Legg Mason Partners Variable Equity Trust NCSRS 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)

620 Eighth Avenue, 47^th Floor, New York, NY 10018

(Address of principal executive offices) (Zip code)

Marc A. De Oliveira.

Franklin Templeton

100 First Stamford Place

Stamford, CT 06902

(Name and address of agent for service)

Registrant’s telephone number, including area code: 877-6LM-FUND/656-3863

Date of fiscal year end: December 31

Date of reporting period: June 30, 2022

ITEM 1.

REPORT TO STOCKHOLDERS.

The Semi-Annual Report to Stockholders is filed herewith.


June 30, 2022

Semi-Annual Report

Franklin

Multi-Asset Variable Allocation Series

Franklin Multi-Asset Variable Growth Fund

Franklin Multi-Asset Variable Moderate Growth Fund

Franklin Multi-Asset Variable Conservative Growth Fund

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


What’s inside
Letter from the president			II
Performance review			III
Portfolios at a glance			1
Portfolios expenses			4
Schedules of investments			7
Statements of assets and liabilities			10
Statements of operations			11
Statements of changes in net assets			12
Financial highlights			15
Notes to financial statements			19
Board approval of management and subadvisory agreements			28
Statement regarding liquidity risk management program			40

Franklin Multi-Asset Variable Allocation Series

Franklin Multi-Asset Variable Allocation Series consists of separate investment Portfolios, each with its own investment objective and policies. Each Portfolio is a “fund of funds,” investing in other mutual funds and exchange-traded funds (ETFs), and is managed as an asset allocation program.

The Portfolios are separate investment series of Legg Mason Partners Variable Equity Trust, a Maryland statutory trust.

Letter from the president

LOGO

Dear Shareholder,

We are pleased to provide the semi-annual report of Franklin Multi-Asset Variable Allocation Series for the six-month reporting period ended June 30, 2022. Please read on for each Portfolio’s performance information during the Portfolios’ reporting period.

Special shareholder notice

Effective June 30, 2022, Thomas Picciochi, CAIA, is no longer a portfolio manager for the Portfolios.

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

•

Market insights and commentaries from our portfolio managers and

•

A host of educational resources.

We look forward to helping you meet your financial goals.

Sincerely,

Jane Trust, CFA

President and Chief Executive Officer

July 29, 2022


II		Franklin Multi-Asset Variable Allocation Series

Performance review

Franklin Multi-Asset Variable Growth Fund¹

Franklin Multi-Asset Variable Growth Fund seeks capital appreciation. The Portfolio organizes its investments in underlying funds into two main asset classes: the equity class (equity securities of all types) and the fixed income class (fixed income securities of all types). The portfolio managers may invest across all asset classes and strategies. The portfolio managers will allocate between 70% to 100% of the Portfolio’s assets to underlying funds that invest in equity and equity-like strategies and between 0% to 30% to underlying funds that invest in fixed income strategies. The portfolio managers may, however, allocate assets to any underlying funds in varying amounts in a manner consistent with the Portfolio’s investment objective. The Portfolio’s allocation to each asset class will be measured at the time of purchase and may vary thereafter as a result of market movements.

Performance review

For the six months ended June 30, 2022, Class I shares of Franklin Multi-Asset Variable Growth Fund returned -18.02%. The Portfolio’s unmanaged benchmarks, the Bloomberg U.S. Aggregate Indexi, the Russell 3000 Indexii, and the Variable Growth Composite Benchmarkiii, returned -10.35%, -21.10% and -19.76%, respectively, for the same period. The Lipper Variable Mixed-Asset Target Allocation Aggressive Growth Funds Category Averageiv returned -19.43% over the same time frame.


Performance Snapshot as of June 30, 2022 (unaudited)
	6 months
Franklin Multi-Asset Variable Growth Fund: Class I		-18.02	%
Bloomberg U.S. Aggregate Index		-10.35	%
Russell 3000 Index		-21.10	%
Variable Growth Composite Benchmark		-19.76	%
Lipper Variable Mixed-Asset Target Allocation Aggressive Growth Funds Category Average		-19.43	%

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.

Share class returns assume the reinvestment of all distributions, including return of capital, if any, at net asset value and the deduction of all Portfolio expenses. Performance figures for periods shorter than one year represent cumulative figures and are not annualized.

The portfolio managers periodically adjust the allocation of the Portfolio’s assets among different Legg Mason and Franklin Templeton affiliatedmutualfundsandexchange-tradedfunds(“ETFs”) and ETFs that are managed by unaffiliated investment advisers, depending upon the portfolio managers’ outlook for the equity and bond markets in general, particular sectors of such markets and the performance outlook for the underlying funds. In assessing the equity and bond markets, the portfolio managers consider a broad range of market and economic trends and quantitative factors.

Total Annual Operating Expenses† (unaudited)

As of the Portfolio’s current prospectus dated May 1, 2022, the gross total annual fund operating expense ratio for Class I shares was 0.80%.

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.

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.

†	Includes expenses of the underlying funds in which the Portfolio invests.


Franklin Multi-Asset Variable Allocation Series		III

Performance review (cont’d)

Franklin Multi-Asset Variable Moderate Growth Fund¹

Franklin Multi-Asset Variable Moderate Growth Fund seeks long-term growth of capital. The Portfolio organizes its investments in underlying funds into two main asset classes: the equity class (equity securities of all types) and the fixed income class (fixed income securities of all types). The portfolio managers may invest across all asset classes and strategies. The portfolio managers will allocate between 55% to 85% of the Portfolio’s assets to underlying funds that invest in equity and equity-like strategies and between 15% to 45% to underlying funds that invest in fixed income strategies. The portfolio managers may, however, allocate assets to any underlying funds in varying amounts in a manner consistent with the Portfolio’s investment objective. The Portfolio’s allocation to each asset class will be measured at the time of purchase and may vary thereafter as a result of market movements.

Performance review

For the six months ended June 30, 2022, Class I shares of Franklin Multi-Asset Variable Moderate Growth Fund returned -16.96%. The Portfolio’s unmanaged benchmarks, the Bloomberg U.S. Aggregate Index, the Russell 3000 Index, and the Variable Moderate Growth Composite Benchmarkv, returned -10.35%, -21.10% and -18.14%, respectively, for the same period. The Lipper Variable Mixed-Asset Target Allocation Growth Funds Category Averagevi returned -17.01% over the same time frame.


Performance Snapshot as of June 30, 2022 (unaudited)
	6 months
Franklin Multi-Asset Variable Moderate Growth Fund: Class I		-16.96	%
Bloomberg U.S. Aggregate Index		-10.35	%
Russell 3000 Index		-21.10	%
Variable Moderate Growth Composite Benchmark		-18.14	%
Lipper Variable Mixed-Asset Target Allocation Growth Funds Category Average		-17.01	%

The portfolio managers periodically adjust the allocation of the Portfolio’s assets among different Legg Mason and Franklin Templeton affiliated mutual funds and ETFs and ETFs that are managed by unaffiliated investment advisers, depending upon the portfolio managers’ outlook for the equity and bond markets in general, particular sectors of such markets and the performance outlook for the underlying funds. In assessing the equity and bond markets, the portfolio managers consider a broad range of market and economic trends and quantitative factors.

Total Annual Operating Expenses† (unaudited)

As of the Portfolio’s current prospectus dated May 1, 2022, the gross total annual fund operating fund expense ratio for Class I shares was 0.94%.

As a result of an expense limitation arrangement, the ratio of total annual fund operating expenses, other than interest, brokerage, taxes, extraordinary expenses and acquired fund fees and expenses (fees and expenses of underlying funds), to average net assets will not exceed 0.20% for Class I shares. Total annual fund operating expenses after waiving fees and/or reimbursing expenses exceeded the expense limitation (“expensecap”) for Class I shares as a result of acquired fund fees and expenses. This expense limitation arrangement cannot be terminated prior to December 31, 2023 without the Board of Trustees’ consent.

The manager is permitted to recapture amounts waived and/or reimbursed to a class during the same fiscal year if the class’ total annual fund operating expenses have fallen to a level below the expense cap in effect at the time the fees were earned or the expenses incurred. In no case will the manager recapture any amount that would result, on any particular business day of the Portfolio, in the class’ total annual fund operating expenses exceeding the expense cap or any other lower limit then in effect.

†	Includes expenses of the underlying funds in which the Portfolio invests.


IV		Franklin Multi-Asset Variable Allocation Series

Franklin Multi-Asset Variable Conservative Growth Fund¹

Franklin Multi-Asset Variable Conservative Growth Fund seeks balance of growth of capital and income. The Portfolio organizes its investments in underlying funds into two main asset classes: the equity class (equity securities of all types) and the fixed income class (fixed income securities of all types). The portfolio managers may invest across all asset classes and strategies. The portfolio managers will allocate between 35% to 65% of the Portfolio’s assets to underlying funds that invest in equity and equity-like strategies and between 35% to 65% to underlying funds that invest in fixed income strategies. The portfolio managers may, however, allocate assets to any underlying funds in varying amounts in a manner consistent with the Portfolio’s investment objective.The Portfolio’s allocation to each asset class will be measured at the time of purchase and may vary thereafter as a result of market movements.

Performance review

For the six months ended June 30, 2022, Class I shares of Franklin Multi-Asset Variable Conservative Growth Fund returned -15.52%. The Portfolio’s unmanaged benchmarks, the Bloomberg U.S. Aggregate Index, the Russell 1000 Index, and the Variable Conservative Growth Composite Benchmarkvii, returned-10.35%,-20.94%and-16.10%,respectively,forthesameperiod.TheLipperVariableMixed-Asset Target Allocation Moderate Funds Category Averageviii returned -15.65% over the same time frame.


Performance Snapshot as of June 30, 2022 (unaudited)
	6 months
Franklin Multi-Asset Variable Conservative Growth Fund:
Class I		-15.52	%
Class II		-15.59	%
Bloomberg U.S. Aggregate Index		-10.35	%
Russell 1000 Index		-20.94	%
Variable Conservative Growth Composite Benchmark		-16.10	%
Lipper Variable Mixed-Asset Target Allocation Moderate Funds Category Average		-15.65	%

All share class returns assume the reinvestment of all distributions, including returns of capital, if any, at net asset value and the deduction of all Portfolio expenses. Performance figures for periods shorter than one year represent cumulative figures and are not annualized.

Total Annual Operating Expenses† (unaudited)

As of the Portfolio’s current prospectus dated May 1, 2022, the gross total annual fund operating expense ratios for Class I and Class II shares were 0.69% and 0.94%, respectively.

†	Includes expenses of the underlying funds in which the Portfolio invests.


Franklin Multi-Asset Variable Allocation Series		V

Performance review (cont’d)

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

Sincerely,

LOGO

Jane Trust, CFA

President and Chief Executive Officer

July 29, 2022

RISKS: Equity securities are subject to price and market fluctuations. Fixed income securities are subject to interest rate and credit risks. Foreign securities are subject to certain risks of overseas investing including currency fluctuations and political, social and economic uncertainties, which could increase volatility. These risks are magnified in emerging markets. Emerging market countries tend to have economic, political, and legal systems that are less developed and are less stable than those of more developed countries. Investments in small- and mid-capitalization companies may involve a higher degree of risk and volatility than investments in larger, more established companies. As interest rates rise, bond prices fall, reducing the value of the Portfolios’ share prices. High-yield bonds (commonly known as “junk” bonds) involve greater credit and liquidity risks than investment grade bonds.

Each Portfolio is a fund of funds – it invests primarily in other funds – and is subject to the risks of the underlying funds in which it invests. There are additional risks and other expenses associated with investing in other mutual funds and ETFs, rather than directly in portfolio securities. In addition to the Portfolio’s operating expenses, you will indirectly bear the operating expenses of the underlying funds in which the Portfolio invests. The Portfolios pay brokerage commissions in connection with the purchase and sale of shares of ETFs. In addition, each Portfolio indirectly bears its pro rata share of the fees and expenses incurred by the underlying funds it invests in, including management fees and other expenses. These expenses are in addition to the expenses that each Portfolio bears directly in connection with its own operation. Certain underlying funds 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. Also, the portfolio managers may invest in underlying funds that have a limited performance history. Please see the Portfolios’ prospectus for a more complete discussion of these and other risks and the Portfolios’ investment strategies.

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

ⁱ	The Bloomberg 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.

ⁱⁱ	The Russell 3000 Index measures the performance of the 3,000 largest U.S. companies based on total market capitalization, which represents approximately 98% of the U.S. equity market.

