LEGG MASON TAX FREE INCOME FUND, 485APOS, 1995-06-15

LEGG MASON TAX FREE INCOME FUND
485APOS, 1995-06-15

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As filed with the Securities and Exchange Commission on June 15, 1995.
1933 Act File No. 33-37971
1940 Act File No. 811-6223
=========================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM N-lA
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No: ___ [ ]
Post-Effective Amendment No: 7 [X]
---
and
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No: 9
---
LEGG MASON TAX-FREE INCOME FUND
(Exact Name of Registrant as Specified in Charter)

111 South Calvert Street
Baltimore, Maryland 21202
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (410) 539-0000

Copies to:

CHARLES A. BACIGALUPO ARTHUR C. DELIBERT, ESQ.
111 South Calvert Street Kirkpatrick & Lockhart LLP
Baltimore, Maryland 21202 1800 M Street, N.W.
(Name and Address of South Lobby - Ninth Floor
Agent for Service) Washington, D.C. 20036-5891

It is proposed that this filing will become effective:

------- immediately upon filing pursuant to Rule 485(b)
------- on --------------, 1995 pursuant to Rule 485(b)
X 60 days after filing pursuant to Rule 485(a)(i)
-------
------- on --------------, 1995 pursuant to Rule 485(a)(i)
------- 75 days after filing pursuant to Rule 485 (a)(ii)
------- on --------------, 1995 pursuant to Rule 485 (a)(ii)

<PAGE>

Registrant has filed a declaration pursuant to Rule 24f-2 under the
Investment Company Act of 1940 and filed the notice required by such Rule
for its most recent fiscal year on June 6, 1995.

<PAGE>

Legg Mason Tax-Free Income Fund

Contents of Registration Statement

This registration statement consists of the following papers and
documents.

Cover Sheet

Table of Contents

Cross Reference Sheets

LEGG MASON MARYLAND TAX-FREE INCOME TRUST - PRIMARY SHARES

Part A - Prospectus

NAVIGATOR MARYLAND TAX-FREE INCOME TRUST

Part A - Prospectus

LEGG MASON PENNSYLVANIA TAX-FREE INCOME TRUST - PRIMARY SHARES

Part A - Prospectus

NAVIGATOR PENNSYLVANIA TAX-FREE INCOME TRUST

Part A - Prospectus

LEGG MASON TAX-FREE INTERMEDIATE-TERM INCOME TRUST - PRIMARY SHARES

Part A - Prospectus

NAVIGATOR TAX-FREE INTERMEDIATE-TERM INCOME TRUST

Part A - Prospectus

Legg Mason Tax-Free Intermediate-Term Income Trust - Primary Shares
Navigator Tax-Free Intermediate-Term Income Trust
Legg Mason Maryland Tax-Free Income Trust - Primary Shares
Navigator Maryland Tax-Free Income Trust
Legg Mason Pennsylvania Tax-Free Income Trust - Primary Shares
Navigator Pennsylvania Tax-Free Income Trust
------------------------------------------------

Part B - Statement of Additional Information

Part C - Other Information

Signature Page

Exhibits
<PAGE>

Legg Mason Tax-Free Income Fund
Legg Mason Pennsylvania Tax-Free Income Trust - Primary Shares
Form N-1A Cross Reference Sheet
---------------------------------

<TABLE>
<CAPTION>
<S> <C>
Part A Item No. Prospectus Caption
----------------- ___________________

1 Cover Page
2 Prospectus Highlights:
Fund Expenses

3 Financial Highlights:
Performance Information

4 Investment Objective and Policies;
Description of the Trust and Its Shares
5 Fund Expenses;
The Fund's Management and Investment Adviser;
The Fund's Distributor;
The Fund's Custodian and Transfer Agent

6 Prospectus Highlights;
Dividends and Other Distributions;
Shareholder Services Taxes;
Description of the Trust and Its Shares
7 How You Can Invest In the Fund;
How Your Shareholder Account Is Maintained;
How Net Asset Value Is Determined;
The Fund's Distributor

8 How You Can Redeem Your Primary Shares

9 Not Applicable

</TABLE>
<PAGE>

Legg Mason Tax-Free Income Fund
Navigator Pennsylvania Tax-Free Income Trust
Form N-1A Cross Reference Sheet
---------------------------------

<S> <C>
Part A Item No. Prospectus Caption
--------------- -------------------

1 Cover Page
2 Fund Expenses

3 Financial Highlights;
Performance Information

4 Investment Objective and Policies;
Description of the Trust and Its Shares
5 Fund Expenses;
The Fund's Management and Investment Adviser;
The Fund's Distributor;

6 Dividends and Other Distributions;
Shareholder Services;
Taxes;
Description of the Trust and Its Shares
7 How to Purchase and Redeem Shares;
How Shareholder Accounts are Maintained;
How Net Asset Value Is Determined;
The Fund's Distributor

8 How to Purchase and Redeem Shares

9 Not Applicable

</TABLE>
<PAGE>

Legg Mason Tax-Free Income Fund
Legg Mason Tax-Free Intermediate-Term Income Trust - Primary Shares
Form N-1A Cross Reference Sheet
--------------------------------

<TABLE>
<CAPTION>
<S> <C>
Part A Item No. Prospectus Caption
--------------- --------------------

1 Cover Page
2 Prospectus Highlights;
Fund Expenses

3 Financial Highlights;
Performance Information

6 Prospectus Highlights;
Dividends and Other Distributions;
Shareholder Services;
Taxes;
Description of the Trust and Its Shares
7 How You Can Invest In the Fund;
How Your Shareholder Account Is Maintained;
How Net Asset Value Is Determined;
The Fund's Distributor

8 How You Can Redeem Your Primary Shares

9 Not Applicable

</TABLE>
<PAGE>

Legg Mason Tax-Free Income Fund
Navigator Tax-Free Intermediate-Term Income Trust
Form N-1A Cross Reference Sheet
--------------------------------

<TABLE>
<CAPTION>
<S> <C>
Part A Item No. Prospectus Caption
----------------- -------------------

1 Cover Page
2 Prospectus Highlights;
Fund Expenses

3 Performance Information

4 Investment Objective and Policies;
Description of the Trust and Its Shares
5 Fund Expenses;
The Fund's Management and Investment Adviser;
The Fund's Distributor;

6 Dividends and Other Distributions
Shareholder Services;
Taxes;
Description of the Trust and Its Shares
7 How to Purchase and Redeem Shares;
How Shareholder Accounts are Maintained;
How Net Asset Value Is Determined;
The Fund's Distributor

8 How to Purchase and Redeem Shares

9 Not Applicable

</TABLE>
<PAGE>

Legg Mason Tax-Free Income Fund
Legg Mason Maryland Tax-Free Income Trust - Primary Shares
Form N-1A Cross Reference Sheet
---------------------------------

<TABLE>
<CAPTION>
<S> <C>
Part A Item No. Prospectus Caption
---------------- -------------------

1 Cover Page
2 Prospectus Highlights;
Fund Expenses

3 Financial Highlights;
Performance Information

8 How You Can Redeem Your Primary Shares

9 Not Applicable

</TABLE>
<PAGE>

Legg Mason Tax-Free Income Fund
Navigator Maryland Tax-Free Income Trust
Form N-1A Cross Reference Sheet
-----------------------------------

<TABLE>
<CAPTION>
<S> <C>
Part A Item No. Prospectus Caption
---------------- -------------------

1 Cover Page
2 Fund Expenses

3 Performance Information

4 Investment Objective and Policies;
Description of the Trust and Its Shares
5 Fund Expenses;
The Fund's Management and Investment Adviser;
The Fund's Distributor;

8 How to Purchase and Redeem Shares

9 Not Applicable

</TABLE>
<PAGE>

Legg Mason Tax-Free Income Fund
Form N-1A Cross Reference Sheet
---------------------------------

<TABLE>
<CAPTION>
<S> <C>
Statement of Additional
Part B Item No. Information Caption
----------------- -----------------------

10 Cover Page
11 Table of Contents

12 Not Applicable

13 Additional Information About Investment
Limitations and Policies;
Portfolio Transactions and Brokerage
14 The Trust's Trustees and Officers

15 The Trust's Trustees and Officers
16 The Funds' Investment Adviser;
The Funds' Distributor;
The Trust's Independent Accountants;
The Trust's Custodian and Transfer and
Dividend-Disbursing Agent

17 Portfolio Transactions and Brokerage

18 Not Applicable
19 Valuation of Fund Shares;
Additional Purchase and Redemption
Information

20 Additional Tax Information;
21 Portfolio Transactions and Brokerage;
The Funds' Distributor;

22 Performance Information

23 Financial Statements

</TABLE>
<PAGE>

<PAGE>
TABLE OF CONTENTS
Prospectus Highlights 2
Fund Expenses 3
Financial Highlights 4
Performance Information 5
Who Should Invest 5
Investment Objective and Policies 6
How You Can Invest in the Fund 11
How Your Shareholder Account is Maintained 13

How You Can Redeem Your Primary Shares 13

How Net Asset Value is Determined 14
Dividends and Other Distributions 14
Taxes 15
Shareholder Services 17
The Fund's Management and Investment Adviser 18
The Fund's Distributor 19
The Fund's Custodian and Transfer Agent 19
Description of the Trust and its Shares 19
ADDRESSES
DISTRIBUTOR:
Legg Mason Wood Walker, Inc.
111 South Calvert Street
P.O. Box 1476, Baltimore, MD 21203-1476
410 (Bullet) 539 (Bullet) 0000 800 (Bullet) 822 (Bullet) 5544

TRANSFER AND SHAREHOLDER SERVICING AGENT:
Boston Financial Data Services
P.O. Box 953, Boston, MA 02103

COUNSEL:

Kirkpatrick & Lockhart LLP
1800 M Street, N.W., Washington, DC 20036

INDEPENDENT ACCOUNTANTS:
Coopers & Lybrand L.L.P.
217 East Redwood Street, Baltimore, Maryland 21202

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR THE STATEMENT OF
ADDITIONAL INFORMATION IN CONNECTION WITH THE OFFERING MADE BY THE
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR ITS
DISTRIBUTOR. THE PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE FUND OR
BY THE PRINCIPAL UNDERWRITER IN ANY JURISDICTION IN WHICH SUCH OFFERING
MAY NOT LAWFULLY BE MADE.
(recycle logo here) PRINTED ON RECYCLED PAPER
LMF-029
PROSPECTUS

JULY 31, 1995
LEGG MASON

MARYLAND
TAX-FREE
INCOME
TRUST

PRIMARY SHARES
PUTTING YOUR FUTURE FIRST

--Legg Mason logo here--<PAGE>
<PAGE>

THE LEGG MASON MARYLAND TAX-FREE INCOME TRUST -- PRIMARY SHARES

PROSPECTUS
The Legg Mason Maryland Tax-Free Income Trust ("Fund"), is a
non-diversified, professionally managed portfolio seeking 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. The Fund is a separate series of Legg Mason Tax-Free Income Fund
("Trust"), an open-end management investment company.

In attempting to achieve the Fund's objective, the Fund's investment
adviser, Legg Mason Fund Adviser, Inc. ("Adviser"), invests primarily in
debt instruments issued by or on behalf of the State of Maryland, its
political subdivisions, municipalities, agencies, instrumentalities or
public authorities, the interest on which, in the opinion of counsel to
the issuer, is exempt from federal and Maryland state and local income
taxes ("Maryland municipal obligations") and which are investment grade,
I.E., securities rated within the four highest grades by Moody's Investors
Service, Inc. ("Moody's") or Standard & Poor's Ratings Group ("S&P") or,
if unrated by either Moody's or S&P ("unrated securities"), deemed by the
Adviser to be of comparable quality. Under normal circumstances, the
dollar-weighted average maturity of the Fund's portfolio is expected to be
between 12 and 24 years. The Fund also may engage in hedging transactions.

The Primary Class of shares ("Primary Shares") offered in this
Prospectus is available to all investors except certain institutions (see
page 4).

This Prospectus sets forth concisely the information about the Fund
that a prospective investor ought to know before investing. It should be
read and retained for future reference. A Statement of Additional
Information about the Fund dated July 31, 1995 has been filed with the
Securities and Exchange Commission ("SEC") and, as amended or supplemented
from time to time, is incorporated herein by reference. The Statement of
Additional Information is available without charge upon request from the
Fund's distributor, Legg Mason Wood Walker, Incorporated ("Legg Mason")
(address and telephone numbers listed below).

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

Dated: July 31, 1995

Legg Mason Wood Walker, Inc.
111 South Calvert Street
P.O. Box 1476
Baltimore, MD 21203-1476
410 (Bullet) 539 (Bullet) 0000
800 (Bullet) 822 (Bullet) 5544
<PAGE>
PROSPECTUS HIGHLIGHTS

THE LEGG MASON MARYLAND TAX-FREE INCOME TRUST -- PRIMARY SHARES

The following summary is qualified in its entirety by the more
detailed information appearing in the body of this Prospectus and in the
Statement of Additional Information.

FUND'S INCEPTION:
May 1, 1991
NET ASSETS:

Over $146 million as of May 31, 1995

FUND TYPE:

The Fund, a separate series of the Trust, is an open-end,
non-diversified municipal bond fund emphasizing tax-exempt income. You may
purchase or redeem Primary Shares of the Fund through a brokerage account
with Legg Mason or certain of its affiliates. See "How You Can Invest in
the Fund," page 8, and "How You Can Redeem Your Primary Shares," page 9.

INVESTMENT OBJECTIVE AND POLICIES:
The Fund's investment objective is to earn 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. The
Fund attempts to meet this objective by investing primarily in investment
grade Maryland municipal obligations. See "Investment Objective and
Policies," page 6.
INVESTMENT TECHNIQUES AND RISKS:

There can be no assurance that the Fund will achieve its objective.
The value of the debt instruments held by the Fund, and thus the net asset
value of Fund shares, generally fluctuates inversely with movements in
interest rates. Under normal circumstances, the Fund's dollar-weighted
average maturity is expected to be between 12 and 24 years; therefore, the
net asset value of the Fund's shares will be more sensitive to interest
rate movements and will fluctuate more than a portfolio of shorter-term
securities. Additionally, changes in economic conditions in, or
governmental policies of, the state of Maryland could have a significant
impact on the performance of the Fund. As a non-diversified series, the
Fund may be subject to greater risk with respect to its portfolio
securities than an investment company that has a broader range of
investments, because changes in the financial condition or market
assessment of a single issuer may cause greater fluctuation in the Fund's
total return and the price of Fund shares. The Fund invests in investment
grade securities, I.E., those in the four highest ratings categories of
Moody's or S&P or securities unrated by either of those services but
deemed by the Adviser to be of comparable quality; Moody's considers those
securities rated in its fourth highest category (I.E., Baa) to have
speculative characteristics. The Fund's participation in hedging and
option strategies also involves certain investment risks and transaction
costs. See "Yield and Risk Factors" and "Investment Techniques," pages
8-11.

DISTRIBUTOR :
Legg Mason Wood Walker, Incorporated
INVESTMENT ADVISER:
Legg Mason Fund Adviser, Inc.

TRANSFER AND SHAREHOLDER SERVICING AGENT :
Boston Financial Data Services

CUSTODIAN:
State Street Bank and Trust Company

EXCHANGE PRIVILEGE:
All funds in the Legg Mason Family of Funds. See "Exchange Privilege,"
page 17.
DIVIDENDS:
Declared daily and paid monthly. See "Dividends and Other
Distributions," page 14.
REINVESTMENT:

All dividends and other distributions are automatically reinvested in
Primary Shares unless cash payments are requested.

INITIAL PURCHASE:

$1,000 minimum, generally.

SUBSEQUENT PURCHASES:

$100 minimum, generally.

PURCHASE METHODS:

Send bank/personal check or wire federal funds. See "How You Can
Invest in the Fund," page 11. Larger purchases may be eligible for reduced
initial sales charges, as may purchases pursuant to a Letter of Intention
as described on page 12.

PUBLIC OFFERING PRICE PER SHARE:
Net asset value plus any applicable sales charge (maximum sales charge
is 2.75% of public offering price).
2
<PAGE>
FUND EXPENSES

The purpose of the following table is to assist an investor in
understanding the various costs and expenses that an investor in Primary
Shares will bear directly or indirectly. The expenses and fees set forth
below are based on average net assets and annual Fund operating expenses
related to Primary Shares for the year ended March 31, 1995.

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge on purchases 2.75%(1)(2)
Sales charge on reinvested dividends None
Redemption or exchange fees None
ANNUAL FUND OPERATING EXPENSES -- PRIMARY
SHARES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management fees(3) 0.21%
12b-1 fees 0.25%
Other expenses 0.14%
Total operating expenses (after fee
waivers)(3) 0.60%
</TABLE>

(1) As a percentage of offering price.
(2) See "How You Can Invest In The Fund," page 11, for additional
information concerning volume reductions, sales charge waivers and
reduced sales charge purchase plans.

(3) Pursuant to a voluntary expense limitation, the Adviser and Legg Mason
have agreed to waive the management and 12b-1 fees and assume certain
other expenses such that total operating expenses relating to Primary
Shares (exclusive of taxes, interest, brokerage fees, and
extraordinary expenses) will not exceed 0.60% (annualized) of average
daily net assets until January 31, 1996 or until the Fund's net
assets reach $200 million, whichever occurs first. In the absence of
such waivers, the expected management fee, 12b-1 fee, other expenses
and total operating expenses relating to Primary Shares would be
0.55%, 0.25%, 0.14%, and 0.94% of average net assets, respectively.

EXAMPLE OF EFFECT OF FUND EXPENSES
The following example illustrates the expenses that you would pay on a
$1,000 investment in Primary Shares over various time periods assuming (1)
a 5% annual rate of return and (2) redemption at the end of each time
period. As noted in the table above, the Fund charges no redemption fees
of any kind.

<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$33 $46 $60 $100
</TABLE>

This example assumes that the maximum 2.75% initial sales charge is
deducted at the time of purchase, that the percentage amounts listed under
"Annual Fund Operating Expenses" remain the same over the time periods
shown and that all dividends and capital gain distributions are reinvested
in additional Fund shares. If the waiver is not extended beyond January
31, 1996, the expense figures in the example will be higher.

Because the Fund pays a 12b-1 fee with respect to Primary Shares,
long-term investors in Primary Shares may pay more in distribution
expenses than the economic equivalent of the maximum front-end sales
charge permitted by the National Association of Securities Dealers, Inc.
("NASD"). For further information concerning Fund expenses, see "The
Fund's Management and Investment Adviser," page 18.

3
<PAGE>
FINANCIAL HIGHLIGHTS

Effective July 31, 1995, the Fund commenced the sale of a second class
of shares, known as Navigator Shares. Navigator Shares are currently
offered for sale only to institutional clients of the Fairfield Group, Inc.
("Fairfield") for investment of their own funds and funds for which they
act in a fiduciary capacity, to clients of Legg Mason Trust Company ("Trust
Company") for which Trust Company exercises discretionary investment
management responsibility, to qualified retirement plans managed on a
discretionary basis and having net assets of at least $200 million, and to
The Legg Mason Profit Sharing Plan and Trust. Navigator Shares pay no 12b-1
distribution fees and may pay lower transfer agency fees. The information
below is for Primary Shares and reflects the 12b-1 fees paid by that Class.

The financial highlights for the period May 1, 1991 (commencement of
operations) to March 31, 1992 and for the years ended March 31, 1993
through 1995 have been derived from financial statements which have been
audited by Coopers & Lybrand L.L.P., independent accountants. The Fund's
financial statements for the year ended March 31, 1995 and the report of
Coopers & Lybrand L.L.P. thereon are included in the Fund's annual report
and are incorporated by reference into the Statement of Additional
Information. The annual report is available to shareholders without charge
by calling your Legg Mason or affiliated investment executive or Legg
Mason's Funds Marketing Department at 800-822-5544.

<TABLE>
<CAPTION>
PRIMARY CLASS
<S> <C> <C> <C> <C>
Years Ended March 31, 1995 1994 1993 1992(1)
<CAPTION>
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $15.69 $15.97 $15.03 $14.70
Net investment income 0.828(2) 0.839(2) 0.877(2) 0.823(2)
Net realized and unrealized gain (loss) on investments 0.180 (0.275) 0.947 0.333
Total from investment operations 1.008 0.564 1.824 1.156
Distributions to shareholders:
Net investment income (0.828) (0.839) (0.877) (0.823)
Net realized gain on investments -- -- (0.007) (0.003)
In excess of net realized gain on investments -- (0.005) -- --
Net asset value, end of period $15.87 $15.69 $15.97 $15.03
Total return(4) 6.60% 3.51% 12.47% 8.04%(3)
RATIOS/SUPPLEMENTAL DATA:
Ratios to average net assets:
Expenses 0.54%(2) 0.46%(2) 0.40%(2) 0.18%(2)(5)
Net investment income 5.32%(2) 5.10%(2) 5.61%(2) 5.91%(2)(5)
Portfolio turnover rate 9.5% 6.6% -- 5.4%(5)
Net assets, end of period (in thousands) $142,314 $145,578 $128,566 $83,052
</TABLE>

(1) FOR THE PERIOD MAY 1, 1991 (COMMENCEMENT OF OPERATIONS) TO MARCH 31,
1992.

(2) NET OF FEES WAIVED AND REIMBURSEMENTS MADE BY THE ADVISER IN EXCESS OF
VOLUNTARY EXPENSE LIMITATIONS AS FOLLOWS: ALL EXPENSES UNTIL OCTOBER
20, 1991; 0.25% UNTIL DECEMBER 31, 1991; 0.35% UNTIL JUNE 30, 1992;
0.40% UNTIL DECEMBER 31, 1992; 0.45% UNTIL DECEMBER 31, 1993; 0.50%
UNTIL MARCH 31, 1994; AND 0.60% THROUGH JANUARY 31, 1996.

(3) NOT ANNUALIZED. THE ANNUALIZED TOTAL RETURN FOR THE PERIOD WOULD HAVE
BEEN 8.76%.

(4) EXCLUDING SALES CHARGE.

(5) ANNUALIZED.

4
<PAGE>
PERFORMANCE INFORMATION

From time to time the Fund may quote the total return of each class of
shares in advertisements or in reports or other communications to
shareholders. A mutual fund's TOTAL RETURN is a measurement of the overall
change in value of an investment in the fund, including changes in share
price and assuming reinvestment of dividends and capital gain
distributions. CUMULATIVE TOTAL RETURN shows the fund's performance over a
specific period of time. AVERAGE ANNUAL TOTAL RETURN is the average annual
compounded return that would have produced the same cumulative total
return if the fund's performance had been constant over the entire period.
The Fund's total return reflects deduction of the maximum initial sales
charge at the time of purchase. Average annual returns, which differ from
actual year-by-year results, tend to smooth out variations in a fund's
return.

Total returns of Primary Shares as of March 31, 1995 were as follows:

<TABLE>
<CAPTION>
Cumulative Average Annual
Total Return Total Return
<S> <C> <C>
One Year +3.70% +3.70%
Life of Fund(|) +30.34 +7.00
</TABLE>

(|) Fund's inception -- May 1, 1991.
The Fund also may advertise its yield or tax equivalent yield. Yield
reflects investment income net of expenses over a 30-day (or one-month)
period on a Fund share, expressed as an annualized percentage of the
maximum offering price per share at the end of the period. Tax equivalent
yield shows the taxable yield an investor would have to earn before taxes
to equal the Fund's tax-exempt yield. A tax equivalent yield is calculated
by dividing the Fund's tax-exempt yield by the result of one minus a
stated federal, state and local income tax rate. The effective yield,
although calculated similarly, will be slightly higher than the yield
because it assumes that income earned from the investment is reinvested
(i.e., the compounding effect of reinvestment). Yield computations differ
from other accounting methods and therefore may differ from dividends
actually paid or reported net income.

Total return and yield information reflect past performance and are
not predictions or guarantees of future results. Yields and total returns
would be lower if the Adviser and Legg Mason had not waived a portion of
the fees and reimbursed certain expenses during the fiscal years 1992
through 1995. Investment return and share price will fluctuate, and the
value of your shares, when redeemed, may be worth more or less than their
original cost. As of the date of this Prospectus, Navigator Shares have no
performance record. Further information about the Fund's performance is
contained in the annual report to shareholders, which may be obtained
without charge by calling your Legg Mason or affiliated investment
executive or Legg Mason's Funds Marketing Department at 800-822-5544.

WHO SHOULD INVEST

The Fund is designed for longer-term investors who are able to benefit
from income exempt from federal and Maryland state and local income taxes.
The value of Primary Shares can generally be expected to fluctuate
inversely with changes in interest rates and, because of the potential
negative impact of rising interest rates and other risks, the Fund would
not be appropriate for investors whose primary goal is stability of
principal. The Fund is not intended to be a balanced investment program.
The Fund is not an appropriate investment for "substantial users" of
certain facilities financed by industrial development or private activity
bonds or related persons thereof. See "Taxes -- Federal Income Tax," page
15.

5
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is to earn 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. The investment objective of the Fund may not be changed without a
shareholder vote; however, except as otherwise noted, the investment
policies of the Fund described below may be changed by the Board of
Trustees of the Trust without a shareholder vote. There can be no
assurance that the Fund's investment objective will be achieved.

The Fund seeks to achieve its investment objective by investing
primarily in debt instruments issued by or on behalf of the State of
Maryland, its political subdivisions, municipalities, agencies,
instrumentalities or public authorities, the interest on which, in the
opinion of counsel to the issuer, is exempt from federal and Maryland
state and local income taxes. As a fundamental policy, under normal
circumstances, the Fund will maintain at least 80% of its total assets in
Maryland municipal obligations, exclusive of any such obligations the
interest on which is a tax preference item for purposes of the federal
alternative minimum tax ("Tax Preference Item"). See "Temporary
Investments," page 7.

The Fund invests in securities that, in the opinion of the Adviser,
present acceptable credit risks and that, at the time of purchase, are
rated:
"Baa" or higher by Moody's or "BBB" or higher by S&P in the case of
bonds;
"P1" or higher by Moody's or "A1" or higher by S&P in the case of
commercial paper;
"MIG-1" or higher by Moody's or "SP-1" or higher by S&P in the case of
notes; and
"VMIG-1" or higher by Moody's in the case of variable rate demand
notes.

The Fund also invests in securities unrated by either of the above
services which are deemed by the Adviser to be of comparable quality.

The bond ratings noted above are considered "investment grade" by the
respective rating agencies. A rating of a municipal obligation represents
the rating agency's opinion regarding its quality and is not a guarantee
of quality. Moody's considers that bonds rated in its fourth highest
category (I.E., Baa) have speculative characteristics; changes in economic
conditions or other circumstances are more likely to lead to a weakened
capacity for the issuers of such securities to make principal and interest
payments than is the case for higher rated bonds. In the event the rating
on an issue held in the Fund's portfolio is changed by Moody's or S&P,
such change will be considered by the Adviser in its evaluation of the
overall investment merits of that security. If, as a result of any
downgradings by Moody's or S&P, or, for unrated securities, any
determinations by the Adviser that securities are no longer of comparable
quality to investment grade securities, more than 5% of the Fund's total
assets are represented by securities rated below investment grade or the
equivalent, the Adviser will, as soon as practicable consistent with
achieving an orderly disposition of the securities, sell such holdings
until they represent 5% or less of the Fund's total assets. A discussion
of the ratings outlined above is included in the Statement of Additional
Information.

In addition to the agency ratings, there are other criteria which will
be used by the Adviser in selecting securities for the portfolio.
Consideration will be given to the maturity and duration of each bond as
well as its effect on the overall average maturity and duration of the
portfolio. Analysis of the current and historical yield spreads is done to
determine the relative value in any bond considered for purchase. The
coupon level and call features also figure in the decision on the relative
merits of an investment. Consideration is also given to the type of
bond -- whether it is a general obligation or a revenue bond. In addition
to this examination of bond characteristics, significant effort is devoted
to analysis of the creditworthiness of the bond issuer at the time of
purchase and on an ongoing basis.

The Fund is permitted to invest in municipal securities of any
maturity. The maturities of the Fund's portfolio securities will reflect
the Adviser's judgment concerning current and future market conditions as
well as other factors, such as the Fund's liquidity needs. Under normal
circumstances, the dollar-weighted average maturity of the Fund's
portfolio is expected to be between 12 and 24 years.

The Fund does not expect its portfolio turn-
over rate to exceed 90% per year.

6
<PAGE>
MUNICIPAL OBLIGATIONS

Municipal obligations include obligations issued to obtain funds for
various public purposes, including constructing a wide range of public
facilities, such as bridges, highways, housing, hospitals, mass
transportation, schools and streets. Other public purposes for which
municipal obligations may be issued include the refunding of outstanding
obligations, the obtaining of funds for general operating expenses and the
making of loans to other public institutions and facilities. In addition,
certain types of industrial development bonds ("IDBs") and private
activity bonds ("PABs") are issued by or on behalf of public authorities
to finance various privately operated facilities, including pollution
control facilities, convention or trade show facilities, and airport, mass
transit, port or parking facilities. Interest on certain tax-exempt PABs
will constitute a Tax Preference Item. Accordingly, under normal
circumstances, the Fund's investment in obligations, the interest on which
is such an item, including PABs, will be limited to a maximum of 20% of
its total assets.

Municipal obligations also include short-term tax anticipation notes,
bond anticipation notes, revenue anticipation notes and other forms of
short-term debt obligations. Such notes may be issued with a short-term
maturity in anticipation of the receipt of tax payments, the proceeds of
bond placements or other revenues.
Municipal obligations also include municipal lease obligations. These
obligations, which are issued by state and local governments to acquire
land, equipment and facilities, typically are not fully backed by the
municipality's credit, and, if funds are not appropriated for the
following year's lease payments, a lease may terminate, with the
possibility of default on the lease obligation and significant loss to the
Fund. Certificates of Participation are participations in municipal lease
obligations or installment sales contracts. Each certificate represents a
proportionate interest in or right to the lease purchase payments made.
The two principal classifications of municipal obligations are
"general obligation" and "revenue" bonds. "General obligation" bonds are
secured by the issuer's pledge of its faith, credit and taxing power.
"Revenue" bonds are payable only from the revenues derived from a
particular facility or class of facilities or from the proceeds of a
special excise tax or other specific revenue source such as the corporate
user of the facility being financed. IDBs and PABs are usually revenue
bonds and are not payable from the unrestricted revenues of the issuer.
The credit quality of the IDBs and PABs is usually directly related to the
credit standing of the corporate user of the facilities.
TEMPORARY INVESTMENTS

During unusual market conditions, including if, in the Adviser's
opinion, there are insufficient suitable Maryland municipal obligations
available that pay interest that is not a Tax Preference Item, the Fund
temporarily may invest more than 20% of its total assets in municipal
obligations the interest on which is exempt from federal income tax but is
such an item and/or is subject to Maryland state and local income taxes.
The Fund expects that under normal circumstances it will maintain needed
liquidity through the purchase of short-term municipal securities.
However, for liquidity purposes, or pending the investment of the proceeds
of the sale of shares, the Fund temporarily may invest in taxable
short-term investments consisting of: obligations of the U.S. Government,
its agencies and instrumentalities; certificates of deposit and bankers'
acceptances of U.S. domestic banks with assets of one billion dollars or
more; commercial paper or other corporate notes of high quality; and any
of such items subject to short-term repurchase agreements. The Fund may
invest without limit in such instruments for temporary, defensive
purposes, when in the Adviser's opinion, no suitable municipal securities
are available. No more than 10% of the Fund's net assets will be invested
in repurchase agreements maturing in more than seven days and other
illiquid securities. Interest earned from such taxable investments will be
taxable to investors as ordinary income when distributed to them.

As a fundamental policy, the Fund may borrow money solely for
temporary purposes from banks or by engaging in reverse repurchase
agreements in an amount up to 10% of the value of its total assets;
however, borrowings in excess of 5% of the value of the Fund's total
assets may be made only from banks.
7
<PAGE>
YIELD AND RISK FACTORS
Yield
The yield of a municipal obligation is dependent on a variety of
factors, including general municipal securities market conditions, general
fixed-income market conditions, the financial condition of the issuer, the
size of the particular offering, the maturity of the obligation, the
credit quality and rating of the issue and expectations regarding changes
in income tax rates.
Interest Rate Risk
If general market interest rates increase, the prices of municipal
obligations ordinarily will decrease. In a market of decreasing interest
rates, the opposite generally will be true. Although longer-term bonds
generally offer higher yields than shorter-term bonds, their prices are
more sensitive to changes in interest rates than bonds with shorter
maturities. Under normal circumstances, the dollar-weighted average
maturity of the Fund's portfolio is expected to be 12-24 years. Therefore,
the value of the Fund's portfolio securities, and hence of the Fund's
shares, will be more sensitive to changes in interest rates and will
fluctuate more than the value of a portfolio of shorter-term municipal
obligations.
Maryland
Changes in economic conditions in or governmental policies of the
state of Maryland could have a significant impact on the performance of
the Fund. For example, services (including mining), wholesale and retail
trade, government, and manufacturing (primarily printing and publishing,
food and kindred products, instruments and related products, electronic
equipment, industrial machinery and transportation equipment) are the
leading areas of employment in the State of Maryland. In contrast to the
nation as a whole, more people in Maryland are employed in government than
in manufacturing. The relatively high concentration of governmental
employment in Maryland makes the state potentially vulnerable to any
decreases in federal, including military, and state governmental spending.
In recent years, finance, insurance, and real estate were large
contributors to the gross state product. The outlook for those sectors is
subject to question given disclosures indicating continuing financial
weakness in major banking and insurance companies having their corporate
headquarters in Maryland and the general regional decline in real estate
activity and values.
The Fund may invest in certain municipal obligations with unique
risks. These include, but are not limited to, securities issued by
hospitals and other health care providers. The hospital industry
throughout the nation has been subjected to pressure to reduce expenses
and to limit lengths of stay. That pressure may adversely affect the
financial health of some hospitals.
An expanded discussion of certain investment considerations relating
to debt obligations of Maryland and its political subdivisions is
contained in the Statement of Additional Information.
Concentration
The Fund may invest 25% or more of its total assets in a particular
segment of the municipal securities market, such as hospital revenue
bonds, housing agency bonds, IDBs or airport bonds, or in securities the
interest on which is paid from revenues of a similar type of project. In
such circumstances, economic, business, political or other changes
affecting one issue of bonds (such as proposed legislation affecting
healthcare or the financing of a project, shortages or price increases of
needed materials, or declining markets or needs for the projects) would
most likely affect other bonds in the same segment, thereby potentially
increasing market risk. As a result, the Fund is subject to greater risk
than other funds that do not follow this practice.
Non-Diversification
The Fund has registered as a "non-diversified" investment company.
Therefore, the percentage of Fund assets invested in any single issuer is
not limited by the Investment Company Act of 1940 ("1940 Act"). However,
the Fund intends to continue to qualify as a regulated investment company
("RIC") under the Internal Revenue Code of 1986, as amended ("Code"). To
qualify as a RIC, the Fund generally must meet the following
diversification requirements at the close of each quarter of its taxable
year: (1) at least 50% of the value of
8
<PAGE>
the Fund's total assets must consist of cash, securities of the U.S.
Government and other RICs and holdings of other securities, which, with
respect to any one issuer, do not have a value greater than 5% of the
value of the Fund's total assets; and (2) no more than 25% of the value of
the Fund's total assets may be invested in the securities of a single
issuer. For these purposes, the term "issuer" does not include the U.S.
Government or other RICs. To the extent that the Fund's assets are
invested in the obligations of a limited number of issuers, the value of
the Fund's shares will be more susceptible to any single economic,
political or regulatory occurrence affecting one or more of those issuers
than the shares of a diversified investment company would be.

Other Risks

Current efforts to restructure the federal budget and the relationship
between the federal government and state and local governments may impact
the financing of some issuers of municipal securities. Some states and
localities are experiencing substantial deficits and may find it difficult
for political or economic reasons to increase taxes. Some local
jurisdictions have invested heavily in derivative instruments and may now
hold portfolios of uncertain valuation. Each of these factors may affect
the ability of an issuer of municipal securities to meet its obligations.
Efforts by Congress to restructure the federal income tax system could
adversely effect the value of municipal securities.

INVESTMENT TECHNIQUES
The Fund may employ the investment techniques described below, among
others. Use of certain of these techniques may give rise to taxable
income.
When-Issued Securities
The Fund may enter into commitments to purchase municipal obligations
or other securities on a when-issued basis. The Fund may purchase when-
issued securities because such securities are often the most efficiently
priced and have the best liquidity in the bond market. As with the
purchase of any security, when the Fund purchases securities on a
when-issued basis, it assumes the risks of ownership at the time of
purchase, not at the time of receipt. However, the Fund does not have to
pay for the obligations until they are delivered to the Fund, normally 15
to 45 days later. To meet that payment obligation, the Fund will set aside
cash or marketable high-quality debt securities equal to the payment that
will be due. Depending on market conditions, the Fund's when-issued
purchases could cause its share value to be more volatile, because they
may increase the amount by which the Fund's total assets, including the
value of the when-issued securities held by the Fund, exceed its net
assets. The Fund does not expect that its commitment to purchase
when-issued securities will at any time exceed, in the aggregate, 25% of
total assets.
Callable Bonds
Callable municipal bonds are municipal bonds which carry a provision
permitting the issuer to redeem the bonds prior to their maturity dates at
a specified price which typically reflects a premium over the bonds'
original issue price. If the proceeds of a bond owned by the Fund called
under circumstances favorable to the issuer are reinvested, the result may
be a lower overall yield on such proceeds upon reinvestment because of
lower prevailing interest rates. If the purchase price of such bonds
included a premium related to the appreciated value of the bonds, some or
all of that premium may not be recovered by bondholders, such as the Fund,
depending on the price at which such bonds were redeemed.
Each callable bond is "market-to-market" daily based on the bond's
call date so that the call of some or all of the Fund's callable bonds is
not expected to have a material impact on the Fund's net asset value. In
light of the previously described pricing policies and because the Fund
follows certain amortization procedures required by the Internal Revenue
Service, the Fund does not expect to suffer any material adverse impact in
connection with a call of bonds purchased at a premium. Notwithstanding
such policies, however, as with any investment strategy, there is no
guarantee that a call may not have a more substantial impact than
anticipated.
9
<PAGE>
Stand-By Commitments
The Fund may acquire "stand-by commitments" with respect to its
investments in municipal obligations. A stand-by commitment is a put (that
is, the right to sell the underlying security within a specified period of
time at a specified exercise price) that may be sold, transferred or
assigned only with the underlying security. Under a stand-by commitment, a
broker, dealer or bank agrees to purchase, at the Fund's option, specified
municipal obligations at a specified price. The total amount paid for
outstanding stand-by commitments held by the Fund will not exceed 25% of
the Fund's total assets calculated immediately after each stand-by
commitment is acquired.
Securities Lending, Zero Coupon and Deferred Interest Bonds

The Fund may engage in securities lending and may invest in zero
coupon and deferred interest bonds. However, the Fund does not currently
intend to loan securities with a value exceeding 5% of its total assets or
to invest more than 5% of its total assets in zero coupon and deferred
interest bonds. Any income from securities lending would be taxable when
distributed to shareholders. For further information concerning securities
lending, zero coupon and deferred interest bonds, see the Statement of
Additional Information.

Variable Rate and Floating Rate Obligations
The Fund may invest in variable rate municipal obligations and notes.
Variable rate obligations have a yield that is adjusted periodically based
upon market conditions.

The Fund may also invest in floating rate and variable rate demand
notes. Demand notes provide that the holder may demand payment of the note
at its par value plus accrued interest. The notes may be supported by an
unconditional bank letter of credit guaranteeing payment of the principal
or both the principal and accrued interest. Floating rate demand notes
have an interest rate related to a known lending rate, such as the prime
rate, and are automatically adjusted when such rate changes. Such
securities often react to changes in market interest rates in a manner
similar to shorter-term securities that mature at the time of the next
interest rate reset for the variable or floating rate instrument.

Futures and Option Strategies
To protect against the effect of adverse changes in interest rates,
the Fund may purchase and sell interest rate futures contracts and options
on securities indexes, and may purchase put options on interest rate
futures contracts and debt securities (practices known as "hedging"). The
Fund may purchase put options on interest rate futures contracts or sell
interest rate futures contracts (that is, enter into a futures contract to
sell the underlying security) to attempt to reduce the risk of
fluctuations in its share value. The Fund may purchase an interest rate
futures contract (that is, enter into a futures contract to purchase the
underlying security) to attempt to establish more definitely the return on
securities the Fund intends to purchase. The Fund may not use these
instruments for speculation or leverage. In addition, the Fund's ability
to use these strategies may be limited by market conditions, regulatory
limits and tax considerations.
The Fund may seek to enhance its income by writing (selling) covered
call options and covered put options. It may write puts and calls only on
a covered basis, which means, in the case of calls, that the Fund will own
the underlying instrument while the call is outstanding and, in the case
of puts, that the Fund will have cash, U.S. government securities or other
high-grade, liquid debt instruments in a segregated account in an amount
not less than the exercise price while the put is outstanding. Any gains
from futures and options transactions would be taxable.

10
<PAGE>

the markets for futures and options are not always liquid, the Fund may be
unable to close out or liquidate its hedged position and may be locked in
during a market decline. The Adviser attempts to minimize the possible
negative effects of these factors through careful selection and monitoring
of the Fund's futures and options positions. The Adviser is of the opinion
that the Fund's investments in futures transactions will not have a
material adverse effect on the Fund's liquidity or ability to honor
redemptions.

The purchase and sale of options and futures contracts involve risks
different from those involved with direct investments in securities, and
also require different skills from the Adviser in managing the Fund's
portfolio. While utilization of options, future contracts and similar
instruments may be advantageous to the Fund, if the Adviser is not
successful in employing such instruments in managing the Fund's
investments or in predicting interest rate changes, the Fund's performance
will be worse than if the Fund did not use such instruments. In addition,
the Fund will pay commissions and other costs in connection with such
investments, which may increase the Fund's expenses and reduce its yield.
A more complete discussion of the possible risks involved in transactions
in options and futures contracts is contained in the Statement of
Additional Information.

The Fund's current policy is to limit options and futures transactions
to those described above. The Fund currently does not intend to (i)
purchase put and call options having a value in excess of 5% of its total
assets or (ii) write options on portfolio securities having aggregate
exercise prices exceeding 25% of its net assets. Normally, options will be
written, if at all, on those portfolio securities which the Adviser does
not expect to have significant short-term capital appreciation.
INVESTMENT LIMITATIONS
The Fund has adopted certain fundamental limitations that, like its
investment objective, can be changed only by the vote of a majority of the
outstanding voting securities of the Fund. For these purposes, a "vote of
a majority of the outstanding voting securities" of the Fund means the
affirmative vote of the lesser of (1) more than 50% of the outstanding
shares of the Fund, or (2) 67% or more of the shares present at a
shareholders' meeting if more than 50% of the outstanding shares are
represented in person or by proxy. These investment limitations are set
forth under "Additional Information About Investment Limitations and
Policies" in the Statement of Additional Information. Other Fund policies,
unless described as fundamental, can be changed by the Board of Trustees.
HOW YOU CAN INVEST IN THE FUND

You may purchase Primary Shares of the Fund through a brokerage
account with Legg Mason or with an affiliate that has a dealer agreement
with Legg Mason (Legg Mason is a wholly owned subsidiary of Legg Mason,
Inc., a financial services holding company). Your Legg Mason or affiliated
investment executive will be pleased to explain the shareholder services
available from the Fund and answer any questions you may have.

The minimum initial investment in Primary Shares for each account,
including investments made by exchange from other Legg Mason funds, is
$1,000, and the minimum investment for each purchase of additional shares
is $100. However, for those investing through the Fund's Future First
Systematic Investment Plan, payroll deduction plans and plans involving
automatic payment of funds from financial institutions or automatic
investment of dividends from certain unit investment trusts, minimum
initial and subsequent investments are lower. The Fund may change these
minimum amount requirements at its discretion.

You should always furnish your shareholder account number when making
additional purchases of shares.

There are three ways you can invest in Primary Shares of the Fund:

1. THROUGH YOUR LEGG MASON OR AFFILIATED INVESTMENT EXECUTIVE

Shares may be purchased through any Legg Mason or affiliated
investment executive. An investment executive will be pleased to open an
account for you, explain to you the shareholder services available from
the Fund, and answer any questions you may have. After you have
established a Legg Mason or affiliated account, you can

11
<PAGE>

order shares from your investment executive in person, by telephone or by
mail.

2. THROUGH THE FUTURE FIRST SYSTEMATIC INVESTMENT PLAN

You may also buy shares through the Future First Systematic Investment
Plan. Under this plan, you may arrange for automatic monthly investments
in the Fund of $50 or more by authorizing Boston Financial Data Services
("BFDS"), the Fund's transfer agent, to prepare a check each month drawn
on your checking account. There is no minimum initial investment. Please
contact any Legg Mason or affiliated investment executive for further
information.

3. THROUGH AUTOMATIC INVESTMENTS

Arrangements may be made with some employers and financial
institutions, such as banks or credit unions, for regular automatic
monthly investments of $50 or more in shares. In addition, it may be
possible for dividends from certain unit investment trusts to be invested
automatically in shares. Persons interested in establishing such automatic
investment programs should contact the Fund through any Legg Mason or
affiliated investment executive.

<TABLE>
<CAPTION>
SALES CHARGE SCHEDULE
<S> <C> <C>
Sales Charge as
Sales Charge as a Percentage of
a Percentage of Net Amount
Public Offering Invested (Net
Amount of Purchase Price Asset Value
<CAPTION>
<S> <C> <C>
Less than $50,000 2.75% 2.83%
$50,000 to $99,999 2.50 2.56
$100,000 to $249,999 2.00 2.04
$250,000 to $499,999 1.50 1.52
$500,000 to $999,999 1.25 1.27
$1,000,000 to
$2,999,999 1.00 1.01
$3,000,000 to
$4,999,999 0.50 0.50
$5,000,000 and over 0.25 0.25
</TABLE>

Shares are available without a sales charge through exchanges for
shares of the other series of the Trust for which sales charges equivalent
to those of the Fund were paid or through exchanges of shares of other
Legg Mason funds which were obtained through an exchange of shares in
another series of the Trust on which a sales charge was paid. If the sales
charges previously paid were less than sales charges on the Fund, an
additional sales charge equal to the difference is due. In addition, Fund
shares may be purchased without a sales charge by employees, directors and
officers of Legg Mason or its affiliates, directors or trustees and
officers of any of the Legg Mason funds, the spouses and children under 21
years of age of any of the foregoing persons and by advisory clients of
investment advisers affiliated with Legg Mason.

Shareholders who have redeemed shares on which a sales charge was paid
may reinstate their Fund account without a sales charge up to the dollar
amount redeemed by purchasing shares within 90 days of the redemption
("reinstatement privilege"). Shareholders may exercise their reinstatement
privilege by notifying their investment executive of such desire and
placing an order for the amount to be purchased within 90 days after the
date of redemption. The reinstatement will be made at the net asset value
next determined after the Notice of Reinstatement and order have been
received by Legg Mason's Funds Processing.

Primary Shares may be purchased at reduced sales charges through
either of the two Legg Mason reduced sales charge plans. These are (1) a
Letter of Intention ("LOI") and (2) a Right of Accumulation, as described
below.

Through an LOI, you may pay a lower sales charge if the dollar amount
of shares currently being purchased plus the dollar amount of any
purchases you intend to make during the next thirteen months of shares of
this and other Legg Mason funds sold with an initial sales charge equals
$50,000 or more. To take advantage of an LOI, you should indicate the
total amount you intend to purchase over the thirteen-month period on the
form available from your Legg Mason or affiliated investment executive.
Holdings acquired up to 90 days before the LOI is filed will be counted
toward completion of the LOI, and will be entitled to a retroactive
downward adjustment of the initial sales charge.

If the Fund's transfer agent, BFDS, does not receive a completed LOI
within 20 business days
12
<PAGE>
after settlement of the first LOI purchase or if the total purchases
indicated on the LOI are not made within the thirteen-month period, your
account will be charged with the difference between the reduced LOI sales
charge and the sales charge applicable to the purchase actually made.
shares with a value equal to 2 1/2% of the intended LOI purchases will be
held in escrow during the thirteen-month period (registered in your name)
to assure such necessary payment. These escrowed shares may not be
exchanged for shares of other Legg Mason funds. If you redeem your account
during this period, the Fund will withhold from the escrow amount
sufficient shares to pay any unpaid sale charge.
Under the Right of Accumulation, the current value of an investor's
existing shares in Legg Mason funds sold with an initial sales charge may
be combined with the amount of the investor's current purchase in
determining the sales charge for the current purchase. In determining both
the current value of existing shares and the amount of the investor's
current purchase, shares held or purchased by the investor's spouse,
and/or children under the age of 21, may be included. Legg Mason may
require supporting documentation in connection with purchases made under
the Right of Accumulation.

Orders received by your Legg Mason or affiliated investment executive
before the close of business of the New York Stock Exchange, Inc.
("Exchange") (normally 4:00 p.m. Eastern time) ("close of the Exchange")
on any day the Exchange is open will be executed at the net asset value,
plus any applicable sales charge, determined as of the close of the
Exchange on that day. Orders received by your Legg Mason or affiliated
investment executive after the close of the Exchange or on days the
Exchange is closed will be executed at the net asset value, plus any
applicable sales charge, determined as of the close of the Exchange on the
next day the Exchange is open. See "How Net Asset Value is Determined,"
page 14. Payment must be made within three business days to Legg Mason.
The Fund reserves the right to reject any order for shares of the Fund or
to suspend the offering of shares for a period of time.

HOW YOUR SHAREHOLDER ACCOUNT IS MAINTAINED

When you initially purchase shares, a shareholder account is
established automatically for you. Any shares that you purchase or receive
as a dividend or other distribution will be credited directly to your
account at the time of purchase or receipt. No certificates are issued
unless you specifically request them in writing. Shareholders who elect to
receive certificates can redeem their shares only by mail. Certificates
will be issued in full shares only. No certificates will be issued for
shares prior to 15 business days after purchase of such shares by check
unless the Fund can be reasonably assured during that period that payment
for the purchase of such shares has been collected. Shares may not be held
in, or transferred to, an account with any brokerage firm other than Legg
Mason or its affiliates.

HOW YOU CAN REDEEM YOUR PRIMARY SHARES
There are two ways you can redeem your Primary Shares. First, you may
give your Legg Mason or affiliated investment executive an order for
repurchase of your shares. Please have the following information ready
when you call: the number of shares to be redeemed and your shareholder
account number. Second, you may send a written request for redemption to
"Legg Mason Maryland Tax-Free Income Trust, c/o Legg Mason Funds
Processing, P.O. Box 1476, Baltimore, Maryland 21203-1476."

Requests for redemption in "good order," as described below, received
by your Legg Mason or affiliated investment executive before the close of
the Exchange on any day when the Exchange is open, will be transmitted to
BFDS, transfer agent for the Fund, for redemption at the net asset value
per share determined as of the close of the Exchange on that day. Requests
for redemption received by your Legg Mason or affiliated investment
executive after the close of the Exchange will be executed at the net
asset value determined as of the close of the Exchange on its next trading
day. A redemption request received by your Legg Mason or affiliated
investment executive may be treated as a request for repurchase and, if it
is accepted by Legg Mason, your shares will be purchased at the net asset
value per share determined as of the next close of the Exchange.

13
<PAGE>

Proceeds from your redemption will settle in your Legg Mason brokerage
account two business days after trade date. However, the Fund reserves the
right to take up to seven days to make payment upon redemption if, in the
judgment of the Adviser, the Fund could be adversely affected by immediate
payment. (The Statement of Additional Information describes several other
circumstances in which the date of payment may be postponed or the right
of redemption suspended.) The proceeds of your redemption or repurchase
may be more or less than your original cost. If the shares to be redeemed
or repurchased were paid for by check (including certified or cashier's
checks) within 15 business days of the redemption or repurchase request,
the proceeds may not be disbursed unless the Fund can be reasonably
assured that the check has been collected.

