a_vtsmallcapvalue.htm

Message from the Trustees

Dear Shareholder:

As 2014 gets under way, signs point to a more widespread economic recovery around the world. We are encouraged by the improvement that the larger developed economies are showing in key areas such as unemployment, housing, and manufacturing.

Some storm clouds also have cleared. It is no longer a guessing game as to when the U.S. Federal Reserve will begin reducing its stimulative bond-buying program. And the looming threat of another federal government shutdown is easing. Moreover, the embattled 17-nation eurozone, which just a year ago appeared to teeter on the verge of financial collapse, seems to be emerging from recession. At the same time, Japan is pursuing structural policies seeking to reverse its deflationary spiral, while China is working toward instituting important domestic reforms to support sustainable growth.

In 2013, U.S. stocks, as measured by the S&P 500 Index, soared more than 30%, posting their best year since 1997. Equities may continue to benefit from better business conditions, but it is worth remembering that advances of such magnitude are rare. For fixed-income investors, rising Treasury yields may continue to pose a challenge requiring a different set of strategies than those that were common during the years of falling rates.

To help you pursue your financial goals in this environment, Putnam offers fresh thinking and a commitment to fundamental research, active investing, and risk management strategies. Your financial advisor also can help guide you toward your investment goals, while taking into account your time horizon and tolerance for risk.

We would like to welcome new shareholders of the fund and to thank you for investing with Putnam. We would also like to extend our thanks to Elizabeth Kennan, who has retired from the Board of Trustees, for her 20 years of dedicated service.

Performance summary (as of 12/31/13)

Investment objective

Capital appreciation

Net asset value December 31, 2013


Class IA: $21.02	Class IB: $20.84

Total return at net asset value


			Russell 2000
(as of 12/31/13)	Class IA shares*	Class IB shares*	Value Index

1 year	39.93%	39.61%	34.52%

5 years	162.01	158.95	125.29
Annualized	21.25	20.96	17.64

10 years	122.47	117.16	128.34
Annualized	8.32	8.06	8.61

Life	317.68	303.61	313.46
Annualized	10.24	9.98	10.16

For a portion of the periods, the fund had expense limitations, without which returns would have been lower.

* Class inception date: April 30, 1999.

Russell 2000 Value Index is an unmanaged index of those companies in the small-cap Russell 2000 Index chosen for their value orientation.

Data represent 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. Performance information does not reflect any deduction for taxes a shareholder may owe on fund distributions or on the redemption of fund 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 have been lower. For more recent performance, contact your variable annuity provider who can provide you with performance that reflects the charges and expenses at your contract level.

Allocations are shown as a percentage of the fund’s net assets. Short-term investments and net other assets, if any, represent the market value weights of cash, derivatives, short-term securities, and other unclassified assets in the portfolio. Summary information may differ from the portfolio schedule included in the financial statements due to the inclusion of derivative securities, any interest accruals, the exclusion of as-of trades, if any, and the use of different classifications of securities for presentation purposes. Holdings and allocations may vary over time.

Putnam VT Small Cap Value Fund 1

Report from your fund’s manager

Could you describe the environment for stock market investors during the 12 months ended December 31, 2013?

The equity market rallied strongly over the course of 2013. While equity market indexes reached or surpassed record highs, stocks encountered some volatility, particularly during August, largely related to concerns about Federal Reserve policy and unrest in the Middle East. During the second quarter, the Fed had hinted at plans to taper its quantitative easing [QE] program, and the market’s initial reaction was a sharp decline. However, investors continued to gain confidence in the recovery, and in late December, the market response was muted when the Fed announced plans for its first modest reduction in asset purchases.

How did small-cap value stocks fare during the period?

Small-cap value stocks, as measured by the Russell 2000 Value Index, rose more than 34% for the annual period. U.S. small-cap stocks generally outperformed U.S. large caps for the year, due in part to the fact that they tend to be more closely tied to the U.S. economy than are larger-cap companies that derive a greater proportion of their revenues from outside the United States. In addition, their smaller size enables them to be more nimble and benefit more quickly from economic rebounds. The Russell 2000 Value Index closed the year strongly as investors became more optimistic about the strength of the economy.

Were there any notable changes in the portfolio’s strategy during the period?

I did not make any significant changes to the portfolio’s investment strategy. Together with our small-cap value team, I seek to invest in high-quality companies that we believe are priced at a discount to their intrinsic value and have, in our view, a catalyst to unlock value or that stand to benefit from improving business momentum that has yet to be fully recognized by investors.

What is your outlook for stocks and the economy as we begin 2014?

The U.S. economy continues to provide an attractive environment for investors, in our view. The housing sector is recovering, U.S. corporate profits remain robust, and consumer spending is slowly increasing. In addition, corporate capital spending appears to be rising. Thus, we think the environment for U.S. equities could remain positive in the coming months, although risks remain given the still-subpar rate of economic growth and macroeconomic risks such as political conflicts over the federal budget.

In terms of valuation, our outlook is cautious. Much of the appreciation in small-cap value equities over the past year was due to multiple expansion as investors bid up stocks. While we continue to find opportunities in this segment of the market, we are concerned that the prices of some stocks in the index may have become overpriced.

As markets recover and investors begin paying closer attention to company fundamentals, we believe stock selection, the linchpin of our investment strategy, will remain important. In the current market environment, we believe that U.S. small-cap stocks offer more reasonable valuations than do their large-cap counterparts. We believe that further share price appreciation will depend on a domestic economy that continues to make progress on unemployment while achieving overall growth in a potentially rising-interest-rate environment.

The views expressed in this report are exclusively those of Putnam Management and are subject to change. They are not meant as investment advice. Please note that the holdings discussed in this report may not have been held by the fund for the entire period. Portfolio composition is subject to review in accordance with the fund’s investment strategy and may vary in the future.

Consider these risks before investing: Investments in small and/ or midsize companies increase the risk of greater price fluctuations. Value stocks may fail to rebound, and the market may not favor value-style investing. Stock prices may fall or fail to rise over time for several reasons, including general financial market conditions and factors related to a specific issuer or industry. You can lose money by investing in the fund.

Your fund’s manager

Portfolio Manager Eric N. Harthun is a CFA® charterholder. He joined Putnam in 2000 and has been in the investment industry since 1994.

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

2 Putnam VT Small Cap Value Fund

Understanding your 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. 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, 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 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 July 1, 2013, to December 31, 2013. 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 a		Expenses and value for a
	$1,000 investment, assuming		$1,000 investment, assuming a
	actual returns for the 6 months		hypothetical 5% annualized return
	ended 12/31/13		for the 6 months ended 12/31/13



	Class IA	Class IB	Class IA	Class IB


Expenses paid
per $1,000*	$4.47	$5.85	$4.13	$5.40


Ending value
(after expenses)	$1,189.60	$1,188.80	$1,021.12	$1,019.86


Annualized
expense ratio†	0.81%	1.06%	0.81%	1.06%

*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 12/31/13. 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.

†For the fund’s most recent fiscal half year; may differ from expense ratios based on one-year data in the financial highlights.

A note about your fund’s auditor

During your fund’s fiscal year, between July 18, 2013 and December 16, 2013, a non-U.S. member firm in PricewaterhouseCoopers LLP’s (“PwC”) global network of firms had an investment in certain non-U.S. funds that became affiliated with Putnam Investments as a result of the acquisition of the funds’ advisor by Putnam’s parent company, Great-West Lifeco Inc. The investment consisted of pension plan assets for the benefit of the member firm’s personnel. The investment is inconsistent with the requirements of the Securities and Exchange Commission’s auditor independence rules, which require an auditor to be independent for the entire year under audit. Your fund has been informed by PwC that this investment was no longer held by the plans as of December 16, 2013. During the period between the acquisition noted above and the disposition of the investment, none of the member firm’s personnel was on the PwC audit team for your fund, and none of the members of the audit team participated in the member firm’s pension plans. Based on its knowledge of the facts and its experience with PwC, the Audit and Compliance Committee of your fund’s Board of Trustees concluded that the investment by the PwC member firm would not affect PwC’s ability to render an objective audit opinion to your fund. Based on this conclusion and consideration of the potential risks that the disruption of a change of auditor could present, the Audit and Compliance Committee determined that PwC should continue to act as auditor for your fund.

