Legg Mason Partners Variable Equity Trust N-CSR Certified 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 811-21128

Legg Mason Partners Variable Equity 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
100 First Stamford Place
Stamford, CT 06902
(Name and address of agent for service)

Registrant’s telephone number, including area code: Funds Investor Services 1-800-822-5544

or

Institutional Shareholder Services 1-888-425-6432

Date of fiscal year end: October 31

Date of reporting period: October 31, 2009

ITEM 1. REPORT TO STOCKHOLDERS.

The Annual Report to Stockholders is filed herewith.

ANNUAL REPORT / OCTOBER 31, 2009

Legg Mason Investment

Counsel Variable Social
Awareness Portfolio

Managed by LEGG MASON INVESTMENT COUNSEL

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

Portfolio objective

The Portfolio seeks capital appreciation and retention of net investment income.

Portfolio name change

Prior to November 2, 2009, the Portfolio was known as Legg Mason Partners Variable Social Awareness Portfolio. There was no change in the Portfolio’s investment objective or investment policies as a result of the name change.

What’s inside

Letter from the chairman	I
Portfolio overview	1
Portfolio at a glance	7
Portfolio expenses	8
Portfolio performance	10
Historical performance	11
Schedule of investments	12
Statement of assets and liabilities	19
Statement of operations	20
Statements of changes in net assets	21
Financial highlights	22
Notes to financial statements	23
Report of independent registered public accounting firm	33
Additional information	34
Important tax information	41

Legg Mason Partners Fund Advisor, LLC (“LMPFA”) is the Portfolio’s investment manager and Legg Mason Investment Counsel, LLC (“LMIC”) is the Portfolio’s subadviser. LMPFA and LMIC are wholly-owned subsidiaries of Legg Mason, Inc.

Letter from the chairman

R. Jay Gerken, CFA

Chairman, President and Chief Executive Officer

Dear Shareholder,

While the U.S. economy remained weak during much of the twelve-month reporting period ended October 31, 2009, the lengthiest recession since the Great Depression finally appeared to have ended during the third quarter of 2009.

Looking back, the U.S. Department of Commerce reported that fourth quarter 2008 U.S. gross domestic product (“GDP”)ⁱ contracted 5.4%. Economic weakness accelerated during the first quarter of 2009, as GDP fell 6.4%. However, the economic environment started to get relatively better during the second quarter, as GDP fell 0.7%. The economy’s more modest contraction was due, in part, to smaller declines in both exports and business spending. After contracting four consecutive quarters, the Commerce Department’s preliminary estimate for third quarter 2009 GDP growth was 2.8%. A variety of factors helped the economy to expand, including the government’s $787 billion stimulus program and its “Cash for Clunkers” car rebate program, which helped spur an increase in car sales.

Even before GDP advanced in the third quarter, there were signs that the economy was starting to regain its footing. The manufacturing sector, as measured by the Institute for Supply Management’s PMIⁱⁱ, rose to 52.9 in August 2009, the first time it surpassed 50 since January 2008 (a reading below 50 indicates a contraction, whereas a reading above 50 indicates an expansion). While the PMI dipped to 52.6 in September, it rose to 55.7 in October, its best reading since April 2006.

The housing market also saw some improvement during the reporting period. According to its most recent data, the S&P/Case-Shiller Home Price Indexⁱⁱⁱ indicated that home prices rose 1.2% in August 2009 versus the prior month. This marked the fourth straight monthly gain. In addition, the National Association of Realtors’ Pending Home Sales Index^iv rose 6.1% in September, the eighth consecutive monthly increase.

One area that remained weak—and could hamper the magnitude of economic recovery—was the labor market. While monthly job losses have moderated compared to earlier in the year, the unemployment rate rose to

Legg Mason Investment Counsel Variable Social Awareness Portfolio  I

Letter from the chairman continued

10.2% in October 2009, its highest level in more than twenty-six years. Since December 2007, the number of unemployed has risen by approximately 8.2 million and there have been twenty-two consecutive months of job losses.

The Federal Reserve Board (“Fed”)^v continued to pursue an accommodative monetary policy during the reporting period. After reducing the federal funds rate^vi from 5.25% in August 2007 to a range of 0 to 1/4 percent in December 2008—a historic low—the Fed has maintained this stance thus far in 2009. In conjunction with its November 2009 meeting, the Fed said that it “will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.”

After a poor start, the U.S. stock market rallied and, overall, generated solid results during the twelve-month reporting period. Stock prices fell during three of the first four months of the reporting period. This was due to a number of factors, including the rapidly weakening global economy, an ongoing credit crisis and plunging corporate profits. Stock prices continued to decline in early March, reaching a twelve-year low on March 9^th. Stocks then rallied sharply through the end of September, as the S&P 500 Index^vii (the “Index”) rose approximately 58% from its March low. The Index then fell 1.86% in October, its first monthly loss since February. The market’s strong rebound was due to a variety of factors, including optimism that the economy was bottoming and that corporate profits would improve as the year progressed. All told, the Index returned 9.80% over the twelve-month reporting period ended October 31, 2009.

During the twelve months ended October 31, 2009, both short- and long-term Treasury yields experienced periods of heightened volatility. When the period began, two- and ten-year Treasury yields were 1.56% and 4.01%, respectively. The ongoing fallout from the issues related to the subprime mortgage market, the credit crisis, forced selling by leveraged investors and a lack of liquidity triggered several “flights to quality.” During these periods, Treasury yields moved lower (and their prices higher), while riskier segments of the market saw their yields move higher (and their prices lower). This was particularly true toward the end of 2008, as the turmoil in the financial markets and sharply falling stock prices caused investors to flee securities that were perceived to be risky, even high-quality corporate bonds and high-grade municipal bonds. When the first half of the reporting period ended on April 30, 2009, two- and ten-year Treasury yields were 0.91% and 3.16%, respectively.

During the second half of the period, Treasury yields generally moved higher (and their prices lower) until early June. Two- and ten-year yields

II  Legg Mason Investment Counsel Variable Social Awareness Portfolio

peaked at 1.42% and 3.98%, respectively, before falling and ending the reporting period at 0.90% and 3.41%, respectively. In a reversal from 2008, investor risk aversion faded as the twelve-month reporting period progressed, driving spread sector (non-Treasury) prices higher. For the twelve-month period ended October 31, 2009, the Barclays Capital U.S. Aggregate Index^viii returned 13.79%.

A special note regarding increased market volatility

Dramatically higher volatility in the financial markets has been very challenging for many investors. Market movements have been rapid—sometimes in reaction to economic news, and sometimes creating the news. In the midst of this evolving market environment, we at Legg Mason want to do everything we can to help you reach your financial goals. Now, as always, we remain committed to providing you with excellent service and a full spectrum of investment choices. Rest assured, we will continue to work hard to ensure that our investment managers make every effort to deliver strong long-term results.

We also remain committed to supplementing the support you receive from your financial advisor. One way we accomplish this is through our enhanced website, www.leggmason.com/individualinvestors. Here you can gain immediate access to many special features to help guide you through difficult times, including:

•  Market insights and commentaries from our portfolio managers and

•  A host of educational resources.

During periods of market unrest, it is especially important to work closely with your financial advisor and remember that reaching one’s investment goals unfolds over time and through multiple market cycles. Time and again, history has shown that, over the long run, the markets have eventually recovered and grown.

Information about your portfolio

Please read on for a more detailed look at prevailing economic and market conditions during the Portfolio’s reporting period and to learn how those conditions have affected Portfolio performance.

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.

Legg Mason Investment Counsel Variable Social Awareness Portfolio  III

Letter from the chairman continued

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

Sincerely,

R. Jay Gerken, CFA

Chairman, President and Chief Executive Officer

November 27, 2009

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	The Institute for Supply Management’s PMI is based on a survey of purchasing executives who buy the raw materials for manufacturing at more than 350 companies. It offers an early reading on the health of the manufacturing sector.
iii	The S&P/Case-Shiller Home Price Index measures the residential housing market, tracking changes in the value of the residential real estate market in twenty metropolitan regions across the United States.
iv	The Pending Home Sales Index is an index created by the National Association of Realtors that tracks home sales in which a contract is signed but the sale has not yet closed. The Index is a leading indicator of future existing home sales as it typically takes four to six weeks to close a sale after a contract has been signed.
v	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.
vi	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.
vii	The S&P 500 Index is an unmanaged index of 500 stocks and is generally representative of the performance of larger companies in the U.S.
viii	The Barclays Capital U.S. Aggregate Index is a broad-based bond index comprised of government, corporate, mortgage- and asset-backed issues, rated investment grade or higher, and having at least one year to maturity.

IV  Legg Mason Investment Counsel Variable Social Awareness Portfolio

Portfolio overview

Q. What is the Portfolio’s investment strategy?

A. The Portfolio seeks capital appreciation and retention of net investment income.

The Portfolio invests primarily in common stocks and other equity securities of U.S. companies that we believe are undervalued and have above-average potential for growth. Our rigorous stock selection is based upon proprietary fundamental analysis combined with a top-down approach to portfolio construction. We seek to invest in a broad range of companies, without regard to market capitalization, that exhibit superior characteristics including solid long-term earnings growth, high sustainable profitability, quality management, sound capital structure, strong cash-flow and reasonable valuation.

The Portfolio targets a 30% investment (normally between 25% and 35%) in fixed-income securities, primarily investment grade, which may be of any maturity. Our fixed-income strategy utilizes fundamental analysis and an assessment of relative value within the context of current market conditions, expected interest rate movements, changes in the shape of the yield curveⁱ, and fluctuations in sector spreads. We employ a disciplined approach, constantly assessing market conditions in order to identify market anomalies. The Portfolio also may invest a portion of its assets in equity and debt securities of foreign issuers.

