N-CSRS 1 a_vtnewopps098.htm PUTNAM VARIABLE TRUST a_vtnewopps098.htm
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: (811-05346)   
 
Exact name of registrant as specified in charter:  Putnam Variable Trust 
 
Address of principal executive offices: One Post Office Square, Boston, Massachusetts 02109 
 
Name and address of agent for service:    Beth S. Mazor, Vice President 
  One Post Office Square 
  Boston, Massachusetts 02109 
 
Copy to:    John W. Gerstmayr, Esq. 
  Ropes & Gray LLP 
  One International Place 
  Boston, Massachusetts 02110 
 
Registrant’s telephone number, including area code:  (617) 292-1000 
 
Date of fiscal year end: December 31, 2009     
 
Date of reporting period: January 1, 2009 — June 30, 2009 

Item 1. Report to Stockholders:
The following is a copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Investment Company Act of 1940:


Putnam VT New Opportunities Fund

Investment objective
Long-term capital appreciation

Net asset value June 30, 2009

Class IA: $14.40  Class IB: $14.20   
 
Performance summary     
Total return at net asset value     
(as of 6/30/09)‡  Class IA shares*  Class IB shares† 
6 months  10.02%  9.86% 
1 year  –26.60  –26.80 
5 years  –8.23  –9.37 
Annualized  –1.70  –1.95 
10 years  –31.46  –33.04 
Annualized  –3.71  –3.93 
Life  104.03  97.82 
Annualized  4.82  4.60 

During portions of the periods shown, the fund limited expenses, without which returns would have been lower.

* Class inception date: May 2, 1994.

† Class inception date: April 30, 1998.

‡ Recent performance benefited from receipt of an Enron Class Action Settlement pertaining to investments made prior to 2002.

Data represents past performance. Past performance does not guarantee future results. More recent returns may be less or more than those shown. Investment return and principal value will fluctuate, and you may have a gain or a loss when you sell your shares. All total return figures are at net asset value and exclude contract charges and expenses, which are added to the variable annuity contracts to determine total return at unit value. Had these charges and expenses been reflected, performance would be lower. Periods and performance for class IB shares before their inception are derived from the historical performance of class IA shares, adjusted to reflect the higher operating expenses applicable to such shares. To obtain the most recent month-end performance for the Putnam subaccounts, visit www.putnam.com.

Report from your fund’s manager

The stock market was extremely volatile during the past six months, declining sharply in January and February, rallying in March and April, and stabilizing in May and June. During this time, stocks generally posted positive overall returns, with growth stocks outperforming value stocks. For the six months ended June 30, 2009, Putnam VT New Opportunities Fund’s class IA shares returned 10.02% at net asset value.

Entering the year, management had positioned the fund fairly defensively based on concerns about a deteriorating economy, rising unemployment, and slowing consumer spending. The fund was underweight consumer cyclicals, as well as industrials and technology stocks given the potential for reduced corporate spending. That defensive positioning served the fund well until the market completely reversed direction starting in early March. The fund retook some gains in the final two months of the period, as the market refocused on higher-quality growth stocks, such as those the fund typically holds. Overall, health care was the biggest detractor from performance. “Safer” stocks, like those in the health-care industry, tended to lag the market as it rallied from March to May. An overweight position in energy and an underweight to industrials, meanwhile, were the biggest contributors to performance. Energy stocks rose on higher natural gas and oil prices, while industrials were some of the weakest performers during the period.

Turning to specific stocks, Brocade Communications, a network technology company, was one of the best-performing holdings, as large technology companies were eager to resell the company’s networking products instead of those of Cisco, which is often viewed as a potential competitor. Apple also helped performance, reflecting strong sales of the iPhone and continued market-share gains of Mac computers. Freeport-McMoRan Copper and Gold was another strong performer, as copper prices rose due to resurgent demand from China.

Sequenom, however, was a significant detractor to performance after the company announced that the release of its forthcoming blood test for Down syndrome would be delayed. Cephalon also detracted from performance, as the market became increasingly concerned about the generic risk to its lead drug, Provigil, and questioned the potential success of its second-generation drug, Nuvigil.

Although management believes the economy appears to be bottoming, it expects a long, slow recovery. In the short term, the market could give back some of its recent gains before a longer-term growth trend takes hold. With this in mind, the fund has reduced its defensive positioning by reducing its exposure to health care and consumer staples, while increasing its exposure to technology, industrials, and financials. Management believes the months ahead may be choppy for equity investors, but that a sustained recovery is likely to take root as the year progresses.

Consider these risks before you invest: The fund invests some or all of its assets in small and/or midsize companies. Such investments increase the risk of greater price fluctuations. Stocks with above-average earnings may be more volatile, especially if earnings do not continue to grow.

Current and future portfolio holdings are subject to risk.

2 Putnam VT New Opportunities Fund 

Your fund’s manager


Gerald Moore is a Portfolio Manager at Putnam. A CFA charterholder, he joined Putnam in 1997 and has been in the investment industry since 1992.

Your fund’s manager may also manage other accounts managed by Putnam Management or an affiliate, including retail mutual fund counterparts to the funds in Putnam Variable Trust or other accounts advised by Putnam Management or an affiliate.


Portfolio composition will vary over time. Allocations represented as a percentage of portfolio market value. Due to rounding, percentages may not equal 100%. Summary information may differ from the portfolio schedule included in the financial statements due to the inclusion of derivative securities and the use of different classifications of securities for presentation purposes. Information is as of 6/30/09 and may not reflect trades entered into on that date.

Understanding your VT fund’s expenses

As an investor in a variable annuity product that invests in a registered investment company, you pay ongoing expenses, such as management fees, distribution fees (12b-1 fees), and other expenses. During all or a portion of the period, the fund limited its expenses; had it not done so, expenses would have been higher. Using the following information, you can estimate how these expenses affect your investment and compare them with the expenses of other funds. You may also pay one-time transaction expenses, including sales charges (loads), which are not shown in this section and would result in higher total expenses. Charges and expenses at the insurance company separate account level are not reflected. For more information, see your fund’s prospectus or talk to your financial representative.

Review your VT fund’s expenses

The first two columns in the following table show the expenses you would have paid on a $1,000 investment in your fund from January 1, 2009, to June 30, 2009. They also show how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses. To estimate the ongoing expenses you paid over the period, divide your account value by $1,000, then multiply the result by the number in the first line for the class of shares you own.

Compare your fund’s expenses with those of other funds

The two right-hand columns of the table show your fund’s expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total costs) of investing in the fund with those of other funds. All shareholder reports of mutual funds and funds serving as variable annuity vehicles will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.

      Expenses and value for 
  Expenses and value for  a $1,000 investment, 
  a $1,000 investment,  assuming a hypothetical 
  assuming actual returns  5% annualized return 
  for the 6 months ended  for the 6 months ended 
    6/30/09    6/30/09 
VT New Opportunities Fund  Class IA  Class IB  Class IA  Class IB 
Expenses paid per $1,000*  $4.17  $5.46  $4.01  $5.26 
Ending value (after expenses)  $1,100.20  $1,098.60  $1,020.83  $1,019.59 
Annualized expense ratio  0.80%  1.05%  0.80%  1.05% 

* Expenses for each share class are calculated using the fund’s annualized expense ratio for each class, which represents the ongoing expenses as a percentage of average net assets for the six months ended 6/30/09. The expense ratio may differ for each share class. Expenses are calculated by multiplying the expense ratio by the average account value for the period; then multiplying the result by the number of days in the period; and then dividing that result by the number of days in the year.

Putnam VT New Opportunities Fund 3 

The fund’s portfolio 6/30/09 (Unaudited)

COMMON STOCKS (99.3%)*  Shares  Value 
Aerospace and defense (2.5%)     
Alliant Techsystems, Inc. †  25,500  $2,100,180 
L-3 Communications Holdings, Inc. S  26,500  1,838,570 
Orbital Sciences Corp. † S  126,500  1,919,005 
Precision Castparts Corp.  40,100  2,928,503 
Raytheon Co.  88,450  3,929,834 
    12,716,092 
Banking (1.6%)     
Bank of the Ozarks, Inc. S  34,000  735,420 
First Citizens BancShares, Inc. Class A  3,700  494,505 
Northern Trust Corp.  60,800  3,263,744 
Wells Fargo & Co.  153,100  3,714,206 
    8,207,875 
Beverage (1.4%)     
Coca-Cola Co. (The) S  55,500  2,663,445 
Heckmann Corp. † S  58,050  217,688 
PepsiCo, Inc.  80,252  4,410,650 
    7,291,783 
Biotechnology (5.1%)     
Amgen, Inc. †  149,850  7,933,059 
Dendreon Corp. † S  55,300  1,374,205 
Genzyme Corp. †  63,721  3,547,348 
Gilead Sciences, Inc. † S  133,150  6,236,746 
Life Technologies Corp. † S  64,906  2,707,878 
Myriad Genetics, Inc. †  48,900  1,743,285 
Sequenom, Inc. † S  189,000  738,990 
Vertex Pharmaceuticals, Inc. †  56,000  1,995,840 
    26,277,351 
Cable television (0.7%)     
DIRECTV Group, Inc. (The) † S  142,300  3,516,233 
    3,516,233 
Chemicals (1.2%)     
FMC Corp.  31,600  1,494,680 
Monsanto Co.  14,558  1,082,242 
Potash Corp. of Saskatchewan, Inc. (Canada)  11,300  1,051,465 
Sigma-Adrich Corp. S  51,100  2,532,516 
    6,160,903 
Coal (0.8%)     
Massey Energy Co.  101,610  1,985,459 
Walter Industries, Inc. S  61,775  2,238,726 
    4,224,185 
Commercial and consumer services (1.8%)     
Dun & Bradstreet Corp. (The) S  24,500  1,989,645 
Emergency Medical Services Corp. Class A †  28,800  1,060,416 
HMS Holdings Corp. † S  38,150  1,553,468 
Navigant Consulting, Inc. † S  93,000  1,201,560 
Priceline.com, Inc. † S  30,535  3,406,179 
    9,211,268 
Communications equipment (5.0%)     
Cisco Systems, Inc. †  650,619  12,127,538 
F5 Networks, Inc. † S  98,618  3,411,197 
Qualcomm, Inc.  220,200  9,953,040 
    25,491,775 
Computers (9.0%)     
Apple, Inc. †  127,477  18,156,542 
Brocade Communications Systems, Inc. †  629,300  4,921,126 
Hewlett-Packard Co.  92,467  3,573,850 
IBM Corp.  159,345  16,638,805 
LogMeIn, Inc. †  4,050  64,800 
Quest Software, Inc. †  201,600  2,810,304 
    46,165,427 