ⁱⁱⁱ

The Variable Growth Composite Benchmark is a hypothetical representation of the performance of the Portfolio’s major asset classes. It consists of 45% Russell 1000 Index, 20% Russell 2000 Index, 20% MSCI EAFE Index, 10% Bloomberg U.S. Aggregate Index and 5% Bloomberg U.S. Corporate High Yield — 2% Issuer Cap Index. The Russell 1000 Index measures the performance of the large-cap segment of the U.S. equity universe. It is a subset of the Russell 3000 Index and includes approximately 1,000 of the largest securities based on a combination of their market cap and current index membership. The Russell 1000 represents approximately 92% of the U.S. market. The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe. The Russell 2000 is a subset of the Russell 3000 Index representing approximately 10% of the total market capitalization of that index. It includes approximately 2,000 of the smallest securities based on a combination of their market cap and current index membership.The MSCI EAFE Index is a free float adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The Bloomberg U.S. Corporate High Yield — 2% Issuer Cap Index is an index of the 2% Issuer Cap component of the Bloomberg U.S.Corporate High Yield Index, which covers the U.S. dollar-denominated, non-investment grade, fixed-rate, taxable corporate bond market.

^iv

Lipper, Inc., a wholly-owned subsidiary of Refinitiv, provides independent insight on global collective investments. Returns are based on the six-month period ended June 30, 2022, including the reinvestment of all distributions, including returns of capital, if any, calculated among the 73 funds in the Portfolio’s Lipper category.

The Variable Moderate Growth Composite Benchmark is a hypothetical representation of the performance of the Portfolio’s major asset classes. It consists of 40% Russell 1000 Index, 15% Russell 2000 Index, 15% MSCI EAFE Index, 25% Bloomberg U.S. Aggregate Index and 5% Bloomberg U.S.Corporate High Yield — 2% Issuer Cap Index.

^vi

^vii

The Variable Conservative Growth Composite Benchmark is a hypothetical representation of the performance of the Portfolio’s major asset classes. It consists of 28% Russell 1000 Index, 12% Russell 2000 Index, 10% MSCI EAFE Index, 43% Bloomberg U.S. Aggregate Index and 7% Bloomberg U.S.Corporate High Yield — 2% Issuer Cap Index.

^viii


VI		Franklin Multi-Asset Variable Allocation Series

Portfolios at a glance (unaudited)

Franklin Multi-Asset Variable Growth Fund Investment Breakdown† (%) as a percent of total investments

LOGO

†	The bar graph above represents the composition of the Portfolio’s investments as of June 30, 2022 and December 31, 2021. The Portfolio is actively managed. As a result, the composition of the Portfolio’s investments is subject to change at any time.

‡	Represents less than 0.1%.


Franklin Multi-Asset Variable Allocation Series 2022 Semi-Annual Report					1

Portfolios at a glance (unaudited) (cont’d)

Franklin Multi-Asset Variable Moderate Growth Fund Investment Breakdown† (%) as a percent of total investments

LOGO

†	The bar graph above represents the composition of the Portfolio’s investments as of June 30, 2022 and December 31, 2021. The Portfolio is actively managed. As a result, the composition of the Portfolio’s investments is subject to change at any time.


2				Franklin Multi-Asset Variable Allocation Series 2022 Semi-Annual Report

Franklin Multi-Asset Variable Conservative Growth Fund Investment Breakdown† (%) as a percent of total investments

LOGO

†	The bar graph above represents the composition of the Portfolio’s investments as of June 30, 2022 and December 31, 2021. The Portfolio is actively managed. As a result, the composition of the Portfolio’s investments is subject to change at any time.


Franklin Multi-Asset Variable Allocation Series 2022 Semi-Annual Report					3

Portfolios expenses (unaudited)

Example

As a shareholder of the Portfolio, you may incur two types of costs: (1) transaction costs and (2) ongoing costs, including 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 funds.

This example is based on an investment of $1,000 invested on January 1, 2022 and held for the six months ended June 30, 2022.

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”.

Hypothetical example for comparison purposes

The table below titled “Based on hypothetical total return” providesinformationabouthypotheticalaccountvaluesandhypothetical 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 portfolios. 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 actual total return¹													Based on hypothetical total return¹
Franklin Multi-Asset Variable Growth Fund	Actual Total Return²			Beginning Account Value		Ending Account Value		Annualized Expense Ratio³			Expenses Paid During the Period⁴		Franklin Multi-Asset Variable Growth Fund	Hypothetical Annualized Total Return	Beginning Account Value		Ending Account Value		Annualized Expense Ratio³			Expenses Paid During the Period⁴
Class I		-18.02	%	$	1,000.00	$	819.80		0.13	%	$	0.59	Class I	5.00%	$	1,000.00	$	1,024.15		0.13	%	$	0.65

¹	For the six months ended June 30, 2022.

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 returns do not reflect expenses associated with separate accounts such as administrative fees, account charges and surrender charges, which, if reflected, would reduce the total returns. Performance figures may reflect compensating balance arrangements, fee waivers and/or expense reimbursements. In the absence of compensating balance arrangements, fee waivers and/or expense reimbursements, the total return would have been lower. Past performance is no guarantee of future results.

³	Does not include fees and expenses of the Underlying Funds in which the Portfolio invests.

⁴	Expenses (net of compensating balance arrangements, fee waivers and/or expense reimbursements) are equal to the class’ 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 (181), then divided by 365.


4				Franklin Multi-Asset Variable Allocation Series 2022 Semi-Annual Report

Example

This example is based on an investment of $1,000 invested on January 1, 2022 and held for the six months ended June 30, 2022.

Actual expenses

Hypothetical example for comparison purposes



Based on actual total return¹													Based on hypothetical total return¹
Franklin Multi-Asset Variable Moderate Growth Fund	Actual Total Return²			Beginning Account Value		Ending Account Value		Annualized Expense Ratio³			Expenses Paid During the Period⁴		Franklin Multi-Asset Variable Moderate Growth Fund	Hypothetical Annualized Total Return	Beginning Account Value		Ending Account Value		Annualized Expense Ratio³			Expenses Paid During the Period⁴
Class I		-16.96	%	$	1,000.00	$	830.40		0.20	%	$	0.91	Class I	5.00%	$	1,000.00	$	1,023.80		0.20	%	$	1.00

¹	For the six months ended June 30, 2022.

³	Does not include fees and expenses of the Underlying Funds in which the Portfolio invests.

⁴	Expenses (net of compensating balance arrangements, fee waivers and/or expense reimbursements) are equal to the class’ 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 (181), then divided by 365.


Franklin Multi-Asset Variable Allocation Series 2022 Semi-Annual Report					5

Portfolios expenses (unaudited) (cont’d)

Example

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

This example is based on an investment of $1,000 invested on January 1, 2022 and held for the six months ended June 30, 2022.

Actual expenses

Hypothetical example for comparison purposes



Based on actual total return¹													Based on hypothetical total return¹
Franklin Multi-Asset Variable Conservative Growth Fund	Actual Total Return²			Beginning Account Value		Ending Account Value		Annualized Expense Ratio³			Expenses Paid During the Period⁴		Franklin Multi-Asset Variable Conservative Growth Fund	Hypothetical Annualized Total Return	Beginning Account Value		Ending Account Value		Annualized Expense Ratio³			Expenses Paid During the Period⁴
Class I		-15.52	%	$	1,000.00	$	844.80		0.13	%	$	0.59	Class I	5.00%	$	1,000.00	$	1,024.15		0.13	%	$	0.65
Class II		-15.59			1,000.00		844.10		0.38			1.74	Class II	5.00		1,000.00		1,022.91		0.38			1.91

¹	For the six months ended June 30, 2022.

³	Does not include fees and expenses of the Underlying Funds in which the Portfolio invests.

⁴

Expenses (net of compensating balance arrangements, fee waivers and/or expense reimbursements) are equal to each class’ respective annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year (181), then divided by 365.


6				Franklin Multi-Asset Variable Allocation Series 2022 Semi-Annual Report

Schedules of investments (unaudited)

June 30, 2022

Franklin Multi-Asset Variable Growth Fund


(Percentages shown based on Portfolio net assets)
Description				Shares		Value
Investments in Underlying Funds^(a)— 99.7%
Domestic Equity — 69.5%
Legg Mason Global Asset Management Trust:
BrandywineGLOBAL — Diversified US Large Cap Value Fund, Class IS Shares					324,776	$	5,985,621
BrandywineGLOBAL — Dynamic US Large Cap Value Fund, Class IS Shares					497,575		5,926,114
ClearBridge Small Cap Fund, Class IS Shares					56,801		3,306,943
Franklin U.S. Small Cap Equity Fund, Class IS Shares					345,754		3,689,201
Legg Mason Partners Investment Trust:
ClearBridge Appreciation Fund, Class IS Shares					575,344		16,040,607
ClearBridge Large Cap Growth Fund, Class IS Shares					235,627		11,986,327
ClearBridge Small Cap Growth Fund, Class IS Shares					66,031		2,344,761
Total Domestic Equity							49,279,574
Foreign Equity — 20.4%
Legg Mason Global Asset Management Trust — Franklin International Equity Fund, Class IS Shares					999,340		14,480,432
Domestic Fixed Income — 9.8%
Western Asset Funds, Inc.:
Western Asset Core Bond Fund, Class IS Shares					462,340		5,168,968
Western Asset Intermediate Bond Fund, Class IS Shares					177,653		1,740,999
Total Domestic Fixed Income							6,909,967
Total Investments in Underlying Funds before Short-Term Investments (Cost — $60,412,931)							70,669,973

	Rate
Short-Term Investments — 0.4%
Invesco Government & Agency Portfolio, Institutional Class (Cost — $294,098)		1.417	%		294,098		294,098
Total Investments — 100.1% (Cost — $60,707,029)							70,964,071
Liabilities in Excess of Other Assets — (0.1)%							(51,842	)
Total Net Assets — 100.0%						$	70,912,229

^(a)	Underlying Funds are affiliated with Franklin Resources, Inc. and more information about the Underlying Funds is available at www.franklintempleton.com (Note 8).

See Notes to Financial Statements.


Franklin Multi-Asset Variable Allocation Series 2022 Semi-Annual Report					7

Schedules of investments (unaudited) (cont’d)

June 30, 2022

Franklin Multi-Asset Variable Moderate Growth Fund


(Percentages shown based on Portfolio net assets)
Description				Shares		Value
Investments in Underlying Funds^(a)— 99.6%
Domestic Equity — 61.7%
Legg Mason Global Asset Management Trust:
BrandywineGLOBAL — Diversified US Large Cap Value Fund, Class IS Shares					108,634	$	2,002,120
BrandywineGLOBAL — Dynamic US Large Cap Value Fund, Class IS Shares					166,362		1,981,377
ClearBridge Small Cap Fund, Class IS Shares					18,934		1,102,314
Franklin U.S. Small Cap Equity Fund, Class IS Shares					115,806		1,235,650
Legg Mason Partners Investment Trust:
ClearBridge Appreciation Fund, Class IS Shares					192,099		5,355,730
ClearBridge Large Cap Growth Fund, Class IS Shares					78,644		4,000,655
ClearBridge Small Cap Growth Fund, Class IS Shares					22,007		781,468
Total Domestic Equity							16,459,314
Domestic Fixed Income — 19.9%
Western Asset Funds, Inc.:
Western Asset Core Bond Fund, Class IS Shares					356,264		3,983,037
Western Asset Intermediate Bond Fund, Class IS Shares					136,822		1,340,854
Total Domestic Fixed Income							5,323,891
Foreign Equity — 18.0%
Legg Mason Global Asset Management Trust — Franklin International Equity Fund, Class IS Shares					332,394		4,816,389
Total Investments in Underlying Funds before Short-Term Investments (Cost — $23,708,608)							26,599,594

	Rate
Short-Term Investments — 0.5%
Invesco Government & Agency Portfolio, Institutional Class (Cost — $139,227)		1.417	%		139,227		139,227
Total Investments — 100.1% (Cost — $23,847,835)							26,738,821
Liabilities in Excess of Other Assets — (0.1)%							(38,492	)
Total Net Assets — 100.0%						$	26,700,329

^(a)	Underlying Funds are affiliated with Franklin Resources, Inc. and more information about the Underlying Funds is available at www.franklintempleton.com (Note 8).

See Notes to Financial Statements.


