-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IFr3vZEaLjZ6zNsfxlZnmAbGMg1WHO8F5scONf0Ro0QcUeUheUViM61zNxjv47tJ bRHko/h9qi31jRdGZ1K2tA== 0000914851-07-000130.txt : 20070327 0000914851-07-000130.hdr.sgml : 20070327 20070327143907 ACCESSION NUMBER: 0000914851-07-000130 CONFORMED SUBMISSION TYPE: NSAR-B/A PUBLIC DOCUMENT COUNT: 26 CONFORMED PERIOD OF REPORT: 20061231 FILED AS OF DATE: 20070327 DATE AS OF CHANGE: 20070327 EFFECTIVENESS DATE: 20070327 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LEGG MASON PARTNERS INVESTMENT FUNDS, INC. CENTRAL INDEX KEY: 0000355747 IRS NUMBER: 133089608 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: NSAR-B/A SEC ACT: 1940 Act SEC FILE NUMBER: 811-03275 FILM NUMBER: 07720945 BUSINESS ADDRESS: STREET 1: 125 BROAD STREET STREET 2: 10TH FLOOR, MF-2 CITY: NEW YORK STATE: NY ZIP: 10004 BUSINESS PHONE: 800-451-2010 MAIL ADDRESS: STREET 1: 125 BROAD STREET STREET 2: 10TH FLOOR, MF-2 CITY: NEW YORK STATE: NY ZIP: 10004 FORMER COMPANY: FORMER CONFORMED NAME: SMITH BARNEY INVESTMENT FUNDS INC DATE OF NAME CHANGE: 20060105 FORMER COMPANY: FORMER CONFORMED NAME: SMITH BARNEY INVESTMENT FUNDS INC /MD/ DATE OF NAME CHANGE: 20010308 FORMER COMPANY: FORMER CONFORMED NAME: SMITH BARNEY SHEARSON INVESTMENT FUNDS INC DATE OF NAME CHANGE: 19931015 0000355747 S000008854 Legg Mason Partners Government Securities Fund C000024095 Class 1 sgvsx C000024096 Class A sgvax C000024097 Class B hgvsx C000024098 Class C sgslx C000024099 Class I sgsyx 0000355747 S000008861 Legg Mason Partners Investment Grade Bond Fund C000024115 Class A sigax C000024116 Class B hbdix C000024117 Class C sbilx C000024118 Class I sigyx 0000355747 S000008867 Legg Mason Partners Real Return Strategy Fund C000024139 Class A C000024140 Class B C000024141 Class C C000024142 Class Y NSAR-B/A 1 amendanswer.fil PAGE 1 000 B000000 12/31/2006 000 C000000 355747 000 D000000 N 000 E000000 NF 000 F000000 Y 000 G000000 Y 000 H000000 N 000 I000000 6.1 000 J000000 A 001 A000000 LEGG MASON PARTNERS INVESTMENT FUNDS, INC. 001 B000000 811-3275 001 C000000 8004512010 002 A000000 125 BROAD STREET 002 B000000 NEW YORK 002 C000000 NY 002 D010000 10004 003 000000 N 004 000000 N 005 000000 N 006 000000 N 007 A000000 Y 007 B000000 2 007 C010100 1 007 C020100 LMP Investment Grade Bond Fund 007 C030100 N 007 C010200 2 007 C020200 LMP Government Securities Fund 007 C030200 N 007 C011300 13 007 C021300 LMP Real Return Strategy Fund 007 C031300 Y 008 A000101 LEGG MASON PARTNERS FUND ADVISOR, LLC 008 B000101 A 008 C000101 801-66785 008 D010101 NEW YORK 008 D020101 NY 008 D030101 10022 008 A000102 WESTERN ASSET MANAGEMENT COMPANY 008 B000102 S 008 C000102 801-00000 008 D010102 PASADENA 008 D020102 CA 008 D030102 91105 008 A000201 LEGG MASON PARTNERS FUND ADVISOR, LLC 008 B000201 A 008 C000201 801-66785 008 D010201 NEW YORK 008 D020201 NY 008 D030201 10022 008 A000202 WESTERN ASSET MANAGEMENT COMPANY 008 B000202 S PAGE 2 008 C000202 801-00000 008 D010202 PASADENA 008 D020202 CA 008 D030202 91105 008 A001301 LEGG MASON PARTNERS FUND ADVISOR, LLC 008 B001301 A 008 C001301 801-66785 008 D011301 NEW YORK 008 D021301 NY 008 D031301 10022 008 A001302 WESTERN ASSET MANAGEMENT COMPANY 008 B001302 S 008 C001302 801-00000 008 D011302 PASADENA 008 D021302 CA 008 D031302 91105 008 A001303 CLEARBRIDGE ADVISORS, LLC 008 B001303 S 008 C001303 801-64710 008 D011303 NEW YORK 008 D021303 NY 008 D031303 10022 008 A001304 BATTERYMARCH FINANCIAL MANAGEMENT, INC. 008 B001304 S 008 C001304 801-0000 008 D011304 BOSTON 008 D021304 MA 008 D031304 02216 011 A000101 CITIGROUP GLOBAL MARKETS INC. 011 B000101 8-8177 011 C010101 NEW YORK 011 C020101 NY 011 C030101 10013 011 A000102 PFS INVESTMENTS INC. 011 B000102 8-26486 011 C010102 DULUTH 011 C020102 GA 011 C030102 30099 011 A000103 LEGG MASON INVESTOR SERVICES, LLC 011 B000103 8-016767 011 C010103 BALTIMORE 011 C020103 MD 011 C030103 21202 011 A000201 CITIGROUP GLOBAL MARKETS INC. 011 B000201 8-8177 011 C010201 NEW YORK 011 C020201 NY 011 C030201 10013 011 A000202 PFS INVESTMENTS INC. 011 B000202 8-26486 011 C010202 DULUTH PAGE 3 011 C020202 GA 011 C030202 30099 011 A000203 LEGG MASON INVESTOR SERVICES, LLC 011 B000203 8-016767 011 C010203 BALTIMORE 011 C020203 MD 011 C030203 21202 011 A001301 CITIGROUP GLOBAL MARKETS INC. 011 B001301 8-8177 011 C011301 NEW YORK 011 C021301 NY 011 C031301 10013 011 A001302 LEGG MASON INVESTOR SERVICES, LLC 011 B001302 8-016767 011 C011302 BALTIMORE 011 C021302 MD 011 C031302 21202 012 A00AA01 PFPC INC. 012 B00AA01 84-1761 012 C01AA01 WESTBOROUGH 012 C02AA01 MA 012 C03AA01 01581 013 A00AA01 KPMG LLP 013 B01AA01 NEW YORK 013 B02AA01 NY 013 B03AA01 10154 014 A00AA01 LEGG MASON INVESTOR SERVICES, LLC 014 B00AA01 8-016767 015 A00AA01 STATE STREET BANK AND TRUST COMPANY 015 B00AA01 C 015 C01AA01 BOSTON 015 C02AA01 MA 015 C03AA01 02110 015 E01AA01 X 018 00AA00 Y 019 A00AA00 Y 019 B00AA00 162 019 C00AA00 LMPARTNERS 020 A000001 CREDIT SUISSE SECURITIES (USA) LLC 020 B000001 13-1898818 020 C000001 5 020 A000002 LEHMAN BROTHERS INC. 020 B000002 13-2518466 020 C000002 4 020 A000003 JPMORGAN CHASE & CO. 020 B000003 13-3224016 020 C000003 3 020 A000004 UBS SECURITIES LLC 020 B000004 13-3873456 020 C000004 3 020 A000005 MACQUARIE SECURITIES, INC. PAGE 4 020 B000005 98-0141094 020 C000005 2 020 A000006 INVESTMENT TECHNOLOGY GROUP, INC. 020 B000006 13-3757717 020 C000006 2 020 A000007 MERRILL LYNCH, PIERCE, FENNER & SMITH, INC. 020 B000007 13-5674085 020 C000007 2 020 A000008 PIPER JAFFRAY & CO. 020 B000008 41-0953246 020 C000008 1 020 A000009 DEUTSCHE BANK SECURITIES, INC. 020 B000009 13-2730828 020 C000009 1 020 A000010 INSTINET CORP. 020 B000010 12-0596491 020 C000010 1 021 000000 33 022 A000001 NOMURA SECURITIES INTERNATIONAL, INC. 022 B000001 13-2642206 022 C000001 16854893 022 D000001 0 022 A000002 MERRILL LYNCH, PIERCE, FENNER & SMITH, INC. 022 B000002 13-5674085 022 C000002 14340703 022 D000002 95064 022 A000003 BANC OF AMERICA SECURITIES LLC 022 B000003 56-2058405 022 C000003 2741861 022 D000003 701243 022 A000004 MORGAN STANLEY 022 B000004 13-2655998 022 C000004 1691012 022 D000004 1199884 022 A000005 LEHMAN BROTHERS INC. 022 B000005 13-2518466 022 C000005 898004 022 D000005 908447 022 A000006 JPMORGAN CHASE & CO. 022 B000006 13-3224016 022 C000006 908717 022 D000006 890056 022 A000007 GOLDMAN SACHS & CO. 022 B000007 13-5108880 022 C000007 1179137 022 D000007 227373 022 A000008 GREENWICH CAPITAL MARKETS, INC. 022 B000008 13-3172275 022 C000008 1129525 022 D000008 0 022 A000009 CREDIT SUISSE SECURITIES (USA) LLC PAGE 5 022 B000009 13-1898818 022 C000009 238513 022 D000009 220433 022 A000010 DEUTSCHE BANK SECURITIES, INC. 022 B000010 13-2730828 022 C000010 307822 022 D000010 101669 023 C000000 41290885 023 D000000 5219965 024 000100 Y 024 000200 Y 024 001300 N 025 A000101 JPMORGAN CHASE & CO. 025 B000101 13-3224016 025 C000101 D 025 D000101 11894 025 A000102 UBS SECURITIES LLC 025 B000102 13-3873456 025 C000102 D 025 D000102 7552 025 A000103 LEHMAN BROTHERS INC. 025 B000103 13-2518466 025 C000103 D 025 D000103 5348 025 A000104 WACHOVIA SECURITIES LLC 025 B000104 34-1542819 025 C000104 D 025 D000104 5002 025 A000105 BEAR STEARNS & CO., INC. 025 B000105 13-3299429 025 C000105 D 025 D000105 3934 025 A000106 GOLDMAN SACHS & CO. 025 B000106 13-5108880 025 C000106 D 025 D000106 3554 025 A000201 BANC OF AMERICA SECURITIES LLC 025 B000201 56-2058405 025 C000201 D 025 D000201 5152 025 A000202 MORGAN STANLEY 025 B000202 13-2655998 025 C000202 D 025 D000202 2647 025 A000203 CREDIT SUISSE SECURITIES (USA) LLC 025 B000203 13-1898818 025 C000203 D 025 D000203 1284 025 D001301 0 026 A000000 N 026 B000000 Y PAGE 6 026 C000000 N 026 D000000 Y 026 E000000 N 026 F000000 N 026 G010000 N 026 G020000 N 026 H000000 N 027 000000 Y 028 A010100 9446 028 A020100 0 028 A030100 0 028 A040100 12841 028 B010100 9158 028 B020100 2168 028 B030100 0 028 B040100 18814 028 C010100 8884 028 C020100 4559 028 C030100 0 028 C040100 188327 028 D010100 11745 028 D020100 2220 028 D030100 0 028 D040100 13392 028 E010100 11816 028 E020100 0 028 E030100 0 028 E040100 13055 028 F010100 14252 028 F020100 4606 028 F030100 0 028 F040100 15513 028 G010100 65301 028 G020100 13553 028 G030100 0 028 G040100 261942 028 H000100 29248 028 A010200 4474 028 A020200 0 028 A030200 0 028 A040200 10007 028 B010200 5406 028 B020200 1867 028 B030200 0 028 B040200 11686 028 C010200 4066 028 C020200 3952 028 C030200 0 028 C040200 12432 028 D010200 4855 028 D020200 2051 PAGE 7 028 D030200 0 028 D040200 9190 028 E010200 4883 028 E020200 0 028 E030200 0 028 E040200 9348 028 F010200 3823 028 F020200 4495 028 F030200 0 028 F040200 10644 028 G010200 27507 028 G020200 12365 028 G030200 0 028 G040200 63307 028 H000200 18215 028 A011300 25 028 A021300 0 028 A031300 0 028 A041300 2662 028 B011300 1 028 B021300 0 028 B031300 0 028 B041300 641 028 C011300 1 028 C021300 150 028 C031300 0 028 C041300 738 028 D011300 17 028 D021300 0 028 D031300 0 028 D041300 2766 028 E011300 23 028 E021300 0 028 E031300 0 028 E041300 349 028 F011300 1 028 F021300 0 028 F031300 0 028 F041300 20969 028 G011300 68 028 G021300 150 028 G031300 0 028 G041300 28125 028 H001300 49 029 000100 Y 029 000200 Y 029 001300 Y 030 A000100 7 030 B000100 4.25 030 C000100 0.00 030 A000200 2 PAGE 8 030 B000200 6.75 030 C000200 0.00 030 A001300 0 030 B001300 5.75 030 C001300 0.00 031 A000100 1 031 B000100 0 031 A000200 0 031 B000200 0 031 A001300 0 031 B001300 0 032 000100 0 032 000200 0 032 001300 0 033 000100 6 033 000200 2 033 001300 0 034 000100 Y 034 000200 Y 034 001300 Y 035 000100 107 035 000200 39 035 001300 0 036 A000100 N 036 B000100 0 036 A000200 N 036 B000200 0 036 A001300 N 036 B001300 0 037 000100 N 037 000200 N 037 001300 N 038 000100 0 038 000200 0 038 001300 0 039 000100 Y 039 000200 Y 039 001300 Y 040 000100 Y 040 000200 Y 040 001300 Y 041 000100 Y 041 000200 Y 041 001300 Y 042 A000100 0 042 B000100 0 042 C000100 100 042 D000100 0 042 E000100 0 042 F000100 0 042 G000100 0 PAGE 9 042 H000100 0 042 A000200 0 042 B000200 0 042 C000200 100 042 D000200 0 042 E000200 0 042 F000200 0 042 G000200 0 042 H000200 0 042 A001300 0 042 B001300 0 042 C001300 100 042 D001300 0 042 E001300 0 042 F001300 0 042 G001300 0 042 H001300 0 043 000100 2626 043 000200 1481 043 001300 0 044 000100 0 044 000200 0 044 001300 0 045 000100 Y 045 000200 Y 045 001300 Y 046 000100 N 046 000200 N 046 001300 N 047 000100 Y 047 000200 Y 047 001300 Y 048 000100 0.000 048 A010100 500000 048 A020100 0.650 048 B010100 0 048 B020100 0.000 048 C010100 0 048 C020100 0.000 048 D010100 0 048 D020100 0.000 048 E010100 0 048 E020100 0.000 048 F010100 0 048 F020100 0.000 048 G010100 0 048 G020100 0.000 048 H010100 0 048 H020100 0.000 048 I010100 0 048 I020100 0.000 PAGE 10 048 J010100 0 048 J020100 0.000 048 K010100 500000 048 K020100 0.600 048 000200 0.000 048 A010200 2000000 048 A020200 0.550 048 B010200 2000000 048 B020200 0.500 048 C010200 2000000 048 C020200 0.450 048 D010200 2000000 048 D020200 0.400 048 E010200 0 048 E020200 0.000 048 F010200 0 048 F020200 0.000 048 G010200 0 048 G020200 0.000 048 H010200 0 048 H020200 0.000 048 I010200 0 048 I020200 0.000 048 J010200 0 048 J020200 0.000 048 K010200 8000000 048 K020200 0.350 048 001300 0.650 048 A011300 0 048 A021300 0.000 048 B011300 0 048 B021300 0.000 048 C011300 0 048 C021300 0.000 048 D011300 0 048 D021300 0.000 048 E011300 0 048 E021300 0.000 048 F011300 0 048 F021300 0.000 048 G011300 0 048 G021300 0.000 048 H011300 0 048 H021300 0.000 048 I011300 0 048 I021300 0.000 048 J011300 0 048 J021300 0.000 048 K011300 0 048 K021300 0.000 049 000100 N PAGE 11 049 000200 N 049 001300 N 050 000100 N 050 000200 N 050 001300 N 051 000100 N 051 000200 N 051 001300 N 052 000100 N 052 000200 N 052 001300 N 053 A000100 Y 053 B000100 N 053 C000100 N 053 A000200 Y 053 B000200 N 053 C000200 N 053 A001300 Y 053 B001300 Y 053 C001300 N 054 A00AA00 Y 054 B00AA00 Y 054 C00AA00 Y 054 D00AA00 N 054 E00AA00 N 054 F00AA00 N 054 G00AA00 Y 054 H00AA00 Y 054 I00AA00 N 054 J00AA00 Y 054 K00AA00 N 054 L00AA00 Y 054 M00AA00 Y 054 N00AA00 N 054 O00AA00 Y 055 A000100 N 055 B000100 N 055 A000200 N 055 B000200 N 055 A001300 N 055 B001300 N 056 000100 N 056 000200 N 056 001300 N 057 000100 N 057 000200 N 057 001300 N 058 A000100 N 058 A000200 N 058 A001300 N 059 000100 Y PAGE 12 059 000200 Y 059 001300 Y 060 A000100 Y 060 B000100 Y 060 A000200 Y 060 B000200 Y 060 A001300 N 060 B001300 N 061 000100 500 061 000200 500 061 001300 500 062 A000100 Y 062 B000100 0.0 062 C000100 0.0 062 D000100 7.1 062 E000100 0.0 062 F000100 0.0 062 G000100 0.0 062 H000100 0.0 062 I000100 0.0 062 J000100 0.0 062 K000100 0.0 062 L000100 0.0 062 M000100 16.4 062 N000100 0.0 062 O000100 0.2 062 P000100 71.9 062 Q000100 3.1 062 R000100 0.0 062 A000200 Y 062 B000200 0.0 062 C000200 2.9 062 D000200 3.7 062 E000200 0.0 062 F000200 0.0 062 G000200 0.0 062 H000200 0.0 062 I000200 0.0 062 J000200 0.0 062 K000200 0.0 062 L000200 0.0 062 M000200 0.0 062 N000200 0.2 062 O000200 0.0 062 P000200 0.0 062 Q000200 123.0 062 R000200 0.0 062 A001300 N 062 B001300 0.0 062 C001300 0.0 062 D001300 0.0 PAGE 13 062 E001300 0.0 062 F001300 0.0 062 G001300 0.0 062 H001300 0.0 062 I001300 0.0 062 J001300 0.0 062 K001300 0.0 062 L001300 0.0 062 M001300 0.0 062 N001300 0.0 062 O001300 0.0 062 P001300 0.0 062 Q001300 0.0 062 R001300 0.0 063 A000100 0 063 B000100 10.5 063 A000200 0 063 B000200 6.4 063 A001300 0 063 B001300 0.0 064 A000100 Y 064 B000100 N 064 A000200 Y 064 B000200 N 066 A000100 N 066 A000200 N 066 A001300 Y 067 000100 N 067 000200 N 067 001300 N 068 A000100 N 068 B000100 N 068 A000200 N 068 B000200 N 068 A001300 N 068 B001300 N 069 000100 N 069 000200 N 069 001300 N 070 A010100 Y 070 A020100 Y 070 B010100 N 070 B020100 N 070 C010100 Y 070 C020100 N 070 D010100 N 070 D020100 N 070 E010100 Y 070 E020100 Y 070 F010100 N 070 F020100 N PAGE 14 070 G010100 Y 070 G020100 N 070 H010100 N 070 H020100 N 070 I010100 N 070 I020100 N 070 J010100 Y 070 J020100 Y 070 K010100 N 070 K020100 N 070 L010100 Y 070 L020100 Y 070 M010100 N 070 M020100 N 070 N010100 Y 070 N020100 N 070 O010100 Y 070 O020100 N 070 P010100 Y 070 P020100 Y 070 Q010100 N 070 Q020100 N 070 R010100 Y 070 R020100 N 070 A010200 Y 070 A020200 Y 070 B010200 N 070 B020200 N 070 C010200 Y 070 C020200 Y 070 D010200 N 070 D020200 N 070 E010200 Y 070 E020200 N 070 F010200 N 070 F020200 N 070 G010200 Y 070 G020200 N 070 H010200 N 070 H020200 N 070 I010200 N 070 I020200 N 070 J010200 Y 070 J020200 Y 070 K010200 N 070 K020200 N 070 L010200 N 070 L020200 N 070 M010200 N 070 M020200 N 070 N010200 N PAGE 15 070 N020200 N 070 O010200 N 070 O020200 N 070 P010200 N 070 P020200 N 070 Q010200 N 070 Q020200 N 070 R010200 N 070 R020200 N 070 A011300 Y 070 A021300 N 070 B011300 Y 070 B021300 N 070 C011300 Y 070 C021300 N 070 D011300 Y 070 D021300 N 070 E011300 Y 070 E021300 N 070 F011300 Y 070 F021300 N 070 G011300 Y 070 G021300 N 070 H011300 Y 070 H021300 N 070 I011300 Y 070 I021300 N 070 J011300 Y 070 J021300 N 070 K011300 Y 070 K021300 N 070 L011300 Y 070 L021300 N 070 M011300 Y 070 M021300 N 070 N011300 Y 070 N021300 N 070 O011300 N 070 O021300 N 070 P011300 Y 070 P021300 N 070 Q011300 Y 070 Q021300 N 070 R011300 Y 070 R021300 N 071 A000100 822560 071 B000100 1035401 071 C000100 879535 071 D000100 94 071 A000200 1898744 071 B000200 1819676 PAGE 16 071 C000200 685135 071 D000200 266 071 A001300 0 071 B001300 0 071 C001300 0 071 D001300 0 072 A000100 12 072 B000100 53002 072 C000100 0 072 D000100 0 072 E000100 0 072 F000100 5678 072 G000100 0 072 H000100 0 072 I000100 1316 072 J000100 4 072 K000100 0 072 L000100 101 072 M000100 29 072 N000100 66 072 O000100 0 072 P000100 0 072 Q000100 0 072 R000100 31 072 S000100 28 072 T000100 2626 072 U000100 0 072 V000100 0 072 W000100 152 072 X000100 10031 072 Y000100 42 072 Z000100 43013 072AA000100 0 072BB000100 7808 072CC010100 0 072CC020100 12837 072DD010100 22440 072DD020100 23448 072EE000100 0 072 A000200 12 072 B000200 30540 072 C000200 0 072 D000200 0 072 E000200 0 072 F000200 3249 072 G000200 0 072 H000200 0 072 I000200 742 072 J000200 5 072 K000200 0 072 L000200 64 PAGE 17 072 M000200 24 072 N000200 66 072 O000200 0 072 P000200 0 072 Q000200 0 072 R000200 31 072 S000200 12 072 T000200 1481 072 U000200 0 072 V000200 0 072 W000200 141 072 X000200 5815 072 Y000200 31 072 Z000200 24756 072AA000200 0 072BB000200 7382 072CC010200 4939 072CC020200 0 072DD010200 14899 072DD020200 12454 072EE000200 0 072 A001300 12 072 B001300 0 072 C001300 0 072 D001300 0 072 E001300 0 072 F001300 0 072 G001300 0 072 H001300 0 072 I001300 0 072 J001300 0 072 K001300 0 072 L001300 0 072 M001300 0 072 N001300 0 072 O001300 0 072 P001300 0 072 Q001300 0 072 R001300 0 072 S001300 0 072 T001300 0 072 U001300 0 072 V001300 0 072 W001300 0 072 X001300 0 072 Y001300 0 072 Z001300 0 072AA001300 0 072BB001300 0 072CC011300 0 072CC021300 0 PAGE 18 072DD011300 0 072DD021300 0 072EE001300 0 073 A010100 0.0000 073 A020100 0.0000 073 B000100 0.0000 073 C000100 0.0000 073 A010200 0.0000 073 A020200 0.0000 073 B000200 0.0000 073 C000200 0.0000 073 A011300 0.0000 073 A021300 0.0000 073 B001300 0.0000 073 C001300 0.0000 074 A000100 1 074 B000100 56138 074 C000100 254 074 D000100 722830 074 E000100 0 074 F000100 0 074 G000100 0 074 H000100 0 074 I000100 0 074 J000100 0 074 K000100 7 074 L000100 13840 074 M000100 45 074 N000100 793115 074 O000100 0 074 P000100 510 074 Q000100 0 074 R010100 0 074 R020100 0 074 R030100 0 074 R040100 3138 074 S000100 0 074 T000100 789467 074 U010100 35736 074 U020100 29259 074 V010100 0.00 074 V020100 0.00 074 W000100 0.0000 074 X000100 57425 074 Y000100 23975 074 A000200 0 074 B000200 21254 074 C000200 16283 074 D000200 700827 074 E000200 0 074 F000200 0 PAGE 19 074 G000200 0 074 H000200 0 074 I000200 0 074 J000200 0 074 K000200 0 074 L000200 3641 074 M000200 40 074 N000200 742045 074 O000200 171305 074 P000200 317 074 Q000200 0 074 R010200 0 074 R020200 0 074 R030200 0 074 R040200 1408 074 S000200 0 074 T000200 569015 074 U010200 32324 074 U020200 26534 074 V010200 0.00 074 V020200 0.00 074 W000200 0.0000 074 X000200 42451 074 Y000200 285388 074 A001300 32 074 B001300 0 074 C001300 0 074 D001300 0 074 E001300 0 074 F001300 0 074 G001300 0 074 H001300 0 074 I001300 0 074 J001300 0 074 K001300 0 074 L001300 9 074 M001300 0 074 N001300 41 074 O001300 0 074 P001300 28 074 Q001300 0 074 R011300 0 074 R021300 0 074 R031300 0 074 R041300 13 074 S001300 0 074 T001300 0 074 U011300 0 074 U021300 0 074 V011300 0.00 074 V021300 0.00 PAGE 20 074 W001300 0.0000 074 X001300 0 074 Y001300 0 075 A000100 0 075 B000100 905862 075 A000200 0 075 B000200 591952 075 A001300 0 075 B001300 0 076 000100 0.00 076 000200 0.00 076 001300 0.00 077 A000000 Y 077 B000000 Y 077 C000000 Y 077 D000000 N 077 E000000 N 077 F000000 N 077 G000000 N 077 H000000 N 077 I000000 N 077 J000000 N 077 K000000 N 077 L000000 N 077 M000000 N 077 N000000 N 077 O000000 N 077 P000000 N 077 Q010000 Y 077 Q020000 N 077 Q030000 N 078 000000 N 080 A00AA00 ICI Mutual Insurance Co. 080 C00AA00 145000 081 A00AA00 Y 081 B00AA00 160 082 A00AA00 Y 082 B00AA00 100 083 A00AA00 N 083 B00AA00 0 084 A00AA00 N 084 B00AA00 0 085 A00AA00 Y 085 B00AA00 N 086 A010000 0 086 A020000 0 086 B010000 0 086 B020000 0 086 C010000 0 086 C020000 0 086 D010000 0 PAGE 21 086 D020000 0 086 E010000 0 086 E020000 0 086 F010000 0 086 F020000 0 SIGNATURE JENNIFER ROBERTS TITLE ACC'TG MANAGER EX-99.77B ACCT LTTR 2 item77b.txt Report of Independent Registered Public Accounting Firm The Board of Directors Legg Mason Partners Investment Funds, Inc.: In planning and performing our audits of the financial statements of Legg Mason Partners Investment Grade Bond Fund (formerly Smith Barney Investment Grade Bond Fund) and Legg Mason Partners Government Securities Fund (formerly Smith Barney Government Securities Fund), each a series of Legg Mason Partners Investment Funds, Inc. (formerly Smith Barney Investment Funds Inc.), as of and for the year ended December 31, 2006, in accordance with the standards of the Public Company Accounting Oversight Board (United States), we considered its internal control over financial reporting, including control activities for safeguarding securities, as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements and to comply with the requirements of Form N- SAR, but not for the purpose of expressing an opinion on the effectiveness of the Trust's internal control over financial reporting. Accordingly, we express no such opinion. The management of the Trust is responsible for establishing and maintaining effective internal control over financial reporting. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of controls. A fund's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Such internal control includes policies and procedures that provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of a fund's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the fund's ability to initiate, authorize, record, process or report external financial data reliably in accordance with U.S. generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the fund's annual or interim financial statements that is more than inconsequential will not be prevented or detected. