As filed with the Securities and Exchange Commission on
April 30, 1999
Registration No. 33-17486
811-5346
- -------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM N-1A
----
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
----
----
Pre-Effective Amendment No. / /
----
----
Post-Effective Amendment No. 21 / X /
and ----
----
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY / X /
ACT OF 1940 ----
----
Amendment No. 22 / X /
(Check appropriate box or boxes) ----
---------------
PUTNAM VARIABLE TRUST
(Exact name of registrant as specified in charter)
One Post Office Square, Boston, Massachusetts 02109
(Address of principal executive offices)
Registrant's Telephone Number, including Area Code
(617) 292-1000
--------------------
It is proposed that this filing will become effective
(check appropriate box)
- ----
/ / immediately upon filing pursuant to paragraph (b)
- ----
- ----
/ X / on April 30, 1999 pursuant to paragraph (b)
- ----
- ----
/ / 60 days after filing pursuant to paragraph (a)(1)
- ----
- ----
/ / on (date) pursuant to paragraph (a)(1)
- ----
- ----
/ / 75 days after filing pursuant to paragraph (a)(2)
- ----
- ----
/ / on (date) pursuant to paragraph (a)(2) of Rule 485.
- ----
If appropriate, check the following box:
- ----
/ / This post-effective amendment designates a new
- ---- effective date for a previously filed post-effective amendment.
-----------
JOHN R. VERANI, Vice President
PUTNAM VARIABLE TRUST
One Post Office Square
Boston, Massachusetts 02109
(Name and address of agent for service)
---------------
Copy to:
JOHN W. GERSTMAYR, Esquire
ROPES & GRAY
One International Place
Boston, Massachusetts 02110
-------------------
<TABLE>
<CAPTION>
PUTNAM VARIABLE TRUST PROSPECTUS
Class IA Shares APRIL 30, 1999
Growth Funds Growth and Income Funds
<S> <C>
Putnam VT Asia Pacific Growth Fund Putnam VT The George Putnam Fund of Boston
Putnam VT Global Growth Fund Putnam VT Growth and Income Fund
Putnam VT Health Sciences Fund Putnam VT International Growth and Income Fund
Putnam VT International Growth Fund Putnam VT New Value Fund
Putnam VT International New Opportunities Fund Putnam VT Small Cap Value Fund
Putnam VT Investors Fund Putnam VT Utilities Growth and Income Fund
Putnam VT New Opportunities Fund
Income Funds
Putnam VT OTC & Emerging Growth Fund
Putnam VT Research Fund Putnam VT Diversified Income Fund
Putnam VT Vista Fund Putnam VT High Yield Fund
Putnam VT Voyager Fund Putnam VT Income Fund
Asset Allocation Fund Money Market Fund
Putnam VT Global Asset Allocation Putnam VT Money Market Fund
</TABLE>
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 (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.
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 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)
Since
Past inception
1 year (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 fixed-income securities. The fund
invests in the following three sectors of the fixed-income securities
markets:
* U.S. Government and Investment Grade Sector: consisting primarily of
debt obligations of the U.S. government, its agencies and
instrumentalities,
* High Yield Sector: consisting of high-yielding, lower-rated, higher risk
U.S. and foreign fixed-income securities ("junk bonds"), and
* International Sector: consisting of obligations 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)
Since
Past Past inception
1 year 5 years (9/15/93)
Class IA -1.37% 5.62% 5.76%
Lehman Brothers
Mortgage-backed
Bond Index 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 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 investment-grade 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 Past Past
1 year 5 years 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 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
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)
Since
Past Past inception
1 year 5 years (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 Past Past
1 year 5 years 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 Past Past
1 year 5 years 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 FIXED-INCOME
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)
Since
Past Past inception
1 year 5 years (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)
Since
Past inception
1 year (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)
Since
Past inception
1 year (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)
Since
Past inception
1 year (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 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 Past Past
1 year 5 years 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)
Since
Past inception
1 year (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)
Since
Past inception
1 year (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 over-the-counter ("OTC")
market or common stocks of "emerging growth" companies listed on
securities exchanges. "Emerging growth" companies are companies that
Putnam Management believes have a leading or proprietary position in a
growing industry or are gaining market share in an established industry.
These companies may range from startups or recently organized companies to
mature companies with long, established operating histories. The fund
mainly buys stocks of small to medium-sized companies, although the fund
may invest in companies of any size. Most stocks bought by the fund are
growth stocks whose earnings Putnam Management believes are likely to grow
faster than the economy as a whole.
MAIN RISKS
* The 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
investment-grade 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)
Since
Past Past inception
1 year 5 years (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 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)
Since
Past inception
1 year (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 Past Past
1 year 5 years 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.
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 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
well-known companies. The following is a description of the investment
objectives and policies of each investment category:
U.S. Equities. The objective of the U.S. Equities category is to seek both
capital growth and, to a lesser extent, current income through equity
securities. The fund may invest 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
asset-backed securities, convertible securities and preferred stocks of
non-governmental issuers.
International Fixed Income. The investment objective of the International
Fixed Income category is to seek high current income by investing
principally in foreign currency denominated debt securities issued by
foreign governmental or supranational entities. The fund may also invest
assets allocated to this 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 funds 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 funds 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 above-average growth.
Putnam VT New Value Fund
The fund pursues its goal by investing mainly in common stocks. The fund
generally invests in value stocks. Putnam Management will consider, among
other things, a company's financial strength, competitive position in its
industry and projected future earnings and dividends, and the securities
long-term potential for capital appreciation when deciding whether to buy
or sell investments. Because Putnam Management evaluates securities for
the fund based on their long-term potential for capital appreciation, the
fund's investments may not appreciate over the shorter term, and as a
result the fund's total return over certain periods may be less than that
of 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
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 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
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 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 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. Growth 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 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. 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.
Investments in premium securities. The funds may invest in so-called
"Premium" investments, which offer interest rates higher than prevailing
market rates. In addition, during times of declining interest rates, many
of the affected funds' investments may offer interest rates that are
higher than current market rates. When a fund holds these "premium"
investments, shareholders are likely to receive higher dividends (but will
bear a greater risk that the value of the fund's shares will fall) than
they would if the fund held investments that offered current market rates
of interest. Premium investments involve a greater risk of loss, because
their values tend to decline towards the face value over time.
Prepayments generally cause losses on premium investments, because
prepayments are made at face value and do not reflect any premium over
face value.
Investors may find it useful to compare the relevant fund's yield, which
reflects amortization of market premiums, with its current dividend rate,
which does not reflect that amortization.
Illiquid securities. Each fund (other than Putnam VT Money Market Fund)
may invest up to 15% of its assets in illiquid securities. Putnam 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. 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-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. 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.
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.
<TABLE>
<CAPTION>
Business experience
Fund name Year (at least 5 years)
- --------------------- ------- ---------------------------------------------------------------
Putnam VT Asia Pacific
Growth Fund
<S> <C> <C>
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. Prior
Managing Director 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. Prior
Senior Vice President 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. Prior
Vice President 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. Prior
Managing Director 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. Prior
Managing Director 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 1997.
Senior Vice President 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. Prior
Managing Director 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.
[/R]
</TABLE>
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 date-related 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.
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 (A1)
Investment Operations
Net
Net Asset Net Realized and Total
Value, Investment Unrealized from
Year Beginning Income Gain(Loss)on Investment
ended of Period (Loss) Investments operations
<S> <C> <C> <C> <C>
Putnam VT Asia Pacific
Growth Fund
1998 $9.20 $.08(a) $(.56) $(.48)
1997 11.01 .07 (1.66) (1.59)
1996 10.23 .05 .88 .93
1995*** 10.00 .06(a)(b) .17 .23
Putnam VT Diversified
Income Fund
1998 $11.31 $.86(a) $(.99) $(.13)
1997 11.27 .82(a) (.05) .77
1996 11.03 .80(a) .11 .91
1995 9.74 .71 1.09 1.80
1994 10.23 .61 (1.04) (.43)
Putnam VT The George Putnam
Fund of Boston
1998****** $10.00 $.18(a)(b) $.19 $.37
Putnam VT Global Asset
Allocation Fund
1998 $18.76 $.46(a) $2.00 $2.46
1997 17.25 .50 2.63 3.13
1996 16.15 .43 1.94 2.37
1995 13.19 .47 2.74 3.21
1994 14.29 .35 (.71) (.36)
Putnam VT Global Growth Fund
1998 $18.34 $.05(a) $5.01 $5.06
1997 16.88 .13 2.18 2.31
1996 15.18 .17 2.35 2.52
1995 13.48 .20 1.85 2.05
1994 13.68 .13 (.26) (.13)
Putnam VT Growth and Income
Fund
1998 $28.32 $.44(a) $3.77 $4.21
1997 24.56 .48 5.07 5.55
1996 21.47 .65(a) 3.84 4.49
1995 16.44 .53 5.31 5.84
1994 17.38 .50 (.48) .02
Financial Highlights (A2)
Putnam VT Health Sciences Fund
1998****** $10.00 $.01(a)(b) $.94 $.95
Putnam VT High Yield Fund
1998 $13.62 $1.31 $(1.98) $(.67)
1997 12.96 1.06 .65 1.71
1996 12.37 1.18(a) .32 1.50
1995 11.46 .91 1.05 1.96
1994 12.53 1.05 (1.17) (.12)
Putnam VT International
Growth Fund
1998 $11.43 $.11(a) $2.03 $2.14
1997**** 10.00 .05(b) 1.56 1.61
Putnam VT International
Growth and Income Fund
1998 $11.53 $.23(a) $1.06 $1.29
1997**** 10.00 .07 1.87 1.94
Putnam VT International
New Opportunities
Fund
1998 $9.96 $.04(a)(b) $1.59 $1.55
1997**** 10.00 .01(b) (.02) (.01)
Putnam VT Investors Fund
1998****** $10.00 $.02(a)(b) $1.65 $1.67
Putnam VT Money Market Fund
1998 $1.00 $.0510 $-- $.0510
1997 1.00 .0509 -- .0509
1996 1.00 .0497 -- .0497
1995 1.00 .0533 -- .0533
1994 1.00 .0377 -- .0377
Putnam VT New Opportunities
Fund
1998 $21.23 $(.04) $5.19 $5.15
1997 17.22 --(e) 4.01 4.01
1996 15.63 (.01) 1.60 1.59
1995 10.82 -- 4.84 4.84
1994****** 10.00 --(b) .82 .82
Financial Highlights (A3)
Putnam VT New Value Fund
1998 $11.76 $.16(a) $.57 $.73
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
Putnam VT U.S. Government
and High Quality Bond Fund
1998 $13.42 $.82(a) $.24 $1.06
1997 13.21 .88 .18 1.06
1996 13.74 .81 (.52) .29
1995 12.22 .81 1.56 2.37
1994 13.53 .81 (1.24) (.43)
Putnam VT Utilities Growth
and Income Fund
1998 $17.14 $.54(a) $1.90 $2.44
1997 14.80 .53 3.11 3.64
1996 13.28 .54 1.49 2.03
1995 10.68 .53 2.65 3.18
1994 12.00 .60 (1.44) (.84)
Putnam VT Vista Fund
1998 $12.32 $(.02)(a) $2.42 $2.40
1997******** 10.00 --(e) 2.32 2.32
Putnam VT Voyager Fund
1998 $39.08 $.05(a) $9.26 $9.31
1997 32.53 .10 8.01 8.11
1996 30.50 .09 3.75 3.84
1995 22.20 .10 8.76 8.86
1994 22.41 .07 .14 .21
Financial Highlights (A Continued: A4)
Less Distributions:
From
From In Excess Net In Excess of
Net of Net Realized Net Realized
Year Investment Investment Gain on Gain on
ended Income Income Investments Investments
Putnam VT Asia Pacific
Growth Fund
1998 $(.38) $-- $-- $--
1997 (.22) -- -- --
1996 (.15) -- -- --
1995*** -- -- -- --
Putnam VT Diversified
Income Fund
1998 $(.48) $-- $(.21) $--
1997 (.63) -- (.10) --
1996 (.67) -- -- --
1995 (.51) -- -- --
1994 (.06) -- -- --
Putnam VT The George Putnam
Fund of Boston
1998****** $(.09) $-- $-- $--
Putnam VT Global Asset
Allocation Fund
1998 $(.43) $-- $(1.85) $--
1997 (.60) -- (1.02) --
1996 (.44) -- (.83) --
1995 (.25) -- -- --
1994 (.29) -- (.43) $(.02)
Putnam VT Global Growth Fund
1998 $(.52) $-- $(2.60) $--
1997 (.41) -- (.44) --
1996 (.25) -- (.57) --
1995 (.11) -- (.24) --
1994 (.05) -- (.02) --
Putnam VT Growth and Income
Fund
1998 $(.50) $-- $(3.26) $--
1997 (.52) -- (1.27) --
1996 (.51) -- (.89) --
1995 (.51) -- (.30) --
1994 (.38) -- (.58) --
Financial Highlights (A5)
Putnam VT Health Sciences Fund
1998****** $(.01) $-- $-- $--
Putnam VT High Yield Fund
1998 $(1.08) $-- $(.17) $--
1997 (.94) -- (.11) --
1996 (.91) -- -- --
1995 (1.05) -- -- --
1994 (.79) -- (.14) (.02)
Putnam VT International
Growth Fund
1998 $(.04) $-- $-- $--
1997**** (.05) (.02) (.04) (.06)
Putnam VT International
Growth and Income Fund
1998 $(.11) $-- $(.22) $(.19)
1997**** (.08) (.05) (.28) --
Putnam VT International
New Opportunities Fund
1998 $(.02) $-- $-- $--
1997**** (.01) (.02) -- --
Putnam VT Investors Fund
1998****** $(.01) $-- $-- $--
Putnam VT Money Market Fund
1998 $(.0510) $-- $-- $--
1997 (.0509) -- -- --
1996 (.0497) -- -- --
1995 (.0533) -- -- --
1994 (.0377) -- -- --
Putnam VT New Opportunities
Fund
1998 $-- $-- $(.32) $--
1997 -- -- -- --
1996 -- -- -- --
1995 -- -- (.02) --
1994****** -- -- -- --
Financial Highlights (A6)
Putnam VT New Value Fund
1998 $(.23) $-- $(.23) $--
1997******* -- -- -- --
Putnam VT OTC & Emerging
Growth Fund
1998****** $-- $-- $-- $--
Putnam VT Research Fund
1998******* $(.01) $-- $(.01) $--
Putnam VT U.S. Government
and High Quality Bond Fund
1998 $(.73) $-- $(.02) $--
1997 (.85) -- -- --
1996 (.82) -- -- --
1995 (.85) -- -- --
1994 (.66) -- (.22) --
Putnam VT Utilities Growth
and Income Fund
1998 $(.51) $-- $(.88) $--
1997 (.55) -- (.75) --
1996 (.51) -- -- --
1995 (.58) -- -- --
1994 (.35) -- (.12) (.01)
Putnam VT Vista Fund
1998 $-- $-- $-- $--
1997******** --(e) -- -- --
Putnam VT Voyager Fund
1998 $(.10) $-- $(2.44) $--
1997 (.07) -- (1.49) --
1996 (.13) -- (1.68) --
1995 (.07) -- (.49) --
1994 (.05) -- (.37) --
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights (B1)
Investment Operations
Total
Investment
Net Asset Return at
Year Return of Total Value, End Net Asset
ended Capital Distributions of Period Value(%)(C)
<S> <C> <C> <C> <C>
Putnam VT Asia Pacific
Growth Fund
1998 $(.01) $(.39) $8.33 (5.48)
1997 -- (.22) 9.20 (14.66)
1996 -- (.15) 11.01 9.10
1995*** -- -- 10.23 2.30*
Putnam VT Diversified
Income Fund
1998 $-- $(.69) $10.49 (1.37)
1997 -- (.73) 11.31 7.38
1996 -- (.67) 11.27 8.81
1995 -- (.51) 11.03 19.13
1994 -- (.06) 9.74 (4.23)
Putnam VT The George
Putnam Fund of Boston
1998****** $-- $(.09) $10.28 3.69*
Putnam VT Global Asset
Allocation Fund
1998 $-- $(2.28) $18.94 13.47
1997 -- (1.62) 18.76 19.67
1996 -- (1.27) 17.25 15.62
1995 -- (.25) 16.15 24.71
1994 -- (.74) 13.19 (2.50)
Putnam VT Global Growth
Fund
1998 $-- $(3.12) $20.28 29.71
1997 -- (.85) 18.34 14.33
1996 -- (.82) 16.88 17.20
1995 -- (.35) 15.18 15.67
1994 -- (.07) 13.48 (.96)
Putnam VT Growth and
Income Fund
1998 $-- $(3.76) $28.77 15.42
1997 -- (1.79) 28.32 24.15
1996 -- (1.40) 24.56 21.92
1995 -- (.81) 21.47 36.71
1994 -- (.96) 16.44 .35
Financial Highlights (B2)
Putnam VT Health
Sciences Fund
1998****** $--(e) $(.01) $10.94 9.51*
Putnam High Yield
Fund
1998 $-- $(1.25) $11.70 (5.86)
1997 -- (1.05) 13.62 14.34
1996 -- (.91) 12.96 12.81
1995 -- (1.05) 12.37 18.32
1994 -- (.95) 11.46 (.94)
Putnam VT International
Growth Fund
1998 $(.01) (.05) $13.52 18.69
1997******** (.01) (.18) 11.43 16.13
Putnam VT International
Growth and Income Fund
1998 $(.06) $(.58) $12.24 11.28
1997**** -- (.41) 11.53 19.43
Putnam VT International New
Opportunities Fund
1998 $-- $(.02) $11.49 15.58
1997**** -- (.03) 9.96 (.10)
Putnam VT Investors Fund
1998****** $(.01) $(.02) $11.65 16.66*
Putnam VT Money Market Fund
1998 $-- $(.0510) $1.00 5.19
1997 -- (.0509) 1.00 5.22
1996 -- (.0497) 1.00 5.08
1995 -- (.0533) 1.00 5.46
1994 -- (.0377) 1.00 3.82
Putnam VT New
Opportunities Fund
1998 $-- $(.32) $26.06 24.38
1997 -- -- 21.23 23.29
1996 -- -- 17.22 10.17
1995 (.01) (.03) 15.63 44.87
1994****** -- 10.82 8.20*
Putnam VT New Value Fund
1998 $-- $(.46) $12.03 6.26
1997**** -- -- 11.76 17.60
Putnam VT OTC & Emerging
Growth Fund
1998**** $--(e) $-- $10.09 $.94*
Financial Highlights (B3)
Putnam VT Research Fund
Fund
1998******* $-- $(.02) $11.93 19.51*
Putnam VT U.S. Government and
High Quality Bond Fund
1998 $-- (.75) $13.73 8.25
1997 -- (.85) 13.42 8.64
1996 -- (.82) 13.21 2.42
1995 -- (.85) 13.74 20.44
1994 -- (.88) 12.22 (3.23)
Putnam VT Utilities
Growth and Income Fund
1998 $-- $(1.39) $18.19 14.92
1997 -- (1.30) 17.14 27.10
1996 -- (.51) 14.80 15.80
1995 -- (.58) 13.28 31.08
1994 -- (.48) 10.68 (7.02)
Putnam Vista Fund
1998 $-- $-- $14.72 19.48
1998**** --(e) -- 12.32 23.21
Putnam VT Voyager Fund
1998 $-- $(2.54) $45.85 24.36
1997 -- (1.56) 39.08 26.51
1996 -- (1.81) 32.53 12.97
1995 -- (.56) 30.50 40.67
1994 -- (.42) 22.20 1.04
Financial Highlights (B Continued: B4)
Less Distributions:
Ratio of
Net Assets Ratio of Net Investment
End of Expenses to Income to
Year Period Average Net Average Net Portfolio
ended (in thousands) Assets(%)(d) Assets(%) Turnover(%)
Putnam VT Asia Pacific
Growth Fund
1998 $90,667 1.12 1.01 136.49
1997 112,902 1.07 .70 102.92
1996 130,548 1.23 .84 66.10
1995*** 25,045 .81(b)* .72(b)* 67.72*
Putnam VT Diversified
Income Fund
1998 $669,053 .78 7.94 186.80
1997 608,148 .80 7.43 282.56
1996 494,811 .83 7.45 235.53
1995 303,721 .85 7.85 297.17
1994 215,935 .80 7.60 165.17
Putnam VT The George
Putnam Fund of Boston
1998****** $113,202 .57(b) 1.84(b)* 99.85
Putnam VT Global Asset
Allocation Fund
1998 $1,020,354 .78 2.54 133.80
1997 956,532 .77 3.01 181.05
1996 747,734 .83 3.08 165.03
1995 535,666 .84 3.31 150.88
1994 414,223 .76 3.19 150.21
Putnam VT Global Growth
Fund
1998 $1,987,094 .72 .26 164.56
1997 1,611,503 .75 .77 158.37
1996 1,344,887 .76 1.25 79.18
1995 831,593 .75 1.49 82.53
1994 669,821 .77 1.21 41.55
Putnam VT Growth and
Income Fund
1998 $9,948,386 .50 1.59 63.62
1997 8,337,334 .51 2.08 64.96
1996 5,679,100 .54 2.90 39.57
1995 3,312,306 .57 3.34 50.87
1994 1,907,380 .62 3.64 46.43
Financial Highlights (B5)
Putnam VT Health
Sciences Fund
1998****** $134,436 .61(b) .14(b)* 39.68*
Putnam High Yield
Fund
1998 $1,032,892 .71 10.31 52.00
1997 1,025,298 .72 9.26 84.61
1996 769,918 .76 9.57 62.72
1995 498,467 .79 9.42 69.78
1994 327,119 .74 9.79 62.09
Putnam VT International
Growth Fund
1998 $317,602 1.07 .84 98.31
1997******** 150,884 1.20(b) .79(b) 75.18
Putnam VT International
Growth and Income Fund
1998 $305,047 .99 1.86 62.61
1997**** 206,598 1.12 1.11 53.20
Putnam VT International New
Opportunities Fund
1998 $135,451 1.60(b) .36(b) 157.72
1997**** 107,000 1.60(b) .09(b) 131.89
Putnam VT Investors Fund
1998****** $243,296 .57(b)* .l9(b)* 42.97*
Putnam VT Money Market Fund
1998 $595,158 .53 5.04 --
1997 405,577 .54 5.10 --
1996 437,132 .53 4.93 --
1995 263,213 .57 5.43 --
1994 244,064 .55 3.90 --
Putnam VT New
Opportunities Fund
1998 $3,586,225 .61 (.16) 59.75
1997 2,590,244 .63 (.01) 71.78
1996 1,674,197 .72 (.13) 57.94
1995 515,109 .84 (.03) 30.87
1994****** 68,592 .47(b)* .03(b)* 32.77*
Putnam VT New Value Fund
1998 $255,754 .81 1.34 130.96
1997**** $195,391 .85 1.59 64.15
Putnam VT OTC & Emerging
Growth Fund
1998**** $28,059 .60(b)* (.16)(b)* 59.93*
Financial Highlights (B6)
Putnam VT Research Fund
Fund
1998******* $22,626 .22(b)* .19(b)* 19.76*
Putnam VT U.S. Government
and High Quality Bond Fund
1998 $1,000,161 .67 6.13 233.04
1997 789,540 .69 6.58 194.29
1996 778,924 .69 6.48 142.49
1995 747,024 .70 6.22 149.18
1994 640,458 .67 6.24 118.34
Putnam VT Utilities
Growth and Income Fund
1998 $1,015,327 .72 3.19 24.77
1997 822,257 .74 3.63 42.46
1996 657,429 .73 4.22 61.94
1995 530,461 .68 4.72 60.33
1994 384,169 .68 5.23 84.88
Putnam Vista Fund
1998 $311,612 .77 (.12) 116.48
1998**** 170,660 .87 -- 75.43
Putnam VT Voyager Fund
1998 $5,803,073 .58 .14 62.99
1997 4,538,535 .59 .30 82.00
1996 3,281,490 .63 .36 63.87
1995 2,000,232 .68 .49 57.51
1994 1,026,972 .71 .40 62.44
* 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.
</TABLE>
For more information
about the funds of Putnam Variable Trust
The Trust's statement of additional information (SAI) and annual and
semi-annual reports to shareholders include additional information about
the funds. The SAI, and the auditor's report and financial statements
included in the Trust's most recent annual report to the funds'
shareholders, are incorporated by reference into this prospectus, which
means they are part of this prospectus for legal purposes. The Trust's
annual report discusses the market conditions and investment strategies
that significantly affected the funds' performance during the funds' last
fiscal year. You may get free copies of these materials, request other
information about the funds and other Putnam funds, or make shareholder
inquiries, by contacting your financial advisor or by calling Putnam
toll-free at 1-800-225-1581.
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.
<TABLE>
<CAPTION>
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 Growth and Income Funds
<S> <C>
Putnam VT Asia Pacific
Growth Fund Putnam VT The George Putnam Fund of Boston
Putnam VT Global Growth Fund Putnam VT Growth and Income Fund
Putnam VT Health Sciences
Fund Putnam VT International Growth and Income Fund
Putnam VT International
Growth Fund Putnam VT New Value Fund
Putnam VT International New
Opportunities Fund Putnam VT Small Cap Value Fund
Putnam VT Investors Fund Putnam VT Utilities Growth and Income Fund
Putnam VT New Opportunities
Fund
Income Funds
Putnam VT OTC & Emerging
Growth Fund
Putnam VT Research Fund Putnam VT Diversified Income Fund
Putnam VT Vista Fund Putnam VT High Yield Fund
Putnam VT Voyager Fund Putnam VT Income Fund
Asset Allocation Fund
Money Market Fund
Putnam VT Global Asset
Allocation Putnam VT Money Market Fund
</TABLE>
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 (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 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)
Since
Past inception
1 year (5/1/95)
Class IB -5.53% -2.94%
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 fixed-income securities. The fund
invests in the following three sectors of the fixed-income securities
markets:
* U.S. Government and Investment Grade Sector: consisting primarily of
debt obligations of the U.S. government, its agencies and
instrumentalities,
* High Yield Sector: consisting of high-yielding, lower-rated, higher risk
U.S. and foreign fixed-income securities ("junk bonds"), and
* International Sector: consisting of obligations of foreign governments,
their agencies and instrumentalities 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)
Since
Past Past inception
1 year 5 years (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 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 investment-grade 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
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 Past Past
1 year 5 years 10 years
Class IB 13.53% 13.68% 12.53%
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 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)
Since
Past Past inception
1 year 5 years (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 Past Past
1 year 5 years 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 Past Past
1 year 5 years 10 years
Class IB -5.90% 7.18% 9.75%
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 FIXED-INCOME
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)
Since
Past Past inception
1 year 5 years (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)
Since
Past inception
1 year (1/2/97)
Class IB 18.43% 17.30%
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. 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)
Since
Past inception
1 year (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.