Putnam VT Small Cap Value Fund 3

The fund’s portfolio 12/31/13


COMMON STOCKS (92.2%)*	Shares	Value

Aerospace and defense (0.7%)
Huntington Ingalls Industries, Inc.	16,532	$1,488,045

		1,488,045
Air freight and logistics (0.5%)
Park-Ohio Holdings Corp. †	23,378	1,225,007

		1,225,007
Auto components (2.1%)
Dana Holding Corp.	51,000	1,000,620

Goodyear Tire & Rubber Co. (The)	52,700	1,256,895

Stoneridge, Inc. †	93,054	1,186,439

Tower International, Inc. †	58,325	1,248,155

		4,692,109
Capital markets (1.0%)
Cowen Group, Inc. Class A †	323,515	1,264,944

Silvercrest Asset Management Group, Inc. Class A	56,309	960,068

		2,225,012
Chemicals (4.5%)
Advanced Emissions Solutions, Inc. †	10,681	579,231

Cabot Corp.	24,700	1,269,580

Chemtura Corp. †	34,400	960,448

Kraton Performance Polymers, Inc. †	51,700	1,191,685

LSB Industries, Inc. †	30,100	1,234,702

Minerals Technologies, Inc.	17,495	1,050,925

OM Group, Inc. †	39,398	1,434,481

Omnova Solutions, Inc. †	114,119	1,039,624

RPM International, Inc.	28,339	1,176,352

		9,937,028
Commercial banks (12.5%)
Ameris Bancorp †	70,100	1,479,811

Bancorp, Inc. (The) †	76,285	1,366,264

Chemical Financial Corp.	40,217	1,273,672

CVB Financial Corp. ^S	68,900	1,176,123

Eagle Bancorp, Inc.	30,240	926,251

Financial Institutions, Inc.	62,700	1,549,317

First Connecticut Bancorp, Inc.	31,400	506,168

First Merchants Corp.	73,900	1,681,964

First NBC Bank Holding Co. †	44,841	1,448,364

First Niagara Financial Group, Inc.	96,600	1,025,892

First of Long Island Corp. (The)	12,296	527,130

Flushing Financial Corp.	33,900	701,730

Heartland Financial USA, Inc.	41,500	1,194,785

Independent Bank Group, Inc.	10,195	506,284

Investors Bancorp, Inc.	64,508	1,650,115

Lakeland Financial Corp.	33,300	1,298,700

National Bank Holdings Corp. Class A	51,481	1,101,693

OFG Bancorp (Puerto Rico) ^S	90,100	1,562,334

Pacific Premier Bancorp, Inc. †	101,000	1,589,740

Popular, Inc. (Puerto Rico) †	47,020	1,350,885

State Bank Financial Corp.	55,200	1,004,088

Sterling Bancorp	115,400	1,542,898

Western Alliance Bancorp †	41,500	990,190

		27,454,398
Commercial services and supplies (2.8%)
Deluxe Corp. ^S	23,900	1,247,341

Ennis, Inc.	52,906	936,436

KAR Auction Services, Inc.	28,999	856,920

Performant Financial Corp. †	129,504	1,333,891

Pitney Bowes, Inc. ^S	73,200	1,705,560

		6,080,148


COMMON STOCKS (92.2%)* cont.	Shares	Value

Communications equipment (1.4%)
Emcore Corp. †	210,300	$1,076,736

Oplink Communications, Inc. †	58,668	1,091,225

Polycom, Inc. †	74,100	832,143

		3,000,104
Computers and peripherals (1.4%)
BancTec, Inc. 144A (Private) ^F	152,299	152,299

Datalink Corp. †	83,286	907,817

Electronics for Imaging, Inc. †	8,300	321,459

Logitech International SA (Switzerland) ^S	120,900	1,655,121

		3,036,696
Construction and engineering (1.0%)
EMCOR Group, Inc.	24,200	1,027,048

Orion Marine Group, Inc. †	96,600	1,162,098

UniTek Global Services, Inc. †	42,017	69,748

		2,258,894
Construction materials (0.4%)
Caesarstone Sdot-Yam, Ltd. (Israel)	20,155	1,001,099

		1,001,099
Consumer finance (1.4%)
Encore Capital Group, Inc. †	29,300	1,472,618

Portfolio Recovery Associates, Inc. †	21,100	1,114,924

Regional Management Corp. †	11,800	400,374

		2,987,916
Containers and packaging (1.1%)
Berry Plastics Group, Inc. †	37,165	884,155

Greif, Inc. Class A	14,500	759,800

Rock-Tenn Co. Class A	7,800	819,078

		2,463,033
Distributors (1.1%)
Core-Mark Holding Co., Inc.	13,339	1,012,830

VOXX International Corp. †	80,200	1,339,340

		2,352,170
Diversified consumer services (0.9%)
Corinthian Colleges, Inc. † ^S	211,300	376,114

Hillenbrand, Inc.	38,000	1,117,960

Steiner Leisure, Ltd. (Bahamas) †	9,200	452,548

		1,946,622
Diversified financial services (0.6%)
Gain Capital Holdings, Inc. ^S	60,700	455,857

PHH Corp. †	34,200	832,770

		1,288,627
Diversified telecommunication services (0.3%)
Cogent Communication Group, Inc.	19,557	790,298

		790,298
Electric utilities (2.8%)
IDACORP, Inc. ^S	25,500	1,321,920

PNM Resources, Inc.	85,000	2,050,200

Portland General Electric Co. ^S	40,100	1,211,020

UIL Holdings Corp. ^S	24,338	943,098

UNS Energy Corp.	11,534	690,310

		6,216,548
Electrical equipment (0.4%)
Coleman Cable, Inc.	33,800	886,236

		886,236
Electronic equipment, instruments, and components (0.9%)
Newport Corp. †	40,840	737,979

TTM Technologies, Inc. †	139,200	1,194,336

		1,932,315
Energy equipment and services (2.0%)
Key Energy Services, Inc. † ^S	94,700	748,130

Matrix Service Co. †	68,038	1,664,890

Pioneer Energy Services Corp. †	93,496	748,903

Tidewater, Inc.	21,836	1,294,220

		4,456,143

Putnam VT Small Cap Value Fund 5


COMMON STOCKS (92.2%)* cont.	Shares	Value

Food and staples retail (0.6%)
Spartan Stores, Inc.	59,240	$1,438,347

		1,438,347
Food products (0.3%)
Sanderson Farms, Inc.	9,700	701,601

		701,601
Gas utilities (0.9%)
Southwest Gas Corp.	33,531	1,874,718

		1,874,718
Health-care equipment and supplies (1.4%)
Cutera, Inc. †	67,284	684,951

PhotoMedex, Inc. † ^S	77,000	997,150

Symmetry Medical, Inc. †	129,300	1,303,344

		2,985,445
Health-care providers and services (1.6%)
Centene Corp. † ^S	15,500	913,725

Ensign Group, Inc. (The)	19,500	863,265

Providence Service Corp. (The) †	29,800	766,456

Triple-S Management Corp. Class B (Puerto Rico) †	53,900	1,047,816

		3,591,262
Hotels, restaurants, and leisure (0.6%)
Marriott Vacations Worldwide Corp. †	26,899	1,419,191

		1,419,191
Household durables (0.7%)
Newell Rubbermaid, Inc.	30,188	978,393

UCP, Inc. Class A †	35,774	523,731

		1,502,124
Insurance (6.8%)
Allied World Assurance Co. Holdings AG	19,300	2,177,233

American Financial Group, Inc.	23,443	1,353,130

Employers Holdings, Inc.	33,421	1,057,775

Hanover Insurance Group, Inc. (The)	22,900	1,367,359

Health Insurance Innovations, Inc. Class A †	36,131	365,284

Maiden Holdings, Ltd. (Bermuda)	108,600	1,186,998

PartnerRe, Ltd.	19,600	2,066,428

Reinsurance Group of America, Inc. Class A	17,373	1,344,844

Stancorp Financial Group ^S	25,000	1,656,250

Validus Holdings, Ltd. ^S	60,414	2,434,080

		15,009,381
Internet software and services (1.3%)
Perficient, Inc. †	58,500	1,370,070

Web.com Group, Inc. † ^S	47,086	1,496,864

		2,866,934
IT Services (1.8%)
Convergys Corp. ^S	45,800	964,090

Global Cash Access Holdings, Inc. †	132,400	1,322,676

Unisys Corp. † ^S	48,700	1,634,859

		3,921,625
Machinery (2.0%)
Dynamic Materials Corp.	32,522	707,028

Navistar International Corp. †	23,670	903,957

Rexnord Corp. †	26,311	710,660

TriMas Corp. †	25,600	1,021,184

Wabash National Corp. † ^S	78,800	973,180

		4,316,009
Media (0.5%)
MDC Partners, Inc. Class A	44,850	1,144,124

		1,144,124
Metals and mining (2.1%)
Constellium NV Class A (Netherlands) †	74,941	1,743,877

