N-CSR 1 a_vtmulticapcore.htm PUTNAM VARIABLE TRUST a_vtmulticapcore.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: Stephen Tate, 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, 2022
Date of reporting period: January 1, 2022 – December 31, 2022



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:



Message from the Trustees

February 9, 2023

Dear Shareholder:

As an investor, you might be happy to see 2022 in the rearview mirror. High inflation and aggressive interest-rate increases from the U.S. Federal Reserve contributed to market volatility and negative returns for stocks and bonds. Fortunately, toward the end of the year, we  saw both inflation levels and Fed actions begin to moderate somewhat.

Although we still face high inflation and uncertainty on how much the economy will slow because of higher interest rates, we believe financial market performance might be better in 2023 as compared with 2022. Historically, stocks and bonds have recovered from bear markets like the one we are experiencing. Be assured that our investment teams are actively researching securities with attractive potential and working to keep portfolio risks in check.

Thank you for investing with Putnam.



Performance summary (as of 12/31/22)

Investment objective
Capital appreciation

Net asset value December 31, 2022

Class IA: $16.39  Class IB: $16.36 

 

Annualized total return at net asset value (as of 12/31/22)

  Class IA shares  Class IB shares  Russell 3000 
  (4/30/98)  (4/30/98)  Index 
1 year  –15.54%  –15.77%  –19.21% 
5 years  9.77  9.50  8.79 
10 years  12.84  12.55  12.13 
Life of fund  6.12  5.87  7.21 

 

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

Before June 30, 2018, the fund was managed with a materially different investment strategy and may have achieved materially different performance results under its current investment strategy from that shown for periods before this date.


The Russell 3000® Index is an unmanaged index of the 3,000 largest U.S. companies.

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 Multi-Cap Core Fund   1 

 


Report from your fund’s managers

How was the investing environment during the 12-month reporting period ended December 31, 2022?

Stock markets had a very challenging calendar 2022, with all three major U.S. indexes logging their biggest declines since 2008. Conditions were particularly difficult for growth stocks and the technology sector. Throughout the year, financial markets were challenged by multiple, converging risks in the macroeconomy. High inflation, rising interest rates, and the Russia-Ukraine War contributed to a risk-averse investing environment. Combating inflation remained a top priority of the U.S. Federal Reserve as inflation reached 40-year highs. Toward the close of 2022, stocks were lifted by some positive earnings reports as well as data that showed the pace of inflation was easing. However, concerns about a possible recession persisted.

How did Putnam VT Multi-Cap Core Fund perform during the reporting period?

For the 12-month reporting period, the fund’s class IA shares posted a return of –15.54%, outperforming the fund’s benchmark, the Russell 3000 Index, which returned –19.21%.

What were some holdings that helped fund performance relative to the fund’s benchmark for the reporting period?

A relative overweight position in McKesson, a drug distributor, was the top contributor to fund performance. Investors focused on McKesson’s strategic priorities and the continued tailwind from the company’s pandemic-related contracts. Also, the company had exposure to growing markets through its oncology and biopharmaceutical businesses.

A relative overweight position in ConocoPhillips, one of the world’s leading energy companies, was another top performer. The company benefited from rising oil prices and also from its position as the second-largest producer of liquefied natural gas.

What were some stocks that detracted from fund performance relative to the fund’s benchmark for the reporting period?

A relative overweight position in Microsoft was one of the top detractors for the period. The stock, like those of most large technology companies, struggled in the difficult macroeconomic conditions of 2022. Despite its short-term underperformance, we believe the company continues to offer attractive long-term growth potential. Most notable is growth potential in the company’s cloud computing business, Azure, in our view. Microsoft has also demonstrated success and competitive strength in its Office 365 software business and its video game platforms.

Another detractor that was affected by industry-wide challenges was LAM Research, a maker of semiconductor manufacturing equipment. The fund held a relative overweight position in the stock. LAM felt the effects of a U.S. ban on semiconductor exports to China. We are still optimistic about the company’s long-term growth prospects, and the stock remained in the portfolio at period-end.

What is your outlook as the fund begins a new fiscal year?

We believe more volatility is likely for financial markets in the months ahead. However, while we understand the concern it can cause to fund shareholders, as active portfolio managers, we welcome periods of dislocation because we believe they may present us with more investment opportunities. We believe the fund will continue to benefit from our “go anywhere” core approach, which allows us to invest in both growth and value stocks. Regardless of the market environment, we remain focused on our disciplined investment process and the long-term potential of the companies in which we invest.

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. Current and future portfolio holdings are subject to risk.

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.

Consider these risks before investing: Investments in small and/ or midsize companies increase the risk of greater price fluctuations. Growth stocks may be more susceptible to earnings disappointments, and value stocks may fail to rebound. 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.

Our investment techniques, analyses, and judgments may not produce the outcome we intend. The investments we select for the fund may not perform as well as other securities that we do not select for the fund. We, or the fund’s other service providers, may experience disruptions or operating errors that could have a negative effect on the fund. You can lose money by investing in the fund.


Portfolio Manager Arthur Yeager joined Putnam in 2017 and has been in the investment industry since 1984. [Photo unavailable.]

