Proxy Materials Enclosed

September 3, 2002 [LEGG MASON FUNDS LOGO]

Personalized Guidance
Intelligent Choices.(SM)

Dear Shareholder,

The Legg Mason Funds will hold Special Meetings of Shareholders on October 30,
2002 (October 24, 2002 for Cash Reserve Trust and Batterymarch Small Cap). The
purpose of the meetings is to vote on some important proposals affecting the
funds. As a shareholder, we encourage you to support the funds' proposals.

You are being asked to vote on proposals concerning the following:

o The election of new directors
This proposal would expand the number of independent directors serving each
fund. If approved, each board would be composed of two-thirds independent
directors.

o amendment or removal of current investment restrictions

o changes in organizational documents of certain funds
These two proposals are designed to modernize and standardize the investment
restrictions governing the Legg Mason Funds and to provide for flexibility and
efficiencies in managing the operations of the Funds.

The following Question & Answer document summarizes the proposals and explains
the voting process. However, before you vote, please read the full text of the
proxy statement for a complete understanding of the proposals.

The directors believe these proposals are in the best interests of shareholders
and unanimously recommend that you vote FOR each of the proposals.

Your vote is important no matter how many shares you own. Voting is easy!
Simply complete the enclosed proxy card(s) and return it in the postage-paid
envelope provided. Please be sure to sign your card. You may also vote via the
telephone or Internet by following the enclosed instructions.

Thank you for taking the time to review these materials and for voting your
shares.

Best regards,

/s/ Mark R. Fetting

Mark R. Fetting
President

Questions and Answers

YOUR VOTE IS IMPORTANT

In September, the Legg Mason Funds are asking all of their shareholders for
their support by voting for the proposals in the funds' 2002 proxy statement.
Your proxy vote is important and we encourage you to support the funds'
proposals.

Q: Why am I receiving this proxy statement?

A: As a shareholder of one or more of the Legg Mason Funds, you are being
asked to vote on a variety of proposals. Page 3 of the proxy statement
details which of the proposals apply to which funds.

Q: What will I be asked to vote on?

A: Proposal 1 -- Election of Directors (All Funds)
The Boards of Directors provide broad supervision over the funds' affairs,
ensuring that they operate in the best interests of shareholders.
Independent directors play an important role in that process. In
recognition of this important role, the proposed slate of directors will
expand the number of independent directors serving each fund. If the
entire slate is approved, each Board will be composed of at least
two-thirds independent directors.

Proposal 2 -- To Modernize the Funds' Fundamental Investment Restrictions
(All Funds)
The Legg Mason Funds have certain investment restrictions that are
"fundamental" -- that is, they cannot be changed without shareholder
approval. Some of those fundamental restrictions reflect regulatory,
business or industry conditions, practices or requirements that are no
longer in effect. Others reflect regulatory requirements that, while still
in effect, do not require fundamental restrictions.

This proposal would modernize the funds' fundamental investment
limitations and make them the same for almost all of the Legg Mason Funds.
The funds will continue to be managed in accordance with the investment
policies described in their prospectuses. The Boards do not expect that
the revised policies will change significantly the level of risk
associated with an investment in any fund.

Proposal 3 -- To Change the Investment Objective of each Fund from
Fundamental to Non-Fundamental (All Funds)
This proposal would provide each Board with the flexibility to change a
fund's investment objective when the Board believes it is in the best
interest of shareholders to do so. Although the Boards have no current
intention of changing any fund's investment objective, fund shareholders
would receive prior notice of any such change. Currently, each fund's
investment objective can only be changed with shareholder approval.

Proposal 4 -- To Amend and Restate the Articles of Incorporation of Value
Trust, Special Investment Trust, Tax-Exempt Trust, Focus Trust, and Income
Trust (US Government Intermediate, Investment Grade, Government Money
Market, High Yield)
Each of these Corporations is organized as a Maryland corporation. This
proposal will allow these funds to modernize their organizational
documents, most of which date back 15 years or more. This proposal will
also promote consistency across the Legg Mason Funds organized as Maryland
corporations.

Proposal 5 -- To Amend the Bylaws of Tax-Exempt Trust
This proposal will remove from the bylaws certain investment restrictions
that are also part of the fund's fundamental limitations, which
shareholders are being asked to change as described in Proposal 2. In
addition, the amendment will remove certain prohibitions on transactions
with affiliates that are not required to be in the bylaws and which are
already addressed by the federal securities laws.

Q: Why should I bother to vote?

A: Your vote is important no matter how many shares you own. The Boards
believe these proposed changes are in the best interests of fund
shareholders. If numerous shareholders fail to vote their proxies, the
funds may not receive enough votes to move forward with the scheduled
shareholder meetings and the proposed changes. If this occurs, the funds
may need to solicit shareholders again and incur additional expenses that
are borne by all shareholders of the funds.

Q: Who is entitled to vote?

A: Shareholders of record of each fund at the close of business on August 26,
2002 are entitled to vote.

Q: How do the Boards of Directors recommend I vote?

A: The Boards recommend that you vote "FOR" all proposals.

Q: How can I vote my shares?

A: You can vote in one of four ways:

o Through the Internet by accessing the web site whose Internet address
appears on the enclosed proxy card(s) and on the Voting Instructions
card. Enter the control number from your proxy card.
o By telephone by calling the toll-free number that appears on the
enclosed proxy card(s) and the Voting Instructions card.
o By mail by voting, signing, dating and returning your proxy card(s) in
the enclosed postage-paid envelope; or
o In person by attending the meeting.

Q: What if I return my proxy card(s) but do not indicate how I am voting?

A: If you sign, date and return the proxy card(s) but give no instructions,
your shares will be voted "FOR" Proposals 1 through 5 (as applicable to your
fund) and "FOR" or "AGAINST" any other matters that arise at the meeting in
the discretion of the individuals named as proxies.

Q: Why did I receive multiple proxy cards?

A: If you own more than one Legg Mason Fund, you may receive more than one
proxy card. To the extent we were able, we have combined some of the funds
onto a single card if a particular proposal applies to multiple funds.
However, if you own multiple funds and different proposals apply to those
funds, you may receive multiple cards. It is important that you complete
each proxy card in its entirety. Please take the time to vote on all of the
proposals on each card. Your vote is important!

Q: Whom should I call with questions regarding this proxy statement?

A: You may call your Legg Mason Financial Advisor, or Legg Mason Funds
Investor Services at 1-800-822-5544 (Monday-Friday, 8:00 a.m.-5:30 p.m.
ET), for more information about this proxy statement.

Q: Will I be solicited regarding my votes?

A: Legg Mason Funds has retained Georgeson Shareholder Communications to assist
with the solicitation of proxies for the meeting. Georgeson's
representatives will contact fund shareholders whose votes have not been
received in the weeks prior to the meeting. If you need assistance in voting
your shares or additional copies of the funds' proxy materials, contact
Georgeson at 1-866-434-4434.

Legg Mason Focus Trust, Inc.
Legg Mason Global Trust, Inc.
Legg Mason Europe Fund
Legg Mason Emerging Markets Trust
Legg Mason Global Income Trust
Legg Mason International Equity Trust
Legg Mason Income Trust, Inc.
Legg Mason High Yield Portfolio
Legg Mason Investment Grade Income Portfolio
Legg Mason U.S. Government Intermediate-Term Portfolio
Legg Mason U.S. Government Money Market Portfolio
Legg Mason Investment Trust, Inc.
Legg Mason Opportunity Trust
Legg Mason Investors Trust, Inc.
Legg Mason American Leading Companies Trust
Legg Mason Balanced Trust
Legg Mason Financial Services Fund
Legg Mason U.S. Small-Capitalization Value Trust
Legg Mason Light Street Trust, Inc.
Legg Mason Classic Valuation Fund
Legg Mason Tax-Exempt Trust, Inc.
Legg Mason Tax-Free Income Fund
Legg Mason Maryland Tax-Free Income Trust
Legg Mason Pennsylvania Tax-Free Income Trust
Legg Mason Tax-Free Intermediate-Term Income Trust
Legg Mason Special Investment Trust, Inc.
Legg Mason Value Trust, Inc.

100 Light Street
Baltimore, Maryland 21202

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

NOTICE OF SPECIAL MEETINGS OF SHAREHOLDERS
October 30, 2002

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

To the Shareholders:

A series of Special Meetings of Shareholders ("Meeting") of the
above-listed Legg Mason Funds (each a "Fund") will be held at the offices of the
Funds at 100 Light Street (28th Floor, Oriole Room), Baltimore, Maryland 21202,
on October 30, 2002 at 11:00 a.m. (Eastern time). The Meeting is being held to
consider the following proposals:

(1) To elect ten Directors to Legg Mason Investment Trust, Inc. and nine
Directors or Trustees to each of the other Funds;

(2) To consider a series of proposals to modernize the investment
restrictions of the Funds;

(3) To consider a proposal to change the Funds' investment objectives from
fundamental to non-fundamental;

(4) To amend and restate the Articles of Incorporation of Legg Mason Value
Trust, Inc., Legg Mason Special Investment Trust, Inc., Legg Mason
Income Trust, Inc., Legg Mason Tax-Exempt Trust, Inc. and Legg Mason
Focus Trust, Inc.;

(5) To amend the Bylaws of Legg Mason Tax-Exempt Trust, Inc.; and

(6) To consider and act upon any other business that may properly come
before the Meeting or any adjournments thereof.

These proposals are discussed in greater detail in the attached Proxy
Statement. You are entitled to vote at the Meeting and any adjournment thereof
if you were a holder of record of shares of one or more of the Funds at the
close of business on August 26, 2002. If you attend the Meeting, you may vote
your shares in person.

Enclosed with this Proxy Statement are one or more proxy cards
corresponding to each Fund in which you own shares. Please note that you must
indicate a vote and sign the card with respect to each Fund for which you
receive a proxy card in order for your vote to count for that Fund.

Whether or not you intend to attend the Meeting in person, you may vote in
any of the following ways:

(1) By Mail: Vote, sign, date and return the enclosed proxy card(s) in the
enclosed postage-paid envelope;

(2) By Telephone: Vote by telephone by calling the toll-free number that
appears on the enclosed proxy card(s) and the Voting Instructions card.
(A confirmation of your telephone vote will be mailed to you); or

(3) By Internet: Have your proxy card(s) available. Vote by Internet by
accessing the web site whose Internet address appears on the enclosed
proxy card(s) and on the Voting Instructions card. Enter your control
number from your proxy card(s). Follow the simple instructions found on
the web site.

By order of the Boards of Directors/Trustees,

/s/ Marc R. Duffy

Marc R. Duffy
Secretary

Dated: September 3, 2002
Baltimore, Maryland

Legg Mason Cash Reserve Trust
and
Legg Mason Charles Street Trust, Inc.
(on behalf of its series, Batterymarch U.S. Small Capitalization Equity
Portfolio)

100 Light Street
Baltimore, Maryland 21202

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

NOTICE OF SPECIAL MEETINGS OF SHAREHOLDERS
October 24, 2002

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

To the Shareholders:

A series of Special Meetings of Shareholders ("Meeting") of the
above-listed Legg Mason Funds (each a "Fund") will be held at the offices of the
Funds at 100 Light Street (28th Floor, Oriole Room), Baltimore, Maryland 21202,
on October 24, 2002 at 2:00 p.m. (Eastern time). The Meeting is being held to
consider the following proposals:

(1) To elect nine Trustees or Directors;

(2) To consider a series of proposals to modernize the investment
restrictions of the Funds;

(3) To consider a proposal to change the Funds' investment objectives from
fundamental to non-fundamental; and

(4) To consider and act upon any other business that may properly come
before the Meeting or any adjournments thereof.

Whether or not you intend to attend the Meeting in person, you may vote in
any of the following ways:

(1) By Mail: Vote, sign, date and return the enclosed proxy card(s) in the
enclosed postage-paid envelope;

(2) By Telephone: Vote by telephone by calling the toll-free number that
appears on the enclosed proxy card and the Voting Instructions card. (A
confirmation of your telephone vote will be mailed to you.) (Legg Mason
Cash Reserve Trust only); or

(3) By Internet: Have your proxy card available. Vote by Internet by
accessing the web site whose Internet address appears on the enclosed
proxy card and the Voting Instructions card. Enter your control number
from your proxy card. Follow the simple instructions found on the web
site (Legg Mason Cash Reserve Trust only).

By order of the Boards of Directors/Trustees,

/s/ Marc R. Duffy

Marc R. Duffy
Secretary

Dated: September 3, 2002
Baltimore, Maryland

- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN.
PLEASE RETURN YOUR PROXY CARD(S) PROMPTLY.

Shareholders are invited to attend the Meeting(s) in person. Any
shareholder who does not expect to attend the Meeting(s) is urged to
indicate voting instructions on the enclosed form(s) of proxy, sign and date
it, and return it in the envelope provided, which needs no postage if mailed
in the United States. If you sign, date and return the proxy card(s) but
give no instructions, your shares will be voted "FOR" Proposals 1 through 5,
as applicable to the Fund(s) of which you are a shareholder, and "FOR" or
"AGAINST" any other matter acted upon at the Meeting in the discretion of
the persons named as proxies. Alternatively, you may vote your proxy card(s)
by telephone or on the Internet in accordance with the instructions on the
enclosed proxy card(s).

To avoid the additional expense to the Funds of further solicitation, we
ask your cooperation in voting your proxy card(s) promptly, no matter how
large or small your holdings may be.

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

Legg Mason Cash Reserve Trust
Legg Mason Charles Street Trust, Inc.
Batterymarch U.S. Small Capitalization Equity Portfolio
Legg Mason Focus Trust, Inc.
Legg Mason Global Trust, Inc.
Legg Mason Europe Fund
Legg Mason Emerging Markets Trust
Legg Mason Global Income Trust
Legg Mason International Equity Trust
Legg Mason Income Trust, Inc.
Legg Mason High Yield Portfolio
Legg Mason Investment Grade Income Portfolio
Legg Mason U.S. Government Intermediate-Term Portfolio
Legg Mason U.S. Government Money Market Portfolio
Legg Mason Investment Trust, Inc.
Legg Mason Opportunity Trust
Legg Mason Investors Trust, Inc.
Legg Mason American Leading Companies Trust
Legg Mason Balanced Trust
Legg Mason Financial Services Fund
Legg Mason U.S. Small-Capitalization Value Trust
Legg Mason Light Street Trust, Inc.
Legg Mason Classic Valuation Fund
Legg Mason Tax-Exempt Trust, Inc.
Legg Mason Tax-Free Income Fund
Legg Mason Maryland Tax-Free Income Trust
Legg Mason Pennsylvania Tax-Free Income Trust
Legg Mason Tax-Free Intermediate-Term Income Trust
Legg Mason Special Investment Trust, Inc.
Legg Mason Value Trust, Inc.

100 Light Street
Baltimore, Maryland 21202
(800) 822-5544

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

PROXY STATEMENT

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

Special Meetings of Shareholders
October 24, 2002 (Legg Mason Cash Reserve Trust and Legg Mason Charles Street
Trust, Inc.)
October 30, 2002 (All other Funds)

INTRODUCTION

This Proxy Statement is being furnished to the shareholders of each of the
above-listed funds (each a "Fund") by the Board of Directors or Trustees (each a
"Board" or "Board of Directors," and individually, "Directors") of each
Corporation and Trust (referred to herein as "Corporations") of which the Funds
are a part, in connection with the solicitation of shareholder votes by proxy to
be voted at the Special Meetings of Shareholders or any adjournments thereof
("Meeting") to be held on October 30, 2002 at 11:00 a.m. Eastern time (October
24, 2002 at 2:00 p.m. Eastern time for Legg Mason Cash Reserve Trust and Legg
Mason Charles Street Trust, Inc.) at the offices of the Funds at 100 Light
Street (28th Floor, Oriole Room), Baltimore, Maryland 21202. It is expected that

the Notice of Special Meeting, Proxy Statement and form of proxy first will be
mailed to shareholders on or about September 6, 2002.

As more fully described in this Proxy Statement, the purpose of the
Meeting is to vote on the following proposals:

(1) To elect ten Directors to Legg Mason Investment Trust, Inc. and nine
Directors or Trustees to each of the other Funds;

(2) To consider a series of proposals to modernize the investment
restrictions of the Funds;

(3) To consider a proposal to change the Funds' investment objectives from
fundamental to non-fundamental;

(5) To amend the Bylaws of Legg Mason Tax-Exempt Trust, Inc.; and

(6) To consider and act upon any other business that may properly come
before the Meeting or any adjournments thereof.

If the enclosed forms of proxy is executed properly and returned, shares
represented by it will be voted at the Meeting in accordance with the
instructions on the proxy. A proxy may nevertheless be revoked at any time prior
to its use by written notification received by the Funds, by the execution of a
subsequently dated proxy or by attending the Meeting and voting in person.
However, if no instructions are specified on a proxy, shares will be voted "FOR"
the election of the nominees for Director listed in this Proxy Statement, "FOR"
Proposals 2, 3, 4 and 5, and "FOR" or "AGAINST" any other matters acted upon at
the Meeting in the discretion of the persons named as proxies.

The close of business on August 26, 2002 has been fixed as the record date
for the determination of shareholders entitled to notice of and to vote at the
Meeting ("Record Date"). Each share will be entitled to one vote at the Meeting
and fractional shares will be entitled to proportionate fractional shares of one
vote. A table showing the outstanding shares with respect to each Fund as of
August 2, 2002 is attached as Exhibit A.

As of August 9, 2002, the Directors and officers of each Corporation, as a
group, beneficially owned less than 1% of the outstanding shares of each class
of each Fund. A table showing the record and beneficial owners of more than 5%
of the outstanding shares of any class of each Fund as of August 2, 2002 is
attached as Exhibit B.

The solicitation is made primarily by the mailing of this Proxy Statement
and the accompanying proxy card(s). Supplementary solicitations may be made by
mail, telephone, telegraph or in person by regular employees of the Funds'
administrators, advisers, or distributor. All expenses in connection with
preparing this Proxy Statement and its enclosures and additional solicitation
expenses will be borne by the Funds. In addition, the Funds may retain Georgeson
Shareholder Communications Inc., a proxy solicitation firm, at a cost of
approximately $80,000 plus out of pocket expenses to solicit shareholders on
behalf of the Funds.

Required Vote: For all Funds except Legg Mason Tax-Exempt Trust, Inc., Legg
Mason Charles Street Trust, Inc. and Legg Mason Cash Reserve Trust, the presence
at the Meeting, in person or by proxy, of one-third of the shares entitled to
vote is required for a quorum. For Legg Mason Tax-Exempt Trust, Inc., a quorum
requires the presence, in person or by proxy, of a majority of the shares
entitled to vote. For Legg Mason Charles Street Trust, Inc., a quorum requires
the presence of 30% of the shares entitled to vote, and for Legg Mason Cash
Reserve Trust, a quorum requires the presence of 25% of the shares entitled to
vote.

The affirmative vote of a plurality of the votes cast at the Meeting on the
election of Directors is required to elect a Director. The shareholders of each
Corporation will vote separately on the election of its Directors. Proposal 2
and Proposal 3, which would modernize the fundamental investment restrictions of
the Funds and de-fundamentalize their investment objectives, respectively,
requires approval by the lesser of (a) the vote of 67% or more of the voting
securities present at a meeting, if the holders of more than 50% of the
outstanding voting securities are present, or (b) the vote of more than 50% of
the outstanding shares (referred to herein as a "1940 Act Majority

Vote"). Each Fund will vote separately on Proposals 2 and 3. Approval of
Proposal 4, to amend the Articles of Incorporation of certain Corporations,
requires the affirmative vote of a majority of the outstanding shares of the
Corporation. Approval of Proposal 5, to amend the Bylaws of Tax-Exempt Trust,
requires the affirmative vote of a majority of the outstanding shares of
Tax-Exempt Trust.

In the event that a quorum is not present at the Meeting or sufficient
votes to approve a proposal are not received, the persons named as proxies may
propose one or more adjournments of the Meeting to permit further solicitation
of proxies. Any such adjournments will require the affirmative vote of a
majority of the shares present at the Meeting or represented by proxy. In such
case, the persons named as proxies will vote those proxies which they are
entitled to vote in favor of such item "FOR" such an adjournment, and will vote
those proxies required to be voted against such item "AGAINST" such an
adjournment. A shareholder vote may be taken on any Proposal in this Proxy
Statement prior to any such adjournment if sufficient votes have been received
and it is otherwise appropriate.

Broker non-votes are shares held in street name for which the broker
indicates that instructions have not been received from the beneficial owners or
other persons entitled to vote and with respect to which the broker does not
have discretionary voting authority. Abstentions and broker non-votes will be
counted as shares present for purposes of determining whether a quorum is
present. Accordingly, abstentions and broker non-votes effectively will be a
vote against Proposals 2 and 3 and against an adjournment because the required
vote is a percentage of the shares present at the Meeting, but will have no
impact on the proposal to elect Directors because the required vote is a
plurality of the votes cast at the Meeting, or on Proposals 4 and 5 because the
required votes are a majority of the shares outstanding.

Summarized below are the Proposals that shareholders of the Funds are being
asked to consider:

Fund Proposal
- -----------------------------------------------------------------------------------------------------

All Funds 1. To elect ten Directors to Legg Mason
Investment Trust, Inc., and nine
Directors or Trustees to each of the
other Funds.

- -----------------------------------------------------------------------------------------------------
All Funds 2. To consider a series of proposals to
modernize the investment restrictions of
the Funds.

- -----------------------------------------------------------------------------------------------------
All Funds 3. To consider a proposal to change the
Funds' investment objectives from
fundamental to non-fundamental.

- -----------------------------------------------------------------------------------------------------
Legg Mason Value Trust 4. To amend and restate the Articles of
Legg Mason Special Investment Trust Incorporation.
Legg Mason Income Trust
Legg Mason Tax-Exempt Trust
Legg Mason Focus Trust
- -----------------------------------------------------------------------------------------------------
Legg Mason Tax-Exempt Trust 5. To amend the Bylaws.
- -----------------------------------------------------------------------------------------------------

Copies of the Funds' most recent annual and semi-annual reports, including
financial statements, have previously been delivered to shareholders. A Fund
shareholder may obtain a free copy of the Fund's Annual Report for its most
recently completed fiscal year, including audited financial statements, by
calling Legg Mason Wood Walker, Incorporated toll-free at (800) 822-5544 or by
mailing a written request to Legg Mason Wood Walker, Incorporated, 100 Light
Street, P.O. Box 1476 Baltimore, Maryland 21203-1476. (The Annual Report for
Legg Mason Cash Reserve Trust for the fiscal year ending August 31, 2002 will
not be available until late October 2002. Shareholders can request a copy of
Legg Mason Cash Reserve Trust's previous Annual Report, containing audited
financial statements for the fiscal year ended August 31, 2001, and its
Semi-Annual Report, containing unaudited financial statements for the six months
ended February 28, 2002.)

PROPOSAL 1 -- ELECTION OF DIRECTORS

The Boards have nominated the nine individuals identified below for
election to the Boards of Directors (ten individuals with respect to Legg Mason
Investment Trust, Inc.) Under the Proposal, shareholders of the Funds are being
asked to vote on these nominees. Pertinent information about each nominee is
set forth below. Each of the nominees except Ms. Masters, Mr. Rowan and Mr.
Mehlman currently serves as a Director of one or more Corporations.

Mr. Fetting was appointed as a Director by the Boards of Legg Mason Value
Trust, Inc., Legg Mason Special Investment Trust, Inc., Legg Mason Charles
Street Trust, Inc. and Legg Mason Investment Trust, Inc. on November 8, 2001.
Mr. O'Brien was appointed a Director by the Boards of all Corporations on August
6, 1999 except Legg Mason Tax-Exempt Trust, Inc., Legg Mason Income Trust, Inc.
and Legg Mason Charles Street Trust, Inc. He was subsequently elected to the
Board of Legg Mason Charles Street Trust, Inc. on April 27, 2001. In addition,
Dr. McGovern was appointed to the Boards of Legg Mason Income Trust, Inc. and
Legg Mason Tax-Exempt Trust, Inc. on July 21, 1989. Mr. Gilmore was appointed to
those Boards on February 2, 1990. Ms. Masters, Mr. Rowan and Mr. Mehlman were
nominated by the Boards on August 7, 2002 for election as Directors by
shareholders.

The Corporations do not contemplate holding annual shareholder meetings for
the purpose of electing Directors. Thus, if elected to the Board of a
Corporation, each nominee will hold office as a Director of that Corporation
until the earlier to occur of (a) the next meeting of shareholders of that
Corporation at which Directors are elected and until their successors are
elected and qualified or (b) until their terms expire in accordance with the
Corporation's retirement policy. Each Corporation's retirement policy generally
calls for the retirement of Directors in the year in which they reach the age of
75; however, a Director may be asked to remain on the Board beyond that age by a
vote of the independent Directors other than the Director being asked to remain.
Mr. Gilmore is not subject to this policy until the end of 2005.

