PUTNAM VARIABLE TRUST, 497, 1999-05-07

PUTNAM VARIABLE TRUST
497, 1999-05-07

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PUTNAM VARIABLE TRUST
PROSPECTUS Class IA Shares
APRIL 30, 1999

Growth Funds

Putnam VT Asia Pacific Growth Fund
Putnam VT Global Growth Fund
Putnam VT Health Sciences Fund
Putnam VT International Growth Fund
Putnam VT International New Opportunities Fund
Putnam VT Investors Fund
Putnam VT New Opportunities Fund
Putnam VT OTC & Emerging Growth Fund
Putnam VT Research Fund
Putnam VT Vista Fund
Putnam VT Voyager Fund

Growth and Income Funds
Putnam VT The George Putnam Fund of Boston
Putnam VT Growth and Income Fund
Putnam VT International Growth and Income Fund
Putnam VT New Value Fund
Putnam VT Small Cap Value Fund
Putnam VT Utilities Growth and Income Fund

Income Funds

Putnam VT Diversified Income Fund
Putnam VT High Yield Fund
Putnam VT Income Fund

Asset Allocation Fund

Putnam VT Global Asset Allocation

Money Market Fund

Putnam VT Money Market Fund

This prospectus explains what you should know about
the funds in Putnam Variable Trust, which are
available for purchase by separate accounts of
insurance companies.

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

Fund summaries
The following summaries identify each fund's goal,
principal investment strategies and the main risks
that could adversely affect the value of a fund's
shares and the total return on your investment. Each
summary also contains performance information that
provides some indication of each fund's risks. The
chart contained in each summary shows year-to-year
changes in the performance of the fund's class IA
shares. A table following each chart compares the
fund's performance to that of broad measures of market
performance. Of course, a fund's past performance is
not necessarily an indication of future performance.
None of the performance information reflects the
impact of insurance-related charges or expenses.
Please refer to the prospectus for your insurance
contract for information about those charges and
performance data reflecting those charges and
expenses.

You can lose money by investing in any of the funds.
A fund may not achieve its goals, and none of the
funds are 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. Although Putnam VT Money Market Fund seeks to
preserve the value of your investment at $1.00 per
share, you may lose money by investing in that fund.

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.
MAIN RISKS
* 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 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 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. 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.

PERFORMANCE INFORMATION
CALENDAR YEAR TOTAL RETURNS FOR CLASS IA SHARES
(Bar chart)
Plot Points
1995 2.30%
1996 9.10%
1997 -14.66%
1998 -5.48%

Year-to-date performance through 3/31/99 was 8.52%.
During the periods shown in the bar chart, the highest
return for a quarter was 18.16% (quarter ending
12/31/98) and the lowest return for a quarter was -
15.83% (quarter ending 12/31/97).
Average annual total returns (for periods ending 12/31/98)

Past 1 year Since inception (5/1/95)
Class IA -5.48% -2.82%
MSCI Pacific Index 2.44% -9.28%

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, an
unmanaged index of Asian and Pacific Rim equity
securities, with all values expressed in U.S. dollars.

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 fixedincome 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
denominated in foreign and U.S. currencies of foreign
governments, their agencies and instrumentalities, and
other fixed-income securities denominated in foreign
and U.S. currencies.
MAIN RISKS
* 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 and emerging market government debt than
for U.S. Government debt. Credit risk is especially
high 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 securities (in the U.S.
and Investment Grade Sector) 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 that Putnam Management's allocation of
the fund's assets among the listed sectors may
adversely affect the fund's performance.
* 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.
PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IA SHARES
(Bar chart)
Plot Points
1994 -4.23%
1995 19.13%
1996 8.81%
1997 7.38%
1998 -1.37%

Year-to-date performance through 3/31/99 was 0.53%.
During the periods shown in the bar chart, the highest
return for a quarter was 5.97% (quarter ending
6/30/95) and the lowest return for a quarter was -
4.94% (quarter ending 9/30/98).
Average annual total returns (for periods ending
12/31/98)

Past 1 year Past 5 years Since inception (9/15/93)
Class IA -1.37% 5.62% 5.76%
Lehman Brothers
Mortgage-backed 7.23% 7.06% --
Bond Index
Salomon Brothers
Non U.S. World
Government Bond
Index 17.79% 8.26 7.89%
First Boston
High Yield Index 0.58% 8.16% 8.65%

The fund's performance is compared to the Lehman
Brothers Mortgage-backed Bond Index, an unmanaged index
of U.S. government and mortgage-backed 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 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 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. Credit risk is especially
high for debt of below investmentgrade quality.
* The risk that Putnam Management's allocation of
the fund's assets between stocks and bonds may adversely affect
the fund's performance.
PERFORMANCE INFORMATION
Performance information will be available after the
fund completes a full calendar year of operation.

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.
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: The objective of this sector is
to seek both capital growth, and, to a lesser extent, current
income. This sector will invest primarily in 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: The objective of this
sector is to seek capital appreciation. This sector will invest
primarily in growth and value stocks principally
traded in foreign securities markets.

* U.S. Fixed-income: The objective of this sector
is to seek high current income which in the judgement of Putnam
Management does not involve undue risk to principal or
income. This sector will invest primarily in fixed-
income securities of U.S. companies or the U.S.
government, its agencies or instrumentalities,
mortgage-backed and asset-backed securities,
convertible securities and preferred stock.

* International Fixed-income: The objective of
this sector is to seek high current income. This sector will invest
primarily in fixed-income securities denominated in
foreign currencies of non U.S. companies or foreign
governmental issuers or supranatural
agencies.
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 expects that under normal market
conditions it will invest a majority of its assets in
equity securities. The fund can invest in companies
of any size.
MAIN RISKS
* 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.
* The risk that the value of a fund's fixed
income investments will fall if interest rates rise.
Interest rate risk is generally highest for
investments with long maturities.
* The risk that the companies or governments
whose fixed income securities a fund buys will not make timely
payments of interest and principal. This credit risk
is higher for corporate fixed income investments and
foreign government fixed income investments than it is
for fixed-income investments of the U.S. government.
This credit risk is higher still for fixed-income
investments rated below investment grade in quality
(commonly known as "junk bonds").
* 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 Putnam Management's allocation of
the fund's assets among the listed sectors may
adversely affect the fund's performance.
PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IA SHARES
(Bar chart)
Plot points
1989 16.08%
1990 0.18%
1991 19.02%
1992 6.29%
1993 17.48%
1994 -2.50%
1995 24.71%
1996 15.62%
1997 19.67%
1998 13.47%

Year-to-date performance through 3/31/99 was 1.39%.
During the periods shown in the bar chart, the highest
return for a quarter was 14.57% (quarter ending
12/31/98) and the lowest return for a quarter was -
10.30% (quarter ending 9/30/98).
Average annual total returns (for periods ending 12/31/98)

Past 1 year Past 5 years Past 10 years
Class IA 13.47% 13.80% 12.68%
MSCI World Index 29.34% 15.69% 10.66%

The fund's performance is also compared 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
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. 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 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 (also known as emerging)
markets.

MAIN RISKS
* 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 mediumsized 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.
PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IA SHARES
(Bar chart)
Plot points
1991 15.01%
1992 -0.36%
1993 32.40%
1994 -0.96%
1995 15.67%
1996 17.20%
1997 14.33%
1998 29.71%

Year-to-date performance through 3/31/99 was 2.98%.
During the periods shown in the bar chart, the highest
return for a quarter was 22.32% (quarter ending
12/31/98) and the lowest return for a quarter was -
12.18% (quarter ending 9/30/98).
Average annual total returns (for periods ending 12/31/98)

Past 1 year Past 5 years Since inception (5/1/90)
Class IA 29.71% 14.77% 12.68%
MSCI World Index 24.34% 15.69% 12.60%

The fund's performance is compared to the Morgan
Stanley Capital International World Index, an
unmanaged index of international 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 - value stocks
The fund invests primarily in "value" stocks, that
offer the potential for capital growth, current
income, or both. 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 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.
* 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.
PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IA SHARES
(Bar chart)
Plot points
1989 21.30%
1990 1.96%
1991 19.05%
1992 9.75%
1993 14.27%
1994 0.35%
1995 36.71%
1996 21.92%
1997 24.15%
1998 15.42%

Year-to-date performance through 3/31/99 was 2.57%.
During the periods shown in the bar chart, the highest
return for a quarter was 16.62% (quarter ending
12/31/98) and the lowest return for a quarter was -
9.96% (quarter ending 9/30/98).

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

Past 1 year Past 5 years Past 10 years
Class IA 15.42% 19.10% 16.04%
S&P 500 Index 28.58% 24.07% 19.21%

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 - growth stocks
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 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 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 the price of the fund's investments,
regardless of how well the companies in which the fund
invests perform.
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.
PERFORMANCE INFORMATION

Performance information will be available after the
fund completes a full calendar year of operation.

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 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. This risk is especially high 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.
* The risk that the prices of the fund's
investments, particularly the fixed-income investments in which it
mainly invests, will fall if interest rates rise.
This interest rate risk is 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.
PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IA SHARES
(Bar Chart)

Plot Points
1989 -2.65%
1990 -9.98%
1991 44.83%
1992 18.98%
1993 19.57%
1994 -0.94%
1995 18.32%
1996 12.81%
1997 14.34%
1998 -5.86%

Year-to-date performance through 3/31/99 was 2.68%.
During the periods shown in the bar chart, the
highest return for a quarter was 19.79% (quarter
ending 3/31/91) and the lowest return for a quarter
was -9.95% (quarter ending 9/30/98).
Average annual total returns (for periods ending 12/31/98)

Past 1 year Past 5 years Past 10 years
Class IA -5.86% 7.31% 9.90%
First Boston High
Yield Index 0.58% 8.16% 10.74%

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 INCOME FUND
Goal
The fund seeks current income consistent with
preservation of capital.
Main investment strategies - Corporate and U.S.
government fixedincome securities
The fund will normally invest mostly in bonds and
other debt securities, and to a lesser degree, in
preferred stocks. These investments are commonly
known as fixed-income securities. The fund's
investments are generally long- or intermediate-term
(with maturities of more than three years). The
fund's investments in fixed-income securities
generally include:

* corporate bonds and notes, including both investment
grade and high-yielding, lower-rated, higher-risk
securities "junk bonds," issued mainly by domestic
companies, and
* U.S. government securities, including debt
obligations issued by the U.S. government, its
agencies and instrumentalities.
The fund generally invests significantly in mortgage-
backed investments which represent participations in,
or are secured by, mortgage loans. The fund's
mortgage-backed investments may include
collateralized mortgage obligations (CMOs) and
stripped mortgage-backed securities (strips). Some
of these investments will not be guaranteed as to
principal and interest by the U.S. government, its
agencies or instrumentalities.
Main risks
* The risk that movements in the securities markets
will reduce the value of the fund's investments.
* The risk that rising interest rates will cause the
value of the fund's debt investments to fall.
Interest rate risk is generally highest for
investments with long maturities and the fund expects
that its investments will normally be weighted towards
longer maturities.
* The risk that the issuers of the fund's investments
or the mortgagors who are repaying the mortgages
underlying the fund's investments, will fail to make
timely payments of interest and principal or will
default. 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 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 may be prepaid faster than expected during
periods of falling interest rates. 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 reduce the rate of prepayments. 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
Prior to April 9, 1999, the fund's policies required
it to invest at least 25% of its assets in U.S.
government securities and limited the amount of assets
invested in securities rated below A. Consequently,
the historic information in the table does not reflect
the fund's performance under its current investment
policies or its current distribution policies.

CALENDAR YEAR TOTAL RETURNS FOR CLASS IA SHARES
(BAR CHART)
Plot Points

1989 14.06%
1990 7.51%
1991 17.28%
1992 7.49%
1993 11.28%
1994 -3.23%
1995 20.44%
1996 2.42%
1997 8.64%
1998 8.25%

Year-to-date performance through 3/31/99 was -0.58%.
During the periods shown in the bar chart, the highest
return for a quarter was 7.99% (quarter ending
6/30/89) and the lowest return for a quarter was -
3.17% (quarter ending 3/31/96).
Average annual total returns (for periods ending 12/31/98)

Past 1 year Past 5 years Since inception (2/1/88)
Class IA 8.25% 7.01% 9.21%
Lehman Brothers
Aggregate Bond
Index 8.69% 7.27% 9.26%
Lehman Brothers
Government/Corporate
Bond Index 9.47% 7.31% 9.34%

The fund's performance is compared to the Lehman
Brothers Aggregate Bond Index, an unmanaged index of
investment-grade bonds. The fund's benchmark index,
the Lehman Brothers Government/Corporate Bond Index,
has been changed to the Lehman Brothers Aggregate
Bond Index because Putnam Management believes this
index is a more appropriate index to compare the
fund's performance under its new investment
objective and policies. PUTNAM VT INTERNATIONAL
GROWTH FUND
Goal
The fund seeks capital appreciation.
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 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 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,
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.

PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IA SHARES
(Bar chart)
Plot points
1998 18.69%
Year-to-date performance through 3/31/99 was 5.18%.
During the periods shown in the bar chart, the highest
return for a quarter was 22.22% (quarter ending
12/31/98) and the lowest return for a quarter was -
18.92% (quarter ending 9/30/98).
Average annual total returns (for periods ending 12/31/98)

Past 1 year Since inception (1/2/97)
Class IA 18.69% 17.50%
MSCI EAFE Index 20.00% 10.52%

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 Morgan Stanley Capital International
(MSCI) EAFE Index an unmanaged index of equity
securities from Europe, Australia, and the Far East,
with all values expressed in U.S. dollars.

PUTNAM VT INTERNATIONAL GROWTH AND INCOME FUND
Goal
The fund seeks capital growth. Current income is a
secondary objective.
Main investment strategies - GROWTH AND 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 value 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 medium and large-sized
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 emerging markets.
Main risks
* 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. 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 markets will
reduce the value 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

1998 11.28%

Year-to-date performance through 3/31/99 was 4.25%.
During the periods shown in the bar chart, the highest
return for a quarter was 16.54% (quarter ending
12/31/98) and the lowest return for a quarter was -
17.32% (quarter ending 9/30/98).
Average annual total returns (for periods ending 12/31/98)

Past 1 year Since inception (1/2/97)
Class IA 11.28% 15.36%
MSCI EAFE Index 20.00% 10.52%

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 Morgan Stanley Capital International
(MSCI) EAFE Index, an unmanaged index of equity
securities from Europe, Australia, and the Far East,
with all values expressed in U.S. dollars.

PUTNAM VT INTERNATIONAL NEW OPPORTUNITIES FUND
GOAL
The fund seeks long-term capital appreciation.

MAIN INVESTMENT STRATEGIES - GROWTH STOCKS
Under normal market conditions, the fund generally
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 may invest in both established and developing
(also known as emerging) markets.
MAIN RISKS
* 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.

PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IA SHARES
(Bar chart)
Plot points
1998 15.58%
Year-to-date performance through 3/31/99 was 7.15%.
During the periods shown in the bar chart, the highest
return for a quarter was 19.19% (quarter ending
12/31/98) and the lowest return for a quarter was -
16.61% (quarter ending 9/30/98).
Average annual total returns (for periods ending 12/31/98)

Past 1 year Since inception (1/2/97)
Class IA 15.58% 15.46%
MSCI EAFE Index 20.00% 10.52%

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 Morgan Stanley
Capital International (EAFE) Index, an unmanaged index
of international equity securities from Europe,
Australia and the Far East, 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
The fund is designed for investors seeking long-term
growth of capital from a portfolio of quality common
stocks.
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 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.
PERFORMANCE INFORMATION

Performance information will be available after the
fund completes a full calendar year of operation.

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 primarily
* 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

PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IA SHARES
(Bar chart)
Plot points
1989 8.88%
1990 7.98%
1991 5.92%
1992 3.57%
1993 2.79%
1994 3.82%
1995 5.46%
1996 5.08%
1997 5.22%
1998 5.19%

Year-to-date performance through 3/31/99 was 1.16%.
During the periods shown in the bar chart, the highest
return for a quarter was 2.34% (quarter ending
6/30/89) and the lowest return for a quarter was 0.67%
(quarter ending 6/30/93).
Average annual total returns (for periods ending 12/31/98)

Past 1 year Past 5 years Past 10 years
Class IA 5.19% 4.95% 5.38%
Merrill Lynch 91-Day
Treasury Bill Index 5.23% 5.22% 5.69%
Lipper Money Market
Average 5.10% 4.90% 5.32%

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. The
Lipper Money Market Average is an arithmetic average
of the total return of all money market mutual funds
tracked by Lipper Analytical Services.

PUTNAM VT NEW OPPORTUNITIES FUND
Goal
The fund seeks long-term capital appreciation.
Main investment strategies - GROWTH
The fund invests primarily in "growth" stocks which
are stocks of 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 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 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 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.

PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES
(Bar chart)
Plot points
1995 44.87%
1996 10.17%
1997 23.29%
1998 24.38%

Year-to-date performance through 3/31/99 was 6.50%.
During the periods shown in the bar chart, the highest
return for a quarter was 29.33% (quarter ending
12/31/98) and the lowest return for a quarter was -
18.85% (quarter ending 9/30/98).
Average annual total returns (for periods ending 12/31/98)

Past 1 year Since inception (5/2/94)
Class IA 24.38% 23.19%
S&P 500 Index 28.58% 26.56%

The fund's performance has benefitted from Putnam
Management's agreement to limit the fund's expenses
through the period ended 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. The fund may invest in companies
of any size. MAIN RISKS
* 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.
PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IA SHARES
(Bar chart)
Plot points
1998 6.26%
Year-to-date performance through 3/31/99 was 5.17%.
During the periods shown in the bar chart, the highest
return for a quarter was 16.45% (quarter ending
12/31/98) and the lowest return for a quarter was -
12.09% (quarter ending 9/30/98).
Average annual total returns (for periods ending 12/31/98)

Past 1 year Since inception (1/2/97)
Class IA 6.26% 11.85%
S&P 500 Index 28.58% 31.40%

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 GROWTH FUND
Goal
The fund seeks capital appreciation.
Main investment strategies - growth stocks
Under normal market conditions, the fund generally
invests at least 65% of its total assets in common
stocks traded in the overthe-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 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.
PERFORMANCE INFORMATION

Performance information will be available after the
fund completes a full calendar year of operation.

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 Putnam Management's equity research analysts
believe have the greatest 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 invests mainly in large 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 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.
PERFORMANCE INFORMATION
Performance information will be available after the
fund completes a full calendar year of operation.

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 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.

PERFORMANCE INFORMATION
Performance information will be available after the
fund completes a full calendar year of operation.

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. The
fund mainly buys stocks of larger companies, although
the fund may invest in companies of any size.

MAIN RISKS
* 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 risk that the value of the fund's debt
securities will fall if interest rates rise. Interest rate risk is
highest for investments with long maturities.
* The risk that the companies whose debt securities
the fund purchases will fail to make timely payments of
interest and principal. This credit risk is higher
for corporate debt securities than for U.S. Government
debt securities. It is especially high for fixed-
income investments of below investmentgrade quality.
* 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 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.

PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IA SHARES
(Bar chart)
Plot points
1993 13.42%
1994 -7.02%
1995 31.08%
1996 15.80%
1997 27.10%
1998 14.92%

Year-to-date performance through 3/31/99 was -7.80%.
During the periods shown in the bar chart, the highest
return for a quarter was 12.32% (quarter ending
12/31/97) and the lowest return for a quarter was -
6.76% (quarter ending 3/31/94).

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

Past 1 year Past 5 years Since inception (5/4/92)
Class IA 14.92% 15.57% 14.75%
S&P 500 Index 28.58% 24.07% 20.45%

PUTNAM VT VISTA 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
mainly buys stocks of medium size companies, although
the fund may invest in companies of any size.
MAIN RISKS
* 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.
PERFORMANCE INFORMATION
CALENDAR YEAR TOTAL RETURNS FOR CLASS IA SHARES
(Bar chart)
Plot points
1998 19.48%
Year-to-date performance through 3/31/99 was 4.89%.
During the periods shown in the bar chart, the
highest return for a quarter was 23.49% (quarter
ending 12/31/98) and the lowest return for a quarter
was -17.22% (quarter ending 9/30/98).
Average annual total returns (for periods ending 12/31/98)

Past 1 year Since inception (1/2/97)
Class IA 19.48% 21.45%
S&P 500 Index 28.58% 31.40%

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 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 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 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-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.
PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IA SHARES
(Bar chart)
Plot points
1989 32.38%
1990 -2.03%
1991 46.09%
1992 10.36%
1993 18.70%
1994 1.04%
1995 40.67%
1996 12.97%
1997 26.51%
1998 24.36%

Year-to-date performance through 3/31/99 was 6.13%.
During the periods shown in the bar chart, the highest
return for a quarter was 27.15% (quarter ending
12/31/98) and the lowest return for a quarter was -
17.36% (quarter ending 9/30/90).
Average annual total returns (for periods ending 12/31/98)

Past 1 year Past 5 years Past 10 years
Class IA 24.36% 20.37% 20.15%
S&P 500 Index 28.58% 24.07% 19.21%

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) 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. Any
investment carries with it some level of risk that
generally reflects its potential for reward.