8				Franklin Multi-Asset Variable Allocation Series 2022 Semi-Annual Report

Franklin Multi-Asset Variable Conservative Growth Fund


(Percentages shown based on Portfolio net assets)
Description				Shares		Value
Investments in Underlying Funds^(a)— 99.6%
Domestic Equity — 47.2%
Legg Mason Global Asset Management Trust:
BrandywineGLOBAL — Dynamic US Large Cap Value Fund, Class IS Shares					742,598	$	8,844,348
ClearBridge Small Cap Fund, Class IS Shares					40,414		2,352,922
Franklin U.S. Small Cap Equity Fund, Class IS Shares					282,606		3,015,405
Legg Mason Partners Investment Trust:
ClearBridge Appreciation Fund, Class IS Shares					418,654		11,672,081
ClearBridge Large Cap Growth Fund, Class IS Shares					170,793		8,688,218
ClearBridge Small Cap Growth Fund, Class IS Shares					49,891		1,771,630
Total Domestic Equity							36,344,604
Domestic Fixed Income — 39.1%
Western Asset Funds, Inc.:
Western Asset Core Bond Fund, Class IS Shares					2,029,735		22,692,432
Western Asset Intermediate Bond Fund, Class IS Shares					750,464		7,354,551
Total Domestic Fixed Income							30,046,983
Foreign Equity — 13.3%
Legg Mason Global Asset Management Trust — Franklin International Equity Fund, Class IS Shares					705,557		10,223,518
Total Investments in Underlying Funds before Short-Term Investments (Cost — $71,650,303)							76,615,105

	Rate
Short-Term Investments — 6.1%
Invesco Government & Agency Portfolio, Institutional Class (Cost — $4,702,955)		1.417	%		4,702,955		4,702,955
Total Investments — 105.7% (Cost — $76,353,258)							81,318,060
Liabilities in Excess of Other Assets — (5.7)%							(4,373,036	)
Total Net Assets — 100.0%						$	76,945,024

^(a)	Underlying Funds are affiliated with Franklin Resources, Inc. and more information about the Underlying Funds is available at www.franklintempleton.com (Note 8).

See Notes to Financial Statements.


Franklin Multi-Asset Variable Allocation Series 2022 Semi-Annual Report					9

Statements of assets and liabilities (unaudited)

June 30, 2022


	Franklin Multi-Asset Variable Growth Fund		Franklin Multi-Asset Variable Moderate Growth Fund		Franklin Multi-Asset Variable Conservative Growth Fund

Assets:
Investments in affiliated Underlying Funds, at cost	$	60,412,931	$	23,708,608	$	71,650,303
Short-term investments, at cost		294,098		139,227		4,702,955
Investments in affiliated Underlying Funds, at value	$	70,669,973	$	26,599,594	$	76,615,105
Short-term investments, at value		294,098		139,227		4,702,955
Distributions receivable from affiliated Underlying Funds		23,066		17,543		83,636
Distributions receivable from unaffiliated Underlying Funds		269		84		492
Receivable for Portfolio shares sold		—		—		73
Receivable from investment manager		—		2,857		—
Prepaid expenses		1,469		1,484		2,083
*Total Assets*		*70,988,875*		*26,760,789*		*81,404,344*

Liabilities:
Payable for investments in affiliated Underlying Funds		23,066		17,543		4,388,636
Fund accounting fees payable		15,829		15,539		15,819
Audit and tax fees payable		14,465		14,326		14,438
Shareholder reports payable		8,484		3,107		8,377
Legal fees payable		6,381		6,396		6,380
Payable for Portfolio shares repurchased		6,298		2,105		20,301
Trustees’ fees payable		902		330		895
Due to custodian		167		167		167
Service and/or distribution fees payable		—		—		3,257
Accrued expenses		1,054		947		1,050
*Total Liabilities*		*76,646*		*60,460*		*4,459,320*
Total Net Assets	$	70,912,229	$	26,700,329	$	76,945,024

Net Assets:
Par value (Note 7)	$	61	$	23	$	60
Paid-in capital in excess of par value		65,373,670		25,707,744		76,499,238
Total distributable earnings (loss)		5,538,498		992,562		445,726
Total Net Assets	$	70,912,229	$	26,700,329	$	76,945,024

Net Assets:
Class I		$70,912,229		$26,700,329		$61,211,710
Class II		—		—		$15,733,314

Shares Outstanding:
Class I		6,088,578		2,260,720		4,734,620
Class II		—		—		1,223,545

Net Asset Value:
Class I		$11.65		$11.81		$12.93
Class II		—		—		$12.86

See Notes to Financial Statements.


10				Franklin Multi-Asset Variable Allocation Series 2022 Semi-Annual Report

Statements of operations (unaudited)

For the Six Months Ended June 30, 2022


	Franklin Multi-Asset Variable Growth Fund		Franklin Multi-Asset Variable Moderate Growth Fund		Franklin Multi-Asset Variable Conservative Growth Fund

Investment Income:
Income distributions from affiliated Underlying Funds	$	179,599	$	111,806	$	498,303
Income distributions from unaffiliated Underlying Funds		456		163		819
*Total Investment Income*		*180,055*		*111,969*		*499,122*

Expenses:
Fund accounting fees		16,309		16,035		16,310
Legal fees		14,504		14,400		14,504
Audit and tax fees		13,465		13,326		13,438
Shareholder reports		3,595		2,040		3,916
Trustees’ fees		3,545		1,555		3,571
Transfer agent fees (Note 5)		509		482		393
Commitment fees (Note 9)		188		69		192
Custody fees		54		48		47
Interest expense		26		10		—
Service and/or distribution fees (Notes 2 and 5)		—		—		20,960
Miscellaneous expenses		1,246		1,352		1,606
*Total Expenses*		*53,441*		*49,317*		*74,937*
Less: Fee waivers and/or expense reimbursements (Notes 2 and 5)		—		(19,119)		—
*Net Expenses*		*53,441*		*30,198*		*74,937*
Net Investment Income		126,614		81,771		424,185

Realized and Unrealized Gain (Loss) on Affiliated Underlying Funds and Capital Gain Distributions From Affiliated Underlying Funds (Notes 1 and 3):
Net Realized Gain (Loss) From:
Sale of affiliated Underlying Funds		(970,493)		(610,144)		(2,494,925)
Capital gain distributions from affiliated Underlying Funds		327,970		97,397		211,501
*Net Realized Loss*		*(642,523)*		*(512,747)*		*(2,283,424)*
*Change in Net Unrealized Appreciation (Depreciation) from Affiliated Underlying Funds*		*(15,794,018)*		*(5,169,270)*		*(12,631,247)*
Net Loss on Affiliated Underlying Funds and Capital Gain Distributions From Affiliated Underlying Funds		(16,436,541)		(5,682,017)		(14,914,671)
Decrease in Net Assets From Operations	$	(16,309,927)	$	(5,600,246)	$	(14,490,486)

See Notes to Financial Statements.


Franklin Multi-Asset Variable Allocation Series 2022 Semi-Annual Report					11

Statements of changes in net assets

Franklin Multi-Asset Variable Growth Fund


For the Six Months Ended June 30, 2022 (unaudited) and the Year Ended December 31, 2021	2022		2021

Operations:
Net investment income	$	126,614	$	966,865
Net realized gain (loss)		(642,523)		14,132,458
Change in net unrealized appreciation (depreciation)		(15,794,018)		3,057,867
*Increase (Decrease) in Net Assets From Operations*		*(16,309,927)*		*18,157,190*

Distributions to Shareholders From (Notes 1 and 6):
Total distributable earnings		(7,334,002)		(10,481,103)
*Decrease in Net Assets From Distributions to Shareholders*		*(7,334,002)*		*(10,481,103)*

Portfolio Share Transactions (Note 7):
Net proceeds from sale of shares		126,198		713,881
Reinvestment of distributions		7,334,002		10,481,103
Cost of shares repurchased		(7,180,999)		(17,249,605)
*Increase (Decrease) in Net Assets From Portfolio Share Transactions*		*279,201*		*(6,054,621)*
*Increase (Decrease) in Net Assets*		*(23,364,728)*		*1,621,466*

Net Assets:
Beginning of period		94,276,957		92,655,491
End of period	$	70,912,229	$	94,276,957

See Notes to Financial Statements.


12				Franklin Multi-Asset Variable Allocation Series 2022 Semi-Annual Report

Franklin Multi-Asset Variable Moderate Growth Fund


For the Six Months Ended June 30, 2022 (unaudited) and the Year Ended December 31, 2021	2022		2021

Operations:
Net investment income	$	81,771	$	361,232
Net realized gain (loss)		(512,747)		4,212,105
Change in net unrealized appreciation (depreciation)		(5,169,270)		712,307
*Increase (Decrease) in Net Assets From Operations*		*(5,600,246)*		*5,285,644*

Distributions to Shareholders From (Notes 1 and 6):
Total distributable earnings		(1,964,256)		(3,456,169)
*Decrease in Net Assets From Distributions to Shareholders*		*(1,964,256)*		*(3,456,169)*

Portfolio Share Transactions (Note 7):
Net proceeds from sale of shares		65,307		121,983
Reinvestment of distributions		1,964,256		3,456,169
Cost of shares repurchased		(1,853,900)		(4,348,773)
*Increase (Decrease) in Net Assets From Portfolio Share Transactions*		*175,663*		*(770,621)*
*Increase (Decrease) in Net Assets*		*(7,388,839)*		*1,058,854*

Net Assets:
Beginning of period		34,089,168		33,030,314
End of period	$	26,700,329	$	34,089,168

See Notes to Financial Statements.


Franklin Multi-Asset Variable Allocation Series 2022 Semi-Annual Report					13

Statements of changes in net assets (cont’d)

Franklin Multi-Asset Variable Conservative Growth Fund


For the Six Months Ended June 30, 2022 (unaudited) and the Year Ended December 31, 2021	2022		2021

Operations:
Net investment income	$	424,185	$	1,151,676
Net realized gain (loss)		(2,283,424)		8,668,616
Change in net unrealized appreciation (depreciation)		(12,631,247)		437,767
*Increase (Decrease) in Net Assets From Operations*		*(14,490,486)*		*10,258,059*

Distributions to Shareholders From (Notes 1 and 6):
Total distributable earnings		(4,412,249)		(7,833,188)
*Decrease in Net Assets From Distributions to Shareholders*		*(4,412,249)*		*(7,833,188)*

Portfolio Share Transactions (Note 7):
Net proceeds from sale of shares		2,211,130		7,017,022
Reinvestment of distributions		4,412,249		7,833,188
Cost of shares repurchased		(5,849,370)		(13,245,345)
*Increase in Net Assets From Portfolio Share Transactions*		*774,009*		*1,604,865*
*Increase (Decrease) in Net Assets*		*(18,128,726)*		*4,029,736*

Net Assets:
Beginning of period		95,073,750		91,044,014
End of period	$	76,945,024	$	95,073,750

See Notes to Financial Statements.


14				Franklin Multi-Asset Variable Allocation Series 2022 Semi-Annual Report

Financial highlights

Franklin Multi-Asset Variable Growth Fund


For a share of beneficial interest outstanding throughout each year ended December 31, unless otherwise noted:
Class I Shares^1,2	2022³			2021			2020			2019			2018			2017

Net asset value, beginning of period	$	15.88		$	14.74		$	14.00		$	12.20		$	14.46		$	14.55

Income (loss) from operations:
Net investment income		0.02			0.16			0.17			0.18			0.20			0.22
Net realized and unrealized gain (loss)		(2.90)			2.87			1.30			2.52			(1.30)			2.56
*Total income (loss) from operations*		*(2.88)*			*3.03*			*1.47*			*2.70*			*(1.10)*			*2.78*

Less distributions from:
Net investment income		(0.16)			(0.69)			(0.21)			(0.21)			(0.38)			(0.29)
Net realized gains		(1.19)			(1.20)			(0.52)			(0.69)			(0.78)			(2.58)
*Total distributions*		*(1.35)*			*(1.89)*			*(0.73)*			*(0.90)*			*(1.16)*			*(2.87)*

Net asset value, end of period	$	11.65		$	15.88		$	14.74		$	14.00		$	12.20		$	14.46
*Total return⁴*		*(18.02)*	%		*20.69*	%		*11.24*	%		*22.58*	%		*(8.05)*	%		*19.33*	%

Net assets, end of period (000s)	$	70,912		$	94,277		$	92,655		$	97,959		$	94,715		$	118,126

Ratios to average net assets:
Gross expenses⁵		0.13	%⁶		0.12	%		0.14	%		0.12	%		0.11	%		0.12	%
Net expenses^5,7		0.13	⁶		0.12			0.13	⁸		0.12			0.11			0.12
Net investment income		0.31	⁶		1.00			1.27			1.38			1.36			1.40

Portfolio turnover rate		30	%		19	%		21	%		19	%		15	%		88	%⁹

¹	Effective May 1, 2017, the existing single class shares were renamed Class I shares.

²	Per share amounts have been calculated using the average shares method.

³	For the six months ended June 30, 2022 (unaudited).

⁴

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

⁵	Does not include fees and expenses of the Underlying Funds in which the Portfolio invests.

⁶	Annualized.

⁷

⁸	Reflects fee waivers and/or expense reimbursements.

⁹	Excludes the value of securities received in lieu of cash proceeds from the sale of Underlying Funds and the subsequent sale of those securities.

See Notes to Financial Statements.


