The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments.
Net realized foreign exchange gains or losses arise from sales of foreign currencies, including gains and losses on forward foreign currency contracts, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities, at the date of valuation, resulting from changes in exchange rates.
Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.
Notes to Financial Statements (unaudited) (continued)
2. Investment Management Agreement and Other Transactions with Affiliates
On December 1, 2005, Citigroup Inc. (“Citigroup”) completed the sale of substantially all of its asset management business to Legg Mason, Inc. (“Legg Mason”). As a result, the Fund’s investment manager, Smith Barney Fund Management LLC (“SBFM” or the “Manager”) and the Fund’s then sub-adviser, Legg Mason International Equities Ltd. (“LMIE”) (formerly “Citigroup Asset Management Ltd.”) (“CAM Ltd.”) previously indirect wholly-owned subsidiaries of Citigroup, became wholly-owned subsidiaries of Legg Mason. Completion of the sale caused the Fund’s then existing investment management contract and sub-advisory agreement to terminate. The Fund’s shareholders approved a new investment management contract between the Fund and the Manager, and a new subadvisory contract between the Manager and LMIE which became effective on December 1, 2005. Effective February 1, 2006, the sub-advisory agreement with LMIE, was terminated.
Legg Mason, whose principal executive offices are in Baltimore, Maryland, is a financial services holding company.
Prior to the Legg Mason transaction and continuing under the new investment management contract, the Fund pays the Manager an investment management fee calculated at an annual rate of 0.80% of the Fund’s average daily net assets. This fee is calculated daily and paid monthly.
During the six months ended April 30, 2006, the Fund’s Class A, B and C shares had voluntary expense limitations in place of 1.50%, 2.25% and 2.25%, respectively. For the six months ended April 30, 2006, the Manager waived a portion of its investment management fee and/or reimbursed expenses amounting to $5,459. Such waivers and/or expense reimbursements are voluntary and may be reduced or terminated at any time.
The Fund’s Board has approved PFPC Inc. (“PFPC”) to serve as transfer agent for the Fund, effective January 1, 2006. The principal business office of PFPC is located at 4400 Computer Drive, Westborough, MA 01581. Prior to January 1, 2006, Citicorp Trust Bank, fsb. (“CTB”), a subsidiary of Citigroup, acted as the Fund’s transfer agent. Also, prior to January 1, 2006, PFPC and Primerica Shareholder Services (“PSS”), another subsidiary of Citigroup, acted as the Fund’s sub-transfer agents. CTB received account fees and asset-based fees that varied according to the size and type of account. PFPC and PSS were responsible for shareholder recordkeeping and financial processing for all shareholder accounts and were paid by CTB. For the period ended April 30, 2006, the Fund paid transfer agent fees of $46,363 to CTB. In addition, for the period ended April 30, 2006, the Fund also paid $4,499 to other Citigroup affiliates for shareholder recordkeeping services.
The Fund’s Board has appointed the Fund’s current distributor, Citigroup Global Markets Inc. (“CGM”), PFS Investment Inc. (“PFS”), both subsidiaries of Citigroup, and Legg Mason Investor Services, LLC (“LMIS”), a wholly-owned broker-dealer subsidiary of Legg Mason, as co-distributors of the Fund. The Fund’s Board has also approved an amended and restated Rule 12b-1 Plan. CGM and other broker-dealers, financial intermediaries and financial institutions (each called a “Service Agent”) that currently offer Fund shares will continue to make the Fund’s shares available to their clients. Additional Service Agents may offer Fund shares in the future.
Legg Mason Partners Health Sciences Fund 2006 Semi-Annual Report 15
Notes to Financial Statements (unaudited) (continued)
There is a maximum initial sales charge of 5.00% for Class A shares. There is a contingent deferred sales charge (“CDSC”) of 5.00% on Class B shares, which applies if redemption occurs within one year from purchase payment. This CDSC declines thereafter by 1.00% per year until no CDSC is incurred. Class C shares have a 1.00% CDSC, which applies if redemption occurs within one year from purchase payment. In certain cases, Class A shares have a 1.00% CDSC, which applies if redemption occurs within one year from purchase payment. This CDSC only applies to those purchases of Class A shares, which, when combined with current holdings of Class A shares, equal or exceed $1,000,000 in the aggregate. These purchases do not incur an initial sales charge.
