Edgar Filing: WESTERN ASSET MANAGED MUNICIPALS FUND INC.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number			811-6629

Western Asset Managed Municipals Fund Inc.
(Exact name of registrant as specified in charter)

55 Water Street, New York, NY					10041
(Address of principal executive offices)					(Zip code)

Robert I. Frenkel, Esq. Legg Mason & Co., LLC 100 First Stamford Place Stamford, CT 06902
(Name and address of agent for service)

Registrant’s telephone number, including area code:				(888) 777-0102

Date of fiscal year end:	May 31

Date of reporting period:		November 30, 2010

ITEM 1. REPORT TO STOCKHOLDERS.

The Semi-Annual Report to Stockholders is filed herewith.

November 30, 2010

Semi-Annual Report

Western Asset Managed Municipals Fund Inc.
(MMU)

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

Western Asset Managed Municipals Fund Inc.

Fund objective

The Fund seeks to maximize current income exempt from federal income tax* as is consistent with preservation of principal.

*	Certain investors may be subject to the federal alternative minimum tax (“AMT”), and state and local taxes will apply. Capital gains, if any, are fully taxable. Please consult your personal tax or legal adviser.

What’s inside

Letter from the chairman		II

Investment commentary		III

Fund at a glance		1

Spread duration		2

Effective duration		3

Schedule of investments		4

Statement of assets and liabilities		18

Statement of operations		19

Statements of changes in net assets		20

Financial highlights		21

Notes to financial statements		22

Board approval of management and subadvisory agreements		28

Additional shareholder information		34

Dividend reinvestment plan		35

Letter from the chairman

Dear Shareholder,

We are pleased to provide the semi-annual report of Western Asset Managed Municipals Fund Inc. for the six-month reporting period ended November 30, 2010. Please read on for Fund performance information and a detailed look at prevailing economic and market conditions during the Fund’s reporting period.

As always, we remain committed to providing you with excellent service and a full spectrum of investment choices. We also remain committed to supplementing the support you receive from your financial advisor. One way we accomplish this is through our website, www.leggmason.com/cef. Here you can gain immediate access to market and investment information, including:

· Fund prices and performance,

· Market insights and commentaries from our portfolio managers, and

· A host of educational resources.

We look forward to helping you meet your financial goals.

Sincerely,

R. Jay Gerken, CFA

Chairman, President and Chief Executive Officer

December 31, 2010

Western Asset Managed Municipals Fund Inc.

III

Investment commentary

Economic review

While the U.S. economy continued to expand over the six months ended November 30, 2010, economic data was mixed and unemployment remained elevated. The Federal Reserve Board (“Fed”)i expressed concerns regarding the direction of the economy and took additional actions in an attempt to spur growth. This initially caused investor sentiment to improve, but the financial markets declined toward the end of the reporting period given a re-escalation of the European sovereign debt crisis.

In September 2010, the National Bureau of Economic Research (“NBER”), the organization charged with determining when recessions start and end, announced that the recession that began in December 2007 had concluded in June 2009. However, the NBER said, “In determining that a trough occurred in June 2009, the committee did not conclude that economic conditions since that month have been favorable or that the economy has returned to operating at normal capacity.” The NBER’s point is well-taken given continued areas of weakness in the U.S. economy.

Although the U.S. Department of Commerce continued to report positive U.S. gross domestic product (“GDP”)ii growth, the expansion has moderated since peaking at 5.0% in the fourth quarter of 2009. A slower drawdown in business inventories and renewed consumer spending were contributing factors spurring the economy’s solid growth at the end of 2009. However, the economy has grown at a more modest pace thus far in 2010. According to the Commerce Department, GDP growth was 3.7% and 1.7% during the first and second quarters of 2010, respectively. GDP growth then edged somewhat higher to 2.6% in the third quarter.

Turning to the job market, after experiencing sharp job losses in 2009, the U.S. Department of Labor reported that over one million new positions were added during the first five months of 2010. Included in that number, however, were 700,000 temporary government jobs tied to the 2010 Census. From June through September, more than 525,000 of these temporary positions were eliminated. This more than offset private sector growth and resulted in a total net loss of 300,000 jobs from June through September. The employment picture then brightened somewhat in October, as 172,000 new jobs were created. Payrolls then increased a disappointing 39,000 in November and the unemployment rate inched up to end the period at 9.8%. The unemployment rate has now exceeded 9.0% since May 2009.

There was mixed news in the housing market during the period. According to the National Association of Realtors (“NAR”), existing-home sales increased 7.0% and 8.0% in March and April, respectively, after sales had fallen for the period from December 2009 through February 2010. The rebound was largely attributed to people rushing to take advantage of the government’s $8,000 tax credit for first-time home buyers that expired at the end of April. However, with the end of the tax credit, existing-home sales then declined from May through July. Sales then rose 7.3% and 10.0% in August and September, respectively. Sales then dipped 2.2% in October and rose 5.6% in November. Looking at home prices, the NAR reported that the median existing-home price for all housing types was $170,600 in November 2010, which was 0.4% higher than in November 2009. Prices appeared to stabilize somewhat as the number of

Western Asset Managed Municipals Fund Inc.

Investment commentary (cont’d)

existing homes on the market declined in November. The inventory of unsold homes was a 9.5 month supply in November at the current sales level, versus a 10.5 month supply in October.

One overall bright spot for the economy has been the manufacturing sector. Based on the Institute for Supply Management’s PMIiii, the manufacturing sector has grown sixteen consecutive months since it began expanding in August 2009. After reaching a six-year peak of 60.4 in April 2010, PMI data indicated somewhat more modest growth from May through July (a reading below 50 indicates a contraction, whereas a reading above 50 indicates an expansion). The manufacturing sector then expanded at a faster pace in August, before moderating somewhat in September. Manufacturing then grew in October at its fastest pace since May with a reading of 56.9 for the month, before dipping to 56.6 in November.

Financial market overview

As the reporting period began, the financial markets were regaining their footing following a sharp sell-off that had begun in late April and continued throughout much of May. During this period, risk aversion was elevated and investors flocked to the relative safety of U.S. Treasury securities. Demand for the fixed-income spread sectors (non-Treasuries) then resumed in June and July, followed by another “flight to quality” in August. Risk appetite then returned in September and October before the financial markets again weakened beginning in mid-November.

Due to signs that economic growth was slowing toward the end of the reporting period, the Fed took further actions to spur the economy. At its August 10th meeting, the Fed announced an ongoing program that calls for using the proceeds from expiring agency debt and agency mortgage-backed securities to purchase longer-dated Treasury securities.

In addition, the Fed remained cautious throughout the reporting period given pockets of weakness in the economy. At its meeting in September 2010, the Fed said, “The Committee will continue to monitor the economic outlook and financial developments and is prepared to provide additional accommodation if needed to support the economic recovery. . . .” This led to speculation that the Fed may again move to purchase large amounts of agency and Treasury securities in an attempt to avoid a double-dip recession and ward off deflation.

The Fed then took additional action in early November. Citing that “the pace of recovery in output and employment continues to be slow,” the Fed announced another round of quantitative easing to help stimulate the economy, entailing the purchase of $600 billion of long-term U.S. Treasury securities by the end of the second quarter of 2011. This, coupled with the Fed’s previously announced program to use the proceeds of expiring securities to purchase Treasuries, means it could buy a total of $850 billion to $900 billion of Treasury securities by the end of June 2011.

Fixed-income market review

As discussed earlier, just prior to the beginning of the six-month reporting period, investor risk aversion was elevated due to the escalating sovereign debt crisis in Europe. In addition, there were uncertainties regarding new financial reforms in the U.S. and some worse-than-expected economic data.

Western Asset Managed Municipals Fund Inc.

Most spread sectors then produced positive absolute returns in June and July, as investor demand for these securities again increased. There was another bout of risk aversion in August, given fears that the economy may slip back into a recession. However, with the Fed indicating the possibility of another round of quantitative easing, most spread sectors rallied in September and October. The spread sectors then ended the reporting period on a weak note as financial troubles in Ireland resulted in a re-emergence of the European sovereign debt crisis.

Both short- and long-term Treasury yields fluctuated but, overall, moved lower during the six months ended November 30, 2010. When the period began, two- and ten-year Treasury yields were 0.76% and 3.31%, respectively. On June 3, 2010, two- and ten-year Treasury yields peaked at 0.82% and 3.39%, respectively. Subsequent to hitting their highs for the period, yields largely declined during much of the remainder of the reporting period. When the period ended on November 30, 2010, two-year Treasury yields were 0.45%, versus a low of 0.33% earlier in the month. Ten-year Treasury yields ended the period at 2.81%, which was higher than their trough of 2.41% that occurred in October. Longer-term yields moved higher toward the end of the period as fears of future inflation increased in light of the Fed’s additional policy accommodation.

The municipal bond market lagged its taxable bond counterpart over the six months ended November 30, 2010. Over that period, the Barclays Capital Municipal Bond Indexiv and the Barclays Capital U.S. Aggregate Indexv returned 1.12% and 3.85%, respectively. A large portion of the municipal market’s underperformance occurred in November 2010. Concerns that Congress may not extend the popular Build America Bond program, which was scheduled to expire at the end of 2010, led to a sharp increase in issuance of these securities, which was not readily absorbed by investor demand. In addition, there were some high profile issues regarding the financial well-being of some municipal bond issuers.

Performance review

For the six months ended November 30, 2010, Western Asset Managed Municipals Fund Inc. returned -0.13% based on its net asset value (“NAV”)vi and 1.80% based on its New York Stock Exchange (“NYSE”) market price per share. The Fund’s unmanaged benchmark, the Barclays Capital Municipal Bond Index, returned 1.12% for the same period. The Lipper General Municipal Debt (Leveraged) Closed-End Funds Category Averagevii returned 0.74% over the same time frame. Please note that Lipper performance returns are based on each fund’s NAV.

Certain investors may be subject to the federal alternative minimum tax, and state and local taxes will apply. Capital gains, if any, are fully taxable. Please consult your personal tax or legal adviser.

During this six-month period, the Fund made distributions to common stock shareholders totaling $0.39 per share, which may have included a return of capital. The performance table shows the Fund’s six-month total return based on its NAV and market price as of November 30, 2010. Past performance is no guarantee of future results.

Western Asset Managed Municipals Fund Inc.

Investment commentary (cont’d)

Performance Snapshot as of November 30, 2010 (unaudited)

Price Per Share	6-Month Total Return*
$12.43 (NAV)	-0.13	%
$12.73 (Market Price)	1.80	%

All figures represent past performance and are not a guarantee of future results.

Total returns are based on changes in NAV or market price, respectively. Total returns assume the reinvestment of all distributions, including returns of capital, if any, in additional shares in accordance with the Fund’s Dividend Reinvestment Plan. Performance figures for periods shorter than one year represent cumulative figures and are not annualized.

Looking for additional information?

The Fund is traded under the symbol “MMU” and its closing market price is available in most newspapers under the NYSE listings. The daily NAV is available on-line under the symbol “XMMUX” on most financial websites. Barron’s and the Wall Street Journal’s Monday edition both carry closed-end fund tables that provide additional information. In addition, the Fund issues a quarterly press release that can be found on most major financial websites as well as www.leggmason.com/cef.

In a continuing effort to provide information concerning the Fund, shareholders may call 1-888-777-0102 (toll free), Monday through Friday from 8:00 a.m. to 5:30 p.m. Eastern Time, for the Fund’s current NAV, market price and other information.

As always, thank you for your confidence in our stewardship of your assets.