COMMON STOCKS (99.3%)* cont.  Shares  Value 
Consumer (0.4%)     
Scotts Miracle-Gro Co. (The) Class A S  55,300  $1,938,265 
    1,938,265 
Consumer goods (2.5%)     
Church & Dwight Co., Inc.  56,400  3,063,084 
Colgate-Palmolive Co. S  86,700  6,133,158 
Procter & Gamble Co. (The)  69,400  3,546,340 
    12,742,582 
Consumer services (—%)     
OpenTable, Inc. † S  8,320  251,014 
    251,014 
Containers (0.3%)     
Silgan Holdings, Inc.  35,900  1,760,177 
    1,760,177 
Distribution (0.1%)     
Spartan Stores, Inc.  37,950  470,960 
    470,960 
Electric utilities (0.5%)     
Exelon Corp.  46,550  2,383,826 
    2,383,826 
Electrical equipment (1.3%)     
Emerson Electric Co.  128,100  4,150,440 
GrafTech International, Ltd. †  81,100  917,241 
Vestas Wind Systems A/S (Denmark) †  23,575  1,696,721 
    6,764,402 
Electronics (1.9%)     
Altera Corp.  155,791  2,536,277 
Integrated Device Technology, Inc. †  224,523  1,356,119 
Intel Corp.  114,007  1,886,816 
Marvell Technology Group, Ltd. †  168,300  1,959,012 
Silicon Laboratories, Inc. † S  47,900  1,817,326 
    9,555,550 
Energy (oil field) (0.8%)     
FMC Technologies, Inc. † S  63,300  2,378,814 
Noble Corp.  53,650  1,622,913 
    4,001,727 
Energy (other) (0.5%)     
First Solar, Inc. †  15,950  2,585,814 
    2,585,814 
Engineering and construction (1.0%)     
ENGlobal Corp. †  188,100  925,452 
Fluor Corp. S  50,938  2,612,610 
Michael Baker Corp. †  36,900  1,563,084 
    5,101,146 
Financial (0.6%)     
CME Group, Inc.  3,300  1,026,663 
Intercontinental Exchange, Inc. †  20,100  2,296,224 
    3,322,887 
Food (1.5%)     
Del Monte Foods Co.  114,700  1,075,886 
General Mills, Inc.  48,300  2,705,766 
Ralcorp Holdings, Inc. †  29,700  1,809,324 
TreeHouse Foods, Inc. † S  73,200  2,105,964 
    7,696,940 
Gaming and lottery (0.6%)     
Bally Technologies, Inc. †  99,300  2,971,056 
    2,971,056 
Health-care services (3.1%)     
AMERIGROUP Corp. †  72,742  1,953,123 
Express Scripts, Inc. †  83,300  5,726,875 
Healthsouth Corp. † S  154,300  2,228,092 
Omnicare, Inc. S  74,750  1,925,560 
Quest Diagnostics, Inc.  69,500  3,921,885 
    15,755,535 

4 Putnam VT New Opportunities Fund 

COMMON STOCKS (99.3%)* cont.  Shares  Value 
Insurance (1.8%)     
Aflac, Inc.  109,900  $3,416,791 
AON Corp.  41,700  1,579,179 
Fidelity National Title Group, Inc. Class A  122,650  1,659,455 
Transatlantic Holdings, Inc.  58,153  2,519,769 
    9,175,194 
Investment banking/Brokerage (2.2%)     
Eaton Vance Corp. S  79,650  2,130,638 
Goldman Sachs Group, Inc. (The)  25,371  3,740,700 
TD Ameritrade Holding Corp. †  147,900  2,594,166 
Waddell & Reed Financial, Inc. Class A S  108,900  2,871,693 
    11,337,197 
Machinery (1.0%)     
Chart Industries, Inc. †  47,100  856,278 
Joy Global, Inc.  73,250  2,616,490 
Parker-Hannifin Corp.  36,800  1,580,928 
    5,053,696 
Manufacturing (0.6%)     
Flowserve Corp.  20,250  1,413,653 
Shaw Group, Inc. †  62,000  1,699,420 
    3,113,073 
Medical technology (4.6%)     
Baxter International, Inc.  112,476  5,956,729 
Becton, Dickinson and Co.  51,220  3,652,498 
Boston Scientific Corp. †  208,600  2,115,204 
Covidien PLC (Ireland)  53,600  2,006,784 
Hospira, Inc. †  70,200  2,704,104 
St. Jude Medical, Inc. †  133,150  5,472,465 
Varian Medical Systems, Inc. † S  56,500  1,985,410 
    23,893,194 
Metals (2.0%)     
Barrick Gold Corp. (Canada) S  38,600  1,295,030 
Cliffs Natural Resources, Inc. S  83,587  2,045,374 
Freeport-McMoRan Copper & Gold, Inc.     
Class BS  39,250  1,966,818 
Newmont Mining Corp. S  80,397  3,285,825 
Nucor Corp.  41,050  1,823,852 
    10,416,899 
Natural gas utilities (0.6%)     
Southwestern Energy Co. †  74,800  2,905,980 
    2,905,980 
Oil and gas (2.6%)     
Comstock Resources, Inc. †  49,650  1,640,933 
Exxon Mobil Corp.  58,804  4,110,988 
McMoRan Exploration Co. † S  88,797  529,230 
Occidental Petroleum Corp.  42,300  2,783,763 
Petroleo Brasileiro SA ADR (Brazil)  66,108  2,709,106 
Ultra Petroleum Corp. † S  41,300  1,610,700 
    13,384,720 
Pharmaceuticals (6.2%)     
Abbott Laboratories  230,800  10,856,832 
Cephalon, Inc. †  37,900  2,147,035 
Emergent Biosolutions, Inc. † S  29,149  417,705 
Johnson & Johnson  234,025  13,292,620 
Myriad Pharmaceuticals, Inc. †  5  23 
Teva Pharmaceutical Industries, Ltd. ADR     
(Israel) S  52,300  2,580,482 
Wyeth  61,950  2,811,911 
    32,106,608 
Power producers (0.8%)     
AES Corp. (The) †  350,800  4,072,788 
    4,072,788 

COMMON STOCKS (99.3%)* cont.  Shares  Value 
Publishing (0.4%)     
Marvel Entertainment, Inc. † S  61,600  $2,192,344 
    2,192,344 
Railroads (0.6%)     
Union Pacific Corp.  59,750  3,110,585 
    3,110,585 
Restaurants (2.7%)     
McDonald’s Corp. S  146,500  8,422,285 
Panera Bread Co. Class A † S  38,900  1,939,554 
Yum! Brands, Inc.  99,081  3,303,361 
    13,665,200 
Retail (7.8%)     
Advance Auto Parts, Inc. S  59,700  2,476,953 
Amazon.com, Inc. †  25,800  2,158,428 
AutoZone, Inc. †  18,548  2,802,788 
BJ’s Wholesale Club, Inc. †  81,017  2,611,178 
CVS Caremark Corp.  105,300  3,355,911 
GameStop Corp. †  105,200  2,315,452 
Herbalife, Ltd. (Cayman Islands)  72,900  2,299,266 
Jo-Ann Stores, Inc. † S  89,900  1,858,233 
Kroger Co.  138,150  3,046,208 
TJX Cos., Inc. (The)  139,573  4,390,967 
Wal-Mart Stores, Inc.  266,300  12,899,572 
    40,214,956 
Schools (1.2%)     
Apollo Group, Inc. Class A †  51,200  3,641,344 
Career Education Corp. †  109,500  2,725,455 
    6,366,799 
Semiconductor (0.9%)     
Cymer, Inc. † S  37,700  1,120,821 
Hittite Microwave Corp. †  40,500  1,407,375 
Maxim Integrated Products, Inc.  150,000  2,353,500 
    4,881,696 
Shipping (0.6%)     
Kirby Corp. † S  53,200  1,691,228 
Knight Transportation, Inc. S  84,000  1,390,200 
    3,081,428 
Software (8.0%)     
Activision Blizzard, Inc. †  186,550  2,356,127 
Microsoft Corp.  798,391  18,977,754 
Oracle Corp.  507,750  10,876,005 
Red Hat, Inc. †  200,800  4,042,104 
Symantec Corp. †  107,200  1,668,032 
THQ, Inc. †  167,200  1,197,152 
TIBCO Software, Inc. †  313,750  2,249,588 
    41,366,762 
Technology (0.4%)     
Affiliated Computer Services, Inc. Class A †  43,000  1,910,060 
    1,910,060 
Technology services (4.1%)     
Accenture, Ltd. Class A  145,036  4,852,905 
CSG Systems International, Inc. †  125,100  1,656,324 
Google, Inc. Class A †  29,051  12,247,611 
SAIC, Inc. †  123,600  2,292,780 
    21,049,620 
Telecommunications (0.9%)     
NeuStar, Inc. Class A †  148,056  3,280,921 
Premiere Global Services, Inc. †  127,700  1,384,268 
    4,665,189 
Tobacco (2.9%)     
Lorillard, Inc.  44,400  3,008,988 
Philip Morris International, Inc.  277,040  12,084,485 
    15,093,473 

Putnam VT New Opportunities Fund 5 

COMMON STOCKS (99.3%)* cont.  Shares  Value 
Toys (0.8%)     
Hasbro, Inc.  79,950  $1,937,988 
Nintendo Co., Ltd. ADR (Japan)  63,300  2,181,951 
    4,119,939 
Transportation services (1.0%)     
C.H. Robinson Worldwide, Inc. S  57,000  2,972,550 
Expeditors International of Washington, Inc.  71,700  2,390,478 
    5,363,028 
Waste Management (0.4%)     
Stericycle, Inc. † S  41,100  2,117,883 
    2,117,883 
 
Total common stocks (cost $543,095,721)    $511,223,084 

CONVERTIBLE PREFERRED STOCKS (—%)*  Shares  Value 
 
Optisolar, Inc. Ser. B-1, zero % cv. pfd.     
(acquired 7/30/08, cost $31,502) (Private) F ‡ †  5,081  $31,502 
Total convertible preferred stocks (cost $31,502)    $31,502 
 
SHORT-TERM INVESTMENTS (11.9%)*  Principal amount/shares  Value 
 
U.S. Treasury Bills for an effective yield     
of 0.50%, December 17, 2009  $373,000  $371,780 
U.S. Treasury Bills for an effective yield     
of 0.40%, February 11, 2010  33,000  32,916 
Short-term investments held as collateral     
for loaned securities with yields ranging     
from 0.25% to 0.89% and due dates ranging     
from July 1, 2009 to August 7, 2009 d  56,251,809  56,249,904 
Putnam Money Market Liquidity Fund e  4,671,298  4,671,298 
Total short-term investments (cost $61,326,219)    $61,325,898 
Total investments (cost $604,453,442)    $572,580,484 

* Percentages indicated are based on net assets of $514,682,445.

