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

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-21128

Legg Mason Partners Variable Equity Trust

(Exact name of registrant as specified in charter)

125 Broad Street, New York, NY	10004
(Address of principal executive offices)	(Zip code)

Robert I. Frenkel, Esq.

Legg Mason & Co., LLC

300 First Stamford Place, 4^th Floor

Stamford, CT 06902

(Name and address of agent for service)

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

Date of fiscal year end: October 31

Date of reporting period: April 30, 2007

ITEM 1. REPORT TO STOCKHOLDERS.

The Semi-Annual Report to Stockholders is filed herewith.

SEMI-ANNUAL

REPORT

APRIL 30, 2007

Legg Mason Partners Variable Dividend Strategy Portfolio

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

Legg Mason Partners Variable Dividend Strategy Portfolio

Semi-Annual Report Ÿ April 30, 2007

What’s

Inside

Portfolio Objective

The Portfolio seeks capital appreciation, principally through investments in dividend-paying stocks.

Letter from the Chairman	I
Fund at a Glance	1
Fund Expenses	2
Schedule of Investments	4
Statement of Assets and Liabilities	9
Statement of Operations	10
Statements of Changes in Net Assets	11
Financial Highlights	12
Notes to Financial Statements	13
Additional Shareholder Information	21

Letter from the Chairman

R. JAY GERKEN

Chairman, President and

Chief Executive Officer

Dear Shareholder,

The U.S. economy showed signs of weakening during the six-month reporting period. U.S. gross domestic product (“GDP”)ⁱ expanded 2.5% in the fourth quarter of 2006. Based on the preliminary estimate from the U.S. Commerce Department, GDP growth was a tepid 0.6% in the first quarter of 2007. While consumer spending remained fairly solid, ongoing troubles in the housing market continued to negatively impact the economy. In addition, corporate spending was mixed during the reporting period.

After increasing the federal funds rateⁱⁱ to 5.25% in June 2006—its 17th consecutive rate hike—the Federal Reserve Board (“Fed”)ⁱⁱⁱ held rates steady at its last seven meetings. In its statement accompanying the May 2007 meeting, the Fed stated, “Economic growth slowed in the first part of this year and the adjustment in the housing sector is ongoing. Nevertheless, the economy seems likely to expand at a moderate pace over coming quarters. Core inflation remains somewhat elevated. Although inflation pressures seem likely to moderate over time, the high level of resource utilization has the potential to sustain those pressures.”

Despite concerns regarding the economy and increased volatility in the financial markets, stock prices generally rose during the six-month reporting period. After treading water during the first half of 2006, stocks rallied through the end of the year. 2007 began on a positive note, as the S&P 500 Index^iv hit a six-year high in January. Stock prices rose on the back of optimism for continued solid corporate profits and hopes for a soft economic landing. The U.S. stock market’s ascent continued during much of February 2007, before a sharp decline at the end of the month. This was, in part, triggered by an 8.8% fall in China’s stock market on February 28th, its worst one-day performance in 10 years. The repercussions of this decline were widespread, as stock

Legg Mason Partners Variable Dividend Strategy Portfolio         I

markets around the world also declined. After a modest increase in March, U.S. stock prices rallied sharply in April, due to surprisingly strong first quarter corporate profits. All told, the S&P 500 Index returned 8.60% during the six months ended April 30, 2007.

Looking at the market more closely, mid-cap stocks outperformed their large- and small-cap counterparts, with the Russell Midcap^v, Russell 1000^vi, and Russell 2000^vii Indexes returning 12.24%, 9.10%, and 6.86%, respectively. From an investment style perspective, value stocks outperformed growth stocks, with the Russell 3000 Value^viii and Russell 3000 Growth^ix Indexes returning 9.48% and 8.34%, respectively.

Performance Update

For the six months ended April 30, 2007, Legg Mason Partners Variable Dividend Strategy Portfolio¹ returned 8.63%. These shares outperformed the Portfolio’s unmanaged benchmark, the S&P 500 Index, as well as the Portfolio’s Lipper Variable Large-Cap Core Funds Category Average², which both returned 8.60% for the same time period.

Performance Snapshot as of April 30, 2007 (unaudited)
	Six Months
Variable Dividend Strategy Portfolio1	8.63%
S&P 500 Index	8.60%
Lipper Variable Large-Cap Core Funds Category Average	8.60%
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. Performance figures reflect reimbursements and/or fee waivers, without which the performance would have been lower. 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
As of the Portfolio’s most current prospectus dated April 30, 2007, the gross total operating expenses for the Portfolio was 0.88%.

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 initial sales charges and 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. is a major independent mutual-fund tracking organization. Returns are based on the six-month period ended April 30, 2007, including the reinvestment of all distributions, including returns of capital, if any, calculated among the 214 funds in the Portfolio’s Lipper category.

II         Legg Mason Partners Variable Dividend Strategy Portfolio

Special Shareholder Notices

With a goal of moving the mutual funds formerly advised by Citigroup Asset Management (“CAM”) to a more cohesive and rational operating platform, Legg Mason, Inc. recommended a number of governance- and investment-related proposals to streamline and restructure the funds. The Boards of Directors/Trustees of the affected funds have carefully considered and approved these proposals and, where required, have obtained shareholder approval. As such, the following changes became effective during the month of April 2007:

• Funds Redomiciled and Single Form of Organization Adopted: The legacy CAM funds have been redomiciled to a single jurisdiction and a single form of corporate structure has been introduced. Equity funds have been grouped for organizational and governance purposes with other funds in the fund complex that are predominantly equity funds, and fixed-income funds have been grouped with other funds that are predominantly fixed-income funds. Additionally, the funds have adopted a single form of organization as a Maryland business trust, with all funds operating under uniform charter documents.