For all securities in the portfolio, we utilize our proprietary social research to determine whether, relative to other companies in their industry, selected companies make a positive contribution to society through their products and services and through the way they conduct business. Specifically, we focus on companies that:

•  Have fair and reasonable employment practices

•  Contribute to the general well-being of the citizens of its host communities and countries and have respect for human rights

•  Utilize strategies to minimize the negative impact of business activities on the environment

•  Do not manufacture nuclear weapons or other weapons of mass destruction or derive more than 5% of their revenue from the production of non-nuclear weaponry

•  Do not derive more than 5% of their revenue from the production or sale of tobacco products

Legg Mason Investment Counsel Variable Social Awareness Portfolio 2009 Annual Report  1

Portfolio overview continued

Q. What were the overall market conditions during the Portfolio’s reporting period?

A. Over the past seven months, the U.S. stock market has recorded its sharpest rally in over seventy years as investors concluded that the global economy was not falling into the abyss. During that period, stocks of companies perceived to be at the greatest risk from continued economic deterioration and dysfunction actually generally led the market higher. The power of this rally begs the question, “Where do we go from here?”

Our near-term outlook is somewhat cautious: the base case calls for modest improvements in U.S. gross domestic product (“GDP”)ⁱⁱ growth over the next few quarters, followed by a longer-term plateau to slower growth.

Mixed signals are present today:

•  Positives: Credit is flowing for large companies; service businesses (the largest segment of the economy) once again are growing; merger activity is increasing; improved corporate earnings are being announced; and the residential housing market is stabilizing.

•  Negatives: Unemployment is at a twenty-six-year high; domestic sales are less robust than exports for many businesses; the small-business sector is stagnant; the dollar is weak; and over-leveraged consumers remain careful about discretionary spending.

In our opinion, there is more evidence today than in prior months that a slow, inevitable, though somewhat unsteady, economic recovery is taking hold in the U.S., as well as in major global markets. The continued strong performance in the U.S. stock market has sustained the belief that the path to recovery is clearer. Importantly, we believe there has been progress on many of the key dimensions that facilitate a growing economy, including the easing of credit for large companies, continued low interest rates, the first expansion of the huge services sector in years, better corporate earnings, more issuance of debt and equity, increased merger and acquisition activity, stabilization of the residential housing market, improvements in retail sales, and increased industrial output.

Clearly, the actions of the Federal Reserve Board (“Fed”)ⁱⁱⁱ in moving aggressively to support the U.S. economy finally have had a salutary effect on the equity and credit markets. Similarly, the intervention by the central banks in Europe and Asia to promote growth has righted the economic ship of state in key industrial nations and staved off the economic doomsday scenario of a systemic collapse of the global markets.

2  Legg Mason Investment Counsel Variable Social Awareness Portfolio 2009 Annual Report

Q. How did we respond to these changing market conditions?

A. As market conditions deteriorated during the fourth quarter of 2008 and the beginning of 2009, we repositioned the Portfolio’s holdings. Specifically, within the equity portion of the portfolio, we overweighted the Consumer Staples and Health Care sectors and significantly underweighted the Financials sector.

However, as the equity markets bottomed in March 2009, we once again adjusted the Portfolio’s holdings to take advantage of an expected rally. We increased exposure to the Information Technology (“IT”) and Industrials sectors and reduced exposure to the Consumer Staples and Materials sectors.

Within the fixed-income portion of the Portfolio, the yield curve steepened tremendously as short-term rates remained pinned down and long-term rates experienced the effects of the ongoing issuance of U.S. Treasury securities. As yields further along the curve increased, we purchased longer-dated U.S. Treasury securities and altered the term structure of the portfolio, becoming more barbelled (overweighted in the short and long-end of the yield curve). At the same time, we have kept the average duration^iv the Portfolio below that of the benchmark.

In addition, given the impressive tightening in the corporate bond sector, we decreased the allocation to this segment. This will be an ongoing tactic as opportunities present themselves.

Finally, as both the U.S. Treasury and Agency sectors appeared relatively rich, we began to increase positions in higher-quality asset-backed and commercial mortgage-backed securities. The yields and spread pick-up over other sectors, along with the solid credit structures and additional credit enhancements, gave these securities a better risk/reward profile.

Legg Mason Investment Counsel Variable Social Awareness Portfolio 2009 Annual Report  3

Portfolio overview continued

Performance review

For the twelve months ended October 31, 2009, Legg Mason Investment Counsel Variable Social Awareness Portfolio¹ returned 14.17%. The Portfolio’s unmanaged benchmarks, the S&P 500 Index^v and the Barclays Capital U.S. Aggregate Index^vi, returned 9.80% and 13.79%, respectively, over the same time frame. The Blended S&P 500 Index (70%) and Barclays Capital U.S. Aggregate Index (30%)^vii returned 11.57% for the same period. The Lipper Variable Specialty/Miscellaneous Funds Category Average² returned 13.41% over the same time frame.

   PERFORMANCE SNAPSHOT as of October 31, 2009 (unaudited)

	6 MONTHS		12 MONTHS
Variable Social Awareness Portfolio1		16.46%		14.17%
S&P 500 Index		20.04%		9.80%
Barclays Capital U.S. Aggregate Index		5.61%		13.79%
Blended S&P 500 Index (70%) and Barclays Capital U.S. Aggregate Index (30%)		15.61%		11.57%
Lipper Variable Specialty/Miscellaneous Funds Category Average2		17.31%		13.41%

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

Portfolio returns assume the reinvestment of all distributions, including returns of capital, if any, at net asset value and the deduction of all Portfolio expenses.

   TOTAL ANNUAL OPERATING EXPENSES (unaudited)

As of the Portfolio’s most current prospectus dated February 28, 2009, the gross total operating expense ratio was 0.91%.

Actual expenses may be higher. For example, expenses may be higher than those shown if average net assets decrease. Net assets are more likely to decrease and Portfolio expense ratios are more likely to increase when markets are volatile.

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 period ended October 31, 2009, including the reinvestment of all distributions, including returns of capital, if any, calculated among the 54 funds for the six-month period and among the 53 funds for the twelve-month period in the Portfolio’s Lipper category.

4  Legg Mason Investment Counsel Variable Social Awareness Portfolio 2009 Annual Report

Q. What were the leading contributors to performance?

A. In the equity portion of the Portfolio, stock selection in the Energy, IT, Telecommunication Services, Industrials and Materials sectors enhanced results during the reporting period. In terms of sector positioning, the overweighting in the Health Care and Materials sectors and underweighting in the Utilities and Industrials sectors contributed to relative performance. On an individual stock basis, the largest contributors to performance were NetApp Inc., National-Oilwell Varco Inc., Broadcom Corp. (Class A Shares), Apple Inc. and Inverness Medical Innovations Inc.

In the fixed-income portion, the two leading contributors to performance were the portfolio’s duration strategy and the roll-down effect^viii. We continued to take advantage of market volatility and ended the reporting period with a duration shorter than that of the benchmark as interest rates appeared unsustainably low.

Q. What were the leading detractors from performance?

A. In the equity portion of the Portfolio, stock selection in the Financials, Consumer Staples and Consumer Discretionary sectors detracted from relative results. In terms of sector positioning, our overweighting in the Consumer Staples sector and underweighting in the Consumer Discretionary sector detracted from results. On an individual stock basis, the largest detractors from performance were Wells Fargo & Co., U.S. Bancorp, Covanta Holding Corp., Procter & Gamble Co. and Celgene Corp.

In the fixed-income portion, the Portfolio’s “up-in-quality” bias was a detractor. Its overweight to securities rated A or better hurt relative performance.

Thank you for your investment in Legg Mason Investment Counsel Variable Social Awareness Portfolio. As always, we appreciate that you have chosen us to manage your assets and we remain focused on seeking to achieve the Portfolio’s investment goals.

Sincerely,

Ronald T. Bates	David K. Kafes, CFA
Portfolio Manager (Equity Portion)	Portfolio Manager (Fixed-Income Portion)
Legg Mason Investment Counsel, LLC	Legg Mason Investment Counsel, LLC
November 17, 2009

Legg Mason Investment Counsel Variable Social Awareness Portfolio 2009 Annual Report  5

Portfolio overview continued

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.

Portfolio holdings and breakdowns are as of October 31, 2009 and are subject to change and may not be representative of the portfolio managers’ current or future investments. The Portfolio’s top ten holdings (as a percentage of net assets) as of this date were: BP PLC, ADR (3.0%), Apache Corp. (2.9%), Procter & Gamble Co. (2.5%), General Mills Inc. (2.0%), PepsiCo Inc. (2.0%), Federal National Mortgage Association (FNMA), 5.500% due 6/1/36 (1.9%), Arch Capital Group Ltd. (1.9%), CVS Caremark Corp. (1.8%), U.S. Bancorp (1.8%) and Express Scripts Inc. (1.7%). Please refer to pages 12 through 18 for a list and percentage breakdown of the Portfolio’s holdings.

The mention of sector breakdowns is for informational purposes only and should not be construed as a recommendation to purchase or sell any securities. The information provided regarding such sectors is not a sufficient basis upon which to make an investment decision. Investors seeking financial advice regarding the appropriateness of investing in any securities or investment strategies discussed should consult their financial professional. The Portfolio’s top five sector holdings (as a percentage of net assets) as of October 31, 2009 were: Information Technology (13.9%), Financials (13.8%), Health Care (11.4%), Consumer Staples (9.8%) and Energy (9.0%). The Portfolio’s composition is subject to change at any time.

RISKS: Keep in mind, stock prices are subject to market fluctuations and fixed-income securities are subject to credit and market risks. As interest rates rise, bond prices fall, reducing the value of the Portfolio’s share price. Also, because the Portfolio uses a social awareness criterion, there may be a smaller universe of investments. 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	The yield curve is the graphical depiction of the relationship between the yield on bonds of the same credit quality but different maturities.
ii	Gross domestic product (“GDP”) is the market value of all final goods and services produced within a country in a given period of time.
iii	The 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.
iv	Duration is the measure of the price sensitivity of a fixed-income security to an interest rate change of 100 basis points. Calculation is based on the weighted average of the present values for all cash flows.
v	The S&P 500 Index is an unmanaged index of 500 stocks and is generally representative of the performance of larger companies in the U.S.
vi	The Barclays Capital U.S. Aggregate Index is a broad-based bond index comprised of government, corporate, mortgage- and asset-backed issues, rated investment grade or higher, and having at least one year to maturity.
vii	The Blended S&P 500 Index (70%) and Barclays Capital U.S. Aggregate Index (30%) has been prepared by the managers. It consists of 70% of the performance of the S&P 500 Index and 30% of the Barclays Capital U.S. Aggregate Index.
viii	A steep yield curve presents the opportunity to reap gains via “roll down,” or price appreciation that arises as bonds are revalued at successively lower yields as they approach maturity.