† Non-income-producing security.

‡ Restricted, excluding 144A securities, as to public resale. The total market value of restricted securities held at June 30, 2009 was $31,502, or less than 0.1% of net assets.

d See Note 1 to the financial statements.

e See Note 6 to the financial statements regarding investments in Putnam Money Market Liquidity Fund.

F Is valued at fair value following procedures approved by the Trustees. Securities may be classified as a Level 2 or Level 3 for SFAS 157 disclosures based on the securities valuation inputs. On June 30, 2009, fair value pricing was also used for certain foreign securities in the portfolio (Note 1).

S Securities on loan, in part or in entirety, at June 30, 2009.

ADR after the name of a foreign holding stands for American Depository Receipts representing ownership of foreign securities on deposit with a custodian bank.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“SFAS 157”). SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. While the adoption of SFAS 157 does not have a material effect on the fund’s net asset value, it does require additional disclosures about fair value measurements. SFAS 157 establishes a three-level hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of the fund’s investments. The three levels are defined as follows:

Level 1 — Valuations based on quoted prices for identical securities in active markets.

Level 2 — Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3 — Valuations based on inputs that are unobservable and signifi-cant to the fair value measurement.

The following is a summary of the inputs used to value the fund’s net assets as of June 30, 2009:

    Valuation inputs   
Investments in securities:  Level 1  Level 2  Level 3 
Common stocks:       
Basic materials  $16,577,802  $—  $— 
Capital goods  34,929,748  1,696,721  — 
Communication services  8,181,422  —  — 
Consumer cyclicals  49,335,265  —  — 
Consumer staples  74,891,314  —  — 
Energy  24,196,446  —  — 
Financial  32,043,153  —  — 
Health care  98,032,688  —  — 
Technology  150,420,890  —  — 
Transportation  11,555,041  —  — 
Utilities and power  9,362,594  —  — 
Total common stocks  509,526,363  1,696,721  — 
Convertible preferred       
stocks  —  —  31,502 
Short-term investments  4,671,298  56,654,600  — 
Totals by level  $514,197,661  $58,351,321  $31,502 
  Level 1  Level 2  Level 3 
Other financial instruments:  $—  $—  $— 

Other financial instruments include futures, written options, TBA sale commitments, swaps and forward contracts.

The following is a reconciliation of Level 3 assets as of June 30, 2009:

        Change in net       
  Balance as of  Accrued    unrealized    Net transfers in   
  December 31,  discounts/  Realized  appreciation  Net  and/or out of  Balance as of 
Investments in securities:  2008  premiums  gain/(loss)  (depreciation)  purchases/sales  Level 3**  June 30, 2009 
Convertible preferred stocks  $—  $—  $—  $—  $—  $31,502  $31,502 
Total  $—  $—  $—  $—  $—  $31,502  $31,502 

**Represents Level 3 securities acquired in merger with Putnam VT Discovery Growth Fund.

The accompanying notes are an integral part of these financial statements.

6 Putnam VT New Opportunities Fund 

Statement of assets and liabilities
6/30/09 (Unaudited)

Assets   
Investment in securities, at value, including $54,847,817   
of securities on loan (Note 1):   
Unaffiliated issuers (identified cost $599,782,144) 

$567,909,186 

Affiliated issuers (identified cost $4,671,298) (Note 6)  4,671,298 
Dividends, interest and other receivables  588,753 
Receivable for shares of the fund sold  13,408 
Receivable for investments sold  36,726,548 
Receivable for investor servicing fees (Note 2)  23,479 
Total assets  609,932,672 
 
Liabilities   
Payable to custodian (Note 2)  146,155 
Payable for investments purchased  37,132,352 
Payable for shares of the fund repurchased  434,490 
Payable for compensation of Manager (Note 2)  869,742 
Payable for custodian fees (Note 2)  17,439 
Payable for Trustee compensation and expenses (Note 2)  273,232 
Payable for administrative services (Note 2)  1,989 
Payable for distribution fees (Note 2)  14,400 
Collateral on securities loaned, at value (Note 1)  56,249,904 
Other accrued expenses  110,524 
Total liabilities  95,250,227 
 
Net assets  $514,682,445 
 
Represented by   
Paid-in capital (Unlimited shares authorized) (Notes 1, 4 and 8)  $1,652,022,561 
Undistributed net investment income (Notes 1 and 8)  1,591,833 
Accumulated net realized loss on investments (Notes 1 and 8)  (1,107,058,991) 
Net unrealized depreciation of investments (Note 8)  (31,872,958) 
Total — Representing net assets applicable to   
capital shares outstanding  $514,682,445 
 
Computation of net asset value Class IA   
Net Assets  $444,886,297 
Number of shares outstanding  30,897,508 
Net asset value, offering price and redemption price   
per share (net assets divided by number of shares outstanding)  $14.40 
Computation of net asset value Class IB   
Net Assets  $69,796,148 
Number of shares outstanding  4,914,660 
Net asset value, offering price and redemption price   
per share (net assets divided by number of shares outstanding)  $14.20 

Statement of operations
Six months ended 6/30/09 (Unaudited)

Investment income   
Dividends (net of foreign tax of $2,890)  $3,566,621 
Interest (including interest income of $2,603   
from investments in affiliated issuers) (Note 6)  20,514 
Securities lending  1,207 
Total investment income  3,588,342 
 
Expenses   
Compensation of Manager (Note 2)  1,683,244 
Investor servicing fees (Note 2)  71,290 
Custodian fees (Note 2)  8,275 
Trustee compensation and expenses (Note 2)  23,407 
Administrative services (Note 2)  19,092 
Distribution fees — Class IB (Note 2)  78,599 
Other  125,617 
Fees waived and reimbursed by Manager (Note 2)  (2,289) 
Total expenses  2,007,235 
 
Expense reduction (Note 2)  (74,015) 
Net expenses  1,933,220 
 
Net investment income  1,655,122 
 
Net realized loss on investments (Notes 1 and 3)  (63,178,513) 
Net realized gain on futures contracts (Note 1)  377,731 
Net unrealized appreciation of investments and   
futures contracts during the period  107,243,070 
Net gain on investments  44,442,288 
 
Net increase in net assets resulting from operations  $46,097,410 

The accompanying notes are an integral part of these financial statements.

Putnam VT New Opportunities Fund 7 

Statement of changes in net assets

  Putnam VT
  New Opportunities Fund 
  Six months ended  Year ended 
  6/30/09*  12/31/08 
Increase (decrease) in net assets     
Operations:     
Net investment income  $1,655,122  $3,358,146 
Net realized loss on investments  (62,800,782)  (149,094,663) 
Net unrealized appreciation (depreciation)     
of investments  107,243,070  (205,979,371) 
Net increase (decrease) in net assets     
resulting from operations  46,097,410  (351,715,888) 
Distributions to shareholders (Note 1):     
From ordinary income     
Net investment income     
Class IA  (3,073,568)  (2,169,773) 
Class IB  (258,955)  — 
Decrease from capital share transactions     
(Notes 4 and 8)  (29,402,364)  (194,918,922) 
Total increase (decrease) in net assets  13,362,523  (548,804,583) 
Net assets:     
Beginning of period  501,319,922  1,050,124,505 
End of period (including undistributed     
net investment income of $1,591,833 and     
$3,266,562, respectively)  $514,682,445  $501,319,922 

* Unaudited

The accompanying notes are an integral part of these financial statements.

8 Putnam VT New Opportunities Fund 

Financial highlights (For a common share outstanding throughout the period)

INVESTMENT OPERATIONS:   LESS DISTRIBUTIONS:    RATIOS AND SUPPLEMENTAL DATA:
Period ended  Net asset value, beginning of period  Net investment income (loss)a,f  Net realized and unrealized gain (loss) on investments  Total from investment operations  From net investment income  Total distributions  Net asset value, end of period  Total return at net asset value (%)b,c  Net assets, end of period (in thousands)  Ratio of expenses to average net assets (%)b,d,f  Ratio of net investment income (loss) to average net assets (%)f  Portfolio turnover (%) 
Putnam VT New Opportunities Fund (Class IA)  
6/30/09†  $13.19  .05  1.26  1.31  (.10)  (.10)  $14.40  10.02*  $444,886  .40*  .36*  35.55* 
12/31/08  21.55  .08  (8.39) i,j  (8.31)  (.05)  (.05)  13.19  (38.62) j  442,197  .76  .46  78.52 
12/31/07  20.36  .05  1.17  1.22  (.03)  (.03)  21.55  6.02  926,866  .72  .24  139.35 
12/31/06  18.74  .03  1.62  1.65  (.03)  (.03)  20.36  8.82  1,145,101  .71  .16  84.06 
12/31/05  17.05  .03 h  1.72  1.75  (.06)  (.06)  18.74  10.32 h  1,352,498  .66  .18 h  56.12 
12/31/04  15.43  .05 g  1.57  1.62  —  —  17.05  10.50  1,621,906  .69  .33 g  115.82 
Putnam VT New Opportunities Fund (Class IB)  
6/30/09†  $12.98  .03  1.24  1.27  (.05)  (.05)  $14.20  9.86*  $69,796  .52*  .24*  35.55* 
12/31/08  21.19  .04  (8.25) i,j  (8.21)  —  —  12.98  (38.75) j  59,123  1.01  .21  78.52 
12/31/07  20.04  — e  1.15  1.15  —  —  21.19  5.74  123,258  .97  (.01)  139.35 
12/31/06  18.46  (.02)  1.60  1.58  —  —  20.04  8.56  145,998  .96  (.09)  84.06 
12/31/05  16.80  (.01) h  1.69  1.68  (.02)  (.02)  18.46  10.00 h  159,861  .91  (.07) h  56.12 
12/31/04  15.23  .01 g  1.56  1.57  —  —  16.80  10.31  171,305  .94  .09 g  115.82 

* Not annualized.