Globe Specialty Metals, Inc.	83,900	1,511,039

Horsehead Holding Corp. † ^S	84,116	1,363,520

		4,618,436


COMMON STOCKS (92.2%)* cont.	Shares	Value

Multi-utilities (0.5%)
Avista Corp. ^S	37,631	$1,060,818

		1,060,818
Oil, gas, and consumable fuels (5.2%)
Bill Barrett Corp. † ^S	40,500	1,084,590

Energen Corp.	21,993	1,556,005

EPL Oil & Gas, Inc. †	30,200	860,700

EXCO Resources, Inc. (Rights) † ^S	111,000	17,760

EXCO Resources, Inc. ^S	111,000	589,410

Gulfport Energy Corp. †	18,000	1,136,700

Kodiak Oil & Gas Corp. † ^S	138,500	1,552,585

Midstates Petroleum Co., Inc. † ^S	151,900	1,005,578

Ring Energy, Inc. †	38,517	469,907

Scorpio Tankers, Inc. (Monaco)	107,124	1,262,992

SM Energy Co.	14,501	1,205,178

Stone Energy Corp. †	22,800	788,652

		11,530,057
Pharmaceuticals (0.6%)
Questcor Pharmaceuticals, Inc. ^S	21,500	1,170,675

Sucampo Pharmaceuticals, Inc. Class A †	25,846	242,952

		1,413,627
Professional services (0.6%)
Kforce, Inc. ^S	64,400	1,317,624

		1,317,624
Real estate investment trusts (REITs) (7.2%)
American Assets Trust, Inc.	30,420	956,101

Campus Crest Communities, Inc. ^S	76,806	722,744

Cherry Hill Mortgage Investment Corp. †	52,655	937,259

Colony Financial, Inc.	57,800	1,172,762

Education Realty Trust, Inc.	79,606	702,125

EPR Properties ^S	20,700	1,017,612

Gaming and Leisure Properties, Inc. †	21,600	1,097,496

Healthcare Trust of America, Inc. Class A	64,500	634,680

iStar Financial, Inc. †	131,200	1,872,224

MFA Financial, Inc. ^S	125,181	883,778

One Liberty Properties, Inc.	33,688	678,139

Piedmont Office Realty Trust, Inc. Class A ^S	40,500	669,060

QTS Realty Trust, Inc. Class A †	24,779	614,024

RAIT Financial Trust ^S	150,500	1,349,985

Summit Hotel Properties, Inc.	181,210	1,630,890

Two Harbors Investment Corp.	106,100	984,608

		15,923,487
Real estate management and development (1.2%)
Forestar Group, Inc. † ^S	23,946	509,331

Howard Hughes Corp. (The) †	5,500	660,550

RE/MAX Holdings, Inc. Class A †	43,925	1,408,675

		2,578,556
Road and rail (1.3%)
Quality Distribution, Inc. †	139,873	1,794,571

Ryder System, Inc.	15,900	1,173,102

		2,967,673
Semiconductors and semiconductor equipment (4.6%)
Ambarella, Inc. † ^S	15,495	525,749

FormFactor, Inc. †	176,269	1,061,139

GT Advanced Technologies, Inc. † ^S	168,214	1,466,826

Integrated Silicon Solutions, Inc. †	110,000	1,329,900

Magnachip Semiconductor Corp. (South Korea) †	61,485	1,198,958

Pericom Semiconductor Corp. †	88,000	779,680

Photronics, Inc. † ^S	121,400	1,096,242

RF Micro Devices, Inc. †	268,300	1,384,428

Silicon Image, Inc. †	200,400	1,232,460

		10,075,382

6 Putnam VT Small Cap Value Fund


COMMON STOCKS (92.2%)* cont.	Shares	Value

Software (2.1%)
Actuate Corp. †	151,900	$1,171,149

AVG Technologies NV (Netherlands) † ^S	69,600	1,197,816

Mentor Graphics Corp.	58,300	1,403,281

TiVo, Inc. †	59,000	774,080

		4,546,326
Specialty retail (2.2%)
Ascena Retail Group, Inc. †	54,600	1,155,336

CST Brands, Inc.	25,200	925,344

Express, Inc. †	38,700	722,529

Pep Boys — Manny, Moe & Jack (The) †	64,800	786,672

Select Comfort Corp. † ^S	31,800	670,662

Wet Seal, Inc. (The) Class A † ^S	218,000	595,140

		4,855,683
Textiles, apparel, and luxury goods (0.9%)
G-III Apparel Group, Ltd. †	6,586	485,981

Skechers U.S.A., Inc. Class A † ^S	44,800	1,484,224

		1,970,205
Thrifts and mortgage finance (2.6%)
Banc of California, Inc.	47,100	631,611

BofI Holding, Inc. †	5,458	428,071

EverBank Financial Corp.	58,420	1,071,423

Meta Financial Group, Inc.	26,200	1,056,646

Rockville Financial, Inc.	95,000	1,349,950

United Financial Bancorp, Inc.	58,488	1,104,838

		5,642,539
Trading companies and distributors (2.3%)
HD Supply Holdings, Inc. †	52,400	1,258,124

MRC Global, Inc. †	35,886	1,157,682

Rush Enterprises, Inc. Class A † ^S	45,200	1,340,180

Stock Building Supply Holdings, Inc. †	72,911	1,328,438

		5,084,424
Transportation infrastructure (0.5%)
Aegean Marine Petroleum Network, Inc. (Greece) ^S	98,164	1,101,400

		1,101,400

Total common stocks (cost $154,008,674)		$203,175,446


INVESTMENT COMPANIES (3.4%)*	Shares	Value

American Capital, Ltd. †	105,500	$1,650,020

Hercules Technology Growth Capital, Inc. ^S	51,238	840,303

Horizon Technology Finance Corp. ^S	70,686	1,004,448

Medley Capital Corp.	76,400	1,058,140

Solar Capital, Ltd.	61,005	1,375,663

TCP Capital Corp. ^S	95,781	1,607,205

Total investment companies (cost $6,830,314)		$7,535,779

SHORT-TERM INVESTMENTS (20.7%)*	Shares	Value

Putnam Cash Collateral Pool, LLC 0.14% ^d	37,174,000	$37,174,000

Putnam Short Term Investment Fund 0.08% ^L	8,443,676	8,443,676

Total short-term investments (cost $45,617,676)		$45,617,676

Total investments (cost $206,456,664)		$256,328,901

Notes to the fund’s portfolio

Unless noted otherwise, the notes to the fund’s portfolio are for the close of the fund’s reporting period, which ran from January 1, 2013 through December 31, 2013 (the reporting period). Within the following notes to the portfolio, references to “ASC 820” represent Accounting Standards Codification 820 Fair Value Measurements and Disclosures and references to “OTC”, if any, represent over-the-counter.

* Percentages indicated are based on net assets of $220,321,391.

† Non-income-producing security.

^dAffiliated company. See Note 1 to the financial statements regarding securities lending. The rate quoted in the security description is the annualized 7-day yield of the fund at the close of the reporting period.

^FIs valued at fair value following procedures approved by the Trustees. Securities may be classified as Level 2 or Level 3 for ASC 820 based on the securities’ valuation inputs.

^LAffiliated company (Note 5). The rate quoted in the security description is the annualized 7-day yield of the fund at the close of the reporting period.

^SSecurity on loan, in part or in entirety, at the close of the reporting period (Note 1).

144A after the name of an issuer represents securities exempt from registration under Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.

ASC 820 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 significant to the fair value measurement.

The following is a summary of the inputs used to value the fund’s net assets as of the close of the reporting period:


		Valuation inputs

Investments in securities:	Level 1	Level 2	Level 3

Common stocks*:

Consumer discretionary	$19,882,228	$—	$—

Consumer staples	2,139,948	—	—

Energy	15,986,200	—	—

Financials	73,109,916	—	—

Health care	7,990,334	—	—

Industrials	26,725,460	—	—

Information technology	29,227,083	152,299	—

Materials	18,019,596	—	—

Telecommunication services	790,298	—	—

Utilities	9,152,084	—	—

Total common stocks	203,023,147	152,299	—

Investment companies	7,535,779	—	—

Short-term investments	8,443,676	37,174,000	—

Totals by level	$219,002,602	$37,326,299	$—

* Common stock classifications are presented at the sector level, which may differ from the fund’s portfolio presentation.

