N-CSR 1 a_vtsmallcapvalue.htm PUTNAM VARIABLE TRUST a_vtsmallcapvalue.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES



Investment Company Act file number: (811–05346)
Exact name of registrant as specified in charter: Putnam Variable Trust
Address of principal executive offices: 100 Federal Street, Boston, Massachusetts 02110
Name and address of agent for service: Robert T. Burns, Vice President
100 Federal Street
Boston, Massachusetts 02110
Copy to:         Bryan Chegwidden, Esq.
Ropes & Gray LLP
1211 Avenue of the Americas
New York, New York 10036
Registrant's telephone number, including area code: (617) 292–1000
Date of fiscal year end: December 31, 2019
Date of reporting period: January 1, 2019 — December 31, 2019



Item 1. Report to Stockholders:

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


IMPORTANT NOTICE: Delivery of paper fund reports

In accordance with regulations adopted by the Securities and Exchange Commission, beginning on or after January 1, 2021, at the election of your insurance provider, you may not receive paper reports like this one in the mail from the insurance provider that offers your variable annuity contract or variable life insurance policy unless you specifically request it. Instead, they will be available on a website, and your insurance provider will notify you by mail whenever a new one is available, and provide you with a website link to access the report.

If you wish to continue to receive paper reports free of charge after January 1, 2021, please contact your insurance provider.

If you already receive these reports electronically, no action is required.


Message from the Trustees

February 7, 2020

Dear Shareholder:

Global financial markets overcame a number of uncertainties in 2019. Both stock and bond markets experienced bouts of volatility, but performance recovered despite macroeconomic headwinds and risks. Stock markets worldwide delivered solid returns for the calendar year, with all three major U.S. equity indexes reaching record highs in December. The year was also beneficial for bond investors, as global fixed-income markets posted strong returns, thanks in part to policy easing from central banks.

Although no one can predict the direction of the markets in the months ahead, Putnam’s experienced investment professionals actively seek to position their fund portfolios for all types of conditions. They take a research-intensive approach to investing that includes risk management strategies designed to serve investors through changing markets. In all environments, we believe investors should remain focused on time-tested approaches, such as maintaining a well-diversified portfolio, thinking about long-term goals, and speaking regularly with a financial advisor.

Thank you for investing with Putnam.



Performance summary (as of 12/31/19)

Investment objective

Capital appreciation

Net asset value December 31, 2019

Class IA: $9.96  Class IB: $9.77 

 

Total return at net asset value

 

      Russell 2000 
(as of 12/31/19)  Class IA shares*  Class IB shares*  Value Index 
1 year  24.12%  23.82%  22.39% 
5 years  32.73  31.02  40.20 
Annualized  5.83  5.55  6.99 
10 years  173.53  166.79  172.99 
Annualized  10.59  10.31  10.56 
Life  474.86  446.96  504.11 
Annualized  8.83  8.57  9.09 

 

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

* Class inception date: April 30, 1999.


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

Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company.

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. Cash 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, the use of different classifications of securities for presentation purposes, and rounding. Holdings and allocations may vary over time.

Putnam VT Small Cap Value Fund 1 

 


Report from your fund’s manager

Mike, what was the market like for U.S. small-cap value stocks during the 12-month reporting period ended December 31, 2019?

In sharp contrast to 2018, when most asset classes lost ground, 2019 proved to be a stellar year for investing in equities. The rally was broad based, with major benchmarks repeatedly setting new highs. The Russell 2000 Value Index [the fund’s benchmark] returned 22.39% for the period. The rally was not without its setbacks. Stocks experienced notable sell-offs in May and August when investors grappled with fears of slowing U.S. growth due to the U.S.–China trade war. However, the Federal Reserve’s decision to lower interest rates three times during 2019 (in July, September, and October) proved to be a powerful anecdote to those concerns. Despite strong employment and consumer spending, inflation remained low, allowing the Fed to become more accommodative in its rate-policy decisions. The Trump administration’s announcement of a U.S.–China “phase one” trade deal in December added more momentum to the rally.

Within the fund’s benchmark, 10 of the 11 sectors ended the year with positive returns, led by information technology [52.67%], real estate [29.67%], and industrials [27.50%]. Energy [–7.53%] was the only sector with negative performance. From a market-cap and style perspective, large-cap growth stocks outpaced small-cap value stocks.

You assumed management of the fund on January 31, 2019. How would you describe your investment approach?

Our small-cap value team searches the market for companies that we believe are priced at a discount to their intrinsic value and have a catalyst to unlock value that has not yet been fully realized by investors. Our bottom-up investment process relies on stock selection rather than overarching themes, such as predictions about the direction of the economy, market volatility, or acquisition targets, that might tilt the portfolio too narrowly in a single direction. Rather, we seek to add value in each sector of the benchmark while attempting to limit overall risk and risk relative to the benchmark. After assuming management of the fund, we reduced the number of holdings and increased stock-specific risk as part of this strategy. These repositioning efforts were beneficial for the fund’s performance relative to the benchmark during the period.

How did Putnam VT Small Cap Value Fund perform for the 12 months ended December 31, 2019?

The fund’s class IA shares posted a return of 24.12%, outperforming the fund’s benchmark [which returned 22.39% as previously mentioned]. The most significant contributor to fund performance was an overweight position in the outperforming technology sector. From a stock selection perspective, an overweight position in Scorpio Tankers augmented returns due to a strong cyclical rebound in product tanker day rates and heightened expectations concerning the recent implementation of IMO 2020 fuel regulations. On the other hand, results for Nesco Holdings were disappointing. This provider of specialty rental equipment to electric utility, telecom, and rail infrastructure end-markets reported a decline in equipment sales revenue, which can be lumpy in nature. During the reporting period, investors’ preference for reliable financial performance severely punished companies that missed market expectations. Nesco’s stock sold off sharply in this environment. We retain the stock in the portfolio, as we contend that it was oversold in the rush to judgement.

What is your outlook for the fund’s 2020 fiscal year?

We believe small-cap value stocks are well positioned to outperform in 2020. Our outlook is based on these stocks’ underperformance during the past several years and our belief that there may be potential improvement in what has been a tepid economic environment. Any economic acceleration could disproportionally lift both small-cap and value stocks as investors seek more risk, in our view. Conversely, should the U.S. economy tip into recession, we believe that large-cap growth stocks would have further to fall than small-cap value stocks given their strong outperformance in recent years.