Sincerely,

R. Jay Gerken, CFA

Chairman, President and
Chief Executive Officer

December 31, 2010

RISKS: The Fund’s investments are subject to a number of risks such as liquidity risk, interest rate risk, credit risk, leveraging risk and management risk. As interest rates rise, the price of fixed-income investments declines. Lower-rated, higher-yielding bonds are subject to greater credit risk than higher-rated investment grade securities. The Fund may make significant investments in derivative instruments. Derivative instruments can be illiquid, may disproportionately increase losses and could have a potentially large impact on Fund performance. Leverage may result in greater volatility of NAV and market price of common shares and may increase a shareholder’s risk of loss.

All investments are subject to risk including the possible loss of principal. Past performance is no guarantee of future results. All index performance reflects no deduction for fees, expenses or taxes. Please note that an investor cannot invest directly in an index.

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

Western Asset Managed Municipals Fund Inc.

VII

i	The Federal Reserve Board (“Fed”) is responsible for the formulation of policies designed to promote economic growth, full employment, stable prices and a sustainable pattern of international trade and payments.
ii	Gross domestic product (“GDP”) is the market value of all final goods and services produced within a country in a given period of time.
iii	The Institute for Supply Management’s PMI is based on a survey of purchasing executives who buy the raw materials for manufacturing at more than 350 companies. It offers an early reading on the health of the manufacturing sector.
iv	The Barclays Capital Municipal Bond Index is a market value weighted index of investment grade municipal bonds with maturities of one year or more.
v	The Barclays Capital U.S. Aggregate Index is a broad-based bond index comprised of government, corporate, mortgage- and asset-backed issues, rated investment grade or higher, and having at least one year to maturity.
vi	Net asset value (“NAV”) is calculated by subtracting total liabilities and outstanding preferred stock (if any) from the closing value of all securities held by the Fund (plus all other assets) and dividing the result (total net assets) by the total number of the common shares outstanding. The NAV fluctuates with changes in the market prices of securities in which the Fund has invested. However, the price at which an investor may buy or sell shares of the Fund is the Fund’s market price as determined by supply of and demand for the Fund’s shares.
vii	Lipper, Inc., a wholly-owned subsidiary of Reuters, provides independent insight on global collective investments. Returns are based on the six-month period ended November 30, 2010, including the reinvestment of all distributions, including returns of capital, if any, calculated among the 63 funds in the Fund’s Lipper category.

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Western Asset Managed Municipals Fund Inc. 2010 Semi-Annual Report

Fund at a glance† (unaudited)

Investment breakdown (%) as a percent of total investments

† The bar graph above represents the composition of the Fund’s investments as of November 30, 2010 and May 31, 2010 and does not include derivatives such as futures contracts. The Fund is actively managed. As a result, the composition of the Fund’s investments is subject to change at any time.

Western Asset Managed Municipals Fund Inc. 2010 Semi-Annual Report

Spread duration (unaudited)

Economic Exposure — November 30, 2010

Spread duration measures the sensitivity to changes in spreads. The spread over Treasuries is the annual risk-premium demanded by investors to hold non-Treasury securities. Spread duration is quantified as the % change in price resulting from a 100 basis points change in spreads. For a security with positive spread duration, an increase in spreads would result in a price decline and a decline in spreads would result in a price increase. This chart highlights the market sector exposure of the Fund’s portfolio and the exposure relative to the selected benchmark as of the end of the reporting period.

MMU	— Western Asset Managed Municipals Fund Inc.
BC Muni Bond	— Barclays Capital Municipal Bond Index

Western Asset Managed Municipals Fund Inc. 2010 Semi-Annual Report

Effective duration (unaudited)

Interest Rate Exposure — November 30, 2010

Effective duration measures the sensitivity to changes in Treasury yields. Effective duration is quantified as the % change in price resulting from a 100 basis points change in Treasury yields. For a security with positive effective duration, an increase in Treasury yields would result in a price decline and a decline in Treasury yields would result in a price increase. This chart highlights the interest rate exposure of the Fund’s portfolio relative to the selected benchmark as of the end of the reporting period.

MMU	— Western Asset Managed Municipals Fund Inc.
BC Muni Bond	— Barclays Capital Municipal Bond Index

Western Asset Managed Municipals Fund Inc. 2010 Semi-Annual Report

Schedule of investments (unaudited)

November 30, 2010

Western Asset Managed Municipals Fund Inc.

Security	Rate		Maturity Date	Face Amount	Value
Municipal Bonds — 99.4%
*Arizona — 4.9%*
Greater Arizona Development Authority, Development Authority Infrastructure Revenue, Pinal County Road Project, NATL	5.000	%	8/1/19	$ 3,705,000	$ 3,999,844
Phoenix, AZ, Civic Improvement Corp. Airport Revenue	5.000	%	7/1/40	5,000,000	4,893,950
Phoenix, AZ, Civic Improvement Corp. Airport Revenue, Senior Lien, FGIC	5.250	%	7/1/22	3,000,000	3,047,040	(a)
Phoenix, AZ, GO	5.000	%	7/1/27	1,000,000	1,046,510	(b)
Salt Verde, AZ, Financial Corp. Gas Revenue	5.000	%	12/1/32	15,000,000	13,425,300
Salt Verde, AZ, Financial Corp. Gas Revenue	5.000	%	12/1/37	10,040,000	8,835,099
Salt Verde, AZ, Financial Corp. Senior Gas Revenue	5.250	%	12/1/28	2,000,000	1,986,200
*Total Arizona*					*37,233,943*
*California — 14.7%*
Bay Area Toll Authority, CA, Toll Bridge Revenue, San Francisco Bay Area	5.125	%	4/1/39	21,700,000	21,999,460
California EFA Revenue	5.625	%	7/1/23	1,170,000	982,344
California Health Facilities Financing Authority Revenue, Stanford Hospital & Clinics	5.150	%	11/15/40	2,000,000	1,975,860
California Housing Finance Agency Revenue:
Home Mortgage	4.700	%	8/1/24	3,100,000	2,777,352	(a)
Home Mortgage	4.800	%	8/1/37	10,000,000	8,038,900	(a)
California State Department of Veterans Affairs, Home Purchase Revenue, AMBAC	5.350	%	12/1/27	5,000,000	5,051,050
California Statewide CDA Revenue:
Methodist Hospital Project, FHA	6.625	%	8/1/29	5,885,000	6,611,680
St. Joseph Health System, FGIC	5.750	%	7/1/47	3,000,000	3,014,460
Garden Grove, CA, Agency for Community Development, Tax Allocation, Refunding, AMBAC	5.000	%	10/1/29	7,375,000	6,823,203
Los Angeles, CA, Convention & Exhibition Center Authority, Lease Revenue	5.125	%	8/15/22	7,250,000	7,701,530
Los Angeles, CA, Department of Airports Revenue, Los Angeles International Airport	5.000	%	5/15/40	5,000,000	4,909,100
M-S-R Energy Authority, CA, Gas Revenue	6.500	%	11/1/39	12,000,000	13,080,720
Modesto, CA, Irrigation District, COP, Capital Improvements	6.000	%	10/1/39	6,500,000	6,951,490
Rancho Cucamonga, CA, RDA, Tax Allocation, Rancho Redevelopment Projects, NATL	5.125	%	9/1/30	3,340,000	3,106,367
Sacramento County, CA, COP, Unrefunded Balance, Public Facilities Project, NATL	5.375	%	2/1/19	1,145,000	1,148,389
San Bernardino County, CA, COP, Arrowhead Project	5.125	%	8/1/24	5,185,000	5,200,814

See Notes to Financial Statements.

Western Asset Managed Municipals Fund Inc. 2010 Semi-Annual Report

Western Asset Managed Municipals Fund Inc.

Security	Rate		Maturity Date	Face Amount	Value
*California — continued*
San Mateo County Community College District, COP, NATL	5.000	%	10/1/25	$ 3,000,000	$ 3,439,770	(b)
Santa Clara, CA, RDA, Tax Allocation, Bayshore North Project, NATL	5.000	%	6/1/23	2,500,000	2,502,300
Walnut, CA, Energy Center Authority Revenue	5.000	%	1/1/40	7,745,000	7,446,430
*Total California*					*112,761,219*
*Colorado — 8.9%*
Colorado Health Facilities Authority Revenue, Sisters Leavenworth	5.000	%	1/1/35	6,000,000	5,917,080
Denver, CO, City & County Airport Revenue	6.125	%	11/15/25	10,945,000	13,500,658	(a)(c)
Denver, CO, City & County Airport Revenue, Unrefunded Balance	6.125	%	11/15/25	13,630,000	13,671,980	(a)
El Paso County, CO, COP, Detention Facility Project, AMBAC	5.000	%	12/1/23	1,700,000	1,740,460
Garfield County, CO, GO:
School District No. 2, AGM, State Aid Withholding	5.000	%	12/1/23	2,300,000	2,497,938	(b)
School District No. 2, AGM, State Aid Withholding	5.000	%	12/1/25	1,000,000	1,086,060	(b)
Public Authority for Colorado Energy, Natural Gas Purchase Revenue	6.500	%	11/15/38	20,000,000	21,924,600
University of Colorado, COP, Master Lease Purchase Agreement, AMBAC	5.000	%	6/1/28	7,320,000	8,043,362	(b)
*Total Colorado*					*68,382,138*
*Connecticut — 0.1%*
Connecticut State HEFA Revenue, Child Care Facilities Project, AMBAC	5.625	%	7/1/29	970,000	*973,637*
*Delaware — 0.6%*
Delaware State EDA Revenue, Indian River Power LLC	5.375	%	10/1/45	5,000,000	*4,620,250*
*District of Columbia — 1.9%*
District of Columbia, Hospital Revenue, Children’s Hospital Obligation, AGM	5.450	%	7/15/35	14,665,000	*14,824,702*
*Florida — 9.0%*
Florida State Board of Education Capital Outlay, GO, Public Education, Refunding, AGM	5.000	%	6/1/24	5,000,000	5,118,450
Florida State Department of Transportation, GO, Right of Way Project, FGIC	5.000	%	7/1/25	1,465,000	1,530,954
Jacksonville, FL, Electric Authority, Electric System Revenue	5.000	%	10/1/28	3,305,000	3,345,586
Martin County, FL, IDA Revenue, Indiantown Cogeneration Project	7.875	%	12/15/25	6,500,000	6,529,055	(a)
Miami Beach, FL, Stormwater Revenue, FGIC	5.375	%	9/1/30	1,290,000	1,306,847
Miami-Dade County, FL, Aviation Revenue	5.500	%	10/1/41	10,000,000	10,089,600

See Notes to Financial Statements.

Western Asset Managed Municipals Fund Inc. 2010 Semi-Annual Report

Schedule of investments (unaudited) (cont’d)

November 30, 2010

Western Asset Managed Municipals Fund Inc.