• New Boards Elected: New Boards have been elected for the legacy CAM funds. The 10 Boards previously overseeing the funds have been realigned and consolidated into 2 Boards, with the remaining Boards each overseeing a distinct asset class or product type: equity or fixed income.

• Revised Fundamental Investment Policies Instituted: A uniform set of fundamental investment policies has been instituted for most funds, to the extent appropriate. Please note, however, that each fund will continue to be managed in accordance with its prospectus and statement of additional information, as well as any policies or guidelines that may have been established by the fund’s Board or investment manager.

Legg Mason Partners Variable Dividend Strategy Portfolio         III

Information About Your Portfolio

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

Important information concerning the Portfolio and its Manager with regard to recent regulatory developments that may affect the Portfolio is contained in the Notes to Financial Statements included in this report.

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

Sincerely,

R. Jay Gerken, CFA

Chairman, President and Chief Executive Officer

June 4, 2007

IV         Legg Mason Partners Variable Dividend Strategy Portfolio

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

RISKS: The Portfolio may invest in foreign securities that may be subject to certain risks not associated with domestic investing, such as currency fluctuations, and changes in political and economic conditions. The Portfolio may engage in active and frequent trading, resulting in increased transaction costs, which could detract from the Portfolio’s performance. The Portfolio may use derivatives, such as options and futures, which can be illiquid, may disproportionately increase losses and have a potentially large impact on Portfolio performance. Please see the Portfolio’s prospectus for more information on these and other risks.

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

ⁱ Gross Domestic Product (“GDP”) is the market value of all final goods and services produced within a country in a given period of time.

ⁱⁱ The federal funds rate is the interest rate that banks with excess reserves at a Federal Reserve district bank charge other banks that need overnight loans.

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 The S&P 500 Index is an unmanaged index of 500 stocks that is generally representative of the performance of larger companies in the U.S.

^v The Russell Midcap Index measures the performance of the 800 smallest companies in the Russell 1000 Index, which represents approximately 25% of the total market capitalization of the Russell 1000 Index.

^vi The Russell 1000 Index measures the performance of the 1,000 largest companies in the Russell 3000 Index, which represents approximately 92% of the total market capitalization of the Russell 3000 Index.

^vii The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 8% of the total market capitalization of the Russell 3000 Index.

^viii The Russell 3000 Value Index measures the performance of those Russell 3000 Index companies with lower price-to-book ratios and lower forecasted growth values. (A price-to-book ratio is the price of a stock compared to the difference between a company’s assets and liabilities.)

^ix The Russell 3000 Growth Index measures the performance of those Russell 3000 Index companies with higher price-to-book ratios and higher forecasted growth values.

Legg Mason Partners Variable Dividend Strategy Portfolio         V

Fund at a Glance (unaudited)

Legg Mason Partners Variable Dividend Strategy Portfolio 2007 Semi-Annual Report         1

Fund Expenses (unaudited)

Example

As a shareholder of the Fund, you may incur two types of costs: (1) transaction costs and (2) ongoing costs, including management fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund 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 November 1, 2006 and held for the six months ended April 30, 2007.

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 Return⁽¹⁾

Actual Total Return(2)		Beginning Account Value	Ending Account Value	Annualized Expense Ratio(3)		Expenses Paid During the Period(4)
8.63	%	$1,000.00	$1,086.30	0.93	%	$4.81

⁽¹⁾ For the six months ended April 30, 2007.

⁽²⁾ Assumes reinvestment of all distributions, including returns of capital, if any, at net asset value. Total return is not annualized, as it may not be representative of the total return for the year. Total returns do not reflect expenses associated with the separate account such as administrative fees, account charges and surrender charges, which, if reflected, would reduce the total returns. Performance figures may reflect fee waivers and/or expense reimbursements. In the absence of fee waivers, the total return would have been lower. Past performance is no guarantee of future results.

⁽³⁾ The expense ratios do not include the non-recurring restructuring and/or reorganization fees.

⁽⁴⁾ Expenses (net of fee waivers and/or expense reimbursements) are equal to the Fund’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.

2         Legg Mason Partners Variable Dividend Strategy Portfolio 2007 Semi-Annual Report

Fund Expenses (unaudited) (continued)

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 Fund’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 Fund and other funds. To do so, compare the 5.00% hypothetical example relating to the Fund 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, such as front-end or back-end sales charges (loads). Therefore, this 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 Return⁽¹⁾

Hypothetical Annualized Total Return		Beginning Account Value	Ending Account Value	Annualized Expense Ratio(2)		Expenses Paid During the Period(3)
5.00	%	$1,000.00	$1,020.18	0.93	%	$4.66

⁽¹⁾ For the six months ended April 30, 2007.

⁽²⁾ The expense ratios do not include the non-recurring restructuring and/or reorganization fees.