6  Legg Mason Investment Counsel Variable Social Awareness Portfolio 2009 Annual Report

Portfolio at a glance^† (unaudited)

   INVESTMENT BREAKDOWN (%) As a percent of total investments

† The bar graphs above represent the composition of the Portfolio’s investments as of October 31, 2009 and October 31, 2008, and do not include derivatives. The Portfolio is actively managed. As a result, the composition of the Portfolio’s investments is subject to change at any time.

Legg Mason Investment Counsel Variable Social Awareness Portfolio 2009 Annual Report  7

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 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 May 1, 2009 and held for the six months ended October 31, 2009.

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 TOTAL		ACCOUNT		ACCOUNT		EXPENSE		PAID DURING
RETURN2		VALUE		VALUE		RATIO		THE PERIOD3
	16.46%	$	1,000.00	$	1,164.60		0.85%	$	4.64

1	For the six months ended October 31, 2009.
2	Assumes the 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 return does 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. 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 the Portfolio’s annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year, then divided by 365.

8  Legg Mason Investment Counsel Variable Social Awareness Portfolio 2009 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
	5.00%	$	1,000.00	$	1,020.92		0.85%	$	4.33

1	For the six months ended October 31, 2009.
2	Expenses (net of fee waivers and/or expense reimbursements) are equal to the Portfolio’s annualized expense ratio, multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year, then divided by 365.

Legg Mason Investment Counsel Variable Social Awareness Portfolio 2009 Annual Report  9

Portfolio performance (unaudited)

   AVERAGE ANNUAL TOTAL RETURNS¹

Twelve Months Ended 10/31/09	14.17	%
Five Years Ended 10/31/09	3.30
Ten Years Ended 10/31/09	0.04

   CUMULATIVE TOTAL RETURN¹

10/31/99 through 10/31/09 0.43 %

¹ Assumes the reinvestment of all distributions, including returns of capital, if any, at net asset value. All figures represent past performance and are not a guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The returns shown 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.

10  Legg Mason Investment Counsel Variable Social Awareness Portfolio 2009 Annual Report

Historical performance (unaudited)

   VALUE OF $10,000 INVESTED IN LEGG MASON INVESTMENT COUNSEL VARIABLE SOCIAL AWARENESS PORTFOLIO
   VS. S&P 500 INDEX, BARCLAYS CAPITAL U.S. AGGREGATE INDEX AND BLENDED S&P 500 INDEX (70%) AND
   BARCLAYS CAPITAL U.S. AGGREGATE INDEX (30%)† — October 1999 - October 2009

†

Hypothetical illustration of $10,000 invested in Legg Mason Investment Counsel Variable Social Awareness Portfolio on October 31, 1999, assuming the reinvestment of all distributions, including returns of capital, if any, at net asset value through October 31, 2009. The S&P 500 Index is an unmanaged index of 500 stocks and is generally representative of the performance of larger companies in the U.S. The Barclays Capital U.S. Aggregate Index is a broad-based bond index comprised of government, corporate, mortgage- and asset-backed issues, rated investment grade or higher, and having at least one year to maturity. The Blended S&P 500 Index (70%) and Barclays Capital U.S. Aggregate Index (30%) has been prepared by the managers. It consists of 70% of the performance of the S&P 500 Index and 30% of the Barclays Capital U.S. Aggregate Index. The Indexes are unmanaged and are not subject to the same management and trading expenses as a mutual fund. Please note that an investor cannot invest directly in an index.

All figures represent past performance and are not a guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The returns shown 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 reimbursements, the total return would have been lower.

Legg Mason Investment Counsel Variable Social Awareness Portfolio 2009 Annual Report  11

Schedule of investments
October 31, 2009

   LEGG MASON INVESTMENT COUNSEL VARIABLE SOCIAL AWARENESS PORTFOLIO

SHARES		SECURITY	VALUE
COMMON STOCKS — 69.5%
CONSUMER DISCRETIONARY — 6.5%
		Hotels, Restaurants & Leisure — 1.6%
	29,560	Yum! Brands Inc.	$	974,002
		Multiline Retail — 1.0%
	13,400	Target Corp.		648,962
		Specialty Retail — 1.5%
	46,950	Lowe’s Cos. Inc.		918,812
		Textiles, Apparel & Luxury Goods — 2.4%
	20,180	Coach Inc.		665,335
	11,140	V.F. Corp.		791,385
		Total Textiles, Apparel & Luxury Goods		1,456,720
		TOTAL CONSUMER DISCRETIONARY		3,998,496
CONSUMER STAPLES — 9.1%
		Beverages — 2.0%
	20,310	PepsiCo Inc.		1,229,771
		Food & Staples Retailing — 1.8%
	31,460	CVS Caremark Corp.		1,110,538
		Food Products — 2.8%
	66,430	Darling International Inc.*		461,689
	18,920	General Mills Inc.		1,247,206
		Total Food Products		1,708,895
		Household Products — 2.5%
	26,387	Procter & Gamble Co.		1,530,446
		TOTAL CONSUMER STAPLES		5,579,650
ENERGY — 8.5%
		Energy Equipment & Services — 2.6%
	10,430	FMC Technologies Inc.*		548,618
	25,624	National-Oilwell Varco Inc.*		1,050,328
		Total Energy Equipment & Services		1,598,946
		Oil, Gas & Consumable Fuels — 5.9%
	18,590	Apache Corp.		1,749,691
	32,771	BP PLC, ADR		1,855,494
		Total Oil, Gas & Consumable Fuels		3,605,185
		TOTAL ENERGY		5,204,131
FINANCIALS — 8.1%
		Capital Markets — 3.1%
	53,910	Charles Schwab Corp.		934,799

See Notes to Financial Statements.

12  Legg Mason Investment Counsel Variable Social Awareness Portfolio 2009 Annual Report

   LEGG MASON INVESTMENT COUNSEL VARIABLE SOCIAL AWARENESS PORTFOLIO

SHARES		SECURITY	VALUE
		Capital Markets — 3.1% continued
	3,000	Goldman Sachs Group Inc.	$	510,510
	10,210	State Street Corp.		428,616
		Total Capital Markets		1,873,925
		Commercial Banks — 3.2%
	30,500	Comerica Inc.		846,375
	47,050	U.S. Bancorp		1,092,501
		Total Commercial Banks		1,938,876
		Insurance — 1.8%
	16,900	Arch Capital Group Ltd.*		1,138,553
		TOTAL FINANCIALS		4,951,354
HEALTH CARE — 9.9%
		Biotechnology — 4.0%
	41,350	BioMarin Pharmaceutical Inc.*		643,406
	17,390	Celgene Corp.*		887,760
	21,690	Gilead Sciences Inc.*		922,909
		Total Biotechnology		2,454,075
		Health Care Equipment & Supplies — 4.1%
	20,970	Covidien PLC		883,257
	20,330	Inverness Medical Innovations Inc.*		772,743
	18,480	Stryker Corp.		850,080
		Total Health Care Equipment & Supplies		2,506,080
		Health Care Providers & Services — 1.8%
	13,330	Express Scripts Inc.*		1,065,333
		TOTAL HEALTH CARE		6,025,488
INDUSTRIALS — 7.2%
		Building Products — 0.9%
	48,470	Masco Corp.		569,523
		Commercial Services & Supplies — 4.0%
	51,654	Covanta Holding Corp.*		887,416
	40,560	Republic Services Inc.		1,050,909
	19,430	Tetra Technology Inc.*		499,934
		Total Commercial Services & Supplies		2,438,259
		Electrical Equipment — 1.6%
	25,490	Emerson Electric Co.		962,247
		Machinery — 0.7%
	9,000	Deere & Co.		409,950
		TOTAL INDUSTRIALS		4,379,979

See Notes to Financial Statements.

Legg Mason Investment Counsel Variable Social Awareness Portfolio 2009 Annual Report  13

Schedule of investments continued
October 31, 2009

   LEGG MASON INVESTMENT COUNSEL VARIABLE SOCIAL AWARENESS PORTFOLIO

SHARES		SECURITY	VALUE
INFORMATION TECHNOLOGY — 13.5%
		Communications Equipment — 3.8%
	39,340	Cisco Systems Inc.*	$	898,919
	42,050	Corning Inc.		614,350
	32,062	Juniper Networks Inc.*		817,902
		Total Communications Equipment		2,331,171
		Computers & Peripherals — 3.0%
	4,710	Apple Inc.*		887,835
	34,920	NetApp Inc.*		944,586
		Total Computers & Peripherals		1,832,421
		Internet Software & Services — 1.6%
	1,770	Google Inc., Class A Shares*		948,932
		IT Services — 2.5%
	23,730	Accenture PLC, Class A Shares		879,909
	16,620	Lender Processing Services Inc.		661,476
		Total IT Services		1,541,385
		Semiconductors & Semiconductor Equipment — 1.8%
	27,690	Broadcom Corp., Class A Shares*		736,831
	12,910	Varian Semiconductor Equipment Associates Inc.*		366,515
		Total Semiconductors & Semiconductor Equipment		1,103,346
		Software — 0.8%
	18,611	Amdocs Ltd.*		468,997
		TOTAL INFORMATION TECHNOLOGY		8,226,252
MATERIALS — 2.7%
		Chemicals — 1.9%
	9,700	Air Products & Chemicals Inc.		748,161
	4,200	Potash Corp. of Saskatchewan Inc.		389,676
		Total Chemicals		1,137,837
		Construction Materials — 0.3%
	2,500	Martin Marietta Materials Inc.		208,300
		Metals & Mining — 0.5%
	9,120	Cliffs Natural Resources Inc.		324,398
		TOTAL MATERIALS		1,670,535
TELECOMMUNICATION SERVICES — 1.9%
		Wireless Telecommunication Services — 1.9%
	12,990	America Movil SAB de CV, Series L Shares, ADR		573,249
	15,500	American Tower Corp., Class A Shares*		570,710
		TOTAL TELECOMMUNICATION SERVICES		1,143,959

See Notes to Financial Statements.

