Investment Company Act file number

811-6629

Western Asset Managed Municipals Fund Inc.

(Exact name of registrant as specified in charter)

55 Water Street, New York, NY

10041

(Address of principal executive offices)

(Zip code)

Robert I. Frenkel, Esq.

Legg Mason & Co., LLC

300 First Stamford Place

Stamford, CT 06902

(Name and address of agent for service)

Registrant's telephone number, including area code:

1-800-451-2010

Date of fiscal year end:

May 31

Date of reporting period:

February 29, 2008

Schedule of Investments (unaudited)

February 29, 2008

Face
Amount

Security

Value

MUNICIPAL BONDS — 97.8%

Alabama — 3.5%

$

24,510,000

Jefferson County, AL, Sewer Revenue, Capital Improvement Warrants, FGIC, 5.375% due 2/1/36 (a)

$

25,387,458

Arizona — 2.7%

3,705,000

Greater Arizona Development Authority, Development Authority Infrastructure Revenue, Pinal County Road Project, MBIA, 5.000% due 8/1/19

3,799,403

4,000,000

Mesa, AZ, IDA, Revenue, Discovery Health Systems, MBIA, 5.625% due 1/1/29 (a)

4,235,040

Phoenix, AZ:

3,000,000

Civic Improvement Corp. Airport Revenue, Senior Lien, FGIC, 5.250% due 7/1/22 (b)

2,967,060

1,000,000

GO, 5.000% due 7/1/27 (a)

1,041,370

10,040,000

Salt Verde, AZ Financial Corp., Gas Revenue, 5.000% due 12/1/37

8,118,344

Total Arizona

20,161,217

California — 11.4%

California EFA Revenue:

4,485,000

5.625% due 7/1/23 (a)

4,576,135

2,555,000

5.625% due 7/1/23

2,413,172

California Health Facilities Finance Authority Revenue:

6,000,000

Cedars-Sinai Medical Center, 6.250% due 12/1/34 (a)

6,419,580

1,000,000

Sutter Health, 6.250% due 8/15/35

1,034,920

3,100,000

California Housing Finance Agency Revenue, Home Mortgage, 4.700% due 8/1/24 (b)

2,789,473

5,000,000

California State Department of Veterans Affairs, Home Purchase Revenue, AMBAC, 5.350% due 12/1/27

5,051,400

10,000,000

California State, GO, 5.000% due 12/1/29 (c)

9,420,800

7,375,000

Garden Grove, CA, Agency for Community Development, Tax Allocation, Refunding, AMBAC, 5.000% due 10/1/29

6,582,114

6,000,000

Golden State Tobacco Securitization Corp., CA, Tobacco Settlement Revenue, 6.750% due 6/1/39 (a)

6,863,820

6,000,000

Long Beach, CA, Bond Finance Authority, Natural Gas Purpose Revenue, 5.500% due 11/15/28

5,205,660

7,000,000

Los Angeles County, CA, COP, Antelope Valley Courthouse, AMBAC, 5.250% due 11/1/33 (a)

7,420,910

3,355,000

Pomona, CA, Public Financing Authority Revenue, Water Facilities Project, AMBAC, 5.000% due 5/1/37

2,934,786

3,340,000

Rancho Cucamonga, CA, RDA, Tax Allocation, Rancho Redevelopment Projects, MBIA, 5.125% due 9/1/30

3,276,607

1,145,000

Sacramento County, CA, COP, Unrefunded Balance, Public Facilities Project, MBIA, 5.375% due 2/1/19

1,158,900

5,000,000

San Diego, CA, USD GO, FSA, 5.000% due 7/1/28

5,303,700

3,000,000

San Jose, CA, Airport Revenue, MBIA, 5.000% due 3/1/28

2,781,720

3,000,000

San Mateo County Community College District, COP, MBIA, 5.000% due 10/1/25 (a)

3,256,590

2,500,000

Santa Clara, CA, RDA, Tax Allocation, Bayshore North Project, MBIA, 5.000% due 6/1/23

2,499,800

5,000,000

Southern California Public Power Authority, Natural Gas Revenue, Project Number 1, 5.000% due 11/1/29

4,369,650

Total California

83,359,737

Colorado — 7.3%

4,000,000

Colorado Educational & Cultural Facilities Authority Revenue, University of Denver Project, AMBAC, 5.375% due 3/1/23 (a)

4,263,214

Colorado Health Facilities Authority Revenue:

5,000,000

Refunding Adventist Health, Sunbelt, 5.250% due 11/15/35 (d)

4,525,600

Schedule of Investments  (unaudited) (continued)

February 29, 2008

Face
Amount

Security

Value

Colorado — 7.3% (continued)

$

4,000,000

Remarketed 7/8/98, 5.350% due 8/1/15 (e)

$

4,084,360

2,000,000

Denver, CO, City & County, COP, AMBAC, 5.500% due 12/1/25 (a)

2,147,220

Denver, CO, City & County Airport Revenue:

10,945,000

6.125% due 11/15/25 (b)(c)(e)

12,149,169

13,630,000

Unrefunded Balance, 6.125% due 11/15/25 (b)

13,743,674

1,700,000

El Paso County, CO, COP, Detention Facility Project, AMBAC, 5.000% due 12/1/23

1,701,292

Garfield County, CO, GO, School District No. 2, FSA, State Aid Withholding:

2,300,000

5.000% due 12/1/23

2,311,385

1,000,000

5.000% due 12/1/25

994,110

7,320,000

University of Colorado, COP, Master Lease Purchase Agreement, AMBAC, 5.000% due 6/1/28 (a)

7,859,191

Total Colorado

53,779,215

Connecticut — 1.0%

Connecticut State:

GO:

4,490,000

5.500% due 6/15/21 (a)

4,869,630

1,600,000

5.000% due 6/15/22 (a)

1,703,664

970,000

HEFA Revenue, Child Care Facilities Project, AMBAC, 5.625% due 7/1/29

972,910

Total Connecticut

7,546,204

Delaware — 1.4%

10,000,000

Delaware State, EDA Revenue, PCR, Refunding, Delmarva Project, AMBAC, 5.200% due 2/1/19

10,291,000

Florida — 3.9%

5,000,000

Florida State Board of Education, Capital Outlay, GO, Public Education, Refunding, FSA, 5.000% due 6/1/24

4,983,100

1,465,000

Florida State Department of Transportation, GO, Right of Way Project, FGIC, 5.000% due 7/1/25

1,405,858

5,620,000

Jacksonville, FL, Health Facilities Authority Revenue, Brooks Health System, 5.250% due 11/1/38

4,933,966

6,500,000

Martin County, FL, IDA Revenue, Indiantown Cogeneration Project, 7.875% due 12/15/25 (b)

6,515,795

1,290,000

Miami Beach, FL, Stormwater Revenue, FGIC, 5.375% due 9/1/30

1,279,190

2,000,000

Orange County, FL, School Board, COP, MBIA, 5.250% due 8/1/23 (a)

2,095,040

5,000,000

Orlando, FL, State Sales Tax Payments Revenue, 5.000% due 8/1/32

4,710,900

2,500,000

South Brevard, FL, Recreational Facilities Improvement, Special District, AMBAC, 5.000% due 7/1/20

2,511,250

Total Florida

28,435,099

Georgia — 5.5%

6,940,000

Atlanta, GA, Development Authority, Educational Facilities Revenue, Science Park LLC Project, 5.000% due 7/1/39 (c)

6,067,364

6,000,000

Augusta, GA, Water & Sewer Revenue, FSA, 5.250% due 10/1/26 (a)(c)

6,405,720

2,335,000

Georgia State, HFA Revenue, Single Family, 4.550% due 12/1/31 (b)

1,959,158

Main Street Natural Gas Inc., GA, Gas Project Revenue:

4,000,000

5.000% due 3/15/22

3,392,120

12,750,000

5.500% due 9/15/24

11,109,203

5,205,000

5.500% due 9/15/27

4,392,604

Private Colleges & Universities Authority Revenue, Mercer University Project:

2,180,000

5.750% due 10/1/21 (a)

2,407,461

Refunding:

2,000,000

5.250% due 10/1/25

1,774,720

1,000,000

5.375% due 10/1/29

879,640

Schedule of Investments  (unaudited) (continued)

February 29, 2008

Face
Amount

Security

Value

Georgia — 5.5% (continued)

$

2,000,000

Savannah, GA, EDA, Revenue, College of Arts & Design Inc. Project, 6.900% due 10/1/29 (a)

$

2,164,480

Total Georgia

40,552,470

Hawaii — 0.6%

4,000,000

Hawaii State, Department of Budget & Finance, Special Purpose Revenue, Kaiser Permanente, 5.100% due 3/1/14 (e)

4,123,240

Illinois — 4.1%

Chicago, IL:

4,095,000

Refunding GO, FGIC, 5.500% due 1/1/35

4,083,247

7,400,000

Skyway Toll Bridge Revenue, AMBAC, 5.500% due 1/1/31 (a)(c)

7,958,478

8,000,000

Illinois Health Facilities Authority Revenue, Order of Saint Francis Healthcare System, 6.250% due 11/15/29 (a)(c)

8,533,680

5,000,000

Illinois State, GO, MBIA, 5.625% due 6/1/25 (a)

5,306,450

4,000,000

Illinois State, Toll Highway Authority, Toll Highway Revenue, Senior Priority, FSA, 5.000% due 1/1/22

3,956,480

Total Illinois

29,838,335

Indiana — 0.4%

3,000,000

Indiana State DFA Environment Improvement Revenue, USX Corp. Project, 5.250% due 12/1/22

3,144,210

Iowa — 0.8%

Iowa Finance Authority Single Family Mortgage Revenue, GNMA/FNMA:

2,500,000

4.900% due 7/1/31 (b)

2,188,200

4,275,000

4.950% due 7/1/37 (b)

3,706,853

Total Iowa

5,895,053

Kansas — 1.2%

5,000,000

Johnson County, KS, GO, USD No. 229, Refunding, 5.000% due 10/1/18

5,230,600

3,000,000

Wyandotte County, Kansas City, KS, Unified Government Utilities Systems Revenue, Refunding, AMBAC, 5.650% due 9/1/17

3,223,290

Total Kansas

8,453,890

Kentucky — 1.6%

13,000,000

Louisville & Jefferson County, KY, Metro Government Health System Revenue, Norton Healthcare Inc., 5.250% due 10/1/36

11,600,030

Maine — 0.2%

1,770,000

Maine State Housing Authority Mortgage Revenue, 5.300% due 11/15/23

1,727,679

Maryland — 1.2%

Baltimore, MD, Project Revenue, Refunding, Wastewater Projects, FGIC:

2,500,000

5.125% due 7/1/32

2,368,475

3,385,000

5.200% due 7/1/32

3,240,697

3,075,000

Maryland State Health & Higher EFA Revenue, Johns Hopkins Hospital Issue, 5.000% due 11/15/26 (a)

3,299,629

Total Maryland

8,908,801

Massachusetts — 4.7%

2,430,000

Massachusetts Bay Transportation Authority, Sales Tax Revenue, 5.500% due 7/1/30 (a)(f)

2,563,504

1,125,000

Massachusetts DFA Revenue, Merrimack College Issue, MBIA, 5.200% due 7/1/32

1,027,958

1,850,000

Massachusetts HEFA Revenue, University of Massachusetts Issue, FGIC, 5.125% due 10/1/27

1,804,176

3,500,000

Massachusetts State DFA Revenue, Boston University, AMBAC, 5.000% due 10/1/39

3,263,785

Schedule of Investments  (unaudited) (continued)

February 29, 2008

Face
Amount

Security

Value

Massachusetts — 4.7% (continued)

$

2,500,000

Massachusetts State HEFA Revenue, Berklee College of Music, 5.000% due 10/1/32

$

2,247,850

5,000,000

Massachusetts State Special Obligation Revenue, Consolidated Loan, FGIC, 5.000% due 6/1/21 (a)

5,329,350

Massachusetts State, GO, Consolidated Loan:

10,950,000

5.250% due 11/1/30 (a)

11,712,667

6,050,000

Refunded Balance, 5.250% due 11/1/30 (a)

6,471,382

Total Massachusetts

34,420,672

Michigan — 3.2%

5,000,000

East Lansing, MI, Community School District, GO, School Building & Site, Q-SBLF, 5.625% due 5/1/30 (a)

5,290,050

Michigan State, COP, AMBAC:

2,345,000

5.500% due 6/1/19 (a)(f)

2,477,188

6,000,000

5.500% due 6/1/27 (a)

6,338,220

Michigan State Hospital Finance Authority Revenue, Refunding:

5,000,000

Sparrow Hospital Obligated, 5.000% due 11/15/36

4,253,250

2,500,000

Trinity Health Credit, 5.375% due 12/1/23

2,532,600

3,000,000

Michigan State Housing Development Authority, Rental Housing Revenue, 5.300% due 10/1/26 (b)

2,796,420

Total Michigan

23,687,728

Minnesota — 1.9%

1,500,000

Dakota County, MN, CDA, MFH Revenue, Southfork Apartments, FNMA-Collateralized, 5.625% due 2/1/26

