Legg Mason Partners Variable Equity Trust
02/25/2026 | Press release | Distributed by Public on 02/25/2026 11:24
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
|
ClearBridge Variable Small Cap Growth Portfolio
|
|
|
Class I
|
Annual Shareholder Report | December 31, 2025
|
This annual shareholder reportcontains important information about ClearBridge Variable Small Cap Growth Portfolio 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.
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
|
$84
|
0.80%
|
| * | 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. |
HOW DID THE FUND PERFORM LAST YEAR AND WHAT AFFECTED ITS PERFORMANCE?
For the twelve months ended December 31, 2025, Class I shares of ClearBridge Variable Small Cap Growth Portfolio 9.23%. The Fund compares its performance to the Russell 2000 Growth Index, which returned 13.01% for the same period.
PERFORMANCE HIGHLIGHTS
|
Top contributors to performance:
|
|
|
↑
|
Bloom Energy, in the industrials sector, provides solid oxide fuel cell systems that deliver reliable, on-site power generation for commercial, industrial and data-center customers. The stock rose as rising electricity demand, particularly from data centers, increased interest in its solid oxide fuel cell technology as a reliable on-site power solution. Improved demand visibility, commercial traction, and progress toward profitability supported positive investor sentiment.
|
|
↑
|
H&E Equipment Services is an equipment rental company focused on heavy construction, industrial and infrastructure equipment, with a growing national footprint and a fleet weighted toward higher-utilization categories such as aerial work platforms and earthmoving equipment. During the period, the stock was acquired by peer Herc Holdings at a significant premium.
|
|
↑
|
Insmed, in the health care sector, is a global biopharmaceutical company developing therapies for serious and rare diseases, including lung conditions and genetic disorders. The stock also advanced after providing positive pipeline updates, including progress on its inhalation powder for lung patients.
|
|
Top detractors from performance:
|
|
|
↓
|
Wix.com, in the information technology sector, operates as a cloud-based website development platform for small businesses and agencies. The company saw its share price decline due to investor concerns that the development of artificial intelligence (AI) could cause disintermediation between the company and its customers, as well as uneven software and consumer demand outlooks.
|
|
↓
|
Trex, in the industrials sector, manufactures and distributes decking, railing, and outdoor living products and accessories for residential and commercial markets. Shares declined as demand normalized, competition intensified, and uncertainty around capacity absorption weighed on investor sentiment.
|
|
↓
|
Shift4 Payments, in the financial sector, provides software and payment processing solutions. The company saw a pullback by its customers in the restaurant and hospitality industries over weaker consumer discretionary spending.
|
| ClearBridge Variable Small Cap Growth Portfolio | PAGE 1 | 7877-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
|
9.23
|
-0.17
|
9.38
|
|
Russell 3000 Index
|
17.15
|
13.15
|
14.29
|
|
Russell 2000 Growth Index
|
13.01
|
3.18
|
9.57
|
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
|
$404,863,858
|
|
Total Number of Portfolio Holdings
|
85
|
|
Total Management Fee Paid
|
$3,027,521
|
|
Portfolio Turnover Rate
|
37%
|
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. |
| ClearBridge Variable Small Cap Growth Portfolio | PAGE 2 | 7877-ATSR-0226 |
|
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
|
| ClearBridge Variable Small Cap Growth Portfolio | PAGE 3 | 7877-ATSR-0226 |
|
ClearBridge Variable Small Cap Growth Portfolio
|
|
|
Class II
|
Annual Shareholder Report | December 31, 2025
|
This annual shareholder reportcontains important information about ClearBridge Variable Small Cap Growth Portfolio 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.
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
|
$110
|
1.05%
|
| * | 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. |
HOW DID THE FUND PERFORM LAST YEAR AND WHAT AFFECTED ITS PERFORMANCE?
For the twelve months ended December 31, 2025, Class II shares of ClearBridge Variable Small Cap Growth Portfolio 8.97%. The Fund compares its performance to the Russell 2000 Growth Index, which returned 13.01% for the same period.
PERFORMANCE HIGHLIGHTS
|
Top contributors to performance:
|
|
|
↑
|
Bloom Energy, in the industrials sector, provides solid oxide fuel cell systems that deliver reliable, on-site power generation for commercial, industrial and data-center customers. The stock rose as rising electricity demand, particularly from data centers, increased interest in its solid oxide fuel cell technology as a reliable on-site power solution. Improved demand visibility, commercial traction, and progress toward profitability supported positive investor sentiment.
|
|
↑
|
H&E Equipment Services is an equipment rental company focused on heavy construction, industrial and infrastructure equipment, with a growing national footprint and a fleet weighted toward higher-utilization categories such as aerial work platforms and earthmoving equipment. During the period, the stock was acquired by peer Herc Holdings at a significant premium.
|
|
↑
|
Insmed, in the health care sector, is a global biopharmaceutical company developing therapies for serious and rare diseases, including lung conditions and genetic disorders. The stock also advanced after providing positive pipeline updates, including progress on its inhalation powder for lung patients.
|
|
Top detractors from performance:
|
|
|
↓
|
Wix.com, in the information technology sector, operates as a cloud-based website development platform for small businesses and agencies. The company saw its share price decline due to investor concerns that the development of artificial intelligence (AI) could cause disintermediation between the company and its customers, as well as uneven software and consumer demand outlooks.
|
|
↓
|
Trex, in the industrials sector, manufactures and distributes decking, railing, and outdoor living products and accessories for residential and commercial markets. Shares declined as demand normalized, competition intensified, and uncertainty around capacity absorption weighed on investor sentiment.
|
|
↓
|
Shift4 Payments, in the financial sector, provides software and payment processing solutions. The company saw a pullback by its customers in the restaurant and hospitality industries over weaker consumer discretionary spending.
|
| ClearBridge Variable Small Cap Growth Portfolio | PAGE 1 | 7935-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 12/31/2015 - 12/31/2025
AVERAGE ANNUAL TOTAL RETURNS (%) Period Ended December 31, 2025
|
1 Year
|
5 Year
|
10 Year
|
|
|
Class II
|
8.97
|
-0.42
|
9.11
|
|
Russell 3000 Index
|
17.15
|
13.15
|
14.29
|
|
Russell 2000 Growth Index
|
13.01
|
3.18
|
9.57
|
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
|
$404,863,858
|
|
Total Number of Portfolio Holdings
|
85
|
|
Total Management Fee Paid
|
$3,027,521
|
|
Portfolio Turnover Rate
|
37%
|
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. |
| ClearBridge Variable Small Cap Growth Portfolio | PAGE 2 | 7935-ATSR-0226 |
|
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
|
| ClearBridge Variable Small Cap Growth Portfolio | PAGE 3 | 7935-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. |
ClearBridge
Variable Small Cap Growth Portfolio
Variable Small Cap Growth Portfolio
Financial Statements and Other Important Information
Annual | December 31, 2025
Table of Contents
|
Schedule of Investments
|
1
|
|
Statement of Assets and Liabilities
|
6
|
|
Statement of Operations
|
7
|
|
Statements of Changes in Net Assets
|
8
|
|
Financial Highlights
|
9
|
|
Notes to Financial Statements
|
11
|
|
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
Schedule of Investments December 31, 2025
ClearBridge Variable Small Cap Growth Portfolio
(Percentages shown based on Portfolio net assets)
|
Security
|
|
|
|
Shares
|
Value
|
|
Common Stocks - 95.5%
|
|||||
|
Consumer Discretionary - 7.6%
|
|||||
|
Automobile Components - 0.3%
|
|||||
|
Fox Factory Holding Corp.