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. The value of investments in the fund’s portfolio may fall or fail to rise over extended periods of time for a variety of reasons, including general economic, political, or financial market conditions; investor sentiment and market perceptions; government actions; geopolitical events or changes; and factors related to a specific issuer, geography, industry, or sector. These and other factors may lead to increased volatility and reduced liquidity in the fund’s portfolio holdings. These risks are generally greater for small and midsize companies. From time to time, the fund may invest a significant portion of its assets in companies in one or more related industries or sectors, which would make the fund more vulnerable to adverse developments affecting those industries or sectors. You can lose money by investing in the fund.

                                                             

Your fund’s manager


Portfolio Manager Michael C. Petro, CFA, joined Putnam in 2002 and has been in the investment industry since 1999.

Your fund’s manager also manages 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 two left-hand columns of the Expenses per $1,000 table show the expenses you would have paid on a $1,000 investment in your fund from 7/1/19 to 12/31/19. 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 Expenses per $1,000 table show your fund’s expenses based on a $1,000 investment, a ssuming 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.

Expense ratios

  Class IA  Class IB 
Total annual operating expenses for the fiscal     
year ended 12/31/18  1.11%  1.36% 
Annualized expense ratio for the six-month     
period ended 12/31/19*  0.76%  1.01% 

 

Fiscal-year expense information in this table is taken from the most recent prospectus, is subject to change, and may differ from that shown for the annualized expense ratio and in the financial highlights of this report.

Prospectus expense information also includes the impact of acquired fund fees and expenses of 0.26%, which is not included in the financial highlights or annualized expense ratios. Expenses are shown as a percentage of average net assets.

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

Expenses per $1,000

      Expenses and value for a 
  Expenses and value for a  $1,000 investment, assuming 
  $1,000 investment, assuming  a hypothetical 5% annualized 
  actual returns for the  return for the 6 months 
  6 months ended 12/31/19  ended 12/31/19   
  Class IA  Class IB  Class IA  Class IB 
Expenses paid         
per $1,000*†  $3.97  $5.27  $3.87  $5.14 
Ending value         
(after         
expenses)  $1,071.00  $1,068.90  $1,021.37  $1,020.11 

 

*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 12/31/19. The expense ratio may differ for each share class.

†Expenses based on actual returns 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. Expenses based on a hypothetical 5% return are calculated by multiplying the expense ratio by the average account value for the six-month period; then multiplying the result by the number of days in the six-month period; and then dividing that result by the number of days in the year.

Putnam VT Small Cap Value Fund 3 

 


Report of Independent Registered Public Accounting Firm

To the Trustees of Putnam Variable Trust
and Shareholders of Putnam VT Small Cap Value Fund

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities, including the fund’s portfolio, of Putnam VT Small Cap Value Fund (one of the funds constituting Putnam Variable Trust, referred to hereafter as the “Fund”) as of December 31, 2019, the related statement of operations for the year ended December 31, 2019, the statement of changes in net assets for each of the two years in the period ended December 31, 2019, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2019 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2019, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2019 and the financial highlights for each of the five years in the period ended December 31, 2019 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2019 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Boston, Massachusetts
February 7, 2020

We have served as the auditor of one or more investment companies in the Putnam Investments family of mutual funds since at least 1957. We have not been able to determine the specific year we began serving as auditor.

4 Putnam VT Small Cap Value Fund 

 


The fund’s portfolio 12/31/19

COMMON STOCKS (97.7%)*   Shares   Value 
 
Aerospace and defense (2.1%)     
Parsons Corp. †   27,049   $1,116,583 
Vectrus, Inc. †   29,098   1,491,563 
    2,608,146 
Airlines (1.0%)     
Mesa Air Group, Inc. †   144,700   1,293,618 
    1,293,618 
Auto components (0.9%)     
Cooper Tire & Rubber Co. S   40,523   1,165,036 
    1,165,036 
Banks (19.3%)     
Ameris Bancorp   26,100   1,110,294 
Camden National Corp.   12,714   585,607 
Coastal Financial Corp./WA †   13,698   225,606 
ConnectOne Bancorp, Inc.   46,169   1,187,467 
CrossFirst Bankshares, Inc. †   32,571   469,674 
First Horizon National Corp.   66,419   1,099,899 
First Merchants Corp.   35,700   1,484,763 
Franklin Financial Network, Inc.   32,938   1,130,762 
Hancock Whitney Corp.   27,350   1,200,118 
IBERIABANK Corp.   13,727   1,027,191 
Investors Bancorp, Inc.   128,213   1,527,658 
Lakeland Bancorp, Inc.   64,000   1,112,320 
OFG Bancorp (Puerto Rico)   64,300   1,518,123 
Preferred Bank   22,000   1,321,980 
Southern First Bancshares, Inc. †   10,584   449,714 
Sterling Bancorp   73,549   1,550,413 
Synovus Financial Corp.   29,359   1,150,873 
TCF Financial Corp.   31,600   1,478,880 
TriCo Bancshares   15,200   620,312 
Univest Financial Corp.   48,900   1,309,542 
Western Alliance Bancorp   19,100   1,088,700 
Wintrust Financial Corp.   17,100   1,212,390 
    23,862,286 
Building products (1.7%)     
Masonite International Corp. †   13,700   989,277 
Quanex Building Products Corp.   66,866   1,142,071 
    2,131,348 
Chemicals (2.3%)     
Element Solutions, Inc. †   106,300   1,241,584 
Tronox Holdings PLC Class A (United Kingdom) S   141,300   1,613,646 
    2,855,230 
Commercial services and supplies (2.2%)     
CECO Environmental Corp. †   121,126   927,825 
Quad Graphics, Inc.   98,000   457,660 
SP Plus Corp. †   32,063   1,360,433 
    2,745,918 
Communications equipment (0.8%)     
NETGEAR, Inc. †   40,800   1,000,008 
    1,000,008 
Construction and engineering (3.5%)     
Ameresco, Inc. Class A †   66,880   1,170,400 
MYR Group, Inc. †   29,202   951,693 
Sterling Construction Co., Inc. †   71,417   1,005,551 
WillScot Corp. †   61,500   1,137,135 
    4,264,779 
Construction materials (0.8%)     
Eagle Materials, Inc.   11,563   1,048,302 
    1,048,302 
Containers and packaging (0.9%)     
Silgan Holdings, Inc.   35,600   1,106,448 
    1,106,448 

 