A redemption request will be considered to be received in "good order"
only if:

1. You have indicated in writing the number of Primary Shares to be
redeemed and your shareholder account number;

2. The written request is signed by you and by any co-owner of the
account with exactly the same name or names used in establishing the
account;
3. The written request is accompanied by any certificates representing
the shares that have been issued to you, and you have endorsed the
certificates for transfer or an accompanying stock power exactly as the
name or names appear on the certificates; and

4. The signatures on the written redemption request and on any
certificates for your shares (or an accompanying stock power) have been
guaranteed without qualification by a national bank, a state bank, a
member firm of a principal stock exchange or other entity described in
Rule 17Ad-15 under the Securities Exchange Act of 1934.

Other supporting legal documents may be required from corporations or
other organizations, fiduciaries or persons other than the shareholder of
record making the request for redemption or repurchase. If you have a
question concerning the redemption of shares, contact your Legg Mason or
affiliated investment executive.

The Fund will not be responsible for the authenticity of redemption
instructions received by telephone, provided it follows reasonable
procedures to identify the caller. The Fund may request identifying
information from callers or employ identification numbers. The Fund may be
liable for losses due to unauthorized or fraudulent instructions if it
does not follow reasonable procedures. Telephone redemption privileges are
available automatically to all shareholders unless certificates have been
issued. Shareholders who do not wish to have telephone redemption
privileges should call their Legg Mason or affiliated investment executive
for further instructions.
Because of the relatively high cost of maintaining small accounts, the
Fund may elect to close any account with a current value of less than $500
by redeeming all of the shares in the account and mailing the proceeds to
you. However, the Fund will not redeem accounts that fall below $500
solely as a result of a reduction in net asset value per share. If the
Fund elects to redeem the shares in your account, you will be notified
that your account is below $500 and will be allowed 60 days in which to
make an additional investment in order to avoid having your account
closed.
HOW NET ASSET VALUE IS DETERMINED

Net asset value per share is determined daily, as of the close of the
Exchange, on every day that the Exchange is open, by subtracting the
liabilities attributable to Primary Shares from the total assets
attributable to such shares and dividing the result by the number of
Primary Shares outstanding. Securities owned by the Fund for which market
quotations are readily available are valued at current market value. In
the absence of readily available market quotations, securities are
valued based upon appraisals received from an independent pricing service
using a computerized matrix system or based upon appraisals derived from
information concerning the security or similar securities received from
recognized dealers in those securities. Other Securities are valued at
fair value as determined by, or under the supervision of, the Board of
Trustees of the Trust. Pursuant to guidelines established by the Board of
Trustees, the fair value of debt securities with remaining maturities of
60 days or less shall be their amortized cost, unless conditions
otherwise indicate.

14
<PAGE>
DIVIDENDS AND OTHER DISTRIBUTIONS

Dividends from net investment income are declared daily and paid
monthly. Shareholders begin to earn dividends on their Primary Shares as
of the settlement date, which is normally the third business day after
their orders are placed with their Legg Mason or affiliated investment
executive. Dividends from net short-term capital gain, if any, and
distributions of substantially all net capital gain (the excess of net
long-term capital gain over net short-term capital loss), if any,
generally are declared and paid after the end of the taxable year in which
the gain is realized. A second distribution of net capital gain may be
necessary in some years to avoid imposition of the excise tax described
under the heading "Additional Tax Information" in the Statement of
Additional Information. Dividends and capital gain distributions, if any,
on shares held by shareholders maintaining a Systematic Withdrawal Plan
generally are reinvested in Fund shares on the payment dates. Other
shareholders may elect to:

1. Receive both dividends and capital gain distributions in Primary
Shares;

2. Receive dividends in cash and capital gain distributions in Primary
Shares;

3. Receive dividends in Primary Shares and capital gain distributions
in cash; or

4. Receive both dividends and capital gain distributions in cash.

In certain cases, you may reinvest your dividends and capital gain
distributions in Primary Shares of another Legg Mason fund. Please contact
your Legg Mason or affiliated investment executive for additional
information about this option.

If no election is made, both dividends and capital gains distributions
will be credited to your account in Primary Shares at the net asset value
of the shares determined as of the close of the Exchange on the
reinvestment date. Shares received pursuant to any of the first three
(reinvestment) elections above also will be credited to your account at
that net asset value. If you elect to receive dividends and/or capital
gain distributions in cash, you will be sent a check or will have your
Legg Mason account credited after the payment date. You may elect at any
time to change your option by notifying the Fund in writing at: Legg Mason
Maryland Tax-Free Income Trust, c/o Legg Mason Funds Processing, P.O. Box
1476, Baltimore, Maryland 21203-1476. Your election must be received at
least 10 days before the record date in order to be effective for
dividends and capital gain distributions paid to shareholders as of that
date.

TAXES
FEDERAL INCOME TAX
The Fund intends to continue to qualify for treatment as a RIC under
the Code. If the Fund so qualifies and, at the close of each quarter of
its taxable year, at least 50% of the value of its total assets consists
of certain obligations the interest on which is excludable from gross
income under section 103(a) of the Code, the Fund may pay
"exempt-interest" dividends to its shareholders. Those dividends
constitute the portion of the aggregate dividends (excluding capital gain
distributions), as designated by the Fund, equal to the excess of the
excludable interest over certain amounts disallowed as deductions.
Exempt-interest dividends are excludable from a shareholder's gross
income; however, the amount of such dividends must be reported on the
recipient's federal income tax return.
If and to the extent the Fund receives interest on certain PABs, a
proportionate part of the exempt-interest dividends paid by the Fund will
be treated as a Tax Preference Item. In addition, exempt-interest
dividends received by a corporate shareholder may be indirectly subject to
the federal alternative minimum tax without regard to whether the Fund's
tax-exempt interest is attributable to PABs.
To the extent dividends are derived from taxable income from temporary
investments, from net short-term capital gain or from the use of certain
investment techniques described in "Investment Objective and Policies,"
page 6, they are taxable to shareholders as ordinary income (whether paid
in cash or reinvested in Fund shares). No portion of those dividends will
qualify for the corporate dividends-received deduction. Distributions
derived from net capital gain, if any, are taxable to shareholders as
long-term capital gain regardless of the length of time they have held
their Fund Shares (and irrespective of whether those distributions are
paid in cash or reinvested in Fund shares).
15
<PAGE>
Interest on indebtedness incurred or continued by a shareholder in
order to purchase or carry Fund shares generally is not deductible.
Persons who are "substantial users" (or related persons) of facilities
financed by IDBs or PABs should consult their tax advisers before
purchasing shares of the Fund because, for users of certain of these
facilities, the interest on those bonds is not exempt from federal income
tax. For these purposes, a "substantial user" includes a non-exempt person
who regularly uses in trade or business a part of a facility financed from
the proceeds of IDBs or PABs.
A redemption of Fund shares may result in taxable gain or loss to the
redeeming shareholder, depending on whether the redemption proceeds are
more or less than the shareholder's adjusted basis for the redeemed shares
(which normally includes any sales charge paid). An exchange of Fund
shares for shares of any other Legg Mason fund generally will have similar
tax consequences. However, special tax rules apply if (1) a shareholder
disposes of Fund shares through a redemption or exchange within 90 days
after the shareholder acquired the shares and (2) the shareholder
subsequently acquires shares of the Fund or of another Legg Mason fund
without the imposition of a sales charge that otherwise would have been
imposed except for the reinstatement privilege or exchange privilege. See
"How You Can Invest in the Fund," page 11, and "Shareholder Services --
Exchange Privilege," page 17. In these cases, any sales charge that was
imposed on the purchase of those shares will not be taken into account in
determining the amount of gain or loss on the redemption or
exchange -- the tax effect of that charge will instead be deferred by
being treated as having been incurred in connection with the newly
acquired shares. In addition, if Fund shares are purchased within 30 days
before or after redeeming Fund shares at a loss, all or part of that loss
will not be deductible and instead will increase the basis of the newly
purchased shares.
MARYLAND TAXES

Dividends paid by the Fund to Maryland residents attributable to
interest received or capital gains recognized by the Fund on Maryland
municipal obligations are exempt from Maryland state and local income
taxes. Distributions attributable to interest received or capital gains
recognized by the Fund on certain U.S. government obligations also are
exempt from Maryland state and local income taxes. Distributions
attributable to the Fund's other income or gains generally are subject to
these taxes.

Interest on indebtedness incurred by a shareholder to purchase or
carry Fund shares generally is not deductible for purposes of either
Maryland state or local income tax. Fund shares held by an individual are
not subject to the Maryland personal property tax. Fund shares held by a
corporation also are not subject to the Maryland personal property tax.
Subject to a three year phase-in period, dividends paid by the Fund with
respect to Maryland municipal obligations and profits realized on the sale
or exchange of such obligations are not subject to the Maryland Franchise
Tax imposed on "financial institutions" and measured by net earnings.

In the case of individuals, Maryland imposes an income tax on Tax
Preference Items. Interest paid on certain PABs is a Tax Preference Item.
Accordingly, if the Fund holds such bonds, 50% of the interest thereon in
excess of a threshold amount is taxable by Maryland.

GENERAL

Shareholders receive information after the close of each year
concerning the federal and Maryland state and local income tax status of
all dividends and capital gain distributions. The Fund is required to
withhold 31% of all taxable dividends, capital gain distributions and
redemption proceeds payable to any individuals and certain other
noncorporate shareholders who do not provide the Fund with a certified
taxpayer identification number. The Fund also is required to withhold 31%
of all taxable dividends and capital gain distributions payable to such
shareholders who otherwise are subject to backup withholding. Dividends
derived from interest on Maryland municipal obligations may not be exempt
from taxation under the laws of states other than Maryland.

The foregoing is only a summary of some of the important federal and
Maryland income tax considerations generally affecting the Fund and its
shareholders; see the Statement of Additional
16
<PAGE>

Information for a further discussion. In addition to those considerations,
which are applicable to any investment in the Fund, there may be other
federal, state or local tax considerations applicable to a particular
investor. Prospective shareholders are urged to consult their tax advisers
with respect to the effects of this investment on their own tax
situations.

SHAREHOLDER SERVICES
CONFIRMATIONS AND REPORTS

You will receive from the distributor a confirmation after each
transaction (except a reinvestment of dividends, capital gains and
purchases made through the Future First Systematic Investment Plan or
through automatic investments). An account statement will be sent to you
monthly unless there has been no activity in the account or you are
purchasing shares through the Future First Systematic Investment Plan or
through automatic investments, in which case an account statement will be
sent quarterly. Reports will be sent to shareholders at least semiannually
showing the Fund's portfolio and other information; the annual report will
contain financial statements audited by the independent accountants of the
Trust.

Shareholder inquiries should be addressed to "Legg Mason Maryland
Tax-Free Income Trust, c/o Legg Mason Funds Processing, P.O. Box 1476,
Baltimore, Maryland 21203-1476."

SYSTEMATIC WITHDRAWAL PLAN
You may elect to make systematic withdrawals from your Fund account of
a minimum of $50 on a monthly basis if you are purchasing or already own
shares with a net asset value of $5,000 or more. Shareholders should not
purchase shares of the Fund while they are participating in the Systematic
Withdrawal Plan. Please contact your Legg Mason or affiliated investment
executive for further information.
EXCHANGE PRIVILEGE

As a Fund shareholder, you are entitled to exchange your Primary
Shares of the Fund for the corresponding class of shares of the following
funds in the Legg Mason Family of Funds, provided that such shares are
eligible for sale in your state of residence:

Legg Mason Cash Reserve Trust
A money market fund seeking stability of principal and current income
consistent with stability of principal.
Legg Mason Tax Exempt Trust, Inc.
A money market fund seeking high current income exempt from federal
income tax, preservation of capital, and liquidity.
Legg Mason U.S. Government Money Market Portfolio
A money market fund seeking high current income consistent with
liquidity and conservation of principal.
Legg Mason Value Trust, Inc.
A mutual fund seeking long-term growth of capital.

Legg Mason Special Investment Trust, Inc.
A mutual fund seeking capital appreciation by investing principally in
issuers with market capitalization of less than $2.5 billion.

Legg Mason Total Return Trust, Inc.
A mutual fund seeking capital appreciation and current income in order
to achieve an attractive total investment return consistent with
reasonable risk.
Legg Mason American Leading Companies Trust
A mutual fund seeking long-term capital appreciation and current
income consistent with prudent investment risk.

Legg Mason Global Equity Trust
A mutual Fund seeking maximum long-term total return, by investing in
common stocks of companies located in at least three different countries.

Legg Mason U.S. Government Intermediate-Term Portfolio
A mutual fund seeking high current income consistent with prudent
investment risk and liquidity needs, primarily by investing in debt
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, while maintaining an average dollar-weighted maturity
of between three and ten years.
17
<PAGE>
Legg Mason Investment Grade Income Portfolio
A mutual fund seeking a high level of current income, primarily
through investment in a diversified portfolio of investment grade debt
securities.
Legg Mason High Yield Portfolio

A mutual fund seeking primarily a high level of current income and
secondarily, capital appreciation, by investing principally in
lower-rated, fixed-income securities.

Legg Mason Global Government Trust
A mutual fund seeking capital appreciation and current income by
investing principally in debt securities issued or guaranteed by foreign
governments, the U.S. Government, their agencies, instrumentalities and
political subdivisions.
Legg Mason Pennsylvania Tax-Free Income Trust*
A tax-exempt municipal bond fund seeking 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.
Legg Mason Tax-Free Intermediate-Term Income Trust*
A tax-exempt municipal bond fund seeking a high level of current
income exempt from federal tax, consistent with prudent investment risk.
*Shares of these funds are sold with an initial sales charge.

Investments by exchange into the Legg Mason funds sold without an
initial sales charge are made at the per share net asset value determined
on the same business day as redemption of the Fund shares you wish to
exchange. Investments by exchange into the Legg Mason funds sold with an
initial sales charge are made at the per share net asset value, plus an
additional sales charge if the sales charge previously paid was less than
the sales charge applicable to the fund, into which you are exchanging,
determined on the same business day as redemption of the Fund shares you
wish to redeem. Exchanges from the other Legg Mason funds sold without an
initial sales charge will be at net asset value plus the applicable sales
charge (unless the investment in the fund was transferred from a Legg
Mason fund sold with the same or higher sales charge). There is no charge
for the exchange privilege, but the Fund reserves the right to terminate
or limit the exchange privilege of any shareholder who makes more than
four exchanges from the Fund in one calendar year. To obtain further
information concerning the exchange privilege and prospectuses of other
Legg Mason funds, or to make an exchange, please contact your Legg Mason
or affiliated investment executive. To effect an exchange by telephone,
please call your Legg Mason or affiliated investment executive with the
information described in "How You Can Redeem Your Primary Shares," page
13. The other factors relating to telephone redemptions described in that
section apply also to telephone exchanges. Please read the prospectus for
the other funds carefully before you invest by exchange. The Fund reserves
the right to modify or terminate the exchange privilege upon 60 days'
notice to shareholders. There is no assurance the money market funds will
be able to maintain a $1.00 share price. None of the funds is insured or
guaranteed by the U.S. Government.

THE FUND'S MANAGEMENT AND INVESTMENT ADVISER
BOARD OF TRUSTEES
The business and affairs of the Fund are managed under the direction
of the Board of Trustees of the Trust.
ADVISER
Pursuant to an advisory agreement with the Fund ("Advisory
Agreement"), which was approved by the Trust's Board of Trustees, the
Adviser, a wholly owned subsidiary of Legg Mason, Inc., serves as the
Fund's investment adviser. The Adviser administers and acts as the
portfolio manager for the Fund and is responsible for the actual
investment management of the Fund, including the responsibility for making
investment decisions and placing orders to buy, sell or hold a particular
security. The Fund pays the Adviser, pursuant to the Advisory Agreement, a
management fee equal to an annual rate of 0.55% of the Fund's average
daily net assets. The Fund pays all its other expenses which are not
assumed by the Adviser.

Pursuant to a voluntary expense limitation, the Adviser and Legg Mason
have agreed to waive

18
<PAGE>

the management and 12b-1 fees and assume certain other expenses relating
to Primary Shares (exclusive of taxes, interest, brokerage fees and
extraordinary expenses) in excess of 0.60% (annualized) of average daily
net assets until January 31, 1996 or until the Fund's net assets reach
$200 million, whichever occurs first. During the fiscal year ended March
31, 1995, the Fund's expenses as a percentage of average net assets were
0.54%.

The Adviser acts as investment adviser, manager or consultant to
fifteen investment company portfolios (excluding the Fund) which had
aggregate assets under management of more than $4.3 billion as of May 31,
1995. The Adviser's address is 111 South Calvert Street, Baltimore,
Maryland 21202.

Victoria M. Schwatka has been primarily responsible for the day-to-day
management of the Fund since its inception. Ms. Schwatka is a portfolio
manager and Senior Vice-President of Legg Mason's Fixed Income Group. Ms.
Schwatka has been employed by Legg Mason since June, 1986.
THE FUND'S DISTRIBUTOR

Legg Mason is the distributor of the Fund's shares pursuant to an
Underwriting Agreement with the Fund. The Underwriting Agreement obligates
Legg Mason to pay certain expenses in connection with the offering of
shares of the Fund, including any compensation to its investment
executives, the printing and distribution of prospectuses, statements of
additional information and periodic reports used in connection with the
offering to prospective investors, after the prospectuses, statements of
additional information and reports have been prepared, set in type and
mailed to existing shareholders at the Fund's expense, and for any
supplementary sales literature and advertising costs. Legg Mason receives
the sales charge imposed on the purchase of Primary shares.

The Trust's Board of Trustees has adopted a Distribution and
Shareholder Services Plan ("Plan") pursuant to Rule 12b-1 under the 1940
Act. The Plan provides that as compensation for its ongoing services to
investors in Primary Shares and its activities and expenses related to the
sale and distribution of Primary Shares, Legg Mason receives from the Fund
annual service and distribution fees payable from the assets attributable
to Primary Shares, each equal to 0.125% of the Fund's average daily net
assets. These fees are calculated daily and paid monthly. The fees
received by Legg Mason during any year may be more or less than its cost
of providing distribution and shareholder services for Primary Shares.

Legg Mason receives a fee from BFDS for assisting it with its transfer
agent and shareholder servicing functions; for the year ended March 31,
1995, Legg Mason received from BFDS $19,111 for performing such services
in connection with this Fund.

NASD rules limit the amount of annual distribution fees that may be
paid by mutual funds and impose a ceiling on the cumulative distribution
fees received. The Fund's Plan complies with those rules.
The Chairman, President and Treasurer of the Trust are employed by
Legg Mason.
THE FUND'S CUSTODIAN AND TRANSFER AGENT

State Street Bank and Trust Company, P.O. Box 1713, Boston,
Massachusetts 02105, is custodian for the securities and cash of the Fund.
Boston Financial Data Services, P.O. Box 953, Boston, Massachusetts 02103,
is the transfer agent for Fund shares and dividend-disbursing agent for
the Fund.

DESCRIPTION OF THE TRUST AND ITS SHARES
The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated November 21, 1990. The Declaration of Trust
authorizes the Trust to issue an unlimited number of shares and to create
additional series, each of which may issue separate classes of shares.
Three series of the Trust, including the Fund, currently are being
offered.

Each series of the Trust currently offers two Classes of
Shares -- Class A (known as "Primary Shares") and Class Y (known as
"Navigator Shares"). Each Class represents interests in the same pool of
assets of the Fund. A separate vote is taken by a Class of Shares of the
Fund if a matter affects just that Class of Shares. Each Class of Shares
may bear certain differing Class-specific expenses. Salespersons and
others entitled to receive compensation for selling or servicing Fund

19
<PAGE>

shares may receive more with respect to one Class than another.

The Fund pays no Rule 12b-1 fee with respect to Navigator Shares. The
per share net asset value of the Navigator Shares, and dividends and
distributions (if any) paid to Navigator shareholders, are generally
expected to be higher than those of Primary Shares of the Fund, because of
the lower expenses attributable to Navigator Shares. The per share net
asset value of the Classes of Shares will tend to converge, however,
immediately after the payment of ordinary income dividends. Navigator
Shares of the Fund may be exchanged for the corresponding class of shares
of certain other Legg Mason Funds. Investments by exchange into the other
Legg Mason Funds are made at the per share net asset value, determined on
the same business day as redemption of the Navigator Shares the investors
wish to redeem.

The Board of Trustees of the Trust does not anticipate that there will
be any conflicts among the interests of the holders of the different
Classes of Fund shares. On an ongoing basis, the Board will consider
whether any such conflict exists and, if so, take appropriate action.

Shareholders of the Fund are entitled to one vote per share and
fractional votes for fractional shares held. Voting rights are not
cumulative. All shares of the Fund are fully paid and nonassessable and
have no preemptive or conversion rights.

Shareholders' meetings will not be held except where the 1940 Act
requires a shareholder vote on certain matters (including the election of
trustees, approval of an advisory contract, and approval of a plan of
distribution pursuant to Rule 12b-1). The Trust will call a special
meeting of the shareholders at the request of 10% or more of the shares
entitled to vote; shareholders wishing to call such a meeting should
submit a written request to the Fund at 111 South Calvert Street,
Baltimore, Maryland 21202, stating the purpose of the proposed meeting and
the matters to be acted upon.
20

<PAGE>

NAVIGATOR MARYLAND TAX-FREE INCOME TRUST
PROSPECTUS

Shares of Navigator Maryland Tax-Free Income Trust ("Navigator
Shares") represent a separate class ("Navigator Class") of interests in
Legg Mason Maryland Tax-Free Income Trust ("Fund"), a non-diversified,
professionally managed portfolio seeking 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. The Fund is a
separate series of Legg Mason Tax-Free Income Fund, ("Trust"), an open-end
management investment company.

In attempting to achieve the Fund's objective, the Fund's
investment adviser, Legg Mason Fund Adviser, Inc. ("Adviser"), invests
primarily in debt instruments issued by or on behalf of the State of
Maryland, its political subdivisions, municipalities, agencies,
instrumentalities or public authorities, the interest on which, in the
opinion of counsel to the issuer, is exempt from federal and Maryland
state and local income taxes ("Maryland municipal obligations") and which
are investment grade, i.e., securities rated within the four highest
grades by Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's
Ratings Group ("S&P") or, if unrated by either Moody's or S&P ("unrated
securities"), deemed by the Adviser to be of comparable quality. Under
normal circumstances, the dollar-weighted average maturity of the Fund's
portfolio is expected to be between 12 and 24 years. The Fund also may
engage in hedging transactions.

The Navigator Class of Shares, described in this Prospectus, is
currently offered for sale only to institutional clients of the Fairfield
Group, Inc. ("Fairfield") for investment of their own funds and funds for
which they act in a fiduciary capacity, to clients of Legg Mason Trust
Company ("Trust Company") for which the Trust Company exercises
discretionary investment management responsibility (such institutional
investors are referred to collectively as "Institutional Clients" and
accounts of the customers with such Clients ("Customers") are referred to
collectively as "Customer Accounts"), to qualified retirement plans
managed on a discretionary basis and having net assets of at least $200
million, and to The Legg Mason Profit Sharing Plan and Trust. Navigator
Shares may not be purchased by individuals directly, but Institutional
Clients may purchase shares for Customer Accounts maintained for
individuals.

Navigator Shares are sold and redeemed without any purchase or
redemption charge imposed by the Fund, although Institutional Clients may
charge their Customer Accounts for services provided in connection with
the purchase or redemption of shares. See "How to Purchase and Redeem
Shares." The Fund will pay management fees to Legg Mason Fund Adviser,
Inc., but Navigator Class pays no distribution fees.

MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK OR OTHER DEPOSITORY INSTITUTION.
SHARES ARE NOT INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD, OR ANY
OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
<PAGE>

This Prospectus sets forth concisely the information about the
Fund that a prospective investor ought to know before investing. It should
be read and retained for future reference. A Statement of Additional
Information about the Fund dated July 31, 1995 has been filed with the
Securities and Exchange Commission ("SEC") and, as amended or supplemented
from time to time, is incorporated herein by reference. The Statement of
Additional Information is available without charge upon request from Legg
Mason (address and telephone numbers listed below).

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

Dated: July 31, 1995

Legg Mason Wood Walker, Inc.
111 South Calvert Street
P.O. Box 1476
Baltimore, MD 21203-1476
410-539-0000
800-822-5544

2
<PAGE>

FUND EXPENSES

The purpose of the following table is to assist an investor in
understanding the various costs and expenses that an investor in Navigator
Shares will bear directly or indirectly. The expenses and fees set forth
in the table are based on estimated expenses for the initial period of
operations of the Navigator Class.

SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge on purchases or
reinvested dividends None
Redemption or exchange fees None

ANNUAL FUND OPERATING EXPENSES -- NAVIGATOR SHARES
(as a percentage of average net assets)

Management fees(1) 0.21%
12b-1 fees None
Other expenses 0.14%
-----
Total operating expenses 0.35%
=====

(1) Pursuant to a voluntary expense limitation, the Adviser has
agreed to waive the management fees and assume certain other expenses such
that total operating expenses (exclusive of taxes, interest, brokerage
fees and extraordinary expenses) of the Navigator Class will not exceed
0.35% (annualized) of average daily net assets until Janaury 31, 1996 or
until the Fund's net assets reach $200 million, whichever occurs first,
and unless extended will terminate on that date. In the absence of such
waivers, the expense ratio for Navigator Class would have been 0.69%.

For further information concerning Fund expenses, please see "The
Fund's Management and Investment Adviser" and "The Fund's Distributor,"
page 22.

EXAMPLE OF EFFECT OF FUND EXPENSES

The following example illustrates the expenses that you would pay
on a $1,000 investment in Navigator Shares over various time periods
assuming (1) a 5% annual rate of return and (2) redemption at the end of
each time period. As noted in the table above, the Fund charges no
redemption fees of any kind.

1 Year 3 Years 5 Years 10 Years
----- ------ ------ --------

$3 $11 $19 $43

3
<PAGE>

This example assumes that all dividends and capital gain
distributions are reinvested and that the percentage amounts listed under
"Annual Fund Operating Expenses" remain the same over the time periods
shown. The above tables and the assumption in the example of a 5% annual
return are required by regulations of the SEC applicable to all mutual
funds. THE ASSUMED 5% ANNUAL RETURN IS NOT A PREDICTION OF, AND DOES NOT
REPRESENT, THE PROJECTED OR ACTUAL PERFORMANCE OF NAVIGATOR SHARES. THE
ABOVE TABLES AND EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST
OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN. The actual expenses attributable to Navigator Shares will depend
upon, among other things, the level of average net assets, the levels of
sales and redemptions of shares, the extent to which Navigator Shares
incur variable expenses, such as transfer agency costs, and whether the
Adviser reimburses all or a portion of the Fund's expenses.

4
<PAGE>

FINANCIAL HIGHLIGHTS

Effective July 31, 1995, the Fund commenced the sale of Navigator
Shares. Navigator Shares pay no 12b-1 distribution fees. The information
below is for Primary Shares and reflects 12b-1 fees paid by that class and
not by Navigator Shares.

The financial highlights for the period May 1, 1991 (commencement
of operations) to March 31, 1992, and the years ended March 31, 1993
through 1995 have been derived from financial statements which have been
audited by Coopers & Lybrand L.L.P., independent accountants. The Fund's
financial statements for the year ended March 31, 1995 and the report of
Coopers & Lybrand L.L.P. thereon are included in the Fund's annual report
and are incorporated by reference into the Statement of Additional
Information. The annual report is available to shareholders without charge
by calling an investment executive at Fairfield or Legg Mason or Legg
Mason's Funds Marketing Department at 800-822-5544.

PRIMARY SHARES

Years Ended March 31 1995 1994 1993 1992(1)

Per Share Operating
Performance:

Net asset value,
beginning of
period $15.69 $15.97 $15.03 $14.70

Net investment
income .828(2) .839(2) .877(2) .823(2)

Net realized and
unrealized gain
(loss) on
investments .180 (.275) .947 .333

Total from
investment
operations 1.008 .564 1.824 1.156

Distributions to
shareholders
from:

5
<PAGE>

PRIMARY SHARES

Net investment
income (.828) (.839) (.877) (.823)

Net realized
gain on
investments -- -- (.007) (.003)

In excess of
net realized
gain on
investments -- (.005) -- --

Net asset value,
end of period $15.87 $15.69 $15.97 $15.03

Total return(5)
6.60% 3.51% 12.47% 8.04%(3)

Ratios/Supplemental
Data:
Ratios to average
net assets:
Expenses 0.54%(2) 0.46%(2) 0.40%(2) 0.18%(2)(4)
Net investment
income 5.32%(2) 5.10%(2) 5.61%(2) 5.91%(2)(4)

Portfolio
turnover rate 9.5% 6.6% -- 5.4% (4)

Net assets, end
of period
(in thousands) $142,314 $145,578 $128,566 $83,052
</TABLE>

(1) For the period May 1, 1991 (commencement of operations) to March 31,
1992.
(2) Net of fees waived and reimbursements made by the Adviser in excess
of voluntary expense limitations as follows: all expenses until
October 20, 1991; 0.25% until December 31, 1991; 0.35% until June 30,
1992; 0.40% until December 31, 1992; 0.45% until December 31, 1993;
0.50% until June 30, 1994; and 0.60% until January 31, 1996.
(3) Not annualized. The annualized total return for the period would
have been 8.76%.
(4) Annualized.
(5) Excluding sales charge.

PERFORMANCE INFORMATION

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<PAGE>

From time to time the Fund may quote the total return of each
class of shares in advertisements or in reports or other communications to
shareholders. A mutual fund's TOTAL RETURN is a measurement of the overall
change in value of an investment in the fund, including changes in share
price and assuming reinvestment of dividends and other distributions.
CUMULATIVE TOTAL RETURN shows the fund's performance over a specific
period of time. AVERAGE ANNUAL TOTAL RETURN is the average annual
compounded return that would have produced the same cumulative total
return if the fund's performance had been constant over the entire period.

Performance information is based on historical results and is not
intended to indicate future performance. The investment return and
principal value of an investment in the fund will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost. Average annual returns, which differ from actual
year-to-year results, tend to smooth out variations in a fund's returns.

Total returns of Primary Shares as of March 31, 1995 were as
follows:

Cumulative Average Annual
Total Return Total Return

One Year +3.70% +3.70%
Life of Fund(1) +30.34 +7.00

(1) Fund's inception - May 1, 1991.

No adjustment has been made for any income taxes payable by
shareholders. As of the date of this Prospectus, Navigator Shares have no
performance record. Because Navigator Shares have lower total expenses,
they will generally have a higher return than Primary Shares.

The Fund also may advertise its yield or tax equivalent yield.
Yield reflects investment income net of expenses over a 30-day (or
one-month) period on a Fund share, expressed as an annualized percentage
of the maximum offering price per share at the end of the period. Tax
equivalent yield shows the taxable yield an investor would have to earn
before taxes to equal the Fund's tax-exempt yield. A tax equivalent yield
is calculated by dividing the Fund's tax-exempt yield by the result of one
minus a stated federal, state and local income tax rate. The effective
yield, although calculated similarly, will be slightly higher than the
yield because it assumes that income earned from the investment is
reinvested (i.e., the compounding effect of reinvestment). Yield
computations differ from other accounting methods and therefore may differ
from dividends actually paid or reported net income.

Total return and yield information reflect past performance and
are not predictions or guarantees of future results. Yields and total
returns of Primary Shares would be lower if the Adviser and Legg Mason had
not waived a portion of the fees and reimbursed certain expenses in the
years 1992 through 1995. Investment return and share price will fluctuate,

7
<PAGE>

and the value of your shares, when redeemed, may be worth more or less
than their original cost.

Further information about the Fund's performance is contained in
the Annual Report to Shareholders, which may be obtained without charge by
calling an investment executive at Fairfield or Legg Mason or Legg Mason's
Funds Marketing Department at 800-822-5544.

WHO SHOULD INVEST

The Fund is designed for longer-term investors who are able to
benefit from income exempt from federal and Maryland state and local
income taxes. The value of Navigator Shares can generally be expected to
fluctuate inversely with changes in interest rates and, because of the
potential negative impact of rising interest rates and other risks, the
Fund would not be appropriate for investors whose primary goal is
stability of principal. The Fund is not intended to be a balanced
investment program. The Fund is not an appropriate investment for
"substantial users" of certain facilities financed by industrial
development or private activity bonds or related persons thereof. See
"Taxes-Federal Income Tax," page 18.

INVESTMENT OBJECTIVE AND POLICIES

The investment objective of the Fund is to earn 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. The investment objective of the Fund may not be changed without a
shareholder vote; however, except as otherwise noted, the investment
policies of the Fund described below may be changed by the Board of
Trustees of the Trust without a shareholder vote. There can be no
assurance that the Fund's investment objective will be achieved.

The Fund invests in securities that, in the opinion of the
Adviser, present acceptable credit risks and that, at the time of
purchase, are rated:

"Baa" or higher by Moody's or "BBB" or higher by S&P in the case
of bonds;

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<PAGE>

"P1" or higher by Moody's or "A1" or higher by S&P in the case of
commercial paper;
"MIG-1" or higher by Moody's or "SP-1" or higher by S&P in the
case of notes; and
"VMIG-1" or higher by Moody's in the case of variable rate demand
notes.

The Fund also invests in securities unrated by any of the above
services which are deemed by the Adviser to be of comparable quality.

The bond ratings noted above are considered "investment grade" by
the respective rating agencies. A rating of a municipal obligation
represents the rating agency's opinion regarding its quality and is not a
guarantee of quality. Moody's considers that bonds rated in its fourth
highest category (i.e., Baa) have speculative characteristics; changes in
economic conditions or other circumstances are more likely to lead to a
weakened capacity for the issuers of such securities to make principal and
interest payments than is the case for higher rated bonds. In the event
the rating on an issue held in the Fund's portfolio is changed by Moody's
or S&P, such change will be considered by the Adviser in its evaluation of
the overall investment merits of that security. If, as a result of any
downgradings by Moody's or S&P or, for unrated securities, any
determinations by the Adviser that securities are no longer of comparable
quality to investment grade securities, more than 5% of the Fund's total
assets are represented by securities rated below investment grade or the
equivalent, the Adviser will, as soon as practicable consistent with
achieving an orderly disposition of the securities, sell such holdings
until they represent 5% or less of the Fund's total assets. A discussion
of the ratings outlined above is included in the Statement of Additional
Information.

In addition to the agency ratings, there are other criteria which
will be used by the Adviser in selecting securities for the portfolio.
Consideration will be given to the maturity and duration of each bond as
well as its effect on the overall average maturity and duration of the
portfolio. Analysis of the current and historical yield spreads is done to
determine the relative value in any bond considered for purchase. The
coupon level and call features also figure in the decision on the relative
merits of an investment. Consideration is also given to the type of bond-
whether it is a general obligation or a revenue bond. In addition to this
examination of bond characteristics, significant effort is devoted to
analysis of the creditworthiness of the bond issuer at the time of
purchase and on an ongoing basis.

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<PAGE>

MUNICIPAL OBLIGATIONS

Municipal obligations include obligations issued to obtain funds
for various public purposes, including constructing a wide range of public
facilities, such as bridges, highways, housing, hospitals, mass
transportation, schools and streets. Other public purposes for which
municipal obligations may be issued include the refunding of outstanding
obligations, the obtaining of funds for general operating expenses and the
making of loans to other public institutions and facilities. In addition,
certain types of industrial development bonds ("IDBs") and private
activity bonds ("PABs") are issued by or on behalf of public authorities
to finance various privately operated facilities, including pollution
control facilities, convention or trade show facilities, and airport, mass
transit, port or parking facilities. Interest on certain tax-exempt PABs
will constitute a Tax Preference Item. Accordingly, under normal
circumstances, the Fund's investment in obligations, the interest on which
is such an item, including PABs, will be limited to a maximum of 20% of
its total assets.

Municipal obligations also include municipal lease obligations.
These obligations, which are issued by state and local governments to
acquire land, equipment and facilities, typically are not fully backed by
the municipality's credit, and, if funds are not appropriated for the
following year's lease payments, a lease may terminate, with the
possibility of default on the lease obligation and significant loss to the
Fund. Certificates of Participation are participations in municipal lease
obligations or installment sales contracts. Each certificate represents a
proportionate interest in or right to the lease purchase payments made.

The two principal classifications of municipal obligations are
"general obligation" and "revenue" bonds. "General obligation" bonds are
secured by the issuer's pledge of its faith, credit and taxing power.
"Revenue" bonds are payable only from the revenues derived from a
particular facility or class of facilities or from the proceeds of a
special excise tax or other specific revenue source such as the corporate
user of the facility being financed. IDBs and PABs are usually revenue
bonds and are not payable from the unrestricted revenues of the issuer.
The credit quality of IDBs and PABs is usually directly related to the
credit standing of the corporate user of the facilities.

TEMPORARY INVESTMENTS

10
<PAGE>

obligations the interest on which is exempt from federal income tax but is
such an item and/or is subject to Maryland state and local income taxes.
The Fund expects that under normal circumstances it will maintain needed
liquidity through the purchase of short-term municipal securities.
However, for liquidity purposes, or pending the investment of the proceeds
of the sale of shares, the Fund temporarily may invest in taxable
short-term investments consisting of: obligations of the U.S. Government,
its agencies and instrumentalities; certificates of deposit and bankers'
acceptances of U.S. domestic banks with assets of one billion dollars or
more; commercial paper or other corporate notes of high quality; and any
of such items subject to short-term repurchase agreements. The Fund may
invest without limit in such instruments for temporary, defensive
purposes, when in the Adviser's opinion, no suitable municipal securities
are available. No more than 10% of the Fund's net assets will be invested
in repurchase agreements maturing in more than seven days and other
illiquid securities. Interest earned from such taxable investments will be
taxable to investors as ordinary income when distributed to them.
As a fundamental policy, the Fund may borrow money solely for temporary
purposes from banks or by engaging in reverse repurchase agreements in an
amount up to 10% of the value of its total assets; however, borrowings in
excess of 5% of the value of the Fund's total assets may be made only from
banks.

YIELD AND RISK FACTORS

YIELD
The yield of a municipal obligation is dependent on a variety of
factors, including general municipal securities market conditions, general
fixed-income market conditions, the financial condition of the issuer, the
size of the particular offering, the maturity of the obligation, the
credit quality and rating of the issue and expectations regarding changes
in income tax rates.

11
<PAGE>

INTEREST RATE RISK

If general market interest rates increase, the prices of
municipal obligations ordinarily will decrease. In a market of decreasing
interest rates, the opposite generally will be true. Although longer-term
bonds generally offer higher yields than shorter-term bonds, their prices
are more sensitive to changes in interest rates than bonds with shorter
maturities. Under normal circumstances, the dollar-weighted average
maturity of the Fund's portfolio is expected to be 12-24 years. Therefore,
the value of the Fund's portfolio securities, and hence of the Fund's
shares, will be more sensitive to changes in interest rates and will
fluctuate more than the value of a portfolio of shorter-term municipal
obligations.

MARYLAND

Changes in economic conditions in or governmental policies of the
state of Maryland could have a significant impact on the performance of
the Fund. For example, services (including mining), wholesale and retail
trade, government, and manufacturing (primarily printing and publishing,
food and kindred products, instruments and related products, electronic
equipment, industrial machinery and transportation equipment) are the
leading areas of employment in the State of Maryland. In contrast to the
nation as a whole, more people in Maryland are employed in government than
in manufacturing. The relatively high concentration of governmental
employment in Maryland makes the state potentially vulnerable to any
decreases in federal, including military, and state governmental spending.

In recent years, finance, insurance, and real estate were large
contributors to the gross state product. The outlook for those sectors is
subject to question given disclosures indicating continuing financial
weakness in major banking and insurance companies having their corporate
headquarters in Maryland and the general regional decline in real estate
activity and values.

The Fund may invest in certain municipal obligations with unique
risks. These include, but are not limited to, securities issued by
hospitals and other health care providers. The hospital industry
throughout the nation has been subjected to pressure to reduce expenses
and to limit lengths of stay. That pressure may adversely affect the
financial health of some hospitals.

An expanded discussion of certain investment considerations
relating to debt obligations of Maryland and its political subdivisions is
contained in the Statement of Additional Information.

CONCENTRATION

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<PAGE>

of project. In such circumstances, economic, business, political or other
changes affecting one issue of bonds (such as proposed legislation
affecting healthcare or the financing of a project, shortages or price
increases of needed materials, or declining markets or needs for the
projects) would most likely affect other bonds in the same segment,
thereby potentially increasing market risk. As a result, the Fund is
subject to greater risk than other funds that do not follow this practice.

NON-DIVERSIFICATION

The Fund has registered as a "non-diversified" investment
company. Therefore, the percentage of Fund assets invested in any single
issuer is not limited by the Investment Company Act of 1940 ("1940 Act").
However, the Fund intends to continue to qualify as a regulated investment
company ("RIC") under the Internal Revenue Code of 1986, as amended
("Code"). To qualify as a RIC, the Fund generally must meet the following
diversification requirements at the close of each quarter of its taxable
year: (1) at least 50% of the value of the Fund's total assets must
consist of cash, securities of the U.S. Government and other RICs and
holdings of other securities, which, with respect to any one issuer, do
not have a value greater than 5% of the value of the Fund's total assets;
and (2) no more than 25% of the value of the Fund's total assets may be
invested in the securities of a single issuer. For these purposes, the
term "issuer" does not include the U.S. Government or other RICs. To the
extent that the Fund's assets are invested in the obligations of a limited
number of issuers, the value of the Fund's shares will be more susceptible
to any single economic, political or regulatory occurrence affecting one
or more of those issuers than the shares of a diversified investment
company would be.

OTHER RISKS

Current efforts to restructure the federal budget and the
relationship between the federal government and state and local
governments may impact the financing of some issuers of municipal
securities. Some states and localities are experiencing substantial
deficits and may find it difficult for political or economic reasons to
increase taxes. Some local jurisdictions have invested heavily in
derivative instruments and may now hold portfolios of uncertain valuation.
Each of these factors may affect the ability of an issuer of municipal
securities to meet its obligations. Efforts by Congress to restructure
the federal income tax system could adversely effect the value of
municipal securities.

INVESTMENT TECHNIQUES

The Fund may employ the investment techniques described below,
among others. Use of certain of these techniques may give rise to taxable
income.

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<PAGE>

WHEN-ISSUED SECURITIES

The Fund may enter into commitments to purchase municipal
obligations or other securities on a when-issued basis. The Fund may
purchase when-issued securities because such securities are often the most
efficiently priced and have the best liquidity in the bond market. As with
the purchase of any security, when the Fund purchases securities on a
when-issued basis, it assumes the risks of ownership at the time of
purchase, not at the time of receipt. However, the Fund does not have to
pay for the obligations until they are delivered to the Fund, normally 15
to 45 days later. To meet that payment obligation, the Fund will set aside
cash or marketable high-quality debt securities equal to the payment that
will be due. Depending on market conditions, the Fund's when-issued
purchases could cause its share value to be more volatile, because they
may increase the amount by which the Fund's total assets, including the
value of the when-issued securities held by the Fund, exceed its net
assets. The Fund does not expect that its commitment to purchase
when-issued securities will at any time exceed, in the aggregate, 25% of
total assets.

CALLABLE BONDS

Callable municipal bonds are municipal bonds which carry a
provision permitting the issuer to redeem the bonds prior to their
maturity dates at a specified price which typically reflects a premium
over the bonds' original issue price. If the proceeds of a bond owned by
the Fund called under circumstances favorable to the issuer are
reinvested, the result may be a lower overall yield on such proceeds upon
reinvestment because of lower prevailing interest rates. If the purchase
price of such bonds included a premium related to the appreciated value of
the bonds, some or all of that premium may not be recovered by
bondholders, such as the Fund, depending on the price at which such bonds
were redeemed.

Each callable bond is "marked-to-market" daily based on the
bond's call date so that the call of some or all of the Fund's callable
bonds is not expected to have a material impact on the Fund's net asset
value. In light of the previously described pricing policies and because
the Fund follows certain amortization procedures required by the Internal
Revenue Service, the Fund does not expect to suffer any material adverse
impact in connection with a call of bonds purchased at a premium.
Notwithstanding such policies, however, as with any investment strategy,
there is no guarantee that a call may not have a more substantial impact
than anticipated.

STAND-BY COMMITMENTS

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<PAGE>

broker, dealer or bank agrees to purchase, at the Fund's option, specified
municipal obligations at a specified price. The total amount paid for
outstanding stand-by commitments held by the Fund will not exceed 25% of
the Fund's total assets calculated immediately after each stand-by
commitment is acquired.

SECURITIES LENDING, ZERO COUPON AND DEFERRED INTEREST BONDS

VARIABLE RATE AND FLOATING RATE OBLIGATIONS

The Fund may invest in variable rate municipal obligations and
notes. Variable rate obligations have a yield that is adjusted
periodically based upon market conditions.

The Fund may also invest in floating rate and variable rate
demand notes. Demand notes provide that the holder may demand payment of
the note at its par value plus accrued interest. The notes may be
supported by an unconditional bank letter of credit guaranteeing payment
of the principal or both the principal and accrued interest. Floating rate
demand notes have an interest rate related to a known lending rate, such
as the prime rate, and are automatically adjusted when such rate changes.
Such securities often react to changes in a manner similar to shorter-term
securities that mature at the time of the next interest rate reset for the
variable or floating rate instrument.

FUTURES AND OPTION STRATEGIES

To protect against the effect of adverse changes in interest
rates, the Fund may purchase and sell interest rate futures contracts and
options on securities indexes, and may purchase put options on interest
rate futures contracts and debt securities (practices known as "hedging").
The Fund may purchase put options on interest rate futures contracts or
sell interest rate futures contracts (that is, enter into a futures
contract to sell the underlying security) to attempt to reduce the risk of
fluctuations in its share value. The Fund may purchase an interest rate
futures contract (that is, enter into a futures contract to purchase the
underlying security) to attempt to establish more definitely the return on
securities the Fund intends to purchase. The Fund may not use these
instruments for speculation or leverage. In addition, the Fund's ability
to use these strategies may be limited by market conditions, regulatory
limits and tax considerations.

15
<PAGE>

The Fund may seek to enhance its income by writing (selling)
covered call options and covered put options. It may write puts and calls
only on a covered basis, which means, in the case of calls, that the Fund
will own the underlying instrument while the call is outstanding and, in
the case of puts, that the Fund will have cash, U.S. government securities
or other high-grade, liquid debt instruments in a segregated account in an
amount not less than the exercise price while the put is outstanding. Any
gains from futures and options transactions would be taxable.

The success of the Fund's strategies in reducing risks depends on
many factors, the most significant of which is the Adviser's ability to
predict market interest rate changes correctly, which differs from its
ability to select portfolio securities. In addition, a hedge could be
unsuccessful if the changes in the value of its futures contract or option
positions do not correlate to the changes in the value of the Fund's
investments. It is also possible that the Fund may be unable to purchase
or sell a portfolio security at a time that otherwise would be favorable
for it to do so, or that the Fund may need to sell a portfolio security at
a disadvantageous time, due to the need for the Fund to maintain "cover"
or to segregate securities in connection with hedging transactions.
Because the markets for futures and options are not always liquid, the
Fund may be unable to close out or liquidate its hedged position and may
be locked in during a market decline. The Adviser attempts to minimize the
possible negative effects of these factors through careful selection and
monitoring of the Fund's futures and options positions. The Adviser is of
the opinion that the Fund's investments in futures transactions will not
have a material adverse effect on the Fund's liquidity or ability to honor
redemptions.

The purchase and sale of options and futures contracts involve
risks different from those involved with direct investments in securities,
and also require different skills from the Adviser in managing the Fund's
portfolio. While utilization of options, futures contracts and similar
instruments may be advantageous to the Fund, if the Adviser is not
successful in employing such instruments in managing the Fund's
investments or in predicting interest rate changes, the Fund's performance
will be worse than if the Fund did not use such instruments. In addition,
the Fund will pay commissions and other costs in connection with such
investments, which may increase the Fund's expenses and reduce its yield.
A more complete discussion of the possible risks involved in transactions
in options and futures contracts is contained in the Statement of
Additional Information.

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<PAGE>

INVESTMENT LIMITATIONS

The Fund has adopted certain fundamental limitations that, like
its investment objective, can be changed only by the vote of a majority of
the outstanding voting securities of the Fund. For these purposes, a "vote
of a majority of the outstanding voting securities" of the Fund means the
affirmative vote of the lesser of (1) more than 50% of the outstanding
shares of the Fund, or (2) 67% or more of the shares present at a
shareholders' meeting if more than 50% of the outstanding shares are
represented in person or by proxy. These investment limitations are set
forth under "Additional Information About Investment Limitations and
Policies" in the Statement of Additional Information. Other Fund policies,
unless described as fundamental, can be changed by the Board of Trustees.

HOW TO PURCHASE AND REDEEM SHARES

Institutional Clients of Fairfield Group, Inc. may purchase
Navigator Shares from Fairfield, the principal offices of which are
located at 200 Gibraltar Road, Horsham, Pennsylvania 19044. Other
investors eligible to purchase Navigator Shares may purchase them through
a brokerage account with Legg Mason Wood Walker, Inc. ("Legg Mason").
(Legg Mason and Fairfield are wholly owned subsidiaries of Legg Mason,
Inc., a financial services holding company.)

PURCHASE OF SHARES

The minimum investment is $50,000 for the initial purchase of
Navigator Shares and $100 for each subsequent investment. The Fund
reserves the right to change these minimum amounts at its discretion.
Institutional Clients may set different minimums for their Customers'
investments in accounts invested in Navigator Shares.

Share purchases will be processed at the net asset value next
determined after Legg Mason or Fairfield has received your order; payment
must be made within three business days to the selling organization.
Orders received by Legg Mason or Fairfield before the close of business of
the New York Stock Exchange, Inc. ("Exchange") (normally 4:00 p.m. Eastern
time) ("close of the Exchange") on any day the Exchange is open will be
executed at the net asset value determined as of the close of the Exchange
on that day. Orders received by Legg Mason or Fairfield after the close
of the Exchange or on days the Exchange is closed will be executed at the
net asset value determined as of the close of the Exchange on the next day
the Exchange is open. See "How Net Asset Value is Determined" on page 17.
The Fund reserves the right to reject any order for shares of the Fund, to
suspend the offering of shares for a period of time, or to waive any
minimum investment requirements.

In addition to Institutional Clients purchasing shares directly
from Fairfield, Navigator Shares may be purchased through procedures
established by Fairfield in connection with requirements of Customer
Accounts of various Institutional Clients.

17
<PAGE>

No sales charge is imposed by the Fund in connection with the
purchase of Navigator Shares. Depending upon the terms of a particular
Customer Account, however, Institutional Clients may charge their
Customers fees for automatic investment and other cash management services
provided in connection with investments in the Fund. Information
concerning these services and any applicable charges will be provided by
the Institutional Clients. This Prospectus should be read by Customers in
connection with any such information received from the Institutional
Clients. Any such fees, charges or other requirements imposed by an
Institutional Client upon its Customers will be in addition to the fees
and requirements described in this Prospectus.

REDEMPTION OF SHARES

Shares may ordinarily be redeemed by a shareholder via telephone,
in accordance with the procedures described below. However, Customers of
Institutional Clients wishing to redeem shares held in Customer Accounts
at the Institution may redeem only in accordance with instructions and
limitations pertaining to their Account at the Institution.

Fairfield clients can make telephone redemption requests by
calling Fairfield at 1-800-441-3885. Legg Mason clients should call their
investment executives or Legg Mason Funds Processing at 1-800-822-5544.
Callers should have available the number of shares (or dollar amount) to
be redeemed and their account number.