|
56,339
|
$963,961
*
|
|||
|
Broadline Retail - 1.6%
|
|||||
|
Global-e Online Ltd.
|
167,400
|
6,580,494
*
|
|||
|
Building Products - 0.7%
|
|||||
|
Modine Manufacturing Co.
|
22,200
|
2,963,922
*
|
|||
|
Diversified Consumer Services - 0.5%
|
|||||
|
Universal Technical Institute Inc.
|
72,100
|
1,883,973
*
|
|||
|
Hotels, Restaurants & Leisure - 3.7%
|
|||||
|
Dutch Bros Inc., Class A Shares
|
114,805
|
7,028,362
*
|
|||
|
Wingstop Inc.
|
32,641
|
7,784,552
|
|||
|
Total Hotels, Restaurants & Leisure
|
14,812,914
|
||||
|
Specialty Retail - 0.8%
|
|||||
|
Boot Barn Holdings Inc.
|
19,000
|
3,352,930
*
|
|||
|
|
|||||
|
Total Consumer Discretionary
|
30,558,194
|
||||
|
Consumer Staples - 6.7%
|
|||||
|
Consumer Staples Distribution & Retail - 6.1%
|
|||||
|
BJ's Wholesale Club Holdings Inc.
|
75,183
|
6,768,725
*
|
|||
|
Casey's General Stores Inc.
|
16,673
|
9,215,334
|
|||
|
Grocery Outlet Holding Corp.
|
175,686
|
1,774,429
*
|
|||
|
Performance Food Group Co.
|
77,766
|
6,992,719
*
|
|||
|
Total Consumer Staples Distribution & Retail
|
24,751,207
|
||||
|
Personal Care Products - 0.6%
|
|||||
|
e.l.f. Beauty Inc.
|
31,500
|
2,395,260
*
|
|||
|
|
|||||
|
Total Consumer Staples
|
27,146,467
|
||||
|
Energy - 2.8%
|
|||||
|
Energy Equipment & Services - 1.8%
|
|||||
|
Archrock Inc.
|
74,300
|
1,933,286
|
|||
|
Cactus Inc., Class A Shares
|
114,580
|
5,234,014
|
|||
|
Total Energy Equipment & Services
|
7,167,300
|
||||
|
Oil, Gas & Consumable Fuels - 1.0%
|
|||||
|
Matador Resources Co.
|
93,400
|
3,963,896
|
|||
|
|
|||||
|
Total Energy
|
11,131,196
|
||||
|
Financials - 9.6%
|
|||||
|
Banks - 2.6%
|
|||||
|
Pathward Financial Inc.
|
19,500
|
1,384,500
|
|||
|
UMB Financial Corp.
|
17,100
|
1,967,184
|
|||
|
Wintrust Financial Corp.
|
50,900
|
7,116,838
|
|||
|
Total Banks
|
10,468,522
|
||||
See Notes to Financial Statements.
ClearBridge Variable Small Cap Growth Portfolio 2025 Annual Report
1
Schedule of Investments (cont'd) December 31, 2025
ClearBridge Variable Small Cap Growth Portfolio
(Percentages shown based on Portfolio net assets)
|
Security
|
|
|
|
Shares
|
Value
|
|
|
|||||
|
Capital Markets - 4.1%
|
|||||
|
Hamilton Lane Inc., Class A Shares
|
57,303
|
$7,696,366
|
|||
|
PJT Partners Inc., Class A Shares
|
51,701
|
8,644,407
|
|||
|
Total Capital Markets
|
16,340,773
|
||||
|
Financial Services - 2.4%
|
|||||
|
NMI Holdings Inc.
|
98,800
|
4,030,052
*
|
|||
|
Shift4 Payments Inc., Class A Shares
|
92,125
|
5,801,111
*
|
|||
|
Total Financial Services
|
9,831,163
|
||||
|
Insurance - 0.5%
|
|||||
|
Trupanion Inc.
|
56,639
|
2,116,600
*
|
|||
|
|
|||||
|
Total Financials
|
38,757,058
|
||||
|
Health Care - 21.3%
|
|||||
|
Biotechnology - 9.8%
|
|||||
|
Bridgebio Pharma Inc.
|
66,200
|
5,063,638
*
|
|||
|
Caris Life Sciences Inc.
|
104,307
|
2,814,203
*
|
|||
|
CG oncology Inc.
|
38,900
|
1,615,128
*
|
|||
|
Dyne Therapeutics Inc.
|
54,200
|
1,060,152
*
|
|||
|
Geron Corp.
|
655,600
|
865,392
*
|
|||
|
Insmed Inc.
|
43,500
|
7,570,740
*
|
|||
|
Mirum Pharmaceuticals Inc.
|
113,500
|
8,965,365
*
|
|||
|
Protagonist Therapeutics Inc.
|
30,000
|
2,620,200
*
|
|||
|
Rhythm Pharmaceuticals Inc.
|
35,700
|
3,821,328
*
|
|||
|
TG Therapeutics Inc.
|
181,400
|
5,407,534
*
|
|||
|
Total Biotechnology
|
39,803,680
|
||||
|
Health Care Equipment & Supplies - 3.5%
|
|||||
|
Insulet Corp.
|
12,676
|
3,603,026
*
|
|||
|
Penumbra Inc.
|
34,026
|
10,579,024
*
|
|||
|
Total Health Care Equipment & Supplies
|
14,182,050
|
||||
|
Health Care Providers & Services - 4.7%
|
|||||
|
HealthEquity Inc.
|
72,332
|
6,626,334
*
|
|||
|
Hims & Hers Health Inc.
|
34,000
|
1,103,980
*
|
|||
|
RadNet Inc.
|
96,900
|
6,913,815
*
|
|||
|
Surgery Partners Inc.
|
281,198
|
4,344,509
*
|
|||
|
Total Health Care Providers & Services
|
18,988,638
|
||||
|
Life Sciences Tools & Services - 2.2%
|
|||||
|
ICON PLC
|
20,600
|
3,753,732
*
|
|||
|
Medpace Holdings Inc.
|
8,900
|
4,998,685
*
|
|||
|
Total Life Sciences Tools & Services
|
8,752,417
|
||||
|
Pharmaceuticals - 1.1%
|
|||||
|
Tarsus Pharmaceuticals Inc.
|
53,700
|
4,396,956
*
|
|||
|
|
|||||
|
Total Health Care
|
86,123,741
|
||||
See Notes to Financial Statements.