For the period ended April 30, 2006, LMIS, PFS, and CGM and its affiliates received sales charges of approximately $4,800 on sales of the Fund’s Class A shares. In addition, for the period ended April 30, 2006, CDSCs paid to LMIS, PFS, and CGM and its affiliates were approximately:
| | | | | Class B | | Class C |
|
| CDSCs | | | | $3,000 | | $0 | * |
|
* Amount represents less than $1,000. The Fund has adopted an unfunded, non-qualified deferred compensation plan (the “Plan”) which allows non-interested directors (“Directors”) to defer the receipt of all or a portion of the directors’ fees earned until a later date specified by the Directors. The deferred fees earn a return based on notional investments selected by the Directors. The balance of the deferred fees payable may change depending upon the investment performance. Any gains or losses incurred in the deferred balances are reported in the Statement of Operations under Directors’ fees. Under the Plan, deferred fees are considered a general obligation of the Fund and any payments made pursuant to the Plan will be made from the Fund’s general assets. Effective January 1, 2006, the Board of Directors voted to discontinue offering the Plan to its members. This change will have no effect on fees previously deferred. As of April 30, 2006, the Fund had accrued $355 as deferred compensation payable under the Plan.
Certain officers and one Director of the Company are employees of Legg Mason or its affiliates and do not receive compensation from the Company.
3. Investments
During the six months ended April 30, 2006, the aggregate cost of purchases and proceeds from sales of investments (excluding short-term investments) were as follows:
| Purchases | | $ | 45,311,662 |
|
| Sales | | | 52,959,827 |
|
At April 30, 2006, the aggregate gross unrealized appreciation and depreciation of investments for federal income tax purposes were substantially as follows:
| Gross unrealized appreciation | | $ | 4,221,045 | |
| Gross unrealized depreciation | | | (3,281,902 | ) |
|
| Net unrealized appreciation | | $ | 939,143 | |
|
16 Legg Mason Partners Health Sciences Fund 2006 Semi-Annual Report
Notes to Financial Statements (unaudited) (continued)
4. Class Specific Expenses
The Fund has adopted a Rule 12b-1distribution plan and under that plan the Fund pays a service fee with respect to its Class A, B and C shares calculated at the annual rate of 0.25% of the average daily net assets of each respective class. The Fund also pays a distribution fee with respect to its Class B and C shares calculated at the annual rate of 0.75% of the average daily net assets of each class, respectively. Distribution fees are accrued daily and paid monthly.
For the six months ended April 30, 2006, class specific expenses were as follows:
| | | | | | | | | Shareholder |
| | | Distribution | Transfer | Reports |
| | | Fees | Agent Fees | Expenses |
|
| Class A | | $ | 28,664 | | $ | 29,025 | | $ | 9,412 | |
| Class B | | | 133,565 | | | 27,422 | | | 12,851 | |
| Class C | | | 78,636 | | | 9,765 | | | 4,887 | |
|
| Total | | $ | 240,865 | | $ | 66,212 | | $ | 27,150 | |
|
5. Capital Shares
At April 30, 2006, the Fund had 750 million shares of capital stock authorized with a par value of $0.001 per share. The Fund has the ability to issue multiple classes of shares. Each share of a class represents an identical interest in the Fund and has the same rights, except that each class bears certain direct expenses, including those specifically related to the distribution of its shares.
