Legg Mason Partners Variable Portfolios Ii N-CSRS Certified semi-annual shareholder report (management investment company)

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 811-06310

Legg Mason Partners Variable Income Trust

(Exact name of registrant as specified in charter)

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

Robert I. Frenkel, Esq.
Legg Mason & Co., LLC
300 First Stamford Place, 4^th Floor
Stamford, CT 06902
(Name and address of agent for service)

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

Date of fiscal year end: December 31

Date of reporting period: June 30, 2008

ITEM 1. REPORT TO STOCKHOLDERS.

          The Semi-Annual Report to Stockholders is filed herewith.

SEMI-ANNUAL REPORT / JUNE 30, 2008

Legg Mason Partners

Variable Strategic Bond
Portfolio

Managed by WESTERN ASSET

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

Portfolio objective

The Portfolio seeks to maximize total return, consistent with the preservation of capital.

What’s inside

Letter from the chairman	I
Portfolio at a glance	1
Portfolio expenses	2
Schedule of investments	4
Statement of assets and liabilities	21
Statement of operations	22
Statements of changes in net assets	23
Financial highlights	24
Notes to financial statements	26

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

Letter from the chairman

R. Jay Gerken, CFA

Chairman, President and Chief Executive Officer

Dear Shareholder,

The U.S. economy was lackluster during the six-month reporting period ended June 30, 2008. Looking back, third quarter 2007 U.S. gross domestic product (“GDP”)ⁱ growth was 4.8%, its strongest showing in four years. However, continued weakness in the housing market, an ongoing credit crunch and soaring oil and food prices then took their toll on the economy. During the fourth quarter of 2007, GDP growth was -0.2%. First quarter 2008 GDP growth was a modest 0.9%. The advance estimate for second quarter 2008 GDP growth was 1.9%.

The debate continues as to whether or not the U.S. will fall into a recession. However, it is a moot point for many people, as the job market continues to weaken and soaring energy and food prices are tempering consumer spending. In terms of the employment picture, the U.S. Department of Labor reported that payroll employment declined in each of the first six months of 2008, and the unemployment rate rose to 5.5% in May, its highest level since October 2004. Oil prices surpassed $140 a barrel in June 2008, with the average price for a gallon of gas exceeding $4 for the first time ever.ⁱⁱ These factors, coupled with a sputtering housing market, contributed to the Consumer Confidence Index falling for the sixth consecutive month in June 2008, reaching its lowest level since 1992.ⁱⁱⁱ

Ongoing issues related to the housing and subprime mortgage markets and seizing credit markets prompted the Federal Reserve Board (“Fed”)^iv to take aggressive and, in some cases, unprecedented actions. Beginning in September 2007, the Fed reduced the federal funds rate^v from 5.25% to 4.75%. This marked the first such reduction since June 2003. The Fed then reduced the federal funds rate on six additional occasions through April 2008, bringing the federal funds rate to 2.00%. However, the Fed then shifted gears in the face of mounting inflationary prices and a weakening U.S. dollar. At its meeting in June, the Fed held rates steady and stated: “Recent information indicates that overall economic activity continues to expand, partly reflecting some firming in household spending. However, labor markets have softened further and financial markets remain under considerable stress. Tight credit conditions, the ongoing housing contraction, and the rise in energy prices are likely to weigh on economic growth over the next few quarters.”

Legg Mason Partners Variable Strategic Bond Portfolio  I

Letter from the chairman continued

In addition to the interest rate cuts, the Fed took several actions to improve liquidity in the credit markets. In March 2008, the Fed established a new lending program allowing certain brokerage firms, known as primary dealers, to also borrow from its discount window. The Fed also increased the maximum term for discount window loans from 30 to 90 days. Then, in mid-March, the Fed played a major role in facilitating the purchase of Bear Stearns by JPMorgan Chase.

During the six-month reporting period ended June 30, 2008, both short- and long-term Treasury yields experienced periods of volatility. Investors were initially focused on the subprime segment of the mortgage-backed market. These concerns broadened, however, to include a wide range of financial institutions and markets. As a result, other fixed-income instruments also experienced increased price volatility. This turmoil triggered a “flight to quality” during the first quarter of 2008, causing Treasury yields to move lower (and their prices higher), while riskier segments of the market saw their yields move higher (and their prices lower). Treasury yields then moved higher in April, May and early June, as oil prices hit record levels. However, an additional credit crunch in mid-June resulted in another flight to quality, with Treasury yields again moving lower. Overall, during the six months ended June 30, 2008, two-year Treasury yields fell from 3.05% to 2.63%. Over the same time frame, 10-year Treasury yields moved from 4.04% to 3.99%. Looking at the six-month period as a whole, the overall bond market, as measured by the Lehman Brothers U.S. Aggregate Index^vi, returned a modest 1.13%.

Periods of increased investor risk aversion caused the high-yield bond market to produce weak results over the six months ended June 30, 2008. During that period, the Citigroup High Yield Market Index^vii returned -1.50%. While high-yield bond prices rallied in April and May, it was not enough to overcome several flights to quality that served to drag down the sector.

Increased investor risk aversion caused the emerging debt markets to post a modest decline over the six months ended June 30, 2008. During that period, the JPMorgan Emerging Markets Bond Index Global (“EMBI Global”)^viii returned -0.18%. While the EMBI Global produced positive results in January, April and May, it was not enough to overcome periods of weakness, in particular during the month of June.

II  Legg Mason Partners Variable Strategic Bond Portfolio

Performance review

For the six months ended June 30, 2008, Class I shares of Legg Mason Partners Variable Strategic Bond Portfolio¹ returned -5.54%. The Portfolio’s unmanaged benchmark, the Lehman Brothers U.S. Aggregate Index, returned 1.13% for the same period. The Lipper Variable Global Income Funds Category Average² returned 1.38% over the same time frame.

PERFORMANCE SNAPSHOT as of June 30, 2008 (unaudited)

	6 MONTHS
	(not annualized)
Variable Strategic Bond Portfolio1 — Class I Shares		-5.54%
Lehman Brothers U.S. Aggregate Index		1.13%
Lipper Variable Global Income Funds Category Average2		1.38%

The performance shown represents past performance. Past performance is no guarantee of future results and current performance may be higher or lower than the performance shown above. Principal value, investment returns and yields will fluctuate and investors’ shares, when redeemed, may be worth more or less than their original cost.

Class II shares returned -5.86% over the six months ended June 30, 2008. All share class returns assume the reinvestment of all distributions, including returns of capital, if any, at net asset value and the deduction of all Portfolio expenses.

Performance figures reflect expense reimbursements and/or fee waivers, without which the performance would have been lower.

The 30-Day SEC Yields for the period ended June 30, 2008 for Class I and II shares were 5.26% and 4.95%, respectively. Current expense reimbursements and/or fee waivers are voluntary and may be reduced or terminated at any time. Absent current expense reimbursements and/or fee waivers, the 30-Day SEC Yields for Class I and II shares would have been 5.26% and 1.06%, respectively. The 30-Day SEC Yield is the average annualized net investment income per share for the 30-day period indicated and is subject to change.

TOTAL ANNUAL OPERATING EXPENSES (unaudited)

As of the Portfolio’s most current prospectus dated April 28, 2008, as supplemented June 16, 2008, the gross total operating expenses for Class I and Class II shares were 0.90% and 1.25%, respectively.

¹ The Portfolio is an underlying investment option of various variable annuity and variable life insurance products. The Portfolio’s performance returns do not reflect the deduction of expenses imposed in connection with investing in variable annuity or variable life insurance contracts, such as administrative fees, account charges and surrender charges, which, if reflected, would reduce the performance of the Portfolio. Past performance is no guarantee of future results.

² Lipper, Inc., a wholly-owned subsidiary of Reuters, provides independent insight on global collective investments. Returns are based on the six-month period ended June 30, 2008, including the reinvestment of all distributions, including returns of capital, if any, calculated among the 34 funds in the Portfolio’s Lipper category.

Legg Mason Partners Variable Strategic Bond Portfolio  III

Letter from the chairman continued

Information about your portfolio

As you may be aware, several issues in the mutual fund industry have come under the scrutiny of federal and state regulators. Affiliates of the Portfolio’s manager have, in recent years, received requests for information from various government regulators regarding market timing, late trading, fees, and other mutual fund issues in connection with various investigations. The regulators appear to be examining, among other things, the Portfolio’s response to market timing and shareholder exchange activity, including compliance with prospectus disclosure related to these subjects. The Portfolio is not in a position to predict the outcome of these requests and investigations.

Important information with regard to recent regulatory developments that may affect the Portfolio is contained in the “Notes to financial statements” included in this report.

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

Sincerely,

R. Jay Gerken, CFA
Chairman, President and Chief Executive Officer

July 31, 2008

IV  Legg Mason Partners Variable Strategic Bond Portfolio

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

RISKS: As interest rates rise, bond prices fall, reducing the value of the Portfolio’s share price. High-yield bonds involve greater credit and liquidity risks than investment grade bonds. Investing in foreign securities is subject to certain risks not associated with domestic investing, such as currency fluctuations, and changes in political and economic conditions. These risks are magnified in emerging or developing markets. The Portfolio may use derivatives, such as options and futures, which can be illiquid, may disproportionately increase losses, and have a potentially large impact on Portfolio performance. Please see the Portfolio’s prospectus for more information on these and other risks.

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

i	Gross domestic product (“GDP”) is the market value of all final goods and services produced within a country in a given period of time.
ii	Source: Bloomberg, 7/08.
iii	Source: The Conference Board, 7/08.
iv	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.
v	The federal funds rate is the rate charged by one depository institution on an overnight sale of immediately available funds (balances at the Federal Reserve) to another depository institution; the rate may vary from depository institution to depository institution and from day to day.
vi	The Lehman Brothers U.S. Aggregate Index is a broad-based bond index comprised of government, corporate, mortgage- and asset-backed issues, rated investment grade or higher, and having at least one year to maturity.
vii	The Citigroup High Yield Market Index is a broad-based unmanaged index of high-yield securities.
viii	The JPMorgan Emerging Markets Bond Index Global (“EMBI Global”) tracks total returns for U.S. dollar-denominated debt instruments issued by emerging market sovereign and quasi-sovereign entities: Brady bonds, loans, Eurobonds and local market instruments. Countries covered are Argentina, Belize, Brazil, Bulgaria, Chile, China, Colombia, Dominican Republic, Ecuador, Egypt, El Salvador, Gabon, Georgia, Ghana, Hungary, Indonesia, Iraq, Jamaica, Kazakhstan, Lebanon, Malaysia, Mexico, Pakistan, Panama, Peru, the Philippines, Poland, Russia, Serbia, South Africa, Sri Lanka, Trinidad & Tobago, Tunisia, Turkey, Ukraine, Uruguay, Venezuela and Vietnam.

Legg Mason Partners Variable Strategic Bond Portfolio  V

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Portfolio at a glance (unaudited)

INVESTMENT BREAKDOWN (%) As a percent of total investment — June 30, 2008

Legg Mason Partners Variable Strategic Bond Portfolio 2008 Semi-Annual Report  1

Portfolio expenses (unaudited)

Example

As a shareholder of the Portfolio, you may incur two types of costs: (1) transaction costs and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Portfolio expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested on January 1, 2008 and held for the six months ended June 30, 2008.

Actual expenses

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

BASED ON ACTUAL TOTAL RETURN¹

				BEGINNING		ENDING		ANNUALIZED			EXPENSES
	ACTUAL			ACCOUNT		ACCOUNT		EXPENSE			PAID DURING
	TOTAL RETURN2			VALUE		VALUE		RATIO			THE PERIOD3
Class I		(5.54	)%	$	1,000.00	$	944.60		0.93	%	$	4.50
Class II		(5.86	)		1,000.00		941.40		1.25			6.03

1	For the six months ended June 30, 2008.
2	Assumes reinvestment of all distributions, including returns of capital, if any, at net asset value. Total return is not annualized, as it may not be representative of the total return for the year. Total returns do not reflect expenses associated with the separate account such as administrative fees, account charges and surrender charges, which, if reflected, would reduce the total returns. Performance figures may reflect fee waivers and/or expense reimbursements. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower. Past performance is no guarantee of future results.
3	Expenses (net of fee waivers and/or expense reimbursements) are equal to each class’ respective annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year, then divided by 366.