It is the intention of the persons named in the enclosed forms of proxy to
vote in favor of the election of each nominee for Director listed below. Each
nominee has consented to be named in this Proxy Statement and to serve as
Director of all Corporations if elected. The Board has no reason to believe that
any of the nominees will become unavailable for election as a Director, but if
that should occur before the Meeting, the proxies will be voted for such other
nominee(s) as the Board may recommend.

None of the nominees is related to any other nominee. The following tables
set forth certain information regarding each nominee for Director. Unless
otherwise noted, each of the nominees has engaged in the principal occupation
listed in the following table for five years or more.

INFORMATION REGARDING NOMINEES
FOR ELECTION AS DIRECTOR

Term of
Position Office and Number of
Held With Length Legg Mason
Name, Age and Each of Time Funds
Address (1) Corporation Served* Overseen
- -------------------- ------------- ------------ ------------------------

INDEPENDENT DIRECTORS:
Gilmore, Richard G. Director Since 1989 Director/Trustee of
Age 75 all Legg Mason
Funds (consisting of
23 portfolios).

Lehman, Arnold L. Director Since 1982 Director/Trustee of
Age 55 all Legg Mason
Funds (consisting of
23 portfolios).

McGovern, Jill E. Director Since 1989 Director/Trustee of
Age 57 all Legg Mason
Funds (consisting of
23 portfolios).

O'Brien, G. Peter Director Since 1999 Director/Trustee of
Age 56 all Legg Mason
Funds except Legg
Mason Income Trust,
Inc. and Legg Mason
Tax-Exempt Trust,
Inc. (consisting of 18
portfolios).(3)

Masters, Robin J.W. None None None
Age 46

Mehlman, Arthur S. None None None
Age 60

Rowan, S. Ford None None None
Age 59

Other Principal Occupation(s)
Name, Age and Directorships During the Past
Address (1) Held Five Years
- --------------------- ----------------------- -------------------------------------

INDEPENDENT
DIRECTORS:
Gilmore, Richard G. None Retired. Trustee of Pacor Settlement
Age 75 Trust, Inc. (since 1990). Formerly:
Director of CSS Industries, Inc.
(diversified holding company that
makes seasonal decorative
products); and Senior Vice
President, Chief Financial Officer
and Director of PECO Energy Co.,
Inc. (now Exelon Corporation).

Lehman, Arnold L. None Executive Director of The Brooklyn
Age 55 Museum of Art (since 1997).
Formerly: Executive Director of
The Baltimore Museum of Art
( 1979-1997).

McGovern, Jill E. None Chief Executive Officer of The
Age 57 Marrow Foundation since 1993.
Formerly: Executive Director of the
Baltimore International Festival
(January 1991-March 1993); and
Senior Assistant to the President of
The Johns Hopkins University
( 1986-1990).

O'Brien, G. Peter Director of the Royce Trustee of Colgate University and
Age 56 Family of Funds President of Hill House, Inc.
(consisting of 17 (residential home care). Formerly:
portfolios);(4) Managing Director, Equity Capital
Renaissance Capital Markets Group of Merrill Lynch &
Greenwich Funds; and Co. (1971-1999).
Pinnacle Holdings,
Inc. (wireless
communications).

Masters, Robin J.W. None Retired. Director of The Family
Age 46 Learning Centre (non-profit) (since
1996) and Bermuda SMARTRISK
(non-profit) (since 2001). Formerly:
Chief Investment Officer of ACE
Limited (insurance).

Mehlman, Arthur S. None Retired. Director of Maryland
Age 60 Business Roundtable for Education
(non-profit), University of Maryland
Foundation (non-profit), and
University of Maryland College
Park Foundation (non-profit) (since
1998). Formerly (until June 2002):
Partner, KPMG LLP (international
accounting firm).

Rowan, S. Ford None Consultant, Rowan & Blewitt Inc.
Age 59 (management consulting); Adjunct
Professor, George Washington
University (since 2000); Director of
Santa Fe Institute (scientific
research institute) (since 1999) and
Annapolis Center for Science-Based
Public Policy (since 1995).

Term of
Position Office and Number of
Held With Length Legg Mason
Name, Age and Each of Time Funds
Address (1) Corporation Served* Overseen
- --------------------- -------------------- ------------ ------------------------

INTERESTED DIRECTORS:
Curley Jr., John F. Chairman and Since 1982 Chairman and
Age 63 Director Director/Trustee of
all Legg Mason
Funds (consisting of
23 portfolios).

Fetting, Mark R. President of all Since Director of four Legg
Age 47 Corporations; 2001 Mason Funds
Director of (consisting of four
Legg Mason portfolios); President
Value Trust, of all Legg Mason
Inc., Legg funds (consisting of
Mason Special 23 portfolios).
Investment
Trust, Inc., Legg
Mason Charles
Street Trust, Inc.
and Legg
Mason
Investment
Trust, Inc.

Murphy, Jennifer W. Director of Since 1999 Director of one Legg
Age 37 (nominee for Legg Mason Mason Fund
director of Legg Investment (consisting of one
Mason Investment Trust, Inc. portfolio).
Trust, Inc. only)

Other Principal Occupation(s)
Name, Age and Directorships During the Past
Address (1) Held Five Years
- --------------------- ----------------------- -------------------------------------

INTERESTED DIRECTORS:
Curley Jr., John F. None Director and/or officer of various
Age 63 other Legg Mason affiliates.
Formerly: Vice Chairman and
Director of Legg Mason, Inc. and
Legg Mason Wood Walker,
Incorporated; Director of Legg Mason
Fund Adviser, Inc. and Western Asset
Management Company (each a
registered investment adviser).

Fetting, Mark R. Director of the Royce Executive Vice President of Legg
Age 47 Family of Funds Mason, Inc., Director and/or officer
(consisting of 17 of various other Legg Mason
portfolios). affiliates (since 2000). Formerly:
Division President and Senior
Officer of Prudential Financial
Group, Inc. and related companies,
including fund boards and
consulting services to subsidiary
companies from 1991 to 2000;
Partner, Greenwich Associates; and
Vice President, T. Rowe Price
Group, Inc.

Murphy, Jennifer W. None Chief Operations Officer of LMM
Age 37 (nominee for LLC (since October 1999); Senior
director of Legg Vice President, COO, CFO and
Mason Investment Director of Legg Mason Funds
Trust, Inc. only) Management, Inc. (since December
1998). Formerly: Director of
Special Projects, Legg Mason, Inc.
(March 1995 to November 1998).

- ------------
(1) The mailing address of each Director listed above is 100 Light Street, 23rd
Floor, Baltimore, Maryland 21202, Attn: Fund Secretary.
(2) Reflects earliest year of election or appointment to the Boards of any Legg
Mason Fund.
(3) If elected to the Boards of all Legg Mason Funds, as proposed, Messrs.
O'Brien and Fetting would oversee 23 portfolios.
(4) Royce & Associates, Inc., investment adviser to the Royce Funds, is a
wholly owned subsidiary of Legg Mason, Inc., which also owns the Funds'
investment advisers and distributor.

Messrs. Curley and Fetting and Ms. Murphy are considered to be interested
persons (as defined in the Investment Company Act of 1940, as amended ("1940
Act")), of each Corporation on the basis of their employment with the Funds'
investment advisers or their affiliated entities (including the Funds' principal
underwriter), including Legg Mason, Inc., the parent holding company.

Compensation of Directors

Officers and Directors who are "interested persons" of the Corporations (as
defined in the 1940 Act) receive no salary or fees from the Corporations. Each
Director who is not an interested person of the Corporations ("Independent
Directors") receives an annual retainer and a per meeting fee based on the net
assets of the Funds as of December 31 of the previous year.

Currently, for each Fund having net assets of up to $250 million as of the
previous December 31, a Corporation pays its Directors an annual retainer of
$600 and a per meeting fee of $150. For each Fund having net assets of $250
million to $1 billion as of the previous December 31, a Corporation pays its
Directors an annual retainer of $1,200 and

a per meeting fee of $300. For each Fund having net assets over $1 billion as
of the previous December 31, a Corporation pays its Directors an annual
retainer of $2,000 and a per meeting fee of $400. The Corporations also pay
travel and other out-of-pocket expenses incurred by the Directors in attending
Board meetings.

The table below includes certain information relating to the compensation
of the Directors by each Fund for the year ended December 31, 2001. Annual
Board fees may be reviewed periodically and changed by a Board. None of the
Corporations has any retirement plan for its Directors.

Compensation Table

John F. Mark R. Richard G. Arnold L.
Curley, Jr. Fetting Gilmore Lehman
------------- --------- ------------ -----------

American Leading
Companies Trust None None $ 2,400 $ 2,400
Balanced Trust None None $ 1,200 $ 1,200
Batterymarch U.S. Small
Capitalization Equity
Portfolio None None $ 900 $ 900
Cash Reserve Trust None None $ 3,600 $ 3,600
Classic Valuation Fund None None $ 1,200 $ 1,200
Emerging Markets Trust None None $ 1,200 $ 1,200
Europe Fund None None $ 1,200 $ 1,200
Financial Services Fund None None $ 1,200 $ 1,200
Focus Trust None None $ 1,200 $ 1,200
Global Income Trust None None $ 1,200 $ 1,200
High Yield Portfolio None None $ 1,800 $ 1,800
International Equity Trust None None $ 1,500 $ 1,500
Investment Grade Income
Portfolio None None $ 1,200 $ 1,200
Maryland Tax-Free Income
Trust None None $ 1,200 $ 1,200
Opportunity Trust None None $ 3,000 $ 3,000
Pennsylvania Tax-Free
Income Trust None None $ 1,200 $ 1,200
Special Investment Trust None None $ 3,600 $ 3,600
Tax-Exempt Trust None None $ 2,400 $ 2,400
Tax-Free Intermediate-Term
Income Trust None None $ 1,200 $ 1,200
U.S. Government
Intermediate-Term
Portfolio None None $ 2,400 $ 2,400
U.S. Government Money
Market Portfolio None None $ 2,400 $ 2,400
U.S. Small-Capitalization
Value Trust None None $ 1,200 $ 1,200
Value Trust None None $ 3,600 $ 3,600
Total Compensation from
Funds and Fund Complex None None $42,000 $42,000

Raymond A. Jill E. Jennifer W. G. Peter T.A.
Mason(1) McGovern Murphy O'Brien Rodgers(1)
---------- -------- ----------- -------- ----------

American Leading
Companies Trust None $ 2,400 None $ 2,400 $ 2,100
Balanced Trust None $ 1,200 None $ 1,200 $ 1,050
Batterymarch U.S. Small
Capitalization Equity
Portfolio None $ 900 None $ 900 $ 900
Cash Reserve Trust None $ 3,600 None $ 3,600 $ 3,200
Classic Valuation Fund None $ 1,200 None $ 1,200 $ 1,050
Emerging Markets Trust None $ 1,200 None $ 1,200 $ 1,050
Europe Fund None $ 1,200 None $ 1,200 $ 1,050
Financial Services Fund None $ 1,200 None $ 1,200 $ 1,050
Focus Trust None $ 1,200 None $ 1,200 $ 1,050
Global Income Trust None $ 1,200 None $ 1,200 $ 1,050
High Yield Portfolio None $ 1,800 None None $ 1,200
International Equity Trust None $ 1,500 None $ 1,500 $ 1,200
Investment Grade Income
Portfolio None $ 1,200 None None $ 1,050
Maryland Tax-Free Income
Trust None $ 1,200 None $ 1,200 $ 1,050
Opportunity Trust None $ 3,000 None $ 3,000 $ 2,850
Pennsylvania Tax-Free
Income Trust None $ 1,200 None $ 1,200 $ 1,050
Special Investment Trust None $ 3,600 None $ 3,600 $ 3,200
Tax-Exempt Trust None $ 2,400 None None $ 2,100
Tax-Free Intermediate-Term
Income Trust None $ 1,200 None $ 1,200 $ 1,050
U.S. Government
Intermediate-Term
Portfolio None $ 2,400 None None $ 2,100
U.S. Government Money
Market Portfolio None $ 2,400 None None $ 2,100
U.S. Small-Capitalization
Value Trust None $ 1,200 None $ 1,200 $ 1,050
Value Trust None $ 3,600 None $ 3,600 $ 3,200
Total Compensation from
Funds and Fund Complex None $42,000 None $46,775(2) $36,750

- ------------
(1)Messrs. Mason and Rodgers are retiring from the Boards and are not standing
for election.
(2)This includes compensation from the Royce Family of Funds.

The following table shows the dollar range of each nominee's and each
executive officer's ownership of shares of each Fund and of all the Legg Mason
Funds served, or to be served, by the Director and Executive Officers, all as
of August 9, 2002:

Nominees' and Executive Officers' Share Ownership Table by Dollar Range

Robin
John F. Mark R. Richard G. Arnold L. J.W.
Curley, Jr. Fetting Gilmore Lehman Masters
----------- ------- ---------- --------- -------

American Leading $50,000- $10,000- $1,000-
Companies Trust $100,000 None $50,000 $10,000 None

Balanced Trust $1,000-
None None $10,000 None None

Batterymarch U.S. Small
Capitalization Equity
Portfolio None None None None None

Cash Reserve Trust $1,000- Over $10,000- $10,000-
$10,000 $100,000 $50,000 $50,000 None

Classic Valuation Fund $10,000-
None None $50,000 None None

Emerging Markets Trust $10,000-
None None $50,000 None None

Europe Fund $1,000-
None None $10,000 None None

Financial Services Fund $10,000-
None None $50,000 None None

Focus Trust $10,000-
None None $50,000 None None

Global Income Trust $10,000-
None None $50,000 None None

High Yield Portfolio $1,000- $10,000-
None $10,000 $50,000 None None

International Equity $10,000-
Trust None None $50,000 None None

Investment Grade
Income Portfolio None None None None None

Maryland Tax-Free $10,000-
Income Trust $50,000 None None None None

Opportunity Trust $10,000- $50,000- $10,000- Over
$50,000 $100,000 $50,000 $100,000 None

Jennifer
Jill E. Arthur S. W. G. Peter S. Ford Marc R. Marie K.
McGovern Mehlman Murphy O'Brien Rowan Duffy Karpinski
-------- --------- --------- -------- ------ ------- ---------

American Leading $1,000- $50,000-
Companies Trust $10,000 None None $100,000 None None None

Balanced Trust
None None None None None None None
Batterymarch U.S. Small
Capitalization Equity
Portfolio None None None None None None None

Cash Reserve Trust $10,000- Over $50,000-
$50,000 None None None $100,000 None $100,000

Classic Valuation Fund $10,000-
None None None $50,000 None None None

Emerging Markets Trust
None None None None None None None

Europe Fund $1,000-
None None None None None None $10,000

Financial Services Fund $10,000-
None None None $50,000 None None None

Focus Trust
None None None None None None None

Global Income Trust
None None None None None None None

High Yield Portfolio
None None None None None None None

International Equity
Trust None None None None None None None

Investment Grade $50,000-
Income Portfolio None None None None None None $100,000

Maryland Tax-Free $10,000- $10,000-
Income Trust $50,000 None None None None None $50,000

Opportunity Trust Over Over $10,000- $10,000- $10,000-
None None $100,000 $100,000 $50,000 $50,000 $50,000

Nominees' and Executive Officers' Share Ownership Table by Dollar Range
(continued)

Robin
John F. Mark R. Richard G. Arnold L. J.W.
Curley, Jr. Fetting Gilmore Lehman Masters
----------- ------- ---------- --------- -------

Pennsylvania Tax-Free
Income Trust None None None None None

Special Investment Trust Over $10,000- $10,000-
$100,000 None $50,000 $50,000 None

Tax-Exempt Trust Over $10,000-
$100,000 None $50,000 None None

Tax-Free Intermediate- $10,000-
Term Income Trust None None $50,000 None None

U.S. Government
Intermediate-Term $50,000-
Portfolio $100,000 None None None None

U.S. Government Money
Market Portfolio None None None None None

U.S. Small-Capitalization $10,000- $1,000-
Value Trust None None $50,000 $10,000 None

Value Trust Over $50,000- $10,000- Over
$100,000 $100,000 $50,000 $100,000 None

Family of Investment
Companies
(all Legg Mason Over Over Over Over
Funds) $100,000 $100,000 $100,000 $100,000 None

Jennifer
Jill E. Arthur S. W. G. Peter S. Ford Marc R. Marie K.
McGovern Mehlman Murphy O'Brien Rowan Duffy Karpinski
-------- --------- -------- -------- ------- ------- ---------

Pennsylvania Tax-Free
Income Trust None None None None None None None

Special Investment Trust Over Over $10,000- Over
$100,000 None None $100,000 $ 50,000 None $100,000

Tax-Exempt Trust
None None None None None None None

Tax-Free Intermediate- $10,000-
Term Income Trust $50,000 None None None None None None

U.S. Government
Intermediate-Term
Portfolio None None None None None None None

U.S. Government Money
Market Portfolio None None None None None None None

U.S. Small-Capitalization $50,000- $1,000-
Value Trust None None None $100,000 None None $10,000

Value Trust Over $10,000- $50,000- $10,000- $10,000- Over
$100,000 None $50,000 $100,000 $50,000 $50,000 $100,000

Family of Investment
Companies
(all Legg Mason Over Over Over Over $10,000- Over
Funds) $100,000 None $100,000 $100,000 $100,000 $50,000 $100,000

Board of Directors and Committee Meetings:

Under applicable law, the Boards are responsible for overseeing the affairs
of the Corporations. The officers manage the day-to-day operations of the
Corporations under the direction of the Boards.

The Boards of all Corporations met four times during the most recent
fiscal year, except that the Boards of Legg Mason Cash Reserve Trust, Legg
Mason Tax Exempt Trust, Inc. and Legg Mason Income Trust, Inc. met five times,
and each current Director attended at least 75% of the total number of meetings
of the Boards and of any committees of which he or she was a member during that
year. The standing committees of the Boards include an Audit Committee and a
Nominating Committee. All Directors who are not interested persons of the
Corporations (as defined in the 1940 Act) are members of the Audit and
Nominating Committees. The Boards do not have standing compensation committees.

The Audit Committees act pursuant to a written charter adopted by the
Boards of Directors and are responsible for overseeing accounting and financial
reporting policies, practices and internal controls. The Audit Committees'
duties are: (a) to oversee generally the financial and accounting policies of
the Corporation, including internal accounting control procedures, and the
reports prepared by the independent auditors; (b) to review and recommend
approval or disapproval of audit services and the fees charged for the
services; (c) to evaluate the independence of the independent auditors and to
recommend whether to retain the independent auditors for the next fiscal year;
and (d) to report to the Boards of Directors and make such recommendations as
they deem necessary. The Audit Committees currently consist of Messrs. Gilmore,
Lehman, and O'Brien, Dr. McGovern, and Mr. Rodgers, a retiring Director. The
Audit Committees of each Fund met twice during the most recent fiscal year,
except that the Audit Committee of Cash Reserve Trust met once. Each member of
the Committees attended all meetings.

The Nominating Committees act pursuant to a written charter adopted by the
Boards of Directors and meet periodically to review and nominate candidates for
positions as Independent Directors and to recommend governance arrangements for
the Boards. The Nominating Committees currently consist of Messrs. Gilmore,
Lehman, O'Brien, and Rodgers and Dr. McGovern. During the last fiscal year, the
Nominating Committees met twice.

Executive Officers of the Corporations

The officers of the Corporations, other than those shown above who also
serve as Directors, are:

Term of
Position Office and
Held With Length
Name, Age and the of Time
Address (1) Corporation Served (2)
- ------------------------- ---------------- ---------------

Duffy, Marc R. (3) Vice President Since 2000
Age 44 and Secretary

Karpinski, Marie K. (3) Vice President (4)
Age 53 and Treasurer

Number of
Legg Mason Other Principal Occupation(s)
Name, Age and Funds Directorships During the Past
Address (1) Overseen Held Five Years
- ------------------------- ----------------------- --------------- ------------------------------------

Duffy, Marc R. (3) Vice President and None Vice President and Secretary, Legg
Age 44 Secretary of all Legg Mason Fund Adviser Inc. (since
Mason funds 2000); and Associate General
(consisting of 23 Counsel of Legg Mason Wood
portfolios). Walker, Incorporated (since 1999).
Formerly: Senior Associate,
Kirkpatrick & Lockhart LLP
(1996-1999); and Senior Counsel,
Securities and Exchange Commission,
Division of Investment Management
(1989-1995).

Karpinski, Marie K. (3) Vice President and None Vice President and Treasurer of
Age 53 Treasurer of all Legg Legg Mason Fund Adviser, Inc.
Mason funds and Western Asset Funds, Inc.;
(consisting of 23 and Treasurer of Pacific American
portfolios). Income Shares, Inc. and Western
Asset Premier Bond Fund.

- ------------
(1) The mailing address of each officer listed above is 100 Light Street, 23rd
Floor, Baltimore, Maryland 21202, Attn: Fund Secretary.
(2) Officers serve one-year terms, subject to annual reappointment by the
Boards of Directors.
(3) Officers are interested persons of the Corporations (as defined in the 1940
Act).
(4) Ms. Karpinski has served as Treasurer or Assistant Treasurer of each Fund
since the earlier of the Fund's inception or 1983.

The nominees for Director must be elected by a vote of a plurality of the
votes cast at the Meeting in person or by proxy.

EACH BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE "FOR" EACH OF THE NOMINEES

PROPOSAL 2 -- TO MODERNIZE THE FUNDS' INVESTMENT RESTRICTIONS

Each Fund has adopted certain investment restrictions or policies that are
"fundamental," meaning that as a matter of law they cannot be changed without
shareholder approval. Over time, some Funds have adopted fundamental
restrictions to reflect certain regulatory, business or industry conditions.
Changes in applicable law now permit investment companies like the Funds to
remove certain of these restrictions. Investment companies, however, are
required to have fundamental investment restrictions on the topics addressed in
Proposals 2A-2G.

Each Corporation's Board of Directors, together with the Corporation's
officers and investment advisers, have reviewed each Fund's current fundamental
restrictions and have concluded that certain restrictions should be removed or
revised based on the development of new practices and changes in applicable law
and to facilitate administration of the Fund. At the Meeting, shareholders will
be asked to approve the revised restrictions and to remove all other
fundamental restrictions.

The revised restrictions maintain important investor protections while
providing flexibility to respond to changing markets, new investment
opportunities and future changes in applicable law. In some cases, only
technical changes are being made. The proposed modifications are expected to
facilitate the management of the Funds' assets and simplify the process of
monitoring compliance with investment restrictions. The revised restrictions
(with variations required by the specific investment focus of each Fund) will
be the standard form for Funds in the Legg Mason Fund complex.

The revised restrictions do not affect the investment objectives of the
Funds, which remain unchanged (except as noted in Proposal 3). The Funds will
continue to be managed in accordance with the investment restrictions described
in their Prospectuses, Statements of Additional Information and in accordance
with federal law. The revised restrictions would give the Funds an increased
ability to engage in certain activities. The Directors may consider and adopt
such non-fundamental investment restrictions for the Funds as they determine to
be appropriate and in the shareholders' best interests. Except where indicated
below, the proposed modifications are not expected to significantly affect the
manner in which the Funds are managed, the investment programs of the Funds or
the investment performance of the Funds. The Boards do not anticipate that the
changes, individually or in the aggregate, will result in a material change in
the level of investment risk associated with an investment in any Fund, except
where indicated below.

The Boards of Directors unanimously recommend that shareholders vote to
amend or remove each Fund's fundamental investment restrictions as discussed
below. The Funds affected by the proposed changes are listed in italics at the
beginning of each section. Each section sets out the fundamental investment
restrictions that will apply to each Fund if shareholders of that Fund approve
the Proposal. Appendix C lists each Fund's current fundamental investment
restrictions with a cross-reference to the applicable proposal. To be approved
for a Fund, each Proposal must receive a 1940 Act Majority Vote of that Fund's
shares. If any Proposal is not approved for a Fund, then that Fund's existing
fundamental restriction on that topic will remain in effect. If shareholders
approve the following changes to the fundamental investment restrictions of a
Fund, such changes will become effective as of January 1, 2003.

Proposal No. 2-A: To Modify the Fundamental Investment Restriction on Borrowing
Money.

Funds to which this Proposal applies: All Funds

If shareholders of a Fund approve Proposal 2-A, each Fund's current
fundamental investment restriction on borrowing money, set forth in Exhibit C
to this Proxy Statement, would be modified to read as follows:

"The Fund may not borrow money, except (1) in an amount not exceeding
33-1/3% of the Fund's total assets (including the amount borrowed) less
liabilities (other than borrowings) or (2) by entering into reverse
repurchase agreements or dollar rolls."

If shareholders of a Fund, other than Legg Mason Opportunity Trust,
approve the proposed fundamental investment restriction on borrowing, the
Boards intend to adopt the following non-fundamental investment restriction on
borrowing for that Fund:

"As a non-fundamental policy, the Fund will not borrow for investment
purposes an amount in excess of 5% of its total assets."

