Putnam Variable Trust N-CSRS Certified semi-annual shareholder report (management investment company)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: (811-05346)

Exact name of registrant as specified in charter: Putnam Variable Trust

Address of principal executive offices: One Post Office Square, Boston, Massachusetts 02109

Name and address of agent for service: Robert T. Burns, Vice President
One Post Office Square
Boston, Massachusetts 02109

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, 2015

Date of reporting period: January 1, 2015 – June 30, 2015

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

Dear Shareholder:

Looking back on the first half of 2015, we can highlight some transitions in the financial markets. The U.S. economy has rallied from a brief dip during the first quarter, and bond yields have risen on a sustained basis in recent months. Firmer data on employment growth, wage gains, and consumer prices underscore this progress.

The Federal Reserve is monitoring these and other indicators as it considers raising interest rates, an action it has not taken since 2006. Higher interest rates can pose a risk to fixed-income investments, while also having a less direct impact on stocks by adding to business financing costs, among other effects.

Through mid-2015, U.S. stock market averages have continued near record-high levels. Although gains have been modest this year, the U.S. market has been more placid than China’s market, in which a dizzying advance gave way to a sharp pullback in June, and European markets that were caught up in Greece’s debt crisis. Global market conditions, we believe, call for a well-crafted and flexible strategy.

With the possibility that markets could move in different directions from here, it might be a prudent time to consult your financial advisor and determine whether any adjustments or additions to your portfolio are warranted.

In the following pages, your portfolio manager provides a perspective for your consideration. Putnam’s disciplined fundamental research promotes a culture of thinking proactively about risks. We share with Putnam’s managers a deep conviction that an active, research-driven approach can play a valuable role in your portfolio.

As always, thank you for investing with Putnam. We would also like to extend our thanks to Charles Curtis, who has retired from the Board of Trustees, for his many years of dedicated service.

Performance summary (as of 6/30/15)

Investment objective

Capital appreciation

Net asset value June 30, 2015
Class IA: $15.28		Class IB: $15.13
Total return at net asset value
			Russell 2000
(as of 6/30/15)	Class IA shares*	Class IB shares*	Value Index
6 months	3.70%	3.56%	0.76%
1 year	3.45	3.25	0.78
5 years	117.97	115.18	99.47
Annualized	16.86	16.56	14.81
10 years	87.38	82.81	94.40
Annualized	6.48	6.22	6.87
Life	349.13	332.35	334.18
Annualized	9.74	9.48	9.51

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.

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

Putnam VT Small Cap Value Fund   1 

Report from your fund’s manager

What was the market environment like for small-cap value investors during the six-month reporting period ended June 30, 2015?

U.S. small-cap value stocks continued their advance during the first half of 2015, despite macroeconomic headwinds that tempered those gains at times. With the U.S. unemployment rate and other economic indicators improving, speculation intensified that the Federal Reserve might raise interest rates for the first time in nine years. However, expectations for monetary tightening were gradually pushed back following the economic slowdown in the first quarter of 2015; the low crude oil prices that eased inflationary pressure; and the strong dollar, which dampened growth by making exports less competitive for U.S. multinational corporations. Outside the United States, the Greek debt crisis and slowing economic activity in China and other emerging markets added to volatility in equity markets worldwide.

One significant contributor to the performance of small-cap stocks was the widely held belief that smaller companies are more insulated from the effects of the strong U.S. dollar, since they are more domestically focused than are large companies. The Russell 2000 Index, a broad measure of small-cap stock performance, set several record highs during the period, peaking on June 23. In the later weeks of the period, some profit taking came into play, as the asset class has enjoyed considerable gains since late 2012. Small-cap stocks also lost some of their gains due to expectations that the Fed will raise interest rates, albeit slowly, later this year. Small companies also tend to have more leverage, which could be a headwind when rates begin to rise, and debt costs could also rise.

How did Putnam VT Small Cap Fund perform for the six-month reporting period ended June 30, 2015?

The portfolio outperformed its benchmark, the Russell 2000 Value Index, as well as the Russell 3000 Index, a measure of broad market performance, for the period. Stock selection effects were positive. Sector allocation effects, a residual of the investment process, also added value. Results from the industrials, information technology, and materials sectors contributed positively to performance. Investments in the financials and utilities sectors held back performance. Transactional cash held within the portfolio played a defensive role during the quarter’s volatility, augmenting results relative to the benchmark.

What is your outlook for small-cap stocks for the balance of 2015?

While we believe resilient economic growth and low inflation provide a supportive environment, the easy part of the bull market in U.S. stocks may be over. We are well past the stage in which investors can readily find an abundance of compelling investment opportunities at reasonable valuations, in our view. However, we continue to be upbeat in our outlook for small-cap stocks, as we believe the fundamental health of small-cap companies remains fairly strong.

Since valuations are high following a multiyear bull market caused in large part by low interest rates, we recognize that an increase in rates could have a negative impact on market returns. Small-cap stocks tend to be more sensitive to market moves. Therefore, we believe that a dramatic downturn in the markets could have an amplified effect on companies within the small-cap universe. That said, small companies on the whole (though there are notable exceptions) tend to be more domestically focused than their larger multinational peers. Thus, we believe that their earnings may be less affected by a rising U.S. dollar.

We will continue to focus on investing in what we believe are high-quality small-cap companies that are priced at a discount to their intrinsic value and that we believe have a catalyst to unlock value that has not yet been fully recognized by investors. We believe our bottom-up investment process, which seeks to outperform our benchmark through stock selection rather than top-down macroeconomics, is an effective way to add value in each sector of the benchmark while limiting overall risk and risk relative to the benchmark.

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

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

Your fund’s manager

Portfolio Manager Eric N. Harthun, CFA, joined Putnam in 2000 and has been in the investment industry since 1994.

