AMENDED
DISTRIBUTION PLAN OF
LEGG MASON CASH RESERVE TRUST
WHEREAS, Legg Mason Cash Reserve Trust ("Trust") is an open-end
management investment company registered under the Investment Company Act of
1940, as amended ("1940 Act"), and offers for public sale shares of beneficial
interest;
WHEREAS, the Trust has registered the offering of its shares of
beneficial interest under a Registration Statement filed with the Securities and
Exchange Commission and that Registration Statement is in effect as of the date
hereof;
WHEREAS, the Trust desires to adopt a Distribution Plan pursuant to
Rule 12b-1 under the 1940 Act and the Board of Trustees has determined that
there is a reasonable likelihood that adoption of the Distribution Plan will
benefit the Trust and its shareholders; and
WHEREAS, the Trust has employed Legg Mason Wood Walker, Incorporated
("Legg Mason") as principal underwriter of the shares of the Trust;
NOW, THEREFORE, the Trust hereby adopts this Distribution Plan ("Plan")
in accordance with Rule 12b-1 under the 1940 Act on the following terms and
conditions:
1. A. The Trust shall pay to Legg Mason, as compensation for Legg
Mason's services as principal underwriter of the Trust's shares, a distribution
and shareholder services fee at the rate of 0.15% on an annualized basis of the
average daily net assets of the Trust's shares, such fee to be calculated and
accrued daily and paid monthly or at such other intervals as the Board shall
determine.
B. The Trust may pay a distribution and service fee to Legg
Mason at a lesser rate than the fee specified in paragraph l.A. of this Plan, as
agreed upon by the Board and Legg Mason and as approved in the manner specified
in paragraph 3 of this Plan. The distribution and service fee payable hereunder
is payable without regard to the aggregate amount that may be paid over the
years, provided that, so long as the limitations set forth in Article 111,
Section 26(d) of the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. ("NASD") remain in effect and apply to distributors or
dealers in the Trust's shares, the amounts paid hereunder shall not exceed those
limitations, including permissible interest.
2. As principal underwriter of the Trust's shares, Legg Mason may
spend such amounts as it deems appropriate on any activities or expenses
primarily intended to result in the sale of the shares of the Trust and/or the
servicing and maintenance of shareholder accounts, including, but not limited
to, compensation to employees of Legg Mason; compensation to Legg Mason, other
broker-dealers and other entities that engage in or support the distribution of
shares or who service shareholder accounts or provide sub-accounting and
recordkeeping services; expenses of Legg Mason and such other broker-dealers and
other entities, including overhead and telephone and other communication
expenses; the printing of prospectuses, statements of additional information,
and reports for other than existing shareholders; and preparation and
distribution of sales literature and advertising materials.
3. This amended Plan shall take effect on May 10, 1996 and shall
continue in effect for successive periods of one year from its execution for so
long as such continuance is specifically approved at least annually together
with any related agreements, by votes of a majority of both (a) the Board of
Trustees of the Trust and (b) those Trustees who are not "interested persons" of
the Trust, as defined in the 1940 Act, and who have no direct or indirect
financial interest in the operation of this Plan or any agreements related to it
(the "Rule 12b-1 Trustees"), cost in person at a meeting or meetings called for
the purpose of voting on this Plan and such related agreements; and only if the
Trustees who approve the Plan taking effect have reached the conclusion required
by Rule 12b-1 (e) under the 1940 Act.
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4. Any person authorized to direct the disposition of monies paid or
payable by the Trust pursuant to this Plan or any related agreement shall
provide to the Trust's Board of Trustees and the Board shall review, at least
quarterly, a written report of the amounts so expended and the purposes for
which such expenditures were made. Legg Mason shall submit only information
regarding amounts expended for "distribution activities," as defined in this
paragraph 4, to the Board in support of the distribution fee payable hereunder
and shall submit only information regarding amounts expended for "service
activities," as defined in this paragraph 4, to the Board in support of the
service fee payable hereunder.
For purposes of this Plan, "distribution activities" shall mean
any activities in connection with Legg Mason's performance of its obligations
under the underwriting agreement, dated May 10, 1996, by and between the Trust
and Legg Mason, that are not deemed "service activities." As used herein,
"distribution activities" also includes sub-accounting or recordkeeping services
provided by an entity if the entity is compensated, directly or indirectly, by
the Fund or Legg Mason for such services. Such entity may also be paid a service
fee if it provides appropriate services. Nothing in the foregoing is intended to
or shall cause there to be any implication that compensation for such services
must be made only pursuant to a plan of distribution under Rule 12b-1. "Service
activities" shall mean activities covered by the definition of "service fee"
contained in amendments to Article 111, Section 26(d) of the NASD's Rules of
Fair Practice that became effective July 7, 1993, including the provision by
Legg Mason of personal, continuing services to investors in the Trust's shares.
Overhead and other expenses of Legg Mason related to its "distribution
activities" or "service activities," including telephone and other
communications expenses, may be included in the information regarding amounts
expended for such distribution or service activities, respectively.
5. This Plan may be terminated with respect to the Trust at any time
by vote of a majority of the Rule 12b-1 Trustees or by vote of a majority of the
outstanding voting securities of the Trust.
6. This Plan may not be amended to increase materially the amount of
distribution and service fee provided for in paragraph l.A. hereof unless such
amendment is approved by a vote of at least a majority of the outstanding
securities, as defined in the 1940 Act, of the Trust, and no material amendment
to the Plan shall be made unless such amendment is approved in the manner
provided for continuing approval in paragraph 3 hereof.
7. While this Plan is in effect, the selection and nomination of
Trustees who are not interested persons of the Trust, as defined in the 1940
Act, shall be committed to the discretion of Trustees who are themselves not
interested persons.
8. The Trust shall preserve copies of this Plan and any related
agreements for a period of not less than six years from the date of expiration
of the Plan or agreement, as the case may be, the first two years in an easily
accessible place; and shall preserve copies of each report made pursuant to
paragraph 4 hereof for a period of not less than six years from the date of such
report, the first two years in an easily accessible place.
IN WITNESS WHEREOF, the Trust has executed this Distribution Plan as of
the day and year set forth below.
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Date: May 10, 1996 LEGG MASON CASH RESERVE TRUST
By: /s/ Marie K. Karpinski
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Attest:
By: /s/ Kathi D. Bair
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Agreed and Assented to by
LEGG MASON WOOD WALKER, INCORPORATED
By: /s/ John F. Curley Jr.
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