⁽³⁾ Expenses (net of fee waivers and/or expense reimbursements) are equal to the Fund’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 Partners Variable Dividend Strategy Portfolio 2007 Semi-Annual Report         3

Schedule of Investments (April 30, 2007) (unaudited)

LEGG MASON PARTNERS VARIABLE DIVIDEND STRATEGY PORTFOLIO

Shares	Security	Value
COMMON STOCKS — 96.6%
CONSUMER DISCRETIONARY — 5.7%
Hotels, Restaurants & Leisure — 1.2%
19,721	McDonald’s Corp.	$	952,130
Media — 2.9%
7,150	Cinemark Holdings Inc. *		135,135
15,200	News Corp., Class B Shares		364,800
69,300	Pearson PLC		1,185,068
12,870	Regal Entertainment Group, Class A Shares		279,922
19,900	Time Warner Inc.		410,537
	Total Media		2,375,462
Specialty Retail — 1.6%
45,300	Gap, Inc.		813,135
12,799	Home Depot Inc.		484,698
	Total Specialty Retail		1,297,833
	TOTAL CONSUMER DISCRETIONARY		4,625,425
CONSUMER STAPLES — 12.0%
Beverages — 1.6%
11,400	Coca-Cola Co.		594,966
9,997	PepsiCo Inc.		660,702
	Total Beverages		1,255,668
Food & Staples Retailing — 2.2%
37,800	Wal-Mart Stores Inc.		1,811,376
Food Products — 4.8%
10,600	Cadbury Schweppes PLC, ADR		562,330
11,250	Campbell Soup Co.		439,875
8,600	General Mills Inc.		515,140
5,800	H.J. Heinz Co.		273,238
25,129	Kraft Foods Inc., Class A Shares		841,067
39,361	Unilever PLC, ADR		1,232,393
	Total Food Products		3,864,043
Household Products — 3.4%
27,906	Kimberly-Clark Corp.		1,986,070
11,400	Procter & Gamble Co.		733,134
	Total Household Products		2,719,204
	TOTAL CONSUMER STAPLES		9,650,291
ENERGY — 7.7%
Oil, Gas & Consumable Fuels — 7.7%
7,200	BP PLC, ADR		484,704
27,946	Chevron Corp.		2,173,919

See Notes to Financial Statements.

4         Legg Mason Partners Variable Dividend Strategy Portfolio 2007 Semi-Annual Report

Schedule of Investments (April 30, 2007) (unaudited) (continued)

Shares	Security	Value
Oil, Gas & Consumable Fuels — 7.7% (continued)
42,842	Exxon Mobil Corp.	$	3,400,798
6,708	Spectra Energy Corp.		175,079
	TOTAL ENERGY		6,234,500
EXCHANGE TRADED FUND — 0.5%
11,400	Health Care Select Sector SPDR Fund		411,654
FINANCIALS — 16.2%
Capital Markets — 2.8%
5,800	Bank of New York Co. Inc.		234,784
11,400	Merrill Lynch & Co. Inc.		1,028,622
1,180	Nuveen Investments, Inc. Class A Shares		62,894
14,526	UBS AG, Registered Shares		942,738
	Total Capital Markets		2,269,038
Commercial Banks — 2.9%
10,400	Wachovia Corp.		577,616
49,146	Wells Fargo & Co.		1,763,850
	Total Commercial Banks		2,341,466
Consumer Finance — 0.7%
8,500	American Express Co.		515,695
Diversified Financial Services — 5.4%
37,678	Bank of America Corp.		1,917,810
47,141	JPMorgan Chase & Co.		2,456,046
	Total Diversified Financial Services		4,373,856
Insurance — 3.7%
7,300	American International Group Inc.		510,343
25,842	Chubb Corp.		1,391,075
200	Hartford Financial Services Group Inc.		20,240
17,300	Marsh & McLennan Cos. Inc.		549,448
9,200	Travelers Cos. Inc.		497,720
	Total Insurance		2,968,826
Real Estate Investment Trusts (REITs) — 0.5%
25,000	Annaly Mortgage Management Inc.		397,750
Thrifts & Mortgage Finance — 0.2%
14,300	Hudson City Bancorp Inc.		190,476
	TOTAL FINANCIALS		13,057,107
HEALTH CARE — 13.0%
Health Care Equipment & Supplies — 0.9%
13,392	Baxter International Inc.		758,389
Pharmaceuticals — 12.1%
36,756	Abbott Laboratories		2,081,125
11,175	Eli Lilly & Co.		660,778

See Notes to Financial Statements.

Legg Mason Partners Variable Dividend Strategy Portfolio 2007 Semi-Annual Report         5

Schedule of Investments (April 30, 2007) (unaudited) (continued)

Shares	Security	Value
Pharmaceuticals — 12.1% (continued)
20,494	GlaxoSmithKline PLC, ADR	$	1,184,143
33,450	Johnson & Johnson		2,148,159
10,000	Novartis AG, ADR		580,900
51,857	Pfizer Inc.		1,372,136
30,305	Wyeth		1,681,928
	Total Pharmaceuticals		9,709,169
	TOTAL HEALTH CARE		10,467,558
INDUSTRIALS — 18.0%
Aerospace & Defense — 5.6%
47,882	Honeywell International Inc.		2,594,247
12,800	Raytheon Co.		685,312
18,600	United Technologies Corp.		1,248,618
	Total Aerospace & Defense		4,528,177
Air Freight & Logistics — 0.5%
5,700	United Parcel Service Inc., Class B Shares		401,451
Building Products — 0.3%
8,400	Masco Corp.		228,564
Commercial Services & Supplies — 2.7%
12,750	Pitney Bowes Inc.		612,000
15,700	R.R. Donnelley & Sons Co.		631,140
24,200	Waste Management Inc.		905,322
	Total Commercial Services & Supplies		2,148,462
Electrical Equipment — 3.5%
5,800	Cooper Industries Ltd., Class A Shares		288,608
41,420	Emerson Electric Co.		1,946,326
10,900	Hubbell Inc., Class B Shares		563,421
	Total Electrical Equipment		2,798,355
Industrial Conglomerates — 5.4%
10,000	3M Co.		827,700
81,225	General Electric Co.		2,993,953
17,100	Tyco International Ltd.		557,973
	Total Industrial Conglomerates		4,379,626
	TOTAL INDUSTRIALS		14,484,635
INFORMATION TECHNOLOGY — 8.1%
Computers & Peripherals — 1.6%
12,830	International Business Machines Corp.		1,311,354
IT Services — 1.0%
18,500	Automatic Data Processing Inc.		828,060
Semiconductors & Semiconductor Equipment — 2.9%
14,200	Intel Corp.		305,300
29,200	Linear Technology Corp.		1,092,664