2
ClearBridge Variable Small Cap Growth Portfolio 2025 Annual Report
ClearBridge Variable Small Cap Growth Portfolio
(Percentages shown based on Portfolio net assets)
|
Security
|
|
|
|
Shares
|
Value
|
|
|
|||||
|
Industrials - 23.5%
|
|||||
|
Aerospace & Defense - 5.9%
|
|||||
|
Beta Technologies Inc., Class A Shares
|
30,383
|
$857,105
*
|
|||
|
BWX Technologies Inc.
|
53,600
|
9,264,224
|
|||
|
Karman Holdings Inc.
|
30,900
|
2,260,953
*
|
|||
|
Kratos Defense & Security Solutions Inc.
|
65,000
|
4,934,150
*
|
|||
|
Moog Inc., Class A Shares
|
27,337
|
6,657,926
|
|||
|
Total Aerospace & Defense
|
23,974,358
|
||||
|
Air Freight & Logistics - 1.6%
|
|||||
|
GXO Logistics Inc.
|
125,185
|
6,589,738
*
|
|||
|
Building Products - 1.4%
|
|||||
|
Simpson Manufacturing Co. Inc.
|
12,100
|
1,953,787
|
|||
|
Trex Co. Inc.
|
103,127
|
3,617,695
*
|
|||
|
Total Building Products
|
5,571,482
|
||||
|
Construction & Engineering - 2.4%
|
|||||
|
Construction Partners Inc., Class A Shares
|
78,100
|
8,477,755
*
|
|||
|
Limbach Holdings Inc.
|
17,200
|
1,339,020
*
|
|||
|
Total Construction & Engineering
|
9,816,775
|
||||
|
Electrical Equipment - 2.8%
|
|||||
|
Bloom Energy Corp., Class A Shares
|
129,969
|
11,293,007
*
|
|||
|
Ground Transportation - 2.3%
|
|||||
|
XPO Inc.
|
67,180
|
9,130,434
*
|
|||
|
Machinery - 3.0%
|
|||||
|
RBC Bearings Inc.
|
27,236
|
12,213,439
*
|
|||
|
Trading Companies & Distributors - 4.1%
|
|||||
|
FTAI Aviation Ltd.
|
33,000
|
6,496,050
|
|||
|
McGrath RentCorp.
|
44,200
|
4,637,906
|
|||
|
Xometry Inc., Class A Shares
|
93,587
|
5,565,619
*
|
|||
|
Total Trading Companies & Distributors
|
16,699,575
|
||||
|
|
|||||
|
Total Industrials
|
95,288,808
|
||||
|
Information Technology - 21.1%
|
|||||
|
Electronic Equipment, Instruments & Components - 3.9%
|
|||||
|
Fabrinet
|
21,200
|
9,651,936
*
|
|||
|
OSI Systems Inc.
|
24,443
|
6,234,431
*
|
|||
|
Total Electronic Equipment, Instruments & Components
|
15,886,367
|
||||
|
IT Services - 1.7%
|
|||||
|
Wix.com Ltd.
|
65,047
|
6,757,733
*
|
|||
|
Semiconductors & Semiconductor Equipment - 5.9%
|
|||||
|
Allegro MicroSystems Inc.
|
210,215
|
5,545,472
*
|
|||
|
Credo Technology Group Holding Ltd.
|
41,400
|
5,957,046
*
|
|||
|
Lattice Semiconductor Corp.
|
145,250
|
10,687,495
*
|
|||
See Notes to Financial Statements.
ClearBridge Variable Small Cap Growth Portfolio 2025 Annual Report
3
Schedule of Investments (cont'd) December 31, 2025
ClearBridge Variable Small Cap Growth Portfolio
(Percentages shown based on Portfolio net assets)
|
Security
|
|
|
|
Shares
|
Value
|
|
|
|||||
|
Semiconductors & Semiconductor Equipment - continued
|
|||||
|
Rigetti Computing Inc.
|
88,900
|
$1,969,135
*
|
|||
|
Total Semiconductors & Semiconductor Equipment
|
24,159,148
|
||||
|
Software - 8.9%
|
|||||
|
Brain Corp.
|
52,367
|
189,973
*(a)(b)(c)
|
|||
|
Cellebrite DI Ltd.
|
93,200
|
1,680,396
*
|
|||
|
Clearwater Analytics Holdings Inc., Class A Shares
|
137,800
|
3,323,736
*
|
|||
|
Intapp Inc.
|
101,500
|
4,650,730
*
|
|||
|
Klaviyo Inc., Class A Shares
|
218,849
|
7,106,027
*
|
|||
|
nCino Inc.
|
142,200
|
3,646,008
*
|
|||
|
Onestream Inc.
|
77,119
|
1,417,447
*
|
|||
|
PagerDuty Inc.
|
63,054
|
826,638
*
|
|||
|
Sprout Social Inc., Class A Shares
|
120,650
|
1,359,725
*
|
|||
|
Varonis Systems Inc.
|
211,367
|
6,932,838
*
|
|||
|
Zeta Global Holdings Corp., Class A Shares
|
241,070
|
4,905,774
*
|
|||
|
Total Software
|
36,039,292
|
||||
|
Technology Hardware, Storage & Peripherals - 0.7%
|
|||||
|
IonQ Inc.
|
61,600
|
2,763,992
*
|
|||
|
|
|||||
|
Total Information Technology
|
85,606,532
|
||||
|
Materials - 2.9%
|
|||||
|
Chemicals - 2.9%
|
|||||
|
Balchem Corp.
|
39,956
|
6,127,652
|
|||
|
Element Solutions Inc.
|
231,300
|
5,780,187
|
|||
|
|
|||||
|
Total Materials
|
11,907,839
|
||||
|
Total Common Stocks (Cost - $243,480,171)
|
386,519,835
|
||||
|
Investments in Underlying Funds - 2.8%
|
|||||
|
iShares Trust - iShares Russell 2000 Growth ETF
|
15,600
|
5,038,956
|
|||
|
State Street SPDR S&P Biotech ETF
|
52,200
|
6,364,746
|
|||
|
|
|||||
|
Total Investments in Underlying Funds (Cost - $9,801,288)
|
11,403,702
|
||||
|
|
|
Rate
|
|
|
|
|
Convertible Preferred Stocks - 0.3%
|
|||||
|
Health Care - 0.3%
|
|||||
|
Health Care Equipment & Supplies - 0.3%
|
|||||
|
Yellowstone Midco Holdings II (Cost - $1,073,000)
|
-
|
1,073
|
1,073,000
*(a)(b)(c)
|
||
|
|
|||||
|
Preferred Stocks - 0.1%
|
|||||
|
Information Technology - 0.1%
|
|||||
|
Software - 0.1%
|
|||||
|
Brain Corp. (Cost - $898,085)
|
-
|
170,237
|
617,571
*(a)(b)(c)
|
||
|
Total Investments before Short-Term Investments (Cost - $255,252,544)
|
399,614,108
|
||||
See Notes to Financial Statements.