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 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)
Since
Past inception
1 year (1/2/97)
Class IB 15.42% 7.32%
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 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 Past Past
1 year 5 years 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 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 44.65%
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)
Since
Past inception
1 year (5/2/94)
Class IB 24.22% 23.04%
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 IB SHARES
(Bar chart)
Plot points
1998 6.11%
Average annual total returns (for periods ending 12/31/98)
Since
Past inception
1 year (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 over-the-counter ("OTC")
market or common stocks of "emerging growth" companies listed on
securities exchanges. "Emerging growth" companies are companies that
Putnam Management believes have a leading or proprietary position in a
growing industry or are gaining market share in an established industry.
These companies may range from startups or recently organized companies to
mature companies with long, established operating histories. The fund
mainly buys stocks of small to medium sized companies, although the fund
may invest in companies of any size. Most stocks bought by the fund are
growth stocks whose earnings Putnam Management believes are likely to grow
faster than the economy as a whole.
MAIN RISKS
* The 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
investment-grade 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 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)
Since
Past Past inception
1 year 5 years (5/4/92)
Class IB 14.86% 15.42% 14.61%
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 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 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)
Since
Past inception
1 year (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 Past Past
1 year 5 years 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?
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.
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 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
well-known companies. The following is a description of the investment
objectives and policies of each investment category:
U.S. Equities. The objective of the U.S. Equities category is to seek both
capital growth and, to a lesser extent, current income through equity
securities. The fund may invest 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
asset-backed securities, convertible securities and preferred stocks of
non-governmental issuers.
International Fixed Income. The investment objective of the International
Fixed -income category is to seek high current income by investing
principally in foreign currency denominated debt securities issued by
foreign governmental or supranational entities. The fund may also invest
assets allocated to this 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 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. 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 funds 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 funds 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 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 above-average growth.
Putnam VT New Value Fund
The fund pursues its goal by investing mainly in common stocks. The fund
generally invests in value stocks. Putnam Management will consider, among
other things, a company's financial strength, competitive position in its
industry and projected future earnings and dividends, and the securities
long-term potential for capital appreciation when deciding whether to buy
or sell investments. Because Putnam Management evaluates securities for
the fund based on their long-term potential for capital appreciation, the
fund's investments may not appreciate over the shorter term, and as a
result the fund's total return over certain periods may be less than that
of 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
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
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 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.
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
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 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 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 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. 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.
Investments in premium securities. The funds may invest in so-called
"Premium" investments, which offer interest rates higher than prevailing
market rates. In addition, during times of declining interest rates, many
of the affected funds' investments may offer interest rates that are
higher than current market rates. When a fund holds these "premium"
investments, shareholders are likely to receive higher dividends (but will
bear a greater risk that the value of the fund's shares will fall) than
they would if the fund held investments that offered current market rates
of interest. Premium investments involve a greater risk of loss, because
their values tend to decline towards the face value over time.
Prepayments generally cause losses on premium investments, because
prepayments are made at face value and do not reflect any premium over
face value.
Investors may find it useful to compare the relevant fund's yield, which
reflects amortization of market premiums, with its current dividend rate,
which does not reflect that amortization.
Illiquid securities. Each fund (other than Putnam VT Money Market Fund)
may invest up to 15% of its assets in illiquid securities. Putnam 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. 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-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. 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.
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.
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.
<TABLE>
<CAPTION>
Business experience
Fund name Year (at least 5 years)
- --------------------- ------- -------------------------
Putnam VT Asia Pacific
Growth Fund
<S> <C> <C>
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. Prior
Managing Director 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. Prior
Senior Vice President 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. Prior
Vice President 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. Prior
Managing Director 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. Prior
Managing Director 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 1997. Prior to
Senior Vice President 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. Prior
Managing Director 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.
</TABLE>
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 date-related 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.
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?
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.
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:
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
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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) $-- $-- $--
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) $-- $-- $--
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) $.99 $.97 $-- $-- $-- $--
Putnam VT Voyager
Fund
1998 $41.55 $(.01)a $4.27 $4.26 $-- $-- $-- $--
<CAPTION>
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(%)(c) (in thousands) Assets(%)(d) Assets(%) Turnover (%)
<S> <C> <C> <C> <C> <C> <C> <C>
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
* 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.
</TABLE>
For more information
about the funds of Putnam Variable Trust
The Trust's statement of additional information (SAI) and annual and
semi-annual reports to shareholders include additional information about
the funds. The SAI, and the auditor's report and financial statements
included in the Trust's most recent annual report to the funds'
shareholders, 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
FORM N-1A
PART B
STATEMENT OF ADDITIONAL INFORMATION ("SAI")
April 30, 1999
This SAI is not a prospectus and is only authorized for distribution when
accompanied or preceded by the prospectuses of the Trust dated April 30,
1998, as revised from time to time.
This SAI contains information which may be useful to investors but which
is not included in the prospectus. If the Trust has more than one form of
current prospectus, each reference to the prospectus in this SAI shall
include all of the Trust's prospectuses, unless otherwise noted. The SAI
should be read together with the applicable prospectus. Investors may
obtain a free copy of the applicable prospectus from Putnam Investor
Services, Mailing address: P.O. Box 41203, Providence, RI 02940-1203.
The 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 1-800-225-1581.
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 lower-rated
securities fluctuate in response to changes in interest rates. A decrease
in interest rates will generally result in an increase in the value of a
fund's assets. Conversely, during periods of rising interest rates, the
value of a fund's assets will generally decline. The values of lower-rated
securities may often be affected to a greater extent by changes in general
economic conditions and business conditions affecting the issuers of such
securities and their industries. Negative publicity or investor
perceptions may also adversely affect the values of lower-rated
securities. Changes by recognized rating services in their ratings of any
fixed-income security and changes in the ability of an issuer to make
payments of interest and principal may also affect the value of these
investments. Changes in the value of portfolio securities generally will
not affect income derived from these securities, but 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 "zero-coupon" bonds
and "payment-in-kind" bonds identified in the prospectus, unless otherwise
specified in the prospectus. Zero-coupon bonds are issued at a significant
discount from their principal amount in lieu of paying interest
periodically. Payment-in-kind bonds allow the issuer, at its option, to
make current interest payments on the bonds either in cash or in
additional bonds. Because zero-coupon bonds and payment-in-kind bonds do
not pay current interest in cash, their values are subject to greater
fluctuation in response to changes in market interest rates than bonds
that pay interest currently in cash. Both zero-coupon and payment-in-kind
bonds allow an issuer to avoid the need to generate cash to meet current
interest payments. Accordingly, such bonds may involve greater credit
risks than bonds paying interest currently in cash. A fund is nonetheless
required to accrue interest income on such 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 mortgage-backed securities (IOs
and POs), it may do so without limit. None of the funds, however,
currently intends to invest more than 15% of its assets in inverse
floating obligations or more than 35% of its assets in IOs and POs under
normal market conditions.
Private Placements
Each fund may invest in securities that are purchased in private
placements and, accordingly, are subject to restrictions on resale as a
matter of contract or under federal securities laws. Because there may be
relatively few potential purchasers for such investments, especially under
adverse market or economic conditions or in the event of adverse changes
in the financial condition of the issuer, a fund could find it more
difficult to sell such securities when Putnam Management believes it
advisable to do so or may be able to sell such securities only at prices
lower than if such securities were more widely held. At times, it may also
be more difficult to determine the fair value of such securities for
purposes of computing the fund's net asset value.
While such private placements may often offer attractive opportunities for
investment not otherwise available on the open market, the securities so
purchased are often "restricted securities," i.e., securities which cannot
be sold to the public without registration under the Securities Act of
1933 or the availability of an exemption from registration (such as Rules
144 or 144A), or which are "not readily marketable" because they are
subject to other legal or contractual delays in or restrictions on resale.
The absence of a trading market can make it difficult to ascertain a
market value for illiquid investments. Disposing of illiquid investments
may involve time-consuming negotiation and legal expenses, and it may be
difficult or impossible for the fund to sell them promptly at an
acceptable price. The fund may have to bear the extra expense of
registering such securities for resale and the risk of substantial delay
in effecting such registration. Also market quotations are less readily
available. The judgment of Putnam Management may at times play a greater
role in valuing these securities than in the case of unrestricted
securities.
Generally speaking, restricted securities may be sold only to qualified
institutional buyers, or in a privately negotiated transaction to a
limited number of purchasers, or in limited quantities after they have
been held for a specified period of time and other conditions are met
pursuant to an exemption from registration, or in a public offering for
which a registration statement is in effect under the Securities Act of
1933. A fund may be deemed to be an "underwriter" for purposes of the
Securities Act of 1933 when selling restricted securities to the public,
and in such event the fund may be liable to purchasers of such securities
if the registration statement prepared by the issuer, or the prospectus
forming a part of it, is materially inaccurate or misleading.
Loan Participations
A fund may invest in "loan participations." By purchasing a loan
participation, a fund acquires some or all of the interest of a bank or
other lending institution in a loan to a particular borrower. Many such
loans are secured, and most impose restrictive covenants which must be met
by the borrower.
The loans in which a fund may invest are typically made by a syndicate of
banks, represented by an agent bank which has negotiated and structured
the loan and which is responsible generally for collecting interest,
principal, and other amounts from the borrower on its own behalf and on
behalf of the other lending institutions in the syndicate and for
enforcing its and their other rights against the borrower. Each of the
lending institutions, including the agent bank, lends to the borrower a
portion of the total amount of the loan, and retains the corresponding
interest in the loan.
A fund's ability to receive payments of principal and interest and other
amounts in connection with loan participations held by it will depend
primarily on the financial condition of the borrower. The failure by a
fund to receive scheduled interest or principal payments on a loan
participation would adversely affect the income of the fund and would
likely reduce the value of its assets, which would be reflected in a
reduction in a fund's net asset value. Banks and other lending
institutions generally perform a credit analysis of the borrower before
originating a loan or participating in a lending syndicate. In selecting
the loan participations in which a fund will invest, however, Putnam
Management will not rely solely on that credit analysis, but will perform
its own investment analysis of the borrowers. Putnam Management's analysis
may include consideration of the borrower's financial strength and
managerial experience, debt coverage, additional borrowing requirements or
debt maturity schedules, changing financial conditions, and responsiveness
to changes in business conditions and interest rates. Because loan
participations in which a fund may invest are not generally rated by
independent credit rating agencies, a decision by a fund to invest in a
particular loan participation will depend almost exclusively on Putnam
Management's and the original lending institutions credit analysis of the
borrower.
Loan participations may be structured in different forms, including
novations, assignments, and participating interests. In a novation, a fund
assumes all of the rights of a lending institution in a loan, including
the right to receive payments of principal and interest and other amounts
directly from the borrower and to enforce its rights as a lender directly
against the borrower. A fund assumes the position of a co-lender with
other syndicate members. As an alternative, a fund may purchase an
assignment of a portion of a lender's interest in a loan. In this case, a
fund may be required generally to rely upon the assigning bank to demand
payment and enforce its rights against the borrower, but would otherwise
be entitled to all of such bank's rights in the loan. A fund may also
purchase a participating interest in a portion of the rights of a lending
institution in a loan. In such case, it will be entitled to receive
payments of principal, interest, and premium, if 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 mortgage-related security is
inaccurately predicted, a fund may not be able to realize the rate of
return it expected.
Mortgage-backed securities are less effective than other types of
securities as a means of "locking in" attractive long-term interest rates.
One reason is the need to reinvest prepayments of principal; another is
the possibility of significant unscheduled prepayments resulting from
declines in interest rates. These prepayments would have to be reinvested
at lower rates. As a result, these securities may have less potential for
capital appreciation during periods of declining interest rates than other
securities of comparable maturities, although they may have a similar risk
of decline in market value during periods of rising interest rates.
Prepayments may also significantly shorten the effective maturities of
these securities, especially during periods of declining interest rates.
Conversely, during periods of rising interest rates, a reduction in
prepayments may increase the effective maturities of these securities,
subjecting them to a greater risk of decline in 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 mortgage-backed securities,
potentially limiting a fund's ability to buy or sell those securities at
any particular time.
Structured notes
Each fund may invest in so-called structured notes. These securities are
generally derivative instruments whose value is tied to an underlying
index or other security or asset class. Such structured notes may include,
for example, notes that allow a fund to invest indirectly in certain
foreign investments which the fund would otherwise would not be able to
directly invest, often because of restrictions imposed by local laws.
Securities Loans
Each fund may make secured loans of its portfolio securities, on either a
short-term or long-term basis, amounting to not more than 25% of its total
assets, thereby realizing additional income. The risks in lending
portfolio securities, as with other extensions of credit, consist of
possible delay in recovery of the securities or possible loss of rights in
the collateral should the borrower fail financially. As a matter of
policy, securities loans are made to broker-dealers pursuant to agreements
requiring that the loans be continuously secured by collateral consisting
of cash or short-term debt obligations at least equal at all times to the
value of the securities on loan, "marked-to-market" daily. The borrower
pays to the fund an amount equal to any dividends or interest received on
securities lent. The fund retains all or a portion of the interest
received on investment of the cash collateral or receives a fee from the
borrower. Although voting rights, or rights to 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 over-the-counter call and put options on foreign
currency futures contracts and on foreign currencies. A fund may also
enter into contracts to purchase or sell foreign currencies at a future
date ("forward contracts") and purchase and sell foreign currency futures
contracts.
A fund's currency hedging transactions may call for the delivery of one
foreign currency in exchange for another foreign currency and may at times
not involve currencies in which its portfolio securities are then
denominated. Putnam Management will engage in such "cross hedging"
activities when it believes that such transactions provide significant
hedging opportunities for a fund.
Cross hedging transactions by a fund involve the risk of imperfect
correlation between changes in the values of the currencies to which such
transactions relate and changes in the value of the currency or other
asset or liability which is the subject of the hedge.
For transaction hedging purposes, a fund may also purchase exchange-listed
and over-the-counter call and put options on foreign currency futures
contracts and on foreign currencies. A put option on a futures contract
gives the fund the right to assume a short position in the futures
contract until expiration of the option. A put option on a currency gives
the fund the right to sell the currency at an exercise price until the
expiration of the option. A call option on a futures contract gives the
fund the right to assume a long position in the futures contract until the
expiration of the option. A call option on a currency gives the fund the
right to purchase the currency at the exercise price until the expiration
of the option.
A fund may engage in position hedging to protect against a decline in the
value relative to the U.S. dollar of the currencies in which its portfolio
securities are denominated or quoted (or an increase in the value of the
currency in which the securities the fund intends to buy are denominated,
when the fund holds cash or short-term investments). For position hedging
purposes, the fund may purchase or sell, on exchanges or in
over-the-counter markets, foreign currency futures contracts, foreign
currency forward contracts and options on foreign currency futures
contracts and on foreign currencies on exchanges or in over-the-counter
markets. In connection with position hedging, a fund may also purchase or
sell foreign currency on a spot basis.
It is impossible to forecast with precision the market value of portfolio
securities at the expiration or maturity of a forward or futures contract.
Accordingly, it may be necessary for a fund to purchase additional foreign
currency on the spot market (and bear the expense of such purchase) if the
market value of the security or securities being hedged is less than the
amount of foreign currency the fund is obligated to deliver and a decision
is made to sell the security or securities and make delivery of the
foreign currency. Conversely, it may be necessary to sell on the spot
market some of the foreign currency received upon the sale of the
portfolio security or securities if the market value of such security or
securities exceeds the amount of foreign currency the fund is obligated to
deliver.
Transaction and position hedging do not eliminate fluctuations in the
underlying prices of the securities which the fund owns or intends to
purchase or sell. They simply establish a rate of exchange which one can
achieve at some future point in time. Additionally, although these
techniques tend to minimize the risk of loss due to a decline in the value
of the hedged currency, they tend to limit any potential gain which might
result from the increase in value of such currency. See "Risk factors in
options transactions" above.
A fund may seek to increase its current return or to offset some of the
costs of hedging against fluctuations in current exchange rates by writing
covered call options and covered put options on foreign currencies. The
fund receives a premium from writing a call or put option, which increases
the fund's current return if the option expires unexercised or is closed
out at a net profit. The fund may terminate an option that it has written
prior to its expiration by entering into a closing purchase transaction in
which it purchases an option having the same terms as the option written.
The fund's currency hedging transactions may call for the delivery of one
foreign currency in exchange for another foreign currency and may at times
not involve currencies in which its portfolio securities are then
denominated. Putnam Management will engage in such "cross hedging"
activities when it believes that such transactions provide significant
hedging opportunities for the fund. Cross hedging transactions by the fund
involve the risk of imperfect correlation between changes in the values of
the currencies to which such transactions relate and changes in the value
of the currency or other asset or liability which is the subject of the
hedge.
The fund may also engage in non-hedging currency transactions. For
example, Putnam Management may believe that exposure to a currency is in
the fund's best interest but that securities denominated in that currency
will not assist the fund in meeting its objective. In that case the fund
may purchase a currency forward contract or option in order to increase
its exposure to the currency. In accordance with SEC regulations, the fund
will segregate liquid assets in its portfolio to cover forward contracts
used for non-hedging purposes.
The value of any currency, including U.S. dollars and foreign currencies,
may be affected by complex political and economic factors applicable to
the issuing country. In addition, the exchange rates of foreign currencies
(and therefore the values of foreign currency options, forward contracts
and futures contracts) may be affected significantly, fixed, or supported
directly or indirectly by U.S. and foreign government actions. Government
intervention may increase risks involved in purchasing or selling foreign
currency options, forward contracts and futures contracts, since exchange
rates may not be free to fluctuate in response to other market forces.
The value of a foreign currency option, forward contract or futures
contract reflects the value of an exchange rate, which in turn reflects
relative values of two currencies, the U.S. dollar and the foreign
currency in question. Because foreign currency transactions occurring in
the interbank market involve substantially larger amounts than those that
may be involved in the exercise of foreign currency options, forward
contracts and futures contracts, investors may be disadvantaged by having
to deal in an odd-lot market for the underlying foreign currencies in
connection with options at prices that are less favorable than for round
lots. Foreign governmental restrictions or taxes could result in adverse
changes in the cost of acquiring or disposing of foreign currencies.
There is no systematic reporting of last sale information for foreign
currencies and there is no regulatory requirement that quotations
available through dealers or other market sources be firm or revised on a
timely basis. Available quotation information is generally representative
of very large round-lot transactions in the interbank market and thus may
not reflect exchange rates for smaller odd-lot transactions (less than $1
million) where rates may be less favorable. The interbank market in
foreign currencies is a global, around-the-clock market. To the extent
that options markets are closed while the markets for the underlying
currencies remain open, significant price and rate movements may take
place in the underlying markets that cannot be reflected in the options
markets.
The decision as to whether and to what extent a fund will engage in
foreign currency exchange transactions will depend on a number of factors,
including prevailing market conditions, the composition of the fund's
portfolio and the availability of suitable transactions. Accordingly,
there can be no assurance that a fund will engage in foreign currency
exchange transactions at any given time or from time to time.
Currency forward and futures contracts. A forward foreign currency
contract involves an obligation to purchase or sell a specific currency at
a future date, which may be any fixed number of days from the date of the
contract as agreed by the parties, at a price set at the time of the
contract. In the case of a cancelable forward contract, the holder has the
unilateral right to cancel the contract at maturity by paying a specified
fee. The contracts are traded in the interbank market conducted directly
between currency traders (usually large commercial banks) and their
customers. A forward contract generally has no deposit requirement, and no
commissions are charged at any stage for trades. A foreign currency
futures contract is a standardized contract for the future delivery of a
specified amount of a foreign currency at a price set at the time of the
contract. Foreign currency futures contracts traded in the United States
are designed by and traded on exchanges regulated by the CFTC, such as the
New York Mercantile Exchange.
Forward foreign currency exchange contracts differ from foreign currency
futures contracts in certain respects. For example, the maturity date of a
forward contract may be any fixed number of days from the date of the
contract agreed upon by the parties, rather than a predetermined date in a
given month. Forward contracts may be in any amount agreed upon by the
parties rather than predetermined amounts. Also, forward foreign exchange
contracts are traded directly between currency traders so that no
intermediary is required. A forward contract generally requires no margin
or other deposit.
At the maturity of a forward or futures contract, the fund may either
accept or make delivery of the currency specified in the contract, or at
or prior to maturity enter into a closing transaction involving the
purchase or sale of an offsetting contract. Closing transactions with
respect to forward contracts are usually effected with the currency trader
who is a party to the original forward contract. Closing transactions with
respect to futures contracts are effected on a commodities exchange; a
clearing corporation associated with the exchange assumes responsibility
for closing out such contracts.
Positions in the foreign currency futures contracts may be closed out only
on an exchange or board of trade which provides a secondary market in such
contracts. Although a fund intends to purchase or sell foreign currency
futures contracts only on exchanges or boards of trade where there appears
to be an active secondary market, there is no assurance that a secondary
market on an exchange or board of trade will exist for any particular
contract or at any particular time. In such event, it may not be possible
to close a futures position and, in the event of adverse price movements,
the fund would continue to be required to make daily cash payments of
variation margin.
Foreign currency options. In general, options on foreign currencies
operate similarly to options on securities and are subject to many of the
risks described above. Foreign currency options are traded primarily in
the over-the-counter market, although options on foreign currencies are
also listed on several exchanges. Options are traded not only on the
currencies of individual nations, but also on the 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
over-the-counter transactions with broker-dealers or other financial
institutions, in which its investment return will depend on the change in
value of a specified security or index. A fund would typically receive
from the counterparty the amount of any increase, and pay to the
counterparty the amount of any decrease, in the value of the underlying
security or index. The contracts would thus, absent the failure of the
counterparty to complete its obligations, provide to the investing fund
approximately the same return as it would have realized if it had owned
the security or index directly.
A fund's ability to realize a profit from such transactions will depend on
the ability of the financial institutions with which it enters into the
transactions to meet their obligations to the fund. Under certain
circumstances, suitable transactions may not be available to the funds, or
the fund may be unable to close out their positions under such
transactions at the same time, or at the same price, as if they purchased
comparable publicly traded securities.
Derivatives
Certain of the instruments in which the funds may invest, such as futures
contracts, options and forward contracts, are considered to be
"derivatives." Derivatives are financial instruments whose value depends
upon, or is derived from, the value of an underlying asset, such as a
security or an index. Further information about specific derivatives and
the risks involved in their use is included elsewhere in the prospectus or
in this SAI.
Year 2000
Like other financial and business organizations, the funds depend on the
proper function of their service providers' computer systems. To the
extent that the systems used by the funds or their service providers
cannot distinguish between the year 1900 and the year 2000 or have other
operating difficulties as a result of the year 2000, the operations of and
services provided to the funds and their shareholders could be adversely
impacted. Putnam Management and its affiliates have reported that each
expects to modify its systems, as necessary, to address this so-called
"year 2000 problem," and will, on behalf of the funds, inquire as to the
year 2000 compliance of the funds' other major service providers. However,
there can be no assurance that the operations of and services provided to
the funds and their shareholders will not be adversely affected.
Similarly, companies in which the funds invest may also experience "year
2000 problems," which could ultimately result in losses to a fund to the
extent that the securities of any such company decline in value as a
result of a "year 2000 problem."
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:
Putnam VT Putnam VT Putnam VT Putnam VT Putnam VT Putnam VT
Asia Pacific Diversified Global Asset Global Growth and High Yield
Trustee/Year Growth Fund Income Fund Allocation Fund Growth Fund Income Fund Fund
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Jameson A. Baxter/1994 (4) 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:
Putnam VT Putnam VT Putnam VT Putnam VT Putnam VT Putnam VT
International International Growth International New Money New Value New
Trustee/Year Growth Fund and Income Fund Opportunities Fund Market Fund Fund Opportunities Fund
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
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 Income
Trustee/Year Fund Growth Fund Fund of Boston Fund Fund
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
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:
Putnam VT Total compensation
Utilities Growth Putnam VT Putnam VT All Putnam from all Putnam
Trustee/Year and Income Fund Vista Fund Voyager Fund funds (2) funds (3)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
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>
<TABLE>
<CAPTION>
COMPENSATION TABLE (continued)
Estimated Aggregate compensation (1) from:
Putnam VT
Small Cap
Trustee/Year Fund+
- -------------------------------------------------------
<S> <C>
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>
<TABLE>
<CAPTION>
COMPENSATION TABLE
Pension or retirement benefits accrued as part of fund expenses (3) from:
Putnam VT Putnam VT Putnam VT Putnam VT Putnam VT Putnam VT
Asia Pacific Diversified Global Asset Global Growth and High Yield
Trustee/Year Growth Fund Income Fund Allocation Fund Growth Fund Income Fund Fund
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Jameson A. Baxter/1994 (4) 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:
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
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
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:
Putnam VT Putnam VT
Utilities Growth Income Putnam VT Putnam VT
Trustee/Year and Income Fund Fund Vista Fund++ Voyager Fund
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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:
Putnam VT
Putnam VT Putnam VT The George Putnam VT
Putnam VT OTC & Emerging Health Sciences Putnam Fund Putnam VT Small Cap
Trustee/Year Investors Fund++ Growth Fund++ Fund++ of Boston++ Research Fund++ Value Fund++
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
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
+ 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.