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

2   Putnam VT Small Cap Value Fund 

Understanding your fund’s expenses

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

Review your fund’s expenses

The two left-hand columns of the Expense per $1,000 table show the expenses you would have paid on a $1,000 investment in your fund from January 1, 2015, to June 30, 2015. 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 Expense 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 12/31/14*	1.03%	1.28%
Annualized expense ratio for the six-month period
ended 6/30/15	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 0.27%, which is not included in the financial highlights or annualized expense ratios. Expenses are shown as a percentage of average net assets.

* Restated to reflect current fees.

Expense per $1,000
	Expenses and value for a		Expenses and value for a
	$1,000 investment, assuming		$1,000 investment, assuming a
	actual returns for the 6 months		hypothetical 5% annualized return
	ended 6/30/15		for the 6 months ended 6/30/15
	Class IA	Class IB	Class IA	Class IB
Expenses paid
per $1,000*†	$3.84	$5.10	$3.81	$5.06
Ending value
(after expenses)	$1,037.00	$1,035.60	$1,021.03	$1,019.79

*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 June 30, 2015. 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 

The fund’s portfolio 6/30/15 (Unaudited)

COMMON STOCKS (92.5%)*	Shares	Value
Aerospace and defense (0.8%)
Engility Holdings, Inc.	30,700	$772,412
Vectrus, Inc. †	22,100	549,627
		1,322,039
Air freight and logistics (1.1%)
Atlas Air Worldwide Holdings, Inc. †	20,100	1,104,696
Park-Ohio Holdings Corp.	15,778	764,602
		1,869,298
Auto components (1.6%)
Goodyear Tire & Rubber Co. (The)	38,500	1,160,775
Remy International, Inc.	42,200	933,042
Stoneridge, Inc. †	61,854	724,310
		2,818,127
Banks (14.6%)
Ameris Bancorp	37,391	945,615
Banc of California, Inc.	51,306	705,458
Berkshire Hills Bancorp, Inc.	31,400	894,272
BNC Bancorp	46,900	906,577
Chemical Financial Corp.	40,293	1,332,087
Eagle Bancorp, Inc. †	16,440	722,702
First Connecticut Bancorp, Inc.	29,700	471,339
First Merchants Corp.	50,600	1,249,820
First NBC Bank Holding Co. †	21,996	791,856
Franklin Financial Network, Inc. †	40,321	924,964
Fulton Financial Corp.	102,400	1,337,344
Great Western Bancorp, Inc.	41,300	995,743
Hanmi Financial Corp.	42,700	1,060,668
Lakeland Financial Corp.	22,200	962,814
Old National Bancorp S	91,500	1,323,090
Pacific Premier Bancorp, Inc. †	54,600	926,016
Popular, Inc. (Puerto Rico) †	22,920	661,471
ServisFirst Bancshares, Inc.	28,496	1,070,595
Simmons First National Corp. Class A	23,040	1,075,507
Southside Bancshares, Inc.	29,400	859,362
Sterling Bancorp S	75,100	1,103,970
Tristate Capital Holdings, Inc. †	80,213	1,037,154
WesBanco, Inc.	28,100	955,962
Western Alliance Bancorp †	20,700	698,832
Wintrust Financial Corp.	26,700	1,425,246
Yadkin Financial Corp. †	43,000	900,850
		25,339,314
Beverages (0.4%)
Cott Corp. (Canada)	72,769	711,681
		711,681
Biotechnology (1.4%)
Eagle Pharmaceuticals, Inc. † S	7,500	606,450
Emergent BioSolutions, Inc. †	34,903	1,150,054
PDL BioPharma, Inc. S	100,500	646,215
		2,402,719
Building products (2.4%)
CaesarStone Sdot-Yam, Ltd. (Israel)	14,255	977,038
Continental Building Products, Inc. †	48,642	1,030,724
NCI Building Systems, Inc. †	47,972	722,938
PGT, Inc. †	95,081	1,379,625
		4,110,325
Capital markets (1.1%)
Cowen Group, Inc. Class A † S	130,615	835,936
OM Asset Management PLC (United Kingdom)	59,305	1,055,036
		1,890,972

COMMON STOCKS (92.5%)* cont.	Shares	Value
Chemicals (3.2%)
American Vanguard Corp.	51,600	$712,080
Cabot Corp.	17,100	637,659
Chemours Co. (The) †	35,500	568,000
Ferro Corp. †	67,100	1,125,938
Minerals Technologies, Inc.	15,095	1,028,422
Olin Corp. S	25,900	698,005
Orion Engineered Carbons SA (Luxembourg)	39,100	721,786
		5,491,890
Commercial services and supplies (2.5%)
ARC Document Solutions, Inc. †	94,700	720,667
Deluxe Corp.	18,000	1,116,000
Ennis, Inc.	37,306	693,519
Knoll, Inc.	41,500	1,038,745
Pitney Bowes, Inc.	34,700	722,107
		4,291,038
Communications equipment (0.4%)
Polycom, Inc. †	66,900	765,336
		765,336
Construction and engineering (1.1%)
Comfort Systems USA, Inc.	26,300	603,585
EMCOR Group, Inc.	15,600	745,212
Orion Marine Group, Inc. †	69,200	499,624
		1,848,421
Consumer finance (1.3%)
Encore Capital Group, Inc. † S	25,900	1,106,966
PRA Group, Inc. † S	18,200	1,134,042
		2,241,008
Diversified consumer services (0.6%)
Carriage Services, Inc. S	45,900	1,096,092
		1,096,092
Diversified financial services (0.2%)
Gain Capital Holdings, Inc.	33,200	317,392
		317,392
Diversified telecommunication services (0.5%)
Iridium Communications, Inc. † S	98,600	896,274
		896,274
Electric utilities (1.8%)
IDACORP, Inc.	28,500	1,599,990
PNM Resources, Inc.	33,100	814,260
Portland General Electric Co.	23,600	782,576
		3,196,826
Electrical equipment (0.5%)
General Cable Corp.	46,200	911,526
		911,526
Electronic equipment, instruments, and components (2.4%)
Neonode, Inc. † S	139,400	411,230
Newport Corp. †	55,900	1,059,864
Plexus Corp. †	21,700	952,196
SuperCom, Ltd. (Israel) †	71,789	910,285
SYNNEX Corp. S	11,300	827,047
		4,160,622
Energy equipment and services (2.0%)
Core Laboratories NV S	7,300	832,492
Independence Contract Drilling, Inc. †	48,656	431,579
Key Energy Services, Inc. †	203,244	365,839
Matrix Service Co. †	40,500	740,340
Patterson-UTI Energy, Inc.	42,400	797,756
Tidewater, Inc. S	12,536	284,943
		3,452,949
Food and staples retail (0.8%)
SpartanNash Co.	41,940	1,364,728
		1,364,728