14  Legg Mason Investment Counsel Variable Social Awareness Portfolio 2009 Annual Report

   LEGG MASON INVESTMENT COUNSEL VARIABLE SOCIAL AWARENESS PORTFOLIO

SHARES		SECURITY	VALUE
UTILITIES — 2.1%
		Electric Utilities — 2.1%
	12,890	Exelon Corp.	$	605,314
	30,500	Northeast Utilities		703,025
		TOTAL UTILITIES		1,308,339
		TOTAL COMMON STOCKS (Cost — $39,505,423)		42,488,183
FACE
AMOUNT
ASSET-BACKED SECURITIES — 0.6%
FINANCIALS — 0.6%
		Automobiles — 0.6%
$	44,443	Harley-Davidson Motorcycle Trust, 3.760% due 12/17/12		44,504
	159,000	Honda Auto Receivables Owner Trust, 4.470% due 1/18/12		162,666
	137,691	Hyundai Auto Receivables Trust, 5.260% due 11/15/12		139,388
		TOTAL ASSET-BACKED SECURITIES (Cost — $346,527)		346,558
COLLATERALIZED MORTGAGE OBLIGATIONS — 1.7%
		Banc of America Commercial Mortgage Inc.:
	287,000	5.142% due 11/10/42(a)		295,176
	91,989	5.611% due 5/10/45		94,358
	165,648	Bear Stearns Commercial Mortgage Securities, 4.240% due 8/13/39(a)		166,789
	161,094	Credit Suisse First Boston Mortgage Securities Corp., 6.505% due 2/15/34		165,964
	177,000	JPMorgan Chase Commercial Mortgage Securities Corp., 5.201% due 8/12/37		184,102
	129,033	TIAA Seasoned Commercial Mortgage Trust, 5.670% due 8/15/39(a)		134,106
		TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost — $1,035,924)		1,040,495
CORPORATE BONDS & NOTES — 9.3%
CONSUMER DISCRETIONARY — 0.8%
		Media — 0.3%
	200,000	Comcast Corp., Bonds, 5.650% due 6/15/35		188,126
		Specialty Retail — 0.5%
	275,000	Home Depot Inc., Senior Notes, 5.200% due 3/1/11		287,372
		TOTAL CONSUMER DISCRETIONARY		475,498
CONSUMER STAPLES — 0.7%
		Beverages — 0.4%
	245,000	PepsiCo Inc., Senior Notes, 5.000% due 6/1/18		261,414

See Notes to Financial Statements.

Legg Mason Investment Counsel Variable Social Awareness Portfolio 2009 Annual Report  15

Schedule of investments continued
October 31, 2009

   LEGG MASON INVESTMENT COUNSEL VARIABLE SOCIAL AWARENESS PORTFOLIO

FACE
AMOUNT		SECURITY	VALUE
		Household Products — 0.3%
$	170,000	Procter & Gamble Co., Senior Notes, 4.600% due 1/15/14	$	182,842
		TOTAL CONSUMER STAPLES		444,256
ENERGY — 0.5%
		Oil, Gas & Consumable Fuels — 0.5%
	275,000	Apache Corp., Senior Notes, 5.250% due 4/15/13		297,610
FINANCIALS — 5.1%
		Capital Markets — 0.4%
	243,000	Goldman Sachs Group Inc., Senior Notes, 5.700% due 9/1/12		263,866
		Commercial Banks — 1.0%
	170,000	Barclays Bank PLC, Senior Notes, 5.000% due 9/22/16		173,987
	160,000	National City Bank, Subordinated Notes, 6.200% due 12/15/11		171,043
	250,000	Wells Fargo Bank NA, Subordinated Notes, 6.450% due 2/1/11		263,704
		Total Commercial Banks		608,734
		Consumer Finance — 2.2%
	325,000	HSBC Finance Corp., Notes, 6.375% due 10/15/11		348,019
	325,000	John Deere Capital Corp., Medium-Term Notes, 5.650% due 7/25/11		348,417
	800,000	SLM Corp., Medium-Term Notes, 5.000% due 10/1/13		665,287
		Total Consumer Finance		1,361,723
		Diversified Financial Services — 1.2%
	250,000	Bank of America Corp., Senior Notes, 5.625% due 10/14/16		256,387
	225,000	IBM International Group Capital LLC, Senior Notes, 5.050% due 10/22/12		246,266
	200,000	National Rural Utilities Cooperative Finance Corp., Medium-Term Notes, 8.000% due 3/1/32		236,092
		Total Diversified Financial Services		738,745
		Insurance — 0.3%
	200,000	Genworth Financial Inc., Senior Notes, 6.500% due 6/15/34		159,196
		TOTAL FINANCIALS		3,132,264
HEALTH CARE — 1.5%
		Pharmaceuticals — 1.5%
	225,000	Abbott Laboratories, Senior Notes, 5.600% due 11/30/17		247,096
	275,000	AstraZeneca PLC, Senior Notes, 5.400% due 9/15/12		303,278
	130,000	Merck & Co. Inc., Senior Notes, 4.000% due 6/30/15		136,407
	185,000	Novartis Capital Corp., Senior Notes, 4.125% due 2/10/14		195,597
		TOTAL HEALTH CARE		882,378

See Notes to Financial Statements.

16  Legg Mason Investment Counsel Variable Social Awareness Portfolio 2009 Annual Report

   LEGG MASON INVESTMENT COUNSEL VARIABLE SOCIAL AWARENESS PORTFOLIO

FACE
AMOUNT		SECURITY	VALUE
INFORMATION TECHNOLOGY — 0.4%
		Computers & Peripherals — 0.3%
$	160,000	Hewlett-Packard Co., Senior Notes, 4.250% due 2/24/12	$	169,071
		Software — 0.1%
	80,000	Microsoft Corp., Senior Notes, 2.950% due 6/1/14		81,251
		TOTAL INFORMATION TECHNOLOGY		250,322
MATERIALS — 0.3%
		Chemicals — 0.3%
	200,000	Potash Corp. of Saskatchewan Inc., Senior Notes, 5.875% due 12/1/36		204,482
		TOTAL CORPORATE BONDS & NOTES (Cost — $5,613,086)		5,686,810
MORTGAGE-BACKED SECURITIES — 8.7%
		FHLMC — 2.5%
		Federal Home Loan Mortgage Corp. (FHLMC):
	289,239	6.000% due 9/1/37(b)		308,100
		Gold:
	1,090,477	5.000% due 7/1/35-6/1/36(b)		1,132,781
	99,493	7.500% due 8/1/36(b)		108,790
		Total FHLMC		1,549,671
		FNMA — 6.2%
		Federal National Mortgage Association (FNMA):
	285,855	5.000% due 5/1/18(b)		305,370
	1,493,534	6.000% due 6/1/22-9/1/37(b)		1,590,450
	1,490,345	5.500% due 1/1/24-6/1/36(b)		1,575,900
	278,759	6.500% due 2/1/37(b)		299,889
		Total FNMA		3,771,609
		TOTAL MORTGAGE-BACKED SECURITIES (Cost — $4,963,112)		5,321,280
U.S. GOVERNMENT & AGENCY OBLIGATIONS — 6.0%
		U.S. Government Agencies — 4.1%
		Federal National Mortgage Association (FNMA):
	365,000	Bonds, 6.625% due 11/15/30(b)		459,547
		Notes:
	199,000	4.625% due 10/15/13(b)		217,841
	640,000	5.000% due 4/15/15(b)		710,883
	503,000	4.875% due 12/15/16(b)		551,497
	509,000	5.375% due 6/12/17(b)		576,438
		Total U.S. Government Agencies		2,516,206

See Notes to Financial Statements.

Legg Mason Investment Counsel Variable Social Awareness Portfolio 2009 Annual Report  17

Schedule of investments continued
October 31, 2009

   LEGG MASON INVESTMENT COUNSEL VARIABLE SOCIAL AWARENESS PORTFOLIO

FACE
AMOUNT		SECURITY	VALUE
		U.S. Government Obligations — 1.9%
		U.S. Treasury Bonds:
$	152,000	6.000% due 2/15/26	$	185,986
	442,000	3.500% due 2/15/39		387,579
		U.S. Treasury Notes:
	100,000	0.875% due 2/28/11		100,488
	248,000	4.250% due 11/15/14		270,863
	61,000	2.750% due 2/15/19		57,988
	157,000	3.125% due 5/15/19		153,689
		Total U.S. Government Obligations		1,156,593
		TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS (Cost — $3,398,055)		3,672,799
		TOTAL INVESTMENTS BEFORE SHORT-TERM INVESTMENT (Cost — $54,862,127)		58,556,125
SHORT-TERM INVESTMENT — 4.3%
		Repurchase Agreement — 4.3%
	2,610,997	Goldman Sachs & Co. repurchase agreement dated 10/30/09, 0.050% due 11/2/09; Proceeds at maturity — $2,611,008; (Fully collateralized by U.S. government agency obligation, 3.000% due 10/29/14; Market value — $2,668,509) (Cost — $2,610,997)		2,610,997
		TOTAL INVESTMENTS — 100.1% (Cost — $57,473,124#)		61,167,122
		Liabilities in Excess of Other Assets — (0.1)%		(57,401	)
		TOTAL NET ASSETS — 100.0%	$	61,109,721

*	Non-income producing security.
(a)	Variable rate security. Interest rate disclosed is that which is in effect at October 31, 2009.
(b)	On September 7, 2008, the Federal Housing Finance Agency placed Fannie Mae (FNMA) and Freddie Mac (FHLMC) into conservatorship.
#	Aggregate cost for federal income tax purposes is $57,638,170.

Abbreviation used in this schedule:

ADR — American Depositary Receipt

See Notes to Financial Statements.