See Notes to Financial Statements.

6         Legg Mason Partners Variable Dividend Strategy Portfolio 2007 Semi-Annual Report

Schedule of Investments (April 30, 2007) (unaudited) (continued)

Shares	Security	Value
Semiconductors & Semiconductor Equipment — 2.9% (continued)
90,800	Taiwan Semiconductor Manufacturing Co., Ltd., ADR	$	957,032
	Total Semiconductors & Semiconductor Equipment		2,354,996
Software — 2.6%
68,321	Microsoft Corp.		2,045,531
	TOTAL INFORMATION TECHNOLOGY		6,539,941
MATERIALS — 8.4%
Chemicals — 5.1%
23,155	Dow Chemical Co.		1,032,945
47,900	E.I. du Pont de Nemours & Co.		2,355,243
9,280	PPG Industries Inc.		682,822
	Total Chemicals		4,071,010
Metals & Mining — 1.5%
32,944	Alcoa Inc.		1,169,183
Paper & Forest Products — 1.8%
18,688	Weyerhaeuser Co.		1,480,463
	TOTAL MATERIALS		6,720,656
TELECOMMUNICATION SERVICES — 5.1%
Diversified Telecommunication Services — 3.5%
12,000	AT&T Inc.		464,640
11,400	Embarq Corp.		684,456
44,419	Verizon Communications Inc.		1,695,917
	Total Diversified Telecommunication Services		2,845,013
Wireless Telecommunication Services — 1.6%
44,187	Vodafone Group PLC, ADR		1,269,493
	TOTAL TELECOMMUNICATION SERVICES		4,114,506
UTILITIES — 1.9%
Electric Utilities — 1.4%
13,416	Duke Energy Corp.		275,296
12,800	FPL Group Inc.		823,936
	Total Electric Utilities		1,099,232
Multi-Utilities — 0.5%
17,200	NiSource Inc.		422,948
	TOTAL UTILITIES		1,522,180
	TOTAL INVESTMENTS BEFORE SHORT-TERM INVESTMENT (Cost — $61,218,171)		77,828,453

See Notes to Financial Statements.

Legg Mason Partners Variable Dividend Strategy Portfolio 2007 Semi-Annual Report         7

Schedule of Investments (April 30, 2007) (unaudited) (continued)

Face Amount		Security	Value
	SHORT-TERM INVESTMENT — 3.6%
	Repurchase Agreement — 3.6%
$	2,874,000	Interest in $372,329,000 joint tri-party repurchase agreement dated 4/30/07 with Greenwich Capital Markets Inc., 5.230% due 5/1/07; Proceeds at maturity — $2,874,418; (Fully collateralized by various U.S. government agency obligation, 3.555% to 7.089% due 7/1/12 to 11/1/46; Market value — $2,931,500) (Cost — $2,874,000)	$	2,874,000
		TOTAL INVESTMENTS — 100.2% (Cost — $64,092,171#)		80,702,453
		Liabilities in Excess of Other Assets — (0.2)%		(143,354	)
		TOTAL NET ASSETS — 100.0%	$	80,559,099

* Non-income producing security.

# Aggregate cost for federal income tax purposes is substantially the same.

Abbreviations used in this schedule:
ADR	—American Depositary Receipt
SPDR	—Standard & Poor’s Depositary Receipts

See Notes to Financial Statements.

8         Legg Mason Partners Variable Dividend Strategy Portfolio 2007 Semi-Annual Report

Statement of Assets and Liabilities (April 30, 2007) (unaudited)

ASSETS:
Investments, at value (Cost — $64,092,171)	$	80,702,453
Cash		1,806
Dividends and interest receivable		109,988
Prepaid expenses		219
Total Assets		80,814,466
LIABILITIES:
Payable for Fund shares repurchased		60,326
Investment management fee payable		42,276
Payable for securities purchased		24,732
Trustees’ fees payable		13,636
Trustees’ retirement plan		2,204
Accrued expenses		112,193
Total Liabilities		255,367
Total Net Assets	$	80,559,099
NET ASSETS:
Par value (Note 4)	$	76
Paid-in capital in excess of par value		86,831,813
Undistributed net investment income		303,745
Accumulated net realized loss on investments		(23,187,137	)
Net unrealized appreciation on investments and foreign currencies		16,610,602
Total Net Assets	$	80,559,099
Shares Outstanding		7,597,666
Net Asset Value		$10.60

See Notes to Financial Statements.