Orders for redemption received by Legg Mason or Fairfield before
the close of the Exchange, on any day when the Exchange is open, will be
transmitted to Boston Financial Data Services ("BFDS"), transfer agent for
the Fund, for redemption at the net asset value per share determined as of
the close of the Exchange on that day. Requests for redemption received by
Legg Mason or Fairfield after the close of the Exchange will be executed
at the net asset value determined as of the close of the Exchange on its
next trading day. A redemption request received by Legg Mason or Fairfield
may be treated as a request for repurchase and, if it is accepted by Legg
Mason, your shares will be purchased at the net asset value per share
determined as of the next close of the Exchange.

Shareholders may have their telephone redemption requests paid by
a direct wire to a domestic commercial bank account previously designated
by the shareholder, or mailed to the name and address in which the
shareholder's account is registered with the Fund. Such payments will
normally be transmitted on the next business day following receipt of a
valid request for redemption. However, the Fund reserves the right to take
up to seven days to make payment upon redemption if, in the judgment of
the Adviser, the Fund could be adversely affected by immediate payment.
(The Statement of Additional Information describes several other
circumstances in which the date of payment may be postponed or the right
of redemption suspended.) The proceeds of redemption or repurchase may be
more or less than the original cost. If the shares to be redeemed or
repurchased were paid for by check (including certified or cashier's
checks) within 15 business days of the redemption or repurchase request,

18
<PAGE>

the proceeds may not be disbursed unless the Fund can be reasonably
assured that the check has been collected.

Because of the relatively high cost of maintaining small
accounts, the Fund may elect to close any account with a current value of
less than $500 by redeeming all of the shares in the account and mailing
the proceeds to the investor. However, the Fund will not redeem accounts
that fall below $500 solely as a result of a reduction in net asset value
per share. If the Fund elects to redeem the shares in an account, the
investor will be notified that the account is below $500 and will be
allowed 60 days in which to make an additional investment in order to
avoid having the account closed.

HOW SHAREHOLDER ACCOUNTS ARE MAINTAINED

A shareholder account is established automatically for each
investor. Any shares the investor purchases or receives as a dividend or
other distribution will be credited directly to the account at the time of
purchase or receipt. No certificates are issued unless the shareholder
specifically requests them in writing. Shareholders who elect to receive
certificates can redeem their shares only by mail. Certificates will be
issued in full shares only. No certificates will be issued for shares
prior to 15 business days after purchase of such shares by check unless
the Fund can be reasonably assured during that period that payment for the
purchase of such shares has been collected. Fund shares may not be held
in, or transferred to, an account with any brokerage firm other than
Fairfield, Legg Mason or their affiliates.

Every shareholder of record will receive a confirmation of each
new share transaction with the Fund, which will also show the total number
of shares being held in safekeeping by the Fund's transfer agent for the
account of the shareholder.

Navigator Shares sold to Institutional Clients acting in a
fiduciary, advisory, custodial, or other similar capacity on behalf of
persons maintaining Customer Accounts at Institutional Clients will
normally be held of record by the Institutional Clients. Therefore, in
the context of Institutional Clients, references in this Prospectus to
shareholders mean the Institutional Clients rather than their Customers.
Institutional Clients purchasing or holding Navigator Shares on behalf of
their Customers are responsible for the transmission of purchase and

19
<PAGE>

redemption orders (and the delivery of funds) to the Fund on a timely
basis.

HOW NET ASSET VALUE IS DETERMINED

Net asset value per share is determined daily as of the close of
the Exchange, on every day that the Exchange is open, by subtracting the
liabilities attributable to Navigator Shares from the total assets
attributable to such shares and dividing the result by the number of
Navigator Shares outstanding. Securities owned by the Fund for which
market quotations are readily available are valued at current market
value. In the absence of readily available market quotations, securities
are valued based upon appraisals received from an independent pricing
service using a computerized matrix system or based upon appraisals
derived from information concerning the security or similar securities
received from recognized dealers in those securities. Other securities are
valued at fair value as determined by, or under the supervision of, the
Board of Trustees of the Trust. Pursuant to guidelines established by the
Board of Trustees, the fair value of debt securities with remaining
maturities of 60 days or less shall be their amortized cost, unless
conditions otherwise indicate.

DIVIDENDS AND OTHER DISTRIBUTIONS

Dividends from net investment income are declared daily and paid
monthly. Shareholders begin to earn dividends on their Navigator Shares
as of the settlement date, which is normally the third business day after
their orders are placed with their Legg Mason or affiliated investment
executive. The Fund also distributes to shareholders substantially all net
capital gain (the excess of net long-term capital gain over net short-term
capital loss) after the end of the taxable year in which the gain is
realized. A second distribution of net capital gain may be necessary in
some years to avoid imposition of the excise tax described under the
heading "Additional Tax Information" in the Statement of Additional
Information. Shareholders may elect to:

1. Receive both dividends and capital gain distributions in
Navigator Shares of the Fund;
2. Receive dividends in cash and capital gain distributions in
Navigator Shares of the Fund;
3. Receive dividends in Navigator Shares of the Fund and capital
gain distributions in cash; or
4. Receive both dividends and capital gain distributions in cash.

In certain cases, shareholders may reinvest dividends and capital
gain distributions in shares of another Navigator fund. Please contact an
investment executive for additional information about this option.
Qualified retirement plans that obtained Navigator Shares through exchange
generally receive dividends and capital gain distributions in additional
shares.

20
<PAGE>

If no election is made, both dividends and capital gain
distributions will be credited to the Institutional Client's account in
Navigator Shares at the net asset value of the shares determined as of the
close of the Exchange on the reinvestment date. Shares received pursuant
to any of the first three (reinvestment) elections above also will be
credited to the account at that net asset value. If an investor elects to
receive dividends or capital gain distributions in cash, a check will be
sent. Investors purchasing through Fairfield may elect at any time to
change the distribution option by notifying in writing Navigator Maryland
Tax-Free Income Trust, c/o Fairfield Group, Inc., 200 Gibraltar Road,
Horsham, Pennsylvania 19044. Those purchasing through Legg Mason should
write to Navigator Maryland Tax-Free Income Trust, c/o Legg Mason Funds
Processing, P.O. Box 1476, Baltimore, Maryland, 21203-1476. An election
must be received at least 10 days before the record date in order to be
effective for dividends and capital gain distributions paid to
shareholders as of that date.

TAXES

FEDERAL INCOME TAX

The Fund intends to continue to qualify for treatment as a RIC
under the Code. If the Fund so qualifies and, at the close of each quarter
of its taxable year, at least 50% of the value of its total assets
consists of certain obligations the interest on which is excludable from
gross income under section 103(a) of the Code, the Fund may pay
"exempt-interest" dividends to its shareholders. Those dividends
constitute the portion of the aggregate dividends (excluding capital gain
distributions), as designated by the Fund, equal to the excess of the
excludable interest over certain amounts disallowed as deductions.
Exempt-interest dividends are excludable from a shareholder's gross
income; however, the amount of such dividends must be reported on the
recipient's federal income tax return.

If and to the extent the Fund receives interest on certain PABs,
a proportionate part of the exempt-interest dividends paid by the Fund
will be treated as a Tax Preference Item. In addition, exempt-interest
dividends received by a corporate shareholder may be indirectly subject to
the federal alternative minimum tax without regard to whether the Fund's
tax-exempt interest is attributable to PABs.

To the extent dividends are derived from taxable income from
temporary investments, from net short-term capital gain or from the use of
certain investment techniques described in "Investment Objective and
Policies," page 9, they are taxable to shareholders as ordinary income
(whether paid in cash or reinvested in Fund shares). No portion of those
dividends will qualify for the corporate dividends-received deduction.
Distributions derived from net capital gain, if any, are taxable to
shareholders as long-term capital gain regardless of the length of time
they have held their Fund shares (and irrespective of whether those
distributions are paid in cash or reinvested in Fund shares).

21
<PAGE>

Interest on indebtedness incurred or continued by a shareholder
in order to purchase or carry Fund shares generally is not deductible.
Persons who are "substantial users" (or related persons) of facilities
financed by IDBs or PABs should consult their tax advisers before
purchasing shares of the Fund because, for users of certain of these
facilities, the interest on those bonds is not exempt from federal income
tax. For these purposes, a "substantial user" includes a non-exempt person
who regularly uses in trade or business a part of a facility financed from
the proceeds of IDBs or PABs.

A redemption of Fund shares may result in taxable gain or loss to
the redeeming shareholder, depending on whether the redemption proceeds
are more or less than the shareholder's adjusted basis for the redeemed
shares (which normally includes any sales charge paid). An exchange of
Fund shares for shares of any other Navigator fund generally will have
similar tax consequences. However, special tax rules apply if (1) a
shareholder disposes of Fund shares through a redemption or exchange
within 90 days after the shareholder acquired the shares and (2) the
shareholder subsequently acquires shares of the Fund or of another Legg
Mason fund without the imposition of a sales charge that otherwise would
have been imposed except for the reinstatement privilege or exchange
privilege. See "How To Purchase and Redeem Shares," page 15, and
"Shareholder Services-Exchange Privilege," page 21. In these cases, any
sales charge that was imposed on the purchase of those shares will not be
taken into account in determining the amount of gain or loss on the
redemption or exchange--the tax effect of that charge will instead be
deferred by being treated as having been incurred in connection with the
newly acquired shares. In addition, if Fund shares are purchased within 30
days before or after redeeming Fund shares at a loss, all or part of that
loss will not be deductible and instead will increase the basis of the
newly purchased shares.

MARYLAND TAXES

22
<PAGE>

GENERAL

The foregoing is only a summary of some of the important federal
and Maryland income tax considerations generally affecting the Fund and
its shareholders; see the Statement of Additional Information for a
further discussion. In addition to those considerations, which are
applicable to any investment in the Fund, there may be other federal,
state or local tax considerations applicable to a particular investor.
Prospective shareholders are urged to consult their tax advisers with
respect to the effects of this investment on their own tax situations.

SHAREHOLDER SERVICES

CONFIRMATIONS AND REPORTS

Shareholders will receive from the distributor a confirmation
after each transaction (except a reinvestment of dividends and capital
gain distributions). An account statement will be sent to each shareholder
monthly unless there has been no activity in the account, in which case an
account statement will be sent quarterly. Reports will be sent to
shareholders at least semiannually showing the Fund's portfolio and other
information; the annual report will contain financial statements audited
by the Fund's independent accountants.

Confirmations for purchases and redemptions of Navigator Shares
made by Institutional Clients acting in a fiduciary, advisory, custodial,
or other similar capacity on behalf of persons maintaining Customer
Accounts at Institutional Clients will be sent to the Institutional
Client. Beneficial ownership of shares by Customer Accounts will be
recorded by the Institutional Client and reflected in the regular account
statements provided by them to their customers.

Shareholder inquiries should be addressed to "Navigator Maryland
Tax-Free Income Trust, c/o Legg Mason Funds Processing, P.O. Box 1476,

23
<PAGE>

Baltimore, Maryland 21203-1476," or "Fairfield Group, Inc., 200 Gibraltar
Road, Horsham, Pennsylvania 19044."

EXCHANGE PRIVILEGE

Holders of Navigator Shares are entitled to exchange them for
Navigator Shares of the following funds, provided the shares to be
acquired are eligible for sale under applicable state securities laws:

NAVIGATOR MONEY MARKET FUND, INC. -- PRIME OBLIGATIONS PORTFOLIO

A money market fund seeking to provide as high a level of current
interest income as is consistent with liquidity and relative stability of
principal.

NAVIGATOR TAX-FREE MONEY MARKET FUND, INC.

A money market fund seeking to provide its shareholders with as
high a level of current interest income that is exempt from federal income
taxes as is consistent with liquidity and relative stability of principal.

NAVIGATOR VALUE TRUST

A mutual fund seeking long-term growth of capital.

NAVIGATOR TOTAL RETURN TRUST

A mutual fund seeking capital appreciation and current income in
order to achieve an attractive total investment return consistent with
reasonable risk.

NAVIGATOR SPECIAL INVESTMENT TRUST

A mutual fund seeking capital appreciation by investing
principally in issuers with market capitalizations of less than $2.5
billion.

NAVIGATOR AMERICAN LEADING COMPANIES TRUST

A mutual fund seeking long-term capital appreciation and current
income consistent with prudent investment risk.

NAVIGATOR U.S. GOVERNMENT INTERMEDIATE-TERM PORTFOLIO

A mutual fund seeking high current income consistent with prudent
investment risk and liquidity needs, primarily by investing in debt
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, while maintaining an average dollar-weighted maturity
of between three and ten years.

24
<PAGE>

NAVIGATOR PENNSYLVANIA TAX-FREE INCOME TRUST

A tax-exempt municipal bond fund seeking 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.

NAVIGATOR TAX-FREE INTERMEDIATE-TERM INCOME TRUST

A tax-exempt municipal bond fund seeking a high level of current
income exempt from federal income tax, consistent with prudent investment
risk.

LEGG MASON CASH RESERVE TRUST

A money market fund seeking stability of principal and current
income consistent with stability of principal.

Investments by exchange into other Navigator funds are made at
the per share net asset value next determined on the same business day as
redemption of the Fund shares you wish to exchange. To obtain further
information concerning the exchange privilege and prospectuses of other
Navigator funds, or to make an exchange, please contact your investment
executive. To effect an exchange by telephone, please call your investment
executive with the information described in the section "How to Purchase
and Redeem Shares," page 15. The other factors relating to telephone
redemptions described in that section apply also to telephone exchanges.
Please read the prospectus for the other funds carefully before you invest
by exchange. The Fund reserves the right to modify or terminate the
exchange privilege upon 60 days' notice to shareholders. There is no
assurance the money market funds will be able to maintain a $1.00 share
price. None of the funds is insured or guaranteed by the U.S. Government.

THE FUND'S MANAGEMENT AND INVESTMENT ADVISER

BOARD OF DIRECTORS

The business and affairs of the Fund are managed under the
direction of the Board of Trustees of the Trust.

ADVISER

25
<PAGE>

Pursuant to a voluntary expense limitation, the Adviser has
agreed to waive the management fee and assume certain other expenses
(exclusive of taxes, interest, brokerage fees and extraordinary expenses)
in excess of 0.35% (annualized) of average daily net assets attributable
to Navigator Shares until January 31, 1996 or until the Fund's net assets
reach $200 million, whichever occurs first.

The Adviser acts as investment adviser, manager or consultant to
fifteen investment company portfolios (excluding the Fund) which had
aggregate assets under management of approximately $4.3 billion as of May
31, 1995. The Adviser's address is 111 South Calvert Street, Baltimore,
Maryland 21202.

Victoria M. Schwatka has been primarily responsible for the
day-to-day management of the Fund since its inception. Ms. Schwatka is a
portfolio manager and Senior Vice-President of Legg Mason's Fixed Income
Group. Ms. Schwatka has been employed by Legg Mason since June, 1986.

THE FUND'S DISTRIBUTOR

Legg Mason is the distributor of the Fund's shares pursuant to an
Underwriting Agreement with the Fund. The Underwriting Agreement obligates
Legg Mason to pay certain expenses in connection with the offering of
shares of the Fund, including any compensation to its investment
executives, the printing and distribution of prospectuses, statements of
additional information and periodic reports used in connection with the
offering to prospective investors, after the prospectuses, statements of
additional information and reports have been prepared, set in type and
mailed to existing shareholders at the Fund's expense, and for any
supplementary sales literature and advertising costs. Legg Mason also
assists BFDS with certain of its duties as transfer agent; for the year
ended March 31, 1995, Legg Mason received from BFDS $19,111 for performing
such services in connection with the Fund.

Fairfield Group, Inc., a wholly owned subsidiary of Legg Mason,
Inc., is a registered broker-dealer with principal offices located at 200
Gibraltar Road, Horsham, Pennsylvania 19044. Fairfield may sell
Navigator Shares pursuant to a Dealer Agreement with the Fund's
Distributor, Legg Mason. Neither Fairfield nor Legg Mason receives
compensation from the Fund for selling Navigator Shares.

The Chairman, President and Treasurer of the Fund are employed by
Legg Mason.

DESCRIPTION OF THE TRUST AND ITS SHARES

26
<PAGE>

offered. Each series of the Trust currently offers two Classes of Shares -
- Class Y (known as "Navigator Shares") and Class A (known as "Primary
Shares"). Each Class represents interests in the same pool of assets of
the Fund. A separate vote is taken by a Class of Shares of the Fund if a
matter affects just that Class of Shares. Each Class of Shares may bear
certain differing Class-specific expenses. Salespersons and others
entitled to receive compensation for selling or servicing Fund Shares may
receive more with respect to one Class than another.

The initial and subsequent investment minimums for Primary Shares
are $1,000 and $100, respectively. Investments in Primary Shares may be
made through a Legg Mason or affiliated investment executive, through the
Future First Systematic Investment Plan or through automatic investment
arrangements. For information about Primary Shares, call 800-822-5544.

Holders of Primary Shares bear distribution and service fees
under Rule 12b-1 at the rate of 0.25% of the net assets attributable to
Primary Shares. Investors in Primary Shares may elect to receive
dividends and/or capital gain distributions in cash through the receipt of
a check or a credit to their Legg Mason account. The per share net asset
value of the Navigator Shares, and dividends and distributions (if any)
paid to Navigator shareholders, are generally expected to be higher than
those of Primary Shares of the Fund, because of the lower expenses
attributable to Navigator Shares. Primary Shares of the Fund may be
exchanged for the corresponding Class of Shares of other Legg Mason funds.
Investments by exchange into the Legg Mason funds sold with an initial
sales charge are made at the per share net asset value, plus the sales
charge, determined on the same business day as redemption of the fund
shares the investors in Primary Shares wish to redeem.

The Board of Trustees of the Trust does not anticipate that there
will be any conflicts among the interests of the holders of the different
Classes of Fund shares. On an ongoing basis, the Board will consider
whether any such conflict exists and, if so, take appropriate action.

Shareholders' meetings will not be held except where the
Investment Company Act of 1940 requires a shareholder vote on certain
matters (including the election of trustees, approval of an advisory
contract, and approval of a plan of distribution pursuant to Rule 12b-1).
The Trust will call a special meeting of the shareholders at the request
of 10% or more of the shares entitled to vote; shareholders wishing to
call such a meeting should submit a written request to the Fund at 111
South Calvert Street, Baltimore, Maryland 21202, stating the purpose of
the proposed meeting and the matters to be acted upon.

27
<PAGE>

TABLE OF CONTENTS
Page

Fund Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . 5
Performance Information . . . . . . . . . . . . . . . . . . . . . . . . 7
Investment Objective and Policies . . . . . . . . . . . . . . . . . . . 9
How to Purchase and Redeem Shares . . . . . . . . . . . . . . . . . . . 15
How Shareholder Accounts are Maintained . . . . . . . . . . . . . . . . 17
How Net Asset Value is Determined . . . . . . . . . . . . . . . . . . . 17
Dividends and Other Distributions . . . . . . . . . . . . . . . . . . . 18
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Shareholder Services . . . . . . . . . . . . . . . . . . . . . . . . . 20
The Fund's Management and Investment Adviser . . . . . . . . . . . . . 22
The Fund's Distributor . . . . . . . . . . . . . . . . . . . . . . . . 22
Description of the Trust and Its Shares . . . . . . . . . . . . . . . . 23

ADDRESSES

DISTRIBUTOR:
Legg Mason Wood Walker, Inc.
111 South Calvert Street
P.O. Box 1476, Baltimore, MD 21203-1476
410-539-0000 800-822-5544

TRANSFER AND SHAREHOLDER SERVICING AGENT:
Boston Financial Data Services
P.O. Box 953, Boston, MA 02103

Counsel:
Kirkpatrick & Lockhart LLP
1800 M Street, N.W., Washington, DC 20036

INDEPENDENT ACCOUNTANTS:
Coopers & Lybrand L.L.P.
217 East Redwood Street, Baltimore, Maryland 21202

No person has been authorized to give any information or to
make any representations not contained in this Prospectus or
the Statement of Additional Information in connection with
the offering made by the Prospectus and, if given or made,
such information or representations must not be relied upon
as having been authorized by the Fund or its distributor. The
Prospectus does not constitute an offering by the Fund or by
the principal underwriter in any jurisdiction in which such
offering may not lawfully be made.

LMF - 029A
<PAGE>

How You Can Redeem Your Primary Shares 13

TRANSFER AND SHAREHOLDER SERVICING AGENT:

Boston Financial Data Services
P.O. Box 953, Boston, MA 02103

COUNSEL:

Kirkpatrick & Lockhart LLP
1800 M Street, N.W., Washington, DC 20036

INDEPENDENT ACCOUNTANTS:

Coopers & Lybrand L.L.P.
217 East Redwood Street, Baltimore, Maryland 21202

JULY 31, 1995

LEGG MASON
PENNSYLVANIA
TAX-FREE
INCOME
TRUST

PRIMARY SHARES
PUTTING YOUR FUTURE FIRST

--Legg Mason logo here--<PAGE>
<PAGE>

THE LEGG MASON PENNSYLVANIA TAX-FREE INCOME TRUST -- PRIMARY SHARES

PROSPECTUS
The Legg Mason Pennsylvania Tax-Free Income Trust ("Fund") is a
non-diversified, professionally managed portfolio seeking 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. The Fund is a separate series of Legg Mason Tax-Free Income Fund
("Trust"), an open-end management investment company.
In attempting to achieve the Fund's objective, the Fund's investment
adviser, Legg Mason Fund Adviser, Inc. ("Adviser"), invests primarily in
debt instruments issued by or on behalf of the Commonwealth of
Pennsylvania, its political subdivisions, municipalities, agencies,
instrumentalities or public authorities, the interest on which, in the
opinion of counsel to the issuer, is exempt from federal income tax and
Pennsylvania personal income tax ("Pennsylvania municipal obligations")
and which are investment grade, I.E., securities rated within the four
highest grades by Moody's Investors Service, Inc. ("Moody's") or Standard
& Poor's Ratings Group ("S&P") or, if unrated by either Moody's or S&P
("unrated securities"), deemed by the Adviser to be of comparable quality.
The Fund's shares are exempt from Pennsylvania county personal property
tax to the extent that the Fund invests in Pennsylvania municipal
obligations. Under normal circumstances, the dollar-weighted average
maturity of the Fund's portfolio is expected to be between 12 and 24
years. The Fund also may engage in hedging transactions.

The Primary Class of shares ("Primary Shares") offered in this
Prospectus is available to all investors except certain institutions (see
page 4).

Dated: July 31, 1995

Legg Mason Wood Walker, Inc.
111 South Calvert Street
P.O. Box 1476
Baltimore, MD 21203-1476
410 (Bullet) 539 (Bullet) 0000
800 (Bullet) 822 (Bullet) 5544
<PAGE>
PROSPECTUS HIGHLIGHTS

THE LEGG MASON PENNSYLVANIA TAX-FREE INCOME TRUST -- PRIMARY SHARES

The following summary is qualified in its entirety by the more
detailed information appearing in the body of this Prospectus and in the
Statement of Additional Information.

FUND'S INCEPTION:
August 1, 1991
NET ASSETS:

Over $65 million as of May 31, 1995

FUND TYPE:

The Fund, a separate series of the Trust, is an open-end,
non-diversified, municipal bond fund emphasizing tax-exempt income. You
may purchase or redeem Primary Shares of the Fund through a brokerage
account with Legg Mason or certain of its affiliates. See "How You Can
Invest in the Fund," page 11, and "How You Can Redeem Your Primary
Shares," page 13.

INVESTMENT OBJECTIVE AND POLICIES:
The Fund's investment objective is to earn 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.
The Fund attempts to meet this objective by investing primarily in
investment grade Pennsylvania municipal obligations. See "Investment
Objective and Policies," page 6.
INVESTMENT TECHNIQUES AND RISKS:

There can be no assurance that the Fund will achieve its objective.
The value of the debt instruments held by the Fund, and thus the net asset
value of Fund shares, generally fluctuates inversely with movements in
interest rates. Under normal circumstances, the Fund's dollar-weighted
average maturity is expected to be between 12 and 24 years; therefore, the
net asset value of the Fund's shares will be more sensitive to interest
rate movements and will fluctuate more than a portfolio of shorter-term
securities. Additionally, changes in economic conditions in, or
governmental policies of, the Commonwealth of Pennsylvania could have a
significant impact on the performance of the Fund. As a non-diversified
series, the Fund may be subject to greater risk with respect to its
portfolio securities than an investment company that has a broader range
of investments, because changes in the financial condition or market
assessment of a single issuer may cause greater fluctuation in the Fund's
total return and the price of Fund shares. The Fund invests in investment
grade securities, I.E., those in the four highest ratings categories of
Moody's or S&P or securities unrated by either of those services but
deemed by the Adviser to be of comparable quality; Moody's considers those
securities rated in its fourth highest category (I.E., Baa) to have
speculative characteristics. The Fund's participation in hedging and
option income strategies also involves certain investment risks and
transaction costs. See "Yield and Risk Factors" and "Investment
Techniques," pages 8-11.

DISTRIBUTOR :
Legg Mason Wood Walker, Incorporated
INVESTMENT ADVISER :
Legg Mason Fund Adviser, Inc.

TRANSFER AND SHAREHOLDER SERVICING AGENT :

Boston Financial Data Services

CUSTODIAN:

State Street Bank and Trust Company

All dividends and other distributions are automatically reinvested in
Primary Shares unless cash payments are requested.

INITIAL PURCHASE:

$1,000 minimum, generally.

SUBSEQUENT PURCHASES:

$100 minimum, generally.

PURCHASE METHODS:

Send bank/personal check or wire federal funds. See "How You Can
Invest in the Fund," page 11. Larger purchases may be eligible for reduced
initial sales charges as may purchases pursuant to a Letter of Intention
as described on page 12.

PUBLIC OFFERING PRICE PER SHARE:
Net asset value plus any applicable sales charge (maximum sales charge
is 2.75% of public offering price).
2
<PAGE>
FUND EXPENSES

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge on purchases 2.75%(1)(2)
Sales charge on reinvested dividends None
Redemption or exchange fees None
ANNUAL FUND OPERATING EXPENSES -- PRIMARY
SHARES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management fees(3) 0.09%
12b-1 fees 0.25%
Other expenses 0.21%
Total operating expenses (after fee
waivers)(3) 0.55%
</TABLE>

(1) As a percentage of offering price.
(2) See "How You Can Invest In The Fund," page 11 for additional
information concerning volume reductions, sales charge waivers and reduced
sales charge purchase plans.

(3) Pursuant to a voluntary expense limitation, the Adviser and Legg Mason
have agreed to waive the management and 12b-1 fees and assume certain
other expenses such that total operating expenses relating to Primary
Shares (exclusive of taxes, interest, brokerage fees, and extraordinary
expenses) will not exceed 0.55% (annualized) of average daily net assets
until January 31, 1996 or until the Fund's net assets reach $125
million, whichever occurs first. In the absence of such waivers, the
expected management fee, 12b-1 fee, other expenses and total operating
expenses relating to Primary Shares would be 0.55%, 0.25%, 0.21% and 1.01%
of average net assets, respectively.

EXAMPLE OF EFFECT OF FUND EXPENSES

The following example illustrates the expenses that you would pay on a
$1,000 investment in Primary Shares over various time periods assuming (1)
a 5% annual rate of return and (2) redemption at the end of each time
period. As noted in the table above, the Fund charges no redemption fees
of any kind.

<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$33 $45 $57 $95
</TABLE>

This example assumes that the maximum 2.75% initial sales charge is
deducted at the time of purchase, that the percentage amounts listed under
"Annual Fund Operating Expenses" remain the same over the time periods
shown and that all dividends and capital gain distributions are
reinvested in additional Fund shares. If the waiver is not extended
beyond January 31, 1996, the expense figures in the example will be
higher.

3
<PAGE>
FINANCIAL HIGHLIGHTS

The financial highlights for the period August 1, 1991 (commencement of
operations) to March 31, 1992 and for the years ended March 31, 1993
through 1995 have been derived from financial statements which have been
audited by Coopers & Lybrand L.L.P., independent accountants. The Fund's
financial statements for the year ended March 31, 1995 and the report of
Coopers & Lybrand L.L.P. thereon are included in the Fund's annual report
and are incorporated by reference into the Statement of Additional
Information. The annual report is available to shareholders without charge
by calling your Legg Mason or affiliated investment executive or Legg
Mason's Funds Marketing Department at 800-822-5544.

<TABLE>
<CAPTION>
PRIMARY CLASS
<S> <C> <C> <C> <C>
Years Ended March 31, 1995 1994 1993 1992(1)
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $15.80 $16.03 $14.99 $14.70
Net investment income 0.85(2) 0.86(2) 0.91(2) 0.63(2)
Net realized and unrealized gain (loss) on investments 0.22 (0.23) 1.04 0.29
Total from investment operations 1.07 0.63 1.95 0.92
Distributions to shareholders from net investment income (0.85) (0.86) (0.91) (0.63)
Net asset value, end of period $16.02 $15.80 $16.03 $14.99
Total return(4) 7.03% 3.81% 13.31% 6.36%(3)
RATIOS/SUPPLEMENTAL DATA:
Ratios to average net assets:
Expenses 0.49%(2) 0.40%(2) 0.32%(2) 0.12%(2)(5)
Net investment income 5.42%(2) 5.16%(2) 5.74%(2) 6.11%(2)(5)
Portfolio turnover rate 2.08% -- -- --
Net assets, end of period (in thousands) $63,929 $62,904 $49,959 $28,873
</TABLE>

(1) FOR THE PERIOD AUGUST 1, 1991 (COMMENCEMENT OF OPERATIONS) TO MARCH 31,
1992.

(2) NET OF FEES WAIVED AND REIMBURSEMENTS MADE BY THE ADVISER IN EXCESS OF
VOLUNTARY EXPENSE LIMITATIONS AS FOLLOWS: ALL EXPENSES UNTIL NOVEMBER 30,
1991; 0.20% UNTIL MARCH 31, 1992; 0.25% UNTIL JUNE 30, 1992; 0.30% UNTIL
DECEMBER 31, 1992; 0.35% UNTIL JULY 31, 1993; 0.40% UNTIL DECEMBER 31,
1993; 0.45% UNTIL MARCH 31, 1994; AND 0.55% UNTIL JANUARY 31, 1996.

(3) NOT ANNUALIZED. THE ANNUALIZED TOTAL RETURN FOR THE PERIOD WOULD HAVE
BEEN 9.55%.

(4) EXCLUDING SALES CHARGE.

(5) ANNUALIZED.

4
<PAGE>
PERFORMANCE INFORMATION

Total returns of Primary Shares as of March 31, 1995 were as follows:

<TABLE>
<CAPTION>
Cumulative Average Annual
Total Return Total Return
<S> <C> <C>
One Year +4.07% +4.07%
Life of Fund(|) +30.16 +7.45
</TABLE>

(|) Fund's inception -- August 1, 1991.
The Fund also may advertise its yield or tax equivalent yield. Yield
reflects investment income net of expenses over a 30-day (or one-month)
period on a Fund share, expressed as an annualized percentage of the
maximum offering price per share at the end of the period. Tax equivalent
yield shows the taxable yield an investor would have to earn before taxes
to equal the Fund's tax-exempt yield. A tax equivalent yield is calculated
by dividing the Fund's tax-exempt yield by the result of one minus a
stated federal, state and local income tax rate. The effective yield,
although calculated similarly, will be slightly higher than the yield
because it assumes that income earned from the investment is reinvested
(i.e., the compounding effect of reinvestment). Yield computations differ
from other accounting methods and therefore may differ from dividends
actually paid or reported net income.

Total return and yield information reflect past performance and are
not predictions or guarantees of future results. Investment return and
share price will fluctuate, and the value of your shares, when redeemed,
may be worth more or less than their original cost. Yields and total
returns would be lower if the Adviser and Legg Mason had not waived a
portion of the fees and reimbursed certain expenses during the fiscal
years 1992 through 1995. As of the date of this Prospectus, Navigator
Shares have no performance record. Further information about the Fund's
performance is contained in the Annual Report to Shareholders, which may
be obtained without charge by calling your Legg Mason or affiliated
investment executive or Legg Mason's Funds Marketing Department at
800-822-5544.

WHO SHOULD INVEST

The Fund is designed for longer-term investors who are able to benefit
from income exempt from federal income tax and Pennsylvania personal
income tax. The value of Primary Shares can generally be expected to
fluctuate inversely with changes in interest rates and, because of the
potential negative impact of rising interest rates and other risks, the
Fund would not be appropriate for investors whose primary goal is
stability of principal. The Fund is not intended to be a balanced
investment program. The Fund is not an appropriate investment for
"substantial users" of certain facilities financed by industrial
development or private activity bonds or related persons thereof. See
"Taxes -- Federal Income Tax," page 15.

5
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is to earn 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. The investment objective of the Fund may not be changed without a
vote of the shareholders; however, except as otherwise noted, the
investment policies of the Fund described below may be changed by the
Board of Trustees of the Trust without a shareholder vote. There can be no
assurance that the Fund's investment objective will be achieved.
The Fund seeks to achieve its investment objective by investing
primarily in debt instruments issued by or on behalf of the Commonwealth
of Pennsylvania, its political subdivisions, municipalities, agencies,
instrumentalities or public authorities, the interest on which, in the
opinion of counsel to the issuer, is exempt from federal income tax and
Pennsylvania personal income tax. As a fundamental policy, under normal
circumstances, the Fund will maintain at least 80% of its total assets in
Pennsylvania municipal obligations, exclusive of any such obligations the
interest on which is a tax preference item for purposes of the federal
alternative minimum tax ("Tax Preference Item"). See "Temporary
Investments" page 7.
The Fund invests in securities that, in the opinion of the Adviser,
present acceptable credit risks and that, at the time of purchase, are
rated:
"Baa" or higher by Moody's or "BBB" or higher by S&P in the case of
bonds;
"P1" or higher by Moody's or "A1" or higher by S&P in the case of
commercial paper;
"MIG-1" or higher by Moody's or "SP-1" or higher by S&P in the case of
notes; and
"VMIG-1" or higher by Moody's in the case of variable rate demand
notes.

The Fund also invests in securities unrated by either of the above
services which are deemed by the Adviser to be of comparable quality.

The bond ratings noted above are considered "investment grade" by the
respective rating agencies. A rating of a municipal obligation represents
the rating agency's opinion regarding its quality and is not a guarantee
of quality. Moody's considers that bonds rated in its fourth highest
category (I.E., Baa) have speculative characteristics; changes in economic
conditions or other circumstances are more likely to lead to a weakened
capacity for the issuers of such securities to make principal and interest
payments than is the case for higher rated bonds. In the event the rating
on an issue held in the Fund's portfolio is changed by Moody's or S&P,
such change will be considered by the Adviser in its evaluation of the
overall investment merits of that security. If, as a result of any
downgradings by Moody's or S&P, or, for unrated securities, any
determinations by the Adviser that securities are no longer of comparable
quality to investment grade securities, more than 5% of the Fund's total
assets are represented by securities rated below investment grade or the
equivalent, the Adviser will, as soon as practicable consistent with
achieving an orderly disposition of the securities, sell such holdings
until they represent 5% or less of the Fund's total assets. A description
of the ratings outlined above is included in the Statement of Additional
Information.

The Fund does not expect its portfolio turnover rate to exceed 90%
per year.

6
<PAGE>
MUNICIPAL OBLIGATIONS

Municipal obligations also include short-term tax anticipation notes,
bond anticipation notes, revenue anticipation notes and other forms of
short-term debt obligations. Such notes may be issued with a short-term
maturity in anticipation of the receipt of tax payments, the proceeds of
bond placements or other revenues.
Municipal obligations also include municipal lease obligations. These
obligations, which are issued by state and local governments to acquire
land, equipment and facilities, typically are not fully backed by the
municipality's credit; and, if funds are not appropriated for the
following year's lease payments, a lease may terminate, with the
possibility of default on the lease obligation and significant loss to the
Fund. Certificates of Participation are participations in municipal lease
obligations or installment sales contracts. Each certificate represents a
proportionate interest in or right to the lease purchase payments made.
The two principal classifications of municipal obligations are
"general obligation" and "revenue" bonds. "General obligation" bonds are
secured by the issuer's pledge of its faith, credit and taxing power.
"Revenue" bonds are payable only from the revenues derived from a
particular facility or class of facilities or from the proceeds of a
special excise tax or other specific revenue source such as the corporate
user of the facility being financed. IDBs and PABs are usually revenue
bonds and are not payable from the unrestricted revenues of the issuer.
The credit quality of IDBs and PABs is usually directly related to the
credit standing of the corporate user of the facilities.
TEMPORARY INVESTMENTS

During unusual market conditions, including if, in the Adviser's
opinion, there are insufficient suitable Pennsylvania municipal
obligations available that pay interest that is not a Tax Preference Item,
the Fund temporarily may invest more than 20% of its total assets in
municipal obligations the interest on which is exempt from federal income
tax but is such an item and/or is subject to Pennsylvania personal income
tax. The Fund expects that under normal circumstances it will maintain
needed liquidity through the purchase of short-term municipal securities.
However, for liquidity purposes, or pending the investment of the proceeds
of the sale of shares, the Fund temporarily may invest in taxable
short-term investments consisting of: obligations of the U.S. Government,
its agencies and instrumentalities; certificates of deposit and bankers'
acceptances of U.S. domestic banks with assets of one billion dollars or
more; commercial paper or other corporate notes of high quality; and any
of such items subject to short-term repurchase agreements. The Fund may
invest without limit in such instruments for temporary, defensive
purposes, when in the Adviser's opinion, no suitable municipal securities
are available. No more than 10% of the Fund's net assets will be invested
in repurchase agreements maturing in more than seven days and other
illiquid securities. Interest earned from such taxable investments will be
taxable to investors as ordinary income when distributed to them.

As a fundamental policy, the Fund may borrow money solely for
temporary purposes from banks or by engaging in reverse repurchase
agreements in an amount up to 10% of the value of its total assets;
however, borrowings in excess of 5% of the value of the Fund's total
assets may be made only from banks.
7
<PAGE>
YIELD AND RISK FACTORS
Yield
The yield of a municipal obligation is dependent on a variety of
factors, including general municipal securities market conditions, general
fixed-income market conditions, the financial condition of the issuer, the
size of the particular offering, the maturity of the obligation, the
credit quality and rating of the issue and expectations regarding changes
in income tax rates.
Interest Rate Risk
If general market interest rates increase, the prices of municipal
obligations ordinarily will decrease. In a market of decreasing interest
rates, the opposite generally will be true. Although longer-term bonds
generally offer higher yields than shorter-term bonds, their prices are
more sensitive to changes in interest rates than bonds with shorter
maturities. Under normal circumstances, the dollar-weighted average
maturity of the Fund's portfolio is expected to be 12-24 years. Therefore,
the value of the Fund's portfolio securities, and hence of the Fund's
shares, will be more sensitive to changes in interest rates and will
fluctuate more than the value of a portfolio of shorter-term municipal
obligations.
Pennsylvania
Changes in economic conditions in, or governmental policies of, the
Commonwealth of Pennsylvania could have a significant impact on the
performance of the Fund. For example, Pennsylvania's continued dependence
on manufacturing, mining and steel has made Pennsylvania vulnerable to
cyclical industry fluctuations, foreign imports and environmental
concerns. However, growth in the service and trade sectors has helped
diversify Pennsylvania's economy and reduce its unemployment rate below
the national average. Changes in local economic conditions or local
governmental policies within Pennsylvania, which can vary substantially by
region, could also have a significant impact on the performance of
municipal obligations held by the Fund. The City of Philadelphia, for
example, recently experienced severe financial problems which impaired its
ability to borrow money and adversely affected the ratings of its
obligations and their marketability. While the Fund may invest in
obligations that are secured by obligors other than Pennsylvania or its
political subdivisions (such as hospitals, universities, corporate
obligors and corporate credit and liquidity providers) and obligations
limited to specific revenue pledges (such as sewer authority bonds), the
creditworthiness of these obligors may be partly dependent on the
creditworthiness of Pennsylvania or its municipal authorities.
An expanded discussion of certain investment considerations relating
to debt obligations of Pennsylvania and its political subdivisions is
contained in the Statement of Additional Information.
Concentration
The Fund may invest 25% or more of its total assets in a particular
segment of the municipal securities market, such as hospital revenue
bonds, housing agency bonds, IDBs or airport bonds, or in securities the
interest on which is paid from revenues of a similar type of project. In
such circumstances, economic, business, political or other changes
affecting one issue of bonds (such as proposed legislation affecting
healthcare or the financing of a project, shortages or price increase of
needed materials, or declining markets or needs for the projects) would
most likely affect other bonds in the same segment, thereby potentially
increasing market risk. As a result, the Fund is subject to greater risk
than other funds that do not follow this practice.
Non-Diversification
The Fund has registered as a "non-diversified" investment company.
Therefore, the percentage of Fund assets invested in any single issuer is
not limited by the Investment Company Act of 1940 ("1940 Act"). However,
the Fund intends to continue to qualify as a regulated investment company
("RIC") under the Internal Revenue Code of 1986, as amended ("Code"). To
qualify as a RIC, the Fund generally must meet the following
diversification requirements at the close of each quarter of its taxable
year: (1) at least 50% of the value of the Fund's total assets must
consist of cash, securities of the U.S. Government and other RICs and
holdings of other securities, which, with respect to any one issuer, do
not have a value greater than
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<PAGE>
5% of the value of the Fund's total assets; and (2) no more than 25% of
the value of the Fund's total assets may be invested in the securities of
a single issuer. For these purposes, the term "issuer" does not include
the U.S. Government or other RICs. To the extent that the Fund's assets
are invested in the obligations of a limited number of issuers, the value
of the Fund's shares will be more susceptible to any single economic,
political or regulatory occurrence affecting one or more of those issuers
than the shares of a diversified investment company would be.

Other Risks

INVESTMENT TECHNIQUES
The Fund may employ the investment techniques described below, among
others. Use of certain of these techniques may give rise to taxable
income.
When-Issued Securities
The Fund may enter into commitments to purchase municipal obligations
or other securities on a when-issued basis. When-issued securities are
often the most efficiently priced and have the best liquidity in the bond
market. As with the purchase of any security, when the Fund purchases
securities on a when-issued basis, it assumes the risks of ownership at
the time of purchase, not at the time of receipt. However, the Fund does
not have to pay for the obligations until they are delivered to the Fund,
normally 15 to 45 days later. To meet that payment obligation, the Fund
will set aside cash or marketable high-quality debt securities equal to
the payment that will be due. Depending on market conditions, the Fund's
when-issued purchases could cause its share value to be more volatile,
because they may increase the amount by which the Fund's total assets,
including the value of the when-issued securities held by the Fund, exceed
its net assets. The Fund does not expect that its commitment to purchase
when-issued securities will at any time exceed, in the aggregate, 25% of
total assets.
Callable Bonds
Callable municipal bonds are municipal bonds which carry a provision
permitting the issuer to redeem the bonds prior to their maturity dates at
a specified price which typically reflects a premium over the bonds'
original issue price. If the proceeds of a bond owned by the Fund called
under circumstances favorable to the issuer are reinvested, the result may
be a lower overall yield on such proceeds upon reinvestment because of
lower prevailing interest rates. If the purchase price of such bonds
included a premium related to the appreciated value of the bonds, some or
all of that premium may not be recovered by bondholders, such as the Fund,
depending on the price at which such bonds were redeemed.
Each callable bond is "marked-to-market" daily based on the bond's
call date so that the call of some or all of the Fund's callable bonds is
not expected to have a material impact on the Fund's net asset value. In
light of the previously described pricing policies and because the Fund
follows certain amortization procedures required by the Internal Revenue
Service, the Fund does not expect to suffer any material adverse impact in
connection with a call of bonds purchased at a premium. Notwithstanding
such policies, however, as with any investment strategy, there is a no
guarantee that a call may not have a more substantial impact than
anticipated.
Stand-By Commitments
The Fund may acquire "stand-by commitments" with respect to its
investments in municipal obligations. A stand-by commitment is a put (that
is, the right to sell the underlying security within a specified period of
time at a specified
9
<PAGE>
exercise price) that may be sold, transferred or assigned only with the
underlying security. Under a stand-by commitment, a broker, dealer or bank
agrees to purchase, at the Fund's option, specified municipal obligations
at a specified price. The total amount paid for outstanding stand-by
commitments held by the Fund will not exceed 25% of the Fund's total
assets calculated immediately after each stand-by commitment is acquired.
Securities Lending, Zero Coupon and Deferred Interest Bonds

The success of the Fund's strategies in reducing risks depends on many
factors, the most significant of which is the Adviser's ability to predict
market interest rate changes correctly, which differs from its ability to
select portfolio securities. In addition, a hedge could be unsuccessful if
the changes in the value of its futures contract or option positions do
not correlate to the changes in the value of the Fund's investments. It is
also possible that the Fund may be unable to purchase or sell a portfolio
security at a time that otherwise would be favorable for it to do so, or
that the Fund may need to sell a portfolio security at a disadvantageous
time, due to the need for the Fund to maintain "cover" or to segregate
securities in connection with hedging transactions. Because the markets
for futures and options are not always liquid, the Fund may be unable to
close out or liquidate its hedged position and may be locked in during a
market decline. The Adviser attempts to

10
<PAGE>
minimize the possible negative effects of these factors through careful
selection and monitoring of the Fund's futures and options positions. The
Adviser is of the opinion that the Fund's investments in futures
transactions will not have a material adverse effect on the Fund's
liquidity or ability to honor redemptions.

The purchase and sale of options and futures contracts involve risks
different from those involved with direct investments in securities, and
also require different skills from the Adviser in managing the Fund's
portfolio. While utilization of options, futures contracts and similar
instruments may be advantageous to the Fund, if the Adviser is not
successful in employing such instruments in managing the Fund's
investments or in predicting interest rate changes, the Fund's performance
will be worse than if the Fund did not use such instruments. In addition,
the Fund will pay commissions and other costs in connection with such
investments, which may increase the Fund's expenses and reduce its yield.
A more complete discussion of the possible risks involved in transactions
in options and futures contracts is contained in the Statement of
Additional Information.

The Fund's current policy is to limit options and futures transactions
to those described above. The Fund currently does not intend to (i)
purchase put and call options having a value in excess of 5% of its total
assets or (ii) write options on portfolio securities having aggregate
exercise prices exceeding 25% of its net assets. Normally, options will be
written, if at all, on those portfolio securities which the Adviser does
not expect to have significant short-term capital appreciation.
INVESTMENT LIMITATIONS
The Fund has adopted certain fundamental limitations that, like its
investment objective, can be changed only by the vote of a majority of the
outstanding voting securities of the Fund. For these purposes a "vote of a
majority of the outstanding voting securities" of the Fund means the
affirmative vote of the lesser of (1) more than 50% of the outstanding
shares of the Fund or (2) 67% or more of the shares present at a
shareholders' meeting if more than 50% of the outstanding shares are
represented in person or by proxy. These investment limitations are set
forth in the Statement of Additional Information under "Additional
Information About Investment Limitations and Policies." Other Fund
policies, unless described as fundamental, can be changed by the Board of
Directors.
HOW YOU CAN INVEST IN THE FUND

You may purchase Primary Shares of the Fund through a brokerage
account with Legg Mason, or with an affiliate that has a dealer agreement
with Legg Mason (Legg Mason is a wholly owned subsidiary of Legg Mason,
Inc., a financial services holding company). Your Legg Mason or affiliated
investment executive will be pleased to explain the shareholder services
available from the Fund and answer any questions you may have.

The minimum initial investment in Primary Shares for each account,
including investments made by exchange from other Legg Mason funds, is
$1,000, and the minimum investment for each purchase of additional shares
is $100. However, those investing through the Fund's Future First
Systematic Investment Plan, payroll deduction plans and plans involving
automatic payment of funds from financial institutions or automatic
investment of dividends from certain unit investment trusts, are subject
to lower minimum initial and subsequent investments. The Fund may change
these minimum amount requirements at its discretion.

You should always furnish your shareholder account number when making
additional purchases of shares.

There are three ways you can invest in Primary Shares of the Fund:

1. THROUGH YOUR LEGG MASON OR AFFILIATED INVESTMENT EXECUTIVE

11
<PAGE>
2. THROUGH THE FUTURE FIRST SYSTEMATIC INVESTMENT PLAN

3. THROUGH AUTOMATIC INVESTMENTS

SALES CHARGE SCHEDULE
<TABLE>
<CAPTION>
Sales Charge as
Sales Charge as a Percentage of
a Percentage of Net Amount
Public Offering Invested (Net
Amount of Purchase Price Asset Value)
<S> <C> <C>
Less than $50,000 2.75% 2.83%
$50,000 to $99,999 2.50 2.56
$100,000 to $249,999 2.00 2.04
$250,000 to $499,999 1.50 1.52
$500,000 to $999,999 1.25 1.27
$1,000,000 to
$2,999,999 1.00 1.01
$3,000,000 to
$4,999,999 0.50 0.50
$5,000,000 and over 0.25 0.25
</TABLE>

Shares are available without a sales charge through exchanges of
shares of the other series of the Trust for which a sales charge was paid
or through exchanges of shares of other Legg Mason funds which were
obtained through an exchange of shares in another series of the Trust on
which a sales charge was paid. If the sales charges previously paid were
less than sales charges on the Fund, an additional sales charge equal to
the difference is due. In addition, Fund shares may be purchased without a
sales charge by employees, directors and officers of Legg Mason or its
affiliates, directors or trustees and officers of any of the Legg Mason
funds, the spouses and children under 21 years of age of any of the
foregoing persons and by advisory clients of investment advisers
affiliated with Legg Mason.

Shareholders who have redeemed shares on which a sales charge was paid
may reinstate their Fund account without a sales charge up to the dollar
amount redeemed by purchasing shares within 90 days of the redemption
("reinstatement privilege"). Shareholders may exercise their reinstatement
privilege by notifying their investment executive of such desire and
placing an order within 90 days after the date of redemption. The
reinstatement will be made at the net asset value next determined after
the Notice of Reinstatement and order have been received by Legg Mason's
Funds Processing.

If the Fund's transfer agent, BFDS, does not receive a completed LOI
within 20 business days after settlement of the first LOI purchase of if
the total purchases indicated on the LOI are not made
12
<PAGE>
within the thirteen-month period, your account will be charged with the
difference between the reduced LOI sales charge and the sales charge
applicable to the purchases actually made. Shares with a value equal to
2 1/2% of the intended LOI purchases will be held in escrow during the
thirteen-month period (registered in your name) to assure such necessary
payment. These escrowed shares may not be exchanged for shares of other
Legg Mason funds. If you redeem your account during this period, the Fund
will withhold from the escrow account sufficient shares to pay any unpaid
sales charges.
Under the Right of Accumulation, the current value of an investor's
existing shares in Legg Mason funds sold with an initial sales charge may
be combined with the amount of the investor's current purchase in
determining the sales charge for the current purchase. In determining both
the current value of existing shares and the amount of the investor's
current purchase, shares held or purchased by the investor's spouse,
and/or children under the age of 21, may be included. Legg Mason may
require supporting documentation in connection with purchases made under
the Right of Accumulation.

HOW YOUR SHAREHOLDER ACCOUNT IS MAINTAINED

When you initially purchase shares, a shareholder account is
established automatically for you. Any shares that you purchase or receive
as a dividend or other distribution will be credited directly to your
account at the time of purchase or receipt. No certificates are issued
unless you specifically request them in writing. Shareholders who elect to
receive certificates can redeem their shares only by mail. Certificates
will be issued in full shares only. No certificates will be issued for
shares prior to 15 business days after purchase of such shares by check,
unless the Fund can be reasonably assured during that period that payment
for the purchase of such shares has been collected. Shares may not be held
in nor transferred to an account with any brokerage firm other than Legg
Mason or its affiliates.

