securities are the rates at June 30, 2009. These rates vary with the weighted average coupon of the underlying loans.

^G	On September 7, 2008, the Federal Housing Finance Agency placed Fannie Mae and Freddie Mac into conservatorship.

^H	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.

^I	All or a portion of this security is collateral to cover futures and options contracts written.

^J	Illiquid security valued at fair value under the procedures approved by the Board of Directors.

^K	Stripped Security - Security with interest-only or principal-only payment streams, denoted by a 1 or 2, respectively. For interest-only securities, the amount shown as principal is the notional balance used to calculate the amount of interest due.

^L	Yankee Bond - A dollar-denominated bond issued in the U.S. by foreign entities.

^M	Credit Linked Security - The rates of interest earned on these securities are tied to the credit rating assigned by Standard & Poor’s Rating Service and/or Moody’s Investors Services.

^N	Non-income producing.

^O	Aggregate cost for federal income tax purposes is substantially the same as book cost. At June 30, 2009, the aggregate gross unrealized appreciation and depreciation of investments for federal income tax purposes were substantially as follows:


Gross unrealized appreciation	$	1,528,820
Gross unrealized depreciation		(30,208,303	)

Net unrealized depreciation	$	(28,679,483	)

^P	Futures are described in more detail in the notes to financial statements.

See notes to financial statements.


Semi-Annual Report to Shareholders		23

Semi-Annual Report to Shareholders

Statement of Assets and Liabilities

Limited Duration Bond Portfolio

June 30, 2009 (Unaudited)


Assets:

Investment securities at market value (Cost - $121,773,592)			$	93,094,109
Short-term securities at value (Cost - $3,339,000)				3,339,000
Cash				466
Receivable for securities sold				4,284,554
Interest receivable				904,251
Receivable for fund shares sold				127,685
Other assets				11,324

Total assets				101,761,389

Liabilities:

Payable for securities purchased	$	1,563,059
Payable for fund shares repurchased		474,204
Accrued management fees		24,776
Accrued distribution and service fees		38,099
Futures variation margin payable		28,744
Payable for Lehman settlement		2,281
Income distribution payable		32
Accrued expenses and other liabilities		90,729

Total liabilities				2,221,924

Net Assets			$	99,539,465

Net assets consist of:

Accumulated paid-in-capital			$	139,020,346
Overdistributed net investment income				(181,716	)
Accumulated net realized loss on investments, options and futures				(10,583,728	)
Net unrealized depreciation of investments and futures				(28,715,437	)

Net Assets			$	99,539,465

Net Asset Value Per Share:
Primary Class (10,872,869 shares outstanding)			$	8.56

Institutional Class (755,827 shares outstanding)			$	8.56

See notes to financial statements.


24		Semi-Annual Report to Shareholders

Statement of Operations

Limited Duration Bond Portfolio

For the Six Months Ended June 30, 2009 (Unaudited)


Investment Income:

Interest			$	2,506,290

Expenses:

Management fees	218,916
Distribution and service fees:
Primary Class	227,437
Audit and legal fees	15,131
Custodian fees	17,358
Directors’ fees and expenses	30,812
Registration fees	20,106
Reports to shareholders:
Primary Class	14,666
Institutional Class	246
Transfer agent and shareholder servicing expense:
Primary Class	25,294
Institutional Class	9,364
Other expenses	18,569

	597,899
Less: Fees waived	(111,967	)

Net expenses				485,932


Net Investment Income				2,020,358

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

Net realized gain/(loss) on:
Investments	(1,446,181	)
Options written	(819,207	)
Futures	2,312,701

				47,313

Change in unrealized appreciation/(depreciation) of:
Investments	8,476,718
Options written	745,213
Futures	(2,177,368	)

				7,044,563

Net Realized and Unrealized Gain on Investments				7,091,876

Change in Net Assets Resulting From Operations			$	9,112,234

See notes to financial statements.