Security	Rate		Maturity Date	Face Amount	Value
*Florida — continued*
Miami-Dade County, FL, Aviation Revenue, Miami International Airport	5.375	%	10/1/35	$10,705,000	$10,789,570
Miami-Dade County, FL, Expressway Authority Toll System Revenue	5.000	%	7/1/40	10,000,000	9,626,200
Orange County, FL, Health Facilities Authority Revenue, Hospital-Orlando Regional Healthcare	5.000	%	11/1/35	4,545,000	4,394,015
Orange County, FL, School Board, COP, AGC	5.500	%	8/1/34	8,000,000	8,294,880
Orlando, FL, State Sales Tax Payments Revenue	5.000	%	8/1/32	5,000,000	5,093,050
South Brevard, FL, Recreational Facilities Improvement, Special District, AMBAC	5.000	%	7/1/20	2,500,000	2,505,400
*Total Florida*					*68,623,607*
*Georgia — 3.9%*
Atlanta, GA, Water & Wastewater Revenue	6.250	%	11/1/39	13,000,000	14,146,600
DeKalb, Newton & Gwinnett Counties, GA, Joint Development Authority Revenue, GGC Foundation LLC Project	6.125	%	7/1/40	6,220,000	6,811,957
Main Street Natural Gas Inc., GA, Gas Project Revenue	5.000	%	3/15/22	4,000,000	3,948,840
Private Colleges & Universities Authority Revenue:
Mercer University Project	5.750	%	10/1/21	2,180,000	2,316,686	(b)
Mercer University Project, Refunding	5.250	%	10/1/25	2,000,000	1,999,840
Mercer University Project, Refunding	5.375	%	10/1/29	1,000,000	969,420
*Total Georgia*					*30,193,343*
*Hawaii — 0.9%*
Hawaii State Airports System Revenue	5.000	%	7/1/39	7,000,000	*6,823,040*
*Illinois — 5.8%*
Illinois Finance Authority Revenue:
Advocate Health Care & Hospitals Corp. Network	6.250	%	11/1/28	2,445,000	2,677,642
Alexian, AGM	5.500	%	1/1/28	12,530,000	13,075,807
Memorial Health System	5.500	%	4/1/39	7,000,000	6,822,970
Metropolitan Pier & Exposition Authority, IL, Dedicated State Tax Revenue, Mccormick	5.250	%	6/15/50	22,000,000	21,533,160
*Total Illinois*					*44,109,579*
*Indiana — 1.4%*
Indianapolis, IN, Thermal Energy System	5.000	%	10/1/25	5,000,000	5,254,000	(d)
Richmond, IN, Hospital Authority Revenue, Reid Hospital & Health Care Services Inc. Project	6.625	%	1/1/39	5,000,000	5,322,400
*Total Indiana*					*10,576,400*
*Kentucky — 1.3%*
Louisville & Jefferson County, KY, Metro Government Health System Revenue, Norton Healthcare Inc.	5.250	%	10/1/36	11,000,000	*10,183,910*

See Notes to Financial Statements.

Western Asset Managed Municipals Fund Inc. 2010 Semi-Annual Report

Western Asset Managed Municipals Fund Inc.

Security	Rate		Maturity Date	Face Amount	Value
*Maine — 0.2%*
Maine State Housing Authority Mortgage Revenue	5.300	%	11/15/23	$ 1,770,000	$ 1,782,815
*Maryland — 1.0%*
Baltimore, MD, Project Revenue:
Refunding, Wastewater Projects, FGIC	5.125	%	7/1/32	2,500,000	2,534,100
Refunding, Wastewater Projects, FGIC	5.200	%	7/1/32	2,000,000	2,029,540
Maryland State Health & Higher EFA Revenue, Johns Hopkins Hospital Issue	5.000	%	11/15/26	3,075,000	3,443,108	(b)
*Total Maryland*					*8,006,748*
*Massachusetts — 3.2%*
Massachusetts DFA Revenue, Merrimack College Issue, NATL	5.200	%	7/1/32	1,125,000	1,030,815
Massachusetts State DFA Revenue:
Boston University	5.000	%	10/1/29	3,000,000	3,066,390
Boston University, AMBAC	5.000	%	10/1/39	3,500,000	3,494,435
Massachusetts State HEFA Revenue:
Berklee College of Music	5.000	%	10/1/32	1,500,000	1,503,330
Suffolk University	5.750	%	7/1/39	8,000,000	8,162,320
Massachusetts State Housing Finance Agency Revenue	7.000	%	12/1/38	5,000,000	5,396,050
Massachusetts State Special Obligation Dedicated Tax Revenue, NATL, FGIC	5.500	%	1/1/34	2,000,000	2,096,560
*Total Massachusetts*					*24,749,900*
*Michigan — 0.8%*
Michigan State Hospital Finance Authority Revenue, Refunding, Trinity Health Credit	5.375	%	12/1/23	1,500,000	1,535,685
Royal Oak, MI, Hospital Finance Authority Revenue, William Beaumont Hospital	8.250	%	9/1/39	4,000,000	4,685,600
*Total Michigan*					*6,221,285*
*Minnesota — 0.2%*
Dakota County, MN, CDA, MFH Revenue, Southfork Apartments, LIQ-FNMA	5.625	%	2/1/26	1,500,000	*1,468,605*
*Missouri — 1.8%*
Greene County, MO, Reorganized School District No. 8, GO, Missouri State Aid Direct Deposit Program, AGM	5.100	%	3/1/22	1,500,000	1,571,640
Kansa City, MO, Water Revenue	5.250	%	12/1/32	1,000,000	1,062,300
Missouri State HEFA Revenue, Children’s Mercy Hospital	5.625	%	5/15/39	6,000,000	6,090,420
Platte County, MO, IDA Revenue, Refunding & Improvement Zona Rosa Retail Project	5.000	%	12/1/32	5,000,000	5,154,650
*Total Missouri*					*13,879,010*

See Notes to Financial Statements.

Western Asset Managed Municipals Fund Inc. 2010 Semi-Annual Report

Schedule of investments (unaudited) (cont’d)

November 30, 2010

Western Asset Managed Municipals Fund Inc.

Security	Rate		Maturity Date	Face Amount	Value
*Montana — 1.2%*
Montana State Board of Investment, Resource Recovery Revenue, Yellowstone Energy LP Project	7.000	%	12/31/19	$ 9,080,000	$ 8,792,255	(a)
*Nebraska — 0.4%*
Nebraska Public Power Generation Agency Revenue, Whelan Energy Center Unit 2-A, AMBAC	5.000	%	1/1/25	3,000,000	*3,107,910*
*Nevada — 1.7%*
Reno, NV, Hospital Revenue, Washoe Medical Centre, AGM	5.500	%	6/1/33	12,750,000	*12,684,847*
*New Jersey — 4.1%*
New Jersey State Higher Education Assistance Authority, Student Loan Revenue	5.625	%	6/1/30	12,320,000	12,804,422
New Jersey State Higher Education Assistance Authority, Student Loan Revenue, AGC	6.125	%	6/1/30	10,000,000	10,511,100	(a)
New Jersey State Housing & Mortgage Finance Agency Revenue	6.375	%	10/1/28	6,590,000	7,090,906
South Jersey Port Corp., New Jersey Revenue, Refunding	5.000	%	1/1/26	1,350,000	1,373,922
*Total New Jersey*					*31,780,350*
*New Mexico — 0.7%*
New Mexico State Hospital Equipment Loan Council, Hospital Revenue, Presbyterian Healthcare Services	6.125	%	8/1/28	5,000,000	*5,446,850*
*New York — 8.0%*
Liberty, NY, Development Corporation Revenue:
Goldman Sachs Headquarters	5.250	%	10/1/35	13,000,000	13,052,910
Goldman Sachs Headquarters	5.500	%	10/1/37	8,985,000	9,452,310
Long Island Power Authority, NY, Electric System Revenue	6.000	%	5/1/33	24,570,000	26,678,106
New York City, NY, Municipal Water Finance Authority, Water & Sewer Systems Revenue	5.250	%	6/15/25	4,315,000	4,425,162
New York City, NY, Municipal Water Finance Authority, Water & Sewer Systems Revenue	5.250	%	6/15/25	1,685,000	1,745,862	(b)
New York City, NY, TFA, Building Aid Revenue	5.000	%	1/15/32	4,000,000	4,109,880
New York Liberty Development Corp., Liberty Revenue, Second Priority, Bank of America Tower	5.125	%	1/15/44	1,000,000	1,003,920
New York State Dormitory Authority Revenue, Willow Towers Inc. Project, GNMA-Collateralized	5.250	%	2/1/22	1,000,000	1,033,650
*Total New York*					*61,501,800*
*North Carolina — 0.5%*
Harnett County, NC, GO, Refunded Custody Receipts, AMBAC	5.250	%	6/1/24	1,615,000	1,711,012

See Notes to Financial Statements.

Western Asset Managed Municipals Fund Inc. 2010 Semi-Annual Report

Western Asset Managed Municipals Fund Inc.

Security	Rate		Maturity Date	Face Amount	Value
*North Carolina — continued*
North Carolina Capital Facilities Finance Agency, Educational Facilities Revenue:
Elizabeth City State University Housing Foundation LLC Project, AMBAC	5.000	%	6/1/23	$ 1,000,000	$ 943,160
Elizabeth City State University Housing Foundation LLC Project, AMBAC	5.000	%	6/1/33	1,250,000	1,077,450
*Total North Carolina*					*3,731,622*
*North Dakota — 1.7%*
North Dakota State Housing Finance Agency Revenue, Housing Finance Program, Home Mortgage Finance	5.625	%	1/1/39	12,525,000	*12,978,655*
*Ohio — 3.3%*
Hamilton County, OH, Hospital Facilities Revenue, Cincinnati Children’s Hospital, FGIC	5.250	%	5/15/23	2,000,000	2,024,440
Hamilton County, OH, Sales Tax Revenue, AMBAC	5.250	%	12/1/32	5,075,000	5,088,144
Lorain County, OH, Hospital Revenue, Catholic Healthcare Partners	5.375	%	10/1/30	7,500,000	7,559,700
Lucas County, OH, Hospital Revenue, Promedica Healthcare Obligation Group, AMBAC	5.375	%	11/15/29	5,990,000	5,998,326
Summit County, OH, GO:
FGIC	5.000	%	12/1/21	1,000,000	1,051,450
FGIC	5.000	%	12/1/22	500,000	524,230
Trumbull County, OH, GO, NATL	5.200	%	12/1/20	1,500,000	1,571,550
Warrensville Heights, OH, GO, City School District, School Improvements, FGIC	5.625	%	12/1/20	1,500,000	1,515,000	(b)
*Total Ohio*					*25,332,840*
*Oregon — 0.8%*
Clackamas County, OR, Hospital Facility Authority Revenue, Legacy Health System	5.750	%	5/1/16	3,210,000	3,276,415
Oregon State Housing & Community Services Department, Mortgage Revenue, Single-Family Mortgage Program	5.050	%	7/1/26	1,680,000	1,683,897	(a)
Umatilla County, OR, Hospital Facility Authority Revenue:
Catholic Health Initiatives	5.000	%	5/1/32	535,000	537,975
Catholic Health Initiatives	5.000	%	5/1/32	465,000	527,222	(b)
*Total Oregon*					*6,025,509*
*Pennsylvania — 1.4%*
Pennsylvania State Public School Building Authority Lease Revenue, Philadelphia School District Project, AGM	5.000	%	6/1/33	10,755,000	*10,640,352*
*Puerto Rico — 3.4%*
Puerto Rico Sales Tax Financing Corp., Sales Tax Revenue	5.750	%	8/1/37	6,000,000	6,206,160

See Notes to Financial Statements.

Western Asset Managed Municipals Fund Inc. 2010 Semi-Annual Report

Schedule of investments (unaudited) (cont’d)

November 30, 2010

Western Asset Managed Municipals Fund Inc.