4
ClearBridge Variable Small Cap Growth Portfolio 2025 Annual Report
ClearBridge Variable Small Cap Growth Portfolio
(Percentages shown based on Portfolio net assets)
|
Security
|
|
Rate
|
|
Shares
|
Value
|
|
|
|||||
|
Short-Term Investments - 1.4%
|
|||||
|
JPMorgan 100% U.S. Treasury Securities Money Market
Fund, Institutional Class
|
3.609%
|
2,806,108
|
$2,806,108
(d)
|
||
|
Western Asset Premier Institutional U.S. Treasury
Reserves, Premium Shares
|
3.662%
|
2,806,108
|
2,806,108
(d)(e)
|
||
|
|
|||||
|
Total Short-Term Investments (Cost - $5,612,216)
|
5,612,216
|
||||
|
Total Investments - 100.1% (Cost - $260,864,760)
|
405,226,324
|
||||
|
Liabilities in Excess of Other Assets - (0.1)%
|
(362,466
)
|
||||
|
Total Net Assets - 100.0%
|
$404,863,858
|
||||
|
*
|
Non-income producing security.
|
|
(a)
|
Security is fair valued in accordance with procedures approved by the Board of Trustees (Note 1).
|
|
(b)
|
Security is valued using significant unobservable inputs (Note 1).
|
|
(c)
|
Restricted security (Note 9).
|
|
(d)
|
Rate shown is one-day yield as of the end of the reporting period.
|
|
(e)
|
In this instance, as defined in the Investment Company Act of 1940, an "Affiliated Company"represents Portfolio
ownership of at least 5% of the outstanding voting securities of an issuer, or a company which is under common
ownership or control with the Portfolio. At December 31, 2025, the total market value of investments in Affiliated
Companies was $2,806,108 and the cost was $2,806,108 (Note 8).
|
|
Abbreviation(s) used in this schedule:
|
||
|
ETF
|
-
|
Exchange-Traded Fund
|
|
SPDR
|
-
|
Standard & Poor's Depositary Receipts
|
See Notes to Financial Statements.
ClearBridge Variable Small Cap Growth Portfolio 2025 Annual Report
5
Statement of Assets and Liabilities December 31, 2025
|
Assets:
|
|
|
Investments in unaffiliated securities, at value (Cost - $258,058,652)
|
$402,420,216
|
|
Investments in affiliated securities, at value (Cost - $2,806,108)
|
2,806,108
|
|
Cash
|
20
|
|
Receivable for Portfolio shares sold
|
204,946
|
|
Dividends receivable from unaffiliated investments
|
86,403
|
|
Dividends receivable from affiliated investments
|
9,076
|
|
Prepaid expenses
|
1,378
|
|
Total Assets
|
405,528,147
|
|
Liabilities:
|
|
|
Investment management fee payable
|
263,328
|
|
Payable for Portfolio shares repurchased
|
250,995
|
|
Fund accounting fees payable
|
65,205
|
|
Service and/or distribution fees payable
|
31,260
|
|
Trustees' fees payable
|
243
|
|
Accrued expenses
|
53,258
|
|
Total Liabilities
|
664,289
|
|
Total Net Assets
|
$404,863,858
|
|
Net Assets:
|
|
|
Par value (Note 7)
|
$149
|
|
Paid-in capital in excess of par value
|
255,983,213
|
|
Total distributable earnings (loss)
|
148,880,496
|
|
Total Net Assets
|
$404,863,858
|
|
Net Assets:
|
|
|
Class I
|
$260,775,990
|
|
Class II
|
$144,087,868
|
|
Shares Outstanding:
|
|
|
Class I
|
9,247,237
|
|
Class II
|
5,604,235
|
|
Net Asset Value:
|
|
|
Class I
|
$28.20
|
|
Class II
|
$25.71
|
See Notes to Financial Statements.
6
ClearBridge Variable Small Cap Growth Portfolio 2025 Annual Report
Statement of Operations For the Year Ended December 31, 2025
|
Investment Income:
|
|
|
Dividends from unaffiliated investments
|
$1,181,758
|
|
Dividends from affiliated investments
|
142,068
|
|
Total Investment Income
|
1,323,826
|
|
Expenses:
|
|
|
Investment management fee (Note 2)
|
3,031,633
|
|
Service and/or distribution fees (Notes 2 and 5)
|
344,815
|
|
Fund accounting fees
|
70,986
|
|
Legal fees
|
41,591
|
|
Audit and tax fees
|
32,424
|
|
Shareholder reports
|
25,310
|
|
Trustees' fees
|
16,743
|
|
Commitment fees (Note 10)
|
3,428
|
|
Transfer agent fees (Notes 2 and 5)
|
2,724
|
|
Insurance
|
2,641
|
|
Custody fees
|
1,249
|
|
Interest expense
|
27
|
|
Miscellaneous expenses
|
9,522
|
|
Total Expenses
|
3,583,093
|
|
Less: Fee waivers and/or expense reimbursements (Notes 2 and 5)
|
(4,112
)
|
|
Net Expenses
|
3,578,981
|
|
Net Investment Loss
|
(2,255,155
)
|
|
Realized and Unrealized Gain on Investments and Written Options (Notes 1, 3 and 4):
|
|
|
Net Realized Gain From:
|
|
|
Investment transactions in unaffiliated securities
|
21,485,436
|
|
Written options
|
34,976
|
|
Net Realized Gain
|
21,520,412
|
|
Change in Net Unrealized Appreciation (Depreciation) From Unaffiliated
Investments
|
15,145,755
|
|
Net Gain on Investments and Written Options
|
36,666,167
|
|
Increase in Net Assets From Operations
|
$34,411,012
|
See Notes to Financial Statements.
ClearBridge Variable Small Cap Growth Portfolio 2025 Annual Report
7
Statements of Changes in Net Assets
|
For the Years Ended December 31,
|
2025
|
2024
|
|
Operations:
|
||
|
Net investment loss
|
$(2,255,155
)
|
$(2,202,099
)
|
|
Net realized gain
|
21,520,412
|
26,668,719
|
|
Change in net unrealized appreciation (depreciation)
|
15,145,755
|
(7,175,479
)
|
|
Increase in Net Assets From Operations
|
34,411,012
|
17,291,141
|
|
Distributions to Shareholders From (Notes 1 and 6):
|
||
|
Total distributable earnings
|
(29,082,942
)
|
(14,061,644
)
|
|
Decrease in Net Assets From Distributions to Shareholders
|
(29,082,942
)
|
(14,061,644
)
|
|
Portfolio Share Transactions (Note 7):
|
||
|
Net proceeds from sale of shares
|
80,071,834
|
81,768,621
|
|
Reinvestment of distributions
|
29,082,942
|
14,061,644
|
|
Cost of shares repurchased
|
(114,579,851
)
|
(116,936,928
)
|
|
Decrease in Net Assets From Portfolio Share Transactions
|
(5,425,075
)
|
(21,106,663
)
|
|
Decrease in Net Assets
|
(97,005
)
|
(17,877,166
)
|
|
Net Assets:
|
||
|
Beginning of year
|
404,960,863
|
422,838,029
|
|
End of year
|
$404,863,858
|
$404,960,863
|
See Notes to Financial Statements.