Transactions in shares of each class were as follows:
| | | Six Months Ended | | Year Ended |
| | | April 30, 2006 | | October 31, 2005 |
| |
|
|
|
| | | Shares | | | Amount | | Shares | | | Amount |
|
| Class A | | | | | | | | | | | | | | |
| Shares sold | | 208,695 | | | $ | 2,790,256 | | | 442,292 | | | $ | 5,566,363 | |
| Shares repurchased | | (304,604 | ) | | | (4,070,980 | ) | | (404,565 | ) | | | (5,009,641 | ) |
|
| Net Increase (Decrease) | | (95,909 | ) | | $ | (1,280,724 | ) | | 37,727 | | | $ | 556,722 | |
|
| Class B | | | | | | | | | | | | | | |
| Shares sold | | 72,896 | | | $ | 931,096 | | | 191,739 | | | $ | 2,308,654 | |
| Shares repurchased | | (308,240 | ) | | | (3,935,487 | ) | | (621,240 | ) | | | (7,409,984 | ) |
|
| Net Decrease | | (235,344 | ) | | $ | (3,004,391 | ) | | (429,501 | ) | | $ | (5,101,330 | ) |
|
| Class C | | | | | | | | | | | | | | |
| Shares sold | | 18,626 | | | $ | 237,339 | | | 74,433 | | | $ | 882,435 | |
| Shares repurchased | | (198,518 | ) | | | (2,531,216 | ) | | (456,325 | ) | | | (5,423,786 | ) |
|
| Net Decrease | | (179,892 | ) | | $ | (2,293,877 | ) | | (381,892 | ) | | $ | (4,541,351 | ) |
|
6. Capital Loss Carryforward
As of October 31, 2005, the Fund had, for federal income tax purposes, a net capital loss carryforward of approximately $7,099,577, which expires in 2011. This amount will be available to offset any future taxable capital gains.
Legg Mason Partners Health Sciences Fund 2006 Semi-Annual Report 17
Notes to Financial Statements (unaudited) (continued)
7. Regulatory Matters
On May 31, 2005, the U.S. Securities and Exchange Commission (“SEC”) issued an order in connection with the settlement of an administrative proceeding against SBFM and CGM relating to the appointment of an affiliated transfer agent for the Smith Barney family of mutual funds (the “Funds”).
The SEC order finds that SBFM and CGM willfully violated Section 206(1) of the Investment Advisers Act of 1940 (“Advisers Act”). Specifically, the order finds that SBFM and CGM knowingly or recklessly failed to disclose to the boards of the Funds in 1999 when proposing a new transfer agent arrangement with an affiliated transfer agent that: First Data Investors Services Group (“First Data”), the Funds’ then-existing transfer agent, had offered to continue as transfer agent and do the same work for substantially less money than before; and that Citigroup Asset Management (“CAM”), the Citigroup business unit that, at the time, included the Fund’s investment manager and other investment advisory companies, had entered into a side letter with First Data under which CAM agreed to recommend the appointment of First Data as sub-transfer agent to the affiliated transfer agent in exchange for, among other things, a guarantee by First Data of specified amounts of asset management and investment banking fees to CAM and CGM. The order also finds that SBFM and CGM willfully violated Section 206(2) of the Advisers Act by virtue of the omissions discussed above and other misrepresentations and omissions in the materials provided to the Funds’ boards, including the failure to make clear that the affiliated transfer agent would earn a high profit for performing limited functions while First Data continued to perform almost all of the transfer agent functions, and the suggestion that the proposed arrangement was in the Funds’ best interests and that no viable alternatives existed. SBFM and CGM do not admit or deny any wrongdoing or liability. The settlement does not establish wrongdoing or liability for purposes of any other proceeding.
The SEC censured SBFM and CGM and ordered them to cease and desist from violations of Sections 206(1) and 206(2) of the Advisers Act. The order requires Citigroup to pay $208.1 million, including $109 million in disgorgement of profits, $19.1 million in interest, and a civil money penalty of $80 million. Approximately $24.4 million has already been paid to the Funds, primarily through fee waivers. The remaining $183.7 million, including the penalty, has been paid to the U.S. Treasury and will be distributed pursuant to a plan submitted for the approval of the SEC. At this time, there is no certainty as to how the above-described proceeds of the settlement will be distributed, to whom such distributions will be made, the methodology by which such distributions will be allocated, and when such distributions will be made. The order also required that transfer agency fees received from the Funds since December 1, 2004, less certain expenses, be placed in escrow and provided that a portion of such fees might be subsequently distributed in accordance with the terms of the order. On April 3, 2006, an aggregate amount of approximately $9 million was distributed to the affected Funds.