† Unaudited.

a Per share net investment income (loss) has been determined on the basis of weighted average number of shares outstanding during the period.

b The charges and expenses at the insurance company separate account level are not reflected.

c Total return assumes dividend reinvestment.

d Includes amounts paid through expense offset arrangements and brokerage/service arrangements (Note 2).

e Amount represents less than $0.01 per share.

f Reflects an involuntary contractual expense limitation in effect during the period. For periods prior to June 30, 2009 certain fund expenses were waived in connection with the fund’s investment in Putnam Prime Money Market Fund. As a result of such limitation and/or waivers, the expenses of each class reflect a reduction of the following amounts (Note 2):

  Percentage of average net assets 
6/30/09  <0.01% 
12/31/08  <0.01 
12/31/07  <0.01 
12/31/06  <0.01 
12/31/05  <0.01 
12/31/04  <0.01 

g Reflects a special dividend which amounted to $0.06 per share and 0.37% of average net assets.

h Reflects a non-recurring accrual related to Putnam Management’s settlement with the Securities and Exchange Commission (SEC) regarding brokerage allocation practices, which amounted to $0.01 per share and 0.04% of average net assets for class IA and class IB shares.

i Reflects a non-recurring reimbursement pursuant to a settlement between the SEC and Knight Securities, L.P. which amounted to $0.02 per share.

j Reflects a non-recurring litigation payment from Enron Corporation which amounted to $0.10 per share outstanding as of December 29, 2008. Without this payment, total returns for the year ended December 31, 2008 would have been –39.13% and –39.26% for class IA and class IB shares, respectively.

The accompanying notes are an integral part of these financial statements.

Putnam VT New Opportunities Fund 9 

Notes to financial statements 6/30/09 (Unaudited)

Note 1: Significant accounting policies

Putnam VT New Opportunities Fund (the “fund”), is a diversified series of Putnam Variable Trust (the “Trust”), a Massachusetts business trust, which is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The fund seeks long-term capital appreciation by investing in common stocks of companies in market sectors that management believes have strong long-term growth potential.

The fund offers class IA and class IB shares of beneficial interest. Class IA shares are offered at net asset value and are not subject to a distribution fee. Class IB shares are offered at net asset value and pay an ongoing distribution fee, which is identified in Note 2.

Investment income, realized and unrealized gains and losses and expenses of the fund are borne pro-rata based on the relative net assets of each class to the total net assets of the fund, except that each class bears expenses unique to that class (including the distribution fees applicable to such classes). Each class votes as a class only with respect to its own distribution plan or other matters on which a class vote is required by law or determined by the Trustees. If the fund were liquidated, shares of each class would receive their pro-rata share of the net assets of the fund. In addition, the Trustees declare separate dividends on each class of shares.

In the normal course of business, the fund enters into contracts that may include agreements to indemnify another party under given circumstances. The fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be, but have not yet been, made against the fund. However, the fund’s management team expects the risk of material loss to be remote.

The following is a summary of significant accounting policies consistently followed by the fund in the preparation of its financial statements. The preparation of financial statements is in conformity with accounting principles generally accepted in the United States of America and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. Subsequent events after the balance sheet date through the date that the financial statements were issued, August 7, 2009, have been evaluated in the preparation of the financial statements.

A) Security valuation Investments for which market quotations are readily available are valued at the last reported sales price on their principal exchange, or official closing price for certain markets. If no sales are reported — as in the case of some securities traded over-the-counter — a security is valued at its last reported bid price. Many securities markets and exchanges outside the U.S. close prior to the close of the New York Stock Exchange and therefore the closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the close of the New York Stock Exchange. Accordingly, on certain days, the fund will fair value foreign equity securities taking into account multiple factors, including movements in the U.S. securities markets. The number of days on which fair value prices will be used will depend on market activity and it is possible that fair value prices will be used by the fund to a significant extent. At June 30, 2009, fair value pricing was used for certain foreign securities in the portfolio. Securities quoted in foreign currencies, if any, are translated into U.S. dollars at the current exchange rate. To the extent a pricing service or dealer is unable to value a security or provides a valuation which Putnam Investment Management, LLC (“Putnam Management”), the fund’s manager, an indirect wholly-owned subsidiary of Putnam Investments, LLC, does not believe accurately reflects the security’s fair value, the security will be valued at fair value by Putnam Management. Certain investments, including certain restricted and illiquid securities and derivatives, are also valued at fair value following procedures approved by the Trustees. Such valuations and procedures are reviewed periodically by the Trustees. The fair value of securities is generally determined as the amount that the fund could reasonably expect to realize from an orderly disposition of such securities over a reasonable period of time. By its nature, a fair value price is a good faith estimate of the value of a security in a current sale and does not reflect an actual market price, which may be different by a material amount.

B) Joint trading account Pursuant to an exemptive order from the Securities and Exchange Commission (the “SEC”), the fund may transfer uninvested cash balances, including cash collateral received under security lending arrangements, into a joint trading account along with the cash of other registered investment companies and certain other accounts managed by Putnam Management. These balances may be invested in issues of short-term investments having maturities of up to 397 days for collateral received under security lending arrangements and up to 90 days for other cash investments.

C) Security transactions and related investment income Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Gains or losses on securities sold are determined on the identified cost basis.

Interest income is recorded on the accrual basis. Dividend income, net of applicable withholding taxes, is recognized on the ex-dividend date except that certain dividends from foreign securities, if any, are recognized as soon as the fund is informed of the ex-dividend date. Non-cash dividends, if any, are recorded at the fair market value of the securities received. Dividends representing a return of capital or capital gains, if any, are reflected as a reduction of cost and/or as a realized gain.

D) Futures and options contracts The fund may use futures and options contracts to hedge against changes in the values of securities the fund owns, owned or expects to purchase, or for other investment purposes. The fund may also write options on swaps or securities it owns or in which it may invest to increase its current returns.

The potential risk to the fund is that the change in value of futures and options contracts may not correspond to the change in value of the hedged instruments. In addition, losses may arise from changes in the value of the underlying instruments, if there is an illiquid secondary market for the contracts, interest or exchange rates moving unexpectedly or if the counterparty to the contract is unable to perform. With futures, there is minimal counterparty credit risk to the fund since futures are exchange traded and the exchange’s clearinghouse, as counterparty to all exchange traded futures, guarantees the futures against default. Risks may exceed amounts recognized on the Statement of assets and liabilities. When the contract is closed, the fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. Realized gains and losses on purchased options are included in realized gains and losses on investment securities. If a written call option is exercised, the premium originally received is recorded as an addition to sales proceeds. If a written put option is exercised, the premium originally received is recorded as a reduction to the cost of investments.

Futures contracts are valued at the quoted daily settlement prices established by the exchange on which they trade. The fund and the broker agree to exchange an amount of cash equal to the daily fluctuation in the value of the futures contract. Such receipts or payments are known as “variation margin.” Exchange traded options are valued at the last sale price or, if no sales are reported, the last bid price for purchased options and the last ask price for written options. Options traded over-the-counter are valued using prices supplied by dealers. Futures and written option contracts outstanding at period end, if any, are listed after the fund’s portfolio. Outstanding contracts at period end are indicative of the volume of activity during the period.

E) Securities lending The fund may lend securities, through its agents, to qualified borrowers in order to earn additional income. The loans are collateralized by cash and/or securities in an amount at least equal to the market value of the securities loaned. The market value of securities loaned is determined daily and any additional required collateral is allocated to the fund on the next business day. The risk of borrower default will be borne by the fund’s agents; the fund will bear the risk of loss with respect to the investment of the cash collateral. Income from securities lending is included in investment income on the Statement of operations. At June 30, 2009, the value of securities loaned amounted to $54,847,817. The fund received cash collateral of $56,249,904 which is pooled with collateral of other Putnam funds into 23 issues of short-term investments.

F) Federal taxes It is the policy of the fund to distribute all of its taxable income within the prescribed time and otherwise comply with the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), applicable to regulated investment companies. It is also the intention of the fund to distribute an amount sufficient to avoid imposition of any excise tax under Section 4982 of the Code. The fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (“FIN 48”). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The fund did not have any unrecognized tax benefits in the accompanying financial statements. No

10 Putnam VT New Opportunities Fund 

provision has been made for federal taxes on income, capital gains or unrealized appreciation on securities held nor for excise tax on income and capital gains. Each of the fund’s federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service and state departments of revenue.

At December 31, 2008 the fund had a capital loss carryover of $1,033,809,949 available to the extent allowed by the Code to offset future net capital gain, if any. The amounts of the carryovers (excluding any amounts acquired in a merger) and the expiration dates are:

Loss carryover  Expiration 
$184,975,957  12/31/09 
625,131,957  12/31/10 
74,066,552  12/31/11 
149,635,483  12/31/16 

As a result of the February 17, 2009 merger of Putnam VT Discovery Growth Fund, the fund acquired $9,127,174 in capital loss carryovers which are subject to limitations imposed by the Code. The acquired capital loss carryovers and the expiration dates are:

Loss carryover  Expiration 
$6,786,544  12/31/15 
2,340,630  12/31/16 

The aggregate identified cost on a tax basis is $604,637,281, resulting in gross unrealized appreciation and depreciation of $39,330,518 and $71,387,315, respectively, or net unrealized depreciation of $32,056,797.

G) Distributions to shareholders Distributions to shareholders from net investment income are recorded by the fund on the ex-dividend date. Distributions from capital gains, if any, are recorded on the ex-dividend date and paid at least annually. The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Dividend sources are estimated at the time of declaration. Actual results may vary. Any non-taxable return of capital cannot be determined until final tax calculations are completed after the end of the fund’s fiscal year. Reclassifications are made to the fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryovers) under income tax regulations.

H) Expenses of the trust Expenses directly charged or attributable to any fund will be paid from the assets of that fund. Generally, expenses of the trust will be allocated among and charged to the assets of each fund on a basis that the Trustees deem fair and equitable, which may be based on the relative assets of each fund or the nature of the services performed and relative applicability to each fund.

I) Beneficial interest At June 30, 2009, insurance companies or their separate accounts were record owners of all but a de minimis number of the shares of the fund. Approximately 56.2% of the fund is owned by accounts of one group of insurance companies.