If shareholders of Legg Mason Opportunity Trust approve the proposed
fundamental investment restriction on borrowing, the Board intends to adopt the
following non-fundamental investment restriction on borrowing for that Fund:

"The Fund may not borrow for investment purposes an amount of money in
excess of 10% of its net assets. In addition, the Fund may borrow for
temporary purposes including to facilitate shareholder redemptions in times
of unusual market volatility. Temporary borrowings are not considered to be
for investment purposes. Compliance with these percentage limits is
measured as of the time of the borrowing."

The non-fundamental investment restrictions for any Fund may be changed by
its Board without further shareholder approval.

The Declaration of Trust of Legg Mason Cash Reserve Trust currently
contains a provision that recites that Fund's existing restriction on
borrowing. This provision may be amended only by a 1940 Act Majority Vote of
shareholders. In order for that Fund to adopt the revised fundamental
investment restriction on borrowing cited above, its shareholders must also
approve the elimination of this provision from its Declaration of Trust. The
elimination of the restriction on borrowing from the Fund's Declaration of
Trust is consistent with the modern approach to remove investment-related
restrictions from the Funds' organizational documents. Consequently, a vote to
modernize Cash Reserve Trust's investment restriction on borrowing will also
serve as a vote to amend its Declaration of Trust to remove the
investment-related provision on borrowing.

Discussion of Proposed Modifications. The 1940 Act requires every mutual
fund to set forth a fundamental investment restriction indicating the extent to
which the fund may borrow money. Under the 1940 Act, a fund may borrow money
from a bank for any purpose up to 33-1/3% of its total assets. Currently,
however, the borrowing authority of the individual Funds varies from 5% to
33-1/3% of the Fund's total assets. In addition, the borrowing authority of the
Funds varies with respect to their ability to borrow from entities other than
banks and to engage in reverse repurchase agreements or dollar rolls. (Reverse
repurchase agreements involve the sale of securities held by a Fund pursuant to
the Fund's agreement to repurchase the securities at an agreed upon date and
price, which typically reflects the current market rate of interest. In a
dollar roll transaction, the Fund sells a security and agrees to buy a
substantially similar security for future delivery. While it is not clear that
dollar rolls constitute borrowing, they are sufficiently similar to reverse
repurchase agreements (which are considered to be borrowings under the 1940
Act), that the Funds believe a specific carve-out to allow them is warranted.
Certain of the Funds also have fundamental or non-fundamental restrictions
limiting their ability to purchase securities while borrowings in excess of 5%
of the Fund's assets are outstanding and/or to pledge assets.

The proposed modifications would: (1) permit borrowings of up to 33-1/3% of
total assets; (2) permit the use of reverse repurchase agreements or dollar
rolls; (3) remove the restrictions that allow borrowings to be made only from
banks (the 1940 Act currently allows a fund to borrow any amount in excess of 5%
of its total assets only from banks; however, the SEC has permitted some mutual
funds to borrow from other funds, although there is no assurance that the SEC
would grant the Legg Mason Funds such permission, and other possibilities may
develop as the financial services industry continues to evolve); (4) remove the
restrictions that limit the purchase of securities when loans are outstanding;
and (5) remove any fundamental restrictions on pledging assets.

For example, removing the fundamental investment restrictions on
purchasing securities when borrowings are greater than 5% of a Fund's assets
will enhance the Funds' flexibility in emergency situations. For similar
reasons, it is advantageous to remove the fundamental investment restrictions
on pledging assets for those Funds that have it (as described in Proposal 2-Q)
and to permit the Board to address such situations on a case-by-case basis when
it considers the approval of lines of credit or other borrowing arrangements,
consistent with current industry practice and market conditions. To the extent
a Fund borrows money, positive or negative performance by the Fund's
investments may be magnified.

If Proposal 2-A is approved, the investment advisers of Legg Mason Global
Income Trust, Legg Mason Investment Grade Income Portfolio and Legg Mason U.S.
Government Intermediate-Term Portfolio all intend to utilize dollar rolls to a
greater degree. In a dollar roll transaction, the Funds will sell a
fixed-income security for delivery in the current month and simultaneously
contract to purchase substantially similar securities (same type, coupon and
maturity) at an agreed upon future time. When engaging in dollar roll
transactions, the Funds will forgo principal and interest paid on the security
that is sold, but will receive the difference between the current sales price
and the forward price for the future purchase. The Funds would also be able to
earn interest on the income that is received from the initial sale. Because
dollar rolls involve the receipt of money subject to a future obligation to use
it to purchase securities in the future, they could be viewed as a kind of
borrowing or as a leveraging of the Funds' portfolios. The obligation to
purchase securities on a specified future date involves the risk that the
market value of the securities that a Fund is obligated to purchase may decline
below the purchase price. In addition, in the event the other party to the
transaction files for bankruptcy, becomes insolvent or defaults on its
obligation, a Fund may be adversely affected. To reduce the risk that a Fund
will not be able to make its future purchase in a dollar roll transaction, each
Fund will segregate assets consistent with the requirements of the 1940 Act.

EACH BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE "FOR" PROPOSAL NO. 2-A.

Proposal No. 2-B: To Modify the Fundamental Investment Restriction on
Underwriting Securities.

Funds to which this Proposal applies: All Funds

If shareholders of a Fund approve Proposal 2-B, the Fund's current
fundamental investment restriction on underwriting securities, set forth in
Exhibit C to this Proxy Statement, would be modified to read as follows:

"The Fund may not engage in the business of underwriting the securities of
other issuers, except as permitted by the 1940 Act and the rules and
regulations promulgated thereunder, as such statute, rules, and regulations
are amended from time to time or are interpreted from time to time by the
SEC or SEC staff or to the extent that the Fund may be permitted to do so
by exemptive order or other relief from the SEC or SEC staff (collectively,
"1940 Act Laws, Interpretations and Exemptions"). This restriction does not
prevent the Fund from engaging in transactions involving the acquisition,
disposition or resale of portfolio securities, regardless of whether the
Fund may be considered to be an underwriter under the Securities Act of
1933, as amended (the "1933 Act")."

Discussion of Proposed Modifications. The 1940 Act requires every mutual
fund to set forth a fundamental investment restriction indicating the extent to
which the fund may engage in the business of underwriting securities issued by
other persons. The Funds have similar fundamental investment restrictions on
this subject, which generally state that the Fund may not underwrite (or, for
some Funds, engage in the business of underwriting) securities issued by others
except as the Fund may be deemed an underwriter in connection with the
disposition of portfolio securities. (The exception in these restrictions
refers to a technical provision of the 1933 Act, which deems certain persons to
be "underwriters" if they purchase a security from the issuer and later sell it
to the public.)

The proposed changes will allow the Funds greater flexibility to respond
to future investment opportunities, as the 1940 Act Laws, Interpretations and
Exemptions do not prohibit a mutual fund from underwriting the securities of
others.

EACH BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE "FOR" PROPOSAL NO. 2-B.

Proposal No. 2-C: To Modify the Fundamental Investment Restriction on Lending.

Funds to which this Proposal applies: All Funds

If shareholders of a Fund approve Proposal 2-C, the Fund's current
fundamental investment restriction on lending, set forth in Exhibit C to this
Proxy Statement, would be modified to read as follows:

"The Fund may not lend money or other assets, except to the extent
permitted by the 1940 Act Laws, Interpretations and Exemptions. This
restriction does not prevent the Fund from purchasing debt

obligations in pursuit of its investment program, or for defensive or cash
management purposes, entering into repurchase agreements, loaning its
portfolio securities to financial intermediaries, institutions or
institutional investors, or investing in loans, including assignments and
participation interests."

Discussion of Proposed Modifications. The 1940 Act requires every mutual
fund to set forth a fundamental investment restriction indicating the extent to
which the fund may lend. The Funds' current fundamental investment restrictions
on lending are substantially similar in that they generally prohibit the making
of loans (except for the lending of portfolio securities) and specify that an
investment in debt instruments does not constitute the making of a loan. Cash
Reserve Trust is not currently permitted to lend portfolio securities. Most of
the Funds also specifically except repurchase agreements from their lending
restrictions. (A repurchase agreement is an agreement to purchase a security,
coupled with an agreement to sell that security back to the original seller at
an agreed upon date, at a price that generally depends on current interest
rates. The 1940 Act treats these agreements as loans.)

The new restriction would allow the Funds to lend to the full extent
permitted under the 1940 Act. SEC staff interpretations of the 1940 Act
generally prohibit funds from lending more than one-third of their total
assets, except through the purchase of debt obligations or the use of
repurchase agreements.

The proposed modifications also would: (1) expressly permit the use of
repurchase agreements by all the Funds; (2) clarify that each Fund may make
investments in debt obligations in pursuit of its investment program or for
defensive or cash management purposes; (3) remove the current restriction of
Cash Reserve Trust on lending portfolio securities; and (4) eliminate minor
differences in the wording of the Funds' fundamental investment restrictions on
lending.

EACH BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE "FOR" PROPOSAL NO. 2-C.

Proposal No. 2-D: To Modify the Fundamental Investment Restriction on Issuing
Senior Securities.

Funds to which this Proposal applies: All Funds

If shareholders of a Fund approve Proposal 2-D, the Fund's current
fundamental investment restriction on issuing senior securities, set forth in
Exhibit C to this Proxy Statement, would be modified to read as follows:

"The Fund may not issue senior securities, except as permitted under the
1940 Act Laws, Interpretations and Exemptions."

Discussion of Proposed Modifications. The 1940 Act requires every mutual
fund to set forth a fundamental investment restriction indicating the extent to
which the fund may issue "senior securities," a term that is generally defined
to refer to fund obligations that have a priority over a fund's common stock
with respect to the distribution of fund assets or the payment of dividends.
The proposed fundamental investment restriction on issuing senior securities
would be substantially identical to the fundamental investment restriction
currently used by most of the Funds. Most of the Funds' current fundamental
investment restrictions on issuing senior securities permit the Fund to engage
in such activities only as permitted by the 1940 Act, but do not specify the
manner in which the issuance of senior securities may be made. Certain of the
Funds prohibit the issuance of senior securities, except for borrowings from
banks not in excess of a specified percentage of the Fund's assets at the time
the money is borrowed, as allowed by the 1940 Act.

The new restriction would permit the Funds to issue senior securities to
the extent permitted by the 1940 Act. The 1940 Act currently prohibits mutual
funds from issuing senior securities except that funds may borrow money from
banks, provided that there is asset coverage of at least 300% for all
borrowings. This means that, after any borrowing, the fund's total assets
(including the amount borrowed), less liabilities (other than the amount
borrowed), must equal at least three times the amount borrowed. Together with
the restriction on borrowing, the restriction proposed here would make clear
that the Funds can take full advantage of the latitude allowed by the 1940 Act
in this area.

Certain other widely used investment techniques that involve a commitment
by a fund to deliver money or securities in the future are not considered by
the SEC staff to be senior securities. These include repurchase and reverse
repurchase agreements, dollar rolls, options, futures, and forward contracts,
swaps and when-issued and

delayed delivery securities, provided, in each case, that the fund segregates
cash or liquid securities in an amount necessary to pay the obligation or the
fund holds an offsetting commitment from another party. Borrowings for
temporary purposes in amounts up to 5% of a fund's total assets also are not
considered senior securities. The proposed revised restriction would not affect
the Funds' ability to engage in these practices, but could be important in the
future if these techniques or others are deemed to be senior securities.

EACH BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE "FOR" PROPOSAL NO. 2-D.

Proposal No. 2-E: To Modify the Fundamental Investment Restriction on Real
Estate Investments.

Funds to which this Proposal applies: All Funds

If shareholders of a Fund approve Proposal 2-E, the Fund's current
fundamental investment restriction on real estate investments, set forth in
Exhibit C to this Proxy Statement, would be modified to read as follows:

"The Fund may not purchase or sell real estate unless acquired as a result
of ownership of securities or other instruments. This restriction does not
prevent the Fund from investing in issuers that invest, deal, or otherwise
engage in transactions in or hold real estate or interests therein,
investing in instruments that are secured by real estate or interests
therein, or exercising rights under agreements relating to such securities,
including the right to enforce security interests."

Discussion of Proposed Modifications. The 1940 Act requires every mutual
fund to set forth a fundamental investment restriction indicating the extent to
which the fund may engage in the purchase and sale of real estate. The Funds'
current fundamental investment restrictions on real estate investments
generally prohibit the purchase or holding of real estate, except for the
purchase or holding of securities collateralized by real estate or interests
therein. Certain of the Funds also explicitly prohibit the selling of real
estate except for real estate acquired as a result of the Fund's ownership of
securities. The tax-exempt Funds are permitted to purchase municipal bonds
secured by real estate or interests therein.

The proposed new restriction would: (1) preserve or add the ability to
invest in all real estate-related securities and companies whose business
consists in whole or in part of investing in real estate (provided that the
investment is otherwise consistent with a Fund's investment program); (2)
clarify the Funds' ability to exercise all rights attached to their real estate
related interests; and (3) eliminate minor differences in the wording of the
Funds' fundamental investment restrictions on real estate investments. As a
result of exercising its rights attached to real estate-related securities, a
Fund could eventually own an interest in real property. If this occurs, the
Fund would dispose of the property as soon as practicable, consistent with the
Fund's best interests.

EACH BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE "FOR" PROPOSAL NO. 2-E.

Proposal No. 2-F: To Modify the Fundamental Investment Restriction on Investing
in Commodities.

Funds to which this Proposal applies: All Funds

If shareholders of a Fund approve Proposal 2-F, the Fund's current
fundamental investment restriction on investing in commodities, set forth in
Exhibit C to this Proxy Statement, would be modified to read as follows:

"The Fund may not purchase or sell physical commodities unless acquired as
a result of ownership of securities or other instruments. This restriction
does not prevent the Fund from engaging in transactions involving foreign
currency, futures contracts and options, forward contracts, swaps, caps,
floors, collars, securities purchased or sold on a forward-commitment or
delayed-delivery basis or other financial instruments, or investing in
securities or other instruments that are secured by physical commodities."

Discussion of Proposed Modifications. The 1940 Act requires every mutual
fund to set forth a fundamental investment restriction indicating the extent to
which the fund may engage in the purchase and sale of commodities. The Funds'
current fundamental investment restrictions on investing in commodities
generally prohibit the purchase or sale of commodities. Although it is not
clear that financial instruments such as interest rate or S&P 500 futures

contracts are "commodities," the restrictions of most Funds make an exception
for transactions in some combination of futures, options, forward contracts,
swaps, and other derivative products. However, the fundamental restrictions of
Focus Trust, Tax-Exempt Trust, U.S. Government Money Market Portfolio and Cash
Reserve Trust do not expressly set forth such exceptions.

The proposed modifications would: (1) clarify the types of derivative
transactions that are permissible for the Funds; (2) permit the Funds to invest
in new financial instruments that may be developed in the future; (3) clarify
that the Funds may invest in securities or other instruments backed by physical
commodities; and (4) clarify that the Funds may acquire physical commodities as
the result of ownership of instruments other than securities and may sell any
physical commodities acquired in that way.

EACH BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE "FOR" PROPOSAL NO. 2-F.

Proposal No. 2-G: To Modify the Fundamental Investment Restriction on Industry
Concentration.

Funds to which this Proposal applies: All Funds

If shareholders of a Fund approve Proposal 2-G, the current investment
restriction on concentration of every Fund except Financial Services Fund and
Cash Reserve Trust, set forth in Exhibit C to this Proxy Statement, would be
modified to read as follows:

"The Fund may not make any investment if, as a result, the Fund's
investments will be concentrated (as that term may be defined or
interpreted by the 1940 Act Laws, Interpretations and Exemptions) in any
one industry. This restriction does not limit the Fund's investment in
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities and repurchase agreements with respect thereto, or
securities of municipal issuers."

The following interpretation of this revised fundamental investment
restriction would follow each Fund's fundamental investment restriction on
concentration:

"Although not a part of the Fund's fundamental investment restriction, it
is the current position of the SEC staff that a fund's investments are
concentrated in an industry when 25% or more of the fund's net assets are
invested in issuers whose principal business is in that industry."

If shareholders of Financial Services Fund approve Proposal 2-G, the
Fund's current fundamental investment restriction on concentration, set forth
in Exhibit C to this Proxy Statement, would be modified to read as follows:

"The Fund may not make any investment if, as a result, the Fund's
investments will be concentrated (as that term may be defined or
interpreted by the 1940 Act Laws, Interpretations and Exemptions) in any
one industry other than the financial services industry. This restriction
does not limit the Fund's investment in securities issued or guranteed by
the U.S. Government, its agencies or instrumentatlities and repurchase
agreements with respect thereto, or securities of municipal issuers."

If shareholders of Cash Reserve Trust approve Proposal 2-G, the Fund's
current fundamental investment restriction on concentration, set forth in
Exhibit C to this Proxy Statement, would be modified to read as above, except
that it would permit "investments in instruments of domestic banks (such as
time and demand deposits and certificates of deposit), U.S. branches of foreign
banks subject to substantially similar regulation as domestic banks, and
foreign branches of domestic banks whose parent would be unconditionally liable
in the event that the foreign branch failed to pay on its instruments," in
addition to the other exclusions set forth above.

Discussion of Proposed Modifications. The 1940 Act requires every mutual
fund to set forth a fundamental investment restriction indicating the extent to
which the fund may concentrate investments in a particular industry or group of
industries. The Funds' current fundamental investment restrictions on
concentration generally prohibit the purchase of any security if, as a result,
25% or more of the Fund's assets would be invested in issuers in a single
industry, or having their principal business in the same industry. Most of the
Funds' current fundamental restrictions also make an exception for securities
issued or guaranteed by the U.S. Government, its agencies, or instrumentalities
and repurchase agreements with respect thereto. A repurchase agreement that is
fully collateralized is considered to be an investment in the underlying
security and not an investment in the counterparty. The tax-free Funds exempt
certain municipal securities from the concentration restriction. Financial
Services Fund differs from the other Funds in that it concentrates its
investments in the financial services industries. Cash Reserve Trust has an
investment restriction based on SEC pronouncements applicable to money market
funds, whereby it reserves freedom of action to concentrate its investments in
certain bank instruments.

The proposed modifications would afford the Funds the flexibility to take
advantage of any future changes in the position of the SEC regarding
concentration. The proposed modifications also would clarify that all of the
Funds' securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities and repurchase agreements with respect thereto are excluded
from the Funds' fundamental investment restrictions on concentration and that
securities of municipal issuers are excluded from the Funds' restrictions on
concentration. In addition, these changes would preserve the special provisions
relating to Financial Services Fund and Cash Reserve Trust.

Private activity bonds generally are not considered municipal securities
for purposes of this restriction. Private activity bonds are issued under the
name of a state or municipal agency or instrumentality, but relate to a
particular economic development project carried out by a private entity.
Payment of principal and interest on these bonds generally depends on the
success or failure of the project to which they relate. Tax-Exempt Trust,
Maryland Tax-Free Income Trust, Pennsylvania Tax-Free Income Trust and Tax-Free
Intermediate-Term Income Trust may invest significantly in such securities.

EACH BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE "FOR" PROPOSAL NO. 2-G.

Proposal No. 2-H: To Remove the Fundamental Investment Restriction on
Diversification.

Funds to which this Proposal applies: Cash Reserve Trust, U.S. Government
Intermediate-Term Portfolio, Investment Grade Income Portfolio, High Yield
Portfolio, American Leading Companies Trust, Balanced Trust,
Small-Capitalization Value Trust, Financial Services Fund, Europe Fund,
International Equity Trust, Emerging Markets Trust, Classic Valuation Fund,
Special Investment Trust, Value Trust, Focus Trust and Tax-Exempt Trust

If shareholders of a Fund other than Focus Trust approve Proposal 2-H, the
Fund's current fundamental investment restriction on diversification, set forth
in Exhibit C to this Proxy Statement, would be removed and the following
non-fundamental policy would be added:

"The Fund is diversified under the 1940 Act. Although not a part of the
Fund's fundamental investment restrictions, the 1940 Act currently states
that a fund is diversified if it invests at least 75% of the value of its
total assets in cash and cash items (including receivables), U.S.
Government securities, securities of other investment companies and other
securities, provided, however, that (1) no more than 5% of the value of the
diversified fund's total assets can represent the securities of any one
issuer and (2) no more than 10% of the outstanding voting securities of
such issuer can be held by the diversified fund."

Despite this change, the Funds' status as a "diversifed" fund will
continue to be changeable only upon a shareholder vote.

Focus Trust currently has the following fundamental investment restriction
despite its status as a "non-diversified" fund under the 1940 Act:

"The Fund may not purchase the securities of any one issuer if, immediately
after such purchase, the Fund would own more than 25% of the outstanding
voting securities of such issuer."

If this Proposal is approved for Focus Trust, this investment restriction
would be removed. However, Focus Trust would continue to be subject to the
provisions of the Internal Revenue Code that specify certain diversification
requirements for mutual funds in order to be treated as a regulated investment
company for tax purposes regardless of whether a fund is "diversified" or
"non-diversified" under the 1940 Act.

Discussion of Proposed Modifications. Although the 1940 Act requires every
mutual fund to state whether it is diversified or non-diversified (which the
Funds will continue to do) and requires any change in status from "diversified"
to "non-diversified" to be approved by shareholders, it does not require them
to recite as a fundamental investment restriction the applicable percentage
limitations. The Funds' current fundamental investment restrictions on
diversification generally recite the applicable percentage limitations and an
exception for securities issued by the U.S. Government. Certain of the Funds
also recite an exception for cash and cash items and securities of other
investment companies.

The proposed modifications would clarify that the percentage limitations
and exceptions applicable to diversified funds are not a part of the
fundamental investment restriction on diversification. Accordingly, if a Fund
adopts the proposed new policy on diversification and the requirements for
diversification were to be changed, the Fund could take advantage of that
change. (The SEC has, for example, determined that money market funds that
comply with the diversification requirements of Rule 2a-7 under the 1940 Act
will be deemed diversified, even though that Rule's diversification test
differs from the one in the 1940 Act.)

EACH BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE "FOR" PROPOSAL NO. 2-H.

Proposal No. 2-I: To Remove the Fundamental Investment Restriction on Investing
in Illiquid Securities.

Funds to which this Proposal applies: Europe Fund and Tax-Exempt Trust

If shareholders of a Fund approve Proposal 2-I, the Fund's current
fundamental investment restriction on investing in illiquid securities, set
forth in Exhibit C to this Proxy Statement, would be removed, and the Board
would adopt a non-fundamental investment restriction on investing in illiquid
securities that could, in the future, be modified without shareholder approval.

For Europe Fund, the non-fundamental investment restriction on investing
in illiquid securities would state as follows:

"The Fund may not purchase any security if, as a result, more than 15% of
its net assets would be invested in securities that are deemed to be
illiquid because they are subject to legal or contractual restrictions on
resale or because they cannot be sold or disposed of within seven days in
the ordinary course of business at approximately the prices at which they
are valued."

For Tax-Exempt Trust, the non-fundamental investment restriction on
investing in illiquid securities would state as follows:

"The Fund may not purchase any security if, as a result, more than 10% of
its net assets would be invested in securities that are deemed to be
illiquid because they are subject to legal or contractual restrictions on
resale or because they cannot be sold or disposed of within seven days in
the ordinary course of business at approximately the prices at which they
are valued."

Discussion of Proposed Modifications. A restriction on investing in
illiquid securities is required by the 1940 Act Laws, Interpretations and
Exemptions, but it is not required to be a fundamental restriction. Consistent
with the 1940 Act Laws, Interpretations and Exemptions, the proposed
non-fundamental investment restrictions would limit investments in illiquid
securities to 10% of Tax-Exempt Trust's net assets, because it is a money
market fund, and 15% of Europe Fund's net assets.

EACH BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE "FOR" PROPOSAL NO. 2-I.

Proposal No. 2-J: To Remove the Fundamental Investment Restriction on Short
Sales.

Funds to which this Proposal applies: Cash Reserve Trust, Europe Fund, Focus
Trust, Investment Grade Income Portfolio, Maryland Tax-Free Income Trust,
Pennsylvania Tax-Free Income Trust, Special Investment Trust, Tax Exempt Trust,
Tax-Free Intermediate-Term Income Trust, U.S. Government Intermediate-Term
Portfolio, U.S. Government Money Market Portfolio and Value Trust

If shareholders of a Fund approve Proposal 2-J, the Fund's current
fundamental investment restriction on short sales, set forth in Exhibit C to
this Proxy Statement, would be removed and the Board would adopt a
non-fundamental investment restriction on short sales that, in the future,
could be modified without shareholder approval. The non-fundamental investment
restriction on short sales would state as follows:

"The Fund may not sell securities short (unless it owns or has the right to
obtain securities equivalent in kind and amount to the securities sold
short). This restriction does not prevent the Fund from entering into short
positions in foreign currency, futures contracts, options, forward
contracts, swaps, caps, floors,

collars, securities purchased or sold on a forward-commitment or
delayed-delivery basis or other financial instruments."