Franklin Multi-Asset Variable Allocation Series 2022 Semi-Annual Report					15

Financial highlights (cont’d)

Franklin Multi-Asset Variable Moderate Growth Fund


For a share of beneficial interest outstanding throughout each year ended December 31, unless otherwise noted:
Class I Shares^1,2	2022³			2021			2020			2019			2018			2017

Net asset value, beginning of period		$15.37			$14.62			$13.87			$12.16			$13.93			$14.57

Income (loss) from operations:
Net investment income		0.04			0.17			0.18			0.20			0.22			0.24
Net realized and unrealized gain (loss)		(2.67)			2.25			1.29			2.25			(1.07)			2.18
*Total income (loss) from operations*		*(2.63)*			*2.42*			*1.47*			*2.45*			*(0.85)*			*2.42*

Less distributions from:
Net investment income		(0.00)	⁴		(0.68)			(0.23)			(0.51)			(0.35)			(0.34)
Net realized gains		(0.93)			(0.99)			(0.49)			(0.23)			(0.57)			(2.72)
*Total distributions*		*(0.93)*			*(1.67)*			*(0.72)*			*(0.74)*			*(0.92)*			*(3.06)*

Net asset value, end of period		$11.81			$15.37			$14.62			$13.87			$12.16			$13.93
*Total return⁵*		*(16.96)*	%		*16.66*	%		*11.07*	%		*20.43*	%		*(6.28)*	%		*16.73*	%

Net assets, end of period (000s)		$26,700			$34,089			$33,030			$33,182			$31,468			$37,446

Ratios to average net assets:
Gross expenses⁶		0.33	%⁷		0.31	%		0.35	%		0.29	%		0.30	%		0.30	%
Net expenses^6,8,9		0.20	⁷		0.20			0.20			0.20			0.20			0.20
Net investment income		0.54	⁷		1.04			1.36			1.53			1.56			1.52

Portfolio turnover rate		30	%		18	%		26	%		21	%		16	%		87	%¹⁰

¹	Effective May 1, 2017, the existing single class shares were renamed Class I shares.

²	Per share amounts have been calculated using the average shares method.

³	For the six months ended June 30, 2022 (unaudited).

⁴	Amount represents less than $0.005 per share.

⁵

⁶	Does not include fees and expenses of the Underlying Funds in which the Portfolio invests.

⁷	Annualized.

⁸

⁹	Reflects fee waivers and/or expense reimbursements.

¹⁰	Excludes the value of securities received in lieu of cash proceeds from the sale of Underlying Funds and the subsequent sale of those securities.

See Notes to Financial Statements.


16				Franklin Multi-Asset Variable Allocation Series 2022 Semi-Annual Report

Franklin Multi-Asset Variable Conservative Growth Fund


For a share of each class of beneficial interest outstanding throughout each year ended December 31, unless otherwise noted:
Class I Shares^1,2	2022³			2021			2020			2019			2018			2017

Net asset value, beginning of period		$16.25			$15.86			$14.88			$13.23			$14.64			$14.76

Income (loss) from operations:
Net investment income		0.08			0.21			0.23			0.27			0.28			0.28
Net realized and unrealized gain (loss)		(2.61)			1.60			1.37			2.01			(0.91)			1.73
*Total income (loss) from operations*		*(2.53)*			*1.81*			*1.60*			*2.28*			*(0.63)*			*2.01*

Less distributions from:
Net investment income		(0.03)			(0.57)			(0.32)			(0.31)			(0.38)			(0.39)
Net realized gains		(0.76)			(0.85)			(0.30)			(0.32)			(0.40)			(1.74)
*Total distributions*		*(0.79)*			*(1.42)*			*(0.62)*			*(0.63)*			*(0.78)*			*(2.13)*

Net asset value, end of period		$12.93			$16.25			$15.86			$14.88			$13.23			$14.64
*Total return⁴*		*(15.52)*	%		*11.47*	%		*10.96*	%		*17.37*	%		*(4.40)*	%		*13.55*	%

Net assets, end of period (000s)		$61,212			$76,687			$77,465			$80,945			$78,534			$94,355

Ratios to average net assets:
Gross expenses⁵		0.13	%⁶		0.12	%		0.14	%		0.12	%		0.14	%		0.14	%
Net expenses^5,7		0.13	⁶		0.12			0.14	⁸		0.12			0.14			0.14
Net investment income		1.05	⁶		1.24			1.59			1.88			1.90			1.78

Portfolio turnover rate		33	%		17	%		28	%		24	%		11	%		86	%⁹

¹	Effective May 1, 2017, the existing single class shares were renamed Class I shares.

²	Per share amounts have been calculated using the average shares method.

³	For the six months ended June 30, 2022 (unaudited).

⁴

⁵	Does not include fees and expenses of the Underlying Funds in which the Portfolio invests.

⁶	Annualized.

⁷

⁸	Reflects fee waivers and/or expense reimbursements.

⁹	Excludes the value of securities received in lieu of cash proceeds from the sale of Underlying Funds and the subsequent sale of those securities.

See Notes to Financial Statements.


Franklin Multi-Asset Variable Allocation Series 2022 Semi-Annual Report					17

Financial highlights (cont’d)

Franklin Multi-Asset Variable Conservative Growth Fund


For a share of each class of beneficial interest outstanding throughout each year ended December 31, unless otherwise noted:
Class II Shares¹	2022²			2021			2020			2019			2018			2017³

Net asset value, beginning of period		$16.18			$15.81			$14.83			$13.21			$14.62			$15.72

Income (loss) from operations:
Net investment income		0.06			0.17			0.21			0.25			0.33			0.32
Net realized and unrealized gain (loss)		(2.59)			1.58			1.35			1.97			(0.98)			0.66
*Total income (loss) from operations*		*(2.53)*			*1.75*			*1.56*			*2.22*			*(0.65)*			*0.98*

Less distributions from:
Net investment income		(0.03)			(0.53)			(0.28)			(0.28)			(0.36)			(0.34)
Net realized gains		(0.76)			(0.85)			(0.30)			(0.32)			(0.40)			(1.74)
*Total distributions*		*(0.79)*			*(1.38)*			*(0.58)*			*(0.60)*			*(0.76)*			*(2.08)*

Net asset value, end of period		$12.86			$16.18			$15.81			$14.83			$13.21			$14.62
*Total return⁴*		*(15.59)*	%		*11.12*	%		*10.77*	%		*16.94*	%		*(4.55)*	%		*6.18*	%

Net assets, end of period (000s)		$15,733			$18,387			$13,579			$9,823			$4,888			$1,111

Ratios to average net assets:
Gross expenses⁵		0.38	%⁶		0.37	%		0.39	%		0.37	%		0.38	%		0.43	%⁶
Net expenses^5,7		0.38	⁶		0.37			0.39	⁸		0.37			0.38			0.43	⁶
Net investment income		0.80	⁶		1.03			1.41			1.77			2.32			3.90	⁶

Portfolio turnover rate		33	%		17	%		28	%		24	%		11	%		86	%^9,10

¹	Per share amounts have been calculated using the average shares method.

²	For the six months ended June 30, 2022 (unaudited).

³	For the period June 23, 2017 (inception date) to December 31, 2017.

⁴

⁵	Does not include fees and expenses of the Underlying Funds in which the Portfolio invests.

⁶	Annualized.

⁷

This expense limitation arrangement cannot be terminated prior to December 31, 2023 without the Board of Trustees’ consent.

⁸	Reflects fee waivers and/or expense reimbursements.

⁹	Excludes the value of securities received in lieu of cash proceeds from the sale of Underlying Funds and the subsequent sale of those securities.

¹⁰	For the year ended December 31, 2017.

See Notes to Financial Statements.


18				Franklin Multi-Asset Variable Allocation Series 2022 Semi-Annual Report

Notes to financial statements (unaudited)

1. Organization and significant accounting policies

Franklin Multi-Asset Variable Growth Fund (“Variable Growth”), Franklin Multi-Asset Variable Moderate Growth Fund (“Variable Moderate Growth”) and Franklin Multi-Asset Variable Conservative Growth Fund (“Variable Conservative Growth”) (the “Portfolios”) are separate diversified investment series of Legg Mason Partners Variable Equity Trust (the “Trust”). The Trust, a Maryland statutory trust, is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Portfolios invest in Legg Mason and Franklin Templeton affiliated mutual funds and exchange-traded funds (“ETFs”) and ETFs managed by unaffiliated investment advisers (“Underlying Funds”). Shares of the Portfolios are offered to separate accounts sponsored by certain life insurance companies and qualified pension and retirement plans, including affiliates of the investment manager.

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

(a) Investment valuation. Investments in the Underlying Funds are valued at the closing net asset value per share of each Underlying Fund on the day of valuation. Equity securities, including ETFs, 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. The valuations for fixed income securities (which may include, but are not limited to, corporate, government, municipal, mortgage-backed, collateralized mortgage obligations and asset-backed securities) and certain derivative instruments are typically the prices supplied by independent third party pricing services, which may use market prices or broker/dealer quotations or a variety of valuation techniques and methodologies. The independent third party pricing services typically use inputs that are observable such as issuer details, interest rates, yield curves, prepayment speeds, credit risks/spreads, default rates and quoted prices for similar securities. Investments in open-end funds are valued at the closing net asset value per share of each fund on the day of valuation. When the Portfolios hold securities or other assets that are denominated in a foreign currency, the Portfolios will normally use the currency exchange rates as of 4:00 p.m. (Eastern Time). If independent third party pricing services are unable to supply prices for a portfolio investment, or if the prices supplied are deemed by the manager to be unreliable, the market price may be determined by the manager using quotations from one or more broker/dealers or at the transaction price if the security has recently been purchased and no value has yet been obtained from a pricing service or pricing broker. When reliable prices are not readily available, 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 each Portfolio calculates its net asset value, the Portfolios value these securities as determined in accordance with procedures approved by the Portfolios’ Board of Trustees.

The Board of Trustees is responsible for the valuation process and has delegated the supervision of the daily valuation process to the Global Fund Valuation Committee (the “Valuation Committee”). The Valuation Committee, pursuant to the policies adopted by the Board of Trustees, is responsible for making fair value determinations, evaluating the effectiveness of the Portfolios’ pricing policies, and reporting to the Board of Trustees. When determining the reliability of third party pricing information for investments owned by the Portfolios, the Valuation Committee, among other things, conducts due diligence reviews of pricing vendors, monitors the daily change in prices and reviews transactions among market participants.

The Valuation Committee will consider pricing methodologies it deems relevant and appropriate when making fair value determinations. Examples of possible methodologies include, but are not limited to, multiple of earnings; discount from market of a similar freely traded security; discounted cash-flow analysis; book value or a multiple thereof; risk premium/yield analysis; yield to maturity; and/or fundamental investment analysis. The Valuation Committee will also consider factors it deems relevant and appropriate in light of the facts and circumstances. Examples of possible factors include, but are not limited to, the type of security; the issuer’s financial statements; the purchase price of the security; the discount from market value of unrestricted securities of the same class at the time of purchase; analysts’ research and observations from financial institutions; information regarding any transactions or offers with respect to the security; the existence of merger proposals or tender offers affecting the security; the price and extent of public trading in similar securities of the issuer or comparable companies; and the existence of a shelf registration for restricted securities. Additionally, if the closing net


Franklin Multi-Asset Variable Allocation Series 2022 Semi-Annual Report					19

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

asset value per share for an Underlying Fund is not available on the day of valuation, the Valuation Committee may adjust the Underlying Fund’s last available net asset value per share to account for significant events that have occurred subsequent to the Underlying Fund’s last net asset value per share calculation but prior to the day of valuation.

For each portfolio security that has been fair valued pursuant to the policies adopted by the Board of Trustees, the fair value price is compared against the last available and next available market quotations. The Valuation Committee reviews the results of such back testing monthly and fair valuation occurrences are reported to the Board of Trustees quarterly.

The Portfolios use valuation techniques to measure fair value that are consistent with the market approach and/or income approach, depending on the type of security and the particular circumstance. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable securities. The income approach uses valuation techniques to discount estimated future cash flows to present value.

GAAP establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are summarized in the three broad levels listed below:

•

Level 1 — quoted prices in active markets for identical investments

•

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

•

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

The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.

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


Variable Growth
	ASSETS
Description	Quoted Prices (Level 1)		Other Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Investments in Underlying Funds†	$	70,669,973		—		—	$	70,669,973
Short-Term Investments†		294,098		—		—		294,098
Total Investments	$	70,964,071		—		—	$	70,964,071

† See Schedule of Investments for additional detailed categorizations.


Variable Moderate Growth
	ASSETS
Description	Quoted Prices (Level 1)		Other Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Investments in Underlying Funds†	$	26,599,594		—		—	$	26,599,594
Short-Term Investments†		139,227		—		—		139,227
Total Investments	$	26,738,821		—		—	$	26,738,821

†	See Schedule of Investments for additional detailed categorizations.


20				Franklin Multi-Asset Variable Allocation Series 2022 Semi-Annual Report


Variable Conservative Growth
	ASSETS
Description	Quoted Prices (Level 1)		Other Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Investments in Underlying Funds†	$	76,615,105		—		—	$	76,615,105
Short-Term Investments†		4,702,955		—		—		4,702,955
Total Investments	$	81,318,060		—		—	$	81,318,060

†	See Schedule of Investments for additional detailed categorizations.