Your fund’s managers 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 Multi-Cap Core 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 7/1/22 to 12/31/22. 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, 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.

Expense ratios

  Class IA  Class IB 
Total annual operating expenses for the fiscal     
year ended 12/31/21  0.66%  0.91% 
Annualized expense ratio for the six-month     
period ended 12/31/22*  0.64%  0.89% 

 

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.

Expenses are shown as a percentage of average net assets.

*Expense ratios for each class are for the fund’s most recent fiscal half year. As a result of this, ratios 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 12/31/22    ended 12/31/22     
    Class IA    Class IB    Class IA    Class IB 
Expenses paid         
per $1,000*†    $3.29    $4.58    $3.26    $4.53 
Ending value         
(after         
expenses)    $1,041.30    $1,040.10    $1,021.98    $1,020.72 

 

*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 12/31/22. 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 (184); and then dividing that result by the number of days in the year (365). 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 (184); and then dividing that result by the number of days in the year (365).

Putnam VT Multi-Cap Core Fund   3 

 


Report of Independent Registered Public Accounting Firm

To the Board of Trustees of Putnam Variable Trust and Shareholders of
Putnam VT Multi-Cap Core Fund:

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities, including the fund’s portfolio, of Putnam VT Multi-Cap Core Fund (one of the funds constituting Putnam Variable Trust, referred to hereafter as the “Fund”) as of December 31, 2022, the related statement of operations for the year ended December 31, 2022, the statement of changes in net assets for each of the two years in the period ended December 31, 2022, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2022 (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, 2022, 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, 2022 and the financial highlights for each of the five years in the period ended December 31, 2022 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, 2022 by correspondence with the custodian, transfer agent and broker; when replies were not received from the broker, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Boston, Massachusetts
February 9, 2023

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

4   Putnam VT Multi-Cap Core Fund 

 


The fund’s portfolio 12/31/22

COMMON STOCKS (94.9%)*  Shares  Value 
 
Aerospace and defense (2.3%)     
Northrop Grumman Corp.  2,653  $1,447,503 
Raytheon Technologies Corp.  14,328  1,445,982 
    2,893,485 
Air freight and logistics (0.4%)     
GXO Logistics, Inc.  †   10,706  457,039 
    457,039 
Airlines (0.7%)     
Southwest Airlines Co.  †   28,543  961,043 
    961,043 
Auto components (0.8%)     
Magna International, Inc. (Canada)  18,220  1,023,600 
    1,023,600 
Automobiles (0.6%)     
General Motors Co.  6,763  227,507 
Tesla, Inc.  †   4,155  511,813 
    739,320 
Banks (3.6%)     
Bank of America Corp.  115,210  3,815,755 
KeyCorp  49,474  861,837 
    4,677,592 
Beverages (2.6%)     
Coca-Cola Co. (The)  38,512  2,449,748 
Molson Coors Beverage Co. Class B  18,127  933,903 
    3,383,651 
Biotechnology (3.9%)     
AbbVie, Inc.  14,303  2,311,508 
Amgen, Inc.  6,420  1,686,149 
Regeneron Pharmaceuticals, Inc.  †   1,326  956,696 
    4,954,353 
Capital markets (4.2%)     
Ameriprise Financial, Inc.  4,571  1,423,272 
Goldman Sachs Group, Inc. (The)  4,903  1,683,592 
Morgan Stanley  7,043  598,796 
Raymond James Financial, Inc.  13,792  1,473,675 
TPG, Inc. S   6,944  193,252 
    5,372,587 
Chemicals (0.8%)     
DuPont de Nemours, Inc.  3,444  236,362 
Eastman Chemical Co.  10,032  817,006 
    1,053,368 
Communications equipment (1.3%)     
Cisco Systems, Inc./Delaware  33,816  1,610,994 
    1,610,994 
Containers and packaging (0.3%)     
Berry Global Group, Inc.  6,203  374,847 
    374,847 
Distributors (0.5%)     
LKQ Corp.  11,726  626,286 
    626,286 
Diversified financial services (3.1%)     
Apollo Global Management, Inc.  19,505  1,244,224 
Berkshire Hathaway, Inc. Class B  †   8,911  2,752,608 
    3,996,832 
Diversified telecommunication services (0.6%)     
Liberty Global PLC Class A (United Kingdom)  †   40,381  764,412 
    764,412 
Electric utilities (2.6%)     
Constellation Energy Corp.  11,787  1,016,157 
NRG Energy, Inc.  29,220  929,780 
PG&E Corp.  †   83,969  1,365,336 
    3,311,273 

 