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. 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. The fund invests in both developed and
developing (also known as emerging) markets.
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 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.
Putnam Management expects that a substantial portion
of the fund's assets will normally be invested in each
of the sectors.
* 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 (rated
BBB or higher (or comparable unrated securities)) 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 corporate issuers and similar
non-dollar denominated securities of U.S. corporate
issuers.
Although the fund has the flexibility to invest in any
country where Putnam Management sees potential for
high income, it presently expects to invest the assets
allocated to the international sector 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. In
addition, 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
securities 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 size. The fund may invest without limit in
securities of foreign issuers traded in U.S. markets.
The fund may also invest in securities of foreign
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
not normally represent more than 20% of its 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 wellknown companies. The following is
a description of the investment objectives and
policies of each investment category:

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
Iincome 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 this sector in any fixed-
income securities Putnam Management considers
appropriate, including U.S. government securities,
debt securities, mortgage-backed and assetbacked
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 sector
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 rating 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 developing (also known as emerging)
markets.
PUTNAM VT GROWTH AND INCOME 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 when deciding whether to buy or sell
investments. The fund may invest in companies of any
size. The fund may invest without limit in securities
of foreign issuers traded in the U.S. public markets.
The fund may also 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 by investing mainly in
companies in the health sciences industries. The fund
may invest in companies of any size. The fund may
invest without limit in securities of foreign issuers
traded in U.S. public markets. While the fund may
also invest in securities of foreign issuers that are
not traded in U.S. public markets, it does not expect
that such investments will normally represent more
than 30% of its assets, although they may occasionally
exceed this amount.
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. Therefore, events that
affect the health sciences industries more
significantly than the market as a whole will have a
greater effect 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 introduced 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 rating agency rating such
security, including securities in the lowest ratings
categories, and unrated investments that Putnam
Management determines are of comparable quality.

PUTNAM VT INCOME FUND
The fund pursues its goal by investing mainly in fixed-
income securities. 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:
Corporate obligations. These investments include
* investment grade and high-yielding, lower-rated,
higher-risk fixed-income securities mainly issued by
domestic companies, and rated at the time of purchase
at least B (or its equivalent) by a nationally
recognized securities rating agency, or if unrated,
determined by Putnam Management to be of comparable
quality.
* mortgage-backed investments (including CMOs and
strips) of private issuers.
U.S. government and agency investments. These
investments include * U.S. Treasury bills, notes and
bonds.
* Obligations backed 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
U.S. government, such as mortgage participation
certificates guaranteed by the Government National
Mortgage Association (GNMA, commonly known as "Ginnie
Mae") and Federal Housing Administration debentures.
* Obligations backed 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 Federal
National Mortgage Association (FNMA, commonly known as
"Fannie Mae") bonds and Federal Home Loan Bank debt.
The fund's mortgage-backed investments may also
include CMOs and strips issued or guaranteed by the
U.S. government, its agencies or instrumentalities.
The yields available from U.S. government securities
are generally lower than the yields available from
comparable corporate debt securities.
The fund may invest substantially in debt investments
rated, at the time of purchase, no lower than 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. A reduction in an investment's
rating will generally cause its value to decline.
The fund may invest in U.S. dollar denominated fixed-
income securities of foreign issuer's including Yankee
bonds, but the fund will not invest in fixed-income
securities denominated in foreign currencies.

PUTNAM VT INTERNATIONAL GROWTH 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 projected
future earnings and dividends when deciding whether to
buy or sell investments. The fund may invest in
companies of any size.

PUTNAM VT INTERNATIONAL GROWTH AND INCOME FUND

The fund pursues its goals by investing mainly in
common stocks of companies outside the U.S. 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.

PUTNAM VT INTERNATIONAL NEW OPPORTUNITIES FUND
The fund pursues its goal by investing mainly in
growth companies outside the United States that Putnam
Management believes have above-average growth
prospects due to the fundamental growth of their
market sector. 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 INVESTORS FUND
The fund pursues its goal by investing mainly in
common stocks. 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. The fund may invest
without limit in securities of foreign issuers traded
in U.S. public markets. The fund may also 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 MONEY MARKET FUND

The fund pursues its goal by investing in high
quality, short term money market investments, such as
commercial paper, U.S. government debt and repurchase
agreements, corporate obligations and certificates of
deposit 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 and bank certificates of deposit and bankers'
acceptances payable in U.S. dollars by foreign banks
or foreign branches of U.S. banks.
Credit quality. The fund buys only high quality
investments that Putnam Management believes present
minimal credit risk at the time of purchase. High
quality investments are
* rated in one of the two highest categories by at
least two nationally recognized rating services, or
* rated by one rating service in one of its
service's two highest categories (if only one rating service has
provided a rating) or
* unrated investments that Putnam Management
determines are of equivalent quality
To maintain liquidity and preserve capital, the fund may
decide not to buy investments that pay the highest
available yields at any particular time.
Thus, debt of issuers with good credit prospects
usually offers lower yields than that of issuers with
less secure credit prospects. Higher-rated
investments generally offer lower credit
risk, but not necessarily lower interest rate risk.
The value of a higher-rated investment can still
fluctuate in response to changes in interest rates.
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.
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 the 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 it
expires.

PUTNAM VT NEW OPPORTUNITIES FUND

The fund pursues its goal by investing mainly in
growth stocks. 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
without limit in securities of foreign issuers traded
in U.S. public
markets. The fund may also 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.

Subject to the fund's investment restrictions, the
fund may invest up to one-half of its assets in any
one particular sector. 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 aboveaverage 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 other equity mutual
funds. The fund may invest in companies of any size.
The fund may invest without limit in securities of
foreign issuers traded in U.S. public markets. The
fund may also 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 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 without limit in
securities of foreign issuers traded in U.S. public
markets. The fund may also invest in securities of
issuers not actively traded in U.S. public 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 by investing mainly in
common stocks recommended by Putnam Management's
equity research analysts 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. 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 without limit in securities of foreign
issuers traded in U.S. public markets. The fund may
also 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 SMALL CAP VALUE FUND

The fund pursues its goal by investing mainly in value
stocks of smaller issuers. 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 longterm
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 without limit in
securities of foreign issuers traded in U.S. public
markets. The fund may also 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 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 without
limit in securities of foreign issuers traded in U.S.
public markets. The fund may also 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 below
BBB (or its equivalent) by a nationally recognized
securities rating agency, or, if unrated, are
determined by Putnam Management to be of comparable
quality. Up to 25% of the fund's assets may be
invested in foreign markets.

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 effect on the 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 conservation 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 to protect
the public and also to ensure that utility companies
attract funds in order to grow and continue to provide
appropriate services. These pricing policies may not
continue.

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.
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 these trends will
result in certain utility companies being able to earn
more than their traditional regulated rates, while
others may be forced to defend their core business
from increased competition and may be less profitable.
Although Putnam Management seeks to take advantage of
favorable investment opportunities that may arise from
these trends, the fund may not benefit from any such
changes.

PUTNAM VT VISTA FUND

The fund pursues its goal 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 without limit in securities of
foreign issuers traded in U.S. public markets. The
fund may also 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 VOYAGER FUND

COMMON INVESTMENT STRATEGIES AND RELATED RISKS

Common stocks. Common stocks 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 affecting multiple companies 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 rates. In addition, a company'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 may invest in
growth stocks. Growths stocks are 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 mediumsized 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.
* 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.
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.
Fixed-income investments. Each of the funds may
invest in fixedincome securities. 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.
"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 in 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 issuer'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 better 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. The funds may
invest in socalled "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 VT Money Market Fund
may invest up to 10% of its assets in illiquid
securities. 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
funds may invest in asset-backed and mortgage-backed
securities. Assetbacked and mortgage-backed
securities include 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.

Certain funds may also invest in asset-backed
securities. Assetbacked 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.

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.
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.
Derivatives. The funds may engage in a variety of
transactions involving derivatives, such as futures,
options, warrants and swap contracts. Derivatives are
financial instruments whose value depends upon, or is
derived from, the value of something else, such as one
or 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, pool of investments index or
currency specified in the derivative instrument.
The funds may use derivatives both for hedging and non-
hedging purposes. The decision as to whether and to
the extent the fund will use derivatives for hedging
purposes will depend upon a number of factors,
including market conditions, the funds' investments
and the availablility of suitable derivatives.
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.
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 (investments not traded on an exchange)
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.
Other investments. In addition to the main investment
strategies described above, the funds may also make other types
of investments, 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 each fund's last fiscal year):
Putnam VT Asia Pacific Growth Fund .80%
Putnam VT Diversified Income Fund .67%
Putnam VT Global Asset Allocation Fund .65%
Putnam VT Global Growth Fund .60%
Putnam VT Growth and Income Fund .46%
Putnam VT High Yield Fund .64%
Putnam VT Income Fund .60%
Putnam VT International Growth Fund .80%
Putnam VT International Growth and Income Fund .80%
Putnam VT International New Opportunities Fund* 1.18%
Putnam VT Money Market Fund .45%
Putnam VT New Opportunities Fund .56%
Putnam VT New Value Fund .70%
Putnam VT Utilities Growth and Income Fund .65%
Putnam VT Vista Fund .65%
Putnam VT Voyager Fund .54%

* 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 International New Opportunities Fund 1.20%

The following funds paid Putnam Management a quarterly
management fee for these services at the annual rate
of: Putnam VT The George Putnam Fund of Boston,
Putnam VT Investors Fund and Putnam VT Research Fund:
0.65% of the first $500 million of average net assets;
0.55% of the next $500 million; 0.50% of the next $500
million; 0.45% of the next $5 billion; 0.425% of the
next $5 billion; 0.405% of the next $5 billion; 0.39%
of the next $5 billion; and 0.38% of any excess
thereafter.

Putnam VT Health Sciences Fund and Putnam VT OTC &
Emerging Growth Fund: 0.70% of the first $500 million
of average net assets; 0.60% of the next $500 million;
0.55% of the next $500 million; 0.50% of the next $5
billion; 0.475% of the next $5 billion; 0.455% of the
next $5 billion; 0.44% of the next $5 billion; and
0.43% of any excess thereafter.
Putnam VT Small Cap Value Fund: 0.80% of the first
$500 million of average net assets; 0.70% of the next
$500 million; 0.65% of the next $500 million; 0.60% of
the next $5 billion; 0.575% of the next $5 billion;
0.555% of the next $5 billion; 0.54% of the next $5
billion; and 0.53% of any excess thereafter.
Putnam Management's Global Asset Allocation committee
has primary responsibility for the day-to-day
management of Putnam VT Global Asset Allocation and
the Global Equity Research Team has primary
responsibility for the day-to-day management of Putnam
VT Research Fund.
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.

Business experience
Fund name Year (at least 5 years)
- --------------------- ------- -------------------------
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.

Carmel Peters 1999 Employed by Putnam Management since 1997.
Senior Vice President Prior to May 1997, Ms. Peters was
employed at Wheelock Natwest
Investment Management, Hong Kong, and
prior to February 1996, Ms. Peters was
employed at Rothschild Asset Management
Asia Pacific, Hong Kong.

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

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

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.

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 by Putnam Management since 1992.
Senior Vice President

Krishna K. Memani 1999 Employed by Putnam Management since 1998.
Managing Director 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.
Managing Director 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.
Managing Director 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 by Putnam Management since 1994.
Senior Vice Pesident Prior to July 1994, Ms. Svensson was
employed by Lord Abbett & Co.

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

Olivier Rudigoz 1998 Employed by Putnam Management since 1998.
Vice President 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 1983.
Managing Director

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

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

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

Rosemary 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 was
employed by MFS Investment Management.

Putnam VT Income Fund

Kevin M. Cronin 1999 Employed by Putnam Management since 1997.
Managing Director Prior to February 1997, Mr. Cronin was
employed at MFS Investment Management.

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

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 1996.
Managing Director 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.

Mark Pollard 1999 Employed by Putnam Management since 1990.
Managing Director

Paul Warren 1999 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 International
Growth and Income Fund

Deborah F. Kuenstner 1999 Employed by Putnam Management since 1997.
Managing Director Prior to May 1997, Ms. Kuenster was
employed at Dupont Pension Fund
Investment.

George Stairs 1999 Employed by Putnam Management since 1994.
Senior Vice President Prior to July 1994, Mr. Stairs was
employed at Value Quest Ltd.

Putnam VT International
New Opportunities Fund

Robert Swift 1996 Employed by Putnam Management since 1995.
Managing Director 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 by Putnam Management since
Senior Vice President 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 by Putnam Management since 1997.
Senior Vice President Prior to July 1997, Mr. Chang was
employed by Columbia Management.
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 by Putnam Management since 1994.
Senior Vice President

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 Utilities
Growth and Income Fund

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

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

Putnam VT Vista Fund

Eric Wetlaufer 1997 Employed by Putnam Management since 1997.
Managing Director 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 by Putnam Management since 1997.
Senior Vice President Prior to December 1997, Ms. Parker was
employed at Keystone Investments.

Dana Clark 1999 Employed by Putnam Management since 1987.
Vice President

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

Michael E. Nance 1999 Employed by Putnam Management since 1994.
Senior Vice President Prior to June 1994, Mr. Nance attended
the University of Chicago Graduate
School of Business.

Year 2000 Issues. The funds could be adversely
affected if the computer systems used by Putnam
Management and the funds' other service providers do
not properly process and calculate the daterelated
information relating to the end of this century and
the beginning of the next. While year 2000-related
computer problems could have a negative effect on a
fund, both in its operations and in its investments,
Putnam Management is working to avoid such problems
and to obtain assurances from service providers that
they are taking similar steps. No assurances, though,
can be provided that the funds will not be adversely
impacted by these matters.

How to buy and sell fund shares

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 affected 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
which funds are 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.

The funds currently do not foresee any disadvantages
to policyowners arising out of the fact that the funds
offer their 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 do the funds price their shares?

The price of a fund's shares is based on its net asset
value (NAV). The NAV per share of each class equals
the total value of its assets, less its liabilities,
divided by the number of its outstanding shares.
Shares are only valued as of the close of regular
trading on the New York Stock Exchange each day the
exchange is open.

Each fund (other than Putnam VT Money Market Fund)
values its investments for which market quotations are
readily available at market value. It values short-
term investments that will mature within 60 days at
amortized cost, which approximates market value. It
values all other investments and assets at their fair
value. Putnam VT Money Market Fund values all of its
investments at amortized cost.

Each fund translates prices for its investments quoted
in foreign currencies into U.S. dollars at current
exchange rates. As a result, changes in the value of
those currencies in relation to the U.S. dollar may
affect each fund's NAV. Because foreign markets may
be open at different times than the New York Stock
Exchange, the value of each fund's shares may change
on days when shareholders are not able to buy or sell
them. If events materially affecting the values of
each fund's foreign investments (other than Putnam VT
Money Market Fund) occur between the close of foreign
markets and the close of regular trading on the New
York Stock Exchange, these investments will be valued
at their fair value.

Fund distributions and taxes

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.

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
foreign, 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.

A fund's investments in certain debt obligations may
cause the fund to recognize taxable income in excess
of the cash generated by such obligations. Thus, the
fund could be required at times to liquidate other
investments in order to satisfy its distribution
requirements.

Financial highlights

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.
<TABLE><CAPTION>
Financial Highlights
Investment Operations Less Distributions:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net From Net Asset Net
Realized and Total From In Excess Net In Excess of
Value, Investment Unrealized from Net Net Realized Net Realized
Year Beginning Income Gain (Loss)on Investment Investment Investment Gain on Gain on
ended of Period (Loss) Investments operations Income Income Investments Investments
Putnam VT Asia
Pacific Growth Fund
1998 $9.20 $.08(a) $(.56) $(.48) $(.38) $- $- $-
1997 11.01 .07 (1.66) (1.59) (.22) - - -
1996 10.23 .05 .88 .93 (.15) - - -
1995*** 10.00 .06(a)(b) .17 .23 - - - -
Putnam VT Diversified
Income Fund
1998 $11.31 $.86(a) $(.99) $(.13) $(.48) $- $(.21) $-
1997 11.27 .82(a) (.05) .77 (.63) - (.10) -
1996 11.03 .80(a) .11 .91 (.67) - - -
1995 9.74 .71 1.09 1.80 (.51) - - -
1994 10.23 .61 (1.04) (.43) (.06) - - -
Putnam VT The George Putnam Fund of Boston
1998****** $10.00 $.18(a)(b) $.19 $.37 $(.09) $- $- $-
Putnam VT Global Asset Allocation Fund
1998 $18.76 $.46(a) $2.00 $2.46 $(.43) $- $(1.85) $-
1997 17.25 .50 2.63 3.13 (.60) - (1.02) -
1996 16.15 .43 1.94 2.37 (.44) - (.83) -
1995 13.19 .47 2.74 3.21 (.25) - - -
1994 14.29 .35 (.71) (.36) (.29) - (.43) $(.02)
Putnam VT Global Growth Fund
1998 $18.34 $.05(a) $5.01 $5.06 $(.52) $- $(2.60) $-
1997 16.88 .13 2.18 2.31 (.41) - (.44) -
1996 15.18 .17 2.35 2.52 (.25) - (.57) -
1995 13.48 .20 1.85 2.05 (.11) - (.24) -
1994 13.68 .13 (.26) (.13) (.05) - (.02) -
Putnam VT Growth and Income Fund
1998 $28.32 $.44(a) $3.77 $4.21 $(.50) $- $(3.26) $-
1997 24.56 .48 5.07 5.55 (.52) - (1.27) -
1996 21.47 .65(a) 3.84 4.49 (.51) - (.89) -
1995 16.44 .53 5.31 5.84 (.51) - (.30) -
1994 17.38 .50 (.48) .02 (.38) - (.58) -
Putnam VT Health Sciences Fund
1998****** $10.00 $.01(a)(b) $.94 $.95 $(.01) $- $- $-
Putnam VT High Yield Fund
1998 $13.62 $1.31 $(1.98) $(.67) $(1.08) $- $(.17) $-
1997 12.96 1.06 .65 1.71 (.94) - (.11) -
1996 12.37 1.18(a) .32 1.50 (.91) - - -
1995 11.46 .91 1.05 1.96 (1.05) - - -
1994 12.53 1.05 (1.17) (.12) (.79) - (.14) (.02)
Putnam VT International Growth Fund
1998 $11.43 $.11(a) $2.03 $2.14 $(.04) $- $- $-
1997**** 10.00 .05(b) 1.56 1.61 (.05) (.02) (.04) (.06)
Putnam VT International Growth and
Income Fund
1998 $11.53 $.23(a) $1.06 $1.29 $(.11) $- $(.22) $(.19)
1997**** 10.00 .07 1.87 1.94 (.08) (.05) (.28) -
Putnam VT International New Opportunities
Fund
1998 $9.96 $.04(a)(b)$1.59 $1.55 $(.02) $- $- $-
1997**** 10.00 .01(b) (.02) (.01) (.01) (.02) - -
Putnam VT Investors Fund
1998****** $10.00 $.02(a)(b)$1.65 $1.67 $(.01) $- $- $-
Putnam VT Money Market Fund
1998 $1.00 $.0510 $ - $.0510 $(.0510) $- $- $-
1997 1.00 .0509 - .0509 (.0509) - - -
1996 1.00 .0497 - .0497 (.0497) - - -
1995 1.00 .0533 - .0533 (.0533) - - -
1994 1.00 .0377 - .0377 (.0377) - - -
Putnam VT New Opportunities Fund
1998 $21.23 $(.04) $5.19 $5.15 $- $- $(.32) $-
1997 17.22 -(e) 4.01 4.01 - - - -
1996 15.63 (.01) 1.60 1.59 - - - -
1995 10.82 - 4.84 4.84 - - (.02) -
1994****** 10.00 -(b) .82 .82 - - - -
</TABLE>
<TABLE><CAPTION>
Investment Operations Less Distributions:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net From Net Asset Net
Realized and Total From In Excess Net In Excess of
Value, Investment Unrealized from Net of Net Net Realized Net Realized
Year Beginning Income Gain (Loss) on Investment Investment Investment Gain on Gain on
ended of Period (Loss) Investments operations Income Income Investments Investments
Putnam VT New Value Fund
1998 $11.76 $.16(a) $.57 $.73 $(.23) $- $(.23) $-
1997******* 10.00 .18(a) 1.58 1.76 - - - -
Putnam VT OTC & Emerging Growth Fund
1998****** $10.00 $(.01)(a)(b) $.10 $.09 $- $- $- $-
Putnam VT Research Fund
1998******* $10.00 $.02(a)(b) $1.93 $1.95 $(.01) $- $(.01) $-
Putnam VT U.S. Government
and High Quality Bond Fund
1998 $13.42 $.82(a) $.24 $1.06 $(.73) $- $(.02) $-
1997 13.21 .88 .18 1.06 (.85) - - -
1996 13.74 .81 (.52) .29 (.82) - - -
1995 12.22 .81 1.56 2.37 (.85) - - -
1994 13.53 .81 (1.24) (.43) (.66) - (.22) -
Putnam VT Utilities Growth and Income Fund
1998 $17.14 $.54(a) $1.90 $2.44 $(.51) $- $(.88) $-
1997 14.80 .53 3.11 3.64 (.55) - (.75) -
1996 13.28 .54 1.49 2.03 (.51) - - -
1995 10.68 .53 2.65 3.18 (.58) - - -
1994 12.00 .60 (1.44) (.84) (.35) - (.12) (.01)
Putnam VT Vista Fund
1998 $12.32 $(.02)(a) $2.42 $2.40 $- $- $- $-
1997******** 10.00 - (e) 2.32 2.32 - (e) - -- --
Putnam VT Voyager Fund
1998 $39.08 $.05(a) $9.26 $9.31 $(.10) $- $(2.44) $-
1997 32.53 .10 8.01 8.11 (.07) - (1.49) -
1996 30.50 .09 3.75 3.84 (.13) - (1.68) -
1995 22.20 .10 8.76 8.86 (.07) - (.49) -
1994 22.41 .07 .14 .21 (.05) - (.37) -
</TABLE>
<TABLE><CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>