</TABLE>
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%
** 1 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%
** 2 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%
* 3
Putnam VT Global Asset
Allocation Fund 1.24%
Putnam VT Global Growth Fund 1.57%
** 3 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%
(c) Putnam Capital Manager Trust Separate Account VLII
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 *
** 4 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%
(c) Putnam Capital Manager Trust Separate Account VLII
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 *
** 5 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%
* 5
(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%
(c) Paragon IVUL
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%
(c) IDS Life Variable Life Separate Account
Putnam VT New 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%
(c) Variable Annuity Account Eight
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%
** 6 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 tax-exempt
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 publicly-owned holding company whose principal
businesses are international insurance and reinsurance brokerage, employee
benefit consulting and investment management.
Trustees and officers of a fund who are also officers of Putnam Management
or its affiliates or who are stockholders of Marsh & McLennan Companies,
Inc. will benefit from the advisory fees, sales commissions, distribution
fees, custodian fees and transfer agency fees paid or allowed by the fund.
The Management Contract
Under a Management Contract between the Trust and Putnam Management dated
October 2, 1987, as supplemented March 2, 1990, and as further
supplemented February 27, 1992, July 9, 1993, April 5, 1994, June 2, 1994,
April 7, 1995, July 13, 1995, July 11, 1996 and as further supplemented,
December 20, 1996, February 6, 1998, and July 10, 1998 and 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:
<TABLE>
<CAPTION>
Fund Rate
<S> <C>
Putnam VT International New 1.20% of the first $500 million of average net assets, 1.10% of the next $500 million, 1.05%
Opportunities Fund 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 0.80% of the first $500 million of average net assets, 0.70% of the next $500 million, 0.65%
Growth Fund, of the next $500 million, 0.60% of the next $5 billion, 0.575% of the next $5 billion, 0.555%
Putnam VT International of the next $5 billion, 0.54% of the next $5 billion, and 0.53% of any excess thereafter.
Growth Fund, and
Putnam VT International
Growth and
Income Fund
Putnam VT Diversified Income Fund, 0.70% of the first $500 million of average net assets, 0.60% of the next $500 million,
Putnam VT Global Asset 0.55% of the next $500 million, 0.50% of the next $5 billion, 0.475% of the next $5 billion,
Allocation Fund, Fund 0.455% of the next $5 billion, 0.44% of the next $5 billion and 0.43% of any excess
Putnam VT Health Sciences thereafter.
Fund
Putnam VT High Yield Fund,
Putnam VT New Opportunities
Fund,
Putnam VT New Value Fund,
Putnam VT OTC & Emerging
Growth Fund,
Putnam VT Utilities Growth
and Income Fund and
Putnam VT Voyager Fund
Putnam VT Growth and Income Fund, 0.65% of the first $500 million of average net assets, 0.55% of the next $500 million, 0.50%
Putnam VT Investors Fund, of the next $500 million, 0.45% of the next $5 billion, 0.425%of the next $5 billion, 0.405%
Putnam VT The George Putnam of the next $5 billion, 0.39% of thenext $5 billion and 0.38% of any excess thereafter.
Fund of Boston,
Putnam VT Research Fund,
Putnam VT Income Fund
Putnam VT Vista Fund
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% ofany excess thereafter.
The Trust pays affiliates of Putnam Management additional amounts for
investor servicing and custody services.
</TABLE>
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 Reflecting a reduction
in the following
Fiscal Management amounts pursuant to
Fund name year fee paid an expense limitation
- ---------------------------------- ------- ----------- ---------------------
<S> <C> <C> <C>
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
* Commencement of operations January 2, 1997
+ Commencement of operations April 30, 1998
++ Commencement of operations September 30, 1998
</TABLE>
Portfolio Transactions
Investment decisions. Investment decisions for each of the funds and for
the other investment advisory clients of Putnam Management and its
affiliates are made with a view to achieving their respective investment
objectives. Investment decisions are the product of many factors in
addition to basic suitability for the particular client involved. Thus, a
particular security may be bought or sold for certain clients even though
it could have been bought or sold for other clients at the same time.
Likewise, a particular security may be bought for one or more clients when
one or more other clients are selling the security. In some instances, one
client may sell a particular security to another client. It also sometimes
happens that two or more clients simultaneously purchase or sell the same
security, in which event each day's transactions in such security are,
insofar as possible, averaged as to price and allocated between such
clients in a manner which in Putnam Management's opinion is equitable to
each and in accordance with the amount being purchased or sold by each.
There may be circumstances when purchases or sales of portfolio securities
for one or more clients will have an adverse effect on other clients.
Brokerage and research services. Transactions on U.S. stock exchanges,
commodities markets and futures markets and other agency transactions
involve the payment by the Trust of negotiated brokerage commissions. Such
commissions vary among different brokers. Also, a particular broker may
charge different commissions according to such factors as the difficulty
and size of the transaction. Transactions in foreign investments often
involve the payment of fixed brokerage commissions, which may be higher
than those in the United States. There is generally no stated commission
in the case of securities traded in the over-the-counter markets, but the
price paid by the Trust usually includes an undisclosed dealer commission
or mark-up. In underwritten offerings, the price paid includes a
disclosed, fixed commission or discount retained by the underwriter or
dealer.
It has for many years been a common practice in the investment advisory
business for advisers of investment companies and other institutional
investors to receive "brokerage and research services" (as defined in the
Securities Exchange Act of 1934, as amended (the "1934 Act")) from
broker-dealers that execute portfolio transactions for the clients of such
advisers and from third parties with which these broker-dealers have
arrangements. Consistent with this practice, Putnam Management receives
brokerage and research services and other similar services from many
broker-dealers with which Putnam Management places the funds' portfolio
transactions and from third parties with which these broker-dealers have
arrangements. These services include such matters as general economic and
market reviews, industry and company reviews, evaluations of investments,
recommendations as to the purchase and sale of investments, newspapers,
magazines, pricing services, quotation services, news services and
personal computers utilized by Putnam Management's managers and analysts.
Where the services referred to above are not used exclusively by Putnam
Management for research purposes, Putnam Management, based upon its own
allocations of expected use, bears that portion of the cost of these
services which directly relates to their non-research use. Some of these
services are of value to Putnam Management and its affiliates in advising
various of their clients (including the Trust), although not all of these
services are necessarily useful and of value in managing the Trust. The
management fee paid by the Trust is not reduced because Putnam Management
and its affiliates receive these services even though Putnam Management
might otherwise be required to purchase some of these services for cash.
Putnam Management places all orders for the purchase and sale of portfolio
investments for each fund and buys and sells investments for each fund
through a substantial number of brokers and dealers. In so doing, Putnam
Management uses its best efforts to obtain for each fund the most
favorable price and execution available, except to the extent it may be
permitted to pay higher brokerage commissions as described below. In
seeking the most favorable price and execution, Putnam Management, having
in mind each fund's best interests, considers all factors it deems
relevant, including, by way of illustration, price, the size of the
transaction, the nature of the market for the security or other
investment, the amount of the commission, the timing of the transaction
taking into account market prices and trends, the reputation, experience
and financial stability of the broker-dealer involved and the quality of
service rendered by the broker-dealer in other transactions.
As permitted by Section 28(e) of the 1934 Act, and by the Management
Contract, Putnam Management may cause a fund to pay a broker-dealer which
provides "brokerage and research services" (as defined in the 1934 Act) to
Putnam Management an amount of disclosed commission for effecting
securities transactions on stock exchanges and other agency transactions
for the fund on an agency basis in excess of the commission which another
broker-dealer would have charged for effecting that transaction. Putnam
Management's authority to cause a fund to pay any such greater commissions
is also subject to such policies as the Trustees may adopt from time to
time. Putnam Management does not currently intend to cause the Trust to
make such payments. It is the position of the staff of the Securities and
Exchange Commission that Section 28(e) does not apply to the payment of
such greater commissions in "principal" transactions. Accordingly, Putnam
Management will use its best efforts to 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.
<TABLE>
<CAPTION>
Fiscal Brokerage
Fund name year commissions
- ------------------------------- -------- -----------
<S> <C> <C>
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.
</TABLE>
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
----------------------------------------------------------------------
1 5 10 Life
Putnam VT Fund Yield* year years years of fund
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
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%
* 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.
</TABLE>
<TABLE>
<CAPTION>
Class IB Shares
Total Return
----------------------------------------------------------------------
1 5 10 Life
Putnam VT Fund Yield* year years years of fund
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
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
* 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,
institutional-size trading units of such securities using methods based on
market transactions for comparable securities and various relationships
between securities which are generally recognized by institutional
traders. If any securities held by a fund are restricted as to resale,
Putnam Management determines their fair value following procedures
approved by the Trustees. The fair value of such securities is generally
determined as the amount which the fund could reasonably expect to realize
from an orderly disposition of such securities over a reasonable period of
time. The valuation procedures applied in any specific instance are likely
to vary from case to case. However, consideration is generally given to
the financial position of the issuer and other fundamental analytical data
relating to the investment and to the nature of the restrictions on
disposition of the securities (including any registration expenses that
might be borne by the fund in connection with such disposition). In
addition, specific factors are also generally considered, such as the cost
of the investment, the market value of any unrestricted securities of the
same class, the size of the holding, the prices of any recent transactions
or offers with respect to such securities and any available analysts'
reports regarding the issuer.
Generally, trading in certain securities (such as foreign securities) is
substantially completed each day at various times prior to the close of
the Exchange. The values of these securities used in determining the net
asset value of the Trust's shares are computed as of such times. Also,
because of the amount of time required to collect and process trading
information as to large numbers of securities issues, the values of
certain securities (such as convertible bonds, U.S. government securities,
and tax-exempt securities) are determined based on market quotations
collected earlier in the day at the latest practicable time prior to the
close of the Exchange. Occasionally, events affecting the value of such
securities may occur between such times and the close of the Exchange
which will not be reflected in the computation of the funds' net asset
values. If events materially affecting the values of such securities occur
during such period, then these securities will be valued at their fair
value following procedures approved by the Trustees. In addition,
securities held by some of the funds may be traded in foreign markets that
are open for business on days that a fund is not, and the trading of such
securities on those days may have an impact on the value of a
shareholder's investment at a time when the shareholder cannot buy and
sell shares of the fund.
DISTRIBUTION PLAN
The Trust has adopted a distribution plan with respect to class IB shares,
the principal features of which are described in the prospectus. This SAI
contains additional information which may be of interest to investors.
Continuance of the plan is subject to annual approval by a vote of the
Trustees, including a majority of the Trustees who are not interested
persons of a fund and who have no direct or indirect interest in the plan
or related arrangements (the "Qualified Trustees"), cast in person at a
meeting called for that purpose. All material amendments to the plan must
be likewise approved by the Trustees and the Qualified Trustees. The class
IB plan may not be amended in order to increase materially the costs which
a fund may bear for distribution pursuant to such plan without also being
approved by a majority of the outstanding voting securities of a fund. The
class IB plan may terminate automatically in the event of its assignment
and may be terminated without penalty, at any time, by a vote of a
majority of the Qualified Trustees or by a vote of a majority of the
outstanding voting securities of the fund or the relevant class of a fund,
as the case may be.
Putnam Mutual Funds pays service fees to insurance companies and their
affiliated dealers at the rates set forth in the Prospectus. Service fees
are paid quarterly to the insurance company or dealer of record for that
quarter.
Financial institutions receiving payments from Putnam Mutual Funds as
described above may be required to comply with various state and federal
regulatory requirements, including among others those regulating the
activities of insurance companies and securities brokers or dealers.
Except as otherwise agreed between Putnam Mutual Funds and a dealer, for
purposes of determining the amounts payable to insurance companies or
their affiliates, "average net asset value" means the product of (i) the
average daily share balance in such account(s) and (ii) the average daily
net asset value of the relevant class of shares over the quarter.
During fiscal 1998, class IB shares of the funds paid the following 12b-1
fees to Putnam Mutual Funds:
Putnam VT Asia Pacific
Growth Fund $ 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 third-party broker having an agreement
with the subcustodians. The Trust pays PFTC an annual fee based on each
fund's assets, securities transactions and securities holdings and
reimburses PFTC for certain out-of-pocket expenses incurred by it or any
subcustodian employed by it in performing custodial services.
INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS
PricewaterhouseCoopers LLP are the Trust's independent accountants,
providing audit services, tax return review and other tax consulting
services and assistance and consultation in connection with the review of
various Securities and Exchange Commission filings. The Report of
Independent Accountants and financial statements included in the Trust's
Annual Report for the fiscal year ended December 31, 1998 filed
electronically on 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.
PUTNAM VARIABLE TRUST
FORM N-1A
PART C
OTHER INFORMATION
Item 23. Exhibits
1. Agreement and Declaration of Trust dated
September 24, 1987, as revised January 1,
1997 -- Incorporated by reference to Post-
Effective Amendment No. 14 to the
Registrant's Registration Statement.
2. By-Laws, as amended through January 30,
1997 -- Incorporated by reference to Post-
Effective Amendment No. 14 to the
Registrant's Registration Statement.
3a. Portions of Agreement and Declaration of
Trust Relating to Shareholders' Rights --
Incorporated by reference to Post-
Effective Amendment No. 14 to the
Registrant's Registration Statement.
3b. Portions of By-Laws Relating to
Shareholders' Rights -- Incorporated by
reference to Post-Effective Amendment No.
14 to the Registrant's Registration
Statement.
4. Management Contract dated October 2, 1987,
as supplemented March 2, 1990, as further
supplemented February 27, 1992, July 9,
1993, April 5, 1994, June 2, 1994, April
7, 1995, July 13, 1995, July 11, 1996,
December 20, 1996, February 6, 1998, July
10, 1998 and March 4, 1999 - Exhibit 1.
5a. Distributor's Contract dated May 6, 1994 -
Incorporated by reference to Post-
Effective Amendment No. 10 to the
Registrant's Registration Statement.
5b. Form of Specimen Dealer Sales Contract -
Incorporated by reference to Post-
Effective Amendment No. 11 to the
Registrant's Registration Statement.
5c. Form of Specimen Financial Institution
Sales Contract -- Incorporated by
reference to Post-Effective Amendment No.
11 to the Registrant's Registration
Statement.
6. Not applicable.
7. Custodian Agreement with Putnam Fiduciary
Trust Company dated May 3, 1991, as
amended July 13, 1992 -- Incorporated by
reference to Post-Effective Amendment No.
10 to the Registrant's Registration
Statement.
8. Investor Servicing Agreement dated June 3,
1991 with Putnam Fiduciary Trust Company -
Incorporated by reference to Post-
Effective Amendment No. 10 to the
Registrant's Registration Statement.
9. Opinion of Ropes & Gray, including consent
-- Incorporated by reference to Post-
Effective Amendment No. 10 to the
Registrant's Registration Statement.
10. Not applicable.
11. Not applicable.
12. Investment Letters from Putnam Investment
Management, Inc. to the Registrant --
Incorporated by reference to Pre-Effective
Amendment No. 10 to the Registrant's
Registration Statement.
13a. Class IB Distribution Plan and Agreement -
-Incorporated by reference to Post-
Effective Amendment No. 15 to the
Registrant's Registration Statement.
13b. Form of Specimen Dealer Service Agreement
- Incorporated by reference to Post-
Effective Amendment No. 15 to the
Registrant's Registration Statement.
13c. Form of Specimen Financial Institution
Service Agreement - Incorporated by
reference to Post-Effective Amendment No.
15 to the Registrant's Registration Statement.
14a. Financial Data Schedule - Putnam VT Asia
Pacific Growth Fund Class IA Shares --
Exhibit 2.
14b. Financial Data Schedule - Putnam VT Asia
Pacific Growth Fund Class IB Shares --
Exhibit 3.
14c. Financial Data Schedule - Putnam VT
Diversified Income Fund Class IA Shares --
Exhibit 4.
14d. Financial Data Schedule - Putnam VT
Diversified Income Fund Class IB Shares --
Exhibit 5.
14e. Financial Data Schedule - Putnam VT The George
Putnam Fund of Boston Class IA Shares -- Exhibit 6.
14f. Financial Data Schedule - Putnam VT The George
Putnam Fund of Boston Class IB Shares -- Exhibit 7.
14g. Financial Data Schedule - Putnam VT Global
Asset Allocation Fund Class IA Shares --
Exhibit 8.
14h. Financial Data Schedule Putnam VT Global
Asset Allocation Fund Class IB Shares --
Exhibit 9.
14i. Financial Data Schedule - Putnam VT Global
Growth Fund Class IA Shares -- Exhibit 10.
14j. Financial Data Schedule - Putnam VT Global
Growth Fund Class IB Shares -- Exhibit 11.
14k. Financial Data Schedule - Putnam VT Growth
and Income Fund Class IA Shares -- Exhibit
12.
14l. Financial Data Schedule - Putnam Growth
and Income Fund Class IB Shares -- Exhibit
13.
14m. Financial Data Schedule - Putnam VT Health
Sciences Fund Class IA Shares -- Exhibit
14.
14n. Financial Data Schedule - Putnam VT Health
Sciences Fund Class IB Shares -- Exhibit
15.
14o. Financial Data Schedule - Putnam VT High
Yield Fund Class IA Shares -- Exhibit 16.
14p. Financial Data Schedule - Putnam VT High
Yield Fund Class IB Shares -- Exhibit 17.
14q. Financial Data Schedule - Putnam VT
International Growth Fund Class IA Shares
-- Exhibit 18.
14r. Financial Data Schedule - Putnam VT
International Growth Fund Class IB Shares
-- Exhibit 19.
14s. Financial Data Schedule - Putnam VT
International Growth and Income Fund Class
IA Shares -- Exhibit 20.
14t. Financial Data Schedule - Putnam VT
International Growth and Income Fund Class
IB Shares -- Exhibit 21.
14u. Financial Data Schedule - Putnam VT
International New Opportunities Fund Class
IA Shares -- Exhibit 22.
14v. Financial Data Schedule - Putnam VT
International New Opportunities Fund Class
IB Shares -- Exhibit 23.
14w. Financial Data Schedule - Putnam VT
Investors Fund Class IA Shares -- Exhibit
24.
14x. Financial Data Schedule - Putnam VT
Investors Fund Class IB Shares -- Exhibit
25.
14y. Financial Data Schedule - Putnam VT Money
Market Fund Class IA Shares -- Exhibit 26.
14z. Financial Data Schedule - Putnam VT Money
Market Fund Class IB Shares -- Exhibit 27.
14aa. Financial Data Schedule - Putnam VT New
Opportunities Fund Class IA Shares --
Exhibit 28.
14bb. Financial Data Schedule - Putnam VT New
Opportunities Fund Class IB Shares --
Exhibit 29.
14cc. Financial Data Schedule - Putnam VT New
Value Fund Class IA Shares -- Exhibit 30.
14dd. Financial Data Schedule - Putnam VT New
Value Fund Class IB Shares -- Exhibit 31.
14ee. Financial Data Schedule - Putnam VT OTC &
Emerging Growth Fund Class IA Shares --
Exhibit 32.
14ff. Financial Data Schedule - Putnam VT OTC &
Emerging Growth Fund Class IB Shares --
Exhibit 33.
14gg. Financial Data Schedule - Putnam VT
Research Fund Class IA Shares -- Exhibit
34.
14hh. Financial Data Schedule - Putnam VT
Research Fund Class IB Shares -- Exhibit
35.
14ii. Financial Data Schedule - Putnam VT U.S.
Government and High Quality Bond Fund
Class IA Shares -- Exhibit 36.
14jj. Financial Data Schedule - Putnam VT U.S.
Government and High Quality Bond Fund
Class IB Shares -- Exhibit 37.
14kk. Financial Data Schedule - Putnam VT
Utilities Growth and Income Fund Class IA
Shares -- Exhibit 38.
14ll. Financial Data Schedule - Putnam VT
Utilities Growth and Income Fund Class IB
shares -- Exhibit 39.
14mm. Financial Data Schedule - Putnam VT Vista
Fund Class IA Shares -- Exhibit 40.
14nn. Financial Data Schedule - Putnam VT Vista
Fund Class IB Shares -- Exhibit 41.
14oo. Financial Data Schedule - Putnam VT
Voyager Fund Class IA Shares -- Exhibit
42.
14pp. Financial Data Schedule - Putnam VT
Voyager Fund Class IB Shares -- Exhibit
43.
15. Rule 18f-3(d) Plan - Incorporated by
reference to Post-Effective Amendment No.
15 to the Registrant's Registration
Statement.
Item 24. Persons Controlled by or under Common Control with the Fund
None.
Item 25. Indemnification
The information required by this item is incorporated by
reference to the Registrant's Initial Registration Statement on Form N-
1A under the Investment Company Act of 1940 (File No. 811- 5346).
<PAGE>
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Except as set forth below, the directors and officers of the
Registrant's investment adviser have been engaged during the past
two fiscal years in no business, vocation or employment of a
substantial nature other than as directors or officers of the
investment adviser or certain of its corporate affiliates.
Certain officers of the investment adviser serve as officers of
some or all of the Putnam funds. The address of the investment
adviser, its corporate affiliates and the Putnam Funds is one Post
Office Square, Boston, Massachusetts 02109.
NAME
NON-PUTNAM BUSINESS AND OTHER CONNECTIONS
Michael J. Abata
Assistant Vice President
Prior to May, 1997, Assistant Vice President, Alliance Capital
Management Corp., 1345 Avenue of the Americas, New York, NY 10020
Pankaj Aggrawal
Vice President
Prior to April, 1998, Quantitative Analyst, Vestek Systems, 388
Market St., Suite 700, San Francsico, CA 94111
Blake Anderson
Managing Director
Trustee, Salem Female Charitable Society, Salem MA 01970
Barry R. Allen
Vice Present
Prior to December, 1997, Analyst/Director of Research, Harbor
Capital Management, 125 High St., Boston, MA 02110
Maria Alma R. Aragon
Assistant Vice President
Prior to July, 1998,
Michael Arends
Senior Vice President
Prior to May, 1997, Managing Director, Equities, Phoenix Duff &
Phelps, 56 Prospect St., Hartford, CT 06101; Board Member, Donald
L. Arends, Inc., 100 Jorie Blvd., OakBrook, ILL 60523
Nikesh Arora
Vice President
Prior to April, 1997, Chief Financial Officer, Fidelity
Investments, 82 Devonshire St., Boston, MA 02110
Michael J. Atkin
Senior Vice President
Prior to July, 1997, Director of Latin America Institute of
International Finance, 2000 Pennsylvania Avenue, Washington, D.C.
20006
Jeffrey B. Augustine
Senior Vice President
Prior to January, 1998, Vice President, Investment Consulting,
Investor Tools, Inc., 100 Bridge St. Plaza, Yorkville, IL
60560
Rowland T. Bankes
Vice President
Prior to July, 1997, Senior Fixed-Income Trader, Jennison,
Jennison Associates Capital Corp., One Financial Center, Boston,
MA 02110
Robert R. Beck
Senior Vice President
Director, Charles Bridge Publishing, 85 Main St., Watertown, MA
02172; Board of Overseers, Beth Israel Deaconess Medical Center,
330 Brookline Ave., Boston, MA 02215
Carl D. Bell
Vice President
Prior to January, 1998, Principal, Smith Breedon Association,
100 Europa Drive, Suite 200, Chapel Hill, NC 27514
Richard L. Block
Senior Vice President
Prior to June, 1998, Principal, head International Equity
Trader, Morgan Stanley Asset Management, 1221 Avenue of the
Americas, New York, NY 10036
Jeffrey M. Bray
Vice President
Prior to October, 1997, Analyst, Lehman Brothers, 3 World
Financial Center, New York, NY 10285
David J. Buckle
Vice President
Prior to March, 1998, Vice President, J.P. Morgan Investment
Management, 28 King St., London, England SWI YXA
Ronald J. Bukovac
Vice President
Prior to October, 1997, Senior Manager, Valuation, Price
Waterhouse, 200 E. Randolph Drive, Chicago, IL 60601
Robert W. Burke
Senior Managing Director
Member-Executive Committee, The Ridge Club, Country Club Road,
Sandwich, MA 02563; Member-Advisory Board, Cathedral High School,
74 Union Park St., So. Boston, MA 02118
Ivka Kalus-Bystricky
Vice President
Prior to March, 1998, Management Consultant, Manager, Arthur D.
Little, Acorn Park, Cambridge, MA 02140
Diana R.M. Carney
Assistant Vice President
Prior to January, 1997, Librarian, Lipper Analytical Services,
Inc., 1380 Lawrence St., Denver, CO 80202
Richard P. Cervone
Assistant Vice President
Prior to August, 1998, Equity Analyst, Loomis, Sayles & Co.,
One Financial Center, Boston, MA, 02216.
Jack P. Chang
Vice President
Prior to July, 1997, Vice President, Columbia Management Company,
1300 S.W. 6th Ave., Portland, OR 97207
Mary Claire Chase
Vice President
Prior to January, 1997, Director of Staff Development, Arthur D.
