PUTNAM VARIABLE TRUST, 485APOS, 1999-02-12

PUTNAM VARIABLE TRUST
485APOS, 1999-02-12

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As filed with the Securities and Exchange Commission on

February 12, 1999

Registration No. 33-17486
811-5346
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM N-1A
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
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Pre-Effective Amendment No. / /
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Post-Effective Amendment No. 20 / X /

and ----
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY / X /
ACT OF 1940 ----
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Amendment No. 21 / X /

(Check appropriate box or boxes) ----

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PUTNAM VARIABLE TRUST
(Exact name of registrant as specified in charter)

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

Registrant's Telephone Number, including Area Code
(617) 292-1000
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It is proposed that this filing will become effective
(check appropriate box)

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/ / immediately upon filing pursuant to paragraph (b)

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/ / on (date) pursuant to paragraph (b)
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/ / 60 days after filing pursuant to paragraph (a)(1)
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/ / on (date) pursuant to paragraph (a)(1)
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/ X / 75 days after filing pursuant to paragraph (a)(2)

- ----
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/ / on (date) pursuant to paragraph (a)(2) of Rule 485.
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If appropriate, check the following box:

- ----
/ / this post-effective amendment designates a new
- ---- effective date for a previously filed post-effective amendment.
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JOHN R. VERANI, Vice President
PUTNAM VARIABLE TRUST
One Post Office Square
Boston, Massachusetts 02109
(Name and address of agent for service)
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Copy to:
JOHN W. GERSTMAYR, Esquire
ROPES & GRAY
One International Place
Boston, Massachusetts 02110
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PUTNAM VARIABLE TRUST
Class IA Shares

PROSPECTUS - APRIL 30, 1999

Putnam Variable Trust (the "Trust") offers shares of beneficial interest
in separate investment portfolios (collectively, the "funds") for purchase
by separate accounts of various insurance companies. The funds, which have
different investment objectives and policies, offered by this prospectus
are:

Domestic Equity Funds Global and International Funds

Putnam VT The George Putnam Putnam VT Asia Pacific Growth Fund
Fund of Boston Putnam VT Global Asset Allocation Fund
Putnam VT Growth and Income Fund Putnam VT Global Growth Fund
Putnam VT Health Sciences Fund Putnam VT International Growth Fund
Putnam VT Investors Fund Putnam VT International Growth and
Putnam VT New Opportunities Fund Income Fund
Putnam VT New Value Fund Putnam VT International New
Opportunities Fund
Putnam VT OTC & Emerging Growth Fund Fixed-Income
Putnam VT Research Fund
Putnam VT Small Cap Value Fund Putnam VT Diversified Income Fund
Putnam VT Utilities Growth and Putnam VT High Yield Fund
Income Fund Putnam VT Money Market Fund
Putnam VT Vista Fund Putnam VT U.S. Government and High
Putnam VT Voyager Fund Quality Bond Fund

Putnam Investment Management, Inc. (Putnam Management), which has managed
mutual funds since 1937, manages the funds. These securities have not been
approved or disapproved by the Securities and Exchange Commission nor
has the Commission passsed upon the accuracy or adequacy of this
prospectus. Any statement to the contrary is a crime.

CONTENTS

The Trust

Investment objectives and policies of the funds

Fund summaries (including Goal, Main investment strategies, Main risks
and Performance information)

What are the funds main investment strategies and related risks?

Who manages the funds?

Sales and Redemptions

How do the funds price their shares?

Fund distributions and taxes

Financial Highlights

THE TRUST

The Trust is designed to serve as a funding vehicle for insurance separate
accounts associated with variable annuity contracts and variable life
insurance policies. The Trust presently serves as the funding vehicle for
variable annuity contracts and variable life insurance policies offered by
separate accounts of various insurance companies. You should consult the
prospectus issued by the relevant insurance company for more information
about a separate account. Shares of the Trust are offered to these
separate accounts through Putnam Mutual Funds Corp. ("Putnam Mutual
Funds"), the principal underwriter for the Trust.

INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS

Each fund of the Trust has its own goals that it pursues through its own
investment policies as described below. The particular goals and
policies of the funds will affect the return of each fund and the degree
of market and financial risk to which each fund is subject. For more
information about the investment strategies employed by the funds, see
"Common investment policies and techniques." The goals and policies of
each fund may, unless otherwise specifically stated, be changed by the
Trustees without a vote of the shareholders.

FUND SUMMARIES

The following is a summary of certain key information about the funds.
You will find additional information about each fund, including a detailed
description of the risks of an investment in each fund, after this
summary.

The summary identifies eaach fund's goal, principal investment
strategies and principal risks. The summary of each fund's principal
investment strategies is accompanied by a short discussion of some of the
fund's principal risks.

More detailed descriptions of the funds, including the risks associated
with investing in the funds, can be found further back in this Prospectus.
Please be sure to read this additional information before you invest.

PUTNAM VT ASIA PACIFIC GROWTH FUND

GOAL

The fund seeks capital appreciation.

MAIN INVESTMENT STRATEGIES - ASIAN PACIFIC STOCKS

Under normal market conditions, the fund will seek to achieve its goal by
investing mostly in common stocks issued by Asian or Pacific Basin
companies. The fund may invest in both growth and value stocks. Growth
stocks are issued by companies whose earnings Putnam Management believes
are likely to grow faster than the economy as a whole. Growth in earnings
may lead to an increase in the price of the stock. Value stocks are those
that Putnam Management believes are currently undervalued compared to
their true worth. If Putnam Management is correct and other investors
recognize this discount, the price of the stock may rise. The fund invests
mainly in medium and large-sized companies, although it can invest in
companiesof any size. Although the fund emphasizes investments in
developed countries, it may also invest in companie!s located in emerging
markets.ldb

You can lose money by investing in any of the funds. A fund may not
achieve its goals, and is not intended as a complete investment program.
An investment in any fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.

MAIN RISKS

The main risks that could adversely affect the value of this fund's shares
and the total return on your investment include

* The risks of investing outside the United States, such as currency
fluctuations, economic or financial instability, or unfavorable
political or legal developments in foreign markets. These risks are
increased when investing in emerging markets.

* The risk of investing mostly in one geographic region. Investments in
a single region, even though representing a number of different
countries within the region, may be affected by common economic forces
and other factors. The vulnerability of the fund to factors affecting
Asian and Pacific Basin investments will be significantly greater than
that of a more geographically diversified fund, which may result in
greater losses and volatility.

* The risk that the stock price of one or more of the companies in the
fund's portfolio will fall, or will fail to appreciate as anticipated by
Putnam Management. Many factors can adversely affect a stock's
performance. This risk is generally greater for small and medium-sized
companies, which tend to be more vulnerable to adverse developments.

* The risk that movements in the securities markets will reduce the
value of the fund's investments, regardless of how well the companies in
which the fund invests perform.

* The risk that Putnam Management's allocation of a fund's assets
between stocks and bonds and United States and International may
adversely affect a fund's performance.

The fund will generally be managed in a style similar to that of the
Putnam Asia Pacific Growth Fund.

PERFORMANCE INFORMATION

The following information provides some indication of the fund's risks.
The chart shows year-to-year changes in the performance of the fund's
class IA shares. The table following the chart compares the fund's
performance to that of a broad measure of market performance. Of course,
the fund's past performance is not an indication of future performance.
None of the performance information listed below reflects the impact of
insurance-related charges or expenses. Please refer to your subaccount's
prospectus for information about those charges and performance data
reflecting those charges and expenses.

CALENDAR YEAR TOTAL RETURNS FOR CLASS IA SHARES
(Bar chart)
Plot Points
1995 %
1996 %
1997 %
1998 %
Year-to-date performance through 3/30/99 was %. During the periods shown
in the bar chart, the highest return for a quarter was % (quarter ending )
and the lowest return for a quarter was % (quarter ending ).

Average Annual Total Returns (for periods ending 12/31/98)
Past Since
1 year Inception
(5/1/95)
Class IA % %
MSCI Pacific Index % %

The fund's performance has benefitted from Putnam Management's agreement
to limit the fund's expenses through the period ended December 31, 1995.
The fund's performance is compared to the Morgan Stanley Capital
International (MSCI) Pacific Index (MSCI), an unmanaged index of
approximately 418 equity securities issued by companies located in five
Asian countries.

PUTNAM VT DIVERSIFIED INCOME FUND

GOAL

The fund seeks as high a level of current income as Putnam Management
believes is consistent with preservation of capital.

MAIN INVESTMENT STRATEGIES-MULTISECTOR FIXED-INCOME SECURITIES

Under normal market conditions, the fund will invest mostly in bonds and
other debt securities, and, to a lesser degree, preferred stocks. These
investments are commonly known as fixed-income securities. The fund
invests in the following three sectors of the fixed-income securities
markets:

* U.S. Government and Investment Grade Sector: consisting primarily of
debt obligations of the U.S. government, its agencies and
instrumentalities,

* High Yield Sector: consisting of high-yielding, lower-rated, higher
risk U.S. and foreign fixed-income securities ("junk bonds"), and

* International Sector: consisting of obligations of foreign
governments, their agencies and instrumentalities, and other fixed-income
securities denominated in foreign currencies.

MAIN RISKS

The main risks that could adversely affect the value of this fund's shares
and the total return on your investment include

* The risk that movements in the securities markets will reduce the value
of the fund's investments. The value of the fund's debt investments are
particularly likely to fall if interest rates rise. Interest rate risk is
highest for investments with long maturities.

* The risk that the companies whose debt the fund purchases will fail to
make timely payments of interest and principal. This credit risk is higher
for corporate debt than for U.S. Government debt and is higher still for
debt of below investment-grade quality. Because the fund invests
substantially in junk bonds this risk is heightened for the fund.
Investors should carefully consider the risks associated with an
investment in the fund.

* The risk that mortgages underlying the fund's investments in
mortgage-backed (in the U.S. and Investment Grade Sector) securities may
be prepaid. This might force the fund to reinvest the proceeds from
prepayments in investments offering a lower yield. With respect to these
investments, the fund therefore might not benefit from any increase in
value as a result of declining interest rates. Similarly, rising interest
rates may cause prepayments to fall. This would effectively extend the
fund's maturity and increase its interest rate risk at times when that is
least desirable-during periods of rising interest rates.

* The risk of investing outside the United States, such as currency
fluctuations, economic or financial instability, lack of timely or
reliable financial information, or unfavorable political or legal
developments in foreign markets. These risks are increased when investing
in emerging markets.

The fund will generally be managed in a style similar to that of the
Putnam Diversified Income Fund.

PERFORMANCE INFORMATION

The following information provides some indication of the fund's risks.
The chart shows year-to-year changes in the performance of the fund's
class IA shares. The table following the chart compares the fund's
performance to that of a broad measures of market performance. Of course,
the fund's past performance is not an indication of future performance.
None of the performance information listed below reflects the impact of
insurance-related charges or expenses. Please refer to your subaccount's
prospectus for information about those charges and performance data
reflecting those charges and expenses.

CALENDAR YEAR TOTAL RETURNS FOR CLASS IA SHARES
(Bar chart)
Plot Points
1994 %
1995 %
1996 %
1
2

Year-to-date performance through 3/30/99 was %. During the periods shown
in the bar chart, the highest return for a quarter was % (quarter ending )
and the lowest return for a quarter was % (quarter ending ).

Average Annual Total Returns (for periods ending 12/31/98)
Since
Past Past inception
1 year 5 years (9/15/93)

Class IA % % %
Lehman Brothers
Aggregate Bond
Index % % %
Salomon Non-U.S.
World Government
Bond Index % % %
First Boston High
Yield Index % %

The fund's performance is compared to the Lehman Brothers Aggregate Bond
Index, an index that is frequently used as a broad measure for fixed
income securities; Salomon Brothers Non-U.S. World Government Bond Index,
a market capitalization weighted benchmark that tracks the performance of
government bond markets tracked by the Salomon Brothers World Government
Bond Index, excluding the United States; and the First Boston High Yield
Index, an unmanaged index of lower-rated, higher-yielding U.S. corporate
bonds.

PUTNAM VT THE GEORGE PUTNAM FUND OF BOSTON

GOAL

The fund seeks to provide a balanced investment composed of a well
diversified portfolio of stocks and bonds that will produce both capital
growth and current income.

MAIN INVESTMENT STRATEGIES - GROWTH AND INCOME

The fund may invest in almost any type of security or negotiable
instrument, including cash or money market instruments. The fund's
portfolio will include some securities selected primarily to provide for
capital protection, others selected for dependable income and still others
for growth in value.

* Stocks: The fund will not usually invest more than 75% of its assets
in stocks and that portion of the value of convertible securities
attributable to conversion rights, although it may occasionally do so.
Most of the stocks bought by the fund are "value" stocks that Putnam
Management believes are currently selling below their true worth. If
Putnam Management is correct and other investors recognize this discount,
the price of the stock may rise. The fund mainly buys stocks of larger
companies, although the fund may invest in companies of any size.

* Bonds: The fund's debt investments:

* may be issued by governments or private companies,

* are mostly investment grade, and

* are generally intermediate- to long-term (with maturities of more than 3
years).

MAIN RISKS

The main risks that could adversely affect the value of this fund's shares
and the total return on your investment include

* The risk that the stock price of one or more of the companies in the
fund's portfolio will fall, or will fail to appreciate as anticipated by
Putnam Management. Many factors can adversely affect a stock's
performance. This risk is greater for small and medium-sized companies,
which tend to be more vulnerable to adverse developments.

* The risk that movements in the securities markets will reduce the
value of the fund's investments, regardless of how well the companies in
the fund's portfolio perform.

* The risk that the value of the fund's debt investments will fall if
interest rates rise. Interest rate risk is highest for investments with
long maturities.

* The risk that Putnam Management's allocation of the fund's assets
between stocks and bonds may adversely affect the fund's performance.

The fund will generally be managed in a style similar to that of the The
George Putnam Fund of Boston .

PERFORMANCE INFORMATION

No performance information is available for the fund because it has not
yet completed its first fiscal year of operations.

PUTNAM VT GLOBAL ASSET ALLOCATION FUND

GOAL

The investment objective of Putnam VT Global Asset Allocation Fund is to
seek a high level of long-term total return consistent with preservation
of capital. By seeking total return, the fund seeks to increase the value
of the shareholder's investment through both capital appreciation and
investment income.

MAIN INVESTMENT STRATEGY - STRATEGIC ASSET ALLOCATION

The fund invests in a wide variety of equity and fixed-income securities
both of U.S. and foreign issuers. The fund's portfolio may include
securities in the following four investment categories, which in the
judgment of Putnam Management represent large, well-differentiated classes
of securities with distinctive investment characteristics:

* U.S. Equities: This sector may invest in both growth and value stocks of
U.S. companies. Growth stocks are issued by companies whose earnings Putnam
Management believes are likely to grow faster than the economy as a whole.
Growth in earnings may lead to an increase in the price of the stock. Value
stocks are those that Putnam Management believes are currently undervalued
compared to their true worth. If Putnam Management is correct and other
investors recognize this discount, the price of the stock may rise.

* International Equities: This sector may invest in both growth and
value stocks of non-U.S. companies.

* U.S. Fixed Income: This sector may invest in fixed income securities
of U.S. companies or the U.S. government, its agencies or
instrumentalities.

* International Fixed Income: This sector may invest in fixed income
securities of non-U.S. companies or the foreign governmental issuers.

The amount of fund assets assigned to each investment category will be
reevaluated by Putnam Management at least quarterly based on Putnam
Management's assessment of the relative market opportunities and risks of
each investment category taking into account various economic and market
factors.The fund may from time to time invest in all or any one of the
investment categories as Putnam Management may consider appropriate in
response to changing market conditions. The fund can invest in
companies of any size.

MAIN RISKS

The main risks that could adversely affect the value of this fund's
shares and the total return on your investment include

* The risks of investing outside the United States, such as currency
fluctuations, economic or financial instability, lack of timely or
reliable financial information, or unfavorable political or legal
developments in foreign markets. These risks are increased for
investments in emerging markets.

* The risk that movements in the securities markets will adversely
affect the price of the fund's investments, regardless of how well the
companies in which the fund invests perform.

PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IA SHARES
(Bar chart)
Plot points
1989 %
1990 %
1991 %
1992 %
1993 %
1994 %
1995 %
1996 %
1997
1998

Average Annual Total Returns (for periods ending 12/31/98)
Past Past Past
1 year 5 years 10 years
Class IA % % %
MSCI World Index % % %

The fund's performance has benefitted from Putnam Management's agreement
to limit the fund's expenses through December 31, 1998. The fund's
performance is also compared to the to the Morgan Stanley Capital
International (MSCI) World Index, an unmanaged index of global equity
securities, with all values expressed in U.S. dollars.

PUTNAM VT GLOBAL GROWTH FUND

GOAL

The fund seeks capital appreciation.

MAIN INVESTMENT STRATEGIES - GROWTH STOCKS

Under normal market conditions, the fund generally diversifies its
investments among a number of different countries by investing at least
65% of its total assets in at least three countries, one of which may be
the United States. The fund invests mainly in growth stocks, which are
those issued by companies whose earnings Putnam Management believes are
likely to grow faster than the economy as a whole. Growth in earnings may
lead to an increase in the price of the stock.

The fund invests mainly in medium and large-sized companies, although it
can invest in companies of any size. Although the fund emphasizes
investments in developed countries, it may also invest in companies
located in developing or emerging markets.

MAIN RISKS

The main risks that could adversely affect the value of this fund's shares
and the total return on your investment include

* The risk that the stock price of one or more of the companies in the
fund's portfolio will fall, or will fail to appreciate as anticipated by
Putnam Management. Many factors can adversely affect a stock's
performance, including factors relating to a specific company or
industry or general financial market conditions. This risk is generally
greater for small and medium-sized companies, which tend to be more
vulnerable to adverse developments.

* The risk that movements in the securities markets will reduce the
value of the fund's investments, regardless of how well the companies in
which the fund invests perform.

The fund will generally be managed in a style similar to that of the
Putnam Global Growth Fund.

PERFORMANCE INFORMATION

The following information provides some indication of the fund's risks.
The chart shows year-to-year changes in the performance of the fund's
class IA shares. The table following the chart compares the fund's
performance to that of two broad measures of market performance. Of
course, the fund's past performance is not an indication of future
performance. None of the performance information listed below reflects the
impact of insurance-related charges or expenses. Please refer to your
subaccount's prospectus for information about those charges and
performance data reflecting those charges and expenses.

CALENDAR YEAR TOTAL RETURNS FOR CLASS IA SHARES
(Bar chart)
Plot points
1991 %
1992 %
1993 %
1994 %
1995 %
1996 %
1997
1998

Average Annual Total Returns (for periods ending 12/31/98)
Past Past Since
1 year 5 years inception
(5/1/90)
Class IA % % %
MSCI EAFE % % %
MSCI WORLD % % %

The fund's performance is also compared to the Morgan Stanley Capital
International (MSCI) EAFE Index, an unmanaged index of equity securities
from Europe, Australia and the Far East, and to the Morgan Stanley Capital
International (MSCI) World Index, an unmanaged index of global equity
securities, with all values expressed in U.S. dollars.

PUTNAM VT GROWTH AND INCOME FUND

GOAL

The fund seeks capital growth and current income.

MAIN INVESTMENT STRATEGIES-GROWTH AND INCOME

The fund invests primarily in "value stocks," which are common stocks that
Putnam Management believes are currently selling below their true worth.
Value stocks are those that Putnam Management believes are currently
undervalued compared to their true worth. If Putnam Management is correct
and other investors recognize this discount, the price of the stock may
rise. The fund invests mainly in large companies, although it can invest
in companies of any size.

MAIN RISKS

The main risks that could adversely affect the value of this fund's shares
and the total return on your investment include

* The risk that the stock price of one or more of the companies in the fund's
portfolio will fall, or will fail to appreciate as anticipated by Putnam
Management, regardless of movements in the securities markets. Many factors
can adversely affect a stock's performance. This risk is greater for smaller
companies, which tend to be more vulnerable to adverse developments.

* The risk that movements in the securities markets will reduce the value of
the fund's investments, regardless of how well the companies in the fund's
portfolio perform.

The fund will generally be managed in a style similar to that of the
Putnam Growth and Income Fund.

PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IA SHARES
(Bar chart)
Plot points
1989 %
1990 %
1991 %
1992 %
1993 %
1994 %
1995 %
1996 %
1997 %
1998 %

Average Annual Total Returns (for periods ending 12/31/98)
Past Past Past
1 year 5 years 10 years
Class IA % % %
S&P 500 Index % % %

The fund's performance is compared to the Standard & Poor's 500 Index, an
unmanaged index of common stocks frequently used as a general measure
of U.S. stock market performance.

PUTNAM VT HEALTH SCIENCES FUND

GOAL

The fund seeks capital appreciation.

MAIN INVESTMENT STRATEGIES - CAPITAL APPRECIATION

The fund invests at least 80% of its assets (other than assets invested in
U.S. government securities, short-term debt obligations and cash or
money market instruments) in common stocks and other securities of
companies in the health sciences industries, except when Putnam
Management, believes alternative strategies are appropriate to protect the
fund against a market decline. The fund invests mainly in growth stocks,
which are those issued by companies whose earnings Putnam Management
believes are likely to grow faster than the economy as a whole.

MAIN RISKS

The main risks that could adversely affect the value of the fund's shares
and the total return on your investment include

* The risk that the stock price of one or more of the companies in the
fund's portfolio will fall, or will fail to appreciate as anticipated by
Putnam Management. Many factors can adversely affect a stock's
performance, including factors related to a specific company or industry
or general financial market conditions. This risk is greater for small
and medium-sized companies, which tend to be more vulnerable to adverse
developments.

* The risk that movements in the securities markets will reduce the
value of the fund's investments, regardless of how well the companies in
which the fund invests perform.

* The risk of investing in a single group of industries. Investments in
the health sciences industries, even though representing interests in
different companies in such industries, may be affected by common
economic forces and other factors. The vulnerability of the fund to
factors affecting the health sciences industries will be significantly
greater than that of a fund that invests in a broader range of
industries, which may result in greater losses and volatility.

The fund is "non-diversified," which means that it may invest more of its
assets in the securities of fewer companies than a "diversified" fund. The
fund may therefore be more exposed to the risk of loss from a few issuers
than a fund that invests more broadly.

The fund will generally be managed in a style similar to that of the
Putnam Health Sciences Trust.

PERFORMANCE INFORMATION

No performance information is available for the fund because it has not
yet completed its first fiscal year of operations.

PUTNAM VT HIGH YIELD FUND

GOAL

The fund seeks high current income. Capital growth is a secondary
objective when consistent with high current income.

MAIN INVESTMENT STRATEGIES - INCOME

Normally, the fund invests at least 80% of its assets in debt securities,
convertible securities or preferred stocks that are consistent with the
fund's primary objective of high current income. Typically the fund's
investments are

* corporate bonds and notes,

* below investment grade in quality ("junk bonds"), and

* intermediate- to long-term (with maturities of more than 3 years).

The fund seeks its secondary goal of capital growth mainly through
investments that are expected to increase in value because of declining
long-term interest rates or improvements in the credit quality of the
issuing company. The fund often invests in companies with smaller
capitalizations.

MAIN RISKS

The main risks that could adversely affect the value of the fund's shares
and the total return on your investment include

* The risk that issuers of debt the fund holds will not make (or will
be perceived as unlikely to make) timely payments of interest and
principal. This credit risk is higher for corporate debt than for U.S.
government debt, and is higher still for junk bonds. Because the fund
invests mainly in junk bonds, this risk is heightened for the fund.
Investors should carefully consider the risks associated with an
investment in the fund.

* The risk that movements in the securities markets will reduce the
value of the fund's investments.

* This risk includes interest rate risk, which means that the prices of
the fund's investments, particularly the fixed-income investments in
which it mainly invests, are likely to fall if interest rates rise.
Interest rate risk is often highest for investments with long
maturities.

* The risk that the price of one or more of the investments in the
fund's portfolio will fall, or will fail to appreciate as expected by
Putnam Management. Many factors can adversely affect an investment's
performance. This risk is greater for smaller companies, which tend to
be more vulnerable to adverse developments.

The fund will generally be managed in a style similar to that of the
Putnam High Yield Advantage Fund.

PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IA SHARES
(Bar chart)
Plot points
1989 %
1990 %
1991 %
1992 %
1993 %
1994 %
1995 %
1996 %
1997
1998

Average Annual Total Returns (for periods ending 12/31/98)
Past Past Past
1 year 5 years 10 years
Class IA % % %
First Boston High Yield
Index % % %

The fund's performance is compared to the First Boston High Yield Index,
an unmanaged index of lower-rated, higher-yielding U.S. corporate bonds.
The First Boston High Yield Index includes over 180 issues with an average
maturity range of 7 to 10 years.

PUTNAM VT INTERNATIONAL GROWTH FUND

GOAL

The fund seeks capital growth.

MAIN INVESTMENT STRATEGIES - GROWTH

Under normal conditions, the fund generally diversifies its investments
among a number of different countries by investing at least 65% of its
total assets in at least three countries other than the United States. The
fund may invest in both growth and value stocks. Growth stocks are issued
by companies whose earnings Putnam Management believes are likely to grow
faster than the economy as a whole. Value stocks are those that Putnam
Management believes are currently undervalued compared to their true
worth. If Putnam Management is correct and other investors recognize this
discount, the price of the stock may rise. The fund invests mainly in
medium and large-sized companies, although it can invest in companies of
any size. Although the fund emphasizes investments in developed countries,
it may also invest in companies located in emerging markets.

MAIN RISKS

The main risks that could adversely affect the value of the fund's shares
and the total return on your investment include

* The risks of investing outside the United States, such as currency
fluctuations, economic or financial instability, lack of timely or
reliable financial information or unfavorable political or legal
developments in international markets.

* The risk that the stock price of one or more of the companies in the
fund's portfolio will fall, or will fail to appreciate as anticipated by
Putnam Management, regardless of movements in foreign or U.S. securities
markets. Many factors can adversely affect a stock's performance. This
risk is greater for smaller companies, which tend to be more vulnerable
to adverse developments.

* The risk that movements in foreign or U.S. securities markets will
reduce the value of the fund's investments, regardless of how well the
companies in the fund's portfolio perform.

The fund's shares may rise and fall in value, and you can lose money by
investing in the fund. The fund may not achieve its goals, and is not
intended as a complete investment program. An investment in the fund is
not a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.

The fund will generally be managed in a style similar to that of the
Putnam International Growth Fund.

PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IA SHARES
(Bar chart)
Plot points
1998 %

Average annual total returns (for periods ending 12/31/98)
Past Since
1 year inception
(1/2/97)

Class IA % %
MSCI EAFE % %

The fund's performance has benefitted from Putnam Management's agreement
to limit the fund's expenses through the period ended December 31, 1998.
The Europe, Australia and the Far East (EAFE) component of the Morgan
Stanley Capital International World Index is an unmanaged list of
international equity securities, excluding U.S. securities, with all
values expressed in U.S. dollars.

PUTNAM VT INTERNATIONAL GROWTH AND INCOME

GOAL

The fund seeks capital growth. Current income is a secondary objective.

MAIN INVESTMENT STRATEGIES - GROWTH AND INCOME

The fund is designed for investors who seek growth of the value of their
investment over time with a modest level of current income. The fund
generally diversifies its investments among a number of different
countries by investing at least 65% of its total assets in at least three
countries other than the United States. The fund invests mainly in common
stocks that Putnam Management believes are currently selling below their
true worth. Such investments are also known as value stocks. If Putnam
Management is correct and other investors recognize this discount, the
price of the stock may rise. The fund invests mainly in large companies,
although it can invest in companies of any size. The fund emphasizes
investments in more developed countries, but may also invest in companies
located in emerg!ing markets.

MAIN RISKS

The main risks that could adversely affect the value of this fund's shares
and the total return on your investment include

* The risk that the stock price of one or more of the companies in the
fund's portfolio will fall, or will fail to appreciate as anticipated by
Putnam Management. Many factors can adversely affect a stock's
performance. This risk is greater for smaller companies, which tend to
be more vulnerable to adverse developments.

* The risk that movements in the markets will reduce the value of the
fund's investments, regardless of how well the companies in which the
fund invests perform.

The fund will generally be managed in a style similar to that of the
Putnam International Growth and Income Fund.

PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IA SHARES
(Bar chart)
Plot points
1998 %

Average annual total returns (for periods ending 12/31/98)
Past Since
1 year inception
(1/2/97)
Class IA % %
MSCI EAFE % %

The fund's performance has benefitted from Putnam Management's agreement
to limit the fund's expenses through the period ended December 31, 1998.
The Morgan Stanley Capital International (MSCI) EAFE Index is an unmanaged
index of equity securities from Europe, Australia, and the Far East, with
all values expressed in U.S. dollars.

PUTNAM INTERNATIONAL NEW OPPORTUNITIES FUND

GOAL

The fund seeks long-term capital appreciation.

MAIN INVESTMENT STRATEGIES-GROWTH STOCKS

Under normal market conditions, the fund invests at least 65% of its total
assets in at least three countries other than the United States. The fund
invests mainly in growth stocks, which are stocks issued by companies
whose earnings Putnam Management believes are likely to grow faster than
the economy as a whole.

The fund may invest in companies of any size. The fund emphasizes
investments in developing or emerging markets.

MAIN RISKS

The main risks that could adversely affect the value of this fund's shares
and the total return on your investment include

* The risks of investing outside the United States, such as currency
fluctuations, economic or financial instability, lack of timely or
reliable financial information, or unfavorable political or legal
developments in international markets. These risks are increased when
investing in emerging markets.

* The risk that the stock price of one or more of the companies in the
fund's portfolio will fall, or will fail to appreciate as anticipated by
Putnam Management. Many factors can adversely affect a stock's
performance including factors to a specific company or industry or to
general financial market conditions. This risk is generally greater for
small and medium-sized companies, which tend to be more vulnerable to
adverse developments.

* The risk that movements in the securities markets will reduce the
value of the fund's investments, regardless of how well the companies in
the fund's portfolio perform.

The fund will generally be managed in a style similar to that of the
Putnam International New Opportunities Fund.

PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IA SHARES
(Bar chart)
Plot points
1998 %

Average annual total returns (for periods ending 12/31/98)
Past Since
1 year inception
(1/2/97)

Class IA % %
MSCI EAFE % %

The fund's performance has benefitted from Putnam Management's agreement
to limit the fund's expenses through the period ended December 31, 1998.
The Europe, Australia and the Far East (EAFE) component of the Morgan
Stanley Capital International World Index is an unmanaged index of
international equity securities, excluding U.S. securities, with all
values expressed in U.S. dollars.

PUTNAM VT INVESTORS FUND

GOAL

The fund seeks long-term growth of capital and any increased income that
results from this growth.

MAIN INVESTMENT STRATEGIES - GROWTH

Most of the stocks bought by the fund are "growth" stocks whose earnings
Putnam Management believes are likely to grow faster than the economy as a
whole. The fund mainly buys stocks of larger companies, although the fund
may invest in companies of any size.

MAIN RISKS

The main risks that could adversely affect the value of this fund's shares
and the total return on your investment include

* The risk that the stock price of one or more of the companies in the
fund's portfolio will fall, or will fail to appreciate as anticipated by
Putnam Management, regardless of movement in the securities markets. Many
factors can adversely affect a stock's performance.

* The risk that movements in the securities markets will reduce the
value of the fund's investments, regardless of how well the companies in
the fund's portfolio perform.

The fund will generally be managed in a style similar to that of the
Putnam Investors Fund.

PERFORMANCE INFORMATION

No performance information is available for the fund because it has not
yet completed its first fiscal year of operations.

PUTNAM VT MONEY MARKET FUND

GOAL

The fund seeks as high a rate of current income as Putnam Management
believes is consistent with preservation of capital and maintenance of
liquidity.

MAIN INVESTMENT STRATEGY - INCOME

The fund seeks to maintain a stable net asset asset value of $1.00 per
share.

The fund's investments are

* high quality money market instruments, and
* short-term (with a dollar-weighted average portfolio maturity of 90 days or
less).

MAIN RISKS

While money market funds are designed to be relatively low risk
investments, they are not entirely free of risk. The main risks that could
adversely affect the value of the fund's shares and the total return and
yield on your investment include

* the risk that the value of your investment may be eroded over time by
the effects of inflation, and

* the risk that, as a result of a deterioration in the credit quality
of issuers whose securities the fund holds or an increase in interest
rates the fund may be unable to maintain a net asset value of $1.00 per
share.

There is no guarantee that the fund will achieve its goals and the fund is
intended as a complete investment program. Investments in the fund are
neither insured nor guaranteed by the Federal Deposit Insurance
Corporation or any other government agency. Although the fund seeks to
preserve the value of your investment at $1.00 per share, you may lose
money by investing in the fund.

The fund will generally be managed in a style similar to that of the
Putnam Money Market Fund.

PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IA SHARES
(Bar chart)
Plot points
1989 %
1990 %
1991 %
1992 %
1993 %
1994 %
1995 %
1996 %
1997
1998

Average annual total returns (for periods ending 12/31/98)
Past Past Past
1 year 5 years 10 years

Class IA % % %
Merrill Lynch 91-Day
Treasury Bill Index % % %
Lipper Money Market % % %
Fund Average

The fund's performance is compared to the Merrill Lynch 91-Day Treasury
Bill Index, an unmanaged index that seeks to measure the performance of
short-term U.S. Treasury bills currently available in the marketplace.

PUTNAM VT NEW OPPORTUNITIES FUND

GOAL

The fund seeks long-term growth of capital appreciation.

MAIN INVESTMENT STRATEGIES - GROWTH

The fund invests primarily in "growth" stocks whose earnings Putnam
Management believes are likely to grow faster than the economy as a whole.
The fund may invest in companies of any size. The fund will generally
invest in companies that Putnam Management identifies as offering the best
prospects for long-term growth potential. Those sectors will change from
time to time but the current sectors are identified later in this
prospectus.

MAIN RISKS

The main risks that could adversely affect the value of this fund's shares
and the total return on your investment include

* The risk that the stock price of one or more of the companies in the
fund's portfolio will fall, or will fail to appreciate as anticipated by
Putnam Management, regardless of movement in the securities markets. Many
factors can adversely affect a stock's performance.

* The risk that movements in the securities markets will adversely
affect the value of the fund's investments, regardless of how well the
companies in the fund's portfolio perform.

* The risk of investing in a limited group of market sectors.
Investments in the sectors identified by Putnam Management as having the
potential for capital growth, even though representing interests in
different companies in such industries, may be affected by common
economic forces and other factors. The vulnerability of the fund to
factors affecting the sectors chosen will be significantly greater than
that of a fund that invests in a broader range of industries which may
result in greater losses and volatility.

The fund will generally be managed in a style similar to that of the
Putnam New Opportunities Fund.

PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES
(Bar chart)
Plot points
1995 %
1996 %
1997
1998

Average annual total returns (for periods ending 12/31/98)
Past Since
1 year inception
(5/2/94)

Class IA % %
S&P Index % %

The fund's performance has benefitted from Putnam Management's agreement
to limit the fund's expenses through the period ended December 31, 1994.
The fund's performance is compared to the Standard & Poor's 500 Index, an
unmanaged index of common stocks frequently used as a general measure of
U.S. stock market performance.

PUTNAM VT NEW VALUE FUND

GOAL

The fund seeks long-term capital appreciation.

MAIN INVESTMENT STRATEGIES - VALUE STOCKS

Under normal market conditions, the fund invests in value stocks, which
are common stocks that Putnam Management believes are undervalued at the
time of purchase and have the potential for long-term capital
appreciation. If Putnam Management is correct and other investors
recognize this discount, the price of the stock may rise. Putnam
Management may select stocks of companies of any size.

MAIN RISKS

The main risks that could adversely affect the value of this fund's shares
and the total return on your investment include

* The risk that the stock price of one or more of the companies in the
fund's portfolio will fall, or will fail to appreciate as anticipated by
Putnam Management. Many factors can adversely affect a stock's
performance. This risk is greater for small and medium-sized companies,
which tend to be more vulnerable to adverse developments.

* The risk that movements in the securities markets will adversely
affect the price of the fund's investments, regardless of how well the
companies in the fund's portfolio perform.

The fund will generally be managed in a style similar to that of the
Putnam New Value Fund.

PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IA SHARES
(Bar chart)
Plot points
1998 %

Average annual total returns (for periods ending 12/31/98)
Past Since
1 year inception
(1/2/97)

Class IA % %
S&P 500 Index % %

The fund's performance has benefitted from Putnam Management's agreement
to limit the fund's expenses through December 31, 1998. The fund's
performance is compared to the Standard & Poor's 500 Index, an unmanaged
index of common stocks frequently used as a general measure of U.S. stock
market performance.

PUTNAM VT OTC & EMERGING MARKETS FUND

GOAL

The fund seeks capital appreciation.

MAIN INVESTMENT STRATEGIES - GROWTH STOCKS

Under normal market conditions, the fund invests at least 65% of its total
assets in common stocks traded in the over-the-counter ("OTC") market or
common stocks of "emerging growth" companies listed on securities
exchanges. "Emerging growth" companies are companies that Putnam
Management believes have a leading or proprietary position in a growing
industry or are gaining market share in an established industry. These
companies may range from startups or recently organized companies to
mature companies with long, established operating histories. The fund
mainly buys stocks of small to medium sized companies, although the fund
may invest in companies of any size. Most stocks bought by the fund are
"growth" stocks whose earnings Putnam Management believes are likely to
grow faster than the economy as a whole.

MAIN RISKS

The main risks that could adversely affect the value of this fund's shares
and the total return on your investment include

* The risk that the stock price of one or more of the companies in the
fund's portfolio will fall, or will fail to appreciate as anticipated by
Putnam Management. Many factors can adversely affect a stock's
performance. This risk is greater for small and medium-sized companies,
which tend to be more vulnerable to adverse developments.

* The risk that movements in the securities markets will adversely
affect the price of the fund's investments, regardless of how well the
companies in the fund's portfolio perform.

The fund will generally be managed in a style similar to that of the
Putnam OTC & Emerging Markets Fund.

PERFORMANCE INFORMATION

No performance information is available for the fund because it has not
yet completed its first fiscal year of operations.

PUTNAM VT RESEARCH FUND

GOAL

The fund seeks capital appreciation.

MAIN INVESTMENT STRATEGIES - GROWTH STOCKS

Under normal market conditions, the fund will seek to achieve its goal by
investing mostly in common stocks that by Putnam Management believes have
the potential for capital appreciation. The fund may invest in both
growth and value stocks. Growth stocks are issued by companies whose
earnings Putnam Management believes are likely to grow faster than the
economy as a whole. Value stocks are those that Putnam Management believes
are currently undervalued compared to their true worth. If Putnam
Management is correct and other investors recognize this discount, the
price of the stock may rise. The fund can invest in companies of any size.
Although the fund emphasizes investments in developed countries, it
may also invest in companies located in emerging markets.

MAIN RISKS

The main risks that could adversely affect the value of this fund's shares
and the total return on your investment include

* The risk that the stock price of one or more of the companies in the
fund's portfolio will fall, or will fail to appreciate as anticipated by
Putnam Management. Many factors can adversely affect a stock's
performance. This risk is greater for small and medium-sized companies,
which tend to be more vulnerable to adverse developments.

* The risk that movements in the securities markets will reduce the
value of the fund's investments, regardless of how well the companies in
the fund's portfolio perform.

The fund's shares may rise and fall in value, and you can lose money by
investing in the fund. The fund may not achieve its goal, and is not
intended as a complete investment program. An investment in the fund is
not a deposit of the bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.

The fund will generally be managed in a style similar to that of the
Putnam Research Fund.

PERFORMANCE INFORMATION

No performance information is available for the fund because it has not
yet completed its first fiscal year of operations.

PUTNAM VT SMALL CAP VALUE FUND

GOAL

The fund seeks capital appreciation.

MAIN INVESTMENT STRATEGIES -- VALUE STOCKS

The fund generally invests in common stocks of small companies. These are
companies of a size similar to those of the Russell 2000 Index, a commonly
used measure of small company performance. The fund will generally invest
in value stocks, which stocks are those that Putnam Management believes
are currently undervalued compared to their true worth. If Putnam
Management is correct and other investors recognize this discount, the
price of the stock may rise.

MAIN RISKS

The main risks that could adversely affect the value of this fund's shares
and the total return on your investment include

* The risk that the stock price of one or more of the companies in the
fund's portfolio will fall, or will fail to appreciate as anticipated by
Putnam Management. Many factors can adversely affect a stock's
performance. This risk is greater for small and medium-sized companies,
which tend to be more vulnerable to adverse developments.

* The risk that movements in the securities markets will adversely
affect the price of the fund's investments, regardless of how well the
companies in the fund's portfolio perform.

The fund will generally be managed in a style similar to that of the
Putnam Small Cap Value Fund

PERFORMANCE INFORMATION

No performance information is available for the fund because it has not
yet completed its first fiscal year of operations.

PUTNAM VT U.S. GOVERNMENT AND HIGH QUALITY BOND FUND

GOAL

Putnam VT U.S. Government and High Quality Bond Fund seeks current income
consistent with preservation of capital.

MAIN INVESTMENT STRATEGY - U.S. GOVERNMENT AND HIGH QUALITY DEBT
SECURITIES

The fund invests primarily in U.S. government securities and in other debt
obligations rated, at the time of purchase, at least A by a nationally
recognized securities rating agency, such as S&P or Moody's, or, if not
rated, determined by Putnam Management to be of comparable quality. The
fund will not necessarily dispose of a security when its rating is reduced
below its rating at the time of purchase.

Putnam Management may take full advantage of the entire range of
maturities of U.S. government securities and other high quality bonds and
may adjust the average maturity of the fund's portfolio from time to time,
depending on its assessment of relative yields on securities of different
maturities and expectations of future changes in interest rates. Thus, at
certain times the average maturity of the portfolio may be relatively
short (less than one year to five years, for example) and at other times
may be relatively long (more than 10 years, for example).

Putnam Management will allocate the fund's assets between U.S.
government securities and other high quality bonds , depending on its
assessment of market conditions and the relative investment returns
available from such securities. The fund will not, however, make any
investment, if, as a result, less than 25% of the value of its assets
would be invested in U.S. government securities . The fund may invest in
securities principally traded in foreign markets, and expects that such
investments will not ordinarily exceed 20% of its assets. The fund may
engage in defensive strategies when Putnam Management judges that
conditions in the securities markets make pursuing the fund's basic
investment strategy inconsistent with the best interests of its
shareholders. The fund may also invest in high quality mortgage-backed and
asset-backed securities.

MAIN RISKS

The main risks that could adversely affect the value of this fund's shares
and the total return on your investment include

* The risk that mortgages underlying the fund's investments in mortgage-
backed securities may be prepaid. This might force the fund to reinvest
the proceeds from prepayments in investments offering a lower yield. With
respect to these investments, the fund therefore might not benefit from
any increase in value as a result of declining interest rates. Similarly,
rising interest rates may cause prepayments to fall. This would
effectively extend the fund's maturity and increase its interest rate
risk at times when that is least desirable-during periods of rising
interest rates.

PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IA SHARES
(Bar chart)
Plot points
1988 %
1987 %
1988 %
1989 %
1990 %
1991 %
1992 %
1993 %
1994 %
1995 %
1996 %
1997 %
1998 %

Average annual total returns (for periods ending 12/31/98)
Past Since
1 year inception
(2/1/88)

Class IA % %
S&P 500 Index % %

PUTNAM VT UTILITIES GROWTH AND INCOME FUND

GOALS

The fund seeks capital growth and current income.

MAIN INVESTMENT STRATEGIES - VALUE STOCKS

Under normal market conditions, the fund will invest at least 65% of its
total assets in equity and debt securities of companies in the public
utilities industries. Most of the stocks bought by the fund are "value"
stocks that Putnam Management believes are currently selling below their
true worth. If Putnam Management is correct and other investors recognize
this discount, the price of the stock may rise. Up to 25% of the fund's
assets may be invested in foreign markets. The fund mainly buys stocks of
larger companies, although the fund may invest in companies of any size.

MAIN RISKS

The main risks that could adversely affect the value of this fund's shares
and the total return on your investment include:

* The risk of investing in a single group of industries. Investments in
the utilities industries, even though representing interests in different
companies in such industries, may be affected by common economic forces
and other factors. The vulnerability of the fund to factors affecting the
utilities industries will be significantly greater than that of a fund
that invests in a broader range of industries, which may result in
greater losses and volatility.

* The risk that the stock price of one or more of the companies in the
fund's portfolio will fall, or will fail to appreciate as anticipated by
Putnam Management. Many factors can adversely affect a stock's
performance, including factors related to a specific company or industry
or general financial market conditions. This risk is greater for smaller
companies, which tend to be more vulnerable to adverse developments.

* The risk that movements in the securities markets will reduce the
value of the fund's investments, regardless of how well the companies in
the fund's portfolio perform. The value of the fund's fixed-income
investments is likely to fall if interest rates rise. Interest rate risk
is highest for investments with long maturities.

* The risks of investing outside the United States, such as currency
fluctuations, economic or financial instability, or unfavorable political
or legal developments in foreign markets. These risks are increased when
investing in emerging markets.

* The risk that the companies whose fixed-income investments the fund
purchases will fail to make timely payments of interest and principal.
This credit risk is higher for corporate fixed-income investments than
for U.S. Government fixed-income investments and is higher still for
fixed-income investments of below investment-grade quality.

The fund will generally be managed in a style similar to that of the
Putnam Utilities Growth and Income Fund.

PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IA SHARES
(Bar chart)
Plot points
1993 %
1994 %
1995 %
1996 %
1997
1998

Average annual total returns (for periods ending 12/31/98)
Past Past Since
1 year 5 years inception
Class IA % % %
S&P Utility Index % % %

The fund's performance is compared to the S&P Utility Index, an unmanaged
index of common stocks issued by utility companies.

PUTNAM VT VISTA FUND

GOAL

The fund seeks capital appreciation.

MAIN INVESTMENT STRATEGIES - GROWTH STOCKS

The fund mainly buys stocks of medium sized companies, although the fund
may invest in companies of any size. The fund invests mainly in "growth"
stocks. Growth stocks are common stocks that are issued by companies whose
earnings Putnam Management believes are likely to grow faster than the
economy as a whole. The fund mainly buys stocks of medium size companies,
although the fund may invest in companies of any size.

MAIN RISKS

The main risks that could adversely affect the value of this fund's shares
and the total return on your investment include

* The risk that the stock price of one or more of the companies in the
fund's portfolio will fall, or will fail to appreciate as anticipated by
Putnam Management. Many factors can adversely affect a stock's
performance. This risk is greater for small and medium-sized companies,
which tend to be more vulnerable to adverse developments.

* The risk that movements in the securities markets will reduce the of
the fund's investments, regardless of how well the companies in the
fund's portfolio perform.

The fund will generally be managed in a style similar to that of the
Putnam Vista Fund.

PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IA SHARES
(Bar chart)
Plot points
1998
Average annual total returns (for periods ending 12/31/98)
Past Since
1 year inception
(1/2/97)

Class IA % %
Russell Midcap Index %
Russell Midcap
Growth Index % %

The fund's performance has benefitted from Putnam Management's agreement
to limit the fund's expenses through the period ended December 31, 1998.
The fund's performance is compared to the Russell Midcap Index and the
Russell Midcap Growth Index. The Russell Midcap Index is composed of the
800 smallest companies in the Russell 1000 Index, representing
approximately 35% of the Russell 1000 total market capitalization. The
Russell Midcap Growth Index is composed of securities with
greater-than-average growth orientation within the Russell Midcap Index.
Each security's growth orientation is determined by a composite score of
the security's price-to-book ratio and forecasted growth rate. Growth
stocks tend to have a higher price-to-book ratios and forecasted growth
rates than value stocks. This index is composed of approximately 450
companies! from the Russell 1000 Growth Index, representing 20% of the
total market capitalization of the Russell 1000 Growth Index.

PUTNAM VT VOYAGER FUND

GOAL

The fund seeks capital appreciation.

MAIN INVESTMENT STRATEGIES-GROWTH STOCKS

The fund invests mainly in "growth" stocks. Growth stocks are common
stocks that are issued by companies whose earnings Putnam Management
believes are likely to grow faster than the economy as a whole. The fund
may invest in companies of any size.

MAIN RISKS

The main risks that could adversely affect the value of this fund's shares
and the total return on your investment include

* The risk that the prices of the stocks in the fund's portfolio will
fall, or will fail to appreciate as anticipated by Putnam Management.
Many factors can adversely affect a stock's performance. This risk is
greater for small or medium-size companies, which tend to be more
vulnerable to adverse developments.

* The risk that movements in the securities markets will reduce the
value of the fund's investments, regardless of how well the companies in
the fund's portfolio perform.

The fund will generally be managed in a style similar to that of the
Putnam Voyager Fund.

PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IA SHARES
(Bar chart)
Plot points
1989 %
1990 %
1991 %
1992 %
1993 %
1994 %
1995 %
1996 %
1997 %
1998

Average annual total returns (for periods ending 12/31/98)
Past Past Past
1 year 5 years 10 years
Class IA % % %
S&P 500 Index % % %

The fund's performance is compared to the Standard & Poor's 500 Index, an
unmanaged index of common stocks frequently used as a general measure of
U.S. stock market performance.

What are the funds' main investment
strategies and related risks?

The funds (other than Putnam VT Global Asset Allocation Fund and Putnam VT
U.S. Government and High Quality Bond Fund) are generally managed in
styles similar to other open-end investment companies which are managed by
Putnam Management and whose shares are generally offered to the public.
These other Putnam funds may, however, employ different investment
practices and may invest in securities different from those in which their
counterpart funds invest, and consequently will not have identical
portfolios or experience identical investment results.

The first part of this section describes the investment strategies and
related risks that are particular to each of the funds. The second part of
this section describes the main investment strategies and related risks
that are common to a number of the funds. Investors are urged to read both
parts of this section.

Putnam VT Asia Pacific Fund

Under normal market conditions, the fund will seek to achieve its goal by
investing mostly in common stocks issued by Asian or Pacific Basin
companies. The fund may invest in both growth and value stocks. Any
investment carries with it some level of risk that generally reflects its
potential for reward. Putnam Management will consider, among other things,
a company's financial strength, competitive position in its industry and
projected future earnings and dividends when deciding whether to buy or
sell investments. The fund invests mainly in medium and large-sized
companies but may invest in companies of any size.

Geographic focus. The fund considers the following to be "Asian or Pacific
Basin" companies

* companies organized under the laws of an Asian or a Pacific Basin
country with a principal office in an Asian or a Pacific Basin country,

* companies that earn 50% or more of their total revenues from
business in Asia or the Pacific Basin, or

* companies whose common stock is traded principally on a securities
exchange in Asia or the Pacific Basin.

The fund anticipates that under normal market conditions it will invest
85% of its assets in Asian or Pacific Basin companies and at least 65% of
its assets will be invested in securities of issuers that meet at least
one of the first two criteria listed above.

Asian and Pacific Basin countries may include, for example, Australia,
Hong Kong, India, Indonesia, Japan, Korea, Malaysia, New Zealand, the
People's Republic of China, the Philippines, Singapore, Taiwan and
Thailand.

Developments in Asian or Pacific Basin economies will generally have a
greater effect on the fund than if it were more geographically
diversified, which may result in greater losses and volatility.

Putnam VT Diversified Income Fund

The fund pursues its goal of high current income by investing mainly in
fixed-income securities in the three sectors described below in the
amounts determined appropriate by Putnam Management subject to the
limitations described below.

* U.S. Government and Investment Grade Sector: This sector includes

* U.S. government securities: U.S. Treasury bills, notes and bonds; and
mortgage participation certificates guaranteed by the Government
National Mortgage Association ("Ginnie Mae"), Federal Housing
Administration debentures, Federal National Mortgage Association
("Fannie Mae") bonds and Federal Home Loan Bank debt, which are also
known as mortgage-backed securities.

* Mortgage-backed securities that are privately issued which will be
supported by the credit of any government agency or instrumentality.

* Other types of debt securities, such as debt securities of private
issuers that are investment grade at the time of purchase.

Under normal market conditions, at least 65% of the assets allocated to
the U.S. Government and Investment Grade Sector will be invested in U.S.
government securities and the fund will invest 20% of its net assets in
U.S. government securities. Some of the U.S. government securities are
supported by the full faith and credit of the United States, while others
are supported only by the credit of a government entity.

* High Yield Sector: Includes

* high yielding, lower-rated, higher risk U.S. and foreign corporate
fixed-income securities, such as debt securities, convertible securities
and preferred stock, rated at the time of purchase at least CCC (or its
equivalent) by a nationally recognized securities rating agency, or if
unrated determined by Putnam Management to be of comparable quality.

* International Sector: Includes

* debt obligations issued or guaranteed by foreign, national,
provincial, state, or other governments with taxing authority, or by
their agencies or instrumentalities;

* debt obligations of supranational entities, such as international
organizations designated or supported by government entities to promote
economic reconstruction or development, international banking
institutions and related government agencies; and

* debt obligations and other fixed-income securities of foreign and
similar non-dollar denominated securities of U.S. corporate issuers.

The fund may invest up to 5% of its net assets in securities rated below
CCC (or its equivalent at the time of purchase) and unrated of comparable
quality.

Although the fund has the flexibility to invest in any country where
Putnam Management sees potential for high income, it presently expects to
invest primarily in the securities of companies in industrialized Western
European countries (including Scandinavian countries), and in Canada,
Japan, Australia and New Zealand.