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

Putnam VT Asia Pacific Growth Fund
1998 $(.01) $(.39) $8.33 (5.48) $90,667 1.12 1.01 136.49
1997 - (.22) 9.20 (14.66) 112,902 1.07 .70 102.92
1996 - (.15) 11.01 9.10 130,548 1.23 .84 66.10
1995*** - - 10.23 2.30* 25,045 .81(b)* .72(b)* 67.72*
Putnam VT Diversified Income Fund
1998 $- $(.69) $10.49 (1.37) $669,053 .78 7.94 186.80
1997 - (.73) 11.31 7.38 608,148 .80 7.43 282.56
1996 - (.67) 11.27 8.81 494,811 .83 7.45 235.53
1995 - (.51) 11.03 19.13 303,721 .85 7.85 297.17
1994 - (.06) 9.74 (4.23) 215,935 .80 7.60 165.17
Putnam VT The George Putnam Fund
of Boston
1998****** $- $(.09) $10.28 3.69* $113,202 .57(b) 1.84(b)* 99.85
Putnam VT Global Asset Allocation
Fund
1998 $- $(2.28) $18.94 13.47 $1,020,354 .78 2.54 133.80
1997 - (1.62) 18.76 19.67 956,532 .77 3.01 181.05
1996 - (1.27) 17.25 15.62 747,734 .83 3.08 165.03
1995 - (.25) 16.15 24.71 535,666 .84 3.31 150.88
1994 - (.74) 13.19 (2.50) 414,223 .76 3.19 150.21
Putnam VT Global Growth Fund
1998 $- $(3.12) $20.28 29.71 $1,987,094 .72 .26 164.56
1997 - (.85) 18.34 14.33 1,611,503 .75 .77 158.37
1996 - (.82) 16.88 17.20 1,344,887 .76 1.25 79.18
1995 - (.35) 15.18 15.67 831,593 .75 1.49 82.53
1994 - (.07) 13.48 (.96) 669,821 .77 1.21 41.55
Putnam VT Growth and Income Fund
1998 $- $(3.76) $28.77 15.42 $9,948,386 .50 1.59 63.62
1997 - (1.79) 28.32 24.15 8,337,334 .51 2.08 64.96
1996 - (1.40) 24.56 21.92 5,679,100 .54 2.90 39.57
1995 - (.81) 21.47 36.71 3,312,306 .57 3.34 50.87
1994 - (.96) 16.44 .35 1,907,380 .62 3.64 46.43
Putnam VT Health Sciences Fund
1998****** $-(e) $(.01) $10.94 9.51* $134,436 .61(b) .14(b)* 39.68*
Putnam High Yield Fund
1998 $- $(1.25) $11.70 (5.86) $1,032,892 .71 10.31 52.00
1997 - (1.05) 13.62 14.34 1,025,298 .72 9.26 84.61
1996 - (.91) 12.96 12.81 769,918 .76 9.57 62.72
1995 - (1.05) 12.37 18.32 498,467 .79 9.42 69.78
1994 - (.95) 11.46 (.94) 327,119 .74 9.79 62.09
Putnam VT International Growth
Fund
1998 $(.01) (.05) $13.52 18.69 $317,602 1.07 .84 98.31
1997******** (.01) (.18) 11.43 16.13 150,884 1.20(b) .79(b) 75.18
Putnam VT International Growth
and Income Fund
1998 $(.06) $(.58) $12.24 11.28 $305,047 .99 1.86 62.61
1997**** - (.41) 11.53 19.43 206,598 1.12 1.11 53.20
Putnam VT International New
Opportunities Fund
1998 $- $(.02) $11.49 15.58 $135,451 1.60(b) .36(b) 157.72
1997**** - (.03) 9.96 (.10) 107,000 1.60(b) .09(b) 131.89
Putnam VT Investors Fund
1998****** $(.01) $(.02) $11.65 16.66* $243,296 .57(b)* .l9(b)* 42.97*
Putnam VT Money Market Fund
1998 $- $(.0510) $1.00 5.19 $595,158 .53 5.04 -
1997 - (.0509) 1.00 5.22 405,577 .54 5.10 -
1996 - (.0497) 1.00 5.08 437,132 .53 4.93 -
1995 - (.0533) 1.00 5.46 263,213 .57 5.43 -
1994 - (.0377) 1.00 3.82 244,064 .55 3.90 -
Putnam VT New Opportunities Fund
1998 $- $(.32) $26.06 24.38 $3,586,225 .61 (.16) 59.75
1997 - - 21.23 23.29 2,590,244 .63 (.01) 71.78
1996 - - 17.22 10.17 1,674,197 .72 (.13) 57.94
1995 (.01) (.03) 15.63 44.87 515,109 .84 (.03) 30.87
1994****** - - 10.82 8.20* 68,592 .47(b)* .03(b)* 32.77*
Putnam VT New Value Fund
1998 $- $(.46) $12.03 6.26 $255,754 .81 1.34 130.96
1997**** - - 11.76 17.60 $195,391 .85 1.59 64.15
Putnam VT OTC & Emerging Growth
Fund
1998**** $-(e) $- $10.09 $.94* $28,059 .60(b)* (.16)(b)* 59.93*
Putnam VT Research Fund
Fund
1998******* $- $(.02) $11.93 19.51* $22,626 .22(b)* .19(b)* 19.76*
Putnam VT U.S. Government and
High Quality Bond Fund
1998 $- (.75) $13.73 8.25 $1,000,161 .67 6.13 233.04
1997 - (.85) 13.42 8.64 789,540 .69 6.58 194.29
1996 - (.82) 13.21 2.42 778,924 .69 6.48 142.49
1995 - (.85) 13.74 20.44 747,024 .70 6.22 149.18
1994 - (.88) 12.22 (3.23) 640,458 .67 6.24 118.34
Putnam VT Utilities
Growth and Income Fund
1998 $- $(1.39) $18.19 14.92 $1,015,327 .72 3.19 24.77
1997 - (1.30) 17.14 27.10 822,257 .74 3.63 42.46
1996 - (.51) 14.80 15.80 657,429 .73 4.22 61.94
1995 - (.58) 13.28 31.08 530,461 .68 4.72 60.33
1994 - (.48) 10.68 (7.02) 384,169 .68 5.23 84.88
Putnam Vista Fund
1998 $- $- $14.72 19.48 $311,612 .77 (.12) 116.48
1998**** -(e) - 12.32 23.21 170,660 .87 - 75.43
Putnam VT Voyager Fund
1998 $- $(2.54) $45.85 24.36 $5,803,073 .58 .14 62.99
1997 - (1.56) 39.08 26.51 4,538,535 .59 .30 82.00
1996 - (1.81) 32.53 12.97 3,281,490 .63 .36 63.87
1995 - (.56) 30.50 40.67 2,000,232 .68 .49 57.51
1994 - (.42) 22.20 1.04 1,026,972 .71 .40 62.44
</TABLE>
* Not annualized.
** For the period May 2, 1994 (commencement of operations) to
December 31, 1994.
*** For the period May 1, 1995 (commencement of operations) to
December 31, 1995.
**** For the period January 2, 1997 (commencement of operations) to
December 31, 1997.
***** For the period April 6, 1998 (commencement of operations) to
December 31, 1998.
****** For the period April 30, 1998 (commencement of operations) to
December 31, 1998.
******* For the period September 30, 1998 (commencement of operations) to
December 31, 1998.

(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 1995 reflect a reduction of approximately $0.03
per share, expenses of Putnam VT The George Putnam
Fund of Boston for the period ended 1998 reflect a
reduction of approximately $0.03 per share, expenses
of Putnam VT Health Sciences Fund for the period ended
1998 reflect a reduction of approximately $0.01 per
share, expenses of Putnam VT International Growth Fund
for the period ended 1997 reflect a reduction of
approximately $0.01 per share, expenses of Putnam VT
International New Opportunities Fund for the period
ended 1998 reflect a reduction of approximately $0.01
per share, expenses of Putnam VT Investors Fund for
the period ended 1998 reflect a reduction of
approximately $0.01 per share, expenses of Putnam VT
OTC & Emerging Markets Fund for the period ended 1998
reflect a reduction of approximately $0.06 per share
and expenses of Putnam VT Research Fund for the period
ended 1998 reflect a reduction of approximately $0.03
per share.
(c) Total investment return assumes dividend
reinvestment.
(d) The ratio of expenses to average net assets for
the periods ended on or after Decemer 31, 1995
includes amounts paid through expense offset and
brokerage service arrangements. Prior period ratios
exclude these amounts.
(e) Net investment income, distributions from net
investment income and returns of capital were less
than $0.01 per share.

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 1-800-225-1581.
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

www.putnaminv.com

File No. 811-5346

Putnam Mutual Funds
Corp. Member, NASD, Inc.

PUTNAM VARIABLE TRUST
PROSPECTUS Class IB Shares
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:

Growth Funds

Income Funds

Putnam VT Diversified Income Fund
Putnam VT High Yield Fund
Putnam VT Income Fund

Asset Allocation Fund

Putnam VT Global Asset Allocation

Money Market Fund

Putnam VT Money Market Fund

This prospectus explains what you should know about
the funds in Putnam Variable Trust, which are
available for purchase by separate accounts of
insurance companies.

CONTENTS

Fund summaries
The following summaries identify each fund's goal,
principal investment strategies and the main risks
that could adversely affect the value of a fund's
shares and the total return on your investment. Each
summary also contains performance information that
provides some indication of each fund's risks. The
chart contained in each summary 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. A table following each chart compares the
fund's performance to that of broad measures of market
performance. Of course, a fund's past performance is
not necessarily an indication of future performance.
None of the performance information reflects the
impact of insurance-related charges or expenses.
Please refer to the prospectus for your insurance
contract for information about those charges and
performance data reflecting those charges and
expenses.

Class IB performance for the period prior to April 6,
1998 for Putnam VT Diversified Income Fund, Putnam VT
Growth and Income Fund and Putnam VT International
Growth and Income Fund, prior to April 30, 1998 for
Putnam VT Asia Pacific Growth Fund, Putnam VT Global
Asset Allocation Fund, Putnam VT Global Growth Fund,
Putnam VT High Yield Fund, Putnam VT International
Growth Fund,. Putnam VT Money Market Fund, Putnam VT
New Opportunities Fund, Putnam VT New Value Fund,
Putnam VT Utilities Growth and Income Fund, Putnam VT
Vista Fund and Putnam VT Voyager Fund

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.
You can lose money by investing in any of the funds.
A fund may not achieve its goals, and none of the
funds are 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. Although Putnam VT Money Market Fund seeks to
preserve the value of your investment at $1.00 per
share, you may lose money by investing in that fund.

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. MAIN RISKS
* 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 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 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. 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.
PERFORMANCE INFORMATION
CALENDAR YEAR TOTAL RETURNS FOR CLASS IB SHARES
(Bar chart)
Plot Points
1995 2.20%
1996 8.94%
1997 -14.78%
1998 -5.53%

Year-to-date performance through 3/31/99 was 8.40%.
During the periods shown in the bar chart, the highest
return for a quarter was 18.16% (quarter ending
12/31/98) and the lowest return for a quarter was -
15.86% (quarter ending 12/31/97).
Average annual total returns (for periods ending 12/31/98)

Past 1 year Since inception (5/1/95)
Class IB -5.53% -2.94%
MSCI Pacific
Index 2.44% -9.28%

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 fixedincome
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 denominated in foreign and U.S.
currencies, and other fixed-income securities
denominated in foreign and U.S. currencies.
MAIN RISKS
* 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 and emerging market government debt than
for U.S. Government debt. Credit risk is especially
high 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 securities (in the U.S.
and Investment Grade Sector) 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 that Putnam Management's allocation of
the fund's assets among the listed sectors may
adversely affect the fund's performance.
* 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.
PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IB SHARES
(Bar chart)
Plot Points
1994 -4.38%
1995 18.95%
1996 8.65%
1997 7.22%
1998 -1.60%

Year-to-date performance through 3/31/99 was 0.52%.
During the periods shown in the bar chart, the highest
return for a quarter was 5.93% (quarter ending
6/30/95) and the lowest return for a quarter was -
4.94% (quarter ending 9/30/98).

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

Past 1 year Past 5 years Since inception (9/15/93)
Class IB -1.6% 5.45% 5.58%
Lehman Brothers
Mortgage-backed
Bond Index 6.97% 7.23% 7.06%
Salomon Brothers
Non U.S. World
Government Bond
Index 17.79% 8.26% 7.89%
First Boston
High Yield
Index 0.58% 8.16% 8.65%

The fund's performance is compared to the Lehman
Brothers Mortgagebacked Bond Index, an unmanaged index
of U.S. government and mortgage-backed 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 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 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. Credit risk is especially high for debt
of below investmentgrade quality.
* The risk that Putnam Management's allocation of
the fund's assets between stocks and bonds may adversely affect
the fund's performance.
PERFORMANCE INFORMATION
Performance information will be available after the
fund completes a full calendar year of operation.

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.
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:

* International Equities: The objective of this
sector is to seek capital appreciation. This sector will invest
primarily in growth and value stocks principally
traded in foreign securities markets.

* U.S. Fixed-income: The objective of this sector
is to seek high current income which in the judgement
of Putnam Management does not involve undue risk to
principal or income. This sector will invest
primarily in fixed-income securities of U.S. companies
or the U.S. government, its agencies or
instrumentalities, mortgage-backed and asset-backed
securities, convertible securities and preferred
stock.

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 expects that under normal market
conditions it will invest a majority of its assets in
equity securities. The fund can invest in companies
of any size.

MAIN RISKS

* 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.
* The risk that the value of a fund's fixed-
income investments will fall if interest rates rise.
Interest rate risk is generally highest for
investments with long maturities.
* The risk that the companies or governments
whose fixedincome securities the fund buys will not
make timely payments of interest and principal. This
credit risk is higher for corporate fixed-income
investments and foreign government fixed-income
investments than it is for fixed-income investments of
the U.S. government. This credit risk is higher still
for fixed-income investments rated below investment
grade in quality (commonly known as "junk bonds").
* 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 Putnam Management's allocation of
the fund's assets among the listed sectors may
adversely affect the fund's performance.
PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IB SHARES
(Bar chart)
Plot points
1989 15.91%
1990 0.03%
1991 18.84%
1992 6.13%
1993 17.30%
1994 -2.64%
1995 24.92%
1996 15.45%
1997 19.49%
1998 13.53%

Year-to-date performance through 3/31/99 was 1.32%.
During the periods shown in the bar chart, the highest
return for a quarter was 14.63% (quarter ending
12/31/98) and the lowest return for a quarter was -
10.30% (quarter ending 9/30/98).
Average annual total returns (for periods ending 12/31/98)

Past 1 year Past 5 years Past 10 years
Class IB 13.53% 13.68% 12.53%
MSCI World Index 29.34% 15.69% 10.66%

MAIN RISKS
* 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.
PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IB SHARES
(Bar chart)
Plot points
1991 14.84%
1992 -0.51%
1993 32.20%
1994 -1.11%
1995 15.50%
1996 17.03%
1997 14.16%
1998 29.65%

Year-to-date performance through 3/31/99 was 2.92%.
During the periods shown in the bar chart, the highest
return for a quarter was 22.32% (quarter ending
12/31/98) and the lowest return for a quarter was -
12.18% (quarter ending 9/30/95).
Average annual total returns (for periods ending 12/31/98)

Past 1 year Past 5 years Since inception (5/1/90)
Class IB 29.65% 14.62% 12.53%
MSCI World Index 29.34% 15.69% 12.60%

The fund's performance is compared to the Morgan
Stanley Capital International World Index, an
unmanaged index of international 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 - value stocks
The fund invests primarily in value stocks, that offer
the potential for capital growth, current income, or
both. 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 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.
* 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.
PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IB SHARES
(Bar chart)
Plot points
1989 21.12%
1990 1.81%
1991 18.87%
1992 9.59%
1993 14.09%
1994 0.20%
1995 36.51%
1996 21.73%
1997 23.96%
1998 15.29%

Year-to-date performance through 3/31/99 was 2.53%.
ring the periods shown in the bar chart, the highest
return for a quarter was 16.59% (quarter ending
12/31/98) and the lowest return for a quarter was -
10.00% (quarter ending 9/30/98).
Average annual total returns (for periods ending 12/31/98)

Past 1 year Past 5 years Past 10 years
Class IB 15.29% 18.94% 15.87%
S&P 500 Index 28.58% 24.07% 19.21%

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 - growth stocks
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 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 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 the price of the fund's investments,
regardless of how well the companies in which the fund
invests perform.
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.
PERFORMANCE INFORMATION

Performance information will be available after the
fund completes a full calendar year of operation.

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 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. This risk is especially high 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.
* The risk that the prices of the fund's
investments, particularly the fixed-income investments in which it
mainly invests, will fall if interest rates rise.
This interest rate risk is 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.
PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IB SHARES
(Bar Chart)

Plot Points
1989 -2.79%
1990 -10.11%
1991 44.01%
1992 18.80%
1993 19.39%
1994 -1.08%
1995 18.14%
1996 12.64%
1997 14.17%
1998 -5.90%

Year-to-date performance through 3/31/99 was 2.66%.
During the periods shown in the bar chart, the
highest return for a quarter was 19.74% (quarter
ending 3/31/91) and the lowest return for a quarter
was -9.95% (quarter ending 9/30/98).
Average annual total returns (for periods ending 12/31/98)

Past 1 year Past 5 years Past 10 years
Class IB -5.90% 7.18% 9.75%
First Boston High
Yield Index 0.58% 8.16% 10.74%

PUTNAM VT INCOME FUND
Goal
The fund seeks current income consistent with
preservation of capital.
Main investment strategies - Corporate and U.S.
government fixedincome securities
The fund will normally invest mostly in bonds and
other debt securities, and, to a lesser degree, in
preferred stocks. These investments are commonly
known as fixed-income securities. The fund's
investments are generally long- or intermediate-term
(with maturities of more than three years). The
fund's investments in fixed-income securities
generally include:

* corporate bonds and notes, including both investment
grade and high-yielding, lower-rated, higher-risk
securities "junk bonds," issued mainly by domestic
companies, and
* U.S. government securities, including debt
obligations issued by the U.S. government, its
agencies and instrumentalities.
The fund generally invests significantly in mortgage-
backed investments which represent participations in,
or are secured by, mortgage loans. The fund's mortgage-backed
investments may include collateralized mortgage
obligations (CMOs) and stripped mortgage-backed
securities (strips). Some of these investments will
not be guaranteed as to principal and interest by the
U.S. government, its agencies or instrumentalities.
Main risks
* The risk that movements in the securities markets
will reduce the value of the fund's investments.
* The risk that rising interest rates will cause the
value of the fund's debt investments to fall.
Interest rate risk is generally highest for
investments with long maturities and the fund expects
that its investments will normally be weighted towards
longer maturities.
* The risk that the issuers of the fund's investments
or the mortgagor's who are repaying the mortgages
underlying the fund's investments, will fail to make
timely payments of interest and principal or will
default. 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 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 may be prepaid faster than expected during
periods of falling interest rates. 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 reduce the rate of prepayments. 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
Prior to April 9, 1999, the fund's policies required
it to invest at least 25% of its assets in U.S.
government securities and limited the amount of assets
invested in securities rated below A. Consequently,
the information in the table does not reflect the
fund's performance under its current investment
policies or its current distribution policies.

CALENDAR YEAR TOTAL RETURNS FOR CLASS IB SHARES
(Bar Chart)
Plot Points
1989 13.89%
1990 7.35%
1991 17.10%
1992 7.33%
1993 11.11%
1994 -3.43%
1995 20.26%
1996 2.26%
1997 8.48%
1998 8.20%

Year-to-date performance through 3/31/99 was -0.60%.
During the periods shown in the bar chart, the highest
return for a quarter was 7.95% (quarter ending
6/30/89) and the lowest return for a quarter was -
3.20% (quarter ending 3/31/96).

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

Past 1 year Past 5 years Since inception (2/1/88)
Class IB 8.20% 6.87% 9.06%
Lehman Brothers
Aggregate Bond
Index 8.69% 7.27% 9.26%
Lehman Brothers
Government/Corporate
Bond Index 9.47% 7.31% 9.34%

The fund's performance is compared to the Lehman
Brothers Aggregate Bond Index, an unmanaged index of
investment grade bonds. The fund's benchmark index,
the Lehman Brothers Government/Corporate Bond Index,
has been changed to the Lehman Brothers Aggregate
Bond Index because Putnam Management believes this
index is a more appropriate index to compare the
fund's performance under its new investment
objective and policies. PUTNAM VT INTERNATIONAL
GROWTH FUND
Goal
The fund seeks capital appreciation.
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 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 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,
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.

PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IB SHARES
(Bar chart)
Plot points
1998 18.69%
Year-to-date performance through 3/31/99 was 5.18%.
During the periods shown in the bar chart, the highest
return for a quarter was 22.06% (quarter ending
12/31/98) and the lowest return for a quarter was -
18.92% (quarter ending 9/30/98).
Average annual total returns (for periods ending 12/31/98)

Past 1 year Since inception (1/2/97)
Class IB 18.43% 17.30%
MSCI EAFE Index 20.00% 10.52%

PUTNAM VT INTERNATIONAL GROWTH AND INCOME FUND
Goal
The fund seeks capital growth. Current income is a
secondary objective.
Main investment strategies - GROWTH AND 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 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 invests mainly in medium and large-sized
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 emerging markets.
Main risks
* 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. 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 markets will
reduce the value 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

1998 11.20

Year-to-date performance through 3/31/99 was 4.25%.
During the periods shown in the bar chart, the highest
return for a quarter was 16.51% (quarter ending
12/31/98) and the lowest return for a quarter was -
17.32% (quarter ending 9/30/98).
Average annual total returns (for periods ending 12/31/98)

Past 1 year Since inception (1/2/97)
Class IB 11.20% 15.22%
MSCI EAFE Index 20.00% 10.52%

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 Morgan Stanley Capital International
(MSCI) EAFE Index, an unmanaged index of equity
securities from Europe, Australia, and the Far East,
with all values expressed in U.S. dollars.
PUTNAM VT INTERNATIONAL NEW OPPORTUNITIES FUND
GOAL
The fund seeks long-term capital appreciation.

* 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.

PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IB SHARES
(Bar chart)
Plot points
1998 15.42%
Year-to-date performance through 3/31/99 was 7.15%.
During the periods shown in the bar chart, the highest
return for a quarter was 19.09% (quarter ending
12/31/98) and the lowest return for a quarter was -
16.61% (quarter ending 9/30/98).
Average annual total returns (for periods ending 12/31/98)

Past 1 year Since inception (1/2/97)
Class IB 15.42% 7.32%
MSCI EAFE Index 20.00% 10.52%

Performance information will be available after the
fund completes a full calendar year of operation.