18  Legg Mason Investment Counsel Variable Social Awareness Portfolio 2009 Annual Report

Statement of assets and liabilities
October 31, 2009

ASSETS:
Investments, at value (Cost — $57,473,124)	$	61,167,122
Dividends and interest receivable		201,107
Prepaid expenses		1,959
Total Assets		61,370,188
LIABILITIES:
Payable for Portfolio shares repurchased		99,282
Investment management fee payable		36,825
Trustees’ fees payable		166
Accrued expenses		124,194
Total Liabilities		260,467
TOTAL NET ASSETS	$	61,109,721
NET ASSETS:
Par value (Note 5)	$	29
Paid-in capital in excess of par value		67,142,023
Undistributed net investment income		600,130
Accumulated net realized loss on investments		(10,326,459	)
Net unrealized appreciation on investments		3,693,998
TOTAL NET ASSETS	$	61,109,721
Shares Outstanding		2,898,883
Net Asset Value		$21.08

See Notes to Financial Statements.

Legg Mason Investment Counsel Variable Social Awareness Portfolio 2009 Annual Report  19

Statement of operations
For the Year Ended October 31, 2009

INVESTMENT INCOME:
Interest	$	878,981
Dividends		680,363
Less: Foreign taxes withheld		(351	)
Total Investment Income		1,558,993
EXPENSES:
Investment management fee (Note 2)		397,926
Shareholder reports		42,547
Audit and tax		21,761
Legal fees		18,291
Trustees’ fees		4,452
Transfer agent fees		3,538
Insurance		2,872
Custody fees		2,133
Miscellaneous expenses		5,643
Total Expenses		499,163
NET INVESTMENT INCOME		1,059,830
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTES 1 AND 3):
Net Realized Loss from Investment Transactions		(4,090,202	)
Change in Net Unrealized Appreciation/Depreciation from Investments		10,455,173
NET GAIN ON INVESTMENTS		6,364,971
INCREASE IN NET ASSETS FROM OPERATIONS	$	7,424,801

See Notes to Financial Statements.

20  Legg Mason Investment Counsel Variable Social Awareness Portfolio 2009 Annual Report

Statements of changes in net assets

FOR THE YEARS ENDED OCTOBER 31,	2009			2008
OPERATIONS:
Net investment income	$	1,059,830		$	1,330,217
Net realized loss		(4,090,202	)		(5,376,469	)
Change in net unrealized appreciation/depreciation		10,455,173			(17,541,882	)
Increase (Decrease) in Net Assets From Operations		7,424,801			(21,588,134	)
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTE 1):
Net investment income		(1,400,001	)		(1,200,006	)
Net realized gains		—			(13,917,051	)
Decrease in Net Assets From Distributions to Shareholders		(1,400,001	)		(15,117,057	)
PORTFOLIO SHARE TRANSACTIONS (NOTE 5):
Net proceeds from sale of shares		438,050			2,961,366
Reinvestment of distributions		1,400,001			15,117,057
Cost of shares repurchased		(7,815,129	)		(12,413,743	)
Increase (Decrease) in Net Assets From Portfolio Share Transactions		(5,977,078	)		5,664,680
INCREASE (DECREASE) IN NET ASSETS		47,722			(31,040,511	)
NET ASSETS:
Beginning of year		61,061,999			92,102,510
End of year*	$	61,109,721		$	61,061,999
* Includes undistributed net investment income of:		$600,130			$932,251

See Notes to Financial Statements.

Legg Mason Investment Counsel Variable Social Awareness Portfolio 2009 Annual Report  21

Financial highlights

   FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT
   EACH YEAR ENDED OCTOBER 31:

	2009			2008			2007			20061			20051,2,3			20041,†
NET ASSET VALUE, BEGINNING OF YEAR		$18.92			$30.39			$26.45			$24.58			$24.30			$23.04
INCOME (LOSS) FROM OPERATIONS:
Net investment income		0.36			0.42			0.32			0.15			0.10			0.17
Net realized and unrealized gain (loss)		2.24			(6.86	)		3.76			1.90			0.18			1.26
Total income (loss) from operations		2.60			(6.44	)		4.08			2.05			0.28			1.43
LESS DISTRIBUTIONS FROM:
Net investment income		(0.44	)		(0.40	)		(0.14	)		(0.18	)		(0.00	)4		(0.17	)
Net realized gains		—			(4.63	)		—			—			—			—
Total distributions		(0.44	)		(5.03	)		(0.14	)		(0.18	)		(0.00	)4		(0.17	)
NET ASSET VALUE, END OF YEAR		$21.08			$18.92			$30.39			$26.45			$24.58			$24.30
Total return5		14.17	%		(25.22	)%		15.48	%		8.36	%		1.16	%		6.23	%
NET ASSETS, END OF YEAR (000s)		$61,110			$61,062			$92,103			$87,381			$90,835			$93,845
RATIOS TO AVERAGE NET ASSETS:
Gross expenses		0.88	%		1.03	%		0.84	%6		0.80	%		0.75	%7		0.75	%
Net expenses8		0.88			0.93	9		0.82	6,9		0.79	9		0.75	7		0.71	9
Net investment income		1.86			1.62			1.13			0.56			0.52	7		0.77
PORTFOLIO TURNOVER RATE		30	%		42	%		122	%		13	%		6	%		18	%

1	Represents a share of capital stock outstanding prior to April 30, 2007.
2	For the period January 1, 2005 to October 31, 2005.
3	Effective July 1, 2005, The Travelers Series Trust-Social Awareness Stock Portfolio was reorganized into the Travelers Series Fund Inc.-Social Awareness Stock Portfolio. With this transaction, the Portfolio’s fiscal year end changed to October 31, 2005.
4	Amount represents less than $0.01 per share.
5	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 period of less than one year are not 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 would have been 0.83% and 0.81%, respectively.
7	Annualized.
8	As a result of an expense limitation, the ratio of expenses, other than interest, brokerage, taxes and extraordinary expenses, to average net assets of the Portfolio will not exceed 1.00% until December 31, 2011. Prior to April 30, 2007, the expense limitation was 1.25%.
9	Reflects fee waivers and/or expense reimbursements.
†	For the year ended December 31.

See Notes to Financial Statements.

22  Legg Mason Investment Counsel Variable Social Awareness Portfolio 2009 Annual Report

Notes to financial statements

1.  Organization and significant accounting policies

Legg Mason Investment Counsel Variable Social Awareness Portfolio (formerly known as Legg Mason Partners Variable Social Awareness Portfolio) (the “Portfolio”) is a separate diversified investment series of Legg Mason Partners Variable Equity 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. Subsequent events have been evaluated through December 15, 2009, the issuance date of the financial statements.

(a) Investment valuation. 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. 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. 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 values these securities at fair value as determined in accordance with the procedures approved by the Portfolio’s Board of Trustees. Short-term obligations with maturities of 60 days or less are valued at amortized cost, which approximates fair value.

The Portfolio has adopted Financial Accounting Standards Board Codification Topic 820 (formerly Statement of Financial Accounting Standards No. 157) (“ASC Topic 820”). ASC Topic 820 establishes a single definition of fair value, creates a three-tier hierarchy as a framework for measuring fair value based on inputs used to value the Portfolio’s investments, and requires additional disclosure about fair value. The hierarchy of inputs is summarized below.

Legg Mason Investment Counsel Variable Social Awareness Portfolio 2009 Annual Report  23

Notes to financial statements continued

•  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)

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

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

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
DESCRIPTION	(LEVEL 1)		(LEVEL 2)		(LEVEL 3)		TOTAL
Long-term investments†:
Common stocks	$	42,488,183		—		—	$	42,488,183
Asset-backed securities		—	$	346,558		—		346,558
Collateralized mortgage obligations		—		1,040,495		—		1,040,495
Corporate bonds & notes		—		5,686,810		—		5,686,810
Mortgage-backed securities		—		5,321,280		—		5,321,280
U.S. government & agency obligations		—		3,672,799		—		3,672,799
Total long-term investments		42,488,183		16,067,942		—		58,556,125
Short-term investment†		—		2,610,997		—		2,610,997
Total investments	$	42,488,183	$	18,678,939		—	$	61,167,122

† See Schedule of Investments for additional detailed categorizations.

(b) 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 daily 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.

24  Legg Mason Investment Counsel Variable Social Awareness Portfolio 2009 Annual Report

(c) 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.

(d) Security transactions and investment Income. Security transactions are accounted for on a trade date basis. Interest income, adjusted for amortization of premium and accretion of discount, is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date. Foreign dividend income is recorded on the ex-dividend date or as soon as practical after the Portfolio determines the existence of a dividend declaration after exercising reasonable due diligence. 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.

(e) 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.

Legg Mason Investment Counsel Variable Social Awareness Portfolio 2009 Annual Report  25

Notes to financial statements continued

(f) 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 (the “Code”), as amended, applicable to regulated investment companies. Accordingly, the Portfolio intends to distribute its taxable income and net realized gains, if any, to shareholders in accordance with timing requirements imposed by the Code. Therefore, no federal 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 October 31, 2009, 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 Internal Revenue Service and state departments of revenue.

Under the applicable foreign tax laws, a withholding tax may be imposed on interest, dividends and capital gains at various rates.

(g) 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. During the current year, the following reclassifications have been made:

	UNDISTRIBUTED NET		ACCUMULATED NET
	INVESTMENT INCOME		REALIZED LOSS
(a)	$	8,050	$	(8,050	)

^(a) Reclassifications are primarily due to losses from mortgage backed securities treated as capital losses for tax purposes.

2. Investment management agreement and other transactions with affiliates

Legg Mason Partners Fund Advisor, LLC (“LMPFA”) is the Portfolio’s investment manager and Legg Mason Investment Counsel, LLC (“LMIC”) is the Portfolio’s subadviser. LMPFA and LMIC 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, in accordance with the following breakpoint schedule:

AVERAGE DAILY NET ASSETS	ANNUAL RATE
First $50 million		0.71	%
Next $50 million		0.61
Next $100 million		0.51
Over $200 million		0.46

26  Legg Mason Investment Counsel Variable Social Awareness Portfolio 2009 Annual Report

LMPFA provides administrative and certain oversight services to the Portfolio. LMPFA delegates to the subadviser the day-to-day portfolio management of the Portfolio, except for the management of cash and short-term instruments. For its services, LMPFA pays LMIC 70% of the net management fee it receives from the Portfolio.