At the start and close of the reporting period, Level 3 investments in securities were not considered a significant portion of the fund’s portfolio.

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

Putnam VT Small Cap Value Fund 7

Statement of operations
Year ended 12/31/13


Investment income

Dividends (net of foreign tax of $10,059)	$3,215,097

Interest (including interest income of $4,251 from investments in affiliated issuers) (Note 5)	4,448

Securities lending (Note 1)	85,589

Total investment income	3,305,134

Expenses

Compensation of Manager (Note 2)	1,423,968

Investor servicing fees (Note 2)	226,293

Custodian fees (Note 2)	25,945

Trustee compensation and expenses (Note 2)	17,857

Distribution fees (Note 2)	402,684

Administrative services (Note 2)	6,078

Other	121,730

Total expenses	2,224,555

Expense reduction (Note 2)	(29,040)

Net expenses	2,195,515

Net investment income	1,109,619
Net realized gain on investments (Notes 1 and 3)	48,410,508

Net unrealized appreciation of investments during the year	26,026,860

Net gain on investments	74,437,368

Net increase in net assets resulting from operations	$75,546,987

Statement of changes in net assets


	Year ended	Year ended
	12/31/13	12/31/12

Decrease in net assets

Operations:

Net investment income	$1,109,619	$2,124,180

Net realized gain on investments	48,410,508	22,516,265

Net unrealized appreciation of investments	26,026,860	11,559,218

Net increase in net assets resulting from operations	75,546,987	36,199,663

Distributions to shareholders (Note 1):

From ordinary income

Net investment income

Class IA	(698,348)	(430,835)

Class IB	(1,529,298)	(756,241)

From net realized long-term gain on investments

Class IA	(934,768)	—

Class IB	(2,602,845)	—

Decrease from capital share transactions (Note 4)	(72,680,699)	(37,076,036)

Total decrease in net assets	(2,898,971)	(2,063,449)

Net assets:

Beginning of year	223,220,362	225,283,811

End of year (including undistributed net investment income of $896,705 and $2,040,940, respectively)	$220,321,391	$223,220,362

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

Putnam VT Small Cap Value Fund 9

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	Net realized and unrealized gain (loss) on investments	Total from investment operations	From net investment income	From net realized gain on investments	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 (%)^c,d	Ratio of net investment income (loss) to average net assets (%)	Portfolio turnover (%)

Class IA

12/31/13	$15.42	.12	5.93	6.05	(.19)	(.26)	(.45)	$21.02	39.93	$72,183	.81	.65	59

12/31/12	13.18	.16	2.18	2.34	(.10)	—	(.10)	15.42	17.79	58,447	.81	1.13	72

12/31/11	13.90	.09	(.71)	(.62)	(.10)	—	(.10)	13.18	(4.54)	58,788	.78	.66	63

12/31/10	11.06	.09	2.81	2.90	(.06)	—	(.06)	13.90	26.31	73,838	.82	.78	69

12/31/09	8.62	.07	2.56	2.63	(.19)	—	(.19)	11.06	31.84	65,428	.96 ^e	.75 ^e	93

Class IB

12/31/13	$15.29	.08	5.88	5.96	(.15)	(.26)	(.41)	$20.84	39.61	$148,138	1.06	.43	59

12/31/12	13.07	.13	2.15	2.28	(.06)	—	(.06)	15.29	17.49	164,774	1.06	.88	72

12/31/11	13.78	.05	(.69)	(.64)	(.07)	—	(.07)	13.07	(4.73)	166,495	1.03	.41	63

12/31/10	10.97	.06	2.79	2.85	(.04)	—	(.04)	13.78	25.98	207,791	1.07	.53	69

12/31/09	8.53	.04	2.55	2.59	(.15)	—	(.15)	10.97	31.53	193,272	1.21 ^e	.50 ^e	93

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

^bTotal return assumes dividend reinvestment.

^cThe charges and expenses at the insurance company separate account level are not reflected.

^dIncludes amounts paid through expense offset and brokerage/service arrangements (Note 2).

^eReflects an involuntary contractual expense limitation in effect during the period. As a result of such limitation, the expenses of each class reflect a reduction of 0.02% of average net assets as of December 31, 2009.

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

10 Putnam VT Small Cap Value Fund

Notes to financial statements 12/31/13

Within the following Notes to financial statements, references to “State Street” represent State Street Bank and Trust Company, references to “the SEC” represent the Securities and Exchange Commission, references to “Putnam Management” represent Putnam Investment Management, LLC, the fund’s manager, an indirect wholly-owned subsidiary of Putnam Investments, LLC and references to “OTC”, if any, represent over-the-counter. Unless otherwise noted, the “reporting period” represents the period from January 1, 2013 through December 31, 2013.

Putnam VT Small Cap Value Fund (the fund) is a diversified series of Putnam Variable Trust (the Trust), a Massachusetts business trust registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The investment objective of the fund is to seek capital appreciation by investing mainly in common stocks of small U.S. companies, with a focus on value stocks. Value stocks are issued by companies that we believe are currently undervalued by the market. If we are correct and other investors recognize the value of the company, the price of its stock may rise. We may consider, among other factors, a company’s valuation, financial strength, growth potential, competitive position in its industry, projected future earnings, cash flows and dividends when deciding whether to buy or sell investments.

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.

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.

Note 1 — Significant accounting policies

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. Actual results could differ from those estimates. Subsequent events after the Statement of assets and liabilities date through the date that the financial statements were issued have been evaluated in the preparation of the financial statements.

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.

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, and are classified as Level 1 securities under Accounting Standards Codification 820 Fair Value Measurements and Disclosures (ASC 820). If no sales are reported, as in the case of some securities that are traded OTC, a security is valued at its last reported bid price and is generally categorized as a Level 2 security.

Investments in open-end investment companies (excluding exchange traded funds), if any, which can be classified as Level 1 or Level 2 securities, are valued based on their net asset value. The net asset value of such investment companies equals the total value of their assets less their liabilities and divided by the number of their outstanding shares.

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, currency valuations and comparisons to the valuation of American Depository Receipts, exchange-traded funds and futures contracts. These securities, which would generally be classified as Level 1 securities, will be transferred to Level 2 of the fair value hierarchy when they are valued at fair value. 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. Securities quoted in foreign currencies, if any, are translated into U.S. dollars at the current exchange rate. Short-term securities with remaining maturities of 60 days or less may be valued at amortized cost, which approximates fair value and are classified as Level 2 securities.

To the extent a pricing service or dealer is unable to value a security or provides a valuation that Putnam Management does not believe accurately reflects the security’s fair value, the security will be valued at fair value by Putnam Management in accordance with policies and procedures approved by the Trustees. Certain investments, including certain restricted and illiquid securities and derivatives, are also valued at fair value following procedures approved by the Trustees. These valuations consider such factors as significant market or specific security events such as interest rate or credit quality changes, various relationships with other securities, discount rates, U.S. Treasury, U.S. swap and credit yields, index levels, convexity exposures and recovery rates. These securities are classified as Level 2 or as Level 3 depending on the priority of the significant inputs.

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.

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, net of any applicable withholding taxes, is recorded on the accrual basis. Dividend income, net of any 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 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.

Securities lending The fund may lend securities, through its agent, to qualified borrowers in order to earn additional income. The loans are collateralized by cash in an amount at least equal to the fair value of the securities loaned. The fair 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 agent; 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. Cash collateral is invested in Putnam Cash Collateral Pool, LLC, a limited liability company managed by an affiliate of Putnam Management. Investments in Putnam Cash Collateral Pool, LLC are valued at its closing net asset value each business day. There are no management fees charged to Putnam Cash Collateral Pool, LLC. At the close of the reporting period, the value of securities loaned amounted to $36,143,194. Certain of these securities were sold prior to the close of the reporting period and are included in Receivable for investments sold on the Statement of assets and liabilities. The fund received cash collateral of $37,174,000.

Interfund lending The fund, along with other Putnam funds, may participate in an interfund lending program pursuant to an exemptive order issued by the SEC. This program allows the fund to borrow from or lend to other Putnam funds that permit such transactions. Interfund lending transactions are subject to each fund’s investment policies and borrowing and lending limits. Interest earned or paid on the interfund lending transaction will be based on the average of certain current market rates. During the reporting period, the fund did not utilize the program.