The order required SBFM to recommend a new transfer agent contract to the Fund boards within 180 days of the entry of the order; if a Citigroup affiliate submitted a proposal to serve as transfer agent or sub-transfer agent, SBFM and CGM would have been required, at their expense, to engage an independent monitor to oversee a competitive
18 Legg Mason Partners Health Sciences Fund 2006 Semi-Annual Report
Notes to Financial Statements (unaudited) (continued)
bidding process. On November 21, 2005, and within the specified timeframe, the Fund’s Board selected a new transfer agent for the Fund. No Citigroup affiliate submitted a proposal to serve as transfer agent. Under the order, SBFM also must comply with an amended version of a vendor policy that Citigroup instituted in August 2004.
Although there can be no assurance, SBFM does not believe that this matter will have a material adverse effect on the Funds.
On December 1, 2005, Citigroup completed the sale of substantially all of its global asset management business, including SBFM, to Legg Mason.
8. Legal Matters
Beginning in August 2005, five class action lawsuits alleging violations of federal securities laws and state law were filed against CGM and SBFM, (collectively, the “Defendants”) based on the May 31, 2005 settlement order issued against the Defendants by the SEC described in Note 7. The complaints seek injunctive relief and compensatory and punitive damages, removal of SBFM as the investment manager for the Smith Barney family of funds, rescission of the Funds’ management and other contracts with SBFM, recovery of all fees paid to SBFM pursuant to such contracts, and an award of attorneys’ fees and litigation expenses.
On October 5, 2005, a motion to consolidate the five actions and any subsequently filed, related action was filed. That motion contemplates that a consolidated amended complaint alleging substantially similar causes of action will be filed in the future.
As of the date of this report, SBFM believes that resolution of the pending lawsuit will not have a material effect on the financial position or results of operations of the Funds or the ability of the Fund’s investment manager and its affiliates to continue to render services to the Funds under their respective contracts.
* * *
Beginning in June 2004, class action lawsuits alleging violations of the federal securities laws were filed against CGM and a number of its affiliates, including SBFM and Salomon Brothers Asset Management Inc. (“SBAM”) (collectively, the “Advisers”), substantially all of the mutual funds managed by the Advisers, including the Fund (the “Funds”), and directors or trustees of the Funds (collectively, the “Defendants”). The complaints alleged, among other things, that CGM created various undisclosed incentives for its brokers to sell Smith Barney and Salomon Brothers funds. In addition, according to the complaints, the Advisers caused the Funds to pay excessive brokerage commissions to CGM for steering clients towards proprietary funds. The complaints also alleged that the Defendants breached their fiduciary duty to the Funds by improperly charging Rule 12b-1 fees and by drawing on fund assets to make undisclosed payments of soft dollars and excessive brokerage commissions. The complaints also alleged that the Funds failed to adequately disclose certain aspects of the allegedly wrongful conduct. The complaints sought injunctive relief and compensatory and punitive damages, rescission of the Funds’ contracts with the Advisers, recovery of all fees paid to the Advisers pursuant to such contracts and an award of attorneys’ fees and litigation expenses.
On December 15, 2004, a consolidated amended complaint (the “Complaint”) was filed alleging substantially similar causes of action. While the lawsuit is in its earliest stages, to the extent that the Complaint purports to state causes of action against the Funds, the
Legg Mason Partners Health Sciences Fund 2006 Semi-Annual Report 19
Notes to Financial Statements (unaudited) (continued)
Fund’s investment manager believes the Funds have significant defenses to such allegations, which the Funds intend to vigorously assert in responding to the Complaint.
Additional lawsuits arising out of these circumstances and presenting similar allegations and requests for relief may be filed against the Defendants in the future.
As of the date of this report, the Fund’s investment manager and the Funds believe that the resolution of the pending lawsuit will not have a material effect on the financial position or results of operations of the Funds or the ability of the Advisers and their affiliates to continue to render services to the Funds under their respective contracts.
The Defendants have moved to dismiss the Complaint. Those motions are pending before the court.
