Legg Mason Partners Variable Equity Trust
02/24/2026 | Press release | Distributed by Public on 02/24/2026 14:11
Annual Report by Investment Company (Form N-CSR)
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)
One Madison Avenue, 17th Floor, New York, NY 10010
(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: December 31, 2025
| ITEM 1. | REPORT TO STOCKHOLDERS |
(a) The Report to Shareholders is filed herewith
|
Franklin Multi-Asset Variable Growth Fund
|
||
|
Class I
|
||
|
Annual Shareholder Report | December 31, 2025
|
||
This annual shareholder reportcontains important information about Franklin Multi-Asset Variable Growth Fund for the period January 1, 2025, to December 31, 2025.
You can find additional information about the Fund at https://www.franklintempleton.com/regulatory-fund-documents. You can also request this information by contacting us at 877-6LM-FUND/656-3863.
You can find additional information about the Fund at https://www.franklintempleton.com/regulatory-fund-documents. You can also request this information by contacting us at 877-6LM-FUND/656-3863.
This report describes changes to the Fund that occurred during the reporting period.
WHAT WERE THE FUND COSTS FOR THE LAST YEAR? (based on a hypothetical $10,000 investment)
|
Class Name
|
Costs of a $10,000 investment
|
Costs paid as a percentage of a $10,000 investment
|
|
Class I1,2
|
$15
|
0.14%
|
| 1 | Does not reflect expenses incurred from investing through variable annuity or variable life insurance products. |
| 2 | Excludes fees and expenses of the underlying funds in which the Fund invests. |
HOW DID THE FUND PERFORM LAST YEAR AND WHAT AFFECTED ITS PERFORMANCE?
For the twelve months ended December 31, 2025, Class I shares of Franklin Multi-Asset Variable Growth Fund returned 16.56%. The Fund compares its performance to the Russell 3000 Index, the Bloomberg U.S. Aggregate Index and the Composite Benchmark†, which returned 17.15%, 7.30% and 17.77%, respectively, for the same period.
PERFORMANCE HIGHLIGHTS
|
Top contributors to performance:
|
|
|
↑
|
Exposure to U.S. equities was the leading contributor to absolute return by virtue of weight in the portfolio and return.
|
|
↑
|
An underweight to fixed income was a contributor to relative return as fixed income underperformed equities.
|
|
↑
|
Franklin Large Cap Equity Fund, Putnam Large Cap Value Fund and BrandywineGLOBAL - Diversified US Large Cap Value Fund were the leading contributors to relative return at the manager level.
|
|
Top detractors from performance:
|
|
|
↓
|
Underlying manager results were the leading detractor from relative return, especially in U.S. equities.
|
|
↓
|
Asset allocation effects also detracted, especially an underweight to international equities which outperformed U.S. equities.
|
|
↓
|
ClearBridge Large Cap Growth Fund was the leading detractor at the manager level.
|
| Franklin Multi-Asset Variable Growth Fund | PAGE 1 | 7573-ATSR-0226 |
HOW DID THE FUND PERFORM OVER THE LAST 10 YEARS?
The Fund's past performance is not necessarily an indication of how the Fund will perform in the future. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
VALUE OF A $10,000 INVESTMENT - Class I 12/31/2015 - 12/31/2025
AVERAGE ANNUAL TOTAL RETURNS (%) Period Ended December 31, 2025
|
1 Year
|
5 Year
|
10 Year
|
|
|
Class I
|
16.56
|
11.01
|
10.59
|
|
Russell 3000 Index
|
17.15
|
13.15
|
14.29
|
|
Bloomberg U.S. Aggregate Index
|
7.30
|
-0.36
|
2.01
|
|
Composite Benchmark†
|
17.77
|
9.47
|
10.85
|
| † | The Fund's Composite Benchmark is comprised of 45% Russell 1000 Index, 20% Russell 2000 Index, 20% MSCI EAFE Index, 10% Bloomberg U.S. Aggregate Index and 5% Bloomberg U.S. High Yield-2% Issuer Cap Index. |
Performance does not reflect expenses incurred from investing through variable annuity or variable life insurance products, which if reflected, would reduce performance of the Fund.
Fund performance figures may reflect fee waivers and/or expense reimbursements, without which the performance would have been lower.
Important data provider notices and terms available at www.franklintempletondatasources.com.
KEY FUND STATISTICS (as of December 31, 2025)
|
Total Net Assets
|
$69,344,819
|
|
Total Number of Portfolio Holdings
|
12
|
|
Total Management Fee Paid
|
$0
|
|
Portfolio Turnover Rate
|
25%
|
| Franklin Multi-Asset Variable Growth Fund | PAGE 2 | 7573-ATSR-0226 |
WHAT DID THE FUND INVEST IN? (as of December 31, 2025)
Portfolio Composition*(% of Total Investments)
| * | Does not include derivatives, except purchased options, if any. |
HOW HAS THE FUND CHANGED?
Effective January 31, 2025, Berkeley Belknap joined the portfolio management team.
This is a summary of a change to the Fund since 1/1/2025. For more complete information, you may review the Fund's current prospectus and any applicable supplements and the Fund's next prospectus, which we expect to be available by 5/1/2026,
at https://www.franklintempleton.com/regulatory-fund-documentsor upon request at 877-6LM-FUND/656-3863or
[email protected].
at https://www.franklintempleton.com/regulatory-fund-documentsor upon request at 877-6LM-FUND/656-3863or
[email protected].
|
WHERE CAN I FIND ADDITIONAL INFORMATION ABOUT THE FUND?
|
|
|
Additional information is available on https://www.franklintempleton.com/regulatory-fund-documents, including its:
|
|
|
• prospectus • proxy voting information • financial information • holdings • tax information
|
| Franklin Multi-Asset Variable Growth Fund | PAGE 3 | 7573-ATSR-0226 |
|
Franklin Multi-Asset Variable Moderate Growth Fund
|
||
|
Class I
|
||
|
Annual Shareholder Report | December 31, 2025
|
||
This annual shareholder reportcontains important information about Franklin Multi-Asset Variable Moderate Growth Fund for the period January 1, 2025, to December 31, 2025.
You can find additional information about the Fund at https://www.franklintempleton.com/regulatory-fund-documents. You can also request this information by contacting us at 877-6LM-FUND/656-3863.
You can find additional information about the Fund at https://www.franklintempleton.com/regulatory-fund-documents. You can also request this information by contacting us at 877-6LM-FUND/656-3863.
This report describes changes to the Fund that occurred during the reporting period.
WHAT WERE THE FUND COSTS FOR THE LAST YEAR? (based on a hypothetical $10,000 investment)
|
Class Name
|
Costs of a $10,000 investment
|
Costs paid as a percentage of a $10,000 investment*
|
|
Class I1,2
|
$21
|
0.20%
|
| * | Reflects fee waivers and/or expense reimbursements, without which expenses would have been higher. |
| 1 | Does not reflect expenses incurred from investing through variable annuity or variable life insurance products. |
| 2 | Excludes fees and expenses of the underlying funds in which the Fund invests. |
HOW DID THE FUND PERFORM LAST YEAR AND WHAT AFFECTED ITS PERFORMANCE?
For the twelve months ended December 31, 2025, Class I shares of Franklin Multi-Asset Variable Moderate Growth Fund returned 14.86%. The Fund compares its performance to the Russell 3000 Index, the Bloomberg U.S. Aggregate Index and the Composite Benchmark†, which returned 17.15%, 7.30% and 15.80%, respectively, for the same period.
PERFORMANCE HIGHLIGHTS
|
Top contributors to performance:
|
|
|
↑
|
Exposure to U.S. equities was the leading contributor to absolute return by virtue of weight in the portfolio and return.
|
|
↑
|
Asset allocation effects contributed to relative performance due to an equity overweight and fixed income underweight.
|
|
↑
|
Franklin U.S. Large Cap Equity Fund, Putnam Large Cap Value Fund and BrandywineGLOBAL - Diversified US Large Cap Value Fund were the leading contributors to relative performance at the manager level.
|
|
Top detractors from performance:
|
|
|
↓
|
Underlying manager selection was the major detractor from relative performance, especially in U.S. equities.
|
|
↓
|
An underweight to international equities, an asset class outperformer, was a major detractor.
|
|
↓
|
ClearBridge Large Cap Growth Fund was the leading detractor from relative performance at the manager level.
|
| Franklin Multi-Asset Variable Moderate Growth Fund | PAGE 1 | 7572-ATSR-0226 |
HOW DID THE FUND PERFORM OVER THE LAST 10 YEARS?
The Fund's past performance is not necessarily an indication of how the Fund will perform in the future. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
VALUE OF A $10,000 INVESTMENT - Class I 12/31/2015 - 12/31/2025
AVERAGE ANNUAL TOTAL RETURNS (%) Period Ended December 31, 2025
|
1 Year
|
5 Year
|
10 Year
|
|
|
Class I
|
14.86
|
9.31
|
9.45
|
|
Russell 3000 Index
|
17.15
|
13.15
|
14.29
|
|
Bloomberg U.S. Aggregate Index
|
7.30
|
-0.36
|
2.01
|
|
Composite Benchmark†
|
15.80
|
7.96
|
9.56
|
| † | The Fund's Composite Benchmark is comprised of 40% Russell 1000 Index, 15% Russell 2000 Index, 15% MSCI EAFE Index, 25% Bloomberg U.S. Aggregate Index and 5% Bloomberg U.S. High Yield-2% Issuer Cap Index. |
Performance does not reflect expenses incurred from investing through variable annuity or variable life insurance products, which if reflected, would reduce performance of the Fund.
Fund performance figures may reflect fee waivers and/or expense reimbursements, without which the performance would have been lower.
Important data provider notices and terms available at www.franklintempletondatasources.com.
KEY FUND STATISTICS (as of December 31, 2025)
|
Total Net Assets
|
$28,319,218
|
|
Total Number of Portfolio Holdings
|
12
|
|
Total Management Fee Paid
|
$0
|
|
Portfolio Turnover Rate
|
24%
|
| Franklin Multi-Asset Variable Moderate Growth Fund | PAGE 2 | 7572-ATSR-0226 |
WHAT DID THE FUND INVEST IN? (as of December 31, 2025)
Portfolio Composition*(% of Total Investments)
| * | Does not include derivatives, except purchased options, if any. |
HOW HAS THE FUND CHANGED?
Effective January 31, 2025, Berkeley Belknap joined the portfolio management team.
This is a summary of a change to the Fund since 1/1/2025. For more complete information, you may review the Fund's current prospectus and any applicable supplements and the Fund's next prospectus, which we expect to be available by 5/1/2026,
at https://www.franklintempleton.com/regulatory-fund-documentsor upon request at 877-6LM-FUND/656-3863or
[email protected].
at https://www.franklintempleton.com/regulatory-fund-documentsor upon request at 877-6LM-FUND/656-3863or
[email protected].
|
WHERE CAN I FIND ADDITIONAL INFORMATION ABOUT THE FUND?
|
|
|
Additional information is available on https://www.franklintempleton.com/regulatory-fund-documents, including its:
|
|
|
• prospectus • proxy voting information • financial information • holdings • tax information
|
| Franklin Multi-Asset Variable Moderate Growth Fund | PAGE 3 | 7572-ATSR-0226 |
|
Franklin Multi-Asset Variable Conservative Growth Fund
|
||
|
Class I
|
||
|
Annual Shareholder Report | December 31, 2025
|
||
This annual shareholder reportcontains important information about Franklin Multi-Asset Variable Conservative Growth Fund for the period January 1, 2025, to December 31, 2025.