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. Our consideration of the Trust's internal control over financial reporting was for the limited purpose described in the first paragraph and would not necessarily disclose all deficiencies in internal control that might be significant deficiencies or material weaknesses under standards established by the Public Company Accounting Oversight Board (United States). However, we noted no deficiencies in the Trust's internal control over financial reporting and its operation, including controls for safeguarding securities, that we consider to be a material weakness as defined above as of December 31, 2006. This report is intended solely for the information and use of management and the of Board Legg Mason Partners Investment Funds, Inc. and the Securities and Exchange Commission and is not intended to be and should not be used by anyone other than these specified parties. New York, New York February 26, 2007 EX-99.77C VOTES 3 item77ca.txt LEGG MASON PARTNERS INVESTMENT FUNDS, INC. LMP Government Securities Fund Inc. Sub-Item 77C Registrant incorporates by reference Registrant's Additional definitive proxy soliciting materials and rule 14(a)(12) material dated January 12, 2007 filed on January 12, 2007. (Accession No. 0001193125-07-005917) EX-99.77C VOTES 4 item77cb.txt LEGG MASON PARTNERS INVESTMENT FUNDS, INC. Sub-Item 77C Registrant incorporates by reference Registrant's Additional definitive proxy soliciting materials and rule 14(a)(12) material dated Decemeber 20, 2006 filed on Decemeber 20,2006. (Accession No. 0001193125-06-257189) EX-99.77C VOTES 5 item77cc.txt LEGG MASON PARTNERS INVESTMENT FUNDS, INC. LMP Government Securities Fund Inc. LMP Investment Grade Bond Fund Inc. Sub-Item 77C Registrant incorporates by reference Registrant's Additional definitive proxy soliciting materials and rule 14(a)(12) material dated December 11, 2006 filed on December 11, 2006. (Accession No. 0001193125-06-250518) EX-99.77C VOTES 6 item77cd.txt LEGG MASON PARTNERS INVESTMENT FUNDS, INC. Sub-Item 77C Registrant incorporates by reference Registrant's Additional definitive proxy soliciting materials and rule 14(a)(12) material dated Decemeber 6, 2006 filed on Decemeber 6,2006. (Accession No. 0001193125-06-247839) EX-99.77C VOTES 7 item77ce.txt LEGG MASON PARTNERS INVESTMENT FUNDS, INC. Sub-Item 77C Registrant incorporates by reference Registrant's Additional definitive proxy soliciting materials and rule 14(a)(12) material dated November 22, 2006 filed on November 22,2006. (Accession No. 0001193125-06-241087) EX-99.77C VOTES 8 item77cf.txt LEGG MASON PARTNERS INVESTMENT FUNDS, INC. Sub-Item 77C Registrant incorporates by reference Registrant's Additional definitive proxy soliciting materials and rule 14(a)(12) material dated November 17, 2006 filed on November 17,2006. (Accession No. 0001193125-06-238151) EX-99.77C VOTES 9 item77cg.txt LEGG MASON PARTNERS INVESTMENT FUNDS, INC. LMP Government Securities Fund Inc. LMP Investment Grade Bond Fund Inc. Sub-Item 77C Registrant incorporates by reference Registrant's Additional definitive proxy soliciting materials and rule 14(a)(12) material dated October 30, 2006 filed on October 30, 2006. (Accession No. 0001193125-06-217930) EX-99.77C VOTES 10 item77ch.txt LEGG MASON PARTNERS INVESTMENT FUNDS, INC. LMP Government Securities Fund Inc. Sub-Item 77C Registrant incorporates by reference Registrant's Additional definitive proxy soliciting materials and rule 14(a)(12) material dated October 20, 2006 filed on October 20, 2006. (Accession No. 0001193125-06-211749) EX-99.77C VOTES 11 item77ci.txt LEGG MASON PARTNERS INVESTMENT FUNDS, INC. LMP Government Securities Fund Inc. Sub-Item 77C Registrant incorporates by reference Registrant's Additional definitive proxy soliciting materials and rule 14(a)(12) material dated October 20, 2006 filed on October 20, 2006. (Accession No. 0001193125-06-211740) EX-99.77C VOTES 12 item77cj.txt LEGG MASON PARTNERS INVESTMENT FUNDS, INC. LMP Government Securities Fund Inc. Sub-Item 77C Registrant incorporates by reference Registrant's Additional definitive proxy soliciting materials and rule 14(a)(12) material dated October 20, 2006 filed on October 20, 2006. (Accession No. 0001193125-06-211737) EX-99.77C VOTES 13 item77ck.txt LEGG MASON PARTNERS INVESTMENT FUNDS, INC. LMP Government Securities Fund Inc. LMP Investment Grade Bond Fund Inc. LMP Real Return Strategy Fund Inc. Sub-Item 77C Registrant incorporates by reference Registrant's Additional definitive proxy soliciting materials and rule 14(a)(12) material dated October 19, 2006 filed on October 19, 2006. (Accession No. 0001193125-06-210895) EX-99.77C VOTES 14 item77cl.txt LEGG MASON PARTNERS INVESTMENT FUNDS, INC. LMP Government Securities Fund Inc. LMP Investment Grade Bond Fund Inc. Sub-Item 77C Registrant incorporates by reference Registrant's Other definitive proxy statements dated October 6, 2006 filed on October 6, 2006. (Accession No. 0001193125-06-203842) EX-99.77C VOTES 15 item77cm.txt LEGG MASON PARTNERS INVESTMENT FUNDS, INC. LMP Government Securities Fund Inc. Sub-Item 77C Registrant incorporates by reference Registrant's Additional definitive proxy soliciting materials and rule 14(a)(12) material dated October 3,2006 filed on October 3,2006. (Accession No. 0001193125-06-201783) EX-99.77C VOTES 16 item77cn.txt LEGG MASON PARTNERS INVESTMENT FUNDS, INC. Sub-Item 77C Registrant incorporates by reference Registrant's Additional definitive proxy soliciting materials and rule 14(a)(12) material dated September 25,2006 filed on September 25,2006. (Accession No. 0001193125-06-196323) EX-99.77C VOTES 17 item77co.txt LEGG MASON PARTNERS INVESTMENT FUNDS, INC. LMP Government Securities Fund Inc. Sub-Item 77C Registrant incorporates by reference Registrant's Additional definitive proxy soliciting materials and rule 14(a)(12) material dated September 25,2006 filed on September 25,2006. (Accession No. 0001193125-06-196297) EX-99.77C VOTES 18 item77cp.txt LEGG MASON PARTNERS INVESTMENT FUNDS, INC. LMP Government Securities Fund Inc. LMP Investment Grade Bond Fund Inc. LMP Real Return Strategy Fund Inc. Sub-Item 77C Registrant incorporates by reference Registrant's Proxy Statement Pursuant to Section 14a of the Securities Exchange Act of 1934 dated August 7, 2006 filed on August 7,2006. (Accession No. 0001193125-06-163709) EX-99.77Q1 OTHR EXHB 19 item77q1a.txt MANAGEMENT AGREEMENT Legg Mason Partners Fund Advisor, LLC This MANAGEMENT AGREEMENT ("Agreement") is made this 1st day of August, 2006, by and between Legg Mason Partners Investment Funds, Inc. (the "Corporation") and Legg Mason Partners Fund Advisor, LLC, a Delaware limited liability company (the "Manager"). WHEREAS, the Corporation is registered as a management investment company under the Investment Company Act of 1940, as amended (the "1940 Act"); WHEREAS, the Manager is engaged primarily in rendering investment advisory, management and administrative services and is registered as an investment adviser under the Investment Advisers Act of 1940, as amended; WHEREAS, the Corporation wishes to retain the Manager to provide investment advisory, management, and administrative services to the Corporation with respect to the series of the Corporation designated in Schedule A annexed hereto (the "Fund"); and WHEREAS, the Manager is willing to furnish such services on the terms and conditions hereinafter set forth; NOW THEREFORE, in consideration of the promises and mutual covenants herein contained, it is agreed as follows: 1. The Corporation hereby appoints the Manager to act as investment adviser and administrator of the Fund for the period and on the terms set forth in this Agreement. The Manager accepts such appointment and agrees to render the services herein set forth, for the compensation herein provided. 2. The Fund shall at all times keep the Manager fully informed with regard to the securities owned by it, its funds available, or to become available, for investment, and generally as to the condition of its affairs. It shall furnish the Manager with such other documents and information with regard to its affairs as the Manager may from time to time reasonably request. 3. (a) Subject to the supervision of the Corporation's Board of Directors (the "Board"), the Manager shall regularly provide the Fund with investment research, advice, management and supervision and shall furnish a continuous investment program for the Fund's portfolio of securities and other investments consistent with the Fund's investment objectives, policies and restrictions, as stated in the Fund's current Prospectus and Statement of Additional Information. The Manager shall determine from time to time what securities and other investments will be purchased, retained, sold or exchanged by the Fund and what portion of the assets of the Fund's portfolio will be held in the various securities and other investments in which the Fund invests, and shall implement those decisions, all subject to the provisions of the Corporation's Articles of Incorporation and By- Laws (collectively, the "Governing Documents"), the 1940 Act, and the applicable rules and regulations promulgated thereunder by the Securities and Exchange Commission (the "SEC") and interpretive guidance issued thereunder by the SEC staff and any other applicable federal and state law, as well as the investment objectives, policies and restrictions of the Fund referred to above, and any other specific policies adopted by the Board and disclosed to the Manager. The Manager is authorized as the agent of the Corporation to give instructions to the custodian of the Fund as to deliveries of securities and other investments and payments of cash for the account of the Fund. Subject to applicable provisions of the 1940 Act and direction from the Board, the investment program to be provided hereunder may entail the investment of all or substantially all of the assets of a Fund in one or more investment companies. The Manager will place orders pursuant to its investment determinations for the Fund either directly with the issuer or with any broker or dealer, foreign currency dealer, futures commission merchant or others selected by it. In connection with the selection of such brokers or dealers and the placing of such orders, subject to applicable law, brokers or dealers may be selected who also provide brokerage and research services (as those terms are defined in Section 28(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) to the Funds and/or the other accounts over which the Manager or its affiliates exercise investment discretion. The Manager is authorized to pay a broker or dealer who provides such brokerage and research services a commission for executing a portfolio transaction for a Fund which is in excess of the amount of commission another broker or dealer would have charged for effecting that transaction if the Manager determines in good faith that such amount of commission is reasonable in relation to the value of the brokerage and research services provided by such broker or dealer. This determination may be viewed in terms of either that particular transaction or the overall responsibilities which the Manager and its affiliates have with respect to accounts over which they exercise investment discretion. The Board may adopt policies and procedures that modify and restrict the Manager's authority regarding the execution of the Fund's portfolio transactions provided herein. The Manager shall also provide advice and recommendations with respect to other aspects of the business and affairs of the Fund, shall exercise voting rights, rights to consent to corporate action and any other rights pertaining to a Fund's portfolio securities subject to such direction as the Board may provide, and shall perform such other functions of investment management and supervision as may be directed by the Board. (b) Subject to the direction and control of the Board, the Manager shall perform such administrative and management services as may from time to time be reasonably requested by the Fund as necessary for the operation of the Fund, such as (i) supervising the overall administration of the Fund, including negotiation of contracts and fees with and the monitoring of performance and billings of the Fund's transfer agent, shareholder servicing agents, custodian and other independent contractors or agents, (ii) providing certain compliance, fund accounting, regulatory reporting, and tax reporting services, (iii) preparing or participating in the preparation of Board materials, registration statements, proxy statements and reports and other communications to shareholders, (iv) maintaining the Fund's existence, and (v) during such times as shares are publicly offered, maintaining the registration and qualification of the Fund's shares under federal and state laws. Notwithstanding the foregoing, the Manager shall not be deemed to have assumed any duties with respect to, and shall not be responsible for, the distribution of the shares of any Fund, nor shall the Manager be deemed to have assumed or have any responsibility with respect to functions specifically assumed by any transfer agent, fund accounting agent, custodian, shareholder servicing agent or other agent, in each case employed by the Fund to perform such functions. (c) The Fund hereby authorizes any entity or person associated with the Manager which is a member of a national securities exchange to effect any transaction on the exchange for the account of the Fund which is permitted by Section 11(a) of the Exchange Act and Rule 11a2-2(T) thereunder, and the Fund hereby consents to the retention of compensation for such transactions in accordance with Rule 11a2-2(T)(a)(2)(iv). Notwithstanding the foregoing, the Manager agrees that it will not deal with itself, or with members of the Board or any principal underwriter of the Fund, as principals or agents in making purchases or sales of securities or other property for the account of the Fund, nor will it purchase any securities from an underwriting or selling group in which the Manager or its affiliates is participating, or arrange for purchases and sales of securities between a Fund and another account advised by the Manager or its affiliates, except in each case as permitted by the 1940 Act and in accordance with such policies and procedures as may be adopted by a Fund from time to time, and will comply with all other provisions of the Governing Documents and the Fund's then-current Prospectus and Statement of Additional Information relative to the Manager and its directors and officers. 4. Subject to the Board's approval, the Manager or the Fund may enter into contracts with one or more investment subadvisers or subadministrators, including without limitation, affiliates of the Manager, in which the Manager delegates to such investment subadvisers or subadministrators any or all its duties specified hereunder, on such terms as the Manager will determine to be necessary, desirable or appropriate, provided that in each case the Manager shall supervise the activities of each such subadviser or subadministrator and further provided that such contracts impose on any investment subadviser or subadministrator bound thereby all the conditions to which the Manager is subject hereunder and that such contracts are entered into in accordance with and meet all applicable requirements of the 1940 Act. 5. (a) The Manager, at its expense, shall supply the Board and officers of the Corporation with all information and reports reasonably required by them and reasonably available to the Manager and shall furnish the Fund with office facilities, including space, furniture and equipment and all personnel reasonably necessary for the operation of the Fund. The Manager shall oversee the maintenance of all books and records with respect to the Fund's securities transactions and the keeping of the Fund's books of account in accordance with all applicable federal and state laws and regulations. In compliance with the requirements of Rule 31a-3 under the 1940 Act, the Manager hereby agrees that any records that it maintains for the Fund are the property of the Fund, and further agrees to surrender promptly to the Fund any of such records upon the Fund's request. The Manager further agrees to arrange for the preservation of the records required to be maintained by Rule 31a-1 under the 1940 Act for the periods prescribed by Rule 31a-2 under the 1940 Act. The Manager shall authorize and permit any of its directors, officers and employees, who may be elected as Board members or officers of the Fund, to serve in the capacities in which they are elected. (b) The Manager shall bear all expenses, and shall furnish all necessary services, facilities and personnel, in connection with its responsibilities under this Agreement. Other than as herein specifically indicated, the Manager shall not be responsible for the Fund's expenses, including, without limitation, advisory fees; distribution fees; interest; taxes; governmental fees; voluntary assessments and other expenses incurred in connection with membership in investment company organizations; organization costs of the Fund; the cost (including brokerage commissions, transaction fees or charges, if any) in connection with the purchase or sale of the Fund's securities and other investments and any losses in connection therewith; fees and expenses of custodians, transfer agents, registrars, independent pricing vendors or other agents; legal expenses; loan commitment fees; expenses relating to share certificates; expenses relating to the issuing and redemption or repurchase of the Fund's shares and servicing shareholder accounts; expenses of registering and qualifying the Fund's shares for sale under applicable federal and state law; expenses of preparing, setting in print, printing and distributing prospectuses and statements of additional information and any supplements thereto, reports, proxy statements, notices and dividends to the Fund's shareholders; costs of stationery; website costs; costs of meetings of the Board or any committee thereof, meetings of shareholders and other meetings of the Fund; Board fees; audit fees; travel expenses of officers, members of the Board and employees of the Fund, if any; and the Fund's pro rata portion of premiums on any fidelity bond and other insurance covering the Fund and its officers, Board members and employees; litigation expenses and any non-recurring or extraordinary expenses as may arise, including, without limitation, those relating to actions, suits or proceedings to which the Fund is a party and the legal obligation which the Fund may have to indemnify the Fund's Board members and officers with respect thereto. 6. No member of the Board, officer or employee of the Corporation or Fund shall receive from the Corporation or Fund any salary or other compensation as such member of the Board, officer or employee while he is at the same time a director, officer, or employee of the Manager or any affiliated company of the Manager, except as the Board may decide. This paragraph shall not apply to Board members, executive committee members, consultants and other persons who are not regular members of the Manager's or any affiliated company's staff. 7. As compensation for the services performed and the facilities furnished and expenses assumed by the Manager, including the services of any consultants retained by the Manager, the Fund shall pay the Manager, as promptly as possible after the last day of each month, a fee, computed daily at an annual rate set forth opposite the Fund's name on Schedule A annexed hereto, provided however, that if the Fund invests all or substantially all of its assets in another registered investment company for which the Manager or an affiliate of the Manager serves as investment adviser or investment manager, the annual fee computed as set forth on such Schedule A shall be reduced by the aggregate management fees allocated to that Fund for the Fund's then-current fiscal year from such other registered investment company. The first payment of the fee shall be made as promptly as possible at the end of the month succeeding the effective date of this Agreement, and shall constitute a full payment of the fee due the Manager for all services prior to that date. If this Agreement is terminated as of any date not the last day of a month, such fee shall be paid as promptly as possible after such date of termination, shall be based on the average daily net assets of the Fund in that period from the beginning of such month to such date of termination, and shall be that proportion of such average daily net assets as the number of business days in such period bears to the number of business days in such month. The average daily net assets of the Fund shall in all cases be based only on business days and be computed as of the time of the regular close of business of the New York Stock Exchange, or such other time as may be determined by the Board. 8. The Manager assumes no responsibility under this Agreement other than to render the services called for hereunder, in good faith, and shall not be liable for any error of judgment or mistake of law, or for any loss arising out of any investment or for any act or omission in the execution of securities transactions for a Fund, provided that nothing in this Agreement shall protect the Manager against any liability to the Fund to which the Manager would otherwise be subject by reason of willful misfeasance, bad faith, or gross negligence in the performance of its duties or by reason of its reckless disregard of its obligations and duties hereunder. As used in this Section 8, the term "Manager" shall include any affiliates of the Manager performing services for the Corporation or the Fund contemplated hereby and the partners, shareholders, directors, officers and employees of the Manager and such affiliates. 9. Nothing in this Agreement shall limit or restrict the right of any director, officer, or employee of the Manager who may also be a Board member, officer, or employee of the Corporation or the Fund, to engage in any other business or to devote his time and attention in part to the management or other aspects of any other business, whether of a similar nature or a dissimilar nature, nor to limit or restrict the right of the Manager to engage in any other business or to render services of any kind, including investment advisory and management services, to any other fund, firm, individual or association. If the purchase or sale of securities consistent with the investment policies of a Fund or one or more other accounts of the Manager is considered at or about the same time, transactions in such securities will be allocated among the accounts in a manner deemed equitable by the Manager. Such transactions may be combined, in accordance with applicable laws and regulations, and consistent with the Manager's policies and procedures as presented to the Board from time to time. 10. For the purposes of this Agreement, the Fund's "net assets" shall be determined as provided in the Fund's then-current Prospectus and Statement of Additional Information and the terms "assignment," "interested person," and "majority of the outstanding voting securities" shall have the meanings given to them by Section 2(a) of the 1940 Act, subject to such exemptions as may be granted by the SEC by any rule, regulation or order. 11. This Agreement will become effective with respect to the Fund on the date set forth opposite the Fund's name on Schedule A annexed hereto, provided that it shall have been approved by the Corporation's Board and by the shareholders of the Fund in accordance with the requirements of the 1940 Act and, unless sooner terminated as provided herein, will continue in effect until November 30, 2007. Thereafter, if not terminated, this Agreement shall continue in effect with respect to the Fund, so long as such continuance is specifically approved at least annually (i) by the Board or (ii) by a vote of a majority of the outstanding voting securities of the Fund, provided that in either event the continuance is also approved by a majority of the Board members who are not interested persons of any party to this Agreement, by vote cast in person at a meeting called for the purpose of voting on such approval. 