2  Legg Mason Partners Variable Strategic Bond Portfolio 2008 Semi-Annual Report

Hypothetical example for comparison purposes

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

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

BASED ON HYPOTHETICAL TOTAL RETURN¹

	HYPOTHETICAL			BEGINNING		ENDING		ANNUALIZED			EXPENSES
	ANNUALIZED			ACCOUNT		ACCOUNT		EXPENSE			PAID DURING
	TOTAL RETURN			VALUE		VALUE		RATIO			THE PERIOD2
Class I		5.00	%	$	1,000.00	$	1,020.24		0.93	%	$	4.67
Class II		5.00			1,000.00		1,018.65		1.25			6.27

1	For the six months ended June 30, 2008.
2	Expenses (net of fee waivers and/or expense reimbursements) are equal to each class’ respective annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year, then divided by 366.

Legg Mason Partners Variable Strategic Bond Portfolio 2008 Semi-Annual Report  3

Schedule of investments (unaudited)
June 30, 2008

LEGG MASON PARTNERS VARIABLE STRATEGIC BOND PORTFOLIO

FACE
AMOUNT		SECURITY	VALUE
MORTGAGE-BACKED SECURITIES — 48.8%
		FHLMC — 8.9%
		Federal Home Loan Mortgage Corp. (FHLMC):
$	146,363	5.805% due 2/1/37(a)(b)	$	149,084
	903,571	5.901% due 4/1/37(a)(b)		919,534
	407,464	5.942% due 5/1/37(a)(b)		414,509
	335,347	5.944% due 5/1/37(a)(b)		341,026
	755,192	5.570% due 1/1/38(a)(b)		765,881
	3,693,146	Gold, 5.500% due 11/1/35-12/1/37(b)		3,644,582
		Total FHLMC		6,234,616
		FNMA — 33.8%
		Federal National Mortgage Association (FNMA):
	4,200,000	5.500% due 7/17/23-7/14/38(c)		4,224,032
	100,000	6.000% due 7/17/23(c)		102,516
	7,522	8.000% due 7/1/30-9/1/30(b)		8,140
	439	7.500% due 8/1/30		473
	27,908	7.500% due 9/1/30-2/1/31(b)		30,082
	1,839,543	5.000% due 2/1/36(b)		1,769,733
	462,109	5.500% due 11/1/36(b)		456,396
	855,676	6.500% due 6/1/37(b)		882,084
	4,050,000	5.000% due 7/14/38(b)(c)		3,882,306
	12,800,000	5.000% due 8/13/38(c)		12,241,997
		Total FNMA		23,597,759
		GNMA — 6.1%
		Government National Mortgage Association (GNMA):
	3,300,000	6.000% due 7/21/38-8/20/38(c)		3,344,127
	900,000	5.500% due 8/20/38(c)		890,719
		Total GNMA		4,234,846
		TOTAL MORTGAGE-BACKED SECURITIES (Cost — $33,992,085)		34,067,221
ASSET-BACKED SECURITIES — 7.4%
		Credit Card — 0.6%
	430,000	Washington Mutual Master Note Trust, 2.501% due 9/15/13(a)(d)		405,279
		Home Equity — 6.7%
	159,634	Accredited Mortgage Loan Trust, 2.723% due 9/25/35(a)(b)		152,913
	496,124	ACE Securities Corp., 2.653% due 1/25/36(a)(b)		136,086
	49,333	Amortizing Residential Collateral Trust, 3.683% due 8/25/32(a)(b)		17,214

See Notes to Financial Statements.

4  Legg Mason Partners Variable Strategic Bond Portfolio 2008 Semi-Annual Report

LEGG MASON PARTNERS VARIABLE STRATEGIC BOND PORTFOLIO

FACE
AMOUNT		SECURITY	VALUE
		Home Equity — 6.7% continued
$	547,281	Bear Stearns Asset-Backed Securities Trust, 2.833% due 9/25/34(a)(b)	$	534,696
	94,698	Countrywide Asset-Backed Certificates, 3.733% due 6/25/34(a)(b)		53,663
		Countrywide Home Equity Loan Trust:
	708,460	5.900% due 11/15/28(a)(b)		494,489
	533,484	5.620% due 12/15/33(a)(d)		287,561
	611,631	First Horizon ABS Trust, 2.643% due 10/25/34(a)(b)		341,502
	685,415	GMAC Mortgage Corp. Loan Trust, 3.233% due 2/25/31(a)(b)(d)		546,056
	93,940	Green Tree Financial Corp., 7.070% due 1/15/29(b)		93,185
	226,279	GSAMP Trust, 2.583% due 1/25/36(a)(b)		126,479
	471,750	Indymac Home Equity Loan Asset-Backed Trust, 2.653% due 4/25/36(a)(b)		155,883
	821,337	Lehman XS Trust, 2.693% due 9/25/46(a)(b)		478,233
	95,462	Long Beach Mortgage Loan Trust, 2.623% due 11/25/35(a)(b)		94,512
	411,927	SACO I Trust, 2.653% due 3/25/36(a)(b)		175,825
	3,130	Sail Net Interest Margin Notes, 7.750% due 4/27/33(d)(e)		0
	758,749	Securitized Asset Backed Receivables LLC, 2.713% due 2/25/37(a)(b)		515,494
	788,162	Washington Mutual Asset-Backed Certificates, 2.733% due 5/25/47(a)(b)		507,202
		Total Home Equity		4,710,993
		Manufactured Housing — 0.1%
	43,861	Mid-State Trust, 7.340% due 7/1/35(b)		44,276
		TOTAL ASSET-BACKED SECURITIES (Cost — $7,998,672)		5,160,548
COLLATERALIZED MORTGAGE OBLIGATIONS — 23.0%
	633,140	American Home Mortgage Investment Trust, 5.294% due 6/25/45(a)(b)		533,753
	810,000	Banc of America Commercial Mortgage Inc., 5.372% due 9/10/45(a)(b)		773,624
	456,051	Banc of America Mortgage Securities, 4.805% due 9/25/35(a)(b)		445,331
	140,373	Banc of America Mortgage Securities Inc., 5.172% due 12/25/34(a)(b)		137,261
	863,556	Bear Stearns Structured Products Inc., 3.083% due 9/27/37(a)(d)(f)		820,974
	125,000	Commercial Mortgage Asset Trust, 7.350% due 1/17/32(a)(b)		133,886
	301,454	Commercial Mortgage Pass-Through Certificates, 5.447% due 7/16/34(b)(d)		302,872

See Notes to Financial Statements.

Legg Mason Partners Variable Strategic Bond Portfolio 2008 Semi-Annual Report  5

Schedule of investments (unaudited) continued
June 30, 2008

LEGG MASON PARTNERS VARIABLE STRATEGIC BOND PORTFOLIO

FACE
AMOUNT		SECURITY	VALUE
COLLATERALIZED MORTGAGE OBLIGATIONS — 23.0% continued
		Countrywide Alternative Loan Trust:
$	475,159	2.712% due 7/20/35(a)(b)	$	368,549
	536,588	2.813% due 11/20/35(a)(b)		393,582
	557,685	2.753% due 1/25/36(a)(b)		435,626
	627,590	2.693% due 7/25/46(a)(b)		433,118
	372,089	Countrywide Home Loan, Mortgage Pass-Through Trust, 2.783% due 5/25/35(a)(b)		289,417
	810,000	Credit Suisse Mortgage Capital Certificates, 5.609% due 2/15/39(a)(b)		781,566
	347,491	Deutsche ALT-A Securities Inc. Mortgage Loan Trust, 4.952% due 8/25/35(a)(b)		315,164
		Downey Savings & Loan Association Mortgage Loan Trust:
	383,937	2.693% due 3/19/45(a)(b)		298,427
	507,435	4.448% due 3/19/46(a)(b)		362,974
	507,435	4.448% due 3/19/47(a)(b)(f)		350,155
	5,909,012	First Union National Bank Commercial Mortgage, IO, 0.810% due 5/17/32(a)(e)		87,512
	346,456	GSR Mortgage Loan Trust, 5.406% due 10/25/35(a)(b)		337,174
		Harborview Mortgage Loan Trust:
	360,720	2.883% due 11/19/34(a)(b)		309,376
	432,400	2.833% due 1/19/35(a)(b)		375,241
	797,436	2.693% due 11/19/36(a)(b)		563,543
	268,013	Indymac Index Mortgage Loan Trust, 6.279% due 3/25/35(a)(b)(f)		206,370
	155,495	Merit Securities Corp., 3.883% due 9/28/32(a)(d)		144,657
		Merrill Lynch/Countrywide Commercial Mortgage Trust:
	760,000	6.156% due 7/12/17(a)(b)		735,720
	740,000	5.810% due 6/12/50(a)(b)		704,130
	774,716	Morgan Stanley Mortgage Loan Trust, 6.096% due 3/25/36(a)(b)		598,547
	228,040	RBSGC Mortgage Pass-Through Certificates, 2.933% due 1/25/37(a)(b)		171,119
	250,010	Residential Accredit Loans Inc., 2.843% due 1/25/37(a)(b)		191,719
	397,372	Sequoia Mortgage Trust, 3.562% due 6/20/33(a)(b)		369,920
	495,859	Structured Adjustable Rate Mortgage Loan Trust, 2.803% due 10/25/35(a)(b)		374,978
		Structured Asset Mortgage Investments Inc.:
	62,013	6.502% due 8/25/35(a)(b)		48,573
	392,904	2.693% due 5/25/36(a)(b)		282,219
	311,584	Structured Asset Securities Corp., 2.763% due 4/25/35(a)(b)		276,935

See Notes to Financial Statements.

6  Legg Mason Partners Variable Strategic Bond Portfolio 2008 Semi-Annual Report

LEGG MASON PARTNERS VARIABLE STRATEGIC BOND PORTFOLIO

FACE
AMOUNT		SECURITY	VALUE
COLLATERALIZED MORTGAGE OBLIGATIONS — 23.0% continued
$	653,224	Thornburg Mortgage Securities Trust, 2.653% due 1/25/36(a)(b)	$	645,608
		Washington Mutual Inc.:
	700,000	4.425% due 8/25/35(a)(b)		667,790
	617,243	2.753% due 12/25/45(a)(b)		477,911
	335,815	2.773% due 12/25/45(a)(b)		294,363
		Washington Mutual Mortgage Pass-Through Certificates:
	324,579	5.502% due 9/25/36(a)(b)		311,343
	828,173	4.338% due 7/25/47(a)(b)		414,086
	247,272	Wells Fargo Mortgage Backed Securities Trust, 5.240% due 4/25/36(a)(b)		243,534
		TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost — $18,846,295)		16,008,647
COLLATERALIZED SENIOR LOAN — 0.3%
	248,750	First Data Corp., Term Loan, 5.355% due 10/15/14(a)(b)(d) (Cost — $239,558)		229,068
CONVERTIBLE BOND & NOTE — 0.1%
		Automobiles — 0.1%
	60,000	Ford Motor Co., Senior Notes, 4.250% due 12/15/36(b) (Cost — $60,000)		43,950
CORPORATE BONDS & NOTES — 35.9%
CONSUMER DISCRETIONARY — 4.0%
		Auto Components — 0.0%
		Visteon Corp.:
	14,000	12.250% due 12/31/16(b)(d)		11,270
	6,000	Senior Notes, 8.250% due 8/1/10(b)		5,370
		Total Auto Components		16,640
		Automobiles — 0.5%
		Ford Motor Co.:
		Debentures:
	10,000	6.625% due 10/1/28(b)		5,400
	25,000	8.900% due 1/15/32(b)		16,125
	345,000	Notes, 7.450% due 7/16/31(b)		202,687
		General Motors Corp., Senior Debentures:
	160,000	8.250% due 7/15/23(b)		94,000
	5,000	8.375% due 7/15/33(b)		2,988
		Total Automobiles		321,200

See Notes to Financial Statements.