Discussion of Proposed Modifications. The Funds are not required to have a
fundamental investment restriction on short sales of securities. Typically, in
a short sale, an investor borrows a security from a lender, sells that security
to a third party, and is obligated to return an identical security to the
lender. The obligation to return an identical security to the lender involves
the risk that the price of the securities that the borrower is obligated to
purchase (and then return to the lender) may be higher than the price the
borrower received for the sale of the securities. Currently, several of the
Funds have fundamental investment restrictions that prohibit short sales of
securities, but permit short positions in other financial instruments, such as
futures. The proposed modifications would incorporate such exceptions into the
proposed non-fundamental investment restriction.

EACH BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE "FOR" PROPOSAL NO. 2-J.

Proposal No. 2-K: To Remove the Fundamental Investment Restriction on Margin
Transactions.

Funds to which this Proposal applies: Cash Reserve Trust, Europe Fund,
Financial Services Fund, Focus Trust, Investment Grade Income Portfolio,
Maryland Tax-Free Income Trust, Pennsylvania Tax-Free Income Trust, Special
Investment Trust, Tax-Exempt Trust, Tax-Free Intermediate-Term Income Trust,
U.S. Government Intermediate-Term Portfolio, U.S. Government Money Market
Portfolio and Value Trust

If shareholders of a Fund approve Proposal 2-K, the Fund's current
fundamental investment restriction on margin transactions, set forth in Exhibit
C to this Proxy Statement, would be removed and the Board would adopt a
non-fundamental investment restriction on margin transactions that could, in
the future, be modified without shareholder approval. The non-fundamental
investment restriction on margin transactions would state as follows:

"The Fund may not purchase securities on margin, except that (1) the Fund
may obtain such short-term credits as are necessary for the clearance of
transactions and (2) the Fund may make margin payments in connection with
foreign currency, futures contracts, options, forward contracts, swaps,
caps, floors, collars, securities on a forward-commitment or
delayed-delivery basis or other financial instruments."

Discussion of Proposed Modifications. The Funds are not required to have a
fundamental investment restriction on margin transactions. Margin transactions
involve the purchase of securities with money borrowed from a broker or
elsewhere. Currently, many of the Funds have fundamental investment
restrictions that prohibit margin transactions, except where, for example,
borrowing is necessary for the clearance of transactions or the margin
transaction involves the use of futures and other financial instruments. The
proposed modifications would incorporate such exceptions into the
non-fundamental investment restriction.

EACH BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE "FOR" PROPOSAL NO. 2-K.

Proposal No. 2-L: To Remove the Fundamental Investment Restriction on
Investments in Oil, Gas and Mineral Programs.

Funds to which this Proposal applies: Cash Reserve Trust, Focus Trust, U.S.
Government Intermediate-Term Portfolio, Investment Grade Income Portfolio, U.S.
Government Money Market Portfolio, Europe Fund, Maryland Tax-Free Income Trust,
Pennsylvania Tax-Free Income Trust and Tax-Free Intermediate-Term Income Trust

If shareholders of a Fund approve Proposal 2-L, the Fund's current
fundamental investment restriction on investments in oil, gas and mineral
programs, set forth in Exhibit C to this Proxy Statement, would be removed.

Discussion of Proposed Modifications. There is no federal requirement that
the Funds have a fundamental investment restriction on oil, gas and mineral
investments. In order to maximize each Fund's investment flexibility, the
Boards propose that each Fund's restriction on oil, gas, and mineral
investments be removed.

EACH BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE "FOR" PROPOSAL NO. 2-L.

Proposal No. 2-M: To Remove the Fundamental Investment Restriction on Investing
for the Purpose of Exercising Control.

Funds to which this Proposal applies: Cash Reserve Trust and Focus Trust

If shareholders of a Fund approve Proposal 2-M, the Fund's current
fundamental investment restriction on investing for the purpose of exercising
control or management, set forth in Exhibit C to this Proxy Statement, would be
removed.

Discussion of Proposed Modifications. There is no federal requirement that
the Funds have an affirmative restriction on this subject if they do not intend
to make investments for the purpose of exercising control. Moreover, there is
no requirement that any restriction that they do have regarding control be
categorized as fundamental. In order to maximize each Fund's investment
flexibility, the Boards propose that each Fund's restriction on investing for
the purpose of exercising control or management be removed.

EACH BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE "FOR" PROPOSAL NO. 2-M.

Proposal No. 2-N: To Remove the Fundamental Investment Restriction on
Investments in Issuers Whose Securities Are Owned by Officers and Trustees of
the Fund or its Investment Adviser.

Fund to which this Proposal applies: Cash Reserve Trust

If shareholders of the Fund approve Proposal 2-N, the Fund's current
fundamental investment restriction on investments in issuers whose securities
are owned by officers and trustees of the Fund or its investment adviser, set
forth in Exhibit C to this Proxy Statement, would be removed.

Discussion of Proposed Modifications. There is no federal requirement that
the Fund have a fundamental investment restriction on this subject. In order to
maximize the Fund's investment flexibility, the Board proposes that this
restriction be removed. The removal of this investment restriction will not
remove any existing safeguard against transactions involving conflicts of
interest between portfolio companies and the Funds' directors, officers or
advisers.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE "FOR" PROPOSAL NO. 2-N.

Proposal No. 2-O: To Remove the Fundamental Investment Restriction on
Investments in Puts, Calls, Straddles and Spreads.

Funds to which this Proposal applies: Cash Reserve Trust, Focus Trust and
Tax-Exempt Trust

If shareholders of a Fund approve Proposal 2-O, the Fund's current
fundamental investment restriction on investments in puts, calls, straddles,
and spreads, set forth in Exhibit C to this Proxy Statement, would be removed.

Discussion of Proposed Modifications. There is no federal requirement that
the Funds have a fundamental investment restriction on investments in puts,
calls, straddles or spreads. In order to maximize each Fund's investment
flexibility, the Boards propose that this restriction be removed.

EACH BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE "FOR" PROPOSAL NO. 2-O.

Proposal No. 2-P: To Remove the Fundamental Investment Restriction on
Investments in Securities of Issuers That Have Been in Operation Less than
Three Years.

Funds to which this Proposal applies: Focus Trust, Europe Fund and Tax-Exempt
Trust

If shareholders of a Fund approve Proposal 2-P, the Fund's current
fundamental investment restriction on investments in securities of issuers that
have been in operation less than three years, set forth in Exhibit C to this
Proxy Statement, would be removed.

Discussion of Proposed Modifications. There is no federal requirement that
the Funds have a fundamental investment restriction on investments in
securities of issuers that have been in operation less than three years. In
order to maximize the Funds' investment flexibility, the Boards propose that
this restriction be removed. Although the Funds do not currently intend to
invest to a greater extent in issuers that have been in operation less than
three years, such investments can be more volatile than investments in more
seasoned issuers.

EACH BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE "FOR" PROPOSAL NO. 2-P.

Proposal No. 2-Q: To Remove the Fundamental Investment Restriction on Pledging
Assets.

Funds to which this Proposal applies: U.S. Government Intermediate-Term
Portfolio, Investment Grade Income Portfolio, U.S. Government Money Market
Portfolio and Tax-Exempt Trust

If shareholders of a Fund approve Proposal 2-Q, the Fund's current
fundamental investment restrictions on pledging assets, set forth in Exhibit C
to this Proxy Statement, would be removed.

Discussion of Proposed Modifications. There is no federal requirement that
the Funds have a fundamental investment restriction on pledging assets. In
order to maximize the Funds' investment flexibility, the Boards propose that
this restriction be removed.

EACH BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE "FOR" PROPOSAL NO. 2-Q.

Proposal No. 2-R: To Remove the Fundamental Investment Restriction on
Investments in Securities Issued by Other Investment Companies.

Funds to which this Proposal applies: Cash Reserve Trust, U.S. Government
Intermediate-Term Portfolio, Investment Grade Income Portfolio and Tax-Exempt
Trust

If shareholders of a Fund approve Proposal 2-R, the Fund's current
fundamental investment restriction on investments in securities issued by other
investment companies, set forth in Exhibit C to this Proxy Statement, would be
removed.

Discussion of Proposed Modifications. The 1940 Act limits the extent to
which funds may acquire securities of other investment companies. There is no
federal requirement, however, that the Funds have a fundamental investment
restriction regarding investments in other investment companies. In order to
maximize the Funds' investment flexibility, the Boards propose that this
restriction be removed. Any such investment would still be subject to the
requirements of the 1940 Act. Although the Funds do not currently intend to
invest to a greater extent in securities issued by other investment companies,
such an investment may involve indirect expenses to the Funds' shareholders
because they will be subject to the expenses of the investment company in which
the Funds invest.

EACH BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE "FOR" PROPOSAL NO. 2-R.

Proposal No. 2-S: To Remove the Fundamental Investment Restriction on Joint
Participation in Securities Trading Accounts.

Fund to which this Proposal applies: Focus Trust

If shareholders of the Fund approve Proposal 2-S, the Fund's current
fundamental investment restriction on joint participation in securities trading
accounts, set forth in Exhibit C to this Proxy Statement, would be removed.

Discussion of Proposed Modifications. The 1940 Act limits the extent to
which funds may participate in joint transactions with their affiliates. There
is no federal requirement, however, that the Fund have a fundamental investment
restriction regarding such transactions. In order to maximize the Fund's
investment flexibility, this restriction should be removed.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE "FOR" PROPOSAL NO. 2-S.

Proposal No. 2-T: To Remove the Fundamental Investment Restrictions on
Purchasing Common Stocks, Preferred Stock, Warrants or Other Equity Securities.

Funds to which this Proposal applies: Europe Fund and Tax-Exempt Trust

If shareholders of the Funds approve Proposal 2-T, Tax-Exempt Trust's
current fundamental investment restriction prohibiting the purchase of common
stocks, preferred stock, warrants and other equity securities and Europe Fund's
current fundamental investment restriction prohibiting the purchase of
warrants, set forth in Exhibit C to this Proxy Statement, would be removed.

Discussion of Proposed Modifications.There is no federal requirement that
the Funds have a fundamental investment restriction regarding purchases of
common stocks, preferred stock, warrants or other equity securities. In order
to maximize the Funds' investment flexibility, the Boards propose that
Tax-Exempt Trust's and Europe Fund's fundamental investment restriction on
these types of securities be removed.

EACH BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE "FOR" PROPOSAL NO. 2-T.

Proposal No. 2-U: To Remove the Fundamental Investment Restriction on
Obligations with a Maturity Greater Than One Year.

Fund to which this Proposal applies: Tax-Exempt Trust

Tax-Exempt Trust has a fundamental investment restriction on investing in
municipal obligations with maturities greater than one year, which states that:

"As a fundamental restriction, except during defensive periods, the Fund
maintains at least 80% of its assets invested in municipal obligations that
have remaining maturities of one year or less or that are variable or
floating rate demand notes."

If shareholders of the Fund approve this Proposal, the Fund's current
fundamental investment restriction on investing in municipal obligations with
maturities greater than one year would be removed.

Discussion of Proposed Modifications. The 1940 Act Laws, Interpretations
and Exemptions set forth investment restrictions applicable to money market
funds. Generally, these restrictions are designed to enable money market funds
to maintain a $1.00 share price. The Fund's current fundamental investment
restrictions require the Fund to invest at least 80% of its assets in
securities with maturities of one year or less, or that are variable or
floating rate demand notes. At the time the Fund was established, this one-year
limitation was imposed on all money market funds by SEC regulations. More
recently, the SEC has amended its regulations to permit money market funds to
invest in securities with maturities of up to 397 days. The Fund's current
fundamental investment restriction disadvantages the Fund because it prohibits
the Fund from taking advantage of potential investment opportunities and
techniques that are consistent with regulatory requirements for money market
funds and in which almost every other municipal money market fund can invest.
The proposed removal would permit the Fund's investments to be governed by the
current rules applicable to investments made by money market funds.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE "FOR" PROPOSAL NO. 2-U.

Proposal No. 2-V: To Amend the Fundamental Investment Policies on Maryland and
Pennsylvania Municipal Securities.

Funds to which this Proposal Applies: Maryland Tax-Free Income Trust and
Pennsylvania Tax-Free Income Trust

The Board of Trustees of Legg Mason Tax-Free Income Fund has approved a
change to the fundamental investment policies of two of its series, Maryland
Tax-Free Income Trust and Pennsylvania Tax-Free Income Trust. These changes are
meant to increase the Funds' investment flexibility without altering their
tax-free nature.

Maryland Tax-Free Income Trust's investment policy currently states:

"Under normal circumstances, the Fund will maintain at least 80% of its
total assets in Maryland municipal obligations, the interest on which is
not a tax preference item for purposes of the federal alternative minimum
tax."

Pennsylvania Tax-Free Income Trust's investment policy currently states:

"Under normal circumstances, the Fund will maintain at least 80% of its
total assets in Pennsylvania municipal obligations, the interest on which
is not a tax preference item for purposes of the federal alternative
minimum tax."

For both Funds, the Board of Trustees recommends amending their
fundamental investment policies to read as follows:

"Under normal circumstances, the Fund will invest at least 80% of its net
assets in municipal obligations the interest on which is not subject to
Maryland/Pennsylvania [as applicable] state and local taxes, exclusive of
any such obligations the interest on which is a tax preference item for
purposes of the federal alternative minimum tax."

The first change recommended above is replacing "maintain" with "invest."
This change will enhance the Funds' investment flexibility because it clarifies
that the 80% minimum is required only as of the time of investment. This means
that the Funds will meet the terms of this policy if they comply with it as of
the time of their investment, but subsequent market action or redemption
activity decreases the value of their investments in such securities to below
80% of their net assets.

The proposal would change the focus of the investment policy from
investments in Maryland or Pennsylvania municipal securities to investments in
municipal securities the interest on which is exempt from Maryland or
Pennsylvania state and local taxes. This revision will promote the Funds'
investment flexibility as it will allow them to invest in municipal obligations
that are not subject to their particular state's taxes, but that are not issued
by Maryland or Pennsylvania municipalities. If the policy is adopted by
shareholders of a Fund, there are certain other obligations, designated by
statute as not being subject to state or local taxes, in which the Fund could
invest. Examples of such securities are municipal obligations of territories of
the United States, such as Puerto Rico and Guam. Investments in obligations of
other jurisdictions generally will be subject to the political and economic
risks particular to such jurisdictions. Furthermore, obligations of additional
municipalities, agencies or instrumentalities could be statutorily declared as
exempt from Maryland and/or Pennsylvania state and local taxes in the future.
This change to the Funds' policy would allow them to capitalize on such
prospective exemptions as well.

The Board of Trustees believes that the proposed revision of Maryland
Tax-Free Income Trust's and Pennsylvania Tax-Free Income Trust's investment
policy will be in the best interests of each Fund and its shareholders because
it will increase the Fund's investment flexibility, promote further portfolio
diversification and allow the Fund to take advantage of future statutory
enlargements of the category of obligations whose income is exempt from
Maryland and/or Pennsylvania state and local taxes.

THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS
THAT YOU VOTE "FOR" PROPOSAL NO. 2-V.

PROPOSAL 3 -- TO CHANGE THE INVESTMENT OBJECTIVE
OF EACH FUND FROM FUNDAMENTAL TO NON-FUNDAMENTAL

Funds to which this Proposal applies: All Funds

Every registered investment company is required to state its investment
objective, i.e., the goal of its investment program, in its prospectus. There
is no requirement that a fund's investment objective be fundamental, but most
funds, including the Funds, have stated that their investment objectives are
fundamental. The Boards of Directors of the Funds have approved a proposal to
make each Fund's investment objective non-fundamental. Please see Exhibit C to
this Proxy Statement for each Fund's investment objective.

If approved by shareholders, this change would mean that the Board would
be able to change a Fund's investment objective in the future without further
approval by shareholders. This change would enhance a Fund's flexibility by
allowing a Board to more easily alter the Fund's investment objective when the
Board believes it is

in the best interests of shareholders or when necessary to comply with possible
future regulatory changes. Fund shareholders would receive prior notice of any
change to a Fund's investment objective. The Boards have no current intention
of changing any Fund's investment objective.

To be approved for a Fund, this Proposal must receive a 1940 Act Majority
of that Fund's shares. If this Proposal is not approved for a Fund, then that
Fund's investment objective will remain fundamental.

EACH BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE "FOR" PROPOSAL NO. 3.

PROPOSAL 4 -- TO AMEND AND RESTATE THE ARTICLES OF INCORPORATION

Corporations to which this Proposal applies: Value Trust, Special Investment
Trust, Tax-Exempt Trust, Focus Trust, Income Trust (High Yield Portfolio,
Investment Grade Income Portfolio, U.S. Government Intermediate-Term Portfolio
and U.S. Government Money Market Portfolio)

The Boards of Directors of the Corporations listed above have approved
Amended and Restated Articles of Incorporation for these Corporations and
recommend that each Corporation's shareholders approve them. The main reasons
to amend and restate the Articles of Incorporation of these Corporations are to
modernize their provisions to reflect changes in state and federal law, to
enhance the Corporations' flexibility by deleting unnecessary provisions and to
consolidate each of the Corporation's amendments and supplements to its current
Articles of Incorporation into one document. These changes will also promote
consistency across the Articles of Incorporation of all of the Legg Mason Funds
organized as Maryland corporations.

A copy of Value Trust's proposed Amended and Restated Articles is attached
as Exhibit D to this Proxy Statement. (The proposed Amended and Restated
Articles of Incorporation of the other Corporations would be identical to those
for Value Trust except for the names of the Corporations, their series and
classes and the number of shares authorized and allocated to each series and
class.) Below is a summary of the substantive changes that will be reflected in
the Corporations' Amended and Restated Articles of Incorporation.

o The Amended and Restated Articles of Incorporation would consolidate and
clarify various provisions relating to series and classes of shares. They
would also consolidate the various amendments and supplements to the
Articles of Incorporation creating new shares, series and classes and
renaming the Funds and their classes. In addition, where necessary,
explicit references to the Corporations' series and classes would be
added. In particular, a section would be added stating that a Corporation
may enter into a contract on behalf of a specific series or class, and
that all actions, liabilities, judgments, or payments arising out of such
a contract will be the sole responsibility of that series or class.
Previously, this limitation on contractual liability appeared only in the
Corporations' contracts. Additionally, these provisions would clarify
that only shares of series or classes that will be affected by a proposal
may vote on such proposal at a shareholder meeting.

o A provision would be added which states that the presence or absence of a
quorum may be determined separately for each matter to be decided at a
shareholder meeting. This provision is necessary because certain
investment intermediaries are allowed to vote, and do vote, when no vote
is given by the beneficial owners with respect to some items in a proxy
statement, but are not permitted to vote on other items. As a result, it
is not unusual for a Corporation to receive many more votes on one item
than another.

o The section that permits all of the Corporations (except for Focus Trust)
to redeem the shares owned by a single shareholder if their total value
falls below $500 has been amended to remove this specific value. The
provision now allows the minimum account value to be decided by the
Boards of Directors by resolution. In addition, the notice period that
must be given by a Corporation to a shareholder before redeeming such a
small account has been reduced from 60 days to 45 days, as permitted by
Maryland law. These changes will provide flexibility for the Corporations
to terminate small accounts in order to reduce administrative costs that
are borne by all investors in a Fund. Although there is no current
intention to raise the minimum account value above $500, the Boards may
do so at some time in the future. (Focus Trust's Articles of
Incorporation already state that the minimum value in a shareholder
account is to be decided by its Board of Directors by resolution.)

o A section has been added that states that the provisions on limitation of
liability and indemnification of Directors, officers and other persons
acting on behalf of the Corporations cannot be subsequently repealed or
narrowed by any action of shareholders with respect to any act or
omission which occurred prior to such action. This section will provide
legal protection and certainty to such parties when they act by ensuring
that there will not be retroactive changes to the Corporations' Articles
of Incorporation and will provide certainty that the actions of such
parties will be judged by a certain specified standard. Such a safeguard
is necessary in order to recruit qualified persons to serve as Directors,
officers or agents of the Corporations.

o For Tax-Exempt Trust only, the number of shares required to be present at
a shareholder meeting in order to transact business is decreased in the
Amended and Restated Articles of Incorporation from a majority of
Tax-Exempt Trust's outstanding shares to one-third of such shares.
Maryland law provides that this standard can be reduced to less than a
majority of outstanding shares through an amendment to the Articles of
Incorporation, which must be approved by Tax-Exempt Trust's shareholders.
The Articles of Incorporation of all of the other Legg Mason Funds
already provide for quorum standards of one-third or less. This provision
will decrease the chance that Tax-Exempt Trust would have to adjourn its
shareholder meetings because of low attendance, thereby saving it and its
shareholders the additional time and expense of another proxy
solicitation.

The Boards of Directors believe that the proposed Amended and Restated
Articles of Incorporation will be in the best interests of each Corporation and
its shareholders because they increase the Corporation's flexibility by
deleting outmoded provisions and allow the Corporation to take advantage of
positive changes in state and federal law. Based upon the foregoing, the Boards
of Directors unanimously recommend that shareholders approve each Corporation's
Amended and Restated Articles of Incorporation. To be approved for a
Corporation, this Proposal must be approved by a majority of the votes entitled
to be cast at the Meeting by shareholders of that Corporation. If this Proposal
is not approved for a Corporation, that Corporation's existing Articles of
Incorporation will remain in effect.

EACH BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE "FOR" PROPOSAL NO. 4.

PROPOSAL 5 -- TO AMEND THE BYLAWS OF
LEGG MASON TAX-EXEMPT TRUST

The Board of Directors of Tax-Exempt Trust recommends that shareholders
repeal Articles 11.02(b), 12 and 13 of Tax-Exempt Trust's Bylaws. Unlike other
provisions of the Bylaws, these Articles can be amended or repealed only by a
vote of Tax-Exempt Trust's shareholders.

Article 12 prohibits certain types of investments in Tax-Exempt Trust
shares by persons closely related to Tax Exempt Trust, loans by Tax-Exempt
Trust to such persons and certain transactions between Tax-Exempt Trust and
such persons that involve potential conflicts of interest. The provisions of
Article 12 apply to Tax-Exempt Trust's Directors and officers, as well as its
investment adviser and distributor and any partner, officer, director or
stockholder thereof or any other person financially interested in these
entities. Article 12 also prohibits Tax-Exempt Trust from imposing any
restrictions on the transfer of its shares, other than any restrictions that
may be permitted by the Articles of Incorporation.

In most cases, the 1940 Act contains provisions that would prohibit or
restrict the types of transactions that Article 12 prohibits. Also, many of the
persons and entities subject to Article 12 have a fiduciary duty under state
law to protect the interests of Tax-Exempt Trust and its shareholders. The
Board of Directors believes that the 1940 Act's provisions and the fiduciary
duties of these persons and entities are sufficient to protect Tax-Exempt Trust
shareholders from self-dealing or overreaching by such persons and entities.
Furthermore, to the extent the SEC issues rules or interpretations liberalizing
the restrictions in the 1940 Act, Tax-Exempt Trust may be unable to take full
advantage of them, and its investment program may suffer, because it is bound
by this outdated Bylaw provision. The prohibitions in Article 12 are not
required to be in Tax-Exempt Trust's corporate documents by state or federal
law, and no other Legg Mason Fund has such a provision in its bylaws. Thus,
removing Article 12 from Tax-Exempt Trust's Bylaws will not reduce
shareholders' safeguards to any meaningful extent, but it will give Tax-Exempt
Trust

the flexibility to engage in transactions that may be beneficial for Tax-Exempt
Trust and its shareholders in a timely manner to the full extent permitted by
law.

The Board of Directors also recommends that Tax-Exempt Trust shareholders
repeal Article 13 of the Bylaws. Article 13 currently enumerates certain
investment restrictions to which Tax-Exempt Trust is subject. As these
restrictions overlap with Tax-Exempt Trust's fundamental investment
restrictions, in order to modernize Tax-Exempt Trust's fundamental investment
restrictions as described in Proposal 2, a majority of Tax-Exempt Trust's
shares must approve a related amendment to Tax-Exempt Trust's Bylaws. Rather
than amending Article 13 to reflect Tax-Exempt Trust's new investment
restrictions, the Board of Directors believes that it is in the best interests
of Tax-Exempt Trust's shareholders to delete Article 13 in its entirety. As
described above, the 1940 Act already requires a shareholder vote to amend a
fund's fundamental investment restrictions. Consequently, shareholders will
continue to have significant protection against changes to Tax-Exempt Trust's
fundamental investment restrictions that are not supported by Tax-Exempt Trust
shareholders. However, as the 1940 Act's voting standard is at times lower than
the standard in Tax-Exempt Trust's Bylaws, obtaining shareholder approval for
such changes will be less difficult and costly to Tax-Exempt Trust and it will
be less likely that Tax-Exempt Trust will be prevented from adjusting its
restrictions in the future to respond to changes in the financial markets or in
regulatory regimes. Also, there is no state or federal requirement that
Tax-Exempt Trust's investment restrictions be set forth in its corporate
documents, and no other Legg Mason Fund has such a provision in its bylaws.