COMMON STOCKS (97.7%)* cont.   Shares   Value 
 
Electric utilities (1.8%)     
PNM Resources, Inc.   22,100   $1,120,691 
Portland General Electric Co.   19,600   1,093,484 
    2,214,175 
Electronic equipment, instruments, and components (2.5%)   
Bel Fuse, Inc. Class B   10,554   216,357 
Jabil, Inc.   34,500   1,425,885 
SYNNEX Corp.   11,043   1,422,338 
    3,064,580 
Energy equipment and services (1.7%)     
ProPetro Holding Corp. †   89,800   1,010,250 
Select Energy Services, Inc. Class A †   113,490   1,053,187 
    2,063,437 
Entertainment (0.8%)     
Lions Gate Entertainment Corp. Class A † S   92,451   985,528 
    985,528 
Equity real estate investment trusts (REITs) (8.2%)     
Alpine Income Property Trust, Inc. R S   49,881   949,235 
Chatham Lodging Trust R   52,100   955,514 
Columbia Property Trust, Inc. R   54,400   1,137,504 
Diversified Healthcare Trust R   169,528   1,430,816 
Gaming and Leisure Properties, Inc. R   20,135   866,812 
Plymouth Industrial REIT, Inc. R   48,900   899,271 
QTS Realty Trust, Inc. Class A R S   25,145   1,364,619 
Spirit Realty Capital, Inc. R   28,667   1,409,843 
STORE Capital Corp. R   28,300   1,053,892 
    10,067,506 
Food and staples retail (1.1%)     
Ingles Markets, Inc. Class A   28,700   1,363,537 
    1,363,537 
Health-care providers and services (4.6%)     
Acadia Healthcare Co., Inc. † S   32,733   1,087,390 
Brookdale Senior Living, Inc. †   217,666   1,582,432 
Magellan Health, Inc. †   21,300   1,666,726 
Premier, Inc. Class A † S   34,100   1,291,708 
    5,628,256 
Hotels, restaurants, and leisure (2.8%)     
Bloomin’ Brands, Inc.   31,196   688,496 
Cedar Fair LP   15,504   859,542 
Cheesecake Factory, Inc. (The) S   23,158   899,920 
Dine Brans Global, Inc. S   12,100   1,010,592 
    3,458,550 
Household durables (1.0%)     
Purple Innovation, Inc. †   141,559   1,232,979 
    1,232,979 
Insurance (3.0%)     
Argo Group International Holdings, Ltd. (Bermuda)   16,100   1,058,575 
Heritage Insurance Holdings, Inc.   86,735   1,149,239 
Palomar Holdings, Inc. † S   29,001   1,464,260 
    3,672,074 
Interactive media and services (2.3%)     
Cars.com, Inc. †   124,134   1,516,917 
Meet Group, Inc. (The) †   255,983   1,282,475 
    2,799,392 
IT Services (1.1%)     
CACI International, Inc. Class A †   5,300   1,324,947 
    1,324,947 
Leisure products (0.9%)     
Clarus Corp.   79,170   1,073,545 
    1,073,545 
Machinery (2.0%)     
Columbus McKinnon Corp./NY   31,300   1,252,939 
Rexnord Corp. †   36,700   1,197,154 
    2,450,093 

 

Putnam VT Small Cap Value Fund 5 

 


COMMON STOCKS (97.7%)* cont.   Shares   Value 
 
Media (1.0%)     
Emerald Expositions Events, Inc.   120,300   $1,269,165 
    1,269,165 
Metals and mining (1.4%)     
Cleveland-Cliffs, Inc. S   132,100   1,109,640 
Ferroglobe Representation & Warranty Insurance     
Trust †   102,740   — 
Mayville Engineering Co., Inc. †   60,511   567,593 
    1,677,233 
Mortgage real estate investment trusts (REITs) (1.1%)   
Ladder Capital Corp. R   74,100   1,336,764 
    1,336,764 
Multi-utilities (1.0%)     
Unitil Corp.   20,000   1,236,400 
    1,236,400 
Multiline retail (1.0%)     
Big Lots, Inc. S   44,000   1,263,680 
    1,263,680 
Oil, gas, and consumable fuels (5.6%)     
Arch Coal, Inc. Class A S   10,800   774,792 
Magnolia Oil & Gas Corp. Class A † S   122,600   1,542,308 
Par Pacific Holdings, Inc. †   43,129   1,002,318 
Range Resources Corp. S   90,200   437,470 
Scorpio Tankers, Inc. S   51,804   2,037,969 
Vermilion Energy, Inc. (Canada) S   66,000   1,079,034 
    6,873,891 
Paper and forest products (1.7%)     
Louisiana-Pacific Corp.   39,600   1,174,932 
Verso Corp. Class A †   54,300   979,029 
    2,153,961 
Professional services (—%)     
BancTec, Inc. 144A CVR F   152,299   — 
    — 
Real estate management and development (1.1%)     
Newmark Group, Inc. Class A   99,400   1,337,427 
    1,337,427 
Semiconductors and semiconductor equipment (3.7%)   
FormFactor, Inc. †   48,700   1,264,739 
Photronics, Inc. †   112,706   1,776,247 
Silicon Motion Technology Corp. ADR (Taiwan)   22,900   1,161,259 
Synaptics, Inc. †   6,335   416,653 
    4,618,898 
Software (0.9%)     
j2 Global, Inc. S   12,300   1,152,633 
    1,152,633 
Specialty retail (2.5%)     
Express, Inc. †   90,000   438,300 
Genesco, Inc. †   28,800   1,380,096 
Shoe Carnival, Inc. S   33,100   1,233,968 
    3,052,364 
Technology hardware, storage, and peripherals (0.6%)   
Super Micro Computer, Inc. †   33,300   799,866 
    799,866 
Thrifts and mortgage finance (3.1%)     
First Defiance Financial Corp.   35,826   1,128,161 
HomeStreet, Inc. †   20,600   700,400 
MGIC Investment Corp.   56,700   803,439 
Walker & Dunlop, Inc.   18,500   1,196,580 
    3,828,580 
Trading companies and distributors (2.2%)     
GMS, Inc. †   36,000   974,880 
MRC Global, Inc. †   79,900   1,089,836 
Nesco Holdings, Inc. †   146,439   601,864 
    2,666,580 

 

COMMON STOCKS (97.7%)* cont.   Shares   Value 
 
Water utilities (0.8%)     
Consolidated Water Co., Ltd. (Cayman Islands)   63,700   $1,038,310 
    1,038,310 
Wireless telecommunication services (0.7%)     
Shenandoah Telecommunications Co. S   20,100   836,361 
    836,361 
 
Total common stocks (cost $112,790,847)     $120,621,831 

 

INVESTMENT COMPANIES (1.5%)*   Shares   Value 
 
Alcentra Capital Corp.   88,287   $798,997 
TriplePoint Venture Growth BDC Corp. S   73,100   1,039,482 
Total investment companies (cost $1,877,360)     $1,838,479 

 

  Expiration       
WARRANTS (—%)* †   date   Strike price   Warrants   Value 
 
Nesco Holdings, Inc.   1/1/25   $11.50   25,714   $12,086 
Total warrants (cost $32,914)       $12,086 

 

SHORT-TERM INVESTMENTS (15.1%)*   Shares   Value 
 
Putnam Cash Collateral Pool, LLC 1.81% d   16,711,340   $16,711,340 
Putnam Short Term Investment Fund 1.72% L   1,931,235   1,931,235 
Total short-term investments (cost $18,642,575)   $18,642,575 
 
Total investments (cost $133,343,696)     $141,114,971 

 

Key to holding’s abbreviations

 

ADR  American Depository Receipts: represents ownership of foreign securities on deposit with a custodian bank 
CVR  Contingent Value Rights 

 

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, 2019 through December 31, 2019 (the reporting period). Within the following notes to the portfolio, 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 “ASC 820” represent Accounting Standards Codification 820 Fair Value Measurements and Disclosures.

