UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-4395

Legg Mason Partners Municipal Funds

(Exact name of registrant as specified in charter)

125 Broad Street, New York, NY	10004
(Address of principal executive offices)	(Zip code)

Robert I. Frenkel, Esq.

Legg Mason & Co., LLC

300 First Stamford Place, 4^th Floor

Stamford, CT 06902

(Name and address of agent for service)

Registrant’s telephone number, including area code: (800) 451-2010

Date of fiscal year end: March 31

Date of reporting period: September 30, 2006

ITEM 1. REPORT TO STOCKHOLDERS.

The Semi-Annual Report to Stockholders is filed herewith.

SEMI-ANNUAL

REPORT

SEPTEMBER 30, 2006

Legg Mason Partners New York Municipals Fund

INVESTMENT PRODUCTS: NOT FDIC INSURED Ÿ NO BANK GUARANTEE Ÿ MAY LOSE VALUE

Legg Mason Partners New York Municipals Fund

Semi-Annual Report  •  September 30, 2006

What’s

Inside

Fund Objective

The Fund seeks as high a level of income exempt from federal income taxes* and New York State and New York City personal income taxes as is consistent with prudent investing.

* Certain investors may be subject to the Federal Alternative Minimum Tax and state and local taxes may apply. Capital gains, if any, are fully taxable. Please consult your personal tax adviser.

Letter from the Chairman	I
Fund at a Glance	1
Fund Expenses	2
Schedule of Investments	4
Statement of Assets and Liabilities	14
Statement of Operations	15
Statements of Changes in Net Assets	16
Financial Highlights	17
Notes to Financial Statements	21
Board Approval of Management and Subadvisory Agreements	30

Letter from the Chairman

R. JAY GERKEN, CFA

Chairman, President and Chief Executive Officer

Dear Shareholder,

While the U.S. economy continued to expand, it weakened considerably as the reporting period progressed. After gross domestic product (“GDP”)ⁱ increased a modest 1.7% in the last three months of 2005, the economy rebounded sharply in the first quarter of 2006. During this time, GDP rose 5.6%, its highest reading since the third quarter of 2003. The economy then took a step backwards in the second quarter of 2006, as GDP growth was 2.6% according to the U.S. Commerce Department. The advance estimate for third quarter GDP growth was 1.6%—the lowest growth rate since the first quarter of 2003.

After increasing the federal funds rateⁱⁱ to 5.25% in June—its 17^th consecutive rate hike—the Federal Reserve Board (“Fed”)ⁱⁱⁱ paused from raising rates as its August, September and October meetings. In its statement accompanying the October meeting, the Fed stated, “Economic growth has slowed over the course of the year, partly reflecting a cooling of the housing market. Going forward, the economy seems likely to expand at a moderate pace. Readings on core inflation have been elevated, and the high level of resource utilization has the potential to sustain inflation pressures. However, inflation pressures seem likely to moderate over time, reflecting reduced impetus from energy prices, contained inflation expectations, and the cumulative effects of monetary policy actions and other factors restraining aggregate demand.” The Fed’s next meeting is on December 12^th and we believe any further rate movements will likely be data dependent.

After a prolonged period of rising interest rates, both short- and long-term yields declined over the reporting period. After peaking in late June—when two- and 10-year Treasuries hit 5.29% and 5.25%, respectively—rates fell sharply as the Fed paused from its tightening cycle. In

Legg Mason Partners New York Municipals Fund         I

addition, inflationary pressures eased as oil prices, which rose to a record $78 a barrel in mid-July, fell 15% in the third quarter.^.iv Overall, during the six months ended September 30, 2006, two-year Treasury yields fell from 4.82% to 4.71%. Over the same period, 10-year Treasury yields declined from 4.86% to 4.64%. Looking at the municipal market, it slightly lagged its taxable bond counterparts over the six months ended September 30, 2006. Over that period, the Lehman Brothers Municipal Index^v and the Lehman Brothers U.S. Aggregate Index^vi, returned 3.44% and 3.73%, respectively.

Performance Review

For the six months ended September 30, 2006, Class A shares of the Legg Mason Partners New York Municipals Fund, excluding sales charges, returned 2.93%. These shares underperformed the Lipper New York Municipal Debt Funds Category Average¹ which increased 3.20%. The Fund’s unmanaged benchmark, the Lehman Brothers Municipal Bond Index, returned 3.44% for the same period.

Performance Snapshot As of September 30, 2006 (excluding sales charges) (unaudited)
	6 Months
New York Municipals Fund — Class A Shares	2.93%
Lehman Brothers Municipal Bond Index	3.44%
Lipper New York Municipal Debt Funds Category Average	3.20%
The performance shown represents past performance. Past performance is no guarantee of future results and current performance may be higher or lower than the performance shown above. Principal value and investment returns will fluctuate and investors’ shares, when redeemed, may be worth more or less than their original cost. To obtain performance data current to the most recent month-end, please visit our website at www.leggmason.com/InvestorServices.
Excluding sales charges, Class B shares returned 2.67%, Class C shares returned 2.64%, and Class Y shares returned 2.93% over the six months ended September 30, 2006. All share class returns assume the reinvestment of all distributions, including returns of the capital, if any, at net asset value and the deduction of all Fund expenses. Returns have not been adjusted to include sales charges that may apply when shares are purchased or the deduction of taxes that a shareholder would pay on Fund distributions.
Performance figures reflect reimbursements and/or fee waivers, without which the performance would have been lower.

¹ Lipper, Inc. is a major independent mutual-fund tracking organization. Returns are based on the six-month period ended September 30, 2006, including the reinvestment of all distributions, including returns of capital, if any, calculated among the 104 funds in the Fund’s Lipper category, and excluding sales charges.

II         Legg Mason Partners New York Municipals Fund

Certain investors may be subject to the Federal Alternative Minimum Tax, and state and local taxes may apply. Capital gains, if any, are fully taxable. Please consult your personal tax or legal adviser.

Special Shareholder Notices

As part of the continuing effort to integrate investment products managed by the advisers acquired with Citigroup Inc.’s asset management business, Legg Mason, Inc. (“Legg Mason”) has recommended various Fund actions in order to streamline product offerings, standardize share class pricing features, eliminate redundancies and improve efficiencies within the organization. At Board meetings held during June and July 2006, the Fund’s Board reviewed and approved these recommendations, and provided authorization to move ahead with proxy solicitations for those matters needing shareholder approval.

Effective August 1, 2006, Legg Mason Partners Fund Advisor, LLC (“LMPFA”) became the Fund’s investment manager and Western Asset Management Company (“Western Asset”) became the Fund’s subadviser. The portfolio managers who are responsible for the day-to-day management of the Fund remain the same immediately prior to and immediately after the date of these changes. LMPFA and Western Asset are wholly-owned subsidiaries of Legg Mason.

Certain changes regarding share class pricing and related matters were implemented on November 20, 2006. Please consult the Fund’s current prospectus for more information.

The Fund was formerly known as Smith Barney Muni Funds—New York Portfolio.

Information About Your Fund

As you may be aware, several issues in the mutual fund industry have come under the scrutiny of federal and state regulators. Affiliates of the Fund’s manager have, in recent years, received requests for information from various government regulators regarding market timing, late trading, fees, and other mutual fund issues in connection with various investigations. The regulators appear to be examining, among other things, the Fund’s response to market timing and shareholder exchange activity, including compliance

Legg Mason Partners New York Municipals Fund         III

with prospectus disclosure related to these subjects. The Fund is not in a position to predict the outcome of these requests and investigations.

Important information with regard to recent regulatory developments that may affect the Fund is contained in the Notes to Financial Statements included in this report.

As always, thank you for your confidence in our stewardship of your assets. We look forward to helping you meet your financial goals.

Sincerely,

R. Jay Gerken, CFA

Chairman, President, and Chief Executive Officer

October 27, 2006

The information provided is not intended to be a forecast of future events, a guarantee of future results or investment advice. Views expressed may differ from those of the firm as a whole.

RISKS: Keep in mind, the Fund’s investments are subject to interest rate and credit risks. As interest rate rise, bond prices fall, reducing the value of the Fund’s share price. As a non-diversified fund, it can invest a larger percentage of its assets in fewer issues than a diversified fund. This may magnify the Fund’s losses from events affecting a particular issuer. The Fund may use derivatives, such as options and futures, which can be illiquid, may disproportionately increase losses, and have a potentially large impact on Fund performance. Please see the Fund’s prospectus for more information on these and other risks.

All index performance reflects no deduction for fees, expenses or taxes. Please note an investor cannot invest directly in an index.

ⁱ Gross domestic product is a market value of goods and services produced by labor and property in a given country.

ⁱⁱ The federal funds rate is the interest rate that banks with excess reserves at a Federal Reserve district bank charge other banks that need overnight loans.

ⁱⁱⁱ The Federal Reserve Board is responsible for the formulation of a policy designed to promote economic growth, full employment, stable prices, and a sustainable pattern of international trade and payments.

^iv Source: The Wall Street Journal, 9/29/06.

^v The Lehman Brothers Municipal Bond Index is a broad measure of the municipal bond market with maturities of at least one year.

^vi The Lehman Brothers U.S. Aggregate Index is a broad-based bond index comprised of government, corporate, mortgage and asset-backed issues, rated investment grade or higher, and having at least one year to maturity.

IV         Legg Mason Partners New York Municipals Fund

Fund at a Glance (unaudited)

Legg Mason Partners New York Municipals Fund 2006 Semi-Annual Report         1

Fund Expenses (unaudited)

Example

As a shareholder of the Fund, you may incur two types of costs: (1) transaction costs, including front-end and back-end sales charges (loads) on purchase payments, reinvested dividends, or other distributions; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested on April 1, 2006 and held for the six months ended September 30, 2006.

Actual Expenses

The table below titled “Based on Actual Total Return” provides information about actual account values and actual expenses. You may use the information provided in this table, together with the amount you invested, to estimate the expenses that you paid over the period. To estimate the expenses you paid on your account, divide your ending account value by $1,000 (for example, an $8,600 ending account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled “Expenses Paid During the Period”.

Based on Actual Total Return(1)
	Actual Total Return Without Sales Charges(2)		Beginning Account Value		Ending Account Value		Annualized Expense Ratio		Expenses Paid During the Period(3)
Class A	2.93	%	$	1,000.00	$	1,029.30	0.68	%	$	3.46
Class B	2.67			1,000.00		1,026.70	1.17			5.94
Class C	2.64			1,000.00		1,026.40	1.23			6.25
Class Y	2.93			1,000.00		1,029.30	0.53			2.70

⁽¹⁾ For the six months ended September 30, 2006.

⁽²⁾ Assumes reinvestment of all distributions, including returns of capital, if any, at net asset value and does not reflect the deduction of the applicable sales charge with respect to Class A shares or the applicable contingent deferred sales charges (“CDSC”) with respect to Class B and C shares. Total return is not annualized, as it may not be representative of the total return for the year. Performance figures may reflect fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower.