8
ClearBridge Variable Small Cap Growth Portfolio 2025 Annual Report
Financial Highlights
|
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
|
$27.69
|
$27.35
|
$25.23
|
$36.32
|
$36.60
|
|
Income (loss) from operations:
|
|||||
|
Net investment loss
|
(0.13
)
|
(0.13
)
|
(0.10
)
|
(0.12
)
|
(0.18
)
|
|
Net realized and unrealized gain (loss)
|
2.65
|
1.43
|
2.22
|
(10.42
)
|
4.70
|
|
Total income (loss) from operations
|
2.52
|
1.30
|
2.12
|
(10.54)
|
4.52
|
|
Less distributions from:
|
|||||
|
Net realized gains
|
(2.01
)
|
(0.96
)
|
-
|
(0.55
)
|
(4.80
)
|
|
Total distributions
|
(2.01
)
|
(0.96
)
|
-
|
(0.55
)
|
(4.80
)
|
|
Net asset value, end of year
|
$28.20
|
$27.69
|
$27.35
|
$25.23
|
$36.32
|
|
Total return2
|
9.23
%
|
4.50
%
|
8.40
%
|
(28.85
)%
|
12.61
%
|
|
Net assets, end of year (millions)
|
$261
|
$270
|
$287
|
$261
|
$368
|
|
Ratios to average net assets:
|
|||||
|
Gross expenses
|
0.80
%
|
0.80
%
|
0.80
%
|
0.80
%
|
0.80
%
|
|
Net expenses3,4
|
0.80
|
0.80
|
0.80
|
0.80
|
0.80
|
|
Net investment loss
|
(0.47
)
|
(0.45
)
|
(0.39
)
|
(0.43
)
|
(0.46
)
|
|
Portfolio turnover rate
|
37
%
|
36
%
|
15
%
|
8
%
|
16
%
|
|
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
|
As a result of an expense limitation arrangement, the ratio of total annual fund operating expenses, other than
interest, brokerage commissions, taxes, extraordinary expenses and acquired fund fees and expenses, to average
net assets of Class I shares did not exceed 1.00%. This expense limitation arrangement cannot be terminated prior
to December 31, 2027 without the Board of Trustees' consent. In addition, the manager has agreed to waive the
Portfolio's management fee to an extent sufficient to offset the net management fee payable in connection with
any investment in an affiliated money market fund.
|
|
4
|
Reflects fee waivers and/or expense reimbursements.
|
See Notes to Financial Statements.
ClearBridge Variable Small Cap Growth Portfolio 2025 Annual Report
9
Financial Highlights (cont'd)
|
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
|
$25.47
|
$25.29
|
$23.39
|
$33.81
|
$34.46
|
|
Income (loss) from operations:
|
|||||
|
Net investment loss
|
(0.19
)
|
(0.18
)
|
(0.15
)
|
(0.17
)
|
(0.27
)
|
|
Net realized and unrealized gain (loss)
|
2.44
|
1.32
|
2.05
|
(9.70
)
|
4.42
|
|
Total income (loss) from operations
|
2.25
|
1.14
|
1.90
|
(9.87)
|
4.15
|
|
Less distributions from:
|
|||||
|
Net realized gains
|
(2.01
)
|
(0.96
)
|
-
|
(0.55
)
|
(4.80
)
|
|
Total distributions
|
(2.01
)
|
(0.96
)
|
-
|
(0.55
)
|
(4.80
)
|
|
Net asset value, end of year
|
$25.71
|
$25.47
|
$25.29
|
$23.39
|
$33.81
|
|
Total return2
|
8.97
%
|
4.23
%
|
8.12
%
|
(29.01
)%
|
12.31
%
|
|
Net assets, end of year (millions)
|
$144
|
$135
|
$136
|
$117
|
$175
|
|
Ratios to average net assets:
|
|||||
|
Gross expenses
|
1.05
%
|
1.05
%
|
1.05
%
|
1.05
%
|
1.05
%
|
|
Net expenses3,4
|
1.05
|
1.05
|
1.05
|
1.04
|
1.05
|
|
Net investment loss
|
(0.72
)
|
(0.70
)
|
(0.64
)
|
(0.69
)
|
(0.71
)
|
|
Portfolio turnover rate
|
37
%
|
36
%
|
15
%
|
8
%
|
16
%
|
|
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
|
As a result of an expense limitation arrangement, the ratio of total annual fund operating expenses, other than
interest, brokerage commissions, taxes, extraordinary expenses and acquired fund fees and expenses, to average
net assets of Class II shares did not exceed 1.25%. This expense limitation arrangement cannot be terminated prior
to December 31, 2027 without the Board of Trustees' consent. In addition, the manager has agreed to waive the
Portfolio's management fee to an extent sufficient to offset the net management fee payable in connection with
any investment in an affiliated money market fund.
|
|
4
|
Reflects fee waivers and/or expense reimbursements.
|
See Notes to Financial Statements.
10
ClearBridge Variable Small Cap Growth Portfolio 2025 Annual Report
Notes to Financial Statements
1. Organization and significant accounting policies
ClearBridge Variable Small Cap Growth Portfolio (the "Portfolio") is a 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.
Shares of the Portfolio may only be purchased or redeemed through variable annuity contracts and variable life insurance policies offered by the separate accounts of participating insurance companies or through eligible pension or other qualified plans.
The Portfolio follows 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 Portfolio 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. Equity securities, including exchange-traded funds, 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 Portfolio holds securities or other assets that are denominated in a foreign currency, the Portfolio 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 the Portfolio calculates its net asset value, the Portfolio values these securities as
ClearBridge Variable Small Cap Growth Portfolio 2025 Annual Report
11
Notes to Financial Statements (cont'd)
determined in accordance with procedures approved by the Portfolio's Board of Trustees (the "Board").
Pursuant to policies adopted by the Board, the Portfolio's manager has been designated as the valuation designee and is responsible for the oversight of the daily valuation process. The Portfolio's 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 Portfolio's pricing policies, and reporting to the Portfolio's manager and the Board. When determining the reliability of third party pricing information for investments owned by the Portfolio, the Valuation Committee, among other things, conducts due diligence reviews of pricing vendors, monitors the daily change in prices and reviews transactions among market participants.
The Valuation Committee will consider pricing methodologies it deems relevant and appropriate when making fair value determinations. Examples of possible methodologies include, but are not limited to, multiple of earnings; discount from market of a similar freely traded security; discounted cash-flow analysis; book value or a multiple thereof; risk premium/yield analysis; yield to maturity; and/or fundamental investment analysis. The Valuation Committee will also consider factors it deems relevant and appropriate in light of the facts and circumstances. Examples of possible factors include, but are not limited to, the type of security; the issuer's financial statements; the purchase price of the security; the discount from market value of unrestricted securities of the same class at the time of purchase; analysts' research and observations from financial institutions; information regarding any transactions or offers with respect to the security; the existence of merger proposals or tender offers affecting the security; the price and extent of public trading in similar securities of the issuer or comparable companies; and the existence of a shelf registration for restricted securities.
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 Portfolio uses 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.