Little Co., 25 Acorn Park, Cambridge, MA 02140
C. Beth Cotner
Senior Vice President
Director, The Lyric Stage Theater, 140 Clarendon St., Boston, MA
02116
Stephen P. Cotto
Assistant Vice President
Prior to March, 1998, Facilities Supervisor, Unicco Service
Co., 4 Copley Place, Boston, MA 02116
Kevin M. Cronin
Managing Director
Prior to February, 1997, Vice President and Portfolio Manager, MFS
Investment Management, 500 Boylston St., Boston, MA 02117
Joseph F. Cushing
Assistant Vice President
Prior to June, 1998, Investment Analyst - Fixed Income,
Metropolitan Life Insurance Company, 334 Madison Avenue, Convent
Station, NJ 07961
John R.S. Cutler
Assistant Vice President
Member, Burst Media, L.L.C., 10 New England Executive Park,
Burlington, MA 01803
Kenneth Daly
Managing Director
President, Andover River Rd. TMA, River Road Transportation
Management Association, 7 Shattuck Rd., Andover, MA 01810
Michael W. Davis
Vice President
Prior to August, 1997,
Technical Finance Consultant, Bank of America Mortgage, 50
California St., San Francisco, CA 94111
Donna M. Daylor
Vice President
Prior to April, 1998, Director of Training, UniCare Life &
Health Ins. Co., 1350 Main St., Springfield, MA. Prior to
February, 1997, Director of Training, John Hancock Mutual Life
Insurance Company, 200 Clarendon St., Boston, MA 02117
John C. Delano
Assistant Vice President
Prior to July, 1998, Senior Foreign Exchange Trader, Nationsbank,
233 So. Wacker Drive, Chicago, IL 60606
Edwin M. Denson
Vice President
Prior to November, 1997, Vice President and Senior Economist
Primark Decision Economics, 260 Franklin St., Boston, MA 02110
Ralph C. Derbyshire
Senior Vice President
Prior to November, 1997, Partner, Palmer & Dodge, One Beacon
Street, Boston, MA 02108; Board Member, MSPCC, 399 Boylston St.,
Boston, MA; Board Member, Winchester After School Program,
Skillings Rd., Winchester, MA
Michael G. Dolan
Assistant Vice President
Chairman-Finance Council, St. Mary's Parish, 44 Myrtle St.,
Melrose, MA 02176; Member, School Advisory Board, St. Mary's
School, 44 Myrtle St., Melrose, MA 02176
Mark E. Dow
Vice President
Prior to November, 1997, Economist, International Monetary Fund,
Washington, DC
Emily Durbin
Vice President
Board of Directors, Family Service, Inc., Lawrence, MA 01840
Karnig H. Durgarian
Managing Director
Board Member, EBRI, Suite 600, 2121 K St., N.W., Washington, DC
20037-1896. Trustee, American Assembly, 122 C. St., N.W., Suite
350, Washington, DC 20001
Nathan Eigerman
Vice President
Trustee, Flower Hill Trust, 298 Marlborough St., #4, Boston, MA
02116
Lisa V. Emerick
Vice President
Prior to September, 1998, Asian Sales Trader, BWZ Securities
Asia, Inc., Citibank Tower, 3 Garden Road, Hong Kong
Irene M. Esteves
Managing Director
Prior to January, 1997, Vice President, Miller Brewing Co., 3939
West Highland Blvd., Milwaukee, WI 53210. Board of Director
Member, American Management Association Finance council, 1601
Broadway, New York, NY; Board of Director Member, First Night
Boston, 20 Park Plaza, Suite 927, Boston, MA; Board of Director
Member, SC Johnson Commercialmarkets, 8310 16th St., Stutevant, WI
53177; Board of Director Member, Massachusetts Taxpayers
Foundation, 24 Province St., Boston, MA; Board of Director Member,
Mrs. Bairds Bakeries, 515 Jones St., Suite 200, Fort Worth, Texas
76102
Deborah S. Farrell
Senior Vice President
Prior to May, 1997, Manager, Asian Investments, Emerging
Markets Investors Corporation, 1001 19th Street North, 16th Floor,
Arlington, VA 22209
Ian Ferguson
Senior Managing Director
Trustee, Park School, 171 Goddard Avenue, Brookline, MA 02146
John Ferry
Vice President
Prior to September, 1998, Vice President, Scudder Kemper
Investments, 101 California St., San Francisco, CA 94111.
Edward R. Finch
Vice President
Prior to December, 1997, Managing Director, M.A. Weatherbie & Co.,
265 Franklin St., Boston, MA 02110
Kate Fleisher
Vice President
Prior to January, 1998, Director of Human Resources, Laura Ashley,
6 St., James Ave. Suite 410, Boston, MA 02116
Karen T. Frost
Senior Vice President
Prior to February, 1998, Vice President, Morgan Stanley
Organization, 25 Cabot Square, London, England E14 4QA.
Stephen C. Gibbs
Vice President
Prior to June, 1998, Senior Financial Analyst, Fidelity
Investments, 82 Devonshire St., Boston, MA 02109
J. Peter Grant
Senior Vice President
Trustee, The Dover Church, Dover, MA 02030
Patrice Graviere
Senior Vice President
Prior to March, 1998, Regional Director for Latin America, MFS
International, LTD, Buenos Aires, Brazil
Paul E. Haagensen
Senior Vice President
Director, Haagensen Research Foundation, 630 West 168th St., New
York, NY 10032
James B. Haines
Assistant Vice President
Prior to February, 1997, Associate, Benefit Department, Ropes &
Gray, One International Place, Boston, MA 02110
Mary S. Hapij
Vice President
Prior to March, 1997, Research Liberty Manager, Pioneering
Management Corp., 60 State Street, Boston, MA 02109
Nigel P. Hart
Vice President
Prior to October, 1997, Senior Vice President and Portfolio
Manager, Investment Advisers, 3700 First Bank Place, Minneapolis,
MN 55402
Deborah R. Healey
Senior Vice President
Corporator, New England Baptist Hospital, 125 Parker Hill Ave.,
Boston, MA 02120; Director, NEB Enterprises, 125 Parket Hill Ave.,
Boston, MA 02120
Marianne P. Isgur
Assistant Vice President
Prior to March, 1998, Executive Recruiter, Professions, 2 Villa
Rd., So. Hamilton, MA 01982; President, Equine Ventures, LTD., 25
Fellows Rd., Ipswich, MA 01932
Jeffrey Kaufman
Senior Vice President
Prior to July, 1998, Vice President and Portfolio Manager, MFS
Investmnt Management, 500 Boylston St., Boston, MA 02116
Ira C. Kalus-Bystricky
Vice President
Prior to March, 1998, Consultant, Arthur D. Little, 25 Acorn Park,
Cambridge, MA 02114
Hiroshi Kato
Vice President
Prior to August, 1998, Manager, Senior Analyst, Daiwa Institute
of Research, 15-6 Fuyuki, Koutou-ku, Tokyo, 135-8460
Mary E. Kearney
Managing Director
Trustee, Massachusetts Eye and Ear Infirmary, 243 Charles St.,
Boston, MA 02114
Kevin J. Keleher
Assistant Vice President
Prior to August, 1998, Support Manager, Digital Equipment Co., 111
Powder Mill Rd., Maynard, MA 01754
Catherine Kennedy
Vice President
Prior to September, 1997, Principal, Morgan Stanley, 1585
Broadway, New York, NY 10036
Jeffrey K. Kerrigan
Assistant Vice President
Prior to June, 1997, Vice President, Fleet Investments, 75 State
St., Boston, MA 02109
David R. King
Vice President
Prior to June, 1997, Vice President, Fleet Investments, 75 State
St., Boston, MA 02109
William P. King
Vice President
Prior to November, 1997, Portfolio Manager, TSA Global Asset
Management, 700 South Flower St., Los Angeles, CA 90017
Deborah F. Kuenstner
Managing Director
Prior to March, 1997, Senior Portfolio Manager, DuPont Pension
Fund Investment, 1 Right Parkway, Wilmington, DE 19850; Director,
Board of Pensions, Presbyterian Church, 1001 Market St.,
Philadelphia, PA
Thomas J. Kurey
Vice President
Prior to August, 1997, Vice President, Evergreen Securities, 77 W.
Wacker, Chicago, IL 60601
Linda Lane
Assistant Vice President
Member, American Society for Training & Development, 27 Glen
Street, Suite 4, Stoughton, MA 02072
Kenneth W. Lang
Vice President
Prior to April, 1997, Vice President, Montgomery Securities, 600
Montgomery St., San Francisco, CA 94111
Coleman N. Lannum, III
Senior Vice President
Prior to June, 1997, Director-Investor Relations, Mallinckrodt,
Inc., 7733 Forsyth Blvd., St. Louis, MO 63105
Leonard LaPorta, Jr.
Vice President
Prior to March, 1998, Assistant Vice President, State Street
Global Advisors, Two International Place, Boston, MA 02110; Board
of Overseers', USS Constitution Museum, Charleston, MA
Lawrence J. Lasser
President, Director and Chief Executive
Director, Marsh & McLennan Companies, Inc., 1221 Avenue of the
Americas, New York, NY 10020; Board of Governors and Executive
Committee, Investment Company Institute, 1401 H. St., N.W. Suite
1200, Washington, DC 20005; Board of Overseers, Museum of Fine
Arts, 465 Huntington, Ave., Boston, MA 02115; Trustee, Beth Israel
Deaconess Medical Center, 330 Brookline Ave., Boston, MA; Member
of the Council on Foreign Relations, 58 East 68th St., New York,
NY 10021; Member of the Board of Directors of the United Way of
Massachusetts Bay, 245 Summer St., Suite 1401, Boston, MA 02110;
Trustee of the Vineyard Open Land Foundation, RFD Box 319X,
Vineyard Haven, MA 02568.
Joan M. Leary
Vice President
Prior to January, 1997, Senior Tax Manager, KMPG, 99 High Street,
Boston, MA 02110
Craig S. Lewis
Vice President
Prior to January, 1998, Analyst, Keystone Investments, 200
Berkeley Street, Boston, MA 02101
Geirulv Lode
Vice President
Prior to July, 1997, Vice President, Chancellor Lgt, Asset
Management, 1166 Avenue of the Americas, New York, NY 10036
Elizabeth M. MacElwee Jones
Senior Vice President
Prior to January, 1998, Principal, Morgan Stanley, 1155 Broadway,
New York, NY 10036
Saba S. Malak
Vice President
Prior to October, 1997, Consultant, The Boston Consultant,
Exchange Place, Boston, MA 02109
Bruce D. Martin
Vice President
Prior to April, 1997, Vice President, Eaton Vance, 29 Boston, MA
02110
Kevin Maloney
Managing Director
Institutional Director, Financial Management Association,
University of South Florida, College of Business Administration,
Suite 3331, Tampa, FL 33620
Jabaz Mathai
Assistant Vice President
Prior to December, 1997, Associate, Deutsche Morgan Grenfell,
31 West 52ndSt., New York, NY 10019
Scott M. Maxwell
Managing Director
Prior to March, 1997, Chief Financial Officer-Equity Division,
Lehman Brothers, 3 World Financial Center, New York, NY 10285
Bridget McCavoy
Assistant Vice President
Prior to October, 1997, Senior Recruiter, BankBoston, 100 Federal
St., Boston, MA 02110; Prior to October, 1996. Executive
Recruiter, HI Hunt & Co., 99 Summer St., Boston, MA 02110
William McGue
Managing Director
Board Member, Sacred Heart Elementary School, 75 Commercial
St.,Weymouth, MA 02188; Board of Directors Member and Treasurer,
Whittemore Shores Condominium Association, Bridgewater, NH 03222
Paul K. Michaud
Vice President
Prior to December, 1997, Assistant Vice President, Union Bank of
Switzerland, Bahnhofstrasse 45, 8021 Zurich, Switzerland
Carol H. Miller
Assistant Vice President
Board Member, The Robbins-de Beaumont Foundation, c/o Sullivan &
Worcester, One Post Office Square, Boston, MA 02109; Board Member,
Burke Mtn. Academy, East Burke, VT; Board Member, The Lyric Stage
Theater, 140 Clarendon St., Boston, MA 02116; Board Member, The
Boston Modern Orchestra Project, P.O. Box 39134, Cambridge, MA
02139
Christopher G. Miller
Vice President
Prior to January, 1998, Portfolio Manager, Analytic TSA Global
Asset Management, 700 So. Flower St., Los Angeles, CA 90017
William H. Miller
Senior Vice President
Prior to October, 1997, Vice President and Asset Portfolio
Manager, Delaware Management, One Commerce Square, Philadelphia,
PA
Jeanne L. Mockard
Senior Vice President
Trustee, The Bryn Mawr School, 109, W. Melrose Avenue, Baltimore,
MA 21210
Gerard I. Moore
Vice President
Prior To August, 1997, Vice President/Equity Research, Boston
Company Asset Management, One Boston Place, Boston, MA 02109
Donald E. Mullin
Senior Vice President
Corporate Representative and Board Member, Delta Dental Plan of
Massachusetts, 10 Presidents Landing, P.O. Box 94104, Medford, MA
02155
Kenneth W. Murphy, Jr.
Assistant Vice President
Prior to May, 1998, Senior Financial Analyst, Merck & Co.,
Inc., One Merck Drive, Whitehouse Station, NJ 08889
Kimberly A.M. Page Nauen
Assistant Vice President
Prior to February, 1998, Senior Consultant, Andersen
Consulting, 100 Williams St., Wellesley, MA 02181
Gayle M. O'Connell
Assistant Vice President
Prior To March, 1997, Assistant Director of Human Resources, ITT
Sheraton Corporation, 60 State St., Boston, MA 02109
Stephen S. Oler
Senior Vice President
Prior to June, 1997, Vice President, Templeton Investment Counsel,
500 E. Broward Blvd., Ft. Lauderdale, FL 33394
Kerry M. Owens
Assistant Vice President
Prior to July, 1998, Marketing Manager, ABN Amro, 199 Bishopsgate,
London, England, EC2M 3TY; Prior to April, 1997, Assistant
Manager, Citibank, 336 Strand, London, England, WC2
Margery C. Parker
Senior Vice President
Prior to December, 1997, Vice President and Portfolio Manager,
Keystone Investments 200 Berkeley Street, Boston, MA 02101
Carmel Peters
Senior Vice President
Prior to April, 1997, Managing Director/Chief Investment Asia
Pacific, Whellock NatWest Investment Management, Ltd, NatWest
Tower, Times Square, Causeway Bay, Hong Kong, China
William Perry
Vice President
Prior to September, 1997, Senior Trader, Fidelity Management &
Research, 82 Devonshire St., Boston, MA 02110
Keith Plapinger
Vice President
Chairman and Trustee, Advent School, 17 Brimmer St., Boston, MA
02108
Charles E. Porter
Executive Vice President
Trustee, Anatolia College, 130 Bowdoin St., Suite 1201, Boston, MA
02108; Governor, Handel & Hayden Society, Horticulture Hall, 300
Massachusetts Ave., Boston, MA 0215
George Putnam
Chairman and Director
Chairman and Director, Putnam Mutual Funds Corp.; Director, The
Boston Company, Inc., One Boston Place, Boston, MA 02108;
Director, Boston Safe Deposit and Trust Company, One Boston Place,
Boston, MA 02108; Director, Freeport-McMoRan, Inc., 200 Park
Avenue, New York, NY 10166; Director, General Mills, Inc., 9200
Wayzata Boulevard, Minneapolis, MN 55440; Director, Houghton
Mifflin Company, One Beacon Street, Boston, MA 02108; Director,
Marsh & McLennan Companies, Inc., 1221 Avenue of the Americas, New
York, NY 10020; Director, Rockefeller Group, Inc., 1230 Avenue of
the Americas, New York, NY 10020; Trustee, Massachusetts General
Hospital, Fruit Street, Boston, Ma 02114; McLean Hospital 115 Mill
St., Belmont,MA 02178; The Colonial Williamsburg Foundation, Post
Office Box 1776, Williamsburg, VA 23187; The Museum of Fine Arts,
465 Huntington Avenue, Boston, MA 02115; WGBH Foundation, 125
Western Avenue,Boston, MA 02134; The Nature Conservancy, Post
Office Square Building, 79 Milk St., Suite 300, Boston, MA 02109;
Trustee, The Jackson Laboratory, 600 Main St., Bar Harbor, ME 04
Robert A. Piepenburg
Vice President
Prior to December, 1997, Assistant Vice President, BankBoston
Corp./Boston Security, 100 Federal St., Boston, MA 02106
James A. Polk
Vice President
Prior to June, 1998, Investment Officer, Massachusetts
Financial Services, 500 Boylston St., Boston, MA 02116
Elizabeth Price
Assistant Vice President
Prior to January, 1998, Investment Analyst, Schroder Investment
Management Limited, 33 Gutter Lane, London, EC2V 8AS, England
Edward Qian
Vice President
Prior to February, 1998, Back Bay Advisors, 399 Boylston St.,
Boston, MA 02116; Pror to September, 1996, Post-Doctorate
Research, Massachusetts Institute of Technology, 77 Massachusetts
Avenue, Cambridge, MA 02109
Keith Quinton
Senior Vice President
Director, Eleazar, Inc., West Wheelock St., Hanover, NH 03755
Kevin J. Rogers
Senior Vice President
Prior to September, 1998, Managing Director- Portfolio Manager,
Invesco, NY Organization, 1066 Avenue of the Americas, New York,
NY 10036. Prior to June, 1997, Senior Analyst, Fidelity
Management & Research Co., 82 Devonshire St., Boston, MA 02109
Thomas V. Reilly
Managing Director
Trustee, Knox College, 2 East South St., Galesburg, IL
61401
Marc J. Ritenhouse
Vice President
Prior to January, 1998, Director of Finance, Fidelity Investments,
Inc., 82 Devonshire St., Boston, MA 02109
Oliver Rudigoz
Vice President
Prior to April, 1998, Portfolio Manager, Paribas Asset Management,
#3 Rue D'Antin, Paris, France, 75002
Michael V. Salm
Vice President
Prior to November, 1997, Mortgage Analyst, Blackrock Financial 345
Park Ave., New York, NY 10010
Saied Simozar
Senior Vice President
Prior to March, 1998, Manager, Portfolio Analytics, DuPont
Pension fund Investment, One Righter Parkway, Suite 3200,
Wilmington, DE 198903
Robert J. Schoen
Assistant Vice President
Prior to June, 1997, Sole Proprietor, Schoen Timing Strategies,
315 E. 21st , New York, NY 10010
Justin M. Scott
Managing Director
Director, DSI Proprieties (Neja) Ltd., Epping Rd., Reydon, Essex
CM19 5RD
Max S. Senter
Senior Vice President
General Partner, M.S. Senter & Sons Partnership, 4900 Fayetteville
Rd., Raleigh, NC 27611
Edward Shadek, Jr.
Vice President
Prior to March, 1997, Portfolio Manager, Newhold Asset Management,
950 Haverford Rd., Bryn Mawr, PA 19010
Raj Ken Sharma
Vice President
Prior to January, 1998, Vice President and Portfolio Manager,
Fleet Financial, 75 State Street, Boston, MA 02106
Jean I. Sievert
Senior Vice President
Prior to October, 1998, Vice President, Salomon Smith Barney,
Seven World Trade Center, New York, NY 10048.
Gordon H. Silver
Managing Director
Trustee, Wang Center for the Performing Arts, 270 Tremont St.,
Boston, MA 02116
David M. Silk
Senior Vice President
Member of Board of Directors, Jobs for Bay State Graduates, 451
Andover St., Suite 305, North Andover, MA 01845
Steven Spiegel
Senior Managing Director
Director, Ultra Diamond and Gold Outlet , 29 East Madison
St., Suite 1800, Chicago, IL 60602; Director, FACES New York
University Medical Center, 550 First Avenue, New York, NY 10016;
Trustee, Babson College, One College Drive, Wellesley, MA 02157;
Christopher A. Spurlock
Vice President
Prior to May, 1997, Sales Trader, J.P. Morgan, 60 Wall St., New
York, NY
James St. John
Assistant Vice President
Prior to July, 1998, Investment Analyst, University of
Rochester, Rochester, NY 14627
Loren Michael Starr
Managing Director
Prior to February, 1998, Senior Vice President, Lehman
Brothers, 3 World Financial Center, New York, NY 10285.
Michael P. Stack
Senior Vice President
Prior to November, 1997, Senior Vice President and Portfolio
Manager, Independence Investment Associates, 53 State St.,
Boston, MA 02109
Casey Strumpft
Senior Vice President
Prior to January, 1997, Director, Blue Cross and Blue Shireld, 100
Summer St., Boston, MA 02110
Toshifumi Sugimoto
Senior Vice President
Prior to October, 1998, Portfolio Manager, Deputy General
Manager, Nikko Securities Investment Trust & Management, Fixed
Income Department, 4-3 Nihonbashi, Hakozakicho, Chuou-ku, Tokyo,
Japan, 103-0015
Robert E. Sweeney
Vice President
Prior to February, 1998, Vice President, Corporate Research Smith
Barney, One New York Plaza, New York, NY 10004
Judith H. Swirbalus
Vice President
Prior to January, 1998, Alex, Brown & Sons, One South St.,
Baltimore, MD 21202
John C. Talanian
Managing Director
Member of Board of Directors, the Japan Society of Boston, One
Milk Street, Bosston, MA 02109
Robert J. Toner
Assistant Vice President
Prior to September, 1998, Associate, Goodwin Procter & Hoar, LLP,
Exchange Place, Boston, MA 02109
John R. Tonkin
Assistant Vice President
Prior to January, 1998, Analyst, Credit Suisse First Boston Celtic
Towers, The Terrace Wellington, New Zealand
Scott G. Vierra
Vice President
Prior to September, 1997, Staffing Lead, Cisco Systems, 250 Apolio
Drive, Chelmsford, MA 01824
David L. Waldman
Managing Director
Prior to June, 1997, Senior Portfolio Manager, Lazard Feres Asset
Management, 30 Rockefeller Center, New York, NY 10112
Paul C. Warren
Senior Vice President
Prior to May, 1997, Director, IDS Fund Management, LT, One
Pacific Place, Squensway, Hong Kong, China
Dierdre West-Smith
Assistant Vice President
Trustee, St. James Condo Association, 66 St. James St., Roxbury,
MA 02119
Toshifumi Sugimoto
Senior Vice President
Prior to October, 1998, Portfolio Manager, Deputy General
Manager, Nikko Securities Investment Trust & Management, Fixed
Income Department, 4-3 Nihonbashi, Hakozakicho, Chuo-ku, Tokyo,
Japan, 103-0015
Eric Wetlaufer
Managing Director
President and Member of Board of Directors, The Boston Security
Analysts Society, Inc., 100 Boylston St., Suite 1050, Boston, MA
02110
Edward F. Whalen
Senior Vice President
Member of the Board of Directors, Hockomock Area YMCA, 300 Elmwood
St., North Attleboro, MA 02760
Burton Wilson
Vice President
Prior to March, 1997, Associate Investments Banking, Robertson
Stephens & Co., 555 California St., Suite 2600, San Francisco, CA
94104
Richard P. Wyke
Senior Vice President
Director, Salem YMCA, One Sewall St., Salem, MA 01970
Michael R. Yogg
Senior Vice President
Prior to April, 1997, Senior Vice President, State Street
Research & Management, One Financial Center, Boston, MA 02111
Scott D. Zaleski
Assistant Vice President
Prior to May, 1997, Investment Officer, State Street Bank & Trust,
1776 Heritage Dr., Quincy, MA 02171; Prior to September, 1996,
Investment Associate Fidelity Investments, 82 Devonshire St.,
Boston, MA 02109
Michael P. Zeller
Vice President
Prior to July, 1997, Sales Manger, NYNEX Information Resources, 35
Village R., Middleton, MA 01949
ITEM 27. PRINCIPAL UNDERWRITER
(a) Putnam Mutual Funds Corp. is the principal underwriter for
each of the following investment companies, including the
Registrant:
Putnam American Government Income Fund, Putnam Arizona Tax Exempt
Income Fund, Putnam Asia Pacific Growth Fund, Putnam Asset
Allocation Funds, Putnam Balanced Retirement Fund, Putnam
California Tax Exempt Income Fund, Putnam California Tax Exempt
Money Market Fund, Putnam Capital Opportunitites Fund, Putnam
Convertible Income-Growth Trust, Putnam Diversified Equity Trust,
Putnam Diversified Income Trust, Putnam Equity Income Fund, Putnam
Europe Growth Fund, Putnam Florida Tax Exempt Income Fund, Putnam
Funds Trust, The George Putnam Fund of Boston, Putnam Global
Governmental Income Trust, Putnam Global Growth Fund, Putnam
Global Natural Resources Fund, The Putnam Fund for Growth and
Income, Putnam Growth and Income Fund II, Putnam Health Sciences
Trust, Putnam High Yield Trust, Putnam High Yield Advantage Fund,
Putnam High Quality Bond Fund, Putnam Income Fund, Putnam
Intermediate U.S. Government Income Fund, Putnam International
Growth Fund, Putnam Investment Funds, Putnam Investors Fund,
Putnam Massachusetts Tax Exempt Income Fund, Putnam Michigan Tax
Exempt Income Fund, Putnam Minnesota Tax Exempt Income Fund,
Putnam Money Market Fund, Putnam Municipal Income Fund, Putnam New
Jersey Tax Exempt Income Fund, Putnam New Opportunities Fund,
Putnam New York Tax Exempt Income Fund, Putnam New York Tax Exempt
Money Market Fund, Putnam New York Tax Exempt Opportunities Fund,
Putnam Ohio Tax Exempt Income Fund, Putnam OTC & Emerging Growth
Fund, Putnam Pennsylvania Tax Exempt Income Fund, Putnam Preferred
Income Fund, Putnam Strategic Income Fund, Putnam Tax Exempt
Income Fund, Putnam Tax Exempt Money Market Fund, Putnam Tax-Free
Income Trust, Putnam U.S. Government Income Trust, Putnam
Utilities Growth and Income Fund, Putnam Variable Trust, Putnam
Vista Fund, Putnam Voyager Fund, Putnam Voyager Fund II.
(b) The directors and officers of the Registrant's principal
underwriter are listed below. The principal business address of
each person is One Post Office Square, Boston, MA 02109:
Name
Positions and Offices
with Underwriter
Positions and Offices
with Registrant
Aaron, Jefferson F. III
Asst . Vice President
None
Adduci,John V.