⁽³⁾ Expenses (net of fee waivers and/or expense reimbursements) are equal to each class’ respective annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year, then divided by 365.

2         Legg Mason Partners New York Municipals Fund 2006 Semi-Annual Report

Fund Expenses (unaudited) (continued)

Hypothetical Example for Comparison Purposes

The table below titled “Based on Hypothetical Total Return” provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio and an assumed rate of return of 5.00% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use the information provided in this table to compare the ongoing costs of investing in the Fund and other funds. To do so, compare the 5.00% hypothetical example relating to the Fund with the 5.00% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table below are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as front-end or back-end sales charges (loads). Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.

Based on Hypothetical Total Return(1)
	Hypothetical Annualized Total Return		Beginning Account Value		Ending Account Value		Annualized Expense Ratio		Expenses Paid During the Period(2)
Class A	5.00	%	$	1,000.00	$	1,021.66	0.68	%	$	3.45
Class B	5.00			1,000.00		1,019.20	1.17			5.92
Class C	5.00			1,000.00		1,018.90	1.23			6.23
Class Y	5.00			1,000.00		1,022.41	0.53			2.69

⁽¹⁾ For the six months ended September 30, 2006.

⁽²⁾ Expenses (net of fee waivers and/or expense reimbursements) are equal to each class’ respective annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year, then divided by 365.

Legg Mason Partners New York Municipals Fund 2006 Semi-Annual Report         3

Schedule of Investments (September 30, 2006) (unaudited)

LEGG MASON PARTNERS NEW YORK MUNICIPALS FUND

Face Amount		Rating‡	Security	Value
	MUNICIPAL BONDS — 95.4%
	Education — 23.0%
$	2,755,000	Aaa(a)	Albany, NY, IDA, Civic Facility Revenue, St. Rose Project, Series A, AMBAC-Insured, 5.375% due 7/1/31	$	2,955,839
			Amherst, NY, IDA, Civic Facilities Revenue, University of Buffalo Foundation, Faculty-Student Housing, Series B, AMBAC-Insured:
	1,000,000	AAA	5.125% due 8/1/20		1,076,380
	3,615,000	AAA	5.250% due 8/1/31		3,875,967
			Madison County, NY, IDA, Civic Facilities Revenue, Colgate University Project, Series B:
	2,250,000	AA-	5.000% due 7/1/23		2,381,670
	2,000,000	AA-	5.000% due 7/1/33		2,079,860
			New York State Dormitory Authority Revenue:
	1,000,000	AA-	4201 School Program, 5.000% due 7/1/18		1,037,280
			City University Systems:
	14,000,000	AAA	2nd Generation, Series A, FGIC-Insured, 5.000% due 7/1/16		14,592,760
	16,925,000	AAA	3rd Generation, Series 1, FGIC-Insured, 5.250% due 7/1/25 (b)		17,677,147
	5,825,000	AAA	Series A, FGIC-TCRS-Insured, 5.625% due 7/1/16 (c)		6,693,682
	7,000,000	AAA	Series B, FSA-Insured, 6.000% due 7/1/14		7,722,260
	1,785,000	A1(a)	Series C, 7.500% due 7/1/10		1,922,142
	2,000,000	AA-	Department of Education, 5.000% due 7/1/24		2,111,460
	5,000,000	AAA	New School University, MBIA-Insured, 5.000% due 7/1/29 Refunding:		5,161,300
	7,960,000	AA+	Cornell University, Series A, 5.000% due 7/1/35		8,412,128
	1,610,000	Aaa(a)	Siena College, MBIA-Insured, 5.000% due 7/1/19		1,748,219
	10,260,000	AAA	Rockefeller University, 5.000% due 7/1/28		10,583,908
	765,000	AA-	Series B, 7.500% due 5/15/11		850,492
	1,150,000	AAA	St. John’s University, MBIA-Insured, 5.250% due 7/1/25		1,190,319
			State University Educational Facility:
			Series A:
	12,110,000	AAA	FSA-Insured, 5.875% due 5/15/17 (c)		14,252,622
	7,030,000	AAA	MBIA-Insured, 5.000% due 5/15/16		7,250,180
	5,000,000	AAA	Series B, FGIC-Insured, 5.250% due 5/15/19		5,651,250
	3,000,000	Aaa(a)	Teachers College, MBIA-Insured, 5.000% due 7/1/22		3,152,370
	2,300,000	AAA	University of Rochester, Series A, MBIA-Insured, 5.000% due 7/1/27		2,358,466
	690,000	AAA	Unrefunded Balance, University of Rochester, Series A, MBIA-Insured, 5.000% due 7/1/16		712,729
	2,500,000	AAA	Willow Towers Inc., MBIA-Insured, 5.400% due 2/1/34		2,685,125
			Rensselaer County, NY, IDA, Civic Facilities Revenue, Polytechnic Institute Dormitory Project:
	5,430,000	A	Series A, 5.125% due 8/1/29		5,611,905
	5,820,000	A	Series B, 5.125% due 8/1/27		6,022,827
			Schenectady, NY, IDA, Civic Facilities Revenue, Union College Project, Series A, AMBAC-Insured:
	2,000,000	Aaa(a)	5.375% due 12/1/19		2,138,240
	1,725,000	Aaa(a)	5.000% due 7/1/22		1,820,737

See Notes to Financial Statements.

4         Legg Mason Partners New York Municipals Fund 2006 Semi-Annual Report

Schedule of Investments (September 30, 2006) (unaudited) (continued)

Face Amount		Rating‡	Security	Value
	Education — 23.0% (continued)
$	3,000,000	Aaa(a)	5.450% due 12/1/29	$	3,204,690
	2,390,000	Aaa(a)	5.625% due 7/1/31		2,640,568
			Taconic Hills, NY, School District at Craryville, FGIC-Insured, State Aid Withholding:
	1,420,000	Aaa(a)	5.000% due 6/15/25		1,502,743
	700,000	Aaa(a)	5.000% due 6/15/26		738,227
			Total Education		151,815,492
	Escrowed to Maturity (d) — 1.2%
	690,000	AAA	Commonwealth of Puerto Rico, Aqueduct & Sewer Authority Revenue, 10.250% due 7/1/09		753,915
	1,655,000	AAA	New York City, NY, Trust Cultural Resource Revenue, AMBAC-Insured, American Museum of Natural History, Series A, 5.250% due 7/1/17		1,728,234
	4,980,000	AAA	New York State Environmental Facilities Corp., Clean Water & Drinking Revolving Funds, Correctional Facilities Service Contract Series C, AMBAC-Insured, Call 6/15/08 @ 101, 5.000% due 6/15/16		5,067,548
			Total Escrowed to Maturity		7,549,697
	Finance — 1.0%
	5,000,000	AAA	New York State LGAC, Series B, MBIA-Insured, 4.875% due 4/1/20		5,134,750
	1,260,000	BBB-	Puerto Rico Public Financial Corp., Series E, 5.500% due 8/1/29		1,325,079
			Total Finance		6,459,829
	General Obligation — 0.9%
	4,505,000	Aaa(a)	North Hempstead, NY, GO, Series A, FGIC-Insured, 5.000% due 9/1/22		4,734,755
	1,000,000	AAA	Yonkers, NY, GO, Series C, State Aid Withholding, FGIC-Insured, 5.000% due 6/1/19		1,047,610
			Total General Obligation		5,782,365
	Government Facilities — 2.1%
			New York State Urban Development Corp. Revenue:
	7,000,000	AA-	Correctional & Youth Facilities, Series A, 5.500% due 1/1/11 (e)		7,484,330
	3,050,000	AAA	Correctional Capital Facilities, MBIA-Insured, 5.000% due 1/1/20		3,132,350
	3,000,000	AA-	State Facilities, 5.700% due 4/1/20		3,457,440
			Total Government Facilities		14,074,120
	Hospitals — 5.2%
	1,620,000	AAA	East Rochester, NY, Housing Authority Revenue, North Park Nursing Home, GNMA, 5.200% due 10/20/24		1,724,295
			New York City Health & Hospital Corp. Revenue, Health System, Series A:
	3,000,000	AAA	AMBAC-Insured, 5.000% due 2/15/20		3,123,180
			FSA-Insured:
	1,110,000	AAA	5.000% due 2/15/22		1,157,608
	3,750,000	AAA	5.125% due 2/15/23		3,951,675

See Notes to Financial Statements.

Legg Mason Partners New York Municipals Fund 2006 Semi-Annual Report         5

Schedule of Investments (September 30, 2006) (unaudited) (continued)

Face Amount		Rating‡	Security	Value
	Hospitals — 5.2% (continued)
			New York State Dormitory Authority Revenue:
			Cabrini Westchester, GNMA-Collateralized:
$	2,400,000	AA	5.100% due 2/15/26	$	2,583,360
	4,525,000	AA	5.200% due 2/15/41		4,840,257
	5,000,000	AAA	Maimonides Medical Center, MBIA-Insured, 5.000% due 8/1/24		5,270,950
			Mental Health Services Facilities, Series B:
	40,000	AA-	5.000% due 2/15/18		41,336
			Unrefunded Balance:
	4,180,000	AA-	5.625% due 2/15/21		4,292,358
	190,000	AAA	5.250% due 8/15/30		199,945
	1,500,000	AAA	United Cerebral Palsy, AMBAC-Insured, 5.125% due 7/1/21		1,608,840
	2,000,000	AAA	Victory Memorial Hospital, MBIA-Insured, 5.375% due 8/1/25		2,103,700
			New York State Medical Care Facilities, Series B:
	880,000	AA	Hospital & Nursing Home Insured Mortgage, FHA-Insured, 7.000% due 8/15/32		881,329
	2,560,000	AA	Mortgage Project, FHA-Insured, 6.100% due 2/15/15		2,582,246
			Total Hospitals		34,361,079
	Housing: Multi-Family — 2.9%
			New York City, NY, HDC:
	1,176,777	NR	Cadman Project, FHA, 6.500% due 11/15/18		1,238,581
	948,254	NR	Kelly Project, 6.500% due 2/15/18		1,001,233
	5,000,000	AA	MFH Revenue, Series A, 5.100% due 11/1/24		5,236,350
			New York State Dormitory Authority Revenue, Park Ridge Housing Inc., FNMA:
	1,000,000	AAA	6.375% due 8/1/20 (c)		1,111,550
	1,470,000	AAA	6.500% due 8/1/25		1,638,815
			New York State Housing Finance Agency Revenue, Secured Mortgage Program:
			Series A, SONYMA-Insured:
	500,000	Aa1(a)	7.000% due 8/15/12 (f)		502,835
	500,000	Aa1(a)	7.050% due 8/15/24 (f)		504,965
	6,870,000	Aa1(a)	Series B, SONYMA-Insured, 6.250% due 8/15/29 (f)		7,041,475
	135,000	AAA	Series C, FHA-Insured, 6.500% due 8/15/24		135,518
	530,000	A2(a)	Rensselaer Housing Authority, MFH Mortgage Revenue, Rensselaer Elderly Apartments, 7.750% due 1/1/11		531,198
			Total Housing: Multi-Family		18,942,520
	Housing: Single-Family — 2.0%
			New York State Mortgage Agency Revenue, Homeowner Mortgage:
	2,190,000	Aa1(a)	Series 65, 5.850% due 10/1/28 (f)		2,251,583
	4,700,000	Aa1(a)	Series 67, 5.800% due 10/1/28 (f)		4,805,327
	6,000,000	Aa1(a)	Series 71, 5.350% due 10/1/18 (f)		6,148,740
			Total Housing: Single-Family		13,205,650

See Notes to Financial Statements.