* Percentages indicated are based on net assets of $123,509,384.

† This security is non-income-producing.

d Affiliated company. See Notes 1 and 5 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.

F This security is valued by Putnam Management at fair value following procedures approved by the Trustees. Securities are classified as Level 3 for ASC 820 based on the securities’ valuation inputs (Note 1).

L Affiliated 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.

R Real Estate Investment Trust.

S Security 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 of the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.

6 Putnam VT Small Cap Value Fund 

 


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*:       
Communication services  $5,890,446  $—­  $—­ 
Consumer discretionary  11,246,154  —­  —­ 
Consumer staples  1,363,537  —­  —­ 
Energy  8,937,328  —­  —­ 
Financials  32,699,704  —­  —­ 
Health care  5,628,256  —­  —­ 
Industrials  18,160,482  —­  —** 
Information technology  11,960,932  —­  —­ 
Materials  8,841,174  —­  —­ 
Real estate  11,404,933  —­  —­ 
Utilities  4,488,885  —­  —­ 
Total common stocks  120,621,831  —­  —­ 
Investment companies  1,838,479  —­  —­ 
Warrants  12,086  —­  —­ 
Short-term investments  1,931,235  16,711,340  —­ 
Totals by level  $124,403,631  $16,711,340  $—** 

 

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

**Value of Level 3 Security is $—.

At the start and close of the reporting period, Level 3 investments in securities represented less than 1% of the fund’s net assets and 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 assets and liabilities
12/31/19

Assets   
Investment in securities, at value, including $16,200,465 of securities on loan (Note 1):   
Unaffiliated issuers (identified cost $114,701,121)  $122,472,396 
Affiliated issuers (identified cost $18,642,575) (Notes 1 and 5)  18,642,575 
Dividends, interest and other receivables  229,950 
Receivable for shares of the fund sold  17,292 
Receivable for investments sold  269,635 
Total assets  141,631,848 
 
Liabilities   
Payable to custodian  1,557 
Payable for investments purchased  829,083 
Payable for shares of the fund repurchased  287,798 
Payable for compensation of Manager (Note 2)  64,071 
Payable for custodian fees (Note 2)  55,607 
Payable for investor servicing fees (Note 2)  14,188 
Payable for Trustee compensation and expenses (Note 2)  85,953 
Payable for administrative services (Note 2)  1,175 
Payable for distribution fees (Note 2)  17,398 
Collateral on securities loaned, at value (Note 1)  16,711,340 
Other accrued expenses  54,294 
Total liabilities  18,122,464 
 
Net assets  $123,509,384 
 
Represented by   
Paid-in capital (Unlimited shares authorized) (Notes 1 and 4)  $132,707,694 
Total distributable earnings (Note 1)  (9,198,310) 
Total — Representing net assets applicable to capital shares outstanding  $123,509,384 
 
Computation of net asset value Class IA   
Net assets  $40,670,764 
Number of shares outstanding  4,082,139 
Net asset value, offering price and redemption price per share (net assets divided by number of shares outstanding)  $9.96 
 
Computation of net asset value Class IB   
Net assets  $82,838,620 
Number of shares outstanding  8,475,321 
Net asset value, offering price and redemption price per share (net assets divided by number of shares outstanding)  $9.77 

 

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

8 Putnam VT Small Cap Value Fund 

 


Statement of operations
Year ended 12/31/19

Investment income   
Dividends (net of foreign tax of $29,050)  $2,408,594 
Interest (including interest income of $79,346 from investments in affiliated issuers) (Note 5)  83,359 
Securities lending (net of expenses) (Notes 1 and 5)  65,287 
Total investment income  2,557,240 
 
Expenses   
Compensation of Manager (Note 2)  758,626 
Investor servicing fees (Note 2)  85,735 
Custodian fees (Note 2)  53,035 
Trustee compensation and expenses (Note 2)  2,833 
Distribution fees (Note 2)  203,736 
Administrative services (Note 2)  3,504 
Other  81,221 
Total expenses  1,188,690 
 
Expense reduction (Note 2)  (61,922) 
Net expenses  1,126,768 
 
Net investment income  1,430,472 
 
Realized and unrealized gain (loss)   
Net realized gain (loss) on:   
Securities from unaffiliated issuers (Notes 1 and 3)  (760,953) 
Foreign currency transactions (Note 1)  797 
Futures contracts (Note 1)  542,079 
Written options (Note 1)  146,545 
Total net realized loss  (71,532) 
Change in net unrealized appreciation (depreciation) on:   
Securities from unaffiliated issuers  24,621,365 
Assets and liabilities in foreign currencies  (2,304) 
Written options  (32,599) 
Total change in net unrealized appreciation  24,586,462 
 
Net gain on investments  24,514,930 
 
Net increase in net assets resulting from operations  $25,945,402 

 

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

Putnam VT Small Cap Value Fund 9 

 


Statement of changes in net assets

  Year ended  Year ended 
  12/31/19  12/31/18 
Increase (decrease) in net assets     
Operations:     
Net investment income  $1,430,472  $1,989,020 
Net realized loss on investments and foreign currency transactions  (71,532)  (4,211,488) 
Change in net unrealized appreciation (depreciation) of investments and assets and liabilities in foreign currencies  24,586,462  (25,222,116) 
Net increase (decrease) in net assets resulting from operations  25,945,402  (27,444,584) 
Distributions to shareholders (Note 1):     
From ordinary income     
Net investment income     
Class IA  (486,034)  (341,687) 
Class IB  (735,114)  (390,264) 
Net realized short-term gain on investments     
Class IA  (4,126,171)  (4,376,851) 
Class IB  (8,271,601)  (8,331,815) 
From net realized long-term gain on investments     
Class IA  (157,036)  (11,275,681) 
Class IB  (314,804)  (21,464,489) 
Increase (decrease) from capital share transactions (Note 4)  (850,862)  26,214,379 
Total increase (decrease) in net assets  11,003,780  (47,410,992) 
Net assets:     
Beginning of year  112,505,604  159,916,596 
End of year  $123,509,384  $112,505,604 