Putnam Management will consider, among other things, the risks and
opportunities of each market sector and economic and market conditions
when deciding the amount of the fund's assets to allocate to each of the
three market sectors in which the fund invests.

The fund may invest substantially in debt investments rated, at the time
of purchase, as low as CCC (or its equivalent) by a nationally recognized
securities rating agency, and unrated investments that Putnam Management
determines are of comparable quality. The fund will not necessarily sell
an investment if its rating is reduced.

Putnam VT The George Putnam Fund of Boston

The fund pursues its goals by investing mainly in common stocks and debt
investments. Putnam Management will consider, among other things, a
company's financial strength, competitive position in its industry and
projected future earnings and dividends when deciding whether to buy or
sell investments.

Under normal market conditions, the fund expects that most of its debt
investments will be investment grade, which means that at the time of
purchase they are rated at least BBB (or its equivalent) by a nationally
recognized securities rating agency, or are unrated but determined by
Putnam Management to be of comparable quality. The fund may buy debt
investments rated, at the time of purchase, as low as B (or its
equivalent) by a nationally recognized securities rating agency, and
unrated investments that Putnam Management determines are of comparable
quality. The fund will not necessarily sell an investment if its rating is
reduced. The fund may invest in companies of any si!ze. The fund may
invest in securities of issuers not actively traded in U.S. markets. The
fund expects that its investments in such foreign securities not actively
traded in U.S. markets will generally not exceed 20% of the fund's total
assets, although the fund's investments in such foreign securities may
exceed this amount from time to time.

Putnam VT Global Asset Allocation Fund

The fund pursues its goals by investing in a wide variety of equity and
fixed-income securities both of U.S. and foreign issuers. The portion of
the fund's assets invested in each investment category will be managed as
a separate investment portfolio in accordance with that category's
particular investment objectives and policies, independently of the fund's
overall objective. The fund may invest in small and relatively less
well-known companies.The following is a description of the investment
objectives and policies of each investment category:

U.S. Equities. The objective of the U.S. Equities category is to seek both
capital growth and, to a lesser extent, current income through equity
securities. The fund may invest in either growth stocks or value stocks.

International Equities. The objective of the International Equities
category is to seek capital appreciation. Assets allocated to this
category will be invested in securities principally traded in foreign
securities markets. These securities will primarily be common stocks or
securities convertible into common stocks. The fund may invest in either
growth or value stocks.

U.S. Fixed Income. The objective of the U.S. Fixed Income category is to
seek high current income through a portfolio of fixed-income securities
that in the judgment of Putnam Management does not involve undue risk to
principal or income. The fund may invest assets allocated to the U.S.
Fixed Income catgetory in any fixed-income securities Putnam Management
considers appropriate, including U.S. government securities, debt
securities, mortgage-backed and asset-backed securities, convertible
securities and preferred stocks of non-governmental issuers.

International Fixed Income. The investment objective of the International
Fixed Income category is to seek high current income by investing
principally in foreign currency denominated debt securities issued by
foreign governmental or supranational entities. The fund may also invest
assets allocated to this category in debt securities of private issuers,
convertible securities and preferred stocks principally traded in foreign
securities markets.

The fund will not purchase fixed-income securities rated , at the time of
purchase, below CCC (or its equivalent) by each nationally recognized
securities rating agency rating such security or, if unrated, determined
by Putnam Management to be of comparable quality, if, as a result, more
than 5% of the fund's total assets would be invested in securities of that
quality. In addition, the fund will not purchase fixed-income securities
rated, at the time of purchase, below BBB by each rataing agency rating
such security, or, if unrated, determined to be of comparable quality by
Putnam Management, if, as a result, more than 35% of the fund's total
assets would be invested in securities of that quality. The fund will not
necessarily dispose of a security when its rating is reduced below its
rating at the time of purchase.

Putnam VT Global Growth Fund

The fund pursues its goal by investing mainly in growth stocks issued by
companies worldwide. Putnam Management will consider, among other things,
a company's financial strength, competitive position in its industry and
projected future earnings and dividends when deciding whether to buy or
sell investments. The fund may invest in companies of any size and in both
developed and emerging markets.

Putnam VT Growth and Income Fund

The fund pursues its goal by investing mainly in common stocks, which
represent ownership interests in companies. The fund generally invests in
value stocks. Putnam Management will consider, among other things, a
company's financial strength, competitive position in its industry and
projected future earnings and dividends when deciding whether to buy or
sell investments. The fund may invest in companies of any size. The fund
may invest in securities of issuers not actively traded in U.S. markets.
The fund expects that its investments in such foreign securities not
actively traded in U.S. markets will generally not exceed 20% of the
fund's total assets, although the fund's investments in such foreign
securities may exceed this amount from time to time.

Putnam VT Health Sciences Fund

The fund pursues its goal of capital appreciation by investing mainly in
companies in the health sciences industries. The fund may invest in
companies of any size. The fund may invest in companies of any size. The
fund may invest in securities of issuers not actively traded in U.S.
markets. The fund expects that its investments in such foreign securities
not actively traded in U.S. markets will generally not exceed 30% of the
fund's total assets, although the fund's investments in such foreign
securities may exceed this amount from time to time.

Industry focus. The fund invests in a wide variety of companies in the
health sciences industries, including companies in the pharmaceutical,
health care services, applied research and development, and medical
equipment and supplies businesses. The fund considers a company to be
principally engaged in the health sciences industries if at the time of
investment Putnam Management determines that at least 50% of the company's
assets, revenues or profits are derived from these industries.

* Under normal market conditions, the fund will invest at least 65% of
its assets in securities of issuers meeting at least one of these 50%
tests.

* Putnam Management may also consider a company with the potential for
growth as a result of particular products, technology, patents or other
market advantages in the health science industries to be in the health
sciences industries. The fund does not anticipate that companies in this
category will represent more than 15% of the fund's investments in the
health sciences industries.

* The fund invests primarily in a single group of industries and is
therefore more concentrated and less diversified than funds not
primarily investing in a single group of industries. Events that affect
the health sciences industries more significantly than the market as a
whole will have a greater affect on the fund than a fund that is more
widely diversified among a number of unrelated industries. Because the
fund's investments are concentrated in the health sciences industries,
many products and services are subject to risk of rapid obsolescence
caused by technological and scientific advances. In addition, the health
sciences industries are generally subject to greater government
regulation than many other industries. Changes in governmental policies
may have a material effect on the demand for or costs of certain
products and services. Regulatory approvals are generally required
before new drugs and medical devices or procedures may be in!troduced
and before the acquisition of additional facilities and equipment by
health care providers. Changes in governmental payment systems and the
increased use of managed care arrangements may also affect the revenues
and expenses of health care service providers.

Putnam VT High Yield Fund

The fund pursues its goals by investing mainly in corporate bonds and
notes, and to a lesser degree, in preferred stocks. These investments are
commonly known as fixed-income investments. The fund may invest in
companies of any size. The fund may invest in securities of issuers not
actively traded in U.S. markets. The fund expects that its investments in
such foreign securities not actively traded in U.S. markets will generally
not exceed 20% of the fund's total assets, although the fund's investments
in such foreign securities may exceed this amount from time to time.

The fund's investments are mainly below investment grade in credit
quality. The fund may buy investments rated, at the time of purchase, at
least CCC (or its equivalent) by a nationally recognized securities rating
agency, and unrated investments that Putnam Management determines are of
comparable quality. The fund will not necessarily sell an investment if
its rating is reduced. The fund may also invest up to 15% of its total
assets in securities rated below CCC (or its equivalent) by each agency
rating such security, including securities in the lowest ratings
categories, and unrated investments that Putnam Management determines are
of comparable quality.

Putnam International Growth Fund

Putnam VT International Growth and Income Fund

The fund pursues its goals of capital growth and current income by
investing mainly in common stocks. Putnam Management will consider, among
other things, a company's financial strength, competitive position in its
industry and projected future earnings and dividends when deciding whether
to buy or sell investments. The fund may invest in companies of any size.
The fund generally invests in value stocks. The fund may invest in
companies of any size.

Putnam VT International New Opportunities Fund

The fund pursues its goal by investing mainly in growth companies outside
the United States. Putnam Management will consider, among other things, a
company's financial strength, competitive position in its industry and
projected future earnings and dividends when deciding whether to buy or
sell investments. The fund may invest in companies of any size.

Putnam VT Investors Fund

The fund pursues its goal by investing mainly in common stocks, which
represent ownership interests in companies. The fund may invest in
companies of any size. Putnam Management gives more consideration to
growth potential than to dividend income. Putnam Management believes that
evaluating a company's probable future earnings, dividends, financial
strength, working assets and competitive position will prove more
profitable in the long run than simply seeking current dividend income.

Putnam VT Money Market Fund

The fund pursues its goal by investing in high quality, short term money
market investments, such as certificates of deposit, commercial paper,
U.S. government debt and repurchase agreements, corporate obligations and
bankers acceptances issued by banks with deposits in excess of $2 billion
(or the foreign currency equivalent) at the close of the last calendar
year. If the Trustees change this minimum deposit requirement,
shareholders would be notified. The fund may invest without limit in money
market instruments of foreign issuers that are denominated in U.S.
dollars.

* Concentration of investments. The fund may invest without limit in
money market investments from the banking, personal credit and business
credit industries when Putnam Management believes the yield and
marketability of those investments justify any additional risks that may
arise from a concentration of investments in those industries. The fund
will invest over 25% of its assets in money market investments from the
personal credit or business credit industries only when Putnam Management
determines that the yields on those investments exceed the yields that
are available from eligible investments of issuers in other industries.

The value of the fund's shares may be more vulnerable than the values of
shares of money market funds that invest in issuers in a greater number of
industries. To the extent that the fund invests significantly in a
particular industry, it runs an increased risk of loss if economic or
other developments that affect that industry cause the prices of related
money market investments to fall.

* Letters of credit & other credit enhancements. The fund may buy
investments backed by credit enhancements such as letters of credit, which
are designed to give additional protection to investors. For example, if
an issuer of a note does not have the credit rating usually required by
the fund, another company may use its higher credit rating to back up the
credit of the issuer of the note by selling the issuer a letter of credit.
The main risk in investments backed by a letter of credit is that the
company issuing the letter of credit will not be able, or will be thought
to be unlikely to be able, to fulfill its obligations to the fund.

* Short-term maturity. The fund invests in short-term money market
instruments. The dollar-weighted average portfolio maturity will not
exceed 90 days and the fund may not hold a security with a remaining
maturity of more than 397 days. Although these policies tend to reduce
risk (see "interest rates" below), short-term investments generally have
lower yields than longer-term investments.

* Interest rates. The values of money market investments usually rise and
fall in response to changes in interest rates. Declining interest rates
will generally raise the value of existing money market investments, and
rising interest rates will generally lower the value of existing money
market investments. Changes in the values of money market investments
usually will not affect the amount of income the fund receives from them,
but could affect the value of the fund's shares. Interest rate risk is
generally lowest for investments with short maturities, and the short-term
nature of money market investments is designed to reduce this risk.

* Insurance. The fund has bought liability insurance that insures it
against a decrease in the value of its investments arising from the
issuer's default or bankruptcy. The insurance covers most of the fund's
investments, other than U.S. government securities. Although the insurance
may provide the fund with some protection against certain credit risks, it
does not guarantee or insure that the fund will be able to maintain a
stable net asset value of $1.00 per share. The maximum total coverage for
each fund is $30 million, with a deductible for each loss of $1 million or
0.30% of the fund's net assets, whichever is less. The $30 million maximum
coverage is shared with four other Putnam money market funds. Recovery
under the insurance is subject to certain conditions, including the
condition that the other Putnam money market funds have not previously
exhausted the insurance coverage, and the insurance might not be renewed
when i!t expires.

Putnam VT New Opportunities Fund

The fund pursues its goal by investing mainly in growth and value stocks
issued by companies outside the United States. Putnam Management will
consider, among other things, a company's financial strength, competitive
position in its industry (and within the economy as a whole) and projected
future earnings and dividends when deciding whether to buy or sell
investments and it will also consider the relative strength and growth
prospects of market sectors as compared to the economy as a whole. The
fund may invest in companies of any size. The fund may invest in
securities of issuers not actively traded in U.S. markets. The fund
expects that its investments in such foreign securities not actively
traded in U.S. markets will generally not exceed 20% of the fund's total
assets, although the fund's investments in such foreign securities may
exceed this amount from time to time.

The sectors of the economy which offer above-average growth potential will
change over time. At present, Putnam Management has identified the
following sectors of the economy, and examples of industries within these
sectors, as having an above-average growth potential over the next three
to five years:

* Personal Communications - long-distance telephone, competitive local
exchange carriers, cellular telephone, paging, personal communication
networks;

* Media/Entertainment - cable television system operators, cable
television network programmers, film entertainment providers, theme park
operators, radio and television stations, billboard advertisers;

* Medical Technology/Cost-Containment - home and outpatient care,
medical device companies, pharmaceuticals and biotechnology, health care
information services, physician practice management, managed care
providers;

* Industrial and Environmental Services - solid waste disposal,
remediation services, oil services, independent power producers;

* Applied/Advanced Technology - database software, application software,
entertainment software, networking and communications equipment, computer
systems integrators, information services, semiconductors, manufacturing
technology;

* Personal Financial Services - stock brokerage companies, specialty
insurance companies, credit card issuers, and other consumer-oriented
financial services companies;

* Value-oriented Consuming - retailers, restaurants, hotel chains,
casino operators, travel companies, consumer franchise companies and
other consumer product or service companies able to provide quality
products or services at lower prices or offering greater perceived value
than competitors; and

* Business Services - staffing and temporary help companies, electronic
commerce services, education and training services.

In addition, the fund may also invest a portion of its assets in
securities of companies that, although not in any of the sectors described
above, Putnam Management expects to experience above-average growth.

Putnam VT New Value Fund

The fund pursues its goal by investing mainly in common stocks. The fund
generally invests in value stocks. Putnam Management will consider, among
other things, a company's financial strength, competitive position in its
industry and projected future earnings and dividends, and the securities
long-term potential for capital appreciation when deciding whether to buy
or sell investments. Because Putnam Management evaluates securities for
the fund based on their long-term potential for capital appreciation, the
fund's investments may not appreciate over the shorter term, and as a
result the fund's total return over certain periods may be less than that
of o!ther equity mutual funds. The fund may invest in companies of any
size. The fund may invest in securities of issuers not actively traded in
U.S. markets. The fund expects that its investments in such foreign
securities not actively traded in U.S. markets will generally not exceed
20% of the fund's total assets, although the fund's investments in such
foreign securities may exceed this amount from time to time.

Putnam VT OTC & Emerging Growth Fund

The fund pursues its goal of capital appreciation by investing mainly in
common stocks of small to medium-sized companies. The fund generally
invests in growth stocks. Putnam Management will consider, among other
things, a company's financial strength, competitive position in its
industry and projected future earnings and dividends when deciding whether
to buy or sell investments. The fund may invest in securities of issuers
not actively traded in U.S. markets. The fund expects that its investments
in such foreign securities not actively traded in U.S. markets will
generally not exceed 20% of the fund's total assets, although the fund's
investments in such foreign securities may exceed this amount from time to
time.

Putnam VT Research Fund

The fund pursues its goal of seeking above average capital growth by
investing mainly in common stocks, which represent ownership interests in
companies. The fund generally invests in growth stocks. In selecting
investments, Putnam Management will consider a company's projected future
earnings potential, competitive position in industry, relative valuation
vs. industry peers and financial strength. Putnam Management seeks to
construct a portfolio of securities that manages the level and magnitude
of risk assumed by the fund. The fund may sell securities in the portfolio
when Putnam Management believes that the conditions underlying the
decision to purchase the! security have changed. The fund may invest in
companies of any size. The fund may invest in securities of issuers not
actively traded in U.S. markets. The fund expects that its investments in
such foreign securities not actively traded in U.S. markets will generally
not exceed 20% of the fund's total assets, although the fund's investments
in such foreign securities may exceed this amount from time to time.

The fund invests primarily in common stocks recommended by Putnam
Management as having the greatest potential for capital appreciation.
Because Putnam Management's style for the fund emphasizes fundamental
analysis, Putnam Management, when selecting securities for the fund, will
focus primarily on individual securities rather than sector or industry
weightings. Notwithstanding this focus on individual securities, Putnam
Management currently expects that the fund's portfolio will invest in
securities representing most (and at times possibly all) of the sectors
included in the Standard & Poor's 500 Composite Stock Price Index (the
"S&P 500"), although the fund is not an index fund and its portfolio is
not intended to replicate the index.

Putnam VT Small Cap Value Fund

The fund pursues its goal by investing mainly in value stocks. Putnam
Management will consider, among other things, a company's financial
strength, competitive position in its industry and projected future
earnings and dividends, and the securities long-term potential for capital
appreciation when deciding whether to buy or sell investments. Because
Putnam Management evaluates securities for the fund based on their
long-term potential for capital appreciation, the fund's investments may
not appreciate over the shorter term, and as a result the fund's total
return over certain periods may be less than that of other equity mutual
funds. The fund may inves!t in companies of any size. The fund may invest
in securities of issuers not actively traded in U.S. markets. The fund
expects that its investments in such foreign securities not actively
traded in U.S. markets will generally not exceed 20% of the fund's total
assets, although the fund's investments in such foreign securities may
exceed this amount from time to time.

Putnam VT U.S. Government and High Quality Bond Fund

The fund pursues its goals by investing mainly in U.S. government
investment and other debt obligations rated at least A by a nationally
recongized securities rating agency, or unrated securities determined by
Putnam Management to be of comparable quality. The fund also invests in
investment-grade debt securities issued mainly by domestic companies.
Putnam Management will consider, among other things, credit, interest rate
and prepayment risks as well as general market conditions when deciding
whether to buy or sell investments. The fund mainly invests in:

* U.S. government obligations. Under normal market conditions, the fund
will invest at least 65% of its total assets in U.S. government
securities. These investments include,

- - U.S. Treasury bills, notes and bonds.

- - Obligations guaranteed by the U.S. Treasury. These include obligations
issued or guaranteed by certain agencies and instrumentalities of the U.S.
government that are backed by the full faith and credit of the United
States, such as Ginnie Mae mortgage participation certificates and Federal
Housing Administration debentures.

- - Obligations guaranteed by a federal agency or government-sponsored
entity. These include obligations issued or guaranteed by certain agencies
and government-sponsored entities that are supported only by the credit of
such agency or entity, such as Fannie Mae bonds and Federal Home Loan Bank
debt.

Ginnie Mae mortgage participation certificates, Federal Housing
Administration debentures, Fannie Mae bonds and Federal Home Loan Bank
debt are commonly known as mortgage-backed securities. Mortgage-backed
securities represent participations in, or are secured by, mortgage loans.
The fund may also invest in other mortgage-backed securities including
collateralized mortgage obligations (CMOs) and stripped mortgage-backed
securities (strips). CMOs are issued with a number of classes (sometimes
called series) that have different maturities and may represent interests
in some or all of the interest or principal in the underlying mortgage
pool. Strips usually have two classes, which receive different portions of
payments of either interest (the interest-only, or "IO"class) or principal
(the principal-only or "PO" class) of underlying mortgages. The fund may
buy both IOs and POs.

The fund's mortgage-backed securities may be issued or guaranteed by the
U.S. government, its agencies or instrumentalities, or may be issued by
private issuers and represent an interest in or are secured by
mortgage-backed securities issued or guaranteed by the U.S. government,
its agencies or instrumentalities.

* Privately issued mortgage-backed securities. These investments which
include CMOs and strips that represent an interest in or are secured by
mortgage loans or mortgage-backed securities lacking a government
guarantee.

* Corporate obligations. These investments include mainly investment-
grade corporate debt securities issued by domestic companies and, to a
lesser degree, foreign companies but may include securities below
investment grade in quality.

The fund may invest in companies of any size. The fund may invest in
securities of issuers not actively traded in U.S. markets. The fund
expects that its investments in such foreign securities not actively
traded in U.S. markets will generally not exceed 20% of the fund's total
assets, although the fund's investments in such foreign securities may
exceed this amount from time to time.

The fund will only invest in non-U.S. government securities only if they
are rated "investment-grade" at time of purchase, that is, rated at least
BBB (or its equivalent) by a nationally recognized securities rating
agency or are unrated securities that Putnam Management determines are of
comparable quality. The fund will not necessarily dispose of a security if
its rating is reduced below this level.

Putnam VT Utilities Growth and Income Fund

The fund pursues its goals of capital growth and current income by
investing mainly in common stocks and other securities of companies in the
utilities industries. Putnam Management will consider, among other things,
a company's financial strength, competitive position in its industry and
projected future earnings and dividends when deciding whether to buy or
sell investments. The fund may invest in companies of any size. The fund
may invest in securities of issuers not actively traded in U.S. markets.
The fund expects that its investments in such foreign securities not
actively traded in U.S. markets will generally not exceed 25% of the
fund's total assets, although the fund's investments in such foreign
securities may exceed this amount from time to time. The fund may invest
up to 20% of its total assets in fixed-income securities that are rated
BBB (or its equivalent) or below by a nationally recog!nized securities
rating agency, or, if unrated, are determined by Putnam Management to be
of comparable quality.

Industry Focus. The public utilities industries include companies engaged
in the manufacture, production, generation, transmission, sale or
distribution of electric or gas energy or other types of energy, water
supply companies and companies engaged in telecommunications, including
telephone, telegraph, satellite, microwave and other communications media
(but not companies engaged in public broadcasting or cable television).
The fund considers a company to be in the public utilities industries if
at the time of investment Putnam Management determines that at least 50%
of the company's assets, revenues or profits are derived from these
industries.

Under normal market conditions, the fund will invest at least 65% of its
assets in securities of issuers meeting at least one of these 50% tests.

The fund invests primarily in a single group of industries and is
therefore more concentrated and less diversified than funds not primarily
investing in a single group of industries. Therefore, events that affect
the public utilities industries more significantly than the market as a
whole will have a greater affect on your fund than a fund that is more
widely diversified among a number of different industries. For example,
many utility companies, especially electric, gas and other energy-related
utility companies, have historically been subject to risks of increase in
fuel and other operating costs, changes in interest rates on borrowings
for capital improvement programs, changes in applicable laws and
regulations, changes in technology which may render existing plants,
equipment or products obsolete, the effects of energy conser!vation and
operating constraints, and increased costs and delays associated with
compliance with environmental regulations. In particular, regulatory
changes with respect to nuclear and conventionally-fueled power generating
facilities could increase costs or impair the ability of utility companies
to operate such facilities or obtain adequate return on invested capital.
Generally, prices charged by utilities are regulated in the United States
and in foreign countries with the intention of protecting the public while
ensuring that utility companies earn a return sufficient to allow them to
attract capital in order to grow and continue to provide appropriate
services. There can be no assurance that such pricing policies or rates of
return will continue in the future.

In recent years, regulatory changes in the United States have increasingly
allowed utility companies to provide services and products outside their
traditional geographic areas and lines of business, creating new areas of
competition within the utilities industries. This trend toward
deregulation and the emergence of new entrants have caused non-regulated
providers of utility services to become a significant part of the
utilities industries. Putnam Management believes that the emergence of
competition and deregulation will result in certain utility companies
being able to earn more than their traditional regulated rates of return,
while others may be forced to defend their core business from increased
competition and may be less profitable. Although Putnam Manag!ement seeks
to take advantage of favorable investment opportunities that may arise
from these structural changes, there can be no assurance that the fund
will benefit from any such changes.

Putnam VT Vista Fund

The fund pursues its goal of seeking above average capital growth by
investing mainly in growth stocks that Putnam Management believes have
above-average potential for capital appreciation. In selecting
investments, Putnam Management will consider projected future earnings
potential, competitive position in industry, relative valuation vs.
industry peers and financial strength. The fund may invest in companies of
any size but currently invests principally in securities of medium-sized
companies. The fund may invest in securities of issuers not actively
traded in U.S. markets. The fund expects that its investments in such
foreign securities not actively traded in U.S. markets will ge!nerally not
exceed 20% of the fund's total assets, although the fund's investments in
such foreign securities may exceed this amount from time to time.

Putnam VT Voyager Fund

The fund pursues its goal of capital appreciation by investing mainly in
growth stocks. Putnam Management will consider, among other things, a
company's financial strength, competitive position in its industry and
projected future earnings and dividends when deciding whether to buy or
sell investments. The fund may invest in companies of any size. The fund
may invest in securities of issuers not actively traded in U.S. markets.
The fund expects that its investments in such foreign securities not
actively traded in U.S. markets will generally not exceed 20% of the
fund's total assets, although the fund's investments in such foreign
securities may exceed this amount from t!ime to time.

Common Investment Strategies And Related Risks

* Common stocks. Common stokcs represent an ownership interest in a company.
The value of a company's stock may fall as a result of factors directly
relating to that company, such as decisions made by its management or lower
demand for the company's products or services. A stock's value may also fall
because of factors in a number of different industries, such as increases in
production costs. The value of a company's stock may also be affected by
changes in financial market conditions that are relatively unrelated to the
company or its industry, such as changes in interest rates or currency
exchange r!ates. In addition, a companyte s stock generally pays dividends
only after the company makes required payments to holders of its bonds and
other debt. For this reason, the value of the stock will usually react more
strongly than the bonds and other debt to actual or perceived changes in the
company's financial condition or prospects.

* Growth stocks. Certain funds invest in stocks of companies Putnam
Management believes have earnings that are likely to grow faster than the
economy as a whole. These growth stocks typically trade at higher multiples of
current earnings than other stocks. Therefore, the values of growth stocks may
be more sensitive to changes in current or expected earnings than the values
of other stocks. If Putnam Management's assessment of the prospects for the
company's earnings growth is wrong, or if its judgment about how other
investors will value the company's earnings growth is wrong, then the price of
the company's stock may fall or not approach the value that Putnam Management
has placed on it.

* Value stocks. Certain funds may also invest in companies that are not
expected to experience significant earnings growth, but whose stock Putnam
Management believes is undervalued compared to its true worth. These companies
may have experienced adverse business developments or may be subject to
special risks that have caused their stocks to be out of favor. If Putnam
Management's assessment of a company's prospects is wrong, or if other
investors do not eventually recognize the value of the company, then price of
the company's stock may fall or may not approach the value that Putnam
Management has placed on it.

* Smaller companies. Certain funds can invest in small and medium-size
companies, including companies with market capitalizations of less than $500
million. These companies are more likely than larger companies to have limited
product lines, markets or financial resources, or to depend on a small,
inexperienced management group. Stocks of these companies may trade less
frequently and in limited volume, and their prices may fluctuate more than
stocks of other companies. Stocks of these companies may therefore be more
vulnerable to adverse developments than those of larger companies.

* Foreign investments. Each of the funds may invest in securities of foreign
issuers. Foreign investments involve certain special risks, including

* Unfavorable changes in currency exchange rates: Foreign investments are
normally issued and traded in foreign currencies. As a result, their values
may be affected by changes in the exchange rates between particular foreign
currencies and the U.S. dollar.

* Political and economic developments: Foreign investments may be subject to
the risks of seizure by a foreign government, imposition of restrictions on
the exchange or transport of foreign currency, and tax increases.

* Unreliable or untimely information: There may be less information publicly
available about a foreign company than about most U.S. companies, and foreign
companies are usually not subject to accounting, auditing and financial
reporting standards and practices comparable to those in the United States.

* Limited legal recourse: Legal remedies for investors such as the fund may
be more limited than those available in the United States.

* Limited markets: Certain foreign investments may be less liquid (harder to
buy and sell) and more volatile than domestic investments, which means the
fund may at times be unable to sell these foreign investments at desirable
prices. For the same reason, the fund may at times find it difficult to value
its foreign investments.

* Trading practices: Brokerage commissions and other fees are generally
higher for foreign investments than for domestic investments. The procedures
and rules for settling foreign transactions may also involve delays in
payment, delivery or recovery of money or investments.

* Lower yield: Common stocks of foreign companies have historically offered
lower dividends than comparable U.S. companies. Foreign withholding taxes may
further reduce the amount of income available to distribute to shareholders of
the fund. The fund's yield is therefore expected to be lower than yields of
most funds that invest mainly in common stocks of U.S. companies.

Certain of these risks may also apply to some extent to U.S.-traded
investments that are denominated in foreign currencies, investments in
U.S. companies that are traded in foreign markets, or to investments in
U.S. companies that have significant foreign operations. Special U.S. tax
considerations may apply to the fund's foreign investments.

* Emerging markets. The risks of foreign investments are typically increased
in less developed and developing countries, which are sometimes referred to as
emerging markets. For example, political and economic structures in these
countries may be young and developing rapidly, which can cause instability.
These countries are also more likely to experience high levels of inflation,
deflation or currency devaluation, which could hurt their economies and
securities markets. For these and other reasons, investments in emerging
markets are often considered speculative.

* Fixed-income investments. The value of a fixed-income investment may fall
as a result of factors directly relating to the issuer of the security, such
as decisions made by its management or a reduction in its credit rating. An
investment's value may also fall because of factors affecting not just the
issuer, but other issuers, such as increases in production costs. The value of
an investment may also be affected by general changes in financial market
conditions, such as changing interest rates or currency exchange rates.

* Interest rate risk. The values of fixed income investments usually rise and
fall in response to changes in interest rates. Declining interest rates will
generally raise the value of existing fixed-income investments, and rising
interest rates will generally lower the value of existing fixed-income
investments. Changes in the values of fixed income investments usually will
not affect the amount of income a fund receives from them, but will affect the
value of a fund's shares. Interest rate risk is often greater for investments
with longer maturities.

* Credit risk. Investors normally expect to be compensated in proportion to
the risk they assume. Fixed-income investments of companies with poor credit
usually offer higher yields than those of companies with better credit.
Higher-rated investments generally offer lower-credit risk, but not lower
interest rate risk. The value of a higher-rated investment still fluctuates in
response to changes in interest rates.

* Certain of the funds may at time invest in "zero coupon" bonds and
"payment-in-kind" bonds. Zero coupon bonds are issued at less than face value
and make payments of interest only at maturity rather than at intervals during
the life of the bond. Payment-in-kind bonds give the issuing company the
option to make interest payments in additional bonds rather than in cash. Both
kinds of bonds allow a company to avoid generating cash to make current
interest payments. These bonds therefore involve greater credit risk and are
subject to greater price fluctuations than bonds that pay current interest in
cash.!

* Lower-rated investments. Certain of the funds may invest a significant
portion of their assets in securities that are below BBB (or its equivalent)
and comparable unrated securities that are considered below investment grade
and are commonly known as "junk bonds." These investments are considered to be
of poor standing and mainly speculative, and those rated CCC may be in
default. The lower ratings of these investments reflect a greater possibility
that the issuing companies may be unable to make timely payments of interest
and principal and thus default. There may be an increased risk of default i!n
adverse economic conditions. If this happens, or is perceived as likely to
happen, the values of those investments will usually be more volatile. A
default or expected default could also make it difficult for a fund to sell
the investments at prices approximating the values the fund had previously
placed on them. Because junk bonds are traded mainly by institutions, they
usually have a limited market, which may at times make it difficult for the
fund to establish their fair value.

Credit ratings are based largely on the issuing company's historical
financial condition and the rating agencies' investment analysis at the
time of purchase. The rating assigned to any particular investment does
not necessarily reflect the issuer's current financial condition and does
not reflect an assessment of an investment's volatility or liquidity.

Although Putnam Management considers credit ratings in making investment
decisions, it performs its own investment analysis and does not rely only
on ratings assigned by the rating agencies. Putnam Management seeks to
minimize the risks of fixed-income investments through careful analysis of
such factors as a company's experience, managerial strength, financial
condition, borrowing requirements and debt maturity schedule. When a fund
buys fixed-income investments of a company with poor credit prospects, the
achievement of its goals depends more on Putnam Management's ability than
would be the case if the fund were buying fixed-income investments of a
company with bette!r credit prospects

Because the likelihood of default is higher for the lower-rated
investments in which certain funds invest, funds investing in high yield
securities are more likely to have to participate in various legal
proceedings or to take possession of and manage assets that secure the
issuing company's obligations. This could increase the affected fund's
operating expenses and decrease its net asset value.

At times a fund, either by itself or together with other funds and
accounts managed by Putnam Management or its affiliates, may own all or
most of the fixed-income investments of a particular issuer. This
concentration of ownership may make it more difficult to sell, or
determine the fair value of, these investments.

Although they are generally thought to have lower credit risk, investment
grade fixed-income investments may share some of the risks of lower-rated
investments.

Although U.S. government investments are generally considered to have the
least credit reisk - the risk that the issuer will fail to make timely
payments of interest and principal - they are not completely free of
credit risk. While certain U.S. government securities, such as U.S.
Treasury obligations and Ginnie Mae certificates, are backed by the full
faith and credit of the U.S. government, other securities in which the
fund may invest are subject to varying degrees of risk. The risk factors
include the creditworthiness of the issuer and, in the case of
mortage-backed securities, the ability of the underlying mortgagors or
other borrowers to meet their obligations. In addition, the values of
these investments will still fluctuate in response to changes in interest
rates.

* Investments in premium securities. Each of the funds may invest in so-
called "premium" investments, which offer interest rates higher than
prevailing market rates. In addition, during times of declining interest
rates, many of the affected funds' investments may offer interest rates that
are higher than current market rates. When a fund holds these "premium"
investments, shareholders are likely to receive higher dividends (but will
bear a greater risk that the value of the fund's shares will fall) than they
would if the fund held investments that offered current market rates of
interest. Premium investments involve a greater risk of loss, because their
values tend to decline towards the face value over time.

Prepayments generally cause losses on premium investments, because
prepayments are made at face value and do not reflect any premium over
face value.

Investors may find it useful to compare the relevant fund's yield, which
reflects amortization of market premiums, with its current dividend rate,
which does not reflect that amortization.

* Illiquid securities. Each fund (other than Putnam VT Money Market Fund) may
invest up to 15% of its assets in illiquid securities. Putnam Management
believes that opportunities to earn high yields may exist from time to time in
securities which are illiquid and which may be considered speculative. The
sale of these securities is usually restricted under federal securities laws.
As a result of illiquidity, the fund may not be able to sell these securities
when Putnam Management considers it desirable to do so or may have to sell
them at less than fair market value.

* Mortgage-backed and asset-backed securities

As described above, certain of the funds may invest in asset-backed and
mortgage-backed securities, including collateralized mortgage
obligations (CMOs) and certain stripped mortgage-backed securities. CMOs
and other mortgage-backed securities represent participations in, or are
secured by, mortgage loans and include:

- - Certain securities issued or guaranteed by the U.S. government or one of
its agencies or instrumentalities;

- - Securities issued by private issuers that represent an interest in or are
secured by mortgage-backed securities issued or guaranteed by the U.S.
government or one of its agencies or instrumentalities; and

- - Securities issued by private issuers that represent an interest in or are
secured by mortgage loans or mortgage-backed securities .

Stripped mortgage-backed securities are usually structured with two
classes that receive different portions of the interest and principal
distributions on a pool of mortgage loans. A fund may invest in both the
interest-only or "IO" class and the principal-only or "PO" class. The
yield to maturity on an IO or PO class of stripped mortgage-backed
securities is extremely sensitive not only to changes in prevailing
interest rates but also to the rate of principal payments (including
prepayments) on the underlying assets. Also, the secondary market for
stripped mortgage-backed securities may be more volatile and less liquid
than that for other mortgage-backed securities, potentially limiting a
fund's ability to buy or sell those securities at any particular time.

Each fund may also invest in asset-backed securities. Asset-backed
securities are structured like mortgage-backed securities, but instead of
mortgage loans or interests in mortgage loans, the underlying assets may
include such items as motor vehicle installment sales or installment loan
contracts, leases of various types of real and personal property, and
receivables from credit card agreements. The ability of an issuer of
asset-backed securities to enforce its security interest in the underlying
assets may be limited.

Mortgage-backed and asset-backed securities have yield and maturity
characteristics corresponding to the underlying assets. Unlike traditional
debt securities, which may pay a fixed rate of interest until maturity
when the entire principal amount comes due, payments on certain
mortgage-backed and asset-backed securities include both interest and a
partial payment of principal. Besides the scheduled repayment of
principal, payments of principal may result from the voluntary prepayment,
refinancing, or foreclosure of the underlying mortgage loans or other
assets.

CMOs are issued with a number of classes or series that have different
maturities and that may represent interests in some or all of the interest
or principal on the underlying collateral. Payment of interest or
principal on some classes or series of CMOs may be subject to
contingencies or some classes or series may bear some or all of the risk
of default on the underlying mortgages. CMOs of different classes or
series are generally retired in sequence as the underlying mortgage loans
in the mortgage pool are repaid. If enough mortgages are repaid ahead of
schedule, the classes or series of a CMO with the earliest maturities
generally will be retired prior to their maturities. Thus, the early
retirement of particular classes or series of a CMO woud have the same
effect as the prepayment of mortgages underlying other mortgage-backed
securities. Conversely, slower than anticipated prepayments can extend the
effective maturities of CMOs, subjecting them to a greater risk !of
decline in market value in response to rising interest rates than
traditional debt securities, and, therefore, potentially increasing the
volatility of a fund.

Prepayment risk. Traditional debt investments typically pay a fixed rate
of interest until maturity, when the entire principal amount is due. By
contrast, payments on mortgage-backed investments typically include both
interest and a partial payment of principal. Principal may also be prepaid
voluntarily, or as a result of refinancing or foreclosure. A fund may have
to invest the proceeds from prepaid investments under less attractive
terms and yields.

Prepayments are particularly common during periods of declining interest
rates, when property owners seek to refinance their mortgages at more
favorable terms; the reverse is true during periods of rising interest
rates.

Mortgage-backed investments are therefore less likely to increase in
value during periods of declining interest rates than other debt of
comparable maturities, although they may have a similar or even higher
risk of decline in value during periods of rising interest rates and can
increase the volatility of the fund.

* Securities loans, repurchase agreements and forward commitments. A fund may
lend portfolio securities amounting to not more than 25% of its assets to
broker-dealers and may enter into repurchase agreements on up to 25% of its
assets. These transactions must be fully collateralized at all times. A fund
(other than Putnam VT Money Market Fund) may also purchase securities for
future delivery, which may increase its overall investment exposure and
involves a risk of loss if the value of the securities declines prior to the
settlement date. These transactions involve some risk if the other party
should default on its obligation and a fund is delayed or prevented from
recovering the collateral or completing the transaction.

* Swaps Certain of the funds may enter into other types of "over-the-counter"
transactions with broker-dealers or other financial institutions such as
"swap" contracts, in which its investment return will depend on the change in
value of a specified security or index. A fund would typically receive from
the counterparty the amount of any increase, and pay to the counterparty the
amount of any decrease, in the value of the underlying security or index. The
contracts would thus, absent the failure of the counterparty to complete its
obligations, provide to the fund approximately the same return as it would
have realized if it had owned the security o!r index directly.

A fund's ability to realize a profit from such transactions will depend on
the ability of the financial institutions with which it enters into the
transactions to meet their obligations to the fund. Under certain
circumstances, suitable transactions may not be available to the fund, or
the fund may be unable to close out its position under such transactions
at the same times, or at the same prices, as if it had purchased
comparable publicly traded securities.

* Derivatives. The funds may engage in a variety of transactions involving
derivatives, such as futures, options and warrants. Derivatives are financial
instruments whose value depends upon, or is derived from, the value of
something else, such as one ore more underlying investments, pools of
investments, indexes or currencies. The fund's return on a derivative
typically depends on the change in the value of the investment, index or
currency specified in the derivative instrument.

The funds may use derivatives both for hedging and non-hedging purposes.
Derivatives involve special risks and may result in losses. The funds will
be dependent on Putnam Management's ability to analyze and manage these
sophisticated instruments. The prices of derivatives may move in
unexpected ways, especially in abnormal market conditions. Some
derivatives are "leveraged" and therefore may magnify or otherwise
increase investment losses to the fund. The funds' use of derivatives may
also increase the amount of taxes payable by shareholders.

Other risks arise from the potential inability to terminate or sell
derivatives positions. A liquid secondary market may not always exist for
the fund's derivative positions at any time. In fact, many
over-the-counter instruments will not be liquid. Over-the-counter
instruments also involve the risk that the other party will not meet its
obligations to the fund. For further information about the risks of
derivatives, see the statement of additional information (SAI).

* Frequent trading. The funds may buy or sell investments relatively often,
which involves higher brokerage commissions and other expenses, and may
increase the amount of taxes payable by shareholders.

* Non-diversified funds

Putnam VT Health Sciences Fund and Putnam VT Utilities Growth and Income
Fund are each "non-diversified" investment companies under the Investment
Company Act of 1940 (the "1940 Act"). That means that each may invest more
of its assets in the securities of fewer companies than a "diversified"
fund. Each fund may therefore be more exposed to the risk of loss from a
few issuers than the other fund that invests more broadly.

*Other investments. In addition to the main investment strategies
described above, the funds may also make other types of investments, such
as investments in preferred stocks, convertible securities, derivative
instruments or fixed income securities, and therefore may be subject to
other risks, as described in the funds' SAI.

*Alternative strategies. At times Putnam Management may judge that market
conditions make pursuing a funds' investment strategies inconsistent with
the best interests of its shareholders. Putnam Management then may
temporarily use alternative strategies that are mainly designed to limit a
fund's losses. Although Putnam Management has the flexibility to use these
strategies, it may choose not to for a variety of reasons, even in very
volatile market conditions. These strategies may cause the affected fund
to miss out on investment opportunities, and may prevent the fund from
achieving its goal.

*Changes in policies. The Trust's Trustees may change any of the funds'
goals, investment strategies and other policies without shareholder
approval, except as otherwise indicated.

Who manages the funds?

The Trust's Trustees oversee the general conduct of each fund's business.
The Trustees have retained Putnam Management to be the funds' investment
manager, responsible for making investment decisions for the funds and
managing the funds' other affairs and business. Each fund pays Putnam
Management a quarterly management fee for these services based on the
fund's average net assets. Putnam Management's address is One Post
Office Square, Boston, MA 02109. The funds paid Putnam Management
management fees in the following amounts (reflected as a percentage of
average net assets for the fund's last fiscal year):

Putnam VT Asia Pacific Growth Fund ----%
Putnam VT Diversified Income Fund ----%
Putnam VT The George Putnam Fund of Boston* ----%
Putnam VT Global Asset Allocation Fund ----%
Putnam VT Global Growth Fund ----%
Putnam VT Growth and Income Fund ----%
Putnam VT Health Sciences Trust* ----%
Putnam VT High Yield Fund ----%
Putnam VT International Growth Fund* ----%
Putnam VT International Growth and Income Fund ----%
Putnam VT International New Opportunities Fund ----%
Putnam VT Investors Fund ----%
Putnam VT Money Market Fund ----%
Putnam VT New Opportunities Fund* ----%
Putnam VT New Value Fund* ----%
Putnam VT OTC & Emerging Growth Fund* ----%
Putnam VT Research Fund* ----%
Putnam VT Small Cap Value Fund* ----%
Putnam VT U.S. Government and High Quality Bond Fund ----%
Putnam VT Utilities Growth and Income Fund ----%
Putnam VT Vista Fund ----%
Putnam VT Voyager Fund ----%

* The management fees shown in the table reflect an expense limitation
then in effect or currently in effect. In the absence of an expense
limitation, management fees would have been:

Putnam VT The George Putnam Fund of Boston ----%
Putnam VT Health Sciences Fund ----%
Putnam VT International Growth Fund ----%
Putnam VT International New Opportunities Fund ----%
Putnam VT Investors Fund ----%
Putnam VT OTC & Emerging Growth Fund ----%
Putnam VT Research Fund ----%
PutnamVT Small Cap Value Fund+ ----%

+ Estimated management fees.

The following officers of Putnam Management have had primary
responsibility for the day-to-day management of the relevant fund's
portfolio since the years shown below. Their experience as either
portfolio managers or investment analysts over the last five years is also
shown.

<TABLE>
<CAPTION>
Business experience
Fund name Year (at least 5 years)
- --------------------- ------- -------------------------
<S> <C> <C>
Putnam VT Asia Pacific
Growth Fund

Paul Warren 1997 Employed by Putnam Management since 1997.
Senior Vice President Prior to May, 1997, Mr. Warren was employed by IDS Fund
Management. Prior to August 1994, he was employed by
Pilgrim Baxter Associates .
Putnam VT Diversified
Income Fund
William Kohli 1994 Employed by Putnam Management since 1994.
Managing Director Prior to September, 1994, Mr. Kohli was employed by
Global Bond Management .

Jennifer E. Leichter 1993 Employed by Putnam Management since 1987.
Managing Director

Jeffrey A. Kaufman 1998 Employed by Putnam Management since 1998.
Senior Vice President Prior to August 1998, Mr. Kaufman was employed by MFS
Investment Management.

David L. Waldman 1998 Employed as an investment professional by Putnam
Managing Director Management since 1997. Prior to June 1997, Mr. Waldman
was employed at Lazard Freres and prior to April 1995,
was employed at Goldman Sachs.

Putnam VT The George
Putnam Fund of Boston

Edward P. Bousa 1998 Employed by Putnam Management since 1992.
Senior Vice President

James M. Prusko 1998 Employed as an investment professional
Senior Vice President by Putnam Management since 1992.

David L. Waldman 1998 Employed as an investment professional
Managing Director by Putnam Management since 1997. Prior
to June 1997, Mr. Waldman was employed
by Lazard Freres, and prior to April 1995
was employed at Goldman Sachs.

Krishna K. Memani 1999 Employed as an investment professional
Managing Director by Putnam Management since 1998. Prior
to September 1998, Mr. Memani was
employed by Morgan Stanley & Co.

Putnam VT Global
Growth Fund

Robert Swift 1996 Employed by Putnam Management since 1995.
Senior Vice President Prior to August 1995, Mr. Swift was employed by IAI
International/Hill Samuel Investment Advisors.

Kelly A. Morgan 1997 Employed by Putnam Management since 1996.
Senior Vice President Prior to December1996, Ms. Morgan was employed by
Alliance Capital Management L.P.

David J. Santos 1999 Employed by Putnam Management since 1986.
Senior Vice President

Lisa Svensson 1998 Employed as an investment professional by
Senior Vice President Putnam Management since 1994. Prior to July 1994, Ms.
Svensson was employed by Lord Abbett & Co.

Manuel Weiss 1998 Employed as an investment professional by Putnam
Senior Vice President Management since 1987.

Olivier Rudigoz 1998 Employed as an investment professional by Putnam
Vice President Management since 1998. Prior to April 1998, Mr. Rudigoz
was employed by Paribas Asset Management.

Putnam VT Growth and
Income Fund

David L. King 1993 Employed by Putnam Management since
Managing Director 1983.

Hugh H. Mullin 1998 Employed by Putnam Management since 1986.
Senior Vice President

Sheldon N. Simon 1997 Employed by Putnam Management since 1984.
Senior Vice President

Putnam VT Health Sciences
Fund

Roland Gillis 1998 Employed by Putnam Management since 1995.
Managing Director Prior to March 1995, Mr. Gillis was employed by
Keystone Custodian Funds, Inc.

Richard B. England 1998 Employed by Putnam Management since 1992.
Senior Vice President

David G. Carlson 1998 Employed by Putnam Management since 1992.
Senior Vice President

Margery C. Parker 1998 Employed by Putnam Management since 1997.
Senior Vice President Prior to December 1997, Ms. Parker was employed by
Keystone Investments.
Putnam VT High
Yield Fund

Jennifer E. Leichter 1997 Employed by Putnam Management since 1987.
Managing Director

Robert M. Paine 1997 Employed by Putnam Management since 1987.
Senior Vice President

Rosemary H. Thomsen 1997 Employed by Putnam Management since 1986.
Senior Vice President

Jeffrey A. Kaufman 1998 Employed by Putnam Management since 1998.
Senior Vice President Prior to August 1998, Mr. Kaufman employed by MFS
Investment Management.

Putnam VT International
Growth Fund

Justin M. Scott 1996 Employed by Putnam Management since 1988.
Managing Director

Omid Kamshad 1996 Employed by Putnam Management since
Managing Director 1986. Prior to January1996, Mr. Kamshad was employed by
Lombard Odier International and prior to April 1995, he
was employed by Baring Asset Management Company.

Putnam VT International
Growth and Income Fund

Justin M. Scott 1996 Employed by Putnam Management since 1988.
Managing Director

Putnam VT International
New Opportunities Fund

Robert Swift 1996 Employed by Putnam Management since 1995.
Senior Vice President Prior to August1995, Mr. Swift was employed by IAI
International/Hill Samuel Investment Advisors.

J. Peter Grant 1996 Employed by Putnam Management since 1973.
Senior Vice President

Stephen Oler 1998 Employed Employed by Putnam Management since
Senior Vice President 1997. Prior to June1997, Mr. Oler was employed by at
Templeton Investments, and prior to March1996 was
employed by Baring Asset Management Co.

Jack P. Chang 1999 Employed as an investment professional by
Vice President Putnam Management since 1997. Prior to July 1997, Mr.
Chang was employedby Columbia Management.

Deborah S. Farrell 1998 Employed by Putnam Management since 1997.
Senior Vice President Prior to May 1997, Ms. Farrell was employed by Emerging
Markets Investors Corporation.

Putnam VT Investors
Fund

C. Beth Cotner 1998 Employed by Putnam Management since 1995.
Senior Vice President Prior to September1995, Ms. Cotner was employed by
Kemper Financial Services.

Richard B. England 1998 Employed by Putnam Management since 1992.
Senior Vice President

Manuel H. Weiss 1998 Employed by Putnam Management since 1987.
Senior Vice President

Putnam VT Money
Market Fund

Joanne Driscoll 1997 Employed by Putnam Management since 1995.
Vice President Prior to April 1995, Ms. Driscoll was a Graduate
Teaching Assistant in the Finance Department at
Northeastern University and prior to September 1994,
Ms. Driscoll was employed by Bank of Boston.

Putnam VT New
Opportunities Fund

Daniel L. Miller 1994 Employed by Putnam Management since 1983.
Managing Director

Jeffrey R. Lindsey 1999 Employed as an investment professional by
Senior Vice President Putnam Management since 1994. Prior to April 1994, Mr.
Lindsey was employed by Strategic Portfolio Management,
Inc.

Putnam VT New Value Fund

David L. King 1996 Employed by Putnam Management since 1983.
Managing Director

Putnam VT OTC & Emerging
Growth Fund

Steven L. Kirson 1998 Employed by Putnam Management since 1989.
Senior Vice President

Michael J. Mufson 1998 Employed by Putnam Management since 1993.
Senior Vice President

Putnam VT Research Fund

Thomas R. Bogan 1998 Employed by Putnam Management since 1994.
Prior to November 1994, Mr. Bogan was employed by Lord,
Abbett & Co.

Putnam VT U.S.
Government and High
Quality Bond Fund

Michael Martino 1998 Employed by Putnam Management since 1994.
Managing Director

Kevin M. Cronin 1998 Employed by Putnam Management since 1997.
Managing Director Prior to February 1997, Mr. Cronin was employed at MFS
Investment Management.

Putnam VT Utilities
Growth and Income Fund

Jeanne L. Mockard 1998 Employed by Putnam Management since
Senior Vice President 1990.

Christopher A. Ray 1995 Employed by Putnam Management since 1992.
Senior Vice President

Putnam VT Vista Fund

Eric Wetlaufer 1997 Employed by Putnam Management since
Managing Director 1997. Prior to November, 1997, Mr. Wetlaufer was
employed by Cadence Capital Management.

Anthony C. Santosus 1996 Employed by Putnam Management since 1985.
Senior Vice President

Margery C. Parker 1998 Employed as an investment professional
Senior Vice President by Putnam Management since 1997. Prior to December
1997, Ms. Parker was employed at Keystone Investments.

Dana Clark 1999 Employed as an investment professional
Vice President by Putnam Management since 1987.

Putnam VT Voyager Fund

Robert R. Beck 1995 Employed by Putnam Management since 1989.
Managing Director

Roland W. Gillis 1995 Employed by Putnam Management since 1995.
Managing Director Prior to March, 1995, Mr. Gillis was employed by Keystone
Custodian Funds, Inc.

Michael P. Stack 1997 Employed by Putnam Management since 1997.
Senior Vice President Prior to November, 1997, Mr. Stack was employed by
Independence Investment Associates, Inc.

Charles H. Swanberg 1994 Employed by Putnam Management since 1984.
Senior Vice President

</TABLE>

The Trust, on behalf of the funds, pays all expenses not assumed by Putnam
Management, including Trustees' fees and auditing, legal, custodial,
investor servicing and shareholder reporting expenses. The Trust also
reimburses Putnam Management for the compensation and related expenses of
certain officers of the Trust and their staff who provide administrative
services. The total reimbursement is determined annually by the Trustees.
Expenses of the Trust directly charged or attributable to a fund will be
paid from the assets of that fund. General expenses of the Trust will be
allocated among and charged to the assets of the funds on a basis that the
Trustees deem fair and equitable, which may be based on the nature of the
services performed and their relative applicability to, or the relative
assets of, the funds.

Putnam Management places all orders for purchases and sales of the
securities of each fund. In selecting broker-dealers, Putnam Management
may consider research and brokerage services furnished to it and its
affiliates. Subject to seeking the most favorable price and execution
available, Putnam Management may consider, if permitted by law, sales of
shares of the other Putnam funds as a factor in the selection of
broker-dealers.