1,509,795

4,000,000

Minneapolis & St. Paul, MN, Metropolitan Airports Commission, Airport Revenue, FGIC, 5.250% due 1/1/26 (a)

4,216,080

7,000,000

Minneapolis, MN, Healthcare System Revenue, Allina Health System, 6.000% due 11/15/23 (a)

7,779,940

325,000

Minnesota State Housing Financing Agency, Single-Family Mortgage, 5.500% due 1/1/17

326,411

Total Minnesota

13,832,226

Mississippi — 0.5%

4,000,000

Mississippi Development Bank, Special Obligation, Capital Projects & Equipment Program, AMBAC, 5.625% due 7/1/31

3,851,440

Missouri — 3.7%

1,500,000

Greene County, MO, Reorganized School District No. 8, GO, Missouri State Aid Direct Deposit Program, FSA, 5.100% due 3/1/22

1,589,190

21,000,000

Missouri State Environmental Improvement & Energy Resource Authority, Water Pollution Revolving Funds Program, 5.000% due 1/1/24

21,066,150

5,000,000

Platte County, MO, IDA Revenue, Refunding & Improvement Zona Rosa Retail Project, 5.000% due 12/1/32

4,673,600

20,000

St. Louis, MO, Airport Revenue, Airport Development Program, MBIA, 5.125% due 7/1/22 (a)

21,158

Total Missouri

27,350,098

Montana — 1.3%

9,700,000

Montana State Board of Investment, Resource Recovery Revenue, Yellowstone Energy LP Project, 7.000% due 12/31/19 (b)

9,735,502

Nebraska — 0.4%

3,000,000

Nebraska Public Power Generation Agency Revenue, Whelan Energy Center Unit 2-A, AMBAC, 5.000% due 1/1/25

2,759,940

New Jersey — 3.2%

1,000,000

New Jersey EDA Revenue, School Facilities Construction, 5.000% due 6/15/28 (a)

1,068,180

New Jersey Health Care Facilities Financing Authority Revenue:

Schedule of Investments  (unaudited) (continued)

February 29, 2008

Face
Amount

Security

Value

New Jersey — 3.2% (continued)

$

3,875,000

Englewood Hospital, FHA/MBIA, 5.000% due 8/1/23

$

3,874,806

8,000,000

Robert Wood Johnson University Hospital, 5.700% due 7/1/20

8,223,120

2,395,000

New Jersey State Highway Authority, Garden State Parkway General Revenue, 5.625% due 1/1/30 (a)

2,537,934

3,125,000

New Jersey State, EDA, PCR, Refunding, PSEG Power LLC Project, 5.000% due 3/1/12

3,200,937

1,350,000

South Jersey Port Corp., New Jersey Revenue, Refunding, 5.000% due 1/1/26

1,299,051

3,285,000

Tobacco Settlement Financing Corp., NJ, Asset-Backed Bonds, 5.750% due 6/1/32

3,525,298

Total New Jersey

23,729,326

New Mexico — 0.1%

495,000

New Mexico Mortgage Financing Authority, Single-Family Mortgage Revenue, 5.625% due 9/1/28 (f)

498,519

New York — 3.5%

Nassau Health Care Corp., New York Health Systems Revenue, FSA:

2,000,000

5.500% due 8/1/19 (a)

2,122,660

3,000,000

5.750% due 8/1/29 (a)

3,194,310

New York City, NY:

5,100,000

Housing Development Corp. Revenue, Capital Fund Package, New York City Housing Authority, FGIC, 5.000% due 7/1/25

4,978,416

6,000,000

Municipal Water Finance Authority, Water & Sewer System Revenue, 5.250% due 6/15/25

6,058,980

New York State Dormitory Authority Revenue:

5,000,000

State University Educational Facility, FSA, 5.500% due 5/15/30 (a)

5,345,500

1,000,000

Willow Towers Inc. Project, GNMA-Collateralized, 5.250% due 2/1/22

1,015,700

3,000,000

New York State Thruway Authority, Highway & Bridge, Transportation Fund, FGIC, 5.400% due 4/1/17 (a)

3,188,610

Total New York

25,904,176

North Carolina — 0.9%

1,750,000

Charlotte, NC, COP, Governmental Facilities Projects, 5.000% due 6/1/28

1,691,480

1,615,000

Harnett County, NC, GO, Refunded Custody Receipts, AMBAC, 5.250% due 6/1/24

1,627,678

1,000,000

Iredell County, NC, COP, Iredell County School Project, FSA, 5.000% due 6/1/28

948,680

North Carolina Capital Facilities Finance Agency, Educational Facilities Revenue, Elizabeth City State University Housing Foundation LLC Project, AMBAC:

1,000,000

5.000% due 6/1/23

999,920

1,250,000

5.000% due 6/1/33

1,211,562

Total North Carolina

6,479,320

Ohio — 8.5%

2,000,000

Canton, OH, City School District, GO, Variable Purpose, MBIA, 5.500% due 12/1/20 (a)

2,134,240

3,000,000

Cuyahoga County, OH, Hospital Revenue, University Hospitals Health System Inc., AMBAC, 5.500% due 1/15/30 (a)

3,149,010

1,000,000

Garfield Heights, OH, City School District, School Improvement, FSA, 5.000% due 12/15/22

1,010,920

Hamilton County, OH:

2,000,000

Hospital Facilities Revenue, Cincinnati Childrens Hospital, FGIC, 5.250% due 5/15/23

2,013,500

Sales Tax Revenue, AMBAC:

19,925,000

5.250% due 12/1/32 (a)

21,132,256

5,075,000

5.250% due 12/1/32

4,964,517

Schedule of Investments (unaudited)(continued)

February 29, 2008

Face
Amount

Security

Value

Ohio — 8.5% (continued)

$

7,500,000

Lorain County, OH, Hospital Revenue, Catholic Healthcare Partners, 5.375% due 10/1/30

$

7,074,300

5,990,000

Lucas County, OH, Hospital Revenue, Promedica Healthcare Obligation Group, AMBAC, 5.375% due 11/15/29

5,763,219

3,025,000

Muskingum County, OH, GO, Refunding & County Facilities Improvement, MBIA, 5.125% due 12/1/19

3,092,306

1,805,000

Ohio State Revenue, Revitalization Project, AMBAC, 5.000% due 4/1/21

1,821,642

1,375,000

Ohio State, Higher Educational Facility Commission Revenue, University of Dayton Project, AMBAC, 5.500% due 12/1/25 (a)

1,479,981

1,500,000

Steubenville, OH, Hospital Revenue, 6.375% due 10/1/20 (a)

1,625,160

Summit County, OH, GO, FGIC:

1,000,000

5.000% due 12/1/21

1,008,860

500,000

5.000% due 12/1/22

500,950

1,500,000

Trumbull County, OH, GO, MBIA, 5.200% due 12/1/20

1,544,835

2,000,000

University of Cincinnati, OH, General Receipts, FGIC, 5.250% due 6/1/24 (a)

2,154,040

1,500,000

Warrensville Heights, OH, GO, City School District, School Improvements, FGIC, 5.625% due 12/1/20 (a)(f)

1,619,430

Total Ohio

62,089,166

Oregon — 2.2%

3,210,000

Clackamas County, OR, Hospital Facilities Authority Revenue, Legacy Health System, 5.750% due 5/1/16

3,359,329

4,895,000

Oregon State Department of Transportation, Highway User Tax Revenue, 5.125% due
11/15/23 (a)

5,267,069

2,000,000

Oregon State Facilities Authority Revenue, University Portland Projects, 5.000% due 4/1/32

1,711,500

1,680,000

Oregon State Housing & Community Services Department, Mortgage Revenue, Single-Family Mortgage Program, 5.050% due 7/1/26 (b)

1,558,284

3,980,000

Oregon State Veterans Welfare, GO, 5.500% due 12/1/42

3,901,077

Total Oregon

15,797,259

Pennsylvania — 3.6%

State Public School Building Authorities, School Revenue, Philadelphia School District Project, FSA, State Aid Withholding:

18,745,000

5.250% due 6/1/26 (a)

20,301,772

5,540,000

5.250% due 6/1/27 (a)

6,000,097

Total Pennsylvania

26,301,869

South Carolina — 5.1%

Berkeley County, SC:

10,000,000

PCR, Refunding, SC Generating Co. Project, 4.875% due 10/1/14

10,222,400

2,025,000

Water & Sewer Revenue, FSA, 5.000% due 6/1/23

2,032,169

15,000,000

Greenville County, SC, School District Installment Purchase, Refunding, Building Equity Sooner for Tomorrow, 5.500% due 12/1/28 (a)(c)

16,557,450

South Carolina Transportation Infrastructure Bank Revenue:

2,505,000

AMBAC, 5.125% due 10/1/31 (a)

2,677,845

3,000,000

MBIA, 5.500% due 10/1/30 (a)

3,165,750

3,000,000

Refunding, AMBAC, 5.000% due 10/1/23

2,927,010

Total South Carolina

37,582,624

Tennessee — 1.9%

1,025,000

Hardeman County, TN, Correctional Facilities Corp., Correctional Facilities Revenue, 7.750% due 8/1/17

1,039,934

6,420,000

Memphis-Shelby County, TN, Sports Authority Income Revenue, Memphis Arena Project, AMBAC, 5.125% due 11/1/21 (a)

6,904,325

3,000,000

Tennessee Energy Acquisition Corp., Gas Revenue, 5.000% due 2/1/27

2,640,450

Schedule of Investments (unaudited)(continued)

February 29, 2008

Face
Amount

Security

Value

Tennessee — 1.9% (continued)

$

3,000,000

Tennessee State, GO, 5.250% due 3/1/17 (a)

$

3,139,440

Total Tennessee

13,724,149

Texas — 2.3%

10,000,000

Board of Managers Guadalupe Joint County-City of Seguin Hospital Revenue, Guadalupe Regional Medical Center Project, FHA, 5.500% due 8/15/36 (c)

9,425,100

5,000,000

Dallas-Fort Worth, TX, International Airport Facilities Improvement Corp. Revenue, American Airlines Inc., Guarantee Agreement, 6.375% due 5/1/35 (b)

4,128,000

1,000,000

Harris County, TX, Health Facilities Development Corp., School Health Care System, Revenue, 5.750% due 7/1/27 (e)

1,077,810

2,335,000

Pasadena, TX, ISD, GO, School Building, PSF-GTD, 4.750% due 2/15/24

2,258,856

Total Texas

16,889,766

Virginia — 2.7%

3,000,000

Chesterfield County, VA, IDA, PCR, Virginia Electric & Power Co., Remarketed 11/8/02, 5.875% due 6/1/17

3,139,620

10,000,000

Virginia State HDA Commonwealth Mortgage Revenue, MBIA, 5.350% due 7/1/31

9,894,100

7,000,000

York County, VA, IDA, PCR, Virginia Electrical & Power Co., Remarketed 11/8/02, 5.500% due 7/1/09

7,062,020

Total Virginia

20,095,740

Washington — 0.4%

3,000,000

State of Washington, GO, AMBAC, 5.000% due 7/1/20

3,079,320

West Virginia — 0.6%

West Virginia State Housing Development Fund, Housing Finance Revenue:

3,845,000

5.300% due 5/1/24

3,849,345

400,000

5.350% due 11/1/27

398,620

Total West Virginia

4,247,965

Wisconsin — 0.3%

Wisconsin State HEFA Revenue:

1,100,000

Kenosha Hospital & Medical Center Project, 5.700% due 5/15/20

1,114,355

1,250,000

Medical College of Wisconsin Inc. Project, MBIA, 5.400% due 12/1/16

1,265,200

Total Wisconsin

2,379,555

TOTAL INVESTMENTS BEFORE SHORT-TERM INVESTMENTS
(Cost — $708,961,056)

717,639,998

SHORT-TERM INVESTMENTS — 2.2%

Alaska — 0.3%

2,300,000

Alaska State Housing Finance Corp., Home Mortgage Revenue, SPA - Landesbank Baden-Wuerttemburg, 3.100%, 3/6/08 (g)

2,300,000

Arizona — 0.0%

250,000

Arizona Health Facilities Authority Revenue, Health Facility Catholic West, LOC-Bank of America NA, 3.200%, 3/5/08 (g)

250,000

Delaware — 0.1%

500,000

Delaware State EDA Revenue, Hospital Billing, LOC-JPMorgan Chase, 3.200%, 3/5/08 (g)

500,000

Georgia — 0.1%

300,000

Municipal Electric Authority of Georgia, Project One, FSA, SPA-Dexia Credit Local, 3.200%, 3/5/08 (g)

300,000

Schedule of Investments (unaudited)(continued)

February 29, 2008

Face
Amount

Security

Value

Illinois — 0.8%

$

400,000

Cook County, IL, GO, Capital Improvement, SPA-Depfa Bank PLC, 3.250%, 3/6/08 (g)

$

400,000

5,100,000

Illinois Finance Authority Revenue, Alexian Brothers Health, LOC-Bank One N.A., 3.100%, 3/6/08 (g)