Semi-Annual Report to Shareholders		25

Semi-Annual Report to Shareholders

Statement of Changes in Net Assets

Limited Duration Bond Portfolio


	For the Six Months Ended June 30, 2009			For the Year Ended December 31, 2008
	(Unaudited)
Change in Net Assets:

Net investment income	$	2,020,358		$	6,236,030
Net realized gain/(loss)		47,313			(1,083,843	)
Change in unrealized appreciation/(depreciation)		7,044,563			(29,246,464	)

Change in net assets resulting from operations		9,112,234			(24,094,277	)

Distributions to shareholders from:
Net investment income:
Primary Class		(1,855,630	)		(6,092,645	)
Institutional Class		(145,722	)		(503,244	)

Change in net assets from fund share transactions:
Primary Class		(10,128,999	)		(42,218,056	)
Institutional Class		(1,731,429	)		(1,186,880	)

Change in net assets		(4,749,546	)		(74,095,102	)

Net Assets:

Beginning of period		104,289,011			178,384,113

End of period	$	99,539,465		$	104,289,011

Overdistributed net investment income	$	(181,716	)	$	(200,722	)

See notes to financial statements.


26		Semi-Annual Report to Shareholders

Semi-Annual Report to Shareholders

Financial Highlights

Limited Duration Bond Portfolio

For a share of each class of capital stock outstanding:

Primary Class:


	Six Months Ended June 30,			Years Ended December 31,
	2009			2008			2007			2006			2005			2004
	(Unaudited)
Net asset value, beginning of period	$	7.95		$	9.97		$	10.22		$	10.20		$	10.36		$	10.54

Investment operations:
Net investment income		.17	^A		.39	^A		.46	^A		.42	^A		.33			.29
Net realized and unrealized gain/(loss)		.61			(1.99	)		(.25	)		.02			(.14	)		(.09	)

Total from investment operations		.78			(1.60	)		.21			.44			.19			.20

Distributions from:
Net investment income		(.17	)		(.42	)		(.46	)		(.42	)		(.35	)		(.37	)
Net realized gain on investments		—			—			—			—			—			(.01	)

Total distributions		(.17	)		(.42	)		(.46	)		(.42	)		(.35	)		(.38	)

Net asset value, end of period	$	8.56		$	7.95		$	9.97		$	10.22		$	10.20		$	10.36

Total return^B		9.87	%		(16.52	)%		2.05	%		4.46	%		1.83	%		1.89	%

Ratios to Average Net Assets:^C
Total expenses		1.25	%^D		1.22	%		1.18	%		1.21	%		1.15	%		1.21	%
Expenses net of waivers, if any		1.03	%^D		1.00	%		1.00	%		1.00	%		1.00	%		1.00	%
Expenses net of all reductions		1.03	%^D		1.00	%		1.00	%		1.00	%		1.00	%		1.00	%
Net investment income		4.12	%^D		4.21	%		4.51	%		4.10	%		3.21	%		2.81	%

Supplemental Data:
Portfolio turnover rate		27.0	%		224.1	%		286.8	%		237.2	%		81.6	%		238.0	%

Net assets, end of period (in thousands)	$	93,068		$	96,574		$	167,195		$	191,883		$	219,497		$	274,606

^A	Computed using average daily shares outstanding.

^D	Annualized.

See notes to financial statements.


Semi-Annual Report to Shareholders		27

Semi-Annual Report to Shareholders

Financial Highlights

Limited Duration Bond Portfolio

For a share of each class of capital stock outstanding:

Institutional Class:


	Six Months Ended June 30, 2009			Years Ended December 31,
	Six Months Ended June 30, 2009			2008			2007			2006			2005			2004
	(Unaudited)

Net asset value, beginning of period	$	7.95		$	9.97		$	10.22		$	10.20		$	10.37		$	10.55

Investment operations:
Net investment income		.19	^A		.43	^A		.51	^A		.47	^A		.40			.35
Net realized and unrealized gain/(loss)		.61			(1.99	)		(.25	)		.03			(.17	)		(.10	)

Total from investment operations		.80			(1.56	)		.26			.50			.23			.25

Distributions from:
Net investment income		(.19	)		(.46	)		(.51	)		(.48	)		(.40	)		(.42	)
Net realized gain on investments		—			—			—			—			—			(.01	)

Total distributions		(.19	)		(.46	)		(.51	)		(.48	)		(.40	)		(.43	)


Net asset value, end of period	$	8.56		$	7.95		$	9.97		$	10.22		$	10.20		$	10.37

Total return^B		10.15	%		(16.09	)%		2.56	%		4.98	%		2.29	%		2.41	%

Ratios to Average Net Assets:^C
Total expenses		.96	%^D		.77	%		.72	%		.64	%		.62	%		.70	%
Expenses net of waivers, if any		.50	%^D		.50	%		.50	%		.50	%		.46	%		.48	%
Expenses net of all reductions		.50	%^D		.50	%		.50	%		.50	%		.46	%		.48	%
Net investment income		4.65	%^D		4.71	%		5.02	%		4.58	%		3.85	%		3.22	%

Supplemental Data:
Portfolio turnover rate		27.0	%		224.1	%		286.8	%		237.2	%		81.6	%		238.0	%

Net assets, end of period (in thousands)	$	6,471		$	7,715		$	11,189		$	11,052		$	18,213		$	9,546

^A	Computed using average daily shares outstanding.