Legg Mason Partners Variable Strategic Bond Portfolio 2008 Semi-Annual Report  7

Schedule of investments (unaudited) continued
June 30, 2008

LEGG MASON PARTNERS VARIABLE STRATEGIC BOND PORTFOLIO

FACE
AMOUNT		SECURITY	VALUE
		Diversified Consumer Services — 0.1%
		Service Corp. International, Senior Notes:
$	20,000	7.625% due 10/1/18(b)	$	20,050
	35,000	7.500% due 4/1/27(b)		29,925
		Total Diversified Consumer Services		49,975
		Hotels, Restaurants & Leisure — 0.5%
	25,000	Caesars Entertainment Inc., Senior Subordinated Notes, 8.125% due 5/15/11(b)		20,125
	30,000	Carrols Corp., Senior Subordinated Notes, 9.000% due 1/15/13(b)		26,250
		MGM MIRAGE Inc.:
	80,000	Notes, 6.750% due 9/1/12(b)		72,200
	70,000	Senior Notes, 7.625% due 1/15/17(b)		57,925
		Station Casinos Inc.:
	15,000	Senior Notes, 7.750% due 8/15/16(b)		11,550
	75,000	Senior Subordinated Notes, 6.500% due 2/1/14(b)		43,500
	125,000	Turning Stone Casino Resort Enterprise, Senior Notes, 9.125% due 12/15/10(b)(d)		124,687
		Total Hotels, Restaurants & Leisure		356,237
		Media — 2.9%
	170,000	CCH I LLC/CCH I Capital Corp., Senior Secured Notes, 11.000% due 10/1/15(b)		126,862
	190,000	Clear Channel Communications Inc., Senior Notes, 6.250% due 3/15/11(b)		161,121
	325,000	Comcast Cable Communications Holdings Inc., Notes, 8.375% due 3/15/13(b)		358,099
	100,000	Comcast Cable Communications Inc., Notes, 8.875% due 5/1/17(b)		114,857
		Comcast Corp., Notes:
	140,000	6.500% due 1/15/15(b)		142,352
	10,000	6.500% due 1/15/17(b)		10,076
	10,000	5.875% due 2/15/18(b)		9,638
	50,000	CSC Holdings Inc., Senior Notes, 6.750% due 4/15/12(b)		47,250
	48,000	Dex Media West LLC/Dex Media Finance Co., Senior Subordinated Notes, 9.875% due 8/15/13(b)		43,320
	81,000	DIRECTV Holdings LLC/DIRECTV Financing Co. Inc., Senior Notes, 8.375% due 3/15/13(b)		83,835
	75,000	EchoStar DBS Corp., Senior Notes, 6.625% due 10/1/14(b)		69,562
	70,000	Idearc Inc., Senior Notes, 8.000% due 11/15/16(b)		44,363
	500,000	Liberty Media Corp., Senior Notes, 7.875% due 7/15/09(b)		507,366

See Notes to Financial Statements.

8  Legg Mason Partners Variable Strategic Bond Portfolio 2008 Semi-Annual Report

LEGG MASON PARTNERS VARIABLE STRATEGIC BOND PORTFOLIO

FACE
AMOUNT		SECURITY	VALUE
		Media — 2.9% continued
$	290,000	Time Warner Inc., Senior Notes, 7.625% due 4/15/31(b)	$	295,219
	30,000	TL Acquisitions Inc., Senior Notes, 10.500% due 1/15/15(d)		26,100
		Total Media		2,040,020
		Multiline Retail — 0.0%
	25,000	Neiman Marcus Group Inc., Senior Subordinated Notes, 10.375% due 10/15/15(b)		25,125
		TOTAL CONSUMER DISCRETIONARY		2,809,197
CONSUMER STAPLES — 0.4%
		Food & Staples Retailing — 0.2%
	178,602	CVS Caremark Corp., 6.943% due 1/10/30(d)		172,128
		Food Products — 0.2%
		Dole Food Co. Inc., Senior Notes:
	100,000	7.250% due 6/15/10(b)		91,000
	27,000	8.875% due 3/15/11(b)		24,165
		Total Food Products		115,165
		TOTAL CONSUMER STAPLES		287,293
ENERGY — 5.0%
		Energy Equipment & Services — 0.1%
	55,000	Complete Production Services Inc., Senior Notes, 8.000% due 12/15/16(b)		55,206
		Oil, Gas & Consumable Fuels — 4.9%
	290,000	Anadarko Finance Co., Senior Notes, 7.500% due 5/1/31(b)		311,738
	90,000	Anadarko Petroleum Corp., Senior Notes, 6.450% due 9/15/36(b)		89,123
		Chesapeake Energy Corp., Senior Notes:
	100,000	6.625% due 1/15/16(b)		96,500
	75,000	6.500% due 8/15/17(b)		70,500
		Compagnie Generale de Geophysique SA, Senior Notes:
	15,000	7.500% due 5/15/15(b)		15,038
	55,000	7.750% due 5/15/17(b)		55,344
	355,000	ConocoPhillips Holding Co., Senior Notes, 6.950% due 4/15/29(b)		390,455
		El Paso Corp., Medium-Term Notes:
	225,000	7.375% due 12/15/12(b)		232,430
	30,000	7.750% due 1/15/32(b)		30,204
	100,000	EXCO Resources Inc., Senior Notes, 7.250% due 1/15/11(b)		98,750
	175,000	Gaz Capital SA, Notes, 8.625% due 4/28/34(b)(d)		190,312
	100,000	Gazprom, Loan Participation Notes, 6.212% due 11/22/16(d)		93,680

See Notes to Financial Statements.

Legg Mason Partners Variable Strategic Bond Portfolio 2008 Semi-Annual Report  9

Schedule of investments (unaudited) continued
June 30, 2008

LEGG MASON PARTNERS VARIABLE STRATEGIC BOND PORTFOLIO

FACE
AMOUNT		SECURITY	VALUE
		Oil, Gas & Consumable Fuels — 4.9% continued
		Hess Corp.:
$	20,000	7.875% due 10/1/29(b)	$	23,001
	210,000	Notes, 7.300% due 8/15/31(b)		235,228
	240,000	Intergas Finance BV, 6.375% due 5/14/17(b)(d)		214,200
	170,000	KazMunaiGaz Finance Sub B.V., 8.375% due 7/2/13(d)		170,297
		Kinder Morgan Energy Partners LP, Senior Notes:
	30,000	6.300% due 2/1/09(b)		30,309
	20,000	6.000% due 2/1/17(b)		19,795
		OPTI Canada Inc., Senior Secured Notes:
	40,000	7.875% due 12/15/14(b)		39,700
	45,000	8.250% due 12/15/14(b)		45,000
	20,000	Peabody Energy Corp., 6.875% due 3/15/13(b)		20,150
		Pemex Project Funding Master Trust:
	40,000	6.625% due 6/15/35(b)(d)		39,664
	25,000	Senior Bonds, 6.625% due 6/15/35(b)		24,790
	190,000	Petrobras International Finance Co., Senior Notes, 6.125% due 10/6/16(b)		190,950
	50,000	Quicksilver Resources Inc., Senior Subordinated Notes, 7.125% due 4/1/16(b)		46,812
	30,000	SemGroup LP, Senior Notes, 8.750% due 11/15/15(b)(d)(l)		29,250
	20,000	Tennessee Gas Pipeline Co., 7.625% due 4/1/37(b)		20,916
	75,000	Whiting Petroleum Corp., Senior Subordinated Notes, 7.000% due 2/1/14(b)		73,969
		Williams Cos. Inc.:
	130,000	Debentures, 7.500% due 1/15/31(b)		132,112
		Notes:
	55,000	7.875% due 9/1/21(b)		58,575
	174,000	8.750% due 3/15/32(b)		198,360
		Senior Notes:
	75,000	7.625% due 7/15/19(b)		79,125
	40,000	7.750% due 6/15/31(b)		41,800
		Total Oil, Gas & Consumable Fuels		3,408,077
		TOTAL ENERGY		3,463,283
FINANCIALS — 15.1%
		Capital Markets — 2.9%
		Bear Stearns Co. Inc.:
	100,000	Senior Notes, 7.250% due 2/1/18(b)		104,537

See Notes to Financial Statements.

10  Legg Mason Partners Variable Strategic Bond Portfolio 2008 Semi-Annual Report

LEGG MASON PARTNERS VARIABLE STRATEGIC BOND PORTFOLIO

FACE
AMOUNT		SECURITY	VALUE
		Capital Markets — 2.9% continued
$	140,000	Subordinated Notes, 5.550% due 1/22/17(b)	$	129,606
	90,000	Credit Suisse Guernsey Ltd., 5.860% due 5/15/17(a)(b)(g)		75,151
	490,000	Kaupthing Bank HF, 7.625% due 2/28/15(b)(d)(e)(f)		442,617
	80,000	Lehman Brothers Holdings E-Capital Trust I, Notes, 3.499% due 8/19/65(a)(b)		59,444
	630,000	Lehman Brothers Holdings Inc., Medium-Term Notes, 6.750% due 12/28/17(b)		592,846
		Morgan Stanley:
	80,000	Medium-Term Notes, 3.184% due 10/18/16(a)(b)		69,519
	600,000	Subordinated Notes, 4.750% due 4/1/14(b)		547,408
	20,000	Morgan Stanley Bank AG for OAO Gazprom, Loan Participation Notes, 9.625% due 3/1/13(b)(d)		22,181
		Total Capital Markets		2,043,309
		Commercial Banks — 3.4%
		Glitnir Banki HF:
	190,000	Notes, 6.330% due 7/28/11(d)		154,210
	170,000	Subordinated Notes, 6.693% due 6/15/16(a)(b)(d)		109,386
		ICICI Bank Ltd., Subordinated Bonds:
	120,000	6.375% due 4/30/22(a)(d)		108,639
	118,000	6.375% due 4/30/22(a)(b)(d)		105,920
	340,000	Landsbanki Islands HF, 6.100% due 8/25/11(d)		299,959
	150,000	Resona Preferred Global Securities Cayman Ltd., Bonds, 7.191% due 7/30/15(a)(d)(g)		138,694
	120,000	Royal Bank of Scotland Group PLC, Bonds, 6.990% due 10/5/17(a)(d)(g)		108,180
	160,000	Santander Issuances SA Unipersonal, Subordinated Notes, 5.805% due 6/20/16(a)(d)		154,704
	170,000	Shinsei Finance Cayman Ltd., Junior Subordinated Bonds, 6.418% due 7/20/16(a)(d)(g)		119,555
	80,000	SunTrust Capital, Trust Preferred Securities, 6.100% due 12/15/36(a)(b)		63,722
		TuranAlem Finance BV, Bonds:
	270,000	8.250% due 1/22/37(d)		226,125
	210,000	8.250% due 1/22/37(b)(d)		176,137
	510,000	Wachovia Corp., Subordinated Notes, 5.250% due 8/1/14(b)		475,458
	100,000	Wells Fargo Capital X, Capital Securities, 5.950% due 12/15/36(b)		91,010
		Total Commercial Banks		2,331,699

See Notes to Financial Statements.

Legg Mason Partners Variable Strategic Bond Portfolio 2008 Semi-Annual Report  11

Schedule of investments (unaudited) continued
June 30, 2008

LEGG MASON PARTNERS VARIABLE STRATEGIC BOND PORTFOLIO

FACE
AMOUNT		SECURITY	VALUE
		Consumer Finance — 4.4%
$	120,000	American Express Co., Subordinated Debentures, 6.800% due 9/1/66(a)(b)	$	111,114
		Ford Motor Credit Co.:
		Notes:
	650,000	7.375% due 10/28/09(b)		592,183
	410,000	7.875% due 6/15/10(b)		354,045
		Senior Notes:
	600,000	5.800% due 1/12/09(b)		572,984
	183,000	8.026% due 6/15/11(a)(b)		149,010
		General Motors Acceptance Corp.:
	20,000	Bonds, 8.000% due 11/1/31(b)		13,037
		Notes:
	10,000	7.250% due 3/2/11(b)		7,354
	375,000	6.875% due 9/15/11(b)		269,641
	460,000	6.625% due 5/15/12(b)		315,812
	175,000	6.750% due 12/1/14(b)		115,712
	70,000	Senior Notes, 5.850% due 1/14/09(b)		66,479
		SLM Corp., Medium-Term Notes:
	160,000	5.000% due 10/1/13(b)		138,500
	335,000	5.375% due 5/15/14(b)		294,666
	40,000	5.050% due 11/14/14(b)		34,016
	50,000	5.625% due 8/1/33(b)		37,757
		Total Consumer Finance		3,072,310
		Diversified Financial Services — 3.5%
	200,000	AGFC Capital Trust I, 6.000% due 1/15/67(a)(b)(d)		158,954
	160,000	Aiful Corp., Notes, 5.000% due 8/10/10(b)(d)		142,400
		Bank of America Corp.:
	120,000	Notes, 8.000% due 1/30/18(a)(b)(g)		112,607
	400,000	Subordinated Notes, 5.420% due 3/15/17(b)		366,472
	330,000	El Paso Performance-Linked Trust Certificates, Senior Notes, 7.750% due 7/15/11(d)		334,102
	300,000	General Electric Capital Corp., Subordinated Debentures, 6.375% due 11/15/67(a)(b)		284,231
		JPMorgan Chase & Co.:
	130,000	5.150% due 10/1/15(b)		125,357
		Subordinated Notes:
	120,000	6.625% due 3/15/12(b)		123,848

See Notes to Financial Statements.