6         Legg Mason Partners New York Municipals Fund 2006 Semi-Annual Report

Schedule of Investments (September 30, 2006) (unaudited) (continued)

Face Amount		Rating‡	Security	Value
	Industrial Development — 2.2%
$	2,250,000	BBB	Essex County, NY, IDA Revenue, Solid Waste, International Paper Co. Project, Series A, 6.150% due 4/1/21 (f)	$	2,310,188
	365,000	NR	Monroe County, NY, IDA Revenue, Public Improvement, Canal Ponds Park, Series A, 7.000% due 6/15/13		379,282
			Onondaga County, NY, IDA:
	750,000	AA	Civic Facilities Revenue, Syracuse Home Association Project, 5.200% due 12/1/18		786,150
	8,000,000	A+	Sewer Facilities Revenue, Bristol-Myers Squibb Co. Project, 5.750% due 3/1/24 (f)		9,271,680
	1,410,000	AA	Rensselaer County, NY, IDA, Albany International Corp., 7.550% due 7/15/07		1,438,567
			Total Industrial Development		14,185,867
	Life Care Systems — 1.5%
			New York State Dormitory Authority Revenue Bonds, FHA-Insured:
	3,685,000	AA	Hebrew Nursing Home, 6.125% due 2/1/37		3,782,984
	1,500,000	AAA	Menorah Campus Nursing Home, 6.100% due 2/1/37		1,548,465
	3,155,000	AA	Wesley Garden Nursing Home, 6.125% due 8/1/35		3,233,717
	1,250,000	AAA	Syracuse, NY, IDA Revenue, James Square Association, FHA-Insured, 7.000% due 8/1/25		1,251,738
			Total Life Care Systems		9,816,904
	Pollution Control — 0.7%
			New York State Environmental Facilities Corp.:
	1,060,000	AAA	Clean Water & Drinking Revolving Funds, Series C, 5.000% due 6/15/16		1,094,323
			State Water Revolving Fund, Series A:
	120,000	AAA	7.500% due 6/15/12		126,611
	805,000	AAA	GIC-Societe Generale, 7.250% due 6/15/10		806,006
	1,000,000	AAA	North Country, NY, Development Authority, Solid Waste Management System Revenue, FSA-Insured, 6.000% due 5/15/15		1,112,400
	1,710,000	CCC+	Puerto Rico Industrial Medical & Environmental Facilities, Finance Authority Revenue, American Airlines Inc., Series A, 6.450% due 12/1/25		1,730,537
			Total Pollution Control		4,869,877
	Pre-Refunded (g) — 39.8%
	18,660,000	AAA	Long Island Power Authority, Electric System Revenue, Series A, MBIA/IBC-Insured, Call 6/1/08 @ 101, 5.250% due 12/1/26 (b)		19,375,425
			Metropolitan Transportation Authority:
			Dedicated Tax Fund, Series A, FSA-Insured, Call 10/1/14 @ 100:
	2,290,000	AAA	5.125% due 4/1/19		2,528,984
	4,500,000	AAA	5.250% due 4/1/23		5,008,365
			Transit Facilities Revenue:
	5,000,000	AAA	Series A, Call 7/1/09 @ 100, 6.000% due 7/1/19		5,327,800
	10,000,000	AAA	Series A, MBIA-Insured, Call 7/1/07 @ 101.50, 5.625% due 7/1/25		10,305,800

See Notes to Financial Statements.

Legg Mason Partners New York Municipals Fund 2006 Semi-Annual Report         7

Schedule of Investments (September 30, 2006) (unaudited) (continued)

Face Amount		Rating‡	Security	Value
	Pre-Refunded (g) — 39.8% (continued)
$	11,000,000	AAA	Metropolitan Transportation Authority of New York, Dedicated Tax Fund, Series A, FGIC-Insured, Call 11/15/11 @ 100, 5.250% due 11/15/23	$	11,888,470
	5,000,000	AAA	Nassau Health Care Corp., New York Health Systems Revenue, FSA-Insured, Call 8/1/09 @ 102, 5.500% due 8/1/19		5,354,350
			New York City, NY:
	2,595,000	AAA	COP, Transit Authority, Metropolitan Transportation Authority, Triborough Bridge & Tunnel Authority, AMBAC-Insured, Call 1/1/10 @ 101, 5.875% due 1/1/30		2,806,181
			Municipal Water Finance Authority, Water & Sewer System Revenue:
	16,000,000	AAA	Call 6/15/10 @ 101, 5.500% due 6/15/33		17,246,400
	1,000,000	AAA	FSA-Insured, Call 6/15/07 @ 101, 5.250% due 6/15/29		1,022,220
	1,565,000	AA+	Series B, Call 6/15/10 @ 101, 6.000% due 6/15/33		1,713,832
	10,000,000	AAA	TFA Revenue, Series C, Call 5/1/10 @ 101, 5.500% due 11/1/29		10,758,100
	20,000,000	AAA	Transit Authority, Metropolitan Transportation Authority, Series A, AMBAC-Insured, Call 1/1/10 @ 101, 5.250% due 1/1/29		21,247,800
			New York State Dormitory Authority Revenue:
			City University Systems:
	6,000,000	AA-	4th Generation, Series A, Call 7/1/11 @ 100, 5.250% due 7/1/31		6,438,480
	4,500,000	AAA	MBIA/IBC-Insured, Call 7/1/08 @ 101, 5.000% due 7/1/28		4,659,840
	2,000,000	AAA	Columbia University, Call 7/1/08 @ 101, 5.000% due 7/1/18		2,071,040
			Court Facilities, City of New York Issue:
	3,000,000	AAA	AMBAC-Insured, Call 5/15/10 @ 101, 5.750% due 5/15/30		3,254,670
	5,000,000	A+	Call 5/15/10 @101, 6.000% due 5/15/39		5,457,650
			Mental Health Services Facilities:
			Series B:
	2,820,000	AA-	Call 2/15/07 @ 102, 5.625% due 2/15/21		2,897,268
	2,460,000	AA-	Call 2/15/08 @ 102, 5.000% due 2/15/18		2,557,564
	2,410,000	AAA	Series D, FSA-Insured, Call 8/15/10 @ 100, 5.250% due 8/15/30		2,561,974
			State University Dormitory Facility, FGIC-Insured, Call 7/1/11 @ 100:
	1,000,000	AAA	5.500% due 7/1/26		1,086,170
	1,000,000	AAA	5.500% due 7/1/27		1,086,170
	12,000,000	AAA	5.100% due 7/1/31		12,826,080
			State University Educational Facility:
	12,750,000	AAA	Series A, FGIC-Insured, Call 5/15/12 @ 101, 5.000% due 5/15/27		13,794,480
	5,000,000	AAA	Series B, FSA-Insured, Call 5/15/10 @ 101, 5.500% due 5/15/30		5,382,400
	3,225,000	AAA	University of Rochester, Series A, MBIA-Insured, Call 7/1/08 @ 101, 5.000% due 7/1/16		3,339,552
			New York State Environmental Facilities Corp., Clean Water & Drinking Revolving Funds, Series B, Call 10/15/09 @ 100:
	295,000	AAA	5.250% due 4/15/17		309,977
	400,000	AAA	5.250% due 4/15/18		420,308
			New York State Thruway Authority, Highway & Bridge Toll Revenue Fund, FGIC-Insured:
			Series A, Call 4/1/11 @ 101:
	3,410,000	AAA	5.000% due 4/1/19		3,648,598
	2,000,000	AAA	5.000% due 4/1/20		2,139,940

See Notes to Financial Statements.

8         Legg Mason Partners New York Municipals Fund 2006 Semi-Annual Report

Schedule of Investments (September 30, 2006) (unaudited) (continued)

Face Amount		Rating‡	Security	Value
	Pre-Refunded (g) — 39.8% (continued)
$	2,500,000	AAA	5.000% due 4/1/21	$	2,674,925
	15,000,000	AAA	Series B, Call 4/1/09 @ 101, 5.000% due 4/1/19		15,681,000
	4,000,000	AAA	Series B-1, Call 4/1/10 @ 101, 5.500% due 4/1/18		4,297,600
			New York State Urban Development Corp. Revenue, Correctional Facilities Service Contract:
	6,600,000	AAA	Series C, AMBAC-Insured, Call 1/1/09 @ 101, 6.000% due 1/1/29		7,017,846
	18,400,000	AAA	Series D, FSA-Insured, Call 1/1/11@ 100, 5.250% due 1/1/30 (b)		19,650,464
	3,740,000	BBB-	Puerto Rico Public Financial Corp., Series E, Call 2/1/12 @ 100, 5.500% due 8/1/29		4,083,257
			Triborough Bridge & Tunnel Authority:
	10,125,000	AAA	GO, Series B, Call 1/1/22 @ 100, 5.500% due 1/1/30		11,688,806
	3,500,000	AA-	Series A, Call 1/1/22 @ 100, 5.250% due 1/1/28		4,021,430
	4,200,000	AAA	Series B, Call 1/1/16 @ 100, 5.375% due 1/1/19		4,749,696
			Total Pre-Refunded		262,380,912
	Public Facilities — 2.0%
			New York City, NY, Trust Cultural Resource Revenue, AMBAC-Insured, Museum of Modern Art:
	3,100,000	AAA	Series A, 5.000% due 4/1/23		3,249,916
	9,000,000	AAA	Series D, 5.125% due 7/1/31		9,504,810
	345,000	AA-	New York State, COP, Hanson Redevelopment Project, 8.375% due 5/1/08		359,504
			Total Public Facilities		13,114,230
	Tobacco — 0.3%
	2,000,000	AA-	Tobacco Settlement Financing Corp., Series C-1, 5.500% due 6/1/21		2,172,520
	Transportation — 4.9%
	750,000	BBB+	Albany, NY, Parking Authority, Series A, 5.625% due 7/15/25		807,015
	5,000,000	AA-	New York State Thruway Authority, General Revenue, Series E, 5.000% due 1/1/25		5,119,550
			Port Authority of New York & New Jersey:
	7,250,000	AA-	109th Series, 5.375% due 1/15/32		7,355,850
	12,000,000	NR	Special Obligation Revenue 5th Installment, 6.750% due 10/1/19 (f)		12,191,160
			Triborough Bridge & Tunnel Authority:
	945,000	AA-	Convention Center Project, Series E, 7.250% due 1/1/10		1,000,594
	5,200,000	AAA	Series A, MBIA/IBC-Insured, 5.250% due 11/15/30		5,592,080
			Total Transportation		32,066,249
	Utilities — 0.7%
			New York State Energy Research & Development Authority, Gas Facilities Revenue:
	3,000,000	A+	Brooklyn Union Gas Co. Project RIBS, Series B, 9.919% due 7/1/26 (f)(h)(i)		3,162,600
	1,500,000	Baa2(a)	Corning Natural Gas Corp. Series A, 8.250% due 12/1/18 (f)		1,502,610
			Total Utilities		4,665,210

See Notes to Financial Statements.