COMMON STOCKS (94.9%)* cont.  Shares  Value 
 
Electrical equipment (—%)     
FREYR Battery SA (Norway)  †  S   6,870  $59,632 
    59,632 
Entertainment (1.0%)     
Universal Music Group NV (Netherlands)  19,296  464,953 
Walt Disney Co. (The)  †   8,071  701,208 
Warner Bros Discovery, Inc.  †   15,868  150,429 
    1,316,590 
Equity real estate investment trusts (REITs) (2.3%)     
Armada Hoffler Properties, Inc.  53,369  613,744 
Boston Properties, Inc. S   6,373  430,687 
Gaming and Leisure Properties, Inc.  34,668  1,805,856 
Vornado Realty Trust S   5,633  117,223 
    2,967,510 
Food and staples retailing (1.3%)     
Walmart, Inc.  12,109  1,716,935 
    1,716,935 
Health-care equipment and supplies (0.5%)     
Medtronic PLC  7,094  551,346 
Nyxoah SA (Belgium)  †   9,312  44,325 
    595,671 
Health-care providers and services (5.9%)     
CVS Health Corp.  10,031  934,789 
Elevance Health, Inc.  2,075  1,064,413 
HCA Healthcare, Inc.  2,385  572,305 
McKesson Corp.  4,711  1,767,190 
Tenet Healthcare Corp.  †   7,289  355,630 
UnitedHealth Group, Inc.  5,468  2,899,024 
    7,593,351 
Hotels, restaurants, and leisure (1.1%)     
Booking Holdings, Inc.  †   164  330,506 
Chuy’s Holdings, Inc.  †   11,749  332,497 
McDonald’s Corp.  2,923  770,298 
    1,433,301 
Household durables (1.3%)     
PulteGroup, Inc.  38,120  1,735,604 
    1,735,604 
Household products (1.2%)     
Procter & Gamble Co. (The)  9,793  1,484,227 
    1,484,227 
Industrial conglomerates (1.4%)     
Honeywell International, Inc.  8,544  1,830,979 
    1,830,979 
Insurance (1.5%)     
Arch Capital Group, Ltd.  †   13,373  839,557 
Assured Guaranty, Ltd.  18,176  1,131,638 
    1,971,195 
Interactive media and services (4.0%)     
Alphabet, Inc. Class C  †   44,210  3,922,753 
Meta Platforms, Inc. Class A  †   10,444  1,256,831 
    5,179,584 
Internet and direct marketing retail (2.3%)     
Amazon.com, Inc.  †   35,345  2,968,980 
    2,968,980 
IT Services (2.7%)     
Gartner, Inc.  †   2,874  966,066 
Mastercard, Inc. Class A  7,307  2,540,863 
    3,506,929 
Machinery (2.1%)     
Deere & Co.  1,765  756,761 
Otis Worldwide Corp.  24,931  1,952,347 
    2,709,108 
Media (0.5%)     
Comcast Corp. Class A  19,808  692,686 
    692,686 

 

Putnam VT Multi-Cap Core Fund   5 

 


COMMON STOCKS (94.9%)* cont.  Shares  Value 
 
Metals and mining (1.5%)     
Freeport-McMoRan, Inc. (Indonesia)  25,640  $974,320 
Nucor Corp.  7,148  942,178 
    1,916,498 
Mortgage real estate investment trusts (REITs) (0.3%)   
Starwood Property Trust, Inc. S   23,846  437,097 
    437,097 
Multi-utilities (0.7%)     
CMS Energy Corp.  14,374  910,305 
    910,305 
Multiline retail (0.9%)     
Target Corp.  8,124  1,210,801 
    1,210,801 
Oil, gas, and consumable fuels (2.2%)     
Antero Resources Corp.  †   6,135  190,124 
ConocoPhillips  14,909  1,759,262 
Phillips 66  8,485  883,119 
    2,832,505 
Pharmaceuticals (5.1%)     
Eli Lilly and Co.  5,150  1,884,076 
Johnson & Johnson  12,741  2,250,698 
Merck & Co., Inc.  11,861  1,315,978 
Pfizer, Inc.  21,176  1,085,058 
    6,535,810 
Real estate management and development (1.1%)     
CBRE Group, Inc. Class A  †   18,010  1,386,050 
    1,386,050 
Road and rail (1.7%)     
Union Pacific Corp.  10,295  2,131,786 
    2,131,786 
Semiconductors and semiconductor equipment (3.4%)   
Intel Corp.  14,776  390,530 
Lam Research Corp.  2,838  1,192,811 
NVIDIA Corp.  8,198  1,198,056 
Qualcomm, Inc.  6,837  751,660 
Texas Instruments, Inc.  5,480  905,406 
    4,438,463 
Software (9.7%)     
Adobe, Inc.  †   2,342  788,153 
Fair Isaac Corp.  †   326  195,137 
Microsoft Corp.  35,883  8,605,461 
NCR Corp.  †   16,984  397,595 
Oracle Corp.  24,565  2,007,943 
salesforce.com, Inc.  †   3,903  517,499 
    12,511,788 
Specialty retail (2.0%)     
Best Buy Co., Inc.  11,145  893,940 
Lowe’s Cos., Inc.  8,407  1,675,011 
    2,568,951 
Technology hardware, storage, and peripherals (6.4%)   
Apple, Inc.  63,323  8,227,557 
    8,227,557 
Textiles, apparel, and luxury goods (0.5%)     
Nike, Inc. Class B  4,993  584,231 
    584,231 

 

COMMON STOCKS (94.9%)* cont.    Shares  Value 
 
Tobacco (0.7%)       
Altria Group, Inc.    21,005  $960,139 
      960,139 
Trading companies and distributors (1.3%)     
Karat Packaging, Inc.    12,256  176,119 
United Rentals, Inc.  †     4,180  1,485,655 
      1,661,774 
Total common stocks (cost $74,446,407)    $122,276,719 
 