The Board also recommends the repeal of Article 11.02(b) of the Bylaws.
This Article simply states that Articles 12 and 13 cannot be amended or
repealed without a shareholder vote. If shareholders vote to eliminate Articles
12 and 13, Article 11.02(b) will be superfluous.

In consideration of the foregoing, the Board of Directors of Tax-Exempt
Trust unanimously recommends that Tax-Exempt Trust shareholders approve this
Proposal. Approval of the Proposal includes approval of amendments to
Tax-Exempt Trust's Bylaws to repeal Articles 11.02(b), 12 and 13 in their
entirety. An affirmative vote of a majority of the outstanding shares of
Tax-Exempt Trust is required for approval of this Proposal.

Both this Proposal and the proposals within Proposal 2 that apply to
Tax-Exempt Trust must be approved in order to amend certain of Tax-Exempt
Trust's fundamental investment restrictions. If these Proposals are not both
approved, Tax-Exempt Trust's fundamental investment restrictions will change
only to the extent that they do not change the investment restrictions outlined
in Article 13. In addition, if this Proposal is not approved, a shareholder
vote will still be required to amend Articles 12 and 13 of Tax-Exempt Trust's
Bylaws and the prohibitions of Article 12 will remain in place.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE "FOR" PROPOSAL NO. 5.

INFORMATION ON THE FUNDS' INDEPENDENT ACCOUNTANTS

Ernst & Young LLP. The financial statements of the following Funds for
their most recent fiscal years were audited by Ernst & Young LLP ("E&Y"), 2001
Market Street, Philadelphia, PA 19103:

Legg Mason American Leading Companies Trust
Legg Mason Balanced Trust
Legg Mason Cash Reserve Trust
Legg Mason Financial Services Fund
Legg Mason Opportunity Trust
Legg Mason U.S. Small Capitalization Value Trust
Batterymarch U.S. Small Capitalization Equity Portfolio

The Boards have selected E&Y as the independent auditors for each Fund
listed above for the current fiscal year. E&Y has been the independent auditor
of each of these Funds since the Fund's inception. E&Y has informed the Audit
Committees for these Funds that it has no material direct or indirect financial
interest in any of the Funds and that investments in the Funds by its personnel
and their family members are prohibited where appropriate to maintain the
auditors' independence. In the opinion of the Audit Committees, the services
provided by E&Y are compatible with maintaining its independence.

Representatives of E&Y are not expected to be present at the Meeting but
have been given the opportunity to make a statement if they so desire and will
be available should any matter arise requiring their presence.

Audit Fees

The aggregate fees billed by E&Y for professional services rendered for
the audit of the Funds' annual financial statements for the most recent fiscal
year and the review of the financial statements included in the Funds' annual
reports to shareholders were:

Legg Mason American Leading Companies Trust $20,450
Legg Mason Balanced Trust $20,450
Legg Mason Cash Reserve Trust $30,000
Legg Mason Financial Services Fund $20,450
Legg Mason Opportunity Trust $27,500
Legg Mason U.S. Small Capitalization Value Trust $20,450
Batterymarch U.S. Small Capitalization Equity Portfolio $17,500

Financial Information Systems Design and Implementation Fees

No fees were billed by E&Y for the most recent fiscal year for
professional services rendered to the Funds, their investment advisers and all
entities controlling, controlled by or under common control with such
investment advisers for information technology services relating to financial
information systems design and implementation.

All Other Fees

For tax services provided to the Funds, E&Y billed the following amounts
in fees for the most recent fiscal year:

Legg Mason American Leading Companies Trust $3,300
Legg Mason Balanced Trust $3,300
Legg Mason Cash Reserve Trust $3,000
Legg Mason Financial Services Fund $3,300
Legg Mason Opportunity Trust $3,200
Legg Mason U.S. Small Capitalization Value Trust $3,300
Batterymarch U.S. Small Capitalization Equity Portfolio $3,300

E&Y did not provide any other non-audit services to the Funds, their
investment advisers, and all other entities controlling, controlled by, or
under common control with the investment advisers that provide services to the
Funds.

PricewaterhouseCoopers LLP. The financial statements of the following
Funds for their most recent fiscal years were audited by PricewaterhouseCoopers
LLP ("PwC"), 250 West Pratt Street, Baltimore, MD 21201:

Legg Mason Classic Valuation Fund
Legg Mason Emerging Markets Trust
Legg Mason Europe Fund
Legg Mason Focus Trust
Legg Mason High Yield Portfolio
Legg Mason Global Income Trust
Legg Mason International Equity Trust
Legg Mason Investment Grade Income Portfolio
Legg Mason Maryland Tax-Free Income Trust
Legg Mason Pennsylvania Tax-Free Income Trust
Legg Mason Special Investment Trust
Legg Mason Tax-Exempt Trust
Legg Mason Tax-Free Intermediate-Term Income Trust
Legg Mason U.S. Government Money Market Portfolio
Legg Mason U.S. Government Intermediate-Term Portfolio
Legg Mason Value Trust

The Boards have selected PwC as the independent accountants for each Fund
listed above for the current fiscal year. PwC has been the independent
accountants of each of these Funds since the Fund's inception. PwC has informed
the Audit Committees for these Funds that it has no material direct or indirect
financial interest in any of the Funds and that investments in the Funds by its
personnel and their family members are prohibited where appropriate to maintain
the accountants' independence. In the opinion of the Audit Committees, the
services provided by PwC are compatible with maintaining its independence.

Representatives of PwC are not expected to be present at the Meeting but
have been given the opportunity to make a statement if they so desire and will
be available should any matter arise requiring their presence.

Audit Fees

The aggregate fees billed by PwC for professional services rendered for
the audit of the Funds' annual financial statements for the most recent fiscal
year and the review of the financial statements included in the Funds' annual
reports to shareholders were:

Legg Mason Classic Valuation Fund $10,500
Legg Mason Emerging Markets Trust $28,000
Legg Mason Europe Fund $12,000
Legg Mason Focus Trust $11,500
Legg Mason High Yield Portfolio $28,000
Legg Mason Global Income Trust $27,000
Legg Mason International Equity Trust $27,000
Legg Mason Investment Grade Income Portfolio $25,400
Legg Mason Maryland Tax-Free Income Trust $15,000
Legg Mason Pennsylvania Tax-Free Income Trust $14,000
Legg Mason Special Investment Trust $23,400
Legg Mason Tax-Exempt Trust $18,000
Legg Mason Tax-Free Intermediate-Term Income Trust $14,000
Legg Mason U.S. Government Money Market Portfolio $16,600
Legg Mason U.S. Government Intermediate-Term Portfolio $24,900
Legg Mason Value Trust $24,900

Financial Information Systems Design and Implementation Fees

No fees were billed by PwC for the most recent fiscal year for
professional services rendered to the Funds, their investment advisers and all
entities controlling, controlled by or under common control with such
investment advisers for information technology services relating to financial
information systems design and implementation.

All Other Fees

For tax services provided to the Funds, PwC billed the following amounts
in fees for the most recent fiscal year:

Legg Mason Classic Valuation Fund $ 3,800
Legg Mason Emerging Markets Trust $11,200
Legg Mason Europe Fund $ 6,200
Legg Mason Focus Trust $ 3,500
Legg Mason High Yield Portfolio $ 9,000
Legg Mason Global Income Trust $11,200
Legg Mason International Equity Trust $11,200
Legg Mason Investment Grade Income Portfolio $ 9,100
Legg Mason Maryland Tax-Free Income Trust $ 4,200
Legg Mason Pennsylvania Tax-Free Income Trust $ 4,200
Legg Mason Special Investment Trust $ 8,000
Legg Mason Tax-Exempt Trust $ 4,900
Legg Mason Tax-Free Intermediate-Term Income Trust $ 4,200

Legg Mason U.S. Government Money Market Portfolio $4,900
Legg Mason U.S. Government Intermediate-Term Portfolio $9,100
Legg Mason Value Trust $8,000

For other services provided to any of the Funds' investment advisers and
all other entities controlling, controlled by, or under common control with the
investment advisers that provide services to the Funds, PwC billed $1,985,000
in fees for the most recent fiscal year.

THE FUNDS' MANAGERS, ADVISERS, ADMINISTRATORS AND DISTRIBUTOR

Legg Mason Fund Adviser, Inc. ("LMFA") is located at 100 Light Street,
Baltimore, Maryland 21202 and is a wholly owned subsidiary of Legg Mason, Inc.
LMFA serves as manager to Batterymarch U.S. Small Capitalization Equity
Portfolio, Legg Mason Maryland Tax-Free Income Trust, Legg Mason Pennsylvania
Tax-Free Income Trust, Legg Mason Tax-Free Intermediate-Term Income Trust, Legg
Mason Cash Reserve Trust, Legg Mason Classic Valuation Fund, Legg Mason
Tax-Exempt Trust, Legg Mason U.S. Government Intermediate-Term Portfolio, Legg
Mason Investment Grade Income Portfolio, Legg Mason High Yield Portfolio, Legg
Mason U.S. Government Money Market Portfolio, Legg Mason Global Income Trust,
Legg Mason Europe Fund, Legg Mason International Equity Trust, Legg Mason
Emerging Markets Trust, Legg Mason Balanced Trust, Legg Mason U.S.
Small-Capitalization Value Trust and Legg Mason Financial Services Fund under
separate investment advisory agreements with each of these Funds. LMFA serves
as administrator to Legg Mason Value Trust, Legg Mason Special Investment
Trust, Legg Mason American Leading Companies Trust and Legg Mason Focus Trust
pursuant to sub-administration agreements between LMFA and Legg Mason Funds
Management, Inc. LMFA also serves as administrator to Legg Mason Opportunity
Trust pursuant to an administrative services agreement between LMFA and LMM
LLC.

Legg Mason Funds Management, Inc. ("LMFM") is located at 100 Light Street,
Baltimore, Maryland, 21202 and is a wholly owned subsidiary of Legg Mason, Inc.
LMFM serves as manager and investment adviser to Legg Mason American Leading
Companies Trust, Legg Mason Special Investment Trust, Legg Mason Value Trust
and Legg Mason Focus Trust pursuant to separate investment advisory and
management agreements with each of these Funds. LMFM also serves as sub-adviser
to Legg Mason Opportunity Trust pursuant to an advisory agreement between LMM
LLC and LMFM.

Gray, Seifert & Co., Inc. ("Gray Seifert") is located at 380 Madison
Avenue, New York, New York 10017 and is a wholly owned subsidiary of Legg
Mason, Inc. Gray Seifert serves as investment sub-adviser to Legg Mason
Financial Services Fund pursuant to a sub-advisory agreement between Gray
Seifert and LMFA.

Bartlett & Co. ("Bartlett") is located at 36 East Fourth Street,
Cincinnati, Ohio 45202 and is a wholly owned subsidiary of Legg Mason, Inc.
Bartlett serves as investment adviser to Legg Mason Balanced Trust pursuant to
an investment advisory agreement between Bartlett and LMFA.

Batterymarch Financial Management, Inc. ("Batterymarch") is located at 200
Clarendon Street, Boston, Massachusetts 02116 and is a wholly owned subsidiary
of Legg Mason, Inc. Batterymarch serves as investment adviser to Batterymarch
U.S. Small Capitalization Equity Portfolio, Legg Mason International Equity
Trust and Legg Mason Emerging Markets Trust pursuant to advisory contracts
between Batterymarch and LMFA.

Brandywine Asset Management, LLC ("Brandywine") is located at 201 North
Walnut Street, Wilmington, Delaware 19801 and is a wholly owned subsidiary of
Legg Mason, Inc. Brandywine serves as investment adviser to Legg Mason U.S.
Small-Capitalization Value Trust and Legg Mason Classic Valuation Fund,
pursuant to investment advisory agreements between Brandywine and LMFA.

Legg Mason Trust, fsb ("LM Trust") is located at 100 Light Street,
Baltimore, Maryland 21202 and is a wholly owned subsidiary of Legg Mason, Inc.
LM Trust serves as investment adviser to Legg Mason Tax-Exempt Trust, Legg
Mason Maryland Tax-Free Income Trust, Legg Mason Pennsylvania Tax-Free Income
Trust and Legg Mason Tax-Free Intermediate-Term Income Trust pursuant to
advisory agreements between LMFA and LM Trust.

LMM LLC ("LMM") is located at 100 Light Street, Baltimore, Maryland 21202
and is 50% owned by Legg Mason, Inc. and 50% owned, directly or indirectly, by
William H. Miller, III. LMM serves as investment adviser and manager to Legg
Mason Opportunity Trust pursuant to a management agreement with the Fund.

Lombard Odier International Portfolio Management Limited ("Lombard Odier")
is located at 3 Waterhouse Square, 142 Holborn, London, England and is a wholly
owned subsidiary of Lombard Odier & Cie, a Swiss private bank. Lombard Odier
serves as investment sub-adviser to Legg Mason Europe Fund pursuant to a
sub-advisory agreement between Lombard Odier and LMFA.

Western Asset Management Company ("Western Asset") is located at 117 East
Colorado Boulevard, Pasadena, California 91105 and is a wholly owned subsidiary
of Legg Mason, Inc. Western Asset serves as investment adviser to Legg Mason
Cash Reserve Trust, Legg Mason U.S. Government Intermediate-Term Portfolio,
Legg Mason Investment Grade Income Portfolio, Legg Mason High Yield Portfolio,
Legg Mason U.S. Government Money Market Portfolio and Legg Mason Global Income
Trust pursuant to advisory agreements between Western Asset and LMFA.

Western Asset Management Company Limited ("Western Asset Ltd.") is located
at 155 Bishopsgate, London, England and is a wholly owned subsidiary of Legg
Mason, Inc. Western Asset Ltd. serves as investment sub-adviser to Legg Mason
Global Income Trust pursuant to a sub-advisory agreement with Western Asset.
Western Asset Ltd. also serves as sub-administrator to Legg Mason Global Income
Trust pursuant to a sub-administration agreement between Western Asset Ltd. and
LMFA.

Legg Mason Wood Walker, Incorporated ("LMWW") is a wholly owned subsidiary
of Legg Mason, Inc. and is located at 100 Light Street, Baltimore, Maryland
21202. LMWW serves as each Fund's distributor pursuant to an underwriting
agreement and is compensated for its distribution and shareholder services
pursuant to each Fund's Rule 12b-1 plan.

OTHER MATTERS

No business, other than as set forth above, is expected to come before the
Meeting. Should any other matters requiring a vote of shareholders properly
come before the Meeting, the persons named in the enclosed proxy will vote
thereon in accordance with their best judgment in the interests of the affected
Funds.

SHAREHOLDER PROPOSALS

As a general matter, the Corporations do not hold annual or other regular
meetings of shareholders. Any shareholder who wishes to submit proposals to be
considered at a special meeting of a Corporation's shareholders should send
such proposals to the appropriate Corporation at 100 Light Street, 23rd Floor,
Baltimore, Maryland 21202, Attn: Fund Secretary. Proposals must be received
within a reasonable period of time prior to any meeting to be included in the
proxy materials or otherwise to be considered at the meeting. Moreover,
inclusion of such proposals is subject to limitations under the federal
securities laws. Persons named as proxies for any subsequent shareholder
meeting will vote in their discretion with respect to proposals submitted on an
untimely basis.

By order of the Boards of Directors/Trustees,

/s/ Marc R. Duffy

Marc R. Duffy
Secretary

Dated: September 3, 2002

Exhibit A

As of August 2, 2002, the following numbers of shares were outstanding
with respect to each Fund:

Financial
Primary Institutional Intermediary Total --
Class Class Class Class A All Classes
---------------- --------------- -------------- ----------- ----------------

American Leading Companies Trust 29,241,510 554,465 None None 29,795,975
Balanced Trust 3,367,709 36,039 2,325,475 None 5,729,223
Batterymarch U.S. Small Capitalization 16,064,084 None None None 16,064,084
Equity Portfolio
Cash Reserve Trust 2,428,615,104 None None None 2,428,615,104
Classic Valuation Fund 7,057,309 15,909 None None 7,073,218
Emerging Markets Trust 6,473,139 None None None 6,473,139
Europe Fund 1,512,636 96,578 None 1,892,248 3,501,462
Financial Services Fund 3,562,015 None None 759,357 4,321,372
Focus Trust 6,089,371 None None None 6,089,371
Global Income Trust 4,895,182 None None None 4,895,182
High Yield Portfolio 20,409,300 300,564 None None 20,709,864
International Equity Trust 10,623,472 29,543 None None 10,653,015
Investment Grade Income Portfolio 29,666,415 290,011 None None 29,956,426
Maryland Tax-Free Income 10,061,543 None None None 10,061,543
Opportunity Trust 180,356,091 3,777,175 None None 184,133,266
Pennsylvania Tax-Free Income Trust 4,412,913 None None None 4,412,913
Special Investment Trust 68,349,819 2,743,694 None None 71,093,513
Tax-Exempt Trust 464,045,608 None None None 464,045,608
Tax-Free Intermediate-Term Income 3,975,834 None None None 3,975,834
Trust
U.S. Government Intermediate-Term 34,263,512 872,391 None None 35,135,903
Portfolio
U.S. Government Money Market 526,364,806 None None None 526,364,806
Portfolio
U.S. Small-Capitalization Value Trust 17,503,292 598,048 None None 18,101,340
Value Trust 184,378,068 32,918,579 4,314,740 None 221,611,387

A-1

Exhibit B

PRINCIPAL SHAREHOLDERS

To the Funds' knowledge as of August 2, 2002, the following are all of the
record and beneficial owners of more than 5% of the outstanding shares of any
class of each Fund.

Unless otherwise indicated, each of the shareholders listed below may be
contacted c/o the respective Fund at 100 Light Street, 23rd Fl., Baltimore,
Maryland 21202, Attn: Fund Secretary.

Number of
Shares Owned Percentage of
Beneficially or Class of the
Fund Name and Address of Owner of Record Fund Owned
- ----------------------------- ---------------------------------------- ----------------- --------------

Institutional Class
Legg Mason American Leading Legg Mason Wood Walker, Inc. 553,410 99.81%
Companies Trust Deferred Comp
C/O Brian Becker LM Profit Sharing Plan
PO Box 1476
Baltimore, MD 21203-1476

Legg Mason Balanced Trust Robert A. Schriber MD Inc. 16,294 45.21%
Profit Sharing Plan 1987

Kevin M Reid DO Inc. 14,192 39.38%
Defined Contribution
Pension Plan

Legg Mason Trust TTEE 3,404 9.45%
Gottesman Family Trust
100 Light Street
Baltimore, MD 21202-1036

Legg Mason Trust TTEE 2,148 5.96%
Gottesman Marital Trust
100 Light Street
Baltimore, MD 21202-1036

Legg Mason Classic Vanguard Fiduciary Trust Co. 15,909 100.00%
Valuation Fund PO Box 2600 VM 613
Attn: Outside Funds
Valley Forge, PA 19482-2600

Legg Mason Europe Fund Band & Co. 36,429 37.72%
C/O Firstar Bank
PO Box 1787
Milwaukee, WI 53201-1787

Legg Mason Wood Walker, Inc. 20,529 21.26%
Deferred Comp
C/O Brian Becker LM Profit Sharing Plan
PO Box 1476
Baltimore, MD 21203-1476

Robert A. Schriber MD Inc. 8,362 8.66%
Profit Sharing Plan 1987

B-1

Number of
Shares Owned Percentage of
Beneficially or Class of the
Fund Name and Address of Owner of Record Fund Owned
- --------------------------------- ---------------------------------------- ----------------- --------------

Debra M. Hardy-Havens TTEE 5,908 6.12%
Capitol Associates Inc.
Mon Pur Pen PL DTD 1/1/90

LMWW Custodian 5,515 5.71%
FBO Harold C. Murrer
Rollover IRA

Legg Mason High Yield Portfolio Legg Mason Wood Walker, Inc. 255,455 84.98%
Deferred Comp
C/O Brian Becker LM Profit Sharing Plan
PO Box 1476
Baltimore, MD 21203-1476

Loyola Blakefield 38,212 12.72%

Legg Mason International Legg Mason Wood Walker, Inc. 29,543 100.00%
Equity Trust Deferred Comp
C/O Brian Becker LM Profit Sharing Plan
PO Box 1476
Baltimore, MD 21203-1476

Legg Mason Investment Legg Mason Wood Walker, Inc. 207,991 71.69%
Grade Income Portfolio Deferred Comp
C/O Brian Becker LM Profit Sharing Plan
PO Box 1476
Baltimore, MD 21203-1476

Legg Mason Trust FSB 82,099 28.31%
TTEE of the Frank & Shirley
Nicolai Charitable Remainder Unitrust
DTD 5/14/00

Legg Mason Opportunity Trust Legg Mason Wood Walker, Inc. 3,414,843 90.40%
Deferred Comp
C/O Brian Becker LM Profit Sharing Plan
PO Box 1476
Baltimore, MD 21203-1476

William H. Miller III & Leslie J.W. 312,028 8.27%
Miller

Legg Mason Special Legg Mason Wood Walker, Inc. 2,253,965 82.15%
Investment Trust Deferred Comp
C/O Brian Becker LM Profit Sharing Plan
PO Box 1476
Baltimore, MD 21203-1476

Boston Safe Deposit and Trust 279,679 10.19%
Company as Trustee for the TWA Pilots
DAP/401K Plan

B-2

Number of
Shares Owned Percentage of
Beneficially or Class of the
Fund Name and Address of Owner of Record Fund Owned
- ---------------------------------- ----------------------------------------- ----------------- --------------

Legg Mason U.S. Government Legg Mason Wood Walker, Inc. 699,155 80.14%
Intermediate-Term Portfolio Deferred Comp
C/O Brian Becker LM Profit Sharing Plan
PO Box 1476
Baltimore, MD 21203-1476

Legg Mason Trust FSB 149,963 17.19%
TTEE of the Frank & Shirley
Nicolai Charitable Remainder Unitrust
DTD 5/14/00

Legg Mason U.S. Small- Legg Mason Wood Walker, Inc. 585,996 97.97%
Capitalization Value Trust Deferred Comp
C/O Brian Becker LM Profit Sharing Plan
PO Box 1476
Baltimore, MD 21203-1476

Legg Mason Value Trust Fidelity Investments Inst. Oper. Co. As 4,625,175 14.05%
Agent for Certain Employee Benefit Plans
100 Magellan Way
Covington, KY 41015-1999

Chase Manhattan Bank 3,429,886 10.42%
FBO ADP Retirement and Savings Plan
4 New York Plz #2
New York, NY 10004-2413

Charles Schwab & Co, Inc. 2,966,615 9.01%
Special Custody Account
Benefit of Customers
101 Montgomery Street
San Francisco, CA 94104-4122

Legg Mason Wood Walker, Inc. 3,187,242 9.68%
Deferred Comp.
C/O Brian Becker LM Profit Sharing Plan
PO Box 1476
Baltimore, MD 21203-1476

Batterymarch U.S. Small City & County of Denver Water Board 1,791,573 11.15%
Capitalization Equity Portfolio Commissioners TTEE
Employee's Retirement Plan

STRAFE & Co. 1,771,768 11.03%
FAO Childrens Custody

Acuity, A Mutual Insurance Co. 1,583,499 9.86%

Welfare Foundation, Inc. 1,044,182 6.50%

B-3

Financial Intermediary Class
Legg Mason Balanced Trust EMJAYCO 125,367 5.39%
FBO American Micro Products
401K Plan #90486
PO Box 17909
Milwaukee, WI 53217

Legg Mason Value Trust Fidelity Investments Inst. Oper. Co. As 2,108,604 48.87%
Agent for Certain Employee Benefit Plans
100 Magellan Way
Covington, KY 41015-1999

Great-West Life & Annuity 736,617 17.07%
Client Plans FFII

Key Trust Company 264,958 6.14%
Lubrizol Employees
Profit Sharing & Savings Plan

Class A
Legg Mason Europe Fund Charles Schwab & Co, Inc. 154,713 8.18%
C/O ADP Proxy Services
101 Montgomery Street
San Francisco, CA 94101

EMJAYCO 113,419 5.99%
FBO American Micro Products
PO Box 17909
Milwaukee, WI 53217

Legg Mason Financial Neuberger Berman LLC 440,479 58.01%
Services Fund 55 Water St FL 27
New York, NY 10041-0001

KINCO & CO 51,147 6.74%
C/O Republic National Bank
1 Hanson PL Lower Level
Brooklyn, NY 11243-2907

Primary Class
Legg Mason Classic Manu Kumar 397,408 5.63%
Valuation Fund

B-4

Exhibit C

THE FUNDS' FUNDAMENTAL INVESTMENT OBJECTIVES AND RESTRICTIONS

LEGG MASON FOCUS TRUST, INC.