4   Putnam VT Small Cap Value Fund 

COMMON STOCKS (92.5%)* cont.	Shares	Value
Food products (0.5%)
B&G Foods, Inc.	29,200	$833,076
		833,076
Gas utilities (0.5%)
Southwest Gas Corp. S	16,731	890,257
		890,257
Health-care equipment and supplies (1.1%)
Alere, Inc. †	21,400	1,128,850
Lantheus Holdings, Inc. †	124,604	771,299
Teladoc, Inc. †	342	6,498
		1,906,647
Health-care providers and services (0.5%)
Ensign Group, Inc. (The)	18,964	968,302
		968,302
Hotels, restaurants, and leisure (1.1%)
ClubCorp Holdings, Inc.	44,800	1,069,824
Marriott Vacations Worldwide Corp. S	9,999	917,408
		1,987,232
Household durables (1.4%)
Century Communities, Inc. †	43,100	867,603
Installed Building Products, Inc. †	28,149	689,088
WCI Communities, Inc. †	38,415	936,942
		2,493,633
Independent power and renewable electricity producers (0.6%)
Dynegy, Inc. †	35,400	1,035,450
		1,035,450��
Insurance (7.8%)
Allied World Assurance Co. Holdings AG	30,700	1,326,854
American Financial Group, Inc.	17,543	1,140,997
AMERISAFE, Inc.	18,800	884,728
Endurance Specialty Holdings, Ltd. S	14,500	952,650
Hanover Insurance Group, Inc. (The)	16,800	1,243,704
Maiden Holdings, Ltd. (Bermuda) S	80,900	1,276,602
National General Holdings Corp.	45,100	939,433
PartnerRe, Ltd.	9,500	1,220,750
Patriot National, Inc. †	57,226	915,616
Reinsurance Group of America, Inc.	15,573	1,477,411
Stancorp Financial Group	13,800	1,043,418
Validus Holdings, Ltd.	25,714	1,131,159
		13,553,322
Internet software and services (1.8%)
Everyday Health, Inc. †	76,100	972,558
j2 Global, Inc.	18,200	1,236,508
Monster Worldwide, Inc. † S	144,829	947,182
		3,156,248
IT Services (1.8%)
Convergys Corp.	55,200	1,407,048
Global Cash Access Holdings, Inc. †	111,500	863,010
Perficient, Inc. †	43,900	844,636
		3,114,694
Leisure products (0.9%)
Smith & Wesson Holding Corp. † S	90,700	1,504,713
		1,504,713
Machinery (1.0%)
Briggs & Stratton Corp. S	53,700	1,034,262
Oshkosh Corp. S	18,600	788,268
		1,822,530
Media (1.1%)
Live Nation Entertainment, Inc. †	26,500	728,485
Madison Square Garden Co. (The) Class A †	6,500	542,685
MDC Partners, Inc. Class A	32,850	647,145
		1,918,315

COMMON STOCKS (92.5%)* cont.	Shares	Value
Metals and mining (1.0%)
Globe Specialty Metals, Inc.	55,040	$974,208
Horsehead Holding Corp. † S	66,200	775,864
		1,750,072
Multi-utilities (0.8%)
Avista Corp.	48,731	1,493,605
		1,493,605
Oil, gas, and consumable fuels (6.2%)
Aegean Marine Petroleum Network, Inc. (Greece) S	62,317	770,238
Bill Barrett Corp. † S	31,600	271,444
Callon Petroleum Co. †	76,369	635,390
DHT Holdings, Inc. (Bermuda)	70,100	544,677
Energen Corp.	13,893	948,892
EP Energy Corp. Class A † S	50,300	640,319
Gulfport Energy Corp. †	19,300	776,825
Memorial Resource Development Corp. †	45,500	863,135
Midstates Petroleum Co., Inc. † S	99,800	92,814
PBF Energy, Inc. Class A	33,900	963,438
Ring Energy, Inc. † S	54,508	609,945
Scorpio Tankers, Inc.	127,506	1,286,536
SM Energy Co.	12,901	594,994
Stone Energy Corp. †	63,900	804,501
Teekay Tankers, Ltd. Class A (Bermuda)	98,000	647,780
Whiting Petroleum Corp. †	7,739	260,030
		10,710,958
Pharmaceuticals (1.2%)
Medicines Co. (The) † S	18,200	520,702
Pernix Therapeutics Holdings † S	144,200	853,664
POZEN, Inc. †	64,600	666,026
		2,040,392
Professional services (1.7%)
Heidrick & Struggles International, Inc.	40,300	1,051,024
Kforce, Inc.	37,500	857,625
On Assignment, Inc. †	25,200	989,856
		2,898,505
Real estate investment trusts (REITs) (7.8%)
AG Mortgage Investment Trust, Inc.	45,200	781,056
American Assets Trust, Inc.	20,720	812,431
CBL & Associates Properties, Inc.	43,100	698,220
Cherry Hill Mortgage Investment Corp.	44,855	727,548
Colony Capital, Inc. Class A	39,700	899,205
Education Realty Trust, Inc.	18,101	567,647
EPR Properties S	14,100	772,398
Healthcare Trust of America, Inc. Class A	17,700	423,915
iStar Financial, Inc. †	88,100	1,173,492
MFA Financial, Inc.	103,081	761,769
One Liberty Properties, Inc.	24,788	527,489
Piedmont Office Realty Trust, Inc. Class A	29,200	513,628
RAIT Financial Trust S	136,000	830,960
Rayonier, Inc.	44,700	1,142,085
Summit Hotel Properties, Inc. S	126,210	1,641,992
Two Harbors Investment Corp.	84,500	823,030
ZAIS Financial Corp.	23,400	378,378
		13,475,243
Real estate management and development (0.4%)
RE/MAX Holdings, Inc. Class A	20,825	739,496
		739,496
Road and rail (0.5%)
Ryder System, Inc.	9,400	821,278
		821,278