12. This Agreement is terminable with respect to the Fund without penalty by the Board or by vote of a majority of the outstanding voting securities of the Fund, in each case on not more than 60 days' nor less than 30 days' written notice to the Manager, or by the Manager upon not less than 90 days' written notice to the Fund, and will be terminated upon the mutual written consent of the Manager and the Corporation. This Agreement shall terminate automatically in the event of its assignment by the Manager and shall not be assignable by the Corporation without the consent of the Manager. 13. The Manager agrees that for services rendered to the Fund, or for any claim by it in connection with services rendered to the Fund, it shall look only to assets of the Fund for satisfaction and that it shall have no claim against the assets of any other portfolios of the Corporation. 14. No provision of this Agreement may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought, and no material amendment of the Agreement shall be effective until approved, if so required by the 1940 Act, by vote of the holders of a majority of the Fund's outstanding voting securities. 15. This Agreement embodies the entire agreement and understanding between the parties hereto, and supersedes all prior agreements and understandings relating to the subject matter hereof. Should any part of this Agreement be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding on and shall inure to the benefit of the parties hereto and their respective successors. 16. This Agreement shall be construed and the provisions thereof interpreted under and in accordance with the laws of the State of New York. [signature page to follow] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers thereunto duly authorized. LEGG MASON PARTNERS INVESTMENT FUNDS, INC. By: Name: Title: LEGG MASON PARTNERS FUND ADVISOR, LLC By: Name: Title: Schedule A Legg Mason Partners Government Securities Fund Date: August 1, 2006 Fee: The following percentage of the Fund's average daily net assets: First $2 billion--0.55% Next $2 billion--0.50% Next $2 billion--0.45% Next $2 billion--0.40% Over $8 billion--0.35% EX-99.77Q1 OTHR EXHB 20 item77q1b.txt MANAGEMENT AGREEMENT Legg Mason Partners Fund Advisor, LLC This MANAGEMENT AGREEMENT ("Agreement") is made this 1st day of August, 2006, by and between Legg Mason Partners Investment Funds, Inc. (the "Corporation") and Legg Mason Partners Fund Advisor, LLC, a Delaware limited liability company (the "Manager"). WHEREAS, the Corporation is registered as a management investment company under the Investment Company Act of 1940, as amended (the "1940 Act"); WHEREAS, the Manager is engaged primarily in rendering investment advisory, management and administrative services and is registered as an investment adviser under the Investment Advisers Act of 1940, as amended; WHEREAS, the Corporation wishes to retain the Manager to provide investment advisory, management, and administrative services to the Corporation with respect to the series of the Corporation designated in Schedule A annexed hereto (the "Fund"); and WHEREAS, the Manager is willing to furnish such services on the terms and conditions hereinafter set forth; NOW THEREFORE, in consideration of the promises and mutual covenants herein contained, it is agreed as follows: 1. The Corporation hereby appoints the Manager to act as investment adviser and administrator of the Fund for the period and on the terms set forth in this Agreement. The Manager accepts such appointment and agrees to render the services herein set forth, for the compensation herein provided. 2. The Fund shall at all times keep the Manager fully informed with regard to the securities owned by it, its funds available, or to become available, for investment, and generally as to the condition of its affairs. It shall furnish the Manager with such other documents and information with regard to its affairs as the Manager may from time to time reasonably request. 3. (a) Subject to the supervision of the Corporation's Board of Directors (the "Board"), the Manager shall regularly provide the Fund with investment research, advice, management and supervision and shall furnish a continuous investment program for the Fund's portfolio of securities and other investments consistent with the Fund's investment objectives, policies and restrictions, as stated in the Fund's current Prospectus and Statement of Additional Information. The Manager shall determine from time to time what securities and other investments will be purchased, retained, sold or exchanged by the Fund and what portion of the assets of the Fund's portfolio will be held in the various securities and other investments in which the Fund invests, and shall implement those decisions, all subject to the provisions of the Corporation's Articles of Incorporation and By- Laws (collectively, the "Governing Documents"), the 1940 Act, and the applicable rules and regulations promulgated thereunder by the Securities and Exchange Commission (the "SEC") and interpretive guidance issued thereunder by the SEC staff and any other applicable federal and state law, as well as the investment objectives, policies and restrictions of the Fund referred to above, and any other specific policies adopted by the Board and disclosed to the Manager. The Manager is authorized as the agent of the Corporation to give instructions to the custodian of the Fund as to deliveries of securities and other investments and payments of cash for the account of the Fund. Subject to applicable provisions of the 1940 Act and direction from the Board, the investment program to be provided hereunder may entail the investment of all or substantially all of the assets of a Fund in one or more investment companies. The Manager will place orders pursuant to its investment determinations for the Fund either directly with the issuer or with any broker or dealer, foreign currency dealer, futures commission merchant or others selected by it. In connection with the selection of such brokers or dealers and the placing of such orders, subject to applicable law, brokers or dealers may be selected who also provide brokerage and research services (as those terms are defined in Section 28(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) to the Funds and/or the other accounts over which the Manager or its affiliates exercise investment discretion. The Manager is authorized to pay a broker or dealer who provides such brokerage and research services a commission for executing a portfolio transaction for a Fund which is in excess of the amount of commission another broker or dealer would have charged for effecting that transaction if the Manager determines in good faith that such amount of commission is reasonable in relation to the value of the brokerage and research services provided by such broker or dealer. This determination may be viewed in terms of either that particular transaction or the overall responsibilities which the Manager and its affiliates have with respect to accounts over which they exercise investment discretion. The Board may adopt policies and procedures that modify and restrict the Manager's authority regarding the execution of the Fund's portfolio transactions provided herein. The Manager shall also provide advice and recommendations with respect to other aspects of the business and affairs of the Fund, shall exercise voting rights, rights to consent to corporate action and any other rights pertaining to a Fund's portfolio securities subject to such direction as the Board may provide, and shall perform such other functions of investment management and supervision as may be directed by the Board. (b) Subject to the direction and control of the Board, the Manager shall perform such administrative and management services as may from time to time be reasonably requested by the Fund as necessary for the operation of the Fund, such as (i) supervising the overall administration of the Fund, including negotiation of contracts and fees with and the monitoring of performance and billings of the Fund's transfer agent, shareholder servicing agents, custodian and other independent contractors or agents, (ii) providing certain compliance, fund accounting, regulatory reporting, and tax reporting services, (iii) preparing or participating in the preparation of Board materials, registration statements, proxy statements and reports and other communications to shareholders, (iv) maintaining the Fund's existence, and (v) during such times as shares are publicly offered, maintaining the registration and qualification of the Fund's shares under federal and state laws. Notwithstanding the foregoing, the Manager shall not be deemed to have assumed any duties with respect to, and shall not be responsible for, the distribution of the shares of any Fund, nor shall the Manager be deemed to have assumed or have any responsibility with respect to functions specifically assumed by any transfer agent, fund accounting agent, custodian, shareholder servicing agent or other agent, in each case employed by the Fund to perform such functions. (c) The Fund hereby authorizes any entity or person associated with the Manager which is a member of a national securities exchange to effect any transaction on the exchange for the account of the Fund which is permitted by Section 11(a) of the Exchange Act and Rule 11a2-2(T) thereunder, and the Fund hereby consents to the retention of compensation for such transactions in accordance with Rule 11a2-2(T)(a)(2)(iv). Notwithstanding the foregoing, the Manager agrees that it will not deal with itself, or with members of the Board or any principal underwriter of the Fund, as principals or agents in making purchases or sales of securities or other property for the account of the Fund, nor will it purchase any securities from an underwriting or selling group in which the Manager or its affiliates is participating, or arrange for purchases and sales of securities between a Fund and another account advised by the Manager or its affiliates, except in each case as permitted by the 1940 Act and in accordance with such policies and procedures as may be adopted by a Fund from time to time, and will comply with all other provisions of the Governing Documents and the Fund's then-current Prospectus and Statement of Additional Information relative to the Manager and its directors and officers. 4. Subject to the Board's approval, the Manager or the Fund may enter into contracts with one or more investment subadvisers or subadministrators, including without limitation, affiliates of the Manager, in which the Manager delegates to such investment subadvisers or subadministrators any or all its duties specified hereunder, on such terms as the Manager will determine to be necessary, desirable or appropriate, provided that in each case the Manager shall supervise the activities of each such subadviser or subadministrator and further provided that such contracts impose on any investment subadviser or subadministrator bound thereby all the conditions to which the Manager is subject hereunder and that such contracts are entered into in accordance with and meet all applicable requirements of the 1940 Act. 5. (a) The Manager, at its expense, shall supply the Board and officers of the Corporation with all information and reports reasonably required by them and reasonably available to the Manager and shall furnish the Fund with office facilities, including space, furniture and equipment and all personnel reasonably necessary for the operation of the Fund. The Manager shall oversee the maintenance of all books and records with respect to the Fund's securities transactions and the keeping of the Fund's books of account in accordance with all applicable federal and state laws and regulations. In compliance with the requirements of Rule 31a-3 under the 1940 Act, the Manager hereby agrees that any records that it maintains for the Fund are the property of the Fund, and further agrees to surrender promptly to the Fund any of such records upon the Fund's request. The Manager further agrees to arrange for the preservation of the records required to be maintained by Rule 31a-1 under the 1940 Act for the periods prescribed by Rule 31a-2 under the 1940 Act. The Manager shall authorize and permit any of its directors, officers and employees, who may be elected as Board members or officers of the Fund, to serve in the capacities in which they are elected. (b) The Manager shall bear all expenses, and shall furnish all necessary services, facilities and personnel, in connection with its responsibilities under this Agreement. Other than as herein specifically indicated, the Manager shall not be responsible for the Fund's expenses, including, without limitation, advisory fees; distribution fees; interest; taxes; governmental fees; voluntary assessments and other expenses incurred in connection with membership in investment company organizations; organization costs of the Fund; the cost (including brokerage commissions, transaction fees or charges, if any) in connection with the purchase or sale of the Fund's securities and other investments and any losses in connection therewith; fees and expenses of custodians, transfer agents, registrars, independent pricing vendors or other agents; legal expenses; loan commitment fees; expenses relating to share certificates; expenses relating to the issuing and redemption or repurchase of the Fund's shares and servicing shareholder accounts; expenses of registering and qualifying the Fund's shares for sale under applicable federal and state law; expenses of preparing, setting in print, printing and distributing prospectuses and statements of additional information and any supplements thereto, reports, proxy statements, notices and dividends to the Fund's shareholders; costs of stationery; website costs; costs of meetings of the Board or any committee thereof, meetings of shareholders and other meetings of the Fund; Board fees; audit fees; travel expenses of officers, members of the Board and employees of the Fund, if any; and the Fund's pro rata portion of premiums on any fidelity bond and other insurance covering the Fund and its officers, Board members and employees; litigation expenses and any non-recurring or extraordinary expenses as may arise, including, without limitation, those relating to actions, suits or proceedings to which the Fund is a party and the legal obligation which the Fund may have to indemnify the Fund's Board members and officers with respect thereto. 6. No member of the Board, officer or employee of the Corporation or Fund shall receive from the Corporation or Fund any salary or other compensation as such member of the Board, officer or employee while he is at the same time a director, officer, or employee of the Manager or any affiliated company of the Manager, except as the Board may decide. This paragraph shall not apply to Board members, executive committee members, consultants and other persons who are not regular members of the Manager's or any affiliated company's staff. 7. As compensation for the services performed and the facilities furnished and expenses assumed by the Manager, including the services of any consultants retained by the Manager, the Fund shall pay the Manager, as promptly as possible after the last day of each month, a fee, computed daily at an annual rate set forth opposite the Fund's name on Schedule A annexed hereto, provided however, that if the Fund invests all or substantially all of its assets in another registered investment company for which the Manager or an affiliate of the Manager serves as investment adviser or investment manager, the annual fee computed as set forth on such Schedule A shall be reduced by the aggregate management fees allocated to that Fund for the Fund's then-current fiscal year from such other registered investment company. The first payment of the fee shall be made as promptly as possible at the end of the month succeeding the effective date of this Agreement, and shall constitute a full payment of the fee due the Manager for all services prior to that date. If this Agreement is terminated as of any date not the last day of a month, such fee shall be paid as promptly as possible after such date of termination, shall be based on the average daily net assets of the Fund in that period from the beginning of such month to such date of termination, and shall be that proportion of such average daily net assets as the number of business days in such period bears to the number of business days in such month. The average daily net assets of the Fund shall in all cases be based only on business days and be computed as of the time of the regular close of business of the New York Stock Exchange, or such other time as may be determined by the Board. 8. The Manager assumes no responsibility under this Agreement other than to render the services called for hereunder, in good faith, and shall not be liable for any error of judgment or mistake of law, or for any loss arising out of any investment or for any act or omission in the execution of securities transactions for a Fund, provided that nothing in this Agreement shall protect the Manager against any liability to the Fund to which the Manager would otherwise be subject by reason of willful misfeasance, bad faith, or gross negligence in the performance of its duties or by reason of its reckless disregard of its obligations and duties hereunder. As used in this Section 8, the term "Manager" shall include any affiliates of the Manager performing services for the Corporation or the Fund contemplated hereby and the partners, shareholders, directors, officers and employees of the Manager and such affiliates. 9. Nothing in this Agreement shall limit or restrict the right of any director, officer, or employee of the Manager who may also be a Board member, officer, or employee of the Corporation or the Fund, to engage in any other business or to devote his time and attention in part to the management or other aspects of any other business, whether of a similar nature or a dissimilar nature, nor to limit or restrict the right of the Manager to engage in any other business or to render services of any kind, including investment advisory and management services, to any other fund, firm, individual or association. If the purchase or sale of securities consistent with the investment policies of a Fund or one or more other accounts of the Manager is considered at or about the same time, transactions in such securities will be allocated among the accounts in a manner deemed equitable by the Manager. Such transactions may be combined, in accordance with applicable laws and regulations, and consistent with the Manager's policies and procedures as presented to the Board from time to time. 10. For the purposes of this Agreement, the Fund's "net assets" shall be determined as provided in the Fund's then-current Prospectus and Statement of Additional Information and the terms "assignment," "interested person," and "majority of the outstanding voting securities" shall have the meanings given to them by Section 2(a) of the 1940 Act, subject to such exemptions as may be granted by the SEC by any rule, regulation or order. 11. This Agreement will become effective with respect to the Fund on the date set forth opposite the Fund's name on Schedule A annexed hereto, provided that it shall have been approved by the Corporation's Board and by the shareholders of the Fund in accordance with the requirements of the 1940 Act and, unless sooner terminated as provided herein, will continue in effect until November 30, 2007. Thereafter, if not terminated, this Agreement shall continue in effect with respect to the Fund, so long as such continuance is specifically approved at least annually (i) by the Board or (ii) by a vote of a majority of the outstanding voting securities of the Fund, provided that in either event the continuance is also approved by a majority of the Board members who are not interested persons of any party to this Agreement, by vote cast in person at a meeting called for the purpose of voting on such approval. 12. This Agreement is terminable with respect to the Fund without penalty by the Board or by vote of a majority of the outstanding voting securities of the Fund, in each case on not more than 60 days' nor less than 30 days' written notice to the Manager, or by the Manager upon not less than 90 days' written notice to the Fund, and will be terminated upon the mutual written consent of the Manager and the Corporation. This Agreement shall terminate automatically in the event of its assignment by the Manager and shall not be assignable by the Corporation without the consent of the Manager. 13. The Manager agrees that for services rendered to the Fund, or for any claim by it in connection with services rendered to the Fund, it shall look only to assets of the Fund for satisfaction and that it shall have no claim against the assets of any other portfolios of the Corporation. 14. No provision of this Agreement may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought, and no material amendment of the Agreement shall be effective until approved, if so required by the 1940 Act, by vote of the holders of a majority of the Fund's outstanding voting securities. 15. This Agreement embodies the entire agreement and understanding between the parties hereto, and supersedes all prior agreements and understandings relating to the subject matter hereof. Should any part of this Agreement be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding on and shall inure to the benefit of the parties hereto and their respective successors. 16. This Agreement shall be construed and the provisions thereof interpreted under and in accordance with the laws of the State of New York. [signature page to follow] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers thereunto duly authorized. LEGG MASON PARTNERS INVESTMENT FUNDS, INC. By: Name: Title: LEGG MASON PARTNERS FUND ADVISOR, LLC By: Name: Title: Schedule A Legg Mason Partners Investment Grade Bond Fund Date: August 1, 2006 Fee: The following percentage of the Fund's average daily net assets: First $500 million--0.65% Over $500 million--0.60% EX-99.77Q1 OTHR EXHB 21 item77q1c.txt MANAGEMENT AGREEMENT Legg Mason Partners Fund Advisor, LLC This MANAGEMENT AGREEMENT ("Agreement") is made this 1st day of August, 2006, by and between Legg Mason Partners Investment Funds, Inc. (the "Corporation") and Legg Mason Partners Fund Advisor, LLC, a Delaware limited liability company (the "Manager"). WHEREAS, the Corporation is registered as a management investment company under the Investment Company Act of 1940, as amended (the "1940 Act"); WHEREAS, the Manager is engaged primarily in rendering investment advisory, management and administrative services and is registered as an investment adviser under the Investment Advisers Act of 1940, as amended; WHEREAS, the Corporation wishes to retain the Manager to provide investment advisory, management, and administrative services to the Corporation with respect to the series of the Corporation designated in Schedule A annexed hereto (the "Fund"); and WHEREAS, the Manager is willing to furnish such services on the terms and conditions hereinafter set forth; NOW THEREFORE, in consideration of the promises and mutual covenants herein contained, it is agreed as follows: 1. The Corporation hereby appoints the Manager to act as investment adviser and administrator of the Fund for the period and on the terms set forth in this Agreement. The Manager accepts such appointment and agrees to render the services herein set forth, for the compensation herein provided. 