Current Fundamental Investment Objective: Maximum long-term capital
appreciation with minimum long-term risk to principal. (Proposal 3)

Current Fundamental Investment Restrictions. Focus Trust may not:

1. Borrow money or issue senior securities, except that the fund may borrow
from banks and enter into reverse repurchase agreements for temporary
purposes in amounts up to one-third of the value of its total assets at
the time of such borrowing; or mortgage, pledge, or hypothecate any
assets, except in connection with any such borrowing and in amounts not in
excess of the lesser of the dollar amounts borrowed or 5% of the value of
the total assets of the fund at the time of its borrowing. All borrowings
will be done from a bank and asset coverage of at least 300% is required
(Proposals 2-A and 2-D);

2. Act as an underwriter of securities, except that, in connection with the
disposition of a security, the fund may be deemed to be an "underwriter"
as that term is defined in the Securities Act of 1933 (Proposal 2-B);

3. Make loans, except that this restriction shall not prohibit (a) the
purchase and holding of debt instruments in accordance with the fund's
investment objectives and policies, (b) the lending of portfolio
securities, or (c) entry into repurchase agreements with banks or
broker-dealers (Proposal 2-C);

4. Purchase or sell real estate (but this restriction shall not prevent the
fund from investing directly or indirectly in portfolio instruments
secured by real estate or interests therein or acquiring securities of
real estate investment trusts or other issuers that deal in real estate),
interests in oil, gas and/or mineral exploration or development programs
or leases (Proposals 2-E and 2-L);

5. Purchase or sell commodities or commodity contracts (Proposal 2-F);

6. Invest more than 25% of the value of its total assets (taken at market
value at the time of each investment) in securities of issuers whose
principal business activities are in the same industry. For this purpose,
"industry" does not include the U.S. Government, its agencies or
instrumentalities (Proposal 2-G);

7. Purchase the securities of any one issuer if, immediately after such
purchase, the fund would own more than 25% of the outstanding voting
securities of such issuer (Proposal 2-H);

8. Sell securities short or purchase securities on margin, except for such
short-term credits as are necessary for the clearance of transactions
(Proposals 2-J and 2-K);

9. Make investments in securities for the purpose of exercising control
(Proposal 2-M);

10. Invest in puts, calls, straddles or combinations thereof (Proposal 2-O);

11. Purchase securities of issuers having less than three years' continuous
operation, if such purchase would cause the value of the fund's
investments in all such issuers to exceed 5% of the value of its total
assets. Such three-year periods shall include the operation of any
predecessor company or companies (Proposal 2-P); and

12. Participate on a joint or joint and several basis in any securities trading
account (Proposal 2-S).

LEGG MASON GLOBAL TRUST, INC.

Europe Fund

Current Fundamental Investment Objective: Long-term growth of capital (Proposal
3).

Current Fundamental Investment Restrictions. Europe Fund may not:

1. Borrow money, except (a) from a bank, provided that immediately after such
borrowing there is an asset coverage of 300% for all borrowings of the
fund; or (b) from a bank or other persons for temporary purposes only,
provided that such temporary borrowings are in an amount not exceeding 5%
of the fund's total assets at the time when the borrowing is made. The
fund will not borrow money in excess of 15% of the total value

C-1

of its assets (including the amount borrowed) less its liabilities (not
including its borrowings), and will not purchase securities at any time
when borrowings exceed 5% of its total assets (Proposal 2-A);

2. Act as underwriter of securities issued by other persons. This limitation
is not applicable to the extent that, in connection with the disposition
of portfolio securities (including restricted securities), the fund may be
deemed an underwriter under certain federal securities laws (Proposal
2-B);

3. Lend money to other persons except through the use of publicly distributed
debt obligations and the entering into of repurchase agreements consistent
with its investment policies (Proposal 2-C);

4. Issue senior securities except to evidence borrowings permitted by
limitation (1) above (Proposal 2-D);

5. Purchase, hold or deal in real estate. This limitation is not applicable to
investments in securities which are secured by or represent interests in
real estate or to securities issued by companies, including real estate
investment trusts, that invest in real estate or interests in real estate.
This limitation does not preclude the fund from investing in
mortgage-related securities or investing directly in mortgages (Proposal
2-E);

6. Purchase, hold or deal in commodities or commodities futures contracts
except as described in this Statement of Additional Information. This does
not preclude the fund from investing in futures contracts, put and call
options on foreign currencies or forward currency exchange contracts
(Proposal 2-F);

7. Invest 25% or more of its total assets in a particular industry. This
limitation is not applicable to investments in obligations issued or
guaranteed by the U.S. Government, its agencies and instrumentalities or
repurchase agreements with respect thereto (Proposal 2-G);

8. Purchase any security (other than obligations of the U.S. Government, its
agencies or instrumentalities), if as a result (a) more than 25% of the
value of the fund's total assets would then be invested in securities of
any single issuer, or (b) as to 75% of the value of the fund's total
assets (i) more than 5% of the value of the fund's total assets would then
be invested in securities of any single issuer, or (ii) the fund would own
more than 10% of the voting securities of any single issuer. For purposes
of this limitation, the fund will treat both the corporate borrower and
the financial intermediary as issuers of a loan participation interest
(Proposal 2-H);

9. Purchase securities for which there are legal restrictions on resale and
other securities that are not readily marketable if as a result of such
purchase more than 15% of the value of the fund's net assets would be
invested in such securities, provided that securities that are not subject
to restrictions on resale in the country in which they are principally
traded are not considered subject to this restriction (Proposal 2-I);

10. Make short sales of securities or maintain a short position in any security
(Proposal 2-J);

11. Purchase securities or evidences of interest thereon on "margin." This
limitation is not applicable to short term credit obtained by the fund for
the clearance of purchases and sales or redemption of securities, or to
arrangements with respect to transactions involving options, futures
contracts, short sales and other permitted investments and techniques
(including foreign currency exchange contracts) (Proposal 2-K);

12. Invest in oil, gas, mineral exploration or development programs, except
that the fund may invest in issuers which invest in such programs
(Proposal 2-L);

13. Purchase any security if as a result the fund would have more than 5% of
its net assets invested in securities of companies which together with any
predecessors have been in continuous operation for less than three years
(Proposal 2-P); and

14. Invest more than 5% of its net assets in warrants issued by U.S. entities,
provided that no more than 2% of its net assets will be invested in
warrants that are not listed on the New York Stock Exchange or American
Stock Exchange; except that these limitations are not applicable to
warrants issued by non-U.S. issuers (Proposal 2-T).

C-2

Emerging Markets Trust

Current Fundamental Investment Objective: Long-term capital appreciation
(Proposal 3).

Current Fundamental Investment Restrictions. Emerging Markets Trust may not:

1. Borrow money, except from banks or through reverse repurchase agreements or
dollar rolls for temporary purposes in an aggregate amount not to exceed
33-1/3% of the total assets (including borrowings), less liabilities
(exclusive of borrowings), of the fund; provided that borrowings,
including reverse repurchase agreements and dollar rolls, in excess of 5%
of such value will be only from banks (although not a fundamental policy
subject to shareholder approval, the fund will not purchase securities if
borrowings, including reverse repurchase agreements and dollar rolls,
exceed 5% of its total assets) (Proposal 2-A);

2. Engage in the business of underwriting the securities of other issuers
except insofar as the fund may be deemed an underwriter under the 1933 Act
in disposing of a portfolio security (Proposal 2-B);

3. Make loans, except loans of portfolio securities and except to the extent
the purchase of notes, bonds, or other evidences of indebtedness, the
entry into repurchase agreements, or deposits with banks and other
financial institutions may be considered loans (Proposal 2-C);

4. Issue senior securities, except as permitted by the 1940 Act (Proposal
2-D);

5. Buy or hold any real estate other than instruments secured by real estate
or interests therein (Proposal 2-E);

6. Purchase or sell any commodities or commodities contracts, except that the
fund may purchase or sell currencies; futures contracts on currencies,
securities or securities indexes, options on currencies, securities, and
securities indexes; and options on interest rate and currency futures
contracts (Proposal 2-F);

7. Purchase any security if, as a result thereof, 25% or more of its total
assets would be invested in the securities of issuers having their
principal business activities in the same industry. This limitation does
not apply to securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities and repurchase agreements with respect
thereto (Proposal 2-G); and

8. With respect to 75% of its total assets, invest more than 5% of its total
assets (taken at market value) in securities of any one issuer, or
purchase more than 10% of the voting securities of any one issuer (other
than, in each case, cash items, securities of the U.S. Government, its
agencies and instrumentalities, and securities issued by other investment
companies) (Proposal 2-H).

Global Income Trust

Current Fundamental Investment Objective: Current income and capital
appreciation in order to achieve an attractive total return consistent with
prudent investment risk (Proposal 3).

Current Fundamental Investment Restrictions. Global Income Trust may not:

1. Borrow money, except from banks or through reverse repurchase agreements or
dollar rolls for temporary purposes in an aggregate amount not to exceed
33-1/3% of the total assets, including borrowings, less liabilities
exclusive of borrowings, of the fund; provided that borrowings, including
reverse repurchase agreements and dollar rolls, in excess of 5% of such
value will be only from banks (although not a fundamental policy subject
to shareholder approval, the fund will not purchase securities if
borrowings, including reverse repurchase agreements and dollar rolls,
exceed 5% of its total assets) (Proposal 2-A);

2. Underwrite the securities of other issuers except insofar as the fund may
be deemed an underwriter under the Securities Act of 1933, as amended,
("1933 Act") in disposing of a portfolio security (Proposal 2-B);

3. Make loans, except loans of portfolio securities and except to the extent
the purchase of notes, bonds, loans, loan participations and advances in
connection therewith or other evidences of indebtedness, the entry into
repurchase agreements, or deposits with banks and other financial
institutions may be considered loans (Proposal 2-C);

C-3

4. Issue senior securities, except as permitted by the Investment Company Act
of 1940, as amended ("1940 Act") (Proposal 2-D);

5. Buy or hold any real estate other than instruments secured by real estate
or interests therein (Proposal 2-E);

6. Purchase or sell any commodities or commodities contracts, except that the
fund may purchase or sell currencies, interest rate and currency futures
contracts, options on currencies and securities indexes and options on
interest rate and currency futures contracts (Proposal 2-F); and

International Equity Trust

Current Fundamental Investment Objective: Maximum long-term total return
(Proposal 3).

Current Fundamental Investment Restrictions. International Equity Trust may
not:

4. Issue senior securities, except as permitted by the 1940 Act (Proposal
2-D);

5. Buy or hold any real estate other than instruments secured by real estate
or interests therein (Proposal 2-E);

C-4

LEGG MASON INCOME TRUST, INC.

High Yield Portfolio

Current Fundamental Investment Objective: High current income and, secondarily,
capital appreciation (Proposal 3).

Current Fundamental Investment Restrictions. High Yield Portfolio may not:

1. Borrow money, except from banks or through reverse repurchase agreements or
dollar rolls for temporary purposes in an aggregate amount not to exceed
5% of the value of its total assets at the time of borrowing (Proposal
2-A);

2. Engage in the business of underwriting the securities of other issuers
except insofar as the fund may be deemed an underwriter under the
Securities Act of 1933, as amended ("1933 Act"), in disposing of a
portfolio security (Proposal 2-B);

3. Make loans, except loans of portfolio securities and except to the extent
the purchase of notes, bonds or other evidences of indebtedness, the entry
into repurchase agreements, or deposits with banks and other financial
institutions may be considered loans (Proposal 2-C);

4. Issue senior securities, except as permitted under the 1940 Act (Proposal
2-D);

5. Buy or hold any real estate; provided, however, that instruments secured by
real estate or interests therein are not subject to this limitation
(Proposal 2-E);

6. Purchase or sell any commodities or commodities contracts, except that the
fund may purchase or sell currencies, interest rate and currency futures
contracts, options on currencies, securities, and securities indexes and
options on interest rate and currency futures contracts, and may enter
into swap agreements (Proposal 2-F);

8. With respect to 75% of its total assets, invest more than 5% of its total
assets (taken at market value) in securities of any one issuer, other than
the U.S. Government, its agencies and instrumentalities, or purchase more
than 10% of the voting securities of any one issuer (Proposal 2-H).

Investment Grade Income Portfolio

Current Fundamental Investment Objective: High level of current income through
investment in a diversified portfolio of debt securities (Proposal 3).

Current Fundamental Investment Restrictions. Investment Grade Income Portfolio
may not:

1. Borrow money, except for temporary purposes in an aggregate amount not to
exceed 5% of the value of its total assets at the time of borrowing
(Proposal 2-A);

2. Underwrite the securities of other issuers, except to the extent that in
connection with the disposition of restricted securities or the purchase
of securities either directly from the issuer or from an underwriter for
an issuer, each fund may be deemed to be an underwriter (Proposal 2-B);

3. Make loans, except loans of portfolio securities and except to the extent
the purchase of a portion of an issue of publicly distributed notes, bonds
or other evidences of indebtedness or deposits with banks and other
financial institutions may be considered loans (Proposal 2-C);

4. Issue senior securities, except as permitted under the Investment Company
Act of 1940, as amended ("1940 Act") (Proposal 2-D);

C-5

6. Purchase or sell commodities and commodity contracts, except that each fund
may purchase or sell options, interest rate futures contracts and options
on interest rate futures contracts (Proposal 2-F);

7. Invest 25% or more of its total assets (taken at market value) in any one
industry (Proposal 2-G);

8. Invest more than 5% of its total assets (taken at market value) in
securities of any one issuer, other than the U.S. Government, its agencies
and instrumentalities, or buy more than 10% of the voting securities or
more than 10% of all the securities of any issuer (Proposal 2-H);

9. Make short sales of securities unless at all times while a short position
is open the fund maintains a long position in the same security in an
amount at least equal thereto; provided, however, that the fund may
purchase or sell futures contracts, and may make initial and variation
margin payments in connection with purchases or sales of futures contracts
or of options on futures contracts (Proposal 2-J);

10. Purchase securities on "margin," except that each fund may make margin
deposits in connection with its use of options, interest rate futures
contracts and options on interest rate futures contracts (Proposal 2-K);

11. Purchase or sell interests in oil and gas or other mineral exploration or
development programs (Proposal 2-L);

12. Mortgage, pledge or hypothecate any of its assets, except to collateralize
permitted borrowings up to 5% of the value of its total assets at the time
of borrowing; provided, that the deposit in escrow of underlying
securities in connection with the writing of call options is not deemed to
be a pledge; and provided further, that deposit of initial margin or the
payment of variation margin in connection with the purchase or sale of
futures contracts or of options on futures contracts shall not be deemed
to constitute pledging assets (Proposal 2-Q); and

13. Invest in securities issued by other investment companies, except in
connection with a merger, consolidation, acquisition or reorganization or
by purchase in the open market of securities of closed-end investment
companies where no underwriter or dealer commission or profit, other than
a customary brokerage commission, is involved and only if immediately
thereafter not more than 10% of a fund's total assets (taken at market
value) would be invested in such securities (Proposal 2-R).

U.S. Government Intermediate-Term Portfolio

Current Fundamental Investment Objective: High current income consistent with
prudent investment risk and liquidity needs (Proposal 3).

Current Fundamental Investment Restrictions. U.S. Government Intermediate-Term
Portfolio may not:

1. Borrow money, except for temporary purposes in an aggregate amount not to
exceed 5% of the value of its total assets at the time of borrowing
(Proposal 2-A);

4. Issue senior securities, except as permitted under the Investment Company
Act of 1940, as amended ("1940 Act") (Proposal 2-D);

7. Invest 25% or more of its total assets (taken at market value) in any one
industry (Proposal 2-G);

C-6

11. Purchase or sell interests in oil and gas or other mineral exploration or
development programs (Proposal 2-L);

U.S. Government Money Market Portfolio

Current Fundamental Investment Objective: High current income consistent with
liquidity and conservation of principal (Proposal 3).

Current Fundamental Investment Restrictions. U.S. Government Money Market
Portfolio may not:

1. Borrow money, except for temporary purposes in an aggregate amount not to
exceed 5% of the value of its total assets at the time of borrowing.
(Although not a fundamental policy subject to shareholder approval, the
fund intends to repay any money borrowed before any additional portfolio
securities are purchased) (Proposal 2-A);

2. Underwrite the securities of other issuers, except to the extent that in
connection with the disposition of restricted securities or the purchase
of securities either directly from the issuer or from an underwriter for
an issuer, the fund may be deemed to be an underwriter (Proposal 2-B);

3. Make loans, except loans of portfolio securities and except to the extent
the purchase of a portion of an issue of publicly distributed notes, bonds
or other evidences of indebtedness, entry into repurchase agreements or
deposits with banks and other financial institutions may be considered
loans (Proposal 2-C);

4. Issue senior securities, except as permitted under the 1940 Act (Proposal
2-D);

5. Purchase or hold real estate, except that the fund may invest in securities
collateralized by real estate or interests therein (Proposal 2-E);

6. Purchase or sell commodities and commodity contracts (Proposal 2-F);

8. Make short sales of securities unless at all times while a short position
is open the fund maintains a long position in the same security in an
amount at least equal thereto (Proposal 2-J);

C-7

9. Purchase securities on "margin" except that the fund may obtain such
credits as may be necessary for clearing the purchases and sales of
securities (Proposal 2-K);

10. Purchase or sell interests in oil and gas or other mineral exploration or
development programs (Proposal 2-L); and

11. Mortgage, pledge or hypothecate any of its assets, except to collateralize
permitted borrowings up to 5% of the value of its total assets at the time
of borrowing (Proposal 2-Q).

LEGG MASON INVESTMENT TRUST, INC.

Opportunity Trust

Current Fundamental Investment Objective: Long-term growth of capital (Proposal
3).

Current Fundamental Investment Restrictions. Opportunity Trust may not:

1. Borrow money, except that the fund may borrow money in an amount not
exceeding 33-1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings) (Proposal 2-A);

2. Engage in the business of underwriting the securities of other issuers,
except insofar as the fund may be deemed an underwriter under the
Securities Act of 1933, as amended ("1933 Act"), in disposing of a
portfolio security (Proposal 2-B);

3. Lend any security or make any other loan if, as a result, more than 33-1/3%
of its total assets would be lent to other parties, but this limitation
does not apply to the purchase of debt securities or to repurchase
agreements (Proposal 2-C);

4. Issue senior securities, except as permitted under the Investment Company
Act of 1940, as amended ("1940 Act") (Proposal 2-D);

5. Purchase or sell real estate unless acquired as a result of ownership of
securities or other instruments (but this shall not prevent the fund from
investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business) (Proposal
2-E);

6. Purchase or sell physical commodities; however, this policy shall not
prevent the fund from purchasing and selling foreign currency, futures
contracts, options, forward contracts, swaps, caps, floors, collars and
other financial instruments (Proposal 2-F); and

LEGG MASON INVESTORS TRUST, INC.

American Leading Companies

Current Fundamental Investment Objective: Long-term capital appreciation and
current income consistent with prudent investment risk (Proposal 3).

Current Fundamental Investment Restrictions. American Leading Companies may
not:

1. Borrow money, except from banks or through reverse repurchase agreements
for temporary purposes in an aggregate amount not to exceed 5% of the
value of its total assets at the time of borrowings. (Although not a
fundamental policy subject to shareholder approval, the fund will repay
any money borrowed before any portfolio securities are purchased)
(Proposal 2-A);

C-8

4. Issue senior securities, except as permitted under the 1940 Act (Proposal
2-D);

5. Buy or hold any real estate; provided, however, that instruments secured by
real estate or interests therein are not subject to this limitation
(Proposal 2-E);

6. Purchase or sell any commodities or commodities contracts, except that the
fund may purchase or sell currencies, interest rate and currency futures
contracts, options on currencies, securities, and securities indexes and
options on interest rate and currency futures contracts (Proposal 2-F);

Balanced Trust

Current Fundamental Investment Objective: Long-term capital appreciation and
current income in order to achieve an attractive total investment return
consistent with reasonable risk (Proposal 3).

Current Fundamental Investment Restrictions. Balanced Trust may not:

4. Issue senior securities, except as permitted under the 1940 Act (Proposal
2-D);

5. Buy or hold any real estate; provided, however, that instruments secured by
real estate or interests therein are not subject to this limitation
(Proposal 2-E);

6. Purchase or sell any commodities or commodities contracts, except that the
fund may purchase or sell currencies, interest rate and currency futures
contracts, options on currencies, securities, and securities indexes and
options on interest rate and currency futures contracts (Proposal 2-F);

C-9

Financial Services Fund

Current Fundamental Investment Objective: Long-term growth of capital (Proposal
3).

Current Fundamental Investment Restrictions. Financial Services Fund may not:

3. Make loans to other persons, except (a) by loaning portfolio securities,
(b) by engaging in repurchase agreements, (c) by purchasing nonpublicly
offered debt securities, or (d) through direct investments in mortgages.
For purposes of this limitation, the term "loans" shall not include the
purchase of a portion of an issue of publicly distributed bonds,
debentures or other securities (Proposal 2-C);

4. Issue senior securities, except as permitted under the 1940 Act (Proposal
2-D);

6. Purchase, hold or deal in commodities or commodities futures contracts,
except that the fund may purchase or sell forward currency contracts
(Proposal 2-F);

7. Invest more than 25% of its total assets in a particular industry other
than the financial services industry (Proposal 2-G);

8. Purchase the securities of any issuer if such purchase at the time thereof
would cause less than 75% of the value of its total assets to be invested
in cash and cash items (including receivables), securities issued by the
U.S. government, its agencies or instrumentalities and repurchase
agreements with respect thereto, securities of other investment companies,
other securities for the purposes of this calculation limited in respect
of any one issuer to an amount not greater in value than 5% of the value
of the total assets of the fund and to not more than 10% of the
outstanding voting securities of such issuer (Proposal 2-H); and

9. Purchase securities or evidences of interest thereon on "margin." This
limitation is not applicable to short term credit obtained by the fund for
the clearance of purchases and sales or redemption of securities, or to
arrangements with respect to transactions involving options, futures
contracts, short sales and other permitted investments and techniques
(including foreign exchange contracts) (Proposal 2-K).

U.S. Small-Capitalization Value Trust

Current Fundamental Investment Objective: Long-term capital appreciation
(Proposal 3).

Current Fundamental Investment Restrictions. U.S. Small-Capitalization Value
Trust may not:

C-10

4. Issue senior securities, except as permitted under the 1940 Act (Proposal
2-D);

5. Buy or hold any real estate; provided, however, that instruments secured by
real estate or interests therein are not subject to this limitation
(Proposal 2-E);

6. Purchase or sell any commodities or commodities contracts, except that the
fund may purchase or sell currencies, interest rate and currency futures
contracts, options on currencies, securities, and securities indexes and
options on interest rate and currency futures contracts (Proposal 2-F);

LEGG MASON LIGHT STREET TRUST, INC.

Classic Valuation Fund

Current Fundamental Investment Objective: Long-term growth of capital (Proposal
3).

Current Fundamental Investment Restrictions. Classic Valuation Fund may not:

1. Borrow money, except that the fund may borrow money in an amount not
exceeding 33-1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings) (Proposal 2-A);

2. Underwrite the securities of other issuers except insofar as the fund may
be deemed an underwriter under the Securities Act of 1933, as amended, in
disposing of a portfolio security (Proposal 2-B);

3. Lend any security or make any loan if, as a result, more than 33-1/3% of its
total assets would be lent to other parties, but this limitation does not
apply to the purchase of debt securities or to repurchase agreements
(Proposal 2-C);

4. Issue senior securities, except as permitted under the 1940 Act (Proposal
2-D);

C-11

LEGG MASON TAX-EXEMPT TRUST, INC.

Current Fundamental Investment Objective: High current income exempt from
federal income tax, preservation of capital, and maintenance of liquidity
(Proposal 3).

