[Mike_The_Grad]

The level of each reservoir should be within 1/4" from full. The rubber diaphragm in the cover is meant to expand when the fluid level drops, it's to displace the fluid lost, otherwise there would be a vacuum created, or air would find its way into the system.
All the symptoms you describe indicate a leak in the rear half of your brake system. So it's either in the master cylinder itself or somewhere between the proportioning valve and the rear wheel cylinders.
Remember brake fluid removes paint, and brake fluid does not evaporate. So you could start your search by grabbing some degreaser or brake cleaner and start hitting the brake lines, I'd start at the master cylinder and work my way towards the rear cleaning the lines as you go, there are a few threaded unions along the way. I think one at each frame rail in the front close to the main crossmember, and one or two towards the rear of the vehicle, don't rule out possible weak spots in the brake line tubing.
I had a leak about 2 " above a threaded union on the driver side frame rail. I guess years ago my header primary tubes were rubbing alongside the tubing. And it happened to be at a bend so it wore through the metal brake line over time. Also the union on the passenger side of my truck was slightly loose. I don't know how, but it happend.
When's the last time you inspected your rear drum brakes? Or serviced them?