9. Other Matters
On September 16, 2005, the staff of the SEC informed SBFM and SBAM that the staff is considering recommending that the SEC institute administrative proceedings against SBFM and SBAM for alleged violations of Section 19(a) and 34(b) of the Investment Company Act (and related Rule 19a-1). The notification is a result of an industry wide inspection by the SEC and is based upon alleged deficiencies in disclosures regarding dividends and distributions paid to shareholders of certain funds. Section 19(a) and related Rule 19a-1 of the Investment Company Act generally require funds that are making dividend and distribution payments to provide shareholders with a written statement disclosing the source of the dividends and distributions, and, in particular, the portion of the payments made from each of net investment income, undistributed net profits and/or paid-in capital. In connection with the contemplated proceedings, the staff may seek a cease and desist order and/or monetary damages from SBFM or SBAM.
Although there can be no assurance, SBFM believes that this matter is not likely to have a material adverse effect on the Funds or SBFM’s ability to perform investment management services relating to the Fund.
20 Legg Mason Partners Health Sciences Fund 2006 Semi-Annual Report
Additional Shareholder Information (unaudited)
Results of a Special Meeting of Shareholders
On November 29, 2005, a Special Meeting of Shareholders was held for the following purposes: 1) to approve a new management agreement and a new sub-advisory agreemeent and 2) to elect Directors. The following tables provide the number of votes cast for, against or withheld, as well as the number of abstentions and broker non-votes as to each matter voted on at the Special Meeting of Shareholders.
1. Approval of New Management Agreement and Sub-Advisory Agreement
| | | | | | Broker |
| Item Voted On | | Votes For | Votes Against | Abstentions | Non-Votes |
|
| New Management Agreement | | 2,600,117.433 | 86,559.675 | 122,293.534 | 149,609.000 |
| New Sub-Advisory Agreement | | 2,597,225.537 | 86,569.615 | 125,175.490 | 149,609.000 |
|
2. Election of Directors1
| | | Authority | | Broker |
| Nominees: | Votes For | Withheld | Abstentions | Non-Votes |
|
| Dwight B. Crane | 14,103,064.939 | 838,567.079 | 85,535.619 | 0.000 |
| Burt N. Dorsett | 14,100,247.788 | 841,384.230 | 85,535.619 | 0.000 |
| Elliot S. Jaffe | 14,096,272.780 | 845,359.238 | 85,535.619 | 0.000 |
| Stephen E. Kaufman | 14,084,774.176 | 856,857.842 | 85,535.619 | 0.000 |
| Cornelius C. Rose, Jr. | 14,099,243.932 | 842,388.086 | 85,535.619 | 0.000 |
| R. Jay Gerken | 14,088,894.767 | 852,737.251 | 85,535.619 | 0.000 |
|
1 Directors are elected by the shareholders of all of the series of the Company of which the Fund is a series.
Legg Mason Partners Health Sciences Fund 2006 Semi-Annual Report 21
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| | Legg Mason Partners
Health Sciences Fund |
| | | | |
| | | | |
| | | | |
| | DIRECTORS | | OFFICERS (continued) |
| | Dwight B. Crane | | Steven Frank |
| | Burt N. Dorsett | | Controller |
| | R. Jay Gerken, CFA | | |
| | Chairman | | Robert I. Frenkel |
| | Elliot S. Jaffe | | Secretary and |
| | Stephen E. Kaufman | | Chief Legal Officer |
| | Cornelius C. Rose, Jr. | | |
| | | | INVESTMENT MANAGER |
| | OFFICERS | | Smith Barney Fund |
| | R. Jay Gerken, CFA | | Management LLC |
| | President and | | |
| | Chief Executive Officer | | DISTRIBUTORS |
| | | | Citigroup Global Markets Inc. |
| | Andrew B. Shoup | | Legg Mason Investor Services, LLC |
| | Senior Vice President and | | PFS Investments Inc. |
| | Chief Administrative Officer | | |
| | | | CUSTODIAN |
| | Kaprel Ozsolak | | State Street Bank and |
| | Chief Financial Officer | | Trust Company |
| | and Treasurer | | |