You can find additional information about the Fund at https://www.franklintempleton.com/regulatory-fund-documents. You can also request this information by contacting us at 877-6LM-FUND/656-3863.
You can find additional information about the Fund at https://www.franklintempleton.com/regulatory-fund-documents. You can also request this information by contacting us at 877-6LM-FUND/656-3863.
This report describes changes to the Fund that occurred during the reporting period.
WHAT WERE THE FUND COSTS FOR THE LAST YEAR? (based on a hypothetical $10,000 investment)
|
Class Name
|
Costs of a $10,000 investment
|
Costs paid as a percentage of a $10,000 investment
|
|
Class I1,2
|
$14
|
0.13%
|
| 1 | Does not reflect expenses incurred from investing through variable annuity or variable life insurance products. |
| 2 | Excludes fees and expenses of the underlying funds in which the Fund invests. |
HOW DID THE FUND PERFORM LAST YEAR AND WHAT AFFECTED ITS PERFORMANCE?
For the twelve months ended December 31, 2025, Class I shares of Franklin Multi-Asset Variable Conservative Growth Fund returned 12.76%. The Fund compares its performance to the Bloomberg U.S. Aggregate Index, the Russell 1000 Index and the Composite Benchmark†, which returned 7.30%, 17.37% and 13.27%, respectively, for the same period.
PERFORMANCE HIGHLIGHTS
|
Top contributors to performance:
|
|
|
↑
|
Exposure to U.S. equities was the leading contributor to absolute return by virtue of weight in the portfolio and return.
|
|
↑
|
Asset allocation effects contributed to relative performance, due to an equity overweight and fixed income underweight.
|
|
↑
|
Franklin Large Cap Equity Fund, Putnam Large Cap Value and BrandywineGLOBAL - Diversified US Large Cap Value Fund were the leading contributors to relative performance at the manager level.
|
|
Top detractors from performance:
|
|
|
↓
|
Underlying manager selection was a detractor from relative performance overall, especially in U.S. equities.
|
|
↓
|
ClearBridge Large Cap Growth Fund was the leading detractor from relative performance at the manager level.
|
| Franklin Multi-Asset Variable Conservative Growth Fund | PAGE 1 | 7571-ATSR-0226 |
HOW DID THE FUND PERFORM OVER THE LAST 10 YEARS?
The Fund's past performance is not necessarily an indication of how the Fund will perform in the future. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
VALUE OF A $10,000 INVESTMENT - Class I 12/31/2015 - 12/31/2025
AVERAGE ANNUAL TOTAL RETURNS (%) Period Ended December 31, 2025
|
1 Year
|
5 Year
|
10 Year
|
|
|
Class I
|
12.76
|
6.69
|
7.70
|
|
Russell 3000 Index
|
17.15
|
13.15
|
14.29
|
|
Bloomberg U.S. Aggregate Index
|
7.30
|
-0.36
|
2.01
|
|
Russell 1000 Index
|
17.37
|
13.59
|
14.59
|
|
Composite Benchmark†
|
13.27
|
5.71
|
7.61
|
| † | The Fund's Composite Benchmark is comprised of 28% Russell 1000 Index, 12% Russell 2000 Index, 10% MSCI EAFE Index, 43% Bloomberg U.S. Aggregate Index and 7% Bloomberg U.S. High Yield-2% Issuer Cap Index. |
Performance does not reflect expenses incurred from investing through variable annuity or variable life insurance products, which if reflected, would reduce performance of the Fund.
Fund performance figures may reflect fee waivers and/or expense reimbursements, without which the performance would have been lower.
Important data provider notices and terms available at www.franklintempletondatasources.com.
KEY FUND STATISTICS (as of December 31, 2025)
|
Total Net Assets
|
$75,930,795
|
|
Total Number of Portfolio Holdings
|
12
|
|
Total Management Fee Paid
|
$0
|
|
Portfolio Turnover Rate
|
19%
|
| Franklin Multi-Asset Variable Conservative Growth Fund | PAGE 2 | 7571-ATSR-0226 |
WHAT DID THE FUND INVEST IN? (as of December 31, 2025)
Portfolio Composition*(% of Total Investments)
| * | Does not include derivatives, except purchased options, if any. |
HOW HAS THE FUND CHANGED?
Effective January 31, 2025, Berkeley Belknap joined the portfolio management team.
This is a summary of a change to the Fund since 1/1/2025. For more complete information, you may review the Fund's current prospectus and any applicable supplements and the Fund's next prospectus, which we expect to be available by 5/1/2026,
at https://www.franklintempleton.com/regulatory-fund-documentsor upon request at 877-6LM-FUND/656-3863or
[email protected].
at https://www.franklintempleton.com/regulatory-fund-documentsor upon request at 877-6LM-FUND/656-3863or
[email protected].
|
WHERE CAN I FIND ADDITIONAL INFORMATION ABOUT THE FUND?
|
|
|
Additional information is available on https://www.franklintempleton.com/regulatory-fund-documents, including its:
|
|
|
• prospectus • proxy voting information • financial information • holdings • tax information
|
| Franklin Multi-Asset Variable Conservative Growth Fund | PAGE 3 | 7571-ATSR-0226 |
|
Franklin Multi-Asset Variable Conservative Growth Fund
|
||
|
Class II
|
||
|
Annual Shareholder Report | December 31, 2025
|
||
This annual shareholder reportcontains important information about Franklin Multi-Asset Variable Conservative Growth Fund for the period January 1, 2025, to December 31, 2025.
You can find additional information about the Fund at https://www.franklintempleton.com/regulatory-fund-documents. You can also request this information by contacting us at 877-6LM-FUND/656-3863.
You can find additional information about the Fund at https://www.franklintempleton.com/regulatory-fund-documents. You can also request this information by contacting us at 877-6LM-FUND/656-3863.
This report describes changes to the Fund that occurred during the reporting period.
WHAT WERE THE FUND COSTS FOR THE LAST YEAR? (based on a hypothetical $10,000 investment)
|
Class Name
|
Costs of a $10,000 investment
|
Costs paid as a percentage of a $10,000 investment
|
|
Class II1,2
|
$40
|
0.38%
|
| 1 | Does not reflect expenses incurred from investing through variable annuity or variable life insurance products. |
| 2 | Excludes fees and expenses of the underlying funds in which the Fund invests. |
HOW DID THE FUND PERFORM LAST YEAR AND WHAT AFFECTED ITS PERFORMANCE?
For the twelve months ended December 31, 2025, Class II shares of Franklin Multi-Asset Variable Conservative Growth Fund returned 12.50%. The Fund compares its performance to the Bloomberg U.S. Aggregate Index, the Russell 1000 Index and the Composite Benchmark†, which returned 7.30%, 17.37% and 13.27%, respectively, for the same period.
PERFORMANCE HIGHLIGHTS
|
Top contributors to performance:
|
|
|
↑
|
Exposure to U.S. equities was the leading contributor to absolute return by virtue of weight in the portfolio and return.
|
|
↑
|
Asset allocation effects contributed to relative performance, due to an equity overweight and fixed income underweight.
|
|
↑
|
Franklin Large Cap Equity Fund, Putnam Large Cap Value and BrandywineGLOBAL - Diversified US Large Cap Value Fund were the leading contributors to relative performance at the manager level.
|
|
Top detractors from performance:
|
|
|
↓
|
Underlying manager selection was a detractor from relative performance overall, especially in U.S. equities.
|
|
↓
|
ClearBridge Large Cap Growth Fund was the leading detractor from relative performance at the manager level.
|
| Franklin Multi-Asset Variable Conservative Growth Fund | PAGE 1 | 7526-ATSR-0226 |
HOW DID THE FUND PERFORM OVER THE LAST 10 YEARS?
The Fund's past performance is not necessarily an indication of how the Fund will perform in the future. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
VALUE OF A $10,000 INVESTMENT - Class II 6/23/2017 - 12/31/2025
AVERAGE ANNUAL TOTAL RETURNS (%) Period Ended December 31, 2025
|
1 Year
|
5 Year
|
Since Inception
(6/23/2017) |
|
|
Class II
|
12.50
|
6.43
|
7.09
|
|
Russell 3000 Index
|
17.15
|
13.15
|
14.10
|
|
Bloomberg U.S. Aggregate Index
|
7.30
|
-0.36
|
1.71
|
|
Russell 1000 Index
|
17.37
|
13.59
|
14.49
|
|
Composite Benchmark†
|
13.27
|
5.71
|
7.18
|
| † | The Fund's Composite Benchmark is comprised of 28% Russell 1000 Index, 12% Russell 2000 Index, 10% MSCI EAFE Index, 43% Bloomberg U.S. Aggregate Index and 7% Bloomberg U.S. High Yield-2% Issuer Cap Index. |
Performance does not reflect expenses incurred from investing through variable annuity or variable life insurance products, which if reflected, would reduce performance of the Fund.
Fund performance figures may reflect fee waivers and/or expense reimbursements, without which the performance would have been lower.
Important data provider notices and terms available at www.franklintempletondatasources.com.
KEY FUND STATISTICS (as of December 31, 2025)
|
Total Net Assets
|
$75,930,795
|
|
Total Number of Portfolio Holdings
|
12
|
|
Total Management Fee Paid
|
$0
|
|
Portfolio Turnover Rate
|
19%
|
| Franklin Multi-Asset Variable Conservative Growth Fund | PAGE 2 | 7526-ATSR-0226 |
WHAT DID THE FUND INVEST IN? (as of December 31, 2025)
Portfolio Composition*(% of Total Investments)
| * | Does not include derivatives, except purchased options, if any. |
HOW HAS THE FUND CHANGED?
Effective January 31, 2025, Berkeley Belknap joined the portfolio management team.
This is a summary of a change to the Fund since 1/1/2025. For more complete information, you may review the Fund's current prospectus and any applicable supplements and the Fund's next prospectus, which we expect to be available by 5/1/2026,
at https://www.franklintempleton.com/regulatory-fund-documentsor upon request at 877-6LM-FUND/656-3863or
[email protected].
at https://www.franklintempleton.com/regulatory-fund-documentsor upon request at 877-6LM-FUND/656-3863or
[email protected].
|
WHERE CAN I FIND ADDITIONAL INFORMATION ABOUT THE FUND?
|
|
|
Additional information is available on https://www.franklintempleton.com/regulatory-fund-documents, including its:
|
|
|
• prospectus • proxy voting information • financial information • holdings • tax information
|
| Franklin Multi-Asset Variable Conservative Growth Fund | PAGE 3 | 7526-ATSR-0226 |
(b) Not applicable
| ITEM 2. | CODE OF ETHICS. |
(a) The Registrant has adopted a code of ethics that applies to its principal executive officers and principal financial and accounting officer.
(c) N/A
(d) N/A
(f) Pursuant to Item 19(a) (1), the Registrant is attaching as an exhibit a copy of its code of ethics that applies to its principal executive officers and principal financial and accounting officer.
| ITEM 3. | AUDIT COMMITTEE FINANCIAL EXPERT. |
The Board of Trustees of the Registrant has determined that Stephen R. Gross, possesses the technical attributes identified in Item 3 to Form N-CSR to qualify as an "audit committee financial expert," and has designated Stephen R. Gross as the Audit Committee's financial expert. Stephen R. Gross is an "independent" Trustee pursuant to paragraph (a)(2) of Item 3 to Form N-CSR.