Security	Rate		Maturity Date	Face Amount	Value
*Puerto Rico — continued*
Puerto Rico Sales Tax Financing Corp., Sales Tax Revenue	5.500	%	8/1/42	$15,000,000	$15,236,100
Puerto Rico Sales Tax Financing Corp., Sales Tax Revenue	6.000	%	8/1/42	4,000,000	4,214,840
*Total Puerto Rico*					*25,657,100*
*Rhode Island — 0.7%*
Rhode Island State Health & Educational Building Corp., Revenue, Hospital Financing	7.000	%	5/15/39	5,000,000	*5,544,050*
*South Carolina — 0.3%*
South Carolina State Ports Authority Revenue	5.250	%	7/1/40	2,500,000	*2,492,425*	(e)
*Tennessee — 0.9%*
Hardeman County, TN, Correctional Facilities Corp., Correctional Facilities Revenue	7.750	%	8/1/17	795,000	795,390
Tennessee Energy Acquisition Corp., Gas Revenue	5.250	%	9/1/26	6,000,000	5,836,680
*Total Tennessee*					*6,632,070*
*Texas — 7.1%*
Dallas-Fort Worth, TX, International Airport Facilities Improvement Corp. Revenue, American Airlines Inc., Guarantee Agreement	6.375	%	5/1/35	5,000,000	4,246,300	(a)
Dallas-Fort Worth, TX, International Airport Revenue:
Joint Improvement	5.000	%	11/1/45	10,000,000	9,869,400
NATL	6.000	%	11/1/23	5,000,000	5,007,700	(a)
Harris County, TX, Health Facilities Development Corp., School Health Care System Revenue	5.750	%	7/1/27	1,000,000	1,202,990	(c)
Love Field Airport Modernization Corp, TX, Special Facilities Revenue, Southwest Airlines Co. Project	5.250	%	11/1/40	2,000,000	1,852,520
North Texas Tollway Authority Revenue	5.750	%	1/1/33	5,000,000	4,999,750
North Texas Tollway Authority Revenue	5.750	%	1/1/40	15,000,000	15,068,400
Tarrant County, TX, Cultural Education Facilities Finance Corp. Revenue, Texas Health Resources	5.000	%	11/15/40	5,000,000	4,878,550
Texas Private Activity Bond Surface Transportation Corp. Revenue, LBJ Infrastructure Group LLC	7.000	%	6/30/40	7,000,000	7,215,950
*Total Texas*					*54,341,560*
*Virginia — 0.4%*
Chesterfield County, VA, IDA, PCR, Virginia Electric & Power Co., Remarketed 11/8/02	5.875	%	6/1/17	3,000,000	*3,069,390*
*Wisconsin — 1.3%*
Wisconsin State General Revenue, Appropriation Revenue	6.000	%	5/1/36	7,500,000	8,170,575

See Notes to Financial Statements.

Western Asset Managed Municipals Fund Inc. 2010 Semi-Annual Report

Western Asset Managed Municipals Fund Inc.

Security	Rate		Maturity Date	Face Amount	Value
*Wisconsin — continued*
Wisconsin State HEFA Revenue:
Kenosha Hospital & Medical Center Project	5.700	%	5/15/20	$ 565,000	$ 565,588
Medical College of Wisconsin Inc. Project, NATL	5.400	%	12/1/16	1,250,000	1,253,762
*Total Wisconsin*					*9,989,925*
*Wyoming — 0.9%*
Wyoming CDA, Housing Revenue	5.600	%	6/1/35	7,190,000	*7,220,486*	(a)
Total Investments before Short-Term Investments (Cost — $727,540,717)					762,384,127
Short-Term Investments — 0.6%
*Oklahoma — 0.1%*
Oklahoma State Turnpike Authority Revenue, SPA-JPMorgan Chase	0.270	%	1/1/28	800,000	*800,000*	(f)(g)
*Puerto Rico — 0.5%*
Commonwealth of Puerto Rico, GO, Public Improvement, AGM, LOC-Wells Fargo Bank N.A.	0.220	%	7/1/32	3,900,000	*3,900,000*	(f)(g)
Total Short-Term Investments (Cost — $4,700,000)					4,700,000
Total Investments — 100.0% (Cost — $732,240,717 #)					$767,084,127

(a)	Income from this issue is considered a preference item for purposes of calculating the alternative minimum tax (“AMT”).
(b)	Pre-Refunded bonds are escrowed with U.S. government obligations and/or U.S. government agency securities and are considered by the manager to be triple-A rated even if issuer has not applied for new ratings.
(c)	Bonds are escrowed to maturity by government securities and/or U.S. government agency securities and are considered by the manager to be triple-A rated even if issuer has not applied for new ratings.
(d)	Variable rate security. Interest rate disclosed is that which is in effect at November 30, 2010.
(e)	Security is purchased on a when-issued basis.
(f)	Variable rate demand obligations have a demand feature under which the Fund can tender them back to the issuer or liquidity provider on no more than 7 days notice.
(g)	Maturity date shown is the final maturity date. The security may be sold back to the issuer before final maturity.
#	Aggregate cost for federal income tax purposes is substantially the same.

See Notes to Financial Statements.

Western Asset Managed Municipals Fund Inc. 2010 Semi-Annual Report

Schedule of investments (unaudited) (cont’d)

November 30, 2010

Western Asset Managed Municipals Fund Inc.

Abbreviations used in this schedule:

AGC	— Assured Guaranty Corporation — Insured Bonds
AGM	— Assured Guaranty Municipal Corporation — Insured Bonds
AMBAC	— American Municipal Bond Assurance Corporation — Insured Bonds
CDA	— Communities Development Authority
COP	— Certificates of Participation
DFA	— Development Finance Agency
EDA	— Economic Development Authority
EFA	— Educational Facilities Authority
FGIC	— Financial Guaranty Insurance Company — Insured Bonds
FHA	— Federal Housing Administration
FNMA	— Federal National Mortgage Association
GNMA	— Government National Mortgage Association
GO	— General Obligation
HEFA	— Health & Educational Facilities Authority
IDA	— Industrial Development Authority
LIQ	— Liquidity Facility
LOC	— Letter of Credit
MFH	— Multi-Family Housing
NATL	— National Public Finance Guarantee Corporation — Insured Bonds
PCR	— Pollution Control Revenue
RDA	— Redevelopment Agency
SPA	— Standby Bond Purchase Agreement — Insured Bonds
TFA	— Transitional Finance Authority

Summary of Investments by Industry†

Health care	18.6	%
Transportation	16.6
Industrial revenue	13.3
Special tax obligation	11.3
Power	8.5
Education	7.1
Housing	7.0
Pre-refunded/escrowed to maturity	6.9
Leasing	4.8
Water & sewer	3.3
Local general obligation	1.3
State general obligation	0.7
Short-term investments	0.6
	100.0	%

† As a percentage of total investments. Please note that Fund holdings are as of November, 30, 2010 and are subject to change.

See Notes to Financial Statements.

Western Asset Managed Municipals Fund Inc. 2010 Semi-Annual Report

Western Asset Managed Municipals Fund Inc.

Ratings Table*

S&P/Moody’s/Fitch**
AAA/Aaa	4.7	%
AA/Aa	37.4
A	48.5
BBB/Baa	3.7
BB/Ba	0.8
B/B	0.2
CCC/Caa	0.6
A-1/VMIG 1	0.6
NR	3.5
	100.0	%

As a percentage of total investments.

The ratings shown are based on each portfolio security’s rating as determined by S&P, Moody’s or Fitch, each a Nationally Recognized Statistical Ratings Organization (“NRSRO”). These ratings are the opinions of the NRSRO and are not measures of quality or guarantees of performance. Securities may be rated by other NRSROs, and these ratings may be higher or lower. In the event that a security is rated by multiple NRSROs and receives different ratings, the Fund will treat the security as being rated in the highest rating category received from an NRSRO.

See pages 14 through 17 for definitions of ratings.

See Notes to Financial Statements.

Western Asset Managed Municipals Fund Inc. 2010 Semi-Annual Report

Bond ratings

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

Long-term security ratings (unaudited)

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

AAA	—	An obligation rated “AAA” has the highest rating assigned by Standard & Poor’s. The obligor’s capacity to meet its financial commitment on the obligation is extremely strong.
AA	—	An obligation rated “AA” differs from the highest-rated obligations only to a small degree. The obligor’s capacity to meet its financial commitment on the obligation is very strong.
A	—	An obligation rated “A” is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher-rated categories. However, the obligor’s capacity to meet its financial commitment on the obligation is still strong.
BBB	—	An obligation rated “BBB” exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation.
BB	—	An obligation rated “BB” is less vulnerable to nonpayment than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions, which could lead to the obligor’s inadequate capacity to meet its financial commitment on the obligation.
B	—	An obligation rated “B” is more vulnerable to nonpayment than obligations rated “BB”, but the obligor currently has the capacity to meet its financial commitment on the obligation. Adverse business, financial, or economic conditions will likely impair the obligor’s capacity or willingness to meet its financial commitment on the obligation.
CCC	—	An obligation rated “CCC” is currently vulnerable to nonpayment, and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitment on the obligation. In the event of adverse business, financial, or economic conditions, the obligor is not likely to have the capacity to meet its financial commitment on the obligation.
CC	—	An obligation rated “CC” is currently highly vulnerable to nonpayment.
C	—	The “C” rating may be used to cover a situation where a bankruptcy petition has been filed or similar action has been taken, but payments on this obligation are being continued.
D	—	An obligation rated “D” is in payment default. The “D” rating category is used when payments on an obligation are not made on the date due, even if the applicable grace period has not expired, unless Standard & Poor’s believes that such payments will be made during such grace period. The “D” rating also will be used upon the filing of a bankruptcy petition or the taking of a similar action if payments of on obligation are jeopardized.

Western Asset Managed Municipals Fund Inc. 2010 Semi-Annual Report

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

Aaa	—	Obligations rated “Aaa” are judged to be of the highest quality, with minimal credit risk.
Aa	—	Obligations rated “Aa” are judged to be of high quality and are subject to very low credit risk.
A	—	Obligations rated “A” are considered upper-medium grade and are subject to low credit risk.
Baa	—	Obligations rated “Baa” are subject to moderate credit risk. They are considered medium grade and as such may possess certain speculative characteristics.
Ba	—	Obligations rated “Ba” are judged to have speculative elements and are subject to substantial credit risk.
B	—	Obligations rated “B” are considered speculative and are subject to high credit risk.
Caa	—	Obligations rated “Caa” are judged to be of poor standing and are subject to very high credit risk.
Ca	—	Obligations rated “Ca” are highly speculative and are likely in, or very near, default, with some prospect of recovery for principal and interest.
C	—	Obligations rated “C” are the lowest rated class and are typically in default, with little prospect of recovery for principal and interest.

Fitch Ratings Service (“Fitch”) Structured, Project & Public Finance Obligations — Ratings from “AA” to “CCC” may be modified by the addition of a plus (+) or minus (–) sign to show relative standings within the major rating categories.

AAA	—	Obligations rated “AAA” by Fitch denote the lowest expectation of default risk. They are assigned only in cases of exceptionally strong capacity for payment of financial commitments. This capacity is highly unlikely to be adversely affected by foreseeable events.
AA	—	Obligations rated “AA” denote expectations of very low default risk. They indicate very strong capacity for payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events.
A	—	Obligations rated “A” denote expectations of low default risk. The capacity for payment of financial commitments is considered strong. This capacity may, nevertheless, be more vulnerable to adverse business or economic conditions than is the case for higher ratings.
BBB	—	Obligations rated “BBB” indicate that expectations of default risk are currently low. The capacity for payment of financial commitments is considered adequate but adverse business or economic conditions are more likely to impair this capacity.
BB	—	Obligations rated “BB” indicate an elevated vulnerability to default risk, particularly in the event of adverse changes in business or economic conditions over time; however, business or financial flexibility exists which supports the servicing of financial commitments.
B	—	Obligations rated “B” indicate that material default risk is present, but a limited margin of safety remains. Financial commitments are currently being met; however, capacity for continued payment is vulnerable to deterioration in the business and economic environment.
CCC	—	Default is a real possibility.
CC	—	Default of some kind appears probable.
C	—	Default is imminent or inevitable, or the issuer is in standstill.