Vice President
None
Alberts,Richard W.
Asst. Vice President
None
Alden,Donald F.
Vice President
None
Alders,Christopher A.
Senior Vice President
None
Alpaugh,Christopher S.
Vice President
None
Amisano,Paulette C.
Vice President
None
Andrews,Margaret
Vice President
None
Arends,Michael K.
Senior Vice President
None
Asher,Steven E.
Senior Vice President
None
Avery,Scott A.
Senior Vice President
None
Aymond,Christian E.
Senior Vice President
None
Aymond,Colin C.
Vice President
None
Barnett, William E.
Assistant Vice President
None
Barrett, Thomas
Vice President
None
Battit,Suzanne J
Vice President
None
Beatty,Steven M.
Senior Vice President
None
Bent,John J.
Vice President
None
Beringer,Thomas C.
Vice President
None
Berka,Sharon A.
Senior Vice President
None
Boneparth,John F.
Managing Director
None
Bonfilio Jr.,Peter J.
Asst. Vice President
None
Bouchard,Keith R.
Senior Vice President
None
Bradford Jr.,Linwood E.
Senior Vice President
None
Brennan,Mary Ann
Asst. Vice President
None
Bresnahan,Leslee R.
Senior Vice President
None
Brockelman,James D.
Senior Vice President
None
Brookman,Joel S.
Vice President
None
Brown,Timothy K.
Senior Vice President
None
Buckner,Gail D.
Senior Vice President
None
Burke,Robert W.
Sr Managing Director
None
Burrill, Gregory J.
Vice President
None
Cabana,Susan D.
Vice President
None
Capone,Robert G.
Senior Vice President
None
Cartwright,Patricia A.
Asst. Vice President
None
Casey,David M.
Vice President
None
Castle Jr.,James R.
Vice President
None
Chapman,Thomas E.
Vice President
None
Chase,Mary Claire
Vice President
None
Chrostowski,Louis F.
Senior Vice President
None
Church,Daniel J.
Vice President
None
Clark,Richard B.
Senior Vice President
None
Clermont,Mary
Asst. Vice President
None
Clinton,John C.
Asst. Vice President
None
Collman,Kathleen M.
Sr Managing Director
None
Commane,Karen L.
Asst. Vice President
None
Coneeny,Mark L.
Senior Vice President
None
Connelly,Donald A.
Senior Vice President
None
Connolly,Karen E.
Asst. Vice President
None
Conyers,Barry M.
Vice President
None
Corbett,Dennis
Vice President
None
Corvinus,F. Nicholas
Senior Vice President
None
Cosmer,Thomas A.
Senior Vice President
None
Cotto,Stephen P
Asst. Vice President
None
Cristo,Chad H.
Vice President
None
Crowley,Colleen J.
Asst. Vice President
None
Curran,Peter J.
Senior Vice President
None
Dahill,Jessica E.
Vice President
None
Daly,Kenneth L.
Managing Director
None
Dane,Edward H.
Senior Vice President
None
Daylor,Donna M.
Vice President
None
Days,Nancy M.
Asst. Vice President
None
De Oliveira-Smith,Pamela
Asst. Vice President
None
Deluse,Laura R.
Asst. Vice President
None
DeMont,Lisa M.
Vice President
None
Dennehy,Teresa F.
Vice President
None
Derbyshire,Ralph C
Senior Vice President
None
Devin,Renate S.
Senior Vice President
None
Diaz, Roger
Vice President
None
DiStasio,Karen E.
Vice President
None
Dolan,Michael G.
Vice President
None
Donaldson,Scott M.
Vice President
None
Doughtery, Thomas
Vice President
None
Duffy,Deirdre E.
Senior Vice President
None
Durbin,Emily J.
Vice President
None
Durkee,Christine
Asst. Vice President
None
Edlin,David B.
Managing Director
None
Eisenkraft,Gail A.
Managing Director
None
English,James M.
Senior Vice President
None
Esposito,Vincent
Managing Director
None
Farrell,Deborah S.
Senior Vice President
None
Favalaro, Beth
Vice President
None
Feldman,Susan H.
Senior Vice President
None
Fisher,C. Nancy
Managing Director
None
Fishman,Mitchell B.
Senior Vice President
None
Fiumara,Joseph C.
Vice President
None
Flaherty,Patricia C.
Senior Vice President
None
Fleisher,Kate
Vice President
None
Foley,Timothy P.
Vice President
None
Frost,Karen T.
Senior Vice President
None
Fullerton,Brian J.
Senior Vice President
None
Gates,Judy S.
Senior Vice President
None
Gennaco,Joseph P.
Senior Vice President
None
Gibbs,Stephen C.
Vice President
None
Gindel,Caroline E.
Asst. Vice President
None
Goodfellow,Mark D.
Vice President
None
Goodman,Robert
Managing Director
None
Gore, Gregory T.
Vice President
None
Gould ,Carol J.
Asst. Vice President
None
Grace ,Anthony J.
Asst. Vice President
None
Grace,Linda K.
Vice President
None
Grey, Eric M.
Vice President
None
Grossberg,Jill
Asst. Vice President
None
Grove,Denise
Vice President
None
Gubala,Jeffrey P.
Vice President
None
Guerin,Donnalee
Asst. Vice President
None
Guerra,Salvatore F.
Vice President
None
Haines,James B.
Asst. Vice President
None
Hall,Debra L.
Vice President
None
Halloran,James E.
Vice President
None
Halloran,Thomas W.
Senior Vice President
None
Hansen, Christine M.
Assistant Vice President
None
Harbeck,John D.
Vice President
None
Harrington,Bruce D.
Vice President
None
Harrington, Shannon W.
Vice President
None
Hartig, Robert
Vice President
None
Hartigan,Craig W.
Vice President
None
Hartley,Deborah M.
Asst. Vice President
None
Hawkins III,Howard W.
Vice President
None
Hayes-Castro,Deanna R.
Vice President
None
Hedstrom,Gayle A.
Asst. Vice President
None
Heffernan,Paul P.
Senior Vice President
None
Heimanson,Susan M.
Senior Vice President
None
Holly Sr.,Jeremiah K.
Vice President
None
Holmes,Maureen A.
Asst. Vice President
None
Hooley,Daniel F Jr.
Asst. Vice President
None
Hoyt,Paula J.
Asst. Vice President
None
Hurley,William J.
Managing Director & CFO
None
Hutchins,Robert B.
Vice President
None
Isgur,Marianne P.
Asst. Vice President
None
Jacobsen,Dwight D.
Managing Director
None
Jordan,Stephen R.
Asst. Vice President
None
Kapinos,Peter J.
Vice President
None
Kay,Karen R.
Senior Vice President
None
Keleher,Kevin J.
Asst. Vice President
None
Kelley,Brian J.
Vice President
None
Kelly,A.Siobhan
Asst. Vice President
None
Kennedy,Alicia C.
Asst. Vice President
None
King,David L.
Managing Director
None
King,David R.
Vice President
None
Kinsman,Anne
Senior Vice President
None
Kirk,Deborah H.
Senior Vice President
None
Koontz,Jill A.
Senior Vice President
None
Kreutzberg,Howard H.
Senior Vice President
None
Lacascia,Charles M.
Vice President
None
Landers,Bruce M.
Vice President
None
Lane, Linda L.
Asst . Vice President
None
LaPierre,Christopher W
Asst. Vice President
None
Lathrop,James D.
Senior Vice President
None
Lawlor,Stephanie T.
Asst. Vice President
None
Leary,Joan M.
Vice President
None
Ledbetter,Charles C.
Vice President
None
Leddy, Maura W.
Vice President
None
Leipsitz,Margaret
Asst. Vice President
None
Lemire,Kevin
Vice President
None
Levy,Eric S.
Senior Vice President
None
Levy,Norman S.
Vice President
None
Lewandowski Jr.,Edward V.
Vice President
None
Lewandowski,Edward V.
Senior Vice President
None
Li,Mei
Asst. Vice President
None
Lieberman,Samuel L.
Vice President
None
Lifsitz,David M.
Vice President
None
Lilien,David R.
Vice President
None
Linehan,Ann-Marie
Asst. Vice President
None
Litant,Lisa M.
Asst. Vice President
None
Lockwood,Maura A.
Senior Vice President
None
Lomba,Rufino R.
Senior Vice President
None
Long,Gregory T.
Vice President
None
Lucey,Kevin J
Vice President
None
Lucey,Robert F.
Director
None
Lyons ,Robert F.
Asst. Vice President
None
Malatos,Ann
Vice President
None
Mallin,Bonnie J.
Senior Vice President
None
Maloof,Renee L.
Asst. Vice President
None
Mancini,Dana
Asst. Vice President
None
Manning,George J.
Vice President
None
Manthorne,Heather M.
Asst. Vice President
None
Maravel,Alexi A.
Asst. Vice President
None
Marius,Frederick S.
Vice President
None
McAvoy,Bridget
Asst. Vice President
None
McCafferty,Karen A.
Vice President
None
McCarthy,Anne B.
Asst. Vice President
None
McConville,Paul D.
Senior Vice President
None
McCracken,Brian
Asst. Vice President
None
McCutcheon,Bruce A
Senior Vice President
None
McDermott,Daniel E.
Asst. Vice President
None
McKenna,Mark J.
Senior Vice President
None
McNamara,Laura
Vice President
None
McNamee,Mary G.
Asst. Vice President
None
Meagher,Dorothy B.
Asst. Vice President
None
Metelmann,Claye A.
Vice President
None
Miller,Bart D.
Senior Vice President
None
Miller,Jeffrey M.
Managing Director
None
Mills,Ronald K.
Vice President
None
Minsk,Judith
Asst. Vice President
None
Mintzer,Matthew P.
Senior Vice President
None
Richard Monaghan
President and Director
None
Monahan ,Kimberly A.
Vice President
None
Moody,Paul R.
Vice President
None
Moonin,Sara R.
Asst. Vice President
None
Moret,Mitchell L.
Senior Vice President
None
Richard Monaghan
President and Director
Mosher ,Barry L.
Asst. Vice President
None
Mullen,Donald E.
Senior Vice President
None
Murphy Jr.,Kenneth W.
Asst. Vice President
None
Murphy,Paul G.
Vice President
None
Murray,Brendan R.
Vice President
None
Nadherny,Robert
Senior Vice President
None
Natale,Ellen E.
Asst. Vice President
None
Nauen,Kimberly Page
Asst. Vice President
None
Neary,Ellen R.
Vice President
None
Nelson,Alexander L.
Managing Director
None
Newell,Amy Jane
Vice President
None
Nickodemus,John P.
Senior Vice President
None
Nickse,Gail A.
Asst. Vice President
None
O'Brien,Lois C.
Vice President
None
O'Brien,Nancy E.
Vice President
None
O'Connell,Gayle M.
Asst. Vice President
None
Onofrio,Ellen
Asst. Vice President
None
Owens,Kerry M.
Asst. Vice President
None
Palmer,Patrick J.
Vice President
None
Palombo,Joseph R.
Managing Director
None
Panessa,Brian
Vice President
None
Papes,Scott A.
Vice President
None
Parr,Cynthia O.
Vice President
None
Pelletier,Dale M.
Vice President
None
Peterson,Jennifer H.
Asst. Vice President
None
Peterson,Kathryn L.
Vice President
None
Petralia,Randolph S.
Senior Vice President
None
Phoenix,John G.
Senior Vice President
None
Phoenix,Joseph
Senior Vice President
None
Plapinger,Keith
Senior Vice President
None
Powers,Brian S.
Asst. Vice President
None
Present,Howard B.
Senior Vice President
None
Pulkrabek,Scott M.
Vice President
None
Putnam,George
Director
Chairman and President
Rezabek,Joseph L.
Asst. Vice President
None
Riley,Megan G.
Asst. Vice President
None
Ritenhouse,Marc J.
Vice President
None
Rodammer,Kris
Vice President
None
Rogers,Deborah A.
Vice President
None
Rothman,Debra V.
Vice President
None
Rowe,Robert B.
Vice President
None
Ruys de Perez,Charles A.
Senior Vice President
None
Ryan,Carolyn M.
Asst. Vice President
None
Ryan,Deborah A.
Vice President
None
Saunders,Catherine A.
Senior Vice President
None
Saunders,Robbin L.
Vice President
None
Saur,Karl W.
Vice President
None
Scanlon,Michael M.
Vice President
None
Schaefer,Jennifer L.
Asst. Vice President
None
Schofield,Shannon D.
Vice President
None
Schultz,Mitchell D.
Managing Director
None
Scordato,Christine A.
Senior Vice President
None
Scott,Joseph W.
Asst. Vice President
None
Segers,Elizabeth R.
Senior Vice President
None
Shamburg,John B.
Vice President
None
Sharpless,Kathy G.
Managing Director
None
Shiebler,William N.
Director
Vice President
Short,Jonathan D.
Senior Vice President
None
Siemon, Jr., Frank E.
Assistant Vice President
None
Silver,Gordon H.
Senior Managing Director
Vice President
Skistimas Jr,John J.
Vice President
None
Smith,Stuart C.
Asst. Vice President
None
Southard,Peter J.
Vice President
None
Spiegel,Steven
Sr Managing Director
None
Stack,Michael P.
Senior Vice President
None
Stanojev,Nicholas T.
Senior Vice President
None
Starr,Loren M.
Managing Director
None
Steinberg,Lauren B.
Asst. Vice President
None
Stern,Derek A.
Asst. Vice President
None
Stickney,Paul R.
Senior Vice President
None
Strumpf,Casey
Senior Vice President
None
Sugimoto, Toshifumi
Senior Vice President
None
Sullivan,Brian L.
Senior Vice President
None
Sullivan,Donna G
Vice President
None
Sullivan,Elaine M.
Senior Vice President
None
Sullivan,Guy
Managing Director
None
Sullivan,Kevin J.
Senior Vice President
None
Sullivan,Maryann
Asst. Vice President
None
Sutherland,George C.
Vice President
None
Sweeney,Janet C.
Senior Vice President
None
Talanian,John C.
Managing Director
None
Tanner,B Iris
Vice President
None
Tavares,April M.
Asst. Vice President
None
Taylor,David S.
Vice President
None
Telling,John R.
Senior Vice President
None
Tibbetts,Richard B.
Managing Director
None
Tirado,Patrice M.
Vice President
None
Toner,Robert J.
Asst. Vice President
None
Tosi,Janet E.
Vice President
None
Troped,Bonnie L.
Senior Vice President
None
Trowbridge,Wendy S.
Asst. Vice President
None
Twigg,Christine M.
Asst. Vice President
None
Vander Linde,Douglas J.
Senior Vice President
None
Veddern, Daniel R.
Vice President
None
Verani,John R.
Senior Vice President
Vice President
Vierra,Scott G.
Vice President
None
West-Smith,Deirdre
Asst. Vice President
None
Whalen,Brian
Vice President
None
Whalen,Edward F.
Senior Vice President
None
Whitaker,J. Greg
Vice President
None
White,J. Bennett
Vice President
None
Wolfson,Jane
Senior Vice President
None
Woloshin,Benjamin I.
Senior Vice President
None
Woolverton,William H.
Managing Director
None
Zeller,Michael P.
Vice President
None
Zografos,Laura J.
Vice President
None
Zukowski,Virginia A.
Senior Vice President
None
Item 28. Location of Accounts and Records
Persons maintaining physical possession of accounts, books and
other documents required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and the Rules promulgated thereunder are
Registrant's Clerk, Beverly Marcus; Registrant's investment adviser,
Putnam Investment Management, Inc.; Registrant's principal underwriter,
Putnam Mutual Funds Corp.; Registrant's custodian, Putnam Fiduciary
Trust Company ("PFTC"); and Registrant's transfer and dividend
disbursing agent, Putnam Investor Services, a division of PFTC. The
address of the Clerk, investment adviser, principal underwriter,
custodian and transfer and dividend disbursing agent is One Post Office
Square, Boston, Massachusetts 02109.
Item 29. Management Services
None.
Item 30. Undertakings
None.
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the
Prospectuses and Statement of Additional Information constituting parts
of Post-Effective Amendment No. 21 to the Registration Statement of
Putnam Variable Trust on Form N-1A (File No. 33-17486) of our report
dated February 12, 1999, on our audit of the financial statements and
financial highlights of the Trust, which report is included in the
Annual Report for Putnam Variable Trust for the year ended December 31,
1998 which is incorporated by reference into the Registration Statement.
We also consent to the references to our firm under the caption
"Independent Accountants and Financial Statements" in the Statement of
Additional Information and under the heading "financial highlights" in
such Prospectuses.
PriceWaterhouseCoopers LLP
Boston, Massachusetts
April 26, 1999
NOTICE
A copy of the Agreement and Declaration of Trust of Putnam Variable
Trust is on file with the Secretary of State of The Commonwealth of
Massachusetts and notice is hereby given that this instrument is
executed on behalf of the Registrant by an officer of the Registrant as
an officer and not individually and the obligations of or arising out of
this instrument are not binding upon any of the Trustees, officers or
shareholders individually but are binding only upon the assets and
property of the Registrant.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the fund certifies that it meets all of
the requirements for effectiveness of this Registration Statement under
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Amendment to its Registration Statement to be signed on its behalf by
the undersigned, duly authorized, in the City of Boston, and The
Commonwealth of Massachusetts, on the 30th day of April 30, 1999.
Putnam Variable Trust
By: Gordon H. Silver, Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement of Putnam Variable Trust has
been signed below by the following persons in the capacities and on the
dates indicated:
Signature Title
George Putnam President and Chairman of the Board; Principal
Executive Officer; Trustee
John D. Hughes Senior Vice President; Treasurer and Principal
Financial Officer
Paul G. Bucuvalas Assistant Treasurer and Principal
Accounting Officer
Jameson A. Baxter Trustee
Hans H. Estin Trustee
John A. Hill Trustee
Ronald J. Jackson Trustee
Paul L. Joskow Trustee
Elizabeth T. Kennan Trustee
Lawrence J. Lasser Trustee
John H. Mullin, III Trustee
Robert E. Patterson Trustee
Donald S. Perkins Trustee
William F. Pounds Trustee
George Putnam, III Trustee
A.J.C. Smith Trustee
W. Thomas Stephens Trustee
W. Nicholas Thorndike Trustee
By: Gordon H. Silver,
as Attorney-in-Fact
April 30, 1999
</TABLE>
PUTNAM VARIABLE TRUST
(formerly Putnam Capital Manager Trust)
MANAGEMENT CONTRACT
Management Contract dated as of October 2, 1987, as supplemented March
2, 1990, as further supplemented February 27, 1992, as further
supplemented July 9, 1993, as further supplemented April 5, 1994, as
further supplemented June 2, 1994, as further supplemented April 7,
1995, as further supplemented July 13, 1995, as further supplemented
July 11, 1996, as further supplemented December 20, 1996 as further
supplemented February 6, 1998, as further supplemented July 10, 1998 and
as further supplemented March 4, 1999 between Putnam Variable Trust
(formerly Putnam Capital Manager Trust), a Massachusetts business trust
(the "Fund"), and PUTNAM INVESTMENT MANAGEMENT, INC., a Massachusetts
corporation (the "Manager").
WITNESSETH:
That in consideration of the mutual covenants herein contained, it is
agreed as follows:
1. SERVICES TO BE RENDERED BY MANAGER TO FUND.
(a) The Manager, at its expense, will furnish continuously an
investment program for the Fund, will determine what investments shall
be purchased, held, sold or exchanged by the Fund and what portion, if
any, of the assets of the Fund shall be held uninvested and shall, on
behalf of the Fund, make changes in the Fund's investments. Subject
always to the control of the Trustees of the Fund and except for the
functions carried out by the officers and personnel referred to in
Section 1(d), the Manager will also manage, supervise and conduct the
other affairs and business of the Fund and matters incidental thereto.
In the performance of its duties, the Manager will comply with the
provisions of the Agreement and Declaration of Trust and By-Laws of the
Fund and its stated investment objectives, policies and restrictions,
and will use its best efforts to safeguard and promote the welfare of
the Fund and to comply with other policies which the Trustees may from
time to time determine and shall exercise the same care and diligence
expected of the Trustees.
(b) The Manager, at its expense, except as such expense is paid by
the Fund as provided in Section 1(d), will furnish (1) all necessary
investment and management facilities, including salaries of personnel,
required for it to execute its duties faithfully; (2) suitable office
space for the Fund; and (3) administrative facilities, including
bookkeeping, clerical personnel and equipment necessary for the
efficient conduct of the affairs of the Fund, including determination of
the Fund's net asset value, but excluding shareholder accounting
services. Except as otherwise provided in Section 1(d), the Manager
will pay the compensation, if any, of the officers of the Fund.
(c) The Manager, at its expense, shall place all orders for the
purchase and sale of portfolio investments for the Fund's account with
brokers or dealers selected by the Manager. In the selection of such
brokers or dealers and the placing of such orders, the Manager shall use
its best efforts to obtain for the Fund the most favorable price and
execution available, except to the extent it may be permitted to pay
higher brokerage commissions for brokerage and research services as
described below. In using its best efforts to obtain for the Fund the
most favorable price and execution available, the Manager, bearing in
mind the Fund's best interests at all times, shall consider all factors
it deems relevant, including by way of illustration, price, the size of
the transaction, the nature of the market for the security, the amount
of the commission, the timing of the transaction taking into account
market prices and trends, the reputation, experience and financial
stability of the broker or dealer involved and the quality of service
rendered by the broker or dealer in other transactions. Subject to such
policies as the Trustees of the Fund may determine, the Manager shall
not be deemed to have acted unlawfully or to have breached any duty
created by this Contract or otherwise solely by reason of its having
caused the Fund to pay a broker or dealer that provides brokerage and
research services to the Manager an amount of commission for effecting a
portfolio investment transaction in excess of the amount of commission
another broker or dealer would have charged for effecting that
transaction, if the Manager determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer, viewed in terms of
either that particular transaction or the Manager's overall
responsibilities with respect to the Fund and to other clients of the
Manager as to which the Manager exercises investment discretion. The
Manager agrees that in connection with purchases or sales of portfolio
investments for the Fund's account, neither the Manager nor any officer,
director, employee or agent of the Manager shall act as a principal or
receive any commission other than as provided in Section 3.
(d) The Fund will pay or reimburse the Manager for (i) the
compensation of the Vice Chairman of the Fund and of persons assisting
him in these offices, as determined from time to time by the Trustees of
the Fund, (ii) the compensation in whole or in part of such other
officers of the Fund and persons assisting them as may be determined
from time to time by the Trustees of the Fund, and (iii) the cost of
suitable office space, utilities, support services and equipment of the
Vice Chairman and persons assisting him and, as determined from time to
time by the Trustees of the Fund, all or a part of such cost
attributable to the other officers and persons assisting them whose
compensation is paid in whole or in part by the Fund. The Fund will pay
the fees, if any, of the Trustees of the Fund.
(e) The Manager shall pay all expenses incurred in connection with
the organization of the Fund and the initial public offering and sale of
its shares of beneficial interest, provided that upon the issuance and
sale of such shares to the public pursuant to the offering, and only in
such event, the Fund shall become liable for, and to the extent
requested reimburse the Manager for, registration fees payable to the
Securities and Exchange Commission and for an additional amount not
exceeding $125,000 as its agreed share of such expenses.
(f) The Manager shall not be obligated to pay any expenses of or for
the Fund not expressly assumed by the Manager pursuant to this Section 1
other than as provided in Section 3.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees, officers and
employees of the Fund may be a shareholder, director, officer or
employee of, or be otherwise interested in, the Manager, and in any
person controlled by or under common control with the Manager, and that
the Manager and any person controlled by or under common control with
the Manager may have an interest in the Fund. It is also understood
that the Manager and any person controlled by or under common control
with the Manager have and may have advisory, management, service or
other contracts with other organizations and persons, and may have other
interests and business.
3. COMPENSATION TO BE PAID BY THE FUND TO THE MANAGER.
The Fund will pay to the Manager as compensation for the Manager's
services rendered, for the facilities furnished and for the expenses
borne by the Manager pursuant to paragraphs (a), (b), (c) and (e) of
Section 1, a fee, computed and paid quarterly at the following annual
rates applicable to the average net asset value of each Series of the
Fund (a "Series") of:
Putnam VT International New Opportunities Fund:
(a) 1.20% of the first $500 million of average net assets;
(b) 1.10% of the next $500 million;
(c) 1.05% of the next $500 million;
(d) 1.00% of the next $5 billion;
(e) 0.975% of the next $5 billion;
(f) 0.955% of the next $5 billion;
(g) 0.94% of the next $5 billion; and
(h) 0.93% of any excess thereafter.
Putnam VT Asia Pacific Growth Fund, Putnam VT International Growth Fund,
Putnam VT International Growth and Income Fund and Putnam VT Small Cap
Value Fund:
(a) 0.80% of the first $500 million of average net assets;
(b) 0.70% of the next $500 million;
(c) 0.65% of the next $500 million;
(d) 0.60% of the next $5 billion;
(e) 0.575% of the next $5 billion;
(f) 0.555% of the next $5 billion;
(g) 0.54% of the next $5 billion; and
(h) 0.53% of any excess thereafter.
Putnam VT Diversified Income Fund, Putnam VT Global Asset Allocation
Fund, Putnam VT Health Sciences Fund, Putnam VT High Yield Fund, Putnam
VT New Opportunities Fund, Putnam VT New Value Fund, Putnam VT Utilities
Growth and Income Fund, Putnam VT Voyager Fund and Putnam VT OTC
Emerging Growth Fund:
(a) 0.70% of the first $500 million of average net assets;
(b) 0.60% of the next $500 million;
(c) 0.55% of the next $500 million;
(d) 0.50% of the next $5 billion;
(e) 0.475% of the next $5 billion;
(f) 0.455% of the next $5 billion;
(g) 0.44% of the next $5 billion; and
(h) 0.43% of any excess thereafter.