Putnam VT Small Cap Value Fund   5 

COMMON STOCKS (92.5%)* cont.	Shares	Value
Semiconductors and semiconductor equipment (2.4%)
Advanced Energy Industries, Inc. †	37,300	$1,025,377
Cypress Semiconductor Corp. †	72,316	850,436
FormFactor, Inc. †	94,400	868,480
Mattson Technology, Inc. †	191,849	642,694
Xcerra Corp. †	107,700	815,289
		4,202,276
Software (1.0%)
AVG Technologies NV (Netherlands) †	51,633	1,404,934
Glu Mobile, Inc. † S	59,400	368,874
		1,773,808
Specialty retail (1.4%)
Ascena Retail Group, Inc. †	41,100	684,521
Express, Inc. †	49,400	894,634
Office Depot, Inc. †	93,300	807,978
		2,387,133
Technology hardware, storage, and peripherals (1.8%)
BancTec, Inc. 144A CVR F	152,299	—
Logitech International SA (Switzerland)	56,500	828,290
QLogic Corp. †	95,400	1,353,726
Quantum Corp. †	521,700	876,456
		3,058,472
Textiles, apparel, and luxury goods (0.5%)
Steven Madden, Ltd. †	22,700	971,106
		971,106
Thrifts and mortgage finance (4.0%)
BofI Holding, Inc. † S	6,500	687,115
Meta Financial Group, Inc.	24,594	1,055,574
NMI Holdings, Inc. Class A †	81,800	656,036
Provident Financial Services, Inc.	66,900	1,270,431
Walker & Dunlop, Inc. †	33,621	899,026
Washington Federal, Inc.	46,200	1,078,770
WSFS Financial Corp.	45,200	1,236,220
		6,883,172
Trading companies and distributors (1.0%)
Rush Enterprises, Inc. Class A †	32,600	854,446
Stock Building Supply Holdings, Inc. †	46,187	902,956
		1,757,402
Total common stocks (cost $132,563,726)		$160,645,914
INVESTMENT COMPANIES (3.6%)*	Shares	Value
American Capital, Ltd. †	72,600	$983,730
Hercules Technology Growth Capital, Inc.	95,079	1,098,162
Solar Capital, Ltd.	59,201	1,065,618
TCP Capital Corp. S	65,481	1,001,204
TPG Specialty Lending, Inc. S	56,281	956,777
TriplePoint Venture Growth BDC Corp.	78,853	1,062,938
Total investment companies (cost $6,550,617)		$6,168,429
SHORT-TERM INVESTMENTS (16.5%)*	Shares	Value
Putnam Cash Collateral Pool, LLC 0.24% d	21,552,898	$21,552,898
Putnam Short Term Investment Fund 0.10% L	7,059,747	7,059,747
Total short-term investments (cost $28,612,645)		$28,612,645
Total investments (cost $167,726,988)		$195,426,988

Key to holding’s abbreviations
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, 2015 through June 30, 2015 (the reporting period). Within the following notes to the portfolio, references to “ASC 820” represent Accounting Standards Codification 820 Fair Value Measurements and Disclosures and references to “OTC”, if any, represent over-the-counter.

* Percentages indicated are based on net assets of $173,606,582.

† This security is non-income-producing.

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

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

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

At the close of the reporting period, the fund maintained liquid assets totaling $550,225 to cover the settlement of certain securities.

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

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*:
Consumer discretionary	$15,176,351	$—	$—
Consumer staples	2,909,485	—	—
Energy	14,163,907	—	—
Financials	64,439,919	—	—
Health care	7,318,060	—	—
Industrials	21,652,362	—	—
Information technology	20,231,456	—	—**
Materials	7,241,962	—	—
Telecommunication services	896,274	—	—
Utilities	6,616,138	—	—
Total common stocks	160,645,914	—	—
Investment companies	6,168,429	—	—
Short-term investments	7,059,747	21,552,898	—
Totals by level	$173,874,090	$21,552,898	$—

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

** Value of Level 3 security is $—.

During the reporting period, transfers within the fair value hierarchy, if any, (other than certain transfers involving non-U.S. equity securities as described in Note 1) did not represent, in the aggregate, more than 1% of the fund’s net assets measured as of the end of the period.