NR	—	indicates that the obligation is not rated by Standard & Poor’s, Moody’s or Fitch.

Western Asset Managed Municipals Fund Inc. 2010 Semi-Annual Report

Short-term security ratings (unaudited)

Standard & Poor’s Municipal Short-Term Notes Ratings

SP-1	—	A short-term obligation rated “SP-1” is rated in the highest category by Standard & Poor’s. Strong capacity to pay principal and interest. An issue determined to possess a very strong capacity to pay debt service is given a plus (+) designation.
SP-2	—	A short-term obligation rated “SP-2” is a Standard & Poor’s rating indicating satisfactory capacity to pay principal and interest, with some vulnerability to adverse financial and economic changes over the term of the notes.
SP-3	—	A short-term obligation rated “SP-3” is a Standard & Poor’s rating indicating speculative capacity to pay principal and interest.

Standard & Poor’s Short-Term Issues Credit Ratings

A-1	—	A short-term obligation rated “A-1” is rated in the highest category by Standard & Poor’s. The obligor’s capacity to meet its financial commitment on the obligation is strong. Within this category, certain obligations are designated with a plus sign (+). This indicates that the obligor’s capacity to meet its financial commitment on these obligations is extremely strong.
A-2	—	A short-term obligation rated “A-2” by Standard & Poor’s is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rating categories. However, the obligor’s capacity to meet its financial commitment on the obligation is satisfactory.
A-3	—	A short-term obligation rated “A-3” by Standard & Poor’s exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation.
B	—	A short-term obligation rated “B” by Standard & Poor’s is regarded as having significant speculative characteristics. Ratings of “B-1”, “B-2” and “B-3” may be assigned to indicate finer distinctions within the “B” category. The obligor currently has the capacity to meet its financial commitment on the obligation; however, it faces major ongoing uncertainties which could lead to the obligor’s inadequate capacity to meet its financial commitment on the obligation.

Moody’s Variable Rate Demand Obligations (VRDO) Ratings

VMIG 1	—	Moody’s highest rating for issues having a variable rate demand feature — VRDO. This designation denotes superior credit quality. Excellent protection is afforded by the superior short-term credit strength of the liquidity provider and structural and legal protections that ensure the timely payment of purchase price on demand.
VMIG 2	—	This designation denotes strong credit quality. Good protection is afforded by the strong short-term credit strength of the liquidity provider and structural and legal protections that ensure the timely payment of purchase price on demand.
VMIG 3	—	This designation denotes acceptable credit quality. Adequate protection is afforded by the strong short-term credit strength of the liquidity provider and structural and legal protections that ensure the timely payment of purchase price on demand.

Western Asset Managed Municipals Fund Inc. 2010 Semi-Annual Report

Moody’s Short-Term Municipal Obligations Ratings

MIG 1	—	Moody’s highest rating for short-term municipal obligations. This designation denotes superior credit quality. Excellent protection is afforded by established cash flows, highly reliable liquidity support, or demonstrated broad-based access to the market for refinancing.
MIG 2	—	This designation denotes strong credit quality. Margins of protection are ample, although not as large as the preceding group.
MIG 3	—	This designation denotes acceptable credit quality. Liquidity and cash flow protection may be narrow, and market access for refinancing is likely to be less well-established.
SG	—	This designation denotes speculative-grade credit quality. Debt instruments in this category may lack sufficient margins of protection.

Moody’s Short-Term Obligations Ratings

P-1	—	Moody’s highest rating for commercial paper and for VRDO prior to the advent of the VMIG 1 rating. Have a superior ability to repay short-term debt obligations.
P-2	—	Have a strong ability to repay short-term debt obligations.
P-3	—	Have an acceptable ability to repay short-term debt obligations.
NP	—	Issuers do not fall within any of the Prime rating categories.

Fitch’s Short-Term Issuer or Obligations Ratings

F1	—	Fitch’s highest rating indicating the strongest intrinsic capacity for timely payment of financial commitments; may have an added “+” to denote any exceptionally strong credit feature.
F2	—	Fitch rating indicating good intrinsic capacity for timely payment of financial commitments.
F3	—	Fitch rating indicating intrinsic capacity for timely payment of financial commitments is adequate.

NR	—	Indicates that the obligation is not rated by Standard & Poor’s, Moody’s or Fitch.

Western Asset Managed Municipals Fund Inc. 2010 Semi-Annual Report

Statement of assets and liabilities (unaudited)

November 30, 2010

Assets:
Investments, at value (Cost — $732,240,717)		$767,084,127
Cash		33,997
Interest receivable		11,506,855
Prepaid expenses		48,008
*Total Assets*		*778,672,987*

Liabilities:
Payable for securities purchased		4,238,828
Investment management fee payable		352,784
Directors’ fees payable		13,951
Distributions payable to Auction Rate Cumulative Preferred Stockholders		13,365
Accrued expenses		71,872
*Total Liabilities*		*4,690,800*
Series M, T, W, Th and F Auction Rate Cumulative Preferred Stock (2,000 shares for each series authorized and issued at $25,000 for each share) (Note 5)		250,000,000
Total Net Assets		$523,982,187

Net Assets:
Par value ($0.001 par value; 42,169,708 common shares issued and outstanding; 500,000,000 common shares authorized)		$ 42,170
Paid-in capital in excess of par value		512,964,586
Undistributed net investment income		13,831,708
Accumulated net realized loss on investments and futures contracts		(37,699,687)
Net unrealized appreciation on investments		34,843,410
Total Net Assets		$523,982,187

Shares Outstanding		42,169,708

Net Asset Value		$12.43

See Notes to Financial Statements.

Western Asset Managed Municipals Fund Inc. 2010 Semi-Annual Report

Statement of operations (unaudited)

For the Six Months Ended November 30, 2010

Investment Income:
*Interest*		$ 20,851,097

Expenses:
Investment management fee (Note 2)		2,175,926
Directors’ fees		87,351
Auction participation fees (Note 5)		62,743
Legal fees		55,521
Transfer agent fees		32,803
Audit and tax		32,462
Auction agent fees		21,208
Shareholder reports		20,447
Stock exchange listing fees		16,703
Insurance		9,307
Rating agency fees		9,133
Custody fees		5,300
Miscellaneous expenses		5,468
*Total Expenses*		*2,534,372*
Net Investment Income		18,316,725

Realized and Unrealized Gain (Loss) on Investments and Futures Contracts (Notes 1, 3 and 4):
Net Realized Gain (Loss) From:
Investment transactions		5,118,092
Futures contracts		(8,961,604)
*Net Realized Loss*		*(3,843,512)*
Change in Net Unrealized Appreciation (Depreciation) From:
Investments		(13,539,930)
Futures contracts		(1,269,872)
*Change in Net Unrealized Appreciation (Depreciation)*		*(14,809,802)*
Net Loss on Investments and Futures Contracts		(18,653,314)
Distributions Paid to Auction Rate Cumulative Preferred Stockholders from Net Investment Income (Note 1)		(525,144)
Decrease in Net Assets from Operations		$ (861,733)

See Notes to Financial Statements.

Western Asset Managed Municipals Fund Inc. 2010 Semi-Annual Report

Statements of changes in net assets

For the six months ended November 30, 2010 (unaudited) and the year ended May 31, 2010	November 30	May 31

Operations:
Net investment income	$ 18,316,725	$ 37,061,255
Net realized gain (loss)	(3,843,512)	1,347,532
Change in net unrealized appreciation (depreciation)	(14,809,802)	36,342,685
Distributions paid to auction rate preferred stockholders from net investment income	(525,144)	(1,076,296)
*Increase (Decrease) in Net Assets From Operations*	*(861,733)*	*73,675,176*

Distributions to Common Stock Shareholders From (Note 1):
Net investment income	(16,408,663)	(30,188,939)
*Decrease in Net Assets From Distributions to Common Stock Shareholders*	*(16,408,663)*	*(30,188,939)*

Fund Share Transactions:
Reinvestment of distributions (165,669 and 88,528 shares issued, respectively)	2,070,622	1,113,238
*Increase in Net Assets From Fund Share Transactions*	*2,070,622*	*1,113,238*
*Increase (Decrease) in Net Assets*	*(15,199,774)*	*44,599,475*

Net Assets:
Beginning of period	539,181,961	494,582,486
End of period*	$523,982,187	$539,181,961
* Includes undistributed net investment income of:	$13,831,708	$12,448,790

See Notes to Financial Statements.

Western Asset Managed Municipals Fund Inc. 2010 Semi-Annual Report

Financial highlights

For a share of capital stock outstanding throughout each year ended May 31, unless otherwise noted:

	20101		2010		2009		2008		2007		2006

Net asset value, beginning of period	$12.84		$11.80		$12.07		$12.04		$11.96		$11.73

Income (loss) from operations:
Net investment income	0.42		0.88		0.83		0.78		0.77		0.75
Net realized and unrealized gain (loss)	(0.43)		0.91		(0.41)		0.01		0.08		0.20
Distributions paid to Auction rate Cumulative Preferred Stockholders from net investment income	(0.01)		(0.03)		(0.13)		(0.22)		(0.22)		(0.17)
*Total income (loss) from operations*	*(0.02)*		*1.76*		*0.29*		*0.57*		*0.63*		*0.78*

Distributions paid to common stock shareholders from:
Net investment income	(0.39)		(0.72)		(0.56)		(0.54)		(0.55)		(0.55)
Net asset value, end of period	$12.43		$12.84		$11.80		$12.07		$12.04		$11.96
Market price, end of period	$12.73		$12.90		$11.10		$11.13		$11.18		$10.79
*Total return, based on NAV2,3***	*(0.13)*	%	*15.44*	%	*3.19*	%	*5.30*	%	*5.71*	%	*7.29*	%
*Total return, based on Market Price*3	*1.80*	%	*23.29*	%	*5.27*	%	*4.57*	%	*8.81*	%	*5.91*	%
Net assets, end of period (000s)	$523,982		$539,182		$494,582		$505,751		$504,471		$501,256
Ratios to average net assets based on common shares outstanding4:
Gross expenses	0.94	%5	0.97	%	1.16	%	1.09	%	1.08	%6	1.14	%
Net expenses	0.94	5	0.97		1.16		1.09		1.07	6,7	1.14	7
Net investment income	6.78	5	7.06		7.59		6.47		6.38		6.36
Portfolio turnover rate	11	%	28	%	49	%	40	%	23	%	11	%
Auction Rate Preferred Stock:
Total Amount Outstanding (000s)	$250,000		$250,000		$250,000		$250,000		$250,000		$250,000
Asset Coverage Per Share	77,398		78,918		74,458		75,575		75,447		75,126
Involuntary Liquidating Preference Per Share8	25,000		25,000		25,000		25,000		25,000		25,000

1	For the six months ended November 30, 2010 (unaudited).
2	Performance figures may reflect compensating balance arrangements, fee waivers and/or expense reimbursements. In the absence of compensating balance arrangements, fee waivers and/or expense reimbursements, the total return would have been lower. Past performance is no guarantee of future results. Total returns for periods of less than one year are not annualized.
3	The total return calculation assumes that distributions are reinvested in accordance with the Fund’s dividend reinvestment plan. Past performance is no guarantee of future results. Total returns for periods of less than one year are not annualized.
4	Calculated on the basis of average net assets of common stock shareholders. Ratios do not reflect the effect of dividend payments to preferred stockholders.
5	Annualized.
6	Included in the expense ratios are certain non-recurring restructuring (and reorganization, if applicable) fees that were incurred by the Fund during the period. Without these fees, the gross and net expense ratios would both have been 1.05%.
7	Reflects fee waivers and/or expense reimbursements.
8	Excludes accumulated and unpaid distributions.