12
ClearBridge Variable Small Cap Growth Portfolio 2025 Annual Report
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 Portfolio's 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 Portfolio's assets carried at fair value:
|
ASSETS
|
||||
|
Description
|
Quoted Prices
(Level 1)
|
Other Significant
Observable Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
Total
|
|
Long-Term Investments†:
|
||||
|
Common Stocks:
|
||||
|
Information Technology
|
$85,416,559
|
-
|
$189,973
|
$85,606,532
|
|
Other Common Stocks
|
300,913,303
|
-
|
-
|
300,913,303
|
|
Investments in Underlying
Funds
|
11,403,702
|
-
|
-
|
11,403,702
|
|
Convertible Preferred Stocks
|
-
|
-
|
1,073,000
|
1,073,000
|
|
Preferred Stocks
|
-
|
-
|
617,571
|
617,571
|
|
Total Long-Term Investments
|
397,733,564
|
-
|
1,880,544
|
399,614,108
|
|
Short-Term Investments†
|
5,612,216
|
-
|
-
|
5,612,216
|
|
Total Investments
|
$403,345,780
|
-
|
$1,880,544
|
$405,226,324
|
|
†
|
See Schedule of Investments for additional detailed categorizations.
|
(b) Purchased options. The Portfolio may purchase option contracts generally to gain or reduce exposure to certain types of investments or market factors or as a means of attempting to enhance returns. When the Portfolio purchases an option, an amount equal to the premium paid by the Portfolio is recorded as an investment on the Statement of Assets and Liabilities, the value of which is marked-to-market to reflect the current market value of the option purchased. If the purchased option expires, the Portfolio realizes a loss equal to the amount of premium paid. When an instrument is purchased or sold through the exercise of an option, the related premium paid is added to the basis of the instrument acquired or deducted from the proceeds of the instrument sold. The risk associated with purchasing put and call options is limited to the premium paid.
ClearBridge Variable Small Cap Growth Portfolio 2025 Annual Report
13
Notes to Financial Statements (cont'd)
(c) Written options. The Portfolio may write option contracts generally to gain or reduce exposure to certain types of investments or market factors or as a means of attempting to enhance returns. When the Portfolio writes an option, an amount equal to the premium received by the Portfolio is recorded as a liability, the value of which is marked-to-market daily to reflect the current market value of the option written. If the option expires, the premium received is recorded as a realized gain. When a written call option is exercised, the difference between the premium received plus the option exercise price and the Portfolio's basis in the underlying security (in the case of a covered written call option), or the cost to purchase the underlying security (in the case of an uncovered written call option), including brokerage commission, is recognized as a realized gain or loss. When a written put option is exercised, the amount of the premium received is subtracted from the cost of the security purchased by the Portfolio from the exercise of the written put option to form the Portfolio's basis in the underlying security purchased. The writer or buyer of an option traded on an exchange can liquidate the position before the exercise of the option by entering into a closing transaction. The cost of a closing transaction is deducted from the original premium received resulting in a realized gain or loss to the Portfolio.
The risk in writing a covered call option is that the Portfolio may forego the opportunity of profit if the market price of the underlying security increases and the option is exercised. The risk in writing a put option is that the Portfolio may incur a loss if the market price of the underlying security decreases and the option is exercised. The risk in writing an uncovered call option is that the Portfolio is exposed to the risk of loss if the market price of the underlying security increases. In addition, there is the risk that the Portfolio may not be able to enter into a closing transaction because of an illiquid secondary market.
(d) Foreign investment risks. The Portfolio's investments in foreign securities may involve risks not present in domestic investments. Since securities may be denominated in foreign currencies, may require settlement in foreign currencies or may pay interest or dividends in foreign currencies, changes in the relationship of these foreign currencies to the U.S. dollar can significantly affect the value of the investments and earnings of the Portfolio. Foreign investments may also subject the Portfolio to foreign government exchange restrictions, expropriation, taxation or other political, social or economic developments, all of which affect the market and/or credit risk of the investments.
(e) Counterparty risk and credit-risk-related contingent features of derivative instruments. The Portfolio may invest in certain securities or engage in other transactions where the Portfolio is exposed to counterparty credit risk in addition to broader market risks. The Portfolio may invest in securities of issuers, which may also be considered counterparties as trading partners in other transactions. This may increase the risk of loss in the event of default or bankruptcy by the counterparty or if the counterparty otherwise fails to meet its contractual obligations. The Portfolio's subadviser attempts to mitigate counterparty risk by (i) periodically assessing the creditworthiness of its trading partners, (ii) monitoring and/or limiting the amount of its net exposure to each individual counterparty
14
ClearBridge Variable Small Cap Growth Portfolio 2025 Annual Report
based on its assessment and (iii) requiring collateral from the counterparty for certain transactions. Market events and changes in overall economic conditions may impact the assessment of such counterparty risk by the subadviser. In addition, declines in the values of underlying collateral received may expose the Portfolio to increased risk of loss.
With exchange traded and centrally cleared derivatives, there is less counterparty risk to the Portfolio since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, the credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, the Portfolio does not have a contractual right of offset against a clearing broker or clearinghouse in the event of a default of the clearing broker or clearinghouse.
The Portfolio has entered into master agreements, such as an International Swaps and Derivatives Association, Inc. Master Agreement ("ISDA Master Agreement") or similar agreement, with certain of its derivative counterparties that govern over-the-counter ("OTC") derivatives and provide for general obligations, representations, agreements, collateral posting terms, netting provisions in the event of default or termination and credit related contingent features. The credit related contingent features include, but are not limited to, a percentage decrease in the Portfolio's net assets or net asset value per share over a specified period of time. If these credit related contingent features were triggered, the derivatives counterparty could terminate the positions and demand payment or require additional collateral.
Under an ISDA Master Agreement, the Portfolio may, under certain circumstances, offset with the counterparty certain derivative financial instruments' payables and/or receivables with collateral held and/or posted and create one single net payment. However, absent an event of default by the counterparty or a termination of the agreement, the terms of the ISDA Master Agreements do not result in an offset of reported amounts of financial assets and financial liabilities in the Statement of Assets and Liabilities across transactions between the Portfolio and the applicable counterparty. The enforceability of the right to offset may vary by jurisdiction.
Collateral requirements differ by type of derivative. Collateral or margin requirements are set by the broker or exchange clearinghouse for exchange traded derivatives while collateral terms are contract specific for OTC traded derivatives. Cash collateral that has been pledged to cover obligations of the Portfolio under derivative contracts, if any, will be reported separately in the Statement of Assets and Liabilities. Securities pledged as collateral, if any, for the same purpose are noted in the Schedule of Investments.
As of December 31, 2025, the Portfolio did not have any open OTC derivative transactions with credit related contingent features in a net liability position.
(f) Security transactions and investment income. Security transactions are accounted for on a trade date basis. Interest income (including interest income from payment-in-kind
ClearBridge Variable Small Cap Growth Portfolio 2025 Annual Report
15
Notes to Financial Statements (cont'd)
securities) is recorded on the accrual basis. Amortization of premiums and accretion of discounts on debt securities are recorded to interest income over the lives of the respective securities, except for premiums on certain callable debt securities, which are amortized to the earliest call date. Dividend income is recorded on the ex-dividend date for dividends received in cash and/or securities. Foreign dividend income is recorded on the ex-dividend date or as soon as practicable after the Portfolio determines the existence of a dividend declaration after exercising reasonable due diligence. The cost of investments sold is determined by use of the specific identification method. To the extent any issuer defaults or a credit event occurs that impacts the issuer, the Portfolio may halt any additional interest income accruals and consider the realizability of interest accrued up to the date of default or credit event.
(g) Distributions to shareholders. Distributions from net investment income and distributions of net realized gains, if any, are declared at least annually. Distributions to shareholders of the Portfolio are recorded on the ex-dividend date and are determined in accordance with income tax regulations, which may differ from GAAP.
(h) Share class accounting. Investment income, common expenses and realized/unrealizedgains (losses) on investments are allocated to the various classes of the Portfolio on the basis of daily net assets of each class. Fees relating to a specific class are charged directly to that share class.