(b) Fund of funds risk. The cost of investing in the Portfolios, as funds of funds, may be higher than the cost of investing in a mutual fund that only invests directly in individual securities. An Underlying Fund may change its investment objective or policies without the Portfolios’ approval, which could force the Portfolios to withdraw their investments from such Underlying Fund at a time that is unfavorable to the Portfolios. In addition, one Underlying Fund may buy the same securities that another Underlying Fund sells. Therefore, the Portfolios would indirectly bear the costs of these trades without accomplishing any investment purpose.

(c) Security transactions and investment income. Security transactions are accounted for on a trade date basis. Net investment income distributions, if any, from the Underlying Funds are recorded on the ex-dividend date as investment income. Interest income is recorded on an accrual basis. Short-term and long-term capital gain distributions, if any, from the Underlying Funds are recorded on the ex-dividend date as realized gains. The character of certain distributions received from the Underlying Funds may represent a return of capital. The Portfolios determine the components of these distributions subsequent to the ex-dividend date, based on the actual tax character reported by the Underlying Funds. These distributions are recorded by adjusting the cost basis of the related Underlying Fund. The cost of investments sold is determined by use of the specific identification method.

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

(e) Share class accounting. Investment income, common expenses and realized/unrealized gains (losses) on investments are allocated to the various classes of the Portfolios on the basis of daily net assets of each class. Fees relating to a specific class are charged directly to that share class.

(f) Compensating balance arrangements. The Portfolios have an arrangement with their custodian bank whereby a portion of the custodian’s fees is paid indirectly by credits earned on the Portfolios’ cash on deposit with the bank.

(g) Federal and other taxes. It is the Portfolios’ 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 Portfolios intend to distribute their taxable income and net realized gains, if any, to shareholders in accordance with timing requirements imposed by the Code. Therefore, no federal or state income tax provision is required in the Portfolios’ financial statements.

Management has analyzed the Portfolios’ tax positions taken on income tax returns for all open tax years and has concluded that as of December 31, 2021, no provision for income tax is required in the Portfolios’ financial statements. The Portfolios’ federal and state income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.

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

2. Investment management agreement and other transactions with affiliates

Legg Mason Partners Fund Advisor, LLC (“LMPFA”) is each Portfolio’s investment manager. Franklin Advisers, Inc. (“Franklin Advisers”) is each Portfolio’s subadviser. Western Asset Management Company, LLC (“Western Asset”) manages the portion of each Portfolio’s cash and short-term instruments allocated to it. LMPFA, Franklin Advisers and Western Asset are wholly-owned subsidiaries of Franklin Resources, Inc. (“Franklin Resources”). Under the investment management agreements, the Portfolios do not pay a management fee.


Franklin Multi-Asset Variable Allocation Series 2022 Semi-Annual Report					21

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

LMPFA provides administrative and certain oversight services to the Portfolios. LMPFA delegates to the subadviser the day-to-day portfolio management of the Portfolios, except for the management of the portion of each Portfolio’s cash and short-term instruments allocated to Western Asset.

The Portfolios indirectly bear their proportionate share of expenses from the Underlying Funds. Since the Underlying Funds have varied expense levels and the Portfolios may own different proportions of the Underlying Funds at different times, the amount of expenses incurred indirectly by the Portfolios will vary.

As a result of expense limitation arrangements between the Portfolios and LMPFA, the ratio of total annual fund operating expenses, other than interest, brokerage, taxes, extraordinary expenses and acquired fund fees and expenses (fees and expenses of Underlying Funds), to average net assets of Class I shares of Variable Growth, Variable Moderate Growth and Variable Conservative Growth and Class II shares of Variable Conservative Growth did not exceed 0.20% and 0.45%, respectively. These expense limitation arrangements cannot be terminated prior to December 31, 2023 without the Board of Trustees’ consent.

During the six months ended June 30, 2022, fees waived and/or expenses reimbursed were as follows:


Variable Moderate Growth		$	19,119

LMPFA is permitted to recapture amounts waived and/or reimbursed to a class during the same fiscal year if the class’ total annual fund operating expenses have fallen to a level below the expense limitation (“expense cap”) in effect at the time the fees were earned or the expenses incurred. In no case will LMPFA recapture any amount that would result, on any particular business day of the Portfolios, in the class’ total annual fund operating expenses exceeding the expense cap or any other lower limit then in effect.

In addition, the Portfolios indirectly pay management and/or administration fees to LMPFA and certain LMPFA affiliates as shareholders in the Underlying Funds. These management and/or administration fees ranged from 0.40% to 0.75% of the average daily net assets of the Underlying Funds.

Franklin Distributors, LLC (“Franklin Distributors”) serves as the Portfolios’ sole and exclusive distributor. Franklin Distributors is an indirect, wholly-owned broker-dealer subsidiary of Franklin Resources.

All officers and one Trustee of the Trust are employees of Franklin Resources or its affiliates and do not receive compensation from the Trust.

3. Investments

During the six months ended June 30, 2022, the aggregate cost of purchases and proceeds from sales of investments (excluding short-term investments) were as follows:


	Purchases		Sales
Variable Growth	$	25,066,198	$	31,495,000
Variable Moderate Growth		9,253,154		10,900,000
Variable Conservative Growth		28,359,731		31,255,000

At June 30, 2022, the aggregate cost of investments and the aggregate gross unrealized appreciation and depreciation of investments for federal income tax purposes were substantially as follows:


			Variable Growth
	Cost		Gross Unrealized Appreciation		Gross Unrealized Depreciation		Net Unrealized Appreciation
Securities	$	60,707,029	$	10,945,941	$	(688,899)	$	10,257,042

			Variable Moderate Growth
	Cost		Gross Unrealized Appreciation		Gross Unrealized Depreciation		Net Unrealized Appreciation
Securities	$	23,847,835	$	3,437,161	$	(546,175)	$	2,890,986


22				Franklin Multi-Asset Variable Allocation Series 2022 Semi-Annual Report


			Variable Conservative Growth
	Cost		Gross Unrealized Appreciation		Gross Unrealized Depreciation		Net Unrealized Appreciation
Securities	$	76,353,258	$	7,566,290	$	(2,601,488)	$	4,964,802

4. Derivative instruments and hedging activities

During the six months ended June 30, 2022, the Portfolios did not invest in derivative instruments.

5. Class specific expenses, waivers and/or expense reimbursements

Variable Conservative Growth has adopted a Rule 12b-1 shareholder services and distribution plan and under that plan the Portfolio pays service and/or distribution fees with respect to its Class II shares calculated at the annual rate of 0.25% of the average daily net assets of the class. Service and/or distribution fees are accrued daily and paid monthly.

For the six months ended June 30, 2022, class specific expenses were as follows:


	Transfer Agent Fees
Variable Growth
Class I	$	509

	Transfer Agent Fees
Variable Moderate Growth
Class I	$	482


	Service and/or Distribution Fees		Transfer Agent Fees
Variable Conservative Growth
Class I		—	$	297
Class II	$	20,960		96
Total	$	20,960	$	393

For the six months ended June 30, 2022, waivers and/or expense reimbursements by class were as follows:


	Waivers/Expense Reimbursements
Variable Moderate Growth
Class I	$	19,119

6. Distributions to shareholders by class


	Six Months Ended June 30, 2022		Year Ended December 31, 2021
Variable Growth
Net Investment Income:
Class I	$	850,002	$	3,775,005
Net Realized Gains:
Class I	$	6,484,000	$	6,706,098


Franklin Multi-Asset Variable Allocation Series 2022 Semi-Annual Report					23

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


	Six Months Ended June 30, 2022		Year Ended December 31, 2021
Variable Moderate Growth
Net Investment Income:
Class I	$	5,000	$	1,390,002
Net Realized Gains:
Class I	$	1,959,256	$	2,066,167


	Six Months Ended June 30, 2022		Year Ended December 31, 2021
Variable Conservative Growth
Net Investment Income:
Class I	$	119,325	$	2,532,545
Class II		30,679		567,462
Total	$	150,004	$	3,100,007
Net Realized Gains:
Class I	$	3,390,538	$	3,847,970
Class II		871,707		885,211
Total	$	4,262,245	$	4,733,181

7. Shares of beneficial interest

At June 30, 2022, the Trust had an unlimited number of shares of beneficial interest authorized with a par value of $0.00001 per share. The Portfolios have the ability to issue multiple classes of shares. Each class of shares represents an identical interest and has the same rights, except that each class bears certain direct expenses, including those specifically related to the distribution of its shares.

Transactions in shares of each class were as follows:


	Six Months Ended June 30, 2022				Year Ended December 31, 2021
	Shares		Amount		Shares		Amount
Variable Growth
Class I
Shares sold		9,568	$	126,198		42,588	$	713,881
Shares issued on reinvestment		641,645		7,334,002		652,663		10,481,103
Shares repurchased		(498,169)		(7,180,999)		(1,044,239)		(17,249,605)
Net increase (decrease)		153,044	$	279,201		(348,988)	$	(6,054,621)


	Six Months Ended June 30, 2022				Year Ended December 31, 2021
	Shares		Amount		Shares		Amount
Variable Moderate Growth
Class I
Shares sold		4,803	$	65,307		7,622	$	121,983
Shares issued on reinvestment		169,186		1,964,256		222,648		3,456,169
Shares repurchased		(131,455)		(1,853,900)		(271,603)		(4,348,773)
Net increase (decrease)		42,534	$	175,663		(41,333)	$	(770,621)


24				Franklin Multi-Asset Variable Allocation Series 2022 Semi-Annual Report


	Six Months Ended June 30, 2022				Year Ended December 31, 2021
	Shares		Amount		Shares		Amount
Variable Conservative Growth
Class I
Shares sold		15,135	$	220,770		71,558	$	1,218,075
Shares issued on reinvestment		275,716		3,509,863		388,984		6,380,515
Shares repurchased		(276,328)		(4,106,244)		(624,600)		(10,539,227)
Net increase (decrease)		14,523	$	(375,611)		(164,058)	$	(2,940,637)
Class II
Shares sold		131,672	$	1,990,360		348,935	$	5,798,947
Shares issued on reinvestment		71,279		902,386		88,950		1,452,673
Shares repurchased		(115,470)		(1,743,126)		(160,797)		(2,706,118)
Net increase		87,481	$	1,149,620		277,088	$	4,545,502

8. Transactions with affiliated companies

As defined by the 1940 Act, an affiliated company is one in which the Portfolios own 5% or more of the outstanding voting securities, or a company which is under common ownership or control with the Portfolios. The following Underlying Funds were considered affiliated companies for all or some portion of the six months ended June 30, 2022. The following transactions were effected in such Underlying Funds for the six months ended June 30, 2022.


	Affiliate Value at December 31, 2021										Realized Gain (Loss) from Sale of Affiliated Underlying Funds		Income Distributions from Affiliated Underlying Funds		Capital Gain Distributions from Affiliated Underlying Funds		Net Increase (Decrease) in Unrealized Appreciation (Depreciation)		Affiliate Value at June 30, 2022



			Purchased				Sold
Variable Growth			Cost		Shares		Cost		Shares
BrandywineGLOBAL — Diversified US Large Cap Value Fund, Class IS Shares	$	6,176,993	$	1,325,000		71,390	$	844,811		47,931	$	130,190		—		—	$	(671,561)	$	5,985,621
BrandywineGLOBAL — Dynamic US Large Cap Value Fund, Class IS Shares		20,071,055		155,475		13,266		10,776,705		955,508		1,008,295		—	$	155,475		(3,523,711)		5,926,114
ClearBridge Small Cap Fund, Class IS Shares		—		3,345,000		56,801		—		—		—		—		—		(38,057)		3,306,943
Franklin U.S. Small Cap Equity Fund, Class IS Shares		14,763,530		688,759		61,803		9,880,265		791,324		(1,225,265)	$	51,265		172,495		(1,882,823)		3,689,201
ClearBridge Appreciation Fund, Class IS Shares		7,686,775		10,255,000		365,547		477,518		21,454		192,481		—		—		(1,423,650)		16,040,607
ClearBridge Large Cap Growth Fund, Class IS Shares		8,747,051		6,390,000		122,580		300,179		4,049		(60,180)		—		—		(2,850,545)		11,986,327
ClearBridge Small Cap Growth Fund, Class IS Shares		4,080,256		620,000		15,316		1,062,951		27,406		(52,951)		—		—		(1,292,544)		2,344,761
Franklin International Equity Fund, Class IS Shares		20,007,723		790,000		54,110		3,115,769		180,064		(330,768)		—		—		(3,201,522)		14,480,432
Western Asset Core Bond Fund, Class IS Shares		4,926,778		1,198,212		105,070		247,040		18,533		(32,040)		53,839		—		(708,982)		5,168,968
Western Asset Intermediate Bond Fund, Class IS Shares		7,403,125		298,752		28,349		5,760,255		526,163		(600,255)		74,495		—		(200,623)		1,740,999
	$	93,863,286	$	25,066,198			$	32,465,493			$	(970,493)	$	179,599	$	327,970	$	(15,794,018)	$	70,669,973