INVESTMENT COMPANIES (1.0%)*    Shares  Value 
 
iShares Expanded Tech-Software Sector ETF  4,986  $1,275,668 
Total investment companies (cost $1,424,315)    $1,275,668 
 
    Principal   
    amount/   
SHORT-TERM INVESTMENTS (5.1%)*    shares  Value 
 
Putnam Cash Collateral Pool, LLC 4.62% d Shares  1,068,687  $1,068,687 
Putnam Short Term Investment Fund     
Class P 4.53% L   Shares  4,951,318  4,951,318 
U.S. Treasury Bills 3.973%, 1/10/23    $100,000  99,930 
U.S. Treasury Bills 3.900%, 1/24/23    100,000  99,776 
U.S. Treasury Bills 3.652%, 1/12/23 #     400,000  399,652 
Total short-term investments (cost $6,619,223)    $6,619,363 
 
Total investments (cost $82,489,945)    $130,171,750 

 

Key to holding’s abbreviations

ETF  Exchange Traded Fund 

 

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, 2022 through December 31, 2022 (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 $128,805,217.

† This security is non-income-producing.

# This security, in part or in entirety, was pledged and segregated with the broker to cover margin requirements for futures contracts at the close of the reporting period. Collateral at period end totaled $291,620 and is included in Investments in securities on the Statement of assets and liabilities (Notes 1 and 8).

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.

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.

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

Unless otherwise noted, the rates quoted in Short-term investments security descriptions represent the weighted average yield to maturity.

The dates shown on debt obligations are the original maturity dates.

6   Putnam VT Multi-Cap Core Fund 

 


          Unrealized 
  Number of  Notional    Expiration   appreciation/ 
FUTURES CONTRACTS OUTSTANDING at 12/31/22  contracts  amount  Value  date   (depreciation) 
Russell 2000 Index E-Mini (Long)  33  $2,906,056  $2,921,985  Mar-23  $(58,391) 
S&P 500 Index E-Mini (Long)  8  1,535,800  1,544,400  Mar-23  (36,891) 
Unrealized appreciation          — 
Unrealized (depreciation)          (95,282) 
Total          $(95,282) 

 

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  $7,953,272  $—­  $—­ 
Consumer discretionary  12,891,074  —­  —­ 
Consumer staples  7,544,952  —­  —­ 
Energy  2,832,505  —­  —­ 
Financials  16,455,303  —­  —­ 
Health care  19,679,185  —­  —­ 
Industrials  12,704,846  —­  —­ 
Information technology  30,295,731  —­  —­ 
Materials  3,344,713  —­  —­ 
Real estate  4,353,560  —­  —­ 
Utilities  4,221,578  —­  —­ 
Total common stocks  122,276,719  —­  —­ 
Investment companies  1,275,668  —­  —­ 
Short-term investments  —­  6,619,363  —­ 
Totals by level  $123,552,387  $6,619,363  $—­ 
 
      Valuation inputs     
Other financial instruments:  Level 1  Level 2  Level 3 
Futures contracts  $(95,282)  $—­  $—­ 
Totals by level  $(95,282)  $—­  $—­ 

 

* 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 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 Multi-Cap Core Fund   7 

 


Statement of assets and liabilities
12/31/22

Assets   
Investment in securities, at value, including $1,041,024 of securities on loan (Note 1):   
Unaffiliated issuers (identified cost $76,469,940)  $124,151,745 
Affiliated issuers (identified cost $6,020,005) (Notes 1 and 5)  6,020,005 
Foreign currency (cost $755) (Note 1)  808 
Dividends, interest and other receivables  190,277 
Receivable for investments sold  357 
Total assets  130,363,192 
 
Liabilities   
Payable for investments purchased  73,865 
Payable for shares of the fund repurchased  144,377 
Payable for compensation of Manager (Note 2)  61,651 
Payable for custodian fees (Note 2)  6,960 
Payable for investor servicing fees (Note 2)  15,423 
Payable for Trustee compensation and expenses (Note 2)  99,653 
Payable for administrative services (Note 2)  1,575 
Payable for distribution fees (Note 2)  13,830 
Payable for variation margin on futures contracts (Note 1)  14,553 
Collateral on securities loaned, at value (Note 1)  1,068,687 
Other accrued expenses  57,401 
Total liabilities  1,557,975 
 
Net assets  $128,805,217 
 
Represented by   
Paid-in capital (Unlimited shares authorized) (Notes 1 and 4)  $67,894,887 
Total distributable earnings (Note 1)  60,910,330 
Total — Representing net assets applicable to capital shares outstanding  $128,805,217 
Computation of net asset value Class IA   
Net assets  $65,081,185 
Number of shares outstanding  3,971,116 
Net asset value, offering price and redemption price per share (net assets divided by number of shares outstanding)  $16.39 
 
Computation of net asset value Class IB   
Net assets  $63,724,032 
Number of shares outstanding  3,895,604 
Net asset value, offering price and redemption price per share (net assets divided by number of shares outstanding)  $16.36 