Note 2: Management fee, administrative services and
other transactions

The fund pays Putnam Management for management and investment advisory services quarterly based on the average net assets of the fund. Such fee is based on the following annual rates: 0.70% of the first $500 million of average net assets, 0.60% of the next $500 million, 0.55% of the next $500 million, 0.50% of the next $5 billion, 0.475% of the next $5 billion, 0.455% of the next $5 billion, 0.44% of the next $5 billion and 0.43% thereafter.

Putnam Management has agreed to waive fees and reimburse expenses of the fund through July 31, 2009 to the extent necessary to ensure that the fund’s expenses do not exceed the simple average of the expenses for the fund’s Lipper peer group of funds underlying variable insurance products that have the same investment classification or objective as the fund. The expense reimbursement is based on a comparison of the fund’s expenses with the average annualized operating expenses of the funds in its Lipper peer group for each calendar quarter during the fund’s last fiscal year, excluding 12b-1 fees and without giving effect to any expense offset and brokerage/service arrangements that may reduce fund expenses. For the period ended June 30, 2009, Putnam Management waived $2,289 of its management fee from the fund.

Putnam Management has also contractually agreed from August 1, 2009 through July 31, 2010, to limit the fund’s expenses (not including brokerage, interest, taxes, investment-related expenses, extraordinary expenses and payments under the fund’s investor servicing contract, investment management contract and distribution plan) to an annual rate of 0.20% of the fund’s average net assets.

The fund reimburses Putnam Management an allocated amount for the compensation and related expenses of certain officers of the fund and their staff who provide administrative services to the fund. The aggregate amount of all such reimbursements is determined annually by the Trustees.

Custodial functions for the fund’s assets are provided by State Street Bank and Trust Company (“State Street”). Custody fees are based on the fund’s asset level, the number of its security holdings and transaction volumes.

Putnam Investor Services, Inc., an affiliate of Putnam Management, provided investor servicing agent functions to the fund. Putnam Investor Services, Inc. was paid a monthly fee for investor servicing at an annual rate of 0.03% of the fund’s average net assets. The amounts incurred for investor servicing agent functions provided by affiliates of Putnam Management during the six months ended June 30, 2009 are included in Investor servicing fees in the Statement of operations.

Under the custodian contract between the fund and State Street, the custodian bank has a lien on the securities of the fund to the extent permitted by the fund’s investment restrictions to cover any advances made by the custodian bank for the settlement of securities purchased by the fund. At June 30, 2009, the payable to the custodian bank represents the amount due for cash advanced for the settlement of securities purchased.

The fund has entered into expense offset arrangements with Putnam Fiduciary Trust Company (“PFTC”), an affiliate of Putnam Management, and State Street whereby PFTC’s and State Street’s fees are reduced by credits allowed on cash balances. The fund also reduced expenses through brokerage/service arrangements. For the six months ended June 30, 2009, the fund’s expenses were reduced by $69 under the expense offset arrangements and by $73,946 under the brokerage/service arrangements.

Each independent Trustee of the fund receives an annual Trustee fee, of which $493, as a quarterly retainer, has been allocated to the fund, and an additional fee for each Trustees meeting attended. Trustees receive additional fees for attendance at certain committee meetings and industry seminars and for certain compliance-related matters. Trustees also are reimbursed for expenses they incur relating to their services as Trustees.

The fund has adopted a Trustee Fee Deferral Plan (the “Deferral Plan”) which allows the Trustees to defer the receipt of all or a portion of Trustees fees payable on or after July 1, 1995. The deferred fees remain invested in certain Putnam funds until distribution in accordance with the Deferral Plan.

The fund has adopted an unfunded noncontributory defined benefit pension plan (the “Pension Plan”) covering all Trustees of the fund who have served as a Trustee for at least five years and were first elected prior to 2004. Benefits under the Pension Plan are equal to 50% of the Trustee’s average annual attendance and retainer fees for the three years ended December 31, 2005. The retirement benefit is payable during a Trustee’s lifetime, beginning the year following retirement, for the number of years of service through December 31, 2006. Pension expense for the fund is included in Trustee compensation and expenses in the Statement of operations. Accrued pension liability is included in Payable for Trustee compensation and expenses in the Statement of assets and liabilities. The Trustees have terminated the Pension Plan with respect to any Trustee first elected after 2003.

The fund has adopted a distribution plan (the “Plan”) with respect to its class IB shares pursuant to Rule 12b-1 under the Investment Company Act of 1940. The purpose of the Plan is to compensate Putnam Retail Management Limited Partnership, a wholly-owned subsidiary of Putnam Investments, LLC and Putnam Retail Management GP, Inc., for services provided and expenses incurred in distributing shares of the fund. The Plan provides for payment by the fund to Putnam Retail Management Limited Partnership at an annual rate of up to 0.35% of the average net assets attributable to the fund’s class IB

Putnam VT New Opportunities Fund 11 

shares. The Trustees have approved payment by the fund at an annual rate of 0.25% of the average net assets attributable to the fund’s class IB shares.

Note 3: Purchases and sales of securities

During the six months ended June 30, 2009, cost of purchases and proceeds from sales of investment securities other than short-term investments aggregated $170,666,792 and $202,045,154, respectively. There were no purchases or sales of U.S. government securities.

Note 4: Capital shares

At June 30, 2009, there was an unlimited number of shares of beneficial interest authorized. Subscriptions and redemptions are presented at the omnibus level. Transactions in capital shares were as follows:

    Class IA shares   Class IB shares
  Six months ended 6/30/09  Year ended 12/31/08  Six months ended 6/30/09  Year ended 12/31/08 
 
  Shares  Amount  Shares  Amount  Shares  Amount  Shares  Amount 
Putnam VT New Opportunities Fund                 
Shares sold  107,460  $1,387,764  92,293  $1,527,565  63,400  $823,623  70,579  $1,176,829 
Shares issued in connection with                 
reinvestment of distributions  248,269  3,073,568  115,536  2,169,773  21,191  258,955  —  — 
Shares issued in connection with the merger                 
of Putnam VT Discovery Growth Fund  385,906  5,019,056  —  —  745,413  9,536,298  —  — 
Subtotal  741,635  9,480,388  207,829  3,697,338  830,004  10,618,876  70,579  1,176,829 
Shares repurchased  (3,377,152)  (43,484,262)  (9,692,041)  (175,784,335)  (471,955)  (6,017,366)  (1,330,104)  (24,008,754) 
Net increase (decrease)  (2,635,517)  $(34,003,874)  (9,484,212)    $(172,086,997)  358,049  $4,601,510  (1,259,525)  $(22,831,925) 

Note 5: Summary of derivative activity

As of June 30, 2009, the fund did not hold any derivative instruments.

The following is a summary of realized and unrealized gains or losses of derivative instruments on the Statement of operations for the six months ended June 30, 2009 (see Note 1):

Amount of Realized Gain or (Loss) on Derivatives Recognized in Income   
Derivatives not accounted for as hedging     
instruments under Statement 133  Futures  Total 
Equity contracts  $377,731  $377,731 
Total  $377,731  $377,731 

Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income 
Derivatives not accounted for as hedging     
instruments under Statement 133  Futures  Total 
Equity contracts  $(378,996)  $(378,996) 
Total  $(378,996)  $(378,996) 

Note 6: Investment in Putnam Money Market Liquidity Fund

The fund invested in Putnam Money Market Liquidity Fund, an open-end management investment company managed by Putnam Management. Investments in Putnam Money Market Liquidity Fund are valued at its closing net asset value each business day. Income distributions earned by the fund are recorded as interest income in the Statement of operations and totaled $2,603 for the period ended June 30, 2009. During the period ended June 30, 2009, cost of purchases and proceeds of sales of investments in Putnam Money Market Liquidity Fund aggregated $27,435,646 and $22,764,348, respectively. Management fees charged to Putnam Money Market Liquidity Fund have been waived by Putnam Management.

Note 7: Regulatory matters and litigation

In late 2003 and 2004, Putnam Management settled charges brought by the Securities and Exchange Commission (the “SEC”) and the Massachusetts Securities Division in connection with excessive short-term trading in Putnam funds. Distribution of payments from Putnam Management to certain open-end Putnam funds and their shareholders is expected to be completed in the next several months. These allegations and related matters have served as the general basis for certain lawsuits, including purported class action lawsuits against Putnam Management and, in a limited number of cases, some Putnam funds.

Putnam Management believes that these lawsuits will have no material adverse effect on the funds or on Putnam Management’s ability to provide investment management services. In addition, Putnam Management has agreed to bear any costs incurred by the Putnam funds as a result of these matters.

Note 8: Acquisition of Putnam VT Discovery Growth Fund

On February 17, 2009, Putnam VT New Opportunities Fund issued 385,906 and 745,413 class IA and class IB shares, respectively, for 1,666,012 and 3,230,409 class IA and class IB shares of Putnam VT Discovery Growth Fund to acquire that fund’s net assets in a tax-free exchange. The net assets of Putnam VT New Opportunities Fund and Putnam VT Discovery Growth Fund on February 13, 2009, were $482,106,017 and $14,555,354, respectively. On February 13, 2009, Putnam VT Discovery Growth Fund had undistributed net investment income of $2,672, accumulated net realized loss of $9,867,406 and unrealized depreciation of $1,235,858. The aggregate net assets of Putnam VT New Opportunities Fund immediately following the acquisition were $496,661,371.

Information presented in the Statement of operations and changes in net assets reflect only the operations of Putnam VT New Opportunities Fund.

Note 9: Market and credit risk

In the normal course of business, the fund trades financial instruments and enters into financial transactions where risk of potential loss exists due to changes in the market (market risk) or failure of the contracting party to the transaction to perform (credit risk). The fund may be exposed to additional credit risk that an institution or other entity with which the fund has unsettled or open transactions will default.

Note 10: Other

At their July 2009 meeting, the Board of Trustees approved a new management contract for the fund, which will be submitted to shareholders for approval at a meeting expected to be held in the fourth quarter of 2009. Under the proposed management contract, management fee breakpoints would be determined by reference to the assets of all of the open-end Putnam Funds, rather than only the assets of the fund.

12 Putnam VT New Opportunities Fund 

Trustee approval of management contract

General conclusions

The Board of Trustees of the Putnam funds oversees the management of the funds in Putnam Variable Trust and, as required by law, determines annually for each fund whether to approve the continuance of the management contract with Putnam Investment Management (“Putnam Management”), and with respect to certain funds in Putnam Variable Trust, the sub-management contract between Putnam Management and its affiliate, Putnam Investments Limited (“PIL”), and the sub-advisory contract among Putnam Management, PIL and another affiliate, Putnam Advisory Company (“PAC”).