SALES AND REDEMPTIONS

The Trust has an underwriting agreement relating to the funds with Putnam
Mutual Funds, One Post Office Square, Boston, Massachusetts 02109. Putnam
Mutual Funds presently offers shares of each fund of the Trust
continuously to separate accounts of various insurers. The underwriting
agreement presently provides that Putnam Mutual Funds accepts orders for
shares at net asset value and no sales commission or load is charged.
Putnam Mutual Funds may, at its expense, provide promotional incentives to
dealers that sell variable insurance products.

Shares are sold or redeemed at the net asset value per share next
determined after receipt of an order, except that, in the case of Putnam
VT Money Market Fund, purchases will not be effected until the next
determination of net asset value after federal funds have been made
available to the Trust. Orders for purchases or sales of shares of a fund
must be received by Putnam Mutual Funds before the close of regular
trading on the New York Stock Exchange in order to receive that day's net
asset value. No fee is charged to a separate account when it redeems fund
shares.

Please check with your insurance company to determine the funds available
under your variable annuity contract or variable life insurance policy.
Certain funds may not be available in your state due to various insurance
regulations. Inclusion in this prospectus of a fund that is not available
in your state is not to be considered a solicitation. This prospectus
should be read in conjunction with the prospectus of the separate account
of the specific insurance product which accompanies this prospectus.

Each fund currently does not foresee any disadvantages to policyowners
arising out of the fact that each fund offers its shares to separate
accounts of various insurance companies to serve as the investment medium
for their variable products. Nevertheless, the Trustees intend to monitor
events in order to identify any material irreconcilable conflicts which
may possibly arise, and to determine what action, if any, should be taken
in response to such conflicts. If such a conflict were to occur, one or
more insurance companies' separate accounts might be required to withdraw
their investments in one or more funds and shares of another fund may be
substituted. This might force a fund to sell portfolio securities at
disadvantageous prices. In addition, the Trustees may refuse to sell
shares of any fund to any separate account or may suspend or terminate the
offering of shares of any fund if such action is required by law or
regulatory authority or is in the best interests of! the shareholders of
the fund.

Under unusual circumstances, the Trust may suspend repurchases or postpone
payment for up to seven days or longer, as permitted by federal securities
law.

HOW A FUND VALUES ITS SHARES

The Trust calculates the net asset value of a share of each fund by
dividing the total value of its assets, less liabilities, by the number of
its shares outstanding. Shares are valued as of the close of regular
trading on the New York Stock Exchange each day the Exchange is open.

Except for securities held by Putnam VT Money Market Fund, portfolio
securities for which market quotations are readily available are valued at
market value. Short-term investments that will mature in 60 days or less
are valued at amortized cost, which approximates market value. All other
securities and assets are valued at their fair value following procedures
approved by the Trustees. The Trust values the portfolio investments of
Putnam VT Money Market Fund at amortized cost pursuant to Rule 2a-7 under
the 1940 Act.

HOW A FUND MAKES DISTRIBUTIONS TO SHAREHOLDERS; TAX INFORMATION

Putnam VT Money Market Fund will declare a dividend of its net investment
income daily and distribute such dividend monthly. Each month's
distributions will be paid on the first business day of the next month.
Since the net income of Putnam VT Money Market Fund is declared as a
dividend each time it is determined, the net asset value per share of the
fund remains at $1.00 immediately after each determination and dividend
declaration. Each of the other funds will distribute any net investment
income and net realized capital gains at least annually. Both types of
distributions will be made in shares of such funds unless an election is
made on behalf of a separate account to receive some or all of the
distributions in cash.

Distributions are reinvested without a sales charge, using the net asset
value determined on the ex-dividend date, except that with respect to
Putnam VT Money Market Fund, distributions are reinvested using the net
asset value determined on the day following the distribution payment date.
Distributions on each share are determined in the same manner and are paid
in the same amount, regardless of class, except for such differences as
are attributable to differential class expenses.

Generally, owners of variable annuity and variable life contracts are not
taxed currently on income or gains realized with respect to such
contracts. However, some distributions from such contracts may be taxable
at ordinary income tax rates. In addition, distributions made to an owner
who is younger than 59 1/2 may be subject to a 10% penalty tax. Investors
should ask their own tax advisors for more information on their own tax
situation, including possible state or local taxes.

In order for investors to receive the favorable tax treatment available to
holders of variable annuity and variable life contracts, the separate
accounts underlying such contracts, as well as the funds in which such
accounts invest, must meet certain diversification requirements. Each fund
intends to comply with these requirements. If a fund does not meet such
requirements, income allocable to the contracts would be taxable currently
to the holders of such contracts.

Each fund intends to qualify as a "regulated investment company" for
federal income tax purposes and to meet all other requirements necessary
for it to be relieved of federal income taxes on income and gains it
distributes to the separate accounts. For information concerning federal
income tax consequences for the holders of variable annuity contracts and
variable life insurance policies, contract holders should consult the
prospectus of the applicable separate account.

Fund investments in foreign securities may be subject to withholding taxes
at the source on dividend or interest payments. In that case, a fund's
yield on those securities would be decreased.

FINANCIAL HIGHLIGHTS

It is expected that owners of the variable annuity contracts and variable
life insurance policies who have contract or policy values allocated to
the funds will receive an unaudited semi-annual financial statement and an
audited annual financial statement for such funds. These reports show the
investments owned by each fund and provide other relevant information
about the fund.

The financial highlights table is intended to help you understand the
funds' recent financial performance. Certain information reflects
financial results for a single fund share. The total returns represent the
rate that an investor would have earned or lost on an investment in the
fund, assuming reinvestment of all dividends and distributions. This
information has been derived from each fund's financial statements, which
have been audited and reported on by PricewaterhouseCoopers LLP. Its
report and the fund's financial statements are included in the funds'
annual report to shareholders, which is available upon request.

Financial Highlights I

Investment Operations

Net
Net Asset Realized and Total
Value, Net Unrealized from
Period Beginning Investment Gain (Loss) on Investment
ended of Period Income Investments operations
<S> <C> <C> <C> <C>
Putnam VT Asia Pacific Growth Fund
December 31, 1998
December 31, 1997 $11.01 $.07 ($1.66) ($1.59)
December 31, 1996 10.23 .05 .88 .93
December 31, 1995** 10.00 .06(a)(b) .17 .23

Putnam VT Diversified Income Fund
December 31, 1998
December 31, 1997 $11.27 $.82(a) $ (.05) $.77
December 31, 1996 11.03 .80(a) .11 .91
December 31, 1995 9.74 .71 1.09 1.80
December 31, 1994 10.23 .61 (1.04) (.43)

Putnam VT Global Asset Allocation Fund
December 31, 1998
December 31, 1997 $17.25 $.50 $2.63 $3.13
December 31, 1996 16.15 .43 1.94 2.37
December 31, 1995 13.19 .47 2.74 3.21
December 31, 1994 14.29 .35 (.71) (.36)

Putnam VT Global Growth Fund
December 31, 1998
December 31, 1997 $16.88 $.13 $2.18 $2.31
December 31, 1996 15.18 .17 2.35 2.52
December 31, 1995 13.48 .20 1.85 2.05
December 31, 1994 13.68 .13 (.26) (.13)

Putnam VT Growth and Income Fund
December 31, 1998
December 31, 1997 $24.56 $.48 $5.07 $5.55
December 31, 1996 21.47 .65(a) 3.84 4.49
December 31, 1995 16.44 .53 5.31 5.84
December 31, 1994 17.38 .50 (.48) .02

Financial Highlights I (Continued )

Less Distributions:

From
From In Excess Net In Excess of
Net of Net Realized Net Realized
Period Investment Investment Gain on Gain on
ended Income Income Investments Investments

Putnam VT Asia Pacific Growth Fund
December 31, 1998
December 31, 1997 ($.22) $-- $-- $--
December 31, 1996 (.15) -- -- --
December 31, 1995** -- -- -- --

Putnam VT Diversified Income Fund
December 31, 1998
December 31, 1997 ($.63) $-- ($.10) $--
December 31, 1996 (.67) -- -- --
December 31, 1995 (.51) -- -- --
December 31, 1994 (.06) -- -- --

Putnam VT Global Asset Allocation Fund
December 31, 1998
December 31, 1997 ($.60) $-- ($1.02) --
December 31, 1996 (.44) -- (.83) --
December 31, 1995 (.25) -- -- --
December 31, 1994 (.29) -- (.43) (.02)

Putnam VT Global Growth Fund
December 31, 1998
December 31, 1997 ($.41) $-- ($.44) --
December 31, 1996 (.25) -- (.57) --
December 31, 1995 (.11) -- (.24) --
December 31, 1994 (.05) -- (.02) --

Putnam VT Growth and Income Fund
December 31, 1998
December 31, 1997 ($.52) $-- ($1.27) --
December 31, 1996 (.51) -- (.89) --
December 31, 1995 (.51) -- (.30) --
December 31, 1994 (.38) -- (.58) --

Financial Highlights II

Investment Operations

Net
Net Asset Realized and Total
Value, Net Unrealized from
Period Beginning Investment Gain (Loss) on Investment
ended of Period Income Investments operations

Putnam VT High
Yield Fund
December 31, 1998
December 31, 1997 $12.96 $1.06 $.65 $1.71
December 31, 1996 12.37 1.18(a) .32 1.50
December 31, 1995 11.46 .91 1.05 1.96
December 31, 1994 12.53 1.05 (1.17) (.12)
-- --

Putnam VT International
Growth Fund
December 31, 1998
December 31, 1997******* $10.00 $.05(b) $1.56 $1.61

Putnam VT International
Growth and Income Fund
December 31, 1998
December 31, 1997****** $10.00 $.07 $1.87 $1.94

Putnam VT International
New Opportunities Fund
December 31, 1998
December 31, 1997******* $10.00 $.01(b) ($.02) ($.01)

Putnam VT Money
Market Fund
December 31, 1998
December 31, 1997 $1.00 $.0509 -- $.0509
December 31, 1996 1.00 .0497 -- .0497
December 31, 1995 1.00 .0533 -- .0533
December 31, 1994 1.00 .0377 -- .0377

Putnam VT New
Opportunities Fund
December 31, 1998
December 31, 1997 $17.22 $--(f) $4.01 $4.01
December 31, 1996 15.63 (.01) 1.60 1.59
December 31, 1995 10.82 -- 4.84 4.84
December 31, 1994****** 10.00 --(b) .82 .82

Financial Highlights II (Continued)

Less Distributions:

From
From In Excess Net In Excess of
Net of Net Realized Net Realized
Period Investment Investment Gain on Gain on
ended Income Income Investments Investments

Putnam VT High
Yield Fund
December 31, 1998
December 31, 1997 ($.94) $-- ($.11) --
December 31, 1996 (.91) -- -- --
December 31, 1995 (1.05) -- -- --
December 31, 1994 (.79) -- (.14) (.02)

Putnam VT International
Growth Fund
December 31, 1998
December 31, 1997******* ($.05) ($.02) ($.04) ($.06)

Putnam VT International
Growth and Income Fund
December 31, 1998
December 31, 1997****** ($.08) ($.05) ($.28) --

Putnam VT International
New Opportunities Fund
December 31, 1998
December 31, 1997******* ($.01) ($.02) -- --

Putnam VT Money
Market Fund
December 31, 1998
December 31, 1997 ($.0509) -- --
December 31, 1996 (.0497) -- --
December 31, 1995 (.0533) -- --
December 31, 1994 (.0377) -- --

Putnam VT New
Opportunities Fund
December 31, 1998
December 31, 1997 -- -- --
December 31, 1996 -- - --
December 31, 1995 -- (.02) --
December 31, 1994****** -- -- --

Financial Highlights III

Investment Operations

Net
Net Asset Realized and Total
Value, Net Unrealized from
Period Beginning Investment Gain (Loss) on Investment
ended of Period Income Investments operations

Putnam VT New Value
Fund
December 31, 1998
December 31,
1997******* $10.00 $.18(a) $1.58 $1.76

Putnam VT U.S. Government
and High Quality Bond Fund
December 31, 1998
December 31, 1997 $13.24 $.88 $.19 $1.06
December 31, 1996 13.74 .81 (.52) .29
December 31, 1995 12.22 .81 1.56 2.37
December 31, 1994 13.53 .81 (1.24) (.43)

Putnam VT Utilities
Growth and Income Fund
December 31, 1998
December 31, 1997 $14.80 $.53 $3.11 $3.64
December 31, 1996 13.28 .54 1.49 2.03
December 31, 1995 10.68 .53 2.65 3.18
December 31, 1994 12.00 .60 (1.44) (.84)

Putnam VT Vista
Fund
December 31, 1998
December 31,
1997******** $10.00 $--(f) $2.32 $2.32

Putnam VT Voyager Fund
December 31, 1998
December 31, 1997 $32.53 $.10 $8.01 $8.11
December 31, 1996 30.50 .09 3.75 3.84
December 31, 1995 22.20 .10 8.76 8.86
December 31, 1994 22.41 .07 .14 .21

Financial Highlights III (Continued)

Less Distributions:

From
From In Excess Net In Excess of
Net of Net Realized Net Realized
Period Investment Investment Gain on Gain on
ended Income Income Investments Investments

Putnam VT New Value
Fund
December 31, 1998
December 31,
1997******* $-- $-- $-- $--

Putnam VT U.S. Government
and High Quality Bond Fund
December 31, 1998
December 31, 1997 ($.85) $-- -- --
December 31, 1996 (.82) -- -- --
December 31, 1995 (.85) -- -- --
December 31, 1994 (.66) -- (.22) --

Putnam VT Utilities
Growth and Income Fund
December 31, 1998
December 31, 1997 ($.55) $-- ($.75) --
December 31, 1996 (.51) -- -- --
December 31, 1995 (.58) -- -- --
December 31, 1994 (.35) -- (.12) --

Putnam VT Vista
Fund
December 31, 1998
December 31,
1997******** $--(f) $-- $-- $--

Putnam VT Voyager Fund
December 31, 1998
December 31, 1997 ($.07) $-- ($1.49) --
December 31, 1996 (.13) -- (1.68) --
December 31, 1995 (.07) -- (.49) --
December 31, 1994 (.05) -- (.37) --

Financial Highlights IV

Total Ratio of Net
Investment Ratio of Investment
Net Asset Return at Net Assets Expenses to Income to
Return of Total Value, End Net Asset End of Period Average Net Average Net
Capital Distributions of Period Value(%)(c) (in thousands) Assets(%)(d) Assets(%)

<S> <C> <C> <C> <C> <C> <C> <C>
Putnam VT Asia
Pacific Growth Fund
December 31, 1998
December 31, 1997 $-- ($.22) $9.20 ($14.66) $112,902 $1.07 $.70
December 31, 1996 -- (.15) 11.01 9.10 130,548 1.23 .84
December 31, 1995** -- -- 10.23 2.30* 25,045 .81(b)* .72(b)*

Putnam VT Diversified
Income Fund
December 31, 1998
December 31, 1997 $-- ($.73) $11.31 $7.38 $608,148 $.80 $7.43
December 31, 1996 -- (.67) 11.27 8.81 494,811 .83 7.45
December 31, 1995 -- (.51) 11.03 19.13 303,721 .85 7.85
December 31, 1994 -- (.06) 9.74 (4.23) 215,935 .80 7.60

Putnam VT Global Asset
Allocation Fund
December 31, 1998
December 31, 1997 $-- ($1.62) $18.76 $19.67 $956,532 $.77 $3.01
December 31, 1996 -- ($1.27) 17.25 15.62 747,734 .83 3.08
December 31, 1995 -- (.25) 16.15 24.71 535,666 .84 3.31
December 31, 1994 -- (.74) 13.19 (2.50) 414,223 .76 3.19

Putnam VT Global Growth
Fund
December 31, 1998
December 31, 1997 $-- ($.85) $18.34 $14.33 $1,611,503 $.75 $.77
December 31, 1996 -- (.82) $16.88 17.20 1,344,887 .76 1.25
December 31, 1995 -- (.35) 15.18 15.67 831,593 .75 1.49
December 31, 1994 -- (.07) 13.48 (.96) 669,821 .77 1.21

Putnam VT Growth and
Income Fund
December 31, 1998
December 31, 1997 $-- ($1.79) $28.32 $24.15 $8,337,334 $.51 $2.08
December 31, 1996 -- (1.40) 24.56 21.92 5,679,100 .54 2.90
December 31, 1995 -- (.81) 21.47 36.71 3,312,306 .57 3.34
December 31, 1994 -- (.96) 16.44 .35 1,907,380 .62 3.64

Financial Highlights V

Putnam High Yield
Fund
December 31, 1998
December 31, 1997 $-- ($1.05) $13.62 $14.32 $1,025,298 $.72
December 31, 1996 -- (.91) 12.96 12.81 769,918 .76 9.57
December 31, 1995 -- (1.05) 12.37 18.32 498,467 .79 9.42
December 31, 1994 -- (.95) 11.46 (.94) 327,119 .74 9.79

Putnam VT International
Growth Fund
December 31, 1998
December 31, 1997******** ($.01) ($.18) $11.43 $16.13 $150,884 1.20(b) .79(b)

Putnam VT International
Growth and Income Fund
December 31, 1998
December 31, 1997******** $-- ($.41) $11.53 $19.43 $206,598 $1.12 $1.11

Putnam VT International New
Opportunities Fund
December 31, 1998
December 31, 1997******** $-- ($.03) $9.96 ($.10) $107,000 1.60(b) .09(b)

Putnam VT Money Market Fund
December 31, 1998
December 31, 1997 $-- ($.0509) $1.00 5.22 $405,577 .54 5.10
December 31, 1996 -- (.0497) 1.00 5.08 $437,132 .53 4.93
December 31, 1995 -- (.0533) 1.00 5.46 263,213 .57 5.43
December 31, 1994 -- (.0377) 1.00 3.82 244,064 .55 3.90

Putnam VT New Opportunities
Fund
December 31, 1998
December 31, 1997 $-- $-- $21.23 23.29 $2,590,244 .63 (.01)
December 31, 1996 -- -- 17.22 10.17 $1,674,197 .72 (.13)
December 31, 1995 (.01) (.03) 15.63 44.87 515,109 .84 (.03)
December 31, 1994****** -- -- 10.82 8.20* 68,592 .47(b)* .03(b)*

Putnam VT New Value Fund
December 31, 1998
December 31, 1997******** $-- ($.85) $13.42 8.64 $789,540 .69 6.58

Financial Highlights VI

Putnam VT U.S. Government and
High Quality Bond Fund
December 31, 1998
December 31, 1997 $-- ($1.30) $17.14 27.10 $822,257 .74 3.63
December 31, 1996 -- (.82) 13.21 2.42 778,924 .69 6.48
December 31, 1995 -- (.85) 13.74 20.44 747,024 .70 6.22
December 31, 1994 -- (.88) 12.22 (3.23) 640,458 .67 6.24

Putnam VT Utilities
Growth and Income Fund
December 31, 1998
December 31, 1997 $-- ($1.30) $17.14 27.1 $822,257 .74
December 31, 1996 -- (.51) 14.80 15.80 657,429 .73 4.22
December 31, 1995 -- (.58) 13.28 31.08 530,461 .68 4.72
December 31, 1994 -- (.48) 10.68 (7.02) 384,169 .68 5.23

Putnam Vista Fund
December 31, 1998
December 31, 1998******** $--(f) $-- $12.32 23.31 $170,660 .87

Putnam VT Voyager Fund
December 31, 1998
December 31, 1997 $-- ($1.56) $39.08 26.51 $4,538,535 .59 .30
December 31, 1996 -- (1.81) 32.53 12.97 $3,281,490 .63 .36
December 31, 1995 -- (.56) 30.50 40.67 2,000,232 .68 .49
December 31, 1994 -- (.42) 22.20 1.04 1,026,972 .71 .40

</TABLE>

Financial Highlights VI

Average
Portfolio Commission
Turnover (%) Rate Paid(e)

<S> <C> <C>
Putnam VT Asia
Pacific Growth Fund
December 31, 1998
December 31, 1997 102.92 $.0144
December 31, 1996 66.10 .0197
December 31, 1995** 67.72*

Putnam VT Diversified
Income Fund

December 31, 1998
December 31, 1997 282.56
December 31, 1996 235.53
December 31, 1995 297.17
December 31, 1994 165.17

Putnam VT Global Asset
Allocation Fund
December 31, 1998
December 31, 1997 181.05 $.0295
December 31, 1996 165.03 .0475
December 31, 1995 150.88
December 31, 1994 150.21

Putnam VT Global Growth
Fund
December 31, 1998
December 31, 1997 158.37 $.0245
December 31, 1996 79.18 .0318
December 31, 1995 82.53
December 31, 1994 41.55

Putnam VT Growth and
Income Fund
December 31, 1998
December 31, 1997 64.96 $.0497
December 31, 1996 39.57 .0517
December 31, 1995 50.87
December 31, 1994 46.43

Putnam High Yield
Fund
December 31, 1998
December 31, 1997 84.61
December 31, 1996 62.72
December 31, 1995 69.78
December 31, 1994 62.09

Putnam VT International
Growth Fund
December 31, 1998
December 31, 1997******** 75.18 $.0352

Putnam VT International
Growth and Income Fund
December 31, 1998
December 31, 1997******** 53.20 $.0330

Putnam VT International New
Opportunities Fund
December 31, 1998
December 31, 1997******** 131.89 $.0207

Financial Highlights VII

Average
Portfolio Commission
Turnover (%) Rate Paid(e)

Putnam VT Money Market Fund
December 31, 1998
December 31, 1997 --
December 31, 1996 --
December 31, 1995 --
December 31, 1994 --

Putnam VT New Opportunities Fund
December 31, 1998
December 31, 1997 71.78 $.0472
December 31, 1996 57.94 .0488
December 31, 1995 30.87
December 31, 1994****** 32.77*

Putnam VT New Value Fund
December 31, 1998
December 31, 1997******** 64.15

Putnam VT U.S. Government and
High Quality Bond Fund
December 31, 1998
December 31, 1997 194.29
December 31, 1996 142.49
December 31, 1995 149.18
December 31, 1994 118.34

Putnam VT Utilities
Growth and Income Fund
December 31, 1998
December 31, 1997 42.46 $.0452
December 31, 1996 61.94 .0475
December 31, 1995 60.33
December 31, 1994 84.88

Putnam Vista Fund
December 31, 1998
December 31, 1997******** 74.43 $.0381

Putnam VT Voyager Fund
December 31, 1998
December 31, 1997 82.00 $.0524
December 31, 1996 63.87 .0544
December 31, 1995 57.51
December 31, 1994 62.44

* Not annualized.
** For the period May 1, 1995 (commencement of operations) to December 31, 1995.
*** For the period September 15, 1993 (commencement of operations) to December 31, 1993.
**** For the period February 1, 1988 (commencement of operations) to December 31, 1988.
***** For the period May 1, 1990 (commencement of operations) to December 31, 1990.
****** For the period May 2, 1994 (commencement of operations) to December 31, 1994.
******* For the period May 4, 1992 (commencement of operations) to December 31, 1992.
******** For the period January 2, 1997 (commencement of operations) to December 31, 1997.

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

(b) Reflects an expense limitation in effect during the period. As a result of
such limitation, expenses of Putnam VT Asia Pacific Growth Fund for the period
ended December 31, 1995 reflect a reduction of approximately $0.03 per share,
expenses of Putnam VT High Yield Fund for the period ended December 31, 1998
reflect a reduction of less than $0.01 per share, expenses of Putnam VT New
Opportunities Fund for the period ended December 31, 1994 reflect a reduction
of approximately $0.02 per share, and expenses of Putnam VT Utilities Growth
and Income Fund for th eperiod ended December 31, 1992 rreflect a reduction of
approximately $0.01 per share.

(d) The ratio of expenses to average net assets for the periods ended on or
after December 31, 1995 includes amounts paid through expense offset and
brokerage service arrangements. Prior period ratios exclude these amounts.

(e) Certain funds are required to disclose the average commission rate paid
per share for fiscal periods beginning on or after September 1, 1995.

(f) Net investment income distributions from net investment income and returns
of capital were less than $0.01 per share.

</TABLE>

For more information
about the funds of Putnam Variable Trust

The Trust's statement of additional information (SAI) and annual and
semi-annual reports to shareholders include additional information about
the funds. The SAI, and the auditor's report and financial statements
included in the Trust's most recent annual report to the funds'
shareholders, are incorporated by reference into this prospectus, which
means they are part of this prospectus for legal purposes. The Trust's
annual report discusses the market conditions and investment strategies
that significantly affected the funds' performance during the funds' last
fiscal year. You may get free copies of these materials, request other
information about the funds and other Putnam funds, or make shareholder
inquiries, by contacting your financial advisor or by calling Putnam
toll-free !at 1-800-752-9894.

You may review and copy information about the funds, including the Trust's
SAI, at the Securities and Exchange Commission's public reference room in
Washington, D.C. You may call the Commission at 1-800-SEC-0330 for
information about the operation of the public reference room. You may also
access reports and other information about the fund on the Commission's
Internet site at http://www.sec.gov. You may get copies of this
information, with payment of a duplication fee, by writing the Public
Reference Section of the Commission, Washington, D.C. 20549-6009. You may
need to refer to the fund's file number.

PUTNAM INVESTMENTS

One Post Office Square
Boston, Massachusetts 02109
1-800-752-9894

Address correspondence to
Putnam Investor Services
P. O. Box 989
Boston, Massachusetts 02103

File No. 811-5346

Putnam Mutual Funds Corp.
Member, NASD, Inc.

PUTNAM VARIABLE TRUST

Class IB Shares
PROSPECTUS - APRIL 30, 1999

Domestic Equity Funds Global and International Funds

Putnam VT The George Putnam Putnam VT Asia Pacific Growth Fund

Fund of Boston Putnam VT Global Asset Allocation Fund
Putnam VT Growth and
Income Fund Putnam VT Global Growth Fund
Putnam VT Health Sciences
Fund Putnam VT International Growth Fund

Putnam VT Investors Fund Putnam VT International Growth and
Putnam VT New Opportunities Income Fund
Fund

Putnam VT New Value Fund Putnam VT International New Opportunities Fund

Putnam VT OTC & Emerging
Growth Fund Fixed-Income

Putnam VT Research Fund

Putnam VT Small Cap Value
Fund Putnam VT Diversified Income Fund
Putnam VT Utilities Growth
and Income Fund Putnam VT High Yield Fund
Putnam VT Vista Fund Putnam VT Money Market Fund
Putnam VT Voyager Fund Putnam VT U.S. Government and High
Quality Bond Fund

Putnam Investment Management, Inc. (Putnam Management), which has managed
mutual funds since 1937, manages the funds. These securities have not been
approved or disapproved by the Securities and Exchange Commission nor has
the Commission passsed upon the accuracy or adequacy of this prospectus. Any
statement to the contrary is a crime.

CONTENTS

The Trust
Investment objectives and policies of the funds
Fund summaries (including Goal, Main investment strategies, Main risks
and Performance information)

What are the funds main investment strategies and related risks?
Who manages the funds?
Sales and Redemptions
Distribution Plan
How do the funds price their shares?
Fund distributions and taxes
Financial Highlights

THE TRUST

The Trust is designed to serve as a funding vehicle for insurance separate
accounts associated with variable annuity contracts and variable life
insurance policies. The Trust presently serves as the funding vehicle for
variable annuity contracts and variable life insurance policies offered by
separate accounts of various insurance companies. You should consult the
prospectus issued by the relevant insurance company for more information
about a separate account. Shares of the Trust are offered to these separate
accounts through Putnam Mutual Funds Corp. ("Putnam Mutual Funds"), the
principal underwriter for the Trust.

INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS

FUND SUMMARIES

The summary identifies each fund's goal, principal investment
strategies and principal risks. The summary of each fund's principal
investment strategies is accompanied by a short discussion of some of the
fund's principal risks.

PUTNAM VT ASIA PACIFIC GROWTH FUND

GOAL

The fund seeks capital appreciation.

MAIN INVESTMENT STRATEGIES - ASIAN PACIFIC STOCKS

Under normal market conditions, the fund will seek to achieve its goal by
investing mostly in common stocks issued by Asian or Pacific Basin
companies. The fund may invest in both growth and value stocks. Growth
stocks are issued by companies whose earnings Putnam Management believes
are likely to grow faster than the economy as a whole. Growth in earnings
may lead to an increase in the price of the stock. Value stocks are those
that Putnam Management believes are currently undervalued compared to their
true worth. If Putnam Management is correct and other investors recognize
this discount, the price of the stock may rise. The fund invests mainly in
medium and large-sized companies, although it can invest in companies of any
size. Although the fund emphasizes investments in developed countries, it
may also invest in companies located in emerging markets.ldb

MAIN RISKS

The main risks that could adversely affect the value of this fund's shares
and the total return on your investment include

* The risk of investing mostly in one geographic region. Investments in a
single region, even though representing a number of different countries
within the region, may be affected by common economic forces and other
factors. The vulnerability of the fund to factors affecting Asian and
Pacific Basin investments will be significantly greater than that of a more
geographically diversified fund, which may result in greater losses and
volatility.

* The risk that the stock price of one or more of the companies in the
fund's portfolio will fall, or will fail to appreciate as anticipated by
Putnam Management. Many factors can adversely affect a stock's performance.
This risk is generally greater for small and medium-sized companies, which
tend to be more vulnerable to adverse developments.

* The risk that movements in the securities markets will reduce the value of
the fund's investments, regardless of how well the companies in which the
fund invests perform.

* The risk that Putnam Management's allocation of a fund's assets between
stocks and bonds and United States and International may adversely affect a
fund's performance.

The fund will generally be managed in a style similar to that of the
Putnam Asia Pacific Growth Fund.

PERFORMANCE INFORMATION

The following information provides some indication of the fund's risks.
The chart shows year-to-year changes in the performance of the fund's
class IB shares which are based on class IA shares and adjusted to reflect
payments under the class IB distribution plan. The table following the chart
compares the fund's performance to that of a broad measure of market
performance. Of course, the fund's past performance is not an indication of
future performance. None of the performance information listed below
reflects the impact of insurance-related charges or expenses. Please refer
to your subaccount's prospectus for information about those charges and
performance data reflecting those charges and expenses.

CALENDAR YEAR TOTAL RETURNS FOR CLASS IB SHARES
(Bar chart)
Plot Points

1995 %

1996 %

1997 %

1998 %

Average Annual Total Returns (for periods ending 12/31/98)
Past Since
1 year Inception (5/1/95)
Class IB % %
MSCI Pacific Index % %

PUTNAM VT DIVERSIFIED INCOME FUND

GOAL

The fund seeks as high a level of current income as Putnam Management
believes is consistent with preservation of capital.

MAIN INVESTMENT STRATEGIES-MULTISECTOR FIXED-INCOME SECURITIES

* U.S. Government and Investment Grade Sector: consisting primarily of
debt obligations of the U.S. government, its agencies and
instrumentalities,

* High Yield Sector: consisting of high-yielding, lower-rated, higher
risk U.S. and foreign fixed-income securities ("junk bonds"), and

* International Sector: consisting of obligations of foreign
governments, their agencies and instrumentalities, and other fixed-income
securities denominated in foreign currencies.

MAIN RISKS

The main risks that could adversely affect the value of this fund's shares
and the total return on your investment include

* The risk that movements in the securities markets will reduce the value of
the fund's investments. The value of the fund's debt investments are
particularly likely to fall if interest rates rise. Interest rate risk is
highest for investments with long maturities.

* The risk that the companies whose debt the fund purchases will fail to
make timely payments of interest and principal. This credit risk is higher
for corporate debt than for U.S. Government debt and is higher still for
debt of below investment-grade quality. Because the fund invests
substantially in junk bonds this risk is heightened for the fund. Investors
should carefully consider the risks associated with an
investment in the fund.

The fund will generally be managed in a style similar to that of the
Putnam Diversified Income Fund.

PERFORMANCE INFORMATION

The following information provides some indication of the fund's risks.
The chart shows year-to-year changes in the performance of the fund's
class IB shares which are based on class IA shares and adjusted to reflect
payments under the class IB distribution plan. The table following the chart
compares the fund's performance to that of a broad measures of market
performance. Of course, the fund's past performance is not an indication of
future performance. None of the performance information listed below
reflects the impact of insurance-related charges or expenses. Please refer
to your subaccount's prospectus for information about those charges and
performance data reflecting those charges and expenses.

CALENDAR YEAR TOTAL RETURNS FOR CLASS IB SHARES
(Bar chart)
Plot Points

1994 %
1995 %
1996 %
1997 %
1998 %

Average Annual Total Returns (for periods ending 12/31/98)

Since
Past Past inception
1 year 5 years (9/15/93)

Class IB % % %
Lehman Brothers
Aggregate Bond
Index % % %
Salomon Non-U.S.
World Government
Bond Index % % %
First Boston High
Yield Index % %
The fund's performance is compared to the Lehman Brothers Aggregate Bond
Index, an index that is frequently used as a broad measure for fixed
income securities; Salomon Brothers Non-U.S. World Government Bond Index, a
market capitalization weighted benchmark that tracks the performance of
government bond markets tracked by the Salomon Brothers World Government
Bond Index, excluding the United States; and the First Boston High Yield
Index, an unmanaged index of lower-rated, higher-yielding U.S. corporate
bonds.

PUTNAM VT THE GEORGE PUTNAM FUND OF BOSTON

GOAL

The fund seeks to provide a balanced investment composed of a well
diversified portfolio of stocks and bonds that will produce both capital
growth and current income.

MAIN INVESTMENT STRATEGIES - GROWTH AND INCOME

* Stocks: The fund will not usually invest more than 75% of its assets in
stocks and that portion of the value of convertible securities attributable
to conversion rights, although it may occasionally do so. Most of the stocks
bought by the fund are "value" stocks that Putnam Management believes are
currently selling below their true worth. If Putnam Management is correct
and other investors recognize this discount, the price of the stock may
rise. The fund mainly buys stocks of larger companies, although the fund may
invest in companies of any size.

* Bonds: The fund's debt investments:

* may be issued by governments or private companies,

* are mostly investment grade, and

* are generally intermediate- to long-term (with maturities of more than 3
years).

MAIN RISKS
The main risks that could adversely affect the value of this fund's shares
and the total return on your investment include

* The risk that the stock price of one or more of the companies in the
fund's portfolio will fall, or will fail to appreciate as anticipated by
Putnam Management. Many factors can adversely affect a stock's performance.
This risk is greater for small and medium-sized companies, which tend to be
more vulnerable to adverse developments.

* The risk that movements in the securities markets will reduce the value of
the fund's investments, regardless of how well the companies in the fund's
portfolio perform.

* The risk that the value of the fund's debt investments will fall if
interest rates rise. Interest rate risk is highest for investments with
long maturities.

* The risk that Putnam Management's allocation of the fund's assets between
stocks and bonds may adversely affect the fund's performance.

* The risk that the companies whose debt the fund purchases will fail to
make timely payments of interest and principal. This credit risk is higher
for corporate debt than for U.S. Government debt and is higher still for
debt of below investment-grade quality. The fund will generally be managed
in a style similar to that of the The George Putnam Fund of Boston.

PERFORMANCE INFORMATION

No performance information is available for the fund because it has not
yet completed its first fiscal year of operations.

PUTNAM VT GLOBAL ASSET ALLOCATION FUND

GOAL

The investment objective of Putnam VT Global Asset Allocation Fund is to
seek a high level of long-term total return consistent with preservation
of capital. By seeking total return, the fund seeks to increase the valueof
the shareholder's investment through both capital appreciation and
investment income.

MAIN INVESTMENT STRATEGY - STRATEGIC ASSET ALLOCATION

* International Equities: This sector may invest in both growth and value
stocks of non-U.S. companies.

* U.S. Fixed Income: This sector may invest in fixed income securities of
U.S. companies or the U.S. government, its agencies or instrumentalities.

* International Fixed Income: This sector may invest in fixed income
securities of non-U.S. companies or the foreign governmental issuers.

The amount of fund assets assigned to each investment category will be
reevaluated by Putnam Management at least quarterly based on Putnam
Management's assessment of the relative market opportunities and risks of
each investment category taking into account various economic and market
factors. The fund may from time to time invest in all or any one of the
investment categories as Putnam Management may consider appropriate in
response to changing market conditions. The fund can invest in companies of
any size.

MAIN RISKS

The main risks that could adversely affect the value of this fund's
shares and the total return on your investment include

* The risks of investing outside the United States, such as currency
fluctuations, economic or financial instability, lack of timely or reliable
financial information, or unfavorable political or legal developments in
foreign markets. These risks are increased for investments in emerging
markets.

* The risk that the stock price of one or more of the companies in the
fund's portfolio will fall, or will fail to appreciate as anticipated by
Putnam Management. Many factors can adversely affect a stock's performance.
This risk is generally greater for small and medium-sized companies, which
tend to be more vulnerable to adverse developments.

* The risk that movements in the securities markets will adversely affect
the price of the fund's investments, regardless of how well the companies in
which the fund invests perform.

PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IB SHARES
(Bar chart)
Plot points

1989 %
1990 %
1991 %
1992 %
1993 %
1994 %
1995 %
1996 %
1997 %
1998 %

Year-to-date performance through 3/30/99 was %. During the periods shown
in the bar chart, the highest return for a quarter was % (quarter ending
)and the lowest return for a quarter was % (quarter ending ).

Average Annual Total Returns (for periods ending 12/31/98)

Past Past Past
1 year 5 years 10 years
Class IB % % %
MSCI World Index % % %

PUTNAM VT GLOBAL GROWTH FUND

GOAL

The fund seeks capital appreciation.

MAIN INVESTMENT STRATEGIES - GROWTH STOCKS

MAIN RISKS

The main risks that could adversely affect the value of this fund's shares
and the total return on your investment include

* The risks of investing outside the United States, such as currency
fluctuations, economic or financial instability, lack of timely or reliable
financial information, or unfavorable political or legal developments in
foreign markets. These risks are increased for investments in emerging
markets.

* The risk that the stock price of one or more of the companies in the
fund's portfolio will fall, or will fail to appreciate as anticipated by
Putnam Management. Many factors can adversely affect a stock's performance,
including factors relating to a specific company or industry or general
financial market conditions. This risk is generally greater for small and
medium-sized companies, which tend to be more vulnerable to adverse
developments.

* The risk that movements in the securities markets will reduce the value of
the fund's investments, regardless of how well the companies in which the
fund invests perform.

The fund will generally be managed in a style similar to that of the
Putnam Global Growth Fund.

PERFORMANCE INFORMATION

The following information provides some indication of the fund's risks.
The chart shows year-to-year changes in the performance of the fund's
class IB shares which are based on class IA shares and adjusted to reflect
payments under the class IB distribution plan. The table following the chart
compares the fund's performance to that of two broad measures of market
performance. Of course, the fund's past performance is not an indication of
future performance. None of the performance information listed below
reflects the impact of insurance-related charges or expenses. Please refer
to your subaccount's prospectus for information about those charges and
performance data reflecting those charges and expenses.

CALENDAR YEAR TOTAL RETURNS FOR CLASS IB SHARES
(Bar chart)
Plot points

1991 %
1992 %
1993 %
1994 %
1995 %
1996 %
1997 %
1998 %

Year-to-date performance through 3/30/99 was %. During the periods shown
in the bar chart, the highest return for a quarter was % (quarter ending)
and the lowest return for a quarter was % (quarter ending ).

Average Annual Total Returns (for periods ending 12/31/98)

Past Past Since
1 year 5 years inception
(5/1/90)
Class IB % % %
MSCI EAFE % % %
MSCI WORLD % % %

PUTNAM VT GROWTH AND INCOME FUND

GOAL

The fund seeks capital growth and current income.

MAIN INVESTMENT STRATEGIES-GROWTH AND INCOME

MAIN RISKS

The main risks that could adversely affect the value of this fund's shares
and the total return on your investment include

* The risk that the stock price of one or more of the companies in the
fund's portfolio will fall, or will fail to appreciate as anticipated by
Putnam Management, regardless of movements in the securities markets. Many
factors can adversely affect a stock's performance. This risk is greater for
smaller companies, which tend to be more vulnerable to adverse developments.

PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IB SHARES
(Bar chart)
Plot points

1989 %
1990 %
1991 %
1992 %
1993 %
1994 %
1995 %
1996 %
1997 %
1998 %

Average Annual Total Returns (for periods ending 12/31/98)
Past Past Past
1 year 5 years 10 years
Class IB % % %
S&P 500 Index % % %

The fund's performance is compared to the Standard & Poor's 500 Index, an
unmanaged index of common stocks frequently used as a general measure of
U.S. stock market performance.

PUTNAM VT HEALTH SCIENCES FUND

GOAL

The fund seeks capital appreciation.

MAIN INVESTMENT STRATEGIES - CAPITAL APPRECIATION

MAIN RISKS

The main risks that could adversely affect the value of the fund's shares
and the total return on your investment include

* The risk that the stock price of one or more of the companies in the
fund's portfolio will fall, or will fail to appreciate as anticipated by
Putnam Management. Many factors can adversely affect a stock's performance,
including factors related to a specific company or industry or general
financial market conditions. This risk is greater for small and medium-sized
companies, which tend to be more vulnerable to adverse developments.

* The risk that movements in the securities markets will reduce the value of
the fund's investments, regardless of how well the companies in which the
fund invests perform.

* The risk of investing in a single group of industries. Investments in the
health sciences industries, even though representing interests in different
companies in such industries, may be affected by common economic forces and
other factors. The vulnerability of the fund to factors affecting the health
sciences industries will be significantly greater than that of a fund that
invests in a broader range of industries, which may result in greater losses
and volatility.

The fund is "non-diversified," which means that it may invest more of
itsassets in the securities of fewer companies than a "diversified" fund.
The fund may therefore be more exposed to the risk of loss from a few
issuers than a fund that invests more broadly.

The fund will generally be managed in a style similar to that of the
Putnam Health Sciences Trust.

PERFORMANCE INFORMATION

No performance information is available for the fund because it has not
yet completed its first fiscal year of operations.

PUTNAM VT HIGH YIELD FUND

GOAL

The fund seeks high current income. Capital growth is a secondary
objective when consistent with high current income.

MAIN INVESTMENT STRATEGIES - INCOME

* corporate bonds and notes,

* below investment grade in quality ("junk bonds"), and

* intermediate- to long-term (with maturities of more than 3 years).
The fund seeks its secondary goal of capital growth mainly through
investments that are expected to increase in value because of declining
long-term interest rates or improvements in the credit quality of the
issuing company. The fund often invests in companies with smaller
capitalizations.

MAIN RISKS

The main risks that could adversely affect the value of the fund's shares
and the total return on your investment include

* The risk that issuers of debt the fund holds will not make (or will be
perceived as unlikely to make) timely payments of interest and principal.
This credit risk is higher for corporate debt than for U.S. government debt,
and is higher still for junk bonds. Because the fund invests mainly in junk
bonds, this risk is heightened for the fund. Investors should carefully
consider the risks associated with an investment in the fund.

* The risk that movements in the securities markets will reduce the value of
the fund's investments.

* This risk includes interest rate risk, which means that the prices of the
fund's investments, particularly the fixed-income investments in which it
mainly invests, are likely to fall if interest rates rise. Interest rate
risk is often highest for investments with long maturities.

* The risk that the price of one or more of the investments in the fund's
portfolio will fall, or will fail to appreciate as expected by Putnam
Management. Many factors can adversely affect an investment's performance.
This risk is greater for smaller companies, which tend to be more vulnerable
to adverse developments.

The fund will generally be managed in a style similar to that of the
Putnam High Yield Advantage Fund.

PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IB SHARES

Plot points

1989 %
1990 %
1991 %
1992 %
1993 %
1994 %
1995 %
1996 %
1997 %
1998 %

Average Annual Total Returns (for periods ending 12/31/98)
Past Past Past
1 year 5 years 10 years

Class IB % % %
First Boston High Yield
Index % % %

PUTNAM VT INTERNATIONAL GROWTH FUND

GOAL

The fund seeks capital growth.

MAIN INVESTMENT STRATEGIES - GROWTH

Under normal conditions, the fund generally diversifies its investments
among a number of different countries by investing at least 65% of its
total assets in at least three countries other than the United States. The
fund may invest in both growth and value stocks. Growth stocks are issued by
companies whose earnings Putnam Management believes are likely to grow
faster than the economy as a whole. Value stocks are those that Putnam
Management believes are currently undervalued compared to their true worth.
If Putnam Management is correct and other investors recognize this discount,
the price of the stock may rise. The fund invests mainly in medium and
large-sized companies, although it can invest in companies of any size.
Although the fund emphasizes investments in developed countries, it may also
invest in companies located in emerging markets. !db

MAIN RISKS

The main risks that could adversely affect the value of the fund's shares
and the total return on your investment include

* The risks of investing outside the United States, such as currency
fluctuations, economic or financial instability, lack of timely or reliable
financial information or unfavorable political or legal developments in
international markets.

* The risk that the stock price of one or more of the companies in the
fund's portfolio will fall, or will fail to appreciate as anticipated by
Putnam Management, regardless of movements in foreign or U.S. securities
markets. Many factors can adversely affect a stock's performance. This risk
is greater for smaller companies, which tend to be more vulnerable to
adverse developments.

* The risk that movements in foreign or U.S. securities markets will reduce
the value of the fund's investments, regardless of how well the companies in
the fund's portfolio perform. The fund's shares may rise and fall in value,
and you can lose money by investing in the fund. The fund may not achieve
its goals, and is not intended as a complete investment program. An
investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.

The fund will generally be managed in a style similar to that of the
Putnam International Growth Fund.

PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IB SHARES
(Bar chart)
Plot points

1998 %

Average annual total returns (for periods ending 12/31/98)

Past Since
1 year inception
(1/2/97)

Class IB % %
MSCI EAFE % %

PUTNAM VT INTERNATIONAL GROWTH AND INCOME

GOAL

The fund seeks capital growth. Current income is a secondary objective.

MAIN INVESTMENT STRATEGIES - GROWTH AND INCOME

The fund is designed for investors who seek growth of the value of their
investment over time with a modest level of current income. The fund
generally diversifies its investments among a number of different
countries by investing at least 65% of its total assets in at least three
countries other than the United States. The fund invests mainly in common
stocks that Putnam Management believes are currently selling below their
true worth. Such investments are also known as value stocks. If Putnam
Management is correct and other investors recognize this discount, the price
of the stock may rise. The fund invests mainly in large companies, although
it can invest in companies of any size. The fund emphasizes investments in
more developed countries, but may also invest in companies located in
emerg!ing markets.uldb

MAIN RISKS

The main risks that could adversely affect the value of this fund's shares
and the total return on your investment include

* The risks of investing outside the United States, such as currency
fluctuations, economic or financial instability, lack of timely or reliable
financial information, or unfavorable political or legal developments in
international markets.

* The risk that the stock price of one or more of the companies in the
fund's portfolio will fall, or will fail to appreciate as anticipated by
Putnam Management. Many factors can adversely affect a stock's performance.
This risk is greater for smaller companies, which tend to be more vulnerable
to adverse developments.

* The risk that movements in the markets will reduce the value of the fund's
investments, regardless of how well the companies in which the fund invests
perform. The fund will generally be managed in a style similar to that of
the Putnam International Growth and Income Fund.

PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IB SHARES
(Bar chart)
Plot points

1998 %

Average annual total returns (for periods ending 12/31/98)

Past Since
1 year inception
(1/2/97)
Class IB % %
MSCI EAFE % %
The fund's performance has benefitted from Putnam Management's agreement
to limit the fund's expenses through the period ended December 31, 1998.
The Morgan Stanley Capital International (MSCI) EAFE Index is an unmanaged
index of equity securities from Europe, Australia, and the Far East, with
all values expressed in U.S. dollars.

PUTNAM INTERNATIONAL NEW OPPORTUNITIES FUND

GOAL

The fund seeks long-term capital appreciation.

MAIN INVESTMENT STRATEGIES-GROWTH STOCKS

Under normal market conditions, the fund invests at least 65% of its total
assets in at least three countries other than the United States. The fund
invests mainly in growth stocks, which are stocks issued by companies whose
earnings Putnam Management believes are likely to grow faster than the
economy as a whole.

The fund may invest in companies of any size. The fund emphasizes
investments in developing or emerging markets.

MAIN RISKS

The main risks that could adversely affect the value of this fund's shares
and the total return on your investment include

* The risks of investing outside the United States, such as currency
fluctuations, economic or financial instability, lack of timely or reliable
financial information, or unfavorable political or legal developments in
international markets. These risks are increased when investing in emerging
markets.

* The risk that the stock price of one or more of the companies in the
fund's portfolio will fall, or will fail to appreciate as anticipated by
Putnam Management. Many factors can adversely affect a stock's performance
including factors to a specific company or industry or to general financial
market conditions. This risk is generally greater for small and medium-sized
companies, which tend to be more vulnerable to adverse developments.

* The risk that movements in the securities markets will reduce the value of
the fund's investments, regardless of how well the companies in the fund's
portfolio perform.

The fund will generally be managed in a style similar to that of the
Putnam International New Opportunities Fund.

PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IB SHARES
(Bar chart)
Plot points

1998 %

Average annual total returns (for periods ending 12/31/98)

Past Since
1 year inception
(1/2/97)

Class IB % %
MSCI EAFE % %

The fund's performance has benefitted from Putnam Management's agreement
to limit the fund's expenses through the period ended December 31, 1998.
The Europe, Australia and the Far East (EAFE) component of the Morgan
Stanley Capital International World Index is an unmanaged index of
international equity securities, excluding U.S. securities, with all
values expressed in U.S. dollars.

PUTNAM VT INVESTORS FUND

GOAL

The fund seeks long-term growth of capital and any increased income that
results from this growth.

MAIN INVESTMENT STRATEGIES - GROWTH

MAIN RISKS

The main risks that could adversely affect the value of this fund's shares
and the total return on your investment include

* The risk that the stock price of one or more of the companies in the
fund's portfolio will fall, or will fail to appreciate as anticipated by
Putnam Management, regardless of movement in the securities markets. Many
factors can adversely affect a stock's performance.

PERFORMANCE INFORMATION

No performance information is available for the fund because it has not
yet completed its first fiscal year of operations.

PUTNAM VT MONEY MARKET FUND

GOAL

The fund seeks as high a rate of current income as Putnam Management
believes is consistent with preservation of capital and maintenance of
liquidity.

MAIN INVESTMENT STRATEGY - INCOME

The fund seeks to maintain a stable net asset asset value of $1.00 per
share.

The fund's investments are

* high quality money market instruments, and

* short-term (with a dollar-weighted average portfolio maturity of 90 days
or less).

MAIN RISKS

* the risk that the value of your investment may be eroded over time by the
effects of inflation, and

* the risk that, as a result of a deterioration in the credit quality of
issuers whose securities the fund holds or an increase in interest rates the
fund may be unable to maintain a net asset value of $1.00 per share

The fund will generally be managed in a style similar to that of the
Putnam Money Market Fund.

PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IB SHARES
(Bar chart)
Plot points

1989 %
1990 %
1991 %
1992 %
1993 %
1994 %
1995 %
1996 %
1997
1998

Average annual total returns (for periods ending 12/31/98)

Past Past Past
1 year 5 years 10 years

Class IB % % %
Merrill Lynch 91-Day
Treasury Bill Index % % %
Lipper Money Market % % %
Fund Average

PUTNAM VT NEW OPPORTUNITIES FUND

GOAL

The fund seeks long-term growth of capital appreciation.

MAIN INVESTMENT STRATEGIES - GROWTH

The fund invests primarily in "growth" stocks whose earnings Putnam
Management believes are likely to grow faster than the economy as a whole.
The fund may invest in companies of any size. The fund will generally invest
in companies that Putnam Management identifies as offering the best
prospects for long-term growth potential. Those sectors will change from
time to time but the current sectors are identified later in this
prospectus.

MAIN RISKS

The main risks that could adversely affect the value of this fund's shares
and the total return on your investment include

* The risk that the stock price of one or more of the companies in the
fund's portfolio will fall, or will fail to appreciate as anticipated by
Putnam Management, regardless of movement in the securities markets. Many
factors can adversely affect a stock's performance.

* The risk that movements in the securities markets will adversely affect
the value of the fund's investments, regardless of how well the companies in
the fund's portfolio perform.

* The risk of investing in a limited group of market sectors. Investments in
the sectors identified by Putnam Management as having the potential for
capital growth, even though representing interests in different companies in
such industries, may be affected by common economic forces and other
factors. The vulnerability of the fund to factors affecting the sectors
chosen will be significantly greater than that of a fund that invests in a
broader range of industries which may result in greater losses and
volatility. The fund will generally be managed in a style similar to that of
the Putnam New Opportunities Fund.

PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES
Plot points

1995 %
1996 %
1997
1998
Average annual total returns (for periods ending 12/31/98)

Past Since
1 year inception
(5/2/94)

Class IB % %
S&P Index % %

PUTNAM VT NEW VALUE FUND

GOAL

The fund seeks long-term capital appreciation.

MAIN INVESTMENT STRATEGIES - VALUE STOCKS

MAIN RISKS

The main risks that could adversely affect the value of this fund's shares
and the total return on your investment include

* The risk that the stock price of one or more of the companies in the
fund's portfolio will fall, or will fail to appreciate as anticipated by
Putnam Management. Many factors can adversely affect a stock's performance.
This risk is greater for small and medium-sized companies, which tend to be
more vulnerable to adverse developments.

* The risk that movements in the securities markets will adversely affect
the price of the fund's investments, regardless of how well the companies in
the fund's portfolio perform.

The fund will generally be managed in a style similar to that of the
Putnam New Value Fund.

PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IB SHARES
(Bar chart)
Plot points
1998 %

Average annual total returns (for periods ending 12/31/98)

Past Since
1 year inception
(1/2/97)

Class IB % %
S&P 500 Index % %
The fund's performance has benefitted from Putnam Management's agreement
to limit the fund's expenses through December 31, 1998. The fund's
performance is compared to the Standard & Poor's 500 Index, an unmanaged
index of common stocks frequently used as a general measure of U.S. stock
market performance.

PUTNAM VT OTC & EMERGING MARKETS FUND

GOAL

The fund seeks capital appreciation.

MAIN INVESTMENT STRATEGIES - GROWTH STOCKS

Under normal market conditions, the fund invests at least 65% of its total
assets in common stocks traded in the over-the-counter ("OTC") market or
common stocks of "emerging growth" companies listed on securities exchanges.
"Emerging growth" companies are companies that Putnam Management believes
have a leading or proprietary position in a growing industry or are gaining
market share in an established industry. These companies may range from
startups or recently organized companies to mature companies with long,
established operating histories. The fund mainly buys stocks of small to
medium sized companies, although the fund may invest in companies of any
size. Most stocks bought by the fund are "growth" stocks whose earnings
Putnam Management believes are likely to grow faster than the economy
as a whole.

MAIN RISKS

The main risks that could adversely affect the value of this fund's shares
and the total return on your investment include

* The risk that the stock price of one or more of the companies in the
fund's portfolio will fall, or will fail to appreciate as anticipated by
Putnam Management. Many factors can adversely affect a stock's performance.
This risk is greater for small and medium-sized companies, which tend to be
more vulnerable to adverse developments.

* The risk that movements in the securities markets will adversely affect
the price of the fund's investments, regardless of how well the companies in
the fund's portfolio perform. The fund will generally be managed in a style
similar to that of the Putnam OTC & Emerging Markets Fund.

PERFORMANCE INFORMATION

No performance information is available for the fund because it has not
yet completed its first fiscal year of operations.

PUTNAM VT RESEARCH FUND

GOAL

The fund seeks capital appreciation.

MAIN INVESTMENT STRATEGIES - GROWTH STOCKS

Under normal market conditions, the fund will seek to achieve its goal by
investing mostly in common stocks that by Putnam Management believes have
the potential for capital appreciation. The fund may invest in both
growth and value stocks. Growth stocks are issued by companies whose
earnings Putnam Management believes are likely to grow faster than the
economy as a whole. Value stocks are those that Putnam Management believes
are currently undervalued compared to their true worth. If Putnam Management
is correct and other investors recognize this discount, the price of the
stock may rise. The fund can invest in companies of any size. Although the
fund emphasizes investments in developed countries, it may also invest in
companies located in emerging markets.

MAIN RISKS

The main risks that could adversely affect the value of this fund's shares
and the total return on your investment include

* The risk that the stock price of one or more of the companies in the
fund's portfolio will fall, or will fail to appreciate as anticipated by
Putnam Management. Many factors can adversely affect a stock's performance.
This risk is greater for small and medium-sized companies, which tend to be
more vulnerable to adverse developments.

* The risk that movements in the securities markets will reduce the value of
the fund's investments, regardless of how well the companies in the fund's
portfolio perform. The fund's shares may rise and fall in value, and you can
lose money by investing in the fund. The fund may not achieve its goal, and
is not intended as a complete investment program. An investment in the fund
is not a deposit of the bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.

The fund will generally be managed in a style similar to that of the
Putnam Research Fund.

PERFORMANCE INFORMATION

No performance information is available for the fund because it has not
yet completed its first fiscal year of operations.

PUTNAM VT SMALL CAP VALUE FUND

GOAL

The fund seeks capital appreciation.

MAIN INVESTMENT STRATEGIES -- VALUE STOCKS

The fund generally invests in common stocks of small companies. These are
companies of a size similar to those of the Russell 2000 Index, a commonly
used measure of small company performance. The fund will generally invest in
value stocks, which stocks are those that Putnam Management believes are
currently undervalued compared to their true worth. If Putnam Management is
correct and other investors recognize this discount, the price of the stock
may rise.

MAIN RISKS

The main risks that could adversely affect the value of this fund's shares
and the total return on your investment include

* The risk that the stock price of one or more of the companies in the
fund's portfolio will fall, or will fail to appreciate as anticipated by
Putnam Management. Many factors can adversely affect a stock's performance.
This risk is greater for small and medium-sized companies, which tend to be
more vulnerable to adverse developments.

PERFORMANCE INFORMATION

No performance information is available for the fund because it has not
yet completed its first fiscal year of operations.

PUTNAM VT U.S. GOVERNMENT AND HIGH QUALITY BOND FUND

GOAL

Putnam VT U.S. Government and High Quality Bond Fund seeks current income
consistent with preservation of capital.

MAIN INVESTMENT STRATEGY - U.S. GOVERNMENT AND HIGH QUALITY DEBT
SECURITIES

The fund invests primarily in U.S. government securities and in other debt
obligations rated, at the time of purchase, at least A by a nationally
recognized securities rating agency, such as S&P or Moody's, or, if not
rated, determined by Putnam Management to be of comparable quality. The fund
will not necessarily dispose of a security when its rating is reduced below
its rating at the time of purchase. ^

Putnam Management will allocate the fund's assets between U.S.
government securities and other high quality bonds , depending on its
assessment of market conditions and the relative investment returns
available from such securities. The fund will not, however, make any
investment, if, as a result, less than 25% of the value of its assets
would be invested in U.S. government securities. The fund may invest in
securities principally traded in foreign markets, and expects that such
investments will not ordinarily exceed 20% of its assets. The fund may
engage in defensive strategies when Putnam Management judges that
conditions in the securities markets make pursuing the fund's basic
investment strategy inconsistent with the best interests of its
shareholders. The fund may also invest in high quality mortgage-backed and
asset-backed securities.

MAIN RISKS

The main risks that could adversely affect the value of this fund's shares
and the total return on your investment include

* The risk that movements in the securities markets will reduce the value of
the fund's investments. The value of the fund's debt investments are
particularly likely to fall if interest rates rise. Interest rate risk is
highest for investments with long maturities.

* The risk that mortgages underlying the fund's investments in mortgage-
backed securities may be prepaid. This might force the fund to reinvest the
proceeds from prepayments in investments offering a lower yield. With
respect to these investments, the fund therefore might not benefit from any
increase in value as a result of declining interest rates. Similarly, rising
interest rates may cause prepayments to fall. This would effectively extend
the fund's maturity and increase its interest rate risk at times when that
is least desirable-during periods of rising interest rates.

PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IB SHARES
(Bar chart)
Plot points

1988 %
1987 %
1988 %
1989 %
1990 %
1991 %
1992 %
1993 %
1994 %
1995 %
1996 %
1997 %
1998 %

Average annual total returns (for periods ending 12/31/98)

Past Since
1 year inception
(2/1/88)

Class IB % %
S&P 500 Index % %

PUTNAM VT UTILITIES GROWTH AND INCOME FUND

GOALS

The fund seeks capital growth and current income.

MAIN INVESTMENT STRATEGIES - VALUE STOCKS

MAIN RISKS

The main risks that could adversely affect the value of this fund's shares
and the total return on your investment include:

* The risk of investing in a single group of industries. Investments in the
utilities industries, even though representing interests in different
companies in such industries, may be affected by common economic forces and
other factors. The vulnerability of the fund to factors affecting the
utilities industries will be significantly greater than that of a fund that
invests in a broader range of industries, which may result in greater losses
and volatility.

* The risk that the stock price of one or more of the companies in the
fund's portfolio will fall, or will fail to appreciate as anticipated by
Putnam Management. Many factors can adversely affect a stock's performance,
including factors related to a specific company or industry or general
financial market conditions. This risk is greater for smaller companies,
which tend to be more vulnerable to adverse developments.

* The risk that movements in the securities markets will reduce the value of
the fund's investments, regardless of how well the companies in the fund's
portfolio perform. The value of the fund's fixed-income investments is
likely to fall if interest rates rise. Interest rate risk is highest for
investments with long maturities.

* The risks of investing outside the United States, such as currency
fluctuations, economic or financial instability, or unfavorable political or
legal developments in foreign markets. These risks are increased when
investing in emerging markets.

* The risk that the companies whose fixed-income investments the fund
purchases will fail to make timely payments of interest and principal. This
credit risk is higher for corporate fixed-income investments than for U.S.
Government fixed-income investments and is higher still for fixed-income
investments of below investment-grade quality.

The fund will generally be managed in a style similar to that of the
Putnam Utilities Growth and Income Fund.

PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IB SHARES
(Bar chart)
Plot points

1993 %
1994 %
1995 %
1996 %
1997
1998

Average annual total returns (for periods ending 12/31/98)

Past Past Since
1 year 5 years inception
Class IB % % %
S&P Utility Index % % %

The fund's performance is compared to the S&P Utility Index, an unmanaged
index of common stocks issued by utility companies.

PUTNAM VT VISTA FUND

GOAL

The fund seeks capital appreciation.

MAIN INVESTMENT STRATEGIES - GROWTH STOCKS

MAIN RISKS

The main risks that could adversely affect the value of this fund's shares
and the total return on your investment include

* The risk that the stock price of one or more of the companies in the
fund's portfolio will fall, or will fail to appreciate as anticipated by
Putnam Management. Many factors can adversely affect a stock's performance.
This risk is greater for small and medium-sized companies, which tend to be
more vulnerable to adverse developments.

* The risk that movements in the securities markets will reduce the of the
fund's investments, regardless of how well the companies in the fund's
portfolio perform. The fund's shares may rise and fall in value, and you can
lose money by investing in the fund. The fund may not achieve its goal, and
is not intended as a complete investment program. An investment in the fund
is not a deposit of the bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.

The fund will generally be managed in a style similar to that of the
Putnam Vista Fund.

PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IB SHARES
(Bar chart)
Plot points

1998 %

Average annual total returns (for periods ending 12/31/98)

Past Since
1 year inception
(1/2/97)

Class IB % %
Russell Midcap Index %
Russell Midcap
Growth Index % %

PUTNAM VT VOYAGER FUND

GOAL

The fund seeks capital appreciation.

MAIN INVESTMENT STRATEGIES-GROWTH STOCKS

MAIN RISKS

The main risks that could adversely affect the value of this fund's shares
and the total return on your investment include

* The risk that the prices of the stocks in the fund's portfolio will fall,
or will fail to appreciate as anticipated by Putnam Management. Many factors
can adversely affect a stock's performance. This risk is greater for small
or medium-size companies, which tend to be more vulnerable to adverse
developments.

PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IB SHARES
(Bar chart)
Plot points
1989 %
1990 %
1991 %
1992 %
1993 %
1994 %
1995 %
1996 %
1997 %
1998

Average annual total returns (for periods ending 12/31/98)

Past Past Past
1 year 5 years 10 years
Class IB % % %
S&P 500 Index % % %

The fund's performance is compared to the Standard & Poor's 500 Index, an
unmanaged index of common stocks frequently used as a general measure of
U.S. stock market performance.

What are the funds' main investment
strategies and related risks?

The funds (other than Putnam VT Global Asset Allocation Fund and Putnam VT
U.S. Government and High Quality Bond Fund) are generally managed in
styles similar to other open-end investment companies which are managed by
Putnam Management and whose shares are generally offered to the public.
These other Putnam funds may, however, employ different investment practices
and may invest in securities different from those in which their counterpart
funds invest, and consequently will not have identical portfolios or
experience identical investment results.

The first part of this section describes the investment strategies and
related risks that are particular to each of the funds. The second part of
this section describes the main investment strategies and related risks that
are common to a number of the funds. Investors are urged to read both parts
of this section.

Putnam VT Asia Pacific Fund

Under normal market conditions, the fund will seek to achieve its goal by
investing mostly in common stocks issued by Asian or Pacific Basin
companies. The fund may invest in both growth and value stocks. Any
investment carries with it some level of risk that generally reflects its
potential for reward. Putnam Management will consider, among other things, a
company's financial strength, competitive position in its industry and
projected future earnings and dividends when deciding whether to buy or sell
investments. The fund invests mainly in medium and large-sized companies but
may invest in companies of any size.

Geographic focus. The fund considers the following to be "Asian or Pacific
Basin" companies

* companies organized under the laws of an Asian or a Pacific Basin country
with a principal office in an Asian or a Pacific Basin country,

* companies that earn 50% or more of their total revenues from business in
Asia or the Pacific Basin, or

* companies whose common stock is traded principally on a securities
exchange in Asia or the Pacific Basin.

The fund anticipates that under normal market conditions it will invest
85% of its assets in Asian or Pacific Basin companies and at least 65%
of its assets will be invested in securities of issuers that meet at
least one of the first two criteria listed above.

Developments in Asian or Pacific Basin economies will generally have a
greater effect on the fund than if it were more geographically
diversified, which may result in greater losses and volatility.

Putnam VT Diversified Income Fund

* U.S. Government and Investment Grade Sector: This sector includes

* U.S. government securities: U.S. Treasury bills, notes and bonds; and
mortgage participation certificates guaranteed by the Government National
Mortgage Association ("Ginnie Mae"), Federal Housing Administration
debentures, Federal National Mortgage Association ("Fannie Mae") bonds and
Federal Home Loan Bank debt, which are also known as mortgage-backed
securities.

* Mortgage-backed securities that are privately issued which will be
supported by the credit of any government agency or instrumentality.

* Other types of debt securities, such as debt securities of private issuers
that are investment grade at the time of purchase.

* High Yield Sector: Includes

* high yielding, lower-rated, higher risk U.S. and foreign corporate fixed-
income securities, such as debt securities, convertible securities and
preferred stock, rated at the time of purchase at least CCC (or its
equivalent) by a nationally recognized securities rating agency, or if
unrated determined by Putnam Management to be of comparable quality.

* International Sector: Includes

* debt obligations issued or guaranteed by foreign, national, provincial,
state, or other governments with taxing authority, or by their agencies or
instrumentalities;

* debt obligations and other fixed-income securities of foreign and similar
non-dollar denominated securities of U.S. corporate issuers.

The fund may invest up to 5% of its net assets in securities rated below
CCC (or its equivalent at the time of purchase) and unrated of comparable
quality.

Putnam VT The George Putnam Fund of Boston

Putnam VT Global Asset Allocation Fund

Putnam VT Global Growth Fund

Putnam VT Growth and Income Fund

Putnam VT Health Sciences Fund

* Under normal market conditions, the fund will invest at least 65% of its
assets in securities of issuers meeting at least one of these 50% tests.

* The fund invests primarily in a single group of industries and is
therefore more concentrated and less diversified than funds not primarily
investing in a single group of industries. Events that affect the health
sciences industries more significantly than the market as a whole will have
a greater affect on the fund than a fund that is more widely diversified
among a number of unrelated industries. Because the fund's investments are
concentrated in the health sciences industries, many products and services
are subject to risk of rapid obsolescence caused by technological and
scientific advances. In addition, the health sciences industries are
generally subject to greater government regulation than many other
industries. Changes in governmental policies may have a material effect on
the demand for or costs of certain products and services. Regulatory
approvals are generally required before new drugs and medical devices or
procedures may be in!troduced and before the acquisition of additional
facilities and equipment by health care providers. Changes in governmental
payment systems and the increased use of managed care arrangements may also
affect the revenues and expenses of health care service providers.

Putnam VT High Yield Fund

Putnam International Growth Fund

Putnam VT International Growth and Income Fund

Putnam VT International New Opportunities Fund

Putnam VT Investors Fund

Putnam VT Money Market Fund

* Concentration of investments. The fund may invest without limit in money
market investments from the banking, personal credit and business credit
industries when Putnam Management believes the yield and marketability of
those investments justify any additional risks that may arise from a
concentration of investments in those industries. The fund will invest over
25% of its assets in money market investments from the personal credit or
business credit industries only when Putnam Management determines that the
yields on those investments exceed the yields that are available from
eligible investments of issuers in other industries.

Putnam VT New Opportunities Fund

* Personal Communications - long-distance telephone, competitive local
exchange carriers, cellular telephone, paging, personal communication
networks;

* Media/Entertainment - cable television system operators, cable television
network programmers, film entertainment providers, theme park operators,
radio and television stations, billboard advertisers;

* Medical Technology/Cost-Containment - home and outpatient care, medical
device companies, pharmaceuticals and biotechnology, health care information
services, physician practice management, managed care providers;

* Industrial and Environmental Services - solid waste disposal, remediation
services, oil services, independent power producers;

* Personal Financial Services - stock brokerage companies, specialty
insurance companies, credit card issuers, and other consumer-oriented
financial services companies;

* Value-oriented Consuming - retailers, restaurants, hotel chains, casino
operators, travel companies, consumer franchise companies and other consumer
product or service companies able to provide quality products or services at
lower prices or offering greater perceived value than competitors; and

* Business Services - staffing and temporary help companies, electronic
commerce services, education and training services.

Putnam VT New Value Fund

The fund pursues its goal by investing mainly in common stocks. The fund
generally invests in value stocks. Putnam Management will consider, among
other things, a company's financial strength, competitive position in its
industry and projected future earnings and dividends, and the securities
long-term potential for capital appreciation when deciding whether to buy
or sell investments. Because Putnam Management evaluates securities for
the fund based on their long-term potential for capital appreciation, the
fund's investments may not appreciate over the shorter term, and as a
result the fund's total return over certain periods may be less than that
of !other equity mutual funds. The fund may invest in companies of any
size. The fund may invest in securities of issuers not actively traded in
U.S. markets. The fund expects that its investments in such foreign
securities not actively traded in U.S. markets will generally not exceed
20% of the fund's total assets, although the fund's investments in such
foreign securities may exceed this amount from time to time.

Putnam VT OTC & Emerging Growth Fund

Putnam VT Research Fund

Putnam VT Small Cap Value Fund

Putnam VT U.S. Government and High Quality Bond Fund

* U.S. government obligations. Under normal market conditions, the fund will
invest at least 65% of its total assets in U.S. government securities. These
investments include,

- - U.S. Treasury bills, notes and bonds.

* Corporate obligations. These investments include mainly investment-grade
corporate debt securities issued by domestic companies and, to a lesser
degree, foreign companies but may include securities below investment grade
in quality.

The fund may invest in companies of any size. The fund may
invest in securities of issuers not actively traded in U.S. markets. The
fund expects that its investments in such foreign securities not actively
traded in U.S. markets will generally not exceed 20% of the fund's total
assets, although the fund's investments in such foreign securities may
exceed this amount from time to time.

Putnam VT Utilities Growth and Income Fund

The fund pursues its goals of capital growth and current income by
investing mainly in common stocks and other securities of companies in the
utilities industries. Putnam Management will consider, among other things,
a company's financial strength, competitive position in its industry and
projected future earnings and dividends when deciding whether to buy or
sell investments. The fund may invest in companies of any size. The fund
may invest in securities of issuers not actively traded in U.S. markets.
The fund expects that its investments in such foreign securities not
actively traded in U.S. markets will generally not exceed 25% of the
fund's total assets, although the fund's investments in such foreign
securities may exceed this amount from time to time. The fund may invest
up to 20% of its total assets in fixed-income securities that are rated
BBB (or its equivalent) or below by a nationa!lly recognized securities
rating agency, or, if unrated, are determined by Putnam Management to be
of comparable quality.

Under normal market conditions, the fund will invest at least 65% of its
assets in securities of issuers meeting at least one of these 50% tests.

Putnam VT Vista Fund

Putnam VT Voyager Fund

Common Investment Strategies And Related Risks

* Growth stocks. Certain funds invest in stocks of companies Putnam
Management believes have earnings that are likely to grow faster than the
economy as a whole. These growth stocks typically trade at higher multiples
of current earnings than other stocks. Therefore, the values of growth
stocks may be more sensitive to changes in current or expected earnings than
the values of other stocks. If Putnam Management's assessment of the
prospects for the company's earnings growth is wrong, or if its judgment
about how other investors will value the company's earnings growth is wrong,
then the price of the company's stock may fall or not approach the value
that Putnam Management has placed on it.

* Value stocks. Certain funds may also invest in companies that are not
expected to experience significant earnings growth, but whose stock Putnam
Management believes is undervalued compared to its true worth. These
companies may have experienced adverse business developments or may be
subject to special risks that have caused their stocks to be out of favor.
If Putnam Management's assessment of a company's prospects is wrong, or if
other investors do not eventually recognize the value of the company, then
price of the company's stock may fall or may not approach the value that
Putnam Management has placed on it.

* Smaller companies. Certain funds can invest in small and medium-size
companies, including companies with market capitalizations of less than $500
million. These companies are more likely than larger companies to have
limited product lines, markets or financial resources, or to depend on a
small, inexperienced management group. Stocks of these companies may trade
less frequently and in limited volume, and their prices may fluctuate more
than stocks of other companies. Stocks of these companies may therefore be
more vulnerable to adverse developments than those of larger companies.

* Foreign investments. Each of the funds may invest in securities of foreign
issuers. Foreign investments involve certain special risks, including

* Unreliable or untimely information: There may be less information publicly
available about a foreign company than about most U.S. companies, and
foreign companies are usually not subject to accounting, auditing and
financial reporting standards and practices comparable to those in the
United States.

* Limited legal recourse: Legal remedies for investors such as the fund may
be more limited than those available in the United States.

* Lower yield: Common stocks of foreign companies have historically offered
lower dividends than comparable U.S. companies. Foreign withholding taxes
may further reduce the amount of income available to distribute to
shareholders of the fund. The fund's yield is therefore expected to be lower
than yields of most funds that invest mainly in common stocks of U.S.
companies.

Certain of these risks may also apply to some extent to U.S.-
traded investments that are denominated in foreign currencies, investments
in U.S. companies that are traded in foreign markets, or to investments in
U.S. companies that have significant foreign operations. Special U.S. tax
considerations may apply to the fund's foreign investments.

* Emerging markets. The risks of foreign investments are typically increased
in less developed and developing countries, which are sometimes referred to
as emerging markets. For example, political and economic structures in these
countries may be young and developing rapidly, which can cause instability.
These countries are also more likely to experience high levels of inflation,
deflation or currency devaluation, which could hurt their economies and
securities markets. For these and other reasons, investments in emerging
markets are often considered speculative.

* Fixed-income investments. The value of a fixed-income investment may fall
as a result of factors directly relating to the issuer of the security, such
as decisions made by its management or a reduction in its credit rating. An
investment's value may also fall because of factors affecting not just the
issuer, but other issuers, such as increases in production costs. The value
of an investment may also be affected by general changes in financial market
conditions, such as changing interest rates or currency exchange rates.

* Interest rate risk. The values of fixed income investments usually rise
and fall in response to changes in interest rates. Declining interest rates
will generally raise the value of existing fixed-income investments, and
rising interest rates will generally lower the value of existing fixed-
income investments. Changes in the values of fixed income investments
usually will not affect the amount of income a fund receives from them, but
will affect the value of a fund's shares. Interest rate risk is often
greater for investments with longer maturities.

* Certain of the funds may at time invest in "zero coupon" bonds and
"payment-in-kind" bonds. Zero coupon bonds are issued at less than face
value and make payments of interest only at maturity rather than at
intervals during the life of the bond. Payment-in-kind bonds give the
issuing company the option to make interest payments in additional bonds
rather than in cash. Both kinds of bonds allow a company to avoid generating
cash to make current interest payments. These bonds therefore involve
greater credit risk and are subject to greater price fluctuations than bonds
that pay current interest in cash.!

* Lower-rated investments. Certain of the funds may invest a significant
portion of their assets in securities that are below BBB (or its equivalent)
and comparable unrated securities that are considered below investment grade
and are commonly known as "junk bonds." These investments are considered to
be of poor standing and mainly speculative, and those rated CCC may be in
default. The lower ratings of these investments reflect a greater
possibility that the issuing companies may be unable to make timely payments
of interest and principal and thus default. There may be an increased risk
of default i!n adverse economic conditions. If this happens, or is perceived
as likely to happen, the values of those investments will usually be more
volatile. A default or expected default could also make it difficult for a
fund to sell the investments at prices approximating the values the fund had
previously placed on them. Because junk bonds are traded mainly by
institutions, they usually have a limited market, which may at times make it
difficult for the fund to establish their fair value.

Credit ratings are based largely on the issuing company's historical
financial condition and the rating agencies' investment analysis at the time
of purchase. The rating assigned to any particular investment does not
necessarily reflect the issuer's current financial condition and does not
reflect an assessment of an investment's volatility or liquidity.

Although they are generally thought to have lower credit risk, investment
grade fixed-income investments may share some of the risks of lower-rated
investments.

Prepayments generally cause losses on premium investments, because
prepayments are made at face value and do not reflect any premium over
face value.

Investors may find it useful to compare the relevant fund's yield, which
reflects amortization of market premiums, with its current dividend rate,
which does not reflect that amortization.

* Illiquid securities. Each fund (other than Putnam VT Money Market Fund)
may invest up to 15% of its assets in illiquid securities. Putnam Management
believes that opportunities to earn high yields may exist from time to time
in securities which are illiquid and which may be considered speculative.
The sale of these securities is usually restricted under federal securities
laws. As a result of illiquidity, the fund may not be able to sell these
securities when Putnam Management considers it desirable to do so or may
have to sell them at less than fair market value.

* Mortgage-backed and asset-backed securities

- - Certain securities issued or guaranteed by the U.S. government or one of
its agencies or instrumentalities;
- - Securities issued by private issuers that represent an interest in or are
secured by mortgage-backed securities issued or guaranteed by the U.S.
government or one of its agencies or instrumentalities; and
- - Securities issued by private issuers that represent an interest in or are
secured by mortgage loans or mortgage-backed securities.

CMOs are issued with a number of classes or series that have different
maturities and that may represent interests in some or all of the interest
or principal on the underlying collateral. Payment of interest or
principal on some classes or series of CMOs may be subject to
contingencies or some classes or series may bear some or all of the risk
of default on the underlying mortgages. CMOs of different classes or
series are generally retired in sequence as the underlying mortgage loans
in the mortgage pool are repaid. If enough mortgages are repaid ahead of
schedule, the classes or series of a CMO with the earliest maturities
generally will be retired prior to their maturities. Thus, the early
retirement of particular classes or series of a CMO would have the same
effect as the prepayment of mortgages underlying other mortgage-backed
securities. Conversely, slower than anticipated prepayments can extend the
effective maturities of CMOs, subjecting them to a greater risk !of
decline in market value in response to rising interest rates than
traditional debt securities, and, therefore, potentially increasing the
volatility of a fund.

* Securities loans, repurchase agreements and forward commitments. A fund
may lend portfolio securities amounting to not more than 25% of its assets
to broker-dealers and may enter into repurchase agreements on up to 25% of
its assets. These transactions must be fully collateralized at all times. A
fund (other than Putnam VT Money Market Fund) may also purchase securities
for future delivery, which may increase its overall investmen exposure and
involves a risk of loss if the value of the securities declines prior to the
settlement date. These transactions involve some risk if the other party
should default on its obligation and a fund is delayed or prevented from
recovering the collateral or completing the transaction.

* Swaps Certain of the funds may enter into other types of "over-the-
counter" transactions with broker-dealers or other financial institutions
such as "swap" contracts, in which its investment return will depend on the
change in value of a specified security or index. A fund would typically
receive from the counterparty the amount of any increase, and pay to the
counterparty the amount of any decrease, in the value of the underlying
security or index. The contracts would thus, absent the failure of the
counterparty to complete its obligations, provide to the fund approximately
the same return as it would have realized if it had owned the security o!r
index directly.

* Derivatives. The funds may engage in a variety of transactions involving
derivatives, such as futures, options and warrants. Derivatives are
financial instruments whose value depends upon, or is derived from, the
value of something else, such as one ore more underlying investments, pools
of investments, indexes or currencies. The fund's return on a derivative
typically depends on the change in the value of the investment, index or
currency specified in the derivative instrument.

* Non-diversified funds
Putnam VT Health Sciences Fund and Putnam VT Utilities Growth and Income
Fund are each "non-diversified" investment companies under the Investment
Company Act of 1940 (the "1940 Act"). That means that each may invest more
of its assets in the securities of fewer companies than a "diversified"
fund. Each fund may therefore be more exposed to the risk of loss from a
few issuers than the other fund that invests more broadly.

* Other investments. In addition to the main investment strategies
described above, the funds may also make other types of investments, such
as investments in preferred stocks, convertible securities, derivative
instruments or fixed income securities, and therefore may be subject to
other risks, as described in the funds' SAI.

* Alternative strategies. At times Putnam Management may judge that market
conditions make pursuing a funds' investment strategies inconsistent with
the best interests of its shareholders. Putnam Management then may
temporarily use alternative strategies that are mainly designed to limit a
fund's losses. Although Putnam Management has the flexibility to use these
strategies, it may choose not to for a variety of reasons, even in very
volatile market conditions. These strategies may cause the affected fund
to miss out on investment opportunities, and may prevent the fund from
achieving its goal.

* Changes in policies. The Trust's Trustees may change any of the funds'
goals, investment strategies and other policies without shareholder
approval, except as otherwise indicated.

Who manages the funds?
The Trust's Trustees oversee the general conduct of each fund's business.
The Trustees have retained Putnam Management to be the funds' investment
manager, responsible for making investment decisions for the funds and
managing the funds' other affairs and business. Each fund pays Putnam
Management a quarterly management fee for these services based on the
fund's average net assets. Putnam Management's address is One Post
Office Square, Boston, MA 02109. The funds paid Putnam Management
management fees in the following amounts (reflected as a percentage of
average net assets for the fund's last fiscal year):

* The management fees shown in the table reflect an expense limitation
then in effect or currently in effect. In the absence of an expense
limitation, management fees would have been:

+ Estimated management fees.

<TABLE>
<CAPTION>
Business experience
Fund name Year (at least 5 years)
- --------------------- ------- -------------------------

<S> <C> <C>
Putnam VT Asia Pacific
Growth Fund

William Kohli 1994 Employed by Putnam Management since 1994.
Managing Director Prior to September, 1994, Mr. Kohli was
employed by Global Bond Management.

Jennifer E. Leichter 1993 Employed by Putnam Management since 1987.
Managing Director

Jeffrey A. Kaufman 1998 Employed by Putnam Management since 1998.
Senior Vice President Prior to August 1998, Mr. Kaufman was
employed by MFS Investment Management.

David L. Waldman 1998 Employed as an investment professional by Putnam
Managing Director Management since 1997. Prior to June 1997,
Mr. Waldman was employed at Lazard
Freres and prior to April 1995, was
employed at Goldman Sachs.

Putnam VT The George
Putnam Fund of Boston

Edward P. Bousa 1998 Employed by Putnam Management since 1992.
Senior Vice President

James M. Prusko 1998 Employed as an investment professional
Senior Vice President by Putnam Management since 1992.

Krishna K. Memani 1999 Employed as an investment professional
Managing Director by Putnam Management since 1998. Prior
to September 1998, Mr. Memani was
employed by Morgan Stanley & Co.

Putnam VT Global
Growth Fund

Robert Swift 1996 Employed by Putnam Management since 1995.
Senior Vice President Prior to August 1995, Mr. Swift was
employed by IAI International/Hill
Samuel Investment Advisors.

Kelly A. Morgan 1997 Employed by Putnam Management since 1996.
Senior Vice President Prior to December 1996, Ms. Morgan was
employed by Alliance Capital Management L.P.

David J. Santos 1999 Employed by Putnam Management since 1986.
Senior Vice President

Lisa Svensson 1998 Employed as an investment professional
Senior Vice President by Putnam Management since 1994.
Prior to July 1994, Ms. Svensson was
employed by Lord Abbett & Co.

Manuel Weiss 1998 Employed as an investment professional
Senior Vice President by Putnam Management since 1987.

Olivier Rudigoz 1998 Employed as an investment professional
Vice President by Putnam Management since 1998.
Prior to April 1998, Mr. Rudigoz was
employed by Paribas Asset
Management.

Putnam VT Growth and
Income Fund

David L. King 1993 Employed by Putnam Management since
Managing Director 1983.

Hugh H. Mullin 1998 Employed by Putnam Management since 1986.
Senior Vice President

Sheldon N. Simon 1997 Employed by Putnam Management since 1984.
Senior Vice President

Putnam VT Health Sciences
Fund

Roland Gillis 1998 Employed by Putnam Management since 1995.
Managing Director Prior to March 1995, Mr. Gillis was
employed by Keystone Custodian Funds, Inc.

Richard B. England 1998 Employed by Putnam Management since 1992.
Senior Vice President

David G. Carlson 1998 Employed by Putnam Management since 1992.
Senior Vice President

Margery C. Parker 1998 Employed by Putnam Management since
Senior Vice President 1997. Prior to December 1997, Ms.
Parker was employed by Keystone
Investments.

Putnam VT High
Yield Fund

Jennifer E. Leichter 1997 Employed by Putnam Management since 1987.
Managing Director

Robert M. Paine 1997 Employed by Putnam Management since 1987.
Senior Vice President

Rosemary H. Thomsen 1997 Employed by Putnam Management since 1986.
Senior Vice President

Jeffrey A. Kaufman 1998 Employed by Putnam Management since 1998.
Senior Vice President Prior to August 1998, Mr. Kaufman
employed by MFS Investment Management.

Putnam VT International
Growth Fund

Justin M. Scott 1996 Employed by Putnam Management since 1988.
Managing Director

Omid Kamshad 1996 Employed by Putnam Management since
Managing Director 1986. Prior to January 1996, Mr.
Kamshad was employed by Lombard Odier
International and prior to April 1995,
he was employed by Baring Asset
Management Company.

Putnam VT International
Growth and Income Fund

Justin M. Scott 1996 Employed by Putnam Management since 1988.
Managing Director

Putnam VT International
New Opportunities Fund

Robert Swift 1996 Employed by Putnam Management since
Senior Vice President 1995. Prior to August 1995,
Mr. Swift was employed by IAI
International/Hill Samuel Investment
Advisors.

J. Peter Grant 1996 Employed by Putnam Management since 1973.
Senior Vice President

Stephen Oler 1998 Employed Employed by Putnam Management
Senior Vice President since 1997. Prior to June 1997, Mr.
Oler was employed by at Templeton
Investments, and prior to March 1996
was employed by Baring Asset
Management Co.

Jack P. Chang 1999 Employed as an investment professional
Vice President by Putnam Management since 1997.
Prior to July 1997, Mr. Chang was
employed by Columbia Management.

Deborah S. Farrell 1998 Employed by Putnam Management since
Senior Vice President 1997. Prior to May 1997, Ms.
Farrell was employed by Emerging
Markets Investors Corporation.

Putnam VT Investors
Fund

C. Beth Cotner 1998 Employed by Putnam Management since 1995.
Senior Vice President Prior to September 1995, Ms. Cotner was
employed by Kemper Financial Services.

Richard B. England 1998 Employed by Putnam Management since 1992.
Senior Vice President

Manuel H. Weiss 1998 Employed by Putnam Management since 1987.
Senior Vice President

Putnam VT Money
Market Fund

Joanne Driscoll 1997 Employed by Putnam Management since 1995.
Vice President Prior to April 1995, Ms. Driscoll was a
Graduate Teaching Assistant in the
Finance Department at Northeastern
University and prior to September 1994,
Ms. Driscoll was employed by Bank of
Boston.

Putnam VT New
Opportunities Fund

Daniel L. Miller 1994 Employed by Putnam Management since 1983.
Managing Director

Jeffrey R. Lindsey 1999 Employed as an investment professional
Senior Vice President by Putnam Management since 1994.
Prior to April 1994, Mr. Lindsey was
employed by Strategic Portfolio
Management, Inc.

Putnam VT New Value Fund

David L. King 1996 Employed by Putnam Management since 1983.
Managing Director

Putnam VT OTC & Emerging
Growth Fund

Steven L. Kirson 1998 Employed by Putnam Management since 1989.
Senior Vice President

Michael J. Mufson 1998 Employed by Putnam Management since 1993.
Senior Vice President

Putnam VT Research Fund

Thomas R. Bogan 1998 Employed by Putnam Management since
1994. Prior to November 1994, Mr. Bogan
was employed by Lord, Abbett & Co.

Putnam VT U.S.
Government and High
Quality Bond Fund

Michael Martino 1998 Employed by Putnam Management since 1994.
Managing Director

Kevin M. Cronin 1998 Employed by Putnam Management since 1997.
Managing Director Prior to February 1997, Mr. Cronin was
employed at MFS Investment Management.

Putnam VT Utilities
Growth and Income Fund

Jeanne L. Mockard 1998 Employed by Putnam Management since
Senior Vice President 1990.

Christopher A. Ray 1995 Employed by Putnam Management since 1992.
Senior Vice President

Putnam VT Vista Fund

Eric Wetlaufer 1997 Employed by Putnam Management since
Managing Director 1997. Prior to November, 1997, Mr.
Wetlaufer was employed by Cadence
Capital Management.

Anthony C. Santosus 1996 Employed by Putnam Management since 1985.
Senior Vice President

Margery C. Parker 1998 Employed as an investment professional
Senior Vice President by Putnam Management since 1997. Prior
to December 1997, Ms. Parker was
employed at Keystone Investments.

Dana Clark 1999 Employed as an investment professional
Vice President by Putnam Management since 1987.

Putnam VT Voyager Fund

Robert R. Beck 1995 Employed by Putnam Management since 1989.
Managing Director

Roland W. Gillis 1995 Employed by Putnam Management since 1995.
Managing Director Prior to March, 1995, Mr. Gillis was
employed by Keystone Custodian Funds,
Inc.

Michael P. Stack 1997 Employed by Putnam Management since 1997.
Senior Vice President Prior to November, 1997, Mr. Stack was
employed by Independence Investment
Associates, Inc.

Charles H. Swanberg 1994 Employed by Putnam Management since 1984.
Senior Vice President

</TABLE>

SALES AND REDEMPTIONS

Under unusual circumstances, the Trust may suspend repurchases or postpone
payment for up to seven days or longer, as permitted by federal securities
law.

DISTRIBUTION PLAN

The Trust has adopted a Distribution Plan with respect to class IB shares
to compensate Putnam Mutual Funds for services provided and expenses
incurred by it as principal underwriter of the class IB shares, including
the payments to insurance companies and their affiliated dealers mentioned
below. The plans provide for payments by each fund to Putnam Mutual Funds
at the annual rate (expressed as a percentage of average net assets) of up
to 0.35% on class IB shares. The Trustees currently limit payments on
class IB shares to 0.15% of average net assets.

Putnam Mutual Funds compensates insurance companies (or affiliated
broker-dealers) whose separate accounts invest in the Trust through class
IB shares for providing services to their contract holders investing in
the Trust.

Putnam Mutual Funds makes quarterly payments to dealers at the annual rate
of up to 0.15% of the average net asset value of class IB shares.

Putnam Mutual Funds may suspend or modify its payments to dealers. The
payments are also subject to the continuation of the Distribution Plan,
the terms of service agreements between dealers and Putnam Mutual Funds,
and any applicable limits imposed by the National Association of
Securities Dealers, Inc.

HOW A FUND VALUES ITS SHARES

HOW A FUND MAKES DISTRIBUTIONS TO SHAREHOLDERS; TAX INFORMATION

Fund investments in foreign securities may be subject to withholding taxes
at the source on dividend or interest payments. In that case, a fund's
yield on those securities would be decreased.

FINANCIAL HIGHLIGHTS

Financial Highlights

Investment Operations
Net
Net Asset Realized and Total
Value, Net Unrealized from
Period Beginning Investment Gain (Loss) on Investment
ended of Period Income Investments operations
<S> <C> <C> <C> <C>
Putnam VT Asia Pacific Growth Fund
December 31, 1998

Putnam VT Diversified Income Fund
December 31, 1998

Putnam VT Global Asset Allocation Fund
December 31, 1998

Putnam VT Global Growth Fund
December 31, 1998

Putnam VT Growth and Income Fund
December 31, 1998

Putnam VT High
Yield Fund
December 31, 1998

Putnam VT International
Growth Fund
December 31, 1998

Putnam VT International
Growth and Income Fund
December 31, 1998

Putnam VT International
New Opportunities Fund
December 31, 1998

Putnam VT Money
Market Fund
December 31, 1998

Financial Highlights (Continued)

Less Distributions:
From
From In Excess Net In Excess of
Net of Net Realized Net Realized
Period Investment Investment Gain on Gain on
ended Income Income Investments Investments

Putnam VT Asia Pacific Growth Fund
December 31, 1998

Putnam VT Diversified Income Fund
December 31, 1998

Putnam VT Global Asset Allocation Fund
December 31, 1998

Putnam VT Global Growth Fund
December 31, 1998

Putnam VT Growth and Income Fund
December 31, 1998

Putnam VT High
Yield Fund
December 31, 1998

Putnam VT International
Growth Fund
December 31, 1998

Putnam VT International
Growth and Income Fund
December 31, 1998

Putnam VT International
New Opportunities Fund
December 31, 1998

Putnam VT Money
Market Fund
December 31, 1998

Investment Operations

Net
Net Asset Realized and Total
Value, Net Unrealized from
Period Beginning Investment Gain (Loss) on Investment
ended of Period Income Investments operations

Putnam VT New
Opportunities Fund
December 31, 1998

Putnam VT New Value
Fund
December 31, 1998

Putnam VT U.S. Government
and High Quality Bond Fund
December 31, 1998

Putnam VT Utilities
Growth and Income Fund
December 31, 1998

Putnam VT Vista
Fund
December 31, 1998

Putnam VT Voyager Fund
December 31, 1998

(Continued)

Investment Operations
Less Distributions:
From
From In Excess Net In Excess of
Net of Net Realized Net Realized
Period Investment Investment Gain on Gain on
ended Income Income Investments Investments

Putnam VT New
Opportunities Fund
December 31, 1998

Putnam VT New Value
Fund
December 31, 1998

Putnam VT U.S. Government
and High Quality Bond Fund
December 31, 1998

Putnam VT Utilities
Growth and Income Fund
December 31, 1998

Putnam VT Vista
Fund
December 31, 1998

Putnam VT Voyager Fund
December 31, 1998

(Continued)

Total
Investment
Net Asset Return at
Return of Total Value, End Net Asset
Capital Distributions of Period Value(%)(c)

Putnam VT Asia
Pacific Growth Fund
December 31, 1998

Putnam VT Diversified
Income Fund

Putnam VT Global Asset
Allocation Fund
December 31, 1998

Putnam VT Global Growth
Fund
December 31, 1998

Putnam VT Growth and
Income Fund
December 31, 1998

Putnam High Yield
Fund
December 31, 1998

Putnam VT International
Growth Fund
December 31, 1998

Putnam VT International
Growth and Income Fund
December 31, 1998

Putnam VT International New
Opportunities Fund
December 31, 1998

Putnam VT Money Market Fund
December 31, 1998

Putnam VT New Opportunities Fund
December 31, 1998

Putnam VT New Value Fund
December 31, 1998

(Continued)

Ratio of Net
Ratio of Investment
Net Assets Expenses to Income to
End of Period Average Net Average Net
(in thousands) Assets(%)(d) Assets(%)

Putnam VT Asia
Pacific Growth Fund
December 31, 1998

Putnam VT Diversified
Income Fund

Putnam VT Global Asset
Allocation Fund
December 31, 1998

Putnam VT Global Growth
Fund
December 31, 1998

Putnam VT Growth and
Income Fund
December 31, 1998

Putnam High Yield
Fund
December 31, 1998

Putnam VT International
Growth Fund
December 31, 1998

Putnam VT International
Growth and Income Fund
December 31, 1998

Putnam VT International New
Opportunities Fund
December 31, 1998

Putnam VT Money Market Fund
December 31, 1998

Putnam VT New Opportunities Fund
December 31, 1998

Putnam VT New Value Fund
December 31, 1998

(Continued)

Total
Investment
Net Asset Return at
Return of Total Value, End Net Asset
Capital Distributions of Period Value(%)(c)

Putnam VT U.S. Government and
High Quality Bond Fund
December 31, 1998

Putnam VT Utilities
Growth and Income Fund
December 31, 1998

Putnam Vista Fund
December 31, 1998

Putnam VT Voyager Fund
December 31, 1998

(Continued)

Ratio of Net
Ratio of Investment
Net Assets Expenses to Income to
End of Period Average Net Average Net
(in thousands) Assets(%)(d) Assets(%)

Putnam VT U.S. Government and
High Quality Bond Fund
December 31, 1998

Putnam VT Utilities
Growth and Income Fund
December 31, 1998

Putnam Vista Fund
December 31, 1998

Putnam VT Voyager Fund
December 31, 1998

Average
Portfolio Commission
Turnover (%) Rate Paid(e)

Putnam VT Asia
Pacific Growth Fund
December 31, 1998

Putnam VT Diversified
Income Fund
December 31, 1998

Putnam VT Global Asset
Allocation Fund
December 31, 1998

Putnam VT Global Growth
Fund
December 31, 1998

Putnam VT Growth and
Income Fund
December 31, 1998

Putnam High Yield
Fund
December 31, 1998

Putnam VT International
Growth Fund
December 31, 1998

Putnam VT International
Growth and Income Fund
December 31, 1998

Putnam VT International New
Opportunities Fund
December 31, 1998

Putnam VT Money Market Fund
December 31, 1998
December 31, 1994

Putnam VT New Opportunities Fund
December 31, 1998

Putnam VT New Value Fund
December 31, 1998

Putnam VT U.S. Government and
High Quality Bond Fund
December 31, 1998

Putnam VT Utilities
Growth and Income Fund
December 31, 1998

Putnam Vista Fund
December 31, 1998

Putnam VT Voyager Fund
December 31, 1998

* Not annualized.
** For the period (commencement of operations) to December 31, 1998.
*** For the period (commencement of operations) to December 31, 1998
**** For the period (commencement of operations) to December 31, 1998.

</TABLE>

For more information
about the funds of Putnam Variable Trust

PUTNAM INVESTMENTS

One Post Office Square
Boston, Massachusetts 02109
1-800-752-9894

Address correspondence to
Putnam Investor Services
P. O. Box 989
Boston, Massachusetts 02103

File No. 811-5346

Putnam Mutual Funds Corp.
Member, NASD, Inc.

PUTNAM VARIABLE TRUST
FORM N-1A
PART B

STATEMENT OF ADDITIONAL INFORMATION ("SAI")

April 30, 1999

This SAI is not a prospectus and is only authorized for distribution when
accompanied or preceded by the prospectuses of the Trust dated April 30,
1998, as revised from time to time.

This SAI contains information which may be useful to investors but which
is not included in the prospectus. If the Trust has more than one form of
current prospectus, each reference to the prospectus in this SAI shall
include all of the Trust's prospectuses, unless otherwise noted. The SAI
should be read together with the applicable prospectus. Investors may
obtain a free copy of the applicable prospectus from Putnam Investor
Services, Mailing address: P.O. Box 41203, Providence, RI 02940-1203.

The Report of the Trust's independent accountants and the audited
financial statements of the Trust are incorporated by reference into this
SAI. Investors may receive a copy of the Trust's annual report, which
contain copies of the Trust's financial statements, by contacting Putnam
Investor Services at 1-800-225-1581.

Table of Contents
PUTNAM VARIABLE TRUST
SAI DEFINITIONS

The "Trust" -- Putnam Variable Trust.
"Putnam Management" -- Putnam Investment Management, Inc., the Trust's
investment manager.
"Putnam Mutual Funds" -- Putnam Mutual Funds Corp., the Trust's
principal underwriter.
"Putnam Fiduciary Trust -- Putnam Fiduciary Trust Company,
Company" the Trust's custodian.

"Putnam Investor
Services" -- Putnam Investor Services, a division of
Putnam Fiduciary Trust Company, the Trust's
investor servicing agent.

TRUST ORGANIZATION AND CLASSIFICATION

Putnam Variable Trust is a Massachusetts business trust organized on
September 24, 1987. A copy of the Agreement and Declaration of Trust,
which is governed by Massachusetts law, is on file with the Secretary of
State of The Commonwealth of Massachusetts. Prior to January 1, 1997, the
Trust was known as Putnam Capital Manager Trust. As of the date of this
SAI, Putnam Investments owned more than 25% of the shares of the Putnam VT
Research Fund and Putnam VT Small Cap Value Fund and therefore may be
deemed to "control" these funds.

The Trust is an open-end management investment company with an unlimited
number of authorized shares of beneficial interest. Shares of the Trust
may, without shareholder approval, be divided into two or more series of
shares representing separate investment portfolios, and are currently
divided into twenty-two series of shares, each representing a separate
investment portfolio which is being offered to separate accounts of
various insurance companies. Each portfolio is a diversified investment
company, except for Putnam VT Health Sciences Fund and Putnam VT Utilities
Growth and Income Fund, each of which is a non-diversified investment
companies.

Prior to January 1, 1997, Putnam VT Asia Pacific Growth Fund was known as
PCM Asia Pacific Growth Fund, Putnam VT Diversified Income Fund was known
as PCM Diversified Income Fund, Putnam VT Global Asset Allocation Fund was
known as PCM Global Asset Allocation Fund, Putnam VT Global Growth Fund
was known as PCM Global Growth Fund, Putnam VT Growth and Income Fund was
known as PCM Growth and Income Fund, Putnam VT High Yield Fund was known
as PCM High Yield Fund, Putnam VT Money Market Fund was known as PCM Money
Market Fund, Putnam VT New Opportunities Fund was known as PCM New
Opportunities Fund, Putnam VT U.S. Government and High Quality Bond Fund
was known as PCM U.S. Government and High Quality Bond Fund, Putnam VT
Utilities Growth and Income Fund was known as PCM Utilities Growth and
Income Fund, and Putnam VT Voyager Fund was known as PCM Voyager Fund.

Any series of shares of the Trust may be further divided without
shareholder approval into two or more classes of shares having such
preferences and special or relative rights and privileges as the Trustees
may determine. Shares of each series are currently divided into two
classes: class IA shares and class IB shares. Class IB shares are subject
to fees imposed pursuant to a distribution plan. The funds may also offer
other classes of shares with different sales charges and expenses. Because
of these different sales charges and expenses, the investment performance
of the classes will vary.

The two classes of shares are offered under a multiple class distribution
system approved by the Trust's Trustees, and are designed to allow
promotion of insurance products investing in the Trust through alternative
distribution channels. The insurance company issuing a variable contract
selects the class of shares in which the separate account funding the
contract invests.

Each share has one vote, with fractional shares voting proportionately.
Shares vote as a single class without regard to series or classes of
shares except (i) when required by the 1940 Act, or when the Trustees have
determined that the matter affects one or more series or classes of shares
materially differently, shares shall be voted by individual series or
class, and (ii) when the Trustees have determined that the matter affects
only the interests of one or more series or classes, only the shareholders
of such series or class shall be entitled to vote. Shares are freely
transferable, are entitled to dividends as declared by the Trustees, and,
if the portfolio were liquidated, would receive the net assets of the
portfolio. The Trust may suspend the sale of shares of any portfolio at
any time and may refuse any order to purchase shares. Although the Trust
is not required to hold annual meetings of its shareholders, shareholders
holding at least 10% of the outstanding sha!res entitled to vote have the
right to call a meeting to elect or remove Trustees, or to take other
actions as provided in the Agreement and Declaration of Trust.

Shares of the funds may only be purchased by an insurance company separate
account. For matters requiring shareholder approval, you may be able to
instruct the insurance company separate account how to vote the fund
shares attributable to your contract or policy. See the Voting Rights
section of your insurance product prospectus.

SECURITIES RATINGS

The following rating services describe rated securities as follows:

Moody's Investors Service, Inc.

Bonds

Aaa -- Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edged." Interest payments are protected by a large or
by an exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.

Aa -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there
may be other elements present which make the long-term risk appear
somewhat larger than the Aaa securities.

A -- Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in
the future.

Baa -- Bonds which are rated Baa are considered as medium grade
obligations, (i.e., they are neither highly protected nor poorly secured).
Interest payments and principal security appear adequate for the present
but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds
lack outstanding investment characteristics and in fact have speculative
characteristics as well.

Ba -- Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate, and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.

B -- Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.

Caa -- Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to
principal or interest.

Ca -- Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.

C -- Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.

Notes (for Money Market funds only)

MIG 1/VMIG 1 -- This designation denotes best quality. There is present
strong protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.

MIG 2/VMIG 2 -- This designation denotes high quality. Margins of
protection are ample although not so large as in the preceding group.

Commercial paper (for Money Market funds only)

Issuers rated Prime-1 (or supporting institutions) have a superior ability
for repayment of senior short-term debt obligations. Prime-1 repayment
ability will often be evidenced by the following characteristics:

- -- Leading market positions in well established industries.
- -- High rates of return on funds employed.
- -- Conservative capitalization structure with moderate reliance on debt and
ample asset protection.
- -- Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
- -- Well established access to a range of financial markets and assured
sources of alternate liquidity.

Issuers rated Prime-2 (or supporting institutions) have a strong ability
for repayment of senior short-term debt obligations. This will normally be
evidenced by many of the characteristics cited above to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternate liquidity is
maintained.

Standard & Poor's

Bonds

AAA -- An obligation rated AAA has the highest rating assigned by Standard
& Poor's. The obligor's capacity to meet its financial commitment on the
obligation is extremely strong.

AA -- An obligation rated AA differs from the highest-rated obligations
only in small degree. The obligor's capacity to meet its financial
commitment on the obligation is very strong.

A -- An obligation rated A is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
obligations in higher-rated categories. However, the obligor's capacity to
meet its financial commitment on the obligation is still strong.

BBB -- An obligation rated BBB exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity of the obligor to meet its financial
commitment on the obligation.