Legg Mason Partners New York Municipals Fund 2006 Semi-Annual Report         9

Schedule of Investments (September 30, 2006) (unaudited) (continued)

Face Amount		Rating‡	Security	Value
	Water & Sewer — 5.0%
			New York City, NY, Municipal Water Finance Authority, Water & Sewer System Revenue:
$	2,750,000	AAA	FSA-Insured, 5.000% due 6/15/29	$	2,847,790
			Series B:
	5,205,000	AAA	FGIC-Insured, 5.125% due 6/15/30		5,297,337
	990,000	AA+	Unrefunded Balance, 6.000% due 6/15/33		1,077,308
			Series D:
	5,000,000	AA+	5.250% due 6/15/25		5,350,800
	2,375,000	AAA	MBIA-Insured, 5.000% due 6/15/15		2,452,686
			New York State Environmental Facilities Corp., Clean Water & Drinking Revolving Funds:
	8,500,000	AAA	5.000% due 6/15/32		8,918,200
			Series B:
	965,000	AAA	5.250% due 4/15/17		1,017,979
	2,490,000	AAA	5.250% due 10/15/17		2,626,701
	1,340,000	AAA	5.250% due 4/15/18		1,408,822
	1,880,000	AAA	5.250% due 10/15/18		1,971,048
			Total Water & Sewer		32,968,671
			TOTAL INVESTMENTS BEFORE SHORT-TERM INVESTMENTS (Cost — $581,488,245)		628,431,192
	SHORT-TERM INVESTMENTS (j) — 4.2%
	Finance — 1.9%
			New York City, NY, TFA:
	5,100,000	A-1+	Future Tax Secured, Series C, SPA-Bayerische Landesbank, 3.800%, 10/2/06		5,100,000
	4,740,000	A-1+	New York City Recovery Project Revenue, Series 1, Subordinated Series 1-C, LIQ-JPMorgan Chase, 3.800%, 10/2/06		4,740,000
	2,500,000	A-1+	Revenue, New York City Recovery Project, Series 3, Subordinated Series 3-F, SPA-Royal Bank of Canada, 3.870%, 10/2/06		2,500,000
			Total Finance		12,340,000
	General Obligation — 0.3%
			New York City, NY, GO:
	1,200,000	A-1	Series H, Subordinated Series H-2, MBIA-Insured, SPA-Wachovia Bank, 3.760%, 10/2/06		1,200,000
	1,100,000	A-1+	Subordinated Series H-4, LOC-Bank of New York, 3.800%, 10/2/06		1,100,000
			Total General Obligation		2,300,000
	Water & Sewer — 1.9%
			New York City, NY, Municipal Water Finance Authority, Water & Sewer System Revenue:
	7,000,000	A-1+	Fiscal 2003, Subordinated Series C-1, SPA-Depfa Bank PLC, 3.810%, 10/2/06		7,000,000
	300,000	A-1+	Series A, FGIC-Insured, SPA-FGIC, 3.780%, 10/2/06		300,000
	4,900,000	A-1+	Series F-1, SPA-Dexia Credit Local, 3.810%, 10/2/06		4,900,000
			Total Water & Sewer		12,200,000

See Notes to Financial Statements.

10         Legg Mason Partners New York Municipals Fund 2006 Semi-Annual Report

Schedule of Investments (September 30, 2006) (unaudited) (continued)

Face Amount		Rating‡	Security	Value
	Utility — 0.1%
$	800,000	A-1+	Long Island, NY, Power Authority, Electric System Revenue, Subordinated Series 2, Subordinated Series 2B, LOC-Bayerische Landesbank, 3.800%, 10/2/06	$	800,000
			TOTAL SHORT-TERM INVESTMENTS (Cost — $27,640,000)		27,640,000
			TOTAL INVESTMENTS — 99.6% (Cost — $609,128,245#)		656,071,192
			Other Assets in Excess of Liabilities — 0.4%		2,828,611
			TOTAL NET ASSETS — 100.0%	$	658,899,803

‡ All ratings are by Standard & Poor’s Ratings Service, unless otherwise noted.

^(a) Rating by Moody’s Investors Service.

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

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

^(d) 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.

^(e) Maturity date shown represents the mandatory tender date.

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

^(g) 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.

^(h) Variable rate security. Interest rate disclosed is that which is in effect at September 30, 2006.

⁽ⁱ⁾ Residual interest bonds—coupon varies inversely with level of short-term tax-exempt interest rates.

^(j) 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.

See pages 12 and 13 for definitions of ratings.

Abbreviations used in this schedule:
AMBAC	— Ambac Assurance Corporation
COP	— Certificate of Participation
FGIC	— Financial Guaranty Insurance Company
FHA	— Federal Housing Administration
FNMA	— Federal National Mortgage Association
FSA	— Financial Security Assurance
GIC	— Guaranteed Investment Contract
GNMA	— Government National Mortgage Association
GO	— General Obligation
HDC	— Housing Development Corporation
IBC	— Insured Bond Certificates
IDA	— Industrial Development Authority
LGAC	— Local Government Assistance Corporation
LIQ	— Liquidity Facility
LOC	— Letter of Credit
MBIA	— Municipal Bond Investors Assurance Corporation
MFH	— Multi-Family Housing
RIBS	— Residual Interest Bonds
SONYMA	— State of New York Mortgage Association
SPA	— Standby Bond Purchase Agreement
TCRS	— Transferable Custodial Receipts
TFA	— Transitional Finance Authority

See Notes to Financial Statements.

Legg Mason Partners New York Municipals Fund 2006 Semi-Annual Report         11

Bond Ratings (unaudited)

The definitions of the applicable rating symbols are set forth below:

Standard & Poor’s Ratings Service (“Standard & Poor’s”) — Ratings from “AA” to “CCC” may be modified by the addition of a plus (+) or minus (-) sign to show relative standings within the major rating categories.

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.

Moody’s Investors Service (“Moody’s”) — Numerical modifiers 1, 2 and 3 may be applied to each generic rating from “Aa” to “Caa,” where 1 is the highest and 3 the lowest ranking within its generic category.

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.

12         Legg Mason Partners New York Municipals Fund 2006 Semi-Annual Report

Bond Ratings (unaudited) (continued)

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 or Fitch Ratings Service (“Fitch”).

Short-Term Security Ratings (unaudited)

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.

MIG 1 — 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.

F-1 — 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.

Legg Mason Partners New York Municipals Fund 2006 Semi-Annual Report         13

Statement of Assets and Liabilities (September 30, 2006) (unaudited)

ASSETS:
Investments, at value (Cost — $609,128,245)	$	656,071,192
Cash		25,916
Interest receivable		9,479,945
Receivable for Fund shares sold		1,870,944
Receivable for securities sold		215,000
Prepaid expenses		25,192
Total Assets		667,688,189
LIABILITIES:
Payable for securities purchased		7,403,857
Distributions payable		783,981
Investment management fee payable		268,880
Payable for Fund shares repurchased		166,484
Distribution fees payable		37,365
Deferred compensation payable		23,626
Trustees’ fees payable		4,519
Payable to broker — variation margin on open futures contracts		5
Accrued expenses		99,669
Total Liabilities		8,788,386
Total Net Assets	$	658,899,803
NET ASSETS:
Par value (Note 6)	$	49,799
Paid-in capital in excess of par value		641,399,139
Undistributed net investment income		390,046
Accumulated net realized loss on investments and futures contracts		(29,134,357	)
Net unrealized appreciation on investments and futures contracts		46,195,176
Total Net Assets	$	658,899,803
Shares Outstanding:
Class A		41,714,525
Class B		4,919,964
Class C		2,883,841
Class Y		280,288
Net Asset Value:
Class A (and redemption price)		$13.23
Class B *		$13.23
Class C *		$13.22
Class Y (and redemption price)		$13.22
Maximum Public Offering Price Per Share:
Class A (based on maximum sales charge of 4.00%)		$13.78

* Redemption price is NAV of Class B and C shares reduced by a 4.50% and 1.00% CDSC, respectively, if shares are redeemed within one year from purchase payment (See Note 2).

See Notes to Financial Statements.

14         Legg Mason Partners New York Municipals Fund 2006 Semi-Annual Report

Statement of Operations (For the six months ended September 30, 2006) (unaudited)

INVESTMENT INCOME:
Interest	$	16,439,608
EXPENSES:
Investment management fee (Note 2)		1,610,202
Distribution fees (Notes 2 and 4)		753,797
Transfer agent fees (Note 4)		38,367
Audit and tax		18,437
Registration fees		16,944
Legal fees		14,348
Shareholder reports (Note 4)		10,153
Insurance		7,366
Trustees’ fees		6,045
Custody fees		1,013
Miscellaneous expenses		989
Total Expenses		2,477,661
Less: Fee waivers and/or expense reimbursements (Notes 2 and 8)		(33,167	)
Net Expenses		2,444,494
Net Investment Income		13,995,114
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES CONTRACTS (NOTES 1 AND 3):
Net Realized Gain From:
Investment transactions		396,856
Futures contracts		8,343,383
Net Realized Gain		8,740,239
Change in Net Unrealized Appreciation/Depreciation From:
Investments		1,072,739
Futures contracts		(5,623,321	)
Change in Net Unrealized Appreciation/Depreciation		(4,550,582	)
Net Gain on Investments and Futures Contracts		4,189,657
Increase in Net Assets From Operations	$	18,184,771

See Notes to Financial Statements.