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
6/30/15 (Unaudited)

Assets
Investment in securities, at value, including $20,910,960 of securities on loan (Note 1):
Unaffiliated issuers (identified cost $139,114,343)	$166,814,343
Affiliated issuers (identified cost $28,612,645) (Notes 1 and 5)	28,612,645
Dividends, interest and other receivables	325,733
Receivable for shares of the fund sold	143,035
Receivable for investments sold	1,542,519
Total assets	197,438,275
Liabilities
Payable for investments purchased	1,707,181
Payable for shares of the fund repurchased	289,615
Payable for compensation of Manager (Note 2)	89,666
Payable for custodian fees (Note 2)	7,667
Payable for investor servicing fees (Note 2)	18,524
Payable for Trustee compensation and expenses (Note 2)	101,344
Payable for administrative services (Note 2)	537
Payable for distribution fees (Note 2)	23,596
Collateral on securities loaned, at value (Note 1)	21,552,898
Other accrued expenses	40,665
Total liabilities	23,831,693
Net assets	$173,606,582
Represented by
Paid-in capital (Unlimited shares authorized) (Notes 1 and 4)	$133,085,570
Undistributed net investment income (Note 1)	1,030,439
Accumulated net realized gain on investments (Note 1)	11,790,573
Net unrealized appreciation of investments	27,700,000
Total — Representing net assets applicable to capital shares outstanding	$173,606,582
Computation of net asset value Class IA
Net assets	$60,834,472
Number of shares outstanding	3,980,849
Net asset value, offering price and redemption price per share (net assets divided by number of shares outstanding)	$15.28
Computation of net asset value Class IB
Net assets	$112,772,110
Number of shares outstanding	7,454,780
Net asset value, offering price and redemption price per share (net assets divided by number of shares outstanding)	$15.13

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

8   Putnam VT Small Cap Value Fund 

Statement of operations
Six months ended 6/30/15 (Unaudited)

Investment income
Dividends (net of foreign tax of $5,887)	$1,876,460
Interest (including interest income of $4,835 from investments in affiliated issuers) (Note 5)	4,876
Securities lending (Note 1)	70,228
Total investment income	1,951,564
Expenses
Compensation of Manager (Note 2)	542,528
Investor servicing fees (Note 2)	62,072
Custodian fees (Note 2)	10,664
Trustee compensation and expenses (Note 2)	5,299
Distribution fees (Note 2)	143,545
Administrative services (Note 2)	1,768
Other	44,701
Total expenses	810,577
Expense reduction (Note 2)	(5,511)
Net expenses	805,066
Net investment income	1,146,498
Net realized gain on investments (Notes 1 and 3)	12,627,848
Net unrealized depreciation of investments during the period	(7,581,161)
Net gain on investments	5,046,687
Net increase in net assets resulting from operations	$6,193,185

Statement of changes in net assets
	Six months ended	Year ended
	6/30/15*	12/31/14
Decrease in net assets
Operations:
Net investment income	$1,146,498	$1,661,374
Net realized gain on investments	12,627,848	19,208,079
Net unrealized depreciation of investments	(7,581,161)	(14,591,076)
Net increase in net assets resulting from operations	6,193,185	6,278,377
Distributions to shareholders (Note 1):
From ordinary income
Net investment income
Class IA	(668,658)	(517,223)
Class IB	(944,758)	(644,037)
Net realized short-term gain on investments
Class IA	(1,250,100)	(4,651,731)
Class IB	(2,372,239)	(9,434,815)
From net realized long-term gain on investments
Class IA	(5,371,070)	(11,064,639)
Class IB	(10,192,353)	(22,441,713)
Increase from capital share transactions (Note 4)	4,251,330	6,115,635
Total decrease in net assets	(10,354,663)	(36,360,146)
Net assets:
Beginning of period	183,961,245	220,321,391
End of period (including undistributed net investment income of $1,030,439 and $1,497,357, respectively)	$173,606,582	$183,961,245

* Unaudited.

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

Putnam VT Small Cap Value Fund   9 

Financial highlights (For a common share outstanding throughout the period)
INVESTMENT OPERATIONS:					LESS DISTRIBUTIONS:					RATIOS AND SUPPLEMENTAL DATA:
Period ended	Net asset value, beginning of period	Net investment income (loss)a	Net realized and unrealized gain (loss) on investments	Total from investment operations	From net investment income	From net realized gain on investments	Total distributions	Net asset value, end of period	Total return at net asset value (%)b,c	Net assets, end of period (in thousands)	Ratio of expenses to average net assets (%)c,d	Ratio of net investment income (loss) to average net assets (%)	Portfolio turnover (%)
Class IA
6/30/15†	$16.70	.12	.46	.58	(.18)	(1.82)	(2.00)	$15.28	3.70 *	$60,834	.38 *	.73*	32*
12/31/14	21.02	.17	.47	.64	(.16)	(4.80)	(4.96)	16.70	3.69	63,215	.79	1.01	55
12/31/13	15.42	.12	5.93	6.05	(.19)	(.26)	(.45)	21.02	39.93	72,183	.81	.65	59
12/31/12	13.18	.16	2.18	2.34	(.10)	—	(.10)	15.42	17.79	58,447	.81	1.13	72
12/31/11	13.90	.09	(.71)	(.62)	(.10)	—	(.10)	13.18	(4.54)	58,788	.78	.66	63
12/31/10	11.06	.09	2.81	2.90	(.06)	—	(.06)	13.90	26.31	73,838	.82	.78	69
Class IB
6/30/15†	$16.53	.09	.47	.56	(.14)	(1.82)	(1.96)	$15.13	3.56*	$112,772	.50 *	.60 *	32*
12/31/14	20.84	.13	.46	.59	(.10)	(4.80)	(4.90)	16.53	3.43	120,747	1.04	.76	55
12/31/13	15.29	.08	5.88	5.96	(.15)	(.26)	(.41)	20.84	39.61	148,138	1.06	.43	59
12/31/12	13.07	.13	2.15	2.28	(.06)	—	(.06)	15.29	17.49	164,774	1.06	.88	72
12/31/11	13.78	.05	(.69)	(.64)	(.07)	—	(.07)	13.07	(4.73)	166,495	1.03	.41	63
12/31/10	10.97	.06	2.79	2.85	(.04)	—	(.04)	13.78	25.98	207,791	1.07	.53	69

* Not annualized.

† Unaudited.