(i) Compensating balance arrangements. The Portfolio had an arrangement with its custodian bank whereby a portion of the custodian's fees was paid indirectly by credits earned on the Portfolio's 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 Statement of Operations.
(j) Federal and other taxes. It is the Portfolio's policy to comply with the federal income and excise tax requirements of the Internal Revenue Code of 1986 (the "Code"), as amended, applicable to regulated investment companies. Accordingly, the Portfolio intends to distribute its taxable income and net realized gains, if any, to shareholders in accordance with timing requirements imposed by the Code. Therefore, no federal or state income tax provision is required in the Portfolio's financial statements.
Management has analyzed the Portfolio's 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 Portfolio's financial statements. The Portfolio's 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.
(k) Reclassification. GAAP requires that certain components of net assets be reclassified to reflect permanent differences between financial and tax reporting. These
16
ClearBridge Variable Small Cap Growth Portfolio 2025 Annual Report
reclassifications have no effect on net assets or net asset value per share. During the current year, the following reclassifications have been made:
|
|
Total Distributable
Earnings (Loss)
|
Paid-in
Capital
|
|
(a)
|
$2,255,155
|
$(2,255,155)
|
(a)
Reclassifications are due to a tax net operating loss.
2. Investment management agreementand other transactions with affiliates
Franklin Templeton Fund Adviser, LLC ("FTFA") is the Portfolio's investment manager and ClearBridge Investments, LLC ("ClearBridge") is the Portfolio's subadviser. Western Asset Management Company, LLC ("Western Asset") manages the portion of the Portfolio's cash and short-term instruments allocated to it. FTFA, ClearBridge and Western Asset are indirect, wholly-owned subsidiaries of Franklin Resources, Inc. ("Franklin Resources").
Under the investment management agreement, the Portfolio pays an investment management fee, calculated daily and paid monthly, at an annual rate of 0.75% of the Portfolio's average daily net assets.
FTFA provides administrative and certain oversight services to the Portfolio. FTFA delegates to the subadviser the day-to-day portfolio management of the Portfolio, except for the management of the portion of the Portfolio's cash and short-term instruments allocated to Western Asset. For its services, FTFA pays ClearBridge a fee monthly, at an annual rate equal to 70% of the net management fee it receives from the Portfolio. For Western Asset's services to the Portfolio, FTFA pays Western Asset monthly 0.02% of the portion of the Portfolio's average daily net assets that are allocated to Western Asset by FTFA.
As a result of expense limitation arrangements between the Portfolio and FTFA, the ratio of total annual fund operating expenses, other than interest, brokerage commissions, taxes, extraordinary expenses and acquired fund fees and expenses, to average net assets of Class I and Class II shares did not exceed 1.00% and 1.25%, respectively. These expense limitation arrangements cannot be terminated prior to December 31, 2027 without the Board's consent. In addition, the manager has agreed to waive the Portfolio's management fee to an extent sufficient to offset the net management fee payable in connection with any investment in an affiliated money market fund (the "affiliated money market fund waiver"). The affiliated money market fund waiver is not subject to the recapture provision discussed below.
During the year ended December 31, 2025, fees waived and/or expenses reimbursed amounted to $4,112, all of which was an affiliated money market fund waiver.
During the year ended December 31, 2025, fees waived and/or expenses reimbursed amounted to $4,112, all of which was an affiliated money market fund waiver.
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
ClearBridge Variable Small Cap Growth Portfolio 2025 Annual Report
17
Notes to Financial Statements (cont'd)
particular business day of the Portfolio, in the class' total annual fund operating expenses exceeding the expense cap or any other lower limit then in effect.
Franklin Distributors, LLC ("Franklin Distributors") serves as the Portfolio's 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 Portfolio's shareholder servicing agent and acts as the Portfolio's transfer agent and dividend-paying agent. Investor Services is an indirect, wholly-owned subsidiary of Franklin Resources. Each class of shares of the Portfolio 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, the Portfolio incurred transfer agent fees as reported on the Statement of Operations, of which $2,470 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.
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
|
$148,127,947
|
|
Sales
|
179,318,630
|
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:
|
|
Cost
|
Gross
Unrealized
Appreciation
|
Gross
Unrealized
Depreciation
|
Net
Unrealized
Appreciation
|
|
Securities
|
$261,922,377
|
$160,279,734
|
$(16,975,787)
|
$143,303,947
|
4. Derivative instruments and hedging activities
At December 31, 2025, the Portfolio did not have any derivative instruments outstanding.
The following table provides information about the effect of derivatives and hedging activities on the Portfolio's Statement of Operations for the year ended December 31, 2025.
18
ClearBridge Variable Small Cap Growth Portfolio 2025 Annual Report
The table provides additional detail about the amounts and sources of gains (losses) realized on derivatives during the period.
|
AMOUNT OF NET REALIZED GAIN (LOSS) ON DERIVATIVES RECOGNIZED
|
|
|
|
Equity
Risk
|
|
Purchased options1
|
$(90,325
)
|
|
Written options
|
34,976
|
|
Total
|
$(55,349
)
|
|
1
|
Net realized gain (loss) from purchased options is reported in Net Realized Gain (Loss) From Investment
transactions in unaffiliated securities in the Statement of Operations.
|
During the year ended December 31, 2025, the volume of derivative activity for the Portfolio was as follows:
|
|
Average Market
Value*
|
|
Purchased options†
|
$3,825
|
|
Written options†
|
39,161
|
|
*
|
Based on the average of the market values at each month-end during the period.
|
|
†
|
At December 31, 2025, there were no open positions held in this derivative.
|
5. Class specific expenses, waivers and/or expense reimbursements
The Portfolio 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:
|
|
Service and/or
Distribution Fees
|
Transfer Agent
Fees
|
|
Class I
|
-
|
$2,327
|
|
Class II
|
$344,815
|
397
|
|
Total
|
$344,815
|
$2,724
|
For the year ended December 31, 2025, waivers and/or expense reimbursements by class were as follows:
|
|
Waivers/Expense
Reimbursements
|
|
Class I
|
$2,716
|
|
Class II
|
1,396
|
|
Total
|
$4,112
|
ClearBridge Variable Small Cap Growth Portfolio 2025 Annual Report
19
Notes to Financial Statements (cont'd)
6. Distributions to shareholders by class
|
|
Year Ended
December 31, 2025
|
Year Ended
December 31, 2024
|
|
Net Realized Gains:
|
||
|
Class I
|
$18,457,481
|
$9,124,844
|
|
Class II
|
10,625,461
|
4,936,800
|
|
Total
|
$29,082,942
|
$14,061,644
|
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 Portfolio has the ability to issue multiple classes of shares. Each class of shares represents an identical interest and has the same rights, except that each class bears certain direct expenses, including those specifically related to the distribution of its shares.
