Putnam VT Global Equity Fund
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12 | 31 | 19
February 13, 2020
Global financial markets overcame a number of uncertainties in 2019. Both stock and
bond markets experienced bouts of volatility, but performance recovered despite
macroeconomic headwinds and risks. Stock markets worldwide delivered solid returns
for the calendar year, with all three major U.S. equity indexes reaching record highs in
December. The year was also beneficial for bond investors, as global fixed-income markets
posted strong returns, thanks in part to policy easing from central banks.
Although no one can predict the direction of the markets in the months ahead, Putnam’s
experienced investment professionals actively seek to position their fund portfolios for
all types of conditions. They take a research-intensive approach to investing that includes
risk management strategies designed to serve investors through changing markets. In all
environments, we believe investors should remain focused on time-tested approaches,
such as maintaining a well-diversified portfolio, thinking about long-term goals, and
speaking regularly with a financial advisor.
Thank you for investing with Putnam.
Robert L. Reynolds
President and Chief Executive Officer
Kenneth R. Leibler
Chair, Board of Trustees
Message from the Trustees
Putnam VT Global Equity Fund 1
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 information in the portfolio schedule notes
included in the financial statements due to the inclusion of derivative securi-
ties, any interest accruals, the exclusion of as-of trades, if any, and rounding.
Holdings and allocations may vary over time.
67.3% United States
9.0% United Kingdom
3.9% Other countries
1.0% Cash and net other assets
Performance summary (as of 12/31/19)
Net asset value December 31, 2019
Class IA: $19.83 Class IB: $19.59
Total return at net asset value
(as of 12/31/19) Class IA shares* Class IB shares†
1 year 26.92% 26.60% 27.67%
5 years 43.20 41.39 52.03
Annualized 7.45 7.17 8.74
10 years 143.90 137.56 147.12
Annualized 9.33 9.04 9.47
Life 576.61 535.03 662.81
Annualized 6.66 6.43 7.11
For a portion of the periods, the fund had expense limitations, without which
returns would have been lower.
* Class inception date: May 1, 1990.
† Class inception date: April 30, 1998.
Cumulative total returns of a $10,000
investment in class IA and class IB shares
at net asset value — since 12/31/09
12/31/09 2010 2011 2012 2013 2014 2015 2016 2017 2018 12/31/19
$23,756 (Putnam class IB shares)
$24,390 (Putnam class IA shares)
$24,712 (MSCI World Index (ND))
Putnam VT Global Equity Fund class IA shares
Putnam VT Global Equity Fund class IB shares
MSCI World Index (ND)
The MSCI World Index (ND) is an unmanaged index of equity securities from devel-
oped countries. Calculated with net dividends (ND), this total return index reflects
the reinvestment of dividends after the deduction of withholding taxes, using a
tax rate applicable to non-resident institutional investors who do not benefit from
double taxation treaties.
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. Performance of class IB shares
before their inception is derived from the historical performance of class IA
shares, adjusted to reflect the higher operating expenses applicable to such
shares. 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.
2 Putnam VT Global Equity Fund
Report from your fund’s managers
Can you describe the investing environment for the 12-month
reporting period ended December 31, 2019?
Equities reached new highs over the period. Despite bouts of market
volatility, investors seemed more willing to shrug off geopolitical and
macroeconomics risks. These risks included the ongoing U.S.–China
trade dispute, a slowing global economy, Italy’s debt crisis, reces-
sionary concerns in Germany, and uncertainty over a Brexit deal. In
the United States, record-low unemployment, solid wage reports, and
healthy consumer spending remained a bright spot for the period.
Monetary policy grew more accommodative, which helped global
stocks recover from losses sustained in May and August of 2019. In July,
the U.S. Federal Reserve [the Fed] lowered its interest rate for the first
time since 2008. The European Central Bank [ECB] moved its interest
rate to an all-time low of -0.5% in September. By October, central banks
in China and Japan introduced comprehensive stimulus packages.
In the final quarter of 2019, investor optimism was bolstered by
positive U.S.–China trade talks. In December, the United States and
China reached a “phase one” trade deal. Global stock markets rallied
and finished the year strong. For the 12-months ended December 31,
2019, the S&P 500 Index, a broad measure of stocks, posted a return
of 31.49%. International stocks, as measured by the MSCI EAFE Index
[ND], gained 22.01% over the reporting period.
How did Putnam VT Global Equity Fund perform during
For the 12-month reporting period, the fund’s class IA shares
returned 26.92%, compared with 27.67% for the fund’s benchmark,
the MSCI World Index [ND].
What were some specific stocks that contributed to fund
performance during the reporting period?
Summit Materials, a North American supplier of aggregates, cement,
and asphalt, was the fund’s top contributor. The stock rose on
improving fundamentals in the second half of 2019. The fund’s over-
weight position relative to its benchmark in Ball Corp., a U.S.-based
aluminum can manufacturer, also aided results. Ball’s sustainable
packaging solutions continued to attract sales from global manufac-
turers seeking to reduce their carbon footprint. Another highlight was
our investment in Switzerland-based SIG Combibloc Group, which was
not held in the benchmark. SIG Combibloc makes aseptic carton filling
solutions that provide eco-friendly alternatives to plastic containers
used in the dairy and beverage industries. Investors were impressed
by the firm’s innovation, which includes recycling low-quality plastic
waste into high-quality, food-grade materials.
What about detractors from fund performance during the
Not owning technology giant Apple was our largest detractor rela-
tive to the benchmark. Despite lower iPhone sales, Apple’s quarterly
revenues and earnings growth exceeded analyst expectations. This
contributed to a surprise upside in Apple’s stock. Bank of Ireland
Group, a commercial bank operation in Ireland, was a disappoint-
ment. Investors grew concerned over delays in a key IT infrastructure
update, which stalled the company’s profit revitalization plan. We sold
our position in Bank of Ireland during the period. Seven Generations
Energy [7G], an energy producer based in Calgary, Canada, also
dampened results. During the period, 7G had difficulties sustaining
production growth at its large-scale property. We sold our position in
7G during the reporting period.
As the fund begins a new fiscal year, what is your outlook?
The phase-one trade deal between the United States and China
cleared the path for riskier assets to rally late in 2019, but investor
uncertainty remains. 2019 was a year of valuation expansion, and
investors may fear stock markets have little room for appreciation in
2020. We believe a course of steady earnings and meaningful global
economic growth could justify