^D	Annualized.

See notes to financial statements.


28		Semi-Annual Report to Shareholders

Notes to Financial Statements

Legg Mason Income Trust, Inc.

(Unaudited)

1. Organization and Significant Accounting Policies:

Legg Mason Income Trust, Inc. (“Corporation”), consisting of the Investment Grade Income Portfolio (“Investment Grade”), and the Limited Duration Bond Portfolio (“Limited Duration”) (each a “Fund”), is registered under the Investment Company Act of 1940 (“1940 Act”), as amended, as an open-end, diversified investment company.

Investment Grade and Limited Duration Portfolios consist of two classes of shares: Primary Class and Institutional Class. 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.

Preparation of the financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. Subsequent events have been evaluated through July 10, 2009, the issuance date of the financial statements.

Investment Valuation

The Funds’ securities are valued under policies approved by and under the general oversight of the Board of Directors. The Fund adopted Statement of Financial Accounting Standards No. 157 (“FAS 157”). FAS 157 establishes a single definition of fair value, creates a three-tier hierarchy as a framework for measuring fair value based on inputs used to value the Fund’s investments, and requires additional disclosure about fair value. The hierarchy of inputs is summarized below.

•

Level 1 – quoted prices in active markets for identical investments

•

Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

•

Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

Debt securities are valued at the last quoted bid prices provided by an independent pricing service that are based on transactions in debt obligations, quotations from bond dealers, market transactions in comparable securities and various other relationships between securities. Equity securities for which market quotations are available are valued at the last sale price or official closing price on the primary market or exchange on which they trade. Publicly traded foreign government debt securities are typically traded internationally in the over-the-counter market and are valued at the bid price as of the close of business of that market. Futures contracts are valued daily at the settlement price established by the board of trade or exchange on which they are traded. When prices are not readily available, or are determined not to reflect fair value, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded, but before a Fund calculates its net asset value, the Fund may value these securities at fair value as determined in accordance with the procedures approved by the Corporation’s Board of Directors.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in these securities

The following is a summary of the inputs used in valuing the Fund’s assets carried at fair value:

Investment Grade Income Portfolio


Description	Quoted Prices (Level 1)			Other Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)	Total
Long-term investments:
Corporate bonds and notes		—		$	157,865,914	—	$	157,865,914
Mortgage-backed securities		—			1,759,410	—		1,759,410
U.S. government and agency obligations		—			686,704	—		686,704
U.S. government agency mortgage-backed securities		—			41,250	—		41,250
Yankee bonds		—			44,973,006	—		44,973,006
Preferred stocks	$	346,119			264,918	—		611,037

Total long-term investments		346,119			205,591,202	—		205,937,321

Short-term investments:
U.S. government and agency obligations		—			161,691	—		161,691
Repurchase agreements		—			3,031,000	—		3,031,000

Total short-term investments		—			3,192,691	—		3,192,691

Total investments		346,119			208,783,893	—		209,130,012

Other financial instruments:
Futures contracts purchased	$	(226,570	)		—	—	$	(226,570	)
Futures contracts written		65,564			—	—		65,564

Total other financial Instruments		(161,006	)		—	—		(161,006	)
Total	$	185,113		$	208,783,893	—	$	208,969,006


Semi-Annual Report to Shareholders		29

*	Other financial instruments include options, futures, swaps and forward contracts.

Following is a reconciliation of investments in which significant unobservable inputs (Level 3) were used in determining fair value:


INVESTMENTS IN SECURITIES	YANKEE BONDS			TOTAL
Balance as of December 31, 2008	$	102,000		$	102,000
Accrued premiums/discounts		19,542			19,542
Realized gain/(loss)		—			—
Change in unrealized appreciation (depreciation)		14,458			14,458
Net purchases		—			—
Net sales		—			—
Net transfers in to Level 3		—			—
Net transfers out of Level 3	$	136,000		$	136,000
Balance as of June 30, 2009		—			—
Net unrealized appreciation (depreciation) for investments in securities still held at June 30, 2009	$	(1,327,211	)	$	(1,327,211	)

(1)	This amount is included in net realized gain (loss) from investment transactions in the accompanying Statement of Operations.