As a result of an expense limitation, the ratio of expenses, other than interest, brokerage, taxes and extraordinary expenses, to average net assets of the Portfolio will not exceed 1.00% until December 31, 2011. This expense limitation cannot be terminated prior to December 31, 2011 without the Board of Trustees’ consent.

The manager is permitted to recapture amounts previously forgone or reimbursed to the Portfolio during the same fiscal year if the Portfolio’s total annual operating expenses have fallen to a level below an expense limitation (“expense cap”). 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, 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.

3.  Investments

During the year ended October 31, 2009, the aggregate cost of purchases and proceeds from sales of investments (excluding short-term investments) and U.S. Government & Agency Obligations were as follows:

			U.S. GOVERNMENT &
	INVESTMENTS		AGENCY OBLIGATIONS
Purchases	$	14,971,167	$	1,481,263
Sales		15,085,573		5,151,268

At October 31, 2009, the aggregate gross unrealized appreciation and depreciation of investments for federal income tax purposes were as follows:

Gross unrealized appreciation	$	6,060,505
Gross unrealized depreciation		(2,531,553	)
Net unrealized appreciation	$	3,528,952

4.  Derivative instruments and hedging activities

Financial Accounting Standards Board Codification Topic 815 (formerly Statement of Financial Accounting Standards No. 161) (“ASC Topic 815”) requires enhanced disclosure about an entity’s derivative and hedging activities.

Legg Mason Investment Counsel Variable Social Awareness Portfolio 2009 Annual Report  27

Notes to financial statements continued

During the year ended October 31, 2009, the Portfolio did not invest in any derivative instruments.

5.  Shares of beneficial interest

At October 31, 2009, the Trust had an unlimited number of shares of beneficial interest authorized with a par value of $0.00001 per share. Each share represents an identical interest and has the same rights.

Transactions in shares of the Portfolio were as follows:

	YEAR ENDED			YEAR ENDED
	OCTOBER 31, 2009			OCTOBER 31, 2008
Shares sold		23,294			119,491
Shares issued on reinvestment		78,081			604,441
Shares repurchased		(430,169	)		(527,014	)
Net increase (decrease)		(328,794	)		196,918

6.  Income tax information and distributions to shareholders

The tax character of distributions paid during the fiscal years ended October 31, was as follows:

	2009		2008
Distributions Paid From:
Ordinary income	$	1,400,001	$	1,200,006
Net long-term capital gains		—		13,917,051
Total distributions paid	$	1,400,001	$	15,117,057

As of October 31, 2009, the components of accumulated earnings on a tax basis were as follows:

Undistributed ordinary income — net	$	697,612
Capital loss carryforward*		(10,161,413	)
Other book/tax temporary differences(a)		(97,482	)
Unrealized appreciation/(depreciation)(b)		3,528,952
Total accumulated earnings/(losses) — net	$	(6,032,331	)

* As of October 31, 2009, the Portfolio had the following net capital loss carryforward remaining:

YEAR OF EXPIRATION	AMOUNT
10/31/2011	$	(797,243	)
10/31/2016		(5,288,876	)
10/31/2017		(4,075,294	)
	$	(10,161,413	)

	These amounts will be available to offset any future taxable capital gains.
(a)	Other book/tax temporary differences are attributable primarily to the book/tax differences in the timing of the deductibility of various expenses.
(b)	The difference between book-basis and tax-basis unrealized appreciation/(depreciation) is attributable primarily to the tax deferral of losses on wash sales.

28  Legg Mason Investment Counsel Variable Social Awareness Portfolio 2009 Annual Report

7. Regulatory matters

On May 31, 2005, the U.S. Securities and Exchange Commission (“SEC”) issued an order in connection with the settlement of an administrative proceeding against Smith Barney Fund Management LLC (“SBFM”), a wholly-owned subsidiary of Legg Mason and the then investment adviser or manager to the Portfolio, and Citigroup Global Markets Inc. (“CGM”), a former distributor of the Portfolio, relating to the appointment of an affiliated transfer agent for the Smith Barney family of mutual funds, including the Portfolio (the “Affected Funds”).

The SEC order found that SBFM and CGM willfully violated Section 206(1) of the Investment Advisers Act of 1940, as amended, and the rules promulgated there under (the “Advisers Act”). Specifically, the order found that SBFM and CGM knowingly or recklessly failed to disclose to the boards of the Affected Funds in 1999 when proposing a new transfer agent arrangement with an affiliated transfer agent that: First Data Investors Services Group (“First Data”), the Affected Funds’ then-existing transfer agent, had offered to continue as transfer agent and do the same work for substantially less money than before; and that Citigroup Asset Management (“CAM”), the Citigroup business unit that, at the time, included the Affected Funds’ investment manager and other investment advisory companies, had entered into a side letter with First Data under which CAM agreed to recommend the appointment of First Data as sub-transfer agent to the affiliated transfer agent in exchange, among other things, for a guarantee by First Data of specified amounts of asset management and investment banking fees to CAM and CGM. The order also found that SBFM and CGM willfully violated Section 206(2) of the Advisers Act by virtue of the omissions discussed above and other misrepresentations and omissions in the materials provided to the Affected Funds’ boards, including the failure to make clear that the affiliated transfer agent would earn a high profit for performing limited functions while First Data continued to perform almost all of the transfer agent functions, and the suggestion that the proposed arrangement was in the Affected Funds’ best interests and that no viable alternatives existed.

SBFM and CGM do not admit or deny any wrongdoing or liability. The settlement does not establish wrongdoing or liability for purposes of any other proceeding. The SEC censured SBFM and CGM and ordered them to cease and desist from violations of Sections 206(1) and 206(2) of the Advisers Act. The order required Citigroup to pay $208.1 million, including $109 million in disgorgement of profits, $19.1 million in interest, and a civil money penalty of $80 million. Approximately $24.4 million has already been paid to the Affected Funds, primarily through fee waivers. The remaining $183.7 million, including the penalty, has been paid to the U.S. Treasury and will be distributed pursuant to a plan submitted for the approval of the SEC. At this time, there is no certainty as to how the above-described proceeds of the settlement will be

Legg Mason Investment Counsel Variable Social Awareness Portfolio 2009 Annual Report  29

Notes to financial statements continued

distributed, to whom such distributions will be made, the methodology by which such distributions will be allocated, and when such distributions will be made. The order also required that transfer agency fees received from the Affected Funds since December 1, 2004, less certain expenses, be placed in escrow and provided that a portion of such fees might be subsequently distributed in accordance with the terms of the order. On April 3, 2006, an aggregate amount of approximately $9 million held in escrow was distributed to the Affected Funds.

The order required SBFM to recommend a new transfer agent contract to the Affected Funds’ boards within 180 days of the entry of the order; if a Citigroup affiliate submitted a proposal to serve as transfer agent or sub-transfer agent, SBFM and CGM would have been required, at their expense, to engage an independent monitor to oversee a competitive bidding process. On November 21, 2005, and within the specified timeframe, the Affected Funds’ boards selected a new transfer agent for the Affected Funds. No Citigroup affiliate submitted a proposal to serve as transfer agent. Under the order, SBFM also must comply with an amended version of a vendor policy that Citigroup instituted in August 2004.

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

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

8.  Legal matters

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

30  Legg Mason Investment Counsel Variable Social Awareness Portfolio 2009 Annual Report

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 replead 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 Fund was not identified in the Second Amended Complaint. The Second Amended Complaint alleges no claims against any of the funds or any of their Board Members. Under Section 36(b), the Second Amended Complaint alleges similar facts and seeks similar relief against the Second Amended Complaint Defendants as the Complaint.

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. The appeal was fully briefed and oral argument before the U.S. Court of Appeals for the Second Circuit took place on March 5, 2009. The parties currently are awaiting a decision from the U.S. Court of Appeals for the Second Circuit.

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 SEC as described in Note 7. The complaints seek injunctive relief and compensatory and punitive damages, removal of SBFM as the investment manager for the Smith Barney family of

Legg Mason Investment Counsel Variable Social Awareness Portfolio 2009 Annual Report  31

Notes to financial statements continued

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 was filed with the U.S. Court of Appeals for the Second Circuit. After full briefing, oral argument before the U.S. Court of Appeals for the Second Circuit took place on March 4, 2009. The parties currently are awaiting a decision from the U.S. Court of Appeals for the Second Circuit.

9.  Other shareholder information

At the August 2009 meeting, the Board of Trustees approved changing the Portfolio’s fiscal year end from October 31^stto December 31^st. This change will result in a “stub period” annual report being produced for the two-month period ending December 31, 2009.

32  Legg Mason Investment Counsel Variable Social Awareness Portfolio 2009 Annual Report

Report of independent registered public
accounting firm

The Board of Trustees and Shareholders
Legg Mason Partners Variable Equity Trust:

We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Legg Mason Investment Counsel Variable Social Awareness Portfolio (formerly Legg Mason Partners Variable Social Awareness Portfolio), a series of Legg Mason Partners Variable Equity Trust, as of October 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Portfolio’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian and broker. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Legg Mason Investment Counsel Variable Social Awareness Portfolio as of October 31, 2009, and the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.

New York, New York
December 15, 2009

Legg Mason Investment Counsel Variable Social Awareness Portfolio 2009 Annual Report  33

Additional information (unaudited)
Information about Trustees and Officers

The business and affairs of Legg Mason Investment Counsel Variable Social Awareness Portfolio (formerly known as Legg Mason Partners Variable Social Awareness Portfolio) [the “portfolio”], are managed under the direction of the Board of Trustees. The current Trustees, including the Trustees who are not “interested persons” (as defined in the Investment Company Act of 1940, as amended) of the Portfolio (the “Independent Trustees”), and executive officers of the Portfolio, their years of birth, their principal occupations during at least the past five years [their titles may have varied during that period], the number of funds associated with Legg Mason the Trustees oversee, and other board memberships they hold are set forth below. The address of each Trustee is c/o R. Jay Gerken, 620 Eighth Avenue, New York, New York 10018.

The Statement of Additional Information includes additional information about Trustees and is available, without charge, upon request by calling Funds Investor Services at 1-800-822-5544 or Institutional Shareholder Services at 1-888-425-6432.