Obligations rated BB, B, CCC, CC and C are regarded as having significant
speculative characteristics. BB indicates the lowest degree of speculation
and C the highest. While such obligations will likely have some quality
and protective characteristics, these are outweighed by large
uncertainties or major exposures to adverse conditions.

BB -- An obligation rated BB is less vulnerable to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which
could lead to the obligor's inadequate capacity to meet its financial
commitment on the obligation.

B -- An obligation rated B is more vulnerable to nonpayment than
obligations rated BB, but the obligor currently has the capacity to meet
its financial commitment on the obligations. Adverse business, financial,
or economic conditions will likely impair the obligor's capacity or
willingness to meet its financial commitment on the obligation.

CCC -- An obligation rated CCC is currently vulnerable to nonpayment, and
is dependent upon favorable business, financial, and economic conditions
for the obligor to meet its financial commitment on the obligation. In the
event of adverse business, financial, or economic conditions, the obligor
is not likely to have the capacity to meet its financial commitment on the
obligation.

CC -- An obligation rated CC is currently highly vulnerable to nonpayment.

C -- The C rating may be used to cover a situation where a bankruptcy
petition has been filed, or similar action has been taken, but payments on
this obligation are being continued.

D -- An obligation rated D is in payment default. The D rating category is
used when interest payments or principal payments are not made on the date
due even if the applicable grace period has not expired, unless Standard &
Poor's believes that such payments will be made during such grace period.
The D rating also will be used upon the filing of a bankruptcy petition,
or the taking of a similar action if payments on an obligation are
jeopardized.

Notes (for Money Market funds only)

SP-1 -- Strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics are given a plus
(+) designation.

SP-2 -- Satisfactory capacity to pay principal and interest.

SP-3 -- Speculative capacity to pay principal and interest.

Commercial paper (for Money Market funds only)

A-1 -- This highest category indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely
strong safety characteristics are denoted with a plus sign (+)
designation.

A-2 -- Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated `A-1'.

A-3 -- Issues carrying this designation have adequate capacity for timely
payment. They are, however, more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher
designations.

Duff & Phelps Corporation

Long-Term Debt

AAA -- Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.

AA+, AA, AA- -- High credit quality. Protection factors are strong. Risk
is modest but may vary slightly from time to time because of economic
conditions.

A+, A, A- -- Protection factors are average but adequate. However, risk
factors are more variable and greater in periods of economic stress.

BBB+, BBB, BBB- -- Below-average protection factors but still considered
sufficient for prudent investment. Considerable variability in risk during
economic cycles.

BB+, BB, BB- -- Below investment grade but deemed likely to meet
obligations when due. Present or prospective financial protection factors
fluctuate according to industry conditions or company fortunes. Overall
quality may move up or down frequently within this category.

B+, B, B- -- Below investment grade and possessing risk that obligations
will not be met when due. Financial protection factors will fluctuate
widely according to economic cycles, industry conditions and/or company
fortunes. Potential exists for frequent changes in the rating within this
category or into a higher or lower rating grade.

CCC -- Well below investment-grade securities. Considerable uncertainty
exists as to timely payment of principal, interest or preferred dividends.
Protection factors are narrow and risk can be substantial with unfavorable
economic/industry conditions, and/or with unfavorable company
developments.

DD -- Defaulted debt obligations. Issuer failed to meet scheduled
principal and/or interest payments.

Fitch Investors Service, Inc.

AAA -- Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest
and repay principal, which is unlikely to be affected by reasonably
foreseeable events.

AA -- Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated AAA.

A -- Bonds considered to be investment grade and of high credit quality.
The obligor's ability to pay interest and repay principal is considered to
be strong, but may be more vulnerable to adverse changes in economic
conditions and circumstances than bonds with higher ratings.

BBB -- Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these
bonds, and therefore impair timely payment. The likelihood that the
ratings of these bonds will fall below investment grade is higher than for
bonds with higher ratings.

BB -- Bonds considered to be speculative. The obligor's ability to pay
interest and repay principal may be affected over time by adverse economic
changes. However, business and financial alternatives can be identified
which could assist the obligor in satisfying its debt service
requirements.

B -- Bonds are considered highly speculative. Bonds in this class are
lightly protected as to the obligor's ability to pay interest over the
life of the issue and repay principal when due.

CCC -- Bonds have certain characteristics which, with passing of time,
could lead to the possibility of default on either principal or interest
payments.

CC -- Bonds are minimally protected. Default in payment of
interest and/or principal seems probable.

C -- Bonds are in actual or imminent default in payment of interest or
principal.

DDD -- Bonds are in default and in arrears in interest and/or principal
payments. Such bonds are extremely speculative and should be valued only
on the basis of their value in liquidation or reorganization of the
obligor.

INVESTMENT OBJECTIVES AND POLICIES

The Trust consists of twenty-two separate investment portfolios (the
"funds") with differing investment objectives and policies: Putnam VT Asia
Pacific Growth Fund, Putnam VT Diversified Income Fund, Putnam VT The
George Putnam Fund of Boston, Putnam VT Global Asset Allocation Fund,
Putnam VT Global Growth Fund, Putnam VT Growth and Income Fund, Putnam VT
Health Sciences Fund, Putnam VT High Yield Fund, Putnam VT International
Growth Fund, Putnam VT International Growth and Income Fund, Putnam VT
International New Opportunities Fund, Putnam VT Investors Fund, Putnam VT
Money Market Fund, Putnam VT New Opportunities Fund, Putnam VT New Value
Fund, Putnam VT OTC & Emerging Growth Fund, Putnam VT Research Fund,
Putnam VT Small Cap Value Fund, Putnam VT U.S. Government and High Quality
Bond Fund, Putnam VT Utilities Growth and Income Fund, Putnam VT Vista
Fund and Putnam VT Voyager Fund. The investment objectives and policies
!of the funds are described in the prospectus offering such funds. This
SAI contains, among other things, the investment restrictions of the
funds. It also contains information concerning certain investment
practices in which some or all of the funds may engage. The prospectus
indicats which practices are applicable to each fund which it offers.

Except as described below under "Investment Restrictions of the Trust,"
the investment policies described in the prospectus and in this SAI are
not fundamental, and the Trustees may change such policies without
shareholder approval. As a matter of policy, the Trustees would not
materially change the funds' investment objectives without shareholder
approval.

Short-term Trading

In seeking a fund's objective or objectives, Putnam Management will buy or
sell portfolio securities whenever Putnam Management believes it
appropriate to do so. In deciding whether to sell a portfolio security,
Putnam Management does not consider how long the fund has owned the
security. From time to time the fund will buy securities intending to seek
short-term trading profits. A change in the securities held by the fund is
known as "portfolio turnover" and generally involves some expense to the
fund. This expense may include brokerage commissions or dealer markups and
other transaction costs on both the sale of securities and the
reinvestment of the proceeds in other securities.^ As a result of a fund's
investment policies, under certain market conditions the fund's portfolio
turnover rate may be higher than that of other mutual funds. Portfolio
turnover rate for a fiscal year is the ratio of the lesser of purchases or
sales of! portfolio securities to the monthly average of the value of
portfolio securities - excluding securities whose maturities at
acquisition were one year or less. A fund's portfolio turnover rate is not
a limiting factor when Putnam Management considers a change in a fund's
portfolio.

Convertible Securities. Convertible securities include bonds, debentures,
notes, preferred stocks and other securities that may be converted into or
exchanged for, at a specific price or formula within a particular period
of time, a prescribed amount of common stock or other equity securities of
the same or a different issuer. Convertible securities entitle the holder
to receive interest paid or accrued on debt or dividends paid or accrued
on preferred stock until the security matures or is redeemed, converted or
exchanged.

The market value of a convertible security is a function of its
"investment value" and its "conversion value." A security's "investment
value" represents the value of the security without its conversion feature
(i.e., a nonconvertible fixed income security). The investment value may
be determined by reference to its credit quality and the current value of
its yield to maturity or probable call date. At any given time, investment
value is dependent upon such factors as the general level of interest
rates, the yield of similar nonconvertible securities, the financial
strength of the issuer and the seniority of the security in the issuer's
capital structure. A security's "conversion value" is determined by
multiplying the number of shares the holder is entitled to receive upon
conversion or exchange by the current price of the underlying security.

If the conversion value of a convertible security is significantly below
its investment value, the convertible security will trade like
nonconvertible debt or preferred stock and its market value will not be
influenced greatly by fluctuations in the market price of the underlying
security. Conversely, if the conversion value of a convertible security is
near or above its investment value, the market value of the convertible
security will be more heavily influenced by fluctuations in the market
price of the underlying security.

The fund's investments in convertible securities may at times include
securities that have a mandatory conversion feature, pursuant to which the
securities convert automatically into common stock or other equity
securities at a specified date and a specified conversion ratio, or that
are convertible at the option of the issuer. Because conversion of the
security is not at the option of the holder, the fund may be required to
convert the security into the underlying common stock even at times when
the value of the underlying common stock or other equity security has
declined substantially.

The fund's investments in convertible securities, particularly securities
that are convertible into securities of an issuer other than the issuer of
the convertible security, may be illiquid. The fund may not be able to
dispose of such securities in a timely fashion or for a fair price, which
could result in losses to the fund.

Lower-rated Securities

A fund may invest in lower-rated fixed-income securities (commonly known
as "junk bonds") to the extent described in the prospectus. The lower
ratings of certain securities held by a fund reflect a greater possibility
that adverse changes in the financial condition of the issuer or in
general economic conditions, or both, or an unanticipated rise in interest
rates, may impair the ability of the issuer to make payments of interest
and principal. The inability (or perceived inability) of issuers to make
timely payment of interest and principal would likely make the values of
securities held by a fund more volatile and could limit a fund's ability
to sell its securities at prices approximating the values the fund had
placed on such securities. In the absence of a liquid trading market for
securities held by it, a fund at times may be unable to establish the fair
value of such securities.

Securities ratings are based largely on the issuer's historical financial
condition and the rating agencies' analysis at the time of rating.
Consequently, the rating assigned to any particular security is not
necessarily a reflection of the issuer's current financial condition,
which may be better or worse than the rating would indicate. In addition,
the rating assigned to a security by Moody's Investors Service, Inc. or
Standard & Poor's (or by any other nationally recognized securities rating
organization) does not reflect an assessment of the volatility of the
security's market value or the liquidity of an investment in the security.
See the prospectus for a description of security ratings.

Like those of other fixed-income securities, the values of lower-rated
securities fluctuate in response to changes in interest rates. A decrease
in interest rates will generally result in an increase in the value of a
fund's assets. Conversely, during periods of rising interest rates, the
value of a fund's assets will generally decline. The values of lower-rated
securities may often be affected to a greater extent by changes in general
economic conditions and business conditions affecting the issuers of such
securities and their industries. Negative publicity or investor
perceptions may also adversely affect the values of lower-rated
securities. Changes by recognized rating services in their ratings of any
fixed-income security and changes in the ability of an issuer to make
payments of interest and principal may also affect the value of these
investments. Changes in the value of portfolio securities generally will
not affect income derived from these securities, but w!ill affect a fund's
net asset value. A fund will not necessarily dispose of a security when
its rating is reduced below its rating at the time of purchase. However,
Putnam Management will monitor the investment to determine whether its
retention will assist in meeting a fund's investment objective or
objectives.

Issuers of lower-rated securities are often highly leveraged, so that
their ability to service their debt obligations during an economic
downturn or during sustained periods of rising interest rates may be
impaired. Such issuers may not have more traditional methods of financing
available to them and may be unable to repay outstanding obligations at
maturity by refinancing. The risk of loss due to default in payment of
interest or repayment of principal by such issuers is significantly
greater because such securities frequently are unsecured and subordinated
to the prior payment of senior indebtedness.

At times, a substantial portion of a fund's assets may be invested in
securities of which the fund, by itself or together with other funds and
accounts managed by Putnam Management or its affiliates, holds all or a
major portion. Although Putnam Management generally considers such
securities to be liquid because of the availability of an institutional
market for such securities, it is possible that, under adverse market or
economic conditions or in the event of adverse changes in the financial
condition of the issuer, a fund could find it more difficult to sell these
securities when Putnam Management believes it advisable to do so or may be
able to sell the securities only at prices lower than if they were more
widely held. Under these circumstances, it may also be more difficult to
determine the fair value of such securities for purposes of computing a
fund's net asset value. In order to enforce its rights in the event of a
default under such securities, a fund may be re!quired to participate in
various legal proceedings or take possession of and manage assets securing
the issuer's obligations on such securities. This could increase the
fund's operating expenses and adversely affect the fund's net asset value.
In addition, each fund's intention to qualify as a "regulated investment
company" under the Internal Revenue Code may limit the extent to which a
fund may exercise its rights by taking possession of such assets.

Certain securities held by a fund may permit the issuer at its option to
"call," or redeem, its securities. If an issuer were to redeem securities
held by a fund during a time of declining interest rates, the fund may not
be able to reinvest the proceeds in securities providing the same
investment return as the securities redeemed.

A fund may at times invest without limit in so-called "zero-coupon" bonds
and "payment-in-kind" bonds identified in the prospectus, unless otherwise
specified in the prospectus. Zero-coupon bonds are issued at a significant
discount from their principal amount in lieu of paying interest
periodically. Payment-in-kind bonds allow the issuer, at its option, to
make current interest payments on the bonds either in cash or in
additional bonds. Because zero-coupon bonds and payment-in-kind bonds do
not pay current interest in cash, their values are subject to greater
fluctuation in response to changes in market interest rates than bonds
that pay interest currently in cash. Both zero-coupon and payment-in-kind
bonds allow an issuer to avoid the need to generate cash to meet current
interest payments. Accordingly, such bonds may involve greater credit
risks than bonds paying interest currently in cash. A fund is nonetheless
required to accrue interest income on such investment!s and to distribute
such amounts at least annually to shareholders, even though such bonds do
not pay current interest in cash. Thus, it may be necessary at times for a
fund to liquidate other investments in order to satisfy its dividend
requirements.

To the extent the fund invests in securities in the lower rating
categories, the achievement of the fund's goals is more dependent on
Putnam Management's investment analysis than would be the case if the fund
were investing in securities in the higher rating categories.

Investments in Premium Securities

Unless otherwise specified in the prospectus or elsewhere in this SAI, if
a fund may invest in premium securities, it may do so without limit.

Investments in Miscellaneous Fixed-Income Securities

Unless otherwise specified in the prospectus or elsewhere in this SAI, if
a fund may invest in inverse floating obligations, premium securities, or
interest-only or principal-only classes of mortgage-backed securities (IOs
and POs), it may do so without limit. None of the funds, however,
currently intends to invest more than 15% of its assets in inverse
floating obligations or more than 35% of its assets in IOs and POs under
normal market conditions.

Private Placements

Each fund may invest in securities that are purchased in private
placements and, accordingly, are subject to restrictions on resale as a
matter of contract or under federal securities laws. Because there may be
relatively few potential purchasers for such investments, especially under
adverse market or economic conditions or in the event of adverse changes
in the financial condition of the issuer, a fund could find it more
difficult to sell such securities when Putnam Management believes it
advisable to do so or may be able to sell such securities only at prices
lower than if such securities were more widely held. At times, it may also
be more difficult to determine the fair value of such securities for
purposes of computing the fund's net asset value.

While such private placements may often offer attractive opportunities for
investment not otherwise available on the open market, the securities so
purchased are often "restricted securities," i.e., securities which cannot
be sold to the public without registration under the Securities Act of
1933 or the availability of an exemption from registration (such as Rules
144 or 144A), or which are "not readily marketable" because they are
subject to other legal or contractual delays in or restrictions on resale.

The absence of a trading market can make it difficult to ascertain a
market value for illiquid investments. Disposing of illiquid investments
may involve time-consuming negotiation and legal expenses, and it may be
difficult or impossible for the fund to sell them promptly at an
acceptable price. The fund may have to bear the extra expense of
registering such securities for resale and the risk of substantial delay
in effecting such registration. Also market quotations are less readily
available. The judgment of Putnam Management may at times play a greater
role in valuing these securities than in the case of unrestricted
securities.

Generally speaking, restricted securities may be sold only to qualified
institutional buyers, or in a privately negotiated transaction to a
limited number of purchasers, or in limited quantities after they have
been held for a specified period of time and other conditions are met
pursuant to an exemption from registration, or in a public offering for
which a registration statement is in effect under the Securities Act of
1933. A fund may be deemed to be an "underwriter" for purposes of the
Securities Act of 1933 when selling restricted securities to the public,
and in such event the fund may be liable to purchasers of such securities
if the registration statement prepared by the issuer, or the prospectus
forming a part of it, is materially inaccurate or misleading.

Loan Participations

A fund may invest in "loan participations." By purchasing a loan
participation, a fund acquires some or all of the interest of a bank or
other lending institution in a loan to a particular borrower. Many such
loans are secured, and most impose restrictive covenants which must be met
by the borrower.

The loans in which a fund may invest are typically made by a syndicate of
banks, represented by an agent bank which has negotiated and structured
the loan and which is responsible generally for collecting interest,
principal, and other amounts from the borrower on its own behalf and on
behalf of the other lending institutions in the syndicate and for
enforcing its and their other rights against the borrower. Each of the
lending institutions, including the agent bank, lends to the borrower a
portion of the total amount of the loan, and retains the corresponding
interest in the loan.

A fund's ability to receive payments of principal and interest and other
amounts in connection with loan participations held by it will depend
primarily on the financial condition of the borrower. The failure by a
fund to receive scheduled interest or principal payments on a loan
participation would adversely affect the income of the fund and would
likely reduce the value of its assets, which would be reflected in a
reduction in a fund's net asset value. Banks and other lending
institutions generally perform a credit analysis of the borrower before
originating a loan or participating in a lending syndicate. In selecting
the loan participations in which a fund will invest, however, Putnam
Management will not rely solely on that credit analysis, but will perform
its own investment analysis of the borrowers. Putnam Management's analysis
may include consideration of the borrower's financial strength and
managerial experience, debt coverage, additional borrowing requirements
!or debt maturity schedules, changing financial conditions, and
responsiveness to changes in business conditions and interest rates.
Because loan participations in which a fund may invest are not generally
rated by independent credit rating agencies, a decision by a fund to
invest in a particular loan participation will depend almost exclusively
on Putnam Management's and the original lending institutions credit
analysis of the borrower.

Loan participations may be structured in different forms, including
novations, assignments, and participating interests. In a novation, a fund
assumes all of the rights of a lending institution in a loan, including
the right to receive payments of principal and interest and other amounts
directly from the borrower and to enforce its rights as a lender directly
against the borrower. A fund assumes the position of a co-lender with
other syndicate members. As an alternative, a fund may purchase an
assignment of a portion of a lender's interest in a loan. In this case, a
fund may be required generally to rely upon the assigning bank to demand
payment and enforce its rights against the borrower, but would otherwise
be entitled to all of such bank's rights in the loan. A fund may also
purchase a participating interest in a portion of the rights of a lending
institution in a loan. In such case, it will be entitled to receive
payments of principal, interest, and premium, if an!y, but will not
generally be entitled to enforce its rights directly against the agent
bank or the borrower, but must rely for that purpose on the lending
institution. A fund may also acquire a loan participation directly by
acting as a member of the original lending syndicate.

A fund will in many cases be required to rely upon the lending institution
from which it purchases the loan participation to collect and pass on to a
fund such payments and to enforce a fund's rights under the loan. As a
result, an insolvency, bankruptcy, or reorganization of the lending
institution may delay or prevent a fund from receiving principal,
interest, and other amounts with respect to the underlying loan. When a
fund is required to rely upon a lending institution to pay to the fund
principal, interest, and other amounts received by it, Putnam Management
will also evaluate the creditworthiness of the lending institution.

The borrower of a loan in which a fund holds a participation interest may,
either at its own election or pursuant to terms of the loan documentation,
prepay amounts of the loan from time to time. There is no assurance that a
fund will be able to reinvest the proceeds of any loan prepayment at the
same interest rate or on the same terms as those of the original loan
participation.

Corporate loans in which a fund may purchase a loan participation are made
generally to finance internal growth, mergers, acquisitions, stock
repurchases, leveraged buy-outs, and other corporate activities. Under
current market conditions, most of the corporate loan participations
purchased by a fund will represent interests in loans made to finance
highly leveraged corporate acquisitions, known as "leveraged buy-out"
transactions. The highly leveraged capital structure of the borrowers in
such transactions may make such loans especially vulnerable to adverse
changes in economic or market conditions. In addition, loan participations
generally are subject to restrictions on transfer, and only limited
opportunities may exist to sell such participations in secondary markets.
As a result, a fund may be unable to sell loan participations at a time
when it may otherwise be desirable to do so or may be able to sell them
only at a price that is less than their fair market value.!

Certain of the loan participations acquired by a fund may involve
revolving credit facilities under which a borrower may from time to time
borrow and repay amounts up to the maximum amount of the facility. In such
cases, a fund would have an obligation to advance its portion of such
additional borrowings upon the terms specified in the loan participation.
To the extent that a fund is committed to make additional loans under such
a participation, it will at all times hold and maintain in a segregated
account liquid assets in an amount sufficient to meet such commitments.
Certain of the loan participations acquired by a fund may also involve
loans made in foreign currencies. A fund's investment in such
participations would involve the risks of currency fluctuations described
above with respect to investments in the foreign securities.

Floating Rate and Variable Rate Demand Notes

Certain funds may purchase floating rate and variable rate demand notes
and bonds. These securities may have a stated maturity in excess of one
year, but permit a holder to demand payment of principal plus accrued
interest upon a specified number of days notice. Frequently, such
obligations are secured by letters of credit or other credit support
arrangements provided by banks. The issuer has a corresponding right,
after a given period, to prepay in its discretion the outstanding
principal of the obligation plus accrued interest upon a specific number
of days notice to the holders. The interest rate of a floating rate
instrument may be based on a known lending rate, such as a bank's prime
rate, and is reset whenever such rate is adjusted. The interest rate on a
variable rate demand note is reset at specified intervals at a market
rate.

Mortgage-Backed and Asset-Backed Securities

To the extent described in the prospectus, each fund may invest in
mortgage-backed securities, including collateralized mortgage obligations
("CMOs") and certain stripped mortgage-backed securities. CMOs and other
mortgage-backed securities represent a participation in, or are secured
by, mortgage loans.

Mortgage-backed securities have yield and maturity characteristics
corresponding to the underlying assets. Unlike traditional debt
securities, which may pay a fixed rate of interest until maturity, when
the entire principal amount comes due, payments on certain mortgage-backed
securities include both interest and a partial repayment of principal.
Besides the scheduled repayment of principal, repayments of principal may
result from the voluntary prepayment, refinancing, or foreclosure of the
underlying mortgage loans. If property owners make unscheduled prepayments
of their mortgage loans, these prepayments will result in early payment of
the applicable mortgage-related securities. In that event a fund may be
unable to invest the proceeds from the early payment of the
mortgage-related securities in an investment that provides as high a yield
as the mortgage-related securities. Consequently, early payment associated
with mortgage-related securities may cause these securit!ies to experience
significantly greater price and yield volatility than that experienced by
traditional fixed-income securities. The occurrence of mortgage
prepayments is affected by factors including the level of interest rates,
general economic conditions, the location and age of the mortgage and
other social and demographic conditions. During periods of falling
interest rates, the rate of mortgage prepayments tends to increase,
thereby tending to decrease the life of mortgage-related securities.
During periods of rising interest rates, the rate of mortgage prepayments
usually decreases, thereby tending to increase the life of
mortgage-related securities. If the life of a mortgage-related security is
inaccurately predicted, a fund may not be able to realize the rate of
return it expected.

Mortgage-backed securities are less effective than other types of
securities as a means of "locking in" attractive long-term interest rates.
One reason is the need to reinvest prepayments of principal; another is
the possibility of significant unscheduled prepayments resulting from
declines in interest rates. These prepayments would have to be reinvested
at lower rates. As a result, these securities may have less potential for
capital appreciation during periods of declining interest rates than other
securities of comparable maturities, although they may have a similar risk
of decline in market value during periods of rising interest rates.
Prepayments may also significantly shorten the effective maturities of
these securities, especially during periods of declining interest rates.
Conversely, during periods of rising interest rates, a reduction in
prepayments may increase the effective maturities of these securities,
subjecting them to a greater risk of decline in mark!et value in response
to rising interest rates than traditional debt securities, and, therefore,
potentially increasing the volatility of a fund.

Prepayments may cause losses on securities purchased at a premium. At
times, some of the mortgage-backed securities in which a fund may invest
will have higher than market interest rates and therefore will be
purchased at a premium above their par value. Unscheduled prepayments,
which are made at par, will cause the fund to experience a loss equal to
any unamortized premium.

CMOs may be issued by a U.S. government agency or instrumentality or by a
private issuer. Although payment of the principal of, and interest on, the
underlying collateral securing privately issued CMOs may be guaranteed by
the U.S. government or its agencies or instrumentalities, these CMOs
represent obligations solely of the private issuer and are not insured or
guaranteed by the U.S. government, its agencies or instrumentalities or
any other person or entity.

Prepayments could cause early retirement of CMOs. CMOs are designed to
allocate the risk of prepayment among investors by issuing multiple
classes of securities, each having different maturities, interest rates
and payment schedules, and with the principal and interest on the
underlying mortgages allocated among the several classes in various ways.
Payment of interest or principal on some classes or series of CMOs may be
subject to contingencies or some classes or series may bear some or all of
the risk of default on the underlying mortgages. CMOS of different classes
or series are generally retired in sequence as the underlying mortgage
loans in the mortgage pool are repaid. If enough mortgages are repaid
ahead of schedule, the classes or series of a CMO with the earliest
maturities generally will be retired prior to their maturities. Thus, the
early retirement of particular classes or series of a CMO held by a fund
would have the same effect as the prepayment of mortg!ages underlying
other mortgage-backed securities. Conversely, slower than anticipated
prepayments can extend the effective maturities of CMOs, subjecting them
to a greater risk of decline in market value in response to rising
interest rates than traditional debt securities, and, therefore,
potentially increasing the volatility of the fund.

Prepayments could result in losses on stripped mortgage-backed securities.
Stripped mortgage-backed securities are usually structured with two
classes that receive different portions of the interest and principal
distributions on a pool of mortgage loans. A fund may invest in both the
interest-only or "IO" class and the principal-only or "PO" class. The
yield to maturity on an IO class of stripped mortgage-backed securities is
extremely sensitive not only to changes in prevailing interest rates but
also to the rate of principal payments (including prepayments) on the
underlying assets. A rapid rate of principal prepayments may have a
measurable adverse effect on the fund's yield to maturity to the extent it
invests in IOs. If the assets underlying the IO experience greater than
anticipated prepayments of principal, the fund may fail to recoup fully
its initial investment in these securities. Conversely, POs tend to
increase in value if prepayments are greater than antic!ipated and decline
if prepayments are slower than anticipated.

The secondary market for stripped mortgage-backed securities may be more
volatile and less liquid than that for other mortgage-backed securities,
potentially limiting a fund's ability to buy or sell those securities at
any particular time.

Structured notes

Each fund may invest in so-called structured notes. These securities are
generally derivative instruments whose value is tied to an underlying
index or other security or asset class. Such structured notes may include,
for example, notes that allow a fund to invest indirectly in certain
foreign investments which the fund would otherwise would not be able to
directly invest, often because of restrictions imposed by local laws.

Securities Loans

Each fund may make secured loans of its portfolio securities, on either a
short-term or long-term basis, amounting to not more than 25% of its total
assets, thereby realizing additional income. The risks in lending
portfolio securities, as with other extensions of credit, consist of
possible delay in recovery of the securities or possible loss of rights in
the collateral should the borrower fail financially. As a matter of
policy, securities loans are made to broker-dealers pursuant to agreements
requiring that the loans be continuously secured by collateral consisting
of cash or short-term debt obligations at least equal at all times to the
value of the securities on loan, "marked-to-market" daily. The borrower
pays to the fund an amount equal to any dividends or interest received on
securities lent. The fund retains all or a portion of the interest
received on investment of the cash collateral or receives a fee from the
borrower. Although voting rights, or rights to c!onsent, with respect to
the loaned securities may pass to the borrower, the fund retains the right
to call the loans at any time on reasonable notice, and it will do so to
enable the fund to exercise voting rights on any matters materially
affecting the investment. The fund may also call such loans in order to
sell the securities.

Forward Commitments

Each fund may enter into contracts to purchase securities for a fixed
price at a future date beyond customary settlement time ("forward
commitments") if the fund sets aside, on the books and records of its
custodian, liquid assets in an amount sufficient to meet the purchase
price, or if the fund enters into offsetting contracts for the forward
sale of other securities it owns. In the case of to-be-announced ("TBA")
purchase commitments, the unit price and the estimated principal amount
are established when the fund enters into a contract, with the actual
principal amount being within a specified range of the estimate. Forward
commitments may be considered securities in themselves, and involve a risk
of loss if the value of the security to be purchased declines prior to the
settlement date, which risk is in addition to the risk of decline in the
value of the fund's other assets. Where such purchases are made through
dealers, the fund relies on the dealer to consummate the! sale. The
dealer's failure to do so may result in the loss to the fund of an
advantageous yield or price. Although a fund will generally enter into
forward commitments with the intention of acquiring securities for its
portfolio or for delivery pursuant to options contracts it has entered
into, a fund may dispose of a commitment prior to settlement if Putnam
Management deems it appropriate to do so. A fund may realize short-term
profits or losses upon the sale of forward commitments.

A fund may enter into TBA sale commitments to hedge its portfolio
positions or to sell securities it owns under delayed delivery
arrangements. Proceeds of TBA sale commitments are not received until the
contractual settlement date. During the time a TBA sale commitment is
outstanding, equivalent deliverable securities, or an offsetting TBA
purchase commitment deliverable on or before the sale commitment date, are
held as "cover" for the transaction. Unsettled TBA sale commitments are
valued at the current market value of the underlying securities. If the
TBA sale commitment is closed through the acquisition of an offsetting
purchase commitment, that fund realizes a gain or loss on the commitment
without regard to any unrealized gain or loss on the underlying security.
If a fund delivers securities under the commitment, the fund realizes a
gain or loss from the sale of the securities based upon the unit price
established at the date the commitment was entered into.

Repurchase Agreements

Each fund may enter into repurchase agreements up to the limit specified
in the prospectus. A repurchase agreement is a contract under which a fund
acquires a security for a relatively short period (usually not more than
one week) subject to the obligation of the seller to repurchase and the
fund to resell such security at a fixed time and price (representing the
fund's cost plus interest). It is the Trust's present intention to enter
into repurchase agreements only with commercial banks and registered
broker-dealers approved by the Trustees and only with respect to
obligations of the U.S. government or its agencies or instrumentalities.
Repurchase agreements may also be viewed as loans made by a fund which are
collateralized by the securities subject to repurchase. Putnam Management
will monitor such transactions to ensure that the value of the underlying
securities will be at least equal at all times to the total amount of the
repurchase obligation, including the inter!est factor. If the seller
defaults, a fund could realize a loss on the sale of the underlying
security to the extent that the proceeds of sale including accrued
interest are less than the resale price provided in the agreement
including interest. In addition, if the seller should be involved in
bankruptcy or insolvency proceedings, a fund may incur delay and costs in
selling the underlying security or may suffer a loss of principal and
interest if the fund is treated as an unsecured creditor and required to
return the underlying collateral to the seller's estate.

Pursuant to an exemptive order issued by the Securities and Exchange
Commission, the fund may transfer uninvested cash balances into a joint
account, along with cash of other Putnam funds and certain other accounts.
These balances may be invested in one or more repurchase agreements and/or
short-term money market instruments.

Options on Securities

Writing covered options. Each fund may write covered call options and
covered put options on optionable securities held in its portfolio, when
in the opinion of Putnam Management such transactions are consistent with
a fund's investment objective(s) and policies. Call options written by a
fund give the purchaser the right to buy the underlying securities from
the fund at a stated exercise price; put options give the purchaser the
right to sell the underlying securities to the fund at a stated price.

Each fund may write only covered options, which means that, so long as a
fund is obligated as the writer of a call option, it will own the
underlying securities subject to the option (or comparable securities
satisfying the cover requirements of securities exchanges). In the case of
put options, the fund will hold cash and/or high-grade short-term debt
obligations equal to the price to be paid if the option is exercised. In
addition, the fund will be considered to have covered a put or call option
if and to the extent that it holds an option that offsets some or all of
the risk of the option it has written. Each fund may write combinations of
covered puts and calls on the same underlying security.

A fund will receive a premium from writing a put or call option, which
increases the fund's return on the underlying security in the event the
option expires unexercised or is closed out at a profit. The amount of the
premium reflects, among other things, the relationship between the
exercise price and the current market value of the underlying security,
the volatility of the underlying security, the amount of time remaining
until expiration, current interest rates, and the effect of supply and
demand in the options market and in the market for the underlying
security. By writing a call option, the fund limits its opportunity to
profit from any increase in the market value of the underlying security
above the exercise price of the option but continues to bear the risk of a
decline in the value of the underlying security. By writing a put option,
the fund assumes the risk that it may be required to purchase the
underlying security for an exercise price higher than its then!-current
market value, resulting in a potential capital loss unless the security
subsequently appreciates in value.

A fund may terminate an option that it has written prior to its expiration
by entering into a closing purchase transaction in which it purchases an
offsetting option. The fund realizes a profit or loss from a closing
transaction if the cost of the transaction (option premium plus
transaction costs) is less or more than the premium received from writing
the option. If a fund writes a call option but does not own the underlying
security, and when it writes a put option, the fund may be required to
deposit cash or securities with its broker as "margin," or collateral, for
its obligation to buy or sell the underlying security. As the value of the
underlying security varies, the fund may have to deposit additional margin
with the broker. Margin requirements are complex and are fixed by
individual brokers, subject to minimum requirements currently imposed by
the Federal Reserve Board and by stock exchanges and other self-regulatory
organizations.

Purchasing put options. A fund may purchase put options to protect its
portfolio holdings in an underlying security against a decline in market
value. Such protection is provided during the life of the put option since
the fund, as holder of the option, is able to sell the underlying security
at the put exercise price regardless of any decline in the underlying
security's market price. In order for a put option to be profitable, the
market price of the underlying security must decline sufficiently below
the exercise price to cover the premium and transaction costs. By using
put options in this manner, the fund will reduce any profit it might
otherwise have realized from appreciation of the underlying security by
the premium paid for the put option and by transaction costs.

Purchasing call options. A fund may purchase call options to hedge against
an increase in the price of securities that the fund wants ultimately to
buy. Such hedge protection is provided during the life of the call option
since the fund, as holder of the call option, is able to buy the
underlying security at the exercise price regardless of any increase in
the underlying security's market price. In order for a call option to be
profitable, the market price of the underlying security must rise
sufficiently above the exercise price to cover the premium and transaction
costs.

Risk Factors in Options Transactions

The successful use of a fund's options strategies depends on the ability
of Putnam Management to forecast correctly interest rate and market
movements. For example, if the fund were to write a call option based on
Putnam Management's expectation that the price of the underlying security
would fall, but the price were to rise instead, the fund could be required
to sell the security upon exercise at a price below the current market
price. Similarly, if the fund were to write a put option based on Putnam
Management's expectation that the price of the underlying security would
rise, but the price were to fall instead, the fund could be required to
purchase the security upon exercise at a price higher than the current
market price.

When a fund purchases an option, it runs the risk that it will lose its
entire investment in the option in a relatively short period of time,
unless the fund exercises the option or enters into a closing sale
transaction before the option's expiration. If the price of the underlying
security does not rise (in the case of a call) or fall (in the case of a
put) to an extent sufficient to cover the option premium and transaction
costs, the fund will lose part or all of its investment in the option.
This contrasts with an investment by the fund in the underlying security,
since the fund will not realize a loss if the security's price does not
change.

The effective use of options also depends on a fund's ability to terminate
option positions at times when Putnam Management deems it desirable to do
so. There is no assurance that the fund will be able to effect closing
transactions at any particular time or at an acceptable price.

If a secondary market in options were to become unavailable, a fund could
no longer engage in closing transactions. Lack of investor interest might
adversely affect the liquidity of the market for particular options or
series of options. A market may discontinue trading of a particular option
or options generally. In addition, a market could become temporarily
unavailable if unusual events -- such as volume in excess of trading or
clearing capability -- were to interrupt normal market operations.

A market may at times find it necessary to impose restrictions on
particular types of options transactions, such as opening transactions.
For example, if an underlying security ceases to meet qualifications
imposed by the market or the Options Clearing Corporation, new series of
options on that security will no longer be opened to replace expiring
series, and opening transactions in existing series may be prohibited. If
an options market were to become unavailable, a fund as a holder of an
option would be able to realize profits or limit losses only by exercising
the option, and the fund, as option writer, would remain obligated under
the option until expiration or exercise.

Disruptions in the markets for the securities underlying options purchased
or sold by a fund could result in losses on the options. If trading is
interrupted in an underlying security, the trading of options on that
security is normally halted as well. As a result, the fund as purchaser or
writer of an option will be unable to close out its positions until
options trading resumes, and it may be faced with considerable losses if
trading in the security reopens at a substantially different price. In
addition, the Options Clearing Corporation or other options markets may
impose exercise restrictions. If a prohibition on exercise is imposed at
the time when trading in the option has also been halted, the fund as
purchaser or writer of an option will be locked into its position until
one of the two restrictions has been lifted. If the Options Clearing
Corporation were to determine that the available supply of an underlying
security appears insufficient to permit delivery by !the writers of all
outstanding calls in the event of exercise, the Options Clearing
Corporation may prohibit indefinitely the exercise of put options. The
fund, as holder of such a put option, could lose its entire investment if
the prohibition remained in effect until the put option's expiration.

Foreign-traded options are subject to many of the same risks presented by
internationally-traded securities. In addition, because of time
differences between the United States and various foreign countries, and
because different holidays are observed in different countries, foreign
options markets may be open for trading during hours or on days when U.S.
markets are closed. As a result, option premiums may not reflect the
current prices of the underlying interest in the United States.

Over-the-counter ("OTC") options purchased by a fund and assets held to
cover OTC options written by the fund may, under certain circumstances, be
considered illiquid securities for purposes of any limitation on the
fund's ability to invest in illiquid securities.

Futures Contracts and Related Options

Subject to applicable law, a fund may invest without limit in futures
contracts and related options for hedging and non-hedging purposes, such
as to manage the effective duration of the fund's portfolio or as a
substitute for direct investment. A financial futures contract sale
creates an obligation by the seller to deliver the type of financial
instrument called for in the contract in a specified delivery month for a
stated price. A financial futures contract purchase creates an obligation
by the purchaser to take delivery of the type of financial instrument
called for in the contract in a specified delivery month at a stated
price. The specific instruments delivered or taken, respectively, at
settlement date are not determined until on or near that date. The
determination is made in accordance with the rules of the exchange on
which the futures contract sale or purchase was made. Futures contracts
are traded in the United States only on commodity exchanges or bo!ards of
trade -- known as "contract markets" -- approved for such trading by the
Commodity Futures Trading Commission (the "CFTC"), and must be executed
through a futures commission merchant or brokerage firm which is a member
of the relevant contract market.

Although futures contracts (other than index futures) by their terms call
for actual delivery or acceptance of commodities or securities, in most
cases the contracts are closed out before the settlement date without the
making or taking of delivery. Closing out a futures contract sale is
effected by purchasing a futures contract for the same aggregate amount of
the specific type of financial instrument or commodity with the same
delivery date. If the price of the initial sale of the futures contract
exceeds the price of the offsetting purchase, the seller is paid the
difference and realizes a gain. Conversely, if the price of the offsetting
purchase exceeds the price of the initial sale, the seller realizes a
loss. If the fund is unable to enter into a closing transaction, the
amount of the fund's potential loss is unlimited. The closing out of a
futures contract purchase is effected by the purchaser's entering into a
futures contract sale. If the offsetting sale price! exceeds the purchase
price, the purchaser realizes a gain, and if the purchase price exceeds
the offsetting sale price, the purchaser realizes a loss. In general, 40%
of the gain or loss arising from the closing out of a futures contract
traded on an exchange approved by the CFTC is treated as short-term gain
or loss, and 60% is treated as long-term gain or loss.

Unlike when a fund purchases or sells a security, no price is paid or
received by the fund upon the purchase or sale of a futures contract. Upon
entering into a contract, the fund is required to deposit with its
custodian in a segregated account in the name of the futures broker an
amount of liquid assets. This amount is known as "initial margin." The
nature of initial margin in futures transactions is different from that of
margin in security transactions in that futures contract margin does not
involve the borrowing of funds to finance the transactions. Rather, the
initial margin is similar to a performance bond or good faith deposit
which is returned to the fund upon termination of the futures contract,
assuming all contractual obligations have been satisfied. Futures
contracts also involve brokerage costs.

Subsequent payments, called "variation margin" or "maintenance margin," to
and from the broker (or the custodian) are made on a daily basis as the
price of the underlying security or commodity fluctuates, making the long
and short positions in the futures contract more or less valuable, a
process known as "marking to the market." For example, when a fund has
purchased a futures contract on a security and the price of the underlying
security has risen, that position will have increased in value and the
fund will receive from the broker a variation margin payment based on that
increase in value. Conversely, when the fund has purchased a security
futures contract and the price of the underlying security has declined,
the position would be less valuable and the fund would be required to make
a variation margin payment to the broker.

A fund may elect to close some or all of its futures positions at any time
prior to their expiration date in order to reduce or eliminate the hedge
position then currently held by the fund. The fund may close its positions
by taking opposite positions which will operate to terminate the fund's
position in the futures contracts. Final determinations of variation
margin are then made, additional cash is required to be paid by or
released to the fund, and the fund realizes a loss or a gain. Such closing
transactions involve additional commission costs.

None of the funds intend to purchase or sell futures or related options
for other than hedging purposes, if, as a result, the sum of the initial
margin deposits on the fund's existing futures and related options
positions and premiums paid for outstanding options on futures contracts
would exceed 5% of the fund's net assets.

Options on futures contracts. A fund may purchase and write call and put
options on futures contracts it may buy or sell and enter into closing
transactions with respect to such options to terminate existing positions.
In return for the premium paid, options on futures contracts give the
purchaser the right to assume a position in a futures contract at the
specified option exercise price at any time during the period of the
option. The fund may use options on futures contracts in lieu of writing
or buying options directly on the underlying securities or purchasing and
selling the underlying futures contracts. For example, to hedge against a
possible decrease in the value of its portfolio securities, a fund may
purchase put options or write call options on futures contracts rather
than selling futures contracts. Similarly, a fund may purchase call
options or write put options on futures contracts as a substitute for the
purchase of futures! contracts to hedge against a possible increase in the
price of securities which the fund expects to purchase. Such options
generally operate in the same manner as options purchased or written
directly on the underlying investments.

As with options on securities, the holder or writer of an option may
terminate his position by selling or purchasing an offsetting option.
There is no guarantee that such closing transactions can be effected.

A fund will be required to deposit initial margin and maintenance margin
with respect to put and call options on futures contracts written by it
pursuant to brokers' requirements similar to those described above in
connection with the discussion of futures contracts.

Risks of transactions in futures contracts and related options. Successful
use of futures contracts by a fund is subject to Putnam Management's
ability to predict movements in various factors affecting securities
markets, including interest rates.

Compared to the purchase or sale of futures contracts, the purchase of
call or put options on futures contracts involves less potential risk to a
fund because the maximum amount at risk is the premium paid for the
options (plus transaction costs). However, there may be circumstances when
the purchase of a call or put option on a futures contract would result in
a loss to a fund when the purchase or sale of a futures contract would
not, such as when there is no movement in the prices of the hedged
investments. The writing of an option on a futures contract involves risks
similar to those risks relating to the sale of futures contracts.

The use of options and futures strategies also involves the risk of
imperfect correlation among movements in the prices of the securities
underlying the futures and options purchased and sold by the fund, of the
options and futures contracts themselves, and, in the case of hedging
transactions, of the securities which are the subject of a hedge. The
successful use of these strategies further depends on the ability of
Putnam Management to forecast interest rates and market movements
correctly.

There is no assurance that higher than anticipated trading activity or
other unforeseen events might not, at times, render certain market
clearing facilities inadequate, and thereby result in the institution by
exchanges of special procedures which may interfere with the timely
execution of customer orders.

To reduce or eliminate a position held by a fund, the fund may seek to
close out such position. The ability to establish and close out positions
will be subject to the development and maintenance of a liquid secondary
market. It is not certain that this market will develop or continue to
exist for a particular futures contract or option. Reasons for the absence
of a liquid secondary market on an exchange include the following: (i)
there may be insufficient trading interest in certain contracts or
options; (ii) restrictions may be imposed by an exchange on opening
transactions or closing transactions or both; (iii) trading halts,
suspensions or other restrictions may be imposed with respect to
particular classes or series of contracts or options, or underlying
securities; (iv) unusual or unforeseen circumstances may interrupt normal
operations on an exchange; (v) the facilities of an exchange or a clearing
corporation may not at all times be adequate to handle current tra!ding
volume; or (vi) one or more exchanges could, for economic or other
reasons, decide or be compelled at some future date to discontinue the
trading of contracts or options (or a particular class or series of
contracts or options), in which event the secondary market on that
exchange for such contracts or options (or in the class or series of
contracts or options) would cease to exist, although outstanding contracts
or options on the exchange that had been issued by a clearing corporation
as a result of trades on that exchange would continue to be exercisable in
accordance with their terms.

U.S. Treasury security futures contracts and options. U.S. Treasury
security futures contracts require the seller to deliver, or the purchaser
to take delivery of, the type of U.S. Treasury security called for in the
contract at a specified date and price. Options on U.S. Treasury security
futures contracts give the purchaser the right in return for the premium
paid to assume a position in a U.S. Treasury security futures contract at
the specified option exercise price at any time during the period of the
option.

Successful use of U.S. Treasury security futures contracts by a fund is
subject to Putnam Management's ability to predict movements in the
direction of interest rates and other factors affecting markets for debt
securities. For example, if a fund has sold U.S. Treasury security futures
contracts in order to hedge against the possibility of an increase in
interest rates which would adversely affect securities held in its
portfolio, and the prices of the fund's securities increase instead as a
result of a decline in interest rates, the fund will lose part or all of
the benefit of the increased value of its securities which it has hedged
because it will have offsetting losses in its futures positions. In
addition, in such situations, if the fund has insufficient cash, it may
have to sell securities to meet daily maintenance margin requirements at a
time when it may be disadvantageous to do so.

There is also a risk that price movements in U.S. Treasury security
futures contracts and related options will not correlate closely with
price movements in markets for particular securities. For example, if a
fund has hedged against a decline in the values of fixed-income securities
held by it by selling Treasury security futures and the values of Treasury
securities subsequently increase while the values of its fixed-income
securities decrease, the fund would incur losses on both the Treasury
security futures contracts written by it and the fixed-income securities
held in its portfolio.

Index futures contracts. An index futures contract is a contract to buy or
sell units of an index at a specified future date at a price agreed upon
when the contract is made. Entering into a contract to buy units of an
index is commonly referred to as buying or purchasing a contract or
holding a long position in the index. Entering into a contract to sell
units of an index is commonly referred to as selling a contract or holding
a short position. A unit is the current value of the index. A fund may
enter into stock index futures contracts, debt index futures contracts, or
other index futures contracts appropriate to its objective(s). A fund may
also purchase and sell options on index futures contracts.

For example, the Standard & Poor's 500 Composite Stock Price Index ("S&P
500") is composed of 500 selected common stocks, most of which are listed
on the New York Stock Exchange. The S&P 500 assigns relative weightings to
the common stocks included in the Index, and the value fluctuates with
changes in the market values of those common stocks. In the case of the
S&P 500, contracts are to buy or sell 500 units. Thus, if the value of the
S&P 500 were $150, one contract would be worth $75,000 (500 units x $150).
The stock index futures contract specifies that no delivery of the actual
stocks making up the index will take place. Instead, settlement in cash
must occur upon the termination of the contract, with the settlement being
the difference between the contract price and the actual level of the
stock index at the expiration of the contract. For example, if a fund
enters into a futures contract to buy 500 units of the S&P 500 at a
specified future date at a contract pri!ce of $150 and the S&P 500 is at
$154 on that future date, the fund will gain $2,000 (500 units x gain of
$4). If the fund enters into a futures contract to sell 500 units of the
stock index at a specified future date at a contract price of $150 and the
S&P 500 is at $152 on that future date, the fund will lose $1,000 (500
units x loss of $2).

There are several risks in connection with the use by a fund of index
futures. One risk arises because of the imperfect correlation between
movements in the prices of the index futures and movements in the prices
of securities which are the subject of the hedge. Putnam Management will,
however, attempt to reduce this risk by buying or selling, to the extent
possible, futures on indices the movements of which will, in its judgment,
have a significant correlation with movements in the prices of the
securities sought to be hedged.

Successful use of index futures by a fund is also subject to Putnam
Management's ability to predict movements in the direction of the market.
For example, it is possible that, where a fund has sold futures to hedge
its portfolio against a decline in the market, the index on which the
futures are written may advance and the value of securities held in the
fund's portfolio may decline. If this occurred, the fund would lose money
on the futures and also experience a decline in value in its portfolio
securities. It is also possible that, if a fund has hedged against the
possibility of a decline in the market adversely affecting securities held
in its portfolio and securities prices increase instead, the fund will
lose part or all of the benefit of the increased value of those securities
it has hedged because it will have offsetting losses in its futures
positions. In addition, in such situations, if the fund has insufficient
cash, it may have to sell securities to meet dail!y variation margin
requirements at a time when it is disadvantageous to do so.

In addition to the possibility that there may be an imperfect correlation,
or no correlation at all, between movements in the index futures and the
portion of the portfolio being hedged, the prices of index futures may not
correlate perfectly with movements in the underlying index due to certain
market distortions. First, all participants in the futures market are
subject to margin deposit and maintenance requirements. Rather than
meeting additional margin deposit requirements, investors may close
futures contracts through offsetting transactions which could distort the
normal relationship between the index and futures markets. Second, margin
requirements in the futures market are less onerous than margin
requirements in the securities market, and as a result the futures market
may attract more speculators than the securities market does. Increased
participation by speculators in the futures market may also cause
temporary price distortions. Due to the possibility of pr!ice distortions
in the futures market and also because of the imperfect correlation
between movements in the index and movements in the prices of index
futures, even a correct forecast of general market trends by Putnam
Management may still not result in a profitable position over a short time
period.

Options on stock index futures. Options on index futures are similar to
options on securities except that options on index futures give the
purchaser the right, in return for the premium paid, to assume a position
in an index futures contract (a long position if the option is a call and
a short position if the option is a put), at a specified exercise price at
any time during the period of the option. Upon exercise of the option, the
delivery of the futures position by the writer of the option to the holder
of the option will be accompanied by delivery of the accumulated balance
in the writer's futures margin account which represents the amount by
which the market price of the index futures contract, at exercise, exceeds
(in the case of a call) or is less than (in the case of a put) the
exercise price of the option on the index future. If an option is
exercised on the last trading day prior to its expiration date, the
settlement will be mad!e entirely in cash equal to the difference between
the exercise price of the option and the closing level of the index on
which the future is based on the expiration date. Purchasers of options
who fail to exercise their options prior to the exercise date suffer a
loss of the premium paid.

Options on Indices

As an alternative to purchasing call and put options on index futures, a
fund may purchase and sell call and put options on the underlying indices
themselves. Such options would be used in a manner identical to the use of
options on index futures.

Index Warrants

A fund may purchase put warrants and call warrants whose values vary
depending on the change in the value of one or more specified securities
indices ("index warrants"). Index warrants are generally issued by banks
or other financial institutions and give the holder the right, at any time
during the term of the warrant, to receive upon exercise of the warrant a
cash payment from the issuer based on the value of the underlying index at
the time of exercise. In general, if the value of the underlying index
rises above the exercise price of the index warrant, the holder of a call
warrant will be entitled to receive a cash payment from the issuer upon
exercise based on the difference between the value of the index and the
exercise price of the warrant; if the value of the underlying index falls,
the holder of a put warrant will be entitled to receive a cash payment
from the issuer upon exercise based on the difference between the exercise
price of the warrant and the value of !the index. The holder of a warrant
would not be entitled to any payments from the issuer at any time when, in
the case of a call warrant, the exercise price is greater than the value
of the underlying index, or, in the case of a put warrant, the exercise
price is less than the value of the underlying index. If the fund were not
to exercise an index warrant prior to its expiration, then the fund would
lose the amount of the purchase price paid by it for the warrant.

A fund will normally use index warrants in a manner similar to its use of
options on securities indices. The risks of a fund's use of index warrants
are generally similar to those relating to its use of index options.
Unlike most index options, however, index warrants are issued in limited
amounts and are not obligations of a regulated clearing agency, but are
backed only by the credit of the bank or other institution which issues
the warrant. Also, index warrants generally have longer terms than index
options. Although the fund will normally invest only in exchange-listed
warrants, index warrants are not likely to be as liquid as certain index
options backed by a recognized clearing agency. In addition, the terms of
index warrants may limit the fund's ability to exercise the warrants at
such time, or in such quantities, as the fund would otherwise wish to do.

Foreign Investments

A fund may invest in securities of foreign issuers that are not actively
traded in U.S. markets. These foreign investments involve certain special
risks described below.