See Notes to Financial Statements.

Western Asset Managed Municipals Fund Inc. 2010 Semi-Annual Report

Notes to financial statements (unaudited)

1. Organization and significant accounting policies

Western Asset Managed Municipals Fund Inc. (the “Fund”) was incorporated in Maryland and is registered as a non-diversified, closed-end management investment company under the Investment Company Act of 1940, as amended (the “1940 Act”). The Fund seeks to maximize current income exempt from federal income tax as is consistent with preservation of principal.

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

(a) Investment valuation. Securities are valued at the mean between the last quoted bid and asked prices provided by an independent pricing service, which are based on transactions in municipal obligations, quotations from municipal bond dealers, market transactions in comparable securities and various other relationships between securities. Futures contracts are valued daily at the settlement price established by the board of trade or exchange on which they are traded. When prices are not readily available, or are determined not to reflect fair value, the Fund values these securities at fair value as determined in accordance with procedures approved by the Fund’s Board of Directors. Short-term obligations with maturities of 60 days or less are valued at amortized cost, which approximates fair value.

The Fund has adopted Financial Accounting Standards Board Codification Topic 820 (“ASC Topic 820”). ASC Topic 820 establishes a single definition of fair value, creates a three-tier hierarchy as a framework for measuring fair value based on inputs used to value the Fund’s investments, and requires additional disclosure about fair value. The hierarchy of inputs is summarized below.

·	Level 1 — quoted prices in active markets for identical investments

·	Level 2 — other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

·	Level 3 — significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

The Fund uses valuation techniques to measure fair value that are consistent with the market approach and/or income approach, depending on the type of security and the particular circumstance. The market approach uses prices

Western Asset Managed Municipals Fund Inc. 2010 Semi-Annual Report

and other relevant information generated by market transactions involving identical or comparable securities. The income approach uses valuation techniques to discount estimated future cash flows to present value.

The following is a summary of the inputs used in valuing the Fund’s assets carried at fair value:

ASSETS

Description	Quoted Prices (Level 1)	Other Significant Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Total
Municipal bonds†	—	$762,384,127	—	$762,384,127
Short-term investments†	—	4,700,000	—	4,700,000
Total investments	—	$767,084,127	—	$767,084,127

† See Schedule of Investments for additional detailed categorizations.

(b) Futures contracts. The Fund may use futures contracts to gain exposure to, or hedge against, changes in the value of interest rates. A futures contract represents a commitment for the future purchase or sale of an asset at a specified price on a specified date.

Upon entering into a futures contract, the Fund is required to deposit cash or cash equivalents with a broker in an amount equal to a certain percentage of the contract amount. This is known as the “initial margin” and subsequent payments (“variation margin”) are made or received by the Fund each day, depending on the daily fluctuation in the value of the contract. The daily changes in contract value are recorded as unrealized gains or losses in the Statement of Operations and the Fund recognizes a realized gain or loss when the contract is closed.

Futures contracts involve, to varying degrees, risk of loss in excess of the amounts reflected in the financial statements. In addition, there is the risk that the Fund may not be able to enter into a closing transaction because of an illiquid secondary market.

(c) Securities traded on a when-issued basis. The Fund may trade securities on a when-issued basis. In a when-issued transaction, the securities are purchased or sold by the Fund with payment and delivery taking place in the future in order to secure what is considered to be an advantageous price and yield to the Fund at the time of entering into the transaction.

Purchasing such securities involves risk of loss if the value of the securities declines prior to settlement. These securities are subject to market fluctuations and their current value is determined in the same manner as for other securities.

(d) Security transactions and investment income. Security transactions are accounted for on a trade date basis. Interest income, adjusted for amortization of premium and accretion of discount, is recorded on the accrual basis.

Western Asset Managed Municipals Fund Inc. 2010 Semi-Annual Report

Notes to financial statements (unaudited) (cont’d)

The cost of investments sold is determined by use of the specific identification method. To the extent any issuer defaults or a credit event occurs that impacts the issuer, the Fund may halt any additional interest income accruals and consider the realizability of interest accrued up to the date of default or credit event.

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

In addition, the holders of the Auction Rate Cumulative Preferred Stock (“ARCPS”) shall be entitled to receive dividends out of the funds legally available to shareholders.

(f) Net asset value. The net asset value (“NAV”) of the Fund’s Common Stock is determined no less frequently than the close of business on the Fund’s last business day of each week (generally Friday) and on the last business day of the month. It is determined by dividing the value of the net assets available to Common Stock by the total number of shares of Common Stock outstanding. For the purpose of determining the NAV per share of the Common Stock, the value of the Fund’s net assets shall be deemed to equal the value of the Fund’s assets less (1) the Fund’s liabilities, and (2) the aggregate liquidation value (i.e., $25,000 per outstanding share) of the ARCPS.

(g) Federal and other taxes. It is the Fund’s policy to comply with the federal income and excise tax requirements of the Internal Revenue Code of 1986 (the “Code”), as amended, applicable to regulated investment companies. Accordingly, the Fund intends to distribute its taxable income and net realized gains, if any, to shareholders in accordance with timing requirements imposed by the Code. Therefore, no federal or state income tax provision is required in the Fund’s financial statements.

Management has analyzed the Fund’s tax positions taken on income tax returns for all open tax years and has concluded that as of November 30, 2010, no provision for income tax is required in the Fund’s financial statements. The Fund’s federal and state income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by Internal Revenue Service and state departments of revenue.

Western Asset Managed Municipals Fund Inc. 2010 Semi-Annual Report

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

2. Investment management agreement and other transactions with affiliates

Legg Mason Partners Fund Advisor, LLC (“LMPFA”) is the Fund’s investment manager and Western Asset Management Company (“Western Asset”) is the Fund’s subadviser. LMPFA and Western Asset are wholly-owned subsidiaries of Legg Mason, Inc. (“Legg Mason”).

LMPFA provides administrative and certain oversight services to the Fund. The Fund pays an investment management fee, calculated daily and paid monthly, at an annual rate of 0.55% of the Fund’s average daily net assets, plus the aggregate liquidation value of the Fund’s preferred stock.

LMPFA delegates to Western Asset the day-to-day portfolio management of the Fund. For its services, LMPFA pays Western Asset 70% of the net management fee it receives from the Fund.

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

3. Investments

During the six months ended November 30, 2010, the aggregate cost of purchases and proceeds from sales of investments (excluding short-term investments) were as follows:

Purchases		$85,541,985
Sales		96,832,648

At November 30, 2010, the aggregate gross unrealized appreciation and depreciation of investments for federal income tax purposes were substantially as follows:

Gross unrealized appreciation	$40,710,847
Gross unrealized depreciation	(5,867,437	)
Net unrealized appreciation	$34,843,410

4. Derivative instruments and hedging activities

Financial Accounting Standards Board Codification Topic 815 requires enhanced disclosure about an entity’s derivative and hedging activities.

The following tables provide information about the effect of derivatives and hedging activities on the Fund’s Statement of Operations for the six months ended November 30, 2010. The first table provides additional detail about the amounts and sources of gains (losses) realized on derivatives during the period. The second table provides additional information about the change in

Western Asset Managed Municipals Fund Inc. 2010 Semi-Annual Report

Notes to financial statements (unaudited) (cont’d)

unrealized appreciation (depreciation) resulting from the Fund’s derivatives and hedging activities during the period.

AMOUNT OF REALIZED GAIN (LOSS) ON DERIVATIVES RECOGNIZED

	Interest Rate Contracts Risk
Futures contracts	$(8,961,604	)

CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON DERIVATIVES RECOGNIZED

	Interest Rate Contracts Risk
Futures contracts	$(1,269,872	)

During the six months ended November 30, 2010, the volume of derivative activity for the Fund was as follows:

		Average Market Value
Futures contracts (to sell)†		$151,632,917

† At November 30, 2010, there were no open positions held in this derivative.

5. Auction rate cumulative preferred stock

As of November 30, 2010, the Fund had 2,000 outstanding shares of each of ARCPS Series M, Series T, Series W, Series Th and Series F. The ARCPS’ dividends are cumulative at a rate determined at an auction and the dividend period is typically seven days. The dividend rate cannot exceed a certain maximum rate, including in the event of a failed auction, unless the Board of Directors of the Fund authorizes an increased maximum rate. Due to failed auctions experienced by the Fund’s ARCPS starting February 14, 2008, the Fund paid the applicable maximum rate, which was calculated as 110% of the prevailing 30-day “AA” Financial Composite Commercial Paper Rate. The Fund may pay higher maximum rates if the rating of the Fund’s ARCPS were to be lowered by the rating agencies.

The dividend rates ranged from 0.350% to 0.472% during the six months ended November 30, 2010. At November 30, 2010, the dividend rates in effect were as follows:

		Series M		Series T		Series W		Series Th		Series F
Dividend rates		0.411%		0.442%		0.442%		0.442%		0.442%

The ARCPS are redeemable under certain conditions by the Fund, or subject to mandatory redemption if the Fund is in default of certain coverage requirements, at a redemption price equal to the liquidation preference, which is the sum of $25,000 per share plus accumulated and unpaid dividends. The ARCPS are otherwise not redeemable by holders of shares.

The Fund is required to maintain certain asset coverages with respect to the ARCPS. If the Fund fails to maintain these coverages and does not cure any such failure within the required time period, the Fund is required to redeem

Western Asset Managed Municipals Fund Inc. 2010 Semi-Annual Report

a requisite number of the ARCPS in order to meet the applicable requirement. Additionally, failure to meet the foregoing asset requirements would restrict the Fund’s ability to pay dividends to common stock shareholders.

Citigroup Global Markets Inc. (“CGM”), currently acts as the broker/dealer in connection with the auction of ARCPS. After each auction, the auction agent will pay to the participating broker/dealer, from monies the Fund provides, a participation fee at the annual rate of 0.25% of the purchase price of the ARCPS that the broker/dealer places at the auction. However, on August 3, 2009, CGM reduced its participation fee to an annual rate of 0.05% of the purchase price of the ARCPS, in the case of a failed auction. For the six months ended November 30, 2010, the Fund incurred auction participation fees of $62,743 for CGM’s services as the participating broker/dealer.

6. Distributions subsequent to November 30, 2010

On November 15, 2010, the Board of Directors (“Board”) declared a dividend in the amount of $0.0677 per share, payable on December 30, 2010 to shareholders of record on December 23, 2010. On November 15, 2010, the Board also declared two dividends, each in the amount of $0.0650 per share, payable on January 28, 2011 and February 25, 2011 to shareholders of record on January 21, 2011 and February 18, 2011, respectively.

7. Capital loss carryforward

As of May 31, 2010, the Fund had a net capital loss carryforward of approximately $30,851,363, of which $1,770,048 expires in 2011, $25,731,958 expires in 2013 and $3,349,357 expires in 2018. These amounts will be available to offset any future taxable capital gains.

Western Asset Managed Municipals Fund Inc.