Line of credit The fund participates, along with other Putnam funds, in a $315 million unsecured committed line of credit and a $185 million unsecured uncommitted line of credit, both provided by State Street. Borrowings may be made for temporary or emergency purposes, including the funding of shareholder redemption requests and trade settlements. Interest is charged

Putnam VT Small Cap Value Fund 11

to the fund based on the fund’s borrowing at a rate equal to the Federal Funds rate plus 1.25% for the committed line of credit and the Federal Funds rate plus 1.30% for the uncommitted line of credit. A closing fee equal to 0.02% of the committed line of credit and $50,000 for the uncommitted line of credit has been paid by the participating funds. In addition, a commitment fee of 0.11% per annum on any unutilized portion of the committed line of credit is allocated to the participating funds based on their relative net assets and paid quarterly. During the reporting period, the fund had no borrowings against these arrangements.

Federal taxes It is the policy of the fund to distribute all of its taxable income within the prescribed time period and otherwise comply with the provisions of the Internal Revenue Code of 1986, as amended (the Code), applicable to regulated investment companies.

The fund is subject to the provisions of Accounting Standards Codification 740 Income Taxes (ASC 740). ASC 740 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 a liability to record for any unrecognized tax benefits in the accompanying financial statements. No 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.

The fund may also be subject to taxes imposed by governments of countries in which it invests. Such taxes are generally based on either income or gains earned or repatriated. The fund accrues and applies such taxes to net investment income, net realized gains and net unrealized gains as income and/or capital gains are earned. In some cases, the fund may be entitled to reclaim all or a portion of such taxes, and such reclaim amounts, if any, are reflected as an asset on the fund’s books. In many cases, however, the fund may not receive such amounts for an extended period of time, depending on the country of investment.

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. These differences include temporary and/or permanent differences from losses on wash sale transactions. 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. At the close of the reporting period, the fund reclassified $26,208 to decrease undistributed net investment income, and $26,208 to increase accumulated net realized gain.

The tax basis components of distributable earnings and the federal tax cost as of the close of the reporting period were as follows:


Unrealized appreciation	$57,044,576
Unrealized depreciation	(7,977,213)

Net unrealized appreciation	49,067,363
Undistributed ordinary income	896,707
Undistributed short-term gain	14,112,240
Undistributed long-term gain	33,526,478

Cost for federal income tax purposes	$207,261,538

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.

Beneficial interest At the close of the reporting period, insurance companies or their separate accounts were record owners of all but a de minimis number of the shares of the fund. Approximately 44.2% of the fund is owned by accounts of one insurance company.

Note 2 — Management fee, administrative services and other transactions

The fund pays Putnam Management a management fee (based on the fund’s average net assets and computed and paid monthly) at annual rates that may vary based on the average of the aggregate net assets of most open-end funds, as defined in the fund’s management contract, sponsored by Putnam Management. Such annual rates may vary as follows:


0.780%	of the first $5 billion,
0.730%	of the next $5 billion,
0.680%	of the next $10 billion,
0.630%	of the next $10 billion,
0.580%	of the next $50 billion,
0.560%	of the next $50 billion,
0.550%	of the next $100 billion and
0.545%	of any excess thereafter.

Following the death on October 8, 2013 of The Honourable Paul G. Desmarais, who controlled directly and indirectly a majority of the voting shares of Power Corporation of Canada, the ultimate parent company of Putnam Management, the Trustees of the fund approved an interim management contract with Putnam Management. Consistent with Rule 15a-4 under the Investment Company Act of 1940, the interim management contract will remain in effect until the earlier to occur of (i) approval by the fund’s shareholders of a new management contract and (ii) March 7, 2014. Except with respect to termination, the substantive terms of the interim management contract, including terms relating to fees payable to Putnam Management, are identical to the terms of the fund’s previous management contract with Putnam Management. The Trustees of the fund also approved the continuance, effective October 8, 2013, of the sub-management contract between Putnam Management and Putnam Investments Limited (PIL) described below, for a term no longer than March 7, 2014. The Trustees of the fund have called a shareholder meeting for February 27, 2014, at which shareholders of the fund will consider approval of a proposed new management contract between the fund and Putnam Management. The substantive terms of the proposed new management contract, including terms relating to fees, are identical to the terms of the fund’s previous management contract. Further information regarding the proposed new management contract is included in a proxy statement filed with the SEC on December 20, 2013. The proxy statement was mailed to shareholders of record beginning on or about December 23, 2013.

Putnam Management has contractually agreed, through June 30, 2014, to waive fees or reimburse the fund’s expenses to the extent necessary to limit the cumulative expenses of the fund, exclusive of brokerage, interest, taxes, investment-related expenses, extraordinary expenses, acquired fund fees and expenses and payments under the fund’s investor servicing contract, investment management contract and distribution plans, on a fiscal year-to-date basis to an annual rate of 0.20% of the fund’s average net assets over such fiscal year-to-date period. This expense limitation remains in place under the interim management contract described above. During the reporting period, the fund’s expenses were not reduced as a result of this limit.

PIL, an affiliate of Putnam Management, is authorized by the Trustees to manage a separate portion of the assets of the fund as determined by Putnam Management from time to time. Putnam Management pays a quarterly sub-management fee to PIL for its services at an annual rate of 0.35% of the average net assets of the portion of the fund managed by PIL.

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. 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, provides investor servicing agent functions to the fund. Putnam Investor Services, Inc. was paid a monthly fee for investor servicing at an annual rate of 0.10% of the fund’s average net assets. During the reporting period, the expenses for each class of shares related to investor servicing fees were as follows:


Class IA	$65,171
Class IB	161,122

Total	$226,293

The fund has entered into expense offset arrangements with Putnam Investor Services, Inc. and State Street whereby Putnam Investor Services, Inc.’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 reporting

12 Putnam VT Small Cap Value Fund

period, the fund’s expenses were reduced by $8 under the expense offset arrangements and by $29,032 under the brokerage/service arrangements.

Each independent Trustee of the fund receives an annual Trustee fee, of which $148, as a quarterly retainer, has been allocated to the fund, and an additional fee for each Trustees meeting attended. 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, an indirect wholly-owned subsidiary of Putnam Investments, LLC, 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 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. During the reporting period, the class specific expenses related to distribution fees were as follows:


Class IB	$402,684

Note 3 — Purchases and sales of securities

During the reporting period, cost of purchases and proceeds from sales of investment securities other than short-term investments aggregated $130,229,316 and $213,618,860, respectively. There were no purchases or proceeds from sales of long-term U.S. government securities.

Note 4 — Capital shares

At the close of the reporting period, 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
	Year ended 12/31/13		Year ended 12/31/12		Year ended 12/31/13		Year ended 12/31/12

	Shares	Amount	Shares	Amount	Shares	Amount	Shares	Amount

Shares sold	276,203	$5,068,775	149,365	$2,148,693	322,825	$5,762,300	949,779	$13,927,438

Shares issued in connection with
reinvestment of distributions	96,463	1,633,116	29,130	430,835	245,815	4,132,143	51,480	756,241

	372,666	6,701,891	178,495	2,579,528	568,640	9,894,443	1,001,259	14,683,679

Shares repurchased	(728,817)	(13,093,449)	(848,047)	(12,214,335)	(4,235,719)	(76,183,584)	(2,963,826)	(42,124,908)

Net decrease	(356,151)	$(6,391,558)	(669,552)	$(9,634,807)	(3,667,079)	$(66,289,141)	(1,962,567)	$(27,441,229)

Note 5 — Affiliated transactions

Transactions during the reporting period with Putnam Money Market Liquidity Fund and Putnam Short Term Investment Fund, which are under common ownership or control, were as follows:


	Fair value at the beginning of				Fair value at the end of the
Name of affiliate	the reporting period	Purchase cost	Sale proceeds	Investment income	reporting period

Putnam Money Market Liquidity Fund*	$2,997,832	$10,896,779	$13,894,611	$458	$—

Putnam Short Term Investment Fund*	—	90,235,604	81,791,928	3,793	8,443,676

Totals	$2,997,832	$101,132,383	$95,686,539	$4,251	$8,443,676

* Management fees charged to Putnam Money Market Liquidity Fund and Putnam Short Term Investment Fund have been waived by Putnam Management.

Note 6 — Market, credit and other risks

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. Investments in foreign securities involve certain risks, including those related to economic instability, unfavorable political developments, and currency fluctuations.

