FINANCIAL INTERMEDIARY CLASS DISTRIBUTION PLAN OF
LEGG MASON TOTAL RETURN TRUST, INC.
WHEREAS, Legg Mason Total Return Trust, Inc. (the "Corporation") is an
open-end management investment company registered under the Investment Company
Act of 1940, as amended ("1940 Act"), and has offered, and intends to continue
offering, for public sale shares of common stock known as the Legg Mason Total
Return Trust (the "Fund");
WHEREAS, the Corporation has registered the offering of its shares of
common stock 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 Corporation desires to adopt a Distribution Plan pursuant
to Rule 12b-1 under the 1940 Act with respect to the Fund's Financial
Intermediary Class of shares (the "Class"), and the Board of Directors has
determined that there is a reasonable likelihood that adoption of the
Distribution Plan will benefit the Fund and shareholders of the Class;
WHEREAS, the Corporation has employed Legg Mason Wood Walker,
Incorporated ("Legg Mason") as principal underwriter of the shares of the
Corporation;
NOW, THEREFORE, the Corporation hereby adopts this Distribution Plan
(the "Plan") in accordance with Rule 12b-1 under the 1940 Act on the following
terms and conditions:
1. A. The Fund shall pay to Legg Mason, as compensation for Legg
Mason's services as principal underwriter of the Fund's Financial Intermediary
Class shares, a distribution fee at the rate not to exceed 0.15% on an
annualized basis of the average daily net assets attributable to Financial
Intermediary Class shares of the Fund, such fee to be calculated and accrued
daily and paid monthly or at such other intervals as the Board shall determine.
B. The Fund shall pay to Legg Mason, as compensation for
ongoing services provided to the investors in Financial Intermediary Class
shares of the Fund, a service fee at the rate not to exceed 0.25% on an
annualized basis of the average daily net assets attributable to Financial
Intermediary Class shares of the Fund, such fees to be calculated and accrued
daily and paid monthly or at such other intervals as the Board shall determine.
C. The Fund may pay a distribution or service fee to Legg
Mason at a lesser rate than the fees specified in paragraph 1.A and 1.B.,
respectively, of this Plan as approved in the manner specified in paragraph 3 of
this Plan. Amounts payable hereunder are payable without regard to the aggregate
amount that may be paid over the years, provided that, so long as the
limitations set forth in Conduct Rule 2830 of the National Association of
Securities Dealers, Inc. ("NASD") remain in effect and apply to distributors or
dealers in the Corporation's shares, the amounts paid hereunder shall not exceed
those limitations, including permissible interest.
2. As principal underwriter of the Corporation's shares, Legg Mason may
spend such amounts as it deems appropriate on any activities or expenses
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primarily intended to result in the sale of the shares of the Fund 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 Plan shall take effect on January 22, 2001, 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 Directors of
the Corporation and (b) those Directors who are not "interested persons" of the
Corporation, 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 Directors"), cast in person at a meeting or meetings called for
the purpose of voting on this Plan and such related agreements; and only if the
Directors who approve the Plan taking effect have reached the conclusion
required by Rule 12b-1(e) under the 1940 Act.
4. Any person authorized to direct the disposition of monies paid or
payable by the Fund pursuant to this Plan or any related agreement shall provide
to the Corporation's Board of Directors 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 February 7, 1996, by and between the
Corporation and Legg Mason, with respect to the Fund, that are not deemed
"service activities." As used herein, "distribution activities" also include
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 Conduct Rule
2830 of the NASD, including the provision by Legg Mason of personal, continuing
services to investors in the Corporation'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.
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5. This Plan may be terminated with respect to the Class at any time by
vote of a majority of the Rule 12b-1 Directors or by vote of a majority of the
outstanding shares of the Class.
6. After the issuance of Financial Intermediary Class shares of the
Fund, this Plan may not be amended to increase materially the amount of
distribution fees provided for in paragraph 1.A. hereof or the amount of service
fees provided for in paragraph 1.B. hereof unless such amendment is approved by
a vote of at least a majority of the outstanding shares of the Class 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
directors who are not interested persons of the Corporation, as defined in the
1940 Act, shall be committed to the discretion of directors who are themselves
not interested persons.
8. The Corporation 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.
9. As used in this Plan, the term "majority of the outstanding shares
of the Class" means the affirmative vote, at a duly called and held meeting of
the Fund's Financial Intermediary Class shareholders, (i) of the holders of 67%
or more of the Financial Intermediary Class shares present (in person or by
proxy) and entitled to vote at such meeting, if the holders or more than 50% of
the outstanding Financial Intermediary Class shares entitled to vote at such
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meeting are present in person or in proxy, or (ii) of the holders of more than
50% of the outstanding Financial Intermediary Class shares entitled to vote at
such meeting, whichever is less.
IN WITNESS WHEREOF, the Corporation has executed this Distribution Plan
as of the day and year set forth below:
DATED: January 19, 2001
ATTEST: LEGG MASON TOTAL RETURN TRUST, INC.
By:/s/ Kevin Ehrlich By:/s/ Marc R. Duffy
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Marc R. Duffy
Vice President and Secretary
Agreed and assented to by:
LEGG MASON WOOD WALKER, INCORPORATED
By:/s/ Andrew J. Bowden
---------------------------------
Andrew J. Bowden
Vice President
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