Board approval of management and sub-advisory agreements (unaudited)

Background

The Investment Company Act of 1940, as amended (the “1940 Act”), requires that the Board of Directors (the “Board”) of Western Asset Managed Municipals Fund, Inc. (the “Fund”), including a majority of its members that are not considered to be “interested persons” under the 1940 Act (the “Independent Directors”) voting separately, approve on an annual basis the continuation of the investment management contract (the “Management Agreement”) with the Fund’s manager, Legg Mason Partners Fund Advisor, LLC (the “Manager”), and the sub-advisory agreement (the “Sub-Advisory Agreement”) with the Manager’s affiliate, Western Asset Management Company (the “Sub-Adviser”). At a meeting (the “Contract Renewal Meeting”) held in-person on November 10 and 11, 2010, the Board, including the Independent Directors, considered and approved the continuation of each of the Management Agreement and Sub-Advisory Agreement for an additional one-year term. To assist in its consideration of the renewals of the Management Agreement and the Sub-Advisory Agreement, the Board received and considered a variety of information (together with the information provided at the Contract Renewal Meeting, the “Contract Renewal Information”) about the Manager and Sub-Adviser, as well as the management and sub-advisory arrangements for the Fund and the other closed-end funds in the same complex under the Board’s supervision (collectively, the “Legg Mason Closed-end Funds”), certain portions of which are discussed below. A presentation made by the Manager and the Sub-Adviser to the Board at the Contract Renewal Meeting in connection with its evaluations of the Management Agreement and the Sub-Advisory Agreement encompassed the Fund and other Legg Mason Closed-end Funds. In addition to the Contract Renewal Information, the Board received performance and other information throughout the year related to the respective services rendered by the Manager and the Sub-Adviser to the Fund. The Board’s evaluation took into account the information received throughout the year and also reflected the knowledge and familiarity gained as members of the Board of the Fund and the other Legg Mason Closed-end Funds with respect to the services provided to the Fund by the Manager and the Sub-Adviser.

The Manager provides the Fund with investment advisory and administrative services pursuant to the Management Agreement and the Sub-Adviser provides the Fund with investment sub-advisory services pursuant to the Sub-Advisory Agreement. The discussion below covers the advisory and administrative functions being rendered by the Manager, each such function being encompassed by the Management Agreement, and the investment sub-advisory function being rendered by the Sub-Adviser.

Western Asset Managed Municipals Fund Inc.

Board approval of management agreement and sub-advisory agreement

In its deliberations regarding renewal of the Management Agreement and the Sub-Advisory Agreement, the Board, including the Independent Directors, considered the factors below.

Nature, extent and quality of the services under the management agreement and sub-advisory agreement

The Board received and considered Contract Renewal Information regarding the nature, extent and quality of services provided to the Fund by the Manager and the Sub-Adviser under the Management Agreement and the Sub-Advisory Agreement, respectively, during the past year. The Board also reviewed Contract Renewal Information regarding the Fund’s compliance policies and procedures established pursuant to the 1940 Act.

The Board reviewed the qualifications, backgrounds and responsibilities of the Fund’s senior personnel and the portfolio management team primarily responsible for the day-to-day portfolio management of the Fund. The Board also considered, based on its knowledge of the Manager and its affiliates, the Contract Renewal Information and the Board’s discussions with the Manager and the Sub-Adviser at the Contract Renewal Meeting, the general reputation and investment records of the Manager and the Sub-Adviser and their affiliates and the financial resources available to the corporate parent of the Manager and the Sub-Adviser, Legg Mason, Inc. (“Legg Mason”), to support their activities in respect of the Fund and the other Legg Mason Closed-end Funds.

The Board considered the responsibilities of the Manager and the Sub-Adviser under the Management Agreement and the Sub-Advisory Agreement, respectively, including the Manager’s coordination and oversight of services provided to the Fund by the Sub-Adviser and others. The Management Agreement permits the Manager to delegate certain of its responsibilities, including its advisory duties thereunder, provided that the Manager, in each case, will supervise the activities of the delegee. Pursuant to this provision of the Management Agreement, the Manager does not provide day-to-day portfolio management services to the Fund. Rather, portfolio management services for the Fund are provided by the Sub-Adviser pursuant to the Sub-Advisory Agreement.

In reaching its determinations regarding continuation of the Management Agreement and Sub-Advisory Agreements, the Board took into account that Fund shareholders, in pursuing their investment goals and objectives, likely purchased their shares based upon the reputation and the investment style, philosophy and strategy of the Manager and the Sub-Adviser, as well as the resources available to the Manager and the Sub-Adviser.

Western Asset Managed Municipals Fund Inc.

Board approval of management and sub-advisory agreements (unaudited) (cont’d)

The Board concluded that, overall, the nature, extent and quality of services provided to the Fund under the Management Agreement and the Sub-Advisory Agreement have been satisfactory under the circumstances.

Fund performance

The Board received and considered performance information and analyses (the “Lipper Performance Information”) for the Fund, as well as for a group of funds (the “Performance Universe”) selected by Lipper, Inc. (“Lipper”), an independent provider of investment company data. The Board was provided with a description of the methodology Lipper used to determine the similarity of the Fund with the funds included in the Performance Universe. The Performance Universe consisted of the Fund and all funds classified by Lipper as leveraged general municipal debt closed-end funds regardless of asset size. The Board noted that it had received and discussed with management information throughout the year at periodic intervals comparing the Fund’s performance against its benchmarks and its peer funds as selected by Lipper.

The Lipper Performance Information comparing the Fund’s performance to that of its Performance Universe showed, among other things, that the Fund’s performance for the 1-year period ended June 30, 2010 was ranked fifty-sixth out of the sixty-one funds in the Performance Universe, but its performance for the 3-year period ended June 30, 2010 was ranked second among the sixty funds in the Performance Universe for that period. The Fund’s performance for the 5-year period ended June 30, 2010 was ranked first among the fifty-nine funds in the Performance Universe for that period and its performance for the 10-year period ended June 30, 2010 was ranked fourteenth among the forty-two funds in the Performance Universe for that period. The Board considered the Manager’s explanation of the strategy which resulted in the Fund’s significant underperformance relative to its Performance Universe for the 1-year period and noted that the Fund’s relative performance for the 3-, 5- and 10-year periods remained very strong. The Board also considered the Fund’s performance in relation to its benchmarks and in absolute terms, as well as the volatile market conditions during 2008.

Based on its review, which included consideration of all of the factors noted above, the Board concluded that, under the circumstances, the Fund’s long-term performance supported continuation of the Management Agreement and the Sub-Advisory Agreement for an additional period not to exceed one year.

Management fees and expense ratios

The Board reviewed and considered the management fee (the “Management Fee”) payable by the Fund to the Manager under the Management Agreement and the sub-advisory fee (the “Sub-Advisory Fee”) payable to the Sub-Adviser under the Sub-Advisory Agreement in light of the nature, extent

Western Asset Managed Municipals Fund Inc.

and quality of the management and sub-advisory services provided by the Manager and the Sub-Adviser. The Board noted that the Sub-Advisory Fee is paid by the Manager, not the Fund, and, accordingly, that the retention of the Sub-Adviser does not increase the fees or expenses otherwise incurred by the Fund’s shareholders.

Additionally, the Board received and considered information and analyses prepared by Lipper (the “Lipper Expense Information”) comparing the Management Fee and the Fund’s overall expenses with those of funds in an expense group (the “Expense Group”) selected and provided by Lipper. The comparison was based upon the constituent funds’ latest fiscal years. The Expense Group consisted of the Fund and nine other leveraged general municipal debt closed-end funds, as classified by Lipper. The Expense Group funds had net common share assets ranging from $127.7 million to $502.4 million. Two of the other funds in the Expense Group were larger than the Fund and seven were smaller.

The Lipper Expense Information, comparing the Management Fee as well as the Fund’s actual total expenses to the Fund’s Expense Group, showed that the Fund’s contractual Management Fee and its actual Management Fee (i.e., giving in effect to a voluntary fee waiver implemented by the Manager) on the basis of common share assets only each was ranked second among the ten Expense Group funds and was better than the Expense Group median. The Fund’s actual Management Fee on the basis of common and leveraged assets was ranked fourth among the Expense Group Funds and was at the Expense Group median. The Board noted that the Fund’s actual total expenses were better than the median for the Expense Group on both a common share assets only basis and on a common share and leveraged assets basis, ranking second and first among Expense Group funds, respectively.

At the Contract Renewal Meeting, the Board considered and approved a request (the “Cost Allocation Request”) from the Manager to allocate to the Fund certain fund accounting and financial reporting costs previously paid by the Manager on a voluntary basis in line with industry practice and the terms of the Management Agreement. In doing so, the Board reviewed supporting information and analyses provided by the Manager, including information and analyses as to the impact of the Cost Allocation Request on Fund expenses.

The Board also reviewed Contract Renewal Information regarding fees charged by the Manager to other U.S. clients investing primarily in an asset class similar to that of the Fund, including, where applicable, separate accounts. The Board was advised that the fees paid by such other clients generally are lower, and may be significantly lower, than the Management Fee. The Contract Renewal Information discussed the significant differences in scope of services provided to the Fund and to these other clients, noting that the Fund is provided with administrative services, office facilities, Fund

Western Asset Managed Municipals Fund Inc.

Board approval of management and sub-advisory agreements (unaudited) (cont’d)

officers (including the Fund’s chief executive, chief financial and chief compliance officers), and that the Manager coordinates and oversees the provision of services to the Fund by other fund service providers. The Contract Renewal Information included an analysis of complex-wide management fees provided by the Manager. At the Contract Renewal Meeting, the Board noted that the Contract Renewal Information included information regarding management fees paid by open-end mutual funds in the same complex (the “Legg Mason Open-end Funds”) and that such information indicated that the management fees paid by the Legg Mason Closed-end Funds generally were higher than those paid by the Legg Mason Open-end Funds. The Manager, in response, discussed differences between the services provided to the Fund and the other Legg Mason Closed-end Funds and services provided to the Legg Mason Open-end Funds. The Board considered the fee comparisons in light of the different services provided in managing these other types of clients and funds.

Taking all of the above into consideration, the Board determined that the Management Fee and the Sub-Advisory Fee were reasonable in light of the nature, extent and overall quality of the investment advisory and other services provided to the Fund under the Management Agreement and the Sub-Advisory Agreement.

Manager profitability

The Board, as part of the Contract Renewal Information, received an analysis of the profitability to the Manager and its affiliates in providing services to the Fund for the Manager’s fiscal years ended March 31, 2010 and March 31, 2009. The Board also received profitability information with respect to the Legg Mason fund complex as a whole. In addition, the Board received Contract Renewal Information with respect to the Manager’s revenue and cost allocation methodologies used in preparing such profitability data. In 2007, the Board received a report from an outside consultant that had reviewed the Manager’s methodologies and the Board was assured by the Manager at the Contract Renewal Meeting that there had been no significant changes in those methodologies since the report was rendered. The profitability to the Sub-Adviser was not considered to be a material factor in the Board’s considerations since the Sub-Advisory Fee is paid by the Manager. The profitability analysis presented to the Board as part of the Contract Renewal Information indicated that profitability to the Manager in providing services to the Fund had increased by 2 percent over the period covered by the analysis. The Manager presented information to the Board showing that the Cost Allocation Request would increase profitability slightly. Under the circumstances, the Board concluded that the Manager’s profitability remained at a reasonable level in light of the nature, extent and overall quality of the services provided to the Fund.

Western Asset Managed Municipals Fund Inc.