12  Legg Mason Partners Variable Strategic Bond Portfolio 2008 Semi-Annual Report

LEGG MASON PARTNERS VARIABLE STRATEGIC BOND PORTFOLIO

FACE
AMOUNT		SECURITY	VALUE
		Diversified Financial Services — 3.5% continued
$	260,000	5.125% due 9/15/14(b)	$	253,137
		Residential Capital LLC:
	63,000	8.500% due 5/15/10(d)		53,235
	348,000	9.625% due 5/15/15(d)		170,520
		TNK-BP Finance SA:
	200,000	7.500% due 7/18/16(b),(d)		189,740
	100,000	Senior Notes, 7.875% due 3/13/18(b)(d)		96,750
	50,000	Vanguard Health Holdings Co., I LLC, Senior Discount Notes, step bond to yield 9.378% due 10/1/15(b)		44,250
		Total Diversified Financial Services		2,455,603
		Insurance — 0.7%
		American International Group Inc.:
	140,000	Junior Subordinated Debentures, 6.250% due 3/15/37(b)		109,902
	30,000	Medium-Term Notes, 5.850% due 1/16/18(b)		28,156
	270,000	MetLife Inc., Junior Subordinated Debentures, 6.400% due 12/15/36(b)		236,453
	130,000	Travelers Cos. Inc., Junior Subordinated Debentures, 6.250% due 3/15/37(a)(b)		111,867
		Total Insurance		486,378
		Real Estate Management & Development — 0.1%
	150,000	Realogy Corp., Senior Subordinated Notes, 12.375% due 4/15/15(b)		74,250
		Thrifts & Mortgage Finance — 0.1%
	70,000	Countrywide Financial Corp., Medium-Term Notes, 2.868% due 1/5/09(a)(b)		68,639
		TOTAL FINANCIALS		10,532,188
HEALTH CARE — 0.9%
		Health Care Providers & Services — 0.7%
	50,000	Community Health Systems Inc., Senior Notes, 8.875% due 7/15/15(b)		50,563
	65,000	DaVita Inc., Senior Notes, 6.625% due 3/15/13(b)		62,725
		HCA Inc.:
		Senior Notes:
	151,000	5.750% due 3/15/14(b)		126,462
	14,000	6.500% due 2/15/16(b)		11,725
		Senior Secured Notes:
	110,000	9.250% due 11/15/16(b)		113,575
	33,000	9.625% due 11/15/16(b)(h)		34,073

See Notes to Financial Statements.

Legg Mason Partners Variable Strategic Bond Portfolio 2008 Semi-Annual Report  13

Schedule of investments (unaudited) continued
June 30, 2008

LEGG MASON PARTNERS VARIABLE STRATEGIC BOND PORTFOLIO

FACE
AMOUNT		SECURITY	VALUE
		Health Care Providers & Services — 0.7% continued
		Tenet Healthcare Corp., Senior Notes:
$	75,000	7.375% due 2/1/13(b)	$	70,875
	15,000	6.875% due 11/15/31(b)		10,875
	10,000	WellPoint Inc., Senior Notes, 5.875% due 6/15/17(b)		9,682
		Total Health Care Providers & Services		490,555
		Pharmaceuticals — 0.2%
	150,000	Wyeth, 5.950% due 4/1/37(b)		145,273
		TOTAL HEALTH CARE		635,828
INDUSTRIALS — 0.9%
		Aerospace & Defense — 0.3%
	50,000	DRS Technologies Inc., Senior Subordinated Notes, 6.625% due 2/1/16(b)		51,000
	175,000	L-3 Communications Corp., Senior Subordinated Notes, 7.625% due 6/15/12(b)		177,188
		Total Aerospace & Defense		228,188
		Airlines — 0.4%
	2,602	Continental Airlines Inc., Pass-Through Certificates, 6.541% due 9/15/08(b)(f)		2,602
	97,284	Delta Air Lines Inc., 6.821% due 8/10/22(b)		80,259
	200,000	Delta Air Lines Inc., Pass-Through Certificates, 7.570% due 11/18/10(b)		189,000
		Total Airlines		271,861
		Commercial Services & Supplies — 0.1%
	50,000	Allied Security Escrow Corp., Senior Subordinated Notes, 11.375% due 7/15/11(b)		43,250
	50,000	Interface Inc., Senior Notes, 10.375% due 2/1/10(b)		52,750
		Total Commercial Services & Supplies		96,000
		Machinery — 0.0%
	20,000	Terex Corp., Senior Subordinated Notes, 7.375% due 1/15/14(b)		19,800
		Road & Rail — 0.1%
		Hertz Corp.:
	25,000	Senior Notes, 8.875% due 1/1/14(b)		23,000
	10,000	Senior Subordinated Notes, 10.500% due 1/1/16(b)		9,150
		Total Road & Rail		32,150
		TOTAL INDUSTRIALS		647,999

See Notes to Financial Statements.

14  Legg Mason Partners Variable Strategic Bond Portfolio 2008 Semi-Annual Report

LEGG MASON PARTNERS VARIABLE STRATEGIC BOND PORTFOLIO

FACE
AMOUNT		SECURITY	VALUE
INFORMATION TECHNOLOGY — 0.5%
		IT Services — 0.4%
$	250,000	Electronic Data Systems Corp., Notes, 7.125% due 10/15/09(b)	$	257,895
	50,000	SunGard Data Systems Inc., Senior Notes, 9.125% due 8/15/13(b)		50,750
		Total IT Services		308,645
		Office Electronics — 0.1%
	50,000	Xerox Corp., Senior Notes, 6.400% due 3/15/16(b)		49,985
		TOTAL INFORMATION TECHNOLOGY		358,630
MATERIALS — 1.7%
		Chemicals — 0.2%
	80,000	FMC Finance III SA, 6.875% due 7/15/17(b)		79,000
	10,000	Georgia Gulf Corp., Senior Notes, 9.500% due 10/15/14(b)		7,525
	75,000	Methanex Corp., Senior Notes, 8.750% due 8/15/12(b)		79,688
		Total Chemicals		166,213
		Containers & Packaging — 0.2%
		Graham Packaging Co. Inc.:
	30,000	Senior Notes, 8.500% due 10/15/12(b)		28,575
	10,000	Senior Subordinated Notes, 9.875% due 10/15/14(b)		8,900
	75,000	Graphic Packaging International Corp., Senior Subordinated Notes, 9.500% due 8/15/13(b)		72,000
	25,000	Radnor Holdings Corp., Senior Notes, 11.000% due 3/15/10(e)(f)(i)		0
		Total Containers & Packaging		109,475
		Metals & Mining — 1.0%
	190,000	Evraz Group SA, Notes, 8.875% due 4/24/13(d)		191,178
	80,000	Freeport-McMoRan Copper & Gold Inc., Senior Notes, 8.375% due 4/1/17(b)		84,531
	45,000	Steel Dynamics Inc., 6.750% due 4/1/15(b)		43,313
	270,000	Vale Overseas Ltd., Notes, 6.875% due 11/21/36(b)		252,108
	100,000	Vedanta Resources PLC, 8.750% due 1/15/14(d)		100,376
		Total Metals & Mining		671,506
		Paper & Forest Products — 0.3%
	190,000	Weyerhaeuser Co., Notes, 6.750% due 3/15/12(b)		195,844
		TOTAL MATERIALS		1,143,038
TELECOMMUNICATION SERVICES — 3.7%
		Diversified Telecommunication Services — 2.7%
	200,000	AT&T Inc., 5.500% due 2/1/18(b)		194,157

See Notes to Financial Statements.

Legg Mason Partners Variable Strategic Bond Portfolio 2008 Semi-Annual Report  15

Schedule of investments (unaudited) continued
June 30, 2008

LEGG MASON PARTNERS VARIABLE STRATEGIC BOND PORTFOLIO

FACE
AMOUNT		SECURITY	VALUE
		Diversified Telecommunication Services — 2.7% continued
$	30,000	Citizens Communications Co., Senior Notes, 7.875% due 1/15/27(b)	$	26,400
	260,000	Deutsche Telekom International Finance, Senior Notes, 5.750% due 3/23/16(b)		254,075
	200,000	Koninklijke KPN NV, Senior Notes, 8.000% due 10/1/10(b)		211,716
	40,000	Level 3 Financing Inc., Senior Notes, 9.250% due 11/1/14(b)		36,600
	120,000	Qwest Communications International Inc., Senior Notes, 7.500% due 2/15/14(b)		114,600
	425,000	Telecom Italia Capital S.p.A., Senior Notes, 5.250% due 10/1/15(b)		389,512
	345,000	Verizon Florida Inc., Senior Notes, 6.125% due 1/15/13(b)		352,003
	60,000	Verizon New York Inc., Senior Debentures, 6.875% due 4/1/12(b)		62,625
	190,000	Vimpel Communications, Loan Participation Notes, 8.375% due 4/30/13(b)(d)		187,490
	45,000	Windstream Corp., Senior Notes, 8.625% due 8/1/16(b)		45,112
		Total Diversified Telecommunication Services		1,874,290
		Wireless Telecommunication Services — 1.0%
	80,000	America Movil SAB de CV, 5.625% due 11/15/17(b)		77,447
	25,000	American Tower Corp., Senior Notes, 7.500% due 5/1/12(b)		25,375
		Nextel Communications Inc., Senior Notes:
	160,000	6.875% due 10/31/13(b)		135,296
	205,000	7.375% due 8/1/15(b)		170,260
	325,000	Sprint Capital Corp., Senior Notes, 8.375% due 3/15/12(b)		322,001
		Total Wireless Telecommunication Services		730,379
		TOTAL TELECOMMUNICATION SERVICES		2,604,669
UTILITIES — 3.7%
		Electric Utilities — 0.9%
	14,000	Duke Energy Corp., Senior Notes, 5.625% due 11/30/12(b)		14,419
	195,000	Exelon Corp., Bonds, 5.625% due 6/15/35(b)		168,612
	285,000	FirstEnergy Corp., Notes, 7.375% due 11/15/31(b)		310,806
	130,000	Pacific Gas & Electric Co., First Mortgage Bonds, 6.050% due 3/1/34(b)		125,750
		Total Electric Utilities		619,587
		Independent Power Producers & Energy Traders — 2.8%
		AES Corp., Senior Notes:
	93,000	9.375% due 9/15/10(b)		98,347
	17,000	7.750% due 3/1/14(b)		16,851
	50,000	7.750% due 10/15/15(b)		49,500

See Notes to Financial Statements.

16  Legg Mason Partners Variable Strategic Bond Portfolio 2008 Semi-Annual Report

LEGG MASON PARTNERS VARIABLE STRATEGIC BOND PORTFOLIO

FACE
AMOUNT		SECURITY	VALUE
		Independent Power Producers & Energy Traders — 2.8% continued
$	280,000	8.000% due 10/15/17(b)	$	275,800
		Dynegy Holdings Inc.:
	25,000	Senior Debentures, 7.125% due 5/15/18(b)		21,875
	60,000	Senior Notes, 7.750% due 6/1/19(b)		54,900
		Edison Mission Energy, Senior Notes:
	110,000	7.200% due 5/15/19(b)		103,125
	20,000	7.625% due 5/15/27(b)		18,050
		Energy Future Holdings, Senior Notes:
	10,000	10.875% due 11/1/17(b)(d)		10,150
	780,000	11.250% due 11/1/17(d)(h)		781,950
		NRG Energy Inc., Senior Notes:
	25,000	7.250% due 2/1/14(b)		23,938
	150,000	7.375% due 2/1/16(b)		141,562
		TXU Corp., Senior Notes:
	80,000	5.550% due 11/15/14(b)		63,030
	75,000	6.500% due 11/15/24(b)		55,710
	290,000	6.550% due 11/15/34(b)		212,738
		Total Independent Power Producers & Energy Traders		1,927,526
		TOTAL UTILITIES		2,547,113
		TOTAL CORPORATE BONDS & NOTES (Cost — $26,948,518)		25,029,238
SOVEREIGN BONDS — 2.7%
		Germany — 0.2%
	110,000	Bundesrepublik Deutschland, 4.250% due 1/4/14(b)		169,899
		Italy — 0.5%
	325,000	Region of Lombardy, 5.804% due 10/25/32(b)		354,350
		Mexico — 0.8%
		United Mexican States:
	66,000	10.375% due 2/17/09(b)		68,805
		Medium-Term Notes:
	145,000	5.875% due 1/15/14(b)		150,075
	270,000	5.625% due 1/15/17(b)		273,173
	56,000	6.750% due 9/27/34(b)		59,710
		Total Mexico		551,763
		Russia — 0.4%
	175,000	Russian Federation, 11.000% due 7/24/18(b)(d)		245,875

See Notes to Financial Statements.