Foreign securities are normally denominated and traded in foreign
currencies. As a result, the value of a fund's foreign investments and the
value of its shares (other than Putnam VT Money Market Fund) may be
affected favorably or unfavorably by changes in currency exchange rates
relative to the U.S. dollar. There may be less information publicly
available about a foreign issuer than about a U.S. issuer, and foreign
issuers are not generally subject to accounting, auditing and financial
reporting standards and practices comparable to those in the United
States. The securities of some foreign issuers are less liquid and at
times more volatile than securities of comparable U.S. issuers. Foreign
brokerage commissions and other fees are also generally higher than in the
United States. Foreign settlement procedures and trade regulations may
involve certain risks (such as delay in payment or delivery of securities
or in the recovery of a fund's assets held abroad) and expense!s not
present in the settlement of investments in U.S. markets.

In addition, a fund's investments in foreign securities may be subject to
the risk of nationalization or expropriation of assets, imposition of
currency exchange controls or restrictions on the repatriation of foreign
currency, confiscatory taxation, political or financial instability and
diplomatic developments which could affect the value of a fund's
investments in certain foreign countries. Dividends or interest on, or
proceeds from the sale of, foreign securities may be subject to foreign
withholding taxes, and special U.S. tax considerations may apply.

Legal remedies available to investors in certain foreign countries may be
more limited than those available with respect to investments in the
United States or in other foreign countries. The laws of some foreign
countries may limit a fund's ability to invest in securities of certain
issuers organized under the laws of those foreign countries.

The risks described above, including the risks of nationalization or
expropriation of assets, are typically increased in connection with
investments in "emerging markets." For example, political and economic
structures in these countries may be in their infancy and developing
rapidly, and such countries may lack the social, political and economic
stability characteristic of more developed countries. Certain of these
countries have in the past failed to recognize private property rights and
have at times nationalized and expropriated the assets of private
companies. High rates of inflation or currency devaluations may adversely
affect the economies and securities markets of such countries. Investments
in emerging markets may be considered speculative.

The currencies of certain emerging market countries have experienced a
steady devaluation relative to the U.S. dollar, and continued devaluations
may adversely affect the value of a fund's assets denominated in such
currencies. Many emerging market companies have experienced substantial,
and in some periods extremely high, rates of inflation for many years, and
continued inflation may adversely affect the economies and securities
markets of such countries.

In addition, unanticipated political or social developments may affect the
value of a fund's investments in emerging markets and the availability to
a fund of additional investments in these markets. The small size, limited
trading volume and relative inexperience of the securities markets in
these countries may make a fund's investments in securities traded in
emerging markets illiquid and more volatile than investments in securities
traded in more developed countries, and a fund may be required to
establish special custodial or other arrangements before making
investments in securities traded in emerging markets. There may be little
financial or accounting information available with respect to issuers of
emerging market securities, and it may be difficult as a result to assess
the value or prospects of an investment in such securities.

Certain of the foregoing risks may also apply to some extent to securities
of U.S. issuers that are denominated in foreign currencies or that are
traded in foreign markets, or securities of U.S. issuers having
significant foreign operations.

Foreign Currency Transactions

Unless otherwise specified in the prospectus or this SAI, a fund may
engage without limit in currency exchange transactions, including
purchasing and selling foreign currency, foreign currency options, foreign
currency forward contracts and foreign currency futures contracts and
related options, to manage its exposure to foreign currencies. In
addition, a fund may write covered call and put options on foreign
currencies for the purpose of increasing its current return.

Generally, a fund may engage in both "transaction hedging" and "position
hedging." The fund may also engage in foreign currency transactions for
non-hedging purposes, subject to applicable law. When it engages in
transaction hedging, the fund enters into foreign currency transactions
with respect to specific receivables or payables, generally arising in
connection with the purchase or sale of portfolio securities. The fund
will engage in transaction hedging when it desires to "lock in" the U.S.
dollar price of a security it has agreed to purchase or sell, or the U.S.
dollar equivalent of a dividend or interest payment in a foreign currency.
By transaction hedging, the fund will attempt to protect itself against a
possible loss resulting from an adverse change in the relationship between
the U.S. dollar and the applicable foreign currency during the period
between the date on which the security is purchased or sold, or on which
the dividend or interest payment is earned, !and the date on which such
payments are made or received.

A fund may purchase or sell a foreign currency on a spot (or cash) basis
at the prevailing spot rate in connection with the settlement of
transactions in portfolio securities denominated in that foreign currency.
If conditions warrant, for transaction hedging purposes a fund may also
enter into contracts to purchase or sell foreign currencies at a future
date ("forward contracts") and purchase and sell foreign currency futures
contracts. A foreign currency forward contract is a negotiated agreement
to exchange currency at a future time at a rate or rates that may be
higher or lower than the spot rate. Foreign currency futures contracts are
standardized exchange-traded contracts and have margin requirements. In
addition, for transaction hedging purposes a fund may also purchase or
sell exchange-listed and over-the-counter call and put options on foreign
currency futures contracts and on foreign currencies. A fund may also
enter into contracts to purchase or sell foreign !currencies at a future
date ("forward contracts") and purchase and sell foreign currency futures
contracts.

A fund's currency hedging transactions may call for the delivery of one
foreign currency in exchange for another foreign currency and may at times
not involve currencies in which its portfolio securities are then
denominated. Putnam Management will engage in such "cross hedging"
activities when it believes that such transactions provide significant
hedging opportunities for a fund.

Cross hedging transactions by a fund involve the risk of imperfect
correlation between changes in the values of the currencies to which such
transactions relate and changes in the value of the currency or other
asset or liability which is the subject of the hedge.

For transaction hedging purposes, a fund may also purchase exchange-listed
and over-the-counter call and put options on foreign currency futures
contracts and on foreign currencies. A put option on a futures contract
gives the fund the right to assume a short position in the futures
contract until expiration of the option. A put option on a currency gives
the fund the right to sell the currency at an exercise price until the
expiration of the option. A call option on a futures contract gives the
fund the right to assume a long position in the futures contract until the
expiration of the option. A call option on a currency gives the fund the
right to purchase the currency at the exercise price until the expiration
of the option.

A fund may engage in position hedging to protect against a decline in the
value relative to the U.S. dollar of the currencies in which its portfolio
securities are denominated or quoted (or an increase in the value of the
currency in which the securities the fund intends to buy are denominated,
when the fund holds cash or short-term investments). For position hedging
purposes, the fund may purchase or sell, on exchanges or in
over-the-counter markets, foreign currency futures contracts, foreign
currency forward contracts and options on foreign currency futures
contracts and on foreign currencies on exchanges or in over-the-counter
markets. In connection with position hedging, a fund may also purchase or
sell foreign currency on a spot basis.

It is impossible to forecast with precision the market value of portfolio
securities at the expiration or maturity of a forward or futures contract.
Accordingly, it may be necessary for a fund to purchase additional foreign
currency on the spot market (and bear the expense of such purchase) if the
market value of the security or securities being hedged is less than the
amount of foreign currency the fund is obligated to deliver and a decision
is made to sell the security or securities and make delivery of the
foreign currency. Conversely, it may be necessary to sell on the spot
market some of the foreign currency received upon the sale of the
portfolio security or securities if the market value of such security or
securities exceeds the amount of foreign currency the fund is obligated to
deliver.

Transaction and position hedging do not eliminate fluctuations in the
underlying prices of the securities which the fund owns or intends to
purchase or sell. They simply establish a rate of exchange which one can
achieve at some future point in time. Additionally, although these
techniques tend to minimize the risk of loss due to a decline in the value
of the hedged currency, they tend to limit any potential gain which might
result from the increase in value of such currency. See "Risk factors in
options transactions" above.

A fund may seek to increase its current return or to offset some of the
costs of hedging against fluctuations in current exchange rates by writing
covered call options and covered put options on foreign currencies. The
fund receives a premium from writing a call or put option, which increases
the fund's current return if the option expires unexercised or is closed
out at a net profit. The fund may terminate an option that it has written
prior to its expiration by entering into a closing purchase transaction in
which it purchases an option having the same terms as the option written.

The fund's currency hedging transactions may call for the delivery of one
foreign currency in exchange for another foreign currency and may at times
not involve currencies in which its portfolio securities are then
denominated. Putnam Management will engage in such "cross hedging"
activities when it believes that such transactions provide significant
hedging opportunities for the fund. Cross hedging transactions by the fund
involve the risk of imperfect correlation between changes in the values of
the currencies to which such transactions relate and changes in the value
of the currency or other asset or liability which is the subject of the
hedge.

The fund may also engage in non-hedging currency transactions. For
example, Putnam Management may believe that exposure to a currency is in
the fund's best interest but that securities denominated in that currency
will not assist the fund in meeting its objective. In that case the fund
may purchase a currency forward contract or option in order to increase
its exposure to the currency. In accordance with SEC regulations, the fund
will segregate liquid assets in its portfolio to cover forward contracts
used for non-hedging purposes.

The value of any currency, including U.S. dollars and foreign currencies,
may be affected by complex political and economic factors applicable to
the issuing country. In addition, the exchange rates of foreign currencies
(and therefore the values of foreign currency options, forward contracts
and futures contracts) may be affected significantly, fixed, or supported
directly or indirectly by U.S. and foreign government actions. Government
intervention may increase risks involved in purchasing or selling foreign
currency options, forward contracts and futures contracts, since exchange
rates may not be free to fluctuate in response to other market forces.

The value of a foreign currency option, forward contract or futures
contract reflects the value of an exchange rate, which in turn reflects
relative values of two currencies, the U.S. dollar and the foreign
currency in question. Because foreign currency transactions occurring in
the interbank market involve substantially larger amounts than those that
may be involved in the exercise of foreign currency options, forward
contracts and futures contracts, investors may be disadvantaged by having
to deal in an odd-lot market for the underlying foreign currencies in
connection with options at prices that are less favorable than for round
lots. Foreign governmental restrictions or taxes could result in adverse
changes in the cost of acquiring or disposing of foreign currencies.

There is no systematic reporting of last sale information for foreign
currencies and there is no regulatory requirement that quotations
available through dealers or other market sources be firm or revised on a
timely basis. Available quotation information is generally representative
of very large round-lot transactions in the interbank market and thus may
not reflect exchange rates for smaller odd-lot transactions (less than $1
million) where rates may be less favorable. The interbank market in
foreign currencies is a global, around-the-clock market. To the extent
that options markets are closed while the markets for the underlying
currencies remain open, significant price and rate movements may take
place in the underlying markets that cannot be reflected in the options
markets.

The decision as to whether and to what extent a fund will engage in
foreign currency exchange transactions will depend on a number of factors,
including prevailing market conditions, the composition of the fund's
portfolio and the availability of suitable transactions. Accordingly,
there can be no assurance that a fund will engage in foreign currency
exchange transactions at any given time or from time to time.

Currency forward and futures contracts. A forward foreign currency
contract involves an obligation to purchase or sell a specific currency at
a future date, which may be any fixed number of days from the date of the
contract as agreed by the parties, at a price set at the time of the
contract. In the case of a cancelable forward contract, the holder has the
unilateral right to cancel the contract at maturity by paying a specified
fee. The contracts are traded in the interbank market conducted directly
between currency traders (usually large commercial banks) and their
customers. A forward contract generally has no deposit requirement, and no
commissions are charged at any stage for trades. A foreign currency
futures contract is a standardized contract for the future delivery of a
specified amount of a foreign currency at a price set at the time of the
contract. Foreign currency futures contracts traded in the United States
are designed !by and traded on exchanges regulated by the CFTC, such as
the New York Mercantile Exchange.

Forward foreign currency exchange contracts differ from foreign currency
futures contracts in certain respects. For example, the maturity date of a
forward contract may be any fixed number of days from the date of the
contract agreed upon by the parties, rather than a predetermined date in a
given month. Forward contracts may be in any amount agreed upon by the
parties rather than predetermined amounts. Also, forward foreign exchange
contracts are traded directly between currency traders so that no
intermediary is required. A forward contract generally requires no margin
or other deposit.

At the maturity of a forward or futures contract, the fund may either
accept or make delivery of the currency specified in the contract, or at
or prior to maturity enter into a closing transaction involving the
purchase or sale of an offsetting contract. Closing transactions with
respect to forward contracts are usually effected with the currency trader
who is a party to the original forward contract. Closing transactions with
respect to futures contracts are effected on a commodities exchange; a
clearing corporation associated with the exchange assumes responsibility
for closing out such contracts.

Positions in the foreign currency futures contracts may be closed out only
on an exchange or board of trade which provides a secondary market in such
contracts. Although a fund intends to purchase or sell foreign currency
futures contracts only on exchanges or boards of trade where there appears
to be an active secondary market, there is no assurance that a secondary
market on an exchange or board of trade will exist for any particular
contract or at any particular time. In such event, it may not be possible
to close a futures position and, in the event of adverse price movements,
the fund would continue to be required to make daily cash payments of
variation margin.

Foreign currency options. In general, options on foreign currencies
operate similarly to options on securities and are subject to many of the
risks described above. Foreign currency options are traded primarily in
the over-the-counter market, although options on foreign currencies are
also listed on several exchanges. Options are traded not only on the
currencies of individual nations, but also on the European Currency Unit
("ECU"). The ECU is composed of amounts of a number of currencies, and is
the official medium of exchange of the European Community's European
Monetary System.

A fund will only purchase or write foreign currency options when Putnam
Management believes that a liquid secondary market exists for such
options. There can be no assurance that a liquid secondary market will
exist for a particular option at any specific time. Options on foreign
currencies are affected by all of those factors which influence foreign
exchange rates and investments generally.

Settlement procedures. Settlement procedures relating to a fund's
investments in foreign securities and to the fund's foreign currency
exchange transactions may be more complex than settlements with respect to
investments in debt or equity securities of U.S. issuers, and may involve
certain risks not present in the fund's domestic investments. For example,
settlement of transactions involving foreign securities or foreign
currencies may occur within a foreign country, and the fund may be
required to accept or make delivery of the underlying securities or
currency in conformity with any applicable U.S. or foreign restrictions or
regulations, and may be required to pay any fees, taxes or charges
associated with such delivery. Such investments may also involve the risk
that an entity involved in the settlement may not meet its obligations.

Foreign currency conversion. Although foreign exchange dealers do not
charge a fee for currency conversion, they do realize a profit based on
the difference (the "spread") between prices at which they are buying and
selling various currencies. Thus, a dealer may offer to sell a foreign
currency to a fund at one rate, while offering a lesser rate of exchange
should the fund desire to resell that currency to the dealer.

Restricted Securities

The SEC Staff currently takes the view that any delegation by the Trustees
of the authority to determine that a restricted security is readily
marketable (as described in the investment restrictions of the funds) must
be pursuant to written procedures established by the Trustees. It is the
present intention of the Trustees that, if the Trustees decide to delegate
such determinations to Putnam Management or another person, they would do
so pursuant to written procedures, consistent with the Staff's position.
Should the Staff modify its position in the future, the Trustees would
consider what action would be appropriate in light of the Staff's position
at that time.

Swap Agreements

The funds may enter into swap agreements and other types of
over-the-counter transactions with broker-dealers or other financial
institutions, in which its investment return will depend on the change in
value of a specified security or index. A fund would typically receive
from the counterparty the amount of any increase, and pay to the
counterparty the amount of any decrease, in the value of the underlying
security or index. The contracts would thus, absent the failure of the
counterparty to complete its obligations, provide to the investing fund
approximately the same return as it would have realized if it had owned
the security or index directly.

A fund's ability to realize a profit from such transactions will depend on
the ability of the financial institutions with which it enters into the
transactions to meet their obligations to the fund. Under certain
circumstances, suitable transactions may not be available to the funds, or
the fund may be unable to close out their positions under such
transactions at the same time, or at the same price, as if they purchased
comparable publicly traded securities.

Derivatives

Certain of the instruments in which the funds may invest, such as futures
contracts, options and forward contracts, are considered to be
"derivatives." Derivatives are financial instruments whose value depends
upon, or is derived from, the value of an underlying asset, such as a
security or an index. Further information about specific derivatives and
the risks involved in their use is included elsewhere in the prospectus or
in this SAI.

Year 2000

Like other financial and business organizations, the funds depend on the
proper function of their service ^ providers' computer systems. To the
extent that the systems used by the funds or their service providers
cannot distinguish between the year 1900 and the year 2000 or have other
operating difficulties as a result of the year 2000, the operations of and
services provided to the funds and their shareholders could be adversely
impacted. Putnam Management and its affiliates have reported that each
expects to modify its systems, as necessary, to address this so-called
"year 2000 problem," and will, on behalf of the funds, inquire as to the
year 2000 compliance of the ^ funds' other major service providers.
However, there can be no assurance that the operations of and services
provided to the funds and their shareholders will not be adversely
affected. Similarly, companies in which the funds invest may also
experience "year 2000 problems,"! which could ultimately result in losses
to a fund to the extent that the securities of any such company decline in
value as a result of a "year 2000 problem."

Euro Conversion

Eleven member countries of the European Economic and Monetary Union (the
"EMU") have qualified for and began the conversion of their national
currencies to the "euro" on January 1, 1999. The euro is a common currency
that is expected to eventually be used as the sole currency for these
countries and other EMU members that wish to convert to the euro. National
currencies will continue to exist for the initial eleven converting
countries through at least July of 2002 while the full transition to the
euro in the countries involved in the conversion occurs. Possible
consequences to funds that invest in securities denominated in any of the
national currencies affected include the risks that: (i) the unification
of economic and monetary policies underpinning the currency unification
may increase the potential for similarities in the movements of markets in
the European countries converting to the euro, (ii) c!ontracts (including
contracts regarding currency transactions) denominated in (or tied to)
those currencies may become more difficult to enforce, and that (iii)
companies in which the funds invest may be adversely affected by their
failure (or the failure of other companies with which they do business) to
adequately address the operational aspects of the conversion.

Like other financial and business organizations, the funds depend on the
proper function of their service providers' computer and other systems.
The funds could be adversely affected if the computer or other systems
used by Putnam Management and the funds' other service providers cannot
appropriately account for the conversion to the euro. Putnam Management
and its affiliates expect that their systems will be able to address this
issue without any material interruption of service. However, there can be
no assurance that the operations of and services provided to the funds and
their shareholders will not be adversely affected. Similarly, companies in
which the funds invest may also experience similar problems in dealing
with the conversion to the euro, which could result in losses to the
funds.

TAXES

Taxation of the Trust. Each fund intends to qualify each year as a
regulated investment company under Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"). In order to qualify for the
special tax treatment accorded regulated investment companies and their
shareholders, each fund must, among other things:

(a) Derive at least 90% of its gross income from dividends, interest,
payments with respect to certain securities loans, and gains from the sale
of stock, securities and foreign currencies, or other income (including
but not limited to gains from options, futures, or forward contracts)
derived with respect to its business of investing in such stock,
securities, or currencies;

(b) Distribute with respect to each taxable year at least 90% of the sum
of its taxable net investment income, its net tax-exempt income, and the
excess, if any, of net short-term capital gains over net long-term capital
losses for such year; and

(c) Diversify its holdings so that, at the end of each fiscal quarter, (i)
at least 50% of the market value of the fund's assets is represented by
cash and cash items, U.S. government securities, securities of other
regulated investment companies, and other securities limited in respect of
any one issuer to a value not greater than 5% of the value of the fund's
total assets and to not more than 10% of the outstanding voting securities
of such issuer, and (ii) not more than 25% of the value of its assets is
invested in the securities (other than those of the U.S. Government or
other regulated investment companies) of any one issuer or of two or more
issuers which the fund controls and which are engaged in the same,
similar, or related trades or businesses.

If a fund qualifies as a regulated investment company that is accorded
special tax treatment, the fund will not be subject to federal income tax
on income paid to its shareholders in the form of dividends (including
capital gain dividends).

If a fund failed to qualify as a regulated investment company accorded
special tax treatment in any taxable year, the fund would be subject to
tax on its taxable income at corporate rates. In addition, the fund could
be required to recognize unrealized gains, pay substantial taxes and
interest and make substantial distributions before requalifying as a
regulated investment company that is accorded special tax treatment.

Internal Revenue Service regulations applicable to variable annuity and
variable life insurance separate accounts generally require that
portfolios that serve as the funding vehicles for such separate accounts
invest no more than 55% of the value of their assets in one investment,
70% in two investments, 80% in three investments, and 90% in four
investments. Alternatively, a portfolio will be treated as meeting these
requirements for any quarter of its taxable year if, as of the close of
such quarter, the portfolio meets the diversification requirements
applicable to regulated investment companies described above and no more
than 55% of the value of its total assets consist of cash and cash items
(including receivables), U.S. government securities and securities of
other regulated investment companies. Each of the funds intends to comply
with these requirements. Please refer to the prospectus of the separate
accounts that hold interests in the funds for a discussio!n of the tax
consequences of variable annuity and variable life contracts.

If a fund fails to distribute in a calendar year substantially all of its
ordinary income for such year and substantially all of its capital gain
net income for the one-year period ending October 31 (or later if the fund
is permitted so to elect and so elects), plus any retained amount from the
prior year, the fund will be subject to a 4% excise tax on the
undistributed amounts. A fund is exempt from this distribution requirement
and excise tax if at all times during the calendar year each shareholder
in the fund was "a segregated asset account of a life insurance company
held in connection with variable contracts."

Securities issued or purchased at a discount. A fund's investment in
securities issued at a discount and certain other obligations will (and
investments in securities purchased at a discount may) require the fund
to accrue and distribute income not yet received. In order to generate
sufficient cash to make the requisite distributions, the fund may be
required to sell securities in its portfolio that it otherwise would
have continued to hold.

[Capital loss carryover. Distributions from capital gains are generally
made after applying any available capital loss carryovers. The amounts
and expiration dates of any capital loss carryovers available to a fund
are shown in Note 1 (Federal income taxes) to the financial statements
incorporated by reference into this SAI. - Check on capital loss
carryovers]

Foreign securities. A fund's investment in foreign securities may be
subject to withholding taxes at the source on dividend or interest
payments. In that case, the fund's yield on these securities would be
decreased

Investment by a fund in "passive foreign investment companies" could
subject the fund to a U.S. federal income tax or other charge on the
proceeds from the sale of its investment in such a company; however,
this tax can be avoided by making an election to mark such investments
to market annually or to treat the passive foreign investment
company as a "qualified electing fund."

The qualified electing fund and mark-to-market elections may have the
effect of accelerating the recognition of income (without the receipt of
cash) and increase the amount required to be distributed for the fund to
avoid taxation. Making either of these elections therefore may require
a fund to liquidate other investments (including times when it is not
advantageous to do so) to meet its distribution requirement,
which may affect a fund's total return.

A "passive foreign investment company" is any foreign corporation: (i)
75 percent of more of the income of which for the taxable year is
passive income, or (ii) the average percentage of the assets of which
(generally by value, but by adjusted tax basis in certain cases) that
produce or are held for the production of passive income is at least 50
percent. Generally, passive income for this purpose means dividends,
interest (including income equivalent to interest), royalties, rents,
annuities, the excess of gains over losses from certain property
transactions and commodities transactions, and foreign currency gains.
Passive income for this purpose does not include rents and royalties
received by the foreign corporation from active business and certain
income received from related persons.

This discussion of federal income tax treatment of the Trust and its
shareholders is based on the law as of the date of this SAI.

INVESTMENT RESTRICTIONS

As fundamental investment restrictions, which may not be changed as to
any fund without a vote of a majority of the outstanding voting
securities of that fund, the Trust may not and will not take any of the
following actions with respect to that fund:

(1)(a) (All funds except Putnam VT The George Putnam Fund of Boston,
Putnam VT Health Sciences Fund, Putnam VT Investors Fund, Putnam VT OTC
& Emerging Growth Fund, Putnam VT Small Cap Value Fund and Putnam VT
Voyager Fund) Borrow money in excess of 10% of the value (taken at the
lower of cost or current value) of the fund's total assets (not
including the amount borrowed) at the time the borrowing is made, and
then only from banks as a temporary measure to facilitate the meeting of
redemption requests (not for leverage) which might otherwise require the
untimely disposition of portfolio investments or for extraordinary or
emergency purposes. Such borrowings will be repaid before any
additional investments are purchased.

(1)(b) (Putnam VT Voyager Fund) Borrow more than 50% of the value
of its total assets (excluding borrowings and stock index futures
contracts and call options on stock index futures contracts and stock
indices) less liabilities other than borrowings and stock index futures
contracts and call options on stock index futures contracts and stock
indices.

(1)(c) (Putnam VT The George Putnam Fund of Boston, Putnam VT Health
Sciences Fund, Putnam VT Investors Fund, Putnam VT OTC & Emerging Growth
Fund, Putnam VT Research Fund and Putnam VT Small Cap Value Fund)
Borrow money in excess of 33 1/3% of the value of its total assets (not
including the amount borrowed) at the time the borrowing is made.

(2) Underwrite securities issued by other persons except to the
extent that, in connection with the disposition of its portfolio
investments, it may be deemed to be an underwriter under certain federal
securities laws.

(3) Purchase or sell real estate, although it may purchase
securities of issuers which deal in real estate, securities which are
secured by interests in real estate, and securities which represent
interests in real estate, and it may acquire and dispose of real estate
or interests in real estate acquired through the exercise of
its rights as a holder of debt obligations secured by real estate or
interests therein.

(4) (All funds except Putnam VT Research Fund and Putnam VT Small
Cap Value Fund) Purchase or sell commodities or commodity contracts,
except that the fund may purchase and sell financial futures contracts
and options and may enter into foreign exchange contracts and other
financial transactions not involving physical commodities.

(4)(b) (Putnam VT Research Fund and Putnam VT Small Cap Value Fund)
Purchase or sell commodities or commodity contracts, except that the
fund may purchase and sell financial futures contracts and options.

(5)(a) (All funds except Putnam VT The George Putnam Fund of Boston,
Putnam VT Health Sciences Fund, Putnam VT Investors Fund , Putnam VT OTC
& Emerging Growth Fund and Putnam VT Small Cap Value Fund) Make loans,
except by purchase of debt obligations in which the fund may invest
consistent with its investment policies, by entering into repurchase
agreements, or by lending its portfolio securities.

(5)(b) (Putnam VT The George Putnam Fund of Boston, Putnam VT Health
Sciences Fund, Putnam Investors Fund, Putnam OTC & Emerging Growth Fund,
Putnam VT Research Fund and Putnam Small Cap Value Fund) Make loans,
except by purchase of debt obligations in which the fund may invest
consistent with its investment policies (including without limitation
debt obligations issued by other Putnam Funds), by entering into
repurchase agreements, or by lending its portfolio securities.

(6)(a) (All funds except Putnam VT Health Sciences Fund and Putnam
VT Utilities Growth and Income Fund) With respect to 75% of its total
assets, invest in the securities of any issuer if, immediately after
such investment, more than 5% of the total assets of the fund (taken at
current value) would be invested in the securities of such issuer;
provided that this limitation does not apply to obligations issued or
guaranteed as to interest or principal by the U.S. government or its
agencies or instrumentalities.

(6)(b) (Putnam VT Health Sciences Fund and Putnam VT Utilities
Growth and Income Fund) With respect to 50% of its total assets, invest
in the securities of any issuer if, immediately after such investment,
more than 5% of the total assets of the fund (taken at current value)
would be invested in the securities of such issuer; provided that this
limitation does not apply to obligations issued or guaranteed as to
interest or principal by the U.S. government or its agencies or
instrumentalities.

(7)(a) (All funds except Putnam VT Health Sciences Fund and Putnam
VT Utilities Growth and Income Fund) With respect to 75% of its total
assets, acquire more than 10% of the outstanding voting securities of
any issuer.

(7)(b) (Putnam VT Health Sciences Fund and Putnam VT Utilities
Growth and Income Fund) With respect to 50% of its total assets,
acquire more than 10% of the outstanding voting securities of any
issuer.

(8) Purchase securities (other than securities of the U.S.
government, its agencies or instrumentalities) if, as a result of such
purchase, more than 25% of the fund's total assets would be invested in
any one industry; except that Putnam VT Utilities Growth and Income Fund
may invest more than 25% of its assets in any of the public utilities
industries and Putnam VT Health Sciences Fund may invest more than
25% of its assets in companies that Putnam Management determines are
principally engaged in the health sciences industries; and except that
Putnam VT Money Market Fund may invest up to 100% of its assets (i) in
the banking industry, (ii) in the personal credit institution or
business credit institution industries when in the opinion of
management yield differentials make such investments desirable, or (iii)
any combination of these.

(9) Issue any class of securities which is senior to the fund's shares
of beneficial interest, except for permitted borrowings.

The Investment Company Act of 1940 provides that a "vote of a majority
of the outstanding voting securities" of a fund or the Trust means the
affirmative vote of the lesser of (1) more than 50% of the outstanding
shares of a fund or the Trust, as the case may be, or (2) 67% or more of
the shares present at a meeting if more than 50% of the outstanding
shares are represented at the meeting in person or by proxy.

- ---------------------

It is contrary to each funds' present policy, which may be changed
without shareholder approval, to:

(1) Invest in (a) securities which are not readily marketable, (b)
securities restricted as to resale (excluding securities determined by
the Trustees of the fund (or the person designated by the Trustees of
the fund to make such determinations) to be readily marketable), and (c)
repurchase agreements maturing in more than seven days, if, as a result,
more than 15% of the fund's net assets (taken at current value)
would be invested in securities described in (a), (b) and (c) above.

All percentage limitations on investments (other than pursuant to non-
fundamental restriction (1)) will apply at the time of the making of an
investment and shall not be considered violated unless an excess or
deficiency occurs or exists immediately after and as a result of such
investment.

MANAGEMENT

Trustees Name (Age)

*+George Putnam (72), Chairman and President. Chairman and Director of
Putnam Management and Putnam Mutual Funds. Director, Freeport Copper
and Gold, Inc. (a mining and natural resource company), Houghton Mifflin
Company (a major publishing company) and Marsh & McLennan Companies,
Inc.

John A. Hill (56), Vice Chairman. Chairman and Managing Director, First
Reserve Corporation (a registered investment adviser investing in
companies in the world-wide energy industry on behalf of institutional
investors). Director of Snyder Oil Corporation, TransMontaigne Oil
Company, Weatherford Enterra, Inc. (an oil field service company) and
various private companies owned by First Reserve Corporation,
such as James River Coal and Anker Coal Corporation, and various First
Reserve Funds, such as American Gas & Oil Investors, Ltd., AmGO II,
L.P., First Reserve Secured Energy Assets Fund, L.P., First Reserve Fund
V., L.P., First Reserve Fund VI, L.P., and First Reserve Fund VII, L.P.

+William F. Pounds (70), Vice Chairman. Professor Emeritus of
\Management, Alfred P. Sloan School of Management, Massachusetts
Institute of Technology. Director of IDEXX Laboratories, Inc. (a
provider of diagnostic products and services for health and food
and environmental industries), Management Sciences for Health, Inc. (a
non-profit organization), and Sun Company, Inc. (a petroleum refining
and marketing company.)

Jameson A. Baxter (55), Trustee. President, Baxter Associates, Inc. (a
management and financial consulting firm). Director of Avondale Federal
Savings Bank, ASHTA Chemicals, Inc. and Banta Corporation (printing and
digital imaging). Chairman Emeritus of the Board of Trustees, Mount
Holyoke College.

+Hans H. Estin (70), Trustee. Chartered Financial Analyst and Vice
Chairman, North American Management Corp. (a registered investment
adviser).

Ronald J. Jackson (54), Trustee. Former Chairman, President and Chief
Executive Officer of Fisher-Price, Inc. (a major toy manufacturer.)

*Paul L. Joskow (51), Trustee. Professor Emeritus of Economics and
Management and former Chairman of the Department of Economics,
Massachusetts Institute of Technology. Director, New England Electric
System (a public utility holding company), State Farm Indemnity Company
(an automobile insurance company) and Whitehead Institute for
Biomedical Research (a non-profit research institution.)

Elizabeth T. Kennan (60), Trustee. President Emeritus and Professor,
Mount Holyoke College. Director, Bell Atlantic (a telecommunications
company), the Kentucky Home Life Insurance Companies, NYNEX Corporation,
Northeast Utilities and Talbots (a distributor of women's apparel.)

*Lawrence J. Lasser (55), Trustee and Vice President. President, Chief
Executive Officer and Director of Putnam Investments, Inc. and Putnam
Investment Management, Inc. Director of Marsh & McLennan Companies,
Inc. and the United Way of Massachusetts Bay.

John H. Mullin, III (57), Trustee. Chairman and CEO of Ridgeway Farm,
Director of ACX Technologies, Inc. (a company engaged in the manufacture
of industrial ceramics and packaging products), Alex. Brown Realty, Inc.
and The Liberty Corporation (a company engaged in the life insurance and
broadcasting industries).

+Robert E. Patterson (53), Trustee. President and Trustee of Cabot
Industrial Trust (a publicly traded real estate investment trust).
Director of Brandywine Trust
Company.

*Donald S. Perkins (71), Trustee. Director of various corporations,
including AON Corp. (an insurance company), Cummins Engine Company, Inc.
(an engine and power generator manufacturer and assembler), Parsons
Group L.L.C. (a corporation providing financial staffing services),
LaSalle Street Fund, Inc. and LaSalle U.S. Realty Income
and Growth Fund, Inc. (real estate investment trusts), Lucent
Technologies Inc. (a global provider of telecommunications equipment),
Nanophase Technologies Inc. (a producer of nano crystalline materials),
Ryerson Tull, Inc. (America's largest steel service corporation), and
Springs Industries, Inc. (a textile manufacturer.)

*#George Putnam III (47), Trustee. President, New Generation Research,
Inc. (a publisher of financial advisory and other research services
relating to bankrupt and distressed companies) and New Generation
Advisers, Inc. (a registered investment adviser). Director,
Massachusetts Audubon Society and The Boston Family Office,
L.L.C. (a registered investment advisor).

*A.J.C. Smith (64), Trustee. Chairman and Chief Executive Officer,
Marsh & McLennan Companies, Inc. Director, Trident Partnership (a $667
million 10-year partnership with over 30 institutional investors.)

W. Thomas Stephens (56), Trustee. President and Chief Executive Officer
of MacMillan Bloedel Ltd. (a major forest products company.) Director,
Qwest Communications (a fiber optics manufacturer) and New Century
Energies (a public utility company).

W. Nicholas Thorndike (65), Trustee. Director of various corporations
and charitable organizations, including Courier Corporation (a book
manufacturer), Data General Corporation (a provider of customized
computer solutions), Bradley Real Estate, Inc., and Providence Journal
Co.

*Trustees who are or may be deemed to be "interested persons" (as
defined in the Investment Company Act of 1940) of the fund, Putnam
Management or Putnam Mutual Funds.

+Members of the Executive Committee of the Trustees. The Executive
Committee meets between regular meetings of the Trustees as may be
required to review investment matters and other affairs of the fund and
may exercise all of the powers of the Trustees.

#George Putnam, III is the son of George Putnam.

Officers Name (Age)

Charles E. Porter (60), Executive Vice President. Managing Director of
Putnam Investments, Inc. and Putnam Management.

Patricia C. Flaherty (51), Vice President. Senior Vice President of
Putnam Investments, Inc. and Putnam Management.

Gordon H. Silver (51), Vice President. Director and Senior Managing
Director of Putnam Investments, Inc. and Putnam Management.

Brett C. Browchuck (35), Vice President. Managing Director of Putnam
Management.

Ian C. Ferguson (41), Vice President. Senior Managing Director of
Putnam Investments, Inc. and Putnam Management.

Richard Monaghan (44), Vice President, Managing Director of Putnam
Investments, Inc. and Putnam Management.

John R. Verani (59), Vice President. Senior Vice President of Putnam
Investments, Inc. and Putnam Management.

John D. Hughes (63), Senior Vice President and Treasurer.

Beverly Marcus (54), Clerk and Assistant Treasurer.

- -----------------

Each of the following persons is also a Vice President of the Trust and
certain of the other Putnam funds, the total of which is noted
parenthetically. Officers of Putnam Management hold the same offices in
Putnam Management's parent company, Putnam
Investments, Inc.

Michael K. Arends (44) (2 funds), Senior Vice President of Putnam
Management. Prior to November 1997, Mr. Arends was employed at Phoenix
Duff & Phelps. Prior to August 1994, Mr. Arends was employed with
Kemper Financial Services.

Robert R. Beck (58) (2 funds), Managing Director of Putnam Management.

Edward P. Bousa (39) (3 funds), Senior Vice President of Putnam
Management.

David G. Carlson (36) (1 fund), Senior Vice President of Putnam
Management.

Jack P. Chang (40) (2 funds), Vice President of Putnam Management.
Prior to July 1997, Mr. Chang was employed at Columbia Management.

Dana Clark (43) ( funds), Vice President of Putnam Management.

C. Beth Cotner (45) (4 funds), Senior Vice President of Putnam
Management. Prior to September 1995, Ms. Cotner was employed at Kemper
Financial Services.

Kevin M. Cronin (37) (6 funds), Managing Director of Putnam Management.
Prior to February 1997, Mr. Cronin was employed at MFS Investment
Management.

Joanne M. Driscoll (28) (2 funds), Vice President of Putnam Management.

Richard England (40) (2 funds), Senior Vice President of Putnam
Management.

Roland W. Gillis (49) (4 funds), Senior Vice President of Putnam
Management. Prior to March 1995, Mr. Gillis was employed at Keystone
Custodian Funds, Inc.

J. Peter Grant (55) (5 funds), Senior Vice President of Putnam
Management.

Omid Kamshad (36) (4 funds), Managing Director of Putnam Management.
Prior to January 1996, Mr. Kamshad was employed at Lomdard Odier
International and prior to April 1995, he was employed at Baring Asset
Management Company.

Jeffrey A. Kaufman (33) (9 funds), Managing Director of Putnam
Management. Prior to August 1998, 1996, Mr. Kaufman was employed at MFS
Investment Management.

Steven L. Kirson (37) (1 fund), Senior Vice President of Putnam
Management.

David L. King (41) (5 funds), Senior Vice President of Putnam
Management.

D. William Kohli (37) (8 funds), Managing Director of Putnam Management.
Prior to September 1994, Mr. Kohli was employed at Global Bond
Management.

Jennifer E. Leichter (37) (11 funds), Managing Director of Putnam
Management.

Jeffrey R. Lindsey (36) (4 funds), Senior Vice President of Putnam
Management.

Michael Martino (45) (8 funds), Managing Director of Putnam Management.

Carol C. McMullen (43) (14 funds), Managing Director of Putnam
Management.

Krishna K. Memani ( ) ( funds), Managing Director of Putnam
Management. Prior to September 1998, Mr. Memani was employed at Morgan
Stanley & Co.

Daniel L. Miller (41) (6 funds), Managing Director of Putnam Management.

Jeanne L. Mockard (35) (5 funds), Senior Vice President of Putnam
Management.

Kelly A. Morgan (35) (2 funds), Senior Vice President of Putnam
Management. Prior to December 1996, Ms. Morgan was employed at Alliance
Capital Management L.P.

Hugh H. Mullin (36) (3 funds), Senior Vice President of Putnam
Management.

Stephen Oler (37) (7 funds), Senior Vice President of Putnam Management.
Prior to June 1997, Mr. Oler was employed at Templeton Investments and
prior to March 1996 was employed at Baring Asset Management Co.

Steven Oristaglio (43) (59 funds), Managing Director of Putnam
Management. Prior to July 1998, Mr. Oristaglio was employed at Swiss
Bank Corp.

Robert M. Paine (34) (6 funds), Senior Vice President of Putnam
Management.

Margery C. Parker (48) (4 funds), Senior Vice President of Putnam
Management. Prior to December 1997, Ms. Parker was employed at Keystone
Investments.

James Prusko (33) (6 funds), Senior Vice President of Putnam Management.

Christopher A. Ray (35) (2 funds), Senior Vice President of Putnam
Management.

Anthony C. Santosus (40) (1 fund), Senior Vice President of Putnam
Management.

Olivier M. Rudigoz (34) (2 funds), Vice President of Putnam Management.

David J. Santos (40) (3 funds), Vice President of Putnam Management.

Sheldon N. Simon (41) (4 funds), Senior Vice President of Putnam
Management.

Michael P. Stack (39) (2 funds), Senior Vice President of Putnam
Management. Prior to November 1997, Mr. Stack was employed at
Independence Investment Associates, Inc.

Lisa Svensson (37) (1 fund), Senior Vice President of Putnam Management.
Prior to July 1994, Ms. Svensson was employed at Lord Abbett.

Charles H. Swanberg (50) (4 funds), Senior Vice President of Putnam
Management.

Robert Swift (38) (5 funds), Senior Vice President of Putnam Management.
Prior to August 1995, Mr. Swift was employed at IAI International/Hill
Samuel Investments Advisors.

Rosemary H. Thomsen (37) (3 funds), Vice President of Putnam Management.

David L. Waldman (33) (10 funds), Managing Director of Putnam
Management. Prior to June 1997, Mr. Waldman was employed at Lazard
Freres and prior to April 1995 was employed at Goldman Sachs.

Paul Warren (38) (3 funds), Senior Vice President of Putnam Management.
Prior to May 1997, Mr. Warren was employed at IDS Fund Management and
prior to August 1994, was employed at Pilgrim Baxter Associates.

Eric M. Wetlaufer (36) (2 funds), Managing Director of Putnam
Management. Prior to November 1997, Mr. Wetlaufer was employed at
Cadence Capital Management.

Manuel Weiss (49) (1 fund), Senior Vice President of Putnam Management.

Except as stated below, the principal occupations of the officers and
Trustees for the last five years have been with the employers as shown
above, although in some cases they have held different positions with
such employers. Prior to July, 1998, Mr. Joskow was Chairman of the
Department of Economics, Massachusetts Institute of Technology, and,
prior to September, 1998, he was a consultant to National Economic
Research Associates. Prior to June, 1995, Ms. Kennan was President of
Mount Holyoke College. Prior to 1996, Mr. Stephens was Chairman of the
Board of Directors, President and Chief Executive Officer of Johns
Manville Corporation. Prior to April, 1996, Mr. Ferguson was CEO at
Hong Kong Shanghai Banking Corporation. Prior to February, 1998, Mr.
Patterson was Executive Vice President and Director of Acquisitions of
Cabot Partners Limited Partnership.

The Trust pays each Trustee a fee for his or her services. Each Trustee
also receives fees for serving as Trustee of other Putnam funds. The
Trustees periodically review their fees to assure that such fees
continue to be appropriate in light of their responsibilities as well as
in relation to fees paid to trustees of other mutual fund complexes.
The Trustees meet monthly over a two-day period, except in August. The
Compensation Committee, which consists solely of Trustees not affiliated
with Putnam Management and is responsible for recommending Trustee
compensation, estimates that Committee and Trustee meeting time together
with the appropriate preparation requires the equivalent of at least
three business days per Trustee meeting. The following
table shows the year each Trustee was first elected a Trustee of the
Putnam funds the fees paid to each Trustee by each Putnam VT fund for
fiscal 1998 (except for Putnam VT The George Putnam Fund of Boston,
Putnam VT Health Sciences Fund, Putnam VT Investors Fund, Putnam VT OTC
& Emerging Growth Fund, Putnam VT Research Fund and Putnam VT Small Cap
Value Fund) for which fees expected to be paid for the first full fiscal
year are shown), and the fees paid to each Trustee by all of the Putnam
funds for the year ended December 31, 1998:

COMPENSATION TABLE

Aggregate compensation (1) from:

Putnam VT Putnam VT Putnam VT Putnam VT Putnam VT Putnam VT
Asia Pacific Diversified Global Asset Global Growth and High Yield
Trustee/Year Growth Fund Income Fund Allocation Fund Growth Fund Income Fund Fund

<S> <C> <C> <C> <C> <C> <C>
Jameson A. Baxter/1994 (4)
Hans H. Estin/1972
John A. Hill/1985 (4)(5)
Ronald J. Jackson/1996 (4)
Paul L. Joskow/1997 (4)
Elizabeth T. Kennan/1992
Lawrence J. Lasser/1992
John H. Mullin, III/1997 (4)
Robert E. Patterson/1984
Donald S. Perkins/1982
William F. Pounds/1971 (5)
George Putnam/1957
George Putnam, III/1984
A.J.C. Smith/1986
W. Thomas Stephens (4)
W. Nicholas Thorndike/1992

</TABLE>

<TABLE>
<CAPTION>
COMPENSATION TABLE (continued)

Aggregate compensation (1) from:

Putnam VT
Putnam VT International Putnam VT Putnam VT Putnam VT Putnam VT
International Growth and International New Money New Value New
Trustee/Year Growth Fund Income Fund Opportunities Fund Market Fund Fund Opportunities Fund

</TABLE>

<TABLE><CAPTION>
COMPENSATION TABLE (continued)

Estimated Aggregate compensation (1) from:

Putnam VT
Putnam VT OTC & Putnam VT The George
Putnam VT Emerging Growth Small Cap Health Putnam Fund Putnam VT
Trustee/Year Investors Fund+ Fund+ Value Fund Sciences Fund+ of Boston Fund+ Research Fund+

<TABLE><CAPTION>
COMPENSATION TABLE (continued)
Aggregate compensation (1) from:

Estimated
annual
Putnam VT benefits from all
Putnam VT U.S. Government Putnam Funds
Utilities Growth and High Quality Putnam VT Putnam VT All Putnam upon
Trustee/Year and Income Fund Bond Fund Vista Fund Voyager Fund funds (2) retirement (4)

<TABLE>
<CAPTION>
COMPENSATION TABLE

Pension or retirement benefits accrued as part of fund expenses (3) from:

Putnam VT Putnam VT Putnam VT Putnam VT Putnam VT Putnam VT
Asia Pacific Diversified Global Asset Global Growth and High Yield
Growth Income Allocation Growth Income Fund
Trustee/Year Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Jameson A. Baxter/1994 (4)
Hans H. Estin/1972
John A. Hill/1985 (4)(5)
Ronald J. Jackson/1996 (4)
Paul L. Joskow/1997 (4)
Elizabeth T. Kennan/1992
Lawrence J. Lasser/1992
John H. Mullin, III/1997 (4)
Robert E. Patterson/1984
Donald S. Perkins/1982
William F. Pounds/1971 (5)
George Putnam/1957
George Putnam, III/1984
A.J.C. Smith/1986
W. Thomas Stephens (4)
W. Nicholas Thorndike/1992

</TABLE>

<TABLE>
<CAPTION>
COMPENSATION TABLE (continued)

Pension or retirement benefits accrued as part of fund expenses (3) from:

Putnam VT Putnam VT Putnam VT Putnam VT Putnam VT Putnam VT
International International International New Money New New
Trustee/Year Growth++ Growth and Income++ Opportunities++ Market Value++ Opportunities

</TABLE>

<TABLE><CAPTION>
COMPENSATION TABLE (continued)

Pension or retirement benefits accrued as part of fund expenses (3) from:

Putnam VT
Putnam VT U.S. Government
Utilities Growth and High Putnam VT Putnam VT
Trustee/Year and Income Quality Bond Vista++ Voyager

<S> <C> <C> <C>
Jameson A. Baxter/1994 (4)
Hans H. Estin/1972
John A. Hill/1985 (4)(5)
Ronald J. Jackson/1996 (4)
Paul L. Joskow/1997 (4)
Elizabeth T. Kennan/1992
Lawrence J. Lasser/1992
John H. Mullin, III/1997 (4)
Robert E. Patterson/1984
Donald S. Perkins/1982
William F. Pounds/1971 (5)
George Putnam/1957
George Putnam, III/1984
A.J.C. Smith/1986
W. Thomas Stephens (4)
W. Nicholas Thorndike/1992
</TABLE>

<TABLE>
<CAPTION>
COMPENSATION TABLE (continued)

Pension or retirement benefits accrued as part of fund expenses (3) from:

Putnam VT
Putnam VT Putnam VT The George
Putnam VT OTC & Emerging Health Putnam Fund Putnam VT
Trustee/Year Investors++ Growth++ Sciences++ of Boston++ Research++

<S> <C> <C> <C> <C> <C>
Jameson A. Baxter/1994 (4)
Hans H. Estin/1972
John A. Hill/1985 (4)(5)
Ronald J. Jackson/1996 (4)
Paul L. Joskow/1997 (4)
Elizabeth T. Kennan/1992
Lawrence J. Lasser/1992
John H. Mullin, III/1997 (4)
Robert E. Patterson/1984
Donald S. Perkins/1982
William F. Pounds/1971 (5)
George Putnam/1957
George Putnam, III/1984
A.J.C. Smith/1986
W. Thomas Stephens (4)
W. Nicholas Thorndike/1992

</TABLE>

+ Reflects estimated amounts to be paid for the current fiscal
year.
++ For certain newly created funds, actual pension or retirement
benefit information is not yet available.
(1) Includes an annual retainer and an attendance fee for each
meeting attended.
(2) Assumes that each Trustee retires at the normal retirement date.
Estimated benefits for each Trustee are based on Trustee fee
rates in effect during calendar 1998.
(3) As of December 31, 1998, there were 113 funds in the Putnam
family.
(4) Includes compensation deferred pursuant to a Trustee
Compensation Deferral Plan. The total amount of deferred
compensation payable to Ms. Baxter as of December 31, 1998 by
was $ , including income earned on such
amount. The total amount of deferred compensation payable to
Mr. Hill as of December 31, 1998 by , was $ ,
including income earned on such amount. The total amount of
deferred compensation payable to Mr. Jackson as of December 31,
1998 by was $ , including income earned on
such amount. The total amount of deferred compensation payable
to Mr. Joskow as of December 31, 1998 by was $ ,
including income earned on such amount. The total amount of
deferred compensation payable to Mr. Mullin as of December 31,
1998 by was $ , including income earned on such
amount. The total amount of deferred compensat!ion payable to
Mr. Stephens as of December 31, 1998 by was $ including
income earned on such amount.
(5) Includes additional compensation for service as Vice Chairman of
the Putnam funds.

Under a Retirement Plan for Trustees of the Putnam funds (the "Plan"),
each Trustee who retires with at least five years of service as a
Trustee of the funds is entitled to receive an annual retirement benefit
equal to one-half of the average annual compensation paid to such
Trustee for the last three years of service prior to retirement. This
retirement benefit is payable during a Trustee's lifetime, beginning
the year following retirement, for a number of years equal to such
Trustee's years of service. A death benefit is also available under the
Plan which assures that the Trustee and his or her beneficiaries will
receive benefit payments for the lesser of an aggregate period of (i)
ten years or (ii) such Trustee's total years of service.

The Plan Administrator (a committee comprised of Trustees that are not
"interested persons" of the fund, as defined in the Investment Company
Act of 1940) may terminate or amend the Plan at any time, but no
termination or amendment will result in a reduction in the amount of
benefits (i) currently being paid to a Trustee at the time of such
termination or amendment, or (ii) to which a current Trustee would have
been entitled had he or she retired immediately prior to such
termination or amendment.

For additional information concerning the Trustees, see "Management" in
this SAI.

The Agreement and Declaration of Trust of the Trust provides that the
Trust will indemnify its Trustees and officers against liabilities and
expenses incurred in connection with litigation in which they may be
involved because of their offices with the Trust, except if it is
determined in the manner specified in such Agreement and Declaration of
Trust that such Trustees and officers have not acted in good faith in
the reasonable belief that their actions were in the best interests of
the Trust or that such indemnification would relieve any officer or
Trustee of any liability to the Trust or its shareholders by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard
of his or her duties. The Trust, at its expense, provides liability
insurance for the benefit of its Trustees and officers.

Trustees and officers of the Trust who are also officers of Putnam
Management or its affiliates or stockholders of Marsh & McLennan
Companies, Inc. will benefit from the advisory fees, transfer agency
fees and custodian fees and fees paid or allowed by the
Trust. At, 1999 the officers and Trustees as a group owned directly no
shares of the Trust or any fund. As of that date, less than 1% of the
value of the accumulation units with respect to any fund was
attributable to the officers and Trustees of the
Trust, as a group, owning variable annuity contracts or variable life
insurance policies issued by the insurers listed in the following tables.
All of the shares of each of the funds are owned by the
insurance company separate accounts listed below and by Putnam
Management pursuant to its initial capital contribution to each fund
during the organization of the Trust and the subsequent organization of
Putnam VT Global Growth Fund, Putnam VT Utilities! Growth and Income
Fund, Putnam VT Diversified Income Fund, Putnam VT New Opportunities
Fund, Putnam VT Asia Pacific Growth Fund, Putnam VT International Growth
Fund, Putnam VT International Growth and Income Fund, Putnam VT
International New Opportunities Fund, Putnam VT New Value Fund , Putnam
VT Vista Fund, Putnam VT The George Putnam Fund of Boston, Putnam VT
Health Sciences Fund, Putnam VT Investors Fund, Putnam VT OTC & Emerging
Growth Fund, Putnam VT Research Fund and Putnam VT Small Cap Value Fund.
Except to the extent set forth below, to the knowledge of the Trust no
person owned of record or beneficially 5% or more of the shares of any
fund as of August 31, 1998.