Legg Mason Partners New York Municipals Fund 2006 Semi-Annual Report         15

Statements of Changes in Net Assets

For the six months ended September 30, 2006 (unaudited) and the year ended March 31, 2006
	September 30			March 31
OPERATIONS:
Net investment income	$	13,995,114		$	28,556,549
Net realized gain (loss)		8,740,239			(3,020,390	)
Change in net unrealized appreciation/depreciation		(4,550,582	)		(4,742,025	)
Increase in Net Assets From Operations		18,184,771			20,794,134
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTES 1 AND 5):
Net investment income		(13,888,067	)		(28,027,639	)
Decrease in Net Assets From Distributions to Shareholders		(13,888,067	)		(28,027,639	)
FUND SHARE TRANSACTIONS (NOTE 6):
Net proceeds from sale of shares		59,679,972			75,284,890
Reinvestment of distributions		8,526,986			16,640,069
Cost of shares repurchased		(52,268,195	)		(163,898,183	)
Increase (Decrease) in Net Assets From Fund Share Transactions		15,938,763			(71,973,224	)
Increase (Decrease) in Net Assets		20,235,467			(79,206,729	)
NET ASSETS:
Beginning of period		638,664,336			717,871,065
End of period*	$	658,899,803		$	638,664,336
* Includes undistributed net investment income of:		$390,046			$282,999

See Notes to Financial Statements.

16         Legg Mason Partners New York Municipals Fund 2006 Semi-Annual Report

Financial Highlights

For a share of each class of beneficial interest outstanding throughout each year ended March 31, unless otherwise noted:

Class A Shares(1)	2006(2)			2006			2005			2004			2003			2002
Net Asset Value, Beginning of Period	$	13.14		$	13.28		$	13.57		$	13.66		$	13.19		$	13.42
Income (Loss) From Operations:
Net investment income		0.29			0.57			0.60			0.61			0.63			0.65
Net realized and unrealized gain (loss)		0.09			(0.14	)		(0.30	)		(0.09	)		0.46			(0.23	)
Total Income From Operations		0.38			0.43			0.30			0.52			1.09			0.42
Less Distributions From:
Net investment income		(0.29	)		(0.57	)		(0.59	)		(0.61	)		(0.62	)		(0.65	)
In excess of net investment income		—			—			—			(0.00	)(3)		—			—
Total Distributions		(0.29	)		(0.57	)		(0.59	)		(0.61	)		(0.62	)		(0.65	)
Net Asset Value, End of Period	$	13.23		$	13.14		$	13.28		$	13.57		$	13.66		$	13.19
Total Return(4)		2.93	%		3.29	%		2.28	%		3.87	%		8.42	%		3.15	%
Net Assets, End of Period (millions)		$552			$527			$578			$617			$627			$633
Ratios to Average Net Assets:
Gross expenses		0.69	%(5)		0.70	%		0.70	%		0.68	%		0.70	%		0.70	%
Net expenses(6)		0.68	(5)(7)		0.67	(7)		0.69	(7)		0.68			0.70			0.70
Net investment income		4.43	(5)		4.36			4.43			4.46			4.62			4.86
Portfolio Turnover Rate		3	%		0	%(8)		5	%		8	%		14	%		20	%

⁽¹⁾ Per share amounts have been calculated using the average shares method.

⁽²⁾ For the six months ended September 30, 2006 (unaudited).

⁽³⁾ Amount represents less than $0.01 per share.

⁽⁴⁾ Performance figures may reflect fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower. Total returns for periods of less than one year are not annualized.

⁽⁵⁾ Annualized.  

⁽⁶⁾ As a result of an expense limitation, the ratio of expenses to average net assets of Class A may not exceed 0.85%.

⁽⁷⁾ Reflects fee waivers and/or expense reimbursements.

⁽⁸⁾ Amount represents less than 1%.

See Notes to Financial Statements.

Legg Mason Partners New York Municipals Fund 2006 Semi-Annual Report         17

Financial Highlights (continued)

For a share of each class of beneficial interest outstanding throughout each year ended March 31, unless otherwise noted:

Class B Shares(1)	2006(2)			2006			2005			2004			2003			2002
Net Asset Value, Beginning of Period	$	13.14		$	13.28		$	13.57		$	13.66		$	13.19		$	13.42
Income (Loss) From Operations:
Net investment income		0.26			0.50			0.52			0.54			0.56			0.57
Net realized and unrealized gain (loss)		0.09			(0.15	)		(0.29	)		(0.09	)		0.46			(0.22	)
Total Income From Operations		0.35			0.35			0.23			0.45			1.02			0.35
Less Distributions From:
Net investment income		(0.26	)		(0.49	)		(0.52	)		(0.54	)		(0.55	)		(0.58	)
In excess of net investment income		—			—			—			(0.00	)(3)		—			—
Total Distributions		(0.26	)		(0.49	)		(0.52	)		(0.54	)		(0.55	)		(0.58	)
Net Asset Value, End of Period	$	13.23		$	13.14		$	13.28		$	13.57		$	13.66		$	13.19
Total Return(4)		2.67	%		2.71	%		1.72	%		3.35	%		7.86	%		2.60	%
Net Assets, End of Period (millions)		$65			$71			$94			$120			$140			$139
Ratios to Average Net Assets:
Gross expenses		1.19	%(5)		1.23	%		1.23	%		1.21	%		1.22	%		1.21	%
Net expenses(6)		1.17	(5)(7)		1.23	(7)		1.22	(7)		1.21			1.22			1.21
Net investment income		3.94	(5)		3.80			3.89			3.93			4.10			4.27
Portfolio Turnover Rate		3	%		0	%(8)		5	%		8	%		14	%		20	%

⁽¹⁾ Per share amounts have been calculated using the average shares method.

⁽²⁾ For the six months ended September 30, 2006 (unaudited).

⁽³⁾ Amount represents less than $0.01 per share.

⁽⁴⁾ Performance figures may reflect fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower. Total returns for periods of less than one year are not annualized.

⁽⁵⁾ Annualized.  

⁽⁶⁾ As a result of an expense limitation, the ratio of expenses to average net assets of Class B may not exceed 1.35%.

⁽⁷⁾ Reflects fee waivers and/or expense reimbursements.

⁽⁸⁾ Amount represents less than 1%.

See Notes to Financial Statements.

18         Legg Mason Partners New York Municipals Fund 2006 Semi-Annual Report

Financial Highlights (continued)

For a share of each class of beneficial interest outstanding throughout each year ended March 31, unless otherwise noted:

Class C Shares(1)	2006(2)			2006			2005			2004			2003			2002
Net Asset Value, Beginning of Period	$	13.13		$	13.27		$	13.56		$	13.65		$	13.18		$	13.41
Income (Loss) From Operations:
Net investment income		0.26			0.50			0.52			0.53			0.55			0.57
Net realized and unrealized gain (loss)		0.08			(0.15	)		(0.29	)		(0.08	)		0.47			(0.23	)
Total Income From Operations		0.34			0.35			0.23			0.45			1.02			0.34
Less Distributions From:
Net investment income		(0.25	)		(0.49	)		(0.52	)		(0.54	)		(0.55	)		(0.57	)
In excess of net investment income		—			—			—			(0.00	)(3)		—			—
Total Distributions		(0.25	)		(0.49	)		(0.52	)		(0.54	)		(0.55	)		(0.57	)
Net Asset Value, End of Period	$	13.22		$	13.13		$	13.27		$	13.56		$	13.65		$	13.18
Total Return(4)		2.64	%		2.69	%		1.69	%		3.30	%		7.82	%		2.56	%
Net Assets, End of Period (millions)		$38			$37			$42			$45			$45			$41
Ratios to Average Net Assets:
Gross expenses		1.25	%(5)		1.26	%		1.26	%		1.24	%		1.26	%		1.26	%
Net expenses(6)		1.23	(5)(7)		1.26	(7)		1.25	(7)		1.24			1.26			1.26
Net investment income		3.87	(5)		3.77			3.86			3.90			4.05			4.27
Portfolio Turnover Rate		3	%		0	%(8)		5	%		8	%		14	%		20	%

⁽¹⁾ Per share amounts have been calculated using the average shares method.

⁽²⁾ For the six months ended September 30, 2006 (unaudited).

⁽³⁾ Amount represents less than $0.01 per share.

⁽⁴⁾ Performance figures may reflect fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower. Total returns for periods of less than one year are not annualized.

⁽⁵⁾ Annualized.  

⁽⁶⁾ As a result of an expense limitation, the ratio of expenses to average net assets of Class C may not exceed 1.40%.

⁽⁷⁾ Reflects fee waivers and/or expense reimbursements.

⁽⁸⁾ Amount represents less than 1%.

See Notes to Financial Statements.

Legg Mason Partners New York Municipals Fund 2006 Semi-Annual Report         19

Financial Highlights (continued)

For a share of each class of beneficial interest outstanding throughout each year ended March 31, unless otherwise noted:

Class Y Shares(1)	2006(2)			2006			2005			2004			2003			2002
Net Asset Value, Beginning of Period	$	13.14		$	13.27		$	13.57		$	13.65		$	13.19		$	13.42
Income (Loss) From Operations:
Net investment income		0.30			0.59			0.62			0.63			0.67			0.67
Net realized and unrealized gain (loss)		0.08			(0.14	)		(0.30	)		(0.07	)		0.44			(0.23	)
Total Income From Operations		0.38			0.45			0.32			0.56			1.11			0.44
Less Distributions From:
Net investment income		(0.30	)		(0.58	)		(0.62	)		(0.64	)		(0.65	)		(0.67	)
In excess of net investment income		—			—			—			(0.00	)(3)		—			—
Total Distributions		(0.30	)		(0.58	)		(0.62	)		(0.64	)		(0.65	)		(0.67	)
Net Asset Value, End of Period	$	13.22		$	13.14		$	13.27		$	13.57		$	13.65		$	13.19
Total Return(4)		2.93	%		3.52	%		2.38	%		4.13	%		8.53	%		3.33	%
Net Assets, End of Period (millions)		$4			$4			$4			$4			$4			$11
Ratios to Average Net Assets:
Gross expenses		0.53	%(5)		0.53	%		0.54	%		0.51	%		0.52	%		0.52	%
Net expenses(6)		0.53	(5)(7)		0.53	(7)		0.53	(7)		0.51			0.52			0.52
Net investment income		4.59	(5)		4.51			4.59			4.63			4.78			5.01
Portfolio Turnover Rate		3	%		0	%(8)		5	%		8	%		14	%		20	%

⁽¹⁾ Per share amounts have been calculated using the average shares method.

⁽²⁾ For the six months ended September 30, 2006 (unaudited).

⁽³⁾ Amount represents less than $0.01 per share.

⁽⁴⁾ Performance figures may reflect fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower. Total returns for periods of less than one year are not annualized.

⁽⁵⁾ Annualized.  

⁽⁶⁾ As a result of an expense limitation, the ratio of expenses to average net assets of Class Y may not exceed 0.70%.

⁽⁷⁾ Reflects fee waivers and/or expense reimbursements.

⁽⁸⁾ Amount represents less than 1%.

See Notes to Financial Statements.