Putnam VT Small Cap Value Fund 13

Trustee approval of management contract

Putnam Investment Management (“Putnam Management”) serves as investment manager to your fund under a management contract. In addition, Putnam Management’s affiliate, Putnam Investments Limited (“PIL”), provides services to your fund under a sub-management contract between Putnam Management and PIL. Putnam Management is majority owned (directly and indirectly) by Power Corporation of Canada, a diversified international management and holding company with interests in companies in the financial services, communications and other business sectors. Until his death on October 8, 2013, The Honourable Paul G. Desmarais, both directly and through holding companies, controlled a majority of the voting shares of Power Corporation of Canada. Upon his death, Mr. Desmarais’ voting control of shares of Power Corporation of Canada was transferred to The Desmarais Family Residuary Trust (the “Transfer”). As a technical matter, the Transfer may have constituted an “assignment” within the meaning of the Investment Company Act of 1940, as amended (the “1940 Act”), causing your fund’s existing management and sub-management contracts to terminate automatically. On October 18, 2013, the Trustees, including all of the Trustees who are not “interested persons” (as this term is defined in the 1940 Act) of the Putnam funds (the “Independent Trustees”), approved interim management contracts between the Putnam funds and Putnam Management and the continuance of your fund’s sub-management contract to address this possibility and to avoid disruption of investment advisory and other services provided to the Putnam funds. At a subsequent meeting on November 22, 2013, the Trustees, including all of the Independent Trustees, approved new definitive management contracts between the Putnam funds and Putnam Management and determined to recommend their approval to the shareholders of the Putnam funds at a shareholder meeting called for February 27, 2014. The Trustees also approved new sub-management contracts, to be effective at the same time as the new definitive management contracts.

In considering whether to approve your fund’s interim management contract and the continuance of your fund’s sub-management contract in October, and in considering whether to approve your fund’s new definitive management contract and its new sub-management contract in November, the Trustees took into account that they had recently approved the continuation (through June 30, 2014) of the fund’s previous management and sub-management contracts at their meeting in June 2013. The Trustees considered that the terms of the interim management contract and new definitive management contract were identical to those of the previous management contract, except for the effective dates and initial terms and for certain non-substantive changes. They also considered that the terms of the sub-management contract were identical to those of the previous sub-management contract, except for the effective dates and initial terms. In light of the substantial similarity between the proposed contracts and the previous versions of these contracts approved by the Trustees at their June 2013 meeting, the Trustees relied to a considerable extent on their review of these contracts in connection with their June meeting. In addition, the Trustees considered a number other factors relating to the Transfer, including, but not limited to, the following:

• Information about the operations of The Desmarais FamilyResiduary Trust, including that Paul Desmarais, Jr. and André Desmarais, Mr. Desmarais’ sons, were expected to exercise, jointly, voting control over the Power Corporation of Canada shares controlled by The Desmarais Family Residuary Trust.

• That Paul Desmarais, Jr. and André Desmarais had been playing active managerial roles at Power Corporation of Canada, with responsibility for the oversight of Power Corporation of Canada’s subsidiaries, including Putnam Investments, since Power Corporation of Canada had acquired Putnam Investments in 2007, including serving as Directors of Putnam Investments, and that the Transfer would not affect their responsibilities as officers of Power Corporation of Canada.

• The intention expressed by representatives of Power Corporation of Canada and its subsidiaries, Power Financial Corporation and Great-West Lifeco, that there would be no change to the operations or management of Putnam Investments, to Putnam Management’s management of the funds or to investment, advisory and other services provided to the funds by Putnam Management and its affiliates as a result of the Transfer.

• Putnam Management’s assurances that, following the Transfer, Putnam Management would continue to provide the same level of services to each fund and that the Transfer will not have an adverse impact on the ability of Putnam Management and its affiliates to continue to provide high quality investment advisory and other services to the funds.

• Putnam Management’s assurances that there are no current plans to make any changes to the operations of the funds, existing management fees, expense limitations, distribution arrangements, or the quality of any services provided to the funds or their shareholders, as a result of the Transfer.

• The benefits that the funds have received and may potentially receive as a result of Putnam Management being a member of the Power Corporation of Canada group of companies, which promotes the stability of the Putnam organization.

• Putnam Investments’ commitment to bear a reasonable share of the expenses incurred by the Putnam Funds in connection with the Transfer.

General conclusions in connection with the Trustees’ June 2013 approval of the fund’s management and sub-management contracts

As noted above, in connection with their deliberations in October and November 2013, in addition to the factors described above, the Trustees considered their recent approval of your fund’s management and sub-management contracts in June 2013. The Board oversees the management of each fund and, as required by law, determines annually whether to approve the continuance of your fund’s management and sub-management contracts. The Board, with the assistance of its Contract Committee, requests and evaluates all information it deems reasonably necessary under the circumstances in connection with its annual contract review. The Contract Committee consists solely of Independent Trustees.

At the outset of the review process, members of the Board’s independent staff and independent legal counsel met with representatives of Putnam Management to review the annual contract review materials furnished to the Contract Committee during the course of

Putnam VT Small Cap Value Fund 15

the previous year’s review and to discuss possible changes in these materials that might be necessary or desirable for the coming year. Following these discussions and in consultation with the Contract Committee, the Independent Trustees’ independent legal counsel requested that Putnam Management furnish specified information, together with any additional information that Putnam Management considered relevant, to the Contract Committee. Over the course of several months ending in June 2013, the Contract Committee met on a number of occasions with representatives of Putnam Management, and separately in executive session, to consider the information that Putnam Management provided. Throughout this process, the Contract Committee was assisted by the members of the Board’s independent staff and by independent legal counsel for the Putnam funds and the Independent Trustees.

In May 2013, the Contract Committee met in executive session to discuss and consider its preliminary recommendations with respect to the continuance of the contracts. At the Trustees’ June 20, 2013 meeting, the Contract Committee met in executive session with the other Independent Trustees to review a summary of the key financial data that the Contract Committee considered in the course of its review. The Contract Committee then presented its written report, which summarized the key factors that the Committee had considered and set forth its final recommendations. The Contract Committee then recommended, and the Independent Trustees approved, the continuance of your fund’s management and sub-management contracts, effective July 1, 2013, subject to certain changes in the sub-management contract noted below. (Because PIL is an affiliate of Putnam Management and Putnam Management remains fully responsible for all services provided by PIL, the Trustees have not evaluated PIL as a separate entity, and all subsequent references to Putnam Management below should be deemed to include reference to PIL as necessary or appropriate in the context.) The Independent Trustees’ June 2013 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 services to the fund, and

• That the 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 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 management arrangements for your fund and the other Putnam funds are the result of many years of review and discussion between the Independent Trustees and Putnam Management, that some 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 fee arrangements in previous years. For example, with some minor exceptions, the current fee arrangements in the management contracts for the Putnam funds were implemented at the beginning of 2010 following extensive review and discussion by the Trustees, as well as approval by shareholders.

As noted above, the Trustees considered administrative revisions to your fund’s sub-management contract. Putnam Management recommended that the sub-management contract be revised to reduce the sub-management fee that Putnam Management pays to PIL with respect to the portion of the portfolios of certain funds, but not your fund, that may be allocated to PIL from time to time. The Independent Trustees’ approval of this recommendation was based on their conclusion that these changes would have no practical effect on Putnam Management’s continued responsibility for the management of these funds or the costs borne by fund shareholders and would not result in any reduction in the nature and quality of services provided to the funds.

Management fee schedules and total expenses

The Trustees reviewed the management fee schedules in effect for all Putnam funds, including fee levels and breakpoints. The Trustees also reviewed the total expenses of each Putnam fund, recognizing that in most cases management fees represented the major, but not the sole, determinant of total costs to shareholders.

In reviewing fees and expenses, the Trustees generally focus their attention on material changes in circumstances — for example, changes in assets under management, changes in a fund’s investment style, changes in Putnam Management’s operating costs or profitability, 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 your fund.

Under its management contract, your fund has the benefit of breakpoints in its management fee schedule that provide shareholders with economies of scale in the form of reduced fee levels as assets under management in the Putnam family of funds increase. The Trustees concluded that the fee schedule in effect for your fund represented an appropriate sharing of economies of scale between fund shareholders and Putnam Management.