 

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

8   Putnam VT Multi-Cap Core Fund 

 


Statement of operations
Year ended 12/31/22

Investment income   
Dividends (net of foreign tax of $5,216)  $2,436,641 
Interest (including interest income of $45,380 from investments in affiliated issuers) (Note 5)  49,925 
Securities lending (net of expenses) (Notes 1 and 5)  4,622 
Total investment income  2,491,188 
 
Expenses   
Compensation of Manager (Note 2)  795,912 
Investor servicing fees (Note 2)  101,731 
Custodian fees (Note 2)  16,385 
Trustee compensation and expenses (Note 2)  5,850 
Distribution fees (Note 2)  183,969 
Administrative services (Note 2)  4,335 
Other  85,988 
Total expenses  1,194,170 
Expense reduction (Note 2)  (249) 
Net expenses  1,193,921 
 
Net investment income  1,297,267 
 
Realized and unrealized gain (loss)   
Net realized gain (loss) on:   
Securities from unaffiliated issuers (Notes 1 and 3)  12,161,122 
Foreign currency transactions (Note 1)  (301) 
Futures contracts (Note 1)  53,413 
Written options (Note 1)  (11,977) 
Total net realized gain  12,202,257 
Change in net unrealized appreciation (depreciation) on:   
Securities from unaffiliated issuers  (39,950,430) 
Assets and liabilities in foreign currencies  41 
Futures contracts  (95,282) 
Total change in net unrealized depreciation  (40,045,671) 
 
Net loss on investments  (27,843,414) 
 
Net decrease in net assets resulting from operations  $(26,546,147) 

 

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

Putnam VT Multi-Cap Core Fund   9 

 


Statement of changes in net assets

  Year ended  Year ended 
  12/31/22  12/31/21 
Decrease in net assets     
Operations:     
Net investment income  $1,297,267  $1,630,050 
Net realized gain on investments and foreign currency transactions  12,202,257  85,895,535 
Change in net unrealized depreciation of investments and assets and liabilities in foreign currencies  (40,045,671)  (12,236,543) 
Net increase (decrease) in net assets resulting from operations  (26,546,147)  75,289,042 
Distributions to shareholders (Note 1):     
From ordinary income     
Net investment income     
Class IA  (1,250,352)  (681,223) 
Class IB  (840,477)  (1,409,074) 
Net realized short-term gain on investments     
Class IA  (4,051,558)  (2,271,813) 
Class IB  (4,268,556)  (6,226,348) 
From net realized long-term gain on investments     
Class IA  (14,683,704)  (4,530,773) 
Class IB  (15,470,154)  (12,417,469) 
Increase (decrease) from capital share transactions (Note 4)  19,692,436  (144,993,363) 
Total decrease in net assets  (47,418,512)  (97,241,021) 
Net assets:     
Beginning of year  176,223,729  273,464,750 
End of year  $128,805,217  $176,223,729 

 

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

10   Putnam VT Multi-Cap Core 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 (%)b,d		 Ratio
 of net investment
 income (loss)
 to average
 net assets (%)		 Portfolio
 turnover (%)
Class IA                           
12/31/22­  $25.69­  .19­  (3.30)  (3.11)  (.39)  (5.80)  (6.19)  $16.39­  (15.54)  $65,081­  .70e  1.02­  17­ 
12/31/21  21.65­  .19­  6.18­  6.37­  (.21)  (2.12)  (2.33)  25.69­  31.32­  85,607­  .66­  .79­  29­ 
12/31/20  19.67­  .22­  2.76­  2.98­  (.23)  (.77)  (1.00)  21.65­  17.64­  71,010­  .67­  1.23­  47­ 
12/31/19  16.93­  .25­  4.74­  4.99­  (.26)  (1.99)  (2.25)  19.67­  32.00­  67,622­  .68­  1.38­  24­ 
12/31/18  20.58­  .25­  (1.66)  (1.41)  (.28)  (1.96)  (2.24)  16.93­  (7.44)  58,155­  .68­  1.27­  34­ 
Class IB                           
12/31/22­  $25.57­  .14­  (3.30)  (3.16)  (.25)  (5.80)  (6.05)  $16.36­  (15.77)  $63,724­  .95 e  .77­  17­ 
12/31/21  21.55­  .12­  6.18­  6.30­  (.16)  (2.12)  (2.28)  25.57­  31.07­  90,617­  .91­  .52­  29­ 
12/31/20  19.58­  .18­  2.74­  2.92­  (.18)  (.77)  (.95)  21.55­  17.27­  202,455­  .92­  .98­  47­ 
12/31/19  16.86­  .20­  4.72­  4.92­  (.21)  (1.99)  (2.20)  19.58­  31.63­  198,969­  .93­  1.13­  24­ 
12/31/18  20.49­  .20­  (1.64)  (1.44)  (.23)  (1.96)  (2.19)  16.86­  (7.63)  172,132­  .93­  1.02­  34­ 

 

Before June 30, 2018, the fund was managed with a materially different investment strategy and may have achieved materially different performance results under its current investment strategy from that shown for periods before this date.

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

c Total return assumes dividend reinvestment.