Putnam VT Growth and Income Fund, Putnam VT Income Fund Fund, Putnam VT
Vista Fund, Putnam VT Investors Fund, Putnam VT The George Putnam Fund
of Boston and Putnam VT Research Fund:
(a) 0.65% of the first $500 million of average net assets;
(b) 0.55% of the next $500 million;
(c) 0.50% of the next $500 million;
(d) 0.45% of the next $5 billion;
(e) 0.425% of the next $5 billion;
(f) 0.405% of the next $5 billion;
(g) 0.39% of the next $5 billion; and
(h) 0.38% of any excess thereafter.
Putnam VT Money Market Fund:
(a) 0.45% of the first $500 million of average net assets;
(b) 0.35% of the next $500 million;
(c) 0.30% of the next $500 million;
(d) 0.25% of the next $5 billion;
(e) 0.225% of the next $5 billion;
(f) 0.205% of the next $5 billion;
(g) 0.19% of the next $5 billion; and
(h) 0.18% of any excess thereafter.
Putnam VT Global Growth Fund: 0.60% of average net assets.
Such fees computed with respect to the net asset value of each Series
shall be paid from the assets of such Series. Such average net asset
value of each Series of the Fund shall be determined by taking an
average of all of the determinations of such net asset value during such
quarter at the close of business on each business day during such
quarter while this Contract is in effect. Such fee shall be payable for
each month within 30 days after the end of such quarter.
The fees payable by the Fund to the Manager pursuant to this Section 3
with respect to any Series of the Fund shall be reduced by any
commissions, fees, brokerage or similar payments received by the Manager
or any affiliated person of the Manager in connection with the purchase
and sale of portfolio investments of such Series, less any direct
expenses approved by the Trustees incurred by the Manager or any
affiliated person of the Manager in connection with obtaining such
payments.
In the event that expenses of any Series of the Fund for any fiscal year
should exceed the expense limitation on investment company expenses
imposed by any statute or regulatory authority of any jurisdiction in
which shares of that Series are qualified for offer or sale, the
compensation due the Manager for such fiscal year shall be reduced by
the amount of such excess by a reduction or refund thereof. In the
event that the expenses of any Series of the Fund exceed any expense
limitation which the Manager may, by written notice to the Fund,
voluntarily declare to be effective subject to such terms and conditions
as the Manager may prescribe in such notice, the compensation due the
Manager shall be reduced, and, if necessary, the Manager shall assume
expenses of the Series to the extent required by the terms and
conditions of such expense limitation.
If the Manager shall serve for less than the whole of a month, the
foregoing compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THIS CONTRACT.
This Contract shall automatically terminate, without the payment of any
penalty, in the event of its assignment; and this Contract shall not be
amended as to any Series of the Fund unless such amendment be approved
at a meeting by the affirmative vote of a majority of the outstanding
shares of the Series, and by the vote, cast in person at a meeting
called for the purpose of voting on such approval, of a majority of the
Trustees of the Fund who are not interested persons of the Fund or of
the Manager.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract shall become effective upon its execution, and shall
remain in full force and effect as to each Series continuously
thereafter (unless terminated automatically as set forth in Section 4)
until terminated as follows:
(a) Either party hereto may at any time terminate this Contract as to
any Series or as to the Fund by not more than sixty days' nor less than
thirty days' written notice delivered or mailed by registered mail,
postage prepaid, to the other party, or
(b) If (i) the Trustees of the Fund or the shareholders by the
affirmative vote of a majority of the outstanding shares of the Series,
and (ii) a majority of the Trustees of the Fund who are not interested
persons of the Fund or of the Manager, by vote cast in person at a
meeting called for the purpose of voting on such approval, do not
specifically approve at least annually the continuance of this Contract,
then this Contract shall automatically terminate as to such Series at
the close of business on:
January 31, 1989 in the case of Putnam VT Global Growth Fund, and
the second anniversary of its execution with respect to any other
Series,
or the expiration of one year from the effective date of the last such
continuance, whichever is later; provided, however, that if the
continuance of this Contract is submitted to the shareholders of a
Series for their approval and such shareholders fail to approve such
continuance of this Contract as provided herein, the Manager may
continue to serve hereunder in a manner consistent with the Investment
Company Act of 1940 and the Rules and Regulations thereunder.
Action by the Fund under (a) above may be taken either (i) by vote of a
majority of its Trustees, or (ii) by the affirmative vote of a majority
of the outstanding shares of one or more Series affected.
Termination of this Contract pursuant to this Section 5 will be without
the payment of any penalty.
6. CERTAIN DEFINITIONS.
For the purposes of this Contract, the "affirmative vote of a majority
of the outstanding shares" means the affirmative vote, at a duly called
and held meeting of shareholders, (a) of the holders of 67% or more of
the shares of the Fund or the Series, as the case may be, present (in
person or by proxy) and entitled to vote at such meeting, if the holders
of more than 50% of the outstanding shares of the Fund or the Series, as
the case may be, entitled to vote at such meeting are present in person
or by proxy, or (b) of the holders of more than 50% of the outstanding
shares of the Fund, or the Series, as the case may be, entitled to vote
at such meeting, whichever is less.
For the purposes of this Contract, the terms "affiliated person",
"control", "interested person" and "assignment" shall have their
respective meanings defined in the Investment Company Act of 1940 and
the Rules and Regulations thereunder, subject, however, to such
exemptions as may be granted by the Securities and Exchange Commission
under said Act; the term "specifically approve at least annually" shall
be construed in a manner consistent with the Investment Company Act of
1940 and the Rules and Regulations thereunder; and the term "brokerage
and research services" shall have the meaning given in the Securities
Exchange Act of 1934 and the Rules and Regulations thereunder.
7. NON-LIABILITY OF MANAGER.
In the absence of willful misfeasance, bad faith or gross negligence on
the part of the Manager, or reckless disregard of its obligations and
duties hereunder, the Manager shall not be subject to any liability to
the Fund or to any shareholder of the Fund, for any act or omission in
the course of, or connected with, rendering services hereunder.
8. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS.
A copy of the Agreement and Declaration of Trust of the Fund is on file
with the Secretary of State of The Commonwealth of Massachusetts, and
notice is hereby given that this instrument is executed on behalf of the
Trustees of the Fund as Trustees and not individually and that the
obligations of or arising out of this instrument are not binding upon
any of the Trustees or shareholders individually but are binding only
upon the assets and property of the Fund.
IN WITNESS WHEREOF, PUTNAM VARIABLE TRUST and PUTNAM INVESTMENT
MANAGEMENT, INC. have each caused this instrument to be signed in
duplicate in its behalf by its President or a Vice President thereunto
duly authorized, all as of the day and year first above written.
PUTNAM VARIABLE TRUST
/s/ Charles E. Porter
By:
---------------------------------------------
Charles E. Porter
Executive Vice President
PUTNAM INVESTMENT MANAGEMENT, INC.
/s/ Gordon H. Silver
By:
---------------------------------------------
Gordon H. Silver
Senior Managing Director
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
[DESCRIPTION] FINANCIAL DATA SCHEDULES
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust Asia Pacific Growth Fund
</LEGEND>
<SERIES>
<NUMBER> 021
<NAME> CLASS A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 80,459,159
<INVESTMENTS-AT-VALUE> 92,357,140
<RECEIVABLES> 586,779
<ASSETS-OTHER> 48,180
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 92,992,099
<PAYABLE-FOR-SECURITIES> 281,984
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,932,098
<TOTAL-LIABILITIES> 2,214,082
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 115,694,544
<SHARES-COMMON-STOCK> 10,883,238
<SHARES-COMMON-PRIOR> 12,265,876
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (12,294)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (36,821,470)
<ACCUM-APPREC-OR-DEPREC> 11,917,237
<NET-ASSETS> 90,778,017
<DIVIDEND-INCOME> 1,928,037
<INTEREST-INCOME> 106,549
<OTHER-INCOME> 0
<EXPENSES-NET> 1,063,746
<NET-INVESTMENT-INCOME> 970,840
<REALIZED-GAINS-CURRENT> (22,230,884)
<APPREC-INCREASE-CURRENT> 14,919,582
<NET-CHANGE-FROM-OPS> (6,340,462)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (4,516,269)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (127,308)
<NUMBER-OF-SHARES-SOLD> 14,515,839
<NUMBER-OF-SHARES-REDEEMED> (16,420,839)
<SHARES-REINVESTED> 522,362
<NET-CHANGE-IN-ASSETS> (22,124,056)
<ACCUMULATED-NII-PRIOR> 3,110,245
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (14,297,932)
<GROSS-ADVISORY-FEES> 769,751
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,072,026
<AVERAGE-NET-ASSETS> 96,100,003
<PER-SHARE-NAV-BEGIN> 9.20
<PER-SHARE-NII> .08
<PER-SHARE-GAIN-APPREC> (.56)
<PER-SHARE-DIVIDEND> (.38)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> (.01)
<PER-SHARE-NAV-END> 8.33
<EXPENSE-RATIO> 1.12
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust Asia Pacific Growth Fund
</LEGEND>
<SERIES>
<NUMBER> 022
<NAME> CLASS B
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 80,459,159
<INVESTMENTS-AT-VALUE> 92,357,140
<RECEIVABLES> 586,779
<ASSETS-OTHER> 48,180
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 92,992,099
<PAYABLE-FOR-SECURITIES> 281,984
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,932,098
<TOTAL-LIABILITIES> 2,214,082
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 115,694,544
<SHARES-COMMON-STOCK> 13,353
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (12,294)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (36,821,470)
<ACCUM-APPREC-OR-DEPREC> 11,917,237
<NET-ASSETS> 90,778,017
<DIVIDEND-INCOME> 1,928,037
<INTEREST-INCOME> 106,549
<OTHER-INCOME> 0
<EXPENSES-NET> 1,063,746
<NET-INVESTMENT-INCOME> 970,840
<REALIZED-GAINS-CURRENT> (22,230,884)
<APPREC-INCREASE-CURRENT> 14,919,582
<NET-CHANGE-FROM-OPS> (6,340,462)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 53,802
<NUMBER-OF-SHARES-REDEEMED> (40,449)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (22,124,056)
<ACCUMULATED-NII-PRIOR> 3,110,245
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (14,297,932)
<GROSS-ADVISORY-FEES> 769,751
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,072,026
<AVERAGE-NET-ASSETS> 24,590
<PER-SHARE-NAV-BEGIN> 8.57
<PER-SHARE-NII> (.01)
<PER-SHARE-GAIN-APPREC> (.23)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.33
<EXPENSE-RATIO> .85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust Diversified Income Fund
</LEGEND>
<SERIES>
<NUMBER> 021
<NAME> CLASS A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 694,750,810
<INVESTMENTS-AT-VALUE> 665,505,335
<RECEIVABLES> 12,970,788
<ASSETS-OTHER> 342,090
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 678,350,323
<PAYABLE-FOR-SECURITIES> 3,051,402
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,282,460
<TOTAL-LIABILITIES> 7,333,862
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 672,457,467
<SHARES-COMMON-STOCK> 63,809,394
<SHARES-COMMON-PRIOR> 53,760,037
<ACCUMULATED-NII-CURRENT> 47,501,141
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (19,414,732)
<ACCUM-APPREC-OR-DEPREC> (29,527,415)
<NET-ASSETS> 671,016,461
<DIVIDEND-INCOME> 2,453,732
<INTEREST-INCOME> 53,844,425
<OTHER-INCOME> 0
<EXPENSES-NET> 4,837,510
<NET-INVESTMENT-INCOME> 51,460,647
<REALIZED-GAINS-CURRENT> (22,036,826)
<APPREC-INCREASE-CURRENT> (39,661,327)
<NET-CHANGE-FROM-OPS> (10,237,506)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (26,682,103)
<DISTRIBUTIONS-OF-GAINS> (11,333,017)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8,709,460
<NUMBER-OF-SHARES-REDEEMED> (2,147,661)
<SHARES-REINVESTED> 3,487,558
<NET-CHANGE-IN-ASSETS> 62,868,788
<ACCUMULATED-NII-PRIOR> 29,946,121
<ACCUMULATED-GAINS-PRIOR> 11,721,933
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4,373,212
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,063,817
<AVERAGE-NET-ASSETS> 647,996,894
<PER-SHARE-NAV-BEGIN> 11.31
<PER-SHARE-NII> .86
<PER-SHARE-GAIN-APPREC> (.99)
<PER-SHARE-DIVIDEND> (.48)
<PER-SHARE-DISTRIBUTIONS> (.21)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.49
<EXPENSE-RATIO> .78
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust Diversified Income Fund
</LEGEND>
<SERIES>
<NUMBER> 022
<NAME> CLASS B
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 694,750,810
<INVESTMENTS-AT-VALUE> 665,505,335
<RECEIVABLES> 12,790,788
<ASSETS-OTHER> 342,090
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 678,350,323
<PAYABLE-FOR-SECURITIES> 3,051,402
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,282,460
<TOTAL-LIABILITIES> 7,333,862
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 672,457,467
<SHARES-COMMON-STOCK> 187,484
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 47,501,141
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (19,414,732)
<ACCUM-APPREC-OR-DEPREC> (29,527,415)
<NET-ASSETS> 671,016,461
<DIVIDEND-INCOME> 2,453,732
<INTEREST-INCOME> 53,844,425
<OTHER-INCOME> 0
<EXPENSES-NET> 4,837,510
<NET-INVESTMENT-INCOME> 51,460,647
<REALIZED-GAINS-CURRENT> (22,036,826)
<APPREC-INCREASE-CURRENT> (39,661,327)
<NET-CHANGE-FROM-OPS> (10,237,506)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 195,858
<NUMBER-OF-SHARES-REDEEMED> (8,374)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 62,868,788
<ACCUMULATED-NII-PRIOR> 29,946,121
<ACCUMULATED-GAINS-PRIOR> 11,721,933
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4,373,212
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,063,817
<AVERAGE-NET-ASSETS> 307,869
<PER-SHARE-NAV-BEGIN> 10.95
<PER-SHARE-NII> .46
<PER-SHARE-GAIN-APPREC> (.94)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.47
<EXPENSE-RATIO> .69
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust The George Putnam Fund of Boston
</LEGEND>
<SERIES>
<NUMBER> 021
<NAME> CLASS A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 114,643,666
<INVESTMENTS-AT-VALUE> 119,568,807
<RECEIVABLES> 1,378,394
<ASSETS-OTHER> 4,749
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 120,951,950
<PAYABLE-FOR-SECURITIES> 5,687,794
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 137,800
<TOTAL-LIABILITIES> 5,825,594
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 110,261,125
<SHARES-COMMON-STOCK> 11,013,542
<SHARES-COMMON-PRIOR> 200,000
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (44,081)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (15,829)
<ACCUM-APPREC-OR-DEPREC> 4,925,141
<NET-ASSETS> 115,126,356
<DIVIDEND-INCOME> 434,723
<INTEREST-INCOME> 708,080
<OTHER-INCOME> 0
<EXPENSES-NET> 268,034
<NET-INVESTMENT-INCOME> 874,769
<REALIZED-GAINS-CURRENT> (15,776)
<APPREC-INCREASE-CURRENT> 4,925,141
<NET-CHANGE-FROM-OPS> 5,784,134
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (909,452)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10,809,311
<NUMBER-OF-SHARES-REDEEMED> (83,984)
<SHARES-REINVESTED> 88,215
<NET-CHANGE-IN-ASSETS> 113,125,356
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 207,992
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 271,991
<AVERAGE-NET-ASSETS> 47,216,618
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .18
<PER-SHARE-GAIN-APPREC> .19
<PER-SHARE-DIVIDEND> (.09)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.28
<EXPENSE-RATIO> .57
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust The George Putnam Fund of Boston
</LEGEND>
<SERIES>
<NUMBER> 022
<NAME> CLASS B
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 114,643,666
<INVESTMENTS-AT-VALUE> 119,568,807
<RECEIVABLES> 1,378,394
<ASSETS-OTHER> 4,749
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 120,951,950
<PAYABLE-FOR-SECURITIES> 5,687,794
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 137,800
<TOTAL-LIABILITIES> 5,825,594
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 110,261,125
<SHARES-COMMON-STOCK> 187,141
<SHARES-COMMON-PRIOR> 100
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (44,081)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (15,829)
<ACCUM-APPREC-OR-DEPREC> 4,925,141
<NET-ASSETS> 115,126,356
<DIVIDEND-INCOME> 434,723
<INTEREST-INCOME> 708,080
<OTHER-INCOME> 0
<EXPENSES-NET> 268,034
<NET-INVESTMENT-INCOME> 874,769
<REALIZED-GAINS-CURRENT> (15,776)
<APPREC-INCREASE-CURRENT> 4,925,141
<NET-CHANGE-FROM-OPS> 5,784,134
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (15,315)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 199,620
<NUMBER-OF-SHARES-REDEEMED> (14,094)
<SHARES-REINVESTED> 1,515
<NET-CHANGE-IN-ASSETS> 113,125,356
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 207,992
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 271,991
<AVERAGE-NET-ASSETS> 455,182
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .17
<PER-SHARE-GAIN-APPREC> .20
<PER-SHARE-DIVIDEND> (.09)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.28
<EXPENSE-RATIO> .67
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust Global Asset Allocation Fund
</LEGEND>
<SERIES>
<NUMBER> 021
<NAME> CLASS A
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 834,022,547
<INVESTMENTS-AT-VALUE> 993,714,391
<RECEIVABLES> 12,347,561
<ASSETS-OTHER> 37,322,651
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,043,384,603
<PAYABLE-FOR-SECURITIES> 16,359,482
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5,352,489
<TOTAL-LIABILITIES> 21,711,971
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 788,157,111
<SHARES-COMMON-STOCK> 53,881,407
<SHARES-COMMON-PRIOR> 50,986,332
<ACCUMULATED-NII-CURRENT> 18,368,225
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 54,031,084
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 161,116,212
<NET-ASSETS> 1,021,672,632
<DIVIDEND-INCOME> 8,677,729
<INTEREST-INCOME> 24,283,063
<OTHER-INCOME> 0
<EXPENSES-NET> 7,605,134
<NET-INVESTMENT-INCOME> 25,355,658
<REALIZED-GAINS-CURRENT> 48,568,169
<APPREC-INCREASE-CURRENT> 43,294,979
<NET-CHANGE-FROM-OPS> 117,218,806
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (21,801,279)
<DISTRIBUTIONS-OF-GAINS> (93,644,097)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,663,813
<NUMBER-OF-SHARES-REDEEMED> (5,049,801)
<SHARES-REINVESTED> 6,281,033
<NET-CHANGE-IN-ASSETS> 65,140,473
<ACCUMULATED-NII-PRIOR> 19,696,988
<ACCUMULATED-GAINS-PRIOR> 94,421,572
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6,476,330
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 7,767,260
<AVERAGE-NET-ASSETS> 997,164,941
<PER-SHARE-NAV-BEGIN> 18.76
<PER-SHARE-NII> .46
<PER-SHARE-GAIN-APPREC> 2.00
<PER-SHARE-DIVIDEND> (.43)
<PER-SHARE-DISTRIBUTIONS> (1.85)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 18.94
<EXPENSE-RATIO> .78
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust Global Asset Allocation Fund
</LEGEND>
<SERIES>
<NUMBER> 022
<NAME> CLASS B
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 834,022,547
<INVESTMENTS-AT-VALUE> 993,714,391
<RECEIVABLES> 12,347,561
<ASSETS-OTHER> 37,322,651
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,043,384,603
<PAYABLE-FOR-SECURITIES> 16,359,482
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5,352,489
<TOTAL-LIABILITIES> 21,711,971
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 788,157,111
<SHARES-COMMON-STOCK> 69,604
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 18,368,225
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 54,031,084
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 161,116,212
<NET-ASSETS> 1,021,672,632
<DIVIDEND-INCOME> 8,677,729
<INTEREST-INCOME> 24,283,063
<OTHER-INCOME> 0
<EXPENSES-NET> 7,605,134
<NET-INVESTMENT-INCOME> 25,355,658
<REALIZED-GAINS-CURRENT> 48,568,169
<APPREC-INCREASE-CURRENT> 43,294,979
<NET-CHANGE-FROM-OPS> 117,218,806
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 96,750
<NUMBER-OF-SHARES-REDEEMED> (27,146)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 65,140,473
<ACCUMULATED-NII-PRIOR> 19,696,988
<ACCUMULATED-GAINS-PRIOR> 94,421,572
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6,476,330
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 7,767,260
<AVERAGE-NET-ASSETS> 378,433
<PER-SHARE-NAV-BEGIN> 18.16
<PER-SHARE-NII> .33
<PER-SHARE-GAIN-APPREC> .46
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 18.95
<EXPENSE-RATIO> .63
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust Global Growth Fund
</LEGEND>
<SERIES>
<NUMBER> 021
<NAME> CLASS A
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 1,577,608,901
<INVESTMENTS-AT-VALUE> 1,978,917,470
<RECEIVABLES> 8,703,179
<ASSETS-OTHER> 7,209,354
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,994,830,003
<PAYABLE-FOR-SECURITIES> 4,026,719
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,885,832
<TOTAL-LIABILITIES> 6,912,551
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,416,165,613
<SHARES-COMMON-STOCK> 98,005,512
<SHARES-COMMON-PRIOR> 87,869,535
<ACCUMULATED-NII-CURRENT> 7,163,966
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 163,271,931
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 401,315,939
<NET-ASSETS> 1,987,917,452
<DIVIDEND-INCOME> 15,240,465
<INTEREST-INCOME> 1,876,290
<OTHER-INCOME> 0
<EXPENSES-NET> 12,503,387
<NET-INVESTMENT-INCOME> 4,613,368
<REALIZED-GAINS-CURRENT> 196,526,598
<APPREC-INCREASE-CURRENT> 258,892,378
<NET-CHANGE-FROM-OPS> 460,032,344
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (45,115,988)
<DISTRIBUTIONS-OF-GAINS> (225,579,941)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,476,202
<NUMBER-OF-SHARES-REDEEMED> (10,353,865)
<SHARES-REINVESTED> 15,013,640
<NET-CHANGE-IN-ASSETS> 376,413,994
<ACCUMULATED-NII-PRIOR> 39,155,023
<ACCUMULATED-GAINS-PRIOR> 201,097,344
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 10,690,208
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 12,815,041
<AVERAGE-NET-ASSETS> 1,783,008,821
<PER-SHARE-NAV-BEGIN> 18.34
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> 5.01
<PER-SHARE-DIVIDEND> (.52)
<PER-SHARE-DISTRIBUTIONS> (2.60)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.28
<EXPENSE-RATIO> .72
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust Global Growth Fund
</LEGEND>
<SERIES>
<NUMBER> 022
<NAME> CLASS B
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 1,577,608,901
<INVESTMENTS-AT-VALUE> 1,978,917,470
<RECEIVABLES> 8,703,179
<ASSETS-OTHER> 7,209,354
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,994,830,003
<PAYABLE-FOR-SECURITIES> 4,026,719
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,885,832
<TOTAL-LIABILITIES> 6,912,551
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,416,165,613
<SHARES-COMMON-STOCK> 40,606
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 7,163,966
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 163,271,931
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 401,315,939
<NET-ASSETS> 1,987,917,452
<DIVIDEND-INCOME> 15,240,465
<INTEREST-INCOME> 1,876,290
<OTHER-INCOME> 0
<EXPENSES-NET> 12,503,387
<NET-INVESTMENT-INCOME> 4,613,368
<REALIZED-GAINS-CURRENT> 196,526,598
<APPREC-INCREASE-CURRENT> 258,892,378
<NET-CHANGE-FROM-OPS> 460,032,344
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 42,380
<NUMBER-OF-SHARES-REDEEMED> (1,774)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 376,413,994
<ACCUMULATED-NII-PRIOR> 39,155,023
<ACCUMULATED-GAINS-PRIOR> 201,097,344
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 10,690,208
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 12,815,041
<AVERAGE-NET-ASSETS> 155,765
<PER-SHARE-NAV-BEGIN> 18.03
<PER-SHARE-NII> (.05)
<PER-SHARE-GAIN-APPREC> 2.30
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.28
<EXPENSE-RATIO> .59
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust Growth and Income Fund
</LEGEND>
<SERIES>
<NUMBER> 021
<NAME> CLASS A
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 8,152,437,905
<INVESTMENTS-AT-VALUE> 9,990,816,033
<RECEIVABLES> 37,210,550
<ASSETS-OTHER> 564,068
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 10,028,590,556
<PAYABLE-FOR-SECURITIES> 60,871,662
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 11,749,573
<TOTAL-LIABILITIES> 72,621,235
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7,336,374,553
<SHARES-COMMON-STOCK> 345,731,715
<SHARES-COMMON-PRIOR> 294,356,911
<ACCUMULATED-NII-CURRENT> 139,548,823