Under applicable securities laws, a person determined to be an audit committee financial expert will not be deemed an "expert" for any purpose, including without limitation for the purposes of Section 11 of the Securities Act of 1933, as a result of being designated or identified as an audit committee financial expert. The designation or identification of a person as an audit committee financial expert does not impose on such person any duties, obligations, or liabilities greater than the duties, obligations, and liabilities imposed on such person as a member of the audit committee and board of directors in the absence of such designation or identification. The designation or identification of a person as an audit committee financial expert does not affect the duties, obligations, or liability of any other member of the audit committee or board of directors.
| ITEM 4. | PRINCIPAL ACCOUNTANT FEES AND SERVICES. |
a) Audit Fees. The aggregate fees billed in the last two fiscal years ending December 31, 2024 and December 31, 2025 (the "Reporting Periods") for professional services rendered by the Registrant's principal accountant (the "Auditor") for the audit of the Registrant's annual financial statements, or services that are normally provided by the Auditor in connection with the statutory and regulatory filings or engagements for the Reporting Periods, were $379,312 in December 31, 2024 and $383,105 in December 31, 2025.
b) Audit-Related Fees. The aggregate fees billed in the Reporting Periods for assurance and related services by the Auditor that are reasonably related to the performance of the Registrant's financial statements were $0 in December 31, 2024 and $0 in December 31, 2025.
(c) Tax Fees. The aggregate fees billed in the Reporting Periods for professional services rendered by the Auditor for tax compliance, tax advice and tax planning ("Tax Services") were $149,250 in December 31, 2024 and $149,250 in December 31, 2025. These services consisted of (i) review or preparation of U.S. federal, state, local and excise tax returns; (ii) U.S. federal, state and local tax planning, advice and assistance regarding statutory, regulatory or administrative developments, and (iii) tax advice regarding tax qualification matters and/or treatment of various financial instruments held or proposed to be acquired or held.
There were no fees billed for tax services by the Auditors to the Registrant's investment manager and any entity controlling, controlled by, or under common control with the investment manager that provides ongoing services to the Registrant ("Service Affiliates") during the Reporting Periods that required pre-approval by the Audit Committee.
d) All Other Fees. The aggregate fees billed in the Reporting Periods for products and services provided by the Auditor to the Registrant, other than the services reported in paragraphs (a) through (c) of this item, were $0 in December 31, 2024 and $0 in December 31, 2025.
There were no other non-audit services rendered by the Auditor to the Service Affiliates requiring pre-approval by the Audit Committee in the Reporting Periods.
(e) Audit Committee's pre-approval policies and procedures described in paragraph (c) (7) of Rule 2-01 of Regulation S-X.
(1) The Charter for the Audit Committee (the "Committee") of the Board of each registered investment company (the "Fund") advised by the Registrant's investment manager or one of their affiliates (each, an "Adviser") requires that the Committee shall approve (a) all audit and permissible non-audit services to be provided to the Fund and (b) all permissible non-audit services to be provided by the Fund's independent auditors to the Adviser and any service providers controlling, controlled by or under common control with the Adviser that provide ongoing services to the Fund ("Covered Service Providers") if the engagement relates directly to the operations and financial reporting of the Fund. The Committee may implement policies and procedures by which such services are approved other than by the full Committee.
The Committee shall not approve non-audit services that the Committee believes may impair the independence of the auditors. As of the date of the approval of this Audit Committee Charter, permissible non-audit services include any professional services (including tax services), that are not prohibited services as described below, provided to the Fund by the independent auditors, other than those provided to the Fund in connection with an audit or a review of the financial statements of the Fund. Permissible non-audit services may not include: (i) bookkeeping or other services related to the accounting records or financial statements of the Fund; (ii) financial information systems design and implementation; (iii) appraisal or valuation services, fairness opinions or contribution-in-kind reports; (iv) actuarial services; (v) internal audit outsourcing services; (vi) management functions or human resources; (vii) broker or dealer, investment adviser or investment banking services; (viii) legal services and expert services unrelated to the audit; and (ix) any other service the Public Company Accounting Oversight Board determines, by regulation, is impermissible.
Pre-approval by the Committee of any permissible non-audit services is not required so long as: (i) the aggregate amount of all such permissible non-audit services provided to the Fund, the Adviser and the Covered Service Providers constitutes not more than 5% of the total amount of revenues paid to the independent auditors during the fiscal year in which the permissible non-audit services are provided to (a) the Fund, (b) the Adviser and (c) any entity controlling, controlled by or under common control with the Adviser that provides ongoing services to the Fund during the fiscal year in which the services are provided that would have to be approved by the Committee; (ii) the permissible non-audit services were not recognized by the Fund at the time of the engagement to be non-audit services; and (iii) such services are promptly brought to the attention of the Committee and approved by the Committee (or its delegate(s)) prior to the completion of the audit.
(2) None of the services described in paragraphs (b) through (d) of this Item were performed in reliance on paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not applicable.
(g) Non-audit fees billed by the Auditor for services rendered to the Registrant and the Service Affiliates during the reporting period were $811,835 in December 31, 2024 and $870,024 in December 31, 2025.
(h) Yes. The Registrant's Audit Committee has considered whether the provision of non-audit services that were rendered to Service Affiliates, which were not pre-approved (not requiring pre-approval), is compatible with maintaining the Auditor's independence. All services provided by the Auditor to the Registrant or to the Service Affiliates, which were required to be pre-approved, were pre-approved as required.
(i) Not applicable.
(j) Not applicable.
| ITEM 5. | AUDIT COMMITTEE OF LISTED REGISTRANTS. |
Not applicable.
| ITEM 6. | SCHEDULE OF INVESTMENTS. |
| (a) | Please see schedule of investments contained in the Financial Statements and Financial Highlights included under Item 7 of this Form N-CSR. |
| (b) |
Not applicable. |
| ITEM 7. | FINANCIAL STATEMENTS AND FINANCIAL HIGHLIGHTS FOR OPEN-END MANAGEMENT INVESTMENT COMPANIES. |
Franklin Variable Asset Allocation Series
Financial Statements and Other Important Information
Annual | December 31, 2025
Franklin Multi-Asset Variable Growth Fund
Franklin Multi-Asset Variable Moderate Growth Fund
Franklin Multi-Asset Variable Conservative Growth Fund
Table of Contents
|
Schedules of Investments
|
1
|
|
Statements of Assets and Liabilities
|
4
|
|
Statements of Operations
|
5
|
|
Statements of Changes in Net Assets
|
6
|
|
Financial Highlights
|
9
|
|
Notes to Financial Statements
|
13
|
|
Report of Independent Registered Public Accounting Firm
|
23
|
|
Important Tax Information
|
24
|
|
Changes in and Disagreements with Accountants
|
25
|
|
Results of Meeting(s) of Shareholders
|
25
|
|
Remuneration Paid to Directors, Officers and Others
|
25
|
franklintempleton.com
Financial Statements and Other Important Information - Annual
Schedules of Investments December 31, 2025
Franklin Multi-Asset Variable Growth Fund
(Percentages shown based on Portfolio net assets)
|
Description
|
|
|
|
Shares
|
Value
|
|
Investments in Underlying Funds(a)- 100.1%
|
|||||
|
Domestic Equity - 77.8%
|
|||||
|
Franklin Value Investors Trust - Franklin Small Cap Value Fund, Class R6 Shares
|
18,834
|
$1,135,323
|
|||
|
Legg Mason Global Asset Management Trust - Franklin U.S. Small Cap Equity Fund, Class IS
Shares
|
75,045
|
1,125,673
|
|||
|
Legg Mason Partners Investment Trust:
|
|||||
|
ClearBridge Appreciation Fund, Class IS Shares
|
104,874
|
3,624,451
|
|||
|
ClearBridge Large Cap Growth Fund, Class IS Shares
|
231,341
|
17,216,375
|
|||
|
ClearBridge Small Cap Growth Fund, Class IS Shares
|
41,170
|
1,539,359
|
|||
|
Franklin U.S. Large Cap Equity Fund, Class IS Shares
|
727,628
|
20,038,873
|
|||
|
Putnam Investment Funds - Putnam Large Cap Value Fund, Class R6 Shares
|
235,143
|
9,234,059
|
|||
|
|
|||||
|
Total Domestic Equity
|
53,914,113
|
||||
|
Foreign Equity - 15.5%
|
|||||
|
Legg Mason Global Asset Management Trust - Franklin International Equity Fund, Class IS
Shares
|
513,399
|
10,750,572
|
|||
|
|
|||||
|
Domestic Fixed Income - 6.8%
|
|||||
|
Franklin Templeton ETF Trust:
|
|||||
|
Franklin Investment Grade Corporate ETF
|
16,322
|
353,372
|
|||
|
Franklin U.S. Core Bond ETF
|
164,373
|
3,554,566
|
|||
|
Franklin U.S. Treasury Bond ETF
|
40,378
|
828,557
|
|||
|
|
|||||
|
Total Domestic Fixed Income
|
4,736,495
|
||||
|
Total Investments in Underlying Funds before Short-Term Investments (Cost - $50,688,376)
|
69,401,180
|
||||
|
|
|
Rate
|
|
|
|
|
Short-Term Investments - 0.2%
|
|||||
|
Invesco Government & Agency Portfolio, Institutional Class
(Cost - $138,640)
|
3.707%
|
138,640
|
138,640
(b)
|
||
|
Total Investments - 100.3% (Cost - $50,827,016)
|
69,539,820
|
||||
|
Liabilities in Excess of Other Assets - (0.3)%
|
(195,001
)
|
||||
|
Total Net Assets - 100.0%
|
$69,344,819
|
||||
|
(a)
|
Underlying Funds are affiliated with Franklin Resources, Inc. and more information about the Underlying Funds are available at
www.franklintempleton.com (Note 8).
|
|
(b)
|
Rate shown is one-day yield as of the end of the reporting period.
|
|
Abbreviation(s) used in this schedule:
|
||
|
ETF
|
-
|
Exchange-Traded Fund
|
See Notes to Financial Statements.