Variable Moderate Growth	Affiliate Value at December 31, 2021										Realized Gain (Loss) from Sale of Affiliated Underlying Funds		Income Distributions from Affiliated Underlying Funds		Capital Gain Distributions from Affiliated Underlying Funds		Net Increase (Decrease) in Unrealized Appreciation (Depreciation)		Affiliate Value at June 30, 2022



			Purchased				Sold
			Cost		Shares		Cost		Shares
BrandywineGLOBAL — Diversified US Large Cap Value Fund, Class IS Shares	$	1,439,100	$	900,000		48,491		186,130		10,057	$	18,870		—		—	$	(150,850)	$	2,002,120
BrandywineGLOBAL — Dynamic US Large Cap Value Fund, Class IS Shares		6,118,619		48,154		4,109		3,142,282		276,672		267,718		—	$	48,154		(1,043,114)		1,981,377


Franklin Multi-Asset Variable Allocation Series 2022 Semi-Annual Report					25

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


Variable Moderate Growth cont’d)	Affiliate Value at December 31, 2021										Realized Gain (Loss) from Sale of Affiliated Underlying Funds		Income Distributions from Affiliated Underlying Funds		Capital Gain Distributions from Affiliated Underlying Funds		Net Increase (Decrease) in Unrealized Appreciation (Depreciation)		Affiliate Value at June 30, 2022



			Purchased				Sold
			Cost		Shares		Cost		Shares
ClearBridge Small Cap Fund, Class IS Shares		—		$1,115,000		18,934		—		—		—		—		—		$(12,686)		$1,102,314
Franklin U.S. Small Cap Equity Fund, Class IS Shares		$4,108,448		178,878		16,366		$2,446,367		199,792		$(266,367)		$14,635		$49,243		(605,309)		1,235,650
ClearBridge Appreciation Fund, Class IS Shares		3,578,656		2,575,000		91,787		203,515		7,349		26,485		—		—		(594,411)		5,355,730
ClearBridge Large Cap Growth Fund, Class IS Shares		2,708,422		2,225,000		42,795		30,259		408		(5,259)		—		—		(902,508)		4,000,655
ClearBridge Small Cap Growth Fund, Class IS Shares		1,024,541		165,000		4,090		85,861		1,699		(20,862)		—		—		(322,212)		781,468
Western Asset Core Bond Fund, Class IS Shares		3,773,200		860,267		76,016		100,817		7,563		(10,817)		40,748		—		(549,613)		3,983,037
Western Asset Intermediate Bond Fund, Class IS Shares		5,667,162		130,855		12,519		4,306,503		392,774		(456,502)		56,423		—		(150,660)		1,340,854
Franklin International Equity Fund, Class IS Shares		5,607,706		1,055,000		72,260		1,008,410		55,260		(163,410)		—		—		(837,907)		4,816,389
		$34,025,854		$9,253,154				$11,510,144				$(610,144)		$111,806		$97,397		$(5,169,270)		$26,599,594

Variable Conservative Growth	Affiliate Value at December 31, 2021										Realized Gain (Loss) from Sale of Affiliated Underlying Funds		Income Distributions from Affiliated Underlying Funds		Capital Gain Distributions from Affiliated Underlying Funds		Net Increase (Decrease) in Unrealized Appreciation (Depreciation)		Affiliate Value at June 30, 2022



			Purchased				Sold
			Cost		Shares		Cost		Shares
BrandywineGLOBAL — Dynamic US Large Cap Value Fund, Class IS Shares		$12,046,753		$4,408,250		370,233		$5,622,575		491,821		$417,426		—		$98,250		$(1,988,080)		$8,844,348
ClearBridge Small Cap Fund, Class IS Shares		—		2,380,000		40,414		—		—		—		—		—		(27,078)		2,352,922
Franklin U.S. Small Cap Equity Fund, Class IS Shares		9,197,428		636,908		56,711		5,209,662		443,983		(364,663)		$33,657		113,251		(1,609,269)		3,015,405
ClearBridge Appreciation Fund, Class IS Shares		9,217,212		4,600,000		163,831		662,338		22,470		42,662		—		—		(1,482,793)		11,672,081
ClearBridge Large Cap Growth Fund, Class IS Shares		5,756,886		4,975,000		95,862		158,383		2,136		(18,382)		—		—		(1,885,285)		8,688,218
ClearBridge Small Cap Growth Fund, Class IS Shares		2,092,396		445,000		11,210		69,738		1,380		(9,738)		—		—		(696,028)		1,771,630
Western Asset Core Bond Fund, Class IS Shares		18,249,694		7,402,480		663,608		347,922		25,917		(52,923)		194,803		—		(2,611,820)		22,692,432
Western Asset Intermediate Bond Fund, Class IS Shares		27,422,112		267,093		26,219		19,518,318		1,777,773		(2,088,318)		269,843		—		(816,336)		7,354,551
Franklin International Equity Fund, Class IS Shares		10,654,065		3,245,000		222,261		2,160,989		115,920		(420,989)		—		—		(1,514,558)		10,223,518
		$94,636,546		$28,359,731				$33,749,925				$(2,494,925)		$498,303		$211,501		$(12,631,247)		$76,615,105

9. Redemption facility

On February 4, 2022, the Portfolios, together with other U.S. registered and foreign investment funds (collectively, the “Borrowers”) managed by Franklin Resources or its affiliates, became a borrower in a joint syndicated senior unsecured credit facility totaling $2.675 billion (the “Global Credit Facility”). The Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests. Unless renewed, the Global Credit Facility will terminate on February 3, 2023.

Under the terms of the Global Credit Facility, the Portfolios shall, in addition to interest charged on any borrowings made by the Portfolios and other costs incurred by the Portfolios, pay its share of fees and expenses incurred in connection with the implementation and maintenance of the Global Credit Facility, based upon its relative share of the aggregate net assets


26				Franklin Multi-Asset Variable Allocation Series 2022 Semi-Annual Report

of all the Borrowers, including an annual commitment fee of 0.15% based upon the unused portion of the Global Credit Facility. These fees are reflected in the Statements of Operations. The Portfolios did not utilize the Global Credit Facility during the six months ended June 30, 2022.

10. Deferred capital losses

As of December 31, 2021, Variable Conservative Growth had deferred capital losses of $3,816, which have no expiration date, that will be available to offset future taxable capital gains.

11. Recent accounting pronouncement

In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2020-04, Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate Reform on Financial Reporting.In January 2021, the FASB issued ASU No. 2021-01, with further amendments to Topic 848. The amendments in the ASUs provide optional temporary accounting recognition and financial reporting relief from the effect of certain types of contract modifications due to the planned discontinuation of the LIBOR and other interbank-offered based reference rates as of the end of 2021 and 2023. The ASUs are effective for certain reference rate-related contract modifications that occur during the period March 12, 2020 through December 31, 2022. Management has reviewed the requirements and believes the adoption of these ASUs will not have a material impact on the financial statements.

12. Other matters

The outbreak of the respiratory illness COVID-19 (commonly referred to as “coronavirus”) has continued to rapidly spread around the world, causing considerable uncertainty for the global economy and financial markets. The ultimate economic fallout from the pandemic, and the long-term impact on economies, markets, industries and individual issuers, are not known. The COVID-19 pandemic could adversely affect the value and liquidity of the Portfolios’ investments, impair the Portfolios’ ability to satisfy redemption requests, and negatively impact the Portfolios’ performance. In addition, the outbreak of COVID-19, and measures taken to mitigate its effects, could result in disruptions to the services provided to the Portfolios by their service providers.

* * *

On February 24, 2022, Russia engaged in military actions in the sovereign territory of Ukraine. The current political and financial uncertainty surrounding Russia and Ukraine may increase market volatility and the economic risk of investing in securities in these countries and may also cause uncertainty for the global economy and broader financial markets. The ultimate fallout and long-term impact from these events are not known. The Portfolios will continue to assess the impact on valuations and liquidity and will take any potential actions needed in accordance with procedures approved by the Board of Trustees.


Franklin Multi-Asset Variable Allocation Series 2022 Semi-Annual Report					27

Board approval of management and subadvisory agreements (unaudited)

Legg Mason Partners Variable Equity Trust

— Franklin Multi-Asset Variable Growth Fund

At an in-person meeting of the Board of Trustees of Legg Mason Partners Variable Equity Trust (the “Trust”) held on May 4 and 5, 2022, the Board, including the Trustees who are not considered to be “interested persons” of the Trust (the “Independent Trustees”) under the Investment Company Act of 1940, as amended (the “1940 Act”), approved for an annual period the continuation of the management agreement (the “Management Agreement”) between the Trust and Legg Mason Partners Fund Advisor, LLC (the “Manager”) with respect to Franklin Multi-Asset Variable Growth Fund, a series of the Trust (the “Fund”), and the sub-advisory agreement pursuant to which Franklin Advisers, Inc. (“Franklin Advisers”) provides day-to-day management of the Fund’s portfolio, and the sub-advisory agreement pursuant to which Western Asset Management Company, LLC (“Western Asset” and, together with Franklin Advisers, the “Sub-Advisers”) provides day-to-day management of the Fund’s cash and short-term instruments allocated to it by the Manager. The management agreement and sub-advisory agreements are collectively referred to as the “Agreements.”

Background

The Board received extensive information in advance of the meeting to assist it in its consideration of the Agreements and asked questions and requested additional information from management. Throughout the year, the Board (including its various committees) had met with representatives of the Manager and the Subadvisers, and had received information relevant to the renewal of the Agreements. Prior to the meeting, the Independent Trustees met with their independent legal counsel to discuss and consider the information provided and submitted questions to management, and they considered the responses provided. The Board received and considered a variety of information about the Manager and the Subadvisers, as well as the management, advisory and sub-advisory arrangements for the Fund and other funds overseen by the Board, certain portions of which are discussed below. The information received and considered by the Board both in conjunction with the May 2022 meeting and throughout the year was both written and oral. The contractual arrangements discussed below are the product of multiple years of review and negotiation and information received and considered by the Board during those years.

The information provided and presentations made to the Board encompassed the Fund and all other funds overseen by the Board. The discussion below covers both the advisory and the administrative functions being rendered by the Manager, both of which functions are encompassed by the Management Agreement, as well as the advisory functions rendered by the Subadvisers pursuant to the Sub-Advisory Agreements.

Board approval of management agreement and sub-advisory agreements

The Independent Trustees were advised by separate independent legal counsel throughout the process. Prior to voting, the Independent Trustees received a memorandum from their independent legal counsel discussing the legal standards for their consideration of the proposed continuation of the Agreements. The Independent Trustees also reviewed the proposed continuation of the Management Agreement and the Sub-Advisory Agreements in private sessions with their independent legal counsel at which no representatives of the Manager and Subadvisers were present. The Independent Trustees considered the Management Agreement and each Sub-Advisory Agreement separately in the course of their review. In doing so, they noted the respective roles of the Manager and the Subadvisers in providing services to the Fund.

In approving the Agreements, the Board, including the Independent Trustees, considered a variety of factors, including those factors discussed below. No single factor reviewed by the Board was identified by the Board as the principal factor in determining whether to approve the Management Agreement and the Sub-Advisory Agreements. Each Trustee may have attributed different weight to the various factors in evaluating the Management Agreement and each Sub-Advisory Agreement.

After considering all relevant factors and information, the Board, exercising its business judgment, determined that the continuation of the Agreements was in the best interests of the Fund and its shareholders and approved the continuation of each such agreement for another year.

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

The Board received and considered information regarding the nature, extent and quality of services provided to the Fund by the Manager and the Subadvisers under the Management Agreement and the Sub-Advisory Agreements, respectively,


28				Franklin Multi-Asset Variable Allocation Series

during the past year. The Board noted information received at regular meetings throughout the year related to the services rendered by the Manager in its management of the Fund’s affairs and the Manager’s role in coordinating the activities of the Fund’s other service providers. The Board’s evaluation of the services provided by the Manager and the Subadvisers took into account the Board’s knowledge gained as Trustees of funds in the fund complex overseen by the Trustees, including knowledge gained regarding the scope and quality of the investment management and other capabilities of the Manager and the Subadvisers, and the quality of the Manager’s administrative and other services. The Board observed that the scope of services provided by the Manager and the Subadvisers, and of the undertakings required of the Manager and Subadvisers in connection with those services, including maintaining and monitoring their own and the Fund’s compliance programs, liquidity management programs and cybersecurity programs, had expanded over time as a result of regulatory, market and other developments. The Board also noted that on a regular basis it received and reviewed information from the Manager regarding the Fund’s compliance policies and procedures established pursuant to Rule 38a-1 under the 1940 Act. The Board also considered the risks associated with the Fund borne by the Manager and its affiliates (such as entrepreneurial, operational, reputational, litigation and regulatory risk), as well as the Manager’s and each Subadviser’s risk management processes.