Economies of scale

The Board received and discussed Contract Renewal Information concerning whether the Manager realizes economies of scale if the Fund’s assets grow. The Board noted that because the Fund is a closed-end fund with no current plans to seek additional assets beyond maintaining its dividend reinvestment plan, any significant growth in its assets generally will occur through appreciation in the value of the Fund’s investment portfolio, rather than sales of additional shares in the Fund. The Board determined that the Management Fee structure was appropriate under present circumstances.

Other benefits to the manager and the sub-adviser

The Board considered other benefits received by the Manager, the Sub-Adviser and their affiliates as a result of their relationship with the Fund and did not regard such benefits as excessive.

* * *

In light of all of the foregoing and other relevant factors, the Board determined that, under the circumstances, continuation of the Management and the Sub-Advisory Agreements would be in the interests of the Fund and its shareholders and unanimously voted to continue each Agreement for a period of one additional year.

No single factor reviewed by the Board was identified by the Board as the principal factor in determining whether to approve continuation of the Management Agreement and the Sub-Advisory Agreement, and each Board member attributed different weights to the various factors. The Independent Directors were advised by separate independent legal counsel throughout the process. Prior to the Contract Renewal Meeting, the Board received a memorandum prepared by the Manager discussing its responsibilities in connection with the proposed continuation of the Management Agreement and the Sub-Advisory Agreement as part of the Contract Renewal Information and the Independent Directors separately received a memorandum discussing such responsibilities from their independent counsel. Prior to voting, the Independent Directors also discussed the proposed continuation of the Management Agreement and the Sub-Advisory Agreement in private sessions with their independent legal counsel at which no representatives of the Manager were present.

Western Asset Managed Municipals Fund Inc.

Additional shareholder information (unaudited)

Results of annual meeting of shareholders

The Annual Meeting of Shareholders of the Fund was held on September 24, 2010, for the purpose of considering and voting upon the election of Directors. The following table provides information concerning the matter voted upon at the meeting:

Election of directors

Nominees	Common Shares Voted for Election	Common Shares Withheld	Preferred Shares Voted for Election	Preferred Shares Withheld
Daniel P. Cronin	39,805,739	544,423	9,371	397
Jeswald W. Salacuse	N/A	N/A	9,371	397

At November 30, 2010, in addition to Daniel P. Cronin and Jeswald W. Salacuse the other Directors of the Fund were as follows:

Carol L. Colman
Paolo M. Cucchi
Leslie H. Gelb
R. Jay Gerken
William R. Hutchinson
Riordan Roett

Western Asset Managed Municipals Fund Inc.

Dividend reinvestment plan (unaudited)

Under the Fund’s Dividend Reinvestment Plan (“Plan”), a shareholder whose shares of common stock are registered in his own name will have all distributions from the Fund reinvested automatically by American Stock Transfer & Trust Company (“AST”), as purchasing agent under the Plan, unless the shareholder elects to receive cash. Distributions with respect to shares registered in the name of a broker-dealer or other nominee (that is, in street name) will be reinvested by the broker or nominee in additional shares under the Plan, unless the service is not provided by the broker or nominee or the shareholder elects to receive distributions in cash. Investors who own common stock registered in street name should consult their broker-dealers for details regarding reinvestment. All distributions to shareholders who do not participate in the Plan will be paid by check mailed directly to the record holder by or under the direction of AST as dividend paying agent.

The number of shares of common stock distributed to participants in the Plan in lieu of a cash dividend is determined in the following manner. When the market price of the common stock is equal to or exceeds 98% of the net asset value per share of the common stock on the determination date (generally, the record date for the distribution), Plan participants will be issued shares of common stock by the Fund at a price equal to the greater of 98% of net asset value or 95% of the market price of the common stock.

If the market price of the common stock is less than 98% of the net asset value of the common stock at the time of valuation (which is the close of business on the determination date), AST will buy common stock in the open market, on the NYSE or elsewhere, for the participants’ accounts. If following the commencement of the purchases and before AST has completed its purchases, the market price exceeds the net asset value of the common stock as of the valuation time, AST will attempt to terminate purchases in the open market and cause the Fund to issue the remaining portion of the dividend or distribution in shares at a price equal to the greater of (a) 98% of net asset value as of the valuation time or (b) 95% of the then current market price. In this case, the number of shares received by a Plan participant will be based on the weighted average of prices paid for shares purchased in the open market and the price at which the Fund issues the remaining shares. To the extent AST is unable to stop open market purchases and cause the Fund to issue the remaining shares, the average per share purchase price paid by AST may exceed the net asset value of the common stock as of the valuation time, resulting in the acquisition of fewer shares than if the dividend or capital gains distribution had been paid in common stock issued by the Fund at such net asset value. AST will begin to purchase common stock on the open market as soon as practicable after the determination date for the dividend or capital gains distribution, but in no event shall such purchases continue later than 30 days after the payment date for such dividend or distribution, or the record date for a succeeding dividend or distribution, except when necessary to comply with applicable provisions of the federal securities laws.

Western Asset Managed Municipals Fund Inc.

Dividend reinvestment plan (unaudited) (cont’d)

AST maintains all shareholder accounts in the Plan and furnishes written confirmations of all transactions in each account, including information needed by a shareholder for personal and tax records. The automatic reinvestment of dividends and capital gains distributions will not relieve Plan participants of any income tax that may be payable on the dividends or capital gains distributions. Common stock in the account of each Plan participant will be held by AST in uncertificated form in the name of the Plan participant.

Plan participants are subject to no charge for reinvesting dividends and capital gains distributions under the Plan. AST’s fees for handling the reinvestment of dividends and capital gains distributions will be paid by the Fund. No brokerage charges apply with respect to shares of common stock issued directly by the Fund under the Plan. Each Plan participant will, however, bear a proportionate share of any brokerage commissions actually incurred with respect to any open market purchases made under the Plan.

Experience under the Plan may indicate that changes to it are desirable. The Fund reserves the right to amend or terminate the Plan as applied to any dividend or capital gains distribution paid subsequent to written notice of the change sent to participants at least 30 days before the record date for the dividend or capital gains distribution. The Plan also may be amended or terminated by AST, with the Fund’s prior written consent, on at least 30 days’ written notice to Plan participants. All correspondence concerning the plan should be directed by mail to American Stock Transfer & Trust Company, 59 Maiden Lane, New York, New York 10038 or by telephone at 1-888-888-0151.

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Western Asset

Managed Municipals Fund Inc.

Directors	Western Asset Managed Municipals Fund Inc.	Independent registered public accounting firm
Carol L. Colman	55 Water Street	KPMG LLP
Daniel P. Cronin	New York, NY 10041	345 Park Avenue
Paolo M. Cucchi		New York, NY 10154
Leslie H. Gelb	Investment manager
R. Jay Gerken, CFA	Legg Mason Partners Fund	Legal counsel
Chairman	Advisor, LLC	Simpson Thacher & Bartlett LLP
William R. Hutchinson		425 Lexington Avenue
Riordan Roett	Subadviser	New York, NY 10017
Jeswald W. Salacuse	Western Asset Management Company
		New York Stock Exchange Symbol
Officers	Auction agent	MMU
R. Jay Gerken, CFA	Deutsche Bank
President and Chief Executive Officer	60 Wall Street New York, NY 10005
Kaprel Ozsolak
Chief Financial Officer	Custodian
Ted P. Becker	State Street Bank and Trust Company
Chief Compliance Officer	1 Lincoln Street
Robert I. Frenkel	Boston, MA 02111
Secretary and
Chief Legal Officer	Transfer agent
Thomas C. Mandia	American Stock Transfer & Trust Company
Assistant Secretary	59 Maiden Lane
Steven Frank	New York, NY 10038
Treasurer
Jeanne M. Kelly
Senior Vice President

Privacy policy

We are committed to keeping nonpublic personal information about you secure and confidential. This notice is intended to help you understand how we fulfill this commitment. From time to time, we may collect a variety of personal information about you, including:

· Information we receive from you on applications and forms, via the telephone, and through our websites;

· Information about your transactions with us, our affiliates, or others (such as your purchases, sales, or account balances); and

· Information we receive from consumer reporting agencies.

We do not disclose nonpublic personal information about our customers or former customers, except to our affiliates (such as broker-dealers or investment advisers within the Legg Mason family of companies) or as is otherwise permitted by applicable law or regulation. For example, we may share this information with others in order to process your transactions or service an account. We may also provide this information to companies that perform marketing services on our behalf, such as printing and mailing, or to other financial institutions with whom we have joint marketing agreements. When we enter into such agreements, we will require these companies to protect the confidentiality of this information and to use it only to perform the services for which we hired them.

With respect to our internal security procedures, we maintain physical, electronic, and procedural safeguards to protect your nonpublic personal information, and we restrict access to this information.

If you decide at some point either to close your account(s) or become an inactive customer, we will continue to adhere to our privacy policies and practices with respect to your nonpublic personal information.

NOT PART OF THE SEMI-ANNUAL REPORT

Western Asset Managed Municipals Fund Inc.

Western Asset Managed Municipals Fund Inc.
55 Water Street
New York, NY 10041

Notice is hereby given in accordance with Section 23(c) of the Investment Company Act of 1940, as amended, that from time to time the Fund may purchase at market prices, shares of its Common Stock in the open market.

The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the SEC’s website at www.sec.gov. The Fund’s Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington D.C., and information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. To obtain information on Form N-Q from the Fund, shareholders can call 1-888-777-0102.

Information on how the Fund voted proxies relating to portfolio securities during the prior 12-month period ended June 30th of each year and a description of the policies and procedures that the Fund uses to determine how to vote proxies related to portfolio transactions are available (1) without charge, upon request, by calling 1-888-777-0102, (2) on the Fund’s website at www.leggmason.com/cef and (3) on the SEC’s website at www.sec.gov.

This report is transmitted to the shareholders of Western Asset Managed Municipals Fund Inc. for their information. This is not a prospectus, circular or representation intended for use in the purchase or sale of shares of the Fund or any securities mentioned in this report.

American Stock
Transfer & Trust Company
59 Maiden Lane
New York, NY 10038

WASX010152 12/10 SR10-1267

ITEM 2.	CODE OF ETHICS.

	Not applicable.

ITEM 3.	AUDIT COMMITTEE FINANCIAL EXPERT.

	Not applicable.

ITEM 4.	PRINCIPAL ACCOUNTANT FEES AND SERVICES.

	Not applicable.

ITEM 5.	AUDIT COMMITTEE OF LISTED REGISTRANTS.

	Not applicable.

ITEM 6.	SCHEDULE OF INVESTMENTS.

	Included herein under Item 1.

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

	Not applicable.

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

	Not applicable.

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

	Not applicable.

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

	Not applicable.

ITEM 11.	CONTROLS AND PROCEDURES.

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

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

ITEM 12.		EXHIBITS.

		(a) (1) Not applicable. Exhibit 99.CODE ETH

		(a) (2) Certifications pursuant to section 302 of the Sarbanes-Oxley Act of 2002 attached hereto.
		Exhibit 99.CERT

		(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 attached hereto.
		Exhibit 99.906CERT

SIGNATURES

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

Western Asset Managed Municipals Fund Inc.

By:	/s/ R. Jay Gerken
	(R. Jay Gerken)
	Chief Executive Officer of
	Western Asset Managed Municipals Fund Inc.

Date:	January 26, 2011

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

By:	/s/ R. Jay Gerken
	(R. Jay Gerken)
	Chief Executive Officer of
	Western Asset Managed Municipals Fund Inc.

Date:	January 26, 2011

By:	/s/ Kaprel Ozsolak
	(Kaprel Ozsolak)
	Chief Financial Officer of
	Western Asset Managed Municipals Fund Inc.

Date:	January 26, 2011