Legg Mason Partners Variable Dividend Strategy Portfolio 2007 Semi-Annual Report         9

Statement of Operations (For the six months ended April 30, 2007) (unaudited)

INVESTMENT INCOME:
Dividends	$	1,000,117
Interest		156,412
Less: Foreign taxes withheld		(5,623	)
Total Investment Income		1,150,906
EXPENSES:
Investment management fee (Note 2)		251,724
Legal fees		61,752
Trustees’ fees (Note 9)		18,039
Shareholder reports		15,871
Audit and tax		15,628
Custody fees		13,586
Restructuring and reorganization fees (Note 9)		6,858
Insurance		748
Transfer agent fees		35
Miscellaneous expenses		5,448
Total Expenses		389,689
Less: Fee waivers and/or expense reimbursements (Notes 2 and 9)		(22,142	)
Net Expenses		367,547
Net Investment Income		783,359
REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS (NOTES 1 AND 3):
Net Realized Gain on Investment Transactions		910,801
Change in Net Unrealized Appreciation From:
Investments		4,866,139
Foreign currencies		320
Change in Net Unrealized Appreciation/Depreciation		4,866,459
Net Gain on Investments and Foreign Currency Transactions		5,777,260
Increase in Net Assets From Operations	$	6,560,619

See Notes to Financial Statements.

10         Legg Mason Partners Variable Dividend Strategy Portfolio 2007 Semi-Annual Report

Statements of Changes in Net Assets

For the six months ended April 30, 2007 (unaudited) and the year ended October 31, 2006
	2007			2006
OPERATIONS:
Net investment income	$	783,359		$	1,571,003
Net realized gain		910,801			1,933,121
Change in net unrealized appreciation/depreciation		4,866,459			8,271,356
Increase in Net Assets From Operations		6,560,619			11,775,480
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTE 1):
Net investment income		(1,600,005	)		(1,500,001	)
Decrease in Net Assets From Distributions to Shareholders		(1,600,005	)		(1,500,001	)
FUND SHARE TRANSACTIONS (NOTE 4):
Net proceeds from sale of shares		3,759,462			3,603,419
Reinvestment of distributions		1,600,005			1,500,001
Cost of shares repurchased		(6,529,245	)		(14,476,987	)
Decrease in Net Assets From Fund Share Transactions		(1,169,778	)		(9,373,567	)
Increase in Net Assets		3,790,836			901,912
NET ASSETS:
Beginning of period		76,768,263			75,866,351
End of period*	$	80,559,099		$	76,768,263
* Includes undistributed net investment income of:		$303,745			$1,120,391

See Notes to Financial Statements.

Legg Mason Partners Variable Dividend Strategy Portfolio 2007 Semi-Annual Report         11

Financial Highlights

For a share of beneficial interest outstanding throughout each year ended October 31, unless otherwise noted:

	2007(1)			2006			2005			2004			2003			2002
Net Asset Value, Beginning of Period	$	9.96		$	8.69		$	8.58		$	8.33		$	7.24		$	8.96
Income (Loss) From Operations:
Net investment income		0.10			0.19			0.18			0.03			0.03			0.02
Net realized and unrealized gain (loss)		0.75			1.25			0.01			0.25			1.09			(1.72	)
Total Income (Loss) From Operations		0.85			1.44			0.19			0.28			1.12			(1.70	)
Less Distributions From:
Net investment income		(0.21	)		(0.17	)		(0.08	)		(0.03	)		(0.03	)		(0.02	)
Total Distributions		(0.21	)		(0.17	)		(0.08	)		(0.03	)		(0.03	)		(0.02	)
Net Asset Value, End of Period	$	10.60		$	9.96		$	8.69		$	8.58		$	8.33		$	7.24
Total Return(2)		8.63	%		16.89	%		2.23	%		3.41	%		15.47	%		(18.94	)%
Net Assets, End of Period (000s)		$80,559			$76,768			$75,866			$77,836			$73,717			$61,139
Ratios to Average Net Assets:
Gross expenses		1.01	%(3)(4)		0.90	%		0.86	%		0.88	%		0.91	%		0.93	%
Net expenses(5)		0.95	(3)(4)(6)		0.89	(6)		0.86			0.88	(6)		0.91			0.93
Net investment income		2.02	(3)		2.08			2.07			0.37			0.47			0.24
Portfolio Turnover Rate		7	%		22	%		99	%		42	%		77	%		45	%

⁽¹⁾ For the six months ended April 30, 2007 (unaudited).

⁽²⁾ Performance figures may reflect fee waivers and/or expense reimbursements. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower. Total returns do not reflect expenses associated with the separate accounts such as administrative fees, account charges and surrender charges which, if reflected, would reduce the total return for all periods shown. Past performance is no guarantee of future results. Total returns for periods of less than one year are not annualized.

⁽³⁾ Annualized.

⁽⁴⁾ Included in the expense ratios are certain non-recurring restructuring (and reorganization, if applicable) fees that were incurred by the Fund during the period. Without these fees the gross and net expense ratios would have been 0.98% and 0.93%, respectively (Note 9).

⁽⁵⁾ As a result of a voluntary expense limitation, the ratio of expenses other than interest, brokerage, taxes and extraordinary expenses, to average net assets, will not exceed 0.95%.

⁽⁶⁾ Reflects fee waivers and/or expense reimbursements.

See Notes to Financial Statements.