2. The Fund shall at all times keep the Manager fully informed with regard to the securities owned by it, its funds available, or to become available, for investment, and generally as to the condition of its affairs. It shall furnish the Manager with such other documents and information with regard to its affairs as the Manager may from time to time reasonably request. 3. (a) Subject to the supervision of the Corporation's Board of Directors (the "Board"), the Manager shall regularly provide the Fund with investment research, advice, management and supervision and shall furnish a continuous investment program for the Fund's portfolio of securities and other investments consistent with the Fund's investment objectives, policies and restrictions, as stated in the Fund's current Prospectus and Statement of Additional Information. The Manager shall determine from time to time what securities and other investments will be purchased, retained, sold or exchanged by the Fund and what portion of the assets of the Fund's portfolio will be held in the various securities and other investments in which the Fund invests, and shall implement those decisions, all subject to the provisions of the Corporation's Articles of Incorporation and By- Laws (collectively, the "Governing Documents"), the 1940 Act, and the applicable rules and regulations promulgated thereunder by the Securities and Exchange Commission (the "SEC") and interpretive guidance issued thereunder by the SEC staff and any other applicable federal and state law, as well as the investment objectives, policies and restrictions of the Fund referred to above, and any other specific policies adopted by the Board and disclosed to the Manager. The Manager is authorized as the agent of the Corporation to give instructions to the custodian of the Fund as to deliveries of securities and other investments and payments of cash for the account of the Fund. Subject to applicable provisions of the 1940 Act and direction from the Board, the investment program to be provided hereunder may entail the investment of all or substantially all of the assets of a Fund in one or more investment companies. The Manager will place orders pursuant to its investment determinations for the Fund either directly with the issuer or with any broker or dealer, foreign currency dealer, futures commission merchant or others selected by it. In connection with the selection of such brokers or dealers and the placing of such orders, subject to applicable law, brokers or dealers may be selected who also provide brokerage and research services (as those terms are defined in Section 28(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) to the Funds and/or the other accounts over which the Manager or its affiliates exercise investment discretion. The Manager is authorized to pay a broker or dealer who provides such brokerage and research services a commission for executing a portfolio transaction for a Fund which is in excess of the amount of commission another broker or dealer would have charged for effecting that transaction if the Manager determines in good faith that such amount of commission is reasonable in relation to the value of the brokerage and research services provided by such broker or dealer. This determination may be viewed in terms of either that particular transaction or the overall responsibilities which the Manager and its affiliates have with respect to accounts over which they exercise investment discretion. The Board may adopt policies and procedures that modify and restrict the Manager's authority regarding the execution of the Fund's portfolio transactions provided herein. The Manager shall also provide advice and recommendations with respect to other aspects of the business and affairs of the Fund, shall exercise voting rights, rights to consent to corporate action and any other rights pertaining to a Fund's portfolio securities subject to such direction as the Board may provide, and shall perform such other functions of investment management and supervision as may be directed by the Board. (b) Subject to the direction and control of the Board, the Manager shall perform such administrative and management services as may from time to time be reasonably requested by the Fund as necessary for the operation of the Fund, such as (i) supervising the overall administration of the Fund, including negotiation of contracts and fees with and the monitoring of performance and billings of the Fund's transfer agent, shareholder servicing agents, custodian and other independent contractors or agents, (ii) providing certain compliance, fund accounting, regulatory reporting, and tax reporting services, (iii) preparing or participating in the preparation of Board materials, registration statements, proxy statements and reports and other communications to shareholders, (iv) maintaining the Fund's existence, and (v) during such times as shares are publicly offered, maintaining the registration and qualification of the Fund's shares under federal and state laws. Notwithstanding the foregoing, the Manager shall not be deemed to have assumed any duties with respect to, and shall not be responsible for, the distribution of the shares of any Fund, nor shall the Manager be deemed to have assumed or have any responsibility with respect to functions specifically assumed by any transfer agent, fund accounting agent, custodian, shareholder servicing agent or other agent, in each case employed by the Fund to perform such functions. (c) The Fund hereby authorizes any entity or person associated with the Manager which is a member of a national securities exchange to effect any transaction on the exchange for the account of the Fund which is permitted by Section 11(a) of the Exchange Act and Rule 11a2-2(T) thereunder, and the Fund hereby consents to the retention of compensation for such transactions in accordance with Rule 11a2-2(T)(a)(2)(iv). Notwithstanding the foregoing, the Manager agrees that it will not deal with itself, or with members of the Board or any principal underwriter of the Fund, as principals or agents in making purchases or sales of securities or other property for the account of the Fund, nor will it purchase any securities from an underwriting or selling group in which the Manager or its affiliates is participating, or arrange for purchases and sales of securities between a Fund and another account advised by the Manager or its affiliates, except in each case as permitted by the 1940 Act and in accordance with such policies and procedures as may be adopted by a Fund from time to time, and will comply with all other provisions of the Governing Documents and the Fund's then-current Prospectus and Statement of Additional Information relative to the Manager and its directors and officers. 4. Subject to the Board's approval, the Manager or the Fund may enter into contracts with one or more investment subadvisers or subadministrators, including without limitation, affiliates of the Manager, in which the Manager delegates to such investment subadvisers or subadministrators any or all its duties specified hereunder, on such terms as the Manager will determine to be necessary, desirable or appropriate, provided that in each case the Manager shall supervise the activities of each such subadviser or subadministrator and further provided that such contracts impose on any investment subadviser or subadministrator bound thereby all the conditions to which the Manager is subject hereunder and that such contracts are entered into in accordance with and meet all applicable requirements of the 1940 Act. 5. (a) The Manager, at its expense, shall supply the Board and officers of the Corporation with all information and reports reasonably required by them and reasonably available to the Manager and shall furnish the Fund with office facilities, including space, furniture and equipment and all personnel reasonably necessary for the operation of the Fund. The Manager shall oversee the maintenance of all books and records with respect to the Fund's securities transactions and the keeping of the Fund's books of account in accordance with all applicable federal and state laws and regulations. In compliance with the requirements of Rule 31a-3 under the 1940 Act, the Manager hereby agrees that any records that it maintains for the Fund are the property of the Fund, and further agrees to surrender promptly to the Fund any of such records upon the Fund's request. The Manager further agrees to arrange for the preservation of the records required to be maintained by Rule 31a-1 under the 1940 Act for the periods prescribed by Rule 31a-2 under the 1940 Act. The Manager shall authorize and permit any of its directors, officers and employees, who may be elected as Board members or officers of the Fund, to serve in the capacities in which they are elected. (b) The Manager shall bear all expenses, and shall furnish all necessary services, facilities and personnel, in connection with its responsibilities under this Agreement. Other than as herein specifically indicated, the Manager shall not be responsible for the Fund's expenses, including, without limitation, advisory fees; distribution fees; interest; taxes; governmental fees; voluntary assessments and other expenses incurred in connection with membership in investment company organizations; organization costs of the Fund; the cost (including brokerage commissions, transaction fees or charges, if any) in connection with the purchase or sale of the Fund's securities and other investments and any losses in connection therewith; fees and expenses of custodians, transfer agents, registrars, independent pricing vendors or other agents; legal expenses; loan commitment fees; expenses relating to share certificates; expenses relating to the issuing and redemption or repurchase of the Fund's shares and servicing shareholder accounts; expenses of registering and qualifying the Fund's shares for sale under applicable federal and state law; expenses of preparing, setting in print, printing and distributing prospectuses and statements of additional information and any supplements thereto, reports, proxy statements, notices and dividends to the Fund's shareholders; costs of stationery; website costs; costs of meetings of the Board or any committee thereof, meetings of shareholders and other meetings of the Fund; Board fees; audit fees; travel expenses of officers, members of the Board and employees of the Fund, if any; and the Fund's pro rata portion of premiums on any fidelity bond and other insurance covering the Fund and its officers, Board members and employees; litigation expenses and any non-recurring or extraordinary expenses as may arise, including, without limitation, those relating to actions, suits or proceedings to which the Fund is a party and the legal obligation which the Fund may have to indemnify the Fund's Board members and officers with respect thereto. 6. No member of the Board, officer or employee of the Corporation or Fund shall receive from the Corporation or Fund any salary or other compensation as such member of the Board, officer or employee while he is at the same time a director, officer, or employee of the Manager or any affiliated company of the Manager, except as the Board may decide. This paragraph shall not apply to Board members, executive committee members, consultants and other persons who are not regular members of the Manager's or any affiliated company's staff. 7. As compensation for the services performed and the facilities furnished and expenses assumed by the Manager, including the services of any consultants retained by the Manager, the Fund shall pay the Manager, as promptly as possible after the last day of each month, a fee, computed daily at an annual rate set forth opposite the Fund's name on Schedule A annexed hereto, provided however, that if the Fund invests all or substantially all of its assets in another registered investment company for which the Manager or an affiliate of the Manager serves as investment adviser or investment manager, the annual fee computed as set forth on such Schedule A shall be reduced by the aggregate management fees allocated to that Fund for the Fund's then-current fiscal year from such other registered investment company. The first payment of the fee shall be made as promptly as possible at the end of the month succeeding the effective date of this Agreement, and shall constitute a full payment of the fee due the Manager for all services prior to that date. If this Agreement is terminated as of any date not the last day of a month, such fee shall be paid as promptly as possible after such date of termination, shall be based on the average daily net assets of the Fund in that period from the beginning of such month to such date of termination, and shall be that proportion of such average daily net assets as the number of business days in such period bears to the number of business days in such month. The average daily net assets of the Fund shall in all cases be based only on business days and be computed as of the time of the regular close of business of the New York Stock Exchange, or such other time as may be determined by the Board. 8. The Manager assumes no responsibility under this Agreement other than to render the services called for hereunder, in good faith, and shall not be liable for any error of judgment or mistake of law, or for any loss arising out of any investment or for any act or omission in the execution of securities transactions for a Fund, provided that nothing in this Agreement shall protect the Manager against any liability to the Fund to which the Manager would otherwise be subject by reason of willful misfeasance, bad faith, or gross negligence in the performance of its duties or by reason of its reckless disregard of its obligations and duties hereunder. As used in this Section 8, the term "Manager" shall include any affiliates of the Manager performing services for the Corporation or the Fund contemplated hereby and the partners, shareholders, directors, officers and employees of the Manager and such affiliates. 9. Nothing in this Agreement shall limit or restrict the right of any director, officer, or employee of the Manager who may also be a Board member, officer, or employee of the Corporation or the Fund, to engage in any other business or to devote his time and attention in part to the management or other aspects of any other business, whether of a similar nature or a dissimilar nature, nor to limit or restrict the right of the Manager to engage in any other business or to render services of any kind, including investment advisory and management services, to any other fund, firm, individual or association. If the purchase or sale of securities consistent with the investment policies of a Fund or one or more other accounts of the Manager is considered at or about the same time, transactions in such securities will be allocated among the accounts in a manner deemed equitable by the Manager. Such transactions may be combined, in accordance with applicable laws and regulations, and consistent with the Manager's policies and procedures as presented to the Board from time to time. 10. For the purposes of this Agreement, the Fund's "net assets" shall be determined as provided in the Fund's then-current Prospectus and Statement of Additional Information and the terms "assignment," "interested person," and "majority of the outstanding voting securities" shall have the meanings given to them by Section 2(a) of the 1940 Act, subject to such exemptions as may be granted by the SEC by any rule, regulation or order. 11. This Agreement will become effective with respect to the Fund on the date set forth opposite the Fund's name on Schedule A annexed hereto, provided that it shall have been approved by the Corporation's Board and by the shareholders of the Fund in accordance with the requirements of the 1940 Act and, unless sooner terminated as provided herein, will continue in effect until November 30, 2007. Thereafter, if not terminated, this Agreement shall continue in effect with respect to the Fund, so long as such continuance is specifically approved at least annually (i) by the Board or (ii) by a vote of a majority of the outstanding voting securities of the Fund, provided that in either event the continuance is also approved by a majority of the Board members who are not interested persons of any party to this Agreement, by vote cast in person at a meeting called for the purpose of voting on such approval. 12. This Agreement is terminable with respect to the Fund without penalty by the Board or by vote of a majority of the outstanding voting securities of the Fund, in each case on not more than 60 days' nor less than 30 days' written notice to the Manager, or by the Manager upon not less than 90 days' written notice to the Fund, and will be terminated upon the mutual written consent of the Manager and the Corporation. This Agreement shall terminate automatically in the event of its assignment by the Manager and shall not be assignable by the Corporation without the consent of the Manager. 13. The Manager agrees that for services rendered to the Fund, or for any claim by it in connection with services rendered to the Fund, it shall look only to assets of the Fund for satisfaction and that it shall have no claim against the assets of any other portfolios of the Corporation. 14. No provision of this Agreement may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought, and no material amendment of the Agreement shall be effective until approved, if so required by the 1940 Act, by vote of the holders of a majority of the Fund's outstanding voting securities. 15. This Agreement embodies the entire agreement and understanding between the parties hereto, and supersedes all prior agreements and understandings relating to the subject matter hereof. Should any part of this Agreement be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding on and shall inure to the benefit of the parties hereto and their respective successors. 16. This Agreement shall be construed and the provisions thereof interpreted under and in accordance with the laws of the State of New York. [signature page to follow] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers thereunto duly authorized. LEGG MASON PARTNERS INVESTMENT FUNDS, INC. By: Name: Title: LEGG MASON PARTNERS FUND ADVISOR, LLC By: Name: Title: Schedule A Legg Mason Partners Real Return Strategy Fund Date: August 1, 2006 Fee: The following percentage of the Fund's average daily net assets: 0.65% EX-99.77Q1 OTHR EXHB 22 item77q1d.txt SUBADVISORY AGREEMENT This SUBADVISORY AGREEMENT ("Agreement") is made this 1st day of August, 2006, by and between Legg Mason Partners Fund Advisor, LLC, a Delaware limited liability company (the "Manager"), and CAM North America LLC, a Delaware limited liability company (the "Subadviser"). WHEREAS, the Manager has been retained by Legg Mason Partners Investment Funds, Inc. (the "Corporation"), a registered management investment company under the Investment Company Act of 1940, as amended (the "1940 Act") to provide investment advisory, management, and administrative services to the Corporation with respect to certain series of the Corporation; and WHEREAS, the Manager wishes to engage the Subadviser to provide certain investment advisory services to the Corporation with respect to the series of the Corporation designated in Schedule A annexed hereto (the "Fund") and Subadviser is willing to furnish such services on the terms and conditions hereinafter set forth; NOW THEREFORE, in consideration of the promises and mutual covenants herein contained, it is agreed as follows: 1. In accordance with and subject to the Management Agreement between the Corporation and the Manager with respect to the Fund (the "Management Agreement"), the Manager hereby appoints the Subadviser to act as Subadviser with respect to the Fund for the period and on the terms set forth in this Agreement. The Subadviser accepts such appointment and agrees to render the services herein set forth, for the compensation herein provided. 2. The Manager shall cause the Subadviser to be kept fully informed at all times with regard to the securities owned by the Fund, its funds available, or to become available, for investment, and generally as to the condition of the Fund's affairs. Manager shall furnish the Subadviser with such other documents and information with regard to the Fund's affairs as the Subadviser may from time to time reasonably request. 