1
Franklin Variable Asset Allocation Series 2025 Annual Report
Schedules of Investments (cont'd) December 31, 2025
Franklin Multi-Asset Variable Moderate Growth Fund
(Percentages shown based on Portfolio net assets)
|
Description
|
|
|
|
Shares
|
Value
|
|
Investments in Underlying Funds(a)- 100.0%
|
|||||
|
Domestic Equity - 65.5%
|
|||||
|
Franklin Value Investors Trust - Franklin Small Cap Value Fund, Class R6 Shares
|
6,489
|
$391,161
|
|||
|
Legg Mason Global Asset Management Trust - Franklin U.S. Small Cap Equity Fund, Class IS
Shares
|
25,857
|
387,851
|
|||
|
Legg Mason Partners Investment Trust:
|
|||||
|
ClearBridge Appreciation Fund, Class IS Shares
|
35,716
|
1,234,334
|
|||
|
ClearBridge Large Cap Growth Fund, Class IS Shares
|
79,689
|
5,930,490
|
|||
|
ClearBridge Small Cap Growth Fund, Class IS Shares
|
14,185
|
530,363
|
|||
|
Franklin U.S. Large Cap Equity Fund, Class IS Shares
|
250,286
|
6,892,865
|
|||
|
Putnam Investment Funds - Putnam Large Cap Value Fund, Class R6 Shares
|
80,785
|
3,172,434
|
|||
|
|
|||||
|
Total Domestic Equity
|
18,539,498
|
||||
|
Domestic Fixed Income - 21.6%
|
|||||
|
Franklin Templeton ETF Trust:
|
|||||
|
Franklin Investment Grade Corporate ETF
|
21,093
|
456,663
|
|||
|
Franklin U.S. Core Bond ETF
|
211,918
|
4,582,727
|
|||
|
Franklin U.S. Treasury Bond ETF
|
52,030
|
1,067,656
|
|||
|
|
|||||
|
Total Domestic Fixed Income
|
6,107,046
|
||||
|
Foreign Equity - 12.9%
|
|||||
|
Legg Mason Global Asset Management Trust - Franklin International Equity Fund, Class IS
Shares
|
175,230
|
3,669,309
|
|||
|
Total Investments in Underlying Funds before Short-Term Investments (Cost - $22,291,899)
|
28,315,853
|
||||
|
|
|
Rate
|
|
|
|
|
Short-Term Investments - 0.2%
|
|||||
|
Invesco Government & Agency Portfolio, Institutional Class
(Cost - $72,843)
|
3.707%
|
72,843
|
72,843
(b)
|
||
|
Total Investments - 100.2% (Cost - $22,364,742)
|
28,388,696
|
||||
|
Liabilities in Excess of Other Assets - (0.2)%
|
(69,478
)
|
||||
|
Total Net Assets - 100.0%
|
$28,319,218
|
||||
|
(a)
|
Underlying Funds are affiliated with Franklin Resources, Inc. and more information about the Underlying Funds are available at
www.franklintempleton.com (Note 8).
|
|
(b)
|
Rate shown is one-day yield as of the end of the reporting period.
|
|
Abbreviation(s) used in this schedule:
|
||
|
ETF
|
-
|
Exchange-Traded Fund
|
See Notes to Financial Statements.
2
Franklin Variable Asset Allocation Series 2025 Annual Report
Franklin Multi-Asset Variable Conservative Growth Fund
(Percentages shown based on Portfolio net assets)
|
Description
|
|
|
|
Shares
|
Value
|
|
Investments in Underlying Funds(a)- 99.8%
|
|||||
|
Domestic Equity - 48.7%
|
|||||
|
Franklin Value Investors Trust - Franklin Small Cap Value Fund, Class R6 Shares
|
12,950
|
$780,655
|
|||
|
Legg Mason Global Asset Management Trust - Franklin U.S. Small Cap Equity Fund, Class IS
Shares
|
51,599
|
773,981
|
|||
|
Legg Mason Partners Investment Trust:
|
|||||
|
ClearBridge Appreciation Fund, Class IS Shares
|
69,316
|
2,395,550
|
|||
|
ClearBridge Large Cap Growth Fund, Class IS Shares
|
159,059
|
11,837,185
|
|||
|
ClearBridge Small Cap Growth Fund, Class IS Shares
|
28,307
|
1,058,399
|
|||
|
Franklin U.S. Large Cap Equity Fund, Class IS Shares
|
501,178
|
13,802,451
|
|||
|
Putnam Investment Funds - Putnam Large Cap Value Fund, Class R6 Shares
|
161,697
|
6,349,825
|
|||
|
|
|||||
|
Total Domestic Equity
|
36,998,046
|
||||
|
Domestic Fixed Income - 41.4%
|
|||||
|
Franklin Templeton ETF Trust:
|
|||||
|
Franklin Investment Grade Corporate ETF
|
108,370
|
2,346,210
|
|||
|
Franklin U.S. Core Bond ETF
|
1,091,598
|
23,605,807
|
|||
|
Franklin U.S. Treasury Bond ETF
|
268,031
|
5,499,996
|
|||
|
|
|||||
|
Total Domestic Fixed Income
|
31,452,013
|
||||
|
Foreign Equity - 9.7%
|
|||||
|
Legg Mason Global Asset Management Trust - Franklin International Equity Fund, Class IS
Shares
|
351,072
|
7,351,456
|
|||
|
Total Investments in Underlying Funds before Short-Term Investments (Cost - $63,762,082)
|
75,801,515
|
||||
|
|
|
Rate
|
|
|
|
|
Short-Term Investments - 0.3%
|
|||||
|
Invesco Government & Agency Portfolio, Institutional Class
(Cost - $236,772)
|
3.707%
|
236,772
|
236,772
(b)
|
||
|
Total Investments - 100.1% (Cost - $63,998,854)
|
76,038,287
|
||||
|
Liabilities in Excess of Other Assets - (0.1)%
|
(107,492
)
|
||||
|
Total Net Assets - 100.0%
|
$75,930,795
|
||||
|
(a)
|
Underlying Funds are affiliated with Franklin Resources, Inc. and more information about the Underlying Funds are available at
www.franklintempleton.com (Note 8).
|
|
(b)
|
Rate shown is one-day yield as of the end of the reporting period.
|
|
Abbreviation(s) used in this schedule:
|
||
|
ETF
|
-
|
Exchange-Traded Fund
|
See Notes to Financial Statements.
3
Franklin Variable Asset Allocation Series 2025 Annual Report
Statements of Assets and Liabilities
December 31, 2025
|
|
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
|
$50,688,376
|
$22,291,899
|
$63,762,082
|
|
Short-term investments, at cost
|
138,640
|
72,843
|
236,772
|
|
Investments in affiliated Underlying Funds, at value
|
$69,401,180
|
$28,315,853
|
$75,801,515
|
|
Short-term investments, at value
|
138,640
|
72,843
|
236,772
|
|
Distributions receivable from unaffiliated Underlying Funds
|
690
|
321
|
1,217
|
|
Receivable for Portfolio shares sold
|
-
|
303
|
3,848
|
|
Receivable from investment manager
|
-
|
1,005
|
-
|
|
Total Assets
|
69,540,510
|
28,390,325
|
76,043,352
|
|
Liabilities:
|
|||
|
Payable for Portfolio shares repurchased
|
124,986
|
1,318
|
36,899
|
|
Fund accounting fees payable
|
28,639
|
28,178
|
29,050
|
|
Audit and tax fees payable
|
27,456
|
27,157
|
27,398
|
|
Legal fees payable
|
9,232
|
9,057
|
9,252
|
|
Trustees' fees payable
|
79
|
58
|
79
|
|
Service and/or distribution fees payable
|
-
|
-
|
4,928
|
|
Accrued expenses
|
5,299
|
5,339
|
4,951
|
|
Total Liabilities
|
195,691
|
71,107
|
112,557
|
|
Total Net Assets
|
$69,344,819
|
$28,319,218
|
$75,930,795
|
|
Net Assets:
|
|||
|
Par value (Note 7)
|
$48
|
$20
|
$50
|
|
Paid-in capital in excess of par value
|
47,357,071
|
21,618,216
|
62,403,038
|
|
Total distributable earnings (loss)
|
21,987,700
|
6,700,982
|
13,527,707
|
|
Total Net Assets
|
$69,344,819
|
$28,319,218
|
$75,930,795
|
|
Net Assets:
|
|||
|
Class I
|
$69,344,819
|
$28,319,218
|
$52,735,323
|
|
Class II
|
-
|
-
|
$23,195,472
|
|
Shares Outstanding:
|
|||
|
Class I
|
4,807,196
|
1,963,630
|
3,468,553
|
|
Class II
|
-
|
-
|
1,534,444
|
|
Net Asset Value:
|
|||
|
Class I
|
$14.43
|
$14.42
|
$15.20
|
|
Class II
|
-
|
-
|
$15.12
|
See Notes to Financial Statements.
4
Franklin Variable Asset Allocation Series 2025 Annual Report
Statements of Operations
For the Year Ended December 31, 2025
|
|
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
|
$664,591
|
$421,616
|
$1,649,895
|
|
Interest
|
21,419
|
9,438
|
25,776
|
|
Total Investment Income
|
686,010
|
431,054
|
1,675,671
|
|
Expenses:
|
|||
|
Fund accounting fees
|
31,095
|
30,581
|
31,343
|
|
Audit and tax fees
|
29,456
|
29,157
|
29,398
|
|
Legal fees
|
19,441
|
18,609
|
19,550
|
|
Shareholder reports
|
6,009
|
4,123
|
5,089
|
|
Trustees' fees
|
3,269
|
1,683
|
3,475
|
|
Commitment fees (Note 9)
|
596
|
243
|
642
|
|
Interest expense
|
148
|
79
|
20
|
|
Custody fees
|
82
|
88
|
241
|
|
Transfer agent fees (Notes 2 and 5)
|
69
|
76
|
142
|
|
Service and/or distribution fees (Notes 2 and 5)
|
-
|
-
|
54,676
|
|
Miscellaneous expenses
|
4,890
|
4,687
|
5,655
|
|
Total Expenses
|
95,055
|
89,326
|
150,231
|
|
Less: Fee waivers and/or expense reimbursements
(Notes 2 and 5)
|
-
|
(33,346)
|
-
|
|
Net Expenses
|
95,055
|
55,980
|
150,231
|
|
Net Investment Income
|
590,955
|
375,074
|
1,525,440
|
|
Realized and Unrealized Gain on Investments, Affiliated Underlying Funds and Capital Gain Distributions From Affiliated
Underlying Funds (Notes 1 and 3):
|
|||
|
Net Realized Gain From:
|
|||
|
Sale of affiliated Underlying Funds
|
3,998,200
|
1,243,478
|
1,717,723
|
|
Investment transactions (Note 3)
|
11,638
|
3,901
|
7,759
|
|
Capital gain distributions from affiliated Underlying Funds
|
4,252,034
|
1,460,041
|
2,888,453
|
|
Net Realized Gain
|
8,261,872
|
2,707,420
|
4,613,935
|
|
Change in Net Unrealized Appreciation
(Depreciation) from Affiliated Underlying Funds
|
1,789,622
|
868,820
|
2,831,603
|
|
Net Gain on Investments, Affiliated Underlying Funds and
Capital Gain Distributions From Affiliated Underlying Funds
|
10,051,494
|
3,576,240
|
7,445,538
|
|
Increase in Net Assets From Operations
|
$10,642,449
|
$3,951,314
|
$8,970,978
|
See Notes to Financial Statements.
5
Franklin Variable Asset Allocation Series 2025 Annual Report
Statements of Changes in Net Assets
Franklin Multi-Asset Variable Growth Fund
|
For the Years Ended December 31,
|
2025
|
2024
|
|
Operations:
|
||
|
Net investment income
|
$590,955
|
$642,873
|
|
Net realized gain
|
8,261,872
|
11,783,963
|
|
Change in net unrealized appreciation (depreciation)
|
1,789,622
|
(237,542)
|
|
Increase in Net Assets From Operations
|
10,642,449
|
12,189,294
|
|
Distributions to Shareholders From (Notes 1 and 6):
|
||
|
Total distributable earnings
|
(9,418,788)
|
(7,002,061)
|
|
Decrease in Net Assets From Distributions to Shareholders
|
(9,418,788)
|
(7,002,061)
|
|
Portfolio Share Transactions (Note 7):
|
||
|
Net proceeds from sale of shares
|
379,042
|
250,730
|
|
Reinvestment of distributions
|
9,418,763
|
7,002,061
|
|
Cost of shares repurchased
|
(12,547,636
)
|
(14,913,135
)
|
|
Decrease in Net Assets From Portfolio Share Transactions
|
(2,749,831)
|
(7,660,344)
|
|
Decrease in Net Assets
|
(1,526,170)
|
(2,473,111)
|
|
Net Assets:
|
||
|
Beginning of year
|
70,870,989
|
73,344,100
|
|
End of year
|
$69,344,819
|
$70,870,989
|
See Notes to Financial Statements.