(2)

This amount is included in the change in net unrealized appreciation (depreciation) in the accompanying Statement of Operations. Change in unrealized appreciation (depreciation) includes net unrealized appreciation (depreciation) resulting from changes in investment values during the reporting period and the reversal of previously recorded unrealized appreciation (depreciation) when gains or losses are realized.

Limited Duration Bond Portfolio


	Quoted Prices (Level 1)			Other Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Long-term investments:
Corporate bonds and notes		—		$	25,072,882		—	$	25,072,882
Asset-backed securities		—			10,984,159		—		10,984,159
Mortgage-backed securities		—			20,807,722	$	59,050		20,866,772
U.S. government and agency obligations		—			10,559,486		—		10,559,486
U.S. government agency mortgage-backed securities		—			10,878,197		—		10,878,197
Yankee bonds		—			14,502,326		—		14,502,326
Preferred stocks	$	47,847			—		182,440		230,287

Total long-term investments		47,847			92,804,772		241,490		93,094,109

Short-term investments:
Repurchase agreements		—			3,339,000		—		3,339,000

Total short-term investments		—			3,339,000		—		3,339,000

Total investments		47,847			96,143,772		241,490		96,433,109

Other financial instruments:
Futures contracts purchased		(34,089	)		—		—		(34,089	)
Futures contracts written		(1,865	)		—		—		(1,865	)

Total other financial instruments		(35,954	)		—		—		(35,954	)
Total	$	11,893		$	96,143,772	$	241,490	$	96,397,155

*	Other financial instruments include options, futures, swaps and forward contracts.

Following is a reconciliation of investments in which significant unobservable inputs (Level 3) were used in determining fair value:


INVESTMENTS IN SECURITIES	MORTGAGE- BACKED SECURITIES			YANKEE BONDS			PREFERRED STOCKS			TOTAL
Balance as of December 31, 2008		—		$	19,800		$	187,245		$	207,045
Accrued premiums/discounts		—			3,861			—			3,861
Realized gain/(loss)		—			—			—			—
Change in unrealized appreciation (depreciation)		—			2,739			(4,805	)		(2,066	)
Net purchases		—			—			—			—
Net sales		—			—			—			—
Net transfers in to Level 3	$	59,050			—			—			59,050
Net transfers out of Level 3		—			26,400			—			26,400
Balance as of June 30, 2009	$	59,050			—		$	182,440		$	241,490
Net unrealized appreciation (depreciation) for investments in securities still held at June 30, 2009	$	(54,469	)	$	(256,697	)	$	(1,355,008	)	$	(1,666,174	)


30		Semi-Annual Report to Shareholders

(1)	This amount is included in net realized gain (loss) from investment transactions in the accompanying Statement of Operations.

(2)

Security Transactions

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

For the six months ended June 30, 2009, security transactions (excluding short-term investments) were as follows:


	Purchases				Proceeds From Sales
	U.S. Gov’t. Securities		Other		U.S. Gov’t. Securities		Other
Investment Grade	$	4,159,520	$	9,476,988	$	3,433,031	$	35,402,976
Limited Duration	$	15,537,702	$	10,368,473	$	19,244,732	$	16,073,178

Repurchase Agreements

Each Fund may enter into repurchase agreements with institutions that its investment adviser has determined are creditworthy. Each repurchase agreement is recorded at cost. Under the terms of a typical repurchase agreement, a fund takes possession of an underlying debt obligation subject to an obligation of the seller to repurchase, and of the fund to resell, the obligation at an agreed-upon price and time, thereby determining the yield during a fund’s holding period. When entering into repurchase agreements, it is each Fund’s policy that its custodian acting on the Fund’s behalf, or a third party custodian take possession of the underlying collateral securities, the market value of which, at all times, at least equals the principal amount of the repurchase transaction, including accrued interest. To the extent that any repurchase transaction exceeds one business day, the value of the collateral is marked to market daily in an effort to ensure the adequacy of the collateral. If the counterparty defaults, a Fund generally has the right to use the collateral to satisfy the terms of the repurchase transaction. However, if the market value of the collateral declines during the period in which a Fund seeks to assert its rights or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of the collateral by the Fund may be delayed or limited.