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

e Includes one-time proxy cost of 0.01%.

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

Putnam VT Multi-Cap Core Fund   11 

 


Notes to financial statements 12/31/22

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, 2022 through December 31, 2022.

Putnam VT Multi-Cap Core 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 (growth or value stocks or both) of U.S. companies of any size that Putnam Management believes have favorable investment potential. For example, the fund may purchase stocks of companies with stock prices that reflect a value lower than that which Putnam Management places on the company. Putnam Management may also consider other factors Putnam Management believes will cause the stock price to rise and 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.

Market quotations are not considered to be readily available for certain debt obligations (including short-term investments with remaining maturities of 60 days or less) and other investments; such investments are valued on the basis of valuations furnished by an independent pricing service approved by the Trustees or dealers selected by Putnam Management. Such services or dealers determine valuations for normal institutional-size trading units of such securities using methods based on market transactions for comparable securities and various relationships, generally recognized by institutional traders, between securities (which consider such factors as security prices, yields, maturities and ratings). These securities will generally be categorized as Level 2.

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.

Joint trading account Pursuant to an exemptive order from the SEC, the fund may transfer uninvested cash balances into a joint trading account along with the cash of other registered investment companies and certain other accounts managed by Putnam Management. These balances may be invested in issues of short-term investments having maturities of up to 90 days.

Repurchase agreements The fund, or any joint trading account, through its custodian, receives delivery of the underlying securities, the fair value of which at the time of purchase is required to be in an amount at least equal to the resale

12   Putnam VT Multi-Cap Core Fund 

 


price, including accrued interest. Collateral for certain tri-party repurchase agreements is held at the counterparty’s custodian in a segregated account for the benefit of the fund and the counterparty. Putnam Management is responsible for determining that the value of these underlying securities is at all times at least equal to the resale price, including accrued interest. In the event of default or bankruptcy by the other party to the agreement, retention of the collateral may be subject to legal proceedings.

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, if any, is recorded on the accrual basis. Amortization and accretion of premiums and discounts on debt securities, if any, 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 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 manage downside risks.

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 pledged 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 counterpar-ty’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 $1,068,687 and the value of securities loaned amounted to $1,041,024.

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 $100 million ($317.5 million prior to October 14, 2022) 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 Bank Funding Rate for the committed line of credit and 1.30% plus the higher of (1) the

Putnam VT Multi-Cap Core Fund   13 

 


Federal Funds rate and (2) the Overnight Bank Funding Rate 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.

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, from nontaxable dividends, from unrealized gains and losses on certain futures contracts, from a redesignation of taxable distributions, from partnership income and from a transfer of in-kind gain/loss. 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 $596,329 to decrease undistributed net investment income, $291,300 to decrease paid-in capital and $887,629 to increase accumulated net realized gain.

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  $52,733,614 
Unrealized depreciation  (5,284,897) 
Net unrealized appreciation  47,448,717 
Undistributed ordinary income  251,834 
Undistributed long-term gains  13,209,725 
Undistributed short-term gains  — 
Cost for federal income tax purposes  $82,627,751 

 

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 34.3% 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:

0.710%  of the first $5 billion, 
0.660%  of the next $5 billion, 
0.610%  of the next $10 billion, 
0.560%  of the next $10 billion, 
0.510%  of the next $50 billion, 
0.490%  of the next $50 billion, 
0.480%  of the next $100 billion and 
0.475%  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 0.548% of the fund’s average net assets.

Putnam Management has contractually agreed, through April 30, 2024, 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 0.25% (prior to July 1, 2022, the annual rate was 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  $50,181 
Class IB  51,550 
Total  $101,731 

 

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. For the reporting period, the fund’s expenses were reduced by $249 under the expense offset arrangements.

Each Independent Trustee of the fund receives an annual Trustee fee, of which $107, 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

14   Putnam VT Multi-Cap Core Fund 

 


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. 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 (Long-term)  $24,282,545  $49,536,414 
U.S. government securities     
(Long-term)  —  — 
Total  $24,282,545  $49,536,414 

 

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. In certain circumstances shares may be purchased or redeemed through the delivery to the fund or receipt by the shareholders, respectively, of securities, the fair value of which is used to determine the number of shares issued or redeemed. Subscriptions and redemptions are presented at the omnibus level. Transactions in capital shares were as follows:

    Class IA shares      Class IB shares   
  Year ended 12/31/22  Year ended 12/31/21  Year ended 12/31/22  Year ended 12/31/21 
  Shares  Amount  Shares  Amount  Shares  Amount  Shares  Amount 
Shares sold  68,132  $1,231,987  186,079  $4,440,008  153,374  $3,010,684  190,099  $4,507,083 
Shares issued in connection with                 
reinvestment of distributions  1,046,915  19,985,614  342,822  7,483,809  1,078,009  20,579,187  921,548  20,052,891 
  1,115,047  21,217,601  528,901  11,923,817  1,231,383  23,589,871  1,111,647  24,559,974 
Shares repurchased  (475,974)  (8,829,657)  (477,299)  (11,383,499)  (880,280)  (16,285,379)  (2,093,951)  (49,367,548) 
Redemptions in kind  —  —  —  —  —  —  (4,866,026)  (120,726,107) 
Net increase (decrease)  639,073  $12,387,944  51,602  $540,318  351,103  $7,304,492  (5,848,330)  $(145,533,681) 

 

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  12/31/21  Purchase cost  Sale proceeds  Investment income  12/31/22 
Short-term investments           
Putnam Cash Collateral Pool, LLC*  $4,116,365  $52,633,618  $55,681,296  $33,184  $1,068,687 
Putnam Short Term Investment           
Fund**  —  17,561,724  12,610,406  45,380  4,951,318 
Total Short-term investments  $4,116,365  $70,195,342  $68,291,702  $78,564  $6,020,005 

 

*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.