INDEPENDENT TRUSTEES
PAUL R. ADES
Birth year	1940
Position(s) held with Fund1	Trustee
Term of office1 and length of time served2	Since 1983
Principal occupation(s) during past five years	Law Firm of Paul R. Ades, PLLC (since 2000)
Number of portfolios in fund complex over- seen by Trustee	55
Other board member- ships held by Trustee	None
ANDREW L. BREECH
Birth year	1952
Position(s) held with Fund1	Trustee
Term of office1 and length of time served2	Since 1991
Principal occupation(s) during past five years	President, Dealer Operating Control Service, Inc. (automotive retail management) (since 1985)
Number of portfolios in fund complex over- seen by Trustee	55
Other board member- ships held by Trustee	None

34  Legg Mason Investment Counsel Variable Social Awareness Portfolio

DWIGHT B. CRANE
Birth year	1937
Position(s) held with Fund1	Trustee
Term of office1 and length of time served2	Since 1981
Principal occupation(s) during past five years	Professor Emeritus, Harvard Business School (since 2007); formerly, Professor, Harvard Business School (1969 to 2007); Independent Consultant (since 1969)
Number of portfolios in fund complex over- seen by Trustee	55
Other board member- ships held by Trustee	None
ROBERT M. FRAYN, JR.
Birth year	1934
Position(s) held with Fund1	Trustee
Term of office1 and length of time served2	Since 1981
Principal occupation(s) during past five years	Retired; formerly, President and Director, Book Publishing Co. (1970 to 2002)
Number of portfolios in fund complex over- seen by Trustee	55
Other board member- ships held by Trustee	None
FRANK G. HUBBARD
Birth year	1937
Position(s) held with Fund1	Trustee
Term of office1 and length of time served2	Since 1993
Principal occupation(s) during past five years	President, Avatar International Inc. (business development) (since 1998)
Number of portfolios in fund complex over- seen by Trustee	55
Other board member- ships held by Trustee	None

Legg Mason Investment Counsel Variable Social Awareness Portfolio  35

Additional information (unaudited) continued
Information about Trustees and Officers

HOWARD J. JOHNSON
Birth year	1938
Position(s) held with Fund1	Trustee
Term of office1 and length of time served2	From 1981 to 1998 and 2000 to Present
Principal occupation(s) during past five years	Chief Executive Officer, Genesis Imaging LLC (technology company) (since 2003)
Number of portfolios in fund complex over- seen by Trustee	55
Other board member- ships held by Trustee	None
DAVID E. MARYATT
Birth year	1936
Position(s) held with Fund1	Trustee
Term of office1 and length of time served2	Since 1983
Principal occupation(s) during past five years	Private Investor; President and Director, ALS Co. (real estate management and development firm) (since 1992)
Number of portfolios in fund complex over- seen by Trustee	55
Other board member- ships held by Trustee	None
JEROME H. MILLER
Birth year	1938
Position(s) held with Fund1	Trustee
Term of office1 and length of time served2	Since 1995
Principal occupation(s) during past five years	Retired
Number of portfolios in fund complex over- seen by Trustee	55
Other board member- ships held by Trustee	None

36  Legg Mason Investment Counsel Variable Social Awareness Portfolio

KEN MILLER
Birth year	1942
Position(s) held with Fund1	Trustee
Term of office1 and length of time served2	Since 1983
Principal occupation(s) during past five years	President, Young Stuff Apparel Group, Inc. (apparel manufacturer), division of Li & Fung (since 1963)
Number of portfolios in fund complex over- seen by Trustee	55
Other board member- ships held by Trustee	None
JOHN J. MURPHY
Birth year	1944
Position(s) held with Fund1	Trustee
Term of office1 and length of time served2	Since 2002
Principal occupation(s) during past five years	Founder and Senior Principal, Murphy Capital Management (investment management) (since 1983)
Number of portfolios in fund complex over- seen by Trustee	55
Other board member- ships held by Trustee	Director, Nicholas Applegate Institutional Funds (since 2005); Trustee, Consulting Group Capital Markets Funds (since 2002); Trustee, UBS Funds (since 2008); formerly, Director, Atlantic Stewardship Bank (2004 to 2005); formerly, Director, Barclays International Funds Group Ltd. and affiliated companies (1983 to 2003)
THOMAS F. SCHLAFLY
Birth year	1948
Position(s) held with Fund1	Trustee
Term of office1 and length of time served2	Since 1983
Principal occupation(s) during past five years	President, The Saint Louis Brewery, Inc. (brewery) (since 1989); Partner, Thompson Coburn LLP (law firm) (since 2009); Of Counsel, Husch Blackwell Sanders LLP (law firm) and its predecessor firms (prior to May 2009)
Number of portfolios in fund complex over- seen by Trustee	55
Other board member- ships held by Trustee	Director, Citizens National Bank of Greater St. Louis (since 2006)

Legg Mason Investment Counsel Variable Social Awareness Portfolio  37

Additional information (unaudited) continued
Information about Trustees and Officers

JERRY A. VISCIONE
Birth year	1944
Position(s) held with Fund1	Trustee
Term of office1 and length of time served2	Since 1993
Principal occupation(s) during past five years	Retired
Number of portfolios in fund complex over- seen by Trustee	55
Other board member- ships held by Trustee	None
INTERESTED TRUSTEE
R. JAY GERKEN, CFA3
Birth year	1951
Position(s) held with Fund1	Trustee, President, Chairman, and Chief Executive Officer
Term of office1 and length of time served2	Since 2002
Principal occupation(s) during past five years	Managing Director, Legg Mason & Co., LLC; Chairman of the Board and Trustee/Director of 148 funds associated with Legg Mason Partners Fund Advisor, LLC (“LMPFA”) and its affiliates; President of LMPFA (since 2006); Chairman, President and Chief Executive Officer (“CEO”) of certain mutual funds associated with Legg Mason, Inc. or its affiliates; President and CEO, Smith Barney Fund Management LLC and Chairman, President and CEO, Citi Fund Management, Inc. (formerly registered investment advisers) (since 2002); formerly, Managing Director of Citigroup Global Markets Inc. (“CFM”) (1989 to 2006); formerly, Chairman, President and CEO, Travelers Investment Adviser Inc. (2002 to 2005)
Number of portfolios in fund complex over- seen by Trustee	135
Other board member- ships held by Trustee	Former Trustee, Consulting Group Capital Markets Funds (2002 to 2006)
OFFICERS
KAPREL OZSOLAK Legg Mason 55 Water Street, New York, NY 10041
Birth year	1965
Position(s) held with Fund1	Chief Financial Officer and Treasurer
Term of office1 and length of time served2	Since 2004
Principal occupation(s) during past five years	Director of Legg Mason; Chief Financial Officer and Treasurer of certain mutual funds associated with Legg Mason; formerly, Controller of certain mutual funds associated with certain predecessor firms of Legg Mason (2002 to 2004)

38  Legg Mason Investment Counsel Variable Social Awareness Portfolio

TED P. BECKER Legg Mason 620 Eight Avenue, New York, NY 10018
Birth year	1951
Position(s) held with Fund1	Chief Compliance Officer
Term of office1 and length of time served2	Since 2006
Principal occupation(s) during past five years	Director of Global Compliance at Legg Mason (since 2006); Chief Compliance Officer of LMPFA (since 2006); Managing Director of Compliance at Legg Mason (since 2005); Chief Compliance Officer with certain mutual funds associated with Legg Mason, LMPFA and certain affiliates (since 2006); formerly, Managing Director of Compliance at CAM or its predecessor (2002 to 2005);
JOHN CHIOTA Legg Mason 100 First Stamford Place, Stamford, CT 06902
Birth year	1968
Position(s) held with Fund1	Chief Anti-Money Laundering Compliance Officer/Identity Theft Prevention Officer
Term of office1 and length of time served2	Since 2006/2008
Principal occupation(s) during past five years	Identity Theft Prevention Officer with certain mutual funds associated with Legg Mason or its affiliates (since 2008); Chief Anti-Money Laundering Compliance Officer with certain mutual funds associated with Legg Mason or its affiliates (since 2006); Vice President of Legg Mason or its predecessor (since 2004); Prior to August 2004, Chief AML Compliance Officer with TD Waterhouse
ROBERT I. FRENKEL Legg Mason 100 First Stamford Place, Stamford, CT 06902
Birth year	1954
Position(s) held with Fund1	Secretary and Chief Legal Officer
Term of office1 and length of time served2	Since 2003
Principal occupation(s) during past five years	Managing Director and General Counsel of Global Mutual Funds for Legg Mason and its predecessors (since 1994); Secretary and Chief Legal Officer of mutual funds associated with Legg Mason (since 2003); formerly, Secretary of CFM (2001 to 2004)
THOMAS C. MANDIA Legg Mason 100 First Stamford Place, Stamford, CT 06902
Birth year	1962
Position(s) held with Fund1	Assistant Secretary
Term of office1 and length of time served2	Since 2000
Principal occupation(s) during past five years	Managing Director and Deputy General Counsel of Legg Mason (since 2005); formerly, Managing Director and Deputy General Counsel for CAM (1992 to 2005)

Legg Mason Investment Counsel Variable Social Awareness Portfolio  39

Additional information (unaudited) continued
Information about Trustees and Officers

STEVEN FRANK Legg Mason 55 Water Street, New York, NY 10041
Birth year	1967
Position(s) held with Fund1	Controller
Term of office1 and length of time served2	Since 2005
Principal occupation(s) during past five years	Vice President of Legg Mason (since 2002); Controller of certain mutual funds associated with Legg Mason or its predecessors (since 2005); formerly, Assistant Controller of certain mutual funds associated with Legg Mason predecessors (2001 to 2005)
ALBERT LASKAJ Legg Mason 55 Water Street, New York, NY 10041
Birth year	1977
Position(s) held with Fund1	Controller
Term of office1 and length of time served2	Since 2007
Principal occupation(s) during past five years	Vice President of Legg Mason (since 2008); Controller of certain mutual funds associated with Legg Mason (since 2007); formerly, Assistant Controller of certain mutual funds associated with Legg Mason (from 2005 to 2007); formerly, Accounting Manager of certain mutual funds associated with certain predecessor firms of Legg Mason (2003 to 2005)

1	Each Trustee and Officer serves until his or her successor has been duly elected and qualified or until his or her earlier death, resignation, retirement or removal.
2	Indicates the earliest year in which the Trustee or Officer became a Board Member or Officer, as applicable for a fund in the Legg Mason Partners funds complex.
3	Mr. Gerken is an “interested person” of the Trust as defined in the 1940 Act because Mr. Gerken is an officer of LMPFA and certain of its affiliates.