Options and Futures

The current market value of an exchange traded option is the last sale price or, in the absence of a sale, the price obtained by reference to broker-dealer quotations. Futures contracts are valued daily at the settlement price established by the board of trade or exchange on which they are traded. Futures contracts are marked-to-market on a daily basis. As the contract’s value fluctuates, payments known as variation margin are made or received by each Fund each day, depending on the daily fluctuation in the value of the contract. The daily changes in contract value are recorded as unrealized gains or losses, and a Fund recognizes a gain or loss when the contract is closed.

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 and distributions to shareholders are allocated at the class level and are recorded on the ex-dividend date. Dividends from net investment income are declared daily and paid monthly for each Fund. Net capital gain distributions, which are calculated at the Fund level, are declared and paid in December, to the extent necessary in order to comply with federal excise tax regulations. Distributions are determined in accordance with federal income tax regulations, which may differ from those determined in accordance with accounting principles generally accepted in the United States of America; accordingly, periodic reclassifications are made within the Funds’ capital accounts to reflect income and gains available for distribution under federal income tax regulations.


Semi-Annual Report to Shareholders		31

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 each Fund’s cash on deposit with the bank. This deposit arrangement is an alternative to purchasing overnight investments.

Credit and Market Risk

Investments in structured securities collateralized by residential real estate mortgages are subject to certain credit and liquidity risks. When market conditions result in an increase in default rates of the underlying mortgages and the foreclosure values of underlying real estate properties are materially below the outstanding amount of the respective underlying mortgages, collection of accrued interest and principal on these investments may be doubtful. Such market conditions may significantly impair the value of these investments resulting in a lack of correlation between their credit ratings and values.

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 upon claims that may be made against the Funds in the future and, therefore, cannot be estimated; however, based on experience, the risk of material loss from such claims is considered remote.

2. Federal Income Taxes:

It is the Funds’ policy to comply with the federal income and excise tax requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies. Accordingly, each Fund intends to distribute substantially all of its taxable income and net realized gains, if any, to shareholders each year. Therefore, no federal income tax provision is required in the Funds’ financial statements.

Management has analyzed each Fund’s tax positions taken on federal income tax returns for all open tax years and has concluded that as of June 30, 2009, no provision for income tax would be required in the Funds’ financial statements. The Funds’ federal and state income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.

Reclassification

GAAP requires that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or net asset values per share.

3. Financial Instruments:

Options and Futures

When the Fund writes an option, an amount equal to the premium received by the Fund is recorded as a liability, the value of which is marked-to-market daily to reflect the current market value of the option written. If the option expires, the Fund realizes a gain from investments equal to the amount of the premium received. When a written call option is exercised, the difference between the premium received plus the option exercise price and the Fund’s basis in the underlying security (in the case of a covered written call option), or the cost to purchase the underlying security (in the case of an uncovered written call option), including brokerage commission, is treated as a realized gain or loss. When a written put option is exercised, the amount of the premium received is subtracted from the cost of the security purchased by the Fund from the exercise of the written put option to form the Fund’s basis in the underlying security purchased. The writer or buyer of an option traded on an exchange can liquidate the position before the exercise of the option by entering into a closing transaction. The cost of a closing transaction is deducted from the original premium received resulting in a realized gain or loss to the Fund.

The risk in writing a covered call option is that the Fund may forego the opportunity of profit if the market price of the underlying security increases and the option is exercised. The risk in writing a put option is that the Fund may incur a loss if the market price of the underlying security decreases and the option is exercised. The risk in writing a call option is that the Fund is exposed to the risk of loss if the market price of the underlying security increases. In addition, there is the risk that the Fund may not be able to enter into a closing transaction because of an illiquid secondary market.


32		Semi-Annual Report to Shareholders

Activity in written call and put options during the six months ended June 30, 2009, was as follows:


Limited Duration	Actual Contracts		Premiums
Options outstanding at December 31, 2008	352		$	299,403
Options written	—
Options closed	(352	)		(299,403	)
Options expired	—			—
Options exercised	—			—

Options outstanding at June 30, 2009	—			—

The Fund may use futures contracts to gain exposure to, or hedge against, changes in the value of equities, interest rates or foreign currencies. A futures contract represents a commitment for the future purchase or sale of an asset at a specified price on a specified date.

Upon entering into a futures contract, the Fund is required to deposit with a broker cash or cash equivalents in an amount equal to a certain percentage of the contract amount. This is known as the “initial margin.” Subsequent payments (“variation margin”) are made or received by the Fund each day, depending on the daily fluctuation in the value of the contract. For certain futures including foreign denominated futures variation margin is not settled daily, but is recorded as a net variation margin payable or receivable. Futures contracts are valued daily at the settlement price established by the board of trade or exchange on which they are traded. The daily changes in contract value are recorded as unrealized gains or losses in the Statement of Operations and the Fund recognizes a realized gain or loss when the contract is closed.