The Board reviewed the qualifications, backgrounds and responsibilities of the Manager’s and each Subadviser’s senior personnel and the team of investment professionals primarily responsible for the day-to-day portfolio management of the Fund. The Board also considered, based on its knowledge of the Manager and the Manager’s affiliates, the financial resources of Franklin Resources, Inc., the parent organization of the Manager and the Subadvisers. The Board recognized the importance of having a fund manager with significant resources.

The Board considered the division of responsibilities among the Manager and the Subadvisers and the oversight provided by the Manager. The Board also considered the policies and practices of the Manager and the Subadvisers regarding the selection of brokers and dealers and the execution of portfolio transactions. The Board considered management’s periodic reports to the Board on, among other things, its business plans, any organizational changes and portfolio manager compensation.

Performance Comparisons. The Board received and considered performance information for the Fund as well as for a group of funds (the “Performance Universe”) selected by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent provider of investment company data, based on classifications provided by Thomson Reuters Lipper (“Lipper”). The Board was provided with a description of the methodology used to determine the similarity of the Fund with the funds included in the Performance Universe. It was noted that while the Board found the Broadridge data generally useful, they recognized its limitations, including that the data may vary depending on the end date selected and that the results of the performance comparisons may vary depending on the selection of the peer group and its composition over time. The Board also noted that it had received and discussed with management information throughout the year at periodic intervals comparing the Fund’s performance against its benchmark and against the Fund’s peers. The Board also considered the Fund’s performance in light of overall financial market conditions.

The information comparing the Fund’s performance to that of its Performance Universe, consisting of all funds (including the Fund) classified as mixed-asset target allocation aggressive growth funds underlying variable insurance products by Lipper, showed, among other data, that the performance of the Fund’s Class I shares for the one-, three-, five- and ten-year periods ended December 31, 2021 was above the median performance and ranked in the first quintile of the funds in the Performance Universe for the one-year period, and was below the median performance of the funds in the Performance Universe for the three-, five- and ten-year periods. The Board considered the relative proximity of the Fund’s performance to the Performance Universe medians and noted the explanations from the Manager and Franklin Advisers concerning the reasons for the Fund’s relative performance versus the peer group for the various periods.

The Board concluded that, overall, the nature, extent and quality of services provided (and expected to be provided), including performance, under the Management Agreement and each Sub-Advisory Agreement were sufficient for renewal.

Management fees and expense ratios

The Board reviewed and considered the contractual management fee payable by the Fund to the Manager (the “Contractual Management Fee”) and the actual management fees paid by the Fund to the Manager (the “Actual Management Fee”) in light of the nature, extent and quality of the management and sub-advisory services provided by the Manager and the Subadvisers, respectively. The Board also noted that the compensation paid to the Subadvisers is the responsibility and expense of the Manager, not the Fund.


Franklin Multi-Asset Variable Allocation Series					29

Board approval of management and subadvisory agreements (unaudited) (cont’d)

The Board received and considered information provided by Broadridge comparing the Contractual Management Fee and the Actual Management Fee and the Fund’s total actual expenses with those of funds in both the relevant expense group and a broader group of funds, each selected by Broadridge based on classifications provided by Lipper. It was noted that while the Board found the Broadridge data generally useful, they recognized its limitations, including that the data may vary depending on the selection of the peer group. The Board also reviewed information regarding fees charged by the Manager and/or the Subadvisers to other U.S. clients investing primarily in an asset class similar to that of the Fund, noting that there were none.

The Manager reviewed with the Board the differences in services provided to these different types of accounts, noting that the Fund is provided with certain administrative services, office facilities, and Fund officers (including the Fund’s chief executive, chief financial and chief compliance officers), and that the Manager coordinates and oversees the provision of services to the Fund by other Fund service providers. The Board considered the fee comparisons in light of the differences in management of these different types of accounts, and the differences in the degree of entrepreneurial and other risks borne by the Manager in managing the Fund and in managing other types of accounts.

The Board considered the overall management fee, the fees of each of the Subadvisers and the amount of the management fee retained by the Manager after payment of the subadvisory fees, in each case in light of the services rendered for those amounts. The Board also received an analysis of complex-wide management fees provided by the Manager, which, among other things, set out a framework of fees based on asset classes.

The Board also received and considered information comparing the Fund’s Contractual Management Fee and Actual Management Fee as well as its actual total expense ratio with those of a group of seven mixed-asset target allocation aggressive growth funds of funds underlying variable insurance products (including the Fund) selected by Broadridge to be comparable to the Fund (the “Expense Group”), and a broader group of funds selected by Broadridge consisting of all mixed-asset target allocation aggressive growth funds of funds underlying variable insurance products (including the Fund) (the “Expense Universe”). This information showed that the Fund’s Actual Management Fee was below the median of management fees paid by the funds in the Expense Group and below the median of management fees paid by the funds in the Expense Universe. This information also showed that the Fund’s actual total expense ratio was below the median of the total expense ratios of the funds in the Expense Group and approximately equivalent to the median of the actual total expense ratios of the funds in the Expense Universe, and that the Fund’s underlying fund expenses were at the median of the underlying fund expenses of the funds in the Expense Group and above the median of the underlying fund expenses of the funds in the Expense Universe. The Board took into account management’s discussion of the Fund’s expenses and noted the limited size of the Expense Group.

Taking all of the above into consideration, as well as the factors identified below, the Board determined that the management fee and the subadvisory fees for the Fund were reasonable in light of the nature, extent and quality of the services provided to the Fund under the Management Agreement and the Sub-Advisory Agreements.

Manager profitability

The Board received and considered an analysis of the profitability of the Manager and its affiliates in providing services to the Fund. The Board also received profitability information with respect to the Legg Mason Funds complex as a whole. The Board received information with respect to the Manager’s allocation methodologies used in preparing this profitability data. It was noted that the allocation methodologies had been reviewed by an outside consultant. The profitability of the Manager and its affiliates was considered by the Board not excessive in light of the nature, extent and quality of the services provided to the Fund.

Economies of scale

The Board received and discussed information concerning whether the Manager realizes economies of scale with respect to the management of the Fund as the Fund’s assets grow. The Board also noted the size of the Fund.

The Board determined that the management fee structure for the Fund was reasonable.


30				Franklin Multi-Asset Variable Allocation Series

Other benefits to the Manager and the Subadvisers

The Board considered other benefits received by the Manager, the Subadvisers and their affiliates as a result of their relationship with the Fund, including the opportunity to offer additional products and services to Fund shareholders, including the recent appointment of an affiliate of the Manager as the transfer agent of the Fund.

In light of the costs of providing investment management and other services to the Fund and the ongoing commitment of the Manager and the Subadvisers to the Fund, the Board considered that the ancillary benefits that the Manager, the Subadvisers and their affiliates received were reasonable.


Franklin Multi-Asset Variable Allocation Series					31

Board approval of management and subadvisory agreements (unaudited) (cont’d)

Legg Mason Partners Variable Equity Trust

— Franklin Multi-Asset Variable Moderate Growth Fund

At an in-person meeting of the Board of Trustees of Legg Mason Partners Variable Equity Trust (the “Trust”) held on May 4 and 5, 2022, the Board, including the Trustees who are not considered to be “interested persons” of the Trust (the “Independent Trustees”) under the Investment Company Act of 1940, as amended (the “1940 Act”), approved for an annual period the continuation of the management agreement (the “Management Agreement”) between the Trust and Legg Mason Partners Fund Advisor, LLC (the “Manager”) with respect to Franklin Multi-Asset Variable Moderate Growth Fund, a series of the Trust (the “Fund”), and the sub-advisory agreement pursuant to which Franklin Advisers, Inc. (“Franklin Advisers”) provides day-to-day management of the Fund’s portfolio, and the sub-advisory agreement pursuant to which Western Asset Management Company, LLC (“Western Asset” and, together with Franklin Advisers, the “Sub-Advisers”) provides day-to-day management of the Fund’s cash and short-term instruments allocated to it by the Manager. The management agreement and sub-advisory agreements are collectively referred to as the “Agreements.”

Background

Board approval of management agreement and sub-advisory agreements

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


32				Franklin Multi-Asset Variable Allocation Series

Management fees and expense ratios

The Board reviewed and considered the contractual management fee payable by the Fund to the Manager (the “Contractual Management Fee”) and the actual management fees paid by the Fund to the Manager (the “Actual Management Fee”) in light of the nature, extent and quality of the management and sub-advisory services provided by the Manager and the Subadvisers, respectively. The Board also considered that fee waiver and/or expense reimbursement arrangements are currently in place for the Fund. The Board also noted that the compensation paid to the Subadvisers is the responsibility and expense of the Manager, not the Fund.


Franklin Multi-Asset Variable Allocation Series					33

Board approval of management and subadvisory agreements (unaudited) (cont’d)

The Board also received and considered information comparing the Fund’s Contractual Management Fee and Actual Management Fee as well as its actual total expense ratio with those of a group of eight mixed-asset target allocation growth funds of funds underlying variable insurance products (including the Fund) selected by Broadridge to be comparable to the Fund (the “Expense Group”), and a broader group of funds selected by Broadridge consisting of all mixed-asset target allocation growth funds of funds underlying variable insurance products (including the Fund) (the “Expense Universe”). This information showed that the Fund’s Actual Management Fee was below the median of management fees paid by the funds in the Expense Group and below the median of management fees paid by the funds in the Expense Universe. This information also showed that the Fund’s actual total expense ratio was approximately equivalent to the median of the total expense ratios of the funds in the Expense Group and above the median of the actual total expense ratios of the funds in the Expense Universe, and that the Fund’s underlying fund expenses were below the median of the underlying fund expenses of the funds in the Expense Group but above the median of the underlying fund expenses of the funds in the Expense Universe. The Board took into account management’s discussion of the Fund’s expenses and noted the limited size of the Expense Group. The Board also considered that the current limitation on the Fund’s expenses is expected to continue until and expire on December 31, 2023.

Manager profitability

Economies of scale

The Board determined that the management fee structure for the Fund was reasonable.


34				Franklin Multi-Asset Variable Allocation Series

Other benefits to the Manager and the Subadvisers


Franklin Multi-Asset Variable Allocation Series					35

Board approval of management and subadvisory agreements (unaudited) (cont’d)

Legg Mason Partners Variable Equity Trust

— Franklin Multi-Asset Variable Conservative Growth Fund

At an in-person meeting of the Board of Trustees of Legg Mason Partners Variable Equity Trust (the “Trust”) held on May 4 and 5, 2022, the Board, including the Trustees who are not considered to be “interested persons” of the Trust (the “Independent Trustees”) under the Investment Company Act of 1940, as amended (the “1940 Act”), approved for an annual period the continuation of the management agreement (the “Management Agreement”) between the Trust and Legg Mason Partners Fund Advisor, LLC (the “Manager”) with respect to Franklin Multi-Asset Variable Conservative Growth Fund, a series of the Trust (the “Fund”), and the sub-advisory agreement pursuant to which Franklin Advisers, Inc. (“Franklin Advisers”) provides day-to-day management of the Fund’s portfolio, and the sub-advisory agreement pursuant to which Western Asset Management Company, LLC (“Western Asset” and, together with Franklin Advisers, the “Sub-Advisers”) provides day-to-day management of the Fund’s cash and short-term instruments allocated to it by the Manager. The management agreement and sub-advisory agreements are collectively referred to as the “Agreements.”

Background

Board approval of management agreement and sub-advisory agreements

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


36				Franklin Multi-Asset Variable Allocation Series

Management fees and expense ratios


Franklin Multi-Asset Variable Allocation Series					37

Board approval of management and subadvisory agreements (unaudited) (cont’d)

The Board also received and considered information comparing the Fund’s Contractual Management Fee and Actual Management Fee as well as its actual total expense ratio with those of a group of ten mixed-asset target allocation moderate funds underlying variable insurance products (including the Fund) selected by Broadridge to be comparable to the Fund (the “Expense Group”), and a broader group of funds selected by Broadridge consisting of all mixed-asset target allocation moderate funds of funds underlying variable insurance products (including the Fund) (the “Expense Universe”). This information showed that the Fund’s Actual Management Fee was approximately equivalent to the median of management fees paid by the funds in the Expense Group and below the median of management fees paid by the funds in the Expense Universe. This information also showed that the Fund’s actual total expense ratio was approximately equivalent to the median of the total expense ratios of the funds in the Expense Group and approximately equivalent to the median of the actual total expense ratios of the funds in the Expense Universe, and that the Fund’s underlying fund expenses were approximately equivalent to the median of the underlying fund expenses of the funds in the Expense Group and above the median of the underlying fund expenses of the funds in the Expense Universe. The Board took into account management’s discussion of the Fund’s expenses and noted the limited size of the Expense Group.

Manager profitability

Economies of scale

The Board determined that the management fee structure for the Fund was reasonable.