As in the past, the Trustees also focused on the competitiveness of each fund’s total expense ratio. In order to ensure that expenses of the Putnam funds continue to meet competitive standards, the Trustees and Putnam Management have implemented certain expense limitations. These expense limitations were: (i) a contractual expense limitation applicable to all retail open-end funds of 32 basis points on investor servicing fees and expenses and (ii) a contractual expense limitation applicable to all open-end funds of 20 basis points on so-called “other expenses” (i.e., all expenses exclusive of management fees, investor servicing fees, distribution fees, investment-related expenses, interest, taxes, brokerage commissions, extraordinary expenses and acquired fund fees and expenses). These expense limitations serve in particular to maintain competitive expense levels for funds with large numbers of small shareholder accounts and funds with relatively small net assets. Most funds, including your fund, had sufficiently low expenses that these expense limitations did not apply. Putnam Management’s support for these expense limitations, including its agreement to reduce the expense limitation applicable to the open-end funds’ investor servicing fees and expenses as noted above, was an important factor in the Trustees’

16 Putnam VT Small Cap Value Fund

decision to approve the continuance of your fund’s management and sub-management contracts.

The Trustees reviewed comparative fee and expense information for a custom group of competitive funds selected by Lipper Inc. This comparative information included your fund’s percentile ranking for effective management fees and total expenses (excluding any applicable 12b-1 fee), which provides a general indication of your fund’s relative standing. In the custom peer group, your fund ranked in the first quintile in effective management fees (determined for your fund and the other funds in the custom peer group based on fund asset size and the applicable contractual management fee schedule) and in the first quintile in total expenses (excluding any applicable 12b-1 fees) as of December 31, 2012 (the first quintile representing the least expensive funds and the fifth quintile the most expensive funds). The fee and expense data reported by Lipper as of December 31, 2012 reflected the most recent fiscal year-end data available in Lipper’s database at that time.

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 the 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, investor servicing and distribution services provided to the funds. In this regard, the Trustees also reviewed an analysis of Putnam Management’s revenues, expenses and profitability, allocated on a fund-by-fund basis, with respect to the funds’ management, distribution, and investor servicing contracts. For each fund, the analysis presented information about revenues, expenses and profitability for each of the agreements separately and for the agreements taken together on a combined basis. The Trustees concluded that, at current asset levels, the fee schedules in place represented reasonable compensation for the services being provided and represented an appropriate sharing of such economies of scale as may exist in the management of the Putnam funds at that time.

The information examined by the Trustees as part of their annual contract review for the Putnam funds 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, and the like. This information included comparisons of those fees with fees charged to the funds, as well as an assessment of the differences in the services provided to these different types of clients. The Trustees observed 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 may reflect historical competitive forces operating in separate markets. The Trustees considered the fact that in many cases fee rates across different asset classes are 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 its institutional clients. The Trustees did not rely on these comparisons to any significant extent in concluding that the management fees paid by your fund are reasonable.

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 your fund’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 committees of the Trustees, which meet on a regular basis with the funds’ portfolio teams and with the Chief Investment Officer and other senior members of Putnam Management’s Investment Division throughout the year. The Trustees concluded that Putnam Management generally provides a high-quality investment process — based on the experience and skills of the individuals assigned to the management of fund portfolios, the resources made available to them, and in general Putnam Management’s ability to attract and retain high-quality personnel — but also recognized that this does not guarantee favorable investment results for every fund in every time period.

The Trustees considered that 2012 was a year of strong competitive performance for many of the Putnam funds, with only a relatively small number of exceptions. They noted that this strong performance was exemplified by the fact that the Putnam funds were recognized by Barron’s as the best performing mutual fund complex for 2012 — the second time in four years that Putnam Management has achieved this distinction for the Putnam funds. They also noted, however, the disappointing investment performance of some funds for periods ended December 31, 2012 and considered information provided by Putnam Management regarding the factors contributing to the underperformance and actions being taken to improve the performance of these particular funds. The Trustees indicated their intention to continue to monitor performance trends to assess the effectiveness of these efforts and to evaluate whether additional actions to address areas of underperformance are warranted.

For purposes of evaluating investment performance, the Trustees generally focus on competitive industry rankings for the one-year, three-year, and five-year periods. For a number of Putnam funds with relatively unique investment mandates, the Trustees evaluated performance based on comparisons of their total returns with the returns of selected investment benchmarks or targeted returns. In the case of your fund, the Trustees considered that its class IA share cumulative total return performance at net asset value was in the following quartiles of its Lipper Inc. peer group (Lipper VP (Underlying Funds) — Small-Cap Value Funds) for the one-year, three-year and five-year periods ended December 31, 2012 (the first quartile representing the best-performing funds and the fourth quartile the worst-performing funds):


One-year period	Three-year period	Five-year period

2nd	2nd	4th

Over the one-year, three-year and five-year periods ended December 31, 2012, there were 54, 50 and 40 funds, respectively, in your fund’s Lipper peer group. (When considering performance information, shareholders should be mindful that past performance is not a guarantee of future results.) The Trustees, while noting that your fund’s investment performance over the one-year and three-year periods ended December 31, 2012 had been favorable, expressed concern about your fund’s fourth quartile performance over the five-year period then ended and considered the circumstances that may have contributed to this disappointing

Putnam VT Small Cap Value Fund 17

performance. The Trustees considered Putnam Management’s observation that the fund’s underperformance over this period was due in significant part to the fund’s particularly weak performance in 2008. They noted Putnam Management’s view that performance over this period suffered as a result of poor security selection, primarily in the financials sector.

The Trustees also considered steps that Putnam Management had taken to support improved performance. They noted that a new portfolio manager had joined the fund’s portfolio management team in November 2008 (and that this portfolio manager had taken sole responsibility for managing the fund’s investments in November 2009), and that the fund’s relative performance had improved under this portfolio manager, with the fund ranking in the second quartile for the one-year and three-year periods ending December 31, 2012. The Trustees also considered a number of other changes that Putnam Management had made in recent years in efforts to support and improve fund performance generally. These changes included Putnam Management’s efforts to increase accountability and to reduce complexity in the portfolio management process for the Putnam equity funds by moving generally from a portfolio management team structure to a decision-making process that vests full authority and responsibility with individual portfolio managers and by affirming its commitment to a fundamental-driven approach to investing. The Trustees noted that Putnam Management had also worked to strengthen its fundamental research capabilities by adding new investment personnel to the large-cap equities research team and by bringing U.S. and international research under common leadership. In addition, the Trustees recognized that Putnam Management has adjusted the compensation structure for portfolio managers and research analysts so that only those who achieve top-quartile returns over a rolling three-year basis are eligible for full bonuses.

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 issues that may arise from time to time. 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 past responsiveness of Putnam Management 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; investor servicing

The Trustees considered various potential benefits that Putnam Management may receive in connection with the services it provides under the management contract with your fund. These include benefits related to brokerage allocation and the use of soft dollars, whereby a portion of the commissions paid by a fund for brokerage may be used to acquire research services that are expected to be useful to Putnam Management in managing the assets of the fund and of other clients. Subject to policies established by the Trustees, soft dollars generated by these means are used primarily to acquire brokerage and research services that enhance Putnam Management’s investment capabilities and supplement Putnam Management’s internal research efforts. However, the Trustees noted that a portion of available soft dollars continues to be used to pay fund expenses. The Trustees indicated their continued intent to monitor regulatory and industry developments in this area with the assistance of their Brokerage Committee and also indicated their continued intent to monitor the allocation of the Putnam funds’ brokerage in order to ensure that the principle of seeking best price and execution remains paramount in the portfolio trading process.

Putnam Management may also receive benefits from payments that the funds make to Putnam Management’s affiliates for investor or distribution services. In conjunction with the annual review of your fund’s management and sub-management contracts, the Trustees reviewed your fund’s investor servicing agreement with Putnam Investor Services, Inc. (“PSERV”) and its distributor’s contracts and distribution plans with Putnam Retail Management Limited Partnership (“PRM”), both of which are affiliates of Putnam Management. The Trustees concluded that the fees payable by the funds to PSERV and PRM, as applicable, for such services are reasonable in relation to the nature and quality of such services, the fees paid by competitive funds, and the costs incurred by PSERV and PRM, as applicable, in providing such services.

18 Putnam VT Small Cap Value Fund

*Mr. Reynolds is an “interested person” (as defined in the Investment Company Act of 1940) of the fund and Putnam Investments. He is President and Chief Executive Officer of Putnam Investments, as well as the President of your fund and each of the other Putnam funds.

The address of each Trustee is One Post Office Square, Boston, MA 02109.

As of December 31, 2013, there were 116 Putnam funds. All Trustees serve as Trustees of all Putnam funds.

Each Trustee serves for an indefinite term, until his or her resignation, retirement at age 75, removal, or death.