Legg Mason Partners Variable Strategic Bond Portfolio 2008 Semi-Annual Report  17

Schedule of investments (unaudited) continued
June 30, 2008

LEGG MASON PARTNERS VARIABLE STRATEGIC BOND PORTFOLIO

FACE
AMOUNT		SECURITY	VALUE
		Supranational — 0.8%
$	540,000	Corporacion Andina de Fomento, Notes, 6.875% due 3/15/12(b)	$	567,976
		TOTAL SOVEREIGN BONDS (Cost — $1,802,635)		1,889,863
U.S. GOVERNMENT & AGENCY OBLIGATIONS — 2.3%
		U.S. Government Agencies — 1.7%
	400,000	Farmer Mac, Guaranteed Trust, 5.125% due 4/19/17(d)		408,816
	260,000	Federal Home Loan Bank (FHLB), Global Bonds, 5.500% due 7/15/36(b)		270,832
	100,000	Federal Home Loan Mortgage Corp. (FHLMC), 5.600% due 9/26/13(b)		100,576
	140,000	Federal National Mortgage Association (FNMA), 3.000% due 7/12/10(b)		139,435
	270,000	Tennessee Valley Authority, 5.980% due 4/1/36(b)		291,625
		Total U.S. Government Agencies		1,211,284
		U.S. Government Obligations — 0.6%
		U.S. Treasury Bonds:
	10,000	6.375% due 8/15/27(b)		12,253
	100,000	6.125% due 8/15/29(b)(j)		120,649
	135,000	5.375% due 2/15/31(b)(j)		150,040
	120,000	4.750% due 2/15/37(b)		123,956
		Total U.S. Government Obligations		406,898
		��
		TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS (Cost — $1,555,969)		1,618,182
SHARES
COMMON STOCKS — 0.0%
CONSUMER DISCRETIONARY — 0.0%
		Household Durables — 0.0%
	176,627	Home Interiors & Gifts Inc.(e)(f)*		0
INFORMATION TECHNOLOGY — 0.0%
		Computers & Peripherals — 0.0%
	1,014	Axiohm Transaction Solutions Inc.(e)(f)*		0
		TOTAL COMMON STOCKS (Cost — $65,741)		0
PREFERRED STOCKS — 0.6%
FINANCIALS — 0.6%
		Thrifts & Mortgage Finance — 0.6%
	10,000	Federal Home Loan Mortgage Corp. (FHLMC), 8.375%(a)(b)		243,000
	400	Federal National Mortgage Association (FNMA), 7.000%(a)(b)		18,872

See Notes to Financial Statements.

18  Legg Mason Partners Variable Strategic Bond Portfolio 2008 Semi-Annual Report

LEGG MASON PARTNERS VARIABLE STRATEGIC BOND PORTFOLIO

SHARES		SECURITY	VALUE
		Thrifts & Mortgage Finance — 0.6% continued
	7,475	Federal National Mortgage Association (FNMA), 8.250%(b)	$	171,551
		TOTAL PREFERRED STOCKS (Cost — $458,155)		433,423
WARRANTS
WARRANT — 0.1%
	1,250	Bolivarian Republic of Venezuela, Oil-linked payment obligations, Expires 4/15/20(a)(b)* (Cost — $0)		44,687
		TOTAL INVESTMENTS BEFORE SHORT-TERM INVESTMENTS (Cost — $91,967,628)		84,524,827
FACE
AMOUNT
SHORT-TERM INVESTMENTS — 14.7%
		U.S. Government Agencies — 10.1%
		Federal Home Loan Bank (FHLB), Discount Notes:
$	3,800,000	2.123% due 10/24/08(k)		3,770,926
	3,000,000	2.512% due 10/28/08(k)		2,976,249
	272,000	Federal National Mortgage Association (FNMA), Discount Notes, 1.825% due 12/15/08(j)(k)		268,864
		Total U.S. Government Agencies
		(Cost — $7,019,627)		7,016,039
		Repurchase Agreement — 4.6%
	3,229,000	Morgan Stanley tri-party repurchase agreement dated 6/30/08, 2.400% due 7/1/08; Proceeds at maturity — $3,229,215; (Fully collateralized by U.S. government agency obligation, 0.000% due 12/30/08; Market value — 3,297,248)(b) (Cost — $3,229,000)		3,229,000
		TOTAL SHORT-TERM INVESTMENTS (Cost — $10,248,627)		10,245,039
		TOTAL INVESTMENTS — 135.9% (Cost — $102,216,255#)		94,769,866
		Liabilities in Excess of Other Assets — (35.9)%		(25,033,952	)
		TOTAL NET ASSETS — 100.0%	$	69,735,914

See Notes to Financial Statements.

Legg Mason Partners Variable Strategic Bond Portfolio 2008 Semi-Annual Report  19

Schedule of investments (unaudited) continued
June 30, 2008

LEGG MASON PARTNERS VARIABLE STRATEGIC BOND PORTFOLIO

*	Non-income producing security.
(a)	Variable rate security. Interest rate disclosed is that which is in effect at June 30, 2008.
(b)	All or a portion of this security is segregated for open futures contracts, written options, swap contracts, and to-be-announced securities (“TBA”).
(c)	This security is traded on TBA basis (See Note 1).
(d)	Security is exempt from registration under Rule 144A of the Securities Act of 1933. This security may be resold in transactions that are exempt from registration, normally to qualified institutional buyers. This security has been deemed liquid pursuant to guidelines approved by the Board of Directors, unless otherwise noted.
(e)	Illiquid security.
(f)	Security is valued in good faith at fair value by or under the direction of the Board of Directors (See Note 2).
(g)	Security has no maturity date. The date shown represents the next call date.
(h)	Payment-in-kind security for which part of the income earned may be paid as additional principal.
(i)	Security is currently in default.
(j)	All or a portion of this security is held at the broker as collateral for open futures contracts.
(k)	Rate shown represents yield-to-maturity.
(l)	Subsequent to June 30, 2008, this security is in default as of July 22, 2008.
#	Aggregate cost for federal income tax purposes is substantially the same.
	Abbreviation used in this schedule:
	IO — Interest Only

SCHEDULE OF OPTIONS WRITTEN

			EXPIRATION		STRIKE
CONTRACTS		SECURITY	DATE		PRICE		VALUE
	1	Eurodollar Futures, Call (Premium received — $533)		9/15/08	$	97.25	$	188

See Notes to Financial Statements.

20  Legg Mason Partners Variable Strategic Bond Portfolio 2008 Semi-Annual Report

Statement of assets and liabilities (unaudited)
June 30, 2008

ASSETS:
Investments, at value (Cost — $102,216,255)	$	94,769,866
Foreign currency, at value (Cost — $90)		91
Cash		304
Receivable for securities sold		15,186,483
Dividends and interest receivable		688,997
Unrealized appreciation on swaps		208,705
Interest receivable for open swap contracts		64,486
Premium received for swaps purchased		50,084
Receivable from broker — variation margin on open futures contracts		23,784
Principal paydown receivable		12,707
Prepaid expenses		1,535
Total Assets		111,007,042
LIABILITIES:
Payable for securities purchased		40,293,762
Payable for Portfolio shares repurchased		558,191
Unrealized depreciation on swaps		190,087
Interest payable for open swap contracts		67,248
Investment management fee payable		49,943
Trustees’ fees payable		5,811
Options written, at value (premium received $533)		188
Accrued expenses		105,898
Total Liabilities		41,271,128
TOTAL NET ASSETS	$	69,735,914
NET ASSETS:
Par value (Note 7)	$	75
Paid-in capital in excess of par value		76,973,190
Undistributed net investment income		1,853,509
Accumulated net realized loss on investments, futures contracts, options written, swap contracts and foreign currency transactions		(1,316,160	)
Net unrealized depreciation on investments, futures contracts, options written, swap contracts and foreign currencies		(7,774,700	)
TOTAL NET ASSETS		$69,735,914
Shares Outstanding:
Class I		7,465,838
Class II		50
Net Asset Value:
Class I		$9.34
Class II		$9.34

See Notes to Financial Statements.

Legg Mason Partners Variable Strategic Bond Portfolio 2008 Semi-Annual Report  21

Statement of operations (unaudited)
For the Six Months Ended June 30, 2008

INVESTMENT INCOME:
Interest	$	2,251,361
Dividends		24,996
Total Investment Income		2,276,357
EXPENSES:
Investment management fee (Note 3)		252,191
Shareholder reports (Note 5)		74,258
Audit and tax		14,266
Legal fees		14,159
Custody fees		3,354
Insurance		1,855
Trustees’ fees		948
Transfer agent fees (Note 5)		68
Distribution fees (Notes 3 and 5)		1
Miscellaneous expenses		4,519
Total Expenses		365,619
Less: Fee waivers and/or expense reimbursements (Note 3)		(6,123	)
Fees paid indirectly (Note 1)		(73	)
Net Expenses		359,423
NET INVESTMENT INCOME		1,916,934
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES CONTRACTS, OPTIONS WRITTEN, SWAP CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS (NOTES 1 AND 4):
Net Realized Gain (Loss) From:
Investment transactions		(225,208	)
Futures contracts		(599,137	)
Options written		95,253
Swap contracts		9,186
Foreign currency transactions		3,407
Net Realized Loss		(716,499	)
Change in Net Unrealized Appreciation/Depreciation From:
Investments		(5,387,363	)
Futures contracts		(245,397	)
Options written		68,501
Swap contracts		18,618
Foreign currencies		6
Change in Net Unrealized Appreciation/Depreciation		(5,545,635	)
Net Loss on Investments, Futures Contracts, Options Written, Swap Contracts and Foreign Currency Transactions		(6,262,134	)
DECREASE IN NET ASSETS FROM OPERATIONS	$	(4,345,200	)

See Notes to Financial Statements.

22  Legg Mason Partners Variable Strategic Bond Portfolio 2008 Semi-Annual Report

Statements of changes in net assets

FOR THE SIX MONTHS ENDED JUNE 30, 2008 (unaudited)
AND THE YEAR ENDED DECEMBER 31, 2007	2008			2007
OPERATIONS:
Net investment income	$	1,916,934		$	4,787,347
Net realized loss		(716,499	)		(224,997	)
Change in net unrealized appreciation/depreciation		(5,545,635	)		(2,775,325	)
Increase (Decrease) in Net Assets From Operations		(4,345,200	)		1,787,025
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTES 1 AND 6):
Net investment income		(300,000	)		(4,250,003	)
Decrease in Net Assets From Distributions to Shareholders		(300,000	)		(4,250,003	)
PORTFOLIO SHARE TRANSACTIONS (NOTE 7):
Net proceeds from sale of shares		1,980,405			8,601,847
Reinvestment of distributions		300,000			4,250,003
Cost of shares repurchased		(13,723,150	)		(22,533,404	)
Decrease in Net Assets From Portfolio Share Transactions		(11,442,745	)		(9,681,554	)
DECREASE IN NET ASSETS		(16,087,945	)		(12,144,532	)
NET ASSETS:
Beginning of period		85,823,859			97,968,391
End of period*	$	69,735,914		$	85,823,859
* Includes undistributed net investment income of:		$1,853,509			$236,575

See Notes to Financial Statements.

Legg Mason Partners Variable Strategic Bond Portfolio 2008 Semi-Annual Report  23

Financial highlights

FOR A SHARE OF EACH CLASS OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH YEAR ENDED DECEMBER 31, UNLESS OTHERWISE NOTED:

CLASS I SHARES	20081,2			20072			20062,3			20052,3			20043			20033
NET ASSET VALUE, BEGINNING OF PERIOD		$9.93			$10.24			$10.31			$10.88			$10.89			$10.39
INCOME (LOSS) FROM OPERATIONS:
Net investment income		0.24			0.53			0.54			0.50			0.52			0.56
Net realized and unrealized gain (loss)		(0.79	)		(0.33	)		(0.02	)		(0.23	)		0.20			0.81
Total income (loss) from operations		(0.55	)		0.20			0.52			0.27			0.72			1.37
LESS DISTRIBUTIONS FROM:
Net investment income		(0.04	)		(0.51	)		(0.58	)		(0.53	)		(0.53	)		(0.61	)
Net realized gains		—			—			(0.01	)		(0.31	)		(0.20	)		(0.26	)
Total distributions		(0.04	)		(0.51	)		(0.59	)		(0.84	)		(0.73	)		(0.87	)
NET ASSET VALUE, END OF PERIOD		$9.34			$9.93			$10.24			$10.31			$10.88			$10.89
Total return4		(5.54	)%		1.99	%		5.03	%		2.47	%		6.65	%		13.23	%
NET ASSETS, END OF PERIOD (000S)		$69,736			$85,823			$97,968			$103,132			$102,739			$97,277
RATIOS TO AVERAGE NET ASSETS:
Gross expenses		0.94	%5		0.83	%		0.83	%6		0.96	%		0.98	%		1.00	%
Net expenses7		0.93	5,8,9		0.83	8		0.83	6,9		0.96			0.98			1.00
Net investment income		4.94	5		5.12			5.13			4.58			4.76			4.96
PORTFOLIO TURNOVER RATE		16	%10		79	%10		209	%10		104	%10		70	%10		72	%

1	For the six months ended June 30, 2008 (unaudited).
2	Per share amounts have been calculated using the average shares method.
3	For a share of capital stock outstanding for the periods prior to April 30, 2007.
4	Performance figures may reflect fee waivers and/or expense reimbursements. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower. Total returns do not reflect expenses associated with the separate accounts such as administrative fees, account charges and surrender charges which, if reflected, would reduce the total return for all periods shown. Past performance is no guarantee of future results. Total returns for periods of less than one year are not annualized.
5	Annualized.
6	Included in the expense ratios are certain non-recurring restructuring (and reorganization, if applicable) fees that were incurred by the Portfolio during the period. Without these fees, the gross and net expense ratios both would have been 0.81%.
7	As a result of a voluntary expense limitation, the ratio of expenses, other than interest, brokerage, taxes and extraordinary expenses, to average net assets of Class I shares will not exceed 1.00%.
8	There was no impact to the expense ratio as a result of fees paid indirectly.
9	Reflects fee waivers and/or expense reimbursements.