In this regard, the Board of Trustees, with the assistance of its Contract Committee consisting solely of Trustees who are not “interested persons” (as such term is defined in the Investment Company Act of 1940, as amended) of the Putnam funds (the “Independent Trustees”), requests and evaluates all information it deems reasonably necessary under the circumstances. Over the course of several months ending in June 2009, the Contract Committee met several times to consider the information provided by Putnam Management and other information developed with the assistance of the Board’s independent counsel and independent staff. The Contract Committee reviewed and discussed key aspects of this information with all of the Independent Trustees. At the Trustees’ June 12, 2009 meeting, the Contract Committee recommended, and the Independent Trustees approved, the continuance of the funds’ management contract — and with respect to certain funds in Putnam Variable Trust, the sub-management and sub-advisory contracts — effective July 1, 2009. (Because PIL and PAC are affiliates of Putnam Management and Putnam Management remains fully responsible for all services provided by PIL and PAC, the Trustees have not evaluated PIL and PAC as separate entities, except as otherwise indicated below, and all subsequent references to Putnam Management below should be deemed to include reference to PIL and PAC as necessary or appropriate in the context.)

The Independent Trustees’ approval was based on the following conclusions:

• That the fee schedule in effect for your fund represented reasonable compensation in light of the nature and quality of the services being provided to the fund, the fees paid by competitive funds and the costs incurred by Putnam Management in providing such services, and

• That such fee schedule represented an appropriate sharing between fund shareholders and Putnam Management of such economies of scale as may exist in the management of the fund at current asset levels.

These conclusions were based on a comprehensive consideration of all information provided to the Trustees, were subject to the continued application of certain expense reductions and waivers pending other considerations noted below, and were not the result of any single factor. Some of the factors that figured particularly in the Trustees’ deliberations and how the Trustees considered these factors are described below, although individual Trustees may have evaluated the information presented differently, giving different weights to various factors. It is also important to recognize that the fee arrangements for the funds in Putnam Variable Trust and the other Putnam funds are the result of many years of review and discussion between the Independent Trustees and Putnam Management, that certain aspects of the arrangements may receive greater scrutiny in some years than others, and that the Trustees’ conclusions may be based, in part, on their consideration of these same arrangements in prior years.

Consideration of strategic pricing proposal

The Trustees considered that the Contract Committee had been engaged in a detailed review of Putnam Management’s strategic pricing proposal that was first presented to the Committee at its May 2009 meeting. The proposal included proposed changes to the basic structure of the management fees in place for all open-end funds (except the Putnam RetirementReady® Funds and Putnam Money Market Liquidity Fund), including implementation of a breakpoint structure based on the aggregate net assets of all such funds in lieu of the individual breakpoint structures in place for each fund, as well as implementation of performance fees for certain funds. In addition, the proposal recommended substituting separate expense limitations on investor servicing fees and on other expenses as a group in lieu of the total expense limitations in place for many funds.

While the Contract Committee noted the likelihood that the Trustees and Putnam Management would reach agreement on the strategic pricing matters in later months, the terms of the management contracts required that the Trustees approve the continuance of the contracts in order to prevent their expiration at June 30, 2009. The Contract Committee’s recommendations in June reflect its conclusion that the terms of the contractual arrangements for each fund continued to be appropriate for the upcoming term, absent any possible agreement with respect to the matters addressed in Putnam Management’s proposal.

The Trustees were mindful of the significant changes that had occurred at Putnam Management in the past two years, including a change of ownership, the installation of a new senior management team at Putnam Management, the substantial decline in assets under management resulting from extraordinary market forces as well as continued net redemptions in many funds, the introduction of new fund products representing novel investment strategies and the introduction of performance fees for certain new funds. The Trustees were also mindful that many other leading firms in the industry had also been experiencing significant challenges due to the changing financial and competitive environment. For these reasons, even though the Trustees believed that the current contractual arrangements in place between the funds and Putnam Management and its affiliates have served shareholders well and continued to be appropriate for the near term, the Trustees believed that it was an appropriate time to reconsider the current structure of the funds’ contractual arrangements with Putnam Management with a view to possible changes that might better serve the interests of shareholders in this new environment. The Trustees concluded their review of Putnam Management’s strategic pricing proposal in July 2009, and their considerations regarding the proposal are discussed below under the heading “Subsequent approval of strategic pricing proposal.” With the exception of the discussion under this heading, the following discussion generally addresses only the Trustees’ reasons for recommending the continuance of the current contractual arrangements as, at the time the Trustees determined to make this recommendation, the Trustees had not yet reached any conclusions with respect to the strategic pricing proposal.

Putnam VT New Opportunities Fund 13 

Management fee schedules and categories;
total expenses

The Trustees reviewed the management fee schedules in effect for all Putnam funds, including fee levels and breakpoints, and the assignment of funds to particular fee categories. The general fee structure has been carefully developed over the years and re-examined on many occasions and adjusted where appropriate. In this regard, the Trustees noted that shareholders of all funds voted by overwhelming majorities in 2007 to approve new management contracts containing identical fee schedules.

In reviewing fees and expenses, the Trustees generally focused their attention on material changes in circumstances — for example, changes in a fund’s size or investment style, changes in Putnam Management’s operating costs, or changes in competitive practices in the mutual fund industry — that suggest that consideration of fee changes might be warranted. The Trustees concluded that the circumstances did not warrant changes to the management fee structure of the funds in Putnam Variable Trust at that time but, as indicated above, based on their detailed review of the current fee structure, were prepared to consider possible changes to these arrangements that might better serve the interests of shareholders in the future. The Trustees focused on two areas of particular interest, as discussed further below:

• Competitiveness. The Trustees reviewed comparative fee and expense information for competitive funds, which indicated that, in a custom peer group of competitive funds selected by Lipper Inc., your fund ranked in the following percentiles in management fees and total expenses (less any applicable 12b-1 fees and excluding charges and expenses at the insurance company separate account level) as of December 31, 2008 (the first percentile being the least expensive funds and the 100th percentile being the most expensive funds).

  Actual   
  management fee  Total expenses 
  (percentile rank)  (percentile rank) 
Putnam VT New Opportunities Fund  33rd  25th 

The Trustees noted that expense ratios for a number of Putnam funds, which show the percentage of fund assets used to pay for management and administrative services, distribution (12b-1) fees and other expenses, had been increasing recently as a result of declining net assets and the natural operation of fee breakpoints. The Trustees expressed their intention to monitor the funds’ percentile rankings in management fees and in total expenses to ensure that fees and expenses of the funds continue to meet evolving competitive standards.

The Trustees noted that the expense ratio increases described above were being controlled by expense limitations initially implemented in January 2004. These expense limitations give effect to a commitment by Putnam Management that the expense ratio of each open-end fund would be no higher than the average expense ratio of the competitive funds included in the fund’s relevant Lipper universe (exclusive of any applicable 12b-1 charges in each case). The Trustees observed that this commitment to limit fund expenses has served shareholders well since its inception and, while the Contract Committee was reviewing proposed alternative expense limitation arrangements as noted above, the Trustees received a commitment from Putnam Management and its parent company to continue this program through at least June 30, 2010, or such earlier time as the Trustees and Putnam Management reach agreement on alternative arrangements.

In order to ensure that the expenses of the Putnam funds continue to meet evolving competitive standards, the Trustees requested, and Putnam Management agreed, to extend for the twelve months beginning July 1, 2009, or until such earlier time as the Trustees and Putnam Management reach agreement on alternative expense limitation arrangements, an additional expense limitation for certain funds at an amount equal to the average expense ratio (exclusive of 12b-1 charges) of a custom peer group of competitive funds selected by Lipper to correspond to the size of the fund. This additional expense limitation will be applied to those open-end funds that had above-average expense ratios (exclusive of 12b-1 charges) based on the custom peer group data for the period ended December 31, 2007. This additional expense limitation was not applied to your fund because it had a below-average expense ratio relative to its custom peer group.

• Economies of scale. The funds in Putnam Variable Trust currently have the benefit of breakpoints in their management fees that provide shareholders with significant economies of scale, which means that the effective management fee rate of a fund (as a percentage of fund assets) declines as the fund grows in size and crosses specified asset thresholds. Conversely, as a fund shrinks in size — as has been the case for many Putnam funds in recent years — these breakpoints result in increasing fee levels. In recent years, the Trustees have examined the operation of the existing breakpoint structure during periods of both growth and decline in asset levels. The Trustees concluded that the fee schedules in effect for the funds in Putnam Variable Trust represented an appropriate sharing of economies of scale at that time but, as noted above, were in the process of reviewing a proposal to eliminate individual fund breakpoints for all of the open-end funds (except for the Putnam RetirementReady® Funds and Putnam Money Market Liquidity Fund) in favor of a breakpoint structure based on the aggregate net assets of all such funds.

In connection with their review of the management fees and total expenses of the Putnam funds, the Trustees also reviewed the costs of the services provided and profits realized by Putnam Management and its affiliates from their contractual relationships with the funds. This information included trends in revenues, expenses and profitability of Putnam Management and its affiliates relating to the investment management and distribution services provided to the funds. In this regard, the Trustees also reviewed an analysis of Putnam Management’s revenues, expenses and profitability with respect to the funds’ management contracts, allocated on a fund-by-fund basis.

Investment performance

The quality of the investment process provided by Putnam Management represented a major factor in the Trustees’ evaluation of the quality of services provided by Putnam Management under Putnam Variable Trust’s management contract. The Trustees were assisted in their review of the Putnam funds’ investment process and performance by the work of the Investment Oversight Coordinating Committee of the Trustees and the Investment Oversight Committees of the Trustees, which had met on a regular monthly basis with the funds’ portfolio teams throughout the year. The Trustees concluded that Putnam Management generally provides a high-quality investment process —as measured by the experience and skills of the individuals assigned to the management of fund portfolios, the resources made available to such personnel, and in general the ability of Putnam Management to attract andretain high-quality personnel — butalsorecognized thatthis does not guarantee favorable investment results for every fund in every time period. The Trustees considered the investment performance

14 Putnam VT New Opportunities Fund 

of each fund over multiple time periods and considered information comparing each fund’s performance with various benchmarks and with the performance of competitive funds.