| | | | TRANSFER AGENT |
| | Thomas Linkas | | PFPC Inc. |
| | Vice President and | | 4400 Computer Drive |
| | Investment Officer | | Westborough, Massachusetts 01581 |
| | | | |
| | Charles F. Lovejoy | | INDEPENDENT REGISTERED |
| | Vice President and | | PUBLIC ACCOUNTING FIRM |
| | Investment Officer | | KPMG LLP |
| | | | 345 Park Avenue |
| | Ted P. Becker | | New York, New York 10154 |
| | Chief Compliance Officer | | |
| | | | |
| | John Chiota | | |
| | Chief Anti-Money Laundering | | |
| | Compliance Officer | | |
| ITEM | 2 | . | CODE OF ETHICS. |
| | | | |
| | | Not Applicable. |
| | | | |
| ITEM | 3 | . | AUDIT COMMITTEE FINANCIAL EXPERT. |
| | | | |
| | | Not Applicable. |
| | | | |
| ITEM | 4 | . | PRINCIPAL ACCOUNTANT FEES AND SERVICES. |
| | | | |
| | | Not applicable. |
| | | | |
| ITEM | 5 | . | AUDIT COMMITTEE OF LISTED REGISTRANTS. |
| | | | |
| | | Not applicable. |
| | | | |
| ITEM | 6 | . | SCHEDULE OF INVESTMENTS. |
| | | | |
| | | Included herein under Item 1. |
| | | | |
| ITEM | 7 | . | DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END |
| | | MANAGEMENT INVESTMENT COMPANIES. |
| | | | |
| | | Not applicable. |
| | | | |
| ITEM | 8 | . | PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
| | | | |
| | | Not applicable. |
| | | | |
| ITEM | 9 | . | PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT |
| | | COMPANY AND AFFILIATED PURCHASERS. |
| | | | |
| | | Not applicable. |
| | | | |
| ITEM | 10 | . | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. |
| | | | |
| | | Not applicable. |
| | | | |
| ITEM | 11 | . | CONTROLS AND PROCEDURES. |
| | | | | |
| | | (a) | The registrant’s principal executive officer and principal |
| | | | financial officer have concluded that the registrant’s |
| | | | disclosure controls and procedures (as defined in Rule 30a- |
| | | | 3(c) under the Investment Company Act of 1940, as amended (the |
| | | | “1940 Act”)) are effective as of a date within 90 days of the |
| | | | filing date of this report that includes the disclosure |
| | | | required by this paragraph, based on their evaluation of the |
| | | | disclosure controls and procedures required by Rule 30a-3(b) |
| | | | under the 1940 Act and 15d-15(b) under the Securities Exchange |
| | | | Act of 1934. |
| | | | | |
| | | (b) | There were no changes in the registrant’s internal control |
| | | | over financial reporting (as defined in Rule 30a-3(d) under |
| | | | the 1940 Act) that occurred during the registrant’s last |
| | | | fiscal half-year (the registrant’s second fiscal half-year in |
| | | | the case of an annual report) that have materially affected, |
| | | | | or are likely to materially affect the registrant’s internal |
| | | | | control over financial reporting. |
| | | |
| ITEM 12. | EXHIBITS. | |
| | | |
| | (a) | Not applicable. |
| | | |
| | (b) | Attached hereto. |
| |
| | Exhibit 99.CERT | Certifications pursuant to section 302 of |
| | | | the Sarbanes-Oxley Act of 2002 |
| | | | |
| | Exhibit 99.906CERT | Certifications pursuant to Section 906 of |
| | | | the Sarbanes-Oxley Act of 2002 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this Report to be signed on its behalf by the undersigned, there unto duly authorized.
Legg Mason Partners Sector Series, Inc.
| By: | /s/ R. Jay Gerken |
| | R. Jay Gerken |
| | Chief Executive Officer of |
| | Legg Mason Partners Sector Series, Inc. |
| |
| |
| Date: | July 10, 2006 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| By: | /s/ R. Jay Gerken |
| | R. Jay Gerken |
| | Chief Executive Officer of |
| | Legg Mason Partners Sector Series, Inc. |
| |
| Date: | July 10, 2006 |
| |
| |
| |
| By: | /s/ Kaprel Ozsolak |
| | Kaprel Ozsolak |
| | Chief Financial Officer of |
| | Legg Mason Partners Sector Series, Inc. |
| |
| Date: | July 10, 2006 |