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 primarily
* 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

PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IB SHARES
(Bar chart)
Plot points
1989 8.71%
1990 7.81%
1991 5.76%
1992 3.42%
1993 2.64%
1994 3.67%
1995 5.30%
1996 4.93%
1997 5.06%
1998 5.12%

Year-to-date performance through 3/31/99 was 1.11%.
During the periods shown in the bar chart, the highest
return for a quarter was 2.31% (quarter ending
6/30/89) and the lowest return for a quarter was 0.63%
(quarter ending 6/30/93).
Average annual total returns (for periods ending 12/31/98)

Past 1 year Past 5 years Past 10 years
Class IB 5.12% 4.82% 5.23%
Merrill Lynch 91-Day
Treasury
Bill Index 5.23% 5.22% 5.69%
Lipper Money
Market Average 5.10% 4.90% 5.32%

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. The Lipper Money Market Average is an
arithmetic average of the total return of all money
market mutual funds tracked by Lipper Analytical
Services.

PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES
(Bar chart)
Plot points
1995 44.65%
1996 10.01%
1997 23.10%
1998 24.22%

Year-to-date performance through 3/31/99 was 6.46%.
During the periods shown in the bar chart, the highest
return for a quarter was 29.33% (quarter ending
12/31/98) and the lowest return for a quarter was -
18.85% (quarter ending 9/30/98).
Average annual total returns (for periods ending 12/31/98)

Past 1 year Since inception (5/2/94)
Class IB 24.22% 23.04%
S&P 500 Index 28.58% 26.56%

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. The fund may invest in companies
of any size. MAIN RISKS
* 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.
PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IB SHARES
(Bar chart)
Plot points
1998 6.11%
Average annual total returns (for periods ending 12/31/98)

Past 1 year Since inception (1/2/97)
Class IB 6.11% 11.66%
S&P 500 Index 28.58% 31.40%

The fund's performance has benefitted from Putnam
Management's agreement to limit the fund's expenses
through 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 GROWTH FUND
Goal
The fund seeks capital appreciation.
Main investment strategies - growth stocks
Under normal market conditions, the fund generally
invests at least 65% of its total assets in common
stocks traded in the overthe-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 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.
PERFORMANCE INFORMATION

Performance information will be available after the
fund completes a full calendar year of operation.
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 Putnam Management's equity research analysts
believe have the greatest 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 invests mainly in large 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 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.
PERFORMANCE INFORMATION
Performance information will be available after the
fund completes a full calendar year of operation.
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 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. PERFORMANCE INFORMATION
Performance information will be available after the
fund completes a full calendar year of operation.
PUTNAM VT UTILITIES GROWTH AND INCOME FUND

GOALS
The fund seeks capital growth and current income.

CALENDAR YEAR TOTAL RETURNS FOR CLASS IB SHARES
(Bar chart)
Plot points
1993 13.25%
1994 -7.16%
1995 30.88%
1996 15.62%
1997 26.91%
1998 14.86%

Year-to-date performance through 3/31/99 was -7.81%.
During the periods shown in the bar chart, the highest
return for a quarter was 12.28% (quarter ending
12/31/97) and the lowest return for a quarter was -
6.77% (quarter ending 3/31/94).
Average annual total returns (for periods ending 12/31/98)

Past 1 year Past 5 years Since inception (5/4/92)
Class IB 14.86% 15.42% 14.61%
S&P 500 Index 28.58% 24.07% 20.45%

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
mainly buys stocks of medium size companies, although
the fund may invest in companies of any size.
MAIN RISKS
* 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.
PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IB SHARES
(Bar chart)
Plot points
1998 19.50%
Year-to-date performance through 3/31/99 was 4.82%.
During the periods shown in the bar chart, the highest
return for a quarter was 23.68% (quarter ending
12/31/98) and the lowest return for a quarter was -
17.29% (quarter ending 9/30/98).
Average annual total returns (for periods ending 12/31/98)

Past 1 year Since inception (1/2/97)
Class IB 19.50% 21.33%
S&P 500 Index 28.58% 31.40%

The fund's performance has benefitted from Putnam
Management's agreement to limit the fund's expenses
through the period ended 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 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 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.
PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IB SHARES
(Bar chart)
Plot points
1989 32.18%
1990 -2.18%
1991 45.87%
1992 10.19%
1993 18.92%
1994 0.89%
1995 40.46%
1996 12.80%
1997 26.33%
1998 24.19%

Year-to-date performance through 3/31/99 was 6.12%.
During the periods shown in the bar chart, the highest
return for a quarter was 27.07% (quarter ending
12/31/98) and the lowest return for a quarter was -
17.39% (quarter ending 9/30/90).
Average annual total returns (for periods ending 12/31/98)

Past 1 year Past 5 years Past 10 years
Class IB 24.19% 20.19% 19.98%
S&P 500 Index 28.58% 24.07% 19.21%

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?

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. 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. The fund invests in both developed and
developing (also known as emerging) markets.
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 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.
Putnam Management expects that a substantial portion
of the fund's assets will normally be invested in each
of the sectors.
* 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 (rated
BBB or higher (or comparable unrated securities)) 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 corporate issuers and similar non-dollar denominated
securities of U.S. corporate issuers.
Although the fund has the flexibility to invest in any
country where Putnam Management sees potential for
high income, it presently expects to invest the assets
allocated to the International Sector 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. In
addition, 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
securities of comparable quality.
The fund will not necessarily sell an investment if
its rating is reduced.

PUTNAM VT THE GEORGE PUTNAM FUND OF BOSTON

PUTNAM VT GLOBAL ASSET ALLOCATION FUND

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 assets allocated to
this sector 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 this sector in any fixed-income
securities Putnam Management considers appropriate,
including U.S. government securities, debt securities,
mortgage-backed and assetbacked 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 sector
in debt securities of private issuers, convertible
securities and preferred stocks principally traded in
foreign securities markets.

PUTNAM VT GLOBAL GROWTH FUND

PUTNAM VT GROWTH AND INCOME FUND

PUTNAM VT HEALTH SCIENCES FUND

The fund pursues its goal 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
without limit in securities of foreign issuers traded
in U.S. public markets. While the fund may also
invest in
securities of foreign issuers that are not traded in
U.S. public markets, it does not expect that such
investments will normally represent more than 30% of
its assets, although they may occasionally exceed this
amount.
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. Therefore, events that
affect the health sciences industries more
significantly than the market as a whole will have a
greater effect 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 introduced 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 rating agency rating such
security, including securities in the lowest ratings
categories, and unrated investments that Putnam
Management determines are of comparable quality.

PUTNAM VT INCOME FUND
The fund pursues its goal by investing mainly in
fixed-income securities. 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:
Corporate obligations. These investments include
* investment grade and high-yielding, lower-rated,
higher-risk fixed-income securities mainly issued by
domestic companies, and rated at the time of purchase
at least B (or its equivalent) by a nationally
recognized securities rating agency, or if unrated,
determined by Putnam Management to be of comparable
quality.
* mortgage-backed investments (including CMOs and
strips) of private issuers.
U.S. government and agency investments. These
investments include * U.S. Treasury bills, notes and
bonds.
* Obligations backed 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
U.S. government, such as mortgage participation
certificates guaranteed by the Government National
Mortgage Association (GNMA, commonly known as "Ginnie
Mae") and Federal Housing Administration debentures.
* Obligations backed 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 Federal
National Mortgage Association (FNMA, commonly known as
"Fannie Mae") bonds and Federal Home Loan Bank debt.
The fund's mortgage-backed investments may also
include CMOs and strips issued or guaranteed by the
U.S. government, its agencies or instrumentalities.
The yields available from U.S. government securities
are generally lower than the yields available from
comparable corporate debt securities.
The fund may invest substantially in debt investments
rated, at the time of purchase, no lower than 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. A reduction in an investment's
rating will generally cause its value to decline.
The fund may invest in U.S. dollar denominated fixed-
income securities of foreign issuer's, including
Yankee bonds, but the fund will not invest in fixed-
income securities denominated in foreign currencies.

PUTNAM VT INTERNATIONAL GROWTH FUND

PUTNAM VT INTERNATIONAL GROWTH AND INCOME FUND

The fund pursues its goals 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 pursues its goal by investing in high
quality, short term money market investments, such as
commercial paper, U.S. government debt and repurchase
agreements, corporate obligations and certificates of
deposit 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 and bank certificates of deposit and bankers'
acceptances payable in U.S. dollars by foreign banks
or foreign branches of U.S. banks.
Credit quality. The fund buys only high quality
investments that Putnam Management believes present
minimal credit risk at the time of purchase. High
quality investments are
* rated in one of the two highest categories by
at least two nationally recognized rating services, or
* rated by one rating service in one of its service's
two highest categories (if only one rating service has
provided a rating) or * unrated investments that
Putnam Management determines are of equivalent quality
To maintain liquidity and preserve capital, the fund may
decide not to buy investments that pay the highest
available yields at any particular time.
Thus, debt of issuers with good credit prospects
usually offers lower yields than that of issuers with
less secure credit prospects. Higher-rated
investments generally offer lower credit risk, but not
necessarily lower interest rate risk. The value of a
higher-rated investment can still fluctuate in
response to changes in interest rates.
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.
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 the 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 it
expires.

PUTNAM VT NEW OPPORTUNITIES FUND

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.

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 without limit in securities of
foreign issuers traded in U.S. public markets. The
fund may also 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 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 companies of any
size. The fund may invest without limit in securities
of foreign issuers traded in U.S. public markets. The
fund may also invest in securities of issuers not
actively traded in U.S. public 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

PUTNAM VT SMALL CAP VALUE FUND

The fund pursues its goal by investing mainly in value
stocks of smaller issuers. 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 longterm
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 without limit in
securities of foreign issuers traded in U.S. public
markets. The fund may also 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 by investing mainly in
equity and debt 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
without limit in securities of foreign issuers traded
in U.S. public markets. The fund may also 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 below
BBB (or its equivalent) by a nationally recognized
securities rating agency, or, if unrated, are
determined by Putnam Management to be of comparable
quality. Up to 25% of the fund's assets may be
invested in foreign markets.

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. 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
these trends will result in certain utility companies
being able to earn more than their traditional
regulated rates, while others may be forced to defend
their core business from increased competition and may
be less profitable. Although Putnam Management seeks
to take advantage of favorable investment
opportunities that may arise from these trends, the
fund may not benefit from any such changes.

PUTNAM VT VISTA FUND

PUTNAM VT VOYAGER FUND

COMMON INVESTMENT STRATEGIES AND RELATED RISKS

Common stocks. Common stocks 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 affecting multiple companies 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 rates. In addition, a company'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 may invest in
growth stocks. Growths stocks are 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 mediumsized 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.
* 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.
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.
Fixed-income investments. Each of the funds may
invest in fixed income securities. 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.
"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 in 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 issuer'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 better 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 risk - 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.

Mortgage-backed and asset-backed securities. Asset-
backed and mortgage-backed securities include
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
loans or mortgage-backed securities.

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.
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.
Derivatives. The funds may engage in a variety of
transactions involving derivatives, such as futures,
options, warrants and swap contracts. Derivatives are
financial instruments whose value depends upon, or is
derived from, the value of something else, such as one
or 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, pool of investments index or
currency specified in the derivative instrument.
The funds may use derivatives both for hedging and non-
hedging purposes. The decision as to whether and to
the extent the fund will use derivative hedging
purposes will depend upon a number of factors,
including market conditions, the funds' investments
and the availablility of suitable derivatives.
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.
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 (investments not traded on an
exchange) 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.
Other investments. In addition to the main investment
strategies described above, the funds may also make
other types of investments, 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 each fund's last fiscal year):
Putnam VT Asia Pacific
Growth Fund .80%
Putnam VT Diversified Income Fund .67%
Putnam VT Global Asset Allocation Fund .65%
Putnam VT Global Growth Fund .60%
Putnam VT Growth and Income Fund .46%
Putnam VT High Yield Fund .64%
Putnam VT Income Fund .60%
Putnam VT International Growth Fund .80%
Putnam VT International Growth and Income Fund .80%
Putnam VT International New Opportunities Fund* 1.18%
Putnam VT Money Market Fund .45%
Putnam VT New Opportunities Fund .56%
Putnam VT New Value Fund .70%
Putnam VT Utilities Growth and Income Fund .65%
Putnam VT Vista Fund .65%
Putnam VT Voyager Fund .54%

* 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 International New
Opportunities Fund 1.20%

Putnam VT Small Cap Value Fund: 0.80% of the first
$500 million of average net assets; 0.70% of the next $500 million;
0.65% of the next $500 million; 0.60% of the next $5
billion; 0.575% of the next $5 billion; 0.555% of the
next $5 billion; 0.54% of the next $5 billion; and
0.53% of any excess thereafter.
Putnam Management's Global Asset Allocation committee
has primary responsibility for the day-to-day
management of Putnam VT Global Asset Allocation and
the Global Equity Research Team has primary
responsibility for the day-to-day management of Putnam
VT Research Fund.
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.

Business experience
Fund name Year (at least 5 years)
- --------------------- ------- -------------------------

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.

Carmel Peters 1999 Employed by Putnam Management since 1997.
Senior Vice President Prior to May 1997, Ms. Peters was employed
at Wheelock Natwest Investment Management,
Hong Kong, and prior to February 1996,
Ms. Peters was employed at Rothschild
Asset Management Asia Pacific, Hong Kong.

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

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

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.

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 by Putnam Management since 1992.
Senior Vice President

Krishna K. Memani 1999 Employed by Putnam Management since 1998.
Managing Director 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.
Managing Director 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.
Managing Director 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 by Putnam Management since 1994.
Senior Vice President Prior to July 1994, Ms. Svensson was
employed by Lord Abbett & Co.

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

Olivier Rudigoz 1998 Employed by Putnam Management since 1998.
Vice President 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 1983.
Managing Director

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

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

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

Rosemary 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 was
employed by MFS Investment Management.

Putnam VT Income Fund
Kevin M. Cronin 1999 Employed by Putnam Management since 1997.
Managing Director Prior to February 1997, Mr. Cronin was
employed at MFS Investment Management.
Krishna K. Memani 1999 Employed by Putnam Management since 1998.
Managing Director Prior to September 1998, Mr. Memani
was employed at Morgan Stanley & Co.

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 1996. 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.

Mark Pollard 1999 Employed by Putnam Management since 1990.
Managing Director

Paul Warren 1999 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 International
Growth and Income Fund

Deborah F. Kuenstner 1999 Employed by Putnam Management since 1997.
Managing Director Prior to May 1997, Ms. Kuenster was employed
at Dupont Pension Fund Investment.

George Stairs 1999 Employed by Putnam Management since 1994.
Senior Vice President Prior to July 1994, Mr. Stairs was
employed at Value Quest Ltd.

Putnam VT International
New Opportunities Fund

Robert Swift 1996 Employed by Putnam Management since 1995.
Managing Director 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

Jack P. Chang 1999 Employed by Putnam Management since 1997.
Senior Vice President Prior to July 1997, Mr. Chang was
employed by Columbia Management.

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

Putnam VT New
Opportunities Fund

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

Jeffrey R. Lindsey 1999 Employed by Putnam Management since 1994.
Senior Vice President

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 Utilities
Growth and Income Fund

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

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

Putnam VT Vista Fund

Eric Wetlaufer 1997 Employed by Putnam Management since 1997.
Managing Director 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 by Putnam Management since 1997.
Senior Vice President Prior to December 1997, Ms. Parker was
employed at Keystone Investments.

Dana Clark 1999 Employed by Putnam Management since 1987.
Vice President

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

Michael E. Nance 1999 Employed by Putnam Management since 1994.
Senior Vice President Prior to June 1994, Mr. Nance attended
the University of Chicago Graduate
School of Business.

How to buy and sell fund shares

Please check with your insurance company to determine
which funds are 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.

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 do the funds price their shares?

Each fund (other than Putnam VT Money Market Fund)
values its investments for which market quotations are
readily available at market value. It values short-
term investments that will mature within 60 days at
amortized cost, which approximates market value. It
values all other investments and assets at their fair
value.
Putnam VT Money Market Fund values all of its
investments at amortized cost.

Fund distributions and taxes

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.

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

Putnam VT Asia Pacific Growth Fund
1998 $8.57 $(.01)a $(.23) $(.24) $- $- $- $-

Putnam VT Diversified Income Fund
1998** $10.95 $.62a $(1.10) $(.48) $- $- $- $-

Putnam VT The George Putnam Fund of Boston
1998 $10.00 $.17ab $.20 $.37 (.09) $- $- $-

Putnam VT Global Asset Allocation Fund
1998 $18.16 $.33a $.46 $.79 $- $- $- $-

Putnam VT Global Growth Fund
1998 $18.03 $(.05)a $2.30 $2.25 $- $- $- $-

Putnam VT Growth and Income Fund
1998 $28.02 $.26a $.47 $.73 $- $- $- $-

Putnam VT Health Sciences Fund
1998** $10.00 $(.01)ab $.95 $.94 $(.01) $- $- $-e

Putnam VT High Yield Fund
1998 $12.99 $.79a $(2.08) $(1.29) $- $- $- $-

Putnam VT International Growth Fund
1998 $13.44 $(.04)a $.15 $.11 $(.03) $- $- $(.01)

Putnam VT International Growth and
Income Fund
1998 $13.36 $(.01)a $(.57) $(.58) $(.11) $(.19) $(.18) $(.06)

Putnam VT International New Opportunities
Fund
1998 $11.39 $(.05)ab $.14 $.09 $- $- $- $-

Putnam VT Investors Fund
1998** $10.00 $.01ab $1.64 $1.65 $(.01) $- $- $-e

Putnam VT Money Market Fund
1998 $1.00 $.0338a $- $.0338 $(.0338) $- $- $-

Putnam VT New Opportunities Fund
1998 $23.94 $(.05)a $2.15 $2.10 $- $- $- $-

Putnam VT New Value Fund
1998 $11.91 $.13a $.13 $.26 $(.13) $(.02) $- $-

Putnam VT OTC & Emerging Growth Fund
1998** $10.00 $.02ab $1.90 $1.92 $(.01) $(.01) $- $-

Putnam VT Research Fund
1998*** $10.00 $.02ab $1.90 $1.92 $(.01) $(.01) $- $-

Putnam VT U.S. Government
and High Quality Bond Fund
1998 $12.88 $.50a $.35 $.85 $- $- $- $-

Putnam VT Utilities Growth and Income Fund
1998 $16.19 $.29a $1.71 $2.00 $- $- $- $-

Putnam VT Vista Fund
1998 $13.76 $(.02)a $.99 $.97 $- $- $- $-

Putnam VT Voyager Fund
1998 $41.55 $(.01)a $4.27 $4.26 $- $- $- $-
</TABLE>
<TABLE><CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Total Ratio of Net
Investment Ratio of Investment
Net Assets Return at Net Assets Expenses to Income (Loss) to
Total Value, End Net Asset End of Period Average Net Average Net Portfolio
Distributions of Period Value(%)(c) (in thousands) Assets(%)(d) Assets(%) Turnover (%)

Putnam VT Asia Pacific Growth Fund
1998 $- $8.33 $(2.80)* $111 $.85* $(.10)* $136.49

Putnam VT Diversified Income Fund
1998** $- $10.47 $(4.38)* $1,963 $.69* 5.74* 186.80

Putnam VT The George Putnam Fund
of Boston
1998 $(.09) $10.28 3.69* $1,924 .67b 1.74b* 99.85*

Putnam VT Global Asset Allocation
Fund
1998 $- $18.95 $4.35* $1,319 $.63* 1.82* 133.80

Putnam VT Global Growth Fund
1998 $- $20.28 12.48* $823 .59* (.34)* 164.56

Putnam VT Growth and Income Fund
1998 $- $28.75 $2.61* $7,583 $.49* 1.20* 63.62

Putnam VT Health Sciences Fund
1998** $(.01) $10.93 $9.40* $2,129 $.71b* (.11)b 39.68*

Putnam High Yield Fund
1998 $- $11.70 (9.93)* $1,840 .58* 7.63* 52.00

Putnam VT International Growth
Fund
1998 $(.04) $13.51 .81* $1,234 .83* (.29)* 98.31

Putnam VT International Growth
and Income Fund
1998 $(.54) $12.24 (4.24)* 926 .84b (.07)b 62.61

Putnam VT International New
Opportunities Fund
1998 $- $11.48 .79* $85 $1.18* (.44)b* 157.72

Putnam VT Investors Fund
1998** $(.01) $11.64 16.54* $2,619 .67b* .03b* 42.97*

Putnam VT Money Market Fund
1998 $(0.338) $1.00 3.42* $13,188 .46* 3.18* -

Putnam VT New Opportunities Fund
1998 $- $26.04 8.77* $1,359 .51* (.25)* 59.75

Putnam VT New Value Fund
1998 $(.15) $12.02 2.28* $414 .65* 1.26* 130.96

Putnam VT OTC & Emerging Growth
Fund
1998** $- $10.08 .82* $541 .71b* (.42)b* 59.93

Putnam VT Research Fund
Fund
1998*** $(.02) $11.90 19.19* $255 .25b* .15b* 19.76*

Putnam VT U.S. Government and
High Quality Bond Fund
1998 $- $13.73 6.60* $2,288 .56* 4.03* 233.04

Putnam VT Utilities
Growth and Income Fund
1998 $- $18.19 12.35* $1,799 .59* 1.98* 24.77

Putnam Vista Fund
1998 $- $14.73 7.05* $851 .62* (.18)* 116.48

Putnam VT Voyager Fund
1998 $- $45.81 10.25* $4,332 .49* (.04)* 62.99
</TABLE>

* Not annualized.
** For the period April 30, 1998 (commencement of operations) to
December 31, 1998.
*** For the period September 30, 1998 (commencement of operations) to
December 31, 1998.
(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 the following funds reflect a reduction of
approximately the amounts per share noted for the
period ending December 31, 1998: Putnam VT The George
Putnam Fund of Boston Class IB, $0.03, Putnam VT
Health Sciences Fund Class IB $0.01; Putnam VT
International New Opportunities Fund less than $0.01;
Putnam VT Investors Fund Class IB, less than $0.01;
Putnam VT OTC & Emerging Growth Fund Class IB, $0.05;
and Putnam VT Research Fund, $0.03.
(c) Total investment return assumes dividend reinvestment.
(d) The ratio of expenses to average net assets for
the periods ended December 31, 1995 includes amounts
paid through expense offset and brokerage service
arrangements. Prior period ratios exclude these amounts.
(e) Net investment income distributions from net
investment income and returns of capital were less
than $0.01 per share.