HOW YOU CAN REDEEM YOUR PRIMARY SHARES

There are two ways you can redeem your Primary Shares. First, you may
give your Legg Mason or affiliated investment executive an order for
repurchase of your shares. Please have the following information ready
when you call: the number of shares to be redeemed and your shareholder
account number. Second, you may send a written request for redemption to
"Legg Mason Pennsylvania Tax-Free Income Trust, c/o Legg Mason Funds
Processing, P.O. Box 1476, Baltimore, Maryland 21203-1476."

Proceeds from your redemption will settle in your Legg Mason brokerage
account two business days after trade date. However, the Fund reserves

13
<PAGE>
the right to take up to seven days to make payment upon redemption if, in
the judgment of the Adviser, the Fund could be adversely affected by
immediate payment. (The Statement of Additional Information describes
several other circumstances in which the date of payment may be postponed
or the right of redemption suspended.) The proceeds of your redemption or
repurchase may be more or less than your original cost. If the shares to
be redeemed or repurchased were paid for by check (including certified or
cashier's checks), within 15 business days of the redemption or repurchase
request, the proceeds may not be disbursed unless the Fund can be
reasonably assured that the check has been collected.
A redemption request will be considered to be received in "good order"
only if:

1. You have indicated in writing the number of Primary Shares to be
redeemed and your shareholder account number;

Net asset value per share is determined daily, as of the close of the
Exchange, on every day that the Exchange is open, by subtracting the
liabilities attributable to Primary Shares from the total assets
attributable to such shares and dividing the result by the number of
Primary Shares outstanding. Securities owned by the Fund for which market
quotations are readily available are valued at current market value. In
the absence of readily available market quotations, securities are valued
based upon appraisals received from an independent pricing service using a
computerized matrix system or based upon appraisals derived from
information concerning the security or similar securities received from
recognized dealers in those securities. Other securities are valued at
fair value as determined by, or under the supervision of, the Board of
Trustees of the Trust. Pursuant to guidelines established by the Board of
Trustees, the fair value of debt securities with remaining maturities of
60 days or less shall be their amortized cost, unless conditions otherwise
indicate.

DIVIDENDS AND OTHER DISTRIBUTIONS
Dividends from net investment income are declared daily and paid
monthly. Shareholders
14
<PAGE>

begin to earn dividends on their Primary Shares as of the settlement date,
which is normally the third business day after their orders are placed
with their Legg Mason or affiliated investment executive. Dividends from
net short-term capital gain, if any, and distributions of substantially
all net capital gain (the excess of net long-term capital gain over net
short-term capital loss), if any, generally are declared and paid after
the end of the taxable year in which the gain is realized. A second
distribution of net capital gain may be necessary in some years to avoid
imposition of the excise tax described under the heading "Additional Tax
Information" in the Statement of Additional Information. Dividends and
capital gain distributions, if any, on shares held by shareholders
maintaining a Systematic Withdrawal Plan generally are reinvested in Fund
shares on the payment dates. Other shareholders may elect to:

1. Receive both dividends and capital gain distributions in Primary
Shares;

2. Receive dividends in cash and capital gain distributions in Primary
Shares;

3. Receive dividends in Primary Shares and capital gain distributions
in cash; or

4. Receive both dividends and capital gain distributions in cash.

If no election is made, both dividends and capital gain distributions
will be credited to your account in Primary Shares at the net asset value
of the shares determined as of the close of the Exchange on the
reinvestment date. Shares received pursuant to any of the first three
(reinvestment) elections above also will be credited to your account at
that net asset value. If you elect to receive dividends and/or capital
gain distributions in cash, you will be sent a check or will have your
Legg Mason account credited after the payment date. You may elect at any
time to change your option by notifying the Fund in writing at: Legg Mason
Pennsylvania Tax-Free Income Trust, c/o Legg Mason Funds Processing, P.O.
Box 1476, Baltimore, Maryland 21203-1476. Your election must be received
at least 10 days before the record date in order to be effective for
dividends and capital gain distributions paid to shareholders as of that
date.

TAXES
FEDERAL INCOME TAX
The Fund intends to continue to qualify for treatment as a RIC under
the Code. If the Fund so qualifies and, at the close of each quarter of
its taxable year, at least 50% of the value of its total assets consists
of certain obligations the interest on which is excludable from gross
income under section 103(a) of the Code, the Fund may pay
"exempt-interest" dividends to its shareholders. Those dividends
constitute the portion of the aggregate dividends (excluding capital gain
distributions), as designated by the Fund, equal to the excess of the
excludable interest over certain amounts disallowed as deductions.
Exempt-interest dividends are excludable from a shareholder's gross
income; however, the amount of such dividends must be reported on the
recipient's federal income tax return.
If and to the extent the Fund receives interest on certain PABs, a
proportionate part of the exempt-interest dividends paid by the Fund will
be treated as a Tax Preference Item. In addition, exempt-interest
dividends received by a corporate shareholder may be indirectly subject to
the federal alternative minimum tax without regard to whether the Fund's
tax-exempt interest is attributable to PABs.
To the extent dividends are derived from taxable income from temporary
investments, from net short-term capital gain or from the use of certain
investment techniques described in "Investment Objectives and Policies,"
page 6, they are taxable to shareholders as ordinary income (whether paid
in cash or reinvested in Fund shares). No portion of those dividends will
qualify for the corporate dividends-received deduction. Distributions
derived from net capital gain, if any, are taxable to shareholders as
long-term capital gain regardless of the length of time they have held
their Fund shares (and irrespective of whether those distributions are
paid in cash or reinvested in Fund shares).
15
<PAGE>
Interest on indebtedness incurred or continued by a shareholder in
order to purchase or carry Fund shares generally is not deductible.
Persons who are "substantial users" (or related persons) of facilities
financed by IDBs or PABs should consult their tax advisers before
purchasing shares of the Fund because, for users of certain of these
facilities, the interest on those bonds is not exempt from federal income
tax. For these purposes, a "substantial user" includes a non-exempt person
who regularly uses in trade or business a part of a facility financed from
the proceeds of IDBs or PABs.
A redemption of Fund shares may result in taxable gain or loss to the
redeeming shareholder, depending on whether the redemption proceeds are
more or less than the shareholder's adjusted basis for the redeemed shares
(which normally includes any sales charge paid). An exchange of Fund
shares for shares of any other Legg Mason fund generally will have similar
tax consequences. However, special tax rules apply if (1) a shareholder
disposes of Fund shares through a redemption or exchange within 90 days
after the shareholder acquired the shares and (2) the shareholder
subsequently acquires shares of the Fund or of another Legg Mason fund
without the imposition of a sales charge that otherwise would have been
imposed except for the reinstatement privilege or exchange privilege. See
"How You Can Invest in the Fund," page 11, and "Shareholder Services --
Exchange Privilege," page 17. In these cases, any sales charge that was
imposed on the purchase of those shares will not be taken into account in
determining the amount of gain or loss on the redemption or
exchange -- the tax effect of that charge will instead be deferred by
being treated as having been incurred in connection with the newly
acquired shares. In addition, if Fund shares are purchased within 30 days
before or after redeeming Fund shares at a loss, all or part of that loss
will not be deductible and instead will increase the basis of the newly
purchased shares.
PENNSYLVANIA TAXES
Individual shareholders of the Fund who are otherwise subject to the
Pennsylvania personal income tax will not be subject to that tax on
distributions by the Fund that are attributable to interest on
Pennsylvania municipal obligations. Distributions attributable to most
other sources, including gains, will not be exempt from Pennsylvania
personal income tax.

Shares that are held by individual shareholders who are Pennsylvania
residents will be exempt from the Pennsylvania county personal property
tax to the extent that the Fund's portfolio consists of Pennsylvania
municipal obligations on the annual assessment date. Nonresidents of
Pennsylvania are not subject to this tax. Corporations are not subject to
any of these personal property taxes. For shareholders who are residents
of the City of Philadelphia, distributions of interest derived from
Pennsylvania municipal obligations are not taxable for purposes of the
Philadelphia School District investment net income tax, provided that the
Fund reports to its shareholders the percentage of Pennsylvania municipal
obligations held by it for the year. The Fund will report such percentage
to its shareholders.

Distributions of interest, but not gains, realized on Pennsylvania
municipal obligations are not subject to the Pennsylvania corporate net
income tax. The Pennsylvania Department of Revenue also takes the position
that shares of funds similar to the Fund are not considered exempt assets
of a corporation for the purposes of determining its capital stock value
subject to Pennsylvania capital stock and franchise taxes.
GENERAL

Shareholders receive information after the close of each year
concerning the federal income tax and Pennsylvania personal income tax
status of all dividends and capital gain distributions. The Fund is
required to withhold 31% of all taxable dividends, capital gain
distributions and redemption proceeds payable to any individuals and
certain other noncorporate shareholders who do not provide the Fund with a
certified taxpayer identification number. The Fund also is required to
withhold 31% of all taxable dividends and capital gain distributions
payable to such shareholders who otherwise are subject to backup
withholding. Dividends derived from interest on Pennsylvania municipal
obligations may not be exempt from

16
<PAGE>
taxation under the laws of states other than Pennsylvania.

The foregoing is only a summary of some of the important federal,
Pennsylvania and certain local income tax considerations generally
affecting the Fund and its shareholders; see the Statement of Additional
Information for a further discussion. In addition to those considerations,
which are applicable to any investment in the Fund, there may be other
federal, state or local tax considerations applicable to a particular
investor. Prospective shareholders are urged to consult their tax advisers
with respect to the effects of this investment on their own tax
situations.

SHAREHOLDER SERVICES
CONFIRMATIONS AND REPORTS

Shareholder inquiries should be addressed to "Legg Mason Pennsylvania
Tax-Free Income Trust, c/o Legg Mason Funds Processing, P.O. Box 1476,
Baltimore, Maryland 21203-1476."

A mutual fund seeking capital appreciation by investing principally in
issuers with market capitalization of less than $2.5 billion.

Legg Mason Global Equity Trust

A mutual fund seeking maximum long-term total return, by investing in
common stocks of companies located in at least three different countries.

Legg Mason U.S. Government Intermediate-Term Portfolio
A mutual fund seeking high current income consistent with prudent
investment risk and liquidity needs, primarily through investing in
17
<PAGE>
debt obligations issued or guaranteed by the U.S. Government, its agencies
or instrumentalities, while maintaining an average dollar-weighted
maturity of between three and ten years.
Legg Mason Investment Grade Income Portfolio
A mutual fund seeking a high level of current income, primarily
through investment in a diversified portfolio of investment grade debt
securities.
Legg Mason High Yield Portfolio

A mutual fund seeking primarily a high level of current income and
secondarily, capital appreciation, by investing principally in
lower-rated, fixed-income securities.

Legg Mason Global Government Trust
A mutual fund seeking capital appreciation and current income by
investing principally in debt securities issued or guaranteed by foreign
governments, the U.S. Government, their agencies, instrumentalities and
political subdivisions.
Legg Mason Maryland Tax-Free Income Trust*
A tax-exempt municipal bond fund seeking 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.
Legg Mason Tax-Free Intermediate-Term Income Trust*
A tax-exempt municipal bond fund seeking a high level of current
income exempt from federal income tax, consistent with prudent investment
risk.
*Shares of these funds are sold with an initial sales charge.

Investments by exchange into the Legg Mason funds sold without an
initial sales charge are made at the per share net asset value next
determined on the same business day as redemption of the Fund shares you
wish to exchange. Investments by exchange into the other Legg Mason funds
sold with an initial sales charge are made at the per share net asset
value, plus an additional sales charge if the sales charge previously paid
was less than the sales charge applicable to the fund, into which you are
exchanging, determined on the same business day as redemption of the Fund
shares you wish to redeem. Exchanges from the other Legg Mason funds sold
without an initial sales charge will be at net asset value plus the
applicable sales charge (unless the investment in the fund was transferred
from a Legg Mason fund sold with the same or higher sales charge). There
is no charge for the exchange privilege, but the Fund reserves the right
to terminate or limit the exchange privilege of any shareholder who makes
more than four exchanges from the Fund in one calendar year. To obtain
further information concerning the exchange privilege and prospectuses of
other Legg Mason funds, or to make an exchange, please contact your Legg
Mason or affiliated investment executive. To effect an exchange by
telephone, please call your Legg Mason or affiliated investment executive
with the information described in "How You Can Redeem Your Primary
Shares," page 13. The other factors relating to telephone redemptions
described in that section apply also to telephone exchanges. Please read
the prospectus for the other funds carefully before you invest by
exchange. The Fund reserves the right to modify or terminate the exchange
privilege upon 60 days' notice to shareholders. There is no assurance the
money market funds will be able to maintain a $1.00 share price. None of
the funds is insured or guaranteed by the U.S. Government.

THE FUND'S MANAGEMENT AND INVESTMENT ADVISER
BOARD OF TRUSTEES
The business and affairs of the Fund are managed under the direction
of the Board of Trustees of the Trust.
ADVISER
Pursuant to an advisory agreement with the Fund ("Advisory
Agreement"), which was approved by the Trust's Board of Trustees, the
Adviser, a wholly owned subsidiary of Legg Mason, Inc., serves as the
Fund's investment adviser. The Adviser administers and acts as the
portfolio manager for the Fund and is responsible for the actual
investment management of the Fund, including the responsibility for making
investment decisions and placing orders to buy, sell or hold a particular
security. The Fund pays the Adviser, pursuant to the Advisory Agreement, a
management fee equal to an annual rate of 0.55% of the Fund's average
daily net assets.
18
<PAGE>
Victoria M. Schwatka has been primarily responsible for the day-to-day
management of the Fund since its inception. Ms. Schwatka is a portfolio
manager and Senior Vice-President of Legg Mason's Fixed Income Group. Ms.
Schwatka has been employed by Legg Mason since June, 1986.

Pursuant to a voluntary expense limitation, the Adviser and Legg Mason
have agreed to waive the management and 12b-1 fees and assume certain
other expenses relating to Primary Shares (exclusive of taxes, interest,
brokerage fees, and extraordinary expenses) in excess of 0.55%
(annualized) of average daily net assets until January 31, 1996 or
until the Fund's net assets reach $125 million, whichever occurs first.
During the fiscal year ended March 31, 1995, the Fund's expenses as a
percentage of average net assets were 0.49%.

THE FUND'S DISTRIBUTOR

Legg Mason is the distributor of the Fund's shares pursuant to an
Underwriting Agreement with the Fund. The Underwriting Agreement obligates
Legg Mason to pay certain expenses in connection with the offering of
shares of the Fund, including any compensation to its investment
executives, the printing and distribution of prospectuses, statements of
additional information and periodic reports used in connection with the
offering to prospective investors, after the prospectuses and statements
of additional information and reports have been prepared, set in type and
mailed to existing shareholders at the Fund's expense, and for any
supplementary sales literature and advertising costs. Legg Mason receives
the sales charge imposed on the purchase of Primary Shares.

Legg Mason receives a fee from BFDS for assisting it with its transfer
agent and shareholder servicing functions; for the year ended March 31,
1995, Legg Mason received from BFDS $9,300 for performing such services in
connection with this Fund.

NASD rules limit the amount of annual distribution fees that may be
paid by mutual funds and impose a ceiling on the cumulative distribution
fees received. The Fund's Plan complies with those rules.
The Chairman, President and Treasurer of the Fund are employed by Legg
Mason.
THE FUND'S CUSTODIAN AND TRANSFER AGENT

DESCRIPTION OF THE TRUST AND ITS SHARES
The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated November 21, 1990. The Declaration of Trust
authorizes the Trust to issue an unlimited number of shares of beneficial
interest (par value $.001) and to create additional series, each of which
may issue separate classes of shares. Three series of the Trust, including
the Fund, currently are being offered.

19
<PAGE>

Shares may bear certain differing Class-specific expenses. Salespersons
and others entitled to receive compensation for selling or servicing Fund
shares may receive more with respect to one Class than another.

The initial and subsequent investment minimums for Navigator Shares
are $50,000 and $100, respectively. Investments in Navigator Shares may be
made through investment executives of Fairfield Group, Inc., Horsham,
Pennsylvania, or Legg Mason. For information about Navigator Shares, call
800-822-5544.
The Fund pays no Rule 12b-1 fee with respect to Navigator Shares. The
per share net asset value of the Navigator Shares, and dividends and
distributions (if any) paid to Navigator shareholders, are generally
expected to be higher than those of Primary Shares of the Fund, because of
the lower expenses attributable to Navigator Shares. The per share net
asset value of the Classes of Shares will tend to converge, however,
immediately after the payment of ordinary income dividends. Navigator
Shares of the Fund may be exchanged for the corresponding class of shares
of certain other Legg Mason Funds. Investments by exchange into the other
Legg Mason Funds are made at the per share net asset value, determined on
the same business day as redemption of the Navigator Shares the investors
wish to redeem.

<PAGE>

NAVIGATOR PENNSYLVANIA TAX-FREE INCOME TRUST
Prospectus

Shares of Navigator Pennsylvania Tax-Free Income Trust
("Navigator Shares") represent a separate class ("Navigator Class") of
interests in Legg Mason Pennsylvania Tax-Free Income Trust ("Fund"), a
non-diversified, professionally managed portfolio seeking a high level of
current income exempt from federal income tax and Pennsylvnia personal
income tax, consistent with prudent investment risk and preservation of
capital. The Fund is a separate series of Legg Mason Tax-Free Income Fund,
("Trust"), an open-end management investment company.

In attempting to achieve the Fund's objective, the Fund's
investment adviser, Legg Mason Fund Adviser, Inc. ("Adviser"), invests
primarily in debt instruments issued by or on behalf of the Commonwealth
of Pennsylvania, its political subdivisions, municipalities, agencies,
instrumentalities or public authorities, the interest on which, in the
opinion of counsel to the issuer, is exempt from federal income tax and
Pennsylvania personal income tax ("Pennsylvania municipal obligations")
and which are investment grade, i.e., securities rated within the four
highest grades by Moody's Investors Service, Inc. ("Moody's") or Standard
& Poor's Ratings Group ("S&P") or, if unrated by either Moody's or S&P
("unrated securities"), deemed by the Adviser to be of comparable quality.
The Fund's shares are exempt from Pennsylvania county personal property
tax to the extent that the Fund invests in Pennsylvania municipal
obligations. Under normal circumstances, the dollar-weighted average
maturity of the Fund's portfolio is expected to be between 12 and 24
years. The Fund also may engage in hedging transactions.

OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.

This Prospectus sets forth concisely the information about the
Fund that a prospective investor ought to know before investing. It should
be read and retained for future reference. A Statement of Additional
Information about the Fund dated July 31, 1995 has been filed with the
Securities and Exchange Commission ("SEC") and, as amended or supplemented
from time to time, is incorporated herein by reference. The Statement of
Additional Information is available without charge upon request from Legg
Mason (address and telephone numbers listed below).

Dated: July 31, 1995

Legg Mason Wood Walker, Inc.
111 South Calvert Street
P.O. Box 1476
Baltimore, MD 21203-1476
410-539-0000
800-822-5544

2
<PAGE>

FUND EXPENSES

SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge on purchases or
reinvested dividends None
Redemption or exchange fees None

ANNUAL FUND OPERATING EXPENSES -- NAVIGATOR SHARES
(as a percentage of average net assets)

Management fees(1) 0.09%
12b-1 fees None
Other expenses 0.21%
-----
Total operating expenses 0.30%
=====

(1) Pursuant to a voluntary expense limitation, the Adviser has
agreed to waive the management fees and assume certain other expenses such
that total operating expenses (exclusive of taxes, interest, brokerage
fees and extraordinary expenses) of the Navigator Class will not exceed
0.30% (annualized) of average daily net assets until January 31, 1996 or
until the Fund's net assets reach $125 million, whichever occurs first,
and unless extended will terminate on that date. In the absence of such
waivers, the expense ratio for Navigator Class would have been 0.76%.

For further information concerning Fund expenses, please see "The
Fund's Management and Investment Adviser" and "The Fund's Distributor,"
page 21.

EXAMPLE OF EFFECT OF FUND EXPENSES

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$3 $9 $16 $37

3
<PAGE>

return are required by regulations of the SEC applicable to all mutual
funds. THE ASSUMED 5% ANNUAL RETURN IS NOT A PREDICTION OF, AND DOES NOT
REPRESENT, THE PROJECTED OR ACTUAL PERFORMANCE OF NAVIGATOR SHARES. THE
ABOVE TABLES AND EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST
OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN. The actual expenses attributable to Navigator Shares will depend
upon, among other things, the level of average net assets, the levels of
sales and redemptions of shares, the extent to which Navigator Shares
incur variable expenses, such as transfer agency costs, and whether the
Adviser reimburses all or a portion of the Fund's expenses.

FINANCIAL HIGHLIGHTS

The financial highlights for the period August 1, 1991
(commencement of operations) to March 31, 1992, and the years ended March
31, 1993 through 1995 have been derived from financial statements which
have been audited by Coopers & Lybrand L.L.P., independent accountants.
The Fund's financial statements for the year ended March 31, 1995 and the
report of Coopers & Lybrand L.L.P. thereon are included in the Fund's
annual report and are incorporated by reference into the Statement of
Additional Information. The annual report is available to shareholders
without charge by calling an investment executive at Fairfield or Legg
Mason or Legg Mason's Funds Marketing Department at 800-822-5544.

<TABLE>
<CAPTION>
PRIMARY SHARES

Years Ended March 31, 1995 1994 1993 1992(1)

Per Share Operating
Performance:

Net asset value,
beginning of
period $15.80 $16.03 $14.99 $14.70

Net investment
income .85(2) .86(2) .91(2) .63(2)

Net realized and
unrealized gain
(loss) on
investments .22 (.23) 1.04 .29

4
<PAGE>

PRIMARY SHARES

Years Ended March 31, 1995 1994 1993 1992(1)

Total from
investment
operations 1.07 .63 1.95 .92

Distributions to
shareholders from
net investment
income (.85) (.86) (.91) (.63)
Net asset value,
end of period $16.02 $15.80 $16.03 $14.99

Total return(4) 7.03% 3.81% 13.31% 6.36%(3)

Ratios/Supplemental
Data:
Ratios to average
net assets:

Expenses 0.49%(2) 0.40%(2) 0.32%(2) 0.12%(2)(5)
Net investment
income 5.42%(2) 5.16%(2) 5.74%(2) 5.91%(2)(5)

Portfolio turnover
rate 2.08% -- -- --
Net assets, end of
period (in
thousands) $63,929 $62,904 $49,959 $28,873
</TABLE>
------------------
(1) For the period August 1, 1991 (commencement of operations) to March
31, 1992.
(2) Net of fees waived and reimbursements made by the Adviser in excess
of voluntary expense limitations as follows: all expenses until
November 30, 1991; 0.20% until March 31, 1992; 0.25% until June 30,
1992; 0.30% until December 31, 1992; 0.35% until July 31, 1993; 0.40%
until December 31, 1993; 0.45% until June 30, 1994; and 0.55% until
January 31, 1996.
(3) Not annualized. The annualized total return for the period would
have been 9.55%.
(4) Excluding sales charge.
(5) Annualized.

PERFORMANCE INFORMATION

5
<PAGE>

From time to time the Fund may quote the total return of each
class of shares in advertisements or in reports or other communications to
shareholders. A mutual fund's TOTAL RETURN is a measurement of the overall
change in value of an investment in the fund, including changes in share
price and assuming reinvestment of dividends and other distributions.
CUMULATIVE TOTAL RETURN shows the fund's performance over a specific
period of time. AVERAGE ANNUAL TOTAL RETURN is the average annual
compounded return that would have produced the same cumulative total
return if the fund's performance had been constant over the entire period.

Total returns of Primary Shares as of March 31, 1995 were as
follows:

Cumulative Average Annual
Total Return Total Return
------------------------------
One Year +4.07% +4.07%
Life of Fund(1) +30.16 +7.45

(1) Fund's inception - August 1, 1991.

No adjustment has been made for any income taxes payable by
shareholders. As of the date of this Prospectus, Navigator Shares have no
performance record. Total returns of Primary Shares would have been lower
if the Adviser and/or Distributor had not waived certain fees in the years
1992 through 1995. Because Navigator Shares have lower total expenses,
they will generally have a higher return than Primary Shares.

6
<PAGE>

not waived a portion of the fees and reimbursed certain expenses.
Investment return and share price will fluctuate, and the value of your
shares, when redeemed, may be worth more or less than their original cost.

WHO SHOULD INVEST

The Fund is designed for longer-term investors who are able to
benefit from income exempt from federal income tax and Pennsylvania
personal income tax. The value of Navigator Shares can generally be
expected to fluctuate inversely with changes in interest rates and,
because of the potential negative impact of rising interest rates and
other risks, the Fund would not be appropriate for investors whose primary
goal is stability of principal. The Fund is not intended to be a balanced
investment program. The Fund is not an appropriate investment for
"substantial users" of certain facilities financed by industrial
development or private activity bonds or related persons thereof. See
"Taxes-Federal Income Tax," page 17.

INVESTMENT OBJECTIVE AND POLICIES

The investment objective of the Fund is to earn 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. The investment objective of the Fund may not be changed without a
shareholder vote; however, except as otherwise noted, the investment
policies of the Fund described below may be changed by the Board of
Trustees of the Trust without a shareholder vote. There can be no
assurance that the Fund's investment objective will be achieved.

The Fund seeks to achieve its investment objective by investing
primarily in debt instruments issued by or on behalf of the Commonwealth
of Pennsylvania, its political subdivisions, municipalities, agencies,
instrumentalities or public authorities, the interest on which, in the
opinion of counsel to the issuer, is exempt from federal income tax and
Pennsylvania personal income tax. As a fundamental policy, under normal
circumstances, the Fund will maintain at least 80% of its total assets in
Pennsylvania municipal obligations, exclusive of any such obligations the
interest on which is a tax preference item for purposes of the federal
alternative minimum tax ("Tax Preference Item"). See "Temporary
Investments" page 9.

The Fund invests in securities that, in the opinion of the
Adviser, present acceptable credit risks and that, at the time of
purchase, are rated:

7
<PAGE>

"Baa" or higher by Moody's or "BBB" or higher by S&P in the case
of bonds;
"P1" or higher by Moody's or "A1" or higher by S&P in the case of
commercial paper;
"MIG-1" or higher by Moody's or "SP-1" or higher by S&P in the
case of notes; and
"VMIG-1" or higher by Moody's in the case of variable rate demand
notes.

The Fund also invests in securities unrated by any of the above
services which are deemed by the Adviser to be of comparable quality.

The bond ratings noted above are considered "investment grade" by
the respective rating agencies. A rating of a municipal obligation
represents the rating agency's opinion regarding its quality and is not a
guarantee of quality. Moody's considers that bonds rated in its fourth
highest category (i.e., Baa) have speculative characteristics; changes in
economic conditions or other circumstances are more likely to lead to a
weakened capacity for the issuers of such securities to make principal and
interest payments than is the case for higher rated bonds. In the event
the rating on an issue held in the Fund's portfolio is changed by Moody's
or S&P, such change will be considered by the Adviser in its evaluation of
the overall investment merits of that security. If, as a result of any
downgradings by Moody's or S&P or, for unrated securities, any
determinations by the Adviser that securities are no longer of comparable
quality to investment grade securities, more than 5% of the Fund's total
assets are represented by securities rated below investment grade or the
equivalent, the Adviser will, as soon as practicable consistent with
achieving an orderly disposition of the securities, sell such holdings
until they represent 5% or less of the Fund's total assets. A description
of the ratings outlined above is included in the Statement of Additional
Information.

In addition to the agency ratings, there are other criteria which
will be used by the Adviser in selecting securities for the portfolio.
Consideration will be given to the maturity and duration of each bond as
well as its effect on the overall average maturity and duration of the
portfolio. Analysis of the current and historical yield spreads is done to
determine the relative value in any bond considered for purchase. The
coupon level and call features also figure in the decision on the relative
merits of an investment. Consideration is also given to the type of bond--
whether it is a general obligation or a revenue bond. In addition to this
examination of bond characteristics, significant effort is devoted to
analysis of the creditworthiness of the bond issuer at the time of
purchase and on an ongoing basis.

8
<PAGE>

The Fund does not expect its portfolio turnover rate to exceed
90% per year.

MUNICIPAL OBLIGATIONS

Municipal obligations include obligations issued to obtain funds
for various public purposes, including constructing a wide range of public
facilities, such as bridges, highways, housing, hospitals, mass
transportation, schools and streets. Other public purposes for which
municipal obligations may be issued include the refunding of outstanding
obligations, the obtaining of funds for general operating expenses and the
making of loans to other public institutions and facilities. In addition,
certain types of industrial development bonds ("IDBs") and private
activity bonds ("PABs") are issued by or on behalf of public authorities
to finance various privately operated facilities, including pollution
control facilities, convention or trade show facilities, and airport, mass
transit, port or parking facilities. Interest on certain tax-exempt PABs
will constitute a Tax Preference Item. Accordingly, under normal
circumstances, the Fund's investment in obligations, the interest on which
is such an item, including PABs, will be limited to a maximum of 20% of
its total assets.

Municipal obligations also include municipal lease obligations.
These obligations, which are issued by state and local governments to
acquire land, equipment and facilities, typically are not fully backed by
the municipality's credit; and, if funds are not appropriated for the
following year's lease payments, a lease may terminate, with the
possibility of default on the lease obligation and significant loss to the
Fund. Certificates of Participation are participations in municipal lease
obligations or installment sales contracts. Each certificate represents a
proportionate interest in or right to the lease purchase payments made.

9
<PAGE>

TEMPORARY INVESTMENTS

YIELD AND RISK FACTORS

Yield

The yield of a municipal obligation is dependent on a variety of
factors, including general municipal securities market conditions, general
fixed-income market conditions, the financial condition of the issuer, the
size of the particular offering, the maturity of the obligation, the
credit quality and rating of the issue and expectations regarding changes
in income tax rates.

INTEREST RATE RISK

10
<PAGE>

fluctuate more than the value of a portfolio of shorter-term municipal
obligations.

PENNSYLVANIA

Changes in economic conditions in, or governmental policies of,
the Commonwealth of Pennsylvania could have a significant impact on the
performance of the Fund. For example, Pennsylvania's continued dependence
on manufacturing, mining and steel has made Pennsylvania vulnerable to
cyclical industry fluctuations, foreign imports and environmental
concerns. However, growth in the service and trade sectors has helped
diversify Pennsylvania's economy and reduce its unemployment rate below
the national average. Changes in local economic conditions or local
governmental policies within Pennsylvania, which can vary substantially by
region, could also have a significant impact on the performance of
municipal obligations held by the Fund. The City of Philadelphia, for
example, recently experienced severe financial problems which impaired its
ability to borrow money and adversely affected the ratings of its
obligations and their marketability. While the Fund may invest in
obligations that are secured by obligors other than Pennsylvania or its
political subdivisions (such as hospitals, universities, corporate
obligors and corporate credit and liquidity providers) and obligations
limited to specific revenue pledges (such as sewer authority bonds), the
creditworthiness of these obligors may be partly dependent on the
creditworthiness of Pennsylvania or its municipal authorities.

An expanded discussion of certain investment considerations
relating to debt obligations of Pennsylvania and its political
subdivisions is contained in the Statement of Additional Information.

CONCENTRATION

The Fund may invest 25% or more of its total assets in a
particular segment of the municipal securities market, such as hospital
revenue bonds, housing agency bonds, IDBs or airport bonds, or in
securities the interest on which is paid from revenues of a similar type
of project. In such circumstances, economic, business, political or other
changes affecting one issue of bonds (such as proposed legislation
affecting healthcare or the financing of a project, shortages or price
increases of needed materials, or declining markets or needs for the
projects) would most likely affect other bonds in the same segment,
thereby potentially increasing market risk. As a result, the Fund is
subject to greater risk than other funds that do not follow this practice.

NON-DIVERSIFICATION

11
<PAGE>

diversification requirements at the close of each quarter of its taxable
year: (1) at least 50% of the value of the Fund's total assets must
consist of cash, securities of the U.S. Government and other RICs and
holdings of other securities, which, with respect to any one issuer, do
not have a value greater than 5% of the value of the Fund's total assets;
and (2) no more than 25% of the value of the Fund's total assets may be
invested in the securities of a single issuer. For these purposes, the
term "issuer" does not include the U.S. Government or other RICs. To the
extent that the Fund's assets are invested in the obligations of a limited
number of issuers, the value of the Fund's shares will be more susceptible
to any single economic, political or regulatory occurrence affecting one
or more of those issuers than the shares of a diversified investment
company would be.

OTHER RISKS

Current efforts to restructure the federal budget and the
relationship between the federal government and state and local
governments may impact the financing of some issuers of municipal
securities. Some states and localities are experiencing substantial
deficits and may find it difficult for political or economic reasons to
increase taxes. Some local jurisdictions have invested heavily in
derivative instruments and may now hold portfolios of uncertain valuation.
Each of these factors may affect the ability of an issuer of municipal
securities to meet its obligations. Efforts by Congress to restructure
the federal income tax system could adversely effect the value of
municipal securities.

INVESTMENT TECHNIQUES

The Fund may employ the investment techniques described below,
among others. Use of certain of these techniques may give rise to taxable
income.

WHEN-ISSUED SECURITIES

The Fund may enter into commitments to purchase municipal
obligations or other securities on a when-issued basis. When-issued
securities are often the most efficiently priced and have the best
liquidity in the bond market. As with the purchase of any security, when
the Fund purchases securities on a when-issued basis, it assumes the risks
of ownership at the time of purchase, not at the time of receipt. However,
the Fund does not have to pay for the obligations until they are delivered
to the Fund, normally 15 to 45 days later. To meet that payment
obligation, the Fund will set aside cash or marketable high-quality debt
securities equal to the payment that will be due. Depending on market
conditions, the Fund's when-issued purchases could cause its share value
to be more volatile, because they may increase the amount by which the
Fund's total assets, including the value of the when-issued securities
held by the Fund, exceed its net assets. The Fund does not expect that its

12
<PAGE>

commitment to purchase when-issued securities will at any time exceed, in
the aggregate, 25% of total assets.

CALLABLE BONDS

STAND-BY COMMITMENTS

The Fund may acquire "stand-by commitments" with respect to its
investments in municipal obligations. A stand-by commitment is a put (that
is, the right to sell the underlying security within a specified period of
time at a specified exercise price) that may be sold, transferred or
assigned only with the underlying security. Under a stand-by commitment, a
broker, dealer or bank agrees to purchase, at the Fund's option, specified
municipal obligations at a specified price. The total amount paid for
outstanding stand-by commitments held by the Fund will not exceed 25% of
the Fund's total assets calculated immediately after each stand-by
commitment is acquired.

SECURITIES LENDING, ZERO COUPON AND DEFERRED INTEREST BONDS

13
<PAGE>

VARIABLE RATE AND FLOATING RATE OBLIGATIONS

The Fund may invest in variable rate municipal obligations and
notes. Variable rate obligations have a yield that is adjusted
periodically based upon market conditions.

The Fund may also invest in floating rate and variable rate
demand notes. Demand notes provide that the holder may demand payment of
the note at its par value plus accrued interest. The notes may be
supported by an unconditional bank letter of credit guaranteeing payment
of the principal or both the principal and accrued interest. Floating rate
demand notes have an interest rate related to a known lending rate, such
as the prime rate, and are automatically adjusted when such rate changes.
Such securities often react to changes in market interest rates in a
manner similar to shorter-term securities that mature at the time of the
next interest rate reset for the variable or floating rate instrument.

FUTURES AND OPTION STRATEGIES

14
<PAGE>

a disadvantageous time, due to the need for the Fund to maintain "cover"
or to segregate securities in connection with hedging transactions.
Because the markets for futures and options are not always liquid, the
Fund may be unable to close out or liquidate its hedged position and may
be locked in during a market decline. The Adviser attempts to minimize the
possible negative effects of these factors through careful selection and
monitoring of the Fund's futures and options positions. The Adviser is of
the opinion that the Fund's investments in futures transactions will not
have a material adverse effect on the Fund's liquidity or ability to honor
redemptions.

The purchase and sale of options and futures contracts involve
risks different from those involved with direct investments in securities,
and also require different skills from the Adviser in managing the Fund's
portfolio. While utilization of options, futures contracts and similar
instruments may be advantageous to the Fund, if the Adviser is not
successful in employing such instruments in managing the Fund's
investments or in predicting interest rate changes, the Fund's performance
will be worse than if the Fund did not use such instruments. In addition,
the Fund will pay commissions and other costs in connection with such
investments, which may increase the Fund's expenses and reduce its yield.
A more complete discussion of the possible risks involved in transactions
in options and futures contracts is contained in the Statement of
Additional Information.

INVESTMENT LIMITATIONS

The Fund has adopted certain fundamental limitations that, like
its investment objective, can be changed only by the vote of a majority of
the outstanding voting securities of the Fund. For these purposes a "vote
of a majority of the outstanding voting securities" of the Fund means the
affirmative vote of the lesser of (1) more than 50% of the outstanding
shares of the Fund or (2) 67% or more of the shares present at a
shareholders' meeting if more than 50% of the outstanding shares are
represented in person or by proxy. These investment limitations are set
forth in the Statement of Additional Information under "Additional
Information About Investment Limitations and Policies." Other Fund
policies, unless described as fundamental, can be changed by the Board of
Trustees.

HOW TO PURCHASE AND REDEEM SHARES

15
<PAGE>

PURCHASE OF SHARES

Share purchases will be processed at the net asset value next
determined after Legg Mason or Fairfield has received your order; payment
must be made within three business days to the selling organization.
Orders received by Legg Mason or Fairfield before the close of business of
the New York Stock Exchange, Inc. ("Exchange") (normally 4:00 p.m. Eastern
time) ("close of the Exchange") on any day the Exchange is open will be
executed at the net asset value determined as of the close of the Exchange
on that day. Orders received by Legg Mason or Fairfield after the close
of the Exchange or on days the Exchange is closed will be executed at the
net asset value determined as of the close of the Exchange on the next day
the Exchange is open. See "How Net Asset Value is Determined" on page 16.
The Fund reserves the right to reject any order for shares of the Fund, to
suspend the offering of shares for a period of time, or to waive any
minimum investment requirements.

REDEMPTION OF SHARES

Shares may ordinarily be redeemed by a shareholder via telephone,
in accordance with the procedures described below. However, Customers of

16
<PAGE>

Institutional Clients wishing to redeem shares held in Customer Accounts
at the Institution may redeem only in accordance with instructions and
limitations pertaining to their Account at the Institution.

Because of the relatively high cost of maintaining small
accounts, the Fund may elect to close any account with a current value of

17
<PAGE>

less than $500 by redeeming all of the shares in the account and mailing
the proceeds to the investor. However, the Fund will not redeem accounts
that fall below $500 solely as a result of a reduction in net asset value
per share. If the Fund elects to redeem the shares in an account, the
investor will be notified that the account is below $500 and will be
allowed 60 days in which to make an additional investment in order to
avoid having the account closed.

HOW SHAREHOLDER ACCOUNTS ARE MAINTAINED

HOW NET ASSET VALUE IS DETERMINED

18
<PAGE>

valued at fair value as determined by, or under the supervision of, the
Board of Trustees of the Trust. Pursuant to guidelines established by the
Board of Trustees, the fair value of debt securities with remaining
maturities of 60 days or less shall be their amortized cost, unless
conditions otherwise indicate.

DIVIDENDS AND OTHER DISTRIBUTIONS

If no election is made, both dividends and capital gain
distributions will be credited to the Institutional Client's account in
Navigator Shares at the net asset value of the shares determined as of the
close of the Exchange on the reinvestment date. Shares received pursuant
to any of the first three (reinvestment) elections above also will be
credited to the account at that net asset value. If an investor elects to
receive dividends or capital gain distributions in cash, a check will be
sent. Investors purchasing through Fairfield may elect at any time to
change the distribution option by notifying in writing Navigator
Pennsylvania Tax-Free Income Trust, c/o Fairfield Group, Inc., 200
Gibraltar Road, Horsham, Pennsylvania 19044. Those purchasing through
Legg Mason should write to Navigator Pennsylvania Tax-Free Income Trust,
c/o Legg Mason Funds Processing, P.O. Box 1476, Baltimore, Maryland,
21203-1476. An election must be received at least 10 days before the
record date in order to be effective for dividends and capital gain
distributions paid to shareholders as of that date.

19
<PAGE>

TAXES

FEDERAL INCOME TAX

To the extent dividends are derived from taxable income from
temporary investments, from net short-term capital gain or from the use of
certain investment techniques described in "Investment Objective and
Policies," page 8, they are taxable to shareholders as ordinary income
(whether paid in cash or reinvested in Fund shares). No portion of those
dividends will qualify for the corporate dividends-received deduction.
Distributions derived from net capital gain, if any, are taxable to
shareholders as long-term capital gain regardless of the length of time
they have held their Fund shares (and irrespective of whether those
distributions are paid in cash or reinvested in Fund shares).

20
<PAGE>

within 90 days after the shareholder acquired the shares and (2) the
shareholder subsequently acquires shares of the Fund or of another Legg
Mason fund without the imposition of a sales charge that otherwise would
have been imposed except for the reinstatement privilege or exchange
privilege. See "How To Purchase and Redeem Shares," page 14, and
"Shareholder Services-Exchange Privilege," page 20. In these cases, any
sales charge that was imposed on the purchase of those shares will not be
taken into account in determining the amount of gain or loss on the
redemption or exchange--the tax effect of that charge will instead be
deferred by being treated as having been incurred in connection with the
newly acquired shares. In addition, if Fund shares are purchased within 30
days before or after redeeming Fund shares at a loss, all or part of that
loss will not be deductible and instead will increase the basis of the
newly purchased shares.

PENNSYLVANIA TAXES

Individual shareholders of the Fund who are otherwise subject to
the Pennsylvania personal income tax will not be subject to that tax on
distributions by the Fund that are attributable to interest on
Pennsylvania municipal obligations. Distributions attributable to most
other sources, including gains, will not be exempt from Pennsylvania
personal income tax.

Navigator Shares that are held by individual shareholders who are
Pennsylvania residents will be exempt from the Pennsylvania county
personal property tax to the extent that the Fund's portfolio consists of
Pennsylvania municipal obligations on the annual assessment date.
Nonresidents of Pennsylvania are not subject to this tax. Corporations are
not subject to any of these personal property taxes. For shareholders who
are residents of the City of Philadelphia, distributions of interest
derived from Pennsylvania municipal obligations are not taxable for
purposes of the Philadelphia School District investment net income tax,
provided that the Fund reports to its shareholders the percentage of
Pennsylvania municipal obligations held by it for the year. The Fund will
report such percentage to its shareholders.

Distributions of interest, but not gains, realized on
Pennsylvania municipal obligations are not subject to the Pennsylvania
corporate net income tax. The Pennsylvania Department of Revenue also
takes the position that shares of funds similar to the Fund are not
considered exempt assets of a corporation for the purposes of determining
its capital stock value subject to Pennsylvania capital stock and
franchise taxes.

GENERAL

21
<PAGE>

certain other noncorporate shareholders who do not provide the Fund with a
certified taxpayer identification number. The Fund also is required to
withhold 31% of all taxable dividends and capital gain distributions
payable to such shareholders who otherwise are subject to backup
withholding. Dividends derived from interest on Pennsylvania municipal
obligations may not be exempt from taxation under the laws of states other
than Pennsylvania.

SHAREHOLDER SERVICES

CONFIRMATIONS AND REPORTS

Shareholder inquiries should be addressed to "Navigator
Pennsylvania Tax-Free Income Trust, c/o Legg Mason Funds Processing, P.O.
Box 1476, Baltimore, Maryland 21203-1476," or "Fairfield Group, Inc., 200
Gibraltar Road, Horsham, Pennsylvania 19044."

EXCHANGE PRIVILEGE

Holders of Navigator Shares are entitled to exchange them for
Navigator Shares of the following funds, provided the shares to be
acquired are eligible for sale under applicable state securities laws:

22
<PAGE>

NAVIGATOR MONEY MARKET FUND, INC. -- PRIME OBLIGATIONS PORTFOLIO

A money market fund seeking to provide as high a level of current
interest income as is consistent with liquidity and relative stability of
principal.

NAVIGATOR TAX-FREE MONEY MARKET FUND, INC.

NAVIGATOR VALUE TRUST

A mutual fund seeking long-term growth of capital.

NAVIGATOR TOTAL RETURN TRUST

A mutual fund seeking capital appreciation and current income in
order to achieve an attractive total investment return consistent with
reasonable risk.

NAVIGATOR SPECIAL INVESTMENT TRUST

A mutual fund seeking capital appreciation by investing
principally in issuers with market capitalizations of less than $2.5
billion.

NAVIGATOR AMERICAN LEADING COMPANIES TRUST

A mutual fund seeking long-term capital appreciation and current
income consistent with prudent investment risk.

NAVIGATOR U.S. GOVERNMENT INTERMEDIATE-TERM PORTFOLIO

NAVIGATOR MARYLAND TAX-FREE INCOME TRUST

A tax-exempt municipal bond fund seeking 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.

NAVIGATOR TAX-FREE INTERMEDIATE-TERM INCOME TRUST

23
<PAGE>

A tax-exempt municipal bond fund seeking a high level of current
income exempt from federal income tax, consistent with prudent investment
risk.

LEGG MASON CASH RESERVE TRUST

A money market fund seeking stability of principal and current
income consistent with stability of principal.

Investments by exchange into other Navigator funds are made at
the per share net asset value next determined on the same business day as
redemption of the Fund shares you wish to exchange. To obtain further
information concerning the exchange privilege and prospectuses of other
Navigator funds, or to make an exchange, please contact your investment
executive. To effect an exchange by telephone, please call your investment
executive with the information described in the section "How to Purchase
and Redeem Shares," page 14. The other factors relating to telephone
redemptions described in that section apply also to telephone exchanges.
Please read the prospectus for the other funds carefully before you invest
by exchange. The Fund reserves the right to modify or terminate the
exchange privilege upon 60 days' notice to shareholders. There is no
assurance the money market funds will be able to maintain a $1.00 share
price. None of the funds is insured or guaranteed by the U.S. Government.

THE FUND'S MANAGEMENT AND INVESTMENT ADVISER

BOARD OF DIRECTORS

The business and affairs of the Fund are managed under the
direction of the Board of Trustees of the Trust.

ADVISER

Pursuant to a voluntary expense limitation, the Adviser has
agreed to waive the management fee and assume certain other expenses
(exclusive of taxes, interest, brokerage fees and extraordinary expenses)
in excess of 0.30% (annualized) of average daily net assets attributable
to Navigator Shares until January 31, 1996 or until the Fund's net assets
reach $125 million, whichever occurs first.

24
<PAGE>

Victoria M. Schwatka has been primarily responsible for the
day-to-day management of the Fund since its inception. Ms. Schwatka is a
portfolio manager and Senior Vice-President of Legg Mason's Fixed Income
Group. Ms. Schwatka has been employed by Legg Mason since June, 1986.

THE FUND'S DISTRIBUTOR

Legg Mason is the distributor of the Fund's shares pursuant to an
Underwriting Agreement with the Fund. The Underwriting Agreement obligates
Legg Mason to pay certain expenses in connection with the offering of
shares of the Fund, including any compensation to its investment
executives, the printing and distribution of prospectuses, statements of
additional information and periodic reports used in connection with the
offering to prospective investors, after the prospectuses, statements of
additional information and reports have been prepared, set in type and
mailed to existing shareholders at the Fund's expense, and for any
supplementary sales literature and advertising costs. Legg Mason also
assists BFDS with certain of its duties as transfer agent; for the year
ended March 31, 1995, Legg Mason received from BFDS $9,300 for performing
such services in connection with the Fund.

The Chairman, President and Treasurer of the Fund are employed by
Legg Mason.

DESCRIPTION OF THE TRUST AND ITS SHARES

The Trust was established as a Massachusetts business trust under
a Declaration of Trust dated November 21, 1990. The Declaration of Trust
authorizes the Trust to issue an unlimited number of shares and to create
additional series, each of which may issue separate classes of shares.
Three series of the Trust, including the Fund, currently are being
offered. Each series of the Trust currently offers two Classes of Shares -
- Class Y (known as "Navigator Shares") and Class A (known as "Primary
Shares"). Each Class represents interests in the same pool of assets of
the Fund. A separate vote is taken by a Class of Shares of the Fund if a
matter affects just that Class of Shares. Each Class of Shares may bear
certain differing Class-specific expenses. Salespersons and others
entitled to receive compensation for selling or servicing Fund Shares may
receive more with respect to one Class than another.

25
<PAGE>

The Board of Trustees of the Trust does not anticipate that there
will be any conflicts among the interests of the holders of the different
Classes of Fund shares. On an ongoing basis, the Board will consider
whether any such conflict exists and, if so, take appropriate action.

26
<PAGE>

TABLE OF CONTENTS

Fund Expenses . . . . . . . . . . . . . . . . . . . . . . . . 3
Financial Highlights . . . . . . . . . . . . . . . . . . . . . 5
Performance Information . . . . . . . . . . . . . . . . . . . 6
Investment Objective and Policies . . . . . . . . . . . . . . 8
How to Purchase and Redeem Shares . . . . . . . . . . . . . . 14
How Shareholder Accounts are Maintained . . . . . . . . . . . 16
How Net Asset Value is Determined . . . . . . . . . . . . . . 16
Dividends and Other Distributions . . . . . . . . . . . . . . 17
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Shareholder Services . . . . . . . . . . . . . . . . . . . . . 19
The Fund's Management and Investment Adviser . . . . . . . . . 21
The Fund's Distributor . . . . . . . . . . . . . . . . . . . . 22
Description of the Trust and Its Shares . . . . . . . . . . . 22

ADDRESSES

DISTRIBUTOR:
Legg Mason Wood Walker, Inc.
111 South Calvert Street
P.O. Box 1476, Baltimore, MD 21203-1476
410-539-0000 800-822-5544

TRANSFER AND SHAREHOLDER SERVICING AGENT:
Boston Financial Data Services
P.O. Box 953, Boston, MA 02103

COUNSEL:
Kirkpatrick & Lockhart LLP
1800 M Street, N.W., Washington, DC 20036

INDEPENDENT ACCOUNTANTS:
Coopers & Lybrand L.L.P.
217 East Redwood Street, Baltimore, Maryland 21202

LMF - 033A
<PAGE>

How Your Shareholder Account is Maintained 13

How You Can Redeem Your Primary Shares 13

How Net Asset Value is Determined 14
Dividends and Other Distributions 14

Taxes 15

Shareholder Services 16

The Fund's Management and Investment Adviser 18

The Fund's Distributor 18

The Fund's Custodian and Transfer Agent 19

Description of the Trust and its Shares 19

ADDRESSES
DISTRIBUTOR:
Legg Mason Wood Walker, Inc.
111 South Calvert Street
P.O. Box 1476, Baltimore, MD 21203-1476
410 (Bullet) 539 (Bullet) 0000 800 (Bullet) 822 (Bullet) 5544

TRANSFER AND SHAREHOLDER SERVICING AGENT:

Boston Financial Data Services
P.O. Box 953, Boston, MA 02103

COUNSEL:

Kirkpatrick & Lockhart LLP
1800 M Street, N.W., Washington, DC 20036

INDEPENDENT ACCOUNTANTS:

Coopers & Lybrand L.L.P.
217 East Redwood Street, Baltimore, Maryland 21202

JULY 31, 1995
LEGG MASON

TAX-FREE
INTERMEDIATE-
TERM
INCOME TRUST

PRIMARY SHARES
PUTTING YOUR FUTURE FIRST

--Legg Mason logo here--<PAGE>
<PAGE>

THE LEGG MASON TAX-FREE INTERMEDIATE-TERM INCOME TRUST -- PRIMARY SHARES

PROSPECTUS
The Legg Mason Tax-Free Intermediate-Term Income Trust ("Fund") is a
non-diversified, professionally managed portfolio seeking a high level of
current income exempt from federal income tax, consistent with prudent
investment risk. The Fund is a separate series of Legg Mason Tax-Free
Income Fund ("Trust"), an open-end management investment company.