20         Legg Mason Partners New York Municipals Fund 2006 Semi-Annual Report

Notes to Financial Statements (unaudited)

1. Organization and Significant Accounting Policies

Legg Mason Partners New York Municipals Fund (formerly known as New York Portfolio) (the “Fund”) a separate non-diversified investment fund of Legg Mason Partners Municipal Funds (formerly known as Smith Barney Muni Funds) (the “Trust”). The Trust, a Massachusetts business trust, is registered under the Investment Company Act of 1940, as amended, (the “1940 Act”), as an open-end management investment company.

The following are significant accounting policies consistently followed by the Fund and are in conformity with U.S. generally accepted accounting principles (“GAAP”). Estimates and assumptions are required to be made regarding assets, liabilities and changes in net assets resulting from operations when financial statements are prepared. Changes in the economic environment, financial markets and any other parameters used in determining these estimates could cause actual results to differ.

(a) Investment Valuation. Securities are valued at the mean between the bid and asked prices provided by an independent pricing service that are based on transactions in municipal obligations, quotations from municipal bond dealers, market transactions in comparable securities and various other relationships between securities. Securities for which market quotations are not readily available or are determined not to reflect fair value, will be valued in good faith by or under the direction of the Fund’s Board of Trustees. Short-term obligations with maturities of 60 days or less are valued at amortized cost, which approximates market value.

(b) Financial Futures Contracts. The Fund may enter into financial futures contracts typically to hedge against economic impact of adverse changes in the market value of portfolio securities due to changes in interest rates, as a substitute for buying or selling securities or as a cash flow management technique. Upon entering into a financial futures contract, the Fund is required to deposit cash or securities as initial margin. Additional securities are also segregated up to the current market value of the financial futures contracts. Subsequent payments, known as variation margin, are made or received by the Fund each day, depending on the daily fluctuation in the value of the underlying financial instruments. The Fund recognizes an unrealized gain or loss equal to the daily variation margin. When the financial futures contracts are closed, a realized gain or loss is recognized equal to the difference between the proceeds from (or cost of) the closing transactions and the Fund’s basis in the contracts.

The risks associated with entering into financial futures contracts include the possibility that a change in the value of the contract may not correlate with the changes in the value of the underlying instruments. In addition, investing in financial futures contracts involves the risk that the Fund could lose more than the original margin deposit and subsequent payments required for a futures transaction. Risks may also arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of their contracts.

(c) Fund Concentration. Since the Fund invests primarily in obligations of issuers within New York, it is subject to possible concentration risks associated with the economic, political, or legal developments or industrial or regional matters specifically affecting New York.

Legg Mason Partners New York Municipals Fund 2006 Semi-Annual Report         21

Notes to Financial Statements (unaudited) (continued)

(d) Security Transactions and Investment Income. Security transactions are accounted for on a trade date basis. Interest income, adjusted for amortization of premium and accretion of discount, is recorded on the accrual basis. The cost of investments sold is determined by use of the specific identification method. To the extent any issuer defaults on an expected interest payment, the Fund’s policy is to generally halt any additional interest income accruals and consider the realizability of interest accrued up to the date of default.

(e) Distributions to Shareholders. Distributions from net investment income on the shares of the Fund are declared each business day to shareholders of record, and are paid monthly. The Fund intends to satisfy conditions that will enable interest from municipal securities, which is exempt from federal and certain state income taxes, to retain such tax-exempt status when distributed to the shareholders of the Fund. Distributions of net realized gains, if any, are taxable and are declared at least annually. Distributions are recorded on the ex-dividend date and are determined in accordance with income tax regulations, which may differ from GAAP.

(f) Class Accounting. Investment income, common expenses and realized/unrealized gain (loss) on investments are allocated to the various classes of the Fund on the basis of daily net assets of each class. Fees relating to a specific class are charged directly to that class.

(g) Federal and Other Taxes. It is the Fund’s policy to comply with the federal income and excise tax requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies. Accordingly, the Fund intends to distribute substantially all of its income and net realized gains on investments, if any, to shareholders each year. Therefore, no federal income tax provision is required in the Fund’s financial statements.

(h) Reclassification. GAAP requires that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or net asset values per share.

2. Investment Management Agreement and Other Transactions with Affiliates

For a portion of this reporting period, Smith Barney Fund Management LLC (“SBFM”), an indirect wholly-owned subsidiary of Legg Mason, Inc. (“Legg Mason”), acted as the investment manager of the Fund. Under the investment management agreement, the Fund paid an investment management fee calculated at an annual rate of 0.50% of the Fund’s average daily net assets. This fee was calculated daily and paid monthly.

Effective August 1, 2006, Legg Mason Partners Fund Advisor, LLC (“LMPFA”) became the Fund’s investment manager and Western Asset Management Company (“Western Asset”) became the Fund’s subadviser. The portfolio managers who are responsible for the day-to-day management of the Fund remained the same immediately prior to and immediately after the date of these changes. LMPFA and Western Asset are wholly-owned subsidiaries of Legg Mason.

22         Legg Mason Partners New York Municipals Fund 2006 Semi-Annual Report

Notes to Financial Statements (unaudited) (continued)

LMPFA provides administrative and certain oversight services to the Fund. LMPFA has delegated to the subadviser the day-to-day portfolio management of the Fund. The Fund’s investment management fee remains unchanged. For its services, LMPFA pays Western Asset 70% of the net management fee it receives from the Fund.

During the six months ended September 30, 2006, the Fund’s Class A, Class B, Class C and Class Y shares had voluntary expense limitations of 0.85%, 1.35%, 1.40% and 0.70%, respectively.

During the six months ended September 30, 2006, SBFM and LMPFA waived a portion of their investment management fees in the amount of $33,167.

Citigroup Global Markets Inc. (“CGM”), PFS Investments Inc. (“PFS”) and Legg Mason Investor Services, LLC (“LMIS”), a wholly-owned broker-dealer subsidiary of Legg Mason, serve as co-distributors of the Fund.

There is a maximum initial sales charge of 4.00% for Class A shares. There is a contingent deferred sales charge (“CDSC”) of 4.50% on Class B shares, which applies if redemption occurs within one year from purchase payment. This CDSC declines thereafter by 0.50% the first year after purchase payment and thereafter by 1.00% per year until no CDSC is incurred. Class C shares also have a 1.00% CDSC, which applies if redemption occurs within one year from purchase payment. In certain cases, Class A shares have a 1.00% CDSC, which applies if redemption occurs within one year from purchase payment. This CDSC only applies to those purchases of Class A shares, which, when combined with current holdings of Class A shares, equal or exceed $500,000 in the aggregate. These purchases do not incur an initial sales charge.

For the six months ended September 30, 2006, LMIS and its affiliates received sales charges of approximately $80 on sales of the Fund’s Class A shares. In addition, for the six months ended September 30, 2006 there were no CDSCs paid to LMIS and its affiliates.

Effective November 20, 2006, the maximum initial sales charge on Class A shares of the Fund increased from 4.00% to 4.25% for shares purchased on or after that date.

The Fund has adopted an unfunded, non-qualified deferred compensation plan (the “Plan”) which allows non-interested trustees (“Trustees”) to defer the receipt of all or a portion of the trustees’ fees earned until a later date specified by the Trustees. The deferred fees earn a return based on notional investments selected by the Trustees. The balance of the deferred fees payable may change depending upon the investment performance. Any gains or losses incurred in the deferred balances are reported in the Statement of Operations under Trustees’ fees. Under the Plan, deferred fees are considered a general obligation of the Fund and any payments made pursuant to the Plan will be made from the Fund’s general assets. Effective January 1, 2006, the Board of Trustees voted to discontinue offering the Plan to its members. This change will have no effect on fees previously deferred. As of September 30, 2006, the Fund had accrued $23,626 as deferred compensation payable under the Plan.

Certain officers and one Trustee of the Fund are employees of Legg Mason or its affiliates and do not receive compensation from the Fund.

Legg Mason Partners New York Municipals Fund 2006 Semi-Annual Report         23

Notes to Financial Statements (unaudited) (continued)

3. Investments

During the six months ended September 30, 2006, the aggregate cost of purchases and proceeds from sales of investments (excluding short-term investments) were as follows:

Purchases	$	25,530,221
Sales		20,825,561

At September 30, 2006, the aggregate gross unrealized appreciation and depreciation of investments for federal income tax purposes were substantially as follows:

Gross unrealized appreciation	$	46,956,919
Gross unrealized depreciation		(13,972	)
Net unrealized appreciation	$	46,942,947

At September 30, 2006, the Fund had the following open futures contracts:

	Number of Contracts	Expiration Date	Basis Value		Market Value		Unrealized Loss
Contracts to Sell:
U S. Treasury Bond	585	12/06	$	65,009,885	$	65,757,656	$	(747,771	)

4. Class Specific Expenses

The Fund has adopted a Rule 12b-1 distribution plan and under that plan the Fund pays a service fee with respect to its Class A, B and C shares calculated at the annual rate of 0.15% of the average daily net assets of each respective class. The Fund also pays a distribution fee with respect to its Class B and C shares calculated at the annual rate of 0.50% and 0.55% of the average daily net assets of each class, respectively. Distribution fees are accrued daily and paid monthly.

For the six months ended September 30, 2006, class specific expenses were as follows:

	Distribution Fees		Transfer Agent Fees		Shareholder Reports Expenses
Class A	$	401,056	$	28,086	$	7,549
Class B		220,911		6,982		1,555
Class C		131,830		3,294		924
Class Y		—		5		125
Total	$	753,797	$	38,367	$	10,153

CGM, LMIS and its affiliates have agreed to reimburse the Fund for any amount which exceeds payments made by the Fund with respect to the distribution plan for Class A shares over the cumulative unreimbursed amounts spent by CGM, LMIS and its affiliates in performing their services under the distribution plan. During the six months ended September 30, 2006, no reimbursement was required.

24         Legg Mason Partners New York Municipals Fund 2006 Semi-Annual Report

Notes to Financial Statements (unaudited) (continued)

5. Distributions to Shareholders by Class

	Six Months Ended September 30, 2006		Year Ended March 31, 2006
Net Investment Income:
Class A	$	11,753,627	$	23,336,616
Class B		1,326,715		3,064,282
Class C		723,487		1,463,021
Class Y		84,238		163,720
Total	$	13,888,067	$	28,027,639

6. Shares of Beneficial Interest

At September 30, 2006, the Trust had an unlimited number of shares of beneficial interest authorized with a par value of $0.001 per share. The Fund has the ability to issue multiple classes of shares. Each share of a class represents an identical interest and has the same rights, except that each class bears certain direct expenses specifically related to the distribution of its shares.