3. (a) Subject to the supervision of the Corporation's Board of Directors (the "Board") and the Manager, the Subadviser shall regularly provide the Fund with respect to such portion of the Fund's assets as shall be allocated to the Subadviser by the Manager from time to time (the "Allocated Assets") with investment research, advice, management and supervision and shall furnish a continuous investment program for the Allocated Assets consistent with the Fund's investment objectives, policies and restrictions, as stated in the Fund's current Prospectus and Statement of Additional Information. The Subadviser shall, with respect to the Allocated Assets, determine from time to time what securities and other investments will be purchased, retained, sold or exchanged by the Fund and what portion of the Allocated Assets will be held in the various securities and other investments in which the Fund invests, and shall implement those decisions, all subject to the provisions of the Corporation's Articles of Incorporation and By-Laws (collectively, the "Governing Documents"), the 1940 Act, and the applicable rules and regulations promulgated thereunder by the Securities and Exchange Commission (the "SEC") and interpretive guidance issued thereunder by the SEC staff and any other applicable federal and state law, as well as the investment objectives, policies and restrictions of the Fund referred to above, and any other specific policies adopted by the Board and disclosed to the Subadviser. The Subadviser is authorized as the agent of the Corporation to give instructions with respect to the Allocated Assets to the custodian of the Fund as to deliveries of securities and other investments and payments of cash for the account of the Fund. Subject to applicable provisions of the 1940 Act, the investment program to be provided hereunder may entail the investment of all or substantially all of the assets of a Fund in one or more investment companies. The Subadviser will place orders pursuant to its investment determinations for the Fund either directly with the issuer or with any broker or dealer, foreign currency dealer, futures commission merchant or others selected by it. In connection with the selection of such brokers or dealers and the placing of such orders, subject to applicable law, brokers or dealers may be selected who also provide brokerage and research services (as those terms are defined in Section 28(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) to the Funds and/or the other accounts over which the Subadviser or its affiliates exercise investment discretion. The Subadviser is authorized to pay a broker or dealer who provides such brokerage and research services a commission for executing a portfolio transaction for a Fund which is in excess of the amount of commission another broker or dealer would have charged for effecting that transaction if the Subadviser determines in good faith that such amount of commission is reasonable in relation to the value of the brokerage and research services provided by such broker or dealer. This determination may be viewed in terms of either that particular transaction or the overall responsibilities which the Subadviser and its affiliates have with respect to accounts over which they exercise investment discretion. The Board may adopt policies and procedures that modify and restrict the Subadviser's authority regarding the execution of the Fund's portfolio transactions provided herein. The Subadviser shall exercise voting rights, rights to consent to corporate action and any other rights pertaining to the Allocated Assets subject to such direction as the Board may provide, and shall perform such other functions of investment management and supervision as may be directed by the Board. (b) The Fund hereby authorizes any entity or person associated with the Subadviser which is a member of a national securities exchange to effect any transaction on the exchange for the account of the Fund which is permitted by Section 11(a) of the Exchange Act and Rule 11a2-2(T) thereunder, and the Fund hereby consents to the retention of compensation for such transactions in accordance with Rule 11a2-2(T)(a)(2)(iv). Notwithstanding the foregoing, the Subadviser agrees that it will not deal with itself, or with members of the Board or any principal underwriter of the Fund, as principals or agents in making purchases or sales of securities or other property for the account of a Fund, nor will it purchase any securities from an underwriting or selling group in which the Subadviser or its affiliates is participating, or arrange for purchases and sales of securities between a Fund and another account advised by the Subadviser or its affiliates, except in each case as permitted by the 1940 Act and in accordance with such policies and procedures as may be adopted by a Fund from time to time, and will comply with all other provisions of the Governing Documents and the Fund's then-current Prospectus and Statement of Additional Information relative to the Subadviser and its directors and officers. 4. The Subadviser may delegate to any other one or more companies that the Subadviser controls, is controlled by, or is under common control with, or to specified employees of any such companies, certain of the Subadviser's duties under this Agreement, provided in each case the Subadviser will supervise the activities of each such entity or employees thereof, that such delegation will not relieve the Subadviser of any of its duties or obligations under this Agreement and provided further that any such arrangements are entered into in accordance with all applicable requirements of the 1940 Act. 5. The Subadviser agrees that it will keep records relating to its services hereunder in accordance with all applicable laws, and in compliance with the requirements of Rule 31a-3 under the 1940 Act, the Subadviser hereby agrees that any records that it maintains for the Fund are the property of the Fund, and further agrees to surrender promptly to the Fund any of such records upon the Fund's request. The Subadviser further agrees to arrange for the preservation of the records required to be maintained by Rule 31a-1 under the 1940 Act for the periods prescribed by Rule 31a-2 under the 1940 Act. 6. (a) The Subadviser, at its expense, shall supply the Board, the officers of the Corporation, and the Manager with all information and reports reasonably required by them and reasonably available to the Subadviser relating to the services provided by the Subadviser hereunder. (b) The Subadviser shall bear all expenses, and shall furnish all necessary services, facilities and personnel, in connection with its responsibilities under this Agreement. Other than as herein specifically indicated, the Subadviser shall not be responsible for the Fund's expenses, including, without limitation, advisory fees; distribution fees; interest; taxes; governmental fees; voluntary assessments and other expenses incurred in connection with membership in investment company organizations; organization costs of the Fund; the cost (including brokerage commissions, transaction fees or charges, if any) in connection with the purchase or sale of the Fund's securities and other investments and any losses in connection therewith; fees and expenses of custodians, transfer agents, registrars, independent pricing vendors or other agents; legal expenses; loan commitment fees; expenses relating to share certificates; expenses relating to the issuing and redemption or repurchase of the Fund's shares and servicing shareholder accounts; expenses of registering and qualifying the Fund's shares for sale under applicable federal and state law; expenses of preparing, setting in print, printing and distributing prospectuses and statements of additional information and any supplements thereto, reports, proxy statements, notices and dividends to the Fund's shareholders; costs of stationery; website costs; costs of meetings of the Board or any committee thereof, meetings of shareholders and other meetings of the Fund; Board fees; audit fees; travel expenses of officers, members of the Board and employees of the Fund, if any; and the Fund's pro rata portion of premiums on any fidelity bond and other insurance covering the Fund and its officers, Board members and employees; litigation expenses and any non-recurring or extraordinary expenses as may arise, including, without limitation, those relating to actions, suits or proceedings to which the Fund is a party and the legal obligation which the Fund may have to indemnify the Fund's Board members and officers with respect thereto. 7. No member of the Board, officer or employee of the Corporation or Fund shall receive from the Corporation or Fund any salary or other compensation as such member of the Board, officer or employee while he is at the same time a director, officer, or employee of the Subadviser or any affiliated company of the Subadviser, except as the Board may decide. This paragraph shall not apply to Board members, executive committee members, consultants and other persons who are not regular members of the Subadviser's or any affiliated company's staff. 8. As compensation for the services performed by the Subadviser, including the services of any consultants retained by the Subadviser, the Manager shall pay the Subadviser out of the management fee it receives with respect to the Fund, and only to the extent thereof, as promptly as possible after the last day of each month, a fee, computed daily at an annual rate set forth on Schedule A annexed hereto. The first payment of the fee shall be made as promptly as possible at the end of the month succeeding the effective date of this Agreement, and shall constitute a full payment of the fee due the Subadviser for all services prior to that date. If this Agreement is terminated as of any date not the last day of a month, such fee shall be paid as promptly as possible after such date of termination, shall be based on the average daily net assets of the Fund or, if less, the portion thereof comprising the Allocated Assets in that period from the beginning of such month to such date of termination, and shall be that proportion of such average daily net assets as the number of business days in such period bears to the number of business days in such month. The average daily net assets of the Fund or the portion thereof comprising the Allocated Assets shall in all cases be based only on business days and be computed as of the time of the regular close of business of the New York Stock Exchange, or such other time as may be determined by the Board. 9. The Subadviser assumes no responsibility under this Agreement other than to render the services called for hereunder, in good faith, and shall not be liable for any error of judgment or mistake of law, or for any loss arising out of any investment or for any act or omission in the execution of securities transactions for a Fund, provided that nothing in this Agreement shall protect the Subadviser against any liability to the Manager or the Fund to which the Subadviser would otherwise be subject by reason of willful misfeasance, bad faith, or gross negligence in the performance of its duties or by reason of its reckless disregard of its obligations and duties hereunder. As used in this Section 9, the term "Subadviser" shall include any affiliates of the Subadviser performing services for the Corporation or the Fund contemplated hereby and the partners, shareholders, directors, officers and employees of the Subadviser and such affiliates. 10. Nothing in this Agreement shall limit or restrict the right of any director, officer, or employee of the Subadviser who may also be a Board member, officer, or employee of the Corporation or the Fund, to engage in any other business or to devote his time and attention in part to the management or other aspects of any other business, whether of a similar nature or a dissimilar nature, nor to limit or restrict the right of the Subadviser to engage in any other business or to render services of any kind, including investment advisory and management services, to any other fund, firm, individual or association. If the purchase or sale of securities consistent with the investment policies of a Fund or one or more other accounts of the Subadviser is considered at or about the same time, transactions in such securities will be allocated among the accounts in a manner deemed equitable by the Subadviser. Such transactions may be combined, in accordance with applicable laws and regulations, and consistent with the Subadviser's policies and procedures as presented to the Board from time to time. 11. For the purposes of this Agreement, the Fund's "net assets" shall be determined as provided in the Fund's then- current Prospectus and Statement of Additional Information and the terms "assignment," "interested person," and "majority of the outstanding voting securities" shall have the meanings given to them by Section 2(a) of the 1940 Act, subject to such exemptions as may be granted by the SEC by any rule, regulation or order. 12. This Agreement will become effective with respect to the Fund on the date set forth opposite the Fund's name on Schedule A annexed hereto, provided that it shall have been approved by the Corporation's Board and, if so required by the 1940 Act, by the shareholders of the Fund in accordance with the requirements of the 1940 Act and, unless sooner terminated as provided herein, will continue in effect through November 30, 2007. Thereafter, if not terminated, this Agreement shall continue in effect with respect to the Fund, so long as such continuance is specifically approved at least annually (i) by the Board or (ii) by a vote of a majority of the outstanding voting securities of the Fund, provided that in either event the continuance is also approved by a majority of the Board members who are not interested persons of any party to this Agreement, by vote cast in person at a meeting called for the purpose of voting on such approval. 13. This Agreement is terminable with respect to the Fund without penalty by the Board or by vote of a majority of the outstanding voting securities of the Fund, in each case on not more than 60 days' nor less than 30 days' written notice to the Subadviser, or by the Subadviser upon not less than 90 days' written notice to the Fund and the Manager, and will be terminated upon the mutual written consent of the Manager and the Subadviser. This Agreement shall terminate automatically in the event of its assignment by the Subadviser and shall not be assignable by the Manager without the consent of the Subadviser. 14. The Subadviser agrees that for any claim by it against the Fund in connection with this Agreement or the services rendered under this Agreement, it shall look only to assets of the Fund for satisfaction and that it shall have no claim against the assets of any other portfolios of the Corporation. 15. No provision of this Agreement may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought, and no material amendment of the Agreement shall be effective until approved, if so required by the 1940 Act, by vote of the holders of a majority of the Fund's outstanding voting securities. 16. This Agreement, and any supplemental terms contained on Annex I hereto, if applicable, embodies the entire agreement and understanding between the parties hereto, and supersedes all prior agreements and understandings relating to the subject matter hereof. Should any part of this Agreement be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding on and shall inure to the benefit of the parties hereto and their respective successors. 17. This Agreement shall be construed and the provisions thereof interpreted under and in accordance with the laws of the State of New York. [signature page to follow] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers thereunto duly authorized. LEGG MASON PARTNERS FUND ADVISOR, LLC By: _______________________________ Name: Title: CAM NORTH AMERICA LLC By: _______________________________ Name: Title: The foregoing is acknowledged: The undersigned officer of the Corporation has executed this Agreement not individually but in his/her capacity as an officer of the Corporation. The Corporation does not hereby undertake, on behalf of the Fund or otherwise, any obligation to the Subadviser. LEGG MASON PARTNERS INVESTMENT FUNDS, INC. By: _______________________________ Name: Title: ANNEX I Not applicable. SCHEDULE A Legg Mason Partners Real Return Strategy Fund Date: August 1, 2006 Fee: The sub-advisory fee will be 70% of the management fee paid to Legg Mason Partners Fund Advisor, LLC, net of expense waivers and reimbursements, with respect to the Allocated Assets only. EX-99.77Q1 OTHR EXHB 23 item77q1e.txt SUBADVISORY AGREEMENT This SUBADVISORY AGREEMENT ("Agreement") is made this 1st day of August, 2006, by and between Legg Mason Partners Fund Advisor, LLC, a Delaware limited liability company (the "Manager"), and Western Asset Management Company, a California corporation (the "Subadviser"). WHEREAS, the Manager has been retained by Legg Mason Partners Investment Funds, Inc. (the "Corporation"), a registered management investment company under the Investment Company Act of 1940, as amended (the "1940 Act") to provide investment advisory, management, and administrative services to the Corporation with respect to certain series of the Corporation; and WHEREAS, the Manager wishes to engage the Subadviser to provide certain investment advisory services to the Corporation with respect to the series of the Corporation designated in Schedule A annexed hereto (the "Fund") and Subadviser is willing to furnish such services on the terms and conditions hereinafter set forth; NOW THEREFORE, in consideration of the promises and mutual covenants herein contained, it is agreed as follows: 1. In accordance with and subject to the Management Agreement between the Corporation and the Manager with respect to the Fund (the "Management Agreement"), the Manager hereby appoints the Subadviser to act as Subadviser with respect to the Fund for the period and on the terms set forth in this Agreement. The Subadviser accepts such appointment and agrees to render the services herein set forth, for the compensation herein provided. 2. The Manager shall cause the Subadviser to be kept fully informed at all times with regard to the securities owned by the Fund, its funds available, or to become available, for investment, and generally as to the condition of the Fund's affairs. Manager shall furnish the Subadviser with such other documents and information with regard to the Fund's affairs as the Subadviser may from time to time reasonably request. 3. (a) Subject to the supervision of the Corporation's Board of Directors (the "Board") and the Manager, the Subadviser shall regularly provide the Fund with respect to such portion of the Fund's assets as shall be allocated to the Subadviser by the Manager from time to time (the "Allocated Assets") with investment research, advice, management and supervision and shall furnish a continuous investment program for the Allocated Assets consistent with the Fund's investment objectives, policies and restrictions, as stated in the Fund's current Prospectus and Statement of Additional Information. The Subadviser shall, with respect to the Allocated Assets, determine from time to time what securities and other investments will be purchased (including, as permitted in accordance with this paragraph, swap agreements, options and futures), retained, sold or exchanged by the Fund and what portion of the Allocated Assets will be held in the various securities and other investments in which the Fund invests, and shall implement those decisions (including the execution of investment documentation), all subject to the provisions of the Corporation's Articles of Incorporation and By-Laws (collectively, the "Governing Documents"), the 1940 Act, and the applicable rules and regulations promulgated thereunder by the Securities and Exchange Commission (the "SEC") and interpretive guidance issued thereunder by the SEC staff and any other applicable federal and state law, as well as the investment objectives, policies and restrictions of the Fund referred to above, and any other specific policies adopted by the Board and disclosed to the Subadviser. The Subadviser is authorized as the agent of the Corporation to give instructions with respect to the Allocated Assets to the custodian of the Fund as to deliveries of securities and other investments and payments of cash for the account of the Fund. Subject to applicable provisions of the 1940 Act, the investment program to be provided hereunder may entail the investment of all or substantially all of the assets of a Fund in one or more investment companies. The Subadviser will place orders pursuant to its investment determinations for the Fund either directly with the issuer or with any broker or dealer, foreign currency dealer, futures commission merchant or others selected by it. In connection with the selection of such brokers or dealers and the placing of such orders, subject to applicable law, brokers or dealers may be selected who also provide brokerage and research services (as those terms are defined in Section 28(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) to the Funds and/or the other accounts over which the Subadviser or its affiliates exercise investment discretion. The Subadviser is authorized to pay a broker or dealer who provides such brokerage and research services a commission for executing a portfolio transaction for a Fund which is in excess of the amount of commission another broker or dealer would have charged for effecting that transaction if the Subadviser determines in good faith that such amount of commission is reasonable in relation to the value of the brokerage and research services provided by such broker or dealer. This determination may be viewed in terms of either that particular transaction or the overall responsibilities which the Subadviser and its affiliates have with respect to accounts over which they exercise investment discretion. The Board may adopt policies and procedures that modify and restrict the Subadviser's authority regarding the execution of the Fund's portfolio transactions provided herein. The Subadviser shall exercise voting rights, rights to consent to corporate action and any other rights pertaining to the Allocated Assets subject to such direction as the Board may provide, and shall perform such other functions of investment management and supervision as may be directed by the Board. (b) The Fund hereby authorizes any entity or person associated with the Subadviser which is a member of a national securities exchange to effect any transaction on the exchange for the account of the Fund which is permitted by Section 11(a) of the Exchange Act and Rule 11a2-2(T) thereunder, and the Fund hereby consents to the retention of compensation for such transactions in accordance with Rule 11a2-2(T)(a)(2)(iv). Notwithstanding the foregoing, the Subadviser agrees that it will not deal with itself, or with members of the Board or any principal underwriter of the Fund, as principals or agents in making purchases or sales of securities or other property for the account of a Fund, nor will it purchase any securities from an underwriting or selling group in which the Subadviser or its affiliates is participating, or arrange for purchases and sales of securities between a Fund and another account advised by the Subadviser or its affiliates, except in each case as permitted by the 1940 Act and in accordance with such policies and procedures as may be adopted by a Fund from time to time, and will comply with all other provisions of the Governing Documents and the Fund's then-current Prospectus and Statement of Additional Information relative to the Subadviser and its directors and officers. 