Transactions in shares of each class were as follows:
|
|
Year Ended
December 31, 2025
|
Year Ended
December 31, 2024
|
||
|
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Class I
|
||||
|
Shares sold
|
1,629,839
|
$45,897,408
|
1,724,125
|
$47,812,089
|
|
Shares issued on reinvestment
|
655,845
|
18,457,481
|
305,274
|
9,124,844
|
|
Shares repurchased
|
(2,787,155
)
|
(77,921,850
)
|
(2,762,087
)
|
(76,487,842
)
|
|
Net decrease
|
(501,471
)
|
$(13,566,961
)
|
(732,688
)
|
$(19,550,909
)
|
|
Class II
|
||||
|
Shares sold
|
1,331,000
|
$34,174,426
|
1,343,247
|
$33,956,532
|
|
Shares issued on reinvestment
|
412,568
|
10,625,461
|
179,496
|
4,936,800
|
|
Shares repurchased
|
(1,440,602
)
|
(36,658,001
)
|
(1,605,726
)
|
(40,449,086
)
|
|
Net increase (decrease)
|
302,966
|
$8,141,886
|
(82,983
)
|
$(1,555,754
)
|
8. Transactions with affiliated company
As defined by the 1940 Act, an affiliated company is one in which the Portfolio owns 5% or more of the outstanding voting securities, or a company which is under common ownership or control with the Portfolio. The following company was considered an affiliated company
20
ClearBridge Variable Small Cap Growth Portfolio 2025 Annual Report
for all or some portion of the year ended December 31, 2025. The following transactions were effected in such company for the year ended December 31, 2025.
|
|
Affiliate
Value at
December 31,
2024
|
Purchased
|
Sold
|
||
|
Cost
|
Shares
|
Proceeds
|
Shares
|
||
|
Western Asset
Premier
Institutional U.S.
Treasury Reserves,
Premium Shares
|
$5,588,019
|
$48,707,072
|
48,707,072
|
$51,488,983
|
51,488,983
|
|
(cont'd)
|
Realized
Gain (Loss)
|
Dividend
Income
|
Net Increase
(Decrease) in
Unrealized
Appreciation
(Depreciation)
|
Affiliate
Value at
December 31,
2025
|
|
Western Asset Premier
Institutional U.S.
Treasury Reserves,
Premium Shares
|
-
|
$142,068
|
-
|
$2,806,108
|
9. Restricted securities
The following Portfolio investments are restricted as to resale and, in the absence of readily ascertainable market values, are fair valued in accordance with procedures approved by the Board.
|
Security
|
Number of
Shares
|
Acquisition
Date
|
Cost
|
Fair Value
at 12/31/2025
|
Value Per
Share
|
Percent of
Net Assets
|
|
Brain Corp., Common
Shares
|
52,367
|
3/21
|
$228,844
|
$189,973
|
$3.63
|
0.05
%
|
|
Brain Corp., Preferred
Shares
|
170,237
|
4/20, 11/20
|
898,085
|
617,571
|
3.63
|
0.15
|
|
Yellowstone Midco
Holdings II , Convertible
Preferred Stock
|
1,073
|
10/25
|
1,073,000
|
1,073,000
|
1,000.00
|
0.26
|
|
Total
|
$2,199,929
|
$1,880,544
|
0.46
%
|
10. Redemption facility
The Portfolio, together with other U.S. registered and foreign investment funds (collectively, the "Borrowers") managed by Franklin Resources or its affiliates, is a borrower 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 Portfolio shall, in addition to interest charged on any borrowings made by the Portfolio and other costs incurred by the Portfolio,
ClearBridge Variable Small Cap Growth Portfolio 2025 Annual Report
21
Notes to Financial Statements (cont'd)
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 Statement of Operations. The Portfolio did not utilize the Global Credit Facility during the year ended December 31, 2025.
11. Income tax information and distributions to shareholders
The tax character of distributions paid during the fiscal years ended December 31, was as follows:
|
|
2025
|
2024
|
|
Distributions paid from:
|
||
|
Net long-term capital gains
|
$29,082,942
|
$14,061,644
|
As of December 31, 2025, the components of distributable earnings (loss) on a tax basis were as follows:
|
Undistributed long-term capital gains - net
|
$5,576,549
|
|
Unrealized appreciation (depreciation)(a)
|
143,303,947
|
|
Total distributable earnings (loss) - net
|
$148,880,496
|
|
(a)
|
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable to the tax
deferral of losses on wash sales and the realization for tax purposes of unrealized gains on investments in
passive foreign investment companies.
|
12. Operating segments
The Portfolio operates as a single operating segment, which is an investment portfolio. A management group assigned to the Portfolio within the Portfolio's investment manager serves as the Chief Operating Decision Maker ("CODM") and is responsible for evaluating the Portfolio's operating results and allocating resources in accordance with the Portfolio's 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 Statement of Assets and Liabilities and the Statement of Operations, along with the related Notes to Financial Statements. The Portfolio's Schedule of Investments provides details of the Portfolio's 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
ClearBridge Variable Small Cap Growth Portfolio 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 ClearBridge Variable Small Cap Growth Portfolio
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of ClearBridge Variable Small Cap Growth Portfolio (one of the portfolios constituting Legg Mason Partners Variable Equity Trust, referred to hereafter as the "Portfolio") as of December 31, 2025, the related statement of operations for the year ended December 31, 2025, the statement 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 the Portfolio as of December 31, 2025, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2025 and 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 Opinion
These financial statements are the responsibility of the Portfolio's management. Our responsibility is to express an opinion on the Portfolio's 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 Portfolio 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 and portfolio company investees. We believe that our audits provide a reasonable basis for our opinion.
/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.
ClearBridge Variable Small Cap Growth Portfolio 2025 Annual Report
23
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 Portfolio is required to be furnished to shareholders with respect to income earned and distributions paid during its fiscal year.
The Portfolio hereby reports the following amounts, or if subsequently determined to be different, the maximum allowable amounts, for the fiscal year ended December 31, 2025:
|
|
Pursuant to:
|
Amount Reported
|
|
Long-Term Capital Gain Dividends Distributed
|
§852(b)(3)(C)
|
$29,082,942
|
|
Income Eligible for Dividends Received Deduction (DRD)
|
§854(b)(1)(A)
|
$953,778
|
24
ClearBridge Variable Small Cap Growth Portfolio
|
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.
|
|
ClearBridge Variable Small Cap Growth Portfolio
25
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ClearBridge
Variable Small Cap Growth Portfolio
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
ClearBridge Investments, LLC
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
PricewaterhouseCoopers LLP
Baltimore, MD
Baltimore, MD
ClearBridge Variable Small Cap Growth Portfolio
The Portfolio is a separate investment series of Legg Mason Partners Variable Equity Trust, a Maryland statutory trust.
ClearBridge Variable Small Cap Growth Portfolio
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 Portfolio files its complete schedule of portfolio holdings with the Securities and Exchange Commission ("SEC") for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The Portfolio's 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 Portfolio at 877-6LM-FUND/656-3863.
Information on how the Portfolio voted proxies relating to portfolio securities during the prior 12-month period ended June 30th of each year and a description of the policies and procedures that the Portfolio uses to determine how to vote proxies related to portfolio transactions are available (1) without charge, upon request, by calling the Portfolio 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 ClearBridge Variable Small Cap Growth Portfolio. This report is not authorized for distribution to prospective investors in the Portfolio unless preceded or accompanied by a current prospectus.
Investors should consider the Portfolio's investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other important information about the Portfolio. Please read the prospectus carefully before investing.
www.franklintempleton.com
© 2026 Franklin Distributors, LLC, Member FINRA/SIPC. All rights reserved.
90176-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 25, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on February 25, 2026 at 17:25 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]