^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.

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

10   Putnam VT Small Cap Value Fund 

Notes to financial statements 6/30/15 (Unaudited)

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, 2015 through June 30, 2015.

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 the stock may rise. The fund invests mainly in small companies of a size similar to those in the Russell 2000 Value Index. 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.

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 close of the New York Stock Exchange and therefore the closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the close of the New York Stock Exchange. Accordingly, on certain days, the fund will fair value foreign equity securities taking into account multiple factors including movements in the U.S. securities markets, currency valuations and comparisons to the valuation of American Depository Receipts, exchange-traded funds and futures contracts. These securities, which would generally be classified as Level 1 securities, will be transferred to Level 2 of the fair value hierarchy when they are valued at fair value. The number of days on which fair value prices will be used will depend on market activity and it is possible that fair value prices will be used by the fund to a significant extent. Securities quoted in foreign currencies, if any, are translated into U.S. dollars at the current exchange rate. Short-term securities with remaining maturities of 60 days or less may be valued at amortized cost, which approximates fair value, and are classified as Level 2 securities.

To the extent a pricing service or dealer is unable to value a security or provides a valuation that Putnam Management does not believe accurately reflects the security’s fair value, the security will be valued at fair value by Putnam Management in accordance with policies and procedures approved by the Trustees. Certain investments, including certain restricted and illiquid securities and derivatives, are also valued at fair value following procedures approved by the Trustees. These valuations consider such factors as significant market or specific security events such as interest rate or credit quality changes, various relationships with other securities, discount rates, U.S. Treasury, U.S. swap and credit yields, index levels, convexity exposures, 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, is recorded on the accrual basis. Dividend income, net of any applicable withholding taxes, is recognized on the ex-dividend date except that certain dividends from foreign securities, if any, are recognized as soon as the fund is informed of the ex-dividend date. Non-cash dividends, if any, are recorded at the fair value of the securities received. Dividends representing a return of capital or capital gains, if any, are reflected as a reduction of cost and/or as a realized gain.

Securities lending The fund may lend securities, through its agent, to qualified borrowers in order to earn additional income. The loans are collateralized by cash in an amount at least equal to the fair value of the securities loaned. The fair value of securities loaned is determined daily and any additional required collateral is allocated to the fund on the next business day. The risk of borrower default will be borne by the fund’s agent; the fund will bear the risk of loss with respect to the investment of the cash collateral. Income from securities lending is included in investment income on the Statement of operations. Cash collateral is invested in Putnam Cash Collateral Pool, LLC, a limited liability company managed by an affiliate of Putnam Management. Investments in Putnam Cash Collateral Pool, LLC are valued at its closing net asset value each business day. There are no management fees charged to Putnam Cash Collateral Pool, LLC. At the close of the reporting period, the fund received cash collateral of $21,552,898 and the value of securities loaned amounted to $21,034,084. Certain of these securities were sold prior to the close of the reporting period

Putnam VT Small Cap Value Fund   11 

and are included in Receivable for investments sold on the Statement of assets and liabilities.

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 $392.5 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 the Federal Funds rate plus 1.25% for the committed line of credit and the Federal Funds rate plus 1.30% for the uncommitted line of credit. A closing fee equal to 0.04% 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 0.11% per annum on any unutilized portion of the committed line of credit is allocated to the participating funds based on their relative net assets and paid quarterly. During the reporting period, the fund had no borrowings against these arrangements.

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

The fund is subject to the provisions of Accounting Standards Codification 740 Income Taxes (ASC 740). ASC 740 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The fund did not have a liability to record for any unrecognized tax benefits in the accompanying financial statements. No provision has been made for federal taxes on income, capital gains or unrealized appreciation on securities held nor for excise tax on income and capital gains. Each of the fund’s federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service.

The aggregate identified cost on a tax basis is $168,453,543, resulting in gross unrealized appreciation and depreciation of $33,669,650 and $6,696,205, respectively, or net unrealized appreciation of $26,973,445.

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

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 42.3% 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 most open-end funds, as defined in the fund’s management contract, sponsored by Putnam Management. Such annual rates may vary as follows:

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

Putnam Management has contractually agreed, through April 30, 2017, to waive fees or reimburse the fund’s expenses to the extent necessary to limit the cumulative expenses of the fund, exclusive of brokerage, interest, taxes, investment-related expenses, extraordinary expenses, acquired fund fees and expenses and payments under the fund’s investor servicing contract, investment management contract and distribution plans, on a fiscal year-to-date basis to an annual rate of 0.20% of the fund’s average net assets over such fiscal year-to-date period. 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. Putnam Management pays a quarterly sub-management fee to PIL for its services at an annual rate of 0.35% of the average net assets of the portion of the fund managed by PIL.

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

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

Putnam Investor Services, Inc., an affiliate of Putnam Management, provides investor servicing agent functions to the fund. Putnam Investor Services, Inc. was paid a monthly fee for investor servicing at an annual rate of 0.07% (0.10% prior to January 1, 2015) 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	$21,512
Class IB	40,560
Total	$62,072

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 not reduced under the expense offset arrangements and were reduced by $5,511 under the brokerage/ service arrangements.

Each Independent Trustee of the fund receives an annual Trustee fee, of which $103, as a quarterly retainer, has been allocated to the fund, and an additional fee for each Trustees meeting attended. Trustees also are reimbursed for expenses they incur relating to their services as Trustees.