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

www.putnaminv.com
File No. 811-5346

Putnam Mutual Funds
Corp. Member, NASD, Inc.

PUTNAM VARIABLE TRUST
PROSPECTUS
Class IA Shares
APRIL 30, 1999
Investment Category: Growth

Putnam Variable Trust (the "Trust") offers shares of
beneficial interest in separate investment portfolios
for purchase by separate accounts of various insurance
companies. One of these portfolios is Putnam VT New
Opportunities Fund (the "fund"). This prospectus
explains what you should know about the fund.

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

CONTENTS

Fund summary (including Goal, Main investment strategy,
Main risks and Performance information)
What are the fund's main investment strategies and
related risks? Who manages the fund?
How to buy and sell fund shares.
How does the fund price its shares?
Fund distributions and taxes
Financial highlights

FUND SUMMARY

The following summary identifies the fund's goal,
principal investment strategies and the main risks
that could adversely affect the value of the fund's
shares and the total return on your investment. The
summary also contains performance information that
provides some indication of the fund's risks. The
chart contained in the summary shows year-to-year
changes in the performance of the fund's class IA
shares. A table following the chart compares the
fund's performance to that of broad measures of market
performance. Of course, the fund's past performance
is not necessarily an indication of future
performance. None of the performance information
reflects the impact of insurance-related charges or
expenses. Please refer to the prospectus for your
insurance contract for information about those charges
and performance data reflecting those charges and
expenses.

A more detailed description of the fund, including the
risks associated with investing in the fund, can be
found further back in this prospectus. Please be sure
to read this additional information before you invest.
You can lose money by investing in the fund. The fund
may not achieve its goals, and it is not intended as a
complete investment program. An investment in the
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.

PUTNAM VT NEW OPPORTUNITIES FUND
Goal
The fund seeks long-term capital appreciation.
Main investment strategies - GROWTH
The fund invests primarily in growth stocks which are
stocks of 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 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 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 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.

PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IA SHARES
(Bar chart)
Plot points
1995 44.87%
1996 10.17%
1997 23.29%
1998 24.38%

Past 1 year Since Inception (5/2/94)
Class IA 24.38% 23.19%
S&P 500 Index 28.58% 26.56%

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.
What are the fund's main investment strategies and related risks?

The fund is generally managed in a style similar to
the Putnam New Opportunities Fund which is managed by
Putnam Management and whose shares are generally
offered to the public. Putnam New Opportunities Fund,
however, employs different investment practices and
may invest in securities different from those in which
Putnam VT New Opportunities Fund invests, and
consequently the two funds will not have identical
portfolios or experience identical investment results.
Any investment carries with it some level of risk that
generally reflects its potential for reward.

PUTNAM VT NEW OPPORTUNITIES FUND

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

* 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.

Common stocks. Common stocks 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 affecting multiple companies 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 rates. In addition, a company'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. The fund invests in growth
stocks. Growths stocks are 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.
Smaller companies. The fund invests in small and
medium-sized 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. The fund 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.
* 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.
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.
Derivatives. The fund may engage in a variety of
transactions involving derivatives, such as futures,
options, warrants and swap contracts. Derivatives are
financial instruments whose value depends upon, or is
derived from, the value of something else, such as one
or 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, pool of investments index or
currency specified in the derivative instrument.
The fund may use derivatives both for hedging and non-
hedging purposes. The decision as to whether and to
the extent the fund will use derivative hedging
purposes will depend upon a number of factors,
including market conditions, the fund's investments
and the availablility of suitable derivatives.
Derivatives involve special risks and may result in
losses. The fund 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.
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 (investments not traded on an
exchange) 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 fund may buy or sell
investments relatively often, which involves higher
brokerage commissions and other expenses.
Other investments. In addition to the main investment
strategies described above, the funds may also make
other types of investments, and therefore may be
subject to other risks, as described in the Trust's
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
the fund's goals, investment strategies and other
policies without shareholder approval, except as
otherwise indicated.

Who manages the fund?
The Trust's Trustees oversee the general conduct of
the fund's business. The Trustees have retained
Putnam Management to be the fund's investment manager,
responsible for making investment decisions for the
fund and managing the fund's other affairs and
business. The 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 fund paid
Putnam Management a management fee of 0.56% during the
fund's last fiscal year.

The following officers of Putnam Management have had
primary responsibility for the day-to-day management
of the 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.

Manager Year Experience
- --------------------- ------- ------------------------
Daniel L. Miller 1994 Employed by Putnam Management since 1983.
Managing Director

Jeffrey R. Lindsey 1999 Employed by Putnam Management since 1994.
Senior Vice President

Year 2000 Issues. The fund could be adversely
affected if the computer systems used by Putnam
Management and the fund's other service providers do
not properly process and calculate the daterelated
information relating to the end of this century and
the beginning of the next. While year 2000-related
computer problems could have a negative effect on the
fund, both in its operations and in its investments,
Putnam Management is working to avoid such problems
and to obtain assurances from service providers that
they are taking similar steps. No assurances, though,
can be provided that the fund will not be adversely
impacted by these matters.

How to buy and sell fund shares

The Trust has an underwriting agreement relating to
the fund with Putnam Mutual Funds, One Post Office
Square, Boston, Massachusetts 02109. Putnam Mutual
Funds presently offers shares of the fund 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.
Orders for purchases or sales of shares of the 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.

The fund currently does not foresee any disadvantages
to policyowners arising out of the fact that the 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 the fund and shares of
another fund offered by the Trust may be substituted.
This might force the fund to sell portfolio securities
at disadvantageous prices. In addition, the Trustees
may refuse to sell shares of the fund to any separate
account or may suspend or terminate the offering of
shares of the 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 does the fund price its shares?

The price of the fund's shares is based on its net
asset value (NAV). The NAV per share of each class of
shares equals the total value of its assets, less its
liabilities, divided by the number of its outstanding
shares. Shares are only valued as of the close of
regular trading on the New York Stock Exchange each
day the exchange is open.

The fund values its investments for which market
quotations are readily available at market value. It
values short-term investments that will mature within
60 days at amortized cost, which approximates market
value. It values all other investments and assets at
their fair value.

The fund translates prices for its investments quoted
in foreign currencies into U.S. dollars at current
exchange rates. As a result, changes in the value of
those currencies in relation to the U.S. dollar may
affect the fund's NAV. Because foreign markets may be
open at different times than the New York Stock
Exchange, the value of the fund's shares may change on
days when shareholders are not able to buy or sell
them. If events materially affecting the values of
the fund's foreign investments occur between the close
of foreign markets and the close of regular trading on
the New York Stock Exchange, these investments will be
valued at their fair value.

Fund distributions and taxes

The fund will distribute any net investment income and
net realized capital gains at least annually. Both
types of distributions will be made in shares of the
fund 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. 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
foreign, 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. The fund intends to
comply with these requirements. If the fund does not
meet such requirements, income allocable to the
contracts would be taxable currently to the holders of
such contracts.
The 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, the fund's yield on
those securities would be decreased.
Financial highlights
The financial highlights table is intended to help you
understand the fund's 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 the 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 fund's annual
report to shareholders, which is available upon
request.
CLASS IA
(For a share outstanding throughout the period)
<TABLE><CAPTION>
Year ended December 31
<S> <C> <C> <C> <C> <C>
1998 1997 1996 1995 1994*

Net asset value, beginning of period $21.53 $17.22 $15.63 $10.82 $10.00

Investment operations
Net investment income (Loss) (.04) - (.01) - -b

Net realized and unrealized gain
(loss) on investments(loss) $5.19 $4.01 $1.60 $4.84 0.82

Total from investment operations $5.15 $4.01 $1.59 $4.84 0.82

Less distributions:
From net investment income - - - - -
In excess of net investment income - - - - -
From net realized gain on investments $(.32) - - (.02) -
In excess of net realized gain on
investments - - - - -
From return of capital - - - (.01) -
Total distributions $(.32) - - (.03) -

Net asset value, end of period $26.05 $21.23 $17.22 $15.63 $10.82

Ratios and supplemental data

Total investment return at
net asset value (%)c 24.38 23.39 10.17 44.87 8.20*

Net assets, end of period
(in thousands) $3,586,225 $2,590,244 $1,674,197 $515,109 $68,592

Ratio of expenses to average
net assets (%)d .61 .63 .72 .84 .47b*
Ratio of net investment income (loss) to
average net assets (%) (.16) (.01) (.13) (.03) .03(b)**
Portfolio turnover (%) 59.75 71.78 57.94 30.87 32.77*

</TABLE>
* Not annualized.
** For the period May 2, 1994 (commencement of operations) to
December 31, 1994.

a Per share net investment income (loss) has been
determined on the basis of the weighted average number of shares
outstanding during the period.
b Reflects an expense limitation in effect during
the period. As a result of such limitation, expenses were reduced
by $0.02 per share.
c Total return assumes dividend reinvestment and
does not reflect the effect of sales charges.
d The ratio of expenses to average net assets for
periods ended July 31, 1996 and thereafter includes amounts paid
through brokerage service and expense offset
arrangements. Prior period ratios exclude these
amounts.
e Net investment income, distributions from net
investment income and returns of capital were less than $0.01 per
share.

For more information
about the fund and Putnam Variable Trust

The Trust's statement of additional information (SAI)
and annual and semi-annual reports to shareholders
include additional information about the fund. The
SAI, and the auditor's report and financial statements
included in the Trust's most recent annual report to
the fund's 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 fund's
performance during the fund's 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-
800-225-1581.
You may review and copy information about the fund,
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

www.putnaminv.com

File No. 811-5346

Putnam Mutual Funds
Corp. Member, NASD, Inc.

PUTNAM VARIABLE TRUST
PROSPECTUS Class IA Shares
APRIL 30, 1999

Growth Funds Growth and Income Funds
Putnam VT Asia Pacific Growth Fund Putnam VT Growth and Income Fund
Putnam New Opportunities Fund Putnam VT Utilities Growth and
Putnam VT Voyager Fund Income Fund

Income Fund
Putnam VT Diversified Income Fund

This prospectus explains what you should know about
the funds in Putnam Variable Trust, which are
available for purchase by separate accounts of
insurance companies.

CONTENTS

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?
How to buy and sell fund shares.
How do the funds price their shares?
Fund distributions and taxes
Financial highlights
Fund summaries
The following summaries identify each fund's goal,
principal investment strategies and the main risks
that could adversely affect the value of a fund's
shares and the total return on your investment. Each
summary also contains performance information that
provides some indication of each fund's risks. The
chart contained in each summary shows year-to-year
changes in the performance of the fund's class IA
shares. A table following each chart compares the
fund's performance to that of broad measures of market
performance. Of course, a fund's past performance is
not necessarily an indication of future performance.
None of the performance information reflects the
impact of insurance-related charges or expenses.
Please refer to the prospectus for your insurance
contract for information about those charges and
performance data reflecting those charges and
expenses.

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.
MAIN RISKS
* 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 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 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. 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.
PERFORMANCE INFORMATION
CALENDAR YEAR TOTAL RETURNS FOR CLASS IA SHARES
(Bar chart)
Plot Points
1995 2.30%
1996 9.10%
1997 -14.66%
1998 -5.48%

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

Past 1 year Since inception (5/1/95)
Class IA -5.48% -2.82%
MSCI Pacific Index 2.44% -9.28%

The fund's performance has benefitted from Putnam
Management's agreement to limit the fund's expenses
through the period ended 1995. The fund's performance
is compared to the Morgan Stanley Capital
International (MSCI) Pacific Index, an unmanaged index
of Asian and Pacific Rim equity securities, with all
values expressed in U.S. dollars.

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 fixedincome 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
denominated in foreign and U.S. currencies of foreign
governments, their agencies and instrumentalities, and
other fixed-income securities denominated in foreign
and U.S. currencies.
MAIN RISKS
* 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 and emerging market government debt than
for U.S. Government debt. Credit risk is especially
high 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 securities (in the U.S.
and Investment Grade Sector) 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 that Putnam Management's allocation of
the fund's assets among the listed sectors may
adversely affect the fund's performance.
*
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.
PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IA SHARES
(Bar chart)
Plot Points
1994 -4.23%
1995 19.13%
1996 8.81%
1997 7.38%
1998 -1.37%

Year-to-date performance through 3/31/99 was 0.53%.
During the periods shown in the bar chart, the
highest return for a quarter was 5.97% (quarter
ending 6/30/95) and the lowest return for a quarter
was -4.94% (quarter ending 9/30/98).

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

Past 1 year Past 5 years Since inception (9/15/93)
Class IA -1.37% 5.62% 5.76%
Lehman Brothers
Mortgage-backed
Bond Index 6.97% 7.23% 7.06%
Salomon Brothers
Non U.S. World
Government Bond
Index 17.79% 8.26 7.89%
First Boston
High Yield Index 0.58% 8.16% 8.65%

PUTNAM VT GROWTH AND INCOME FUND
Goal
The fund seeks capital growth and current income.
Main investment strategies - value stocks
The fund invests primarily in "value" stocks, that
offer the potential for capital growth, current income,
or both. 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 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.
* 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.
PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IA SHARES
(Bar chart)
Plot points
1989 21.30%
1990 1.96%
1991 19.05%
1992 9.75%
1993 14.27%
1994 0.35%
1995 36.71%
1996 21.92%
1997 24.15%
1998 15.42%

Year-to-date performance through 3/31/99 was 2.57%.
ring the periods shown in the bar chart, the highest
return for a quarter was 16.62 (quarter ending
12/31/98) and the lowest return for a quarter was -
9.96% (quarter ending 9/30/98).
Average annual total returns (for periods ending 12/31/98)

Past 1 year Past 5 years Past 10 years
Class IA 15.42% 19.10% 16.04%
S&P 500 Index 28.58% 24.07% 19.21%

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 OPPORTUNITIES FUND
Goal
The fund seeks long-term capital appreciation.
Main investment strategies - GROWTH
The fund invests primarily in "growth" stocks which
are stocks of 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 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 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 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.

PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES
(Bar chart)
Plot points
1995 44.87%
1996 10.17%
1997 23.29
1998 24.38

Past 1 year Since inception (5/2/94)
Class IA 24.38% 23.19%
S&P 500 Index 28.58% 26.56%

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. The
fund mainly buys stocks of larger
companies, although the fund may invest in companies
of any size.

MAIN RISKS
* 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 risk that the value of the fund's debt
securities will fall if interest rates rise. Interest
rate risk is highest for investments with long
maturities.
* The risk that the companies whose debt securities
the fund purchases will fail to make timely payments
of interest and principal. This credit risk is higher
for corporate debt securities than for U.S. Government
debt securities. It is especially high for fixed-
income investments of below investmentgrade quality.

* 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 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.

PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IA SHARES
(Bar chart)
Plot points
1993 13.42%
1994 -7.02%
1995 31.08%
1996 15.80%
1997 27.10%
1998 14.92%

Past 1 year Past 5 years Since inception (5/4/92)
Class IA 14.92% 15.57% 14.75%
S&P 500 Index 28.58% 24.07 20.45%

The fund's performance has benefitted from Putnam
Management's agreement to limit the fund's expenses
through December 31, 1992. 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 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 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.
PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IA SHARES
(Bar chart)
Plot points
1989 32.38%
1990 -2.03%
1991 46.09%
1992 10.36%
1993 18.70%
1994 1.04%
1995 40.67%
1996 12.97%
1997 26.51%
1998 24.36%

Past 1 year Past 5 years Past 10 years
Class IA 24.36% 20.37% 20.15%
S&P 500 Index 28.58% 24.07% 19.21%

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 are generally managed in styles similar to
other openend 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. Any investment carries with it
some level of risk that generally reflects its
potential for reward.

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. 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. The fund invests in both developed and
developing (also known as emerging) markets.
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 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.
Putnam Management expects that a substantial portion
of the fund's assets will normally be invested in each
of the sectors.
* 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 (rated
BBB or higher (or comparable unrated securities)) 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 corporate issuers and similar non-dollar denominated
securities of U.S. corporate issuers.
Although the fund has the flexibility to invest in any
country where Putnam Management sees potential for
high income, it presently expects to invest the assets
allocated to the International Sector 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. In addition, 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
securities of comparable quality. The fund will not
necessarily sell an investment if its rating is
reduced.
PUTNAM VT GROWTH AND INCOME 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;
* 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.

PUTNAM VT UTILITIES GROWTH AND INCOME FUND

The fund pursues its goals 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 without
limit in securities of foreign issuers traded in U.S.
public markets. The fund may alosinvest 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 below BBB (or
its equivalent) by a nationally recognized securities
rating agency, or, if unrated, are determined by
Putnam Management to be of comparable quality. Up to
25% of the fund's assets may be invested in foreign
markets.

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. 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
these trends will result in certain utility companies
being able to earn more than their traditional
regulated rates, while others may be forced to defend
their core business from increased competition and may
be less profitable. Although Putnam Management seeks
to take advantage of favorable investment
opportunities that may arise from these trends, the
fund may not benefit from any such changes.

PUTNAM VT VOYAGER FUND

COMMON INVESTMENT STRATEGIES AND RELATED RISKS

Common stocks. Common stocks 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 affecting multiple companies 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 rates. In addition, a company'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 may invest in
growth stocks. Growths stocks are 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 mediumsized 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.
* 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.
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.
Fixed-income investments. Each of the funds may
invest in fixed income securities. 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.
"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 in 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 issuer'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 better 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.

Illiquid securities. Each fund (other than Putnam VT
Money Market Fund) may invest up to 15% of its assets
in illiquid securities.
Putnam VT Money Market Fund may invest up to 10% of
its assets in illiquid securities. 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.

- - 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
loans or mortgage-backed securities.

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.
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.
Derivatives. The funds may engage in a variety of
transactions involving derivatives, such as futures,
options, warrants and swap contracts. Derivatives are
financial instruments whose value depends upon, or is
derived from, the value of something else, such as one
or 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, pool of investments index or
currency specified in the derivative instrument.
The funds may use derivatives both for hedging and non-
hedging purposes. The decision as to whether and to
the extent the fund will use derivative hedging
purposes will depend upon a number of factors,
including market conditions, the funds' investments
and the availablility of suitable derivatives.
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.
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 (investments not traded on an
exchange) 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.
Other investments. In addition to the main investment
strategies described above, the funds may also make
other types of investments, 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 each fund's last fiscal year):
Putnam VT Asia Pacific Growth Fund .80% Putnam VT
Diversified Income Fund .67% Putnam VT Growth and
Income Fund .46%
Putnam VT New Opportunities Fund .56%
Putnam VT Utilities Growth and Income Fund .65%
Putnam VT Voyager Fund .54%

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.

Business experience
Fund name Year (at least 5 years)
- --------------------- ------- -------------------------

Putnam VT Asia Pacific
Growth Fund

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

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

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.
Putnam VT Growth and
Income Fund

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

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 New
Opportunities Fund

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

Jeffrey R. Lindsey 1999 Employed by Putnam Management since 1994.
Senior Vice President

Putnam VT Utilities
Growth and Income Fund

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

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

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

Michael E. Nance 1999 Employed by Putnam Management since 1994.
Senior Vice President Prior to June 1994, Mr. Nance attended
the University of Chicago Graduate
School of Business.

How to buy and sell fund shares

Shares are sold or redeemed at the net asset value per
share next determined after receipt of an order.
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.

Each fund values its investments for which market
quotations are readily available at market value. It
values short-term investments that will mature within
60 days at amortized cost, which approximates market
value. It values all other investments and assets at
their fair value. Putnam VT Money Market Fund values
all of its investments at amortized cost.

Fund distributions and taxes

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 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.