 

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

10 Putnam VT Small Cap Value Fund 

 


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

INVESTMENT OPERATIONS:        LESS DISTRIBUTIONS:      RATIOS AND SUPPLEMENTAL DATA: 
Period ended­ Net asset value, beginning of period Net investment income (loss)a 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                           
12/31/19­  $9.05­  .13­  1.94­  2.07­  (.12)  (1.04)  (1.16)  $9.96­  24.12­  $40,671­  .80­  1.34­  164­ 
12/31/18  16.41­  .18­  (2.62)  (2.44)  (.11)  (4.81)  (4.92)  9.05­  (19.42)  38,310­  .85­  1.51­  561­ 
12/31/17  15.94­  .10­  1.15­  1.25­  (.15)  (.63)  (.78)  16.41­  8.15­  55,886­  .82­  .66­  398­ 
12/31/16  14.16­  .15­  3.28­  3.43­  (.21)  (1.44)  (1.65)  15.94­  27.70­  59,872­  .78e  1.14e  67­ 
12/31/15  16.70­  .20­  (.74)  (.54)  (.18)  (1.82)  (2.00)  14.16­  (3.90)  52,593­  .76­  1.30­  52­ 
Class IB                           
12/31/19­  $8.89­  .10­  1.91­  2.01­  (.09)  (1.04)  (1.13)  $9.77­  23.82­  $82,839­  1.05­  1.09­  164­ 
12/31/18  16.20­  .15­  (2.59)  (2.44)  (.06)  (4.81)  (4.87)  8.89­  (19.66)  74,196­  1.10­  1.26­  561­ 
12/31/17  15.75­  .06­  1.13­  1.19­  (.11)  (.63)  (.74)  16.20­  7.87­  104,031­  1.07­  .41­  398­ 
12/31/16  13.99­  .12­  3.25­  3.37­  (.17)  (1.44)  (1.61)  15.75­  27.49­  110,569­  1.03e  .89e  67­ 
12/31/15  16.53­  .16­  (.74)  (.58)  (.14)  (1.82)  (1.96)  13.99­  (4.24)  96,438­  1.01­  1.04­  52­ 

 

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

b Total return assumes dividend reinvestment.

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

d Includes amounts paid through expense offset and brokerage/service arrangements, if any (Note 2). Also excludes acquired fund fees and expenses, if any.

e Reflects a voluntary waiver of certain fund expenses in effect during the period. As a result of such waiver, the expenses of each class reflect a reduction of less than 0.01% as a percentage of average net assets.

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

Putnam VT Small Cap Value Fund 11 

 


Notes to financial statements 12/31/19

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, 2019 through December 31, 2019.

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 goal of the fund is to seek capital appreciation. The fund invests mainly in common stocks of small U.S. companies, with a focus on value stocks. Value stocks are issued by companies that Putnam Management believes are currently undervalued by the market. If Putnam Management is correct and other investors ultimately recognize the value of the company, the price of its stock may rise. Under normal circumstances, Putnam Management invests at least 80% of the fund’s net assets in companies of a size similar to those in the Russell 2000 Value Index. This policy may be changed only after 60 days’ notice to shareholders. As of March 31, 2019, the index was composed of companies having market capitalizations of between approximately $24.5 million and $6.6 billion. Putnam Management 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.

The fund has entered into contractual arrangements with an investment adviser, administrator, distributor, shareholder servicing agent and custodian, who each provide services to the fund. Unless expressly stated otherwise, shareholders are not parties to, or intended beneficiaries of these contractual arrangements, and these contractual arrangements are not intended to create any shareholder right to enforce them against the service providers or to seek any remedy under them against the service providers, either directly or on behalf of the fund.

Under the fund’s Amended and Restated Agreement and Declaration of Trust, any claims asserted against or on behalf of the Putnam Funds, including claims against Trustees and Officers, must be brought in state and federal courts located within the Commonwealth of Massachusetts.

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 Portfolio securities and other investments are valued using policies and procedures adopted by the Board of Trustees. The Trustees have formed a Pricing Committee to oversee the implementation of these procedures and have delegated responsibility for valuing the fund’s assets in accordance with these procedures to Putnam Management. Putnam Management has established an internal Valuation Committee that is responsible for making fair value determinations, evaluating the effectiveness of the pricing policies of the fund and reporting to the Pricing Committee.

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 scheduled 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 scheduled close of the New York Stock Exchange. Accordingly, on certain days, the fund will fair value certain 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. The foreign equity 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.

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, recovery rates, sales and other multiples and resale restrictions. These securities are classified as Level 2 or as Level 3 depending on the priority of the significant inputs.

To assess the continuing appropriateness of fair valuations, the Valuation Committee reviews and affirms the reasonableness of such valuations on a regular basis after considering all relevant information that is reasonably available. 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 and including amortization and accretion of premiums and discounts on debt securities, 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.

Foreign currency translation The accounting records of the fund are maintained in U.S. dollars. The fair value of foreign securities, currency holdings, and other assets and liabilities is recorded in the books and records of the fund after

12 Putnam VT Small Cap Value Fund 

 


translation to U.S. dollars based on the exchange rates on that day. The cost of each security is determined using historical exchange rates. Income and withholding taxes are translated at prevailing exchange rates when earned or incurred. The fund does not isolate that portion of realized or unrealized gains or losses resulting from changes in the foreign exchange rate on investments from fluctuations arising from changes in the market prices of the securities. Such gains and losses are included with the net realized and unrealized gain or loss on investments. Net realized gains and losses on foreign currency transactions represent net realized exchange gains or losses on disposition of foreign currencies, currency gains and losses realized between the trade and settlement dates on securities transactions and the difference between the amount of investment income and foreign withholding taxes recorded on the fund’s books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized appreciation and depreciation of assets and liabilities in foreign currencies arise from changes in the value of assets and liabilities other than investments at the period end, resulting from changes in the exchange rate.

Options contracts The fund uses options contracts to hedge against changes in values of securities it owns, owned or expects to own, to generate additional income for the portfolio and to enhance returns on securities owned.