In attempting to achieve the Fund's objective, the Fund's investment
adviser, Legg Mason Fund Adviser, Inc. ("Adviser"), invests primarily in
debt instruments issued by or on behalf of states, territories and
possessions of the United States, the District of Columbia and their
respective authorities, agencies, instrumentalities and political
subdivisions, the interest on which, in the opinion of counsel to the
issuer, is exempt from federal income tax and which are investment grade,
I.E. securities rated within the four highest grades by Moody's Investors
Service, Inc. ("Moody's"), Standard & Poor's Ratings Group ("S&P") or
Fitch Investors Service, Inc. ("Fitch") or, if unrated by either Moody's,
S&P or Fitch ("unrated securities"), deemed by the Adviser to be of
comparable quality, while maintaining an average dollar-weighted maturity
of between 2 and 10 years. The Fund also may engage in hedging
transactions.

The Primary Class of shares ("Primary Shares") offered in this
Prospectus is available to all investors except certain institutions (see
page 4).

Dated: July 31, 1995

Legg Mason Wood Walker, Inc.
111 South Calvert Street
P.O. Box 1476
Baltimore, MD 21203-1476
410 (Bullet) 539 (Bullet) 0000
800 (Bullet) 822 (Bullet) 5544
<PAGE>
PROSPECTUS HIGHLIGHTS

THE LEGG MASON TAX-FREE INTERMEDIATE-TERM INCOME TRUST -- PRIMARY SHARES,

The following summary is qualified in its entirety by the more
detailed information appearing in the body of this Prospectus and in the
Statement of Additional Information.

FUND'S INCEPTION:
November 9, 1992
NET ASSETS:

Over $49 million as of May 31, 1995

FUND TYPE:

INVESTMENT OBJECTIVE AND POLICIES:
The Fund's investment objective is to earn a high level of current
income exempt from federal income tax, consistent with prudent investment
risk. The Fund attempts to meet this objective by investing primarily in
investment grade municipal obligations, while maintaining an average
dollar-weighted maturity of between 2 and 10 years. See "Investment
Objective and Policies," page 6.
INVESTMENT TECHNIQUES AND RISKS:

There can be no assurance that the Fund will achieve its objective.
The value of the debt instruments held by the Fund, and thus the net asset
value of Fund shares, generally fluctuates inversely with movements in
interest rates. Under normal circumstances, the Fund's dollar-weighted
average maturity is expected to be between 2 and 10 years; therefore, the
net asset value of the Fund's shares will be more sensitive to interest
rate movements and will fluctuate more than a portfolio of shorter-term
securities. Additionally, changes in economic conditions in or
governmental policies of the various states and municipalities could have
a significant impact on the performance of the Fund. As a non-diversified
series, the Fund may be subject to greater risk with respect to its
portfolio securities than an investment company that has a broader range
of investments, because changes in the financial condition or market
assessment of a single issuer may cause greater fluctuation in the Fund's
total return and the price of Fund shares. The Fund invests in investment
grade securities, i.e., those rated in the four highest ratings categories
of Moody's, S&P or Fitch or securities unrated by any of those services
but determined by the Adviser to be of comparable quality; Moody's
considers those securities rated in its fourth highest category (I.E.,
Baa) to have speculative characteristics. The Fund's participation in
hedging and option strategies also involves certain investment risks and
transaction costs. See "Yield and Risk Factors" and "Investment
Techniques," pages 8-11.

DISTRIBUTOR :
Legg Mason Wood Walker, Incorporated
INVESTMENT ADVISER :
Legg Mason Fund Adviser, Inc.

TRANSFER AND SHAREHOLDER SERVICING AGENT :

Boston Financial Data Services

CUSTODIAN:

State Street Bank and Trust Company

EXCHANGE PRIVILEGE:
All funds in the Legg Mason Family of Funds. See "Exchange Privilege,"
page 16.
DIVIDENDS:
Declared daily and paid monthly. See "Dividends and Other
Distributions," page 14.
REINVESTMENT:

All dividends and other distributions are automatically reinvested in
Primary Shares unless cash payments are requested.

INITIAL PURCHASE:

$1,000 minimum, generally.

SUBSEQUENT PURCHASES:

$100 minimum, generally.

PURCHASE METHODS:

PUBLIC OFFERING PRICE PER SHARE:

Net asset value plus any applicable sales charge (maximum sales charge
is 2.00% of public offering price). The front-end sales charge is waived
for all purchases made through January 31, 1996.

2
<PAGE>
FUND EXPENSES

The purpose of the following table is to assist an investor in
understanding the various costs and expenses that an investor in Primary
Shares will bear directly or indirectly. The expenses and fees set forth
in the table are based on average net assets and annual Fund operating
expenses related to Primary Shares for the year ended March 31, 1995.

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge on purchases (WAIVED FOR
ALL PURCHASES MADE THROUGH JANUARY 31,
1996) 2.00%(1)(2)
Sales charge on reinvested dividends None
Redemption or exchange fees None
ANNUAL FUND OPERATING EXPENSES -- PRIMARY
SHARES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management fees (after waiver)(3) 0.16%
12b-1 fees (after waiver)(3) 0.25%
Other expenses 0.24%
Total operating expenses (after fee
waivers)(3) 0.65%
</TABLE>

(1) As a percentage of offering price.

(2) See "How You Can Invest In The Fund," page 11, for additional
information concerning volume reductions, sales charge waivers and reduced
sales charge purchase plans. Effective August 1, 1995 through January 31,
1996, the 2.00% sales charge will be waived for all new accounts and
subsequent investments into existing accounts. After January 31, 1996,
any exchanges of these shares will be subject to the full sales charge,
if any, since no sales charge was paid on the shares purchased during
this period.

(3) Pursuant to a voluntary expense limitation, the Adviser and Legg Mason
have agreed to waive the management and 12b-1 fees and assume certain
other expenses such that total operating expenses relating to Primary
Shares (exclusive of taxes, interest, brokerage and extraordinary
expenses) will not exceed 0.65% (annualized) of average daily net assets
until January 31, 1996, or until the Fund's net assets reach $100
million, whichever occurs first. In the absence of such waivers, the
expected management fee, 12b-1 fee, other expenses and total operating
expenses relating to Primary Shares would be 0.55%, 0.25%, 0.24% and 1.04%
of average net assets, respectively.

EXAMPLE OF EFFECT OF FUND EXPENSES

The following example illustrates the expenses that you would pay on a
$1,000 investment in Primary Shares over various time periods assuming (1)
a 5% annual rate of return and (2) full redemption at the end of each time
period. As noted in the table above, the Fund charges no redemption fees
of any kind.

<TABLE>
<S> <C> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Assuming 2.00%
sales charge $26 $40 $55 $99
Assuming no sales
charge $ 6 $20 $35 $79
</TABLE>

This example assumes that the maximum 2.00% initial sales charge is
deducted at the time of purchase, that the percentage amounts listed under
"Annual Fund Operating Expenses" remain the same over the time periods
shown and that all dividends and capital gain distributions are
reinvested in additional Fund shares. If the fee waiver is not extended
beyond January 31, 1996 the expense figures in the example will be
higher.

The above tables and the assumption in the example of a 5% annual
return are required by regulations of the SEC applicable to all mutual
funds. THE ASSUMED 5% ANNUAL RETURN IS NOT A PREDICTION OF, AND DOES NOT
REPRESENT, THE PROJECTED OR ACTUAL PERFORMANCE OF PRIMARY SHARES. THE
ABOVE TABLES AND EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN
THOSE SHOWN. The actual expenses attributable to Primary Shares will
depend upon, among other things, the level of average net assets, the
levels of sales and redemptions of shares, the extent to which the
Adviser and Legg Mason waive their fees and reimburse Fund expenses and
the extent to which Primary Shares incur variable expenses, such as
transfer agency costs. Because the Fund pays a 12b-1 fee with respect to
Primary Shares, long-term investors in Primary Shares may pay more in
distribution expenses than the economic equivalent of the maximum
front-end sales charge permitted by the National Association of
Securities Dealers, Inc. ("NASD"). For further information concerning
Fund expenses, see "The Fund's Management and Investment Adviser,"
page 18.

3
<PAGE>
FINANCIAL HIGHLIGHTS

The financial highlights for the period November 9, 1992 (commencement
of operations) to March 31, 1993 and for the years ended March 31, 1994
through 1995 have been derived from financial statements which have been
audited by Coopers & Lybrand L.L.P., independent accountants. The Fund's
financial statements for the year ended March 31, 1995 and the report of
Coopers & Lybrand L.L.P. thereon are included in the Fund's annual report
and are incorporated by reference into the Statement of Additional
Information. The annual report is available to shareholders without charge
by calling your Legg Mason or affiliated investment executive or Legg
Mason's Funds Marketing Department at 800-822-5544.

<TABLE>
<CAPTION>
PRIMARY CLASS
<S> <C> <C> <C>
Years Ended March 31, 1995 1994 1993(1)
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $14.96 $15.06 $14.70
Net investment income 0.72(2) 0.70(2) 0.28(2)
Net realized and unrealized gain (loss) on investments 0.10 (0.09) 0.36
Total from investment operations 0.82 0.61 0.64
Distributions to shareholders from:
Net investment income (0.72) (0.70) (0.28)
Net realized gain on investments -- (0.01) --
Net asset value, end of period $15.06 $14.96 $15.06
Total return(4) 5.65% 3.99% 4.35%(3)
RATIOS/SUPPLEMENTAL DATA:
Ratios to average net assets:
Expenses 0.34%(2) 0.30%(2) 0.20%(2)(5)
Net investment income 4.83%(2) 4.44%(2) 4.71%(2)(5)
Portfolio turnover rate 24.8% 6.63% --
Net assets, end of period (in thousands) $48,837 $54,032 $37,138
</TABLE>

(1) FOR THE PERIOD NOVEMBER 9, 1992 (COMMENCEMENT OF OPERATIONS) TO MARCH
31, 1993.

(2) NET OF FEES WAIVED AND EXPENSES REIMBURSED BY THE ADVISER IN EXCESS OF
VOLUNTARY EXPENSE LIMITATIONS AS FOLLOWS: 0.20% OF AVERAGE DAILY NET ASSETS
UNTIL MARCH 31, 1993; 0.30% UNTIL MARCH 31, 1994; AND 0.65% UNTIL
JANUARY 31, 1996.

(3) NOT ANNUALIZED. THE ANNUALIZED TOTAL RETURN FOR THE PERIOD WOULD HAVE
BEEN 11.10%.

(4) EXCLUDING SALES CHARGE.

(5) ANNUALIZED.

4
<PAGE>
PERFORMANCE INFORMATION

Total returns of Primary Shares as of March 31, 1995 were as follows:

<TABLE>
<CAPTION>
Cumulative Average Annual
Total Return Total Return
<S> <C> <C>
One Year +3.50% +3.50%
Life of Fund(|) +12.34 +4.99
</TABLE>

(|) Fund's inception -- November 9, 1992.

The Fund also may advertise its yield or tax equivalent yield. Yield
reflects investment income net of expenses over a 30-day (or one-month)
period on a Fund share, expressed as an annualized percentage of the
maximum offering price per share at the end of the period. Tax equivalent
yield shows the taxable yield an investor would have to earn before taxes
to equal the Fund's tax-exempt yield. A tax equivalent yield is calculated
by dividing the Fund's tax-exempt yield by the result of one minus a
stated federal income tax rate. The effective yield, although calculated
similarly, will be slightly higher than the yield because it assumes that
income earned from the investment is reinvested (i.e., the compounding
effect of reinvestment). Yield computations differ from other accounting
methods and therefore may differ from dividends actually paid or reported
net income.

Total return and yield information reflect past performance and are
not predictions or guarantees of future results. Investment return and
share price will fluctuate, and the value of your shares, when redeemed,
may be worth more or less than their original cost. Yields and total
returns would have been lower if the Adviser and Legg Mason had not
waived/reimbursed certain fees and expenses during the fiscal years 1993
through 1995. As of the date of this Prospectus, Navigator Shares have no
performance record. Further information about the Fund's performance is
contained in the Annual Report to Shareholders, which may be obtained
without charge by calling your Legg Mason or affiliated investment
executive or Legg Mason's Funds Marketing Department at 800-822-5544.

WHO SHOULD INVEST

The Fund is designed for longer-term investors who are able to benefit
from income exempt from federal income tax. The value of Primary Shares
can generally be expected to fluctuate inversely with changes in interest
rates and, because of the potential negative impact of rising interest
rates and other risks, the Fund would not be appropriate for investors
whose primary goal is stability of principal. The Fund is not intended to
be a balanced investment program. The Fund is not an appropriate
investment for "substantial users" of certain facilities financed by
industrial development or private activity bonds or related persons
thereof. See "Taxes" page 15.

5
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES

The investment objective of the Fund is to earn a high level of
current income exempt from federal income tax, consistent with prudent
investment risk. The investment objective of the Fund may not be changed
without a shareholder vote; however, except as otherwise noted, the
investment policies of the Fund described below may be changed by the
Board of Trustees without a shareholder vote. There can be no assurance
that the Fund's investment objective will be achieved.

The Fund seeks to achieve its investment objective by investing
primarily in debt instruments issued by or on behalf of states,
territories and possessions of the United States, the District of Columbia
and their respective authorities, agencies, instrumentalities and
political subdivisions, the interest on which, in the opinion of counsel
to the issuer, is exempt from federal income tax ("municipal
obligations"), while maintaining an average dollar-weighted maturity of
between 2 and 10 years. As a fundamental policy, under normal
circumstances, the Fund will maintain at least 80% of its total assets in
municipal obligations exclusive of any such obligations the interest on
which is a tax preference item for purposes of the alternative minimum tax
("Tax Preference Item"). See "Temporary Investments" page 7.

The Fund invests in securities that, in the opinion of the Adviser,
present acceptable credit risks and that, at the time of purchase, are
rated:
"Baa" or higher by Moody's, "BBB" or higher by S&P or Fitch in the
case of bonds;
"MIG-1" or higher by Moody's, "SP-1" or higher by S&P or "F-1" or
higher by Fitch in the case of notes;
"P1" or higher by Moody's, "A1" or higher by S&P or "F-1" or higher by
Fitch in the case of commercial paper; and
"VMIG-1" or higher by Moody's in the case of variable rate demand
notes.

The Fund also invests in securities unrated by any of the above
services which are determined by the Adviser to be of comparable quality.

The bond ratings noted above are considered "investment grade" by the
respective rating agencies. A rating of a municipal obligation represents
the rating agency's opinion regarding its quality and is not a guarantee
of quality. Moody's considers that bonds rated in its fourth highest
category (I.E., Baa) have speculative characteristics; changes in economic
conditions or other circumstances are more likely to lead to a weakened
capacity for the issuers of such securities to make principal and interest
payments than is the case for higher rated bonds. In the event the rating
on an issue held in the Fund's portfolio is changed by Moody's, S&P or
Fitch, such change will be considered by the Adviser in its evaluation of
the overall investment merits of that security. If, as a result of any
downgradings by Moody's, S&P or Fitch or, for unrated securities, any
determinations by the Adviser that securities are no longer of comparable
quality to investment grade securities, more than 5% of the Fund's total
assets are represented by securities rated below investment grade or the
equivalent, the Adviser will, as soon as practicable consistent with
achieving an orderly disposition of the securities, sell such holdings
until they represent 5% or less of the Fund's total assets. A discussion
of the ratings outlined above is included in the Statement of Additional
Information.

6
<PAGE>

The Fund does not expect its portfolio turnover rate to exceed 90%
per year.

MUNICIPAL OBLIGATIONS

Municipal obligations also include short-term tax anticipation notes,
bond anticipation notes, revenue anticipation notes and other forms of
short-term debt obligations. Such notes may be issued with a short-term
maturity in anticipation of the receipt of tax payments, the proceeds of
bond placements or other revenues.
Municipal obligations also include municipal lease obligations. These
obligations, which are issued by state and local governments to acquire
land, equipment and facilities, typically are not fully backed by the
municipality's credit, and, if funds are not appropriated for the
following year's lease payments, a lease may terminate, with the
possibility of default on the lease obligation and significant loss to the
Fund. Certificates of Participation are participations in municipal lease
obligations or installment sales contracts. Each certificate represents a
proportionate interest in or right to the lease purchase payments made.
The two principal classifications of municipal obligations are
"general obligation" and "revenue" bonds. "General obligation" bonds are
secured by the issuer's pledge of its faith, credit and taxing power.
"Revenue" bonds are payable only from the revenues derived from a
particular facility or class of facilities or from the proceeds of a
special excise tax or other specific revenue source such as the corporate
user of the facility being financed. IDBs and PABs are usually revenue
bonds and are not payable from the unrestricted revenues of the issuer.
The credit quality of IDBs and PABs is usually directly related to the
credit standing of the corporate user of the facilities.
TEMPORARY INVESTMENTS

During unusual market conditions, including if, in the Adviser's
opinion, there are insufficient suitable municipal obligations available
that pay interest that is not a Tax Preference Item, the Fund temporarily
may invest more than 20% of its total assets in municipal obligations the
interest on which is exempt from federal income tax but is such an item.
The Fund expects that under normal circumstances it will maintain needed
liquidity through the purchase of short-term municipal securities.
However, for liquidity purposes, or pending the investment of the proceeds
of the sale of shares, the Fund temporarily may invest in taxable
short-term investments consisting of: obligations of the U.S. Government,
its agencies and instrumentalities; certificates of deposit and bankers'
acceptances of U.S. domestic banks with assets of one billion dollars or
more; commercial paper or other corporate notes of high quality; and any
of such items subject to short-term repurchase agreements. The Fund may
invest without limit in such instruments for temporary defensive purposes,
when in the Adviser's opinion, no suitable municipal securities are
available. No more than 10% of the Fund's net assets will be invested in
repurchase agreements maturing in more than seven days and other illiquid
securities. Interest earned from such investments will be taxable to
investors as ordinary income when distributed to them.

If general market interest rates increase, the prices of municipal
obligations ordinarily will decrease. In a market of decreasing interest
rates, the opposite generally will be true. Although longer-term bonds
generally offer higher yields than shorter-term bonds, their prices are
more sensitive to changes in interest rates than bonds with shorter
maturities. Under normal circumstances, the dollar-weighted average
maturity of the Fund's portfolio is expected to be 2-10 years. Therefore,
the value of the Fund's portfolio securities, and hence of the Fund's
shares, will be more sensitive to changes in interest rates and will
fluctuate more than the value of a portfolio of shorter-term municipal
obligations.

Concentration
The Fund may invest 25% or more of its total assets in a particular
segment of the municipal securities market, such as hospital revenue
bonds, housing agency bonds, IDBs or airport bonds, or in securities the
interest on which is paid from revenues of a similar type of project. In
such circumstances, economic, business, political or other changes
affecting one issue of bonds (such as proposed legislation affecting
healthcare or the financing of a project, shortages or price increases of
needed materials, or declining markets or needs for the projects) would
most likely affect other bonds in the same segment, thereby potentially
increasing market risk. As a result, the Fund is subject to greater risk
than other funds that do not follow this practice.
Non-Diversification
The Fund has registered as a "non-diversified" investment company.
Therefore, the percentage of Fund assets invested in any single issuer is
not limited by the Investment Company Act of 1940 ("1940 Act"). However,
the Fund intends to continue to qualify as a regulated investment company
("RIC") under the Internal Revenue Code of 1986, as amended ("Code"). To
qualify as a RIC, the Fund generally must meet the following
diversification requirements at the close of each quarter of its taxable
year: (1) at least 50% of the value of the Fund's total assets must
consist of cash, securities of the U.S. Government and other RICs and
holdings of other securities, which, with respect to any one issuer, do
not have a value greater than 5% of the value of the Fund's total assets;
and (2) no more than 25% of the value of the Fund's total assets may be
invested in the securities of a single issuer. For these purposes, the
term "issuer" does not include the U.S. Government or other RICs. To the
extent that the Fund's assets are invested in the obligations of a limited
number of issuers, the value of the Fund's shares will be more susceptible
to any single economic, political or regulatory occurrence affecting one
or more of those issuers than the shares of a diversified investment
company would be.

Other Risks

8
<PAGE>
INVESTMENT TECHNIQUES
The Fund may employ the investment techniques described below, among
others. Use of certain of these techniques may give rise to taxable
income.
When-Issued Securities
The Fund may enter into commitments to purchase municipal obligations
or other securities on a when-issued basis. The Fund may purchase when-
issued securities because such securities are often the most efficiently
priced and have the best liquidity in the bond market. As with the
purchase of any security, when the Fund purchases securities on a
when-issued basis, it assumes the risks of ownership at the time of
purchase, not at the time of receipt. However, the Fund does not have to
pay for the obligations until they are delivered to the Fund, normally 15
to 45 days later. To meet that payment obligation, the Fund will set aside
cash or marketable high-quality debt securities equal to the payment that
will be due. Depending on market conditions, the Fund's when-issued
purchases could cause its share value to be more volatile, because they
may increase the amount by which the Fund's total assets, including the
value of the when-issued securities held by the Fund, exceed its net
assets. The Fund does not expect that its commitment to purchase
when-issued securities will at any time exceed, in the aggregate, 25% of
total assets.
Callable Bonds
Callable municipal bonds are municipal bonds which carry a provision
permitting the issuer to redeem the bonds prior to their maturity dates at
a specified price which typically reflects a premium over the bonds'
original issue price. If the proceeds of a bond owned by the Fund called
under circumstances favorable to the issuer are reinvested, the result may
be a lower overall yield on such proceeds upon reinvestment because of
lower prevailing interest rates. If the purchase price of such bonds
included a premium related to the appreciated value of the bonds, some or
all of that premium may not be recovered by bondholders, such as the Fund,
depending on the price at which such bonds were redeemed.
Each callable bond is "market-to-market" daily based on the bond's
call date so that the call of some or all of the Fund's callable bonds is
not expected to have a material impact on the Fund's net asset value. In
light of the above pricing policies and because the Fund follows certain
amortization procedures required by the Internal Revenue Service, the Fund
does not expect to suffer any material adverse impact in connection with a
call of bonds purchased at a premium. Notwithstanding such policies,
however, as with any investment strategy, there is a no guarantee that a
call may not have a more substantial impact than anticipated.
Stand-By Commitments
The Fund may acquire "stand-by commitments" with respect to its
investments in municipal obligations. A stand-by commitment is a put (that
is, the right to sell the underlying security within a specified period of
time at a specified exercise price) that may be sold, transferred or
assigned only with the underlying security. Under a stand-by commitment, a
broker, dealer or bank agrees to purchase, at the Fund's option, specified
municipal obligations at a specified price. The total amount paid for
outstanding stand-by commitments held by the Fund will not exceed 25% of
the Fund's total assets calculated immediately after each stand-by
commitment is acquired.
Securities Lending, Zero Coupon and Deferred Interest Bonds

The Fund may also invest in floating rate and variable rate demand
notes. Demand notes provide that the holder may demand payment of the note
at its par value plus accrued interest. The notes may be supported by an
unconditional bank letter of credit guaranteeing payment of the principal
or both the principal and accrued interest. Floating rate demand notes
have an interest rate related to a known lending rate, such as the prime
rate, and are automatically adjusted when such rate changes. In
calculating its dollar-weighted average maturity, the Fund may determine
the maturity of a variable or floating rate note according to the interest
rate reset date, or the date principal can be recovered on demand, rather
than the date of ultimate maturity.

The success of the Fund's strategies in reducing risks depends on many
factors, the most significant of which is the Adviser's ability to predict
market interest rate changes correctly, which differs from its ability to
select portfolio securities. In addition, a hedge could be unsuccessful if
the changes in the value of its futures contract or option positions do
not correlate to the changes in the value of the Fund's investments. It is
also possible that the Fund may be unable to purchase or sell a portfolio
security at a time that otherwise would be favorable for it to do so, or
that the Fund may need to sell a portfolio security at a disadvantageous
time, due to the need for the Fund to maintain "cover" or to segregate
securities in connection with hedging transactions. Because the markets
for futures and options are not always liquid, the Fund may be unable to
close out or liquidate its hedged position and may be locked in during a
market decline. The Adviser attempts to minimize the possible negative
effects of these factors through careful selection and monitoring of the
Fund's futures and options positions. The Adviser is of the opinion that
the Fund's investments in futures transactions will not have a material
adverse effect on the Fund's liquidity or ability to honor redemptions.

The purchase and sale of options and futures contracts involve risks
different from those involved with direct investments in securities, and
also require different skills from the Adviser in managing the Fund's
portfolio. While utilization of options, futures contracts and similar
instruments may be advantageous to the Fund, if the Adviser is not
successful in employing such instruments in managing the Fund's
investments or in predicting interest rate changes, the Fund's performance
will be worse than if the Fund did not use such instruments. In addition,
the Fund will pay commissions and other costs in connection with such
investments, which may increase the Fund's expenses and reduce its yield.
A more complete discussion of the possible risks involved in transactions
in options and futures contracts is contained in the Statement of
Additional Information.

The Fund's current policy is to limit options and futures transactions
to those described above.
10
<PAGE>
The Fund currently does not intend to (i) purchase put and call options
having a value in excess of 5% of its total assets or (ii) write options
on portfolio securities having aggregate exercise prices exceeding 25% of
its net assets. Normally, options will be written, if at all, on those
portfolio securities which the Adviser does not expect to have significant
short-term capital appreciation.

INVESTMENT LIMITATIONS
The Fund has adopted certain fundamental limitations that, like its
investment objective, can be changed only by a vote of a majority of the
outstanding voting securities of the Fund. For these purposes a "vote of a
majority of the outstanding voting securities" of the Fund means the
affirmative vote of the lesser of (1) more than 50% of the outstanding
shares of the Fund, or (2) 67% or more of the shares present at a
shareholders' meeting if more than 50% of the outstanding shares are
represented in person or by proxy. These investment limitations are set
forth under "Additional Information About Investment Limitations and
Policies" in the Statement of Additional Information. Other Fund policies,
unless described as fundamental, can be changed by the Board of Trustees.

HOW YOU CAN INVEST IN THE FUND

The minimum initial investment in Primary Shares for each account,
including investments made by exchange from other Legg Mason funds, is
$1,000, and the minimum investment for each purchase of additional shares
is $100. However, those investing through the Fund's Future First
Systematic Investment Plan, payroll deduction plans and plans involving
automatic payment of funds from financial institutions or automatic
investment of dividends from certain unit investment trusts, minimum
initial and subsequent investments are lower. The Fund may change these
minimum amount requirements at its discretion.

You should always furnish your shareholder account number when making
additional purchases of shares.

There are three ways you can invest in Primary Shares of the Fund:

1. THROUGH YOUR LEGG MASON OR AFFILIATED INVESTMENT EXECUTIVE

2. THROUGH THE FUTURE FIRST SYSTEMATIC INVESTMENT PLAN

3. THROUGH AUTOMATIC INVESTMENTS

Shares are purchased at the net asset value next determined after your
Legg Mason or affiliated investment executive has transmitted your order
to the Fund, plus any applicable sales charge, which will vary with the
amount purchased, as shown below. EFFECTIVE AUGUST 1, 1995 THROUGH
JANUARY 31, 1996, THE FUND'S 2.00% SALES CHARGE WILL BE WAIVED FOR ALL
NEW ACCOUNTS AND SUBSEQUENT INVESTMENTS INTO EXISTING ACCOUNTS. AFTER
JANUARY 31, 1996, ANY EXCHANGES OF THESE SHARES WILL BE SUBJECT TO THE
FULL SALES CHARGE, IF ANY, SINCE NO SALES CHARGE WAS PAID ON THE SHARES
PURCHASED DURING THIS PERIOD.

11
<PAGE>

SALES CHARGE SCHEDULE
<TABLE>
<CAPTION>
Sales Charge as
Sales Charge as a Percentage of
a Percentage of Net Amount
Public Offering Invested (Net
Amount of Purchase Price Asset Value)
<S> <C> <C>
Less than $50,000 2.00% 2.04%
$50,000 to $99,999 1.75 1.78
$100,000 to $249,999 1.50 1.52
$250,000 to $499,999 1.25 1.27
$500,000 to $999,999 1.00 1.01
$1,000,000 and over 0.75 0.76
</TABLE>

Shares are available without a sales charge through exchanges of
shares of the other series of the Trust for which sales charges equivalent
to those of the Fund were paid or through exchanges of shares of other
Legg Mason funds which were obtained through an exchange of shares in
another series of the Trust on which a sales charge was paid. If the sales
charges previously paid were less than sales charges on the Fund, an
additional sales charge equal to the difference is due. In addition, Fund
shares may be purchased without a sales charge by employees, directors and
officers of Legg Mason or its affiliates, directors or trustees and
officers of any of the Legg Mason funds, the spouses and children under 21
years of age of any of the foregoing persons and by advisory clients of
investment advisers affiliated with Legg Mason.

Shareholders who have redeemed shares on which a sales charge was paid
may reinstate their Fund account without a sales charge up to the dollar
amount redeemed by purchasing shares within 90 days of the redemption
("reinstatement privilege"). Shareholders may exercise their reinstatement
privilege by notifying their investment executive of such desire and
placing an order within 90 days after the date of redemption. The
reinstatement will be made at the net asset value next determined after
the Notice of Reinstatement and order have been received by Legg Mason's
Funds Processing.

Through an LOI, you may pay a lower sales charge if the dollar amount
of shares currently being purchased plus the dollar amount of any
purchases you intend to make during the next thirteen months of shares of
this and other Less Mason funds sold with an initial sales charge equals
$50,000 or more. To take advantage of an LOI, you should indicate the
total amount you intend to purchase over the thirteen-month period on the
form available from your Legg Mason or affiliated investment executive.
Holdings acquired up to 90 days before the LOI is filed will be counted
towards completion of the LOI, and will be entitled to a retroactive
downward adjustment of the initial sales charge.

Under the Right of Accumulation, the current value of an investor's
existing shares in Legg Mason funds sold with an initial sales charge may
be combined with the amount of the investor's current purchase in
determining the sales charge for the current purchase. In determining both
the current value of existing shares and the amount of the investor's
current purchase, shares held or purchased by the investor's spouse,
and/or children under the age of 21, may be included. Legg Mason may
require supporting documentation in connection with purchases made under
the Right of Accumulation.

12
<PAGE>

HOW YOUR SHAREHOLDER ACCOUNT IS MAINTAINED

HOW YOU CAN REDEEM YOUR PRIMARY SHARES

There are two ways you can redeem your Primary Shares. First, you may
give your Legg Mason or affiliated investment executive an order for
repurchase of your shares. Please have the following information ready
when you call: the number of shares to be redeemed and your shareholder
account number. Second, you may send a written request for redemption to
"Legg Mason Tax-Free Intermediate-Term Income Trust, c/o Legg Mason Funds
Processing, P.O. Box 1476, Baltimore, Maryland 21203-1476."

Proceeds from your redemption will settle in your Legg Mason brokerage
account two business days after trade date. However, the Fund reserves the
right to take up to seven days to make payment upon redemption if, in the
judgment of the Adviser, the Fund could be adversely affected by immediate
payment. (The Statement of Additional Information describes several other
circumstances in which the date of payment may be postponed or the right
of redemption suspended.) The proceeds of your redemption or repurchase
may be more or less than your original cost. If the shares to be redeemed
or repurchased were paid for by check (including certified or cashier's
checks), within 15 business days of the redemption or repurchase request,
the proceeds may not be disbursed unless the Fund can be reasonably
assured that the check has been collected.

A redemption request will be considered to be received in "good order"
only if:

1. You have indicated in writing the number of Primary Shares to be
redeemed and your shareholder account number;

2. The written request is signed by you and by any co-owner of the
account with exactly the same name or names used in establishing the
account;

3. The written request is accompanied by any certificates representing
the shares that have been
13
<PAGE>
issued to you, and you have endorsed the certificates for transfer or an
accompanying stock power exactly as the name or names appear on the
certificates; and

Net asset value per share is determined daily as of the close of the
Exchange, on every day that the Exchange is open, by subtracting the
liabilities attributable to Primary Shares from the total assets
attributable to such shares and dividing the result by the number of
Primary Shares outstanding. Securities owned by the Fund for which market
quotations are readily available are valued at current market value. In
the absence of readily available market quotations, securities are valued
based upon appraisals received from an independent pricing service using a
computerized matrix system or based upon appraisals derived from
information concerning the security or similar securities received from
recognized dealers in those securities. Other securities are valued at
fair value as determined by, or under the supervision of, the Board of
Trustees of the Trust. Pursuant to guidelines established by the Board of
Trustees, the fair value of debt securities with remaining maturities of
60 days or less shall be their amortized cost, unless conditions otherwise
indicate.

DIVIDENDS AND OTHER DISTRIBUTIONS

1. Receive both dividends and capital gain distributions in Primary
Shares;

2. Receive dividends in cash and capital gain distributions in Primary
Shares;

3. Receive dividends in Primary Shares and capital gain distributions
in cash; or

14
<PAGE>
4. Receive both dividends and capital gain distributions in cash.

If no election is made, both dividends and capital gain distributions
will be credited to your account in Primary Shares at the net asset value
of the shares determined as of the close of the Exchange on the
reinvestment date. Shares received pursuant to any of the first three
(reinvestment) elections above also will be credited to your account at
their net asset value. If you elect to receive dividends and/or capital
gain distributions in cash, you will be sent a check or will have your
Legg Mason account credited after the payment date. You may elect at any
time to change your option by notifying the Fund in writing at: Legg Mason
Tax-Free Intermediate-Term Income Trust, c/o Legg Mason Funds Processing,
P.O. Box 1476, Baltimore, Maryland 21203-1476. Your election must be
received at least 10 days before the record date in order to be effective
for dividends and capital gain distributions paid to shareholders as of
that date.

TAXES

The Fund intends to continue to qualify for treatment as a RIC under
the Code. If the Fund so qualifies and, at the close of each quarter of
its taxable year, at least 50% of the value of its total assets consists
of certain obligations the interest on which is excludable from gross
income under section 103(a) of the Code, the Fund may pay
"exempt-interest" dividends to its shareholders. Those dividends
constitute the portion of the aggregate dividends (excluding capital gain
distributions), as designated by the Fund, equal to the excess of the
excludable interest over certain amounts disallowed as deductions.
Exempt-interest dividends are excludable from a shareholder's gross
income; however, the amount of such dividends must be reported on the
recipient's federal income tax return. Dividends derived from interest on
municipal obligations may not be exempt from taxation under state or local
law.

If and to the extent the Fund receives interest on certain PABs, a
proportionate part of the exempt-interest dividends paid by the Fund will
be treated as a Tax Preference Item. In addition, exempt-interest
dividends received by a corporate shareholder may be indirectly subject to
the federal alternative minimum tax without regard to whether the Fund's
tax-exempt interest is attributable to PABs.

To the extent dividends are derived from taxable income from temporary
investments, from net short-term capital gain or from the use of certain
investment techniques described in "Investment Objective and Policies,"
page 6, they are taxable to shareholders as ordinary income (whether paid
in cash or reinvested in Fund shares). No portion of those dividends will
qualify for the corporate dividends-received deduction. Distributions
derived from net capital gain, if any, are taxable to shareholders as
long-term capital gain regardless of the length of time they have held
their Fund shares (and irrespective of whether those distributions are
paid in cash or reinvested in Fund shares).

Interest on indebtedness incurred or continued by a shareholder in
order to purchase or carry Fund shares generally is not deductible.
Persons who are "substantial users" (or related persons) of facilities
financed by IDBs or PABs should consult their tax advisers before
purchasing shares of the Fund because, for users of certain of these
facilities, the interest on those bonds is not exempt from federal income
tax. For these purposes, a "substantial user" includes a non-exempt person
who regularly uses in trade or business a part of a facility financed from
the proceeds of IDBs or PABs.

15
<PAGE>

of another Legg Mason fund without the imposition of a sales charge that
otherwise would have been imposed except for the reinstatement privilege
or exchange privilege. See "How You Can Invest in the Fund," page 11, and
"Shareholder Services -- Exchange Privilege," below. In these cases, any
sales charge that was imposed on the purchase of those shares will not be
taken into account in determining the amount of gain or loss on the
redemption or exchange -- the tax effect of that charge will instead be
deferred by being treated as having been incurred in connection with the
newly acquired shares. In addition, if Fund shares are purchased within 30
days before or after redeeming Fund shares at a loss, all or part of that
loss will not be deductible and instead will increase the basis of the
newly purchased shares.

Shareholders receive information after the close of each year
concerning the federal income tax status of all dividends and capital gain
distributions. The Fund is required to withhold 31% of all taxable
dividends, capital gain distributions and redemption proceeds payable to
any individuals and certain other noncorporate shareholders who do not
provide the fund with a certified taxpayer identification number. The Fund
also is required to withhold 31% of all taxable dividends and capital gain
distributions payable to such shareholders who otherwise are subject to
backup withholding.

The foregoing is only a summary of some of the important federal
income tax considerations generally affecting the Fund and its
shareholders; see the Statement of Additional Information for a further
discussion. In addition to those considerations, which are applicable to
any investment in the Fund, there may be other federal, state or local tax
considerations applicable to a particular investor. Prospective
shareholders are urged to consult their tax advisers with respect to the
effects of this investment on their own tax situations.

SHAREHOLDER SERVICES
CONFIRMATIONS AND REPORTS

Shareholder inquiries should be addressed to "Legg Mason Tax-Free
Intermediate-Term Income Trust, c/o Legg Mason Funds Processing, P.O. Box
1476, Baltimore, Maryland 21203-1476.

Legg Mason Cash Reserve Trust
A money market fund seeking stability of principal and current income
consistent with stability of principal.
Legg Mason Tax Exempt Trust, Inc.
A money market fund seeking high current income exempt from federal
income tax, preservation of capital, and liquidity.
Legg Mason U.S. Government Money Market Portfolio
A money market fund seeking high current income consistent with
liquidity and conservation of principal.
16
<PAGE>
Legg Mason Value Trust, Inc.
A mutual fund seeking long-term growth of capital.
Legg Mason Special Investment Trust, Inc.

A mutual fund seeking capital appreciation by investing principally in
issuers with market capitalization of less than $2.5 billion.

Legg Mason Global Equity Trust

A mutual fund seeking maximum long-term total return, by investing in
common stocks of companies located in at least three different countries.

Legg Mason U.S. Government Intermediate-Term Portfolio

A mutual fund seeking high current income consistent with prudent
investment risk and liquidity needs, primarily through investing in debt
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, while maintaining an average dollar-weighted maturity
of between three and ten years.

Legg Mason Investment Grade Income Portfolio
A mutual fund seeking a high level of current income, primarily
through investment in a diversified portfolio of investment grade debt
securities.
Legg Mason High Yield Portfolio

A mutual fund seeking primarily a high level of current income and,
secondarily, capital appreciation, by investing principally in
lower-rated, fixed-income securities.

Legg Mason Global Government Trust
A mutual fund seeking capital appreciation and current income by
investing principally in debt securities issued or guaranteed by foreign
governments, the U.S. Government, their agencies, instrumentalities and
political subdivisions.
Legg Mason Maryland Tax-Free Income Trust*
A tax-exempt municipal bond fund seeking 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.
Legg Mason Pennsylvania Tax-Free Income Trust*
A tax-exempt municipal bond fund seeking 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.
*Shares of these funds are sold with an initial sales charge.

Investments by exchange into the Legg Mason funds sold without an
initial sales charge are made at the per share net asset value determined
on the same business day as redemption of the Fund shares you wish to
exchange. Investments by exchange into the other Legg Mason funds sold
with an initial sales charge are made at the per share net asset value,
plus an additional sales charge if the sales charge previously paid was
less than the sales charge applicable to the fund into which you are
exchanging, determined on the same business day as redemption of the Fund
shares you wish to redeem. Exchanges from the other Legg Mason funds sold
without an initial sales charge will be at net asset value plus the
applicable sales charge (unless the investment in the fund was transferred
from a Legg Mason fund sold with the same or higher sales charge). There
is no charge for the exchange privilege, but the Fund reserves the right
to terminate or limit the exchange privilege of any shareholder who makes
more than four exchanges from the Fund in one calendar year. To obtain
further information concerning the exchange privilege and prospectuses of
other Legg Mason funds, or to make an exchange, please contact your Legg
Mason or affiliated investment executive. To effect an exchange by
telephone, please call your Legg Mason or affiliated investment executive
with the information

17
<PAGE>

described in "How You Can Redeem Your Primary Shares" on page 13. The
other factors relating to telephone redemptions described in that section
apply also to telephone exchanges. Please read the prospectus for the
other funds carefully before you invest by exchange. The Fund reserves the
right to modify or terminate the exchange privilege upon 60 days' notice
to shareholders. There is no assurance the money market funds will be able
to maintain a $1.00 share price. None of the funds is insured or
guaranteed by the U.S. Government.

THE FUND'S MANAGEMENT AND INVESTMENT ADVISER
BOARD OF TRUSTEES
The business and affairs of the Fund are managed under the direction
of the Board of Trustees of the Trust.
ADVISER

Pursuant to an advisory agreement with the Fund ("Advisory
Agreement"), which was approved by the Trust's Board of Trustees, the
Adviser, a wholly owned subsidiary of Legg Mason, Inc., serves as the
Fund's investment adviser. The Adviser administers and acts as the
portfolio manager for the Fund and is responsible for the actual
investment management of the Fund, including the responsibility for making
investment decisions and placing orders to buy, sell or hold a particular
security. The Fund pays the Adviser, pursuant to the Advisory Agreement, a
management fee equal to an annual rate of 0.55% of the Fund's average
daily net assets. The Fund pays all its other expenses which are not
assumed by the Adviser. Pursuant to a voluntary expense limitation, the
Adviser and Legg Mason have agreed to waive the management and 12b-1 fees
and assume certain other expenses relating to Primary Shares (exclusive of
taxes, interest, brokerage and extraordinary expenses) in excess of 0.65%
(annualized) of average daily net assets until January 31, 1996 or until
the Fund's net assets reach $100 million, whichever occurs first. During
the fiscal year ended March 31, 1995, the Fund's expenses as a percentage
of average net assets were 0.34%.

The Adviser acts as investment adviser, manager or consultant to
fifteen investment company portfolios (excluding the Fund) which had
aggregate assets under management of over $4.4 billion as of May 31, 1995.
The Adviser's address is 111 South Calvert Street, Baltimore, Maryland
21202.

THE FUND'S DISTRIBUTOR

The Board of Trustees has adopted a Distribution and Shareholder
Services Plan ("Plan") pursuant to Rule 12b-1 under the 1940 Act. The Plan
provides that as compensation for its ongoing services to investors in
Primary Shares and its activities and expenses related to the sale and
distribution of Primary Shares, Legg Mason receives from the Fund annual
service and distribution fees payable from the assets attributable to
Primary Shares, each equal to 0.125% of the Fund's average daily net
assets. These fees are calculated daily and paid monthly. The fees
received by Legg Mason during any year may be more or less than its cost
of providing distribution and shareholder services for Primary Shares.

Legg Mason receives a fee from BFDS for assisting it with its transfer
agent and shareholder servicing functions; for the year ended March 31,
1995, Legg Mason received from BFDS $6,059 for performing such services in
connection with this Fund.

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<PAGE>
NASD rules limit the amount of annual distribution fees that may be
paid by mutual funds and impose a ceiling on the cumulative distribution
fees received. The Fund's Plan complies with those rules.
The Chairman, President and Treasurer of the Fund are employed by Legg
Mason.
THE FUND'S CUSTODIAN AND TRANSFER AGENT

DESCRIPTION OF THE TRUST AND ITS SHARES

<PAGE>

Navigator Tax-Free Intermediate-Term Income Trust

PROSPECTUS

Shares of Navigator Tax-Free Intermediate-Term Income Trust
("Navigator Shares") represent a separate class ("Navigator Class") of
interests in Legg Mason Tax-Free Intermediate-Term Income Trust ("Fund"),
a non-diversified, professionally managed portfolio seeking a high level
of current income exempt from federal income tax, consistent with prudent
investment risk. The Fund is a separate series of Legg Mason Tax-Free
Income Fund, ("Trust"), an open-end management investment company.

In attempting to achieve the Fund's objective, the Fund's
investment adviser, Legg Mason Fund Adviser, Inc. ("Adviser"), invests
primarily in debt instruments issued by or on behalf of states,
territories and possessions of the United States, the District of Columbia
and their respective authorities, agencies, instrumentalities and
political subdivisions, the interest on which, in the opinion of counsel
to the issuer, is exempt from federal income tax and which are investment
grade, i.e. securities rated within the four highest grades by Moody's
Investors Service, Inc. ("Moody's"), Standard & Poor's Ratings Group
("S&P") or Fitch Investors Service, Inc. ("Fitch") or, if unrated by
Moody's, S&P or Fitch ("unrated securities"), deemed by the Adviser to be
of comparable quality, while maintaining an average dollar-weighted
maturity of between 2 and 10 years. The Fund also may engage in hedging
transactions.

This Prospectus sets forth concisely the information about the
Fund that a prospective investor ought to know before investing. It should
be read and retained for future reference. A Statement of Additional
Information about the Fund dated July 31, 1995 has been filed with the
Securities and Exchange Commission ("SEC") and, as amended or supplemented
from time to time, is incorporated herein by reference. The Statement of
Additional Information is available without charge upon request from Legg
Mason (address and telephone numbers listed below).

Dated: July 31, 1995

Legg Mason Wood Walker, Inc.
111 South Calvert Street
P.O. Box 1476
Baltimore, MD 21203-1476
410-539-0000
800-822-5544

2
<PAGE>

FUND EXPENSES

SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge on purchases or
reinvested dividends None
Redemption or exchange fees None

ANNUAL FUND OPERATING EXPENSES -- NAVIGATOR SHARES
(as a percentage of average net assets)

Management fees(1) 0.16%
12b-1 fees None
Other expenses 0.24%
-----
Total operating expenses 0.40%
=====

(1) Pursuant to a voluntary expense limitation, the Adviser has
agreed to waive the management fees and assume certain other expenses such
that total operating expenses (exclusive of taxes, interest, brokerage
fees and extraordinary expenses) of the Navigator Class will not exceed
0.40% (annualized) of average daily net assets until January 31, 1996 or
until the Fund's net assets reach $100 million, whichever occurs first,
and unless extended will terminate on that date. In the absence of such
waivers, the expense ratio for Navigator Class would have been 0.79%.

For further information concerning Fund expenses, please see "The
Fund's Management and Investment Adviser," page 20 and "The Fund's
Distributor," page 21.

EXAMPLE OF EFFECT OF FUND EXPENSES

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$4 $13 $22 $49

3
<PAGE>

shown. The above tables and the assumption in the example of a 5% annual
return are required by regulations of the SEC applicable to all mutual
funds. THE ASSUMED 5% ANNUAL RETURN IS NOT A PREDICTION OF, AND DOES NOT
REPRESENT, THE PROJECTED OR ACTUAL PERFORMANCE OF NAVIGATOR SHARES. THE
ABOVE TABLES AND EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST
OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN. The actual expenses attributable to Navigator Shares will depend
upon, among other things, the level of average net assets, the levels of
sales and redemptions of shares, the extent to which Navigator Shares
incur variable expenses, such as transfer agency costs, and whether the
Adviser reimburses all or a portion of the Fund's expenses.

FINANCIAL HIGHLIGHTS

The financial highlights for the period November 9, 1992
(commencement of operations) to March 31, 1993, and the years ended March
31, 1994 through 1995 have been derived from financial statements which
have been audited by Coopers & Lybrand L.L.P., independent accountants.
The Fund's financial statements for the year ended March 31, 1995 and the
report of Coopers & Lybrand L.L.P. thereon are included in the Fund's
annual report and are incorporated by reference into the Statement of
Additional Information. The annual report is available to shareholders
without charge by calling an investment executive at Fairfield or Legg
Mason or Legg Mason's Funds Marketing Department at 800-822-5544.
<TABLE>
<CAPTION>
PRIMARY SHARES

Years Ended March 31, 1995 1994 1993(1)
Per Share Operating
Performance:

Net asset value, beginning
of period $14.96 $15.06 $14.70

Net investment income .72(2) .70(2) .28(2)

Net realized and unreali/zed
gain (loss) on investments .10 (.09) .36

Total from investment
operations .82 .61 .64

4
<PAGE>

Distributions to
shareholders from net
investment income (.72) (.70) (.28)

Net realized gain on
investments -- (.01) --

Net asset value, end of
period $15.06 $14.96 $15.06

Total return(4) 5.65% 3.99% 4.35%(3)

Ratios/Supplemental Data:
Ratios to average net
assets:

Expenses 0.34%(2) 0.30%(2) 0.20%(2)(5)
Net investment income 4.83%(2) 4.44%(2) 4.71%(2)(5)

Portfolio turnover rate 24.8% 6.63% --
Net assets, end of period
(in thousands) $48,837 $54,032 $37,138

</TABLE>

------------------
(1) For the period November 9, 1992 (commencement of operations) to March
31, 1993.
(2) Net of fees waived and reimbursements made by the Adviser in excess
of voluntary expense limitations as follows: 0.20% until March 31,
1993; 0.30 until June 30, 1994; and 0.40% until January 31, 1996.
(3) Not annualized. The annualized total return for the period would
have been 11.10%.
(4) Excluding sales charge.
(5) Annualized.

5
<PAGE>

PERFORMANCE INFORMATION

From time to time the Fund may quote the total return of each
class of shares in advertisements or in reports or other communications to
shareholders. A mutual fund's TOTAL RETURN is a measurement of the overall
change in value of an investment in the fund, including changes in share
price and assuming reinvestment of dividends and other distributions.
CUMULATIVE TOTAL RETURN shows the fund's performance over a specific
period of time. AVERAGE ANNUAL TOTAL RETURN is the average annual
compounded return that would have produced the same cumulative total
return if the fund's performance had been constant over the entire period.

Total returns of Primary Shares as of March 31, 1995 were as
follows:

Cumulative Average Annual
Total Return Total Return
---------------------------------

One Year +3.50% +3.50%
Life of Fund(1) +12.34 +4.99

(1) Fund's inception - November 9, 1992.

No adjustment has been made for any income taxes payable by
shareholders. As of the date of this Prospectus, Navigator Shares have no
performance record. Yields and total returns of Primary Shares would have
been lower if the Adviser and/or Distributor had not waived certain fees
in the years 1993 through 1995. Because Navigator Shares have lower total
expenses, they will generally have a higher return than Primary Shares.

6
<PAGE>

Total return and yield information reflect past performance and
are not predictions or guarantees of future results. Total returns of
Primary Shares would be lower if the Adviser and Legg Mason had not waived
a portion of the fees and reimbursed certain expenses. Investment return
and share price will fluctuate, and the value of your shares, when
redeemed, may be worth more or less than their original cost.

WHO SHOULD INVEST

The Fund is designed for longer-term investors who are able to
benefit from income exempt from federal income tax. The value of Navigator
Shares can generally be expected to fluctuate inversely with changes in
interest rates and, because of the potential negative impact of rising
interest rates and other risks, the Fund would not be appropriate for
investors whose primary goal is stability of principal. The Fund is not
intended to be a balanced investment program. The Fund is not an
appropriate investment for "substantial users" of certain facilities
financed by industrial development or private activity bonds or related
persons thereof. See "Taxes," page 17.

INVESTMENT OBJECTIVE AND POLICIES

The investment objective of the Fund is to earn a high level of
current income exempt from federal income tax, consistent with prudent
investment risk. The investment objective of the Fund may not be changed
without a shareholder vote; however, except as otherwise noted, the
investment policies of the Fund described below may be changed by the
Trust's Board of Trustees without a shareholder vote. There can be no
assurance that the Fund's investment objective will be achieved.

7
<PAGE>

The Fund invests in securities that, in the opinion of the
Adviser, present acceptable credit risks and that, at the time of
purchase, are rated:

"Baa" or higher by Moody's, "BBB" or higher by S&P or Fitch in
the case of bonds;
"MIG-1" or higher by Moody's, "SP-1" or higher by S&P or "F-1" or
higher by Fitch in the case of notes;
"P1" or higher by Moody's, "A1" or higher by S&P or "F-1" or
higher by Fitch in the case of commercial paper; and
"VMIG-1" or higher by Moody's in the case of variable rate demand
notes.