5,100,000

Total Illinois

5,500,000

Kansas — 0.0%

150,000

Kansas State Department of Transportation Highway Revenue, Refunding, SPA-Dexia Credit Local & Westdeutsche Landesbank, 3.050%, 3/6/08 (g)

150,000

Massachusetts — 0.7%

300,000

Massachusetts State HEFA, Partners Healthcare Systems, SPA-JPMorgan Chase, 3.350%, 3/6/08 (g)

300,000

4,500,000

Massachusetts State HEFA Revenue, Amherst College, 3.000%, 3/6/08 (g)

4,500,000

200,000

Massachusetts State, GO, Consolidated Loan, SPA-Bank of America, 4.020%, 3/3/08 (g)

200,000

Total Massachusetts

5,000,000

New York — 0.0%

300,000

Long Island, NY, Power Authority, Electric System Revenue, FSA, SPA-Dexia Credit Local, 3.250%, 3/5/08 (g)

300,000

Pennsylvania — 0.0%

250,000

Northampton County, PA, General Purpose Authority Revenue, Higher Education Lehigh University, SPA- JPMorgan Chase, 3.230%, 3/6/08 (g)

250,000

Vermont — 0.1%

625,000

Vermont Educational & Health Buildings Financing Agency Revenue, Hospital, Northeastern Vermont, LOC-TD Banknorth NA, 3.500%, 3/3/08 (g)

625,000

Washington — 0.1%

400,000

Washington State Health Care Facilities Authority, National Healthcare Research and Education Finance Corp., LOC-BNP Paribas, 3.200%, 3/5/08 (g)

400,000

200,000

Washington, WA, HEFA, Revenue, Whitman College Project, SPA-JPMorgan Chase, 3.400%, 3/6/08 (g)

200,000

Total Washington

600,000

TOTAL SHORT-TERM INVESTMENTS (Cost — $15,775,000)

15,775,000

TOTAL INVESTMENTS — 100.0% (Cost — $724,736,056#)

$

733,414,998

(a)

Pre-Refunded bonds are escrowed with government obligations and/or government agency securities and are considered by the manager to be triple-A rated even if issuer has not applied for new ratings.

(b)

Income from this issue is considered a preference item for purposes of calculating the alternative minimum tax (“AMT”).

(c)

All or a portion of this security is segregated for open futures contracts and extended settlements.

(d)

Variable rate security. Interest rate disclosed is that which is in effect at February 29, 2008.

(e)

Bonds are escrowed to maturity by government securities and/or U.S. government agency securities and are considered by the manager to be triple-A rated even if issuer has not applied for new ratings.

(f)

All or a portion of this security is held at the broker as collateral for open futures contracts.

(g)

Variable rate demand obligations have a demand feature under which the Fund can tender them back to the issuer on no more than 7 days notice. Date shown is the date of the next interest rate change.

#

Aggregate cost for federal income tax purposes is substantially the same.

Abbreviations used in this schedule:

AMBAC - Ambac Assurance Corporation - Insured Bonds

CDA - Community Development Authority

COP - Certificate of Participation

DFA - Development Finance Agency

Schedule of Investments (unaudited)(continued)

February 29, 2008

EDA - Economic Development Authority

EFA - Educational Facilities Authority

FGIC - Financial Guaranty Insurance Company - Insured Bonds

FHA - Federal Housing Administration

FNMA - Federal National Mortgage Association

FSA - Financial Security Assurance - Insured Bonds

GNMA - Government National Mortgage Association

GO - General Obligation

GTD - Guaranteed

HDA - Housing Development Agency

HEFA - Health & Educational Facilities Authority

HFA - Housing Finance Authority

IDA - Industrial Development Authority

ISD - Independent School District

LOC - Letter of Credit

MBIA - Municipal Bond Investors Assurance Corporation - Insured Bonds

MFH - Multi-Family Housing

PCR - Pollution Control Revenue

PSF - Permanent School Fund

Q-SBLF - Qualified School Board Loan Fund

RDA - Redevelopment Agency

SPA - Standby Bond Purchase Agreement

USD - Unified School District

Pre-Refunded/Escrowed to Maturity

41.8

%

Hospitals

9.5

Electric

7.1

Housing

5.9

Water & Sewer

5.3

Local General Obligation

5.3

Industrial Development

5.2

Transportation

4.4

Education

4.0

Special Tax

4.0

State General Obligation

3.4

Other Revenue

1.7

Resource Recovery

1.3

Leasing

0.6

Housing: Single Family

0.3

General Obligation

0.1

Utilities

0.1

100.0

%

S&P/Moodys †

AAA/Aaa

28.8

%

AA/Aa

22.4

A

37.6

BBB/Baa

3.9

BB/Ba

1.9

CCC/Caa

0.6

A-1/VMIG1

2.2

NR

2.6

100.0

%

AAA

— Bonds rated “AAA” have the highest rating assigned by Standard & Poor’s. Capacity to pay interest and repay principal is extremely strong.