12         Legg Mason Partners Variable Dividend Strategy Portfolio 2007 Semi-Annual Report

Notes to Financial Statements (unaudited)

1. Organization and Significant Accounting Policies

Legg Mason Partners Variable Dividend Strategy Portfolio (the “Fund”) is a separate diversified 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. Prior to April 27, 2007, the Fund was a separate diversified investment fund of Legg Mason Partners Investment Series, a Massachusetts business trust, registered under the 1940 Act.

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

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

(a) Investment Valuation. Equity securities for which market quotations are available are valued at the last sale price or official closing price on the primary market or exchange on which they trade. Debt securities are valued at the mean between the 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 Fund calculates its net asset value, the Fund may value these investments at fair value as determined in accordance with the procedures approved by the Fund’s Board of Trustees. Short-term obligations with maturities of 60 days or less are valued at amortized cost, which approximates market value.

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

(c) 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 Fund 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 Fund’s policy is to generally halt any additional interest income accruals and consider the realizability of interest accrued up to the date of default.

Legg Mason Partners Variable Dividend Strategy Portfolio 2007 Semi-Annual Report         13

Notes to Financial Statements (unaudited) (continued)

(d) 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 on 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 Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments.

Net realized foreign exchange gains or losses arise from sales of foreign currencies, including gains and losses on forward foreign currency contracts, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities, at the date of valuation, resulting from changes in exchange rates.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

(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 Fund are recorded on the ex-dividend date and are determined in accordance with income tax regulations, which may differ from GAAP.

(f) Federal and Other Taxes. It is the Fund’s policy to comply with the federal income and excise tax requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies. Accordingly, the Fund intends to distribute substantially all of its income and net realized gains on investments, if any, to shareholders each year. Therefore, no federal income tax provision is required in the Fund’s financial statements. 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.

2. Investment Management Agreement and Other Transactions with Affiliates

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

14         Legg Mason Partners Variable Dividend Strategy Portfolio 2007 Semi-Annual Report

Notes to Financial Statements (unaudited) (continued)

Under the investment management agreement, the Fund pays an investment management fee calculated daily and paid monthly, at an annual rate of the Fund’s average daily net assets in accordance with the following breakpoint schedule:

Average Daily Net Assets	Annual Rate
First $1 billion	0.650	%
Next $1 billion	0.600
Next $1 billion	0.550
Next $1 billion	0.500
Over $4 billion	0.450

LMPFA provides administrative and certain oversight services to the Fund. LMPFA has delegated to the subadviser the day-to-day portfolio management of the Fund, except for the management of cash and short-term investments. For its services, LMPFA pays ClearBridge 70% of the net management fee it receives from the Fund.

During the six months ended April 30, 2007, the Fund had a voluntary expense limitation in place of 0.95%.

During the six months ended April 30, 2007, the Fund waived a portion of its investment management fee in the amount of $20,252. In addition, for the six months ended April 30, 2007, the Fund was reimbursed for expenses amounting to $1,890.

Citigroup Global Markets Inc. (“CGM”) and Legg Mason Investor Services, LLC (“LMIS”) serve as co-distributors of the Fund. LMIS is a wholly-owned broker-dealer subsidiary of Legg Mason.

On July 10, 2006, a retirement plan applicable to the Fund was amended by the Board then overseeing the Fund (the “Previous Board”) to provide for the payment of certain benefits (in lieu of any other retirement payments under any previous plans) to Trustees who had not elected to retire as of April 2007. Trustees electing to receive benefits under the amended plan waived all rights to receive payments to which they were previously entitled under the plan. Each fund overseen by the Previous Board (including the Fund) paid its pro rata share (based upon asset size) of such benefits to the Trustees comprising the Previous Board. Legg Mason or its affiliates agreed to reimburse the funds an amount equal to 50% of these benefits. The Fund’s allocable share of benefits under this amendment was $2,204. Generally, benefits under the retirement plan are paid in quarterly installments unless the Trustee elected to receive them in a lump sum at net present value. Two former Trustees are currently receiving payments under the retirement plan.

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

Legg Mason Partners Variable Dividend Strategy Portfolio 2007 Semi-Annual Report         15

Notes to Financial Statements (unaudited) (continued)

3. Investments

During the six months ended April 30, 2007, the aggregate cost of purchases and proceeds from sales of investments (excluding short-term investments) were as follows:

	Investments
Purchases	$	6,155,499
Sales		4,870,587

At April 30, 2007, the aggregate gross unrealized appreciation and depreciation of investments for federal income tax purposes were substantially as follows:

Gross unrealized appreciation	$	16,939,882
Gross unrealized depreciation		(329,600	)
Net unrealized appreciation	$	16,610,282

4. Shares of Beneficial Interest

At April 30, 2007, the Trust had an unlimited number of shares of beneficial interest authorized with a par value of $0.00001 per share. Each share of a Fund represents an identical interest and has the same rights.

Transactions in shares of the Fund were as follows:

	Six Months Ended April 30, 2007		Year Ended October 31, 2006
Shares sold	371,132		389,733
Shares issued on reinvestment	158,574		171,428
Shares repurchased	(643,482	)	(1,581,717	)
Net Decrease	(113,776	)	(1,020,556	)

5. Capital Loss Carryforward

On October 31, 2006, the Fund had a net capital loss carryforward of approximately $23,665,914, of which $1,360,004 expires in 2009, $15,846,502 expires in 2010, and $6,459,408 expires in 2011. These amounts will be available to offset any future taxable capital gains. However, Legg Mason Partners Variable Dividend Strategy Portfolio is subject to annual limitation of $3,423,032. The losses are subject to this limitation because they were derived from a Fund ownership change.