Officers
In addition to Robert L. Reynolds, the other officers of the fund are shown below:


Jonathan S. Horwitz (Born 1955)	Michael J. Higgins (Born 1976)	James P. Pappas (Born 1953)
Executive Vice President, Principal Executive	Vice President, Treasurer, and Clerk	Vice President
Officer, and Compliance Liaison	Since 2010	Since 2004
Since 2004	Manager of Finance, Dunkin’ Brands	Director of Trustee Relations,
	(2008–2010); Senior Financial Analyst, Old	Putnam Investments and
Steven D. Krichmar (Born 1958)	Mutual Asset Management (2007–2008);	Putnam Management
Vice President and Principal Financial Officer	Senior Financial Analyst, Putnam Investments
Since 2002	(1999–2007)	Mark C. Trenchard (Born 1962)
Chief of Operations, Putnam Investments and		Vice President and BSA Compliance Officer
Putnam Management	Janet C. Smith (Born 1965)	Since 2002
	Vice President, Principal Accounting Officer,	Director of Operational Compliance,
Robert T. Burns (Born 1961)	and Assistant Treasurer	Putnam Investments and Putnam
Vice President and Chief Legal Officer	Since 2007	Retail Management
Since 2011	Director of Fund Administration Services,
General Counsel, Putnam Investments,	Putnam Investments and	Nancy E. Florek (Born 1957)
Putnam Management, and Putnam	Putnam Management	Vice President, Director of Proxy Voting and
Retail Management		Corporate Governance, Assistant Clerk, and
	Susan G. Malloy (Born 1957)	Associate Treasurer
Robert R. Leveille (Born 1969)	Vice President and Assistant Treasurer	Since 2000
Vice President and Chief Compliance Officer	Since 2007
Since 2007	Director of Accounting & Control
Chief Compliance Officer, Putnam	Services, Putnam Investments and
Investments, Putnam Management, and	Putnam Management
Putnam Retail Management

The principal occupations of the officers for the past five years have been with the employers as shown above, although in some cases they have held different positions with such employers. The address of each Officer is One Post Office Square, Boston, MA 02109.

20 Putnam VT Small Cap Value Fund

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, 2013, are available in the Individual Investors section of putnam.com and on the SEC’s website, www.sec.gov. If you have questions about finding forms on the SEC’s website, 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 website 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 website or the operation of the public reference room.


Fund information

Investment Manager	Investor Servicing Agent	Trustees
Putnam Investment Management, LLC	Putnam Investor Services, Inc.	Jameson A. Baxter, Chair
One Post Office Square	Mailing address:	Liaquat Ahamed
Boston, MA 02109	P.O. Box 8383	Ravi Akhoury
	Boston, MA 02266-8383	Barbara M. Baumann
Investment Sub-Manager	1-800-225-1581	Charles B. Curtis
Putnam Investments Limited		Robert J. Darretta
57–59 St James’s Street	Custodian	Katinka Domotorffy
London, England SW1A 1LD	State Street Bank and Trust Company	John A. Hill
		Paul L. Joskow
Marketing Services	Legal Counsel	Kenneth R. Leibler
Putnam Retail Management	Ropes & Gray LLP	Robert E. Patterson
One Post Office Square		George Putnam, III
Boston, MA 02109	Auditor	Robert L. Reynolds
	PricewaterhouseCoopers LLP	W. Thomas Stephens

The fund’s Statement of Additional Information contains additional information about the fund’s Trustees and is available without charge upon request by calling 1-800-225-1581.

Putnam VT Small Cap Value Fund 21


Assets

Investment in securities, at value, including $36,032,405 of securities on loan (Note 1):

Unaffiliated issuers (identified cost $160,838,988)	$210,711,225

Affi liated issuers (identified cost $45,617,676) (Notes 1 and 5)	45,617,676

Cash	85,310

Dividends, interest and other receivables	300,986

Receivable for shares of the fund sold	654

Receivable for investments sold	1,322,333

Total assets	258,038,184

Liabilities

Payable for investments purchased	117,865

Payable for shares of the fund repurchased	69,404

Payable for compensation of Manager (Note 2)	114,392

Payable for custodian fees (Note 2)	11,810

Payable for investor servicing fees (Note 2)	15,679

Payable for Trustee compensation and expenses (Note 2)	103,133

Payable for administrative services (Note 2)	1,444

Payable for distribution fees (Note 2)	30,848

Collateral on securities loaned, at value (Note 1)	37,174,000

Other accrued expenses	78,218

Total liabilities	37,716,793

Net assets	$220,321,391

Represented by

Paid-in capital (Unlimited shares authorized) (Notes 1 and 4)	$122,718,605

Undistributed net investment income (Note 1)	896,705

Accumulated net realized gain on investments (Note 1)	46,833,844

Net unrealized appreciation of investments	49,872,237

Total — Representing net assets applicable to capital shares outstanding	$220,321,391

Computation of net asset value Class IA

Net assets	$72,183,229

Number of shares outstanding	3,433,498

Net asset value, offering price and redemption price per share (net assets divided by number of shares outstanding)	$21.02

Computation of net asset value Class IB

Net assets	$148,138,162

Number of shares outstanding	7,109,698

Net asset value, offering price and redemption price per share (net assets divided by number of shares outstanding)	$20.84


	Goldman Sachs Bank USA	Total

Assets:

Securities on loan**	$36,143,194	$36,143,194

Total Assets	$36,143,194	$36,143,194

Total Financial and Derivative Net Assets	$36,143,194	$36,143,194

Total collateral received (pledged) ^##†	$36,143,194	$36,143,194

Net amount	$—	$—



This report has been prepared for the shareholders		H521
of Putnam VT Small Cap Value Fund.		285131 2/14


Fiscal year ended	Audit Fees	Audit-Related Fees	Tax Fees	All Other Fees


December 31, 2013	$31,149	$ —	$2,631	$ —
December 31, 2012	$36,454	$ —	$2,631	$459


Fiscal year ended	Audit-Related Fees	Tax Fees	All Other Fees	Total Non-Audit Fees


December 31, 2013	$ —	$150,000	$ —	$ —

December 31, 2012	$ —	$147,500	$ —	$ —


	CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES


	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:	Robert T. Burns, Vice President One Post Office Square Boston, Massachusetts 02109


	Copy to:	John W. Gerstmayr, Esq. Ropes & Gray LLP 800 Boylston Street Boston, Massachusetts 02199-3600


	Registrant’s telephone number, including area code:	(617) 292-1000


	Date of reporting period :	January 1, 2013 — December 31, 2013


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


	The following table presents fees billed in each of the last two fiscal years for services rendered to the fund by the fund’s independent auditor:


	For the fiscal years ended December 31, 2013 and December 31, 2012, the fund’s independent auditor billed aggregate non-audit fees in the amounts of $152,631 and $255,202 respectively, to the fund, Putnam Management and any entity controlling, controlled by or under common control with Putnam Management that provides ongoing services to the fund.


	UNITED STATES SECURITIES AND EXCHANGE COMMISSION


	FORM N-CSR


	Item 1. Report to Stockholders:


	Audit Fees represent fees billed for the fund’s last two fiscal years relating to the audit and review of the financial statements included in annual reports and registration statements, and other services that are normally provided in connection with statutory and regulatory filings or engagements.


	Audit-Related Fees represent fees billed in the fund’s last two fiscal years for services traditionally performed by the fund’s auditor, including accounting consultation for proposed transactions or concerning financial accounting and reporting standards and other audit or attest services not required by statute or regulation.


	Tax Fees represent fees billed in the fund’s last two fiscal years for tax compliance, tax planning and tax advice services. Tax planning and tax advice services include assistance with tax audits, employee benefit plans and requests for rulings or technical advice from taxing authorities.


	All Other Fees represent fees billed for services relating to an analysis of fund profitability


	Pre-Approval Policies of the Audit and Compliance Committee. The Audit and Compliance Committee of the Putnam funds has determined that, as a matter of policy, all work performed for the funds by the funds’ independent auditors will be pre-approved by the Committee itself and thus will generally not be subject to pre-approval procedures.


	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:


	Item 8. Portfolio Managers of Closed-End Investment Companies


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


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


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


	(a)(1) The Code of Ethics of The Putnam Funds, which incorporates the Code of Ethics of Putnam Investments, is filed herewith.


	(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.


	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.


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


	/s/Jonathan S. Horwitz Jonathan S. Horwitz Principal Executive Officer


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