6
Franklin Variable Asset Allocation Series 2025 Annual Report
Franklin Multi-Asset Variable Moderate Growth Fund
|
For the Years Ended December 31,
|
2025
|
2024
|
|
Operations:
|
||
|
Net investment income
|
$375,074
|
$350,391
|
|
Net realized gain
|
2,707,420
|
4,090,200
|
|
Change in net unrealized appreciation (depreciation)
|
868,820
|
(321,411)
|
|
Increase in Net Assets From Operations
|
3,951,314
|
4,119,180
|
|
Distributions to Shareholders From (Notes 1 and 6):
|
||
|
Total distributable earnings
|
(3,794,988)
|
(2,122,243)
|
|
Decrease in Net Assets From Distributions to Shareholders
|
(3,794,988)
|
(2,122,243)
|
|
Portfolio Share Transactions (Note 7):
|
||
|
Net proceeds from sale of shares
|
237,669
|
265,883
|
|
Reinvestment of distributions
|
3,794,961
|
2,122,243
|
|
Cost of shares repurchased
|
(4,444,964
)
|
(3,361,541
)
|
|
Decrease in Net Assets From Portfolio Share Transactions
|
(412,334)
|
(973,415)
|
|
Increase (Decrease) in Net Assets
|
(256,008)
|
1,023,522
|
|
Net Assets:
|
||
|
Beginning of year
|
28,575,226
|
27,551,704
|
|
End of year
|
$28,319,218
|
$28,575,226
|
See Notes to Financial Statements.
7
Franklin Variable Asset Allocation Series 2025 Annual Report
Statements of Changes in Net Assets (cont'd)
Franklin Multi-Asset Variable Conservative Growth Fund
|
For the Years Ended December 31,
|
2025
|
2024
|
|
Operations:
|
||
|
Net investment income
|
$1,525,440
|
$1,473,696
|
|
Net realized gain
|
4,613,935
|
8,238,444
|
|
Change in net unrealized appreciation (depreciation)
|
2,831,603
|
(804,970)
|
|
Increase in Net Assets From Operations
|
8,970,978
|
8,907,170
|
|
Distributions to Shareholders From (Notes 1 and 6):
|
||
|
Total distributable earnings
|
(8,676,457)
|
(4,314,363)
|
|
Decrease in Net Assets From Distributions to Shareholders
|
(8,676,457)
|
(4,314,363)
|
|
Portfolio Share Transactions (Note 7):
|
||
|
Net proceeds from sale of shares
|
3,004,562
|
3,159,310
|
|
Reinvestment of distributions
|
8,676,432
|
4,314,363
|
|
Cost of shares repurchased
|
(11,495,186
)
|
(15,205,160
)
|
|
Increase (Decrease) in Net Assets From Portfolio Share Transactions
|
185,808
|
(7,731,487)
|
|
Increase (Decrease) in Net Assets
|
480,329
|
(3,138,680)
|
|
Net Assets:
|
||
|
Beginning of year
|
75,450,466
|
78,589,146
|
|
End of year
|
$75,930,795
|
$75,450,466
|
See Notes to Financial Statements.
8
Franklin Variable Asset Allocation Series 2025 Annual Report
Financial Highlights
Franklin Multi-Asset Variable Growth Fund
|
For a share of beneficial interest outstanding throughout each year ended December 31:
|
|||||
|
Class I Shares1
|
2025
|
2024
|
2023
|
2022
|
2021
|
|
Net asset value, beginning of year
|
$14.26
|
$13.40
|
$11.85
|
$15.88
|
$14.74
|
|
Income (loss) from operations:
|
|||||
|
Net investment income
|
0.12
|
0.13
|
0.19
|
0.20
|
0.16
|
|
Net realized and unrealized gain (loss)
|
2.09
|
2.21
|
2.10
|
(2.63
)
|
2.87
|
|
Total income (loss) from operations
|
2.21
|
2.34
|
2.29
|
(2.43)
|
3.03
|
|
Less distributions from:
|
|||||
|
Net investment income
|
(0.29
)
|
(0.29
)
|
(0.15
)
|
(0.41
)
|
(0.69
)
|
|
Net realized gains
|
(1.75
)
|
(1.19
)
|
(0.59
)
|
(1.19
)
|
(1.20
)
|
|
Total distributions
|
(2.04
)
|
(1.48
)
|
(0.74
)
|
(1.60
)
|
(1.89
)
|
|
Net asset value, end of year
|
$14.43
|
$14.26
|
$13.40
|
$11.85
|
$15.88
|
|
Total return2
|
16.56
%
|
17.64
%
|
19.58
%
|
(14.80
)%
|
20.69
%
|
|
Net assets, end of year (000s)
|
$69,345
|
$70,871
|
$73,344
|
$70,058
|
$94,277
|
|
Ratios to average net assets:
|
|||||
|
Gross expenses3
|
0.14
%
|
0.15
%
|
0.15
%
|
0.13
%
|
0.12
%
|
|
Net expenses3,4
|
0.14
|
0.15
|
0.15
|
0.13
|
0.12
|
|
Net investment income
|
0.85
|
0.86
|
1.53
|
1.52
|
1.00
|
|
Portfolio turnover rate
|
25
%5
|
60
%
|
20
%
|
42
%
|
19
%
|
|
1
|
Per share amounts have been calculated using the average shares method.
|
|
2
|
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.
|
|
3
|
Does not include fees and expenses of the Underlying Funds in which the Portfolio invests.
|
|
4
|
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 of Class I shares did not exceed 0.20%. This
expense limitation arrangement cannot be terminated prior to December 31, 2027 without the Board of Trustees' consent.
|
|
5
|
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.
9
Franklin Variable Asset Allocation Series 2025 Annual Report
Financial Highlights (cont'd)
Franklin Multi-Asset Variable Moderate Growth Fund
|
For a share of beneficial interest outstanding throughout each year ended December 31:
|
|||||
|
Class I Shares1
|
2025
|
2024
|
2023
|
2022
|
2021
|
|
Net asset value, beginning of year
|
$14.43
|
$13.48
|
$11.95
|
$15.37
|
$14.62
|
|
Income (loss) from operations:
|
|||||
|
Net investment income
|
0.19
|
0.18
|
0.22
|
0.21
|
0.17
|
|
Net realized and unrealized gain (loss)
|
1.83
|
1.89
|
1.90
|
(2.47
)
|
2.25
|
|
Total income (loss) from operations
|
2.02
|
2.07
|
2.12
|
(2.26)
|
2.42
|
|
Less distributions from:
|
|||||
|
Net investment income
|
(0.30
)
|
(0.24
)
|
(0.24
)
|
(0.23
)
|
(0.68
)
|
|
Net realized gains
|
(1.73
)
|
(0.88
)
|
(0.35
)
|
(0.93
)
|
(0.99
)
|
|
Total distributions
|
(2.03
)
|
(1.12
)
|
(0.59
)
|
(1.16
)
|
(1.67
)
|
|
Net asset value, end of year
|
$14.42
|
$14.43
|
$13.48
|
$11.95
|
$15.37
|
|
Total return2
|
14.86
%
|
15.46
%
|
17.81
%
|
(14.36
)%
|
16.66
%
|
|
Net assets, end of year (000s)
|
$28,319
|
$28,575
|
$27,552
|
$26,389
|
$34,089
|
|
Ratios to average net assets:
|
|||||
|
Gross expenses3
|
0.31
%
|
0.37
%
|
0.37
%
|
0.35
%
|
0.31
%
|
|
Net expenses3,4,5
|
0.20
|
0.20
|
0.20
|
0.20
|
0.20
|
|
Net investment income
|
1.32
|
1.22
|
1.73
|
1.61
|
1.04
|
|
Portfolio turnover rate
|
24
%6
|
74
%
|
18
%
|
42
%
|
18
%
|
|
1
|
Per share amounts have been calculated using the average shares method.
|
|
2
|
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.
|
|
3
|
Does not include fees and expenses of the Underlying Funds in which the Portfolio invests.
|
|
4
|
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 of Class I shares did not exceed 0.20%. This
expense limitation arrangement cannot be terminated prior to December 31, 2027 without the Board of Trustees' consent.
|
|
5
|
Reflects fee waivers and/or expense reimbursements.
|
|
6
|
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.
10
Franklin Variable Asset Allocation Series 2025 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:
|
|||||
|
Class I Shares1
|
2025
|
2024
|
2023
|
2022
|
2021
|
|
Net asset value, beginning of year
|
$15.20
|
$14.41
|
$12.86
|
$16.25
|
$15.86
|
|
Income (loss) from operations:
|
|||||
|
Net investment income
|
0.32
|
0.29
|
0.31
|
0.26
|
0.21
|
|
Net realized and unrealized gain (loss)
|
1.52
|
1.40
|
1.57
|
(2.59
)
|
1.60
|
|
Total income (loss) from operations
|
1.84
|
1.69
|
1.88
|
(2.33)
|
1.81
|
|
Less distributions from:
|
|||||
|
Net investment income
|
(0.40
)
|
(0.41
)
|
(0.33
)
|
(0.30
)
|
(0.57
)
|
|
Net realized gains
|
(1.44
)
|
(0.49
)
|
-
|
(0.76
)
|
(0.85
)
|
|
Total distributions
|
(1.84
)
|
(0.90
)
|
(0.33
)
|
(1.06
)
|
(1.42
)
|
|
Net asset value, end of year
|
$15.20
|
$15.20
|
$14.41
|
$12.86
|
$16.25
|
|
Total return2
|
12.76
%
|
11.79
%
|
14.63
%
|
(14.17
)%
|
11.47
%
|
|
Net assets, end of year (000s)
|
$52,735
|
$54,672
|
$59,370
|
$57,593
|
$76,687
|
|
Ratios to average net assets:
|
|||||
|
Gross expenses3
|
0.13
%
|
0.14
%
|
0.14
%
|
0.13
%
|
0.12
%
|
|
Net expenses3,4
|
0.13
|
0.14
|
0.14
|
0.13
|
0.12
|
|
Net investment income
|
2.09
|
1.91
|
2.25
|
1.87
|
1.24
|
|
Portfolio turnover rate
|
19
%5
|
84
%
|
16
%
|
49
%
|
17
%
|
|
1
|
Per share amounts have been calculated using the average shares method.
|
|
2
|
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.
|
|
3
|
Does not include fees and expenses of the Underlying Funds in which the Portfolio invests.
|
|
4
|
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 of Class I shares did not exceed 0.20%. This
expense limitation arrangement cannot be terminated prior to December 31, 2027 without the Board of Trustees' consent.
|
|
5
|
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.