Futures contracts involve, to varying degrees, risk of loss in excess of the amounts reflected in the financial statements. In addition, there is the risk that the Fund may not be able to enter into a closing transaction because of an illiquid secondary market.

The open futures positions and related appreciation or depreciation at June 30, 2009 are listed at the end of each Fund’s portfolio of investments.

4. Derivative Instruments and Hedging Activities

Financial Accounting Standards Board Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities,” requires enhanced disclosure about an entity’s derivative and hedging activities.

Below are tables, grouped by derivative type that provides information about the fair value and the location of derivatives within the Statement of Assets and Liabilities’ at June 30, 2009.

Investment Grade

Asset Derivatives


	Interest Rate Contracts Risk⁽¹⁾		Other Contracts Risk⁽²⁾	Total
Futures Contracts⁽³⁾	$	70,643	—	$	70,643

⁽¹⁾	Balance sheet location: Receivables, Net Assets - Unrealized appreciation (depreciation)

⁽²⁾	Balance sheet location: Receivables

⁽³⁾	Includes cumulative appreciation/depreciation of futures contracts as reported in the footnotes. Only current day’s variation margin is reported within the Statement of Assets and Liabilities.

Liability Derivatives


	Interest Rate Contracts Risk⁽¹⁾		Other Contracts Risk⁽²⁾	Total
Futures Contracts⁽³⁾	$	231,649	—	$	231,649

⁽¹⁾	Balance sheet location: Payables, Net Assets - Unrealized appreciation (depreciation)

⁽²⁾	Balance sheet location: Payables

⁽³⁾	Includes cumulative appreciation/depreciation of futures contracts as reported in the footnotes. Only current day’s variation margin is reported within the Statement of Assets and Liabilities.

Limited Duration

Asset Derivatives


	Interest Rate Contracts Risk⁽¹⁾		Other Contracts Risk⁽²⁾	Total
Futures contracts⁽³⁾	$	53,975	—	$	53,975

⁽¹⁾	Balance sheet location: Receivables, Net Assets - Unrealized appreciation (depreciation)

⁽²⁾	Balance sheet location: Receivables

⁽³⁾	Includes cumulative appreciation/depreciation of futures contracts as reported in the footnotes. Only current day’s variation margin is reported within the Statement of Assets and Liabilities.

Liability Derivatives


	Interest Rate Contracts Risk⁽¹⁾		Other Contracts Risk⁽²⁾	Total
Futures contracts⁽³⁾	$	89,929	—	$	89,929

⁽¹⁾	Balance sheet location: Payables, Net Assets - Unrealized appreciation (depreciation)

⁽²⁾	Balance sheet location: Payables

⁽³⁾	Includes cumulative appreciation/depreciation of futures contracts as reported in the footnotes. Only current day’s variation margin is reported within the Statement of Assets and Liabilities.

The following tables provide information about the effect of derivatives and hedging activities on the Funds’ Statement of Operations for the six months ended June 30, 2009. The first table provides additional detail about the amounts and sources of gains/(losses) realized on derivatives during the period. The second table provides additional information about the changes in unrealized appreciation/(depreciation) resulting from the Funds’ derivatives and hedging activities during the period.


Semi-Annual Report to Shareholders		33

Investment Grade

Amount of Realized Gain or (Loss) on Derivatives Recognized


	Interest Rate Contracts Risk		Other Contracts Risk	Total
Futures contracts	$	758,161	—	$	758,161

Change in Unrealized Appreciation/Depreciation on Derivatives Recognized


	Interest Rate Contracts Risk			Other Contracts Risk	Total
Futures contracts	$	(499,021	)	—	$	(499,021	)

Limited Duration

Amount of Realized Gain or (Loss) on Derivatives Recognized


	Interest Rate Contracts Risk			Other Contracts Risk	Total
Written options	$	(819,207	)	—	$	(819,207	)
Futures contracts	$	2,312,701		—	$	2,312,701
Total	$	1,493,494		—	$	1,493,494

Change in Unrealized Appreciation/Depreciation on Derivatives Recognized


	Interest Rate Contracts Risk			Other Contracts Risk	Total
Written options	$	745,213		—	$	745,213
Futures contracts	$	(2,177,368	)	—	$	(2,177,368	)
Total	$	(1,432,155	)	—	$	(1,432,155	)