6. 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”), the manager to the Fund at the time, and CGM, relating to the appointment of an affiliated transfer agent for the Smith Barney family of mutual funds, including the Fund (the “Funds”).

16         Legg Mason Partners Variable Dividend Strategy Portfolio 2007 Semi-Annual Report

Notes to Financial Statements (unaudited) (continued)

The SEC order finds that SBFM and CGM willfully violated Section 206(1) of the Investment Advisers Act of 1940, as amended, and the rules promulgated thereunder (the “Advisers Act”). Specifically, the order finds that SBFM and CGM knowingly or recklessly failed to disclose to the boards of the Funds in 1999 when proposing a new transfer agent arrangement with an affiliated transfer agent that: First Data Investors Services Group (“First Data”), the Funds’ then-existing transfer agent, had offered to continue as transfer agent and do the same work for substantially less money than before; and that Citigroup Asset Management (“CAM”), the Citigroup business unit that, at the time, included the 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 finds that SBFM and CGM willfully violated Section 206(2) of the Advisers Act by virtue of the omissions discussed above and other misrepresentations and omissions in the materials provided to the Funds’ boards, including the failure to make clear that the affiliated transfer agent would earn a high profit for performing limited functions while First Data continued to perform almost all of the transfer agent functions, and the suggestion that the proposed arrangement was in the Funds’ best interests and that no viable alternatives existed.

SBFM and CGM do not admit or deny any wrongdoing or liability. The settlement does not establish wrongdoing or liability for purposes of any other proceeding. The SEC censured SBFM and CGM and ordered them to cease and desist from violations of Sections 206(1) and 206(2) of the Advisers Act. The order 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 Funds, primarily through fee waivers. The remaining $183.7 million, including the penalty, has been paid to the U.S. Treasury and will be distributed pursuant to a plan submitted for the approval of the SEC. At this time, there is no certainty as to how the above-described proceeds of the settlement will be distributed, to whom such distributions will be made, the methodology by which such distributions will be allocated, and when such distributions will be made. The order also required that transfer agency fees received from the Funds since December 1, 2004, less certain expenses, be placed in escrow and provided that a portion of such fees might be subsequently distributed in accordance with the terms of the order. On April 3, 2006, an aggregate amount of approximately $9 million held in escrow was distributed to the Funds.

The order required SBFM to recommend a new transfer agent contract to the 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 Funds’ Boards selected a new transfer agent for the 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

Legg Mason Partners Variable Dividend Strategy Portfolio 2007 Semi-Annual Report         17

Notes to Financial Statements (unaudited) (continued)

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

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

7. Legal Matters

Beginning in August 2005, five class action lawsuits alleging violations of federal securities laws and state law were filed against CGM and SBFM, (collectively, the “Defendants”) based on the May 31, 2005 settlement order issued against the Defendants by the SEC as described in Note 6. The complaints seek injunctive relief and compensatory and punitive damages, removal of SBFM as the investment manager for the Smith Barney family of funds, rescission of the Funds’ management and other contracts with SBFM, recovery of all fees paid to SBFM pursuant to such contracts, and an award of attorneys’ fees and litigation expenses.

On October 5, 2005, a motion to consolidate the five actions and any subsequently-filed, related action was filed. That motion contemplates that a consolidated amended complaint alleging substantially similar causes of action will be filed in the future.

As of the date of this report, the Fund’s manager believes that resolution of the pending lawsuit will not have a material effect on the financial position or results of operations of the Fund or the ability of the Fund’s manager and its affiliates to continue to render services to the Fund under their respective contracts.

*     *     *

Beginning in June 2004, class action lawsuits alleging violations of the federal securities laws were filed against CGM and a number of its 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, 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 Defend - -

18         Legg Mason Partners Variable Dividend Strategy Portfolio 2007 Semi-Annual Report

Notes to Financial Statements (unaudited) (continued)

ants 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 (including the Fund) 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, SBFM and CGM 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.

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

8. Other Matters

On September 16, 2005, the staff of the SEC informed SBFM and SBAM that the staff is considering recommending that the SEC institute administrative proceedings against SBFM and SBAM for alleged violations of Section 19(a) and 34(b) of the 1940 Act (and related Rule 19a-1). The notification is a result of an industry wide inspection by the SEC and is based upon alleged deficiencies in disclosures regarding dividends and distributions paid to shareholders of certain funds. Section 19(a) and related Rule 19a-1 of the 1940 Act generally require funds that are making dividend and distribution payments to provide shareholders with a written statement disclosing the source of the dividends and distributions, and, in particular, the portion of the payments made from each of net investment income, undistributed net profits and/or paid-in capital. In connection with the contemplated proceedings, the staff may seek a cease and desist order and/or monetary damages from SBFM or SBAM.

Although there can be no assurance, the Fund’s manager believes that this matter is not likely to have a material adverse effect on the Fund.

9. Special Shareholder Meeting and Reorganization

Shareholders of the Fund approved a number of initiatives designed to streamline and restructure the fund complex. These matters generally are expected to be implemented in 2007. As noted in the proxy materials, Legg Mason will pay for a portion of the costs related to these initiatives. The portions of the costs that are borne by the Fund will be recognized in the period during which the expense is incurred. Such expenses relate to

Legg Mason Partners Variable Dividend Strategy Portfolio 2007 Semi-Annual Report         19

Notes to Financial Statements (unaudited) (continued)

obtaining shareholder votes for proposals presented in the proxy, the election of board members, retirement of board members, as well as printing, mailing, and soliciting proxies. The portions of these costs borne by the Fund and reflected in the Statement of Operations are deemed extraordinary and, therefore, not subject to expense limitation agreements, if applicable. See also “Additional Shareholder Information” at the end of this report.