Other benefits to the Manager and the Subadvisers


38				Franklin Multi-Asset Variable Allocation Series


Franklin Multi-Asset Variable Allocation Series					39

Statement regarding liquidity risk management program (unaudited)

Each Fund has adopted and implemented a written Liquidity Risk Management Program (the “LRMP”) as required by Rule 22e-4 under the Investment Company Act of 1940 (the “Liquidity Rule”). The LRMP is designed to assess and manage each Fund’s liquidity risk, which is defined as the risk that the Fund could not meet requests to redeem shares issued by the Fund without significant dilution of remaining investors’ interests in the Fund. In accordance with the Liquidity Rule, the LRMP includes policies and procedures that provide for: (1) assessment, management, and review (no less frequently than annually) of each Fund’s liquidity risk; (2) classification of each Fund’s portfolio holdings into one of four liquidity categories (Highly Liquid, Moderately Liquid, Less Liquid, and Illiquid); (3) for Funds that do not primarily hold assets that are Highly Liquid, establishing and maintaining a minimum percentage of the Fund’s net assets in Highly Liquid investments (called a “Highly Liquid Investment Minimum” or “HLIM”); and (4) prohibiting the Fund’s acquisition of Illiquid investments that would result in the Fund holding more than 15% of its net assets in Illiquid assets. The LRMP also requires reporting to the Securities and Exchange Commission (“SEC”) (on a non-public basis) and to the Board if the Fund’s holdings of Illiquid assets exceed 15% of the Fund’s net assets. Funds with HLIMs must have procedures for addressing HLIM shortfalls, including reporting to the Board and, with respect to HLIM shortfalls lasting more than seven consecutive calendar days, reporting to the SEC (on a non-public basis).

The Director of Liquidity Risk within the Investment Risk Management Group (the “IRMG”) is the appointed Administrator of the LRMP. The IRMG maintains the Investment Liquidity Committee (the “ILC”) to provide oversight and administration of policies and procedures governing liquidity risk management for Franklin Templeton and Legg Mason products and portfolios. The ILC includes representatives from Franklin Templeton’s Risk, Trading, Global Compliance, Legal, Investment Compliance, Investment Operations, Valuation Committee, Product Management and Global Product Strategy.

In assessing and managing each Fund’s liquidity risk, the ILC considers, as relevant, a variety of factors, including the Fund’s investment strategy and the liquidity of its portfolio investments during both normal and reasonably foreseeable stressed conditions; its short and long-term cash flow projections; and its cash holdings and access to other funding sources including the Funds’ interfund lending facility and line of credit. Classification of the Fund’s portfolio holdings in the four liquidity categories is based on the number of days it is reasonably expected to take to convert the investment to cash (for Highly Liquid and Moderately Liquid holdings) or sell or dispose of the investment (for Less Liquid and Illiquid investments), in current market conditions without significantly changing the investment’s market value.

Each Fund primarily holds liquid assets that are defined under the Liquidity Rule as “Highly Liquid Investments,” and therefore is not required to establish an HLIM. Highly Liquid Investments are defined as cash and any investment reasonably expected to be convertible to cash in current market conditions in three business days or less without the conversion to cash significantly changing the market value of the investment.

At meetings of the Funds’ Board of Trustees/Directors held in May 2022, the Program Administrator provided a written report to the Board addressing the adequacy and effectiveness of the program for the year ended December 31, 2021. The Program Administrator report concluded that (i.) the LRMP, as adopted and implemented, remains reasonably designed to assess and manage each Fund’s liquidity risk; (ii.) the LRMP, including the Highly Liquid Investment Minimum (“HLIM”) where applicable, was implemented and operated effectively to achieve the goal of assessing and managing each Fund’s liquidity risk; and (iii.) each Fund was able to meet requests for redemption without significant dilution of remaining investors’ interests in the Fund.


40				Franklin Multi-Asset Variable Allocation Series

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Franklin

Multi-Asset Variable Allocation Series

Trustees

Paul R. Ades

Andrew L. Breech

Althea L. Duersten

Chair

Stephen R. Gross

Susan M. Heilbron

Howard J. Johnson

Arnold L. Lehman

Robin J. W. Masters

Jerome H. Miller

Ken Miller

G. Peter O’Brien

Thomas F. Schlafly

Jane Trust

Investment manager

Legg Mason Partners Fund Advisor, LLC

Subadviser

Franklin Advisers, Inc.

Distributor

Franklin Distributors, LLC

Custodian

The Bank of New York Mellon

Transfer agent

Franklin Templeton Investor

Services, LLC

3344 Quality Drive

Rancho Cordova, CA 95670-7313

Independent registered public accounting firm

PricewaterhouseCoopers LLP

Baltimore, MD

Franklin Multi-Asset Variable Allocation Series

Franklin Multi-Asset Variable Growth Fund

Franklin Multi-Asset Variable Moderate Growth Fund

Franklin Multi-Asset Variable Conservative Growth Fund

The Portfolios are separate investment series of Legg Mason Partners Variable Equity Trust, a Maryland statutory trust.

Franklin Multi-Asset Variable Allocation Series

Legg Mason Funds

620 Eighth Avenue, 47^th Floor

New York, NY 10018

The Portfolios file their complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year as an exhibit to their reports on Form N-PORT. The Portfolios’ Forms N-PORT are available on the SEC’s website at www.sec.gov. To obtain information on Form N-PORT, shareholders can call the Portfolios at 877-6LM-FUND/656-3863.

Information on how the Portfolios 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 Portfolios use to determine how to vote proxies related to portfolio transactions are available (1) without charge, upon request, by calling the Portfolios at 877-6LM-FUND/656-3863, (2) at www.franklintempleton.com and (3) on the SEC’s website at www.sec.gov.

This report is submitted for the general information of the shareholders of Franklin Multi-Asset Variable Growth Fund, Franklin Multi-Asset Variable Moderate Growth Fund and Franklin Multi-Asset Variable Conservative Growth Fund. This report is not authorized for distribution to prospective investors in the Portfolios unless preceded or accompanied by a current prospectus.

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

www.franklintempleton.com

Legg Mason Funds Privacy and Security Notice

Your Privacy and the Security of Your Personal Information is Very Important to the Legg Mason Funds

This Privacy and Security Notice (the “Privacy Notice”) addresses the Legg Mason Funds’ privacy and data protection practices with respect to nonpublic personal information the Funds receive. The Legg Mason Funds include any funds sold by the Funds’ distributor, Franklin Distributors, LLC, as well as Legg Mason-sponsored closed-end funds. The provisions of this Privacy Notice apply to your information both while you are a shareholder and after you are no longer invested with the Funds.

The Type of Nonpublic Personal Information the Funds Collect About You

The Funds collect and maintain nonpublic personal information about you in connection with your shareholder account. Such information may include, but is not limited to:

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Personal information included on applications or other forms;

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Account balances, transactions, and mutual fund holdings and positions;

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Bank account information, legal documents, and identity verification documentation;

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Online account access user IDs, passwords, security challenge question responses; and

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Information received from consumer reporting agencies regarding credit history and creditworthiness (such as the amount of an individual’s total debt, payment history, etc.).

How the Funds Use Nonpublic Personal Information About You

The Funds do not sell or share your nonpublic personal information with third parties or with affiliates for their marketing purposes, or with other financial institutions or affiliates for joint marketing purposes, unless you have authorized the Funds to do so. The Funds do not disclose any nonpublic personal information about you except as may be required to perform transactions or services you have authorized or as permitted or required by law.

The Funds may disclose information about you to:

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Employees, agents, and affiliates on a “need to know” basis to enable the Funds to conduct ordinary business, or to comply with obligations to government regulators;

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Service providers, including the Funds’ affiliates, who assist the Funds as part of the ordinary course of business (such as printing, mailing services, or processing or servicing your account with us) or otherwise perform services on the Funds’ behalf, including companies that may perform statistical analysis, market research and marketing services solely for the Funds;

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Permit access to transfer, whether in the United States or countries outside of the United States to such Funds’ employees, agents and affiliates and service providers as required to enable the Funds to conduct ordinary business, or to comply with obligations to government regulators;

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The Funds’ representatives such as legal counsel, accountants and auditors to enable the Funds to conduct ordinary business, or to comply with obligations to government regulators;

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Fiduciaries or representatives acting on your behalf, such as an IRA custodian or trustee of a grantor trust.

Except as otherwise permitted by applicable law, companies acting on the Funds’ behalf, including those outside the United States, are contractually obligated to keep nonpublic personal information the Funds provide to them confidential and to use the information the Funds share only to provide the services the Funds ask them to perform. The Funds may disclose nonpublic personal information about you when necessary to enforce their rights or protect against fraud, or as permitted or required by applicable law, such as in connection with a law enforcement or regulatory request, subpoena, or similar legal process. In the event of a corporate action or in the event a Fund service provider changes, the Funds may be required to disclose your nonpublic personal information to third parties. While it is the Funds’ practice to obtain protections for disclosed information in these types of transactions, the Funds cannot guarantee their privacy policy will remain unchanged.

Keeping You Informed of the Funds’ Privacy and Security Practices

The Funds will notify you annually of their privacy policy as required by federal law. While the Funds reserve the right to modify this policy at any time they will notify you promptly if this privacy policy changes.

NOT PART OF THE SEMI-ANNUAL REPORT

Legg Mason Funds Privacy and Security Notice (cont’d)

The Funds’ Security Practices

The Funds maintain appropriate physical, electronic and procedural safeguards designed to guard your nonpublic personal information. The Funds’ internal data security policies restrict access to your nonpublic personal information to authorized employees, who may use your nonpublic personal information for Fund business purposes only.

Although the Funds strive to protect your nonpublic personal information, they cannot ensure or warrant the security of any information you provide or transmit to them, and you do so at your own risk. In the event of a breach of the confidentiality or security of your nonpublic personal information, the Funds will attempt to notify you as necessary, so you can take appropriate protective steps. If you have consented to the Funds using electronic communications or electronic delivery of statements, they may notify you under such circumstances using the most current email address you have on record with them.

In order for the Funds to provide effective service to you, keeping your account information accurate is very important. If you believe that your account information is incomplete, not accurate or not current, if you have questions about the Funds’ privacy practices, or our use of your nonpublic personal information, write the Funds using the contact information on your account statements, email the Funds by clicking on the Contact Us section of the Funds’ website at www.franklintempleton.com, or contact the Fund at 877-6LM-FUND/656-3863.

Revised April 2018

Legg Mason California Consumer Privacy Act Policy

Although much of the personal information we collect is “nonpublic personal information” subject to federal law, residents of California may, in certain circumstances, have additional rights under the California Consumer Privacy Act (“CCPA”). For example, if you are a broker, dealer, agent, fiduciary, or representative acting by or on behalf of, or for, the account of any other person(s) or household, or a financial advisor, or if you have otherwise provided personal information to us separate from the relationship we have with personal investors, the provisions of this Privacy Policy apply to your personal information (as defined by the CCPA).

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In addition to the provisions of the Legg Mason Funds Security and Privacy Notice, you may have the right to know the categories and specific pieces of personal information we have collected about you.

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You also have the right to request the deletion of the personal information collected or maintained by the Funds.

If you wish to exercise any of the rights you have in respect of your personal information, you should advise the Funds by contacting them as set forth below. The rights noted above are subject to our other legal and regulatory obligations and any exemptions under the CCPA. You may designate an authorized agent to make a rights request on your behalf, subject to the identification process described below. We do not discriminate based on requests for information related to our use of your personal information, and you have the right not to receive discriminatory treatment related to the exercise of your privacy rights.

We may request information from you in order to verify your identity or authority in making such a request. If you have appointed an authorized agent to make a request on your behalf, or you are an authorized agent making such a request (such as a power of attorney or other written permission), this process may include providing a password/passcode, a copy of government issued identification, affidavit or other applicable documentation, i.e. written permission. We may require you to verify your identity directly even when using an authorized agent, unless a power of attorney has been provided. We reserve the right to deny a request submitted by an agent if suitable and appropriate proof is not provided.

For the 12-month period prior to the date of this Privacy Policy, the Legg Mason Funds have not sold any of your personal information; nor do we have any plans to do so in the future.

Contact Information

Address: Data Privacy Officer, 100 International Dr., Baltimore, MD 21202

Email: DataProtectionOfficer@franklintempleton.com

Phone: 1-800-396-4748

Revised October 2020

NOT PART OF THE SEMI-ANNUAL REPORT

www.franklintempleton.com

FD01325 8/22 SR22-4473

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 second fiscal quarter of the period covered by this report that have materially affected, or are likely to materially affect the registrant’s internal control over financial reporting.

ITEM 12.

DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

Not applicable

ITEM 13.

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/ Jane Trust
		Jane Trust
		Chief Executive Officer

Date:		August 18, 2022

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/ Jane Trust
		Jane Trust
		Chief Executive Officer

Date:		August 18, 2022

By:		/s/ Christopher Berarducci
		Christopher Berarducci
		Principal Financial Officer

Date:		August 18, 2022

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