¹⁰ Excluding mortgage dollar roll transactions. If mortgage dollar roll transactions had been included, the portfolio turnover rate for the six months ended June 30, 2008, and the years ended December 31, 2007, 2006, 2005, and 2004 would have been 207%, 579%, 619%, 533%, and 441%, respectively.

See Notes to Financial Statements.

24  Legg Mason Partners Variable Strategic Bond Portfolio 2008 Semi-Annual Report

FOR A SHARE OF EACH CLASS OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH YEAR ENDED DECEMBER 31, UNLESS OTHERWISE NOTED:

CLASS II SHARES1	20082			20073
NET ASSET VALUE, BEGINNING OF PERIOD		$9.93			$10.25
INCOME (LOSS) FROM OPERATIONS:
Net investment income		0.21			0.44
Net realized and unrealized loss		(0.79	)		(0.29	)
Total income (loss) from operations		(0.58	)		0.15
LESS DISTRIBUTIONS FROM:
Net investment income		(0.01	)		(0.47	)
Total distributions		(0.01	)		(0.47	)
NET ASSET VALUE, END OF PERIOD		$9.34			$9.93
Total return4		(5.86	)%		1.48	%
NET ASSETS, END OF PERIOD (000s)		$1			$1
RATIOS TO AVERAGE NET ASSETS:
Gross expenses5		4.75	%		12.36	%
Net expenses5,6,7,8		1.25			1.25
Net investment income5		4.43			4.74
PORTFOLIO TURNOVER RATE9		16	%		79	%

1	Per share amounts have been calculated using the average shares method.
2	For the six months ended June 30, 2008 (unaudited).
3	For the period February 2, 2007 (inception date) to December 31, 2007.
4	Performance figures may reflect fee waivers and/or expense reimbursements. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower. Total returns do not reflect expenses associated with the separate accounts such as administrative fees, account charges and surrender charges which, if reflected, would reduce the total return for all periods shown. Past performance is no guarantee of future results. Total returns for periods of less than one year are not annualized.
5	Annualized.
6	There was no impact to the expense ratio as a result of fees paid indirectly.
7	As a result of a voluntary expense limitation, the ratio of expenses, other than interest, brokerage, taxes and extraordinary expenses, to average net assets of Class II shares will not exceed 1.25%.
8	Reflects fee waivers and/or expense reimbursements.
9	Excluding mortgage dollar roll transactions. If mortgage dollar roll transactions had been included, the portfolio turnover rate for the six months ended June 30, 2008, and the year ended December 31, 2007 would have been 207% and 579%, respectively.

See Notes to Financial Statements.

Legg Mason Partners Variable Strategic Bond Portfolio 2008 Semi-Annual Report  25

Notes to financial statements (unaudited)

1.  Organization and significant accounting policies

Legg Mason Partners Variable Strategic Bond Portfolio (the “Portfolio”) is a separate diversified investment series of Legg Mason Partners Variable Income Trust (the “Trust”). The Trust, a Maryland business trust, is registered under the Investment Company Act of 1940, as amended (the“1940 Act”), as an open-end management investment company.

Shares of the Portfolio may only be purchased or redeemed through variable annuity contracts and variable life insurance policies offered by the separate accounts of participating insurance companies or through eligible pension or other qualified plans.

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

(a) Repurchase agreements. When entering into repurchase agreements, it is the Portfolio’s policy that its custodian or a third party custodian take possession of the underlying collateral securities, the market value of which, at all times, at least equals the principal amount of the repurchase transaction, including accrued interest. To the extent that any repurchase transaction exceeds one business day, the value of the collateral is marked-to-market to ensure the adequacy of the collateral. If the seller defaults, and the market value of the collateral declines or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of the collateral by the Portfolio may be delayed or limited.

(b) Financial futures contracts. The Portfolio may enter into financial futures contracts typically, but not necessarily, to hedge a portion of the portfolio. Upon entering into a financial futures contract, the Portfolio is required to deposit cash or securities as initial margin, equal in value to a certain percentage of the contract amount (initial margin deposit). Additional securities are also segregated up to the current market value of the financial futures contracts. Subsequent payments, known as “variation margin,” are made or received by the Portfolio each day, depending on the daily fluctuations in the value of the underlying financial instruments. For foreign currency denominated futures contracts, variation margins are not settled daily. The Portfolio recognizes an unrealized gain or loss equal to the fluctuation in the value. When the financial futures contracts are closed, a realized gain or loss is recognized equal to the difference between the proceeds from (or cost of) the closing transactions and the Portfolio’s basis in the contracts.

26  Legg Mason Partners Variable Strategic Bond Portfolio 2008 Semi-Annual Report

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

(c) Stripped securities. The Portfolio invests in “Stripped Securities, “ a term used collectively for stripped fixed income securities. Stripped securities can be principal only securities (“PO”), which are debt obligations that have been stripped of unmatured interest coupons or, interest only securities (“IO”), which are unmatured interest coupons that have been stripped from debt obligations. As is the case with all securities, the market value of Stripped Securities will fluctuate in response to changes in economic conditions, interest rates and the market’s perception of the securities. However, fluctuations in response to interest rates may be greater in Stripped Securities than for debt obligations of comparable maturities that pay interest currently. The amount of fluctuation increases with a longer period of maturity.

The yield to maturity on IO’s is sensitive to the rate of principal repayments (including prepayments) on the related underlying debt obligation and principal payments may have a material effect on yield to maturity. If the underlying debt obligation experiences greater than anticipated prepayments of principal, the Portfolio may not fully recoup its initial investment in IO’s.

(d) Written options. When the Portfolio writes an option, an amount equal to the premium received by the Portfolio is recorded as a liability, the value of which is marked-to-market daily to reflect the current market value of the option written. If the option expires, the Portfolio realizes a gain from investments equal to the amount of the premium received. When a written call option is exercised, the difference between the premium received plus the option exercise price and the Portfolio’s basis in the underlying security (in the case of a covered written call option), or the cost to purchase the underlying security (in the case of an uncovered written call option), including brokerage commission, is treated as a realized gain or loss. When a written put option is exercised, the amount of the premium received is added to the cost of the security purchased by the Portfolio from the exercise of the written put option to form the Portfolio’s basis in the underlying security purchased. The writer or buyer of an option traded on an exchange can liquidate the position before the exercise of the option by entering into a closing transaction. The cost of a closing transaction is deducted from the original premium received resulting in a realized gain or loss to the Portfolio.

Legg Mason Partners Variable Strategic Bond Portfolio 2008 Semi-Annual Report  27

Notes to financial statements (unaudited) continued

The risk in writing a covered call option is that the Portfolio may forego the opportunity of profit if the market price of the underlying security increases and the option is exercised. The risk in writing a put option is that the Portfolio may incur a loss if the market price of the underlying security decreases and the option is exercised. The risk in writing a call option is that the Portfolio is exposed to the risk of loss if the market price of the underlying security increases. In addition, there is the risk that the Portfolio may not be able to enter into a closing transaction because of an illiquid secondary market.

(e) Securities traded on a to-be-announced basis. The Portfolio may trade securities on a to-be-announced (“TBA”) basis. In a TBA transaction, the Portfolio commits to purchasing or selling securities which have not yet been issued by the issuer and for which specific information is not known, such as the face amount and maturity date and the underlying pool of investments in U.S. government agency mortgage pass-through securities. Securities purchased on a TBA basis are not settled until they are delivered to the Portfolio, normally 15 to 45 days after purchase. Beginning on the date the Portfolio enters into a TBA transaction, cash, U.S. government securities or other liquid high-grade debt obligations are segregated in an amount equal in value to the purchase price of the TBA security. These securities are subject to market fluctuations and their current value is determined in the same manner as for other securities.

(f) Mortgage dollar rolls. The Portfolio may enter into dollar rolls in which the Portfolio sells mortgage-backed securities for delivery in the current month, realizing a gain or loss, and simultaneously contracts to repurchase substantially similar (same type, coupon and maturity) securities to settle on a specified future date. During the roll period, the Portfolio forgoes interest paid on the securities. The Portfolio is compensated by the interest earned on the cash proceeds of the initial sale and by the lower repurchase price at the specified future date. The Portfolio maintains a segregated account, the dollar value of which is at least equal to its obligations with respect to dollar rolls.

The Portfolio executes its mortgage dollar rolls entirely in the TBA market, where the Portfolio makes a forward commitment to purchase a security and, instead of accepting delivery, the position is offset by a sale of the security with a simultaneous agreement to repurchase at a future date.

The risk of entering into a mortgage dollar roll is that the market value of the securities the Portfolio is obligated to repurchase under the agreement may decline below the repurchase price. In the event the buyer of securities under a mortgage dollar roll files for bankruptcy or becomes insolvent, the Portfolio’s use of proceeds of the dollar roll may be restricted pending a determination by the other party, or its trustee or receiver, whether to enforce the Portfolio’s obligation to repurchase the securities.

28  Legg Mason Partners Variable Strategic Bond Portfolio 2008 Semi-Annual Report

(g) Foreign currency translation. Investment securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts based upon prevailing exchange rates at the date of valuation. Purchases and sales of investment securities and income and expense items denominated in foreign currencies are translated into U.S. dollar amounts based upon prevailing exchange rates on the respective dates of such transactions.

The Portfolio 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 Portfolio’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.

(h) Credit and market risk. The Portfolio invests in high yield and emerging market instruments that are subject to certain credit and market risks. The yields of high yield and emerging market debt obligations reflect, among other things, perceived credit and market risks. The Portfolio’s investment in securities rated below investment grade typically involves risks not associated with higher rated securities including, among others, greater risk related to timely and ultimate payment of interest and principal, greater market price volatility and less liquid secondary market trading. The consequences of political, social, economic or diplomatic changes may have disruptive effects on the market prices of investments held by the Portfolio. The Portfolio’s investment in non-dollar denominated securities may also result in foreign currency losses caused by devaluations and exchange rate fluctuations.

Investments in securities (such as those issued by Structured Investment Vehicles, or SIVs) which are collateralized by residential real estate mortgages are subject to certain credit and liquidity risks. When market conditions result in an increase in default rates of the underlying mortgages and the foreclosure

Legg Mason Partners Variable Strategic Bond Portfolio 2008 Semi-Annual Report  29

Notes to financial statements (unaudited) continued

values of underlying real estate properties are materially below the outstanding amount of these underlying mortgages, collection of the full amount of accrued interest and principal on these investments may be doubtful. Such market conditions may significantly impair the value of these investments resulting in a lack of correlation between their credit ratings and values.

(i) Swap contracts. Swaps involve the exchange by the Portfolio with another party of the respective amounts payable with respect to a notional principal amount related to one or more indices. The Portfolio may enter into these transactions to preserve a return or spread on a particular investment or portion of its assets, as a duration management technique, or to protect against any increase in the price of securities the Portfolio anticipates purchasing at a later date. The Portfolio may also use these transactions for speculative purposes, such as to obtain the price performance of a security without actually purchasing the security in circumstances where, for example, the subject security is illiquid, is unavailable for direct investment or available only on less attractive terms.

Swaps are marked-to-market daily based upon quotations from market makers and the change in value, if any, is recorded as an unrealized gain or loss in the Statement of Operations. Net receipts or payments of interest are recorded as realized gains or losses, respectively.