Current Fundamental Investment Restrictions. Tax-Exempt Trust may not:

1. Borrow money, except for temporary purposes in an aggregate amount not to
exceed 10% of the value of the total assets of the fund; provided that
borrowings in excess of 5% of such value will be only from banks, and the
fund will not purchase portfolio securities while its borrowings exceed 5%
(interest paid on borrowed money would reduce income to the fund)
(Proposal 2-A);

2. Underwrite the securities of other issuers, except insofar as the fund may
be deemed an underwriter under the Securities Act of 1933, as amended, in
disposing of a portfolio security (Proposal 2-B);

3. Make loans, except loans of portfolio securities and except to the extent
the purchase of a portion of an issue of publicly distributed notes, bonds
or other evidences of indebtedness, the entry into repurchase agreements,
or deposits with banks and other financial institutions may be considered
loans (Proposal 2-C);

4. Issue senior securities, except as permitted by the Investment Company Act
of 1940, as amended ("1940 Act") (Proposal 2-D);

5. Buy or hold any real estate other than municipal bonds secured by real
estate or interests therein (Proposal 2-E);

6. Buy or hold any commodity or commodity futures contracts, or any oil, gas
or mineral exploration or development program (Proposal 2-F);

7. Purchase any security if, as a result of that purchase, 25% or more of its
total assets would be invested in securities having their principal
business activities in the same industry, except that this limitation does
not apply to securities issued or guaranteed by the U.S. government, its
agencies or instrumentalities. State or local governments or subdivisions
thereof are not considered members of any industry for purposes of this
limitation (Proposal 2-G);

8. Purchase securities of any one issuer, other than obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities, if
immediately after such purchase more than 5% of the fund's total asset
value would be invested in such issuer, except that up to 25% of the
fund's total asset value may be invested without regard to such 5%
limitation (Proposal 2-H);

9. Buy securities which have legal or contractual restrictions on resale, if
the purchase causes more than 10% of the fund's assets to be invested in
illiquid securities and repurchase agreements maturing in more than seven
days (Proposal 2-I);

10. Buy securities on "margin" or make "short" sales of securities (Proposals
2-J and 2-K);

11. Write or purchase put or call options, except to the extent that securities
subject to stand-by commitments may be purchased as set forth under
"Investment Strategies and Risks" in this Statement of Additional
Information ("SAI") (Proposal 2-O);

12. Invest more than 5% of its total assets in securities of issuers which,
including their predecessors, have been in operation for less than three
years (Proposal 2-P);

13. Mortgage or pledge any of the fund's assets, except to the extent, up to a
maximum of 10% of the value of its total assets, necessary to secure
borrowings permitted by paragraph 1 (Proposal 2-Q);

14. Buy securities issued by any other investment company, except in connection
with a merger, consolidation, acquisition or reorganization (Proposal
2-R); and

15. Purchase common stocks, preferred stocks, warrants, or other equity
securities (Proposal 2-T).

C-12

LEGG MASON TAX-FREE INCOME FUND

Maryland Tax-Free Income Trust

Current Fundamental Investment Objective: A high level of current income exempt
from federal and Maryland state and local income taxes, consistent with prudent
investment risk and preservation of capital (Proposal 3).

Current Fundamental Investment Restrictions. Maryland Tax-Free Income Trust may
not:

1. Borrow money, except from banks or through reverse repurchase agreements
for temporary purposes in an aggregate amount not to exceed 10% of the
value of the total assets of the fund; provided that borrowings, including
reverse repurchase agreements, in excess of 5% of such value will be only
from banks (although not a fundamental policy subject to shareholder
approval, the fund will not purchase securities if borrowings, including
reverse repurchase agreements, exceed 5% of its total assets) (Proposal
2-A);

2. Underwrite the securities of other issuers except insofar as the fund may
be deemed an underwriter under the Securities Act of 1933, as amended
("1933 Act"), in disposing of a portfolio security (Proposal 2-B);

3. Make loans, except loans of portfolio securities and except to the extent
the purchase of a portion of an issue of publicly distributed notes, bonds
or other evidences of indebtedness, the entry into repurchase agreements,
or deposits with banks and other financial institutions may be considered
loans (Proposal 2-C);

4. Issue bonds or any other class of securities preferred over shares of the
fund in respect of the fund's assets or earnings, provided that the Trust
may issue separate series of shares in accordance with its Declaration of
Trust (Proposal 2-D);

5. Buy or hold any real estate other than municipal bonds secured by real
estate or interests therein (Proposal 2-E);

6. Purchase or sell any commodities or commodities contracts, except that the
fund may purchase or sell interest rate futures contracts, options on
securities indexes and options on interest rate futures contracts Proposal
2-F);

7. Invest 25% or more of its total assets in the securities of issuers in any
one industry, provided that this limitation does not apply to (a)
obligations issued or guaranteed by the U.S. government or its agencies or
instrumentalities or repurchase agreements thereon; (b) Pennsylvania
municipal obligations for Pennsylvania Tax-Free and Maryland municipal
obligations for Maryland Tax-Free; and (c) municipal obligations for
Tax-Free Intermediate. For the purpose of this restriction, private
activity bonds issued by non-governmental users will not be considered
municipal obligations (Proposal 2-G);

8. Make short sales of securities or maintain a short position, except that
the fund may (a) make short sales and maintain short positions in
connection with its use of options, futures contracts and options on
futures contracts and (b) sell short "against the box" (although not a
fundamental policy, the fund does not intend to make short sales in excess
of 5% of its assets during the coming year) (Proposal 2-J);

9. Buy securities on "margin," except for short-term credits necessary for
clearance of portfolio transactions and except that the fund may make
margin deposits in connection with the use of interest rate futures
contracts and options on interest rate futures contracts (Proposal 2-K);
and

10. Purchase or sell any oil, gas or mineral exploration or development programs
(Proposal 2-L).

Pennsylvania Tax-Free Income Trust

Current Fundamental Investment Objective: A high level of current income exempt
from federal income tax and Pennsylvania personal income tax consistent with
prudent investment risk and preservation of capital (Proposal 3).

Current Fundamental Investment Restrictions. Pennsylvania Tax-Free Income Trust
may not:

C-13

3. Make loans, except loans of portfolio securities and except to the extent
the purchase of a portion of an issue of publicly distributed notes, bonds
or other evidences of indebtedness, the entry into repurchase agreements,
or deposits with banks and other financial institutions may be considered
loans (Proposal 2-C);

5. Buy or hold any real estate other than municipal bonds secured by real
estate or interests therein (Proposal 2-E);

10. Purchase or sell any oil, gas or mineral exploration or development programs
(Proposal 2-L).

Tax-Free Intermediate-Term Income Trust

Current Fundamental Investment Objective: A high level of current income exempt
from federal income tax, consistent with prudent investment risk (Proposal 3).

Current Fundamental Investment Restrictions. Tax-Free Intermediate-Term Income
Trust may not:

3. Make loans, except loans of portfolio securities and except to the extent
the purchase of a portion of an issue of publicly distributed notes, bonds
or other evidences of indebtedness, the entry into repurchase agreements,
or deposits with banks and other financial institutions may be considered
loans (Proposal 2-C);

5. Buy or hold any real estate other than municipal bonds secured by real
estate or interests therein (Proposal 2-E);

C-14

10. Purchase or sell any oil, gas or mineral exploration or development programs
(Proposal 2-L).

LEGG MASON SPECIAL INVESTMENT TRUST, INC.

Current Fundamental Investment Objective: Capital appreciation (Proposal 3).

Current Fundamental Investment Restrictions. Special Investment Trust may not:

1. Borrow money, except from banks or through reverse repurchase agreements
for temporary purposes, in an aggregate amount not to exceed 10% of the
value of the total assets of the respective fund at the time of borrowing;
provided that borrowings, including reverse repurchase agreements, in
excess of 5% of such value will be only from banks (although not a
fundamental policy subject to shareholder approval, each fund will not
purchase securities if borrowings, including reverse purchase agreements,
exceed 5% of its total assets) (Proposal 2-A);

2. Underwrite the securities of other issuers, except insofar as each fund may
be deemed an underwriter under the Securities Act of 1933, as amended
("1933 Act"), in disposing of a portfolio security (Proposal 2-B);

3. Make loans, except loans of portfolio securities and except to the extent
that the purchase of a portion of an issue of publicly distributed notes,
bonds or other evidences of indebtedness or deposits with banks and other
financial institutions may be considered loans (Proposal 2-C);

4. Issue senior securities, except as permitted under the Investment Company
Act of 1940, as amended ("1940 Act") (Proposal 2-D);

5. Purchase or sell real estate, except that each fund may invest in
securities collateralized by real estate or interests therein or in
securities issued by companies that invest in real estate or interests
therein (as a non-fundamental policy changeable without a shareholder
vote, each fund will not purchase or sell interests in real estate limited
partnerships) (Proposal 2-E);

6. Purchase or sell commodities and commodity contracts, but this limitation
shall not prevent each fund from purchasing or selling options and futures
contracts (Proposal 2-F);

7. Invest 25% or more of its total assets (taken at market value) in any one
industry (Proposal 2-G);

8. With respect to 75% of total assets, invest more than 5% of its total
assets (taken at market value) in securities of any one issuer, other than
the U.S. Government, or its agencies and instrumentalities, or purchase
more than 10% of the voting securities of any one issuer (Proposal 2-H);

9. Make short sales of securities or maintain a short position, except that
each fund may (a) make short sales and maintain short positions in
connection with its use of options, futures contracts and options on
futures contracts and (b) sell short "against the box" (Proposal 2-J); and

C-15

10. Purchase securities on "margin", except for short-term credits necessary
for clearance of portfolio transactions and except that each fund may make
margin deposits in connection with the use of futures contracts and
options on futures contracts (Proposal 2-K).

LEGG MASON VALUE TRUST, INC.

Current Fundamental Investment Objective: Long-term growth of capital (Proposal
3).

Current Fundamental Investment Restrictions. Value Trust may not:

4. Issue senior securities, except as permitted under the Investment Company
Act of 1940, as amended ("1940 Act") (Proposal 2-D);

6. Purchase or sell commodities and commodity contracts, but this limitation
shall not prevent each fund from purchasing or selling options and futures
contracts (Proposal 2-F);

7. Invest 25% or more of its total assets (taken at market value) in any one
industry (Proposal 2-G);

LEGG MASON CASH RESERVE TRUST

Current Fundamental Investment Objective: Stability of principal and current
income consistent with stability of principal (Proposal 3).

Current Fundamental Investment Restrictions. Cash Reserve Trust may not:

1. Borrow money except as a temporary measure for extraordinary or emergency
purposes and then only in amounts not in excess of 5% of the value of its
total assets. In addition, the fund may enter into reverse repurchase
agreements and otherwise borrow up to one-third of the value of its total
assets, including the amount borrowed, in order to meet redemption
requests without immediately selling portfolio instruments. This latter
practice is not for investment leverage but solely to facilitate
management of the portfolio by

C-16

enabling the fund to meet redemption requests when the liquidation of
portfolio instruments would be inconvenient or is advantageous (Proposal
2-A);

Interest paid on borrowed funds will not be available for investment. The
fund will liquidate any such borrowings as soon as possible and may not
purchase any portfolio instruments while any borrowings are outstanding.
However, during the period any reverse repurchase agreements are
outstanding, but only to the extent necessary to assure completion of the
reverse repurchase agreements, the fund will restrict the purchase of
portfolio instruments to money market instruments maturing on or before the
expiration date of the reverse repurchase agreements (Proposal 2-A);

2. Engage in underwriting of securities issued by others (Proposal 2-B);

3. Lend any of its assets, except that it may purchase or hold money market
instruments, including repurchase agreements and variable amount demand
master notes, permitted by its investment objective and policies (Proposal
2-C);

4. Issue senior securities, except as permitted by the investment objective
and policies and investment limitations of the fund (Proposal 2-D);

5. Invest in commodities, commodity contracts, oil, gas, or other mineral
programs, or real estate, except that it may purchase money market
instruments issued by companies that invest in or sponsor such interests
(Proposals 2-E, 2-F and 2-L);

6. Purchase money market instruments if, as a result of such purchase, more
than 25% of the value of its total assets would be invested in any one
industry. However, investing in domestic bank instruments (such as time
and demand deposits and certificates of deposit), U.S. Government
obligations or instruments secured by these money market instruments, such
as repurchase agreements, shall not be considered investments in any one
industry. Domestic banks include U.S. branches of foreign banks that are
subject to the same regulation as domestic banks, and foreign branches of
domestic banks whose parent would be unconditionally liable in the event
that the foreign branch failed to pay on its instruments (Proposal 2-G);

7. Purchase securities issued by any one issuer having a value of more than 5%
of the value of its total assets except cash or cash items, repurchase
agreements, and U.S. Government obligations. The fund considers the type
of bank obligations it purchases as cash items (however, as a
non-fundamental policy, the fund will apply the 5% limitation to bank
obligations other than demand deposits) (Proposal 2-H);

8. Sell any money market instruments short or purchase any money market
instruments on margin but may obtain such short-term credits as may be
necessary for clearance of purchases and sales of money market instruments
(Proposals 2-J and 2-K);

9. Acquire the voting securities of any issuer. It will not invest in
securities issued by any other investment company, except as part of a
merger, consolidation, or other acquisition. It will not invest in
securities of a company for the purpose of exercising control or
management (Proposals 2-M and 2-R);

10. Purchase or retain the securities of any issuer if the officers and
trustees of the fund or its investment adviser owning individually more
than 1/2 of 1% of the issuer's securities together own more than 5% of the
issuer's securities (Proposal 2-N); and

11. Invest in puts, calls, straddles, spreads, or any combination of these
(Proposal 2-O).

LEGG MASON CHARLES STREET TRUST, INC.

Batterymarch U.S. Small Capitalization Equity Portfolio.

Current Fundamental Investment Objective: Long-term capital appreciation
(Proposal 3).

Current Fundamental Investment Restrictions. Batterymarch U.S. Small
Capitalization Equity Portfolio may:

1. Make loans, borrow money or issue senior securities to the fullest extent
permitted by the 1940 Act, the rules or regulations thereunder or
applicable orders of the SEC, as such statute, rules, regulations or
orders may be amended from time to time (Proposals 2-A, 2-C and 2-D);

C-17

2. Underwrite securities to the fullest extent permitted by the 1940 Act, the
rules or regulations thereunder or applicable orders of the SEC, as such
statute, rules, regulations or orders may be amended from time to time
(Proposal 2-B);

3. Purchase or sell commodities, commodities contracts, futures contracts,
options, forward contracts or real estate to the fullest extent permitted
by the 1940 Act, the rules or regulations thereunder or applicable orders
of the SEC, as such statute, rules, regulations or orders may be amended
from time to time (Proposals 2-E and 2-F); and

4. Not concentrate investments in a particular industry or group of industries
as concentration is defined under the 1940 Act, the rules or regulations
thereunder or applicable orders of the SEC, as such statute, rules,
regulations or orders may be amended from time to time. Securities issued
or guaranteed by the U.S. Government, its agencies or instrumentalities
and repurchase agreements thereon will not be considered to represent an
industry (Proposal 2-G).

C-18

Exhibit D

MODEL AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
LEGG MASON VALUE TRUST, INC.

Legg Mason Value Trust, Inc., a Maryland corporation (the "Corporation")
hereby certifies to the State Department of Assessments and Taxation of
Maryland that:

FIRST: The Corporation desires to amend and restate its charter as
currently in effect. The charter of the Corporation is hereby amended and
restated in its entirety to read as follows:

FIRST: I, Richard J. Himelfarb, whose post office address is 100 South
Charles Street, Baltimore, Maryland 21201, being more than eighteen years of
age, do under and by virtue of the General Law of the State of Maryland
authorizing the formation of corporations, associate myself as Incorporator with
the intention of forming a corporation.

SECOND: Name.

(a) The name of the Corporation is LEGG MASON VALUE TRUST, INC.

(b) The Board of the Directors of the Corporation reserves the right to
change its corporate name or any series or class name without action
by stockholders in accordance with the General Corporation Law of the
State of Maryland.

THIRD: Duration. The duration of the Corporation shall be perpetual.

FOURTH: Corporate Purposes. The purposes for which the Corporation is
formed are to act as an open-end management investment company, as contemplated
by the Investment Company Act of 1940, as amended ("1940 Act"), and to exercise
and enjoy all of the powers, rights and privileges granted to, or conferred
upon, corporations by the laws of the State of Maryland now or hereafter in
force, including, without limitation:

(a) To hold, invest and reinvest the funds of the Corporation, and in
connection therewith to hold part or all of its funds in cash, and to
purchase, subscribe for or otherwise acquire, to hold for investment
or otherwise, to trade and deal in, write, sell, assign, negotiate,
transfer, exchange, lend, pledge or otherwise dispose of or turn to
account or realize upon, securities of any corporation, company,
association, trust, firm, partnership, or other organization however
or wherever established or organized, as well as securities created or
issued by any United States or foreign issuer (which term "issuer"
shall, for the purpose of the charter of the Corporation, without
limiting the generality thereof, be deemed to include any persons,
firms, associations, partnerships, corporations, syndicates,
combinations, organizations, governments or subdivisions, agencies or
instrumentalities of any government); and to exercise, as owner or
holder of any securities, all rights, powers and privileges in respect
thereof, including the right to vote; to aid by further investment any
issuer, any obligation of or interest in which is held by the
Corporation or in the affairs of which the Corporation has any direct
or indirect interest; to guarantee or become surety on any or all of
the contracts, stocks, bonds, notes, debentures and other obligations
of any corporation, company, trust, association or firm; and to do any
and all other acts and things for the preservation, protection,
improvement and enhancement in value of any and all such securities.

For the purposes of the charter of the Corporation, as the same may
be supplemented or amended, the term "securities" shall be deemed to
include, without limiting the generality thereof, any stocks, shares,
bonds, debentures, bills, notes, mortgages, transferable shares,
investment contracts, voting-trust certificates, and any other
obligations or evidences of indebtedness, and any puts, calls,
straddles, privileges, options, certificates, receipts, warrants,
futures, forward contracts, or fractional undivided interests in oil,
gas or other mineral rights, or other instruments representing rights
to receive, purchase, subscribe for or sell the same, or evidencing
or representing any other direct or indirect rights or interests
therein, including all rights of equitable ownership therein, or in
any property or assets; any negotiable or non-negotiable instruments,
including money market instruments, certificates of interest or
participations in profit sharing agreements, collateral trust
certificates, preorganization certificates or

D-1

subscriptions, bank certificates of deposit, finance paper,
commercial paper, bankers' acceptances and all types of repurchase or
reverse repurchase agreements; interest rate protection instruments;
and derivative or synthetic instruments; any interest or instrument
commonly known as a "security;" or any certificate of interest or
participation in, temporary or interim certificates for, receipt for,
guarantee of, or warrant or right to subscribe to or purchase, any of
the foregoing.

(b) To acquire all or any part of the goodwill, rights, property and
business of any person, firm, association or corporation heretofore or
hereafter engaged in any business similar to any business which the
Corporation has the power to conduct, or, in appropriate
circumstances, any lawful business, and to hold, utilize, enjoy and in
any manner dispose of the whole or any part of the rights, property
and business so acquired, and to assume in connection therewith any
liabilities of any such person, firm, association or corporation.

(c) To apply for, obtain, purchase or otherwise acquire, any patents,
copyrights, licenses, trademarks, trade names and the like, which may
be capable of being used for any of the purposes of the Corporation;
and to use, exercise, develop, grant licenses in respect of, sell and
otherwise turn to account, the same.

(d) To issue and sell shares of its own capital stock and securities
convertible into such capital stock in such amounts and on such terms
and conditions, for such purposes and for such amount or kind of
consideration (including without limitations, securities) now or
hereafter permitted by the laws of the State of Maryland, by the 1940
Act and by the charter of the Corporation, as its Board of Directors
may, and is hereby authorized to, determine.

(e) To purchase, repurchase or otherwise acquire, hold, dispose of,
resell, transfer, reissue or cancel (all without the vote or consent
of the stockholders of the Corporation) shares of its capital stock in
any manner and to the extent now or hereafter permitted by the laws of
the State of Maryland, by the 1940 Act and by the charter of the
Corporation.

(f) To conduct its business in all branches at one or more offices in any
part of the world, without restriction or limit as to extent.

(g) To exercise and enjoy, in any states, territories, districts and
United States dependencies and in foreign countries, all of the
powers, rights and privileges granted to, or conferred upon,
corporations by the General Laws of the State of Maryland now or
hereafter in force.

(h) In general, to carry on any other business in connection with or
incidental to its corporate purposes, to do everything necessary,
suitable or proper for the accomplishment of such purposes or for the
attainment of any object or the furtherance of any power set forth in
the charter of the Corporation, either alone or in association with
others, to do every other act or thing incidental or appurtenant to or
growing out of or connected with its business or purposes, objects or
powers, and, subject to the foregoing, to have and exercise all the
powers, rights and privileges granted to, or conferred upon,
corporations by the laws of the State of Maryland as in force from
time to time.

The foregoing objects and purposes shall, except as otherwise expressly
provided, be in no way limited or restricted by reference to, or inference
from, the terms of any other clause of this or any other Article of the
charter of the Corporation, and shall each be regarded as independent and
construed as a power as well as an object and a purpose, and the
enumeration of specific purposes, objects and powers shall not be construed
to limit or restrict in any manner the meaning of general terms or the
general powers of the Corporation now or hereafter conferred by the laws of
Maryland, nor shall the expression of one thing be deemed to exclude
another, though it be of like nature, not expressed; provided, however,
that the Corporation shall not have power to carry on within the State of
Maryland any business whatsoever the carrying on of which would preclude it
from being classified as an ordinary business corporation under the laws of
said State; nor shall it carry on any business, or exercise any powers, in
any other state, territory, district or country except to the extent that
the same may lawfully be carried on or exercised under the laws thereof.

D-2

Incident to meeting the purposes specified above, the Corporation also
shall have the power, without limitation:

(i) To acquire (by purchase, lease or otherwise) and to take, receive,
own, hold, use, employ, maintain, develop, dispose of (by sale or
otherwise) and otherwise deal with any real or personal property,
wherever located, and any interest therein.

(j) To make contracts and guarantees, incur liabilities and borrow money
and, in this connection, issue notes or other evidence of
indebtedness.

(k) To buy, hold, sell, and otherwise deal in and with commodities,
indices of commodities or securities, and foreign exchange, including
the purchase and sale of futures contracts, options on futures
contracts and forward contracts, subject to any applicable provisions
of law.

(l) To sell, lease, exchange, transfer, convey, mortgage, pledge and
otherwise dispose of any or all of its assets.

FIFTH: Address and Resident Agent. The post office address of the principal
office of the Corporation in the State of Maryland is 100 Light Street,
Baltimore, Maryland 21202. The name of the resident agent of the Corporation in
the State of Maryland is Sheila M. Vidmar, whose post office address is 100
Light Street, Baltimore, Maryland. The resident agent is a citizen of the State
of Maryland and actually resides therein.

SIXTH: Capital Stock.

Section 6.1. Authority to Issue. The total number of shares of capital
stock which the Corporation shall have authority to issue is six hundred million
(600,000,000) shares, of the par value of one tenth of one cent ($0.001)
("Shares"), and of the aggregate par value of six hundred thousand dollars
($600,000). The Board of Directors shall have full power and authority, in its
sole discretion and without obtaining any prior authorization or vote of the
stockholders, to establish, create, classify and reclassify any unissued Shares
by setting or changing such preferences, terms of conversion, rights, voting
powers, restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption as shall be fixed and determined by resolution or
resolutions.

The Shares may be issued by the Board of Directors in such separate and
distinct series ("Series") and/or classes ("Classes") as the Board of Directors
shall from time to time create and establish. The Board of Directors is
authorized, from time to time, to divide or combine the Shares into a greater or
lesser number, to classify or reclassify any unissued Shares of the Corporation
into one or more separate Series or Classes of Shares, and to take such other
action with respect to the Shares as the Board of Directors may deem desirable.
In addition, the Board of Directors is hereby expressly granted authority to
increase or decrease the number of Shares of any Series or Class, but the number
of Shares of any Series or Class shall not be decreased by the Board of
Directors below the number of Shares thereof then outstanding. The Shares of any
Series or Class of stock shall have such preferences, rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption as shall be fixed and determined from time to time by
the Board of Directors.

The Corporation may hold or reissue any Shares reacquired by the
Corporation. The Corporation may also reclassify or reissue for such
consideration and on such terms as the Board of Directors may determine from
time to time, such Shares or cancel them, at the discretion of the Board of
Directors. No holder of any of the Shares shall be entitled as of right to
subscribe for, purchase, or otherwise acquire any Shares of the Corporation
which the Corporation proposes to issue or reissue.

Without limiting the authority of the Board of Directors set forth herein
to establish and designate any further Series or Classes, and to classify and
reclassify any unissued Shares, there is established and classified, one Series
of stock comprising six hundred million (600,000,000) Shares, to be known as
"Legg Mason Value Trust." Of these six hundred million (600,000,000) Shares,
four hundred million (400,000,000) Shares are established and classified as
Shares of Legg Mason Value Trust, Primary Class, one hundred million
(100,000,000) Shares are established and classified as Shares of Legg Mason
Value Trust, Institutional Class, and one hundred million (100,000,000) Shares
are established and classified as Legg Mason Value Trust, Financial Intermediary
Class.