The Covid-19 pandemic and efforts to contain its spread have resulted in, among other effects, significant market volatility, exchange trading suspensions and closures, declines in global financial markets, higher default rates, significant changes in fiscal and monetary policies, and economic downturns and recessions. The effects of the Covid-19 pandemic have negatively affected, and may continue to negatively affect, the global economy, the economies of the United States and other individual countries, the financial performance of individual issuers, sectors, industries, asset classes, and markets, and the value, volatility, and liquidity of particular securities and other assets. The effects of the Covid-19 pandemic also are likely to exacerbate other risks that apply to the fund, which could negatively impact the fund’s performance and lead to losses on your investment in the fund. The duration of the Covid-19 pandemic and its effects cannot be determined with certainty.

Putnam VT Multi-Cap Core 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)  $—* 
Written equity option contracts (contract amount)  $2,000 
Futures contracts (number of contracts)  10 

 

*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 
      Payables, Net assets —   
Equity contracts  Receivables  $—  Unrealized depreciation  $95,282* 
Total    $—    $95,282 

 

*Includes cumulative appreciation/depreciation of futures contracts as reported in the fund’s portfolio. Only current day’s variation margin is reported within the Statement of assets and liabilities.

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  $31,111  $53,413  $84,524 
Total  $31,111  $53,413  $84,524 

 

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  Futures  Total 
Equity contracts  $(95,282)  $(95,282) 
Total  $(95,282)  $(95,282) 

 

Note 8 — Offsetting of financial and derivative assets and liabilities

The following table summarizes any derivatives, repurchase agreements and reverse repurchase agreements, at the end of the reporting period, that are subject to an enforceable master netting agreement or similar agreement. For securities lending transactions or borrowing transactions associated with securities sold short, if any, see Note 1. For financial reporting purposes, the fund does not offset financial assets and financial liabilities that are subject to the master netting agreements in the Statement of assets and liabilities.

  BofA Securities, Inc. Total
Assets:     
Futures contracts§  $—  $— 
Total Assets  $—  $— 
Liabilities:     
Futures contracts§  $14,553  $14,553 
Total Liabilities  $14,553  $14,553 
Total Financial and Derivative Net Assets  $(14,553)  $(14,553) 
Total collateral received (pledged)†##  $—   
Net amount  $(14,553)   
Controlled collateral received (including TBA commitments)**  $—  $— 
Uncontrolled collateral received  $—  $— 
Collateral (pledged) (including TBA commitments)**  $—  $— 

 

**Included with Investments in securities on the Statement of assets and liabilities.

†Additional collateral may be required from certain brokers based on individual agreements.

##Any over-collateralization of total financial and derivative net assets is not shown. Collateral may include amounts related to unsettled agreements.

§Includes current day’s variation margin only as reported on the Statement of assets and liabilities, which is not collateralized. Cumulative appreciation/(depreciation) for futures contracts is represented in the tables listed after the fund’s portfolio. Collateral pledged for initial margin on futures contracts, which is not included in the table above, amounted to $291,620.

Note 9 — Name change and adoption of non-fundamental investment policy

On January 27, 2023, the fund’s Board of Trustees approved a change in name for the fund to Putnam VT Core Equity Fund and the adoption of a new non-fundamental investment policy, both of which are anticipated to be effective on April 30, 2023 (the “Effective Date”). As of the Effective Date, the fund will invest, under normal circumstances, at least 80% of its net assets (plus the amount of any borrowings for investment purposes) in equity investments including common stocks, preferred stocks, convertible securities, warrants, American Depositary Receipts (ADRs) and Global Depositary Receipts (GDRs). This policy may be changed only after 60 days’ notice to shareholders. .

16   Putnam VT Multi-Cap Core Fund 

 


Federal tax information (Unaudited)

Pursuant to §852 of the Internal Revenue Code, as amended, the fund hereby designates $14,636,761 as a capital gain dividend with respect to the taxable year ended December 31, 2022, or, if subsequently determined to be different, the net capital gain of such year.

The fund designated 18.95% of ordinary income distributions as qualifying for the dividends received deduction for corporations.

Putnam VT Multi-Cap Core Fund   17 

 



18   Putnam VT Multi-Cap Core 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 100 Federal Street, Boston, MA 02110.

As of December 31, 2022, there were 92 mutual funds, 4 closed-end funds, and 7 exchange-traded funds in the Putnam funds complex. Each Trustee serves as Trustee of all funds in the Putnam funds complex.