The Trustees noted the disappointing investment performance of many of the funds for periods ended March 31, 2009. They discussed with senior management of Putnam Management the factors contributing to such underperformance and the actions being taken to improve performance. The Trustees recognized that, in recent years, Putnam Management has taken steps to strengthen its investment personnel and processes to address areas of underperformance, including Putnam Management’s continuing efforts to strengthen the equity research function, recent changes in portfolio managers including increased accountability of individual managers rather than teams, recent changes in Putnam Management’s approach to incentive compensation, including emphasis on top quartile performance over a rolling three-year period, and the recent arrival of a new chief investment officer. The Trustees also recognized the substantial improvement in performance of many funds since the implementation of those changes. The Trustees indicated their intention to continue to monitor performance trends to assess the effectiveness of these efforts and to evaluate whether additional changes to address areas of underperformance are warranted.

In the case of your fund, the Trustees considered that the fund’s class IA share cumulative total return performance at net asset value was in particular percentiles of its Lipper Inc. peer group for the one-year, three-year and five-year periods ended March 31, 2009. This information is shown in the following table. (Results do not reflect charges and expenses at the insurance company separate account level.) Where applicable, the table also shows the number of funds in the peer group for the respective periods; this number is indicated in parentheses following the percentile. Note that the first percentile denotes the best-performing funds and the 100th percentile denotes the worst-performing funds. Past performance is not a guarantee of future returns.

  One-year  Three-year  Five-year 
  period  period  period 
  percentile  percentile  percentile 
  rank (# of  rank (# of  rank (# of 
  funds in  funds in  funds in 
IA Share as of 3/31/09  category)  category)  category) 
Putnam VT New Opportunities Fund  18th (145)  60th (124)  60th (100) 
Lipper VP (Underlying Funds) — Multi-Cap Growth Funds     

As a general matter, the Trustees believe that cooperative efforts between the Trustees and Putnam Management represent the most effective way to address investment performance problems. The Trustees noted that investors in the Putnam funds have, in effect, placed their trust in the Putnam organization, under the oversight of the funds’ Trustees, to make appropriate decisions regarding the management of the funds. Based on the responsiveness of Putnam Management in the recent past to Trustee concerns about investment performance, the Trustees concluded that it is preferable to seek change within Putnam Management to address performance shortcomings. In the Trustees’ view, the alternative of engaging a new investment adviser for an underperforming fund would entail significant disruptions and would not provide any greater assurance of improved investment performance.

Brokerage and soft-dollar allocations; other benefits

The Trustees considered various potential benefits that Putnam Management may receive in connection with the services it provides under the management contract with Putnam Variable Trust. These include benefits related to brokerage and soft-dollar allocations, whereby a portion of the commissions paid by a fund for brokerage may be used to acquire research services that may be useful to Putnam Management in managing the assets of the fund and of other clients. The Trustees considered a change made, at Putnam Management’s request, to the Putnam funds’ brokerage allocation policy commencing in 2009, which increased the permitted soft dollar allocation to third-party services over what had been authorized in previous years. The Trustees noted that a portion of available soft dollars continue to be allocated to the payment of fund expenses, although the amount allocated for this purpose has declined in recent years. The Trustees indicated their continued intent to monitor regulatory developments in this area with the assistance of their Brokerage Committee and also indicated their continued intent to monitor the potential benefits associated with the allocation of fund brokerage and trends in industry practice to ensure that the principle of seeking best price and execution remains paramount in the portfolio trading process.

The Trustees’ annual review of Putnam Variable Trust’s management contract also included the review of its distributor’s contract and distribution plan with Putnam Retail Management Limited Partnership and the investor servicing agreement with Putnam Investor Services, Inc., each of which provides benefits to affiliates of Putnam Management.

Comparison of retail and institutional fee schedules

The information examined by the Trustees as part of their annual contract review has included for many years information regarding fees charged by Putnam Management and its affiliates to institutional clients such as defined benefit pension plans, college endowments, etc. This information included comparisons of such fees with fees charged to the funds, as well as a detailed assessment of the differences in the services provided to these two types of clients. The Trustees observed, in this regard, that the differences in fee rates between institutional clients and mutual funds are by no means uniform when examined by individual asset sectors, suggesting that differences in the pricing of investment management services to these types of clients reflect to a substantial degree historical competitive forces operating in separate market places. The Trustees considered the fact that fee rates across different asset classes are typically higher on average for mutual funds than for institutional clients, as well as the differences between the services that Putnam Management provides to the Putnam funds and those that it provides to institutional clients of the firm, but did not rely on such comparisons to any significant extent in concluding that the management fees paid by the funds in Putnam Variable Trust are reasonable.

Subsequent approval of strategic pricing proposal

As mentioned above, at a series of meetings beginning in May 2009 and ending on July 10, 2009, the Contract Committee and the Trustees engaged in a detailed review of Putnam Management’s strategic pricing proposal. Following this review, the Trustees of each fund, including all of the Independent Trustees, voted unanimously on July 10, 2009 to approve proposed management contracts reflecting the proposal, as modified based on discussions between the Independent Trustees and Putnam Management, for each fund. In considering the proposed contracts, the Independent Trustees focused largely

Putnam VT New Opportunities Fund 15 

on the specific proposed changes described below relating to management fees. They also took into account the factors that they considered in connection with their most recent annual approval on June 12, 2009 of the continuance of the funds’ current management contracts and the extensive materials that they had reviewed in connection with that approval process, as described above.

The proposed management contracts are subject to shareholder approval. The Trustees have called a shareholder meeting for each of the funds for November 19, 2009 and have recommended unanimously that shareholders approve the proposed contracts.

• Considerations relating to Fund Family fee rate calculations. The Independent Trustees considered that the proposed management contracts would change the manner in which fund shareholders share in potential economies of scale associated with the management of the funds. Under the current management contracts, shareholders of a fund benefit from increased fund size through reductions in the effective management fee paid to Putnam Management once the fund’s net assets exceed the first breakpoint in the fund’s fee schedule ($500 million for most funds). Conversely, in the case of funds with net assets above the level of the first breakpoint, the effective management fee increases as the fund’s average net assets decline below a breakpoint. These breakpoints are measured solely by the net assets of each individual fund and are not affected by possible growth (or decline) of net assets of other funds in the Fund Family. (“Fund Family” for purposes of this discussion refers to all open-end mutual funds sponsored by Putnam Management, except for the Putnam RetirementReady® Funds and Putnam Money Market Liquidity Fund.) Under the proposed management contracts, potential economies of scale would be shared ratably among shareholders of all funds, regardless of their size. The management fees paid by a fund (and indirectly by shareholders) would no longer be affected by the growth (or decline) of assets of the particular fund, but rather would be affected solely by the growth (or decline) of the aggregate net assets of all funds in the Fund Family, regardless of whether the net assets of the particular fund are growing or declining.

The table below shows the proposed effective management fee rate for your fund, based on June 30, 2009 net assets of the Fund Family ($52.3 billion). This table also shows the effective management fee rate payable by your fund under its current management contract, based on the net assets of the fund as of June 30, 2009. Finally, this table shows the difference in the effective management fees, based on net assets as of June 30, 2009, between the proposed management contract and the current contract.

  Proposed  Current   
  Effective  Effective   
  Contractual  Contractual   
Name of fund  Rate  Rate  Difference 
Putnam VT New Opportunities Fund  0.572%  0.697%  (0.125%) 

As shown in the foregoing table, based on June 30, 2009 net asset levels, the proposed management contract would provide for payment of a management fee rate that is lower for your fund than the management fee rate payable under the current management contract. For a small number of funds (although not your fund), the management fee rate would be slightly higher under the proposed contract at these asset levels, but by only immaterial amounts. In the aggregate, the financial impact on Putnam Management of implementing this proposed change for all funds at June 30, 2009 net asset levels is a reduction in annual management fee revenue of approximately $24.0 million. (Putnam Management has already incurred a significant portion of this revenue reduction through the waiver of a portion of its current management fees for certain funds pending shareholder consideration of the proposed management contracts. Putnam is not obliged to continue such waivers beyond July 31, 2010 in the event that the proposed contracts are not approved by shareholders.) The Independent Trustees carefully considered the implications of this proposed change under a variety of economic circumstances. They considered the fact that at current asset levels the management fees paid by the funds under the proposed contract would be lower for almost all funds, and would not be materially higher for any fund. They considered the possibility that under some circumstances, the current management contract could result in a lower fee for a particular fund than the proposed management contract. Such circumstances might occur, for example, if the aggregate net assets of the Fund Family remain largely unchanged and the net assets of an individual fund grew substantially, or if the net assets of an individual fund remain largely unchanged and the aggregate net assets of the Fund Family declined substantially.

The Independent Trustees noted that future changes in the net assets of individual funds are inherently unpredictable and that experience has shown that funds often grow in size and decline in size over time depending on market conditions and the changing popularity of particular investment styles and asset classes. They noted that, while the aggregate net assets of the Fund Family have changed substantially over time, basing a management fee on the aggregate level of assets of the Fund Family would likely reduce fluctuations in costs paid by individual funds and lead to greater stability and predictability of fund operating costs over time.

The Independent Trustees considered that the proposed management contract would likely be advantageous for newly organized funds that have yet to attract significant assets and for funds in specialty asset classes that are unlikely to grow to a significant size. In each case, such funds would participate in the benefits of scale made possible by the aggregate size of the Fund Family to an extent that would not be possible based solely on their individual size.

The Independent Trustees also considered that for funds that have achieved or are likely to achieve considerable scale on their own, the proposed management contract could result in sharing of economies which might lead to slightly higher costs under some circumstances, but they noted that any such increases are immaterial at current asset levels and that over time such funds are likely to realize offsetting benefits from their opportunity to participate, both through the exchange privilege and through the Fund Family breakpoint fee structure, in the improved growth prospects of a diversified Fund Family able to offer competitively priced products.

The Independent Trustees noted that the implementation of the proposed management contracts would result in a reduction in aggregate fee revenues for Putnam Management at current asset levels. They also noted that applying various projections of growth equally to the aggregate net assets of the Fund Family and to the net assets of individual funds also showed revenue reductions for Putnam Management. They recognized, however, the possibility that under some scenarios Putnam Management might realize greater future revenues, with respect to certain funds, under the proposed contracts than under the current contracts, but considered such circumstances to be both less likely and inherently unpredictable.