D-3

The Primary Class Shares, Institutional Class Shares and Financial
Intermediary Class Shares of Legg Mason Value Trust shall represent investment
in the same pool of assets and shall have the same preferences, conversion and
other rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption, except as provided in the
charter of the Corporation and as set forth below:

(1) The net asset values of Primary Class Shares, Institutional Class
Shares and Financial Intermediary Class Shares shall be calculated
separately. In calculating the net asset values,

(a) Each Class of Legg Mason Value Trust shall be charged with the
transfer agency fees and Rule 12b-1 fees (or equivalent fees by
any other name) attributable to that Class, and not with the
transfer agency fees and Rule 12b-1 fees (or equivalent fees by
any other name) attributable to any other Class;

(b) Each Class of Legg Mason Value Trust shall be charged separately
with such other expenses as may be permitted by Securities and
Exchange Commission ("SEC") rule or order as interpreted from
time to time by the SEC or SEC staff and as the Board of
Directors shall deem appropriate;

(c) All other fees and expenses shall be charged to all Classes of
Legg Mason Value Trust, in the proportion that the net assets of
that Class bear to the net assets of Legg Mason Value Trust,
except as the SEC may otherwise require;

(2) Dividends and other distributions (if any) shall be paid on Primary
Class Shares, Institutional Class Shares and Financial Intermediary
Class Shares of Legg Mason Value Trust at such times as the Board of
Directors or its delegates shall determine. The amounts of all
dividends and other distributions shall be calculated separately for
Primary Class Shares, Institutional Class Shares and Financial
Intermediary Class Shares. In calculating the amount of any dividends
or other distribution:

(b) Each Class of Legg Mason Value Trust shall be charged separately
with such other expenses as may be permitted by SEC rule or order
as interpreted from time to time by the SEC or SEC staff and as
the Board of Directors shall deem appropriate;

Section 6.2. Establishment of Series and Classes. The establishment of any
Series or Class of Shares in addition to those established in Section 6.1 hereof
shall be effective upon the adoption of a resolution by the Board of Directors
setting forth such establishment and designation and the relative rights and
preferences of the Shares of such Series or Class and making the appropriate
amended or supplemental filing with the State Department of Assessments and
Taxation of Maryland. At any time that there are no Shares outstanding of any
particular Series or Class previously established and designated, the Directors
may by a majority vote abolish that Series or Class and the establishment and
designation thereof.

Section 6.3. Dividends. Dividends and distributions on Shares with respect
to each Series or Class may be declared and paid with such frequency, in such
form and in such amount as the Board of Directors may from time to time
determine. Dividends may be declared daily or otherwise pursuant to a standing
resolution or resolutions adopted only once or with such frequency as the Board
of Directors may determine.

All dividends and distributions on Shares of each Series or Class shall be
paid only out of the income belonging to that Series or Class and capital gains
distributions on Shares of each Series or Class shall be paid only out of the
capital gains belonging to that Series or Class. All dividends and distributions
on Shares of each Series or Class shall be distributed pro rata to the holders
of that Series or Class in proportion to the number of Shares of that Series or
Class held by such holders at the date and time of record established for the
payment of such

D-4

dividends or distributions. In connection with any dividend or distribution
program or procedure the Board of Directors may determine that no dividend or
distribution shall be payable on Shares as to which the stockholder's purchase
order and/or payment have not been received by the time or times established by
the Board of Directors under such program or procedure.

Dividends and distributions may be paid in cash, property or Shares, or a
combination thereof, as determined by the Board of Directors or pursuant to any
program that the Board of Directors may have in effect at the time. Any dividend
or distribution paid in Shares will be paid at the current net asset value
thereof as determined in accordance with Section 6.7.

Section 6.4. Assets and Liabilities of Series and Classes. All
consideration received by the Corporation for the issue or sale of Shares of a
particular Series or Class, together with all assets in which such consideration
is invested or reinvested, all income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation of such
assets, and any funds or payments derived from any reinvestment of such proceeds
in whatever form the same may be, shall be referred to as "assets belonging to"
that Series or Class, as the case may be. In addition, any assets, income,
earnings, profits, and proceeds thereof, funds, or payments which are not
readily identifiable as belonging to any particular Series or Class shall be
allocated between and among one or more of the Series or Classes in such manner
as the Board of Directors, in its sole discretion, deems fair and equitable.
Each such allocation shall be conclusive and binding upon the stockholders of
all Series or Classes for all purposes, and all assets allocated to a Series or
Class shall be referred to as assets belonging to that Series or Class. The
assets belonging to a particular Series or Class shall be so recorded upon the
books of the Corporation. The assets belonging to each particular Series or
Class shall be charged with the liabilities of that Series or Class and all
expenses, costs, charges and reserves attributable to that Series or Class, as
the case may be. Any general liabilities, expenses, costs, charges or reserves
of the Corporation which are not readily identifiable as belonging to any
particular Series or Class shall be allocated between or among any one or more
of the Series or Classes in such a manner as the Board of Directors in its sole
discretion deems fair and equitable. Each such allocation shall be conclusive
and binding upon the stockholders of all Series or Classes for all purposes.

Section 6.5. Voting. On each matter submitted to a vote of the
stockholders, each holder of a Share shall be entitled to one vote for each
Share and fractional votes for fractional Shares standing in his or her name on
the books of the Corporation; provided, however, that when required by the 1940
Act or rules thereunder or when the Board of Directors has determined that the
matter affects only the interests of one Series or Class, matters may be
submitted to a vote of the stockholders of such Series or Class only. The
presence in person or by proxy of the holders of one-third of the Shares of
capital stock of the Corporation outstanding and entitled to vote thereat shall
constitute a quorum for the transaction of business at a stockholders' meeting,
except that where holders of any Series or Class vote as a Series or Class,
one-third of the aggregate number of Shares of that Series or Class outstanding
and entitled to vote shall constitute a quorum for the transaction of business
by that Series or Class. The Bylaws may provide that proxies and related
authorizations may be transmitted by any electronic or telecommunications device
or in any other manner permitted by law and may provide for the use of proxy
solicitors, proxy support services, and similar services in any manner permitted
by law. At the discretion of the chair of any meeting of stockholders, the
presence or absence of a quorum may be determined for each matter individually
or collectively for all issues to be brought before the stockholders of the
Corporation or any Series or Class thereof.

Section 6.6. Redemption by Stockholders. Each holder of Shares shall have
the right at such times as may be permitted by the Corporation to require the
Corporation to redeem all or any part of his or her Shares at a redemption price
per Share equal to the net asset value per Share as of such time as the Board of
Directors shall have prescribed by resolution, minus any applicable sales
charge, redemption or repurchase fee, or other permissible charge. In the
absence of such resolution, the redemption price per Share shall be the net
asset value next determined (in accordance with Section 6.7) after acceptance of
a request for redemption in proper form less such charges as are determined by
the Board of Directors and described in the Corporation's registration statement
under the Securities Act of 1933, as amended, except that Shares may be redeemed
from an underwriter at (a) the net asset value next determined after such
requests are received by the underwriter or by a dealer with whom such
underwriter has a sales agreement or (b) when appropriate, the net asset value
determined at a later time. The Board of Directors may specify conditions and
places of redemption, and may specify binding requirements for the proper form
or forms of requests for redemption. The Corporation may require stockholders to
pay a sales charge to the Corporation, the underwriter or any other person
designated by the Board

D-5

of Directors upon redemption or repurchase of Shares of any Series or Class, in
such amount as shall be determined from time to time by the Directors. Payment
of the redemption price may be wholly or partly in securities or other assets
at the value of such securities or assets used in such determination of net
asset value, or may be in cash. Notwithstanding the foregoing, the Board of
Directors may postpone payment of the redemption price and may suspend the
right of the holders of Shares to require the Corporation to redeem Shares
during any period or at any time when and to the extent permissible under the
1940 Act.

Section 6.7. Net Asset Value per Share. The net asset value of each Share
of each Series or Class shall be the quotient obtained by dividing the value of
the total assets of the Series or Class, less liabilities and expenses of that
Series or Class, by the total number of Shares of the Series or Class
outstanding. The Board of Directors shall have the power and duty to determine,
in accordance with generally accepted accounting principles, the net income,
total assets and liabilities of the Corporation and the net asset value per
Share of each Series and Class of Shares at such times and by such methods as it
shall determine subject to any restrictions or requirements under the 1940 Act
and the rules, regulations and interpretations thereof promulgated or issued by
the SEC or insofar as permitted by any order of the SEC applicable to the
Corporation. The Board of Directors may delegate such power and duty to any one
or more of the Directors and officers of the Corporation, to an investment
adviser of the Corporation, to the custodian or depository of the Corporation's
assets, or to another agent or contractor of the Corporation.

Section 6.8. Redemption by the Corporation. The Board of Directors may
cause the Corporation to redeem at current net asset value all Shares of any
Series or Class owned or held by any one stockholder if the Board determines
that the aggregate net asset value of the stockholder's shares has fallen below
a minimum dollar amount set by the Board of Directors. No such redemption shall
be effected unless the Corporation has given the stockholder at least forty-five
(45) days' notice of its intention to redeem the Shares and an opportunity to
purchase a sufficient number of additional Shares to bring the aggregate current
net asset value of his or her Shares to at least the minimum threshold set by
the Board of Directors. Upon redemption of Shares pursuant to this Section, the
Corporation shall promptly cause payment of the full redemption price, in any
permissible form, to be made to the holder of Shares so redeemed, which shall be
the price calculated for the date and time of actual redemption.

Section 6.9. Preemptive Rights. No holder of any Shares or any other
securities of the Corporation, whether now or hereafter authorized, shall have
any preemptive right to subscribe for or purchase any Shares or any other
securities of the Corporation other than such, if any, as the Board of
Directors, in its sole discretion, may determine, and at such price or prices
and upon such other terms as the Board of Directors, in its sole discretion, may
fix; and any Shares or other securities which the Board of Directors may
determine to offer for subscription may, as the Board of Directors, in its sole
discretion, shall determine, be offered to the holders of any Class, Series, or
type of stock or other securities at the time outstanding to the exclusion of
the holders of any or all other Classes, Series, or types of stock or other
securities at the time outstanding.

SEVENTH: Issuance of Shares.

Section 7.1. Issuance of New Shares. The Board of Directors is authorized
to issue and sell or cause to be issued and sold from time to time (without the
necessity of offering the same or any part thereof to existing stockholders) all
or any portion or portions of the entire authorized but unissued Shares of the
Corporation, and all or any portion of portions of the Shares of the Corporation
previously issued and redeemed, for cash or for any other lawful consideration
or considerations and on or for any terms, conditions, or prices consistent with
the provisions of law and of the charter of the Corporation at the time in
force; provided, however, that in no event shall Shares of the Corporation
having a par value be issued or sold for a consideration or considerations less
in amount or value than the par value of the Shares so issued or sold, and
provided further that in no event shall any Shares of the Corporation be issued
or sold, except as a stock dividend distributed to stockholders, for a
consideration (which shall be net to the Corporation after underwriting
discounts or commissions) less in amount or value than the net asset value of
the Shares so issued or sold determined as of such time as the Board of
Directors shall have by resolution prescribed. In the absence of such a
resolution, such net asset value shall be that next determined after an
unconditional order in proper form to purchase such Shares is accepted, except
that Shares may be sold to an underwriter at (a) the net asset value next
determined after such orders are received by the underwriter or by a dealer with
whom such underwriter has a sales agreement or (b) when appropriate, the net
asset value determined at a later time.

D-6

Section 7.2. Fractional Shares. The Corporation may issue and sell
fractions of Shares having pro rata all the rights of full Shares, including,
without limitation, the right to vote and to receive dividends, and wherever the
words "Share" or "Shares" are used in these Articles or in the Bylaws they shall
be deemed to include fractions of Shares, where the context does not clearly
indicate that only full Shares are intended.

EIGHTH: Majority Vote. Except as otherwise required by the 1940 Act or any
other statutory provision, a majority of all the votes cast on a matter at a
stockholders' meeting at which a quorum is present is sufficient to approve any
matter which properly comes before the meeting. Notwithstanding any provision of
law requiring a greater proportion than a majority of the vote to take or
authorize any action, the Corporation is hereby authorized in accordance with
the authority granted by Section 2-104(b)(5) of the Maryland General Corporation
Law, to take such action upon the concurrence of a majority of the aggregate
number of Shares entitled to vote thereon (or of a majority of the aggregate
number of Shares of a Class or Series entitled to vote thereon). The right to
cumulate votes in the election of Directors is expressly prohibited.

NINTH: Board of Directors.

Section 9.1. Powers and Composition. All corporate powers and authority of
the Corporation (except as otherwise provided by statute, by the charter of the
Corporation, or by the Bylaws of the Corporation) shall be vested in and may be
exercised by the Board of Directors. Subject to the provisions of the laws of
the state of Maryland, the number of Directors constituting the Board of
Directors shall be such number as may from time to time be fixed in or in
accordance with the Bylaws of the Corporation. Any vacancy on the Board of
Directors, whether created by expansion of the Board of Directors or otherwise,
may be filled by action of the existing Directors, except as otherwise required
by law. Except as provided in the Bylaws, the election of Directors may be
conducted in any way approved at the meeting (whether of stockholders or
Directors) at which the election is held, provided that such election shall be
by ballot whenever requested by any person entitled to vote.

As of the effective date of these Amended and Restated Articles of
Incorporation, the Board of Directors is comprised of [ ] members, and the
following persons have been duly elected or appointed to serve as Directors
until their successors are duly elected and qualified: [ ].

Section 9.2. Compensation of Directors. Each Director may receive such
remuneration for his or her services as shall be fixed from time to time by
resolution of the Board of Directors.

Section 9.3. Inspection of Records. The Board of Directors shall have the
power to determine whether and to what extent, and at what times and places, and
under what conditions and regulation, the accounts and books of the Corporation
(other than the stock ledger), or any of them, shall be open to inspection by
stockholders. No stockholders shall have any right to inspect any account, book,
or document of the Corporation, except to the extent permitted by statute or the
Bylaws.

TENTH: Contracts.

Section 10.1. Parties to Contracts. Any contract for services as
underwriter, investment adviser, manager, administrator, custodian, transfer
agent or dividend disbursing agent or related services may be entered into with
any corporation, firm, trust or association, although any one or more of the
Directors or officers of the Corporation may be an officer, director, trustee,
stockholder or member of such other party to the contract, and no such contract
shall be invalidated or rendered voidable by reason of the existence of any such
relationship, nor shall any person holding such relationship be liable merely by
reason of such relationship for any loss or expense to the Corporation under or
by reason of said contract or accountable for any profit realized directly or
indirectly therefrom, provided that the contract when entered into was
reasonable and fair and not inconsistent with the provisions of this Article
TENTH. The same person (including a firm, corporation, trust, or association)
may be the other party to any or all of the underwriting, investment advisory or
management contracts entered into by the Corporation, and any individual may be
financially interested or otherwise affiliated with persons who are parties to
any or all of the contracts mentioned in this Section 10.1.

Section 10.2. Contracts Regarding Series or Classes. The Board of Directors
may cause the Corporation to enter into contracts on behalf of the Corporation
or a Series or Class thereof. In accordance with Section 6.5, any obligations or
liabilities stemming from a contract entered into on behalf of a Series or Class
of the Corporation,

D-7

or judgments thereon, are solely the responsibility of that Series or Class.
Any payments due under, or resulting from, such a contract may be satisfied
only by assets of the Series or Class on behalf of which the Corporation
entered into the contract.

ELEVENTH: Liability of Directors and Officers.

Section 11.1. Liability. To the maximum extent permitted by applicable law
(including Maryland law and the 1940 Act) as currently in effect or as it may
hereafter be amended, no Director or officer of the Corporation shall be liable
to the Corporation, its stockholders, or any other party for money damages.

Section 11.2. Indemnification. To the maximum extent permitted by
applicable law (including Maryland law and the 1940 Act) currently in effect or
as it may hereafter be amended, the Corporation shall indemnify and advance
expenses to its present and past Directors, officers, or employees, and persons
who are serving or have served at the request of the Corporation as a director,
officer, employee, partner, trustee or agent of, or in similar capacities for,
other entities. The Board of Directors may determine that the Corporation shall
provide indemnification or advance expenses to an agent.

Section 11.3. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a Director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him or her and incurred by him or her in any such capacity or arising out of his
or her status as such, whether or not the Corporation would have the power to
indemnify him or her against such liability.

Section 11.4. Repeal or Modification. No repeal or modification of this
Article ELEVENTH by the stockholders of the Corporation, or adoption or
modification of any other provision of the charter of the Corporation or Bylaws
inconsistent with this Article ELEVENTH, shall repeal or narrow any (1)
limitation on the liability of any Director, officer or employee of the
Corporation or (2) right of indemnification available to any person covered by
these provisions with respect to any act or omission which occurred prior to
such repeal, modification or adoption.

TWELFTH: Amendment.

Section 12.1. Amendment. The Corporation reserves the right from time to
time to make any amendment of the charter of the Corporation, now or hereafter
authorized by law, including any amendment which alters contract rights, as
expressly set forth in the charter of the Corporation, of any outstanding
Shares. In accordance with Article EIGHTH hereof, any amendment to the charter
of the Corporation required by law at the time of its proposal to be adopted by
stockholders of the Corporation may be adopted at any meeting of the
stockholders upon receiving an affirmative vote of a majority of all votes
entitled to be cast thereon. The Board of Directors may, without a stockholder
vote, take any other action now or hereafter permitted by law without a
stockholder vote.

Section 12.2. Bylaws. Except as may otherwise be expressly provided in the
Bylaws, the Board of Directors is expressly authorized to make, alter, amend and
repeal Bylaws or to adopt new Bylaws of the Corporation, without any action on
the part of stockholders; but the Bylaws made by the Board of Directors and the
power so conferred may be altered or repealed by the stockholders.

SECOND: The foregoing amendment and restatement of the charter of the
Corporation does not increase the authorized capital stock of the Corporation.

THIRD: The foregoing amendment and restatement of the charter of the
Corporation has been advised and approved by a majority of the Board of
Directors and approved by the stockholders of the Corporation.

IN WITNESS WHEREOF, the undersigned Vice President and Secretary of Legg
Mason Value Trust, Inc., has executed the foregoing Amended and Restated
Articles of Incorporation and hereby acknowledges the same to be the act of
said corporation and further acknowledges that, to the best of his knowledge,
information, and belief, the matters and facts set forth therein are true in
all material respects under the penalties of perjury.

On the [ ] day of [ ], 2002.

[SIGNATURE LINES OMITTED]

D-8

Legg Mason Charles Street Trust, Inc.
Batterymarch U.S. Small Capitalization Portfolio

The undersigned, having duly received the Notice of Special Meeting of
Shareholders and the Proxy Statement dated September 3, 2002, hereby appoints
Marc R. Duffy and Mark R. Fetting or either of them the true and lawful
attorneys, agents and proxies of the undersigned (with the power of substitution
and revocation) to represent the undersigned and to vote all shares held of
record by the undersigned on August 26, 2002, at the Special Meeting of
Shareholders to be held on October 24, 2002 at the offices of the Legg Mason
Funds, 100 Light Street, 28th Floor, Baltimore, Maryland at 2:00 p.m., and at
any adjournments thereof.

PLEASE SIGN, DATE, AND RETURN PROMPTLY
IN THE ENCLOSED ENVELOPE

Date ________________, 2002

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

--------------------------------------------------------
Signature(s), (Title(s) if applicable)

Please sign exactly as your name appears on the Proxy. If
joint owners, EITHER may sign this Proxy. When signing as
attorney, executor, administrator, trustee, guardian, or
corporation, please give title.

Please fill in box(es) as shown using black or blue ink. [x]
PLEASE DO NOT USE FINE POINT PENS.

YOUR DIRECTORS RECOMMEND THAT YOU VOTE FOR ALL ITEMS.

ITEM 1. Election of Director Nominees:
FOR AGAINST ABSTAIN
Nominees: (01) Richard G. Gilmore, (02) Arnold L. Lehman, [ ] [ ] [ ] 1.
(03) Jill E. McGovern, (04) Peter G. O'Brien,
(05) Robin J.W. Masters, (06) Arthur S. Mehlman, (07) S. Ford Rowan,
(08) John F. Curley, Jr., (09) Mark R. Fetting

INSTRUCTION: To withhold authority to vote for any individual nominee, write the
nominee's name on the space provided below.

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

ITEM 2. To Modernize the Fund's Investment Restrictions.

2a. To Modify the Fundamental Investment Restriction on Borrowing Money. [ ] [ ] [ ] 2a.

2b. To Modify the Fundamental Investment Restriction on Underwriting Securities. [ ] [ ] [ ] 2b.

2c. To Modify the Fundamental Investment Restriction on Lending. [ ] [ ] [ ] 2c.

2d. To Modify the Fundamental Investment Restriction on Issuing Senior Securities. [ ] [ ] [ ] 2d.

2e. To Modify the Fundamental Investment Restriction on Real Estate Investments. [ ] [ ] [ ] 2e.

2f. To Modify the Fundamental Investment Restriction on Investing in Commodities. [ ] [ ] [ ] 2f.

2g. To Modify the Fundamental Investment Restriction on Industry Concentration. [ ] [ ] [ ] 2g.

ITEM 3. To Change the Investment Objective From Fundamental to Non-Fundamental. [ ] [ ] [ ] 3.

------------------
From: FIRST CLASS
U.S. POSTAGE
PROXY TABULATOR PAID
P.O. BOX 9132 PROXY
HINGHAM, MA 02043-9132 TABULATOR
------------------

\/ Please fold and detach card at perforation before mailing \/

VOTE TODAY BY MAIL,
TOUCH-TONE PHONE OR THE INTERNET
CALL TOLL-FREE 1-800-690-6903
OR LOG ON TO WWW.PROXYWEB.COM

**** CONTROL NUMBER: 999 999 999 999 99 ****

FUND NAME PRINTS HERE
FUND NAME PRINTS HERE

The undersigned, having duly received the Notice of Special Meeting of
Shareholders and the Proxy Statement dated September 3, 2002, hereby appoints
Marc R. Duffy and Mark R. Fetting or either of them the true and lawful
attorneys, agents and proxies of the undersigned (with the power of substitution
and revocation) to represent the undersigned and to vote all shares held of
record by the undersigned on August 26, 2002, at the Special Meeting of
Shareholders to be held on October 30, 2002 at the offices of the Legg Mason
Funds, 100 Light Street, 28th Floor, Baltimore, Maryland at 11:00 a.m., and at
any adjournments thereof.

PLEASE SIGN, DATE, AND RETURN PROMPTLY
IN THE ENCLOSED ENVELOPE

Date ________________ , 2002
--------------------------------------------------

--------------------------------------------------
Signature(s), (Title(s) if applicable)

Please sign exactly as your name appears on the
Proxy. If joint owners, EITHER may sign this
Proxy. When signing as attorney, executor,
administrator, trustee, guardian, or corporation,
please give title.

AAA

\/ Please fold and detach card at perforation before mailing \/

Please fill in box(es) as shown using black or blue ink or number 2 pencil.(X)
PLEASE DO NOT USE FINE POINT PENS.

YOUR DIRECTORS RECOMMEND THAT YOU VOTE FOR ALL ITEMS.

ITEM 1. Election of Director Nominees:

ALL FUNDS.
Nominees: (01) Richard G. Gilmore, (02) Arnold L. Lehman, (03) Jill E. McGovern, FOR AGAINST ABSTAIN
(04) Peter G. O'Brien, (05) Robin J.W. Masters, (06) Arthur S. Mehlman, (07)
S. Ford Rowan, (08) John F. Curley, Jr., (09) Mark R. Fetting
OPPORTUNITY TRUST ONLY.
(10) Jennifer W. Murphy o o o 1.
INSTRUCTION: To withhold authority to vote for any individual nominee, write
the nominee's name on the space provided below.

------------------------------------------------------------------------
ITEM 2. To Modernize the Funds' Investment Restrictions.

ALL FUNDS.
2a. To Modify the Fundamental Investment Restriction on Borrowing Money. o o o 2a.

2b. To Modify the Fundamental Investment Restriction on Underwriting Securities. o o o 2b.

2c. To Modify the Fundamental Investment Restriction on Lending. o o o 2c.

2d. To Modify the Fundamental Investment Restriction on Issuing Senior Securities. o o o 2d.

2e. To Modify the Fundamental Investment Restriction on Real Estate Investments. o o o 2e.

2f. To Modify the Fundamental Investment Restriction on Investing in Commodities. o o o 2f.

2g. To Modify the Fundamental Investment Restriction on Industry Concentration. o o o 2g.

ITEM 3. To Change the Investment Objective from Fundamental to Non-Fundamental. o o o 3.

AAA

------------------
From: FIRST CLASS
U.S. POSTAGE
PROXY TABULATOR PAID
P.O. BOX 9132 PROXY
HINGHAM, MA 02043-9132 TABULATOR
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VOTE TODAY BY MAIL,
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**** CONTROL NUMBER: 999 999 999 999 99 ****

FUND NAME PRINTS HERE
FUND NAME PRINTS HERE

The undersigned, having duly received the Notice of Special Meeting of
Shareholders and the Proxy Statement dated September 3, 2002, hereby appoints
Marc R. Duffy and Mark R. Fetting or either of them the true and lawful
attorneys, agents and proxies of the undersigned (with the power of substitution
and revocation) to represent the undersigned and to vote all shares held of
record by the undersigned on August 26, 2002, at the Special Meeting of
Shareholders to be held on October 30, 2002 at the offices of the Legg Mason
Funds, 100 Light Street, 28th Floor, Baltimore, Maryland at 11:00 a.m., and at
any adjournments thereof.

PLEASE SIGN, DATE, AND RETURN PROMPTLY
IN THE ENCLOSED ENVELOPE

Date ________________ , 2002
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Signature(s), (Title(s) if applicable)

Please sign exactly as your name appears on the
Proxy. If joint owners, EITHER may sign this
Proxy. When signing as attorney, executor,
administrator, trustee, guardian, or corporation,
please give title.

BBB