11
Franklin Variable Asset Allocation Series 2025 Annual Report
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:
|
|||||
|
Class II Shares1
|
2025
|
2024
|
2023
|
2022
|
2021
|
|
Net asset value, beginning of year
|
$15.13
|
$14.34
|
$12.81
|
$16.18
|
$15.81
|
|
Income (loss) from operations:
|
|||||
|
Net investment income
|
0.29
|
0.26
|
0.29
|
0.23
|
0.17
|
|
Net realized and unrealized gain (loss)
|
1.51
|
1.39
|
1.54
|
(2.57
)
|
1.58
|
|
Total income (loss) from operations
|
1.80
|
1.65
|
1.83
|
(2.34)
|
1.75
|
|
Less distributions from:
|
|||||
|
Net investment income
|
(0.37
)
|
(0.37
)
|
(0.30
)
|
(0.27
)
|
(0.53
)
|
|
Net realized gains
|
(1.44
)
|
(0.49
)
|
-
|
(0.76
)
|
(0.85
)
|
|
Total distributions
|
(1.81
)
|
(0.86
)
|
(0.30
)
|
(1.03
)
|
(1.38
)
|
|
Net asset value, end of year
|
$15.12
|
$15.13
|
$14.34
|
$12.81
|
$16.18
|
|
Total return2
|
12.50
%
|
11.58
%
|
14.28
%
|
(14.33
)%
|
11.12
%
|
|
Net assets, end of year (000s)
|
$23,195
|
$20,778
|
$19,219
|
$15,171
|
$18,387
|
|
Ratios to average net assets:
|
|||||
|
Gross expenses3
|
0.38
%
|
0.39
%
|
0.39
%
|
0.38
%
|
0.37
%
|
|
Net expenses3,4
|
0.38
|
0.39
|
0.39
|
0.38
|
0.37
|
|
Net investment income
|
1.88
|
1.69
|
2.15
|
1.68
|
1.03
|
|
Portfolio turnover rate
|
19
%5
|
84
%
|
16
%
|
49
%
|
17
%
|
|
1
|
Per share amounts have been calculated using the average shares method.
|
|
2
|
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.
|
|
3
|
Does not include fees and expenses of the Underlying Funds in which the Portfolio invests.
|
|
4
|
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 of Class II shares did not exceed 0.45%.
This expense limitation arrangement cannot be terminated prior to December 31, 2027 without the Board of Trustees' consent.
|
|
5
|
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.
12
Franklin Variable Asset Allocation Series 2025 Annual Report
Notes to Financial Statements
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 Portfolios follow the accounting and reporting guidance in Financial Accounting Standards Board ("FASB") Accounting Standards Codification Topic 946, Financial Services - Investment Companies("ASC 946"). The following are significant accounting policies consistently followed by the Portfolios and are in conformity with U.S. generally accepted accounting principles ("GAAP"), including, but not limited to, ASC 946. 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").
Pursuant to policies adopted by the Board, the Portfolios' manager has been designated as the valuation designee and is responsible for the oversight of the daily valuation process. The Portfolios' manager is assisted by the Global Fund Valuation Committee (the "Valuation Committee"). The Valuation Committee is responsible for making fair value determinations, evaluating the effectiveness of the Portfolios' pricing policies, and reporting to the Portfolios' manager and the Board. 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
13
Franklin Variable Asset Allocation Series 2025 Annual Report
Notes to Financial Statements (cont'd)
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 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, 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 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 - unadjusted 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†
|
$69,401,180
|
-
|
-
|
$69,401,180
|
|
Short-Term Investments†
|
138,640
|
-
|
-
|
138,640
|
|
Total Investments
|
$69,539,820
|
-
|
-
|
$69,539,820
|
|
†
|
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†
|
$28,315,853
|
-
|
-
|
$28,315,853
|
|
Short-Term Investments†
|
72,843
|
-
|
-
|
72,843
|
|
Total Investments
|
$28,388,696
|
-
|
-
|
$28,388,696
|
|
†
|
See Schedule of Investments for additional detailed categorizations.
|
14
Franklin Variable Asset Allocation Series 2025 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†
|
$75,801,515
|
-
|
-
|
$75,801,515
|
|
Short-Term Investments†
|
236,772
|
-
|
-
|
236,772
|
|
Total Investments
|
$76,038,287
|
-
|
-
|
$76,038,287
|
|
†
|
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 had an arrangement with their custodian bank whereby a portion of the custodian's fees was paid indirectly by credits earned on the Portfolios' cash on deposit with the bank. Effective April 1, 2025, any cash on deposit with the bank will earn interest and be recognized as interest income on the Statements of Operations.
(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, 2025, no provision for income tax is required in the Portfolios' financial statements. The Portfolios' federal and state income and federal excise tax returns for the prior three fiscal years 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. During the current year, the Portfolios had no reclassifications.
2. Investment management agreement and other transactions with affiliates
Franklin Templeton Fund Adviser, LLC ("FTFA") 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
15
Franklin Variable Asset Allocation Series 2025 Annual Report
Notes to Financial Statements (cont'd)
of each Portfolio's cash and short-term instruments allocated to it. FTFA, 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.
FTFA provides administrative and certain oversight services to the Portfolios. FTFA 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 FTFA, 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, 2027 without the Board's consent.
During the year ended December 31, 2025, fees waived and/or expenses reimbursed were as follows:
|
|
|
|
Variable Moderate Growth
|
$33,346
|
FTFA 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 FTFA 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 FTFA and certain FTFA affiliates as shareholders in the Underlying Funds. These management and/or administration fees ranged from 0.09% 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. Franklin Templeton Investor Services, LLC ("Investor Services") serves as the Portfolios' shareholder servicing agent and acts as the Portfolios' transfer agent and dividend-paying agent. Investor Services is an indirect, wholly-owned subsidiary of Franklin Resources. Each class of shares of the Portfolios pays transfer agent fees to Investor Services for its performance of shareholder servicing obligations. Investor Services charges account-based fees based on the number of individual shareholder accounts, as well as a fixed percentage fee based on the total account-based fees charged. In addition, each class reimburses Investor Services for out of pocket expenses incurred. For the year ended December 31, 2025, Variable Growth, Variable Moderate Growth and Variable Conservative Growth incurred transfer agent fees as reported on the Statements of Operations, of which $69, $70 and $124, respectively, was earned by Investor Services.
All officers and one Trustee of the Trust are employees of Franklin Resources or its affiliates and do not receive compensation from the Trust.
16
Franklin Variable Asset Allocation Series 2025 Annual Report
3. Investments
During the year ended December 31, 2025, the aggregate cost of purchases and proceeds from sales of investments (excluding short-term investments) were as follows:
|
|
Purchases
|
Sales
|
|
Variable Growth*
|
$17,523,848
|
$24,634,123
|
|
Variable Moderate Growth**
|
6,682,346
|
9,062,732
|
|
Variable Conservative Growth***
|
14,486,314
|
18,540,986
|
|
*
|
Excludes the value of securities received from the Underlying Funds and the subsequent sale of those securities, totaling $4,471,763 and $4,506,027,
respectively.
|
|
**
|
Excludes the value of securities received from the Underlying Funds and the subsequent sale of those securities, totaling $1,519,902 and $1,533,789,
respectively.
|
|
***
|
Excludes the value of securities received from the Underlying Funds and the subsequent sale of those securities, totaling $2,950,911 and $2,970,594,
respectively.
|
During the year ended December 31, 2025, Variable Growth, Variable Moderate Growth and Variable Conservative Growth received securities in lieu of cash proceeds from the sale of their Underlying Fund: BrandywineGLOBAL - Diversified US Large Cap Value Fund. Subsequently, the securities were sold. The realized gains and losses from the sale of these securities are noted in the Statements of Operations.
At December 31, 2025, the aggregate cost of investments and the aggregate gross unrealized appreciation and depreciation of investments for federal income tax purposes were as follows:
|
|
Variable Growth
|
|||
|
|
Cost
|
Gross
Unrealized
Appreciation
|
Gross
Unrealized
Depreciation
|
Net
Unrealized
Appreciation
|
|
Securities
|
$52,857,871
|
$18,753,572
|
$(2,071,623
)
|
$16,681,949
|
|
|
Variable Moderate Growth
|
|||
|
|
Cost
|
Gross
Unrealized
Appreciation
|
Gross
Unrealized
Depreciation
|
Net
Unrealized
Appreciation
|
|
Securities
|
$23,225,378
|
$6,110,829
|
$(947,511
)
|
$5,163,318
|
|
|
Variable Conservative Growth
|
|||
|
|
Cost
|
Gross
Unrealized
Appreciation
|
Gross
Unrealized
Depreciation
|
Net
Unrealized
Appreciation
|
|
Securities
|
$65,581,536
|
$12,564,785
|
$(2,108,034
)
|
$10,456,751
|
4. Derivative instruments and hedging activities
During the year ended December 31, 2025, 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 year ended December 31, 2025, class specific expenses were as follows:
|
|
Transfer Agent
Fees
|
|
Variable Growth
|
|
|
Class I
|
$69
|
|
|
Transfer Agent
Fees
|
|
Variable Moderate Growth
|
|
|
Class I
|
$76
|
17
Franklin Variable Asset Allocation Series 2025 Annual Report
Notes to Financial Statements (cont'd)
|
|
Service and/or
Distribution Fees
|
Transfer Agent
Fees
|
|
Variable Conservative Growth
|
|
|
|
Class I
|
-
|
$90
|
|
Class II
|
$54,676
|
52
|
|
Total
|
$54,676
|
$142
|
For the year ended December 31, 2025, waivers and/or expense reimbursements by class were as follows:
|
|
Waivers/Expense
Reimbursements
|
|
Variable Moderate Growth
|
|
|
Class I
|
$33,346
|
6. Distributions to shareholders by class
|
|
Year Ended
December 31, 2025
|
Year Ended
December 31, 2024
|
|
Variable Growth
|
|
|
|
Net Investment Income:
|
||
|
Class I
|
$1,353,457
|
$1,367,749
|
|
Net Realized Gains:
|
||
|
Class I
|
$8,065,331
|
$5,634,312
|
|
|
Year Ended
December 31, 2025
|
Year Ended
December 31, 2024
|
|
Variable Moderate Growth
|
|
|
|
Net Investment Income:
|
||
|
Class I
|
$560,276
|
$451,391
|
|
Net Realized Gains:
|
||
|
Class I
|
$3,234,712
|
$1,670,852
|
|
|
Year Ended
December 31, 2025
|
Year Ended
December 31, 2024
|
|
Variable Conservative Growth
|
|
|
|
Net Investment Income:
|
||
|
Class I
|
$1,350,362
|
$1,434,724
|
|
Class II
|
542,154
|
493,244
|
|
Total
|
$1,892,516
|
$1,927,968
|
|
Net Realized Gains:
|
||
|
Class I
|
$4,801,934
|
$1,733,132
|
|
Class II
|
1,982,007
|
653,263
|
|
Total
|
$6,783,941
|
$2,386,395
|
7. Shares of beneficial interest
At December 31, 2025, 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.