4. The Subadviser may delegate to any other one or more companies that the Subadviser controls, is controlled by, or is under common control with, or to specified employees of any such companies, certain of the Subadviser's duties under this Agreement, provided in each case the Subadviser will supervise the activities of each such entity or employees thereof, that such delegation will not relieve the Subadviser of any of its duties or obligations under this Agreement and provided further that any such arrangements are entered into in accordance with all applicable requirements of the 1940 Act. 5. The Subadviser agrees that it will keep records relating to its services hereunder in accordance with all applicable laws, and in compliance with the requirements of Rule 31a-3 under the 1940 Act, the Subadviser hereby agrees that any records that it maintains for the Fund are the property of the Fund, and further agrees to surrender promptly to the Fund any of such records upon the Fund's request. The Subadviser further agrees to arrange for the preservation of the records required to be maintained by Rule 31a-1 under the 1940 Act for the periods prescribed by Rule 31a-2 under the 1940 Act. 6. (a) The Subadviser, at its expense, shall supply the Board, the officers of the Corporation, and the Manager with all information and reports reasonably required by them and reasonably available to the Subadviser relating to the services provided by the Subadviser hereunder. (b) The Subadviser shall bear all expenses, and shall furnish all necessary services, facilities and personnel, in connection with its responsibilities under this Agreement. Other than as herein specifically indicated, the Subadviser shall not be responsible for the Fund's expenses, including, without limitation, advisory fees; distribution fees; interest; taxes; governmental fees; voluntary assessments and other expenses incurred in connection with membership in investment company organizations; organization costs of the Fund; the cost (including brokerage commissions, transaction fees or charges, if any) in connection with the purchase or sale of the Fund's securities and other investments and any losses in connection therewith; fees and expenses of custodians, transfer agents, registrars, independent pricing vendors or other agents; legal expenses; loan commitment fees; expenses relating to share certificates; expenses relating to the issuing and redemption or repurchase of the Fund's shares and servicing shareholder accounts; expenses of registering and qualifying the Fund's shares for sale under applicable federal and state law; expenses of preparing, setting in print, printing and distributing prospectuses and statements of additional information and any supplements thereto, reports, proxy statements, notices and dividends to the Fund's shareholders; costs of stationery; website costs; costs of meetings of the Board or any committee thereof, meetings of shareholders and other meetings of the Fund; Board fees; audit fees; travel expenses of officers, members of the Board and employees of the Fund, if any; and the Fund's pro rata portion of premiums on any fidelity bond and other insurance covering the Fund and its officers, Board members and employees; litigation expenses and any non-recurring or extraordinary expenses as may arise, including, without limitation, those relating to actions, suits or proceedings to which the Fund is a party and the legal obligation which the Fund may have to indemnify the Fund's Board members and officers with respect thereto. 7. No member of the Board, officer or employee of the Corporation or Fund shall receive from the Corporation or Fund any salary or other compensation as such member of the Board, officer or employee while he is at the same time a director, officer, or employee of the Subadviser or any affiliated company of the Subadviser, except as the Board may decide. This paragraph shall not apply to Board members, executive committee members, consultants and other persons who are not regular members of the Subadviser's or any affiliated company's staff. 8. As compensation for the services performed by the Subadviser, including the services of any consultants retained by the Subadviser, the Manager shall pay the Subadviser out of the management fee it receives with respect to the Fund, and only to the extent thereof, as promptly as possible after the last day of each month, a fee, computed daily at an annual rate set forth on Schedule A annexed hereto. The first payment of the fee shall be made as promptly as possible at the end of the month succeeding the effective date of this Agreement, and shall constitute a full payment of the fee due the Subadviser for all services prior to that date. If this Agreement is terminated as of any date not the last day of a month, such fee shall be paid as promptly as possible after such date of termination, shall be based on the average daily net assets of the Fund or, if less, the portion thereof comprising the Allocated Assets in that period from the beginning of such month to such date of termination, and shall be that proportion of such average daily net assets as the number of business days in such period bears to the number of business days in such month. The average daily net assets of the Fund or the portion thereof comprising the Allocated Assets shall in all cases be based only on business days and be computed as of the time of the regular close of business of the New York Stock Exchange, or such other time as may be determined by the Board. 9. The Subadviser assumes no responsibility under this Agreement other than to render the services called for hereunder, in good faith, and shall not be liable for any error of judgment or mistake of law, or for any loss arising out of any investment or for any act or omission in the execution of securities transactions for a Fund, provided that nothing in this Agreement shall protect the Subadviser against any liability to the Manager or the Fund to which the Subadviser would otherwise be subject by reason of willful misfeasance, bad faith, or gross negligence in the performance of its duties or by reason of its reckless disregard of its obligations and duties hereunder. As used in this Section 9, the term "Subadviser" shall include any affiliates of the Subadviser performing services for the Corporation or the Fund contemplated hereby and the partners, shareholders, directors, officers and employees of the Subadviser and such affiliates. 10. Nothing in this Agreement shall limit or restrict the right of any director, officer, or employee of the Subadviser who may also be a Board member, officer, or employee of the Corporation or the Fund, to engage in any other business or to devote his time and attention in part to the management or other aspects of any other business, whether of a similar nature or a dissimilar nature, nor to limit or restrict the right of the Subadviser to engage in any other business or to render services of any kind, including investment advisory and management services, to any other fund, firm, individual or association. If the purchase or sale of securities consistent with the investment policies of a Fund or one or more other accounts of the Subadviser is considered at or about the same time, transactions in such securities will be allocated among the accounts in a manner deemed equitable by the Subadviser. Such transactions may be combined, in accordance with applicable laws and regulations, and consistent with the Subadviser's policies and procedures as presented to the Board from time to time. 11. For the purposes of this Agreement, the Fund's "net assets" shall be determined as provided in the Fund's then- current Prospectus and Statement of Additional Information and the terms "assignment," "interested person," and "majority of the outstanding voting securities" shall have the meanings given to them by Section 2(a) of the 1940 Act, subject to such exemptions as may be granted by the SEC by any rule, regulation or order. 12. This Agreement will become effective with respect to the Fund on the date set forth opposite the Fund's name on Schedule A annexed hereto, provided that it shall have been approved by the Corporation's Board and, if so required by the 1940 Act, by the shareholders of the Fund in accordance with the requirements of the 1940 Act and, unless sooner terminated as provided herein, will continue in effect through November 30, 2007. Thereafter, if not terminated, this Agreement shall continue in effect with respect to the Fund, so long as such continuance is specifically approved at least annually (i) by the Board or (ii) by a vote of a majority of the outstanding voting securities of the Fund, provided that in either event the continuance is also approved by a majority of the Board members who are not interested persons of any party to this Agreement, by vote cast in person at a meeting called for the purpose of voting on such approval. 13. This Agreement is terminable with respect to the Fund without penalty by the Board or by vote of a majority of the outstanding voting securities of the Fund, in each case on not more than 60 days' nor less than 30 days' written notice to the Subadviser, or by the Subadviser upon not less than 90 days' written notice to the Fund and the Manager, and will be terminated upon the mutual written consent of the Manager and the Subadviser. This Agreement shall terminate automatically in the event of its assignment by the Subadviser and shall not be assignable by the Manager without the consent of the Subadviser. 14. The Subadviser agrees that for any claim by it against the Fund in connection with this Agreement or the services rendered under this Agreement, it shall look only to assets of the Fund for satisfaction and that it shall have no claim against the assets of any other portfolios of the Corporation. 15. No provision of this Agreement may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought, and no material amendment of the Agreement shall be effective until approved, if so required by the 1940 Act, by vote of the holders of a majority of the Fund's outstanding voting securities. 16. This Agreement, and any supplemental terms contained on Annex I hereto, if applicable, embodies the entire agreement and understanding between the parties hereto, and supersedes all prior agreements and understandings relating to the subject matter hereof. Should any part of this Agreement be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding on and shall inure to the benefit of the parties hereto and their respective successors. 17. This Agreement shall be construed and the provisions thereof interpreted under and in accordance with the laws of the State of New York. [signature page to follow] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers thereunto duly authorized. LEGG MASON PARTNERS FUND ADVISOR, LLC By: _______________________________ Name: Title: WESTERN ASSET MANAGEMENT COMPANY By: _______________________________ Name: Title: The foregoing is acknowledged: The undersigned officer of the Corporation has executed this Agreement not individually but in his/her capacity as an officer of the Corporation. The Corporation does not hereby undertake, on behalf of the Fund or otherwise, any obligation to the Subadviser. LEGG MASON PARTNERS INVESTMENT FUNDS, INC. By: _______________________________ Name: Title: ANNEX I Not applicable. SCHEDULE A Legg Mason Partners Government Securities Fund Date: August 1, 2006 Fee: The sub-advisory fee will be 70% of the management fee paid to Legg Mason Partners Fund Advisor, LLC, net of expense waivers and reimbursements. EX-99.77Q1 OTHR EXHB 24 item77q1f.txt SUBADVISORY AGREEMENT This SUBADVISORY AGREEMENT ("Agreement") is made this 1st day of August, 2006, by and between Legg Mason Partners Fund Advisor, LLC, a Delaware limited liability company (the "Manager"), and Western Asset Management Company, a California corporation (the "Subadviser"). WHEREAS, the Manager has been retained by Legg Mason Partners Investment Funds, Inc. (the "Corporation"), a registered management investment company under the Investment Company Act of 1940, as amended (the "1940 Act") to provide investment advisory, management, and administrative services to the Corporation with respect to certain series of the Corporation; and WHEREAS, the Manager wishes to engage the Subadviser to provide certain investment advisory services to the Corporation with respect to the series of the Corporation designated in Schedule A annexed hereto (the "Fund") and Subadviser is willing to furnish such services on the terms and conditions hereinafter set forth; NOW THEREFORE, in consideration of the promises and mutual covenants herein contained, it is agreed as follows: 1. In accordance with and subject to the Management Agreement between the Corporation and the Manager with respect to the Fund (the "Management Agreement"), the Manager hereby appoints the Subadviser to act as Subadviser with respect to the Fund for the period and on the terms set forth in this Agreement. The Subadviser accepts such appointment and agrees to render the services herein set forth, for the compensation herein provided. 2. The Manager shall cause the Subadviser to be kept fully informed at all times with regard to the securities owned by the Fund, its funds available, or to become available, for investment, and generally as to the condition of the Fund's affairs. Manager shall furnish the Subadviser with such other documents and information with regard to the Fund's affairs as the Subadviser may from time to time reasonably request. 3. (a) Subject to the supervision of the Corporation's Board of Directors (the "Board") and the Manager, the Subadviser shall regularly provide the Fund with respect to such portion of the Fund's assets as shall be allocated to the Subadviser by the Manager from time to time (the "Allocated Assets") with investment research, advice, management and supervision and shall furnish a continuous investment program for the Allocated Assets consistent with the Fund's investment objectives, policies and restrictions, as stated in the Fund's current Prospectus and Statement of Additional Information. The Subadviser shall, with respect to the Allocated Assets, determine from time to time what securities and other investments will be purchased (including, as permitted in accordance with this paragraph, swap agreements, options and futures), retained, sold or exchanged by the Fund and what portion of the Allocated Assets will be held in the various securities and other investments in which the Fund invests, and shall implement those decisions (including the execution of investment documentation), all subject to the provisions of the Corporation's Articles of Incorporation and By-Laws (collectively, the "Governing Documents"), the 1940 Act, and the applicable rules and regulations promulgated thereunder by the Securities and Exchange Commission (the "SEC") and interpretive guidance issued thereunder by the SEC staff and any other applicable federal and state law, as well as the investment objectives, policies and restrictions of the Fund referred to above, and any other specific policies adopted by the Board and disclosed to the Subadviser. The Subadviser is authorized as the agent of the Corporation to give instructions with respect to the Allocated Assets to the custodian of the Fund as to deliveries of securities and other investments and payments of cash for the account of the Fund. Subject to applicable provisions of the 1940 Act, the investment program to be provided hereunder may entail the investment of all or substantially all of the assets of a Fund in one or more investment companies. The Subadviser will place orders pursuant to its investment determinations for the Fund either directly with the issuer or with any broker or dealer, foreign currency dealer, futures commission merchant or others selected by it. In connection with the selection of such brokers or dealers and the placing of such orders, subject to applicable law, brokers or dealers may be selected who also provide brokerage and research services (as those terms are defined in Section 28(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) to the Funds and/or the other accounts over which the Subadviser or its affiliates exercise investment discretion. The Subadviser is authorized to pay a broker or dealer who provides such brokerage and research services a commission for executing a portfolio transaction for a Fund which is in excess of the amount of commission another broker or dealer would have charged for effecting that transaction if the Subadviser determines in good faith that such amount of commission is reasonable in relation to the value of the brokerage and research services provided by such broker or dealer. This determination may be viewed in terms of either that particular transaction or the overall responsibilities which the Subadviser and its affiliates have with respect to accounts over which they exercise investment discretion. The Board may adopt policies and procedures that modify and restrict the Subadviser's authority regarding the execution of the Fund's portfolio transactions provided herein. The Subadviser shall exercise voting rights, rights to consent to corporate action and any other rights pertaining to the Allocated Assets subject to such direction as the Board may provide, and shall perform such other functions of investment management and supervision as may be directed by the Board. (b) The Fund hereby authorizes any entity or person associated with the Subadviser which is a member of a national securities exchange to effect any transaction on the exchange for the account of the Fund which is permitted by Section 11(a) of the Exchange Act and Rule 11a2-2(T) thereunder, and the Fund hereby consents to the retention of compensation for such transactions in accordance with Rule 11a2-2(T)(a)(2)(iv). Notwithstanding the foregoing, the Subadviser agrees that it will not deal with itself, or with members of the Board or any principal underwriter of the Fund, as principals or agents in making purchases or sales of securities or other property for the account of a Fund, nor will it purchase any securities from an underwriting or selling group in which the Subadviser or its affiliates is participating, or arrange for purchases and sales of securities between a Fund and another account advised by the Subadviser or its affiliates, except in each case as permitted by the 1940 Act and in accordance with such policies and procedures as may be adopted by a Fund from time to time, and will comply with all other provisions of the Governing Documents and the Fund's then-current Prospectus and Statement of Additional Information relative to the Subadviser and its directors and officers. 4. The Subadviser may delegate to any other one or more companies that the Subadviser controls, is controlled by, or is under common control with, or to specified employees of any such companies, certain of the Subadviser's duties under this Agreement, provided in each case the Subadviser will supervise the activities of each such entity or employees thereof, that such delegation will not relieve the Subadviser of any of its duties or obligations under this Agreement and provided further that any such arrangements are entered into in accordance with all applicable requirements of the 1940 Act. 5. The Subadviser agrees that it will keep records relating to its services hereunder in accordance with all applicable laws, and in compliance with the requirements of Rule 31a-3 under the 1940 Act, the Subadviser hereby agrees that any records that it maintains for the Fund are the property of the Fund, and further agrees to surrender promptly to the Fund any of such records upon the Fund's request. The Subadviser further agrees to arrange for the preservation of the records required to be maintained by Rule 31a-1 under the 1940 Act for the periods prescribed by Rule 31a-2 under the 1940 Act. 6. (a) The Subadviser, at its expense, shall supply the Board, the officers of the Corporation, and the Manager with all information and reports reasonably required by them and reasonably available to the Subadviser relating to the services provided by the Subadviser hereunder. (b) The Subadviser shall bear all expenses, and shall furnish all necessary services, facilities and personnel, in connection with its responsibilities under this Agreement. Other than as herein specifically indicated, the Subadviser shall not be responsible for the Fund's expenses, including, without limitation, advisory fees; distribution fees; interest; taxes; governmental fees; voluntary assessments and other expenses incurred in connection with membership in investment company organizations; organization costs of the Fund; the cost (including brokerage commissions, transaction fees or charges, if any) in connection with the purchase or sale of the Fund's securities and other investments and any losses in connection therewith; fees and expenses of custodians, transfer agents, registrars, independent pricing vendors or other agents; legal expenses; loan commitment fees; expenses relating to share certificates; expenses relating to the issuing and redemption or repurchase of the Fund's shares and servicing shareholder accounts; expenses of registering and qualifying the Fund's shares for sale under applicable federal and state law; expenses of preparing, setting in print, printing and distributing prospectuses and statements of additional information and any supplements thereto, reports, proxy statements, notices and dividends to the Fund's shareholders; costs of stationery; website costs; costs of meetings of the Board or any committee thereof, meetings of shareholders and other meetings of the Fund; Board fees; audit fees; travel expenses of officers, members of the Board and employees of the Fund, if any; and the Fund's pro rata portion of premiums on any fidelity bond and other insurance covering the Fund and its officers, Board members and employees; litigation expenses and any non-recurring or extraordinary expenses as may arise, including, without limitation, those relating to actions, suits or proceedings to which the Fund is a party and the legal obligation which the Fund may have to indemnify the Fund's Board members and officers with respect thereto. 7. No member of the Board, officer or employee of the Corporation or Fund shall receive from the Corporation or Fund any salary or other compensation as such member of the Board, officer or employee while he is at the same time a director, officer, or employee of the Subadviser or any affiliated company of the Subadviser, except as the Board may decide. This paragraph shall not apply to Board members, executive committee members, consultants and other persons who are not regular members of the Subadviser's or any affiliated company's staff. 