5. Transactions With Affiliates:

Each Fund has an investment management agreement with Legg Mason Fund Adviser, Inc. (“LMFA”). Pursuant to their respective agreements, LMFA provides the Funds with management and administrative services for which each Fund pays a fee, computed daily and payable monthly, at annual rates of each Fund’s average daily net assets as shown in the table below. LMFA currently intends to voluntarily waive its fees to the extent Limited Duration’s expenses (exclusive of taxes, interest, brokerage and extraordinary expenses) exceed during any month certain annual rates of the Fund’s average daily net assets. This voluntary waiver may be terminated at anytime. LMFA has voluntarily agreed to waive fees to the extent that Investment Grade’s expenses (exclusive of taxes, interest, brokerage and extraordinary expenses) exceed during any month certain annual rates. This voluntary waiver may be terminated at any time. The following chart shows annual rates of management fees, expense limits, and management fees waived, for each Fund:


					Six months Ended June 30, 2009		Maximum Amount Subject to Recapture
Fund	Management Fee		Expense Limitation		Management Fees Waived		Maximum Amount Subject to Recapture
Investment Grade
-Primary Class	0.60	%	1.15	%	$	14,026	$	229,712
-Institutional Class	0.60	%	0.65	%		7,096		17,509
Limited Duration
-Primary Class	0.45	%	1.10	%	$	71,075	$	756,803
-Institutional Class	0.45	%	0.51	%		4,939		61,812

Western Asset Management Company (“Adviser”) serves as investment adviser to the Funds. The Adviser is responsible for the actual investment activity of each Fund. LMFA pays the Adviser a fee, computed daily and payable monthly, at an annual rate of 40% of the management fee received by LMFA for Investment Grade. For Limited Duration, LMFA pays the Adviser a fee, computed daily and payable monthly, of 0.20% of the Fund’s average daily net assets, not to exceed the fee received by LMFA after any fee waivers.

Legg Mason Investor Services, LLC (“LMIS”) serves as distributor of the Funds. LMIS receives an annual distribution fee and an annual service fee based on each Fund’s Primary Class’s average daily net assets, computed daily and payable monthly as shown in the table below. For the six months ended June 30, 2009, LMIS did not waive any distribution and service fees for Investment Grade and Limited Duration, respectively.


Fund	Distribution Fee		Service Fee
Investment Grade	0.25	%	0.25	%
Limited Duration	0.25	%	0.25	%

LMFA, the Adviser and LMIS are corporate affiliates and wholly owned subsidiaries of Legg Mason, Inc.

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

6. 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 did not utilize the line of credit during the six months ended June 30, 2009.


34		Semi-Annual Report to Shareholders

7. Fund Share Transactions:

At June 30, 2009, there were 100,000,000 shares authorized at $.001 par value for each of the Primary and Financial Intermediary Classes of Investment Grade and Limited Duration, and 50,000,000 shares authorized at $.001 par value for each of their Institutional Classes. Share transactions for the Funds were as follows:


	Six Months Ended June 30, 2009					Year Ended December 31, 2008
	Shares		Amount			Shares		Amount
*Investment Grade Income Portfolio*

Primary Class

Shares sold	1,870,422		$	13,090,719		5,602,244		$	51,251,221
Shares issued on reinvestment	1,084,291			7,574,131		2,367,708			20,528,846
Shares repurchased	(7,003,550	)		(48,347,863	)	(17,235,188	)		(148,299,211	)


Net Decrease	(4,048,837	)	$	(27,683,013	)	(9,265,236	)	$	(76,519,144	)

Institutional Class

Shares sold	434,552		$	3,028,971		697,516		$	5,974,142
Shares issued on reinvestment	55,139			385,396		119,333			1,033,284
Shares repurchased	(708,777	)		(4,987,001	)	(4,162,393	)		(40,423,902	)


Net Decrease	(219,086	)	$	(1,572,634	)	(3,345,544	)	$	(33,416,476	)

*Limited Duration Bond Portfolio*

Primary Class

Shares sold	868,264		$	7,165,958		2,349,770		$	21,834,372
Shares issued on reinvestment	224,836			1,833,750		660,072			6,003,189
Shares repurchased	(2,363,518	)		(19,128,707	)	(7,637,193	)		(70,055,617	)


Net Decrease	(1,270,418	)	$	(10,128,999	)	(4,627,351	)	$	(42,218,056	)

Institutional Class

Shares sold	108,003		$	878,369		694,527		$	6,452,975
Shares issued on reinvestment	17,625			143,842		55,370			501,071
Shares repurchased	(339,999	)		(2,753,640	)	(901,485	)		(8,140,926	)


Net Decrease	(214,371	)	$	(1,731,429	)	(151,588	)	$	(1,186,880	)

Item 2.