40  Legg Mason Investment Counsel Variable Social Awareness Portfolio

Important tax information (unaudited)

The following information is provided with respect to the distributions paid during the taxable year ended October 31, 2009:

Record date	12/18/2008
Payable date	12/19/2008
Ordinary Income:
Dividends qualifying for the dividends received deduction for corporations	46.77	%

Please retain this information for your records.

Legg Mason Investment Counsel Variable Social Awareness Portfolio  41

(This page intentionally left blank.)

Legg Mason Investment Counsel
Variable Social Awareness Portfolio

Trustees

Paul R. Ades

Andrew L. Breech

Dwight B. Crane

Robert M. Frayn, Jr.

R. Jay Gerken, CFA

  Chairman

Frank G. Hubbard

Howard J. Johnson

David E. Maryatt

Jerome H. Miller

Ken Miller

John J. Murphy

Thomas F. Schlafly

Jerry A. Viscione

Investment manager

Legg Mason Partners Fund

Advisor, LLC

Subadviser

Legg Mason Investment
Counsel, LLC

Distributor

Legg Mason Investor Services, LLC

Custodian

State Street Bank and Trust

Company

Transfer agent

Boston Financial Data Servicing, Inc.
2 Heritage Drive

Quincy, Massachusetts 02171

Independent registered public accounting firm

KPMG LLP

345 Park Avenue

New York, New York 10154

Legg Mason Investment Counsel Variable Social Awareness Portfolio

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

LEGG MASON INVESTMENT COUNSEL VARIABLE SOCIAL AWARENESS PORTFOLIO
Legg Mason Funds
55 Water Street
New York, NY 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 Funds Investor Services at 1-800-822-5544 or Institutional Shareholder Services at 1-888-425-6432.

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 relating to portfolio transactions are available (1) without charge, upon request, by calling Funds Investor Services at 1-800-822-5544 or Institutional Shareholder Services at 1-888-425-6432, (2) 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 Investment Counsel Variable Social Awareness Portfolio. This report is not authorized for distribution to prospective investors in the Portfolio unless preceded 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

2009 Legg Mason Investor Services, LLC
Member FINRA, SIPC

 

 

Privacy policy

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

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

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

•  Information we receive from consumer reporting agencies.

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

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

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

                    NOT PART OF THE ANNUAL REPORT

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.*

*  Ranked eleventh-largest money manager in the world, according to Pensions & Investments, May 18, 2009, based on 12/31/08 worldwide assets under management.

www.leggmason.com/individualinvestors

2009 Legg Mason Investor Services, LLC Member FINRA, SIPC

FD03332 12/09 SR09-957

NOT PART OF THE ANNUAL REPORT

ITEM 2. CODE OF ETHICS.

The registrant has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller.

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.

The Board of Directors of the registrant has determined that Jerry A. Viscione possesses the technical attributes identified in Instruction 2(b) of Item 3 to Form N-CSR to qualify as an “audit committee financial expert,” and has designated Mr. Viscione as the Audit Committee’s financial expert. Mr. Viscione is an “independent” Director pursuant to paragraph (a)(2) of Item 3 to Form N-CSR.

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

a) Audit Fees. The aggregate fees billed in the last two fiscal years ending October 31, 2008 and October 31, 2009 (the “Reporting Periods”) for professional services rendered by the Registrant’s principal accountant (the “Auditor”) for the audit of the Registrant’s annual financial statements, or services that are normally provided by the Auditor in connection with the statutory and regulatory filings or engagements for the Reporting Periods, were $146,300 in 2008 and $152,500 in 2009.

b) Audit-Related Fees. The aggregate fees billed in the Reporting Period for assurance and related services by the Auditor that are reasonably related to the performance of the Registrant’s financial statements were $0 in 2008 and $149 in 2009. These services consisted of procedures performed in connection with the Re-domiciliation of the various reviews of Prospectus supplements, and consent issuances related to the N-1A filings for the Legg Mason Partners Variable Equity Trust.

In addition, there were no Audit-Related Fees billed in the Reporting Period for assurance and related services by the Auditor to the Registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the Legg Mason Partners Variable Equity Trust (“service affiliates”), that were reasonably related to the performance of the annual audit of the service affiliates. Accordingly, there were no such fees that required pre-approval by the Audit Committee for the Reporting Periods (prior to July 6, 2003 services provided by the Auditor were not required to be pre-approved).

(c) Tax Fees. The aggregate fees billed in the Reporting Periods for professional services rendered by the Auditor for tax compliance, tax advice and tax planning (“Tax Services”) were $30,750 in 2008 and $18,500 in 2009. These services consisted of (i) review or preparation of U.S. federal, state, local and excise tax returns; (ii) U.S. federal, state and local tax planning, advice and assistance regarding statutory, regulatory or administrative developments, and (iii) tax advice regarding tax qualification matters and/or treatment of various financial instruments held or proposed to be acquired or held.

There were no fees billed for tax services by the Auditors to service affiliates during the Reporting Periods that required pre-approval by the Audit Committee.

d) All Other Fees. There were no other fees billed in the Reporting Periods for products and services provided by the Auditor, other than the services reported in paragraphs (a) through (c) of this Item for the Legg Mason Partners Variable Equity Trust.

All Other Fees. There were no other non-audit services rendered by the Auditor to Legg Mason Partners Fund Advisors, LLC (“LMPFA”), and any entity controlling, controlled by or under common control with LMPFA that provided ongoing services to Legg Mason Partners Variable Equity Trust requiring pre-approval by the Audit Committee in the Reporting Period.

(e) Audit Committee’s pre-approval policies and procedures described in paragraph (c)

(7) of Rule 2-01 of Regulation S-X.

(1) The Charter for the Audit Committee (the “Committee”) of the Board of each registered investment company (the “Fund”) advised by LMPFA or one of their affiliates (each, an “Adviser”) requires that the Committee shall approve (a) all audit and permissible non-audit services to be provided to the Fund and (b) all permissible non-audit services to be provided by the Fund’s independent auditors to the Adviser and any Covered Service Providers if the engagement relates directly to the operations and financial reporting of the Fund. The Committee may implement policies and procedures by which such services are approved other than by the full Committee.

The Committee shall not approve non-audit services that the Committee believes may impair the independence of the auditors. As of the date of the approval of this Audit Committee Charter, permissible non-audit services include any professional services (including tax services), that are not prohibited services as described below, provided to the Fund by the independent auditors, other than those provided to the Fund in connection with an audit or a review of the financial statements of the Fund. Permissible non-audit services may not include: (i) bookkeeping or other services related to the accounting records or financial statements of the Fund; (ii) financial information systems design and implementation; (iii) appraisal or valuation services, fairness opinions or contribution-in-kind reports; (iv) actuarial services; (v) internal audit outsourcing services; (vi) management functions or human resources; (vii) broker or dealer, investment adviser or investment banking services; (viii) legal services and expert services unrelated to the audit; and (ix) any other service the Public Company Accounting Oversight Board determines, by regulation, is impermissible.

Pre-approval by the Committee of any permissible non-audit services is not required so long as: (i) the aggregate amount of all such permissible non-audit services provided to the Fund, the Adviser and any service providers controlling, controlled by or under common control with the Adviser that provide ongoing services to the Fund (“Covered Service Providers”) constitutes not more than 5% of the total amount of revenues paid to the independent auditors during the fiscal year in which the permissible non-audit services are provided to (a) the Fund, (b) the Adviser and (c) any entity controlling, controlled by or under common control with the Adviser that provides ongoing services to the Fund during the fiscal year in which the services are provided that would have to be approved by the Committee; (ii) the permissible non-audit services were not recognized by the Fund at the time of the engagement to be non-audit services; and (iii) such services are promptly brought to the attention of the Committee and approved by the Committee (or its delegate(s)) prior to the completion of the audit.

(2) For the Legg Mason Partners Variable Equity Trust, the percentage of fees that were approved by the audit committee, with respect to: Audit-Related Fees were 100% and 100% for 2008 and 2009; Tax Fees were 100% and 100% for 2008 and 2009; and Other Fees were 100% and 100% for 2008 and 2009.

(f) N/A

(g) Non-audit fees billed by the Auditor for services rendered to Legg Mason Partners Variable Equity Trust, LMPFA and any entity controlling, controlled by, or under common control with LMPFA that provides ongoing services to Legg Mason Partners Variable Equity Trust during the reporting period were $0 in 2009.

(h) Yes. Legg Mason Partners Variable Equity Trust’s Audit Committee has considered whether the provision of non-audit services that were rendered to Service Affiliates, which were not pre-approved (not requiring pre-approval), is compatible with maintaining the Accountant’s independence. All services provided by the Auditor to the Legg Mason Partners Variable Equity Trust or to Service Affiliates, which were required to be pre-approved, were pre-approved as required.

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.

a) The independent board members are acting as the registrant’s audit committee as specified in Section 3(a)(58)(B) of the Exchange Act. The Audit Committee consists of the following Board members:

Paul R. Ades
Andrew L. Breech
Dwight B. Crane
Robert M. Frayn, Jr.
Frank G. Hubbard
Howard J. Johnson
David E. Maryatt
Jerome H. Miller
Ken Miller
John J. Murphy
Thomas F. Schlafly
Jerry A. Viscione

b) 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) Code of Ethics attached hereto.

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 Equity Trust

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

Date: December 29, 2009

     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 Equity Trust

Date: December 29, 2009

By:	/s/ Kaprel Ozsolak
	Kaprel Ozsolak
	Chief Financial Officer of Legg Mason Partners Variable Equity Trust

Date: December 29, 2009