10. Recent Accounting Pronouncement

During June 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation 48 (“FIN 48” or the “Interpretation”), Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement 109. FIN 48 supplements FASB Statement 109, Accounting for Income Taxes, by defining the confidence level that a tax position must meet in order to be recognized in the financial statements. FIN 48 prescribes a comprehensive model for how a fund should recognize, measure, present, and disclose in its financial statements uncertain tax positions that the fund has taken or expects to take on a tax return. FIN 48 requires that the tax effects of a position be recognized only if it is “more likely than not” to be sustained based solely on its technical merits. Management must be able to conclude that the tax law, regulations, case law, and other objective information regarding the technical merits sufficiently support the position’s sustainability with a likelihood of more than 50 percent. FIN 48 is effective for fiscal periods beginning after December 15, 2006, which for this Fund will be November 1, 2007. At adoption, the financial statements must be adjusted to reflect only those tax positions that are more likely than not to be sustained as of the adoption date. Management of the Fund has determined that adopting FIN 48 will not have a material impact on the Fund’s financial statements.

*    *    *

On September 20, 2006, FASB released Statement of Financial Accounting Standards No. 157 Fair Value Measurements (“FAS 157”). FAS 157 establishes an authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair value measurements. The application of FAS 157 is required for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. At this time, management is evaluating the implications of FAS 157 and its impact on the financial statements has not yet been determined.

20         Legg Mason Partners Variable Dividend Strategy Portfolio 2007 Semi-Annual Report

Additional Shareholder Information (unaudited)

Results of Special Meetings of Shareholders

On December 11, 2006, a Special Meeting of Shareholders was held to vote on various proposals recently approved by the Fund's Trustees. The following table provides the number of votes cast for, against or withheld, as well as the number of abstentions as to the following proposal:

Revise Fundamental Investment Policies

Items Voted On	Votes For	Votes Against	Abstentions	Broker Non-Votes
Borrowing Money	7,472,149.894	228,092.559	103,700.015	0.000
Underwriting	7,507,181.905	181,827.091	114,933.472	0.000
Lending	7,459,229.408	231,353.274	113,359.786	0.000
Issuing Senior Securities	7,489,542.860	194,830.692	119,568.916	0.000
Real Estate	7,506,260.249	179,987.070	117,695.149	0.000
Commodities	7,476,840.029	218,766.980	108,335.459	0.000
Concentration	7,456,929.468	224,892.410	122,120.590	0.000

Legg Mason Partners Variable Dividend Strategy Portfolio         21

Legg Mason Partners

Variable Dividend

Strategy 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 ClearBridge Advisors, LLC   DISTRIBUTORS Citigroup Global Markets Inc. Legg Mason Investors
    Services, LLC   CUSTODIAN State Street Bank and Trust Company   TRANSFER AGENT PFPC Inc. 4400 Computer Drive Westborough, Massachusetts 01581   INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM KPMG LLP 345 Park Avenue New York, New York 10154

Legg Mason Partners Variable Dividend Strategy Portfolio

The Fund is a separate investment fund of the Legg Mason Partners Variable Equity Trust, a Maryland business trust.

LEGG MASON PARTNERS VARIABLE DIVIDEND STRATEGY PORTFOLIO

Legg Mason Partners Funds

125 Broad Street

10th Floor, MF-2

New York, New York 10004

The Fund files its complete schedules of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the SEC’s website at www.sec.gov. The Fund’s Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington D.C., and information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. To obtain information on Form N-Q from the Fund, shareholders can call Legg Mason Partners Shareholder Services at 1-800-451-2010.

Information on how the Fund voted proxies relating to portfolio securities during the prior 12-month period ended June 30th of each year and a description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio transactions is available (1) without charge, upon request, by calling 1-800-451-2010, (2) on the Fund’s website at www.leggmason.com/InvestorServices.com and (3) on the SEC’s website at www.sec.gov.

This report is submitted for general information of the shareholders of the Legg Mason Partners Variable Dividend Strategy Portfolio.

This report must be preceded or accompanied by a free prospectus. Investors should consider the Fund’s investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other important information about the Fund. Please read the prospectus carefully before investing.

www.leggmason.com/InvestorServices

©2007 Legg Mason Investor Services, LLC

Member NASD, SIPC

FD04233 6/07 SR07-348

ITEM 2. CODE OF ETHICS.

Not Applicable

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.

Not Applicable

ITEM 4. Principal Accountant Fees and Services

Not Applicable

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.

Not applicable.

ITEM 6. SCHEDULE OF INVESTMENTS.

Included herein under Item 1.

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

Not applicable.

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

Not applicable.

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

Not applicable.

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

Not applicable.

ITEM 11. CONTROLS AND PROCEDURES.

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

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

ITEM 12. EXHIBITS.

(a) (1) Not applicable.

Exhibit 99.CODE ETH

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

Exhibit 99.CERT

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

Exhibit 99.906CERT

SIGNATURES

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

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

Date: June 28, 2007

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: June 28, 2007
By:	/s/ Kaprel Ozsolak
	(Kaprel Ozsolak)
	Chief Financial Officer of
	Legg Mason Partners Variable Equity Trust
Date: June 28, 2007