8. As compensation for the services performed by the Subadviser, including the services of any consultants retained by the Subadviser, the Manager shall pay the Subadviser out of the management fee it receives with respect to the Fund, and only to the extent thereof, as promptly as possible after the last day of each month, a fee, computed daily at an annual rate set forth on Schedule A annexed hereto. The first payment of the fee shall be made as promptly as possible at the end of the month succeeding the effective date of this Agreement, and shall constitute a full payment of the fee due the Subadviser for all services prior to that date. If this Agreement is terminated as of any date not the last day of a month, such fee shall be paid as promptly as possible after such date of termination, shall be based on the average daily net assets of the Fund or, if less, the portion thereof comprising the Allocated Assets in that period from the beginning of such month to such date of termination, and shall be that proportion of such average daily net assets as the number of business days in such period bears to the number of business days in such month. The average daily net assets of the Fund or the portion thereof comprising the Allocated Assets shall in all cases be based only on business days and be computed as of the time of the regular close of business of the New York Stock Exchange, or such other time as may be determined by the Board. 9. The Subadviser assumes no responsibility under this Agreement other than to render the services called for hereunder, in good faith, and shall not be liable for any error of judgment or mistake of law, or for any loss arising out of any investment or for any act or omission in the execution of securities transactions for a Fund, provided that nothing in this Agreement shall protect the Subadviser against any liability to the Manager or the Fund to which the Subadviser would otherwise be subject by reason of willful misfeasance, bad faith, or gross negligence in the performance of its duties or by reason of its reckless disregard of its obligations and duties hereunder. As used in this Section 9, the term "Subadviser" shall include any affiliates of the Subadviser performing services for the Corporation or the Fund contemplated hereby and the partners, shareholders, directors, officers and employees of the Subadviser and such affiliates. 10. Nothing in this Agreement shall limit or restrict the right of any director, officer, or employee of the Subadviser who may also be a Board member, officer, or employee of the Corporation or the Fund, to engage in any other business or to devote his time and attention in part to the management or other aspects of any other business, whether of a similar nature or a dissimilar nature, nor to limit or restrict the right of the Subadviser to engage in any other business or to render services of any kind, including investment advisory and management services, to any other fund, firm, individual or association. If the purchase or sale of securities consistent with the investment policies of a Fund or one or more other accounts of the Subadviser is considered at or about the same time, transactions in such securities will be allocated among the accounts in a manner deemed equitable by the Subadviser. Such transactions may be combined, in accordance with applicable laws and regulations, and consistent with the Subadviser's policies and procedures as presented to the Board from time to time. 11. For the purposes of this Agreement, the Fund's "net assets" shall be determined as provided in the Fund's then- current Prospectus and Statement of Additional Information and the terms "assignment," "interested person," and "majority of the outstanding voting securities" shall have the meanings given to them by Section 2(a) of the 1940 Act, subject to such exemptions as may be granted by the SEC by any rule, regulation or order. 12. This Agreement will become effective with respect to the Fund on the date set forth opposite the Fund's name on Schedule A annexed hereto, provided that it shall have been approved by the Corporation's Board and, if so required by the 1940 Act, by the shareholders of the Fund in accordance with the requirements of the 1940 Act and, unless sooner terminated as provided herein, will continue in effect through November 30, 2007. Thereafter, if not terminated, this Agreement shall continue in effect with respect to the Fund, so long as such continuance is specifically approved at least annually (i) by the Board or (ii) by a vote of a majority of the outstanding voting securities of the Fund, provided that in either event the continuance is also approved by a majority of the Board members who are not interested persons of any party to this Agreement, by vote cast in person at a meeting called for the purpose of voting on such approval. 13. This Agreement is terminable with respect to the Fund without penalty by the Board or by vote of a majority of the outstanding voting securities of the Fund, in each case on not more than 60 days' nor less than 30 days' written notice to the Subadviser, or by the Subadviser upon not less than 90 days' written notice to the Fund and the Manager, and will be terminated upon the mutual written consent of the Manager and the Subadviser. This Agreement shall terminate automatically in the event of its assignment by the Subadviser and shall not be assignable by the Manager without the consent of the Subadviser. 14. The Subadviser agrees that for any claim by it against the Fund in connection with this Agreement or the services rendered under this Agreement, it shall look only to assets of the Fund for satisfaction and that it shall have no claim against the assets of any other portfolios of the Corporation. 15. No provision of this Agreement may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought, and no material amendment of the Agreement shall be effective until approved, if so required by the 1940 Act, by vote of the holders of a majority of the Fund's outstanding voting securities. 16. This Agreement, and any supplemental terms contained on Annex I hereto, if applicable, embodies the entire agreement and understanding between the parties hereto, and supersedes all prior agreements and understandings relating to the subject matter hereof. Should any part of this Agreement be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding on and shall inure to the benefit of the parties hereto and their respective successors. 17. This Agreement shall be construed and the provisions thereof interpreted under and in accordance with the laws of the State of New York. [signature page to follow] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers thereunto duly authorized. LEGG MASON PARTNERS FUND ADVISOR, LLC By: _______________________________ Name: Title: WESTERN ASSET MANAGEMENT COMPANY By: _______________________________ Name: Title: The foregoing is acknowledged: The undersigned officer of the Corporation has executed this Agreement not individually but in his/her capacity as an officer of the Corporation. The Corporation does not hereby undertake, on behalf of the Fund or otherwise, any obligation to the Subadviser. LEGG MASON PARTNERS INVESTMENT FUNDS, INC. By: _______________________________ Name: Title: ANNEX I Not applicable. SCHEDULE A Legg Mason Partners Investment Grade Bond Fund Date: August 1, 2006 Fee: The sub-advisory fee will be 70% of the management fee paid to Legg Mason Partners Fund Advisor, LLC, net of expense waivers and reimbursements. EX-99.77Q1 OTHR EXHB 25 item77q1g.txt SUBADVISORY AGREEMENT This SUBADVISORY AGREEMENT ("Agreement") is made this 1st day of August, 2006, by and between Legg Mason Partners Fund Advisor, LLC, a Delaware limited liability company (the "Manager"), and Western Asset Management Company, a California corporation (the "Subadviser"). WHEREAS, the Manager has been retained by Legg Mason Partners Investment Funds, Inc. (the "Corporation"), a registered management investment company under the Investment Company Act of 1940, as amended (the "1940 Act") to provide investment advisory, management, and administrative services to the Corporation with respect to certain series of the Corporation; and WHEREAS, the Manager wishes to engage the Subadviser to provide certain investment advisory services to the Corporation with respect to the series of the Corporation designated in Schedule A annexed hereto (the "Fund") and Subadviser is willing to furnish such services on the terms and conditions hereinafter set forth; NOW THEREFORE, in consideration of the promises and mutual covenants herein contained, it is agreed as follows: 1. In accordance with and subject to the Management Agreement between the Corporation and the Manager with respect to the Fund (the "Management Agreement"), the Manager hereby appoints the Subadviser to act as Subadviser with respect to the Fund for the period and on the terms set forth in this Agreement. The Subadviser accepts such appointment and agrees to render the services herein set forth, for the compensation herein provided. 2. The Manager shall cause the Subadviser to be kept fully informed at all times with regard to the securities owned by the Fund, its funds available, or to become available, for investment, and generally as to the condition of the Fund's affairs. Manager shall furnish the Subadviser with such other documents and information with regard to the Fund's affairs as the Subadviser may from time to time reasonably request. 3. (a) Subject to the supervision of the Corporation's Board of Directors (the "Board") and the Manager, the Subadviser shall regularly provide the Fund with respect to such portion of the Fund's assets as shall be allocated to the Subadviser by the Manager from time to time (the "Allocated Assets") with investment research, advice, management and supervision and shall furnish a continuous investment program for the Allocated Assets consistent with the Fund's investment objectives, policies and restrictions, as stated in the Fund's current Prospectus and Statement of Additional Information. The Subadviser shall, with respect to the Allocated Assets, determine from time to time what securities and other investments will be purchased (including, as permitted in accordance with this paragraph, swap agreements, options and futures), retained, sold or exchanged by the Fund and what portion of the Allocated Assets will be held in the various securities and other investments in which the Fund invests, and shall implement those decisions (including the execution of investment documentation), all subject to the provisions of the Corporation's Articles of Incorporation and By-Laws (collectively, the "Governing Documents"), the 1940 Act, and the applicable rules and regulations promulgated thereunder by the Securities and Exchange Commission (the "SEC") and interpretive guidance issued thereunder by the SEC staff and any other applicable federal and state law, as well as the investment objectives, policies and restrictions of the Fund referred to above, and any other specific policies adopted by the Board and disclosed to the Subadviser. The Subadviser is authorized as the agent of the Corporation to give instructions with respect to the Allocated Assets to the custodian of the Fund as to deliveries of securities and other investments and payments of cash for the account of the Fund. Subject to applicable provisions of the 1940 Act, the investment program to be provided hereunder may entail the investment of all or substantially all of the assets of a Fund in one or more investment companies. The Subadviser will place orders pursuant to its investment determinations for the Fund either directly with the issuer or with any broker or dealer, foreign currency dealer, futures commission merchant or others selected by it. In connection with the selection of such brokers or dealers and the placing of such orders, subject to applicable law, brokers or dealers may be selected who also provide brokerage and research services (as those terms are defined in Section 28(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) to the Funds and/or the other accounts over which the Subadviser or its affiliates exercise investment discretion. The Subadviser is authorized to pay a broker or dealer who provides such brokerage and research services a commission for executing a portfolio transaction for a Fund which is in excess of the amount of commission another broker or dealer would have charged for effecting that transaction if the Subadviser determines in good faith that such amount of commission is reasonable in relation to the value of the brokerage and research services provided by such broker or dealer. This determination may be viewed in terms of either that particular transaction or the overall responsibilities which the Subadviser and its affiliates have with respect to accounts over which they exercise investment discretion. The Board may adopt policies and procedures that modify and restrict the Subadviser's authority regarding the execution of the Fund's portfolio transactions provided herein. The Subadviser shall exercise voting rights, rights to consent to corporate action and any other rights pertaining to the Allocated Assets subject to such direction as the Board may provide, and shall perform such other functions of investment management and supervision as may be directed by the Board. (b) The Fund hereby authorizes any entity or person associated with the Subadviser which is a member of a national securities exchange to effect any transaction on the exchange for the account of the Fund which is permitted by Section 11(a) of the Exchange Act and Rule 11a2-2(T) thereunder, and the Fund hereby consents to the retention of compensation for such transactions in accordance with Rule 11a2-2(T)(a)(2)(iv). Notwithstanding the foregoing, the Subadviser agrees that it will not deal with itself, or with members of the Board or any principal underwriter of the Fund, as principals or agents in making purchases or sales of securities or other property for the account of a Fund, nor will it purchase any securities from an underwriting or selling group in which the Subadviser or its affiliates is participating, or arrange for purchases and sales of securities between a Fund and another account advised by the Subadviser or its affiliates, except in each case as permitted by the 1940 Act and in accordance with such policies and procedures as may be adopted by a Fund from time to time, and will comply with all other provisions of the Governing Documents and the Fund's then-current Prospectus and Statement of Additional Information relative to the Subadviser and its directors and officers. 4. The Subadviser may delegate to any other one or more companies that the Subadviser controls, is controlled by, or is under common control with, or to specified employees of any such companies, certain of the Subadviser's duties under this Agreement, provided in each case the Subadviser will supervise the activities of each such entity or employees thereof, that such delegation will not relieve the Subadviser of any of its duties or obligations under this Agreement and provided further that any such arrangements are entered into in accordance with all applicable requirements of the 1940 Act. 5. The Subadviser agrees that it will keep records relating to its services hereunder in accordance with all applicable laws, and in compliance with the requirements of Rule 31a-3 under the 1940 Act, the Subadviser hereby agrees that any records that it maintains for the Fund are the property of the Fund, and further agrees to surrender promptly to the Fund any of such records upon the Fund's request. The Subadviser further agrees to arrange for the preservation of the records required to be maintained by Rule 31a-1 under the 1940 Act for the periods prescribed by Rule 31a-2 under the 1940 Act. 6. (a) The Subadviser, at its expense, shall supply the Board, the officers of the Corporation, and the Manager with all information and reports reasonably required by them and reasonably available to the Subadviser relating to the services provided by the Subadviser hereunder. (b) The Subadviser shall bear all expenses, and shall furnish all necessary services, facilities and personnel, in connection with its responsibilities under this Agreement. Other than as herein specifically indicated, the Subadviser shall not be responsible for the Fund's expenses, including, without limitation, advisory fees; distribution fees; interest; taxes; governmental fees; voluntary assessments and other expenses incurred in connection with membership in investment company organizations; organization costs of the Fund; the cost (including brokerage commissions, transaction fees or charges, if any) in connection with the purchase or sale of the Fund's securities and other investments and any losses in connection therewith; fees and expenses of custodians, transfer agents, registrars, independent pricing vendors or other agents; legal expenses; loan commitment fees; expenses relating to share certificates; expenses relating to the issuing and redemption or repurchase of the Fund's shares and servicing shareholder accounts; expenses of registering and qualifying the Fund's shares for sale under applicable federal and state law; expenses of preparing, setting in print, printing and distributing prospectuses and statements of additional information and any supplements thereto, reports, proxy statements, notices and dividends to the Fund's shareholders; costs of stationery; website costs; costs of meetings of the Board or any committee thereof, meetings of shareholders and other meetings of the Fund; Board fees; audit fees; travel expenses of officers, members of the Board and employees of the Fund, if any; and the Fund's pro rata portion of premiums on any fidelity bond and other insurance covering the Fund and its officers, Board members and employees; litigation expenses and any non-recurring or extraordinary expenses as may arise, including, without limitation, those relating to actions, suits or proceedings to which the Fund is a party and the legal obligation which the Fund may have to indemnify the Fund's Board members and officers with respect thereto. 7. No member of the Board, officer or employee of the Corporation or Fund shall receive from the Corporation or Fund any salary or other compensation as such member of the Board, officer or employee while he is at the same time a director, officer, or employee of the Subadviser or any affiliated company of the Subadviser, except as the Board may decide. This paragraph shall not apply to Board members, executive committee members, consultants and other persons who are not regular members of the Subadviser's or any affiliated company's staff. 8. As compensation for the services performed by the Subadviser, including the services of any consultants retained by the Subadviser, the Manager shall pay the Subadviser out of the management fee it receives with respect to the Fund, and only to the extent thereof, as promptly as possible after the last day of each month, a fee, computed daily at an annual rate set forth on Schedule A annexed hereto. The first payment of the fee shall be made as promptly as possible at the end of the month succeeding the effective date of this Agreement, and shall constitute a full payment of the fee due the Subadviser for all services prior to that date. If this Agreement is terminated as of any date not the last day of a month, such fee shall be paid as promptly as possible after such date of termination, shall be based on the average daily net assets of the Fund or, if less, the portion thereof comprising the Allocated Assets in that period from the beginning of such month to such date of termination, and shall be that proportion of such average daily net assets as the number of business days in such period bears to the number of business days in such month. The average daily net assets of the Fund or the portion thereof comprising the Allocated Assets shall in all cases be based only on business days and be computed as of the time of the regular close of business of the New York Stock Exchange, or such other time as may be determined by the Board. 9. The Subadviser assumes no responsibility under this Agreement other than to render the services called for hereunder, in good faith, and shall not be liable for any error of judgment or mistake of law, or for any loss arising out of any investment or for any act or omission in the execution of securities transactions for a Fund, provided that nothing in this Agreement shall protect the Subadviser against any liability to the Manager or the Fund to which the Subadviser would otherwise be subject by reason of willful misfeasance, bad faith, or gross negligence in the performance of its duties or by reason of its reckless disregard of its obligations and duties hereunder. As used in this Section 9, the term "Subadviser" shall include any affiliates of the Subadviser performing services for the Corporation or the Fund contemplated hereby and the partners, shareholders, directors, officers and employees of the Subadviser and such affiliates. 10. Nothing in this Agreement shall limit or restrict the right of any director, officer, or employee of the Subadviser who may also be a Board member, officer, or employee of the Corporation or the Fund, to engage in any other business or to devote his time and attention in part to the management or other aspects of any other business, whether of a similar nature or a dissimilar nature, nor to limit or restrict the right of the Subadviser to engage in any other business or to render services of any kind, including investment advisory and management services, to any other fund, firm, individual or association. If the purchase or sale of securities consistent with the investment policies of a Fund or one or more other accounts of the Subadviser is considered at or about the same time, transactions in such securities will be allocated among the accounts in a manner deemed equitable by the Subadviser. Such transactions may be combined, in accordance with applicable laws and regulations, and consistent with the Subadviser's policies and procedures as presented to the Board from time to time. 11. For the purposes of this Agreement, the Fund's "net assets" shall be determined as provided in the Fund's then- current Prospectus and Statement of Additional Information and the terms "assignment," "interested person," and "majority of the outstanding voting securities" shall have the meanings given to them by Section 2(a) of the 1940 Act, subject to such exemptions as may be granted by the SEC by any rule, regulation or order. 