Swaps have risks associated with them, including possible default by the counterparty to the transaction, illiquidity and, where swaps are used as hedges, the risk that the use of a swap could result in losses greater than if the swap had not been employed.

(j) Credit default swaps. The Portfolio may enter into credit default swap (“CDS”) contracts for investment purposes, to manage its credit risk or to add leverage. CDS agreements involve one party making a stream of payments to another party in exchange for the right to receive a specified return in the event of a default by a third party, typically corporate issuers or sovereign issuers of an emerging country, on a specified obligation. The Portfolio may use a CDS to provide a measure of protection against defaults of the issuers (i.e., to reduce risk where a Portfolio has exposure to the sovereign issuer) or to take an active long or short position with respect to the likelihood of a particular issuer’s default. As a seller of protection, the Portfolio generally receives an upfront payment or a fixed rate of income throughout the term of the swap provided that there is no credit event. If the Portfolio is a seller of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Portfolio will pay to the buyer of the protection an amount up to the notional value of the swap, and in certain instances take delivery of the security. As the seller, the Portfolio would effectively add leverage to its portfolio because, in addition to its total net assets, the Portfolio would be subject to investment exposure on the notional amount of the swap.

30  Legg Mason Partners Variable Strategic Bond Portfolio 2008 Semi-Annual Report

As a buyer of protection, the Portfolio generally receives an amount up to the notional value of the swap if a credit event occurs.

Payments received or made at the beginning of the measurement period are reflected as such on the Statement of Assets and Liabilities. These upfront payments are recorded as realized gain or loss on the Statement of Operations upon termination or maturity of the swap. A liquidation payment received or made at the termination of the swap is recorded as realized gain or loss on the Statement of Operations. Net periodic payments received or paid by the Portfolio are recorded as realized gain or loss on the Statement of Operations.

Entering into a CDS agreement involves, to varying degrees, elements of credit, market and documentation risk in excess of the related amounts recognized on the Statement of Assets and Liabilities. Such risks involve the possibility that there will be no liquid market for these agreements, that the counterparty to the agreement may default on its obligation to perform or disagree as to the meaning of the contractual terms in the agreement, and that there will be unfavorable changes in net interest rates.

(k) 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. Dividend income is recorded on the ex-dividend date. The cost of investments sold is determined by use of the specific identification method. To the extent any issuer defaults on an expected interest payment, the Portfolio’s policy is to generally halt any additional interest income accruals and consider the realizability of interest accrued up to the date of default.

(l) Distributions to shareholders. Distributions from net investment income and distributions of net realized gains, if any, are declared at least annually. Distributions to shareholders of the Portfolio are recorded on the ex-dividend date and are determined in accordance with income tax regulations, which may differ from GAAP.

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

(n) Fees paid indirectly. The Portfolio’s custody fees are reduced according to a fee arrangement, which provides for a reduction based on the level of cash deposited with the custodian by the Portfolio. The amount is shown as a reduction of expenses on the Statement of Operations.

(o) Federal and other taxes. It is the Portfolio’s policy to comply with the federal income and excise tax requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies. Accordingly,

Legg Mason Partners Variable Strategic Bond Portfolio 2008 Semi-Annual Report  31

Notes to financial statements (unaudited) continued

the Portfolio intends to distribute substantially all of its taxable income and net realized gains, if any, to shareholders each year. Therefore, no federal income tax provision is required in the Portfolio’s financial statements.

Management has analyzed the Portfolio’s tax positions taken on federal income tax returns for all open tax years and has concluded that as of June 30, 2008, no provision for income tax would be required in the Portfolio’s financial statements. The Portfolio’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 the Internal Revenue Service and state departments of revenue.

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

2.  Investment valuation

Effective January 1, 2008, the Portfolio adopted Statement of Financial Accounting Standards No. 157 (“FAS 157”). FAS 157 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 Portfolio’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 Portfolio’s own assumptions in determining the fair value of investments)

Debt securities are valued at the mean between the last quoted bid and asked prices provided by an independent pricing service that are based on transactions in debt obligations, quotations from bond dealers, market transactions in comparable securities and various other relationships between securities. Equity securities for which market quotations are available are valued at the last reported sales price or official closing price on the primary market or exchange on which they trade. When prices are not readily available, or are determined not to reflect fair value, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded, but before the Portfolio calculates its net asset value, the Portfolio may value these securities at fair value as determined in accordance with the procedures approved by the Portfolio’s

32  Legg Mason Partners Variable Strategic Bond Portfolio 2008 Semi-Annual Report

Board of Trustees. Short-term obligations with maturities of 60 days or less are valued at amortized cost, which approximates fair value.

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

								SIGNIFICANT
						OTHER SIGNIFICANT		UNOBSERVABLE
			QUOTED PRICES			OBSERVABLE INPUTS		INPUTS
	June 30, 2008		(LEVEL 1)			(LEVEL 2)		(LEVEL 3)
Investments in Securities		$94,769,866	$	433,423		$	94,130,073		206,370
Other Financial Instruments*		(328,317)		(346,935	)		18,618		—
Total		$94,441,549	$	86,488		$	94,148,691		206,370

* Other financial instruments may include written options, futures, swaps and forward contracts.

Following is a reconciliation of investments in which significant unobservable inputs (Level 3) were used in determining fair value:

	INVESTMENTS
	IN SECURITIES
Balance as of December 31, 2007		—
Accrued Premiums/Discounts		—
Realized Gain (Loss)		—
Change in unrealized appreciation (depreciation)		—
Net purchases (sales)		—
Transfers in and/or out of Level 3	$	206,370
Balance as of June 30, 2008	$	206,370

3. Investment management agreement and other transactions with affiliates

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

Under the investment management agreement, the Portfolio pays an investment management fee calculated daily and paid monthly at the annual rate of

Legg Mason Partners Variable Strategic Bond Portfolio 2008 Semi-Annual Report  33

Notes to financial statements (unaudited) continued

the Portfolio’s average daily net assets in accordance with the following breakpoint schedule:

AVERAGE DAILY NET ASSETS	ANNUAL RATE
First $1 billion		0.650	%
Next $1 billion		0.625
Next $3 billion		0.600
Next $5 billion		0.575
Over $10 billion		0.550

LMPFA provides administrative and certain oversight services to the Portfolio. LMPFA delegates to the subadvisers the day-to-day portfolio management of the Portfolio. For its services, LMPFA pays Western Asset 70% of the net management fee it receives from the Portfolio. In turn, Western Asset pays Western Asset Limited a sub-advisory fee of 30 basis points on the assets managed by Western Asset Limited.

During the six months ended June 30, 2008, the Portfolio’s Class I and II shares had voluntary expense limitations in place of 1.00% and 1.25% respectively, of their average daily net assets. These expense limitations can be terminated at any time.

During the six months ended June 30, 2008, LMPFA waived a portion of its fee in the amount of $6,123.

Effective January 1, 2008, the manager is permitted to recapture amounts previously voluntarily forgone or reimbursed by the manager to the Portfolio during the same fiscal year if the Portfolio’s total annual operating expenses have fallen to a level below the voluntary fee waiver/reimbursement (“expense cap”) shown in the fee table of the Portfolio’s prospectus. In no case will the manager recapture any amount that would result, on any particular business day of the Portfolio, in the Portfolio’s total annual operating expenses exceeding the expense cap.

Legg Mason Investor Services, LLC (“LMIS”), a wholly-owned broker-dealer subsidiary of Legg Mason, serves as the Portfolio’s sole and exclusive distributor.

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

4.  Investments

During the six months ended June 30, 2008, the aggregate cost of purchases and proceeds from sales of investments (excluding short-term investments and

34  Legg Mason Partners Variable Strategic Bond Portfolio 2008 Semi-Annual Report

mortgage dollar rolls) and U.S. Government & Agency Obligations were as follows:

			U.S. GOVERNMENT &
	INVESTMENTS		AGENCY OBLIGATIONS
Purchases	$	3,219,440	$	12,039,947
Sales		10,876,348		21,871,245

At June 30, 2008, the aggregate gross unrealized appreciation and depreciation of investments for federal income tax purposes were substantially as follows:

Gross unrealized appreciation	$	582,034
Gross unrealized depreciation		(8,028,423	)
Net unrealized depreciation	$	(7,446,389	)

At June 30, 2008, the Portfolio had the following open futures contracts:

	NUMBER OF		EXPIRATION		BASIS		MARKET		UNREALIZED
	CONTRACTS		DATE		VALUE		VALUE		GAIN (LOSS)
Contracts to Buy:
British Pound		11		9/08	$	2,608,789	$	2,570,242	$	(38,547	)
British Pound		20		3/09		4,666,712		4,668,688		1,976
Euribor		10		9/08		3,800,025		3,736,958		(63,067	)
Euribor		29		12/08		10,920,608		10,816,627		(103,981	)
Eurodollar		24		9/08		5,823,482		5,824,200		718
Eurodollar		12		12/08		2,906,848		2,904,600		(2,248	)
Eurodollar		78		3/09		18,900,290		18,852,600		(47,690	)
Eurodollar		4		6/09		961,070		964,700		3,630
Eurodollar		4		9/09		959,720		962,150		2,430
Federal Republic of Germany, 5 Year Bonds		28		9/08		4,710,917		4,664,007		(46,910	)
LIBOR		21		12/08		4,982,718		4,900,294		(82,424	)
U.S. Treasury Bonds		65		9/08		7,473,544		7,513,594		40,050
U.S. Treasury 2 Year Notes		22		9/08		4,650,516		4,646,468		(4,048	)
									$	(340,111	)
Contracts to Sell:
U.S. Treasury 5 Year Notes		40		9/08	$	4,411,339	$	4,422,188	$	(10,849	)
U.S. Treasury 10 Year Notes		53		9/08		6,041,540		6,037,860		3,680
									$	(7,169	)
Net Unrealized Loss on Open Futures Contracts									$	(347,280	)

Legg Mason Partners Variable Strategic Bond Portfolio 2008 Semi-Annual Report  35

Notes to financial statements (unaudited) continued

During the six months ended June 30, 2008, written option transactions for the Portfolio were as follows:

	NUMBER OF			PREMIUMS
	CONTRACTS			RECEIVED
Options written, outstanding December 31, 2007		66		$	48,264
Options written		1,200,100			64,699
Options closed		(141	)		(98,420	)
Options expired		(1,200,024	)		(14,010	)
Options written, outstanding June 30, 2008		1		$	533

At June 30, 2008, the Portfolio held TBA securities with a total cost of $24,640,548.

At June 30, 2008, the Portfolio held the following interest rate swap contracts:

Swap Counterparty:	Barclays Capital Inc.
Notional Amount:	$3,500,000
Payments Received by Portfolio:	Floating Rate (3 month LIBOR)
Payments Made by Portfolio:	Fixed Rate 3.800%
Termination Date:	5/15/16
Unrealized Appreciation:	$159,313
Swap Counterparty:	Barclays Capital Inc.
Notional Amount:	$400,000
Payments Received by Portfolio:	Floating Rate (6 month EURIBOR)
Payments Made by Portfolio:	Fixed Rate 4.466%
Termination Date:	4/11/18
Unrealized Appreciation:	$27,682
Swap Counterparty:	Barclays Capital Inc.
Notional Amount:	$1,800,000
Payments Received by Portfolio:	Fixed Rate 4.280%
Payments Made by Portfolio:	Floating Rate (6 month EURIBOR)
Termination Date:	4/11/10
Unrealized Depreciation:	$(48,911)
Swap Counterparty:	Barclays Capital Inc.
Notional Amount:	$300,000
Payments Received by Portfolio:	Floating Rate (6 month EURIBOR)
Payments Made by Portfolio:	Fixed Rate 4.440%
Termination Date:	4/14/18
Unrealized Appreciation:	$21,710
Swap Counterparty:	Barclays Capital Inc.
Notional Amount:	$1,400,000
Payments Received by Portfolio:	Fixed Rate 4.254%
Payments Made by Portfolio:	Floating Rate (6 month EURIBOR)
Termination Date:	4/14/10
Unrealized Depreciation:	$(39,053)

36  Legg Mason Partners Variable Strategic Bond Portfolio 2008 Semi-Annual Report

Swap Counterparty:	Barclays Capital Inc.
Notional Amount:	$300,000
Payments Received by Portfolio:	Fixed Rate 4.441%
Payments Made by Portfolio:	Floating Rate (6 month EURIBOR)
Termination Date:	5/12/10
Unrealized Depreciation:	$(7,189)

At June 30, 2008, the Portfolio held the following credit default swap contracts:

Swap Counterparty:	Credit Suisse First Boston Inc.
Referenced Entity:	ABX.HE.AAA
Notional Amount:	$400,000
Payments Received by the Portfolio:	0.180% Monthly
Payments Made by the Portfolio:	Payment only if credit event occurs
Termination Date:	7/25/45
Unrealized Depreciation:	$(7,013)
Swap Counterparty:	Lehman Brothers Inc.
Referenced Entity:	CDX North America Crossover Index
Notional Amount:	$1,200,000
Payments Received by the Portfolio:	0.600% quarterly
Payments Made by the Portfolio:	Payment only if credit event occurs
Termination Date:	12/20/12
Unrealized Depreciation:	$(12,398)
Swap Counterparty:	Lehman Brothers Inc.
Referenced Entity:	CDX North America Crossover Index
Notional Amount:	$2,300,000
Payments Received by the Portfolio:	3.500% quarterly
Payments Made by the Portfolio:	Payment only if credit event occurs
Termination Date:	6/20/13
Unrealized Depreciation:	$(75,523)

At June 30, 2008 the Portfolio had total unrealized appreciation of $18,618 from swap contracts.