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

Investment Operations Less Distributions:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net From Net Asset Net
Realized and Total From In Excess Net In Excess of
Value, Investment Unrealized from Net of Net net Realized Net Realized
Year Beginning Income Gain (Loss) on Investment Investment Investment Gain on Gain on
ended of Period (Loss) Investments operations Income Income Investments Investments

Putnam VT Asia Pacific Growth Fund
1998 $9.20 $.08(a) $(.56) $(.48) $(.38) $- $- $-
1997 11.01 .07 (1.66) (1.59) (.22) - - -
1996 10.23 .05 .88 .93 (.15) - - -
1995*** 10.00 .06(a)(b) .17 .23 - - - -

Putnam VT Diversified Income Fund
1998 $11.31 $.86(a) $(.99) $(.13) $(.48) $- $(.21) $-
1997 11.27 .82(a) (.05) .77 (.63) - (.10) -
1996 11.03 .80(a) .11 .91 (.67) - - -
1995 9.74 .71 1.09 1.80 (.51) - - -
1994 10.23 .61 (1.04) (.43) (.06) - - -

Putnam VT Growth and Income Fund
1998 $28.32 $.44(a) $3.77 $4.21 $(.50) $- $(3.26) $-
1997 24.56 .48 5.07 5.55 (.52) - (1.27) -
1996 21.47 .65(a) 3.84 4.49 (.51) - (.89) -
1995 16.44 .53 5.31 5.84 (.51) - (.30) -
1994 17.38 .50 (.48) .02 (.38) - (.58) -

Putnam VT New Opportunities Fund
1998 $21.23 $(.04) $5.19 $5.15 $- $- $(.32) $-
1997 17.22 -(e) 4.01 4.01 - - - -
1996 15.63 (.01) 1.60 1.59 - - - -
1995 10.82 - 4.84 4.84 - - (.02) -
1994****** 10.00 -(b) .82 .82 - - - -

Putnam VT Utilities Growth and Income Fund
1998 $17.14 $.54(a) $1.90 $2.44 $(.51) $- $(.88) $-
1997 14.80 .53 3.11 3.64 (.55) - (.75) -
1996 13.28 .54 1.49 2.03 (.51) - - -
1995 10.68 .53 2.65 3.18 (.58) - - -
1994 12.00 .60 (1.44) (.84) (.35) - (.12) (.01)

Putnam VT Voyager Fund
1998 $39.08 $.05(a) $9.26 $9.31 $(.10) $- $(2.44) $-
1997 32.53 .10 8.01 8.11 (.07) - (1.49) -
1996 30.50 .09 3.75 3.84 (.13) - (1.68) -
1995 22.20 .10 8.76 8.86 (.07) - (.49) -
1994 22.41 .07 .14 .21 (.05) - (.37) -
</TABLE>
<TABLE><CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total Ratio of Net
Investment Ratio of Investment From Net Asset Return at
Income (Loss)
to Return of Total Value, End Net Asset End of Period Average Net Average Net Portfolio
Capital Distributions of Period Value(%)(c) (in thousands) Assets(%)(d) Assets(%) Turnover

Putnam VT Diversified Income Fund
1998 $- $(.69) $10.49 $(1.37) $669,053 $.78 7.94 186.80
1997 - (.73) 11.31 7.38 608,148 .80 7.43 282.56
1996 - (.67) 11.27 8.81 494,811 .83 7.45 235.53
1995 - (.51) 11.03 19.13 303,721 .85 7.85 297.17
1994 - (.06) 9.74 (4.23) 215,935 .80 7.60 165.17

Putnam VT Growth and Income Fund
1998 $- $(3.76) $28.77 $15.42 $9,948,386 $.50 1.59 63.62
1997 - (1.79) 28.32 24.15 8,337,334 .51 2.08 64.96
1996 - (1.40) 24.56 21.92 5,679,100 .54 2.90 39.57
1995 - (.81) 21.47 36.71 3,312,306 .57 3.34 50.87
1994 - (.96) 16.44 .35 1,907,380 .62 3.64 46.43

Putnam VT New Opportunities Fund
1998 $- $(.32) $26.06 $24.38 $3,586,225 .61 (.16) 59.75
1997 - - 21.23 23.29 2,590,244 .63 (.01) 71.78
1996 - - 17.22 10.17 1,674,197 .72 (.13) 57.94
1995 (.01) (.03) 15.63 44.87 515,109 .84 (.03) 30.87
1994****** - - 10.82 8.20* 68,592 .47(b)* .03(b)* 32.77*

Putnam VT Utilities
Growth and Income Fund
1998 $- $(1.39) $18.19 14.92 $1,015,327 .72 3.19 24.77
1997 - (1.30) 17.14 27.10 822,257 .74 3.63 42.46
1996 - (.51) 14.80 15.80 657,429 .73 4.22 61.94
1995 - (.58) 13.28 31.08 530,461 .68 4.72 60.33
1994 - (.48) 10.68 (7.02) 384,169 .68 5.23 84.88

Putnam VT Voyager Fund
1998 $- $(2.54) $45.85 24.36 $5,803,073 .58 .14 62.99
1997 - (1.56) 39.08 26.51 4,538,535 .59 .30 82.00
1996 - (1.81) 32.53 12.97 3,281,490 .63 .36 63.87
1995 - (.56) 30.50 40.67 2,000,232 .68 .49 57.51
1994 - (.42) 22.20 1.04 1,026,972 .71 .40 62.44
</TABLE>
* Not annualized.
** For the period May 1, 1994 (commencement of operations) to
December 31, 1994.
*** For the period May 1, 1995 (commencement of operations) to
December, 1995.
**** For the period January 2, 1997 (commencement of operations) to
December 31, 1997.
***** For the period April 6, 1998 (commencement of operations) to
December 31, 1998.
****** For the period April 30, 1998 (commencement of operations) to
December 31, 1998.
******* For the period September 30, 1998 (commencement of operations) to
December 31, 1998.

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

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

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

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 1-800-225-1581.
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

www.putnaminv.com

File No. 811-5346

Putnam Mutual Funds
Corp. Member, NASD, Inc.

PUTNAM VARIABLE TRUST
PROSPECTUS Class IB Shares
APRIL 30, 1999

Growth Funds Growth and Income Money Market Fund
Putnam VT Global Growth Fund Putnam VT New Value Fund Putnam VT Money
Market Fund

This prospectus explains what you should know about
the funds in Putnam Variable Trust, which are
available for purchase by separate accounts of
insurance companies.

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 passed upon
the accuracy or adequacy of this prospectus. Any
statement to the contrary is a crime.

CONTENTS

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?
How to buy and sell fund shares.
Distribution Plan
How do the funds price their shares?
Fund distributions and taxes
Financial highlights
Fund summaries
The following summaries identify each fund's goal,
principal investment strategies and the main risks
that could adversely affect the value of a fund's
shares and the total return on your investment. Each
summary also contains performance information that
provides some indication of each fund's risks. The
chart contained in each summary 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. A table following each chart compares the
fund's performance to that of broad measures of market
performance. Of course, a fund's past performance is
not necessarily an indication of future performance.
None of the performance information reflects the
impact of insurance-related charges or expenses.
Please refer to the prospectus for your insurance
contract for information about those charges and
performance data reflecting those charges and
expenses.

Class IB performance for the period prior to April 30,
1998 for Putnam VT Global Growth Fund, Putnam VT Money
Market Fund and Putnam VT New Value Fund are based
upon performance of class IA shares of the fund
restated to reflect the fees for class IB shares
including a 12b-1 fee of 0.15%.

PUTNAM VT GLOBAL GROWTH FUND
Goal
The fund seeks capital appreciation.

CALENDAR YEAR TOTAL RETURNS FOR CLASS IB SHARES
(Bar chart)
Plot points
1991 14.84%
1992 -0.51%
1993 32.20%
1994 -1.11%
1995 15.50%
1996 17.03%
1997 14.16%
1998 29.65%

Year-to-date performance through 3/31/99 was 2.92%.
During the periods shown in the bar chart, the highest
return for a quarter was 22.32% (quarter ending
12/31/98) and the lowest return for a quarter was -
12.18% (quarter ending 9/30/98).
Average annual total returns (for periods ending 12/31/98)

Past 1 year Past 5 years Since inception (5/1/90)
Class IB 29.65% 14.62% 12.53%
MSCI World Index 29.34% 15.69% 12.60%

The fund's performance is compared to the Morgan
Stanley Capital International World Index, an
unmanaged index of international equity securities
with all values expressed in U.S. dollars.

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 primarily
* 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

PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IB SHARES
(Bar chart)
Plot points
1989 8.71%
1990 7.81%
1991 5.76%
1992 3.42%
1993 2.64%
1994 3.67%
1995 5.30%
1996 4.93%
1997 5.06%
1998 5.12%

Year-to-date performance through 3/31/99 was 1.11%.
During the periods shown in the bar chart, the
highest return for a quarter was 2.31% (quarter
ending 6/30/89) and the lowest return for a quarter
was 0.63% (quarter ending 6/30/93).
Average annual total returns (for periods ending 12/31/98)

Past 1 year Past 5 years Past 10 years
Class IB 5.12% 4.82% 5.23%
Merrill Lynch 91-Day
Treasury Bill Index 5.23% 5.22% 5.69%
Lipper Money Market
Average 5.10% 4.90% 5.32%

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. The Lipper Money Market Average is an
arithmetic average of the total return of all money
market mutual funds tracked by Lipper Analytical
Services.

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. The fund may invest in companies of any size.
MAIN RISKS
* 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.
PERFORMANCE INFORMATION

CALENDAR YEAR TOTAL RETURNS FOR CLASS IB SHARES
(Bar chart)
Plot points
1998 6.11%
Year-to-date performance through 3/31/99 was 5.17%.
During the periods shown in the bar chart, the highest
return for a quarter was 16.45% (quarter ending
12/31/98) and the lowest return for a quarter was -
12.09% (quarter ending 9/30/98).
Average annual total returns (for periods ending
12/31/98)

Past 1 year Since inception (1/2/97)
Class IB 6.11% 11.66%
S&P 500 Index 28.58% 31.40%

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

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 (Common Investment Strategies and Risks)
provides additional information on the investment
strategies described in part one of the section. It
discusses investment strategies and related risks that
are common to a number of the funds. In addition, the
"Fund Summaries" contain important information about
the funds. Investors are urged to
read the fund summary and both parts of the section
that follows for complete information about the
funds.
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 developing (also known as emerging)
markets.
PUTNAM VT MONEY MARKET FUND

The fund pursues its goal by investing in high
quality, short term money market investments, such as
commercial paper, U.S. government debt and repurchase
agreements, corporate obligations and certificates of
deposit 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 and bank certificates of deposit and bankers'
acceptances payable in U.S. dollars by foreign banks
or foreign branches of U.S. banks.
Credit quality. The fund buys only high quality
investments that Putnam Management believes present
minimal credit risk at the time of purchase. High
quality investments are
* rated in one of the two highest categories by
at least two nationally recognized rating services, or
* rated by one rating service in one of its service's
two highest categories (if only one rating service has
provided a rating) or * unrated investments that
Putnam Management determines are of equivalent quality
To maintain liquidity and preserve capital, the fund may
decide not to buy investments that pay the highest
available yields at any particular time.
Thus, debt of issuers with good credit prospects
usually offers lower yields than that of issuers with
less secure credit prospects. Higher-rated
investments generally offer lower credit risk, but not
necessarily lower interest rate risk. The value of a
higher-rated investment can still fluctuate in
response to changes in interest rates.
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.
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 the 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 it
expires.

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 without limit in securities of
foreign issuers traded in U.S. public markets. The
fund may also 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.
COMMON INVESTMENT STRATEGIES AND RELATED RISKS

Common stocks. Common stocks 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 affecting multiple companies 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 rates. In addition, a company'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 may invest in
growth stocks. Growths stocks are 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 mediumsized 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.
* 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.
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.
Fixed-income investments. Each of the funds may
invest in fixed income securities. 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.
"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 in
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 issuer'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 better 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.

Investments in premium securities. The funds may
invest in socalled "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.

- - 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
loans or mortgage-backed securities.

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.
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.
Derivatives. The funds may engage in a variety of
transactions involving derivatives, such as futures,
options, warrants and swap contracts. Derivatives are
financial instruments whose value depends upon, or is
derived from, the value of something else, such as one
or 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, pool of investments index or
currency specified in the derivative instrument.
The funds may use derivatives both for hedging and non-
hedging purposes. The decision as to whether and to
the extent the fund will use derivative hedging
purposes will depend upon a number of factors,
including market conditions, the funds' investments
and the availablility of suitable derivatives.
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.
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 (investments not traded on an
exchange) 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.
Other investments. In addition to the main investment
strategies described above, the funds may also make
other types of investments, 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.

Business experience
Fund name Year (at least 5 years)
- --------------------- ------- -------------------------

Putnam VT Global
Growth Fund

Robert Swift 1996 Employed by Putnam Management since 1995.
Managing Director 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.
Managing Director 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 by Putnam Management since 1994.
Senior Vice President Prior to July 1994, Ms. Svensson was
employed by Lord Abbett & Co.

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

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

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 Value Fund

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

How to buy and sell fund shares

The funds currently do not foresee any disadvantages
to policyowners arising out of the fact that the funds
offer their 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 do the funds price their shares?

Fund distributions and taxes

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
foreign, 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.
A fund's investments in certain debt obligations may
cause the fund to recognize taxable income in excess
of the cash generated by such obligations. Thus, the
fund could be required at times to liquidate other
investments in order to satisfy its distribution
requirements.
Financial highlights
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.
<TABLE><CAPTION>

Financial Highlights
Investment Operations: Less Distributions:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Net Realized From net In excess of
Value, Net and Unrealized Total from From net Realized Net Realized From
Beginning Investment Gain (Loss) on Investment Investment Gain on Gain on Return of
Period ended of Period Income (Loss) Investments operations Income Investments Investments Capital

Putnam VT Global Growth Fund
1998 $18.03 $(.05)a $2.30 $2.25 $- $- $- $-

Putnam VT Money Market Fund
1998 $1.00 $.0338a $- $.0338 $(.0338) $- $- $-

Putnam VT New Value Fund
1998 $11.91 $.13a $.13 $.26 $(.13) $(.02) $- $-
</TABLE>
<TABLE><CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Total Ratio of Net
Investment Ratio of Investment
Net Asset Return at Net Assets Expenses to Income (Loss) to
Total Value, End Net Asset End of Period Average Net Average Net Portfolio
Distributions of Period Value(%)(b) (in thousands) Assets(%) Assets(%) Turnover

Putnam VT Global Growth Fund
1998 $- $20.28 12.48* $823 .59* (.34)* 164.56

Putnam VT Money Market Fund
1998 $(0.338) $1.00 3.42* $13,188 .46* 3.18* -

Putnam VT New Value Fund
1998 $(.15) $12.02 2.28* $414 .65* 1.26* 130.96
</TABLE>
* Not annualized.

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

(b) Total investment return assumes dividend reinvestment.

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

www.putnaminv.com

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 029401203.

The Annual 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 free copy of the Trust's
annual report, which contain copies of the Trust's
financial statements, by contacting Putnam Investor
Services at 1800-225-1581.

Table of Contents

DEFINITIONS B-2
TRUST ORGANIZATION AND CLASSIFICATION B-2
SECURITIES RATINGS B-3
INVESTMENT OBJECTIVES AND POLICIES B-8
TAXES B-31
INVESTMENT RESTRICTIONS B-33
MANAGEMENT B-36
INVESTMENT PERFORMANCE OF THE TRUST B-74
DETERMINATION OF NET ASSET VALUE B-77
DISTRIBUTION PLAN B-79
SUSPENSION OF REDEMPTIONS B-80
SHAREHOLDER LIABILITY B-80
CUSTODIAN B-81
INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS B-81

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 company.

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. Prior to
April 30, 199, Putnam VT Income Fund was known as
Putnam VT U.S. Government and High Quality Bond 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 shares 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 Income
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 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 indicates 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 funds' 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 funds
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 funds' 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 funds 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 lowerrated 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 lowerrated 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 will
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 required 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
"zerocoupon" bonds and "payment-in-kind" bonds
identified in the prospectus, unless otherwise
specified in the prospectus. Zerocoupon bonds are
issued at a significant discount from their
principal amount in lieu of paying interest
periodically. Paymentin-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 investments 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 mortgagebacked 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 any,
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.

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 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 securities 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
mortgagerelated 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 market 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
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 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 anticipated 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 mortgagebacked 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 shortterm 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
consent, 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 on up
to 25% of its total assets. 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 interest 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
boards 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 trading 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 price 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 daily 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 price 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
made 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 expenses
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 overthe-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
euro, the joint currency of most countries in the
European Union.

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 overthe-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."

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 discussion 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.

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)
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 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, Putnam VT Research 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 (57), 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 and various
private companies owned by First Reserve Corporation,
such as James River Coal and Anker Coal Corporation.

+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 the animal 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 consulting and private
investments firm). Director of MB Financial, Inc.,
ASHTA Chemicals, Inc., Banta Corporation (printing and
digital imaging) and Ryerson Tull, Inc. (America's
largest steel service corporation). 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 (55), 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 (61), Trustee. President Emeritus
and Professor, Mount Holyoke College. Director, Bell
Atlantic (a telecommunications company), the Kentucky
Home Life Insurance Companies, Bell Atlantic,
Northeast Utilities and Talbots (a distributor of
women's apparel).

*Lawrence J. Lasser (56), 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 Hotel Properties, 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),
Neodesic Corp. (a software company), 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 (52), 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 (36), Vice President. Managing
Director of Putnam Management.
Ian C. Ferguson (41), Vice President. Senior Managing
Director of Putnam Investments, Inc., Putnam
Management and Putnam Mutual Funds.
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 (64), 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.
Robert R. Beck (58) (4 funds), Managing Director of
Putnam Management.
Edward P. Bousa (40) (5 funds), Senior Vice President
of Putnam Management.
David G. Carlson (37) (2 funds), Senior Vice President
of Putnam Management.
Jack P. Chang (40) (3 funds), Vice President of Putnam
Management. Prior to July 1997, Mr. Chang was employed
at Columbia Management.
Dana Clark (43) (2 funds), Vice President of Putnam
Management.
C. Beth Cotner (46) (3 funds), Managing Director 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. Prior to April 1995, Ms. Driscoll
was a Graduate teaching assistant in the Finance
Department at Northeastern University. Prior to
September 1994, Ms. Driscoll was employed at Bank of
Boston.
Richard B. England (40) (4 funds), Senior Vice
President of Putnam Management.
Roland W. Gillis (49) (6 funds), Managing Director of
Putnam Management. Prior to March 1995, Mr. Gillis
was employed at Keystone Custodian Funds, Inc.
J. Peter Grant (56) (3 funds), Senior Vice President
of Putnam Management.

Omid Kamshad (36) (5 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), Senior Vice
President of Putnam Management. Prior to August 1998,
Mr. Kaufman was employed at MFS Investment Management.

David L. King (42) (4 funds), Managing Director of
Putnam Management.

Steven L. Kirson (38) (2 funds), Senior Vice President
of Putnam Management.

D. William Kohli (38) (7 funds), Managing Director of
Putnam Management. Prior to September 1994, Mr. Kohli
was employed at Global Bond Management.

Deborah Kuenstner (40) (3 funds), Managing Director of
Putnam Management. Prior to March 1997, Ms. Kuenstner
was employed at Dupont Pension Fund Investment.

Jennifer E. Leichter (38) (12 funds), Managing
Director of Putnam Management.

Jeffrey R. Lindsey (36) (5 funds), Senior Vice
President of Putnam Management.

Krishna K. Memani (38) (8 funds), Managing Director of
Putnam Management. Prior to September 1998, Mr.
Memani was employed at Morgan Stanley & Co.

Daniel L. Miller (41) (2 funds), Managing Director of
Putnam Management.

Jeanne L. Mockard (35) (4 funds), Senior Vice
President of Putnam Management.

Kelly A. Morgan (36) (2 funds), Senior Vice President
of Putnam Management. Prior to December 1996, Ms.
Morgan was employed at Alliance Capital Management
L.P.

Michael J. Mufson (36) (2 funds), Senior Vice
President of Putnam Management.

Hugh H. Mullin (36) (3 funds), Senior Vice President
of Putnam Management.

Michael E. Nance (30) (4 funds), Vice President of
Putnam Management.

Stephen Oler (38) (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.

Margery C. Parker (48) (4 funds), Senior Vice
President of Putnam Management. Prior to December
1997, Ms. Parker was employed at Keystone Investments.

Carmel Peters (48) (4 funds), Senior Vice President of
Putnam Management. Prior to May 1997, Ms. Peters was
employed at Wheelock Natwest Investment Management,
Hong Kong, and prior to February 1996, Ms. Peters was
employed at Rothschild Asset
Management Asia Pacific, Hong Kong.

Mark D. Pollard (39) (3 funds), Senior Vice President
of Putnam Management.

James Prusko (33) (6 funds), Senior Vice President of
Putnam Management.

Olivier M. Rudigoz (34) (2 funds), Vice President of
Putnam Management. Prior to April 1998, Mr. Rudigoz
was employed at Paribas Asset Management.

David J. Santos (41) (4 funds), Senior Vice President
of Putnam Management.

Anthony C. Santosus (40) (2 funds), Senior Vice
President of Putnam Management.

Justin M. Scott (41) (4 funds), Managing Director of
Putnam Management.

Sheldon N. Simon (41) (2 funds), Senior Vice President
of Putnam Management.

Michael P. Stack (40) (4 funds), Senior Vice President
of Putnam Management. Prior to November 1997, Mr.
Stack was employed at Independence Investment
Associates, Inc.

George W. Stairs (39) (3 funds), Senior Vice President
of Putnam Management. Prior to July 1994, Mr. Stairs
was employed at Value Quest Ltd.

Lisa Svensson (36) (2 funds), Senior Vice President of
Putnam Management. Prior to July 1994, Ms. Svensson
was employed at Lord Abbett.

Charles H. Swanberg (51) (4 funds), Senior Vice
President of Putnam Management.

Robert Swift (38) (4 funds), Managing Director of
Putnam Management. Prior to August 1995, Mr. Swift
was employed at IAI International/Hill Samuel
Investments Advisors.

Rosemary H. Thomsen (38) (4 funds), Vice President of
Putnam Management.

David L. Waldman (33) (9 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) (7 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.

Manuel Weiss (50) (5 funds), Senior Vice President of
Putnam Management.