12. This Agreement will become effective with respect to the Fund on the date set forth opposite the Fund's name on Schedule A annexed hereto, provided that it shall have been approved by the Corporation's Board and, if so required by the 1940 Act, by the shareholders of the Fund in accordance with the requirements of the 1940 Act and, unless sooner terminated as provided herein, will continue in effect through November 30, 2007. Thereafter, if not terminated, this Agreement shall continue in effect with respect to the Fund, so long as such continuance is specifically approved at least annually (i) by the Board or (ii) by a vote of a majority of the outstanding voting securities of the Fund, provided that in either event the continuance is also approved by a majority of the Board members who are not interested persons of any party to this Agreement, by vote cast in person at a meeting called for the purpose of voting on such approval. 13. This Agreement is terminable with respect to the Fund without penalty by the Board or by vote of a majority of the outstanding voting securities of the Fund, in each case on not more than 60 days' nor less than 30 days' written notice to the Subadviser, or by the Subadviser upon not less than 90 days' written notice to the Fund and the Manager, and will be terminated upon the mutual written consent of the Manager and the Subadviser. This Agreement shall terminate automatically in the event of its assignment by the Subadviser and shall not be assignable by the Manager without the consent of the Subadviser. 14. The Subadviser agrees that for any claim by it against the Fund in connection with this Agreement or the services rendered under this Agreement, it shall look only to assets of the Fund for satisfaction and that it shall have no claim against the assets of any other portfolios of the Corporation. 15. No provision of this Agreement may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought, and no material amendment of the Agreement shall be effective until approved, if so required by the 1940 Act, by vote of the holders of a majority of the Fund's outstanding voting securities. 16. This Agreement, and any supplemental terms contained on Annex I hereto, if applicable, embodies the entire agreement and understanding between the parties hereto, and supersedes all prior agreements and understandings relating to the subject matter hereof. Should any part of this Agreement be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding on and shall inure to the benefit of the parties hereto and their respective successors. 17. This Agreement shall be construed and the provisions thereof interpreted under and in accordance with the laws of the State of New York. [signature page to follow] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers thereunto duly authorized. LEGG MASON PARTNERS FUND ADVISOR, LLC By: _______________________________ Name: Title: WESTERN ASSET MANAGEMENT COMPANY By: _______________________________ Name: Title: The foregoing is acknowledged: The undersigned officer of the Corporation has executed this Agreement not individually but in his/her capacity as an officer of the Corporation. The Corporation does not hereby undertake, on behalf of the Fund or otherwise, any obligation to the Subadviser. LEGG MASON PARTNERS INVESTMENT FUNDS, INC. By: _______________________________ Name: Title: ANNEX I Not applicable. SCHEDULE A Legg Mason Partners Real Return Strategy Fund Date: August 1, 2006 Fee: The sub-advisory fee will be 70% of the management fee paid to Legg Mason Partners Fund Advisor, LLC, net of expense waivers and reimbursements, with respect to the Allocated Assets only. EX-99.77Q1 OTHR EXHB 26 item77q1h.txt SUBADVISORY AGREEMENT This SUBADVISORY AGREEMENT ("Agreement") is made this 1st day of August, 2006, by and between Legg Mason Partners Fund Advisor, LLC, a Delaware limited liability company (the "Manager"), and Batterymarch Financial Management, Inc., a Maryland corporation (the "Subadviser"). WHEREAS, the Manager has been retained by Legg Mason Partners Investment Funds, Inc. (the "Corporation"), a registered management investment company under the Investment Company Act of 1940, as amended (the "1940 Act") to provide investment advisory, management, and administrative services to the Corporation with respect to certain series of the Corporation; and WHEREAS, the Manager wishes to engage the Subadviser to provide certain investment advisory services to the Corporation with respect to the series of the Corporation designated in Schedule A annexed hereto (the "Fund") and Subadviser is willing to furnish such services on the terms and conditions hereinafter set forth; NOW THEREFORE, in consideration of the promises and mutual covenants herein contained, it is agreed as follows: 1. In accordance with and subject to the Management Agreement between the Corporation and the Manager with respect to the Fund (the "Management Agreement"), the Manager hereby appoints the Subadviser to act as Subadviser with respect to the Fund for the period and on the terms set forth in this Agreement. The Subadviser accepts such appointment and agrees to render the services herein set forth, for the compensation herein provided. 2. The Manager shall cause the Subadviser to be kept fully informed at all times with regard to the securities owned by the Fund, its funds available, or to become available, for investment, and generally as to the condition of the Fund's affairs. Manager shall furnish the Subadviser with such other documents and information with regard to the Fund's affairs as the Subadviser may from time to time reasonably request. 3. (a) Subject to the supervision of the Corporation's Board of Directors (the "Board") and the Manager, the Subadviser shall regularly provide the Fund with respect to such portion of the Fund's assets as shall be allocated to the Subadviser by the Manager from time to time (the "Allocated Assets") with investment research, advice, management and supervision and shall furnish a continuous investment program for the Allocated Assets consistent with the Fund's investment objectives, policies and restrictions, as stated in the Fund's current Prospectus and Statement of Additional Information. The Subadviser shall, with respect to the Allocated Assets, determine from time to time what securities and other investments will be purchased, retained, sold or exchanged by the Fund and what portion of the Allocated Assets will be held in the various securities and other investments in which the Fund invests, and shall implement those decisions (including the execution of investment documentation), all subject to the provisions of the Corporation's Articles of Incorporation and By-Laws (collectively, the "Governing Documents"), the 1940 Act, and the applicable rules and regulations promulgated thereunder by the Securities and Exchange Commission (the "SEC") and interpretive guidance issued thereunder by the SEC staff and any other applicable federal and state law, as well as the investment objectives, policies and restrictions of the Fund referred to above, and any other specific policies adopted by the Board and disclosed to the Subadviser. The Subadviser is authorized as the agent of the Corporation to give instructions with respect to the Allocated Assets to the custodian of the Fund as to deliveries of securities and other investments and payments of cash for the account of the Fund. Subject to applicable provisions of the 1940 Act, the investment program to be provided hereunder may entail the investment of all or substantially all of the assets of a Fund in one or more investment companies. The Subadviser will place orders pursuant to its investment determinations for the Fund either directly with the issuer or with any broker or dealer, foreign currency dealer, futures commission merchant or others selected by it. In connection with the selection of such brokers or dealers and the placing of such orders, subject to applicable law, brokers or dealers may be selected who also provide brokerage and research services (as those terms are defined in Section 28(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) to the Funds and/or the other accounts over which the Subadviser or its affiliates exercise investment discretion. The Subadviser is authorized to pay a broker or dealer who provides such brokerage and research services a commission for executing a portfolio transaction for a Fund which is in excess of the amount of commission another broker or dealer would have charged for effecting that transaction if the Subadviser determines in good faith that such amount of commission is reasonable in relation to the value of the brokerage and research services provided by such broker or dealer. This determination may be viewed in terms of either that particular transaction or the overall responsibilities which the Subadviser and its affiliates have with respect to accounts over which they exercise investment discretion. The Board may adopt policies and procedures that modify and restrict the Subadviser's authority regarding the execution of the Fund's portfolio transactions provided herein. The Subadviser shall exercise voting rights, rights to consent to corporate action and any other rights pertaining to the Allocated Assets subject to such direction as the Board may provide, and shall perform such other functions of investment management and supervision as may be directed by the Board. (b) The Fund hereby authorizes any entity or person associated with the Subadviser which is a member of a national securities exchange to effect any transaction on the exchange for the account of the Fund which is permitted by Section 11(a) of the Exchange Act and Rule 11a2-2(T) thereunder, and the Fund hereby consents to the retention of compensation for such transactions in accordance with Rule 11a2-2(T)(a)(2)(iv). Notwithstanding the foregoing, the Subadviser agrees that it will not deal with itself, or with members of the Board or any principal underwriter of the Fund, as principals or agents in making purchases or sales of securities or other property for the account of a Fund, nor will it purchase any securities from an underwriting or selling group in which the Subadviser or its affiliates is participating, or arrange for purchases and sales of securities between a Fund and another account advised by the Subadviser or its affiliates, except in each case as permitted by the 1940 Act and in accordance with such policies and procedures as may be adopted by a Fund from time to time, and will comply with all other provisions of the Governing Documents and the Fund's then-current Prospectus and Statement of Additional Information relative to the Subadviser and its directors and officers. 4. The Subadviser may delegate to any other one or more companies that the Subadviser controls, is controlled by, or is under common control with, or to specified employees of any such companies, certain of the Subadviser's duties under this Agreement, provided in each case the Subadviser will supervise the activities of each such entity or employees thereof, that such delegation will not relieve the Subadviser of any of its duties or obligations under this Agreement and provided further that any such arrangements are entered into in accordance with all applicable requirements of the 1940 Act. 5. The Subadviser agrees that it will keep records relating to its services hereunder in accordance with all applicable laws, and in compliance with the requirements of Rule 31a-3 under the 1940 Act, the Subadviser hereby agrees that any records that it maintains for the Fund are the property of the Fund, and further agrees to surrender promptly to the Fund any of such records upon the Fund's request. The Subadviser further agrees to arrange for the preservation of the records required to be maintained by Rule 31a-1 under the 1940 Act for the periods prescribed by Rule 31a-2 under the 1940 Act. 6. (a) The Subadviser, at its expense, shall supply the Board, the officers of the Corporation, and the Manager with all information and reports reasonably required by them and reasonably available to the Subadviser relating to the services provided by the Subadviser hereunder. (b) The Subadviser shall bear all expenses, and shall furnish all necessary services, facilities and personnel, in connection with its responsibilities under this Agreement. Other than as herein specifically indicated, the Subadviser shall not be responsible for the Fund's expenses, including, without limitation, advisory fees; distribution fees; interest; taxes; governmental fees; voluntary assessments and other expenses incurred in connection with membership in investment company organizations; organization costs of the Fund; the cost (including brokerage commissions, transaction fees or charges, if any) in connection with the purchase or sale of the Fund's securities and other investments and any losses in connection therewith; fees and expenses of custodians, transfer agents, registrars, independent pricing vendors or other agents; legal expenses; loan commitment fees; expenses relating to share certificates; expenses relating to the issuing and redemption or repurchase of the Fund's shares and servicing shareholder accounts; expenses of registering and qualifying the Fund's shares for sale under applicable federal and state law; expenses of preparing, setting in print, printing and distributing prospectuses and statements of additional information and any supplements thereto, reports, proxy statements, notices and dividends to the Fund's shareholders; costs of stationery; website costs; costs of meetings of the Board or any committee thereof, meetings of shareholders and other meetings of the Fund; Board fees; audit fees; travel expenses of officers, members of the Board and employees of the Fund, if any; and the Fund's pro rata portion of premiums on any fidelity bond and other insurance covering the Fund and its officers, Board members and employees; litigation expenses and any non-recurring or extraordinary expenses as may arise, including, without limitation, those relating to actions, suits or proceedings to which the Fund is a party and the legal obligation which the Fund may have to indemnify the Fund's Board members and officers with respect thereto. 7. No member of the Board, officer or employee of the Corporation or Fund shall receive from the Corporation or Fund any salary or other compensation as such member of the Board, officer or employee while he is at the same time a director, officer, or employee of the Subadviser or any affiliated company of the Subadviser, except as the Board may decide. This paragraph shall not apply to Board members, executive committee members, consultants and other persons who are not regular members of the Subadviser's or any affiliated company's staff. 8. As compensation for the services performed by the Subadviser, including the services of any consultants retained by the Subadviser, the Manager shall pay the Subadviser out of the management fee it receives with respect to the Fund, and only to the extent thereof, as promptly as possible after the last day of each month, a fee, computed daily at an annual rate set forth on Schedule A annexed hereto. The first payment of the fee shall be made as promptly as possible at the end of the month succeeding the effective date of this Agreement, and shall constitute a full payment of the fee due the Subadviser for all services prior to that date. If this Agreement is terminated as of any date not the last day of a month, such fee shall be paid as promptly as possible after such date of termination, shall be based on the average daily net assets of the Fund or, if less, the portion thereof comprising the Allocated Assets in that period from the beginning of such month to such date of termination, and shall be that proportion of such average daily net assets as the number of business days in such period bears to the number of business days in such month. The average daily net assets of the Fund or the portion thereof comprising the Allocated Assets shall in all cases be based only on business days and be computed as of the time of the regular close of business of the New York Stock Exchange, or such other time as may be determined by the Board. 9. The Subadviser assumes no responsibility under this Agreement other than to render the services called for hereunder, in good faith, and shall not be liable for any error of judgment or mistake of law, or for any loss arising out of any investment or for any act or omission in the execution of securities transactions for a Fund, provided that nothing in this Agreement shall protect the Subadviser against any liability to the Manager or the Fund to which the Subadviser would otherwise be subject by reason of willful misfeasance, bad faith, or gross negligence in the performance of its duties or by reason of its reckless disregard of its obligations and duties hereunder. As used in this Section 9, the term "Subadviser" shall include any affiliates of the Subadviser performing services for the Corporation or the Fund contemplated hereby and the partners, shareholders, directors, officers and employees of the Subadviser and such affiliates. 10. Nothing in this Agreement shall limit or restrict the right of any director, officer, or employee of the Subadviser who may also be a Board member, officer, or employee of the Corporation or the Fund, to engage in any other business or to devote his time and attention in part to the management or other aspects of any other business, whether of a similar nature or a dissimilar nature, nor to limit or restrict the right of the Subadviser to engage in any other business or to render services of any kind, including investment advisory and management services, to any other fund, firm, individual or association. If the purchase or sale of securities consistent with the investment policies of a Fund or one or more other accounts of the Subadviser is considered at or about the same time, transactions in such securities will be allocated among the accounts in a manner deemed equitable by the Subadviser. Such transactions may be combined, in accordance with applicable laws and regulations, and consistent with the Subadviser's policies and procedures as presented to the Board from time to time. 11. For the purposes of this Agreement, the Fund's "net assets" shall be determined as provided in the Fund's then- current Prospectus and Statement of Additional Information and the terms "assignment," "interested person," and "majority of the outstanding voting securities" shall have the meanings given to them by Section 2(a) of the 1940 Act, subject to such exemptions as may be granted by the SEC by any rule, regulation or order. 12. This Agreement will become effective with respect to the Fund on the date set forth opposite the Fund's name on Schedule A annexed hereto, provided that it shall have been approved by the Corporation's Board and, if so required by the 1940 Act, by the shareholders of the Fund in accordance with the requirements of the 1940 Act and, unless sooner terminated as provided herein, will continue in effect through November 30, 2007. Thereafter, if not terminated, this Agreement shall continue in effect with respect to the Fund, so long as such continuance is specifically approved at least annually (i) by the Board or (ii) by a vote of a majority of the outstanding voting securities of the Fund, provided that in either event the continuance is also approved by a majority of the Board members who are not interested persons of any party to this Agreement, by vote cast in person at a meeting called for the purpose of voting on such approval. 13. This Agreement is terminable with respect to the Fund without penalty by the Board or by vote of a majority of the outstanding voting securities of the Fund, in each case on not more than 60 days' nor less than 30 days' written notice to the Subadviser, or by the Subadviser upon not less than 90 days' written notice to the Fund and the Manager, and will be terminated upon the mutual written consent of the Manager and the Subadviser. This Agreement shall terminate automatically in the event of its assignment by the Subadviser and shall not be assignable by the Manager without the consent of the Subadviser. 14. The Subadviser agrees that for any claim by it against the Fund in connection with this Agreement or the services rendered under this Agreement, it shall look only to assets of the Fund for satisfaction and that it shall have no claim against the assets of any other portfolios of the Corporation. 15. No provision of this Agreement may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought, and no material amendment of the Agreement shall be effective until approved, if so required by the 1940 Act, by vote of the holders of a majority of the Fund's outstanding voting securities. 16. This Agreement, and any supplemental terms contained on Annex I hereto, if applicable, embodies the entire agreement and understanding between the parties hereto, and supersedes all prior agreements and understandings relating to the subject matter hereof. Should any part of this Agreement be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding on and shall inure to the benefit of the parties hereto and their respective successors. 17. This Agreement shall be construed and the provisions thereof interpreted under and in accordance with the laws of the State of New York. [signature page to follow] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers thereunto duly authorized. LEGG MASON PARTNERS FUND ADVISOR, LLC By: _______________________________ Name: Title: BATTERYMARCH FINANCIAL MANAGEMENT, INC. By: _______________________________ Name: Title: The foregoing is acknowledged: The undersigned officer of the Corporation has executed this Agreement not individually but in his/her capacity as an officer of the Corporation. The Corporation does not hereby undertake, on behalf of the Fund or otherwise, any obligation to the Subadviser. LEGG MASON PARTNERS INVESTMENT FUNDS, INC. By: _______________________________ Name: Title: ANNEX I Not applicable. SCHEDULE A Legg Mason Partners Real Return Strategy Fund Date: August 1, 2006 Fee: The sub-advisory fee will be 70% of the management fee paid to Legg Mason Partners Fund Advisor, LLC, net of expense waivers and reimbursements, with respect to the Allocated Assets only. -----END PRIVACY-ENHANCED MESSAGE-----