18
Franklin Variable Asset Allocation Series 2025 Annual Report
Transactions in shares of each class were as follows:
|
|
Year Ended
December 31, 2025
|
Year Ended
December 31, 2024
|
||
|
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Variable Growth
|
|
|
|
|
|
Class I
|
||||
|
Shares sold
|
25,586
|
$379,042
|
18,052
|
$250,730
|
|
Shares issued on reinvestment
|
678,308
|
9,418,763
|
489,609
|
7,002,061
|
|
Shares repurchased
|
(867,404
)
|
(12,547,636
)
|
(1,011,512
)
|
(14,913,135
)
|
|
Net decrease
|
(163,510
)
|
$(2,749,831
)
|
(503,851
)
|
$(7,660,344
)
|
|
|
Year Ended
December 31, 2025
|
Year Ended
December 31, 2024
|
||
|
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Variable Moderate Growth
|
|
|
|
|
|
Class I
|
||||
|
Shares sold
|
16,544
|
$237,669
|
18,195
|
$265,883
|
|
Shares issued on reinvestment
|
270,613
|
3,794,961
|
147,000
|
2,122,243
|
|
Shares repurchased
|
(303,931
)
|
(4,444,964
)
|
(228,527
)
|
(3,361,541
)
|
|
Net decrease
|
(16,774
)
|
$(412,334
)
|
(63,332
)
|
$(973,415
)
|
|
|
Year Ended
December 31, 2025
|
Year Ended
December 31, 2024
|
||
|
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Variable Conservative Growth
|
|
|
|
|
|
Class I
|
||||
|
Shares sold
|
9,567
|
$143,939
|
30,630
|
$472,572
|
|
Shares issued on reinvestment
|
414,318
|
6,152,271
|
208,361
|
3,167,856
|
|
Shares repurchased
|
(551,702
)
|
(8,456,802
)
|
(763,029
)
|
(11,826,127
)
|
|
Net decrease
|
(127,817
)
|
$(2,160,592
)
|
(524,038
)
|
$(8,185,699
)
|
|
Class II
|
||||
|
Shares sold
|
187,676
|
$2,860,623
|
177,925
|
$2,686,738
|
|
Shares issued on reinvestment
|
171,063
|
2,524,161
|
75,810
|
1,146,507
|
|
Shares repurchased
|
(197,681
)
|
(3,038,384
)
|
(220,214
)
|
(3,379,033
)
|
|
Net increase
|
161,058
|
$2,346,400
|
33,521
|
$454,212
|
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 year ended December 31, 2025. The following transactions were effected in such Underlying Funds for the year ended December 31, 2025.
|
|
Affiliate
Value at
December 31,
2024
|
Purchased
|
Sold
|
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
December 31,
2025
|
||
|
Variable Growth
|
Cost
|
Shares
|
Proceeds
|
Shares
|
||||||
|
Franklin Small Cap Value Fund, Class R6 Shares
|
||||||||||
|
|
$1,483,863
|
$148,243
|
2,444
|
$462,124
|
8,251
|
$(33,633
)
|
$13,881
|
$68,025
|
$(1,026
)
|
$1,135,323
|
|
BrandywineGLOBAL - Diversified US Large Cap Value Fund, Class IS Shares
|
||||||||||
|
|
4,388,129
|
16,823
|
798
|
4,612,557
|
220,095
|
1,417,628
|
-
|
-
|
(1,210,023
)
|
-
|
|
Franklin U.S. Small Cap Equity Fund, Class IS Shares
|
||||||||||
|
|
1,142,010
|
134,407
|
9,859
|
292,937
|
20,744
|
81,410
|
4,626
|
67,093
|
60,783
|
1,125,673
|
|
ClearBridge Appreciation Fund, Class IS Shares
|
||||||||||
|
|
5,290,506
|
699,367
|
19,429
|
2,569,173
|
67,947
|
1,360,799
|
23,005
|
441,011
|
(1,157,048
)
|
3,624,451
|
|
ClearBridge Large Cap Growth Fund, Class IS Shares
|
||||||||||
|
|
19,520,934
|
3,350,189
|
44,481
|
5,326,888
|
72,038
|
83,201
|
-
|
1,639,146
|
(411,061
)
|
17,216,375
|
19
Franklin Variable Asset Allocation Series 2025 Annual Report
Notes to Financial Statements (cont'd)
|
|
Affiliate
Value at
December 31,
2024
|
Purchased
|
Sold
|
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
December 31,
2025
|
||
|
Variable
Growth (cont'd)
|
Cost
|
Shares
|
Proceeds
|
Shares
|
||||||
|
ClearBridge Small Cap Growth Fund, Class IS Shares
|
||||||||||
|
|
$1,987,121
|
$366,026
|
9,640
|
$727,494
|
18,574
|
$26,045
|
-
|
$226,144
|
$(112,339
)
|
$1,539,359
|
|
Franklin U.S. Large Cap Equity Fund, Class IS Shares
|
||||||||||
|
|
16,901,944
|
4,005,745
|
157,824
|
3,192,065
|
125,177
|
100,203
|
$58,684
|
741,940
|
2,223,046
|
20,038,873
|
|
Putnam Large Cap Value Fund, Class R6 Shares
|
||||||||||
|
|
4,347,691
|
5,541,861
|
152,368
|
1,582,169
|
43,282
|
(35,827
)
|
132,535
|
375,931
|
962,503
|
9,234,059
|
|
Franklin International Equity Fund, Class IS Shares
|
||||||||||
|
|
10,867,731
|
1,341,767
|
66,577
|
3,775,709
|
188,346
|
1,062,113
|
211,512
|
692,744
|
1,254,670
|
10,750,572
|
|
Franklin Investment Grade Corporate ETF
|
||||||||||
|
|
360,058
|
145,172
|
6,828
|
162,607
|
7,580
|
(4,569
)
|
18,081
|
-
|
15,318
|
353,372
|
|
Franklin U.S. Core Bond ETF
|
||||||||||
|
|
3,615,417
|
1,436,985
|
67,155
|
1,588,550
|
74,210
|
(45,926
)
|
165,005
|
-
|
136,640
|
3,554,566
|
|
Franklin U.S. Treasury Bond ETF
|
||||||||||
|
|
840,855
|
337,263
|
16,424
|
364,476
|
17,838
|
(13,244
)
|
37,262
|
-
|
28,159
|
828,557
|
|
|
$70,746,259
|
$17,523,848
|
$24,656,749
|
$3,998,200
|
$664,591
|
$4,252,034
|
$1,789,622
|
$69,401,180
|
||
|
|
Affiliate
Value at
December 31,
2024
|
Purchased
|
Sold
|
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
December 31,
2025
|
||
|
Variable Moderate Growth
|
Cost
|
Shares
|
Proceeds
|
Shares
|
||||||
|
Franklin Small Cap Value Fund, Class R6 Shares
|
||||||||||
|
|
$504,512
|
$53,904
|
891
|
$155,159
|
2,780
|
$(12,320
)
|
$4,791
|
$23,476
|
$224
|
$391,161
|
|
BrandywineGLOBAL - Diversified US Large Cap Value Fund, Class IS Shares
|
||||||||||
|
|
1,494,499
|
-
|
-
|
1,565,139
|
74,688
|
464,338
|
-
|
-
|
(393,698
)
|
-
|
|
Franklin U.S. Small Cap Equity Fund, Class IS Shares
|
||||||||||
|
|
388,266
|
48,716
|
3,573
|
97,907
|
6,931
|
24,724
|
1,591
|
23,074
|
24,052
|
387,851
|
|
ClearBridge Appreciation Fund, Class IS Shares
|
||||||||||
|
|
1,801,844
|
255,851
|
7,131
|
893,924
|
23,657
|
449,111
|
7,853
|
150,543
|
(378,548
)
|
1,234,334
|
|
ClearBridge Large Cap Growth Fund, Class IS Shares
|
||||||||||
|
|
6,648,042
|
1,245,815
|
16,643
|
1,862,377
|
25,124
|
18,955
|
-
|
564,922
|
(119,945
)
|
5,930,490
|
|
ClearBridge Small Cap Growth Fund, Class IS Shares
|
||||||||||
|
|
679,533
|
131,811
|
3,466
|
250,879
|
6,415
|
2,022
|
-
|
78,103
|
(32,124
)
|
530,363
|
|
Franklin U.S. Large Cap Equity Fund, Class IS Shares
|
||||||||||
|
|
5,756,326
|
1,522,837
|
60,785
|
1,184,765
|
47,190
|
21,339
|
20,149
|
254,540
|
777,128
|
6,892,865
|
|
Putnam Large Cap Value Fund, Class R6 Shares
|
||||||||||
|
|
1,472,709
|
1,876,689
|
51,604
|
492,520
|
13,519
|
(14,010
)
|
45,403
|
129,367
|
329,566
|
3,172,434
|
|
Franklin Investment Grade Corporate ETF
|
||||||||||
|
|
459,826
|
83,169
|
3,925
|
99,557
|
4,637
|
(2,712
)
|
22,155
|
-
|
15,937
|
456,663
|
|
Franklin U.S. Core Bond ETF
|
||||||||||
|
|
4,616,116
|
832,314
|
39,122
|
988,745
|
46,081
|
(26,189
)
|
202,037
|
-
|
149,231
|
4,582,727
|
|
Franklin U.S. Treasury Bond ETF
|
||||||||||
|
|
1,073,664
|
200,762
|
9,848
|
228,937
|
11,181
|
(7,821
)
|
45,575
|
-
|
29,988
|
1,067,656
|
|
Franklin International Equity Fund, Class IS Shares
|
||||||||||
|
|
3,698,590
|
430,478
|
21,151
|
1,252,809
|
62,086
|
326,041
|
72,062
|
236,016
|
467,009
|
3,669,309
|
|
|
$28,593,927
|
$6,682,346
|
$9,072,718
|
$1,243,478
|
$421,616
|
$1,460,041
|
$868,820
|
$28,315,853
|
||
20
Franklin Variable Asset Allocation Series 2025 Annual Report
|
|
Affiliate
Value at
December 31,
2024
|
Purchased
|
Sold
|
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
December 31,
2025
|
||
|
Variable Conservative
Growth
|
Cost
|
Shares
|
Proceeds
|
Shares
|
||||||
|
Franklin Small Cap Value Fund, Class R6 Shares
|
||||||||||
|
|
$1,007,305
|
$129,399
|
2,177
|
$332,427
|
5,954
|
$(25,857
)
|
$9,504
|
$46,574
|
$2,235
|
$780,655
|
|
BrandywineGLOBAL - Diversified US Large Cap Value Fund, Class IS Shares
|
||||||||||
|
|
2,936,369
|
-
|
-
|
3,075,299
|
146,745
|
312,836
|
-
|
-
|
(173,906
)
|
-
|
|
Franklin U.S. Small Cap Equity Fund, Class IS Shares
|
||||||||||
|
|
775,609
|
112,583
|
8,473
|
208,477
|
15,234
|
47,511
|
3,171
|
45,885
|
46,755
|
773,981
|
|
ClearBridge Appreciation Fund, Class IS Shares
|
||||||||||
|
|
3,540,301
|
523,978
|
14,735
|
1,807,680
|
48,066
|
1,027,148
|
15,155
|
290,535
|
(888,197
)
|
2,395,550
|
|
ClearBridge Large Cap Growth Fund, Class IS Shares
|
||||||||||
|
|
13,062,254
|
2,556,242
|
34,375
|
3,566,348
|
48,555
|
86,644
|
-
|
1,115,309
|
(301,607
)
|
11,837,185
|
|
ClearBridge Small Cap Growth Fund, Class IS Shares
|
||||||||||
|
|
1,356,866
|
289,699
|
7,679
|
529,030
|
13,585
|
18,874
|
-
|
154,981
|
(78,010
)
|
1,058,399
|
|
Franklin U.S. Large Cap Equity Fund, Class IS Shares
|
||||||||||
|
|
11,314,557
|
3,090,723
|
123,722
|
2,149,931
|
87,781
|
4,302
|
40,289
|
505,600
|
1,542,800
|
13,802,451
|
|
Putnam Large Cap Value Fund, Class R6 Shares
|
||||||||||
|
|
2,893,802
|
3,591,572
|
98,746
|
743,857
|
20,952
|
(38,684
)
|
89,132
|
257,403
|
646,992
|
6,349,825
|
|
Franklin Investment Grade Corporate ETF
|
||||||||||
|
|
2,329,139
|
257,245
|
12,140
|
304,085
|
14,218
|
(9,494
)
|
110,752
|
-
|
73,405
|
2,346,210
|
|
Franklin U.S. Core Bond ETF
|
||||||||||
|
|
23,380,796
|
2,617,891
|
123,120
|
2,998,822
|
140,142
|
(87,805
)
|
1,009,933
|
-
|
693,747
|
23,605,807
|
|
Franklin U.S. Treasury Bond ETF
|
||||||||||
|
|
5,438,154
|
664,871
|
32,646
|
713,168
|
34,901
|
(25,861
)
|
227,795
|
-
|
136,000
|
5,499,996
|
|
Franklin International Equity Fund, Class IS Shares
|
||||||||||
|
|
7,283,633
|
652,111
|
31,451
|
2,123,786
|
106,073
|
408,109
|
144,164
|
472,166
|
1,131,389
|
7,351,456
|
|
|
$75,318,785
|
$14,486,314
|
$18,552,910
|
$1,717,723
|
$1,649,895
|
$2,888,453
|
$2,831,603
|
$75,801,515
|
||
9. Redemption facility
The Portfolios, together with other U.S. registered and foreign investment funds (collectively, the "Borrowers") managed by Franklin Resources or its affiliates, are borrowers in a joint syndicated senior unsecured credit facility totaling $2.995 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 January 29, 2027.