Eric M. Wetlaufer (37) (2 funds), Managing Director of
Putnam Management. Prior to November 1997, Mr.
Wetlaufer was employed at Cadence Capital 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
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:
<TABLE>
<CAPTION>
COMPENSATION TABLE

Aggregate compensation (1) from:
<S> <C> <C> <C> <C> <C> <C>
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
- -----------------------------------------------------------------------------------------------
Jameson A. Baxter/1994 (4)
925 1,171 1,328 2,383 6,864 1,559
Hans H. Estin/1972
835 1,062 1,170 2,101 6,048 1,374
John A. Hill/1985 (4)(5)
818 1,034 1,170 2,101 6,048 1,374
Ronald J. Jackson/1996 (4)
918 1,167 1,286 2,308 6,648 1,510
Paul L. Joskow/1997 (4)
820 968 1,164 2,090 6,016 1,366
Elizabeth T. Kennan/1992
918 1,167 1,286 2,308 6,648 1,510
Lawrence J. Lasser/1992
817 1,039 1,144 2,055 5,916 1,343
John H. Mullin, III/1997 (4)
807 957 1,164 2,090 6,016 1.366
Robert E. Patterson/1984
831 1,056 1,164 2,090 6,015 1,366
Donald S. Perkins/1982
835 1,062 1,170 2,101 6,045 1,374
William F. Pounds/1971 (5)
851 1,165 1,328 2,384 7,540 1,538
George Putnam/1957
822 1,045 1,151 2,067 5,949 1,351
George Putnam, III/1984
831 1,056 1,164 2,090 6,016 1,366
A.J.C. Smith/1986
809 1,027 1,132 2,033 5,852 1,329
W. Thomas Stephens (4)
813 969 1,164 2,090 6,016 1,366
W. Nicholas Thorndike/1992
835 1,062 1,170 2,101 6,049 1,374

</TABLE>

<TABLE>
<CAPTION>
COMPENSATION TABLE (continued)

Aggregate compensation (1) from:
<S> <C> <C> <C> <C> <C> <C>
Putnam VT
Putnam VT International Putnam VT Putnam VT Putnam VT Putnam VT
International Growth International New Money New Value New
Trustee/Year Growth Fund and Income Fund Opportunities Fund Market Fund Fund Opportunities Fund
- ------------------------------------------------------------------------------------------------------------
Jameson A. Baxter/1994 (4) 995 1,051 920 462 708 2,951
Hans H. Estin/1972 888 939 833 411 611 2,647
John A. Hill/1985 (4)(5) 903 954 820 474 541 2,647
Ronald J. Jackson/1996 (4) 973 1,020 914 448 686 2,906
Paul L. Joskow/1997 (4) 870 923 806 406 597 2,633
Elizabeth T. Kennan/1992 913 1,030 914 448 686 2,906
Lawrence J. Lasser/1992 870 919 815 402 598 2,589
John H. Mullin, III/1997 (4) 874 925 806 406 616 2,633
Robert E. Patterson/1984 884 934 828 408 607 2,632
Donald S. Perkins/1982 888 939 833 411 611 2,647
William F. Pounds/1971 (5) 930 996 853 504 650 3,126
George Putnam/1957 874 924 819 405 601 2,603
George Putnam, III/1984 884 934 829 409 607 2,633
A.J.C. Smith/1986 860 909 806 397 591 2,562
W. Thomas Stephens (4) 879 930 812 408 617 2,633
W. Nicholas Thorndike/1992 888 939 833 411 611 2,647
</TABLE>
<TABLE>
<CAPTION>
COMPENSATION TABLE (continued)

Aggregate compensation (1) from:

Putnam VT
Putnam VT Putnam VT Putnam VT The George Putnam VT Putnam VT
Investors OTC & Emerging Health Sciences Putnam Fund Research Small Cap
Trustee/Year Fund Growth Fund Fund of Boston Fund Value Fund
- ------------------------------------------------------------------------------------------------------------
Jameson A. Baxter/1994 (4) 233 77 298 81 81 989
Hans H. Estin/1972 221 65 284 60 60 872
John A. Hill/1985 (4)(5) 235 68 274 70 70 872
Ronald J. Jackson/1996 (4) 230 75 293 77 77 958
Paul L. Joskow/1997 (4) 215 69 265 60 60 867
Elizabeth T. Kennan/1992 231 75 293 77 77 958
Lawrence J. Lasser/1992 220 64 282 60 60 853
John H. Mullin, III/1997 (4) 221 60 265 70 70 867
Robert E. Patterson/1984 222 66 284 60 60 867
Donald S. Perkins/1982 222 66 284 60 60 872
William F. Pounds/1971 (5) 236 74 293 62 62 1,020
George Putnam/1957 220 64 281 60 60 858
George Putnam, III/1984 221 64 283 60 60 867
A.J.C. Smith/1986 213 58 274 55 55 843
W. Thomas Stephens (4) 218 59 265 66 66 867
W. Nicholas Thorndike/1992 222 66 284 60 60 872
</TABLE>

<TABLE><CAPTION>
COMPENSATION TABLE (continued)
Aggregate compensation (1) from:
<S> <C> <C> <C> <C> <C>
Total Total
Compensation Compensation
Putnam VT From all From all
Utilities Growth Putnam VT Putnam VT Putnam Putnam
Trustee/Year and Income Fund Vista Fund Voyager Fund funds (2) funds (3)
- --------------------------------------------------------------------------------------------------
Jameson A. Baxter/1994 (4) 1,370 702 4,597 95,000 207,000
Hans H. Estin/1972 1,209 623 4,053 95,000 182,500
John A. Hill/1985 (4)(5) 1,209 639 4,053 115,000 200,500
Ronald J. Jackson/1996 (4) 1,328 684 4,453 95,000 200,500
Paul L. Joskow/1997 (4) 1,202 625 4,030 95,000 180,500
Elizabeth T. Kennan/1992 1,328 684 4,453 95,000 200,500
Lawrence J. Lasser/1992 1,182 609 3,964 95,000 178,500
John H. Mullin, III/1997 (4) 1,202 615 4,030 95,000 180,500
Robert E. Patterson/1984 1,202 619 4,030 95,000 181,500
Donald S. Perkins/1982 1,209 623 4,053 95,000 182,500
William F. Pounds/1971 (5) 1,356 681 4,858 115,000 215,000
George Putnam/1957 1,189 613 3,986 95,000 179,500
George Putnam, III/1984 1,202 619 4,030 95,000 181,500
A.J.C. Smith/1986 1,169 603 3,923 95,000 176,500
W. Thomas Stephens (4) 1,202 618 4,030 95,000 181,500
W. Nicholas Thorndike/1992 1,209 623 4,053 95,000 182,500
</TABLE>

COMPENSATION TABLE (continued)

Estimated Aggregate compensation (1) from:
Putnam VT
Small Cap
Trustee/Year Fund+
- --------------------------------------------------------------------------
Jameson A. Baxter/1994 (4) $75
Hans H. Estin/1972 75
John A. Hill/1985 (4)(5) 80
Ronald J.Jackson/1996 (4) 75
Paul L. Joskow/1997(4) 75
Elizabeth T.Kennan/1992 75
Lawrence J. Lasser/1992 75
John H. Mullin, III/1997 (4) 75
Robert E. Patterson/1984 75
Donald S. Perkins/1982 75
William F. Pounds/1971 (5) 80
George Putnam/1957 75
George Putnam, III/1984 75
A.J.C. Smith/1986 75
W. Thomas Stephens (4) 75
W. Nicholas Thorndike/1992 75

<TABLE>
<CAPTION>
COMPENSATION TABLE

Pension or retirement benefits accrued as part of fund
expenses (3) from:

<S> <C> <C> <C> <C> <C> <C>
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
- ------------------------------------------------------------------------------------------------------------
Jameson A. Baxter/1994 (4) 226 281 312 556 1,592 362
Hans H. Estin/1972 423 527 585 1,042 2,982 678
John A. Hill/1985 (4)(5) 158 198 219 391 1,118 254
Ronald J. Jackson/1996 (4) 123 153 170 303 866 197
Paul L. Joskow/1997 (4) 18 23 25 45 129 29
Elizabeth T. Kennan/1992 230 287 318 567 1,622 369
Lawrence J. Lasser/1992 172 214 238 424 1,214 276
John H. Mullin, III/1997 (4) 28 35 39 69 198 45
Robert E. Patterson/1984 127 158 175 313 895 203
Donald S. Perkins/1982 456 569 632 1,126 3,222 732
William F. Pounds/1971 (5) 475 593 657 1,171 3,353 762
George Putnam/1957 483 602 669 1,189 3,409 776
George Putnam, III/1984 83 104 115 206 589 134
A.J.C. Smith/1986 285 355 394 702 2,008 456
W. Thomas Stephens (4) 26 33 36 65 185 42
W. Nicholas Thorndike/1992 330 412 457 814 2,329 529

</TABLE>

<TABLE>
<CAPTION>
COMPENSATION TABLE (continued)

Pension or retirement benefits accrued as part of fund expenses (3) from:

<S> <C> <C> <C> <C> <C> <C>
Putnam VT Putnam VT Putnam VT Putnam VT Putnam VT Putnam VT
International International International New Money New Value New Opportunities
Trustee/Year Growth Fund++ Growth and Income Fund++Opportunities Fund++Market Fund Fund++ Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Jameson A. Baxter/1994 (4) 226 241 219 108 161 680
Hans H. Estin/1972 423 452 411 203 301 1,274
John A. Hill/1985 (4)(5) 158 169 154 76 113 478
Ronald J. Jackson/1996 (4) 123 131 119 59 87 370
Paul L. Joskow/1997 (4) 18 19 18 9 13 55
Elizabeth T. Kennan/1992 230 246 224 110 164 693
Lawrence J. Lasser/1992 172 184 167 83 122 518
John H. Mullin, III/1997 (4) 28 30 27 13 20 85
Robert E. Patterson/1984 127 136 123 61 90 382
Donald S. Perkins/1982 456 488 444 219 325 1,376
William F. Pounds/1971 (5) 475 508 462 228 338 1,432
George Putnam/1957 483 517 471 231 345 1,456
George Putnam, III/1984 83 89 81 40 59 252
A.J.C. Smith/1986 285 304 277 137 203 858
W. Thomas Stephens (4) 26 28 26 13 19 79
W. Nicholas Thorndike/1992 330 353 321 158 235 995
</TABLE>

<TABLE><CAPTION>
COMPENSATION TABLE (continued)

Pension or retirement benefits accrued as part of fund
expenses (3) from:
<S> <C> <C> <C> <C>
Putnam VT Putnam VT
Utilities Growth Income Putnam VT Putnam VT
Trustee/Year and Income Fund Fund Vista Fund++ Voyager Fund
- -------------------------------------------------------------------------------------------------------
Jameson A. Baxter/1994 (4) 322 235 155 1,054
Hans H. Estin/1972 603 440 290 1,975
John A. Hill/1985 (4)(5) 226 165 109 741
Ronald J. Jackson/1996 (4) 175 128 84 574
Paul L. Joskow/1997 (4) 26 19 12 85
Elizabeth T. Kennan/1992 328 240 158 1,074
Lawrence J. Lasser/1992 245 179 118 804
John H. Mullin, III/1997 (4) 40 29 19 131
Robert E. Patterson/1984 181 132 87 592
Donald S. Perkins/1982 651 476 313 2,133
William F. Pounds/1971 (5) 677 495 326 2,220
George Putnam/1957 687 504 330 2,256
George Putnam, III/1984 119 87 57 390
A.J.C. Smith/1986 406 296 195 1,330
W. Thomas Stephens (4) 37 27 18 123
W. Nicholas Thorndike/1992 471 344 226 1,542
</TABLE>

<TABLE><CAPTION>
COMPENSATION TABLE (continued)

Pension or retirement benefits accrued as part of fund
expenses (3) from:

<S> <C> <C> <C> <C> <C> <C>
Putnam VT Putnam VT The George
Putnam VT Putnam VT OTC & Emerging Health Putnam Putnam VT Small
Investors Growth Sciences Fund Research Cap
Trustee/Year Fund++ Fund++ Fund++ of Boston++ Fund++ Value
Fund
++
- -----------------------------------------------------------------------------------------------------------------------------------
Jameson A. Baxter/1994 (4) 0 0 0 0 0 0
Hans H. Estin/1972 0 0 0 0 0 0
John A. Hill/1985 (4)(5) 0 0 0 0 0 0
Ronald J. Jackson/1996 (4) 0 0 0 0 0 0
Paul L. Joskow/1997 (4) 0 0 0 0 0 0
Elizabeth T. Kennan/1992 0 0 0 0 0 0
Lawrence J. Lasser/1992 0 0 0 0 0 0
John H. Mullin, III/1997 (4) 0 0 0 0 0 0
Robert E. Patterson/1984 0 0 0 0 0 0
Donald S. Perkins/1982 0 0 0 0 0 0
William F. Pounds/1971 (5) 0 0 0 0 0 0
George Putnam/1957 0 0 0 0 0 0
George Putnam, III/1984 0 0 0 0 0 0
A.J.C. Smith/1986 0 0 0 0 0 0
W. Thomas Stephens (4) 0 0 0 0 0 0
W. Nicholas Thorndike/1992 0 0 0 0 0 0
</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 Putnam VT Growth and Income Fund
and Putnam VT Voyager Fund was $7,286 and $5,527,
respectively, including income earned on such amount.
The total amount of deferred compensation payable to
Mr. Hill as of December 31, 1998 by Putnam VT Global
Asset Allocation Fund, Putnam VT Global Growth Fund,
Putnam VT Growth and Income Fund, Putnam VT High Yield Fund, Putnam VT New
Opportunities Fund, Putnam VT Income Fund, Putnam VT
Utilities Growth and Income Fund, and Putnam VT
Voyager Fund, was $6,999, $11,927, $28,249, $7,275,
$10,106, $6,653, $7,345 and $18, 263, respectively,
including income earned on such amount. The total
amount of deferred compensation payable to Mr. Jackson
as of December 31, 1998 by Putnam VT Global Asset
Allocation Fund, Putnam VT Global Growth Fund, Putnam
VT Growth and Income Fund, Putnam VT High Yield Fund,
Putnam VT New Opportunities Fund, Putnam VT Income
Fund, Putnam VT Utilities Growth and Income Fund and
Putnam VT Voyager Fund, was $3,886, $7,009, $17,541,
$3,675, $7,667, $3,263, $3,980 and $12,496,
respectively, including income earned on such amount.
The total amount of deferred compensation payable to
Mr. Joskow as of December 31, 1998 by Putnam VT Global
Asset Allocation Fund, Putnam VT Global Growth Fund,
Putnam VT Growth and Income Fund, Putnam VT High Yield
Fund, Putnam VT New Opportunities Fund, Putnam VT
Income Fund, Putnam VT Utilities Growth and Income
Fund, and Putnam VT Voyager Fund was $1,129, $2,205,
$6,357, $1,444, $3,347, $916, $1,535 and $4,252,
respectively, including income earned on such amount.
The total amount of deferred compensation payable to
Mr. Mullin as of December 31, 1998 by Putnam VT Global
Asset Allocation Fund, Putnam VT Global Growth Fund,
Putnam VT Growth and Income Fund, Putnam VT High Yield
Fund, Putnam VT New Opportunities Fund, Putnam VT
Income Fund, Putnam VT Utilities Growth and Income
Fund, and Putnam VT Voyager Fund was $$1,073, $2,205,
$6,351, $1,261, $2,775, $915, $1,269 and $4,248,
respectively, including income earned on such amount.
The total amount of deferred compensation payable to
Mr. Stephens as of December 31, 1998 by Putnam VT
Global Asset Allocation Fund, Putnam VT Global Growth
Fund, Putnam VT Growth and Income Fund, Putnam VT High
Yield Fund, Putnam VT New Opportunities Fund, Putnam
VT Income Fund, Putnam VT Utilities Growth and Income
Fund, and Putnam VT Voyager Fund was $1,660, $3,000,
$8,427, $1,924, $3,632, $1,253, $1,710, $5,612,
respectively, 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 March 31, 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 March 31, 1999.

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 33.53%
Putnam VT Diversified Income Fund 50.96%
Putnam VT Global Asset Allocation Fund 47.80%
Putnam VT Global Growth Fund 42.59%
Putnam VT The George Putnam Fund of Boston 43.34%
Putnam VT Growth and Income Fund 49.44%
Putnam VT Health Sciences Fund 86.58%
Putnam VT High Yield Fund 42.99%
Putnam VT Income Fund 60.24%
Putnam VT International Growth Fund 36.35%
Putnam VT International Growth and Income Fund 39.47%
Putnam VT International New Opportunities Fund 37.56%
Putnam VT Investors Fund 44.84%
Putnam VT Money Market Fund 48.45%
Putnam VT New Opportunities Fund 30.13%
Putnam VT New Value Fund 38.97%
Putnam VT OTC & Emerging Growth Fund 33.67%
Putnam VT Research Fund 40.70%
Putnam VT Utilities Growth and Income Fund 52.69%
Putnam VT Vista Fund 40.44%
Putnam VT Voyager Fund 44.69%

(b) Putnam Capital Manager Trust Separate
Account VLI

Putnam VT Asia Pacific Growth Fund 0.01%
Putnam VT Diversified Income Fund 0.21%
Putnam VT Global Asset Allocation Fund 1.24%
Putnam VT Global Growth Fund 1.57%
Putnam VT The George Putnam Fund of Boston 0.06%
Putnam VT Growth and Income Fund 0.47%
Putnam VT Health Sciences Fund 0.19%
Putnam VT High Yield Fund 0.79%
Putnam VT Income Fund 0.87%
Putnam VT International Growth Fund 0.06%
Putnam VT International Growth and Income Fund 0.01%
Putnam VT International New Opportunities Fund 0.05%
Putnam VT Investors Fund 0.09%
Putnam VT Money Market Fund 0.20%
Putnam VT New Opportunities Fund 0.85%
Putnam VT New Value Fund 0.01%
Putnam VT OTC & Emerging Growth Fund 4.35%
Putnam VT Research Fund *
Putnam VT Utilities Growth and Income Fund 0.41%
Putnam VT Vista Fund 0.02%
Putnam VT Voyager Fund 1.12%

Putnam VT Asia Pacific Growth Fund *
Putnam VT Diversified Income Fund 0.05%
Putnam VT Global Asset Allocation Fund 0.36%
Putnam VT Global Growth Fund 0.37%
Putnam VT The George Putnam Fund of Boston 0.01%
Putnam VT Growth and Income Fund 0.12%
Putnam VT Health Sciences Fund 0.10%
Putnam VT High Yield Fund 0.22%
Putnam VT Income Fund 0.26%
Putnam VT International Growth Fund 0.06%
Putnam VT International Growth and Income Fund *
Putnam VT International New Opportunities Fund *
Putnam VT Investors Fund 0.06%
Putnam VT Money Market Fund 0.06%
Putnam VT New Opportunities Fund 0.25%
Putnam VT New Value Fund *
Putnam VT OTC & Emerging Growth Fund 0.01%
Putnam VT Research Fund *
Putnam VT Utilities Growth and Income Fund 0.11%
Putnam VT Vista Fund *
Putnam VT Voyager Fund 0.26%

(d) Putnam Capital Manager Trust Variable Life
Separate Account Five

Putnam VT Asia Pacific Growth Fund 0.65%
Putnam VT Diversified Income Fund 0.28%
Putnam VT Global Asset Allocation Fund 0.19%
Putnam VT Global Growth Fund 0.49%
Putnam VT The George Putnam Fund of Boston 0.03%
Putnam VT Growth and Income Fund 0.24%
Putnam VT Health Sciences Fund 0.07%
Putnam VT High Yield Fund 0.45%
Putnam VT Income Fund 0.17%
Putnam VT International Growth Fund 0.09%
Putnam VT International Growth and Income Fund 0.08%
Putnam VT International New Opportunities Fund 0.23%
Putnam VT Investors Fund 0.25%
Putnam VT Money Market Fund 0.59%
Putnam VT New Opportunities Fund 0.37%
Putnam VT New Value Fund 0.10%
Putnam VT OTC & Emerging Growth Fund 0.06%
Putnam VT Research Fund 0.62%
Putnam VT Utilities Growth and Income Fund 0.25%
Putnam VT Vista Fund 0.13%
Putnam VT Voyager Fund 0.28%

(e) Putnam Capital Manager Trust Variable Life
Separate Account VLUL

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 Income 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 Utilities Growth and Income Fund *
Putnam VT Vista 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 59.34%
Putnam VT Diversified Income Fund 44.52%
Putnam VT Global Asset Allocation Fund 49.65%
Putnam VT Global Growth Fund 53.77%
Putnam VT The George Putnam Fund of Boston 56.37%
Putnam VT Growth and Income Fund 47.35%
Putnam VT Health Sciences Fund 11.76%
Putnam VT High Yield Fund 54.08%
Putnam VT Income Fund 35.90%
Putnam VT International Growth Fund 53.78%
Putnam VT International Growth and Income Fund 60.12%
Putnam VT International New Opportunities Fund 60.59%
Putnam VT Investors Fund 54.42%
Putnam VT Money Market Fund 48.04%
Putnam VT New Opportunities Fund 42.76%
Putnam VT New Value Fund 60.35%
Putnam VT OTC & Emerging Growth Fund 61.20%
Putnam VT Research Fund 58.40%
Putnam VT Utilities Growth and Income Fund 44.80%
Putnam VT Vista Fund 58.28%
Putnam VT Voyager Fund 49.74%

(b) Putnam Capital Manager Trust Separate
Account VLI

Putnam VT Asia Pacific Growth Fund 0.02%
Putnam VT Diversified Income Fund 0.04%
Putnam VT Global Asset Allocation Fund 0.13%
Putnam VT Global Growth Fund 0.46%
Putnam VT The George Putnam Fund of Boston 0.11%
Putnam VT Growth and Income Fund 0.11%
Putnam VT Health Sciences Fund 0.76%
Putnam VT High Yield Fund 0.27%
Putnam VT Income Fund 0.20%
Putnam VT International Growth Fund 0.14%
Putnam VT International Growth and Income Fund 0.06%
Putnam VT International New Opportunities Fund 0.03%
Putnam VT Investors Fund 0.17%
Putnam VT Money Market Fund 0.13%
Putnam VT New Opportunities Fund 0.21%
Putnam VT New Value Fund 0.02%
Putnam VT OTC & Emerging Growth Fund 0.51%
Putnam VT Research Fund *
Putnam VT Utilities Growth and Income Fund 0.18%
Putnam VT Vista Fund 0.05%
Putnam VT Voyager Fund 0.23%

Putnam VT Asia Pacific Growth Fund *
Putnam VT Diversified Income Fund 0.05%
Putnam VT Global Asset Allocation Fund 0.03%
Putnam VT Global Growth Fund 0.13%
Putnam VT The George Putnam Fund of Boston 0.09%
Putnam VT Growth and Income Fund 0.06%
Putnam VT Health Sciences Fund 0.15%
Putnam VT High Yield Fund 0.17%
Putnam VT Income Fund 0.10%
Putnam VT International Growth Fund 0.04%
Putnam VT International Growth and Income Fund 0.02%
Putnam VT International New Opportunities Fund 0.02%
Putnam VT Investors Fund 0.04%
Putnam VT Money Market Fund 0.03%
Putnam VT New Opportunities Fund 0.04%
Putnam VT New Value Fund 0.01%
Putnam VT OTC & Emerging Growth Fund 0.13%
Putnam VT Research Fund *
Putnam VT Utilities Growth and Income Fund 0.06%
Putnam VT Vista Fund 0.02%
Putnam VT Voyager Fund 0.06%