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

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

The fund has adopted a distribution plan (the Plan) with respect to its class IB shares pursuant to Rule 12b-1 under the Investment Company Act of 1940. The

12   Putnam VT Small Cap Value Fund 

purpose of the Plan is to compensate Putnam Retail Management Limited Partnership, an indirect wholly-owned subsidiary of Putnam Investments, LLC, for services provided and expenses incurred in distributing shares of the fund. The Plan provides for payment by the fund to Putnam Retail Management Limited Partnership at an annual rate of up to 0.35% of the average net assets attributable to the fund’s class IB shares. The Trustees have approved payment by the fund at an annual rate of 0.25% of the average net assets attributable to the fund’s class IB shares. During the reporting period, the class specific expenses related to distribution fees were as follows:

Class IB  $143,545 

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 purchases	Proceeds from sales
Investments in securities (Long-term)	$53,358,525	$64,021,744
U.S. government securities (Long-term)	—	—
Total	$53,358,525	$64,021,744

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
	Six months ended 6/30/15		Year ended 12/31/14		Six months ended 6/30/15		Year ended 12/31/14
	Shares	Amount	Shares	Amount	Shares	Amount	Shares	Amount
Shares sold	161,103	$2,548,148	258,605	$4,412,217	97,484	$1,518,320	387,568	$6,336,094
Shares issued in connection with
reinvestment of distributions	484,696	7,289,828	998,990	16,233,593	906,668	13,509,350	2,018,657	32,520,565
	645,799	9,837,976	1,257,595	20,645,810	1,004,152	15,027,670	2,406,225	38,856,659
Shares repurchased	(449,236)	(7,141,551)	(906,807)	(15,697,660)	(854,669)	(13,472,765)	(2,210,626)	(37,689,174)
Net increase	196,563	$2,696,425	350,788	$4,948,150	149,483	$1,554,905	195,599	$1,167,485

Note 5 — Affiliated transactions

Transactions during the reporting period with Putnam Short Term Investment Fund, which is under common ownership and control, were as follows:

	Fair value at the beginning of				Fair value at the end of the
Name of affiliate	the reporting period	Purchase cost	Sale proceeds	Investment income	reporting period
Putnam Short Term Investment Fund*	$11,989,552	$23,767,045	$28,696,850	$4,835	$7,059,747
Total	$11,989,552	$23,767,045	$28,696,850	$4,835	$7,059,747

* Management fees charged to Putnam Short Term Investment Fund have been waived by Putnam Management.

Note 6 — Market, credit and other risks

In the normal course of business, the fund trades financial instruments and enters into financial transactions where risk of potential loss exists due to changes in the market (market risk) or failure of the contracting party to the transaction to perform (credit risk). The fund may be exposed to additional credit risk that an institution or other entity with which the fund has unsettled or open transactions will default. Investments in foreign securities involve certain risks, including those related to economic instability, unfavorable political developments, and currency fluctuations.

Putnam VT Small Cap Value Fund   13 

Trustee approval of management contract

General conclusions

The Board of Trustees of The Putnam Funds oversees the management of each fund and, as required by law, determines annually whether to approve the continuance of your fund’s management contract with Putnam Investment Management, LLC (“Putnam Management”) and the sub-management contract with respect to your fund between Putnam Management and its affiliate, Putnam Investments Limited (“PIL”). The Board, with the assistance of its Contract Committee, requests and evaluates all information it deems reasonably necessary under the circumstances in connection with its annual contract review. The Contract Committee consists solely of Trustees who are not “interested persons” (as this term is defined in the Investment Company Act of 1940, as amended (the “1940 Act”)) of The Putnam Funds (“Independent Trustees”).

At the outset of the review process, members of the Board’s independent staff and independent legal counsel met with representatives of Putnam Management to review the annual contract review materials furnished to the Contract Committee during the course of the previous year’s review and to discuss possible changes in these materials that might be necessary or desirable for the coming year. Following these discussions and in consultation with the Contract Committee, the Independent Trustees’ independent legal counsel requested that Putnam Management and its affiliates furnish specified information, together with any additional information that Putnam Management considered relevant, to the Contract Committee. Over the course of several months ending in June 2015, the Contract Committee met on a number of occasions with representatives of Putnam Management, and separately in executive session, to consider the information that Putnam Management provided, as well as supplemental information provided in response to additional requests made by the Contract Committee. Throughout this process, the Contract Committee was assisted by the members of the Board’s independent staff and by independent legal counsel for The Putnam Funds and the Independent Trustees.

In May 2015, the Contract Committee met in executive session to discuss and consider its recommendations with respect to the continuance of the contracts. At the Trustees’ June 19, 2015 meeting, the Contract Committee met in executive session with the other Independent Trustees to review a summary of the key financial, performance and other data that the Contract Committee considered in the course of its review. The Contract Committee then presented its written report, which summarized the key factors that the Committee had considered and set forth its recommendations. The Contract Committee then recommended, and the Independent Trustees approved, the continuance of your fund’s management and sub-management contracts, effective July 1, 2015. (Because PIL is an affiliate of Putnam Management and Putnam Management remains fully responsible for all services provided by PIL, the Trustees have not attempted to evaluate PIL as a separate entity, and all subsequent references to Putnam Management below should be deemed to include reference to PIL as necessary or appropriate in the context.)

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

• That the fee schedule in effect for your fund represented reasonable compensation in light of the nature and quality of the services being provided to the fund, the fees paid by competitive funds, the costs incurred by Putnam Management in providing services to the fund, and the continued application of certain reductions and waivers noted below; and

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

These conclusions were based on a comprehensive consideration of all information provided to the Trustees and were not the result of any single factor. Some of the factors that figured particularly in the Trustees’ deliberations and how the Trustees considered these factors are described below, although individual Trustees may have evaluated the information presented differently, giving different weights to various factors. It is also important to recognize that the management arrangements for your fund and the other Putnam funds are the result of many years of review and discussion between the Independent Trustees and Putnam Management, that some aspects of the arrangements may receive greater scrutiny in some years than others, and that the Trustees’ conclusions may be based, in part, on their consideration of fee arrangements in previous years. For example, with some minor exceptions, the funds’ current fee arrangements were implemented at the beginning of 2010 following extensive review by the Contract Committee and discussions with representatives of Putnam Management, as well as approval by shareholders.