The potential risk to the fund is that the change in value of options contracts may not correspond to the change in value of the hedged instruments. In addition, losses may arise from changes in the value of the underlying instruments if there is an illiquid secondary market for the contracts, if interest or exchange rates move unexpectedly or if the counterparty to the contract is unable to perform. Realized gains and losses on purchased options are included in realized gains and losses on investment securities. If a written call option is exercised, the premium originally received is recorded as an addition to sales proceeds. If a written put option is exercised, the premium originally received is recorded as a reduction to the cost of investments.

Exchange-traded options are valued at the last sale price or, if no sales are reported, the last bid price for purchased options and the last ask price for written options. OTC traded options are valued using prices supplied by dealers.

Options on swaps are similar to options on securities except that the premium paid or received is to buy or grant the right to enter into a previously agreed upon interest rate or credit default contract. Forward premium swap option contracts include premiums that have extended settlement dates. The delayed settlement of the premiums is factored into the daily valuation of the option contracts. In the case of interest rate cap and floor contracts, in return for a premium, ongoing payments between two parties are based on interest rates exceeding a specified rate, in the case of a cap contract, or falling below a specified rate in the case of a floor contract.

Written option contracts outstanding at period end, if any, are listed after the fund’s portfolio.

Futures contracts The fund uses futures contracts to equitize cash.

The potential risk to the fund is that the change in value of futures contracts may not correspond to the change in value of the hedged instruments. In addition, losses may arise from changes in the value of the underlying instruments, if there is an illiquid secondary market for the contracts, if interest or exchange rates move unexpectedly or if the counterparty to the contract is unable to perform. With futures, there is minimal counterparty credit risk to the fund since futures are exchange traded and the exchange’s clearinghouse, as counterparty to all exchange traded futures, guarantees the futures against default. Risks may exceed amounts recognized on the Statement of assets and liabilities. When the contract is closed, the fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.

Futures contracts are valued at the quoted daily settlement prices established by the exchange on which they trade. The fund and the broker agree to exchange an amount of cash equal to the daily fluctuation in the value of the futures contract. Such receipts or payments are known as “variation margin.”

Futures contracts outstanding at period end, if any, are listed after the fund’s portfolio.

Master agreements The fund is a party to ISDA (International Swaps and Derivatives Association, Inc.) Master Agreements (Master Agreements) with certain counterparties that govern OTC derivative and foreign exchange contracts entered into from time to time. The Master Agreements may contain provisions regarding, among other things, the parties’ general obligations, representations, agreements, collateral requirements, events of default and early termination. With respect to certain counterparties, in accordance with the terms of the Master Agreements, collateral posted to the fund is held in a segregated account by the fund’s custodian and, with respect to those amounts which can be sold or repledged, is presented in the fund’s portfolio.

Collateral pledged by the fund is segregated by the fund’s custodian and identified in the fund’s portfolio. Collateral can be in the form of cash or debt securities issued by the U.S. Government or related agencies or other securities as agreed to by the fund and the applicable counterparty. Collateral requirements are determined based on the fund’s net position with each counterparty.

Termination events applicable to the fund may occur upon a decline in the fund’s net assets below a specified threshold over a certain period of time. Termination events applicable to counterparties may occur upon a decline in the counterparty’s long-term and short-term credit ratings below a specified level. In each case, upon occurrence, the other party may elect to terminate early and cause settlement of all derivative and foreign exchange contracts outstanding, including the payment of any losses and costs resulting from such early termination, as reasonably determined by the terminating party. Any decision by one or more of the fund’s counterparties to elect early termination could impact the fund’s future derivative activity.

At the close of the reporting period, the fund did not have a net liability position on open derivative contracts subject to the Master Agreements.

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 remaining maturities of the securities lending transactions are considered overnight and continuous. 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, net of expenses, 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 fund received cash collateral of $16,711,340 and the value of securities loaned amounted to $16,200,465.

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.

Lines of credit The fund participates, along with other Putnam funds, in a $317.5 million unsecured committed line of credit and a $235.5 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 to the fund based on the fund’s borrowing at a rate equal to 1.25% plus the higher of (1) the Federal Funds rate and (2) the overnight LIBOR 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 0.04% of the committed line of credit and 0.04% of the uncommitted line of credit has been paid by the participating funds. In addition, a commitment fee of 0.21% 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.

Putnam VT Small Cap Value Fund 13 

 


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.

Under the Regulated Investment Company Modernization Act of 2010, the fund will be permitted to carry forward capital losses incurred for an unlimited period and the carry forwards will retain their character as either short-term or long-term capital losses. At December 31, 2019, the fund had the following capital loss carryovers available, to the extent allowed by the Code, to offset future net capital gain, if any:

  Loss carryover   
Short-term  Long-term  Total 
$14,281,715  $1,966,888  $16,248,603 

 

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, from nontaxable dividends, from realized built-in losses, from a redesignation of taxable distributions and from partnership income. 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 $1,088,045 to decrease undistributed net investment income, $2,494 to decrease paid-in capital and $1,090,539 to decrease accumulated net realized loss.

Tax cost of investments includes adjustments to net unrealized appreciation (depreciation) which may not necessarily be final tax cost basis adjustments, but closely approximate the tax basis unrealized gains and losses that may be realized and distributed to shareholders. 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  $12,871,850 
Unrealized depreciation  (6,943,707) 
Net unrealized appreciation  5,928,143 
Undistributed ordinary income  1,122,072 
Capital loss carryforward  (16,248,603) 
Cost for federal income tax purposes  $135,186,828 

 

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 38.6% 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 all open-end mutual funds sponsored by Putnam Management (excluding net assets of funds that are invested in, or that are invested in by, other Putnam funds to the extent necessary to avoid “double counting” of those assets). 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. 

 

For the reporting period, the management fee represented an effective rate (excluding the impact from any expense waivers in effect) of 0.620% of the fund’s average net assets.

Putnam Management has contractually agreed, through April 30, 2021, to waive fees and/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 plan, 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. During the reporting period, the fund’s expenses were not reduced as a result of this limit.

Putnam Investments Limited (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. PIL did not manage any portion of the assets of the fund during the reporting period. If Putnam Management were to engage the services of PIL, Putnam Management would pay 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 0.07% of the fund’s average daily net assets. During the reporting period, the expenses for each class of shares related to investor servicing fees were as follows:

Class IA  $28,663 
Class IB  57,072 
Total  $85,735 

 

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 period, the fund’s expenses were reduced by $2,253 under the expense offset arrangements and by $59,669 under the brokerage/service arrangements.

Each Independent Trustee of the fund receives an annual Trustee fee, of which $80, 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.

14 Putnam VT Small Cap Value Fund 

 


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. The expenses related to distribution fees during the reporting period are included in Distribution fees in the Statement of operations.