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 641,667,817
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,838,378,128
<NET-ASSETS> 9,955,969,321
<DIVIDEND-INCOME> 182,340,001
<INTEREST-INCOME> 8,178,035
<OTHER-INCOME> 0
<EXPENSES-NET> 44,830,726
<NET-INVESTMENT-INCOME> 145,687,310
<REALIZED-GAINS-CURRENT> 655,020,567
<APPREC-INCREASE-CURRENT> 495,099,517
<NET-CHANGE-FROM-OPS> 1,295,807,394
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (149,956,847)
<DISTRIBUTIONS-OF-GAINS> (978,918,294)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 20,985,496
<NUMBER-OF-SHARES-REDEEMED> (10,426,008)
<SHARES-REINVESTED> 40,815,316
<NET-CHANGE-IN-ASSETS> 1,618,635,248
<ACCUMULATED-NII-PRIOR> 145,500,331
<ACCUMULATED-GAINS-PRIOR> 963,025,316
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 42,223,532
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 45,905,917
<AVERAGE-NET-ASSETS> 1,052,980
<PER-SHARE-NAV-BEGIN> 28.32
<PER-SHARE-NII> .44
<PER-SHARE-GAIN-APPREC> 3.77
<PER-SHARE-DIVIDEND> (.50)
<PER-SHARE-DISTRIBUTIONS> (3.26)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 28.77
<EXPENSE-RATIO> .50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust Growth and Income Fund
</LEGEND>
<SERIES>
<NUMBER> 022
<NAME> CLASS B
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 8,152,437,905
<INVESTMENTS-AT-VALUE> 9,990,816,033
<RECEIVABLES> 37,210,550
<ASSETS-OTHER> 564,068
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 10,028,590,556
<PAYABLE-FOR-SECURITIES> 60,871,662
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 11,749,573
<TOTAL-LIABILITIES> 72,621,235
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7,336,374,553
<SHARES-COMMON-STOCK> 263,744
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 139,548,823
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 641,667,817
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,838,378,128
<NET-ASSETS> 9,955,969,321
<DIVIDEND-INCOME> 182,340,001
<INTEREST-INCOME> 8,178,035
<OTHER-INCOME> 0
<EXPENSES-NET> 44,830,726
<NET-INVESTMENT-INCOME> 145,687,310
<REALIZED-GAINS-CURRENT> 655,020,567
<APPREC-INCREASE-CURRENT> 495,099,517
<NET-CHANGE-FROM-OPS> 1,295,807,394
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (20,511)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (4,648)
<NUMBER-OF-SHARES-SOLD> 276,080
<NUMBER-OF-SHARES-REDEEMED> (12,336)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,618,635,248
<ACCUMULATED-NII-PRIOR> 145,500,331
<ACCUMULATED-GAINS-PRIOR> 963,025,316
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 42,223,532
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 45,905,917
<AVERAGE-NET-ASSETS> 1,052,980
<PER-SHARE-NAV-BEGIN> 28.02
<PER-SHARE-NII> .26
<PER-SHARE-GAIN-APPREC> .47
<PER-SHARE-DIVIDEND> .00
<PER-SHARE-DISTRIBUTIONS> .00
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 28.75
<EXPENSE-RATIO> .49
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust Health Sciences Fund
</LEGEND>
<SERIES>
<NUMBER> 021
<NAME> CLASS A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 124,911,399
<INVESTMENTS-AT-VALUE> 142,859,489
<RECEIVABLES> 1,365,639
<ASSETS-OTHER> 520
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 144,225,648
<PAYABLE-FOR-SECURITIES> 7,448,779
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 212,195
<TOTAL-LIABILITIES> 7,660,974
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 123,436,616
<SHARES-COMMON-STOCK> 12,283,877
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (4,823,757)
<ACCUM-APPREC-OR-DEPREC> 17,951,815
<NET-ASSETS> 136,564,674
<DIVIDEND-INCOME> 222,881
<INTEREST-INCOME> 236,556
<OTHER-INCOME> 0
<EXPENSES-NET> 375,082
<NET-INVESTMENT-INCOME> 84,355
<REALIZED-GAINS-CURRENT> (4,823,757)
<APPREC-INCREASE-CURRENT> 17,951,815
<NET-CHANGE-FROM-OPS> 13,212,413
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (83,480)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (32,926)
<NUMBER-OF-SHARES-SOLD> 12,220,083
<NUMBER-OF-SHARES-REDEEMED> (147,346)
<SHARES-REINVESTED> 11,140
<NET-CHANGE-IN-ASSETS> 134,563,674
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 295,300
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 380,012
<AVERAGE-NET-ASSETS> 62,253,150
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .01
<PER-SHARE-GAIN-APPREC> .94
<PER-SHARE-DIVIDEND> (.01)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.94
<EXPENSE-RATIO> .61
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust Health Sciences Fund
</LEGEND>
<SERIES>
<NUMBER> 022
<NAME> CLASS B
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 124,911,399
<INVESTMENTS-AT-VALUE> 142,859,489
<RECEIVABLES> 1,365,639
<ASSETS-OTHER> 520
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 144,225,648
<PAYABLE-FOR-SECURITIES> 7,448,779
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 212,195
<TOTAL-LIABILITIES> 7,660,974
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 123,436,616
<SHARES-COMMON-STOCK> 194,680
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (4,823,757)
<ACCUM-APPREC-OR-DEPREC> 17,951,815
<NET-ASSETS> 136,564,674
<DIVIDEND-INCOME> 222,881
<INTEREST-INCOME> 236,556
<OTHER-INCOME> 0
<EXPENSES-NET> 375,082
<NET-INVESTMENT-INCOME> 84,355
<REALIZED-GAINS-CURRENT> (4,823,757)
<APPREC-INCREASE-CURRENT> 17,951,815
<NET-CHANGE-FROM-OPS> 13,212,413
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,104)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (435)
<NUMBER-OF-SHARES-SOLD> 212,762
<NUMBER-OF-SHARES-REDEEMED> (18,332)
<SHARES-REINVESTED> 150
<NET-CHANGE-IN-ASSETS> 134,563,674
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 295,300
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 380,012
<AVERAGE-NET-ASSETS> 339,379
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (.01)
<PER-SHARE-GAIN-APPREC> .95
<PER-SHARE-DIVIDEND> (.01)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.93
<EXPENSE-RATIO> .71
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust High Yield Fund
</LEGEND>
<SERIES>
<NUMBER> 021
<NAME> CLASS A
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-END> Dec-31-1998
<INVESTMENTS-AT-COST> 1,135,682,518
<INVESTMENTS-AT-VALUE> 1,018,532,273
<RECEIVABLES> 22,500,760
<ASSETS-OTHER> 398
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,041,033,431
<PAYABLE-FOR-SECURITIES> 3,364,066
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,938,112
<TOTAL-LIABILITIES> 6,302,178
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,060,453,710
<SHARES-COMMON-STOCK> 88,260,675
<SHARES-COMMON-PRIOR> 75,287,731
<ACCUMULATED-NII-CURRENT> 110,935,694
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (19,501,164)
<ACCUM-APPREC-OR-DEPREC> (117,156,987)
<NET-ASSETS> 1,034,731,253
<DIVIDEND-INCOME> 10,360,123
<INTEREST-INCOME> 108,393,204
<OTHER-INCOME> 0
<EXPENSES-NET> 7,404,349
<NET-INVESTMENT-INCOME> 111,348,978
<REALIZED-GAINS-CURRENT> (19,658,042)
<APPREC-INCREASE-CURRENT> (155,030,509)
<NET-CHANGE-FROM-OPS> (63,339,573)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (84,098,235)
<DISTRIBUTIONS-OF-GAINS> (13,196,473)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 18,556,404
<NUMBER-OF-SHARES-REDEEMED> (13,073,429)
<SHARES-REINVESTED> 7,489,969
<NET-CHANGE-IN-ASSETS> 9,433,129
<ACCUMULATED-NII-PRIOR> 82,916,513
<ACCUMULATED-GAINS-PRIOR> 12,658,981
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6,936,557
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 7,633,346
<AVERAGE-NET-ASSETS> 1,079,308,554
<PER-SHARE-NAV-BEGIN> 13.62
<PER-SHARE-NII> 1.31
<PER-SHARE-GAIN-APPREC> (1.98)
<PER-SHARE-DIVIDEND> (1.08)
<PER-SHARE-DISTRIBUTIONS> (.17)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.70
<EXPENSE-RATIO> .71
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust High Yield Fund
</LEGEND>
<SERIES>
<NUMBER> 022
<NAME> CLASS B
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-END> Dec-31-1998
<INVESTMENTS-AT-COST> 1,135,682,518
<INVESTMENTS-AT-VALUE> 1,018,532,273
<RECEIVABLES> 22,500,760
<ASSETS-OTHER> 398
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,041,033,431
<PAYABLE-FOR-SECURITIES> 3,364,066
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,938,112
<TOTAL-LIABILITIES> 6,302,178
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,060,453,710
<SHARES-COMMON-STOCK> 157,186
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 110,935,694
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (19,501,164)
<ACCUM-APPREC-OR-DEPREC> (117,156,987)
<NET-ASSETS> 1,034,731,253
<DIVIDEND-INCOME> 10,360,123
<INTEREST-INCOME> 108,393,204
<OTHER-INCOME> 0
<EXPENSES-NET> 7,404,349
<NET-INVESTMENT-INCOME> 111,348,978
<REALIZED-GAINS-CURRENT> (19,658,042)
<APPREC-INCREASE-CURRENT> (155,030,509)
<NET-CHANGE-FROM-OPS> (63,339,573)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 171,952
<NUMBER-OF-SHARES-REDEEMED> (14,766)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 9,433,129
<ACCUMULATED-NII-PRIOR> 82,916,513
<ACCUMULATED-GAINS-PRIOR> 12,658,981
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6,936,557
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 7,633,346
<AVERAGE-NET-ASSETS> 40,828
<PER-SHARE-NAV-BEGIN> 12.99
<PER-SHARE-NII> 0.77
<PER-SHARE-GAIN-APPREC> (2.08)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.70
<EXPENSE-RATIO> .58
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust International Growth Fund
</LEGEND>
<SERIES>
<NUMBER> 021
<NAME> CLASS A
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 278,844,842
<INVESTMENTS-AT-VALUE> 321,983,096
<RECEIVABLES> 2,683,042
<ASSETS-OTHER> 7,345
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 324,673,483
<PAYABLE-FOR-SECURITIES> 3,094,406
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,742,883
<TOTAL-LIABILITIES> 5,837,289
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 281,984,369
<SHARES-COMMON-STOCK> 23,488,832
<SHARES-COMMON-PRIOR> 13,203,930
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (224,723)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (6,111,765)
<ACCUM-APPREC-OR-DEPREC> 43,188,313
<NET-ASSETS> 318,836,194
<DIVIDEND-INCOME> 3,648,930
<INTEREST-INCOME> 897,847
<OTHER-INCOME> 0
<EXPENSES-NET> 2,537,023
<NET-INVESTMENT-INCOME> 2,009,754
<REALIZED-GAINS-CURRENT> (6,419,294)
<APPREC-INCREASE-CURRENT> 38,588,932
<NET-CHANGE-FROM-OPS> 34,179,392
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (636,764)
<DISTRIBUTIONS-OF-GAINS> (398,324)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 21,731,822
<NUMBER-OF-SHARES-REDEEMED> (11,524,363)
<SHARES-REINVESTED> 77,443
<NET-CHANGE-IN-ASSETS> 167,951,702
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (138,410)
<OVERDIST-NET-GAINS-PRIOR> (983,749)
<GROSS-ADVISORY-FEES> 1,920,623
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,581,522
<AVERAGE-NET-ASSETS> 239,352,041
<PER-SHARE-NAV-BEGIN> 11.43
<PER-SHARE-NII> .11
<PER-SHARE-GAIN-APPREC> 2.03
<PER-SHARE-DIVIDEND> (.03)
<PER-SHARE-DISTRIBUTIONS> .00
<RETURNS-OF-CAPITAL> (.02)
<PER-SHARE-NAV-END> 13.52
<EXPENSE-RATIO> 1.07
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust International Growth Fund
</LEGEND>
<SERIES>
<NUMBER> 022
<NAME> CLASS B
TABLE>
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 278,844,842
<INVESTMENTS-AT-VALUE> 321,983,096
<RECEIVABLES> 2,683,042
<ASSETS-OTHER> 7,345
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 324,673,483
<PAYABLE-FOR-SECURITIES> 3,094,406
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,742,883
<TOTAL-LIABILITIES> 5,837,289
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 281,984,369
<SHARES-COMMON-STOCK> 91,357
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (224,723)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (6,111,765)
<ACCUM-APPREC-OR-DEPREC> 43,188,313
<NET-ASSETS> 318,836,194
<DIVIDEND-INCOME> 3,648,930
<INTEREST-INCOME> 897,847
<OTHER-INCOME> 0
<EXPENSES-NET> 2,537,023
<NET-INVESTMENT-INCOME> 2,009,754
<REALIZED-GAINS-CURRENT> (6,419,294)
<APPREC-INCREASE-CURRENT> 38,588,932
<NET-CHANGE-FROM-OPS> 34,179,392
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (15,477)
<DISTRIBUTIONS-OF-GAINS> (9,682)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,852,161
<NUMBER-OF-SHARES-REDEEMED> (5,762,725)
<SHARES-REINVESTED> 1,921
<NET-CHANGE-IN-ASSETS> 167,951,702
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (138,410)
<OVERDIST-NET-GAINS-PRIOR> (983,749)
<GROSS-ADVISORY-FEES> 1,920,623
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,581,522
<AVERAGE-NET-ASSETS> 239,352,041
<PER-SHARE-NAV-BEGIN> 13.44
<PER-SHARE-NII> (.04)
<PER-SHARE-GAIN-APPREC> .15
<PER-SHARE-DIVIDEND> (.02)
<PER-SHARE-DISTRIBUTIONS> .00
<RETURNS-OF-CAPITAL> (.02)
<PER-SHARE-NAV-END> 13.51
<EXPENSE-RATIO> .83
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust International Growth and Income
Fund
</LEGEND>
<SERIES>
<NUMBER> 021
<NAME> CLASS A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 290,613,340
<INVESTMENTS-AT-VALUE> 311,384,176
<RECEIVABLES> 3,182,990
<ASSETS-OTHER> 146
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 314,567,312
<PAYABLE-FOR-SECURITIES> 4,740,438
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,854,072
<TOTAL-LIABILITIES> 8,594,510
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 287,979,082
<SHARES-COMMON-STOCK> 24,912,249
<SHARES-COMMON-PRIOR> 17,911,179
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (654,990)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (2,067,655)
<ACCUM-APPREC-OR-DEPREC> 20,716,365
<NET-ASSETS> 305,972,802
<DIVIDEND-INCOME> 5,832,917
<INTEREST-INCOME> 1,941,726
<OTHER-INCOME> 0
<EXPENSES-NET> 2,685,870
<NET-INVESTMENT-INCOME> 5,088,773
<REALIZED-GAINS-CURRENT> 4,694,683
<APPREC-INCREASE-CURRENT> 14,381,219
<NET-CHANGE-FROM-OPS> 24,164,675
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2,590,484)
<DISTRIBUTIONS-OF-GAINS> (9,739,230)
<DISTRIBUTIONS-OTHER> (1,529,177)
<NUMBER-OF-SHARES-SOLD> 21,724,405
<NUMBER-OF-SHARES-REDEEMED> (15,879,232)
<SHARES-REINVESTED> 1,155,897
<NET-CHANGE-IN-ASSETS> 99,374,792
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 214,309
<OVERDISTRIB-NII-PRIOR> (346,390)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,185,230
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,718,070
<AVERAGE-NET-ASSETS> 272,967,285
<PER-SHARE-NAV-BEGIN> 11.53
<PER-SHARE-NII> .23
<PER-SHARE-GAIN-APPREC> 1.06
<PER-SHARE-DIVIDEND> (.11)
<PER-SHARE-DISTRIBUTIONS> (.41)
<RETURNS-OF-CAPITAL> (.06)
<PER-SHARE-NAV-END> 12.24
<EXPENSE-RATIO> .99
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust International Growth and Income
Fund
</LEGEND>
<SERIES>
<NUMBER> 022
<NAME> CLASS B
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 290,613,340
<INVESTMENTS-AT-VALUE> 311,384,176
<RECEIVABLES> 3,182,990
<ASSETS-OTHER> 146
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 314,567,312
<PAYABLE-FOR-SECURITIES> 4,740,438
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,854,072
<TOTAL-LIABILITIES> 8,594,510
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 287,979,082
<SHARES-COMMON-STOCK> 75,625
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (654,990)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (2,067,655)
<ACCUM-APPREC-OR-DEPREC> 20,716,365
<NET-ASSETS> 305,972,802
<DIVIDEND-INCOME> 5,832,917
<INTEREST-INCOME> 1,941,726
<OTHER-INCOME> 0
<EXPENSES-NET> 2,685,870
<NET-INVESTMENT-INCOME> 5,088,773
<REALIZED-GAINS-CURRENT> 4,694,683
<APPREC-INCREASE-CURRENT> 14,381,219
<NET-CHANGE-FROM-OPS> 24,164,675
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (9,677)
<DISTRIBUTIONS-OF-GAINS> (34,629)
<DISTRIBUTIONS-OTHER> (5,628)
<NUMBER-OF-SHARES-SOLD> 608,066
<NUMBER-OF-SHARES-REDEEMED> (536,080)
<SHARES-REINVESTED> 3,639
<NET-CHANGE-IN-ASSETS> 99,374,792
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 214,309
<OVERDISTRIB-NII-PRIOR> (346,390)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,185,230
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,718,070
<AVERAGE-NET-ASSETS> 185,259
<PER-SHARE-NAV-BEGIN> 13.36
<PER-SHARE-NII> (.01)
<PER-SHARE-GAIN-APPREC> (.57)
<PER-SHARE-DIVIDEND> (.11)
<PER-SHARE-DISTRIBUTIONS> (.37)
<RETURNS-OF-CAPITAL> (.06)
<PER-SHARE-NAV-END> 12.24
<EXPENSE-RATIO> .84
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust International New Opportunities
Fund
</LEGEND>
<SERIES>
<NUMBER> 021
<NAME> CLASS A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 109,212,054
<INVESTMENTS-AT-VALUE> 135,210,654
<RECEIVABLES> 3,274,155
<ASSETS-OTHER> 696,034
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 139,180,843
<PAYABLE-FOR-SECURITIES> 2,122,562
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,522,157
<TOTAL-LIABILITIES> 3,644,719
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 123,597,238
<SHARES-COMMON-STOCK> 7,405
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (233,349)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (13,837,772)
<ACCUM-APPREC-OR-DEPREC> 26,010,007
<NET-ASSETS> 135,536,124
<DIVIDEND-INCOME> 1,204,897
<INTEREST-INCOME> 312,196
<OTHER-INCOME> 0
<EXPENSES-NET> 1,958,683
<NET-INVESTMENT-INCOME> (441,590)
<REALIZED-GAINS-CURRENT> (8,286,399)
<APPREC-INCREASE-CURRENT> 26,474,514
<NET-CHANGE-FROM-OPS> 17,746,525
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 108,166
<NUMBER-OF-SHARES-REDEEMED> (100,761)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 28,535,640
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (20,027)
<OVERDIST-NET-GAINS-PRIOR> (5,087,219)
<GROSS-ADVISORY-FEES> 1,488,974
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,985,342
<AVERAGE-NET-ASSETS> 43,007
<PER-SHARE-NAV-BEGIN> 11.39
<PER-SHARE-NII> (.05)
<PER-SHARE-GAIN-APPREC> .14
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.48
<EXPENSE-RATIO> 1.18
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust International New Opportunities
Fund
</LEGEND>
<SERIES>
<NUMBER> 022
<NAME> CLASS B
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 109,212,054
<INVESTMENTS-AT-VALUE> 135,210,654
<RECEIVABLES> 3,274,155
<ASSETS-OTHER> 696,034
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 139,180,843
<PAYABLE-FOR-SECURITIES> 2,122,562
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,522,157
<TOTAL-LIABILITIES> 3,644,719
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 123,597,238
<SHARES-COMMON-STOCK> 7,405
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (233,349)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (13,837,772)
<ACCUM-APPREC-OR-DEPREC> 26,010,007
<NET-ASSETS> 135,536,124
<DIVIDEND-INCOME> 1,204,897
<INTEREST-INCOME> 312,196
<OTHER-INCOME> 0
<EXPENSES-NET> 1,958,683
<NET-INVESTMENT-INCOME> (441,590)
<REALIZED-GAINS-CURRENT> (8,286,399)
<APPREC-INCREASE-CURRENT> 26,474,514
<NET-CHANGE-FROM-OPS> 17,746,525
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 108,166
<NUMBER-OF-SHARES-REDEEMED> (100,761)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 28,535,640
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (20,027)
<OVERDIST-NET-GAINS-PRIOR> (5,087,219)
<GROSS-ADVISORY-FEES> 1,488,974
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,985,342
<AVERAGE-NET-ASSETS> 43,007
<PER-SHARE-NAV-BEGIN> 11.39
<PER-SHARE-NII> (.05)
<PER-SHARE-GAIN-APPREC> .14
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.48
<EXPENSE-RATIO> 1.18
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust Investors Fund
</LEGEND>
<SERIES>
<NUMBER> 021
<NAME> CLASS A
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 211,681,348
<INVESTMENTS-AT-VALUE> 250,774,413
<RECEIVABLES> 2,558,082
<ASSETS-OTHER> 475
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 253,332,970
<PAYABLE-FOR-SECURITIES> 7,052,644
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 365,272
<TOTAL-LIABILITIES> 7,417,916
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 215,660,283
<SHARES-COMMON-STOCK> 20,891,466
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (8,838,294)
<ACCUM-APPREC-OR-DEPREC> 39,093,065
<NET-ASSETS> 245,915,054
<DIVIDEND-INCOME> 438,887
<INTEREST-INCOME> 300,888
<OTHER-INCOME> 0
<EXPENSES-NET> 566,428
<NET-INVESTMENT-INCOME> 183,347
<REALIZED-GAINS-CURRENT> (8,838,294)
<APPREC-INCREASE-CURRENT> 39,093,065
<NET-CHANGE-FROM-OPS> 30,438,118
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 181,901
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 110,129
<NUMBER-OF-SHARES-SOLD> 21,117,159
<NUMBER-OF-SHARES-REDEEMED> (452,016)
<SHARES-REINVESTED> 26,323
<NET-CHANGE-IN-ASSETS> 243,914,054
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 425,193
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 556,428
<AVERAGE-NET-ASSETS> 80,236,046
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .02
<PER-SHARE-GAIN-APPREC> 1.65
<PER-SHARE-DIVIDEND> (.01)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> (.01)
<PER-SHARE-NAV-END> 11.65
<EXPENSE-RATIO> .57
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust Investors Fund
</LEGEND>
<SERIES>
<NUMBER> 022
<NAME> CLASS B
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 211,681,348
<INVESTMENTS-AT-VALUE> 250,774,413
<RECEIVABLES> 2,558,082
<ASSETS-OTHER> 475
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 253,332,970
<PAYABLE-FOR-SECURITIES> 7,052,644
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 365,272
<TOTAL-LIABILITIES> 7,417,916
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 215,660,283
<SHARES-COMMON-STOCK> 225,024
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (8,838,294)
<ACCUM-APPREC-OR-DEPREC> 39,093,065
<NET-ASSETS> 245,915,054
<DIVIDEND-INCOME> 438,887
<INTEREST-INCOME> 300,888
<OTHER-INCOME> 0
<EXPENSES-NET> 566,428
<NET-INVESTMENT-INCOME> 183,347
<REALIZED-GAINS-CURRENT> (8,838,294)
<APPREC-INCREASE-CURRENT> 39,093,065
<NET-CHANGE-FROM-OPS> 30,438,118
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,605
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 972
<NUMBER-OF-SHARES-SOLD> 247,380
<NUMBER-OF-SHARES-REDEEMED> (22,691)
<SHARES-REINVESTED> 235
<NET-CHANGE-IN-ASSETS> 243,914,054
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 425,193
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 556,428
<AVERAGE-NET-ASSETS> 398,813
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .01
<PER-SHARE-GAIN-APPREC> 1.64
<PER-SHARE-DIVIDEND> (.01)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.64
<EXPENSE-RATIO> .67
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust Money Market Fund
</LEGEND>
<SERIES>
<NUMBER> 021
<NAME> CLASS A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 611,499,838
<INVESTMENTS-AT-VALUE> 611,499,838
<RECEIVABLES> 1,686,722
<ASSETS-OTHER> 9,443
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 613,196,003
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,849,970
<TOTAL-LIABILITIES> 4,849,970
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 608,346,033
<SHARES-COMMON-STOCK> 595,158,086
<SHARES-COMMON-PRIOR> 405,577,148
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 608,346,033
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 28,274,095
<OTHER-INCOME> 0
<EXPENSES-NET> 2,691,726
<NET-INVESTMENT-INCOME> 25,582,369
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 25,582,369
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (25,507,476)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,326,313,560
<NUMBER-OF-SHARES-REDEEMED> (1,162,240,098)
<SHARES-REINVESTED> 25,507,476
<NET-CHANGE-IN-ASSETS> 202,768,885
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,267,755
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,709,414
<AVERAGE-NET-ASSETS> 505,882,104
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .051
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.051)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .53
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust Money Market Fund
</LEGEND>
<SERIES>
<NUMBER> 022
<NAME> CLASS B
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 611,499,838
<INVESTMENTS-AT-VALUE> 611,499,838
<RECEIVABLES> 1,686,722
<ASSETS-OTHER> 9,443
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 613,196,003
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,849,970
<TOTAL-LIABILITIES> 4,849,970
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 608,346,033
<SHARES-COMMON-STOCK> 13,187,947
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 608,346,033
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 28,274,095
<OTHER-INCOME> 0
<EXPENSES-NET> 2,691,726
<NET-INVESTMENT-INCOME> 25,582,369
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 25,582,369
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (74,893)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 90,825,384
<NUMBER-OF-SHARES-REDEEMED> (77,712,330)
<SHARES-REINVESTED> 74,893
<NET-CHANGE-IN-ASSETS> 202,768,885
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,267,755
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,709,414
<AVERAGE-NET-ASSETS> 2,543,234
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .034
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.034)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .46
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust New Opportunities Fund
</LEGEND>
<SERIES>
<NUMBER> 021
<NAME> CLASS A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 2,421,374,980
<INVESTMENTS-AT-VALUE> 3,584,814,486
<RECEIVABLES> 12,509,764