Transactions in shares of each class were as follows:

	Six Months Ended September 30, 2006					Year Ended March 31, 2006
	Shares		Amount			Shares		Amount
Class A
Shares sold	4,107,497		$	54,156,970		5,185,004		$	68,163,749
Shares issued on reinvestment	548,760			7,235,248		1,052,342			13,828,577
Shares repurchased	(2,999,015	)		(39,510,944	)	(9,691,188	)		(127,534,227	)
Net Increase (Decrease)	1,657,242		$	21,881,274		(3,453,842	)	$	(45,541,901	)
Class B
Shares sold	114,258		$	1,505,758		149,228		$	1,965,659
Shares issued on reinvestment	61,594			812,038		138,968			1,826,198
Shares repurchased	(686,872	)		(9,054,380	)	(1,944,998	)		(25,576,465	)
Net Decrease	(511,020	)	$	(6,736,584	)	(1,656,802	)	$	(21,784,608	)
Class C
Shares sold	305,212		$	4,017,244		392,130		$	5,155,482
Shares issued on reinvestment	36,412			479,700		75,041			985,294
Shares repurchased	(281,136	)		(3,702,871	)	(821,172	)		(10,787,491	)
Net Increase (Decrease)	60,488		$	794,073		(354,001	)	$	(4,646,715	)

7. Capital Loss Carryforward

As of March 31, 2006, the Fund had net capital loss carryforward of $34,063,080, of which $5,713,826 expires in 2008, $4,646,778 expires in 2009, $1,069,559 expires in 2012, and $22,632,917 expires in 2013. These amounts will be available to offset any future taxable capital gains.

Legg Mason Partners New York Municipals Fund 2006 Semi-Annual Report         25

Notes to Financial Statements (unaudited) (continued)

8. Regulatory Matters

On May 31, 2005, the U.S. Securities and Exchange Commission (“SEC”) issued an order in connection with the settlement of an administrative proceeding against SBFM and CGM relating to the appointment of an affiliated transfer agent for the Smith Barney family of mutual funds (the “Funds”).

The SEC order finds that SBFM and CGM willfully violated Section 206(1) of the Investment Advisers Act of 1940 (“Advisers Act”). Specifically, the order finds that SBFM and CGM knowingly or recklessly failed to disclose to the boards of the Funds in 1999 when proposing a new transfer agent arrangement with an affiliated transfer agent that: First Data Investors Services Group (“First Data”), the Funds’ then-existing transfer agent, had offered to continue as transfer agent and do the same work for substantially less money than before; and that Citigroup Asset Management (“CAM”), the Citigroup business unit that, at the time, included the Fund’s investment manager and other investment advisory companies, had entered into a side letter with First Data under which CAM agreed to recommend the appointment of First Data as sub-transfer agent to the affiliated transfer agent in exchange for, among other things, a guarantee by First Data of specified amounts of asset management and investment banking fees to CAM and CGM. The order also finds that SBFM and CGM willfully violated Section 206(2) of the Advisers Act by virtue of the omissions discussed above and other misrepresentations and omissions in the materials provided to the Funds’ boards, including the failure to make clear that the affiliated transfer agent would earn a high profit for performing limited functions while First Data continued to perform almost all of the transfer agent functions, and the suggestion that the proposed arrangement was in the Funds’ best interests and that no viable alternatives existed. SBFM and CGM do not admit or deny any wrongdoing or liability. The settlement does not establish wrongdoing or liability for purposes of any other proceeding.

The SEC censured SBFM and CGM and ordered them to cease and desist from violations of Sections 206(1) and 206(2) of the Advisers Act. The order requires Citigroup to pay $208.1 million, including $109 million in disgorgement of profits, $19.1 million in interest, and a civil money penalty of $80 million. Approximately $24.4 million has already been paid to the Funds, primarily through fee waivers. The remaining $183.7 million, including the penalty, has been paid to the U.S. Treasury and will be distributed pursuant to a plan submitted for the approval of the SEC. At this time, there is no certainty as to how the above-described proceeds of the settlement will be distributed, to whom such distributions will be made, the methodology by which such distributions will be allocated, and when such distributions will be made.

The order also required that transfer agency fees received from the Funds since December 1, 2004, less certain expenses, be placed in escrow and provided that a portion of such fees might be subsequently distributed in accordance with the terms of the order.

On April 3, 2006, an aggregate amount of approximately $9 million was distributed to the affected Funds.

The order required SBFM to recommend a new transfer agent contract to the Fund boards within 180 days of the entry of the order; if a Citigroup affiliate submitted a proposal to serve as transfer agent or sub-transfer agent, SBFM and CGM would have been

26         Legg Mason Partners New York Municipals Fund 2006 Semi-Annual Report

Notes to Financial Statements (unaudited) (continued)

required, at their expense, to engage an independent monitor to oversee a competitive bidding process. On November 21, 2005, and within the specified timeframe, the Fund’s Board selected a new transfer agent for the Fund. No Citigroup affiliate submitted a proposal to serve as transfer agent. Under the order, SBFM also must comply with an amended version of a vendor policy that Citigroup instituted in August 2004.

Although there can be no assurance, the Fund’s manager does not believe that this matter will have a material adverse effect on the Funds.

On December 1, 2005, Citigroup completed the sale of substantially all of its global asset management business, including SBFM, to Legg Mason.

9. Legal Matters

Beginning in August 2005, five class action lawsuits alleging violations of federal securities laws and state law were filed against CGM and SBFM, (collectively, the “Defendants”) based on the May 31, 2005 settlement order issued against the Defendants by the SEC as described in Note 8. The complaints seek injunctive relief and compensatory and punitive damages, removal of SBFM as the advisor for the Smith Barney family of funds, rescission of the Funds’ management and other contracts with SBFM, recovery of all fees paid to SBFM pursuant to such contracts, and an award of attorneys’ fees and litigation expenses.

On October 5, 2005, a motion to consolidate the five actions and any subsequently filed, related action was filed. That motion contemplates that a consolidated amended complaint alleging substantially similar causes of action will be filed in the future.

As of the date of this report, the Fund’s investment manager believes that resolution of the pending lawsuit will not have a material effect on the financial position or results of operations of the Funds or the ability of the Fund’s investment manager and its affiliates to continue to render services to the Funds under their respective contracts.

* * *

Beginning in June 2004, class action lawsuits alleging violations of the federal securities laws were filed against CGM and a number of its then affiliates, including SBFM and Salomon Brothers Asset Management Inc. (“SBAM”), which were then investment adviser or manager to certain of the Funds (the “Managers”), substantially all of the mutual funds then managed by the Managers (the “Defendant Funds”), and Board Members of the Defendant Funds (collectively, the “Defendants”). The complaints alleged, among other things, that CGM created various undisclosed incentives for its brokers to sell Smith Barney and Salomon Brothers funds. In addition, according to the complaints, the Managers caused the Defendant Funds to pay excessive brokerage commissions to CGM for steering clients towards proprietary funds. The complaints also alleged that the Defendants breached their fiduciary duty to the Defendant Funds by improperly charging Rule 12b-1 fees and by drawing on fund assets to make undisclosed payments of soft dollars and excessive brokerage commissions. The complaints also alleged that the Defendant Funds failed to adequately disclose certain of the allegedly wrongful conduct. The complaints sought injunctive relief and compensatory and punitive damages, rescission of the

Legg Mason Partners New York Municipals Fund 2006 Semi-Annual Report         27

Notes to Financial Statements (unaudited) (continued)

Defendant Funds’ contracts with the Managers, recovery of all fees paid to the Managers pursuant to such contracts and an award of attorneys’ fees and litigation expenses.

On December 15, 2004, a consolidated amended complaint (the “Complaint”) was filed alleging substantially similar causes of action. On May 27, 2005, all of the Defendants filed motions to dismiss the Complaint. On July 26, 2006, the court issued a decision and order (1) finding that plaintiffs lacked standing to sue on behalf of the shareholders of the Funds in which none of the plaintiffs had invested (including the Fund) and dismissing those Funds from the case (although stating that they could be brought back into the case if standing as to them could be established), and (2) other than one stayed claim, dismissing all of the causes of action against the remaining Defendants, with prejudice, except for the cause of action under Section 36(b) of the Investment Company Act, which the court granted plaintiffs leave to repeal as a derivative claim.

On October 16, 2006, plaintiffs filed their Second Consolidated Amended Complaint (“Second Amended Complaint”) which alleges derivative claims on behalf of nine funds identified in the Second Amended Complaint, under Section 36(b) of the 1940 Act, against CAM, SBAM, SBFM and CGM as investment advisers to the identified funds, as well as CGM as a distributor for the identified funds (collectively, the “Second Amended Complaint Defendants”). The Fund was not identified in the Second Amended Complaint. The Second Amended Complaint alleges no claims against any of the Funds or any of their Board Members. Under Section 36(b), the Second Amended Complaint alleges similar facts and seeks similar relief against the Second Amended Complaint Defendants as the Complaint.

Additional lawsuits arising out of these circumstances and presenting similar allegations and requests for relief may be filed in the future.

10. Other Matters

On September 16, 2005, the staff of the SEC informed SBFM and SBAM that the staff is considering recommending that the SEC institute administrative proceedings against SBFM and SBAM for alleged violations of Section 19(a) and 34(b) of the Investment Company Act (and related Rule 19a-1). The notification is a result of an industry wide inspection by the SEC and is based upon alleged deficiencies in disclosures regarding dividends and distributions paid to shareholders of certain funds. Section 19(a) and related Rule 19a-1 of the Investment Company Act generally require funds that are making dividend and distribution payments to provide shareholders with a written statement disclosing the source of the dividends and distributions, and, in particular, the portion of the payments made from each of net investment income, undistributed net profits and/or paid-in capital. In connection with the contemplated proceedings, the staff may seek a cease and desist order and/or monetary damages from SBFM or SBAM.

Although there can be no assurance, the Fund’s manager believes that this matter is not likely to have a material adverse effect on the Fund.

11. Additional Shareholder Information

The Fund’s Board approved certain share class modifications which, among other things, will standardize share class features for all equity and fixed income funds in the fund

28         Legg Mason Partners New York Municipals Fund 2006 Semi-Annual Report

Notes to Financial Statements (unaudited) (continued)

complex. The features standardized include such things as sales loads, distribution charges and other costs. These modifications were implemented on November 20, 2006.

The Fund’s Board also approved a number of initiatives designed to streamline and restructure the fund complex, and authorized seeking shareholder approval for those initiatives where shareholder approval is required. As a result, Fund shareholders have been asked to elect a new Board, approve matters that will result in the Fund being grouped for organizational and governance purposes with other funds in the fund complex, and domicile the Fund as a Maryland business trust, with all funds operating under uniform charter documents. Fund shareholders also have been asked to approve investment matters, including standardized fundamental investment policies.

Proxy materials describing these matters were sent to shareholders. If shareholder approval is obtained, these matters generally are expected to be implemented during the first quarter of 2007.