(d) Putnam Capital Manager Trust Variable Life
Separate Account Five

Putnam VT Asia Pacific Growth Fund 0.42%
Putnam VT Diversified Income Fund 0.41%
Putnam VT Global Asset Allocation Fund 0.40%
Putnam VT Global Growth Fund 0.49%
Putnam VT The George Putnam Fund of Boston *
Putnam VT Growth and Income Fund 0.34%
Putnam VT Health Sciences Fund 0.39%
Putnam VT High Yield Fund 0.37%
Putnam VT Income Fund 0.19%
Putnam VT International Growth Fund 0.25%
Putnam VT International Growth and Income Fund 0.23%
Putnam VT International New Opportunities Fund 0.53%
Putnam VT Investors Fund 0.14%
Putnam VT Money Market Fund 0.63%
Putnam VT New Opportunities Fund 0.47%
Putnam VT New Value Fund 0.32%
Putnam VT OTC & Emerging Growth Fund 0.08%
Putnam VT Research Fund 0.28%
Putnam VT Utilities Growth and Income Fund 0.31%
Putnam VT Vista Fund 0.25%
Putnam VT Voyager Fund 0.34%

(e) Putnam Capital Manager Trust Separate
Account Six

Putnam VT Asia Pacific Growth Fund *
Putnam VT Diversified Income Fund 0.16%
Putnam VT Global Asset Allocation Fund 0.20%
Putnam VT Global Growth Fund 0.05%
Putnam VT The George Putnam Fund of Boston *
Putnam VT Growth and Income Fund 0.03%
Putnam VT Health Sciences Fund *
Putnam VT High Yield Fund *
Putnam VT Income Fund 0.12%
Putnam VT International Growth Fund 6.25%
Putnam VT International Growth and Income Fund *
Putnam VT International New Opportunities Fund *
Putnam VT Investors Fund *
Putnam VT Money Market Fund 0.31%
Putnam VT New Opportunities Fund 0.22%
Putnam VT New Value Fund *
Putnam VT OTC & Emerging Growth Fund *
Putnam VT Research Fund *
Putnam VT Utilities Growth and Income Fund *
Putnam VT Vista Fund *
Putnam VT Voyager Fund *

(f) Putnam Capital Manager Trust Separate
Account VLUL 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 Income 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 Utilities Growth and Income Fund *
Putnam VT Vista Fund *
Putnam VT Voyager Fund *

(3) ReliaStar Life Insurance Company

(a) Select Life I

Putnam VT Diversified Income Fund 0.01%
Putnam VT Growth and Income Fund 0.03%
Putnam VT Utilities Growth and Income Fund 0.03%
Putnam VT Voyager Fund 0.11%

(b) Select Life II

Putnam VT Asia Pacific Growth Fund 1.57%
Putnam VT Diversified Income Fund 0.16%
Putnam VT Growth and Income Fund 0.16%
Putnam VT New Opportunities Fund 0.47%
Putnam VT Utilities Growth and Income Fund 0.17%
Putnam VT Voyager Fund 0.66%
(c) Select Life III
Putnam VT Asia Pacific Growth Fund 1.57%
Putnam VT Diversified Income Fund 0.16%
Putnam VT Growth and Income Fund 0.16%
Putnam VT New Opportunities Fund 0.47%
Putnam VT Utilities Growth and Income Fund 0.17%
Putnam VT Voyager Fund 0.66%

(d) Survivorship Flexible Premium Variable
Life (SVUL I)

Putnam VT Asia Pacific Growth Fund 0.03%
Putnam VT Diversified Income Fund 0.01%
Putnam VT Growth and Income Fund *
Putnam VT New Opportunities Fund *
Putnam VT Utilities Growth and Income Fund *
Putnam VT Voyager Fund 0.01%

(e) Select Annuity II

Putnam VT Diversified Income Fund 0.08%
Putnam VT Growth and Income Fund 0.08%
Putnam VT Utilities Growth and Income Fund 0.14%
Putnam VT Voyager Fund 0.22%

(f) Select Annuity III

Putnam VT Asia Pacific Growth Fund 2.70%
Putnam VT Diversified Income Fund 1.59%
Putnam VT Growth and Income Fund 0.63%
Putnam VT New Opportunities Fund 1.31%
Putnam VT Utilities Growth and Income Fund 0.67%
Putnam VT Voyager Fund 1.47%

(4) ReliaStar Life Insurance Company
of New York

(a) Select Annuity New York

Putnam VT Diversified Income Fund *
Putnam VT Growth and Income Fund *
Putnam VT Utilities Growth and Income Fund 0.01%
Putnam VT Voyager fund 0.01%

(5) American Enterprise Life
Insurance Company

(a) Variable Annuity Account

Putnam VT Diversified Income Fund 1.18%
Putnam VT Growth and Income Fund 0.20%
Putnam VT Global Growth Fund 0.07%
Putnam VT High Yield Fund 0.51%
Putnam VT New Opportunities Fund 0.36%
Putnam VT Voyager Fund 0.01%

(b) American Centurion Life

Putnam VT Diversified Income Fund 0.09%
Putnam VT Growth and Income Fund 0.02%
Putnam VT High Yield Fund 0.09%
Putnam VT New Opportunities Fund 0.01%

(6) Investors Life Insurance Company of
North America

CIGNA Separate Account I

Putnam VT Growth and Income Fund 0.36%
Putnam VT Income Fund 1.86%
Putnam VT Money Market Fund 7.55%
Putnam VT Voyager Fund 0.09%

(7) Paragon Life Insurance Company

(a) Paragon Variable Life

Putnam VT Asia Pacific Growth Fund 0.15%
Putnam VT Diversified Income Fund 0.01%
Putnam VT Global Asset Allocation Fund 0.01%
Putnam VT Global Growth Fund 0.01%
Putnam VT Growth and Income Fund *
Putnam VT High Yield Fund 0.02%
Putnam VT Income 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 Utilities Growth and Income Fund *
Putnam VT Voyager Fund 0.01%
(b) Paragon Variable Life Multi-Manager
Putnam VT High Yield Fund 0.04%
Putnam VT Income Fund 0.08%
Putnam VT New Opportunities Fund 0.03%
Putnam VT Voyager Fund 0.02%

Putnam VT High Yield Fund *
Putnam VT Income Fund *
Putnam VT New Opportunities Fund *
Putnam VT Voyager Fund *

(8) IDS Life Insurance Company

(a) IDS Life Variable Account 10

Putnam VT New Opportunities Fund 16.51%

(b) IDS Life of New York
Flexible Portfolio Annuity Account

Putnam VT New Opportunities Fund 0.93%

Opportunities Fund 4.34%

(d) IDS Life of New York
Account 8

Putnam VT New Opportunities Fund 0.25%

(9) Cova Financial Life Insurance Company

(a) Variable Annuity Account One
Putnam VT Growth and Income Fund 0.17%
Putnam VT International Growth Fund 2.76%
Putnam VT International New Opportunities Fund 0.04%
Putnam VT New Value Fund 0.20%
Putnam VT Vista Fund 0.76%

(b) Variable Annuity Account Five

Putnam VT Growth and Income Fund 0.01%
Putnam VT International Growth Fund 0.23%
Putnam VT International New Opportunities Fund 0.04%
Putnam VT New Value Fund 0.02%
Putnam VT Vista Fund 0.04%

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 9.24%
Putnam VT Growth and Income Fund 8.24%
Putnam VT International Growth and Income Fund 15.20%

(2) Hartford Life and Annuity Insurance Company

(a) ICMG Registered Variable Life Separate
Account One

Putnam VT International Growth Fund 0.42%
Putnam VT Vista Fund 0.70%
Putnam VT Voyager Fund 0.12%

(3) Putnam Hartford Capital Access Variable Annuity

(a) Hartford Life Insurance Company Putnam Capital
Manager Trust Separate Account

Putnam VT Asia Pacific Growth Fund 10.82%
Putnam VT Diversified Income Fund 6.27%
Putnam VT Global Asset Allocation Fund 0.66%
Putnam VT Global Growth Fund 6.33%
Putnam VT The George Putnam Fund of Boston 6.67%
Putnam VT Growth and Income Fund 5.36%
Putnam VT Health Sciences Fund 4.63%
Putnam VT High Yield Fund 5.65%
Putnam VT Income Fund 11.64%
Putnam VT International Growth Fund 9.15%
Putnam VT International Growth and Income Fund 4.41%
Putnam VT International New Opportunities Fund 21.51%
Putnam VT Investors Fund 6.34%
Putnam VT Money Market Fund 6.57%
Putnam VT New Opportunities Fund 11.21%
Putnam VT New Value Fund 2.71%
Putnam VT OTC & Emerging Growth Fund 6.35%
Putnam VT Utilities Growth and Income Fund 49.79%
Putnam VT Vista Fund 6.15%
Putnam VT Voyager Fund 7.23%

(b) Hartford Life and Annuity Insurance Company
Putnam Capital Manager Trust Separate Account Two

Putnam VT Asia Pacific Growth Fund 89.18%
Putnam VT Diversified Income Fund 52.12%
Putnam VT Global Asset Allocation Fund 89.93%
Putnam VT Global Growth Fund 62.36%
Putnam VT The George Putnam Fund of Boston 93.33%
Putnam VT Growth and Income Fund 75.34%
Putnam VT Health Sciences Fund 95.37%
Putnam VT High Yield Fund 82.40%
Putnam VT Income Fund 88.36%
Putnam VT International Growth Fund 90.43%
Putnam VT International Growth and Income Fund 80.38%
Putnam VT International New Opportunities Fund 78.49%
Putnam VT Investors Fund 93.66%
Putnam VT Money Market Fund 86.89%
Putnam VT New Opportunities Fund 88.79%
Putnam VT New Value Fund 49.18%
Putnam VT OTC & Emerging Growth Fund 93.65%
Putnam VT Utilities Growth and Income Fund 93.65%
Putnam VT Research 95.78%
Putnam VT Vista Fund 79.66%
Putnam VT Voyager Fund 62.58%

(4) PFL Life Insurance Company

(a) Flexible Premium Individual Deferred
Variable Annuity

Putnam VT Global Growth Fund 31.31%
Putnam VT Money Market Fund 6.54%
Putnam VT New Value Fund 48.11%

(5) Principal Mutual Life
Insurance Company

(a) PrinFlex Life

Putnam VT Global Asset Allocation Fund 9.41%
Putnam VT Vista Fund 13.49%
Putnam VT Voyager Fund 20.43%

(6) American Express
Insurance Company

(a) AEL Personal Portfolio
Plus 2

Putnam VT Diversified Income Fund 27.02%
Putnam VT Growth and Income Fund 9.52%
Putnam VT High Yield Fund 9.32%
Putnam VT Voyager Fund 8.36%

(b) ACL Personal Portfolio
Plus 2

Putnam VT Diversified Income Fund 5.34%
Putnam VT Growth and Income Fund 1.55%
Putnam VT High Yield Fund 2.63%
Putnam VT Voyager Fund 1.28%

*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 $222
billion in assets in nearly 11 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
institutional clients under its banking and fiduciary
powers. At December 31, 1998, Putnam Management and
its affiliates managed over $294 billion in assets,
including over $20 billion in taxexempt securities and
over $71 billion in retirement plan assets.

Putnam Management, Putnam Mutual Funds and Putnam
Fiduciary Trust Company are subsidiaries of Putnam
Investments, Inc., a holding company which in turn is,
except for a minority stake owned by employees, owned
by Marsh & McLennan Companies, Inc., a publiclyowned
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 March 4,
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 International Growth Fund, and million of average net
Putnam VT International Growth and assets, 0.70% of the
Income Fund next $500 million, 0.65% of the next
$500 million, 0.60% of the next $5
billion, 0.575% of the next $5
billion, 0.555% of the next $5 billion,
0.54% of the next $5 billion, and 0.53%
of any excess thereafter.

Putnam VT Diversified Income Fund, 0.70% of the first $500 Putnam VT Global
Asset Allocation Fund, million of average
Putnam VT Health Sciences Fund net assets, 0.60% of
Putnam VT High Yield Fund, the next $500 million,
Putnam VT New Opportunities Fund, 0.55% of the next $500
Putnam VT New Value Fund, million, 0.50% of the
Putnam VT OTC & Emerging Growth Fund,next $5 billion, 0.475%
Putnam VT Utilities Growth and Income Fund and of the next $5 billion,
Putnam VT Voyager Fund 0.455% of the next $5 billion, 0.44% of
the next $5 billion and 0.43% of any
excess thereafter.

Putnam VT Growth and Income Fund, 0.65% of the first $500
Putnam VT Investors Fund, million of average net
Putnam VT The George Putnam Fund of Boston, assets, 0.55% of the
Putnam VT Research Fund, next $500 million,
Putnam VT Income Fund 0.50% of the next $500
Putnam VT Vista Fund million, 0.45% of the next $5 billion,
0.425% of the next
$5 billion, 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 $253,712 in this regard, including $211,759
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 Clerk 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.
<TABLE><CAPTION>
Management fees

<S> <C> <C> <C>
Reflecting a
reduction in the following
Fiscal Management amounts pursuant to
Fund name year fee paid an expense limitation
- ------------------------------------------- --------------- -----------------------------------------------------------
Putnam VT Asia Pacific Growth Fund 1998 $769,751
1997 $1,076,596
1996 $681,628

Putnam VT Diversified Income Fund 1998 $4,373,212
1997 $3,811,378
1996 $2,766,551

Putnam VT The George Putnam
Fund of Boston 1998+ $207,992 $133,702

Putnam VT Global Asset Allocation Fund 1998 $6,476,330
1997 $5,755,350
1996 $4,262,397

Putnam VT Global Growth Fund 1998 $10,690,208
1997 $9,366,376
1996 $6,444,626

Putnam VT Growth and Income Fund 1998 $42,223,532
1997 $34,012,687
1996 $21,454,942

Putnam VT Health Sciences Fund 1998+ $295,300 $43,829

Putnam VT High Yield Fund 1998 $6,936,557
1997 $5,842,951
1996 $4,142,115

Putnam VT Income Fund 1998 $5,276,417
1997 $4,731,739
1996 $4,628,688

Putnam VT International Growth Fund 1998 $1,920,623
1997* $608,193 $55,502
1996 N/A

Putnam VT International Growth and Income
Fund 1998 $2,185,230
1997* $871,531
1996 N/A

Putnam VT International New
Opportunities Fund 1998 $1,488,974 $25,296
1997* $893,002 $206,574
1996 N/A

Putnam VT Investors Fund 1998+ $425,193 $15,450

Putnam VT Money Market Fund 1998 $2,267,755
1997 $2,090,282
1996 $1,689,370

Putnam VT New Opportunities Fund 1998 $16,639,549
1997 $12,267,574
1996 $7,144,796

Putnam VT New Value Fund 1998 $1,622,770
1997* $757,486
1996 N/A

Putnam VT OTC & Emerging Growth Fund 1998+ $62,785 $93,939

Putnam VT Research Fund 1998++ $19,146 $28,096

Putnam VT Utilities Growth and Income Fund 1998 $5,824,579
1997 $4,703,343
1996 $3,753,576

Putnam VT Vista Fund 1998 $1,526,540
1997* $600,249
1996 N/A

Putnam VT Voyager Fund 1998 $26,815,677
1997 $21,134,308
1996 $15,143,788
</TABLE>
* 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-thecounter 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
nonresearch 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 brokerdealer
involved and the quality of service rendered by the
brokerdealer 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 brokerdealer 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 obtain
the most favorable price 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.
Fiscal Brokerage
Fund name year commissions
- ---------------- ------ ----------------

Putnam VT Asia Pacific Growth 1998 $567,025
Fund 1997 $679,699
1996 $829,577

Putnam VT Diversified 1998 $24,354
Income Fund 1997 $32,813
1996 $11,983

Putnam VT The George
Putnam Fund of Boston ** 1998 $59,761

Putnam VT Global Asset 1998 $1,315,749
Allocation Fund 1997 $1,043,014
1996 $908,217

Putnam VT Global 1998 $9,323,318
Growth Fund 1997 $8,339,967
1996 $3,111,557

Putnam VT Growth and 1998 $9,816,504
Income Fund 1997 $8,609,589
1996 $5,056,587

Putnam VT Health Sciences Fund**
1998 $71,364

Putnam VT High 1998 $687
Yield Fund 1997 $9,384
1996 $14,940

Putnam VT International 1998 $1,195,025
Growth Fund* 1997 $553,235
1996 N/A

Putnam VT International 1998 $788,632
Growth and Income Fund* 1997 $659,464
1996 N/A

Putnam VT International
New Opportunities Fund* 1998 $870,433
1997 $733,380
1996 N/A

Putnam VT Investors Fund** 1998 $153,269

Putnam VT Money 1998 $0
Market Fund 1997 $0
1996 $0

Putnam VT New Opportunities
Fund** 1998 $2,762,099
1997 $2,268,158
1996 $1,584,684

Putnam VT New 1998 $644,506
Value Fund 1997 $292,442
1996 N/A

Putnam VT OTC & Emerging
Growth Fund** 1998 $11,546

Putnam VT Research Fund*** 1998 $12,374

Putnam VT Income Fund 1998 $64,214
1997 $85,584
1996 $23,582

Putnam VT Income Fund 1998 $430,952
1997 $785,994
1996 $898,263

Putnam VT Vista Fund** 1998 $450,722
1997 $174,221
1996 N/A

Putnam VT Voyager Fund 1998 $5,065,820
1997 $3,624,594
1996 $3,380,235

* Commencement of operations January 2, 1997.
** Commencement of operations April 30, 1998.
*** Commencement of operations September 30, 1998.

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 has
won the DALBAR Service Award eight times in the past
nine years. In 1997 and 1998, Putnam was the only
company to win all three DALBAR Awards: for service to
investors, to financial advisors, and to variable
annuity contract holders. DALBAR, Inc. an independent
research firm, presents the awards to financial
services firms that provide consistently excellent
service.

The Trust paid $14,612,839 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 dividend
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.
<TABLE><CAPTION>
Class IA Shares

Total Return
<S> <C> <C> <C> <C> <C>
Putnam VT Fund Yield* 1 year 5 years 10 years Life of fund
Asia Pacific Growth Fund -- -5.48% -- -- -2.82%
Diversified Income Fund 7.51% -1.37% 5.62% -- 5.76%
The George Putnam Fund
of Boston 2.53% -- -- -- 3.69%
Global Asset Allocation Fund 2.13% 13.47% 13.80% 12.68% 12.2%
Global Growth Fund -- 29.71% 14.77% -- 12.68%
Growth and Income Fund 1.56% 15.42% 19.10% 16.04% 16.54%
Health Sciences Fund -- -- -- -- 9.51%
High Yield Fund 10.62% -5.86% 7.31% 9.90% 9.77%
Income Fund 6.18% 8.25% 7.01% 9.21% 8.69%
International Growth Fund -- 18.69% -- -- 17.50%
International Growth and
Income Fund 1.43% 11.28% -- -- 15.36%
International New Opportunities
Fund -- 15.58 -- -- 7.49%
Investors Fund -- -- -- -- 16.66%
Money Market Fund 4.92% 5.19% 4.95% 5.38% 5.47%
New Opportunities Fund -- 24.38% -- -- 23.19%
New Value Fund 1.30% 6.26% -- -- 11.85%
OTC & Emerging Growth Fund -- -- -- -- .94%
Research Fund -- -- -- -- 19.51%
Utilities Growth and Income
Fund 2.87% 14.92% 15.57% -- 14.75%
Vista Fund -- 19.48% -- -- 21.45%
Voyager Fund -- 24.36% 20.37% 20.15% 18.65%
</TABLE>
* 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
<S> <C> <C> <C> <C> <C>
Putnam VT Fund Yield* 1 year 5 years 10 years Life of fund
Asia Pacific Growth Fund -- -5.48 -- -- -2.93
Diversified Income Fund 7.36% -1.56 5.44 -- 5.58
The George Putnam Fund of
Boston 2.31% -- -- -- 3.69
Global Asset Allocation Fund 1.98% 13.47 13.68 12.53 12.09
Global Growth Fund -- 29.64 14.62 -- 12.53
Growth and Income Fund 1.41% 15.30 18.94 15.87 16.37
Health Sciences Fund -- -- -- -- 9.40
High Yield Fund 10.51% -5.92 7.18 9.75 9.62
International Growth Fund -- 18.43 -- -- 17.30
International Growth and
Income Fund 1.26% 11.25 -- -- 15.24
International New
Opportunities Fund -- 15.47 -- -- 7.33
Investors Fund -- -- -- -- 16.54
Income Fund 6.18% 8.25 7.01 9.21 8.69
Money Market Fund 4.73 5.17 4.74 5.26 5.36
New Opportunities Fund -- 24.24 -- -- 23.01
New Value Fund 1.18% 6.06 -- -- 11.68
OTC & Emerging Growth Fund -- -- -- -- 0.82
Research Fund -- -- -- -- 19.19
Utilities Growth and
Income Fund 2.72% 14.85 15.41 -- 14.60
Vista Fund -- 19.47 -- -- 21.37
Voyager Fund -- 24.19 20.18 19.98 18.47
</TABLE>

* 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 and Putnam VT Research 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 under 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 computation 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 corrective 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 of 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 outstanding.

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,
institutionalsize 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 $25
Putnam VT Diversified Income Fund 459
Putnam VT The George Putnam Fund of Boston 457
Putnam VT Global Asset Allocation Fund 378
Putnam VT Global Growth Fund 156
Putnam VT Growth and Income Fund 1,566
Putnam VT Health Sciences Fund 341
Putnam VT High Yield Fund 500
Putnam VT International Growth Fund 1,083
Putnam VT International Growth and Income Fund 275
Putnam VT International New Opportunities Fund 43
Putnam VT Investors Fund 406
Putnam VT Money Market Fund 2,562
Putnam VT New Opportunities Fund 330
Putnam VT New Value Fund 89
Putnam VT OTC & Emerging Growth Fund 105
Putnam VT Research Fund 42
Putnam VT Small Cap Value Fund N/A
Putnam VT U.S. Government and High Quality Bond Fund 608
Putnam VT Utilities Growth and Income Fund 316
Putnam VT Vista Fund 219
Putnam VT Voyager Fund 983

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 any subcustodian
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
subcustodians 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 thirdparty 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 March 2, 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.