Note 3 — Purchases and sales of securities

During the reporting period, the cost of purchases and the proceeds from sales, excluding short-term investments, were as follows:

  Cost of  Proceeds 
  purchases  from sales 
Investments in securities  $194,077,556  $201,811,805 
(Long-term)     
U.S. government securities  —  — 
(Long-term)     
Total  $194,077,556  $201,811,805 

 

The fund may purchase or sell investments from or to other Putnam funds in the ordinary course of business, which can reduce the fund’s transaction costs, at prices determined in accordance with SEC requirements and policies approved by the Trustees. During the reporting period, purchases or sales of long-term securities from or to other Putnam funds, if any, did not represent more than 5% of the fund’s total cost of purchases and/or total proceeds from sales.

Note 4 — Capital shares

At the close of the reporting period, there were 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 12/31/19  Year ended 12/31/18  Year ended 12/31/19  Year ended 12/31/18 
  Shares  Amount  Shares  Amount  Shares  Amount  Shares  Amount 
Shares sold  374,879  $3,566,050  293,191  $3,513,753  506,812  $4,703,164  405,378  $4,741,311 
Shares issued in connection with                 
reinvestment of distributions  525,826  4,769,241  1,500,396  15,994,219  1,045,013  9,321,519  2,874,911  30,186,567 
  900,705  8,335,291  1,793,587  19,507,972  1,551,825  14,024,683  3,280,289  34,927,878 
Shares repurchased  (1,053,103)  (9,960,922)  (964,991)  (11,706,008)  (1,423,410)  (13,249,914)  (1,356,909)  (16,515,463) 
Net increase (decrease)  (152,398)  $(1,625,631)  828,596  $7,801,964  128,415  $774,769  1,923,380  $18,412,415 

 

Note 5 — Affiliated transactions

Transactions during the reporting period with any company which is under common ownership or control were as follows:

          Shares outstanding 
  Fair value as of        and fair value as of 
Name of affiliate  12/31/18  Purchase cost  Sale proceeds  Investment income  12/31/19 
Short-term investments           
Putnam Cash Collateral Pool, LLC*  $13,161,273  $87,205,972  $83,655,905  $304,215  $16,711,340 
Putnam Short Term Investment           
Fund**  3,487,164  45,933,617  47,489,546  79,346  1,931,235 
Total Short-term investments  $16,648,437  $133,139,589  $131,145,451  $383,561  $18,642,575 

 

*No management fees are charged to Putnam Cash Collateral Pool, LLC (Note 1). Investment income shown is included in securities lending income on the Statement of operations. There were no realized or unrealized gains or losses during the period.

**Management fees charged to Putnam Short Term Investment Fund have been waived by Putnam Management. There were no realized or unrealized gains or losses during the period.

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 15 

 


Note 7 — Summary of derivative activity

The volume of activity for the reporting period for any derivative type that was held during the period is listed below and was based on an average of the holdings at the end of each fiscal quarter:

Purchased equity option contracts (contract amount)  $11,000 
Written equity option contracts (contract amount)  $7,000 
Futures contracts (number of contracts)  —* 
Warrants (number of warrants)  18,000 

 

*For the reporting period, there were no holdings at the end of each fiscal quarter and the transactions were considered minimal.

The following is a summary of the fair value of derivative instruments as of the close of the reporting period:

Fair value of derivative instruments as of the close of the reporting period

  Asset derivatives  Liability derivatives 
Derivatives not accounted for as hedging  Statement of assets and    Statement of assets and   
instruments under ASC 815  liabilities location  Fair value  liabilities location  Fair value 
Equity contracts  Investments  $12,086  Payables  $— 
Total    $12,086    $— 

 

The following is a summary of realized and change in unrealized gains or losses of derivative instruments in the Statement of operations for the reporting period (Note 1):

Amount of realized gain or (loss) on derivatives recognized in net gain or (loss) on investments

Derivatives not accounted for as hedging       
instruments under ASC 815  Options  Futures  Total 
Equity contracts  $126,576  $542,079  $668,655 
Total  $126,576  $542,079  $668,655 

 

Change in unrealized appreciation or (depreciation) on derivatives recognized in net gain or (loss) on investments

 

Derivatives not accounted for as hedging       
instruments under ASC 815  Warrants  Options  Total 
Equity contracts  $(20,828)  $342,439  $321,611 
Total  $(20,828)  $342,439  $321,611 

 

 

 

Federal tax information (Unaudited)

Pursuant to §852 of the Internal Revenue Code, as amended, the fund hereby designates $269,890 as a capital gain dividend with respect to the taxable year ended December 31, 2019, or, if subsequently determined to be different, the net capital gain of such year.

The fund designated 7.78% of ordinary income distributions as qualifying for the dividends received deduction for corporations.

16 Putnam VT Small Cap Value Fund 

 


About the Trustees


Putnam VT Small Cap Value Fund 17 

 



*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 100 Federal Street, Boston, MA 02110.

As of December 31, 2019, there were 91 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:

Robert T. Burns (Born 1961)  Michael J. Higgins (Born 1976)  Denere P. Poulack (Born 1968) 
Vice President and Chief Legal Officer  Vice President, Treasurer, and Clerk  Assistant Vice President, Assistant Clerk, and 
Since 2011  Since 2010  Assistant Treasurer 
General Counsel, Putnam Investments, Putnam    Since 2004 
Management, and Putnam Retail Management  Jonathan S. Horwitz (Born 1955)   
  Executive Vice President, Principal Executive  Janet C. Smith (Born 1965) 
James F. Clark (Born 1974)  Officer, and Compliance Liaison  Vice President, Principal Financial Officer, 
Vice President and Chief Compliance Officer  Since 2004  Principal Accounting Officer, and Assistant 
Since 2016    Treasurer 
Chief Compliance Officer and Chief Risk Officer,  Richard T. Kircher (Born 1962)  Since 2007 
Putnam Investments and Chief Compliance  Vice President and BSA Compliance Officer  Head of Fund Administration Services, Putnam 
Officer, Putnam Management  Since 2019  Investments and Putnam Management 
Assistant Director, Operational Compliance,   
Nancy E. Florek (Born 1957)  Putnam Investments and Putnam  Mark C. Trenchard (Born 1962) 
Vice President, Director of Proxy Voting and  Retail Management  Vice President 
Corporate Governance, Assistant Clerk, and    Since 2002 
Assistant Treasurer  Susan G. Malloy (Born 1957)  Director of Operational Compliance,Putnam 
Since 2000  Vice President and Assistant Treasurer  Investments and Putnam Retail Management 
  Since 2007   
Head of Accounting and Middle Office Services,   
Putnam Investments and Putnam 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 100 Federal Street, Boston, MA 02110.