12. Recent Accounting Pronouncements

During June 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation 48 (“FIN 48” or the “Interpretation”), Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement 109. FIN 48 supplements FASB Statement 109, Accounting for Income Taxes, by defining the confidence level that a tax position must meet in order to be recognized in the financial statements. FIN 48 prescribes a comprehensive model for how a fund should recognize, measure, present, and disclose in its financial statements uncertain tax positions that the fund has taken or expects to take on a tax return. FIN 48 requires that the tax effects of a position be recognized only if it is “more likely than not” to be sustained based solely on its technical merits. Management must be able to conclude that the tax law, regulations, case law, and other objective information regarding the technical merits sufficiently support the position’s sustainability with a likelihood of more than 50 percent. FIN 48 is effective for fiscal periods beginning after December 15, 2006, which for this Fund will be April 1, 2007. At adoption, the financial statements must be adjusted to reflect only those tax positions that are more likely than not to be sustained as of the adoption date. Management of the Fund has determined that adopting FIN 48 will not have a material impact on the Fund’s financial statements.

* * *

On September 20, 2006, FASB released Statement of Financial Accounting Standards No. 157 “Fair Value Measurements” (“FAS 157”). FAS 157 establishes an authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair value measurements. The application of FAS 157 is required for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. At this time, management is evaluating the implications of FAS 157 and its impact on the financial statements has not yet been determined.

Legg Mason Partners New York Municipals Fund 2006 Semi-Annual Report         29

Board Approval of Management and Subadvisory Agreements (unaudited)

At a meeting held in person on June 22, 2006, the Fund’s Board, including a majority of the Board Members who are not “interested persons” of the Fund or Legg Mason Partners Fund Advisor, LLC (the “Manager”) or any sub-investment adviser or proposed sub-investment adviser as defined in the Investment Company Act of 1940, as amended (the “1940 Act”) (the “Independent Board Members”), approved a new management agreement (the “New Management Agreement”) between the Fund and the Manager. The Fund’s Board, including a majority of the Independent Board Members, also approved one or more new subadvisory agreements between the Manager and Western Asset Management Company (the “Subadviser”) (the “New Subadvisory Agreement”). The New Management Agreement and the New Subadvisory Agreement replaced the Fund’s prior management agreement with Smith Barney Fund Management LLC and were entered into in connection with an internal reorganization of the Manager’s, the prior manager’s and the Subadviser’s parent organization, Legg Mason. In approving the New Management Agreement and New Subadvisory Agreement, the Board, including the Independent Board Members, considered the factors discussed below, among other things.

The Board noted that the Manager will provide administrative and certain oversight services to the Fund, and the Manager will delegate to the Subadviser the day-to-day portfolio management of the Fund. The Board Members reviewed the qualifications, backgrounds and responsibilities of the senior personnel that will provide oversight and general management services and the portfolio management team that would be primarily responsible for the day-to-day management of the Fund. The Board Members noted that the portfolio management team was expected to be the same as then managing the Fund.

The Board Members received and considered information regarding the nature, extent and quality of services expected to be provided to the Fund by the Manager under the New Management Agreement and by the Subadviser under the New Subadvisory Agreement. The Board Members’ evaluation of the services expected to be provided by the Manager and the Subadviser took into account the Board Members’ knowledge and familiarity gained as Fund Board Members, including as to the scope and quality of Legg Mason’s investment management and other capabilities and the quality of its administrative and other services. The Board Members considered, among other things, information and assurances provided by Legg Mason as to the operations, facilities and organization of the Manager and the Subadviser and the qualifications, backgrounds and responsibilities of their senior personnel. The Board Members further considered the financial resources available to the Manager, the Subadviser and Legg Mason. The Board Members concluded that, overall, the nature, extent and quality of services expected to be provided under the New Management Agreement and the New Subadvisory Agreement were acceptable.

The Board Members also received and considered performance information for the Fund as well as comparative information with respect to a peer group of funds (the “Performance Universe”) selected by Lipper, Inc. (“Lipper”), an independent provider of investment company data. The Board Members were provided with a description of the methodology Lipper used to determine the similarity of the Fund to the funds included in

30         Legg Mason Partners New York Municipals Fund

Board Approval of Management and Subadvisory Agreements (unaudited) (continued)

the Performance Universe. The Board Members noted that they had received and discussed with management, at periodic intervals, information comparing the Fund’s performance against, among other things, its benchmark. Based on the Board Members’ review, which included careful consideration of the factors noted above, the Board Members concluded that the performance of the Fund, under the circumstances, supported approval of the New Management Agreement and New Subadvisory Agreement.

The Board Members reviewed and considered the management fee that would be payable by the Fund to the Manager in light of the nature, extent and quality of the management services expected to be provided by the Manager, including the fee waiver and/or expense reimbursement arrangements currently in place. Additionally, the Board Members received and considered information comparing the Fund’s management fee and overall expenses with those of comparable funds in both the relevant expense group and a broader group of funds, each selected and provided by Lipper. The Board Members also reviewed and considered the subadvisory fee that would be payable by the Manager to the Subadviser in light of the nature, extent and quality of the management services expected to be provided by the Subadviser. The Board Members noted that the Manager, and not the Fund, will pay the subadvisory fee to the Subadviser. The Board Members determined that the Fund’s management fee and the Fund’s subadvisory fee were reasonable in light of the nature, extent and quality of the services expected to be provided to the Fund under the New Management Agreement and the New Subadvisory Agreement.

The Board Members received and considered a pro-forma profitability analysis of Legg Mason and its affiliates in providing services to the Fund, including information with respect to the allocation methodologies used in preparing the profitability data. The Board Members recognized that Legg Mason may realize economies of scale based on its internal reorganization and synergies of operations. The Board Members noted that it was not possible to predict with a high degree of confidence how Legg Mason’s and its affiliates’ profitability would be affected by its internal reorganization and by other factors including potential economies of scale, but that based on their review of the pro-forma profitability analysis, their most recent prior review of the profitability of the predecessor manager and its affiliates from their relationship with the Fund and other factors considered, they determined that the management fee was reasonable. The Board Members noted that they expect to receive profitability information on an annual basis.

In their deliberations, the Board Members also considered, and placed significant importance on, information that had been received and conclusions that had been reached by the Board in connection with the Board’s most recent approval of the Fund’s prior management agreement in addition to information provided in connection with the Board’s evaluation of the terms and conditions of the New Management Agreement and the New Subadvisory Agreement.

The Board Members considered Legg Mason’s advice and the advice of its counsel that the New Management Agreement and the New Subadvisory Agreement were being entered into in connection with an internal reorganization within Legg Mason, that did not involve an actual change of control or management. The Board Members further

Legg Mason Partners New York Municipals Fund         31

Board Approval of Management and Subadvisory Agreements (unaudited) (continued)

noted that the terms and conditions of the New Management Agreement are substantially identical to those of the Fund’s previous management agreement except for the identity of the Manager, and that the initial term of the New Management Agreement (after which it will continue in effect only if such continuance is specifically approved at least annually by the Board, including a majority of the Independent Board Members) was the same as that under the prior management agreement.

In light of all of the foregoing, the Board, including the Independent Board Members, approved the New Management Agreement and the New Subadvisory Agreement. No single factor reviewed by the Board Members was identified as the principal factor in determining whether to approve the New Management Agreement and the New Subadvisory Agreement. The Independent Board Members were advised by separate independent legal counsel throughout the process. The Independent Board Members also discussed the proposed approval of the New Management Agreement and the New Subadvisory Agreement in private sessions with their independent legal counsel at which no representatives of the Manager or Subadviser were present.

32         Legg Mason Partners New York Municipals Fund

Legg Mason Partners New York Municipals Fund

TRUSTEES Lee Abraham Jane F. Dasher Donald R. Foley R. Jay Gerken, CFA
    Chairman Richard E. Hanson, Jr. Paul Hardin Roderick C. Rasmussen John P. Toolan INVESTMENT MANAGER Legg Mason Partners Fund Advisor, LLC   SUBADVISER Western Asset Management Company   DISTRIBUTORS Citigroup Global Markets Inc. Legg Mason Investor Services, LLC PFS Investments Inc.   CUSTODIAN State Street Bank and Trust Company   TRANSFER AGENT PFPC Inc. 4400 Computer Drive Westborough, Massachusetts 01581   INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM KPMG LLP 345 Park Avenue New York, NY 10154

This report is submitted for the general information of the shareholders of Legg Mason Partners New York Municipals Fund but it may also be used as sales literature when preceded or accompanied by the current prospectus.

This report must be preceded or accompanied by a free prospectus. Investors should consider the Fund’s investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other important information about the Fund. Please read the prospectus carefully before investing.

www.leggmason.com/InvestorServices

©2006 Legg Mason Investor Services, LLC

Member NASD, SIPC

FD03481 11/06 SR06-182

Legg Mason Partners New York Municipals Fund

The Funds are separate investment funds of the Legg Mason Partners Municipal Funds, a Massachusetts business trust.

LEGG MASON PARTNERS MUNICIPAL FUNDS

Legg Mason Partners Mutual Funds

125 Broad Street

10th Floor, MF-2

New York, New York 10004

The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the Commission’s website at www.sec.gov. The Fund’s Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington D.C., and information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. To obtain information on Form N-Q from the Fund, shareholders can call 1-800-451-2010.

Information on how the Fund voted proxies relating to portfolio securities during the prior 12-month period ended June 30th of each year and a description of the policies and procedures that the Fund uses to determine how to vote proxies related to portfolio transactions is available (1) without charge, upon request, by calling 1-800-451-2010, (2) on the Fund’s website at www.leggmason.com/InvestorServices and (3) on the SEC’s website at www.sec.gov. Proxy voting reports for the period ending June 30, 2005 will continue to be listed under the Fund’s former Smith Barney Muni Funds — New York Portfolio name.

ITEM 2. CODE OF ETHICS.

Not Applicable.

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.

Not Applicable.

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Not applicable.

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.

Not applicable.

ITEM 6. SCHEDULE OF INVESTMENTS.

Included herein under Item 1.

ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

Not applicable.

ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

Not applicable.

ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.

Not applicable.

ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

Not applicable.

ITEM 11. 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 half-year (the registrant’s second fiscal half-year in the case of an annual report) that have materially affected, or are likely to materially affect the registrant’s internal control over financial reporting.

ITEM 12. EXHIBITS.

(a)(1) Not applicable.

Exhibit 99.CODE ETH

(a)(2) Certifications pursuant to section 302 of the Sarbanes-Oxley Act of 2002 attached hereto.

Exhibit 99.CERT

(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 attached hereto.

Exhibit 99.906CERT

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this Report to be signed on its behalf by the undersigned, there unto duly authorized.

Legg Mason Partners Municipal Funds

By:	/s/ R. Jay Gerken
	(R. Jay Gerken)
	Chief Executive Officer of
	Legg Mason Partners Municipal Funds
Date: December 8, 2006

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By:	/s/ R. Jay Gerken
	(R. Jay Gerken)
	Chief Executive Officer of
	Legg Mason Partners Municipal Funds
Date: December 8, 2006
By:	/s/ Robert J. Brault
	(Robert J. Brault)
	Chief Financial Officer of
	Legg Mason Partners Municipal Funds
Date: December 8, 2006