The Fund also invests in securities unrated by any of the above
services which are determined by the Adviser to be of comparable quality.

The bond ratings noted above are considered "investment grade" by
the respective rating agencies. A rating of a municipal obligation
represents the rating agency's opinion regarding its quality and is not a
guarantee of quality. Moody's considers that bonds rated in its fourth
highest category (i.e. Baa) have speculative characteristics; changes in
economic conditions or other circumstances are more likely to lead to a
weakened capacity to make principal and interest payments for these bonds
than for higher rated bonds. In the event the rating on an issue held in
the Fund's portfolio is changed by Moody's, S&P or Fitch, such change will
be considered by the Adviser in its evaluation of the overall investment
merits of that security. If, as a result of any downgradings by Moody's,
S&P or Fitch or, for unrated securities, any determinations by the Adviser
that securities are no longer of comparable quality to investment grade
securities, more than 5% of the Fund's total assets are represented by
securities rated below investment grade or the equivalent, the Adviser
will, as soon as practicable consistent with achieving an orderly
disposition of the securities, sell such holdings until they represent 5%
or less of the Fund's total assets. A discussion of the ratings outlined
above is included in the Statement of Additional Information.

In addition to the agency ratings, there are other criteria which
will be used by the Adviser in selecting securities for the portfolio.
Consideration will be given to the maturity and duration of each bond as
well as its effect on the overall average maturity and duration of the
portfolio. Analysis of the current and historical yield spreads is done to
determine the relative value in any bond considered for purchase. The
coupon level and call features also figure in the decision on the relative
merits of an investment. Consideration is also given to the type of bond--
whether it is a general obligation or a revenue bond. In addition to this
examination of bond characteristics, significant effort is devoted to
analysis of the creditworthiness of the bond issuer at the time of
purchase and on an ongoing basis.

8
<PAGE>

well as other factors, such as the Fund's liquidity needs. Under normal
circumstances, the dollar-weighted average maturity of the Fund's
portfolio is expected to be between 2 and 10 years.

The Fund does not expect its portfolio turnover rate to exceed
90%.

MUNICIPAL OBLIGATIONS

Municipal obligations include obligations issued to obtain funds
for various public purposes, including constructing a wide range of public
facilities, such as bridges, highways, housing, hospitals, mass
transportation, schools and streets. Other public purposes for which
municipal obligations may be issued include the refunding of outstanding
obligations, the obtaining of funds for general operating expenses and the
making of loans to other public institutions and facilities. In addition,
certain types of industrial development bonds ("IDBs") and private
activity bonds ("PABs") are issued by or on behalf of public authorities
to finance various privately operated facilities, including pollution
control facilities, convention or trade show facilities, and airport, mass
transit, port or parking facilities. Interest on certain tax-exempt PABs
will constitute a Tax Preference Item. Accordingly, under normal
circumstances, the Fund's investment in obligations, the interest on which
is such an item, including PABs, will be limited to a maximum of 20% of
its total assets.

9
<PAGE>

The credit quality of IDBs and PABs is usually directly related to the
credit standing of the corporate user of the facilities.

TEMPORARY INVESTMENTS

YIELD AND RISK FACTORS

YIELD

INTEREST RATE RISK

10
<PAGE>

maturity of the Fund's portfolio is expected to be 2-10 years. Therefore,
the value of the Fund's portfolio securities, and hence of the Fund's
shares, will be more sensitive to changes in interest rates and will
fluctuate more than the value of a portfolio of shorter-term municipal
obligations.

CONCENTRATION

NON-DIVERSIFICATION

The Fund has registered as a "non-diversified" investment
company. Therefore, the percentage of Fund assets invested in any single
issuer is not limited by the Investment Company Act of 1940 ("1940 Act").
However, the Fund intends to continue to qualify as a regulated investment
company ("RIC") under the Internal Revenue Code of 1986, as amended
("Code"). To qualify as a RIC, the Fund generally must meet the following
diversification requirements at the close of each quarter of its taxable
year: (1) at least 50% of the value of the Fund's total assets must
consist of cash, securities of the U. S. Government and other RICs and
holdings of other securities, which, with respect to any one issuer, do
not have a value greater than 5% of the value of the Fund's total assets;
and (2) no more than 25% of the value of the Fund's total assets may be
invested in the securities of a single issuer. For these purposes, the
term "issuer" does not include the U. S. Government or other RICs. To the
extent that the Fund's assets are invested in the obligations of a limited
number of issuers, the value of the Fund's shares will be more susceptible
to any single economic, political or regulatory occurrence affecting one
or more of those issuers than the shares of a diversified investment
company would be.

OTHER RISKS

Current efforts to restructure the federal budget and the
relationship between the federal government and state and local
governments may impact the financing of some issuers of municipal
securities. Some states and localities are experiencing substantial
deficits and may find it difficult for political or economic reasons to
increase taxes. Some local jurisdictions have invested heavily in
derivative instruments and may now hold portfolios of uncertain valuation.
Each of these factors may affect the ability of an issuer of municipal

11
<PAGE>

securities to meet its obligations. Efforts by Congress to restructure
the federal income tax system could adversely effect the value of
municipal securities.

INVESTMENT TECHNIQUES

The Fund may employ the investment techniques described below,
among others. Use of certain of these techniques may give rise to taxable
income.

WHEN-ISSUED SECURITIES

CALLABLE BONDS

Each callable bond is "marked-to-market" daily based on the
bond's call date so that the call of some or all of the Fund's callable
bonds is not expected to have a material impact on the Fund's net asset
value. In light of the above pricing policies and because the Fund follows
certain amortization procedures required by the Internal Revenue Service,
the Fund does not expect to suffer any material adverse impact in
connection with a call of bonds purchased at a premium. Notwithstanding

12
<PAGE>

such policies, however, as with any investment strategy, there is no
guarantee that a call may not have a more substantial impact than
anticipated.

STAND-BY COMMITMENTS

The fund May acquire "stand-by commitments" with respect to its
investments in municipal obligations. A stand-by commitment is a put (that
is, the right to sell the underlying security within a specified period of
time at a specified exercise price) that may be sold, transferred or
assigned only with the underlying security. Under a stand-by commitment, a
broker, dealer or bank agrees to purchase, at the Fund's option, specified
municipal obligations at a specified price. The total amount paid for
outstanding stand-by commitments held by the Fund will not exceed 25% of
the Fund's total assets calculated immediately after each stand-by
commitment is acquired.

SECURITIES LENDING, ZERO COUPON AND DEFERRED INTEREST BONDS

The Fund may engage in securities lending and may invest in zero
coupon and deferred interest bonds. However, the Fund does not currently
intend to loan securities with a value exceeding 5% of its total assets or
to invest more than 5% of its total assets in zero coupon and deferred
interest bonds. Any income from securities lending would be taxable when
distributed to shareholders. For further information concerning securities
lending and zero coupon and deferred interest bonds, see the Statement of
Additional Information.

VARIABLE RATE AND FLOATING RATE OBLIGATIONS

The Fund may invest in variable rate municipal obligations and
notes. Variable rate obligations have a yield that is adjusted
periodically based upon market conditions. The Fund may also invest in
floating rate and variable rate demand notes. Demand notes provide that
the holder may demand payment of the note at its par value plus accrued
interest. The notes may be supported by an unconditional bank letter of
credit guaranteeing payment of the principal or both the principal and
accrued interest. Floating rate demand notes have an interest rate related
to a known lending rate, such as the prime rate, and are automatically
adjusted when such known rate changes. In calculating its dollar-weighted
average maturity, the Fund may determine the maturity of a variable or
floating rate note according to the interest rate reset date, or the date
the principal can be recovered on demand, rather than the date of ultimate
maturity.

FUTURES AND OPTION STRATEGIES

13
<PAGE>

The Fund may purchase put options on interest rate futures contracts or
sell interest rate futures contracts (that is, enter into a futures
contract to sell the underlying security) to attempt to reduce the risk of
fluctuations in its share value. The Fund may purchase an interest rate
futures contract (that is, enter into a futures contract to purchase the
underlying security) to attempt to establish more definitely the return on
securities the Fund intends to purchase. The Fund may not use these
instruments for speculation or leverage. In addition, the Fund's ability
to use these strategies may be limited by market conditions, regulatory
limits and tax considerations.

The success of the Fund's strategies in reducing risks depends on
many factors, the most significant of which is the Adviser's ability to
predict market interest rate changes correctly, which differs from its
ability to select portfolio securities. In addition, a hedge could be
unsuccessful if the changes in the value of its futures contract or option
positions do not correlate to the changes in the value of the Fund's
investments. It is also possible that the Fund may be unable to purchase
or sell a portfolio security at a time that otherwise would be favorable
for it to do so, or that the Fund may need to sell a portfolio security at
a disadvantageous time, due to the need for the Fund to maintain "cover"
or to segregate securities in connection with hedging transactions.
Because the markets for futures and options are not always liquid, the
Fund may be unable to close out or liquidate its hedged position and may
be locked in during a market decline. The Adviser attempts to minimize
the possible negative effects of these factors through careful selection
and monitoring of the Fund's futures and options positions. The Adviser is
of the opinion that the Fund's investments in futures transactions will
not have a material adverse effect on the Fund's liquidity or ability to
honor redemptions.

The purchase and sale of options and futures contracts involve
risks different from those involved with direct investments in securities,
and also require different skills from the Adviser in managing the Fund's
portfolio. While utilization of options, futures contracts and similar
instruments may be advantageous to the Fund, if the Adviser is not
successful in employing such instruments in managing the Fund's
investments or in predicting interest rate changes, the Fund's performance
will be worse than if the Fund did not use such instruments. In addition,
the Fund will pay commissions and other costs in connection with such
investments, which may increase the Fund's expenses and reduce its yield.
A more complete discussion of the possible risks involved in transactions

14
<PAGE>

in options and futures contracts is contained in the Statement of
Additional Information.

INVESTMENT LIMITATIONS

HOW TO PURCHASE AND REDEEM SHARES

PURCHASE OF SHARES

15
<PAGE>

on that day. Orders received by Legg Mason or Fairfield after the close
of the Exchange or on days the Exchange is closed will be executed at the
net asset value determined as of the close of the Exchange on the next day
the Exchange is open. See "How Net Asset Value is Determined" on page 16.
The Fund reserves the right to reject any order for shares of the Fund, to
suspend the offering of shares for a period of time, or to waive any
minimum investment requirements.

REDEMPTION OF SHARES

16
<PAGE>

HOW SHAREHOLDER ACCOUNTS ARE MAINTAINED

17
<PAGE>

HOW NET ASSET VALUE IS DETERMINED

DIVIDENDS AND OTHER DISTRIBUTIONS

1. Receive both dividends and capital gain distributions in
Navigator Shares of the Fund;

18
<PAGE>

2. Receive dividends in cash and capital gain distributions in
Navigator Shares of the Fund;
3. Receive dividends in Navigator Shares of the Fund and capital
gain distributions in cash; or
4. Receive both dividends and capital gain distributions in cash.

If no election is made, both dividends and capital gain
distributions will be credited to the Institutional Client's account in
Navigator Shares at the net asset value of the shares determined as of the
close of the Exchange on the reinvestment date. Shares received pursuant
to any of the first three (reinvestment) elections above also will be
credited to the account at that net asset value. If an investor elects to
receive dividends or capital gain distributions in cash, a check will be
sent. Investors purchasing through Fairfield may elect at any time to
change the distribution option by notifying in writing Navigator Tax-Free
Intermediate-Term Income Trust, c/o Fairfield Group, Inc., 200 Gibraltar
Road, Horsham, Pennsylvania 19044. Those purchasing through Legg Mason
should write to Navigator Tax-Free Intermediate-Term Income Trust, c/o
Legg Mason Funds Processing, P.O. Box 1476, Baltimore, Maryland, 21203-
1476. An election must be received at least 10 days before the record
date in order to be effective for dividends and capital gain distributions
paid to shareholders as of that date.

TAXES

19
<PAGE>

the federal alternative minimum tax without regard to whether the Fund's
tax-exempt interest is attributable to PABs.

To the extent dividends are derived from taxable income from
temporary investments, from net short-term capital gain or from the use of
certain investment techniques described in "Investment Objective and
Policies," page 8, they are taxable to shareholders as ordinary income
(whether paid in cash or reinvested in Fund shares). No portion of those
dividends will qualify for the corporate dividends-received deduction.
Distributions derived from net capital gain, if any, are taxable to
shareholders as long-term capital gain regardless of the length of time
they have held their Fund shares (and irrespective of whether those
distributions are paid in cash or reinvested in Fund shares).\

Interest on indebtedness incurred or continued by a shareholder
in order to purchase or carry Fund shares generally is not deductible.
Persons who are "substantial users" (or related persons) of facilities
financed by IDBs or PABs should consult their tax advisers before
purchasing shares of the Fund because, for users of certain of these
facilities, the interest on such bonds is not exempt from federal income
tax. For these purposes, a "substantial user" includes a non-exempt person
who regularly uses in trade or business a part of a facility financed from
the proceeds of IDBs or PABs.

A redemption of Fund shares may result in taxable gain or loss to
the redeeming shareholder, depending on whether the redemption proceeds
are more or less than the shareholder's adjusted basis for the redeemed
shares (which normally includes any sales charge paid). An exchange of
Fund shares for shares of any other Legg Mason fund generally will have
similar tax consequences. However, special tax rules apply if (1) a
shareholder disposes of Fund shares through a redemption or exchange
within 90 days after the shareholder acquired the shares and (2) the
shareholder subsequently acquires shares of the Fund or of another Legg
Mason fund without the imposition of a sales charge that otherwise would
have been imposed except for the reinstatement privilege or exchange
privilege. See "How To Purchase and Redeem Shares," page 14, and
"Shareholder Services--Exchange Privilege," page 19. In these cases, any
sales charge that was imposed on the purchase of those shares will not be
taken into account in determining the amount of gain or loss on the
redemption or exchange--the tax effect of that charge will instead be
deferred by being treated as having been incurred in connection with the
newly acquired shares. In addition, if Fund shares are purchased within 30
days before or after redeeming Fund shares at a loss, all or part of that
loss will not be deductible and instead will increase the basis of the
newly purchased shares.

Shareholders receive information after the close of each year
concerning the federal income tax status of all dividends and capital gain
distributions. The Fund is required to withhold 31% of all taxable
dividends, capital gain distributions and redemption proceeds payable to
any individuals and certain other noncorporate shareholders who do not
provide the Fund with a certified taxpayer identification number. The Fund

20
<PAGE>

also is required to withhold 31% of all taxable dividends and capital gain
distributions payable to such shareholders who are otherwise subject to
backup withholding.

SHAREHOLDER SERVICES

CONFIRMATIONS AND REPORTS

Shareholder inquiries should be addressed to "Navigator Tax-Free
Intermediate-Term Income Trust, c/o Legg Mason Funds Processing, P.O. Box
1476, Baltimore, Maryland 21203-1476," or "Fairfield Group, Inc., 200
Gibraltar Road, Horsham, Pennsylvania 19044."

EXCHANGE PRIVILEGE

Holders of Navigator Shares are entitled to exchange them for
Navigator Shares of the following funds, provided the shares to be
acquired are eligible for sale under applicable state securities laws:

NAVIGATOR MONEY MARKET FUND, INC. -- PRIME OBLIGATIONS PORTFOLIO

A money market fund seeking to provide as high a level of current
interest income as is consistent with liquidity and relative stability of
principal.

21
<PAGE>

NAVIGATOR TAX-FREE MONEY MARKET FUND, INC.

NAVIGATOR VALUE TRUST

A mutual fund seeking long-term growth of capital.

NAVIGATOR TOTAL RETURN TRUST

A mutual fund seeking capital appreciation and current income in
order to achieve an attractive total investment return consistent with
reasonable risk.

NAVIGATOR SPECIAL INVESTMENT TRUST

A mutual fund seeking capital appreciation by investing
principally in issuers with market capitalizations of less than $2.5
billion.

NAVIGATOR AMERICAN LEADING COMPANIES TRUST

A mutual fund seeking long-term capital appreciation and current
income consistent with prudent investment risk.
NAVIGATOR U.S. GOVERNMENT INTERMEDIATE-TERM PORTFOLIO

NAVIGATOR MARYLAND TAX-FREE INCOME TRUST

NAVIGATOR PENNSYLVANIA TAX-FREE INCOME TRUST

LEGG MASON CASH RESERVE TRUST

A money market fund seeking stability of principal and current
income consistent with stability of principal.

22
<PAGE>

Investments by exchange into other Navigator funds are made at
the per share net asset value next determined on the same business day as
redemption of the Fund shares you wish to exchange. To obtain further
information concerning the exchange privilege and prospectuses of other
Navigator funds, or to make an exchange, please contact your investment
executive. To effect an exchange by telephone, please call your investment
executive with the information described in the section "How to Purchase
and Redeem Shares," page 14. The other factors relating to telephone
redemptions described in that section apply also to telephone exchanges.
Please read the prospectus for the other funds carefully before you invest
by exchange. The Fund reserves the right to modify or terminate the
exchange privilege upon 60 days' notice to shareholders. There is no
assurance the money market funds will be able to maintain a $1.00 share
price. None of the funds is insured or guaranteed by the U.S. Government.

THE FUND'S MANAGEMENT AND INVESTMENT ADVISER

BOARD OF DIRECTORS

The business and affairs of the Fund are managed under the
direction of the Board of Trustees of the Trust.

ADVISER

Pursuant to a voluntary expense limitation, the Adviser has
agreed to waive the management fee and assume certain other expenses
(exclusive of taxes, interest, brokerage fees and extraordinary expenses)
in excess of 0.40% (annualized) of average daily net assets attributable
to Navigator Shares until January 31, 1996 or until the Fund's net assets
reach $100 million, whichever occurs first.

The Adviser acts as investment adviser, manager or consultant to
fifteen investment company portfolios (excluding the Fund) which had
aggregate assets under management of approximately $4.4 billion as of May
31, 1995. The Adviser's address is 111 South Calvert Street, Baltimore,
Maryland 21202.

Victoria M. Schwatka has been primarily responsible for the
day-to-day management of the Fund since its inception. Ms. Schwatka is a

23
<PAGE>

portfolio manager and Senior Vice-President of Legg Mason's Fixed Income
Group. Ms. Schwatka has been employed by Legg Mason since June, 1986.

THE FUND'S DISTRIBUTOR

Legg Mason is the distributor of the Fund's shares pursuant to an
Underwriting Agreement with the Fund. The Underwriting Agreement obligates
Legg Mason to pay certain expenses in connection with the offering of
shares of the Fund, including any compensation to its investment
executives, the printing and distribution of prospectuses, statements of
additional information and periodic reports used in connection with the
offering to prospective investors, after the prospectuses, statements of
additional information and reports have been prepared, set in type and
mailed to existing shareholders at the Fund's expense, and for any
supplementary sales literature and advertising costs. Legg Mason also
assists BFDS with certain of its duties as transfer agent; for the year
ended March 31, 1995, Legg Mason received from BFDS $6,059 for performing
such services in connection with the Fund.

The Chairman, President and Treasurer of the Fund are employed by
Legg Mason.

DESCRIPTION OF THE TRUST AND ITS SHARES

24
<PAGE>

The Board of Trustees of the Trust does not anticipate that there
will be any conflicts among the interests of the holders of the different
Classes of Fund shares. On an ongoing basis, the Board will consider
whether any such conflict exists and, if so, take appropriate action.

25
<PAGE>

TABLE OF CONTENTS

Fund Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . 5
Performance Information . . . . . . . . . . . . . . . . . . . . . . . . 6
Investment Objective and Policies . . . . . . . . . . . . . . . . . . . 8
How to Purchase and Redeem Shares . . . . . . . . . . . . . . . . . . . 14
How Shareholder Accounts are Maintained . . . . . . . . . . . . . . . . 16
How Net Asset Value is Determined . . . . . . . . . . . . . . . . . . . 16
Dividends and Other Distributions . . . . . . . . . . . . . . . . . . . 16
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Shareholder Services . . . . . . . . . . . . . . . . . . . . . . . . . 18
The Fund's Management and Investment Adviser . . . . . . . . . . . . . 20
The Fund's Distributor . . . . . . . . . . . . . . . . . . . . . . . . 21
Description of the Trust and Its Shares . . . . . . . . . . . . . . . . 21

ADDRESSES

DISTRIBUTOR:
Legg Mason Wood Walker, Inc.
111 South Calvert Street
P.O. Box 1476, Baltimore, MD 21203-1476
410-539-0000 800-822-5544

TRANSFER AND SHAREHOLDER SERVICING AGENT:
Boston Financial Data Services
P.O. Box 953, Boston, MA 02103

COUNSEL:
Kirkpatrick & Lockhart LLP
1800 M Street, N.W., Washington, DC 20036

INDEPENDENT ACCOUNTANTS:
Coopers & Lybrand L.L.P.
217 East Redwood Street, Baltimore, Maryland 21202

LMF - 038A
<PAGE>

THE 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

PRIMARY SHARES
NAVIGATOR SHARES

STATEMENT OF ADDITIONAL INFORMATION

The Legg Mason Tax-Free Income Fund ("Trust") is an open-end
investment company which currently has three separate investment series.

Legg Mason Maryland Tax-Free Income Trust ("Maryland Tax-Free
Fund") seeks 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. In attempting to achieve the Maryland
Tax-Free Fund's objective, the Fund's investment adviser, Legg Mason Fund
Adviser, Inc. ("Adviser"), invests primarily in debt instruments issued by
or on behalf of the state of Maryland, its political subdivisions,
municipalities, agencies, instrumentalities or public authorities, the
interest on which, in the opinion of counsel to the issuer, is exempt from
federal and Maryland state and local income tax ("Maryland municipal
obligations") and which are investment grade.
Legg Mason Pennsylvania Tax-Free Income Trust ("Pennsylvania
Tax-Free Fund") seeks 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. In attempting to achieve the
Pennsylvania Tax-Free Fund's objective, the Adviser invests primarily in
debt instruments issued by or on behalf of the Commonwealth of
Pennsylvania, its political subdivisions, municipalities, agencies,
instrumentalities or public authorities, the interest on which, in the
opinion of counsel to the issuer, is exempt from federal income tax and
Pennsylvania personal income tax ("Pennsylvania municipal obligations")
and which are investment grade.

Legg Mason Tax-Free Intermediate-Term Income Trust ("Tax-Free
Intermediate Fund") seeks a high level of current income exempt from
federal income tax, consistent with prudent investment risk and
preservation of capital. In attempting to achieve the Tax-Free
Intermediate Fund's objective, the Adviser invests primarily in debt
instruments issued by or on behalf of states, territories and possessions
of the United States, the District of Columbia and their respective
authorities, agencies, instrumentalities and political subdivisions, the
interest on which, in the opinion of counsel to the issuer, is exempt from
federal income tax ("municipal obligations") and which are investment
grade.

Under normal circumstances, each Fund's investment in
obligations the interest on which is a tax preference item for purposes of
the federal alternative minimum tax ("Tax Preference Item") will be
limited to a maximum of 20% of its total assets.

<PAGE>

Shares of Navigator Maryland Tax-Free Fund, Navigator
Pennsylvania Tax-Free Fund and Navigator Tax-Free Intermediate Fund
(collectively referred to as "Navigator Shares") represent interests in
the Funds that are currently offered for sale only to institutional
clients of the Fairfield Group, Inc. ("Fairfield") for investment of their
own funds and funds for which they act in a fiduciary capacity, to clients
of Legg Mason Trust Company ("Trust Company") for which Trust Company
exercises discretionary investment management responsibility (such
institutional investors are referred to collectively as "Institutional
Clients" and accounts of the customers with such Clients ("Customers") are
referred to collectively as "Customer Accounts"), to qualified retirement
plans managed on a discretionary basis and having net assets of at least
$200 million, and to The Legg Mason Profit Sharing Plan and Trust. The
Navigator Class of Shares of each Fund may not be purchased by individuals
directly, but Institutional Clients may purchase shares for Customer
Accounts maintained for individuals.

The Primary Class of shares of Legg Mason Maryland Tax-Free
Fund, Legg Mason Pennsylvania Tax-Free Fund and Legg Mason Tax-Free
Intermediate Fund (collectively referred to as "Primary Shares") is
offered for sale to all other investors and may be purchased directly by
individuals. The Primary Class of shares of Legg Mason Maryland Tax-Free
Fund and Legg Mason Pennsylvania Tax-Free Fund are sold with a front-end
sales charge. The front-end sales charge is waived for all purchases of
Primary Shares of the Legg Mason Tax-Free Intermediate Fund through
January 31 , 1996.

Navigator Shares are sold and redeemed without any purchase
or redemption charge imposed by the Funds, although Institutions may
charge their Customer Accounts for services provided in connection with
the purchase or redemption of Navigator Shares. The Funds pay management
fees to Legg Mason Fund Adviser, Inc. Primary Shares pay a 12b-1
distribution fee, but Navigator Shares pay no distribution fees. See "The
Fund's Distributor."

Mutual fund shares are not deposits or obligations of, or
guaranteed or endorsed by, any bank or other depository institution.
Shares are not insured by the FDIC, the Federal Reserve Board, or any
other agency, and are subject to investment risk, including the possible
loss of the principal amount invested.

This Statement of Additional Information is not a prospectus
and should be read in conjunction with the Prospectuses for Primary Shares
of the Maryland Tax-Free Fund, the Pennsylvania Tax-Free Fund and the Tax-
Free Intermediate Fund (each individually a "Fund" and collectively
"Funds"), each dated July 31, 1995, as appropriate, which have been filed
with the Securities and Exchange Commission ("SEC"). Copies of the Funds'
Prospectuses are available without charge from the Funds at (410) 539-
0000.

<PAGE>

Dated: July 31, 1995

Legg Mason Wood Walker
Incorporated
--------------------------------------------------------------------------
111 South Calvert Street
P.O. Box 1476
Baltimore, Maryland 21203-1476
(410) 539-0000 (800) 822-5544

This Statement of Additional Information is not authorized
for use unless preceded or accompanied by a Prospectus.
<PAGE>

LEGG MASON TAX-FREE INCOME FUND
Table of Contents

Page
----

Additional Information About Investment
Limitations and Policies 1
Additional Purchase and Redemption Information 16
Special Factors Affecting Maryland and
Pennsylvania 19
Additional Tax Information 24
Valuation of Fund Shares 26
Performance Information 28
The Trust's Trustees and Officers 33
The Funds' Investment Adviser 36
The Funds' Distributor 38
Portfolio Transactions and Brokerage 42
The Trust's Custodian and Transfer and
Dividend-Disbursing Agent 44
Other Information 45
The Trust's Legal Counsel 45
The Trust's Independent Accountants 45
Financial Statements 45
Appendix A: Ratings of Securities A-1

No person has been authorized to give any information or to make
any representations not contained in the Prospectuses or this Statement of
Additional Information in connection with the offering made by the
Prospectuses and, if given or made, such information or representations
must not be relied upon as having been authorized by a Fund or its
distributor. The Prospectuses and this Statement of Additional
Information do not constitute an offering by any Fund or by its
distributor in any jurisdiction in which such offering may not lawfully be
made.
<PAGE>

ADDITIONAL INFORMATION ABOUT INVESTMENT
LIMITATIONS AND POLICIES

In addition to the investment objectives described in the
Prospectuses, each Fund has adopted certain fundamental investment
limitations that cannot be changed except by a vote of the shareholders of
that Fund. The following are each Fund's fundamental investment
limitations set forth in their entirety. Each Fund 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);

2. 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;

3. 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;

4. Buy or hold any real estate other than municipal bonds
secured by real estate or interests therein;

5. 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;

6. Purchase or sell any oil, gas or mineral exploration or
development programs;

7. 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;

8. 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;

9. Make short sales of securities or maintain a short
position, except that the Fund may (a) make short sales and maintain short

1
<PAGE>

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);

The foregoing investment limitations cannot be changed without
the affirmative vote of the lesser of (1) more than 50% of the outstanding
shares of the Fund or (2) 67% or more of the shares present at a
shareholders' meeting if more than 50% of the outstanding shares are
represented at the meeting in person or by proxy.

As a non-fundamental investment limitation (which may be changed
by the vote of the Trust's Board of Trustees without shareholder
approval), each Fund will not:

1. Invest more than 10% of its net assets in illiquid
securities, a term which means securities that cannot be disposed of
within seven days in the normal course of business at approximately the
amount at which the Fund has valued the securities and includes, among
other things, repurchase agreements maturing in more than seven days;

2. 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 the Pennsylvania Tax-Free Fund and
Maryland municipal obligations for the Maryland Tax-Free Fund; and (c)
municipal obligations for the Tax-Free Intermediate Fund. For the purpose
of this restriction, industrial development bonds issued by non-
governmental users will not be considered municipal obligations; or

3. Invest in oil, gas or other mineral leases or in real estate
limited partnership interests.

In addition, the Pennsylvania Tax-Free Fund will not purchase
the securities of other open-end investment companies, except in
connection with a merger, consolidation, reorganization or acquisition of
assets.

If any percentage restriction is adhered to at the time of an
investment or transaction, a later increase or decrease in percentage
resulting from a change in value of portfolio securities or amount of
total assets of a Fund will not be considered a violation of any of the
foregoing fundamental or non-fundamental limitations.

Unless otherwise specified, the policies and limitations set
forth in this Statement of Additional Information are non-fundamental and
can be changed without a shareholder vote. Each Fund anticipates being as
fully invested as practicable in municipal obligations; however, there may
be occasions when, as a result of maturities of portfolio securities, or
sales of a Fund's shares, or in order to meet anticipated redemption
requests, a Fund may hold cash which is not earning income.

2
<PAGE>

Municipal Obligations

The municipal obligations in which each Fund may invest include
municipal leases and participation interests therein. These obligations,
which may take the form of a lease, an installment purchase or a
conditional sales contract, are issued by state and local governments and
authorities to acquire land and a wide variety of equipment and
facilities, such as fire and sanitation vehicles, telecommunications
equipment and other capital assets. Rather than holding such obligations
directly, a Fund may purchase a participation interest in a municipal
lease obligation from a bank or other third party. A participation
interest gives a Fund a specified, undivided pro-rata interest in the
total amount of the obligation.

Municipal lease obligations have risks distinct from those
associated with general obligation or revenue bonds. State constitutions
and statutes set forth requirements that states or municipalities must
meet to incur debt. These may include voter referenda, interest rate
limits or public sale requirements. Leases, installment purchase or
conditional sale contracts (which normally provide for title to the leased
asset to pass to the governmental issuer) have evolved as a means for
governmental issuers to acquire property and equipment without meeting
their constitutional and statutory requirements for the issuance of debt.
The debt-issuance limitations are deemed inapplicable because of the
inclusion in many leases and contracts of "non-appropriation" clauses
providing that the governmental user has no obligation to make future
payments under the lease or contract unless money is appropriated for such
purpose by the appropriate legislative body on a yearly or other periodic
basis.

In determining the liquidity of a municipal lease obligation, the
Adviser will distinguish between simple or direct municipal leases and
municipal lease-backed securities, the latter of which may take the form
of a lease-backed revenue bond or other investment structure using a
municipal lease-purchase agreement as its base. While the former may
present special liquidity issues, the latter are based on a well
established method of securing payment of a municipal obligation. A
Fund's investment in municipal lease obligations and participation
interests therein will be treated as illiquid unless the Adviser
determines, pursuant to guidelines established by the Board of Directors,
that the security could be disposed of within seven days in the normal
course of business at approximately the amount at which the Fund has
valued the security.

The municipal obligations in which each Fund may invest also
include zero coupon bonds and deferred interest bonds, although each Fund
currently does not intend to invest more than 5% of the value of its total
assets in such instruments during the coming year. Zero coupon and
deferred interest bonds are debt obligations which are issued at a
significant discount from face value. Like other municipal securities,
the price can also reflect a premium or discount to par reflecting the
market's judgment as to the issuer's creditworthiness, the interest rate

3
<PAGE>

or other similar factors. The discount approximates the total amount of
interest the bonds will accrue and compound over the period until maturity
or the first interest payment date at a rate of interest reflecting the
market rate of the security at the time of issuance. While zero coupon
bonds do not require the periodic payment of interest, deferred interest
bonds provide for a period of delay before the regular payment of interest
begins. Such instruments benefit the issuer by mitigating its need for
cash to meet debt service, but also require a higher rate of return to
attract investors who are willing to defer receipt of such cash. Such
instruments may experience greater volatility in market value than debt
obligations which make regular payments of interest. Each Fund will
accrue income on such investments for accounting purposes, which is
distributable to shareholders.

An issuer's obligations under its municipal obligations are
subject to the provisions of bankruptcy, insolvency and other laws
affecting the rights and remedies of creditors, such as the Federal
Bankruptcy Act, and laws that may be enacted by Congress or state
legislatures extending the time for payment of principal or interest, or
both, or imposing other constraints upon enforcement of such obligations.
There is also the possibility that as a result of litigation or other
conditions the power or ability of issuers to meet their obligations for
the payment of interest and principal on their municipal obligations may
be materially and adversely affected.

Opinions relating to the validity of municipal obligations, to
the exemption of interest thereon from federal income tax, Maryland state
and local income taxes and Pennsylvania personal income tax, and to the
lack of treatment of that interest as a Tax Preference Item, respectively,
are rendered by counsel to the issuers at the time of issuance. Neither
the Funds nor the Adviser will independently review the basis for such
opinions.

The United States Supreme Court has held that Congress may
subject the interest on municipal obligations to federal income tax. It
can be expected that, as in the past, proposals will be introduced before
Congress for the purpose of restricting or eliminating the federal income
tax exemption for interest on municipal obligations. Proposals also may
be introduced in state legislatures which could affect the state tax
treatment of the Maryland, Pennsylvania and Intermediate-Term Tax-Free
Funds' distributions. If any such proposals were enacted, the availability
of municipal obligations for investment by the Funds and the value of
their assets could be materially and adversely affected. In such event,
each Fund would re-evaluate its investment objective and policies and
consider changes in its structure or possible dissolution.

When-Issued Securities

Delivery of and payment for when-issued securities normally take
place 15 to 45 days after the date of the commitment. Interest rates on
when-issued securities are normally fixed at the time of the commitment.
Consequently, increases in the market rate of interest between the

4
<PAGE>

commitment date and settlement date may result in a market value for the
security on the settlement date that is less than its purchase price.

With regard to each such commitment, a Fund maintains in a
segregated account with the custodian, commencing on the date of such
commitment, cash, U.S. government securities or other high-quality liquid
debt securities equal in value to the purchase price for the when-issued
securities due on the settlement date. Each Fund only makes when-issued
commitments with the intention of actually acquiring the securities
subject thereto, but a Fund may sell these securities before the
settlement date if market conditions warrant. When payment is due for
when-issued securities, a Fund meets its obligations from then-available
cash flow, from the sale of securities or, although it would not normally
expect to do so, from the sale of the when-issued securities themselves
(which may have a market value greater or less than the Fund's payment
obligation). The purchase of when-issued securities may affect a Fund's
share price in a manner similar to the use of borrowing.

Callable Bonds

Callable bonds generally have call-protection (that is, a period
of time during which the bonds may not be called) which usually lasts for
7 to 10 years from the date of issue, after which time such bonds may be
redeemed by the issuer. An issuer may generally be expected to call its
bonds, or a portion of them, during periods of declining interest rates,
when borrowings may be replaced at lower rates than those obtained in
prior years. If interest rates decline as the call-protection on callable
bonds expires, there is an increased likelihood that a number of such
bonds may in fact be redeemed by the issuers.

Stand-By Commitments

When a Fund exercises a stand-by commitment that it has acquired
from a dealer with respect to municipal obligations held by it, the dealer
normally pays the Fund an amount equal to (1) the Fund's acquisition cost
of the municipal obligations (excluding any accrued interest which the
Fund paid on its acquisition) less any amortized market premium or plus
any amortized market or original issue discount during the period the Fund
owned the securities, plus (2) all interest accrued on the securities
since the last interest payment date or the date the securities were
purchased by the Fund, whichever is later. The Fund's right to exercise
stand-by commitments is unconditional and unqualified and exercisable by
the Fund at any time prior to the underlying securities' maturity.

A stand-by commitment is not transferable by a Fund without the
underlying securities, although the Fund could sell the underlying
municipal obligations to a third party at any time. The Fund may pay for
stand-by commitments either separately in cash or by paying a higher price
for portfolio securities which are acquired subject to such a commitment
(thus reducing the yield to maturity otherwise available for the same
securities). Each Fund intends to enter into stand-by commitments only

5
<PAGE>

with those banks, brokers and dealers that in the Adviser's opinion
present minimal credit risks.

Each Fund intends to acquire stand-by commitments solely to
facilitate liquidity and does not intend to exercise its rights thereunder
for trading purposes. The acquisition of a stand-by commitment would not
ordinarily affect the valuation or assumed maturity of the underlying
municipal obligations. Stand-by commitments would not affect the average
weighted maturity of the assets of a Fund.

Variable Rate and Floating Rate Obligations

A variable rate obligation differs from an obligation with a
fixed rate coupon, the value of which fluctuates in inverse relation to
interest rate changes. If interest rates decline below the coupon rate,
generally the value of a fixed rate obligation increases and the
obligation sells at a premium. Should interest rates increase above the
coupon rate, generally the value of a fixed rate obligation decreases and
the obligation sells at a discount. The magnitude of such capital
fluctuations is also a function of the period of time remaining until the
obligation matures. Short-term fixed rate obligations are minimally
affected by interest rate changes; the greater the remaining period until
maturity, the greater the fluctuation in value of a fixed rate obligation
is likely to be.

Variable rate obligation coupons are not fixed for the full term
of the obligation, but are adjusted periodically based upon changes in
prevailing interest rates. As a result, the value of variable rate
obligations is less affected by changes in interest rates. The more
frequently such obligations are adjusted, the less such obligations are
affected by interest rate changes during the period between adjustments.
The value of a variable rate obligation, however, may fluctuate in
response to market factors and changes in the creditworthiness of the
issuer.

By investing in variable rate obligations, a Fund hopes to take
advantage of the normal yield curve function that usually results in
higher yields on longer-term investments. This policy also means that
should interest rates decline, the yield of the Fund will decline, and the
Fund and its shareholders will forego the opportunity for, respectively,
capital appreciation of its portfolio investments and of their shares.
Should interest rates increase, the yield of the Fund will increase, and
the Fund and its shareholders will diminish the risk of, respectively,
capital depreciation of its portfolio investments and of their shares.
There is no limitation on the percentage of a Fund's assets that may be
invested in variable rate obligations. However, each Fund will limit the
value of its investments in any variable rate securities that are illiquid
and in all other illiquid securities to 10% or less of its net assets.

Floating rate obligations also are not fixed, but are adjusted as
specified benchmark interest rates change. In other respects, their
characteristics are similar to variable rate notes, as discussed above.

6
<PAGE>

Yield Factors and Ratings

Standard & Poor's Ratings Group ("S&P"), Moody's Investors
Service, Inc. ("Moody's") and Fitch Investors Service, Inc. ("Fitch") are
private services that provide ratings of the credit quality of
obligations. A description of the ratings assigned to obligations by
Moody's, S&P and Fitch is included in Appendix A. A Fund may consider
these ratings in determining whether to purchase, sell or hold a security.
The ratings represent Moody's, S&P's and Fitch's opinions as to the
quality of the obligations which they undertake to rate. Ratings are
general and are not absolute standards of quality. Consequently,
obligations with the same maturity, interest rate and rating may have
different market prices. In addition to ratings assigned to individual
bond issues, the Adviser will analyze interest rate trends and
developments that may affect individual issuers, including factors such as
liquidity, profitability and asset quality. Credit rating agencies
attempt to evaluate the safety of principal and interest payments and do
not evaluate the risks of fluctuations in market value. Also, rating
agencies may fail to make timely changes in credit ratings in response to
subsequent events, so that an issuer's current financial condition may be
better or worse than the rating indicates.

Securities Lending

A Fund may lend portfolio securities to dealers in municipal
securities, brokers or dealers in corporate or government securities,
banks or other recognized institutional borrowers of securities, provided
that cash or equivalent collateral, equal to at least 100% of the market
value of the securities loaned, is continuously maintained by the borrower
with the Fund. During the time portfolio securities are on loan, the
borrower will pay the Fund an amount equivalent to any dividends or
interest paid on such securities, and the Fund may invest the cash
collateral and earn income, or it may receive an agreed upon amount of
taxable interest income from the borrower who has delivered equivalent
collateral. These loans are subject to termination at the option of the
Fund or the borrower. The Fund may pay reasonable administrative and
custodial fees in connection with a loan and may pay a negotiated portion
of the interest earned on the cash or equivalent collateral to the
borrower or placing broker. The Funds do not have the right to vote
securities on loan, but each Fund would terminate the loan and regain the
right to vote if that were considered important with respect to the
investment. Because interest from securities lending is taxable, each
Fund presently does not intend to loan more than 5% of its portfolio
securities at any given time.

Reverse Repurchase Agreements

A reverse repurchase agreement is a portfolio management
technique in which a Fund temporarily transfers possession of a portfolio
instrument to another person, such as a financial institution or broker-
dealer, in return for cash. At the same time, the Fund agrees to
repurchase the instrument at an agreed upon time (normally within seven

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<PAGE>

days) and price, including interest payment. A Fund may engage in reverse
repurchase agreements as a means of raising cash to satisfy redemption
requests or for other temporary or emergency purposes without the
necessity of selling portfolio instruments. A Fund may also engage in
reverse repurchase agreements in order to reinvest the proceeds in other
securities or repurchase agreements. Such a use of reverse repurchase
agreements would constitute a form of leverage.

When a Fund reinvests the proceeds of a reverse repurchase
agreement in other securities, any fluctuations in the market value of
either the securities transferred to another party or the securities in
which the proceeds are invested would affect the market value of the
Fund's assets. As a result, such transactions could increase fluctuation
in the Fund's net asset value. If a Fund reinvests the proceeds of the
agreement at a rate lower than the cost of the agreement, engaging in the
agreement will lower the Fund's yield. While engaging in reverse
repurchase agreements, each Fund will maintain cash, U.S. government
securities or other high-grade, liquid debt securities in a segregated
account at its custodian bank with a value at least equal to the Fund's
obligation under the agreements.

The ability of a Fund to engage in reverse repurchase agreements
is subject to the Fund's fundamental investment limitation concerning
borrowing described above.

Repurchase Agreements

A repurchase agreement is an agreement under which U.S.
government obligations or other high-quality debt securities are acquired
by a Fund from a securities dealer or bank subject to resale at a
previously agreed-upon price and date. The resale price reflects an
agreed interest rate effective for the period the securities are held and
is unrelated to the interest rate provided by the securities. In these
transactions, the securities acquired by the Fund are held by its
custodian until resold and will be supplemented by additional collateral
if necessary to maintain a total value equal to or in excess of the value
of the repurchase agreements. Repurchase agreements are usually for
periods of one week or less, but may be for longer periods. Each Fund
will not enter into repurchase agreements of more than seven days duration
if more than 10% of its net assets would be invested in such agreements
and other illiquid investments. A Fund's income from repurchase
agreements is taxable income.

To the extent that proceeds from the sale upon a default of the
obligation to repurchase were less than the repurchase price, a Fund might
suffer a loss. In addition, if bankruptcy proceedings are commenced with
respect to the seller of the securities, realization upon the collateral
by the Fund could be delayed or limited, during which time the value of
the Fund's collateral might decline. However, each Fund has adopted
standards for the parties with whom it will enter into repurchase
agreements that the Trust's Board of Trustees believes are reasonably
designed to assure that each party presents no serious risk of becoming

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<PAGE>

involved in bankruptcy proceedings within the time frame contemplated by
the repurchase agreement.

Interest Rate Futures Contracts

Interest rate futures contracts, which are traded on commodity
futures exchanges, provide for the sale by one party and the purchase by
another party of a specified type and amount of financial instruments (or
an index of financial instruments) at a specified future date. Interest
rate futures contracts currently exist covering such financial instruments
as U.S. Treasury bonds, notes and bills, Government National Mortgage
Association certificates, bank certificates of deposit and 90-day
commercial paper. An interest rate futures contract may be held until the
underlying instrument is delivered and paid for on the delivery date, but
most contracts are closed out before then by taking an offsetting position
on a futures exchange.

A Fund may purchase an interest rate futures contract (that is,
enter into a futures contract to purchase an underlying financial
instrument) when it intends to purchase fixed income securities but has
not yet done so. This strategy is sometimes called an anticipatory hedge.
This strategy is intended to minimize the effects of an increase in the
price of the securities the Fund intends to purchase (but may also reduce
the effects of a decrease in price), because the value of the futures
contract would be expected to rise and fall in the same direction as the
price of the securities the Fund intends to purchase. The Fund could
purchase the intended securities either by holding the contract until
delivery and receiving the financial instrument underlying the futures
contract, or by purchasing the securities directly and closing out the
futures contract position. If the Fund no longer wished to purchase the
securities, it would close out the futures contract before delivery.

A Fund may sell a futures contract (that is, enter into a futures
contract to sell an underlying financial instrument) to offset price
changes of securities it already owns. This strategy is intended to
minimize any price changes in the securities the Fund owns (whether
increases or decreases) caused by interest rate changes, because the value
of the futures contract would be expected to move in the opposite
direction from the value of the securities owned by the Fund. The Funds
do not expect ordinarily to hold futures contracts they have sold until
delivery or to use securities they own to satisfy delivery requirements.
Instead, each Fund expects to close out such contracts before the delivery
date.

The prices of interest rate futures contracts depend primarily on
the value of the instruments on which they are based, the price changes of
which, in turn, primarily reflect changes in current interest rates.
Because there are a limited number of types of interest rate futures
contracts, it is likely that the standardized futures contracts available
to a Fund will not exactly match the securities the Fund wishes to hedge
or intends to purchase, and consequently will not provide a perfect hedge
against all price fluctuation. Because fixed income instruments all

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<PAGE>

respond similarly to changes in interest rates, however, a futures
contract, the underlying instrument of which differs from the securities
the Fund wishes to hedge or intends to purchase, may still provide
protection against changes in interest rate levels. To compensate for
differences in historical volatility between positions a Fund wishes to
hedge and the standardized futures contracts available to it, the Fund may
purchase or sell futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase.

Futures Trading

If a Fund does not wish to hold a futures contract position until
the underlying instrument is delivered and paid for on the delivery date,
it may attempt to close out the contract by entering into an offsetting
position on a futures exchange that provides a secondary market for the
contract. A futures contract is closed out by entering into an opposite
position in an identical futures contract (for example, by purchasing a
contract on the same instrument and with the same delivery date as a
contract the Fund had sold) at the current price as determined on the
futures exchange. A Fund's gain or loss on closing out a futures contract
depends on the difference between the price at which the Fund entered into
the contract and the price at which the contract is closed out.
Transaction costs in opening and closing futures contracts must also be
taken into account. There can be no assurance that a Fund will be able to
offset a futures position at the time it wishes to, or at a price that is
advantageous. If a Fund were unable to enter into an offsetting position
in a futures contract, it might have to continue to hold the contract
until the delivery date, in which case it would continue to bear the risk
of price fluctuation in the contract until the underlying instrument was
delivered and paid for.

At the time a Fund enters into an interest rate futures contract,
it is required to deposit with its custodian, in the name of the futures
broker (known as a futures commission merchant, or "FCM"), a percentage of
the contract's value. This amount, which is known as initial margin,
generally equals 5% or less of the value of the futures contract. Initial
margin is in the nature of a good faith deposit or performance bond, and
is returned to the Fund when the futures position is terminated, after all
contractual obligations have been satisfied. Futures margin does not
represent a borrowing by a Fund, unlike margin extended by a securities
broker, and depositing initial margin in connection with futures positions
does not constitute purchasing securities on margin for the purposes of a
Fund's investment limitations. Initial margin may be maintained either in
cash or other liquid, high-quality debt securities such as U.S. government
securities.

As the contract's value fluctuates, payments known as variation
margin or maintenance margin are made to or received from the FCM. If the
contract's value moves against the Fund (i.e., the Fund's futures position
declines in value), the Fund may be required to make payments to the FCM,
and, conversely, the Fund may be entitled to receive payments from the FCM

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<PAGE>

if the value of its futures position increases. This process is known as
marking-to- market and takes place on a daily basis.

In addition to initial margin deposits, the Fund will instruct
its custodian to segregate additional cash and liquid, high-grade debt
securities to cover its obligations under futures contracts it has
purchased. The value of the assets held in the segregated account will be
equal to the daily market value of all outstanding futures contracts
purchased by the Fund, less the amount deposited as initial margin. When
the Fund has sold futures contracts to hedge securities it owns, it will
not sell those securities (or lend to another party) while the contracts
are outstanding, unless it substitutes other similar securities for the
securities sold or lent. The Fund will not sell futures contracts with a
value exceeding the value of securities it owns, except that the Fund may
do so to the extent necessary to adjust for differences in historical
volatility between the securities owned and the contracts used as a hedge.

Risks of Interest Rate Future Contracts

By purchasing an interest rate futures contract, the Fund in
effect becomes exposed to price fluctuations resulting from changes in
interest rates, and by selling a futures contract the Fund neutralizes
those fluctuations. If interest rates fall, the Fund would expect to
profit from an increase in the value of the instrument underlying a
futures contract it had purchased, and if interest rates rise, the Fund
would expect to offset the resulting decline in the value of the
securities it owns by profits in a futures contract it has sold. If
interest rates move in the direction opposite that which was contemplated
at the time of purchase, however, the Fund's positions in futures
contracts could have a negative effect on the Fund's net asset value. If
interest rates rise when the Fund has purchased futures contracts, the
Fund could suffer a loss in its futures positions. Similarly, if interest
rates fall, losses in a futures contract a Fund has sold could negate
gains on securities the Fund owns, or could result in a net loss to the
Fund. In this sense, successful use of interest rate futures contracts by
a Fund will depend on the Adviser's ability to hedge the Fund in the
correct way at the appropriate time.

Other than the risk that interest rates will not move as
expected, the primary risk in employing interest rate futures contracts is
that the market value of the futures contracts may not move in concert
with the value of the securities the Fund wishes to hedge or intends to
purchase. This may result from differences between the instrument
underlying the futures contracts and the securities the Fund wishes to
hedge or intends to purchase, as would be the case, for example, if the
Fund hedged U.S. Treasury bonds by selling futures contracts on U.S.
Treasury notes.

Even if the securities which are the objects of a hedge are
identical to those underlying the futures contract, there may not be
perfect price correlation between the two. Although the value of interest

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<PAGE>

rate futures contracts is primarily determined by the price of the
underlying financial instruments, the value of interest rate futures
contracts is also affected by other factors, such as current and
anticipated short-term and long-term interest rates, the time remaining
until expiration of the futures contract, and conditions in the futures
markets, which may not affect the current market price of the underlying
financial instruments in the same way. In addition, futures exchanges
establish daily price limits for interest rate futures contracts, and may
halt trading in the contracts if their prices move upward and downward
more than a specified daily limit on a given day. This could distort the
relationship between the price of the underlying instrument and the
futures contract, and could prevent prompt liquidation of unfavorable
futures positions. The value of a futures contract may also move
differently from the price of the underlying financial instrument because
of inherent differences between the futures and securities markets,
including variations in speculative demand for futures contracts and for
debt securities, the differing margin requirements for futures contracts
and debt securities, and possible differences in liquidity between the two
markets.

Put Options on Interest Rate Futures Contracts

Purchasing a put option on an interest rate futures contract
gives a Fund the right to assume a seller's position in the contract at a
specified exercise price at any time up to the option's expiration date.
In return for this right, the Fund pays the current market price for the
option (known as the option premium), as determined on the commodity
futures exchange where the option is traded.