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

Putnam VT Multi-Cap Core Fund   19 

 


Officers

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

James F. Clark (Born 1974)  Richard T. Kircher (Born 1962)  Denere P. Poulack (Born 1968) 
Vice President and Chief Compliance Officer  Vice President and BSA Compliance Officer  Assistant Vice President, Assistant Clerk, 
Since 2016  Since 2019  and Assistant Treasurer 
Chief Compliance Officer and Chief Risk Officer,  Assistant Director, Operational Compliance,  Since 2004 
Putnam Investments, and Chief Compliance  Putnam Investments and Putnam   
Officer, Putnam Management  Retail Management  Janet C. Smith (Born 1965) 
    Vice President, Principal Financial 
Nancy E. Florek (Born 1957)  Martin Lemaire (Born 1984)  Officer, Principal Accounting Officer, 
Vice President, Director of Proxy Voting  Vice President and Derivatives Risk Manager  and Assistant Treasurer 
and Corporate Governance, Assistant Clerk,  Since 2022  Since 2007 
and Assistant Treasurer  Risk Manager and Risk Analyst,  Head of Fund Administration Services, Putnam 
Since 2000  Putnam Investments  Investments and Putnam Management 
 
Michael J. Higgins (Born 1976)  Susan G. Malloy (Born 1957)  Stephen J. Tate (Born 1974) 
Vice President, Treasurer, and Clerk  Vice President and Assistant Treasurer  Vice President and Chief Legal Officer 
Since 2010  Since 2007  Since 2021 
  Head of Accounting and Middle Office Services,  General Counsel, Putnam Investments, Putnam 
Jonathan S. Horwitz (Born 1955)  Putnam Investments and Putnam Management  Management, and Putnam Retail Management 
Executive Vice President, Principal Executive     
Officer, and Compliance Liaison  Alan G. McCormack (Born 1964)  Mark C. Trenchard (Born 1962) 
Since 2004  Vice President and Derivatives Risk Manager  Vice President 
  Since 2022  Since 2002 
  Head of Quantitative Equities and Risk,  Director of Operational Compliance, Putnam 
  Putnam Investments  Investments and 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 100 Federal Street, Boston, MA 02110.

20   Putnam VT Multi-Cap Core 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, 2022, 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:  Barbara M. Baumann, Vice Chair 
Boston, MA 02110  P.O. Box 219697  Liaquat Ahamed 
  Kansas City, MO 64121-9697  Katinka Domotorffy 
Investment Sub-Advisor  1-800-225-1581  Catharine Bond Hill 
Putnam Investments Limited    Jennifer Williams Murphy 
16 St James’s Street  Custodian  Marie Pillai 
London, England SW1A 1ER  State Street Bank and Trust Company  George Putnam III 
    Robert L. Reynolds 
Marketing Services  Legal Counsel  Manoj P. Singh 
Putnam Retail Management  Ropes & Gray LLP  Mona K. Sutphen 
Limited Partnership     
100 Federal Street  Independent Registered   
Boston, MA 02110  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 Multi-Cap Core Fund   21 

 


This report has been prepared for the shareholders   
of Putnam VT Multi-Cap Core Fund.  VTAN012 332112 2/23 

 

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 January 2023, the Code of Ethics of Putnam Investments and Code of Ethics of Putnam Funds were amended. The key changes to the Putnam Investments Code of Ethics are as follows: (i) Prohibition on investments in a single stock ETFs and (ii) Revision to the 7-day blackout rule for Analysts. The key change to the Putnam Funds Code of Ethics was that the provisions of the Code of Ethics for employees of PanAgora Asset Management, inc. and any of its subsidiaries are excluded from the Putnam Funds’ Code of Ethics.

Item 3. Audit Committee Financial Expert:
The Funds’ Audit, Compliance and Risk 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 member of the Audit, Compliance and Risk Committee also possesses a combination of knowledge and experience with respect to financial accounting matters, as well as other attributes, that qualifies him or her for service on the Committee. In addition, the Trustees have determined that each of Dr. Hill, Ms. Murphy 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 Risk 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, 2022 $37,838 $ — $7,391 $ —
December 31, 2021 $34,390 $ — $5,812 $ —

For the fiscal years ended December 31, 2022 and December 31, 2021, the fund’s independent auditor billed aggregate non-audit fees in the amounts of $249,402 and $299,232 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 Risk Committee. The Audit, Compliance and Risk 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 Risk 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, 2022 $ — $242,011 $ — $ —
December 31, 2021 $ — $293,420 $ — $ —

Item 5. Audit Committee of Listed Registrants
Not applicable

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

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

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

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

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

Item 11. Controls and Procedures:
(a) The registrant’s principal executive officer and principal financial officer have concluded, based on their evaluation of the effectiveness of the design and operation of the registrant’s disclosure controls and procedures as of a date within 90 days of the filing date of this report, that the design and operation of such procedures are generally effective to provide reasonable assurance that information required to be disclosed by the registrant in this report is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms.

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

Item 12. 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, 2023
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, 2023
By (Signature and Title):
/s/ Janet C. Smith
Janet C. Smith
Principal Financial Officer

Date: February 28, 2023