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Putnam VT Small Cap Value Fund 19 

 


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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, 2019, are available in the Individual Investors section of putnam.com and on the Securities and Exchange Commission’s (SEC) website at 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

The 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-PORT within 60 days of the end of such fiscal quarter. Shareholders may obtain the fund’s Form N-PORT from the SEC’s website at www.sec.gov.

Prior to its use of Form N-PORT, the fund filed its complete schedule of its portfolio holdings with the SEC on Form N-Q, which is available online at www.sec.gov.

Fund information

Investment Manager  Investor Servicing Agent  Trustees 
Putnam Investment Management, LLC  Putnam Investments  Kenneth R. Leibler, Chair 
100 Federal Street  Mailing address:  Liaquat Ahamed 
Boston, MA 02110  P.O. Box 219697  Ravi Akhoury 
  Kansas City, MO 64121-9697  Barbara M. Baumann 
Investment Sub-Advisor  1-800-225-1581  Katinka Domotorffy 
Putnam Investments Limited    Catharine Bond Hill 
16 St James’s Street  Custodian  Paul L. Joskow 
London, England SW1A 1ER  State Street Bank and Trust Company  Robert E. Patterson 
    George Putnam, III 
Marketing Services  Legal Counsel  Robert L. Reynolds 
Putnam Retail Management  Ropes & Gray LLP  Manoj P. Singh 
100 Federal Street     
Boston, MA 02110  Independent Registered   
  Public Accounting Firm   
  PricewaterhouseCoopers LLP   

 

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 

 


   
This report has been prepared for the shareholders  TR521 
of Putnam VT Small Cap Value Fund.  VTAN069 319787 2/20 

 

Item 2. Code of Ethics:
(a) The fund's principal executive, financial and accounting officers are employees of Putnam Investment Management, LLC, the Fund's investment manager. As such they are subject to a comprehensive Code of Ethics adopted and administered by Putnam Investments which is designed to protect the interests of the firm and its clients. The Fund has adopted a Code of Ethics which incorporates the Code of Ethics of Putnam Investments with respect to all of its officers and Trustees who are employees of Putnam Investment Management, LLC. For this reason, the Fund has not adopted a separate code of ethics governing its principal executive, financial and accounting officers.

(c) In October 2019, the Code of Ethics of Putnam Investments was amended.  The key changes to the Code of Ethics are as follows: (i) Employee notification to the Code of Ethics Officer before acting as a public official for any government entity (ii) Clarifying changes to the Insider Trading provisions and to the rules for trading in securities issued by Great-West Lifeco.

Item 3. Audit Committee Financial Expert:
The Funds' Audit, Compliance and Distributions Committee is comprised solely of Trustees who are “independent” (as such term has been defined by the Securities and Exchange Commission (“SEC”) in regulations implementing Section 407 of the Sarbanes-Oxley Act (the “Regulations”)). The Trustees believe that each of the members of the Audit, Compliance and Distributions Committee also possess a combination of knowledge and experience with respect to financial accounting matters, as well as other attributes, that qualify them for service on the Committee. In addition, the Trustees have determined that each of Mr. Patterson, Ms. Baumann and Mr. Singh qualifies as an “audit committee financial expert” (as such term has been defined by the Regulations) based on their review of his or her pertinent experience and education. The SEC has stated, and the funds' amended and restated agreement and Declaration of Trust provides, that the designation or identification of a person as an audit committee financial expert pursuant to this Item 3 of Form N-CSR does not impose on such person any duties, obligations or liability that are greater than the duties, obligations and liability imposed on such person as a member of the Audit, Compliance and Distribution Committee and the Board of Trustees in the absence of such designation or identification.

Item 4. Principal Accountant Fees and Services:
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:


Fiscal year ended Audit Fees Audit-Related Fees Tax Fees All Other Fees
December 31, 2019 $32,018 $ — $6,197 $ —
December 31, 2018 $31,972 $ — $5,047 $ —

For the fiscal years ended December 31, 2019 and December 31, 2018, the fund's independent auditor billed aggregate non-audit fees in the amounts of $163,872 and $621,529 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.

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.

Pre-Approval Policies of the Audit, Compliance and Distributions Committee. The Audit, Compliance and Distributions 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 Audit, Compliance and Distributions Committee also has adopted a policy to pre-approve the engagement by Putnam Management and certain of its affiliates of the funds' independent auditors, even in circumstances where pre-approval is not required by applicable law. Any such requests by Putnam Management or certain of its affiliates are typically submitted in writing to the Committee and explain, among other things, the nature of the proposed engagement, the estimated fees, and why this work should be performed by that particular audit firm as opposed to another one. In reviewing such requests, the Committee considers, among other things, whether the provision of such services by the audit firm are compatible with the independence of the audit firm.

The following table presents fees billed by the fund's independent auditor for services required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2–01 of Regulation S-X.


Fiscal year ended Audit-Related Fees Tax Fees All Other Fees Total Non-Audit Fees
December 31, 2019 $ — $157,675 $ — $ —
December 31, 2018 $ — $616,482 $ — $ —

Item 5. Audit Committee of Listed Registrants
Not applicable

Item 6. Schedule of Investments:
The registrant's schedule of investments in unaffiliated issuers is included in the report to shareholders in Item 1 above.

Item 7. Disclosure of Proxy Voting Policies and Procedures For Closed-End Management Investment Companies:
Not applicable

Item 8. Portfolio Managers of Closed-End Investment Companies
Not Applicable

Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers:
Not applicable

Item 10. Submission of Matters to a Vote of Security Holders:
Not applicable

Item 11. Controls and Procedures:

(a) The registrant's principal executive officer and principal financial officer have concluded, based on their evaluation of the effectiveness of the design and operation of the registrant's disclosure controls and procedures as of a date within 180 days of the filing date of this report, that the design and operation of such procedures are generally effective to provide reasonable assurance that information required to be disclosed by the registrant in this report is recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms.

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

Item 12. Disclosures of Securities Lending Activities for Closed-End Management Investment Companies:
Not Applicable

Item 13. Exhibits:

(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.

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Putnam Variable Trust
By (Signature and Title):
/s/ Janet C. Smith
Janet C. Smith
Principal Accounting Officer

Date: February 28, 2020
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By (Signature and Title):
/s/ Jonathan S. Horwitz
Jonathan S. Horwitz
Principal Executive Officer

Date: February 28, 2020
By (Signature and Title):
/s/ Janet C. Smith
Janet C. Smith
Principal Financial Officer

Date: February 28, 2020