<ASSETS-OTHER> 1,401,117
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,598,725,367
<PAYABLE-FOR-SECURITIES> 6,693,582
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,448,361
<TOTAL-LIABILITIES> 11,141,943
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,376,710,610
<SHARES-COMMON-STOCK> 137,628,302
<SHARES-COMMON-PRIOR> 122,008,086
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 47,433,308
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,163,439,506
<NET-ASSETS> 3,587,583,424
<DIVIDEND-INCOME> 8,256,052
<INTEREST-INCOME> 4,885,727
<OTHER-INCOME> 0
<EXPENSES-NET> 17,821,274
<NET-INVESTMENT-INCOME> (4,679,495)
<REALIZED-GAINS-CURRENT> 52,243,397
<APPREC-INCREASE-CURRENT> 621,550,838
<NET-CHANGE-FROM-OPS> 669,114,740
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (40,377,073)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 27,436,458
<NUMBER-OF-SHARES-REDEEMED> (13,491,638)
<SHARES-REINVESTED> 1,675,396
<NET-CHANGE-IN-ASSETS> 997,339,566
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 35,559,298
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 16,639,549
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 18,095,009
<AVERAGE-NET-ASSETS> 2,978,837,725
<PER-SHARE-NAV-BEGIN> 21.23
<PER-SHARE-NII> (.04)
<PER-SHARE-GAIN-APPREC> 5.19
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.32)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 26.06
<EXPENSE-RATIO> .61
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust New Opportunities Fund
</LEGEND>
<SERIES>
<NUMBER> 022
<NAME> CLASS B
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 2,421,374,980
<INVESTMENTS-AT-VALUE> 3,584,814,486
<RECEIVABLES> 12,509,764
<ASSETS-OTHER> 1,401,117
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,598,725,367
<PAYABLE-FOR-SECURITIES> 6,693,582
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,448,361
<TOTAL-LIABILITIES> 11,141,943
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,376,710,610
<SHARES-COMMON-STOCK> 52,178
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 47,433,308
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,163,439,506
<NET-ASSETS> 3,587,583,424
<DIVIDEND-INCOME> 8,256,052
<INTEREST-INCOME> 4,885,727
<OTHER-INCOME> 0
<EXPENSES-NET> 17,821,274
<NET-INVESTMENT-INCOME> (4,679,495)
<REALIZED-GAINS-CURRENT> 52,243,397
<APPREC-INCREASE-CURRENT> 621,550,838
<NET-CHANGE-FROM-OPS> 669,114,740
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 54,748
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> (570)
<NET-CHANGE-IN-ASSETS> 997,339,566
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 35,559,298
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 16,639,549
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 18,095,009
<AVERAGE-NET-ASSETS> 327,796
<PER-SHARE-NAV-BEGIN> 23.94
<PER-SHARE-NII> (.05)
<PER-SHARE-GAIN-APPREC> 2.15
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .00
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 26.04
<EXPENSE-RATIO> .51
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust New Value Fund
</LEGEND>
<SERIES>
<NUMBER> 021
<NAME> CLASS A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 240,992,289
<INVESTMENTS-AT-VALUE> 256,108,199
<RECEIVABLES> 986,308
<ASSETS-OTHER> 36
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 257,094,543
<PAYABLE-FOR-SECURITIES> 159,828
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 766,931
<TOTAL-LIABILITIES> 926,759
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 237,846,959
<SHARES-COMMON-STOCK> 21,267,484
<SHARES-COMMON-PRIOR> 16,619,656
<ACCUMULATED-NII-CURRENT> 57,759
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3,147,156
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 15,115,910
<NET-ASSETS> 256,167,784
<DIVIDEND-INCOME> 4,459,875
<INTEREST-INCOME> 460,965
<OTHER-INCOME> 0
<EXPENSES-NET> 1,804,057
<NET-INVESTMENT-INCOME> 3,116,783
<REALIZED-GAINS-CURRENT> 3,733,085
<APPREC-INCREASE-CURRENT> 7,492,278
<NET-CHANGE-FROM-OPS> 14,342,146
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (4,522,395)
<DISTRIBUTIONS-OF-GAINS> (4,472,218)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,966,193
<NUMBER-OF-SHARES-REDEEMED> (1,068,232)
<SHARES-REINVESTED> 749,867
<NET-CHANGE-IN-ASSETS> 60,776,933
<ACCUMULATED-NII-PRIOR> 1,560,934
<ACCUMULATED-GAINS-PRIOR> 3,789,899
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,622,770
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,871,516
<AVERAGE-NET-ASSETS> 231,764,555
<PER-SHARE-NAV-BEGIN> 11.76
<PER-SHARE-NII> .16
<PER-SHARE-GAIN-APPREC> .57
<PER-SHARE-DIVIDEND> (.23)
<PER-SHARE-DISTRIBUTIONS> (.23)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.03
<EXPENSE-RATIO> .81
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust New Value Fund
</LEGEND>
<SERIES>
<NUMBER> 022
<NAME> CLASS B
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 240,992,289
<INVESTMENTS-AT-VALUE> 256,108,199
<RECEIVABLES> 986,308
<ASSETS-OTHER> 36
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 257,094,543
<PAYABLE-FOR-SECURITIES> 159,828
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 766,931
<TOTAL-LIABILITIES> 926,759
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 237,846,959
<SHARES-COMMON-STOCK> 34,458
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 57,759
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3,147,156
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 15,115,910
<NET-ASSETS> 256,167,784
<DIVIDEND-INCOME> 4,459,875
<INTEREST-INCOME> 460,965
<OTHER-INCOME> 0
<EXPENSES-NET> 1,804,057
<NET-INVESTMENT-INCOME> 3,116,783
<REALIZED-GAINS-CURRENT> 3,733,085
<APPREC-INCREASE-CURRENT> 7,492,278
<NET-CHANGE-FROM-OPS> 14,342,146
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3,988)
<DISTRIBUTIONS-OF-GAINS> (755)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 36,641
<NUMBER-OF-SHARES-REDEEMED> (2,418)
<SHARES-REINVESTED> 235
<NET-CHANGE-IN-ASSETS> 60,776,933
<ACCUMULATED-NII-PRIOR> 1,560,934
<ACCUMULATED-GAINS-PRIOR> 3,789,899
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,622,770
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,871,516
<AVERAGE-NET-ASSETS> 88,472
<PER-SHARE-NAV-BEGIN> 11.91
<PER-SHARE-NII> .13
<PER-SHARE-GAIN-APPREC> .13
<PER-SHARE-DIVIDEND> (.13)
<PER-SHARE-DISTRIBUTIONS> (.02)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.02
<EXPENSE-RATIO> .65
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust OTC & Emerging Growth Fund
</LEGEND>
<SERIES>
<NUMBER> 021
<NAME> CLASS A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 22,796,998
<INVESTMENTS-AT-VALUE> 28,670,258
<RECEIVABLES> 199,513
<ASSETS-OTHER> 213
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 28,869,984
<PAYABLE-FOR-SECURITIES> 207,986
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 62,019
<TOTAL-LIABILITIES> 270,005
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 25,459,263
<SHARES-COMMON-STOCK> 2,781,247
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (2,732,544)
<ACCUM-APPREC-OR-DEPREC> 5,873,260
<NET-ASSETS> 28,599,979
<DIVIDEND-INCOME> 2,404
<INTEREST-INCOME> 54,580
<OTHER-INCOME> 0
<EXPENSES-NET> 78,393
<NET-INVESTMENT-INCOME> (21,409)
<REALIZED-GAINS-CURRENT> (2,732,544)
<APPREC-INCREASE-CURRENT> 5,873,260
<NET-CHANGE-FROM-OPS> 3,119,307
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (10,506)
<NUMBER-OF-SHARES-SOLD> 3,246,140
<NUMBER-OF-SHARES-REDEEMED> (665,964)
<SHARES-REINVESTED> 1,071
<NET-CHANGE-IN-ASSETS> 26,598,979
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 62,785
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 80,829
<AVERAGE-NET-ASSETS> 13,204,818
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (.01)
<PER-SHARE-GAIN-APPREC> .10
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.09
<EXPENSE-RATIO> .60
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust OTC & Emerging Growth Fund
</LEGEND>
<SERIES>
<NUMBER> 022
<NAME> CLASS B
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 22,796,998
<INVESTMENTS-AT-VALUE> 28,670,258
<RECEIVABLES> 199,513
<ASSETS-OTHER> 213
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 28,869,984
<PAYABLE-FOR-SECURITIES> 207,986
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 62,019
<TOTAL-LIABILITIES> 270,005
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 25,459,263
<SHARES-COMMON-STOCK> 53,638
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (2,732,544)
<ACCUM-APPREC-OR-DEPREC> 5,873,260
<NET-ASSETS> 28,599,979
<DIVIDEND-INCOME> 2,404
<INTEREST-INCOME> 54,580
<OTHER-INCOME> 0
<EXPENSES-NET> 78,393
<NET-INVESTMENT-INCOME> (21,409)
<REALIZED-GAINS-CURRENT> (2,732,544)
<APPREC-INCREASE-CURRENT> 5,873,260
<NET-CHANGE-FROM-OPS> 3,119,307
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (91)
<NUMBER-OF-SHARES-SOLD> 60,996
<NUMBER-OF-SHARES-REDEEMED> (7,468)
<SHARES-REINVESTED> 10
<NET-CHANGE-IN-ASSETS> 26,598,979
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 62,785
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 80,829
<AVERAGE-NET-ASSETS> 103,374
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (.03)
<PER-SHARE-GAIN-APPREC> .11
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.08
<EXPENSE-RATIO> .71
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust Research Fund
</LEGEND>
<SERIES>
<NUMBER> 021
<NAME> CLASS A
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 21,710,526
<INVESTMENTS-AT-VALUE> 23,690,022
<RECEIVABLES> 575,692
<ASSETS-OTHER> 433
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 24,266,147
<PAYABLE-FOR-SECURITIES> 1,355,389
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 29,515
<TOTAL-LIABILITIES> 1,384,904
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 20,640,566
<SHARES-COMMON-STOCK> 1,897,004
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 261,181
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,979,496
<NET-ASSETS> 22,881,243
<DIVIDEND-INCOME> 30,883
<INTEREST-INCOME> 14,966
<OTHER-INCOME> 0
<EXPENSES-NET> 23,968
<NET-INVESTMENT-INCOME> 21,881
<REALIZED-GAINS-CURRENT> 273,279
<APPREC-INCREASE-CURRENT> 1,979,496
<NET-CHANGE-FROM-OPS> 2,274,656
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (21,723)
<DISTRIBUTIONS-OF-GAINS> (11,993)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,730,005
<NUMBER-OF-SHARES-REDEEMED> (35,497)
<SHARES-REINVESTED> 2,596
<NET-CHANGE-IN-ASSETS> 20,881,243
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 19,146
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 25,038
<AVERAGE-NET-ASSETS> 11,450,215
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .02
<PER-SHARE-GAIN-APPREC> 1.93
<PER-SHARE-DIVIDEND> (.01)
<PER-SHARE-DISTRIBUTIONS> (.01)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.93
<EXPENSE-RATIO> .22
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust Research Fund
</LEGEND>
<SERIES>
<NUMBER> 022
<NAME> CLASS B
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 21,710,526
<INVESTMENTS-AT-VALUE> 23,690,022
<RECEIVABLES> 575,692
<ASSETS-OTHER> 433
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 24,266,147
<PAYABLE-FOR-SECURITIES> 1,355,389
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 29,515
<TOTAL-LIABILITIES> 1,384,904
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 20,640,566
<SHARES-COMMON-STOCK> 21,410
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 261,181
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,979,496
<NET-ASSETS> 22,881,243
<DIVIDEND-INCOME> 30,883
<INTEREST-INCOME> 14,966
<OTHER-INCOME> 0
<EXPENSES-NET> 23,968
<NET-INVESTMENT-INCOME> 21,881
<REALIZED-GAINS-CURRENT> 273,279
<APPREC-INCREASE-CURRENT> 1,979,496
<NET-CHANGE-FROM-OPS> 2,274,656
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (158)
<DISTRIBUTIONS-OF-GAINS> (105)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 21,319
<NUMBER-OF-SHARES-REDEEMED> (32)
<SHARES-REINVESTED> 23
<NET-CHANGE-IN-ASSETS> 20,881,243
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 19,146
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 25,038
<AVERAGE-NET-ASSETS> 110,467
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .02
<PER-SHARE-GAIN-APPREC> 1.90
<PER-SHARE-DIVIDEND> (.01)
<PER-SHARE-DISTRIBUTIONS> (.01)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.90
<EXPENSE-RATIO> .25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust US Government and High Quality Bond
Fund
</LEGEND>
<SERIES>
<NUMBER> 021
<NAME> CLASS A
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 1,044,313,520
<INVESTMENTS-AT-VALUE> 1,065,660,432
<RECEIVABLES> 13,561,735
<ASSETS-OTHER> 139,237
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,079,361,404
<PAYABLE-FOR-SECURITIES> 74,926,744
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,985,720
<TOTAL-LIABILITIES> 76,912,464
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 912,746,579
<SHARES-COMMON-STOCK> 72,869,819
<SHARES-COMMON-PRIOR> 58,832,286
<ACCUMULATED-NII-CURRENT> 52,744,212
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 15,682,940
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 21,275,209
<NET-ASSETS> 1,002,448,940
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 59,006,505
<OTHER-INCOME> 0
<EXPENSES-NET> 5,706,429
<NET-INVESTMENT-INCOME> 53,300,076
<REALIZED-GAINS-CURRENT> 17,116,323
<APPREC-INCREASE-CURRENT> (3,093,378)
<NET-CHANGE-FROM-OPS> 67,323,021
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (42,868,771)
<DISTRIBUTIONS-OF-GAINS> (1,115,763)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 17,955,653
<NUMBER-OF-SHARES-REDEEMED> (7,327,772)
<SHARES-REINVESTED> 3,409,652
<NET-CHANGE-IN-ASSETS> 212,908,856
<ACCUMULATED-NII-PRIOR> 41,308,267
<ACCUMULATED-GAINS-PRIOR> 687,020
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5,276,417
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,857,496
<AVERAGE-NET-ASSETS> 868,479,471
<PER-SHARE-NAV-BEGIN> 13.42
<PER-SHARE-NII> .82
<PER-SHARE-GAIN-APPREC> .24
<PER-SHARE-DIVIDEND> (.73)
<PER-SHARE-DISTRIBUTIONS> (.02)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.73
<EXPENSE-RATIO> .67
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust US Government and High Quality Bond
Fund
</LEGEND>
<SERIES>
<NUMBER> 022
<NAME> CLASS B
TABLE>
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 1,044,313,520
<INVESTMENTS-AT-VALUE> 1,065,660,432
<RECEIVABLES> 13,561,735
<ASSETS-OTHER> 139,237
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,079,361,404
<PAYABLE-FOR-SECURITIES> 74,926,744
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,985,720
<TOTAL-LIABILITIES> 76,912,464
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 912,746,579
<SHARES-COMMON-STOCK> 166,693
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 52,744,212
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 15,682,940
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 21,275,209
<NET-ASSETS> 1,002,448,940
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 59,006,505
<OTHER-INCOME> 0
<EXPENSES-NET> 5,706,429
<NET-INVESTMENT-INCOME> 53,300,076
<REALIZED-GAINS-CURRENT> 17,116,323
<APPREC-INCREASE-CURRENT> (3,093,378)
<NET-CHANGE-FROM-OPS> 67,323,021
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 179,630
<NUMBER-OF-SHARES-REDEEMED> (12,937)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 212,908,856
<ACCUMULATED-NII-PRIOR> 41,308,267
<ACCUMULATED-GAINS-PRIOR> 687,020
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5,276,417
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,857,496
<AVERAGE-NET-ASSETS> 604,804
<PER-SHARE-NAV-BEGIN> 12.88
<PER-SHARE-NII> .50
<PER-SHARE-GAIN-APPREC> .35
<PER-SHARE-DIVIDEND> .00
<PER-SHARE-DISTRIBUTIONS> .00
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.73
<EXPENSE-RATIO> .56
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust Utilities Growth and Income Fund
</LEGEND>
<SERIES>
<NUMBER> 021
<NAME> CLASS A
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 756,014,197
<INVESTMENTS-AT-VALUE> 1,015,065,038
<RECEIVABLES> 3,908,244
<ASSETS-OTHER> 18,998
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,018,992,280
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,866,239
<TOTAL-LIABILITIES> 1,866,239
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 701,041,702
<SHARES-COMMON-STOCK> 55,812,807
<SHARES-COMMON-PRIOR> 47,966,028
<ACCUMULATED-NII-CURRENT> 28,000,418
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 29,013,180
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 259,070,741
<NET-ASSETS> 1,017,126,041
<DIVIDEND-INCOME> 25,421,491
<INTEREST-INCOME> 9,268,474
<OTHER-INCOME> 0
<EXPENSES-NET> 6,330,486
<NET-INVESTMENT-INCOME> 28,359,479
<REALIZED-GAINS-CURRENT> 29,497,527
<APPREC-INCREASE-CURRENT> 70,693,208
<NET-CHANGE-FROM-OPS> 128,550,214
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (25,052,399)
<DISTRIBUTIONS-OF-GAINS> (43,178,545)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,091,793
<NUMBER-OF-SHARES-REDEEMED> (3,313,634)
<SHARES-REINVESTED> 4,068,620
<NET-CHANGE-IN-ASSETS> 194,869,500
<ACCUMULATED-NII-PRIOR> 24,966,593
<ACCUMULATED-GAINS-PRIOR> 42,587,132
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5,824,579
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 6,416,736
<AVERAGE-NET-ASSETS> 887,558,555
<PER-SHARE-NAV-BEGIN> 17.14
<PER-SHARE-NII> .54
<PER-SHARE-GAIN-APPREC> 1.90
<PER-SHARE-DIVIDEND> (.51)
<PER-SHARE-DISTRIBUTIONS> (.88)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 18.19
<EXPENSE-RATIO> .72
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust Utilities Growth and Income Fund
</LEGEND>
<SERIES>
<NUMBER> 022
<NAME> CLASS B
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 756,014,197
<INVESTMENTS-AT-VALUE> 1,015,065,038
<RECEIVABLES> 3,908,244
<ASSETS-OTHER> 18,998
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,018,992,280
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,866,239
<TOTAL-LIABILITIES> 1,866,239
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 701,041,702
<SHARES-COMMON-STOCK> 98,901
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 28,000,418
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 29,013,180
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 259,070,741
<NET-ASSETS> 1,017,126,041
<DIVIDEND-INCOME> 25,421,491
<INTEREST-INCOME> 9,268,474
<OTHER-INCOME> 0
<EXPENSES-NET> 6,330,486
<NET-INVESTMENT-INCOME> 28,359,479
<REALIZED-GAINS-CURRENT> 29,497,527
<APPREC-INCREASE-CURRENT> 70,693,208
<NET-CHANGE-FROM-OPS> 128,550,214
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 104,468
<NUMBER-OF-SHARES-REDEEMED> (5,567)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 194,869,500
<ACCUMULATED-NII-PRIOR> 24,966,593
<ACCUMULATED-GAINS-PRIOR> 42,587,132
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5,824,579
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 6,416,736
<AVERAGE-NET-ASSETS> 316,280
<PER-SHARE-NAV-BEGIN> 16.19
<PER-SHARE-NII> .29
<PER-SHARE-GAIN-APPREC> 1.71
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 18.19
<EXPENSE-RATIO> .59
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust Vista Fund
</LEGEND>
<SERIES>
<NUMBER> 021
<NAME> CLASS A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 242,720,631
<INVESTMENTS-AT-VALUE> 318,456,787
<RECEIVABLES> 998,491
<ASSETS-OTHER> 300
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 319,455,578
<PAYABLE-FOR-SECURITIES> 5,963,413
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,028,426
<TOTAL-LIABILITIES> 6,991,839
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 250,867,863
<SHARES-COMMON-STOCK> 21,162,504
<SHARES-COMMON-PRIOR> 13,848,509
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (14,140,280)
<ACCUM-APPREC-OR-DEPREC> 75,736,156
<NET-ASSETS> 312,463,739
<DIVIDEND-INCOME> 895,546
<INTEREST-INCOME> 621,919
<OTHER-INCOME> 0
<EXPENSES-NET> 1,793,226
<NET-INVESTMENT-INCOME> (275,761)
<REALIZED-GAINS-CURRENT> (10,989,282)
<APPREC-INCREASE-CURRENT> 53,652,396
<NET-CHANGE-FROM-OPS> 42,387,353
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8,782,307
<NUMBER-OF-SHARES-REDEEMED> (1,468,312)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 141,803,319
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (3,150,998)
<GROSS-ADVISORY-FEES> 1,526,540
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,818,321
<AVERAGE-NET-ASSETS> 234,705,692
<PER-SHARE-NAV-BEGIN> 12.32
<PER-SHARE-NII> (.02)
<PER-SHARE-GAIN-APPREC> 2.42
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.72
<EXPENSE-RATIO> .77
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust Vista Fund
</LEGEND>
<SERIES>
<NUMBER> 022
<NAME> CLASS B
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 242,720,631
<INVESTMENTS-AT-VALUE> 318,456,787
<RECEIVABLES> 998,491
<ASSETS-OTHER> 300
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 319,455,578
<PAYABLE-FOR-SECURITIES> 5,963,413
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,028,426
<TOTAL-LIABILITIES> 6,991,839
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 250,867,863
<SHARES-COMMON-STOCK> 57,810
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (14,140,280)
<ACCUM-APPREC-OR-DEPREC> 75,736,156
<NET-ASSETS> 312,463,739
<DIVIDEND-INCOME> 895,546
<INTEREST-INCOME> 621,919
<OTHER-INCOME> 0
<EXPENSES-NET> 1,793,226
<NET-INVESTMENT-INCOME> (275,761)
<REALIZED-GAINS-CURRENT> (10,989,282)
<APPREC-INCREASE-CURRENT> 53,652,396
<NET-CHANGE-FROM-OPS> 42,387,353
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 61,163
<NUMBER-OF-SHARES-REDEEMED> (3,353)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 141,803,319
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (3,150,998)
<GROSS-ADVISORY-FEES> 1,526,540
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,818,321
<AVERAGE-NET-ASSETS> 217,384
<PER-SHARE-NAV-BEGIN> 13.76
<PER-SHARE-NII> (.02)
<PER-SHARE-GAIN-APPREC> .99
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.73
<EXPENSE-RATIO> .62
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust Voyager Fund
</LEGEND>
<SERIES>
<NUMBER> 021
<NAME> CLASS A
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 3,993,934,689
<INVESTMENTS-AT-VALUE> 5,814,233,174
<RECEIVABLES> 18,411,680
<ASSETS-OTHER> 919,473
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5,833,564,327
<PAYABLE-FOR-SECURITIES> 19,074,048
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 7,084,873
<TOTAL-LIABILITIES> 26,158,921
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,478,638,960
<SHARES-COMMON-STOCK> 126,573,538
<SHARES-COMMON-PRIOR> 116,119,974
<ACCUMULATED-NII-CURRENT> 6,388,437
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 5,020,809,202
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,820,297,087
<NET-ASSETS> 5,807,405,406
<DIVIDEND-INCOME> 26,259,119
<INTEREST-INCOME> 9,058,506
<OTHER-INCOME> 0
<EXPENSES-NET> 28,534,958
<NET-INVESTMENT-INCOME> 6,782,667
<REALIZED-GAINS-CURRENT> 508,086,665
<APPREC-INCREASE-CURRENT> 594,982,328
<NET-CHANGE-FROM-OPS> 1,109,851,660
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (11,793,024)
<DISTRIBUTIONS-OF-GAINS> (287,749,794)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11,376,573
<NUMBER-OF-SHARES-REDEEMED> (7,792,260)
<SHARES-REINVESTED> 6,869,251
<NET-CHANGE-IN-ASSETS> 1,268,870,264
<ACCUMULATED-NII-PRIOR> 11,397,910
<ACCUMULATED-GAINS-PRIOR> 281,744,935
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 26,815,677
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 29,041,360
<AVERAGE-NET-ASSETS> 5,013,493,075
<PER-SHARE-NAV-BEGIN> 39.08
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> 9.26
<PER-SHARE-DIVIDEND> (.10)
<PER-SHARE-DISTRIBUTIONS> (2.44)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 45.85
<EXPENSE-RATIO> .58
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Putnam Variable Trust Voyager Fund
</LEGEND>
<SERIES>
<NUMBER> 022
<NAME> CLASS B
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 3,993,934,689
<INVESTMENTS-AT-VALUE> 5,814,233,174
<RECEIVABLES> 18,411,680
<ASSETS-OTHER> 919,473
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5,833,564,327
<PAYABLE-FOR-SECURITIES> 19,074,048
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 7,084,873
<TOTAL-LIABILITIES> 26,158,921
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,478,638,960
<SHARES-COMMON-STOCK> 94,559
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 6,388,437
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 5,020,809,202
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,820,297,087
<NET-ASSETS> 5,807,405,406
<DIVIDEND-INCOME> 26,259,119
<INTEREST-INCOME> 9,058,506
<OTHER-INCOME> 0
<EXPENSES-NET> 28,534,958
<NET-INVESTMENT-INCOME> 6,782,667
<REALIZED-GAINS-CURRENT> 508,086,665
<APPREC-INCREASE-CURRENT> 594,982,328
<NET-CHANGE-FROM-OPS> 1,109,851,660
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 98,970
<NUMBER-OF-SHARES-REDEEMED> (4,411)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,268,870,264
<ACCUMULATED-NII-PRIOR> 11,397,910
<ACCUMULATED-GAINS-PRIOR> 281,744,935
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 26,815,677
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 29,041,360
<AVERAGE-NET-ASSETS> 980,591
<PER-SHARE-NAV-BEGIN> 41.55
<PER-SHARE-NII> (.08)
<PER-SHARE-GAIN-APPREC> 4.34
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 45.81
<EXPENSE-RATIO> .49
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