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 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 year ended December 31, 2025.
10. Income tax information and distributions to shareholders
The tax character of distributions paid during the fiscal year ended December 31, 2025 was as follows:
|
|
Variable
Growth
|
Variable
Moderate Growth
|
Variable
Conservative Growth
|
|
Distributions paid from:
|
|||
|
Ordinary income
|
$552,176
|
$602,516
|
$1,974,138
|
|
Net long-term capital gains
|
8,866,612
|
3,192,472
|
6,702,319
|
|
Total distributions paid
|
$9,418,788
|
$3,794,988
|
$8,676,457
|
21
Franklin Variable Asset Allocation Series 2025 Annual Report
Notes to Financial Statements (cont'd)
The tax character of distributions paid during the fiscal year ended December 31, 2024 was as follows:
|
|
Variable
Growth
|
Variable
Moderate Growth
|
Variable
Conservative Growth
|
|
Distributions paid from:
|
|||
|
Ordinary income
|
$2,517,988
|
$900,863
|
$3,070,733
|
|
Net long-term capital gains
|
4,484,073
|
1,221,380
|
1,243,630
|
|
Total distributions paid
|
$7,002,061
|
$2,122,243
|
$4,314,363
|
As of December 31, 2025, the components of distributable earnings (loss) on a tax basis were as follows:
|
|
Variable
Growth
|
Variable
Moderate Growth
|
Variable
Conservative Growth
|
|
Undistributed ordinary income - net
|
$715,245
|
-
|
$1,547
|
|
Undistributed long-term capital gains - net
|
4,590,506
|
$1,537,664
|
3,069,409
|
|
Total undistributed earnings
|
$5,305,751
|
$1,537,664
|
$3,070,956
|
|
Unrealized appreciation (depreciation)(a)
|
16,681,949
|
5,163,318
|
10,456,751
|
|
Total distributable earnings (loss) - net
|
$21,987,700
|
$6,700,982
|
$13,527,707
|
|
(a)
|
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable to the tax deferral of losses on wash sales.
|
11. Operating segments
Each Portfolio operates as a single operating segment, which is an investment portfolio. The portfolio managers assigned to the Portfolios within the Portfolios' investment manager serve as the Chief Operating Decision Maker ("CODM") and are responsible for evaluating the Portfolios' operating results and allocating resources in accordance with the Portfolios' investment strategy. Internal reporting provided to the CODM aligns with the accounting policies and measurement principles used in the financial statements.
For information regarding segment assets, segment profit or loss, and significant expenses, refer to the Statements of Assets and Liabilities and the Statements of Operations, along with the related Notes to Financial Statements. The Portfolios' Schedules of Investments provide details of the Portfolios' investments that generate returns such as interest, dividends, and realized and unrealized gains or losses. Performance metrics, including portfolio turnover and expense ratios, are disclosed in the Financial Highlights.
22
Franklin Variable Asset Allocation Series 2025 Annual Report
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Legg Mason Partners Variable Equity Trust and Shareholders of Franklin Multi-Asset Variable Growth Fund, Franklin Multi-Asset Variable Moderate Growth Fund and Franklin Multi-Asset Variable Conservative Growth Fund
Opinions on the Financial Statements
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Franklin Multi-Asset Variable Growth Fund, Franklin Multi-Asset Variable Moderate Growth Fund and Franklin Multi-Asset Variable Conservative Growth Fund (three of the portfolios constituting Legg Mason Partners Variable Equity Trust, hereafter collectively referred to as the "Portfolios") as of December 31, 2025, the related statements of operations for the year ended December 31, 2025, the statements of changes in net assets for each of the two years in the period ended December 31, 2025, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2025 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Portfolios as of December 31, 2025, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period ended December 31, 2025 and each of the financial highlights for each of the five years in the period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinions
These financial statements are the responsibility of the Portfolios' management. Our responsibility is to express an opinion on the Portfolios' financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Portfolios in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2025 by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinions.
/s/ PricewaterhouseCoopers LLP
Baltimore, Maryland
February 13, 2026
February 13, 2026
We have served as the auditor of one or more investment companies in the Franklin Templeton Group of Funds since 1948.
23
Franklin Variable Asset Allocation Series 2025 Annual Report
Important Tax Information (unaudited)
By mid-February, tax information related to a shareholder's proportionate share of distributions paid during the preceding calendar year will be received, if applicable. Please also refer to www.franklintempleton.com for per share tax information related to any distributions paid during the preceding calendar year. Shareholders are advised to consult with their tax advisors for further information on the treatment of these amounts on their tax returns.
The following tax information for the Portfolios is required to be furnished to shareholders with respect to income earned and distributions paid during its fiscal year.
The Portfolios hereby report the following amounts, or if subsequently determined to be different, the maximum allowable amounts, for the fiscal year ended December 31, 2025:
|
|
Pursuant to:
|
Variable
Growth
|
Variable
Moderate Growth
|
Variable
Conservative Growth
|
|
Long-Term Capital Gain Dividends Distributed
|
§852(b)(3)(C)
|
$8,866,612
|
$3,192,472
|
$6,702,319
|
|
Income Eligible for Dividends Received Deduction (DRD)
|
§854(b)(1)(A)
|
$387,123
|
$132,777
|
$261,946
|
Under Section 853 of the Internal Revenue Code, the Portfolios intend to elect to pass through to their shareholders the following amounts, or amounts as finally determined, of foreign taxes paid and foreign source income earned by the Portfolios during the fiscal year ended December 31, 2025:
|
|
Variable
Growth
|
Variable
Moderate Growth
|
Variable
Conservative Growth
|
|
Foreign Taxes Paid
|
$18,255
|
$6,219
|
$12,443
|
|
Foreign Source Income Earned
|
$147,906
|
$49,665
|
$101,254
|
24
Franklin Variable Asset Allocation Series
|
Changes in and Disagreements with Accountants
|
For the period covered by this report
|
|
Not applicable.
|
|
|
Results of Meeting(s) of Shareholders
|
For the period covered by this report
|
|
Not applicable.
|
|
|
Remuneration Paid to Directors, Officers and Others
|
For the period covered by this report
|
|
Refer to the financial statements included herein.
|
|
25
Franklin Variable Asset Allocation Series
(This page intentionally left blank.)
(This page intentionally left blank.)
(This page intentionally left blank.)
Franklin
Variable Asset Allocation Series
Variable Asset Allocation Series
Trustees
Andrew L. Breech
Stephen R. Gross
Susan M. Heilbron
Arnold L. Lehman
Robin J. W. Masters
G. Peter O'Brien
Chair
Chair
Thomas F. Schlafly
Jane Trust
Investment manager
Franklin Templeton Fund Adviser, 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
Services, LLC
3344 Quality Drive
Rancho Cordova, CA 95670-7313
Independent registered public
accounting firm
accounting firm
PricewaterhouseCoopers LLP
Baltimore, MD
Baltimore, MD
Franklin Variable Asset Allocation Series
Franklin Multi-Asset Variable Growth Fund
Franklin Multi-Asset Variable Moderate Growth Fund
Franklin Multi-Asset Variable Conservative Growth Fund
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 Variable Asset Allocation Series
Legg Mason Funds
One Madison Avenue, 17th Floor
New York, NY 10010
Legg Mason Funds
One Madison Avenue, 17th Floor
New York, NY 10010
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'sinvestment 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
© 2026 Franklin Distributors, LLC, Member FINRA/SIPC. All rights reserved.
FVAAS-AFSOI 2/26
© 2026 Franklin Templeton. All rights reserved.
| ITEM 8. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS FOR OPEN-END MANAGEMENT INVESTMENT COMPANIES. |
The information is disclosed as part of the Financial Statements included in Item 7 of this Form N-CSR.
| ITEM 9. | PROXY DISCLOSURES FOR OPEN-END MANAGEMENT INVESTMENT COMPANIES. |
The information is disclosed as part of the Financial Statements included in Item 7 of this Form N-CSR.
| ITEM 10. | REMUNERATION PAID TO DIRECTORS, OFFICERS, AND OTHERS OF OPEN-END MANAGEMENT INVESTMENT COMPANIES. |
The information is disclosed as part of the Financial Statements included in Item 7 of this Form N-CSR.
| ITEM 11. | STATEMENT REGARDING BASIS FOR APPROVAL OF INVESTMENT ADVISORY CONTRACT. |
The information is disclosed as part of the Financial Statements included in Item 7 of this Form N-CSR, as applicable.
| ITEM 12. | DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable.
| ITEM 13. | PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable.
| ITEM 14. | PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. |
Not applicable.
| ITEM 15. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. |
There have been no changes to the procedures by which shareholders may recommend nominees to the Registrant's Board of Trustees that would require disclosure herein.
| ITEM 16. | 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 period covered by this report that have materially affected or are likely to materially affect the Registrant's internal control over financial reporting. |
| ITEM 17. | DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable.
| ITEM 18. | RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION. |
| (a) | Not applicable. |
| (b) | Not applicable. |
| ITEM 19. | EXHIBITS. |
(a) (1) Code of Ethics attached hereto.
Exhibit 99.CODE ETH
(a) (3) 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: | February 24, 2026 | |
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: | February 24, 2026 | |
| By: | /s/ Christopher Berarducci | |
| Christopher Berarducci | ||
| Principal Financial Officer | ||
| Date: | February 24, 2026 |
Legg Mason Partners Variable Equity Trust published this content on February 24, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on February 24, 2026 at 20:12 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]