Code of Ethics.

Not applicable for semi-annual reports.

Item 3.

Audit Committee Financial Expert.

Not applicable for semi-annual reports.

Item 4.

Principal Accountant Fees and Services.

Not applicable for semi-annual reports.

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 as part of the report to shareholders filed under Item 1 of this Form.

Item 7.

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

Not applicable.

Item 8.

Portfolio Managers of Closed-End Management Investment Companies.

Not applicable.

Item 9.

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

Not applicable.

Item 10.

Submission of Matters to a Vote of Security Holders.

Not applicable.

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 effective, and that the disclosure controls and procedures are reasonably designed to ensure that (1) the 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 rules and forms and (2) that information required to be disclosed is properly communicated to the Registrant’s management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding the required disclosures.

(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) (1)		Not applicable for semiannual reports.

(a) (2)		Separate certifications for the Registrant’s principal executive officer and principal financial officer are attached.

(a) (3)		Not applicable.

(b)		Separate certifications for the Registrant’s principal executive officer and principal financial officer are attached.

The certifications provided pursuant to Rule 30a-2(b) of the Investment Company Act of 1940 and Section 906 of the Sarbanes-Oxley Act are not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (“Exchange Act”), or otherwise subject to the liability of that section. Such certifications will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the Registrant specifically incorporates them by reference.

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 Income Trust, Inc.

/s/ David R. Odenath

David R. Odenath

President, Legg Mason Income Trust, Inc.

Date: September 4, 2009

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.

/s/ David R. Odenath

David R. Odenath

President, Legg Mason Income Trust, Inc.

Date: September 4, 2009

/s/ Kaprel Ozsolak

Kaprel Ozsolak

Chief Financial Officer and Treasurer

Legg Mason Income Trust, Inc.

Date: September 4, 2009

EX-99.12(A)(2) 2 dex9912a2.htm CERTIFICATIONS PURSUANT TO SECTION 302 Certifications Pursuant to Section 302

CERTIFICATIONS PURSUANT TO SECTION 302

Certification Filed as Exhibit 12(a)(2) to Form N-CSR

CERTIFICATION

I, David R. Odenath, certify that:

1. I have reviewed this report on Form N-CSR of Legg Mason Income Trust, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: September 4, 2009

/s/ David R. Odenath

David R. Odenath

President

Legg Mason Income Trust, Inc.

Certification Filed as Exhibit 12(a)(2) to Form N-CSR

CERTIFICATION

I, Kaprel Ozsolak, certify that:

1. I have reviewed this report on Form N-CSR of Legg Mason Income Trust, Inc.;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: September 4, 2009

/s/ Kaprel Ozsolak

Kaprel Ozsolak

Chief Financial Officer and Treasurer

Legg Mason Income Trust, Inc.

EX-99.12(B) 3 dex9912b.htm CERTIFICATIONS PURSUANT TO SECTION 906 Certifications Pursuant to Section 906

CERTIFICATIONS PURSUANT TO SECTION 906

Certification Filed as Exhibit 12(b) to Form N-CSR

CERTIFICATION

I, David R. Odenath, president of Legg Mason Income Trust, Inc., a Maryland corporation (the “Corporation”), certify that, to my knowledge:

1. The Corporation’s periodic report on Form N-CSR for the period-end June 30, 2009, fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in such Form N-CSR fairly presents, in all material aspects, the financial condition and results of operations of the Corporation.


/s/ David R. Odenath		September 4, 2009
David R. Odenath		Date
President

Certification Filed as Exhibit 12(b) to Form N-CSR

CERTIFICATION

I, Kaprel Ozsolak, chief financial officer and Treasurer of Legg Mason Income Trust, Inc., a Maryland corporation (the “Corporation”), certify that, to my knowledge:

2. The information contained in such Form N-CSR fairly presents, in all material aspects, the financial condition and results of operations of the Corporation.


/s/ Kaprel Ozsolak		September 4, 2009
Kaprel Ozsolak		Date
Chief Financial Officer and Treasurer

-----END PRIVACY-ENHANCED MESSAGE-----