Management fee schedules and total expenses

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

In reviewing fees and expenses, the Trustees generally focus their attention on material changes in circumstances — for example, changes in assets under management, changes in a fund’s investment style, changes in Putnam Management’s operating costs or profitability, or changes in competitive practices in the mutual fund industry — that suggest that consideration of fee changes might be warranted. The Trustees concluded that the circumstances did not warrant changes to the management fee structure of your fund.

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

As in the past, the Trustees also focused on the competitiveness of each fund’s total expense ratio. In order to support the effort to have fund expenses meet competitive standards, the Trustees and Putnam Management have implemented certain expense limitations. These expense limitations were: (i) a contractual expense limitation applicable to all retail open-end funds of 32 basis points on investor servicing fees and expenses and (ii) a contractual expense limitation applicable to your fund and all but two of the other open-end funds of 20 basis points on so-called “other expenses” (i.e., all expenses

14   Putnam VT Small Cap Value Fund 

exclusive of management fees, distribution fees, investor servicing fees, investment-related expenses, interest, taxes, brokerage commissions, acquired fund fees and expenses and extraordinary expenses). These expense limitations attempt to maintain competitive expense levels for funds with large numbers of small shareholder accounts and funds with relatively small net assets. Most funds, including your fund, had sufficiently low expenses that these expense limitations were not operative. Putnam Management’s support for these expense limitation arrangements was an important factor in the Trustees’ decision to approve the continuance of your fund’s management and sub-management contracts.

The Trustees reviewed comparative fee and expense information for a custom group of competitive funds selected by Lipper Inc. (“Lipper”). This comparative information included your fund’s percentile ranking for effective management fees and total expenses (excluding any applicable 12b-1 fee), which provides a general indication of your fund’s relative standing. In the custom peer group, your fund ranked in the first quintile in effective management fees (determined for your fund and the other funds in the custom peer group based on fund asset size and the applicable contractual management fee schedule) and in the first quintile in total expenses (excluding any applicable 12b-1 fees) as of December 31, 2014 (the first quintile representing the least expensive funds and the fifth quintile the most expensive funds). The fee and expense data reported by Lipper as of December 31, 2014 reflected the most recent fiscal year-end data available in Lipper’s database at that time.

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

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

Investment performance

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

The Trustees considered that 2014 was a year of strong competitive performance for many of the Putnam funds, with generally strong results for the U.S. equity, money market and global asset allocation funds, but relatively mixed results for the international and global equity and fixed income funds. They noted that the longer-term performance of the Putnam funds continued to be strong, exemplified by the fact that the Putnam funds were recognized by Barron’s as the sixth-best performing mutual fund complex for the five-year period ended December 31, 2014. They also noted, however, the disappointing investment performance of some funds for periods ended December 31, 2014 and considered information provided by Putnam Management regarding the factors contributing to the underperformance and actions being taken to improve the performance of these particular funds. The Trustees indicated their intention to continue to monitor performance trends to assess the effectiveness of these efforts and to evaluate whether additional actions to address areas of underperformance are warranted.

For purposes of evaluating investment performance, the Trustees generally focus on competitive industry rankings for the one-year, three-year and five-year periods. For a number of Putnam funds with relatively unique investment mandates for which meaningful competitive performance rankings are not considered to be available, the Trustees evaluated performance based on comparisons of fund returns with the returns of selected investment benchmarks. In the case of your fund, the Trustees considered that its class IA share cumulative total return performance at net asset value was in the following quartiles of its Lipper peer group (Lipper VP (Underlying Funds) — Small-Cap Value Funds) for the one-year, three-year and five-year periods ended December 31, 2014 (the first quartile representing the best-performing funds and the fourth quartile the worst-performing funds):

One-year period	Three-year period	Five-year period
3rd	1st	2nd

Putnam VT Small Cap Value Fund   15 

Over the one-year, three-year and five-year periods ended December 31, 2014, there were 52, 52 and 48 funds, respectively, in your fund’s Lipper peer group. (When considering performance information, shareholders should be mindful that past performance is not a guarantee of future results.)

The Trustees also considered Putnam Management’s continued efforts to support fund performance through initiatives including structuring compensation for portfolio managers and research analysts to enhance accountability for fund performance, emphasizing accountability in the portfolio management process, and affirming its commitment to a fundamental-driven approach to investing. The Trustees noted further that Putnam Management continued to strengthen its fundamental research capabilities by adding new investment personnel.

Brokerage and soft-dollar allocations; investor servicing

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

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

16   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, 2015, are available in the Individual Investors section of putnam.com and on the SEC’s website, www.sec.gov. If you have questions about finding forms on the SEC’s website, you may call the SEC at 1-800-SEC-0330. You may also obtain the Putnam funds’ proxy voting guidelines and procedures at no charge by calling Putnam’s Shareholder Services at 1-800-225-1581.

Fund portfolio holdings

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

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

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

Putnam VT Small Cap Value Fund   17 

This report has been prepared for the shareholders		H521
of Putnam VT Small Cap Value Fund.	VTSA069 295629	8/15

Item 2. Code of Ethics:

Not applicable

Item 3. Audit Committee Financial Expert:

Not applicable

Item 4. Principal Accountant Fees and Services:

Not applicable

Item 5. Audit Committee of Listed Registrants

Not applicable

Item 6. Schedule of Investments:

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

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

Not applicable

Item 8. Portfolio Managers of Closed-End Investment Companies

Not Applicable

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

Not applicable

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

Not applicable

Item 11. Controls and Procedures:

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

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

Item 12. Exhibits:

(a)(1) Not applicable

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

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

Putnam Variable Trust

By (Signature and Title):

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

Date: August 28, 2015

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: August 28, 2015

By (Signature and Title):

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

Date: August 28, 2015