A Fund may purchase put options on interest rate futures
contracts to hedge against a decline in the market value of securities the
Fund owns. Because a put option is based on a contract to sell a
financial instrument at a certain price, its value will tend to move in
the opposite direction from the price of the financial instrument
underlying the futures contract; that is, the put option's value will tend
to rise when prices fall, and fall when prices rise. By purchasing a put
option on an interest rate futures contract, the Fund would attempt to
offset potential depreciation of securities it owns by appreciation of the
put option. This strategy is similar to selling the underlying futures
contract directly.

A Fund's position in a put option on an interest rate futures
contract may be terminated either by exercising the option (and assuming a
seller's position in the underlying futures contract at the option's
exercise price) or by closing out the option at the current price as
determined on the futures exchange. If the put option is not exercised or
closed out before its expiration date, the entire premium paid would be
lost by the Fund. A Fund could profit from exercising a put option if the
current market value of the underlying futures contract were less than the
sum of the exercise price of the put option and the premium paid for the
option because the Fund would, in effect, be selling the futures contract
at a price higher than the current market price. A Fund could also profit

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<PAGE>

from closing out a put option if the current market price of the option is
greater than the premium the Fund paid for the option. Transaction costs
must also be taken into account in these calculations. A Fund may close
out an option it had purchased by selling an identical option (that is, an
option on the same futures contract, with the same exercise price and
expiration date) in a closing transaction on a futures exchange that
provides a secondary market for the option. A Fund is not required to
make futures margin payments when it purchases an option on an interest
rate futures contract.

Compared to the purchase or sale of an interest rate futures
contract, the purchase of a put option on an interest rate futures
contract involves a smaller potential risk to the Fund, because the
maximum amount at risk is the premium paid for the option (plus related
transaction costs). If prices of debt securities remain stable, however,
purchasing a put option may involve a greater probability of loss than
selling a futures contract, even though the amount of the potential loss
is limited. The Adviser will consider the different risk and reward
characteristics of options and futures contracts when selecting hedging
instruments.

Risks of Transactions in Options on Interest Rate Futures Contracts

Options on interest rate futures contracts are subject to risks
similar to those described above with respect to interest rate futures
contracts. These risks include the risk that the Adviser may not hedge a
Fund in the correct way at the appropriate time, the risk of imperfect
price correlation between the option and the securities being hedged, and
the risk that there may not be an active secondary market for the option.
There is also a risk of imperfect price correlation between the option and
the underlying futures contract.

Although the Adviser will purchase and write only those options
for which there appears to be a liquid secondary market, there can be no
assurance that such a market will exist for any particular option at any
particular time. If there were no liquid secondary market for a
particular option, a Fund might have to exercise an option it had
purchased in order to realize any profit, and might continue to be
obligated under an option it had written until the option expired or was
exercised.

Options Writing on Debt Securities

A Fund may from time to time write (sell) covered call options
and covered put options on certain of its portfolio securities. When it
writes a covered call option, a Fund obligates itself to sell the
underlying security to the purchaser of the option at a fixed price if the
purchaser exercises the option during the option period. A call is
"covered" if the Fund owns the optioned securities or, in the case of
options on certain U.S. government securities, the Fund maintains with its
custodian in a segregated account cash, U.S. government securities or
other high-grade, liquid debt securities with a value sufficient to meet

13
<PAGE>

its obligations under the call. When a Fund writes a call option, it
receives a premium from the purchaser. During the option period, the Fund
foregoes the opportunity to profit from any increase in the market price
of the security above the exercise price of the option, but retains the
risk that the price of the security may decline.

A Fund may also write covered put options. When a Fund writes a
put option, it receives a premium and gives the purchaser of the put the
right to sell the underlying security to the Fund at the exercise price at
any time during the option period. A put is "covered" if a Fund maintains
cash, U.S. government securities or other high-grade, liquid debt
securities with a value equal to the exercise price in a segregated
account. The risk in writing puts is that the market price of the
underlying security may decline below the exercise price (less the
premiums received).

A Fund may seek to terminate its obligations as a writer of a put
or call option prior to its expiration by entering into a "closing
purchase transaction." A closing purchase transaction is the purchase of
an option covering the same underlying security and having the same
exercise price and expiration date as an option previously written by the
Fund on which it wishes to terminate its obligation.

Risks of Writing Options on Debt Securities

When a Fund writes an option, it assumes the risk of fluctuations
in the value of the underlying security in return for a fixed premium and
must be prepared to satisfy exercise of the option at any time until the
expiration date. The writing of options could also result in an increase
in the Fund's turnover rate, particularly in periods of appreciation in
the market price of the underlying securities. In addition, writing
options on portfolio securities involves a number of other risks,
including the risk that the Adviser may not correctly predict interest
rate movements and the risk that there may not be a liquid secondary
market for the option, as a result of which the Fund might be unable to
effect a closing transaction.

If a Fund is unable to close out an option it has written, it
must continue to bear the risks associated with the option, and must
continue to hold cash or securities to cover the option until the option
is exercised or expires. A Fund may engage in options on securities which
are not traded on national exchanges ("unlisted options"). Because
unlisted options may be closed out only with the other party to the option
transaction, it may be more difficult to close out unlisted options than
listed options.

Regulatory Notification of Futures and Options Strategies

The Trust has filed on behalf of the Funds a notice of
eligibility for exclusion from the definition of the term "commodity pool
operator" with the Commodity Futures Trading Commission ("CFTC") and the
National Futures Association, which regulate trading in the futures

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<PAGE>

markets. Under regulations adopted by the CFTC, futures contracts and
related options may be used by a Fund (a) for hedging purposes, without
quantitative limits, and (b) for other purposes to the extent that the
amount of margin deposit on all such non-hedging futures contracts owned
by the Fund, together with the amount of premiums paid by the Fund on all
such non-hedging options held on futures contracts, does not exceed 5% of
the market value of the Fund's net assets. Each Fund will not purchase
futures contracts or related options if as a result more than 25% of the
Fund's total assets would be so invested. These limits on the Fund's
investments in futures contracts are not fundamental and may be changed by
the Board of Trustees as regulatory agencies permit. Each Fund will not
modify these limits to increase its permissible futures and related
options activities without supplying additional information in a
supplement to a current Prospectus or Statement of Additional Information
that has been distributed or made available to the Fund's shareholders.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

Each Fund offers two classes of shares, known as Primary Shares
and Navigator Shares. Primary Shares are available from Legg Mason and
certain of its affiliates. Navigator Shares are currently offered for
sale only to Institutional Clients, to clients of Trust Company, for which
Trust Company exercises discretionary investment management
responsibility, to qualified retirement plans managed on a discretionary
basis and having net assets of at least $200 million, and to The Legg
Mason Profit Sharing Plan and Trust. Navigator Shares may not be
purchased by individuals directly, but Institutional Clients may purchase
shares for Customer Accounts maintained for individuals. Primary Shares
are available to all other investors.

Future First Systematic Investment Plan

If you invest in Primary Shares, the Prospectus for those shares
explains that you may buy additional Primary Shares through the Future
First Systematic Investment Plan. Under this plan you may arrange for
automatic monthly investments in Primary Shares of $50 or more by
authorizing Boston Financial Data Services ("BFDS"), the Funds' transfer
agent, to prepare a check each month drawn on your checking account. Each
month the transfer agent will send a check to your bank for collection,
and the proceeds of the check will be used to buy Primary Shares of the
Fund you selected at the per share net asset value determined on the day
the check is sent to your bank. An account statement will be sent to you
quarterly. You may terminate the Future First Systematic Investment Plan
at any time without charge or penalty. Forms to enroll in the Future
First Systematic Investment Plan are available from any Legg Mason or
affiliated office.

Purchases by Check

In making purchases of shares by check, you should be aware that
checks drawn on a member bank of the Federal Reserve System will normally
be converted to federal funds and used to purchase shares within two

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<PAGE>

business days of receipt by Legg Mason Wood Walker, Incorporated ("Legg
Mason") or its affiliate. Legg Mason is closed on the days that the New
York Stock Exchange, Inc. ("Exchange") is closed, which are listed under
"Valuation of Fund Shares" on page 22. Checks drawn on banks that are not
members of the Federal Reserve System may take up to nine business days to
be converted.

Letter of Intention -- (Primary Shares)

Through a Letter of Intention ("LOI") you may pay the lower sales
charge on the dollar amount of Primary Shares currently being purchased
plus the dollar amount of any purchases you intend to make during the next
thirteen months of shares of this and other Legg Mason funds sold with an
initial sales charge. To take advantage of an LOI you should indicate the
total amount you intend to purchase over the thirteen-month period on the
form available from your Legg Mason or affiliated investment executive.
Holdings acquired up to 90 days before the LOI is filed will be counted
toward completion of the LOI and will be entitled to a retroactive
downward adjustment of the initial sales charge providing that you bring
the prior purchase(s) to the attention of your Legg Mason or affiliated
investment executive at the time the LOI is filed. The minimum investment
under an LOI is $50,000 for the Maryland, Pennsylvania and Intermediate
Tax-Free Funds. Signing an LOI does not obligate you to purchase the full
amount indicated, but you must complete the intended purchase to obtain
the reduced sales charge. The front-end sales charge is waived for all
purchases of Primary Shares of the Tax-Free Intermediate Fund made through
January 31, 1996.

If the total amount of shares purchased at the end of the
eleventh month does not equal the amount stated in the LOI, you will be
notified in writing by Legg Mason of the amount purchased to date, the
amount required to complete the LOI and the expiration date. If the total
purchases indicated on the LOI are not made within the thirteen-month
period, your account will be charged with the difference between the
reduced LOI sales charge and the sales charge applicable to the purchases
actually made. The first purchase under an LOI must be at least 2.5% of
the intended LOI purchases for the Maryland and Pennsylvania Tax-Free
Funds and 1% for the Tax-Free Intermediate Fund. Shares with a value
equal to 2.5% for the Maryland and Pennsylvania Tax-Free Funds and 1% for
the Tax-Free Intermediate Fund, of the intended LOI purchases will be held
in escrow during the thirteen-month period (registered in your name) to
assure such necessary payment. These escrowed shares may not be exchanged
for shares of other Legg Mason funds.

Right of Accumulation -- (Primary Shares)

Under the Right of Accumulation, the current value of your
existing Primary Shares in Legg Mason funds sold with an initial sales
charge may be combined with the amount of your current purchase in

16
<PAGE>

determining the sales charge for the current purchase. In determining
both the current value of existing shares and the amount of the current
purchase, Primary Shares held or purchased by the investor's spouse,
and/or children under the age of 21, may be included. In order to receive
a reduced sales charge for the current purchase, you must remind your Legg
Mason or affiliated investment executive of your share balance in Legg
Mason funds sold with initial sales charges at the time of the current
purchase.

Reinstatement Privilege --(Primary Shares)

As described in the Prospectus, shareholders who have redeemed
their Primary Shares may reinstate their Fund account without a sales
charge by notifying their Legg Mason or affiliated investment executive of
such desire and placing an order for the amount to be purchased within 90
days after the date of redemption. The reinstatement will be made at the
net asset value per share next computed after the Notice of Reinstatement
and order are received by Legg Mason's Funds Processing department. The
amount of a purchase under this reinstatement privilege cannot exceed the
amount of the redemption proceeds. Gain on a redemption is taxable
regardless of whether the reinstatement privilege is exercised; however, a
loss arising out of a redemption will not be deductible to the extent the
reinstatement privilege is exercised within 30 days after redemption, and
an adjustment will be made to the shareholder's tax basis for shares
acquired pursuant to the reinstatement privilege.

Redemption Services

Each Fund reserves the right to modify or terminate the wire or
telephone redemption services described in its Prospectus at any time.

The date of payment for redemption may not be postponed for more
than seven days, and the right of redemption may not be suspended, except
(a) for any periods during which the Exchange is closed (other than for
customary weekend and holiday closings), (b) when trading in markets a
Fund normally utilizes is restricted or an emergency, as defined by rules
and regulations of the SEC, exists, making disposal of the Fund's
investments or determination of its net asset value not reasonably
practicable, or (c) for such other periods as the SEC, by order, may
permit for protection of a Fund's shareholders. In the case of any such
suspension, you may either withdraw your request for redemption or receive
payment based upon the net asset value next determined after the
suspension is lifted.

Each Fund reserves the right under certain conditions to honor
any request for redemption, or combination of requests from the same
shareholder in any 90-day period, totalling $250,000 or 1% of the net
assets of the Fund, whichever is less, by making payment in whole or in
part by securities valued in the same way as they would be valued for
purposes of computing each Fund's net asset value per share. Any such

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<PAGE>

redemption payments shall be made with portfolio securities that are
readily marketable. If payment is made in securities, a shareholder
generally will incur brokerage expenses in converting those securities
into cash and will be subject to fluctuation in the market price of those
securities until they are sold. The Funds do not redeem in kind under
normal circumstances, but would do so where the Adviser determines that it
would be in the best interests of the shareholders as a whole. Although
each Fund may elect to redeem any shareholder account with a current value
of less than $500, a Fund will not redeem accounts that fall below $500
solely as a result of a reduction in net asset value per share.

SPECIAL FACTORS AFFECTING MARYLAND AND PENNSYLVANIA

Overview

The following only highlights some of the more significant
financial trends and problems and is based on information drawn from
official statements and prospectuses relating to securities offerings of
the states of the United States, the State of Maryland and the
Commonwealth of Pennsylvania, their agencies and instrumentalities, as
available on the date of this Statement of Additional Information. The
Funds assume no obligation to update this information.

State and Local Income Tax

The exemption of certain interest income for federal income tax
purposes does not necessarily result in exemption thereof under the income
or other tax laws of any state or local taxing authority. A shareholder
may be exempt from state and local taxes on dividends attributable to
interest income derived from obligations of the state and municipalities
or other localities of the state in which he or she is a resident, but
generally will be taxed on dividends attributable to interest income
derived from obligations of other jurisdictions. Shareholders receive
notification annually of the portion of each Fund's tax-exempt income
attributable to each state. Shareholders should consult their tax
advisers about the tax status in their own states and localities of
distributions from each Fund.

Because the Maryland Tax-Free Fund and the Pennsylvania Tax-Free
Fund each concentrates its investments in a specific state, there are
risks associated with investment in each such Fund which would not exist
if those Funds' investments were more widely diversified. These risks
include the possible enactment of new legislation in the applicable state
which could affect Maryland or Pennsylvania municipal obligations,
economic factors which could affect these obligations and varying levels
of supply and demand for Maryland or Pennsylvania municipal obligations.

Maryland Tax-Free Fund

State Debt The Maryland Constitution prohibits the contracting
of State general obligation debt unless it is authorized by a law levying
an annual tax or taxes sufficient to pay the debt service within 15 years

18
<PAGE>

and prohibiting the repeal of the tax or taxes or their use for another
purpose until the debt is paid. As a uniform practice, each separate
enabling act which authorizes the issuance of general obligation bonds for
a given object or purpose has specifically levied and directed the
collection of an ad valorem property tax on all taxable property in the
State. The Board of Public Works is directed by law to fix by May 1 of
each year the precise rate of such tax necessary to produce revenue
sufficient for debt service requirements of the next fiscal year, which
begins July 1. However, the taxes levied need not be collected if or to
the extent that funds sufficient for debt service requirements in the next
fiscal year have been appropriated in the annual State budget.
Accordingly, the Board, in annually fixing the rate of property tax after
the end of the regular legislative session in April, takes account of
appropriations of general funds for debt service.

There is no general debt limit imposed by the Maryland
Constitution or public general laws, but a special committee created by
statute annually submits to the Governor an estimate of the maximum amount
of new general obligation debt that prudently may be authorized. Although
the committee's responsibilities are advisory only, the Governor is
required to give due consideration to the committee's findings in
preparing a preliminary allocation of new general debt authorization for
the ensuing fiscal year. The continuation of the credit ratings on State
debt is dependent upon several economic and political factors, including
the ability to continue to fund a substantial portion of the debt service
on general obligation debt from general fund revenues in the annual State
budget or to raise the rate of State property tax levies, and the ability
to maintain the amount of authorized debt within the range of
affordability.

Consolidated Transportation Bonds are limited obligations issued
by the Maryland Department of Transportation, the principal of which must
be paid within 15 years from the date of issue, for highway, port,
transit, rail or aviation facilities or any combination of such
facilities. Debt service on Consolidated Transportation Bonds is payable
from those portions of the excise tax on each gallon of motor vehicle fuel
and the motor vehicle titling tax, all mandatory motor vehicle
registration fees, motor carrier fees, and the corporate income tax as are
credited to the Maryland Department of Transportation, plus all
departmental operating revenues and receipts. Holders of such bonds are
not entitled to look to other sources for payment.

The Maryland Transportation Authority operates certain highway,
bridge and tunnel toll facilities in the State. The tolls and other
revenues received from these facilities are pledged as security for
revenue bonds of the Authority issued under, and secured by, a trust
agreement between the Authority and a corporate trustee.

Certain other instrumentalities of the State government are
authorized to borrow money under legislation which expressly provides that
the loan obligations shall not be deemed to constitute a debt or a pledge
of the faith and credit of the State. The Community Development

19
<PAGE>

Administration of the Department of Housing and Community Development,
higher educational istitutions (including St. Mary's College of Maryland,
the University of Maryland System, and Morgan State University), the
Maryland Transportation Authority, the Maryland Water Quality Financing
Administration, and the Maryland Environmental Service have issued and
have outstanding bonds of this type. The principal of and interest on
bonds issued by these bodies are payable solely from various sources,
principally fees generated from use of the facilities or enterprises
financed by the bonds.

The Port of Baltimore is one of the larger foreign trade ports in
the United States and in the world and a significant factor in Maryland's
economy. Total cargo tonnage at the Port declined from 30,682,730 in 1982
to 25,129,171 in 1993. The Port handles both high value general cargo,
including containers and automobiles, as well as bulk cargo such as coal
and grain. The value of the tonnage handled increased from $14.2 billion
in 1982 to $17.2 billion in 1993. The ability of the Port to sustain and
improve its volume and value of cargos is dependent, in part, upon
national and worldwide economic conditions.

The Maryland Stadium Authority is responsible for financing and
directing the acquisition and construction of one or more new professional
sports facilities in Maryland. Currently, the Authority operates Oriole
Park at Camden Yards, which opened in 1992. In connection with the
construction of that facility, the Authority issued $155 million in notes
and bonds. Those notes and bonds, as well as any future financing for a
football stadium, are lease-backed revenue obligations, the payment of
which is secured by, among other things, an assignment of revenues
received under a lease of the sports facilities from the Stadium Authority
to the State. The Stadium Authority also has been assigned responsibility
for constructing an expansion of the Convention Center in Baltimore. The
Convention Center expansion is expected to cost $155 million and will be
financed through a combination of funding from Baltimore City, Stadium
Authority revenue bonds, and State general obligation bonds.

The State has financed and expects to continue to finance the
construction and acquisition of various facilities through conditional
purchase, sale-leaseback, and similar transactions. All of the lease
payments under these arrangements are subject to annual appropriation by
the Maryland General Assembly. In the event that appropriations are not
made, the State may not be held contractually liable for the payments.

Local Subdivision Debt The counties and incorporated
municipalities in Maryland issue general obligation debt for general
governmental purposes. The general obligation debt of the counties and
incorporated municipalities is generally supported by ad valorem taxes on
real estate, tangible personal property and intangible personal property
subject to taxation. The issuer typically pledges its full faith and
credit and unlimited taxing power to the prompt payment of the maturing
principal and interest on the general obligation debt and to the levy and
collection of the ad valorem taxes as and when such taxes become necessary
in order to provide sufficient funds to meet the debt service

20
<PAGE>

requirements. The amount of debt which may be authorized may in some
cases be limited by the requirement that it not exceed a stated percentage
of the assessable base upon which such taxes are levied.

Other Risk Factors The manufacturing sector of Maryland's
economy, which historically has been a significant element of the State's
economic health, has experienced severe financial pressures and an overall
contraction in recent years. This is due in part to the reduction in
defense-related contracts and grants, which has had an adverse impact that
is substantial and is believed to be disproportionately large compared
with the impact on most other states. The State has endeavored to promote
economic growth in other areas, such as financial services, health care
and high technology. Whether the State can successfully make the
transition from an economy reliant on heavy industries to one based on
service and science-oriented businesses is uncertain. Moreover, future
economic difficulties in the service sector and high technology industries
being promoted by Maryland could have an adverse impact on the finances of
the State and its subdivisions, and could adversely affect the market
value of the Bonds in the Maryland Trust or the ability of the respective
obligors to make payments of interest and principal due on such Bonds.

The State and its subdivisions, and their respective officers and
employees, are defendants in numerous legal proceedings, including alleged
tort and breaches of contract and other alleged violations of laws.
Although adverse decisions in these matters could require extraordinary
appropriations not budgeted for, in the opinion of the Attorney General of
Maryland, the legal proceedings are not likely to have a material adverse
effect on the State's financial position.

Pennsylvania Tax-Free Fund

State Debt Pennsylvania may incur debt to rehabilitate areas
affected by disaster, debt approved by the electorate, debt for certain
capital projects (such as highways, public improvements, transportation
assistance, flood control, redevelopment assistance, site development and
industrial development) and tax anticipation debt payable in the fiscal
year of issuance. Pennsylvania had outstanding general obligation debt of
$5,075.8 million at June 30, 1994. Pennsylvania is not permitted to fund
deficits between fiscal years with any form of debt. All year-end deficit
balances must be funded within the succeeding fiscal year's budget. At
May 9, 1995, all outstanding general obligation bonds of Pennsylvania were
rated AA- by S&P and A1 by Moody's (see Appendix A). There can be no
assurance that the current ratings will remain in effect in the future.
The Pennsylvania Tax-Free Fund assumes no obligation to update this rating
information. Over the five-year period ending June 30, 2000, Pennsylvania
has projected that it will issue bonds totaling $2,195.2 million and
retire bonded debt in the principal amount of $2,328.8 million.

21
<PAGE>

Certain agencies created by Pennsylvania have statutory
authorization to incur debt for which Pennsylvania appropriations to pay
debt service thereon is not required. As of December 31, 1994, total
combined debt outstanding for these agencies was $6,549.9 million. The
debt of these agencies is supported by assets of, or revenues derived
from, the various projects financed and is not an obligation of
Pennsylvania. Some of these agencies, however, are indirectly dependent
on Pennsylvania appropriations. The only obligations of agencies in
Pennsylvania that bear a moral obligation of Pennsylvania are those issued
by the Pennsylvania Housing Finance Agency ("PHFA"), a state-created
agency which provides housing for lower and moderate income families, and
The Hospitals and Higher Education Facilities Authority of Philadelphia
("Hospital Authority"), an agency created by the City of Philadelphia to
acquire and prepare various sites for use as intermediate care facilities
for the mentally retarded. As of December 31, 1994, PHFA has $2,300.0
million of revenue bonds and notes outstanding.

Local Government Debt Numerous local government units in
Pennsylvania issue general obligations (i.e., backed by taxing power)
debt, including counties, cities, boroughs, townships and school
districts. School district obligations are supported indirectly by
Pennsylvania. The issuance of non-electoral general obligation debt is
limited by constitutional and statutory provisions. Electoral debt, i.e.,
that approved by the voters, is unlimited. In addition, local government
units and municipal and other authorities may issue revenue obligations
that are supported by the revenues generated from particular projects or
enterprises. Examples include municipal authorities (frequently operating
water and sewer systems), municipal authorities formed to issue
obligations benefiting hospitals and educational institutions, and
industrial development authorities, whose obligations benefit industrial
or commercial occupants. In some cases, sewer or water revenue
obligations are guaranteed by taxing bodies and have the credit
characteristics of general obligation debt.

Other Factors Pennsylvania historically has been identified as a
heavy industry state, although that reputation has changed with the
decline of the coal, steel and railroad industries and the resulting
diversification of Pennsylvania's industrial composition. The major new
sources of growth are in the service sector, including trade, medical and
health services, educational and financial institutions. Manufacturing
has fallen behind both the services sector and the trade sector as the
largest single source of employment in Pennsylvania. Between 1988 and
1993, employment in Pennsylvania has grown each year at a rate slightly in
excess of the growth in employment in the mid-Atlantic region, but less
than that of the U.S. as a whole, during the same period. Pennsylvania's
average unemployment rate for the years 1988, 1989 and 1990 remained
slightly below the nation's annual average unemployment rate, and
Pennsylvania's average annual unemployment rate for the years 1991, 1992
and 1993 remained slightly above the nation's annual average unemployment
rate. The unadjusted unemployment rate for both Pennsylvania and United
States for May, 1995 was 5.7%. The population of Pennsylvania, 12.096

22
<PAGE>

million people in 1994 according to the U.S. Bureau of the Census,
represents a slight increase from the 1985 estimate of 11.772 million.
Per capita income in Pennsylvania was $21,352 for calendar year 1993,
slightly above the per capita income of the United States of $20,817.
Pennsylvania's General Fund, which receives all tax receipts and most
other revenues and through which debt service on all general obligations
of Pennsylvania are made, closed fiscal years ended June 30, 1992, 1993
and 1994 with fund balances of $87,455 million, $698,945 million and
$892,940 million, respectively.

ADDITIONAL TAX INFORMATION

The following is a general summary of certain federal tax
considerations affecting each Fund and its shareholders. Investors are
urged to consult their own tax advisers for more detailed information
regarding any federal, state or local taxes that may be applicable to
them.

General

For federal tax purposes, each Fund is treated as a separate
corporation. In order to continue to qualify for treatment as a
regulated investment company ("RIC") under the Internal Revenue Code of
1986, as amended ("Code"), a Fund must distribute annually to its
shareholders at least 90% of the sum of its net interest income excludable
from gross income under section 103(a) of the Code plus its investment
company taxable income (generally, taxable net investment income plus net
short-term capital gain, if any) ("Distribution Requirement") and must
meet several additional requirements. With respect to each Fund, these
requirements include the following: (1) the Fund must derive at least 90%
of its gross income each taxable year from dividends, interest, payments
with respect to securities loans and gains from the sale or other
disposition of securities, or other income (including gains from options
and futures contracts) derived with respect to its business of investing
in securities ("Income Requirement"); (2) the Fund must derive less than
30% of its gross income each taxable year from the sale or other
disposition of securities, options or futures contracts held for less than
three months ("Short-Short Limitation"); (3) at the close of each quarter
of the Fund's taxable year, at least 50% of the value of its total assets
must be represented by cash and cash items, U.S. government securities,
securities of other RICs and other securities, with those other securities
limited, in respect of any one issuer, to an amount that does not exceed
5% of the value of the Fund's total assets; and (4) at the close of each
quarter of the Fund's taxable year, not more than 25% of the value of its
total assets may be invested in the securities (other than U.S. government
securities or the securities of other RICs) of any one issuer.

Dividends paid by a Fund will qualify as "exempt-interest
dividends" (as defined in each Prospectus), and thus will be excludable
from gross income by its shareholders, if the Fund satisfies the
additional requirement that, at the close of each quarter of the Fund's
taxable year, at least 50% of the value of its total assets consists of

23
<PAGE>

securities the interest on which is excludable from gross income under
section 103(a) of the Code; each Fund intends to continue to satisfy this
requirement. The portion of each dividend excludable from a Fund's
shareholder's gross income may not exceed the Fund's net tax-exempt
income.

To the extent a Fund invests in instruments that generate taxable
income, distributions of the interest earned thereon will be taxable to
the Fund's shareholders as ordinary income to the extent of its earnings
and profits. Moreover, if a Fund realizes capital gains as a result of
market transactions, any distributions of those gains will be taxable to
its shareholders.

If Fund shares are sold at a loss after being held for six months
or less, the loss will be disallowed to the extent of the amount of any
exempt-interest dividends received with respect to those shares, and any
portion of the loss that is not disallowed will be treated as long-term,
instead of short-term, capital loss to the extent of any capital gain
distributions received with respect thereto.

Up to 85% of social security and railroad settlement benefits may
be included in taxable income for recipients whose adjusted gross income
(including income from tax-exempt sources such as a Fund) plus 50% of
their benefits exceeds certain base amounts. Exempt-interest dividends
from a Fund still are tax-exempt to the extent described in each
Prospectus; they are only included in the calculation of whether a
recipient's income exceeds the established amounts.

A Fund will be subject to a nondeductible 4% excise tax ("Excise
Tax") to the extent it fails to distribute by the end of any calendar year
substantially all of its ordinary income for that year and capital gain
net income for the one-year period ending on October 31 of that year, plus
certain other amounts. For this and other purposes, dividends or capital
gain distributions declared by a Fund in December of any year and payable
to shareholders of record on a date in that month will be deemed to have
been paid by the Fund and received by the shareholders on December 31 if
the distributions are paid by the Fund during the following January.
Accordingly, those distributions will be reportable by shareholders for
the year in which that December 31 falls.

A Fund may purchase zero coupon municipal obligations or other
municipal obligations issued with original issue discount. As the holder
of those securities, a Fund must include in its income the original issue
discount that accrues during the taxable year, even if the Fund receives
no corresponding payment on the securities during the year. Because each
Fund annually must distribute substantially all of its income, including
tax-exempt income, to satisfy the Distribution Requirement, it may be
required in a particular year to distribute as a dividend an amount that
is greater than the total amount of cash it actually receives. Those
distributions will be made from the Fund's cash assets or from the
proceeds of sales of portfolio securities, if necessary. The Fund may
realize capital gains or losses from those dispositions, which would

24
<PAGE>

increase or decrease its investment company taxable income and/or net
capital gain (the excess of net long-term capital gain over net short-term
capital loss). In addition, any such gains may be realized on the
disposition of securities held for less than three months. Because of the
Short-Short Limitation, any such gains would reduce the Fund's ability to
sell other securities (and options or futures) held for less than three
months that it might wish to sell in the ordinary course of its portfolio
management.

Shortly after the end of each year, each Fund mails to each
shareholder a statement setting forth the federal income tax status of all
distributions made during the year. Shareholders may be subject to state
and local taxes on distributions from a Fund, except for Maryland and
Pennsylvania residents to the extent described in the Prospectuses for the
Maryland and Pennsylvania Tax-Free Funds. Shareholders should consult
their tax advisers regarding specific questions relating to federal, state
and local taxes.

Issues Related to Hedging Instruments

The use of hedging instruments, such as writing (selling) and
purchasing options and futures contracts, involves complex rules that will
determine for income tax purposes the character and timing of recognition
of the gains and losses a Fund realizes in connection therewith.

Income from transactions in options and futures contracts derived
by a Fund with respect to its business of investing in securities will be
taxable and will qualify as permissible income under the Income
Requirement. However, income from the disposition of options and futures
contracts will be subject to the Short-Short Limitation if they are held
for less than three months.

VALUATION OF FUND SHARES

Net asset value of a Fund share is determined daily for each
class as of the close of the Exchange, on every day that the Exchange is
open, by dividing the value of the total assets attributable to that
class, less liabilities attributable to that class, by the number of
shares of that class outstanding. Pricing will not be done on days when
the Exchange is closed. The Exchange currently observes the following
holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving, and Christmas. When market
quotations are readily available, portfolio securities are valued based
upon market quotations, provided such quotations adequately reflect, in
the Adviser's judgment, the fair value of the security. For valuation
purposes, the market quotation shall be the mean of the most recent bid
and asked prices quoted by the dealers. Where such market quotations are
not readily available, securities are valued based upon appraisals
received from an independent pricing service using a computerized matrix
system or based upon appraisals derived from information concerning the
security or similar securities received from recognized dealers in those
securities. The methods used by the pricing service and the quality of

25
<PAGE>

the valuations so established are reviewed by the Adviser under the
general supervision of the Trust's Board of Trustees. The amortized cost
method of valuation is used with respect to obligations with 60 days or
less remaining to maturity unless the Adviser determines that this does
not represent fair value. All other assets are valued at fair value as
determined in good faith by or under the direction of the Trust's Board of
Trustees. Premiums received on the sale of put and call options are
included in each Fund's net asset value, and the current market value of
options sold by a Fund will be subtracted from its net assets.

PERFORMANCE INFORMATION

The following tables show the value, as of the end of each fiscal
year, of a hypothetical investment of $10,000 made in each Fund at that
Fund's respective commencement of operations (Primary Shares). Each table
assumes that all dividends and capital gain distributions are reinvested
in the respective Fund. Each table includes the effect of all charges and
fees applicable to Primary Shares the respective Fund has paid. (There
are no redemption fees.) The tables do not include the effect of any
income tax that an investor would have to pay on distributions.

For the Maryland Tax-Free Fund:

Value of Original
Shares Plus Shares
Obtained Through Value of Shares
Reinvestment of Acquired Through
Capital Gain Reinvestment of
Fiscal Year Distributions Income Dividends Total Value

1992* $9,942 $ 561 $10,503

1993 10,569 1,244 11,813
1994 10,395 1,832 12,227

1995 10,507 2,527 13,304

* May 1, 1991 (commencement of operations) to March 31, 1992.

If the investor had not reinvested dividends and capital gain
distributions, the total value of the hypothetical investment as of March
31, 1995 would have been $10,496, and the investor would have received a
total of $2,538 in distributions. If the Adviser had not waived or
reimbursed certain Fund expenses in each of the fiscal years, returns
would have been lower.

For the Pennsylvania Tax-Free Fund:

26
<PAGE>

Value of Original
Shares Plus Shares
Obtained Through Value of Shares
Reinvestment of Acquired Through
Capital Gain Reinvestment of
Fiscal Year Distributions Income Dividends Total Value

1992* $10,192 $ 437 $10,629

1993 10,602 1,113 11,715
1994 10,450 1,711 12,161

1995 10,595 2,421 13,016

* August 1, 1991 (commencement of operations) to March 31, 1992.

If the investor had not reinvested dividends and capital gain
distributions, the total value of the hypothetical investment as of March
31, 1995 would have been $10,595, and the investor would have received a
total of $2,145 in distributions. If the Adviser had not waived or
reimbursed certain Fund expenses in each of the fiscal years, returns
would have been lower.

For the Tax-Free Intermediate Fund:

Value of Original
Shares Plus Shares
Obtained Through Value of Shares
Reinvestment of Acquired Through
Capital Gain Reinvestment of
Fiscal Year Distributions Income Dividends Total Value

1993* $10,040 $ 186 $10,226

1994 9,980 640 10,620
1995 10,047 1,187 11,234

* November 9, 1992 (commencement of operations) to March 31, 1993.

If the investor had not reinvested dividends and capital gain
distributions, the total value of the hypothetical investment as of March
31, 1995 would have been $10,040, and the investor would have received a
total of $1,130 in distributions. If the Adviser had not waived or
reimbursed certain Fund expenses in each fiscal year, returns would have
been lower.

Total Return Calculations Average annual total return quotes
used in each Fund's advertising and other promotional materials
("Performance Advertisements") are calculated according to the following
formula:

27
<PAGE>

n
P(1+T) = ERV

where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a
hypothetical $1,000 payment made at the
beginning of that period.

Under the foregoing formula, the time periods used in Performance
Advertisements will be based on rolling calendar quarters, updated at
least to the last day of the most recent quarter prior to submission of
the Performance Advertisements for publication. Total return, or "T" in
the formula above, is computed by finding the average annual change in the
value of an initial $1,000 investment over the period. In calculating the
ending redeemable value, the Maryland Tax-Free and Pennsylvania Tax-Free's
maximum 2.75% initial sales charge or the Tax-Free Intermediate's maximum
2.00% initial sales charge is deducted from the initial $1,000 payment and
all dividends and capital gain distributions by a Fund are assumed to have
been reinvested at net asset value on the reinvestment dates during the
period. Cumulative and average annual returns for the year ended March
31, 1995 are contained in each Fund's prospectus. The front-end sales
charge is waived for all purchases of Primary Shares of the Tax-Free
Intermediate Fund made through January 31, 1996.

Yield Yield figures used in each Fund's Performance
Advertisements are calculated by dividing the Fund's net investment income
for a 30-day period ("Period"), by the average number of shares entitled
to receive dividends during the Period, and expressing the result as an
annualized percentage (assuming semi-annual compounding) of the maximum
offering price per share at the end of the Period. Yield quotations are
calculated according to the following formula:
6
YIELD = 2[(a-b + 1) ] - 1
---
cd
where: a = dividends and interest earned during the
Period
b = expenses accrued for the Period (net of
reimbursements)
c = the average daily number of shares
outstanding during the period that were
entitled to receive dividends
d = the maximum offering price per share on the
last day of the Period.

Except as noted below, in determining net investment income
earned during the Period (variable "a" in the above formula), each Fund
calculates interest earned on each debt obligation held by it during the
Period by (1) computing the obligation's yield to maturity based on the
market value of the obligation (including actual accrued interest) on the

28
<PAGE>

last business day of the Period or, if the obligation was purchased during
the Period, the purchase price plus accrued interest and (2) dividing the
yield to maturity by 360, and multiplying the resulting quotient by the
market value of the obligation (including actual accrued interest). Once
interest earned is calculated in this fashion for each debt obligation
held by a Fund, interest earned during the Period is then determined by
totalling the interest earned on all debt obligations. For purposes of
these calculations, the maturity of an obligation with one or more call
provisions is assumed to be the next date on which the obligation
reasonably can be expected to be called or, if none, the maturity date.

Tax-exempt yield is calculated according to the same formula
except that a = interest exempt from federal income tax earned during the
Period. This tax-exempt yield is then translated into tax equivalent
yield according to the following formula:

TAX EQUIVALENT YIELD = ( E ) = t
-----
l - p
E = tax-exempt yield
p = stated income tax rate
t = taxable yield

From time to time, the Maryland Tax-Free Fund may also illustrate
the effect of tax equivalent yields using information such as that set
forth below:

Combined federal, A taxable yield of
Adjusted Gross Income Maryland and 5.0% 5.5% 6.0% 6.5% 7.0%
Single Return Joint Return local taxes (1) is equivalent to a tax-exempt yield of
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Not over $23,350 Not over $39,000 23% 3.85% 4.24% 4.62% 5.01% 5.39%
$23,350 to $56,550 $39,000 to $94,250 36% 3.20 3.52 3.84 4.16 4.48
$56,550 to $117,950 $94,250 to $143,600 39% 3.05 3.36 3.66 3.97 4.27
$117,950 to $256,500 $143,600 to $256,500 44% 2.80 3.08 3.36 3.64 3.92
Over $256,500 Over $256,500 47.6% 2.62 2.88 3.14 3.41 3.67
</TABLE>

(1) Based on 1995 tax rates using a state rate of 5% and a local tax rate
of 60% of the 5% state rate, or 3%. the rate limits for high income
taxpayers have been eliminated for tax years after 12/31/94.

From time to time, the Pennsylvania Tax-Free Fund may also
illustrate the effect of tax equivalent yields using information such as
that set forth below:

<TABLE>

29
<PAGE>

<CAPTION>
Combined federal A taxable yield of
Adjusted Gross Income and Pennsylvania 5.0% 5.5% 6.0% 6.5% 7.0%
Single Return Joint Return taxes (1) is equivalent to a tax-exempt yield of
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Not over $22,750 Not over $38,000 17.8% 4.11% 4.52% 4.93% 5.34% 5.75%
$22,750 to $55,100 $38,000 to $91,850 30.8% 3.46 3.81 4.15 4.50 4.84
$55,100 to $115,000 $91,850 to $140,000 33.8% 3.31 3.64 3.97 4.30 4.63
$115,000 to $250,000 $140,000 to $250,000 38.9% 3.06 3.36 3.67 3.97 4.28
Over $250,000 Over $250,000 42.4% 2.88 3.17 3.46 3.74 4.03
</TABLE>

(1) Based on 1995 tax rates.

From time to time, the Tax-Free Intermediate Fund may also
illustrate the effect of tax equivalent yields using information such as
that set forth below:

A taxable yield of
Adjusted Gross Income 5.0% 5.5% 6.0% 6.5% 7.0%
Single Return Joint Return Federal Tax(1) is equivalent to a tax-exempt yield of
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Not over $22,750 Not over $38,000 15% 4.25% 4.68% 5.10% 5.53% 5.95%
$22,750 to $55,100 $38,000 to $91,850 28% 3.60 3.96 4.32 4.68 5.04
$55,100 to $115,000 $91,850 to $140,000 31% 3.45 3.80 4.14 4.49 4.83
$115,000 to $250,000 $140,000 to $150,000 36% 3.20 3.52 3.84 4.16 4.48
Over $250,000 Over $250,000 39.6% 3.02 3.32 3.62 3.93 4.23

</TABLE>

(1) Based on 1995 tax rates.

For the 30-day period ended March 31, 1995, the Maryland Tax-Free
Fund's yield and tax equivalent yield (assuming a 23% combined tax rate)
were 5.26% and 6.83%, respectively. The Pennsylvania Tax-Free Fund's
yield and tax equivalent yield (assuming an 17.8% combined tax rate) for
the same period were 5.17% and 6.29%, respectively. The Tax-Free
Intermediate Fund's yield and tax equivalent yield (assuming a 15% tax
rate) for the same period were 4.84% and 5.69%, respectively.

Other Information From time to time, in reports and promotional
literature, each class of shares of a Fund's performance may be compared
to indices of broad groups of managed and unmanaged securities considered
to be representative of or similar to Fund portfolio holdings such as the

30
<PAGE>

Bond Buyer 20, Lipper General Purpose Municipal Bond Average, Lipper
Maryland State Municipal Bond Fund Average (Maryland Tax-Free Fund only)
and Shearson Lehman/American Express Municipal Bond Index. Securities
indices may take no account of the cost of investing or of any tax
consequences of distributions. The Funds may invest in securities not
included in the indices to which they make such comparisons.

A Fund may also cite rankings and ratings and compare the return
of a class with data published by Lipper Analytical Services, Inc.
("Lipper"), CDA Investment Technologies, Inc., Wiesenberger Investment
Company Services, Value Line, Morningstar, and other services or
publications that monitor, compare and/or rank the performance of
investment companies. A Fund may also refer in such materials to mutual
fund performance rankings, ratings and comparisons with funds having
similar investment objectives and other mutual funds reported periodically
in national financial publications such as MONEY Magazine, FORBES,
BUSINESS WEEK and BARRON's.

A Fund may compare the investment return of a class to the return
on certificates of deposit and other forms of bank deposits, and may quote
from organizations that track the rates offered on such deposits. Bank
deposits are insured by an agency of the federal government up to
specified limits. In contrast, Fund shares are not insured, the value of
Fund shares may fluctuate, and an investor's shares, when redeemed, may be
worth more or less than the investor originally paid for them. Unlike the
interest paid on a certificate of deposit, which remains at a specified
rate for a specified period of time, the return of each class of shares
will vary.

In advertising, the Fund may illustrate hypothetical investment
plans designed to help investors meet long-term financial goals, such as
saving for a child's college education or for retirement. Sources such as
the Internal Revenue Service, the Social Security Administration, the
Consumer Price Index and Chase Global Data and Research may supply data
concerning interest rates, college tuitions, the rate of inflation, Social
Security benefits, mortality statistics and other relevant information.
The Fund may use other recognized sources as they become available.

The Fund may use data prepared by Ibbotson Associates of Chicago,
Illinois ("Ibbotson") to compare the returns of various capital markets
and to show the value of a hypothetical investment in a capital market.
Ibbotson relies on different indices to calculate the performance of
common stocks, corporate and government bonds and Treasury bills.

The Fund may illustrate and compare the historical volatility of
different portfolio compositions where the performance of stocks is
represented by the performance of an appropriate market index, such as the
S&P 500 and the performance of bonds is represented by a nationally

31
<PAGE>

recognized bond index, such as the Lehman Brothers Long-Term Government
Bond Index.

The Fund may also include in advertising biographical information
on key investment and managerial personnel.

The Fund may advertise examples of the potential benefits of
periodic investment plans, such as dollar cost averaging, a long-term
investment technique designed to lower average cost per share. Under such
a plan, an investor invests in a mutual fund at regular intervals a fixed
dollar amount, thereby purchasing more shares when prices are low and
fewer shares when prices are high. Although such a plan does not
guarantee profit or guard against loss in declining markets, the average
cost per share could be lower than if a fixed number of shares were
purchased at the same intervals. Investors should consider their ability
to purchase shares through low price levels.

The Fund may discuss Legg Mason's tradition of service. Since
1899, Legg Mason and its affiliated companies have helped investors meet
their specific investment goals and have provided a full spectrum of
financial services. Legg Mason affiliates serve as investment advisers
for private accounts and mutual funds with assets of more than $17 billion
as of March 31, 1995.

THE TRUST'S TRUSTEES AND OFFICERS

The Trust's officers are responsible for the operation of the
Trust under the direction of the Board of Trustees. The officers and
trustees and their principal occupations during the past five years are
set forth below. An asterisk (*) indicates those officers and/or trustees
who are "interested persons" of the Trust as defined by the 1940 Act. The
business address of each officer and director is 111 South Calvert Street,
Baltimore, Maryland, unless otherwise indicated.

JOHN F. CURLEY [56], JR.*, Chairman of the Board and Trustee;
Vice Chairman and Director of Legg Mason, Inc. and Legg Mason Wood Walker,
Inc.; Director of Legg Mason Fund Adviser, Inc. and Western Asset
Management Company; Officer and/or Director of various other affiliates of
Legg Mason, Inc.; President and Director of three Legg Mason funds;
Chairman of the Board, President and Trustee of one Legg Mason fund;
Chairman of the Board and Director of four Legg Mason funds.

EDMUND J. CASHMAN, JR.* [58], President and Trustee; Senior
Executive Vice President and Director of Legg Mason, Inc.; Officer and/or
Director of various other affiliates of Legg Mason, Inc.; President and
Director of one Legg Mason fund; Director of Worldwide Value Fund, Inc.

RICHARD G. GILMORE [68], Trustee; 948 Kennett Way, West Chester,
Pennsylvania. Independent Consultant. Director of CSS Industries, Inc.
(diversified holding company whose subsidiaries are engaged in manufacture

32
<PAGE>

and sale of decorative paper products, business forms, and specialty metal
packaging); Director of PECO Energy Company (formerly Philadelphia
Electric Company); Director of six Legg Mason funds; and Trustee of one
Legg Mason fund. Formerly: Senior Vice President and Chief Financial
Officer of Philadelphia Electric Company (now PECO Energy Company);
Executive Vice President and Treasurer, Girard Bank, and Vice President of
its parent holding company, the Girard Company; and Director of Finance,
City of Philadelphia.

CHARLES F. HAUGH [69], Trustee; 14201 Laurel Park Drive, Suite
104, Laurel, Maryland. Real Estate Developer and Investor; President and
Director of Resource Enterprises, Inc. (real estate brokerage); Chairman
of Resource Realty LLC (management of retail and office space); Partner in
Greater Laurel Health Park Ltd. Partnership (real estate investment and
development); Director of six Legg Mason funds; and Trustee of two Legg
Mason funds.

ARNOLD L. LEHMAN [51], Trustee; The Baltimore Museum of Art, Art
Museum Drive, Baltimore, Maryland. Director of the Baltimore Museum of
Art; Director of six Legg Mason funds; Trustee of two Legg Mason funds.

JILL E. McGOVERN [50], Trustee; 1500 Wilson Boulevard, Arlington,
Virginia. Chief Executive of the Marrow Foundation. Director of six Legg
Mason funds; Trustee of two Legg Mason funds. Formerly: Executive Director
of the Baltimore International Festival (January 1991 - March 1993); and
Senior Assistant to the President of The Johns Hopkins University (1986-
1991).

T. A. RODGERS [60], Trustee; 2901 Boston Street, Baltimore,
Maryland. Principal, T. A. Rodgers & Associates (management consulting);
Director of six Legg Mason funds; Trustee of one Legg Mason fund.
Formerly: Director and Vice President of Corporate Development, Polk
Audio, Inc. (manufacturer of audio components).

EDWARD A. TABER, III* [51], Trustee; Executive Vice President of
Legg Mason, Inc. and Legg Mason Wood Walker, Inc.; Vice Chairman and
Director of Legg Mason Fund Adviser, Inc.; Director of three Legg Mason
funds; President and Director of two Legg Mason funds; Trustee of one Legg
Mason fund; Vice President of Worldwide Value Fund, Inc. Formerly:
Executive Vice President of T. Rowe Price-Fleming International, Inc.
(1986-1992) and Director of the Taxable Fixed Income Division at T. Rowe
Price Associates, Inc. (1973-1992).

The executive officers of the Trust, other than those who also
serve as Trustees, are:

33
<PAGE>

MARIE K. KARPINSKI* [46], Vice President and Treasurer; Treasurer
of Legg Mason Fund Adviser, Inc.; Vice President and Treasurer of eight
Legg Mason funds; and Secretary/Treasurer of Worldwide Value Fund, Inc.;
Vice President of Legg Mason.

SUSAN T. LIND* [53], Secretary; Assistant Treasurer and Secretary
of one Legg Mason fund; Assistant Secretary of Worldwide Value Fund, Inc.;
employee of Legg Mason.

BLANCHE P. ROCHE* [46], Assistant Secretary and Assistant Vice
President; Assistant Secretary and Assistant Vice President of seven Legg
Mason funds; employee of Legg Mason since 1991. Formerly: Manager of
Consumer Financial Services, Primerica Corporation (1989-1991).

Officers and Trustees of the Trust who are "interested persons"
thereof receive no salary or fees from the Trust. Independent Trustees of
the Trust receive a fee of $400 annually for serving as a trustee and a
fee of $400 for each meeting of the Board of Trustees attended by him or
her.

The Nominating Committee of the Board of Trustees is responsible
for the selection and nomination of disinterested trustees. The Committee
is composed of Messrs. Gilmore, Haugh, Lehman and Rodgers and
Dr. McGovern.

On May 31, 1995, the trustees and officers of the Trust owned, in
the aggregate, less than 1% of the outstanding shares of the Maryland Tax-
Free Fund, the Pennsylvania Tax-Free Fund and the Tax-Free Intermediate
Fund.

The following table provides certain information relating to the
compensation of the Trust's trustees for the fiscal year ended March 31,
1995.

34
<PAGE>

COMPENSATION TABLE
<TABLE>
<CAPTION>

<S> <C> <C> <C> <C>
Pension or Total Compen-
Retirement sation From
Aggregate Benefits Accrued Estimated Annual Trust and Fund
Compensation as Part of Funds' Benefits Upon Complex Paid
Name of Person and Position From Trust* Expenses Retirement to Trustees**
John F. Curley, Jr. -
Chairman of the Board and
Trustee None N/A N/A None

Edward A. Taber, III -
Trustee None N/A N/A None

Edmund J. Cashman, Jr.-
President and Trustee None N/A N/A None
Marie K. Karpinski -
Vice President and Treasurer
None N/A N/A None

Richard G. Gilmore -
Trustee $2,000 N/A N/A $21,600

Charles F. Haugh -
Trustee $2,000 N/A N/A $23,600
Arnold L. Lehman -
Trustee $2,000 N/A N/A $23,600

Jill E. McGovern -
Trustee $2,000 N/A N/A $23,600

T. A. Rodgers -
Trustee $2,000 N/A N/A $21,600
</TABLE>
00* Represents fees paid to each director during the fiscal year
ended March 31, 1995.
** Represents aggregate compensation paid to each director during
the calendar year ended December 31, 1994.