5.  Class specific expenses

The Portfolio has adopted a Rule 12b-1 distribution plan and under that plan the Portfolio pays a distribution fee with respect to its Class II shares calculated at the annual rate of 0.25% of the average daily net assets. For the six months ended June 30, 2008, class specific expenses were as follows:

	DISTRIBUTION		TRANSFER AGENT		SHAREHOLDER REPORTS
	FEES		FEES		EXPENSES
Class I		—	$	60	$	74,257
Class II	$	1		8		1
Total	$	1	$	68	$	74,258

Legg Mason Partners Variable Strategic Bond Portfolio 2008 Semi-Annual Report  37

Notes to financial statements (unaudited) continued

6.  Distributions to shareholders by class

	SIX MONTHS ENDED			YEAR ENDED
	JUNE 30, 2008			DECEMBER 31, 2007
Net Investment Income:
Class I	$	300,000		$	4,249,980
Class II*		0	†		23
Total	$	300,000		$	4,250,003

*	For the period February 2, 2007 (inception date) to December 31, 2007.
†	Amount represents less than $1.00.

7.  Shares of beneficial interest

At June 30, 2008, the Trust had an unlimited number of shares of beneficial interest authorized with a par value of $0.00001 per share. The Portfolio has the ability to issue multiple classes of shares. Each share of a class represents an identical interest and has the same rights, except that each class bears certain direct expenses, including these specifically related to the distribution of its shares. Prior to April 30, 2007, the Trust had 10 billion shares of capital stock authorized with a par value of $0.001 per share.

Transactions in shares of each class were as follows:

	SIX MONTHS ENDED						YEAR ENDED
	JUNE 30, 2008						DECEMBER 31, 2007
	SHARES			AMOUNT			SHARES			AMOUNT
Class I
Shares sold		201,784		$	1,980,405			829,263		$	8,601,347
Shares issued on reinvestment		32,051			300,000			430,160			4,249,980
Shares repurchased		(1,412,653	)		(13,723,146	)		(2,178,734	)		(22,533,397	)
Net decrease		(1,178,818	)	$	(11,442,741	)		(919,311	)	$	(9,682,070	)
Class II*
Shares sold		—			—			49		$	500
Shares issued on reinvestment		—			—			2			23
Shares repurchased		0	†	$	(4	)		(1	)		(7	)
Net increase (decrease)		—		$	(4	)		50		$	516

*	For the period February 2, 2007 (inception date) to December 31, 2007.
†	Amount represents less than 1 share.

8.  Capital loss carryforward

On December 31, 2007, the Portfolio had a net capital loss carryforward of approximately $283,242 which expires in 2014. This amount will be available to offset any future taxable capital gains.

38  Legg Mason Partners Variable Strategic Bond Portfolio 2008 Semi-Annual Report

9.  Legal matters

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

On December 15, 2004, a consolidated amended complaint (the “Complaint”) was filed alleging substantially similar causes of action. On May 27, 2005, all of the Defendants filed motions to dismiss the Complaint. On July 26, 2006, the court issued a decision and order (1) finding that plaintiffs lacked standing to sue on behalf of the shareholders of the Funds in which none of the plaintiffs had invested and dismissing those Funds from the case (although stating that they could be brought back into the case if standing as to them could be established), and (2) other than one stayed claim, dismissing all of the causes of action against the remaining Defendants, with prejudice, except for the cause of action under Section 36(b) of the 1940 Act, which the court granted plaintiffs leave to repeal as a derivative claim.

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

Legg Mason Partners Variable Strategic Bond Portfolio 2008 Semi-Annual Report  39

Notes to financial statements (unaudited) continued

similar facts and seeks similar relief against the Second Amended Complaint Defendants as the Complaint.

On December 3, 2007, the court granted the Defendants’ motion to dismiss, with prejudice. On January 2, 2008, the plaintiffs filed a notice of appeal to the Second Circuit Court of Appeals.

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

* * *

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 Securities and Exchange Commission (“SEC”) as previously described. 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. The five actions were subsequently consolidated, and a consolidated complaint was filed. On September 26, 2007, the United States District Court for the Southern District of New York issued an order dismissing the consolidated complaint, and judgment was later entered. An appeal has been filed and is pending before the U.S. Court of Appeals for the Second Circuit.

10. Other matters

On or about May 30, 2006, John Halebian, a purported shareholder of Citi^SM New York Tax Free Reserves, a series of Legg Mason Partners Money Market Trust, formerly a series of CitiFunds Trust III (the “Subject Trust”), filed a complaint in the United States District Court for the Southern District of New York against the independent trustees of the Subject Trust (Elliott J. Berv, Donald M. Carlton, A. Benton Cocanougher, Mark T. Finn, Stephen Randolph Gross, Diana R. Harrington, Susan B. Kerley, Alan G. Merten and R. Richardson Pettit). The Subject Trust is also named in the complaint as a nominal defendant. The complaint alleges both derivative claims on behalf of the Subject Trust and class claims on behalf of a putative class of shareholders of the Subject Trust in connection with the 2005 sale of Citigroup’s asset management business to Legg Mason and the related approval of new investment advisory agreements by the trustees and shareholders. In the derivative claim, the plaintiff alleges, among other things, that the independent trustees breached their fiduciary duty to the Subject Trust and its shareholders by failing to negotiate lower fees or seek competing bids from other qualified investment advisers in connection with Citigroup’s sale to Legg Mason. In the claims brought on behalf of the putative class of shareholders, the plaintiff

40  Legg Mason Partners Variable Strategic Bond Portfolio 2008 Semi-Annual Report

alleges that the independent trustees violated the proxy solicitation requirements of the 1940 Act, and breached their fiduciary duty to shareholders, by virtue of the voting procedures, including “echo voting,” used to obtain approval of the new investment advisory agreements and statements made in a proxy statement regarding those voting procedures. The plaintiff alleges that the proxy statement was misleading because it failed to disclose that the voting procedures violated the 1940 Act. The relief sought includes an award of damages, rescission of the advisory agreement, and an award of costs and attorney fees.

In advance of filing the complaint, Mr. Halebian’s lawyers made written demand for relief on the Board of the Subject Trust, and the Board’s independent trustees formed a demand review committee to investigate the matters raised in the demand, and subsequently in the complaint, and recommend a course of action to the Board. The committee, after a thorough review, determined that the independent trustees did not breach their fiduciary duties as alleged by Mr. Halebian, and that the action demanded by Mr. Halebian would not be in the best interests of the Subject Trust. The Board of the Subject Trust (the trustee who is an “interested person” of the Subject Trust, within the meaning of the 1940 Act, having recused himself from the matter), after receiving and considering the committee’s report and based upon the findings of the committee, subsequently also determined and, adopting the recommendation of the committee, directed counsel to move to dismiss Mr. Halebian’s complaint. A motion to dismiss was filed on October 23, 2006. Opposition papers were filed on or about December 7, 2006. The complaint was dismissed on July 31, 2007. Mr. Halebian has filed an appeal in the U.S. Court of Appeals for the Second Circuit. The appeal is pending.

11.  Recent accounting pronouncement

In March 2008, the Financial Accounting Standards Board issued the Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (“FAS 161”). FAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. FAS 161 requires enhanced disclosures about the Portfolio’s derivative and hedging activities, including how such activities are accounted for and their effect on the Portfolio’s financial position, performance and cash flows. Management is currently evaluating the impact the adoption of FAS 161 will have on the Portfolio’s financial statements and related disclosures.

Legg Mason Partners Variable Strategic Bond Portfolio 2008 Semi-Annual Report  41

Legg Mason Partners Variable Strategic Bond Portfolio

Trustees

Elliott J. Berv

A. Benton Cocanougher

Jane F. Dasher

Mark T. Finn

R. Jay Gerken, CFA

  Chairman

Rainer Greeven

Stephen R. Gross

Richard E. Hanson, Jr.

Diana R. Harrington

Susan M. Heilbron

Susan B. Kerley

Alan G. Merten

R. Richardson Pettit

Investment manager

Legg Mason Partners Fund
Advisor, LLC

Subadvisers

Western Asset Management
Company
Western Asset Management
Company Limited

Distributor

Legg Mason Investor Services, LLC

Custodian

State Street Bank and Trust
Company

Transfer agent

PNC Global Investment Servicing
(formerly, PFPC Inc.)
4400 Computer Drive
Westborough, Massachusetts 01581

Independent registered public
accounting firm

KPMG LLP
345 Park Avenue
New York, New York 10154

Legg Mason Partners Variable Strategic Bond Portfolio

The Portfolio is a separate investment series of the Legg Mason Partners Variable Income Trust, a Maryland business trust.

LEGG MASON PARTNERS VARIABLE STRATEGIC BOND PORTFOLIO
Legg Mason Partners Funds
55 Water Street
New York, New York 10041

The Portfolio 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 Portfolio’s Forms N-Q are available on the SEC’s website at www.sec.gov. The Portfolio’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 Portfolio, shareholders can call Legg Mason Partners Shareholder Services at 1-800-451-2010.

Information on how the Portfolio 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 Portfolio uses to determine how to vote proxies related to portfolio transactions are available (1) without charge, upon request, by calling 1-800-451-2010, on the Portfolio’s website at www.leggmason.com/individualinvestors and (3) on the SEC’s website at www.sec.gov.

This report is submitted for the general information of the shareholders of Legg Mason Partners Variable Strategic Bond Portfolio. This report is not authorized for distribution to prospective investors in the Portfolio unless proceeded or accompanied by a current prospectus.

Investors should consider the Portfolio’s investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other important information about the Portfolio. Please read the prospectus carefully before investing.

www.leggmason.com/individualinvestors

©2008 Legg Mason Investor Services, LLC
Member FINRA, SIPC

 

 

BUILT TO WIN^SM

At Legg Mason, we’ve assembled a collection of experienced investment management firms and empowered each of them with the tools, the resources and, most importantly, the independence to pursue the strategies they know best.

• Each was purposefully chosen for their commitment to investment excellence.

• Each is focused on specific investment styles and asset classes.

• Each exhibits thought leadership in their chosen area of focus.

Together, we’ve built a powerful portfolio of solutions for financial advisors and their clients. And it has made us a world leader in money management.*

*  In the Pensions & Investments May 27, 2008 ranking, Legg Mason is the 9th largest asset manager in the world based on worldwide assets under management as of December 31, 2007.

www.leggmason.com/individualinvestors

©2008 Legg Mason Investor Services, LLC Member FINRA, SIPC

FDXX010091 8/08 SR08-617

NOT PART OF THE SEMI-ANNUAL REPORT

ITEM 2. CODE OF ETHICS.

Not applicable.

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.

Not applicable.

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Not applicable.

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.

Not applicable.

ITEM 6. SCHEDULE OF INVESTMENTS.

Included herein under Item 1.

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

Not applicable.

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

Not applicable.

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

Not applicable.

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

Not applicable.

ITEM 11. CONTROLS AND PROCEDURES.

(a)

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

(b)

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

ITEM 12. EXHIBITS.

(a) (1) Not applicable.

Exhibit 99.CODE ETH

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

Exhibit 99.CERT

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

Exhibit 99.906CERT

SIGNATURES

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

Legg Mason Partners Variable Income Trust
By:	/s/ R. Jay Gerken
	(R. Jay Gerken)
	Chief Executive Officer of
	Legg Mason Partners Variable Income Trust

Date: August 28, 2008

     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 Variable Income Trust

Date: August 28, 2008

By:	/s/ Frances M. Guggino
	(Frances M. Guggino)
	Chief Financial Officer of
	Legg Mason Partners Variable Income Trust

Date: August 28, 2008