Class IA Shares

Percentage of
Issuer Name shares owned
Separate Account Fund of record
- ---------------------------------------------------------------------

(1) Hartford Life Insurance Company

(a) Putnam Capital Manager Trust Separate Account

Putnam VT Asia Pacific Growth Fund
Putnam VT Diversified Income Fund
Putnam VT Global Asset Allocation Fund
Putnam VT Global Growth Fund
Putnam VT The George Putnam Fund of Boston
Putnam VT Growth and Income Fund
Putnam VT Health Sciences Fund
Putnam VT High Yield Fund
Putnam VT International Growth Fund
Putnam VT International Growth and Income Fund
Putnam VT International New Opportunities Fund
Putnam VT Money Market Fund
Putnam VT New Opportunities Fund
Putnam VT New Value Fund
Putnam VT OTC & Emerging Growth Fund
Putnam VT U.S. Government and High Quality
Bond Fund
Putnam VT Utilities Growth and Income Fund
Putnam VT Vista Fund
Putnam VT Voyager Fund

(b) Putnam Capital Manager Trust Separate Account VLI

Putnam VT Diversified Income Fund
Putnam VT The George Putnam Fund of Bost on
Putnam VT Global Asset Allocation Fund
Putnam VT Global Growth Fund
Putnam VT Growth and Income Fund
Putnam VT Health Sciences Fund
Putnam VT High Yield Fund
Putnam VT International Growth Fund
Putnam VT International Growth and Income Fund
Putnam VT International New Opportunities Fund
Putnam VT Investors Fund
Putnam VT Money Market Fund
Putnam VT New Opportunities Fund
Putnam VT OTC & Emerging Growth Fund
Putnam VT U.S. Government and High Quality
Bond Fund
Putnam VT Utilities Growth and Income Fund
Putnam Vista Fund
Putnam VT Voyager Fund

Putnam VT Asia Pacific Growth Fund
Putnam VT Diversified Income Fund
Putnam VT Global Asset Allocation Fund
Putnam VT Global Growth Fund
Putnam VT The George Putnam Fund of Boston
Putnam VT Growth and Income Fund
Putnam VT Health Sciences Fund
Putnam VT High Yield Fund
Putnam VT International Growth Fund
Putnam VT International Growth and Income Fund
Putnam VT International New Opportunities Fund
Putnam VT Investors Fund
Putnam VT Money Market Fund
Putnam VT New Opportunities Fund
Putnam VT New Value Fund
Putnam VT U.S. Government and High Quality
Bond Fund
Putnam VT Utilities Growth and Income Fund
Putnam Vista Fund
Putnam VT Voyager Fund

(d) Putnam Capital Manager Trust Variable Life
Separate Account Five

Putnam VT Asia Pacific Growth Fund
Putnam VT Diversified Income Fund
Putnam VT Global Asset Allocation Fund
Putnam VT Global Growth Fund
Putnam VT The George Putnam Fund of Boston
Putnam VT Growth and Income Fund
Putnam VT Health Sciences Fund
Putnam VT High Yield Fund
Putnam VT International Growth Fund
Putnam VT International Growth and Income Fund
Putnam VT International New Opportunities Fund
Putnam VT Investors Fund
Putnam VT Money Market Fund
Putnam VT New Opportunities Fund
Putnam VT New Value Fund
Putnam VT OTC & Emerging Growth Fund
Putnam VT U.S. Government and High Quality
Bond Fund
Putnam VT Utilities Growth and Income Fund
Putnam VT Vista Fund
Putnam VT Voyager Fund

(e) Putnam Capital Manager Trust Variable Life
Separate Account VLUL

Putnam VT Diversified Income Fund
Putnam VT Global Asset Allocation Fund
Putnam VT Global Growth Fund
Putnam VT Growth and Income Fund
Putnam VT High Yield Fund
Putnam VT Money Market Fund
Putnam VT New Opportunities Fund
Putnam VT U.S. Government and High Quality
Bond Fund
Putnam VT Utilities Growth and Income Fund
Putnam VT Voyager Fund

(2) Hartford Life and Annuity Insurance Company

(a) Putnam Capital Manager Trust Separate Account Two

Putnam VT Asia Pacific Growth Fund
Putnam VT Diversified Income Fund
Putnam VT Global Asset Allocation Fund
Putnam VT Global Growth Fund
Putnam VT The George Putnam Fund of Boston
Putnam VT Growth and Income Fund
Putnam VT Health Sciences Fund
Putnam VT High Yield Fund
Putnam VT International Growth Fund
Putnam VT International Growth and Income Fund
Putnam VT International New Opportunities Fund
Putnam VT Investors Fund
Putnam VT Money Market Fund
Putnam VT New Opportunities Fund
Putnam VT New Value Fund
Putnam VT OTC & Emerging Growth Fund
Putnam VT U.S. Government and High Quality
Bond Fund
Putnam VT Utilities Growth and Income Fund
Putnam Vista Fund
Putnam VT Voyager Fund

(b) Putnam Capital Manager Trust Separate Account VLI

Putnam VT Asia Pacific Growth Fund
Putnam VT Diversified Income Fund
Putnam VT Global Asset Allocation Fund
Putnam VT Global Growth Fund
Putnam VT The George Putnam Fund of Boston
Putnam VT Growth and Income Fund
Putnam VT Health Sciences Fund
Putnam VT High Yield Fund
Putnam VT International Growth Fund
Putnam VT International Growth and Income Fund
Putnam VT International New Opportunities Fund
Putnam VT Investors Fund
Putnam VT Money Market Fund
Putnam VT New Opportunities Fund
Putnam VT New Value Fund
Putnam VT OTC & Emerging Growth Fund
Putnam VT U.S. Government and High Quality
Bond Fund
Putnam VT Utilities Growth and Income Fund
Putnam Vista Fund
Putnam VT Voyager Fund

(d) Putnam Capital Manager Trust Variable Life
Separate Account Five

Putnam VT Asia Pacific Growth Fund
Putnam VT Diversified Income Fund
Putnam VT Global Asset Allocation Fund
Putnam VT Global Growth Fund
Putnam VT The George Putnam Fund of Boston
Putnam VT Growth and Income Fund
Putnam VT Health Sciences Fund
Putnam VT High Yield Fund
Putnam VT International Growth Fund
Putnam VT International Growth and Income Fund
Putnam VT International New Opportunities Fund
Putnam VT Investors Fund
Putnam VT Money Market Fund
Putnam VT New Opportunities Fund
Putnam VT New Value Fund
Putnam VT OTC & Emerging Growth Fund
Putnam VT U.S. Government and High Quality
Bond Fund
Putnam VT Utilities Growth and Income Fund
Putnam Vista Fund
Putnam VT Voyager Fund

(e) Putnam Capital Manager Trust Separate Account Six

Putnam VT Diversified Income Fund
Putnam VT Global Asset Allocation Fund
Putnam VT Global Growth Fund
Putnam VT Growth and Income Fund
Putnam VT International Growth Fund
Putnam VT Money Market Fund
Putnam VT New Opportunities Fund
Putnam VT U.S. Government and High Quality
Bond Fund

(f) Putnam Capital Manager Trust Separate Account VLUL

(3) ReliaStar Life Insurance Company

(a) Select Life I

Putnam VT Diversified Income Fund
Putnam VT Growth and Income Fund
Putnam VT Utilities Growth and Income Fund
Putnam VT Voyager Fund

(b) Select Life II

Putnam VT Asia Pacific Growth Fund
Putnam VT Diversified Income Fund
Putnam VT Growth and Income Fund
Putnam VT New Opportunities Fund
Putnam VT Utilities Growth and Income Fund
Putnam VT Voyager Fund

(d) Survivorship Flexible Premium Variable Life (SVUL I)

(e) Select Annuity II

Putnam VT Diversified Income Fund
Putnam VT Growth and Income Fund
Putnam VT Utilities Growth and Income Fund
Putnam VT Voyager Fund

(f) Select Annuity III

(4) ReliaStar Life Insurance Company of New York

(a) Select Annuity New York

Putnam VT Diversified Income Fund
Putnam VT Growth and Income Fund

(5) American Enterprise Life Insurance Company

(a) Variable Annuity Account

Putnam VT Diversified Income Fund
Putnam VT Growth and Income Fund
Putnam VT Global Growth Fund
Putnam VT High Yield Fund
Putnam VT New Opportunities Fund
Putnam VT Voyager Fund

(b) American Centurion Life

Putnam VT Diversified Income Fund
Putnam VT Global Growth and Income Fund
Putnam VT High Yield Fund
Putnam VT New Opportunities Fund
Putnam VT Voyager Fund

(6) Investors Life Insurance Company of North America

CIGNA Separate Account I

Putnam VT Growth and Income Fund
Putnam VT Money Market Fund
Putnam VT U.S. Government and High Quality
Bond Fund
Putnam VT Voyager Fund

(7) Paragon Life Insurance Company

(a) Paragon Variable Life

Putnam VT Asia Pacific Growth Fund
Putnam VT Diversified Income Fund
Putnam VT Global Asset Allocation Fund
Putnam VT Global Growth Fund
Putnam VT Growth and Income Fund
Putnam VT High Yield Fund
Putnam VT International Growth Fund
Putnam VT International Growth and Income Fund
Putnam VT International New Opportunities Fund
Putnam VT Investors Fund
Putnam VT Money Market Fund
Putnam VT New Opportunities Fund
Putnam VT U.S. Government and High Quality
Bond Fund
Putnam VT Utilities Growth and Income Fund
Putnam VT Voyager Fund

(b) Paragon Variable Life Multi-Manager

Putnam VT High Yield Fund
Putnam VT New Opportunities Fund
Putnam VT U.S. Government and High Quality
Bond Fund
Putnam VT Voyager Fund

(8) IDS Life Insurance Company

(a) IDS Life Variable Account 10

Putnam VT New Opportunities Fund

(b) IDS Life of New York Flexible Portfolio
Annuity Account

Putnam VT New Opportunities Fund

(d) IDS Life of New York Account 8

Putnam VT New Opportunities Fund

(9) Cova Financial Life Insurance Company

(a) Variable Annuity Account One

Putnam VT Growth and Income Fund
Putnam VT International Growth Fund
Putnam VT International New Opportunities Fund
Putnam VT New Value Fund
Putnam VT Vista Fund

(b) Variable Annuity Account Five

Putnam VT Growth and Income Fund
Putnam VT International Growth Fund
Putnam VT International New Opportunities Fund
Putnam VT New Value Fund
Putnam VT Vista Fund

Putnam VT Growth and Income Fund
Putnam VT International Growth Fund
Putnam VT Vista Fund

Class IB Shares
Percentage of
Issuer Name shares owned
Separate Account Fund of record
- --------------------------------------------------------------------

(1) American General Life Insurance Company

(a) Separate Account VL-R

Putnam VT Diversified Income Fund
Putnam VT Growth and Income Fund
Putnam VT International Growth and Income Fund

(2) Hartford Life and Annuity Insurance Company

(a) ICMG Registered Variable Life Separate Account One

Putnam VT International Growth Fund
Putnam VT Vista Fund
Putnam VT Voyager Fund

(3) Putnam Hartford Capital Access Variable Annuity

(a) Hartford Life Insurance Company Putnam Capital Manager Trust
Separate Account

Putnam VT Asia Pacific Growth Fund
Putnam VT Diversified Income Fund
Putnam VT Global Asset Allocation Fund
Putnam VT Global Growth Fund
Putnam VT The George Putnam Fund of Boston
Putnam VT Growth and Income Fund
Putnam VT Health Sciences Fund
Putnam VT High Yield Fund
Putnam VT International Growth Fund
Putnam VT International Growth and Income Fund
Putnam VT International New Opportunities Fund
Putnam VT Investors Fund
Putnam VT Money Market Fund
Putnam VT New Opportunities Fund
Putnam VT New Value Fund
Putnam VT OTC & Emerging Growth Fund
Putnam VT U.S. Government and High Quality
Bond Fund
Putnam VT Utilities Growth and Income Fund
Putnam VT Vista Fund
Putnam VT Voyager Fund

(b) Hartford Life and Annuity Insurance Company Putnam Capital
Manager Trust Separate Account Two

Putnam VT Asia Pacific Growth Fund
Putnam VT Diversified Income Fund
Putnam VT Global Asset Allocation Fund
Putnam VT Global Growth Fund
Putnam VT The George Putnam Fund of Boston
Putnam VT Growth and Income Fund
Putnam VT Health Sciences Fund
Putnam VT High Yield Fund
Putnam VT International Growth Fund
Putnam VT International Growth and Income Fund
Putnam VT International New Opportunities Fund
Putnam VT Investors Fund
Putnam VT Money Market Fund
Putnam VT New Opportunities Fund
Putnam VT New Value Fund
Putnam VT OTC & Emerging Growth Fund
Putnam VT U.S. Government and High Quality
Bond Fund
Putnam VT Utilities Growth and Income Fund
Putnam VT Vista Fund
Putnam VT Voyager Fund

(4) PFL Life Insurance Company

(a) Flexible Premium Individual Deferred Variable Annuity

Putnam VT Global Growth Fund
Putnam VT Money Market Fund
Putnam VT New Value Fund

(5) Principal Mutual Life Insurance Company

(a) PrinFlex Life

Putnam VT Global Asset Allocation Fund
Putnam VT Vista Fund
Putnam VT Voyager Fund

(6) American Express Insurance Company

(a) American Enterprise Life

Putnam VT Diversified Income Fund
Putnam VT Growth and Income Fund
Putnam VT High Yield Fund
Putnam VT Voyager Fund

*Less than 1/10th of 1%.

The address for the separate accounts for Class IA shares listed in (1)
and (2) above is: 200 Hopmeadow St., Simsbury, CT 06089. The address
for the separate accounts listed in (3) and (4) above is: 20 Washington
Avenue South, Minneapolis, MN 55401. The address for the separate
account listed in (5) above is: 80 South 8th Street,
Minneapolis, MN 55440. The address for the separate account listed in
(6) above is: Austin Centre, 701 Brazos Street, Austin, TX 78701. The
address for the separate account listed in (7) above is: 100 South
Brentwood, St. Louis, MO 63105. The address for the separate account
listed in (8) above is: IDS Tower 10, Minneapolis, MN 55440.
The address for the separate account listed in (9) above is: One Tower
Lane, Suite 3000, Oakbrook Terrace, IL 60181.

The address for the separate accounts for Class IB shares listed in (1)
2727-A Allen Parkway, Houston, TX 77019. The address for the separate
account listed in (2) above is: 100 Campus Drive, Suite 250, Florham
Park, NJ. The address for the separate account listed in (3) above is:
200 Hopmeadow St., Simsbury, CT 06089. The address for the separate
accounts listed in (4) above is: 4333 Edgewood Rd., NE Cedar Rapids,
IA 52499. The address for the separate account listed in (5) above is
711 High St., DesMoines, IA 50392. The address for the separate account
listed in (6) above is: 80 South 8th Street, Minneapolis, MN 55440.

Each of the insurance companies issuing the separate accounts listed
above have agreed to vote their shares in proportion to and in the
manner instructed by contract and policy owners. By virtue of the
foregoing, each of these insurance companies, or any of them together,
may be deemed to be a controlling person of each of the funds.

Putnam Management and its affiliates

Putnam Management is one of America's oldest and largest money
management firms. Putnam Management's staff of experienced portfolio
managers and research analysts selects securities and constantly
supervises the fund's portfolio. By pooling an investor's money with
that of other investors, a greater variety of securities can be
purchased than could be purchased by the investor individually; the
resulting diversification helps reduce investment risk. Putnam
Management has been managing mutual funds since 1937. Today, the firm
serves as the investment manager for the funds in the Putnam Family,
with nearly $ billion in assets in million shareholder
accounts at December 31, 1998. An affiliate, The Putnam Advisory
Company, Inc., manages domestic and foreign institutional accounts and
mutual funds, including the accounts of many Fortune 500 companies.
Another affiliate, Putnam Fiduciary Trust Company, provides investment
advice to instit!utional clients under its banking and fiduciary powers.
At December 31, 1998, Putnam Management and its affiliates managed $
billion in assets, including $ billion in tax-exempt
securities and over $ billion in retirement plan assets.

Putnam Management, Putnam Mutual Funds and Putnam Fiduciary Trust
Company are , except for a minority stake owned by employees, owned by
Marsh & McLennan Companies, Inc., a publicly-owned holding company whose
principal businesses are international insurance and reinsurance
brokerage, employee benefit consulting and investment management .

Trustees and officers of a fund who are also officers of Putnam
Management or its affiliates or who are stockholders of Marsh & McLennan
Companies, Inc. will benefit from the advisory fees, sales commissions,
distribution fees, custodian fees and transfer agency fees paid or
allowed by the fund.

The Management Contract

Under a Management Contract between the Trust and Putnam Management
dated October 2, 1987, as supplemented March 2, 1990, and as further
supplemented February 27, 1992, July 9, 1993, April 5, 1994, June 2,
1994, April 7, 1995, July 13, 1995, July 11, 1996 and as further
supplemented, December 20, 1996, February 6, 1998, and July 10, 1998
and , 1999, subject to such policies as the Trustees may
determine, Putnam Management, at its expense, furnishes continuously an
investment program for the funds and makes investment decisions on their
behalf. Subject to the control of the Trustees, Putnam Management also
manages, supervises and conducts the other affairs and business of the
Trust, furnishes office space and equipment, provides bookkeeping
and clerical services (including determination of the net asset value,
but excluding shareholder accounting services) and places all orders for
the purchase and sale of the Trust's portfolio securities. Putnam
Management! may place the Trust's portfolio transactions with broker-
dealers which furnish Putnam Management, without cost to it,
certain research, statistical and quotation services of value to Putnam
Management and its affiliates in advising the Trust and other clients.
In so doing, Putnam Management may cause a fund to pay greater brokerage
commissions than it might otherwise pay.

The compensation payable to Putnam Management under the Management
Contract for its investment management services to the funds is paid
quarterly at the following annual rates of each fund's average net
assets, as determined at the close of each business day during the
quarter:

Fund Rate

Putnam VT International New 1.20% of the first $500
Opportunities Fund million of average net assets, 1.10%
of the next $500 million, 1.05% of
the next $500 million, 1.00% of the
next $5 billion, 0.975% of the next $5
billion, 0.955% of the next $5 billion,
0.94% of the next $5 billion, and
0.93% of any excess thereafter

Putnam VT Asia
Pacific Growth Fund, 0.80% of the first $500
Putnam VT million of average net
International assets, 0.70% of the
Growth Fund, and next $500 million, 0.65% of the next
Putnam VT $500 million, 0.60% of the next $5
International billion, 0.575% of the next $5 billion,
Growth and 0.555% of the next $5 billion, 0.54%
Income Fund of the next $5 billion, and 0.53% of
any excess thereafter.

Putnam VT Diversified 0.70% of the first $500
Income Fund, million of average
Putnam VT Global net assets, 0.60% of
Asset Allocation Fund, the next $500 million,
Putnam VT Health 0.55% of the next $500
Sciences Fund million, 0.50% of the
Putnam VT High next $5 billion, 0.475%
Yield Fund, of the next $5 billion, Fund
Putnam VT New 0.455% of the next $5
Opportunities Fund, billion, 0.44% of the
Putnam VT New next $5 billion and
Value Fund, 0.43% of any excess
Putnam VT OTC & thereafter.
Emerging Growth Fund,
Putnam VT Utilities
Growth and Income Fund and
Putnam VT Voyager Fund

Putnam VT Growth and 0.65% of the first $500
Income Fund, million of average net
Putnam VT Investors Fund, assets, 0.55% of the
Putnam VT The George Putnam next $500 million,
Fund of Boston, 0.50% of the next $500 Fund, and
Putnam VT Research Fund, million, 0.45% of the
Putnam VT U.S. Government & next $5 billion, 0.425%
High Quality Bond Fund of the next $5 billion,
Putnam VT Vista Fund 0.405% of the next $5
billion, 0.39% of the
next $5 billion and
0.38% of any excess
thereafter.

Putnam VT Global Growth Fund 0.60% of average net assets.

Putnam VT Money Market Fund 0.45% of the first $500 million of
average net assets, 0.35% of the next
$500 million, 0.30% of the next $500
million, 0.25% of the next $5 billion,
0.225% of the next $5 billion,
0.205% of the next $5 billion, 0.19%
of the next $5 billion and 0.18% of
any excess thereafter.

The Trust pays affiliates of Putnam Management additional amounts for
investor servicing and custody services.

In addition to the fee paid to Putnam Management, the Trust reimburses
Putnam Management for the compensation and related expenses of certain
officers of the funds and certain persons who assist them in carrying
out the responsibilities of their offices. During fiscal 1998, the
Trust reimbursed Putnam Management $ in this
regard, including $ in contributions to the Putnam
Investments, Inc. Profit Sharing Retirement Plan for the benefit of such
officers and their assistants. The Trust may also pay or reimburse
Putnam Management for all or a part of the compensation and related
expenses of one or more other officers of the Trust and their assistants
who provide certain administrative services for the fund and the
other Putnam funds, each of which bears an allocated share of the
foregoing costs. Currently the Trust is reimbursing Putnam Management
for the compensation and related expenses of the Senior Vice President
and the Cl!erk of the Trust. The aggregate amount of all such payments
and reimbursements is determined annually by the Trustees. Putnam
Management pays all other salaries of officers of the Trust. The Trust
pays all expenses not assumed by Putnam Management including, without
limitation, auditing, legal, custodial, investor servicing and
shareholder reporting expenses. The Trust pays any cost of typesetting
for its prospectuses and any cost of printing and mailing
prospectuses sent to its shareholders. Putnam Mutual Funds pays the
cost of printing and distributing all other prospectuses.

The Management Contract provides that Putnam Management shall not be
subject to any liability to the Trust or to any shareholder of the Trust
for any act or omission in the course of or connected with rendering
services to the Trust in the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of its duties on the part of
Putnam Management. The Management Contract may be terminated as to the
Trust or as to any fund without penalty by vote of the Trustees or the
shareholders of one or more Funds affected, or by Putnam Management, on
30 days' written notice. It may be amended with respect to a fund only
by a vote of the shareholders of that fund. The Management Contract
also terminates without payment of any penalty in the event of
its assignment. The Management Contract provides that it will continue
in effect as to any fund only so long as such continuance is approved at
least annually by vote of either the Trustees or the shareholders of
that !fund, and, in either case, by a majority of the Trustees who are
not "interested persons" of Putnam Management or any fund. In each of
the foregoing cases, the vote of the shareholders of any fund is the
affirmative vote of a "majority of the outstanding voting securities" of
such fund as defined in the Investment Company Act of 1940. The
continuation of the Contract as to all funds was unanimously approved by
the Trustees, including those Trustees who are not "interested persons,"
on January 5, 1996. Putnam Management's compensation under
the Management Contract may be reduced in any year if the fund's
expenses exceed the limits on investment company expenses imposed by any
statute or regulatory authority of any jurisdiction in which shares of
the fund are qualified for offer or sale. The term "expenses" is
defined in the statutes or regulations of such jurisdictions, and
generally excludes brokerage commissions, taxes, interest, extraordinary
expenses and, if the fund has a distribution plan, payments !made under
such plan.

Under the Management Contract, Putnam Management may reduce its
compensation to the extent that a fund's expenses exceed such lower
expense limitation as Putnam Management may, by notice to the fund,
declare to be effective. The expenses subject to this limitation are
exclusive of brokerage commissions, interest, taxes, deferred
organizational and extraordinary expenses and, if the fund has a
distribution plan, payments required under such plan. For the purpose
of determining any such limitation on Putnam Management's compensation,
expenses of the fund shall not reflect the application of commissions or
cash management credits that may reduce designated fund expenses.

Management fees

Reflecting a
reduction in the
following amounts
pursuant to an
Fund Fiscal Management expense
name year fee paid limitation
- ---- ------ ---------- -----------------

Putnam VT
Asia
Pacific
Growth
Fund 1998
1997 $1,076,596
1996 $681,628

Putnam VT
Diversified
Income
Fund 1998
1997 $3,811,378
1996 $2,766,551

Putnam
VT The
George
Putnam
Fund of
Boston 1998+

Putnam
VT Global
Asset
Allocation
Fund 1998
1997 $ 5,755,350
1996 $4,262,397

Putnam
VT Global
Growth
Fund 1998
1997 $9,366,376
1996 $6,444,626

Putnam VT
Growth
and Income
Fund 1998
1997 $34,012,687
1996 $21,454,942

Putnam VT
Health
Sciences
Fund 1998+

Putnam VT
High Yield
Fund 1998
1997 $5,842,951
1996 $4,142,115

Putnam VT
International
Growth Fund 1998
1997* $608,193 $55,502
1996 N/A

Putnam VT
International
Growth &
Income Fund 1998
1997* $871,531
1996 N/A

Putnam
VT
International
New
Opportunities
Fund 1998
1997* $893,002 $206,574
1996 N/A

Putnam VT
Investors
Fund 1998+

Putnam VT
Money
Market Fund 1998
1997 $2,090,282
1996 $1,689,370

Putnam VT
New
Opportunities
Fund 1998
1997 $12,267,574
1996 $7,144,796

Putnam VT
New
Value
Fund 1998
1997* $757,486
1996 N/A

Putnam VT
OTC &
Emerging
Growth
Fund 1998+

Putnam VT
Research
Fund 1998++

Putnam
VT U.S.
Government
and High
Quality Bond
Fund 1998
1997 $4,731,739
1996 $4,628,688

Putnam VT
Utilities
Growth
and Income
Fund 1998
1997 $4,703,343
1996 $3,753,576

Putnam VT
Vista Fund 1998
1997* $600,249
1996 N/A

Putnam
VT
Voyager
Fund
1998
1997 $21,134,308
1996 $15,143,788

* Commencement of operations January 2, 1997
+ Commencement of operations April 30, 1998
++ Commencement of operations September 30, 1998

Portfolio Transactions

Investment decisions. Investment decisions for each of the funds and
for the other investment advisory clients of Putnam Management and its
affiliates are made with a view to achieving their respective investment
objectives. Investment decisions are the product of many factors in
addition to basic suitability for the particular client involved. Thus,
a particular security may be bought or sold for certain clients even
though it could have been bought or sold for other clients at the same
time. Likewise, a particular security may be bought for one or more
clients when one or more other clients are selling the security. In
some instances, one client may sell a particular security to another
client. It also sometimes happens that two or more clients
simultaneously purchase or sell the same security, in which event each
day's transactions in such security are, insofar as possible, averaged
as to price and allocated between such clients in a! manner which in
Putnam Management's opinion is equitable to each and in accordance with
the amount being purchased or sold by each. There may be circumstances
when purchases or sales of portfolio securities for one or more clients
will have an adverse effect on other clients.

Brokerage and research services. Transactions on U.S. stock exchanges,
commodities markets and futures markets and other agency transactions
involve the payment by the Trust of negotiated brokerage commissions.
Such commissions vary among different brokers. Also, a particular
broker may charge different commissions according to such factors as the
difficulty and size of the transaction. Transactions in foreign
investments often involve the payment of fixed brokerage commissions,
which may be higher than those in the United States. There is generally
no stated commission in the case of securities traded in the over-the-
counter markets, but the price paid by the Trust usually includes an
undisclosed dealer commission or mark-up. In underwritten offerings,
the price paid includes a disclosed, fixed commission or discount retained
by the underwriter or dealer.

It has for many years been a common practice in the investment advisory
business for advisers of investment companies and other institutional
investors to receive "brokerage and research services" (as defined in
the Securities Exchange Act of 1934, as amended (the "1934 Act")) from
broker-dealers that execute portfolio transactions for the clients of
such advisers and from third parties with which these broker-
dealers have arrangements. Consistent with this practice, Putnam
Management receives brokerage and research services and other similar
services from many broker-dealers with which Putnam Management places
the funds' portfolio transactions and from third parties with which
these broker-dealers have arrangements. These services include
such matters as general economic and market reviews, industry and
company reviews, evaluations of investments, recommendations as to the
purchase and sale of investments, newspapers, magazines, pricing
services, quotation services, news! services and personal computers
utilized by Putnam Management's managers and analysts. Where the
services referred to above are not used exclusively by Putnam Management
for research purposes, Putnam Management, based upon its own allocations
of expected use, bears that portion of the cost of these services which
directly relates to their non-research use. Some of these services are
of value to Putnam Management and its affiliates in advising various of
their clients (including the Trust), although not all of these services
are necessarily useful and of value in managing the Trust. The
management fee paid by the Trust is not reduced because Putnam
Management and its affiliates receive these services even though Putnam
Management might otherwise be required to purchase some of these
services for cash.

Putnam Management places all orders for the purchase and sale of
portfolio investments for each fund and buys and sells investments for
each fund through a substantial number of brokers and dealers. In so
doing, Putnam Management uses its best efforts to obtain for each fund
the most favorable price and execution available, except to
the extent it may be permitted to pay higher brokerage commissions as
described below. In seeking the most favorable price and execution,
Putnam Management, having in mind each fund's best interests, considers
all factors it deems relevant, including, by way of illustration, price,
the size of the transaction, the nature of the market for the
security or other investment, the amount of the commission, the timing
of the transaction taking into account market prices and trends, the
reputation, experience and financial stability of the broker-dealer
involved and the quality of service rendered by the broker-dealer in
other transactions.

As permitted by Section 28(e) of the 1934 Act, and by the Management
Contract, Putnam Management may cause a fund to pay a broker-dealer
which provides "brokerage and research services" (as defined in the
1934 Act) to Putnam Management an amount of disclosed commission for
effecting securities transactions on stock exchanges and other agency
transactions for the fund on an agency basis in excess of the commission
which another broker-dealer would have charged for effecting that
transaction. Putnam Management's authority to cause a fund to pay any
such greater commissions is also subject to such policies as the
Trustees may adopt from time to time. Putnam Management does not
currently intend to cause the Trust to make such payments. It is
the position of the staff of the Securities and Exchange Commission that
Section 28(e) does not apply to the payment of such greater commissions
in "principal" transactions. Accordingly, Putnam Management will use
its best efforts to obt!ain the most favorableprice and execution
available with respect to such transactions, as described above.

The Management Contract provides that commissions, fees, brokerage or
similar payments received by Putnam Management or an affiliate in
connection with the purchase and sale of portfolio investments of a
fund, less any direct expenses approved by the Trustees, shall be
recaptured by the fund through a reduction of the fee payable by the
fund under the Management Contract. Putnam Management seeks to
recapture for each fund soliciting dealer fees on the tender of the
fund's portfolio securities in tender or exchange offers. Any such fees
which may be recaptured are likely to be minor in amount.

Consistent with the Conduct Rules of the National Association of
Securities Dealers, Inc. and subject to seeking the most favorable price
and execution available and such other policies as the Trustees may
determine, Putnam Management may consider sales of shares of the Trust
(and, if permitted by law, of the other Putnam funds) as a factor
in the selection of broker-dealers to execute portfolio transactions for
the Funds.

Fund Fiscal Brokerage
name year commissions
- ---- ------ -----------

Putnam VT Asia
Pacific Growth
Fund (Commencement 1997 $679,699
of operations 1996 $829,577
May 1, 1995) 1995 $205,198

Putnam VT Diversified
Income Fund 1997 $32,813
1996 $11,983
1995 $14,676

Putnam VT The George Putnam
Fund of Boston
(Commencement
of operations
April 30, 1998) 1998

Putnam VT Global Asset
Allocation Fund 1997 $1,043,014
1996 $908,217
1995 $797,004

Putnam VT Global
Growth Fund 1997 $8,339,967
1996 $3,111,557
1995 $2,275,831

Putnam VT Growth and
Income Fund 1997 $8,609,589
1996 $5,056,587
1995 $3,637,703

Putnam VT Health Sciences
Fund
(Commencement
of operations
April 30, 1998) 1998

Putnam VT High
Yield Fund 1997 $9,384
1996 $14,940
1995 $11,800

Putnam VT International
Growth Fund 1997 $553,235
(Commencement of
operations 1996 N/A
January 2, 1997) 1995 N/A

Putnam VT International
Growth and Income
Fund 1997 $659,464
(Commencement of
operations 1996 N/A
January 2, 1997) 1995 N/A

Putnam VT International
New Opportunities
Fund 1997 $733,380
(Commencement of
operations 1996 N/A
January 2, 1997) 1995 N/A

Putnam VT Investors Fund
(Commencement
of operations
April 30, 1998) 1998

Putnam VT Money
Market Fund 1997 $0
1996 $0
1995 $0

Putnam VT New
Opportunities Fund 1997 $2,268,158
(Commencement of 1996 $1,584,684
operations
January 2, 1997) 1995 $312,487

Putnam VT New
Value Fund 1997 $292,442
1996 N/A
1995 N/A

Putnam VT OTC & Emerging
Growth Fund
(Commencement
of operations
April 30, 1998) 1998

Putnam VT Research Fund
(Commencement
of operations
September 30, 1998) 1998

Putnam VT U.S. Government
and High Quality
Bond Fund 1997 $85,584
1996 $23,582
1995 $2,880

Putnam VT Utilities
Growth and
Income Fund 1997 $785,994
1996 $898,263
1995 $938,350

Putnam VT Vista Fund 1997 $174,221
(Commencement of 1996 N/A
operations
January 2, 1997) 1995 N/A

Putnam VT Voyager Fund 1997 $3,624,594
1996 $3,380,235
1995 $2,171,392

Principal Underwriter

Putnam Mutual Funds is the principal underwriter of shares of the Trust,
which are continuously offered, and shares of the other continuously
offered Putnam funds. Putnam Mutual Funds is not obligated to sell any
specific amount of shares of the Trust and will purchase shares for
resale only against orders for shares.

Investor servicing agent and Custodian

Putnam Investor Services, a division of Putnam Fiduciary Trust Company
("PFTC"), is the Trust's investor servicing agent (transfer, plan and
dividend disbursing agent), for which it receives fees which are paid
monthly by the Trust as an expense of all its shareholders. The fee
paid to Putnam Investor Services is determined on the basis
of the number of shareholder accounts, the number of transactions and
the assets of the fund. Putnam Investor Services won the DALBAR Quality
Tested Service Seal in 1990, 1991, 1992, 1993, 1994 , 1995, 1997 and
1998. Over 10,000 tests of 38 separate shareholder service components
demonstrated that Putnam Investor Services tied for the highest scores,
with two other mutual fund companies in all categories.

The Trust paid $ in gross fees to PFTC for its investor
servicing and custody services during fiscal 1998. The Trust made no
payments to PFTC for out-of-pocket expenses related to the investor
servicing agent's function for the year. For a description of the
custodial services provided by PFTC, see "Custodian" below.

Putnam Fiduciary Trust Company is also investor servicing agent for the
other Putnam funds and receives fees from each of those funds for its
services.

INVESTMENT PERFORMANCE OF THE TRUST

Standard Performance Measures

Yield and total return data for the funds may from time to time be
presented in the prospectus, this SAI and advertisements. In the case
of funds with more than one class of shares, all performance information
is calculated separately for each class. The data is calculated as
follows.

Total return for the one-, five- and ten year periods (or for such
shorter periods as the fund has been in operation or shares of the
relevant class have been outstanding) is determined by calculating the
actual dollar amount of investment return on a $1,000 investment in a
fund at the beginning of the period, at net asset value for class IA
and IB shares and then calculating the annual compounded rate of return
which would produce that amount. Total return for a period of one year
is equal to the actual return of a fund during that period. Total
return calculations assume deduction of the fund's maximum sales charge
or CDSC, if applicable, and reinvestment of all fund distributions at
net asset value on their respective reinvestment dates.

A fund's yield is presented for a specified thirty-day period (the "base
period"). Yield is based on the amount determined by (i) calculating
the aggregate amount of dividends and interest earned by the fund during
the base period less expenses accrued for that period, and (ii) dividing
that amount by the product of (A) the average daily number of shares of
the fund outstanding during the base period and entitled to receive
dividends and (B) the per share net asset value for class IA and IB
shares of the fund on the last day of the base period. The result is
annualized on a compounding basis to determine the fund's yield. For
this calculation, interest earned on debt obligations held by the fund
is generally calculated using the yield to maturity (or first expected
call date) of such obligations based on their market values (or, in the
case of receivables-backed securities such as GNMAs, based on
cost). Dividends on equity securities are accrued daily at their stated
div!idend rates. The amount of expenses used in determining the fund's
yield includes, in addition to expenses actually accrued by the fund, an
estimate of the amount of expenses that the fund would have incurred if
brokerage commissions had not been used to reduce such expenses.

Putnam VT Money Market Fund's yield is computed by determining the
percentage net change, excluding capital changes, in the value of an
investment in one share of the fund over the seven-day period for which
yield is presented (the "base period"), and multiplying the net change
by 365/7 (or approximately 52 weeks). The fund's effective
yield represents a compounding of the fund's yield by adding 1 to the
number representing the percentage change in value of the investment
during the base period, raising that sum to a power equal to 365/7, and
subtracting 1 from the result.

At times, Putnam Management may reduce its compensation or assume
expenses of a fund in order to reduce that fund's expenses. The annual
per share amount of any such fee reduction or assumption of expenses
during the fund's past ten fiscal years (or for the life of the fund, if
shorter) is set forth in the footnotes to the table entitled
"Financial highlights" in the class IA and class IB prospectuses. Any
such fee reduction or assumption of expenses would increase a fund's
yield and total return for periods including the period of the fee
reduction or assumption. The tables below present yield and total
return performance information for the class IA shares for the
period ended December 31, 1998 and for the class IB shares which are
based on class IA shares and adjusted to reflect payments under the
class IB distribution plan. For funds that have been in existence for
more than one year, average annual total return information is shown.
For funds in existence! for a year or less, cumulative total
return information (from the period of the fund's inception through
December 31, 1998) is shown. All data is based on past performance and
does not predict future
results.

Class IA Shares
Total Return
-------------------------------------------
1 5 Life
Putnam VT Fund Yield* year years of fund

Asia Pacific Growth Fund

Diversified Income Fund

Global Asset Allocation Fund

Global Growth Fund

Growth and Income Fund

High Yield Fund

International Growth and Income Fund

International Growth Fund

International New Opportunities Fund

Money Market Fund

New Opportunities Fund

New Value Fund

U.S. Government and High Quality Bond Fund

Utilities Growth and Income Fund

Vista Fund

Voyager Fund

* Information shown for all funds except Putnam VT Money Market Fund
represents 30-day yield. Information shown for Putnam VT Money Market
Fund represents 7-day yield.

Class IB Shares
Total Return
------------------------------------------

1 5 Life
Putnam VT Fund Yield* year years of fund

Asia Pacific Growth Fund

Diversified Income Fund

Global Asset Allocation Fund

Global Growth Fund

Growth and Income Fund

High Yield Fund

International Growth and Income Fund

International Growth Fund

International New Opportunities Fund

Money Market Fund

New Opportunities Fund

New Value Fund

U.S. Government and High Quality
Bond Fund

Utilities Growth and Income Fund

Vista Fund

Voyager Fund

* Information shown for all funds except Putnam VT Money Market Fund
represents 30-day yield. Information shown for Putnam VT Money Market
Fund represents 7-day yield.

See the prospectus for the inception date of each fund. The foregoing
performance information reflects an expense limitation applicable to
Putnam VT High Yield Fund for fiscal 1988, Putnam VT Utilities Growth
and Income Fund for fiscal 1992, Putnam VT New Opportunities Fund for
fiscal 1994, Putnam VT Asia Pacific Growth Fund for fiscal
1995, and Putnam VT International Growth Fund, Putnam VT International
Growth and Income Fund, Putnam VT International New Opportunities Fund,
Putnam New Value Fund and Putnam VT Vista Fund for fiscal 1997 and
Putnam VT The George Putnam Fund of Boston, Putnam VT Health Sciences
Fund, Putnam VT Investors Fund, Putnam VT OTC & Emerging Growth Fund,
Putnam VT Research Fund and Putnam VT Small Cap Value Fund for fiscal
1998. Performance information presented for the funds should not be
compared directly with performance information of other insurance
products without taking into account insurance-related charges and
expenses payable u!nder their variable annuity contracts. These
charges and expenses are not reflected in the funds' performance
and would reduce an investor's return under the annuity contract.

DETERMINATION OF NET ASSET VALUE

The Trust values the shares of each fund daily on each day the New York
Stock Exchange (the "Exchange") is open. Currently, the Exchange is
closed Saturdays, Sundays and the following holidays: New Year's Day,
Rev. Dr. Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, the Fourth of July, Labor Day, Thanksgiving and Christmas.
The Trust determines net asset value as of the close of regular trading
on the Exchange, currently 4:00 p.m. However, equity options held by
a fund are priced as of the close of trading at 4:10 p.m., and futures
contracts on U.S. government and other fixed-income securities and index
options held by a fund are priced as of their close of trading at 4:15
p.m.

Putnam VT Money Market fund. The valuation of the fund's portfolio
instruments at amortized cost is permitted in accordance with Securities
and Exchange Commission Rule 2a-7 and certain procedures adopted by the
Trustees. The amortized cost of an instrument is determined by valuing
it at cost originally and thereafter amortizing any discount or premium
from its face value at a constant rate until maturity, regardless of the
effect of fluctuating interest rates on the market value of the
instrument. Although the amortized cost method provides certainty in
valuation, it may result at times in determinations of value that are
higher or lower than the price the fund would receive if the instruments
were sold. Consequently, changes in the market value of portfolio
instruments during periods of rising or falling interest rates will not
normally be reflected either in the computation of net asset value of
the fund's portfolio or in the daily comp!utation of net income. Under
the procedures adopted by the Trustees, the fund must maintain a
dollar-weighted average portfolio maturity of 397 days or less,
purchase only instruments having remaining maturities of 90 days or
less and invest in securities determined by the Trustees to be of high
quality with minimal credit risks. The Trustees have also established
procedures designed to stabilize, to the extent reasonably possible, the
fund's price per share as computed for the purpose of distribution,
redemption and repurchase at $1.00. These procedures include review of
the fund's portfolio holdings by the Trustees, at such intervals as they
may deem appropriate, to determine whether the fund's net asset
value calculated by using readily available market quotations deviates
from $1.00 per share, and, if so, whether such deviation may result in
material dilution or is otherwise unfair to existing shareholders. In
the event the Trustees determine that such a deviation exists, they will
take such correcti!ve action as they regard as necessary and
appropriate, including selling portfolio instruments prior to maturity
to realize capital gains or losses or to shorten average portfolio
maturity, withholding dividends, redeeming shares in kind, or
establishing a net asset value per share by using readily available
market quotations.

Since the net income of the fund is declared as a dividend each time it
is determined, the net asset value per share of the fund remains at
$1.00 per share immediately after such determination and dividend
declaration. Any increase in the value of a shareholder's investment in
the fund representing the reinvestment of dividend income
is reflected by an increase in the number of shares of the fund in the
shareholder's account on the first day of the next month (or, if that
day is not a business day, on the next business day). It is expected
that the fund's net income will be positive each time it is determined.
However, if because of realized losses on sales of portfolio
investments, a sudden rise in interest rates, or for any other reason
the net income of the fund determined at any time is a negative amount,
the fund will offset such amount allocable to each then shareholder's
account from dividends accrued during the month with respect to such
account. If at the time o!f payment of a dividend (either at the
regular monthly dividend payment date, or, in the case of a
shareholder who is withdrawing all or substantially all of the shares in
an account, at the time of withdrawal), such negative amount exceeds a
shareholder's accrued dividends, the fund will reduce the number of
outstanding shares by treating the shareholder as having contributed to
the capital of the fund that number of full and fractional shares which
represent the amount of excess. Each shareholder is deemed to
have agreed to such contribution in these circumstances by his or her
investment in the fund.

Other Funds. Each of the other funds determines net asset value as
follows: Securities for which market quotations are readily available
are valued at prices which, in the opinion of the Trustees or Putnam
Management, most nearly represent the market values of such securities.
Currently, such prices are determined using the last reported sale price
or, if no sales are reported (as in the case of some securities traded
over-the-counter) the last reported bid price, except that certain
U.S. government securities are valued at the mean between the last
reported bid and asked prices. Short-term investments having remaining
maturities of 60 days or less are stated at amortized cost, which
approximates market value. All other securities and assets are valued
at their fair value following procedures approved by the Trustees.
Liabilities are deducted from the total, and the resulting amount is
divided by the number of shares of the class outstan!ding.

Reliable market quotations are not considered to be readily available
for long-term corporate bonds and notes, certain preferred stocks, tax-
exempt securities, and certain foreign securities. These investments
are valued at fair value on the basis of valuations furnished by pricing
services approved by the Trustees, which determine valuations for
normal, institutional-size trading units of such securities using
methods based on market transactions for comparable securities and
various relationships between securities which are generally recognized
by institutional traders. If any securities held by a fund are
restricted as to resale, Putnam Management determines their fair value
following procedures approved by the Trustees. The fair value of such
securities is generally determined as the amount which the fund
could reasonably expect to realize from an orderly disposition of such
securities over a reasonable period of time. The valuation procedures
applied in any specific instance are likely to vary from case to case.
However, consideration is generally given to the financial position of
the issuer and other fundamental analytical data relating to the
investment and to the nature of the restrictions on disposition of the
securities (including any registration expenses that might be borne by
the fund in connection with such disposition). In addition, specific
factors are also generally considered, such as the cost of the
investment, the market value of any unrestricted securities of the same
class, the size of the holding, the prices of any recent transactions or
offers with respect to such securities and any available analysts'
reports regarding the issuer.

Generally, trading in certain securities (such as foreign securities) is
substantially completed each day at various times prior to the close of
the Exchange. The values of these securities used in determining the
net asset value of the Trust's shares are computed as of such times.
Also, because of the amount of time required to collect
and process trading information as to large numbers of securities
issues, the values of certain securities (such as convertible bonds,
U.S. government securities, and tax-exempt securities) are determined
based on market quotations collected earlier in the day at the latest
practicable time prior to the close of the Exchange. Occasionally,
events affecting the value of such securities may occur between such
times and the close of the Exchange which will not be reflected in the
computation of the funds' net asset values. If events materially
affecting the values of such securities occur during such period, then
these securities will be valued at their fair value following
procedures approved by the Trustees. In addition, securities held by
some of the funds may be traded in foreign markets that are open for
business on days that a fund is not, and the trading of such securities
on those days may have an impact on the value of a shareholder's
investment at a time when the shareholder cannot buy and sell
shares of the fund.

DISTRIBUTION PLAN

The Trust has adopted a distribution plan with respect to class IB
shares, the principal features of which are described in the prospectus.
This SAI contains additional information which may be of interest to
investors.

Continuance of the plan is subject to annual approval by a vote of the
Trustees, including a majority of the Trustees who are not interested
persons of a fund and who have no direct or indirect interest in the
plan or related arrangements (the "Qualified Trustees"), cast in person
at a meeting called for that purpose. All material amendments to the
plan must be likewise approved by the Trustees and the Qualified
Trustees. The class IB plan may not be amended in order to increase
materially the costs which a fund may bear for distribution pursuant to
such plan without also being approved by a majority of the outstanding
voting securities of a fund. The class IB plan may terminate
automatically in the event of its assignment and may be terminated
without penalty, at any time, by a vote of a majority of the
Qualified Trustees or by a vote of a majority of the outstanding voting
securities of the fund or the relevant class of a fund, as the case may
be.

Putnam Mutual Funds pays service fees to insurance companies and their
affiliated dealers at the rates set forth in the Prospectus. Service
fees are paid quarterly to the insurance company or dealer of record for
that quarter.

Financial institutions receiving payments from Putnam Mutual Funds as
described above may be required to comply with various state and federal
regulatory requirements, including among others those regulating the
activities of insurance companies and securities brokers or dealers.

Except as otherwise agreed between Putnam Mutual Funds and a dealer, for
purposes of determining the amounts payable to insurance companies or
their affiliates, "average net asset value" means the product of (i) the
average daily share balance in such account(s) and (ii) the average
daily net asset value of the relevant class of shares over the quarter.

During fiscal 1998, class IB shares of the funds paid the following 12b-
1 fees to Putnam Mutual Funds:

Putnam VT Asia Pacific Growth Fund ___
Putnam VT Diversified Income Fund ___
Putnam VT The George Putnam
Fund of Boston ___
Putnam VT Global Asset Allocation Fund ___
Putnam VT Global Growth Fund ___
Putnam VT Growth and Income Fund ___
Putnam VT Health Sciences Fund ___
Putnam VT High Yield Fund ___
Putnam VT International Growth Fund ___
Putnam VT International Growth and Income Fund ___
Putnam VT International New Opportunities Fund ___
Putnam VT Investors Fund ___
Putnam VT Money Market Fund ___
Putnam VT New Opportunities Fund ___
Putnam VT New Value Fund ___
Putnam VT OTC & Emerging Growth Fund ___
Putnam VT Research Fund ___
Putnam VT Small Cap Value Fund N/A
Putnam VT U.S. Government and High Quality Bond Fund ___
Putnam VT Utilities Growth and Income Fund ___
Putnam VT Vista Fund ___
Putnam VT Voyager Fund ___

SUSPENSION OF REDEMPTIONS

The Trust may not suspend shareholders' right of redemption or postpone
payment for more than seven days unless the New York Stock Exchange is
closed for other than customary weekends or holidays, or except, if
permitted by the rules of the Securities and Exchange Commission during
periods when trading on the Exchange is restricted or during any
emergency which makes it impracticable for the Trust to dispose of its
securities or to determine fairly the value of its net assets, or during
any other period permitted by order of the Commission for protection of
investors.

SHAREHOLDER LIABILITY

Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the
Trust. However, the Agreement and Declaration of Trust disclaims
shareholder liability for acts or obligations of the
Trust and requires that notice of such disclaimer be given in each
agreement, obligation, or instrument entered into or executed by the Trust
or the Trustees. The Agreement and Declaration of Trust provides
for indemnification out of fund property for all loss and expense of any
shareholder held personally liable for the obligations of that fund.
Thus, the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which a fund would
be unable to meet its obligations. The likelihood of such circumstances
is remote.

CUSTODIAN

Putnam Fiduciary Trust Company ("PFTC") is the custodian of the Trust's
assets. In carrying out its duties under its custodian contract, PFTC
may employ one or more subcustodians whose responsibilities will include
safeguarding and controlling the Trust's cash and securities, handling
the receipt and delivery of securities and collecting interest and
dividends on the Trust's investments. PFTC and any subcustodians
employed by it have a lien on the securities of each fund (to the extent
permitted by the Trust's investment restrictions) to secure charges and
any advances made by such subcustodians at the end of any day for the
purpose of paying for securities purchased by the Trust for the benefit
of that fund. The Trust expects that such advances will exist only in
unusual circumstances. Neither PFTC nor anysubcustodian determines the
investment policies of any fund or decides which securities a fund will
buy or sell. PFTC pays the fees and other charges of any subcusto!dians
employed by it. The Trust may from time to time pay custodial expenses
in full or in part through the placement by Putnam Management of the
Trust's portfolio transactions with the subcustodians or with a third-
party broker having an agreement with the subcustodians. The Trust pays
PFTC an annual fee based on each fund's assets, securities transactions
and securities holdings and reimburses PFTC for certain out-of-pocket
expenses incurred by it or any subcustodian employed by it in performing
custodial services.

INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS

PricewaterhouseCoopers LLP are the Trust's independent accountants,
providing audit services, tax return review and other tax consulting
services and assistance and consultation in connection with the review
of various Securities and Exchange Commission filings. The Report of
Independent Accountants and financial statements included in the Trust's
Annual Report for the fiscal year ended December 31, 1998 filed
electronically on February , 1999 (File No. 811-5346), are
incorporated by reference into this SAI. The unaudited financial
statements included in Trust's Semi-Annual Report are incorporated by
reference into this SAI.

The financial statements for the fiscal year ended December 31, 1998
incorporated by reference into this SAI have been so included and
incorporated in reliance upon the report of the independent accountants,
given on their authority as experts in auditing and accounting.

PUTNAM VARIABLE TRUST

FORM N- 1A

PART C

OTHER INFORMATION

Item 23. Exhibits

1. Agreement and Declaration of Trust dated September 24, 1987, as
revised January 1, 1997 -- Incorporated by reference to Post-Effective
Amendment No. 14 to the Registrant's Registration Statement.

2. By-Laws, as amended through January 30, 1997 -- Incorporated by
reference to Post-Effective Amendment No. 14 to the Registrant's
Registration Statement.

3a. Portions of Agreement and Declaration of Trust Relating to
Shareholders' Rights --Incorporated by reference to Post-Effective
Amendment No. 14 to the Registrant's Registration Statement.

3b. Portions of By-Laws Relating to Shareholders' Rights --
Incorporated by reference to Post-Effective Amendment No. 14 to the
Registrant's Registration Statement.

4. Form of Management Contract dated October 2, 1987, as
supplemented March 2, 1990, as further supplemented February 27, 1992,
July 9, 1993, April 5, 1994, June 2, 1994, April 7, 1995, July 13, 1995,
July 11, 1996, December 20, 1996, February 6, 1998 , July 10, 1998 and
April , 1999 - Exhibit 1.

5a. Distributor's Contract dated May 6, 1994 - Incorporated by
reference to Post-Effective Amendment No. 10 to the Registrant's
Registration Statement.

5b. Form of Specimen Dealer Sales Contract - Incorporated by
reference to Post-Effective Amendment No. 11 to the Registrant's
Registration Statement.

5c. Form of Specimen Financial Institution Sales Contract --
Incorporated by reference to Post-Effective Amendment No. 11 to the
Registrant's Registration Statement.

6. Not applicable.

7. Custodian Agreement with Putnam Fiduciary Trust Company dated May
3, 1991, as amended July 13, 1992 -- Incorporated by reference to Post-
Effective Amendment No. 10 to the Registrant's Registration Statement.

8. Investor Servicing Agreement dated June 3, 1991 with Putnam
Fiduciary Trust Company - Incorporated by reference to Post-Effective
Amendment No. 10 to the Registrant's Registration Statement.

9. Opinion of Ropes & Gray, including consent -- Incorporated by
reference to Post-Effective Amendment No. 10 to the Registrant's
Registration Statement.

10. Not applicable.

11. Not applicable.

12. Investment Letters from Putnam Investment Management , Inc. to
the Registrant -- Incorporated by reference to Pre-Effective Amendment
No. 10 to the Registrant's Registration Statement.

13a. Class IB Distribution Plan and Agreement --Incorporated by
reference to Post-Effective Amendment No. 15 to the Registrant's
Registration Statement.