35
<PAGE>

THE FUNDS' INVESTMENT ADVISER

The Adviser, a Maryland corporation, is located at 111 South
Calvert Street, Baltimore, Maryland 21202. The Adviser is a wholly owned
subsidiary of Legg Mason, Inc., which also is the parent of Legg Mason
Wood Walker, Incorporated. The Adviser serves as each Fund's investment
adviser and manager under an Investment Advisory and Management Agreement
("Advisory Agreement") dated March 25, 1991. Continuation of the
Agreement was most recently approved by the Board of Trustees on October
21, 1994. The Advisory Agreement provides that, subject to overall
direction by the Board of Trustees, the Adviser manages the investment and
other affairs of each Fund. The Adviser is responsible for managing each
Fund consistent with the Funds' investment objectives and policies
described in their Prospectuses and this Statement of Additional
Information. The Adviser also is obligated to (a) furnish each Fund with
office space and executive and other personnel necessary for the
operations of the Fund; (b) supervise all aspects of each Fund's
operations; (c) bear the expense of certain informational and purchase and
redemption services to each Fund's shareholders; (d) arrange, but not pay
for, the periodic updating of prospectuses, proxy material, tax returns
and reports to shareholders and state and federal regulatory agencies; and
(e) report regularly to the Trust's officers and trustees. The Adviser
and its affiliates pay all the compensation of trustees and officers of
the Trust who are employees of the Adviser. Each Fund pays all its other
expenses which are not expressly assumed by the Adviser. These expenses
include, among others, interest expense, taxes, auditing and accounting
fees, distribution fees, if any, fees and expenses of the independent
trustees of the Trust, brokerage fees and commissions, expenses of
preparing prospectuses and of printing and distributing prospectuses
annually to existing shareholders, custodian charges, transfer agency
fees, legal expenses, insurance expenses, association membership dues,
governmental fees, expenses of registering and qualifying Fund shares for
sale under federal and state law, and the expense of reports to
shareholders, shareholders' meetings and proxy solicitations. Each Fund
also pays the expenses for maintenance of its financial books and records,
including computation of the Fund's daily net asset value per share and
dividends. Each Fund is also liable for such nonrecurring expenses as may
arise, including litigation to which the Fund may be a party. Each Fund
also may have an obligation to indemnify the trustees and officers of the
Trust with respect to any such litigation.

Under the Advisory Agreement, the Adviser will not be liable for
any error of judgment or mistake of law or for any loss suffered by a Fund
in connection with the performance of the Advisory Agreement, except a
loss resulting from a breach of fiduciary duty with respect to the receipt
of compensation for services or a loss resulting from willful misfeasance,
bad faith or gross negligence on its part in the performance of its duties
or from reckless disregard by it of its obligations or duties thereunder.

With respect to each Fund, the Advisory Agreement terminates
automatically upon assignment. It also is terminable at any time without
penalty by vote of the Trust's Board of Trustees, by vote of a majority of

36
<PAGE>

each Fund's outstanding voting securities, or by the Adviser, on not less
than 60 days' notice to the other party to the Agreement and may be
terminated immediately upon the mutual written consent of both parties to
the Agreement.

As explained in the Prospectus, the Adviser receives for its
services a fee, calculated daily and payable monthly, at an annual rate of
0.55% of the average daily net assets of each Fund. The Adviser has
agreed to waive its fees and reimburse each Fund if and to the extent its
expenses (exclusive of taxes, interest, brokerage and extraordinary
expenses) exceed during any month annual rates of each Fund's average
daily net assets for such month, or certain asset levels, whichever occurs
first, in accordance with the following schedules:

For the Maryland Tax-Free Fund:

Rate Expiration Date Asset Level
---- --------------- -----------

Primary Shares:
0.55%
0.55% December 31, 1994 $200 million
0.50% June 30, 1994 $200 million
0.45% December 31, 1993 $175 million
0.40% December 31, 1992 $150 million

Navigator Shares:
0.30%

For the Pennsylvania Tax-Free Fund:

Primary Shares:
0.50%
0.50% December 31, 1994 $125 million
0.45% June 30, 1994 $125 million
0.40% December 31, 1993 $100 million
0.35% July 31, 1993 $100 million

Navigator Shares:
0.25%

For the Tax-Free Intermediate Fund:
Primary Shares:
0.35%
0.35% December 31, 1994 $100 million
0.30% June 30, 1994 $100 million
0.30% December 31, 1993 $75 million
0.20% March 31, 1993 $75 million

Navigator Shares:
0.10%

37
<PAGE>

For the years ended March 31, 1995 and 1994, the Maryland Tax-
Free Fund paid advisory fees of $778,739 and $806,670 (prior to fees
waived of $569,982 and $707,590), respectively, and for the year ended
March 31, 1993, the Adviser waived all advisory fees for the Fund. For
the year ended March 31, 1995, 1994 and 1993, the Fund paid advisory fees
of $342,774, $327,975 and $215,075 (prior to fees waived of $326,376,
$327,975 and $215,075), respectively, for the Pennsylvania Tax-Free Fund.
For the years ended March 31, 1995, 1994 and the period November 9, 1992
(commencement of operations) to March 31, 1993, the Adviser waived all
advisory fees for the Tax-Free Intermediate Fund.

Under the Advisory Agreement, each Fund has the non-exclusive
right to use the name "Legg Mason" until that Agreement is terminated or
until the right is withdrawn in writing by the Adviser.

THE FUNDS' DISTRIBUTOR

Legg Mason acts as distributor of each Fund's shares pursuant to
an Underwriting Agreement with the Trust. The Underwriting Agreement
obligates Legg Mason to promote the sale of Fund shares and to pay certain
expenses in connection with its distribution efforts, including expenses
for the printing and distribution of prospectuses and periodic reports
used in connection with the offering to prospective investors (after the
prospectuses and reports have been prepared, set in type and mailed to
existing shareholders at the Fund's expense) and for supplementary sales
literature and advertising costs.

Fairfield Group, Inc., a wholly owned subsidiary of Legg Mason,
Inc., with principal offices at 200 Gibraltar Road, Horsham, Pennsylvania,
may act as a dealer for Navigator Shares pursuant to a Dealer Agreement
with Legg Mason. Neither Legg Mason nor Fairfield receives any
compensation from the Funds for its activities in selling Navigator
Shares.

Each Fund has adopted a Distribution and Shareholder Services
Plan ("Plan") which, among other things, permits each Fund to pay Legg
Mason fees for its services related to sales and distribution of Primary
Shares and the provision of ongoing services to to Primary Class
shareholders. Payments are made only from assets attributable to Primary
Shares. Under the Plan, the aggregate fees may not exceed an annual rate
of 0.25% of the Fund's average daily net assets attributable to Primary
Shares. Distribution activities for which such payments may be made
include, but are not limited to, compensation to persons who engage in or
support distribution and redemption of shares, printing of prospectuses
and reports for persons other than existing shareholders, advertising,
preparation and distribution of sales literature, overhead, travel and
telephone expenses, all with respect to Primary Shares only. Legg Mason
may pay all or a portion of the fees to its investment executives. The

38
<PAGE>

Plan has been amended, effective July 1, 1993, to make clear that, of the
aggregate 0.25% fees, 0.125% is paid for distribution services and 0.125%
is paid for ongoing services to shareholders. The amendments also specify
that the Fund may not pay more in distribution fees than 6.25% of total
new gross assets, plus interest, as specified in the Rules of Fair
Practice of the National Association of Securities Dealers, Inc. ("NASD").

Continuation of the Plan was most recently approved on October
21, 1994 by the Board of Trustees of the Trust, including a majority of
the trustees who are not "interested persons" of the Trust as that term is
defined in the 1940 Act and who have no direct or indirect financial
interest in the operation of the Plan or the Underwriting Agreement ("12b-
1 Trustees"). In approving the continuance of the Plan, in accordance
with the requirements of Rule 12b-1, the trustees determined that there
was a reasonable likelihood that the Plan would benefit each Fund and
their Primary Class shareholders. The trustees considered, among other
things, the extent to which the potential benefits of the Plan to each
Fund's Primary Class shareholders outweighed the costs of the Plan; the
likelihood that the Plan would succeed in producing such potential
benefits; the merits of certain possible alternatives to the Plan; and the
extent to which the retention of assets and additional sales of each
Fund's Primary Shares would be likely to maintain or increase the amount
of compensation paid by a Fund to its Adviser.

In considering the costs of the Plan, the trustees gave
particular attention to the fact that any payments made by a Fund to Legg
Mason under the Plan would increase the Fund's level of expenses in the
amount of such payments. Further, the trustees recognized that the
Adviser would earn greater management fees if a Fund's assets were
increased, because such fees are calculated as a percentage of the Fund's
assets and thus would increase if net assets increase. The trustees
further recognized that there can be no assurance that any of the
potential benefits described below would be achieved if the Plan were
implemented.

Among the potential benefits of the Plan, the trustees noted that
the payment of commissions and service fees to Legg Mason and its
investment executives could motivate them to improve their sales efforts
with respect to each Fund's Primary Shares and to maintain and enhance the
level of services they provide to the Funds' Primary Class shareholders.
These efforts, in turn, could lead to increased sales and reduced
redemptions, eventually enabling a Fund to achieve economies of scale and
lower per share operating expenses. Any reduction in such expenses would
serve to offset, in whole or in part, the additional expenses incurred by
a Fund in connection with the Plan. Furthermore, the investment
management of a Fund could be enhanced, as net inflows of cash from new
sales might enable its portfolio manager to take advantage of attractive
investment opportunities, and reduced redemptions could eliminate the
potential need to liquidate attractive securities positions in order to
raise the funds necessary to meet the redemption requests.

39
<PAGE>

As compensation for its services and expenses, Legg Mason
receives from each Fund an annual distribution fee equivalent to 0.125% of
its average daily net assets attributable to Primary Shares and a service
fee equivalent to 0.125% of its average daily net assets attributable to
Primary Shares in accordance with the Plan. The distribution and service
fees are calculated daily and payable monthly. Legg Mason has voluntarily
agreed to waive its fees and reimburse each Fund if and to the extent its
expenses (exclusive of taxes, interest, brokerage and extraordinary
expenses) exceed during any month annual rates of each Fund's average
daily net assets attributable to Primary Shares for such month, or certain
asset levels, whichever occurs first, in accordance with the schedules
described previously.

For the years ended March 31, 1995, 1994 and 1993, the Maryland
Tax-Free Fund paid distribution and service fees of $353,972, $366,668 and
$195,240, respectively, to Legg Mason. For the years ended March 31,
1995 and 1994, the Pennsylvania Tax-Free Fund paid distribution and
service fees of $155,806 and $98,689, respectively and for the year ended
March 31, 1993, Legg Mason waived all distribution and service fees for
the Fund. For the year ended March 31, 1995, the Tax-Free Intermediate
Fund paid distribution and service fees of $49,798 and for the year ended
March 31, 1994 and the period November 9, 1992 (commencement of
operations) to March 31, 1993, Legg Mason waived all distribution and
service fees for the Tax-Free Intermediate Fund.

The Plan will continue in effect only so long as it is approved
at least annually by the vote of a majority of the Board of Trustees,
including a majority of the 12b-1 Trustees, cast in person at a meeting
called for the purpose of voting on the Plan. The Plan may be terminated
with respect to a Fund by a vote of a majority of 12b-1 Trustees or by
vote of a majority of the outstanding voting securities of Primary Shares
of the Funds. Any change in the Plan that would materially increase the
distribution costs to a Fund requires shareholder approval; otherwise, the
Plan may be amended by the trustees, including a majority of the 12b-1
Trustees.

In accordance with Rule 12b-1, the Plan provides that Legg Mason
will submit to the Trust's Board of Trustees, and the trustees will review
at least quarterly, a written report of any amounts expended pursuant to
the Plan and the purposes for which expenditures were made. In addition,
as long as the Plan is in effect, the selection and nomination of the
Independent Trustees will be committed to the discretion of such
Independent Trustees.

40
<PAGE>

For the year ended March 31, 1995, Legg Mason incurred the
following expenses:

Maryland Pennsylvania Tax-Free
Tax-Free Tax-Free Intermediate
Fund Fund Fund

Compensation to
sales personnel $160,000 $ 70,000 $ 58,000
Advertising 91,000 87,000 182,000

Printing and
mailing of
prospectuses to
prospective
shareholders 26,000 31,000 31,000
Other 260,000 250,000 212,000

Total expenses $537,000 $438,000 $483,000

</TABLE>

The foregoing are estimated and do not include all expenses
fairly allocable to Legg Mason's or its affiliates' efforts to distribute
each Fund's Primary Shares.

Initial sales charges on purchases of shares of the Funds are
paid to Legg Mason. For the year ended March 31, 1995, Legg Mason
received $475,000 from sales of the Maryland Tax-Free Fund, $117,000 from
sales of the Pennsylvania Tax-Free Fund and $102,000 from sales of the
Tax-Free Intermediate Fund. For the year ended March 31, 1994, Legg Mason
received $992,000 from sales of the Maryland Tax-Free Fund, $471,000 from
sales of the Pennsylvania Tax-Free Fund and $530,000 from sales of the
Tax-Free Intermediate Fund. For the year ended March 31, 1993, Legg Mason
received $1,251,000 from sales of the Maryland Tax-Free Fund and $573,000
from sales of the Pennsylvania Tax-Free Fund. For the period November 9,
1992 (commencement of operations) to March 31, 1993, Legg Mason received
$622,000 from sales of the Tax-Free Intermediate Fund. Initial sales
charges are waived on purchases of Primary Shares of the Tax-Free
Intermediate Fund made through January 31, 1996.

PORTFOLIO TRANSACTIONS AND BROKERAGE

41
<PAGE>

Under each Advisory Agreement, the Adviser is responsible for the
execution of portfolio transactions. Corporate, municipal and government
debt securities are generally traded on the over-the-counter ("OTC")
market on a "net" basis without a stated commission, through dealers
acting for their own account and not as brokers. Prices paid to a dealer
in debt securities will generally include a "spread," which is the
difference between the price at which the dealer is willing to purchase
and sell the specific security at the time, and includes the dealer's
normal profit. Some portfolio transactions may be executed through
brokers acting as agent. In selecting brokers or dealers, the Adviser
must seek the most favorable price (including the applicable dealer
spread) and execution for such transactions, subject to the possible
payment as described below of higher brokerage commissions to brokers who
provide research and analysis. The Funds may not always pay the lowest
commission or spread available. Rather, in placing orders on behalf of a
Fund, the Adviser also takes into account such factors as size of the
order, difficulty of execution, efficiency of the executing broker's
facilities (including the services described below) and any risk assumed
by the executing broker.

Consistent with the policy of most favorable price and execution,
the Adviser may give consideration to research, statistical and other
services furnished by brokers or dealers to the Adviser for its use, may
place orders with brokers who provide supplemental investment and market
research and securities and economic analysis, and may pay to these
brokers a higher brokerage commission than may be charged by other
brokers. Such research and analysis may be useful to the Adviser in
connection with services to clients other than the Funds. The Adviser's
fee is not reduced by reason of its receiving such brokerage and research
services.

Although the Funds do not expect to purchase securities on a
commission basis, the Funds may use Legg Mason to effect agency
transactions in listed securities at commission rates and under
circumstances consistent with the policy of best execution. Commissions
paid to Legg Mason will not exceed "usual and customary brokerage
commissions." Rule 17e-1 under the 1940 Act defines "usual and customary"
commissions to include amounts which are "reasonable and fair compared to
the commission, fee or other remuneration received by other brokers in
connection with comparable transactions involving similar securities being
purchased or sold on a securities exchange during a comparable period of
time." In the OTC market, the Funds generally will deal with responsible
primary market makers unless a more favorable execution can otherwise be
obtained.

Except as permitted by SEC rules or orders, the Funds may not buy
securities from, or sell securities to, Legg Mason or its affiliated
persons as principal. The Trust's Board of Trustees has adopted
procedures in conformity with Rule 10f-3 under the 1940 Act whereby each
Fund may purchase securities that are offered in certain underwritings in
which Legg Mason or any of its affiliated persons is a participant. These
procedures, among other things, limit a Fund's investment in the amount of

42
<PAGE>

securities of any class of securities offered in an underwriting in which
Legg Mason or any of its affiliated persons is a participant so that: (i)
the Fund together with all other registered investment companies advised
by the Adviser, may not purchase more than 4% of the principal amount of
the offering of such class or $500,000 in principal amount, whichever is
greater, but in no event greater than 10% of the principal amount of the
offering; and (ii) the consideration to be paid by the Fund in purchasing
the securities being offered may not exceed 3% of the total assets of the
Fund. In addition, a Fund may not purchase securities during the
existence of an underwriting if Legg Mason is the sole underwriter of
those securities. Because Legg Mason is a principal underwriter of
municipal obligations, the Funds may be precluded from purchasing certain
new issues of municipal securities or may be permitted to make only
limited investments therein.

Section 11(a) of the Securities Exchange Act of 1934 prohibits
Legg Mason from executing transactions on an exchange for its affiliates,
such as the Funds, unless the affiliate expressly consents by written
contract. The Advisory Agreement expressly provides such consent.

Investment decisions for each Fund are made independently from
those of other funds and accounts advised by the Adviser. However, the
same security may be held in the portfolios of more than one fund or
account. When two or more accounts simultaneously engage in the purchase
or sale of the same security, the prices and amounts will be equitably
allocated to each account. In some cases, this procedure may adversely
affect the price or quantity of the security available to a particular
Fund. In other cases, however, Fund's ability to participate in large-
volume transactions may produce better executions and prices.

Portfolio Turnover

The portfolio turnover rate is computed by dividing the lesser of
purchases or sales of securities for the period by the average value of
portfolio securities for that period. Short-term securities are excluded
from the calculation. Each Fund's portfolio turnover rate may vary from
year to year, depending on market conditions. A high turnover rate (100%
or more) will involve correspondingly greater transaction costs, which
will be borne directly by a Fund. It may also change the character of
capital gains, if any, realized by a Fund and would affect dividends paid
to shareholders because short-term capital gains are taxable as ordinary
income. For the years ended March 31, 1995 and 1994, the Maryland Tax-
Free Fund's portfolio turnover rates were 9.5% and 6.6%, respectively.
For the years ended March 31, 1995 and 1994, the Pennsylvania Tax-Free
Fund's portfolio turnover rates were 2.08% and -0-, respectively. For the
years ended March 31, 1995 and 1994, the Tax-Free Intermediate Fund's
portfolio turnover rates were 24.8% and 6.6%, respectively.

THE TRUST'S CUSTODIAN AND
TRANSFER AND DIVIDEND-DISBURSING AGENT

43
<PAGE>

State Street Bank and Trust Company, P.O. Box 1713, Boston
Massachusetts, serves as custodian of the Funds' assets. BFDS, P.O. Box
953, Boston, Massachusetts 02103 serves as transfer and dividend-
disbursing agent and administrator of various shareholder services. Legg
Mason also assists BFDS with certain of its duties as transfer agent, for
which BFDS pays Legg Mason a fee. Each Fund reserves the right, upon 60
days' written notice, to make other charges to investors to cover
administrative costs.

OTHER INFORMATION

The Trust is an entity of the type commonly known as a
"Massachusetts business trust." Under Massachusetts law, shareholders of
each Fund could, under certain circumstances, be held personally liable
for the obligations of that Fund and of the other Funds. However, the
Trust's Declaration of Trust disclaims shareholder liability for acts or
obligations of the Trust or the Funds and requires that notice of such
disclaimer be given in each note, bond, contract, instrument, certificate
or undertaking made or issued by the trustees or by any officers or
officer by or on behalf of the Trust, a Fund, the trustees or any of them
in connection with the Trust. The Declaration of Trust provides for
indemnification from each Fund's property for all losses and expenses of
any Fund shareholder held personally liable for the obligations of that
Fund. Thus, the risk of a shareholder's incurring financial loss on
account of shareholder liability is limited to circumstances in which a
Fund itself would be unable to meet its obligations, a possibility which
the Adviser believes is remote and not material. Upon payment of any
liability incurred by a Fund shareholder solely by reason of being or
having been a shareholder, the shareholder paying such liability will be
entitled to reimbursement from the general assets of that Fund. The
trustees intend to conduct the operations of each Fund in such a way as to
avoid, as far as possible, ultimate liability of the shareholders for
liabilities of each Fund.

THE TRUST'S LEGAL COUNSEL

Kirkpatrick & Lockhart LLP, 1800 M Street, N.W., Washington, D.C.
20036, serves as counsel to the Trust.

THE TRUST'S INDEPENDENT ACCOUNTANTS

Coopers & Lybrand, 217 L.L.P. East Redwood Street, Baltimore,
Maryland 21202, have been selected by the Trustees to serve as the Trust's
independent accountants.

FINANCIAL STATEMENTS

The Statements of Net Assets as of March 31, 1995; the Statements
of Operations for the year ended March 31, 1995; the Statements of Changes
in Net Assets for the years ended March 31, 1995 and 1994; the Financial

44
<PAGE>

Highlights for the periods presented, the Notes to Financial Statements
and the Reports of the Independent Accountants, for each Fund, all of
which are included in the respective annual reports of the Legg Mason
Maryland Tax-Free Income Trust, the Legg Mason Pennsylvania Tax-Free
Income Trust and the Legg Mason Tax-Free Intermediate-Term Income Trust
for the year ended March 31, 1995, are hereby incorporated by reference in
this Statement of Additional Information.

45
<PAGE>

APPENDIX A

RATINGS OF SECURITIES

1. Description of Moody's Investors Service, Inc. ("Moody's")
Ratings
----------------------------------------------------------

Municipal Bonds

Aaa--Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt edge." Interest payments are protected by
a large or exceptionally stable margin, and principal is secure. While
the various protective elements are likely to change, such changes as can
be visualized are most unlikely to impair the fundamentally strong
position of such issues.

Aa--Bonds which are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group they comprise what are
generally known as high-grade bonds. They are rated lower than the best
bonds because margins of protection may not be as large as in Aaa
securities, fluctuation of protective elements may be of greater amplitude
or there may be other elements present which make long-term risks appear
somewhat larger than in Aaa securities.

A--Bonds which are rated A possess many favorable investment
attributes and are to be considered upper medium-grade obligations.
Factors giving security to principal and interest are considered adequate
but elements may be present which suggest a susceptibility to impairment
sometime in the future.

Baa--Bonds which are rated Baa are considered medium-grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present
but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds
lack outstanding investment characteristics and in fact have speculative
characteristics as well.

Municipal Notes

Moody's ratings for state and municipal notes and other short-
term obligations are designated Moody's Investment Grade ("MIG") and for
variable rated demand obligations are designated Variable Moody's
Investment Grade ("VMIG"). This distinction is in recognition of the
differences between short-term credit risk and long-term credit risk.
Notes bearing the designation MIG-1 or VMIG-1 are of the best quality,
enjoying strong protection from established cash flows for their servicing

A - 1
<PAGE>

or from established and broad-based access to the market for refinancing,
or both.

Moody's applies numerical modifiers 1, 2 and 3 in each generic
rating classification from Aa through B. The modifier 1 indicates that
the security ranks in the higher end of its generic rating, the modifier 2
indicates a mid-range rating; the modifier 3 indicates that the issue
ranks in the lower end of its generic rating.

Commercial Paper

The rating Prime-1 is the highest commercial paper rating
assigned by Moody's. Among the factors considered in assigning
commercial paper ratings are the following: (1) evaluation of the
management of the issuer; (2) economic evaluation of the issuer's industry
or industries and an appraisal of speculative-type risks which may be
inherent in certain areas; (3) evaluation of the issuer's products in
relation to competition and customer acceptance; (4) liquidity; (5) amount
and quality of long-term debt; (6) trend of earnings over a period of ten
years; (7) financial strength of a parent company and the relationships
which exist with the issuer; and (8) recognition by the management of
obligations which may be present or may arise as a result of public
interest questions and preparations to meet such obligations. Relative
strength or weakness of the above factors determines whether the issuer's
commercial paper is rated Prime-1, -2, or -3.

2. Description of Standard & Poor's Ratings Group ("S&P")
------------------------------------------------------

Municipal Bonds

AAA--This is the highest rating assigned by S&P to an obligation
and indicates an extremely strong capacity to pay principal and interest.

AA--Bonds rated AA also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority
of instances they differ from AAA issues only in small degree.

A--Bonds rated A have a strong capacity to pay principal and
interest, although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions.

BBB--Bonds which are rated BBB are regarded as having an adequate
capacity to pay principal and interest. Whereas they normally exhibit
adequate protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
principal and interest for bonds in this category than for bonds in the A
category.

Municipal Notes

A - 2
<PAGE>

Municipal notes with maturities of three years or less are usually
given note ratings (designated SP-1, -2, or -3) by S&P to distinguish more
clearly the credit quality of notes as compared to bonds. Notes rated SP-
1 have a very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety characteristics are
given the designation SP-1+.

Commercial Paper

A. Issues assigned this highest rating are regarded as
having the greatest capacity for timely payment. Issues in this category
are delineated with the numbers 1 and 2 to indicate the relative degree of
safety.

A-1. This designation indicates that the degree of safety
regarding timely payment is either overwhelming or very strong. Those
issues determined to possess overwhelming safety characteristics are
denoted with a plus (+) sign designation.

A-2. Capacity for timely payment on issues with this
designation is strong. However, the relative degree of safety is not as
high as for the issues designated "A-1".

3. Description of Fitch Investors Service, Inc. ("Fitch") Ratings
--------------------------------------------------------------

Investment Grade Bonds

AAA--Bonds considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by
reasonable foreseeable events.

AA--Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is
very strong, although not quite as strong as bonds rated "AAA". Because
bonds rated in the "AAA" and "AA" categories are not significantly
vulnerable to foreseeable future developments, short-term debt of these
issuers is generally rated "F-1+".

A--Bonds considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse change in
economic conditions and circumstances than bonds with higher ratings.

BBB--Bonds considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay principal
is considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these
bonds, and therefore impair timely payment. The likelihood that the
ratings of these bonds will fall below investment grade is higher than for
bonds with higher ratings.

A - 3
<PAGE>

Plus (+) Minus (-)--Plus and minus signs are used with a rating
symbol to indicate the relative position of a credit within the rating
category. Plus and minus signs, however, are not used in the "AAA"
category.

Short-term Ratings

F-1+--Exceptionally Strong Credit Quality. Issues assigned this
rating are regarded as having the strongest degree of assurance for timely
payment.

F-1--Very Strong Credit Quality. Issues assigned this rating
reflect assurance of timely payment only slightly less in degree than
issues rated"F-1+".

F-2--Good Credit Quality. Issues assigned this rating have a
satisfactory degree of assurance for timely payment, but the margin of
safety is not as great as for issues assigned "F-1+" and "F-1" ratings.

F-3-- Fair Credit Quality. Issues assigned this rating have
characteristics suggesting that the degree of assurance for timely
payments is adequate; however, near-term adverse changes could cause these
securities to be rated below investment grade.

A - 4
<PAGE>

Legg Mason Tax-Free Income Fund

Part C. Other Information
------------------

Item 24. Financial Statements and Exhibits
----------------------------------

(a) Financial Statements: The financial statements of the Maryland
Tax-Free Income Trust, the Pennsylvania Tax-Free Income Trust
and the Tax-Free Intermediate-Term Income Trust for the year
ended March 31, 1994 and the reports of the independent
accountants thereon are incorporated into the Statement of
Additional Information by reference to the Annual Report to
Shareholders for the same period.

(b) Exhibits
(1) (a) Declaration of Trust1/
(b) Amendment dated January 31, 1991 to the
Declaration of Trust2/
(c) Amendment dated March 11, 1991 to the
Declaration of Trust3/
(d) Amendment dated July 30, 1992 to the
Declaration of Trust5/

(e) Amendment to Declaration of Trust --filed herewith

(2) By-Laws1/
(3) Voting trust agreement - none

(4) Specimen security2/

(5) (a) Investment Advisory Contract with respect to
the Registrant and the Maryland, Pennsylvania
and High Quality Portfolios4/

(b) Advisory Fee Agreement with respect
to the Tax-Free Intermediate-Term
Income Trust7/

(6) Underwriting Agreement with respect to the
Maryland Pennsylvania and Tax-Free Intermediate-
Term Income Portfolios6/
(7) Bonus, profit sharing or pension plans - none
(8) Custodian Agreement4/
(9) Transfer Agency and Service Agreement4/
(10) (a) Opinion and consent of counsel with respect
to Registrant and the Maryland, Pennsylvania
and High Quality Portfolios 2/
(b) Opinion and consent of counsel with respect
to the Tax-Free Intermediate-Term Income
Portfolio5/

A - 5
<PAGE>

(11) Other opinions, appraisals, rulings and consents -
Accountant's consent -- filed herewith
(12) Financial statements omitted from Item 23 - none
(13) (a) Agreement for providing initial capital with
respect to the Registrant and the Maryland,
Pennsylvania and High Quality Portfolios2/
(b) Agreement for providing initial capital with
respect to the Tax-Free Intermediate-Term
Income Portfolio5/
(14) Prototype Retirement Plan - none
(15) Plan pursuant to Rule 12b-1 with respect
to the Maryland, Pennsylvania and Tax-Free
Intermediate-Term Income Portfolios6/
(16) (a) Schedule for computation of performance
quotations for Legg Mason Maryland Tax-Free
Income Trust -- filed herewith
(b) Schedule for computation of performance
quotations for Legg Mason Pennsylvania Tax-
Free Income Trust -- filed herewith
(c) Schedule for computation of performance quotations
for Legg Mason Tax-Free Intermediate-Term
Income Trust -- filed herewith

(17) Financial Data Schedule -- filed herewith

(18) Copies of Plans Pursuant to Rule 18f-3 - none

____________________________

1/ Incorporated herein by reference to corresponding exhibit of the
initial Registration Statement, SEC File No. 33-37971, filed
November 21, 1990.

2/ Incorporated herein by reference to corresponding exhibit of Pre-
Effective Amendment No. 1 to the Registration Statement, SEC File
No. 33-37971, filed February 19, 1991.

3/ Incorporated herein by reference to corresponding exhibit of Pre-
Effective Amendment No. 2 to the Registration Statement, SEC File
No. 33-37971, filed March 19, 1991.

4/ Incorporated herein by reference to corresponding exhibit of Post-
Effective Amendment No. 1 to the Registration Statement, SEC File
No. 33-37971, filed June 11, 1992.

5/ Incorporated herein by reference to corresponding Exhibit of Post-
Effective Amendment No. 3 to the Registration Statement, SEC File
No. 33-37971, filed August 28, 1992.

A - 6
<PAGE>

6/ Incorporated herein by reference to corresponding Exhibit of Post-
Effective Amendment No. 5 to the Registration Statement, SEC File
No. 33-37971, filed June 30, 1993.

7/ Incorporated herein by reference to corresponding Exhibit of Post-
Effective Amendment No. 6 to the Registration Statement, SEC File
No. 33-37971, filed July 29, 1994.

Item 25. Persons Controlled By or Under Common Control with
Registrant
-----------------------------------------------------

None.

Item 26. Number of Holders of Securities
--------------------------------
<TABLE>
<CAPTION>

<S> <C>
Number of Record Holders
Title of Class (as of May 31, 1995)

Shares of Capital Stock, 4,329
($.001 par value)
Legg Mason Maryland Tax-Free Income Trust 2,114

Legg Mason Pennsylvania Tax-Free Income Trust 1

Legg Mason High Quality Tax-Free Income Trust 1,301
Legg Mason Tax-Free Intermediate-Term Income Trust

</TABLE>

Item 27. Indemnification
-----------------

This item is incorporated by reference to Item 27 of Part C of Post-
Effective Amendment No. 3 to Registration Statement, SEC File No. 33-
37971, filed August 28, 1992.

Item 28. Business and Other Connections of Manager and Investment
Adviser
---------------------------------------------------------

Legg Mason Fund Adviser, Inc. ("Fund Adviser"), the Registrant's manager,
is a registered investment adviser incorporated on January 20, 1982. Fund
Adviser is engaged primarily in the investment advisory business. Fund

A - 7
<PAGE>

Adviser also serves as investment adviser or manager for fourteen open-end
investment companies or portfolios and as investment consultant for one
closed-end investment company. Information as to the officers and
directors of Fund Adviser is included in its Form ADV filed on June 30,
1994 with the Securities and Exchange Commission (Registration Number 801-
16958) and is incorporated herein by reference.

Item 29. Principal Underwriters
-----------------------

(a) Legg Mason Cash Reserve Trust
Legg Mason Special Investment Trust, Inc.
Legg Mason Value Trust, Inc.
Legg Mason Tax-Exempt Trust, Inc.
Legg Mason Income Trust, Inc.
Legg Mason Total Return Trust, Inc.
Legg Mason Global Trust, Inc.
Legg Mason Investors Trust, Inc.
Western Asset Trust, Inc.

(b) The following table sets forth information concerning each
director and officer of the Registrant's principal
underwriter, Legg Mason Wood Walker, Incorporated ("LMWW").

A - 8
<PAGE>

<TABLE>
<CAPTION>
<S> <C> <C>
Position and Positions and
Name and Principal Offices with Offices with
Business Address* Underwriter-LMWW Registrant
------------------- ------------------- ----------------

Raymond A. Mason Chairman of the None
Board
John F. Curley, Jr. Vice Chairman Chairman of the Board and
Trustee

James W. Brinkley President and None
Director

Edmund J. Cashman, Jr. Senior Executive President and
Vice President and Trustee
Director
Richard J. Himelfarb Executive Vice None
President and
Director

James A. Flick Executive Vice None
President
Edward A. Taber, III Executive Vice Trustee
President

Charles A. Bacigalupo Senior Vice None
President,
Secretary and
Director

Horace M. Lowman, Jr. Senior Vice None
President,
Assistant
Secretary and
Director
Thomas M. Daly, Jr. Senior Vice None
President and
Director

William F. Haneman, Jr. Senior Vice None
63 Wall Street President and
New York, New York 10005 Director
Carl Hohnbaum Senior Vice None
24th Floor President and
Two Oliver Plaza Director
Pittsburgh, PA 15222

Graham Humes Senior Vice None
President and
Director

A - 9
<PAGE>

<S> <C> <C>
Position and Positions and
Name and Principal Offices with Offices with
Business Address* Underwriter-LMWW Registrant
------------------- ------------------- ----------------

William B. Jones, Jr. Senior Vice None
1747 Pennsylvania President and
Avenue, N.W. Director
Washington, D.C. 20006
Ernest C. Kiehne Senior Vice None
President and
Director

Douglas C. Petty, Jr. Senior Vice None
1747 Pennsylvania President and
Avenue, N.W. Director
Washington, D.C. 20006

Mark I. Preston Senior Vice None
President and
Director
Robert G. Sabelhaus Senior Vice None
President and
Director

F. Barry Bilson Senior Vice None
President
Jerome M. Dattel Senior Vice None
President

Robert G. Donovan Senior Vice None
President

Harry M. Ford, Jr. Senior Vice None
President
Robert L. Meltzer Senior Vice None
63 Wall Street President
New York, NY 10005

William H. Miller, III Senior Vice None
President
Philip O. Rogers Senior Vice None
President

E. Robert Quasman Senior Vice None
President

Eileen M. O'Rourke Vice President None
and Controller
John C. Boblitz Vice President None

David L. Farrington Vice President None
Daniel L. Foard Vice President None

C. Gregory Kallmyer Vice President None

A - 10
<PAGE>

<S> <C> <C>
Position and Positions and
Name and Principal Offices with Offices with
Business Address* Underwriter-LMWW Registrant
------------------- ------------------- ----------------

Marie K. Karpinski Vice President Vice President
and Treasurer
Jonathan M. Pearl Vice President None

Victoria Schwatka Vice President None

Charles R. Spencer, Jr. Vice President None
2600 Washington Avenue
Newport News, VA 23607
Lewis T. Yeager Vice President None

John T. Rogers Group Vice None
President
Timothy C. Scheve Treasurer None
Thomas E. Hill Director None
One Mill Place
P.O. Drawer 100
Easton, MD 21701

Edward J. Maher Director None
123 South Broad St.
Philadelphia, PA 19109

Marvin McIntyre Director None
1747 Pennsylvania
Avenue, N.W.
Washington, D.C. 20006
George Strum Director None
1777 Reisterstown Road
Suite 165
Pikesville, MD 21208

</TABLE>
______________________________

* All addresses are 111 South Calvert Street, Baltimore, Maryland
21202, unless otherwise indicated.

(c) The Registrant has no principal underwriter which is not an
affiliated person of the Registrant or an affiliated person of
such an affiliated person.

Item 30. Location of Accounts and Records
---------------------------------

State Street Bank and Trust Company
P. O. Box 1713
Boston, Massachusetts 02105

Item 31. Management Services

A - 11
<PAGE>

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

None.

Item 32. Undertakings
-------------

Registrant hereby undertakes to provide each person to
whom a prospectus is delivered with a copy of its latest
annual report to shareholders upon request and without
charge.

A - 12
<PAGE>

Legg Mason Tax-Free Income Fund

Exhibit Index
--------------

Exhibit
__________

(1) (a) Declaration of Trust1/
(b) Amendment dated January 31, 1991 to the
Declaration of Trust2/
(c) Amendment dated March 11, 1991 to the
Declaration of Trust3/
(d) Amendment dated July 30, 1992 to the
Declaration of Trust5/

(e) Amendment to Declaration of Trust -- filed herewith

(2) By-Laws1/
(3) Voting trust agreement - none

(4) Specimen security2/

(5) (a) Investment Advisory Contract with respect to
the Registrant and the Maryland, Pennsylvania
and High Quality Portfolios4/

(b) Advisory Fee Agreement with respect to the
Tax-Free Intermediate-Term Income Portfolio7/

(6) Underwriting Agreement with respect
to the Maryland, Pennsylvania and Tax-Free Intermediate-
Term Income Portfolios6/
(7) Bonus, profit sharing or pension plans - none
(8) Custodian Agreement4/
(9) Transfer Agency and Service Agreement4/
(10) (a) Opinion and consent of counsel with respect
to Registrant and the Maryland, Pennsylvania
and High Quality Portfolios2/
(b) Opinion and consent of counsel with respect
to the Tax-Free Intermediate-Term
Income Portfolio5/
(11) Other opinions, appraisals, rulings and consents
Accountant's consent -- filed herewith
(12) Financial statements omitted from Item 23 - none
(13) (a) Agreement for providing initial capital with
respect to the Registrant and the Maryland,
Pennsylvania and High Quality Portfolios2/
(b) Agreement for providing initial capital with
respect to the Tax-Free Intermediate-Term
Income Portfolio5/
(14) Prototype Retirement Plan - none
(15) Plan pursuant to Rule 12b-1 with respect
to the Maryland, Pennsylvania and Tax-Free
Intermediate-Term Portfolio6/
(16) (a) Schedule for computation of performance
quotations for Legg Mason Maryland Tax-Free

A - 13
<PAGE>

Income Trust -- filed herewith
(b) Schedule for computation of performance
quotations for Legg Mason Pennsylvania Tax-
Free Income Trust -- filed herewith
(c) Schedule for computation of performance
quotations for Legg Mason Tax-Free Intermediate-
Term Income Trust --filed herewith

(17) Financial Data Schedule -- filed herewith

(18) Copies of Plans Pursuant to Rule 18f-3 - none

__________________________

1/ Incorporated herein by reference to corresponding exhibit of the
initial Registration Statement, SEC File No. 33-37971, filed
November 21, 1990.

2/ Incorporated herein by reference to corresponding exhibit of Pre-
Effective Amendment No. 1 to the Registration Statement, SEC File
No. 33-37971, filed February 19, 1991.

3/ Incorporated herein by reference to corresponding exhibit of Pre-
Effective Amendment No. 2 to the Registration Statement, SEC File
No. 33-37971, filed March 19, 1991.

4/ Incorporated herein by reference to corresponding exhibit of Post-
Effective Amendment No. 1 to the Registration Statement, SEC File
No. 33-37971, filed March 19, 1991.

5/ Incorporated herein by reference to corresponding Exhibit of Post-
Effective Amendment No. 3 to the Registration Statement, SEC File
No. 33-37971, filed August 28, 1992.

6/ Incorporated herein by reference to corresponding Exhibit of
Post-Effective Amendment No. 5 to the Registration Statement, SEC
File No. 33-37971, filed June 30, 1993.

7/ Incorporated herein by reference to corresponding Exhibit of Post-
Effective Amendment No. 6 to the Registration Statement, SEC File
No. 33-37971, filed July 29, 1994

A - 14
<PAGE>

SIGNATURE PAGE

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, Legg Mason Tax-Free Income
Fund, certifies that it meets all the requirements for effectiveness of
this Post-Effective Amendment No. 7 to its Registration Statement pursuant
to Rule 485(a) under the Securities Act of 1933 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Baltimore and State of Maryland,
on the 15th day of June, 1995.

Legg Mason Tax-Free Income Fund

By: /s/ John F. Curley, Jr.
-------------------------------
John F. Curley, Jr.
Chairman of the Board and
Trustee

Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 6 to the Registrant's Registration Statement
has been signed below by the following persons in the capacities and on
the dates indicated:
<TABLE>
<CAPTION>

<S> <C> <C>
Signature Title Date
---------- ---------- --------

Chairman of the Board
/s/John F. Curley, Jr. and Trustee June 15, 1995
----------------------
John F. Curley, Jr.
/s/Edmund J. Cashman, Jr. President and Trustee June 15, 1995
------------------------
Edmund J. Cashman, Jr.

/s/Edward A. Taber, III Trustee June 15, 1995
-----------------------
Edward A. Taber, III

/s/Charles F. Haugh Trustee June 15, 1995
--------------------
Charles F. Haugh*
/s/Richard G. Gilmore Trustee June 15, 1995
----------------------
Richard G. Gilmore*

/s/Arnold L. Lehman Trustee June 15, 1995
---------------------
Arnold L. Lehman*
/s/Jill E. McGovern Trustee June 15, 1995
---------------------
Jill E. McGovern*

A - 15
<PAGE>

<S> <C> <C>
Signature Title Date
---------- ---------- --------

/s/T. A. Rodgers Trustee June 15, 1995
---------------------
T. A. Rodgers*
/s/Marie K. Karpinski Vice President June 15, 1995
---------------------- and Treasurer
Marie K. Karpinski

</TABLE>

*Signatures affixed by Marie K. Karpinski pursuant to a power of attorney
dated May 18, 1992, incorporated by reference to Pre-Effective Amendment
No. 3, SEC File No. 33-37971, filed August 28, 1992.

A - 16
<PAGE>

AMENDMENT TO DECLARATION OF TRUST

LEGG MASON TAX-FREE INCOME FUND

CERTIFICATE OF VICE PRESIDENT AND SECRETARY

We, Marie K. Karpinski, Vice President, and Susan T. Lind,
Secretary, of Legg Mason Tax-Free Income Fund ("Trust"), hereby certify
that the trustees of the Trust adopted the following resolutions, which
became effective on August 1, 1994:

RESOLVED, that pursuant to Section 1 of Article III of the
Trust's Declaration of Trust, an unlimited number of shares of beneficial
interest, including all of those known as the Maryland Tax-Free Income
Trust outstanding at the time this resolution becomes effective, are
hereby designated as Maryland Tax-Free Income Trust Class A shares; and be
it further

RESOLVED, that pursuant to Section 1 of Article III of the
Trust's Declaration of Trust, an unlimited number of shares of beneficial
interest, including all of those known as the Pennsylvania Tax-Free Income
Trust outstanding at the time this resolution becomes effective, are
hereby designated as Pennsylvania Tax-Free Income Trust Class A shares;
and be it further

RESOLVED, that pursuant to Section 1 of Article III of the
Trust's Declaration of Trust, an unlimited number of shares of beneficial
interest, including all of those known as the Tax-Free Intermediate-Term
Income Trust outstanding at the time this resolution becomes effective,
are hereby designated as Tax-Free Intermediate-Term Income Trust Class A
shares; and be it further

RESOLVED, that pursuant to Section 1 of Article III of the
Trust's Declaration of Trust, an additional an unlimited number of shares
of beneficial interest of Maryland Tax-Free Income Trust be, and hereby
are, classified as Maryland Tax-Free Income Trust Class Y shares; and be
it further

RESOLVED, that pursuant to Section 1 of Article III of the
Trust's Declaration of Trust, an additional an unlimited number of shares
of beneficial interest of Pennsylvania Tax-Free Income Trust be, and
hereby are, classified as Pennsylvania Tax-Free Income Trust Class Y
shares; and be it further

RESOLVED, that pursuant to Section 1 of Article III of the
Trust's Declaration of Trust, an additional an unlimited number of shares
of beneficial interest of Tax-Free Intermediate-Term Income Trust be, and
hereby are, classified as Tax-Free Intermediate-Term Income Trust Class Y
shares; and be it further

RESOLVED, that the Maryland Tax-Free Income Trust Class A and
Class Y shares shall both be shares of the same series, that the
Pennsylvania Tax-Free Income Trust Class A and Class Y shares shall both
<PAGE>

be shares of the same series, that the Tax-Free Intermediate-Term Income
Trust Class A and Class Y shares shall both be shares of the same series;
and be it further

RESOLVED, that within each series, the Class A and Class Y shares
shall represent investment in the same pool of assets; and be it further

RESOLVED, that the Class A and Class Y shares of a series 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 Trust's Declaration of
Trust and as set forth below:

(1) The net asset values of Class A shares and Class Y shares
shall be calculated separately. In calculating the net asset
values,

(a) Each class 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 shall be charged separately with such
other expenses as may be permitted by SEC rule or order
and as the board of trustees shall deem appropriate;

(c) All other fees and expenses shall be charged to
both classes, in the proportion that the net asset value
of that class bears to the net asset value of the series,
except as the Securities and Exchange Commission may
otherwise require;

(2) Dividends and other distributions shall be paid on Class
A shares and Class Y shares at the same time. The amounts of all
dividends and other distributions shall be calculated separately
for Class A shares and Class Y shares. In calculating the amount
of any dividend or other distribution,

(b) Each class shall be charged separately with such
other expenses as may be permitted by SEC rule or order
and as the board of trustees shall deem appropriate;

- 2 -
<PAGE>

(3) Each class shall vote separately on matters pertaining
only to that class, as the trustees shall from time to time
determine. On all other matters, all classes shall vote
together, and every share, regardless of class, shall have an
equal vote with every other share.

/s/ Marie K. Karpinski
Dated: July 29, 1994 By:-------------------------------
Marie K. Karpinski
Vice President

/s/ Susan T. Lind
By:_________________________
Susan T. Lind
Secretary

Baltimore, Maryland (ss)

Subscribed and sworn to before me this 29th day of July, 1994.

/s/ Melody McFaddin
_________________________
Notary Public

- 3 -
<PAGE>

CONSENT OF INDEPENDENT ACCOUNTANTS

_________

To the Trustees of Legg Mason
Tax-Free Income Fund.:

We consent to the incorporation by reference in this
Post-Effective Amendment No. 7 to the Registration Statement of Legg Mason
Tax-Free Income Fund on Form N-1A (File No. 33-37971) of our reports dated
April 28, 1995 on our audits of the financial statements and financial
highlights of the Maryland Tax-Free Income Trust, Pennsylvania Tax-Free
Income Trust, and Tax-Free Intermediate-Term Income Trust (three of the
portfolios included in the Legg Mason Tax-Free Income Fund) which reports
are included in the Annual Report to Shareholders for the year ended March
31, 1995, which are incorporated by reference in the Registration
Statement. We also consent to the reference to our Firm under the caption
"The Corporation's Independent Accountants".

/s/ Coopers & Lybrand L.L.P.
----------------------------
COOPERS & LYBRAND L.L.P.

Baltimore, Maryland
June 15, 1995
<PAGE>

LEGG MASON PENNSYLVANIA TAX-FREE INCOME TRUST
---------------------------------------------

March 31, 1994 - March 31, 1995 (one year)
-------------------------------
Cumulative Total Return
-----------------------

ERV = (16.02 x 1.22845) - (16.25 x 1.16375) x 1000 + 1000 = 1040.66
------------------------------------
(16.25 x 1.16375)
P = 1000

C = 1040.66 - 1 = 0.04066 = 4.07%
------- ----
1000

Average Annual Return: Same
---------------------

August 1, 1991 - March 31, 1995 (life of fund)
---------------------------------
Cumulative Total Return
-----------------------

ERV = (16.02 X 1.22845) - (15.12 x 1.0) x 1000 + 1000 = 1301.57
------------------------------------
(15.12 x 1.0)
P = 1000

C = 1301.57 - 1 = 0.30157 = 30.16%
------- -----
1000

Average Annual Return:
---------------------
1
-------
3.66576
(0.30157 + 1) - 1 = 7.45%
----
<PAGE>

LEGG MASON TAX-FREE INTERMEDIATE-TERM INCOME TRUST
--------------------------------------------------

March 31, 1994 - March 31, 1995 (one year)
-------------------------------
Cumulative Total Return
-----------------------

ERV = (15.06 x 1.11895) - (15.27 x 1.06625) x 1000 + 1000 = 1034.99
-------------------------------------
(15.27 x 1.06625)
P = 1000

C = 1034.99 - 1 = 0.03499 = 3.50%
------- ----
1000

Average Annual Return: Same
---------------------

November 9, 1992 - March 31, 1995 (life of fund)
-----------------------------------
Cumulative Total Return
-----------------------

ERV = (15.06 X 1.11895) - (15.00 x 1.0) x 1000 + 1000 = 1123.43
------------------------------------
(15.00 x 1.0)
P = 1000

C = 1123.43 - 1 = 0.1234 = 12.34%
------- -----
1000

Average Annual Return:
---------------------
1
-------
2.39178
(0.1234 + 1) - 1 = 4.99%
----
<PAGE>

LEGG MASON MARYLAND TAX-FREE INCOME TRUST
-----------------------------------------

March 31, 1994 - March 31, 1995 (one year)
-------------------------------
Cumulative Total Return
-----------------------

ERV = (15.87 x 1.24182) - (16.14 x 1.17749) x 1000 + 1000 = 1036.99
-------------------------------------
(16.14 x 1.17749)
P = 1000

C = 1036.99 - 1 = 0.3699 = 3.70%
------- ----
1000

Average Annual Return: Same
---------------------

May 1, 1991 - March 31, 1995 (life of fund)
------------------------------
Cumulative Total Return
-----------------------

ERV = (15.87 X 1.24182) - (15.12 x 1.0) x 1000 + 1000 = 1303.42
------------------------------------
(15.12 x 1.0)
P = 1000

C = 1303.42 - 1 = 0.30342 = 30.34%
------- -----
1000

Average Annual Return:
---------------------
1
-------
3.91781
(0.30342 + 1) - 1 = 7.00%
----
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
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<NAME> LEGG MASON MARYLAND TAX-FREE INCOME TRUST
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<SERIES>
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<NAME> LEGG MASON PENNSYLVANIA TAX-FREE INCOME TRUST
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<S> <C>
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<OTHER-ITEMS-LIABILITIES> 226,218
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<EXPENSES-NET> 303,733
<NET-INVESTMENT-INCOME> 3,377,198
<REALIZED-GAINS-CURRENT> (47,088)
<APPREC-INCREASE-CURRENT> 868,878
<NET-CHANGE-FROM-OPS> 4,198,988
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3,377,198)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8,185,030
<NUMBER-OF-SHARES-REDEEMED> (10,331,294)
<SHARES-REINVESTED> 2,349,752
<NET-CHANGE-IN-ASSETS> 1,025,278
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 342,774
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 630,109
<AVERAGE-NET-ASSETS> 62,322,537
<PER-SHARE-NAV-BEGIN> 15.80
<PER-SHARE-NII> 0.85
<PER-SHARE-GAIN-APPREC> 0.22
<PER-SHARE-DIVIDEND> (0.85)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 16.02
<EXPENSE-RATIO> 0.49
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<AVG-DEBT-PER-SHARE> 0

</TABLE>

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<MULTIPLIER> 1

<S> <C>
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<INVESTMENTS-AT-VALUE> 48,369,892
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<SENIOR-LONG-TERM-DEBT> 386,310
<OTHER-ITEMS-LIABILITIES> 159,054
<TOTAL-LIABILITIES> 545,364
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 48,765,098
<SHARES-COMMON-STOCK> 3,243,714
<SHARES-COMMON-PRIOR> 3,612,856
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (228,634)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 300,129
<NET-ASSETS> 48,836,593
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,627,994
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<EXPENSES-NET> 171,519
<NET-INVESTMENT-INCOME> 2,456,475
<REALIZED-GAINS-CURRENT> (221,573)
<APPREC-INCREASE-CURRENT> 450,058
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