16 Putnam VT New Opportunities Fund 

The Independent Trustees considered the extent to which Putnam Management may realize economies of scale in connection with the management of the funds. In this regard, they considered the possibility that such economies of scale as may exist in the management of mutual funds may be associated more closely with the size of the aggregate assets of the mutual fund complex than with the size of any individual fund. In this regard the Independent Trustees considered the financial information provided to them by Putnam Management over a period of many years regarding the allocation of costs involved in calculating the profitability of its mutual fund business as a whole and the profitability of individual funds. The Independent Trustees noted that the methodologies for such cost allocations had been reviewed on a number of occasions in the past by independent financial consultants engaged by the Independent Trustees. The Independent Trustees noted that these methodologies support Putnam Management’s assertion that many of its operating costs and any associated economies of scale are related more to the aggregate net assets under management in various sectors of its business than to the size of individual funds. They noted that on a number of occasions in the past the Independent Trustees had separately considered the possibility of calculating management fees in whole or in part based on aggregate net assets of the Putnam funds.

The Independent Trustees considered the fact that the proposed contracts would result in a sharing among the affected funds of economies of scale that for the most part are now enjoyed by the larger funds, without materially increasing the current costs of any of the larger funds. They concluded that this sharing of economies among funds was appropriate in light of the diverse investment opportunities available to shareholders of all funds through the existence of the exchange privilege. They also considered that the proposed change in management fee structure would allow Putnam Management to introduce new investment products at more attractive pricing levels than may be currently be the case.

After considering all of the foregoing, the Independent Trustees concluded that the proposed calculation of management fees based on the aggregate net assets of the Fund Family represented a fair and reasonable means of sharing possible economies of scale among the shareholders of all funds.

• Considerations relating to addition of fee rate adjustments based on investment performance for certain funds. The Independent Trustees considered that Putnam’s proposal to add fee rate adjustments based on investment performance to the management contracts of certain funds reflected a desire by Putnam Management to align its fee revenues more closely with investment performance in the case of certain funds. They noted that Putnam Management already has a significant financial interest in achieving good performance results for the funds it manages. Putnam Management’s fees are based on the assets under its management (whether calculated on an individual fund or complex-wide basis). Good performance results in higher asset levels and therefore higher revenues to Putnam Management. Moreover, good performance also tends to attract additional investors to particular funds or the complex generally, also resulting in higher revenues. Nevertheless, the Independent Trustees concluded that adjusting management fees based on performance for certain selected funds could provide additional benefits to shareholders.

The Independent Trustees noted that Putnam Management proposed the addition of performance adjustments only for certain of the funds and considered whether similar adjustments might be appropriate for other funds. (Putnam Management did not propose the addition of performance adjustments for any of the funds in Putnam Variable Trust.) In this regard, they considered Putnam Management’s belief that the addition of performance adjustments would be most appropriate for shareholders of U.S. growth funds, international equity funds and Putnam Global Equity Fund. They also considered Putnam Management’s view that it would continue to monitor whether performance fees would be appropriate for other funds. Accordingly, the Independent Trustees concluded that it would be desirable to gain further experience with the operation of performance adjustments for certain funds and the market’s receptivity to such fee structures before giving further consideration to whether similar performance adjustments would be appropriate for other funds as well.

• Considerations relating to standardization of payment terms. The proposed management contracts for all funds provide that management fees will be computed and paid monthly within 15 days after the end of each month. The current contracts of the funds contain quarterly computation and payment terms in some cases. These differences largely reflect practices in place at earlier times when many of the funds were first organized. Under the proposed contract, certain funds would make payments to Putnam Management earlier than they do under their current contract. This would reduce a fund’s opportunity to earn income on accrued but unpaid management fees by a small amount, but would not have a material effect on a fund’s operating costs.

The Independent Trustees considered the fact that standardizing the payment terms for all funds would involve an acceleration in the timing of payments to Putnam Management for some funds and a corresponding loss of a potential opportunity for such funds to earn income on accrued but unpaid management fees. The Independent Trustees did not view this change as having a material impact on shareholders of any fund. In this regard, the Independent Trustees noted that the proposed contracts conform to the payment terms included in management contracts for all Putnam funds organized in recent years and that standardizing payment terms across all funds would reduce administrative burdens for both the funds and Putnam Management.

• Considerations relating to comparisons with management fees and total expenses of competitive funds. As part of their evaluation of the proposed management contracts, the Independent Trustees also reviewed the general approach taken by Putnam Management and the Independent Trustees in recent years in imposing appropriate limits on total fund expenses. As part of the annual contract review process in recent years, Putnam Management agreed to waive fees as needed to limit total fund expenses to a maximum level equal to the average total expenses of comparable competitive funds in the mutual fund industry. In connection with its proposal to implement new management contracts, Putnam Management also proposed, and the Independent Trustees approved, certain changes in this approach that shift the focus from controlling total expenses to imposing separate limits on certain categories of expenses, as required. As a general matter, Putnam Management and the Independent Trustees concluded that management fees for the Putnam funds are competitive with the fees charged by comparable funds in the industry. Nevertheless, the Independent Trustees considered specific management fee waivers proposed to be implemented as of August 1, 2009 by Putnam Management with respect to the current management fees of certain funds, as well as projected reductions in management fees for almost all funds that would result under

Putnam VT New Opportunities Fund 17 

the proposed contracts. Putnam Management and the Independent Trustees also agreed to impose separate expense limitations of 37.5 basis points on the general category of shareholder servicing expenses and 20 basis points on the general category of other ordinary operating expenses. These new expense limitations, as well as the fee waivers, were implemented for all funds effective as of August 1, 2009, replacing the expense limitation referred to above.

These changes resulted in lower total expenses for many funds, but in the case of some funds total expenses increased after application of the new waivers and expense limitations (as compared with the results obtained using the expense limitation method previously in place). In this regard, the Independent Trustees considered the likelihood that total expenses for most of these funds would have increased in any event in the normal course under the previous expense limitation arrangement, as the reported total expense levels of many competitive funds increased in response to the major decline in asset values that began in September 2008. These new waivers and expense limitations will continue in effect until at least July 31, 2010 and will be re-evaluated by the Independent Trustees as part of the annual contract review process prior to their scheduled expiration. However, the management fee waivers referred to above would largely become permanent reductions in fees as a result of the implementation of the proposed management contracts.

Under these new expense limitation arrangements effective August 1, 2009, your fund is subject to an expense limitation of 20 basis points on the general category of other ordinary operating expenses. (The expense limitation of 37.5 basis points on shareholder servicing fees does not affect the current shareholder servicing fees for the Putnam Variable Trust funds, which remain fixed at 3 basis points.)

Other important information

Proxy voting

Putnam is committed to managing our mutual funds in the best interests of our shareholders. The Putnam funds’ proxy voting guidelines and procedures, as well as information regarding how your fund voted proxies relating to portfolio securities during the 12-month period ended June 30, 2009, are available in the Individual Investors section of www.putnam.com and on the SEC’s Web site, www.sec.gov. If you have questions about finding forms on the SEC’s Web site, you may call the SEC at 1-800-SEC-0330. You may also obtain the Putnam funds’ proxy voting guidelines and procedures at no charge by calling Putnam’s Shareholder Services at 1-800-225-1581.

Fund portfolio holdings

Each Putnam VT fund will file a complete schedule of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Shareholders may obtain the fund’s Forms N-Q on the SEC’s Web site at www.sec.gov. In addition, the fund’s Forms N-Q may be reviewed and copied at the SEC’s public reference room in Washington, D.C. You may call the SEC at 1-800-SEC-0330 for information about the SEC’s Web site or the operation of the public reference room.

18 Putnam VT New Opportunities Fund 

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Putnam VT New Opportunities Fund 19 

Investment Manager  Investor Servicing Agent  Trustees 
Putnam Investment Management, LLC  Putnam Investor Services, Inc.  John A. Hill, Chairman 
One Post Office Square  Mailing address:  Jameson A. Baxter, Vice Chairman 
Boston, MA 02109  P.O. Box 8383  Ravi Akhoury 
  Boston, MA 02266-8383  Charles B. Curtis 
Marketing Services  1-800-225-1581  Robert J. Darretta 
Putnam Retail Management    Myra R. Drucker 
One Post Office Square  Custodian  Paul L. Joskow 
Boston, MA 02109  State Street Bank and Trust Company  Elizabeth T. Kennan 
    Kenneth R. Leibler 
  Legal Counsel  Robert E. Patterson 
  Ropes & Gray LLP  George Putnam, III 
    Robert L. Reynolds 
    W. Thomas Stephens 
    Richard B. Worley 
   

This report has been prepared for the shareholders   
of Putnam Variable Trust.  257897 8/09 

Item 2. Code of Ethics:

Not applicable

Item 3. Audit Committee Financial Expert:

Not applicable

Item 4. Principal Accountant Fees and Services:

Not applicable

Item 5. Audit Committee of Listed Registrants

Not applicable

Item 6. Schedule of Investments:

The registrant’s schedule of investments in unaffiliated issuers is included in the report to shareholders in Item 1 above.

Item 7. Disclosure of Proxy Voting Policies and Procedures For Closed-End Management Investment Companies:

Not applicable

Item 8. Portfolio Managers of Closed-End Investment Companies

Not Applicable

Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers:

Not applicable

Item 10. Submission of Matters to a Vote of Security Holders:

Not applicable

Item 11. Controls and Procedures:

(a) The registrant's principal executive officer and principal financial officer have concluded, based on their evaluation of the effectiveness of the design and operation of the registrant's disclosure controls and procedures as of a date within 90 days of the filing date of this report, that the design and operation of such procedures are generally effective to provide reasonable assurance that information required to be disclosed by the registrant in this report is recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms.

(b) Changes in internal control over financial reporting: Not applicable

Item 12. Exhibits:

(a)(1) Not applicable

(a)(2) Separate certifications for the principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940, as amended, are filed herewith.

(b) The certifications required by Rule 30a-2(b) under the Investment Company Act of 1940, as amended, are filed herewith.

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, thereunto duly authorized.

Putnam Variable Trust

By (Signature and Title):

/s/Janet C. Smith
Janet C. Smith
Principal Accounting Officer

Date: August 28, 2009

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By (Signature and Title):

/s/Charles E. Porter
Charles E. Porter
Principal Executive Officer

Date: August 28, 2009

By (Signature and Title):

/s/Steven D. Krichmar
Steven D. Krichmar
Principal Financial Officer

Date: August 28, 2009