13b. Form of Specimen Dealer Service Agreement - Incorporated by
reference to Post-Effective Amendment No. 15 to the Registrant's
Registration Statement.

13c. Form of Specimen Financial Institution Service Agreement -
Incorporated by reference to Post-Effective Amendment No. 15 to the
Registrant's Registration Statement.

14a. Financial Data Schedule - Putnam VT Asia Pacific Growth Fund
Class IA Shares -- To be filed by amendment.

14b. Financial Data Schedule - Putnam VT Asia Pacific Growth Fund
Class IB Shares -- To be filed by amendment.

14c. Financial Data Schedule - Putnam VT Diversified Income Fund Class
IA Shares -- To be filed by amendment.

14d. Financial Data Schedule - Putnam VT Diversified Income Fund Class
IB Shares -- To be filed by amendment.

14e. Financial Data Schedule - Putnam VT The George Putnam Fund of
Boston Class IA Shares -- To be filed by amendment.

14f. Financial Data Schedule - Putnam VT The George Putnam Fund of
Boston Class IB Shares -- To be filed by amendment.

14g. Financial Data Schedule - Putnam VT Global Asset Allocation Fund
Class IA Shares -- To be filed by amendment.

14h. Financial Data Schedule Putnam VT Global Asset Allocation Fund
Class IB Shares -- To be filed by amendment.

14i. Financial Data Schedule - Putnam VT Global Growth Fund Class IA
Shares -- To be filed by amendment.

14j. Financial Data Schedule - Putnam VT Global Growth Fund Class IB
Shares -- To be filed by amendment.

14k. Financial Data Schedule - Putnam VT Growth and Income Fund Class
IA Shares -- To be filed by amendment.

14l. Financial Data Schedule - Putnam Growth and Income Fund Class IB
Shares -- To be filed by amendment.

14m. Financial Data Schedule - Putnam VT Health Sciences Fund Class IA
Shares -- To be filed by amendment.

14n. Financial Data Schedule - Putnam VT Health Sciences Fund Class IB
Shares -- To be filed by amendment.

14o. Financial Data Schedule - Putnam VT High Yield Fund Class IA
Shares -- To be filed by amendment.

14p. Financial Data Schedule - Putnam VT High Yield Fund Class IB
Shares -- To be filed by amendment.

14q. Financial Data Schedule - Putnam VT International Growth Fund
Class IA Shares -- Exhibit 18.

14r. Financial Data Schedule - Putnam VT International Growth Fund
Class IB Shares -- To be filed by amendment.

14s. Financial Data Schedule - Putnam VT International Growth and
Income Fund Class IA Shares -- To be filed by amendment.

14t. Financial Data Schedule - Putnam VT International Growth and
Income Fund Class IB Shares -- To be filed by amendment.

14u. Financial Data Schedule - Putnam VT International New
Opportunitites Fund Class IA Shares -- To be filed by amendment.

14v. Financial Data Schedule - Putnam VT International New
Opportunities Fund Class IB Shares -- To be filed by amendment.

14w. Financial Data Schedule - Putnam VT Investors Fund Class IA
Shares -- To be filed by amendment.

14x. Financial Data Schedule - Putnam VT Investors Fund Class IB
Shares -- To be filed by amendment.

14y. Financial Data Schedule - Putnam VT Money Market Fund Fund Class
IA Shares -- To be filed by amendment.

14z. Financial Data Schedule - Putnam VT Money Market Fund Class IB
Shares -- To be filed by amendment.

14aa. Financial Data Schedule - Putnam VT New Opportunities Fund Class
IA Shares -- To be filed by amendment.

14bb. Financial Data Schedule - Putnam VT New Opportunities Fund Class
IB Shares -- To be filed by amendment.

14cc. Financial Data Schedule - Putnam VT New Value Fund Class IA
Shares -- To be filed by amendment.

14dd. Financial Data Schedule - Putnam VT New Value Fund Class IB
Shares -- To be filed by amendment.

14ee. Financial Data Schedule - Putnam VT OTC & Emerging Growth Fund
Class IA Shares -- To be filed by amendment.

14ff. Financial Data Schedule - Putnam VT OTC & Emerging Growth Fund
Class IB Shares -- To be filed by amendment.

14gg. Financial Data Schedule - Putnam VT Research Fund Class IA Shares
- -- To be filed by amendment.

14hh. Financial Data Schedule - Putnam VT Research Fund Class IB Shares
- -- To be filed by amendment.

14ii. Financial Data Schedule - Putnam VT U.S. Government and High
Quality Bond Fund Class IA Shares -- To be filed by amendment.

14jj. Financial Data Schedule - Putnam VT U.S. Government and High
Quality Bond Fund Class IB Shares -- To be filed by amendment.

14kk. Financial Data Schedule - Putnam VT Utilities Growth and Income
Fund Class IA Shares -- To be filed by amendment.

14ll. Financial Data Schedule - Putnam VT Utilities Growth and Income
Fund Class IB Shares -- To be filed by amendment.

14mm. Financial Data Schedule - Putnam VT Vista Fund Class IA Shares --
To be filed by amendment.

14nn Financial Data Schedule - Putnam VT Vista Fund Class IB Shares --
To be filed by amendment.

14oo. Financial Data Schedule - Putnam VT Voyager Fund Class IA Shares
- -- To be filed by amendment.

14pp. Financial Data Schedule - Putnam VT Voyager Fund Class IB Shares
- -- To be filed by amendment.

15. Rule 18f-3(d) Plan - Incorporated by reference to Post-Effective
Amendment No. 15 to the Registrant's Registration Statement.

Item 24. Persons Controlled by or under Common Control with the
Fund

None.

Item 25. Indemnification

The information required by this item is incorporated by reference to
the Registrant's Initial Registration Statement on Form N-1A under the
Investment Company Act of 1940 (File No. 811-5346).

<PAGE>

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

Except as set forth below, the directors and officers of the
Registrant's investment adviser have been engaged during the past
two fiscal years in no business, vocation or employment of a
substantial nature other than as directors or officers of the
investment adviser or certain of its corporate affiliates.
Certain officers of the investment adviser serve as officers of
some or all of the Putnam funds. The address of the investment
adviser, its corporate affiliates and the Putnam Funds is one Post
Office Square, Boston, Massachusetts 02109.

NAME

NON-PUTNAM BUSINESS AND OTHER CONNECTIONS

Michael J. Abata
Assistant Vice President

Prior to May, 1997, Assistant Vice President, Alliance Capital
Management Corp., 1345 Avenue of the Americas, New York, NY 10020

Pankaj Aggrawal
Vice President

Prior to April, 1998, Quantitative Analyst, Vestek Systems, 388
Market St., Suite 700, San Francsico, CA 94111
Blake Anderson
Managing Director

Trustee, Salem Female Charitable Society, Salem MA 01970

Barry R. Allen
Vice Present

Prior to December, 1997, Analyst/Director of Research, Harbor
Capital Management, 125 High St., Boston, MA 02110

Maria Alma R. Aragon
Assistant Vice President
Prior to July, 1998,

Michael Arends
Senior Vice President
Prior to May, 1997, Managing Director, Equities, Phoenix Duff &
Phelps, 56 Prospect St., Hartford, CT 06101; Board Member, Donald
L. Arends, Inc., 100 Jorie Blvd., OakBrook, ILL 60523

Nikesh Arora
Vice President
Prior to April, 1997, Chief Financial Officer, Fidelity
Investments, 82 Devonshire St., Boston, MA 02110

Michael J. Atkin
Senior Vice President

Prior to July, 1997, Director of Latin America Institute of
International Finance, 2000 Pennsylvania Avenue, Washington, D.C.
20006

Jeffrey B. Augustine
Senior Vice President

Prior to January, 1998, Vice President, Investment Consulting,
Investor Tools, Inc., 100 Bridge St. Plaza, Yorkville, IL
60560

Rowland T. Bankes
Vice President

Prior to July, 1997, Senior Fixed-Income Trader, Jennison,
Jennison Associates Capital Corp., One Financial Center, Boston,
MA 02110

Robert R. Beck
Senior Vice President

Director, Charles Bridge Publishing, 85 Main St., Watertown, MA
02172; Board of Overseers, Beth Israel Deaconess Medical Center,
330 Brookline Ave., Boston, MA 02215

Carl D. Bell
Vice President

Prior to January, 1998, Principal, Smith Breedon Association,
100 Europa Drive, Suite 200, Chapel Hill, NC 27514

Richard L. Block
Senior Vice President

Prior to June, 1998, Principal, head International Equity
Trader, Morgan Stanley Asset Management, 1221 Avenue of the
Americas, New York, NY 10036

Jeffrey M. Bray
Vice President

Prior to October, 1997, Analyst, Lehman Brothers, 3 World
Financial Center, New York, NY 10285

David J. Buckle
Vice President

Prior to March, 1998, Vice President, J.P. Morgan Investment
Management, 28 King St., London, England SWI YXA

Ronald J. Bukovac
Vice President

Prior to October, 1997, Senior Manager, Valuation, Price
Waterhouse, 200 E. Randolph Drive, Chicago, IL 60601

Robert W. Burke
Senior Managing Director

Member-Executive Committee, The Ridge Club, Country Club Road,
Sandwich, MA 02563; Member-Advisory Board, Cathedral High School,
74 Union Park St., So. Boston, MA 02118

Ivka Kalus-Bystricky
Vice President

Prior to March, 1998, Management Consultant, Manager, Arthur D.
Little, Acorn Park, Cambridge, MA 02140

Diana R.M. Carney
Assistant Vice President

Prior to January, 1997, Librarian, Lipper Analytical Services,
Inc., 1380 Lawrence St., Denver, CO 80202

Richard P. Cervone
Assistant Vice President

Prior to August, 1998, Equity Analyst, Loomis, Sayles & Co.,
One Financial Center, Boston, MA, 02216.

Jack P. Chang
Vice President

Prior to July, 1997, Vice President, Columbia Management Company,
1300 S.W. 6th Ave., Portland, OR 97207

Mary Claire Chase
Vice President

Prior to January, 1997, Director of Staff Development, Arthur D.
Little Co., 25 Acorn Park, Cambridge, MA 02140

C. Beth Cotner
Senior Vice President

Director, The Lyric Stage Theater, 140 Clarendon St., Boston, MA
02116

Stephen P. Cotto
Assistant Vice President

Prior to March, 1998, Facilities Supervisor, Unicco Service
Co., 4 Copley Place, Boston, MA 02116

Kevin M. Cronin
Managing Director

Prior to February, 1997, Vice President and Portfolio Manager, MFS
Investment Management, 500 Boylston St., Boston, MA 02117

Joseph F. Cushing
Assistant Vice President

Prior to June, 1998, Investment Analyst - Fixed Income,
Metropolitan Life Insurance Company, 334 Madison Avenue, Convent
Station, NJ 07961

John R.S. Cutler
Assistant Vice President

Member, Burst Media, L.L.C., 10 New England Executive Park,
Burlington, MA 01803

Kenneth Daly
Managing Director

President, Andover River Rd. TMA, River Road Transportation
Management Association, 7 Shattuck Rd., Andover, MA 01810

Michael W. Davis
Vice President

Prior to August, 1997,
Technical Finance Consultant, Bank of America Mortgage, 50
California St., San Francisco, CA 94111

Donna M. Daylor
Vice President

Prior to April, 1998, Director of Training, UniCare Life &
Health Ins. Co., 1350 Main St., Springfield, MA. Prior to
February, 1997, Director of Training, John Hancock Mutual Life
Insurance Company, 200 Clarendon St., Boston, MA 02117

John C. Delano
Assistant Vice President

Prior to July, 1998, Senior Foreign Exchange Trader, Nationsbank,
233 So. Wacker Drive, Chicago, IL 60606

Edwin M. Denson
Vice President

Prior to November, 1997, Vice President and Senior Economist
Primark Decision Economics, 260 Franklin St., Boston, MA 02110

Ralph C. Derbyshire
Senior Vice President

Prior to November, 1997, Partner, Palmer & Dodge, One Beacon
Street, Boston, MA 02108; Board Member, MSPCC, 399 Boylston St.,
Boston, MA; Board Member, Winchester After School Program,
Skillings Rd., Winchester, MA

Michael G. Dolan
Assistant Vice President

Chairman-Finance Council, St. Mary's Parish, 44 Myrtle St.,
Melrose, MA 02176; Member, School Advisory Board, St. Mary's
School, 44 Myrtle St., Melrose, MA 02176

Mark E. Dow
Vice President

Prior to November, 1997, Economist, International Monetary Fund,
Washington, DC

Emily Durbin
Vice President

Board of Directors, Family Service, Inc., Lawrence, MA 01840

Karnig H. Durgarian
Managing Director

Board Member, EBRI, Suite 600, 2121 K St., N.W., Washington, DC
20037-1896. Trustee, American Assembly, 122 C. St., N.W., Suite
350, Washington, DC 20001

Nathan Eigerman
Vice President

Trustee, Flower Hill Trust, 298 Marlborough St., #4, Boston, MA
02116

Lisa V. Emerick
Vice President

Prior to September, 1998, Asian Sales Trader, BWZ Securities
Asia, Inc., Citibank Tower, 3 Garden Road, Hong Kong

Irene M. Esteves
Managing Director

Prior to January, 1997, Vice President, Miller Brewing Co., 3939
West Highland Blvd., Milwaukee, WI 53210. Board of Director
Member, American Management Association Finance council, 1601
Broadway, New York, NY; Board of Director Member, First Night
Boston, 20 Park Plaza, Suite 927, Boston, MA; Board of Director
Member, SC Johnson Commercialmarkets, 8310 16th St., Stutevant, WI
53177; Board of Director Member, Massachusetts Taxpayers
Foundation, 24 Province St., Boston, MA; Board of Director Member,
Mrs. Bairds Bakeries, 515 Jones St., Suite 200, Fort Worth, Texas
76102

Deborah S. Farrell
Senior Vice President

Prior to May, 1997, Manager, Asian Investments, Emerging
Markets Investors Corporation, 1001 19th Street North, 16th Floor,
Arlington, VA 22209

Ian Ferguson
Senior Managing Director

Trustee, Park School, 171 Goddard Avenue, Brookline, MA 02146

John Ferry
Vice President

Prior to September, 1998, Vice President, Scudder Kemper
Investments, 101 California St., San Francisco, CA 94111.

Edward R. Finch
Vice President

Prior to December, 1997, Managing Director, M.A. Weatherbie & Co.,
265 Franklin St., Boston, MA 02110

Kate Fleisher
Vice President

Prior to January, 1998, Director of Human Resources, Laura Ashley,
6 St., James Ave. Suite 410, Boston, MA 02116

Karen T. Frost
Senior Vice President

Prior to February, 1998, Vice President, Morgan Stanley
Organization, 25 Cabot Square, London, England E14 4QA.

Stephen C. Gibbs
Vice President

Prior to June, 1998, Senior Financial Analyst, Fidelity
Investments, 82 Devonshire St., Boston, MA 02109

J. Peter Grant
Senior Vice President

Trustee, The Dover Church, Dover, MA 02030

Patrice Graviere
Senior Vice President

Prior to March, 1998, Regional Director for Latin America, MFS
International, LTD, Buenos Aires, Brazil

Paul E. Haagensen
Senior Vice President

Director, Haagensen Research Foundation, 630 West 168th St., New
York, NY 10032

James B. Haines
Assistant Vice President

Prior to February, 1997, Associate, Benefit Department, Ropes &
Gray, One International Place, Boston, MA 02110

Mary S. Hapij
Vice President

Prior to March, 1997, Research Liberty Manager, Pioneering
Management Corp., 60 State Street, Boston, MA 02109

Nigel P. Hart
Vice President

Prior to October, 1997, Senior Vice President and Portfolio
Manager, Investment Advisers, 3700 First Bank Place, Minneapolis,
MN 55402

Deborah R. Healey
Senior Vice President

Corporator, New England Baptist Hospital, 125 Parker Hill Ave.,
Boston, MA 02120; Director, NEB Enterprises, 125 Parket Hill Ave.,
Boston, MA 02120

Marianne P. Isgur
Assistant Vice President

Prior to March, 1998, Executive Recruiter, Professions, 2 Villa
Rd., So. Hamilton, MA 01982; President, Equine Ventures, LTD., 25
Fellows Rd., Ipswich, MA 01932

Jeffrey Kaufman
Senior Vice President

Prior to July, 1998, Vice President and Portfolio Manager, MFS
Investmnt Management, 500 Boylston St., Boston, MA 02116

Ira C. Kalus-Bystricky
Vice President

Prior to March, 1998, Consultant, Arthur D. Little, 25 Acorn Park,
Cambridge, MA 02114

Hiroshi Kato
Vice President

Prior to August, 1998, Manager, Senior Analyst, Daiwa Institute
of Research, 15-6 Fuyuki, Koutou-ku, Tokyo, 135-8460

Mary E. Kearney
Managing Director

Trustee, Massachusetts Eye and Ear Infirmary, 243 Charles St.,
Boston, MA 02114

Kevin J. Keleher
Assistant Vice President

Prior to August, 1998, Support Manager, Digital Equipment Co., 111
Powder Mill Rd., Maynard, MA 01754

Catherine Kennedy
Vice President

Prior to September, 1997, Principal, Morgan Stanley, 1585
Broadway, New York, NY 10036

Jeffrey K. Kerrigan
Assistant Vice President

Prior to June, 1997, Vice President, Fleet Investments, 75 State
St., Boston, MA 02109

David R. King
Vice President

Prior to June, 1997, Vice President, Fleet Investments, 75 State
St., Boston, MA 02109

William P. King
Vice President

Prior to November, 1997, Portfolio Manager, TSA Global Asset
Management, 700 South Flower St., Los Angeles, CA 90017

Deborah F. Kuenstner
Managing Director

Prior to March, 1997, Senior Portfolio Manager, DuPont Pension
Fund Investment, 1 Right Parkway, Wilmington, DE 19850; Director,
Board of Pensions, Presbyterian Church, 1001 Market St.,
Philadelphia, PA

Thomas J. Kurey
Vice President

Prior to August, 1997, Vice President, Evergreen Securities, 77 W.
Wacker, Chicago, IL 60601

Linda Lane
Assistant Vice President

Member, American Society for Training & Development, 27 Glen
Street, Suite 4, Stoughton, MA 02072

Kenneth W. Lang
Vice President

Prior to April, 1997, Vice President, Montgomery Securities, 600
Montgomery St., San Francisco, CA 94111

Coleman N. Lannum, III
Senior Vice President

Prior to June, 1997, Director-Investor Relations, Mallinckrodt,
Inc., 7733 Forsyth Blvd., St. Louis, MO 63105

Leonard LaPorta, Jr.
Vice President

Prior to March, 1998, Assistant Vice President, State Street
Global Advisors, Two International Place, Boston, MA 02110; Board
of Overseers', USS Constitution Museum, Charleston, MA

Lawrence J. Lasser
President, Director and Chief Executive

Director, Marsh & McLennan Companies, Inc., 1221 Avenue of the
Americas, New York, NY 10020; Board of Governors and Executive
Committee, Investment Company Institute, 1401 H. St., N.W. Suite
1200, Washington, DC 20005; Board of Overseers, Museum of Fine
Arts, 465 Huntington, Ave., Boston, MA 02115; Trustee, Beth Israel
Deaconess Medical Center, 330 Brookline Ave., Boston, MA; Member
of the Council on Foreign Relations, 58 East 68th St., New York,
NY 10021; Member of the Board of Directors of the United Way of
Massachusetts Bay, 245 Summer St., Suite 1401, Boston, MA 02110;
Trustee of the Vineyard Open Land Foundation, RFD Box 319X,
Vineyard Haven, MA 02568.

Joan M. Leary
Vice President

Prior to January, 1997, Senior Tax Manager, KMPG, 99 High Street,
Boston, MA 02110

Craig S. Lewis
Vice President

Prior to January, 1998, Analyst, Keystone Investments, 200
Berkeley Street, Boston, MA 02101

Geirulv Lode
Vice President

Prior to July, 1997, Vice President, Chancellor Lgt, Asset
Management, 1166 Avenue of the Americas, New York, NY 10036

Elizabeth M. MacElwee Jones
Senior Vice President

Prior to January, 1998, Principal, Morgan Stanley, 1155 Broadway,
New York, NY 10036

Saba S. Malak
Vice President

Prior to October, 1997, Consultant, The Boston Consultant,
Exchange Place, Boston, MA 02109

Bruce D. Martin
Vice President

Prior to April, 1997, Vice President, Eaton Vance, 29 Boston, MA
02110

Kevin Maloney
Managing Director

Institutional Director, Financial Management Association,
University of South Florida, College of Business Administration,
Suite 3331, Tampa, FL 33620

Jabaz Mathai
Assistant Vice President

Prior to December, 1997, Associate, Deutsche Morgan Grenfell,
31 West 52ndSt., New York, NY 10019

Scott M. Maxwell
Managing Director

Prior to March, 1997, Chief Financial Officer-Equity Division,
Lehman Brothers, 3 World Financial Center, New York, NY 10285

Bridget McCavoy
Assistant Vice President

Prior to October, 1997, Senior Recruiter, BankBoston, 100 Federal
St., Boston, MA 02110; Prior to October, 1996. Executive
Recruiter, HI Hunt & Co., 99 Summer St., Boston, MA 02110

William McGue
Managing Director

Board Member, Sacred Heart Elementary School, 75 Commercial
St.,Weymouth, MA 02188; Board of Directors Member and Treasurer,
Whittemore Shores Condominium Association, Bridgewater, NH 03222

Paul K. Michaud
Vice President

Prior to December, 1997, Assistant Vice President, Union Bank of
Switzerland, Bahnhofstrasse 45, 8021 Zurich, Switzerland

Carol H. Miller
Assistant Vice President

Board Member, The Robbins-de Beaumont Foundation, c/o Sullivan &
Worcester, One Post Office Square, Boston, MA 02109; Board Member,
Burke Mtn. Academy, East Burke, VT; Board Member, The Lyric Stage
Theater, 140 Clarendon St., Boston, MA 02116; Board Member, The
Boston Modern Orchestra Project, P.O. Box 39134, Cambridge, MA
02139

Christopher G. Miller
Vice President

Prior to January, 1998, Portfolio Manager, Analytic TSA Global
Asset Management, 700 So. Flower St., Los Angeles, CA 90017

William H. Miller
Senior Vice President

Prior to October, 1997, Vice President and Asset Portfolio
Manager, Delaware Management, One Commerce Square, Philadelphia,
PA

Jeanne L. Mockard
Senior Vice President

Trustee, The Bryn Mawr School, 109, W. Melrose Avenue, Baltimore,
MA 21210

Gerard I. Moore
Vice President

Prior To August, 1997, Vice President/Equity Research, Boston
Company Asset Management, One Boston Place, Boston, MA 02109

Donald E. Mullin
Senior Vice President

Corporate Representative and Board Member, Delta Dental Plan of
Massachusetts, 10 Presidents Landing, P.O. Box 94104, Medford, MA
02155

Kenneth W. Murphy, Jr.
Assistant Vice President
Prior to May, 1998, Senior Financial Analyst, Merck & Co.,
Inc., One Merck Drive, Whitehouse Station, NJ 08889

Kimberly A.M. Page Nauen
Assistant Vice President

Prior to February, 1998, Senior Consultant, Andersen
Consulting, 100 Williams St., Wellesley, MA 02181

Gayle M. O'Connell
Assistant Vice President

Prior To March, 1997, Assistant Director of Human Resources, ITT
Sheraton Corporation, 60 State St., Boston, MA 02109

Stephen S. Oler
Senior Vice President

Prior to June, 1997, Vice President, Templeton Investment Counsel,
500 E. Broward Blvd., Ft. Lauderdale, FL 33394

Kerry M. Owens
Assistant Vice President

Prior to July, 1998, Marketing Manager, ABN Amro, 199 Bishopsgate,
London, England, EC2M 3TY; Prior to April, 1997, Assistant
Manager, Citibank, 336 Strand, London, England, WC2

Margery C. Parker
Senior Vice President

Prior to December, 1997, Vice President and Portfolio Manager,
Keystone Investments 200 Berkeley Street, Boston, MA 02101

Carmel Peters
Senior Vice President

Prior to April, 1997, Managing Director/Chief Investment Asia
Pacific, Whellock NatWest Investment Management, Ltd, NatWest
Tower, Times Square, Causeway Bay, Hong Kong, China

William Perry
Vice President

Prior to September, 1997, Senior Trader, Fidelity Management &
Research, 82 Devonshire St., Boston, MA 02110

Keith Plapinger
Vice President

Chairman and Trustee, Advent School, 17 Brimmer St., Boston, MA
02108

Charles E. Porter
Executive Vice President

Trustee, Anatolia College, 130 Bowdoin St., Suite 1201, Boston, MA
02108; Governor, Handel & Hayden Society, Horticulture Hall, 300
Massachusetts Ave., Boston, MA 0215

George Putnam
Chairman and Director

Chairman and Director, Putnam Mutual Funds Corp.; Director, The
Boston Company, Inc., One Boston Place, Boston, MA 02108;
Director, Boston Safe Deposit and Trust Company, One Boston Place,
Boston, MA 02108; Director, Freeport-McMoRan, Inc., 200 Park
Avenue, New York, NY 10166; Director, General Mills, Inc., 9200
Wayzata Boulevard, Minneapolis, MN 55440; Director, Houghton
Mifflin Company, One Beacon Street, Boston, MA 02108; Director,
Marsh & McLennan Companies, Inc., 1221 Avenue of the Americas, New
York, NY 10020; Director, Rockefeller Group, Inc., 1230 Avenue of
the Americas, New York, NY 10020; Trustee, Massachusetts General
Hospital, Fruit Street, Boston, Ma 02114; McLean Hospital 115 Mill
St., Belmont,MA 02178; The Colonial Williamsburg Foundation, Post
Office Box 1776, Williamsburg, VA 23187; The Museum of Fine Arts,
465 Huntington Avenue, Boston, MA 02115; WGBH Foundation, 125
Western Avenue,Boston, MA 02134; The Nature Conservancy, Post
Office Square Building, 79 Milk St., Suite 300, Boston, MA 02109;
Trustee, The Jackson Laboratory, 600 Main St., Bar Harbor, ME 04

Robert A. Piepenburg
Vice President

Prior to December, 1997, Assistant Vice President, BankBoston
Corp./Boston Security, 100 Federal St., Boston, MA 02106

James A. Polk
Vice President

Prior to June, 1998, Investment Officer, Massachusetts
Financial Services, 500 Boylston St., Boston, MA 02116

Elizabeth Price
Assistant Vice President

Prior to January, 1998, Investment Analyst, Schroder Investment
Management Limited, 33 Gutter Lane, London, EC2V 8AS, England

Edward Qian
Vice President

Prior to February, 1998, Back Bay Advisors, 399 Boylston St.,
Boston, MA 02116; Pror to September, 1996, Post-Doctorate
Research, Massachusetts Institute of Technology, 77 Massachusetts
Avenue, Cambridge, MA 02109

Keith Quinton
Senior Vice President

Director, Eleazar, Inc., West Wheelock St., Hanover, NH 03755

Kevin J. Rogers
Senior Vice President
Prior to September, 1998, Managing Director- Portfolio Manager,
Invesco, NY Organization, 1066 Avenue of the Americas, New York,
NY 10036. Prior to June, 1997, Senior Analyst, Fidelity
Management & Research Co., 82 Devonshire St., Boston, MA 02109

Thomas V. Reilly
Managing Director

Trustee, Knox College, 2 East South St., Galesburg, IL
61401
Marc J. Ritenhouse
Vice President

Prior to January, 1998, Director of Finance, Fidelity Investments,
Inc., 82 Devonshire St., Boston, MA 02109

Oliver Rudigoz
Vice President

Prior to April, 1998, Portfolio Manager, Paribas Asset Management,
#3 Rue D'Antin, Paris, France, 75002

Michael V. Salm
Vice President

Prior to November, 1997, Mortgage Analyst, Blackrock Financial 345
Park Ave., New York, NY 10010

Saied Simozar
Senior Vice President

Prior to March, 1998, Manager, Portfolio Analytics, DuPont
Pension fund Investment, One Righter Parkway, Suite 3200,
Wilmington, DE 198903

Robert J. Schoen
Assistant Vice President

Prior to June, 1997, Sole Proprietor, Schoen Timing Strategies,
315 E. 21st , New York, NY 10010

Justin M. Scott
Managing Director

Director, DSI Proprieties (Neja) Ltd., Epping Rd., Reydon, Essex
CM19 5RD

Max S. Senter
Senior Vice President

General Partner, M.S. Senter & Sons Partnership, 4900 Fayetteville
Rd., Raleigh, NC 27611

Edward Shadek, Jr.
Vice President

Prior to March, 1997, Portfolio Manager, Newhold Asset Management,
950 Haverford Rd., Bryn Mawr, PA 19010

Raj Ken Sharma
Vice President

Prior to January, 1998, Vice President and Portfolio Manager,
Fleet Financial, 75 State Street, Boston, MA 02106

Jean I. Sievert
Senior Vice President

Prior to October, 1998, Vice President, Salomon Smith Barney,
Seven World Trade Center, New York, NY 10048.

Gordon H. Silver
Managing Director

Trustee, Wang Center for the Performing Arts, 270 Tremont St.,
Boston, MA 02116

David M. Silk
Senior Vice President

Member of Board of Directors, Jobs for Bay State Graduates, 451
Andover St., Suite 305, North Andover, MA 01845

Steven Spiegel
Senior Managing Director

Director, Ultra Diamond and Gold Outlet , 29 East Madison
St., Suite 1800, Chicago, IL 60602; Director, FACES New York
University Medical Center, 550 First Avenue, New York, NY 10016;
Trustee, Babson College, One College Drive, Wellesley, MA 02157;

Christopher A. Spurlock
Vice President

Prior to May, 1997, Sales Trader, J.P. Morgan, 60 Wall St., New
York, NY

James St. John
Assistant Vice President

Prior to July, 1998, Investment Analyst, University of
Rochester, Rochester, NY 14627
Loren Michael Starr
Managing Director

Prior to February, 1998, Senior Vice President, Lehman
Brothers, 3 World Financial Center, New York, NY 10285.

Michael P. Stack
Senior Vice President

Prior to November, 1997, Senior Vice President and Portfolio
Manager, Independence Investment Associates, 53 State St.,
Boston, MA 02109

Casey Strumpft
Senior Vice President

Prior to January, 1997, Director, Blue Cross and Blue Shireld, 100
Summer St., Boston, MA 02110

Toshifumi Sugimoto
Senior Vice President

Prior to October, 1998, Portfolio Manager, Deputy General
Manager, Nikko Securities Investment Trust & Management, Fixed
Income Department, 4-3 Nihonbashi, Hakozakicho, Chuou-ku, Tokyo,
Japan, 103-0015

Robert E. Sweeney
Vice President

Prior to February, 1998, Vice President, Corporate Research Smith
Barney, One New York Plaza, New York, NY 10004

Judith H. Swirbalus
Vice President

Prior to January, 1998, Alex, Brown & Sons, One South St.,
Baltimore, MD 21202

John C. Talanian
Managing Director

Member of Board of Directors, the Japan Society of Boston, One
Milk Street, Bosston, MA 02109

Robert J. Toner
Assistant Vice President

Prior to September, 1998, Associate, Goodwin Procter & Hoar, LLP,
Exchange Place, Boston, MA 02109

John R. Tonkin
Assistant Vice President

Prior to January, 1998, Analyst, Credit Suisse First Boston Celtic
Towers, The Terrace Wellington, New Zealand

Scott G. Vierra
Vice President

Prior to September, 1997, Staffing Lead, Cisco Systems, 250 Apolio
Drive, Chelmsford, MA 01824

David L. Waldman
Managing Director

Prior to June, 1997, Senior Portfolio Manager, Lazard Feres Asset
Management, 30 Rockefeller Center, New York, NY 10112

Paul C. Warren
Senior Vice President
Prior to May, 1997, Director, IDS Fund Management, LT, One
Pacific Place, Squensway, Hong Kong, China

Dierdre West-Smith
Assistant Vice President

Trustee, St. James Condo Association, 66 St. James St., Roxbury,
MA 02119
Toshifumi Sugimoto
Senior Vice President

Eric Wetlaufer
Managing Director

President and Member of Board of Directors, The Boston Security
Analysts Society, Inc., 100 Boylston St., Suite 1050, Boston, MA
02110

Edward F. Whalen
Senior Vice President

Member of the Board of Directors, Hockomock Area YMCA, 300 Elmwood
St., North Attleboro, MA 02760

Burton Wilson
Vice President

Prior to March, 1997, Associate Investments Banking, Robertson
Stephens & Co., 555 California St., Suite 2600, San Francisco, CA
94104

Richard P. Wyke
Senior Vice President

Director, Salem YMCA, One Sewall St., Salem, MA 01970
Michael R. Yogg
Senior Vice President

Prior to April, 1997, Senior Vice President, State Street
Research & Management, One Financial Center, Boston, MA 02111
Scott D. Zaleski
Assistant Vice President

Prior to May, 1997, Investment Officer, State Street Bank & Trust,
1776 Heritage Dr., Quincy, MA 02171; Prior to September, 1996,
Investment Associate Fidelity Investments, 82 Devonshire St.,
Boston, MA 02109

Michael P. Zeller
Vice President

Prior to July, 1997, Sales Manger, NYNEX Information Resources, 35
Village R., Middleton, MA 01949

ITEM 27. PRINCIPAL UNDERWRITER

(a) Putnam Mutual Funds Corp. is the principal underwriter for
each of the following investment companies, including the
Registrant:

Putnam American Government Income Fund, Putnam Arizona Tax Exempt
Income Fund, Putnam Asia Pacific Growth Fund, Putnam Asset
Allocation Funds, Putnam Balanced Retirement Fund, Putnam
California Tax Exempt Income Fund, Putnam California Tax Exempt
Money Market Fund, Putnam Capital Opportunitites Fund, Putnam
Convertible Income-Growth Trust, Putnam Diversified Equity Trust,
Putnam Diversified Income Trust, Putnam Equity Income Fund, Putnam
Europe Growth Fund, Putnam Florida Tax Exempt Income Fund, Putnam
Funds Trust, The George Putnam Fund of Boston, Putnam Global
Governmental Income Trust, Putnam Global Growth Fund, Putnam
Global Natural Resources Fund, The Putnam Fund for Growth and
Income, Putnam Growth and Income Fund II, Putnam Health Sciences
Trust, Putnam High Yield Trust, Putnam High Yield Advantage Fund,
Putnam High Quality Bond Fund, Putnam Income Fund, Putnam
Intermediate U.S. Government Income Fund, Putnam International
Growth Fund, Putnam Investment Funds, Putnam Investors Fund,
Putnam Massachusetts Tax Exempt Income Fund, Putnam Michigan Tax
Exempt Income Fund, Putnam Minnesota Tax Exempt Income Fund,
Putnam Money Market Fund, Putnam Municipal Income Fund, Putnam New
Jersey Tax Exempt Income Fund, Putnam New Opportunities Fund,
Putnam New York Tax Exempt Income Fund, Putnam New York Tax Exempt
Money Market Fund, Putnam New York Tax Exempt Opportunities Fund,
Putnam Ohio Tax Exempt Income Fund, Putnam OTC & Emerging Growth
Fund, Putnam Pennsylvania Tax Exempt Income Fund, Putnam Preferred
Income Fund, Putnam Strategic Income Fund, Putnam Tax Exempt
Income Fund, Putnam Tax Exempt Money Market Fund, Putnam Tax-Free
Income Trust, Putnam U.S. Government Income Trust, Putnam
Utilities Growth and Income Fund, Putnam Variable Trust, Putnam
Vista Fund, Putnam Voyager Fund, Putnam Voyager Fund II.

(b) The directors and officers of the Registrant's principal
underwriter are listed below. The principal business address of
each person is One Post Office Square, Boston, MA 02109:

Name
Positions and Offices
with Underwriter
Positions and Offices
with Registrant
Aaron, Jefferson F. III
Asst . Vice President
None
Adduci,John V.
Vice President
None
Alberts,Richard W.
Asst. Vice President
None
Alden,Donald F.
Vice President
None
Alders,Christopher A.
Senior Vice President
None
Alpaugh,Christopher S.
Vice President
None
Amisano,Paulette C.
Vice President
None
Andrews,Margaret
Vice President
None
Arends,Michael K.
Senior Vice President
None
Asher,Steven E.
Senior Vice President
None
Avery,Scott A.
Senior Vice President
None
Aymond,Christian E.
Senior Vice President
None
Aymond,Colin C.
Vice President
None
Barnett, William E.
Assistant Vice President
None
Barrett, Thomas
Vice President
None
Battit,Suzanne J
Vice President
None
Beatty,Steven M.
Senior Vice President
None
Bent,John J.
Vice President
None
Beringer,Thomas C.
Vice President
None
Berka,Sharon A.
Senior Vice President
None
Boneparth,John F.
Managing Director
None
Bonfilio Jr.,Peter J.
Asst. Vice President
None
Bouchard,Keith R.
Senior Vice President
None
Bradford Jr.,Linwood E.
Senior Vice President
None
Brennan,Mary Ann
Asst. Vice President
None
Bresnahan,Leslee R.
Senior Vice President
None
Brockelman,James D.
Senior Vice President
None
Brookman,Joel S.
Vice President
None
Brown,Timothy K.
Senior Vice President
None
Buckner,Gail D.
Senior Vice President
None
Burke,Robert W.
Sr Managing Director
None
Burrill, Gregory J.
Vice President
None
Cabana,Susan D.
Vice President
None
Capone,Robert G.
Senior Vice President
None
Cartwright,Patricia A.
Asst. Vice President
None
Casey,David M.
Vice President
None
Castle Jr.,James R.
Vice President
None
Chapman,Thomas E.
Vice President
None
Chase,Mary Claire
Vice President
None
Chrostowski,Louis F.
Senior Vice President
None
Church,Daniel J.
Vice President
None
Clark,Richard B.
Senior Vice President
None
Clermont,Mary
Asst. Vice President
None
Clinton,John C.
Asst. Vice President
None
Collman,Kathleen M.
Sr Managing Director
None
Commane,Karen L.
Asst. Vice President
None
Coneeny,Mark L.
Senior Vice President
None
Connelly,Donald A.
Senior Vice President
None
Connolly,Karen E.
Asst. Vice President
None
Conyers,Barry M.
Vice President
None
Corbett,Dennis
Vice President
None
Corvinus,F. Nicholas
Senior Vice President
None
Cosmer,Thomas A.
Senior Vice President
None
Cotto,Stephen P
Asst. Vice President
None
Cristo,Chad H.
Vice President
None
Crowley,Colleen J.
Asst. Vice President
None
Curran,Peter J.
Senior Vice President
None
Dahill,Jessica E.
Vice President
None
Daly,Kenneth L.
Managing Director
None
Dane,Edward H.
Senior Vice President
None
Daylor,Donna M.
Vice President
None
Days,Nancy M.
Asst. Vice President
None
De Oliveira-Smith,Pamela
Asst. Vice President
None
Deluse,Laura R.
Asst. Vice President
None
DeMont,Lisa M.
Vice President
None
Dennehy,Teresa F.
Vice President
None
Derbyshire,Ralph C
Senior Vice President
None
Devin,Renate S.
Senior Vice President
None
Diaz, Roger
Vice President
None
DiStasio,Karen E.
Vice President
None
Dolan,Michael G.
Vice President
None
Donaldson,Scott M.
Vice President
None
Doughtery, Thomas
Vice President
None
Duffy,Deirdre E.
Senior Vice President
None
Durbin,Emily J.
Vice President
None
Durkee,Christine
Asst. Vice President
None
Edlin,David B.
Managing Director
None
Eisenkraft,Gail A.
Managing Director
None
English,James M.
Senior Vice President
None
Esposito,Vincent
Managing Director
None
Farrell,Deborah S.
Senior Vice President
None
Favalaro, Beth
Vice President
None
Feldman,Susan H.
Senior Vice President
None
Fisher,C. Nancy
Managing Director
None
Fishman,Mitchell B.
Senior Vice President
None
Fiumara,Joseph C.
Vice President
None
Flaherty,Patricia C.
Senior Vice President
None
Fleisher,Kate
Vice President
None
Foley,Timothy P.
Vice President
None
Frost,Karen T.
Senior Vice President
None
Fullerton,Brian J.
Senior Vice President
None
Gates,Judy S.
Senior Vice President
None
Gennaco,Joseph P.
Senior Vice President
None
Gibbs,Stephen C.
Vice President
None
Gindel,Caroline E.
Asst. Vice President
None
Goodfellow,Mark D.
Vice President
None
Goodman,Robert
Managing Director
None
Gore, Gregory T.
Vice President
None
Gould ,Carol J.
Asst. Vice President
None
Grace ,Anthony J.
Asst. Vice President
None
Grace,Linda K.
Vice President
None
Grey, Eric M.
Vice President
None
Grossberg,Jill
Asst. Vice President
None
Grove,Denise
Vice President
None
Gubala,Jeffrey P.
Vice President
None
Guerin,Donnalee
Asst. Vice President
None
Guerra,Salvatore F.
Vice President
None
Haines,James B.
Asst. Vice President
None
Hall,Debra L.
Vice President
None
Halloran,James E.
Vice President
None
Halloran,Thomas W.
Senior Vice President
None
Hansen, Christine M.
Assistant Vice President
None
Harbeck,John D.
Vice President
None
Harrington,Bruce D.
Vice President
None
Harrington, Shannon W.
Vice President
None
Hartig, Robert
Vice President
None
Hartigan,Craig W.
Vice President
None
Hartley,Deborah M.
Asst. Vice President
None
Hawkins III,Howard W.
Vice President
None
Hayes-Castro,Deanna R.
Vice President
None
Hedstrom,Gayle A.
Asst. Vice President
None
Heffernan,Paul P.
Senior Vice President
None
Heimanson,Susan M.
Senior Vice President
None
Holly Sr.,Jeremiah K.
Vice President
None
Holmes,Maureen A.
Asst. Vice President
None
Hooley,Daniel F Jr.
Asst. Vice President
None
Hoyt,Paula J.
Asst. Vice President
None
Hurley,William J.
Managing Director & CFO
None
Hutchins,Robert B.
Vice President
None
Isgur,Marianne P.
Asst. Vice President
None
Jacobsen,Dwight D.
Managing Director
None
Jordan,Stephen R.
Asst. Vice President
None
Kapinos,Peter J.
Vice President
None
Kay,Karen R.
Senior Vice President
None
Keleher,Kevin J.
Asst. Vice President
None
Kelley,Brian J.
Vice President
None
Kelly,A.Siobhan
Asst. Vice President
None
Kennedy,Alicia C.
Asst. Vice President
None
King,David L.
Managing Director
None
King,David R.
Vice President
None
Kinsman,Anne
Senior Vice President
None
Kirk,Deborah H.
Senior Vice President
None
Koontz,Jill A.
Senior Vice President
None
Kreutzberg,Howard H.
Senior Vice President
None
Lacascia,Charles M.
Vice President
None
Landers,Bruce M.
Vice President
None
Lane, Linda L.
Asst . Vice President
None
LaPierre,Christopher W
Asst. Vice President
None
Lathrop,James D.
Senior Vice President
None
Lawlor,Stephanie T.
Asst. Vice President
None
Leary,Joan M.
Vice President
None
Ledbetter,Charles C.
Vice President
None
Leddy, Maura W.
Vice President
None
Leipsitz,Margaret
Asst. Vice President
None
Lemire,Kevin
Vice President
None
Levy,Eric S.
Senior Vice President
None
Levy,Norman S.
Vice President
None
Lewandowski Jr.,Edward V.
Vice President
None
Lewandowski,Edward V.
Senior Vice President
None
Li,Mei
Asst. Vice President
None
Lieberman,Samuel L.
Vice President
None
Lifsitz,David M.
Vice President
None
Lilien,David R.
Vice President
None
Linehan,Ann-Marie
Asst. Vice President
None
Litant,Lisa M.
Asst. Vice President
None
Lockwood,Maura A.
Senior Vice President
None
Lomba,Rufino R.
Senior Vice President
None
Long,Gregory T.
Vice President
None
Lucey,Kevin J
Vice President
None
Lucey,Robert F.
Director
None
Lyons ,Robert F.
Asst. Vice President
None
Malatos,Ann
Vice President
None
Mallin,Bonnie J.
Senior Vice President
None
Maloof,Renee L.
Asst. Vice President
None
Mancini,Dana
Asst. Vice President
None
Manning,George J.
Vice President
None
Manthorne,Heather M.
Asst. Vice President
None
Maravel,Alexi A.
Asst. Vice President
None
Marius,Frederick S.
Vice President
None
McAvoy,Bridget
Asst. Vice President
None
McCafferty,Karen A.
Vice President
None
McCarthy,Anne B.
Asst. Vice President
None
McConville,Paul D.
Senior Vice President
None
McCracken,Brian
Asst. Vice President
None
McCutcheon,Bruce A
Senior Vice President
None
McDermott,Daniel E.
Asst. Vice President
None
McKenna,Mark J.
Senior Vice President
None
McNamara,Laura
Vice President
None
McNamee,Mary G.
Asst. Vice President
None
Meagher,Dorothy B.
Asst. Vice President
None
Metelmann,Claye A.
Vice President
None
Miller,Bart D.
Senior Vice President
None
Miller,Jeffrey M.
Managing Director
None
Mills,Ronald K.
Vice President
None
Minsk,Judith
Asst. Vice President
None
Mintzer,Matthew P.
Senior Vice President
None
Richard Monaghan
President and Director
None
Monahan ,Kimberly A.
Vice President
None
Moody,Paul R.
Vice President
None
Moonin,Sara R.
Asst. Vice President
None
Moret,Mitchell L.
Senior Vice President
None
Richard Monaghan
President and Director

Mosher ,Barry L.
Asst. Vice President
None
Mullen,Donald E.
Senior Vice President
None
Murphy Jr.,Kenneth W.
Asst. Vice President
None
Murphy,Paul G.
Vice President
None
Murray,Brendan R.
Vice President
None
Nadherny,Robert
Senior Vice President
None
Natale,Ellen E.
Asst. Vice President
None
Nauen,Kimberly Page
Asst. Vice President
None
Neary,Ellen R.
Vice President
None
Nelson,Alexander L.
Managing Director
None
Newell,Amy Jane
Vice President
None
Nickodemus,John P.
Senior Vice President
None
Nickse,Gail A.
Asst. Vice President
None
O'Brien,Lois C.
Vice President
None
O'Brien,Nancy E.
Vice President
None
O'Connell,Gayle M.
Asst. Vice President
None
Onofrio,Ellen
Asst. Vice President
None
Owens,Kerry M.
Asst. Vice President
None
Palmer,Patrick J.
Vice President
None
Palombo,Joseph R.
Managing Director
None
Panessa,Brian
Vice President
None
Papes,Scott A.
Vice President
None
Parr,Cynthia O.
Vice President
None
Pelletier,Dale M.
Vice President
None
Peterson,Jennifer H.
Asst. Vice President
None
Peterson,Kathryn L.
Vice President
None
Petralia,Randolph S.
Senior Vice President
None
Phoenix,John G.
Senior Vice President
None
Phoenix,Joseph
Senior Vice President
None
Plapinger,Keith
Senior Vice President
None
Powers,Brian S.
Asst. Vice President
None
Present,Howard B.
Senior Vice President
None
Pulkrabek,Scott M.
Vice President
None
Putnam,George
Director
Chairman and President
Rezabek,Joseph L.
Asst. Vice President
None
Riley,Megan G.
Asst. Vice President
None
Ritenhouse,Marc J.
Vice President
None
Rodammer,Kris
Vice President
None
Rogers,Deborah A.
Vice President
None
Rothman,Debra V.
Vice President
None
Rowe,Robert B.
Vice President
None
Ruys de Perez,Charles A.
Senior Vice President
None
Ryan,Carolyn M.
Asst. Vice President
None
Ryan,Deborah A.
Vice President
None
Saunders,Catherine A.
Senior Vice President
None
Saunders,Robbin L.
Vice President
None
Saur,Karl W.
Vice President
None
Scanlon,Michael M.
Vice President
None
Schaefer,Jennifer L.
Asst. Vice President
None
Schofield,Shannon D.
Vice President
None
Schultz,Mitchell D.
Managing Director
None
Scordato,Christine A.
Senior Vice President
None
Scott,Joseph W.
Asst. Vice President
None
Segers,Elizabeth R.
Senior Vice President
None
Shamburg,John B.
Vice President
None
Sharpless,Kathy G.
Managing Director
None
Shiebler,William N.
Director
Vice President
Short,Jonathan D.
Senior Vice President
None
Siemon, Jr., Frank E.
Assistant Vice President
None
Silver,Gordon H.
Senior Managing Director
Vice President
Skistimas Jr,John J.
Vice President
None
Smith,Stuart C.
Asst. Vice President
None
Southard,Peter J.
Vice President
None
Spiegel,Steven
Sr Managing Director
None
Stack,Michael P.
Senior Vice President
None
Stanojev,Nicholas T.
Senior Vice President
None
Starr,Loren M.
Managing Director
None
Steinberg,Lauren B.
Asst. Vice President
None
Stern,Derek A.
Asst. Vice President
None
Stickney,Paul R.
Senior Vice President
None
Strumpf,Casey
Senior Vice President
None
Sugimoto, Toshifumi
Senior Vice President
None
Sullivan,Brian L.
Senior Vice President
None
Sullivan,Donna G
Vice President
None
Sullivan,Elaine M.
Senior Vice President
None
Sullivan,Guy
Managing Director
None
Sullivan,Kevin J.
Senior Vice President
None
Sullivan,Maryann
Asst. Vice President
None
Sutherland,George C.
Vice President
None
Sweeney,Janet C.
Senior Vice President
None
Talanian,John C.
Managing Director
None
Tanner,B Iris
Vice President
None
Tavares,April M.
Asst. Vice President
None
Taylor,David S.
Vice President
None
Telling,John R.
Senior Vice President
None
Tibbetts,Richard B.
Managing Director
None
Tirado,Patrice M.
Vice President
None
Toner,Robert J.
Asst. Vice President
None
Tosi,Janet E.
Vice President
None
Troped,Bonnie L.
Senior Vice President
None
Trowbridge,Wendy S.
Asst. Vice President
None
Twigg,Christine M.
Asst. Vice President
None
Vander Linde,Douglas J.
Senior Vice President
None
Veddern, Daniel R.
Vice President
None
Verani,John R.
Senior Vice President
Vice President
Vierra,Scott G.
Vice President
None
West-Smith,Deirdre
Asst. Vice President
None
Whalen,Brian
Vice President
None
Whalen,Edward F.
Senior Vice President
None
Whitaker,J. Greg
Vice President
None
White,J. Bennett
Vice President
None
Wolfson,Jane
Senior Vice President
None
Woloshin,Benjamin I.
Senior Vice President
None
Woolverton,William H.
Managing Director
None
Zeller,Michael P.
Vice President
None
Zografos,Laura J.
Vice President
None
Zukowski,Virginia A.
Senior Vice President
None

Item 28. Location of Accounts and Records

Persons maintaining physical possession of accounts, books and other
documents required to be maintained by Section 31(a) of the Investment
Company Act of 1940 and the Rules promulgated thereunder are
Registrant's Clerk, Beverly Marcus; Registrant's investment adviser,
Putnam Investment Management, Inc.; Registrant's principal underwriter,
Putnam Mutual Funds Corp.; Registrant's custodian, Putnam Fiduciary
Trust Company ("PFTC"); and Registrant's transfer and dividend
disbursing agent, Putnam Investor Services, a division of PFTC. The
address of the Clerk, investment adviser, principal underwriter,
custodian and transfer and dividend disbursing agent is One Post Office
Square, Boston, Massachusetts 02109.

Item 29. Management Services

None.

Item 30. Undertakings

None.

NOTICE

A copy of the Agreement and Declaration of Trust of Putnam Variable
Trust is on file with the Secretary of State of The Commonwealth of
Massachusetts and notice is hereby given that this instrument is
executed on behalf of the Registrant by an officer of the Registrant as
an officer and not individually and the obligations of or arising out of
this instrument are not binding upon any of the Trustees, officers or
shareholders individually but are binding only upon the assets and
property of the Registrant.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the has duly caused this Amendment to
its Registration Statement to be signed on its behalf by the
undersigned, duly authorized, in the City of Boston, and The
Commonwealth of Massachusetts, on the 12th day of February, 1999.

Putnam Variable Trust

By: Gordon H. Silver, Vice President

Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement of Putnam Variable Trust has
been signed below by the following persons in the capacities and on the
dates indicated:

Signature Title

George Putnam President and Chairman of the Board;
Principal Executive Officer; Trustee

John D. Hughes Senior Vice President; Treasurer and
Principal Financial Officer

Paul G. Bucuvalas Assistant Treasurer and Principal Accounting
Officer

Jameson A. Baxter Trustee

Hans H. Estin Trustee

John A. Hill Trustee

Ronald J. Jackson Trustee

Paul L. Joskow Trustee

Elizabeth T. Kennan Trustee

Lawrence J. Lasser Trustee

John H. Mullin, III Trustee

Robert E. Patterson Trustee

Donald S. Perkins Trustee

William F. Pounds Trustee

George Putnam, III Trustee

A.J.C. Smith Trustee

W. Thomas Stephens Trustee

W. Nicholas Thorndike Trustee

By: Gordon H. Silver,
as Attorney-in-Fact
February 12, 1999
[/R]