AA

— Bonds rated “AA” have a very strong capacity to pay interest and repay principal and differ from the highest rated issues only in a small degree.

A

— Bonds rated “A” have a strong capacity to pay interest and repay principal although they are somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories.

BBB

— Bonds rated “BBB” are regarded as having an adequate capacity to pay interest and repay principal. Whereas they normally exhibit adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal for bonds in this category than in higher rated categories.

BB, B,

CCC,

CC and C

— Bonds rated “BB”, “B”, “CCC”, “CC” and “C” are regarded, on balance, as predominantly speculative with respect to capacity to pay interest and repay principal in accordance with the terms of the obligation. “BB” represents the lowest degree of speculation and “C” the highest degree of speculation. While such bonds will likely have some quality and protective characteristics, these are outweighed by large uncertainties or major risk exposures to adverse conditions.

D

— Bonds rated “D” are in default and payment of interest and/or repayment of principal is in arrears.

Aaa

— Bonds 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 by an 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 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 or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in “Aaa” securities.

A

— Bonds rated “A” possess many favorable investment attributes and are to be considered as 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 some time in the future.

Baa

— Bonds rated “Baa” are considered as 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.

Ba

— Bonds rated “Ba” are judged to have speculative elements; their future cannot be considered as well assured. Often the protection of interest and principal payments may be very moderate and therefore

not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class.

B

— Bonds rated “B” generally lack characteristics of desirable investments. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small.

Caa

— Bonds rated “Caa” are of poor standing. These may be in default, or present elements of danger may exist with respect to principal or interest.

Ca

— Bonds rated “Ca” represent obligations which are speculative in a high degree. Such issues are often in default or have other marked short-comings.

C

— Bonds rated “C” are the lowest class of bonds and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.

NR

— Indicates that the bond is not rated by Standard & Poor’s Moody’s.

SP-1

— Standard & Poor’s highest rating indicating very strong or strong capacity to pay principal and interest; those issues determined to possess overwhelming safety characteristics are denoted with a plus (+) sign.

A-1

— Standard & Poor’s highest commercial paper and variable-rate demand obligation (VRDO) rating indicating 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.

VMIG 1

— Moody’s highest rating for issues having a demand feature— VRDO.

MIG1

— Moody’s highest rating for short-term municipal obligations.

P-1

— Moody’s highest rating for commercial paper and for VRDO prior to the advent of the VMIG 1 rating.

F1

— Fitch’s highest rating indicating the strongest capacity for timely payment of financial commitments; those issues determined to possess overwhelming strong credit feature are denoted with a plus (+) sign.

Gross unrealized appreciation

$

29,174,400

Gross unrealized depreciation

(20,495,458

)

Net unrealized appreciation

$

8,678,942

Number of
Contracts

Expiration
Date

Basis
Value

Market
Value

Unrealized
Loss

Contracts to Sell:

U.S. Treasury Bonds

291

6/08

$

33,662,151

$

34,519,875

$

(857,724

)

ITEM 2.

CONTROLS AND PROCEDURES.

(a)

The registrant’s principal executive officer and principal financial officer have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a- 3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective as of a date within 90 days of the filing date of this report that includes the disclosure required by this paragraph, based on their evaluation of the disclosure controls and procedures required by Rule 30a-3(b) under the 1940 Act and 15d-15(b) under the Securities Exchange Act of 1934.

(b)

There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the registrant’s last fiscal quarter that have materially affected, or are likely to materially affect the registrant’s internal control over financial reporting.

ITEM 3.

EXHIBITS.

Certifications pursuant to Rule 30a-2(a) under the Investment Company Act of 1940, as amended, are attached hereto.

By

/s/ R. Jay Gerken

R. Jay Gerken

Chief Executive Officer

By

/s/ R. Jay Gerken

R. Jay Gerken

Chief Executive Officer

By

/s/ Kaprel Ozsolak

Kaprel Ozsolak

Chief Financial Officer